NCC GROUP PLC — Annual Report 2015

May 31, 2015

NCC GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MAY 2015

2015 Performance Highlights	4
About NCC Group	6
Chairman's Statement	10
Strategic Report	14
- Our Strategy	14
- Business and Financial Review for 2015	22
- Principal Risks and Uncertainties	30
Corporate Social Responsibility	34
- Stakeholders	36
- Environment and Sustainability	39
Governance Statements	42
- Board of Directors	42
- Directors Report	46
- Corporate Governance Report	54
- Audit Committee Report	60
- Nomination Committee Report	68
- Remuneration Committee Report	70
Financial Statements	94
- Statement of Directors' Responsibilities	94
- Independent Auditor's Report to the Members of NCC Group plc	96
- Consolidated Group Financial Statements	100
- Notes to the Financial Statements	108
Company Information	150
Locations	152

HIGHLIGHTS

Financial

21%

Group revenue increased by 21% (2014: 12%) to £133.7m (2014: £110.7m) – organic growth of 18% (2014: 12%)

Escrow revenue grew by 5% to £32m (2014: 7%)

Assurance up by 21% to £97m (2014: 13%), organic growth up 18% (2014: 13%)

£26.4m

Adjusted Group operating profit* £26.4m (2014: £26.0m)

Escrow and Assurance – combined operating profit up 11% to £33.1m (2014: £28.1m) including central costs

Domain Services operating expenditure of £4.9m (2014: £2.1m)

£22.6m

Group reported operating profit £22.6m (2014: £24.1m)

£25.5m

Group adjusted pre-tax profit* £25.5m (2014: £25.3m)

9.4p

Adjusted fully diluted earnings per share 9.4p (2014: 9.3p)

14%

Total dividend up 14% to 3.98p (2014: 3.5p)

* Operating profit and margin is adjusted for amortisation of acquired intangibles of £2.2m (2014: £2.1m), exceptional items of £0.6m loss (2014: £1.3m profit) and share-based payment charges of £1.0m (2014: £1.1m). Pre-tax profit is adjusted for these items and the unwinding of the discount on the acquisitions' contingent consideration of £0.3m (2014: £0.1m).

Operational

Accumuli plc

Accumuli plc acquired 30 April 2015 – substantially strengthens security capabilities

1,388 employees

Employee numbers increased by 40% to 1,388 worldwide

Domain services

Domain Services transformed:

• .trust acquired and launched as a secure gated community
• Compensation received for withdrawal of .secure domain application
• Open Registry acquired in January 2015
• Division now provides an end-to-end, secure total domain solution

Outlook for 2015/2016

Global reach

Group's global reach and product range provides a platform for sustained long term growth and value

£62.7m

Total of Group's renewal forecasts and order book up 18% to £62.7m (2014: £53.0m)

ABOUT NCC GROUP

NCC GROUP IS A GLOBAL INFORMATION ASSURANCE SPECIALIST PROVIDING ORGANISATIONS WORLDWIDE WITH AN UNRIVALLED SUITE OF EXPERT ESCROW, SECURITY AND RISK CONSULTANCY, WEBSITE PERFORMANCE, SOFTWARE TESTING AND DOMAIN SERVICES.

The Group provides organisations with the peace of mind that their most important assets are protected and operating as they should be at all times by delivering an end-to-end information security solution.

As the technology revolution continues to outpace the ability of organisations to cope with the plethora of security, performance and availability issues, NCC Group is one of the best-placed operations to help address and manage the risk as well as limit the threat.

NCC Group is passionate about changing the shape of the Internet to make it safer. It has the expertise, knowledge and experience as well as a global footprint to provide the capability to achieve this. The organisation is committed to ensuring that clients have access to the right total information assurance solution that works for them.

NCC Group operates three distinct but complementary divisions, NCC Group Escrow, NCC Group Assurance and NCC Group Domain Services, from 30 offices across the UK, continental Europe, North America and Australia. It provides comprehensive end-to-end information assurance for more than 15,000 organisations worldwide.

ABOUT NCC GROUP

NCC Group Escrow

Organisations rely on third party supplied applications and software packages every day to carry out key business functions and processes. These applications allow them to operate more effectively and efficiently and to produce high quality, innovative products and services. However, if a software or Software as a Service ('SaaS') supplier goes out of business and/or changes hands, the continuing availability of these applications could be in doubt and business continuity is at risk.

NCC Group's escrow and verification services assure the long-term availability of these applications, protecting both end users and software suppliers. Working with all parties involved in the development, supply and use of business critical software applications, NCC Group assures that source code, data and other information is constantly accessible and can be properly rebuilt from its components if required.

The Group is one of the world's leading and most established software escrow providers, with more than 30 years' experience and protects over 15,000 organisations worldwide with the most comprehensive escrow solutions available. The expertise contained within the Escrow Division, along with its credentials, offerings, global scale and reputation is unparalleled.

NCC Group Assurance

Security Consulting.

The cyber landscape presents an ever increasing and ever changing threat to security as cyber intruders develop increasingly sophisticated ways to attack corporate networks, thereby gaining access to organisations' sensitive and valuable data.

The Group has a range of complementary services including expert security assurance and penetration testing, forensics, incident response, compliance advice, vulnerability research along with logical and physical audits. These considerable capabilities enable the Group to help organisations strengthen their position in the cyber arms race by assisting them in identifying risk and formulating a robust security strategy.

NCC Group has one of the world's largest security consulting teams. It delivers over 112,000 testing days per year to organisations worldwide. The Group's global presence offers clients skilled and experienced expert services, complemented by a world-renowned research team.

With the recent addition of Accumuli, the Group is expanding these services further. The Group is now able to provide 24 hour, 365 days, frontline support to major organisations as well as steering them through the myriad of different security and data products that are available and suitable for their needs.

Website Performance & Load Testing.

Essential websites, software and infrastructure that support an organisation do not just need protection from malicious attacks, they also need guaranteed performance levels. Flaws in code can prevent software from operating at optimum level and spikes in online traffic can throw websites offline.

Currently NCC Group tests more than six million web pages for clients worldwide annually.

NCC Group Domain Services

The Domain Services division provides a range of products, managed services and automated tools in order to offer a total solution for organisations to manage their web estate and to provide safety and security to their customers.

The management and control of corporate names' and their brands' Top Level Domains (TLDs) is in a state of considerable flux and confusion. In order to foster innovation and competition, the Internet Corporation for Assigned Names and Numbers (ICANN) is currently operating a programme to add thousands more TLDs over the next several years.

The majority of these new domains will be used to categorise companies and individuals into physical locations, industry segments or personal interests. Examples of applied for domains include .blog, .bank, .nike and .web.

The current TLD programme increases the diversity of the Internet's infrastructure and creates opportunities for entrepreneurs. However, it also poses serious challenges to the security of brand owners, Internet sites and consumers, creating intellectual property and security issues as criminals looking for sensitive information are motivated to break the system through phishing and impersonation attacks.

Once ICANN completes the delegation of the remaining new domains and these go live, it is expected that it will initiate another domain name registration process. This is expected to happen in 2017 and there is likely to be a rush by brand-centric and security-savvy companies to apply for more domains.

The Group, with the addition of the Open Registry, now has the capability to offer a total solution to cover an organisation's entire Internet needs, from the application for TLDs to managing their own branded domain presence and their domain estate. The Group has also newly launched its complementary safe neighbourhood or 'gated community' on the Internet, .trust and a Continual Monitoring Service (CMS).

A client who uses the Group's CMS for its own branded domain must adopt the highest appropriate security practices and protocols to ensure that both their own and their customer data and transactions are safe. These policies, which were created in conjunction with over 30 of the world's most important Internet founders, financial, retail and social media operators are aimed at creating a seamless and safe experience, once a user decides to browse or email a .trust or CMS secure domain.

This total offering is unique. It allows domains managed by NCC Group Domain Services or organisations in .trust to provide a safer, more trustworthy Internet for all. User uncertainty is completely removed by using .trust or the closed branded domains, as it guarantees the website can only be owned, operated and controlled by the organisation the user or customer believes it to be.

CHAIRMAN'S STATEMENT

Results and strategic progress

I am yet again delighted to set out that we have achieved another year of strong and consistent growth as well as completing a number of strategic developments. We have witnessed a year of tangible progress, strategically, operationally and financially and are delighted to welcome two very complementary businesses, Open Registry and Accumuli plc, to the Group.

Both the Escrow and Assurance divisions have continued to grow organically and the newly launched Domain Services division continues to expand and further develop its tools and services. It now provides a comprehensive range of services to support our aspiration to make the Internet safer for corporates and consumers alike.

Our markets continue to evolve quickly and we remain active in innovating and creating new services to address the numerous emerging opportunities. Innovation, creation and research and development are the key touchstones of the Group's development and growth.

Our Escrow business has continued to develop its SaaS service and additionally is now providing escrow services to over 45% of all the new domains that have been delegated and registered so far by ICANN.

Online security is failing to keep up with the numerous types of individual and indeed organisations that transgress the Internet. The threat of being hacked or having valuable data stolen continues to evolve rapidly and grow at a seemingly unstoppable pace. We now live in a world that cannot be made truly safe from digital crime. As the number and range of threats proliferate, being innovative and using our experience and skills to protect ourselves becomes more important than ever. Our aim is to deliver a safer and more secure Internet world in which to navigate and transact. We are doing this by providing the best security consultants to world-leading clients as well as conducting world-beating security research.

In line with our acquisition strategy, we have added another security consulting company to complement our geographical and technical presence. Accumuli is one of the UK's leading security consulting and security operations centre providers. Its addition will increase our UK footprint and also enable us to supply a wider range of security-related services to our customers. We are now a comprehensive one-stop consultancy led security services company that caters for all of an organisation's needs.

As part of our vision to create a safer Internet for all, we formed and have heavily invested in the Domain Services division over the last few years. After acquiring the new generic TLD .trust, earlier in the financial year, we set about helping define and guiding the market as to the requirements of an organisation's domain needs.

The domain marketplace has radically altered and the need to bring sanity, order and security is now even more pressing. The Division can now provide this. It is equipped with all the services an organisation should need to operate securely on the Internet, from registering a domain, applying to ICANN for a new Top Level Domain (TLD), complying with ICANN regulations, to enabling the domain securely on the Internet. This can be achieved due to our investment in both .trust, and technologies that support it, alongside the formidable consultancy and back-end operation services which are provided by Open Registry.

The current model of high volume, multiple domain registrations is flawed, dangerous and out-dated. It offers no value to organisations and by its existence makes the hackers' lives even easier. While we can provide organisations with an unparalleled service to determine their exact domain presence and domain requirements, we believe that organisations need to move quickly to own and manage their own top-level domains and to protect themselves and their customers from attack. A branded domain or being part of the .trust secure community is the best way for a customer to be sure who they are transacting with.

It is our objective to help and support them with this strategy and to provide them with a secure gated environment to improve their customers' experiences and reduce the threat of customers being hacked or spoofed.

The rate of change in the Domain Services marketplace makes it an exciting development for the Group and one where we anticipate strong returns in future years.

Overall our strategy remains fundamentally unchanged. The Group aims to develop our three complementary divisions both organically and by acquisition to deliver excellent service and value for money to our customers. This will drive growth across the Group.

In the last 12 months I am pleased to report that organic Group revenues grew by 18% to £129.8m (2014: £110.4m).

Our adjusted pre-tax profits and adjusted fully diluted earnings per share were up to £25.5m (2014: £25.3m) and 9.4p (2014: 9.3p). The Group continues to be highly cash generative with operating cash conversion representing 107% of operating profit (2014: 120%).

CHAIRMAN'S STATEMENT

Dividends

Reflecting the Board's commitment to the shareholders and following our progressive dividend policy, which at least tracks earnings growth, a final dividend of 2.68p is recommended by the Board, making a total for the year of 3.98p, up 14%.

Board composition and diversity

We have a strong and balanced Board, with a range of complementary skills to support the strategic and operational direction of the Group. As a Group we recognise the importance of diversity and our Board members have a wide range of skills and experiences from a variety of business backgrounds. This year we further strengthened the team with the addition of Chris Batterham as an Independent Non-Executive who provides further capability to deliver our strategy.

Board effectiveness

As Chairman, I am responsible for the leadership of the Board and ensuring its effectiveness in all aspects of its performance. The Board is responsible for the Group's strategic development, monitoring achievement of its business objectives, oversight of risk and maintaining a system of effective corporate governance.

Governance

The Board takes its responsibility to maintain sound governance seriously. It is committed to high standards of corporate governance and supports the principles laid down in The UK Corporate Governance Codes published in September 2012 by the Financial Reporting Council ("Code").

The Corporate Governance Report together with the Audit Committee Report, Nomination Committee Report and the Directors' Remuneration Report on pages 54 to 93 describe how the principles of the Code are applied by the Group and reports on the Group's compliance with the Code's provisions.

Employees

The talent, dedication and experience of the people we employ is key to our success. The motivation and retention of our staff remains vital for the Group's future. We aim to be the employer of choice. We proactively monitor staff retention and manage all aspects of individuals' roles, responsibilities and aspirations.

I would like to record my own and the Board's thanks to all of the Group's employees who have made this another successful year. In particular, the Board and I would like to thank Felicity Brandwood, the Group's Company Secretary and Operational Director for Escrow who retired at the end of January 2015 after having initially joined the Group in 1984.

The Group now employs 1,388 people across the world, including 158 associates.

Details of the Group's diversity policy can be found on page 37.

Outlook

The whole organisation is totally focused on client risk mitigation and delivering peace of mind, through a complementary range of services offered to an increasing range and number of multinational clients to address their business issues.

Across the Group the current financial year has started well and the market for our services is stronger than ever.

The Group's recurring income is significant and has increased. The start to the year sees Group Escrow renewals at £18.5m up from £18.0m in the year to 31 May 2015 and a verification order book of £2.4m. The Assurance division order books have improved to £32.3m (2014: £25.3m) and have £6.8m (2014: £6.8m) of monitoring renewals forecast for the current financial year. Additionally Accumuli has an order book of £2.7m, with many renewing contracts, which by the next half-year will be restated in accordance with Group reporting.

The Group's total renewals and order books now stand at £62.7m (2014: £53.0m).

The Domain Services division now covers more than just .trust. It also encompasses managed services and Open Registry as well as being able to provide organisations with a secure solution for their branded domain. The pipeline for .trust customers continues to grow and the prospects for this Division have never looked better. We remain confident that the .trust secure gated community, alongside the provision of a range of secure monitoring services for the branded domains, will start to produce good revenues in this new financial year and become a significant contributor in the coming years.

While the Board expects Domain Services to generate revenues in the financial year ended 31 May 2016, the division is still expected to report a modest loss as the Group continues to roll-out and invest in its new capabilities. However, it is expected that the Division will make a positive contribution in the financial year to May 2017 as all the service lines start to contribute fully.

In summary, the outlook for NCC Group remains very positive. The Group is operating in a number of growing international markets with a range of new and innovative products and services as well as the existing extensive capabilities. The global economic uplift will also help all of the Group's divisions.

As a consequence of all these factors, plus the progress made by Domain Services, alongside the integration of both Open Registry and Accumuli, the Board is confident that the Group can continue to deliver sustainable growth and enhanced shareholder value.

Paul Mitchell Non-Executive Chairman 8 July 2015

STRATEGIC REPORT

OUR STRATEGY - DELIVERING SUSTAINED GROWTH BASED ON INNOVATION AND STABILITY

NCC Group is a global information assurance specialist providing organisations worldwide with expert escrow and verification, security consulting, web performance and domain services.

The Group set about building its future around the software escrow business while looking for new areas of growth in the then uncharted territory of information and cyber security. Since then, through carefully constructed, controlled and sustainable organic growth along with a carefully planned and well-executed strategic acquisitions programme, the Group has developed into a leading multinational provider in both areas.

The Group operates in three distinct but complementary divisions; Escrow, Assurance and Domain Services. These businesses do not actively cross-sell but do share information, intelligence and relationships to ensure that the appropriate products across our portfolio are made available to all our clients.

All divisions are tasked with and measured on providing the best client service, allied to offering appropriate services to help mitigate risk. The Group is cautiously, but actively looking for acquisition opportunities. It will continue to be so, looking for complementary businesses that either further strengthen our market position, geographic presence or appropriately extend the service offering.

Each division has a common objective, to innovate and develop further its product sets, to ensure that it remains at the forefront of thought leadership and delivery, as well as to expand geographically where appropriate.

STRATEGIC REPORT

Escrow Division

The Escrow Division remains the foundation of the Group and is the platform from which the organisation has been built. The fundamentals of the Group are fully encapsulated in the product, which is based around the very highest standards of customer care and equitable treatment to both customers in the contractual relationship.

Escrow offers a high value product for a low, in comparison, investment. Due to its importance to clients, it provides the Group with good recurring revenues along with good margins and cash generation. Escrow can be provided both in the traditional software market as well as in all iterations of the outsourced model, as the basic underpinnings are the same, protection from an event that disrupts the relationship between the owner and licensee of a software product.

Escrow is also an ICANN requirement for all registrars and registries of domains. To date, the Group has been successful in providing registry data escrow services, where the IP address of each domain registered within a TLD is safely secured. We expect to make inroads into the Registrar Data Escrow market place, particularly to support European customers.

The cash flow and profitability of Escrow are reinvested to produce not only better Escrow products and services but also other areas of complementary services to help clients mitigate their information and cyber security risks across the Group's two other divisions.

Assurance Division

The strategic direction and cultural philosophy of the Assurance Division is about evolution and so research is key to being successful in the market place. Information security and cyber security are constantly and rapidly changing with new areas of concern or vulnerabilities frequently and regularly being discovered. To stay ahead in what has become a cyber-arms race, our global corporate culture is aligned with this rapid and constant change. We have created boutique ways of working with cultural values that encourage individuals to fulfil their full creative potential.

Apart from determining security weaknesses, the Group is also committed to making the Internet a safer place for the world to interact, communicate and transact. While combatting the threat of cyber crime is a clearly stated objective, so is finding a safe way for the world to navigate, communicate and transact on the Internet. Accordingly, the Division's strategy is to constantly demand the generation of new ideas and initiatives to fulfil this. However, whilst not all ideas make it to product development or design, each is critically, technically and commercially appraised before any financial commitment is made.

To allow this creativity to flow there is a requirement that the organisation is committed to remaining independent and listening to our clients' requirements as well as looking to complement what the Group does with services that are currently not supplied. To that end, new product or service lines are looked at from a make or buy standpoint. Acquisitions are carefully analysed and decisions to acquire Assurance businesses are based upon culture, fit and service but never on the basis of profit enhancement by cost reduction or the ability to turnaround an ailing business.

The Group has to date been product agnostic and avoided being a reseller of third parties' products, software or services, but this can in certain situations compromise the Group's ability to deliver client solutions. The acquisition of Accumuli required the Group to ensure that the channel and product model employed did not blur the product independence line, nor its independent service capabilities. Following a very detailed due diligence process, the Group was satisfied that our clients are being supplied the right set of products from a controlled process of recommendation even if the product is not sold by the Group.

STRATEGIC REPORT

The Group does not provide white label solutions for third parties to resell, nor does it enter into any strategic alliances that could in any way appear to compromise the Group's objectivity or independence. The Group's scale now, with one of the world's largest security consulting teams, means that it is capable of leading all bids rather than having to look for support from larger third parties.

Integrity and credibility, alongside technical capability, are the leading cultural values of the Group and the fundamental underpinning of our strategy to innovate, create and make safe. This will ensure the Group remains an independent, unbiased organisation and maintains its place as the trusted provider of choice in the security services marketplace.

As much of the work carried out by the Group is research based, the decision was taken to be equitable and ethical in our disclosure policies. Research paid for by third parties and our customers will not be disclosed unless requested by the paying organisation. Self-funded research by us will always be provided to the organisation that it affects in full, free of charge and without disclosure, until such time as the vulnerability has been resolved, provided that it is done in a reasonable timeframe. However, this does not preclude the Group making a full public disclosure if there is a threat to life or to the general public's online security, and the third party is unwilling to remediate the issue.

Domain Services

The strategic objective of the Division is to create a safer Internet for all who traverse and use it. The Internet will only survive as a usable vehicle for commerce and industry if there are radical changes to operators' and users' behaviours.

The Domain Services Division was created in 2012 as a result of the Assurance Division fulfilling its strategic objective of innovating a service that will provide a safer Internet. Utilising the changes in the domain world, the concept of creating a secure gated community from within which its occupants will be able to offer its users the missing vital Internet component, trust, was born.

Over the past 12 months, the divisional strategic objective has been developed and expanded to help those who own their own branded domain and wish to create their own secure communities to offer their customers peace of mind on their web estate. In reality this means NCC Group providing a trust service to its client base on the Internet alongside the Group's own secure community, .trust.

NCC Group now offers a full suite of services, so that in advance of the ICANN application process reopening (expected in 2017), organisations can establish their own brand and domain estate strategy alongside the processes to launch and execute the service.

Currently there are only 600 branded TLDs and it is widely expected that many times this number will be applied for in the next round of applications. The proliferation of branded domains will occur because the Internet is becoming totally unsafe due to the uncontrolled expansion of open generic TLDs that allow anybody to register any domain, regardless of their rights to ownership or intention.

It is clear that the open generic domains and city codes have not been taken up as well as expected in the first round of new TLD introductions. Almost all of these fell well short of their initial registration targets. However, even at these reduced levels of uptake, this does not help the safe traversing of the Internet, as there are still large numbers of domains available for unscrupulous operators to use as a basis to defraud.

The mass volume generic domain model is no longer a valid or appropriate tool for businesses to manage their web estates as organisations are now faced with huge and increasing uncertainty as to which of the domains they should register. With hundreds of generics to choose from and to register, along with the multitude of iterations of an organisation's name, the ability for nefarious third parties to pretend successfully to be an organisation now has limitless opportunities.

Organisations could potentially try and register every algorithmic iteration within every generic top-level domain, but that is administratively daunting, very difficult and hugely costly. Further, the increasing mistrust of users of the Internet has seen a much lower than expected take up of generic domain registrations.

The vast majority of domains are being given away for free in the hope that they will be renewed annually. This model is not sustainable and as the market evolves and some of the open generic domains fail financially, others will become dominated by corrupt powers using them for hacking purposes.

Ultimately it is expected that a number of generic domains and operators will fail which will create further issues for ICANN and organisations alike, as confusion spreads into the market place.

The emergence of the branded and closed domains will be seen as the way forward. Being a closed domain ensures that no spoofing can take place as the registration to that domain is restricted to and controlled by the owner, most likely a brand owner, or NCC Group in the case of .trust. Most importantly as only the rightful owner of a domain can sell or use a domain or any iteration of it, the opportunity for criminals to use it to cyber spoof or cyber squat is eradicated. This is the underlying principle of .trust.

STRATEGIC REPORT

As expected, a number of the branded domains are starting to declare their strategy and to use their domain as a safe haven for client and customer transactions and communications. As the consumer starts to understand and acknowledge that a branded domain is safe, particularly for financial and retail transactions, those without a domain of their own will start to become concerned about losing their competitive advantage online.

As the second round of applications begins, more brands and large organisations will therefore apply for their own domains. Not only does a closed domain offer some security benefits, it also enhances the retail and communication experience, it gives organisations the opportunity to be able offer a controlled and potentially safe eco-system within the Internet.

For a gated community to work fully, it also requires the operator to maintain a high bar of security within their web estate. The .trust community operates in exactly that way as its foundation was first based upon creating internationally accepted policies. These procedures set security standards at the highest level achievable for organisations, as well as creating a mechanism that allows continuous monitoring against those standards to ensure that the clients' environments offer that level of security. This is unique and the tools that monitor compliance are best in class.

Additionally, these closed generics will also top the natural search engine ranking, making them more visible to their target markets. Ultimately, however, for this to work they will need to add a high bar of security and permanent monitoring to their environment to offer their customers the peace of mind they demand and should expect.

As this happens, customer confidence will return to the domain landscape where today 87% of independently surveyed consumers have declared a genuine unease.

NCC Group Domain Services is ideally placed to help organisations provide their online customers with confidence. The Division provides the know-how to navigate the complex application process, how to delegate and operate a domain, control over registrations both for the closed domain and for the portfolio of registered domains, while ensuring the service is in full compliance with ICANN's rules and regulations, as well as most importantly providing a monitored and controlled secure environment set against the highest appropriate security policies. Domain Services is a complete one-stop, safe Internet service.

Key Performance Indicators

Escrow termination rates 8%

Group headcount including associates 40%

929

It is against this backdrop that the Group is offering this service through its domain .trust to a select number of global organisations as well as helping organisations define what their domain strategy is, and in many instances, how to use the branded domain that they have applied for and now own.

The business model is based around expected high renewal rates, good margins and the highest standard of customer service. The take on of new customers will be slow and cautious ensuring that the transition to .trust or using their own secure domain is successful.

The long-term strategy is that Domain Services and Assurance will develop a symbiotic relationship as the opportunities to cross-sell Assurance services increases as the .trust and branded domain communities develop further.

Business performance measures

The Group manages the business using the Key Performance Indicators shown in the charts across the last few pages. Reporting is daily, weekly and monthly and has different levels of granularity according to each manager's responsibility. The provision of accurate and quickly produced management information has always been integral to the Group.

BUSINESS AND FINANCIAL REVIEW FOR 2015

Group revenue

• • Revenue increased by 21%
• • Organic revenue growth of 18%

For the financial year ended 31 May 2015, the Group increased revenue by 21% to £133.7m (2014: £110.7m) with the revenue split being 47%:53% (2014: 49%:51%) between the first and second halves of the year. Organic revenue growth was 18% (2014: 12%).

On a constant currency basis, the Group revenue growth would have been 19% (2014: 15%) as both the dollar and euro exchange rates against the pound varied considerably during the year. Due to the natural hedging through the intercompany loans, the impact on the Group's operating profits was minimal. The Group does not hedge against currency fluctuations.

In the year 54% (2014: 60%) of revenue, £72.1m (2014: £66.4m) was derived from the UK. Continental Europe contributed £13.5m (2014: £10.5m) with the Rest of the World revenue increasing strongly to £48.1m (2014: £33.8m), some 36% of Group revenue.

Group Escrow now accounts for 24% of the Group's revenue (2014: 28%) as the Assurance business continues to see faster organic growth as well as benefiting from the one month's revenue from the newly acquired Accumuli plc. Domain Services saw revenues from the Open Registry group of companies, acquired in January 2015, as well as the £3.1m proceeds received from settling the contention for the Group's application for .secure gTLD.

The Group's recurring income is significant and has increased. In Escrow UK over 89% of all contracts renewed (2014: 88%). Assurance saw 83% of its revenues renewed (2014: 76%), this now represents 52% of all customers (2014: 46%). In addition, 91% (2014: 91%) of the performance monitoring revenues renewed and are recurring.

