Norcon raises £4.5 mln in support of organic growth

Norcon (AIM: NCON) announced the completion of a placing to raise approximately £4.5 million before expenses, and plans to use the money for the pursuit of further organic growth opportunities. 

The news comes only a day after the communications networks specialist reported a strong set of results for the year ended 31 December 2009.  The company achieved  16 percent revenue growth from a year earlier to US$78.2 million while net profit increased by 20 percent to US$7.7 million.

Norcon will issue 6,160,954 new ordinary shares, representing 12.8 percent of the enlarged share capital, in two tranches: the new shares cum dividend will be issued at a price of 75 pence per share on 29 March, representing a discount of 3.2 percent to the closing price on AIM on 23 March 2010, and the new shares ex-dividend will be issued at 70 pence per share on 9 April, representing a discount of 9.7 percent to the closing price on AIM on 23 March 2010.

CEO Arnold Rørholt has subscribed for 66,667 new shares cum dividend, increasing his holding to 2,483,334 shares representing 5.2 percent of the enlarged share capital. He commented:  "We are very pleased to have completed our placing.  This provides us with additional working capital with which to pursue new client engagements and also serves as a vote of confidence from investors in our strategy. The placing, in line with our stated commitments, increases free float and trading liquidity in Norcon shares."

Norcon has been a consultant and project manager for more than 50 years to the private sector and various government agencies.  These organisations rely on Norcon to select, implement and maintain a communication infrastructure that supports the critical needs of their operations.

In yesterday’s results statement, Norcon said its performance in the full year was driven by strong demand for its services, and supported by its existing relationships with core customers, with client retention rates remaining above 90 percent.

The company also highlighted its consistently strong performance over recent years, noting its five year (2005-2009) compound annual growth rates for revenue and net profit, of 14.5 percent and 35.3 percent respectively.

The latest fundraising supports the group’s stated strategy of growing its long-term outsourcing and project management business organically, with a focus on client retention and new contract wins in new territories.  Norcon continues to look at opportunities in Southeast Asian and African regions, as well as in Scandinavia.

The company recently re-established an active office in Scandinavia, which is expected to evolve over time into a regional sales base. According to Norcon, Nordic countries remain at the forefront in rolling out the newest technology, and the company said it is targeting particular opportunities in Norway, Sweden and Denmark. In the Sweden and Norway, mobile network operators launched the new 4G network recently, and the network’s roll-out is planned throughout the region.

Looking ahead, Norcon said it has a good level of visibility over its target 2010 revenues and also for the following one to two years.  The company noted an increase in its potential product pipeline, which it believes bodes well for the future, and it has seen an increasing number of requests for its services.

http://www.proactiveinvestors.co.uk/companies/news/14787/norcon-raises-45-mln-in-support-of-organic-growth--14787.html