Interim Management Statement

RNS Number : 9475O

NCC Group PLC

18 October 2012

 



18 October 2012

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 to 17 October 2012, covering the trading period from 1 June to 30 September 2012.

In the first four months of the financial year, Group revenues are 7% ahead of the same period last year at £29.6m (September 2011: £27.5m).  Excluding the positive effects of an unusually large one-off operational response contract in the Assurance division in the first four months of last year, the underlying growth is 13%.

Rob Cotton, Group Chief Executive, comments:

"We have continued to trade well, in our traditionally quietest quarter and are on course to deliver strong levels of growth and profitability, in line with our expectations for the financial year to 31 May 2013.

"The two acquisitions completed during the summer in New York have further widened and strengthened our US information security capability.  With our Escrow business showing solid growth and the continued strong demand for all aspects of information security, we remain well positioned to maintain our long term, sustained growth."

Group Escrow continues to perform well.  Organic revenue grew by 3% in the period (September 2011: 5%) and Group Escrow renewals are now forecast to be £17.9m for the current financial year (September 2011:  £17.1m.) 

The global verification order book continues to be solid, with good prospects coming through in the US and stands at £2.1m (October 2011: £1.8m.) 

Group Escrow termination rates continue to remain below 12% for contracts (September 2011: 12%).

Escrow UK, the cornerstone of the NCC Group, has seen expected revenue growth levels at 4% (September 2011: 5%) with the verifications order book standing at £1.6m (October 2011: £1.4m.)

In North America revenue grew by 6% (September 2011: 5%) in the period despite the disruption caused by changing the management of the two escrow operations.  The benefits of these changes will be seen during the remainder of the year.

In continental Europe, the smallest part of the Escrow Division, revenue fell by 7% in the period (September 2011: 4% increase) as the disruptions caused by the management changes over the last 12 months were deeper than expected.  The new management structure and sales team have started to make progress in developing the business. 

The Assurance division continues to perform strongly with a 10% increase in revenue (September 2011: 46%), of which 5% was organic growth.  In the same four months last year, the Group benefited from a substantial one-off operational response contract.  Stripping out this contract, the underlying revenue growth is 18% or 13% from organic growth (September 2011: 27%.)

The integration of Matasano and Intrepidus, acquired on 2 August 2012 and 20 August 2012 respectively, has already made very good progress in areas of research and development. 

Research is crucial to the Group as it ensures that NCC Group stays ahead in the ever increasing arms race by discovering new vulnerabilities and weaknesses as well as developing innovative tools such as the recently launched DDoS Secure service.

The challenges for both of these two businesses are the same as for the whole of the Assurance division, the recruitment and retention of the highest quality testers.  The Group is confident that the newly acquired businesses will benefit from its approach to both these areas.  Staff turnover for testers in the whole Assurance division remained at very low at 2%.

The Group's load and performance testing unit saw a 14% growth in contract revenues and continues to achieve monitoring renewal rates of better than 90%.  The renewals base is valued at £6.2m for the year ended 31 May 2013 (September 2011: £5.0m.) 

The application for the .secure gTLD, through Artemis, the Group's subsidiary formed specifically for this process, is still with ICANN.  Currently it is thought that the initial evaluation of applications will completed between March and June next year, with those in contention starting the process of resolution after the evaluations are complete. The level of interest in providing the service to major customers continues to grow and the Group remains confident in its planned investment.

The Assurance Division's overall combined order book and renewals base currently stands at £26.7m (October 2011: £23.5m) including the Testing businesses combined order book of £20.5m (October 2011: £18.5m). 

After the initial payments for the acquisition of Matasano and Intrepidus, the Group's net debt is £31.7m (October 2011: £26.7m) against the revolving credit facility of £35m and additional £5m overdraft facility. 

Discussions continue with the system providers and lawyers over the failed Group wide IT system as the Group follows the contractual steps before commencing legal action. 

The Group expects to report its interim results for the six months to 30 November 2012 on Thursday 17 January 2013.

Enquiries:

NCC Group  (www.nccgroup.com)	0161 209 5432
Rob Cotton, Chief Executive
Atul Patel, Group Finance Director
College Hill
Adrian Duffield/Rozi Morris	020 7457 2020

 

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