SERVICE ENERGY AND
PETROCHEMICALS
MANUFACTURING
AND CONSTRUCTION 
TELECOMS 
RETAIL TRANSPORT FINANCIAL SERVICES GOVERNMENT
ANNUAL REPORT 2005
ANNUAL REPORT 2005 2 CHLORIDE AT A GLANCE
4 CHAIRMAN’S STATEMENT
6 CHIEF EXECUTIVE’S REVIEW
18 FINANCIAL REVIEW
22 BOARD OF DIRECTORS
23 DIRECTORS’ REPORT
27 CORPORATE GOVERNANCE 
31 AUDIT COMMITTEE REPORT 
33 REMUNERATION REPORT
40 STATEMENT OF DIRECTORS’ RESPONSIBILITIES
41 INDEPENDENT AUDITORS’ REPORT
42 CONSOLIDATED PROFIT AND LOSS ACCOUNT
43 BALANCE SHEETS
LIFE.NET SERVICE AND
SUPPORT
PROJECT
MANAGEMENT
CONTACT ASSESSMENT
44 CONSOLIDATED CASH FLOW STATEMENT
45 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
RECONCILIATION OF MOVEMENTS IN EQUITY
SHAREHOLDERS’ FUNDS
46 NOTES TO THE ACCOUNTS
74 PRINCIPAL SUBSIDIARY UNDERTAKINGS
75 FIVE YEAR SUMMAR Y
76 SHAREHOLDER INFORMATION, SECRETARY 
AND ADVISERS
SPIKES
FREQUENCY 
VARIATION
SAGS
SHORT 
INTERRUPTIONS
RFI
TRANSIENTS
SOLUTION ANNUAL REPORT 2005 1
Chloride’s innovative power protection
solutions and services secure business
continuity for critical systems and
processes worldwide.
MILITARY FINANCE DATACENTRES RETAIL
MISSION CRITICAL APPLICATIONS
MANUFACTURING TRANSPORT AIRPORTS HEALTHCARE 2 ANNUAL REPORT 2005
POWER PROTECTION
CHLORIDE AT A GLANCE
HIGHLIGHTS
Key strategic actions to sharpen focus and increase competitive advantage in chosen markets:
l Acquisition of Harath to create the UK’s No 1 critical power protection services company
l Improved efficiency through increased outsourcing and reduction of excess manufacturing capacity in Germany
l Investment in the Indian market through a strategic alliance with DB Power, a leading independent power
protection company
l Decision to exit from Telecom Power Supplies (“TPS”)
Key financials
l Sales up to £165.0 million (2004: £153.2 million), representing 8% growth
l Adjusted operating profit* at £10.9 million – an increase of 29%
l Operating cash flow 100% of adjusted operating profit*
l Adjusted earnings per share* of 3.16p – an increase of 33%. Basic EPS of 0.70p (2004: 1.26p)
l Net exceptional costs** of £2.9 million to bring annualised benefits of approximately £3.0 million
l Full year dividend up 12% to 1.85p, reflecting the Board’s confidence in the Company’s ability to outperform 
in an improving market
* Operating profit/earnings per share before exceptional items of £3.5 million and goodwill amortisation of £2.5 million
** Exceptional costs before write off of TPS China goodwill of £0.8 million
MARKET SECTORS
SERVICE TELECOMS ENERGY AND
PETROCHEMICALS
OPERATING PROFIT
BEFORE GOODWILL AMORTISATION AND 
EXCEPTIONAL ITEMS £MILLION
2003 2004 2005
UP 29%
7.1
8.4
10.9
MANUFACTURING
AND CONSTRUCTION 
TOTAL SALES
£MILLION
2005 2004 2003
153.2
143.0
165.0
UP 8% ANNUAL REPORT 2005 3
EARNINGS PER SHARE
ADJUSTED BASIS PENCE
2003 2004 2005
UP 33%
1.98
2.37
3.16
DIVIDEND PER SHARE
PENCE
2003 2004 2005
UP 1 2%
1.60
1.65
1.85
RETAIL GOVERNMENT FINANCIAL SERVICES TRANSPORT
SALES IN MARKET SECTORS
l Service 28%
l Manufacturing and construction 18%
l Telecoms 16%
l Energy and petrochemicals 10%
l Government/health 8%
l Other 7%
l Retail 6%
l Financial services 4%
l Transport 3%
SALES IN INTERNATIONAL MARKETS
l Europe 68%
l North America 13%
l Asia Pacific 11%
l Africa/Middle East 6%
l Latin America 2%
SERVICE REVENUE
2005 2004 2003
+11%
+11%
UP 1 1%
PRODUCT SALES
2005 2004 2003
+6%
+6.5%
UP 6.5% 4 ANNUAL REPORT 2005
POWER PROTECTION
CHAIRMAN’S STATEMENT
Introduction
Chloride has made excellent progress delivering sustained growth in sales,
profit, and dividends.The Company has continued to outperform the market
with particularly strong growth in Europe and in the retail, medical, energy,
petrochemical, and manufacturing sectors.
Strategy for growth
Our strategy is to focus on the market for power protection solutions and
build market share in sectors where we enjoy real competitive advantage.
During the year we have:
l enhanced our position in the European power protection solutions
market with the acquisition of Harath Engineering Services Limited
(“Harath”).This acquisition, which was completed after the year end,
strengthens our position as the UK’s No 1 specialist provider of power
protection solutions and services for critical applications;
l improved efficiency through increased outsourcing and restructuring,
mainly relating to our manufacturing operations in Germany;
l agreed to invest in a leading Indian power protection company,
DB Power, to give us access to the growing Indian market; and
l sharpened focus on our core business by exiting from the Telecom
Power Supplies (“TPS”) business segment in China and seeking a buyer
for TPS France, which we have restructured for a return to profitability.
These actions will build on our recognised strengths in our core market,
deliver cost savings and expand both our solutions offering and our
geographic footprint.
Key financials
Total sales for the year increased by 8% to £165.0 million (2004:
£153.2 million). Operating profit was £4.9 million (2004: £5.7 million).
Operating profit before exceptional items of £3.5 million and goodwill
amortisation of £2.5 million was up 29% to £10.9 million (2004: £8.4 million).
Excluding the non-core TPS businesses, which made a loss of £0.9 million,
operating profit before exceptional items and goodwill amortisation was
£11.7 million – an increase of 27% on the prior year, on sales up 7% at
£151.7 million.
Chloride’s exit from TPS in China and its restructuring plans, largely in
Germany and the continuing TPS France business, have resulted in a one-off
exceptional pre-tax cost for this year of approximately £4.9 million (£2.9
million net of release of disposal provisions no longer required). In addition,
£0.8 million of goodwill was written off as an exceptional item associated
with TPS China, giving a total pre-tax net exceptional charge for the year 
of £3.7 million.The cash cost, to be incurred mostly in the current year,
is approximately £3.0 million.The benefit from these actions, which will
eliminate losses in TPS and deliver pre-tax savings across the business,
will be approximately £3 million on an annualised basis.
NORMAN
BROADHURST ANNUAL REPORT 2005 5
Profit before tax, exceptional items and goodwill amortisation increased 
by 29% to £9.8 million (2004: £7.6 million), generating adjusted earnings
per share of 3.16p – an increase of 33%. Reported profit before tax was
£3.5 million (2004: £4.9 million) and basic EPS was 0.70p (2004: 1.26p).
Operating cash flow continued to be strong at £10.9 million (2004:
£10.3 million) representing over 100% of adjusted operating profit.
After investing £6.2 million (2004: £8.4 million) in capital expenditure 
in the business, the net debt position at the year end was £16.3 million
(2004: £14.4 million).
Dividend
Following another year of good progress, and given our confidence in the
Company’s future prospects, the Board is proposing an 18% rise in the final
dividend to 1.0p per share (2004: 0.85p).Together with the interim dividend
of 0.85p, this gives a full year dividend of 1.85p – an increase of 12% on the
prior year.
Subject to shareholders’ approval at the Annual General Meeting, the final
dividend will be paid on 26 July 2005 to shareholders on the register 
at 1 July 2005.
International Financial Reporting Standards (“IFRS”)
Preparations continue for the introduction of the IFRS that will first impact
the Group’s interim statement for the six months to 30 September 2005.
The main areas of pre-tax adjusted earnings impact (before exceptional
items and goodwill amortisation), as disclosed previously, are in the recognition
of pension costs, and the cost of share-based payments.The overall impact 
is currently estimated to reduce reported pre-tax adjusted earnings by
between 5% and 7%.The Company has a transition plan in place to manage
the conversion to IFRS and intends to advise shareholders more fully of 
the changes in advance of the interim statement.
Board of directors
John Wheeler has decided to step down as a director at the forthcoming
AGM, to concentrate on his overseas interests. I would like to thank John
for his contribution to the Board.The Nomination Committee has begun
the selection process for another independent non-executive director.
Prospects
I would like to take this opportunity to thank all my colleagues at Chloride
for their efforts this year.They have met the challenges created by our
determination to accelerate growth with commitment and enthusiasm.
T ogether we have achieved another good performance.
We have seen improving trends in many of our core markets.This more
positive environment, together with Chloride’s sharpened focus on its 
core power protection businesses, its commitment to investing in industry-
leading technology and customer service, and above all its talented and highly
experienced people, give me confidence for the future. I am very encouraged
that we enter the new financial year with a lower cost base, an improved
order book and a clear vision for the Company’s continuing development.
NORMAN BROADHURST 6 ANNUAL REPORT 2005
POWER PROTECTION
CHIEF EXECUTIVE’S REVIEW
Our approach to the market
Business continuity is our business. It is also a priority for businesses,
governments and other infrastructure organisations around the world.
The demand for higher levels of power quality to protect critical systems
and processes from power failure continues to drive growth in the 
power protection market.
We have evidence of improving trends in our key markets, driven by this
requirement to ensure power quality. Our customers’ need for power
protection is supported by data from our LIFE.net remote monitoring
system. In the last six months of the year, 1,864 UPS systems monitored by
LIFE.net in the UK recorded over 50,000 mains failures capable of affecting
critical equipment and IT systems, and causing loss of data. Management
of this risk is a necessity for customers whose business transactions and 
processes demand constant, high quality power, and we are convinced that 
this will continue to drive long term growth in the market.
Chloride has consistently grown ahead of the market, particularly in Europe,
in a highly competitive environment.We believe that our approach of offering
total solutions and lifetime support is a sustainable advantage which differentiates
Chloride from the competition and underpins this outperformance.
Another strength of Chloride’s approach is its ability to move quickly 
to respond to new opportunities. Our success in the retail, energy,
petrochemical and medical sectors this year reflects this flexibility.
Flexibility is also a key strength in serving our customers. In January 2005,
our innovative approach to supply chain management, driven by our goal 
of constant improvement in customer service, led to Chloride receiving 
a Cap Gemini European Supply Chain Excellence Award, coming second
only to Dell in the High Tech and Electronics category.
KEITH
HODGKINSON
CHLORIDE SALES GROWTH 
AGAINST MARKET GROWTH
 CHLORIDE  MARKET*
2004
+4.2%
2005
+8%
+7%
+4.6%
*Source: Frost & Sullivan World UPS Market Report 2004 ANNUAL REPORT 2005 7
Strategic developments
During the year the Board undertook a review of the business in order 
to refine the strategy for future growth, which resulted in a series of 
agreed actions to:
l Build market share in core sectors of the power protection
market, where our T otal Solutions approach has significant
competitive advantage
Harath, UK Following the year end, to enhance our leading position 
in the European power protection solutions market, we acquired Harath
Engineering Services Limited. Harath is a service business specialising in 
the maintenance of standby generators, UPS systems and other critical
power protection equipment.This acquisition significantly enhances our
service offering by combining the world class capabilities of Chloride 
and Harath, and consolidates our position as the UK’s No 1 specialist
provider of critical power protection solutions and services. Benefits include
opportunities to extend Chloride’s UK coverage through Harath’s branch
network, drive sales of Chloride UPS systems through Harath’s customer
base and strengthen relationships with shared blue chip customers.
The response to date from customers, including some of the leading UK
facilities management businesses, to Chloride’s broader spread of products
and services has been very positive.
With its enhanced range of critical power protection services, Chloride 
is now even better placed to extend its service offering to support 
a broader installed base. During the course of the coming year, we intend 
to combine Harath with our existing UK service business to present 
a cohesive and comprehensive range of services to our customers.
Synergistic cost savings are also likely, which at this stage are too 
early to quantify.
DB Power It was also decided to review opportunities in India, where
many of Chloride’s international customers are already present. Since the
year end, Chloride has entered into an agreement to form a strategic
alliance with DB Power, one of India’s leading independent power
protection companies. DB Power has an excellent reputation as a high
quality supplier to the Indian market, and in 2004 received awards from 
the leading international market research company, Frost & Sullivan, for 
the “most preferred Indian brand of UPS” and “product line leadership 
in the manufacturing segment”. It has an extensive sales and service 
network, which will provide support for international customers introduced
by Chloride.
This alliance, under which Chloride will take a minority stake in DB Power,
will form a platform for growth in this fast developing market for power
protection solutions.
Left: Darren Gibbons, Managing
Director, Harath 8 ANNUAL REPORT 2005
POWER PROTECTION
CHIEF EXECUTIVE’S REVIEW CONTINUED
l Improve operating efficiencies in the core power 
protection business
The further outsourcing of manufacturing created opportunities to realise
additional cost savings, mainly by closing excess manufacturing capacity 
in Germany.This closure is currently underway and is progressing to 
budget and timetable.
l Sharpen focus by exiting non-core business sectors 
The strategic review concluded that the Telecom Power Supply (“TPS”)
market was becoming increasingly commoditised, with minimal opportunity
to grow service revenues, and that Chloride lacked critical mass to
compete against the international high volume suppliers.Therefore the
Board decided to exit from the TPS business segment in China and France.
Following closure of TPS in China, which made an operating loss before
goodwill amortisation of £0.7 million in the year ended 31 March 2005,
Chloride will retain a presence in China to address the power protection
market, which remains an opportunity for long term growth.
We are in the process of finding a buyer for TPS France, which recorded
sales of £11.3 million and an operating loss before goodwill amortisation 
of £0.2 million in the year. In the meantime, we have positioned the
business for a return to profitability.
Performance and sales
Market research carried out in 2004 predicted that the worldwide market
for uninterruptible power supply systems would grow at c4.6%* for the
year under review. Chloride continued to outperform the market, achieving
total sales growth of 8% (11% in constant currency). Operating profit,
before exceptional items and goodwill amortisation and excluding losses 
in TPS, France and China of £0.9 million, was up 27% to £11.7 million.We
have made good progress in gaining market share in our core European
market, where our success in large systems indicates renewed investment
by call centre and data centre operators, as they install the next generation
server hardware, and respond to increased awareness of the threat to
business continuity. Good growth was also achieved in the oil, gas, energy
and medical sectors.
Chloride performed particularly well in Europe, with sales up 10% (13% 
in constant currency). Sales made good progress in nearly all territories,
but in China we suffered from lower sales in TPS, and in Iraq the slowdown
in the rebuilding programme meant that there was no repeat of the large
hospital contract enjoyed in the previous year. Sales were up 36% in the
Middle East (excluding Iraq) and up 30% in Latin America, although this 
is a small market for us at the present time. Sales in the USA were up 
12% in US dollars, but this was largely eliminated on translation into sterling.