The increasing number of customers that are renewing in Assurance has resulted in renewing Assurance customers' expenditure marginally increasing from £73,225 to £73,752 with total average customer spend increasing to £53,760 from £44,689.

The recurring revenues and average customer order values exclude Accumuli which is currently being integrated in to the Group's reporting processes and procedures.

The Group continued to have minimal reliance on any one customer or sector. Within Assurance the largest customer represents 9% of Assurance revenue which is 6% of Group revenue. The largest customer in Escrow is 1% of total Escrow revenue. The majority of revenue for Domain Services came from the withdrawal of the application for .secure and so has not been included in the sector analysis.

Escrow Assurance

Escrow Assurance

Escrow Assurance

BUSINESS AND FINANCIAL REVIEW FOR 2015

Escrow Division

Escrow

• • Continued solid performance
• • Contract renewal rates of over 88%
• • 145 employees

Escrow UK

• • Revenue £23.7m
• • 5% growth in revenue
• • Recurring revenues increased to £13.2m
• • Termination rate below 12%

Escrow Europe & Escrow US

• • US Revenues £5.2m
• • US revenue growth of 11%
• • Europe revenues were £3.2m

The Group's Escrow business, the cornerstone of NCC Group's profitability, produced another very solid year's performance with a substantial margin and very strong cash conversion, as well as a high degree of recurring revenue, due to the consistent contract renewal rates of over 88%.

The Escrow division increased revenue by 5% to £32.0m (2014: £30.5m) and profitability grew by 5% to £18.9m (2014: £18.1m).

Group Escrow recurring revenue renewals, grew to £18.5m (2014: £17.9m). Group Verification revenues grew by 11% in the year to £8.3m (2014: £7.5m).

Escrow UK.

Escrow UK revenue was £23.7m (2014: £22.5m). This 5% growth in revenue (2014: 8%) was delivered through contract growth and verifications, with only a limited amount coming from the effects of the price increase introduced during the year.

Escrow UK recurring revenues increased to £13.2m (2014: £12.8m) and terminations remain below 12%.

Escrow Europe and Escrow US.

Escrow US revenues grew by 11% to £5.2m (2014: £4.7m) and Escrow Europe revenues were £3.2m (2014: £3.3m).

Escrow UK now has 99 employees (2014: 103), Escrow Europe has 14 employees (2014: 13) and the North American Escrow businesses have 32 employees (2014: 28).

Assurance Division

• • Revenue growth of 21%
• • Excellent organic growth of 18%
• • Security Consulting revenues £72.1m
• • Web Performance recurring revenue rate of 91%
• • Acquistion of Accumuli plc
• • Single global Assurance brand

Assurance now accounts for 73% (2014: 72%) of Group revenues with total divisional revenues increasing by 21% to £97.0m (2014: £80.2m), 18% organically. Profitability grew by 21% to £17.0m (2014: £14.0m).

The acquisition of Accumuli had less than a two percentage point impact on organic growth, as it was acquired on 30 April 2015 and so only contributes for one month of the reported period.

Security consulting revenues grew 25% to £72.1m (2014: £57.5m) while also ensuring that utilisation rates remained suitably low to combat any staff retention issues. Web Performance had a recurring revenue rate of 91% (2014: 91%), which continues its strong track record of client retention.

The Assurance division primarily provides security consulting services. In the UK this is delivered under the NCC Group brand. From 1 June 2015 in North America, the security consulting services, which are being sold by iSEC, Intrepidus, Matasano or NGSS will be provided under the NCC Group name alone.

Security consulting includes penetration and application security testing, operational response, forensics and managed monitoring along with the compliance-based services such as social engineering, card and information security standards and security auditing.

From 30 April 2015 the Division benefited from the acquisition of Accumuli, which offers complementary security services and products as well as being a trusted third party with whom the Group has worked alongside for a number of years. Accumuli offers a broader and a natural expansion to the very specialist services being provided by the Group, bringing Security Operations Centres, security and big data-related third party product sales as well as complementary managed services and some security and risk consultancy service, which will be introduced to clients across the Division.

In due course, the Group as part of the integration process intends to consolidate appropriate managed service offerings together into Domain Services, as the solutions that are being offered to provide clients with peace of mind around their web estate are very similar. The technologies already employed within the Group are similar to those being developed to deliver the secure .trust domain and consolidation will further improve the services offered to all clients.

Web performance testing is less than 10% of Assurance revenues and involves continuously monitoring the performance and load capability of organisations' websites. This is a SaaS-based service that relies heavily on a world-class product with the highest levels of customer support. Ultimately it is envisaged that this, along with the security operations centres and software sales parts of the Group, are combined together as they are all focused on the highest levels of customer support and delivery. The business unit employs 929 employees globally (2014: 590) and uses 158 associates (2014: 122).

BUSINESS AND FINANCIAL REVIEW FOR 2015

Domain Services

• • Own TLD .trust launched - gated community
• • Resolved contention over former domain application
• • Open Registry acquired
• • Unique end to end secure domain solution

In May 2012, the Group established a new wholly owned subsidiary, in California, to develop the critical infrastructure and know-how to create a universal environment for end users to operate and navigate the Internet with complete safety and security.

In January 2015 the Group acquired Open Registry to provide the technical know-how and software to operate as a secure registry and registrar in order to offer a complete end-to-end service for all of a client's ICANN-related and domain requirements. It also provided the platform to grow the European part of the Division.

Domain Services now accounts for almost 4% (2014: 0%) of Group revenues with revenues coming from the recently acquired Open Registry business and the compensation received for the Group's withdrawal of its .secure gTLD new domain application from the ICANN process.

Since 2012, the Group has invested a total of £16.3m in this division. £8.2m has been expensed including £4.9m in the financial year to 31 May 2015 (2014: £2.1m). Development costs amounting to £3.1m were written off as they were no longer deemed realisable due to changes in the development process or the product roadmap. At the end of the financial year to May 2015, the Group capitalised £8.1m which includes the purchase and delegation of the domain .trust which represents £3.0m of the capitalised amount.

NCC Group Domain Services is now positioned to offer a complete suite of automated tools and managed services, from a corporate planning its domain strategy through to the execution of a secure gated eco-system. In advance of the application process, the Group can provide a unique brand estate review to its corporate clients to determine exactly what is owned by whom and what is being operated by whom. The Group is then in a position to take over the domain management for corporate clients and support their domain strategies having completed this review.

After delegation and the registration of TLDs for a corporate, the adherence with ICANN rules is ensured by the Group's domain abuse tool including its security policies. These include the same seamless continuous monitoring solutions that support the Group's own 'gated community'.trust.

Profitability and margins

NCC Group continues to generate strong margins and adjusted Group operating profit grew to £26.4m (2014: £26.0m), including net operational expenditure of £4.9m (2014: £2.1m) in Domain Services and excluding the amortisation of acquired intangibles, exceptional items and share-based charges as set out in the table below.

Despite the increased percentage of revenue from the non-escrow businesses and the effects of the Domain Services operational expenditure, overall adjusted operating margins remained strong at 20% (2014: 24%).

Excluding the Group's operational expenditure on the development of Domain Services, Group operating profits grew by 11% and operating margins would have been 24%.

The Escrow division's operating margins remained strong at 59% (2014: 59%) whilst the Assurance division improved its underlying operating margins due to close cost control and pricing to 18% (2014: 18%).

Contained within exceptional items in 2015 is the one off, net of legal fees, benefit received in settling the legal claims in relation to the abortive implementation of SAP.

	2015	2014
	£000	£000
Reported profit before tax	21,421	23,211
Amortisation of acquired intangible assets	2,207	2,116
Share-based payments	991	1,108
Exceptional items	588	(1,268)
Unwinding of discount on contingent consideration	262	120
Adjusted profit before tax	25,469	25,287
Net financing costs	926	741
Adjusted operating profit	26,395	26,028
Reported operating profit	22,609	24,072

Adjusted Group pre-tax profit improved to £25.5m (2014: £25.3m) after an interest charge of £0.9m.

The Group's reported pre-tax profit was £21.4m (2014: £23.2m), after the inclusion of the unwinding of the discount on the acquisitions' contingent consideration, amortisation of acquired intangible assets, share-based payment charges and the exceptional items.

BUSINESS AND FINANCIAL REVIEW FOR 2015

Taxation

The Group's effective tax rate is 22% (2014: 22%), which is marginally above the average standard UK rate of 21% (2014: 23%). The effective tax rate remains low due to the continued investment in Domain Services and the US tax treatment of these costs.

Earnings per share

The adjusted basic earnings per share from continuing operations was 9.5p (2014: 9.5p).

The table shows the effect on the Group's basic earnings per share of the amortisation of acquired intangibles, share-based payment charges, unwinding of the discount on the contingent consideration for acquisitions and the effect of the exceptional items.

	2015	2014
	Pence	Pence
Basic EPS as per the income statement	8.0	8.7
Amortisation of acquired intangibles	0.8	0.8
Exceptional items	0.2	(0.5)
Unwinding of the discount on the contingent consideration of the acquisitions	0.1	0.1
Share-based payments	0.4	0.4
Adjusted basic EPS	9.5	9.5

The adjusted fully diluted earnings per share from continuing operations was 9.4p (2014: 9.3p) whilst reported fully diluted earnings per share was 7.8p (2014: 8.6p).

Dividends

The Board is recommending a final dividend of 2.68p per ordinary share, making a total for the year of 3.98p. This represents cover of 2.4 times (2014: 2.7 times) based on basic adjusted earnings per share from continuing operations.

Since the Group's flotation in July 2004, the dividend has increased from 0.42p to 3.98p, a compound annual growth rate of 25%.

Cash

The Group continues to be highly cash generative with an operating cash flow before interest and tax of £24.3m (2014: £28.9m), which gives a cash conversion ratio of 107% of operating profit before interest and tax (2014: 120%). It is expected as the mix of business continues to change due to the increase in Assurance revenues, the percentage will be between 100% and 110%.

After accounting for net cash outflows of £19.8m for acquisitions and contingent acquisition payments, the Group ended the year, as expected, with net debt of £50.6m (2014: £23.6m).

In the financial year to May 2015, during the development of Domain Services, the refurbishment and opening of new offices and the roll-out of the new IT solution, the Group spent some £12.9m (2014: £10.8m) on capital expenditure. However, the Group also benefited from resolving the contention for the application for the domain it had applied for in January 2015 for £3.1m and for settling the on-going litigation with a former supplier for £2.0m in April 2015. In the current financial year to May 2016, the investment programme is expected to drop to some £10.0m.

The Group's banking facility with the Royal Bank of Scotland, which provides a £78m revolving credit facility and a £2m overdraft, runs until July 2016. Interest on the facility is charged between 1.5% and 2.25% over LIBOR based on the Group's net debt/EBITDA ratio.

The facility provides the Group with the necessary capacity to meet its current acquisition objectives, although this is regularly reviewed to ensure that unnecessary fees are not incurred due to non-utilisation. The Group was utilising 64% of the facility at the year end.

BUSINESS AND FINANCIAL REVIEW FOR 2015

Principal risks and uncertainties

The Group faces operational risks and uncertainties, which the Directors take all reasonable steps to mitigate, however, the Directors recognise that they can never be eliminated completely. Managing risk sensibly is key to the success of any Company.

The Operational Board carries out a full in-depth review of the Group's risk register annually, although from 2015 this review will be performed bi-annually. The risk register is then reviewed by the Audit Committee for an independent and objective assessment before being circulated to the Board. Day-to-day risks faced by the Group are mitigated by management processes and procedures embedded in the Group's Quality system.

The following table sets out the principal operational risks and uncertainties facing the business, their potential impact and the principal mitigating factors.

Risk Areas	Potential Impact	Mitigation
Information Technology	NCC Group is exposed to the risks that the IT systems on which it relies fail and/ or that sensitive data held by the Group is lost or stolen.	NCC Group has appropriate controls in place in order to mitigate the risk of systems failure and data loss, including systems back-up procedures and disaster recovery plans and also has appropriate malware protection, network security controls and encryption of mobile devices.
Loss of Key Management	Loss of key management resulting in a lack of necessary expertise or continuity to execute strategy.	Existing key management, new hires or management teams that are recruited through acquisitions are tied in through rewarding career structures and attractive salary packages, which include participation in share schemes. In addition, succession plans have been developed or are being developed for key members of the management team, including through acquisitions, which are regularly reviewed.
Recruitment & Retention	An inability to attract and retain sufficient high-calibre employees could become a barrier to the continued success and growth of NCC Group.	This is mitigated with a clear human resources (HR) strategy, which is aligned to the business strategy and focused on attracting, developing and retaining the best people for NCC Group. Consistent, continuous assessment and management of employees underpin it and excellent opportunities for further career training and development. In addition, there is a continual review of compensation and benefits to ensure sector and geographic competitiveness.
Damage to Reputation	Failing to maintain discipline and meet customer expectations on project delivery, testing assignments or source code handling could result in damage to reputation, loss of repeat business and potentially lead to litigation and/or claims against NCC Group.	NCC Group operates a system of policies and procedures which are regularly audited as part of the quality system. These, combined with comprehensive management oversight, the risk management process, project reviews and customer feedback, mitigate the risk to successful service and project delivery. All staff are trained regularly and backups taken wherever possible before testing assignments begin.

BUSINESS AND FINANCIAL REVIEW FOR 2015

Risk Areas	Potential Impact	Mitigation
Acquisitions	A failure to execute, complete and successfully integrate targeted, value enhancing acquisitions represents a risk to growth.	The board remains committed to making value-enhancing acquisitions. The process adopted by the board in identifying and completing such acquisitions is well established and includes a robust due diligence and integration planning process.
Competitive Environment	New lower priced competitors could enter the marketplace.	Emphasis is put on providing a high quality, efficient service. Discussion groups are held regularly to ensure new opportunities to improve or extend the Group's existing product and service offerings are taken.
Investing in new areas	A new product or service area could require significant investment and take time to deliver a return or deliver disappointing returns.	Major new services are only introduced after extensive review and consideration. All new significant investments require board approval.
Ethical breaches	A substantive ethical breach and/or non-compliance with laws or regulations could potentially lead to damage to NCC Group's reputation, fines, litigation and claims for compensation.	NCC Group has a number of measures in place across the group to mitigate this risk, including: Anti-Bribery and Gifts Policies, a Code of Ethics, a Competition Policy statement, segregation of duties, management oversight, financial and operational controls and regular staff training.
Economic Environment	There could be a significant downturn in the economy.	As the business is global it is not based on the economy of just one area in the world. Whilst a major recession could impact assurance work, the effect on the escrow business should be less as the failure of businesses highlights the need for escrow.
Failure to protect intellectual property	Loss of competitive advantage.	Patents are applied for where appropriate and intellectual property is only disclosed under a licence agreement or confidentiality agreement.

There are no persons with whom the Company has contractual or other arrangements that are deemed to be essential to the Group.

The principal financial risks faced by the Group are:

• Credit Risk.

This is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group's receivables from customers. The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer.

• Liquidity Risk.

This is the risk that the Company will not be able to meet its financial obligations as they fall due. The Group manages liquidity risks by regular reviews of forecast cash flows in line with contractual maturities of financial liabilities and the revolving credit facility available. Forecast cash flows are reported to the Board on a monthly basis.

• Currency Risk.

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group entities. The Group's management review the size and probable timing of settlement of all financial assets and liabilities denominated in foreign currencies.

• Interest Rate Risk.

The Group and Company finances its operations through a mixture of retained profits and bank borrowings. The Group borrows and invests surplus cash at floating rates of interest based upon bank base rates.

On behalf of the Board

Rob Cotton Chief Executive 8 July 2015

CORPORATE SOCIAL RESPONSIBILITY

NCC GROUP TAKES ITS CORPORATE SOCIAL RESPONSIBILITIES VERY SERIOUSLY AND RECOGNISES THE IMPORTANT CONTRIBUTIONS TO THE BUSINESS MADE BY THE WIDER COMMUNITY OF STAKEHOLDERS, IN PARTICULAR INVESTORS, EMPLOYEES, CLIENTS, SUPPLIERS AND THE LOCAL COMMUNITIES IN WHICH IT OPERATES. IT RECOGNISES THAT BY ACTING RESPONSIBLY IT CAN DELIVER A SUSTAINABLE BUSINESS, WHILST CONTRIBUTING TO THE COMMUNITY AND PRESERVING THE ENVIRONMENT.

The Group supports the UN Declaration of Human Rights and this underpins its policies and actions.

The Board takes into account social, environmental, human rights and ethical issues in its discussions and decision-making, as well as the health and safety of employees.

CORPORATE SOCIAL RESPONSIBILITY

Stakeholders

Investors.

The investors in the Group need to be comfortable that their capital is being responsibly used to provide them with sustainable returns. The Group communicates regularly with the investors in meetings and road shows to keep them up to date with both the opportunities and challenges faced by the Company.

Employees.

People are at the heart of the Group's business and the support and involvement of the talented individuals who form its team is vital to the continued success of the Group overall. The Head of HR reports directly to the CEO, Rob Cotton, to ensure high level visibility and control of all employment related issues.

The Group aims to attract and retain the brightest and best people in its industry and to make sure they are given the opportunity to develop their talents. The Group is committed to providing a productive working environment and recognises the importance of training and career development.

Each employee has a training record and is positively encouraged to up-skill. All roles where an additional professional qualification can be achieved are actively supported and rewarded. The Group employs a training manager who ensures all relevant staff has the necessary training plans in place.

On a daily basis the Group provides relevant technical, administrative and sales training. Most of the training is provided in-house although external courses and trainers are used where it is appropriate so to do.

A considerable amount of training support is through on the job side-by-side coaching, internal workshops or as part of a research team. It is not possible to directly quantify the total amount spent on training within the Group, as this is part of the normal working week.

The Group has a policy of keeping employees informed of, and engaged in, its business strategy through the Intranet, regular employee briefings and divisional meetings. Information is cascaded from the Board downward to ensure that relevant Group targets are communicated, as well as ensuring that cultural values are aligned.

Comments and suggestions from employees on the Group's performance and management are actively encouraged and a free flow of information between the Directors, managers and employees ensures that everyone has an opportunity to contribute. Direct access to the senior management team is actively promoted and encouraged.

Diversity.

The Group is committed to diversity and offers equal opportunities to all. No employee or potential employee receives more or less favourable treatment due to his or her gender, age, race, national or ethnic origin, religion or belief, disability, sexual orientation, or marital status. As part of this we work to ensure that all employees, whatever their personal circumstances receive the same opportunities for training, career development and promotion.

Approximately 80% of our employees are male and 20% female. In our senior leadership team, approximately 85% of the team are male and 15% female whilst on our Board, 83% of the Directors are male and 17% female.

The Board recognises the need to positively support gender diversity in a technology business, which has traditionally and historically attracted more men. Whilst this is desirable, the root cause stems from the teaching of IT and Technology in our schools and colleges where it is historically seen as an all male preserve. The Group is endeavouring to engage with local schools to help educate and instil the benefits and opportunities of careers in IT and cyber security for all genders.

The Group is committed to its employees and actively attempts to improve their health and wellbeing and morale by encouraging fitness based activities and taking part in charitable events.

The Group has its own football team that plays weekly and organises charitable football tournaments every year involving teams from the local business community. NCC Group also has a very active track cycling club, cricket team, running club and triathlon club.

The Group takes Health and Safety in the work place seriously and complies with all relevant legislation and best practice. There have been no work place fatalities since the Group was formed and no reported workplace accidents in the year.

Clients.

NCC Group values each and every client and is proud of the long-standing nature of its client relationships. Continuing client satisfaction is central to its on-going success and is regularly measured and monitored through the ISO 9001 certified quality programme. This includes written and telephone satisfaction surveys each month.

Rare instances of negative feedback are treated with the utmost seriousness and dealt with swiftly by management through to resolution. Each Operational Director takes direct responsibility for customer satisfaction, with the CEO investigating directly if a Division's performance fails to meet the 75% threshold. No investigations were required in the year reported on.

The Group recognises and understands that its relationships with those with whom it deals are the key to its success and, as such, takes its obligations and commitments to those people and organisations very seriously. The Group's independence, reputation as a supplier of quality services and the trust of its clients are all key assets that it aims to protect at all times. It aims to engender in its employees principles of honesty and integrity and the desire to work to the best of their ability. To ensure best service for the Group's clients all employees are required both to comply with the Company's Code of Ethics and to undergo annual anti-bribery and competition refresher training.

CORPORATE SOCIAL RESPONSIBILITY

The Community.

NCC Group believes in supporting good causes and encourages its staff to get involved too with considerable success to date.

The Group has donated £200,000 to good causes this year, with Children in Need, The Royal Manchester Children's Hospital, Cancer UK and Macmillan all benefiting. Additionally the Group provided security consulting services on pro bono basis to Comic Relief and has supported a number of employee related smaller charity initiatives. A similar policy has been introduced in North America where the Group is looking to donate up to \$100,000 to charitable causes.

The Group believes in community and as importantly likes to encourage its staff to do the same. Again this year the Group has continued to sponsor five local junior football teams by buying their football kit and trophies to encourage children to take an interest in sport and keeping fit. The Group also has co-sponsored a newly formed cycle team Moda Anon who are based in Manchester have started to race throughout the UK.

Every year NCC Group staff members have participated in and organised football tournaments, silent auctions, raffles, bake days and sport days and many more fund raising activities.

The Group is apolitical and does not support any political party in any jurisdiction nor has it ever made a political donation.

Suppliers.

The Group's policy is to pay suppliers in accordance with terms and conditions agreed when orders are placed. Although the Group does not follow any code or standard on payment policy, where terms have not been specifically agreed, invoices dated in one calendar month are paid close to the end of the following month. At 31 May 2015, the Group had an average of 52 days purchases outstanding in trade creditors (2014: 52 days).

An Ethical Supplier's Policy has been adopted to ensure that all suppliers to the Group comply with Health and Safety law, have an environmental policy and behave ethically towards their employees.

NCC Group plc is a constituent company in the FTSE4Good Index Series. The FTSE4Good Index Series is designed to identify companies that demonstrate strong environmental, social and governance practices measured against globally recognised standards.

Environment and sustainability

As a service provider with no manufacturing facilities the impact of the Group's operations on the environment is limited compared with other industries, however it recognises its responsibility to respect and limit damage to the environment in every way it can.

The Group sought third party advice for initiatives that could be implemented and followed as well as for staff education to ensure that they are thinking about the environment both in work and at home. In the coming year the Group is planning to make the selection of a hybrid or electric vehicles considerably more attractive to all company car drivers.

Presently due to the size of the group, external audit is not practical but once the organisation's size becomes such that a significant impact can be made, it will be introduced to verify achievements made.

Accordingly the Group's Environmental Policy aims to reduce the energy our business uses by:

• Conserving energy and other natural resources and improving efficient use of those resources;
• Improving the efficiency of materials used;
• Reducing waste and increasing reuse and recycling wherever possible;
• Encouraging the use of alternative means of transport, for example, via the Cycle to Work scheme and car sharing; and
• Providing all staff with relevant environmental guidance.

Initiatives that have been put in place:

• Energy efficient lighting in the newly refurbished areas and lighting which switches off automatically;
• Expanding the use of recycling in all offices there are paper recycling bins throughout the offices and bottles, cans and plastics recycling bins in the kitchens;
• On demand boiling water and cold water taps have been introduced into the kitchens to reduce wastage of water and power;
• Dual flush cisterns have been installed in the WCs as part of the refurbishment to reduce excess water usage;
• Cycle to work scheme;
• Recycling of printer cartridges in all offices;
• Recycling of redundant IT equipment;
• Addition of low emission car options into the company car scheme;
• Video conferencing facilities available in main offices. This reduces the need for travelling so helping the environment and improving productivity;
• Teleconferencing facilities available for all staff;
• Printer review to enable more double sided printing; and
• Increase staff awareness of environmental issues.

CORPORATE SOCIAL RESPONSIBILITY

Greenhouse Gas Emissions

This section includes our mandatory reporting of greenhouse gas emissions pursuant to the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2014 ("The Regulations").

The greenhouse gas report period is aligned with our financial reporting year and so runs from 1 June to 31 May for each reported year.

The method we have used to calculate GHG emissions is the GHG Protocol Corporate Accounting and Reporting Standard (revised edition), together with the latest emission factors from recognised public sources including, but not limited to, Defra, the International Energy Agency, the US Energy Information Administration, the US Environmental Protection Agency and the Intergovernmental panel on Climate Change.

The reported emissions cover all our offices globally but exclude the recent acquisition of Accumuli plc in April 2015. Our emissions cover scope 1 and scope 2 and we have used revenue as the intensity ratio as it best reflects the size and scale of the business. Our aim is to reduce the overall carbon intensity for the group by at least 10% over the three years to May 2016.

Global Greenhouse gas emissions data	2015	2014	2013
Absolute carbon emissions (tCO2e)	1,449	1,194	1,370
Group Revenue (£m)	129.8*	110.7	99.2
Carbon intensity for whole Group	11.2	10.8	13.8
Year on year carbon intensity change	0.4	(3.0)	-
Cumulative % change	(18)%	(22)%	-

* Group revenue excludes Accumuli

On behalf of the Board

Rob Cotton Chief Executive 8 July 2015

GOVERNANCE STATEMENTS

Board of Directors

The plc and Executive Board comprises the following Directors.

Paul Mitchell Non-Executive Chairman Chairman of Nomination Committee

Paul was appointed Non-Executive Chairman of NCC Group in 1999. He is Non-Executive senior partner of Rickitt Mitchell & Partners Limited, a corporate financial advisory firm based in Manchester. He is also Non-Executive Chairman of Styles & Wood Group plc and a Non-Executive Director of Little Greene Limited.

He is a qualified chartered accountant.

Rob Cotton Chief Executive Member of Nomination Committee

Atul Patel Group Finance Director

Rob was appointed Chief Executive in 2003, having joined the Group as Finance Director and Managing Director of Escrow in 2000.

He steered the Group through its move to the London Stock Exchange's main market in July 2007 following admission to AIM in July 2004, and through a management buy-out in April 2003. As well as delivering consistent organic growth in revenue and profits, he has instigated and overseen a series of strategic expansion plans including the acquisition of complementary businesses worldwide.

A qualified chartered accountant, he previously held a number of director and senior management positions in industry.

Atul joined the Group initially on an interim basis on 18 February 2011 before being appointed to the Board on a full time basis on 19 April 2011. He was formerly a Divisional Finance Director within Tribal Group plc, being responsible for the Government and Health division, operating the finance and support functions as well as advising on business transformation and business integration.

