UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------

                                    FORM 20-F

|_|  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                                       OR

|X|  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                     For the fiscal year ended: 30 June 2003
                     ---------------------------------------
                                       OR

|_|  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                         Commission file number 0-30364

                                  NDS Group plc
             (Exact name of Registrant as specified in its charter)

England and Wales (Jurisdiction of incorporation or organization)

          One London Road, Staines, Middlesex TW18 4EX, United Kingdom
                    (Address of principal executive offices)

 Securities registered or to be registered pursuant to Section 12(b) of the Act.
  Title of each class                 Name of each exchange on which registered

                                    None
                                    ----

 Securities registered or to be registered pursuant to Section 12(g) of the Act.

                     Series A ordinary shares of $0.01 each
                     --------------------------------------

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.
                                      None
                                      ----

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

                11,983,681 Series A ordinary shares of $0.01 each
                42,001,000 Series B ordinary shares of $0.01 each
                   42,000,002 deferred shares of (pound)1 each


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 |X| Yes |_| No

Indicate by check mark which financial statement item the registrant has elected
to follow.

                            |_| Item 17 |X| Item 18


<PAGE>
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS



                                                                                                            Page

<S>               <C>                                                                                       <C>
                  Introduction......................................................................         1
                  Special Note Regarding Forward-Looking Statements.................................         1

PART I
Item 1            Identity of Directors, Senior Management and Advisers.............................         2
Item 2            Offer Statistics and Expected Timetable...........................................         2
Item 3            Key Information...................................................................         2
Item 4            Information on the Company........................................................         8
Item 5            Operating and Financial Review and Prospects......................................         18
Item 6            Directors, Senior Management and Employees........................................         29
Item 7            Major Shareholders and Related Party Transactions.................................         35
Item 8            Financial Information.............................................................         36
Item 9            The Offer and Listing.............................................................         37
Item 10           Additional Information............................................................         38
Item 11           Quantitative and Qualitative Disclosures About Market Risk........................         43
Item 12           Description of Securities Other Than Equity Securities............................         43

PART II
Item 13           Defaults, Dividend Arrearages and Delinquencies...................................         44
Item 14           Material Modifications to the Rights of Security Holders and Use of Proceeds......         44
Item 15           Controls and Procedures...........................................................         44
Item 16           [RESERVED]                                                                                 44
Item 16A          Audit Committee Financial Expert..................................................         44
Item 16B          Code of Ethics....................................................................         44
Item 16C          Principal Accountant Fees and Services............................................         44
Item 16D          Exemptions from the Listing Standards for Audit Committees........................         44

PART III
Item 17           Financial Statements..............................................................         44
Item 18           Financial Statements..............................................................         45
Item 19           Exhibits..........................................................................         45

                  Signatures........................................................................         46
</TABLE>

<PAGE>


INTRODUCTION

As used in this Annual Report on Form 20-F, references to the "Company" are to
NDS Group plc. References to "NDS", "the Group", "NDS Group" and the first
person plural are to NDS Group plc and its subsidiaries and associated
undertaking.

Unless otherwise indicated, the financial information contained in this Annual
Report on Form 20-F has been prepared on the basis of accounting principles
generally accepted in the United Kingdom ("UK GAAP"). UK GAAP differs in certain
material respects from generally accepted accounting principles in the United
States ("US GAAP"). The principal differences between UK GAAP and US GAAP are
explained in Note 31 to our consolidated financial statements: "Summary of
differences between UK and US GAAP".

References to a year are, unless otherwise indicated, references to the
Company's fiscal year ending 30 June of such year. In this Annual Report on Form
20-F, financial and statistical information is, unless otherwise indicated,
stated on the basis of such fiscal year.

References to "pounds", "sterling", "pounds sterling" or "(pound)" refer to the
legal currency of the United Kingdom of Great Britain and Northern Ireland
("UK"), which is the currency in which our consolidated financial statements are
denominated. References herein to "$" or "US$" are to US dollars, the currency
of the United States of America ("US") and references to "(euro)" are to euros,
the currency of certain countries of the European Union.

NDS, VideoGuard, Value@TV, Provider, Synamedia, XTV, Streamserver, Streamshaper
and OpenBet are either trademarks or registered trademarks of NDS Group plc and
subsidiaries in one or more countries worldwide. This Annual Report on Form 20-F
also includes trade names and trademarks of companies other than NDS.


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 20-F contains certain forward-looking statements,
including statements about our business, operations and financial condition and
various statements contained in Item 3: "Key Information - Risk Factors", Item
4: "Information on the Company" and Item 5: "Operating and Financial Review and
Prospects". Our actual results could differ materially from such forward-looking
statements. These statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such
as "may", "will", "should", "could", "expects", "plans", "anticipates",
"believes", "estimates", "predicts", "potential" or "continue" or the negative
of such terms or other comparable terminology.

You are cautioned that any such forward-looking statements are not guarantees of
future performance and include risks and uncertainties. We cannot guarantee
future results, levels of activity, performance or achievements.



                                       1
<PAGE>

                                     PART I

          ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.


                 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.


                             ITEM 3. KEY INFORMATION

Selected financial data

The selected financial data presented below for each year in the three-year
period ended 30 June 2003 and as at 30 June 2003 and 2002, have been derived
from our consolidated financial statements and the notes thereto included
elsewhere in this Annual Report on Form 20-F, and should be read in conjunction
with those financial statements and related notes. The selected financial data
presented below for the years ended 30 June 2000 and 1999 and as at 30 June
2001, 2000 and 1999 have been derived from our audited consolidated financial
statements and the notes thereto for those years.

The financial statements from which the selected financial data were extracted
the years ended and as at 30 June 2003 and 2002 were audited by Ernst & Young
LLP. The financial statements from which the selected financial data were
extracted for the year ended and as at 30 June 2001 and earlier dates were
audited by Arthur Andersen.

The consolidated financial statements have been prepared in accordance with UK
GAAP, which differs in certain significant respects from US GAAP. See Note 31 to
our consolidated financial statements for a discussion of the principal
differences between UK GAAP and US GAAP.

Profit and loss account information in accordance with UK GAAP
<TABLE>
<CAPTION>

                                                                            Year Ended 30 June
                                                                            ------------------
                                                       1999            2000           2001            2002           2003
                                                (pound)'000     (pound)'000    (pound)'000     (pound)'000    (pound)'000
                                                -----------     -----------    -----------     -----------    -----------
<S>                                                   <C>          <C>              <C>            <C>             <C>
Turnover--Continuing operations                     127,574         160,214         215,628        240,788         237,237
        --Discontinued operations                    88,348               -               -              -               -
                                             -------------------------------------------------------------------------------
                                                    215,922         160,214         215,628        240,788         237,237
Cost of sales                                      (101,020)        (61,958)        (76,676)       (83,107)        (94,467)
                                             -------------------------------------------------------------------------------
Gross profit                                        114,902          98,256         138,952        157,681         142,770
Administrative expenses
  - trading expenses                                (95,753)        (72,415)        (95,182)      (103,810)        (92,091)
                                             -------------------------------------------------------------------------------
                                                     19,149          25,841          43,770         53,871          50,679
Administrative expenses
  - amortisation of intangible fixed assets          (2,276)         (1,536)         (4,590)        (7,350)         (9,602)
  - exceptional expenses                                  -               -               -         (3,826)         (4,274)
                                             -------------------------------------------------------------------------------
Operating profit (loss)                              16,873          24,305          39,180         42,695          36,803
----------------------------------------------------------------------------------------------------------------------------
Arising from:
           Continuing operations                     18,734          24,305          39,180         42,695          36,803
           Discontinued operations                   (1,861)              -               -              -               -
----------------------------------------------------------------------------------------------------------------------------

Share of associate's operating profit (loss)              -               -               5             21            (220)
Loss on disposal of associate                             -               -               -              -             (60)
Profit on sale of discontinued operations                 -           5,192               -              -               -
Net interest income (expense)                       (13,205)         (3,389)          2,098          2,513           2,887
                                             -------------------------------------------------------------------------------
Profit on ordinary activities before taxation         3,668          26,108          41,283         45,229          39,410
Taxation                                             (1,194)         (6,498)        (12,154)       (14,551)        (13,472)
                                             -------------------------------------------------------------------------------
Profit on ordinary activities after taxation          2,474          19,610          29,129         30,678          25,938
Minority interests                                     (356)           (218)              -              -             102
                                             -------------------------------------------------------------------------------
Profit for the year attributable to members
of the parent company                                 2,118          19,392          29,129         30,678          26,040
                                             ===============================================================================

</TABLE>


                                       2
<PAGE>

In these selected data, "discontinued operations" refers to the digital
broadcasting business that we transferred on 1 July 1999 to Ordinto Investments,
a subsidiary of The News Corporation Limited ("News Corporation"), the
controlling shareholder of NDS Group plc. The consideration for goodwill
amounted to (pound)20 million. Other net assets were sold for their book value.
The transaction yielded a profit to NDS of (pound)5,192,000, which is a
permanent difference for tax purposes. Ordinto Investments sold the business to
Tandberg Television ASA, an unrelated entity, on 14 October 1999.

Earnings and dividends per share in accordance with UK GAAP
<TABLE>
<CAPTION>

                                                                           Year Ended 30 June
                                                                           ------------------
                                                       1999            2000           2001           2002            2003
                                                       ----            ----           ----           ----            ----
<S>                                                  <C>             <C>            <C>              <C>            <C>
Basic earnings (loss) per share                        5.0p           40.1p           55.1p          57.5p           48.4p
Diluted earnings (loss) per share                      5.0p           38.7p           52.8p          56.1p           48.0p
                                             -------------------------------------------------------------------------------

Weighted average number of shares in issue       42,001,000      48,309,178      52,824,956     53,347,593      53,856,141
Diluted weighted average number of shares        42,001,000      50,044,537      55,197,631     54,659,952      54,267,114
                                             -------------------------------------------------------------------------------
</TABLE>

No dividends have been paid or declared in any of the past five fiscal years.

Profit and loss account information in accordance with US GAAP
<TABLE>
<CAPTION>
                                                                           Year Ended 30 June
                                                                           ------------------
                                                       1999            2000           2001            2002           2003
                                                (pound)'000     (pound)'000    (pound)'000     (pound)'000    (pound)'000
                                                -----------     -----------    -----------     -----------    -----------
<S>                                                 <C>             <C>             <C>           <C>             <C>
Revenues                                            137,024         163,364         206,592        234,727         256,809
                                             -------------------------------------------------------------------------------
Net income                                            4,344           6,814          18,635         28,650          35,458
                                             -------------------------------------------------------------------------------

Earnings per share in accordance with US GAAP
                                                                           Year Ended 30 June
                                                                           ------------------
                                                      1999            2000            2001           2002            2003
                                                      ----            ----            ----           ----            ----
Basic earnings per share                              10.3p           14.1p           35.3p          53.7p           65.8p
Diluted earnings per share                            10.3p           13.6p           33.8p          52.4p           65.6p

Continuing earnings per share - basic                 14.2p            3.4p           35.3p          53.7p           65.8p
Continuing earnings per share - diluted               14.2p            3.3p           33.8p          52.4p           65.6p
Discontinued earnings (loss) per share (1)            (3.9p)          10.7p            -              -               -
                                             -------------------------------------------------------------------------------

Weighted average number of shares in issue       42,001,000      48,309,178      52,824,956     53,347,953      53,856,141
Diluted weighted average number of shares        42,001,000      49,963,410      55,165,120     54,640,510      54,070,452
                                             -------------------------------------------------------------------------------
</TABLE>

(1)  Earnings per share for the year ended 30 June 2000 in respect of the
     discontinued operations represents the profit per share recognised on the
     disposal of the discontinued operations.


<TABLE>
<CAPTION>

Balance sheet information in accordance with UK GAAP
                                                                             As at 30 June
                                                       1999            2000           2001            2002           2003
                                                (pound)'000     (pound)'000    (pound)'000     (pound)'000    (pound)'000
                                                -----------     -----------    -----------     -----------    -----------
<S>                                                <C>             <C>             <C>            <C>            <C>
Total assets                                        182,163         124,096         230,436        284,490         248,271
Long-term liabilities                              (133,540)         (1,474)         (1,684)        (1,445)         (1,533)
Total other liabilities                            (132,757)        (70,005)       (102,886)      (119,237)        (60,409)
Minority interests                                   (1,753)              -               -              -             (58)
                                             -------------------------------------------------------------------------------
Net assets (liabilities)                            (85,887)         52,617         125,866        163,808         186,271
                                             -------------------------------------------------------------------------------

Equity shareholders' funds                         (127,887)         10,617          83,866        121,808         144,271
Non-equity shareholders' funds                       42,000          42,000          42,000         42,000          42,000
                                             -------------------------------------------------------------------------------
                                                    (85,887)         52,617         125,866        163,808         186,271
                                             -------------------------------------------------------------------------------
</TABLE>


                                       3
<PAGE>

Balance sheet information in accordance with US GAAP
<TABLE>
<CAPTION>
                                                                             As at 30 June
                                                                             -------------
                                                       1999            2000           2001            2002           2003
                                                (pound)'000     (pound)'000    (pound)'000     (pound)'000    (pound)'000
                                                -----------     -----------    -----------     -----------    -----------
<S>                                                  <C>            <C>              <C>           <C>          <C>
Total assets - continuing operations                111,367         129,614         212,711        259,157         233,970
Total assets - discontinued operations               75,836               -               -
                                             -------------------------------------------------------------------------------
Total assets                                        187,203         129,614         212,711        259,157         233,970

Long-term liabilities                              (133,540)         (1,474)         (1,684)        (1,445)         (1,533)
Total other liabilities                            (140,248)        (77,371)       (115,036)      (130,274)        (70,855)
Minority interests                                        -               -               -              -             (58)
                                             -------------------------------------------------------------------------------
Net assets (liabilities)                            (86,585)         50,769          95,991        127,438         161,524
                                             -------------------------------------------------------------------------------

Net assets of discontinued operations                65,415               -               -              -               -
                                             -------------------------------------------------------------------------------


Equity share capital
                                                                             As at 30 June
                                                       1999            2000           2001            2002           2003
                                                     Number          Number         Number          Number         Number
                                                  of shares       of shares      of shares       of shares      of shares
                                                -----------     -----------    -----------     -----------    -----------
Equity shares outstanding (number)
Ordinary shares of $0.01 each                    42,001,000               -               -              -               -
Series A ordinary shares of $0.01 each                    -      10,539,126      11,243,400     11,677,033      11,983,681
Series B ordinary shares of $0.01 each                    -      42,001,000      42,001,000     42,001,000      42,001,000
                                             -------------------------------------------------------------------------------

                                                    Nominal         Nominal        Nominal         Nominal        Nominal
                                                      Value           Value          Value           Value          Value
                                                (pound)'000     (pound)'000    (pound)'000     (pound)'000    (pound)'000
Equity shares outstanding (nominal value)
Ordinary shares of $0.01 each                           264               -               -              -               -
Series A ordinary shares of $0.01 each                    -              65              70             73              75
Series B ordinary shares of $0.01 each                    -             264             264            264             264
                                             -------------------------------------------------------------------------------
                                                        264             329             334            337             339
                                             -------------------------------------------------------------------------------
</TABLE>


Exchange rates

Our reporting currency is pounds sterling. The following tables set out, for the
periods and dates indicated, information concerning the noon buying rates in New
York City for cable transfers in foreign currencies as certified by the Federal
Reserve Bank of New York for customs purposes for pounds sterling expressed in
US dollars per (pound)1.00.

As at 28 November 2003, the noon buying rate was US$1.7219 per (pound)1.00.

The highest and lowest rates for each of the previous six months were:

Month                                          High             Low
-----                                          ----             ---

June 2003                                      1.6840           1.6278
July 2003                                      1.6718           1.5867
August 2003                                    1.6170           1.5728
September 2003                                 1.6642           1.5732
October 2003                                   1.7025           1.6598
November                                       1.7219           1.6693


                                       4
<PAGE>


The average exchange rates (calculated by averaging the exchange rates on the
last day of each month during the period) for each of the last five fiscal years
were:

Year Ended 30 June                             Average
------------------                             -------

1999                                           1.6417
2000                                           1.5919
2001                                           1.4479
2002                                           1.4477
2003                                           1.5915


Risk factors

Holders of our securities are exposing themselves to certain risks. Our
business, operating results and financial condition could be materially
adversely affected by any of these risks. The trading price of our securities
could decline due to any of these risks. You should also refer to the other
information set out in this Annual Report on Form 20-F, including our
consolidated financial statements.

Our business will suffer if we do not respond to commercial and technological
changes affecting the broadcasting industry.

Our business and the market in which we operate is characterised by rapid
commercial and technological change, evolving industry standards and frequent
product enhancements. Many digital broadcasters are seeking more sophisticated
software which will afford them greater flexibility in delivering programming
material such as news, films and sports events to viewers. They are also seeking
to offer additional services such as electronic programme guides ("EPGs"),
games, gaming and other interactive applications, personal video recorder
("PVR") functionality and other services.

Our continued success will depend, in part, upon our ability to develop and
market products and services that respond to technological changes and evolving
industry standards in a timely and cost-effective manner. If the market in which
we operate develops more slowly than we anticipate, or if we should fail to
develop and introduce products and services that are compatible with industry
standards, satisfy customer requirements and compete effectively with products
and services offered by our competitors, our business, operating results and
financial condition could be materially adversely affected.

Our operating results and growth could decline if our customers' subscriber
bases do not continue to increase.

A significant portion of our revenues is derived from the sale of smart cards to
our customers and ongoing support and maintenance fees paid by our customers.
These fees are frequently based upon the number of our customers' subscribers.
We also receive royalties for each set-top box manufactured which incorporates
our technology. Therefore, a significant portion of our revenues is dependent
upon our customers' subscriber numbers and the growth in those numbers. If our
customers' subscriber numbers do not continue to increase, we are unlikely to be
able to generate substantial revenue growth or sustain our current revenue
levels and as a consequence our business, operating results and financial
condition could be materially adversely affected.

Our business could be harmed if the security provided by our conditional access
systems and products is compromised.

In common with all providers of conditional access systems, we face risks
relating to the failure of those systems to protect broadcasters and content
providers from signal theft. An important component of our conditional access
systems is the smart cards we provide for the broadcasters' individual
subscribers. Unauthorised viewing and use of content may be accomplished by
counterfeiting the smart card or otherwise thwarting its security features. Any
significant increase in the incidence of signal theft could require the
replacement of a broadcaster's smart cards sooner than otherwise planned. In
those cases where we have accepted specific responsibilities for maintaining the
security of a broadcaster's conditional access system, significant costs could
be imposed on us if a security breach requires an accelerated replacement of
smart cards. To the extent that signal theft may result in the cessation of all,
or some portion of the per-subscriber fees paid to us by a broadcaster while the
security breach is being remedied or, in the event of termination by the
broadcaster of our agreement if the breach is not satisfactorily remedied, the
resultant loss of revenues could have a material adverse effect on our business,
operating results and financial condition. A significant increase in the level
of signal theft, whether or not resulting from a failure of our conditional
access systems, could also injure the reputation of our conditional access
systems among our customers and potential customers and as a consequence, our
business, operating results and financial condition could be materially
adversely affected.

Our business could be harmed if a defect in our software or technology
interferes with, or causes any failure in, our customers' systems.

Our software and technology are integrated into the broadcast infrastructure of
our customers. Accordingly, a defect, error or performance problem with our
software or technology could interfere with, or cause a critical component of,
one or more of our customers' systems to fail for a period of time. This could
result in claims for substantial damages against us, regardless of whether we
are responsible for such failure. Any claim brought against us could be
expensive to defend and require the expenditure of a significant amount of
resources, regardless of whether we prevail. Although we have not experienced
any such material interference or failure in the past, any future problem could
cause severe customer service and public relations problems for our customers
and as a consequence, our business, operating results and financial condition
could be materially adversely affected.


                                       5
<PAGE>

Intense competition could reduce our market share and harm our financial
performance.

We compete both to attract new customers and to retain our existing customers.
Such competition may cause us to lose market share and may result in reduced
profit margins. It may also hinder our ability to develop our business in areas
such as PVRs and interactive television services. In addition, some of the
companies that currently operate in the software business, but which have not
historically been active competitors of ours may, in the future, through
acquisitions or the development of their own resources, seek to enter and obtain
significant market share in our current or planned business areas. Increased
competition from existing competitors or new entrants into our business areas
could result in price reductions, reduced margins or loss of market share, any
of which could materially and adversely affect our business, operating results
and financial condition.

We derive a significant portion of our revenues from a limited number of large
customers. Our revenues could decline significantly if any of these customers
significantly reduces its purchases of our technology or services, or terminates
its relationship with us. In particular, our contract with DIRECTV in the US
expired in August 2003.

Our growth has depended historically on large digital satellite broadcasters
introducing, marketing and promoting products and services that utilise our
technology. We currently derive, and we expect to continue to derive, a
significant portion of our revenues from a limited number of large customers.
Our two largest customers have been DIRECTV Operations, Inc. ("DIRECTV") in the
US and British Sky Broadcasting Group plc ("BSkyB") in the UK. In 2003, these
two customers accounted for approximately 68% of our total revenues. We expect
that we will continue to be dependent upon a limited number of customers for a
significant portion of our revenues, although the particular customers may vary
from period to period. If a large customer purchases significantly less of our
products or services, defers or cancels orders, or terminates its relationship
with us, our revenues could decline significantly and as a result, our business,
operating results and financial condition could be materially adversely
affected.

In particular, our contract to provide the conditional access system for DIRECTV
in the US expired in August 2003. In fiscal 2003, DIRECTV was our largest
customer, accounting for approximately 41% of our total revenues. Following the
expiry of this contract, we are only entitled to receive limited payments for
the continued use of our technology pursuant to termination clauses in the
contract. Accordingly, we expect our revenues and profits in 2004 to be lower
than in 2003.

The nature of our business is such that our operating results may fluctuate from
period to period.

Our operating results have varied in the past from quarter to quarter and from
year to year and are likely to vary from period to period in the future.
Historically, our revenues have reflected a small number of relatively large
orders for our technology and services, which generally have long sales and
order cycles. Our accounting policies typically relate the timing of recognition
of revenue from those orders to delivery or customer acceptance. Additionally,
our customers replace their subscribers' smart cards from time to time, either
to upgrade the features of the smart cards or for security purposes. Again, the
timing of the delivery of those smart cards dictates when we can recognise the
associated revenue. As a result, we believe that period-to-period comparisons of
our operating results may not be a good indication of our future performance.
Our actual results may differ from analyst expectations, which could adversely
affect the price of our securities.

Failure to protect the intellectual property rights upon which we depend could
harm our business.

We rely primarily on a combination of patent, trademark and copyright laws,
trade secrets, confidentiality procedures and contractual provisions to protect
our intellectual property rights and the obligations we have to third parties
from whom we license intellectual property rights. However, we may not be able
to detect unauthorised use of, or take appropriate steps to enforce, our
intellectual property rights and this could have a material adverse effect on
our business, operating results and financial condition.

Defending against intellectual property infringement claims could harm our
business.

We may increasingly be subject to the risk of infringement claims as the number
of products and competitors grows and the functionality of products in different
industry segments overlaps. It may be alleged that products that we have
developed or technology that we have licensed from third parties, infringes the
rights of others. Intellectual property claims could be time consuming to
defend, result in costly litigation, divert management's attention and resources
and cause product shipment delays. Such claims could also require us to seek to
enter into royalty or licence agreements, redesign our products or potentially
cease using aspects of technology, which could have a material adverse effect on
our business, operating results and financial condition.


                                       6
<PAGE>

Any significant disruption in our processing of smart cards could adversely
affect our business.

We process all of our smart cards at two facilities, one located in England and
the other in California. A significant disruption in the processing of smart
cards at either facility could result in delays in the delivery of smart cards
to our customers. The sale of smart cards which we have processed is a material
portion of our business. Although our plants are designed to provide sufficient
capacity to meet expected demand if one plant is inoperable for a period of
time, any significant disruption to our smart card processing facilities could
result in the loss of revenues, customers and future sales.

We may not be able to process sufficient quantities of smart cards because we
obtain certain components from, and depend upon, a limited number of suppliers.

We currently obtain the chips used in our smart cards from a limited number of
suppliers. In the event of a disruption of supply, including a shortage of
manufacturing capacity, we may not be able to develop an alternative source in a
timely manner or at favourable prices. Such failure could harm our ability to
deliver smart cards to our customers or could negatively affect our operating
margins. This could have a material adverse effect on our business, operating
results and financial condition.

Political, regulatory and economic risks associated with our international
customers could harm our business.

Our customers are located throughout the world, and we derived approximately 17%
of our revenues during 2003 from sources outside of the UK, Europe and the US.
Inherent risks of doing business in international markets include changes in
legal and regulatory requirements, export restrictions, exchange controls,
tariffs and other trade barriers, longer payment cycles, political disruption,
wars, acts of terrorism and civil unrest. We may incur substantial expense as a
result of the imposition of new restrictions or changes in the existing legal
and regulatory environments in the territories where we conduct our business or
due to political and economic instability in these territories.

Fluctuations in foreign exchange rates could harm our financial condition.

A risk inherent in our international operations is the exposure to fluctuations
in currency exchange rates. Our reporting currency and the functional currency
of our principal operating subsidiary is sterling. However, certain of our
customer contracts denominate prices in US dollars and also the functional
currency of our operating subsidiaries in the US and Israel is the US dollar. In
2003, approximately 59% of our revenues and 44% of our operating costs were
denominated in US dollars and approximately 4% of our revenues and 13% of our
operating costs were denominated in other currencies (mainly euros). As a
result, we are exposed to fluctuations in exchange rates which may have a
material adverse effect on our business, operating results and financial
condition.

Additionally, although most of our contracts with customers in Latin America and
the Asia-Pacific region are denominated in US dollars, those customers are
affected by fluctuations in their local currencies and by exchange control
regulations which may restrict their ability to remit payments to us.

We are subject to certain risks relating to our operations in Israel.

Our conditional access systems' research and development facilities are located
in Israel and we have three conditional access customers in Israel. We are
therefore directly influenced by the political, economic and security conditions
affecting Israel. Any major hostilities involving Israel, or the interruption or
curtailment of trade or the movement of people within Israel or between Israel
and other countries, could significantly harm our business, operating results
and financial condition. Additionally, certain of our employees are currently
required to perform annual reserve duty in the Israeli Defense Force and are
subject to being called for active military duty at any time. We have, in the
past, operated effectively under these requirements. We cannot predict the
effect of these obligations on us in the future.

We are controlled by, and are dependent upon our relationship with, News
Corporation.

We are controlled by News Corporation, an Australian corporation which is a
diversified international media company. As at the date hereof, News Corporation
beneficially owns approximately 77.7% of our total issued and outstanding share
capital. Because News Corporation beneficially owns 100% of our Series B
ordinary shares, which have ten votes per share (as opposed to our Series A
ordinary shares which have one vote per share), it controls approximately 97.2%
of our voting power. By reason of such ownership, News Corporation is able to
elect our entire board of directors and to control the votes on all other
matters submitted to a vote of our shareholders. Three of our five current
directors are directors of News Corporation. Additionally, Dr. Abe Peled, our
President and Chief Executive, is a member of News Corporation's executive
committee and from time to time is involved in matters pertaining to News
Corporation's wider business interests.

Broadcasters in which News Corporation has an interest currently account for,
and are expected to continue to account for, a significant portion of our
revenues. Such broadcasters include BSkyB, currently one of our largest
customers in terms of revenues, as well as STAR TV in Asia, the Sky Latin
America platforms (comprising Sky Brasil, Sky Mexico, Sky Chile and Sky
Colombia) and Sky Italia. During 2003, approximately 33% of our revenues were
derived directly and indirectly from News Corporation-related broadcasters. The
proportion of our revenues derived from affiliates of News Corporation is likely
to increase following the proposed acquisition by News Corporation of a 34%
equity interest in the parent company of DIRECTV and DIRECTV Latin America.


                                       7
<PAGE>

Although we believe the terms of the arrangements with News Corporation entities
are no less favourable to us than those that we could obtain from unrelated
third parties, we cannot assure you that this is the case.

In addition, because a number of major broadcasters around the world are owned
or controlled by entities that compete with News Corporation or entities in
which News Corporation has an interest, our ability to attract customers in
which News Corporation does not have an interest may be affected by their
perception of our relationship with News Corporation.

Your rights as shareholders differ from the rights of shareholders under US law.

NDS Group plc is a public limited company organised under the laws of England
and Wales. The rights of holders of ordinary shares and, indirectly, many of the
rights of holders of our American Depositary Shares ("ADSs") are governed by
English law and by our Memorandum and Articles of Association. These rights
differ from the rights of shareholders in typical US companies. In particular,
English law significantly limits the circumstances under which shareholders of
English companies may bring derivative actions. Under English law generally,
only NDS can be the proper plaintiff in proceedings in respect of wrongful acts
committed against us. In addition, it may be difficult for you to enforce
liabilities predicated upon US securities laws.

Our share price could be affected by shares becoming available for sale in the
future or by the dilutive effect of the issue of new shares.

If investors or News Corporation sell substantial amounts of our ADSs or
ordinary shares in the public market, the market price of our ADSs could fall.
The negative effect of such sales on the market price of our ADSs could be more
pronounced given the relatively small number of our shares in ADS form relative
to the total number of shares outstanding. In addition, such sales could create
the perception to the public of difficulties or problems with our technologies
and services. These sales may also make it more difficult for us to sell equity
or equity-related securities in the future at a time and price that we deem
appropriate if we require additional financing.

Interests of existing shareholders may also be diluted due to the existence of
options over shares granted to certain employees. Additionally, at our Annual
General Meeting held on 3 November 2003, shareholders authorised the directors,
pursuant to section 80 of the Companies Act 1985, to allot relevant securities
up to a maximum amount of US$406,680 (a maximum of 40,668,000 shares of $0.01
nominal value) for a period expiring on 2 November 2008. At the same time, the
directors were empowered, pursuant to section 95 of the Companies Act 1985, to
allot equity securities for cash without first being required to offer them to
existing shareholders. It is the directors' intention to seek annual renewal of
these authorities.



                       ITEM 4. INFORMATION ON THE COMPANY

History and development of the Company

NDS Group plc is a public limited company incorporated and operating under the
laws of England and Wales. The Company was incorporated in September 1985 and
reorganised as a public limited company in October 1996. Our principal executive
offices and our registered office are located at One London Road, Staines,
Middlesex TW18 4EX, United Kingdom. Our main telephone number is +44 208 476
8000.

Our business is the supply of digital technology and services enabling and
supporting digital pay television platforms. Our technologies include
conditional access and microprocessor security, broadcast stream management,
set-top box middleware, EPGs, PVR systems and interactive applications, which
are supplied to pay-TV platform operators and their content providers. We
operate through a number of subsidiaries under the brand "NDS". We also trade
under the names of two acquired businesses, "Orbis" and "Visionik".

In December 2000 we acquired Orbis Technology Limited ("Orbis"). Orbis is a
company incorporated in the UK, whose principal activity is the supply of
technology to the on-line betting and gaming industry and which is involved in
the opportunities presented by interactive television for betting. Under the
terms of the acquisition agreement, the consideration payable to the vendors was
dependent upon the revenues and profitability of Orbis in the two years ended 31
March 2002 and certain other factors. Following final determination of the
revenues and profitability of Orbis in the two years ended 31 March 2002, the
fair value of the final total consideration payable was (pound)66.4 million.
This was satisfied by a mixture of cash and the issuance of new Series A
ordinary shares.


                                       8
<PAGE>

In December 2001, we formed ADSR Limited ("ADSR"), a company in which we held a
40% equity stake. Through a mixture of equity and loan finance provided by NDS,
ADSR set up a specialist laboratory facility in the UK and incurred capital
expenditure of approximately (pound)2.6 million. During 2003, we terminated our
relationship with ADSR, purchased the laboratory facility referred to above,
obtained full repayment of the loan financing we had provided and sold our
shares for a nominal sum. We now use this laboratory facility for our own
research and development activities and we also sell services which make use of
the facility.

In May 2002, we entered into a series of agreements which gave us an economic
interest amounting to control of Visionik A/S ("Visionik"). Visionik is a
company incorporated in Denmark whose principal activity is the provision of
interactive television applications, particularly games which can be played on a
television. The consideration payable to the vendors of Visionik is dependent on
the revenues and profitability of the business of Visionik in the two years
ending 31 May 2004. Following the first anniversary of the acquisition, we
revised our estimate of the total consideration payable as set out in Note 9b to
our consolidated financial statements.

On 13 September 2003, we entered into a series of agreements with subsidiaries
of Thomson S.A (collectively, "Thomson") whereby we agreed to acquire the
MediaHighway middleware business and license certain related patents for a total
consideration of (euro)60 million in cash. The transaction is subject to
regulatory approvals and certain other conditions and is expected to close by
the end of calendar 2003 or early in calendar 2004. We will fund the acquisition
from our existing cash reserves. The MediaHighway technology includes
"middleware" used in set-top boxes. The word "middleware" is an industry term
which refers to software, similar to the operating system of a PC (such as
Microsoft Windows), that is designed to be used in a set-top box and that
enables the launch and operation of interactive applications. The MediaHighway
middleware complements our NDS Core middleware. The acquisition will involve the
addition of approximately 300 employees, based in Paris, France.

In 2003 we invested a total of (pound)6.1 million in capital expenditure to
ensure that our employees have the necessary facilities and up-to-date equipment
to develop, maintain and enhance our technologies and internal processes and
provide full support for our customers. This capital expenditure included the
acquisition of fixed assets from ADSR referred to above. Capital expenditure,
other than by way of a business combination, amounted to (pound)7.7 million in
2002 and (pound)11.6 million in 2001.

Our growth and capital expenditure have been financed by cash generated from
operations. As at 30 June 2003 and as at the date hereof, we had no net debt.


Business overview

Our business is the supply of digital technology and services enabling and
supporting digital pay television platforms. Our technologies include
conditional access and microprocessor security, broadcast stream management,
set-top box middleware, EPGs, PVR systems and interactive applications, which
are supplied to pay-TV platform operators and their content providers. We
consider that we operate in a single market and we manage our business as a
single segment. An analysis and discussion of our various revenue streams (as
determined under UK GAAP) is given in Item 5: "Operating and financial review
and prospects". A geographic analysis of the sources of our revenues (as
determined under UK GAAP) for each of the last three fiscal years is given in
Note 2b to our consolidated financial statements.

Our technologies and services are designed to enable a broadcast or broadband
platform operator or a content provider to deliver content securely to its
subscribers and to ensure payment for that content. In this discussion, we
identify three main categories of users of our technologies:

o    the platform operator or broadcaster who will typically operate the
     infrastructure;
o    the content provider or channel, who will purchase transmission capacity
     from the platform operator; and
o    the subscriber or viewer of digital television who will usually be a
     customer of the platform operator, but may also be a customer of one or
     more channel operators.


                                       9
<PAGE>

In this context, our customers will be platform operators and the content
providers. We have no commercial relationship with the subscribers. Our main
platform customers, with their country or region of operation are:
<TABLE>
<CAPTION>



Platform                             Country or Region           Platform                          Country or Region

<S>                                  <C>                       <C>                                 <C>
Europe and the Middle East                                       Asia-Pacific
Auna                                 Spain                       BB Cable Corporation              Japan
BSkyB                                UK                          CCTV                              China
Madritel                             Spain                       China Cable Network               China
Matav                                Israel                      China Network Systems             Taiwan
Sky Italia                           Italy                       Chongqing Cable TV                China
Tevel                                Israel                      FoxTel                            Australia
Versatel                             Russia                      Galaxy                            Hong Kong
Viasat                               Scandinavia                 Guizhou Cable TV                  China
Yes                                  Israel                      Hathway                           India
                                                                 Indovision                        Indonesia
USA & Latin America                                              Sichuan Cable Network             China
Cablevision                          USA                         Sky TV                            New Zealand
DIRECTV                              USA                         SkyLife                           Korea
DIRECTV Latin America                Latin America               STAR                              Asia
Sky Brasil                           Brazil                      Telstra                           Australia
Sky Chile                            Chile
Sky Colombia                         Colombia
Sky Mexico                           Mexico
</TABLE>

Many of the broadcast platforms are also content providers. However, the
platforms also sell capacity to other content providers. These content providers
or channels are an additional market for our interactive applications. Whilst
these customers do not comprise a separate business segment, we consider that
they provide a complementary route to market for some of our technologies and
services. Having developed applications for a channel on one platform, we are
able to transfer them to another platform and thereby provide the customer with
some economies of scale. In addition to the broadcasters noted above, our
content provider customers include Bloomberg, Teletext, Discovery Channel, QVC,
MTV, Music Choice Europe, Channel 4 Television and Nickelodeon, amongst others.

Set-top box manufacturers and suppliers of other elements of a broadcast
infrastructure are another category of customers. We work with companies in this
category to integrate those aspects of our technologies which reside in devices
which they supply. In some instances we receive payment from these customers; in
other instances both parties work together for no immediate payment, but receive
income as and when the device is sold. We consider that it is important for us
and for platform operators that our technology is integrated into many different
set-top boxes, chips incorporated in set-top boxes and other broadcast
equipment. This is because the platform operator and the subscriber have greater
choice and security of supply and because it aids price competition; ultimately
it should lower the costs of the platform operator and the subscriber.

Conditional access systems are an essential component of a pay-TV platform. Our
conditional access systems enable our customers to manage and control the
distribution of entertainment and information over a variety of broadcast and
broadband media (cable, satellite, terrestrial, phone-line, internet, etc.), to
protect content (which is a valuable asset to them) from unauthorised viewing
and to enable them to charge their subscribers for that content. Our conditional
access technologies include software that is installed at the broadcasters'
facilities ("the head-end") as well as technologies and smart cards in the
set-top boxes of our customers' subscribers. Our conditional access technology
is integrated with the operating system and middleware of the set-top box (which
may itself be integrated into a television set). The middleware may be provided
by us or by a third party. The combination of conditional access technologies
and set-top box middleware enables applications to be run on the set-top box in
a controlled and secure manner, allowing our customers to provide applications
and secure interactive services to their subscribers. These applications include
EPGs, betting and gaming, interactive advertising and TV commerce, PVR
functionality and other facilities for the subscriber to engage more fully with
the content. Our technologies also include broadcast stream management software
that performs various functions necessary for managing and operating a digital
television broadcasting platform. We complement our technologies with a wide
range of services, including consulting, broadcast system design and
integration, support and maintenance and, in some cases, on-site operation and
management of systems we have supplied to our customers.

We compete in a number of business areas and no single company competes with us
in all our product lines. Competition is intense and in addition to price and
commercial terms, we consider the key differentiators to be:

o    the security that our technology offers to a platform operator;
o    the quality and ease of use of our systems and the availability of
     applications such as EPGs and interactive services;
o    the availability of set-top boxes offered by manufacturers with whom our
     technology is integrated;
o    the availability and cost of chips incorporated into our smart cards;
o    the complexity of the system and the degree of adaptation and integration
     required;
o    the degree of compliance with the various international, national and
     regional standards that relate to broadcast technology;
o    the ability of our conditional access technology to work alongside that of
     a competitor's in a process known as "simulcrypt"; and
o    the ability to integrate our technology with broadcast equipment and
     related systems.