* Source: Frost & Sullivan World UPS Market Report 2004 ANNUAL REPORT 2005 9
Product sales were up by 6% (10% in constant currency), with success in 
a wide range of applications.These included a large data centre in Germany,
central to Vodafone’s GSM mobile network, the pan European Eurofighter
flight simulator project, where Chloride’s European capabilities were an
important factor in winning the contract, the Sonatrach oil pipeline in
Algeria and a large power protection project for the Hudson’s Bay
Company, Canada’s largest department store chain.
Service sales again achieved strong growth – up 11% (13% in constant
currency), reflecting the importance of after sales service support to 
the whole range of critical power protection applications that we serve.
Our services and solutions are key differentiators in developing long term
partnerships with our customers worldwide. Our performance in the 
year reflects the continuing progress in this vitally important aspect 
of our business.
The operating profit margin before exceptional items and goodwill
amortisation improved 1.1 points to 6.6%.This was held back by the 
losses in TPS. In the continuing power protection businesses, good progress
was made in reducing product costs from new designs and increased
outsourcing, and administrative overheads were tightly controlled without
constraining our ability to grow the business, resulting in an improvement 
in the operating margin of 1.2 points to 7.7%.
Far left: Emiliano Cevenini, Product Manager, UPS Systems
Giancarlo Battini, General Manager, Sales and Service Italy
Franco Costa,Vice President Marketing, UPS Systems
Paolo Mistroni, LIFE Product Manager
Left: T ed Antonitis, President, Power Protection 
North America
SALES GROWTH IN EUROPE
2005 2004 2003
+4%
+10%
UP 10%
ADJUSTED OPERATING 
PROFIT MARGIN GROWTH
2005 2004 2003
5.5%
4.9%
6.6%
UP 1 . 1 POINTS 10 ANNUAL REPORT 2005
POWER PROTECTION
CHIEF EXECUTIVE’S REVIEW CONTINUED
Building on our success
Solutions expertise Chloride has consistently outperformed many of 
its competitors, demonstrating its ability to compete against far larger
organisations.We believe a key reason for this is our high quality technical
solutions and service support, and this is why we continue to invest 
in expanding our resources in power protection solutions for critical
applications. In Europe, we now have over 200 technical and service
engineers on the ground in seven countries, demonstrating our
commitment to meeting customers’ needs.
An important aspect of our Total Solutions approach is LIFE.net, our
industry leading remote monitoring and diagnostic system, which was
updated last year with a web enabled version. LIFE connections have once
again risen by 10%, as an increasing number of our customers recognise 
the vital importance of the proactive service and fast response times that
this system offers.
During the second half of the year we introduced Aposyc, an important
software tool which enables us to improve our response and service to
customers, especially where there are complex system design requirements.
A new Customer Relationship Management system aimed at improving 
the interface with customers was introduced in the UK, and will be
progressively introduced in other parts of the Group. In Australia we 
are piloting a new Service Management system, designed to improve
administration and response to customers in our service businesses.
People We pride ourselves on having some of the most talented and
experienced people in the industry. Our senior managers have many years’
successful experience in power protection, and we invest in training our
sales and service engineers to meet the best technical standards.
In Italy, Emiliano Cevenini, who has been with Chloride since graduating
from the University of Bologna, has been recognised by his appointment 
as President of the SC22 UPS sub committee of the EC-recognised Electro
Technical Commission.This body is responsible for developing safety and
technical standards for UPS systems in Europe and globally.This prestigious
appointment is a great credit to Emiliano and confirms that Chloride’s
greatest asset is its committed and highly-trained workforce.
Senior management 
Far left: Ian Bray, Senior Vice President, Finance and Systems
David Renton, President, Sales and Service 
Susan Williams, Group Secretary and Legal Adviser 
Lamberto T assara, President, UPS Systems
Left: Frank Audrain, President, Industrial Systems 
Gavin Leathem, Group Personnel Director
Paul Unsworth, Group Business Development Director 
Martin Strutt,Vice President, Operations
LIFE CONNECTIONS
2005 2004 2003
5,681
4,883
6,256
UP 10% ANNUAL REPORT 2005 11
Product development Our product development programme keeps
Chloride at the forefront of power protection technology.We have
replaced existing products with a new range of single phase UPS products
from 6 –10 Kva, and a new range of three phase products from 10 – 500
Kva, all with highly competitive specifications and lower cost of manufacture.
In the USA we introduced a new series of power conditioners to meet 
the exacting safety standards applicable to the medical sector, which is an
important growth market; a range of power conditioned uninterruptible
power supplies for the protection of retail electronic point-of-sale systems;
and an extension to the range of telecom line protectors for HDSL
applications. Our connectivity offering was also updated to support a wider
span of connectivity options demanded by our customers worldwide.
We also completed our Apodys range of modular products based on vector
digital control technology.These products have proved successful in the oil,
gas and energy sectors.
Information technology The Company has progressed its strategy to
upgrade the strength and security of its operating systems to best 
practice levels and to improve the speed and quality of customer, supplier
and internal communications, by investing a further £1.3 million in IT
infrastructure. Enhancements to the security aspects of LIFE.net have 
also been implemented.
A further £2.0 million was spent on updating and standardising business
software and processes, mainly in Italy, Germany, and France.The objective
of these upgrades has been to enhance operational efficiency.This investment
has played a vital role in enabling the smooth transfer of capability to Italy
and third parties, following closure of our manufacturing capacity in
Germany. Further investment in business software will be made in other
sales and service companies in the coming year.
Outlook
This has been an important year for Chloride.We have achieved strong
growth by building on our recognised strengths and refining our strategy 
to sharpen focus to increase competitive advantage. As a result, we enter
the new year with an order book ahead of last year, a more efficient cost
base and strong balance sheet.We are confident that these benefits,
together with our sharpened strategic focus on core markets where we
have consistently demonstrated competitive advantage, will strengthen our
position in these growing markets in the coming year.We will continue 
to review opportunities for further acquisitions which support our strategy
and complement our capabilities.
KEITH HODGKINSON
Far left: Roberto Sola, IT Manager, UPS Systems Italy
Left: Mike O’Keeffe, UK Service Director 12 ANNUAL REPORT 2005
LAURENT SERVANT  PROJECT MANAGER, FRANCE
The Sonatrach project was managed by Laurent Servant,
who began his career with Chloride and was promoted 
to his current role of project manager four years ago.
Part of his role was to design a tailored training programme 
for Sonatrach technicians.
SUPPLIER OF CHOICE FOR POWER PROTECTION
SOLUTIONS IN OIL AND GAS
Chloride performs
strongly in the
petrochemical sector,
where growing demand 
for oil and gas is 
driving expansion 
POWER PROTECTION ANNUAL REPORT 2005 13
SONATRACH, ALGERIA
The state-owned company, Sonatrach, operates an
extensive network of pipelines to transport oil and 
gas from production fields and refineries in Algeria,
and also as a major export conduit.
Sonatrach selected a range of Apodys equipment and
batteries to protect the compression stations of the
pipeline bringing oil from the Sahara Desert to the 
port of Skikeda. 14 ANNUAL REPORT 2005
ROBERTO POYATO TECHNICAL SUPPORT MANAGER, SPAIN
Roberto Poyato graduated from university with a degree in physics and
electronics and first started with Chloride in 1996, since when he has
worked in exports and technical support, with a particular interest in the
consultant training programme. He found the collaboration with Chloride
UK and other Chloride operations particularly helpful in supporting this
important international project.
SUPPLIER OF CHOICE FOR POWER PROTECTION
SOLUTIONS IN GOVERNMENT PROJECTS
POWER PROTECTION
Chloride’s Total Solution
approach gives competitive
advantage in government
projects, including defence
and healthcare, where
reliability and speed 
of service are essential. ANNUAL REPORT 2005 15
EUROFIGHTER PILOT TRAINING
Flight simulators are an important element 
in training Eurofighter pilots to handle difficult 
flying conditions. Chloride Spain has won the 
power protection contract for Eurofighter flight
simulators in military airports in Spain, Germany,
Italy and the UK. Chloride’s pan European 
capabilities were an important factor in winning 
the contract. 16 ANNUAL REPORT 2005
SUPPLIER OF CHOICE FOR POWER PROTECTION
SOLUTIONS IN TELECOMS
REINHARD SZCZESNEY  SERVICE ENGINEER, GERMANY
Reinhard Szczesney is Team Leader at Chloride’s service centre 
in Dusseldorf. Reinhard has many years’ experience in power 
electronics with Chloride, and previously with Siemens, and played 
a key role in implementing the project to tight deadlines without 
disrupting the Vodafone network.
POWER PROTECTION
Chloride’s success in
sales of large systems
indicates renewed
investment by call
centre and data centre
operators worldwide. ANNUAL REPORT 2005 17
VODAFONE, GERMANY
Vodafone’s information systems plant in Ratingen, Germany
is the largest of its kind in Europe, supporting Vodafone’s
GSM mobile network and controlling worldwide data traffic.
Vodafone chose Chloride to provide power protection 
for this vital facility, where continuous availability of the
Vodafone network is paramount. Chloride’s total solution
includes remote monitoring through LIFE.net to secure 
the highest reliability for this complex application. 18 ANNUAL REPORT 2005
POWER PROTECTION
FINANCIAL REVIEW
l Sales growth brings immediate benefit due to the impact 
of operational gearing as overheads are carefully controlled
l High quality of earnings as service revenues and cash returns 
remain strong
l Focus on UPS means losses eliminated in Telecom Systems and cost
base reduced
l Adjusted EPS* 29% up on prior year. Basic EPS of 0.70p (2004: 1.26p)
l Adjusted earnings* grown but shareholders’ funds reduced by
reorganisation cost and dividend increase
l Undrawn committed facilities of £19 million at 31 March 2005
together with £20 million committed since the balance sheet date 
are available for further investment opportunities
* Earnings before goodwill amortisation and exeptional items
The Company has continued to grow organically and is now actively seeking
to accelerate this growth through a focus on UPS products and services
and by completing further acquisitions.
Shareholder value has risen ahead of the Small Cap Index over the last 
two years.The Company continues to believe it is well positioned to grow
total shareholder return (TSR) further in 2005-06 and beyond.The strong
fundamental drivers for growth – degrading power supplies and increasingly
critical application needs – remain strong. In 2004-05 the share price has
risen from 50p to c. 60p – a rise of over 20%.The Board’s confidence is
again reflected in the dividend, which the Board recommends rises 12% 
to 1.85p for the full year (a 3.2% yield at 31 March 2005).
Cash flow/EBITDA
Management remains committed to turning profits into cash to enable
reinvestment in the businesses. Cash flow from continuing operating
activities was again strong, a result of good credit control, strong growth 
in service revenues, and streamlining the supply chain where possible.
Capital expenditure and investments
Tangible fixed asset capital expenditure in the year was £6.2 million.
The upgrade of the Industrial Systems site in Lyon was finished with 
£1.2 million (out of a total of £1.5 million) being spent on improvements
to testing and customer facilities.
During the year the Group has progressed its strategy to upgrade the
strength and security of its operating systems to best practice levels 
and to improve the speed and quality of customer, supplier and internal
communications, by investing a further £1.3 million in IT infrastructure.
Enhancements to the security aspects of LIFE.net have also been implemented.
A further £2.0 million was spent on updating and standardising business
software and processes mainly in Italy, Germany and France.The objective
NEIL
WARNER TOTAL SHAREHOLDER RETURN
 CHLORIDE FTSE SMALL CAP 
Sep May
2003
Jul Nov Jan Mar May
2004
Jul Sep Nov Jan Mar
2005
ANNUAL REPORT 2005 19
of these upgrades has been to enhance operational efficiency.This
investment played a vital role in enabling the smooth transfer of capability
to Italy and third parties, following closure of our manufacturing capacity 
in Germany. Further investment in business software will be made in other
sales and service companies in the coming year.
Acquisition
On 15 April 2005, Chloride acquired 100% of the shares of Harath
Engineering Services Ltd for a cash consideration of £9.9 million.
The profit before tax of Harath for the year ended 31 August 2004 
was £0.77 million, on sales of £10 million. Net assets were £1.6 million.
Further benefits are expected to accrue from combining the 
Chloride UK service business and Harath.
Shareholders’ funds
Despite the growth in adjusted earnings, the sizeable dividend and the impact
of restructuring costs have again led to a reduction in shareholders’ funds.
Accounting polices and presentation
There have been no new accounting standards adopted during the year.
The thrust remains towards the introduction of International Accounting
Standards and International Financial Reporting Standards (IFRS), as issued
by the International Accounting Standards Board and endorsed by the
European Union, which we will adopt for the year ending 31 March 2006.
Consequently the transition date to IFRS will be 31 March 2004.We are
well advanced in considering the impact that the adoption of IFRS will have
on the financial statements and had already identified the key areas of
impact as employee share and option incentive schemes, pensions, goodwill
impairment testing, taxation and foreign exchange and interest rate hedging.
We have elected to apply the exemption of retrospective application in
relation to accounting for Financial Instruments and therefore this will have
no impact on the 2005 results. In the preparation of our 2006 financial
statements we will implement these requirements in full.
The overall impact is currently estimated to reduce reported pre-tax
adjusted earnings, before exceptional items and goodwill amortisation,
by between 5% and 7%.We shall communicate the results for 2005
restated for IFRS, with a reconciliation between our financial statements
under UK GAAP and IFRS, during the coming months.
Risk management and compliance with guidelines 
for corporate governance
The July 2003 FRC Combined Code seeks to align business objectives with
risk management such that the business can ensure that there is an ongoing
embedded process for managing and reporting on key risks. Directors are
responsible for maintaining a sound system of internal control that provides
reasonable but not absolute assurance that a company will not be hindered
in achieving its business objectives by circumstances that are not foreseen.
Ongoing reporting against these identified risks enables the Board to make
the statement on pages 29 and 30.The Company’s risk control procedures
have enabled the business to remain on a sound footing.
SHAREHOLDERS’ FUNDS
58.4
2005 2004 2003 2002
55.2
50.5
48.1
£MILLION
EBITDA/CASH FLOW
 EBITDA £MILLION CASH FLOW £MILLION
2005 2004 2003 2002
8.2
10.1
12.1
14.0
2.7
11.9
10.3
10.9 FINANCIAL REVIEW CONTINUED
20 ANNUAL REPORT 2005
POWER PROTECTION
Treasury and objectives and policies
Management of financial risk The major financial risks faced by the Group
are liquidity risk, currency risk and interest rate risk.The Board of Chloride
Group PLC regularly reviews these risks and approves written policies
covering the use of financial instruments to manage risk and overall 
risk limits.
The Company continues to operate a central treasury management service
in accordance with the policies and procedures approved by the Board.
This function operates to reduce risk and cost and no transactions are
undertaken on a speculative basis.The trading of financial instruments
within the Company is confined to central treasury.
