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UCM Group PLC (UCM)

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Wednesday 12 April, 2006

UCM Group PLC

Final Results

UCM Group PLC
12 April 2006


Embargoed until 07.00                                             12 April 2006

                                  UCM Group PLC
            Preliminary Results for the Year Ended 31 December 2005
                                        
UCM, the leading provider of speciality fused minerals, today announces its
preliminary results for the year ended 31 December 2005.

Financial Highlights
                                                    Year ended       Year ended
£ Millions                                       December 2005    December 2004

Revenue                                                   33.3             32.8
Operating profit - before exceptional costs                1.4              2.6
Exceptional costs                                         (0.8)               -
(Loss) / Profit before tax                                (0.009)           2.1

Earnings per share - basic and diluted                    (1.6p)            6.0p
Total dividend per share                                   2.0p             4.5p

Key Highlights

   •Zirconia continues to grow revenues and profits
   •Magnesia impacted by sharp increases in power and raw material costs
    together with a reduction in volumes
   •Assets reviewed resulting in an impairment of Magnesia assets of £735,000
    including £462,000 write down of UCM China Inc.
   •Net cash inflow from operating activities increased £0.5m to £2.3m

John Gordon, Chairman, commented:

'We experienced a marked contrast in the performance of our two divisions. The
Zirconia business continued to grow successfully but the Magnesia operation was
seriously hit by unprecedented cost increases, almost all of which were beyond
our control. We took action to counter the cost pressures but Magnesia's setback
stalled the Group's recovery which had started in 2004.

'The outlook for Zirconia remains encouraging and we expect further progress
while the situation for Magnesia has improved and, although we cannot expect an
early return to previous levels of profitability for that Division, overall we
anticipate that the Group will resume progress in 2006.'

Enquiries:

UCM Group PLC                                        (On the day) 020 7067 0700
John Gordon, Chairman                                 (Thereafter) 01785 223122
Jamie Brundell, Chief Executive
Melvyn Fookes, Group Finance Director

Weber Shandwick Square Mile                                       020 7067 0700
Terry Garrett or Alex White or Stephanie Badjonat

Chairman's Statement

Summary

This year has shown a marked contrast in the performance of our two divisions.
The Zirconia Division continues to grow both revenue and profits successfully
but the Magnesia Division was seriously hit by unprecedented cost increases,
almost all of which were beyond our control. Action was taken to reduce costs
but the setback within the Magnesia Division stalled the Group's recovery which
had started in 2004, leaving profit before tax at £806,000 before taking into
account exceptional costs, principally being non cash impairment charges
relating to the assets of the Magnesia Division. Nevertheless, the actions we
have taken should enable the Group to resume progress in 2006.

Financial results

The Group's results for the year ended 31st December 2005 are the first annual
results to be prepared under International Financial Reporting Standards as
adopted for use in the EU ('Adopted IFRS'). All financial data contained in this
Chairman's statement, including comparisons against the previous year, reflect
the conversion to Adopted IFRS, with reconciliations from UK GAAP to Adopted
IFRS forming part of these financial statements.

The Group's revenue for the year increased from £32.8 million in 2004 to £33.3
million in 2005. Within this total, the turnover of the Zirconia Division
increased from £14.1 million to £15.4 million and the turnover of the Magnesia
Division fell from £18.7 million to £17.9 million. Prior to charging certain
exceptional costs, operating profits of the Zirconia Division increased from
£2.1 million in 2004 to £2.4 million in 2005; operating profits of the Magnesia
Division fell from £1.7 million to a loss of £9,000.

The Board has carried out a review of the carrying value of the Group's assets
and has decided that it is prudent to provide for an impairment of magnesia
assets amounting to £735,000. The largest single item impaired is the carrying
value of a licence agreement held by UCM China Inc., which has been written down
by £462,000.

Before all exceptional costs, the Group profit before taxation for the year
ended 31st December 2005 amounted to £806,000 (2004: £2.1 million).

After exceptional costs, the loss before taxation amounted to £9,000 for the
year.

The taxation charge for the year was £362,000 leaving a loss after tax of
£371,000, which results in a loss per share of 1.6p for the year ended 31st
December 2005 against earnings per share of 6.0p for 2004.

Dividend

The directors are not recommending a final dividend in respect of the year ended
31st December 2005 leaving the maintained 2.0p interim dividend as the total for
the year.

Trading

Zirconia Division

Sales of advanced ceramic materials continued to improve and resulted in an
increased profit contribution compared to the preceding year.

Sales of standard zirconia products increased marginally during the year but
cost increases, particularly of raw materials, resulted in a reduced
contribution to group profits compared with 2004.

