NCC confident of medium term financial goals after interim revenues and profits dip
Manchester-based global cyber security specialist, NCC, suffered revenue and profit declines in its first half period to November 30, 2023, but said it was confident in its medium term financial goals.
Unaudited sales for the six months were £159.2m, down from £176.6m in the previous restated period. Last year’s pre-tax profit of £10.3m became a £2.4m pre-tax loss in the current financial year.
The group said it had traded in line with management’s revenue, gross margin and profitability expectations.
It said Cyber Security stabilised, while Managed Services continued its growth and gross margin trajectory. Revenue and profit at Escode, the group’s software escrow business, is continuing to grow, while strategic progress has been achieved and cost efficiencies of £5m have been realised.
The group said it retains a confident outlook, and current trading remains in line with expectations.
While TAS, the largest part of the Cyber business, has less forward visibility than other parts of the business due to the nature of the service, NCC’s Q2 2024 revenue exit rate gives it confidence in the second half of 2024, it said. This will be supported by continued strong revenue growth in Managed Services capability.
The group is confident in delivering low single digit revenue growth in Escode in the second half as it continues to benefit from verification and pricing opportunities and the board has decided not to restart the strategic review of Escode at this juncture.
The strategic actions, including cost base efficiencies within gross margin and overheads, have been successfully implemented and the performance in the first half of 2024 mean it is well placed to deliver on full year expectations.
Chief executive, Mike Maddison, said: “The group delivered a first half financial performance in line with expectations while continuing to transform the business at pace.
“We are emerging as a stronger, more resilient organisation, driven by our new executive team and colleagues. I’m delighted to see Escode go from strength to strength and in Cyber I’m confident we’ve turned a corner with the Technical Assurance Services market stabilising.
“Importantly we continue to see predicted demand increasing in other areas which are central to our strategy, particularly Managed Services.”
He added: “Looking ahead, we are well placed for sustainable long term growth as we deliver on our purpose to create a more secure digital future.”
NCC Group employs around 2,200 staff across Europe, North America, and the Asia Pacific region.
In October 2023, activist investor, Kelso, took a small stake in NCC and said the different divisions were “operationally distinct and have no synergies as part of the same group” – effectively advocating a break up.
However, the group’s November AGM heard that delivery of £5m in cost efficiencies for next year “are being realised ahead of schedule” and a new executive leadership team had been installed.
