Final Results

RNS Number : 9642U

NCC Group PLC

02 July 2009

 



NCC Group plc

Continued solid organic and acquisitive growth drive profits up 19% - dividend up 32%

2 July 2009.  NCC Group plc (LSE: NCC, 'NCC Group' or 'the Group'), the independent information security assurance group, has reported its final results for the year ended 31 May 2009.

Highlights

Financial 

• Group revenue up by 31% to £46.8m (2008: £35.7m)

• Group adjusted operating profits* up by 19% to £12.7m (2008: £10.7m)

• Group adjusted pre tax profits* up by 17% to £12.3m (2008: £10.5m) 

• Cash conversion ratio up to 140% of operating profits (2008: 122%)

• Adjusted fully diluted earnings per share* up 17% to 26.1p (2008: 22.4p)

• Total dividend up 32% of 9.25p (2008: 7.00p)

• Net debt at year end £5.6m - expected to be net debt free by August 2010

Operational

• Group Escrow maintained strong organic revenue growth of 13%

• Assurance Testing now firmly established as UK's largest independent information security business

• Two acquisitions completed and integrated 

• Next Generation Security Software (NGS), an Ethical Security Testing business in November 2008

• Escrow Europe Switzerland acquired the remaining 76% in May 2009, further strengthening Group's position as the world's largest software Escrow provider

Outlook for 2009/2010:

• Group Escrow renewals forecast to be £14.9m (2009: £13.6m)

• Group Escrow verification order book £2.0m (2008: £2.0m)

• Assurance Testing order book, including Consultancy, £9.4m (2008: £7.1m)

• Site Confidence monitoring renewals forecast to be £4.1m (2008: £3.8m)

* Operating profit is adjusted for amortisation of acquired intangibles of £1.2m. Pre tax profit is adjusted for this item and the unwinding of the discount on the acquisitions deferred consideration of £0.2m.  

Rob Cotton, NCC Group Chief Executive commented:

'We have delivered our strongest performance to date against a backdrop of economic and worldwide financial downturn and uncertainty.  We have continued to develop and grow in the face of this adversity and delivered solid and consistent organic growth, complemented by the acquisitions completed over the last few years.  

'The fundamentals of our business remain strong and attractive; substantial recurring revenues, good cash generation and a focus on the faster growing IT services segments. 

'We have started this year in a very strong position which has given us considerable confidence in our ability to deliver further sustainable growth.'

Enquiries:

NCC Group  (www.nccgroup.com)	0161 209 5200
Rob Cotton, Chief Executive
Paul Edwards, Group Finance Director
College Hill
Adrian Duffield	020 7457 2020

Overview

The Group delivered 31% growth in revenues and growth of 17% in both adjusted pre tax profits and adjusted earnings per share, emphasising the strength of the Group's proposition despite the global economic uncertainty faced by all businesses over the last year.

The Group Escrow division maintained its strong, principally organic, revenue growth of 13% whilst Assurance Testing consolidated its position as the UK's largest independent information security business with revenues growing 49%. 

The last five years of solid growth and CAGR of 25% in revenues and 22% for adjusted operating profit, demonstrate the success of the Group's strategy of focused sustainable organic growth, allied to carefully targeted acquisitions.

The Group continues to be highly cash generative and has only £5.6m net debt with operating cash conversion representing140% of operating profits (2008: 122%).

Financial review

Group 

Revenue 

Group revenue for the year ended 31 May 2009 increased by 31% to £46.8m (2008: £35.7m), with the previous year's acquisitions of Secure Test and Escrow Europe successfully integrated into the Group.  

The Group has continued to be acquisitive in the year and purchased the UK-based NGS and the remaining 76% of Escrow Europe Switzerland in November 2008 and May 2009 respectively. Excluding these acquisitions Group revenue grew by 19% to £43.4m.

The Group half year split saw 44% of revenue delivered in the first half (2008: 46%) and 56% in the second half (2008: 54%). 

The geographic split of revenue has continued to evolve with the acquisition of NGS which has a global presence. However, the majority of Group revenue is derived from the UK.  UK revenue was £36.6m (2008: £29.2m) representing 78% (2008: 82%) of the total of the Group, with the rest of the world increasing by 48% to £5.6m (2008: £3.8m) and Europe contributing £4.6m (2008: £2.7m).

Recurring revenue

The Group saw recurring income levels consolidate. In Group Escrow nearly 89% of all contracts renewed, whilst in Assurance Testing 79% of prior year testing revenue was retained, with those customers spending on average 24% more with the Group at nearly £22,000 per renewal. In addition, 90% of Site Confidence's performance monitoring and load testing revenues were renewed and are recurring.

Profitability

Adjusted Group operating profit, excluding the amortisation of acquired intangibles and as set out in the table below, grew by 19% to £12.7m (2008: £10.7m). Adjusted operating margins were, as expected, slightly lower at 27% (2008: 30%) reflecting the change in the Group's margin mix as a result of the acquisitions. Non escrow businesses margins are typically closer to 15%. The adjusted operating profit includes £1.0m (2008: £0.7m) of share based charges and related costs. Excluding the share based charges adjusted operating profits grew by 21%.

The half year split of adjusted operating profits was H1 43%: H2 57% (2008: H1 44%: H2 56%). 

Currency fluctuations resulted in a £28,000 positive impact on the Group's profits.

	Operating profit
£000	2009	2008
Reported operating profit	11,486	9,217
Amortisation of acquired intangibles	1,237	740
Exceptional items	-	711
Adjusted operating profit Adjusted operating profit	12,723	10,668

	Profit before tax
Reported profit before tax	10,867	8,693
Amortisation of acquired intangibles	1,237	740
Exceptional items	-	711
Unwind of the discount on deferred consideration	177	333 333
Adjusted profit before tax	12,281	10,477

Adjusted pre-tax profit increased 17% to £12.3m (2008: £10.5m). The Group's reported pre-tax profit was up 25% to £10.9m (2008: £8.7m) after the inclusion of the unwinding of the discount on the acquisitions deferred consideration and amortisation.

Taxation 

The Group's effective tax rate is 29.2% (2008: 26.9%). The increase in the effective tax rate is largely due to the impact in the prior year of the tax allowance in relation to the exercise of share options granted in 2004. This exceeded the reduction in the tax rate from 30% in 2008 to 28% in 2009.

