(Alliance News) - NCC Group PLC on Tuesday said it expects revenue and adjusted earnings to exceed analyst consensus in its recently-ended financial year.
Shares in Manchester-headquartered NCC were up 12% at 195.40 pence in London in morning trading.
The cyber security advisor did note that the Covid-19 outbreak had hurt trading in the third quarter, with "delays, cancellations, and disruption" since the third quarter of its year. These issues "have broadly followed the same pattern as the spread of Covid-19" in the regions where NCC operates.
Nonetheless, for its year ended May 31, NCC forecasts that revenue will exceed the GBP243 million consensus figure. Likewise, adjusted earnings before interest and tax is on track "to be comfortably ahead" of the GBP22.3 million consensus.
NCC's adjusted figures exclude share-based payments, profit on investment disposal, amortisation of acquired intangibles, and other one-off items.
While revenue is expected to beat financial 2019's figure of GBP250.7 million, adjusted Ebit will be lower that the previous year. NCC attributed this drop to the company's decision to preserve capacity and capability within the business so as to be ready for economic recovery.
Heading into financial 2021, NCC expects Covid-19 to "have an uncertain impact on demand" and so guidance has not been reintroduced. The firm did note, however, that recurring and long-term revenue, especially from its Software Resilience and Manages Services businesses, is likely to provide "some protection".
"We remain confident in the long-term growth potential of the cyber market. 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," said NCC.
At present, NCC has access to a GBP100 million multi-currency revolving credit facility which is set for renewal in June 2024. As at May 31, it had net debt of less than GBP5 million versus GBP20.2 million the prior year and even GBP20.8 million in November 2019.
This debt reduction was attributed to "cash management discipline and short-term discretionary cost saving actions". Net debt includes cash balances of around GBP95 million, compared to GBP35 million the year prior following the full draw down in April of its revolving credit facility - in May 2019 it had GBP43 million undrawn.
NCC said it had benefits from government tax deferral programmes but had not drawn down any government loan support. The total cash timing benefit from its financial 2020 tax deferral came to approximately GBP5 million, which is likely to reverse in financial 2021.
No redundancies have been made so far and no NCC staff have been furloughed. The company will post its preliminary annual results on September 3, a date which accounts for "the logistical challenges" faced by its finance team and auditors as a result of Covid-19.
Chief Executive Adam Palser said: "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. 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."
By Anna Farley; annafarley@alliancenews.com
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