Abacus Group plc
Annual Report & Accounts 2005
Abacus House
Bone Lane
Newbury
Berkshire
RG14 5SF
www.abacus-group.co.uk
Abacus Group plc Annual Report & Accounts 2005 The Abacus Group is a leading franchised distributor of electronic components, flat-panel
displays, printers and related products and provides additional value added services,
including technical support, cable and electro-mechanical sub-assembly and the design
and build of display systems.
The Group employs approximately 750 people and has 9 principal trading businesses
operating in the UK, Eire, Benelux, Scandinavia and Italy.
The Group’s philosophy is to offer as wide a product range as possible in order to be in
tune with the widespread market trend towards supply chain management and vendor
reduction; to work at design level with both existing and new customers in order to be
involved in the proliferation of new products that typifies the electronics industry; and to
combine these features with an unusually high level of personal service and commitment.
The Group has a continual programme of investment to ensure that the logistics and
systems are in place to support and further these aims.
Contents
Financial and Operational Highlights 1
Abacus Group at a glance 2
Chairman’s Statement 4
Chief Executive’s Review 6
Financial Review 9
The Board of Directors, Secretary and Advisors 11
Directors’ Report 12
Corporate Governance Statements 17
Corporate Social Responsibility 22
Directors’ Remuneration Report 24
Statement of Directors’ Responsibilities 32
Auditors’ Report 33
Financial Statements 34
Five Year Summary 56
Notice of Annual General Meeting 57
Form of Proxy 59
Geographic Coverage IBC Abacus Group plc 1
Financial and Operational Highlights
2005 was in line with the Board’s expectations as announced in the July trading
update. Notwithstanding the weakness exhibited by our markets, the business
has performed ahead of the competition, gaining market share. We believe we
are well placed for 2006.
 Profit before tax, exceptional items and intangibles’ amortisation of £8.1 million (2004: £10.0m),
– Profit before tax, after exceptionals (2005: £4.0 million; 2004: £nil) and intangibles (2005: £0.8 million;
2004: £0.7 million) of £3.3 million (2004: £9.3 million)
 Turnover of £178.3 million down 5.1% (2004: £187.8 million), less than the overall sales declines
registered in Abacus markets
 Gross margin before exceptionals up at 23.2% (2004: 22.9%)
 Operating costs, before exceptionals and intangibles at £32.0 million (2004: £32.1 million) due to tight
control over expenditure
– Costs in Nordic region cut by £0.4 million in the last quarter. Cost of securing these ongoing cost
savings amounted to £0.5 million – treated as an exceptional item
 Exceptional cost of £4.0 million includes £3.5 million inventory provision made in anticipation of the new
Restrictions on Hazardous Substances (RoHS) legislation in the EU
The Five Year Summary is shown on page 56
Profit before tax, intangibles 
and exceptionals
      
05 04 03 02
9.5
8.0
10.0
8.1
Earnings per share before intangibles and
exceptionals
pence
03 02
Earnings per share after intangibles and 
exceptionals
pence
16.6
9.8
13.5
12.5
15.9
14.2
05 04 03 02 05 04 03 02
14.1
5.1
£m
Turnover
£m
04 03 02
155.0
147.0
187.8
178.3
05 04 03 02 05 04 03 02 Abacus Group at a glance
-
Abacus Polar has been at the forefront of electronic
component distribution for over 30 years. The sales operation
is run through a network of regional sales offices offering local
customer support. It currently has 19 sales operations in 10
locations covering the UK and Eire. A wide range of market
leading franchises are represented across all product
technologies. Abacus Polar prides itself on its high level of
customer service.
Micromark C&CD is based in Maidenhead and
distributes products across the UK and Eire. Micromark
was formed in 1970, combining with C&CD in 2000.
Micromark C&CD is a narrow line, broadbased technology
electronic component distributor. The company is dedicated
to providing excellent technical support alongside a high 
level of personal service.
TDC was acquired by the Abacus Group in June
2004. The company is based in Basingstoke and was
founded in 1992. It specialises in wireless and wired
products for embedded applications in Machine to
Machine (M2M), Automotive, Consumer Electronic and
Telecommunication products. 
Electric component distribution
2 Abacus Group plc Abacus Group plc 3
Abacus Promax is headquartered in Them in Denmark
and was established in 1985. From its original base it now
markets its services through a network of 6 sales offices in
Scandinavia. Abacus Promax offers a complete range of
electronic technologies from the world’s leading suppliers.
Offering a high level of technical support through its highly
trained and qualified workforce has enabled Abacus Promax
to become a leading distributor in Scandinavia.
Abacus ECC was purchased in 2004 and covers Italy
through a network of regional offices with its headquarters in
Milan. The company approaches the market in three different
ways; Distribution where it holds franchises across all
component product groups; Manufacturers’ Representative 
for a narrow range of blue chip component manufacturers 
and Display and Peripherals where, in conjunction with
Trident, it offers a whole range of products into a variety 
of different applications.
CTL is based In Stonehouse, Gloucestershire and markets
its services across the UK and Eire. CTL offers a range of
sub-contract manufacturing services to the electronics industry
including standard cable assemblies, electromechanical
sub-assembly through to complex box build and associated
testing. The 40,000 sq. ft. facility in Gloucestershire employs a
cell manufacturing technique to utilise space and processes
most efficiently. Automated and semi-automated equipment is
extensively used and, where hand assembly is required, the
technicians are highly trained and qualified. The facility holds
approval to ISO and BABT, and an IIP award.
CCS is based in Runcorn and offers cost efficient wiring and
box build solutions from design through to complete project
management. CCS markets its services in the UK and Eire
and is approved to ISO and UL.
Dubilier is headquartered in Dunmow, Essex and has
been supplying products for the electronics industry for over
50 years. Originally a UK manufacturer, Dubilier now has its
products manufactured globally. Dubilier’s comprehensive
range of Passive products has in recent years been
supplemented by Electromechanical products such as fans,
connectors, fuses and more recently, batteries. The Dubilier
name is synonymous with quality and value. Dubilier markets
its products through Europe, selling both direct and through
its distribution network.
The Trident Microsystems group was formed
in 1967 and has grown to become the leading flat-panel
displays and printer specialist in the UK. In addition, it has 
an office in Benelux and is expanding its operations in
Scandinavia and Italy.
Its expertise has been earned by successfully managing
customer projects, through signing key franchises and by
investing in skilled people. The group has products for OEM
industrial, medical, retail, instrumentation and automotive
designers, as well as the capability to develop bespoke
display and man-machine-interface systems according to
customer need. Trident’s products and expertise are available
through field sales engineers, a network of comprehensive
websites and through its in-house technicians and product
specialists, all ready to find solutions for customers needing
display, printer, industrial computer and card reader products.
Value added distribution services 4 Abacus Group plc
Chairman’s Statement
Abacus Group plc’s performance in the year ended
30 September 2005 has been in line with the level indicated
at the time of the trading update in July 2005. Profit before
tax, exceptional items and intangibles’ amortisation was
£8.1 million (2004: £10.0 million), with the second half
contributing £4.1 million compared with £4.0 million in the
first six months. Profit before tax but after exceptionals and
intangibles was £3.3 million (2004: £9.3 million). Sales for
the year were £178.3 million (2004: £187.8 million). Clearly
we are disappointed to see a 5.1% fall in revenue but to
put this in context, industry figures as measured by
AFDEC show a decline of some 8% in the UK, our
major market.
Despite an increase in the first six months, borrowings
over the year were slightly reduced. Between March and
September 2005 net debt fell by £3.0 million to £29.1 million
compared with £29.4 million at the outset of 2005. This
second half improvement was achieved by an ever tighter
control of working capital, in particular stock and debtors.
The exceptional item of £4.0 million was highlighted in the
July trading update. The principal component is the inventory
provision of £3.5 million to cover the cost of compliance with
the new Restrictions on Hazardous Substances (RoHS)
legislation in the EU effective from 1 July 2006. Distributors
and manufacturers in the electronics sector face this one-off
event as lead and other potentially hazardous materials are
eliminated from components and assembly processes.
The additional £0.5 million in the exceptional charge results
from the reorganisation in the Nordic region and in the event
was slightly lower than the £0.7 million which we indicated
in July.
The revised dividend policy was also announced in the July
trading update and, consistent with this, the Board has
declared a second interim dividend of 3.6p, making a total
for the year of 7.2p (2004: 10.5p). We consider this to be a
sustainable level from which to grow when appropriate in
the future.
Trading in 2005
There were a number of key events in 2005 which affected the
Abacus result – some internal, others external. I have already
mentioned the general market but there were other issues
specific to Abacus. Our special project division of Trident
continues to grow but the second half performance was hit by
delays in the conversion of firm orders into shipments. We are
now much more confident of our ability to assess the longer
lead times associated with special projects and can see the
sales trend falling into place as we go forward. We consider
special projects to be a future growth area and expect it to
lead to expansion in other geographical markets.
In the Nordic region we reconfigured our structure, closing
offices in Finland and reducing our staff in the region by
30 to a total of 60 people. We are however growing our
representation for the display business and have added 
Abacus appointed as European Distributor for 
Microsoft Retail Management System
“
The most significant factor in the coming year will be the proposed recommended acquisition of Deltron
announced on 26 October 2005. Both Abacus and Deltron believe that the acquisition presents an excellent
opportunity for the enlarged Group. The proposed acquisition gives Abacus the opportunity to expand into
territories in Europe where, at present, it has no representation and to grow its business in territories where 
it already has subsidiaries. The proposed acquisition provides an opportunity for considerable operational
savings, thereby enabling the enlarged Group to make good progress with far better prospects for further
growth in the future.
” Abacus Group plc 5
five people in Scandinavia for this activity. This opportunity
arose from the collapse of our competitor, Eurodis, from where
key staff in the region joined us. In the UK, the Eurodis failure
also proved beneficial to Abacus as we were able to purchase 
the Company’s customer information. Since August, this has
assisted Abacus’s UK sales through the broadening of its
customer base.
Generally we consider trading levelled out in the second half
following the deterioration in the first six months and that the
Abacus business is on a firm base going forward.
Outlook
The most significant factor in the coming year will be the
proposed recommended acquisition of Deltron announced on
26 October 2005. Both Abacus and Deltron believe that the
acquisition presents an excellent opportunity for the enlarged
Group. The proposed acquisition gives Abacus the opportunity
to expand into territories in Europe where, at present, it has no
representation and to grow its business in territories where it
already has subsidiaries. The proposed acquisition provides
an opportunity for considerable operational savings, thereby
enabling the enlarged Group to make good progress with
far better prospects for further growth in the future. The
acquisition will lead to Deltron shareholders owning 38.5%
of the enlarged Abacus share capital and is expected to
complete on 17 January 2006.
Since 30 September 2005, trading has continued in line with
the Directors’ expectations. Accordingly, the Directors view 
the enlarged Group’s prospects for the current financial year
with confidence.
People
We appointed Peter Allen as Chief Financial Officer in April
following Peter Griffith-Jones’ retirement. He has made a
significant contribution since his arrival both in the internal
organisation and in his assistance developing the strategy
of the Group.
Following completion of the proposed acquisition of Deltron,
Jerry Vaughan will be joining us as Managing Director –
Deltron; he is currently Chief Operating Officer in Deltron.
We will also be pleased to welcome David Weir to the
Abacus Board as an independent non-executive Director.
Margaret Rice-Jones will be retiring as a non-executive
Director at the AGM on 27 January 2006. We are most
appreciative of the contribution she has made over the
past few years.
In line with best practice, the Abacus Remuneration
Committee is proposing that shareholders approve a new long
term incentive plan for senior executives. The new plan will
involve the award, after a three year period, of Abacus shares
to a maximum value equivalent to the executive’s annual
salary. The level of the award will vary between 33%-100%
of the annual salary dependent on Abacus EPS out performing
the RPI by 3% to 7% per annum.
At Abacus we are extremely fortunate in our people and
the Board joins me in thanking them for their considerable
contribution in a difficult trading period. In anticipation of
a successful completion of the acquisition of Deltron,
I welcome their staff to the enlarged Group and am
confident that we shall move forward together to enjoy
a successful future.
H Westropp
Chairman
22 November 2005 6 Abacus Group plc
Chief Executive’s Review
General Review
The growth in our business in 2004, particularly in the UK and
Eire, did not continue as we moved into 2005 and by the end
of our financial year the various industry association statistics
showed a market decline of 8% in the UK and Eire, 8% in the
Nordic region and 2% in Italy, creating an overall decline in the
regions in which we operate of 5.8%.
Compared to this, our overall sales decline was 5.1% and in
the UK, where we saw growth in Trident, CTL and CCS, our
overall decline was 2%, leading to a strong improvement in
our market share from 14% to 15%.
Trident performed particularly well and, despite billings on its
medical contract not meeting our expectation, as indicated 
in our July trading update, its growth in 2005 was 21%
compared to 2004.
The challenging condition in the markets we serve has
ensured that they remain extremely competitive and, in these
circumstances, it is pleasing to see that our strong focus
on gross margin before exceptionals throughout the 
Group has enabled us to improve this to 23.2% for 2005
(before exceptional items) from 22.9% in 2004. This has
allowed us to maintain the appropriate level of headcount 
to support the workloads (which did not decline) throughout
our business, and therefore to preserve our reputation for
first class service and support with both our customers
and suppliers.
Individual Company Review
We have continued to approach the component distribution
market with regional sales offices and local warehousing, 
thus distinguishing ourselves from our major competitors. 
This “local” service justifies why existing and new customers
should see the Abacus Group as their key supplier and gives
component manufacturers a strong rationale for choosing 
the Abacus Group as a strategic partner.
The non ECD businesses within the Group have performed
better in 2005 than 2004 demonstrating that, by investing in
the right areas, growth can still be achieved despite declining
markets.
Abacus Polar, the UK and Eire based component distribution
business, has seen its sales decline in line with the market.
Notwithstanding this, it has continued to focus on taking new
products to existing and new customers as a key part of its
overall strategy. This combined with the new customer
opportunities and new franchise awards that arose from the
demise of Eurodis and our subsequent purchase of its UK
business information, puts Abacus Polar in a strong position
in the UK and Eire markets as we move into 2006.
Micromark C&CD continues to approach the UK and Eire
market in a different way to Abacus Polar, thus giving
customers and suppliers a choice as to which of the Abacus
Group’s businesses they deal with; indeed some trade with
Abacus Distribution Centre
“
We start the new year with clear signs of stability in all the areas in which we operate and with our UK
and Eire market share improved to 15%. These are sound foundations on which to build our business and
with the growth opportunities created by our investment in Trident and TDC outside of the UK combined
with new customer and franchise opportunities for our UK and Eire component distribution businesses, 
we enter 2006 with a sense of confidence.
” Abacus Group plc 7
both, based on their own individual requirements. We believe
that the size of the UK and Eire market, just under £1billion
based on AFDEC statistics, supports this strategy. Micromark
C&CD is also seeing benefits from the demise of Eurodis.
Promax, our Nordic component distribution business,
continues to have a good position in the Danish market, 
with just over 5% market share based on Europartners 2005
report, but has less in the other markets. A strategic review of
our business and the individual markets’ performance resulted
in us taking the decision in Quarter 4 to close our operation
in Finland and reduce our overall headcount to reflect the
expected sales level. During the year, the UK based IT
platform introduced at the end of 2004 has resulted in an
improved gross margin and this combined with the lower
overhead and the introduction of new franchises in the
wireless module area puts Promax in a much improved
position to produce a more satisfactory result in 2006.
ECC, our Italian component distribution business, has seen
its share fall to 3.4% in a market that has only declined by
2% but despite this it has remained profitable and we are
therefore able to invest to strengthen it for the future. This
investment is in the form of products in identified growth areas
such as wireless modules and displays (in conjunction with
Trident) together with the appropriate relevant technically
qualified personnel to support both existing and new
customers. We are confident that ECC can continue to 
build on its good position in the Italian market which, based
on Europartners 2005 report, places it fifth.
TDC, our UK and Eire based distributor of components for the
wireless and wired communications area, which was acquired
in 2004 has met the expectations set for it in this niche market
which we believe offers growth potential. As with all new
products, the market expectation of price is one of less rather
than more, as products mature, and this has been the case
with TDC where average selling prices have fallen by 15%
during 2nd half 2005 compared to 1st half 2005. However,
over the same period sales have remained level and TDC
continues to bring new opportunities to the Group not only 
in the UK and Eire but in Nordic and Italy as we expand the
franchise coverage into these regions.
Trident, our display and system build business, has performed
well despite the lower than expected billing against its major
medical contract and its sales grew by 21% in 2005. We have
continued to expand coverage outside of the UK and Eire
and, in particular, enhanced its Nordic operation at the end 
of 2005 by employing ex Eurodis personnel who brought with
Customer Sectors
Power 2.4%
Contract Manufacturing (Global) 2.1%
Defence 1.7%
Automotive  1.6%
Consumer  1.6%
Lighting 1.4%
Avionics 1.24%
Navigation 1.2%
Thermoregulation 0.4%
Others 1.6%
Contract Manufacturing (Local) 30.7%
Ind Control 13.8%
Instrumentation 8.7%
Fire & Security 8.0%
Printer Peripheral 5.6%
Comms 5.5%
Audio Visual 5.16%
Medical 4.3%
Distribution 3.0% them excellent product and customer knowledge. We have
also employed additional personnel in Italy and Benelux and
this build up of staff, combined with good franchise support,
puts Trident in a strong position as we move into 2006.
CTL and CCS, our electro-mechanical assembly businesses
focused on the UK markets, both saw growth in 2005 despite
the competitive nature of the market in which they operate.
Their key strength is to offer a very flexible lead time on
manufacturing for those customers who have consistently
changing demand patterns. We believe this fits well
with companies which wish to keep manufacturing local
but at the same time seek to outsource all or part of their
own production.
