NCC in "strong position"

Software escrow and cyber-security specialist NCC said both parts of its business had a good first half, with the former bringing in the bulk of the profits while the latter enjoyed explosive growth in sales and profits.Revenue of the escrow business in the six months ended 30 November rose 10.1% to £11.93m from £10.84m the year before, while the assurance side of the business saw revenue surge 49.0% to £33,01m from £22.16m. Group revenue increased from £22.16m to £33.01m.Group escrow saw operating profit increase by 11.5% to £6.67m from £5.98m at the interim stage the year before, while assurance saw operating profit jump 83.1% to £2.44m from £1.3m.Group escrow margins increased to 55.9% from 55.2% in 2009, while in assurance they were slightly reduced to 11.6% from 11.7% in 2009, reflecting the increase in lower margin revenue from recently acquired SDLC. "The margins at SDLC were a little lower than we wanted them to be," conceded NCC financial director John Gittins, "but there were other aspects of SDLC's performance that really pleased us, particularly the execution of cross-selling opportunities."Statutory profit before tax edged up to £5.33m from £5.17m the year before, but after stripping out the amortisation of intangible assets, exceptional items and the unwinding of the discount on acquisitions, the underlying figure rose by 26% to £7.4m from £5.9m a year earlier.The interim dividend has been increased by 19% to 4.15p from 3.50p the year before.The escrow businesses expect annual renewals to be £15.2m (£14.4m in November 2009) in this financial year, based on termination rates at 12%. Escrow Verification Testing worldwide has a forward order book of £2.4m (£2.3m in November 2009). Broker Altium Securities is predicting revenue growth in the escrow business over the full year will grow by around 10% year on year, while Peel Hunt is a little more optimistic, and has raised its growth rate forecast to 11%. Gittins told Sharecast he is "content" with these forecasts."We feel we are in a really strong position," Gittins said. "The top line is very strong and converting into profitability, and we are rewarding investors with a sizeable increase in the interim dividend." Ncc