Charteris plc
Charteris House
39/40 Bartholomew Close
London EC1A 7JN
Telephone: 020 7600 9199
Facsimile: 020 7600 9212
e-mail: info@charteris.com
www.charteris.com Charteris plc Annual Report 2005
The essential bridge between business and technology Designed and produced by fourthquarter
Printed in England by SV.two
Photography by Graeme Harris
Financial highlights 1
Our business offering 2
Chairman’s statement 4
Chief Executive’s review 6
Practice operating reviews:
–Retail, manufacturing and services practice 8
–Financial services and media practice 9
–Government, legal, utilities and energy practice 10
–Northern practice 11
Finance Director’s review 12
Board of Directors 14
Report of the Remuneration Committee 16
Directors’ report 18
Corporate governance 20
Statement of Directors’ responsibilities 21
Independent Auditors’ report 22
Consolidated profit and loss account 23
Balance sheets 24
Consolidated cash flow statement 25
Accounting policies 26
Notes to the financial statements 27
Notice of Annual General Meeting 37
Information for shareholders 40 Charteris Annual Report 2005 1
Financial highlights
Revenue increased by 40% to £19.3m (FY04: £13.8m)
Revenue from continuing operations increased by 27% to £17.5m
Profit before taxation was up by 65% to £891k (FY04: £541k)
Profit before taxation and goodwill was up by 63% to £1.17m
(FY04: £717k)
Pre goodwill margin was 6% (FY04: 5%)
Cashflow from operating activities £1.4m (FY04: £1.2m)
Diluted EPS before goodwill 1.96p (FY04: 1.25p)
Dividend increased to 0.5p per share (FY04: 0.4p)
2005 2004
£’000 £’000
T urnover 19,290 13,822
Profit before tax and goodwill amortisation 1,170 717
Profit before tax 891 541
Diluted earnings per share before 
goodwill amortisation 1.96p 1.25p
Dividend per share 0.5p 0.4p
Total cash balance 2,085 4,155 Our business offering
Charteris is an acknowledged leader in
transforming business performance through the
strategic application of technology. We provide
major organisations with the essential bridge
between business and technology, ensuring that 
in technology-enabled change our clients obtain
real business benefit from their investment.
Our advice and solutions are informed by 
practical hands-on experience, ensuring a 
currency of knowledge that comes only from 
use of the latest proven techniques. 
Our services are an amalgam of three disciplines: 
Business Projects Technology
In each of these disciplines we apply our deep
experience to help our clients meet demanding
business goals reliably. Combined, these skills
provide an unrivalled capability to deliver step
changes in business performance, efficiency 
and potential. 
At Charteris, experience makes the difference.
We employ only highly experienced practitioners
who combine hard-won expertise with up-to-date
knowledge of  the latest technologies and
methods. This policy marks us out from many
others in the business and IT consulting market 
who populate their teams with trainees and
juniors. With our approach learning curves are
minimised, enabling us to make a difference more
quickly. We also actively transfer our knowledge
and skills to clients’ in-house teams. 
Our ability to effect beneficial business change
is further enhanced by our concentration on
specific market sectors. In this way we ensure that
our services are tailored to our clients’ specific
business environment and goals. Our market
focus areas are: 
• Financial Services 
• Legal Sector 
• Media 
• Public Sector 
• Retail, Manufacturing and Services 
• Telecommunications
Fundamental to our approach is a very close
working relationship with each client. We make
it our business to understand each of our client’s
business. In achieving this proximity we recognise
the importance of local presence. To add to our
locations in London and the West Country,
this year we established a base in Edinburgh,
which will serve clients in Scotland and
Northern England.
Charteris is fully independent. We have no vested
interest in providing outsourcing services. Because
of this our clients know that they will receive
entirely impartial advice and guidance on the
achievement of technology-enabled change. 
2 Charteris Annual Report 2005 CASE STUDY ONE:
Central Government
After a full tendering competition, Charteris has been
engaged to provide the “Senior Responsible Officer (SRO)
Conscience” role for two big change programmes at a large
central government department. The programmes are worth
several hundred million pounds. Charteris is providing
independent advice and guidance on the conduct of the
programmes to the SRO, including bringing in extensive
experience of the running of large scale change and IT
programmes from the private sector. The work is expected to
run for at least three years.
CASE STUDY TWO:
Macquarie Bank
Our capability to deliver major change programmes
innovatively and reliably has been further demonstrated
through our work for a consortium led by Macquarie
European Infrastructure Fund. Charteris played a pivotal
role in successfully managing the delivery of new SAP Back
Office systems and processes, including extensive data
migration, in time for completion of the acquisition by the
consortium of the Wales and West gas distribution network
from National Grid T ransco. The systems and processes,
which went live within extremely demanding timescales,
will be of lasting benefit to Wales and West Utilities Ltd.
CASE STUDY THREE:
Inchcape Shipping Services
Charteris was initially engaged to help with a review of
Service Management practices, bringing them in line with
the industry best practice using methodologies such as
ITIL; this also encompassed a full review of their Disaster
Recovery planning which in turn has improved response
and service level times. After the success of this work, our
team of experienced practitioners helped design and pilot
a new infrastructure platform incorporating Microsoft’s
solutions for directory, authentication and mail systems,
working within a complex distributed environment.
Business
Our business consulting services help clients
achieve sustainable change, improve efficiency and
create new opportunity. We provide independent,
expert advice on the direction, structure and
operation of businesses and their information
systems. With our rare blend of business acumen
and technical flair we help our clients turn
concepts into results – reliably. 
Our business consultants have a practical results-
driven approach, and their reputation is for
delivery. They are able to draw on a deep pool of
experience which they apply in an open and
objective way to ensure the most appropriate
strategy and solution for each client.
Projects
Charteris project and programme managers are
industry-recognised practitioners who have played
leading roles in some of the largest and most
complex assignments in the world of business
systems. They draw on a comprehensive base of
best practice to manage client programmes, to
mentor and coach client teams, or to review a
project. They are always focused on clients’
business goals. 
Our approach is flexible. We undertake entire
projects, assume responsibility for discrete aspects
of projects or programmes, or blend our skills
with those of client delivery teams. 
T echnology
We work with our clients to de-risk the delivery of
technology and safeguard the realisation of business
benefit by offering a depth of experience that very
few others possess. This know-how is the result of
many years’ experience architecting, designing and
delivering enterprise-scale business systems.
Charteris has experience of a wide range of
technologies but we are particularly well known
for our ability to deliver solutions based upon
the latest proven Microsoft technologies. The
depth of our expertise in Microsoft technology is
recognised worldwide, as demonstrated by two
recent global awards from Microsoft. 
Charteris Annual Report 2005 3
JOHN MILLAR
LEAD CONSULTANT
VALERIE CLIFF
LEAD CONSULTANT
JULIAN WARD
LEAD CONSULTANT 4 Charteris Annual Report 2005
Chairman’s statement
The rapid progress – in market conditions that
generally remained challenging – required
additional investment in business and
organisational development, but the company
simultaneously achieved a substantial increase
in profit with good operational cash flow.
I congratulate the whole team on this impressive,
all-round performance.
Results
T urnover in the year ended 31 July 2005 was
£19.3m (2003/04: £13.8m) – an increase of
40%. Cedalion was acquired on 29 October 2004
and contributed £1.8m to turnover in three
quarters of the year. T urnover from the
continuing business was £17.5m. The organic
growth of 27% was an excellent achievement in
the current market.
Profit before tax was £891k (2003/04: £541k) –
an increase of 65%. Profit before tax and the
amortisation of goodwill was £1.17m (2003/04:
£717k). On the latter basis operating profit
margin was 6.1% (compared to 5.2%); the
operating profit margin of the continuing
business was 6.4%.
There was strong cash generation of £1.4m from
operating activities. £2.7m of cash was used for
the acquisition of Cedalion. The cash balance at
31 July 2005 was £2.1m (31 July 2004: £4.2m).
Cedalion
The integration of Cedalion has gone very well
and I am delighted to report that the practice is
now performing strongly. In the first three
months after acquisition the business made a
small loss of £16k; in H2, despite some slippage
on key sales prospects, the practice made an
operating profit of £48k. Good orders were
achieved towards the end of the year. The costs
of integration were £132k. 
Dividend
Three years ago the board agreed that it was a
financial goal for Charteris to pay a dividend and
sustain a progressive dividend policy. A dividend
of 0.4p per share was paid in respect of the
financial year ended 31 July 2002 and the
dividend was maintained at that level for the
subsequent two years. The Directors are
recommending the payment of an increased
dividend of 0.5p for the year ended 31 July 2005,
which is covered 3.9 times by earnings. If
approved, the dividend will be paid on 29
November 2005 to eligible shareholders on the
register on 4 November 2005.
Strategy
The central theme of Charteris’ three-year
strategic plan (developed in 2003 for the financial
years 2003/06) was a return to strong growth but
on a broader business base. At the end of the
second year of the plan, the results of the
successful implementation of this strategy can be
seen clearly. There is a good spread of business
It is a great pleasure to report excellent results for
Charteris in the year ended 31 July 2005. Strong
organic growth was achieved in parallel with the
acquisition and integration of Cedalion, which now
forms a fourth practice within the business.  Charteris Annual Report 2005 5
across the sectors represented by the three
Southern practices. The Northern practice (from
Cedalion) has been introduced to complement
these and broaden the base further. Within each
sector we are proactive in developing propositions
that can be brought to both existing clients and a
wider market.
The practices are focused on segments of the
market that show good growth potential, but we
do not expect them to grow uniformly. In the last
year the strongest growth has been in Government
and in Financial Services and Media, whereas in
the previous year it was in Retail, Manufacturing
and Services. We deploy our professional resources
across all sectors and the increased breadth gives
the company greater flexibility in adjusting to
market conditions. 
In the third year of the plan our strategy is to
continue growing the business ambitiously, but
with more emphasis on improving operating
margin. Although we shall continue to make
investments in business and organisational
development, we believe that the current structure
can largely support the next stage of growth. 
Prospects 
The directors believe that Charteris is well
positioned for its tenth year of trading. It has
established an outstanding reputation for
transforming businesses through the strategic
application of technology. Our advice and
solutions are informed by practical hands-on
experience; we have currency of knowledge from
using the latest proven techniques, yet our team
represents one of the most experienced in the
industry. We find that the importance and value
of such key services are increasingly being
recognised in the market, where organisations
are tending to be ever more discriminating in
seeking suppliers for their IT-related
programmes.
We see good prospects for further growth in
earnings through a combination of growth in
turnover and gradual improvement of operating
margin. 
DAVID MANN
CHAIRMAN
3 October 2005
     33%
Financial services 
and media practice
     27%
Retail, manufacturing
and services practice
     31%
Government, legal,
utilities and energy
practice
     9%
Northern practice
REVENUE BY PRACTICE 
2005
REVENUE £’000
97 98 99 00 01 02 03 04 05
579
2,501
4,654
6,716
13,276
19,087
12,174
13,822
19,290 6 Charteris Annual Report 2005
Chief Executive’s review
Our plans anticipated that in the fast changing
global consulting market, defining factors for
success would be our ability to embrace our
clients’ business vision, and versatility in shaping
our services to their needs. This would require a
proximity to clients that would enable us to
blend our skills with theirs in the delivery of
strategic business change. In so many dimensions
our work this year has demonstrated the
effectiveness of this approach – both for
Charteris and our clients.
