System implementation update

31 May 2012

NCC Group

System implementation update

NCC Group plc (LSE: NCC or "the Group"), the international, independent provider of Escrow and Assurance, has reverted to its former Group-wide IT solution with immediate effect due to operational problems with its new system which was being installed. This has not had any impact on trading which remains in line with the Group's IMS statement on 17 April 2012. However, it will result in a one-off, mostly non-cash charge, of £6.9m in the financial year to 31 May 2012.

In 2009 NCC Group, after an extensive procurement process, selected a technology supplier to specify, install and implement a fully integrated solution across the whole Group. The new system was intended to provide a complete integrated solution for all the Group's business processes as well as a systems backbone for NCC Group as it grew organically and by acquisition, both in Europe and North America.

The new system was implemented in the UK Escrow business and in the finance department in March 2012, following a protracted period of extensive testing. A pilot project was also introduced into a small part of the Assurance division.

Since going live the new system has caused significant disruption across the whole Group that unless addressed, was going to impair business efficiency despite comprehensive efforts to make the solution work. Furthermore, there is now no prospect of an integrated solution being delivered for the Assurance division to meet its essential resource scheduling requirements.

Therefore the Board has now decided to revert back to the previous Group-wide IT system, while it determines whether the issues can be satisfactorily remedied.

Given the substantial investment in time and resources, the Board has written off the £6.9m cost of the new system in the financial year to 31 May 2012. This figure includes the expected £0.9m cash cost of the reversion back to the old system, over the next three months.

Rob Cotton, Group Chief Executive, comments:

"This is a very frustrating position to be in - we have invested considerable amounts of time and resource into the new system but have had to take the hard decision to revert to our old system as the new simply wasn't measuring up to our needs.

"This decision has no bearing on our day to day trading; indeed we are on course to close the year today absolutely in line with our expectations, as stated in our IMS."

There will be an analyst conference call at 8.30am, please contact Lucy Moseley at [email protected] or on +44 (0)20 7457 2020 for details.

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