Dubilier, our ‘own brand’ component business which has 
the majority of its sales in the UK, Eire and Nordic region,
continued to see the average selling price of its passive
products fall by a further 6% in 2005 over 2004. These
products now represent less than 80% of the total sales of
Dubilier as we continue to introduce new products particularly
in the Electromechanical area. The challenge for 2006 is to
continue to introduce ‘non passive’ products and expand the
geographical sales coverage, both of which may well be
assisted by the acquisition strategy for our component
distribution business.
Outlook
One of the challenges we face as a component distributor
serving the European market is to address the migration of
manufacturing from established markets to those offering a
reduced cost base such as the former Eastern European
countries and Asia Pacific, particularly China. A number of
these customers prefer to manage the supply chain in the
country where they are based and today we ship directly to
these developing regions from the UK for such customers.
However, we recognise the need to offer a level of local
support in the country of manufacture and will from the
beginning of 2006 open an office in Hong Kong to supervise
Asia Pacific shipments. Also we have formed a commercial
alliance with a local distribution company in Poland to sell
direct to Abacus customers located there.
We start the new year with clear signs of stability in all the
areas in which we operate and with our UK and Eire market
share improved to 15%. These are sound foundations on
which to build our business and with the growth opportunities
created by our investment in Trident and TDC outside of the
UK combined with new customer and franchise opportunities
for our UK and Eire component distribution businesses, we
enter 2006 with a sense of confidence. Our objective for the
Group is to achieve an acceptable return based on a solid
performance in challenging markets where sales will be
achieved by providing an excellent service, combined with 
the identification of new products and market areas.
We also look forward to the opportunity to integrate Deltron
into the Abacus Group which we believe will strengthen our
relationship with both customers and suppliers and create 
an even stronger base on which to build.
Martin Kent
Chief Executive Officer
22 November 2005
8 Abacus Group plc
Chief Executive’s Review (continued)
Trident supply ZEVO Smart Terminals for 
NHS Patient Power Project Turnover
In the year to 30 September 2005, sales decreased by 5% to
£178.3 million, with an equal decline in each half of the year
compared to 2004. Despite the tougher market conditions
(AFDEC statistics show a 8% decline in the UK, Abacus’s largest
market), year on year sales in the UK and Eire decreased by 
only 2% as the Group increased its market share from 14% in
2004 to 15% in 2005. However, sales declined by 13% in ECC
and 16% in Promax in Sterling terms. Based on AFDEC’s figures,
in the Nordic region Promax’s market share declined slightly 
from 4.6% to 4.3% and in Italy, ECC’s share decreased from
4.0% to 3.4%.
All operations continued to make a pre-exceptional profit with the
exception of Promax. In July 2005, the Group announced that
operations in the Nordic region had been reorganised resulting
in the closure of offices in Finland and an overall reduction of
30 staff in the Nordic region to 60. The reorganisation costs have
been treated as an exceptional charge in 2005.
Looking at the geographical markets, 69% (2004: 67%),
10% (2004: 12%), 13% (2004: 13%) and 8% (2004: 8%) of
the Group’s turnover arose in the UK, Nordic, Italian and other
(mainly European) regions respectively.
Gross margins
During the year, an exceptional provision of £3.5 million 
was made against excess and obsolete stock in anticipation 
of the introduction of Restriction of Hazardous Substances
(RoHS) legislation in July 2006. It is envisaged that the
impact of the legislation will not have a material impact 
on cashflow.
Pre-exceptional margins improved slightly, with the gross profit
margin for 2005 coming in at 23.2% (21.3% post exceptional)
as against 22.9% in the previous year. The pre-exceptional
gross margin reduced from 24.3% in the first half to 22.2% in
the second half of the year, mainly due to favourable exchange
rate movements in the first half.
Operating expenses and intangibles’ amortisation
Other operating expenses (excluding intangibles of £0.8 million
(2004: £0.7 million) and the Promax exceptional restructuring
costs of £0.5 million) for the year ended 30 September 2005
were £32.0 million as compared to £32.1 million in 2004. This
slight decrease was mainly due to a lower bonus expense in 2005
following a reduction in profits, tight cost control and £0.4 million
of savings generated in the quarter ended 30 September 2005
as a consequence of the Promax restructuring.
During the year, distribution headcount decreased by 39, from
605 at September 2004 to 566 at September 2005, of which
26 related to Promax. This tight headcount control has been
achieved by continuing to focus on operational efficiencies,
whilst ensuring that our customer service levels and franchise
support have not diminished.
All acquired goodwill is written off over a 20 year period on a
straight-line basis, subject to impairment reviews if conditions
dictate. The Group’s goodwill amortisation charge in 2005
remained at £0.7 million. In July 2005, the Group acquired
sales and marketing information from the administrators of
Eurodis Electronics UK Limited for £1.6 million. This intangible
asset is to be written off over 5 years, resulting in an additional
amortisation charge of £0.1 million in 2005.
Finance charges
Finance charges rose from £0.9 million to £1.3 million.
This increase arose because of higher average borrowings,
due to the full year effect of 2004 acquisition expenditure,
and an increased proportion of borrowings denominated in
Sterling in 2005 than 2004, attracting a higher interest rate
than borrowings in Yen, Euro and US$. The Group still
achieved a robust interest cover of 7 times (2004: 12),
based on profit before interest, intangibles and exceptionals.
Taxation
The Group’s effective tax rate for the year, based on profits
before taxation and intangibles was 27% against 33% in
the previous year. Excluding prior year adjustments of a
£0.2 million credit in 2005 and £0.1 million charge in 2004,
the rates were both 32%.
Working capital and cash flow
The Group’s cash flow varies seasonally across the year. It 
is the Group’s policy to pay its creditors on time. During the
course of the year, cash flow tends to improve during the latter
part of the summer, which coincides with the Group’s year end.
Net debt for the year decreased by £0.3 million, despite the
£1.6 million purchase of the Eurodis sales and marketing
information and £2.7 million of capital expenditure, through
tight control of inventory and other working capital.
Abacus Group plc 9
Financial Review 10 Abacus Group plc
Financial Review (continued)
The contributing elements were as follows:
Operating activities
Operating profit before depreciation and intangibles reduced
to £6.7 million in 2005 from £12.6 million in 2004 mainly as a
result of the £4.0 million exceptional charge.
The decrease of £8.5 million in net stock in 2005
(2004: £0.3 million inflow) arose mainly from the £3.5 million
RoHS provision and a £6.2 million reduction in gross stock
levels through tight working capital management. The cash
outflow from creditors and provisions was £5.7 million against
an inflow in 2004 of £3.2 million. This mainly reflects bonuses
accrued in 2004 but paid in 2005 and the decrease in year 
on year sales and the associated decrease in cost of sales. 
In 2005 the cash inflow on debtors was £4.0 million against 
an outflow of £3.0 million in 2004, again primarily due to the
reduction in year on year sales. The Group’s year end gross
debtors’ days were 69 in 2005 against 67 in 2004.
Capital expenditure and financial investment
During the year the Group’s capital expenditure amounted 
to £2.7 million (2004: £2.4 million), of which £2.0 million was
spent upgrading our business system (2004: £1.5 million).
This project is now over half complete and is scheduled
to finish in 2007. The fixed asset depreciation charge was
£1.3 million (2004: £1.7 million).
It is the Group’s policy that its larger properties be acquired
on a freehold basis in order to optimise our flexibility of use
for each property, although if circumstances would indicate
leasing to be more appropriate in certain specific situations,
then such a route would be considered.
Purchases of intangible assets amounted to £1.6 million 
as described above.
Treasury
The Group’s treasury function is managed centrally from
Newbury, providing a service to the operating businesses, with
regular reporting to the Board. The Group’s treasury policy is
to ensure that adequate financial resources are available to
the Group for its business operations and that this is provided
in a cost-effective fashion. No speculative transactions are
undertaken, in that all foreign currency purchases are related
to current or projected transactions.
The Group net borrowings were in line year on year at
£29.1 million (2004: £29.4 million). A significant reorganisation
of borrowings was undertaken in August to ensure that
bank facilities were available on a committed basis rather than
as an overdraft. As part of the reorganisation, an £8.0 million
loan has been secured under a commercial mortgage on the
property assets of Abacus. A further committed facility of up
to £25.0 million is secured on UK debtors.
Balance sheet
Shareholders’ funds at 30 September 2005 were £43.4 million
(2004: £44.2 million), the decrease primarily comprising the
2005 transfers from reserves (after dividends of £3.1 million) 
of £0.9 million. The return on capital employed before
intangibles and exceptionals (profit before interest, taxation
and intangibles divided by shareholders’ funds and net debt)
was 13% (2004: 15%) and after intangibles and exceptionals
was 6% (2004: 14%).
Dividend
Two interim dividends of 3.6 pence each were declared during
the year, the former paid in July 2005, and the latter to be paid
on 3 January 2006 to those shareholders on the Register at the
close of business on 2 December 2005. The Directors are not
recommending a final dividend. The total dividend for the year of
7.2 pence compared to 10.5 pence in the previous year reflects
the Board’s decision to restore dividend cover to a more robust
position and is considered to be an appropriate revised dividend
base on which future growth should be factored.
Dividend cover, before and after intangibles and exceptionals,
for the year ending 30 September 2005 is respectively
2.0 times (2004: 1.5) and 0.7 times (2004: 1.3).
Earnings per share
Basic earnings per share, before and after intangibles
and exceptionals, were 14.1 pence (2004: 15.9 pence) and
5.1 pence (2004: 14.2 pence) respectively.
P Allen, ACA
Chief Financial Officer
22 November 2005 Current Board Directors
Anthony Harry Westropp, Non-executive Chairman
aged 60, has been Chairman of the Company since 1994.
He is Chairman of Upperpoint Distribution Limited and a non-
executive Director of the Throgmorton Trust Plc. He is also
a Director of a number of other private companies.
Peter V Allen, Chief Financial Officer
aged 49, a Chartered Accountant, joined the Board in April
2005. He was previously the Deputy Chief Executive Officer
and Chief Financial Officer of Celltech Group, a UK listed
biotechnology company. He is also a non- executive Director
of Prostrakan Group plc and Chroma Therapeutics Limited.
Graham J Grover, Managing Director, Trident
aged 50, joined Trident in 1978 before becoming Sales
Director in 1983. He was instrumental in moving the business
into the displays market. He was appointed Managing Director
in 1987 and joined the Board in March 2004.
Robert E Lambourne, Non-executive Director
aged 53, a Chartered Accountant, joined the Board of Abacus
in June 2004. He is the Chairman of Analyst Investment
Management plc and has held a number of public company
directorships, including appointments as Finance Director of
Fosesco plc, Hepworth PLC and RMC Group Plc.
Retirements from the Board during the year
Peter L Griffith-Jones MA, ACA, Finance Director and
Secretary
aged 51, joined Abacus as Finance Director in 1987 and was
a member of the buy-out team. He resigned from the Board
on 31 March 2005.
Martin R Kent, Chief Executive Officer
aged 54, has been CEO of the Group since November 2000.
He has been in the industry since 1969. He joined Abacus
in 1975, was the Marketing Director for the Group from
December 1987 and was a member of the buy-out team.
Graham McBeth, Managing Director, ECD Europe
aged 43, developed his career within National Semiconductor
for 11 years before moving to Abacus in 1995. He was
appointed to the Board in 1997. He is now responsible for
the ECD companies in the UK, Eire, Scandinavia and Italy.
Mrs Margaret Rice-Jones, Non-executive Director
aged 44, joined the Board of Abacus in January 2003. She
has considerable experience as a senior executive in major
companies in the electronics industry. She is a corporate Vice-
President and General Manager of Motorola’s core networks
business. She will be retiring from the Board of Abacus at the
Annual General Meeting on 27 January 2006.
Abacus Group plc 11
The Board of Directors, Secretary and Advisors
The Board of Directors
The Board currently comprises three non-executive Directors and four executive Directors.
Secretary
G L van der Pant, ACA
Registered Office
Abacus House, Bone Lane,
Newbury, Berkshire, RG14 5SF
Stockbrokers and Financial Advisors
Hoare Govett Limited,
250 Broadgate, London, EC2M 4AA
Auditors
Ernst & Young LLP,
Chartered Accountants & Registered Auditors,
Apex Plaza, Reading,
Berkshire, RG1 1YE
Solicitors
Charles Russell,
7600 The Quorum, Oxford Business Park North,
Oxford OX4 2JZ
Principal Bankers
HSBC Bank plc,
70 Pall Mall, London SW1Y 5ES
Registrars and Transfer Office
Computershare Services plc
PO Box 82, The Pavilions,
Bridgwater Road, Bristol, BS99 7NH
Web site
www.abacus-group.co.uk
Registered Number
2278260 The Directors present their Annual Report on the affairs of the Group, the Accounts and Auditors’ Report for the year ended
30 September 2005.
Principal activity
The Abacus Group distributes electronic components.
Business review and future developments
The Chairman’s Statement, Chief Executive’s Review and the Financial Review comment on the results for the year and future
developments.
Results and dividends
The results for the year ended 30 September 2005 are shown in the consolidated profit and loss account on page 34.
The Company has declared two interim dividends of 3.6 pence each (the latter to be paid on 3 January 2006 to shareholders on
the register at 2 December 2005). Accordingly the Directors are recommending that no final payment be made. The total dividend
for the year is 7.2 pence (2004: 10.5 pence).
Directors
The names of the current Directors, and those who retired during the year, are given on page 11. All the current Board Directors
served at 30 September 2005 and during the year except P Allen who was appointed on 1 April 2005. The interests of all the
Directors, who served at any time in the year, in the share capital of the Company at 30 September 2005, or at the time of their
resignation, are given in the Directors’ Remuneration Report.
G McBeth, who retires at every third Annual General Meeting (AGM), and H Westropp, who retires at every AGM, being eligible
offer themselves for re-election. P Allen, who was appointed by the Board as a Director on 1 April 2005, offers himself for 
re-appointment at the AGM. P Allen’s and G McBeth’s service contracts can be terminated by either party giving in writing 
not less than twelve months notice and H Westropp’s not less than six months notice.
Subject to the acquisition of Deltron Electronics plc (see below), J Vaughan, aged 49, and D Weir, aged 58, (both of whom 
are Directors of Deltron Electronics plc) offer themselves for appointment as executive and non-executive Directors with notice
periods of twelve and six months respectively. D Weir’s appointment will be reviewed prior to the AGM in 2007 and may be
extended for a period of no longer than 3 years. J. Vaughan will be entitled to a £165,000 salary and a pension up to 25% of 
his salary, a discretionary bonus and other benefits. D. Weir will be entitled to a fee of £25,000 per annum.
Mrs M Rice-Jones will be stepping down from the Board at the AGM on 27 January 2006.
Events since the balance sheet date
On 26 October 2005, the Company announced an offer to buy 100% of the share capital of Deltron Electronics plc. It is
anticipated that this will complete on 17 January 2006, subject to shareholder approval.
Substantial shareholdings
The Company has been advised of the following interests in 3 per cent or more of the Ordinary shares in issue at 21 November 2005.
No. of
Shares %
Aegon Asset Management 5,653,307 13.28
Morley Fund Management 3,228,890 7.58
Topfib Ltd 2,808,758 6.60
M & G Investment Management 2,780,958 6.53
Capital Group companies Inc 2,097,900 4.93
P Griffith-Jones* 1,860,326 4.37
F&C Management Ltd 1,691,240 3.97
SG Asset Management 1,689,573 3.97
Threadneedle Asset Management 1,661,018 3.90
Legal & General Investment Management 1,594,308 3.74
Collins Stewart 1,554,486 3.65
Insight Investment Management 1,515,575 3.56
Henderson Global Investors 1,424,589 3.35
*Includes 685,675 shares held in a pension fund and 251,399 of non-beneficial shares.
Supplier payment policy
Group policy is to set terms of payment when agreeing contracts with suppliers, which clearly explain payment procedures, and
to settle bills within those contract terms. The Group operates systems for promptly advising suppliers of, and resolving, queried
and contested items.
12 Abacus Group plc
Directors’ Report Abacus Group plc 13
Trade creditors of the Group at 30 September 2005 were equivalent to 30 days purchases (2004: 34 days). The Company has
no trade creditors.
Charitable donations
The Group contributed £1,762 (2004: £2,089) to charities, primarily local, during the year.
Fixed Assets
In the opinion of the Directors, the current open market value of the Group’s interests in freehold land and buildings is equal to
its fair value.
International Financial Reporting Standards (IFRS)
The Group has undertaken an extensive exercise to evaluate the impact of IFRS, which the Group will adopt from the 1 October
2005. The Group considers that IFRS will have the most significant effect in the following areas:
a) the fair value of share options granted after 7 November 2002 will be expensed to the profit and loss account;
b) there will be greater recognition of intangibles on acquisitions and a consequent reduction in goodwill;
c) goodwill will be subject to impairment review and will no longer be amortised;
d) greater disclosure of segmental information in the Accounts;
e) dividends approved after the balance sheet date will no longer be included in the profit and loss or balance sheet prior to
date of approval;
f) some operating leases may be treated as finance leases; and
g) revenue will be recognised when the customer has received the goods rather than when the goods are shipped.
Auditors
On 4 October 2005 Deloitte & Touche LLP resigned as Auditors and Ernst & Young LLP were appointed to fill the casual vacancy on
21 October 2005. A resolution for the appointment of Ernst & Young LLP will be proposed at the forthcoming Annual General Meeting.
Annual General Meeting
The notice of the Annual General Meeting on 27 January 2006 follows the Report and Accounts, and a Proxy voting form is
enclosed.
Ordinary Resolutions 1 to 8 constitute the ordinary business of the meeting: to approve the Accounts, appoint Directors and
Auditors and approve the Directors’ Remuneration Report.
Resolutions 9 to 12 constitute special business.
Ordinary resolution 9 seeks authority from Shareholders to establish a new long term incentive arrangement, the Abacus
Group Performance Share Plan 2005 (the “Plan”), a summary of the principal terms of which is contained in Appendix 1 of the
Directors’ Report.
Ordinary resolution 10 authorises the Directors to issue Ordinary shares up to a nominal value of £709,725, one third of the
issued share capital at 30 September 2005.