A qualified chartered accountant, Atul joined the management consultancy division of PricewaterhouseCoopers after qualifying, where he focused on performance improvement and business transformation within global organisations.

Debbie Hewitt MBE Senior Independent Non-Executive Director Chair of Remuneration Committee, Member of Audit and Nomination Committees

Debbie joined NCC Group in September 2008 as a Non-Executive Director. She has an MBA, is a Fellow of the Chartered Institute of Personnel Development and was awarded an MBE for services to Business and the Public Sector in 2011. She is Non-Executive Chairman of Moss Bros plc, White Stuff Ltd, Evander Group Ltd and Visa UK Limited and Non-Executive Director of Redrow plc, The Restaurant Group plc, Domestic and General Group Ltd and BGL Group Limited.

Thomas Chambers Non Executive Director Chair of Audit Committee, Member of Remuneration and Nomination Committees

Thomas joined NCC Group in September 2012. Thomas was CFO of smartphone operating systems developer Symbian Limited from 2001 until its sale to Nokia Oyj in 2009. Prior to that he was CFO of First Telecom. He is a chartered accountant and has held roles with Kleinwort Benson, the European Bank for Reconstruction and Development and PricewaterhouseCoopers. He is also Non-Executive Chairman at recruitment company Propel Ltd and a Non-Executive Director of Kings Arms Yard VCT plc and Niu Solutions Ltd and Non-Executive Treasurer of the University of Surrey.

Chris Batterham Non Executive Director Member of Audit, Remuneration and Nomination Committees

Chris is a qualified chartered accountant and was Finance Director of Unipalm plc, before becoming CFO of Searchspace Limited until 2005. He is currently non-executive Chairman of Eckoh plc and a non-executive director of SDL plc, Iomart Group plc and Toumaz Group Ltd.

GOVERNANCE STATEMENTS

Senior management

The senior management team detailed below is responsible for the operation of the Group's divisions. The members of the senior management team include:

Roger Rawlinson Group Managing Director, Assurance

Roger is responsible for the operational management of the Group's Assurance Division. He has worked for NCC Group for over 20 years in a variety of testing and consultancy roles and was appointed a Director in 2004.

Robert Horton European Managing Director, Assurance

Daniel Liptrott Group Managing Director, Escrow

Robert is the Managing Director of NCC Group's European Security Consulting division. He joined the Group in 2008 and has managed and grown Security Consulting services in the Assurance Division, as well as overseeing the integration of a number of the acquired security consulting companies in to the Group.

Robert was a director of NGS Software, a security consulting company he co-founded from its formation in 2001 through to its acquisition by and successful integration into the Group.

Daniel is responsible for the management and strategic development of the Escrow Division globally. Daniel joined the Group in November 2014 from private practice where he had been a corporate partner at a number of international law firms. From 2006 until 2011 he had been the Group's outside counsel at Eversheds LLP and advised on a range of issues including its move to the Main Market of the London Stock Exchange in 2007 and each of the Group's subsequent acquisitions until 2011.

Joel Wallenstrom Group Managing Director, Domain Services

Pete Stock Managing Director, Domain Services

Helen Nisbet Group Company Secretary

Joel returns from a year long sabbatical to lead the development of the Domain Services division based in San Francisco. He joined the Group upon the acquisition of iSEC Partners in 2010, where he had been one of the founding partners. Joel successfully ran the North American Security Consulting business, of which iSEC was part of until 31 May 2014.

Pete is responsible for the development of the Domain Services division based in San Francisco up until 31 August 2015 when he is retiring. He joined the Group upon the acquisition of SDLC Solutions Ltd, which he jointly founded, in 2010, becoming responsible for the Escrow division in June 2011 until 31 May 2014.

Helen is a qualified solicitor and was appointed Company Secretary in 2015 upon the retirement of Felicity Brandwood on 31 January 2015.

This senior management team is part of an operational board, which meets monthly. Senior members of the executive team are invited to make presentations on specific topics or to discuss particular operational issues.

The meetings are chaired by the Chief Executive and attended by the Chairman.

DIRECTORS' REPORT

THE DIRECTORS PRESENT THEIR REPORT AND THE GROUP AND COMPANY FINANCIAL STATEMENTS OF NCC GROUP PLC (THE 'COMPANY') AND ITS SUBSIDIARIES (TOGETHER THE 'GROUP') FOR THE FINANCIAL YEAR ENDED 31 MAY 2015.

Principal activities

Strategic report

The Company is a public limited company incorporated in England, registered number 4627044, with its registered office at Manchester Technology Centre, Oxford Road, Manchester M1 7EF.

The principal activity of the Group is the provision of independent advice and services to customers by way of the provision of escrow, assurance and domain services. The principal activity of the Company is that of a holding company.

Pursuant to sections 414A-D Companies Act 2006, the business review has been replaced with a strategic report, which can be found on page 14. This report sets out the development and performance of the Group's business during the financial year, the position of the Group at the end of the year and a description of the principal risks and uncertainties facing the Group.

UK Corporate Governance Code

The Company's statement on corporate governance can be found in the Corporate Governance Report, the Audit Committee Report, the Nomination Committee Report and the Directors' Remuneration Report on pages 54 to 93. The Corporate Governance Report, the Audit Committee Report, the Nomination Committee Report and the Directors' Remuneration Report form part of this Directors' Report and are incorporated into it by reference.

Going concern

The Directors consider that the Group has adequate financial resources and has access to sufficient borrowing facilities to continue operating for the foreseeable future. Accordingly, as detailed in note 1 to the Financial Statements (Basis of preparation), the Directors continue to adopt the going concern basis in preparing the Annual Report and Financial Statements.

Post balance sheet events

Results and dividends

The Group's and Company's audited Financial Statements for the financial year ended 31 May 2015 are set out on pages 100 to 149.

The Directors propose a final dividend of 2.68p per ordinary share, which together with the interim dividend of 1.30p per ordinary share paid on 27 February 2015 makes a total dividend of 3.98p for the year.

The final dividend will, if approved by shareholders at the Annual General Meeting (AGM), be paid on 25 September 2015 to shareholders on the register at the close of business on 28 August 2015. The ex-dividend date will be 27 August 2015.

There have been no balance sheet events that either require adjustment to the Financial Statements or are important in the understanding of the Company's current position.

DIRECTORS' REPORT

Major shareholders

As at the date of this report, the Company had been notified of the following significant holdings of voting rights in its ordinary shares in accordance with the Financial Conduct Authority's Disclosure and Transparency Rules:

Shareholder	Number of ordinary shares notified	Percentage of ordinary share capital notified
Mawer Investment Management	28,547,656	12.5%
Liontrust Asset Management	24,612,463	10.7%
Montanaro Asset Management	20,989,369	9.2%
Legal & General Investment Management	15,557,588	6.8%
Capital Research Global Investors	13,350,000	5.8%
Henderson Global Investors	7,343,368	3.2%

There were no notifications received under DTR 5 between the information in this table and 8 July 2015 when the accounts were signed.

Share capital and control

At the Company's Annual General Meeting held on 16 September 2014, the Directors were granted authority to allot up to 69,482,637 ordinary shares representing approximately a third of the Company's issued share capital. In addition, the directors were granted authority to allot a further 69,482,637 ordinary shares (again representing approximately a third of the Company's issued share capital) solely to be used in connection with a pre-emptive rights issue.

The holders of ordinary shares are entitled, amongst other rights, to receive the Company's annual reports and accounts, to attend and speak at general meetings of the Company, to appoint proxies and to exercise voting rights.

All rights and obligations attaching to the Company's ordinary shares are set out in the Company's Articles of Association (Articles), copies of which can be obtained from the Companies House website or by writing to the Company Secretary. Unless otherwise provided in the Articles or the terms of issue of any shares, any shareholder may transfer any or all of his shares. The Directors may refuse to register a transfer of shares in certificated form that are not fully paid-up or otherwise in accordance with the Articles.

Details of the movements of the authorised and called up share capital of the Company are set out in note 22 to the financial statements.

Authority to purchase own shares

At the Company's Annual General Meeting held on 16 September 2014, shareholders renewed the Company's authority to make market purchases of up to 20,844,791 ordinary shares representing approximately 10% of the issued share capital. At the 2015 Annual General Meeting, shareholders will be asked to give a similar authority.

After taking into account the effects on earnings per share and the interests of shareholders generally, on 7 April 2015 the Company purchased 210,000 ordinary shares in the market to be held in Treasury against the future crystallising LTIP liabilities that will fall due to the Executive Directors and Senior Management in July 2015.

Directors' remuneration

The Remuneration Committee, on behalf of the Board, has adopted a policy that aims to attract and retain the Directors needed to run the Group successfully. Details of the Directors' remuneration are set out in the Remuneration Report on pages 70 to 93.

Directors' interests

Directors' interests in shares and share options in the Company are detailed in the Directors' Remuneration Report set out on pages 70 to 93.

Directors

Details of the Company's current Directors, together with brief biographical details are set out on pages 42 to 45.

Subject to law and the Company's Articles of Association, the Directors may exercise all of the powers of the Company and may delegate their power and discretion to committees.

The Company's Articles of Association give the Directors power to appoint and replace Directors. Under the terms of reference of the Nomination Committee, any appointment to the Board of the Company must be recommended by the Nomination Committee for approval by the Board. The Articles of Association also require two Directors to retire by rotation each year end and each Director must offer himself for re-election at least every three years. However in accordance with previous years and in accordance with best practice all Directors will submit themselves for re-election each year.

Directors' and officers' insurance and indemnities

The Company maintains Directors' and Officers' liability insurance, which provides appropriate cover for any legal action brought against its Directors. The Directors of the Company have also entered into individual deeds of indemnity with the Company which constitute as qualifying third party indemnity provisions for the purposes of section 234 of the Companies Act 2006.

The deeds were in force with effect from September 2012 (May 2015 in relation to Chris Batterham) and remained in place during the course of the financial year ended 31 May 2015 for the benefit of the Directors and, at the date of this report, are in force for the benefit of the Directors in relation to certain losses and liabilities which they may incur (or have incurred) in connection with their duties, powers or office.

DIRECTORS' REPORT

Corporate social responsibility

The Corporate social responsibility report on pages 34 to 41 provides an update on the Group's policies and activities in respect of its wider stakeholders, employees, clients, suppliers, charities and the community, environmental, ethical and health and safety issues.

During the year the Company made no political donations (2014: £Nil).

Greenhouse Gas Emissions

The Board is committed to maintaining the environment and limiting wherever possible its greenhouse gas emissions, this is covered on pages 34 to 41 in the Corporate Social Responsibility report.

Change of control

Within the Group's revolving credit facility, the lender has the right to demand immediate payment of any outstanding balances upon a change of control of the Group following a takeover bid.

There are no agreements between the Company and its Directors or employees providing for compensation for loss of office or employment (whether through resignation, purported redundancy or otherwise) that occurs because of a takeover bid.

Disclosure of information to auditors

The Directors who held office at the date of approval of this Directors' report confirm that so far as they are each aware, there is no relevant audit information of which the Company's auditors are unaware; and each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

A resolution to re-appoint KPMG LLP as auditors will be put to the members at the Annual General Meeting.

Annual General Meeting

The notice of the Company's Annual General Meeting to be held at the Manchester Technology Centre, along with details of the business to be proposed and explanatory notes, will be available on the Group's website together with the annual report. All shareholders will be notified by post or email, at their request, when the documents have been made available.

Information to be disclosed under LR 9.8.4R

Listing Rule	Detail	Page Ref
LR 9.8.4 (1)	Capitalised interest	51
LR 9.8.4 (2)	Publication of unaudited information	51
LR 9.8.4 (6)	Long-term incentive schemes	70-93
LR 9.8.4 (10)	Contracts of significance which a director is interested in	70-93
LR 9.8.4 (5-9) and (11-16) (A)(B)	Not applicable	N/A

Capitalised interest

During the period, £59,046 of interest was capitalised by the Group, the tax benefit on this amount is £12,299.

Publication of unaudited financial information

On 2 April 2015, the company published a prospectus in connection with the acquisition of Accumuli plc (Prospectus). A copy of the Prospectus is available for inspection at www.morningstar.co.uk/uk/NSM

In accordance with LR 9.2.18R, if the company has published unaudited financial information in a prospectus, the company must reproduce that information in its annual report and accounts and also disclose the actual figures for the same period.

Accordingly, set out below is the unaudited information extracted from the Prospectus. For the purposes of LR 9.2.18R (2), the figures below as published in the Prospectus are the actual figures for the same period.

DIRECTORS' REPORT

Liquidity and capital resources

The capitalisation and indebtedness, distinguishing between guaranteed and unguaranteed, secured and unsecured indebtedness, of the Group are set out below. These figures are as of 31 January 2015, and have been extracted from the Group's unaudited management accounts.

Indebtedness	31 January 2015
	(£m)
Total current debt
Guaranteed	–
Secured	–
Unguaranteed/Unsecured	–
	–
Total Non-Current Debt (excluding current portion of long-term debt)
Guaranteed	–
Secured	46.8
Unguaranteed/Unsecured	–
Total indebtedness as at 31 January 2015	46.8

Capitalisation

This information is as at 31 January 2015 and has been extracted from the Group's unaudited management accounts. There has been no material change to the capitalisation of the Group since 31 January 2015.

Shareholders' Equity	31 January 2015
	(£m)
Share Capital	2.1
Share Premium	23.9
Other Reserves	0.3
Total Shareholders' Equity	26.3

Capital and reserves do not include the retained earnings reserve.

Net indebtedness of NCC Group in the short and medium term

The following table shows the net indebtedness of NCC Group as at 31 January 2015.

	31 January 2015
	(£m)
Cash	7.5
Liquidity	7.5
Current financial debt	–
	31 January 2015
	(£m)
Net current financial liquidity	7.5
Non-current bank loans	(46.8)
Non-current financial indebtedness	(46.8)
Net funds	(39.3)

The Group has a strong capital structure as at 1 April 2015 (being the latest practical date prior to the date of the prospectus), the total amount outstanding under Royal Bank of Scotland facilities was £48.1m and cash was £5.6m.

On behalf of the Board

Rob Cotton Chief Executive 8 July 2015

CORPORATE GOVERNANCE REPORT

THE BOARD IS COMMITTED TO GOOD CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES. IN RESPECT OF THE YEAR ENDED 31 MAY 2015, NCC GROUP HAS BEEN IN FULL COMPLIANCE WITH THE PROVISIONS OF THE CORPORATE GOVERNANCE CODE PUBLISHED BY THE FINANCIAL REPORTING COUNCIL IN SEPTEMBER 2012 (SEE WWW.FRC.ORG.UK) EXCEPT AS STATED IN THE BELOW.

Provision A.3.1.

The Company did not comply with the requirement that the Chairman meets the independence criteria set out below (note 26 to the financial statements and the section entitled independence of the Chairman and the Non-Executive Directors on page 58).

Provision B.2.1.

For the majority of the period the Company did not comply with the requirement that the Board should establish a Nomination Committee of which the majority of members should be independent Non-Executive Directors. During this time, the Senior Independent Non-Executive Director did however have a casting vote. With effect from 1 May 2015, when Chris Batterham was appointed to the Nomination Committee, the Company complied with the requirements of the Code.

The Board strongly believes that good corporate governance is more than just adherence to a set of rules. It is about ensuring that the Company is run efficiently and effectively within a defined framework of systems and controls with clearly defined authority and accountability. There is a clear division between the running of the Board and the running of the Company's business, however the Board is very conscious of its responsibility to review the strategy of the Company and to challenge, where appropriate, decisions made by the executive team in a frank, open and constructive manner.

The Board also reviews the Company's appetite for risk and understands the processes for reviewing risks and the judgments made as a result. Its review ensures that the Company is identifying the correct risks on which to focus and taking any appropriate actions to mitigate those risks.

The effectiveness of the Board is measured by individual director assessments and a rigorous annual board evaluation exercise. This year the matters considered as part of the board evaluation were the composition of the board including its range of knowledge and skills, the independence of its members, its diversity policy, its contribution to Company strategy, the effectiveness of its Committees, its ability to communicate, its attitude to risk and its overall efficiency.

The board review was positive, with useful ideas being generated, which will be acted upon in the forthcoming year. It is recognised that the Board needs constantly to develop its knowledge and skills so that it can respond to evolving market conditions and new business challenges and opportunities.

The different parts of the Company's governance framework are listed below and how it operates in practice.

Responsibilities

The Board.

The Board provides leadership and is responsible for the overall management of NCC Group, its strategy and long-term objectives. It ensures the right company structure is in place to deliver long-term value to shareholders and other stakeholders.

Committees of the Board.

The following formally constituted committees deal with specific aspects of the Group's affairs in accordance with their written terms of reference, which are reviewed regularly and are available on the Group's website www.nccgroup.trust.

The Audit Committee.

The Audit Committee's primary function is to assist the Board in fulfilling its financial and risk responsibilities. It also reviews financial reporting, risk management, the internal controls in place and the external audit process.

The Nomination Committee.

The Nomination Committee is responsible for considering the Board's structure, size, composition and for succession planning.

The Remuneration Committee.

The Remuneration Committee is responsible for determining the remuneration of the executive directors and approving the remuneration of senior managers.

Operational Board.

The Operational Board is responsible for assisting the Chief Executive in the performance of his duties including:

• developing the annual operating plan;
• monitoring the performance of the different divisions of the company against the plan;
• carrying out a formal risk review process;
• reviewing the Company's policies and procedures;
• prioritisation and allocation of resources; and
• overseeing the day to day running of the Company.

CORPORATE GOVERNANCE REPORT

Operation of Governance Framework

Role of the Board.

The Board is responsible to shareholders for the proper management of the Company, for its system of corporate governance and for the long-term success of the Company. Its role is to provide entrepreneurial leadership within a framework of prudent and effective controls. It is responsible for determining the nature and extent of risks it is willing to take to achieve the Group's strategic objectives. It receives information on, at least a monthly basis to enable it to review trading performance, forecasts and strategy and it has a schedule of matters specifically reserved for its decision. The most significant of these are:

• changes to the structure, size and composition of the Board;
• consideration of the independence of Non-Executive Directors;
• consideration of the balance of interests between shareholders, employees, customers, the community and the environment;
• review of the management structure and senior management responsibilities taking into consideration prudent succession planning;
• with the assistance of the Remuneration Committee, approval of remuneration policies across the Group;
• approval of strategic plans, annual operating plans and budgets and any material changes to them;
• oversight of the Group's operations ensuring competent and prudent management, sound planning, an adequate system of internal control and adequate accounting and other records;
• maintaining an appropriate relationship with the Group's auditors;
• reviewing the Group's risk management and internal control principles;
• health and safety matters;

• approval of corporate policies such as the Code of Ethics and Open Door Policy;

• approval of the Group's professional advisors;

• final approval of annual accounts and accounting policies;
• approval of treasury and banking policies;
• approval of the dividend policy;
• changes to the Group's capital structure;
• major changes to the Group's corporate structure or any change to its status as a public company;
• approval of the acquisition or disposal of subsidiaries and major investments and capital projects;
• delegation of the Board's powers and authorities, including the division of responsibilities between the Chairman, the Chief Executive and other Executive Directors; and
• receiving reports on the views of the Company's shareholders and approval of all documents put to shareholders at a general meeting or circulated to shareholders.

Operational management of the Group is delegated to the Operational Board of NCC Group. The Board also delegates other matters to Board committees and management as appropriate.

Procedures exist to allow Directors to seek independent legal and professional advice in respect of their duties at the Company's expense where the circumstances are appropriate.

The Board normally meets on a monthly basis. During the year, the Board met on fourteen scheduled occasions. The attendance of individual Directors at the scheduled Board meetings is shown in the table below. The Non-Executive Directors are contracted to spend a minimum of 24 days per annum on NCC Group affairs and on average spent 30 days on Company business during the year.

		Board meetings attended
Paul Mitchell	Non-Executive Chairman	12/12
Rob Cotton	Chief Executive	12/12
Atul Patel	Group Finance Director	12/12
Debbie Hewitt	Senior Non-Executive Director	12/12
Thomas Chambers	Non-Executive Director	12/12
Chris Batterham	Non-Executive Director	1/1

The Chief Executive in conjunction with the Chairman and other Board members plan the agendas, which are issued with the supporting board papers during the week before the meeting. These supporting papers provide appropriate information to enable the Board to discharge its duties.

Composition of the Board

The Board currently comprises two executive directors and four non-executive directors. During the year, an external recruitment company, Stark Brooks was retained with a brief to help the Company find an additional non-executive director to complement the Board. Accordingly an offer was made to Chris Batterham who became a Non-Executive Director on 1 May 2015. Chris has the extensive experience in technology companies and his skills will complement the Board.

The proportion of women Directors and Officers of the Board currently stands at 25% and women in senior management positions across the Group account for 15% as a whole. The Company's policy is to find, develop and keep a diverse workforce at all levels and it is committed to developing a culture where women can retain senior positions.

All Directors will submit themselves for re-election at the AGM every year.

The Chairman.

Role profiles are in place for the Chairman and Chief Executive Officer, which clearly set out the duties of each role. The Non-Executive Chairman, Paul Mitchell, is responsible for the running of the Board and promoting a culture of openness and debate.

Executive responsibility for the running of the Group's business rests with the Chief Executive Officer who is supported in this by the Group Finance Director and the Operational Board of NCC Group.

The Senior Independent Director.

Debbie Hewitt is the Senior Independent Non-Executive Director. The role of the Senior Independent Director is to provide a sounding board for the Chairman and to serve as an intermediary for other Directors when necessary. Her main responsibility is to be available to the shareholders should they have concerns that they have been unable to resolve through normal channels or when such channels would be inappropriate.

Company Secretary.

The role of the Company Secretary is to ensure good information flows within the Board and its Committees and between senior management and Non-Executive Directors. The Company Secretary is responsible for facilitating the induction of new directors and assisting with their professional development as required. All directors have access to the advice and services of the Company Secretary to enable them to discharge their duties as Directors.

The Company Secretary is responsible for ensuring that Board procedures are complied with and for advising the Board through the Chairman on governance matters. The appointment and removal of the Company Secretary is a matter for the Board as a whole.

CORPORATE GOVERNANCE REPORT

Independence of the Chairman and the Non-Executive Directors

After careful review, the Board has concluded that Debbie Hewitt, Thomas Chambers and Chris Batterham are independent. In coming to this assessment the Board considered the character of the individuals concerned and the fact that none of them:

• has ever been an employee of the Group;
• has ever had a material business relationship with the Group or receives any remuneration other than their salary/fees;
• has close family ties with advisors, other Directors or senior management of the Group that could reasonably be expected to cause a conflict;
• holds cross-directorships or has significant links with other Directors through involvement with other companies or bodies;
• represents a significant shareholder; or
• has served on the NCC Group Board for more than nine years from the date of their first election.

The Board recognises that the Chairman does not comply with this assessment as he has served as Chairman for 16 years and so does not meet the requirements for the Chairman to be independent. The Board has considered this and has put safeguards in place where this could impact his role. For areas where independence is deemed to be key to any decision making, the Senior Independent Non-Executive Director is able to assume that position of responsibility where necessary and has the casting vote.

Terms and conditions of appointment of Non-Executive Directors are available for inspection at the Company's registered office during normal business hours.

Conflicts of Interest

The Companies Act 2006 requires directors to avoid situations where they have, or could have, a direct or indirect interest that conflicts or potentially conflicts with the interests of the Company. The Company's Articles of Association require any Director with a conflict or potential conflict to declare this to the Board. That Director will not then be involved in the discussions relating to the proposal, transaction, contract or arrangement in which they have an interest, unless agreed otherwise by the Directors of the Company in the limited circumstance specified in the Articles of Association, nor will they be counted in the quorum or be permitted to vote on any issue in which they have an interest.

This approach has been followed throughout the year and the Board considers it to have operated effectively.

Board Effectiveness

The performance of the Board is a fundamental component of the Company's success and therefore the Board recognises the importance of reviewing its practices regularly. During the year, each of the Audit Committee, Remuneration Committee and Nomination Committee carried out an internal self-evaluation on their effectiveness and concluded that they continue to be effective and that no significant amendments are required to their operating procedures.

A detailed questionnaire on the performance of the Board was also circulated to all members of the Board for completion. A summary of the results and the resulting recommendations were then prepared and circulated to the Board. The main outcome of the evaluation was to put focus on the Board's main objectives for the coming year in particular the Group's succession planning in general, greater exposure of the Non-Executives to the Operational Board and focusing on monitoring and mitigating risks. Areas of strength included the performance of the Committees, the open and inclusive culture and the quality of information circulated to the Board.

The Senior Independent Non-Executive Director evaluated the performance of the Chairman and the Chairman evaluated the performance of each director. In addition the Non-Executive Directors met independently from the Executive Directors to discuss with the Chairman the overall functioning of the Board and his contribution in making it effective.

The Non-Executive Directors provide a strong independent element on the Board and are well placed to constructively challenge and help develop proposals on strategy and succession planning. Between them they bring an extensive and broad range experience to the Group and this has been extended by the appointment of Chris Batterham as an additional Non-Executive Director.

Diversity

The Board values the aims and objectives of the Davies report on women on boards. When considering appointments to the Board and other senior executive positions a thorough review of the skills, experience and knowledge of the candidates is carried out and appointments made on merit and appropriateness. At present 17% of the directors on the Board are women. Given the relatively small size of the board it would not seem appropriate to impose specific formulaic targets but it is the Company's intention to increase the gender and ethnic diversity of the board and senior management team as opportunities arise.

AUDIT COMMITTEE REPORT

Composition

The Audit Committee is chaired by Thomas Chambers, a Chartered Accountant, who has previously worked as the CFO of two telecommunications companies and held roles with Kleinwort Benson and PriceWaterhouseCoopers. He is therefore considered by the Board to have the recent and relevant experience required by the UK Corporate Governance Code 2012.

The other members of the Committee are the senior independent Non–Executive Director, Debbie Hewitt, who has a wide range of relevant business experience and since joining the Board Chris Batterham, a Chartered Accountant who has previously worked as a Finance Director. The Committee is now comprised of three independent Non-Executive Directors.

Summary biographies of each member of the Committee are included on pages 42 to 43. Each Committee member has significant experience of financial matters through their past and present business activities.

Meeting Frequency and Attendance

The Committee is required by its Terms of Reference to meet at least three times per year. During this financial year the Committee met four times. As well as the members of the Committee, the meetings are usually attended by the Chairman, Chief Executive and Finance Director. The external auditors also attend each meeting. During the year the Committee also meets with the external auditors without the executives present.

