1

22 January 2015

NCC Group plc

Strong revenue growth of 15% drives profit up 6% NCC Group plc (LSE: NCC, “NCC Group” or “the Group”), the international, independent provider of Escrow,

Assurance and Domain Services, has reported its half year results for the six months to 30 November 2014.

Highlights

Financial

Group revenue increased 15% to £62.3m (£54.0m in 2013) – 17% on constant currency basis

o International revenue now 47% (39% in 2013) of Group revenue

o US revenue growth of 41% on a constant currency basis

Group adjusted operating profit* up by 6% to £12.4m (£11.8m in 2013)

o Group adjusted operating profits* excluding Domain Services grew by 14% to £14.3m (£12.6m in

2013)

Reported operating profit was £11.1m (£11.6m in 2013)

Group adjusted pre-tax profit* increased 5% to £12.1m (£11.4m in 2013)

Adjusted fully diluted earnings* per share increased 6% to 4.50p (4.24p in 2013)

Interim dividend up 14% to 1.30p (1.14p in 2013)

Cash conversion ratio 105% of operating profit (104% in 2013)

Operational

Escrow achieving strong revenue growth of 4% to £15.4m (£14.8m in 2013)

Escrow adjusted operating profits* up by 6% to £8.9m (£8.4m in 2013)

Assurance revenues increasing by 20% (15% in 2013) to £46.9m (£39.2m in 2013)

Assurance adjusted operating profits* up 23% to £7.7m (£6.3m in 2013)

Domain Services expanded by £14.9m acquisition of Open Registry (20 January 2015)

Purchase of .trust and sale of .secure completed

Outlook

Total Group orders and renewals up 11% to £57.2m (£51.4m in November 2013) for the current financial

year

With Open Registry, Domain Services is now able to offer an end to end, secure domain service

capabilities

* Operating profit is adjusted for amortisation of acquired intangibles, exceptional items and share based payment charges. Pre-tax profit is adjusted for these items and the unwinding of the discount on the acquisitions’ contingent consideration.

2

Rob Cotton, Group Chief Executive, comments:

“Both the Escrow and Assurance businesses have seen strong organic growth in revenue and profitability, with

a particularly stand out performance by our US operations – it saw a revenue jump up of 41%, on a constant

currency basis.

“Our Domain Services division has been transformed. .trust was successfully acquired whilst we sold .secure

on very favourable terms. The recent acquisition of the Open Registry group of businesses, now means that in

the very dynamic and growing domain markets, we can provide a complete suite of secure services to our

corporate clients around the world.”

Enquiries:

NCC Group (www.nccgroup.com) +44 (0)161 209 5432 Rob Cotton, Chief Executive Atul Patel, Group Finance Director Instinctif Partners Adrian Duffield/Chantal Woolcock +44 (0)20 7457 2020

Overview

Group revenue in the first half increased by 15% to £62.3m (£54.0m in 2013), or 17% on a constant currency

basis, with good growth coming from both the Assurance and Escrow divisions. All the growth was organic.

International revenue, the majority of which is derived from the US, has continued to grow strongly and is now

47% (39% in 2013) of total Group revenue.

Group adjusted operating profit increased by 6% to £12.4m (£11.8m in 2013). Escrow operating profit grew by

6% to £8.9m (£8.4m in 2013) and Assurance by 23% to £7.7m (£6.3m in 2013). Good operational cost control

within Domain Services saw expenditure at £1.9m (£0.8m in 2013).

Domain Services has completed a number of key developments; .trust was bought whilst after the period end

.secure was sold. The division’s capabilities were significantly enhanced by the acquisition of Open Registry

for up to £14.9m on 20 January 2015. Open Registry Domain Services, as it is now known, provide backend

registry operations to brand customers as well as registrar and trademark validation services. The division is

now able to deliver a secure end-to-end solution for all customers’ domain needs.

Group adjusted diluted earnings per share improved 6% to 4.50p (4.24p in 2013). The Board has continued its

progressive dividend policy, increasing the interim dividend by 14% to 1.30p (1.14p in 2013).

The Group continues to be highly cash generative with the ratio of operating cash flow before interest and

tax being 105% of operating profits (104% in 2013). Net debt at the end of the period was £31.3m (£26.2m in

2013) against existing facilities of £45m at the period end. In January 2015 this facility was increased to £60m.

Current trading & outlook

The Group remains focused on risk mitigation and delivering client peace of mind, by providing a

complementary range of services that has the width and depth to provide multinational clients with a total

solution to their information security issues.

The approach of all three Divisions remains unchanged; to develop the business by a combination of

acquisitions of earnings enhancing, high quality businesses, with strong organic growth, all focused away from

areas of discretionary expenditure.

The Escrow businesses expect annual renewals to be £18.3m (£18.1m in November 2013) in this financial year,

based on termination rates at 11%. The Escrow verification testing worldwide order book stands at £2.3m

3

(£2.7m in November 2013). Assurance order books have improved to £29.8m (£23.8m in November 2013) and

have £6.8m of monitoring renewals forecast for the current financial year (£6.8m in November 2013).

In total, the Group’s orders and renewals for the current financial year have increased by 11% to £57.2m

(£51.4m in November 2013), excluding the newly acquired Open Registry business.

