Final Results pt 3
NCC Group PLC
19 July 2005
Notes
1. Basis of preparation
The financial information in this preliminary announcement has been prepared in
accordance with the accounting policies set out in the financial statements of
NCC Group Plc (formerly the NCC Group (Holdings) Limited for the year ended 31
May 2005 which have remained unchanged from the financial year 2004.
The financial information set out above does not constitute the Group's
statutory accounts for the year ended 31 May 2005 or 2004, but is derived from
those accounts. Statutory accounts for the year ended 31 May 2004 have been
filed with the Registrar of companies. The statutory accounts for 2005 will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting. The auditors have reported on those accounts; their reports were
unqualified and did not contain a statement under Section 237(2) or (3) of the
Companies Act 1985.
When published, the Company's Annual Report and Accounts will be sent to
shareholders and will be made available to the public at the Company's
registered office, Manchester Technology Centre, Oxford Road, Manchester. M1
7EF
2. Segmental information
2005 2004
a) Turnover by geographical segment £000 £000
UK 15,790 12,452
Rest of Europe 1,104 1,011
Rest of the World 1,077 1,056
Total turnover 17,971 14,519
2005 2004
b) Turnover by business segment £000 £000
Escrow Solutions 8,238 6,721
Testing Solutions 4,352 3,441
Consultancy 5,381 4,357
Total turnover 17,971 14,519
Operating profit by business segment
Escrow Solutions 4,954 3,760
Testing Solutions 1,039 884
Consultancy 1,028 900
Segment operating profit 7,021 5,544
Amortisation of goodwill (1,500) (1,505)
Head office costs (920) (738)
Operating profit 4,601 3,301
Net assets / (liabilities) by business segment
Escrow Solutions (3,688) (3,003)
Testing Solutions 48 150
Consultancy 280 453
Unallocated net assets 25,087 3,222
Total net assets 21,727 822
Unallocated net assets consist of goodwill, cash, tax payable and other
centrally held assets and liabilities.
3. Exceptional finance costs and goodwill amortisation
During the year ended 31 May 2005, unamortised capitalised deal fees of £861,000
(2004: nil) were written off to the profit and loss account when the debt
financing was repaid on 17 July 2004 following the Group's listing on AIM. Only
£35,000 had a cash impact in the year as the rest were paid in prior periods.
4. Profit on ordinary activities before taxation
2005 2004
£000 £000
Profit on ordinary activities before taxation is stated
after charging/(crediting):
Auditors' remuneration:
Group 26 17
Company 1 2
Non audit 15 38
Depreciation and other amounts written off tangible and
intangible fixed assets:
Owned 354 262
Amortisation of goodwill 1,500 1,505
Operating lease rentals charged:
Hire of plant and equipment 300 236
Other operating leases 340 169
Profit on disposal of fixed assets (11) (12)
Non audit fees relate to taxation advice and consultancy services regarding the
introduction of international financial reporting standards. In addition to the
non audit fees noted above, the auditors provided due diligence services in
respect of the floatation on AIM totalling £217,000.
5. Staff numbers and costs
The average number of persons employed by the Group during the year, including
directors is analysed by category as follows:
Number of employees
2005 2004
Operational 55 50
Administration, sales and marketing 134 101
189 151
6. Interest receivable and interest payable
2005 2004
£000 £000
Interest receivable and similar income
Short term deposits 123 104
Profit on disposal of interest rate swap 39 -
162 104
Interest payable and similar charges
Amounts payable on bank loans and overdrafts (527) (836)
Amounts payable on loan notes - (1,007)
Amortisation of deal fees on term loans (7) (159)
(534) (2,002)
7. Taxation
Analysis of charge in period
2005 2004
£000 £000
UK corporation tax
Current tax on income for the year 1,488 893
Adjustment to tax charge in respect of prior periods (9) -
Total Current tax 1,479 893
Deferred tax (6) -
Tax on profit on ordinary activities 1,473 893
The company envisages that its effective rate of tax will remain consistent with
prior periods.
