NCC buoyed by software market challenges

IT security firm NCC Group has credited its bumper financial year to the challenges facing a number of UK software companies, in particular troubled Torex Retail.

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IT security firm NCC Group has credited its bumper financial year to the challenges facing a number of UK software companies, in particular troubled Torex Retail.

For the last financial year to May, revenue at the National Computing Centre spin-off jumped 22% to £25.4m, with more than half of the business coming from its escrow services, Total Escrow Solutions. The group generated a net profit of £5.4m.

Under escrow services, IT suppliers send a copy of their software to NCC, meaning businesses have a safeguard if a supplier goes out of business. In its report, NCC stated: “Enlightened software owners are now keen to disassociate themselves from the dubious segments of the software development market and are more aware than ever that a licensee will demand escrow protection.”

At the heart of NCC's revenue growth were the struggles at Torex Retail, the debt-laden software group that was sold last month to private equity firm Cerberus. NCC chief executive Rob Cotton said that “many” Torex customers had signed up to the group’s data escrow business in order to assuage fears about their future relationship with the retail software firm.

Ovum analyst Kate Hanaghan pointed out that NCC’s decision to push software suppliers to “proactively offer” its escrow services has paid off.

Torex's shares remain suspended pending fraud investigations by the London Stock Exchange, the Financial Services Authority and the Serious Fraud Office. Last month, then-suspended chief executive Neil Mitchell’s employment was terminated, and he has stated he intends to sue the company.

Nevertheless, Torex’s UK general retail divisional managing director, Doug Hargrove, told ComputerworldUK's sister publication CIO that since the company was put up for sale in January it has been business as usual, adding: “There has never been a doubt about the quality of Torex’s product base or our commitment to our strong customer relationships.”

With such "high profile corporate failures" in the software market, NCC said it remains hopeful for the growth of its escrow business. In the last year it also acquired escrow firm SourceHarbor in a demonstration of its belief in that sector.

The growth of its ethical security testing business, which involves hacking to probe the effectiveness of a firm's IT security, has also played a part in its success. This division saw a 40% rise in revenues last year to £3.1m. The group attributes this boost to the high-profile TK Maxx credit card scandal, where the retail chain was hit by hackers that stole the details of millions of credit and debit card holders in the US and UK.

NCC Group said future profit was likely to grow at a similar pace as hacker activity intensified. The group added that it is "well placed to capitalise" from a "lack of knowledge" amongst senior executives on information security.

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