Last checked at 16 Oct 2009 07:00
16 October 2009
NCC Group
Interim Management Statement
NCC Group plc (LSE: NCC or "the Group"), the international, independent provider of Escrow and Assurance Testing, is today publishing its Interim Management Statement, covering the period from 1 June 2009 to 15 October 2009.
NCC Group's trading performance remains in line with the Board's expectations and on course to deliver the anticipated levels of growth and profitability. Despite the challenging current economic environment, both divisions are trading well ahead of last year.
In the first four months of the financial year, typically the quietest trading period, Group revenues are 25% (October 2008: 29%) ahead of the same period last year, with both divisions showing good growth. Excluding revenues from NGS, which was acquired in November 2008, Group revenue is up by 11% on a like for like basis.
Group Escrow continues to perform well with 9% revenue growth to date in this financial year. Group Escrow renewals are now forecast to be £14.3m for the year against renewals in the year ended 31 May 2009 of £13.6m.
Escrow UK, the cornerstone of the NCC Group, has seen 7% revenue growth (October 2008: 2%), with new contract revenues growing by 18%.
Verification Testing revenue has experienced a similar pattern to last year with the lack of new system upgrades holding back sales opportunities. However, the order book still remains buoyant at £2.1m (May 2009: £2.0m.)
Group Escrow termination rates remain around 12% for contracts and beneficiaries, with most terminations coming from Local Authorities where cost reduction, regardless of consequence, appears to be the approach.
During the last 12 months NCC Group stated that the 2009/10 price list would be pegged to the two main price indices as the Group Escrow was not intending to substantially change the product offering. At present, the RPI, retail price index, and the CPI, consumers' price index, are currently -1.4% and +1.1% respectively.
In the light of these low indices, any price increases would be outweighed by the negative sentiment. The Group is also not seeing any reduction in financial pressures in either the public or private sectors, or any increase in the ability of businesses to spend on anything other than security or risk mitigation related IT projects. Therefore the Board has deferred the UK annual price increase for six months.
The Assurance Testing division continues to demonstrate very strong revenue growth in all areas and has maintained its strong order books. Revenues grew by 40% (October 2008: 34%) and by 13% on an organic basis.
NGS and Secure Test, the Group's Ethical Security Testing brands, have grown their combined order book to £7.2m (May 2009: £6.5m) as market demand continues to increase for high quality Ethical Security Testing. The UK test team continues to grow, but accredited, high quality, resources remain scarce.
The Group's load and performance testing unit, Site Confidence, continues to achieve monitoring renewal rates of close to 90%, which indicates a renewals value of £3.7m annually against renewals in the year ended 31 May 2009 of £3.9m. The renewal rate continues to be affected by corporate failures and clients' budgetary pressures across all sectors but the Group is very satisfied with our ability to attract and retain customers.
Information Security and Advisory service offerings continue to see strong demand as security issues still consume the majority of available IT expenditure. Its order book is currently up at £3.1m (May 2009: £2.9m).
The Group expects to report its interim figures for the six months to 30 November 2009 on Thursday 21 January 2010.
Overall NCC Group remains well on track to deliver another strong year, in line with market expectations, which positions the Group well for continued long term, sustained growth.
Enquiries:
| NCC Group (www.nccgroup.com) | 0161 209 5432 |
| Rob Cotton, Chief Executive | |
| Paul Edwards, Group Finance Director | |
| College Hill | |
| Adrian Duffield | 020 7457 2020 |