Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
magazineOver optimism dents NCC
Cyber security company NCC (NCC) is having to accept it was too optimistic about its ability to recover a profits shortfall from contract losses and delays in its Assurance business that sparked a shock profit warning on 20 October.
The Manchester-based company now admits that adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for the full year to 31 May 2017 will fall within the range of £45.5m to £47.5m.
Some analysts recalculated their forecasts at the time of the warning in October but many did not and are now being forced to take the red pen to estimates. Peel Hunt has slashed its adjusted EBITDA forecasts of £52.7m and £62.7m for this year and next by 12% and 16% respectively, leaving new estimates at £46.5m and £53m.
We said in a website story on 20 October that NCC’s decision to leave guidance for the full year unchanged ‘seems rather unwise,’ and so it now appears. The shares fell around 7% on this latest announcement to 190.5p, having collapsed by 35% on the day of the original warning.
NCC retains a largely positive view on future trading, backed by an ever-increasing number of high profile cyber security breaches. The group’s total forward order book and renewals stood at £112.8m as of 12 December, up 4% on the £108.8m level published on 20 October 2016. ‘These contract cancellations do not reflect any structural change in our Assurance business,’ states NCC chief executive Rob Cotton. (SF)
It’s been a messy few months for NCC but that comes on the back of a particularly strong financial year to 31 May 2016. We continue to side with the more positive analysts.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.