The Group’s revenue has always been biased towards the second half of the financial year and this is

expected to continue this year.

The expansion of service offerings within Domain Services substantially increases the Group’s ability to provide

an end to end service to customers. The Group expects that this will see a strong take up of .trust domains in

due course, following a process that will involve greatly improving customers’ web security in their existing

web estate.

The Group is operating in growth markets and expects that the enhanced Domain Services division will start

to see revenues delivered soon.

The Board remains very confident of a strong second half to the financial year.

Financial review

Revenue

Group revenue was £62.3m (£54.0m in 2013) with international revenue now making up 47% (39% in 2013) of

total Group revenue. Escrow accounted for 25% of NCC Group’s tota l revenue (27% in 2013) with Assurance

representing 75% (73% in 2013).

The table below summarises revenue by division, including their key business areas.

£’000’s

2014

Six months

ended

30 November

2013

Six months

ended

30 November

%

Change

%

Constant

currency

Revenue by business segment

Escrow UK 11,314 10,824 5 -

Escrow Europe 1,553 1,634 (5) 2

Escrow USA 2,520 2,353 7 11

Total Escrow 15,387 14,811 4 5

Security Consulting 36,155 27,185 33 35

Web Performance and Software

Testing 10,783 12,003 (10) (10)

Total Assurance 46,938 39,188 20 21

Total Revenue 62,325 53,999 15 17

On a constant currency basis European and US Escrow growth would be 2% and 11% respectively and 21%

for total Assurance revenue growth.

Within Assurance, the Security Consulting unit, grew by 32% in the UK and Europe and 35% in North America,

41% on a constant currency basis.

The table below provides an analysis of the Group’s revenue by geographical market where the customer is

based. It highlights the significant increase in the scale of the US operations that make up the majority of the

rest of the world revenue.

4

£’000’s 2014

Six months

ended

30 November

2013

Six months

ended

30 November

%

Change

Revenue by geographical destination

UK 33,309 33,011 1

Rest of Europe 6,328 4,066 56

Rest of the world 22,688 16,922 34

Total Revenue 62,325 53,999 15

Profitability

Group adjusted operating profit, before amortisation of acquired intangible assets, exceptional items, share-

based payments and the unwinding of the discount on acquisitions, increased by 6% to £12.4m (£11.8m in

2013).

Group adjusted operating profit is after the £1.9m (£0.8m in 2013) expensed in respect of the continued

investment in Domain Services. Excluding these costs, Group adjusted operating profit increased by 14% to

£14.3m (£12.6m in 2013).

The Group adjusted operating profit margin was 20% (22% in 2013) as a result of the continued growth of

Assurance, which has lower margins than Escrow and the impact of the expensed Domain Services

investment.

Assurance and Escrow operating margin improved to 17% (16% in 2013) and 58% (57% in 2013) respectively.

£’000’s 2014

Six months

ended

30 November

2013

Six months

ended

30 November

Operating profit by business segment

Group Escrow 8,889 8,366

Assurance Testing 7,747 6,283

Domain Services (1,887) (799)

Segment operating profit 14,749 13,850

Head office costs (2,300) (2,066)

Operating profit before amortisation of acquired

intangibles, charges for share based payments and

exceptional items

12,449 11,784

Amortisation of intangible assets Group Escrow (420) (355)

Amortisation of intangible assets Assurance (464) (925)

Share based payments (338) (605)

Operating profit before exceptional items 11,227 9,899

Exceptional items (158) 1,685

Operating profit 11,069 11,584

The Group’s operating profit before exceptional items grew by 14%. The small exceptional cost related to the

on-going legal action with the former provider of the failed group SAP IT solution in 2012. In the prior year an

exceptional profit was reported due to £1.9m of earn out consideration from a previous acquisition no longer

becoming payable.

The Group’s reported pre-tax profit was £10.6m (£11.1m in 2013) after the inclusion of the unwinding of the

discount on the acquisitions contingent consideration, amortisation of acquired intangible assets, share based

payments and exceptional items.

5

Taxation

The tax charge for the six months ended 30 November 2014 is 21% (22% in 2013) of profit before tax and is

based upon the expected tax rate for the full year. The expected rate reflects the continued reduction in the

UK corporate tax rates and the US tax treatment of Domain Services costs.

Earnings per share

The adjusted basic earnings per share from operations increased by 7% to 4.6p (4.3p in 2013) and reported

basic earnings per share from operations were 4.0p (4.2p in 2013).

The table below analyses the effect on the Group’s basic earnings per share of the amortisation of acquired

intangibles, unwinding of the discount on contingent consideration for acquisitions, the effect of the

exceptional items and share based payments.

2014

Six months

ended

30 November

2013

Six months

ended

30 November

Basic EPS

Group earnings per share – unadjusted 4.0p 4.2p

Amortisation of acquired intangibles 0.4p 0.5p

Exceptional items 0.1p (0.6p)

Unwinding of the discount on the

contingent consideration of the

acquisitions 0.0p 0.0p

Share based payments 0.1p 0.2p

Adjusted basic EPS 4.6p 4.3p

The adjusted fully diluted earnings per share from continuing operations increased 6% to 4.5p (2013: 4.2p)

whilst reported fully diluted earnings per share was 4.0p (2013: 4.1p).

