Cyber security firm NCC raises concerns about Brexit as FY revenues rise

Revenue increased by 56% to £209.1m for the year ending 31 May, as organic growth grew 19%. Adjusted profit before tax was up 45% to £37m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was up 48% to £43.7m before an £18.9m exceptional charge.

The company’s adjusted operating profit was up 46% to £38.4m, which included operating profit of £25.7m, up 52% from its Assurance division and £20.1m, up 6% from its Escrow division.

NCC’s total dividend was also up by 17% to 4.65p. The company said since it floated in July 2004 the dividend had increased from 0.42p p 4.65p, which is a compound annual growth rate (CAGR) of 25%.

The company, which joined the FTSE 250 index in December last year, had a 67% increase to £10.4.6m of its forecast contracted revenue and order book.

Chief executive Rob Cotton said post-Brexit, the UK would need to develop data protection standards similar to the European Union (EU)’s in order to do business globally and with the single market.

"The cybercrime arms race is the single biggest threat to corporates and individuals globally particularly as cybercrime is not bound by national borders or political and trade treaties.

"Regardless of when or how the various negotiations develop with the EU, if the UK wants to trade with the EU on equal terms, UK data protection standards will have to be equivalent to the EU's General Data Protection Regulations (GDPR). For the UK to do business with the EU, or any other country for that matter, it is vital that data protection standards and legislation is of the highest order”.

GDPR will be implemented across the EU by May 2018. The government’s national cyber security strategy for the next five years is due for publication later this year.

The company maintained that it “strongly believes that it must have a clear commitment to protect citizens, businesses and public administration more than ever from cyber threats.

“Crucially it needs to put in place reforms that allow continued European and international trading as well as data protection for both citizens and businesses. It should also address the major challenge concerning a dearth in skills in order to continue the UK's unrivalled expertise in security consulting.”

The company said its acquisition of Accumuli, which was rebranded NCC Group Managed Security Services, has been integrated and they have started the process with its recent acquisition of Fox IT.

NCC said its Assurance and Escrow divisions have continued to grow. Assurance’s revenue grew 74%, which 25% was organic growth as Escrow’s organic growth was 10%. This contributed to the company’s adjusted pre-tax profit growth of over 45%.

However the company had decided to withdraw its domain services division to reinvest its assets and resources elsewhere, but it said it will retain its domains security capability. This resulted in an exceptional charge of £13.7m, which £900,000 is a cash cost.

NCC said its strategy is to develop its divisions organically and acquire new businesses in Europe and North America. The company also said that it will open new offices in Singapore and Dubai.

Cotton added: "Although cyber threats are now an everyday occurrence for businesses and individuals alike, there needs to be a cultural shift as it is clear that the required behavioural change at all levels is severely lagging. A recent government cyber survey of FTSE 350 companies indicated that only 33% of boards understood their appetite for cyber risk - 67% do not.

"All listed companies should have a board-led cyber security committee. As such, we are creating a cyber security committee to sit alongside our audit and remuneration committees."

Shares in NCC were up 23.78% to 285.68 at 0952 BST.