NCC’s trading update last week highlighted both the continued strength in the group’s core businesses and the margin drag from recent acquisitions. Escrow is trading well, with all geographies now on an upward trend, while demand for cyber consulting remains strong. We are upgrading our revenue forecasts for the year to May’16 but the higher mix of low margin Accumuli and increased Domain Services losses reduces our adj. PBT forecast by 3%. Net debt is slightly higher than expectations but the group has plenty of headroom for further acquisitions. Trading on 16.0x Dec’16 EV/EBITDA, we believe the upside from further bolt-on acquisitions is already in the price. We leave our target price unchanged at 285p. Hold.