The effective tax rate is above the standard UK rate of 28% largely due to the impact of foreign tax and items not deductable for tax purposes. 

Earnings per share

The adjusted fully diluted earnings per share increased 17% to 26.1p (2008: 22.4p). The basic earnings per share increased 21% to 22.9p (2008: 18.9p), whilst fully diluted earnings per share increased 20% to 22.1p (2008: 18.3p).  

The table below analyses the effect on the Group's fully diluted earnings per share of the amortisation of acquired intangibles, unwind of the discount on the deferred consideration for acquisitions and the effect of the exceptional costs. 

Pence	2009	2008
Diluted EPS as per the income statement	22.1	18.3
Amortisation of acquired intangibles	3.5	1.6
Exceptional items	-	1.5
Unwind of discount on deferred consideration of acquisitions	0.5	1.0
Adjusted diluted EPS	26.1	22.4

  Dividend

In line with the continuing progressive dividend policy, the Board is recommending a final dividend of 6.25p per ordinary share, making the total 9.25p for the year. This represents cover of 2.5 times (2008: 2.7 times) based on basic earnings per share.  

If approved at the Annual General Meeting, the dividend will be paid on 25 September 2009 to shareholders on the register at 28 August 2009. The ex-dividend date will be 26 August 2009.

Shareholders' funds at the end of the year were £44.8m (2008: £39.5m).

Cash

The Group continues to be highly cash generative with operating cash flow before interest and tax of £16.1m (2008: £11.2m) which is 140% of operating profit before interest and tax (2008: 122%).

After accounting for net cash outflows of £11.4m for acquisitions and deferred acquisitions payments made during this year, the Group ended the year with net debt of £5.6m (2008: £3.4m). 

Capital expenditure remained tightly controlled at £1.4m (2008: £1.5m). In the current financial year as the Group upgrades its core IT systems to SAP, there will be a onetime capital expenditure increase of approximately £1.8m.

In the year the Group underwent a refinancing deal to secure a £15m multi option facility term loan which at the year-end was 59% utilised at £8.9m. This facility, along with the highly cash generative nature of the Group's businesses, provides flexibility for future acquisitions and expected capital projects. It expires in July 2010 when the Group expects to be almost debt free.

Balance sheet

Following the acquisitions of NGS and Escrow Europe Switzerland goodwill increased by 18% to £52.2m (2008: £44.1m) and the cost of intangible assets relating to customer contracts and associated relationships increased by 15.7% to £10.1m (2008: £8.7m). The value of goodwill has been assessed and no impairment has been evidenced. The contracts and customer relationships have been assigned a useful economic life of between three and twenty years and are to be amortised over that period.

Divisions

Group Escrow

The worldwide Escrow businesses are the cornerstone of the Group's profitability and provide a notably high degree of recurring revenue due to the high contracts renewals base.  

Group Escrow remains the largest division, accounting for 45% of total revenue (2008: 50%). It increased revenue by 17% to £21.0m (2008: £18.0m), 47% of revenue was delivered in the first half (2008: 47%) and 53% in the second half (2008: 53%). Organic revenue growth in the year was 13%, with strong performances from the overseas operations.

Escrow UK increased revenue by 6% to £16.6m (2008: £15.7m).  UK growth in the first half of the year was slower than the Board would have liked, as clients were affected by the severity and speed of the economic downturn which curtailed their investment in IT software and services. The business also experienced a fall off in demand for verification services. In the first six months overall growth was 1%. In the second six months, due to swift action taken to refocus the sales message, new contract and verifications growth was once again 10%.

Escrow US increased its revenue by 70% to £2.0m (2008: £1.2m) and Escrow Europe increased revenues by 121% to £2.4m (2008: £1.1m) of which £0.5m was derived from Escrow Germany.

Escrow UK contract terminations, as anticipated at the interims results, increased to 11.5% (2008: 9.2%), more details below. However recurring revenues obtained through renewals increased by 22% to £13.6m (2008: £11.2m).

Group Escrow operating profit increased 15% to £11.7m (2008: £10.2m) with Escrow UK contributing 88%.  Escrow US and Escrow Europe continued to increase profitability and contributed 5% and 7% of total Escrow operating profits respectively with all geographies seeing double digit growth. 

Group Escrow operating margins remained strong as a consequence of focused control over contract terminations and new business wins at 55% (2008: 56%) with Escrow UK increasing its margins to 62% (2008: 60%).

Assurance Testing

Assurance Testing now accounts for 41% (2008: 36%) of Group revenues, due to the full year contribution from Secure Test and the acquisition of NGS during the year. Revenue increased by 49% to £19.1m (2008: £12.8m) and, excluding the acquisition of NGS, Assurance Testing revenues increased 22% to £15.7m.

Operating profit increased 67% to £2.8m (2008: £1.7m) and it is expected that both revenues and operating profits will increase further in the current financial year as the demand for Ethical Security Testing and Performance and Load Testing continues to grow.

Assurance Testing continues to benefit from the integration of the various units acquired to date and is focusing on improving its operating margins, which grew to 15% from 13% in the previous year.

Consultancy

Consultancy accounted for 14% of Group revenue (2008: 14%). Revenues grew by 36% to £6.7m (2008: £4.9m). Operating profit increased by 4% to £0.8m (2008: £0.7m) as the general IT consultancy market, which we have been moving away from during the last two years, has continued to be very competitive.  

Customer analysis

As has always been the case, the Group had no reliance on one customer or sector for its revenue. The analysis is as follows and shows a consistent trend.

Top three sectors by division	Escrow	Assurance	Consultancy
Banks & Insurance	23%	20%	-
Software Computer Services	13%	22%	-
Telecoms	18%	-	-
Retail	-	17%	-
Housing	-	-	29%
Local Govt	-	-	19%
Central Govt	-	-	9%

Group revenue split by sector

Sector	%
Banks and Insurance	18
Fixed & Mobile Telecommunications	9
Software & Computer Services	15
Central Government	6
Local Government	8
Education	3
Housing	5
Support Services	4
General Retailers	10
Healthcare Equipment & Services	4
Travel & Leisure	5
Other	13

Operational Review

Market and positioning

It is without doubt a difficult and uncertain global and domestic economic environment in which to operate with the financial world continuing rapidly to change shape and the future still only being measured in months rather than years.  