Core facilities and net liquid funds The Company’s management policy
regarding liquidity risk is to ensure that it always has sufficient committed
facilities available to meet its foreseeable needs. At 31 March 2005 the
Company had committed term facilities of £45 million of which £19 million
remain undrawn.All but £15 million of these facilities are on loan agreements
that expire in a period of greater than one year. Since 31 March, a further
£20 million has been committed and the facility due for renewal within the
year is expected to be renewed on similar terms and conditions.
At 31 March 2005, the Company had net debt of £16.3 million representing
on demand borrowings of £5.3 million most of which relates to the
hedging of our overseas operations, finance lease obligations of £0.4 million
and committed borrowings of £27.6 million less short-term deposits 
of £17.2 million.
In its principal overseas companies the Company has on-demand overdraft
and bill discounting facilities to provide local funding for operating and
working capital requirements. Drawings under these facilities provide a
partial hedge against assets held in local currencies.The funding structures
of our UK and overseas operations are regularly reviewed with the
objective of achieving the optimal post-tax financing cost.
The Company also has adequate foreign exchange contract and engagement
facilities for its day-to-day commercial and exposure matching needs.
Of the £5.3 million of on-demand borrowings at 31 March 2005, £4.9 million
is guaranteed by Chloride Group PLC.The committed term facilities 
are guaranteed by Chloride Group PLC and contain common financial
covenants regarding interest cover, a ceiling on net debt and minimum
consolidated shareholders’ funds. It is Group policy to manage the
consolidated balance sheet so as to operate at all times well within
covenanted restrictions.
Currency risk The Company’s management policy re foreign currency
exposure requires subsidiaries to hedge transactional currency exposures
against the currency in which their results are measured. Net exchange
exposures continue to be hedged at transactional level using the forward
foreign exchange market.
Apart from optimising expenses and interest on local borrowings, the
Group does not believe, as an internationally-based business, that it is
appropriate to hedge other aspects of its profit and loss account translation ANNUAL REPORT 2005 21
exposure.There was a negative exchange impact of £0.3 million on
operating profit during the year.
Net assets are held in a number of currencies and translated at year-end
rates.This is explained more fully in the accounting policy.The resulting
exposures are managed where practicable by matching local currency
assets with local currency borrowings.
Non-sterling currencies of primary importance to the Group moved as
follows in the year: Impact on
operating
2005 2004 % 2005 2004 % profit
year end year end change average average change £m
US$ 1.87 1.81 +3 1.85 1.69 +9
–
0.2
Euro 1.44 1.50
–
4 1.47 1.44 +2
–
0.2
China RMB 15.48 14.99 +3 15.27 13.73 +11 +0.1
T otal
–
0.3
Interest rate risk The Company’s policy is to review the ratio of fixed rate
debt to total outstanding debt on an ongoing basis to minimise the risk 
of major interest rate fluctuations over the medium to long term, and to
hedge such exposure through the use of interest rate swaps.
At 31 March 2005, the Company had a ratio of fixed rate debt to total
outstanding debt of approximately 4%. As of 31 March 2005 the Company
had fixed £1.2 million of euro denominated borrowings at an average 
fixed rate of 2.3%.The remainder of borrowings are at floating rate and
predominantly EURIBOR based.The weighted average remaining period 
as at 31 March 2005 for which the above debt was fixed was 99 months.
Credit risk The Company controls credit risk by entering into financial
instruments only with highly credit rated authorised counterparties.
Counterparty positions are monitored on a regular basis to ensure 
that internally set limits are not broken.
Use and fair value of financial instruments At 31 March 2005, outstanding
forward contracts existed with a gross book value totalling £18.9 million in
respect of its actual transaction exposures.There is no significant difference
between the book and fair value of these forward foreign exchange contracts
at 31 March 2005. In addition to these forward contracts the Group is
exposed to foreign exchange movements on its overseas borrowings.
At 31 March 2005 there were £26.7 million of foreign currency borrowings
(providing a partial hedge against assets held in local currencies).
At 31 March 2005, there were no outstanding interest swaps.There was 
no significant difference between the book and fair market values of these
interest swaps at 31 March 2005.
Tax rate As businesses improve in critical mass and profitability, the Group
is able to utilise previously inaccessible tax losses.The tax charge in 2005
represents an effective rate of 27.0% (2004: 30%).
NEIL WARNER
CORE FACILITIES AND NET DEBT
 CORE FACILITIES AVAILABLE £MILLION             NETDEBT £MILLION
2005 2004 2003 2002 2001
4.9
-8.9
-14.4
-16.3
45.0 45.0
23.0
36.0
-8.2
23.0 22 ANNUAL REPORT 2005
POWER PROTECTION
BOARD OF DIRECTORS
Norman N Broadhurst FCA FCT Non-Executive Chairman
Chairman of the Remuneration and Nomination Committees
Member of the Audit Committee
A non-executive director since March 1998, and Chairman since August
2001. He is also Chairman of Freightliner Limited, a non-executive and
senior independent director of Old Mutual plc, and a non-executive
director of Cattles plc, United Utilities Plc, and Tomkins plc. He was Finance
Director of Railtrack plc from 1994 until his retirement in 2000. Age 63.
Keith H Hodgkinson FCMA Chief Executive
Member of the Nomination Committee
Joined the Board in December 1991 and was confirmed as Chief Executive
in March 1992. His previous career was with GEC plc where he held 
a number of senior appointments. He is a non-executive director of 
De La Rue plc. Age 61.
Angus S J Fraser MA MBA Non-Executive Director
Senior Independent Director
Chairman of the Audit Committee
Member of the Remuneration and Nomination Committees
Joined the Company in 1976 and became an executive director in 1984.
A non-executive director since 1988, he is also Chairman of Alpha Plus
Holdings Limited and Alpha Plus Education Limited and a non-executive
director of Shepherd Building Group Limited and the Caldecott Foundation
Limited. Age 60.
Robin S Southwell BA OBE FRAeS Non-Executive Director
Member of the Audit, Remuneration and Nomination Committees
A non-executive director since January 2002, he is a senior executive 
of EADS – European Aeronautic Defence and Space Company, Chief
Executive of Airtanker Limited and a director of Euromanx Limited 
and Club 328 Limited. He was Chief Executive of W S Atkins PLC 
until October 2002 and his previous career included a number 
of senior appointments with BAE Systems plc. Age 45.
Neil W Warner BA FCA MCT Finance Director
Joined Chloride and was appointed to the Board as Finance Director in
1997. He was with Ocean Group PLC (now Exel plc) for six years from
1990, following appointments in his earlier career with BICC Group PLC
(now Balfour Beatty plc), ALCOA and PricewaterhouseCoopers. He is 
a non-executive director of Dechra Pharmaceuticals PLC. Age 52.
John A C Wheeler BA Non-Executive Director
Member of the Audit, Remuneration and Nomination Committees
A non-executive director since May 1999. He is a director of S130 Limited,
a maritime leisure company. He was formerly Managing Director, Fujitsu
Services Commercial Business, and Chief Executive of neosnetworks.
His previous career included senior appointments with British Telecom.
Age 54.
NORMAN
BROADHURST
KEITH
HODGKINSON
ANGUS
FRASER
ROBIN
SOUTHWELL
NEIL
WARNER
JOHN
WHEELER
  ANNUAL REPORT 2005 23
DIRECTORS’ REPORT
Principal activities
The principal activities during the year under review were the manufacture
and sale of power protection solutions.
Acquisition
After the year end, the Company acquired, on 15 April 2005, the entire
issued share capital of Harath Engineering Services Limited, a UK critical
power protection services company, for a consideration of £9.9 million.
Results
The results for the year and the financial position at 31 March 2005 are
shown in the consolidated profit and loss account on page 42 and the
balance sheets on page 43.The Chief Executive’s review, starting on 
page 6, comments on operating performance and the future development
of the business, whilst the financial review, on pages 18 to 21, covers the
consolidated results, financial position and policies.
Profit on ordinary activities after taxation for the financial year 
was £1.3 million (2004: £2.6 million). After dividends of £4.4 million 
(2004: £3.9 million) the retained loss for the year was £2.7 million 
(2004: £0.9 million).
Directors
Biographical details of the directors are set out on page 22.
Mr Warner retires by rotation at the forthcoming Annual General Meeting
and, being eligible, offers himself for re-election. Mr Warner has a contract
of employment requiring him to give six months’ notice and entitling him 
to receive 12 months’ notice. Mr Broadhurst and Mr Fraser also offer
themselves for re-election at the forthcoming Annual General Meeting.
Mr Broadhurst and Mr Fraser do not have service contracts with the
Company.
Directors’ interests in shares
The interests of the directors in the ordinary shares of the Company were
as shown in the remuneration report on page 39.
Directors’ interests in contracts
No director had, during the year, a disclosable material interest in any
contract or arrangement with the Company or any of its subsidiaries.
Policy on payment of creditors
Appropriate terms and conditions are agreed for transactions with
suppliers and payment is generally made on these terms subject to
compliance by suppliers.
The aggregate amount owed by the Company to trade creditors due
within one year at the financial year end represented approximately 40 days
(2004: 30 days) of the aggregate amount invoiced by suppliers during the
year.The respective figure on a consolidated basis was approximately 80 days
(2004: 69 days), reflecting different payment practices in the various
countries in which Chloride operates.
Charitable and political donations
During the year donations of £9,395 (2004: £2,870) were made to
charitable organisations which are associated with employees or closely
linked with the communities in which the Company operates.This included
a donation of £3,500 towards Tsunami relief, made through Chloride
Thailand. No political donations were made.
Interests in voting shares
At 20 May 2005, the Company had been notified of the following interests
of 3% or more in the Company’s ordinary shares:
Number of % of issued
Name of holder shares shares
Prudential plc 25,495,305 10.25
Standard Life 15,233,473 6.12
AEGON UK plc 10,083,957 4.05
Legal & General Investment Management plc 9,841,710 3.96
Royal Bank of Scotland plc 7,477,642 3.01 24 ANNUAL REPORT 2005
POWER PROTECTION
DIRECTORS’ REPORT CONTINUED
Employee Benefit Trust 
The Chloride Group Employee Benefit Trust (the Trust) was established to
acquire ordinary shares in the Company to satisfy rights to shares arising
on the exercise of executive share options.
During the year, the Trust made the following transfers out of the
Company’s ordinary shares:
Number of 
shares 
Balance at 1 April 2004 11,192,920 
Transferred out (254,877)
Balance at 31 March 2005 10,938,043 
No shares were purchased by the Trust during the year.
The Trust is funded by interest-free loans from the Company.The cost of
the shares held by the Trust was £10.4 million and the market value was
£6.7 million at 31 March 2005. Mourant & Co Trustees Limited, as trustee
of the Trust, has waived all past and future dividends on ordinary shares
held by the Trust except to the extent of 0.0001% of each dividend 
payable per share.
Research and development
Investment in research and development is considered to be key to further
improvement of the Company’s competitive position. Market-driven
programmes to improve existing products and to develop new products
and applications receive high priority. Development engineers work closely
with applications and software engineers and sales and marketing staff in
the operations to ensure that development is focused on the Company’s
key markets.The Company has research and development departments
specialising in the development of power protection solutions at Chicago,
USA (power conditioners and software); Bologna, Italy and Erlangen,
Germany (AC power protection products); Lyon, France (industrial
systems) and Dol de Bretagne, France (DC power protection products).
Corporate and social responsibility
Business policies Chloride has adopted a statement of business policies
and responsibilities which recognises the importance of social, ethical and
environmental responsibility in all aspects of its operations.The statement
confirms Chloride’s global commitment to ethical practices, and to compliance
with health and safety and environmental standards that match or exceed
the standards imposed by law in the countries in which it operates.
The Board recognises the need to review and manage risks to the short-
and long-term value of the business arising from social, ethical and
environmental matters. Compliance with the statement of business policies
and responsibilities is therefore reviewed annually as part of the risk
identification process outlined in the corporate governance report.
The Chloride Board takes full responsibility for compliance with health and
safety and environmental standards and the Finance Director is responsible
for reporting on these issues at Board level. A committee of senior
managers, including the Finance Director, Group Risk Manager, Director for
Personnel and Company Secretary, co-ordinates the monitoring and audit
of health and safety and environmental practices throughout the Company.
In each operating company, local management is tasked with ensuring
compliance with Group policy and compliance with local legislation 
and regulation, with the aid of appropriately qualified employees and/or
external consultants.
External risk control consultants are also employed on a Group basis to
provide an independent audit of compliance with environmental and health
and safety standards at the Company’s principal sites on an ongoing basis.
The reports of the risk control consultants are reviewed by local and
Group management and appropriate action is taken in accordance with
their recommendations.
Environmental policy Chloride acknowledges the importance of good
environmental practice to minimise the impact of its activities on the
environment. It is the Company's policy to comply with standards that ANNUAL REPORT 2005 25
match or exceed environmental legislation in all countries in which it
operates and to adopt responsible environmental practices.To achieve
these objectives on a consistent basis, the Company has a policy of
achieving and maintaining compliance with the ISO 14001 environmental
management standard in all its principal operational sites.
The Company has four principal sites where production activities are
carried out: Bologna, Italy; Dol de Bretagne and Lyon, France and Chicago,
USA. Such activities mainly involve the assembly and testing of electronic
products. All of these sites have achieved ISO 14001 certification. Sales and
Service sites at Madrid, Spain, Istanbul,Turkey, Southampton and Bedford,
UK, Erlangen, Germany and Sydney, Australia have also achieved ISO 14001
certification. As a result, 95% of the Company’s turnover is generated by
sites which are compliant with ISO 14001.
Initiatives which benefit the environment and result in cost savings to the
Company are encouraged.These include waste recycling and reduction 
of energy and materials consumption. As an international Group with
operations in 14 countries, our requirement for air travel has been
considerably reduced by the use of videoconferencing facilities at 12 sites.
Health and safety The Company recognises the primary importance 
of ensuring the health and safety of its employees. Its policy is to manage 
its activities so that employees are not exposed to unnecessary or
unacceptable risks to their health and safety, and to comply with the
relevant legal and regulatory standards in each of the territories in which it
operates. In each of the principal production centres, there is a designated
senior manager responsible for health and safety. Policies and procedures
are documented and in each such location there is either a Works Council
or Health and Safety Committee, which meets regularly to consider health
and safety issues. Health and safety training is provided where necessary,
particularly in relation to battery handling and working with electricity.
During the year, 697 working days (approximately 0.2% of the total) were lost
due to work-related accidents.There were no claims against the Company’s
Employer’s Liability policy arising out of the current Group businesses.
Employees Chloride’s policy is to provide equal recruitment and other
opportunities for all employees, regardless of sex, religion, race or disability.
We endeavour to provide all possible help to retain employees who have
become disabled while working for the Group. It is the practice to encourage
lines of employee communications at local level through appropriate means,
such as works councils, briefing groups, workshops and newsletters.
The Company is committed to developing and motivating its people and,
in the UK, participates in the Investor in People scheme.There is also 
a programme to help employees acquire professional and technical
qualifications that are relevant to their jobs.
The Company has an ongoing employee training programme – “Achieving
Service Excellence” – to promote the customer care ethos throughout the
organisation, as well as training programmes to support and promote the
Company’s solutions offerings.
Outstanding achievement among the sales staff is recognised by the award
of prizes at an annual sales conference.