Our fundamental proposition of providing the
essential bridge between business and technology
has continued to be pivotal in the growth and
competitive differentiation of Charteris. 
This year our business consulting and
programme management skills have been
deployed on some of the largest technology-
enabled change programmes in the industry.
We have also formed combined leadership
teams with our clients to define and build
complex ERP solutions in record time. In the
implementation of these projects we have
selected and managed leading on-shore and off-
shore suppliers. Our independence has been a
vital factor in the success of this model. 
Our deep expertise in the strategic application 
of Microsoft technologies has again been a major
driver of growth. Our technical consulting teams
have continued to work with the latest Microsoft
technologies, and in multi-disciplinary teams
have delivered enterprise-wide business solutions
for major corporate clients.
Market sector growth
The first year of our strategy concentrated on
broadening our business base in target market
sectors and the last 12 months has seen
significant progress in building on this platform.
In our consulting practices we have strengthened
key relationships – which is reflected in 60% of 
our revenues being related to existing clients –
continued the expansion of our client base and
further focused our services to meet the specific
needs of clients within their markets.
With some improvement in market conditions 
in the financial services sector and new business 
in broadcast media, revenue from our financial
services and media practice increased by 51%.
Throughout the year we maintained a strong
presence in the retail banking sector supporting 
a number of high street banks. With Macquarie
European Infrastructure Fund, Charteris played 
a leading role in managing the delivery in very
tight timescales of new SAP Back Office systems
and processes, ready for completion of the
acquisition by Macquarie of the Wales and
West gas distribution network.
The combination of our deep technology skills
and the delivery methodology developed by
Cedalion was a decisive factor in our selection 
by ITV Broadcasting as their partner to
implement a range of new business solutions.
Whilst revenues in our retail, manufacturing
and services practice were affected by the
successful completion of our involvement in a
major project in the first half, the practice’s focus
on transformation and integration resulted in
important new business in the second half,
particularly in the fast developing world of
on-line retailing.
On completion of the design and early
implementation phases of a major ERP solution
for leading medical equipment manufacturer,
KCI International, the programme was
successfully handed over to the client team for
international roll out. Building on its expertise
in supply chain integration, the practice has
developed a centre of excellence for business
integration in multi-channel retailing. This led
in the spring to a major new contract to
implement an e-commerce solution for a fast
growing internet retailer. 
Our business relationship with Microsoft
continued to strengthen this year. We worked
with Microsoft on several high profile projects.
This enabled us to maintain our experience at 
the leading edge of the business application 
of Microsoft technologies – a position further
In the second year of our three year strategy for
growth – and in an industry still recovering from
recession – it is a pleasure to report that we are
right on track. Charteris Annual Report 2005 7
underpinned by being one of the few Microsoft
partners in the world to participate in multiple
early adopter programmes.
We have seen considerable growth this year in the
public sector and continued strong demand for
our services to the legal sector. Overall growth
was 45%. In the public sector we have expanded
our presence in both central and local
government and in the NHS. 
For the National Security community we have
supported the most senior members of a number
of agencies in ensuring the success of critical
technology-enabled change programmes. At the
boundary between health and social care in local
government we have expanded our activities and
are now working with three local authorities in 
the delivery of Case Management systems to help
them comply with the Children Act 2004. 
Charteris is providing independent commercial
and technical advice to the senior management 
of Connecting for Health in the National Health
Service. We continue to experience good demand
from leading law firms. We have again acted for
both private and public sector clients in some 
very large cases which pivot on information
technology issues.
When Charteris was floated on the AIM market
in 2000 our stated intention was to complement
organic growth through selective acquisition.
Following on from our successful acquisition of
TMS in 2001 we were therefore delighted to
announce our second acquisition in November
2004. Cedalion has added a fourth practice to
Charteris and a much valued local presence in
the Scottish market. Cedalion has well
established relationships in the finance sector
where it has developed a risk and compliance
proposition to help clients address increasing
regulatory demands. 
Cedalion has also built a leading position in the
strategic application of Microsoft infrastructure
platforms across a broad base of leading Scottish
organisations, including the Crown Office and
local authorities. The promotion of this
capability through the rest of the Charteris
organisation has already led to new sales in our
traditional markets. 
31%
Principal Consultant
20%
Senior Consultant
9%
Principal T echnologist
35%
Senior T echnologist
5%
Technologist
CONSULTANT TYPE
BREAKDOWN 2005
Charteris team
The success of Charteris this year has been the
team’s success. Our approach to consulting is
based on our people’s ownership of their clients’
business goals and their achievement which places
great responsibility on them. Once again this year
it has been their vision, courage and tenacity,
based on hard-won experience, that has made 
the difference. It is also great to see the work 
and thought leadership of members of the team
again being recognised this year with awards and
accreditations.
Our recruitment activities have attracted a
number of talented people into the organisation,
many recognised leaders in their disciplines, who
are enabling us to deepen our specialist
capabilities. 
It has been a great pleasure to welcome the
Cedalion team into the Charteris business. 
I would like to thank the entire team for the
professionalism and generosity of spirit they
displayed in helping integrate the businesses –
enabling the whole indeed to exceed the sum 
of the parts.
Looking ahead
The progress made by the business this year
provides us with a sound platform on which 
to build for the future. Market conditions have
developed largely in the way we expected: the
market overall has returned to modest growth 
but higher growth opportunities are appearing in
certain sectors and specialisations. The action we
are taking to focus on these areas provides us with
considerable opportunity.
As ever we set our standards high but in the firm
belief that the calibre of our people, client base
and services will enable us to deliver quality
growth for Charteris in the coming years.
DAVID PICKERING
CHIEF EXECUTIVE
3 October 2005 8 Charteris Annual Report 2005
OUR CLIENTS
• Argos Retail Group
• ASDA
• AutoCascade
• Boots
• Bovis Lend Lease
• British American T obacco
• British Computer Society
• BULL Information
Systems
• Deloitte
• Inchcape Shipping
Services
• Innovate Logistics
• John Lewis Partnership
• KCI International
• LogicaCMG
• Maersk Sealand
• Marks & Spencer
• Microsoft
• Patsystems
• Portal Software
• QSA
• Sainsbury’s
• T esco
PRACTICE OPERATING REVIEW
Retail, manufacturing and services practice
Within the retail, manufacturing and services
sectors, our focus on integrating people,
processes and systems, particularly for those that
use or are considering Microsoft technologies, is
successfully allowing us to expand existing client
relationships and to forge new relationships.
This year we have continued with our strategy 
of offering services that combine our business
transformation and integration expertise. Our 
focus on the retail sector has led to the emergence
of a centre of excellence for business transformation
in multi-channel retailing, which is a natural
extension of our work in supply chain integration.
In addition, we have begun to add to our retail
offerings the new technology skills in infrastructure
management that we acquired with Cedalion.
We were delighted to be awarded a major contract
to deliver an enterprise level e-tailing solution,
which was central to the expansion plans of the
client. Key to our success in winning this job was
our ability to integrate the new e-commerce web
presence with legacy systems within the client
organisation and third party providers, such as
fulfilment services.
We have continued to work with clients to help
them gain competitive edge by expanding their
supply chains quickly and cost effectively. For a
major logistics company, we were able to help
assimilate new customers into their rapidly
expanding portfolio by providing a solution that
enabled swift integration with their customers’
systems. We were also proud to have handed
over the initial phases of an international ERP
roll out to a global manufacturing company.
This programme demonstrated our ability to
establish and manage a multi-disciplinary team,
drawn from several partners, to deliver against
challenging timescales.
Building upon the expertise brought to
Charteris through the acquisition of Cedalion,
we successfully delivered a “Well Managed
Infrastructure” project, for a marine services
provider. We ensured a successful migration to
the latest generation of Microsoft’s collaboration
and communications platforms. We also reviewed
the client’s infrastructure operations to align
their procedures with industry best practice.
We are engaged in discussions with several
clients to carry out similar assignments.
Our strong relationship with Microsoft has 
proved a key strength in our ability to deliver
transformational change, both through integration
of front and back office systems, and the
management of infrastructure. This relationship
continues to flourish. As an implementation 
partner we are increasingly being recommended 
by Microsoft for a variety of business intelligence,
knowledge management, and multi-channel 
retail projects. 
As a service supplier to Microsoft we provide world-
class expertise to assist in the delivery of very large
development projects based on the latest Microsoft
technology. This year we have also been working
with Microsoft in Cambridge, helping to develop
the latest generation of software development tools.
Working in partnership with Microsoft continues
to give us access to the practical application of the
very latest Microsoft technology, an experience
which is enhanced by our involvement in a number
of Microsoft’s early adopter programmes. 
Combining the strengths we now have in business
transformation and systems integration,
particularly in supply chain and multi-channel
retailing, with our expertise in infrastructure
management, we believe the practice is well placed
to continue its track record of impressive growth.
MARTIN CHITTY
PRACTICE HEAD
“Charteris was able to provide the skill and focus
Innovate needed to deliver an extremely challenging
supply chain integration programme despite severe
time and resource constraints.”
TONY BERNARDIS, HEAD OF IT, INNOVATE LOGISTICS Charteris Annual Report 2005 9
OUR CLIENTS
• Abbey
• ABN AMRO
• Alchemy Partners
(Guernsey)
• Ansbacher & Co 
• APACS
• Arium
• Bank of New York
• Barclaycard
• Barclays
• Butterfield Bank
• Close Brothers 
Corporate Finance
• CSFB
• Financial Services
Authority
• Granville Baird Capital
Partners
• Guardian Media Group
• HBOS Financial Services
• HSA
• HSBC Investment Bank
• ITV Broadcasting
• LIFFE
• Lloyds TSB
• Macquarie European 
Infrastructure Fund
• Mellon Europe
• Misys International
Banking Systems
• Nationwide Building
Society
• Northern Rock
• Northern Venture
Managers
• Premium Credit
• Reuters
• Room Solutions
• Standard Chartered Bank
• SWX Swiss Exchange 
• UIA Insurance
• virt-x
• William M Mercer
• Yorkshire Fund Managers
PRACTICE OPERATING REVIEW
Financial services and media practice
We have seen a steady improvement in the
business climate in the financial services sector.
We have also been successful in our expansion
into the media sector. These factors, combined
with the relevance of our offerings, have
enabled us to achieve strong growth and
performance through the year.
The practice’s presence in retail banking has
developed further this year. The team has worked
on a range of projects and programmes spanning
the breadth of our offerings. Post acquisition
integration and performance improvement
initiatives have been key drivers of our banking
engagements. Examples of our work range from
Business Change Portfolio Management, to
delivering leading-edge Microsoft skills in the
execution of a post acquisition integration
programme, to shaping an outsourcing programme
for one of the main high-street banks. 
We have built on the credit and operational risk
knowledge and expertise that we gained through
the acquisition of Cedalion by taking to market
our joint capability in the risk and compliance
arena. The strength of the offering was confirmed
by the early successful delivery of a complex
compliance management solution, requiring the
innovative use of Microsoft technologies. 
