Final Results pt 3

NCC Group PLC
19 July 2005

Notes



1.                  Basis of preparation



The financial information in this preliminary announcement has been prepared in
accordance with the accounting policies set out in the financial statements of
NCC Group Plc (formerly the NCC Group (Holdings) Limited for the year ended 31
May 2005 which have remained unchanged from the financial year 2004.



The financial information set out above does not constitute the Group's
statutory accounts for the year ended 31 May 2005 or 2004, but is derived from
those accounts.  Statutory accounts for the year ended 31 May 2004 have been
filed with the Registrar of companies.  The statutory accounts for 2005 will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.  The auditors have reported on those accounts; their reports were
unqualified and did not contain a statement under Section 237(2) or (3) of the
Companies Act 1985.



When published, the Company's Annual Report and Accounts will be sent to
shareholders and will be made available to the public at the Company's
registered office, Manchester Technology Centre, Oxford Road, Manchester.  M1
7EF



2.                  Segmental information


                                                                            2005          2004
a) Turnover by geographical segment                                         £000          £000

UK                                                                        15,790        12,452
Rest of Europe                                                             1,104         1,011
Rest of the World                                                          1,077         1,056
Total turnover                                                            17,971        14,519


                                                                            2005          2004
b) Turnover by business segment                                             £000          £000

Escrow Solutions                                                           8,238         6,721
Testing Solutions                                                          4,352         3,441
Consultancy                                                                5,381         4,357
Total turnover                                                            17,971        14,519


Operating profit by business segment
Escrow Solutions                                                           4,954         3,760
Testing Solutions                                                          1,039           884
Consultancy                                                                1,028           900
Segment operating profit                                                   7,021         5,544
Amortisation of goodwill                                                  (1,500)       (1,505)
Head office costs                                                           (920)         (738)
Operating profit                                                           4,601         3,301


Net assets / (liabilities) by business segment
Escrow Solutions                                                          (3,688)       (3,003)
Testing Solutions                                                             48           150
Consultancy                                                                  280           453
Unallocated net assets                                                    25,087         3,222
Total net assets                                                          21,727           822



Unallocated net assets consist of goodwill, cash, tax payable and other
centrally held assets and liabilities.


3.                  Exceptional finance costs and goodwill amortisation



During the year ended 31 May 2005, unamortised capitalised deal fees of £861,000
(2004: nil) were written off to the profit and loss account when the debt
financing was repaid on 17 July 2004 following the Group's listing on AIM. Only
£35,000 had a cash impact in the year as the rest were paid in prior periods.



4.                  Profit on ordinary activities before taxation


                                                                         2005             2004
                                                                         £000             £000
Profit on ordinary activities before taxation is stated
after charging/(crediting):

Auditors' remuneration:
Group                                                                      26               17
Company                                                                     1                2
Non audit                                                                  15               38

Depreciation and other amounts written off tangible and
intangible fixed assets:
Owned                                                                     354              262

Amortisation of goodwill                                                1,500            1,505

Operating lease rentals charged:
Hire of plant and equipment                                               300              236
Other operating leases                                                    340              169
Profit on disposal of fixed assets                                        (11)             (12)



Non audit fees relate to taxation advice and consultancy services regarding the
introduction of international financial reporting standards. In addition to the
non audit fees noted above, the auditors provided due diligence services in
respect of the floatation on AIM totalling £217,000.



5.                  Staff numbers and costs



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


                                                                         Number of employees
                                                                         2005            2004

Operational                                                                55              50
Administration, sales and marketing                                       134             101
                                                                          189             151



6.                   Interest receivable and interest payable


                                                                         2005             2004
                                                                         £000             £000
Interest receivable and similar income
Short term deposits                                                       123              104
Profit on disposal of interest rate swap                                   39                -
                                                                          162              104

Interest payable and similar charges
Amounts payable on bank loans and overdrafts                             (527)            (836)
Amounts payable on loan notes                                               -           (1,007)
Amortisation of deal fees on term loans                                    (7)            (159)
                                                                         (534)          (2,002)



7.                  Taxation



Analysis of charge in period


                                                                          2005             2004
                                                                          £000             £000

UK corporation tax
Current tax on income for the year                                       1,488              893
Adjustment to tax charge in respect of prior periods                        (9)               -
Total Current tax                                                        1,479              893
Deferred tax                                                                (6)               -
Tax on profit on ordinary activities                                     1,473              893



The company envisages that its effective rate of tax will remain consistent with
prior periods.



