NASA.L Regulatory News (NASA)

Nasstar plc

("Nasstar", "Company" or "Group")

Trading Statement

24 July 2017

"Trading in line - 'Nasstar 10-19' benefits gaining momentum"

Nasstar (stock code: NASA), a provider of hosted managed and cloud computing services, is pleased to provide the following trading update for the half year ended 30 June 2017.

Trading in the first half of the year has been positive as we start to see the benefits of our "Nasstar 10-19" programme come through. The ultimate goal of "Nasstar 10-19" is to maximize revenue and cost synergies to increase Group EBITDA margins from 20% to 25% of revenue by the end of 2019. The programme is designed to bring about increased strategic focus across the entire Nasstar business and has seen the Group refine its market proposition for each of its vertical markets. This is helping drive organic growth both from new business and also from cross selling services into the respective Group customer bases. Overall prospective business in the first half of 2017 has been encouraging with indications that the Nasstar offering is continuing to be more attractive to clients of an increased size.

Investment in growing the Nasstar business has continued during the first half. We are investing significantly in the account management team to ensure customers are proactively managed and revenue opportunities within the wider client base maximised. Similarly, the Group's professional services team has been active on the development of our own application functionality, enhancing our own IP. An important step in this process saw the launch in the first half of a proprietary product called nConduit, an application that seamlessly integrates multiple telephony platforms with a wide range of CRM solutions without the need for extensive coding. nConduit offers valuable cross-selling potential across a large proportion of our clients and we continue to look for similar development opportunities.

As part of the "Nasstar 10-19" programme, the first half has also seen plans initiated that should see Nasstar close three of its seven UK data centres before the end of the year. In addition during the first half of the year, all UK based out of hours support has been migrated to the Nasstar New Zealand office thus generating operational efficiencies in the UK.

An objective of "Nasstar 10-19" is to develop a single & excellent approach to customer service that is continually improving and as a result the Company has selected a single IT Service Management tool, Cherwell, that all operating teams will migrate to during 2017 and into 2018, again improving efficiencies and driving deeper team integration across the Group.

It was very pleasing to again receive significant city validation with Nasstar being listed in the 1,000 Companies to Inspire Britain 2017. Furthermore, Nasstar has continued to build on its certifications with key partner's Microsoft and Citrix to further demonstrate its technical capabilities. In addition, Nasstar continues to deliver industry leading capability in "public / private" cloud hybrid solutions, demonstrated by the recent go live of a law firm based in the UK and Australia, whereby UK users are served out of Nasstar's UK data centres whilst the Australian users are served from Microsoft Azure data centres in Australia. This effectively locates the compute power close to the user in order to deliver optimum performance and user experience. Such an innovative approach to cloud delivery is very much industry leading.

As previously reported, as a result of bank covenant leverage targets being surpassed again during 2017, the Group benefited from the ratchet down of interest on its fixed term loan. From May 2017 the Group's interest margin over base rate moved from 2.75% to 2.5%. Net debt at the end of the half year was in line with expectations at £1m, moving from £2.8m at the end of December 2016, on track for delivery of the full year target of net debt/cash breakeven.

Visibility on full year expectations remains high and the Board is confident that the 2017 full year results will be in line with market expectations.

The Group intends to adopt IFRS 15 from the start of the new financial year, 1 January 2018. We are currently assessing the likely impact of adoption and will provide further information in due course.

Group results for the half year ended 30 June 2017 are expected to be released on 25 September 2017.

For further information, please contact:-

Nasstar plc +44 (0) 1952 225 000

Nigel Redwood, Chief Executive Officer

Niki Redwood, Finance Director

finnCap Limited (Nominated Adviser & Broker) +44 (0) 20 7220 0500

Julian Blunt, James Thompson (Corporate Finance)

Stephen Norcross (Corporate broking)

About Nasstar plc

Nasstar (www.nasstar.com) and its wholly owned operating businesses provide hosted managed and cloud computing services, integrating private and public clouds supplying a robust, secure and stable hosted Information Technology service to business customers. The Group provides a true end to end service for clients providing them with enhanced IT performance and greater cost control over their IT function. The Group owns its primary data centre, is head quartered in Telford with regional offices in Northampton, London and Bournemouth whilst 24 x 7 support is delivered from its Auckland office in New Zealand. Nasstar is an accredited Microsoft Gold Partner, is the 2016 Citrix Networking Partner of the Year and is certified to ISO 27001.

Nasstar specialises in building bespoke cloud hosted services to manage a client's entire application set, tailor made to suit specific industries, designing public, private and hybrid cloud solutions to meet the objectives of the client. The solution is a highly scalable service that provides benefits including "Anywhere Access" to computing; a standardised corporate solution that can be accessed globally in multiple languages; generating cost savings when compared to the traditional IT ownership model whilst replacing capital expenditure with a simple usage based payment model.

Nasstar (AIM:NASA) was founded in 1998, admitted to AIM in December 2005, acquired e-know.net Limited in a reverse takeover in January 2014, Kamanchi Limited in July 2014, VESK in October 2015 and Modrus Limited in September 2016.

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