Market value of land and buildings
The Company’s interests in freehold land and buildings were professionally
valued as at 31 March 2004 on an open market basis. Having regard to 
this valuation, the directors are of the opinion that the values at which the
Company’s interest in land and buildings are included in the balance sheet
are fairly stated.
The directors are of the opinion that the Company’s interests in short-
term leaseholds are fairly stated in the balance sheet.
Articles of Association 
The Company’s Articles of Association were last amended in 2001.
The Board now considers it desirable to propose amendments to:
l update the limit on non-executive directors’ fees; and 26 ANNUAL REPORT 2005
POWER PROTECTION
DIRECTORS’ REPORT CONTINUED
l reflect a recent change in the law relating to the indemnification 
of directors and other officers by the Company.
The proposed amendments to the Articles are summarised below:
Resolution 6 in the accompanying notice of meeting is an ordinary
resolution to increase the maximum figure payable as a fee to a non-
executive director for his services, to £40,000 per annum.
Resolution 7 in the accompanying notice of meeting is a special resolution to
adopt new Articles of Association incorporating the following amendments:
Article 84(3).This article gives the Company power to purchase and
maintain insurance for the benefit of, amongst others, its auditors. In order
to comply with current best practice, the proposed amendments to Article
84(3) have the effect of removing the express power of the Company to
maintain insurance for the benefit of its auditors.
Article 141.This article currently permits the Company to indemnify 
its directors, the secretary, other officers and its auditors against liability
incurred in defending civil or criminal proceedings in which judgment 
is given in their favour or they are acquitted, and against the costs of
successfully applying for relief under the Companies Act 1985 (the Act).
The scope of this indemnity is consistent with what was permitted by
law when the Articles of Association of the Company were adopted.
New legislation relating to the indemnification of directors and other
officers came into effect on 6 April 2005. Under this legislation, directors
and other officers can now be indemnified in respect of liabilities incurred
by them in proceedings brought against them by third parties.They can 
also be indemnified in certain circumstances in respect of the costs of civil
and criminal proceedings as and when such costs are incurred. However,
the indemnity cannot cover liability incurred by a director to the Company
or any associated company; fines imposed in criminal proceedings and
penalties imposed by regulatory authorities; costs incurred in civil
proceedings brought by the Company or an associated company where
judgement is given against him, or costs incurred in proceedings for relief
where relief is refused by the court.
The proposed new Article 141 excludes the auditors of the Company
from indemnification and continues to require the Company to indemnify
its officers to the extent permitted under the Act prior to 6 April.
In addition, it empowers the Company to indemnify its officers to the
extent permitted under the new legislative provisions summarised above.
The proposed new article also requires the Company to indemnify 
its officers where proceedings are disposed of without a formal finding
being made against the relevant officer.
Purchase of own shares
No shares were purchased by the Company during the period under
review pursuant to the proposal approved by shareholders at the 2004
Annual General Meeting for the Company generally to be authorised to
purchase its own ordinary shares. Nevertheless, the Board believes it is
appropriate to seek renewal at the forthcoming Annual General Meeting 
of such an authority for a further year, although it has no present intention
of utilising such authority. Accordingly a resolution to this effect is included
as item 8 in the accompanying notice of meeting. If the resolution is passed,
the Board undertakes that such authority will be exercised only if it results
in an increase in earnings per share and is in the best interests of the
shareholders generally.
Auditors
A resolution to reappoint the auditors, Deloitte & Touche LLP , will be
proposed at the Annual General Meeting.
By order of the Board
SUSAN WILLIAMS
Secretary
26 May 2005 ANNUAL REPORT 2005 27
CORPORATE GOVERNANCE
Compliance with the Combined Code
The Board recognises its accountability to shareholders and is committed 
to maintaining high standards of corporate governance.The Board considers
that, throughout the year under review, the Company has complied with
the Code provisions set out in Section 1 of the July 2003 FRC Combined
Code on Corporate Governance (the Combined Code), except in relation
to membership of Board Committees, the reasons for which are set out 
in the relevant paragraph below.
Application of the principles of the Combined Code 
This report explains how the Company has applied the principles of the
Combined Code to its activities. Section 1 of the Combined Code sets 
out the main and supporting principles of good governance for companies,
which are split into the following topics: directors, remuneration, accountability
and audit, and relations with shareholders.
Directors
Board The Company currently operates with a Board of six directors
comprising the non-executive Chairman, three non-executive directors,
including the Senior Independent Director, and two executive directors.
The size of the Board and the balance between executives and non-
executives are considered appropriate to the Company’s size and scope 
of activities and provide for effective operation. Mr Wheeler has notified
the Board of his intention not to seek re-election when he retires by
rotation at the forthcoming Annual General Meeting, and the Board 
is currently seeking a replacement independent non-executive director.
A schedule of formal meetings of the Board, the Audit Committee and the
Remuneration Committee is arranged each year in line with the Company’s
management reporting, and interim and annual reporting cycle. During the
year, the Board met formally seven times, together with a further meeting
to review strategy.
Attendance at meetings was as follows:
Board Strategy Audit Remuneration Nomination
(7 meetings) (1 meeting) (3 meetings) (3 meetings) (1 meeting)
Norman Broadhurst 7 1 2 3 1
Keith Hodgkinson 7 1 n/a n/a 1
Angus Fraser 7 1 3 3 1
Robin Southwell 7 1 3 3 1
Neil Warner 7 1 n/a n/a n/a
John Wheeler 6 1 3 2 1
Note: n/a mean that the director is not a member of this Committee but may attend at the invitation of the Committee.
In addition to the formal schedule of meetings, the Board held discussions
with the executive directors and senior operational managers on strategy,
business development, and other topics important to the Company’s
progress.
The Board has reserved to itself powers relating to matters that it considers
significant to the Group’s business, operational and financial risks.These are
set out in a formal schedule and include the approval of corporate policies,
strategy, plans and budgets; major acquisitions and disposals of companies 
or businesses; major investment and financial decisions; appointments 
to the Board; executive remuneration policy and major management 
or organisational changes.
The Chairman and Chief Executive have defined roles, providing for a
division of responsibilities between them, which have been documented
and approved by the Board.The Chairman is responsible primarily for the
running of the Board, while the Chief Executive’s primary role is the running
of the business and the development and implementation of strategy. 28 ANNUAL REPORT 2005
POWER PROTECTION
CORPORATE GOVERNANCE CONTINUED
The Board considers that all the non-executive directors are independent
of management and free of any business or other relationship that could
materially interfere with the exercise of their independent judgement.
The non-executive directors are appointed for fixed terms and the
unexpired terms of appointment are set out in the remuneration 
report on page 33.
Each non-executive director has been appointed for a term or successive
terms totalling less than nine years, with the exception of Mr Fraser who
joined the Board in 1984.The Board recognises that length of service 
is one of the factors that might mitigate against a director being regarded
as independent. However, the Board confirms its view that Mr Fraser has
demonstrated his independence of management and the independence of
his judgement throughout the year. In addition the Board, and in particular
the other non-executives who come from different business backgrounds,
value the depth of knowledge of the Company and its market sectors 
that enables Mr Fraser to make a positive contribution to the Board.
Under the Company’s Articles of Association all directors below the age 
of 65 are required to submit themselves for re-election every other year.
Directors aged 65 or over must submit themselves for re-election each year.
All the directors have access to the advice and services of the Company
Secretary and senior managers generally, and may take independent
professional advice at the Company’s expense if they consider it necessary
to do so in the furtherance of their duties.
The non-executive directors held one meeting during the year with the
Chairman, without the executive directors present.
Board Committees The Board has three standing committees – the Audit,
Remuneration and Nomination Committees.The Board has reviewed
membership of these committees and has confirmed its view that, as 
a smaller company, it is appropriate that all the non-executives should 
participate as members of these committees, so that they are fully 
involved in monitoring the governance issues affecting the Company,
including executive remuneration, succession planning, and risk management.
There is therefore no provision for fixed periods of membership of the
committees, as recommended by the Combined Code.The Board also
considers that the Chairman should continue his membership of the Audit
and Remuneration Committees. He brings relevant financial experience 
to the Audit Committee, which is valuable to those committee members
without a financial background. He also has wide experience of best
practice on remuneration issues through his directorships of several 
listed companies, including FTSE 100 companies, and therefore the Board
appreciates his leadership on remuneration issues, as Chairman of the
Remuneration Committee.
The terms of reference of the Audit, Remuneration and Nomination
Committees are available on request.
Audit Committee The Audit Committee comprises Mr A S J Fraser
(Committee Chairman), Mr N N Broadhurst, Mr R S Southwell and 
Mr J A C Wheeler. Its activities are described in the report of the Audit
Committee on pages 31 and 32.
Remuneration Committee The Remuneration Committee met three times
during the year and comprises Mr N N Broadhurst (Committee Chairman),
Mr A S J Fraser, Mr R S Southwell and Mr J A C Wheeler.
The Remuneration Committee determines the policy for remuneration 
of the executive directors and designated senior managers. It determines
individual remuneration packages for the executive directors and
designated senior managers, and considers all aspects of executive
directors’ service agreements, pensions and related matters. It makes
recommendations to the Board on the design of share incentive plans 
and exercises all powers and discretions of the directors in connection 
with the Company’s savings-related and executive share option schemes. ANNUAL REPORT 2005 29
Fees of the non-executive Chairman and the non-executive directors are
determined by the Board.
Nomination Committee The Nomination Committee comprises 
Mr N N Broadhurst (Chairman), Mr K H Hodgkinson, Mr A S J Fraser,
Mr R S Southwell and Mr J A C Wheeler. Its responsibilities include,
in addition to making recommendations to the Board of proposed new
appointments of executive and non-executive directors, succession planning
for directors and senior executives, and making recommendations on
reappointment of non-executive directors at the end of their period 
of office.There is a process for recommending non-executive Board
appointments, based on a review of the skills of the existing directors,
development of a specification and employment of a firm of recruitment
specialists to draw up a short list. Given that the Nomination Committee
consists of all the non-executive directors, the Chairman and the Chief
Executive, matters of reappointment of non-executives and succession
planning are also handled within meetings of the main Board.
Effectiveness reviews The Board conducted a review of its effectiveness
during the year.The review process, which was led by the Chairman,
is based on a combination of written responses by individual directors,
discussion with the Chairman and review by the Board as a whole.The
Audit and Remuneration Committees also conducted reviews of their
effectiveness, using a similar process, led by the Committee Chairmen.The
outcome of these reviews was that both the Board and the Committees
considered that they had the right balance of skills and experience, and that
no change in structure was required.The suggestions made to improve
effectiveness were acted upon. It is intended that the Nomination
Committee will hold its first effectiveness review in the current year.
The Chairman and the Senior Independent Director have conducted
reviews of the performance of individual directors. During the year,
Mr Southwell was reappointed for a term of three years, following 
a review of performance led by the Chairman.
Remuneration
The Remuneration Committee is responsible for compliance with 
the Combined Code in determining executive directors’ remuneration.
The Remuneration Committee report on pages 33 to 39 demonstrates 
how Chloride applies the principles of the Combined Code relating 
to level and make-up of remuneration and to disclosure.
Accountability and audit
Financial reporting The Board seeks to present a balanced and
understandable assessment of the Company’s position and prospects,
through the Chairman’s statement, Chief Executive’s review, financial 
review and directors’ report.
Internal controls The directors are responsible for the Company’s system
of internal control which aims to: safeguard the Company’s assets; ensure
that proper accounting records are maintained; ensure compliance with
statutory and regulatory requirements; and ensure the effectiveness and
efficiency of operations, including the assessment and management of risk.
A system of internal control is designed to manage rather than eliminate
risk of failure to achieve business objectives, and can provide only reasonable
and not absolute assurance particularly against misstatement or loss.
Chloride has a well established and embedded framework of internal
financial and operational control for identifying, evaluating and managing the
risks faced by the Company.This framework has been in place throughout
the year under review, and up to the date of approval of the annual report.
The key elements of this review process, which included a specific assessment
by the Board for the purpose of the annual report and accounts, and
complies with the Turnbull guidance,“Internal Control Guidance for Directors
on the Combined Code” published in September 1999, are as follows:
Directors have responsibility for reviewing the strategy and monitoring the
conduct of the Company.The directors and the executive management of
the Company are accountable for their conduct and performance within  30 ANNUAL REPORT 2005
POWER PROTECTION
CORPORATE GOVERNANCE CONTINUED
the agreed strategies. A management structure exists with clearly defined
lines of responsibility and the appropriate levels of delegation.
The Company and its operations are subject to a detailed annual budget
process and ongoing formal capital investment appraisal process. Actual
performance during the year is monitored monthly against budget,
forecast and previous year, and full-year forecasts are updated at regular
intervals during the year, based on trended historical data and realistic
macroeconomic forecasts.These forecasts and results are presented to 
the Board regularly.The Chief Executive and Finance Director each prepare
Board reports monitoring performance and actions to achieve objectives.
The Company and its subsidiaries operate control procedures designed 
to ensure complete and accurate accounting of financial transactions, and 
to limit the risk of loss of assets or fraud. Measures taken include physical
controls, segregation of duty in key areas and internal reviews and checks.
The identification, mitigation and monitoring of material risks are primarily
the responsibility of operating company management. During the budget
and reporting cycle, general managers and financial controllers are required
to identify risks the business is exposed to, assess any potential impact 
and to put in place actions to reduce them.These are also reviewed 
on a Company-wide basis with significant risks reported to the Audit
Committee which are then monitored throughout the year.
Key functions such as tax, treasury, insurance, legal, personnel and systems
are controlled centrally.
External audit The external auditors are engaged to express an opinion 
on the Company’s annual report and accounts.They independently and
objectively review management’s reporting of the operational results and
financial position.They also review the systems of internal control and the
data contained in the annual report and accounts to the extent necessary
for expressing their audit opinion.
Internal audit The Board has reviewed the need for an internal audit
function and has appointed a Group Risk Manager who is considered to
fulfil this function.The Group Risk Manager scopes and manages reviews 
of operations, which are undertaken by him and by other central staff.
After each site visit, the Risk Manager provides reports to management 
and the Chairman of the Audit Committee.
Going concern The directors confirm that they expect that the Company
has 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.
Relations with shareholders 
Relations with shareholders receive the highest priority.The Company
promotes dialogue with institutional shareholders and analysts through
regular meetings following the announcement of interim and final results,
and responds positively to invitations to enter into dialogue whenever 
it considers it to be in the best interests of shareholders generally to 
do so. All directors are available to attend meetings with shareholders 
if requested.The Chairman and Senior Independent Director attend
analysts’ presentations, and the Chairman also attends meetings with
institutional shareholders when possible.
Trading updates are issued when deemed necessary, and routinely at
the start of the close period before announcement of the preliminary 
and interim results. At the Annual General Meeting there is an opportunity,
following the formal business, for informal communication between
investors and directors. In addition, information, including the presentations
made to institutional shareholders and analysts and recent announcements,
is readily available to shareholders on the Company’s website –
www.chloridegroup.com. It has been the Company’s practice to send 
the Notice of the Annual General Meeting to shareholders at least 
20 working days before the meeting. ANNUAL REPORT 2005 31
AUDIT COMMITTEE REPORT
This report has been prepared in accordance with the Combined Code,
by the Audit Committee of Chloride Group PLC and has been approved
by the Board.