The attendance of individual Committee members at Audit Committee meetings is shown in the table below:

	Meetings attended
Thomas Chambers	4/4
Debbie Hewitt	4/4
Chris Batterham	-

The Audit Committee's Objectives and Responsibilities

The purpose of the Committee is to assist the Board in the discharge of its responsibilities for financial reporting and corporate control, including risk and to provide a forum for reporting by the external auditors. The Committee's Terms of Reference can be found in the Group's Investors' section of the Company's website (www.nccgroup.trust/uk/about-us).

The Terms of Reference are reviewed annually and have been updated to reflect the changes to the UK Corporate Governance Code 2012, requiring a determination of whether the Annual Report and Accounts, taken as a whole, is fair balanced and understandable.

The Committee's main responsibilities can be summarised as follows:

• to monitor the integrity of the financial statements and any formal announcements relating to the Group's financial performance, reviewing the material information and significant financial reporting judgements contained in them;
• to review the Group's internal financial control system, environmental monitoring and risk management systems;
• to review the nature and extent of significant financial and business risks to NCC Group and the mitigation of these risks;
• to make recommendations to the Board in relation to the appointment of the external auditor and to approve the remuneration and terms of engagement of the external auditors;
• to oversee the relationship with the external auditors including, but not limited to, independence, objectivity and effectiveness;

• to develop and implement policy on the engagement of the external auditors to supply non-audit services and to approve any fees for non-audit work paid to the auditors in excess of £10,000 (ten thousand pounds) in any 12 month period;

• to monitor the Company's whistle-blowing procedures;

• to review the Company's procedures for detecting fraud and the systems of control for the prevention and detection of bribery;
• to review regularly the need for an internal audit function;
• to review the audit findings with the external auditor including discussing any major issues which arise during an audit, the accounting and audit judgments made, the level of errors identified during the audit and the effectiveness of the audit; and
• to give due consideration to laws and regulations, the provisions of the UK Corporate Governance Code and the requirements of the UK Listing Authority's Listing, Prospectus and Disclosure and Transparency Rules and any other applicable rules as appropriate.

AUDIT COMMITTEE REPORT

Significant issues considered during the year in relation to the Financial Statements

During the year, the Committee reviewed and considered the following areas in respect of financial reporting and the preparation of the interim and annual financial statements:

• the appropriateness of the accounting policies used;
• the significant areas of judgement in the financial statements;
• compliance with external and internal financial reporting standards and policies;
• disclosures and presentations;
• the requirement for a formal internal audit function; and
• whether the Annual Report and Accounts taken as a whole are fair balanced and understandable and provide the information necessary to assess the Company's performance, business model and strategy.

In carrying out this review the Committee considered the advice of the Group's finance team and the external auditors' reports setting out their views on the accounting treatments and judgements included in the financial statements.

The significant accounting areas and judgements considered by the Committee were:

Revenue Recognition

The Group has defined its revenue recognition policies for each of its revenue streams in line with IAS 18 Revenue. The contracts entered into by the Group are of limited complexity and variety, although there are a large number of transactions.

The Group has three main types of revenue, Assurance, Escrow and Domain Services.

For Assurance, the results of partially completed contracts whether fixed price or on a time and materials basis are recognised on a percentage completion basis according to the number of days worked in comparison to the total contracted number of days by including the profit or loss earned on work completed to the balance sheet date. Provisions are made for any losses on uncompleted contracts expected to be incurred after the balance sheet date. For certain Assurance services, higher set up costs are incurred in the first month of the contract. Where this is the case the revenue associated with this is recognised at the same time as the costs, with the remainder deferred over the life of the contract.

For Escrow and Website Monitoring, other than fees attributable to initial setup of a new project/ contract and verifications, which are recognised upon completion, maintenance and escrow agreement revenue is deferred and released to the income statement on a straight-line basis over the life of the related agreement, on the basis that the performance is deemed to fall evenly over the contract period.

For Domain Services, Trademark Clearinghouse (TMCH) fees are deferred and released to the income statement on a straight-line basis over the life of the related agreement. Agreements are for durations of one, three or five years. Domain name registry fees are recognised on a straight line basis over the period specified in the customer agreement. Revenue from the contracted sale of domain names is recognised when the full title and rights to the domain name have transferred to the customer.

Management operate a number of key controls in relation to recording revenue. All incomplete Assurance projects are reviewed on a monthly basis and provisions made for any losses expected on uncompleted contracts.

Due to the predictable nature of Escrow and Website Monitoring income, actual revenue is compared to expected revenues on a monthly basis and management investigates differences.

The Committee has reviewed the papers prepared by management regarding the revenue recognition policies adopted in comparison to the requirements of IAS18 Revenue.

Revenue recognition is identified as an area of audit focus by our external auditors, KPMG, who compared management's revenue recognition papers to the requirements of IAS18 Revenue, and performed detailed substantive testing and analytical procedures, which enabled them to assess whether the revenue recognition policy adopted had been appropriately complied with. The outcome of this work was then reported to the Committee.

Software and development costs

The Group is undertaking a number of development projects aimed at producing new products and services whilst there is also the on-going investment in the Group's finance systems. As a result total costs of £8.5m have been capitalised in the year.

Given the significant value of the assets, there is an element of judgement in respect of the recoverability of the asset values and also in the classification of the expenditure as to whether it is capital rather than on-going operational in nature.

A key part of this investment has been the continued development of the domain services technologies to run both branded and .trust domains. This has been a key initiative for the Group and significant progress has been made towards bringing this product to market.

As a result of overlap in development with Open Registry and some changes in design the Group took the decision to write off £3.0m of previously capitalised costs. As a result net £3.1m of costs have been treated as capitalised development spend in accordance with IAS38. The total value of costs capitalised as at 31 May 2015 is £8.1m of which £3.0m relates directly to the ownership and delegation of the TLD .trust.

The Committee has addressed this issue through examining the reports received from management outlining the future plans for the business and its approach to classifying costs as capital in nature. The Committee receives regular updates from the Board regarding project progress and costs incurred. The Committee gains additional comfort that the business plans have received Board approval. This is another area of significant risk for the external auditors who have also obtained and challenged the latest business plans and the treatment of a sample of costs to ensure that only development costs have been capitalised.

AUDIT COMMITTEE REPORT

Accounting for Acquisitions

The Group completed the acquisition of Open Registry in January 2015 and Accumuli plc in April 2015. Management completed the exercise to determine the fair value of intangible assets and other net assets acquired in accordance with IFRS3.

The Committee has reviewed a summary of the key assumptions adopted, compared these assumptions to other recent company acquisitions and discussed with our external auditors, KPMG, the accounting for acquisitions and the completeness of related disclosures to ensure that they are complete, accurate, understandable and compliant with IFRS3.

Internal Audit

The Group again formally considered the need for an Internal Audit function, but was satisfied that for this year it was not necessary as the change in the roles of the different members of the finance team had effectively resulted in an internal audit. It is likely however that in the next 12 months, consideration will be given to developing an Internal Audit programme that will be delivered by a qualified auditor.

The CFO in the US, who had held a senior position in finance in the UK has reported to the Board on his observations on the internal controls in the US and regular visits are made to the US offices by members of the senior management team including the Group Finance Director.

Additional comfort is drawn from the internal controls and the Quality and Security procedures that are in place to support the regular internal and external audits that are conducted under the Group's ISO 9001 accredited quality assurance process. Further as the Group has expanded through organic growth and acquisitions, the external auditors KPMG, have extended their audit scope to ensure consistent audit coverage. All acquisitions are independently audited before their acquisition and undergo a comprehensive due diligence process.

These current arrangements are deemed sufficient given the structure of the Group's accounting function and the size of the Group, but it will continue to be reviewed each year.

Internal controls and Risk Management

The Board is responsible for establishing and maintaining the Group's system of internal control and reviewing its effectiveness. Internal control systems are designed to meet the particular needs of the Group and the risks to which it is exposed. By their nature however, internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable and not absolute assurance against material misstatement or loss. Key elements of the internal control system are described below. These have all been in place throughout the year and up to the date of this report and are reviewed regularly by the Board:

• clearly defined management structure and delegation of authority to Committees of the Board, subsidiary boards and associated business units;
• clearly documented internal procedures set out in the Group's ISO 9001:2008 accredited quality manual;
• high recruitment standards and formal career development and training to ensure the integrity and competence of staff;
• regular anti-bribery, security and compliance training;
• regular and comprehensive information provided to management, covering financial performance and key performance indicators, including non-financial measures;
• a detailed budgeting process where business units prepare plans for the coming year;
• procedures for the approval of capital expenditure and investments and acquisitions;

• monthly operational reviews to monitor and re-forecast results against the annual operating plan, with major variances followed up and management action taken where appropriate;

• regular internal audits of key processes and procedures under the Group's ISO 9001 and ISO 27001 accredited quality assurance process;

• on-going procedures to identify, evaluate and manage significant risks faced by the business and procedures to monitor the control systems in place to reduce these risks to an acceptable level;
• an annual detailed Group wide risk review supplemented by formal consideration of progress made against significant business risks at monthly operational board meetings; and
• monitoring of any whistle blowing or fraud reports.

The Board through the Audit Committee monitors the on-going process by which critical risks to the business are identified, evaluated and managed. The Company maintains a risk register, which:

• sets out the Group's risk appetite;
• identifies the key risks faced by the Group and assesses their likelihood and impact; and
• identifies the processes and controls in place to mitigate these risks.

The current principal risks and uncertainties to the Group are set out on page 30 to 33.

The Group's risks are monitored by the Committee and then assessed by the Board which sets aside time for in depth discussion of notable risks to the business. This year an in depth discussion has been held into the risks associated with the provision of the new services through the newly formed Domain Services division.

AUDIT COMMITTEE REPORT

External Auditor Appointment

The Committee reviews and makes recommendations with regard to the re-appointment of external auditors following a formal review of the auditor's performance following the June Audit Committee meeting. In making these recommendations the Committee considers:

• the experience, industry knowledge and expertise of the auditors;
• the scope and planning of the audit and any variations from plan;
• the quality of the processes adopted;
• the fees charged;
• their attitude to and handling of key audit judgements;
• their ability to challenge and communicate effectively with management; and
• the quality of the final report.

The Group's current auditors, KPMG LLP, have been in place since 1 November 2013. The Committee have considered the performance of the external auditors and the reports they have produced and have concluded it is appropriate to recommend to the Board the re-appointment of KPMG LLP as the Group's external auditor for the next financial year.

The choice of external auditor will be reviewed and a formal tender process considered every five years or sooner if the Board considers it appropriate.

Auditor's Independence

The Committee received a formal statement of independence from the external auditors.

The Company also operates a rigorous policy designed to ensure that the auditors' independence is not compromised by their undertaking inappropriate non-audit work. The Audit Committee's approval is therefore required for any fees for non-audit work paid to the auditors in excess of £10,000 (ten thousand pounds) in any financial year. However the Company recognises that it can receive particular benefit from certain non-audit services provided by the external auditors due to their technical skills and detailed understanding of the Company's business.

During this financial year £28,750 (2014: £70,000) non-audit fees were paid to the external auditor for the conclusion of expert systems advice, which started and was approved in 2014, in relation to the now settled claim against the provider of the aborted SAP system implementation project to the Group. The scope of the work proposed and related fee, was approved by the Committee in accordance with its terms of reference to ensure that there was no effect on the auditors' independence. £10,000 of the sum relates to the half year review by the auditors.

All significant pieces of non-audit work are put to informal tender to suitable parties, this includes if appropriate the auditors. Upon review as to suitability and price the work will then be placed to the provider recommended after approval by the Audit Committee if such approval is necessary in accordance with the rules set out above.

Related Party Transactions and other fees approved by the Committee

During the year the Audit Committee approved corporate finance fees payable to Rickitt Mitchell of £748,500 (2014: £85,000) in relation to the successful acquisition of Open Registry in January 2015 and Accumuli plc in April 2015. All of the fees are related directly to the execution and project management of the target acquisitions. Rickitt Mitchell neither seeks nor recommends potential acquisition targets to the Group and the Non Executive Chairman is excluded from all discussions on the approvals of fees.

Fair, balanced and understandable

At the request of the Board, the Committee considered whether the 2015 Annual Report and Accounts was fair balanced and understandable and whether it provided the necessary information for shareholders to assess NCC Group's performance, business model and strategy. The Committee was satisfied that taken as a whole the Report and Accounts are fair balanced and understandable.

Thomas Chambers Chairman, Audit Committee 8 July 2015

NOMINATION COMMITTEE REPORT

PAUL MITCHELL, CHAIRMAN OF THE BOARD, IS CHAIRMAN OF THE NOMINATION COMMITTEE. OTHER MEMBERS OF THE COMMITTEE ARE THE THREE INDEPENDENT NON-EXECUTIVE DIRECTORS, DEBBIE HEWITT, THOMAS CHAMBERS AND CHRIS BATTERHAM AND THE CHIEF EXECUTIVE, ROB COTTON.

The Company now meets the requirement for the Nomination Committee to contain a majority of independent Non-Executive Directors. Until this was the case, the Committee's constitution was such that Debbie Hewitt, as the Senior Independent Non-Executive Director, had a casting vote in the event of equality of votes.

The Nomination Committee's objectives and responsibilities

The Committee is responsible for reviewing the size, structure, balance, composition and progressive refreshing of the Board and as such its duties include:

• reviewing the structure of the board;
• evaluating the balance of skills, knowledge, experience and diversity on the Board;
• making recommendations for further recruitment to the Board or proposing changes to the existing Board;
• reviewing the leadership needs of the Company, both executive and Non-Executive;
• succession planning for Directors and other senior executives within the business; and
• reviewing annually the time required from the Non-Executive Directors.

The Non-Executive Chairman leads the process for the appointment of new Non-Executive Directors to the Board. For Executive Director positions, the Chief Executive leads the process.

In relation to an appointment, the Committee draws up a specification and assesses the capabilities required for such a role, including an assessment of the time commitment required. Candidates are sought by third party advisors and where appropriate through assessment of internal candidates and are then formally considered by the Nomination Committee.

All appointments are made on merit and against objective criteria with due regard for the benefits of diversity on the board, including gender. During the year three candidates for the position of Non-Executive Director were introduced by an external search agency Stark Brooks and interviewed by the Board, who selected Chris Batterham.

During the last financial year Stark Brooks provided other recruitment services to the Company and has no connection with the Company.

The Company and the Committee value the aims and objectives of the Davies report on women on boards and support and apply the Group's diversity policy set out on page 37.

No formal measurable objectives for female representation at board level have currently been set as the Committee is committed, while having regard to the diversity policy, to recommend only the most appropriate candidates for appointment to the Board. Currently 17% of the Directors and officers on the board are women.

When a new Director is appointed they receive a full, formal and tailored induction into the Company and discuss with the Chairman any immediate training requirements.

The Committee's terms of reference can be found in the Group's Investors' section of the Company's website, www.nccgroup.trust/uk/about-us. The terms of reference are reviewed annually and updated when necessary.

Committee Meetings

The Committee is required, in accordance with its terms of reference to meet at least twice per year. During this financial year the Committee met three times.

The attendance of individual Committee members at Nomination Committee meetings is shown in the table below:

	Meetings attended
Paul Mitchell	3/3
Rob Cotton	3/3
Debbie Hewitt	3/3
Thomas Chambers	3/3
Chris Batterham	-

Paul Mitchell Chairman, Nomination Committee 8 July 2015

REMUNERATION COMMITTEE REPORT

Statement by the Chairman of the Remuneration Committee

I am pleased to present the Directors' Remuneration Report for the year ended 31 May 2015. The Report is split in three sections, namely, this Annual Statement, the Directors' Remuneration Policy and the Annual Report on Remuneration.

The Directors' Remuneration Policy was approved at the 2014 Annual General Meeting held on 16 September 2014. The Remuneration Committee is not permitted to deviate from the approved policy for three years, unless it gains shareholder approval for an amended policy.

This approved policy reflects our overall philosophy of adopting clear, simple and market competitive remuneration schemes. The alignment of Executive remuneration with the objectives of the shareholders has been the principal focus, ensuring remuneration structures are fully attuned to the business strategy. We aim to balance the short, medium and long-term components of our remuneration, to ensure that we motivate and retain our Executives and keep them focused on delivering long-term, sustainable growth.

The Remuneration Strategy has been designed to reflect the needs of a large multi-national organisation, which is growing both organically through the innovation of products and services and through acquisitions which enable us to exploit new opportunities. The annual bonus encourages growth across all areas of the business and the Long Term Incentive Plan (LTIP) reflects our market related growth ambitions.

This year, NCC Group has grown both in the UK and internationally and continues to widen its geographical coverage for its clients. It has been a good year for the Group and performance has continued to improve. Adjusted operating profits have grown by 11% to £31.3m before the operational expenditure for Domain Services. This is slightly ahead of market consensus. This level of performance has been reflected in the performance-related elements of Executive remuneration.

The annual bonus for the year ended 31 May 2015 was based on the satisfaction of stretching pre-tax profit targets and performance over the year resulted in a payment of 72.8% of basic salary for both of the Chief Executive and Finance Director. 35% of this bonus will be deferred in shares and held for two years.

In addition, the growth in adjusted EPS over the last three years has resulted in the vesting of 15.4% of the LTIP awarded in the year ended 31 May 2012, for both of the Chief Executive and Finance Director. This reflects the very stretching targets that the Committee set for this period of growth. The target range for future LTIPs is set out on page 81 of this report.

Clawback provisions are in place for the Annual Bonus and the LTIP.

In addition to these performance related elements, the Committee has decided to award a salary increase of 5.96% to the Chief Executive. This percentage increase is in line with the overall salary review awarded to all other employees. In calculating the increase for all other employees, the impact of promotions has been excluded.

The Committee has also decided to award a salary increase of 11% to the Finance Director. This award reflects a market adjustment, which has been fully benchmarked. By way of context, he was appointed in 2011 on a lower quartile salary, to reflect his relative inexperience as a plc Finance Director. The Committee considers that he is now well established in the role and that the business has grown in both scale and complexity since his appointment, it is therefore fully appropriate to adjust his salary accordingly, to a median benchmark. Since his appointment in April 2011, the Finance Director's base salary of £175,000 has been increased by around 19% to bring him closer to a market level of base salary, and following this year's award of an 11% base salary increase the Finance Director's base salary will be in line with market levels.

The salary reviews of these two Executives are compliant with our Remuneration Policy and will be effective from 1 June 2015.

Finally, notwithstanding the fact that Executives do hold substantial shareholdings, we have added an Executive shareholding guideline to our policy this year. This change was made to further align the long-term interests of executives with those of shareholders.

At the Annual General Meeting in September 2015, the Annual Statement and Annual Report on Remuneration will be put to an advisory vote, which provides shareholders with the opportunity to voice their opinions on how the Committee has implemented the Remuneration Policy. The year ended 31 May 2015 was another good year of progress for NCC Group and in this context, we look forward to receiving your support on our approach to Remuneration at the Annual General Meeting.

Debbie Hewitt Chair of the Remuneration Committee 8 July 2015

REMUNERATION COMMITTEE REPORT

Remuneration Policy Report

The Directors' Remuneration Policy, approved at the 2014 AGM, has been reproduced on pages 72 to 79, save that the remuneration illustrations on page 77 have been updated to accurately reflect the Directors' remuneration for 2015/16. In addition to the remuneration policy, this section also sets out our shareholding guidelines which have been introduced this year on page 77.

The Committee has adopted a policy that ensures an appropriate balance between fixed remuneration and performance related incentives. The performance related elements have clearly defined stretching targets that link rewards to business performance in the short, medium and long-term.

All variable elements of remuneration are subject to claw back or repayment by any Executive, where achievement is deemed by the Committee to have been based upon fraud, deliberate error, or gross misrepresentation.

For the purposes of section 226D (6) (b) of the Companies Act 2006, the following policy took effect from 16 September 2014, the date of the 2014 AGM.

Current Policy Table for Executive Directors

Element	Purpose and link to strategy	Operation (including framework to assess performance)	Maximum opportunity
Salary	Attract, retain and reward.	The Remuneration Committee reviews salaries for Executive Directors annually unless responsibilities change. Pay reviews take into account Group and personal performance and externally benchmarked market data for companies operating in IT services, management consulting and relevant high-tech sectors which although not directly comparable provides an indicative range. In setting appropriate salary levels the Committee takes into account pay and employment conditions of employees elsewhere in the Group alongside the impact of any increase to base salaries on the total remuneration package. Any changes are effective from 1 June each year.	Details of current salaries are set out in the Annual Report on Remuneration (page 80). Salary increases are normally in line with those for other employees but also take account of other factors such as changes to responsibility and the complexity of the role.
Benefits	Attract, retain and reward.	Benefits in kind include the provision of a car or car allowance, payment of private fuel, car insurances, private medical insurance, life assurance and permanent health insurance. Executive Directors may be invited to participate in the Sharesave Scheme approved by HMRC.	Market competitive benefit level. SAYE Sharesave Scheme subject to HMRC approved limits.
Annual Bonus	Drive and reward sustainable business performance.	Based on a range of stretching targets measured over one year. This may include, but not exclusively, profit measures and strategic objectives. Performance below the minimum performance target results in no bonus. No more than 25% of the maximum opportunity is paid for achievement of the minimum performance target. The Committee has discretion to reduce the formulaic bonus outcome if individual performance is determined to be unsatisfactory or if the individual is the subject of disciplinary action. 35% of any bonus payment is deferred in shares for 2 years. Claw back provisions are in place.	Chief Executive 100% of salary. Finance Director 100% of salary.

Long Term Incentive Plan	Incentivise share ownership and long-term performance in line with Group strategy.	Awards have a performance period of three years. The level of vesting is determined by financial measures appropriate to the strategic priorities of the business, such as EPS and other measures considered appropriate. The Remuneration Committee has the discretion to determine the number of measures to be used. Performance below the minimum performance target results in no vesting. Performance between the minimum and maximum performance targets results in 20% to 100% of the award vesting. Should a change in control of the Group occur, crystallisation of any LTIP awards is within the discretion of the Remuneration Committee. Clawback provisions are in place.	Award over shares with a face value at grant of 100% of salary p.a.
Pension	Attract, retain and reward.	Executive Directors are entitled to a company pension contribution, which is paid into the Group defined contribution personal pension scheme. They can also opt to have the same level of contribution made as a % of salary.	10% of basic salary, providing they make a contribution of not less than 5% of basic salary.

Choice of performance measures and target setting

For both the annual bonus and LTIPs, our policy is to choose performance measures that help drive and reward the achievement of our strategy and which also provide alignment between Executives and shareholders. The Committee reviews metrics annually to ensure they remain appropriate and reflect the future strategic direction of the Group.

With regard to the annual bonus, the Remuneration Committee believes that a simple and transparent scheme with sufficiently stretching targets and an element of bonus deferral prevents short-term decisions being made and ensures that the Executive is entirely focused on the delivery of sustainable business performance, which significantly enhances shareholder value.

In setting targets, the Committee aims to reward steady, progressive growth. It is the Committee's view that inappropriately high targets can encourage inappropriate risk taking and in a Group where innovation and research is key to Group Strategy, it could result in these areas being dispensed with, thereby jeopardising the long terms aims of the Group.

With regard to the Long Term Incentive Plan, the Committee believes in setting demanding objectives in order to motivate and encourage long-term growth and enhance shareholder value.

REMUNERATION COMMITTEE REPORT

Differences in pay policy for employees and Executive Directors

The remuneration policy for Executive Directors is replicated throughout the Group and aims to attract and retain the best staff and to focus their remuneration on the delivery of long-term sustainable growth by using a mix of salary, benefits, bonus and longer term incentives.

As a result, no element of Executive Director remuneration policy is operated exclusively for Executive Directors:

• The annual performance related pay scheme for Executive Directors is largely the same as that of the Operational Directors and Senior Managers within the business and all are aligned with business objectives;
• Participation in the LTIP was extended in 2005 to other Senior Executives ensuring consistency in policy; and
• The pension scheme is operated for all permanent employees.

Executive shareholding guidelines

The Remuneration Committee has this year decided to adopt a guideline with regard to Executive shareholding. The Committee considers that each Executive Director of the Company should retain a personal holding of shares in the Company, the rationale being that this will expose those Directors to the same risks and rewards enjoyed by the Company's shareholders and as such align the interests of Executive Directors with the interests of the Company's shareholders.

The Executive Directors are expected to build and maintain a minimum holding of Company shares worth at least 100% of their base salary. They will have five years from the later of (i) the date of their respective appointment; and (ii) the 25 June 2015 (being the date the guidelines were initially adopted) to attain their minimum shareholding.

For the avoidance of doubt, Executive Directors are permitted to sell sufficient shares in order to the meet any tax obligation arising from vesting shares, notwithstanding that the Executive Director has not attained their minimum shareholding.

Both Executive Directors have holdings in the Company, as do a significant majority of the Operational Directors.

Non-Executive Director policy table

Element	Purpose and link to strategy	Operation	Maximum opportunity
Fees	Attract, retain and reward	Fees for the Non-Executive Directors are determined by the Board within the limits set by the Articles of Association and are based on information on fees paid in similar companies taking into account the experience of the individuals and the relative time commitments involved. Fees for the Non-Executive Directors are reviewed every three years.	Current fee levels are set out in the Annual Report on Remuneration page 81. Overall fee limit will be within the £300,000 limit set out in the Company's Articles of Association.

Approach to recruitment

The principles applied in the recruitment of a new Director is for the remuneration package to be set in accordance with the terms of the approved remuneration policy for existing Directors in force at the time of appointment. Further detail of this policy for each element of remuneration is set out below:

Salary.

Salaries for new hires, including internal promotions, will be set to reflect their skills and experience, the Company's intended pay positioning and the market rate for the applicable role.

Where it is appropriate to offer a below median salary initially, the Committee will have the discretion to allow phased salary increases over a period of time for newly-appointed Directors, even though this may involve increases in excess of the rate for the wider workforce and inflation.

Benefits.

Benefits will be provided in line with those offered to other Executive Directors, taking account of local market practice, with relocation expenses or arrangements provided if necessary. Tax equalisation may also be considered if an executive is adversely affected by taxation due to their employment with the Company. The Company may also pay legal fees and other costs incurred by the individual.

Incentive opportunity.

The aggregate on going incentive opportunity offered to new recruits will be no higher than that offered under the annual bonus plan and the LTIP to the existing Executive Directors. Different performance measures and targets may be set initially for the annual bonus plan, taking into account the responsibilities of the individual and the point in the financial year at which they join.

'Buyout' awards.

Sign-on bonuses are not generally offered by NCC Group but at Board level, the Committee may offer additional cash and/or share-based 'buyout' awards when it considers these to be in the best interests of the Company and, therefore, shareholders, including awards made under Listing Rule 9.4.2 R. Any such 'buyout' payments would be based solely on remuneration lost when leaving the former employer and would reflect the delivery mechanism such as cash, shares, options, time horizons and performance requirements attaching to that remuneration.

