NCC Group PLC
09 May 2006
NCC GROUP
YEAR END TRADING UPDATE
NCC Group plc, a leading independent provider of IT assurance, security and
consultancy services, is publishing today a trading update covering the period
since the Group announced its interim results on 23 January 2006. The Group's
year end is 31 May 2006.
The Group's overall trading performance during the second half of the year has
been good, in line with the Board's expectations, showing strong organic growth
in both revenue and profit together with good cash generation. The year as a
whole has seen a difficult trading environment, with the H1:H2 split of profits
for the year ending 31 May 2006 expected to be 40:60 and in line with the
consensus range of the market. The Board's expectation for the Group's further
progress remains unchanged for the next financial year.
The Escrow division continues to perform strongly. Annual renewals for the 2006
/2007 financial year are expected to be £8.1 million, up from £7.1 million for
the year to 31 May 2006. The number of beneficiaries to NCC Group escrow
agreements now exceeds 13,200 up from 12,800 in January 2006, and the average
number of agreements per customer has increased to 2.0 (1.9 in January 2006.)
Board expectations for contract terminations continue to be below 11%, against
the planned for rate of 13%.
The Group has seen very encouraging performances from both its German and US
subsidiaries. The Escrow sales model has been trialled, refined and implemented
in Germany and the Board is confident that it will prove successful. The US
business, acquired December 2005, has been successfully integrated. The Board
sees a good opportunity to invest in an account management model to grow the
customer and renewal base in the US. The US renewal base is likely to be in
excess of $1.2 million in this financial year.
The Testing Solutions division order book continues to develop and now stands at
£2.0 million (£1.5 million in May 2005) in line with the Board's expectations.
The demand for Escrow Verification Testing continues to grow, with a strong
renewal trend by customers to re-verify their applications as they are upgraded.
The Penetration Testing unit has continued to grow strongly as corporate network
and electronic trading security continues to be a major boardroom issue.
Additionally, the Group has benefited from the increasing importance being
placed on the independent specialist testing of applications' performance and
load capacity as companies recognise that this is as critical as the capability
of the software.
The Consultancy division has returned to profitability, as expected, and
although the climate remains tough, the order book continues to develop and now
stands at £1.4 million (£1.3 million in May 2005.) The first four months of the
Group's financial year are traditionally the quietest for this business. The
competitive nature of consultancy has been further exacerbated by the
increasingly complex procurement processes adopted by local and central
government.
The Group continues to generate cash strongly. The Board expects the Group to
be cash positive at the end of the financial year even after accounting for the
cost of the US acquisition from £1.5 million net cash positive as at 30 November
2005.
The Group expects to report its preliminary results for the year to 31 May 2006
in mid-July 2006.
Tuesday 9 May 2006
Enquiries:
NCC Group (www.nccgroup.com) 0161 209 5432
Rob Cotton, Chief Executive
Paul Edwards, Group Finance Director
College Hill
Adrian Duffield/Corinna Dorward 020 7457 2020
This information is provided by RNS
The company news service from the London Stock Exchange
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