Special resolution 11 allows the Directors to issue Ordinary shares for cash without applying the pre-emptive rights in section
89 of the Companies Act 1985. It empowers the Directors to make rights issues and issue shares up to a total nominal value of
£106,458, 5% of the issued share capital at 30 September 2005. The authority expires within 15 months or at the end of the
Annual General Meeting for the year ending 30 September 2006, if earlier.
Special resolution 12 sets out the framework in which the Company may purchase its own shares. It limits a purchase to a
maximum of 15 percent of the issued share capital and sets the upper and lower prices to be paid. The Directors intend to
exercise this power only if, in the light of market conditions prevailing at the time, they believe that a purchase will increase
earnings per share and be in the best interest of shareholders generally. In reaching their decision, they will consider other
investment opportunities, appropriate gearing levels and the overall position of the Group. Abacus Group plc shall cancel shares
purchased in this way and reduce the number of shares in issue.
Shareholders may inspect copies of the Directors’ service contracts and the register of Directors’ interests at any time from the
date of the Notice of Annual General Meeting until the end of the Annual General Meeting. These documents are held at the
registered office, which is open during normal business hours.
By order of the Board
Abacus House, Bone Lane, Newbury, G L van der Pant, ACA
Berkshire, RG14 5SF (registered office) Secretary
22 November 2005 Appendix 1
Ordinary resolution 9 seeks authority from Shareholders to establish a new long term incentive arrangement, the Abacus Group
Performance Share Plan 2005 (the “Plan”).
The Remuneration Committee concluded to propose the Plan for adoption following a comprehensive review of all aspects of
remuneration with particular emphasis placed upon long-term incentive provision (the review was undertaken with the assistance
of independent advisors, New Bridge Street Consultants LLP).
The principal terms of the new Plan which will, if approved, replace the existing option grant policy for senior executives (existing
options will be unaffected) are set out below:
Operation
The Remuneration Committee will supervise the operation of the Plan. The Plan will be reviewed by the Remuneration Committee
within five years of its approval by Shareholders.
Eligibility
Any employee (including an executive Director) of the Company and any of its subsidiaries will be eligible to participate in the
Plan at the discretion of the Remuneration Committee, provided that they are not within the period of six months prior to their
anticipated retirement date, unless this restriction would be unlawful. It is currently intended that only the Company’s most senior
executives will be invited to participate in the Plan.
Grant of awards
Awards will ordinarily take the form of a nil (or nominal) cost option over a fixed number of Shares, where a participant can decide
when to exercise his award during a period of one year after it has vested. The Remuneration Committee may also decide to
grant cash-based awards of an equivalent value to share-based awards or to satisfy share-based awards in cash (either in whole
or part), although it does not currently intend to do so.
The Remuneration Committee may normally grant awards within six weeks of the approval of the Plan by Shareholders and within
six weeks following the Company’s announcement of its results for any period. The Remuneration Committee may also grant
awards when there are exceptional circumstances which the Remuneration Committee considers justify the granting of awards.
No awards will be granted more than ten years after the approval of the Plan by Shareholders.
No payment will be required for the grant of an award. Awards are not transferable, except on death. Awards are not
pensionable.
Individual limit
An individual may not receive awards in any financial year over Shares having a market value in excess of 100% of his/her
annual salary.
Vesting of awards
Awards will normally vest following the third anniversary of grant once the Remuneration Committee has determined the extent
to which the applicable performance conditions (see below) have been satisfied and provided the participant is still employed in
the Company’s group.
Once vested, an award will then remain capable of exercise for a period of up to one year (or such longer period as the
Remuneration Committee may determine e.g. if the Company is in a prohibited period during the normal exercise period).
Performance conditions
All awards will be subject to performance conditions set by the Remuneration Committee each year and will reflect the
Company’s performance over a single fixed three year performance period commencing on the first day of the financial year in
which the award is granted (the “Performance Period”). It is intended that the performance conditions will be based on growth
in Earnings Per Share (“EPS”).
EPS will be calculated on a consistent basis, normalising the effects of exceptional items as determined appropriate by the
Remuneration Committee.
14 Abacus Group plc
Directors’ Report (continued) For awards granted in 2006 the performance conditions will be as follows:
Annualised compound EPS growth over the Percentage of the total number of Shares
Performance Period under an award that will vest
<RPI+3% Nil
RPI+3% 33%
RPI+7% 100%
Straight-line vesting will occur for performance between EPS growth of RPI+3% to RPI+7% per annum.
There will be no opportunity to retest performance if the performance conditions are not satisfied over the Performance Period.
The Remuneration Committee may vary the performance conditions applying to existing awards to take account of events
that the Remuneration Committee considers to be exceptional e.g. to take account of technical changes such as changes in
accounting standards and treatment, provided that, in the opinion of the Remuneration Committee, the varied conditions are
not materially less challenging than the conditions originally set.
The Remuneration Committee may impose different performance conditions for future awards, provided that, in the opinion of the
Remuneration Committee, the new performance conditions are not materially less challenging. The Remuneration Committee 
will consult shareholders (and their main representative bodies) before applying fundamentally different performance conditions 
to awards from those described above.
Leaving employment
As a general rule, an award will lapse upon a participant leaving the employment of the Group. However if before the vesting
of an award a participant ceases employment with the Group by reason of death, injury, disability, ill health, redundancy, sale of
their employing company or business out of the Group, or any other reason as determined by the Remuneration Committee, the
award will vest on the date of cessation as to one third of the total number of Shares comprised in the award for each part or
complete year’s service following the date of grant (with any part year’s service counting as a full year), to the extent that the
Remuneration Committee decides that the performance conditions have been satisfied at the relevant time.
In the case of death or ill health, the Remuneration Committee can decide to waive the performance condition and/or reduce or
not apply a pro-rata reduction.
In the case of retirement (whether at the participant’s normal retirement age, or earlier by agreement with his/her employer),
awards will usually only vest on the normal vesting date to the extent that the performance conditions are satisfied at that time,
with pro-rating as described above applying.
Corporate events
The Remuneration Committee will determine the extent to which awards will vest, applying the performance conditions and/or a
time pro-rating reduction as it deems appropriate in the circumstances in the event of a takeover, scheme of arrangement, or
winding up of the Company (not being an internal corporate reorganisation).
In the event of an internal corporate reorganisation, awards will be replaced by equivalent new awards over shares in a new
holding company, unless the Remuneration Committee decides that awards should vest on the basis which would apply in the
case of a takeover.
Overall Plan Limits
The Plan may operate over new issue Shares, treasury Shares or Shares purchased in the market.
Abacus Group plc 15 In any ten year period the Company may not issue (or have the possibility to issue) more than:
a) 10 per cent of the issued ordinary share capital of the Company under the Plan and any other employee share plan adopted
by the Company; and
b) 5 per cent of the issued ordinary share capital of the Company under the Plan and any other executive share plan adopted
by the Company.
Treasury Shares will count as new issue Shares for the purposes of these limits but they will cease to count towards these limits
if institutional investor bodies decide that they need not count.
Participants’ rights
Awards will not confer any shareholder rights on participants until the awards have vested and the participants have received
their Shares.
The Remuneration Committee may decide that participants will receive a payment (in cash and/or Shares) on or shortly following
the vesting of their awards, of an amount equivalent to the dividends that would have been paid on the vested Shares between
the time when the awards were granted and the time when they vest.
Variation of capital
In the event of any variation of the Company’s share capital, or in the event of a demerger, payment of a special dividend or other
similar event which materially affects the market price of the Shares, the Remuneration Committee may make such adjustments
as it considers appropriate to the number of Shares subject to an award.
Rights attaching to Shares
Any Shares allotted when an award vests will rank equally with all other Shares in issue, except for rights arising by reference to
a record date prior to their allotment.
Alterations to the Plan
The Remuneration Committee may, at any time, amend the provisions of the Plan in any respect, provided that the prior approval
of shareholders is obtained for any amendments that are to the advantage of participants in respect of the rules governing
eligibility, limits on participation, the overall limits on the issue of Shares or the transfer of Shares held in treasury, the basis for
determining a participant’s entitlement to, and the terms of, the Shares or cash to be acquired and the adjustment of awards.
The requirement to obtain the prior approval of shareholders will not, however, apply to any minor alteration made to benefit the
administration of the Plan, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or
regulatory treatment for participants or for any company in the group.
Documents on display
Shareholders may inspect the draft rules of the Abacus Group Performance Share Plan 2005 at any time from the date of the
Notice of Annual General Meeting until the end of the Annual General Meeting. These documents will be held and are available
for inspection during normal office hours at the Company’s registered office and at the offices of New Bridge Street Consultants
LLP (20 Little Britain, London EC1A 7DH).
16 Abacus Group plc
Directors’ Report (continued) Abacus Group plc has for several years been committed to developing and maintaining high standards of corporate governance.
These statements describe how the Company applies and complies with the principles of the Combined Code, annexed to the
Listing Rules of the Financial Services Authority and for which the Board is accountable to its shareholders.
Following the Higgs and Smith Reports into the roles of non-executive directors and audit committees, the Code was
superceded and replaced in July 2003.
Statement of compliance with Code of Best Practice
The Company has complied throughout the year with the Code provisions set out in the previous and updated Section 1 of the
Combined Code on Corporate Governance, as applicable to smaller listed companies, issued by the Financial Reporting Council.
The Board of Directors
At 30 September 2005, the Board included a non-executive Chairman, H Westropp, a Chief Executive Officer, M Kent, three
other executive and two other non-executive Directors including a Senior Independent Director (SID), R Lambourne, to whom
concerns may be conveyed. During the year, P Griffith-Jones stepped down and P Allen was appointed as an executive Director
on 31 March 2005 and 1 April 2005 respectively.
All non-executive Directors who served during the year were considered by the Board to be independent of management.
Although H Westropp has been a Board member for more than nine years, he is considered to be independent as he has never
had business or personal relationships with the Company, is not a significant shareholder, does not hold cross-directorships,
receives only fixed Directors’ fees, has never been an employee of the Company and is considered to be of sufficient calibre
and experience that he can exercise judgement free from undue influence of management. Despite the Board considering
H Westropp independent, he resigned from the Audit and Remuneration Committees during the year, as he had served on the
Board for more than nine years.
The Company believes it has a balance of executive and non-executive Directors appropriate for a business of its size.
Each individual executive Director’s performance is formally appraised at an annual review by the CEO, whose performance in
turn is appraised by the non-executive Chairman. The Chairman’s performance is appraised by the non-executive Directors,
who in turn are appraised by the Chairman, CEO and Chief Financial Officer.
The Company Secretary is responsible to the Board for ensuring that the Board, in conducting its business, follows its
procedures and best practice whilst complying with applicable rules and regulations. All Directors have access to the advice
and services of the Company Secretary.
Conduct of Board Meetings
The Board meets each month to consider matters specifically reserved to it for decision (during the year, the Board had
11 such monthly meetings, and details of attendance are given on page 19). When required, the Board convenes between
the regular meetings.
Within seven days of each meeting all members receive up to date reports on key areas of the business and information to
support decisions. Where information is insufficient to enable the Board to discharge its duties, Board members may make
further enquiries.
A part of each meeting is devoted to strategy and planning, and in dealing with issues of strategy, risk, performance, resource
allocation, key appointments and standards of conduct, Board members use their independent judgement. In carrying out their
duties, Board members may also take independent professional advice, at the Company’s expense.
Retirement of Directors
The Articles of Association of Abacus Group plc require that:
a) the Directors must submit themselves for election by shareholders at the next Annual General Meeting after appointment;
b) non-executive Directors who have served nine years or less on the Board, and all executive Directors, are required to retire
every three years; and
c) non-executive Directors, who have served more than nine years on the Board, are required to retire annually.
Abacus Group plc 17
Corporate Governance Statements The names of Directors retiring at the next Annual General Meeting are given on page 12, and biographical details of the
Directors on page 11.
The Board has established three committees, namely the Nominations Committee, the Remuneration Committee and the Audit
Committee, the terms of reference for which are available from the Company Secretary and which will also be available at the
Annual General Meeting. Details of, and attendees at, each of these committees are as follows:
Nominations Committee
Abacus Group plc has developed formal and transparent procedures for appointing new Directors to the Board. These duties
are discharged through the Nominations Committee, which H Westropp chairs. Its other members are M Rice-Jones, M Kent and
R Lambourne. If appropriate, the Committee instructs external professional consultants to ensure a wide range of candidates is
put forward. Before appointing suitable candidates, the Board considers the recommendations of the Committee. The Committee
met once during the year to discuss the appointment of the CFO.
In selecting potential candidates for the position of CFO, an external search consultant was retained to assist the Committee.
Having identified the skills and experience required for the position and after interviewing both internal and external candidates,
the Committee recommended and accepted the appointment of P Allen.
Newly appointed Directors undertake appropriate training to enable them to discharge the responsibilities of their office.
Remuneration Committee
To avoid potential conflicts of interest, the Board has delegated responsibility for defining remuneration policy for executive
Directors and senior management to the Remuneration Committee. R Lambourne is Chairman, with its other members being
M Rice-Jones and H Westropp until his resignation on 28 February 2005. The Committee met 4 times during the year to approve:
a) the draft revised senior executives’ share option scheme and Directors’ bonus structure for 2006, which incorporated certain
institutions’ views on the current arrangements;
b) the Directors’ remuneration for 2005;
c) the payment of the undeferred half of the 2004 bonuses;
d) P Allen’s grant of share options;
e) P Griffith-Jones’ resignation as a Board Director.
The Board is responsible for establishing the fees and responsibilities of the non-executive Directors and takes into account
relevant market information.
The Remuneration Report on pages 24 to 31 describes the Company’s remuneration policy and the procedures for developing
it and for determining remuneration.
Audit Committee and accountability
R Lambourne (Chairman) and M Rice-Jones served on the Committee for the whole year and H Westropp until his resignation
on 28 February 2005. R Lambourne is a Chartered Accountant, who qualified with PricewaterhouseCoopers, and has previously
been Group Finance Director of three listed companies. The Committee has clear terms of reference, under which the Board
gives it authority to examine matters concerning the financial affairs of the Group, internal and external audit reports, Annual and
Interim Accounts, internal control procedures, accounting policies and other matters referred to it by the Board.
Periodically the Audit Committee reviews the independence, and objectivity of the Auditors and the level of non-audit services.
The Board’s practice, when contracting for non-audit services, is to ensure that the level of fees and importance of the work is
considered alongside the audit work, in such a way that non-audit services are provided without detriment to the Auditors’
independence. For the year ending 30 September 2005, the Audit Committee considered that the level of non-audit fees of
£48,000, compared to the audit fee of £111,000, did not prejudice the independence of the Auditors.
In line with its remit, the Committee considered and approved the appointment of Ernst & Young LLP as Auditors at its meeting
on 24 August 2005, following a tender review process.
Minutes of the Committee’s proceedings are copied to the Board and discussed by it where appropriate.
18 Abacus Group plc
Corporate Governance Statements (continued) Attendees at Board and Committee Meetings
Number convened/ Board Nominations Remuneration Audit
attended by Directors Meetings Committee Committee Committee
Number Convened 11 1 4 3
Executive Director
Martin Kent 11 1 2 (in attendance) 3 (in attendance)
Peter Allen* 5 3 (in attendance)
Graham McBeth 10
Graham Grover 10
Peter Griffith-Jones** 5
Non Executive Director
Harry Westropp*** 11 1 2+2 (in attendance) 3 (in attendance)
Margaret Rice-Jones 9143
Robert Lambourne 10 1 4 3
External Auditors
Deloitte & Touche LLP**** N/A N/A N/A 1
Ernst & Young LLP**** N/A N/A N/A 1
* Appointed to the Board on 1 April 2005.
** Resigned from the Board on 31 March 2005.
*** Resigned from the Remuneration and Audit Committees on 28 February 2005.
**** Deloitte & Touch LLP resigned and Ernst & Young LLP were appointed as auditors on 4 October 2005 and 21 October 2005
respectively.
Maintenance of a sound system of internal control
The Board has applied Principle D.2 of the Combined Code by establishing a continuous process for identifying, evaluating
and managing the significant risks which the Group faces. The Board regularly reviews the process, which has been in place
throughout the year and up to the date of approval of this Report, and which is in accordance with Internal Control: Guidance for
Directors on the Combined Code, published in September 1999. The Board is responsible for the Group’s system of internal
control and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to
achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.
In compliance with Provision D.2.1 of the Combined Code, the Board continuously reviews the effectiveness of the Group’s
system of internal control. The Board’s monitoring covers all controls, including financial, operational and compliance controls
and risk management. It is based principally on reviewing reports from management to consider whether significant risks are
identified, evaluated, managed and controlled and whether any significant weaknesses are promptly remedied and indicate a
need for more extensive monitoring. In addition, a regular assessment is carried out to identify and evaluate all significant risks
and consider all significant aspects of internal control in place to manage them.
The Audit Committee assists the Board in discharging its review responsibilities.
Managing business risk
Discussed below are the Group’s five major business risks, together with the systems and initiatives in place to address them:
Market
The year under review has seen market conditions toughen for Abacus’s distribution businesses. Despite this, Abacus’s year on
year sales in the UK and Eire decreased by only 2% (AFDEC statistics show an 8% decline in the UK) as the Group increased its
market share from 14% in 2004 to 15% in 2005. The special project division of Trident continued to grow, although the second
half performance was hit by delays in the conversion of firm orders into shipments, and is considered to be a future growth area
leading to expansion in other geographical markets.
Abacus Group plc 19 Sales declined by 13% in ECC and 16% in Promax in Sterling terms. Based on AFDEC’s figures, in the Nordic region Promax’s
market share declined slightly from 4.6% to 4.3% and in Italy, ECC’s share decreased from 4.0% to 3.4%. All operations
remained profitable with the exception of Promax. Accordingly, the Group announced in July 2005 that operations in the
Nordic region had been reorganised resulting in the closure of offices in Finland and an overall reduction of 30 staff to 60,
generating £0.4 million of savings in the last quarter. The reorganisation costs of £0.5 million have been treated as an
exceptional charge in 2005.