Committee membership
The Committee comprises at least three non-executive directors, and may
include the non-executive Chairman of the Board. Current members are:
Angus Fraser (Chairman of the Audit Committee)
Norman Broadhurst (Chairman of the Company)
Robin Southwell
John Wheeler
The biographies of the Committee members are set out on page 22.
The members bring extensive experience of corporate management 
in senior executive positions to the Committee.The Chairman, Mr Fraser,
gained financial experience early in his career, working in financial services,
and has 37 years’ international experience in industry, commerce and 
the public sector.
In addition to his wide experience as a non-executive director, Mr Broadhurst
brings relevant financial experience to the Committee. He is a chartered
accountant and his career includes financial directorships in a number 
of businesses from 1986 until his retirement as Finance Director of
Railtrack plc in 2000.
Committee responsibilities
The main role and responsibilities of the Audit Committee are set out 
in written terms of reference and include the following:
l monitoring the integrity of the financial statements, reviewing the annual
and interim reports in detail to ensure that they present a balanced and
understandable assessment of the Company’s position and prospects;
l reviewing the effectiveness of the Company’s internal controls and risk
management systems;
l overseeing the relationship with the external auditors, monitoring their
independence, agreeing the scope of audit and monitoring the
effectiveness of the audit process;
l making recommendations to the Board on the requirement for an
internal audit function and reviewing the effectiveness of internal audit; and
l reviewing the Company’s arrangements for whistleblowing.
The Committee has authority to investigate any matters within its terms 
of reference and has access to the resources and information it requires 
for this purpose.
The Committee is entitled to obtain independent professional advice 
on matters within its terms of reference.
Committee meetings
The Committee typically meets three times a year – in May, October,
and March.The Company Secretary acts as secretary to the Committee
and the meetings are normally attended by the Chief Executive,
Finance Director, Group Risk Manager and other senior finance staff.
The external auditors also attend meetings of the Committee and provide
a written report to the pre- and post-year end Committee meeting,
summarising the audit plan and the findings of their audit work.
The Committee meets at least once a year with the auditors without
executive managers being present. It also holds a private meeting at 
least once a year with the Group Risk Manager, in addition to which 
the Committee Chairman meets regularly with the Group Risk Manager 
to review matters arising from his site visit reports.
Attendance at meetings by the Committee members was as set out in 
the Corporate Governance report on page 27. 32 ANNUAL REPORT 2005
POWER PROTECTION
AUDIT COMMITTEE REPORT CONTINUED
Committee activities
The meetings in May and October take place in advance of the preliminary
and interim results announcements. At these meetings, the Committee
considers the draft financial statements and the preliminary and interim
results announcements. It also considers the report of the external auditors
on the full-year audit, focusing on issues of judgement and audit focus
identified in the audit plan.
The third meeting is concerned primarily with the review of the business
risk management process, the outcome from risk control visits, and the
agreement of the visit plan for the forthcoming year. In addition, the
external audit plan and audit fee are considered at this meeting.
During the year, the Committee has also focused on the likely impact of the
adoption of International Financial Reporting Standards for the year ended
31 March 2006, and on the management’s action plan to ensure a smooth
conversion process.
Auditor independence
In order to maintain the independence of the external auditors, the
Company has a policy for determining the types of non-audit work for
which it is appropriate to use the external auditors, including a clearance
procedure for fees.The Committee is satisfied that these procedures have
been followed during the year, and that the external auditor has in place
robust procedures, including the rotation of audit staff and partners,
to ensure their independence, preserve objectivity and comply with
regulatory and professional requirements.
Effectiveness review
During the year, the Committee reviewed its effectiveness through 
a process led by the Committee Chairman.The findings were reported 
to the Committee and the Board.
The Committee has also reviewed the effectiveness of the audit process.
Based on the Committee’s view of the performance of the external auditors
and on the planning and execution of the annual audit, the Committee has
recommended to the Board that a resolution to reappoint Deloitte &
Touche LLP be proposed at the forthcoming Annual General Meeting.
ANGUS FRASER ANNUAL REPORT 2005 33
This report is presented in accordance with the relevant provisions of the
Combined Code on Corporate Governance (the Combined Code) and
the Directors’ Remuneration Report Regulations 2002 (the Regulations).
The Regulations require the auditors to report on the “auditable part”
of the remuneration report.The audited information has therefore been
separately highlighted.
The Board is responsible for executive remuneration policy and setting
non-executive fees including the Chairman’s fees. Responsibility for agreeing
remuneration policy with the Board and determining the remuneration
packages of executive directors and other senior executives has been
delegated to the Remuneration Committee.The members of the
Remuneration Committee are N N Broadhurst (Chairman) and the 
following non-executive directors who are considered by the Board to be
independent of management: A S J Fraser, R S Southwell and J A C Wheeler.
The Remuneration Committee operates under detailed terms of 
reference, copies of which are available on request.
During the year, the Remuneration Committee received advice on
remuneration of executive directors and senior executives from the Chief
Executive and the Director of Personnel, neither of whom take part in the
determination of their own remuneration. Advice was also received from
the Company Secretary in relation to the Company’s share option plans.
Advice was obtained from New Bridge Street Consultants LLP (NBSC),
who were appointed by the Remuneration Committee to advise on
executive remuneration, and long-term incentive arrangements, including
employee share schemes. NBSC have no other connection with the Company.
Non-executive directors
Policy on remuneration The fees of non-executive directors and the non-
executive Chairman are determined by the Board within limits authorised
by the shareholders and in accordance with the Articles of Association 
of the Company.The policy is to set fees at the median level relative to
companies with a comparable market capitalisation. Fees do not contain 
any performance-related element and the non-executive directors do 
not participate in the Chloride Pension Scheme or in the share option or
performance share schemes. Non-executive directors have no entitlement
to compensation for early termination of their term of appointment.
Details of fees paid to non-executive directors, including the Chairman,
are included in the table headed “Summary of remuneration” on page 37.
Term of appointment The non-executive directors are appointed for
specified terms of three years or less.Their letters of appointment have 
no contractual notice period, but the appointment of each non-executive
director is subject to re-election by shareholders on retirement by rotation,
which occurs every two years, or every year in the case of a director aged
65 or over. Details of the commencement date and duration of the current
letters of appointment for non-executives are as follows:
Date of the current Unexpired term
Non-Executive Director letter of appointment of appointment
N N Broadhurst 31 March 2004 26 months
A S J Fraser 31 March 2004 14 months
R S Southwell 21 January 2005 32 months
J A C Wheeler 25 May 2003 –*
* Mr Wheeler is standing down at the 2005 Annual General Meeting.
Executive directors
Policy on remuneration The policy is to provide a combination of salary,
short- and long-term incentives and benefits, which form a competitive and
appropriate total remuneration package. Performance-related remuneration
in the form of annual bonus, together with share options and performance
shares, comprises a significant proportion of the total remuneration
opportunity but is only receivable if stretching performance targets,
which require substantial improvement in financial performance and, in the
case of performance shares, superior total shareholder return, are achieved.
REMUNERATION REPORT 34 ANNUAL REPORT 2005
POWER PROTECTION
REMUNERATION REPORT CONTINUED
Components of the remuneration package
Base salary The base salary of each executive director is reviewed annually,
taking into account the responsibilities and performance of the individual
together with independently furnished information on rates for similar jobs
in comparable industry sectors. In particular, base salaries recognise salary
levels in a group of comparably-sized companies in the electronics sector
and other similar sectors. Details of salaries, bonuses and benefits paid 
to executive directors are included in the table headed “Summary of
remuneration” on page 37.The current basic salary levels of the executive
directors with effect from 1 April 2005 are:
K H Hodgkinson – £338,000
N W Warner – £223,500
These represent an increase of 3% since 2004/05.
Annual bonus Chloride operates annual incentive plans for certain
employees, including executive directors. Eligibility for inclusion in such
schemes and the measures of performance to be used are decided
annually, taking account of key business issues. For the year under review
and for 2005/06, the measure applicable to the incentive plans for
executive directors is actual adjusted earnings per share compared with 
the previous year. For the executive directors, the maximum award under
the annual incentive plan is 75% of base salary. Bonus amounts earned up
to 50% of base salary are paid in cash and any bonuses earned above this
level are deferred into shares which are released two years after the award,
subject to the executive remaining in the Company’s employment. Bonus
shares were earned by the executive directors under this plan, in respect 
of the year ending 31 March 2005. Bonuses earned by the executive
directors under annual incentive plans are not pensionable.
Benefits in kind The taxable benefits provided to executive directors are
use of a fully-expensed car or car allowance, life insurance and medical cover.
Pensions The executive directors are eligible to be considered for
augmented entitlements under the final salary section of the Chloride 
1996 Pension Scheme.The 1996 Pension Scheme is a funded, contributory,
Inland Revenue-approved, occupational pension scheme, which is contracted
into the State Earnings-Related Pension Scheme. It provides a pension of 
up to two-thirds of final pensionable earnings (up to a retirement age of 62),
depending on service.The 1996 Pension Scheme also provides for
dependants’ pensions and lump sums on death in service.
The table headed “Pension entitlements” on page 37 shows the 
retirement benefits, excluding voluntary contributions, which accrued 
under the defined benefit section of the Chloride 1996 Pension Scheme 
to Mr Hodgkinson and Mr Warner during the period under review,
together with the total accrued annual pension to which each director
would be entitled under defined benefit arrangements on leaving service.
The pension benefits of Mr Hodgkinson and Mr Warner are capped 
under legislation and both Mr Hodgkinson and Warner now receive salary
supplements in lieu of contributions to funded unapproved retirement
benefit arrangements.The amount of these payments is shown in the 
table on page 37 headed “Summary of remuneration”.
Executive share incentive schemes
Policy The Board encourages executive directors to build and maintain
holdings of shares in the Company and believes that the potential for
increased share ownership which is provided by share-based incentive
schemes is an important element in promoting a closer alignment of the
interests of shareholders and executive directors.The policy is to make
annual grants of share options and performance shares, with a combined
annual aggregate limit on the value of shares under award of two times
basic salary.The effect of this overall limit is that an individual cannot receive
more value under a combination of Performance Share Plan (PSP) awards
and Executive Share Option Scheme (ESOS) grants than he could have  ANNUAL REPORT 2005 35
under only one plan. In calculating the value of awards, a performance share
is deemed equal to two ESOS awards. For example, an individual could
receive a maximum option grant of 200% of salary or a performance share
grant of 100% of salary. Alternatively, he could receive a 100% option grant
and a 50% performance share grant to receive the maximum level of
award per annum.
Share option scheme The current share option scheme is the Chloride
Group 2001 Executive Share Option Scheme. Options granted under this
scheme are normally exercisable between the third and tenth anniversaries
of the date of grant, on condition that the Company’s adjusted earnings per
share (EPS) growth over a period of at least three consecutive financial
years from the date of grant exceeds the growth in the UK Retail Prices
Index by:
l 3% a year compound for options over shares worth up to 100% 
of annual remuneration base salary;
l 4% a year compound for options over shares worth over 100% 
but not more than 150% of base salary; and
l 7% a year compound for options over shares worth over 150% 
of base salary.
In the case of options granted before 31 March 2004, if these targets 
are not satisfied by the fifth anniversary of grant, the share options lapse.
In the case of options granted after 31 March 2004, options will lapse if 
the performance condition is not achieved by the third anniversary of grant.
Adjusted EPS as disclosed in the report and accounts was chosen as the
basis for the performance condition because achievement of the growth in
EPS necessary before options may be exercised would require a substantial
improvement in the Company’s underlying financial performance.
In the transitional period in moving to International Accounting Standards,
the Remuneration Committee will ensure the EPS targets are appropriately
calculated to ensure consistency.
Performance Share Plan During the year, following shareholder approval,
the Company introduced a Performance Share Plan.The maximum annual
value of shares which can be granted under the PSP is 100% of salary.
Awards granted under the PSP are normally exercisable on the third
anniversary of the date of the award, to the extent that a total shareholder
return (TSR) performance target is met over a fixed performance period of
three financial years.The TSR target compares the Company’s TSR with that
of constituents of the FTSE Small Cap Index (excluding investment trusts).
Awards vest as follows:
Chloride’s ranking % of awards which vest
Below median 0%
Median 30%
Between median and straight line between
upper quartile 30% and 100%
Upper quartile 100%
In addition, no awards will vest under the PSP unless the Company’s EPS
growth is at least equal to the growth in the Retail Prices Index plus 2% pa
over the performance period.
Previous executive share option schemes Prior to the Chloride Group
2001 Executive Share Option Scheme, the Company operated the
Chloride Group 1994 Share Option Scheme and the 1996 Share Option
Scheme, under which Inland Revenue-approved options and, in the case of
the 1996 Scheme unapproved options, were granted to executive directors
as well as senior executives and are still exercisable. No further options 
will be granted under the 1994 or 1996 schemes. Options granted under
the 1994 and 1996 schemes are normally exercisable between the third
and tenth anniversaries of the date of grant, subject to meeting the
performance measures stated in the notes to the table headed “Shares
under option” on page 38. Policy on external appointments of executive directors
The current policy is that executive directors should not take on more
than one major outside appointment and then only with the prior approval
of the Board. Fees associated with any such appointment will normally be
retained by the individual. During the year, Mr Hodgkinson received and
retained fees of £35,000 from his non-executive directorship of De La Rue
plc. Mr Warner received and retained fees of £20,750 from his non-
executive directorship of Dechra Pharmaceuticals PLC.
Total shareholder return
The graph set out below shows the performance of the Company over 
the last five financial years in terms of total shareholder return (TSR),
relative to the FTSE Small Cap Index excluding Investment Trusts.The
Company has selected this as the comparator because the Company 
is a constituent of this index and has used it as a performance benchmark
for a number of years.The graph demonstrates the comparative TSR in
terms of annual movements.A graph showing comparative TSR over the two
years ended 31 March 2005 is included in the financial review on page 19.
36 ANNUAL REPORT 2005
POWER PROTECTION
REMUNERATION REPORT CONTINUED
The outstanding entitlements of the executive directors under all schemes
are set out in the table on page 38 headed “Shares under option”.
Savings-related share option schemes
The Company has two outstanding savings-related schemes, the 1987
Scheme, under which options were last granted in August 1997, and the
1997 Scheme. Under the 1997 Scheme, options – which are available to
eligible UK employees who contract to save a specified monthly amount –
are not normally exercisable until the expiry of three or, depending on an
individual’s initial election, five or seven years from the contract start date.
The entitlements of the executive directors under these schemes are set
out in the table on page 38 headed “Shares under option”.
Contracts of employment
Each of the executive directors has a rolling contract of employment,
terminable on 12 months’ notice if terminated by the Company and 
six months’ notice if terminated by the director.
Mr Hodgkinson and Mr Warner last signed a contract of employment 
on 1 December 1991 and 23 April 1997 respectively. In the event of
termination by the Company, each of the executive directors would be
entitled to 12 months’ salary, pension benefits, benefits in lieu of FURBS 
and benefits in kind. In an appropriate case the Company would have
regard to the departing director’s duty to mitigate loss. However, in the
event of dismissal following a change of control of the Company, each
executive director would be entitled to receive a prescribed payment 
made up of 12 months’ salary and benefits including a bonus payment 
of 20% of basic salary.