REMUNERATION COMMITTEE REPORT

Transitional arrangements for internal appointments to the Board.

In the case of an internal appointment, any variable pay element awarded in respect of the prior role may be allowed to pay out according to its terms on grant, adjusted as relevant to take into account the appointment. In addition, any other on-going remuneration obligations existing prior to appointment may continue, provided that they are put to shareholders for approval at the first AGM following their appointment.

Policy on payment for loss of office.

Payments on termination for Executive Directors are restricted to the value of salary and contractual benefits for the duration of the notice period. It is the policy of the Remuneration Committee to seek to mitigate termination payments and pay what is due and fair. There are no predetermined special provisions for Executive Directors with regard to compensation in the event of loss of office.

Elements of variable remuneration would be treated as follows:

Annual bonus.

The treatment of annual bonus payments upon cessation of employment is determined on a case by case basis. When the Committee determines that the payment of an annual bonus is appropriate, the annual bonus payment is typically:

• payable in cash without deferral pro-rated for the period of time served from the start of the financial year to the date of termination and not for any period in lieu of notice or garden leave and
• subject to the normal bonus targets, tested at the end of the year, and would take into account performance over the notice period.

The Committee also has the discretion to determine whether any deferred shares from previous annual bonus payments will vest at the normal vesting date or earlier on leaving or whether they lapse. If the Committee exercises this discretion, they can also determine if the vesting should be pro-rated to reflect time served since the beginning of the deferral date.

Long Term Incentive Plan.

Under the LTIP, unvested awards will normally lapse upon cessation of employment. However, in line with the plan rules, the Committee has discretion to allow awards to vest at the normal vesting date, or earlier. If the Committee exercises this discretion, awards are normally pro-rated to reflect time served since the date of grant and based on the achievement of the performance criteria.

All Employee Share Schemes.

The Executive Directors, where eligible for participation in all Employee Share Schemes, participate on the same basis as for other employees.

Approach to service contracts

and letters of appointment.

The Committee's policy is to offer service contracts for Executive Directors with notice periods of six to twelve months. In addition, the Executive Directors are subject to a non-compete clause from the date of termination, where enforceable.

All Non-Executive Directors' appointments are terminable on at least three months' notice on either side.

The Executive Directors and Non-Executive Directors offer themselves for re-election every year.

Illustration of remuneration scenarios

The chart below details the hypothetical composition of each Executive Director's remuneration package and how it could vary at different levels of performance under the policy set out on the previous page.

Amounts shown in the chart are in £'000

Note that the charts are indicative, as share price movements are excluded. Assumptions made for each scenario are as follows.

• Minimum.

Fixed remuneration only salary, benefits and pension. Salary based on 2015/16 salary and benefits based on 2014/15 disclosed benefit amounts.

• Target.

Fixed remuneration plus target annual bonus opportunity, £349k for the Chief Executive and £162k for the Finance Director, which is equivalent to 70% of salary for the Chief Executive and for the Finance Director plus 20% vesting of the maximum award under the Long Term Incentive Plan.

• Maximum.

Fixed remuneration plus maximum annual bonus opportunity, £498k for the Chief Executive and £232k for the Finance Director, which is equivalent to 100% of salary for the Chief Executive and 100% of salary for the Finance Director plus 100% vesting of the maximum award under the Long Term Incentive Plan which is 100% of salary for both the Chief Executive and Finance Director.

REMUNERATION COMMITTEE REPORT

Statement of consideration of employment conditions elsewhere in the Group

The Remuneration Committee does not consult directly with employees when determining remuneration policy for Executive Directors. However, as stated above, the annual bonus and LTIP are operated for other employees to ensure alignment of objectives across the Group and the terms of the pension benefit are the same for all permanent employees. In addition, the Committee receives information on general pay levels and policies across the Group when setting Executive Director pay levels.

How shareholder views are taken into account

The Remuneration Committee considers shareholder feedback received on the Directors' Remuneration Report each year and guidance from shareholder representative bodies more generally. Shareholders' views are key inputs when shaping remuneration policy. When any material changes are proposed to the remuneration policy, the Remuneration Committee Chairman will inform major shareholders in advance and will generally offer a meeting to discuss these.

Key areas of discretion in the remuneration policy

The Committee operates the Group's variable incentive plans according to their respective rules and in accordance with HMRC rules where relevant. To ensure the efficient administration of these plans, the Committee will apply certain operational discretions. These discretions are implicit in the policy stated above, but we have listed them for clarity. These include, but are not limited to:

• Whether annual bonus is paid to Executives once notice has been served;
• Discretion in exceptional circumstances to amend previously set incentive targets or to adjust the proposed pay-out to ensure a fair and appropriate outcome;
• Certain decisions relating to the Long Term Incentive Plan awards for which the Committee has discretion as set out in the rules of the relevant share plans which have been approved by shareholders; and
• The decisions on exercise of claw-back rights.

Legacy arrangements

For the avoidance of doubt, in approving this Policy Report, authority is given to the Company to honour any commitments entered into with current or former Directors before the current legislation on remuneration policies came into force or before an individual became a Director, such as the payment outstanding incentive awards, even where it is not consistent with the policy prevailing at the time such commitment is fulfilled.

Details of any payments to former Directors will be set out in the Annual Report on Remuneration as they arise.

External Directorships for Executive Directors

Executive Directors may accept Non-Executive Directorships with the prior agreement of the Board provided it does not conflict with the Group's interests and the time commitment does not impact upon the Executive Director's ability to perform their primary duty. The Executive Directors may retain the fees from external directorships.

REMUNERATION COMMITTEE REPORT

Annual Report on Remuneration

The following report will be subject to an advisory vote at the September 2015 AGM. It sets out how NCC Group's remuneration policy will be implemented in 2015/16 and how it has been implemented in 2014/15. This part of the report has been prepared in accordance with Part 3 of The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and 9.8.8R of the Listing Rules.

How will remuneration policy be implemented in the year ended 31 May 2016?

Executive Directors' Base Salaries.

Since the last salary review in the year ended 31 May 2015, the business has continued to grow in the UK and internationally and continues to widen its geographical coverage for its clients. The Committee has decided to award a salary increase of 5.96% to the Chief Executive. This percentage increase is in line with the overall salary review awarded to all other employees. In calculating the increase for all other employees, the impact of promotions has been excluded.

The Committee has also decided to award a salary increase of 11% to the Finance Director. This award reflects a market adjustment, which has been fully benchmarked. He was appointed in 2011 on a lower quartile salary, to reflect his relative inexperience as a plc Finance Director. The Committee considers that he is now well established in the role and that the business has grown in both scale and complexity since his appointment, it is therefore fully appropriate to adjust his salary accordingly, to a median benchmark.

The salary reviews of these two Executives are compliant with our Remuneration Policy and will be effective from 1 June 2015. They compare to the awards made last year to the Chief Executive of 9.3% and to the Finance Director of 4.5%. Further detail on these increases is set out below:

	Salary to 31 May 2015	Salary to 31 May 2016	% Increase
Chief Executive	£470K	£498K	5.96% (9.3% LY)
Finance Director	£209K	£232K	11.00% (4.5% LY)

Pension and Benefits.

There will be no changes to pension or benefits provision.

Annual Bonus.

The annual bonus maximum for the Chief Executive and Finance Director in 2015/16 will be 100% of salary. In addition, to ensure that this bonus opportunity also results in shareholder alignment and provides greater retention value, 35% of any bonus payment will be deferred in shares for 2 years. The bonus is also subject to claw back provisions.

Payments under the bonus will be based upon the achievement of profit targets set by the Remuneration Committee. The profit target will be based on delivery of the Group's own internal plans, which are comprehensively set, scrutinised and agreed by the Main Board overlaid on to the financial forecasts and expectations in the investor community.

Profit targets will be disclosed retrospectively in the 2017/18 Annual Report on Remuneration.

Long-term Incentive Plan (LTIP)

Awards of 100% of base salary will be made under the LTIP in August 2015 on the same terms as set out in the policy table. The performance conditions are as follows:

Growth in adjusted EPS over the period 1 June 2015 to 31 May 2018	% of LTIP award which will vest
Less than 9% per annum	0%
At or above 15% per annum	100%
Between 9% and 15% per annum	Between 20% and 100% on a straight-line basis

The Committee continues to consider, but has decided not to use, Total Shareholder Return as a measure, as there are no appropriate or sufficiently similar comparable organisations to compare the Group against.

Comparing the share performance against such a diverse sector as the Software and Services sector or the All Share Index, is outside the sphere of influence of the Executives. If this criterion had been included in the past, the rewards for the participating Executives and Senior Managers would have been considerably higher.

Non-Executive Directors' Remuneration

The fees for Non-Executives reflect a core fee for all Non-Executives then additional fees for the Chairman, those that Chair a Committee and also for the Senior Independent Director. The next review of fees will be in the year ended 31 May 2017.

£'000	Fees Year ended 31 May 2015	Fees Year ended 31 May 2016
Paul Mitchell	£75K	£75K
Debbie Hewitt	£51K	£51K
Thomas Chambers	£43K	£43K
Chris Batterham	£3K	£38K

Note: Chris Batterham was appointed to the Board on 1st May 2015.

How has the remuneration policy been implemented in the year ended 31 May 2015?

This section sets out how the remuneration policy was implemented in 2014/15. The key implementation decisions during the year related to:

• Determination of annual bonus outcomes for the 2014/15 performance period;
• Determination of the vesting level of LTIP awards which related to the 3 year performance period ending on 31 May 2015; and
• The value of awards to be granted under the LTIP, which will vest in 2018, based on a demanding 3-year EPS performance target.

Further detail on these decisions, together with other information on payments made to Directors, is set out in the following sections.

REMUNERATION COMMITTEE REPORT

Single Total Figure of Remuneration (Audited)

The detailed emoluments received by the Executive and Non-Executive Directors for the year ended 31 May 2015 are below. No payments were made for loss of office, and no payments were made to past Directors.

Director £000	Year ended	Base Salary / Non Executive Director Fees	Benefits1	Pension Contributions	Annual Bonus2	Long term incentive3	Other4	Total
Rob	31 May 2015	£470k	£29k	£47k	£342k	£105k	-	£993k
Cotton	31 May 2014	£430k	£31k	£43k	£206k	£363k	£16k	£1,089k
Atul	31 May 2015	£209k	£26k	£21k	£152k	£49k	£11k	£468k
Patel	31 May 2014	£200k	£27k	£20k	£77k	£157k	-	£481k
Paul	31 May 2015	£75k	-	-	-	-	-	£75k
Mitchell	31 May 2014	£65k	-	-	-	-	-	£65k
Debbie	31 May 2015	£51k	-	-	-	-	-	£51k
Hewitt	31 May 2014	£45k	-	-	-	-	-	£45k
Thomas	31 May 2015	£43k	-	-	-	-	-	£43k
Chambers	31 May 2014	£38k	-	-	-	-	-	£38k
Chris	31 May 2015	£3k	-	-	-	-	-	£3k
Batterham5	31 May 2014	-	-	-	-	-	-	-

1 Taxable benefits include the provision to every Executive Director of a car or car allowance, payment of private fuel, car insurances, private medical insurance, life assurance and permanent health insurance.

2 Annual Bonus payments for performance in the relevant financial year. 35% of this bonus is deferred in shares for two years.

3 Long-term incentive awards vesting under the LTIP. Further detail is set out on page 84.

4 The value of the awards vesting under the SAYE. Further details may be found on page 86.

5 Chris Batterham was appointed as a Non Executive Director to the Board on 1 May 2015.

Annual Bonus

For the year ended 31 May 2015, the maximum bonus opportunity for Rob Cotton was £470,000 (100% of salary), and for Atul Patel £209,000 (100% of salary). The actual bonus pay out of £342,141 for Rob Cotton and £152,144 for Atul Patel represented 72.8% of the maximum opportunity for Rob Cotton and Atul Patel and was determined by performance against profit targets established at the start of the financial year. 35% of each payment will be deferred in shares for two years.

The Committee has determined that performance targets for the year ended 31 May 2015 annual bonus are market sensitive and has committed to disclosing these targets in the 2017/2018 annual report on remuneration. In line with this policy, we have set out below performance against the profit targets for the year ended 31 May 2013 annual bonus.

		31 May 2013 adjusted Profit Before Tax	31 May 2013 Annual Bonus payments
			Rob Cotton	Atul Patel
Performance	Threshold	£21.7M	£70,000	£26,250
condition	Target	£24.1M	£200,000	£75,000
	Maximum	£28.9M	£280,000	£135,000
Actual performance		£23.0M	£138,900	£52,088

Although bonuses of £138,900 for Rob Cotton and £52,088 for Atul Patel were earned for the year ended 31 May 2013, both Executive Directors waived their rights to these bonuses.

REMUNERATION COMMITTEE REPORT

Long-term incentive plan vesting

LTIP awards vesting based on performance up to the end of the year ended 31 May 2015 were based on an extremely demanding 3 year EPS growth performance condition. Group EPS performance met the performance target, which resulted in 49,510 shares vesting to Rob Cotton and 23,028 shares vesting to Atul Patel. As shown in the table below, this represents 15.4% of the total award.

Executive	Number of LTIP shares awarded	% of shares vesting	Value of shares vesting
Rob Cotton	321,492	15.4%	£104,714
Atul Patel	149,532	15.4%	£48,704

The value shown in the single figure is based on the average share price over March, April and May.

Further detail on the performance condition relating to these awards is set out below:

	Growth in adjusted EPS over the period 1 June 2012 to 31 May 2015	% of LTIP award which will vest
Performance condition	Less than 10% per annum	0%
	At or above 25% per annum	100%
	Between 10% and 25% per annum	Between 0% and 100% on a straight-line basis
Actual performance	11.4% per annum	9.5%

Scheme interests awarded during the year (Audited)

LTIP awards granted in the year.

On 6 August 2014, Executive Directors were granted awards, which will vest in 2017 subject to the demanding performance conditions that were set out in last year's Report on Remuneration. The value of these awards will be included in the single figure table in the year ended 31 May 2017 remuneration report following the end of the performance period. The awards are set out below.

Executive	Number of LTIP awards1	Basis	Face Value2	Performance condition	Performance period
Rob Cotton	228,432	100% of base salary	£470,000	Vesting will be determined	31 May 2014 to 31 May 2017
Atul Patel	101,579	100% of base salary	£209,000	by growth in adjusted EPS over the performance period	31 May 2014 to 31 May 2017

1 LTIP awards are structured as nil-cost options.

2 Based on a share price of £2.0575 which was the closing mid-market price of the Company's shares on the day before the date of grant.

The performance condition for these awards is set out below:

	Average annual growth in adjusted EPS over the period 1 June 2014 to 31 May 2017	% of LTIP award which will vest
Performance condition	Less than 9% per annum	0%
	At or above 15% per annum	100%
	Between 9% and 15% per annum	Between 20% and 100% on a straight-line basis

REMUNERATION COMMITTEE REPORT

SAYE options granted and exercised in the year

The Group operates a HMRC approved SAYE scheme. All eligible employees, including Executive Directors, may be invited to participate on similar terms for a fixed period of three years. During the year both Executive Directors opted to participate in this scheme.

These awards will be included in the other column of the single figure table in the 2016/17 and in the 2017/18 annual remuneration reports, once they have vested.

Executive	Date of Grant	Number of options	Basis	Face Value	Exercise price	Performance condition	Vesting Date
Rob Cotton	5 Aug 2013	7,945	£250 per month contribution over a 3 year period	£11,2481	£1.1327	Awards vest subject to continued employment	October 2016
Rob Cotton	4 Aug 2014	5,933	£250 per month contribution over a 3 year period	£12,4592	£1.5167	Awards vest subject to continued employment	October 2017
Atul Patel	4 Aug 2014	11,867	£500 per month contribution over a 3 year period	£24,9212	£1.5167	Awards vest subject to continued employment	October 2017

1 Calculated on the price of £1.4158, which was the average midmarket share price over the three days preceding the date of grant.

2 Calculated on the price of £2.10, which was the average midmarket share price over the three days preceding the date of grant.

Executive	Date of Grant	Number of Options	Basis	Face Value1	Exercise Price	Performance Condition	Vesting Date	Share price on date of exercise2	Value of options on date of exercise3
Atul Patel	4 Aug 2011	10,596	£250 per month contribution over a 3 year period	£11,274	£0.8516	Awards vest subject to continued employment	October 2014	£1.850	£19,603

Atul Patel also exercised options under the SAYE scheme, which matured in October 2014. This award is detailed in the table below and is included in the single figure table on page 82.

1 Calculated on the midmarket price of £1.064, which was the average midmarket price over the three days preceding the date of grant.

2 Midmarket price on 8 October 2014.

3 Net taxable profit was £10,603 after deducting £9,000 saved from salary under plan.

Directors' interests in shares (Audited)

The tables below set out details of Executive Directors outstanding share awards, which will vest in future years subject to performance and/or continued service.

	Date of awards	Maximum number of options granted	Performance period	Exercise period	Share price on date of grant £	Exercise price £1
Rob Cotton	11 July 2011	374,1302	3 years	1 year	1.082	Nil
	9 July 2012	321,492	3 years	1 year	1.337	Nil
	8 July 2013	312,727	3 years	1 year	1.375	Nil
	6 Aug 2014	228,432	3 years	1 year	2.058	Nil
Atul Patel	11 July 2011	161,6583	3 years	1 year	1.082	Nil
	9 July 2012	149,532	3 years	1 year	1.337	Nil
	8 July 2013	145,454	3 years	1 year	1.375	Nil
	6 Aug 2014	101,579	3 years	1 year	2.058	Nil

LTIP - maximum awards granted

1 Total exercise price of £1.00 on each occasion.

2 187,813 of these awards vested to Rob Cotton in 2014. The remainder lapsed.

3 81,152 of these awards vested to Atul Patel in 2014. The remainder lapsed.

Summary of maximum awards outstanding

	Total LTIP Options held at 31 May 2014	Granted during the period	Exercised during the period	Share price on date of exercise	Lapsed during the period	Total LTIP Options held at 31 May 2015
Rob Cotton	1,008,349	228,432	187,813	£1.88	186,317	862,651
Atul Patel	456,644	101,579	81,152	£1.88	80,506	396,565

All awards granted under the LTIP are subject to continued employment and the satisfaction of the performance conditions as set out below. The awards are all nil cost options.

REMUNERATION COMMITTEE REPORT

Performance conditions for the above awards

The outstanding awards up to the period 31 May 2014 disclosed above are subject to the same performance conditions. If adjusted EPS growth is equal to 25% or more per annum then 100% of the award will vest. If, however, growth is less than 10% per annum, none of the award governed by the EPS condition will vest. Performance between the two points of measure will be determined on a straight-line basis.

The outstanding awards from the period 1 June 2014 disclosed above are subject to the following performance conditions. If adjusted EPS growth is equal to 15% or more per annum then 100% of the award will vest. If, however, growth is less than 9% per annum, none of the award governed by the EPS condition will vest. Performance between the two points of measure will be determined between 20% and 100% on a straight-line basis.

Share ownership

The beneficial and non-beneficial interests of the directors in the share capital of NCC Group at 31 May 2015 are set out below.

		Beneficial Interests in ordinary shares		Maximum Share awards subject to performance conditions2		Share options		Total
	31 May 2014	31 May 2015	31 May 2014	31 May 2015	31 May 2014	31 May 2015	31 May 2014	31 May 2015
Rob Cotton	5,297,191	5,396,555	1,008,349	862,651	7,9453	13,8785	6,313,485	6,273,0842
Atul Patel	30,000	83,530	456,644	396,565	10,5964	11,8676	497,240	491,962
Paul Mitchell	629,600	629,600	-	-	-	-	629,600	629,600
Debbie Hewitt	33,990	33,990	-	-	-	-	33,990	33,990
Thomas Chambers	19,000	19,000	-	-	-	-	19,000	19,000
Chris Batterham	-	20,000	-	-	-	-	-	20,000

1 This information includes holdings of any connected persons.

2 These awards represent the outstanding LTIP interests, which are included in the table on page 87.

3 Represents the SAYE scheme interest, which will vest in October 2016.

4 Represents the SAYE scheme interest, which vested in October 2014.

5 Represents the SAYE scheme interest, which will vest in October 2016 and 2017.

6 Represents the SAYE scheme interest, which will vest in October 2017.

Shareholding requirements

The Remuneration Committee has this year decided to adopt a guideline with regard to Executive beneficial shareholding. The Executive Directors are expected to build and maintain a minimum holding of Company shares worth at least 100% of their base salary. They will have five years from the later of (i) the date of their respective appointment; and (ii) the 25 June 2015, the date that the guidelines were initially adopted, to attain their minimum shareholding.

	Shareholding requirements (% of current salary)	Current shareholding (% of salary)	Requirement met
Rob Cotton	100%	2463%	Yes
Atul Patel	100%	86%	No

Relative importance of the spend on pay

The following table sets out the percentage change in distributions to shareholders and employee remuneration costs.

	31 May 2015	31 May 2014	% Change
Employee remuneration costs (£m)1	73.2M	56.5M	29%
Dividends (£m)2	7.6M	6.8M	13%

1 Based on the figure shown in note 5 to the Financial Statements.

2 Based on the cash returned to shareholders in the year ended 31 May 2015 through dividends as shown in note 8 to the Financial Statements.

REMUNERATION COMMITTEE REPORT

Percentage increase in the remuneration of the Chief Executive

The table below shows the movement in the salary, benefits and annual bonus for the Chief Executive between the current and previous financial year compared to all employees of the Company.

Element of remuneration		% increase/(decrease)
Salary	Chief Executive	6.0%
	Employees	6.3%
Taxable benefits	Chief Executive (% of salary)	(13)%
	Employees (% of salary)	2%
Annual Bonus	Chief Executive (% of salary)	52%
	Employees (% of salary)	(1)%

Performance graph and table

The following graph shows the total shareholder return, with dividends reinvested, from 31 May 2009 against the corresponding changes in a hypothetical holding in shares in the FTSE All Share Index.

The FTSE All Share represents broad equity indices' in which the company is a constituent member and gives a market capitalisation-based perspective.

During the year the Company's share price varied between £1.72 and £2.29 and ended the year at £2.12.

Six-Year Historical TSR Performance Growth in the Value of a Hypothetical £100 Holding Over Six Years FTSE All Share Comparison Based on Spot Value

The share price was £1.79 on 2 June 2014 and £2.12 on 1 June 2015 an increase of 19% in the year.

The table below shows the total remuneration for the Chief Executive over the same six year period including share awards valued at the date they vested.

Year Ending	Chief Executive	Total Remuneration (£000)	Annual Bonus (% of max)1	Long-term incentives (% of max)2
31 May 2015	Rob Cotton	£993	73%	15%
31 May 2014	Rob Cotton	£1,089	73%	50%
31 May 2013	Rob Cotton	£1,118	0%3	63%
31 May 2012	Rob Cotton	£1,074	85%	70%
31 May 2011	Rob Cotton	£1,222	67%	54%
31 May 2010	Rob Cotton	£836	71%	72%

1 Note that this shows the annual bonus payments as a percentage of the maximum opportunity.

2 Shows the number of shares, which vested as a percentage of the maximum number of shares, which could have vested.

3 In 2012/13 Rob Cotton waived his right to a bonus, which would have been equal to 32% of salary. This was equivalent to 50% of the maximum bonus opportunity.

REMUNERATION COMMITTEE REPORT

Membership and attendance

The Remuneration Committee membership consists solely of Non-Executive Directors and comprises Debbie Hewitt as Chairman, Thomas Chambers and Chris Batterham who joined the Committee in May 2015.

The Non-Executive Chairman, Chief Executive and Company Secretary attend the Remuneration Committee by invitation and assists the Committee with its considerations. No Director is involved in setting their personal remuneration plan.

The attendance of individual Committee members at Remuneration Committee meetings is shown in the table below:

	Meetings attended
Debbie Hewitt	7/7
Paul Mitchell1	6/6
Thomas Chambers	6/7
Chris Batterham	1/1

1 Paul Mitchell resigned from the Committee on 20 November 2014.

Adviser to the Committee

During the year, the Committee received no advice on Senior Executive remuneration and employee share schemes.

In 2014 the Committee received advice from New Bridge Street and was comfortable that the advice was objective and independent. The total fee charged 2014/15 was £6,950. The Committee reviews the performance and independence of its advisers on an annual basis.

Service contracts and letters of appointment

The service contracts and letters of appointment of the Directors include the following terms.

Executive	Date of contract	Date of contract
Rob Cotton	8 July 2004	1 year
Atul Patel	19 April 2011	6 months
Non Executive
Paul Mitchell	26 June 2007	3 months
Debbie Hewitt	18 September 2008	3 months
Thomas Chambers	20 September 2012	3 months
Chris Baterham	9 April 2015	3 months

Dilution

The LTIP has a dilution limit, for new and treasury shares, of 10% of the issued ordinary share capital of the Company in any 10 year period for any share option scheme operated by the Company. As at 31 May 2015 the Company had utilised 18,294,498 (31 May 2014: 18,240,271) ordinary shares through LTIP, SAYE, EMI, CSOP, ISO and ESPP awards counting towards the 10% limit which represents 7.98% (2014: 8.75%) of the issued ordinary share capital of the Company.

Statement of shareholder voting

At last year's AGM, the Directors' Remuneration policy received the following votes from shareholders.

Total number of votes	% of votes cast
163,136,669	99.95%
83,317	0.051%
163,219,986	100.0%
9,377,487
172,597,473	100.0%

1 A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast "for" and "against" a resolution.

At last year's AGM, the Directors' Remuneration policy received the following votes from shareholders.

	Total number of votes	% of votes cast
For	164,947,279	99.96%
Against	75,906	0.0005%
Total votes cast (for and against excluding withheld votes)	165,023,185	100.0%
Votes withheld1	7,574,288
Total votes cast (including withheld votes)	172,597,473	100.0%

Approved by the Board and signed on its behalf:

Debbie Hewitt Chair of the Remuneration Committee 8 July 2015

FINANCIAL STATEMENTS

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and the group and parent company financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare group and parent company financial statements for each financial year. Under that law they are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial statements on the same basis.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group and parent company financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether they have been prepared in accordance with IFRSs as adopted by the EU; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

Responsibility statement of the Directors in respect of the annual financial report

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and
• the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group's position and performance, business model and strategy.