Dividends

In line with a continuing progressive dividend policy, the Board is paying an interim dividend of 1.30p (1.14p

in 2013), an increase of 14%. This will be paid on 27 February 2015 to shareholders on the register at the close

of business on 30 January 2015, with an ex-dividend date of 29 January 2015.

This represents cover of 3.1 times (3.7 times in 2013) based on basic earnings from continuing operations and

cover of 3.5 times on an adjusted basic earnings on continuing operations basis (3.7 times in 2013).

Cash & funding

Operating cash flow before interest and tax, as a ratio to operating profits of £11.1m, remained strong at 105%

(104% in 2013). The Group remains committed to strong balance sheet management and borrowing only for

affordable value enhancing acquisitions and the expansion of suitably considered service lines.

The Group had net debt of £31.3m (£26.2m in 2013) at the period end against facilities of £45m.

On 20 January 2015 the Group acquired the Open Registry group of companies for £14.9m (€19.5m) of which

£7.9m (€10.3m) was paid on completion.

The Group increased its banking facilities to £60m comprising of a £55m revolving credit facility and a £5m

overdraft on the same terms.

6

A deferred consideration payment of £0.7m for FortConsult will be paid during the second half of the financial

year.

Capital expenditure increased to £9.7m (£4.5m in 2013) as the Group continued its investment in Domain

Services with capital expenditure in that Division of £4.1m. The Group also continued to invest in the new

Group IT system (£1.2m) and spent £1.8m on the refurbishing and opening of new offices.

Operational review

Group Escrow

Escrow remains the cornerstone of the Group’s profitability and cash generation. All of the Escrow businesses

offer substantial margins, a high degree of recurring revenue due to the contract renewal rates , as well as

notably strong cash conversion characteristics.

Group Escrow revenue increased by 4% (7% in 2013) to £15.4m (£14.8m in 2013) or 5% on a constant currency

basis. Global verification revenues continued the trend seen in the second half of the last fina ncial year and

grew by 8% to £3.7m (£3.4m in 2013).

Group recurring revenues through the renewals process will grow to £18.3m this financial year (£18.1m in 2013).

Group Escrow operating profitability grew by 6% (8% in 2013) to £8.9m (£8.4m in 2013).

The division was strengthened by the appointment of a new divisional Group Managing Director on 1 June

2014. The division is expected to actively increase headcount in all its sales locations in the next six months.

In November 2014 Escrow UK prices were increased slightly ahead of inflation and mainland Europe and US

are following in the second half of the financial year.

Escrow UK. The first half of the financial year saw a good performance in the traditionally quieter period. Even

though the rate of growth was slightly lower, the performance was reassuringly strong as UK revenue grew 5%

(7% in 2013) to £11.3m (£10.8m in 2013).

The underlying termination rate fell to about 11% (2013: 12%), the first change in six years. There has been no

discernible change in the reasons for termination.

Escrow Europe & Escrow USA. Escrow Europe revenues were £1.6m (£1.6m in 2013), although on a constant

currency basis, this would have shown 2% growth. The business has a new General Manager and the European

teams are now stable.

Escrow USA revenue increased by 7% (8% in 2013) to £2.5m. On a constant currency basis this would have

been a very satisfying 11% growth, with strong performances from both Atlanta and San Francisco .

Assurance Division

Despite the Group’s decision to relinquish a number of low margin software testing con tracts, Assurance

revenue increased by 20% to £46.9m (£39.2m in 2013). Within Assurance, Security Consulting grew by 32% in

the UK and Europe and 35% in North America, which is 41% on a constant currency basis.

During the half year, operating profits for the division increased 23% to £7.7m (£6.3m in 2013).

The Group now has one of the largest multi-national accredited security testing teams of consultants in the

industry with over 380 members. The Division employs over 800 globally, with a new team currently being

formed in Spain where some extremely talented security consultants reside, who are capable of working

across Europe. This further enhances the Division’s capability to offer complete international support to multi-

national organisations seeking to improve their information security.

For Assurance, staff retention and recruitment remain the most important issues. The careful balancing of paid -

for utilisation, quality of deliverable work and research ensures that em ployee churn in the security team is

7

consistently and significantly less than the 10% staff churn Group target and significantly less than 30% is which

is regarded as normal in skilled IT environments. Adopting this approach also ensures the Group’s exempl ary

reputation remains intact, which is one of the key draws for new employees.

The Group has a very good reputation for security research as well as for the delivery of web applications,

vulnerability assessments and forensics, in addition to being a leading provider of managed security services.

The Group actively promotes a responsible disclosure policy for both paid for and self -funded vulnerability

research. In the last 12 months, Group employees uncovered 170 new vulnerabilities, of which 70 were

classified as being of critical or high importance. To date, developers and software owners have fixed only

five of them. In addition 11 white papers and 36 new security tools were released.

The managed services provided by the Group, the forerunner of the security monitoring service offered in

Domain Services, currently runs over 5,000 application, infrastructure and monitoring scans per month. This

equates to monitoring over 80,000 live IP addresses monthly or over five million annually. Currently this service

is identifying over 160,000 incidents a month, which is five times as high as this time last year.