                                       10
<PAGE>

We have our own sales force operating in the various regions of the world. They
are supported by regional marketing activity designed to promote awareness of
our company and our technologies and services in each region. We may bid jointly
for projects to implement a new platform with broadcast equipment manufacturers,
system integrators and consumer electronics manufacturers.


Technologies and services

We offer technologies and services in four main areas:

o    conditional access systems and services;
o    middleware and EPGs;
o    interactive infrastructure, applications and services; and
o    head-end and network infrastructure software and services.

Our customers may purchase technologies and services from us in one or more of
these main areas. We consider that these technologies and services comprise a
single business segment from which we derive a number of different revenue
streams. A discussion of these revenue streams and a quantitative commentary on
our business is given under Item 5: "Operating and Financial Review and
Prospects".

Conditional access systems and services

Our main conditional access systems are sold under the name "VideoGuard". The
VideoGuard family of systems is compatible with all internationally accepted
digital television transmission standards. Most of the major consumer
electronics brands have integrated VideoGuard technology in their set-top boxes.
Our VideoGuard conditional access systems include:

o    software components that are installed on dedicated server systems at the
     platform operator's head-end and which are responsible for interfacing with
     the platform operator's subscriber management system, back-office and
     billing systems and play-out and transmission management systems;
o    technologies that are integrated in the set-top box, and which permit the
     decryption of the broadcast signals and support various functions essential
     to the EPG, interactive applications and PVR functionality; and
o    a removable smart card which is inserted into each set-top box and contains
     an embedded computer chip that, if authorised, generates code words used by
     the set-top box to decrypt the broadcast signal, and which also maintains
     information used to identify the subscriber.

The four basic components of a conditional access system that are located at the
platform operator's head-end are: the entitlement management message generator;
the entitlement control message generator; the security server; and the return
path manager. A subscriber management system maintains a database of information
regarding the broadcast content that each subscriber is authorised to view based
on his subscription package. The entitlement management generator processes
information regarding subscribers' viewing entitlements from the subscriber
management system. Systems in the platform operator's head-end also generate
information that describes the content (e.g., programmes) currently being
transmitted. The entitlement control message generator processes this
information. The security server at the platform operator's head-end generates
the codes which are used by the transmission equipment to encrypt the content.
The encrypted content and the descriptive and subscriber entitlement information
are combined into a single transmission stream using technology commonly
referred to as "multiplexing". This transmission stream is then transmitted to
subscribers.

In the subscriber's home, the conditional access software in the subscriber's
set-top box passes the encrypted programme material from the transmission stream
to the sub-system in the set-top box responsible for decrypting. In parallel the
conditional access software in the subscriber's set-top box passes the programme
and subscriber entitlement information to the smart card. The information is
processed by the smart card which records any updates to the subscriber's
viewing entitlement. The EPG software application in the set-top box processes
the programme information contained in the transmission stream and provides an
on-screen listing of content and functions available to the subscriber. When a
subscriber selects content or a service via the EPG, the programme information
is checked against the subscriber's viewing entitlements. If the subscriber is
entitled to view the content, the smart card generates the codes necessary to
decrypt it and permit the subscriber to view it.


                                       11
<PAGE>

If the subscriber decides to watch a pay-per-view event, the smart card
generates the viewing entitlement and the purchase is securely recorded on the
smart card. Periodically, the set-top box is triggered to call the conditional
access system at the platform operator's head-end using the subscriber's
telephone line, cable or broadband connection (the "return path"). The set-top
box downloads the stored pay-per-view purchase information to the return path
manager component of the conditional access system at the head-end which passes
the information to the subscriber management system in order to charge the
subscriber.

A key element of our conditional access technology is the smart card. Smart
cards allow broadcasters to separate the implementation of conditional access
services from the set-top box. This separation allows platform operators to
introduce new features and services without requiring replacement of all of the
subscribers' set-top boxes. New smart cards can be issued, or new security
software can be downloaded to existing smart cards. The smart card also enables
the platform operator securely to address a particular set-top box (or a sub-set
of a population of set-top boxes) to allow the download of new applications or
functionality in a controlled and targeted manner.

VideoGuard's standard features include "over-the-air" subscription entitlements,
support for multiple service providers and the ability for the platform operator
to establish a database of its subscribers' individual profiles and viewing
preferences. VideoGuard also offers numerous programme packaging features which
allow content providers to: group programming material in a number of different
subscription services targeted to the viewing preferences of specific groups of
subscribers; build a hierarchical structure of different subscription packages;
offer video-on-demand events; and offer various modes of pay-per-view operation.
Together, our software in the set-top box and in the smart card can be used to
authenticate interactive transactions originated by the consumer. If the set-top
box is a PVR, our software is also used to enable the secure decryption of
stored content.

Implementations of VideoGuard range from multi-million subscriber digital
satellite broadcast platforms down to small regional broadcasters with a few
thousand subscribers. VideoGuard is customisable and scaleable to a particular
customer's requirements. It can be and has been applied to cable television and
broadband internet platforms. Further variants of VideoGuard exist including one
where all of the software is securely embedded within the set-top box
(dispensing with the separate smart card) and, at the other extreme, variants
where more of the set-top box functionality is combined with that of the smart
card and contained in a detachable point of deployment module or "pod".

Our conditional access technology can be customised to work alongside that of a
competitor in a manner known as "simulcrypt". A single broadcast stream may
contain the necessary information to be decrypted by two or more different
conditional access systems. For example, in the case of Sky Italia, this
capability has allowed two broadcast platforms to merge in a controlled manner
without disabling a legacy population of set-top boxes. In the case of ViaSat, a
pay-TV platform operating in Scandinavia, simulcrypt has allowed us to supply a
conditional access system, replacing an incumbent system supplied by a
competitor. Simulcrypt also offers a route for US cable operators to break away
from the current duopoly of supply that persists in the US. We consider that the
current duopoly works against the interests of both platform operators and
consumers by forcing the use of proprietary technologies and restricting the
ability for competition to emerge in the supply of set-top boxes, with the
consequential effect on set-top box prices and overall business cost.

The security of our customers' content is a primary concern both for the
protection of their revenue streams and for our reputation as a provider of
conditional access systems. We maintain a pro-active security policy designed to
increase the length of time the current version of a platform operator's smart
card remains in service and thereby continue to protect our customer's revenue
streams. There have been in the past, and we expect that there will continue to
be, instances of unauthorised viewing or smart card piracy affecting conditional
access systems generally. A number of individuals and organisations are engaged
in the business of selling, or attempting to sell, unauthorised viewing devices,
including counterfeit smart cards. Other unauthorised devices have the ability
to upgrade the access permitted by genuine smart cards or to reactivate genuine
smart cards that have previously been disabled by the platform operator.

We refine and update our technologies on a continuing basis in order to protect
against and counteract unauthorised viewing. Our strategy relating to the
prevention of unauthorised viewing relies upon a number of elements:

o    Smart cards are designed and manufactured under strict security conditions,
     based on proprietary designs and their supply is continually monitored and
     controlled;
o    We have undertaken extensive efforts to prevent the reverse engineering of
     our smart cards. We incorporate custom proprietary chips in our smart cards
     and incorporate terms in our contracts with chip manufacturers to prevent
     them from selling our proprietary designs to third parties;
o    In conjunction with the platform operator, we periodically implement
     electronic over-the-air countermeasures, consisting of signals transmitted
     in the broadcast stream that alter authorised smart cards in a manner which
     then renders counterfeit smart cards obsolete;
o    From time to time, we supply the platform operator with a new generation of
     smart cards for distribution to their subscribers in order to upgrade
     security or to provide support for enhanced functionality. We use these
     periodic replacements as an opportunity to implement more sophisticated
     security technologies in the new generation of smart cards;
o    We monitor signal theft activity, and work with platform operators and law
     enforcement agencies to detect and prosecute instances of unauthorised
     viewing and signal theft; and
o    Because we use a unique smart card chip design for each of our large
     customers, a security failure affecting one of our large customers should
     not affect the security of another customer.


                                       12
<PAGE>

We do not manufacture smart cards. We have them made to our design by third
party manufacturers with whom we work very closely. In order to maintain
flexibility in the smart card procurement process and to improve our ability to
meet customer requirements, we have contracted with multiple suppliers for some
smart card components. We generally negotiate with multiple sources and contract
with a sole source supplier to provide a particular generation of smart card
chip for each platform for the lifetime of the smart card generation, which may
be as long as several years. We believe that a long-term contract with a sole
supplier for each smart card generation provides a higher level of system
security than other available alternatives. The process for manufacturing chips
is complex and our ability to obtain supplies of particular chips when we need
them is dependent on the manufacturer having available capacity in its plant
when we need it. The price and availability of manufacturing capacity is also
dependent on worldwide demand for specialist computer chips generally. We also
hold stocks of smart cards and components as a buffer against demand exceeding
supply. This inventory may be held at our risk or we may, where possible,
negotiate contract terms with our customers to reduce the risk of our holding
stock in excess of firm orders placed by our customers.

All of our smart cards are tested, programmed and despatched from two
facilities, one in the UK and one in the US, which together are capable of
processing up to 40 million cards per year. In 2003, we distributed
approximately 26 million smart cards.

We negotiate individual agreements with each of our conditional access
customers. We receive revenues from our conditional access systems and services
by some combination of:

o    fees for signal and network security, typically on a per authorised smart
     card basis;
o    licence fees for the use of our technologies and fees for the ongoing
     maintenance, support and enhancement of the head-end components;
o    fees for the design and adaptation of our systems to meet a customer's
     specific requirements;
o    charges for the supply of smart cards for new subscribers, typically on a
     per-unit basis;
o    fees for the supply of replacement smart cards;
o    integration fees from set-top box manufacturers to incorporate our
     technologies in their products; and
o    royalties from set-top box manufacturers or platform operators, based upon
     the number of set-top boxes manufactured, sold or activated.

We consider our main conditional access competitors to be NagraVision, a
division of Kudelski SA; MediaGuard, currently a division of Canal+ Technologies
SA, owned by Thomson and to be acquired (subject to regulatory approvals) by
Kudelski SA; Motorola, Inc.; Scientific-Atlanta, Inc.; Irdeto BV; and Viaccess,
a division of France Telecom.


Middleware and EPGs

Middleware is a specific type of software contained in digital set-top boxes.
Middleware receives information and entire applications from the broadcast
stream, and interacts with the subscriber by means of services such as the
remote control devices, and in certain cases, from non-broadcast streams such as
the analog telephone network or DSL broadband networks by means of a built-in
modem. The middleware then initiates the execution of interactive TV
applications and provides the application with the user input and information
that it has obtained. Middleware therefore is the software that enables access
to interactive TV services through the digital set-top box. It creates the
opportunity for a platform operator to enhance the subscriber's experience by
providing an audio and video environment capable of supplying shopping, e-mail,
games, banking and other interactive services.

We supply certain platform operators with NDS Core middleware. It was first
deployed in 1997 on the Sky Latin America platforms and subsequently on other
platforms and has been significantly enhanced over the years. Amongst other
improvements, it now offers functionality to support advanced graphics and
complex character sets such as Chinese, Hebrew, Russian and Korean. It also
supports application development tools to ease the production of new
applications by ourselves or by third parties.

We generate revenue from the supply of NDS Core from integration fees and by
charging a royalty on each set-top box manufactured on which it is deployed. As
at 30 September 2003, approximately 3.9 million set-top boxes were in use with
NDS Core.


                                       13
<PAGE>

The deployment of NDS Core on a particular platform is not dependent on that
platform using NDS conditional access technology, or vice versa. NDS Core's
principal competitor products are OpenTV (developed by OpenTV Corp.),
MediaHighway (developed by Canal+ Technologies SA and currently owned by
Thomson), Microsoft's TV Foundation and Scientific Atlanta's PowerTV. Each of
these middleware products has different functionality and requires significantly
different amounts of processing and memory capacity in the set-top box. On 13
September 2003, we agreed with Thomson to acquire the MediaHighway middleware
business and to license certain related patents. We anticipate that the
acquisition of MediaHighway will enable us to offer customers a full range of
middleware systems supporting their changing needs.

EPGs

An EPG is an on-screen guide to the content and services available to
subscribers to a particular platform. It is an essential component of any
multi-channel platform operator's system and provides the subscriber with a
logical, fast and easy-to-use means of selecting and changing channels. The EPG
is a software application which processes the programme information contained in
the transmission stream and provides an on-screen listing of programmes and
services available to the subscriber as well as information about programmes.
The subscriber navigates around the EPG by using the remote control unit to view
programme schedule information, change channels, store favourite channels,
adjust set-top box settings and, in some applications, purchase current and
future pay-per-view events. We have implemented EPGs on both NDS Core and
OpenTV. We have also integrated our PVR functionality with our EPGs.


Interactive infrastructure, applications and services

The ability of subscribers to interact with content creates opportunities for
broadcasters to generate additional revenues by offering services designed to
strengthen the relationship between the subscriber and the platform and content.
A broadcast infrastructure that enables interactive services may aid the
platform operator to win subscribers from rival platform operators who have a
less sophisticated infrastructure (e.g., from cable to satellite). Interactive
applications include voting applications, shopping applications and the mass
customisation of content based upon subscribers' preferences. Such applications
require functions to be executed both at the platform operator's head-end and in
the subscriber's set-top box. The more sophisticated applications may depend on
the ability to conduct secure transactions between the subscriber and the
platform operator via the return path (e.g., a telephone line). Other
applications cause the modem in the set-top box to call a premium rate phone
number, the revenue from which may be shared between the platform operator, the
content provider, the application developer and others. We have developed
capabilities for applications to be downloaded into set-top boxes "over the air"
quickly and securely. We generate revenues from interactive applications from a
combination of one-time licence fees, royalties, on-going per subscriber fees,
on-going support and maintenance fees and revenue sharing arrangements.

Most of our competitors in the interactive application market deliver only some
components of a complete system solution. Companies such as TiVo, Inc. compete
with us only in the area of PVR devices. Companies such as Open TV Corp. and
numerous software-authoring companies only compete with us in certain aspects of
interactive television technologies and applications.

Our interactive-TV product offerings include:

Value@TV

Value@TV is our suite of software and technologies used to develop interactive
applications on various middleware systems. Value@TV allows subscribers to
execute transactions off-line because transaction information is stored on the
subscriber's smart card for later transmission to the broadcaster over the
return path. Applications using this technology are operated by individual
channels, but utilise the conditional access technology within the broadcast
platform's infrastructure.

Examples include:

o    Sports applications, which allow subscribers to watch a sporting event
     while selecting from multiple camera angles, watching replays on demand and
     downloading statistics about that sporting event in graphic or text forms.
     The same technology can be used for many different sports. These
     applications have been developed for use on the BSkyB, Sky Latin America
     and certain Chinese platforms.
o    Shopping applications, such as those deployed by QVC: The Shopping Channel
     UK on the BSkyB platform, allow subscribers to purchase an item by browsing
     its interactive directory via the remote control or by selecting from a
     directory of products published on the QVC web site. We are developing a
     similar application for QVC for deployment on the UK cable networks (which
     do not use VideoGuard). Similarly, Teletext has a service on the BSkyB
     platform using our technology which enables subscribers to access travel
     and holiday details using their remote control interactive button.
o    Music Choice Europe uses an application developed by us which enables
     listeners to navigate through multiple channels. It is currently used on
     the BSkyB platform and also on a platform in Spain which does not use
     VideoGuard.
o    Nickelodeon and MTV have both used our technology for voting applications.




                                       14
<PAGE>

Games

We have expertise in developing games applications following our acquisition of
Visionik. Our games have been implemented on various middleware products and are
used by platform operators such as DIRECTV Latin America, BSkyB and Cablevision.
The games range from amusements for children to more sophisticated games for
adults. We believe that games provide content providers and platform operators
possibilities for adding value to traditional programming by generating new
revenue streams, driving subscriber retention and acting as a showcase for the
introduction of interactive TV services.

XTV

We have developed a PVR technology called XTV which extends the television
viewing experience by integrating mass-storage devices such as hard drives in
set-top boxes. XTV uses "meta-data" (data about data) embedded in the broadcast
stream to provide services and functionality that are not readily available in
other products that focus only in managing the hard disk that is integrated in
the set-top box or digital TV. Meta-data allows broadcasters and operators to
enhance their content offerings by offering their subscribers advanced features
such as locating highlights of a programme, advanced content directories and
automatic intelligent recording. The XTV software in the set-top box uses a
viewer profile to search for programmes of special interest to the subscriber.
It automatically scans the EPG and selects programmes or other content that are
subsequently recorded on the hard disk. Stored content can then be viewed by the
subscriber at his convenience. The technology also enables the viewer to "pause
live TV". The XTV-enabled set-top boxes and head-end systems are tightly
integrated with our conditional access technologies, ensuring that the content
in the subscriber's set-top box is stored in encrypted form so that viewing,
copying or distribution can be controlled by the platform operator or content
owner.

We have worked with several set-top box manufacturers to develop XTV-enabled
set-top boxes for BSkyB. These boxes and the service are being marketed by BSkyB
under the brand "Sky+" and we are now working with other manufacturers to
support BSkyB's development plans. We are also working on the implementation of
XTV on NDS Core for deployment on other platforms such as FoxTel in Australia
and the Sky Latin America platforms in Brazil and Mexico.

OpenBet

Our OpenBet software was developed by Orbis and is used by licensed bookmakers
and gaming organisations as a platform for internet and television-based
bookmaking and gaming operations. Although such bookmaking and gaming operations
are highly restricted in the US, their use is permitted in several jurisdictions
including the UK. OpenBet allows a single operator to create multiple betting
sites (e.g., retail locations, internet, TV) all powered by the same OpenBet
server. It has two main elements: the OpenBet gambling engine and the OpenBet
game framework. The OpenBet gambling engine is the core of the system. It
contains all the central features required by any gambling site, including
customer accounts, registration and identity validation, electronic payment,
event management, liability management and monitoring, multi-currency and
multi-lingual functions, regulatory compliance, administration and reports. The
OpenBet game framework allows operators to develop their own games. Different
types of games can be hosted by the OpenBet game framework, such as sports
betting, casino games, lottery games and fantasy competitions. We are expanding
the OpenBet product group to include our own casino-type games and
person-to-person betting.

OpenBet was initially designed for use via the internet and is used by many of
the major bookmakers in the UK and some companies in the Asia-Pacific region. It
is the system that is used by several bookmakers and gaming companies that
operate specialist channels or applications on the BSkyB platform.

Fancy a Flutter

In May 2003 we launched "Fancy a Flutter", a dedicated interactive games and
fixed odds betting channel offered on the BSkyB platform, featuring bingo-style
and other numbers games. Fancy a Flutter operates through a newly formed
subsidiary which is 80% owned by us, with the remaining 20% owned by Rank plc.
The channel offers a mixture of pay-to-play and play-for-fun interactive games
developed by our Visionik business and supported by our VideoGuard, Value@TV and
OpenBet technologies. Rank plc supports Fancy a Flutter with its gaming licence,
use of the "Rank" and "Mecca" brands, as well as marketing and customer service
expertise.


Head-end management systems, software and services

We provide a range of software, systems and services which assist broadcasters
in their adoption and implementation of digital broadcasting platforms. We also
provide ongoing support and maintenance services. We charge one-time fees for
our software and systems, that vary depending on the scale and complexity of the
implementation. We provide design, customisation and integration services for
either a fixed price fee or on a time and materials basis. Our technologies in
this business area include, among others:


                                       15
<PAGE>

Streamserver

Streamserver is the central system that co-ordinates the information flow and
exchange between the various systems at the head-end, including the subscriber
management systems, the programming play-out systems and the conditional access
systems. It also manages the multiplexes. Streamserver incorporates unique
proprietary technology that continuously allocates bandwidth among the various
television channels of a multiplex in order to maximise the efficiency of use of
transmission capacity. It is an integral part of the broadcast infrastructure of
all our large conditional access customers.

Synamedia

Synamedia is our architecture for broadband which incorporates our technologies
for personalisation, meta-data, content protection, encryption and rights
management. It provides a broadband platform operator with the ability to offer
services such as video-on-demand, multi-cast TV, video streaming, content
guides, interactive applications, secure commerce and PVR-type functionality.
The subscriber to a Synamedia platform will typically be using a PC, rather than
a set-top box, and the connection to the network operator will typically be via
a high-speed phone line. We have worked closely with companies such as Alcatel
to integrate Synamedia with other network components. Our Synamedia technology
has been successfully deployed in Japan with BB Cable and we are currently
working on a project for the deployment of a system for the Cyprus telecoms
company, CYTA.


System design, integration and other services

We provide system design, integration and maintenance and support services to
digital broadcasters. Our experience in implementing large and complex systems
has enabled us to sell services to assist companies in planning and designing
new platforms. System integration involves both the selection of appropriate
vendors and the integration of various components, including those of third
party manufacturers, into a single operational broadcast system. Once our
customers' systems are operational we offer them after-sale services including
ongoing support and maintenance. We also offer consulting services, including
business consulting and technical assistance, as well as security design for
interactive and other advanced services.

In broadcast system integration we compete with other TV platform suppliers such
as Motorola, Inc., Scientific-Atlanta, Inc., Thomson and Philips Electronics.


Intellectual property

Since the technology on which our business is dependent is critical to our
success, we need to protect our intellectual property rights, both in our
proprietary technology and in technology which is licensed to us. We rely on a
combination of patent, copyright and trademark laws, trade secrets, licences,
confidentiality agreements and contractual provisions to protect our proprietary
rights. We generally enter into confidentiality and non-disclosure agreements
with our employees, customers and suppliers.

We are the exclusive worldwide licencee of various patents, patent applications
and patentable inventions from Yeda Research & Development Company Limited in
Israel in the area of digital identification and signature schemes, which have
been invented by Professor Adi Shamir ("the Shamir Patents"). We pay a royalty
to Yeda Research & Development Company based on a percentage of relevant
revenues arising from our conditional access technologies. We are also a
non-exclusive licencee of intellectual property rights owned by various third
parties. These rights have been acquired by the payment of a fixed sum or
royalty.

We have developed core competencies in advanced technologies that are
incorporated in a number of our systems. These proprietary technologies address
specific needs of our customers and help us establish and maintain a competitive
advantage.

We work on the development of high security encryption algorithms. These are
mathematical procedures implemented in software that are used to accomplish a
specific function such as encrypting or decrypting data, messages or video
signals by means of secret keys and code words. Our security research team has
developed a number of proprietary high-security encryption algorithms. These
algorithms are used in our conditional access systems. The proprietary nature of
our algorithms and the lack of any publicly available specifications or
documentation regarding their operation make them more secure.

Our chip design team has developed a number of proprietary improvements to the
security and functionality of chips that we integrate into our smart cards. Such
improvements include, for example, functions that hinder the unauthorised
duplication of our smart cards or the introduction of counterfeit smart cards in
a set-top box.

We have developed a number of techniques that allow us to send specially
disguised and encoded messages that disable or alter the operating
characteristics of our smart cards. These technologies allow our customers to
disable the smart cards of delinquent subscribers. In addition, they allow our
customers to combat signal theft more effectively, by randomly altering the
operating characteristics of all valid smart cards in a way which makes
counterfeit smart cards incompatible with the signals transmitted by our
customers.

We have developed sophisticated protocols for transmitting authorisation,
entitlement and other control messages to smart cards. These protocols allow
control messages to be compressed in a way which consumes only a small fraction
of the broadcaster's bandwidth, allowing the broadcaster to transmit more
programmes and channels to its subscribers without having to compromise its
ability to control each individual subscriber's viewing entitlements.


                                       16
<PAGE>

Regulation

We are not an operator of conditional access systems. However, our technology is
used by broadcasters and operators of conditional access systems. Our customers
may therefore be subject to regulation in the jurisdictions in which they offer
their services. These regulations, which differ from jurisdiction to
jurisdiction, and future changes in such regulations, may affect our ability to
sell our conditional access technologies and services.

We do not operate as a bookmaker. However, our OpenBet software is a betting and
gaming application. Our customers are therefore subject to regulation in the
jurisdictions in which they offer their services. This may involve the
independent certification of our software. In many jurisdictions, betting and
gaming regulations are being reviewed, specifically to address betting and
gaming on the internet and via interactive television applications. It is
possible that our customers will become subject to new regulations in this area.
Additionally, Fancy a Flutter makes use of betting licences held by Rank plc and
by BSkyB and so is potentially indirectly subject to changes in regulations
affecting betting and gaming in the UK. The current regulations, which differ
from jurisdiction to jurisdiction, and any future changes in such regulations,
may affect our ability to sell our technologies and services related to betting
and gaming.


Organisational structure

NDS Group plc operates through a number of subsidiaries. There is a common
management structure across the Group, which ensures that the various subsidiary
companies operate in a co-ordinated and complementary manner. A list of the
Company's significant subsidiaries is attached as Exhibit 8 to this Annual
Report. We manage our business as a single operating unit or segment.


Property, plants and equipment

We operate from a number of locations principally located in the UK, Israel and
the US. All of our facilities are leased. A list of our main facilities is set
out below.
<TABLE>
<CAPTION>

                                                                                          Approximate
    Location                       Principal Use                                          Size (sq ft)

    <S>                          <C>                                                         <C>
    Staines, UK                    Executive and administrative offices                       42,000
    Maidenhead, UK                 Smart card processing and distribution                     15,000
    Chandlers Ford, UK             Software development and system integration                29,000
    Chiswick, UK                   Development of betting applications                        15,000
    Jerusalem, Israel              Research and development, conditional access system       100,000
                                   support
    Newport Beach, CA, US          Executive offices of NDS Americas                          16,000
    Lake Forest, CA, US            Smart card processing and distribution                     29,000
</TABLE>

In addition, we have leased premises in Hong Kong; Copenhagen, Denmark; Beijing,
China; Bangalore, India; and Sydney, Australia.

During the year ended 30 June 2003, we incurred capital expenditure of
(pound)1.0 million related to fixtures, fittings and other improvements to
leasehold premises.

Our premises in Jerusalem, Israel are in a number of separate buildings. We have
entered into a lease to occupy a single building in the same area of Jerusalem
which is currently under construction. We expect to take possession of the
premises by the end of calendar 2004 and we have agreed to terminate our current
leases thereafter. The lease will be for approximately 163,000 square feet. We
will incur some capital expenditure during calendar 2004 in fitting out the new
premises and have budgeted approximately (pound)1 million of such expenditure in
fiscal 2004.


                                       17
<PAGE>

We also have identified some surplus property leases which we have either
sub-let or are attempting to dispose of. As a consequence of this review we have
recorded a liability as at 30 June 2003 of (pound)2.3 million in respect of
future rental costs on properties which we will probably be unable to sub-let
and certain other costs relating to termination of contracts. Additionally, we
have contingent liabilities in respect of premises leased to us and currently
assigned or sub-let to third parties. Should the current tenants default on
payment of rents, or terminate their leases, then we may be liable to make
payments to the landlords. The maximum amount of this contingent liability (over
and above what is provided for) is approximately (pound)3 million.

Apart from office accommodation and equipment, we own laboratory, design,
development and test equipment that is necessary in order to conduct our
research and development activities and provide our customers with products and
services. During 2003 we spent approximately (pound)5.3 million on such capital
items. The nature of the equipment is such that it has a relatively short
estimated useful life (typically three to five years) and we expect to incur
capital expenditure in the future so that our facilities remain up-to-date.

We have received grants from the government of the State of Israel towards the
cost of certain capital expenditure. If the conditions of the grants are not
complied with, we may be required to refund the grants, in whole or in part,
with interest from the date of receipt. The major conditions relating to a grant
concern the maintenance of adequate non-distributable reserves and retention of
the associated assets for a set period of time. The cumulative amount received
and receivable to 30 June 2003 amounted to approximately (pound)6.3 million. It
is not anticipated that any repayment will be required. The plant and equipment
of NDS Technologies Israel Limited, with a net book value of approximately
(pound)6.4 million as at 30 June 2003, is the subject of a floating charge to
secure compliance with the terms of the grants.



              ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion should be read in conjunction with our consolidated
financial statements, including the related notes, that appear elsewhere in this
Annual Report on Form 20-F. Our consolidated financial statements have been
prepared in accordance with UK GAAP, which differs in some respects from US
GAAP. Note 31 to our consolidated financial statements explains the principal
differences and provides reconciliations of profits and shareholders' equity
determined under UK GAAP to those that would be reported under US GAAP.

The following discussion contains forward-looking statements relating to future
events and the future financial performance of NDS, each of which involves risks
and uncertainties. Future events and actual results could differ materially from
those described in the forward-looking statements.

Our business is described in Item 4: "Information on the Company". We earn
revenues from customers in the UK, Europe and the Middle East, the US, Latin
America and the Asia-Pacific region. Our operations are located principally in
the UK, Israel, India and the US. We also have sales and customer support
facilities in other countries where our customers and potential customers are
located. We have research and development centres in the UK, Israel, India,
Denmark and China.

We consider that we operate as a single segment and our business is managed as
such. There are no separate divisions or profit centres. To assist in assessing
the financial performance of our business, we have identified a number of
revenue streams and cost categories. Elements within each line item are measured
according to our accounting policies which are set out in Note 1 to our
consolidated financial statements.


Revenues

We have identified four principal revenue streams of our business: conditional
access revenues; integration, development and support fees; licence fees and
royalties; and revenues from new technologies. These revenues are derived as
follows:

Conditional access revenues

Conditional access revenues from a particular platform operator are generally
related to the number of subscribers to that platform. Contracts with customers
typically provide for the long-term supply of smart cards and the provision of
conditional access services to preserve the security of the platform. The volume
of smart cards supplied depends on demand by consumers for set-top boxes, which
enable the subscriber to receive a broadcaster's programmes and services. The
nature and extent of the security services vary by customer and are reflected in
the fees paid, which are typically determined by the number of smart cards in
use and authorised by the platform operator. Thus, a significant proportion of
the growth in conditional access revenues is driven by the growth in the
underlying subscriber bases of our broadcaster customers.


                                       18
<PAGE>

Conditional access revenues consist of sales of smart cards and the receipt of
subscriber fees. Smart cards are sold to the broadcaster at an agreed unit price
for distribution to, and use by, their subscribers. In some circumstances, we
receive fees from broadcasters for the maintenance of the security of
conditional access systems for a specified duration which is typically between
18 and 40 months. Fees are received over the duration of the agreed service
period and are related to the number of subscribers to the platform. The extent
of services provided to maintain the security of the conditional access systems
varies between customers and, on occasion, may include the supply of smart cards
for no extra charge to the broadcasters at a future date in order to replace a
population of smart cards to maintain their security. In other cases, a
broadcaster may purchase separately new cards for all its customers at an agreed
price which may be discounted to reflect the size of an order and the fact that
the development of the replacement cards has been purchased separately.

Integration, development and support revenues

Integration, development and support consists of activities such as software
development and adaptation; design, implementation and project management of
broadcasting systems; and ongoing support and maintenance of software and
broadcast systems. Our ability to earn integration, development and support fees
is dependent on our ability to obtain new customers and to dedicate sufficient
employee resources to accept a new contract. Such revenues are determined by
contractual negotiation and depend on the amount of time required to manage the
integration, customise or develop the software and also on the level of support
and assistance required by the customer.

Contracts for development, integration and installation work are undertaken for
customers on the basis of time and materials and according to fixed price terms,
or a combination of the two. The duration of such contracts has varied from a
few weeks to approximately two years. Contracts for the initial supply of a
system are typically followed by separate contracts for system enhancements and
additional features. Support and maintenance contracts typically involve
negotiation of a fixed periodic fee over the term of the contract.

Licence fees and royalties

We derive licence fees and royalties from licensing technology to broadcasters
for use in their head-end and to set-top box manufacturers. Licence revenues are
dependent upon our ability to obtain new customers for proprietary technology
and upon the ongoing needs of customers to expand their services or upgrade
their systems to more sophisticated technology. Royalty income is typically
receivable on the basis of the number of units manufactured or deployed by a
licensee. Royalties are generally a function of the number of set-top boxes
manufactured, which in turn is dependent upon the ability of the broadcaster or
service provider to generate new subscribers.

New technologies

We have developed, and are marketing, new technologies which offer the platform
operator or content provider the opportunity to increase the revenue per
subscriber through enhancing the viewing experience and delivering more than
just video. Examples include games and gaming, interactive applications,
Synamedia, and the use of our technologies to manage and control the secure
distribution of digital content via broadband networks. Revenues under this
category are in the form of development fees, licence fees, royalties per
subscriber or user and revenue-share arrangements. These are typically earned on
the successful deployment of technology to a customer or on the manufacture of
the set-top box or device containing the technology. In some instances, an
ongoing fee is payable for support and maintenance which is dependent upon the
number of subscribers having access to, or making use of, the enhanced
functionality.

This revenue stream also includes revenues derived from Visionik, which we
acquired on 31 May 2002. Visionik develops and sells games for use on
interactive television and these have been sold in the UK, Europe and Latin
America.

Revenue from new technologies includes revenues derived from Orbis. Orbis's main
product is its OpenBet software, which enables bookmakers to offer their
services over the internet and via interactive digital television. As well as
controlling the user interface, it also manages the back-office functions and
has multi-currency and multi-lingual capabilities. OpenBet is used by many of
the UK's leading bookmakers and some companies in the Asia-Pacific region.

During the year we launched Fancy a Flutter, a dedicated interactive games and
betting channel on the BSkyB platform in the UK, featuring bingo-style and other
numbers games. Fancy a Flutter operates through a newly formed subsidiary which
is 80% owned by NDS, with the remaining 20% owned by Rank plc. The channel
offers a mixture of pay-to-play and play-for-fun interactive games delivered
securely using our VideoGuard and Value@TV technologies, games developed by our
Visionik business and betting control systems developed by our Orbis business.
Rank supports Fancy a Flutter with its gaming licence, use of the "Rank" and
"Mecca" brands and marketing and customer service expertise.

The new technologies' revenue stream depends upon us developing and selling
applications for use by platform operators and content providers, and the
take-up by subscribers of new services, applications and functions.


                                       19
<PAGE>

Expenses

Expenses consist of cost of goods sold, sales and marketing expenses, research
and development costs and general and administration expenses. The largest
element of our total operating expenses is personnel costs.

Cost of goods sold

Cost of goods sold primarily consists of the physical and processing costs of
smart cards, personnel costs incurred in the provision of services and royalties
paid to owners of certain intellectual property rights which we have
incorporated within our technologies.

The cost of smart cards includes the costs of the integrated circuits
manufactured by third party suppliers, the micro-module which houses the
computer chips and the plastic body of the smart cards. We do not manufacture
smart cards, but our engineers design their embedded computer chips, arrange for
their manufacture and assembly by third party suppliers and then program the
smart cards with proprietary software. Component costs are dependent upon the
costs of raw materials, including the cost of computer chips, plastic and
assembly, and the volume of smart cards purchased and processed in any period.

Cost of goods sold also includes an appropriate provision towards the cost of
replacing smart cards where we have agreed to assume this liability and the
obligation is reflected in the fees charged to the customer. The amount provided
to replace a card population in any period is matched with revenues earned over
the life of the card to be replaced.

Personnel costs included in cost of goods sold are largely determined by the
time spent by relevant employees in fulfilling customer contracts. Costs include
an allocation of direct overhead.

Royalty costs are payable under licensing agreements with third parties for the
use of intellectual property rights incorporated in our technologies. Such
royalties are typically a function of relevant revenues. Where we have purchased
rights to use technologies developed by third parties (other than as part of a
business acquisition), this cost category includes the amortisation of the
purchase price.

Sales and marketing

Sales and marketing costs mainly consist of personnel and related costs of our
sales and marketing staff in the UK, Europe and the Middle East, the US and the
Asia-Pacific region. Marketing costs also include advertising, exhibitions,
marketing communications and demonstration activities.

Research and development

Research and development costs consist mainly of salary and related costs
attributable to employees in Israel, the UK, Denmark, China and India who are
developing our technology. Costs include consumables and the depreciation of
equipment used in development and test activities and the benefit of grants
which we have received from the government of the State of Israel. All research
and development costs are written off in the period in which they are incurred.

General and administration

General and administration costs consist primarily of personnel, facilities,
infrastructure, legal and administration costs. A separate element of general
and administration costs is foreign exchange gains and losses. As an
international business, NDS transacts with customers and suppliers in a number
of currencies and is therefore exposed to gains and losses arising on the
translation of monetary assets and liabilities denominated in currencies other
than pounds sterling.

Amortisation of intangible fixed assets

Our assets include goodwill and other intangible assets arising on the
acquisition of the businesses which together comprise NDS as it is now
structured. This includes goodwill and other intangible assets recognised as
part of the acquisitions of Orbis and Visionik.


Critical accounting policies

Our discussion and analysis of our financial condition and financial performance
are based upon our consolidated financial statements, which have been prepared
in accordance with UK GAAP. Our reported financial results are dependent,
amongst other things, on our choice of accounting policies, the application of
those policies, and on the use of estimates. The preparation of financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements, and the amounts
of reported revenues and expenses for the fiscal period. Judgements involved in
making estimates can significantly affect our reported profits, assets and
liabilities.


                                       20
<PAGE>

Our accounting policies are set out in detail in Note 1 to our consolidated
financial statements. The policies and estimation techniques which we consider
are most critical relate to the valuation of assets (principally intangible
fixed assets, accounts receivable and inventory) and the recognition or
de-recognition of liabilities (principally revenue recognition and provisions).
The following accounting policies require significant management judgements and
estimates.

Intangible fixed assets

We have significant intangible assets, primarily intellectual property rights
and goodwill arising in connection with business combinations. We account for
business combinations under the purchase method of accounting. The total cost of
acquisitions is allocated to the underlying net assets acquired, based on their
respective estimated fair market values. Goodwill is recorded as the difference
between the cost of acquiring an entity and the estimated fair market values
assigned to its tangible and identifiable intangible net assets at the date of
acquisition. Determining the fair market value of assets acquired and
liabilities assumed requires management's judgement and often involves the use
of significant estimates and assumptions, including assumptions with respect to
future cash inflows and outflows, discount rates, asset lives, and market
multiples. Intangible assets are amortised over their expected useful lives and
the remaining useful life is re-assessed from time to time. If we identify a
permanent diminution in value of intangible fixed assets we record an impairment
provision. The judgements made in determining the estimated fair market value
assigned to each class of intangible assets acquired as well as their useful
lives and any potential impairment can significantly impact on our reported
operating profits.

Liabilities to customers

The technologies and services we supply to our customers are technically
complicated and are frequently covered by long-term contracts. In assessing the
amounts of revenue recognised in any period, we must make estimates about such
matters as the future costs we will incur to complete our contractual
obligations and, if these costs exceed estimated future revenues, make a
provision for the estimated loss. Where we have obligations to supply smart
cards in the future as part of our support and maintenance obligations, we are
required to estimate future costs and revenues associated with this activity and
accrue a provision for a proportion of the cost of our card changeover
obligations. These estimates include an assessment of the likely timing of the
card changeover, the number of smart cards to be supplied and the costs of those
smart cards. The judgements made in determining the value of our liabilities to
customers can significantly impact our reported operating profits.

