Sharecast - Shares in cyber security company NCC Group slumped by more than a third on Friday after a profits warning, due to deteriorating market conditions in the US, including the collapse of Silicon Valley Bank and its impact on customer confidence.
The company cut earnings guidance, with group adjusted operating profit now expected to be within a range of £28-£32m, compared with November forecasts of around £47m.
NCC said market volatility had “materially increased” and was having a significant impact on near-term cyber security revenue and profitability, particularly in the North American technology sector and to a lesser extent in the UK.
It now expects cyber security revenue growth on a constant currency basis to be low single digits compared to the high single digit growth outlined in its 2023 interim results.
“The Software Resilience (escrow) business remains on track to perform as set out in our FY23 interim results, with revenue growth in H2 FY23 offsetting most of the decline seen in H1 FY23, with a full year outturn of 1% revenue decline still expected,” the company said, adding that it was now reviewing its cost base.
Buying decision delays and cancellations were now exacerbated by North America tech sector client layoffs with staffing has not yet normalised, “so continued sector layoff rounds are introducing more uncertainty”, the company added.
“Turmoil in the banking sector following the failure of Silicon Valley Bank has further knocked market confidence leading to reduced appetite to spend on technology projects across sectors. Recent interest rate increases in both the US and UK are creating further inflationary challenges for clients.”
Vanquis Banking Group reported a strong performance in its preliminary results on Friday, with solid loan book growth in each of its businesses, despite a challenging macroeconomic backdrop.
The FTSE 250 company’s net interest margin increased 0.5 percentage points to 21.0%, reflecting a higher asset yield.
Asset quality across the group's loan books remained high, the board said, while delinquency trends were stable, reflecting its focus on lower risk customers.
However, group central costs increased during the period due to the rollout of the shared services model and investment in the growth and scalability of the businesses.
Group statutory profit before tax from continuing operations was £110.1m, down from £142.2m, which the board put down to the increase in central costs.
Meanwhile, group adjusted profit before tax from continuing operations slid to £126.6m from £167.8m, reflecting better divisional profits year-on-year offset by increased losses from the nascent personal loans business and higher central costs due to the centralisation of group functions.
At the end of December, the firm’s capital and liquidity positions remained robust, with regulatory capital of £679m, down from £707m year-on-year, equating to a CET1 ratio of 26.4%, falling from 29.1%, and a total capital ratio of 37.5%, down from 40.6%.
The group said it held high-quality liquid assets in the Bank of England reserve account of £421m at the end of December, up from £415m a year earlier, equating to significant levels of excess above its liquidity coverage ratio requirement.
Vanquis proposed a final dividend for 2022 of 10.3p per share, reflecting its strong capital position and the board's confidence in the group's outlook.
That would equate to a total dividend payable of 15.3p per share for the year, and a pay-out ratio of adjusted continuing earnings of 40%.
“I am pleased to report that the Group's adjusted profit before tax for FY'22 is marginally ahead of market expectations,” said chief executive officer Malcolm Le May.
“This excellent result reflects another year of important strategic change and progress for the group and is the culmination of the hard work and dedication of colleagues across Vanquis Banking Group to whom the board and I are extremely grateful.
“The group remains well positioned in growing addressable markets to deliver attractive and sustainable returns to shareholders over the medium-term whilst supporting our customers in this challenging macroeconomic environment.”
Wizz Air (LON:WIZZ) and easyJet (LON:EZJ) both gained on the back of a broker upgrade for FTSE 100 rival IAG (LON:ICAG).
FTSE 250 - Risers
Hammerson (HMSO) 25.84p 6.12%
Sirius Real Estate Ltd. (SRE) 76.30p 4.81%
Urban Logistics Reit (SHED) 131.00p 4.80%
Wizz Air Holdings (WIZZ) 3,001.00p 4.49%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 153.40p 4.35%
easyJet (EZJ) 522.60p 4.31%
CMC Markets (CMCX) 180.00p 4.17%
Warehouse Reit (WHR) 102.40p 3.23%
Molten Ventures (GROW) 270.60p 3.20%
Vanquis Banking Group 20 (VANQ) 239.40p 3.01%
FTSE 250 - Fallers
NCC Group (NCC) 101.20p -33.94%
TUI (LON:TUIT) AG Reg Shs (DI) (TUI) 622.20p -5.21%
Digital 9 Infrastructure NPV (DGI9) 61.70p -3.14%
Darktrace (LON:DARK) 257.10p -2.98%
Helios Towers (HTWS) 104.40p -2.97%
Syncona Limited NPV (SYNC) 144.80p -2.95%
Wood Group (John) (WG.) 200.10p -2.82%
Victrex (LON:VCTX) plc (VCT) 1,596.00p -2.33%
Man Group (EMG) 236.60p -2.23%
TBC Bank Group (TBCG) 2,255.00p -2.17%