The web monitoring, performance and load testing business continued to perform strongly. It achieved a

recurring revenue rate above 91% (90% in 2013) as businesses continue to recognise the importance of their

website to their business prospects.

Security marketplace

The growth of the information security market place remains very strong as cyber crime and data breaches

proliferate with reports of corporate breaches hitting the headlines on a daily basis. Details of widespread

security vulnerabilities such as Heartbleed, Shellshock and Poodle have been revealed.

If ever there had been any doubt about nation state capability, the visible exposure of the North Korean

attack on Sony, and the follow up responses and reprisals, confirmed the reality of global cyber warfare.

The reappearance of Hacktivists, who disrupted both Sony and Microsoft gaming platforms during the holiday

season, served as a timely reminder that theft of IP and property, digital vandalism and hacktivism is both

malicious and disruptive. Defending against the damage and disruption is expensive, time consum ing and

can paralyse organisations.

The breaches suffered by the US companies Target and Home Depot are still being globally replicated. In the

UK last year more than 80% of large organisations experienced a security breach. According to the 2014

Information Security Breaches Survey commissioned by the UK Department for Business, Innovation & Skills the

worst breaches cost large organisations, on average £0.6m - £1.2m, which is an increase of 33% - 50% on last

year.

For small businesses the average cost increased by 60% to on average £65k - £115k. The poll found that 59%

expect there to be more breaches over the next year.

Despite the almost daily reporting of hacks and data breaches in the UK, the general public is still largely in

the dark about what data of theirs has been compromised or about what to do to safeguard their data. The

proliferation of generic Top Level Domains (gTLDs) will present more opportunities for on-line fraud along with

the weakening potency of anti-virus software, which is no longer capable of providing an active defence.

Real investment is required by organisations and government agencies.

From the “Trust in The Internet” survey conducted by IDR, commissioned by NCC Group which surveyed 10,000

people in North America and the UK, 77% of people confirmed that they do not feel very safe when shopping

or banking online. Full details are available on www.nccgroup.com .

The poll also revealed that 62% of respondents are more concerned about online security now than they have

ever been, while 23% of people are doing less online due to their security concerns. Significantly 59% of

respondents said they are uncomfortable sharing sensitive financial and personal information when they shop

and interact with organisations online.

8

Concurringly, 64% of consumers believe that they are likely to end up a victim of a security breach within the

next 12 months, while 84% of people believe companies should compensate customers financially for their

loss if they experience a breach.

The backdrop of falling consumer confidence and weakening defences is an ideal market for both the

Assurance Division and Domain Services Division to thrive in.

Open Registry Domain Services

The Group has made considerable progress in this area and is now able to provide an end-to-end secure

domain solution service. The development of the technical capability and the infrastructure to deliver the

.trust community has progressed very well. It is on track, ahead of the initial cost estimates and is nearing

completion.

The recent acquisition of the Open Registry considerably strengthens the Group’s ability to offer a very secure

unique service complementing the provision of .trust.

The Group now has the ability to provide a trusted secure domain environment by operating a number of

complementary capabilities including backend operator (registry), a corporate registrar, third party data

escrow to all parts of the market and anti-abuse monitoring as required by ICANN.

The Group completed the purchase of .trust and has seen it progress through the orderly ICANN process to

becoming a live domain on the Internet. So far it has passed pre-delegation testing and is currently part way

through the 90 days name collision process.

The sunrise period is open for customers to register early their interest in .trust domains, but as the service is

being sold on a targeted approach to specific brands, this is not expected to yield any issues.

The .trust domain is expected to be live by the end of February and when it is, the Group will be the first

organisation to move to the domain with its website becoming www.nccgroup.trust.

The Group is now solely focussed on .trust, having reached, on 3 December 2014, a suitable financial

arrangement to relinquish its interest in the .secure domain that had been applied for. The proceeds from

relinquishing .secure will be used against capitalised development costs incurred to date.

The total anticipated capital expenditure and operating costs are likely to be around £9.5m in this financial

year (£8.3m at 31 May 2014).

To date the Group has capitalised £9.6m (£5.0m at 31 May 2014) of development costs for this project which

relates to the cost of the domain, product and infrastructure design, cost and construction, know -how and

filing of patents.

During the period £1.9m has been expensed (£0.8m at 30 November 2014).

The Group remains on track to launch the service at the end of Q1 2015.

Roll out of .trust & background to acquisition of Open Registry

The strategy for Domain Services is based primarily around the provision of .trust as a domain. Behind that

stands the Group’s high bar Technical Policy. This forms the basis for organisations to set their security policy.

NCC Group’s unique multi tool based monitoring service has been developed to monitor and report

compliance.

This approach is aimed at those organisations that are brand aware, have a substantial Internet presence

and whose business is reliant upon the two-way passage of information between organisations or individuals

using the Internet. This covers retail and financial organisations, especiall y those who have high levels of

consumer traffic, but also companies who have frequent interaction with their supply chain.

9

Moving to .trust is a significant step for organisations to contemplate. Internally there are multiple stakeholders

to persuade and convince, although within most organisations awareness of the changes taking place in the

domain world is still low or non-existent. This lack of understanding is not just specific to .trust but is common to

all of the new domains as demonstrated by the much slower than anticipated global take up rate of new

domain extensions by companies and individuals.