The Board believes that the basic underpinning of demand for the Group's products and services has remained unchanged. However, it is very aware that business investment in new infrastructure and software continues to be considerably less than it has seen over the last few years, as corporations defer decisions and as a consequence implementations and upgrades.

The IT software and services market is also under attack from cost cutters. Decision making ability is being removed and authority levels are being reduced. Discretionary expenditure has been culled. However, selling is still very much possible, providing it is in the right area with the right products.  

Although NCC Group was not immune from the downturn, its positioning helped the Group avoid the worst effects of the downturn in the domestic economy as its products and services fall into the non discretionary expenditure category.

For NCC Group, the product sets are still compelling to its customers as it continues to provide services that are critical to business, for example:

• organisations who need protection for their business critical applications as corporate failures and product withdrawals increase; 

• systems, networks and data security have not kept pace with the growth of data and identity theft and hacking globally, which continue to reach new levels on an almost daily basis. As the Group has stated before this is 'an arms race' which is not getting any slower nor is there any end in sight; and

• web site performance is critical to all types of businesses as the web is now often their primary shop window.  

NCC Group remains the largest provider of Escrow services in the world. Furthermore, it is the only provider who mandates quality ahead of price and does not intend to change that philosophy. There are no signs that the very small virtual providers who offer a low cost, low value proposition are gaining traction in the market. The Board believes their future is in jeopardy as the market shows no sign of wanting to make false economy by trusting part of their disaster recovery and risk mitigation plans to unknown organisations.

The dynamics of the Escrow market have not materially changed since the Group floated in 2004 and the same market assumptions, as detailed by Gartner at the time, remain. As was confirmed then, many companies remain significantly less protected than they should be and apart from those the Group has worked closely with, the Board still believes that to be the case.  

Both the public and private sector still typically believe that they have several times more cover than they actually do have. They are still unaware that they should have considerably more. The UK escrow market without verification testing is still very niche and the Group estimates that the market size is approximately £100m, which still provides NCC Group with considerable headroom for growth.

Within Assurance Testing, the market for Secure Test and NGS, the penetration, security testing and forensics service providers, continues to see strong growth. Media headlines continue to highlight embarrassing and avoidable examples of poor security that have resulted in real data and financial loss.

Within Assurance Testing the Group has the largest team of CESG CHECK accredited ethical security testers in the UK with currently over 100 testers. NCC Group is committed to investing in the number of employees who have the CHECK or equivalent Crest qualification to ensure that as we and the industry grow the highest ethical and technical standards are maintained.  

The information security side of the Consultancy division now fits well into Assurance Testing. The Group is fast becoming the name of choice for major companies wanting to ensure that they are best placed to protect themselves and their business assets from attack.  

The Group provides information security advice from every perspective, especially for those organisations that are covered by the PCI Data Security Standards.  NCC Group's position in the information security market is further enhanced by being accredited PCI Auditors and by having more CLAS consultants in the UK than anybody else.

The Group is managed through two distinct business units, Group Escrow and Assurance Testing. Each is run independently by an autonomous management team responsible for setting and, after Board approval, delivering its own plans, with each area being tasked with generating organic growth.  

This change from three to two divisions reflects the very substantial shift in consulting activity, as it becomes even closer to Assurance Testing and as the Group withdraws further from the low margin commoditised areas of consulting. All future reporting will follow this structure, with non information security consulting being disclosed separately in the Assurance Division.

Divisions 

Group Escrow

During the year the Group expanded its footprint in continental Europe by adding operations in Zurich, to complement its presence in Amsterdam and Munich.

The acquisition of Escrow Europe Switzerland, in which NCC Group already held a 24% stake, demonstrated the intention to widen and strengthen, by acquisition and organically, the geographical spread carefully both in continental Europe and the USA.

Across the escrow businesses in the various countries the Group has experienced positive changes in most of its key performance measures of profitability, renewals, terminations and verification testing.  

Escrow UK

This was very much a year of two halves, with the first six months of the year suffering from the full impact of the global banking crisis, as outlined above. Key changes were made to better take advantage of the market place and the second half of the year saw a 10% growth in revenue. Contained within that excellent result was that Verification revenues grew by 8.5%, which for the year as whole saw Verification revenue only 5% down at £2.9m (2008: £3.0m).

Escrow UK recurring revenues grew 10% to £10.9m (2008: £9.9m) but terminations varied significantly particularly in the first eight months of the year. An improvement in the Group's processes, allied to the passing of the initial knee jerk reaction to the economic downturn, has seen UK termination rates for the last year of 11.5%.

Below are the termination rates for the last three years, importantly, the Group is now seeing a reduction in termination requests which leads the Board to believe rates are returning to normal.

	2006	2007	2008	2009
Termination Rate %	10.3	10.2	9.2	11.5

The external planning guidance historically given was between 11% and 13% for terminations for the previous three years and until September 2009 that had been unchanged. Currently the Board believes the peak of 12% seen in January is unlikely to be a long term trend and so the benchmark remains between these two levels.  

Escrow Europe and Escrow USA

Escrow Europe had a successful year, despite the management team being replaced. The business has benefited from the strong euro, but succeeded in growing profitability by 113% on a consistent currency basis. The Swiss acquisition further consolidates NCC Group's position and the business is already seeing benefits from that acquisition. The two German offices are fully amalgamated and the business is growing at 102% per annum.

Escrow US also benefited from the exchange rate, but underlying growth was still good with revenues up by 70% and profits up by 36%. The US office now employs 16 employees and is growing as the NCC Group brand starts to have an impact in the USA in the escrow market.

Assurance Testing

Assurance Testing in this financial year consists of three component parts, Secure Test, NGS and Site Confidence. Assurance Testing revenue grew 49% to £19.1m with an increase in profitability of 67% to £2.8m (2008: £1.7m), the organic element of which was 38%.   A key feature of the Division is the frequency that customers' renew the testing work performed by the Group.  

The Division currently has a high recurrence rate for Ethical Security testing of 79% of prior year's revenues, which represents 51% of all customers which is a slight change from last year, when the renewal rate was 82% and 56% respectively.  This entirely expected change is due to the increased demand for testing generally, as reflected by the revenue growth seen in the year. More importantly, renewing customers' expenditure has gone up from £17,463 to £21,732 in 2009 and to £15,525 from £14,120 for new customers.  