Our relationship with Macquarie Bank has
deepened during the year, based on the successful
delivery at Wales and West Utilities, and we
continue to support the new organisation in 
the next phase of integration activities. We see 
a developing pipeline of prospects based on
providing a similar service in other organisations
and consider it a key part of the growth strategy
for the practice in the new financial year.
We have made good progress on our plan to
develop our position in a new sector, broadcast
and media. We have been appointed by ITV
Broadcasting as their Microsoft .NET Technology
partner. We are working with ITV to develop
innovative technical solutions using Microsoft
technologies, including a significant project using
SharePoint. A key differentiator in our selection
was the Charteris Delivery Framework which 
was developed specifically to optimise the 
balance between accelerated and flexible use of 
new Microsoft technologies in solving business
problems. We have also developed further
opportunities in the media sector, which we will
seek to convert early in the new financial year. 
Building on the increased activity in our markets
this year and the evident appeal of our market
offerings, we look forward to the new financial
year with optimism and enthusiasm. 
MARGARET HASSALL
PRACTICE HEAD
“We selected Charteris as our Microsoft .NET
Technology partner to provide technical expertise 
and industry best-practice through the deployment 
of their delivery methodology. In addition to their
technology skills, they demonstrate a remarkable
commitment to making our projects successful”
IAN WHITFIELD, TECHNOLOGY DIRECTOR, ITV BROADCASTING 10 Charteris Annual Report 2005
OUR CLIENTS
• Addleshaw Goddard
• ATLAS Consortium
• Atos Origin
• Barlow Lyde & Gilbert
• Boyes T urner
• British T rade International
• Cabinet Office
• Calor Gas
• Capio Healthcare
• Centrica
• Clifford Chance
• Corgi
• Criminal Justice IT
• Croydon Council
• Department for Education
and Skills
• DLA Piper Rudnick
Gray Cary
• Driving Standards Agency
• DSS
• Eversheds
• Freshfields Bruckhaus
Deringer
• Forestry Commission
• General Dental Council
• Herbert Smith
• ICL (UNITAS)
• IMS Health
• Isle of Man Government
• Kent & Medway Strategic
Health Authority
• Lovells
• Mayer Brown Rowe & Maw
• Nabarro Nathanson
• NHS Connecting for Health
• NHS Shared Services
• Olswang
• Pinsent Masons 
• Queen Elizabeth NHS T rust
• Rolfe & Nolan
• Royal Surrey County
Hospital
• Scottish Enterprise
• Tarlo Lyons
• UKERNA
• UNESCO 
• Wandsworth Borough
Council
• Wandsworth Primary
Care T rust
PRACTICE OPERATING REVIEW
Government, legal, utilities and energy practice
GRAHAM HYGATE
PRACTICE HEAD
Our public sector business expanded
significantly during the year. We strengthened
our relationships with existing clients including
the Cabinet Office and the NHS, and built
new relationships in central government, local
government and health.
In central government, we developed our position
as independent, confidential advisors to the Senior
Responsible Owners (SROs) of major change
programmes. We won new contracts as
commercial and technical advisors to the NHS
National Programme for IT, now Connecting for
Health, and as “SRO Conscience” to a major
government department. We continued to provide
independent advice to major change programmes
at the Cabinet Office and within the NHS. We
were also engaged by the EDS-led ATLAS
consortium to provide commercial and technical
advice over a ten year period to the members of
the consortium. ATLAS will support the MOD’s
Defence Information Infrastructure (Future)
project to replace numerous individual
information systems throughout the MOD with a
single, more efficient information infrastructure. 
We established a new client relationship with the
Department for Education and Skills (DfES)
supporting work on information sharing, as part 
of the Every Child Matters: Change for Children
programme. The Every Child Matters Green Paper
(2003) highlighted better information sharing as
key to successful early intervention. The aim of 
the information sharing initiative is to enable 
practitioners to share information, to ensure that
children and families benefit from universal
services, such as education and basic health care,
and to enable them to get any additional support
they may need at the right time. Information
sharing requirements are now part of the
Children Act 2004. 
Compliance with the Children Act is also an
important driver for our work in local government.
We continued to work with Wandsworth Borough
Council on the introduction of a new case
management system which gives care professionals 
a common and up to date view of case information.
The sharing of information between local authorities
and Primary Care T rusts (PCTs) is particularly
important, and we are pleased to have been engaged
by Wandsworth PCT as a result of the success of our
work in the Social Services department.
As well as helping provide a more joined-up
service, social care case management systems
provide much of the raw material for the
calculation of performance indicators, upon which
local authorities’ performance is externally assessed.
Building on this experience, we won related work
at Croydon Council. Our cost-effective approach,
built around the use of Microsoft’s business
intelligence tools, allows our clients to set up a
repeatable process for generating reliable and
auditable performance indicators.
Looking ahead, we see increasing demand for the
kind of leadership support that we provide at the
highest level to some of the UK’s biggest public
sector change programmes. Where tens or
hundreds of millions of pounds of public money
are being invested in technology-enabled change
failure is not an option, and we have
demonstrated the transformational effect that
independent high-quality advice at the highest
level of such programmes can have.
We also foresee strong demand for our capabilities in
the cost-effective use of Microsoft technologies to
help improve productivity within local government
and NHS trusts. The demand we have seen for help
in the generation of Performance Indicators is one
example of a wider need for better data exploitation.
“Charteris helped us demonstrate the progress we have
made this year, drawing on their understanding of
performance assessment in local government and
responding swiftly to our needs with a cost effective
approach to the generation of performance indicators.”
JANE DOYLE, ASSISTANT DIRECTOR, CROYDON SOCIAL SERVICES Charteris Annual Report 2005 11
PRACTICE OPERATING REVIEW
Northern practice
OUR CLIENTS
• Aberdeen Asset
Management
• AEGON
• Baillie Gifford & Co
• Cardiff City Council
• Cleveland Police
• Crown Office and
Procurator Fiscal Service
• East Ayrshire Council
• Foreign and Colonial
Asset Management
• Forestry Commission
• Greater Glasgow
Primary Care T rust
• HBOS
• Midlothian Council
• NHS Borders
• NHS National Services
Scotland
• North Ayrshire Council
• North Lanarkshire
Council
• Northumbria Healthcare
NHS T rust
• Perth & Kinross Council
• Scottish Borders Council
• Scottish National Blood
T ransfusion Service
• Shepherd and
Wedderburn WS
MIKE HINTON
PRACTICE HEAD
Having successfully integrated Cedalion, the
Northern Practice is strengthening relationships
with new and existing clients through the
broader range of skills and offerings which we
can now make available to the market in
Scotland and the North of England.
The practice has built on Cedalion’s long and
successful track record of providing innovative
solutions to clients in the North. We continue
our work in major risk programmes within large
financial institutions, as they prepare to comply
with the demands of the new regulations faced
by the industry. We are now also providing
experienced programme management skills to
complex programmes in two large banks in
Scotland.
One of the specialisations that Cedalion brought
to Charteris was helping clients achieve
operational excellence in their IT departments
through successful implementation of advanced
Microsoft infrastructure technologies and
improved operational processes. This world-class
reputation continues to be demonstrated through
our involvement with a number of early adopter
programmes relating to Microsoft’s infrastructure
management, communication and collaboration
technologies. All of these programmes have
resulted in successful implementation of enterprise
scale solutions using the emerging technologies.
We secured an engagement, in partnership with
Microsoft, to deliver software for part of the
Scottish Executive’s eCare programme. eCare is
about better and more joined up care, advice and
assistance to the people of Scotland through the
use of computers and communication technology.
With the individual’s consent, eCare enables
secure information-sharing between professionals,
such as doctors, nurses, social workers and
teachers, in public and voluntary agencies.
Charteris has also been working with Central
Scotland Police on their landmark migration
from Linux to Windows. This is a complex
project, which will provide a much improved
infrastructure with a lower cost of ownership to
the Police force.
During the year we further demonstrated our
commitment to the financial sector through our
patronage of the Chartered Institute of Bankers in
Scotland. We expect this association will
strengthen further our relationships in the
Scottish finance sector over the coming years.
The practice is well positioned to build on the
strong local foundations in the financial and
public sectors. We will enhance our integrated
risk solutions and Well Managed Infrastructure
offerings, and develop further propositions to
meet the needs of the Northern market. 
“The benefits we’ve achieved surpass my expectations.
We’ve exceeded time and reliability estimates and
increased security. In terms of technology, this project
has been the biggest leap forward the Council has made
in the last 10 or 15 years.” 
ALAN NAIRN, DEPUTY DIRECTOR OF CORPORATE SERVICES, PERTH & KINROSS COUNCIL 12 Charteris Annual Report 2005
Operating profit before tax and goodwill
amortisation stands at 6.4% of revenue in our
continuing operations (FY04: 4.8%). This margin
was achieved whilst integrating Cedalion Ltd into
the group, at an estimated cost of £132k, of
which the majority has been charged against
continuing operations.
We continue to see a gradual increase in average 
fee rates in a number of areas of our business. 
As a result of this and changes to our
remuneration packages, staff costs reduced to 64%
of revenue (FY04: 66%). Other external charges
were steady at 20% of revenue. Administrative
expenses in continuing operations remained at 8%
of revenue. Total administrative expenses include
integration costs and an increased investment in
developing our business. In particular marketing
expenditure in FY05 was £124k (FY04: £54k),
focused predominantly in the second half.
Cash generation
Cash generated by operating activities was
£1.4m, reflecting a cash conversion ratio of 118%
(compared with profit before tax and goodwill
amortisation). Our cash inflow exceeded profit as 
a result of our remuneration policies, which link
consultant bonuses to payment by the client. 
The Group’s debtor days increased to 61 at
31 July 2005 (FY04: 49). Our debtor days at
year end were inflated due to the timing of some
advance invoicing on one of our larger projects.
The net outflow on acquisition of Cedalion Ltd
was £2.7m. Our cash balance at 31 July was
£2.1m compared with £4.2m last year. We paid
corporation tax of £269k (FY04: refund of £142k)
and paid a dividend of £158k (FY04: £158k).
Capital expenditure increased to £189k (FY04:
£94k) as a result of new joiners, the higher
proportion of technology staff within our team
(who require superior equipment) and investment
in new systems. Additionally we repaid £155k of
our mortgage loan (FY04: £156k).
Financial instruments
The Group is financed through shareholder funds
and a £0.9m (FY04: £1.1m) mortgage. The
Group has an agreed overdraft facility with The
Royal Bank of Scotland plc of £800k (FY04:
£250k), which has not been used.
The Group manages its treasury position by
placing surplus cash on short-term deposit. 
The Group does not speculate with derivative
instruments and continues to conduct all of its
business in sterling.
We continue to pursue our objective of improvement
in margin and these results demonstrate further
progress in the financial year ended 31 July 2005.
Finance Director’s review Charteris Annual Report 2005 13
Future changes in accounting standards
T wo new UK accounting standards will be
adopted by the group in the financial year ending
31 July 2006: FRS21, Post Balance Sheet Events
and FRS22, Earnings per Share. In the financial
year ending 31 July 2007 the Group will adopt
FRS20, Share-Based Payment.
International Financial Reporting Standards
(IFRSs) will become mandatory for AIM
companies for accounting periods beginning
on or after 1 January 2007. The Group’s first
reporting year to which IFRSs will apply is
FY08, using restated comparatives for FY07.