Stocks

Stocks are valued at the lower of costs and net realisable value. The judgements
made in estimating net realisable value include making estimates about the
volume of cards which we will supply to our customers and an assessment of any
imbalance between future estimated card supply and our stock and our purchase
commitments which we make to the manufacturers of our smart cards. These
judgements can significantly impact our reported operating profits.

Recoverability of trade debtors

In the last two fiscal years a number of our customers have experienced some
financial difficulties which have, and which are likely to continue to have, an
impact on our assessment of the recoverability of trade debtors and any
associated bad debt provisions. These judgements can significantly impact our
reported operating profits.

Litigation and intellectual property claims

Certain of our customers and others have from time to time made allegations and
claims in law against us. The existence of these matters require us to make
estimates of the likely outcome of the actions or potential claims and to make a
provision for any liabilities where it is probable that we will make a
settlement or be subject to an adverse court ruling. The judgements made in
assessing the amount, if any, of provisions required can significantly impact
our reported operating profits.

Pension costs

Pension costs and obligations are dependent on assumptions used in calculating
such amounts. These assumptions include discount rates, benefits earned,
interest cost, expected return on plan assets, mortality rates and other
factors. In respect of our defined benefit pension obligations, we recognise
pension costs at the required levels of contributions made or actuarially
determined. While we believe that the assumptions used are appropriate,
differences in actual experience or changes in assumptions can significantly
impact our reported operating profits.


New accounting pronouncements

UK law has mandated the use of International Financial Reporting Standards
("IFRS") for listed companies reporting within the European Union for financial
periods ending on or after 31 December 2005. NDS Group plc will be subject to
this requirement, commencing with the financial statements for the year ending
30 June 2006. IFRS differ in many respects from UK GAAP and there is a
prescribed methodology for first-time adoption. Not all the standards that will
be applicable on first-time adoption have yet been published in final form. We
have made an initial study of the key differences between UK GAAP and IFRS and
continue to monitor the evolving standards as they are published. We are not
able to ascertain at this time what the effect adoption of IFRS will have on our
reported financial results or financial position.


                                       21
<PAGE>

Aside from matters relating to IFRS, there have been no new UK accounting
pronouncements which will have a material impact on our reported profits, net
assets and cash flows. Information about new accounting pronouncements under US
GAAP is provided in Note 31 to our consolidated financial statements.

Results of operations

The results of our operations for the three years in the period ended 30 June
2003 are presented and analysed below according to the revenue streams and cost
categories identified above. The measurement of revenues and costs is in
accordance with our accounting policies under UK GAAP as described in detail in
Note 1 to our consolidated financial statements.
<TABLE>
<CAPTION>

                                                           Year ended            Year ended            Year ended
                                                              30 June               30 June               30 June
                                                                 2003                  2002                  2001
                                                          (pound)'000            (pound)'000           (pound)'000
<S>                                                             <C>                <C>                    <C>
Revenues
Conditional access                                            144,789                125,068               122,862
Integration, development & support                             33,234                 43,737                38,282
Licence fees & royalties                                       22,254                 30,615                31,870
New technologies                                               32,451                 33,338                15,069
Other revenue                                                   4,509                  8,030                 7,545
                                                      ------------------     ------------------    ------------------
Total revenues                                                237,237                240,788               215,628
                                                      ------------------     ------------------    ------------------
Cost of sales
Smart card & changeover provisions                            (63,309)               (49,160)              (41,983)
Operations & support                                          (21,124)               (23,300)              (23,681)
Royalties                                                      (4,638)                (4,397)               (5,258)
Other                                                          (5,396)                (6,250)               (5,754)
                                                      ------------------     ------------------    ------------------
Total cost of sales                                           (94,467)               (83,107)              (76,676)
                                                      ------------------     ------------------    ------------------
Gross profit                                                  142,770                157,681               138,952
                                                      ------------------     ------------------    ------------------
Gross profit %                                                 60.2%                  65.5%                 64.4%
Operating expenses, excluding amortisation of
intangible fixed assets and exceptional items
Sales & marketing expenses                                    (14,208)               (15,876)              (14,417)
Research & development                                        (61,294)               (68,738)              (65,164)
General & administration                                      (17,719)               (17,793)              (17,289)
Foreign exchange gains (losses)                                 1,130                 (1,403)                1,688
                                                      ------------------     ------------------    ------------------
Total                                                         (92,091)              (103,810)              (95,182)
                                                      ------------------     ------------------    ------------------
Operating income, before amortisation of intangible
fixed assets and exceptional items                             50,679                 53,871                43,770
Operating income %                                             21.4%                  22.4%                 20.3%

Amortisation of intangibles                                    (9,602)                (7,350)               (4,590)
Exceptional costs                                              (4,274)                (3,826)                    -
                                                      ------------------     ------------------    ------------------
Operating profit                                               36,803                 42,695                39,180

Share of associate's operating profit (loss)                     (280)                    21                     5
Net interest income                                             2,887                  2,513                 2,098
                                                      ------------------     ------------------    ------------------
Profit on ordinary activities before tax                       39,410                 45,229                41,283

Taxation                                                      (13,472)               (14,551)              (12,154)
                                                      ------------------     ------------------    ------------------
                                                               25,938                 30,678                29,129

Equity minority interests                                         102                      -                     -

                                                      ------------------     ------------------    ------------------
Net profit                                                     26,040                 30,678                29,129
                                                      ------------------     ------------------    ------------------
</TABLE>



                                       22
<PAGE>

Commentary on year ended 30 June 2003 compared to year ended 30 June 2002

Revenues

Revenues decreased by 1% to (pound)237.2 million in 2003 from (pound)240.8
million in 2002.

Conditional access revenues are driven by the number of subscribers to a
broadcaster's services and the demand for smart cards. This latter element is
driven by growth in the number of subscribers to a broadcaster's services and by
the occurrence or otherwise of smart card changeovers. Prices charged for card
changeovers may be lower than for "regular" sales as the customer may benefit
from volume discounts. Conditional access revenues increased by 16% to
(pound)144.8 million in 2003 from (pound)125.1 million in 2002. The bulk of the
increase is attributable to DIRECTV. During the period commencing in February
2002 and finishing in May 2003, we supplied 20 million smart cards to DIRECTV as
part of a planned card changeover programme. 14.1 million units were shipped in
2003 versus 5.9 million units in 2002. Demand for smart cards from customers in
Europe and Latin America was at similar levels to 2002, but shipments to
customers in Latin America were much lower in 2003. We recognised income on a
total of 19.3 million units in 2003, compared to 14.7 million in 2002. A further
6.7 million units were supplied to BSkyB as part of their planned card
changeover. BSkyB paid for these replacement cards as part of its monthly
per-subscriber fee and therefore these units had no direct impact on reported
revenues in the period. As at 30 June 2003, 34.4 million smart cards supplied by
NDS were in use by our customers' subscribers, compared to 29.6 million at 30
June 2002. This represents a net increase of 4.8 million subscribers or 16% over
the year.

Integration, development and support revenues declined by 24% to (pound)33.2
million in 2003 from (pound)43.7 million in 2002. The occurrence or otherwise of
integration and development revenues depends on the number and nature of new
systems and enhancements thereto delivered to customers and for which our
revenue recognition criteria are met. Therefore this revenue stream may
fluctuate from period to period depending on the number and size of development
and integration contracts which meet our revenue recognition criteria during the
year. Support revenues primarily depend on the number and value of long-term
contracts entered into with our customers. During 2003, we delivered new systems
to customers in Taiwan and China, but these projects were smaller than those
completed in 2002, which included a major system for SkyLife in Korea. Income
was also earned in the year from enhancements to major systems installed in
previous periods, as well as from long-term ongoing support and maintenance
contracts. We continue to earn revenues from integrating our technology with
many different manufacturers of set-top boxes and components for use in consumer
devices. During 2003 we earned revenues from several manufacturers who have
brought out new set-top box models, particularly for use in the Asia-Pacific
market. The number of support and maintenance contracts increased as more
broadcasters purchased these services. However gross revenues have declined
during 2003 because several customers now purchase support for hardware directly
from the supplier, rather than via NDS.

Licence fees and royalty income declined by 27% to (pound)22.3 million in 2003
from (pound)30.6 million in 2002. Licence fee income is driven by delivered
systems and in some cases by a platform reaching certain subscriber thresholds.
Licence fee income declined as a consequence of the low number of larger new
systems supplied in 2003 compared to 2002. Royalty income is a function of the
number of set-top boxes manufactured or activated. The demand for set-top boxes
is itself driven by the underlying growth in customers' subscriber bases. We
also benefit when subscribers replace or upgrade their set-top boxes. During the
first half of 2003, we experienced a marked decline in set-top box royalties,
which we attribute to manufacturers and distributors drawing down their
inventories (on which we had been paid royalties in previous periods). This
decline reversed in the second half of 2003. An increasing proportion of royalty
income is derived from NDS Core and our EPGs.

Revenues from new technologies declined by 2% to (pound)32.5 million in 2003
compared to (pound)33.3 million in 2002. Several new licence agreements were
signed during the year for our OpenBet software. These agreements are expected
to generate additional income in future years as many include long-term
commitments to purchase further product enhancements. During 2003, we delivered
our Synamedia system for use over broadband networks to BB Cable in Japan. We
recognised revenue from new technologies derived from interactive applications
supplied to platforms such as DIRECTV Latin America and Sky Latin America and
channels such as Bloomberg, QVC, MTV, Music Choice, Nickelodeon and Discovery.
We continue to earn fees for the authentication and authorisation of interactive
services on the BSkyB and other platforms, which are driven by underlying
subscriber numbers. Revenues in this caption in 2002 included initial amounts
received in respect of our XTV PVR technology which is being used by BSkyB and
which is being marketed under the brand "Sky+", and additional but lower
revenues were recognised in 2003.

Other revenues include income earned from managing the personalisation,
fulfilment and distribution of smart cards for certain customers and hardware
supplied to customers as part of an overall system. Revenue from smart card
fulfilment services was higher because of the high volumes of smart cards
supplied to BSkyB as part of its card changeover. Hardware supplied to customers
was lower in 2003 because we supplied fewer large systems.

Overall, revenues were also adversely affected in 2003 compared to 2002 because
of the weaker US dollar compared to sterling. Approximately 61% of our revenues
were denominated in US dollars.


                                       23
<PAGE>

Cost of sales and gross margin

Cost of goods sold increased to (pound)94.5 million in 2003 from (pound)83.1
million in 2002. Gross profit as a percentage of revenues declined to 60.2% in
2003 from 65.5% in 2002. The biggest cost increase was in smart card material
costs, due to the high volumes of cards supplied during the year. Because of
lower prices charged to DIRECTV, reflecting a volume discount because of the
size of the order, gross margins from card sales were lower. Lower costs of
operations and support, which are largely a function of staff costs, reflect the
lower level of system deliveries in 2003. The higher charge for royalties (which
includes the amortisation of the cost of purchasing intellectual property rights
from third parties other than by way of a business acquisition as well as
royalties payable to owners of patents licensed to NDS) is primarily due to
revenue mix, as our conditional access revenues attract higher royalty payments.
Other cost of sales is lower because of fewer purchases of hardware for supply
to customers as part of a system delivery. Other cost of sales includes a bad
debt expense of (pound)1.6 million in 2003 and (pound)1.8 million in 2002. The
charge in 2003 relates to two customers who defaulted on agreed payment plans
and from whom we are attempting to recover monies due; the charge in 2002
related to three customers who entered bankruptcy.

Operating expenses

Sales and marketing expenses declined by 11% to (pound)14.2 million in 2003 from
(pound)15.9 million in 2002. As a percentage of revenues, sales and marketing
costs have decreased from 6.6% to 6.0%. The decline is as a result of a more
targeted approach to marketing, concentrating on key trade shows and audiences,
combined with some redeployment of employees within our business. The weaker US
dollar reduced sterling-reported costs of our US sales and marketing activities,
where we increased headcount and activity.

Research and development expenditure decreased by 11% to (pound)61.3 million in
2003 from (pound)68.7 million in 2002. Average full-time headcount in research
and development activities actually increased from 841 to 879. Most of the
growth was in relatively low-cost regions, particularly in India. The main
reason for the decline in research and development expenditure in 2003 was the
weaker US dollar, which reduced the sterling-reported costs of our Israeli
operations. In US dollar terms, the costs of our Israeli operations declined by
about 10%, mainly through reduced use of contractors and lower discretionary
expenditure, including travel, which is a consequence of the lower level of
project deliveries in the year. As a percentage of revenue, research and
development has decreased from 28.5% to 25.8% of total revenues.

Conditional access technology remains the core of our business and we continue
to invest heavily to ensure that our products remain robust and current. Piracy
is a continuous threat to our customers' revenues and it remains our key
objective to exploit the best of new developments in areas such as algorithm
development, secure chip design and electronic counter measures to protect
against piracy. We have assigned a large group of employees to improve the
ease-of-use of our systems, and to adapt them for deployment in the US cable
market. We have continued to invest heavily in the development of XTV and our
NDS Core set-top box operating system, as well as other tools required by
broadcasters and content providers to exploit the interactive capabilities of
digital television. We have also invested in joint projects with set-top box
manufacturers to accelerate the commercial availability of XTV-enabled decoders
and decoders specifically designed for use in the cable market. We are working
with a number of companies to develop products incorporating Synamedia
technologies for use in broadband applications. We are also examining ways in
which our conditional access expertise might be applied to digital rights
management and digital storage media.

General and administration costs (which exclude charges for the amortisation of
intangible fixed assets acquired as part of a business combination, foreign
exchange gains and losses, and exceptional costs) decreased marginally to
(pound)17.7 million in 2003 from (pound)17.8 million in 2002.

During 2003 we recorded foreign exchange gains of (pound)1.1 million compared to
losses of (pound)1.4 million in 2002. Foreign exchange gains and losses in the
profit and loss account arise from revaluing our monetary assets and liabilities
into the functional currency of each of our subsidiaries and from movements in
exchange rates between issuance or receipt of invoices and subsequent payment.
The movement in the year is due to the volatility in US dollar-sterling and
euro-sterling exchange rates through the year. We estimate that foreign exchange
gains reported in the profit and loss account, combined with the reduction in
reported revenues and costs referred to above, have had a broadly neutral effect
on reported operating profit and a negative affect on reported net assets (the
latter showing in the accounts as a movement in reserves). Historically, we have
not entered into free-standing derivative contracts to hedge foreign exchange
exposure from trading transactions because of the uncertainty in timing of
actual receipts and payments. We expect to review this policy from time to time
as circumstances change.

Operating income before amortisation of intangible fixed assets and exceptional
costs

Management regards operating income before amortisation of intangible fixed
assets and exceptional costs as a key measurement of performance. The factors
outlined above have resulted in a decrease in this measure of profitability of
6% to (pound)50.7 million in 2003 from (pound)53.9 million in 2002. As a
percentage of revenues, this measure has decreased from 22.4% in 2002 to 21.4%
in 2003.


                                       24
<PAGE>

Amortisation of intangible fixed assets

Charges for the amortisation of intangible fixed assets acquired as part of a
business combination rose from (pound)7.4 million in 2002 to (pound)9.6 million
in 2003. This is due to the acquisition of certain intellectual property rights
as part of the Visionik acquisition in May 2002 and the consequence of
increasing (in March 2002) the amount of goodwill arising on the Orbis
acquisition. In June 2003, we refined our estimate of the goodwill arising from
the Visionik acquisition. This reduced the estimated cost of goodwill by
approximately (pound)3.2 million, with a corresponding reduction in liabilities
to the vendors. Further adjustments to goodwill may be required if the revenues
and profitability of the underlying business of Visionik for the year ending 31
May 2004 exceed certain thresholds. Further details are given in Note 9 to our
consolidated financial statements.

Exceptional costs

During the year, we have incurred exceptional costs of (pound)4.3 million. Of
this, (pound)3.8 million relates to the litigation which is discussed more fully
in Note 26c to our consolidated financial statements. A further charge of
(pound)0.5 million has been recorded to write-off our investment in a venture
capital fund specialising in technologies complementary to ours. Following
discussions with the fund manager we concluded that there was little prospect of
realising any value from this investment.

Operating profit

The factors outlined above have resulted in a decrease in operating profit to
(pound)36.8 million in 2003 from (pound)42.7 million in 2002.

Non-operating items

In 2003 we earned net interest income of (pound)2.9 million on cash balances
compared to (pound)2.5 million in 2002. Our cash balances have increased in the
year but this has been offset by reductions in interest rates.

During 2003 we terminated our relationship with ADSR in which we had a 40%
equity interest. As part of the termination we received a rebate of certain fees
paid to ADSR, we purchased certain of its fixed assets and obtained full
repayment of loan financing provided to ADSR. We then sold our shares for a
nominal sum. These transactions resulted in a net charge of (pound)0.3 million.

Taxation

The effective tax rate increased to 34.2% of profit before tax in 2003 from
32.2% of profit before tax in 2002. The increase in the effective tax rate is
due to the increase in the proportion of non-deductible charges for the
amortisation of goodwill and the generation of certain losses for which no
effective relief is available as a result of the write-off of fixed asset
investments and the disposal of our investment in ADSR.

Net profit

As a result of the factors outlined above, net profit attributable to the
ordinary shareholders of NDS Group plc declined 15% from (pound)30.7 million to
(pound)26.0 million.


Commentary on year ended 30 June 2002 compared to year ended 30 June 2001

Revenues

Revenues increased by 12% to (pound)240.8 million in 2002 from (pound)215.6
million in 2001.

Conditional access revenues were driven by the number of subscribers to a
broadcaster's services and the demand for smart cards. Conditional access
revenues increased by 2% to (pound)125.1 million in 2002 from (pound)122.9
million in 2001. Weaker demand for smart cards from customers in Europe and
Latin America was offset by initial sales to SkyLife in Korea and the start of a
planned card changeover for DIRECTV. In 2001, we undertook planned card
changeovers for customers in Latin America and these were completed in 2002. In
2001, we also benefited from the completion of the transition of BSkyB's analog
subscribers to its digital system, which involved the purchase by BSkyB of a new
smart card for each subscriber that migrated to the digital platform. We shipped
a total of 14.7 million smart cards in 2002, compared to a total of 15.5 million
in 2001. As at 30 June 2002, our customers had approximately 29.6 million
subscribers compared to 24.5 million at 30 June 2001, an increase of 5.1 million
or 21% in the year. The change in total conditional access revenues, therefore,
reflected a combination of a decline in smart card sales, which was compounded
by lower prices charged to DIRECTV reflecting the size of the order, and rising
subscriber fees, which are typically a function of a broadcaster's customer
base.


                                       25
<PAGE>

Integration, development and support revenues increased by 14% to (pound)43.8
million in 2002 from (pound)38.3 million in 2001. Income was earned in the year
from developments and enhancements to major systems installed in previous
periods, as well as from long-term ongoing support and maintenance contracts. We
also earned revenues from integrating our technology with that of many different
manufacturers of set-top boxes and components for use in consumer devices.
Revenues were recognised on new systems completed in the year for customers such
as SkyLife in Korea and CCTV in China. We also delivered enhancements to
customers such as DIRECTV, BSkyB, and various customers in the Asia-Pacific
region. These factors resulted in an increase in revenues from integration,
development and support in 2002 compared to 2001.

Licence fees and royalty income declined by 4% from (pound)31.9 million in 2001
to (pound)30.6 million in 2002. The negative effect of the lower subscriber
growth experienced in 2002 compared to 2001 was to some extent offset by
increased royalty income received because consumers replaced or upgraded their
set-top boxes. The overall small decline in licence fees and royalty income
included the consequence of recognition in 2001 of a final payment from
Microsoft for a licence to use and develop our set-top box middleware.

Revenues from new technologies more than doubled from (pound)15.1 million in
2001 to (pound)33.3 million in 2002. 2001 included only seven months
contribution from Orbis. Several new licence agreements were signed during the
year for our OpenBet software, including agreements with Ladbrokes, Rank, and
Wagerworks. Revenues in this caption also included initial amounts received in
respect of the development of our XTV PVR technology for BSkyB. We recognised
revenue from new technologies derived from interactive applications supplied to
platforms such as DIRECTV Latin America, and Sky Latin America and channels such
as MTV, Music Choice, Nickelodeon, Discovery and QVC. We continued to earn fees
for the authentication and authorisation of interactive services on the BSkyB
platform, which were driven by underlying subscriber numbers.

Other revenues included income earned from managing the personalisation,
fulfilment and distribution of smart cards for certain customers and hardware
supplied to customers as part of an overall system.

Cost of sales and gross margin

Cost of goods sold increased to (pound)83.1 million in 2002 from (pound)76.7
million in 2001, an increase of 8%. Overall this was a result of higher
revenues; gross profit as a percentage of revenues improved from 64.4% in 2001
to 65.5% in 2002. Gross margins have improved as a result of economies of scale
and through higher revenues from new technologies, some of which were generated
for no incremental cost. We also benefited from the full year effect of a
reduction during 2001 in the royalty payable to owners of patents licensed to
NDS. Margins from sales of smart cards were lower, mainly as a result of lower
prices charged to DIRECTV reflecting the size of the order. Costs of operations
and support, which are largely a function of staff costs, showed a small
reduction in 2002 as a result of redeployment of staff and cost control.

Operating expenses

Sales and marketing expenses increased by 10% to (pound)15.9 million in 2002
from (pound)14.4 million in 2001. As a percentage of revenues, sales and
marketing costs decreased marginally from 6.7% to 6.6%. The full year effect of
headcount increases, which we put in place during 2001 to deal with the
increasing depth and breadth of our product offerings, were partially offset by
our decision during 2002 to scale back our presence at trade exhibitions and
reduce other marketing activities.

Research and development expenditure increased by 5% to (pound)68.7 million in
2002 from (pound)65.2 million in 2001. Part of the increase was due to the
full-year effect of the Orbis acquisition. We made targeted increases of staff
in some areas, especially related to set-top box technologies and expanded
headcount in lower-cost regions, such as China and India. As a percentage of
revenue, research and development decreased from 30.2% to 28.5% of total
revenues.

General and administration costs (which exclude charges for the amortisation of
intangible fixed assets, foreign exchange gains and losses, and exceptional
costs) increased by 3% to (pound)17.8 million in 2002 from (pound)17.3 million
in 2001. As a percentage of revenue, these costs fell slightly from 8.0% in 2001
to 7.4% in 2002. Underlying costs increased as a result of the full year effect
of our move to a new headquarters facility in the UK in 2001 and from moving,
during 2002, from two sites in the Southampton, UK area to a single new facility
in the same area.

During 2002 we incurred foreign exchange losses of (pound)1.4 million, compared
to a gain in 2001 of (pound)1.7 million. Although the average exchange rates for
2002 were very similar to those for 2001, the US dollar devalued against
sterling during the year, and especially in the fourth quarter. Therefore,
although currency movements did not have a significant effect on reported
revenues or operating costs, they had a material effect on the reported value of
our net assets as at 30 June 2002.

Operating income before amortisation of intangible fixed assets and exceptional
costs

The factors outlined above resulted in an increase in operating income before
amortisation of intangible fixed assets and exceptional costs of 23% to
(pound)53.9 million in 2002 from (pound)43.8 million in 2001. As a percentage of
revenues, this measure of profitability increased from 20.3% in 2001 to 22.4% in
2002.


                                       26
<PAGE>

Amortisation of intangible fixed assets

Charges for the amortisation of intangible fixed assets acquired as part of a
business combination rose from (pound)4.6 million in 2001 to (pound)7.4 million
in 2002. This was due to the effects of the acquisitions of Orbis in December
2001 and of Visionik in May 2002. The Orbis acquisition involved payments to the
vendors which were dependent on the revenues and profitability of the business
for the two years ended 31 March 2002. The final determined amounts were higher
than the estimates used at the time the 30 June 2001 accounts were prepared and
goodwill was revised upwards during 2002 by some (pound)8 million. Hence the
amortisation charge in the year covered 12 months of 2002 as against seven
months of 2001, as well as reflecting an increase in the gross cost to be
amortised over the remaining estimated useful life of the goodwill. On 31 May
2002 we completed a series of transactions which resulted in the acquisition of
Visionik. 2002 included one month's charge for the amortisation of our initial
estimate of the fair value of the intangible assets acquired as part of the
Visionik business combination. Further details are given in Note 9 to our
consolidated financial statements.

Exceptional costs

During the year, we incurred exceptional costs of some (pound)3.8 million. Of
this, (pound)1.6 million related to the litigation initiated by Canal+
Technologies S.A, which is discussed more fully in Note 26c to our consolidated
financial statements. The remaining exceptional charge of (pound)2.2 million was
recorded following a review of our operating locations worldwide and our needs
for the future. As a result of the review, three office buildings were vacated.
The provision included an estimate of future lease payments on properties which
we will probably be unable to sub-let and certain other costs relating to
termination of contracts.

Operating profit

The factors outlined above have resulted in an increase in operating profit of
9% to (pound)42.7 million in 2002 from (pound)39.2 million in 2001.

Non-operating items

In 2002 we earned net interest income of (pound)2.5 million on cash balances
compared to (pound)2.1 million in 2001. Our cash balances increased in the year
and the debt instruments issued as part of the Orbis acquisition were repaid,
but this was offset by reductions in interest rates.

During 2002, profits from our 40% share in ADSR amounted to (pound)21,000,
compared to (pound)5,000 in 2001.

Taxation

The effective tax rate increased to 32.0% of profit before tax in 2002 from
29.4% of profit before tax in 2001, due to the increase in non-deductible
charges for the amortisation of goodwill.

Net profit

As a result of the factors outlined above, net profit attributable to the
ordinary shareholders of NDS Group plc increased 5% to (pound)30.7 million from
(pound)29.1 million.


Differences between UK GAAP and US GAAP

The financial information discussed in the preceding section has been prepared
in accordance with UK GAAP, which differs in some respects from US GAAP. An
explanation and reconciliations of the differences in net income between UK GAAP
and US GAAP is given in Note 31 to our consolidated financial statements.


Liquidity and capital resources

Total cash increased by (pound)23.0 million in the year ended 30 June 2003 from
(pound)98.5 million to (pound)121.5 million. Our only debt relates to a residual
amount of (pound)0.4 million payable in respect of the Visionik acquisition and
(pound)0.4 million of loan finance provided by the minority shareholder in Fancy
a Flutter Limited.

Cash inflow from operating activities was (pound)44.8 million or 122% of
operating profit in 2003 compared to (pound)67.9 million or 159% of operating
profit in 2002. Operating profit and non-cash operating costs were (pound)4.2
million lower in 2003 than in 2002 for the reasons explained above.

Changes in working capital absorbed (pound)10.0 million in 2003, but generated
(pound)8.9 million in 2002. In 2002 we increased our smart card stock levels
because of the DIRECTV card order and the planned BSkyB card changeover. The
provision for the costs of the BSkyB card changeover had also increased in
accordance with our UK GAAP accounting policy. Customer deposits and deferred
income increased during 2002 and were very high at that year end as a result of
advance payments received from DIRECTV and other customers. During 2003, we
substantially completed the BSkyB card changeover, completed the DIRECTV card
order and recognised revenue on a number of projects that were in progress at 30
June 2002. As a result, during 2003, inventory balances fell by (pound)29.4

                                       27
<PAGE>

million, provisions decreased by (pound)14.5 million and customer deposits and
deferred income fell by (pound)23.2 million. These three items resulted in a net
working capital requirement of (pound)8.3 million. As a result of timing of
purchases and recognition of liabilities, net payment operating liabilities
other than customer deposits absorbed a further (pound)13.2 million. Trade
debtors (net of valuation reserves) were markedly lower at 30 June 2003 than at
30 June 2002, which had the effect of releasing (pound)11.5 million of working
capital. The lower trade debtors balance was as a result of: the timing of
billings to customers; an increase in valuation reservesto cover credit notes
which we expected to issue shortly after year end; an increase in valuation
reserves to cover amounts invoiced but for which payment was uncertain; and
improved debtor health (being the proportion of our total trade debtors which
are not past due as measured by reference to the agreed payment terms), which
increased over the year from 80% to 86%.

Interest payments in 2003 were (pound)0.5 million lower than in 2002, reflecting
the repayment of our Series A Loan Notes in June 2002. Interest receipts in 2003
were (pound)0.2 million lower than in 2002 reflecting lower interest rates on
cash balances. Capital expenditure was lower in 2003 than 2002, because the
prior year included the cost of fitting out new premises. Tax payments in 2003
were proportionately higher than the tax charge because of the final
transitional arrangements of a scheme in the UK to accelerate tax payments for
larger corporations. During 2003, we paid approximately (pound)4.9 million of
the total (pound)5.3 million expected consideration due in respect of the
Visionik acquisition.

As at 30 June 2003, approximately (pound)26.5 million of our cash was held in US
dollars, with most of the remainder being held in sterling. It has been our
policy to place cash in excess of our immediate requirements on deposit with
banks, typically with a term of between one day and three months. We have not
invested in marketable securities. As at 30 June 2003, (pound)88.1 million was
held on short-term deposit, with the remaining (pound)33.4 million being in
immediately available funds. This latter amount is higher than normal due to a
large receipt immediately prior to the year end.

We hold most of our cash balances in sterling. To the extent receipts in other
currencies exceed our foreseeable requirements for payments in the other
currency, we convert such amounts into sterling on the spot market.
Historically, we have not entered into free-standing derivative instruments to
hedge our currency cash flow exposures arising from trading transactions, but we
review the situation from time to time and may make use of such derivatives in
the future.

As at 30 June 2003, and as of the date hereof, we have an unused facility to
borrow up to (pound)30 million from a subsidiary of News Corporation. No amounts
have been drawn under this facility during 2003 or up until the date hereof.

Cash accumulated is being held with the intention of using it for the future
development of our business. The expected acquisition of the MediaHighway
business for (euro)60 million will be financed out of our accumulated cash
balances. We entered into a forward contract to purchase (euro)60 million based
on the sterling-euro exchange rate in early November 2003 to mitigate against
fluctuations in the exchange rate prior to the expected closing date. There are
currently no plans to pay any dividends to shareholders, although we regularly
review this policy. We expect that we have sufficient working capital resources
for our present requirements.


Research and development, patents and licences, etc.

Expenditure on research and development in the three years ended 30 June 2003 is
shown in Note 3a to our consolidated financial statements; the numbers of staff
involved are disclosed in Note 6b to our consolidated financial statements.
Software engineers and equipment are the biggest components of research and
development expenditure. Most of our research and development activities are
conducted either in our conditional access research and development facilities
in Israel, or in our software development facilities in the UK, Beijing, China,
Bangalore, India and Copenhagen, Denmark. The majority of our research and
development activities are centred on enhancing and expanding the scope and
functionality of our existing technologies.

Where we license our patents and other forms of intellectual property to third
parties we receive revenue. This may be by way of a licence fee or royalty, or
the value of the intellectual property rights may be reflected in the overall
package of fees negotiated for our technologies and services, or some
combination thereof. We believe that we have the necessary licences for the use
of third party software incorporated into our technologies. Revenues and costs
associated with licensed rights are discussed above.


Trend information

A significant portion of our revenues is derived from our sale of smart cards,
fees paid by our customers based upon the number of their subscribers and
royalties paid to us for each set-top box incorporating our technology which is
manufactured or deployed. This portion of our revenues is largely dependent upon
our customers' subscriber numbers, the growth in our customers' subscriber
numbers and the number of smart cards required in any period by our customers. A
majority of the existing large digital satellite broadcasters have already
entered into arrangements relating to conditional access software and services,
and few new large systems are being planned. If we are unsuccessful in obtaining
new digital broadcasting customers, we are unlikely to be able to generate or
sustain substantial revenue growth and our operating results will be seriously
harmed. Similarly, if our digital broadcasting customers' subscriber numbers do
not continue to increase, or if the number of smart cards required in any period
by our customers decreases substantially, we are unlikely to be able to generate
or sustain substantial revenue growth and our operating results will be
seriously harmed.


                                       28
<PAGE>

Part of our approach to maintaining the security of a particular platform is to
replace the population of smart cards from time to time. When this happens it
significantly changes the number of smart cards shipped from period to period,
with the associated effects on revenues, costs and inventory balances. In each
of the last three fiscal years we have undertaken a card changeover which has
had a favourable effect on revenues. No such card changeovers are currently
expected in fiscal 2004.

The largest element of our operating costs are employee costs and property costs
incurred to provide the facilities in which our employees work. The number of
employees has risen to reflect the increase in the number of platform customers
and the increase in the complexity of our technologies. We are currently
recruiting additional employees, especially in our research and development
activities and therefore we expect our employee costs to rise in 2004.

Our contract to provide the conditional access system for DIRECTV in the US
expired in August 2003. In fiscal 2003, DIRECTV was our largest customer,
accounting for approximately 41% of our total revenues. Following the expiry of
this contract, we are only entitled to receive limited payments for the
continued use of our technology pursuant to termination clauses in the contract.
We have re-assigned employees who were working on the DIRECTV contract to other
projects, including research and development activities. We expect our revenues
and profits in 2004 to be lower than in 2003 as a consequence of this event.

We are involved in a number of ongoing litigation matters, which are discussed
more fully under Item 8: "Financial Information - Litigation". We may incur
costs in the future in defending actions initiated against us and in pursuing
matters initiated by us. This may have a materially adverse affect on our
operating results.

On 13 September 2003, we entered into a series of agreements with Thomson
whereby we agreed to acquire the MediaHighway middleware business and licence
certain related patents for a total consideration of (euro)60 million in cash
which we will fund from our cash reserves. The transaction is subject to
regulatory approvals and certain other conditions and is expected to close by
the end of calendar 2003 or early in calendar 2004. We currently expect the
acquired business to have a negative impact on operating profits in fiscal 2004
and fiscal 2005.


Off-balance sheet arrangements

Other than leases in respect of properties (which are quantified in Note 26b to
our consolidated financial statements) as at 30 June 2003 and as at the date
hereof, we do not have any off-balance sheet arrangements.


Tabular disclosure of contractual obligations

Not applicable.



               ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and senior management

As of the date hereof, our directors are as follows:
<TABLE>
<CAPTION>

Name                        Date of birth         Position                                 Position held since

<S>                          <C>                  <C>                                      <C>
Dr. Abe Peled               21 September 1945     Executive Director, President and        July 1995
                                                  Chief Executive Officer
David DeVoe                 5 January 1947        Non-Executive Director                   October 1996
Lachlan Murdoch             8 September 1971      Non-Executive Director                   February 2002
Arthur Siskind              11 October 1938       Non-Executive Director                   October 1996
Peter Powers                9 April 1944          Non-Executive Director                   January 2000
</TABLE>


                                       29
<PAGE>

David DeVoe, Arthur Siskind and Lachlan Murdoch are directors of News
Corporation, which beneficially owns approximately 77.7% of our total issued and
outstanding share capital and controls approximately 97.2% of the voting power
of the Company.

The sole executive officer of NDS (in addition to Dr. Peled) is Rick Medlock,
Chief Financial Officer, whose date of birth is 1 April 1960 and who has held
the position since July 1996.

The persons named above together comprise the body which exercises
administrative, supervisory and management responsibility for our affairs. Set
out below is further information with respect to these persons.

Abe Peled joined NDS as a director, President and Chief Executive Officer in
July 1995. Prior to his employment with us, Dr. Peled served as Senior Vice
President for business development for Elron Electronic Industries, based in
Haifa. Dr. Peled was employed by IBM in the US from 1974 to 1993, at which time
he served as Research Division Vice President, Systems and Software, with
responsibility for all research and advanced development worldwide. Dr. Peled
received his BSc and MSc degrees in Electrical Engineering from the
Technion-Israel Institute of Technology and his M.A. and Ph.D. degrees in
Electrical Engineering from Princeton University. Dr. Peled also serves on News
Corporation's Executive Committee and advises News Corporation with respect to
various technology matters.

David DeVoe has been a non-executive director of NDS since October 1996 and is a
member of the Audit and Remuneration Committees. Mr. DeVoe has also been an
Executive Director of News Corporation since 1990, Senior Executive Vice
President since 1996 and Chief Financial Officer and Finance Director since
1990. Mr. DeVoe served as an Executive Vice President of News Corporation from
1990 until 1996. He has been a director of News America Incorporated since 1991,
Senior Executive Vice President since 1998 and Executive Vice President from
1991 to 1998. Mr. DeVoe has been a director of Fox Entertainment Group, Inc.
since 1991, and Senior Executive Vice President and Chief Financial Officer
since 1998. Mr DeVoe has been a director of STAR Group Limited since 1993. Mr.
DeVoe has been a director of BSkyB since 1994 and a director of Gemstar-TV Guide
International, Inc. since 2001.

Lachlan Murdoch has been a director of NDS since February 2002. Mr. Murdoch has
been an Executive Director of News Corporation since 1996 and Deputy Chief
Operating Officer since 2000. Mr. Murdoch served as a Senior Executive Vice
President of News Corporation from 1999 to 2000. Mr. Murdoch has been a director
of News Limited since 1995, Chairman since 1997 and served as Chief Executive
from 1997 to 2000, Managing Director from 1996 to 1997 and Deputy Chief
Executive from 1995 to 1996. He has been a director of News America Incorporated
since 1999. Mr. Murdoch has been the Chairman of Queensland Press Limited since
1996 and a director since 1994. Mr. Murdoch has been Deputy Chairman of STAR
Group Limited since 1995. Mr. Murdoch has been a director of FOXTEL Management
since 1998 and a director of Gemstar-TV Guide International, Inc. since 2001.
Mr. Murdoch is the son of Mr. K. Rupert Murdoch, Chairman and Chief Executive of
News Corporation, and the brother of Mr. James Murdoch.

Arthur Siskind has been a non-executive director of NDS since October 1996. Mr.
Siskind has also been an Executive Director of News Corporation since 1991. He
has been a Senior Executive Vice President of News Corporation since 1996 and
Group General Counsel since 1991. Mr Siskind served as Executive Vice President
of News Corporation from 1991 until 1996. Mr Siskind has been a director of News
America Incorporated since 1991, a Senior Executive Vice President since 1998
and served as Executive Vice President from 1991 to 1998. Mr. Siskind has been a
director, Senior Executive Vice President and General Counsel of Fox
Entertainment Group, Inc. since 1998. Mr. Siskind has been a director of STAR
Group Limited since 1993 and a director of BSkyB since 1992. Mr. Siskind has
been a Member of the Bar of the State of New York since 1962.

Peter Powers has been a non-executive director of NDS since January 2000. He is
chairman of the Remuneration and Audit Committees. Mr. Powers is President and
Chief Executive Officer of Powers Global Strategies LLC and former First Deputy
Mayor of the City of New York. He has recently served as the Chair of the New
York City Public Initiatives Corporation, and is a member of the board of
trustees of Manhattan College, and of the board of directors of the New York
City Partnership and Chamber of Commerce, as well as the Central Park
Conservancy and City Center. He also has served as an outside member of the
board of directors of various publicly and privately held companies, serving on
audit, independent evaluation and investigatory committees.

Rick Medlock was appointed Chief Financial Officer and Company Secretary of NDS
in 1996. Mr. Medlock served as Finance Director of Creative Group Holdings Ltd.
from April 1994 until its sale in December 1994 to Policy Management Systems
Corporation ("PMSC"), at which time Mr. Medlock was appointed Chief Financial
Officer, Europe of PMSC. He is currently a non-executive director of Mondiale
Publishing Limited and Logistics Technology Group Limited, as well as a fellow
of the Institute of Chartered Accountants in England and Wales. Mr. Medlock
received an M.A. in Economics from the University of Cambridge in 1983.


