Interim Management Statement
19 Oct 2011
NCC Group plc (LSE: NCC or "the Group"), the international, independent provider of Escrow and Assurance, is today publishing its Interim Management Statement, covering the period from 1 June to 19 October 2011.
NCC Group's trading performance remains in line with the Board's expectations and is on course to deliver good levels of growth and profitability for the financial year to 31 May 2012.
Whilst the Board remains concerned about the global economy, very strong progress has been made in both Divisions. International revenues continue to grow and an increasing number of the Group's customers are either multinational enterprises or have considerable non UK dependent businesses.
In the first four months of the financial year to 30 September 2011, Group revenues are 33% ahead (19% organic) of the same period last year at GBP27.5m (October 2010: GBP20.6m.)
Group Escrow continues to perform well with 12% revenue growth to date, 5% being organic. Group Escrow renewals are now forecast to be GBP17.1m for the current financial year (2011: GBP15.4m.)
Escrow UK, the cornerstone of the NCC Group, has seen a 5% growth in revenue, an improvement on H2 2010/11 which saw only 3% growth, even though traditionally the first few months of the financial year are normally the weakest. The improvement in the Group's ability to recruit and retain account management teams has meant that NCC Group has been able to improve the Escrow trading margin.
From November 2011 the Group is planning to increase Escrow UK prices to reflect the significant improvements in protection offered to clients by the increased liability insurance contained within NCC Group agreements. This takes effect for new Escrow agreements from November and for renewals from January 2012.
The European and North American Escrow businesses' rates of growth were as expected slower than H2 2010/11, reflecting the slower trading quarter. Revenue growth was 4% and 5% respectively. Since its acquisition on 29 March 2011, Escrow Associates, based in Atlanta, has performed very well, meeting the Board's expectations.
The global verification order book continues to be solid at GBP1.8m after rationalisation of older orders that may now no longer be delivered (October 2010: GBP2.1m). GBP1.4m of this order book is in the UK. Group Escrow termination rates remain below 12% for contracts.
The Assurance division continues to perform strongly with a 46% increase in revenue over the same period last year, of which 27% is organic.
iSEC, NGS and SDLC, the Group's testing businesses, have grown their combined order book to GBP18.5m (October 2010: GBP17.7m) as market demand continues to increase particularly for ethical security services. This market continues to benefit from the heightened awareness of hacker attacks as more and more high profile organisations recognise the size of threat they face.
iSEC, based in California, is now fully integrated into the Group. It is increasingly common for both the iSEC and NGS testing teams to be servicing multinational clients together.
Recruiting and retaining the highest quality testers remains important to the Group's international success and is the main constraint on fulfilling the order book. At present the Group is ahead on its planned recruitment and it expects, as the premier employer in the market, for this to continue. Staff turnover across the whole Assurance division to date this year has been 2%, which is considerably better than the expectation of 10%.
SDLC continues to win substantial testing orders. It is directly providing the opportunity for other parts of the Division to offer other premium priced services to global multinationals, which form the long term client base of SDLC. The expected margin improvements have been achieved and the performance of the business unit is ahead of internal targets.
The Group's load and performance testing unit, Site Confidence, has seen a 7% growth in contract revenues and continues to achieve monitoring renewal rates of better than 90%. Renewals are valued at GBP5.0m for the year ended 31 May 2012 (2011: GBP4.7m.)
The Assurance Division's overall order book and renewals currently stands at GBP23.5m (October 2010: GBP22.3m).
The Group net debt as at 18 October 2011 is GBP26.7m against the revolving credit facility of GBP35m and additional GBP2m overdraft facility.
The Group expects to report its Interim results for the six months to 30 November 2011 on Thursday 19 January 2012.
NCC Group remains on course to deliver another very strong year. It is well positioned for continued long term, sustained and increasingly international growth in spite of the weak economic climate in the UK and Europe.
Enquiries:
NCC Group (www.nccgroup.com)
0161 209 5432
Rob Cotton, Chief Executive
Atul Patel, Group Finance Director
College Hill
Adrian Duffield/Rozi Morris
020 7457 2020
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