The most significant factor in the coming year will be the proposed recommended acquisition of Deltron announced on
26 October 2005. Both Abacus and Deltron believe that the acquisition presents an excellent opportunity for the enlarged
Group. The proposed acquisition gives Abacus the opportunity to expand into territories in Europe where, at present, it has no
representation and to grow its business in territories where it already has subsidiaries. The proposed acquisition provides an
opportunity for considerable operational savings, thereby enabling the enlarged Group to make good progress with far better
prospects for further growth in the future.
Operational
This relates to the risk of financial loss and damage to reputation resulting from inadequate or failed internal processes and
systems and from the actions of people or external events. The Group manages this risk through appropriate controls and loss
mitigation actions. Examples include:
a) bespoke business system providing comprehensive management reporting;
b) taking sufficient insurance cover, including for business interruption;
c) maintaining a detailed disaster recovery plan for all major sites;
d) maintaining rigorous data backup procedures;
e) performing regular risk assessments at each of the Group’s locations;
f) carrying out a regular review of the principal suppliers and customers of the Group, and how each impacts on the
Group’s business;
g) regularly reviewing actual performance against budgets and forecasts;
h) establishing clearly defined procedures for the authorisation of major new investments and commitments.
In addition, specialist support functions provide expertise in ensuring the Group adheres to local regulatory and legal
requirements.
Credit
The Group assesses the creditworthiness of any new major customers before commencing trade with them. Based on this and
the customer’s capital base, authorised limits of trade are set. A proactive approach to the identification and control of bad and
doubtful debts is maintained and significant credit risks are highlighted to the Board.
Liquidity
This relates to the risk that the Group is unable to fund its requirements either because of insufficient banking facilities or because
it is constrained by the risk of breaching banking covenants. During the year, the Group undertook a significant reorganisation of
borrowings to ensure that bank facilities were available on a committed basis rather than as an overdraft.
The Group funds its day to day operations and short term assets through a mixture of retained profits, creditors, and short-term
bank and invoice discounting facilities, and its long term assets through bank term loans. The Group’s policy on liquidity is to
ensure that there are sufficient medium and long-term committed borrowing facilities to meet funding requirements. It is Group
policy not to trade in or enter into speculative transactions. Except for finance leases, loan notes and 50% of an £8 million
commercial mortgage loan, the Group pays interest on all debt financing arrangements at an agreed margin over current bank
base rates. The remaining £4 million of the commercial mortgage loan is covered by a five year fixed interest rate swap. The
majority of the cash comprises bank balances with HSBC Bank plc, Unibank AS and a number of Italian banks, institutions which
the Group considers creditworthy. The Group complied with all the relevant bank covenants during the year.
During the year, the Directors reduced the total dividend from 10.5 pence in 2004 to 7.2 pence in 2005 reflecting the Board’s
decision to restore dividend cover to a more robust position and to an appropriate level on which future growth can be factored.
20 Abacus Group plc
Corporate Governance Statements (continued) Foreign currency risk
The Group has significant transactional currency exposures. Such exposures arise from sales and purchases by operating units in
currencies other than the unit’s functional currency. When appropriate, the Group seeks to cover net foreign exchange exposures
with forward contracts, which are arranged centrally, and by negotiating sales and purchases in the same currency where
appropriate. The net assets of the Group’s non-sterling operations represent only 8% of the Group’s total assets. The Group does
not consider it significant enough to justify borrowing any foreign currency to mitigate any structural currency exposure that may
arise from the translation of the foreign currency assets. The CFO appraises the Board of any significant movement in the Group’s
foreign currency exposure.
Internal Audit
The Board has formally reviewed the need for an internal audit function. At the current time, a formal internal audit function is
not considered necessary for a number of reasons: the size of the Group, widespread executive involvement in the Group’s day
to day business, the depth of management reporting from all subsidiary managers to the Board, the level of variance analysis
during the review of the monthly management accounts by both senior management and the Board Directors and robust
internal controls.
Dialogue with institutional shareholders
The Directors seek to build on a mutual understanding of objectives between the Company and its institutional shareholders.
The CEO and CFO are the main contacts. In addition, all shareholders have the opportunity to meet with the executive and
non-executive Directors after the Annual General Meeting to discuss any issues they may have, and are available upon request
at all other times.
The Company maintains regular dialogue with institutional investors and presents the Interim and Preliminary results to them.
The Board is regularly briefed on feedback from institutional visits.
Shareholder relations
The Company encourages participation by, and communication with, its shareholders. It welcomes and responds to all contacts
by shareholders on a wide range of issues, and uses the Annual General Meeting to communicate with private investors. The
Chairmen of the Audit, Remuneration and Nomination Committees attend the Annual General Meeting and are available, along
with operational management, to answer questions from shareholders at the meeting.
The Annual General Meeting is conducted in accordance with the Combined Code. This includes informing members present
at the Meeting of proxy votes for and against resolutions, once the resolutions have been voted on by a show of hands. The
results of voting by proxy and show of hands on the proposed resolutions are announced on the Company’s website shortly
after the AGM.
The Group’s annual and interim results are circulated to shareholders and the financial press. The Group’s share price is listed in
the Financial Times, The Daily Telegraph and The Times. Investor relations information and news releases are made available on
the Company’s website (address: www.abacus-group.co.uk).
Going concern
On the basis of current financial projections and the facilities available, the Directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the Accounts.
Abacus Group plc 21 General
Whilst the Board’s primary accountability is to its shareholders, it also tries to maximise value for all its other “stakeholders”
including employees, customers, suppliers and the community at large, as well as considering the impact of its actions on health,
safety and the environment. Overall responsibility for each of these areas ultimately resides with the full Board. However, specific
responsibility for employee-related and environmental issues resides with the CFO, Peter Allen, and external stakeholder issues
with the CEO, Martin Kent. The Group’s social, environmental and ethical risk management procedures are currently being
implemented and will be subject to a process of regular reviews.
Management at all levels in the organisation is committed to taking account of its corporate social responsibility in its actions,
endeavours to show due respect for human rights, and works to high standards of integrity and ethical propriety. As a
multinational organisation, Abacus takes account of cultural differences between the various territories in which it operates.
Through its continuing commitment to corporate social responsibility, Abacus Group is a member of the FTSE4 Good Series Index.
Employee consultation
The Group values the involvement of its employees. It has continued to inform employees, through meetings, noticeboards and
the intranet, of matters affecting them and of Group performance. The Group consults employee representatives regularly on a
wide range of matters affecting their current and future interests. All eligible employees may join the ShareSave Scheme at
periodic intervals.
Employee development
The Group places great importance on the development and retention of staff. It operates a formal appraisal scheme whereby
the employee and manager provide each other with performance feedback after commencement of employment and at annual
intervals thereafter. At each of these meetings objectives, against which performance is regularly measured, are set for the
coming period and training needs identified.
Over the last four years, a formal and structured training programme has been established for UK employees, promoting such
areas as communication skills, appraisal training, train the trainer and management development. The Group adopts practices to
encourage promotion from within including notifying employees via e-mail of any vacancies and identifying individuals for certain
positions as part of its formal succession planning. Graham McBeth, Managing Director ECD Europe, holds overall responsibility
for training throughout the Group.
Equal opportunities
Group companies are committed to providing equal opportunities to all employees, irrespective of sex, gender orientation,
marital status, creed, colour, race, religious belief, ethnic origin or disability. The Group’s philosophy is that all discrimination on
any of the above grounds is abhorrent and it will condone no discrimination whatsoever, whether negative, positive or of any
other nature. The commitment covers recruiting, training, career development, performance appraisal and social interaction,
both in and outside the workplace. The Group continues to monitor its application of this policy and its compliance with
legislation and codes of best practice.
Disabled Employees
The Group gives full consideration to applications for employment from disabled persons where the requirements of the job can
be adequately fulfilled by a handicapped or disabled person.
Where existing employees become disabled, it is the Group’s policy to provide continuing employment under normal terms and
conditions and to provide training, career development and promotion to disabled employees wherever appropriate.
Ethical Conduct
We expect our staff to act according to the highest standards of ethical behaviour covering such areas as fraud, conflict of
interest, internet abuse, bribery and corruption. This is reinforced through written policies, the inclusion of an anti-harassment
clause in contracts of employment, and the application of disciplinary procedures. The Group does not make corporate political
donations and prohibits the use of bribery and facilitation payments.
Health and safety
The maintenance and improvement of working standards to safeguard the health and well being of staff is a continuing priority.
This is achieved through a documented Health and Safety policy, annual risk assessments carried out at the Group’s main
22 Abacus Group plc
Corporate Social Responsibility locations and training staff in areas such as ‘manual handling’, which all warehouse staff receive on their induction, and ‘hotwork
handling’. All sites maintain accident books, the data from which is collected centrally every quarter and reviewed by the Health
and Safety Committee. Any actions identified are implemented wherever possible. The Group complies with all local health and
safety regulations.
In the interests of staff health, smoking inside company premises is permitted only in designated areas.
Fire Wardens and First Aiders are appointed at each location and receive periodic training.
Suppliers and Customers
The Group believes that long term relationships, founded on trust and mutual advantage, are vital to Abacus’ success. To foster
these relationships, the Group promptly advises suppliers and customers of queries and contested items. It always endeavours
to resolve any queries through dialogue and adopts a commercial stance in their resolution. Contract terms are clearly explained
and payment terms are only extended with prior agreement. The Group has ISO approval, which covers procedures such as
dealing with customer queries, supplier assessments, customer contract review, sales order entry and logistics. The Group’s
business systems monitor delivery performance and these statistics are studied closely, with corrective action being implemented
where appropriate. Customers and suppliers frequently tour Company warehouses and factories, and conduct their own
competence audits of the Group’s performance in various different areas of its operations. The results of these audits are
discussed with the appropriate management, with a view to continuous improvement in the Group’s performance.
The environment
It is Group policy to operate in a responsible manner with regard to the environment. The Group, wherever possible, uses
recycled and recyclable packaging materials, and it recycles waste paper.
Examples of current initiatives include:
a) reusing approximately 20% of outer packaging from incoming warehouse deliveries for outbound shipments;
b) segregating, compacting and baling waste cardboard and paper packaging before dispatching to recycling mills;
c) encouraging customers to return empty specialist anti-static packaging for reuse;
d) using durable returnable pallet box containers for inter-company shipments;
e) dispatching empty printer and photocopier cartridges and waste office paper for recycling;
f) disposing of electronics components and waste cable via registered scrap merchants, which recycle the product
where possible;
g) encouraging suppliers to send data electronically rather than using paper.
The Group sets objectives to reduce waste, and engages with its staff, customers and suppliers with the mandate to continually
find ways to minimise the use of resources.
The Group operates a continual review of its energy and resource utilisation with a view to minimising the impact of the Group’s
activities on the environment. An example is the refurbishment of the Newbury office, in which the most energy efficient lighting,
boilers and air conditioning units were installed.
Assisted by the change in emphasis in State legislation in the UK to an emissions based tax on company cars, the Group
continues to actively encourage employees to downsize cars. The Board also continues to encourage the use of bicycles as
commuter transport.
The Group requires company car drivers to comply with the laws on the use of mobile telephones whilst driving, and pays for the
cost and installation of hands free kits, informing staff by e-mail of the latest legislation and penalties for contravening it, and
including guidance on the use of telephones in the Group’s car policy document.
Although the Group uses minimal environmentally damaging or hazardous material, it ensures that all personnel receive
appropriate training in its handling and all material is properly disposed of.
Abacus Group plc 23 Introduction
This Report has been prepared so as to comply with the requirements of Schedule 7A of the Companies Act 1985. The Report
covers all Directors, both executive and non-executive.
The Regulations require the Auditors to report to the Company’s members on the ‘auditable part’ of the Directors’ Remuneration
Report and to state whether in their opinion that part of the Report has been properly prepared in accordance with the
Companies Act 1985. The Report has therefore been divided into two separate sections, audited and non-audited information.
As required by the Regulations, a resolution to approve the Report will be proposed at the Annual General Meeting of the
Company at which the financial statements will be approved.
Unaudited Information
Composition of the Remuneration Committee
The members of the Remuneration Committee comprised R Lambourne (Chairman), M Rice-Jones and H Westropp until his
resignation on 28 February 2005. None of them had any personal financial interest in decisions (other than as shareholders) and
no cross-directorships or participation in any incentive schemes.
The composition of the Remuneration Committee and its operation comply with the Combined Code.
During the year, the Committee consulted the CEO and CFO on its proposals.
Terms of Reference
The Board agrees the terms of reference of the Remuneration Committee. Its principal functions are to determine, on behalf of
the Board and shareholders:
 remuneration and incentives for the executive Directors, senior managers and other key staff of the Group;
 targets for performance related bonuses for the executive Directors. The Committee also monitors performance against these
targets;
 contractual terms of service agreements, including termination, pension arrangements and other benefits.
Remuneration policy
In framing policy, the Committee seeks and will continue to seek to balance the cost of packages which attract, retain and
motivate Directors of the highest quality, whilst avoiding paying more than is necessary.
The package of each executive Director reflects the principles of the Combined Code in setting remuneration, and takes into
account Group objectives and personal achievement.
The Committee seeks to balance the amount of remuneration paid to an individual Director within the overall package. These
packages are aimed to provide a competitive reward, having regard to the remuneration paid by comparable public companies
and relative performance. In determining pay increases, the Committee is sensitive to pay and employment conditions of all staff
in the Group. Staff pay is determined by market conditions and by both the Group’s and the individual’s performance.
Performance-related elements of the remuneration packages are established as a significant proportion of total pay. These elements
are designed both to motivate executive Directors to perform at the highest levels and to align their interests with those of shareholders.
There are no provisions in any of the Directors’ service contracts for compensation on early termination. Compensation payments for
early termination would be tailored, within legal constraints, to avoid rewarding poor performance and to deal equitably with the Director.
Whilst the Company has stated its current and future remuneration policy of offering competitive and cost effective packages,
which incorporate a significant performance related element, it is conscious that any remuneration policy needs to be flexible.
Any changes to this policy will be stated in subsequent Annual Reports.
In evaluating the remuneration packages for 2006, the Committee sought advice in September 2005 from its independent and
appointed advisor, New Bridge Street Consultants LLP, which also acted as the remuneration benchmarking advisor in 2004 and
as consultants on the 2003 Share Option Scheme and 2004 Sharesave Scheme. The main conclusions of this review, which are
described more fully on the next page, are that:
 Abacus Group’s current Executive Share Option Scheme should be replaced with a new performance related share incentive plan;
 The annual bonus maximum should be reduced from 120% of salary to no more than 75% and that it should not be subject
to deferral; and
 Executive directors should build share ownership of 1 x salary worth of shares.
Components of the policy for executive Directors’ remuneration
 Basic salary
An executive Director’s basic salary review is carried out by the Committee prior to the beginning of the year and when an
individual changes position or responsibility. In deciding appropriate levels, the Committee takes into account the individual’s
24 Abacus Group plc
Directors’ Remuneration Report
for the year ended 30 September 2005 responsibilities and performance, and if considered necessary will take external advice. In June 2004 the Board undertook
an extensive bench-marking exercise with the assistance of New Bridge Street Consultants. In addition to basic salary, the
executive Directors receive certain benefits-in-kind including a car or car allowance, business and private fuel, permanent
health insurance, life assurance and private medical insurance.
 Annual bonuses
The Chief Executive Officer, the Chief Financial Officer and the Managing Director (ECD) participate in the annual bonus
scheme.
Current: The bonuses are based on minimum targets, set by the Committee, being exceeded. These bonuses are capped at
100% of basic salary level and are based on actual profit before tax, certain exceptional items and intangibles’ amortisation
exceeding the Company Broker’s forecast set before commencement of the performance year. Bonuses as a percentage of
salary are earned as follows:
Actual exceeds forecast by Formula Bonus
< 5% 0 0
5% - 9% 2% per complete 1% 10% - 18%
10% - 25% 4% per complete 1% 40% - 100%
25% + Capped 100%
50% of any bonus is payable in cash. The remaining 50% of the bonus is deferred for three years. All or some of the deferred
bonus may be invested in the Company’s shares or taken as a cash amount. The deferred elements will be delivered three
years after the end of the performance year, subject to continued employment during those three years or, if appropriate, the
Director being a “good” leaver (redundancy, ill-health or retirement).
An additional maximum of 20% of basic salary can be earned for achieving predetermined personal objectives set at the
outset of the financial year.
For the year ending 30 September 2005, the Company’s Broker in September 2004 forecast profit on ordinary activities
before intangibles, exceptional items and taxation of £11.0 million, compared to an actual profit of £8.1 million. As actual profit
was less than forecast, the three eligible Directors did not earn any bonuses (£544,000 of bonuses were earned for the year
ending 30 September 2004).
Proposed: The Committee proposes to lower the maximum bonus to 75% of salary for the CEO and 60% for other
Executive Directors. Following the introduction of the new long-term bonus plan and the introduction of share ownership
guidelines, it is felt that the deferral of the bonus is unnecessary and will not be retained. The Committee will also take this
opportunity to alter the measures of performance for the Bonus Plan to create a more tailored incentive for management with
less focus on the volatile annual EPS growth and more focus on the net margin (profit divided by turnover) and meeting
targets (both financial and non-financial) set specifically for each director.
 Long term incentives
The Committee seeks to encourage share ownership by executive Directors and senior staff through share arrangements.
The Committee may consider making awards to individual executive Directors as part of an overall remuneration and incentive
package. In establishing share schemes, the Committee determines the scope of participation of the executive Directors and
appropriate performance targets.
Current: Abacus Group’s current Executive Share Option Scheme 2003 allows for the grant of share options, which are
subject to performance testing of EPS growth at the third, fourth and fifth anniversaries from date of grant. The targets for the
Scheme were set after receiving independent, external advice from New Bridge Street Consultants in consultation with the
Group’s major shareholders. Following adoption of the 2003 Scheme, options may no longer be granted under the 1993
Executive Share Option Scheme (approved) and the 1996 Unapproved Share Option Scheme. All schemes allow for the grant
of two types of options, those approved by the UK Inland Revenue (approved) and those not (unapproved).