Impact of future changes in 
accounting standards
The board has undertaken a review of the impact
of these new accounting standards on the Group’s
financial statements. The board believes that the
adoption of these standards, in particular IFRSs,
will change the presentation of the group’s
financial statements and there are two accounting
standards that are likely to impact the group’s
reported profits in future periods.
First, for the year ending 31 July 2007, on
adoption of FRS20, Share-Based Payment, the
Group will amortise the fair value of share options
over their vesting period. This compares with the
Group’s current accounting policy, which is to
amortise any excess in the market value of share
options over their exercise price on the date of
grant evenly across the vesting period.
Secondly, for the year ending 31 July 2008, on
adoption of the IFRSs on business combinations,
goodwill will be recognised at cost less any
provision for impairment in value. Additionally
the Group will be required to value separately
each intangible asset purchased. This compares
with the current accounting policy which is to
amortise goodwill evenly over its estimated
useful economic life.
MARSALI HARWOOD
FINANCE DIRECTOR
3 October 2005
HALF YEARLY PROGRESS
OF REVENUE (TOTAL
COMPANY) £M
2H03 1H04 2H04 1H05 2H05
4.5
5.9
7.9
8.9
10.4 14 Charteris Annual Report 2005
Board of Directors
David spent most of his career
with Logica where he became
group chief executive and
finally deputy chairman before
leaving the group in 1994. 
As well as being one of the
founders of Charteris, he is 
a non-executive director of
Aveva Group(Official List),
non-executive chairman of
Flomerics Group (AIM) 
and a non-executive director 
of Room Solutions. He is a 
Past President of the British
Computer Society and a 
Past Master of the Worshipful
Company of Information
T echnologists.
CLIFF PREDDY, 58
NON-EXECUTIVE DEPUTY CHAIRMAN
DAVID PICKERING, 51
CHIEF EXECUTIVE
PAUL BIDDLE, 60
NON-EXECUTIVE DIRECTOR
Cliff joined Charteris in 1996
as founding Chief Executive.
Earlier in his career he spent 
27 years with Logica, including
nine years as an Executive
Director on the Logica plc
Board. He is also a 
Non-Executive Director of
Computacenter plc (Official
List), CODASciSys plc (AIM)
and Acquisition Accounting
Limited (a holding company
for TAH Limited).
David is an experienced
business director with a track
record in leading service-based
businesses to achieve major
growth. He became Chief
Executive of Charteris in 1999
having joined the company in
1996 as Business Development
Director. Before joining
Charteris he led a number 
of Logica’s UK businesses.
Latterly he was Director of 
the Energy & Utilities Division,
which grew rapidly into one 
of the company’s largest
operating units.
Paul joined Charteris as a non-
executive Director in August
2000. A Chartered Accountant,
he has previously been Finance
Director of the UK business 
of Digital Equipment & Xerox
Corporation. From 1994 to
2000 he was Chief Financial
Officer of NatWest’s Retail 
& Commercial Businesses. 
In 2001 he joined Jarvis plc 
as Chief Executive of a newly
formed Systems & Technology
Division. Paul is currently
Director of Finance of the
Royal Surrey County 
Hospital T rust.
DAVID MANN, 61
NON-EXECUTIVE CHAIRMAN Charteris Annual Report 2005 15
MARSALI HARWOOD, 38
FINANCE DIRECTOR
CHRIS REES, 61
EXECUTIVE DIRECTOR
ALAN WOODWARD, 43
EXECUTIVE DIRECTOR
Marsali joined Charteris as
Finance Director in October
2000. She is a Chartered
Accountant with strong
commercial interest and
experience in technology
businesses. From 1992 to 1996
she worked with Logica, latterly
as Finance Manager of four of
the UK divisions. She then
joined Sony UK Ltd, where she
was responsible for developing
business and relationships with
digital broadcasters. Marsali has
an Honours degree in Politics,
Philosophy and Economics
from Oxford University.
One of the founder directors 
of Charteris, Chris also practises
as a consultant to financial
institutions and as an expert
witness in IT disputes. His
clients include APACS, ABN
AMRO, Barclays Bank, LIFFE
and Reuters. Previously he 
was Partner in Charge of the
Financial Institutions IT
Practice at Deloitte Consulting.
Before that he was Managing
Director of Logica Software
Products Ltd. His earlier career
was spent with IBM and 
Dun & Bradstreet.
Alan spent the first half of his
career working in government
where he became
internationally recognised 
for his innovative technical
developments. He then joined
Logica in 1990 where he
undertook a variety of roles
involving technical, commercial
and business management,
including overseas operations,
following which he joined
Charteris in 1997. He is a
Chartered Engineer, a Fellow 
of the British Computer
Society as well as a fellow and
member of various other
learned institutions. 16 Charteris Annual Report 2005
REMUNERATION
The Committee makes recommendations to the Board on the Company’s framework for executive and senior staff remuneration
and its cost. The Committee determines and approves on behalf of the Board any contract of employment or related contract
with executive directors or senior staff and agrees any termination arrangements in the event of early termination. The
Committee also makes recommendations to the Board on the Company’s overall limits and policies for share option schemes
and other share-related and long term incentive schemes.
The Chairman of the Remuneration Committee is Cliff Preddy and committee members are David Mann and Paul Biddle. The
Remuneration Committee meets three times a year.
The objective of the Remuneration Committee is that Executive Directors should receive compensation which is appropriate to
their responsibilities and performance and which will attract, motivate and retain executives of the right calibre. The comparator
group for remuneration purposes comprises companies and partnerships in the management consultancy and IT fields matched
to Charteris by reference to sectors and the growth and size characteristics of the business.
The Executive Directors have guaranteed remuneration that is primarily determined by the time spent on the business
development and general management of the Company. In addition, they are paid bonuses, which are dependent upon the
financial performance of the Company and individual time billed to consultancy clients. Aggregate remuneration built up from
these elements will be at the level of a notional full time salary, if financial targets and/or individual consultancy billing targets
are achieved. However, dependent upon the extent of such achievement, aggregate remuneration may exceed or fall short of the
notional full time salary.
Guaranteed remuneration for the Non-Executive Directors consists of their Directors’ fees.
Directors’ remuneration
For the year ended 31 July 2005 the total remuneration was as follows:
Money Money 
purchase purchase 
FixedVariable pension T otal FixedVariable pension T otal
remuneration remuneration Remuneration contributions remuneration remuneration remuneration Remuneration contributions remuneration 
2005 2005 2005 2005 2005 2004 2004 2004 2004 2004
David Mann 42,000 – 42,000 – 42,000 40,000 – 40,000 – 40,000 
Cliff Preddy 42,000 – 42,000 – 42,000 40,000 – 40,000 – 40,000 
David Pickering* 165,105 77,742 242,847 19,687 262,534 151,470 85,054 236,524 18,922 255,446 
Paul Biddle 17,000 – 17,000 – 17,000 15,917 – 15,917 – 15,917 
Marsali Harwood 100,070 43,049 143,119 11,165 154,284 93,962 46,423 140,385 11,231 151,616 
John Millar ––––– 17,413 111,971 129,384 10,400 139,784 
Chris Rees 28,863 228,429 257,292 – 257,292 26,576 163,667 190,243 – 190,243 
Alan Woodward 117,773 65,258 183,031 7,974 191,005 100,000 93,680 193,680 15,494 209,174 
Total 512,811 414,478 927,289 38,826 966,115 485,338 500,795 986,133 56,047 1,042,180 
[Note: John Millar’s remuneration in FY04 is disclosed until his resignation as Director on 31 March 2004.]
* Highest paid Director
SERVICE AGREEMENTS AND LETTERS OF APPOINTMENT
Each of the Executive Directors has a rolling service agreement that may be terminated by either party giving six months’ notice.
The agreements with the Non-Executive Directors may be terminated with six months’ notice given by either party in the case
of David Mann and Cliff Preddy and three months’ notice by either party in the case of Paul Biddle.
SHARE OPTION SCHEMES
Existing Unapproved Scheme
The Company adopted an unapproved option scheme (the Existing Unapproved Scheme) on 20 April 1998 under which
options over 5,787,000 shares were later granted to certain team members and Directors of which 640,333 remain exercisable.
No options have been granted under the scheme since 1 August 2000 and none will be granted in future.
EMI Scheme
The Company adopted an Enterprise Management Incentive Scheme on 24 October 2000. Financial targets may be imposed
that must be satisfied before any options granted can be exercised. Options over 2,706,500 shares remain exercisable or
potentially exercisable under this scheme.
Report of the Remuneration Committee Charteris Annual Report 2005 17
Unapproved Scheme
The Company adopted an Unapproved Scheme on 24 October 2000. Financial targets may be imposed that must be satisfied
before any option granted can be exercised. Options over 2,000 shares remain potentially exercisable under this scheme.
Approved Scheme
The Company adopted an Approved Share Option Scheme on 21 November 2001. The Company may issue share options
under this scheme to its employees within the prescribed limits of £30,000, or four times the employee’s salary, whichever is the
lower. Options will not be exercisable within three years or after ten years from the date of grant. Options over 422,000 shares
remain potentially exercisable under this scheme.
General Employee Benefit Trust
At key points in the development of Charteris the Directors have felt it appropriate to establish special incentives for key
members of management, sales staff and team members. In such cases, whenever possible, they have sought to match the
associated option grants with existing shares held by a General Employee Benefit Trust (the Trust) that was established in March
2000. The Trust initially subscribed for a total of 1,500,000 Ordinary Shares in the Company and later purchased an additional
1,020,781 existing shares in the market.
1,050,000 of the Trust’s shares were linked to EMI share options granted under a pre-existing incentive scheme to selected team
members on 3 December 2001 at a price of 18.57p per share. As at 31 July 2005 203,900 shares had been used by the Trust in
satisfaction of share option exercises under these arrangements and options over 323,600 shares had lapsed, leaving options over
522,500 shares outstanding.
Four additional grants of EMI share options were later made, each linked to trust shares and with performance conditions based
upon the achievement of the strategic plan over the three-year period ending 31 July 2006. These grants were on 25 July 2003
at 18p of which 535,000 shares remain exercisable, 568,000 shares on 14 October 2003 at 28p, 455,000 on 12 November 2004
at 28p and 150,000 on 30 June 2005 at 41p.
The EMI options linked to shares held by the Trust are included in the total for the EMI Scheme disclosed above. 
At 31 July 2005 the Trust held 2,316,881 shares and the remaining 86,381 shares in the Trust can potentially be used to satisfy
other exercises of options.
Limits on issue of new shares
The maximum number of new Ordinary Shares issued or issuable by the Company under the EMI Scheme, the Unapproved
Scheme and the Approved Scheme during the ten-year period commencing on 24 October 2000 is limited to 15% of the
Company’s issued share capital. As at 31 July 2005 options had been granted over a total of 1,494,889 shares that were not
specifically matched by existing shares held by the Trust, representing 3.5% of issued share capital. 
Directors’ share options
Certain of the Directors have rights to acquire ordinary shares in the Company by the exercise of options. The grants have been
made subject to performance conditions based upon significant growth in revenue or profit during a performance period. These
conditions determine the percentage of the options granted that may be exercised. Details of these options are set out below,
including the number of options that may now be exercised, where the relevant performance period has been completed.
