NCC Group, has had a positive start to FY12, despite the testing economic climate. The acquisitive testing and escrow provider says that in the first four months (i.e. June to mid-Oct) it managed growth in both its escrow and testing operations. So, at this early stage, everything’s nicely in line and it expects to deliver “good levels of growth and profitability” for the year to May 2012.
Three indicators stand out. Firstly, organic growth in the first four months was 19% (with headline growth including the impact of NCC’s multiple acquisition at 33%). That’s a strong performance, albeit over a short period, but nonetheless it’s up on the 12% organic growth the company returned in FY11. The main driver, not surprisingly, was testing, with 27% organic growth. This suggests the £30m spent on acquiring iSEC and SDLC during 2010 is bringing in a healthy amount of organic growth. Ethical testing has seen particularly strong demand.
Secondly, we’ve heard previously how attracting and retaining quality testing staff is a key constraint on growth at NCC. The good news is that the company is currently ahead of recruitment targets, while testing staff attrition so far this FY stands at just 2%. It’s entirely plausible that NCC has become something of a “go-to” firm for testing experts thanks to its recent acquisitive growth and its prominent position in the markets on both sides of the Atlantic.
Finally, we’ve written before (see SDLC still testing NCC) of the negative impact of the SDLC acquisition on NCC’s margins and of the need for the company to address this quickly. Today’s statement tells us that “expected margin improvements” at SDLC are being achieved. We’ll look forward to more detail on that key point when the company releases its first half results in January.
