NCC warns on full year performance

IT security specialist NCC Group has announced that its year end performance figures will be lower than expected, as a result of contract cancellations.

The Manchester-headquartered business saw turnover increase 35% to £125.8m for the six months to the end of November (2015: 50% to £93.5m), with organic growth of 18%.

Chief executive Rob Cotton said NCC had continued to see strong organic growth across the business, particularly in assurance.

However, back in October the company said it had suffered a number of “setbacks” over the previous 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 admitted at the time that its rate of growth in profitability will now be more biased towards the second half of the year.

Cotton said: “Whilst our forward visibility remains strong, we now do not expect to make up this profitability in the current financial year.”

It expects the split for adjusted EBITDA will be approximately 46%:54% based on the midpoint of £46.5m, with adjusted EBITDA for the full year in the range of £45.5m to £47.5m – showing growth of up to 5% year on year but less than earlier expectations.

The adjustments include acquisition transactions costs of £600,000 and losses incurred in Domain Services as its winding down process completes.

Cotton said: “Although disappointing, these contract cancellations do not reflect any structural change in our Assurance business. We will continue to exploit our leading worldwide position and are expecting to see solid organic growth in both this and in future years in fast growing markets.

“The long-term outlook for our Assurance business is unchanged and we remain confident in the future prospects for both of our divisions. Overall the Group’s forward order books and renewals have increased to £112.8m from the £108.8m level published on 20 October 2016.”