Name Number of shares Exercise price Grant date Date exercisable Expiry date
Alan Woodward 300,000 18.57p 31 March 2000 31 March 2003 31 March 2007
David Pickering 20,233 26.57p 28 July 2000 28 July 2003 28 July 2007
David Pickering 250,000 28p 14 October 2003 2 October 2006 14 October 2013
Marsali Harwood 140,000 28p 14 October 2003 2 October 2006 14 October 2013
Alan Woodward 180,000 28p 14 October 2003 2 October 2006 14 October 2013
Marsali Harwood 85,000 28p 12 November 2004 2 October 2006 12 November 2014
David Pickering 150,000 28p 12 November 2004 2 October 2006 12 November 2014
Alan Woodward 70,000 28p 12 November 2004 2 October 2006 12 November 2014
No share options were exercised by Directors during the year.
CLIFF PREDDY
CHAIRMAN OF THE REMUNERATION COMMITTEE
3 October 2005 18 Charteris Annual Report 2005
The Directors present their annual report and the audited financial statements for the year ended 31 July 2005.
PRINCIPAL ACTIVITY
The principal activity of the group is to provide consultancy services which help clients improve business performance and
create new business opportunities through the effective application of information technology.
BUSINESS REVIEW
A review of the development of the business during the year is given in the Chairman’s and Chief Executive’s statements on
pages 4 to 7. This also includes reference to the Company’s future prospects.
RESULTS AND DIVIDENDS
The results for the year are set out on page 23.
The Directors recommend that a dividend of 0.5p per share is payable. This will absorb £0.2m leaving a retained profit for the
financial year of £0.3m which will be transferred to reserves. If approved, the dividend will be paid on 29 November 2005 to
eligible shareholders on the register at close of business on 4 November 2005.
SHARE CAPITAL
Details of share capital are given in note 16 to the financial statements on page 34.
DIRECTOR AND THEIR INTERESTS
The Directors who held office during and at the end of the financial year had the following interests in the ordinary shares of
the Company (all the interests are beneficial unless indicated otherwise): 
Ordinary Shares of 1p each Ordinary Shares of 1p each
31 July 2005 1 August 2004
David Mann 5,642,220 5,642,220
David Mann (as trustee without beneficial interest) 3,696,000 3,696,000
Cliff Preddy 5,438,220 5,438,220
Cliff Preddy (as trustee without beneficial interest) 3,600,000 3,600,000
David Pickering 3,359,566 3,359,566
Alan Woodward 459,566 459,566
Chris Rees 4,400,000 4,400,000
Paul Biddle 110,074 110,074
Marsali Harwood 27,013 27,013
Additionally, all of the Directors are regarded as having an interest in the 86,381 ordinary shares held by the trustees of the
Company’s employee benefit trust which are not subject to option agreement (1 August 2004: 531,381 ordinary shares).
Information in relation to Directors’ share options is provided in the Report of the Remuneration Committee.
TRANSACTIONS WITH DIRECTORS
There were no transactions with Directors during the period.
Directors’ report Charteris Annual Report 2005 19
SIGNIFICANT SHAREHOLDINGS
At the time of approving the financial statements, the Directors had been notified that the following persons had interests
amounting to 3% or more in the issued voting share capital of the Company.
Percentage of issued
Number of Ordinary Shares ordinary share capital
David Mann 9,338,220 21.71%
Cliff Preddy 9,038,220 21.01%
Chris Rees 4,400,000 10.23%
David Pickering 3,359,566 7.81%
John Millar 2,487,391 5.78%
Baring Trustees (Guernsey) Ltd* 2,316,881 5.39%
Victory Capital Ltd (Bradshaw Asset Management) 1,600,000 3.72%
*These are the shares held by the Company’s employee benefit trust.
CREDITORS PAYMENT POLICY AND PRACTICE
It is the Group’s policy to abide by the payment terms agreed with suppliers whenever it is satisfied that the supplier has
provided the goods and services in accordance with the agreed terms and conditions. The trade creditor payment days
outstanding for the Group as at 31 July 2005 were 45 days (2004: 34 days).
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year ended 31 July 2005 the Group contributed a total of £4,205 (2004: £750) to support various charities.
The Group made no political donations.
POST BALANCE SHEET EVENTS
There are no material post balance sheet events in the Group.
SHARE PRICE
The share price at 29 July 2005 was 39p. The highest and lowest share price in the year was 59p and 22.5p respectively.
AUDITORS
In accordance with Section 384 of the Companies Act 1985, a resolution for the reappointment of Baker Tilly is to be proposed
at the forthcoming Annual General Meeting.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held in London on 28 November 2005. The formal notice of meeting is set out on
pages 37 to 39.
By order of the Board
MARSALI HARWOOD
SECRETARY
3 October 2005 20 Charteris Annual Report 2005
The Board of Directors is accountable to shareholders for the good corporate governance of the Group. The principles of
corporate governance and a code of best practice are set out in the Combined Code. The Revised Combined Code applies to
reporting years beginning on or after 1 November 2003. Under the rules of the AIM market the Group is not required to
comply in full with the Code nor to state where it derogates from it. The Board considers that the size and nature of the
Group does not warrant compliance with all the Code’s requirements. This statement sets out how the principles of the
Code are applied to Charteris plc.
BOARD OF DIRECTORS
The Non-Executive Chairman of the Company is David Mann. David Pickering is the Chief Executive and is responsible for
the day to day running of the Group. In total the Board comprises four Executive Directors and three Non-Executive. Paul
Biddle is an Independent Non-Executive Director. It is considered that this gives the necessary mix of industry specific and
broad business experience necessary for the effective governance of the Group. The Board meets regularly, normally on a
monthly basis.
AUDIT COMMITTEE
The Audit Committee is chaired by Paul Biddle and comprises the Non-Executive Directors, with the Finance Director and
external auditors generally in attendance. Paul Biddle, as a Chartered Accountant and Director of Finance of the Royal Surrey
County Hospital, provides current financial experience.
The remit of the Committee is to review: 
the appointment and performance of the external auditor;
the audit fee and nature and scope of the audit;
the interim and final report and accounts;
the external auditor’s management letter and management’s response;
the systems of risk management and internal controls;
operating, financial and accounting policies and practices
and to make related recommendations to the Board. The Audit Committee meets at least three times a year.
The Audit Committee undertakes a formal assessment of the auditors’ independence each year which includes a review of
non-audit services provided to the Group and the related fees and discussion with the auditors about any relationships with
the Group or its directors that could affect their independence or the perception of independence.
REMUNERATION COMMITTEE
The Remuneration Committee is chaired by Cliff Preddy and comprises the Non-Executive Directors. A report from the
Remuneration Committee is set out on pages 16 and 17.
RISK COMMITTEE
It is currently part of the responsibility of the Audit Committee to address risk. The Board intends to establish a separate Risk
Committee when it considers that the scale and nature of the Group’s business warrant that.
INTERNAL FINANCIAL CONTROL
The Board is ultimately responsible for the Group’s system of internal financial control and for reviewing its effectiveness. The
Group maintains a comprehensive process of financial reporting. The annual budget is reviewed and approved before being
formally adopted. The Board receives financial reports of the Group’s performance compared to budget and prior years with
explanations of significant variances. In addition monthly reforecasts are presented to the Board.
The effectiveness of the Group’s internal financial controls is the responsibility of the Audit Committee. The maintenance and
constant improvement of these controls is the responsibility of the Finance Director. The external auditors review the internal
financial controls in so far as they are relevant to expressing their audit opinion and report to the Audit Committee on their
findings where appropriate.
GOING CONCERN
After making enquiries, the Directors have formed a judgement at the time of approving the financial statements that there is a
reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the
foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements.
Corporate governance Charteris Annual Report 2005 21
Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of
the state of affairs of the Company and of the Group and of the profit or loss of the Group for that year. In preparing those
financial statements, the Directors are required to:
select suitable accounting policies and apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed subject to any material departures disclosed and
explained in the financial statements;
prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group will
continue in business for the foreseeable future.
The Directors confirm that the financial statements comply with the above requirements.
The Directors are also responsible for keeping proper accounting records which disclose with reasonable accuracy at any time
the financial position of the Company and of the Group and to enable them to ensure that the financial statements comply
with the Companies Act 1985. They have general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The Directors are also responsible for the maintenance and integrity of the Charteris plc website.
Statement of Directors’ responsibilities 22 Charteris Annual Report 2005
We have audited the financial statements on pages 23 to 36. 
This report is made solely to the company’s members, as a body, in accordance with section 235 of the Companies Act 1985.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state
to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or
for the opinion we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law
and United Kingdom Accounting Standards are set out in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and
United Kingdom Auditing Standards. 
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in
accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors’ Report is not consistent
with the financial statements, if the company has not kept proper accounting records, if we have not received all the
information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration
and transactions with the company is not disclosed. 
We read other information contained in the Annual Report, and consider whether it is consistent with the audited financial
statements. This other information comprises only the Directors’ Report, the Chairman’s Statement, the Chief Executive’s
Review, the Report of the Remuneration Committee, the Finance Director’s Review and the Corporate Governance Statement.
We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with
the financial statements. Our responsibilities do not extend to any other information.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of
whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the state of affairs of the Company and the Group at
31 July 2005 and of the Group profit for the year then ended and have been properly prepared in accordance with the
Companies Act 1985.
BAKER TILLY
REGISTERED AUDITOR
CHARTERED ACCOUNTANTS
2 Bloomsbury Street
London WC1B 3ST
3 October 2005
Independent Auditors’ report
to the members of Charteris plc Charteris Annual Report 2005 23
Continuing 
operations Acquisitions Total Total 
2005 2005 2005 2004 
Notes £’000 £’000 £’000 £’000 
Turnover 1 17,521 1,769 19,290 13,822
Other external charges 3 3,679 199 3,878 2,790
Staff costs 4 11,149 1,247 12,396 9,085
Depreciation 174 28 202 120
Goodwill amortisation 279 – 279 176
Administrative expenses 1,400 263 1,663 1,169
16,681 1,737 18,418 13,340
Operating profit before goodwill amortisation 1,119 32 1,151 658
Goodwill amortisation (279) – (279) (176)
Operating profit 840 32 872 482
Interest receivable 84 123
Interest payable and similar charges 2 (65) (64)
Profit on ordinary activities before taxation and
goodwill amortisation 1,170 717
Goodwill amortisation (279) (176)
Profit on ordinary activities before taxation 3 891 541
Taxation 5 (368) (220)
Profit on ordinary activities after taxation and
for the financial year 523 321
Dividends proposed 6 (203) (158)
Retained profit for the year 17 320 163
Dividend per share 0.5p 0.4p
Earnings per share 7
Basic 1.30p 0.81p
Diluted 1.28p 0.81p
Basic before amortisation of goodwill 1.99p 1.26p
Diluted before amortisation of goodwill 1.96p 1.25p
No separate statement of total recognised gains and losses has been presented as all such gains and losses have been dealt
with in the profit and loss account.
