When Adam Palser took over as chief executive of NCC (NCC) four and half years ago, he inherited a mess. In 2015, the cybersecurity company raised £126mn from shareholders to fund two acquisitions for which the previous management team later admitted they overpaid. A £62mn impairment was eventually booked in 2017. At the same time, there were other “significant charges” including long overdue holiday pay provisions and dividends being paid unlawfully from non-distributable reserves.
Tip style
Income
Risk rating
Medium
Timescale
Medium Term
Bull points
- Exposure to cybersecurity market
- Strong cash flow
- Pricing power
- Well-connected new CEO
Bear points
- Recent recruitment issues
- Historical governance problems
- Slow growth from resilience business
Broker Peel Hunt called it “the most disruptive of times for [a people business] in living memory”. In 2017, NCC swung to an operating loss of £53.4mn, from a profit of £11.4mn the year before.