By Order of the Board

Rob Cotton Chief Executive 8 July 2015

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF NCC GROUP PLC ONLY

Opinions and conclusions arising from our audit

1. Our opinion on the financial statements is unmodified

We have audited the financial statements of NCC Group plc for the year ended 31 May 2015 set out on pages 100 to 149. In our opinion:

• the financial statements give a true and fair view of the state of the Group's and of the parent company's affairs as at 31 May 2015 and of the Group's profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU);
• the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

2. Our assessment of risks of material misstatement

In arriving at our audit opinion above on the financial statements, the risks of material misstatement that had the greatest effect on our audit were as follows:

Recoverability of software and development intangibles (£19,427k)

Refer to page 63 (Audit Committee report), pages 111-112 note 1 (accounting policies) and page 125-126 note 11 (financial disclosures)

• The risk The group capitalises internal and external costs in respect of software and development projects. The Group has continued to develop assets in respect the NCC Group Domain Services project and Web Performance projects during the year and expects to generate further revenue from these projects during the next financial year and beyond. The Directors apply judgement in assessing whether sufficient revenue and profitability will be generated by the Domain Services and Web Performance projects to ensure the recoverability of the assets recognised on the balance sheet. The group has also capitalised costs in relation to the finance and operational systems upgrades and expects these upgrades to become operational in the forthcoming final year. The Directors also apply judgement in the classification of expenditure as capital in nature rather than on-going operational expenditure.
• Our response Our audit procedures included detailed testing of the inputs into the Group's project forecasts, assessment of the historical accuracy of the Directors' forecasting, success rates of past projects, and interviews with key operational personnel. Certain of the key inputs, specifically customer sign up rates, revenue growth, timing and amount of capital expenditure and cost of sales, and discount rate applied to future cash flows - all require significant estimation and judgement. For these key inputs we critically assessed the reasonableness of the assumptions with reference to internal and external information. With regard to the discount rate applied to future cash flows to assess recoverability we used our corporate finance valuations specialists to assist us. We assessed whether costs had been appropriately capitalised in respect of significant projects by comparison to the recognition criteria of relevant accounting standards for a sample of costs. We evaluated the adequacy of the Group's disclosures in respect of the risks inherent in the projects as at the year end date.

Business combinations (Total consideration £66,021k, acquired intangibles £24,712k, goodwill £62,680k)

Refer to page 64 (Audit Committee report), page 113 note 1 (accounting policies) and pages 129-132 note 15 (financial disclosures)

• The risk The Group made two significant acquisitions during the year. This is a significant risk area due to the judgements involved, including in relation to the identification and fair value measurement of assets and liabilities acquired, particularly separately recognised intangible assets. Additionally, judgement is required in determining the fair value of contingent consideration payable.
• Our response In this area our audit procedures included using our own valuation specialists' knowledge to assist us in challenging the methodology used to identify the intangibles acquired and the approach to the valuation thereof. We assessed the cash flows applied within the valuation models and the key assumptions applied to the cash flows, such as the discount and growth rates, using internal and external data. In respect of fair value adjustments we considered whether the fair value adjustments made were relevant and complete. We also assessed the Group's assumptions used in the valuation of contingent consideration with reference to budgeted growth rates. We considered the adequacy of the Group's disclosures in respect of accounting for business combinations.

Revenue recognition (Revenue £133,696k, deferred income £31,861k, accrued income £12,173k)

Refer to pages 62- 63 (Audit Committee report), page 113 note 1 (accounting policies) and pages 117 -118 note 2 (financial disclosures)

• The risk The Group delivers a range of services to customers. The Group has defined its policies on revenue recognition and the timing of revenue recognition. Contracts entered into by the Group are of limited complexity and variety. However there are a large number of transactions to be processed. As such revenue recognition is an area of audit focus.
• Our response In this area our audit procedures included critically evaluating the application of the revenue recognition policy with reference to the requirements of relevant accounting standards. We also:
• tested the model that allocates revenue across periods,
• selected a sample of amounts invoiced within close proximity to the year end to consider whether revenue was correctly deferred or accrued as at the balance sheet date based on the underlying contract terms,
• considered the ageing of accrued income balances against our expectation, to identify any issues with performance of obligations; and
• performed analysis of sales trends and accrued and deferred revenue balances, based on historical growth rates, and compared movements to our expectations.

We also considered the adequacy of the Group's disclosures in respect of revenue recognition.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF NCC GROUP PLC ONLY

3. Our application of materiality and an overview of the scope of our audit

The materiality for the financial statements as a whole was set at £1.3 million, determined with reference to a benchmark of Group profit before tax normalised to exclude exceptional items, of £22.0 million, of which it represents 5.9%.

We reported to the Audit Committee any corrected or uncorrected identified exceeding £60,000, in addition to other identified misstatements that warranted reporting on qualitative grounds.

Of the Group's 19 reporting components, audits for Group reporting purposes were performed by the Group audit team for 12 components which have significant operations in the UK and US. In addition, the Group team performed specified risk-focused audit procedures for two other components in the Netherlands and Denmark and in relation to the two components acquired during the year. The latter were not individually financially significant enough to require an audit for group reporting purposes, but did present specific individual risks that needed to be addressed.

The components within the scope of our work accounted for the following percentages of the Group's results:

	Number of components	Group revenue	Group profit before tax	Group total assets
Audits for group reporting purposes	12	92%	93%	90%
Specified risk-focused audit procedures	4	7%	5%	8%
Total	16	99%	98%	98%

For the remaining components, we performed analysis at an aggregated group level to re-examine our assessment that there were no significant risks of material misstatement within these.

The audits undertaken for Group reporting purposes were performed to materiality levels which ranged between £200,000 and £800,000, having regard to the mix of size and risk profile of the Group across the components.

4. Our opinion on other matters prescribed by the Companies Act 2006 is unmodified

In our opinion:

• the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and
• the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
• information given in the Corporate Governance Statement set out on pages 54-59 with respect to internal control and risk management systems in relation to financial reporting processes and about share capital structures is consistent with the financial statements.

5. We have nothing to report in respect of the matters on which we are required to report by exception

Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have identified other information in the annual report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading.

In particular, we are required to report to you if:

• we have identified material inconsistencies between the knowledge we acquired during our audit and the directors' statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's performance, business model and strategy; or
• the Audit Committee Report does not appropriately address matters communicated by us to the Audit Committee.

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
• the parent company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting returns and records; or
• certain disclosures of directors' remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review:

• the directors' statement, set out on page 95, in relation to going concern; and
• the part of the Corporate Governance Statement on pages 54-59 relating to the company's compliance with the ten provisions of the 2012 UK Corporate Governance Code specified for our review.

We have nothing to report in respect of the above responsibilities.

Scope and responsibilities

As explained more fully in the Directors' Responsibilities Statement set out on page 94, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate. This report is made solely to the company's members as a body and is subject to important explanations and disclaimers regarding our responsibilities, published on our website at www.kpmg.com/ukauditscopeukco2014a, which are incorporated into this report as if set out in full and should be read to provide an understanding of the purpose of this report, the work we have undertaken and the basis of our opinions.

Stuart Burdass (Senior Statutory Auditor) for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants 1 St Peter's Square Manchester M2 3AE 8 July 2015

CONSOLIDATED INCOME STATEMENT

	Notes	2015	2014
		£000	£000
Revenue	2	133,696	110,661
Cost of sales		(92,828)	(71,193)
Gross profit		40,868	39,468
Administrative expenses before amortisation of acquired intangible assets, share-based payments and exceptional items		(14,473)	(13,440)
Operating profit before amortisation of acquired intangibles,
share-based payments and exceptional items		26,395	26,028
Amortisation of acquired intangible assets		(2,207)	(2,116)
Share-based payments	21	(991)	(1,108)
Exceptional items	3	(588)	1,268
Total administrative expenses		(18,259)	(15,396)
Operating profit	2, 4	22,609	24,072
Financial income	6	10	24
Finance expense excluding unwinding of discount		(936)	(765)
Net financing costs excluding unwinding of discount		(926)	(741)
Unwinding of discount relating to contingent consideration on business combinations	3	(262)	(120)
Financial expenses	6	(1,198)	(885)
Net financing costs		(1,188)	(861)
Profit before taxation		21,421	23,211
Taxation	7	(4,633)	(5,104)
Profit for the year		16,788	18,107
Attributable to equity holders of the parent company		16,788	18,107
Earnings per share from continuing operations	9
Basic earnings per share		8.0p	8.7p
Diluted earnings per share		7.8p	8.6p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Notes	2015	2014
		£000	£000
Profit for the period		16,788	18,107
Items that may be reclassified subsequently to profit or loss (net of tax)
Foreign exchange translation differences		(388)	(1,968)
Total comprehensive income for the period, net of tax		16,400	16,139
Attributable to:
Equity holders of the parent		16,400	16,139

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 MAY 2015

	Notes	2015		2014
		£000	£000	£000	£000
Non-current assets
Intangible assets	11	204,936		110,064
Plant and equipment	12	9,376		6,244
Investments	13	553		-
Deferred tax assets	16	4,318		2,299
Total non-current assets			219,183		118,607
Current assets
Trade and other receivables	14	44,429		28,691
Cash and cash equivalents		16,353		11,212
Total current assets			60,782		39,903
Total assets			279,965		158,510
Equity
Issued capital	22	2,293		2,085
Share premium		23,964		23,634
Merger reserve		42,308		-
Reserve for own shares		(464)		(1,075)
Retained earnings		65,064		56,003
Currency translation reserve		(1,439)		(1,051)
Total equity attributable to equity holders of the parent			131,726		79,596
Non-current liabilities
Other financial liabilities	19	392		484
Deferred tax liability	16	10,119		2,444
Finance leases		64		-
Contingent consideration on acquisitions	19	7,434		1,001
Interest bearing loans	19, 20	57,155		34,786
Total non-current liabilities			75,164		38,715
Current liabilities
Trade and other payables	17	27,972		17,363
Interest bearing loans	20	9,750		-
Contingent consideration on acquisitions	17	-		2,940
Deferred revenue	18	31,861		17,207
Current tax payable		3,492		2,689
Total current liabilities			73,075		40,199
Total liabilities			148,239		78,914
Total liabilities and equity			279,965		158,510

These financial statements were approved by the Board of Directors on 8 July 2015 and were signed on its behalf by:

Rob Cotton Chief Executive NCC Group plc 4627044 8 July 2015

COMPANY STATEMENT OF FINANCIAL POSITION

AT 31 MAY 2015

	Notes		2015		2014
		£000	£000	£000	£000
Non-current assets
Investments in subsidiaries	27	86,323		33,478
Total non-current assets			86,323		33,478
Current assets
Other receivables	14	8,741		8,009
Cash and cash equivalents		62		35
Total current assets			8,803		8,044
Total assets			95,126		41,522
Equity
Issued capital	22	2,293		2,085
Share premium		23,964		23,634
Merger reserve		42,308		-
Reserve for own shares		(464)		(1,075)
Retained earnings		15,535		15,803
Total equity			83,636		40,447
Current liabilities
Trade and other payables	17	11,490		1,075
Total current liabilities			11,490		1,075
Total liabilities			11,490		1,075
Total liabilities and equity			95,126		41,522

These financial statements were approved by the Board of Directors on 8 July 2015 and were signed on its behalf by:

Rob Cotton Chief Executive NCC Group plc 4627044 8 July 2015

CONSOLIDATED STATEMENT OF CASH FLOWS

	Notes	2015	2014
		£000	£000
Cash flow from operating activities
Profit for the year		16,788	18,107
Adjustments for:
Depreciation charge	12	2,623	2,092
Share-based charges (net of national insurance contributions)	21	885	887
Amortisation of intangible assets	11	2,723	2,438
Net financing costs		1,188	861
(Profit)/loss on sale of plant and equipment		(43)	10
Adjustments to contingent consideration	3	-	(1,894)
Income tax expense		4,633	5,104
Cash inflow for the year before changes in working capital		28,797	27,605
Increase in trade and other receivables		(511)	(3,414)
(Decrease)/increase in trade and other payables		(4,000)	4,661
Cash generated from operating activities before interest and tax		24,286	28,852
Interest paid		(1,072)	(798)
Income taxes paid		(3,417)	(4,489)
Net cash generated from operating activities		19,797	23,565
Cash flows from investing activities
Interest received		10	24
Acquisition of plant and equipment	12	(4,788)	(3,237)
Software and development expenditure	11	(8,175)	(7,520)
Acquisition of businesses	15	(19,831)	(4,249)
Cash acquired with subsidiaries		5,676	-
Net cash used in investing activities		(27,108)	(14,982)
Cash flows from financing activities
Purchase of own shares		(414)	(2,123)
Proceeds from the issue of ordinary share capital		429	558
Draw down of borrowings		20,443	6,838
Equity dividends paid		(7,634)	(6,778)
Net cash used in financing activities		12,824	(1,505)
Net increase in cash and cash equivalents	23	5,513	7,078
Cash and cash equivalents at beginning of year		11,212	4,589
Effect of foreign currency		(372)	(455)
Cash and cash equivalents at end of year		16,353	11,212

COMPANY STATEMENT OF CASH FLOWS

	Notes	2015	2014
		£000	£000
Cash flow from operating activities
Profit for the year	10	7,506	12,709
Adjustments for:
Equity dividends received		(8,100)	(12,850)
Share-based charges (net of national insurance contributions)	21	546	65
Income tax expense		-	69
Cash inflow for the year before changes in working capital		(48)	(7)
Increase/(decrease) in trade and other payables		9,682	(4,435)
Cash generated from operating activities before interest and tax		9,634	(4,442)
Net cash generated from operating activities		9,634	(4,442)
Cash flows from investing activities
Acquisition of business acquired	15	(9,994)	-
Net cash used in investing activities		(9,994)	-
Cash flows from financing activities
Purchase of own shares		(414)	(2,123)
Proceeds from the issue of ordinary share capital		335	558
Equity dividends received		8,100	12,850
Equity dividends paid		(7,634)	(6,778)
Net cash used in financing activities		387	4,507
Net increase in cash and cash equivalents		27	65
Cash and cash equivalents at beginning of year		35	(30)
Cash and cash equivalents at end of year		62	35

STATEMENTS OF CHANGES OF EQUITY

Group	Issued share	Share	Merger	Currency translation	Reserve for own	Retained
	capital	premium	reserve	reserve	shares	earnings	Total
	£000	£000	£000	£000	£000	£000	£000
Balance at 1 June 2013	2,075	23,086	-	917	-	44,392	70,470
Profit for the year	-	-	-	-	-	18,107	18,107
Foreign currency translation differences	-	-	-	(1,968)	-	-	(1,968)
Total comprehensive income for the year	-	-	-	(1,968)	-	18.107	16,139
Transactions with owners recorded directly in equity
Dividends to equity shareholders	-	-	-	-	-	(6,778)	(6,778)
Share-based payment transactions	-	-	-	-	-	887	887
Current and deferred tax on share-based payments	-	-	-	-	-	433	433
Shares issued	10	548	-	-	-	-	558
Purchase of own shares	-	-	-	-	(1,075)	(1,048)	(2,123)
Total contributions by and distributions to owners	10	548	-	-	(1,075)	(6,496)	(7,013)
Balance at 31 May 2014	2,085	23,634	-	(1,051)	(1,075)	56,003	79,596

	Issued			Currency	Reserve
	share	Share	Merger	translation	for own	Retained
	capital £000	premium £000	reserve £000	reserve £000	shares £000	earnings £000	Total £000
Balance at 1 June 2014	2,085	23,634	-	(1,051)	(1,075)	56,003	79,596
Profit for the year	-	-	-	-	-	16,788	16,788
Foreign currency translation differences	-	-	-	(388)	-	-	(388)
Total comprehensive income for the year	-	-	-	(388)	-	16,788	16,400
Transactions with owners recorded directly in equity
Dividends to equity shareholders	-	-	-	-	-	(7,634)	(7,634)
Share-based payment transactions	-	-	-	-	-	885	885
Current and deferred tax on share-based payments	-	-	-	-	-	47	47
Shares issued	208	330	42,308	-	-	-	42,846
Purchase of own shares	-	-	-	-	611	(1,025)	(414)
Total contributions by and distributions
to owners	208	330	42,308	-	611	(7,727)	35,730
Balance at 31 May 2015	2,293	23,964	42,308	(1,439)	(464)	65,064	131,726

STATEMENTS OF CHANGES OF EQUITY

Company	Share capital	Share premium	Merger reserve	Reserve for own shares	Retained earnings	Total
	£000	£000	£000	£000	£000	£000
Balance at 1 June 2013	2,075	23,086	-	-	10,102	35,263
Profit for the period	-	-	-	-	12,709	12,709
Total comprehensive income for the year	-	-	-	-	12,709	12,709
Transactions with owners recorded directly in equity
Dividends to equity shareholders	-	-	-	-	(6,778)	(6,778)
Share-based payment transactions	-	-	-	-	65	65
Current and deferred tax on share-based payments	-	-	-	-	(69)	(69)
Increase in subsidiary investment for share-based charges	-	-	-	-	822	822
Shares issued	10	548	-	-	-	558
Purchase of own shares	-	-	-	(1,075)	(1,048)	(2,123)
Total contributions by and distributions to owners	10	548	-	(1,075)	(7,008)	(7,525)
Balance at 31 May 2014	2,085	23,634	-	(1,075)	15,803	40,447
	Share	Share	Merger	Reserve for	Retained
	capital £000	premium £000	reserve £000	own shares £000	earnings £000	Total £000
Balance at 1 June 2014	2,085	23,634	-	(1,075)	15,803	40,447
Profit for the period	-	-	-	-	7,506	7,506
Total comprehensive income for the year	-	-	-	-	7,506	7,506
Transactions with owners recorded
directly in equity Dividends to equity shareholders	-	-	-	-	(7,634)	(7,634)
Share-based payment transactions	-	-	-	-	546	546
Current and deferred tax on share-based payments	-	-	-	-	-	-
Increase in subsidiary investment for share-based charges	-	-	-	-	339	339
Shares issued	208	330	42,308	-	-	42,846
Purchase of own shares	-	-	-	611	(1,025)	(414)
Total contributions by and distributions to owners	208	330	42,308	611	(7,774)	35,683

NOTES (FORMING PART OF THE FINANCIAL STATEMENTS)

1 Accounting policies

Basis of preparation

NCC Group plc ("the Company") is a company incorporated in the UK. The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the "Group"). The parent company financial statements present information about the Company as a separate entity and not about its Group.

These financial statements have been approved for issue by the Board of Directors on 8 July 2015.

Both the parent and the Group financial statements have been prepared by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRS"). On publishing the parent company financial statements here together with the Group financial statements, the Company is taking advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of these approved financial statements.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Group financial statements.

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for contingent consideration payable on acquisitions which are measured at fair value.

Functional and presentation currency

The Group and Company financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic report on pages 14 to 21. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Business and Financial Review on pages 22 to 33. In addition, note 20 to the financial statements includes the Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and hedging activities and its exposures to credit risk and liquidity risk.

The Group funds its strategic acquisitions and meets its day to day working capital requirements via a revolving credit facility of £78m and an overdraft of £2m. This facility was agreed in March 2015 and is due for renewal on 31 July 2016.

The Group's forecast and projections taking into account reasonably possible changes in trading performance show that the Group is able to operate within the level of this facility and as a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.

The Directors acknowledge the forthcoming need to renew the facility and fully expect to be able to secure sufficient facilities to enable the Group to continue to operate.

After making enquiries, the Directors have a reasonable expectation that the company and the Group have adequate resources to continue in operational existence for the foreseeable future.

Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

NOTES

1 Accounting policies (continued)

New standards

During the year, the following standards have been adopted for the first time;

IFRS13 – Fair Value Measurement Amendments to IFRS7 Disclosures – Offsetting Financial Assets and Financial Liabilities Amendments to IAS32 – Offsetting Financial Assets and Financial Liabilities

The adoption of these standards has not had a material effect on the financial statements of the Group.

Accounting standards not yet effective

A number of new standards, amendments to standards and interpretations have been issued but are not yet effective for the year ended 31 May 2015 and have therefore not been applied in preparing these consolidated financial statements. The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's or the Company's financial statements in the period of initial application with the exception of IFRS 15 where Management are currently considering the impact.

IFRS9 – Financial Instruments recognition and measurement

IFRS10 & IAS28 Amendments - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

IFRS11 Amendments – Accounting for Acquisition of Interests in Joint Operations

IFRS14 – Regulatory Deferral Accounts

IFRS15 – Revenue from Contracts with Customers IAS 16 and IAS 38 Amendments - Clarification of Acceptable Methods of Depreciation and Amortisation

IAS27 Amendments – Equity Method in Separate Financial Statements

Business combinations

Business combinations are accounted for by applying the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Acquisitions on or after 1 June 2010

For acquisitions on or after 1 June 2010, the Group measures goodwill at the acquisition date as:

• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognised in the income statement.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in the income statement.

On a transaction-by-transaction basis, the Group elects to measure non-controlling interests either at its fair value or at its proportionate interest in the recognised amount of the identifiable net assets of the acquiree at the acquisition date.

1 Accounting policies (continued)

Acquisitions before 1 June 2010

For acquisitions before 1 June 2010, goodwill represents the excess of the cost of the acquisition over the Group's interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was recognised immediately in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in connection with business combinations were capitalised as part of the cost of the acquisition.

Contingent consideration on business combinations was recognised only to the extent that it could be reliably estimated and it was probable that the consideration would be paid. Any subsequent changes to the carrying value of the contingent consideration were recognised as adjustments to goodwill.

Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Intangible assets and goodwill

Goodwill

Goodwill represents amounts arising on acquisition of subsidiaries. In respect of business acquisitions that have occurred since 1 June 2004, goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired including identifiable intangible assets. Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable.

In respect of acquisitions prior to 1 June 2004, goodwill is included at its deemed cost, which represents the amount recorded under UK GAAP at 31 May 2004 which was broadly comparable, save that only separable intangibles were recognised and goodwill was amortised.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment in the investee.

Research and development

Expenditure on research activities is recognised in the income statement as an expense as incurred.

Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the Group intends, has the technical ability and has sufficient resources to complete development, future economic benefits are probable and if the Group can measure reliably the expenditure attributable to the intangible asset during its development. Development activities involve a plan or design for the production of new or substantially improved products or processes.

The expenditure capitalised includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use and capitalised borrowing costs. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and less accumulated impairment losses.

Other intangible assets

Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred.

Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and less accumulated impairment losses.

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

NOTES

1 Accounting policies (continued)

Amortisation

Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each balance sheet date. Other intangibles are amortised from the date they are available for use. The estimated useful lives are as follows:

Acquired customer contracts and relationships – between 3 and 20 years Software

– 3 years

Capitalised development costs – between 3 and 10 years

Impairment excluding deferred tax assets

Financial assets (including receivables) A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Non-financial assets

The carrying amounts of the Group's non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair

value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit"). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units, or ("CGU"). Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

1 Accounting policies (continued)

Related party transactions

Details of related party transactions are set out in note 26 to these financial statements.

Plant and equipment

Plant and equipment assets are carried at cost less accumulated depreciation and any recognised impairment in value. To the extent that borrowing costs relate to the acquisition, construction or production of a qualifying asset, borrowing costs are capitalised as part of the cost of that asset. Depreciation is charged to the income statement on a straight line basis over the estimated useful lives of each part of an item of plant and equipment. The rates applied are as follows:

Computer equipment	- 20% to 33%
Plant and equipment	- 20%
Fixtures and fittings	- 10% to 20%
Motor vehicles	- 25%

Plant and equipment is also tested for impairment whenever there is an indication of potential impairment.

Investments

Investments in subsidiaries are carried at cost less impairment. Investments in property and unlisted shares have been acquired from business combinations during the year. These investments are carried at cost less impairment which is based on the fair value at acquisition.

Revenue recognition

Revenue represents the value of services provided during the period, excluding VAT and similar taxes.

Assurance

The results of partially completed contracts whether fixed price or on a time and materials basis are recognised on a percentage completion basis according to the number of days worked in comparison to the total contracted number of days by including the profit or loss earned on work completed to the balance sheet date. Provisions are made for any losses on uncompleted contracts expected to be incurred after the balance sheet date. For certain Assurance services, higher set up costs are incurred in the first month of the contract. Where this is the case the revenue associated with this is recognised at the same time as the costs, with the remainder deferred over the life of the contract.

Escrow and Website Monitoring

Other than fees attributable to initial setup of a new project/contract and verifications, which are recognised upon completion, maintenance and escrow agreement revenue is deferred and released to the income statement on a straight-line basis over the life of the related agreement, on the basis that the performance is deemed to fall evenly over the contract period.

Domain Services

Trademark Clearinghouse (TMCH) fees are deferred and released to the income statement on a straight-line basis over the life of the related agreement. Agreements are for durations of one, three or five years. Domain name registry fees are recognised on a straight line basis over the period specified in the customer agreement. Revenue from the contracted sale of domain names is recognised when the full title and rights to the domain name have transferred to the customer

NOTES

1 Accounting policies (continued)

Determination and presentation of operating segments

The Group determines and presents operating segments based on the information that is provided to the CEO, who is the Group's chief operating decision maker in order to assess performance and to allocate resources.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. An operating segment's results are reviewed regularly by the CEO to make decisions about resources to be allocated to the segment and to assess its performance.

For the year ended 31 May 2015, the Group has three reportable segments (2014: three), Group Escrow, Assurance and Domain Services. Escrow, Assurance and Domain Services are the Group's strategic business units offering different services and they are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the CEO (the chief operating decision maker) reviews internal management reports on a monthly basis.

Foreign currencies

Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date and the gains or losses on translation are included in the income statement.

The assets and liabilities of overseas subsidiaries denominated in foreign currencies are translated at the closing rate and income statements of overseas subsidiary undertakings are translated at the average exchange rates. Gains and losses arising are taken to the currency translation reserve. They are released to the income statement upon disposal of the subsidiary to which they relate.

Operating leases payments

Operating lease rentals are charged to the income statement on a straight-line basis over the period of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense, over the term of the lease.

Employee benefits – defined contribution plans

The Group operates a defined contribution pension scheme. The assets of the scheme are kept separately from those of the Group in an independently administered fund. The amount charged as an expense in the income statement represents the contributions payable to the scheme in respect of the accounting period.

Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Share-based payment transactions

Share-based payment arrangements in which the Group receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Group.

1 Accounting policies (continued)

Share-based payment transactions

The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards.

The fair value of the options granted is measured using an option valuation model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

Share-based payment transactions in which the Group receives goods or services by incurring a liability to transfer cash or other assets that is based on the price of the Group's equity instruments are accounted for as cash-settled share-based payments. The fair value of the amount payable to employees is recognised as an expense, with a corresponding increase in liabilities, over the period in which the employees become unconditionally entitled to payment. The liability is re-measured at each balance sheet date and at settlement date. Any changes in the fair value of the liability are recognised as personnel expense in profit or loss.