8.                  Dividends


                                                                        2005             2004
                                                                        £000             £000

Interim paid (0.75p per ordinary share)                                 (245)               -
Final proposed (1.75p per ordinary share)                               (571)               -
Preference dividend (6% preference shares)                                 -               (4)
                                                                        (816)              (4)



9.                  Earnings per share



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


                                                                        2005             2004
                                                                        £000             £000

Profit for the period                                                  1,079              506
Dividends                                                                816                4
Earnings used in basic and diluted                                     1,895              510

Earnings per share
Amortisation and exceptional item net of tax                           2,103            1,505
Adjusted Earnings used in basic and diluted                            3,998            2,015

Earnings per share

                                                                   Number of        Number of
                                                                      Shares           Shares
                                                                       000's            000's
Basic weighted average number of shares

in issue                                                              31,292           19,545
Dilutive effect of share options                                         472                -
Diluted weighted average shares in issue                              31,764           19,545



10.              Intangible fixed assets


                                                                           Goodwill arising on
                                                                                 consolidation
                                                                                          £000
Cost
At beginning and end of year                                                            29,121
Amortisation
At beginning of year                                                                    (1,720)
Charge for year                                                                         (1,500)
At end of year                                                                          (3,220)

Net book value
At 31 May 2005                                                                          25,901
At 31 May 2004                                                                          27,401



11.              Tangible fixed assets


                                             Computer   Plant and     Fixtures Motor vehicles   Total
                                            equipment   equipment         and
                                                                     fittings
Group                                            £000        £000        £000           £000     £000

Cost
At beginning of year                            1,249         117         126            130    1,622
Additions                                         241         227         328             38      834
Disposals                                          (3)          -           -            (65)     (68)
At end of year                                  1,487         344         454            103    2,388
Depreciation
At beginning of year                              878          88          59             51    1,076
Charge for year                                   222          42          63             27      354
On disposals                                       (1)          -           -            (43)     (44)
At end of year                                  1,099         130         122             35    1,386
Net book value

At 31 May 2005                                    388         214         332             68    1,002
Net book value

At 31 May 2004                                    371          29          67             79      546



Company

The company does not have any tangible fixed assets.



12.              Debtors


                                                 Group        Group       Company      Company
                                                  2005         2004          2005         2004
                                                  £000         £000          £000         £000

Trade debtors                                    2,666        2,407             -            -
Amounts owed by Group undertakings                   -            -           207          134
Deferred tax (see below)                            77           71             -            -
Prepayments and accrued income                     929        1,046             -            -
                                                  3,672       3,524            207          134



All debtors fall due within one year.



13.              Creditors: amounts falling due within one year


                                               Group         Group       Company      Company
                                                2005          2004          2005         2004
                                                £000          £000          £000         £000

Bank loans                                     1,200         1,362         1,200        1,362
Trade creditors                                  331           365             -            -
Amounts owed to Group                              -             -             -            4

Undertakings
Corporation tax                                  728           290             -            -
Other taxation and social security               892           701             -            -
Dividends payable                                571             4           571            4
Other creditors                                    -            56             -           56
                                               3,722         2,778         1,771        1,426



The gross amount of the bank loan for both the company and the Group is
£1,200,000 (2004: £1,400,000) from which capitalised deal fees of nil (2004:
£38,000) have been deducted. The bank loan is unsecured.



14.              Accruals and deferred income


                                               Group         Group       Company      Company
                                                2005          2004          2005         2004
                                                £000          £000          £000         £000

Deferred income                                4,885         4,033             -            -
Accruals                                       1,340         1,550           142          586
                                               6,225         5,583           142          586



Deferred income of £4,885,000 (2004: £4,033,000) consists of Escrow Solutions
agreement revenue and maintenance revenue that has been deferred to be released
to the profit and loss account over the contract term on a pro-rata basis.



15.              Creditors: amounts falling due after one year


                                               Group         Group       Company      Company
                                                2005          2004          2005         2004
                                                £000          £000          £000         £000

Lease incentives                                 122             -             -            -
Term loan A                                    3,900         7,575         3,900        7,575
Term loan B                                        -         3,000             -        3,000
Loan notes                                         -        16,779             -       16,779
Total                                          4,022        27,354         3,900       27,354

Issue costs                                     (25)         (961)          (25)         (961)
Amortisation of issue costs                        7           173             7          173
Net book value                                 4,004        26,566         3,882       26,566





The issue costs are being amortised over the term of the loan.



Term loan A attracts an interest rate of LIBOR plus 0.975%. Loan repayments are
to be made quarterly on the last day of March, June, September and December of
each year. The loan is unsecured.



No outstanding loans are due for repayment after five years.



16.              Financial instruments



Financial instruments policy



All instruments utilised by the Group are for financing purposes.  The
day-to-day financial management and treasury are controlled centrally for all
operations. During the year ended 31 May 2005 the Group realised proceeds of
£39,000 (2004: nil) on disposal of an interest rate swap, the proceeds are
included within interest receivable.



