NCC optimistic about recovery after a challenging year

Cybersecurity group NCC said it expects a "period of considerable change" this year as it executes on its turnaround strategy after macro conditions held back revenue and profit growth in the 12 months to 31 May.

Full-year results, which showed a 6.4% rise in group revenue to £335.1m and a 40.1% slump in adjusted operating profits to £28.8m, were largely in line with expectations after a number of detailed trading updates over recent months. Group operating profit margin was just 0.6% for the year, compared with 11% previously.

In March, NCC announced that market volatility in the North American tech sector – and to a lesser extent in the UK – was impacting results. Tech-sector layoffs resulted in delays or cancellations to contract decisions; the knock-on impact of the Silicon Valley Bank collapse affected demand for tech in the banking sector; while interest-rate hikes in the US and UK were putting cost pressures on clients.

"While the market conditions we announced in our March trading update have impacted our FY23 revenue performance and profitability, we are confident about the medium-term growth drivers for cyber security and that continued progress on strategic actions will position the business to deliver greater growth and profitability in the years ahead," said chief executive Mike Maddison.

"I am pleased to report that since the launch of our Next Chapter strategy in February 2023, the group has delivered foundational components of strategic change to create a more agile and resilient business, improve profitability and deliver shareholder value."

NCC reiterated its medium-term targets for double-digit revenue growth and mid-teens operating profit margins from the year to May 2026 onwards.

A final dividend of 3.15p for the year to May 2023, unchanged from the previous year, "as the board is conscious of the need to invest in new strategy and manage its net debt accordingly following the challenging year", the company said.

The stock was up 1% at 101.4p by 1016 BST on Wednesday, having fallen 50% since the start of 2023.