Cyber group confident of medium-term growth prospects

Manchester-based global cyber security specialist, NCC Group said it is confident about its medium-term growth drivers in a trading update for the year to May 31, 2023, today.

It said the unaudited group adjusted EBIT was within the range announced in March 2023 (£28m to £32m), at c.£28.5m, driven by a reduction in North America and UK Cyber Security revenue expectations previously announced in March 2023.

Adjusted EBIT includes FY23 strategic costs of c.£2.5m with a proportion of the initially estimated £5m deferred into FY24.

Net debt, excluding IFRS 16, stands at c.£50m, with continued strong cash conversion and giving expected leverage of 1.4x.

Group like for like revenue is in line with the prior year at constant currency, while reported is c.+5% growth.

To implement the group’s new strategy, NCC said it continues to review the organisation and has made good progress in establishing a new executive committee with the following recent and planned appointments:

• Angela Brown, Chief Marketing Officer, was appointed in January 2023, with responsibility for global brand, PR and marketing and communications. Angela has more than 25 years of international experience in marketing, brand and communications.
• Kevin Brown, Chief Operating Officer, was appointed in June 2023 with responsibility for global delivery and service capabilities. Kevin spent 20 years in UK policing (specialising in intelligence and serious crime) before moving across to the private sector in 2012. He joined BT initially to transform its ability to manage risk progressing to leading and building BT’s $1bn cyber security business.
• Siân John, Chief Technology Officer, will join in July 2023 from Microsoft to drive innovation, insight and intelligence. Siân brings 25 years of cyber security experience across strategy, business risk, privacy, and technology and is currently Chair of techUK’s Cyber Security Management committee and a council member for EPSRC, the funding body for Engineering and Physical Sciences Research in the UK.
• Also, Guy Ellis has been promoted to Chief Financial Officer replacing Tim Kowalski who is steppind down after five years in the role. Guy joined NCC Group in 2021, as Director of Commercial Finance as well as serving as Interim Managing Director of the Software Resilience business, and most recently as Interim Managing Director of the UK Cyber business. Guy has more than 25 years’ experience in Finance and Commercial roles in the retail sector for brands including Asda and Specsavers. This experience, and the recent interim roles in NCC Group have given him a breadth of understanding of the commercial drivers and operations across the whole business. Tim will remain as CFO until 30 June 2023 and will support an orderly handover to Guy, who will join the Board on the 30 June 2023.

The group said trading conditions in North America and the UK, mainly in the provision of Professional Services, which led to the 31 March trading update, when NCC warned the markets that the business will fall short of the £47m in profits in expected due to a “deterioration in the macro-economic and market environment”, have since stabilised. While a level of uncertainty remains, the Group has not lost any material clients and has been effectively diversifying its client base in the recent period.

In FY24, which will be a period of considerable change for the Group, the Board expects to make modest improvement in Group Adjusted EBIT driven by both the Cyber Security and Software Resilience businesses.

CEO, Mike Maddison, said: “Since launching the next chapter of our strategy in February, the Group has taken a number of strategic steps as we create a more agile and resilient business, improve profitability and deliver shareholder value. I am grateful to all my NCC Group colleagues for their unwavering commitment and energy as we execute our plan to capitalise on the enduring opportunities in the dynamic Cyber market.

“We have fortified our leadership team with high-calibre appointments in key areas, accelerated the diversification of our client base across our fastest growing sectors, secured our new global delivery centre in Manila, which will open ahead of schedule in September 2023, and we will soon complete the rebrand of our Software Resilience business, with work on the Cyber Security brand progressing well.

“While the more challenging market conditions we announced in our March Trading Update have impacted the FY23 outturn, we are confident about the medium-term growth drivers for cyber and that progress on strategic actions will position the business to deliver greater growth and profitability in the current financial year and beyond.”

He added: “On behalf of everyone at NCC Group, I would like to thank Tim for the enormous contribution he has made over the past five years, and we wish him every success in the future.

“Meanwhile, I am delighted that someone with Guy’s commercial perspective, transformation experience and track record in organisations operating in fast-paced industries, has agreed to step up from within NCC Group and we are proud of this internal promotion.  We are all very much looking forward to collaborating with him in his new role.”