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Summary Annual Report and Accounts 2015/2016

Our Advantage
Stands Strong

To Our Stakeholders:

Today, we are focused on our clients more than ever and we continue to drive new, innovative ways of delivering payroll and broader HR solutions and services.


Adel Al-Saleh
Group Chief Executive

2015/16 has been a year of positive change for NGA Human Resources.

In March 2016 we reached agreement with our shareholders and lenders regarding a new capital structure, which significantly reduced indebtedness and strengthened our capital structure. As a result, Goldman Sachs and Park Square Capital are now our principal shareholders and NGA is now well capitalised to generate growth.

Our strategy remains unchanged and our key differentiator – The NGA Advantage – stands strong. The NGA Advantage combines our deep market experience and insight, our wide range of advanced technology options, and our unparalleled flexible, global service delivery capabilities – all of which will continue to drive our strategy for growth. Today, we are focused on our clients more than ever and we continue to drive new, innovative ways of delivering payroll and broader HR solutions and services.

Strategy
Over the last five years NGA has grown into a leader in our chosen markets with our SaaS and BPaaS (Business process as a Service) offerings, and through partnerships with global HRIS leaders, bringing innovative HR service solutions to our customers.

We continue to drive our business across our four clearly defined segments – UK mid-market, UK SMB, Enterprise and ANZ mid-market – each focused on HR technology and services, strong client relationships and market leadership. Our proprietary technology and platform based products and services provide solutions across the employee and HR lifecycle for our customers. Our global scale and flexible delivery options remain unmatched in the market and offer our clients a unique platform for HR transformation and unifying platforms and technologies – illustrated by The NGA Advantage.

In our enterprise segment we are a worldwide leader in delivering client-focused HR services, leveraging partner platforms and NGA Intellectual Property comprising proprietary software platforms, process standards, deployment methodologies, service delivery tools and smart integration solutions. NGA is a long-term partner to our Enterprise customers in streamlining, unifying and transforming HR in any language and country.

In our UK and Australian businesses our primary focus is on providing market-leading, integrated HR and payroll software suites, where we can leverage deep legislative knowledge and HR process expertise to help our clients become better employers.

Over the last five years, we've grown into a leader in our markets with our SaaS and BPaaS (Business Process as a Service) offerings, and through partnerships with global HR SaaS leaders, bringing innovative HR-as-a-Service solutions to our clients.

Business Performance
In the year to 30 April 2016 NGA achieved underlying revenue growth (excluding legacy Convergys and HRC contracts) of 2.3%. We also made good progress in terms of productivity, innovation, delivery quality and client satisfaction.

NGA closed the year with adjusted EBITDA* of £69.8m, 13% below last year at constant exchange rates. Profits in our UK and Australian businesses increased in 2015/16, but declined in the Enterprise business.

*Adjusted EBITDA is defined as operating profit before significant restructuring, one-off items, property provisions, amortisation of intangibles, depreciation of fixed assets, profit on disposal of Public Services business and gain on conversion of debt to equity

NGA's order book closed the year at £1,004m, 3% higher than a year ago, driven by an excellent final quarter. Contract signings amounted to £576m for the year with notable contracts signed with Thyssen Krupp and Stanley Black and Decker.

Revenues grew by 3% to £113m and EBITDA increased by 8% to £41m, driven by revenue growth and productivity improvements in customer delivery.

Revenue growth was driven by our market leading proprietary ResourceLink HR platform where revenues grew by 10%, offsetting the decline in our older legacy platforms. Recurring revenues from SaaS grew by 36%, with SaaS representing 36% of our ResourceLink business.

In March, we opened our new technology innovation centre in Bristol. This investment in innovation has been well received by market analysts and employees alike. We believe that the working environment that we provide for our employees influences the quality of employees' engagement and the success they deliver to clients.

NGA ResourceLink

Revenues declined by 4% to £20m and EBITDA was stable at £3.1m. 2015/16 was another year of transformation for Moorepay and performance stabilised in the second half following two challenging years.