Awareness is highest amongst the 600 brands who have registered for their own domain, but despite the fact

that a number are beginning to be delegated, most remain unclear as to what to use them for.

Equally, there are many who are aware of the changes taking place, who have not registered their brand or

name for a myriad of reasons, including, becoming aware of the process too late, consciousl y deciding not

to or because they were unable to as their name contained a generic word or city name.

These are also potential candidates for .trust as they recognise the need to protect their brand and remove

confusion from their customers.

The three main issues confronting an organisation contemplating joining the .trust community are; can it meet

the security policy standards set; what are its competitors doing; and does it want to be the first member of

the community. Within this comes the subset of questions concerning their current .com estate as well as

owning, applying for or using their own domains or other generics.

The approach applied to these clients therefore has to be consultative. This typically also brings out other

areas of domain control that they have not considered, which slows the decision making process further, such

as which of the other multitude of domains that exist they should be considering.

Currently the Group is engaged in detailed discussions with approximately 30 organisations about joining the

community. From these, it has become apparent that the decision making process is considerably slower and

more involved than was first thought, and this has not been helped by the extended time it has taken to be

get .trust live.

The Group has introduced more steps to allow organisations to get the full benefit of .trust in component

stages.

To that end customers are now able to secure their .trust domain for a fee as a placeholder and then look at

all of the next stages without committing directly to joining the community. Further a number of customers are

looking to use the unique monitoring service against their existing estate to provide them with a

comprehensive security monitoring service, whilst they formulate their domain strategy.

This approach is being equally applied to monitoring brands’ domains for organisations. Consequently it is

likely that the revenue streams will be delivered in Domain Services, although not necessarily immediately as

was first thought.

A number of the Group’s customers now want to be prepared for the next application process and will want

to apply for their own domain names, as well as having their entire domain services requirements looked after

by a single entity.

In order to provide this service, the Group acquired the Open Registry to expand its offering to cover not only

the application process but all the registry, registrar and consultancy services that are required. These

complement the Group’s capabilities in security, domain abuse monitoring and escrow services.

The services that can be offered by NCC Group Domain Services are end to end. This is unique in an emerging

and confused market place, and gives the Group a significant advantage to take the opportunities as they

initially slowly arise.

10

Group IT Systems

The Group’s replacement IT system is now partially operational. Some of the benefits are already beginning

to be seen, although it will take a further 12 months to complete the project around all the Group’s

international offices.

The contractual dispute with the third party implementer, who was responsible for the failed SAP project in

2012, Ciber UK, continues. The Group remains committed to pursuing robustly all reasonable and appropriate

steps to receive a suitable recompense.

Principal risks & uncertainties

The Group faces operational risks and uncertainties, which the Directors take all reasonable steps possible to

mitigate, however the Directors recognise that they can never be eliminated completely.

The principal operational risks and uncertainties the Group faces include those in relation to the recruitment

of additional staff to meet the Group’s ambitious growth plans, the occurrence of unforeseen difficulties in

the integration of the current or future acquisitions the Group may enter into, the dependence on key

executives and senior managers and the speed of adoption of new gTLDs by customers and consumers

globally.

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

be essential to the Group.

11

Group condensed income statement

Notes

2014

six months

ended 30 November

2013

six months

ended 30 November

2014

year

ended 31 May

£000 £000 £000

Continuing operations

Revenue 2 62,325 53,999 110,661

Cost of sales (42,779) (35,291) (71,193)

Gross profit 19,546 18,708 39,468

Administrative expenses before amortisation

of acquired intangible assets, share based

payments and exceptional items

(7,097) (6,924) (13,440)

Operating profit before amortisation, share

based payments and exceptional items 12,449 11,784 26,028

Amortisation of acquired intangible assets (884) (1,280) (2,116)

Share based payments (338) (605) (1,108)

Exceptional items 3 (158) 1,685 1,268

Total administrative expenses (8,477) (7,124) (15,396)

Operating profit 2 11,069 11,584 24,072

Financial income - - 24

Finance expense excluding unwinding of

discount (395) (344) (789)

Net finance expense excluding unwinding

of discount (395) (344) (765)

Unwinding of discount effect relating to

deferred consideration on business

combinations

(65) (107) (120)

Financial expenses (460) (451) (885)

Net financing costs (460) (451) (861)

Profit before taxation 10,609 11,133 23,211

Taxation 4 (2,243) (2,448) (5,104)

Profit for the period 8,366 8,685 18,107

Attributable to equity holders of the parent

company 8,366 8,685 18,107

Earnings per share from continuing

operations 5

Basic earnings per share 4.0p 4.2p 8.7p Diluted earnings per share 4.0p 4.1p 8.6p

12

Group condensed statement of

comprehensive income

2014 six months

ended

30 November

2013 six months

ended

30 November

2014 year

ended

31 May

£000 £000 £000

Profit for the period 8,366 8,685 18,107

Other comprehensive income

Foreign exchange translation differences 1,171 (1,175) (1,968)

Total comprehensive income for the period 9,537 7,510 16,139

Attributable to:

