NCC buoyed by exchange rates as overseas sales tip the balance
Listed IT security business NCC Group has posted a 35% increase in half year turnover, a figure buoyed by global currency markets as the company reveals more than half of its income now comes from international business.
Group revenue was £125.8m for the six months to the end of November (2015: £93.5m) with just over half of that (51%) coming from overseas as a result of its Fox-IT, PSC and VSR acquisitions.
International revenue, which is mostly derived from the US, grew by 89% to £64.2m.
The movements in the global currency markets had a positive impact on the group and on a constant currency basis, group revenue would have increased by 28%.
Escrow accounted for 15% of the total, with Assurance representing 83%.
Despite the storming performance the group did admit that three large unrelated contract cancellations in quick succession and one deferral in the Assurance division reduced the group’s rate of growth in the current financial year.
Pre-tax profits remained static for the half year – at £7.4m (2015: £7.5m). Adjusted pre-tax profits after exceptional items was 5% up at £16.7m.
Looking ahead, the group said the ever-increasing number of high profile cyber security breaches hitting the headlines was good for business.
Assurance order books have improved to £56.5m (2015: £41.0m) with £32.3m of managed services and monitoring renewals forecast for the current financial year (2015: £13.1m).
The Escrow business expects annual renewals to be £21.3m (2015: £19.3m) in this financial year, based on termination rates at 11%. The Escrow verification testing worldwide order book stands at £2.8m (2015: £2.3m).
Rob Cotton, chief executive, said: “We have continued to see strong organic growth across the business, particularly in Assurance, albeit that earlier contract cancellations were disappointing. Our EBITDA has increased by 15% and we are maintaining our interim dividend at 1.50p – a clear indication of our confidence in our growth prospects for this year and beyond.
“With our global reach and increased product range, we are in a prime position to help organisations as they tackle compliance with the General Data Protection Regulation (GDPR) ahead of 25 May 2018.
“GDPR preparation should already be well underway but many organisations still believe that preparing for GDPR sits with the IT department and the legal team. In our view, it belongs with the board.”
Meanwhile chairman Paul Mitchell is to step down from his role at the end of the financial year on May 31, after 17 years in the job.
Debbie Hewitt, senior independent director at the firm, will lead the search to appoint a new chairman “as soon as practicable”, as well as other non – executive appointments to meet succession plans.
Mitchell said: “I have been involved with NCC Group since its inception, through its IPO on AIM to its current position as a substantial UK-based international technology leader in the cyber security sector. I am very proud of the consistent delivery and rapid growth we have achieved during my 17 years as chairman.
“However, I have now decided, and agreed with the board and shareholders, that it is the appropriate time for a new chairman to be appointed to take the group forward to the next level.”