                                       30
<PAGE>

In addition to the persons named above, Julian Brodsky and James Murdoch served
as non-executive directors during the year ended 30 June 2003 but resigned prior
to the date of this Annual Report on Form 20-F. Julian Brodsky retired at our
Annual General Meeting held on 3 November 2003. James Murdoch resigned on 4
November 2003, following his appointment as Chief Executive Officer of BSkyB.


Compensation

The Company's policy on senior executive's remuneration for the current and
future fiscal years is that the overall remuneration package should be
sufficiently competitive to attract, retain and motivate high quality executives
capable of achieving the Group's objectives and thereby enhancing shareholder
value. The remuneration of the individuals identified above in respect of the
year ended 30 June 2003 was as follows:
<TABLE>
<CAPTION>

                                                                            Expense          Pension
                              Salary or fees   Benefits         Bonus       allowance        contributions    Total
                                 (pound)       (pound)         (pound)      (pound)                          (pound)

 <S>                             <C>            <C>            <C>           <C>             <C>             <C>
 Abe Peled                       475,000        114,811        300,000       40,000           42,500         972,311
 David DeVoe                           -              -              -            -                                -
 James Murdoch                         -              -              -            -                                -
 Lachlan Murdoch                       -              -              -            -                                -
 Arthur Siskind                        -              -              -            -                                -
 Julian Brodsky                   32,188              -              -            -                           32,188
 Peter Powers                     34,412              -              -            -                           34,412
 Rick Medlock                    180,000         20,135        120,000            -           14,088         334,223
                         ---------------- -------------- -------------- ------------ ----------------- --------------
                                 721,600        134,946        420,000       40,000           56,588       1,373,134
                         ---------------- -------------- -------------- ------------ ----------------- --------------
</TABLE>

Benefits comprise the provision of a company car and health insurance and, in
respect of Abe Peled only, the provision of accommodation in London. Pension
contributions are amounts paid by NDS in respect of a money purchase pension
scheme. Fees paid in respect of Julian Brodsky and Peter Powers were paid, at
their request, to entities connected with them, rather than to the individuals
personally.


Interests in options

David DeVoe, Arthur Siskind, James Murdoch and Lachlan Murdoch have no interest
in options over shares in the Company. Interests of the other directors and
officers in options over Series A ordinary shares of US$0.01 each are set out
below. All options have been granted under the employee share options schemes
described in Note 19c to our consolidated financial statements. There are no
performance criteria associated with vesting.
<TABLE>
<CAPTION>

a)  Abe Peled

Exercise              Held at         Exercised         Granted         Cancelled           Held at           Vested as at
price            30 June 2002     during fiscal   during fiscal     during fiscal      30 June 2003       24 November 2004
                                           2003            2003              2003            and at
                                                                                        24 November
                                                                                               2003
<S>                     <C>                  <C>               <C>              <C>         <C>                 <C>
$8.14                  132,500                -                -                -           132,500              132,500
$8.14                   88,000                -                -                -            88,000               88,000
$9.85                   88,000                -                -                -            88,000               88,000
$20.00                 200,000                -                -                -           200,000              200,000
$60.00                  40,000                -                -          (40,000)                -                    -
$21.90                  56,000                -                -                -            56,000               28,000
$6.50                        -                -           40,000                -            40,000               10,000
               ---------------- ---------------- ---------------- ----------------- ----------------    -------------------
                       604,500                -           40,000          (40,000)          604,500              546,500
               ---------------- ---------------- ---------------- ----------------- ----------------    -------------------
</TABLE>

These options expire between 21 May 2007 and 21 November 2012. In addition to
the above, on 5 November 2003, Abe Peled was granted a further 60,000 options
over Series A ordinary shares at an exercise price of $17.12.


                                       31
<PAGE>

<TABLE>
<CAPTION>

b)  Julian Brodsky

Exercise              Held at         Exercised         Granted         Cancelled           Held at
price            30 June 2002     during fiscal   during fiscal     during fiscal      30 June 2003
                                           2003            2003              2003

<S>                      <C>                <C>             <C>               <C>             <C>
$20.00                   5,000                -                -                -             5,000
$60.00                   5,000                -                -           (5,000)                -
$21.90                   5,000                -                -                -             5,000
$6.50                        -                -            5,000                -             5,000
               ---------------- ---------------- ---------------- ----------------- ----------------
                        15,000                -            5,000           (5,000)           15,000
               ---------------- ---------------- ---------------- ----------------- ----------------
</TABLE>

Following Julian Brodsky's retirement as a director on 3 November 2003, options
which were vested as at that date were forfeited. He retains the following
options which were vested as at 3 November 2003; all these options expire on 2
November 2005:
<TABLE>
<CAPTION>

Exercise              Held at      Forfeited on         Held and
price            30 June 2003        3 November        vested at
                                           2003      24 November
                                                            2003

<S>                      <C>               <C>            <C>
$20.00                   5,000           (1,250)           3,750
$21.90                   5,000           (2,500)           2,500
$6.50                    5,000           (5,000)               -
               ---------------- ---------------- ----------------
                        15,000           (8,750)           6,250
               ---------------- ---------------- ----------------
</TABLE>



c)  Peter Powers
<TABLE>
<CAPTION>

Exercise              Held at         Exercised         Granted         Cancelled           Held at           Vested as at
price            30 June 2002     during fiscal   during fiscal     during fiscal      30 June 2003       24 November 2004
                                           2003            2003              2003            and at
                                                                                        24 November
                                                                                               2003

<S>                      <C>                  <C>             <C>            <C>            <C>                   <C>
$20.00                   5,000                -                -                -             5,000                 3,750
$60.00                   5,000                -                -           (5,000)                -                     -
$21.90                   5,000                -                -                -             5,000                 2,500
$6.50                        -                -            5,000                -             5,000                 1,250
               ---------------- ---------------- ---------------- ----------------- ---------------- --- ------------------
                        15,000                -            5,000           (5,000)           15,000                 7,500
               ---------------- ---------------- ---------------- ----------------- ---------------- --- ------------------
</TABLE>

These options expire between 24 January 2010 and 21 November 2012. In addition
to the above, on 5 November 2003, Peter Powers was granted a further 5,000
options over Series A ordinary shares at an exercise price of $17.12.
<TABLE>
<CAPTION>

d)  Rick Medlock

Exercise              Held at         Exercised         Granted         Cancelled           Held at           Vested as at
price            30 June 2002     during fiscal   during fiscal     during fiscal      30 June 2003       24 November 2004
                                           2003            2003              2003            and at
                                                                                        24 November
                                                                                               2003

<S>                     <C>                   <C>             <C>               <C>           <C>                 <C>
$8.14                   19,000                -                -                -            19,000                19,000
$8.14                   30,500                -                -                -            30,500                30,500
$9.85                   30,500                -                -                -            30,500                30,500
$20.00                  60,000                -                -                -            60,000                60,000
$34.50                     397                -                -             (397)                -                     -
$60.00                  16,000                -                -          (16,000)                -                     -
$21.90                  21,100                -                -                -            21,100                10,550
$8.096                       -                -            1,799                -             1,799                     -
$6.50                        -                -           16,000                -            16,000                 4,000
               ---------------- ---------------- ---------------- ----------------- ---------------- --- ------------------
                       177,497                -           17,799          (16,397)          178,899               154,550
               ---------------- ---------------- ---------------- ----------------- ---------------- --- ------------------
</TABLE>

These options expire between 21 May 2007 and 21 November 2012. In addition to
the above, on 5 November 2003, Rick Medlock was granted a further 20,000 options
over Series A ordinary shares at an exercise price of $17.12.


                                       32
<PAGE>

During the year ended 30 June 2001, Julian Brodsky and Peter Powers were each
granted 5,000 options at an exercise price which was below their intrinsic value
on the date of grant. The value of the discount is charged to the profit and
loss account over the vesting period of the options as share-based compensation
and the charge for 2003 in respect of each of these Directors was (pound)19,912,
which is in addition to the amounts of remuneration disclosed above. Save for
this item, all other options issued since our initial public offering have been
granted at the closing price quoted on Nasdaq on the last trading day preceding
the grant. Options granted prior to our initial public offering were granted
based on the directors' estimate of the market value of the Company, having
taken independent advice. Options which were cancelled during fiscal 2003 were
returned voluntarily by the holders for no consideration.


Board practices

Board of directors

Our business is managed by our board of directors. Our Articles of Association
provide that the number of our directors is not subject to a maximum, but shall
not be less than two. Directors may be appointed by our shareholders by ordinary
resolution. In addition, the board of directors or the holder of a majority of
the voting rights exercisable, on a poll, at general meetings may appoint
directors. A director so appointed by the board of directors retires from office
at the next annual general meeting, but is then eligible for reappointment.

A director holding the office of chairman or chief executive or appointed by the
holders of a majority of the voting rights and any director appointed by the
board of directors since the previous annual general meeting are not subject to
retirement by rotation. At each annual general meeting, generally one-third of
those directors subject to retirement by rotation are obliged to retire by
rotation, based principally upon the length of time in office, and are eligible
for re-election. Any director may be removed from office in a general meeting,
or by the holder of a majority of the voting rights, or by all the other
directors.

No person is disqualified from being appointed or reappointed as a director and
no director is required to vacate his office by reason of attaining the age of
70 or any other age. A director is not required to own any of our shares. The
quorum for meetings of the board is two directors, unless otherwise decided by
the board.

A director may hold any other office of NDS (except that of auditor) and no
contract, arrangement or transaction involving NDS in which a director is in any
way interested (directly or indirectly) shall be avoided, provided that such
director has disclosed such interest in accordance with the UK Companies Act
1985. Subject to such disclosure, a director may vote or be counted in the
quorum with respect to any resolution of the board or of a committee concerning
any contract, arrangement, transaction or proposal to which we are, or will be,
a party in which he is interested, except a resolution concerning his own
appointment.

During the year ended 30 June 2003, our board of directors comprised seven
directors, five of whom were appointed by News Corporation and are not subject
to retirement by rotation. The two other directors, Julian Brodsky and Peter
Powers, were subject to retirement by rotation. Accordingly, Julian Brodsky
retired by rotation at our Annual General Meeting held on 3 November 2003, but
did not offer himself for re-election. Currently we have five directors and only
one, Peter Powers, satisfies the rules of Nasdaq pertaining to independent
directors. We are currently undertaking a search for one or more suitable
candidates as further independent non-executive directors.

Based on its current beneficial share ownership, News Corporation, through its
subsidiary NDS HoldCo, Inc., has the power to appoint and remove any director.

Apart from Abe Peled, none of the directors has a service contract with the
Company. Dr. Peled was employed by the Company pursuant to a service agreement
dated 1 December 1999 for an original term of three years. On 30 November 2002,
the contract was automatically extended for a further year and will be extended
for further one-year periods unless either party gives 12 months' written notice
not to extend. As of the date hereof, no such notice has been received or given.
On termination, one year's salary is payable to Dr. Peled if the Company
terminates the contract for reasons other than cause or death. Dr. Peled's
remuneration package consists of a basic salary, benefits and discretionary
bonuses. He is also eligible to participate in the Group's share option schemes.
There are no specific performance criteria attaching to the remuneration
package.

Audit Committee

During fiscal 2003, the members of the Audit Committee were Julian Brodsky
(chairman), Peter Powers and David DeVoe. Following Julian Brodsky's retirement
as a director on 3 November 2003, Peter Powers was appointed as chairman.


                                       33
<PAGE>

The Audit Committee, which operates under a charter approved by the Board of
Directors, is expected to meet not less than twice a year. Its purpose is to:
consider and recommend the appointment of auditors; approve the audit fee;
pre-approve fees for non-audit services to be supplied by the auditors; consider
any questions of resignation or dismissal of the auditors; discuss with the
auditors the nature and scope of the audit; review the quarterly and annual
financial statements before submission to the Board of Directors; discuss
problems and reservations, if any, arising from interim and final audits and any
other matters the auditors may wish to discuss; review the auditors' management
letter and management response; consider internal controls; review the work of
the internal audit team; and, if requested by the Board of Directors, review
potential conflicts of interest.

Remuneration Committee

During fiscal 2003, the members of the Remuneration Committee were Peter Powers
(chairman), Julian Brodsky and David DeVoe; Julian Brodsky ceased to be a member
on his retirement as a director on 3 November 2003. The committee has the
authority to review and approve on behalf of the Company the entire individual
remuneration package for each executive director and senior executive, including
approval of: any service contract; any benefit, pension or incentive scheme
entitlement; any other fees and expenses; and any compensation payable on the
termination of a service contract. It also exercises all the powers and
discretions vested in the Board in respect of the Group's share option schemes.
The committee is authorised to obtain outside legal advice or other independent
professional advice, as well as information about remuneration practices in our
industry.


Employees

An analysis of the average number of employees for each of the last three fiscal
years by category of activity and geographic location is as follows:
<TABLE>
<CAPTION>

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                        number              number               number

    <S>                                                                  <C>                 <C>                 <C>
    Category of activity
    Operations                                                            253                 228                  221
    Sales and marketing                                                   133                  92                   74
    Research and development                                              879                 841                  692
    General and administration                                             63                  65                   63
                                                               ----------------    ----------------     ----------------
                                                                        1,328               1,226                1,050
                                                               ----------------    ----------------     ----------------

    Geographic location
    UK                                                                    524                 495                  401
    Israel                                                                546                 546                  520
    US                                                                     75                  81                   84
    Asia-Pacific                                                           74                  56                   41
    Europe                                                                 42                   3                    -
    India                                                                  67                  45                    4
                                                               ----------------    ----------------     ----------------
                                                                        1,328               1,226                1,050
                                                               ----------------    ----------------     ----------------
</TABLE>

The growth in the number of employees is due to the growth in the number and
complexity of customer contracts and the need to provide an appropriate
infrastructure to support the growth of our business. Employee numbers also
increased as a result of the acquisition of Orbis and Visionik. We use temporary
labour from time to time to provide short-term increases in capacity as and when
required. During the year ended 30 June 2003 we employed an average of 111 full
time equivalent temporary staff. None of our employees is subject to any
collective bargaining agreement. We believe that relations with our employees
are satisfactory.


Share ownership

The only director or senior executive who owns shares in the company is Rick
Medlock, who owns 5,100 Series A ordinary shares of $0.01 each.

We operate various share options schemes under which options are granted to
employees and directors at the discretion of the Remuneration Committee. A
description of our share option schemes is provided in Note 19c to our
consolidated financial statements. Details of options held by directors and the
senior executive are given above.


                                       34
<PAGE>
<TABLE>
<CAPTION>


As of 24 November 2003, the number of options outstanding was as follows:

Grant Date                  Expiry Date                      Exercise Price        Number                   Number
                                                                                   outstanding              Vested

<S>                         <C>                                 <C>                 <C>                     <C>
22 May 1997                 21 May 2007                          $8.140             537,041                 537,041
6 April 1998                5 April 2008                         $8.140             422,303                 422,303
25 March 1999               24 March 2009                        $9.850             504,071                 504,071
5 May 1999                  4 May 2009                           $9.850               4,000                   4,000
23 November 1999            22 November 2009                    $20.000             766,369                 766,369
25 January 2000             24 January 2010                     $43.000              11,500                   8,625
28 April 2000               27 April 2010                       $56.875              13,344                  10,007
25 September 2000           24 September 2010                   $20.000               8,750                   7,500
5 December 2000             4 December 2010                     $60.000              23,403                  11,701
1 May 2001                  30 October 2004                     $34.500               2,926                       -
4 October 2001              3 October 2011                      $21.900             908,925                 454,462
13 March 2002               12 March 2012                       $16.950              23,600                   5,900
3 June 2002                 2 June 2012                         $11.400               5,000                   1,250
1 September 2002            31 August 2004                       $8.096             190,316                       -
1 September 2002            31 August 2004                       $8.600              17,278                       -
1 September 2002            28 February 2006                     $8.096             255,833                       -
21 November 2002            20 November 2012                     $6.500             237,073                  57,393
9 January 2003              8 January 2013                       $7.530             153,700                       -
10 February 2003            9 February 2013                      $7.490               8,000                       -
5 November 2003             4 November 2013                     $17.120             854,563                       -

                                                                           --------------------    --------------------
                                                                                  4,947,995               2,790,622
                                                                           --------------------    --------------------
</TABLE>



            ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major shareholders

As at 28 November 2003, our outstanding voting securities consisted of
12,069,295 Series A ordinary shares of $0.01 each (having one vote per share)
and 42,001,000 Series B ordinary shares of $0.01 each (having ten votes per
share). All of the Series B ordinary shares are held by NDS HoldCo, Inc., which
is a Delaware corporation and an indirect subsidiary of News Corporation, a
company incorporated in South Australia. As a consequence of its ownership of
the Series B ordinary shares, News Corporation is entitled to approximately
97.2% of the aggregate voting power of NDS. News Corporation is a diversified
international media company and NDS HoldCo, Inc. is an intermediate holding
company.

Approximately 30% of the voting stock of News Corporation is owned by (1) Mr. K.
Rupert Murdoch, (2) Cruden Investments Pty. Limited ("Cruden"), a private
Australian investment company owned by Mr. K. Rupert Murdoch, members of his
family and various corporations and trusts, the beneficiaries of which include
Mr. K. Rupert Murdoch, members of his family and certain charities, and (3)
corporations which are controlled by trustees of settlements and trusts set up
for the benefit of the Murdoch family, certain charities and other persons. By
virtue of shares of News Corporation owned by such persons and entities, and Mr.
K. Rupert Murdoch's position as Chairman and Chief Executive of News
Corporation, Mr. K. Rupert Murdoch may be deemed to control the operations of
News Corporation.

As at 28 November 2003, 12,019,320 of the 12,069,295 Series A ordinary shares in
issue (being approximately 99.6% of the class) were held by The Bank of New York
as custodian in respect of ADSs they have issued. The remaining 49,975 Series A
ordinary shares can be converted into ADSs at any time on the demand of the
shareholder. We are informed by The Bank of New York that as at 31 October 2003,
there were 8 holders of record in the US. Apart from News Corporation, no person
with a beneficial interest in our share capital informed us that they owned 5%
or more of the class as at 31 October 2003.

As far as is known to us, there are no arrangements the operation of which may
at a subsequent date result in a change of control of the Company.


                                       35
<PAGE>

Related party transactions

Except for the matter referred to below, there have been no transactions between
the Company or its subsidiaries and any director or officer (or parties
connected with them) acting in a personal capacity, other than in respect of
their remuneration and options as set out in Item 6: "Directors, Senior
Management and Employees".

We have a contract with Logistics Technology Group Limited ("LIS"), a company of
which Rick Medlock is a non-executive director. Under this contract, NDS will
manage LIS's offshore development activities in India and we expect to earn
revenues of (pound)350,000 over two years commencing during fiscal 2004.

We conduct business transactions with entities which are subsidiaries or
affiliates of News Corporation on normal commercial terms. These entities are
considered to be related parties. Agreements covering these arrangements were
entered into in the context of a parent-subsidiary relationship and therefore
are not the result of arm's-length negotiations between independent parties.
Accordingly, there can be no assurance that each of the agreements, or the
transactions provided for therein, or any amendments thereof will be effected on
terms at least as favourable to NDS as could have been obtained from
unaffiliated third parties.

These transactions are of two main types, which are the provision by NDS of
integrated broadcast systems and the receipt by NDS of administrative services
from News Corporation. Information about such related party transactions is
given in Note 28 to our consolidated financial statements.



                          ITEM 8. FINANCIAL INFORMATION

The financial statements filed as part of this Annual Report on Form 20-F are
listed in Item 18 and begin on page F-1.

The financial statements for the two years ended 30 June 2003 were audited by
Ernst & Young LLP and their audit opinion is included within this Annual Report
on Form 20-F. Information and other items in this Annual Report on Form 20-F for
periods ending 30 June 2001 and earlier have been extracted or derived from
financial statements on which Arthur Andersen issued an unqualified opinion. A
copy of Arthur Andersen's report to the shareholders of NDS Group plc dated 4
September 2001 is reproduced on page F-3 of this Annual Report on Form 20-F.
Arthur Andersen's report was included in our Annual Report on Form 20-F for the
year ended 30 June 2001 which was filed with the US Securities and Exchange
Commission (the "SEC") on 17 December 2001. Arthur Andersen ceased trading on 31
August 2002 and hence it is not possible to obtain a re-signed opinion.


Export sales

Export sales, being sales to customers located outside the UK, are a significant
proportion of our total sales. For the year ended 30 June 2003, export sales
amounted to (pound)162.3 million (or 68.4% of our total sales); year ended 30
June 2002: (pound)168.1 million (or 70.2% of our total sales); year ended 30
June 2001: (pound)153.5 million (or 71.2% of our total sales).


Litigation

In March 2002, Groupe Canal+S.A., Canal+ Technologies S.A. and Canal+
Technologies Inc., subsidiaries of Vivendi (collectively, "Canal+"), filed a
lawsuit against NDS Group plc and NDS Americas Inc. (a subsidiary company) in
the United States District Court for the Northern District of California,
alleging acts of improper conduct, including unfair competition and copyright
infringement, in connection with the conditional access systems operated by
Canal+. In October 2002, Canal+ and NDS agreed to a stay of all proceedings
pending regulatory approval of the News Corporation's acquisition of Telepiu
S.p.A. The action was dismissed with prejudice on May 14, 2003, after
consummation of the acquisition. In September 2002, EchoStar Communications
Corporation and several affiliates (collectively, "Echostar") asked the court's
permission to intervene in the action, asserting that they have claims similar
to those asserted by Canal+. Additionally, in October 2002, MEASAT Broadcast
Network Systems Sendirian Berhad, a Malaysian satellite broadcaster, requested
permission to intervene in the action, and in December 2002, Sogecable S.A.,
owner of Canal Satelite Digital, a Spanish satellite broadcaster and a customer
of Canal+ Technologies ("Sogecable"), similarly requested permission to
intervene. Upon dismissal of the action, the motions to intervene became moot.

In September 2002, NDS Group plc and two of its subsidiaries were named as
defendants in a lawsuit filed by DIRECTV, Inc. and certain of its affiliates in
the United States District Court for the Central District of California. At
DIRECTV's request, the action was filed under seal. On 21 October 2002, NDS
filed counterclaims against DIRECTV and a chip manufacturer. In late April 2003,
the parties agreed to stay proceedings pending efforts to resolve the disputes
through mediation. In August 2003, the parties agreed to stay the litigation
between them until the closing of News Corporation's acquisition of a 34%
interest in Hughes Electronics Corporation ("Hughes"), the parent company of
DIRECTV. Upon the closing of the acquisition of the Hughes interest, the
litigation and all claims and counterclaims alleged therein will be dismissed
with prejudice.


                                       36
<PAGE>

On 2 October 2002, NDS Americas, Inc. was served with subpoenas by the U.S.
Attorney's office in San Diego, California, seeking documents apparently in
connection with an investigation related to claims made in early 2002 by Canal+
Technologies SA (these claims having been dismissed) and the EchoStar claims
referred to below. NDS is co-operating with the investigation. NDS was advised
by the U.S. Attorney's Office in San Diego that it is not currently considered
either a target or a subject in the investigation. Lead responsibility for the
investigation has recently been transferred to the U.S. Attorney's Office for
the Central District of California.

On 6 June 2003, Echostar Communications Corporation, Echostar Satellite
Corporation, Echostar Technologies Corporation and Nagrastar L.L.C.
(collectively, "Echostar") filed an action against NDS in the United States
District Court for the Central District of California. Echostar filed an amended
complaint on 8 October 2003. The amended complaint purports to allege claims for
violation of the Digital Millennium Copyright Act, the Communications Act of
1934, the Electronic Communications Privacy Act, The Computer Fraud and Abuse
Act, California's Unfair Competition statute and the federal Racketeer
Influenced and Corrupt Organizations ("RICO") statute. The complaint also
purports to allege claims for civil conspiracy, misappropriation of trade
secrets and interference with prospective business advantage. The complaint
seeks injunctive relief, compensatory and exemplary damages and restitution. NDS
filed a motion to dismiss the amended complaint on 7 November 2003, which is
scheduled to be heard on 22 December 2003.

On 25 July 2003, Sogecable, S.A. and its subsidiary Canalsatellite Digital,
S.L., Spanish satellite broadcasters and customers of Canal+ Technologies SA
(together, "Sogecable"), filed an action against NDS in the United States
District Court for the Central District of California. Sogecable filed an
amended complaint on 9 October 2003. The amended complaint purports to allege
claims for violation of the Digital Millennium Copyright Act and the federal
RICO statute. The complaint also purports to allege claims for interference with
contract and prospective business advantage. The complaint seeks injunctive
relief, compensatory and exemplary damages and restitution. NDS filed a motion
to dismiss the amended complaint on 7 November 2003, which is scheduled to be
heard on 22 December 2003.


Dividends

It has been our policy to retain profits for the future development of the
business and accordingly no dividends have been paid or are proposed. We intend
to keep this policy under review and will consider whether it is appropriate to
pay dividends in the future.


Changes in financial condition

There has been no significant change in our financial condition since 30 June
2003.



                          ITEM 9. THE OFFER AND LISTING

Listing details

ADSs, each representing one of our Series A ordinary shares, have been traded on
Nasdaq since our initial public offering on 22 November 1999. Prior to that
date, there was no public trading market in our securities. The principal
trading market for our ADSs is Nasdaq. The ADSs are evidenced by American
Depositary Receipts ("ADRs") issued by The Bank of New York as depositary under
a Deposit Agreement dated 26 November 1999 among the Company, The Bank of New
York and the owners and beneficial owners of ADRs.

Our ADSs have also been listed on Nasdaq Europe in Belgium. The volume of ADSs
traded on Nasdaq Europe has been negligible. Nasdaq has announced that it will
close and we are in the process of de-listing our ADSs from Nasdaq Europe; we
have been informed by Nasdaq Equrope that the last day our ADSs were listed on
that exchange was 28 November 2003. With effect from 13 November 2003, our ADSs
are listed on the First Market - Continuous of the Euronext Brussels exchange in
Belgium.


                                       37
<PAGE>

The high and low closing prices for our ADSs as reported on Nasdaq for each
period since their listing were:
<TABLE>
<CAPTION>


                                                                     High Price                    Low Price
Period                                                               per ADS                       per ADS
------                                                               ----------                    ---------

<S>                                                                <C>                             <C>
Most recent fiscal years (since listing)
22 November 1999 to 30 June 2000                                     $102.000                      $28.000
1 July 2000 to 30 June 2001                                           $82.250                      $33.100
1 July 2001 to 30 June 2002                                           $37.350                       $8.450
1 July 2002 to 30 June 2003                                           $16.700                       $5.000

Most recent quarter and two most recent fiscal years
1 July 2001 to 30 September 2001                                      $37.350                      $18.650
1 October 2001 to 31 December 2001                                    $28.100                      $19.320
1 January 2002 to 31 March 2002                                       $25.650                      $14.000
1 April 2002 to 30 June 2002                                          $14.500                       $8.450
1 July 2002 to 30 September 2002                                      $11.900                       $6.710
1 October 2002 to 31 December 2002                                     $8.750                       $5.000
1 January 2003 to 31 March 2003                                        $8.500                       $6.420
1 April 2003 to 30 June 2003                                          $16.700                       $5.000
1 July 2003 to 30 September 2003                                      $18.310                      $13.751

Most recent six months
June 2003                                                             $16.369                      $13.900
July 2003                                                             $15.510                      $13.751
August 2003                                                           $16.000                      $14.500
September 2003                                                        $18.310                      $14.500
October 2003                                                          $20.600                      $17.510
November 2003                                                         $20.700                      $17.120

</TABLE>


                         ITEM 10. ADDITIONAL INFORMATION

Memorandum and Articles of Association

General information

Clause 4 of our Memorandum of Association defines our objects as being to carry
on business as a general commercial company and states that the clause shall be
interpreted in the widest and most general manner. We are registered under the
Companies Act 1985 of Great Britain at Companies House for England and Wales
under number 1950497.

Directors

Directors' interests, age qualification, share qualification and retirement of
directors by rotation

For information relating to directors' interests, age qualification, share
qualification and retirement of directors by rotation, please refer to the
information given under Item 6: "Directors, Senior Management and Employees -
Board Practices".

Remuneration

For information relating to remuneration of directors, please refer to the
information contained in the registration statement on Form F-1 (File No.
333-11086) declared effective by the SEC on 22 November 1999 ("Form F-1"), under
the caption "Management - Compensation of Directors and Officers" which is
incorporated herein by reference.

Borrowing Powers

The directors can exercise all of the borrowing powers of the Company.

Our shares - rights, preferences and restrictions

Dividends, voting rights, rights to share in any surplus in the event of
liquidation, actions necessary to change the rights of holders of shares,
general meetings, limitations on the right to own securities and changes in
capital

For information relating to dividend rights, voting rights, rights to share in
any surplus in the event of liquidation, actions necessary to change the rights
of holders of shares, general meetings, limitations on the right to own
securities and changes in capital, please refer to the information contained in
Form F-1, under the caption "Description of Share Capital" which is incorporated
herein by reference.


                                       38
<PAGE>

Redemption and sinking fund

Our Articles of Association do not provide for redemption of any of the shares
currently on issue (that is, the Series A ordinary shares or the Series B
ordinary shares) and it does not provide for any sinking fund.

Liability for further capital calls

Members are not liable for any capital calls except in relation to money unpaid
on that member's shares.

Provisions discriminating against the owning of a substantial number of shares

Except where a shareholder fails to disclose their holding as requested by the
Company there are no provisions in the Articles of Association that discriminate
against an existing or prospective member as a result of that member owning a
substantial number of shares. The board has power to suspend certain rights in
respect of the shares held for so long as the shareholder remains in default of
its failure to give the information required by statute.

Changes in control of the Company

Automatic conversion of our Series B ordinary shares into Series A ordinary
shares will occur if any sale, transfer or disposal results in the cessation of
the ultimate beneficial ownership of the Series B ordinary shares being retained
by entities controlled by News Corporation.

Disclosure of substantial shareholdings

Under the Companies Act 1985 of Great Britain, any person who acquires (alone
or, in certain circumstances, with others) a material interest in the voting
share capital of the Company in excess of 3%, or a non-material interest in
excess of 10%, is obliged to disclose prescribed particulars to the Company in
respect of those shares. An obligation of disclosure also arises where such
person's notifiable interests subsequently fall below the notifiable percentage,
or where, above that level, the percentage of the Company's voting share capital
in which he is interested (expressed in whole numbers) increases or decreases.
In addition, the Company may require persons who it believes to be, or to have
been within the previous three years, interested in its voting shares to
disclose prescribed particulars of those interests.


Material contracts

Material contracts entered into by the Group, other than in the ordinary course
of business, in the past two years are as follows:

Acquisition of Visionik

During the year ended 30 June 2002, we entered into a series of agreements with
Visionik and its principal direct and indirect shareholders. These agreements
culminated in NDS acquiring an economic interest amounting to control over
Visionik from 31 May 2002. Visionik is a company incorporated in Denmark whose
principal activity is the provision of interactive television applications.

Under these agreements, NDS acquired all of the intellectual property rights of
Visionik and subscribed for new shares equivalent to approximately 51% of the
enlarged equity capital of Visionik but having approximately 91% of the voting
power. The agreements provide for payment of specified dividends to the minority
shareholders and an obligation on NDS to procure the redemption of the minority
shareholders for a price calculated by reference to the revenues and
profitability of the business of Visionik for the two years ending 31 May 2004.
The consideration is all payable in cash. Further information is given in Note
9c to our consolidated financial statements included elsewhere in this Annual
Report on Form 20-F.

MediaHighway

On 13 September 2003, we entered into a series of agreements with Thomson
whereby we agreed to acquire the MediaHighway middleware business and license
certain related patents for a total consideration of (euro)60 million in cash.
The transaction is subject to regulatory approvals and certain other conditions
and is expected to close by the end of calendar 2003 or early in calendar 2004.

Exchange controls

There are currently no UK foreign exchange control restrictions on the
acquisition of, or payment of dividends on, our ordinary shares or ADSs,
although from time to time UK government sanctions may restrict our ability to
sell securities, pay dividends or make other distributions to the governments of
certain countries, persons associated with those governments or residents of
those countries.


                                       39
<PAGE>

There are no restrictions under our Memorandum and Articles of Association that
limit the right of non-UK residents or citizens to hold our securities,
including our ordinary shares and ADSs.


Taxation

The following discussion summarises certain UK and US tax consequences of the
acquisition, ownership and disposition of shares and shares represented by ADSs
by a US Holder. For the purposes of this discussion, A US Holder is a beneficial
owner of ADSs who is (i) an individual who is a citizen or resident of the US
for US income tax purposes, (ii) a corporation or partnership organised under
the laws of the US or any state thereof or the District of Columbia, (iii) an
estate, the income of which is subject to US federal income taxation regardless
of its source, or (iv) a trust, if a court within the US is able to exercise
primary supervision over the administration of the trust and one or more US
persons have the authority to control all substantial decisions of the trust.
However, in the case of a partnership, estate or trust, this discussion applies
only to the extent that such entity's income is taxed to the entity or its
partners or beneficiaries on a net income basis under US tax law.

This summary is based (i) upon current UK law, United Kingdom Inland Revenue
("UK Inland Revenue") practice, (ii) upon the US Internal Revenue Code, Treasury
Regulations, case law and Internal Revenue Service rulings, all of which are
subject to change, possibly with retro-active effect, (iii) upon the UK-US
Income Tax Convention currently in effect (the "Treaty"'), and (iv) in part upon
representations of the Depositary and assumes that each obligation provided for
in or otherwise contemplated by the Deposit Agreement and any related agreement
will be performed in accordance with their respective terms.

The summary of UK tax consequences relates to the material aspects of the UK
taxation position of US Holders and does not address the UK tax consequences to
a US Holder (i) that is resident (or, in the case of an individual, ordinarily
resident) in the UK for UK tax purposes, (ii) whose holding of ordinary shares
or ADSs is effectively connected with a permanent establishment in the UK
through which such US Holder carries on business activities or, in the case of
an individual who performs independent personal services, with a fixed base
situated therein, or (iii) that is a corporation which alone or together with
one or more associated companies, controls directly or indirectly, 10% or more
of our voting stock.

The summary of US tax consequences may not completely or accurately describe tax
consequences to all US Holders. For example, special rules may apply to US
expatriates, insurance companies, tax-exempt organisations, banks and other
financial institutions, persons subject to the alternative minimum tax,
securities broker-dealers, traders in securities that elect to mark-to-market,
and persons holding their ordinary shares or ADSs as part of a straddle, hedging
or conversion transaction, among others.

The discussion set out below is only a general summary and does not purport to
be a technical analysis nor a description of all possible tax consequences. Tax
consequences to each US Holder will depend upon the particular facts and
circumstances of such holder. Accordingly, each person should consult with his
own professional advisor with respect to the tax consequences of his ownership
and disposition of shares or ADSs. This summary does not discuss any tax rules
other than UK tax and US federal income tax rules. The UK and US tax authorities
and courts are not bound by this summary and may disagree with its conclusions.

US Holders of ADSs will be treated as owners of the shares underlying the ADSs.
Accordingly, except as noted, the tax consequences discussed below apply equally
to US Holders of ADSs and shares.

Taxation of dividends

Under current UK tax legislation, no tax is withheld from dividend payments by
the Company and generally no UK tax is payable by eligible US Holders on
dividends declared on the shares. US Holders who are not resident or ordinarily
resident for tax purposes in the UK with no other source of UK income are not
required to file a UK income tax return.

For US federal income tax purposes, the gross amount of a dividend (including
any withholding tax) will be included in a US Holder's gross income as dividend
income when payment is actually or constructively received by the US Holder in
the case of ordinary shares or the Depositary in the case of ADSs, to the extent
they are paid out of the Company's current or accumulated earnings and profits
as calculated for US federal income tax purposes (subject to the discussion
below under "- US passive foreign investment company rules"). Such dividends
will not give rise to any US dividends received deduction. Dividends will
generally constitute foreign source "passive" income for foreign tax credit
purposes. For recent changes to the US federal income tax rate applicable to
dividend income, see below under "-US tax rate changes").

Also for US federal income tax purposes, the amount of any dividend paid in
non-US currency will be equal to the US dollar value of such currency on the
date the dividend is included in income, regardless of whether the payment is in
fact converted into US dollars. A US Holder will generally be required to
recognise US source ordinary income or loss when such US Holder sells or
disposes of non-US currency. A US Holder may also be required to recognise
foreign currency gain or loss upon receipt of a refund under the Treaty of tax
withheld in excess of the Treaty rate. The US Holder will have a tax basis in
this non-US currency equal to the US dollar value of the currency on the date
the dividend is included in the US Holder's income. This foreign currency gain
or loss will generally be US source ordinary income or loss.


                                       40
<PAGE>

To the extent that any distribution paid exceeds the Company's current and
accumulated earnings and profits as calculated for US federal income tax
purposes, the distribution will be treated as follows:

o    first, as a tax-free return of capital, which will cause a reduction in the
     adjusted tax basis of the US Holder's Shares or ADSs. This adjustment will
     increase the amount of gain, or decrease the amount of loss, that such US
     Holder will recognise on a later disposition of those Shares or ADSs; and
o    second, the balance of the dividend in excess of the adjusted tax basis in
     a US Holder's Shares or ADSs will be taxed as capital gain recognised on a
     sale or exchange.

Any non-US withholding tax with respect to a dividend may be used as a credit
against a US Holder's US federal income tax liability, subject to specific
conditions and limitations.

Taxation of capital gains

A Holder who is not resident and not ordinarily resident for tax purposes in the
UK will not normally be liable for UK tax on chargeable gains realised on the
disposal of his ordinary shares or ADSs unless at the time of the disposal such
Holder carries on a trade, profession or vocation in the UK through a branch or
agency and such ordinary shares or ADSs are used or held or have been acquired
for use by or for the purposes of such trade, profession or vocation or branch
or agency. The surrender of ADSs in exchange for Shares will not be a taxable
event for the purposes of UK corporation tax or UK capital gains tax.
Accordingly, US Holders will not recognise any gain or loss for such purposes
upon such surrender.

In general, for US federal income tax purposes, a US Holder will recognise
capital gain or loss if such US Holder sells or exchanges ordinary shares or
ADSs, provided that such Shares or ADSs are capital assets in the hands of such
US Holder (subject to the discussion below under "- US passive foreign
investment company rules"). Any gain or loss will generally be US source gain or
loss. For an individual, any capital gain will generally be subject to US
federal income tax at preferential rates if the individual has held the ordinary
shares or ADSs for more than one year.

US tax rate changes

Under recently enacted legislation, which is generally effective for tax years
beginning after 31 December 2002 through tax years beginning on or before 31
December 2008, dividend income received by an individual from a corporation
organised in the US or from a "qualified foreign corporation" is eligible for
taxation at the lower rates imposed on long-term capital gains recognised by
individuals. A non-US corporation is a "qualified foreign corporation" if (i) it
is eligible for benefits under a comprehensive US income tax treaty determined
to be satisfactory to the United States Department of the Treasury, or (ii) its
stock with respect to which the dividend is paid is readily tradable on an
established securities market in the US, The United States Department of the
Treasury and Internal Revenue Service have determined that the Treaty is
satisfactory for this purpose. In addition, the Conference Report with respect
to this legislation states that a share of a non-US corporation's stock is
treated as readily tradable on an established securities market in the US is an
ADS (which would include an NDS ADS) backed by such share is so traded.

