Shares of Manchester-based cyber security company NCC Group have fallen more than 40% since it issued a surprise trading update late on Tuesday, initiated a strategic review, and abruptly cancelled a capital markets day for investors due to take place on Wednesday.
Amid three profit warnings, NCC’s stock market value has plummeted from more than £1 billion to less than £300 million in the last four months, according to Bloomberg data.
Analysts at Shore Capital wrote in a note to clients: “We believe disposals, a breakup of the group or indeed a full sale may come under consideration.”
NCC said its chairman Paul Mitchell would step down on May 31, 2017, and said three large unrelated contract cancellations in quick succession and one deferral in its assurance division had affected its rate of growth.
It said then that Debbie Hewitt, NCC senior independent director, would take over as chairman of the nominations committee and lead the search to appoint a new chairman.
“The board now anticipates that the group’s full year adjusted EBITDA will be approximately 20% below the £45.5 million to £47.5 million range, which it published in the trading update announcement on 13th December 2016,” said NCC late on Tuesday.
“The rate of sales growth and subsequent delivery in the assurance division in the third quarter to date has been lower than had been anticipated in both security consulting and software testing and web performance.
“The reduction in expected sales and profitability in the third quarter has been seen in the UK, mainland Europe and North America.
“Whilst sales levels are traditionally significantly higher in the fourth quarter, they are unlikely to utilise fully the cost base deployed across the assurance division in the current financial year.
“This will reduce the division’s profitability in the final quarter.”
NCC said in light of the deterioration in trading in the assurance division through the current financial year, its board is initiating a comprehensive review of NCC Group’s operating strategy.
NCC added: “… given that the significant and planned rise in central and divisional operating costs this financial year has not produced the anticipated improvement in sales, there will also be a review of how the assets and resources of the group can be more efficiently deployed and utilised.”