Proposed: The Committee proposes to replace the Share Option Scheme 2003 with the Abacus Group Performance Share
Plan 2005 (the PSP). Awards will ordinarily take the form of a nil (or nominal) cost option over a fixed number of Shares,
where a participant can decide when to exercise his award during a period of one year after it has vested. All awards will be
subject to performance conditions based on growth in EPS and which are tested only on the third anniversary from date of
grant. If approved, the PSP will replace future option grants for senior executives (existing options will be unaffected). The
PSP is being put to Shareholders for approval at the AGM. More details may be found in Appendix 1 of the Directors’ Report.
Subject to the approval of the PSP at the forthcoming AGM, the Committee has decided that the executive directors will be
expected over the next five years to acquire and hold shares (including existing holdings) worth in aggregate a minimum of 100%
of base salary (after allowing for sales of shares to pay the tax or financing costs on the vesting or exercise of awards and options).
Abacus Group plc 25 Details of each of the current schemes and the proposed 2005 Performance Share Plan PSP scheme are as follows:
Approved Unapproved Executive Share Option Performance Share Plan
1993 1996 Scheme 2003*
Approved & Unapproved
Type of Scheme Share Option Share Option Share Option Nil (or nominal) cost
option over a fixed
number of Shares
Vesting period from date 3 or 5 years 3 or 5 years 3 years only 3 years only
of grant
Lapse period from date 10 years 7 years 10 years 4 years
of grant
Maximum award, lower of:
Absolute limit £30,000 None Approved:   £30,000 None
Unapproved:  None
Limit as a % of salary The total of options held under grant at any one The total of option grants The total of awards 
time across both Schemes is not to exceed issued in any one year granted in any one year
400% of salary under the 2003 Scheme is not to exceed
is not to exceed 200% 100% of salary under
of salary the PSP
EPS growth required in 100% of award vests 100% of award vests Options vest on a Awards vest on a
excess of RPI between on real EPS growth on real EPS growth straight-line basis straight-line basis
date of grant and vesting exceeding 1% per exceeding 3% per between real EPS between real EPS
annum annum growth of 4% (50% of growth of 3% (33% of
award vests) and 6% award vests) and 7%
per annum (full vesting) per annum (full vesting)
Retesting Re-tested from date of grant to any anniversary If targets not met in 3 None
falling between vesting date and lapse date years, re-tested on fourth
and fifth anniversary
of grant*
Period in which option Options can be exercised only in the period in To the extent that the To the extent that the
can be exercised which EPS growth is met performance condition performance condition
following EPS criteria has been satisfied, that has been satisfied, one
being met part of the option that year from date of vesting
can be exercised may
be exercised irrespective
of future EPS perform-
ance until lapse of option
Dilution limits (the No longer No longer 10% of the ordinary 10% of SC over10 years
(the cumulative number applicable applicable share capital (SC) over for all employees share
of unlapsed options, 10 years for all option schemes; and
which can be granted employee share option 5% of SC over 10 years
over a period as schemes (including for the PSP and any
constrained by set %  Sharesave Scheme) other executive share
limits of issuedshare plan
capital)
Cash alternative No Discretion of Approved: No Discretion of 
Remuneration Unapproved: Discretion Remuneration
Committee of Remuneration Committee, although 
Committee it does not currently
intend to do so
* Share options granted under the 2003 scheme to Peter Allen on 26 May 2005 did not allow for any retesting.
 Pensions. The executive Directors participate in personal pension schemes or the Group’s pension plans. All pension
schemes are defined contribution. Details of the CEO’s, CFO’s and Managing Director’s (ECD) pension contributions, which
are based on a % of each executive Director’s basic salary, are summarised below:
Age Company contribution as a
% of basic salary
Under 45 15% G McBeth
45 to 50 20% P Allen
50 25% M Kent
Should an executive Director’s age cross one of the above thresholds, then the 5% increase in contribution is effective from the
month following his birthday. G Grover’s pension contribution is 20% of his basic salary.
26 Abacus Group plc
Directors’ Remuneration Report (continued)
for the year ended 30 September 2005  Contracts of service. The required notice for terminating an executive Director’s service contract is twelve months. The
Committee considers this period of notice to be appropriate.
Details of the executive Directors’ contracts are summarised below:
Contract Date Notice Period
M Kent 1 February 2004 One year
P Allen 10 June 2005 One year
G McBeth 1 February 2004 One year
G Grover 30 March 2004 One year
Non-executive Directors’ remuneration and contracts
The Board has delegated the responsibility for determining the remuneration and services of the non-executive Directors to a
sub-committee, whose members are the CEO and the CFO.
Details of the non-executive Directors’ contracts, which have no automatic renewal provisions, are summarised below:
Contract
Commencement Date Expiry Date Notice period
H Westropp 1 January 2004 1 January 2005 6 months
R Lambourne 1 June 2004 January 2007 AGM 6 months
M Rice-Jones 1 January 2004 January 2006 AGM 6 months
The non-executive Directors’ remuneration packages are:
a) set to attract, motivate and retain the appropriate level of non-executive talent;
b) proportional to their contribution towards the interest of the business;
c) consistent with recognised best standards;
d) in the form of cash fees, payable monthly;
e) never received in the form of share options, in order to maintain independence.
Details of the remuneration, options and interests of the Directors are given later in this Report.
Abacus Group plc 27 Performance Graph
The Regulations require this Remuneration Report to contain a graph showing the performance of the Company and a ‘broad
equity index’ over the past five years. The comparative index chosen is the FTSE Small Cap Index (excluding Investment Trusts)
as the Company is a constituent of the FTSE Small Cap Index. The Regulations require that performance is measured by total
shareholder return (share price growth with dividends deemed to be reinvested gross on the ex-dividend date).
This graph shows the value over the 5 year period ending on 30 September 2005, of £100 invested in Abacus Group plc on
30 September 2000 compared with the value of £100 invested in the FTSE Small Cap Index (excluding Investment Trusts).
28 Abacus Group plc
Directors’ Remuneration Report (continued)
for the year ended 30 September 2005
20
0
40
60
80
100
120 Audited Information
The total amounts for Directors’ remuneration were as follows:
2005 2004
£’000 £’000
Emoluments 814 1,245
Money purchase pension contributions 266 395
Gains on exercising share options – 106
Total 1,080 1,746
Emoluments
Details of individual emoluments in respect of qualifying services of each person who served during the year were as follows:
Salary Taxable Bonus Total Total
or fees benefit *** 2005 2004
£’000 £’000 £’000 £’000 £’000
Current
Executive
M Kent 265 17 – 282 455
P Allen* 107 7 – 114 –
G McBeth 146 18 – 164 292
G Grover 120 17 – 137 63
Non-executive
H Westropp (Chairman) 65 – – 65 55
M Rice-Jones 25 – – 25 25
R Lambourne 25 – – 25 8
Retired
B Murdoch* (Executive) – – – – 48
P Griffith-Jones* (Executive) 1 1 – 2 241
S Wotherspoon* (Executive) – – – – 31
G Kibblewhite** (Non-executive) – – – – 27
Total 754 60 – 814
2004 totals 634 67 544 1,245
Pensions and bonuses are calculated in line with the relevant Scheme Rules.
* S Wotherspoon retired from the Board in February 2004, B Murdoch and G Kibblewhite on 30 September 2004.
P Griffith-Jones retired on 31 March 2005 and P Allen joined the Board on 1 April 2005. P Allen’s annual remuneration is
twice that as disclosed above. P Griffith-Jones sacrificed £95,000 of his emoluments as pension contribution.
** G Kibblewhite’s fees and services were billed by Europartners.
*** 50% of the bonus is payable in cash and 50% deferred for three years.
In addition to the emoluments shown above, Mr P Griffith-Jones received a pension payment of £280,000 under a compromise
agreement made upon his resignation from the Board on 31 March 2005. This represented the deferred half of his 2004 bonus
and twelve months’ emoluments in line with his service contract.
P Allen received remuneration from his other non-Executive roles for the period 1 April 2005 to 30 September 2005
totalling £20,000.
Abacus Group plc 29 Pension contributions
All the executive Directors are members of defined contribution pension schemes. Contributions payable by the Company are
given below.
2005 2004
£’000 £’000
Current
M Kent 66 55
P Allen 13 –
G McBeth 34 39
G Grover 23 9
Retired
B Murdoch – 98
P Griffith-Jones* 130 187
S Wotherspoon – 7
266 395
* P Griffith-Jones’ pension comprised £95,000 emoluments’ sacrifice, grossed up by 12.8% National Insurance, and £23,000
Company contributions.
Share options
Aggregate emoluments on the previous page do not include the value of options to acquire ordinary shares granted to or held by
the Directors. These are given in the table below.
30 Sept
1 Oct 2004 Granted Lapsed 2005 Exercise Earliest date Last date
Number Number Number Number** price for exercise for exercise
Current
M Kent 100,000 – – 100,000 392.0p 21/12/2003 21/12/2007
M Kent 92,550 – – 92,550 221.5p 20/05/2006 20/05/2013
M Kent 135,000 – – 135,000 228.5p 19/11/2005 19/11/2012
M Kent 182,758 – – 182,758 232.0p 01/12/2006 01/12/2013
P Allen – 219,178 – 219,178 182.5p 26/05/2008 25/05/2015
G McBeth 20,000 – (20,000) – 200.0p 22/06/1998 22/06/2005
G McBeth 75,000 – – 75,000 97.5p 04/01/2004 04/01/2006
G McBeth 20,000 – – 20,000 392.0p 21/12/2003 21/12/2007
G McBeth* 1,054 – – 1,054 320.0p 20/12/2005 20/06/2006
G McBeth 61,850 – – 61,850 221.5p 20/05/2006 20/05/2013
G McBeth 125,000 – – 125,000 232.0p 01/12/2006 01/12/2013
G McBeth* 3,077 – – 3,077 245.0p 19/02/2007 19/08/2007
G Grover* 3,846 – – 3,846 245.0p 19/02/2007 19/08/2007
Retired
P Griffith-Jones 100,000 – – 100,000 392.0p 21/12/2003 21/12/2007
P Griffith-Jones 79,000 – – 79,000 221.5p 20/05/2006 20/05/2013
P Griffith-Jones 134,750 – – 134,750 228.5p 19/11/2005 19/11/2012
P Griffith-Jones 155,172 – – 155,172 232.0p 01/12/2006 01/12/2013
P Griffith-Jones* 6,673 – – 6,673 245.0p 19/02/2009 19/08/2009
1,295,730 219,178 (20,000) 1,494,908
No options were exercised during the year.
Details of the share option schemes in which the Directors participate are given earlier in the Directors’ Remuneration Report.
The market price at 30 September 2005 was 118p and the range during the year was 117.5p to 264.5p.
* These options are held by the Directors under the ShareSave Scheme.
** P Griffith-Jones’ options are shown at the date of his resignation as a Board Director, 31 March 2005.
30 Abacus Group plc
Directors’ Remuneration Report (continued)
for the year ended 30 September 2005 Directors’ interests in shares
2005 2005 2004 2004
Beneficial* Non- beneficial* Beneficial Non-Beneficial
H Westropp 17,300 – 17,300 –
P Allen 50,000 – ––
P Griffith-Jones 1,063,252 261,399 1,063,252 261,399
M Kent 53,462 – 53,462 –
G McBeth 31,861 – 31,861 –
G Grover –– ––
R Lambourne 5,000 – 5,000 –
* P Griffith-Jones’ interests are shown as at the date of his resignation as a Board Director. In addition, this Director is the
beneficial owner of 628,975 (2004: 628,975) 5p Ordinary shares held by a pension scheme.
There have been no changes to the interests of the Directors between 30 September 2005 and the date of these Accounts.
Directors’ interests in contracts
During the year, none of the Directors had a material interest in any contract which was of significance in relation to the business
of the Group.
Approval
This Directors’ Remuneration Report has been approved by the Board and signed on its behalf by:
Abacus House, Bone Lane, Newbury, R Lambourne
Berkshire, RG14 5SF (registered office) Chairman of the Remuneration Committee
22 November 2005
Abacus Group plc 31 United Kingdom company law requires the Directors to prepare financial statements for each financial period, which give a true
and fair view of the state of affairs of the Company and the Group as at the end of the financial period and of the profit or loss
of the Group for that period.
In preparing those financial statements, the Directors are required to:
 select suitable accounting policies and then apply them consistently;
 make judgements and estimates that are reasonable and prudent;
 state whether applicable accounting standards have been followed; and
 prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act
1985. They are also responsible for the system of internal controls, for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
32 Abacus Group plc
Statement of Directors’ Responsibilities Abacus Group plc 33
Independent Auditors’ Report
to the members of Abacus Group plc
We have audited the Group’s financial statements for the year ended 30 September 2005 which comprise the Consolidated Profit
and Loss Account, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Cash Flow Statement, Consolidated
Statement of Total Recognised Gains and Losses, and the related notes 1 to 29. These financial statements have been prepared
on the basis of the accounting policies set out therein. We have also audited the information in the Directors’ Remuneration
Report that is described as having been audited.
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 opinions we have formed.
Respective responsibilities of directors and auditors
The Directors are responsible for preparing the Annual Report, including the financial statements which are required to be
prepared in accordance with applicable United Kingdom law and accounting standards as set out in the Statement of Directors’
Responsibilities in relation to the financial statements. The Directors are also responsible for preparing the Directors’
Remuneration Report.
Our responsibility is to audit the financial statements and the part of the Directors’ Remuneration Report to be audited in
accordance with relevant legal and regulatory requirements, United Kingdom Auditing Standards and the Listing Rules of the
Financial Services Authority.
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial
statements and the part of the Directors’ Remuneration Report to be audited have been 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 or the Listing Rules regarding directors’ remuneration and transactions
with the group is not disclosed.
We review whether the Corporate Governance Statement reflects the company’s compliance with the nine provisions of the 2003
FRC Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not.
We are not required to consider whether the board’s statements on internal control cover all risks and controls, or form an
opinion on the effectiveness of the group’s corporate governance procedures or its risk and control procedures.
We read other information contained in the Annual Report and consider whether it is consistent with the audited financial
statements. This other information comprises the Directors’ Report, unaudited part of the Directors’ Remuneration Report,
Chairman’s Statement, Chief Executive’s Review, Operating and Financial Review and 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 United Kingdom 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 and
the part of the Directors’ Remuneration Report to be audited. 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 group’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 and the part of the
Directors’ Remuneration Report to be audited 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 and the part of the Directors’ Remuneration Report to be audited.
Opinion
In our opinion, the financial statements give a true and fair view of the state of affairs of the Company and of the Group as at
30 September 2005 and of the profit of the Group for the year then ended; and the financial statements and the part of the
Directors’ Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985.
Ernst & Young LLP
Registered Auditor
Reading
22 November 2005 2005 2004
Before Intangibles’
intangible and amortisation
exceptional and
items exceptional
items
Notes (Notes 4 & 10) Total Total
£’m £’m £’m £’m
Turnover 1 178.3 – 178.3 187.8
Cost of sales (136.9) (3.5) (140.4) (144.8)
Gross profit 41.4 (3.5) 37.9 43.0
Other operating expenses (32.0) (1.3) (33.3) (32.8)
Operating profit 3 9.4 (4.8) 4.6 10.2
Finance charges (net) 2 (1.3) – (1.3) (0.9)
Profit on ordinary activities before taxation 8.1 (4.8) 3.3 9.3
Tax on profit on ordinary activities 6 (2.0) 0.9 (1.1) (3.3)
Profit on ordinary activities after taxation 6.1 (3.9) 2.2 6.0
Dividends paid and declared on equity shares 7 (3.1) – (3.1) (4.5)
Retained profit (loss) for the year 19 3.0 (3.9) (0.9) 1.5
Earnings per share 9
Basic (before intangible and exceptional items) 14.1p 15.9p
Basic (after intangible and exceptional items) 5.1p 14.2p
Diluted (before intangible and exceptional items) 14.1p 15.8p
Diluted (after intangible and exceptional items) 5.1p 14.1p
All the activities of the Group comprise continuing activities.
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 30 September 2005
2005 2004
£’m £’m
Profit for the financial year 2.2 6.0
Loss on foreign currency translation – (0.1)
2.2 5.9
The accompanying notes are an integral part of the Consolidated Profit and Loss Account and Consolidated Statement of Total
Recognised Gains and Losses.
34 Abacus Group plc
Consolidated Profit and Loss Account
for the year ended 30 September 2005 Notes 2005 2004
£’m £’m
Fixed assets
Intangible assets 10 12.7 11.8
Tangible assets 11 20.1 18.4
32.8 30.2
Current assets
Stocks 13 26.1 34.8
Debtors 14 37.4 41.1
Cash at bank and in hand 1.3 3.1
64.8 79.0
Creditors (amounts falling due within one year) 15 (45.1) (56.3)
Net current assets 19.7 22.7
Total assets less current liabilities 52.5 52.9
Creditors (amounts falling due after more than one year) 16 (7.7) (7.3)
44.8 45.6
Provisions for liabilities and charges 17 (1.4) (1.4)
Net assets 43.4 44.2
Capital and reserves
Called-up share capital 18 2.1 2.1
Share premium account 19 9.2 9.1
Merger reserve 19 3.3 3.3
Capital redemption reserve 19 0.4 0.4
Profit and loss account 19 28.4 29.3
Equity shareholders’ funds 20 43.4 44.2
Minority Interests 21 – –
Total capital employed 43.4 44.2
The accompanying notes are an integral part of the Consolidated Balance Sheet.
