NCC Group (NCC) H2 2024 earnings summary

Executive summary

• Advanced transformation with focus on Escode and Cyber Security, emphasizing operational efficiency, profitability, and strong growth in Managed Services and Digital Forensics.

• Implemented a global operating model and scheduling tools, driving efficiencies and enabling new client wins across regions.

• Strengthened brand recognition, winning Global Partner of the Year for Splunk and launching a new brand for Escode.

• Disposed of non-core Cybersecurity assets to sharpen focus and improve the balance sheet.

• Group remains confident in medium-term financial goals, emphasizing profitable growth and sustainable margins.

Financial highlights

• Adjusted EBITDA rose to £42.1m, up £4.9m year-on-year at constant currency, with gross margin improving by 2 percentage points to 41.4%.

• Group revenue declined by £10.7m to £324.4m, mainly due to North America Cyber revenue drop and FX headwinds.

• Net debt reduced by £11.1m to £38.5m, with strong cash conversion at 91%.

• Dividend maintained at £14.5m (3.15p per share); rolling credit facility of £162.5m retained.

• Adjusted EBIT rose 20.5% to £20.0m; adjusted PBT up 32.7% to £13.8m; adjusted basic EPS up 25% to 3.5p.

Outlook and guidance

• Strategy targets mid-teens revenue and Adjusted EBITDA margin growth for Cyber, and single-digit revenue growth for Escode.

• Focus for FY25 includes profitability improvement in Technical Assurance Services, global rollout of scheduling tools, and expansion in North America and Australia.

• Continued investment in digital identity and operational technology as growth areas.

• Inorganic growth (acquisitions) under active consideration, supported by improved integration capability and balance sheet.

• Confident in delivering on strategy and maintaining momentum in recurring revenue growth.