For Site Confidence performance monitoring and load testing have a recurring revenue rate of 90%.

Secure Test and NGS both had very strong years and the business witnessed the team of 97 testers operating at capacity for most of the year. In addition, the Group gained valuable new clients from its acquisition of NGS all of which continue to use the best security testers in the market regardless of the economic uncertainty.

The Site Confidence operation encompassing the web site monitoring and load testing business had a good year in which revenues grew by 9%. This is before the Group started on its product upgrades which will further improve the competiveness of the products and services.  

The market place for the Site Confidence product has been more affected by the recession than the other areas of Assurance Testing, as customers have been more willing to switch off the Group's services and risk falling behind their competitors' web site performances. However, the recurring income renewal rates remain consistent at 90%.

The acquisition of NGS broadened the Group's appeal in the Ethical security market by further increasing the technical expertise and adding forensics skills and research to the already strong set of propositions.

Consultancy

Consultancy revenues grew by 36% to £6.7m (2008: £4.9m) as the Group continued to grow its presence in the Information Security marketplace.  With the increased presence of Information Security and the synergies that are being achieved from being part of the Assurance division, the Board expects to be able to continue growing both profits and revenues despite dropping certain types of work.

Group Strategy

The Group strategy remains to develop further the two core strands of Escrow and Assurance organically by developing new ideas and looking for new opportunities in the IT and information security markets, geographically and by acquisition when appropriate.  

The Group has always viewed profits, margins and cash generation as the most important features of its business model and we do not intend to change that approach. Escrow's margin has continued to increase and it is normal for us to use a combination of effective selling and price increases to improve it further. The Board does not expect this to change although price increases will be lower than seen in the past.

In Assurance Testing, the Group has been growing rapidly and has historically built revenue and market share at the expense of margin. Over the last 12 months the Board set about realising scale and established market position and changing the focus onto margin improvement. The margin has improved and is expected to continue going forward. Further with the acquisition of NGS, the premium service offering, the Board expects to gain higher day rates.

The strength of the Group's proposition is that it is independent; the Group delivers the right solution for the client without being biased towards a particular vendor or solution. The Group would not consider entering the already over populated reseller market other than to sell its own tools as is the case with the Site Confidence monitoring and load tools and NGS database security tools.

Acquisitions 

The Board has consistently complemented its organic growth by carefully adding accretive acquisitions. The Group successfully completed two acquisitions in the financial year, NGS and the remaining shareholding in Escrow Europe Switzerland. In addition it concluded the earn-out and integration of Escrow Europe.

Acquisitions are still very important to the Group. Seven have been completed and have all been successful and at fair prices reflecting their strategic importance. NGS is now firmly part of the Group and is adding a tremendous amount of value.  

Agreeing a price is always the hardest part of any negotiation and there is a misconception that there are bargains to be had for people businesses. Clearly the disappearance of the overinflated private equity led pricing models will make acquisition pricing ease, but bargains are unlikely to be found.  

The strategy is to look at the highest quality businesses and pay a full and fair price for them. As importantly, the Group typically buys small or mid size people businesses. The Board will continue to invest in appropriate complementary businesses by way of company or asset based acquisitions. NCC Group remains involved in a number of dialogues with suitable target companies but will always remain cautious, as the integration and extraction of enhanced value is of paramount importance to the Group.  

Board change, employees, recruitment and retention

David McKeith joins the Board on 29 July 2009 - see separate statement today. He is replacing Eurfyl ap Gwilym who retires at the AGM after five years with the Group.  

As stated above, NCC Group now predominately operates as two business strands, Group Escrow and Assurance Testing.  Roger Rawlinson has been recently promoted to Managing Director of Assurance Testing and the Group is currently recruiting a Managing Director to lead its global group of Escrow businesses. 

Recruitment and retention remains the biggest challenge to growth for a people business such as NCC Group and the management has made good progress. The Board is committed to employing the best people in the market wherever possible. The Group had a headcount of 421 employees worldwide at the end of the last financial year.

The Group has seen a good intake of new testers and well qualified Information Security consultants in Assurance Testing as it capitalised on its market leading position. In Escrow worldwide all sales teams have grown, even in the UK, where at the year end the escrow sales team reached a record 95. 

As important as recruitment is retention. The management believes that its all round packages place it in the top quartile of remuneration in the locations from which the Group operates. Therefore as in all previous years, the Group has reviewed all salaries and bonuses in the normal way. NCC Group has resisted the temptation to implement a cap or freeze on pay, so as to ensure that its people remain motivated and valued so that the Group is able to retain them when there is an economic upturn.

Outlook

NCC Group continues to make a virtue of acting independently and operating as trusted, equitable advisors. To date it has successfully acquired and integrated seven businesses that have complemented its service and delivery offerings. The Group has an outstanding track record of organic growth and a sound business model that it will continue to evolve and develop to grow the business further.

The economic landscape has fundamentally shifted over the last year and for many businesses this is causing considerable hardship and has led to a period of uncertainty.  

For NCC Group, that is not the case. The decisive action taken over the last three years has ensured the Group has and will continue to weather this economic storm and the Board is confident the business will go from strength to strength.  

NCC Group has a very strong market leading position in all of the niches in which it operates and the services and advice it provides is as far away from discretionary expenditure as it can be. The Group also continues to evolve its range of offerings to ensure it maintains its market leading positions.

The start to the year sees Group Escrow renewals at £14.9m, up from £13.6m achieved in the financial year to 31 May 2009 and a verification order book of £2.0m, of which £0.6m relates to Escrow Europe and Escrow US.  

The Assurance Testing businesses' order books have improved to £9.4m (2008: £7.1m), included in this is £2.9m (2008: £2.5m) from the Consultancy division. The division also has £4.1m of monitoring renewals forecast for the coming financial year (2008: £3.8m). 

The outlook for NCC Group is good and the Board remains very confident in the Group's ability to deliver further sustainable growth.  

