3rd Jan 2006 07:27
NCC Group PLC03 January 2006 NCC Group PLC Acquisition of US escrow software business NCC Group plc ("NCC Group"), the independent provider of IT assurance, securityand consultancy services, has acquired the US based software escrow solutionsbusiness of Recall Total Information Management Inc. ("Recall"), a subsidiary ofBrambles Industries plc, for a maximum consideration of $5.4million (£3.0million) in cash. Based in San Jose, California, Recall's software escrow business principallyfocuses on the provision of escrow solutions to software vendors and softwarecustomers, both on the West Coast and throughout the US. Since its formation in1984, the business has successfully established itself as a leading supplier ofescrow solutions in the US and is one of the top five providers in the market. The business is expected to report revenues of $1.45 million, including in theregion of $1.1 million of annual recurring revenues, in the year to 31 December2005. It is anticipated that the business will contribute over $750,000(£425,000) of profits for a full year, before investment by NCC Group. Thebusiness is net working capital neutral on acquisition. The acquisition of the US business marks a significant move for NCC Group as itlooks to take its successful escrow business template outside the UK andcontinental Europe and into the US. NCC Group believes that the model in the USis different from the UK where there is less active selling but a higher demandfor the service. NCC Group's experience of US clients, serviced out of the UK, is that theyrespond extremely well to its account management approach which in turn leads totremendous opportunities to sell in high value verification services as has beenwitnessed by the Group's success in the UK. NCC Group will be implementing theaccount management and verification testing models into the US during 2006. Inaddition NCC Group will be improving the product offering in the US and will beinstituting integrity testing of all code to further add value to theproposition sold. The software escrow business is a more widely established concept in the US thanin the UK and continental Europe. Although there are a number of operators, themarket is fragmented with plenty of growth potential, particularly in the fieldof verification testing and providing services to licensees, areas of notablestrengths for NCC Group. The existing local management team will stay with the business with NCC Groupbenefiting from their US market experience. NCC Group expects to publish its Interim Results for the six months to November2005 during the week commencing 23 January 2006. Rob Cotton, NCC Group Chief Executive, said: "The Recall Escrow Solutions business has the same basic ingredients as ourbusiness model did five years ago. Our experience of developing the UK marketcombined with a solid renewals base in the US provides us with the idealopportunity to establish a credible presence in the US market. We have provenexpertise of not only exploiting verification testing to complement our escrowcontracts income but targeting licensees of software to further improvepenetration. This is an exciting prospect for the Group, which we expect willbe earnings enhancing within 2006." 3 January 2006 Enquiries: NCC Group (www.nccgroup.com) 0161 209 5432 Rob Cotton, Chief Executive Paul Edwards, Group Finance Director College Hill Adrian Duffield/Clare Warren 020 7457 2815/2055 Note to editors Software escrow A software escrow agreement is a contract made between three parties: thesoftware vendor (the licensor), the software customer (the licensee) and anindependent third party (the escrow agent, such as NCC Group). Under the termsof the agreement, the licensor agrees to send a copy of the source code to theescrow agent and the escrow agent agrees to hold the source code securely, andto release it to the licensee only in the event of certain predefined triggerevents. These include the insolvency of the licensor or its failure to providesupport services as defined in the software license agreement. Source code is one of two software application codes. It is the humanlyreadable version of the software written in a computer programming languageintelligible to the software engineer. The software vendor almost alwayswithholds the source code from users as access to it could enable the creationof a competing product. The source code is essential in rectifying any problemsarising with the software application. Verification testing Verification services are designed to provide customers with an increasing levelof assurance, over and above that which they receive through the basic integritytesting included within escrow solutions agreement, ensuring that the softwaresource code held in escrow is correct and complete, should a trigger eventoccur. Within NCC Group's offerings, different levels of verification are availabledepending on customer requirements. For example, under its most popular fullverification service, NCC Group, with the consent and support of the licensor,compiles the source code and builds it into the licensee's application. Thelicensee would then test the escrow-built application to ensure it is fullyfunctional and correct. A full report of the process is sent to both thelicensee and the licensor. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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