NCC Group plc Annual Report 2022

Glossary of terms – Alternative Performance Measures (APMs)

APMs are the way that financial performance is measured by management and reported to the Board, and the basis of financial measures for senior management’s compensation schemes, and provide supplementary information that assists the user in understanding the underlying trading results.

Closest equivalent IFRS measure

Adjustments to reconcile to IFRS measure

Note reference for reconciliation

Definition, purpose and considerations made by the Directors

APM

Income Statement measures: Constant currency revenue growth rates

3 The Group also reports certain geographic regions on a constant currency basis to reflect the underlying performance taking into account constant foreign exchange rates year on year. This involves translating comparative numbers to current year rates for comparability to enable a growth factor to be calculated. 3 The Group reports revenue excluding the IPM acquisition to allow stakeholders to understand the revenue performance of the existing business for the year ended 31 May 2022 prior to acquiring IPM. 3 The Group reports Software Resilience revenue excluding the IPM acquisition to allow stakeholders to understand the revenue performance of the existing Software Resilience business for the year ended 31 May 2022 prior to acquiring IPM. 3 Represents operating profit before amortisation of acquired intangibles, share-based payments and Individually Significant Items. This measure is to allow the user to understand the Group’s underlying financial performance as measured by management, reported to the Board and used as a financial measure in senior management’s compensation schemes. The Directors consider amortisation of acquired intangibles is a non-cash accounting charge inherently linked to losses associated with historical acquisitions of businesses. The Directors consider share-based payments to be an adjusting item on the basis that fair values are volatile due to movements in share price, which may not be reflective of the underlying performance of the Group. Individually Significant Items are items that are considered unusual by nature or scale and are of such significance that separate disclosure is relevant to understanding the Group’s financial performance and therefore requires separate presentation in the Financial Statements in order to fairly present the financial performance of the Group. 3 Represents operating profit before adjusting items, depreciation and amortisation to assist in the understanding of the Group’s performance. Adjusted EBITDA is disclosed as this is a measure widely used by various stakeholders and used by the Group to measure the cash conversion ratio.

Retranslation of comparative numbers at current year exchange rates to provide constant currency

Revenue growth rates at actual rates of currency exchange

Revenue excluding IPM acquisition

Revenue

Revenue excluding the revenue performance of the IPM acquisition

Revenue

Software Resilience revenue excluding the revenue performance of the IPM acquisition

Software Resilience revenue excluding IPM acquisition

Adjusted operating profit

Operating profit or loss

Operating profit or loss before amortisation of acquired intangibles,

share-based payments and Individually Significant Items

Operating profit or loss

Operating profit or loss, before adjusting items, depreciation and amortisation, finance costs and taxation