No compensation payments were made to executive or non-executive
directors during the year.
31 March
2000
31 March
2001
31 March
2002
31 March
2003
31 March
2005
31 March
2004
TOTAL SHAREHOLDER RETURN
 CHLORIDE £ FTSE SMALL CAP INDEX (EXCLUDING INVESTMENT COMPANIES) £
SOURCE:Thomsom Financial
This graph shows the value, by the end of March 2005,of £100 invested in Chloride on 31 March 2000
compared with the value of £100 invested in the FTSE Small Cap Index (excluding Investment Companies).
0
25
50
75
100
125
150 ANNUAL REPORT 2005 37
Audited information
Summary of remuneration 2005 
Fees/ Performance-
basic related Salary Other 2004
salary bonus supplement benefits Total T otal 
£000 £000 £000 £000 £000 £000 
Chairman
N N Broadhurst 73.0 – – – 73.0 73.0 
Chief Executive
K H Hodgkinson 328.0 196.8
1
169.5 48.0 742.3 634.7 
Executive director
N W Warner 217.0 130.2
2
57.5 10.8 415.5 342.8 
Non-executive directors
A S J Fraser 27.0 – – – 27.0 27.0 
R S Southwell 24.0 – – – 24.0 24.0 
J A C Wheeler 24.0 – – – 24.0 24.0 
Aggregate remuneration 693.0 327.0 227.0 58.8 1,305.8 1,125.5
Payments listed in the column entitled “Salary supplement” represent payments made to Mr Hodgkinson and Mr Warner in lieu of FURBS.
Performance-related bonuses are earned in respect of the year under which they are shown but are not paid until the following year.
1 Of Mr Hodgkinson’s bonus, £32,800 was deferred into shares, in accordance with the Deferred Bonus Scheme Rules.
2 Of Mr Warner’s bonus, £21,700 was deferred into shares, in accordance with the Deferred Bonus Scheme Rules.
Pension entitlements Transfer value
(less directors’
Annual contributions)
pension Increase in Total represented 
Years and months accruing accrued accrued Transfer Transfer by the annual Increase in
of pensionable in 2004/2005 pension pension at value at value at Directors’ Pension transfer value
service at excluding during the 31 March 31 March 31 March contributions accruing (less directors’
31 March 2005 inflation* year 2005 2004 2005 in 2004/05 in 2004/05 contributions)
£ £ £ £ £ £ £ £
K H Hodgkinson 13 years 4 months 1,625 2,317 22,671 387,317 427,570 5,100 25,264 35,153
N W Warner 7 years 11 months 2,653 3,274 21,536 233,586 281,164 5,100 29,533 42,478
* Additional annual pension accrual in 2005, gross of inflation was: Mr K H Hodgkinson – £2,317 and Mr N W Warner – £3,274.
The transfer values shown in the above table are a liability of the Chloride 1996 Pension Scheme.The above table combines the disclosures required 
by the Listing Rules of the Financial Services Authority and the Directors’ Remuneration Regulations 2002. 38 ANNUAL REPORT 2005
POWER PROTECTION
REMUNERATION REPORT CONTINUED
Shares under option The directors’ interests in share options and performance shares, all of which were granted for £nil consideration, as at 31 March 2005
were as follows: Number of ordinary shares under option Normal exercise period
Date Option At 1 April (Lapsed)/granted At 31 March
of grant price 2004 2004/2005 Note 2005 From T o
Directors’ entitlements under executive share option schemes
K H Hodgkinson 26.06.1998 48.75p 400,000 – 1 400,000 26.06.2001 25.06.2008
26.07.1999 78.5p 200,000 – 2 200,000 26.07.2002 25.07.2009
30.05.2000 135.5p 616,000 – 2 616,000 30.05.2003 29.05.2010
13.08.2001 70p 415,000 – 3 415,000 13.08.2004 12.08.2011
06.06.2002 44.5p 550,000 – 3 550,000 06.06.2005 05.06.2012
05.06.2003 35.0p 600,000 –3 600,000 05.06.2006 04.06.2013
27.07.2004 45.75p – 261,702 4 261,702 27.07.2007 26.07.2014
2,781,000 261,702 3,042,702
N W Warner 26.07.1999 78.5p 559,000 – 2 559,000 26.07.2002 25.07.2009
30.05.2000 135.5p 80,000 – 2 80,000 30.05.2003 29.05.2010
13.08.2001 70p 280,000 – 3 280,000 13.08.2004 12.08.2011
06.06.2002 44.5p 375,000 – 3 375,000 06.06.2005 05.06.2012
05.06.2003 35.0p 400,000 3 400,000 05.06.2006 04.06.2013
27.07.2004 45.75p – 173,138 4 173,138 27.07.2007 26.07.2014
1,694,000 173,138 1,867,138
T otal 4,475,000 434,840 4,909,840
Directors’ entitlements under the Performance Share Plan
K H Hodgkinson 27.07.2004 nil – 130,851 5&6 130,851 27.07.2007 26.07.2008
– 130,851 130,851
N W Warner 27.07.2004 nil – 86,569 5&6 86,569 27.07.2007 26.07.2008
– 86,569 86,569
T otal – 217,420 217,420
1 Performance condition met.
2 Performance condition requires the Company’s share price to outperform the FTSE Small Cap Index (excluding investment trusts) in six out of any nine consecutive months from the 28th month following the date of grant and for growth in the Company’s
adjusted earnings per share to exceed that of the UK Retail Prices Index over a period of at least three financial years.
3 Performance condition requires the growth in the Company’s adjusted earnings per share to exceed that of the UK Retail Prices Index by 3% per annum compound over a period of at least three consecutive financial years, with two re-testing opportunities.
4 Performance condition requires the growth in the Company’s adjusted earnings per share to exceed that of the UK Retail Prices Index by 3% per annum compound over a fixed period of three consecutive financial years from the date of grant.
5 The share price on the date of grant was 45.5p.
6 Performance condition requires that the Company’s Total Shareholder Return over a fixed period of three financial years be at least median against the FTSE Small Cap Index (excluding investment trusts) and that the growth in the Company’s earnings per share
exceeds the growth in the UK Retail Prices Index by 2% per annum over the same period. ANNUAL REPORT 2005 39
No options were exercised by the executive directors during the year.The mid-market price of an ordinary share as at 31 March 2005 was 61p (2004: 48.5p).
The mid-market price ranged during the year from a low of 42p (2004: 28p) to a high of 64p (2004: 61.5p).
Number of ordinary shares under option Normal exercise period 
Date Option At 1 April (Lapsed)/granted At 31 March
of grant price 2004 2004/2005 Note 2005 From T o
Directors’ entitlements under savings-related share option schemes
K H Hodgkinson 03.07.2002 37.5p 44,133 – 44,133 01.10.2007 31.03.2008
44,133 – 44,133
N W Warner 03.07.2003 30.5p 52,213 – 52,213 01.10.2008 31.03.2009
52,213 – 52,213
T otal 96,346 – 96,346
Directors’ interests in shares The directors had the following interests in shares of the Company:
31 March 2005 1 April 2004
Number of Number of
ordinary shares ordinary shares
N N Broadhurst 10,000 10,000 
A S J Fraser 30,000 30,000 
K H Hodgkinson 805,902 804,091 
R S Southwell – –
N W Warner 206,176 206,176 
J A C Wheeler – –
In addition to the interests disclosed above, all of which are beneficial, Mr Hodgkinson and Mr Warner are each regarded as having a technical interest 
in the ordinary shares in the Company held by the Chloride Group Employee Benefit Trust (see page 24). Neither of them is, however, entitled to receive
from the Trust more shares than may be allocated to him upon exercise of options under executive share option schemes shown above.The Trust held
10,938,043 shares on 31 March 2005 (2004: 11,192,920).
Note There have been no changes in the holdings of the directors between 31 March and 20 May 2005.
This report was approved by the Board on 26 May 2005 and signed on its behalf by
NORMAN BROADHURST 40 ANNUAL REPORT 2005
POWER PROTECTION
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
United Kingdom company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company 
and Group as at the end of the financial year, and of the profit or loss of the Group for that period. In preparing the financial statements, the directors are required to:
l select suitable accounting policies and then apply them consistently;
l make judgements and estimates that are reasonable and prudent;
l state whether applicable accounting standards have been followed; and
l prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 Group and enable
them to ensure that the financial statements comply with the Companies Act 1985.They are also responsible for the system of internal controls, safeguarding the assets of the Company
and Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. ANNUAL REPORT 2005 41
INDEPENDENT AUDITORS’ REPORT
We have audited the financial statements of Chloride Group PLC for the year ended 31 March 2005 which comprise the consolidated profit and loss account, consolidated balance sheets,
consolidated cash flow statement, consolidated statement of total recognised gains and losses, reconciliation of movements in shareholders’ funds and the related notes 1 to 31.These financial
statements have been prepared under the accounting policies set out therein.We have also audited the information in the part of 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
As described in the statement of directors’ responsibilities, the Company’s directors are responsible for the preparation of the financial statements in accordance with applicable United
Kingdom law and accounting standards.They are also responsible for the preparation of the other information contained in the annual report including the directors’ remuneration report.
Our responsibility is to audit the financial statements and the part of the directors’ remuneration report described as having been audited in accordance with relevant United Kingdom legal
and regulatory requirements and auditing standards.
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
described as having been 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 regarding directors’ remuneration and transactions with the Company and other members of the Group is not disclosed.
We review whether the corporate governance statement reflects the Company’s compliance with the nine provisions of the July 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 the directors’ report and the other information contained in the annual
report for the above year as described in the contents section including the unaudited part of the directors’ remuneration report and consider the implications for our report if we become aware
of any apparent misstatements or material inconsistencies with the financial statements.
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 described as having been 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 circumstances of the Company
and the Group, 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 described as having been 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 described as having been audited.
Opinion
In our opinion:
l the financial statements give a true and fair view of the state of affairs of the Company and the Group as at 31 March 2005 and of the profit of the Group for the year then ended; and
l the financial statements and part of the directors’ remuneration report described as having been audited have been properly prepared in accordance with the Companies Act 1985.
DELOITTE & TOUCHE LLP
Chartered Accountants and Registered Auditors
London 
26 May 2005 42 ANNUAL REPORT 2005
POWER PROTECTION
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH
2005 2004
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations T otal
Notes £000 £000 £000 £000 £000 £000
T urnover: 3
UPS systems 151,718 – 151,718 141,352 – 141,352
Telecom systems 11,310 1,977 13,287 9,212 2,607 11,819
T otal turnover 163,028 1,977 165,005 150,564 2,607 153,171
Operating profit: 3&5
UPS systems 11,720 – 11,720 9,231 – 9,231
Telecom systems (155) (712) (867) (620) (217) (837)
Before exceptional items and goodwill amortisation 11,565 (712) 10,853 8,611 (217) 8,394
Exceptional items – operating 4 (3,460) – (3,460) – – –
Goodwill amortisation (2,459) (41) (2,500) (2,613) (41) (2,654)
T otal operating profit/(loss) 5,646 (753) 4,893 5,998 (258) 5,740
Exceptional items – non-operating: 4
Loss on closure of business – (2,267) (2,267) – –– 
Release of prior year disposal provisions – 1,978 1,978 –––
Profit/(loss) on ordinary activities before interest 5,646 (1,042) 4,604 5,998 (258) 5,740
Net interest payable 7 (1,078) (835)
Profit before tax 3,526 4,905
Taxation 8 (2,227) (2,281)
Profit on ordinary activities after taxation 1,299 2,624
Minority interests 24 358 353
Profit for the financial year 1,657 2,977
Dividends 9 (4,396) (3,916)
Loss retained 23 (2,739) (939)
Earnings per 25p ordinary share 10
Adjusted 3.16p 2.37p
Basic 0.70p 1.26p
Diluted 0.70p 1.25p
There are no material differences between reported and historical cost profits and losses.
The information on pages 42 to 74 inclusive forms part of these accounts. ANNUAL REPORT 2005 43
BALANCE SHEETS
AT 31 MARCH
Group Company
2005 2004 2005 2004
Notes £000 £000 £000 £000
Fixed assets
Goodwill 14 32,634 35,547 – –
Tangible assets 15 21,144 18,168 1,491 469 
Investments 16 – – 116,964 95,016 
53,778 53,715 118,455 95,485 
Current assets
Stocks 17 26,421 26,077 – –
Debtors 18 61,456 53,437 42,312 56,037 
Cash at bank and in hand 27 17,171 9,992 – –
105,048 89,506 42,312 56,037 
Creditors: amounts falling due within one year
Borrowings 21 18,646 8,039 25,716 9,081 
Other 19 63,654 56,235 20,998 20,602 
Net current assets 22,748 25,232 (4,402) 26,354 
T otal assets less current liabilities 76,526 78,947 114,053 121,839 
Creditors: amounts falling due within one year
Borrowings 21 14,134 15,034 13,087 12,999 
Other 19 792 404 – –
Provisions for liabilities and charges 20 13,354 13,031 1,414 1,719 
Net assets 48,246 50,478 99,552 107,121 
Capital and reserves
Called-up share capital 22 62,183 62,136 62,183 62,136 
Share premium account 23 2,987 2,979 2,987 2,979 
Own shares 23 (10,252) (10,500) (10,252) (10,500)
Revaluation reserve 23 970 951 15 15 
Profit and loss account 23 (6,895) (4,620) 44,619 52,491 
Equity shareholders’ funds 48,993 50,946 99,552 107,121 
Minority interests 24 (747) (468) – –
T otal capital employed 48,246 50,478 99,552 107,121 
Approved by the Board on 26 May 2005
K H HODGKINSON N W WARNER
Director Director The information on pages 42 to 74 inclusive forms part of these accounts. 44 ANNUAL REPORT 2005
POWER PROTECTION
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH
2005 2004
£000 £000 £000 £000
Cash flow from operating activities 10,880 10,308 
Returns on investments and servicing of finance
Interest received 666 653 
Interest paid (1,709) (1,446)
Interest element of finance lease rentals (35) (42)
Net cash outflow from returns on investments and servicing of finance (1,078) (835)
T axation (1,162) (2,537)
Capital expenditure and financial investment
Purchase of tangible fixed assets (6,218) (8,414)
Disposal of tangible fixed assets 531 331 
Net cash outflow from capital expenditure and financial investments (5,687) (8,083)
Acquisitions and disposals
Purchase of businesses (493) (444)
Equity dividends paid (4,038) (3,791)
Cash outflow before use of liquid resources and financing (1,578) (5,382)
Management of liquid resources
Net (increase)/decrease in short-term deposits (1,060) 10,111 
Financing
Issue of ordinary share capital 55 125 
Proceeds from sale of own shares 105 19 
Increase/(decrease) in bank advances due within one year 16,582 (18,937)
(Decrease)/increase in other loans due beyond one year (1,039) 13,334 
Net (decrease)/increase in discounted trade bills (601) 250 
Capital element of finance lease rental payments (97) (84)
Net cash inflow/(outflow) from financing 15,005 (5,293)
Increase/(decrease) in cash in the period 12,367 (564)
Reconciliations of operating profit to net cash flow from operating activities and of net cash flow to movement in net debt, together with an analysis of net debt and
other supporting information to the consolidated cash flow statement, are given in note 26 to the accounts on pages 70 and 71.