US passive foreign investment company rules

The Company believes that it will not be treated as a passive foreign investment
company ("PFIC"') for US federal income tax purposes for the current taxable
year or for future taxable years. However, an actual determination of PFIC
status is factual and cannot be made until the close of the applicable taxable
year. The Company will be a PFIC for any taxable year in which either:

o    75% or more of its gross income is passive income; or
o    its assets that produce passive income or that are held for the production
     of passive income amount to at least 50% of the value of its total assets
     on average.

For purposes of this test, the Company will be treated as directly owning its
proportionate share of the assets, and directly receiving its proportionate
share of the gross income, of each corporation in which it owns, directly or
indirectly, at least 25% of the value of the shares of such corporation.


                                       41
<PAGE>

If the Company were to become a PFIC, the tax applicable to distributions on
ordinary shares or ADSs and any gains a US Holder recognises on disposition of
ordinary shares or ADSs may be less favourable to such US Holder. Accordingly,
each person should consult with his own professional advisor regarding the PFIC
rules.

US controlled foreign corporation rules for 10% shareholders The Company is a
controlled foreign corporation ("CFC") for US federal income taxes. In general,
a foreign corporation will constitute a CFC if more than 50% of its shares,
measured by reference to combined voting power or value, is held, directly or
indirectly, by "US Shareholders". A US Shareholder, for this purpose, is any US
Holder that directly or indirectly possesses 10% or more of the combined voting
power of all classes of shares of a corporation.

As long as the Company is a CFC, each US Shareholder possessing 10% of the
combined voting power of the Company is treated, subject to certain exceptions,
as receiving a dividend at the end of our taxable year in an amount equal to
that person's pro-rata share of "subpart F income" and certain US-source income
of the Company (or any foreign affiliate that is a CFC), whether or not such
income is actually distributed. Among other items, and subject to certain
exceptions, "subpart F income" includes dividends, interest, rents, royalties,
annuities, gains from the sale of shares and securities, certain gains from
commodities transactions, certain types of insurance income and income from
certain transactions with related parties.

If a US Shareholder possessing 10% of the combined voting power of the Company
sells or exchanges any of the ordinary shares or ADSs, any gain recognised is
treated as ordinary dividend income (and not capital gain) to the extent that
such US Shareholder's pro-rata share of the earnings and profits of the Company
accumulated after 31 December 1962 and during the period(s) the ordinary shares
or ADSs were held by such US Shareholder while the Company was a CFC.

UK Inheritance Tax

(a) Ordinary shares and ADSs will be assets situated in the UK for the purposes
of UK inheritance tax. A gift of such assets by, or the death of, an individual
holding such assets may (subject to certain exemptions and reliefs) give rise to
a liability to UK inheritance tax. Such a charge may arise even if the Holder is
neither domiciled in the UK nor deemed to be domiciled there for UK inheritance
tax purposes under special rules relating to long residence or previous
domicile. For inheritance tax purposes, a transfer of assets at less than full
market value may be treated as a gift. Special rules apply to gifts where the
donor reserves or retains some benefit. Special inheritance tax rules also apply
to ordinary shares and ADSs held by close companies or by trustees of
settlements bringing them within the charge to inheritance tax.

(b) An individual who is domiciled in the US for the purposes of the UK/United
States Estate and Gift Tax Convention (the "Estate Tax Treaty") and who is not a
national of the UK for the purposes of the Estate Tax Treaty will generally not
be subject to UK inheritance tax in respect of the ordinary shares or ADSs on
the individual's death or on a gift of the ordinary shares or ADSs during the
individual's lifetime, provided that any applicable US federal gift or estate
tax liability is paid, unless the ordinary shares or ADSs are part of the
business property of a permanent establishment of an enterprise of the
individual in the UK or pertain to a fixed base in the UK of the individual used
for the performance of independent personal services. Where the ordinary shares
or ADSs have been placed in trust by a settlor who, at the time of settlement,
was domiciled in the US for the purposes of the Estate Tax Treaty and not a
national of the UK for the purposes of the Estate Tax Treaty, the ordinary
shares or ADSs will generally not be subject to UK inheritance tax (provided
that the ordinary shares or ADSs are not part of the business property of a
permanent establishment in the UK and do not pertain to a fixed base in the UK
as mentioned above). In the exceptional case where the ordinary shares or ADSs
are subject both to UK inheritance tax and to US federal gift or estate tax, the
Estate Tax Treaty generally provides for the tax paid in the UK to be credited
against tax paid in the US or for tax paid in the US to be credited against tax
payable in the UK based on priority rules set out in the Estate Tax Treaty.

UK Stamp Duty/Stamp Duty Reserve Tax

(a) Any conveyance or transfer on sale of the ordinary shares will usually be
subject to stamp duty on the instrument of transfer, generally at a rate of 0.5%
of the amount or value of the consideration rounded up (if necessary) to the
nearest multiple of (pound)5. A charge to stamp duty reserve tax ("SDRT") at the
rate of 0.5% of the amount or value of the consideration will arise in relation
to an agreement to transfer such ordinary shares. However, where within 6 years
of the date of the agreement (or, if the agreement is conditional, the date on
which it becomes unconditional) an instrument of transfer is executed pursuant
to the agreement and stamp duty is paid on that instrument, any liability to
stamp duty reserve tax will be cancelled and any such tax which has been paid
will be repaid.

(b) Stamp duty or SDRT charges at the rate of 1.5% of the amount or value of the
consideration, or in some circumstances, the value of the ordinary shares, may
arise on a transfer or issue of ordinary shares to the Custodian of the
Depositary or to certain persons providing a clearance system (or their nominees
or agents) and will be payable by the Depositary or such other persons.


                                       42
<PAGE>

(c) In accordance with the terms of the Deposit Agreement, any tax or duty
payable by the Depositary or the Custodian of the Depositary on any deposit of
ordinary shares will be charged by the Depositary to the Holder of the ADS or
any deposited security represented by the ADS.

(d) No UK stamp duty will be payable on the acquisition or transfer of an ADS or
beneficial ownership of an ADS, provided that the ADS and any separate
instrument of transfer or written agreement to transfer remains at all times
outside the UK, and provided further that any instrument of transfer or written
agreement to transfer is not executed in the UK An agreement to transfer ADSs
will not give rise to a liability to SDRT.

(e) Any transfer for value of the underlying ordinary shares represented by ADSs
(which will exclude a transfer from the Custodian of the Depositary or the
Depositary to an ADS holder on a cancellation of the ADSs), may give rise to a
liability to UK stamp duty. The amount of UK stamp duty payable is generally
calculated at the rate of 0.5% of the amount or value of the consideration for
the transfer of the ordinary shares rounded up (if necessary) to the nearest
multiple of (pound)5. However, on a transfer from the Custodian of the
Depositary to a US Holder or registered Holder of an ADS upon cancellation of
the ADS, only a fixed UK stamp duty of (pound)5 per instrument of transfer will
be payable.

(f) It should be noted that certain categories of person are not liable to stamp
duty or SDRT or may, although not primarily liable for SDRT, be required to
notify and account for it under the Stamp Duty Reserve Tax Regulations 1986.

US information reporting and backup withholding

Dividend payments on the ordinary shares or ADSs and proceeds from the sale,
exchange or other disposition of the ordinary shares or ADSs may be subject to
information reporting to the Internal Revenue Service and possible US backup
withholding at a rate of 28%. US federal backup withholding generally is imposed
on specified payments to persons that fail to furnish required information.
Backup withholding will not apply to a Holder who furnishes a correct taxpayer
identification number or certificate of foreign status and makes any other
required certification, or who is otherwise exempt from backup withholding. Any
US persons required to establish their exempt status generally must file
Internal Revenue Service Form W-9: "Request for Taxpayer Identification Number
and Certification".

Backup withholding is not an additional tax. Amounts withheld as backup
withholding may be credited against a US Holder's US federal income tax
liability. A US Holder may obtain a refund of any excess amounts withheld under
the backup withholding rules by filing the appropriate claim for refund with the
Internal Revenue Service and furnishing any required information.


Documents on display

Certain documents referred to in this Annual Report can be inspected at our
registered office at One London Road, Staines, Middlesex TW18 4EX, United
Kingdom.

We are subject to the periodic reporting and other informational requirements of
the Securities Exchange Act of 1934, as amended. Copies of reports and other
information, when so filed, may be inspected without charge and may be obtained
at prescribed rates at the public reference facility maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The public may
obtain information regarding the Washington, D.C. Public Reference Room by
calling the SEC at 1-800-SEC-0330. Where required, we have filed documents on
the SEC's Electronic Data Gathering and Retrieval ("EDGAR") system.


       ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The only significant market risk to which we are exposed is to changes in
foreign exchange rates. We operate in international markets and have operational
presence in several countries. Accordingly, a significant proportion of our
costs and revenues are denominated in currencies other sterling, principally US
dollars and euros. Historically, we have not entered into free-standing
derivative contracts to hedge foreign exchange exposure from trading
transactions. We expect to review this policy from time to time as circumstances
change.

Further qualitative information is given in Note 29 to our consolidated
financial statements.


         ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.




                                       43
<PAGE>

                                     PART II

            ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.


       ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
                              AND USE OF PROCEEDS.

Not applicable.


                        ITEM 15. CONTROLS AND PROCEDURES.

Our Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended)
as of the end of the period covered by this Annual Report on Form 20-F and,
based on this evaluation, have concluded that the disclosure controls and
procedures are effective.

There has been no change in our internal control over financial reporting that
occurred during our fiscal year ended 30 June 2003 that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.


                   ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Not applicable.


                            ITEM 16B. CODE OF ETHICS

Not applicable.


                 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICE

Not applicable.


      ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable


                                    PART III
                          ITEM 17. FINANCIAL STATEMENTS

We have elected to respond to Item 18 in lieu of responding to this Item.


                                       44
<PAGE>


                          ITEM 18. FINANCIAL STATEMENTS

Our financial statements are filed as part of this Annual Report and begin on
page F-1.


Index to consolidated financial statements
<TABLE>
<CAPTION>

                                                                                                                  Page
<S>     <C>                                                                                    <C>                <C>
Reports of Independent Auditors:
       Ernst & Young LLP.......................................................................................   F-1

       Somekh Chaikin..........................................................................................   F-2

       Arthur Andersen.........................................................................................   F-3

Audited Financial Statements
       Consolidated Profit and Loss Accounts for the years ended 30 June 2003, 2002 and 2001...................   F-4

       Consolidated Statements of Total Recognised Gains and Losses for the years ended 30 June 2003, 2002 and
       2001....................................................................................................   F-5

       Consolidated Balance Sheets as at 30 June 2003 and 2002.................................................   F-6

       Consolidated Statements of Cash Flows for the years ended 30 June 2003, 2002 and 2001...................   F-7

       Notes to the Consolidated Financial Statements..........................................................   F-8


                                ITEM 19. EXHIBITS

Index to exhibits

                                                                                                         Exhibit number in
                                                                                             Page    document incorporated by
                                                                                                             reference

1          Memorandum and Articles of Association(1)......................................                          3.1

2.1        Specimen Series A ordinary share certificate(1)................................                          4.1

2.2        Form of American Depositary Receipt(1).........................................                          4.3

4.1        Master Intercompany Agreement(1)...............................................                         10.1

4.2        Group Relief Agreement(1)......................................................                         10.2

4.3        Deposit agreement(1)...........................................................                          4.2

8          Subsidiaries...................................................................    E-1

12.1       Certification by the Chief Executive Officer pursuant to SEC Rule 13a-14(a) /
           15d-14(a), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
                                                                                              E-2

12.2       Certification by the Chief Financial Officer pursuant to SEC Rule 13a-14(a) /
           15d-14(a), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
                                                                                              E-3

13.1       Certification of the Chief Executive Officer pursuant to U.S.C section 1350,
           as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002...........    E-4

13.2       Certification of the Chief Financial Officer pursuant to U.S.C section 1350,
           as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002...........    E-5
</TABLE>


(1)  Incorporated by reference to the Registration Statement filed by NDS Group
     plc with the Securities and Exchange Commission on Form F-1 (File No.
     333-11086) and declared effective on 22 November 1999.


                                       45
<PAGE>


                                   SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused and authorised the undersigned to sign this
Annual Report on its behalf.

                                                   NDS Group plc





                                                  By /s/ CRK Medlock
                                                     ---------------------------
                                                         CRK Medlock
                                                         Chief Financial Officer


                                                  Date: 3 December 2003

                                       46
<PAGE>





                         Report of Independent Auditors

To: The Board of Directors
NDS Group plc

We have audited the accompanying consolidated balance sheets of NDS Group plc as
of 30 June 2003 and 2002, and the related consolidated profit and loss accounts
and consolidated statements of total recognised gains and losses, and cash flows
for each of the two years in the period ended 30 June 2003. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of NDS Technologies Israel
Limited, a wholly-owned subsidiary, which statements reflect total assets of
(pound)35 million and (pound)32 million as of 30 June 2003 and 2002,
respectively, and total cost of sales of (pound)35 million and (pound)40 million
and total administrative expenses - trading expenses of (pound)11 million and
(pound)13 million for years ended 30 June 2003 and 2002, respectively. Those
statements were audited by other auditors whose report has been furnished to us,
and our opinion, insofar as it relates to the amounts included for NDS
Technologies Israel Limited, is based solely on the report of the other
auditors.

We conducted our audits in accordance with United Kingdom auditing standards and
United States generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits and the report of other auditors provide a reasonable basis for our
opinion.

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of NDS Group plc at 30 June 2003 and 2002,
and the consolidated results of its operations and its consolidated cash flows
for each of the two years in the period ended 30 June 2003, in conformity with
accounting principles generally accepted in the United Kingdom which differ in
certain respects from those generally accepted in the United States (see Note 31
of Notes to the Consolidated Financial Statements).


                                ERNST & YOUNG LLP

London, England
3 December 2003


                                      F-1
<PAGE>

                         Report of Independent Auditors

Auditor's Report to the Shareholders of
NDS Technologies Israel Limited

We have audited the balance sheets of NDS Technologies Israel Limited ("the
Company") as at 30 June 2003 and 2002, and the related statements of income,
changes in shareholder's equity and cash flows for each of the years then ended
(not separately included herein). These financial statements are the
responsibility of the Company's Board of Directors and of its Management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the United States. Such standards require that we plan and perform the audit
to obtain reasonable assurance that the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Board of Directors and by Management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as at 30 June 2003
and 2002 and the results of its operations, changes in shareholder's equity and
cash flows for each of the years then ended in conformity with generally
accepted accounting principles in Israel.

As explained in Note 1B1, the above mentioned financial statements are stated in
US dollar values adjusted for the changes in the US dollar / New Israeli Shekels
exchange rate, in accordance with Opinions of the Institute of Certified Public
Accountants in Israel.

Somekh Chaikin
Certified Public Accountants (Isr.)

Jerusalem, Israel
8 August 2003



                                      F-2
<PAGE>

                         Report of Independent Auditors

The following report was issued by Arthur Andersen on 4 September 2001 to the
shareholders of NDS Group plc and included in our Annual Report on Form 20-F in
respect of the year ended 30 June 2001 which was filed with the US Securities
and Exchange Commission on 17 December 2001. Arthur Andersen ceased trading on
31 August 2002 and hence it is not possible to obtain a re-signed opinion.


To the Shareholders of NDS Group plc:

We have audited the accompanying consolidated balance sheets of NDS Group plc as
of 30 June 2001 and 2000 and the related consolidated profit and loss accounts
and cash flow statements for each of the three years in the period ended 30 June
2001, all expressed in pounds sterling and prepared on the basis set out in Note
1 to the consolidated financial statements. These financial statements are the
responsibility of the Company's directors. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the directors, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above give a true and fair
view of the state of affairs of NDS Group plc at 30 June 2001 and 30 June 2000
and the consolidated results of its operations and cash flows for each of the
three years in the period ended 30 June 2001, in conformity with generally
accepted accounting principles in the UK.

Accounting practices used by the Company in preparing the accompanying financial
statements conform with generally accepted accounting principles in the United
Kingdom, but do not conform with accounting principles generally accepted in the
United States. A description of these differences and a reconciliation of
consolidated profit for the financial year and total shareholders' funds to
United States generally accepted accounting principles is set out in Note 29.




Arthur Andersen

London, England

4 September 2001


                                      F-3
<PAGE>

<TABLE>
<CAPTION>

                                  NDS Group plc

                      Consolidated Profit and Loss Accounts

                                                         Notes         Year ended          Year ended          Year ended
                                                                     30 June 2003        30 June 2002        30 June 2001
                                                                      (pound)'000         (pound)'000         (pound)'000

<S>                                                       <C>           <C>                <C>                 <C>
Turnover                                                   2            237,237              240,788            215,628

Cost of sales                                                           (94,467)             (83,107)           (76,676)
                                                                  ----------------     ---------------     ---------------
Gross profit                                                            142,770              157,681            138,952

Administrative expenses - trading expenses                 3            (92,091)            (103,810)           (95,182)
                                                                  ----------------     ---------------     ---------------
                                                                         50,679               53,871             43,770
Administrative expenses - amortisation of intangible
fixed assets                                             3, 10           (9,602)              (7,350)            (4,590)
Exceptional administrative expenses                        3             (4,274)              (3,826)                 -
                                                                  ----------------     ---------------     ---------------
Operating profit                                                         36,803               42,695             39,180

Share of associate's operating (loss) profit, net of
goodwill amortisation                                      4               (220)                  21                  5
Loss on disposal of associate                              4                (60)                   -                  -
                                                                  ----------------     ---------------     ---------------
Profit on ordinary activities before interest                            36,523               42,716             39,185

Net interest income                                        5              2,887                2,513              2,098
                                                                  ----------------     ---------------     ---------------
Profit on ordinary activities before taxation              6             39,410               45,229             41,283

Taxation                                                   7            (13,472)             (14,551)           (12,154)
                                                                  ----------------     ---------------     ---------------
Profit on ordinary activities after taxation                             25,938               30,678             29,129

Equity minority interests                                  18               102                    -                  -
                                                                  ----------------     ---------------     ---------------
Profit for the year attributable to members of the
parent company                                                           26,040               30,678             29,129
                                                                  ----------------     ---------------     ---------------


Earnings per share                                         8

Basic earnings per share                                                   48.4p                57.5p               55.1p
Diluted earnings per share                                                 48.0p                56.1p               52.8p

Adjusted basic earnings per share                                          71.0p                76.2p               63.8p
Adjusted diluted earnings per share                                        70.5p                74.3p               61.1p
                                                                  ----------------     ---------------     ---------------
</TABLE>

The statement of movement in reserves and the reconciliation of movements in
shareholders' funds are provided in Notes 20 and 21, respectively.

A summary of the significant adjustments to profit attributable to shareholders
(net income) that would be required if United States generally accepted
accounting principles were applied instead of those generally accepted in the
United Kingdom is set out in Note 31.

The accompanying notes form an integral part of these consolidated profit and
loss accounts.


                                      F-4
<PAGE>
<TABLE>
<CAPTION>


                                  NDS Group plc

          Consolidated Statements of Total Recognised Gains and Losses

                                                                       Year ended          Year ended          Year ended
                                                                     30 June 2003        30 June 2002        30 June 2001
                                                                      (pound)'000         (pound)'000         (pound)'000

<S>                                                                     <C>                   <C>                  <C>
Profit for the year, excluding share of profits of
associate                                                                 26,185               30,605              29,121
Share of associate's profit (loss) for the year                             (145)                  73                   8
                                                                  ----------------     ---------------     ---------------
Consolidated profit for the year                                          26,040               30,678              29,129
Gain (loss) on foreign exchange translation                               (3,617)              (2,338)              1,397
                                                                  ----------------     ---------------     ---------------
Total recognised gains relating to the year                               22,423               28,340              30,526
                                                                  ----------------     ---------------     ---------------

</TABLE>


The statement of comprehensive income required under United States generally
accepted accounting principles is set out in Note 31.

The accompanying notes form an integral part of these consolidated statements of
total recognised gains and losses.



                                      F-5
<PAGE>
<TABLE>
<CAPTION>

                                  NDS Group plc

                           Consolidated Balance Sheets

                                                             Notes           30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000
<S>                                                          <C>                <C>                    <C>
Fixed assets
Investments                                                    9                       -                 2,337
Intangible fixed assets                                        10                 64,049                76,492
Tangible fixed assets                                          11                 14,697                17,694
                                                                        ------------------    ------------------
                                                                                  78,746                96,523
                                                                        ------------------    ------------------

Current assets
Investments                                                    9                       -                   500
Stocks                                                         12                  7,617                37,065
Deferred tax asset                                             7                   4,273                 3,951
Debtors                                                        13                 36,115                47,949
Cash                                                           14                121,520                98,502
                                                                        ------------------    ------------------
                                                                                 169,525               187,967
Creditors
Amounts falling due within one year                            15                (54,081)              (95,546)

                                                                        ------------------    ------------------
Net current assets                                                               115,444                92,421
                                                                        ------------------    ------------------

Total assets less current liabilities                                            194,190               188,944

Creditors
Amounts falling due after one year                             16                 (1,533)               (1,445)

Provision for liabilities and charges                          17                 (6,328)              (23,691)
                                                                        ------------------    ------------------
                                                                                 186,329               163,808
Equity minority interests                                                            (58)                    -

                                                                        ------------------    ------------------
Net assets                                                                       186,271               163,808
                                                                        ------------------    ------------------


Equity capital and reserves
Equity share capital                                           19                    339                   337
Share premium                                                  20                127,777               127,777
Merger reserve                                                 20                 49,816                35,485
Shares to be issued                                            20                      -                14,333
Profit and loss account                                        20               (166,926)             (189,389)
Capital contribution                                           20                133,265               133,265
                                                                        ------------------    ------------------
Total equity shareholders' funds                                                 144,271               121,808

Non-equity share capital                                       19                 42,000                42,000

                                                                        ------------------    ------------------
Total shareholders' funds                                                        186,271               163,808
                                                                        ------------------    ------------------
</TABLE>



A summary of the significant adjustments to shareholders' funds that would be
required if United States generally accepted accounting principles were applied
instead of those generally accepted in the United Kingdom is set out in Note 31.

The accompanying notes form an integral part of these consolidated balance
sheets.


                                      F-6
<PAGE>

<TABLE>
<CAPTION>
                                  NDS Group plc

                      Consolidated Statements of Cash Flows

                                                          Notes        Year ended          Year ended          Year ended
                                                                     30 June 2003        30 June 2002        30 June 2001
                                                                      (pound)'000         (pound)'000         (pound)'000

<S>                                                        <C>            <C>                  <C>                <C>
Net cash inflow from operating activities                   22            44,797               67,916              53,967

Returns on investments and servicing of finance             23             2,922                2,565               2,098
Taxation                                                    23           (14,591)             (13,075)             (9,170)
Capital expenditure and financial investment                23            (5,175)              (6,417)            (11,187)
Acquisitions and disposals                                  23             1,671               (6,561)            (13,852)

                                                                  ----------------     ---------------     ---------------
Cash inflow before management of liquid resources and
financing                                                                 29,624               44,428              21,856

Management of liquid resources                                           (25,637)             (62,482)                  -
Financing                                                   23               526                  525               7,344

                                                                  ----------------     ---------------     ---------------
Increase (decrease) in cash                                 24             4,513              (17,529)             29,200
                                                                  ----------------     ---------------     ---------------

</TABLE>

The significant differences between the statements of cash flows above and those
required if United States generally accepted accounting principles were applied
instead of those generally accepted in the United Kingdom are set out in Note
31.

The accompanying notes form an integral part of these consolidated statements of
cash flows.

                                      F-7
<PAGE>

                                  NDS Group plc

                 Notes to the Consolidated Financial Statements

1.   Accounting policies and principal activity

     NDS Group plc (the "Company") is incorporated in Great Britain. The
     Company, together with its subsidiaries ("NDS" or the "Group"), is engaged
     in the business of providing conditional access, broadcast control,
     interactive software, systems and other services to pay-TV broadcasters and
     content providers.

     The principal accounting policies, all of which have been applied
     consistently throughout the year and the preceding periods, are summarised
     below.

a)   Basis of accounting

     The financial statements have been prepared under the historical cost
     convention and in accordance with applicable UK financial reporting and
     accounting standards.

     These financial statements do not comprise statutory accounts within the
     meaning of section 240 of the Companies Act 1985 of Great Britain (the
     "Act"). Statutory accounts for each of the three years in the period ended
     30 June 2003 have been delivered to the Registrar of Companies in England
     and Wales. The auditors' reports on those accounts were unqualified and did
     not contain a statement under section 237(2) or 237(3) of the Act.

b)   Basis of consolidation

     The financial statements consolidate the accounts of the Company and all
     its subsidiary undertakings, drawn up to 30 June each year. All
     intercompany transactions and balances have been eliminated on
     consolidation. The results and cash flows of subsidiaries or businesses
     acquired or sold are consolidated for the periods from or to the date on
     which control passed to or from the Group. Entities, other than subsidiary
     undertakings, in which the Group has a participating interest and over
     whose operating and financial policies NDS exercises a significant
     influence are treated as associates and accounted for using the equity
     method.

     The Company has taken advantage of section 131 of the Companies Act 1985 to
     apply merger relief in respect of shares issued in connection with the
     acquisition of the share capital of Orbis Technology Limited ("Orbis"). The
     difference between the fair value and the nominal value of shares issued
     has been credited to a merger reserve.

     The Company's ultimate controlling party is The News Corporation Limited,
     which taken together with its subsidiary and associated undertakings is
     referred to herein as "The News Corporation Group".

c)   Goodwill

     Goodwill arising on the acquisition of subsidiary undertakings or
     businesses represents the excess of the fair value of the consideration
     given over the fair value of the identifiable assets and liabilities
     acquired. Goodwill is capitalised and amortised on a straight-line basis
     over its useful economic life. Provision is made for any impairment. The
     useful life of goodwill is considered by the Directors on a case by case
     basis. The Directors' estimates of the periods over which benefits will
     accrue to the Group in respect of goodwill have ranged from 7 to 20 years.

     During the year adjustments have been made to the value of goodwill
     arising, and the consideration paid, in respect of the acquisition of
     Visionik A/S ("Visionik") which occurred on 31 May 2002. Details of the
     adjustments are given in Note 9b.

d)   Intellectual property rights

     Intellectual property rights purchased by the Group are included at cost as
     intangible fixed assets and depreciated on a straight-line basis over their
     useful economic lives. Provision is made for any impairment. The useful
     lives of these assets is considered by the Directors on a case by case
     basis and on the case of assets acquired to date by the Group, they have
     estimated the period over which benefits will accrue to the Group to be
     three years.

e)   Fixed asset investments

     Fixed asset investments are stated at cost less any provision for
     impairment. Income from investments is included in the profit and loss
     account only if received, or declared and receivable.

f)   Associates

     In the consolidated financial statements, investments in associates are
     accounted for using the equity method. The consolidated profit and loss
     account includes the Group's share of associates' profits less losses while
     the Group's share of the net assets of the associates is shown in the
     consolidated balance sheet. Goodwill arising on the acquisition of
     associates is accounted for in accordance with the policy set out above.
     Any unamortised balance of goodwill is included in the carrying value of
     the investment in associates.


                                      F-8
<PAGE>

g)   Research and development

     Research and development expenditure is written off to the profit and loss
     account as incurred.

h)   Tangible fixed assets and depreciation

     Tangible fixed assets are stated at cost net of depreciation and any
     provision for impairment. They are depreciated on a straight-line basis
     over their expected useful economic lives or anticipated length of use by
     NDS. The useful lives are as follows:

     Leasehold improvements: Over lesser of useful life or period of lease.
     Equipment and furniture: two to five years.

i)   Stocks and work-in-progress

     Stocks and work-in-progress are valued at the lower of cost (calculated on
     a first in, first out basis) and net realisable value. Cost represents
     purchase price and, in respect of manufactured or processed items, includes
     an appropriate proportion of production overheads. Net realisable value is
     based on estimated selling price, less further costs expected to be
     incurred to completion and disposal. Provision is made for obsolete,
     slow-moving or defective items where appropriate. Where stock is to be used
     to satisfy a liability incurred under subscriber fee arrangements (see Note
     1m under subscriber fees), the stock is held at cost and the liability is
     measured by reference to that cost.

     Contract work-in-progress represents the cost of bought-in goods and
     services and the direct labour cost of work undertaken for customer
     contracts, where such costs can be clearly related to development and
     integration work for which the associated revenue has not been recognised.

j)   Debtors

     Debtors are recognised at the amounts due to NDS, net of any provision for
     doubtful debts.

k)   Foreign currency

     The reporting currency and functional currency of NDS Group plc is UK
     pounds sterling. The functional currency of each of the subsidiaries of NDS
     Group plc is the local currency of the country in which each subsidiary is
     located, except in the case of the subsidiaries operating in Israel, where
     the functional currency is the US dollar.

     Normal trading activities denominated in foreign currencies are recorded in
     the functional currency of the relevant company at actual exchange rates as
     at the date of the transaction. Monetary assets and liabilities denominated
     in foreign currencies at the year end are reported at the rates of exchange
     prevailing at the year end with any resulting gain or loss being recorded
     in the profit and loss account.

     The results and cash flows of overseas operations are translated into
     sterling at the average rates of exchange during the period and their
     balance sheets at the rates prevailing at the balance sheet date. Exchange
     differences arising on translation of the opening net assets and results of
     overseas operations are dealt with through reserves.

l)   Taxation

     Corporation tax and its overseas equivalents is provided on the taxable
     profits for the year at the rate prevailing during the year.

     Full provision is made for deferred tax assets and liabilities arising from
     timing differences between the recognition of gains and losses in the
     financial statements and their recognition for tax purposes, measured using
     tax rates that have been enacted or substantially enacted. Deferred tax
     assets and liabilities are not discounted to reflect the time value of
     money. The recoverability of deferred tax assets is considered and a
     provision is made if it is considered more likely than not that the asset
     will not be recoverable. No deferred tax is recorded in respect of tax that
     would be payable on the remittance by way of dividend of the past earnings
     of overseas subsidiaries until such time as the remittance becomes binding
     on the subsidiary.

m)   Turnover

     Turnover represents amounts receivable by the Group for goods and services
     provided in the ordinary course of business, net of trade discounts, value
     added tax and other sales-related taxes.


                                      F-9
<PAGE>

     NDS derives revenues from the provision of conditional access, broadcast
     control, interactive software, systems and other services to pay-TV
     broadcasters and content providers. Conditional access systems enable such
     customers to manage and control the distribution of programmes and
     information and to protect such content from signal theft. Other software
     and systems provide broadcasters and content providers with additional
     functionality and enable them to offer additional services. The Group's
     systems include software that is installed at the broadcasters' facilities
     as well as software and smart cards in set-top boxes, digital televisions
     and PCs. The Group's business gives rise to a number of revenue streams for
     which accounting policies are applied as follows:

     Smart cards

     Smart cards are sold to the broadcaster for distribution to and use by
     their subscribers. The revenues derived from these sales are recognised
     upon delivery of the cards in accordance with the customers' instructions.
     Appropriate provision is made for warranty and similar arrangements agreed
     with customers.

     Subscriber fees

     For some contracts, NDS receives fees from broadcasters for the maintenance
     of security of conditional access systems for a specified duration which is
     typically between 18 and 40 months. Fees are received over the duration of
     the agreed service period and are related to the number of subscribers that
     the broadcasters have. These revenues are recognised in the period in which
     the security services are performed. The extent of services provided to
     maintain the security of the conditional access systems will vary between
     customers and, on occasion, may include the supply of smart cards for no
     extra charge to the broadcasters at a future date in order to replace a
     population of smart cards to maintain their security. This is an integral
     part of the wider security maintenance activities and the subscriber fees
     continue to be recognised as the services are performed.

     Costs associated with such arrangements include, therefore, the production
     of replacement smart cards to be provided. In these circumstances, a
     provision is made in the financial statements, which relates the total
     anticipated costs of providing replacement smart cards to the subscriber
     fees recognised to date. The proportion of revenues recognised to date as
     compared with total security fees expected over the duration of the
     maintenance agreement is applied to the total anticipated costs in order to
     calculate the provision required as at each balance sheet date. Movement in
     the provision is included within the profit and loss account as part of
     cost of sales. Amounts provided for as at each balance sheet date are
     included in provisions for liabilities and charges. The provision is
     utilised by the supply of smart cards from stock. The liability is not
     extinguished until the necessary cards have been supplied. Accordingly, it
     is appropriate to recognise separate assets and liabilities until that
     event occurs.

     Development, integration and installation contracts

     Contracts for development, integration and installation work are undertaken
     for customers on the basis of time and materials or according to fixed
     price terms, or a combination of the two. The duration of such contracts
     has varied from a few weeks to approximately two years. Turnover for
     contracts negotiated on a time and materials basis is recognised as costs
     are incurred. Where there is uncertainty as to the scope of work or the fee
     payable, revenue is deferred until any uncertainties are resolved. For
     fixed price contracts involving significant adaptation of software,
     turnover and profit are recognised according to the proportion of the
     estimated contract value completed, ascertained by reference to percentage
     of technical completion, having regard to any customer acceptance
     provisions in the contract. Where a contract has not sufficiently
     progressed for the outcome to be seen with reasonable certainty, but no
     loss is expected, then revenue is deferred until any uncertainties are
     resolved. All losses are recognised as soon as incurred or reasonably
     foreseen. Total contract turnover and profitability to date are reviewed
     periodically and the cumulative effects of changes are recognised in the
     period in which they are identified. Revenue from the supply of hardware
     and other items procured from third party suppliers, which are an integral
     part of an overall system, is recognised once customer acceptance is
     achieved, where this is a critical element of the contractual arrangements
     with the customer.

     Licence fees and royalties

     Licence fee income is recognised when the software is delivered to the
     customer unless the supply is closely linked to customisation, integration
     and installation work, in which case revenue recognition is deferred until
     customer acceptance has occurred.

     Royalty income is typically receivable on the basis of the number of units
     manufactured or deployed by a licensee. Such income is recognised when it
     is fixed or determinable.

     Support and maintenance

     Support and maintenance income is recognised over the term of the contract.


                                      F-10
<PAGE>

     Contingent income

     Revenue which is dependent on the number of subscribers or is contingent
     upon the occurrence of specified events is recognised when the amount has
     become fixed or determinable.

n)   Pension costs

     NDS makes contributions for the benefit of employees to defined
     contribution schemes. The amount charged to the profit and loss account in
     respect of pension costs is the contributions payable in the year.
     Differences between contributions payable in the year and contributions
     actually paid are shown either as accruals or as prepayments in the balance
     sheet.

     Certain current and former US employees are members of a defined benefit
     pension scheme operated for the benefit of certain US employees of
     subsidiaries of The News Corporation Limited. As such it is a
     multi-employer defined benefit scheme and the amounts charged to the profit
     and loss account in respect of pension costs is the contributions payable
     in the year. Differences between contributions payable in the year and
     contributions actually paid are shown either as accruals or as prepayments
     in the balance sheet.

     NDS also has certain liabilities to a small number of current and former
     employees who are members of a UK defined benefit pension scheme. The
     amount charged to the profit and loss account in respect of this scheme is
     the estimated regular cost of providing the benefits accrued in the year,
     adjusted to reflect variations from that cost. The regular cost is
     calculated so that it represents a substantially level percentage of
     current and future payroll. Variations from regular cost are charged or
     credited to the profit and loss account as a constant percentage of payroll
     over the estimated average remaining working life of scheme members. The
     scheme is funded, with the assets of the scheme held separately from those
     of the Group, in a separate trustee administered fund. Differences between
     amounts charged to the profit and loss account and amounts funded are shown
     as either provisions or prepayments in the balance sheet.

     NDS has adopted the transitional provisions of FRS17: "Retirement
     benefits". The disclosure required by this standard is provided in Note 27.

o)   Government grants

     NDS receives grants towards the cost of certain capital expenditure. Such
     grants are treated as deferred income and released to the profit and loss
     account over the expected useful lives of the assets concerned.

p)   National Insurance on share options and similar items

     UK law levies Employer's National Insurance contributions on the gains made
     by employees upon exercise of options issued under certain unapproved share
     option schemes. The charge applies to options granted after 5 April 1999.
     Similarly, a charge to Employer's National Insurance arises when vested
     assets held by an employee benefit trust are distributed. Provision is made
     over the vesting period, based on the prevailing National Insurance rate
     and the market value of the underlying assets as at the balance sheet date.

q)   Leases

     Amounts payable under operating leases, net of any incentives, are charged
     on a straight-line basis over the lease or licence term.

r)   Licence agreements

     NDS has the right to use certain intellectual property under various
     licence agreements. Royalties payable under these licence agreements are
     typically calculated as a percentage of relevant revenues and are charged
     in the profit and loss account to match with the recognition of those
     revenues.

s)   Use of estimates

     The preparation of financial statements requires management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the date
     of the financial statements, and the reported amounts of revenues and
     expenses during the reporting period. Actual results could differ from
     those estimates.


2.   Segment information

a)   Business segment

     NDS has a single business segment, being the provision of conditional
     access, broadcast control, interactive software, systems and other services
     to pay-TV broadcasters and content providers. The segment has associated
     with it a number of revenue streams. The accounting policies of the segment
     are those described in Note 1. All revenues, costs, cash flows, assets and
     liabilities relate to the continuing operations of the Group.


