Nasstar Plc (LON:NASA) Chief Executive Officer Nigel Redwood caught up with DirectorsTalk for an exclusive interview to discuss their results for the year to 31 December 2017.
Q1: First off, congratulations on your 2017 performance, can you talk us through the highlights?
A1: We were very pleased with the results at 2017 and 2017 was the first year where we were clear of acquisitions so it’s really important to demonstrate the underlying strength of the business.
So, to see revenue grow by 31% which was a 9% underlying organic growth rate was very important and that’s once you remove the effect of the acquisitions. More importantly, our strategy to increase profits at a faster rate than revenue really came to fore, we see adjusted EBITDA increase by 50% which ended up 23% of revenues by the end of the year which we’re very pleased with.
Net cash, we actually turn into a net cash of £1 million so that was about £1 million ahead of the expectations, we exited 2016 with £2.8 million net debt. So, that was very pleasing to see us reach net cash and as a result, we’re confident and dividends are going to be up by 15% as well.
Q2: Could you explain the progress that you’ve achieved with the Nasstar 10-19 programme?
A2: Nasstar 10-19, that was a strategy that we launched at the start of 2017 and ultimately that was about bringing together all of the businesses that we’d acquired since 2014 into one business. The ultimate outcome of that is to really drive profit margins by enjoying the cost synergies that you get by bringing businesses together but also making sure that we make maximise our growth potential and revenue synergies by bringing together the customer bases and upselling services across that.
So, 10-19, that strategy is ultimately why EBITDA margins increased from 20% in 2016 to 23% in 2017 so the first year of a 3-year strategy to drive EBITDA margins to 25% by the end of 2019.
Q3: Towards the end of last year, Nasstar announced a significant contract to develop a fully managed cloud solution, how has that gone?
A3: It’s gone very well. So, ultimately the real important part of that contract win was, I guess, the size of the customer, it demonstrated that our strategy to focus on hybrid cloud i.e. a combination of using the public cloud and our private cloud data centres to deliver an integrated solution for customers.
It was really the right strategy to focus on and to be able to win a business with 1,000 users really endorsed that strategy and the implementation has gone really well to date, so it was a phased implementation from December last year through to the end of June this year and it’s going well.
Q4: How is the market developing for the services which you provide?
A4: I think the market’s developing very strongly actually and that contract win, I guess, gives you an indication of where we’re seeing some strong growth in that the combination of technologies now and the general acceptance of cloud computing is really making our solution relevant to enterprises as well as the SME market.
So, we’re continuing to see good market development which we’re very excited by.
Q5: What do Nasstar’s strategy as a group look like for the year ahead?
A5: It’s very much continuing to focus on the 10-19 strategy, we’ve got some technical consolidation that we’re focusing on this year but also continuing to invest in both the account management and the organic growth teams. So, yes, very much to continue to execute on the strategy to date.