  Consolidated income statement

For the year ended 31 May 2009

	Notes	2009	2008
		£000	£000
Revenue	2	46,836	35,745
Cost of sales		(26,275)	(20,055)
Gross profit		20,561	15,690
Administrative expenses before amortisation of intangible assets and exceptional items		(7,838)	(5,022)
Earnings before interest, tax, amortisation and exceptional items		12,723	10,668
Amortisation of intangible assets		(1,237)	(740)
Exceptional items	3	-	(711)
Total administrative expenses		(9,075)	(6,473)
Operating profit	2	11,486	9,217
Financial income	6	24	78
Finance expense excluding unwinding of discount		(466)	(269)
Net financing costs excluding unwinding of discount		(442)	(191)
Unwinding of discount effect relating to deferred consideration on business combinations		(177)	(333)
Financial expenses	6	(643)	(602)
Net financing costs		(619)	(524)
Profit before taxation	4	10,867	8,693
Taxation	7	(3,170)	(2,340)
Profit for the year		7,697	6,353
Attributable to equity holders of the parent company		7,697	6,353
Profit for the year		7,697	6,353
Earnings per share	9
Basic earnings per share		22.9p	18.9p
Diluted earnings per share		22.1p	18.3p

Group balance sheet

at 31 May 2009

	Notes	2009		2008
		£000	£000	£000	£000
Non current assets
Intangible assets	10	60,009		51,833
Plant and equipment	11	2,131		1,939
Deferred tax assets		787		1,145
Total non-current assets		62,927		54,917
Current assets
Trade and other receivables	12	14,785		12,351
Cash and cash equivalents		3,356		1,142
Total current assets		18,141		13,493
Total assets			81,068		68,410
Equity
Issued capital	17	337		336
Share premium		21,630		21,537
Retained earnings		22,891		17,569
Currency translation reserve		(104)		12
Total equity attributable to equity holders of the parent			44,754		39,454
Non current liabilities
Other financial liabilities	16	76		92
Deferred tax liability		1,588		1,499
Interest bearing loans	16	8,932		54
Total non current liabilities		10,596		1,645
Current liabilities
Interest bearing loans		-		4,500
Trade and other payables	14	11,317		11,270
Deferred revenue	15	12,406		11,009
Current tax payable		1,995		532
Total current liabilities		25,718		27,311
Total liabilities			36,314		28,956
Total liabilities and equity			81,068		68,410

These financial statements were approved by the Board of Directors on 1 July 2009 and were signed on its behalf by:

Rob Cotton
Chief Executive
NCC Group plc

Group cash flow statement

for the year ended 31 May 2009

	Notes	2009	2008
		£000	£000
Cash inflow from operating activities
Profit for the year		7,697	6,353
Adjustments for:
Depreciation charge		1,283	1,045
Share based charges		1,031	742
Amortisation of intangible assets		1,237	740
Net financing costs		619	191
Profit on sale of plant and equipment		(1)	(5)
Income tax expense		3,170	2,340
Profit for the year before changes in working capital		15,036	11,406
Increase in receivables		(866)	(3,620)
Increase in payables		1,955	3,460
Cash generated from operating activities before interest and tax		16,125	11,246
Interest paid		(468)	(489)
Income taxes paid		(1,772)	(2,657)
Net cash generated from operating activities		13,885	8,100
Cash flows from investing activities
Interest received		25	273
Proceeds from the sale of plant and equipment		-	69
Acquisition of plant and equipment		(1,409)	(1,466)
Acquisition of business	13	(11,358)	(10,418)
Net cash used in investing activities		(12,742)	(11,542)
Cash flows from financing activities
Proceeds from the issue of ordinary share capital		94	1,618
Draw down of borrowings		4,412	993
Purchase of own shares		(656)	(559)
Payment of bank loans		(56)	-
Equity dividends paid		(2,607)	(1,817)
Net cash from financing activities		1,187	235
Net increase in cash and cash equivalents	18	2,330	(3,207)
Cash and cash equivalents at beginning of year		1,142	4,377
Effect of exchange rate fluctuations on cash held		(116)	(28)
Cash and cash equivalents at end of year		3,356	1,142

Statements of changes of equity

for the year ended 31 May 2009

Group

	Share capital	Share premium	Retained earnings	Currency translation	Total Equity
	£000	£000	£000	£000	£000
Balance at 1 June 2007	326	19,929	13,144	39	33,438
Share based charges	-	-	742	-	742
Purchase of own shares	-	-	(559)	-	(559)
Deferred tax on share based payments	-	-	(294)	-	(294)
Profit for the year	-	-	6,353	-	6,353
Shares issued	10	1,608	-	-	1,618
Currency translation reserve	-	-	-	(27)	(27)
Dividends to shareholders	-	-	(1,817)	-	(1,817)
Balance at 31 May 2008	336	21,537	17,569	12	39,454
Balance at 1 June 2008	336	21,537	17,569	12	39,454
Share based charges	-	-	1,031	-	1,031
Purchase of own shares	-	-	(656)	-	(656)
Deferred tax on share based payments	-	-	(143)	-	(143)
Profit for the year	-	-	7,697	-	7,697
Shares issued	1	93	-	-	94
Currency translation reserve	-	-	-	(116)	(116)
Dividends to shareholders	-	-	(2,607)	-	(2,607)
Balance at 31 May 2009	337	21,630	22,891	(104)	44,754

Notes 

1 Accounting policies

Basis of preparation

NCC Group plc ('the Company') is a company incorporated in the UK.

The Group financial statements consolidate those of the company and its subsidiaries (together referred to as the 'Group'). The parent company financial statements present information about the Company as a separate entity and not about its Group.

Both the parent and the Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ('Adopted IFRS'). On publishing the parent company financial statements here together with the Group financial statements, the company is taking advantage of the exemption in s403 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of these approved financial statements.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Group financial statements.  

Revenue recognition

Revenue represents the value of services provided during the period, excluding VAT. 

Testing and consultancy

The results of partially completed contracts whether fixed price or on a time and materials basis are dealt with on a percentage completion basis according to the number of days worked by including the profit or loss earned on work completed to the balance sheet date. Provisions are made for any losses on uncompleted contracts expected to be incurred after the balance sheet date. 

Escrow and website monitoring

Other than fees attributable to initial setup on the signing of a new contract, which is recognised when the contract is signed, maintenance and escrow agreement revenue is deferred and released to the income statement on a straight-line basis over the life of the related agreement, on the basis that the performance is deemed to fall evenly over the contract period.

Interest bearing borrowings

Interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.

Net financing costs

Net financing costs comprise interest payable and interest receivable on funds invested. 