The information on pages 42 to 74 inclusive forms part of these accounts. ANNUAL REPORT 2005 45
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 MARCH
2005 2004
£000 £000
Profit for the financial year 1,657 2,977 
Currency translation differences on foreign currency net investments 483 (3,702)
Total recognised gains/(losses) since last annual report 2,140 (725)
RECONCILIATION OF MOVEMENTS IN EQUITY
SHAREHOLDERS’ FUNDS
FOR THE YEAR ENDED 31 MARCH
2005 2004
£000 £000
Profit for the financial year 1,657 2,977 
Dividends (4,396) (3,916)
Exchange adjustments 483 (3,702)
New share capital issued 47 88 
Share premium thereon 8 37 
Movement in respect of own shares 248 19 
Net decrease in equity shareholders’ funds (1,953) (4,497)
Opening equity shareholders’ funds 50,946 55,443 
Closing equity shareholders’ funds 48,993 50,946  46 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH
1 ACCOUNTING POLICIES
Basis of accounting The accounts have been prepared under the historical cost convention, as modified by the revaluation of certain land and buildings, and have been
prepared in accordance with applicable accounting standards and the Companies Act 1985.
Basis of consolidation The consolidated accounts include the accounts of the parent company and all its subsidiary undertakings for the year ended 31 March 2005.
In the case of subsidiary undertakings acquired or sold during the year, the results are dealt with from the effective date of their acquisition or to the effective date of 
their sale. Acquisitions are dealt with under the acquisition method.
Goodwill represents the excess of fair value of the consideration given over the fair value of the separable net assets acquired. Goodwill in respect of acquisitions made
prior to 1 April 1998 was either written off directly against reserves or, alternatively, was capitalised and amortised over an appropriate period. Goodwill in respect of
acquisitions made since 1 April 1998 is shown as an asset (in accordance with FRS 10 (Goodwill and Intangible Assets)) and each acquisition is assessed to determine 
the useful economic life of the business and goodwill. As required by FRS 10, the directors have reviewed the useful economic life of goodwill and have concluded that 
it should be written off over 20 years from acquisition, except where specific circumstances suggest shorter periods.
Goodwill is subject to review at the end of the year of acquisition and at any other time when the directors believe that impairment may have occurred. Any impairment
is charged to the profit and loss account in the period in which it arises.
Foreign currencies For the purposes of consolidation, the results and cash flows of non-UK undertakings are translated into sterling at average exchange rates.
The balance sheets of non-UK undertakings are translated into sterling at the exchange rates ruling at the balance sheet date. Differences arising on the retranslation 
of opening balance sheets at the closing exchange rates are taken to reserves.
On consolidation and in the accounts of Group undertakings, certain foreign currency loans and forward foreign exchange contracts and options are matched with
overseas investments and the translation differences arising on these are offset in reserves.The translation differences on unmatched foreign currency loans are taken 
to the profit and loss account together with exchange differences arising on transactions denominated in foreign currencies.
Derivative instruments The Company uses forward foreign currency contracts and interest rate swaps to reduce its exposures to foreign exchange and interest 
rate risk.The Company does not hold or issue derivative financial instruments for speculative purposes.
Where foreign exchange forward contracts are used to hedge foreign currency trade debtors and creditors, realised and unrealised gains and losses are recognised 
in the profit and loss account.Where the instrument is used to hedge against future transactions, gains and losses are not recognised until the transaction occurs.
Interest rate swaps are recognised as an adjustment to the interest expense of the liability to which they relate.
T urnover represents the amounts, excluding VAT and similar sales-related taxes, receivable by the Group for goods and services supplied to outside customers in the
ordinary course of business.Turnover is recognised when persuasive evidence of an arrangement with a customer exists, products have been delivered or services have
been rendered and collectability is reasonably assured.
Revenue on long-term contracts is recognised under the percentage to completion method of accounting and is calculated based on ratio of costs incurred to date
compared with the total expected costs for that contract.
  ANNUAL REPORT 2005 47
1 ACCOUNTING POLICIES CONTINUED
Stocks are valued at the lower of cost and net realisable value. Cost is generally determined on a first in, first out basis and, in the case of products manufactured 
by the Group, consists of direct material and labour costs together with related factory overheads.
T axation The charge for taxation is based on the results for the year. Credit is taken for advance corporation tax charged in previous years to the extent that it is
determined recoverable against short-term corporation tax liabilities.
Deferred tax is recognised on timing differences that have originated but not reversed at the balance sheet date except in the circumstances set out below.This deferred
tax is measured at the average tax rates that are expected to apply at the time in which differences are expected to reverse.
Deferred tax assets are only recognised to the extent that it is considered more likely than not that there will be suitable taxable profits from which the reversal of the
underlying timing differences can be deducted.
No deferred tax is recognised in respect of the potential unaccrued distribution of the retained earnings of overseas subsidiaries nor in respect of the gain arising from
revalued fixed assets.
Depreciation is provided on all tangible fixed assets other than freehold land. It is calculated to write off the cost of the asset or, in the case of assets which have been
revalued, the revalued amount on a straight-line basis over its expected useful life.The rates generally in use are as follows:
Freehold buildings 2% to 5%
Leasehold buildings 2% to 5% (or over remaining life of lease if shorter)
Plant, machinery and other equipment 5% to 40%
Revaluation of properties Prior to 31 March 1999, freehold and leasehold properties were revalued on a regular basis. Any material overall surplus over book value
was credited to the revaluation reserve and any material overall deficit below book value was charged to the profit and loss account in the year of revaluation.
Following the adoption of FRS 15 (Tangible Fixed Assets) in the year to 31 March 2000, no further revaluation will take place and values have been frozen at the valuation
as set out in note 15.
Fixed asset investments are shown at cost less provision for impairment where appropriate.
Research and development expenditure is written off in the year in which it is incurred.
Profit/loss on disposal of fixed assets Profits and losses on the disposal of fixed assets represent the difference between sales proceeds and the net carrying amount,
being historical cost or valuation as applicable (less subsequent depreciation or any provisions made). Any surplus previously taken to revaluation reserve is released
through reserves at the time of disposal.
Leased assets Assets held under finance leases are recorded at the fair value of the asset, with an equivalent liability categorised, as appropriate, under creditors due
within or after one year.The asset is depreciated over the shorter of the lease term and its useful economic life. Finance charges are allocated to accounting periods over
the period of the lease. Rentals under operating leases are charged to the profit and loss account on a straight line basis. 48 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
1 ACCOUNTING POLICIES CONTINUED
Pensions Most Group undertakings have pension or retirement benefit arrangements.These vary but are appropriate to the legal requirements and local practices 
of the countries concerned. In the United Kingdom these arrangements are funded externally, in accordance with defined benefit plans. In other cases suitable provisions 
are made on a similar basis.
Pension costs for defined benefit schemes are accounted for in accordance with Statement of Standard Accounting Practice number 24, with additional disclosures 
as required by the transitional arrangements of FRS 17 (Retirement Benefits).
In all countries the levels of funding or provisions are regularly reviewed to ensure that they are adequate and appropriate in relation to local requirements.
Employment share schemes No cost is recognised in the profit and loss account in respect of awards made under SAYE option schemes.
The cost of awards made under the Group’s share based compensation schemes is based on the intrinsic value of the awards and is charged to the profit and loss
account over the related period of employment.
2 PROFIT FOR THE FINANCIAL YEAR
As permitted by section 230 of the Companies Act 1985, the profit and loss account of the Company is not presented as part of these accounts. Of the Group
consolidated profit for the financial year, a loss of £3,476,000 (2004: profit of £3,772,000) is dealt with in the accounts of the Company.
3 OPERATING PROFIT
2005 2004
Continuing Discontinued Continuing Discontinued
operations operations T otal operations operations T otal
£000 £000 £000 £000 £000 £000
Turnover 163,028 1,977 165,005 150,564 2,607 153,171
Cost of sales (96,840) (1,686) (98,526) (88,523) (1,567) (90,090)
Gross profit 66,188 291 66,479 62,041 1,040 63,081
Distribution expenses (29,625) (129) (29,754) (27,628) (106) (27,734)
Administrative expenses:
Goodwill amortisation (2,459) (41) (2,500) (2,613) (41) (2,654)
Other (28,458) (874) (29,332) (25,802) (1,151) (26,953)
Operating profit/(loss) 5,646 (753) 4,893 5,998 (258) 5,740
Continuing operations for 2005 are shown after operating exceptional items of £1,839,000, £184,000 and £1,437,000 in cost of sales, distribution expenses and
administrative expenses respectively (2004: £nil) (see note 4 below). ANNUAL REPORT 2005 49
4 EXCEPTIONAL ITEMS
2005
£000
Operating exceptional items (3,460)
Non-operating exceptional items:
Closure of business (1,482)
Write off of associated goodwill (785)
Release of prior year disposal provisions 1,978
Total non-operating exceptional items (289)
Total exceptional items pre tax (3,749)
Taxation 389
Exceptional items post tax (3,360)
Operating exceptional items related mainly to the restructuring of manufacturing operations in Germany and in TPS France and comprise payments and provisions 
for redundancy, vacant space and asset write downs.
The loss on closure of business relates to TPS China, and also comprises payments and provisions for redundancy, vacant space and asset write downs.
The release of prior year disposal provisions relates to provisions for costs set up in October 2000 on the disposal of the Safety Systems division, which are 
no longer required. 50 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
5 SEGMENTAL INFORMATION
Segmental profits/(losses) are shown at the level of profit on ordinary activities before interest. Central costs have been fully allocated. Unallocated net assets/(liabilities)
include non-operating assets and liabilities and provisions, dividend creditors, finance lease obligations and cash balances and borrowings.
The Company derives its revenue and profits from a single class of business, power protection.
Turnover, net assets and profit by source
2005 2004
T urnover Net Turnover Net
Third assets/ Profit/ Third assets/ Profit/
T otal party (liabilities) (loss) T otal party (liabilities) (loss)
£000 £000 £000 £000 £000 £000 £000 £000
Europe 136,968 131,034 25,009 10,619 126,706 121,399 22,755 8,278
Americas 22,694 21,875 6,992 772 21,925 20,858 5,568 727
Asia and Australasia 10,199 10,119 1,785 174 8,499 8,307 2,072 (394)
Inter-segment adjustments (6,833) – – – (6,566) – – –
Continuing operations 163,028 163,028 33,786 11,565 150,564 150,564 30,395 8,611
Discontinued operations 1,977 1,977 357 (712) 2,607 2,607 983 (217)
Goodwill and amortisation 32,634 (2,500) 35,547 (2,654)
Operating exceptional items (3,460) –
Unallocated net liabilities (18,531) – (16,447) –
165,005 165,005 48,246 4,893 153,171 153,171 50,478 5,740
Non-operating exceptional items (289) –
Profit on ordinary activities before interest 4,604 5,740 
Net interest payable (1,078) (835)
Profit on ordinary activities before taxation 3,526 4,905 
Third party turnover by market destination
2005 2004
£000 % £000 %
Europe 112,520 68 102,305 67
Americas 24,718 15 22,712 15
Asia and Australasia 23,350 14 23,110 15
Africa 4,417 3 5,044 3
165,005 100 153,171 100 ANNUAL REPORT 2005 51
6 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
2005 2004
£000 £000
The profit on ordinary activities before taxation is stated after charging the following:
Depreciation (at average exchange rates during the year) 3,094 3,677
Amortisation of goodwill 2,500 2,654
Profit/(loss) on sale of fixed assets 24 (221)
Audit fees – including Company £97,000 (2004: £78,000) 308 264
Operating lease rentals – plant and machinery 594 668
– other 2,262 2,261
Research and development expenditure 5,122 5,076
Fees paid to Deloitte & Touche LLP for non-audit but related advisory services to the Company and its subsidiary undertakings amounted to £55,000 (2004: £118,000).
These fees are mainly in respect of the Group’s IFRS conversion (£48,000) and tax advisory services and accountancy advice. All such fees must be reported to the Audit
Committee and prior approval is required from the Chairman of the Audit Committee for any projects above specified limits.
7 NET INTEREST PAYABLE
2005 2004
£000 £000
Bank loans and overdrafts (1,641) (1,388)
Finance leases and hire purchase contracts (35) (42)
Other (68) (58)
(1,744) (1,488)
Interest receivable and similar income 666 653
Net interest payable (1,078) (835) 52 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
8 TAXATION
a) Analysis of charge based on profit for the year
2005 2004
£000 £000
Current tax
United Kingdom:
UK corporation tax on profits at 30% (2004: 30%) 299 2,901
Double tax relief (148) (2,453)
151 448 
Foreign tax 2,168 919 
Adjustment in respect of prior years – UK tax – 150 
– foreign tax (194) (109)
Total current tax 2,125 1,408
Deferred tax
Origination and reversal of timing differences – trading
– current year 549 828
– prior year (447) 45
Total deferred tax 102 873
Tax on profit on ordinary activities 2,227 2,281
ACT written off in previous years amounting to £9,183,000 (2004: £9,183,000) is available to reduce taxation on trading profits in future years.There was no utilisation 
of ACT in the year (2004: £nil).
The foreign tax charge includes tax withheld from remittances to the UK of £104,000 (2004: £64,000).
The Company has tax losses amounting to approximately £22 million (2004: £20 million) of which £3.0 million (2004: £2.2 million) has been taken into account 
in calculating deferred tax. ANNUAL REPORT 2005 53
8 TAXATION CONTINUED
b) Factors affecting tax charge for the year The differences between the current tax charge and the amount calculated by applying the standard rate of UK
corporation tax (30%) to the profit before tax are as follows:
2005 2004
£000 £000
Profit before tax 3,526 4,905 
Tax on profit arrived at by applying the standard rate of UK tax (30%) 1,058 1,472 
Expenses not allowable for tax (including goodwill amortisation) 1,462 1,033 
Overseas losses not tax relieved 582 538 
Brought forward overseas losses utilised (316) (503)
Differences arising on overseas earnings – trading 677 176 
Tax (overprovided)/underprovided in prior years (194) 41 
Other differences (1,144) (1,349)
2,125 1,408 
9 DIVIDENDS
2005 2004
£000 £000
Paid 0.85p per share on 7 December 2004 (2003: 0.80p) 2,019 1,897 
Proposed 1.00p per share to be paid on 26 July 2005 (2004: 0.85p) 2,377 2,019 
4,396 3,916 
The trustees of the Chloride Group Employee Benefit Trust have waived their rights to receive dividends. Accordingly the amounts shown above for 2005 are net 
of dividends of £197,000* (2004: £184,683).
