Interim Management Statement

16 Oct 2008 07:00



16 October 2008 

NCC Group

Interim Management Statement 

NCC Group plc (LSE: NCC or "the Group"), the international, independent provider of Escrow Solutions, Assurance Testing and Consultancy, is today publishing its interim management statement, covering the period from 1 June 2008 to 15 October 2008. 

The Group's overall trading performance continues to be in line with the Board's expectations and remains on track to deliver the anticipated levels of profitability, despite the more difficult economic conditions.

In the first four months of the financial year, typically the quietest trading period, Group revenues are 29% ahead year on year, with all divisions showing good growth. Excluding revenues from Escrow Europe, which was acquired in January 2008, Group revenue growth on a like for like basis is up by 16.4% (October 2007: 14%.)

The Group has not seen any significant cancellations of work orders or contracts, although the financial services, retail and house building sectors have been slower. Deferral of work in these sectors has been replaced by commitments from other areas, notably some of the Group's larger clients who are increasingly anxious about the well being of their key suppliers and software application owners.

The performance of the Group's core division, Group Escrow Solutions, continues to be strong with 19% revenue growth in this financial year. Group renewals are now forecast to be £13.8m for the year (May 2008: £13.8m). Group termination rates are10% for contracts and beneficiaries.

The Group continues to realise benefits from its substantially enlarged European presence and is working hard to capitalise on opportunities arising from the successful acquisition of Escrow Europe.

The UK annual price increase is being implemented this month.  Prices for the core product lines will be increased by at least 8%. The new prices become effective from the start of November for all new Escrow Solutions contracts and Escrow Verification Testing and from the start of January for renewals as they are invoiced five weeks in advance.

Software Escrow Verifications have experienced some impact from the general economic uncertainty. Deferrals of orders have resulted in a small fall in delivered verifications, although the order book is still buoyant at £2.1m (May 2008: £2.1m.)  The Group anticipates this immaterial shortfall will be recovered during the remainder of the financial year.

The Assurance Testing division has seen very strong sales growth with record order books for the businesses. Ethical Security Testing has an order book of £5.1m (May 2008: £4.6m) as market demand continues to increase for high quality Ethical Security Testing. The UK test team continues to grow. In the US the Group is developing its offerings to complement its global reach in this market. 

The load and performance testing business continues to have close to a 90% monitoring renewal rate and this currently suggests a renewals value of £3.7m annually (May 2008: £3.9m). The renewal rate has moved slightly down from that at May due to clients' budgetary pressures in the retail sector.

Twenty Four Seven Assured which provides an effective combination of web monitoring to cover security assurance with capacity and performance will be launched during November. Test marketing has shown that the market is keen on a joined up security testing and monitoring proposition delivered by independent ethical security experts.  The Group has continued to make an investment in developing the product set. 

The Consultancy division continued its strong performance from the second half of the year ended 31 May 2008. The order book is at its highest level ever at £2.7m (May 2008: £2.5m), with revenues 59% ahead of last year.

The Group expects to report its interim figures for the six months to 30 November 2008 on Thursday 22 January 2009.

Overall the Group is on course to deliver another year of strong growth in line with market expectations.

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