Nasstar Plc (LON:NASA) Chief Executive Officer Nigel Redwood caught up with DirectorsTalk for an exclusive interview to discuss their latest trading update for the year ended 31st December 2017
Q1: This morning we saw the announcement of your trading update for the year ended 31st December 2017, a pretty positive performance, can you explain to us what’s driven this?
A1: I’d like to think it’s a very positive performance and can be attributed really to the real focus down on our strategy to integrate the business and become one company. You’ll know from our history that we’ve made many acquisitions since 2014 and 2017 was really about making sure that we could integrate those, take advantages of the revenue synergies but also the cost synergies that those acquisitions generated.
Q2: How did you achieve a swing to a net cash position from the prior net debt situation that you were in?
A2: Cash generation is obviously a very strong aspect of our business model, over 90% of our revenues are contracted recurring on 3-5 years and clients are invoiced quarterly or monthly in advance for our service, as a result, cash generation is a positive outcome of that model.
Historically, one of the acquisitions was previously funded through bank debt which is why we were in a net debt position, but we always knew that with the profile of our business and the cash generation model that we could turn that into, at least, breakeven this year. So, we were delighted to report a £1 million net cash position at the end of 2017.
Q3: Margins have increased over the period; do you expect this progress to continue? Could you also explain a little bit more about the Nasstar 10-19 programme?
A3: So, the Nasstar 10-19 programme was the 3-year plan we kicked off last year internally but also, we informed the city about that plan. That was very much around, focussed about, integrating the business to become one true business and for us to enjoy the synergies that that therefore brings.
The ultimate target on margin was to increase the EBITDA percentage from 20% of revenues at the end of 2016 to 25% of revenues by the end of 2019. So, obviously delighted in the first year to see our EBITDA margins increase in line with those plans at the end of 2017 so yes, we do expect to continue with that margin increasing up to 25% by the end of 2019.
Q4: So, what are the main focus areas for Nasstar in the next few months and how do you view the future?
A4: I view the future very positively, if I’m honest. We’ve got the Nasstar 10-19 programme so that was a 3-year strategy, 2018 represents the second year of that strategy and so, we’ve got a very clear focus and direction for the business.
The whole company is focussed on delivering on the strategic initiatives for 2018 and the ultimate result of that should be the financial performance that we’ve seen to date.