8. Dividends
2005 2004
£000 £000
Interim paid (0.75p per ordinary share) (245) -
Final proposed (1.75p per ordinary share) (571) -
Preference dividend (6% preference shares) - (4)
(816) (4)
9. Earnings per share
The calculation of earnings per share is based on the following:
2005 2004
£000 £000
Profit for the period 1,079 506
Dividends 816 4
Earnings used in basic and diluted 1,895 510
Earnings per share
Amortisation and exceptional item net of tax 2,103 1,505
Adjusted Earnings used in basic and diluted 3,998 2,015
Earnings per share
Number of Number of
Shares Shares
000's 000's
Basic weighted average number of shares
in issue 31,292 19,545
Dilutive effect of share options 472 -
Diluted weighted average shares in issue 31,764 19,545
10. Intangible fixed assets
Goodwill arising on
consolidation
£000
Cost
At beginning and end of year 29,121
Amortisation
At beginning of year (1,720)
Charge for year (1,500)
At end of year (3,220)
Net book value
At 31 May 2005 25,901
At 31 May 2004 27,401
11. Tangible fixed assets
Computer Plant and Fixtures Motor vehicles Total
equipment equipment and
fittings
Group £000 £000 £000 £000 £000
Cost
At beginning of year 1,249 117 126 130 1,622
Additions 241 227 328 38 834
Disposals (3) - - (65) (68)
At end of year 1,487 344 454 103 2,388
Depreciation
At beginning of year 878 88 59 51 1,076
Charge for year 222 42 63 27 354
On disposals (1) - - (43) (44)
At end of year 1,099 130 122 35 1,386
Net book value
At 31 May 2005 388 214 332 68 1,002
Net book value
At 31 May 2004 371 29 67 79 546
Company
The company does not have any tangible fixed assets.
12. Debtors
Group Group Company Company
2005 2004 2005 2004
£000 £000 £000 £000
Trade debtors 2,666 2,407 - -
Amounts owed by Group undertakings - - 207 134
Deferred tax (see below) 77 71 - -
Prepayments and accrued income 929 1,046 - -
3,672 3,524 207 134
All debtors fall due within one year.
13. Creditors: amounts falling due within one year
Group Group Company Company
2005 2004 2005 2004
£000 £000 £000 £000
Bank loans 1,200 1,362 1,200 1,362
Trade creditors 331 365 - -
Amounts owed to Group - - - 4
Undertakings
Corporation tax 728 290 - -
Other taxation and social security 892 701 - -
Dividends payable 571 4 571 4
Other creditors - 56 - 56
3,722 2,778 1,771 1,426
The gross amount of the bank loan for both the company and the Group is
£1,200,000 (2004: £1,400,000) from which capitalised deal fees of nil (2004:
£38,000) have been deducted. The bank loan is unsecured.
14. Accruals and deferred income
Group Group Company Company
2005 2004 2005 2004
£000 £000 £000 £000
Deferred income 4,885 4,033 - -
Accruals 1,340 1,550 142 586
6,225 5,583 142 586
Deferred income of £4,885,000 (2004: £4,033,000) consists of Escrow Solutions
agreement revenue and maintenance revenue that has been deferred to be released
to the profit and loss account over the contract term on a pro-rata basis.
15. Creditors: amounts falling due after one year
Group Group Company Company
2005 2004 2005 2004
£000 £000 £000 £000
Lease incentives 122 - - -
Term loan A 3,900 7,575 3,900 7,575
Term loan B - 3,000 - 3,000
Loan notes - 16,779 - 16,779
Total 4,022 27,354 3,900 27,354
Issue costs (25) (961) (25) (961)
Amortisation of issue costs 7 173 7 173
Net book value 4,004 26,566 3,882 26,566
The issue costs are being amortised over the term of the loan.
Term loan A attracts an interest rate of LIBOR plus 0.975%. Loan repayments are
to be made quarterly on the last day of March, June, September and December of
each year. The loan is unsecured.
No outstanding loans are due for repayment after five years.
16. Financial instruments
Financial instruments policy
All instruments utilised by the Group are for financing purposes. The
day-to-day financial management and treasury are controlled centrally for all
operations. During the year ended 31 May 2005 the Group realised proceeds of
£39,000 (2004: nil) on disposal of an interest rate swap, the proceeds are
included within interest receivable.
