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 2019.

Principal activities

The Company is a public limited company incorporated in England, registered number 4627044, with its registered office at XYZ Building, 2 Hardman Boulevard, Spinningfields, M3 3AQ.

The principal activity of the Group is the provision of independent advice and services to customers through the provision of escrow and cyber assurance services. The principal activity of the Company is that of a holding company.

Results and dividends

The Group's and Company's audited Financial Statements for the financial year ended 31 May 2019 are set out in the Financials.

The Directors propose a final dividend of 3.15p per ordinary share, which together with the interim dividend of 1.5p per ordinary share paid on 28 February 2019 makes a total dividend of 4.65p for the year.

The final dividend will, if approved by shareholders at the Annual General Meeting, be paid on 4 October 2019 to shareholders on the register at the close of business on 6 September 2019. The ex dividend date will be 5 September 2019.

Post balance sheet events

On 10 June 2019, the Group renegotiated its existing term loan and multi-currency revolving credit facilities into a new fully revolving credit facility of £100m with a new five-year term up to June 2024 on similar terms (pricing and covenants). Under the new arrangements, the Group can request an additional accordion facility to increase the total size of the revolving credit facility by up to £75m (previously £50m). In addition, the Group has retained its existing overdraft of £5m. Arrangement fees incurred will be amortised over the term accordingly. Historical arrangements fees have been fully amortised.

There were no other post balance sheet events.

Share capital and control

At the Company's Annual General Meeting held on 26 September 2018, the Directors were granted authority to allot up to 92,559,426 ordinary shares representing approximately a third of the Company's issued share capital. In addition, the Directors were granted authority to allot a further 92,559,426 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.

As at 31 May 2019, the Company's issued ordinary share capital comprised 277,830,625 ordinary shares with a nominal value of one pence each, of which no ordinary shares were held in treasury.

During the year ended 31 May 2019, 170,544 shares in the Company were issued further to the exercise of options pursuant to the Company's share option schemes.

The holders of ordinary shares are entitled, among 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.

Details of the movements of the called up share capital of the Company are set out in note 26 to the Financial Statements and the information in this note is incorporated by reference and forms part of this Directors' Report.

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, the terms of issue of any shares, any restrictions from time to time imposed by laws or regulations (for example, insider trading laws) or pursuant to the EU Market Abuse Regulations whereby certain Directors, officers and employees of the Group require the approval of the Company to deal in ordinary shares of the Company, any shareholder may transfer any or all of his shares.

The Company is not aware of any agreements between shareholders that may results in restrictions on the transfer of securities and/or voting rights.

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.

Authority to purchase own shares

At the Company's Annual General Meeting held on 26 September 2018, shareholders authorised the Company to make market purchases of up to 27,767,828 ordinary shares representing approximately 10% of the issued share capital. This authority was not used during the financial year ended 31 May 2019. At the 2019 Annual General Meeting, shareholders will be asked to give a similar authority.

The Company currently holds nil ordinary shares in treasury.

Directors

Biographical details of the Company's current Directors are set out in the Board of Directors. In addition, Brian Tenner and Thomas Chambers were Directors of the Company in the financial year. 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 at the AGM each year. During the year, no Director had any material interest in any contract of significance in the Group's business.

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 (including those who served as Directors or Officers during 2018/2019). This cover was in place throughout the financial year ended 31 May 2019 and up to the date of this Directors' Report. 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 effect during the course of the financial year ended 31 May 2019 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.

EMPLOYEES

The Group uses a number of ways to engage with its employees on matters that impact them and the performance of the Group. These include briefings by members of the Executive Committee, regular team meetings, the Group's intranet site and weekly update emails which together provide, among other information, an awareness of the financial and economic factors affecting the Company's performance. In July 2018 we created a dedicated Group Communications function, which oversaw the implementation of systems that enable access to information about all aspects of the Group's activity, improving the way that we communicate and engage internally.

We conduct an employee engagement survey to ensure all employees are given a voice in the organisation. In 2018, using insights from our survey and subsequent employee engagement, we defined new values for the organisation. Details of these values are set out in the Sustainability Report.

