NCC Group confident in weathering Covid-19 storm

Cybersecurity company NCC Group updated the market on its trading for the year ended 31 May on Tuesday, saying it expects revenue and adjusted EBIT to be “comfortably ahead” of the latest consensus expectations, of £243m and £22.3m, respectively.

The London-listed firm said revenue would be higher than in the 2019 financial year, while adjusted EBIT would be lower, due to its decision to preserve the capability and capacity of its business in readiness for the economic recovery following the Covid-19 coronavirus pandemic.

Its board said it believed that the Covid crisis would continue to have “an uncertain impact” on demand through the 2021 financial year, and thus it was not in a position to reintroduce guidance on the company’s future financial performance.

However, it said NCC’s recurring and long-term revenues - particularly in its software resilience and managed services businesses - provided it with some protection.

“We remain confident in the long-term growth potential of the cyber market,” the directors said in their statement.

“Therefore, consistent with our March trading update, our two key priorities are to maintain a strong balance sheet and to preserve our specialist capability and capacity in order to meet the strong demand we expect in future years.”

NCC said it still had a strong balance sheet, with access to a committed multi-currency revolving credit facility of £100m, due for renewal in June 2024.

During the year, its cash management discipline and short-term discretionary cost saving actions resulted in net debt as at 31 May falling to less than £5m, down from £20.2m year-on-year.

That included cash balances of around £95m, rising from £35m, following the full drawdown of its revolving credit facility in April, which the board did to provide the group with maximum cash flexibility.

The group had benefited from certain government tax deferral programmes, however it had not drawn down any government loan support.

NCC said its total cash timing benefit from tax deferral in the 2020 financial year totalled around £5m, with reversal expected to occur in the 2021 financial year.

It said that, in keeping with its objective to preserve its capability and capacity, it had not made any Covid-19 related redundancies or furloughed any of its workforce.

The firm’s long-term objective was to be “the global hub for cyber talent”, with the board reporting that technical staff attrition improved year-on-year.

“Thanks to the inspirational response of my NCC Group colleagues, coupled with the investments we have made in systems and processes as part of our ‘securing growth together’ transformation programme, NCC is successfully weathering the Covid-19 storm,” said chief executive officer Adam Palser.

“During this period of uncertainty we have focused on the wellbeing of our people, continued to deliver high impact work to protect our customers from cyber threat and strengthened our balance sheet.

“I am very pleased with our performance and we stand ready to take advantage of opportunities as the global pandemic subsides.”

NCC said it was expecting to report its preliminary results for the year ended 31 May on 3 September.

At 1157 BST, shares in NCC Group were up 11.76% at 195.35p.