Payroll revenues were flat year on year with the business returning to growth in the second half. Our HR Services activity suffered year on year decline due to consolidation of smaller client organisations in the UK SMB market place.

Quality and efficiency were the focus in Payroll Service delivery: our annual Customer Satisfaction Survey showed a 65-point improvement over the last two years with the service now a market leader. Client attrition is at its lowest level in over five years.

Moorepay

Revenues grew by 9% to £19.6m and EBITDA increased by 7% to £5.6m (both on a constant currency basis). Our ANZ mid-market segment saw the execution of our strategy result in contract wins and good revenue growth such that we have now generated 12 consecutive quarters of growth on a year-to-year comparison.

Our Preceda platform – the first cloud HR platform in the region – continued to grow, both through stand-alone SaaS deployment and in combination with BPO and HR shared services from our Sydney and regional delivery centres. At the end of 2015/16 we launched the Preceda Analytics module to support our customers' workforce management and payroll cost analyses.

The business entered the New Year with strong momentum. We anticipate another year of strong order intake, ensuring that our ANZ business continues to flourish.

Preceda

Underlying revenues (excluding legacy acquired Convergys contracts) grew by 2.1% to £261.3m and underlying EBITDA increased by 12.3% to £21.7m at constant exchange rates.

Our Enterprise business saw significant global payroll and HR services contract wins from Stanley Black & Decker and ThyssenKrupp, as well as major contract extensions with State of Florida, GE and Textron. Our fourth quarter represented the biggest quarter ever in terms of signings, positioning the company well for the future.

2015/16 also saw significant investments in our Enterprise sales organisation, with a renewed portfolio of As-A-Service enterprise offerings, expansion of our partner offerings, the establishment of a new inside sales function and various sales effectiveness initiatives. The transformation of our HR consulting activity resulted in the creation of our Digital HR offering, providing a range of expert services across consulting and application maintenance to organisations who are moving HR business processes to the cloud. Some of our largest contract wins in 2015/16 were driven by cloud HR and As-A-Service business process outsourcing. Digital HR and modern, As-a-Service HR offerings will continue see increasing adoption across the enterprise market and are expected to dominate the corporate and HR agenda in years to come. Tangible success of our Digital HR offerings is illustrated in a Net Promoter Score of +32 by our Digital HR clients, well above industry average.

In order to make the most of these strong market trends, we have appointed Andy Monshaw as President of our Enterprise business, with end-to-end responsibility over the segment and a strong focus on driving revenue growth through Digital HR and 'as-a-Service' BPO offerings.

Destination Digital
Our markets continue to grow: organisations of all sizes look to HR technology and services innovation to help improve engagement and performance of their workforce. New Digital HR technologies such as analytics, cloud, social, and mobile are responding to that call for improved performance. Our Digital HR strategy embodies our confidence in the huge opportunities we see in the enterprise segment, beyond our status as the only truly global payroll and HR services provider.

The following three trends represent the most important and influential advances of Digital HR, which will have a transformative impact on how organisations manage themselves and support their people in the years ahead.

  • Employee Experience: The days of a limited user experience – simply providing an inviting user interface to the same old HR systems and processes – are over. "Systems of record" are being replaced by "systems of engagement," which offer an employee experience that connects people to their companies and each other more closely than ever – and enables far more effective outcomes.
  • Digital Workplace: Digital tools are the keys not just to improving productivity, but also to reimagining how to more effectively organise and manage a holistic employee experience across many different touchpoints and workplace environments. The digital workplace itself presents both new demands and opportunities for the deployment of HR technologies and delivery of HR services.
  • HR-as-a-Service: Organisations today are moving beyond simple SaaS models that provide them with cloud platforms, or managed services that focus only on transactional and administrative services. They are moving into "As-a-Service" capabilities that can immediately improve employee, partner and customer effectiveness, sourced from providers who have the functional, technical and scientific knowledge, and the industry expertise, to deliver sophisticated services. As-a-Service introduces utility-thinking into computing, with transparent, flexible pricing models (per employee per month), scalable HR services (per country), and bundled expert services (per technology or HR process).