                                      F-11
<PAGE>

b)   Geographical destination

     Turnover may be analysed by geographical destination as follows:
<TABLE>
<CAPTION>

                                                                  Year ended          Year ended          Year ended
                                                                30 June 2003        30 June 2002        30 June 2001
                                                                 (pound)'000         (pound)'000         (pound)'000

   <S>                                                              <C>               <C>                    <C>
    UK                                                               74,892              71,654              62,139
    Europe and the Middle East                                       17,463              20,981              16,393
    USA                                                             110,584              98,793              70,267
    Latin America                                                    14,538              24,521              57,191
    Asia-Pacific                                                     19,760              24,839               9,638
                                                             ----------------    ----------------    ----------------
                                                                    237,237             240,788             215,628
                                                             ----------------    ----------------    ----------------
</TABLE>

c)   Geographical origin

     The Group's principal operations are situated in the UK, the US and Israel.
     Operations in other jurisdictions are immaterial and have been aggregated
     within the UK operations. Israel operations have no third party turnover
     and recharge their costs to the UK.
<TABLE>
<CAPTION>

    Turnover
                                                                  Year ended           Year ended          Year ended
                                                                30 June 2003         30 June 2002        30 June 2001
                                                                 (pound)'000          (pound)'000         (pound)'000

  <S>                                                                <C>                 <C>                  <C>
    UK                                                              157,474              182,719             154,412
    USA                                                              79,763               58,069              61,216
    Israel                                                                -                    -                   -
                                                             ----------------     ----------------    ----------------
                                                                    237,237              240,788             215,628
                                                             ----------------     ----------------    ----------------

    Profit (loss) on ordinary activities before taxation
                                                                  Year ended           Year ended          Year ended
                                                                30 June 2003         30 June 2002        30 June 2001
                                                                 (pound)'000          (pound)'000         (pound)'000

    UK                                                               36,404               43,632              41,383
    USA                                                               3,006                1,597                (100)
    Israel                                                                -                    -                   -
                                                             ----------------     ----------------    ----------------
                                                                     39,410               45,229              41,283
                                                             ----------------     ----------------    ----------------

    Capital expenditure, depreciation and amortisation
                                                                  Year ended           Year ended          Year ended
                                                                30 June 2003         30 June 2002        30 June 2001
                                                                 (pound)'000          (pound)'000         (pound)'000
    Capital expenditure
    Fixed assets acquired as part of a business
    combination and adjustments thereto
    UK                                                               (3,189)              16,757              55,849
    USA                                                                   -                    -                   -
    Israel                                                                -                    -                   -
                                                             ----------------     ----------------    ----------------
                                                                     (3,189)              16,757              55,849
                                                             ----------------     ----------------    ----------------
    Other capital expenditure
    UK                                                                4,445                3,761               4,939
    USA                                                                 228                  405               1,660
    Israel                                                            1,929                3,570               4,439
                                                             ----------------     ----------------    ----------------
                                                                      6,602                7,736              11,038

</TABLE>




                                      F-12
<PAGE>


<TABLE>
<CAPTION>

                                                                  Year ended           Year ended          Year ended
                                                                30 June 2003         30 June 2002        30 June 2001
                                                                 (pound)'000          (pound)'000         (pound)'000

    <S>                                                               <C>                 <C>                  <C>
    Total capital expenditure
    UK                                                                1,256               20,518              60,788
    USA                                                                 228                  405               1,660
    Israel                                                            1,929                3,570               4,439
                                                             ----------------     ----------------    ----------------
                                                                      3,413               24,493              66,887
                                                             ----------------     ----------------    ----------------
    Depreciation and amortisation
    UK                                                               13,459               11,586               7,505
    USA                                                                 853                1,188               1,145
    Israel                                                            3,504                4,030               4,473
                                                             ----------------     ----------------    ----------------
                                                                     17,816               16,804              13,123
                                                             ----------------     ----------------    ----------------

    Assets
                                                             30 June 2003           30 June 2002          30 June 2001
                                                              (pound)'000            (pound)'000           (pound)'000

    Intangible fixed assets
    UK                                                            64,049                 76,492                67,127
    USA                                                                -                      -                     -
    Israel                                                             -                      -                     -
                                                        ------------------     ------------------ -- ------------------
                                                                  64,049                 76,492                67,127
                                                        ------------------     ------------------ -- ------------------
    Other fixed assets
    UK                                                             7,409                  9,858                 9,693
    USA                                                              845                  1,560                 2,834
    Israel                                                         6,443                  8,613                10,010
                                                        ------------------     ------------------ -- ------------------
                                                                  14,697                 20,031                22,537
                                                        ------------------     ------------------ -- ------------------
    Total fixed assets
    UK                                                            71,458                 86,350                76,820
    USA                                                              845                  1,560                 2,834
    Israel                                                         6,443                  8,613                10,010
                                                        ------------------     ------------------ -- ------------------
                                                                  78,746                 96,523                89,664
                                                        ------------------     ------------------ -- ------------------
    Other net assets (liabilities)
    UK                                                            81,210                 49,049                26,059
    USA                                                            3,834                    739                (2,079)
    Israel                                                        22,481                 17,497                12,222
                                                        ------------------     ------------------ -- ------------------
                                                                 107,525                 67,285                36,202
                                                        ------------------     ------------------ -- ------------------
    Net assets
    UK                                                           152,668                135,399               102,879
    USA                                                            4,679                  2,299                   755
    Israel                                                        28,924                 26,110                22,232
                                                        ------------------     ------------------ -- ------------------
                                                                 186,271                163,808               125,866
                                                        ------------------     ------------------ -- ------------------
</TABLE>

d)   Principal customers

     Substantial revenues are derived from businesses in which The News
     Corporation Group has an equity interest. Turnover from related parties is
     disclosed in Note 28a. There is one principal third party customer (defined
     as a customer accounting for greater than 10% of total turnover), DIRECTV,
     Inc. which generated turnover of (pound)89.4 million (2002: (pound)69.4
     million; 2001: (pound)57.4 million).

e)   Acquisitions

     The revenues and expenses contributed by Visionik in the year ended 30 June
     2002 (the year of acquisition) were not material. Its revenues and costs in
     periods prior to the acquisition were immaterial in the context of the
     Group's financial statements. In the year ended 30 June 2001 (the year of
     acquisition), Orbis contributed revenues of (pound)5,772,000, cost of sales
     of (pound)372,000 and administrative expenses of (pound)5,209,000.


                                      F-13
<PAGE>


3.   Administrative expenses

a)   Trading expenses
     Trading expenses comprise:
<TABLE>
<CAPTION>

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000

   <S>                                                                <C>                 <C>                   <C>
    Sales and marketing                                                14,208              15,876               14,417
    Research and development                                           61,294              68,738               65,164
    General and administration                                         17,719              17,793               17,289
    Foreign exchange losses (gains)                                    (1,130)              1,403               (1,688)
                                                               ----------------    ----------------     ----------------
                                                                       92,091             103,810               95,182
                                                               ----------------    ----------------     ----------------

b)  Amortisation of intangible fixed assets
    Amortisation of intangible fixed assets comprise:

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000

    Amortisation of goodwill                                            7,845               7,109                4,590
    Amortisation of intellectual property rights                        1,891                 241                    -
                                                               ----------------    ----------------     ----------------
                                                                        9,736               7,350                4,590
    Less amounts charged in cost of sales                                (134)                  -                    -
                                                               ----------------    ----------------     ----------------
    Amortisation of intangible fixed assets acquired as
    part of a business combination                                      9,602               7,350                4,590
                                                               ----------------    ----------------     ----------------

c)  Exceptional costs
    Exceptional costs comprise:

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000

    Legal costs                                                         3,809               1,558                    -
    Onerous leases and related costs                                        -               2,268                    -
    Write-off of fixed asset investments                                  465                   -                    -
                                                               ----------------    ----------------     ----------------
                                                                        4,274               3,826                    -
                                                               ----------------    ----------------     ----------------
</TABLE>

     Legal costs
     See Note 26c.

     Onerous leases

     As part of a review of NDS worldwide operations carried out in 2002, it was
     decided to close and dispose of a number of premises. The costs of closure
     included an estimate of rental and related payments which NDS is obliged to
     pay until the end of the relevant lease periods (net of an estimate of
     amounts recoverable from third parties), the write-off of leasehold
     improvements and surplus property and other payments to terminate
     contracts.

     Write-off of fixed assets investments

     NDS held an investment in a venture capital fund. Following discussions
     with the fund manager, it became apparent that there was little prospect of
     realising value in the foreseeable future. Accordingly the investment has
     been written off.


                                      F-14
<PAGE>

<TABLE>
<CAPTION>


d)  Total administrative expenses
    Total administrative expenses may be summarised as:
                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000

   <S>                                                                 <C>                <C>                   <C>
    Sales and marketing                                                14,208              15,876               14,417
    Research and development                                           61,294              68,738               65,164
    General and administration                                         30,465              30,372               20,191
                                                               ----------------    ----------------     ----------------
    Total administrative expenses                                     105,967             114,986               99,772
                                                               ----------------    ----------------     ----------------


4.  Associate

a)  Share of associate's operating profit
                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000

    Share of operating profit (loss)                                     (220)                141                   11
    Amortisation of goodwill                                                -                (120)                  (6)
                                                               ----------------    ----------------     ----------------
                                                                         (220)                 21                    5
                                                               ----------------    ----------------     ----------------
</TABLE>

b)   Loss on disposal of associate

     A subsidiary of the Company owned 40% of the share capital of ADSR Limited
     ("ADSR"), a company incorporated in Great Britain whose business was the
     provision of services connected with electronic chip design and security.
     The Directors considered that NDS exercised significant influence over, but
     not control of, the management of ADSR and accordingly regarded ADSR as an
     associated undertaking. During the year ended 30 June 2003, the
     arrangements with ADSR were terminated. NDS purchased certain specialist
     equipment and facilities from ADSR and received repayment of loan finance
     advanced to ADSR. The shares were then sold for a nominal sum, realising a
     loss of (pound)60,000.


5. Net interest income
<TABLE>
<CAPTION>

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000

   <S>                                                                   <C>                   <C>                <C>
    Net interest receivable from (payable to) The News
    Corporation Group (see Note 28b)                                        -                   -                1,839
    Interest payable on Series A Loan Notes                                 -                (529)                (429)
    Other interest receivable                                           2,930               3,047                  705
    Other interest payable                                                (43)                 (7)                 (18)
                                                               ----------------    ----------------     ----------------
                                                                        2,887               2,511                2,097
    Share of associate's interest income                                    -                   2                    1
                                                               ----------------    ----------------     ----------------
                                                                        2,887               2,513                2,098
                                                               ----------------    ----------------
                                                                                                        ----------------

    Total interest receivable                                           2,930               3,049                2,545
    Total interest payable                                                (43)               (536)                (447)
                                                               ----------------    ----------------     ----------------
                                                                        2,887               2,513                2,098
                                                               ----------------    ----------------     ----------------
</TABLE>

    The Series A Loan Notes ("the Notes") were issued by the Company in
    connection with the acquisition of Orbis. Interest was payable on the Notes
    on 15 December and 15 June each year. The Notes bore interest at a rate of
    52.5 basis points below the quoted London Interbank rate for each six-month
    period, which the Directors considered to be a market rate for similar
    types of debt. The Notes were repaid in full on 15 June 2002. The effective
    annual rate of interest applied during the year ended 30 June 2002 was
    3.797% (2001: 5.133%).



                                      F-15
<PAGE>


6.   Profit on ordinary activities before taxation

a)   Elements of operating expenses

     The profit on ordinary activities before taxation is stated after charging
     (crediting):
<TABLE>
<CAPTION>

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000


   <S>                                                                  <C>               <C>                   <C>
    Depreciation of tangible fixed assets                               8,080               9,454                8,533
    Amortisation of goodwill                                            7,845               7,109                4,590
    Amortisation of intellectual property rights                        1,891                 241                    -
    Primary auditors' remuneration:
             - Audit services                                             200                 186                  164
             - Non-audit services                                           4                   -                  270
    Secondary auditors' remuneration:
             - Audit services                                              19                  29                   31
             - Non-audit services                                          32                  39                   39
    Release of deferred capital government grants                        (644)               (879)                (485)
    Operating lease costs                                               6,882               6,547                4,767
                                                               ----------------    ----------------     ----------------
</TABLE>

     Ernst & Young LLP have been the primary auditors since 23 April 2002; prior
     to that date, the primary auditors were Arthur Andersen. In the year ended
     30 June 2002, audit fees of (pound)81,000 and non-audit fees of
     (pound)178,000 (mainly related to taxation matters) were paid to Arthur
     Andersen and charged to the profit and loss account for services provided
     up to the date of their resignation as auditors. In the year ended 30 June
     2002, additional fees of (pound)48,000 were paid to Arthur Andersen in
     connection with the acquisition of Visionik (2001: (pound)90,000, incurred
     in connection with the acquisition of Orbis) and have been included as part
     of the cost of the investment.

b)   Staff costs

     The average monthly number of employees (including directors) was as
     follows:
<TABLE>
<CAPTION>

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                        number              number               number

     <S>                                                                  <C>                <C>                   <C>
    Operations                                                            253                 228                  221
    Sales and marketing                                                   133                  92                   74
    Research and development                                              879                 841                  692
    General and administration                                             63                  65                   63
                                                               ----------------    ----------------     ----------------
                                                                        1,328               1,226                1,050
                                                               ----------------    ----------------     ----------------

    Their aggregate remuneration comprised:

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000

    Wages, salaries and benefits                                       66,594              70,505               60,460
    Social security costs                                               2,687               1,830                1,798
    Other pension costs                                                 1,560               1,829                1,052
    Share-based compensation                                              361                 398                  230
                                                               ----------------    ----------------     ----------------
                                                                       71,202              74,562               63,540
                                                               ----------------    ----------------     ----------------
</TABLE>



                                      F-16
<PAGE>


<TABLE>
<CAPTION>

c)  Pension costs
    Pension costs comprise:
                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000

   <S>                                                                  <C>                <C>                    <C>
    Defined contribution schemes                                        1,261               1,069                  789
    US multi-employer defined benefit scheme                              149                 129                  133
    UK defined benefit scheme                                             150                 631                  130
                                                               ----------------    ----------------     ----------------
                                                                        1,560               1,829                1,052
                                                               ----------------    ----------------     ----------------
</TABLE>

     Most UK and US employees are eligible for membership of defined
     contribution schemes operated by The News Corporation Group. There were no
     pension contributions to the defined contribution schemes which were unpaid
     or prepaid as at 30 June 2003 or 30 June 2002.

     Approximately 100 US employees of the Group are members of News America
     Incorporated Employees' Pension and Retirement Plan which is operated for
     the benefit of certain US employees of subsidiaries of The News Corporation
     Limited. As such, and so far as it relates to NDS, it is a multi-employer
     defined benefit scheme. As at 31 December 2001, plans assets exceeded plan
     liabilities by approximately $100 million. It is not practical to determine
     the assets and liabilities of this scheme relating to the obligations of
     NDS to current and former employees. Accordingly, the amounts recorded in
     the profit and loss account are the contributions payable in the year. No
     contributions to this scheme were unpaid or prepaid as at 30 June 2003 or
     30 June 2002.

     Further information about the UK defined benefit pension scheme is given in
     Note 27.


7.   Taxation

a)   Analysis of tax charge
<TABLE>
<CAPTION>

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000

   <S>                                                                  <C>                <C>               <C>
    Current tax
    UK Corporation tax on profits for the year                         12,595              13,882               10,087
    Adjustments in respect of prior periods                               200                 435                 (357)
    Double tax relief                                                  (2,227)             (3,000)              (2,472)
                                                               ----------------    ----------------     ----------------
    UK current tax charge                                              10,568              11,317                7,258
    Overseas taxation on profits for the year                           3,437               4,234                3,986
    Adjustments to overseas taxation in respect of prior
    periods                                                              (121)                  -                    -
                                                               ----------------    ----------------     ----------------
    Group current tax charge                                           13,884              15,551               11,244
    Share of associate's tax charge (credit)                              (75)                 68                    4
                                                               ----------------    ----------------     ----------------
    Total current tax charge                                           13,809              15,619               11,248
                                                               ----------------    ----------------     ----------------

    Deferred tax
    Origination and reversal of timing differences                       (695)               (134)                 549
    Adjustments in respect of prior periods                               358                (934)                 357
                                                               ----------------    ----------------     ----------------
    Group deferred tax charge (credit)                                   (337)             (1,068)                 906
                                                               ----------------    ----------------     ----------------

    Total tax charge                                                   13,472              14,551               12,154
                                                               ----------------    ----------------     ----------------
</TABLE>

b)   Factors affecting tax charge

     NDS is subject to taxation on the profits of its overseas subsidiaries.
     Substantially all such profits arise on transactions with UK Group
     companies. It is also subject to taxation on certain remittances from
     overseas customers, for which UK double taxation relief is substantially
     available. The tax rate differs from the statutory UK tax rate of 30% as a
     consequence of different overseas tax rates. Additionally, there are
     material differences between profits recognised in the financial statements
     of group companies and profits calculated for tax purposes. Certain
     charges, primarily goodwill amortisation, are disallowable for tax purposes
     and certain transactions involving employee share options give rise to
     deductible benefits for subsidiary undertakings. Other charges are
     recognised for tax purposes in periods different from those in which they
     are recognised in the financial statements. These latter timing differences
     give rise to deferred tax assets, the potential benefit of which is
     recognised unless the asset is not expected to be recovered.


                                      F-17
<PAGE>
<TABLE>
<CAPTION>

    A reconciliation of the tax charge is as follows:

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000

     <S>                                                               <C>                <C>                  <C>
     Profit on ordinary activities before taxation                     39,410              45,229               41,283
     UK statutory tax rate                                              30.0%               30.0%                30.0%
                                                               ----------------    ----------------     ----------------
     Prima facie tax charge                                            11,823              13,569               12,385

     Effect of different tax rates on profits earned
     outside of the UK                                                 (1,300)               (966)                (856)
     Permanent differences:
     - Non-deductible goodwill                                          2,353               2,133                1,378
     - Other permanent differences                                       (258)                256                 (753)
     Losses for which no effective relief is available                    417                   -                    -
     Tax under- (over-) provided in prior years                           437                (441)                   -
                                                               ----------------    ----------------     ----------------
     Total tax charge                                                  13,472              14,551               12,154
                                                               ----------------    ----------------     ----------------

     Effective tax rate                                                 34.2%               32.2%                29.4%
                                                               ----------------    ----------------     ----------------

     Total tax charge, as above                                        13,472              14,551               12,154
     Add back:
     - Tax effect of timing differences                                   337               1,068                 (906)
     - Share of associate's tax credit (charge)                            75                 (68)                  (4)
                                                               ----------------    ----------------     ----------------
     Group current tax charge                                          13,884              15,551               11,244
                                                               ----------------    ----------------     ----------------
</TABLE>
<TABLE>
<CAPTION>


     As a consequence of the factors noted above, the future tax charge may
     differ from the statutory UK tax rate of 30%.

c)   Deferred tax
     Deferred tax assets relate to:

                                                                             30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000

    <S>                                                                            <C>                 <C>
     Short-term timing differences on accrued expenses                             2,972                 2,946
     Long-term timing differences on fixed assets                                  1,301                 1,005
                                                                        ------------------    ------------------
                                                                                   4,273                 3,951
                                                                        ------------------    ------------------
</TABLE>

     There were no provisions against the recoverability of deferred tax assets
     as at 30 June 2003 or 30 June 2002.

     The movement in deferred tax balances during the two years ended 30 June
     2003 is as follows:
<TABLE>
<CAPTION>

                                                                               Year ended            Year ended
                                                                             30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000

   <S>                                                                           <C>                     <C>
    Beginning of year                                                              3,951                 2,899
    Origination and reversal of timing differences:
    - Fixed asset timing differences                                                 318                   329
    - Timing differences relating to accrued expenses                                377                  (195)
    - Transfer to current tax                                                       (358)                  934
    Foreign exchange movements                                                       (15)                  (16)
                                                                        ------------------    ------------------
    End of year                                                                    4,273                 3,951
                                                                        ------------------    ------------------
</TABLE>

     The Group has losses arising from capital transactions in the UK and
     trading transactions in certain overseas territories with a potential tax
     benefit of (pound)417,000 (2002: (pound) nil). No deferred tax asset has
     been recognised in respect of these items because it cannot be foreseen
     with reasonable certainty that future profits will be generated against
     which these losses could be used.


                                      F-18
<PAGE>

8.  Earnings per share
<TABLE>
<CAPTION>

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001

    <S>                                                                  <C>                 <C>                   <C>
    Basic earnings per share                                              48.4p               57.5p                55.1p
    Diluted earnings per share                                            48.0p               56.1p                52.8p

    Adjusted basic earnings per share                                     71.0p               76.2p                63.8p
    Adjusted diluted earnings per share                                   70.5p               74.3p                61.1p
                                                               ----------------    ----------------     ----------------

</TABLE>

     Basic earnings per share is calculated as the profit attributable to equity
     shareholders divided by the weighted average number of shares in issue.
     Equity shareholders' interests may be diluted due to the existence of share
     options granted to employees (see Note 19c) and, in 2002 and 2001 by shares
     to be issued in connection with the acquisition of Orbis (see Note 9b). The
     dilutive effect of potential shares has been calculated in the manner
     prescribed by FRS 14: "Earnings per share".

     In addition to earnings per share calculated on the basis of net profit for
     the year, figures are also presented for earnings per share adjusted to
     eliminate the distortions caused by amortisation of intangible fixed assets
     acquired as part of a business combination and exceptional items, net of
     tax. A reconciliation of the profits used in the calculations is as
     follows:
<TABLE>
<CAPTION>

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001
                                                                   (pound)'000         (pound)'000          (pound)'000

    <S>                                                               <C>                 <C>                   <C>
    Net profit                                                         26,040              30,678               29,129
    Adjust for:
    - Amortisation of intangible fixed assets acquired a
    part of a business combination                                      9,602               7,350                4,590
    - Exceptional costs                                                 4,274               3,826                    -
    Tax effect of these items                                          (1,670)             (1,220)                   -
                                                               ----------------    ----------------     ----------------
                                                                       38,246              40,634               33,719
                                                               ----------------    ----------------     ----------------

    The weighted average numbers of shares used in the calculations are as follows:

                                                                    Year ended          Year ended           Year ended
                                                                  30 June 2003        30 June 2002         30 June 2001

    Weighted average number of shares in issue                     53,856,141          53,347,593           52,824,956

    Diluted weighted average number of shares                      54,267,114          54,659,952           55,197,631
                                                               ----------------    ----------------     ----------------

</TABLE>

<TABLE>
<CAPTION>


9.  Investments

a)  Group investments
                                                                             30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000

   <S>                                                                               <C>                  <C>
    Fixed asset investments
    Associated undertaking                                                             -                   205
    Loans                                                                              -                 1,667
    Other investments                                                                  -                   465
                                                                        ------------------    ------------------
                                                                                       -                 2,337
                                                                        ------------------    ------------------

    Current asset investments
    Other investments                                                                  -                   500
                                                                        ------------------    ------------------
</TABLE>


                                      F-19
<PAGE>

     Associated undertaking

     The investment in the associated undertaking is discussed in Note 4. The
     movement in the investment in the two years ended 30 June 2003 was:
<TABLE>
<CAPTION>

                                                                            Year ended            Year ended
                                                                          30 June 2003          30 June 2002
                                                                           (pound)'000           (pound)'000

   <S>                                                                             <C>                    <C>
    Share of net assets
    Beginning of year                                                               205                   132
    Share of retained profit (loss) for the year                                   (145)                   73
    Disposal                                                                        (60)                    -
                                                                        ------------------    ------------------
    End of year                                                                       -                   205
                                                                        ------------------    ------------------

    Goodwill
    Beginning of year                                                                 -                   120
    Amortised during the year                                                         -                  (120)
                                                                        ------------------    ------------------
    End of year                                                                       -                     -
                                                                        ------------------    ------------------

    Net book value
    Beginning of year                                                               205                   252
                                                                        ------------------    ------------------
    End of year                                                                       -                   205
                                                                        ------------------    ------------------

</TABLE>

     Loans

     NDS provided loan finance to ADSR to fund an initial programme of capital
     expenditure. The loan was interest free and was repaid during the year
     ended 30 June 2003. It was secured by way of a charge over the assets of
     ADSR. The movement in the loan in the two years ended 30 June 2003 was as
     follows:
<TABLE>
<CAPTION>

                                                                            Year ended            Year ended
                                                                          30 June 2003          30 June 2002
                                                                           (pound)'000           (pound)'000

   <S>                                                                          <C>                        <C>
    Beginning of year                                                             1,667                   622
    Advances                                                                          -                 1,878
    Repayments                                                                   (1,667)                 (833)
                                                                        ------------------    ------------------
    End of year                                                                       -                 1,667
                                                                        ------------------    ------------------

    Other investments
                                                                               Year ended            Year ended
                                                                             30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000
    Fixed asset investments
    Beginning of year                                                                465                   965
    Amounts written off                                                             (465)                    -
    Transfers to current assets                                                        -                  (500)
                                                                        ------------------    ------------------
    End of year                                                                        -                   465
                                                                        ------------------    ------------------

    Current asset investments
    Beginning of year                                                                  -                     -
    Transfers from fixed assets                                                      500                   500
    Disposals                                                                       (500)
                                                                        ------------------    ------------------
    End of year                                                                        -                   500
                                                                        ------------------    ------------------
</TABLE>

     Other fixed asset investments of (pound)465,000 at 30 June 2002 comprised
     the cost of unlisted equity interests in a venture capital fund
     specialising in technology complementary to that developed by NDS. The
     investment was written off during the year (see Note 3c).

     Other current asset investments of (pound)500,000 at 30 June 2002 were sold
     during the year for their carrying value.


                                      F-20
<PAGE>


b)   Acquisition of Visionik

     During the year ended 30 June 2002, NDS entered into a series of agreements
     with Visionik A/S ("Visionik"), and its principal direct and indirect
     shareholders. These agreements culminated in NDS acquiring an economic
     interest amounting to control over Visionik from 31 May 2002. Visionik is a
     company incorporated in Denmark whose principal activity is the provision
     of interactive television applications.

     Under these agreements, NDS acquired all the intellectual property rights
     of Visionik and subscribed for new shares equivalent to approximately 51%
     of the enlarged equity capital of Visionik but having approximately 91% of
     the voting power. The agreements provide for payment of specified dividends
     to the minority shareholders and an obligation on NDS to procure the
     redemption of the minority shareholders for a price calculated by reference
     to the revenues and profitability of the business of Visionik for the two
     years ending 31 May 2004. The Directors consider that the substance of
     these agreements means that NDS acquired full ownership and control of
     Visionik with effect from 31 May 2002. Accordingly no minority interest is
     shown in these consolidated financial statements and a liability has been
     recognised for the expected fair value of the total amount to be paid.

     Following determination of the revenues and profitability of Visionik for
     the year ended 31 May 2003 and consideration of the budgets for the period
     ending 31 May 2004, the Directors concluded that it was unlikely that
     further amounts would become payable. Accordingly, the estimated fair value
     of the goodwill acquired was adjusted during the year ended 30 June 2003. A
     further adjustment to goodwill may be required if the revenues and
     profitability of Visionik for the year ending 31 May 2004 exceed certain
     thresholds, as this would trigger additional payments to the vendors.

     The Directors have undertaken an impairment review and a re-appraisal of
     the fair values of the assets acquired as at 30 June 2003 and, except for
     the adjustment to goodwill referred to above, have concluded that no
     further adjustments are required.
<TABLE>
<CAPTION>

                                                                                           (pound)'000

   <S>                                                                                       <C>
    Goodwill, as estimated at 30 June 2002                                                     3,218
    Adjustment to goodwill made during the year ended 30 June 2003                            (3,189)

                                                                                   -------------------
    Estimate of goodwill as at 30 June 2003                                                       29
                                                                                   -------------------
</TABLE>

     The contribution of Visionik to the revenues, costs and cash flows in the
     year ended 30 June 2002 is not material. The revenues, profits and assets
     of Visionik for the period prior to acquisition equate to less than 10% of
     the equivalent quantities of the pre-existing and enlarged NDS.

c)   Acquisition of Orbis

     On 1 December 2000 the Company acquired the entire share capital of Orbis
     Technology Limited ("Orbis"), a company incorporated in Great Britain whose
     principal activity is the provision of software and services for use as
     betting applications. The consideration payable was dependent on the
     revenues and profitability of Orbis in the two years ending 31 March 2002
     and certain other factors and is payable in instalments. The amounts
     recognised as at 30 June 2001 were an estimate of the amounts expected to
     be paid, as adjusted after determining the actual revenues and
     profitability for the year ended 31 March 2001. Following determination of
     the revenues and profitability of Orbis for the year ended 31 March 2002,
     the Directors undertook an impairment review and a re-appraisal of the fair
     values of the assets acquired and consideration given. Accordingly, the
     following adjustment to the fair value of the goodwill acquired was made
     during the year ended 30 June 2002.
<TABLE>
<CAPTION>

                                                                                           (pound)'000

     <S>                                                                                      <C>
    Goodwill, as originally estimated                                                         55,242
    Adjustment to goodwill                                                                     8,225
                                                                                    ------------------
    Total goodwill arising                                                                    63,467
                                                                                    ------------------

     The adjustment to goodwill was all payable by the issue of new Series A
     ordinary shares and its fair value was determined by reference to the
     quoted price of those shares as at the date of the original acquisition.
</TABLE>



                                      F-21
<PAGE>

10.   Intangible fixed assets

     The movement in intangible fixed assets in the year ended 30 June 2003 was
     as follows:
<TABLE>
<CAPTION>

                                                                           Intellectual
                                                       Goodwill            property rights            Total
                                                      (pound)'000          (pound)'000              (pound)'000

    <S>                                                 <C>                       <C>                <C>
    Cost
    Beginning of year                                   94,234                   5,272                99,506
    Purchases                                                -                     482                   482
    Adjustment to Visionik acquisition                  (3,189)                      -                (3,189)
                                              -------------------     ------------------    ------------------
    End of year                                         91,045                   5,754                96,799
                                              -------------------     ------------------    ------------------

    Accumulated amortisation
    Beginning of year                                   22,773                     241                23,014
    Charge for the year                                  7,845                   1,891                 9,736
                                              -------------------     ------------------    ------------------
    End of year                                         30,618                   2,132                32,750
                                              -------------------     ------------------    ------------------

    Net book value
    Beginning of year                                   71,461                   5,031                76,492
                                              -------------------     ------------------    ------------------
    End of year                                         60,427                   3,622                64,049
                                              -------------------     ------------------    ------------------

     The movement in intangible fixed assets in the year ended 30 June 2002 was
     as follows:

                                                                          Intellectual
                                                      Goodwill            property rights          Total
                                                      (pound)'000         (pound)'000              (pound)'000
    Cost
    Beginning of year                                   82,791                       -                82,791
    Acquisition of Visionik                              3,218                   5,272                 8,490
    Adjustment to Orbis acquisition                      8,225                       -                 8,225
                                              -------------------     ------------------    ------------------
    End of year                                         94,234                   5,272                99,506
                                              -------------------     ------------------    ------------------

    Accumulated amortisation
    Beginning of year                                   15,664                       -                15,664
    Charge for the year                                  7,109                     241                 7,350
                                              -------------------     ------------------    ------------------
    End of year                                         22,773                     241                23,014
                                              -------------------     ------------------    ------------------

    Net book value
    Beginning of year                                   67,127                       -                67,127
                                              -------------------     ------------------    ------------------
    End of year                                         71,461                   5,031                76,492
                                              -------------------     ------------------    ------------------

</TABLE>


                                      F-22
<PAGE>


11.  Tangible fixed assets

     The movement in tangible fixed assets in the year ended 30 June 2003 was as
     follows:
<TABLE>
<CAPTION>

                                                 Leasehold              Equipment &
                                                 improvements           furniture              Total
                                                 (pound)'000            (pound)'000            (pound)'000
      <S>                                           <C>                       <C>                  <C>
      Cost
      Beginning of year                               9,406                 47,516                56,922
      Additions                                         970                  5,150                 6,120
      Disposals                                         (5)                   (551)                 (556)
      Foreign exchange adjustment                      (489)                (2,796)               (3,285)
                                             --------------------    -------------------   -------------------
      End of year                                     9,882                 49,319                59,201
                                             --------------------    -------------------   -------------------

      Depreciation
      Beginning of year                               5,242                 33,986                39,228
      Charge for the year                             1,560                  6,520                 8,080
      Disposals                                          (5)                  (485)                 (490)
      Foreign exchange adjustment                      (397)                (1,917)               (2,314)
                                             --------------------    -------------------   -------------------
      End of year                                     6,400                 38,104                44,504
                                             --------------------    -------------------   -------------------

      Net Book Value
      Beginning of year                               4,164                 13,530                17,694
                                             --------------------    -------------------   -------------------
      End of year                                     3,482                 11,215                14,697
                                             --------------------    -------------------   -------------------

     The movement in tangible fixed assets in the year ended 30 June 2002 was as
     follows:

                                                 Leasehold               Equipment &
                                                 improvements            furniture              Total
                                                 (pound)'000             (pound)'000            (pound)'000
      Cost
      Beginning of year                               9,547                 49,379                58,926
      Acquisition of Visionik                             -                     42                    42
      Additions                                       1,754                  5,982                 7,736
      Disposals                                      (1,372)                (5,058)               (6,430)
      Foreign exchange adjustment                      (523)                (2,829)               (3,352)
                                             --------------------    -------------------   -------------------
      End of year                                     9,406                 47,516                56,922
                                             --------------------    -------------------   -------------------

      Depreciation
      Beginning of year                               4,575                 33,653                38,228
      Charge for the year                             2,130                  7,324                 9,454
      Disposals                                      (1,107)                (4,953)               (6,060)
      Foreign exchange adjustment                      (356)                (2,038)               (2,394)
                                             --------------------    -------------------   -------------------
      End of year                                     5,242                 33,986                39,228
                                             --------------------    -------------------   -------------------

      Net Book Value
      Beginning of year                               4,972                 15,726                20,698
                                             --------------------    -------------------   -------------------
      End of year                                     4,164                 13,530                17,694
                                             --------------------    -------------------   -------------------
</TABLE>



                                      F-23
<PAGE>

12.  Stocks
<TABLE>
<CAPTION>

                                                                             30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000

   <S>                                                                            <C>                   <C>
    Smart cards and their components                                               6,308                32,870
    Contract work-in-progress                                                      1,309                 4,195
                                                                        ------------------    ------------------
                                                                                   7,617                37,065
                                                                        ------------------    ------------------
</TABLE>

     Smart cards and their components are considered to be in the state of
     work-in-progress. There is no material difference between the balance sheet
     value of stock and its replacement cost.


13.  Debtors

     Amounts falling due within one year:
<TABLE>
<CAPTION>

                                                                             30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000

   <S>                                                                           <C>                    <C>
    Trade debtors                                                                 13,639                22,268
    Accrued income                                                                 4,322                 2,868
    Due from The News Corporation Group                                           13,126                17,380
    Corporate tax recoverable                                                        984                   540
    VAT                                                                              473                   171
    Other debtors                                                                    326                 1,654
    Prepaid expenses                                                               3,245                 3,068
                                                                        ------------------    ------------------
                                                                                  36,115                47,949
                                                                        ------------------    ------------------

     Trade debtors are stated net of a provision for doubtful debts
     of(pound)5,561,000 (2002: 4,648,000).

     Amounts due from The News Corporation Group arising out of trading
     transactions with related parties are non-interest bearing and are due
     under normal settlement terms.


14.  Cash

                                                                             30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000

    Restricted cash deposits                                                           -                 5,034
    Short-term deposits                                                           88,103                62,482
    Freely available cash at bank and in hand                                     33,417                30,986
                                                                        ------------------    ------------------
                                                                                 121,520                98,502
                                                                        ------------------    ------------------

     Restricted cash deposits as at 30 June 2002 were amounts held in escrow to
     support amounts payable in respect of the acquisition of Visionik.

     Short-term deposits have maturities between 1 and 77 days.


15.  Creditors - Amounts falling due within one year

                                                                             30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000

    Amounts due in respect of the acquisition of Visionik                            390                 5,159
    Trade creditors                                                                6,357                10,065
    Due to The News Corporation Group                                              1,579                 9,328
    Due to associated undertaking                                                      -                   140
    Corporate tax payable                                                          7,745                 7,946
    Payroll taxes and social security                                              1,604                 1,713
    VAT                                                                            1,950                   940
    Other creditors                                                                3,091                 2,911
    Customer deposits and deferred income                                         14,137                37,255
    Accrued expenses                                                              16,644                19,367
    Deferred government grants                                                       584                   722
                                                                        ------------------    ------------------
                                                                                  54,081                95,546
                                                                        ------------------    ------------------
</TABLE>


                                      F-24
<PAGE>


16.  Creditors - Amounts falling due after one year
<TABLE>
<CAPTION>

                                                                             30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000

    <S>                                                                              <C>                 <C>
    Loan finance                                                                     366                     -
    Deferred government grants                                                     1,167                 1,445
                                                                        ------------------    ------------------
                                                                                   1,533                 1,445
                                                                        ------------------    ------------------
</TABLE>

     Loan finance has been provided by the minority shareholder of a subsidiary
     company. The loan finance is interest free and is repayable in 24 monthly
     instalments commencing 15 May 2005.


17.  Provision for liabilities and charges

     The movement in provisions for liabilities and charges during the two years
     ended 30 June 2003 was as follows:
<TABLE>
<CAPTION>
                                                                                         Employee
                                                         Contingent      Changeover      benefits      Onerous
                                                         consideration   provision       and taxes     leases      Total
                                                         (pound)'000     (pound)'000     (pound)'000   (pound)'000 (pound)'000

   <S>                                                          <C>         <C>                <C>           <C>    <C>
    As at 1 July 2001                                             -         12,571             835            -    13,406
    Acquisition of Visionik                                   2,895              -               -            -     2,895
    Charged (credited) to profit and loss account                 -          4,329           1,287        2,268     7,884
    Used                                                          -              -             (36)        (354)     (390)
    Foreign exchange movement                                     -              -             (93)         (11)     (104)
                                                    ----------------------------------------------------------------------
    As at 30 June 2002                                        2,895         16,900           1,993        1,903    23,691
    Adjustment to goodwill arising on acquisition
    of Visionik                                              (2,895)             -               -            -    (2,895)
    Charged (credited) to profit and loss account                 -          3,810            (604)       1,831     5,037
    Used                                                          -        (17,790)           (217)      (1,409)  (19,416)
    Foreign exchange movements                                    -              -             (79)         (10)      (89)
                                                    ----------------------------------------------------------------------
    As at 30 June 2003                                            -          2,920           1,093        2,315     6,328
                                                    ----------------------------------------------------------------------
</TABLE>

     The contingent consideration is in respect of the acquisition of Visionik
     is explained in Note 9b. The basis for the estimate of the changeover
     provision is set out in Note 1m under the discussion of subscriber fees.
     The provision is expected to be utilised within the next four years. The
     provision for employee benefits and taxes relates to severance pay (see
     Note 26d), National Insurance (see Note 1p and Note 26g) and a UK defined
     benefit pension scheme (see Note 27). The provision for onerous leases is
     in respect of the matter referred to in Note 3c and is expected to be
     utilised over the next three years.


18.  Minority interests

     The movement in equity minority interests in a subsidiary undertaking is as
     follows:
<TABLE>
<CAPTION>

                                                                             30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000

    <S>                                                                             <C>                    <C>
     Beginning of year                                                                 -                     -
     Equity capital contributed by minority shareholder                              160                     -
     Share of losses attributable to minority shareholder                           (102)                    -
                                                                        ------------------    ------------------
     End of year                                                                      58                     -
                                                                        ------------------    ------------------
</TABLE>


                                      F-25
<PAGE>



19.  Share capital and reserves

a)   Called-up equity share capital of the Company
<TABLE>
<CAPTION>

                                                               30 June 2003         30 June 2002        30 June 2001
                                                                    US$'000              US$'000             US$'000
   <S>                                                                <C>                  <C>                 <C>
    Authorised:
    48,000,000 Series A ordinary shares of $0.01 each
                                                                        480                 480                  480
    52,000,000 Series B ordinary shares of $0.01 each
                                                                        520                 520                  520
                                                            ----------------    -----------------    ----------------
                                                                      1,000               1,000                1,000
                                                            ----------------    -----------------    ----------------


                                                                (pound)'000         (pound)'000          (pound)'000
    Allotted, issued and fully paid:
    11,983,681 (2002: 11,677,033; 2001: 11,243,400)
    Series A ordinary shares of $0.01 each                               75                  73                   70
    42,001,000 Series B ordinary shares of $0.01 each
                                                                        264                 264                  264
                                                            ----------------    -----------------    ----------------
                                                                        339                 337                  334
                                                            ----------------    -----------------    ----------------
</TABLE>

     The two classes of ordinary shares entitle the holder to the same rights
     except that the Series A and Series B ordinary shares are entitled to one
     vote and ten votes per share respectively. The Series B ordinary shares may
     be converted by the shareholder into Series A ordinary shares, at the
     instigation of the shareholder at any time. Automatic conversion will occur
     if any sale, transfer or other disposal results in the cessation of the
     ultimate beneficial ownership of the Series B ordinary shares being
     retained by entities controlled by The News Corporation Group.

