NCC shares fall 35% after contract cancellation ‘setbacks’

IT security specialist NCC Group saw its share price tumble 35% this morning, after it announed it had suffered a number of “setbacks” over the last four months.

Within its assurance division there were three large unrelated contract cancellations, a large contract deferral and difficulties with some managed services contract renewals.

The group said it was too early to quantify the likely impact of these in the current financial year, adding it was taking action to mitigate the developments, but admitted its rate of growth in profitability will now be more biased towards the second half of the year.

Despite the cancellations, group revenues increased by 36% to £79.6m with organic growth of 21% for the four months to the end of September.

Both its assurance and escrow divisions showed strong organic revenue growth, up 25% and 4% respectively, despite the first four months of the financial year typically being the group’s quietest trading period.

Rob Cotton, group chief executive, said: “Overall, we continue to make good progress across the business with strong organic growth. However, we have been hit by a number of unrelated adverse developments in the Assurance Division that will have an impact on profitability between the first and second half of the financial year.

“Despite this, we will continue with our measured acquisition strategy and anticipate acquiring additional boutique cyber security consultancies over the next few months.”

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