In 2015/16 we built an end-to-end portfolio of offerings taking clients on a journey to Digital HR success. In addition to end-to-end design, build, deliver and operate options, we have also extended the SuccessFactors Employee Central platform to connect and integrate with other HR tools, providing a superior employee experience.

Confirming our capabilities in Digital HR, industry analysts ISG and HfS have both, in recent months, nominated NGA as pioneers in the HR As-a-Service economy. HfS Research, for example, positioned NGA in the Winners' Circle of their HfS Blueprint 2016 for the completeness of our Digital HR offering, as a result of our integration with SuccessFactors Services.

HfS Blueprint

Innovation and Offerings
Innovation is key to our success, and to the success of the customers we support. Our innovation and next-generation services roadmaps will continue to deliver industry leading and highly regarded HR technology solutions and services in Digital HR and HR-as-a-Service.

Across our business we observe four key sources of innovation for HR platforms and services: smart integration with a wide range of back-office tools; analytics to provide insight and intelligence into workforce and business performance; automation to drive internal efficiencies, and employee experience and self-service. Our innovation strategy addresses all of these.

Some examples of innovations we delivered in 2015/16 include:

  • Our Payroll Exchange platform – smartly connecting core HR systems in the cloud with payroll engines in 145 countries –16 new customers adopted the platform in its first year after launch
  • Our Digital HR experts pioneered the first extensions to SuccessFactors Employee Central using the new Hana Cloud Platform. These extensions provide accelerated deployment and deep integration between core HR and adjacent HR processes and were awarded a finalist position at SAP's Pinnacle Awards
  • Our Cloudify Payroll offering was introduced to help OnPremise HCM users move to the cloud faster and minimise the risks associated with payroll migrations. The offering will also become part of SAP's own solution portfolio later in 2016
  • Our ResourceLink user experience was completely redesigned and now features end-to-end responsive design, making the entire application accessible across every form factor, including mobile and tablets. ResourceLink also introduced ResourceLink Reporting Services, a HR analytics solution, allowing data visualisation and reporting across the entire ResourceLink solution
  • Preceda Analytics module, providing rich, preconfigured dashboards for HR leaders in Australia and New Zealand
  • Moorepay, NGA's UK SMB division, saw the continued development and expansion of HR services beyond its core payroll solution, including health & safety advice, HR & employment legal support and time & attendance solutions

Delivery
Innovation was not restricted to our offerings and platforms; also our service delivery organisation drove performance and productivity through important standardisation and automation initiatives.

In 2015/16 we finished a 3-year long project of delivering our HR service catalogue which features detailed, multi-level descriptions of every HR process, across 1,500 HR sub-processes. This HR catalogue is of significant importance to NGA as it is our foundation for process standardisation. New, digital HR offerings will leverage this HR catalogue and allow NGA to further accelerate the delivery and integration of HR projects in the future.

Automation is critically important in the future success of HR service delivery. A new productivity initiative, Project Horizon, will see the removal of manual interactions and transactions, replacing these with highly accurate and efficient robotic processes, assuring compliance with local legislations and tax laws.

Greater efficiencies also came from our HR shared service centres across the globe. Our integrated global delivery footprint with 10 strategic and premium delivery centres, drives continuous improvement in operational efficiency for our customers. This in turn strengthens our partnership and future opportunities with clients. Our rightshoring model across centres on various continents continued to improve in quality and proves a scalable model for growth.

In Summary
NGA Human Resources is in a strong position to grow. The headwinds that we have faced in our legacy Convergys contracts erosion and HR consulting transformation are coming to an end. We are unrivalled in our technology platforms and delivery of global HR and payroll services; we are a leader in our markets. We are driving the adoption of Digital HR and HR-as-a-Service, and we are working with the best HR technology vendors to pioneer the development of the HR and payroll platforms that will create the visibility businesses need to succeed as we move into a world of work that is more digital, more automated and more services driven than ever.

