Ncc Regulatory News (NCC)

19 April 2011

NCC Group

Interim Management Statement

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 December 2010 to 31 March 2011.

NCC Group's trading performance remains in line with the Board's expectations and is on course to deliver the anticipated levels of growth and profitability. Whilst the Group remains concerned about the underlying UK economy, which is currently stagnating, good solid and consistent growth has been seen in both Divisions.

In the first 10 months of the financial year, Group revenues are 53% ahead of the same period last year at £57.6m (March 2010: £37.7m.)

Group Escrow continues to perform well with 8% revenue growth in the period. Group Escrow renewals are now forecast to be £15.5m for the year to 31 May 2011 (2010: £14.6m.)

Escrow UK, the cornerstone of the NCC Group, has seen 6% revenue growth (March 2010: 9%) with a continued good performance from the Verification Testing business. The global verification order book continues to be solid and is at £2.4m (March 2010: £2.0m) of which £1.8m is UK verifications (March 2010: £1.5m.)

The Group's European and North American Escrow businesses continue to perform well, seeing revenue growth of 10% and 14% respectively. On 29 March 2011, the Group acquired Atlanta based Escrow Associates for a cash consideration of up to $9.5m.

Group Escrow termination rates remain below 12% for contracts.

The Assurance division continues to perform strongly with a 97% growth in revenue in the period, of which 15% was organic growth.

NGS Secure and iSEC, the Group's ethical security testing brands, have grown their combined order book to £12.5m (March 2010: £7.2m) as market demand continues to increase for high quality international ethical security testing, forensics, auditing and managed services.

Recruiting the highest quality testers remains important to the Group's success and the difficulty in finding the highest quality testers has constrained the delivery of the order book. Equally, as the premier provider in this market, the Group is always under pressure from competitors trying to attract our staff. However, a combination of the Group's professional capabilities, research and development opportunities, client experiences and career development in an international group are all key elements in ensuring staff retention. Staff turnover to date this year has been 8% which is slightly up on the half year figure of 7% but 136 testers are now employed.

The Group's load and performance testing unit, Site Confidence, continues to achieve monitoring renewal rates of 90%, which indicates a forecast renewals value of £4.8m for the year ended 31 May 2011 (May 2010: £3.7m.) Overall it has seen 11% growth in contract revenues in the period.

SDLC continues to win substantial testing opportunities and is providing the route for the Group to offer its other premium priced services to the global multinationals which form the long term client base of SDLC. As reported previously, margin pressure on the business has resulted in the anticipated return not yet being achieved but in the longer term the Board is confident that margins will improve.

The overall order book in the Assurance Division currently stands at £19.1m (March 2010: £7.2m).

The Group net debt stands at £26.7m following the acquisition of Escrow Associates against the revolving credit facility of £35m and an additional £2m overdraft facility if required.

The Group has also today appointed Atul Patel as Group Finance Director. He has been Interim Finance Director since 18 February 2011, for further details see the separate announcement made today. 

The Group expects to report its year end results for the 12 months to 31 May 2011 on Thursday 7 July 2011.

NCC Group remains on course to deliver another strong year, in line with market expectations and is well positioned for continued long term, sustained growth.

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