NCC signals confidence with divi hike

21st Jan 2010 16:02

IT security and software escrow provider NCC Group has bumped up its interim dividend by 17%, signifying confidence in the group's prospects on the back of a strong order book and a steady stream of contract renewals.The company's profit before tax in the six months to 30 November rose to £5.43m from £4.68m the year before on revenue that grew 22% from £20.80m to £25.42m. Organic revenue growth was 8%.Diluted earnings per share (EPS) rose to 11.2p from 9.5p a year earlier.'It's a very credible performance,' chairman Paul Mitchell told Sharecast. 'We've achieved a fourfold increase in EPS since we floated six years ago.'Revenue from the software escrow business - which seeks to protect customers from the demise of a critical software supplier - grew 10%, but now accounts for only 43% of group revenues, down from 48% in 2008, as a result of the recent bolt-on acquisitions in the Assurance Testing division.Assurance Testing revenues grew 34% but the Information Security and Advisory business had a tougher time of it, with revenue declining, as expected, by 11% year on year.Nevertheless, Mitchell stressed that cyberspace is becoming more dangerous, not less so. 'Rob Cotton [the company's chief executive] describes it as an arms race, and it is a race we are losing. Companies have got to realise that hacking is a criminal activity, it is theft; there should be no stigma attached to recognising you have been robbed.''We want people to understand why they've been hacked, and how they've been hacked,' Mitchell continued, adding that the business is relatively resilient with strong repeat sales, as 'checking the security of your system isn't something you do once.'The dividend has been increased in line with adjusted operating profits by 17% to 3.50p. Financial controller Darren Powell noted that the interim dividend is normally half that of the final dividend, so it looks like an improved final dividend is on the cards if things go according to the plan. Last year the final dividend was 6.25p.'We normally look for the dividend to be covered about three times by earnings,' Powell said.