Where we have seen challenges over the last few years we have worked our way through to positive solutions. Our new ownership and recapitalisation makes us financially strong and our pipeline and order book indicates that we are developing and delivering the applications, services and solutions that organisations of all sizes need and want, wherever in the world their staff are located.

We have 7,500 colleagues, in 35 locations, supporting more than 8 million employees served on NGA solutions in over 100 countries. All are firmly united in our objective to maintain and grow our position as the leading HR and payroll services partner in the world. Together we are reshaping the delivery and analysis of HR processes worldwide.


Adel Al-Saleh
CEO
NGA Human Resources


Insights

The Three Key Trends Shaping the Future of HR
As one company, with a singular focus on growth and leadership, NGA must constantly identify and leverage key trends in people management. The following three trends represent the most important and influential advances in our business, which will have a transformative impact on how organisations manage themselves and support their people in the years ahead.

01

Employee Experience

The days of user experience—simply providing an inviting user interface to the same old HR systems and processes—are over. 'Systems of record' are being replaced by 'systems of engagement', that offer an employee experience which connects people to their companies and each other more closely than ever—and enables far more effective outcomes.

employee experience

02

Digital Workplace

Digital tools are the keys not just to improving productivity, but also to actually reimagining how to more effectively organise and manage a holistic employee experience across many different touchpoints and workplace environments. The digital workplace itself presents both new demands and opportunities for the deployment of HR technologies and delivery of HR services.

digital workplace

03

HR-as-a-Service

Organisations today are moving beyond simple SaaS models that provide them with on-demand software, or even managed services that focus only on transactional and administrative services. They are tapping into 'As-a-Service' capabilities that can immediately improve employee, partner and customer effectiveness, from providers who have the functional, technical and scientific knowledge, and the industry expertise, to deliver sophisticated services on a moment's notice.

hr service

The New World of Employee Experience
NGA Human Resources is in a strong position to grow. The headwinds that we have faced in our legacy Convergys contracts erosion and HR consulting transformation are coming to an end. We are unrivalled in our technology platforms and delivery of global HR and payroll services; we are a leader in our markets. We are driving the adoption of Digital HR and HR-as-a-Service, and we are working with the best HR technology vendors to pioneer the development of the HR and payroll platforms that will create the visibility businesses need to succeed as we move into a world of work that is more digital, more automated and more services driven than ever.

Early on, when organisations were migrating from largely manual HR functions to new HR technologies and automated HR service delivery, they focused mainly on gaining efficiencies, improving processes and cutting costs to improve business outcomes. In particular, moving 'transactional' work to low-wage countries was a key driver of, and contributor to, these cost efficiencies. The implementation of shared-service delivery models also enabled companies to shift transactional HR functions to automated, self-service systems, that resulted in improved HR process standardisation and measurement.

Today the HR technology market has radically shifted. HR applications are becoming tools for employees first, enabling them to better manage people, learn and develop, and steer their own careers. The industry is seeing a shift in HR technology from 'systems of record' to 'systems of engagement'. Today's HR applications demonstrate that HR's main ways of interacting with employees is digital and as such they are designed to help improve our productivity at work and optimise every touchpoint between employer and employee.

But as the transformation to a digital workplace has unfolded over the last decade or more, additional priorities have emerged. Initially, the emphasis was on the 'user experience', that focused on things like screen configuration and mobile technology applications. The user experience became a key measure for the success of HR service delivery. But more recently, an important distinction between the more narrow user experience and the much broader 'employee experience' has emerged.

Although it includes the user experience, or self-service technology, the employee experience comprises every touchpoint between employee and employer—interaction with a contact center, the speed of issue resolution, easy access and integration workflows across business applications, direct interaction with HR and other lines of business and readily accessible knowledge and information.