Abacus Group plc 35
Consolidated Balance Sheet
30 September 2005 36 Abacus Group plc
Company Balance Sheet
30 September 2005
2005 2004
Notes £’m £’m
Fixed assets
Investments 12 5.6 5.6
Current assets
Debtors (amounts falling due after more than one year) 14 12.7 9.9
Cash at bank and in hand 1.6 3.1
14.3 13.0
Creditors (amounts falling due within one year) 15 (2.0) (4.1)
Net current assets 12.3 8.9
Total assets less current liabilities 17.9 14.5
Creditors (amounts falling due after more than one year) 16 (2.4) (2.4)
Net assets 15.5 12.1
Capital and reserves
Called-up share capital 18 2.1 2.1
Share premium account 19 9.2 9.1
Capital redemption reserve 19 0.4 0.4
Profit and loss account 19 3.8 0.5
Equity shareholders’ funds 15.5 12.1
The accompanying notes are an integral part of the Balance Sheet.
The Accounts on pages 34 to 55 (inclusive) were approved by the Board of Directors on 22 November 2005 and signed on their
behalf by:
M Kent
P Allen Directors 2005 2004
Notes £’m £’m
Net cash inflow from operating activities 22 13.5 13.1
Returns on investments and servicing of finance 23 (1.3) (0.9)
Taxation 23 (3.1) (2.5)
Capital expenditure and financial investment 23 (4.2) (2.4)
4.9 7.3
Acquisitions 23 – (9.3)
Equity dividends paid (4.6) (4.4)
Net cash inflow (outflow) before financing 0.3 (6.4)
Financing 23 0.1 (3.6)
Increase (decrease) in cash in the year 24 0.4 (10.0)
The accompanying notes are an integral part of the Consolidated Cash Flow Statement.
Abacus Group plc 37
Consolidated Cash Flow Statement
for the year ended 30 September 2005 The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the
preceding year.
Basis of accounting
The Accounts are prepared under the historical cost convention and in accordance with applicable UK accounting standards.
Basis of consolidation
The Group Accounts consolidate the accounts of Abacus Group plc and its subsidiary undertakings drawn up to 30 September
each year. The results of subsidiaries acquired or sold are consolidated for the periods from, or to, the date at which control
passed. Acquisitions are accounted for under the acquisition method.
Intangible assets – Goodwill
Goodwill arises on the acquisition of subsidiary undertakings and businesses. If the fair value of the consideration given exceeds
the fair value of the identifiable assets and liabilities acquired, the difference, goodwill, is capitalised. Goodwill is written off on a
straight-line basis over its useful economic life, a maximum of twenty years. Provision is made for any impairment.
Negative goodwill is similarly included in the Balance Sheet and is credited to the Profit and Loss Account in the periods in which
the acquired non-monetary assets are recovered through depreciation or sale. Negative goodwill in excess of the fair values of
the non-monetary assets acquired is credited to the Profit and Loss Account in the periods expected to benefit.
Goodwill arising on acquisitions in the year to 30 September 1997 and in earlier years was written off to reserves in accordance
with the accounting standard then in force. As permitted by the current accounting standard, the goodwill previously written off to
reserves has not been reinstated in the Balance Sheet.
On disposal or closure of a previously acquired business, the attributable amount of goodwill previously written off to reserves is
included in determining the profit or loss on disposal.
Other Intangibles
Intangible assets acquired separately from a business are capitalised at cost and are amortised on a straight line basis over their
estimated useful lives up to a maximum of twenty years. The carrying value of intangible assets is reviewed for impairment at the
end of the first full year following acquisition and in other periods if events or changes in circumstances indicate the carrying value
may not be recoverable.
Investments
Subsidiary undertakings and other fixed asset investments are stated at cost, which includes the costs of acquisition, less
provision for impairment. Current asset investments are stated at the lower of cost or net realisable value.
Where appropriate, and in accordance with Sections 131 and 133 of the Companies Act 1985, the Company records the cost of
investment as the nominal value of shares issued plus the costs of acquisition. The resulting difference arising on consolidation is
taken to merger reserve.
Tangible fixed assets
Tangible fixed assets are shown at cost, net of depreciation and provision for impairment. Depreciation is provided on all tangible
fixed assets, other than freehold land, at rates calculated to write off the cost, less estimated residual value, of each asset over its
expected useful life, as follows:
Straight-line basis Expected useful life
Freehold buildings 50 years
Leasehold improvements over the lease term
Fixtures, fittings and equipment 3 or 8 years
Computer equipment 3 years
Plant and tooling 10 years
Reducing balance basis
Motor vehicles at 25% per annum
Residual value is calculated on prices prevailing at the date of acquisition.
Stocks
Stocks are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its
present location and condition, as follows:
i) Raw materials, consumables and goods for resale – purchase cost on a weighted average cost basis.
ii) Work in progress and finished goods – cost of direct materials and labour plus attributable overheads based on a normal
level of activity.
Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion and disposal.
Provision is made for obsolete, slow-moving and defective items where appropriate.
38 Abacus Group plc
Statement of Accounting Policies
30 September 2005 Debt
Debt is initially stated at the amount of net proceeds after deduction of issue costs if material. The carrying amount is increased
by the finance cost in respect of the accounting period and reduced by payments made in the period.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax
rates and laws that have been enacted or substantially enacted by the Balance Sheet date.
Deferred tax is provided in full on timing differences which result in an obligation at the Balance Sheet date to pay more tax, or a
right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing
differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in
which they are included in financial statements. Deferred tax is not provided on timing differences arising from the revaluation of
fixed assets where there is no commitment to sell the asset, or on unremitted earnings of subsidiaries and associates where
there is no commitment to remit these earnings.
Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred
tax assets and liabilities are not discounted.
Pension costs
The Group offers pensions to all eligible employees, including Directors, through defined contribution pension schemes. The
assets of the schemes are held independently of the Group.
The amount charged to the Profit and Loss Account for all defined contribution schemes is the total of the contributions payable
in the year.
Differences between contributions payable in the year and contributions actually paid are shown in the Balance Sheet as either
accruals or prepayments.
Foreign currency
Trading activities denominated in foreign currencies are recorded in local currencies at the exchange rates effective on the dates
of the transactions or, where appropriate, at the rate of exchange of related forward currency contracts.
Monetary assets and liabilities denominated in foreign currencies at the year end are reported at the rates of exchange prevailing
at the year end or, where appropriate, at the rate of exchange of related forward currency contracts.
The results of overseas operations are translated at the average monthly exchange rates and their balance sheets at the rates of
exchange prevailing at the Balance Sheet date.
Exchange differences arising from retranslating opening net assets and results are dealt with through reserves. All other
differences are included in the Profit and Loss Account.
Forward foreign exchange contracts
The Group uses forward foreign exchange contracts to reduce exposure to foreign exchange risk. It does not hold or issue
derivative financial instruments for speculative purposes.
A forward foreign exchange contract is treated as a hedge, if the contract reduces exposure to exchange movements and is
related to actual assets, liabilities or probable commitments denominated in the same or similar currency as the contract.
Gains or losses arising on these contracts are deferred until the hedged transaction itself is reflected in the Group’s accounts. At
this point the difference is recognised in the Profit and Loss Account.
Turnover
Turnover represents sales, less returns, by subsidiary companies to external customers excluding value added tax. Transactions
are recorded as sales when the delivery of products or performance of services takes place in accordance with the contractual
terms of sale.
Leases
Assets held under hire purchase contracts and finance leases are capitalised as tangible fixed assets and are depreciated over
the shorter of the lease term and their useful lives. The capital elements of future lease obligations are recorded as liabilities, while
the interest elements are charged to the Profit and Loss Account over the period of the lease.
Rentals under operating leases are charged on a straight-line basis over the lease term, even if payments are not made on the
same basis.
Finance costs
Finance costs of debt are recognised in the Profit and Loss Account over the term of such instruments at a constant rate on the
carrying amount.
Related party transactions
Under the provisions of Financial Reporting Standard 8, the Company is not required to disclose details of certain related party
transactions between wholly owned subsidiaries. There were no other related party transactions throughout the year.
Abacus Group plc 39 1 Turnover and segmental analysis
Geographical segments
Turnover represents the amounts derived from the provision of goods and services which fall within the Group’s ordinary activities,
stated net of VAT. Both the turnover and profit before taxation of the Group are attributable to one class of business, electronic
component distribution. These are analysed below by geographical segment.
United Kingdom Nordic Italy Eire Group
2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
£’m £’m £’m £’m £’m £’m £’m £’m £’m £’m
Turnover: by origin
Sales to third parties 134.8 139.6 18.2 21.7 23.0 26.5 2.3 – 178.3 187.8
Exceptional Items
(see note 4) (2.8) – (0.7) – (0.5) – – – (4.0) –
Profit (loss) before taxation 4.2 9.7 (1.0) (0.8) (0.2) 0.4 0.3 – 3.3 9.3
Net assets 40.1 39.6 2.5 3.6 0.5 1.0 0.3 – 43.4 44.2
2005 2004
£’m £’m
Turnover: by destination
United Kingdom 123.0 126.4
Nordic 17.8 21.7
Italy 22.7 24.9
Other European Union 11.9 11.8
Other 2.9 3.0
178.3 187.8
The Directors have not presented further analysis of operating expenses as, in their opinion, a meaningful analysis is not available.
2 Finance charges (net)
2005 2004
£’m £’m
Other interest receivable and similar income (0.1) (0.2)
Interest payable and similar charges:
Bank loans & overdrafts 1.4 1.1
Net interest payable 1.3 0.9
40 Abacus Group plc
Notes to the Accounts
30 September 2005 3 Operating profit
2005 2004
£’m £’m
Operating profit is stated after charging:
Depreciation and other amounts written off tangible fixed assets
— owned 1.1 1.6
— held under hire purchase agreements and finance leases 0.2 0.1
Amortisation of intangible assets 0.8 0.7
Operating lease rentals
— plant and machinery 0.9 1.0
— other 0.6 0.5
Auditors’ remuneration for £’000 £’000
— audit services to Abacus Group plc (Ernst & Young LLP) 12 –
— audit services to Group companies (Ernst & Young LLP) 88 –
— audit services to Abacus Group plc (Deloitte & Touche LLP) 1 11
— audit services to Group companies (Deloitte & Touche LLP) 10 102
— tax advisory services to Group companies (Ernst & Young LLP) 4 –
— tax advisory services to Group companies (Deloitte & Touche LLP) 7 6
— accountancy services to Group companies (Deloitte & Touche LLP) 37 –
4 Exceptional items
2005 2004
£’m £’m
Recognised in arriving at operating profit:
Provision for excess and obsolete stock in anticipation of the introduction of restriction of
hazardous substances (RoHS) legislation in July 2006 3.5 –
Provision for restructuring the Nordic business 0.5 –
4.0 –
5 Staff costs
2005 2004
£’m £’m
Employee costs during the year were:
Wages and salaries 21.4 21.6
Social security costs 2.6 2.6
Other pension costs 1.8 1.5
25.8 25.7
The average monthly number of persons employed by the Group during the year, including executive Directors, was as follows:
2005 2004
Number Number
United Kingdom 624 615
Italy 47 51
Nordic 86 91
Eire 5 –
762 757
Details of Directors’ remuneration for the year are provided in the audited section of the Directors’ Remuneration Report on 
pages 29 to 31.
Abacus Group plc 41 6 Tax on profit on ordinary activities
2005 2004
£’m £’m
Current tax
The tax charge is based on the profit for the year and comprises:
UK corporation tax at 30% 1.8 2.7
Overseas taxation 0.2 0.3
2.0 3.0
Adjustment in respect of prior periods
– UK corporation tax (0.2) 0.1
Total current tax 1.8 3.1
Deferred tax
– Origination and reversal of timing differences (0.7) 0.2
Total tax on profit on ordinary activities 1.1 3.3
The exceptional tax credit of £0.9 million related solely to deferred tax.
The difference between the total current tax shown above and the amount calculated by applying the standard rate of UK
corporation tax to the profit before tax is as follows:
2005 2004
£’m £’m
Group profit on ordinary activities before tax 3.3 9.3
Tax on group profit on ordinary activities at standard UK 
corporation tax rate of 30% (2004 : 30%) 1.0 2.8
Effects of:
Intangibles’ amortisation 0.2 0.2
Timing differences relating to RoHS provision 1.1 –
Other expenses not deductible for tax purposes 0.2 0.2
Capital allowances in excess of depreciation (0.4) (0.1)
Unrelieved losses in foreign subsidiaries 0.2 0.2
Utilisation of brought forward losses (0.3) (0.3)
Adjustments to tax charge in respect of previous periods (0.2) 0.1
Group current tax charge for year 1.8 3.1
The Group earns its profits primarily in the UK, and therefore the tax rate used for tax on profit on ordinary activities is the standard
rate for UK corporation tax, currently 30%.
7 Dividends paid and declared on equity shares
2005 2004
£’m £’m
Equity shares
– interim paid of 3.6p per share (2004 : 3.5p) 1.6 1.5
– second declared interim of 3.6p per share (2004 : nil p) 1.5 –
– final proposed of nil p per share (2004 : 7.0p) – 3.0
3.1 4.5
42 Abacus Group plc
Notes to the Accounts (continued)
30 September 2005 8 Profit attributable to Abacus Group plc
The profit for the financial year dealt with in the Accounts of the parent company, Abacus Group plc, was £6.4 million
(2004 : £4.7 million).
As permitted by Section 230 of the Companies Act 1985, no separate Profit and Loss Account is presented for the parent
company.
9 Earnings per share
Earnings per share in both years are calculated, in accordance with FRS 14, by dividing the earnings by the weighted average
number of shares outstanding in the year.
Basic (non diluted) Diluted
2005 2004 2005 2004
£’m £’m £’m £’m
Earnings after intangibles and exceptional items 2.2 6.0 2.2 6.0
Intangibles 0.8 0.7 0.8 0.7
Exceptional items (post taxation) 3.1 – 3.1 –
Earnings before intangibles and exceptional items 6.1 6.7 6.1 6.7
Weighted average number of shares outstanding (number) 42,569,082 42,426,373 42,672,904 42,809,417
Earnings per share after intangibles and exceptional items (pence) 5.1 14.2 5.1 14.1
Effect on earnings per share resulting from intangibles (pence) 1.8 1.7 1.8 1.7
Effect on earnings per share resulting from exceptional items (pence) 7.2 – 7.2 –
Earnings per share before intangibles and exceptional items (pence) 14.1 15.9 14.1 15.8
Weighted average number of shares
2005 2004
Number Number
of shares of shares
For basic earnings per share 42,569,082 42,426,373
Exercise of options 103,822 383,044
For diluted earnings per share 42,672,904 42,809,417
The Directors have also presented earnings per share before intangibles and exceptional items as they believe it reflects the
underlying performance of the Group.
Abacus Group plc 43 10 Intangible fixed assets
Group Positive Negative Total Marketing Total
Goodwill Goodwill Goodwill Information Intangibles
£’m £’m £’m £’m £’m
Cost
Beginning of year 16.4 (1.4) 15.0 – 15.0
Additions 0.1 – 0.1 1.6 1.7
End of year 16.5 (1.4) 15.1 1.6 16.7
Amortisation
Beginning of year 4.6 (1.4) 3.2 – 3.2
Provided during the year 0.7 – 0.7 0.1 0.8
End of year 5.3 (1.4) 3.9 0.1 4.0
Net book value
Beginning of year 11.8 – 11.8 – 11.8
End of year 11.2 – 11.2 1.5 12.7
The increase in intangibles by £1.7 million arose following:
a) the acquisition of marketing information of Eurodis Electronics UK Limited for £1.6 million. This addition is written off over
5 years, the presumed period over which economic benefit will be derived.
b) a reappraisal of the fair value adjustment to ECC Elettronica SpA’s stock provision and its subsequent increase by £0.1 million
to £0.7 million following a review of excess and obsolete stock.
Goodwill on all acquisitions is amortised over the presumed useful economic lives of 20 years.
11 Tangible fixed assets
Group Land and buildings
Leasehold Plant &
Freehold Improvements Machinery Total
£’m £’m £’m £’m
Cost
Beginning of year 13.2 0.2 8.3 21.7
Additions 0.2 – 2.9 3.1
Disposals – – (0.5) (0.5)
End of year 13.4 0.2 10.7 24.3
Depreciation
Beginning of year 1.3 0.1 1.9 3.3
Charge for the year 0.3 – 1.0 1.3
Disposals – – (0.4) (0.4)
End of year 1.6 0.1 2.5 4.2
Net book value
Beginning of year 11.9 0.1 6.4 18.4
End of year 11.8 0.1 8.2 20.1
Freehold land at cost amounting to £1.7 million (2004 : £1.7 million) has not been depreciated. The net book value of tangible fixed
assets includes £0.1 million (2004 : £0.1 million) financed by hire purchase contracts and finance leases.
44 Abacus Group plc
Notes to the Accounts (continued)
30 September 2005 12 Fixed asset investments
Company
Investments in subsidiary undertakings
£’m
Cost
Beginning and end of year 5.6
Provision for impairment
Beginning and end of year –
Net Book Value
Beginning and end of year 5.6
Abacus Group plc owns 100% of the share capital of Abacus Electronics Holdings Limited, which in turn holds all other
investments in trading subsidiaries.
Principal Group investments
The Company and Group have investments in the ordinary equity share capital or local equivalent of the subsidiary undertakings,
listed below, which principally affected the profits and net assets of the Group. All companies except Innovative Electronic
Components Group Limited distribute electronic components. Innovative Electronic Components Group Limited provides central
administrative support.
Country of incorporation Proportion of shares
and operation held by
Company Group
Abacus Electronics Holdings Limited United Kingdom 100%
Promax Denmark A/S Denmark 100%
Promax Sweden AB Sweden 100%
Promax Finland OY Finland 100%
Promax Norway A/S Norway 100%
Innovative Electronic Components Group Limited United Kingdom 100%
Micromark Electronics Limited United Kingdom 100%
Trident Microsystems Limited United Kingdom 100%
ECC Elettronica SpA Italy 100%
Voting rights in each of the above subsidiaries are equal to the proportion of Ordinary shares held.
Dormant and intermediate holding companies subsidiaries have been omitted to avoid a statement of excessive length. On
31 August 2005 the trade, assets and liabilities of Micromark Electronics Limited were transferred to Abacus Electronics Holdings
Limited. Promax Finland OY has been earmarked for closure.