Magnesia Division

Electro Furnace Products Limited, which produces electrical grade magnesia in
the United Kingdom at Hull, experienced during late 2004 and again in 2005
increases in power costs exceeding 65%. At the same time, competition in the
market saw a reduction in selling prices. Muscle Shoals Minerals Inc., which
produces electrical grade magnesia in the United States, suffered an increase in
raw material costs of 16%, although power costs did not increase as dramatically
as in the United Kingdom. Action has been taken to reduce those costs which are
in the Company's control and some assets of the division have been subject to an
impairment charge to reflect their diminution in value in current market
conditions.

UCM China Inc., which has an exclusive supply arrangement in China, increased
its revenue compared to 2004 but it is still not profitable and the Board has
decided that, in the magnesia market's current condition, it is appropriate to
write off the value of the licence agreement as mentioned above.

Staff

2005 has been a demanding year for the Group and the thanks of shareholders and
Directors go to all staff, who have had to contend with a particularly difficult
environment during the year.

Outlook

Prospects for the Zirconia Division remain encouraging and further progress in
2006 is anticipated. Every effort is being made to restore the profitability of
the Magnesia Division, both by reducing those costs within the Company's control
and seeking appropriate price increases. There are indications that the
exceptionally difficult market conditions which prevailed in the second half of
2005 are now improving and price increases are being achieved. However, it is
not realistic to expect an early return to the levels of profitability earned by
the Division in previous years.


John Gordon
Chairman
11 April 2006

Consolidated income statement
for the year ended 31 December 2005

                                                 2005                       2004

                              Pre-exceptional Exceptional  Continuing Continuing
                                                 costs     operations operations
                                                             total      total
                                   £000           £000        £000       £000

Revenue                           33,333             -       33,333     32,808

Cost of Sales                    (27,034)         (292)     (27,326)   (25,264)
                                _______________________________________________
Gross Profit                       6,299          (292)       6,007      7,544

Distribution expenses               (218)            -         (218)      (236)

Administration expenses           (4,673)         (523)      (5,196)    (4,683)
                                _______________________________________________
Operating profit / (loss)          1,408          (815)         593      2,625
                                ________________________
Financial Income                                                 37          -

Financial expenses                                             (639)      (531)
                                                        _______________________
Net finance cost                                               (602)      (531)
                                                        _______________________
(Loss) / profit before tax                                       (9)     2,094

Taxation                                                       (362)      (656)
                                                        _______________________
(Loss) / profit for the period 
 attributable to equity holders 
 of the company                                                (371)      1,438
                                                        _______________________
Earnings per ordinary share

Basic and diluted                                             (1.6p)       6.0p


Consolidated balance sheet
as at 31 December 2005
                                                               2005        2004
                                                               £000        £000
Non current assets

Intangible assets                                                30         446

Property, plant and equipment                                15,610      16,399

Deferred tax asset                                              289           -
                                                        _______________________
                                                             15,929      16,845
                                                        _______________________
Current assets

Stocks                                                        8,091       8,105

Trade and other receivables                                   6,377       6,329

Current tax receivable                                            -         109

Cash and cash equivalents                                       865         815
                                                        _______________________
                                                             15,333      15,358
                                                        _______________________
                                                        _______________________
Total assets                                                 31,262      32,203
                                                        _______________________
Current liabilities

Financial liabilities                                        10,407      10,366

Trade and other payables                                      3,001       3,318

Current tax payable                                             216          72
                                                        _______________________
                                                             13,624      13,756
                                                        _______________________
Non current liabilities

Financial liabilities                                           202         518

Post employment benefits                                      4,744       3,973

Deferred tax liabilities                                          -         146
                                                        _______________________
                                                              4,946       4,637
                                                        _______________________
                                                        _______________________
Net assets                                                   12,692      13,810
                                                        _______________________
Equity

Share capital                                                 1,196       1,196

Share premium account                                         8,402       8,402

Retained earnings                                              (747)      1,475

Other reserves                                                3,841       2,737
                                                        _______________________
Total equity                                                 12,692      13,810
                                                        _______________________

These financial statements were approved by the Board of Directors on 11 April
2006 and were signed on its behalf by:

M Fookes - Director                                     J K Brundell - Director

Consolidated statement of cash flows
for the year ended 31 December 2005

                                                               2005        2004
                                                               £000        £000

Cash flows from operating activities

(Loss) / profit for the year                                   (371)      1,438
Adjustment for:
Depreciation                                                  1,733       1,691
Amortisation                                                    150          92
Impairment                                                      735           -
Interest                                                        602         531
Income Tax                                                      362         656
                                                        _______________________
Operating profit before changes in working capital
 and provisions                                               3,211       4,408


Decrease / (increase) in trade and other receivables            350        (358)
Decrease / (increase) in stocks                                 527        (873)
(Decrease) / increase in trade and other payables              (451)        241
(Decrease) in provisions and employee benefits                 (542)       (613)
                                                        _______________________
Cash generated from the operations                            3,095       2,805