17.  Called up share capital


                                           Number of shares 2005            2004
                                                            £000            £000
Authorised
Preferred ordinary shares £1.00 (non
equity)
                                           65,000           -               65
A Ordinary shares £1.00                    30,000           -               30
B Ordinary shares £1.00                    5,000            -               5
R Ordinary shares £1.00                    1                -               -
Ordinary shares of 1.00p each              50,000,000       500             -
                                                            500             100
Allotted, called up and fully paid
Preferred ordinary shares £1.00 (non
equity)
                                           65,000           -               65
A Ordinary shares £1.00                    30,000           -               30
B Ordinary shares £1.00                    5,000            -               5
R Ordinary shares £1.00                    1                -               -
Ordinary shares of 1.00p each              32,604,185       326             -
                                                            326             100



On 8 July 2004 the Company conducted a share reorganisation which increased its
authorised share capital to £500,000 divided into 50,000,000 ordinary shares of
1.00p each which 32,604,185 were issued and fully paid and 17,395,815 ordinary
shares were un-issued.



Share options and share incentives



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.
Options granted under these share option schemes as at 31 May 2005 were as
follows.  Other than these options granted there have been no other options
granted during the year.


                                                                                Exercisable
                                                   Options at                 in year ended
                                                 31 May  2005  Exercise price        31 May

Approved EMI scheme                                 1,132,080           £1.70     2008-2015
Share save scheme                                     343,678           £1.36          2008
LTIP                                                  169,118           £nil*          2008

*The exercise price of the LTIP scheme is nil although £1.00 is payable on each
occasion of exercise.

There were no share options granted in the year ended 31 May 2004.



18.              Reserves


                                                             Share premium    Profit and loss
                                                                   account            account
                                                                      £000               £000
Group
At beginning of year                                                   219                526
Premium on share issue                                              19,600                  -
Retained profit for the year                                             -              1,079
Currency translation adjustment                                          -                  -
At end of year                                                      19,819              1,605


                                                             Share premium    Profit and loss
                                                                   account            account
                                                                      £000               £000
Company
At beginning of the year                                               219                691
Premium on share issue                                              19,600                  -
Retained profit for the year                                             -              3,233
At end of year                                                      19,819              3,924



19.              Minority interests


                                                                       2005               2004
                                                                       £000               £000

At beginning of year                                                    (23)               (23)
Acquired with subsidiary undertakings                                     -                  -
At end of year                                                          (23)               (23)
Equity                                                                   (3)                (3)
Non-equity                                                              (20)               (20)
                                                                        (23)               (23)



20.              Contingent liabilities



There is no group banking, performance bond or guarantee to any fellow company.
In 2004 each group company was party to a group banking facility under which it
guaranteed the bank borrowings, performance bonds and guarantees of its fellow
companies.  The drawings under this group facility were £11,975,000 in 2004.



21.              Reconciliation of movements in shareholders' funds and
movements on reserves


                                                   Group        Group      Company      Company
                                                    2005         2004         2005         2004
                                                    £000         £000         £000         £000
Profit / (loss) for the financial year             1,895          510       (1,351)       1,028
Dividends                                           (816)          (4)       4,584           (4)
                                                   1,079          506        3,233        1,024

New share capital subscribed                         226          223          226          223
Increase in share premium                         19,600            -       19,600            -
Currency translation loss                              -           (1)           -            -
Net increase in shareholders' funds               20,905          728       23,059        1,247
Opening shareholders' funds                           845          117       1,010         (237)
Closing shareholders' funds                       21,750           845      24,069        1,010




22.              Notes to the consolidated cash flow statement



a.  Reconciliation of operating profit to net cash flows from operating
activities


                                                                 2005                     2004
                                                                 £000                     £000

Operating profit                                                4,601                    3,301
Depreciation charge                                               354                      262
Amortisation of goodwill                                        1,500                    1,505
Profit on sale of fixed assets                                    (11)                     (12)
Increase in debtors                                              (142)                    (524)
Increase in creditors                                           1,359                      686
Net cash inflow from operating activities                       7,661                    5,218



b.  Analysis of net funds / (debt)


                                                         At      Cash     Non cash    At end of
                                                  beginning      Flow        Items         Year
                                                    of year
                                                       £000      £000         £000         £000

Cash in hand and at bank                              4,278       825            -        5,103
Loan and loan notes                                 (27,928)   23,680         (834)      (5,082)
Total                                               (23,650)   24,505         (834)          21



c.  Reconciliation of net cash flow to movement in net funds / (debt)


                                                                            2005         2004
                                                                            £000         £000

Increase in cash in the year (Note 22b)                                      825          413
Cash outflow from movement in loans and loan notes                        23,680        2,763
Non cash items                                                              (834)        (182)
Movement in net debt in the year                                          23,671        2,994
Net debt at start of year                                                (23,650)     (26,644)
Net funds / (debt) at end of the year                                         21      (23,650)






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