NCC Group (NCC) Trading Update summary

Strategic progress and business transformation

• Significant progress in transforming the business, focusing on technical depth, global delivery, and recurring revenues, with both Cyber Security and Escode returning to growth.

• Four strategic pillars: deepening client relationships, expanding capabilities, leveraging global talent, and investing in core brands, supported by investments in talent, technology, and operational resilience.

• Enhanced global delivery model and transition to a fully global business, deepening client engagement and broadening service offerings.

• Divestments and non-core disposals led to a more focused cybersecurity business, improved balance sheet, and annualised savings of £10m.

• Strategic partnerships and expanded offerings, including digital identity, operational technology, and AI assurance, underpin growth and market positioning.

Financial performance and operational highlights

• 12-month revenue to September 2024 grew 3.5% at constant currency to £329.2m, with gross margin up 4.5 pts to 43.4% and adjusted EBITDA margin at 15.1%.

• Group revenue for the 16 months to September 2024 was £429.5m, up 31.3% at constant currency; adjusted EBITDA for the period was £51.6m.

• Cyber Security revenue up 3.7% constant currency, with UK & APAC +15.1%, Europe +11.8%, and North America decline reduced to (18.1%).

• Managed Services revenue grew 46.7% YoY, now 28.3% of Cyber Security revenue; Technical Assurance Services declined (15.0%).

• Net debt reduced to £45.3m, cash conversion at 96.6%, and dividend maintained at £14.5m, with a final dividend of 1.5p for the four-month period.

Business segment updates and growth drivers

• Cyber Security accounted for 79.7% of group revenue and 66.0% of gross profit, with Managed Services now 26.8% of Cyber Security revenue.

• Escode delivered seven consecutive quarters of growth, 2.8% constant currency revenue increase, and strong client retention (~94–95%), but gross margin declined due to investment in sales and FX impact.

• Escode growth driven by price increases and increased verification revenues, with North America and UK leading regional growth.

• Global delivery model and new systems (Kantata) enable better resource allocation and project profitability insights.

• Both divisions are positioned for continued growth, with Escode expanding into new geographies and verticals.