Equity holders of the parent 9,537 7,510 16,139

Group condensed statement of financial position

Notes 2014

30 November

2013

30 November

2014

31 May

£000 £000 £000

Non-current assets

Intangible assets 7 118,478 104,398 110,064

Plant and equipment 8,045 5,453 6,244 Deferred tax assets 3,098 1,749 2,299

Total non-current assets 129,621 111,600 118,607

Current assets

Trade and other receivables 30,513 25,200 28,691

Cash and cash equivalents 6,987 7,527 11,212

Total current assets 37,500 32,727 39,903

Total assets 167,121 144,327 158,510

Equity Issued capital 2,088 2,085 2,085

Share premium 23,935 23,551 23,634

Reserve for own shares (51) - (1,075)

Retained earnings 58,652 48,205 56,003

Currency translation reserve 120 (258) (1,051)

Total equity attributable to equity holders of

the parent

84,744 73,583 79,596

Non-current liabilities

Interest bearing loans 38,290 33,709 34,786

Other financial liabilities 438 531 484

Deferred tax liability 3,387 2,115 2,444

Contingent consideration on acquisitions 1,024 - 1,001

Total non-current liabilities 43,139 36,355 38,715

13

Current liabilities

Trade and other payables 16,757 11,248 17,363 Contingent consideration on acquisitions 745 4,288 2,940

Deferred revenue 17,690 16,391 17,207

Current tax payable 4,046 2,462 2,689

Total current liabilities 39,238 34,389 40,199

Total liabilities 82,377 70,744 78,914

Total liabilities and equity 167,121 144,327 158,510

14

Group condensed statement of cash flows

2014

six months

ended 30 November

2013

six months

ended 30 November

2014

year

ended 31 May

£000 £000 £000

Cash inflow from operating activities

Profit for the period 8,366 8,685 18,107

Adjustments for:

Depreciation charge 1,182 998 2,092

Share based charges (net of national insurance) 294 465 887

Amortisation of intangible assets 1,125 1,435 2,438

Net financing costs 460 451 861

(Profit)/loss on sale of plant and equipment (33) - 10

Adjustments to contingent consideration - (1,894) (1,894)

Income tax expense 2,243 2,448 5,104

Cash inflow for the period before changes in working

capital

13,637 12,588 27,605

Increase in trade and other receivables (1,790) (726) (3,414)

(Decrease)/Increase in trade and other payables (164) (1,805) 4,661

Cash generated from operating activities before interest and tax 11,683 10,057 28,852

Interest paid (417) (423) (798)

Income tax paid (715) (2,058) (4,489)

Net cash generated from operating activities 10,551 7,576 23,565

Cash flows from investing activities

Interest received - 23 24

Acquisition of plant and equipment (2,732) (1,303) (3,237)

Development expenditure (6,993) (3,192) (7,520)

Acquisition of business net of cash acquired (2,260) (378) (4,249)

( Net cash used in investing activities (11,985)

(4,850)

(14,982)

Cash flows from financing activities

Proceeds from the issue of ordinary share capital 304 475 558

Purchase of own shares - (1,048) (2,123) Draw down of borrowings 2,087 5,355 6,838

Equity div idends paid (4,919) (4,403) (6,778)

Net cash from financing activities (2,528) 379 (1,505)

Net (decrease)/increase in cash and cash equivalents (3,962) 3,105 7,078

Cash and cash equivalents at beginning of period 11,212 4,589 4,589

Effect of exchange rate fluctuations (263) (167) (455)

Cash and cash equivalents at end of period 6,987 7,527 11,212

15

Group condensed statement of changes in equity

Share

capital

Share

premium

Currency

Translation

reserve

Reserve

for own

shares

Retained

earnings

Total

£000 £000 £000 £000 £000 £000

Balance at 1 June 2013 2,075 23,086 917 - 44,392 70,470

Profit for the period - - - - 8,685 8,685

Foreign currency translation differences - - (1,175) - - (1,175)

Total comprehensive income for the period - - (1,175) - 8,685 7,510

Transactions with owners recorded directly in equity

Div idends to equity shareholders - - - - (4,403) (4,403)

Share based payment transactions - - - - 465 465 Current and deferred tax on share based payments - - - - 114 114

Shares issued 10 465 - - - 475

Purchase of own shares - - - - (1,048) (1,048)

Total contributions by and distributions to owners 10 465 - - (4,872) (4,397)

Balance at 30 November 2013 2,085 23,551 (258) - 48,205 73,583

Share

capital

Share

premium

Currency

Translation

reserve

Reserve

for own

shares

Retained

earnings

Total

£000 £000 £000 £000 £000 £000

Balance at 1 June 2013 2,075 23,086 917 - 44,392 70,470 Profit for the period - - - - 18,107 18,107

Foreign currency translation differences - - (1,968) - - (1,968)

Total comprehensive income for the period - - (1,968) - 14,484 16,139

Div idends to equity shareholders - - - - (6,778) (6,778)

Share based payment transactions - - - - 887 887

Current and deferred tax on share based payments

- - - - 443 443

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

Share

capital

Share

premium

Currency

Translation

reserve

Reserve

for own

shares

Retained

earnings

Total

£000 £000 £000 £000 £000

Balance at 1 June 2014 2,085 23,634 (1,051) (1,075) 56,003 79,596 Profit for the period - - - - 8,366 8,366

Foreign currency translation differences - - 1,171 - - 1,171

Total comprehensive income for the period - - 1,171 - 8,366 9,537

Transactions with owners recorded directly in equity Div idends to equity shareholders - - - - (4,919) (4,919)

Share based payment transactions - - - - 294 294

Current and deferred tax on share based payments - - - - (68) (68) Shares issued 3 301 - 1,024 (1,024) 304

Total contributions by and distributions to owners 3 301 - 1,024 (5,717) (4,389)

Balance at 30 November 2014 2,088 23,935 120 (51) 58,652 84,744

16

Notes to the half-yearly report

1 Accounting policies

Basis of preparation

The Group condensed half-yearly financial statements for the six months ended 30 November 2014 have been

prepared in accordance with IAS 34, “Interim Financial Reporting” as adopted by the EU.