Goodwill arising on acquisitions in the year to 30 September 1997 and in earlier years was written off to reserves. Goodwill
previously eliminated against reserves has not been reinstated on implementation of Financial Reporting Standard No. 10,
Goodwill and Intangible Assets. Since 1 October 1997, the acquisition method of accounting has been adopted for all
acquisitions and the goodwill arising on the purchases has been capitalised and is being amortised through the profit and loss
account over a period of 20 years.
13 Stocks
Group
2005 2004
£’m £’m
Raw materials 0.9 1.0
Work in progress 0.5 0.6
Finished goods and goods for resale 24.7 33.2
26.1 34.8
There is no material difference between the replacement cost of stocks and the balance sheet values.
The value of stock is shown net of inventory provisions, including £3.5 million provided for RoHS affected stock in 2005.
Abacus Group plc 45 14 Debtors
Group Company
2005 2004 2005 2004
£’m £’m £’m £’m
Amounts falling due within one year:
Trade debtors 36.4 40.2 – –
Corporation tax recoverable 0.2 0.2 – –
Prepayments and accrued income 0.4 0.7 – –
37.0 41.1 – –
Amounts falling due after more than one year:
Amounts owed by subsidiary undertaking – – 12.7 9.9
Deferred tax asset 0.4 – – –
0.4 – 12.7 9.9
37.4 41.1 12.7 9.9
Deferred taxation Non Exceptional Group Company
exceptional items Total Total
£’m £’m £’m £’m
Beginning of year ––––
Opening balance transferred from provision for liabilities (note 17) (0.3) – (0.3) –
Credited (charged) to profit and loss (0.2) 0.9 0.7 –
End of year (0.5) 0.9 0.4 –
2005 2004
£’m £’m
Accelerated capital allowances (0.5) (0.3)
Other timing differences 0.9 –
Total deferred tax asset (liability) 0.4 (0.3)
The deferred tax asset recognised relates solely to the UK which, based on current results, is more likely than not to achieve
sufficient profits against which the asset can be recovered in the future.
There was no unprovided deferred tax liability at either Balance Sheet date.
The Directors have not provided for a deferred tax asset balance of £1.0 million (2004 : £1.0 million). Of this, £0.6 million 
(2004 : £0.3 million) relates to losses incurred in Promax’s subsidiaries, £0.4 million of timing differences on provisions in Italy 
(2004 : £0.5 million) and £nil of depreciation in excess of capital allowances (2004 : £0.2 million). These deferred tax assets 
would be recognised when the Directors could forecast with certainty that:
a) the Promax operations would move into profit; and
b) the Italian provisions would be utilised in the forseeable future.
46 Abacus Group plc
Notes to the Accounts (continued)
30 September 2005 15 Creditors: amounts falling due within one year
Group Company
2005 2004 2005 2004
£’m £’m £’m £’m
Bank loans and overdrafts 22.4 24.7 – –
Obligations under finance leases and 
hire purchase contracts 0.1 0.1 – –
Other loans 0.2 0.4 0.2 0.4
Trade creditors 13.6 16.8 – –
Corporation tax 0.6 1.9 – –
Other taxation and social security 3.0 3.8 – –
Accruals and deferred income 3.7 5.6 0.3 0.7
Proposed dividend 1.5 3.0 1.5 3.0
45.1 56.3 2.0 4.1
16 Creditors: amounts falling due after more than one year
Group Company
2005 2004 2005 2004
£’m £’m £’m £’m
Bank loans (secured) 7.7 7.3 – –
Amounts owed to subsidiary undertakings – – 2.4 2.4
7.7 7.3 2.4 2.4
The borrowings of the Group and Company are repayable:
Group Company
2005 2004 2005 2004
£’m £’m £’m £’m
On demand or within one year
Hire purchase and finance leases 0.1 0.1 – –
Bank loans and overdrafts 22.4 24.7 – –
Other loans 0.2 0.4 0.2 0.4
22.7 25.2 0.2 0.4
Between one and two years
Bank loans 0.7 1.6 – –
Between two and five years
Bank loans 7.0 5.7 – –
Total borrowings 30.4 32.5 0.2 0.4
Bank overdrafts and loans repayable within one year were £20.8 million and £1.6 million respectively.
Other loans of £0.2 million comprise non-guaranteed loan notes attracting interest of 4%. The date of repayment is subject to the
resolution of outstanding tax issues. All loan notes are redeemable at par.
Group operating companies have granted fixed and floating charges over their assets to secure bank loans and overdrafts totalling
£22.5 million (2004: £22.8 million). Abacus Group plc has guaranteed £3.7 million (2004 - £3.5 million) of bank loans and
overdrafts to overseas subsidiary companies. Finance leases are secured against specific assets.
Abacus Group plc 47 17 Provision for liabilities and charges
Group
Employment
Deferred and agency Maintenance 2005 2004
Taxation termination Warranties Total Total
£’m £’m £’m £’m £’m
Beginning of year 0.3 1.1 – 1.4 2.0
Acquisition of subsidiary undertakings – – – – 1.1
Charged to profit and loss – 0.2 0.2 0.4 0.2
Reduction in the year – – – – (1.9)
Utilised in the year – (0.1) – (0.1) –
Transferred to debtors (note 14) (0.3) – – (0.3) –
End of year – 1.2 0.2 1.4 1.4
Employment and agency termination
The termination provisions related to ECC and are payable by law on the termination of employment or agency contracts. During
the year £0.1 million was paid in connection with the former. The Directors expect that payments from terminating contracts
could arise at any time in the future, depending on the performance of ECC Elettronica SpA, its employees and agents.
Maintenance warranties
A provision is recognised for Trident’s systems sold during the last year, which carry one year’s warranty. It is expected that all
costs will be incurred within one year of the balance sheet date.
18 Called-up share capital
Company
2005 2004
£’m £’m
Authorised share capital:
70,000,000 (2004 : 70,000,000) Ordinary shares of 5p each 3.5 3.5
Allotted, called-up and fully-paid:
42,583,507 Ordinary shares of 5p each (2004 : 42,536,007) 2.1 2.1
48 Abacus Group plc
Notes to the Accounts (continued)
30 September 2005 18 Called-up share capital (continued)
During the year 47,500 Ordinary shares of 5p each were issued for a total consideration of £0.1 million. The Company has
options outstanding for the following shares:
Option scheme Number of Number of Exercise
Shares at Number Number Number Shares at Exercise Price per
1 Oct 2004 Granted Exercised Lapsed 30 Sept 2005 Period Share
2003 26,258 – – – 26,258 2005-2012 228.5p
Approved 25,862 – – 25,862 2006-2013 232.0p
– 16,438 – – 16,438 2008-2015 182.5p
2003 263,492 – – – 263,492 2005-2012 228.5p
Unapproved 233,400 – – – 233,400 2006-2013 221.5p
462,930 – – 462,930 2006-2013 232.0p
– 202,740 – – 202,740 2008-2015 182.5p
1996 21,429 – (10,000) – 11,429 2001-2005 105.0p
Unapproved 75,000 – – – 75,000 2002-2006 120.5p
75,000 – – – 75,000 2002-2006 97.5p
390,000 – – (20,000) 370,000 2003-2007 389.0p
240,000 – – – 240,000 2003-2007 392.0p
1993 82,500 – (37,500) (25,000) 20,000 1998-2005 200.0p
Approved 11,000 – – – 11,000 1999-2006 271.0p
43,571 – – (5,000) 38,571 2001-2008 105.0p
Sharesave 1,077 – (1,077) – 2003-2004 94.0p
25,826 – (4,428) 21,398 2003-2006 320.0p
336,560 – (68,803) 267,757 2007-2010 245.0p
Total 2,313,905 219,178 (47,500) (124,308) 2,361,275
Details of the above Approved and Unapproved option schemes may be found in the ‘Share Options’ section of the Directors’
Remuneration Report.
19 Reserves
Non-distributable Distributable
Share Capital Profit
premium Merger redemption and loss
account reserve reserve account
£’m £’m £’m £’m
Group
Beginning of year 9.1 3.3 0.4 29.3
Premium on share issue 0.1 – – –
Retained loss for the year – – – (0.9)
9.2 3.3 0.4 28.4
Company
Beginning of year 9.1 – 0.4 0.5
Premium on share issue 0.1 – – –
Retained profit for the year – – – 3.3
9.2 – 0.4 3.8
Cumulative goodwill of £34.6 million has arisen on the acquisition of subsidiary undertakings in the years to 30 September 1997.
This goodwill has been written off to reserves in line with the Group’s accounting policy as described on page 38.
Abacus Group plc 49 20 Reconciliation of movement in Group equity shareholders’ funds
2005 2004
£’m £’m
Profit for the year 2.2 6.0
Dividends paid and declared (3.1) (4.5)
(0.9) 1.5
New share capital subscribed 0.1 0.4
Loss on foreign currency translation – (0.1)
Net (reduction) addition to equity shareholders’ funds (0.8) 1.8
Opening equity shareholders’ funds 44.2 42.4
Closing equity shareholders’ funds 43.4 44.2
21 Minority interests
2005 2004
£’m £’m
Beginning of year – –
Acquisition of subsidiary undertaking – 0.5
Acquisition of minority interest – (0.5)
End of year – –
Minority interests in 2004 relate to the acquisition of 40.18% of ECC Distribution Limited, which comprised only equity interests.
22 Reconciliation of operating profit to operating cash flows
2005 2004
£’m £’m
Operating profit 4.6 10.2
Depreciation 1.3 1.7
Intangibles’ amortisation 0.8 0.7
Operating profit before depreciation and intangibles 6.7 12.6
Decrease in stocks 8.5 0.3
Decrease (increase) in debtors 4.0 (3.0)
(Decrease) increase in creditors (6.0) 3.2
Increase in provisions 0.3 –
Net cash inflow from operating activities 13.5 13.1
Net cash inflow from operating activities includes an outflow of £0.5 million relating to exceptional costs due to the business
rationalisation and restructuring of the Nordic operations, including severance and other employee and property costs. There was
no cash outflow relating to the exceptional RoHS inventory provision charge (see note 4).
50 Abacus Group plc
Notes to the Accounts (continued)
30 September 2005 23 Analysis of cash flows
2005 2004
£’m £’m
Returns on investments and servicing of finance
Interest received 0.1 0.2
Interest paid (1.4) (1.1)
Net cash outflow (1.3) (0.9)
Taxation
UK Corporation tax paid (2.8) (2.2)
Overseas tax paid (0.3) (0.3)
Net cash outflow (3.1) (2.5)
Capital expenditure and financial investment
Purchase of intangible fixed assets (1.6) –
Purchase of tangible fixed assets (2.7) (2.4)
Sale of tangible fixed assets 0.1 –
Net cash outflow (4.2) (2.4)
Acquisitions
Purchase of subsidiary undertakings – (2.7)
Purchase of minority interests – (0.7)
Net overdrafts acquired with subsidiary undertakings – (5.9)
Net cash outflow – (9.3)
Financing
Issue of ordinary share capital 0.1 0.4
New loans 8.0 –
Repayment of loans (7.6) (1.2)
Repayment of loan notes (0.2) –
Payment of deferred consideration – (2.4)
Capital element of finance lease rental payments (0.2) (0.4)
Net cash inflow (outflow) 0.1 (3.6)
Abacus Group plc 51 24 Analysis and reconciliation of net debt
1 Oct Cash Other Exchange 30 Sept
2004 flow non-cash differences 2005
changes
£’m £’m £’m £’m £’m
Cash at bank 3.1 (1.8) – – 1.3
Bank overdrafts (23.1) 2.2 – 0.1 (20.8)
0.4 –
Debt due after 1 year (7.3) – (0.4) – (7.7)
Debt due within 1 year (2.0) (0.2) 0.4 – (1.8)
Finance leases due within 1 year (0.1) 0.2 (0.2) – (0.1)
–
(29.4) 0.4 (0.2) 0.1 (29.1)
2005 2004
£’m £’m
Increase (decrease) in cash for the year 0.4 (10.0)
Cash outflow from decrease in
debt and lease financing – 1.6
Change in net debt resulting from cash flows 0.4 (8.4)
Loans and finance leases acquired with subsidiary – (2.1)
Issue of loan notes to purchase subsidiary undertaking – (0.2)
New finance leases (0.2) (0.1)
Foreign exchange difference 0.1 0.1
Movement in net debt in the year 0.3 (10.7)
Net debt at beginning of year (29.4) (18.7)
Net debt at end of year (29.1) (29.4)
25 Financial instruments
An explanation of the Group’s objectives, policies and strategies for the role of derivatives and other financial instruments in
creating and changing the risks of the Group can be found in the ‘Managing business risk’ section of the Corporate Governance
Statements. As permitted under FRS 13, short term debtors and creditors have been excluded from all disclosures other than 
the currency exposure disclosure.
Interest Rate Risk
The Group’s interest charge and income primarily arise on bank loans, invoice discounting facilities secured on trade debtors,
overdrafts and loan notes which are mainly denominated in Sterling, Euro, US dollars, Yen and Danish Kroner. For overdrafts, 
and invoice discounting facilities the interest charge and income is based on the daily base rate plus or minus a fixed percentage.
For loans, the Group has committed facilities:
a) of a £8.0 million commercial mortgage loan, which is repayable in equal quarterly instalments until July 2020, at 
UK LIBOR rate plus 0.9%; and
b) of DKR2.0 million, which is repayable in equal instalments of DKR60,000 until June 2008 and attracts interest at a 
variable rate of daily Danish Libor rate plus 0.7%; and
c) of two loans, one of Euro 0.5 million, which is repayable in equal instalments of Euro 0.25 million until May 2006, the
other of Euro 0.5 million repayable in full in May 2006, both of which attract interest based on the daily Euribor rate 
plus 0.75% and 1% respectively; and
d) of a loan of £0.5 million repayable in full in January 2006 and which attracts interest based on the daily UK LIBOR rate 
plus 0.75%.
Within each country, all bank accounts of the same currency are pooled, which practice the Group actively utilises to minimise
interest charges. The Group has entered into a 5 year interest rate swap fixed at 4.73% based on the value of 50% of its
commercial mortgage loan outstanding at any one time.
52 Abacus Group plc
Notes to the Accounts (continued)
30 September 2005 25 Financial instruments (continued)
The interest rate profile of the financial liabilities (excluding short term debtors and creditors) of the Group at 30 September was 
as follows:
Financial assets and liabilities Floating rate Fixed rate
(excluding short term debtors and creditors) Balance Balance Weighted Weighted
outstanding outstanding average average period
interest rate for which 
rates are fixed
£’m £’m % Years
2005
Assets
Euro 0.7 – – –
Other 0.6 – – –
1.3 – – –
Liabilities
Sterling (16.2) (4.3) 4.6 4.9
US Dollar 0.1 – – –
Euro (9.1) – – –
Yen (0.4) – - –
Other (0.5) – – –
(26.1) (4.3) 4.6 4.9
2004
Assets
Sterling 0.1 – – –
US Dollar 2.8 – – –
Other 0.3 – – –
3.2 – – –
Liabilities
Sterling (19.4) (0.4) 3.8 0.9
US Dollar (0.1) – – –
Euro (12.1) – – –
Yen (0.3) – - –
Other – (0.3) 5.6 3.7
(31.9) (0.7) 4.5 1.9
Assets in the above table for 2005 and 2004 comprise only cash balances.
Floating rate liabilities comprise:
 £4.0 million of a £8.0 million commercial mortgage loan, not hedged by an interest rate swap but bearing interest based 
on the daily UK LIBOR rate and fixed in advance for periods of between one and three months;
 Euro, Sterling and Danish Kroner bank loans of £0.7 million (Euro 1.0 million), £0.5 million and £0.2 million
(DKR 2.0 million) respectively, all being interest based on daily base rates; and
 Overdraft in multiple currencies totalling £20.7 million bearing interest based on daily base rates.
Fixed rate liabilities comprise:
 £4.0 million of the £8.0 million Sterling mortgage loans hedged by an interest rate swap;
 £0.2 million of Sterling loan notes; and
 £0.1 million outstanding obligations on finance leases.
Interest rates on floating rate assets and liabilities are based on the relevant national inter-bank rates.
Abacus Group plc 53 25 Financial instruments (continued)
Currency exposures
As described in the ‘Managing Financial Risk’ section of the Corporate Governance Statements, the Group may enter into forward
foreign currency contracts to protect against the currency exposures that arise on purchase and sale transactions. The table below
shows the Group’s currency exposures. These exposures give rise to currency gains and losses recognised in the profit and loss
account, and arise from monetary assets and liabilities not denominated in the functional currency of the operating unit.
Net foreign currency monetary assets (liabilities)
Functional Currency Sterling Euro US Dollar Yen Other Total
Of Group operation £’m £’m £’m £’m £’m £’m
Sterling – 3.2 12.6 (1.2) 0.1 14.7
Danish Kroner (0.2) (1.7) – – 1.2 (0.7)
Euro – – (0.4) – – (0.4)
Total 2005 (0.2) 1.5 12.2 (1.2) 1.3 13.6
Total 2004 (0.1) (4.0) 0.9 (0.3) – (3.5)
Short term debtors and creditors have been included in the above disclosure. As at year end, the Group had outstanding
commitments for forward exchange contracts of £12.6 million (2004 : £nil).
Maturity of financial liabilities
The maturity profile of the Group’s financial liabilities as at 30 September was as follows:
2005 2004
£’m £’m
On demand or within one year 22.7 25.2
Between one and two years 0.7 1.6
Between two and five years 7.0 5.7
30.4 32.5
Borrowing facilities
The Group had £47.6 million (2004 : £43.9 million) of borrowing facilities at 30 September 2005 of which £17.5 million
(2004 : £11.8 million) were undrawn and £31.3 million (2004 : £9.0 million) were committed.