Consolidated profit and loss account
for the year ended 31 July 2005 24 Charteris Annual Report 2005
Group Company
2005 2004 2005 2004
Notes £’000 £’000 £’000 £’000
Fixed assets
Intangible assets 8 5,368 2,954 2,569 –
Tangible assets 9 2,638 2,557 2,638 2,557
Investments 10 1 1 441 251
8,007 5,512 5,648 2,808
Current assets
Debtors 11 4,475 2,950 4,339 2,950
Cash at bank and in hand 2,085 4,155 2,039 4,155
6,560 7,105 6,378 7,105
Creditors: Amounts falling due within one year 12 (5,499) (4,020) (5,757) (4,055)
Net current assets 1,061 3,085 621 3,050
Total assets less current liabilities 9,068 8,597 6,269 5,858
Creditors: Amounts falling due after more than one year 13 (771) (947) (771) (947)
Provisions for liabilities and charges 14 (38) (25) (38) (25)
Net assets 8,259 7,625 5,460 4,886
Capital and reserves
Called up share capital 16 430 419 430 419 
Share premium account 2,544 2,544 2,544 2,544
Merger reserve 17 3,573 3,284 – –
Other reserve 17 26 19 26 19
Profit and loss account 17 1,880 1,560 2,654 2,105
ESOP reserve 17 (194) (201) (194) (201)
Equity shareholders’ funds 18 8,259 7,625 5,460 4,886
Approved by the board on 3 October 2005.
DAVID PICKERING
DIRECTOR
Balance sheets
31 July 2005 Charteris Annual Report 2005 25
2005 2004 
Notes £’000 £’000 
Cash flow from operating activities 19a 1,380 1,201
Returns on investments and servicing of finance
Interest received 84 123
Interest paid (64) (63)
Net cash inflow from returns on investments and servicing of finance 20 60
Taxation (269) 142
Capital expenditure
Purchase of tangible fixed assets (189) (94)
Net cash outflow for capital expenditure (189) (94)
Acquisition
Purchase of subsidiary undertaking (2,814) –
Cash acquired with subsidiary undertaking 101 –
Net cash outflow for acquisition (2,713) –
Equity dividends paid (158) (158)
Cash (outflow)/inflow before use of liquid resources and financing (1,929) 1,151
Management of liquid resources
Decrease/(increase) in term bank deposits 3,385 (474)
Net cash inflow/(outflow) from management of liquid resources 3,385 (474)
Financing
Repayment of mortgage loan (155) (156)
Proceeds of share option exercise 14 -
Purchase of own shares – (149)
Net cash outflow from financing (141) (305)
Increase in cash in the year 1,315 372
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2005 2004 
Notes £’000 £’000 
Increase in cash in the year 1,315 372
Cash outflow from change in debt 155 156
Cash (inflow)/outflow from (decrease)/increase in liquid resources (3,385) 474
Change in net funds resulting from cash flows (1,915) 1,002
Amortisation of loan arrangement fees (1) (1)
Movement in net funds in the period (1,916) 1,001
Opening net funds 3,059 2,058 
Closing net funds 19b 1,143 3,059
Consolidated cash flow statement
for the year ended 31 July 2005 26 Charteris Annual Report 2005
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards.
BASIS OF CONSOLIDATION
The Group financial statements consolidate those of Charteris plc and its subsidiary undertakings made up to 31 July 2005. Subsidiaries
acquired during the year are consolidated using the acquisition method. Their results are incorporated from the date that control passes. 
PURCHASED GOODWILL
Goodwill representing the excess of the purchase price compared with the fair value of net assets acquired is capitalised and written
off evenly over its estimated useful economic life. The useful economic life is the period over which the directors estimate that the
value of the underlying business acquired is expected to exceed the value of its identifiable net assets. 
TANGIBLE FIXED ASSETS
Depreciation is provided on all tangible fixed assets other than freehold land at rates calculated to write each asset down to its
estimated residual value evenly over its expected useful life, as follows:-
Freehold buildings over 50 years
Leasehold premises over the lease term
Fixtures and fittings over 4 to 5 years
Office equipment over 2-3 years
INVESTMENTS
Fixed asset investments are stated at cost less any provisions for impairment in value.
EMPLOYEE BENEFIT TRUST
The Group operates an employee benefit trust which holds shares in the Company. The Group records the assets and liabilities of
the trust as its own. In accordance with UITF Abstract 38, own shares held are deducted in arriving at shareholders’ funds and
included in a separate negative reserve described as an “ESOP reserve”.
FOREIGN CURRENCIES
Assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date.
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the
profit and loss account.
DEFERRED TAXATION
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where
transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred
at the balance sheet date. Timing differences are differences between the Group’s taxable profits and its results as stated in the
financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which
they are recognised in the financial statements. 
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are expected
to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is
measured on a non-discounted basis.
OPERATING LEASES
Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are
charged to the profit and loss account on a straight line basis over the lease term.
FINANCE COSTS
The costs relating to the obtaining of loan finance are amortised through the profit and loss account at a constant periodic rate.
Loans are included in the balance sheet at the amount received from the lender less the unamortised costs.
PENSIONS
The Group contributes to the personal pension plans of certain employees or to the Group’s personal pension plan. The Group’s
contributions are charged to the profit and loss account as they become due.
TURNOVER
T urnover represents the invoiced value, net of Value Added Tax, of services provided to clients except in respect of fixed price contracts
where turnover represents the sales value of work done in the year. Provision is made for all foreseeable losses on fixed price contracts.
Accounting policies
for the year ended 31 July 2005 1 SEGMENTAL INFORMATION
The group’s operations were all based in the United Kingdom.
The group’s turnover was made to the following geographical markets:
2005 2004
£’000 £’000
United Kingdom 18,585 12,823
Europe (excluding United Kingdom) 251 464
North America 454 511
Asia – 24
19,290 13,822
2 INTEREST PAYABLE AND SIMILAR CHARGES
2005 2004
£’000 £’000
On bank loans and overdrafts 64 63
Amortisation of loan finance costs 1 1
65 64
3PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
2005 2004
£’000 £’000
Profit on ordinary activities before taxation is stated after charging:
Operating lease rentals in respect of land and buildings: 99 –
Other external charges represent project costs including expenses and fees payable to associates and subcontractors.
Amounts payable to Baker Tilly by the group in respect of both audit and non-audit services are set out below:
2005 2004
£’000 £’000
Services as auditors 31 24
Further assurance services
– interim procedures 4 5
Tax services
– compliance services 6 6
– advisory services 5 6
Services in connection with acquisition of subsidiary 39 –
Other services 3 4
88 45
Notes to the financial statements
for the year ended 31 July 2005
Charteris Annual Report 2005 27 4EMPLOYEES
2005 2004
No. No.
The average monthly number of persons (including directors) employed
by the group during the year was:
Management 11 8
Consultants 97 76
Administration 6 5
114 89
2005 2004
£’000 £’000
Staff costs for the above persons:
Wages and salaries 10,384 7,521
Social security costs 755 963
Other pension costs 1,257 601
12,396 9,085
2005 2004
£’000 £’000
Directors’ remuneration
Emoluments 927 986
Money purchase pension contributions 39 56
Total emoluments 966 1,042
Details of directors’ remuneration during the year are set out in the Report of the Remuneration Committee on page 16.
Directors’ remuneration disclosed above includes total emoluments earned by the highest paid Director during the year ended
31 July 2005 of £262,534 (2004: £255,446), which included money purchase pension contributions of £19,687 (2004: £18,922).
The group’s pension costs include money purchase pension contributions for three directors (2004: four).
5TAXATION
2005 2004
£’000 £’000
Current tax:
UK corporation tax on results of the year 339 239
Overprovision in prior year (4) (1)
Total current tax 335 238
Deferred tax:
Origination and reversal of timing differences 33 (18)
Total deferred tax 33 (18)
Tax on profit on ordinary activities 368 220
Notes to the financial statements continued
for the year ended 31 July 2005
28 Charteris Annual Report 2005 5TAXATION continued
Factors affecting tax charge for the year:
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The differences are explained below:
2005 2004
£’000 £’000
Profit on ordinary activities before tax 891 541
Profit on ordinary activities multiplied by the standard rate of
corporation tax in the UK of 30% (2004: 30%) 267 162
Effects of:
Expenses not deductible for tax purposes
– goodwill amortisation 84 53
– depreciation on assets not eligible for capital allowances 13 13
– other expenses 8 10
Capital allowances in excess of depreciation (3) (13)
Utilisation of tax losses acquired with subsidiary (30) –
Other timing differences – 31
Benefit of small companies rate – (17)
Adjustment to tax charge in respect of prior years (4) (1)
Current tax charge for the year 335 238
Factors that may affect future tax charges:
The lack of tax deductibility for goodwill amortisation will continue to affect the tax charge of future years until such time as the
goodwill has been fully amortised.
6 DIVIDENDS
2005 2004
£’000 £’000
Proposed dividend of 0.5p (2004: 0.4p) 203 158
Dividends payable to the trustee of the Group’s employee benefit trust are waived under the terms of the trust deed; the amount
of the proposed dividend so waived is £11,584 (2004: £9,574).
7 EARNINGS PER SHARE
The calculations of earnings per share are based on the following profits and numbers of shares.
2005 2004
£’000 £’000
Profit for the financial year before goodwill amortisation 802 497
Goodwill amortisation (279) (176)
Profit for the financial year 523 321
2005 2004
No. of No. of
shares shares
Weighted average number of shares ’000 ’000
For basic earnings per share 40,371 39,480
Dilutive effect of share options 493 187
For diluted earnings per share 40,864 39,667
The weighted average number of shares for the purposes of basic earnings per share excludes those owned by the Group’s
employee benefit trust.
Charteris Annual Report 2005 29 8 INTANGIBLE FIXED ASSETS
Purchased
goodwill
Group £’000
Cost
1 August 2004 3,510
Additions 2,693
31 July 2005 6,203
Amounts written off
1 August 2004 556
Charged in the year 279
31 July 2005 835
Net book value
31 July 2005 5,368
31 July 2004 2,954
On 31 May 2001, the group acquired 100% of the issued share capital of The Mandelbrot Set (International) Limited. On
29 October 2004, the group acquired 100% of the issued share capital of Cedalion Limited. The goodwill on both acquisitions
is being written off over its estimated useful economic life of 20 years.
Purchased
goodwill
Company £’000
Cost
1 August 2004 –
Reclassification from fixed asset investments 2,635
31 July 2005 2,635
Amounts written off
1 August 2004 –
Charged in the year 66
31 July 2005 66
Net book value
31 July 2005 2,569
31 July 2004 –
On 1 February 2005, the trade and net assets of Cedalion Limited were hived up to Charteris plc at their book value. In order
to comply with generally accepted accounting principles, the excess of the cost of acquisition over net assets retained in
subsidiaries has been reclassified as goodwill in the books of Charteris plc. The goodwill is being written off over its estimated
useful economic life of 20 years.