We offer employees the opportunity to purchase ordinary shares in the Company through participation in the Company's Save As You Earn Scheme. We will also be launching, subject to shareholder approval at the 2019 AGM, a Share Incentive Plan. Both schemes help to encourage employee interest in the performance of the Group.

Equal Opportunities

The Group is committed to providing equality of opportunity to all employees without discrimination and applies fair and equitable employment policies which seek to promote entry into and progression within the Group. Appointments are determined solely by application of job criteria, personal ability, behaviour and competency.

In the opinion of the Directors, all employee policies are deemed to be effective and in accordance with their intended aims.

Disabled Persons

Disabled persons have equal opportunities when applying for vacancies, with due regard to their aptitudes and abilities. Procedures ensure that disabled employees are fairly treated in respect of training and career development. For those employees becoming disabled during the course of their employment, the Group is supportive so as to provide an opportunity for them to remain with the Group, wherever reasonably practicable.

POLITICAL DONATIONS

During the year the Company made no political donations (2018: nil).

SUSTAINABILITY REPORT

The Company's sustainability report in Securing out connected society, A day in the life and Sustainability provides an update on the Group's policies and activities in respect of its wider stakeholders, including employees, community, environmental, ethical and health and safety issues and modern slavery.

OVERSEAS BRANCHES

The Group has one overseas branch in Spain. This is a branch of NCC Group Security Services Limited.

RESEARCH AND DEVELOPMENT

We are committed to using innovative, cost-effective and practical solutions for providing high-quality services and we recognise the importance of ensuring that we focus our investment on the development of technology. The Group's research and development expenditure is predominantly associated with computer and software systems.

Change of control

In the event of a change of control of the Company, the Group and each of its lenders shall enter into negotiation for a period to determine how the Group's loan facilities may continue and if after negotiation there is no agreement the lender has the right to cancel the commitment.

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 THE 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.

REAPPOINTMENT OF AUDITORS

The Board approved the Audit Committee's recommendation to put a resolution to shareholders recommending the reappointment of KPMG LLP as the Company's auditors and KPMG LLP have indicated their willingness to accept the reappointment of auditors to the Company. The Audit Committee, in its recommendation, confirmed that (1) the recommendation was free from influence by a third party and (2) no contractual term of the kind mentioned in Article 16(6) of the EU Regulation 537/2014 has been imposed on the Company. A resolution to reappoint 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 9.30am on 25 September 2019 at its head office at XYZ Building, 2 Hardman Boulevard, Spinningfields, Manchester, M3 3AQ, 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 and Accounts. All shareholders will be notified by post or email, at their request, when the documents have been made available.

Capitalised interest

During the period, no interest was capitalised by the Group (2018: £nil). The tax benefit on this amount was £nil (2018: £nil).

Reporting requirements

The following sets out the location of additional information forming part of the Directors' Report:

Reporting requirementLocation
Board's assessment of the Group's internal control systemsCorporate Governance Report and the Audit Committee Report
Details of uses of financial instruments and specific policies for managing financial riskNote 24 (Financial Instruments)
Directors' interestsDirectors' Remuneration Report
Directors' responsibilities statementDirectors' Responsibilities Statement
Directors' remuneration including disclosures required by Schedule 5 and Schedule 8 of SI2008/410 – Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008Directors' Remuneration Report
DTR4.1.8.R – Management Report – the Directors' Report and Strategic Report comprise the management reportDirectors' Report and the Strategic Report
Going concern statementChief Financial Officer's Review
Greenhouse gas emissionsSustainability Report
Likely future developments of the business and GroupStrategic Report
LR 9.8.4 (4) – Long-term incentive schemesDirectors' Remuneration Report
LR 9.8.6 (2) – Substantial shareholdersShareholder relations
Statement on corporate governanceCorporate Governance Report, Audit Committee Report, Nomination Committee Report and Directors' Remuneration.
Strategic Report – Companies Act 2006 s414A-DStrategic Report

The Business review, Strategic Report and this Directors' Report have been approved and authorised for issue by the Board. They were signed on its behalf by:

Adam Palser

Chief Executive Officer

24 July 2019

Tim Kowalski

Chief Financial Officer

24 July 2019