     During the year ended 30 June 2001, 295,470 Series A ordinary shares were
     issued on the exercise of options for net cash proceeds of (pound)1,670,000
     and 408,804 Series A ordinary shares were issued in connection with the
     acquisition of Orbis at a fair value of (pound)18,487,000, being the fair
     value of the shares as at the date of acquisition. During the year ended 30
     June 2002, 69,878 Series A ordinary shares were issued on the exercise of
     options for net cash proceeds of (pound)525,000. A further 363,755 Series A
     ordinary shares were issued in connection with the acquisition of Orbis at
     a fair value of (pound)17,000,000, being the fair value of the shares as at
     the date of acquisition. During the year ended 30 June 2002, 306,648 Series
     A ordinary shares with a fair value of (pound)14,333,000 were issued as the
     final instalment due in respect of the acquisition of Orbis.

b)   Non-equity share capital
<TABLE>
<CAPTION>

                                                           30 June 2003           30 June 2002          30 June 2001
                                                           (pound)'000            (pound)'000           (pound)'000
   <S>                                                        <C>                   <C>                    <C>
    Authorised, issued and fully paid:
    42,000,002 Deferred Shares of(pound)1 each                42,000                 42,000                42,000
                                                      ------------------     ------------------    ------------------
</TABLE>

     The Deferred Shares do not entitle the holders thereof to receive notice
     of, or attend or vote at, meetings of shareholders of the Company, or to
     receive dividends. Upon liquidation of the Company, the Deferred Shares
     entitle the holders to repayment of the capital paid up on those shares,
     but only after each holder of ordinary shares has received (i) the amount
     paid up on his shares and (ii) an additional sum of $1 million per share.

c)   Share options

     The Company has three executive share option schemes: The NDS 1997
     Executive Share Option Scheme ("the 1997 scheme"), The NDS 1999 Executive
     Share Option Scheme ("the 1999 unapproved scheme") and The NDS UK Approved
     Share Option Scheme ("the 1999 approved scheme"). The provisions of each
     scheme are substantially the same, except that the 1999 approved scheme is
     approved by the UK Inland Revenue for the purposes of granting UK employees
     options over shares in the Company which are free from income tax in the
     hands of the employee under certain circumstances. Following the creation
     of the 1999 unapproved scheme, no further options will be granted under the
     1997 scheme.

     The schemes provide for the grant of options to purchase Series A ordinary
     shares in NDS Group plc with a maximum term of 10 years. Options granted
     under the schemes vest over a four-year period. The schemes authorise
     options to be granted subject to a maximum of 10% of the ordinary shares of
     the Company in issue at the date of grant. Options granted prior to the
     Initial Public Offering were granted at the Directors' estimate of the
     market value of the Company, as supported by independent advice. Vested
     options became exercisable following the Initial Public Offering of the
     Series A ordinary shares on 22 November 1999. With the exception of the
     matter referred to below, all options granted on, and subsequent to, the
     Initial Public Offering have been granted at an exercise price equal to the
     quoted closing price of the Series A ordinary shares on the NASDAQ Exchange
     on the last trading day before the date of grant. On 5 September 2000,
     options over 10,000 shares were granted at an exercise price of $20 per
     share. The intrinsic value of these options as at the date of grant was
     (pound)362,000 (determined using the exchange rate as of the date of
     grant). This amount is being charged to the profit and loss account over
     the vesting period of the options and compensation cost of (pound)40,000
     (2002: (pound)78,000; 2001: (pound)230,000) has been recorded in the year.
     No charge for compensation cost arises in respect of any other options
     granted under these schemes.


                                      F-26
<PAGE>

     In addition, NDS operates employee share ownership schemes in UK, Israel
     and USA. These enable employees to enter into a fixed-term savings contract
     with independent financial institutions linked to an option to subscribe
     for Series A ordinary shares in the Company. The option price is set at a
     discount of between 15% and 20% of the quoted closing price of the Series A
     ordinary shares on the NASDAQ Exchange on the last trading day before the
     announcement of the schemes. The UK scheme is approved as an SAYE scheme by
     the UK Inland Revenue; the schemes available to Israeli and US employees
     have equivalent terms. Accordingly, no charge for compensation costs arises
     in respect of options granted under these schemes.

     The option prices have been determined in US dollars because that is the
     denomination of the market in which the shares are most easily traded. The
     exchange rate as at 30 June 2003 was (pound)1=US$1.6638.

    The number and weighted average exercise prices of options are as follows:
<TABLE>
<CAPTION>

                                                                          Number            Weighted average
                                                                                            exercise price

    <S>                                                                  <C>                      <C>
    Options outstanding, 1 July 2000                                     3,185,700                 $16.030
    Granted                                                                949,529                 $56.193
    Forfeited                                                              (86,816)                $25.394
    Exercised                                                             (295,470)                 $8.718
                                                                  ------------------
    Options outstanding, 30 June 2001                                    3,752,943                 $26.550
    Granted                                                              1,021,638                 $21.734
    Forfeited                                                             (199,135)                $37.308
    Exercised                                                              (69,878)                $10.660
                                                                  ------------------
    Options outstanding, 30 June 2002                                    4,505,568                 $25.229
    Granted                                                                960,927                  $7.601
    Cancelled                                                             (951,815)                $56.919
    Forfeited                                                             (306,771                 $24.833
    Exercised                                                                    -                   -
                                                                  ------------------
    Options outstanding, 30 June 2003                                    4,207,909                 $14.064
                                                                  ------------------

    Options vested, 30 June 2002                                         2,205,173                 $17.753
                                                                  ------------------
    Options vested, 30 June 2003                                         2,389,932                 $13.192
                                                                  ------------------
</TABLE>



                                      F-27
<PAGE>

<TABLE>
<CAPTION>


    Options outstanding as at 30 June 2003 expire as follows:

    Expiry date                                                             Number            Exercise price

   <S>                                                                    <C>                     <C>
    31 August 2004                                                         190,316                $8.096
    31 August 2004                                                          17,278                $8.600
    30 October 2004                                                          2,926               $34.500
    28 February 2006                                                       255,833                $8.096
    21 May 2007                                                            581,261                $8.140
    5 April 2008                                                           447,441                $8.140
    24 March 2009                                                          517,827                $9.850
    4 May 2009                                                               4,000                $9.850
    22 November 2009                                                       771,369               $20.000
    24 January 2010                                                         11,500               $43.000
    24 January 2010                                                         10,000               $20.000
    27 April 2010                                                           13,344               $56.875
    4 December 2010                                                         23,403               $60.000
    3 October 2011                                                         924,315               $21.900
    12 March 2012                                                           23,600               $16.950
    2 June 2012                                                              5,000               $11.400
    20 November 2012                                                       246,796                $6.500
    8 January 2013                                                         153,700                $7.530
    9 February 2013                                                          8,000                $7.490

                                                                  ------------------
                                                                         4,207,909
                                                                  ------------------

</TABLE>

20.  Reserves

     Movements in the Group's reserves for the three years in the period ended
     30 June 2003 are as follows:
<TABLE>
<CAPTION>

                                       Share    Merger      Shares to           Capital   Profit and
                                      premium     reserve    be issued     contribution  loss account       Total
                                  (pound)'000 (pound)'000   (pound)'000     (pound)'000  (pound)'000  (pound)'000

    <S>                               <C>              <C>           <C>        <C>         <C>            <C>
    As at 1 July 2000                 120,726           -             -         133,265     (243,703)        10,288
    Profit for the financial year           -           -             -               -       29,129         29,129
    Issue of shares for cash            6,323           -             -               -       (4,656)         1,667
    Acquisition of Orbis               18,485           -        22,336               -            -         40,821
    Share options                           -           -             -               -          230            230
    Foreign exchange movement               -           -             -               -        1,397          1,397
                                  -----------------------------------------------------------------------------------
    As at 30 June 2001,               145,534           -        22,336         133,265     (217,603)        83,532
     as originally reported
    Prior year adjustment             (18,485)     18,485             -               -            -              -
                                  -----------------------------------------------------------------------------------
    As at 30 June 2001,               127,049      18,485        22,336         133,265     (217,603)        83,532
     as restated
    Profit for the financial year           -           -             -               -       30,678         30,678
    Issue of shares for cash              728           -             -               -         (204)           524
    Acquisition of Orbis                    -      17,000        (8,003)              -            -          8,997
    Share options                           -           -             -               -           78             78
    Foreign exchange movement               -           -             -               -       (2,338)        (2,338)
                                  -----------------------------------------------------------------------------------
    As at 30 June 2002                127,777      35,485        14,333         133,265     (189,389)       121,471
    Profit for the financial year           -           -             -                       26,040         26,040
    Acquisition of Orbis                    -      14,331       (14,333)              -            -             (2)
    Share options                           -           -             -               -           40             40
    Foreign exchange movement               -           -             -               -       (3,617)        (3,617)
                                  -----------------------------------------------------------------------------------
    As at 30 June 2003                127,777      49,816             -         133,265     (166,926)       143,932
                                  -----------------------------------------------------------------------------------
</TABLE>


                                      F-28
<PAGE>


     The prior year adjustment represents the effect of applying merger relief
     under Section 131 of the Companies Act 1985. The prior year adjustment
     gives rise to no net cumulative adjustment to reserves. There is no impact
     on the profit and loss accounts.


21.  Reconciliation of movements in shareholders' funds

     A reconciliation of movements in shareholders' funds for the three years in
     the period ended 30 June 2003 is as follows:
<TABLE>
<CAPTION>

                                                                    Year ended             Year ended            Year ended
                                                                  30 June 2003           30 June 2002          30 June 2001
                                                                   (pound)'000            (pound)'000           (pound)'000

     <S>                                                              <C>                  <C>                    <C>
     Profit for the financial year                                     26,040                 30,678                29,129
     Other recognised gains and losses relating to the year
                                                                       (3,617)                (2,338)                1,397
                                                             ------------------     ----------------------------------------
                                                                       22,423                 28,340                30,526
     Issue of shares for cash                                               -                    525                 1,670
     Acquisition of Orbis                                                   -                  8,999                40,823
     Share options                                                         40                     78                   230
                                                             ------------------     ----------------------------------------
                                                                       22,463                 37,942                73,249
    Opening shareholders' funds                                       163,808                125,866                52,617
                                                             ------------------     ----------------------------------------
    Closing shareholders' funds                                       186,271                163,808               125,866
                                                             ------------------     ----------------------------------------

</TABLE>

22.  Reconciliation of operating profit to operating cash flows

     A reconciliation of operating profit to net cash flow from operating
     activities is as follows:
<TABLE>
<CAPTION>

                                                                    Year ended             Year ended            Year ended
                                                                  30 June 2003           30 June 2002          30 June 2001
                                                                   (pound)'000            (pound)'000           (pound)'000

    <S>                                                               <C>                    <C>                    <C>
     Operating profit                                                  36,803                 42,695                39,180
     Depreciation                                                       8,080                  9,454                 8,533
     Amortisation of intangible fixed assets                            9,736                  7,350                 4,590
     Write-off of investment                                              465                      -                     -
     Share-based compensation                                             361                    398                   230
     Release of deferred capital government grants                       (644)                  (879)                 (485)
     Decrease (increase) in stocks                                     29,448                (14,592)              (10,680)
     Decrease in debtors                                               11,480                    478                 1,181
     Increase (decrease) in creditors                                 (36,464)                15,622                 6,195
     Increase (decrease) in provisions                                (14,468)                 7,390                 5,223
                                                             ------------------     ----------------------------------------
     Net cash inflow from operating activities                         44,797                 67,916                53,967
                                                             ------------------     ----------------------------------------


23.  Analysis of cash flows

a)  Returns on investments and servicing of finance
                                                                    Year ended             Year ended            Year ended
                                                                  30 June 2003           30 June 2002          30 June 2001
                                                                   (pound)'000            (pound)'000           (pound)'000

    Interest received                                                   2,930                  3,122                 2,517
    Interest paid                                                          (8)                  (557)                 (419)
                                                             ------------------     ----------------------------------------
    Net cash inflow                                                     2,922                  2,565                 2,098
                                                             ------------------     ----------------------------------------
</TABLE>




                                      F-29
<PAGE>

<TABLE>
<CAPTION>


b)  Taxation
                                                                    Year ended             Year ended            Year ended
                                                                  30 June 2003           30 June 2002          30 June 2001
                                                                   (pound)'000            (pound)'000           (pound)'000

    <S>                                                               <C>                     <C>                    <C>
    UK tax paid                                                       (10,889)                (9,317)               (5,034)
    Overseas tax paid                                                  (3,702)                (3,758)               (4,136)
                                                             ------------------     ----------------------------------------
    Net cash outflow                                                  (14,591)               (13,075)               (9,170)
                                                             ------------------     ----------------------------------------

c)  Capital expenditure and financial investment
                                                                    Year ended             Year ended            Year ended
                                                                  30 June 2003           30 June 2002          30 June 2001
                                                                   (pound)'000            (pound)'000           (pound)'000

    Purchase of tangible fixed assets                                  (6,120)                (7,736)              (11,645)
    Purchase of intangible fixed assets                                  (482)                     -                     -
    Proceeds from sale of tangible fixed assets                            66                     39                   250
    Capital grants received                                               861                  1,280                   482
    Purchase of investments                                                 -                      -                  (274)
    Proceeds from sale of investments                                     500                      -                     -
                                                             ------------------     ----------------------------------------
    Net cash outflow                                                   (5,175)                (6,417)              (11,187)
                                                             ------------------     ----------------------------------------

d)  Acquisitions and disposals
                                                                    Year ended             Year ended            Year ended
                                                                  30 June 2003           30 June 2002          30 June 2001
                                                                   (pound)'000            (pound)'000           (pound)'000

    Cash payments in connection with acquisitions                      (4,856)                  (300)               (2,969)
    Cash balances acquired with acquisitions                                -                    123                 4,392
    Restricted cash taken off (placed on) deposit in
    connection with acquisitions                                        4,860                 (5,339)              (14,403)
    Investment in associated undertaking                                    -                      -                  (250)
    Loans repaid by (advanced to) associated undertaking                1,667                 (1,045)                 (622)
                                                             ------------------     ----------------------------------------
    Net cash inflow (outflow)                                           1,671                 (6,561)              (13,852)
                                                             ------------------     ----------------------------------------
</TABLE>

     In the year ended 30 June 2002, the contribution of Visionik to the Group's
     consolidated cash flows was not material. In the year ended 30 June 2001,
     Orbis contributed (pound)106,000 to the Group's net operating cash flows,
     contributed (pound)110,000 in respect of net returns on investment and
     servicing of finance, paid (pound)413,000 in respect of taxation and
     utilised (pound)631,000 for capital expenditure.

e)   Management of liquid resources

     During the year ended 30 June 2003, a net amount of (pound)25,637,000 cash
     was placed on short-term deposit with banks (2002: (pound)62,482,000; 2001:
     (pound)nil). Notice periods for withdrawal are between 1 and 77 days.

f)   Financing
<TABLE>
<CAPTION>

                                                                    Year ended             Year ended            Year ended
                                                                  30 June 2003           30 June 2002          30 June 2001
                                                                   (pound)'000            (pound)'000           (pound)'000

   <S>                                                                     <C>                  <C>                  <C>
    Proceeds from issue of shares                                           -                    525                 1,670
    Equity capital contributed by minority interests                      160                      -                     -
    Loan finance provided by minority interests                           366                      -                     -
    Restricted cash taken off deposit                                       -                 14,403                     -
    Repayment of Series A Loan Notes                                        -                (14,403)                    -
    Cash inflow in respect of financing transactions
     with The News Corporation Group                                        -                      -                 5,674
                                                             ------------------     ----------------------------------------
    Net cash inflow (outflow)                                             526                    525                 7,344
                                                             ------------------     ----------------------------------------
</TABLE>



                                      F-30
<PAGE>

g)   Exceptional items

     Cash outflows associated with the exceptional costs referred to in Note 3c
     amount to (pound)4,552,000 (2002: (pound)54,000; 2001: (pound)nil).


24.  Analysis and reconciliation of net funds

a)   Analysis of movements in net funds

     Year ended 30 June 2003
<TABLE>
<CAPTION>
                                                                         Foreign             Other
                                             1 July                      exchange            non-cash     30 June
                                             2002        Cash flow       movements           changes      2003
                                            (pound)'000  (pound)'000    (pound)'000          (pound)'000  (pound)'000

   <S>                                       <C>            <C>             <C>                 <C>     <C>
    Available cash                            30,986        4,153          (2,082)               -        33,417
    Short-term deposits                       62,482       25,637             (16)               -        88,103
    Restricted cash                            5,034       (4,860)           (174)               -             -
                                         ------------ ------------- ---------------- --------------- -------------
    Net cash                                  98,502       25,290          (2,272)               -       121,520
    Loan finance                                   -         (366)              -                -          (366)
    Due in respect of Visionik
    acquisition                               (5,159)       4,856            (350)             263          (390)
                                         ------------ ------------- ---------------- --------------- -------------
   Net funds                                  93,343       29,780          (2,622)             263       120,764
                                         ------------ ------------- ---------------- --------------- -------------

    Year ended 30 June 2002

                                                                         Foreign             Other
                                             1 July                      exchange            non-cash     30 June
                                             2002        Cash flow       movements           changes      2002
                                            (pound)'000  (pound)'000    (pound)'000          (pound)'000  (pound)'000

    Available cash                            50,934      (17,529)         (2,419)               -        30,986
    Short-term deposits                            -       62,482               -                -        62,482
    Restricted cash                           14,403       (9,064)           (305)                         5,034
                                         ------------ ------------- ---------------- --------------- -------------
    Net cash                                  65,337       35,889          (2,724)               -        98,502
    Series A Loan Notes                      (14,403)      14,403               -                -             -
    Due in respect of Visionik
    acquisition                                    -            -             162           (5,321)       (5,159)
                                         ------------ ------------- ---------------- --------------- -------------
    Net funds                                 50,934       50,292          (2,562)          (5,321)       93,343
                                         ------------ ------------- ---------------- --------------- -------------

    Year ended 30 June 2001


                                                                         Foreign             Other
                                             1 July                      exchange            non-cash     30 June
                                             2002        Cash flow       movements           changes      2001
                                            (pound)'000  (pound)'000    (pound)'000          (pound)'000  (pound)'000

    Available cash                            21,734       29,200               -                -        50,934
    Restricted cash                                -       14,403               -                -        14,403
                                         ------------ ------------- ---------------- --------------- -------------
    Net cash                                  21,734       43,603               -                -        65,337
    Due from The News Corporation
    Group in respect of financing
    transactions                               5,674       (5,674)              -                -             -
    Series A Loan Notes                            -            -               -          (14,403)      (14,403)
                                         ------------ ------------- ---------------- --------------- -------------
    Net funds                                 27,408       37,929               -          (14,403)       50,934
                                         ------------ ------------- ---------------- --------------- -------------
</TABLE>


                                      F-31
<PAGE>

<TABLE>
<CAPTION>


b)  Reconciliation of net funds
                                                                      Year ended            Year ended             Year ended
                                                                    30 June 2003          30 June 2002           30 June 2001
                                                                     (pound)'000           (pound)'000            (pound)'000

   <S>                                                                    <C>                <C>                      <C>
    Increase (decrease) in cash in year                                   4,513               (17,529)                29,200
    Cash placed on short-term deposit                                    25,637                62,482                      -
    Cash placed on (withdrawn from) restricted deposit                   (4,860)               (9,064)                14,403
    Loan finance received                                                  (366)                    -                      -
    Paid in respect of Visionik acquisition                               4,856                     -                      -
    Repayment of Series A Loan Notes                                          -                14,403                      -
    Cash inflow (outflow) in respect of financing
    transactions with The News Corporation Group                              -                     -                 (5,674)
                                                               ------------------    -----------------------------------------
    Change in net cash resulting from cash flows                         29,780                50,292                 37,929
    Non-cash transactions                                                   263                (5,321)               (14,403)
    Foreign currency translation differences                             (2,622)               (2,562)                     -
                                                               ------------------    -----------------------------------------
    Movement in net funds in year                                        27,421                42,409                 23,526
    Net funds, beginning of year                                         90,343                50,934                 27,408
                                                               ------------------    -----------------------------------------
    Net funds, end of year                                              120,764                93,343                 50,934
                                                               ------------------    -----------------------------------------

</TABLE>

25.  Non-cash transactions

     Adjustments to the consideration payable in respect of the acquisition of
     Visionik and the issue of shares in respect of the Orbis acquisition are
     non-cash transactions.


26.  Commitments and contingencies

a)   Financial commitments

     Capital expenditure contracted for but not provided in the financial
     statements amounted to (pound)0.1 million (2002: (pound)0.9 million; 2001:
     (pound)1.9 million).

b)   Lease commitments

     The Company and certain subsidiary undertakings occupy buildings held on
     short-term leases. The annual rentals paid on these leases during the year
     ended 30 June 2003 were (pound)6,882,000 (2002: (pound)6,547,000; 2001:
     (pound)4,767,000). The rents payable under these leases are subject to
     renegotiation at various intervals specified in the leases. Certain of the
     leases are held by companies within The News Corporation Group. NDS has
     entered into indemnity agreements whereby it will be liable for all amounts
     due relating to the leases. Minimum annual commitments under operating
     leases are as follows:
<TABLE>
<CAPTION>

                                                                    30 June 2003          30 June 2002
                                                                     (pound)'000           (pound)'000
    <S>                                                                  <C>                    <C>
    Expiry date of lease:
             - Within one year                                              351                    48
             - In two to five years inclusive                             2,945                 2,910
             - Over five years                                            2,701                 2,135
                                                               ------------------    ------------------
                                                                          5,997                 5,093
                                                               ------------------    ------------------

    The future minimum rental commitments as of 30 June 2003 fall due in the following periods:

    Year ending 30 June                                              (pound)'000

    2004                                                                  5,997
    2005                                                                  6,260
    2006                                                                  5,501
    2007                                                                  4,685
    2008                                                                  4,432
    Thereafter                                                           31,100
                                                               ------------------
                                                                         57,975
                                                               ------------------
</TABLE>



                                      F-32
<PAGE>

     An element of these amounts is included within the provision for onerous
     leases shown in Note 17. The Company and certain subsidiary undertakings
     have contingent liabilities in respect of premises previously leased to NDS
     and currently assigned or sub-let to third parties. Should the current
     tenants default on payment or terminate their leases then NDS may be liable
     to make payments to the landlords. The maximum amount of this contingent
     liability (over and above what is provided for) as at 30 June 2003 was
     (pound)3.0 million.


c)   Litigation

     In March 2002, Groupe Canal+S.A., Canal+ Technologies S.A. and Canal+
     Technologies Inc., subsidiaries of Vivendi (collectively, "Canal+"), filed
     a lawsuit against NDS Group plc and NDS Americas Inc. (a subsidiary
     company) in the United States District Court for the Northern District of
     California, alleging acts of improper conduct, including unfair competition
     and copyright infringement, in connection with the conditional access
     systems operated by Canal+. In October 2002, Canal+ and NDS agreed to a
     stay of all proceedings pending regulatory approval of the The News
     Corporation Group's acquisition of Telepiu S.p.A. The action was dismissed
     with prejudice on May 14, 2003, after consummation of the acquisition. In
     September 2002, EchoStar Communications Corporation and several affiliates
     (collectively, "Echostar") asked the court's permission to intervene in the
     action, asserting that they have claims similar to those asserted by
     Canal+. Additionally, in October 2002, MEASAT Broadcast Network Systems
     Sendirian Berhad, a Malaysian satellite broadcaster, requested permission
     to intervene in the action, and in December 2002, Sogecable S.A., owner of
     Canal Satelite Digital, a Spanish satellite broadcaster and a customer of
     Canal+ Technologies ("Sogecable"), similarly requested permission to
     intervene. Upon dismissal of the action, the motions to intervene became
     moot.

     In September 2002, NDS Group plc and two of its subsidiaries were named as
     defendants in a lawsuit filed by DIRECTV, Inc. and certain of its
     affiliates in the United States District Court for the Central District of
     California. At DIRECTV's request, the action was filed under seal. On 21
     October 2002, NDS filed counterclaims against DIRECTV and a chip
     manufacturer. In late April 2003, the parties agreed to stay proceedings
     pending efforts to resolve the disputes through mediation. In August 2003,
     the parties agreed to stay the litigation between them until the closing of
     The News Corporation Group's acquisition of a 34% interest in Hughes
     Electronics Corporation ("Hughes"), the parent company of DIRECTV. Upon the
     closing of the acquisition of the Hughes interest, the litigation and all
     claims and counterclaims alleged therein will be dismissed with prejudice.

     On 2 October 2002, NDS Americas, Inc. was served with subpoenas by the U.S.
     Attorney's office in San Diego, California, seeking documents apparently in
     connection with an investigation related to the claims by Canal+ referred
     to above and the EchoStar claims referred to below. NDS is co-operating
     with the investigation. NDS was advised by the U.S. Attorney's Office in
     San Diego that it is not currently considered either a target or a subject
     in the investigation. Lead responsibility for the investigation has
     recently been transferred to the U.S. Attorney's Office for the Central
     District of California.

     On 6 June 2003, Echostar Communications Corporation, Echostar Satellite
     Corporation, Echostar Technologies Corporation and Nagrastar L.L.C.
     (collectively, "Echostar") filed an action against NDS in the United States
     District Court for the Central District of California. Echostar filed an
     amended complaint on 8 October 2003. The amended complaint purports to
     allege claims for violation of the Digital Millennium Copyright Act, the
     Communications Act of 1934, the Electronic Communications Privacy Act, The
     Computer Fraud and Abuse Act, California's Unfair Competition statute and
     the federal Racketeer Influenced and Corrupt Organizations ("RICO")
     statute. The complaint also purports to allege claims for civil conspiracy,
     misappropriation of trade secrets and interference with prospective
     business advantage. The complaint seeks injunctive relief, compensatory and
     exemplary damages and restitution. NDS filed a motion to dismiss the
     amended complaint on 7 November 2003, which is scheduled to be heard on 22
     December 2003.

     On 25 July 2003, Sogecable, S.A. and its subsidiary Canalsatellite Digital,
     S.L. (together, "Sogecable"), Spanish satellite broadcasters and customers
     of Canal+, filed an action against NDS in the United States District Court
     for the Central District of California. Sogecable filed an amended
     complaint on 9 October 2003. The amended complaint purports to allege
     claims for violation of the Digital Millennium Copyright Act and the
     federal RICO statute. The complaint also purports to allege claims for
     interference with contract and prospective business advantage. The
     complaint seeks injunctive relief, compensatory and exemplary damages and
     restitution. NDS filed a motion to dismiss the amended complaint on 7
     November 2003, which is scheduled to be heard on 22 December 2003.

     The costs of dealing with these matters have been expensed as incurred and
     shown as an exceptional item. Any further costs incurred will be recorded
     in financial statements for future periods.

d)   Severance pay

     In certain countries in which NDS operates, it is required to make
     severance payments to dismissed employees and employees leaving employment
     in certain other circumstances, on the basis of the latest monthly salary
     for each year of service. This liability is provided for by payments of
     premiums to insurance companies under approved plans. Provision is made in
     the financial statements for amounts payable to employees of NDS
     Technologies Israel Limited, an Israeli subsidiary undertaking, that are
     not funded by insurance policies.


                                      F-33
<PAGE>
<TABLE>
<CAPTION>


     The gross liability and the amount funded by insurance policies are:

                                                                             30 June 2003          30 June 2002
                                                                              (pound)'000           (pound)'000

    <S>                                                                            <C>                 <C>
    Gross severance pay                                                            9,985                 9,117
    Amounts funded by insurance policies                                          (9,348)               (7,708)
                                                                        ------------------    ------------------
    Net provision                                                                    637                 1,409
                                                                        ------------------    ------------------
</TABLE>

     Because the gross liability reflects the contracts of employment, it is
     denominated in US dollars, whereas the amount funded by insurance policies
     is regulated by the Israeli Government and is denominated in Israeli
     shekels. Accordingly, the net provision is subject to fluctuations
     depending on the relative values of the US dollar and Israeli shekel. The
     net provision above is included within the provision for employee benefits
     and taxes in Note 17.

e)   Government grants

     A subsidiary company has received government grants towards the cost of
     certain capital expenditure. If the conditions of the grants are not
     complied with, the grants may be required to be refunded, in whole or in
     part, with interest from the date of receipt. The major conditions relating
     to a grant concern the maintenance of adequate non-distributable reserves
     and retention of the associated assets for a set period of time. The
     cumulative amount received and receivable to 30 June 2003 amounted to
     approximately (pound)6.3 million. It is not anticipated that any repayment
     will be required. The fixed assets of the subsidiary company, with a net
     book value of approximately (pound)6.4 million as at 30 June 2003, are the
     subject of a floating charge to secure compliance with the terms of the
     grants.

f)   Intellectual property rights

     The nature of the Group's business is such that it is subject to claims by
     third parties alleging infringements of various intellectual property
     rights. NDS vigorously defends such claims. Where a liability arising from
     these claims is probable, provision is made based on management's best
     estimate. It is not considered that any resulting liability in excess of
     amounts provided for in these financial statements would materially affect
     the financial position of NDS.

g)   National Insurance on share options

     The Company has granted options to certain UK employees under unapproved
     share option schemes. UK law levies Employer's National Insurance
     contributions on the gains made by employees upon exercise of options
     issued under certain unapproved share option schemes. The charge applies to
     options granted after 5 April 1999. Provision is made over the vesting
     period of relevant options based on the prevailing National Insurance rate
     and the difference between the market value of the underlying shares at the
     balance sheet date (being $15.490 per share) and the option exercise price.
     A similar liability to National Insurance arises on undistributed, fully
     vested assets held by an employee benefits trust, which will crystallise
     when the assets are distributed. The amount provided as at 30 June 2003 and
     included within provision for employee benefits and taxes in Note 17 was
     (pound)128,000 (2002: (pound)84,000; 2001: (pound)514,000). The provision
     is expected to be utilised over the life of the options as set out in Note
     18c. The provision would not have been materially different if all relevant
     options extant at 30 June 2003 had been capable of being exercised on that
     date. This liability would increase by approximately (pound)13,000, had the
     stock price been 10% higher than that prevailing on 30 June 2003.

h)   Guarantees

     NDS has entered into various warranties and guarantees to support
     performance bonds issued to customers to which it has supplied technology.
     The nature of these commitments has been considered in determining the
     revenues and costs recognised in these financial statements.

     The Company and certain subsidiaries have entered into cross-guarantees
     with HSBC Bank plc providing mutual guarantees with other companies within
     The News Corporation Group for amounts owed to the bank. The terms and
     maximum amount of the guarantee are not defined; no amounts were
     outstanding as at 30 June 2003.

i)   Minority shareholder

     The minority shareholder has a call option to purchase shares from NDS such
     that the Group's investment in Fancy a Flutter Limited would be reduced to
     50%. The option may be exercised during the period from 16 May 2004 to 15
     June 2004, in which case the price will be (pound)1,350,000. Alternatively
     it may be exercised during the period 15 April 2005 to 15 May 2005, in
     which case the price will be (pound)3,500,000.


                                      F-34
<PAGE>

27.  UK defined benefit pension obligations

     NDS has certain liabilities to a small number of current and former
     employees who are members of a UK defined benefit pension scheme. The most
     recent actuarial valuation was carried out as at 1 December 2001. This
     showed an excess of liabilities over assets of approximately (pound)1.1
     million, which equates to a funding level of 79%, as measured in the manner
     prescribed by UK Government regulations. Under the Group's current
     accounting policy, the charge for the year in respect of the defined
     benefit scheme was (pound)150,000 (2002: (pound)631,000; 2001:
     (pound)130,000). No contributions were unpaid or prepaid as at 30 June 2003
     or 30 June 2002.

     As at 30 June 2001, the scheme was a multi-employer plan and the previous
     actuarial valuation and contribution rates were such that there was no
     material difference between the contributions paid by NDS and the
     cumulative costs charged to the profit and loss account. The scheme was
     split during the year ended 30 June 2002 and as a result of the latest
     actuarial valuation the amount charged to the profit and loss account
     currently exceeds the contribution rate. As at 30 June 2003, provisions for
     employee benefits and taxes in Note 17 includes an amount of (pound)327,000
     (2001: (pound)500,000) in respect of the difference between cash payments
     and cumulative costs charged to the profit and loss account. The scheme is
     closed and the age profile of the active membership is rising significantly
     and therefore the current service cost is likely to increase over the
     coming years. The trustees of the scheme, the actuaries and the Directors
     have agreed to make additional lump sum payments into the scheme.

     The actuarial valuation has been updated to 30 June 2003 using the
     following assumptions:
<TABLE>
<CAPTION>

                                                                                    As at                 As at
                                                                             30 June 2003          30 June 2002

   <S>                                                                              <C>                   <C>
    Rate of increase in salaries                                                    4.5%                  4.7%
    Rate of increase in pensions in payment                                         3.2%                  3.2%
    Discount rate                                                                   5.3%                  5.8%
    Inflation assumption                                                            2.5%                  2.7%
                                                                        ------------------    ------------------
</TABLE>

     The assets in the scheme and the expected rate of return were as follows:
<TABLE>
<CAPTION>

                                        Long-term rate of                          Long-term rate of
                                        return expected at    Value at             return expected     Value at
                                        30 June 2003          30 June 2003         at 30 June 2002     30 June 2002

    <S>                                        <C>            <C>                       <C>            <C>
                                                             (pound)'000                              (pound)'000
    Equities                                   6.50%               2,435                7.00%                3,259
    Bonds                                      4.90%               1,571                5.40%                  741
    Other                                      4.00%                  28                4.00%                  191
                                                         -------------------                      -------------------
    Total market value of assets                                   4,034                                     4,191
    Present value of liabilities                                  (8,309)                                   (7,144)
                                                         -------------------                      -------------------
    Deficit in the scheme                                         (4,275)                                   (2,953)
    Related deferred tax asset                                     1,283                                       886
                                                         -------------------                      -------------------
    Net pension liability                                         (2,992)                                   (2,067)
                                                         -------------------                      -------------------
</TABLE>

     The amounts have not been recognised in these financial statements because
     NDS has elected to provide only the disclosures required by FRS 17 until
     its full adoption becomes mandatory. Had FRS 17 been adopted, the effect
     would have been as follows:
<TABLE>
<CAPTION>

                                                                                  Year ended             Year ended
                                                                                30 June 2003           30 June 2002
                                                                                 (pound)'000            (pound)'000
   <S>                                                                                <C>                     <C>
    Analysis of amount charged to operating profit
    Current service cost                                                               90                      111
    Past service cost                                                                   -                        -
                                                                         --------------------     ------------------
    Total operating charge                                                             90                      111
                                                                         --------------------     ------------------

    Analysis of amount charged to other finance income
    Expected return on pension scheme assets                                          285                      305
    Interest on pension scheme liabilities                                           (416)                    (382)
                                                                         --------------------     ------------------
    Net finance cost                                                                 (131)                     (77)
                                                                         --------------------     ------------------
</TABLE>



                                      F-35
<PAGE>
<TABLE>
<CAPTION>

                                                                                  Year ended             Year ended
                                                                                30 June 2003           30 June 2002
                                                                                 (pound)'000            (pound)'000
     <S>                                                                              <C>                    <C>
    Analysis of amount recognised in statement of total recognised
    gains and losses
    Actual return less expected return on pension scheme assets                      (712)                  (1,110)
    Experience gains arising on the scheme liabilities                                 50                      599
    Changes in assumptions underlying the present value of the scheme
    liabilities                                                                      (747)                    (684)
                                                                         --------------------     ------------------
    Actuarial loss recognised in statement of total recognised gains
    and losses                                                                     (1,409)                  (1,195)
                                                                         --------------------     ------------------

    Movement in deficit during the year
    Deficit in scheme, beginning of year                                           (2,953)                  (1,701)
    Movement in year:
             Current service cost                                                     (90)                    (111)
             Contributions                                                            308                      131
             Past service costs                                                         -                        -
             Other finance charges                                                   (131)                     (77)
             Actuarial loss                                                        (1,409)                  (1,195)
                                                                         --------------------     ------------------
    Deficit in scheme, end of year                                                 (4,275)                  (2,953)
                                                                         --------------------     ------------------



                                                                                   As at                  As at
                                                                               30 June 2003           30 June 2002
                                                                               (pound)'000            (pound)'000
    Balance sheet presentation
    Net assets as reported                                                        186,271                  163,808
    Effect of SSAP 24, net of tax                                                     229                      350
                                                                         --------------------     ------------------
    Net assets excluding pension deficit                                          186,500                  164,158
    Pension deficit                                                                (2,992)                  (2,067)
                                                                         --------------------     ------------------
    Net assets including pension deficit                                          183,508                  162,091
                                                                         --------------------     ------------------

    Reserves note
    Profit and loss reserve as reported                                          (166,926)                (189,389)
    Effect of SSAP 24, net of tax                                                     229                      350
                                                                         --------------------     ------------------
    Profit and loss reserve excluding pension deficit                            (166,697)                (189,039)
    Pension reserve                                                                (2,992)                  (2,067)
                                                                         --------------------     ------------------
    Profit and loss reserve                                                      (169,689)                (191,106)
                                                                         --------------------     ------------------
</TABLE>


28.  Related party transactions

     NDS conducts business transactions with The News Corporation Group on
     normal commercial terms. These entities are considered to be related
     parties. Agreements covering these arrangements were entered into in the
     context of a parent-subsidiary relationship and therefore are not the
     result of arm's-length negotiations between independent parties. There can
     be no assurance therefore, that each of the agreements, or the transactions
     provided for therein, or any amendments thereof will be effected on terms
     at least as favourable to NDS as could have been obtained from unaffiliated
     third parties.

     These transactions are of two main types, which are the provision by NDS of
     integrated broadcast systems and the receipt by NDS of administrative
     services from The News Corporation Group.

a)   Provision of integrated broadcast systems

     Integrated broadcast systems are supplied to both associated undertakings
     and a subsidiary undertaking of The News Corporation Limited. The principal
     related undertakings supplied by NDS are BSkyB, Sky Brasil, Innova, DTH
     TechCo, Sky Columbia, Sky Chile, Sky Argentina, Sky Italia and STAR TV. For
     the year ended 30 June 2003, turnover included (pound)79 million (2002:
     (pound)87 million; 2001: (pound)91 million) from such related parties. As
     at 30 June 2003, (pound)13 million (2002: (pound)17 million) was receivable
     from such related parties for goods and services supplied. Amounts
     receivable are stated net of valuation reserves of (pound) nil (2002:
     (pound)0.6 million).