Interest income and interest payable is recognised in the income statement as they accrue. Dividend income is recognised in the income statement on the date the entity's right to receive the payments is established and pre acquisition dividends are deducted from the cost of investment.

Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill and the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. 

Adopted IFRS not yet applied

The following adopted IFRS were available for early adoption but have not been applied by the Group in these financial statements:

International accounting standards (IFRS)
IFRS 8	Operating segments
IAS 1	Presentation of Financial Statements
IFRS 2	Share based payments: vesting conditions and cancellations

The directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's financial statements. 

2 Segmental information

The Group is organised into three primary business segments; Group Escrow, Assurance Testing and Consultancy. These three segments are the Group's primary reporting format for segment information. Escrow Europe includes amounts previously reported as Escrow Germany. All segments are located in the UK unless indicated otherwise.

	2009 £000	2008 £000
Revenue by business segment
Escrow UK	16,611	15,724
Escrow Europe	2,415	1,094
Escrow US	2,022	1,190
Group Escrow	21,048	18,008
Assurance Testing	19,124	12,835
Consultancy	6,664	4,902
Total revenue	46,836	35,745
Operating profit by business segment
Escrow UK	10,320	9,393
Escrow Europe	797	376
Escrow US	535	394
Group Escrow	11,652	10,163
Assurance Testing	2,804	1,678
Consultancy	754	726
Segment operating profit	15,210	12,567
Head office costs	(2,487)	(1,899)
Operating profit before amortisation and exceptional items	12,723	10,668
Amortisation of intangible assets Escrow US	(143)	(115)
Amortisation of intangible assets Assurance Testing	(694)	(458)
Amortisation of intangible assets Escrow Europe	(400)	(167)
Operating profit before exceptional items	11,486	9,928
Exceptional items	-	(711)
Operating profit	11,486	9,217

Interest and tax are not allocated to business segments and there are no inter segment sales.

	Assets	Liabilities	Assets	Liabilities
	2009	2009	2008	2008
	£000	£000	£000	£000
Assets / (liabilities) by business segment
Escrow UK	4,145	(8,322)	4,623	(7,775)
Escrow Europe	5,632	(2,520)	5,268	(3,296)
Escrow US	4,478	(1,146)	4,483	(744)
Group Escrow	14,255	(11,988)	14,374	(11,815)
Consultancy	2,604	(873)	2,790	(823)
Assurance Testing	11,342	(5,750)	8,055	(9,451)
Unallocated net assets	52,867	(17,703)	43,191	(6,867)
Total assets / (liabilities)	81,068	(36,314)	68,410	(28,956)

Unallocated net assets consist of goodwill arising on consolidation, cash, tax payable and other centrally held assets and liabilities.

2008		Depreciation	Capital expenditure	Total costs incurred to acquire segmental assets
		£000	£000	£000
Escrow UK		508	807	-
Escrow Europe		51	26	6,832
Escrow US		55	17	-
Group Escrow		614	850	6,832
Consultancy		71	137	-
Assurance Testing		360	485	2,725
Total		1,045	1,472	9,557

2009		Depreciation	Capital expenditure	Total costs incurred to acquire segmental assets
		£000	£000	£000
Escrow UK		732	519	-
Escrow Europe		55	78	1,462
Escrow US		77	56	-
Group Escrow		864	653	1,462
Consultancy		92	64	-
Assurance Testing		327	708	10,597
Total		1,283	1,425	12,059

The table below provides additional disclosure on revenue by geographical market where the customer is based.

	2009 £000	2008 £000
Revenue by geographical segment
UK	36,648	29,238
Rest of Europe	4,604	2,745
Rest of the World	5,584	3,762
Total revenue	46,836	35,745

3 Exceptional Items

The Group identifies separately items as 'exceptional'. These are items which in the management's judgement, need to be disclosed by virtue of their size or incidence in order for the user to obtain a proper understanding of the financial information.

Exceptional items in the year ended 31 May 2009 were £nil, exceptional items in the year ended 31 May 2008 were costs relating to the move to the London Stock Exchange's Official List on 13 July 2007 (£531,000) and reorganisation costs following the acquisition of Escrow Europe (£180,000).

4 Expenses and auditors' remuneration

	2009	2008
	£000	£000
Profit before taxation is stated after charging/(crediting):
Amounts receivable by auditors and their associates in respect of:
Audit of these financial statements	33	32
Audit of financial statements of subsidiaries pursuant to legislation	23	10
Services relating to corporate finance transactions entered into or proposed to be entered into by or on behalf of the Company or Group	-	115
Depreciation and other amounts written off tangible and intangible fixed assets:
Owned	1,283	1,045
Amortisation of intangible assets	1,237	740
Exchange (profits) / losses	(28)	15
Operating lease rentals charged:
Hire of property, plant and equipment	832	604
Other operating leases	470	420
Profit on disposal of fixed assets	(1)	(5)

5 Staff numbers and costs

The average number of persons employed by the Group during the year, including directors is analysed by category as follows:

	Number of employees
	2009	2008
Operational	93	77
Administration, sales and marketing	259	230
	352	307

The aggregate payroll costs of these persons were as follows:

	2009	2008
	£000	£000
Wages and salaries	19,625	14,315
Share based payments	1,031	742
Social security costs	2,140	1,891
Other pension costs (note 20)	429	324
	23,225	17,272

6 Net financing costs

	2009	2008
	£000	£000
Financial income
Interest on short term deposits	24	78
	24	78
Financial expenses
Interest payable on bank loans and overdrafts	(466)	(269)
Amortisation of deal fees on term loans	(20)	-
Deferred consideration finance expense (see below)	(157)	(333)
	(643)	(602)

The deferred consideration finance expense of £157,000 (2008: £333,000) relates to the acquisition of Next Generation Security Software Limited, Secure Test and Escrow Europe.

Deferred consideration related to the acquisition of subsidiary undertakings has been discounted to present values. The unwinding of the discount has been treated as a finance expense and is analysed in the table below:

Deferred consideration finance expense			2009	2008
			£000	£000
Site Confidence Limited			138	233
Secure Test Limited			16	76
Escrow Europe Holdings B.V.			3	24
			157	333

 The discount rate used was 6.5% (2008: 6.5%). 

