9th May 2006 07:00
NCC Group PLC09 May 2006 NCC GROUP YEAR END TRADING UPDATE NCC Group plc, a leading independent provider of IT assurance, security andconsultancy services, is publishing today a trading update covering the periodsince the Group announced its interim results on 23 January 2006. The Group'syear end is 31 May 2006. The Group's overall trading performance during the second half of the year hasbeen good, in line with the Board's expectations, showing strong organic growthin both revenue and profit together with good cash generation. The year as awhole has seen a difficult trading environment, with the H1:H2 split of profitsfor the year ending 31 May 2006 expected to be 40:60 and in line with theconsensus range of the market. The Board's expectation for the Group's furtherprogress 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 forthe year to 31 May 2006. The number of beneficiaries to NCC Group escrowagreements now exceeds 13,200 up from 12,800 in January 2006, and the averagenumber of agreements per customer has increased to 2.0 (1.9 in January 2006.) Board expectations for contract terminations continue to be below 11%, againstthe planned for rate of 13%. The Group has seen very encouraging performances from both its German and USsubsidiaries. The Escrow sales model has been trialled, refined and implementedin Germany and the Board is confident that it will prove successful. The USbusiness, acquired December 2005, has been successfully integrated. The Boardsees a good opportunity to invest in an account management model to grow thecustomer and renewal base in the US. The US renewal base is likely to be inexcess 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 strongrenewal trend by customers to re-verify their applications as they are upgraded. The Penetration Testing unit has continued to grow strongly as corporate networkand electronic trading security continues to be a major boardroom issue.Additionally, the Group has benefited from the increasing importance beingplaced on the independent specialist testing of applications' performance andload capacity as companies recognise that this is as critical as the capabilityof the software. The Consultancy division has returned to profitability, as expected, andalthough the climate remains tough, the order book continues to develop and nowstands at £1.4 million (£1.3 million in May 2005.) The first four months of theGroup's financial year are traditionally the quietest for this business. Thecompetitive nature of consultancy has been further exacerbated by theincreasingly complex procurement processes adopted by local and centralgovernment. The Group continues to generate cash strongly. The Board expects the Group tobe cash positive at the end of the financial year even after accounting for thecost of the US acquisition from £1.5 million net cash positive as at 30 November2005. The Group expects to report its preliminary results for the year to 31 May 2006in 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 ExchangeRelated Shares:
Ncc