Where the Company grants options over its own shares to the employees of a subsidiary it recognises, in its individual financial statements, an increase in the cost of investment in that subsidiary equivalent to the equity-settled share-based payment charge recognised in respect of that subsidiary in its consolidated financial statements with the corresponding credit being recognised directly in equity.

Interest bearing borrowings

Interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.

Net financing costs

Net financing costs comprise interest payable and interest receivable on funds invested.

Interest income and interest payable is recognised in the income statement as they accrue and capitalised when interest charges are incurred in relation to the purchase of capitalised assets. To the extent that borrowing costs relate to the acquisition, construction or production of a qualifying asset, borrowing costs are capitalised as part of the cost of that asset.

Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method. Dividend income is recognised in the income statement on the date the entity's right to receive payments is established.

Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

NOTES

1 Accounting policies (continued)

Deferred taxation

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised.

Intra-group financial instruments

Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group, the Company considers these to be insurance arrangements and accounts for them as such. In this respect the Company treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee.

Trade and other receivables

Trade and other receivables are stated at their nominal amount less impairment losses.

Cash and cash equivalents

Cash and cash equivalents comprise of cash in hand and deposits repayable on demand. Bank overdrafts that are repayable on demand form part of the Group's cash management and are included as a component of cash and cash equivalents for the purpose only of the statement of cash flows.

Treasury Shares

NCC Group plc shares held by the Group are deducted from equity as "treasury shares" and are recognised at cost. Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original cost being taken to reserves. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of equity shares.

Use of estimates and judgements

The preparation of financial statements requires management to exercise judgement in applying the Group's accounting policies. It also requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis, with revisions recognised in the period in which the estimates are revised and in any future periods affected.

The areas involving a higher degree of judgement or complexity are set out below and in more detail in the related notes:

• Note 1 Revenue recognition
• Note 1 Assessment of intangible carrying value (including development projects)
• Note 15 The valuation of intangible assets arising on acquisitions

Other sensitive estimates and assumptions that are significant to the financial statements are included in the following notes;

• Note 1 Assessment of intangible assets useful economic lives
• Note 11 Key assumptions used in discounted cash flow projections
• Note 15 Measurement of contingent consideration

2 Segmental information

The Group is organised into three operating segments (2014: three) Escrow, Assurance and Domain Services each of which is separately reported. Whilst revenue and profitability are monitored by individual business units within these operational segments it is only at the operating level that resource allocation decisions are made. Performance is measured based on segment profit, which comprises segment operating profit excluding amortisation of intangible assets, share-based payment charges and exceptional items. Interest and tax are not allocated to business segments and there are no intra-segment sales.

	2015	2014
	£000	£000
Revenue by business segment
Escrow UK	23,729	22,507
Escrow Europe	3,152	3,285
Escrow US	5,151	4,663
Group Escrow	32,032	30,455
Security Consulting	72,084	57,506
Web Performance and Software Testing	22,582	22,700
Accumuli	2,297	-
Assurance	96,963	80,206
Domain Services	4,701	-
Total revenue	133,696	110,661

NOTES

2 Segmental information (continued)

All revenue is in relation to services provided.

	2015	2014
	£000	£000
Operating profit by business segment
Group Escrow	18,891	18,056
Assurance	16,990	14,052
Domain Services	(4,913)	(2,126)
Segment operating profit	30,968	29,982
Head office costs	(4,573)	(3,954)
Operating profit before amortisation of acquired intangibles, charges for share-based payments and exceptional items	26,395	26,028
Amortisation of acquired intangible assets Group Escrow	(722)	(1,097)
Amortisation of acquired intangible assets Assurance	(1,257)	(1,019)
Amortisation of acquired intangible assets Domain Services	(228)	-
Share-based payments	(991)	(1,108)
Operating profit before exceptional items	23,197	22,804
Exceptional items	(588)	1,268
Operating profit	22,609	24,072

There are no customer contracts which account for more than 10% of segment revenue.

	2015	2014
	£000	£000
Revenue by geographical destination
UK	72,121	66,366
Rest of Europe	13,503	10,453
Rest of the World	48,072	33,842
Total revenue	133,696	110,661

3 Exceptional items

The Group identifies separately items as "exceptional". These are items which in management's judgement, need to be disclosed by virtue of their size or incidence in order for the user to obtain a proper understanding of the financial information. Subsequent revisions of estimates for items initially recognised as exceptional provisions are recorded as exceptional items in the year that the revision is made.

	2015	2014
	£000	£000
Operating exceptional items
IT claim net income/(costs)	1,799	(334)
Acquisition related costs	(2,387)	(292)
Revision to estimates of contingent consideration	-	1,894
Total	(588)	1,268

During the year, the Group received a settlement of £2,000,000 in respect of a claim to recover costs incurred on an IT system termination in May 2012. Associated legal costs amounting to £201,000 were incurred in the financial year (2014: £334,000).

Acquisition related costs of £2,387,000 (2014: £292,000) consist of professional fees incurred in relation to the acquisitions made during the current and previous years (see note 15).

In the prior year, the Directors re-assessed the fair value of contingent consideration held in respect of business acquisitions and this resulted in a £1,894,000 release of provisions held.

	2015	2014
	£000	£000
Finance charge exceptional items
Unwinding of discount on contingent consideration	(262)	(120)

The unwinding of the discount on contingent consideration in 2015 relates to the acquisitions of FortConsult A/S and Open Registry Group.

The tax effect in the income statement relating to the exceptional items recognised is:

	2015	2014
	£000	£000
Exceptional items and acquisition related costs
Charge/(credit) in respect of legal fees	375	(77)
Credit in respect of acquisition related costs	(497)	(67)
Total	(122)	(144)

NOTES

4 Expenses and auditors' remuneration

	2015	2014
	£000	£000
Profit before taxation is stated after charging/(crediting):
Amounts receivable by auditors and their associates in respect of:
Audit of these financial statements	38	30
Audit of financial statements of subsidiaries pursuant to legislation	50	30
Total audit	88	60
Review of interim financial statements	10	10
Other assurance services	18	60
Total fees	116	130
Depreciation and other amounts written off tangible and intangible fixed assets:
Owned	2,623	2,092
Amortisation of intangible assets	2,723	2,438
Exchange (gains)/losses	(864)	408
Operating lease rentals charged:
Hire of property, plant and equipment	2,588	2,266
Other operating leases	1,206	984
Research and development expenditure	1,900	1,796
(Profit)/loss on disposal of plant and equipment	(43)	10

5 Staff numbers and costs

Directors' emoluments are disclosed in the remuneration committee report on pages 70 to 93. Total aggregate emoluments of the Directors in respect of 2015 were £1,633,000 (2014: £1,718,000). Employer contributions to pensions for executive Directors for qualifying periods were £68,000 (2014: £63,000). The aggregate net value of share awards granted to the Directors in the period was £679,000 (2014: £630,000). The net value has been calculated by reference to the closing mid-market price of the Company's shares on the day before the date of grant. During the year 279,561 share options were exercised by Directors (2014: 354,430).

Group

The average monthly number of persons employed by the Group during the year, including Directors is analysed by category as follows:

	Number of employees
	2015	2014
Operational	593	467
Administration, sales and marketing	385	372
	978	839

The aggregate payroll costs of these persons were as follows:

	2015	2014
	£000	£000
Wages and salaries	63,834	49,774
Share-based payments (note 21)	885	887
Social security costs	6,642	4,279
Other pension costs (note 25)	1,840	1,615
	73,201	56,555

NOTES

6 Net financing costs

	2015	2014
	£000	£000
Financial income
Interest on short term deposits	10	24
	10	24
Financial expenses
Interest payable on bank loans and overdrafts	(863)	(680)
Amortisation of deal fees on term loans	(73)	(85)
Contingent consideration finance expense (see below)	(262)	(120)
	(1,198)	(885)

Contingent consideration related to the acquisition of subsidiary undertakings has been discounted to its present value. The unwinding of the discount on contingent consideration, relating to FortConsult A/S, Matasano Security LLC and Open Registry Group, has been treated as a finance expense and is analysed in the table below:

Contingent consideration finance expense	2015	2014
	£000	£000
Matasano Security LLC	33	61
Intrepidus Group, Inc	-	55
FortConsult A/S	117	4
Open Registry Group	112	-
	262	120

The risk adjusted discount rate used was 7% (2014: 7%). The total net present value of the contingent consideration as at 31 May is shown in the following table:

Contingent consideration	2015	2014
	£000	£000
Matasano Security LLC	-	2,210
FortConsult A/S	1,640	1,731
Open Registry Group	5,794	-
	7,434	3,941

Current liabilities includes £nil (2014: £2,940,000) in respect of contingent considerations (see note 17).

7 Taxation

Recognised in the income statement	2015	2014
	£000	£000
Current tax expense
Current year	4,408	4,865
Adjustment to tax expense in respect of prior periods	(1,366)	(308)
Foreign tax	591	474
Total current tax	3,633	5,031
Deferred tax (note 16)	1,000	73
Tax in income statement	4,633	5,104
Reconciliation of effective tax rate	2015	2014
	£000	£000
Profit before taxation	21,421	23,211
Current tax using the UK corporation tax rate of 20.83% (2014: 22.67%)	4,462	5,263
Effects of:
Items not taxable for tax purposes	755	(328)
Adjustment to tax charge in respect of prior periods	(628)	(435)
Differences between overseas tax rates	9	155
Movements in temporary differences not recognised	58	334
Effect of rate change	(23)	115
Total tax expense	4,633	5,104

Current and deferred tax recognised directly in equity was a charge of £47,000 (2014: charge of £443,000).

A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2014. This will reduce the Company's future current tax charge. The deferred tax liability at 31 May 2015 has been calculated based on the rate of 20% substantively enacted at the balance sheet date.

8 Dividends

	2015	2014
	£000	£000
Dividends paid and recognised in the year	7,634	6,779
Dividends proposed but not recognised in the year	6,147	4,920
	p	p
Dividends per share paid and recognised in the year	3.66	3.26
Dividends per share proposed but not recognised in the year	2.68	2.36

NOTES

9 Earnings per share

		2015		2014
	£000	£000	£000	£000
Profit for the year from continuing operations used for earnings per share		16,788		18,107
Amortisation of acquired intangible assets	2,207		2,116
Exceptional items (note 3)	588		(1,268)
Unwinding of discount (note 6)	262		120
Share-based payments (note 21)	991		1,108
Tax arising on the above items	(818)		(430)
		3,230		1,646
Adjusted profit from continuing operations used for
adjusted earnings per share		20,018		19,753
		Number		Number
		of shares		of shares
		000s		000s
Basic weighted average number of shares in issue		210,421		208,154
Dilutive effect of share options		3,601		3,283
Diluted weighted average shares in issue		214,022		211,437

The average market value of the Company's shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding.

10 Profit attributable to members of the parent company

The profit for the year dealt with in the accounts of the parent company was £7,506,000 (2014: £12,709,000).

			Customer
	Software	Development costs	contracts and relationships	Goodwill	Total
	£000	£000	£000	£000	£000
Cost:
At 1 June 2013	9,059	1,457	23,817	92,189	126,522
Acquisitions through business combinations	18	-	634	2,735	3,387
Additions – internally developed	3,866	3,654	-	-	7,520
Effects of movements in exchange rates	-	-	(1,433)	-	(4,843)
At 31 May 2014	12,943	4,974	23,018	91,651	132,586
Acquisitions through business combinations	340	-	24,581	62,680	87,601
Additions – internally developed	5,075	3,100	-	-	8,175
Effects of movements in exchange rates	-	667	257	1,189	2,113
At 31 May 2015	18,358	8,741	47,856	155,520	230,475
Amortisation:
At 1 June 2013	6,834	-	14,008	-	20,842
Charge for year	322	-	2,116	-	2,438
Effects of movements in exchange rates	-	-	(758)	-	(758)
At 31 May 2014	7,156	-	15,366	-	22,522
Charge for year	516	-	2,207	-	2,723
Effects of movements in
exchange rates	-	-	294	-	294
At 31 May 2015	7,672	-	17,867	-	25,539
Net book value:
At 31 May 2015	10,686	8,741	29,989	155,520	204,936
At 31 May 2014	5,787	4,974	7,652	91,651	110,064

11 Intangible assets – Group

Management have used business forecasts in determining the recoverability of the asset value of software and development costs relating to the creation of new products and services. The remaining useful economic life of customer contracts and relationships is between 2 and 11 years.

The internal development cost additions of £3.1m represent £6.2m of capitalised costs and a write off of £3.1m relating to developments that were no longer deemed realisable due to changes in the development process or the product roadmap.

The Group has made two acquisitions in the year, details of which are included in note 15. The Company has no intangible assets.

NOTES

11 Intangible assets – Group (continued)

For the purpose of impairment testing, goodwill has been allocated to the Group's three operating divisions, which are also operating segments, as these represent the lowest level at which goodwill is monitored for internal management purposes.

Goodwill considered significant in comparison to the Group's total carrying amount of such assets has been allocated to cash generating units for the purposes of impairment testing as follows:

	Goodwill
	2015	2014
Cash generating units	£000	£000
Escrow UK	21,177	21,177
Escrow Europe	6,046	6,727
Escrow USA	6,990	6,382
Total Group Escrow	34,213	34,286
Assurance Testing	110,688	57,365
Domain Services	10,619	-
Total	155,520	91,651

When assessing impairment, the recoverable amount of each CGU is based on value in use calculations. These calculations require the use of estimates, specifically: pre-tax cash flow projections; long-term growth rates; and a pre-tax market discount rate.

Cash flow projections are based on the Group's current annual operating plan with year two assumptions for expected revenue growth and gross margins based on past experience. Beyond the two year plan the projections are extrapolated using an estimated long-term growth rate of 2.5% (2014: 2.5%). The growth rates represent management's best estimate of a long-term annual growth rate in EBITDA. A different set of assumptions may be more appropriate in future years dependent on changes to the macro-economic environment.

The discount rates used are based on management's calculation of the weighted average cost of capital using the capital asset pricing model to calculate the cost of equity. A range of alpha factors were used to reflect the risk of the cash generating units.

The discount rate has been calculated to reflect the latest market assumptions for the risk-free rate, the Equity Risk Premium and the net cost of debt. Pre-tax market discount rates of 10.1% to 12.7% (2014: 10.5% to 15.8%) have been used in discounting the projected cash flows.

The Directors do not believe that a reasonably possible change of assumptions would cause the recoverable amounts to fall below book value for any of the cash generating units due to the significant levels of headroom.

12 Plant and equipment – Group

	Computer	Plant and	Fixtures and	Motor
	equipment	equipment	fittings	vehicles	Total
	£000	£000	£000	£000	£000
Cost:
At 1 June 2013	10,137	410	5,387	310	16,244
Additions	1,832	-	1,331	74	3,237
Acquired as part of business combination	-	-	60	-	60
Disposals	(30)	-	-	-	(30)
Movement in foreign exchange rates	(90)	(1)	(83)	(6)	(180)
At 31 May 2014	11,849	409	6,695	378	19,331
Additions	2,000	-	2,629	159	4,788
Acquired as part of business combination	545	-	53	-	598
Disposals	-	-	-	(181)	(181)
Movement in foreign exchange rates	194	5	322	10	531
At 31 May 2015	14,588	414	9,699	366	25,067
Depreciation:
At 1 June 2013	8,323	410	2,300	80	11,113
Charge for year	1,429	-	588	75	2,092
Disposals	(26)	-	-	-	(26)
Movement in foreign exchange rates	(75)	(1)	(16)	-	(92)
At 31 May 2014	9,651	409	2,872	155	13,087
Charge for year	1,566	-	986	71	2,623
Disposals	-	-	-	(139)	(139)
Movement in foreign exchange rates	47	5	66	2	120
At 31 May 2015	11,264	414	3,924	89	15,691
Net book value:
At 31 May 2015	3,324	-	5,775	277	9,376
At 31 May 2014	2,198	-	3,823	223	6,244

The company has no plant and equipment.

NOTES

13 Investments

	Group	Group
	2015	2014
	£000	£000
Property	285	-
Interest in unlisted shares	268	-
	553	-

An investment property and interest in shares was acquired in the Accumuli plc acquisition during the year. The investment property comprises a leasehold property owned on a 999 year lease granted in 1989. The investment in shares is a 3.35% holding in an unlisted company. The valuation of the investments in the accounting records of the acquired company are considered to be appropriate as the fair valuation.

14 Trade and other receivables

Group	Group	Company	Company
2015	2015	2014	2014
£000	£000	£000	£000
26,002	19,614	-	-
18,427	9,077	-	-
-	-	8,741	8,009
44,429	28,691	8,741	8,009

15 Acquisitions

Accumuli plc

On 30 April 2015, the Group acquired 100% of the share capital of Accumuli plc for consideration of £52.5m in a share for share exchange plus cash consideration agreement. NCC Group plc issued 20,389,472 new ordinary shares of 1 pence with a closing share price of 208.5p amounting to a share issue valuation of £42.5m. £10.0m cash consideration was paid on a pro-rata basis to the Accumuli shareholders under the Scheme Arrangement.

Accumuli is a leading, rapidly growing, UK based independent specialist in IT security and risk management, providing industry leading solutions and services. The group's business activities are in the Assurance business segment. Prior to the acquisition, Accumuli was a public company quoted on the AIM market of the London Stock Exchange.

The acquisition had the following effect on the Group's assets and liabilities:

		Fair Values
	£000	£000
Acquiree's identifiable net assets at the acquisition date:
Plant and equipment		487
Investments		553
Trade and other receivables		8,418
Stock		36
Deferred costs		3,279
Cash		3,980
Creditors & accruals		(9,298)
Other creditors		(4,413)
Deferred revenue		(9,486)
Current tax liability		(50)
Deferred tax liability		(3,501)
Bank loan		(9,750)
Intangible assets acquired		20,668
Net identifiable assets		923
Goodwill on acquisition		51,583
Total consideration		52,506
Satisfied by: Issue of new 1p ordinary shares	42,512
Cash consideration	9,994
	52,506
Net cash outflow		9,994
Cash acquired		(3,980)
Net cash outflow excluding cash acquired		6,014

The goodwill of £51.6m represents the profitable sales growth expected from the cross-selling opportunities using shared product knowledge, expertise, and customer markets, the value of the workforce's industry knowledge and technical skills, and some central cost saving synergy. The goodwill is not expected to be deductible for tax purposes.

Acquisition costs relating to corporate finance, legal and other professional fees totalling £2.0m were incurred and are recognised as exceptional costs in the profit and loss account (note 3).

The Group' consolidated income statement includes one month's post acquisition trading, with Accumuli plc contributing £2.3m revenue and £0.3m operating profit.

NOTES

15 Acquisitions (continued)

Open Registry Group

On 20 January 2015, the Group acquired the entire share capital of Open Registry S.A (Luxembourg), CHIP S.A. (Luxembourg), Nexperteam C.V.B.A (Belgium) and Sensirius C.V.B.A (Belgium) for total consideration of €19.5m. Of this amount, €10.1m was paid in cash immediately and €0.2m was paid as a retention in June 2015. Contingent consideration of €9.2m is payable in cash depending on specific profit based performance targets on the second and third year anniversaries of the completion date. The undiscounted contingent consideration outcome range is from nil to €9.2m.

The companies' principal activities are in the domain services segment and the acquisition will enable the Group to offer a one stop shop providing secure domain services to corporate customers globally, including both registry and registrar services.

Open Registry S.A.(Open Registry) is the leading European Registry Service Provider for global brands and globally is ranked number six in terms of brand TLD applications under management. Clearinghouse for Intellectual Property S.A. (CHIP) is one of three key service providers that form the consortium that has been authorised by ICANN to operate the Trademark Clearinghouse (TMCH). Nexperteam CVBA (Nexperteam) is an accredited registrar for several TLDs managing over 8,000 domain names. The Company provides domain registrar services ranging from domain name registration, name serving to email and web hosting.

The acquisition had the following effect on the Group's assets and liabilities:

		Fair Values
	£000	£000
Acquiree's identifiable net assets at the acquisition date:
Plant and equipment		111
Intangible assets		209
Investments		34
Trade and other receivables		3,494
Cash		1,696
Creditors & accruals		(1,814)
Deferred revenue		(4,129)
Current tax liability		(14)
Deferred tax liability		(1,213)
Intangible assets acquired		4,044
Net identifiable assets		2,418
Goodwill on acquisition		11,097
Total consideration		13,515
Satisfied by: Initial cash consideration	7,577
Contingent consideration (discounted)	5,938
	13,515
Net cash outflow		7,577
Cash acquired		(1,696)
Net cash outflow excluding cash acquired		5,881

15 Acquisitions (continued)

The goodwill of £11.1m represents expected future customer growth in the Domain Name Registry and TMCH services, incremental revenue from cross-selling opportunities with NCC Group's developing domain services activity, and the value of the workforce's industry knowledge and technical skills. The goodwill is not expected to be deductible for tax purposes.

The Open Registry Group has contributed post acquisition revenue of £1.6m and £Nil operating profit. Acquisition costs relating to corporate finance, legal and other professional fees totalling £0.4m were incurred and are recognised as exceptional costs in the profit and loss account (note 3).

FortConsult

On 2nd May 2014 the Group acquired 100% of the share capital of FortConsult A/S for a maximum consideration of £4.0m, of which a maximum of £2.0m has been withheld subject to the achievement of performance criteria specified in the purchase agreement. The performance conditions are required to be satisfied by 30 April 2015 and 30 April 2016. The contingent consideration is to be paid in June 2016.

The acquisition had the following effect on the Group's assets and liabilities:

	£000
Acquiree's identifiable net assets at the acquisition date:
Plant and equipment	60
Trade and other receivables	803
Cash	239
Creditors & accruals	(410)
Current tax liability	(6)
Deferred tax liability	(217)
Intangible assets purchased	634
Net identifiable assets	1,103
Goodwill on acquisition	2,736
Expected consideration to be paid	3,839
Less purchase consideration withheld	(1,746)
Net cash outflow	2,093
Cash acquired	(239)
Net cash outflow excluding cash acquired	1,854

NOTES

15 Acquisitions (continued)

None of the receivables have been impaired and the full contractual amounts have been collected.

Goodwill of £2.7m has arisen on the acquisition because the purchase price exceeds the fair value of the separately identifiable net assets, liabilities and contingent liabilities acquired. Goodwill represents synergies, business processes and the assembled value of the work force including industry specific knowledge and technical skills. The goodwill is not expected to be deductible for tax purposes.

As noted above, as part of the sale and purchase agreement, a contingent consideration was agreed of up to a maximum of £2.0m which is withheld subject to the achievement of performance criteria specified in the purchase agreement and is based on profit growth forecasts and market multiples.

Due to the inherent uncertainties in deriving forecasts the level of contingent consideration is reassessed at each reporting date to reflect revisions to forecasts or differences between forecast and actual performance. The fair value of the contingent consideration of £1.6m is considered appropriate and is based upon the present value of the future cash flows.

Total acquisition related costs of £292,000 were incurred (see note 3).

Matasano Security LLC

On 1 August 2012 the Group acquired 100% of the partnership interests of Matasano Security LLC for a maximum consideration of £8.1m, of which up to a maximum of £4.1m was withheld subject to the achievement of performance criteria specified in the purchase agreement. The performance conditions were agreed to be satisfied by 31 July 2013 and 31 July 2014 with the contingent consideration to be paid in December 2013 and November 2014. During the period, £2.2m was paid in relation to the final settlement of the contingent consideration due on the acquisition of Matasano Security LLC.

Combined results

The combined results of NCC Group, Accumuli plc and Open Registry for the twelve month period ending 31 May 2015 total to revenue of £167.8m and pre-exceptional operating profit of £29.9m.

16 Deferred tax assets and liabilities

Group

Recognised deferred tax assets and liabilities are attributable to the following:

	Assets		Liabilities		Net
	2015	2014	2015	2014	2015	2014
	£000	£000	£000	£000	£000	£000
Plant and equipment	-	-	(426)	(5)	(426)	(5)
Short term temporary differences	520	178	-	-	520	178
Intangible assets	-	-	(9,693)	(2,439)	(9,693)	(2,439)
Share-based payments	493	579	-	-	493	579
Tax losses	3,305	1,542	-	-	3,305	1,542
Deferred tax asset/(liability)	4,318	2,299	(10,119)	(2,444)	(5,801)	(145)

Movement in deferred tax during the year:

	1 June 2014	Recognised in income	Exchange differences	Recognised	in equity Acquisitions	31 May 2015
	£000	£000	£000	£000	£000	£000
Plant and equipment	(4)	(337)	(53)	-	(32)	(426)
Short term temporary differences	178	201	12	-	129	520
Intangible assets	(2,440)	(1,837)	(69)	-	(5,347)	(9,693)
Share-based payments	579	(67)	-	(19)	-	493
Tax losses	1,542	1,040	187	-	536	3,305
	(145)	(1,000)	77	(19)	(4,714)	(5,801)

	1 June	Recognised	Exchange	Recognised		31 May
	2013	in income	differences		in equity Acquisitions	2014
	£000	£000	£000	£000	£000	£000
Plant and equipment	304	(308)	-	-	-	(4)
Short term temporary differences	266	(31)	-	-	(57)	178
Intangible assets	(1,048)	(1,282)	48	-	(158)	(2,440)
Share-based payments	417	5	-	157	-	579
Tax losses	-	1,543	(1)	-	-	1,542
	(61)	(73)	47	157	(215)	(145)

The Company has £nil deferred tax assets or liabilities (2014: £nil).

A deferred tax asset of £2,819,000 (2014: £1,542,000) has been recognised on US losses as management consider it probable that future taxable profits will be available against which they can be utilised. The Group has not recognised a deferred tax asset on UK losses of £1,252,000 (2014: £Nil) and non UK losses of £285,000 (2014: £855,000) due to the uncertainty over recoverability.

Included in recognised and unrecognised tax losses are losses of £485,000 that will expire in 2020, £472,000 that will expire in 2033, £2,676,000 that will expire in 2024 and £3,157,000 that will expire in 2034.

As at 31 May 2015 the Group has an unrecognised deferred tax asset of £147,000 in respect of UK short term timing differences and intangible assets (2014: £76,000). As at 31 May 2015, the temporary differences arising from unremitted earnings of overseas subsidiaries was £359,000 (2014: £1,646,000). No material tax charges are expected to arise if they were to be distributed and therefore a deferred tax liability in respect of unremitted earnings has not been recognised.

