Acquisition
NCC Group PLC
23 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 Escrow
Solutions, Testing Solutions and Consultancy Services, has acquired the web
assurance performance and monitoring company, Site Confidence Ltd ('Site
Confidence'), for a maximum consideration of up to £9.1m in cash payable in
three stages before June 2008.
The initial payment made on completion of £4.5m, will be supplemented by
payments of up to a £1.0m and up to £3.6m based on the trading performance of
Site Confidence. Adjustments have been made to reflect suitable NCC Group
accounting treatments for revenue recognition, sales commissions and research
and development expenditure, with the impacts being shared between the vendors
and NCC Group. All payments will be made in cash using the Group's cash
reserves or normal debt facilities.
This earnings enhancing acquisition further strengthens the Group's position in
the independent web assurance and IT security market with a complementary range
of web site assurance products and services.
NCC Group has also published its interim results today which show the Group's
revenues up 17% to £11.5m and pretax profit up 23% to £3.2m - see separate
announcement.
Based in Dorking, Surrey, Site Confidence is a leading UK website performance
monitoring company. It provides customers with independent, reliable and
real-time information around the clock in relation to the technical performance
of their web sites, which enables them to detect performance problems, respond
quickly and prevent future slowdowns or outages.
Site Confidence is expected to report approximately £4m of income for the year
ended 31 March 2007, approximately 75% of which is annually recurring revenue.
The contracts for web monitoring are normally on an annual basis, whilst load
testing is on an agreed usage basis. Web monitoring contracts are renewed
typically in 90% of cases and often with some additional services.
As part of the integration process, Site Confidence will adopt the NCC Group
accounting policies in full. The changes to accounting policies were made on
completion and the adjustments required have been made by way of a fair value
adjustment. The business is expected to report a small profit in the remainder
of NCC Group's financial year ending 31 May 2007, with the next financial year
seeing a stronger profit performance.
The Board of NCC Group expects that the business should contribute about £0.8m
of profits for its first full year of NCC Group ownership, before any
investment. The business is net working capital positive on acquisition.
Online consumer demand is driving the need for all online retail and marketing
to have the strongest, fastest and most robust web capabilities in an
increasingly competitive market. Increasingly, site managers and owners need
independent assurance that their online image and capabilities meet, if not
exceed, consumer expectations.
The operation will be managed autonomously, but as part of the Group's Testing
Assurance division, will develop close links with the rest of the business and
in particular it will benefit from its relationship with the Group's web
Penetration Testing operation. The company will trade as 'Site Confidence, an
NCC Group company.'
The business has over 400 blue chip clients, including Norwich Union, Marks &
Spencer, Experian, John Lewis and First Choice. Direct cross selling
opportunities will be developed.
With the acquisition of Site Confidence, NCC Group sees excellent opportunities
to provide an additional Escrow Solutions sales centre in the South of England
as well as the base for another penetration testing facility. The Group plans
to recruit extensively in the South of England using the Site Confidence offices
as a hub for both testers and sales resource. This will significantly help
recruitment process and enhance the Group's growth prospects in the medium term.
Site Confidence management team are staying with the business and NCC Group look
forward 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 Testing
Solutions operation; providing clients with an independent, expert assessment
and clear, unbiased recommendations ensuring optimum performance is achieved and
maintained going forward.
'It has developed strong long-term client relationships, which complement our
successful 'trusted advisor' strategy. This is an exciting earnings enhancing
addition to the Group, which will also provide us with cross selling
opportunities 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 Exchange
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