The maturity of the borrowing facilities, both drawn and undrawn, at 30 September was as follows:
2005 2004
£’m £’m
On demand or within one year 39.9 36.6
Between one and two years 0.7 1.6
Between two and five years 7.0 5.7
47.6 43.9
The principal UK facilities were established in July 2005 with HSBC Bank plc and comprise:
 an invoice discounting facility of 85% of the value of UK debtors, less certain adjustments, up to a maximum value of 
£25 million. At 30 September 2005 the facility was £21.9 million;
 an overdraft facility (repayable on demand) of £2.5 million, which is reviewed every twelve months;
 a mortgage loan facility of £8.0 million at 30 September 2005, repayable in quarterly instalments until July 2020.
In addition, there is a £0.5 million loan facility with Cariplo Bank repayable in January 2006.
54 Abacus Group plc
Notes to the Accounts (continued)
30 September 2005 25 Financial instruments (continued)
The Nordic facilities are with Unibank AS and comprise a total loan and overdraft limit of DKR46.5million. The overdraft is rolled
over every January for twelve months and the loan (DKR2.0 million at 30 September 2005) is repayable in equal monthly
instalments of DKR60,000 until June 2008.
The Italian facilities comprise overdraft and loan facilities of Euro 24.0 million and Euro 1.0 million respectively. The overdraft
facilities (repayable on demand) are with seven Italian banks and are due for renewal between March and April 2006. The loan
facilities comprise two loans, one of Euro 0.5 million repayable in equal instalments of Euro 0.25 million until May 2006, the other
of Euro 0.5 million repayable in full in May 2006.
The maturity of the undrawn committed facilities available at 30 September, in respect of which all conditions precedent had been
met at that date, was as follows:
2005 2004
£’m £’m
On demand or within one year 12.5 –
Gains and losses on hedges
Gains and losses on instruments used for hedging are not recognised until the exposure that is being hedged materialises. The only
material unrecognised gains and losses at the balance sheet date relate to forward foreign currency exchange contracts on which
gains of £0.3 million were not recognised as of 30 September 2005 and which are all expected to be recognised in 2005/06.
Fair value
There were no material differences between the book and fair values of financial assets and liabilities at either 30 September
2005 or 30 September 2004, other than forward foreign currency contracts at 2005 (there were none at 2004) which had book
and fair values of £nil and £0.3 million respectively.
26 Financial commitments
Capital commitments
The Group and Company had capital expenditure commitments of £0.2 million (2004 : £0.1 million) and £nil (2004 : £nil)
respectively at 30 September 2005.
Lease commitments
The Group is committed to pay the following annual amounts under leases outstanding at 30 September.
Land and buildings Other
2005 2004 2005 2004
£’m £’m £’m £’m
Operating leases which expire:
Within one year – 0.2 0.1 0.4
Between two and five years 0.1 0.1 0.5 0.7
After more than five years 0.3 0.2 – –
0.4 0.5 0.6 1.1
The Company has no operating lease commitments.
27 Pension contributions
The Group operates a number of defined contribution pension schemes. The total cost of pension contributions for the year was
£1.8 million (2004 : £1.5 million) of which £0.1 million (2004 : £nil) was outstanding at 30 September 2005.
28 Related party transactions
Other than inter-company transactions, there were no significant transactions with related parties during the year.
29 Event occurring after the end of year
On 26 October 2005, the Company announced an offer to buy 100% of the share capital of Deltron Electronics plc. It is
anticipated that this will complete on 17 January 2006, subject to shareholder approval.
Abacus Group plc 55 2001 2002 2003 2004 2005
£’m £’m £’m £’m £’m
Income Statement
Sales 201.5 155.0 147.0 187.8 178.3
Profit before tax, intangibles and exceptional items 17.1 9.5 8.0 10.0 8.1
Intangibles’ amortisation (0.7) (2.9) (0.4) (0.7) (0.8)
Profit before tax and exceptional items 16.4 6.6 7.6 9.3 7.3
Exceptional Items – – – – (4.0)
Profit after tax 11.3 4.1 5.3 6.0 2.2
Assets employed
Fixed assets 27.0 25.2 25.1 30.2 32.8
Other net assets 39.3 34.1 36.0 43.4 39.7
Capital employed 66.3 59.3 61.1 73.6 72.5
Net debt (26.0) (18.5) (18.7) (29.4) (29.1)
40.3 40.8 42.4 44.2 43.4
Financed by
Shareholders’ funds 40.3 40.8 42.4 44.2 43.4
Cash flow
Operating cash flow 19.0 16.9 2.5 13.1 13.5
Free cash flow 5.4 10.8 2.5 7.3 6.4
Dividends (3.4) (3.8) (4.2) (4.4) (4.6)
Sale of tangible fixed assets 0.1 0.1 0.1 – 0.1
Acquisitions and investments (23.5) – 1.4 (14.0) (1.6)
Equity financing 0.1 0.4 0.2 0.4 0.1
New finance leases (0.3) – – (0.1) (0.2)
Foreign exchange – – (0.2) 0.1 0.1
Movement in net debt (21.6) 7.5 (0.2) (10.7) 0.3
Net debt (26.0) (18.5) (18.7) (29.4) (29.1)
Statistics
Average no. of shares (’000) 41,688 41,816 42,035 42,426 42,569
Earnings per share (Basic pre excep. & intangibles) 28.7p 16.6p 13.5p 15.9p 14.1p
Free cash flow per share 13.0p 25.9p 5.8p 17.3p 15.0p
Dividends per share 8.8p 9.7p 10.2p 10.5p 7.2p
Dividend cover (pre excep. & intangibles) 3.3 1.7 1.3 1.5 2.0
Gross profit (pre excep. & intangibles) 24.6% 24.7% 23.2% 22.9% 23.2%
Return on sales (pre excep. & intangibles) 8.5% 6.1% 5.5% 5.3% 4.5%
Effective tax rate (pre intangibles) 29.9% 26.6% 29.4% 32.7% 27.5%
Net gearing* 64.5% 45.3% 44.0% 66.5% 67.1%
Return on capital employed** 28.8% 17.5% 14.1% 14.8% 13.0%
*Net gearing is defined as net borrowings excluding earnout consideration divided by shareholders’ funds and minority interests.
**Return on capital is defined as profit before exceptional items, interest, tax and intangibles divided by shareholders’ funds,
minority interest and net debt.
56 Abacus Group plc
Five Year Summary NOTICE IS HEREBY GIVEN that the Annual General Meeting of Abacus Group plc (“the Company”) will be held at Abacus
House, Bone Lane, Newbury, Berkshire RG14 5SF on 27 January 2006 at 10.00 am. The Meeting will consider and, if thought fit,
pass the following Resolutions, which are to be proposed, in the case of Resolutions 1 to 10, as Ordinary Resolutions, and in the
case of Resolutions 11 and 12 as Special Resolutions of the Company: 
Resolutions
1. To receive and adopt the Report of the Directors and the Accounts for the year ended 30 September 2005 and the Auditors’
Report thereon.
2. To re-elect as a Director G McBeth, who retires from the Board every third year.
3. To re-elect as a Director A H Westropp, who now retires every year. The Board proposes this re-election following the Chief
Executive Officer’s formal performance evaluation, with input from the Board, which concludes that Mr Westropp continues 
to provide sufficient commitment and effective contribution to his role as Non-executive Chairman of the Board and Chairman
of the Nominations Committee. He attended all the Board meetings and a number of other ad hoc meetings throughout the
year. Aided by his directorships of other companies, Mr Westropp provides effective input in determining the policies of the
Group, monitoring the Group’s performance and contributing to the formulation of its strategy. Mr Westropp is considered 
to be independent by the Board for the reasons outlined in the Corporate Governance section of the Annual Report.
4. To elect as a Director P V Allen following his appointment to the Board on 1 April 2005.
5. To elect as a Director J Vaughan, subject to him being appointed to the Board following completion of the acquisition of
Deltron Electronics plc by the Company which is expected to take place on or about 17 January 2006 (the “Acquisition”). 
J Vaughan has worked for Deltron since February 2004 and has considerable experience of the electronic and
electromechanical industry.
6. To elect as a non-executive Director D Weir, subject to him being appointed to the Board following completion of the
Acquisition. Subject to approval at the 2006 AGM, D Weir’s appointment will be reviewed prior to the AGM in 2007 and may
be extended for a period of no longer than 3 years. Mr Weir was Chief Executive of Caird Group plc, a waste management
company, from 1993 to 1999 and currently has a number of non-executive roles.
7. To approve the Directors’ Remuneration Report.
8. To appoint Ernst & Young as Auditors to fill the casual vacancy left after Deloitte & Touche LLP resigned, and to authorise 
the Directors to fix their remuneration.
9. THAT:
a) the Company’s proposed new long term incentive arrangement, the Abacus Group Performance Share Plan 2005 
(the “Plan”), the main features of which are summarised in Appendix 1 of the Directors’ Report and a copy of the Rules 
of which is produced to the Meeting and initialled by the Chairman for the purpose of identification, be and the same 
is hereby approved, and the board of Directors be and are hereby authorised to do all acts and things as they may
consider necessary to carry the Plan into effect.
b) the board of Directors be and they are hereby authorised to establish such schedules to the Plan and/or such other
schemes based on the Plan, but modified to take account of local tax, exchange control or securities laws outside the
UK, provided that any shares made available under such schedules or other schemes must be treated as counting
against the relevant individual or overall dilution limits in the Plan.
c) the board of Directors be and are hereby authorised to vote and be counted in the quorum, on any matter connected
with the said Plan, notwithstanding that they may be interested in the same (except that no Director may be counted in a
quorum or vote in respect of his own participation) and the prohibition on voting by interested Directors contained in the
Articles of Association of the Company be and is hereby relaxed accordingly.
10. THAT the Directors be and they are hereby generally and unconditionally authorised to exercise all the powers of the
Company to allot relevant securities (within the meaning of section 80 of the Companies Act 1985 (“the Act”)) up to an
aggregate nominal amount of £709,725, being one third of the issued share capital at 30 September 2005, provided that
such authority shall expire on the earlier of the date of the next Annual General Meeting of the Company after the passing of
this Resolution or fifteen months after the passing of this Resolution save that the Company may before such expiry or the
expiry of any renewal of this authority make an offer or agreement which would or might require relevant securities to be
allotted after such expiry and the Directors may allot relevant securities in pursuance of such offer or agreement as if this
authority had not expired and provided further that this authority shall supersede and revoke any other such authorities.
11. THAT, subject to the passing of Resolution 10, the Directors be and they are hereby empowered pursuant to section 95 of
the Act to allot equity securities (as defined for the purposes of sections 89 to 96 of the Act) for cash pursuant to the general
authority conferred on them by Resolution 10 for the purposes of section 80 of the Act as if section 89(1) of the Act did not
apply to any such allotment provided that this power shall be limited: 
Abacus Group plc 57
Notice of Annual General Meeting (i) to the allotment of equity securities in connection with an issue or offer by way of rights in favour of holders of Ordinary
shares where the equity securities respectively attributable to the interests of such holders of Ordinary shares on a fixed
record date are proportionate (as nearly as may be) to the respective numbers of shares held by them but subject to such
exclusions or other arrangements as the Directors may deem necessary or expedient to deal with any legal or practical
problems under the laws of any overseas territory or the requirements of any regulatory body or any other stock
exchange in any territory or in relation to fractional entitlements; and
(ii) to the allotment (otherwise than pursuant to paragraph (i) of this Resolution) of equity securities having in the case of
relevant shares, a nominal amount or, in the case of other equity securities, giving the right to subscribe for or convert
relevant shares having a nominal amount not exceeding in aggregate the sum of £106,458, 5% of the issued share
capital at 30 September 2005,
and shall expire on the earlier of the date of the next Annual General Meeting of the Company after the passing of this
Resolution or fifteen months after the passing of this Resolution, save that the Company may before such expiry make an
offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot
equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired.
12. THAT the Company be generally and unconditionally authorised to make market purchases (as defined in Section 163(3) of
the Act) of its Ordinary shares provided that:
(i) the maximum number of Ordinary shares hereby authorised to be acquired is 6,387,526, 15% of the issued share capital
at 30 September 2005;
(ii) the minimum price which may be paid for any such Ordinary shares is 5 pence;
(iii) the maximum price which may be paid for any such Ordinary share is an amount equal to 105 per cent. of the average
middle market quotations for an Ordinary share according to the London Stock Exchange Daily Official List for the five
business days immediately preceding the day on which the Ordinary share is contracted to be purchased; and
(iv) this authority shall expire at the close of the next Annual General Meeting of the Company to be held after the date
hereof; but a contract of purchase may be made before such expiry which will or may be executed wholly or partly
thereafter and a purchase of Ordinary shares may be made in pursuance of any such contract.
By order of the Board
G L van der Pant, ACA 14 December 2005
Abacus Group plc, registered office: Abacus House, Bone Lane, Newbury, Berkshire, RG14 5SF
NOTES
1. Any member entitled to attend and vote at the above Meeting may appoint a Proxy to attend, and on a poll only, vote on
his/her behalf. A Proxy need not be a member of the Company.
2. To be valid, the enclosed reply-paid Form of Proxy, together, if appropriate, with the Power of Attorney or other authority 
(if any) under which it is signed, or a notarially certified copy of such power or authority must be deposited at the offices of
Computershare Services plc, Registrar’s Department, PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH at least
forty-eight hours before the time appointed for holding the meeting.
3. Completion and return of the Form of Proxy will not preclude ordinary shareholders from attending the Meeting and voting 
in person if they wish to do so.
4. Documents for inspection – Copies of the Directors’ service contracts, register of Directors’ interests and the draft rules of 
the Abacus Group Performance Share Plan 2005 (the “Plan”) will be available for inspection at the registered office of the
Company, Abacus House, Bone Lane, Newbury, Berkshire, RG14 5SF during normal business hours on any weekday
(excluding public holidays) from the date of the notice of the Annual General Meeting until the conclusion of the Annual
General Meeting and any adjournment thereof. A copy of the draft rules of the Plan will also be available for inspection at
such times at the offices of New Bridge Street Consultants LLP (20 Little Britain, London, EC1A 7DH).
5. As permitted by Regulation 41 of the Uncertificated Securities Regulations 2001, only those shareholders who are registered
on the Company’s share register at 6 p.m. on 25 January 2006 shall be entitled to attend the Meeting and to vote in respect
of the number of shares registered in their names at that time. Changes to entries on the share register after 6 p.m. on 
25 January 2006 shall be disregarded in determining the rights of any person to attend and/or vote at the Meeting.
58 Abacus Group plc
Notice of Annual General Meeting (continued)
30 September 2005 For use at the ANNUAL GENERAL MEETING at 10 a.m. on Friday 27 January 2006, at Abacus House, Bone Lane, Newbury,
Berkshire, RG14 5SF.
I/We ..................................................................................................................................................................................................
being (a) holder(s) of Ordinary shares (see note 1) of Abacus Group plc hereby appoint
the Chairman of the Meeting; or .................................................................................................................................... (see note 2)
as my/our Proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held on 27 January
2006 and at every adjournment thereof.
Signature(s).....................................................................................................................................................................(see note 4)
Dated ........................................................................................................................................................................... 2005/2006.
Please indicate with a X in the boxes below how you wish the proxy to vote. Where no X is inserted, the Proxy will, at his
discretion, vote as he thinks fit or abstain from voting.
RESOLUTION For Against
Ordinary Resolutions
1. To receive and adopt the Report of the Directors and the Accounts for the year ended
30 September 2005 and the Auditors’ Report.   2. To re-elect G McBeth as a Director of the Company, who retires every third year.   3. To re-elect A H Westropp as a Director of the Company, who retires every year.   4. To elect P V Allen as a Director of the Company, who was first appointed to the Board
on 1 April 2005.   5. To elect as a Director J Vaughan, subject to completion of the acquisition of
Deltron Electronics plc (the “Acquisition”).   6. To elect as a Director D Weir, subject to completion of the “Acquisition”.   7. To approve the Directors’ Remuneration Report.   8. To appoint Ernst & Young LLP as Auditors to fill the casual vacancy and to authorise
the Directors to fix their remuneration.   9. To approve the new long term incentive arrangement.   10. To authorise the Directors to allot shares.   Special Resolutions
11. To disapply pre-emption rights on the allotment of shares.   12. To allow the Company to purchase its own shares.   NOTES
1. Only a holder of Ordinary shares is entitled to attend and vote or to appoint a Proxy to attend and vote in his/her place at the Annual General Meeting.
2. If any other Proxy is preferred, strike out the words “Chairman of the Meeting”, enter the name and address of the Proxy desired and initial the alteration.
Completion of the Form of Proxy does not prevent a member from attending and voting in person.
3. To be valid, this Form of Proxy and the Power of Attorney or other authority, if any, under which it is signed, must reach the offices of Computershare
Services plc, Registrar’s Department, PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH not later than forty-eight hours before the time
appointed for the meeting or any adjournment thereof.
4. In the case of a Corporation, this Form of Proxy must be either executed under its common seal or under the hand of an officer or Attorney duly
authorised.
5. In the case of joint holders, the vote of the first name in the Register who tenders a vote, whether in person or by Proxy, will be accepted to the
exclusion of the votes of the other joint holders.
6. Any alteration made to the Form of Proxy must be initialled.
7. A Proxy need not be a member of the Company.
8. A vote given by the duly authorised representative of a member shall be valid, notwithstanding the previous determination of such authority, unless
notice in writing of such determination was received by the Company at the offices of Computershare Services plc, Registrar’s Department, PO Box 82,
The Pavilions, Bridgwater Road, Bristol BS99 7NH at least forty-eight hours before the time appointed for holding the meeting.
Abacus Group plc 59
Form of Proxy
Abacus Group plc
✂ BUSINESS REPLY SERVICE
Licence No. SWB1002
1 1
SECOND FOLD
THIRD FOLD AND TUCK IN
FIRST FOLD
COMPUTERSHARE INVESTOR SERVICES PLC
PO Box 1075
The Pavilions
Bridgwater Road
Bristol
BS99 3FA Abacus Group
UK and Ireland
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Local Offices Abacus Group plc
Annual Report & Accounts 2005
Abacus House
Bone Lane
Newbury
Berkshire
RG14 5SF
www.abacus-group.co.uk
Abacus Group plc Annual Report & Accounts 2005