Security outfit NCC Group has reported a 94.5 per cent drop in operating profits in 2023 to £1.9 million despite two rounds of layoffs earlier this year.
The company saw a reduced trading performance in assurance (cybersecurity) and a loss before taxation of £4.3 million.
NCC said it had increased finance costs of £2.5 million due to increased borrowing after the IPM acquisition and an increase in base interest rates.
CEO Mike Maddison said that while the market conditions announced in March impacted FY23 revenue performance and profitability, he was confident about the medium-term growth drivers for cybersecurity and that continued progress on strategic actions will position the business to deliver greater growth and profitability in the years ahead.
“I am pleased to report that since the launch of our Next Chapter strategy in February 2023, the group has delivered foundational components of strategic change to create a more agile and resilient business, improve profitability and deliver shareholder value.
“I am grateful to all my NCC Group colleagues for their unwavering commitment and energy as we execute our plan to capitalise on the enduring opportunities in our markets, particularly given the material cost savings we realised in the business.
“We have fortified our leadership team in key areas with high-calibre individuals with deep cyber industry expertise, accelerated the diversification of our client base across our fastest growing sectors, launched our new global delivery and operations centre in Manila and will reveal today a new distinct brand for our software resilience business, which will give us a clearer, simpler proposition with which to increase our presence in this market.”
In August 2023, NCC also announced the second round of layoffs to their UK staff in six months, quoting a “renewed global strategy in response to changing market dynamics and client demands”.
The vendor said that its FY24 current trading was in line with expectations.
“Cost efficiencies across assurance (cybersecurity) and corporate functions are already being realised, global professional services sales orders have stabilised, and no material clients lost.
“However, North America revenue performance experienced in H2 FY23 is currently annualising through H1 FY24 giving rise to year-on-year double digit Q1 revenue decline,” a statement by NCC read.
NCC said it expects FY24 to be a period of considerable change, targeting a modest improvement in group-adjusted operating profit in both the assurance (cybersecurity) and software resilience businesses in assurance (cybersecurity).
“The operating profit growth will be delivered net of in-year systems investments that will realise newly identified contribution efficiencies of around £1 million from FY25 onwards.”
