City round-up: NCC Group; Carr’s Group

Activist investor, Kelso, has taken a stake in Manchester-based global cyber security specialist, NCC.

The investor, which has a key interest in Manchester online retail giant THG, has acquired one million ordinary shares at an average price of 108p, representing 0.3% of the issued share capital of NCC.

NCC has a market capitalisation of £347m, with two divisions, Software Relience (Escrow) and Assurance (Cyber Security).

Operating across Europe, North America and Asia Pacific, employing around 2,000 staff, the group, for the year ended May 31, 2023, had unaudited revenues of £335.1m and adjusted EBITDA of £41.4m.

Software Reliance (Escrow), is a global leader, providing software escrow services to businesses, protecting the development, supply and use of business-critical technology and software applications, with unaudited revenue for the year to May 31, 2023, of £64.3m. Assurance (Cyber Security) operates in the global cyber security market, which expects CAGR of 10% between 2022 and 2027, as the global cyber threat continues to grow.

The business provides cyber security consultancy services as well as managed services to businesses, which includes continuous detection and response and other cyber services, on a contract model, with unaudited revenue for the year ended May 31, 2023, of £270.8m.

Having previously initiated a strategic review of Software Resilience (Escrow), on June 22, 2023, as part of the post-close trading and strategic update, NNC announced that it had stopped the strategic review of the Software Resilience (Escrow) business and will revisit this later in the calendar year.

As NCC highlights, the two businesses are operationally distinct and have no synergies as part of the same group.

John Goold, CEO of Kelso, said: “NCC is a special company on the UK stock market with two distinct businesses. There is an experienced management team assembled and we support them to deliver shareholder value.”

Last month, NCC warned the current fiscal year will be one of “considerable change” after it plunged into the red, with a pre-tax loss of £4.3m a significant turnaround from the previous year’s £31m pre-tax profit.

NCC said the swing into the red was due to increased finance costs of £2.5m driven by an rise in borrowing following the IPM acquisition, and an increase in base interest rates.

It also cited the recognition of Individually Significant Items (SIs) of £14.7m, of which £9.8m related to the impairment of North American Goodwill within the Assurance (Cyber Security) business.

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Carr’s Group

Cumbrian agricultural and engineering business, Carr’s Group, said full year profits will only be marginally below the previous year’s level, in a trading update for the year to September 2, 2023, today.

Since the last trading update on August 4, 2023, the group has performed in line with the board’s revised expectations.

Despite a soft first half, a strong second half for the Engineering division will result in profit for the full year being only marginally below that of FY22.

The order book has reached a record level, finishing the year at £63m (August 2022: £41m), which gives confidence in growth prospects in FY24 and looking further ahead into FY25.

Conditions in Speciality Agriculture continue to be challenging and as previously indicated, adjusted operating profit will be significantly below the prior year.

Feed block volumes in both the UK and the USA were lower than last year, with drought conditions in parts of the USA and high farm input costs in the UK suppressing demand. The challenging conditions in both markets are expected to continue in the year ahead but the board anticipates a return to growth in the medium and long term.

Central costs will be marginally lower than forecast at the previous update, with further savings anticipated in FY24.

The group closed the year with net cash, excluding leases, of £4.2m (FY22 continuing Group: net debt of £14m). Since the end of the financial year, this has been supplemented by significant customer receipts, with a further £4m related to the disposal of Agricultural Supplies division expected in October 2023.

The group expects to announce its audited results for the year ended September 2, 2023 in mid-December.