Creating a rich, total employee experience is rapidly ascending the list of organisational priorities. That's because, to an even greater degree than the narrower user experience, it drives engagement with the organisation, and engagement raises performance and productivity.

What should HR managers and senior management be aware of—and doing—now, to realise the maximum benefit for employees, as well as for the organisation as a whole? Simply, they must begin to marry the idea of an employee experience based on 'design thinking,' or creating experiences with employees central to the process, with that of 'digitalisation,' or putting digital technology at the heart of the business. When these two concepts are combined, the path is cleared for mapping out the most effective and most advanced HR delivery model for your organisation.

Leveraging the Digital Workplace
As the phrase 'digital workplace' becomes increasingly common, some misconceptions persist in terms of what it means to be truly 'digital'. What digital isn't is just automating paper or adding technology to the ways things have always been done. Instead, digital tools are the keys to actually reimagining how to more effectively organise and manage a holistic employee experience across many different touchpoints.

The digital workplace itself presents new demands and opportunities for the deployment of HR technologies and delivery of HR services. There is demand for an enhanced employee experience; for employee involvement in the design of the experience; and for more parity between employees' experiences with technology in the workplace and as consumers. Likewise, there are new opportunities for building loyalty and increasing engagement, satisfaction and productivity.

But these outcomes are all predicated on optimising the employee experience; embracing the larger context of the seamless and ubiquitous use of technology generally; and by being flexible and adaptable to evolving HR technologies and service delivery models.

Digital technology is the key to creating a digital workplace that is at once well organised and integrated and, at the same time, unique and personal to the individual employee. Digital technology has ushered in nearly limitless opportunities to deliver an employee experience that includes personalised communication, customised services and multichannel access. In other words, what employees now expect.

Additionally, demographic trends reflect that, for many companies, the workforce consists of various groups, not only with permanent and temporary employees, but with freelance staff and contingent workers as well. In many cases, their primary source of interactions and communications with a company is virtual.

Here, getting the employee experience right becomes even more of an imperative and arguably a mandate rather than a 'nice to have.' Providing accurate communication and the right touchpoints for members of each group becomes a matter not just of providing an acceptable experience, but also of mitigating risk and ensuring compliance for the organisation. The HR and business processes supporting these workgroups must be agile and transparent, that the digital workplace will facilitate.

In an increasingly digital workplace, privacy also is a growing issue which presents serious risk, as more and more countries—Russia, India and China among them—implement stringent laws and serious penalties for violations. Supporting the workplace with specialist providers which have a proven, global track record, the required knowledge, expertise and capacity for understanding, and managing constantly changing country-by-country requirements will be key.

Towards HR-as-a-Service
With the continued globalisation of business assets, expertise and operations, maturing enterprises are still working to improve efficiencies and incremental value in their business processes—whether they are applying analytics to capitalise on more comprehensive, global data sources, pursuing end-to-end process delivery, or searching for globally accessible technology platforms based on common standards and enabled in the cloud.

These benefits, and many others, will be coming from technology-enabled 'As-a-Service' capabilities which can immediately improve employee, partner and customer effectiveness. The emergence of As-a-Service will have a significant impact on the traditional IT and business services industries, including the role and capabilities of HR.

And don't think of SaaS, BPaaS and As-a-Service as different names for the same capability. The differences, especially in this last evolution, are significant.

Originally, SaaS took applications off the customer's servers and provided them through the cloud. In many cases, customer staff continued to run the software, and the associated processes and applications, though some forward-looking organisations also managed those services for customers.

NGA took the concept a bit further with BPaaS—Business Process-as-a-Service—recognising that the ability to understand and fully manage/operate the customer's various business processes was really the key. Taking the technical infrastructure off the customer's plate was one thing, but outsourcing the full management of business processes was another.