The total net present value of the deferred contingent consideration as at 31 May is shown in the following table:

Current liabilities - deferred consideration (note 14)			2009	2008
			£000	£000
Site Confidence Limited			55	3,908
Secure Test Limited			-	1,485
Escrow Europe Holdings B.V.			-	717
Escrow Europe Switzerland A.G.			63	-
Next Generation Security Software Limited			4,421	-
			4,539	6,110

7 Taxation 

Recognised in the income statement

		2009	2008
		£000	£000
Current tax expense
Current year		2,911	2,029
Adjustment to tax expense in respect of prior periods		35	4
Foreign tax		320	(10)
Total current tax		3,266	2,023
Deferred tax		(96)	317
Tax in income statement		3,170	2,340

Reconciliation of effective tax rate

		2009	2008
		£000	£000
Profit before taxation		10,867	8,693
Current tax using the UK corporation tax rate of 28% (2008: 30%)		3,043	2,608
Effects of:
Items not (taxable)/ deductable for tax purposes		52	(257)
Foreign tax		50	(1)
Marginal relief		-	(2)
Difference in tax rates (Deferred tax)		-	(5)
Difference in tax rates (Current tax)		-	(22)
Adjustment to tax charge in respect of prior periods		25	19
Total current tax		3,170	2,340

Deferred tax recognised directly in equity was £143,000 (2008: £294,000)

8 Dividends

	2009 £000	2008 £000
Dividends paid and recognised in the year	2,607	1,817
Dividends proposed but not recognised in the year	2,104	1,596
Dividends per share paid and recognised in the year	7.75p	2.25p
Dividends per share proposed but not recognised in the year	6.25p	4.75p

9 Earnings per share

The calculation of earnings per share is based on the following:

	2009 £000	2008 £000
Profit for the year	7,697	6,353
	Number of  Shares 000's	Number of  Shares 000's
Basic weighted average number of shares in issue	33,653	33,653
Dilutive effect of share options	1,211	1,021
Diluted weighted average shares in issue	34,864	34,674

10 Intangible assets - Group

		Customer contracts and relationships	Goodwill	Total
		£000	£000	£000
Cost
At 1 June 2007		4,214	35,365	39,579
Additions		4,515	8,756	13,271
At 31 May 2008		8,729	44,121	52,850
Additions		1,371	8,042	9,413
At 31 May 2009		10,100	52,163	62,263
Amortisation
At 1 June 2007		277	-	277
Charge for year		740	-	740
At 31 May 2008		1,017	-	1,017
Charge for year		1,237	-	1,237
At 31 May 2009		2,254	-	2,254
Net book value
At 31 May 2009		7,846	52,163	60,009
Net book value
At 31 May 2008		7,712	44,121	51,833

The Group has made two acquisitions in the year, details of which are included in note 13. The Company has no intangible assets.

Goodwill considered significant in comparison to the Group's total carrying amount of such assets have been allocated to cash generating units for the purposes of impairment testing as follows:

	Goodwill
	2009	2008
Cash generating units	£000	£000
Escrow	22,871	22,871
Assurance Testing	2,301	2,301
Consultancy	2,229	2,229
NCC Group plc	27,401	27,401
NCC Group Inc	1,218	1,218
Site Confidence Limited	6,396	6,610
Secure Test Limited	3,351	3,351
Next Generation Security Software Limited	7,338	-
Escrow Europe	6,459	5,541
	52,163	44,121

The cash generating units' recoverable amounts are based on value in use calculations using projections of the Group's future performance reflecting the Directors' best estimates of the cash flows. Key assumptions for the value in use calculations are the discount rates, growth rates and expected changes in revenues and direct costs during the period. Risk adjusted discount factors of 10% (2008: 11.5%) have been applied to the projections. The discount rate has been based on management's calculation of the weighted average cost of capital using the capital asset pricing model to calculate the cost of equity. A range of alpha factors were used to reflect the risk of the cash generating units. The directors do not believe that a reasonably possible change of assumptions would cause the recoverable amounts to fall below book value for any of the cash generating units.

11 Plant and equipment - Group

	Computer equipment	Plant and equipment	Fixtures and fittings	Motor vehicles	Total
	£000	£000	£000	£000	£000
Cost
At 1 June 2007	3,103	405	594	239	4,341
Additions	828	-	480	164	1,472
Acquisition of group companies	115	-	95	-	210
Disposals	-	-	-	(122)	(122)
At 31 May 2008	4,046	405	1,169	281	5,901
Additions	947	-	363	115	1,425
Acquisition of group companies	259	-	7	-	266
Disposals	(2)	-	-	(38)	(40)
At 31 May 2009	5,250	405	1,539	358	7,552
Depreciation
At 31 May 2007	2,144	267	365	83	2,859
Charge for year	757	56	160	72	1,045
Acquisition of group companies	69	-	48	-	117
Disposals	-	-	-	(59)	(59)
At 31 May 2008	2,970	323	573	96	3,962
Charge for year	893	58	259	73	1,283
Acquisition of group companies	197	-	3	-	200
Disposals	-	-	-	(24)	(24)
At 31 May 2009	4,060	381	835	145	5,421
Net book value
At 31 May 2009	1,190	24	704	213	2,131
Net book value
At 31 May 2008	1,076	82	596	185	1,939

The company has no plant and equipment 

12 Trade and other receivables

	Group	Group	Company	Company
	2009	2008	2009	2008
	£000	£000	£000	£000
Trade receivables	11,193	10,235	-	-
Prepayments and accrued income	3,592	2,116	-	-
	14,785	12,351	-	-

13 Acquisitions

A. On 26 November 2008 the Group acquired 100% of the share capital of Next Generation Security Software Limited for a maximum consideration of £10,000,000 of which up to £5,000,000 has been withheld subject to the achievement of performance criteria specified in the purchase agreement. The present value of the deferred consideration on 26 November 2008 was £4,127,000. The performance conditions are required to be satisfied by July 2009.