As required by the Disclosure and Transparency Rules of the Financial Services Authority the financial

information contained in this report has been prepared using the accounting policies applied for the year

ended 31 May 2014. They do not contain all the information required for full annual financial statements and

should be read in conjunction with the annual financial statement s for the year ended 31 May 2014.

The financial statements of the Group for the year ended 31 May 2014 are available from the Company’s

registered office, or from the website www.nccgroup.com.

The comparative figures for the financial year ended 31 May 2014 are not the company's statutory accounts

for that financial year. Those accounts, which were prepared under IFRS as adopted by the EU (“adopted

IFRS”), have been reported on by the company's auditors and delivered to the registrar of Companies. The

report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors

drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under

section 498(2) or (3) of the Companies Act 2006.

NCC Group plc (“the Company”) is a company incorporated in the UK .

Significant accounting policies

The accounting policies applied by the Group in these consolidated half-yearly financial statements are the

same as those applied by the Group in its consolidated financial statements as at and for the year ended 31

May 2014.

There are no IFRS or IFRIC interpretations effective for the first time this financial period that have had a material

impact on the Group.

Going concern

The Group’s activities, together with the factors likely to affect its future development, performance and

position are set out in the financial and operational reviews.

The directors have reviewed the trading and cashflow forecasts as part of their going concern assessment

including reasonable downside sensitivities which take into account the uncertainties in the current operating

environment.

Taking into account the above uncertainties and circumstances, the directors formed a judgement that there

is a reasonable expectation that the group has adequate resources to continue in operational existence for

the foreseeable future.

Accordingly they continue to adopt the going concern basis in preparing the group’s condensed half -yearly

financial statements for the period ended 30 November 2014.

Use of estimates and judgements The preparation of the consolidated half-yearly financial statements in conformity with IFRSs requires

management to make judgements, estimates and assumptions that affect the application of accounting

policies and the reported amounts of assets, liabilities, income and expenses. Actual results may di ffer from

these estimates.

17

In preparing the consolidated half-yearly financial statements, the significant judgements made by

management in applying the Group’s accounting policies and key sources of estimated uncertainty were

the same as those applied to the consolidated financial statements for the year ended 31 May 2014.

2 Segmental information

The Group is organised into three operating segments (30 November 2013: three): Group Escrow, Assurance

Testing 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 acquired 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.

2014

Six months

ended

30 November

2013

Six months

ended

30 November

2014

Year ended

31 May

Revenue by business segment

£000 £000 £000

Escrow UK 11,314 10,824 22,507

Escrow Europe 1,553 1,634 3,285

Escrow USA 2,520 2,353 4,663

Total Group Escrow 15,387 14,811 30,455

Security Consulting 36,155 27,185 57,506

Web Performance and Software Testing 10,783 12,003 22,700

Total Assurance 46,938 39,188 80,206

Domain Services - - -

Total Revenue 62,325 53,999 110,661

2014

Six months

ended

30 November

2013

Six months

ended

30 November

2014

Year ended

31 May

Operating profit by business segment

£000 £000 £000

Group Escrow 8,889 8,366 18,056

Assurance 7,747 6,283 14,052

Domain Services (1,887) (799) (2,126)

Segment operating profit 14,749 13,850 29,982

Head office costs (2,300) (2,066) (3,954)

Operating profit before amortisation, share

based payments and exceptional items 12,449 11,784 26,028

Amortisation of acquired intangible assets Group

Escrow

(420) (355) (1,097)

Amortisation of acquired intangible assets

Assurance

(464) (925) (1,019)

Share based payments (338) (605) (1,108)

Operating profit before exceptional items 11,227 9,899 22,804

Exceptional items (158) 1,685 1,268

Operating profit 11,069 11,584 24,072

18

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

The table below provides an analysis of the Group’s revenue by geographical market where the customer is

based.

2014

Six months

ended

30 November

2013

Six months

ended

30 November

2014

Year ended

31 May

£000 £000 £000

Revenue by geographical destination

UK 33,309 33,011 66,366

Rest of Europe 6,328 4,066 10,453

Rest of the World 22,688 16,922 33,842

Total Revenue 62,325 53,999 110,661

3 Exceptional items

The Group identifies separately items as “exceptional”. These are items which in the 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.