Interest received                                                37           -
Interest paid                                                  (637)       (526)
Income tax paid                                                (179)       (426)
                                                        _______________________
Net cash from operating activities                            2,316       1,853
                                                        _______________________
Cash flows from investing activities
Acquisition of property plant and equipment                    (672)       (613)
                                                        _______________________
Net cash flow from investing activities                        (672)       (613)
                                                        _______________________
Cash flow from financing activities

New loans                                                         -          76
(Repayment) / increase of amounts borrowed                     (375)        768
Payment of finance lease liabilities                           (284)       (264)
Dividends paid                                               (1,077)     (1,071)
                                                        _______________________
Net cash from financing activities                           (1,736)       (491)
                                                        _______________________
Net (decrease) / increase in cash and cash equivalents          (92)        749
Cash and cash equivalents at 1 January                          815          92
Effect of exchange rate fluctuations on cash held               142         (26)
                                                        _______________________
Cash and cash equivalents at year end                           865         815
                                                        _______________________

Segmental information

The disclosure requirements of IAS 14 - Segment Reporting requires the Group to
identify its primary and secondary segments, with differing levels of
information disclosed according to this classification. The board have
determined that its primary segments are its divisions, magnesia and zirconia,
with its secondary segments being geography.

Group corporate costs which are not directly attributable to a segment are shown
separately. Inter divisional sales are not material in relation to total Group
revenue, whether analysed by division or by geographical location of operations.

                                       2005                                    2004
                     Magnesia   Zirconia      Group   Total   Magnesia   Zirconia     Group   Total
                                          Corporate                               Corporate
                                              Costs                                   Costs
                       £000's     £000's     £000's  £000's     £000's     £000's    £000's  £000's

Revenue                 17929      15404          -   33333      18675      14133         -   32808
                    _______________________________________________________________________________
Operating profit 
- continuing operations    (9)      2425      (1008)   1408       1692       2107     (1174)   2625

Exceptional costs        (754)         -        (61)   (815)         -          -         -       -

Financial income                                         37                                       -

Financial expenses                                     (639)                                   (531)
                                                    _______                                 _______
(Loss)/profit before tax                                 (9)                                   2094
                                                    _______                                 _______

                     Magnesia   Zirconia      Group   Total   Magnesia   Zirconia     Group   Total
                                          Corporate                               Corporate
                                             Assets                                  Assets
                       £000's     £000's     £000's  £000's     £000's     £000's    £000's  £000's

Segment assets          13372      11703       5033   30108      14503      11690      5086   31279

Deferred tax asset                                      289                                       -

Current tax receivable                                    -                                     109

Cash                                                    865                                     815
                                                    _______                                 _______
Total assets                                          31262                                   32203
                                                    _______                                 _______
Segment liabilities      1683       1200        118    3001       2118        914       286    3318

Financial liabilities                                 10407                                   10366

Current tax payable                                     216                                      72
                                                    _______                                 _______
Total current liabilities                             13624                                   13756
                                                    _______                                 _______
Capital expenditure       380        276          -     656        375        270         -     645

Depreciation and 
 amortisation             964        789        130    1883        917        742       124    1783

                                  2005                          2004
                      Revenue  Assets by   Assets   Revenue  Assets by  Assets
                        by      location  Addition     by    location  addition
                     customer      of        by     customer    of        by
                     location  operation  location  location operation location
                                             of                           of
                                          operation                    operation
                       £000's     £000's     £000's   £000's    £000's    £000's

United Kingdom           2270      15228        106     2383     16315       230
North America            9291      14880        550     9376     14964       415
Continental Europe      12581          -          -    12949         -         -
Central and South         989          -          -      788         -         -
America
Asia                     7693          -          -     6672         -         -
Rest of World             509          -          -      640         -         -
                    ____________________________________________________________
                         33333      30108       656    32808     31279       645
                    ____________________________________________________________

Impairment of intangibles and asset write down relating to the magnesia division
amounted to £735,000 (2004: nil).

NOTES:

1. The financial information set out above does not constitute the Company's
   statutory accounts for the years ended 31 December 2005 and 2004 within the
   meaning of section 240 of the Companies Act 1985 but is derived from those
   accounts. Statutory accounts for 2004 have been delivered to the Registrar of
   Companies whereas those for 2005 will be delivered 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.

2. Earnings per ordinary share is calculated with reference to the loss
   attributable to equity holders of £371,000 (2004 profit: £1,438,000) and the
   weighted average number of ordinary shares in issue during the year of
   23,932,373 (2004: 23,932,373). There is no dilution in the earnings per share in
   both the reporting period and the comparative year of 2004.

3. The annual general meeting will be held on 1 June 2006, at the offices of
   Hammonds, Rutland House, 148 Edmund Street, Birmingham B3 2JR.

4. Copies of the 2005 Report and Accounts will be sent to shareholders in due
   course. Further copies will be available from the Company's registered office at
   Doxey Road, Stafford ST16 1DZ.


MFOOKES/MEJ
4th April 2006
________________




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