The acquisition had the following effect on the Group's assets and liabilities:

	Acquiree's  book values	Fair value  Adjustments	Acquisition amounts
	£000	£000	£000
Acquiree's identifiable net assets at the acquisition date:
Plant and equipment	66	-	66
Trade and other receivables	1,554	-	1,554
Tax recoverable	14		14
Deferred tax liability	-	(347)	(347)
Cash	680	-	680
Creditors & Accruals	(963)	-	(963)
Intangible assets purchased	-	1,242	1,242
Net identifiable (liabilities) / assets	1,351	895	2,246
Goodwill on acquisition			7,338
Expected consideration to be paid including expenses			9,584
Less purchase consideration withheld			(4,127)
Net cash outflow			5,457
Cash acquired			(680)
Net cash outflow excluding cash acquired			4,777

Goodwill has arisen on the acquisition because the purchase price exceeds the fair value of the separately identifiable net assets acquired including £1,242,000 assigned to customer relationships, contracts, non-compete agreements and software. Goodwill represents synergies, business processes and the assembled value of the work force including industry specific knowledge and technical skills.  

From the date of acquisition Next Generation Security Software Limited contributed an operating profit before amortisation of intangible assets of £481,000 and revenue of £3,450,000 to the Group consolidated income statement for the year ended 31 May 2009. After amortisation of intangible assets, operating profits were £274,000. 

B. On 1 May 2009 the Group acquired 100% of Escrow Europe Switzerland A.G. for a maximum consideration of £539,000 of which £62,000 was withheld subject to the achievement of performance criteria specified in the purchase agreement.

The acquisition had the following effect on the Group's assets and liabilities.

	Acquiree's  Book values	Fair value  Adjustments	Acquisition amounts
	£000	£000	£000
Acquiree's identifiable net assets at the acquisition date:
Trade and other receivables	35	-	35
Deferred tax liability	-	(36)	(36)
Cash	21	-	21
Creditors and Accruals	(12)	-	(12)
Deferred Income	(70)		(70)
Intangible assets purchased	-	128	128
Net identifiable (liabilities) /assets	(26)	92	66
Goodwill on acquisition			535
Expected consideration to be paid including expenses			601
Less purchase consideration withheld			(62)
Net cash outflow			539
Cash acquired			(21)
Net cash outflow excluding cash acquired			518

Goodwill has arisen on the acquisition because the purchase price exceeds the fair value of the separately identifiable net assets acquired including £128,000 assigned to customer relationships and contracts. Goodwill represents synergies and business processes. 

From the date of acquisition Escrow Europe Switzerland A.G. contributed an operating profit before amortisation of intangible assets of £8,000 and revenue of £12,000 to the Group consolidated income statement for the year ended 31 May 2009. After amortisation of intangible assets, operating profits were £7,000.

C. During the year ended 31 May 2009, payments were made in relation to the settlement of deferred consideration arising on acquisitions completed in prior years. The amounts paid were; £893,000 in relation to the acquisition of Escrow Europe Holdings B.V., £1,500,000 in relation to the acquisition of Secure Test Limited and £3,640,000 in relation to the acquisition of Site Confidence Limited. Additionally a payment of £30,000 was made during the year in relation to the acquisition of the minority interest in Escrow Europe GmbH.

D. If all of the acquisitions had occurred at the beginning of the financial year it is estimated that the consolidated revenue and operating profit for the year ended 31 May 2009 would have been approximately £50.3m and £11.9m respectively.

14 Trade and other payables

	Group	Group	Company	Company
	2009	2008	2009	2008
	£000	£000	£000	£000
Trade payables	1,217	965	-	-
Amounts owed to Group undertakings	-	-	3,714	2,987
Interest payable	3	4	-	-
Non trade payables	1,807	1,655	-	-
Deferred consideration on acquisition of subsidiary (note 6)	4,539	6,110	-	-
Accruals	3,751	2,536	226	172
	11,317	11,270	3,940	3,159

15 Deferred revenue

	Group	Group	Company	Company
	2009	2008	2009	2008
	£000	£000	£000	£000
Deferred revenue	12,406	11,009	-	-
	12,406	11,009	-	-

Deferred revenue of £10,246,000 (2008: £9,043,000) consists of Escrow agreement revenue and maintenance revenue that has been deferred to be released to the income statement over the contract term on a pro-rata basis. 

Deferred revenue of £2,160,000 (2008: £1,966,000) consists of internet monitoring and load testing agreement revenue that has been deferred to be released to the income statement over the contract term on a pro-rata basis. 

16 Non-current liabilities

	Group	Group	Company	Company
	2009	2008	2009	2008
	£000	£000	£000	£000
Unsecured bank loan	9,000	54	-	-
Revolving credit facility	-	-	-	-
Other financial liabilities	76	92	-
Total	9,076	146	-	-
Issue costs	(88)	-	-	-
Amortisation of issue costs	20	-	-	-
Net book value	9,008	146	-	-

Other financial liabilities of £76,000 relates to the balance of a rent free period (2008: £92,000) which is released to the income statement over the term of the lease. 

17 Called up share capital

		Number of shares	2009	2008
			£000	£000
Authorised
Ordinary shares of 1p each		50,000,000	500	500
			500	500
Allotted, called up and fully paid
Ordinary shares of 1p each at the beginning of the year		33,619,440	336	326
Ordinary shares of 1p each issued in the year		45,057	1	10
Ordinary shares of 1p each at the end of the year		33,664,497	337	336

During the year 45,057 shares were issued in relation to the exercise of employee share options for a total consideration of £94,000 settled in cash. 

18 Cash and cash equivalents

	At beginning of year	Cash flow	Non cash  items	At end of year
	£000	£000	£000	£000
Cash and cash equivalents per balance sheet	1,142	2,330	(116)	3,356
Cash and cash equivalents per cash flow statement	1,142	2,330	(116)	3,356

19 Other financial commitments and contingent liabilities

a) Capital commitments at the end of the financial year, for which no provision has been made, are as follows:

			2009	2008
			£000	£000
Contracted			-	57

b) Non-cancellable operating lease rentals are payable as follows:

	2009		2008
	Land and Buildings £000	Other £000	Land and Buildings £000	Other £000
Within 1 year	124	76	84	104
In second to fifth year inclusive	769	223	569	132
	893	299	653	236

There are no contingent liabilities not provided for at the end of the financial year.

20 Pension scheme

The Group operates a defined contribution pension scheme that is open to all eligible employees. The pension cost charge for the year represents contributions payable by the Group to the fund and amounted to £429,000 (2008: £324,000). The outstanding contributions at the year end were £73,187 (2008: £46,870). 

 

END

 

 

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