REG - Kelso Group Holdings - Further investment in NCC Group Plc

Kelso groupAnnouncement

30/04/2024 07:15

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RNS Number : 4952M  Kelso Group Holdings PLC  30 April 2024

30 April 2024

 

Kelso Group Holdings Plc ("Kelso" or the "Company")

Further investment in NCC Group Plc ("NCC")

 

Kelso, the main market listed acquisition vehicle, makes the following
announcement regarding its investment in NCC alongside Kelso's annual results
which were also announced this morning.

Kelso announces that it has purchased a further 700,000 ordinary shares in NCC
following our initial purchase of shares in October 2023. This purchase takes
Kelso's total holding to 2.2m shares at an average cost price of 117p. NCC's
has two principal businesses, namely in software escrow (Escode) and the other
in cyber security, each of which operate independently. Software escrow is the
process whereby companies protect the core code of their business software
provided by a third party in the event of the software supplier becoming
insolvent or failing to deliver on its contract. Software escrow is
increasingly becoming part of regulators requirements.

In our view, the value of the Escode division has historically not been fully
appreciated.  The NCC capital markets presentation on 25 April 2024 at the
London Stock Exchange was well attended and gave the investment community much
greater insight into the potential of the business.

Escode is the global market leader in software escrow with over 14,000 clients
including c.57% of the Fortune 500 and c.40% of the Forbes 2000.  It had
revenue in 2023 of £64.3m with EBIT of £30.8m. With its market leading
position, first rate client retention rates and long term contracts, Escode
has extremely high quality earnings. Coupled with steady industry growth,
principally driven by regulatory change in particular in the finance and
infrastructure markets, we believe this makes Escode a highly valuable
business.

We look forward to attending the Cybersecurity capital markets day on 20 June
2024 which we expect will be equally informative. The Cybersecurity division
had revenue to 31 May 2023 of £270.8m and EBIT of £6.9m (2022:  £31.9m)
following a pull back in the market. In January 2024, NCC reported its interim
results which were in line with market expectations and as such this gives
confidence that the turnaround is gathering pace.

Kelso believes that the sum of the parts of NCC is significantly greater than
the current market capitalisation. We applaud management's clarity and initial
execution of its strategy and for the significant effort made to include and
educate its existing and new shareholders at the capital markets day.

 

John Goold, CEO of Kelso, commented:

"Well executed capital markets days are a vital part of any listed company's
investor relations strategy, allowing holders and non-holders to deepen their
knowledge. Last week's presentation of Escode allowed investors to hear from
the senior management within the business and also one long term customer,
NatWest Bank. We look forward to the Cybersecurity division capital markets
day in June."

 

For further information please contact:

 Kelso Group Holdings plc                      +44 (0) 75 4033 3933
 John Goold, Chief Executive Officer

 Mark Kirkland, Chief Financial Officer

 Jamie Brooke, Chief Investment Officer
 Zeus (Broker)                                 +44 (0) 20 3829 5000
 Nick Cowles, Ed Beddows (Investment Banking)

 Ben Robertson (Corporate Broking)

 

About Kelso

Kelso was established in November 2022 to identify, engage and unlock trapped
value in the UK stock market. Kelso's strategy is to invest in situations
where there is an anomaly between the intrinsic value and prospects of a
company and its stock market valuation. Kelso will, in particular, look for
situations where it believes the sum of the parts of a business is greater
than the current value.

 

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