2014

Six months

ended

30 November

£000

2013

Six months

ended

30 November

£000

2014

Year ended

31 May

£000

Exceptional items and acquisition related costs

Legal fees (158) (209) (334)

Acquisition related costs - - (292)

Revision to estimates of contingent consideration - 1,894 1,894

Total (158) 1,685 1,268

Legal fees of £158,000 (30 November 2013: £209,000) are primarily in respect of legal advice received in

relation to the Group’s claim to recover capitalised and other costs incurred as part of the Group’s IT system

implementation which was terminated in May 2012. They have been included in exceptional items to be

consistent with the treatment of these costs in previous years.

4 Taxation

The Group tax charge represents the estimated annual effective rate of 21% (30 November 2013: 22%) applied

to the profit before tax for the period.

19

5 Earnings per share

The calculation of earnings per share is based on the following:

2014

Six months

ended

30 November

£000

2013

Six months

ended

30 November

£000

2014

Year ended

31 May

£000

Profit for the period from continuing operations

used for earnings per share 8,366 8,685 18,107

Amortisation of acquired intangible assets 884 1,280 2,116

Exceptional items 158 (1,685) (1,268)

Unwinding of discount 65 107 120

Share based payments 338 605 1,108

Tax arising on the above items (301) (44) (430)

Adjusted profit from continuing operations used

for adjusted earnings per share 9,510 8,948 19,753

Number of

shares

000’s

Number of

shares

000’s

Number of

shares

000’s

Basic weighted average number of shares in issue 208,811 208,385 208,154

Dilutive effect of share options 3,619 2,711 3,283

Diluted weighted average shares in issue 212,430 211,096 211,437

6 Dividends

2014

Six months

ended

30 November

£000

2013

Six months

ended

30 November

£000

2014

Year ended

31 May

£000

Dividends paid and recognised in the period 4,919 4,403 6,779

Dividends proposed but not recognised in the period 2,715 2,376 4,920

Dividends per share paid and recognised in the

Period 2.36p 2.12p 3.26p

Dividends per share proposed but not recognised in the

period 1.30p 1.14p 2.36p

20

7 Intangible assets

Software

Development

costs

Customer

contracts and

relationships Goodwill Total £000 £000 £000 £000 £000

Net book value:

At 1 June 2013 2,225 1,457 9,809 92,189 105,680

Other acquisitions –

internally developed 1,958 1,234 - - 3,192

Effects of movements in

exchange rates - (105) (532) (2,402) (3,039)

Amortisation (159) - (1,276) - (1,435)

At 30 November 2013 4,024 2,586 8,001 89,787 104,398

Acquisitions through

business combinations 18 - 634 2,735 3,387

Other acquisitions –

internally developed

1,908 2,420 - - 4,328

Effects of movements in

exchange rates

- (32) (143) (871) (1,046)

Amortisation (163) - (840) - (1,003)

At 31 May 2014 5,787 4,974 7,652 91,651 110,064

Other acquisitions –

internally developed 2,863 4,130 - - 6,993

Effects of movements in

exchange rates - 448 335 1,793 2,576

Amortisation (271) - (884) - (1,155)

At 30 November 2014 8,379 9,552 7,103 93,444 118,478

8 Acquisitions

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 required to be satisfied by 31 July 2013 and 31 July 2014, with the contingent consideration payable 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.

FortConsult

On 2 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 £1.8m 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 July 2015 and July 2016. The fair

value of the contingent consideration at the acquisition was £1.8m, this value is still considered appropriate

and is based on the present value of future cash flows. Management expect the amount to be payable

based on FortConsult’s predicted performance.

9 Related party transactions

The Group’s key management personnel comprises the Directors of the Group.

NCC Group’s Non-Executive Chairman Paul Mitchell is a director of Rickitt Mitchell & Partners Limited (Rickitt

Mitchell) with whom the Group conducted business to the value of £37,500 (2013: £57,500). Rickitt Mitchell

provides the services of the Non-Executive Chairman and an outsourced acquisition service, which facilitates

the delivery of acquisition targets, w hich have been identified and approved by the Board.

21

10 Post balance sheet events

On 3 December 2014, the Group announced that it had resolved its contention for the application of the

generic top level domain (“gTLD”)“.secure” on acceptable terms to both parties to the application process.

The Group withdrew its application for the .secure gTLD in return for cash consideration from the other

applicant.

A revision to the existing revolving credit facility was agreed with the Group’s bankers to increase t he facility

to £55m in January 2015. The facility is on the same terms and due for renewal in July 2016.

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, €10.3m was paid in cash immediately and €9.2m is payable in cash depending on

specific profit based performance targets on the first, second and third year anniversaries of the completion

date. The companies’ principal activities are in the domain services segment. Further disclosures of the

acquisition have not been included in this report as there has been insufficient time to obtain and review the

relevant financial information from the companies and calculate the accounting treatments for the

disclosure.

Responsibility statement of the Directors in respect of the half-yearly report

We confirm that to the best of our knowledge:

The condensed set of consolidated financial statements has been prepared in accordance with IAS

34, “Interim Financial Reporting” as adopted by the EU;

The half-yearly management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of the important events that

have occurred during the first six months of the financial year and their impact on the condensed set

of financial statements and a description of the principal risks and uncertainties fo r the remaining six

months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken

place in the first six months of the current financial year and that have materially affected the financial

position or performance of the entity during that period and any changes in the related party

transactions described in the last annual report that could do so.