                                      F-36
<PAGE>

b)   Administration and finance services

     The News Corporation Group provided services under a Master Intercompany
     Agreement which provides, among other things, for arrangements governing
     the relationship between NDS and The News Corporation Group. The
     consideration for each of the services and other arrangements set forth in
     the Master Intercompany Agreement is mutually agreed and based upon
     allocated costs. All such consideration and any material arrangements are
     subject to the approval of the Audit Committee of NDS Group plc. The
     services covered by the Master Intercompany Agreement include cash
     management and financing, services of Group employees, facility
     arrangements, employee matters, including pensions and certain other
     services. Amounts charged in respect of these services amounted to
     (pound)124,000 (2002: (pound)119,000; 2001: (pound)105,000, together with a
     refund of amounts previously charged of (pound)339,000, resulting in a net
     credit for the year of (pound)234,000).

     As at 30 June 2003, (pound)1.6 million, (2002: (pound)9.3 million) was owed
     to The News Corporation Group in respect of administrative services and
     operating costs paid on behalf of NDS.

     NDS has a short-term loan facility of (pound)30 million from a subsidiary
     of The News Corporation Limited, which is considered to be adequate for the
     Group's needs. The facility has no expiry date and no amounts were drawn
     down as at 30 June 2003 or 30 June 2002.

     The Company and certain subsidiaries have entered into cross-guarantees
     with HSBC Bank plc providing mutual guarantees with other companies within
     The News Corporation Group for amounts owed to the bank. The terms and
     maximum amount of the guarantee are not defined; no amounts were
     outstanding as at 30 June 2003.


c)   UK Corporation Tax

     NDS Group plc entered into a Group Relief Agreement, with a UK subsidiary
     of The News Corporation Limited, which provides for the mutual surrender of
     losses and other allowances by group relief. Subject to the terms of the
     agreement, the party accepting such surrender shall pay or cause to be paid
     to the surrendering party an amount equal to the amount of tax such
     accepting party would have paid but for such surrender. The Group tax
     charge includes such amounts and part of the corporate tax liability
     included in these financial statements may be settled by payments to The
     News Corporation Group, rather than the Inland Revenue.


29.  Derivatives and financial instruments

a)   Qualitative discussion on financial risks

     NDS is exposed to financial risk factors in the normal course of business.
     The disclosures in this note deal with financial assets and financial
     liabilities as defined in FRS 13: "Derivatives and other financial
     instruments: Disclosures". For this purpose non-equity shares issued by the
     Company are dealt with in the disclosures in the same way as the Group's
     financial liabilities but separately disclosed. Certain financial assets
     such as investments in subsidiary and associated companies are also
     excluded from the scope of these disclosures. As permitted by FRS 13,
     short-term debtors and creditors have been excluded from the disclosures,
     other than the currency disclosures. The principal factors identified by
     the Directors are as follows:

     Foreign exchange

     NDS operates in international markets and has operational presence in
     several countries. Accordingly it has substantial transactions which are
     denominated in US dollars as well as its functional currency of pounds
     sterling. The Directors view these two currencies as being the two main
     currencies of international trade and will enter into contracts denominated
     in either currency. All material contracts with customers in Latin America
     and the Asia-Pacific region are denominated in US dollars. From time to
     time, commercial pressures have resulted in contracts being entered into in
     other currencies, mainly euros.

     Gains or losses arising on the realisation or revaluation of monetary
     assets and liabilities are included within administrative expenses, as
     explained more fully in Note 1k. Movements in foreign exchange rates
     generated foreign exchange gains of (pound)1.1 million (2002: losses of
     (pound)1.4 million) recognised in the profit and loss account. Differences
     arising on the retranslation of the opening net assets and results of
     overseas operations resulted in losses of (pound)3.6 million (2002: losses
     of (pound)2.3 million) being recognised as a movement in consolidated
     reserves.

     Inflation

     Inflation has not had any significant impact on the results of operations
     during either of the two years ended 30 June 2003.


                                      F-37
<PAGE>

     Credit risk

     NDS is exposed to the risk that a customer may default on payment of
     amounts due under contracts. A substantial proportion of revenues is
     derived from large corporations with substantial assets, but many customers
     are in the early stages of their business cycle when they are investing
     heavily to build their businesses which increases credit risk.
     Additionally, a number of customers are located in countries subject to
     exchange control regulations, which may restrict their ability to settle
     debts on a timely basis. The Directors' policy is to reduce credit risk by
     close monitoring of trade receivables and, if necessary, requiring payment
     of at least part of amounts due under contracts in advance. Potential
     customers who are in early stages of development are investigated before
     orders are accepted to ensure that their business plans appear reasonable
     and that their investors are credible. During the year a bad debt expense
     of (pound)1.6 million has been recorded, primarily as a result of customer
     defaulting on an agreed payment plan.

     Interest rate risk

     NDS has entered into no fixed rate borrowings. As at 30 June 2003, NDS had
     cash of (pound)121.5 million. Cash in excess of immediate requirements is
     placed on short-term deposit, earning variable-rate interest. Accordingly
     NDS is not currently exposed to fixed interest rate risk.

     Investment risk

     NDS holds no equity investments, other than in its subsidiaries.
     Accordingly it is not exposed to investment risk.

b)   Liquidity and interest rate risks
     As at 30 June 2003 the NDS Group had no net debt.

     The News Corporation Group operates collective sterling overdraft
     facilities with its bankers which allows individual companies in that group
     to become overdrawn subject to an agreed limit not being exceeded in
     aggregate. Interest is paid by NDS on sterling overdrafts and is received
     on sterling cash balances. Such interest is paid to or received from The
     News Corporation Group.

     NDS has a short-term loan facility of (pound)30 million from a subsidiary
     of The News Corporation Limited, which is considered to be adequate for the
     Group's needs. The facility has no expiry date.

     As at 30 June 2003, the NDS Group had free cash balances of (pound)121.5
     million. The average interest rate applied to cash balances during the year
     was 2.5%.

     The Company has non-equity capital in the form of deferred shares with a
     book value of (pound)42 million as set out in Note 19b. Given the terms of
     the deferred shares, their fair value is assumed to be zero.

c)   Currency risks

     NDS has not entered into any free-standing derivative contracts during
     either of the two years ended 30 June 2003 to mitigate against currency
     risk. All monetary assets and liabilities as at 30 June 2003 have been
     stated in sterling at their re-valued amounts using year end exchange
     rates.

     The table below analyses the net monetary assets or liabilities as at 30
     June 2003 that are denominated in currencies that are not the functional
     currency of the operating unit concerned:

<TABLE>
<CAPTION>

    Net foreign currency assets (liabilities)                    Functional currency of operating unit
                                                             ----------------------------------------------
                                                                          Sterling               US dollar              Total
                                                                       (pound)'000             (pound)'000        (pound)'000

   <S>                                                                      <C>                  <C>                  <C>
    Sterling                                                                    -                  15,133             15,133
    US dollar                                                              18,662                       -             18,662
    Israeli shekel                                                              -                   9,710              9,710
    Australian dollar                                                        (321)                      -               (321)
    Euro                                                                    3,103                       -              3,103
    Other                                                                    (385)                    (19)              (404)
                                                             ----------------------    --------------------    ---------------
                                                                           21,059                  24,824             45,883
                                                             ----------------------    --------------------    ---------------
</TABLE>


                                      F-38
<PAGE>


     The table below analyses the net monetary assets or liabilities as at 30
     June 2002 that are denominated in currencies that are not the functional
     currency of the operating unit concerned:

<TABLE>
<CAPTION>

    Net foreign currency assets (liabilities)                    Functional currency of operating unit
                                                             ----------------------------------------------
                                                                          Sterling               US dollar                Total
                                                                       (pound)'000             (pound)'000          (pound)'000

   <S>                                                                      <C>                    <C>                 <C>
    Sterling                                                                    -                  11,886               11,886
    US dollar                                                               5,227                       -                5,227
    Israeli shekel                                                              -                   1,682                1,682
    Australian dollar                                                         551                       -                  551
    Euro                                                                   (3,885)                      3               (3,882)
    Other                                                                    (434)                      -                 (434)
                                                             ----------------------    --------------------    -----------------
                                                                            1,459                  13,571               15,030
                                                             ----------------------    --------------------    -----------------
</TABLE>

d)   Fair values of financial assets and liabilities

     The Group has received loan finance from the minority shareholder in Fancy
     a Flutter Limited. The loan finance is interest free and is repayable in 24
     monthly instalments commencing 15 May 2005. Its nominal value as at 30 June
     2003 was (pound)366,000 and its estimated fair value was (pound)308,000.

     In addition to the above, the Group's financial assets and liabilities
     comprise cash and short-term deposits, debtors, creditors and provisions,
     for which the fair value is equal to the book value.


30.  Controlling party

     Throughout the period covered by these financial statements, NDS Group plc
     has been under the control of The News Corporation Limited, a company
     registered in Australia. As at 30 June 2003, The News Corporation Limited
     owned approximately 77.80% of the Company's equity share capital and 100%
     of the Company's non-equity share capital; its interest in the overall
     voting capacity of the Company's equity was approximately 97.23%. The News
     Corporation Limited's interest in the Company's shares is held by its
     wholly owned subsidiary, NDS HoldCo, Inc. a US corporation.

     The accounts of the smallest group into which the accounts of the Company
     are consolidated are contained herein. The largest group into which they
     are consolidated is that headed by The News Corporation Limited. Copies of
     those accounts are available from The News Corporation Limited, 2 Holt
     Street, Sydney, New South Wales 2010, Australia.

31.  Summary of differences between UK and US GAAP

     The accounting policies under which the consolidated financial statements
     of the Group are prepared conform to accounting principles generally
     accepted in the United Kingdom (``UK GAAP''). These differ from generally
     accepted accounting principles in the United States (``US GAAP'') as
     regards the Group in the following significant respects.

a)   Recognition of subscriber fees

     Under UK GAAP, subscriber fees are recognised as the services are
     performed. When the services include an obligation to supply smart cards in
     the future at no extra charge to the broadcaster, a changeover provision is
     made in the financial statements which reflects the amount of the total
     anticipated costs relating to the subscriber fees recognised to date.

     Under US GAAP, the costs of supplying smart cards are recognised upon
     shipment of the smart cards to the broadcaster or its subscribers. A
     portion of the subscriber fee revenue is deferred, equivalent to the
     estimated fair value of the cards, which has been calculated based on the
     revenue that NDS would expect to earn in supplying an equivalent volume of
     cards in a standalone arrangement, and no changeover provision is recorded.
     This revenue is recognised upon eventual shipment of the smart cards to the
     broadcaster or its subscribers. During 2003, the Group shipped significant
     volumes of smart cards at no extra cost to fulfil its obligations to a
     customer and accordingly, revenue which had been deferred in previous years
     was recognised.

     In 2003, this had the effect on the income statement of increasing revenue
     by (pound)19,572,000 (2002: reducing revenue by (pound)6,061,000; 2001:
     reducing revenue by (pound)8,359,000) and of increasing cost of sales by
     (pound)13,980,000 (2002: reducing cost of sales by (pound)4,329,000; 2001:
     reducing cost of sales by (pound)5,971,000). On the balance sheet, this
     resulted in an increase in deferred revenue of (pound)4,088,000 (2002:
     (pound)23,660,000) and a reduction in provisions of (pound)2,920,000 (2002:
     (pound)16,900,000).


                                       39
<PAGE>

b)   Amortisation of goodwill

     In June 2001, the Financial Accounting Standards Board issued SFAS 142:
     "Goodwill and Other Intangible Assets". SFAS 142 eliminates the requirement
     to amortise goodwill and identifiable intangible assets that have
     indefinite useful lives. However, it requires that such assets be tested
     for impairment at least annually using guidance specifically provided in
     the statement. SFAS 142 was adopted by NDS on 1 July 2002. Consequently,
     under US GAAP, goodwill is no longer amortised from this date. The
     Directors concluded that no transitional impairment charge is required as
     at 1 July 2002 and that no impairment charge is required as at 30 June
     2003. After the adoption of SFAS 142 the aggregate amount of goodwill is
     presented as a single line item.

     In the profit and loss account for the year ended 30 June 2003, this has
     the effect of reducing goodwill amortisation by (pound)7,845,000; in the
     balance sheet as at 30 June 2003, the effect of presenting goodwill as a
     single line item is to decrease the cost of goodwill by (pound)22,773,000
     and accumulated amortisation by (pound)30,618,000.

c)   Purchase accounting

     (i) Orbis

     Under the agreement for the acquisition of Orbis, NDS was required to make
     additional payments in the form of Series A ordinary shares, with the
     number of shares being determined by the revenues and profitability of
     Orbis for the two years ended 31 March 2002. Payment was contingent on
     certain employees and former shareholders of the acquired company remaining
     in employment up to a specified date.

     Under UK GAAP, NDS has accounted for an allocation of the additional share
     payments as part of staff costs; the amount was determined by estimating
     the value to the Company of the employment lock-in clauses for former
     shareholders and amortising that amount over the relevant period. The
     remaining value of the additional share payments was accounted for as
     contingent consideration and, at 30 June 2001, the best estimate of the
     amount likely to be payable in respect of such consideration was accrued
     and included in goodwill arising as at the date of acquisition. In the year
     ended 30 June 2002, these amounts were adjusted for actual amounts payable.
     The fair value of consideration payable in shares was determined by
     reference to the market price of Series A ordinary shares at the time the
     transaction was completed. To the extent that shares had not been issued as
     at 30 June 2002, the estimated fair value of such shares was shown as a
     separate element of shareholders' funds. All remaining shares due as a
     result of this acquisition were issued during the year ended 30 June 2003.

     Under US GAAP, the contractual terms relating to the additional share
     payments cause all, rather than just part, of the additional share payments
     to be treated as compensation cost for post-acquisition services, which is
     accrued over the relevant service period. To the extent that the cumulative
     compensation cost incurred as at the balance sheet date differs from the
     estimated fair value of the shares issued, the difference is accounted for
     within stockholders' equity. Where the number of shares to be issued was
     determinable as at the acquisition date, the fair value of those shares was
     determined by reference to the market price at the time of the acquisition.
     Where the number of shares was not determinable as at the acquisition date,
     the fair value of those shares was determined by reference to the market
     price when the contingencies were resolved. To the extent that compensation
     cost payable in shares was accrued in advance of the contingencies being
     resolved, the fair value of those shares was estimated by reference to the
     market price as at the balance sheet date.

     This has the effect of increasing compensation costs in the profit and loss
     account by (pound)1,601,000 (2002: (pound)3,794,000; 2001:
     (pound)7,371,000) and reducing cost of goodwill by (pound)31,999,000 and
     decreasing prepaid compensation on the balance sheet by (pound)134,000. In
     the prior year his had the additional effect of reducing amortisation of
     goodwill by (pound)3,025,000 (2001: (pound)1,662,000), reducing the cost of
     goodwill by (pound)36,721,000, reducing accumulated amortisation by
     (pound)4,688,000 and reducing prepaid compensation by (pound)454,000.

     At acquisition, a further difference in goodwill arose in respect of en
     element of licence fee income which was recognised as a pre-acquisition
     item under UK GAAP and a post-acquisition item under US GAAP. The effect in
     the 2001 profit and loss account is to reduce revenues by (pound)677,000.

     (ii) Visionik

     Under the agreement for the acquisition of Visionik, NDS may be required to
     make additional cash payments should the revenues and profitability of the
     business for the two years ending 31 May 2004 exceed certain thresholds.

     Under UK GAAP, where the consideration paid for an acquisition includes a
     contingent payment, the best estimate of the amount likely to be payable in
     respect of such consideration is accrued within provisions for liabilities
     and charges and included within goodwill from date of acquisition. That
     estimate is revised each period until the final amount due (if any) becomes
     determinable. Thus the fair value of the consideration payable for Visionik
     includes an estimate of contingent amounts, which will be amended as the
     amounts become determinable.


                                      F-40
<PAGE>

     Under US GAAP, contingent consideration is only recognised when the
     contingencies are resolved.

     This has no effect in 2003. The effect in 2002 was to reduce the cost of
     goodwill and provisions for contingent consideration by (pound)2,895,000,
     to reduce amortisation of goodwill by (pound)34,000 and to decrease
     accumulated amortisation by (pound)34,000.

d)   Stock-based compensation

     Certain share options were issued to employees prior to 22 November 1999,
     the date of the Company's Initial Public Offering and from which an open
     market existed in the Company's shares. The options were granted at an
     estimate of the market value as at the date of grant. Under UK GAAP, no
     compensation cost arises. Additionally, no compensation cost arises in
     respect of options issued to an employee share purchase plan,
     notwithstanding the fact that the options were issued at a discount to
     market value, because the terms of the schemes satisfy the criteria for
     exemption from recording a compensation cost under UK GAAP. Further,
     options granted within six months of the cancellation of options with less
     favourable terms do not give rise to a charge for compensation cost under
     UK GAAP.

     Under US GAAP, NDS has elected to account for stock-based compensation for
     employees under Accounting Principles Board Opinion No. 25 ("APB 25").
     Under APB 25, the measurement date is the date of the Initial Public
     Offering and a compensation cost is charged to the profit and loss account
     equal to the difference between the exercise price and the market price of
     the shares as set by the Initial Public Offering. The compensation cost is
     charged over the vesting period of the options. Similarly, options granted
     under employee share ownership schemes fail to meet the US GAAP definition
     of non-compensatory plans and a compensation cost is charged to the profit
     and loss account equal to the difference between the option price and the
     market price of the shares on the date the option was granted. The
     compensation cost is charged over the term of the associated savings
     contract. Further, variable accounting is required for certain options
     granted during 2003 which were deemed to be a re-pricing of subsequently
     cancelled unrelated options.

     These items have the effect of decreasing net income in the year ended 30
     June 2003 by (pound)527,000 (2002: increase of (pound)86,000; 2001:
     decrease of (pound)1,470,000). The item has no effect on shareholders'
     equity.

e)   National Insurance on share options

     Under UK GAAP, the liability to pay UK employers' National Insurance on
     gains made by employees on the exercise of certain share options granted
     after 1 April 1999 is accrued over the vesting period and is based on the
     market price of the Company's shares at the balance sheet date.

     Under US GAAP, the recognition point for liabilities for UK employers'
     National Insurance is when the relevant options are exercised.

     The effect is to increase operating income by (pound)44,000 (2002: decrease
     of (pound)430,000; 2001: increase of (pound)16,000) and to reduce the
     provision in the balance sheet to nil from (pound)128,000 (2002:
     (pound)84,000).

f)   Fair valuation of currency derivatives

     NDS has entered into certain contracts denominated in US dollars with
     customers and suppliers located in Europe and the Middle East, Latin
     America and the Asia-Pacific region.

     Under UK GAAP, no exchange gain or loss is recorded on these contracts
     until they have been invoiced.

     Under US GAAP, the fact that these contracts are denominated in US dollars
     cause them to be regarded as containing embedded foreign currency
     derivatives. In line with SFAS 133, an embedded foreign currency derivative
     should be bifurcated from the host contract and recorded in the financial
     statements at fair value as at the balance sheet date with any gain or loss
     being recorded as an element of net income. Once invoiced, gains and losses
     on these contracts are recorded in line with SFAS 52 and so no further GAAP
     difference results.

     The adjustment for the year ended 30 June 2003 decreases operating income
     by (pound)338,000 (2002: decrease of (pound)215,000; 2001: increase of
     (pound)167,000), with an increase in current liabilities of (pound)386,000
     (2002: increase of (pound)48,000).

g)   Pension costs

     Under UK GAAP, provision is made for the cost of retirement benefits
     payable by the Group's defined benefit pension scheme as assessed by
     external professional actuaries and is charged to the profit and loss
     account so as to spread the cost over the period during which the employer
     derives benefit from the employee's services.


                                      F-41
<PAGE>

     Under US GAAP, the projected benefit obligation (pension liability) is
     matched against the fair value of the pension plan's assets and adjusted to
     reflect any unrecognised obligations or assets in determining the pension
     cost or credit for the year. Recognition of an additional minimum liability
     is required if an unfunded accumulated benefit obligation exists (i.e. the
     accumulated benefit obligation exceeds the fair value of plan assets), and
     an asset is recognised. The excess of any additional liability over any
     unrecognised prior service cost is reported as a separate component within
     other comprehensive income, net of tax benefits from timing differences.
     Prior to the year ended 30 June 2002, the defined benefit pension scheme
     referred to in Note 26 was a multi-employer plan and there was no material
     difference between the amounts recorded under UK GAAP and those that would
     be recorded under US GAAP. During the year ended 30 June 2002, the scheme
     was split and is no longer regarded as a multi-employer plan.

     The effect of these differences is to decrease operating income by
     (pound)12,000 (2002: increase of (pound)480,000; 2001: (pound)nil), and to
     generate other comprehensive losses of (pound)152,000 (2002: other
     comprehensive income of (pound)455,000; 2001: (pound)nil). Current assets
     increase by (pound)443,000 (2002: (pound)435,000) and provisions decrease
     by (pound)328,000 (2002: (pound)500,000).

h)   Taxation

    (i) Methodology

     NDS has claimed certain tax deductions arising out of the exercise of
     employee share options. Under UK GAAP, such benefits have been taken within
     the overall tax charge shown in the profit and loss account. US GAAP
     requires that if the employer's tax deduction exceeds the financial
     reporting expense, then the incremental tax benefit is reflected as an
     increase in paid-in capital and a reduction of income taxes payable. If the
     tax deduction is less than the financial reporting deduction, the tax
     effect is recorded as a reduction of paid-in capital to the extent of
     previous, similar capital increases from other awards; otherwise, it is
     charged to income tax expense.

     This results in a reduction in the tax charged to the profit and loss
     account of (pound) nil (2002: reduction of (pound)50,000; 2001: reduction
     of (pound)1,298,000).

     (ii) Consequential adjustments

     As a consequence of the adjustments under a), d), e), f) and g) above,
     additional temporary differences arise which have the effect of increasing
     the tax charged in the profit and loss account by (pound)1,585,000 (2002:
     decrease of (pound)568,000; 2001: decrease of (pound)865,000), generating
     an additional other comprehensive loss of 91,000 (2002: (pound) nil; 2001:
     (pound)nil) and increasing the deferred tax asset by (pound)196,000 (2002:
     1,872,000).

i)   Severance pay

     Under UK GAAP, the provision for severance pay referred to in Note 26d is
     shown net of the amount funded by insurance policies. Under US GAAP, the
     liability and asset should be shown gross. The effect is to increase other
     debtors due after one year and provisions by (pound)9,348,000 (2002:
     (pound)7,708,000). There is no affect on net income or shareholders'
     equity.

Net income under US GAAP
     The following is a summary of the adjustments to profit attributable to
     shareholders (net income) which would be required if US GAAP were to be
     applied instead of the UK GAAP:
<TABLE>
<CAPTION>


                                                                        Year ended            Year ended             Year ended
                                                                      30 June 2003          30 June 2002           30 June 2001
                                                                       (pound)'000           (pound)'000            (pound)'000

    <S>                                                                    <C>                  <C>                     <C>
    Profit for the year in accordance with UK GAAP                         26,040                30,678                 29,129
    Adjustments:
        a) Recognition of subscriber fees                                   5,592                (1,732)                (2,388)
        b) Non-amortisation of goodwill                                     7,845                     -                      -
        c) Purchase accounting
            (i) Orbis                                                      (1,601)                 (769)                (6,386)
            (ii) Visionik                                                       -                    34                      -
        d) Stock-based compensation                                          (527)                   86                 (1,470)
        e) National insurance on share options                                 44                  (430)                    16
        f) Fair valuation of currency derivatives                            (338)                 (215)                   167
        g) Pension costs                                                      (12)                  480                      -
        h) Deferred taxation
            (i)On above adjustments                                        (1,585)                  568                    865
            (ii)      Methodology                                               -                   (50)                (1,298)
                                                                 ------------------    -----------------------------------------
    Net income as adjusted to accord with US GAAP                          35,458                28,650                 18,635
                                                                 ------------------    -----------------------------------------
Net income per share

</TABLE>



                                      F-42
<PAGE>

<TABLE>
<CAPTION>

                                                                        Year ended            Year ended             Year ended
                                                                      30 June 2003          30 June 2002           30 June 2001

    <S>                                                                    <C>                  <C>                     <C>
    Basic                                                                   65.8p                 53.7p                  35.3p
    Diluted                                                                 65.6p                 52.4p                  33.8p
                                                                 ------------------    ------------------     ------------------

      Weighted average number of shares in issue                       52,824,956            53,347,593             53,856,141
      Diluted weighted average number of shares                        55,197,631            54,659,952             54,267,114
                                                                 ---------------------------------------------------------------

Statement of comprehensive income
    Comprehensive income under US GAAP is as follows:

                                                                       Year ended             Year ended             Year ended
                                                                     30 June 2003           30 June 2002           30 June 2001
                                                                      (pound)'000            (pound)'000            (pound)'000

    Net income as adjusted to accord with US GAAP                       35,458                28,650                 18,635

    Currency translation differences                                    (3,617)               (2,337)                 1,397
    Minimum pension liability adjustment, net of tax                      (243)                  455                      -
                                                                 ------------------    -----------------------------------------
    Comprehensive income in accordance with US GAAP                     31,598                26,768                 20,032
                                                                 ------------------    -----------------------------------------
</TABLE>


Shareholders' equity under US GAAP
     The following is a summary of the adjustments to shareholders' funds, which
     would be required if US GAAP were to be applied instead of UK GAAP:
<TABLE>
<CAPTION>

                                                                                      30 June 2003          30 June 2002
                                                                            Notes      (pound)'000           (pound)'000

   <S>                                                                      <C>            <C>                   <C>
    Shareholders' funds in accordance with UK GAAP                                          186,271               163,808

    Adjustments:
    Intangible assets:
                               Cost                                          b)             (22,773)                    -
                               Cost                                          c)             (31,999)              (39,616)
                               Accumulated amortisation                      b)              30,618                     -
                               Accumulated amortisation                      c)                   -                 4,722

    Current assets:
                               Prepayments                                   c)                (134)                 (454)
                               Prepayments                                   g)                 443                   435
                               Deferred tax                                  h)                 196                 1,872
                               Other debtors due after one year              i)               9,348                 7,708

    Current liabilities:
                               Accrued expenses                              f)                (386)                  (48)
                               Deferred income                               a)              (4,088)              (23,660)

    Provisions for liabilities and charges:
                               Changeover                                    a)               2,920                16,900
                               Contingent consideration                      b)                   -                 2,895
                               Employee benefits and taxes                   e)                 128                    84
                               Employee benefits and taxes                   g)                 328                   500
                               Employee benefits and taxes                   i)              (9,348)               (7,708)

                                                                                    ------------------    -----------------
    Shareholders' equity as adjusted in accordance with US GAAP                             161,524               127,438
                                                                                    ------------------    -----------------
</TABLE>



                                      F-43
<PAGE>

     Cash flow statement under US GAAP

     The consolidated statement of cash flows prepared in accordance with UK
     GAAP presents substantially the same information as that required under US
     GAAP. Under US GAAP however, there are certain differences from UK GAAP
     with regard to classification of items within the cash flow statement and
     with regard to the definition of cash and cash equivalents.

     Under UK GAAP, cash flows are presented separately for operating
     activities, returns on investments and servicing of finance, taxation,
     capital expenditure, acquisition or disposals, and financial investment.
     Under US GAAP however, only three categories are reported, being operating
     activities, investing activities and financing activities. Cash flows from
     taxation and returns on investments and servicing of finance would be
     included as operating activities under US GAAP.

     Under UK GAAP, bank deposits which are not available within one day are
     shown as a separate element of cash and the net movement of funds onto or
     off deposit is shown as cash outflow or inflow before arriving at the net
     increase or decrease in cash. Under US GAAP, cash and cash equivalents
     include bank deposits with less than three months to maturity. Restricted
     cash deposits are excluded from the definition of cash and cash equivalents
     under both UK GAAP and US GAAP. Under US GAAP, cash and cash equivalents do
     not include bank overdrafts repayable within three months from the date of
     advance. Under UK GAAP, cash includes cash in hand and deposits repayable
     on demand less overdrafts repayable on demand.

     The presentation of cash flows in accordance with US GAAP would be as
     follows:
<TABLE>
<CAPTION>


                                                                         Year ended         Year ended          Year ended
                                                                       30 June 2003       30 June 2002        30 June 2001
                                                                        (pound)'000        (pound)'000         (pound)'000

    <S>                                                                      <C>              <C>                  <C>
    Cash inflow from operating activities                                    33,128             57,406             46,895
    Cash outflow from investing activities                                   (3,504)           (12,978)           (25,039)
    Cash inflow from financing activities                                       526                525              7,344
                                                                      --------------     ----------------------------------
    Increase in cash and cash equivalents                                    30,150             44,953             29,200
    Effect of exchange rate changes on cash and cash equivalents             (2,098)            (2,419)                 -
    Cash and cash equivalents at beginning of year                           93,468             50,934             21,734
                                                                      --------------     ----------------------------------
    Cash and cash equivalents at end of year                                121,520             93,468             50,934
                                                                      --------------     ----------------------------------
</TABLE>

     Additional disclosures

     a) Stock options

     Under US GAAP, NDS has elected to account for stock-based compensation for
     employees under Accounting Principles Board Opinion No. 25 ("APB 25") and
     adopt the disclosure only alternative provided under SFAS No. 123. For the
     year ended 30 June 2003, a charge for compensation cost of (pound)40,000
     (2002: (pound)78,000; 2001: (pound)230,000) has been recorded under UK GAAP
     in respect of options and an additional charge of (pound)527,000 (2002:
     credit of (pound)86,000; 2001: charge of (pound)1,470,000) is required to
     accord with US GAAP, such that the total compensation cost in respect of
     options under APB 25 is (pound)567,000 (2002: credit of (pound)8,000; 2001:
     charge of (pound)1,700,000).

     The stock-based compensation for the year ended 30 June 2003, had it been
     determined under SFAS No. 123, would have been a credit of (pound)776,000
     (2001: charge of (pound)8,714,000; 2001: charge of (pound)9,806,000).

     The pro forma impact of the compensation cost, had it been recorded as
     determined under SFAS No. 123 would have been as follows:

<TABLE>

                                                                      Year ended          Year ended           Year ended
                                                                    30 June 2003        30 June 2002         30 June 2001
                                                                     (pound)'000         (pound)'000          (pound)'000
   <S>                                                                 <C>                   <C>                   <C>
    Net income(US GAAP)
    As reported                                                        35,458                28,650               18,635
    Add back compensation cost (credit) under APB 25                      567                    (8)               1,700
    Compensation (cost) credit under SFAS 123                             776                (8,714)              (9,806)

                                                               ------------------    ----------------     ----------------
    Pro forma, as adjusted for SFAS 123                                36,801                19,928               10,529
                                                               ------------------    ----------------     ----------------
</TABLE>



                                      F-44
<PAGE>


<TABLE>
<CAPTION>


                                                                      Year ended          Year ended           Year ended
                                                                    30 June 2003        30 June 2002         30 June 2001
                                                                     (pound)'000         (pound)'000          (pound)'000

   <S>                                                                   <C>                    <C>                   <C>
    Net income per share (US GAAP)
    As reported:
             - basic                                                      65.8p                 53.7p                35.3p
             - diluted                                                    65.3p                 52.4p                33.8p

    Pro forma, as adjusted for SFAS 123
             - basic                                                     68.3p                 37.4p                19.9p
             - diluted                                                   68.1p                 36.5p                19.1p
                                                               ------------------    ----------------     ----------------

    The fair value of these options was estimated at the date of grant using the Black-Scholes option pricing model with the
    following weighted average assumptions:

                                                                    Year ended           Year ended          Year ended
                                                                  30 June 2003         30 June 2002        30 June 2001
                                                                   (pound)'000          (pound)'000         (pound)'000

    Risk free interest rate                                             3.15%                4.08%               5.37%
    Dividend yield                                                         0%                   0%                  0%
    Expected volatility                                                   93%                  64%                 50%
    Expected life of options                                         3.8 years            2.5 years           2.5 years

    Weighted average fair value of options granted in year               $5.14                $8.81              $20.13
                                                               ----------------     ----------------    ----------------

</TABLE>


     The exercise price for all outstanding options at 30 June 2003 ranged from
     $6.50 to $60.00, with a weighted average exercise price of $14.06 and a
     remaining contractual life of 6.04 years. The weighted average fair value
     of those options granted during the year ended 30 June 2003 where the
     exercise price equalled the market price was $3.73; their weighted average
     exercise price was $6.91. The weighted average fair value of those options
     granted during the year ended 30 June 2003 where the exercise price was
     less than the market price was $6.18; their weighted average exercise price
     was $8.11. No options were granted in the year ended 30 June 2003 where the
     exercise price was more than the market price.

     The following table summarises information about the stock options
     outstanding 30 June 2003:
<TABLE>
<CAPTION>

                                 Options outstanding as at 30 June 2003             Options exercisable as at 30 June 2003
                            ----------------------------------------------------    ----------------------------------------
    Range of exercise         Number      Weighted average     Weighted average        Number          Weighted average
    prices ($)                           exercise price ($)        remaining                           exercise price ($)
                                                               contractual life

   <S>                      <C>                  <C>             <C>                  <C>                    <C>
    Up to $10.00             2,422,452           $8.30            5.03 years            1,550,529             $8.72
    $10.01 to $20.00           809,969          $19.86            6.50 years              586,637            $19.95
    $20.01 to $30.00           924,315          $21.90            8.27 years              227,892            $21.90
    $30.01 to $40.00             2,926          $34.50            1.34 years                    -              -
    $40.01 to $50.00            11,500          $43.00            6.58 years                8,625            $43.00
    $50.01 to $60.00            36,747          $58.87            7.22 years               16,249            $58.31

    All options              4,207,909          $14.06            6.04 years            2,389,932            $13.19
                           ------------- ------------------- ---------------------- -------------- ----------------------
</TABLE>



                                      F-45
<PAGE>

<TABLE>
<CAPTION>

     Pensions
     Information under US GAAP regarding the Group's defined benefit pension is
     as follows:

                                                                             Year ended             Year ended
                                                                           30 June 2003           30 June 2002
                                                                            (pound)'000            (pound)'000

    <S>                                                                             <C>                  <C>
     Service cost-                                                                   90                    131
     Interest cost                                                                  404                    231
     Expected return on Assets                                                     (346)                  (210)
     Net amortisation of loss                                                       152                      -
                                                                         ------------------     ------------------
     Net periodic pension expenses                                                  300                    152
                                                                         ------------------     ------------------

    The following assumptions were used in accounting for the Plan:

                                                                             Year ended             Year ended
                                                                           30 June 2003           30 June 2002

     Assumed discount rate                                                         5.30%                  6.00%
     Expected long-term rate of return on plan assets                              7.50%                  8.00%
     Rate of increase in pensions                                                  3.00%                  3.00%
     Rate of compensation increase                                                 4.50%                  4.75%
                                                                         ------------------     ------------------

    The following table is a reconciliation of the funded status:

                                                                           30 June 2003           30 June 2002
                                                                            (pound)'000            (pound)'000

    Funded status                                                                (4,217)                (2,512)
    Unrecognised net actuarial loss                                               4,660                  2,947
                                                                         ------------------     ------------------
    Prepaid pension expense                                                         443                    435
                                                                         ------------------     ------------------

    The following table is a reconciliation of projected benefit obligation (PBO):

                                                                             Year ended             Year ended
                                                                           30 June 2003           30 June 2002
                                                                            (pound)'000            (pound)'000

    PBO, beginning of year                                                        6,703                  6,164

    Interest on PBO:                                                                404                    231
    Service cost:                                                                    90                    131
     Benefits paid:                                                                (119)                  (121)
    Employee contributions:                                                          78                     52
    (Gains) Losses:                                                               1,095                    246
                                                                         ------------------     ------------------
    PBO, end of year                                                              8,251                  6,703
                                                                         ------------------     ------------------

    The following table is a reconciliation of the fair value of plan asset:

                                                                             Year ended             Year ended
                                                                           30 June 2003           30 June 2002
                                                                             (pound)000             (pound)000

     Plan assets at fair value, beginning of year                                 4,191                  4,463

     Employer contributions:                                                        308                    131
     Employee contributions:                                                         78                     52
     Benefits paid:                                                                (119)                  (121)
     Return on assets:                                                             (424)                  (334)
                                                                         ------------------     ------------------
     Plan assets at fair value, end of year                                       4,034                  4,191
                                                                         ------------------     ------------------
</TABLE>




                                      F-46
<PAGE>

     Valuation reserves

o    Receivables

     The movement in the valuation reserve against trade accounts receivable is
     as follows:

                                                   (pound)'000

        Balance, 1 July 2000                           573
        Provision / expense                            1,484
                                                   -----------
        Balance, 30 June 2001                          2,057
        Provision / expense                            2,939
        Written off                                    (348)
                                                   -----------
        Balance, 30 June 2002                          4,648
        Provision / expense                            5,166
        Written off                                    (4,253)
                                                   -----------
        Balance, 30 June 2003                          5,561
                                                   -----------


Recent accounting pronouncements

In April 2003, the FASB issued SFAS 149: "Amendment of statement 133 on
derivative instruments and hedging activities". SFAS149 amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities
under SFAS 133: "Accounting for derivative instruments and hedging activities".
This statement is effective for contracts entered into or modified after 30 June
2003. The adoption of this statement is not expected to have a significant
effect on the results of operations, financial condition or cash flows.

In January 2003, the FASB issued FIN 46: "Consolidation of variable interest
entities", which requires variable interest entities to be consolidated by the
primary beneficiary of the entity if various criteria are met. FIN 46 is
effective immediately for all new variable interests created or acquired after
31 January 2003. For variable interest entities created or acquired prior to 1
February 2003, the provisions of FIN 46 applies to NDS from 1 July 2003. Under
the provisions of FIN 46, the Fancy a Flutter joint venture is the only variable
interest entity in which NDS has an interest. Fancy a Flutter Limited is
currently consolidated due to NDS's equity interest and will be required to be
consolidated as a variable interest entity in which NDS is the primary economic
beneficiary under FIN 46 from 30 June 2004. Therefore this interpretation is not
currently expected to have any impact on the group's financial statements.


In November 2002, the Emerging Issues Task Force reached a consensus on EITF
00-21: "Revenue arrangements with multiple deliverables". EITF 00-21 provides
guidance on how to account for arrangements that involve the delivery or
performance of multiple products, services and/or rights to use assets. The
provisions of EITF 00-21 apply to revenue arrangements entered into by NDS from
1 July 2003. This new guidance is not expected to have a significant effect on
the results of operations, financial condition or cash flows but all future
revenue arrangements will be considered in light of this guidance.


32.  Subsequent events

a)   Litigation
     Note 26c includes a discussion of litigation matters that have occurred
     subsequent to 30 June 2003.

b)   Acquisition of MediaHighway

     On 13 September 2003, NDS entered into a series of agreements with
     subsidiaries of Thomson S.A (collectively, "Thomson") whereby a subsidiary
     company agreed to acquire the MediaHighway middleware business and license
     certain related patents for a total consideration of (euro)60 million in
     cash which we will be funded from existing cash reserves. The transaction
     is subject to regulatory approvals and certain other conditions and is
     expected to close by the end of calendar 2003 or early in calendar 2004.
     The acquisition will involve the addition of approximately 300 employees,
     based in Paris, France.

                                      F-47