17. Called up share capital
Number of shares 2005 2004
£000 £000
Authorised
Preferred ordinary shares £1.00 (non
equity)
65,000 - 65
A Ordinary shares £1.00 30,000 - 30
B Ordinary shares £1.00 5,000 - 5
R Ordinary shares £1.00 1 - -
Ordinary shares of 1.00p each 50,000,000 500 -
500 100
Allotted, called up and fully paid
Preferred ordinary shares £1.00 (non
equity)
65,000 - 65
A Ordinary shares £1.00 30,000 - 30
B Ordinary shares £1.00 5,000 - 5
R Ordinary shares £1.00 1 - -
Ordinary shares of 1.00p each 32,604,185 326 -
326 100
On 8 July 2004 the Company conducted a share reorganisation which increased its
authorised share capital to £500,000 divided into 50,000,000 ordinary shares of
1.00p each which 32,604,185 were issued and fully paid and 17,395,815 ordinary
shares were un-issued.
Share options and share incentives
The Company has a number of share option schemes under which options to
subscribe for the Company's shares have been granted to directors and staff.
Options granted under these share option schemes as at 31 May 2005 were as
follows. Other than these options granted there have been no other options
granted during the year.
Exercisable
Options at in year ended
31 May 2005 Exercise price 31 May
Approved EMI scheme 1,132,080 £1.70 2008-2015
Share save scheme 343,678 £1.36 2008
LTIP 169,118 £nil* 2008
*The exercise price of the LTIP scheme is nil although £1.00 is payable on each
occasion of exercise.
There were no share options granted in the year ended 31 May 2004.
18. Reserves
Share premium Profit and loss
account account
£000 £000
Group
At beginning of year 219 526
Premium on share issue 19,600 -
Retained profit for the year - 1,079
Currency translation adjustment - -
At end of year 19,819 1,605
Share premium Profit and loss
account account
£000 £000
Company
At beginning of the year 219 691
Premium on share issue 19,600 -
Retained profit for the year - 3,233
At end of year 19,819 3,924
19. Minority interests
2005 2004
£000 £000
At beginning of year (23) (23)
Acquired with subsidiary undertakings - -
At end of year (23) (23)
Equity (3) (3)
Non-equity (20) (20)
(23) (23)
20. Contingent liabilities
There is no group banking, performance bond or guarantee to any fellow company.
In 2004 each group company was party to a group banking facility under which it
guaranteed the bank borrowings, performance bonds and guarantees of its fellow
companies. The drawings under this group facility were £11,975,000 in 2004.
21. Reconciliation of movements in shareholders' funds and
movements on reserves
Group Group Company Company
2005 2004 2005 2004
£000 £000 £000 £000
Profit / (loss) for the financial year 1,895 510 (1,351) 1,028
Dividends (816) (4) 4,584 (4)
1,079 506 3,233 1,024
New share capital subscribed 226 223 226 223
Increase in share premium 19,600 - 19,600 -
Currency translation loss - (1) - -
Net increase in shareholders' funds 20,905 728 23,059 1,247
Opening shareholders' funds 845 117 1,010 (237)
Closing shareholders' funds 21,750 845 24,069 1,010
22. Notes to the consolidated cash flow statement
a. Reconciliation of operating profit to net cash flows from operating
activities
2005 2004
£000 £000
Operating profit 4,601 3,301
Depreciation charge 354 262
Amortisation of goodwill 1,500 1,505
Profit on sale of fixed assets (11) (12)
Increase in debtors (142) (524)
Increase in creditors 1,359 686
Net cash inflow from operating activities 7,661 5,218
b. Analysis of net funds / (debt)
At Cash Non cash At end of
beginning Flow Items Year
of year
£000 £000 £000 £000
Cash in hand and at bank 4,278 825 - 5,103
Loan and loan notes (27,928) 23,680 (834) (5,082)
Total (23,650) 24,505 (834) 21
c. Reconciliation of net cash flow to movement in net funds / (debt)
2005 2004
£000 £000
Increase in cash in the year (Note 22b) 825 413
Cash outflow from movement in loans and loan notes 23,680 2,763
Non cash items (834) (182)
Movement in net debt in the year 23,671 2,994
Net debt at start of year (23,650) (26,644)
Net funds / (debt) at end of the year 21 (23,650)
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