Notes to the financial statements continued
for the year ended 31 July 2005
30 Charteris Annual Report 2005 9TANGIBLE FIXED ASSETS
Fixtures
Freehold and Office
property fittings equipment Total
Group £’000 £’000 £’000 £’000
Cost
1 August 2004 2,495 313 411 3,219
Additions – 59 224 283
31 July 2005 2,495 372 635 3,502
Depreciation
1 August 2004 136 205 321 662
Charged in the year 30 48 124 202
31 July 2005 166 253 445 864
Net book value
31 July 2005 2,329 119 190 2,638
31 July 2004 2,359 108 90 2,557
Fixtures
Freehold and Office
property fittings equipment Total
Company £’000 £’000 £’000 £’000
Cost
1 August 2004 2,495 313 411 3,219
Transfer from subsidiary – 46 36 82
Additions – 11 178 189
31 July 2005 2,495 370 625 3,490
Depreciation
1 August 2004 136 205 321 662
Charged in the year 30 46 114 190
31 July 2005 166 251 435 852
Net book value
31 July 2005 2,329 119 190 2,638
31 July 2004 2,359 108 90 2,557
10 FIXED ASSET INVESTMENTS
Listed
investments
Group £’000
Cost
1 August 2004 and 31 July 2005 5
Amounts written off
1 August 2004 and 31 July 2005 4
Net book value
31 July 2005 1
31 July 2004 1
The listed investments are stated at market value as at 31 July 2005.
Charteris Annual Report 2005 31 10 FIXED ASSET INVESTMENTS continued
Shares in Listed
subsidiaries investments Total
Company £’000 £’000 £’000
Cost
1 August 2004 250 5 255
Additions 2,825 – 2,825
Reclassification to intangible fixed assets (2,635) – (2,635)
31 July 2005 440 5 445
Amounts written off
1 August 2004 and 31 July 2005 – 4 4
Net book value
31 July 2005 440 1 441
31 July 2004 250 1 251
Shares in subsidiaries
On 29 October 2004, the company acquired 100% of the issued ordinary share capital of Cedalion Limited (“Cedalion”)
whose business was technical consulting related to Microsoft technologies.
The summarised profit and loss account for Cedalion from 1 January 2004 to the date of acquisition was as follows:
£’000
T urnover 2,135
Operating loss (204)
Loss before taxation (211)
Taxation –
Loss after taxation (211)
The profit after taxation for the year ended 31 December 2003 was £244,000.
On 1 February 2005, the trade and net assets of Cedalion were hived up to Charteris plc at their book value. As explained in note
8, the excess of the cost of the shares over net assets retained in subsidiaries has been reclassified to intangible fixed assets.
11 DEBTORS
Group Company
2005 2004 2005 2004
£’000 £’000 £’000 £’000
Due within one year:
Trade debtors 4,053 2,676 3,917 2,676
Other debtors 46 46 46 46
Prepayments and accrued income 338 217 338 217
4,437 2,939 4,301 2,939
Due in more than one year:
Deferred tax asset 38 11 38 11
4,475 2,950 4,339 2,950
The deferred tax asset comprises the tax effect of unutilised tax losses of £30,000 (2004: £nil), other timing differences of
£53,000 (2004: £56,000) less accelerated capital allowances of £45,000 (2004: £45,000).
Notes to the financial statements continued
for the year ended 31 July 2005
32 Charteris Annual Report 2005 12 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Group Company
2005 2004 2005 2004
£’000 £’000 £’000 £’000
Bank loan (see note 13) 171 149 171 149
Trade creditors 975 505 975 505
Amounts owed to subsidiary undertakings – – 258 35
Corporation tax 339 273 339 273
Other taxation and social security 1,095 855 1,095 855
Other creditors 493 616 493 616
Accruals and deferred income 2,223 1,464 2,223 1,464
Proposed dividend 203 158 203 158
5,499 4,020 5,757 4,055
13 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Group and Company
2005 2004
£’000 £’000
Bank loan 771 947
The bank loan is secured by a legal mortgage over the freehold property and a mortgage debenture on the fixed and floating assets
of the group. The loan is repayable by instalments, with interest being charged at base rate plus 1.5% (subsequently renegotiated
to base rate plus 1%), as follows:
Group and Company
2005 2004
£’000 £’000
In less than one year 171 149
Between one and two years 180 157
Between two and five years 591 544
In five years or more – 246
942 1,096
14 PROVISION FOR LIABILITIES AND CHARGES
Dilapidation costs
Group Company
£’000 £’000
1 August 2004 25 25
On acquisition of subsidiary 23 –
Transfer from subsidiary –23
Transfer to profit and loss account (10) (10)
31 July 2005 38 38
Dilapidation costs reflect provision for the cost of returning leased premises to the conditions in which they were first occupied
and are expected to be fully utilised by 31 July 2011.
Charteris Annual Report 2005 33 15 FINANCIAL INSTRUMENTS
All the Group’s financial assets and liabilities are designated in sterling.
The Group had cash balances on deposit at 31 July 2005 of £2,085,000 (2004: £4,155,000) which were earning interest at
variable market rates.
Details of the Group’s secured bank loan is given in note 13.
There is no material difference between the fair value of borrowings and other financial assets and their book value at the
balance sheet date.
Details of the Group’s policy with regard to the management of financial instruments is given in the Finance Director’s
review on page 12.
16 SHARE CAPITAL
2005 2004
£’000 £’000
Authorised:
100,000,000 ordinary shares of 1p each 1,000 1,000
Allotted, issued and fully paid:
43,014,198 (2004: 41,873,514) ordinary shares of 1p each 430 419
Share issues
On 29 October 2004 1,140,684 ordinary shares of 1p each were each issued at 26.3p to the vendors of Cedalion Limited
totalling £300,000.
Share options
The Company has granted options, which remain exercisable, to subscribe for ordinary shares of 1p each, as follows:
Subscription Number of shares for which 
price per share Period within which rights are exercisable
Grant date £ options are exercisable 31.7.05 1.8.04
31.03.2000 0.19 31.03.2003 – 31.03.2007 300,000 300,000
28.07.2000 0.27 28.07.2003 – 28.07.2007 340,333 340,333
24.10.2001 0.84 24.10.2004 – 24.10.2011 10,000 10,000
29.10.2001 0.84 29.10.2004 – 29.10.2011 41,000 54,000
14.06.2002 0.95 14.06.2005 – 14.06.2012 – 75,000
04.12.2002 0.27 04.12.2005 – 04.12.2012 – 125,611
19.12.2002 0.25 19.12.2005 – 19.12.2012 – 98,889
14.10.2003 0.28 14.10.2006 – 14.10.2013 2,000 2,000
13.11.2003 0.23 13.11.2006 – 13.11.2013 177,000 187,000
12.11.2004 0.29 12.11.2007 – 12.11.2014 245,000 –
12.11.2004 0.28 12.11.2007 – 12.11.2014 90,000 –
31.01.2005 0.43 03.10.2006 – 31.01.2015 60,000 –
31.01.2005 0.43 31.01.2008 – 31.01.2015 155,000 –
30.06.2005 0.41 30.06.2008 – 30.06.2015 120,000 –
1,540,333 1,192,833
In addition to the options disclosed above, the EBT has granted options to employees over shares held by the EBT. Details of
these options are disclosed in note 17.
Notes to the financial statements continued
for the year ended 31 July 2005
34 Charteris Annual Report 2005 Charteris Annual Report 2005 35
17 RESERVES
Group Company
2005 2004 2005 2004
£’000 £’000 £’000 £’000
Merger reserve:
1 August 2004 3,284 3,284 – –
Premium on allotment during year 289 – – –
31 July 2005 3,573 3,284 – –
Other reserve:
1 August 2004 19 19 19 19
Premium on options exercised for EBT shares 7 – 7 –
31 July 2005 26 19 26 19
Profit and loss:
1 August 2004 1,560 1,397 2,105 1,766
Retained profit for year 320 163 549 339
31 July 2005 1,880 1,560 2,654 2,105
ESOP reserve:
1 August 2004 (201) (201) (201) (201)
Options exercised for EBT shares 7 – 7 –
31 July 2005 (194) (201) (194) (201)
Own shares
The Group has established a General Employee Benefit T rust (“EBT”) which owned 2,316,881 ordinary shares of 1p each at 31 July
2005 (1 August 2004: 2,393,581). The market value of these shares at 31 July 2005 was £903,584 (31 July 2004: £598,395). At 31
July 2005, there were 522,500 (2004: 599,200) outstanding options for employees to acquire shares from the EBT at 18.57p per
share, 535,000 (2004: 695,000) at 18p per share, 1,023,000 (2004: 568,000) at 28p per share and 150,000 (2004: nil) at 41p.
The report of the remuneration committee on page 17 gives further information regarding the EBT.
18 RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS’ FUNDS
Group Company
2005 2004 2005 2004
£’000 £’000 £’000 £’000
Profit for the financial year 523 321 752 497
Dividends (203) (158) (203) (158)
320 163 549 339
New share capital issued 300 – 11 –
Exercise of share options to acquire shares held by ESOP 14 – 14 –
Net addition to equity shareholders’ funds 634 163 574 339
Opening equity shareholders’ funds 7,625 7,462 4,886 4,547
Closing equity shareholders’ funds 8,259 7,625 5,460 4,886
19 CASH FLOWS
2005 2004
aReconciliation of operating profit to net cash inflow from operating activities £’000 £’000
Operating profit 872 482
Depreciation 202 120
Amortisation of goodwill 279 176
Increase in debtors (819) (1,323)
Increase in creditors 856 1,746
Decrease in provisions (10) –
Net cash flow from operating activities 1,380 1,201 36 Charteris Annual Report 2005
19 CASH FLOWS continued
At At
1 August Other 31 July
2004 Cash flow changes 2005
b Analysis of net funds £’000 £’000 £’000 £’000
Cash in hand, at bank 759 1,315 – 2,074
Bank deposits 3,396 (3,385) – 11
4,155 (2,070) – 2,085
Debt due within 1 year (149) 155 (177) (171)
Debt due after 1 year (947) – 176 (771)
Total 3,059 (1,915) (1) 1,143
20 PURCHASE OF SUBSIDIARY UNDERTAKING
On 29 October 2004, the company acquired the entire issued share capital of Cedalion Limited.
£’000
Net assets acquired:
Tangible fixed assets 94
Debtors 679
Deferred tax asset 60
Cash at bank and in hand 101
Creditors (490)
Provisions (23)
421
Goodwill 2,693
3,114
Discharged by:
Shares allotted 300
Cash paid 2,814
3,114
There was no material difference between the book value and fair value of net assets acquired.
There was no material impact on the group’s operating cashflows during the period from date of acquisition to 31 July 2005
arising from the acquisition of Cedalion Limited.
21 COMMITMENTS UNDER OPERATING LEASES
At 31 July 2005, the group and company had an annual commitment under a non-cancellable operating lease for land and
buildings of £132,000 (2004: £nil). This lease expires in February 2011.
22 PENSION COMMITMENTS
The group contributes to personal pension plans of certain employees. The pension cost charge represents contributions
payable by the Group and amounted to £1,257,000 (2004: £601,000). Contributions totalling £80,655 (2004: £94,874) were
payable at the year end and are included in creditors.
23 COMPANY PROFIT AND LOSS ACCOUNT
As permitted by s230 Companies Act 1985, the Company has not presented its own profit and loss account.
Notes to the financial statements continued
for the year ended 31 July 2005 Charteris Annual Report 2005 37
Notice is given that the Annual General Meeting of Charteris plc (the “Company”) will be held at Charteris House, 39/40
Bartholomew Close, London on Monday 28 November 2005 at 11.00am for the purpose of considering and, if thought fit,
passing the following resolutions as ordinary resolutions in the case of resolutions 1 to 7 and special resolutions in the case of
resolutions 8, 9 and 10.
