Last checked at 21 Feb 2017 16:16
21 February 2017
NCC Group plc
Trading update, strategic review initiated and Capital Markets Day cancelled
NCC Group plc (LSE: NCC, "NCC Group" or "the Group"), the independent global cyber security and risk mitigation expert, has published a trading update and initiated a strategic review. As a result, the Group has cancelled the Capital Markets Day due to take place on Wednesday 22 February 2017.
Trading update
The Board has reviewed its third quarter performance to date and the expected financial outcome for the full year ending 31 May 2017. As a result of this review, the Board has concluded that the performance of the Assurance Division will be significantly lower than previously anticipated.
The Board now anticipates that the Group's full year adjusted[i] EBITDA will be approximately 20% below the £45.5m to £47.5m range, which it published in the trading update announcement on 13th December 2016.
The rate of sales growth and subsequent delivery in the Assurance Division in the third quarter to date has been lower than had been anticipated in both Security Consulting and Software Testing and Web Performance. The reduction in expected sales and profitability in the third quarter has been seen in the UK, mainland Europe and North America.
Whilst sales levels are traditionally significantly higher in the fourth quarter, they are unlikely to utilise fully the cost base deployed across the Assurance Division in the current financial year. This will reduce the Division's profitability in the final quarter.
The Escrow Division continues to perform in line with expectations.
Review of strategy
In light of the deterioration in trading in the Assurance Division through the current financial year, the Board is initiating a comprehensive review of NCC Group's operating strategy. This will include a review of all of the Assurance businesses, how they operate and how they sell.
In addition, given that the significant and planned rise in central and divisional operating costs this financial year has not produced the anticipated improvement in sales, there will also be a review of how the assets and resources of the Group can be more efficiently deployed and utilised.
The review will be led by the Board, supported by externally appointed consultants. The Board expects to update the market no later than the Preliminary Results, due to be announced in July 2017.
The Escrow Division continues to perform satisfactorily. NCC Group continues to firmly believe that the Assurance Division has significant growth prospects which it is determined to capture once the Group has reviewed its existing strategy and operations.
Cancellation of Capital Markets Day
As a consequence of this announcement, NCC Group has cancelled the Capital Markets Day planned for tomorrow, 22 February, 2017.
Enquiries:
NCC Group (www.nccgroup.trust) | +44 (0)161 209 5432 |
Rob Cotton, Chief Executive | |
Brian Tenner, Chief Financial Officer | |
Instinctif Partners | |
Adrian Duffield/Lauren Foster | +44 (0)20 7457 2020 |
[i] Adjusted figures exclude the impact of exceptional items, the results of the now closed Domain Services business, share based payments, unwinding of discount on deferred consideration and amortization of acquired intangible assets and any associated tax thereon.