He has driven NCC Group hard. He’s led two buyouts, floated the business and delivered steady growth. But does he really get the credit he deserves? Michael Taylor tries to work him out.
Rob Cotton has quite a way of getting my attention. In 2005, before we’d actually met, he had called one of our reporters to his office to berate her for the simple error of referring to his business as “the National Computing Centre”, which did a great disservice to its more modern identity as “NCC Group”.
Shortly after, aware his approach may have been interpreted as aggressive, he introduced himself at the Entrepreneur of the Year event in Leeds, where he was shortlisted, thus: “how much do you hate me?”
I take as I find, but finding the real Rob Cotton isn’t straightforward. A snappy dresser with a confident air and the look of England captain John Terry, on the surface he’s one of those spiky chief executives who, having moulded an organisation in his image, is used to getting his way. He probably baulks, too, at the perceived injustice that the outside world doesn’t take him quite as seriously as it should. Though more charitably you could say he’s also one of those blokes with a glint in his eye who quite likes a rumble and whose bark is far worse than his bite.
Since then, relations have improved. we have been careful not to refer to his business by any other moniker than NCC Group and have duly taken notice of his burgeoning escrow software and data security business. annual turnover is close to breaking £40m, and with the last interim profits showing a 17 per cent rise to £5.5m, margins are decent, particularly for the software business, which made £4.9m in 2008 and is the rock on which the rest of the business is built.
Visits to his business next to the BBC (and, confusingly, The National Computing Centre) on Oxford Road, are not without their drama, though.
When I met him last year Cotton had a few points to make about data security. He had come up with the stunt of sending a data stick containing all sorts of security-breaching gremlins to company directors to make the point that people need to wake up to the risks from hackers and viruses.
For my benefit, Cotton got his team of hackers at NCC to compile all the paperwork to apply for passports, driving licences, bank accounts and store cards in my name, and at my home address. It certainly got my attention, but then, he had it already. He had it when I walked through the sales floor of his company and saw the banks of salespeople clinching deals and cheering. For the purposes of this catch up, which is a way of looking at businesses doing well in the recession, Cotton is on fiery form.
“We’re recession-proof, but we’re not impervious to what’s happening,” he says. “But if you manage the balance sheet well, manage cash and don’t take on too much debt you’ll be alright. My view is you turn profits into cash. No business ever disappears when it’s got cash.
“I’d never throw stones at other people’s businesses, but I look at Whittards and wonder when was the last time I had a spare £20 and thought I’ll go and buy some 1980s crockery and exotic tea. It’s typical of 'over optimism' that may have infected a lot of businesses.” For NCC Group this is also an opportunity.
“We’re open to acquisitions, but if a deal isn’t backed by the bank, it’s probably not worth doing. We have enough room in our debt capacity to make acquisitions. I love companies that are slightly broken. But I’m not a turnaround expert.”
But he believes the banking crisis is hurting decent businesses. He should know, in January 2009 NCC went public on the higher bank charges it was hit by. A £15m overdraft facility was renewed and the cost of borrowing, including arrangement and non-utilisation fees, jumped tenfold to £200,000 (£20,000 in 2007).
“The banks are increasing punitive charges to good businesses,” he says. “Government should reverse the VAT cut and take the bad debts on board in a bad bank. It’s the only way to reverse the situation.”
He’s also full of advice for the media. He appreciated Insider’s smiley face front cover in February urging realistic optimism. So, is there anything other businesses can learn from NCC?
“We don’t rely on one customer. When I joined NCC, Nokia was godlike. To the management team – which I got rid of – it was untouchable. No matter how unreasonable or awkward Nokia was; whatever it wanted, it got. We have done good work, bent over backwards, but we should never have got in that state with the company,” he says. “Nokia is still a client, but if it wants my testing guys for £500 per day, or on 90-day payment terms, it can’t.”
Cotton’s business is steady and going well, while the security work is stymied by a lack of available talent. “Our specialist forensic work has increased as fraud has gone up. Our work for GCHQ has expanded, but we’re totally constrained by our resources on that. We just can’t find quality people,” he says.
He describes the battle of wills between companies and hackers as “an arms race” that business is in danger of lagging behind, saying: “You have to apply different methodology all the time. It has to evolve in the same ways the bad guys do.”
It could all have been different for Cotton had he not been beaten up outside a bar in Southport when he was a student. That put paid to a career in dentistry and curtailed his promise as a cricketer. He’s still a keen footballer, “but I’m not ready to learn golf properly yet”, he says. He organised a football tournament last year to raise money for the NSPCC. Less charitably, his team won.
So what next? “You wonder if you still add value if you’re still doing the same job after eight years. I question people who’ve done the same thing for a long time. But I’ve evolved the strategy, brought in different people. and the share price has held up well.”
Also in: May 2009
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A special plea
If recessions serve any purpose at all, it is to give businesses a chance to focus on what is important, profitable and sustainable.
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Search for the heroes
With shares and property on the floor, investors could do worse than take a look at the innovators and inventors pointing the way out of recession, say Edward Devlin and Neil Tague.