ORDINARY RESOLUTIONS 
1. THAT the report of the Directors and the accounts for the year ended 31 July 2005 together with the report of the
auditors thereon be received and considered.
2. THAT a final dividend for the year ending 31 July 2005 of 0.5p per ordinary share of 1p each in the capital of the
Company (“Ordinary Shares”), as recommended by the Directors, be declared, the record date for such dividend having
been fixed by the Directors as 4 November 2005.
3. THAT Baker Tilly be and they are hereby re-appointed as auditors of the Company to hold office from the conclusion of
this meeting until the conclusion of the next general meeting at which accounts are laid before the Company at a
remuneration to be fixed by the Directors of the Company from time to time.
4. THAT Alan Woodward, who pursuant to the articles of association of the Company (the “Articles”) retires by rotation and
is eligible for re-election, be re-elected as a Director of the Company.
5. THAT Marsali Harwood, who pursuant to the Articles retires by rotation and is eligible for re-election, be re-elected as a
Director of the Company.
6. THAT Paul Biddle, who pursuant to the Articles retires by rotation and is eligible for re-election, be re-elected as a Director
of the Company.
7. THAT in substitution for any existing such authority the Directors of the Company from time to time be and they are hereby
generally and unconditionally authorised for the purposes of section 80 of the Companies Act 1985 (the “Act”) to exercise all the
powers of the Company to allot relevant securities (within the meaning of section 80(2) of Act) of the Company up to an
aggregate nominal amount of £430,142 provided that this authority shall expire (unless previously renewed, varied or revoked by
the Company in general meeting) on the conclusion of the Annual General Meeting of the Company in 2006 (the “Authority
Period”) save that the Company may, prior to the expiry of the Authority Period, make an offer or agreement which would or
might require relevant securities to be allotted after the Authority Period and the Directors of the Company from time to time
may allot relevant securities in pursuance of such offer or agreement as if the authority hereby conferred had not expired.
SPECIAL RESOLUTIONS
8. THAT in substitution for any existing such authority the Company be and it is hereby generally and unconditionally
authorised to make market purchases (within the meaning of section 163(3) of the Act) of Ordinary Shares provided that:
i. the maximum number of Ordinary Shares hereby authorised to be acquired is 4,301,420 (representing 10 per cent of
the Company’s issued ordinary share capital);
ii. the minimum price which may be paid for any such share is the nominal value (exclusive of expenses); 
iii. the maximum price (exclusive of expenses) which may be paid for any such share is an amount equal to 105 per cent
of the average of the middle market quotations for an Ordinary Share as derived from the London Stock Exchange Daily
Official List for the 5 business days immediately preceding the day on which the share is contracted to be purchased; and
iv. the authority hereby conferred shall expire 12 months from the date of this resolution or, if earlier, at the conclusion of
the Annual General Meeting of the Company in 2006, except that a contract of purchase may be made before such
expiry which will or may be executed wholly or partly thereafter, and a purchase of shares may be made in pursuance
of any such contract.
9. THAT in substitution for any existing such power the Directors of the Company from time to time be and hereby empowered:
a. pursuant to section 95(1) of the Act to allot equity securities (within the meaning of section 94(2) of the Act) for cash
as if section 89(1) of the Act did not apply to such allotment; and
b. to sell any relevant shares in the Company if immediately before such sale the shares were held by the Company as
treasury shares notwithstanding that section 89(1) may otherwise apply to the sale of such relevant shares;
Notice of Annual General Meeting 38 Charteris Annual Report 2005
provided that this power:
i. shall be limited to:
1. the allotment of equity securities in connection with any offer by way of rights or open offer of relevant equity
securities where the equity securities respectively attributed to the interests of all holders of relevant equity securities
are proportionate (as nearly as may be) to the respective numbers of relevant equity securities held by them but
subject to such exclusions or other arrangements as the Directors of the Company from time to time may deem
necessary or expedient to deal with equity securities which represent fractional entitlements or on account of either
legal or practical problems arising in connection with or under the laws or requirements of any regulatory or other
authority in any jurisdiction; and
2. otherwise than pursuant to paragraph 1 above, the allotment of equity securities up to an aggregate nominal value
of £21,507; and
ii. shall expire (unless previously renewed, varied or revoked by the Company in general meeting) at the end of the
Authority Period but so that the Company may, at any time prior to the expiry of the Authority Period make an offer
or agreement which would or might require equity securities to be allotted or treasury shares sold after the expiry of the
Authority Period and the Directors of the Company from time to time may allot equity securities or sell treasury shares
in pursuance of such offer or agreement as if the authority hereby conferred had not expired.
10. THAT the Articles be amended by the substitution of the following for the existing articles 154.1 and 154.2 which shall
be deleted:
“154.1 Subject to the provisions of the Companies Acts but without prejudice to any indemnity to which he may otherwise
be entitled, every person who is or was a Director or other officer of the Company (other than any person (whether or not
an officer of the Company) engaged by the Company as auditor) may be indemnified out of the assets of the Company
against all costs, charges, expenses, losses and liabilities (together “Liabilities”) incurred by him from time to time (whether
in connection with any negligence, default, breach of duty or breach of trust by him or otherwise) in relation to the affairs
of the Company or the actual or purported execution and/or discharge of the duties of his office and/or the exercise or
purported exercise of his powers or discretions, including any Liability suffered or incurred by him in disputing, defending,
investigating or providing evidence in connection with any actual, threatened or alleged claims, demands, investigation or
proceedings, whether civil or criminal, or in connection with any application under section 144(3) or (4) of section 727
of the Act, PROVIDED THAT this Article 154.1 shall be deemed not to provide for, or entitle any such person to,
indemnification to the extent that (i) it would cause this Article 154.1, or any part of it, to be treated as void under the
Companies Acts or (ii) a Liability arises from an act or omission of the Director or officer which is shown to have been in
bad faith (including one involving fraud or fraudulent concealment by him). 
154.2 The Directors may also, subject to the provisions of the Companies Acts, provide funds to any Director or other
officer (excluding the auditors) or do anything to enable a Director (or former Director) to avoid incurring expenditure of
the nature described in section 337A of the Act.” 
By order of the Board
MARSALI HARWOOD
SECRETARY
Registered office: Charteris House, 39/40 Bartholomew Close, London, EC1A 7JN
3 October 2005
Notice of Annual General Meeting continued Charteris Annual Report 2005 39
NOTES:
1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and on a poll to
vote instead of him/her. A proxy need not be a member of the Company. 
2. A form of proxy is provided with this notice and instructions for its use are shown on the form. To be valid, duly completed
forms must be received at the office of the Company’s registrars, Capita Registrars, The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU not less than 48 hours before the time fixed for the meeting. Deposit of the form of proxy will
not prevent a member attending the meeting and voting in person. If someone else signed the form on your behalf, you or
that person must send the power of attorney or other written authority under which it is signed (or a notarially certified
copy of such power or authority) to the Company’s registrars at the above address so as to be received not less than 48 hours
before the time fixed for the meeting.
3. The Company, pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those
members entered on the register of members at close of business on 26 November 2005 shall be entitled to attend or vote at
the meeting or, if the meeting is adjourned, as at close of business on such date being not more than two days prior to the
date fixed for the adjourned meeting. Changes to entries on the register after such time shall be disregarded in determining
the rights of any person to attend or vote at the meeting.
4. The following documents are available for inspection at the registered office of the Company during normal business hours
on each weekday (public holidays excluded) from the date of this notice until the date of the meeting and at the place of the
meeting for 15 minutes prior to and during the meeting:
a. the register of Directors’ (and their families’) interests in the shares of the Company; and
b. copies of the Directors’ service contracts. FIVE YEAR RECORD
2005 2004 2003 2002 2001
Revenue (£000s) 19,290 13,822 12,174 19,087 13,276
Profit before tax, goodwill amortisation and
exceptional items (£000s) 1,170 717 14 1,758 863
Profit/(loss) before tax (£000s) 891 541 (625) 1,588 828
Cash at year end (£000s) 2,085 4,155 3,309 4,909 3,807
Net funds at year end (£000s) 1,143 3,059 2,058 3,503 2,273
No. staff at year end 137 99 84 107 104
Net current assets (£000s) 1,061 3,085 2,872 3,500 2,660
Shareholders funds (£000s) 8,259 7,625 7,462 8,252 7,637
Dividend per share 0.5p 0.4p 0.4p 0.4p 0.0p
Diluted earnings per share before goodwill amortisation
and exceptional costs 1.96p 1.25p 0.00p 2.91p 1.61p
FINANCIAL CALENDAR
The Annual General Meeting will be held at Charteris House, 39/40 Bartholomew Close on 28 November 2005
Interim statements for the half year ended 31 January will be issued to shareholders in late March or early April
Preliminary results for the year ended 31 July will be announced in October
Annual reports will be posted to shareholders in early November
INVESTOR RELATIONS
Our Corporate website at www.charteris.com has an investor relations section. Our interim and annual reports can be
downloaded from the site. We welcome any input as to how this website can be improved and made more informative
for our shareholders.
We like to hear from our shareholders and David Mann, David Pickering and Marsali Harwood are pleased to receive calls or
respond to emails (david.mann@charteris.com, david.pickering@charteris.com and marsali.harwood@charteris.com).
Shareholder enquiries:
Enquiries relating to matters such as loss of a share certificate, dividend payments, amalgamation of accounts or notification of a
change of name or address should be directed to the Group’s registrars: Capita Registrars, The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU, telephone 0870 162 3100. Capita Registrars also provide a web site which enables you to
download forms and view up to date shareholder information: www.capitaregistrars.com
Registered office:
Charteris House, 39/40 Bartholomew Close, London, EC1A 7JN
Nominated broker and nominated adviser:
Bridgewell Limited, Old Change House, 128 Queen Victoria Street, London, EC4V 4BJ
Principal bankers:
The Royal Bank of Scotland plc, Floors 8 & 9, 280 Bishopsgate, London, EC2M 4RB
Financial PR:
Biddick Associates, Mercury House, Triton Court, 14-18 Finsbury Square, London, EC2A 1BR
Information for shareholders
40 Charteris Annual Report 2005 Designed and produced by fourthquarter
Printed in England by SV.two
Photography by Graeme Harris
Financial highlights 1
Our business offering 2
Chairman’s statement 4
Chief Executive’s review 6
Practice operating reviews:
–Retail, manufacturing and services practice 8
–Financial services and media practice 9
–Government, legal, utilities and energy practice 10
–Northern practice 11
Finance Director’s review 12
Board of Directors 14
Report of the Remuneration Committee 16
Directors’ report 18
Corporate governance 20
Statement of Directors’ responsibilities 21
Independent Auditors’ report 22
Consolidated profit and loss account 23
Balance sheets 24
Consolidated cash flow statement 25
Accounting policies 26
Notes to the financial statements 27
Notice of Annual General Meeting 37
Information for shareholders 40 Charteris plc
Charteris House
39/40 Bartholomew Close
London EC1A 7JN
Telephone: 020 7600 9199
Facsimile: 020 7600 9212
e-mail: info@charteris.com
www.charteris.com Charteris plc Annual Report 2005
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