But today, the digital economy is driving something bigger. The very idea of digital business and the digital economy is about transforming your business from the bottom up. It suggests that new technologies make it possible to entirely rethink your business, or your industry. There is still a Netflix, but there are no CDs traveling through the mail. Digital technology transformed the industry to an online model, with Netflix now becoming involved with content as well as delivery. Uber have likewise transformed the taxi industry, not to mention Airbnb in hospitality.

In this realm, the As-a-Service concept is fairly simple. Instead of establishing their own operations infrastructures, organisations buy what they need from providers who have the functional, technical and scientific knowledge, and the industry expertise, to deliver sophisticated services on a moment's notice. These services can be 'plugged in' right away, becoming operational in days rather than weeks or months. In technical terms, the As-a-Service service delivery approach is where business value is realised through on-demand and scalable plug-and-play services which deliver high-quality, reliable, standardised execution through technology, analytics and context-based results.

The game-changer is centred on today's services work gradually becoming a genuine blending of people-plus-technology. It will move us towards an ultimate destination of services value, accessible on-tap, empowering service buyers to focus on proactive value-identification with help from their service partners. And it will be enabled by intelligent automation and digital tools, all made possible by smart people working together.

And this journey to As-a-Service is all about simplification. Business services today are about speed to business impact; about removing the blockages and obstacles diluting this business impact. Anything less is not taking advantage of the experience and capability which have been developed in the global services market over the past three decades. In this time, enabling technologies, talent, sourcing operating models, and macro-economic trends, such as globalisation of labor, high-growth emerging markets, new business models and consumerisation, enable service buyers, advisors and service providers to engage increasingly in a more flexible and collaborative manner. The ambition is to achieve renewed business results with speed, quality and effectiveness. When we get there, we will be in the As-a-Service economy.

Conclusion
For HR, creating and leveraging the benefits of a digital economy means fully embracing three big ideas.

First, HR needs to be proactive in defining and designing a better employee experience which crosses and incorporates all touchpoints within the organisation. This means beginning with desired outcomes in mind and borrowing from marketing's CRM best practices for managing customer relationships. It also means applying 'design thinking' by making employees and their perspectives front and centre in every aspect of the experience.

Second, HR managers need to understand what becoming 'truly digital' looks like by being aware of the boundless possibilities digital technology affords. With digital technology, virtually anything is possible in terms of creating a rich and satisfying employee experience which includes personalisation, customisation and multichannel access. HR needs to ask the tough questions: Despite the ready availability of digital technology and all its potential, why do we get stuck in the ways we've always done things?

Third, instead of continuing to maintain their own operations infrastructures, organisations are moving beyond SaaS to the broader As-a-Service model. They can buy what they need from providers who have the functional, technical and scientific knowledge, and the industry expertise, to deliver sophisticated services on a moment's notice. In technical terms, the As-a-Service service delivery approach is where business value is realised through on-demand and scalable plug-and-play services which deliver high-quality, reliable, standardised execution through technology, analytics and context-based results.

Though it has been said before, HR today stands at the threshold of nothing less than complete transformation. Stellar results—in engagement, performance and productivity—are within the grasp of every organisation. We see the rapidly evolving HR landscape as an opportunity for CHROs and HR managers to lead the way forward by injecting new thinking into old processes and by reimagining a holistic employee experience in which all touchpoints are actively organised and managed for greater success.

We see the rapidly evolving HR landscape as an opportunity for CHROs and HR managers to lead the way forward by injecting new thinking into old processes and by reimagining a holistic employee experience.

Adel Al-Saleh, CEO NGA Human Resources


Financial Highlights

To clarify for the reader of the accounts, we have adjusted the continuing operating profit and EBITDA* for years ending 30 April 2015 and 30 April 2016, to account for one-off items, property provisions and amortisation of acquired intangibles.


Downloads

In this section you can find pdf documents related to the Annual Report. These can be viewed by clicking on the name of the document.

Summary Annual Report  PDF (902kb)
Financial Report  PDF (409kb)
Directors' Report  PDF (95kb)
Strategic Report  PDF (91kb)