23rd Jan 2007 07:01
NCC Group PLC23 January 2007 23 January 2007 NCC Group plc £9.1m acquisition of web assurance business NCC Group plc ("NCC Group", AIM: NCC), the independent provider of EscrowSolutions, Testing Solutions and Consultancy Services, has acquired the webassurance performance and monitoring company, Site Confidence Ltd ('SiteConfidence'), for a maximum consideration of up to £9.1m in cash payable inthree stages before June 2008. The initial payment made on completion of £4.5m, will be supplemented bypayments of up to a £1.0m and up to £3.6m based on the trading performance ofSite Confidence. Adjustments have been made to reflect suitable NCC Groupaccounting treatments for revenue recognition, sales commissions and researchand development expenditure, with the impacts being shared between the vendorsand NCC Group. All payments will be made in cash using the Group's cashreserves or normal debt facilities. This earnings enhancing acquisition further strengthens the Group's position inthe independent web assurance and IT security market with a complementary rangeof web site assurance products and services. NCC Group has also published its interim results today which show the Group'srevenues up 17% to £11.5m and pretax profit up 23% to £3.2m - see separateannouncement. Based in Dorking, Surrey, Site Confidence is a leading UK website performancemonitoring company. It provides customers with independent, reliable andreal-time information around the clock in relation to the technical performanceof their web sites, which enables them to detect performance problems, respondquickly and prevent future slowdowns or outages. Site Confidence is expected to report approximately £4m of income for the yearended 31 March 2007, approximately 75% of which is annually recurring revenue.The contracts for web monitoring are normally on an annual basis, whilst loadtesting is on an agreed usage basis. Web monitoring contracts are renewedtypically in 90% of cases and often with some additional services. As part of the integration process, Site Confidence will adopt the NCC Groupaccounting policies in full. The changes to accounting policies were made oncompletion and the adjustments required have been made by way of a fair valueadjustment. The business is expected to report a small profit in the remainderof NCC Group's financial year ending 31 May 2007, with the next financial yearseeing a stronger profit performance. The Board of NCC Group expects that the business should contribute about £0.8mof profits for its first full year of NCC Group ownership, before anyinvestment. The business is net working capital positive on acquisition. Online consumer demand is driving the need for all online retail and marketingto have the strongest, fastest and most robust web capabilities in anincreasingly competitive market. Increasingly, site managers and owners needindependent assurance that their online image and capabilities meet, if notexceed, consumer expectations. The operation will be managed autonomously, but as part of the Group's TestingAssurance division, will develop close links with the rest of the business andin particular it will benefit from its relationship with the Group's webPenetration Testing operation. The company will trade as "Site Confidence, anNCC Group company." The business has over 400 blue chip clients, including Norwich Union, Marks &Spencer, Experian, John Lewis and First Choice. Direct cross sellingopportunities will be developed. With the acquisition of Site Confidence, NCC Group sees excellent opportunitiesto provide an additional Escrow Solutions sales centre in the South of Englandas well as the base for another penetration testing facility. The Group plansto recruit extensively in the South of England using the Site Confidence officesas a hub for both testers and sales resource. This will significantly helprecruitment process and enhance the Group's growth prospects in the medium term. Site Confidence management team are staying with the business and NCC Group lookforward to benefiting from their technical and market experience. Rob Cotton, NCC Group Chief Executive, said: "Site Confidence follows the same key principles as our existing TestingSolutions operation; providing clients with an independent, expert assessmentand clear, unbiased recommendations ensuring optimum performance is achieved andmaintained going forward. "It has developed strong long-term client relationships, which complement oursuccessful 'trusted advisor' strategy. This is an exciting earnings enhancingaddition to the Group, which will also provide us with cross sellingopportunities and a geographical hub in the South for all our businesses." Enquiries: NCC Group (www.nccgroup.com) Today 020 7457 2020 Rob Cotton, Chief Executive Thereafter 0161 209 5432/5200 Paul Edwards, Group Finance Director College Hill Adrian Duffield/Corinna Dorward 020 7457 2815/2803 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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