NOTES

17 Trade and other payables

	Group	Group	Company	Company
	2015	2014	2015	2014
	£000	£000	£000	£000
Trade payables	9,039	2,973	-	-
Contingent consideration on acquisitions	-	2,940	-	-
Non trade payables	5,729	5,781	-	-
Intercompany payables	-	-	11,490	-
Finance leases	111	-	-	-
Accruals	13,093	8,609	-	1,075
	27,972	20,303	11,490	1,075

18 Deferred revenue

	Group	Group	Company	Company
	2015	2014	2015	2014
	£000	£000	£000	£000
Deferred revenue	31,861	17,207	-	-
	31,861	17,207	-	-

Deferred revenue consists of: Escrow agreements £12,954,000 (2014: £12,005,000), Assurance contracts £11,968,000 (2014: £2,083,000), Website monitoring and load testing agreements of £3,348,000 (2014: £3,119,000) and Domain Services contracts of £3,591,000 (£Nil). The revenue has been deferred to be released to the income statement over the contract term in accordance with the Group's accounting policy. The balances relating to the acquisitions of Accumuli plc and Open Registry Group are included in Assurance and Domain Services respectively.

19 Non-current liabilities

	Group	Group	Company	Company
	2015	2014	2015	2014
	£000	£000	£000	£000
Secured bank loan	57,240	34,945	-	-
Issue costs	(244)	(244)	-	-
Amortisation of issue costs	159	85	-	-
Interest bearing loans
	57,155	34,786	-	-
Deferred tax (note 16)	10,119	2,444	-	-
Contingent consideration on acquisitions (note 6)	7,434	1,001	-	-
Finance leases	64	-	-	-
Other financial liabilities	392	484	-	-
Total non-current liabilities	75,164	38,715	-	-

For more information about the contractual terms of the Group's interesting bearing secured bank loan, which is measured at amortised cost, see note 20. Other financial liabilities of £392,000 relates to the balance of a rent free period (2014: £484,000) which is released to the income statement over the term of the lease.

	Group	Group	Company	Company
Finance lease maturity	2015	2014	2015	2014
	£000	£000	£000	£000
Within one year or less	111	-	-	-
Between one and five years	64	-	-	-
	175	-	-	-

The finance leases relate to IT equipment and were acquired with the company acquisitions during the year.

NOTES

20 Financial instruments

Financial risk management

The Group has exposure to the followings risks from its use of financial instruments:

• Credit risk
• Liquidity risk
• Currency risk
• Interest rate risk

The Board has overall responsibility for establishing appropriate management of exposure to risk. The Audit Committee oversees how management identify and address risks to the Group.

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total interest bearing loans as shown in the consolidated balance sheet, less cash and cash equivalents. Total capital is calculated as equity, as shown in the consolidated balance sheet, plus net debt. As at 31 May 2015 the Group's gearing ratio was 22% (2014: 30%).

Financial instruments policy

All instruments utilised by the Company and Group are for financing purposes. The day-to-day financial management and treasury are controlled centrally for all operations.

Fair value of financial instruments

As at 31 May 2015 the Group and Company had no other financial instruments other than those disclosed below. The carrying value of contingent consideration on acquisitions, held at the year end is valued using a level 3 valuation method as defined by IFRS 13 Fair Value measurement. There have been no transfers between levels in the year.

The following table presents the Group's financial assets and liabilities that are measured at fair value by level of fair value hierarchy:

• quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
• inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); and
• inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The loan is held at amortised cost which is considered to equate to fair value. All other assets and liabilities are held at either fair value or their carrying value which approximates to fair value.

20 Financial instruments (continued)

		2015			2014
	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
	£000	£000	£000	£000	£000	£000
Trade receivables	-	26,002	-	-	19,614	-
Prepayments and accrued income	-	18,427	-	-	9,077	-
Cash and cash equivalents	-	16,353	-	-	11,212	-
Interest bearing loans	-	(66,905)	-	-	(34,786)	-
Trade and other payables	-	(29,972)	-	-	(17,363)	-
Contingent consideration	-	-	(7,434)	-	-	(2,940)
Deferred revenue	-	(31,861)	-	-	(17,207)	-

The contingent consideration liability reflects the calculated cash outflows and is discounted using a risk-adjusted discount rate.

Credit Risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group's receivables from customers. The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer.

Exposure to credit risk

The carrying value of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

	Group	Group	Company	Company
	2015	2014	2015	2014
	£000	£000	£000	£000
Trade receivables	26,002	19,614	-	-
Cash and cash equivalents	16,353	11,212	62	35
	42,355	30,826	62	35

The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:

	Group	Group	Company	Company
Debtors by geographical segment	2015	2014	2015	2014
	£000	£000	£000	£000
UK	20,607	15,188	-	-
Rest of Europe	969	1,094	-	-
Rest of the World	4,426	3,332	-	-
	26,002	19,614	-	-

NOTES

20 Financial instruments (continued)

The maximum exposure to credit risk at the reporting date by business segment was:

	Group	Group	Company	Company
Debtors by business segment	2015	2014	2015	2014
	£000	£000	£000	£000
Group Escrow	6,696	4,894	-	-
Assurance Testing	19,306	14,720	-	-
Domain Services	-	-	-	-
	26,002	19,614	-	-

The trade receivables of the Group typically comprise of smaller amounts due from a large number of customers. The Group's customer base, whilst concentrated largely in the UK, represents a spread of industry sectors. The largest amount due from a single customer at the reporting date represented 4.4% of total Group receivables (2014: 8.0%). All of the Group's cash is held with financial institutions of high credit rating.

Impairment losses

The ageing of trade receivables at the end of the reporting period was:

Group	Gross	Impairment	Gross	Impairment
	2015	2014	2015	2014
	£000	£000	£000	£000
Not past due	15,497	-	11,202	-
Past due 0-30 days	6,427	-	4,723	-
Past due 31-90 days	3,796	-	3,806	(117)
Past due more than 90 days	538	(256)	126	(126)
	26,258	(256)	19,857	(243)

The Company had no trade receivables (2014: £Nil). The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of specific trade receivables. The movement in the allowance for impairment was:

	Group	Group
	2015	2014
	£000	£000
Balance at 1 June	243	277
Credit for the year	13	(34)
Balance at 31 May	256	243

The allowance accounts in respect of trade receivables are used to record impairment losses unless the Group is satisfied that no recovery of the amounts owing is possible; at that point the amount is considered irrecoverable and is written off against the financial asset directly. The Group reviews all debt more than 90 days past due and provides for impairment losses, net of any revenue which has been deferred, based on trading experience with that customer. The allowance is all for debts older than 90 days (2014: older than 90 days). The ageing of Group debt and associated impairment loss is reported to the Board on a monthly basis.

20 Financial instruments (continued)

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risks by regular reviews of forecast and actual cash flows in line with contractual maturities of financial liabilities and the Revolving Credit Facility available. Forecast cash flows are reported to the Board on a monthly basis. The following are the contractual maturities of financial liabilities, including interest payments of the Group:

At 31 May 2015	Carrying amount	Contractual cash flows	6 months or less	6-12 months	1-2 years	2+ years
	£000	£000	£000	£000	£000	£000
Secured bank borrowings	(66,905)	(66,990)	(9,975)	-	(57,015)	-
Trade and other payables	(27,972)	(27,972)	(27,972)	-	-	-
Contingent consideration	(7,434)	(8,423)	-	-	(1,701)	(6,722)
At 31 May 2014
Secured bank borrowings	(34,786)	(34,945)	-	-	-	(34,945)
Trade and other payables	(17,363)	(17,363)	(17,363)	-	-	-
Contingent consideration	(3,941)	(4,162)	-	(2,239)	-	(1,923)

The financial liabilities of the Company all have contractual maturities within 6 months (2014: within 6 months).

Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group entities. The Group's management review the size and probable timing of settlement of all financial assets and liabilities denominated in foreign currencies. The Group's exposure to currency risk is as follows:

	2015						2014
	Sterling	Euros	USD	AUD	DKK	Sterling	Euros	USD	AUD	DKK
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Receivables	20,508	451	4,268	258	517	15,188	371	3,219	113	723
Cash and cash equivalents	10,251	2,570	2,668	35	829	7,668	1,517	1,683	74	270
Bank borrowings	39,915	-	26,990	-	-	15,791	-	18,995	-	-
Trade and other payables	23,460	1,152	2,865	49	446	14,249	187	6,324	65	479

A change in exchange rates of 10% would not have a significant impact on these financial statements.

NOTES

20 Financial instruments (continued)

Interest rate risk

The Group and Company finances its operations through a mixture of retained profits and bank borrowings. The Group borrows and invests surplus cash at floating rates of interest based upon bank base rate. The financial assets of the Group at the end of the financial year were as follows:

	2015	2014
	£000	£000
Sterling denominated financial assets	10,251	7,668
Euro denominated financial assets	2,570	1,517
US dollar denominated financial assets	2,668	1,683
AU dollar denominated financial assets	35	74
DKK denominated financial assets	829	270
Current trade and other receivables	26,002	19,614
	42,355	30,826

The financial assets of the Company at the end of the financial year were as follows:

	2015	2014
	£000	£000
Sterling denominated financial assets	62	35
Amounts owed by Group undertakings	8,741	8,009
	8,803	8,044

A change of 100 basis points in interest rates would result in a difference in annual pre-tax profit of £476,000 (2014: £300,000).

The financial liabilities of the Group and their maturity profile are as follows:

			2015					2014
	Sterling	Euros	USD	AUD	DKK	Sterling	Euros	USD	AUD	DKK
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Less than one year	-	-	-	-	-	-	-	2,210	-	-
1-2 years	41,155	3,000	26,990	-	-	-	-	-	-	-
2-3 years	-	2,794	-	-	-	15,791	-	18,995	-	-
Current trade and other
payables	23,460	1,152	2,865	49	446	14,249	187	4,114	65	479

The financial liabilities of the Company and their maturity profile are as follows:

	2015	2014
Maturity	£000	£000
Current trade and other payables	11,490	1,075
Sterling denominated financial liabilities	11,490	1,075

As at 31 May 2015 the Group had a multi-currency revolving credit facility of £78 million (2014: £40 million) and a £2m overdraft facility (2014: £5m). The interest payable on drawn down funds ranges from 1.5% to 2.25% above LIBOR subject to the Group's net debt to EBITDA ratio. At the end of May 2015, the effective rate was 1.6% (2014: 1.6%). The revolving credit facility is available until 31 July 2016.

21 Share-based payments

The Company has a number of share option schemes under which options to subscribe for the Company's shares have been granted to Directors and staff, details of which are illustrated in the tables below. Expected term of options represents the period over which the fair value calculations are based.

Approved EMI scheme

Under the Approved EMI Scheme, options granted will be subject to performance criteria. Options will vest if the average EPS growth for the 3 years following their grant is greater than 3% above RPI per annum. The options are to be settled in equity.

Date of grant	Expected term of options	Exercisable between	Exercise Price	2015 Number Outstanding
August 2007	6 years	July 2010 – July 2017	£0.64	61,939
February 2008	6 years	Feb 2011 – Feb 2018	£0.65	5,640

CSOP scheme

Under the CSOP Scheme, options granted will be subject to performance criteria. Options will vest if the average EPS growth for the 3 years following their grant is greater than 10% per annum. The options are to be settled in equity.

Date of grant	Expected term of options	Exercisable between	Exercise Price	2015 Number Outstanding
July 2012	6 years	July 2015 – July 2021	£1.36	327,144
July 2013	6 years	July 2016 – July 2022	£1.40	28,504

LTIP Schemes

The vesting condition for the award of the LTIP schemes relates to growth in the Group's EPS over the performance period. If growth is equal to 25% or more per annum then 100% of the award will vest. If, however, growth is less than 10% per annum, none of the award will vest. Between these two points, vesting is determined on a straight line basis. The options are to be settled in equity.

Date of grant	Expected term of options	Exercisable between	Exercise Price	2015 Number Outstanding
July 2012	3 years	June 2015 – June 2016	Nil*	788,778
July 2013	3 years	June 2016 – June 2017	Nil*	767,262
July 2014	3 years	June 2017 – June 2018	Nil*	638,636

*The option exercise price is nil however £1 is payable on each occasion of exercise.

NOTES

21 Share-based payments (continued)

Sharesave scheme

The Company operates a Sharesave scheme, which is available to all UK based employees and full time Executive Directors of the Company and its subsidiaries who have worked for a qualifying period. All options are to be settled by equity.

Under the scheme the following options have been granted and are outstanding at year end.

Date of grant	Expected term of options	Exercisable between	Exercise Price	2015 Number Outstanding
August 2012	3.25 years	September 2015 - February 2016	£1.09	417,096
August 2013	3.25 years	September 2016 - February 2017	£1.13	482,542
August 2014	3.25 years	September 2017 - February 2018	£1.51	1,189,141

Employee Stock Purchase Plan

The Company operates a stock purchase plan, which is available to all US based employees who have worked for a qualifying period. All options are to be settled by equity.

Under the scheme the following options have been granted and are outstanding at year end.

Date of grant	Expected term	Exercisable	Exercise	2015 Number
	of options	between	Price	Outstanding
February 2015	1 year	February 2016 – February 2019	£1.91	94,856

ISO scheme

Under the ISO Scheme, options granted will be subject to performance criteria. Options will vest if the average EPS growth for the 3 years following their grant is greater than 10% per annum. The options are to be settled in equity.

Date of grant	Expected term of options	Exercisable between	Exercise Price	2015 Number Outstanding
January 2013	3 years	January 2016 – January 2023	£1.48	61,014
January 2014	3 years	January 2017 – January 2024	£2.00	45,111
July 2014	3 years	July 2017 – July 2024	£2.04	14,284
January 2015	3 years	January 2018 – January 2025	£2.00	60,000

21 Share-based payments (continued)

Scheme	Number of instruments as at 1 June 2014	Instruments granted during the year	Options exercised in the year	Forfeitures in the year	Number of instruments as at 31 May 2015
Approved EMI scheme	95,375	-	(33,436)	-	61,939
Approved EMI scheme	5,640	-	-	-	5,640
CSOP scheme	352,872	-	-	(25,728)	327,144
CSOP scheme	42,756	-	-	(14,252)	28,504
Sharesave scheme	380,910	-	(376,620)	(4,290)	-
Sharesave scheme	506,040	-	-	(88,944)	417,096
Sharesave scheme	539,904	-	-	(57,362)	482,542
Sharesave scheme	-	1,304,554	-	(115,413)	1,189,141
ESPP scheme	81,795	-	(46,163)	(35,332)	-
ESPP scheme	-	94,856	-	-	94,856
ISO scheme	61,014	-	-	-	61,014
ISO scheme	45,111	-	-	-	45,111
ISO scheme	-	14,284	-	-	14,284
ISO scheme	-	60,000	-	-	60,000
LTIP	1,139,076	-	(571,814)	(567,262)	-
LTIP	908,400	-	-	(119,622)	788,778
LTIP	956,361	-	-	(189,099)	767,262
LTIP	-	796,594	-	(157,958)	638,636

The following tables illustrate the number of share options for the schemes.

NOTES

21 Share-based payments (continued)

The options outstanding at 31 May 2015 have an exercise price in the range of £Nil to £2.04 (2014: £Nil to £1.36) and a weighted average contractual life of 3 years (2014: 3 years). The weighted average share price at the time the share options were exercised in the year was £2.05 and weighted average share price at the time the share options were forfeited in the year was £1.99.

Scheme	Number of instruments as at 1 June 2014	Instruments granted during the year	Options exercised in the year	Forfeitures in the year	Number of instruments as at 31 May 2015
Approved EMI scheme	14,988	-	(14,988)	-	-
Approved EMI scheme	151,295	-	(54,360)	(1,560)	95,375
Approved EMI scheme	82,764	-	(77,124)	-	5,640
CSOP scheme	81,810	-	(81,810)	-	-
CSOP scheme	28,092	-	(28,092)	-	-
CSOP scheme	363,900	-	-	(11,028)	352,872
CSOP scheme	-	42,756	-	-	42,756
Sharesave scheme	637,812	-	(637,812)	-	-
Sharesave scheme	443,526	-	(1,464)	(61,152)	380,910
Sharesave scheme	577,626	-	(594)	(70,992)	506,040
Sharesave scheme	-	608,231	-	(68,327)	539,904
ESPP scheme	62,672	-	(62,672)	-	-
ESPP scheme	-	81,795	-	-	81,795
ISO scheme	81,352	-	-	(20,338)	61,014
ISO scheme	-	45,111	-	-	45,111
LTIP	1,173,462	-	(742,801)	(430,661)	-
LTIP	1,139,076	-	-	-	1,139,076
LTIP	908,400	-	-	-	908,400
LTIP	-	956,361	-	-	956,361

21 Share-based payments (continued)

The fair value of services received in return for share options is calculated with reference to the fair value of the award on the date of grant. The fair value is spread over the period during which the employee becomes unconditionally entitled to the award, adjusted to reflect actual and expected levels of vesting. Black-Scholes and Binomial models have been used to calculate the fair values of options on their grant date for all options issued after 7 November 2002, which had not vested by 1 January 2005. The assumptions used in the model are illustrated in the table below:

		Fair value at			Option
	Grant Date	measurement date	Exercise price	Expected volatility	expected term	Risk-free interest rate
EMI	Aug-07	£0.20	£0.64	25%	6 years	6.00%
EMI	Feb-08	£0.21	£0.65	25%	6 years	6.00%
CSOP	Aug-12	£0.35	£1.36	35%	6 years	2.75%
CSOP	Jul-13	£0.25	£1.40	32%	6 years	2.75%
SAYE	Aug-12	£0.45	£1.09	35%	3.25 years	2.75%
SAYE	Aug-13	£0.32	£1.13	32%	3.25 years	2.75%
SAYE	Aug-14	£0.68	£1.51	32%	3.25 years	2.75%
ESPP	Feb-14	£0.32	£1.78	35%	1 year	2.75%
ESPP	Feb-15	£0.46	£1.91	35%	1 year	2.75%
ISO	Jan-13	£0.33	£1.48	35%	3 years	2.75%
ISO	Jan-14	£0.35	£2.00	35%	3 years	2.75%
ISO	Jul-14	£0.42	£2.04	32%	3 years	2.75%
ISO	Jan-15	£0.43	£2.00	32%	3 years	2.75%
LTIP	Jul -12	£1.25	£nil*	35%	3 years	2.75%
LTIP	Jul -13	£1.28	£nil*	32%	3 years	2.75%
LTIP	Jul-14	£1.92	£nil*	32%	3 years	2.75%

* The option exercise price is nil however £1 is payable on each occasion of exercise.

The expected volatility is based on the historical volatility, adjusted for any expected changes to future volatility due to publicly available information. For the options granted in the year ending 31 May 2015, dividend yield assumed at the time of option grant is 2.4% (2014: 2.4%).

A charge of £991,000 (2014: £1,108,000) has been made to administrative expenses in the Group income statement in respect of share-based payment transactions, including £106,000 of provision for National Insurance contributions (2014: £221,000). A charge of £546,000 (2014: £65,000) has been made to cost of sales in the Company income statement in respect of share-based payment transactions, including £nil provision for National Insurance contributions (2014: £nil).

NOTES

22 Called up share capital

	Number of shares	2015	2014
		£000	£000
Allotted, called up and fully paid
Ordinary shares of 1p each at the beginning of the year	208,470,322	2,085	2,075
Ordinary shares of 1p each issued in the year	20,845,991	208	10
Ordinary shares of 1p each at the end of the year	229,316,313	2,293	2,085

On 1 May 2015, NCC Group plc issued 20,389,472 new ordinary shares of 1 pence as a share for share exchange in part consideration for the acquisition of Accumuli plc. The closing share price on the date of issue was 208.5 pence representing £204,000 par value of shares and £42,308,000 addition to the merger reserve account. During the year, 456,519 new ordinary shares of 1 pence were issued as a result of exercise of share options.

As at 31 May 2015, 238,186 shares were held in treasury (2014: 600,000). The total consideration paid for the shares was £464,000 (2014: £1,075,000), which has been deducted from equity in the period. These shares are held with the sole purpose of the settling any future share-based basement obligations.

23 Cash and cash equivalents

	At beginning	Cash	Non cash	At end
	of year	flow	items	of year
Cash and cash equivalents per	£000	£000	£000	£000
	11,212	5,513	(372)	16,353
balance sheet Cash and cash equivalents per cash flow statement	11,212	5,513	(372)	16,353

Non-cash items principally relate to the effects of foreign currency.

24 Other financial commitments and contingent liabilities

Non-cancellable operating lease rentals are payable as follows:

	2015			2014
	Land and Buildings	Other	Land and Buildings	Other
	£000	£000	£000	£000
Within one year or less	3,002	371	2,551	473
Between one and five years	10,869	163	9,244	363
Over five years	1,630	-	4,605	-
	15,501	534	16,400	836

There are no contingent liabilities not provided for at the end of the financial year.

25 Pension scheme

The Group operates a defined contribution pension scheme that is open to all eligible employees. The pension cost charge for the year represents contributions payable by the Group to the fund and amounted to £1,840,000 (2014: £1,615,000). The outstanding contributions at the year-end were £208,000 (2014: £173,000).

For the Company, the pension cost charge for the year represents contributions payable by the Company to the fund and amounted to £nil (2014: £nil).

NOTES

26 Related party transactions

The Group's key management personnel comprises the Directors of the Group. The Group and Company's transactions with those Directors are disclosed in the Directors' Remuneration Report.

NCC Group's Non Executive Chairman Paul Mitchell is a director of Rickitt Mitchell and Partners Limited and the Group conducted business to the value of £823,500 (2014: £150,000) with Rickitt Mitchell and Partners Limited. Included within the charge is £748,500 (2014: £85,000) relating to advice received in connection with the acquisitions made during the year ended 31 May 2015. Rickitt Mitchell and Partners Limited provide an outsourced acquisition service, which facilitates the delivery of acquisition targets, which have been identified and approved by the board. The remaining £75,000 (2014: £65,000) relates to the services of the Non Executive Chairman.

27 Investments in subsidiary undertakings

	Shares in group undertakings
Company	£000
At 1 June 2013	32,656
Increase in subsidiary investment for share-based charges	822
At 31 May 2014	33,478
At 1 June 2014	33,478
Increase in subsidiary investment for share-based charges	339
Acquisition of subsidiary	52,506
At 31 May 2015	86,323

The acquisition of subsidiary addition of £52,506,000 relates to the purchase of Accumuli plc (Note 15). Fixed asset investments are recognised at cost.

27 Investments in subsidiary undertakings (continued)

Subsidiary undertakings	Country of incorporation	Principal Activity
NCC Group (Solutions) Limited	England and Wales	Holding Company
NCC Services Limited	England and Wales	Escrow & Assurance
NCC Group Escrow Limited	England and Wales	Dormant
Artemis Internet Limited	England and Wales	Dormant
NCC Group Employees' Trustees Limited	England and Wales	Employee Benefit Trust
Escrow 4 Software Limited	England and Wales	Dormant
NCC Group Performance Testing Limited	England and Wales	Website monitoring & load testing
NCC Group Security Services Limited	England and Wales	Assurance services
NCC Group Audit Limited	England and Wales	Audit compliance
NCC Group SDLC Limited	England and Wales	Software Testing
Axzona Limited	Scotland	Dormant
NCC Group Escrow Europe BV	Netherlands	Escrow
NCC Group Escrow Europe (Switzerland) AG	Switzerland	Escrow
NCC Group GmbH	Germany	Escrow
FortConsult A/S	Denmark	Assurance Services
FC Holding Lithuania ApS	Denmark	Assurance Services
FC Holding Russia ApS	Denmark	Assurance Services
FortConsult UAB	Lithuania	Assurance Services
FortConsult Rus 000	Russia	Assurance Services
NCC Group Security Services, Inc.	USA	Ethical Security Testing
NCC Group Escrow Associates LLC	USA	Escrow
NCC Group Secure Registrar, Inc.	USA	Domain Services
NCC Group Domain Services, Inc.	USA	Domain Services
NCC Group Inc.	USA	Escrow & Assurance
NCC Group Pty Limited	Australia	Assurance services and
		Website monitoring
Accumuli Limited	England and Wales	Assurance Services
Accumuli Holdings Limited	England and Wales	Assurance Services
Armstong Adams Limited	England and Wales	Assurance Services
Randomstorm Limited	England and Wales	Assurance Services
Eqalis Limited	England and Wales	Reselling & support Services
Edgeseven Limited	England and Wales	Reselling & support Services
Accumuli Security Services Limited	England and Wales	Assurance Services
Signify Solutions Limited	England and Wales	Assurance Services
Fujin Technology Limited	England and Wales	Reselling & support Services
Accumuli Security Systems Limited	England and Wales	Assurance Services
Accumuli Security Technology Limited	England and Wales	Assurance Services
Accumuli Security ASH Limited	England and Wales	Assurance Services
Accumuli Security Limited	England and Wales	Assurance Services
Accumuli Debenture Limited	England and Wales	Dormant
Accumuli B.V.	Netherlands	Holding company
Accumuli Managed Services Limited	England and Wales	Dormant
Boxing Orange MSS Limited	England and Wales	Dormant
OpenRegistry S.A	Luxembourg	Domain Services
ClearingHouse for Intellectual Property S.A.	Luxembourg	Domain Services
Nexperteam CVBA	Belgium	Domain Services
Sensirius CVBA	Belgium	Domain Services

COMPANY INFORMATION

Directors

Paul Mitchell – Non-Executive Chairman Rob Cotton – Chief Executive Atul Patel – Group Finance Director Debbie Hewitt MBE – Senior Independent Non Executive Director Thomas Chambers – Non-Executive Director Chris Batterham – Non-Executive Director (appointed 1 May 2015)

Secretary

Felicity Brandwood (resigned 28 January 2015) Helen Nisbet (appointed 29 January 2015)

Registered office

Manchester Technology Centre Oxford Road Manchester M1 7EF

Registered number

4627044

Joint brokers and corporate finance advisers

Cannacord Genuity Limited Peel Hunt LLP 88 Wood Street Moor House, London 120 London Wall, EC2V 7QR London

EC2Y 5ET

Corporate finance advisers

Rickitt Mitchell & Partners Limited 129 Deansgate Manchester M3 3WR

Auditors

KPMG LLP 1 St Peter's Square Manchester M2 3AE

Solicitors

Eversheds LLP 70 Great Bridgewater Street Manchester M1 5ES

Bankers

The Royal Bank of Scotland plc 6th Floor 1 Spinningfields Square Manchester M3 3AP

Registrars

Equiniti Aspect House Spencer Road Lancing West Sussex BN99 6DA

LOCATIONS

UK

Manchester - Head Office
Basingstoke
Cambridge
Cheltenham
Edinburgh
Glasgow

Leatherhead

Leeds

London

Milton Keynes

Wetherby

North America

Atlanta	San Francisco
Austin	Seattle
Chicago	Sunnyvale
New York

Europe

Amsterdam	Madrid
Antwerp	Malmö
Brussels	Munich
Copenhagen	Vilnius
Luxembourg City	Zurich

Australia

Sydney

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