* Assuming no change to the issued capital or the shareholding of the Chloride Group Employee Benefit Trust between 20 May 2005 and the record date. 54 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
10  EARNINGS PER SHARE
2005 2004
million million
Weighted average number of 25p ordinary shares – basic and adjusted 237.5 237.1 
Adjusted for shares under option 0.6 0.2 
Weighted average number of 25p ordinary shares – diluted 238.1 237.3 
£000 £000 
Profit for basic and diluted earnings per share calculations 1,657 2,977
Exceptional items (see note 4) 3,749 –
Tax on exceptional items (389) –
Goodwill amortisation 2,500 2,654 
Profit for adjusted earnings per share calculation 7,517 5,631 
Earnings per share – adjusted 3.16p 2.37p 
– basic 0.70p 1.26p 
– diluted 0.70p 1.25p 
The weighted average number of shares excludes shares held by the Chloride Group Employee Benefit Trust.
The directors consider that the adjusted earnings per share figures more accurately reflect the underlying performance of the business. ANNUAL REPORT 2005 55
11  PENSIONS
Pension costs continue to be accounted for under Statement of Standard Accounting Practice (SSAP) 24. Disclosures are provided under both SSAP 24 and FRS 17.
The Company has a number of pension or retirement benefit arrangements, which are established to meet local legal requirements and practices in the countries 
in which it operates.The total pension cost for the year was £1,146,000 (2004: £1,103,000) and the Company has a provision of £5,225,000 (2004: £4,690,000) 
in its balance sheet to meet the unfunded liabilities of these arrangements.
Defined benefit schemes are operated in the UK and Germany.The bases of these schemes are as follows:
UK On 1 September 1996 the Company set up a hybrid pension scheme with both defined benefit and defined contribution sections (the Chloride 1996 Scheme).
At that date the pension entitlements of active members of the pre-existing Chloride UK Pension Scheme were transferred to this new scheme.The Chloride 
UK Pension Scheme was then wound up and, as a consequence, the current and future liabilities relating to the pensioners and deferred pensioners at that time were
transferred to Legal & General Assurance (Pensions Management) Ltd.The defined benefit section of the Chloride 1996 Scheme has been closed to new members 
since 1 April 1998.
Germany In Germany the Company operates a defined benefit scheme, which in accordance with local practice, is unfunded. Provision for future liabilities is made 
in the balance sheet in accordance with advice given by independent actuaries.
a) Disclosures under SSAP 24 The net charge in the UK of £453,000 comprises £523,000 (2004: £517,000) for the regular cost of meeting future benefits less 
a variation credit of £324,000 (2004: £301,000) relating to the spread of unallocated scheme surpluses, together with contributions in respect of the defined contribution
scheme.
The actuarial valuation of the Chloride 1996 Scheme as at 1 April 2002, which showed a surplus of £1.2 million over accrued past service liabilities, was carried out using
the projected unit method. It was assumed that the annual rate of return on investments would exceed the annual rate of increase in pensionable pay by three
percentage points, and exceed the annual rate of growth in present and future pensions by four and a half percentage points.
As required by SSAP 24 the figures included in the accounts are based on this valuation. It therefore does not take into account any impact on scheme assets or liabilities
resulting from the general fall in stock market values, the adoption of longer life expectancy assumptions or other changes since that date.
The charge in Germany of £75,000 (2004: £146,000) represents the increase in the provision for future benefits arising in the year as advised by independent actuaries.
Pension costs relating to other schemes worldwide have been determined in accordance with local practice using appropriate accounting policies. 56 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
11  PENSIONS CONTINUED
b) Disclosures under FRS 17 In the UK and Germany the Company operates defined benefit schemes for which actuarial valuations have been updated by
independent qualified actuaries to assess the liabilities of the schemes at 31 March 2005 in accordance with FRS 17.The main assumptions used were:
2005 2004 2003
UK Germany UK Germany UK Germany
%% %%%%
Rate of increase in salaries 4.50 2.50 4.75 2.50 4.50 2.50
Rate of increase in pension payments 2.50 1.25 2.75 2.50 2.50 2.50
Discount rate 5.35 4.75 5.50 5.25 5.50 5.25
Inflation 2.50 1.25 2.75 1.25 2.50 1.25
The net assets/liabilities of the UK scheme and the liabilities of the German scheme at 31 March 2005 were as follows:
2005 2004 2003
UK Germany Total UK Germany Total UK Germany Total
Long-term expected rate of return
Equities 8.00 n/a n/a 8.0% n/a n/a 8.0% n/a n/a 
Gilts 4.75 n/a n/a 4.7% n/a n/a 4.6% n/a n/a 
Other 4.50 n/a n/a 4.0% n/a n/a 3.5% n/a n/a 
£000 £000 £000 £000 £000 £000 £000 £000 £000
Market value of assets
Equities 14,542 – 14,542 13,900 – 13,900 10,600 – 10,600 
Gilts 5,413 – 5,413 3,900 – 3,900 2,200 – 2,200 
Other 107 – 107 – – – – – –
Total market value of assets 20,062 – 20,062 17,800 – 17,800 12,800 – (12,800)
Present value of pension liabilities (24,755) (3,062) (27,817) (23,800) (2,539) (26,339) (21,000) (2,394) (23,394)
Deficit in the scheme (4,693) (3,062) (7,755) (6,000) (2,539) (8,539) (8,200) (2,394) (10,594)
Related deferred tax assets 1,408 1,225 2,633 1,800 1,016 2,816 2,460 838 3,298 
Net pension liabilities (3,285) (1,837) (5,122) (4,200) (1,523) (5,723) (5,740) (1,556) (7,296) ANNUAL REPORT 2005 57
11  PENSIONS CONTINUED
In the UK the contribution rate for 2005 was 18.5% of pensionable earnings (2004: 18.5%).
2005 2004
£000 £000
Analysis of the amount charged to operating profit
Current service cost 1,046 1,061
Past service cost – –
Total operating charge 1,046 1,061
Analysis of the amount credited to net financial income
Expected return on pension scheme assets 1,316 925
Interest on pension liabilities (1,462) (1,227)
Net financing charge (146) (302)
T otal profit and loss account charge 1,192 1,363
Analysis of the amount recognised in statement of total recognised gains and losses
Actual return less expected return on pension scheme assets 371 2,310
Experience gains and losses arising on the scheme liabilities 640 (73)
Changes in assumptions underlying the present value of the liabilities (40) (1,040)
Actuarial gain recognised in the statement of total recognised gains and losses 971 1,197
Movement in deficit during the year
Deficit in schemes at the beginning of the year (8,539) (10,594)
Current service cost (1,046) (1,061)
Contributions 1,005 2,221
Finance expense (146) (302)
Actuarial gain 971 1,197
Deficit in schemes at end of year (7,755) (8,539)
History of experience gains and losses
Difference between the expected and actual return on the schemes’ assets: Amount £000 371 2,310
Percentage 1.85 13.0
Experience gains and losses on the schemes’ liabilities: Amount £000 (640) (73)
Percentage (8.24) (0.9)
Total amount recognised in the statement of recognised gains and losses Amount £000 971 1,197
Percentage 12.5 14.0 58 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
12  EMPLOYEE INFORMATION
At 31 March 2005 the total number of the Group’s employees, including executive directors, was 1,341 (2004: 1,396).The average number of persons employed during
the year is analysed below:
2005 2004
£000 £000
Europe – including 164 in the UK (2004: 166) 1,026 1,035
Americas 214 206
Rest of the world 166 173
1,406 1,414
Employment costs (including those relating to executive directors) were as follows:
2005 2004
£000 £000
Wages and salaries 36,597 35,545
Social security costs 8,513 8,100
Other pensions costs (see note 11) 1,146 1,103
46,256 44,748 ANNUAL REPORT 2005 59
13  RELATED PARTY TRANSACTIONS
The Company makes a service charge to the UK pension scheme in respect of pensions administration, office accommodation and related service costs.The total service
charge for the year was £102,000 (2004: £96,000).
At 31 March 2005 the Company had receivable and payable balances with its two non-wholly owned subsidiaries, Chloride Masterguard Power Systems Limited and
Chloride Koexa SA, of £489,000 (2004: £624,000) and £152,000 (2004: £11,000) respectively. During the year these companies purchased goods from fellow subsidiaries
to the value of £1,212,000 (2004: £723,000).
14  GOODWILL
2005 2004
£000 £000
Cost at 1 April 62,010 64,878
Other adjustments 372 (2,868)
Cost at 31 March 62,382 62,010
Accumulated amortisation:
At 1 April 26,463 23,809
Charge for year 2,500 2,654
Write off on closure of business (see note 4) 785 –
At 31 March 29,748 26,463
Net book value at 31 March 32,634 35,547
Other adjustments relate primarily to exchange differences. 60 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
15  TANGIBLE FIXED ASSETS
Group 
Short
Freehold land leasehold land Plant and Company
and buildings and buildings machinery Total Total
£000 £000 £000 £000 £000
Cost or valuation:
At 1 April 10,920 2,888 21,348 35,156 1,702
Exchange rate adjustments 206 49 407 662 –
Capital expenditure 1,367 263 4,698 6,328 1,406
Disposals and adjustments – (54) (1,694) (1,748) (210)
At 31 March 12,493 3,146 24,759 40,398 2,898
Accumulated depreciation:
At 1 April 1,921 1,379 13,688 16,988 1,233
Exchange rate adjustments 67 57 245 369 –
Charge for the year 148 367 2,625 3,140 308
Disposals and adjustments – (6) (1,237) (1,243) (134)
At 31 March 2,136 1,797 15,321 19,254 1,407
Net book value:
At 1 April 2004 8,999 1,509 7,660 18,168 469
At 31 March 2005 10,357 1,349 9,438 21,144 1,491
Notes
a) In the above table, the net book value for the Group includes £392,000 (2004: £493,000) in respect of tangible fixed assets held under finance leases,
and the depreciation charge for the year includes £81,000 (2004: £67,000) in respect of these assets.
b) The tangible fixed assets of the Company comprise plant and machinery, including motor vehicles and office equipment.
c) Following a review of freehold buildings carried out in 2004 by an external surveyor, it was decided to revise the estimated useful lives of certain Group properties.
This change has resulted in a decrease in the depreciation charge of £220,000 in the year.
d) If land and buildings had not been revalued the Group net book values would have been:
Leasehold land 
Freehold land and buildings 
and buildings Short lease 
£000 £000
Historical cost 12,199 3,099
Accumulated depreciation thereon (2,386) (1,624)
9,813 1,475 ANNUAL REPORT 2005 61
15  TANGIBLE FIXED ASSETS CONTINUED
Freehold land and buildings were professionally valued at open market value on an existing use basis in 1993, with subsequent additions at cost as follows:
Freehold land 
and buildings 
£000 
Group
Valuation at 1993 1,425
Cost 11,067
Cost and valuation at 31 March 2005 12,492
16  INVESTMENTS
Company
2005 2004
£000 £000
Subsidiary undertakings
Cost:
At 1 April 116,648 109,615
Additions 21,948 7,033
At 31 March 138,596 116,648
Amounts written off:
At 1 April and 31 March 21,632 21,632
Net book value at 31 March 116,964 95,016
The principal subsidiary undertakings at 31 March 2005 are shown on page 74. 62 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
17  STOCKS
Group
2005 2004
£000 £000
Raw materials and components 10,726 10,201
Work in progress 3,559 4,637
Finished goods 12,136 11,239
26,421 26,077
There is no material difference between the current replacement cost and the historical cost of stocks.
18  DEBTORS
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Amounts falling due within one year
Trade debtors 47,577 41,829 – –
Discounted trade bills – 5 – –
Due from subsidiary undertakings – – 40,200 54,000
Other debtors 5,416 3,630 520 278
Prepayments and accrued income 782 784 128 446
Tax receivable 1,048 1,114 – –
Deferred tax 1,440 1,080 458 491
56,263 48,442 41,306 55,215
Amounts falling due after more than one year
Pension prepayment 2,151 1,835 1,006 822
Tax receivable 1,400 1,619 – –
Deferred tax 1,642 1,541 – –
Total debtors 61,456 53,437 42,312 56,037
The deferred tax asset relates to short-term timing differences and overseas brought forward tax losses. ANNUAL REPORT 2005 63
19  CREDITORS
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Amounts falling due within one year
Obligations under finance leases 85 96 – –
Payments received on account 169 149 – –
Trade creditors 29,811 22,246 1,158 1,244
Discounted trade bills 275 855 – –
Amounts owing to subsidiary undertakings – – 13,529 14,191
UK corporate tax and foreign taxes 8,647 8,406 770 770
Other taxation and social security 4,546 4,973 175 121
Other creditors 6,905 6,717 980 1,140
Accruals 10,838 10,775 2,008 1,118
Dividends payable 2.378 2,018 2,378 2,018
63,654 56,235 20,998 20,602
Group
2005 2004
£000 £000
Amounts falling due after more than one year
Obligations under finance leases 326 397
Payments received on account 37 –
UK corporate tax and foreign taxes 429 7
792 404 64 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
20  PROVISIONS FOR LIABILITIES AND CHARGES
Pensions
Deferred and similar
tax obligations Other T otal
£000 £000 £000 £000
Group
At 1 April 767 4,690 7,574 13,031
Exchange rate adjustments 21 178 (28) 171
Profit and loss account 533 562 2,818 3,913
Exceptional release (see note 4) – – (1,978) (1,978)
Utilised in the year – (204) (1,579) (1,783)
At 31 March 1,321 5,226 6,807 13,354
Company
At 1 April 100 – 1,619 1,719
Profit and loss account 167 – (357) (190)
Utilised in the year – – (115) (115)
At 31 March 267 – 1,147 1,414
Deferred taxation is provided in respect of timing differences, principally related to capital allowances in the UK and overseas tax accounting requirements. No provision 
is included in respect of the potential liability for tax amounting to £125,000 (2004: £128,000) before potential loss relief that would arise if properties included at
valuation in the Group balance sheet were to be sold at these valuation amounts. After loss relief there is no potential net liability (2004: nil).
The provision for pensions and similar obligations relates mainly to the liability in Italy and Germany for certain unfunded employee retirement entitlements.
Other provisions mainly relate to product warranty, provisions for redundancy, vacant space, contractual and other obligations for continuing and disposed businesses.
The timing of the utilisation of these provisions is uncertain except for product warranties which are anticipated to be utilised within the next three years. ANNUAL REPORT 2005 65
21  BORROWINGS
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Borrowings are repayable as follows:
Due on demand or under one year:
Bank 18,646 8,039 25,716 9,081
18,646 8,039 25,716 9,081
Other borrowings due after one year:
Due over one and under two years 13,315 13,225 13,087 12,999
Due over two and under five years 689 1,252 – –
Due over five years 130 557 – –
14,134 15,034 13,087 12,999
Included in the above is a loan of £1.3 million (2004: £2.2 million) at a fixed rate of interest of 2.3% (2004: 2.3%) per annum for a period of six years.
In the Group and Company balance sheets, borrowings and cash balances have been offset where the legal right of offset exists.The Company’s articles of association
limit the external borrowings of the Company and its subsidiary undertakings to an amount equal to twice the share capital and consolidated reserves.
At 31 March 2005 the Group had £45.0 million of committed facilities (2004: £45.0 million), of which £19.0 million (2004: £32.0 million) was unutilised. Of this amount,
£15.0 million expires within one year (2004: £nil), £30.0 million expires within one to two years (2004: £15.0 million) and £nil (2004: £30.0 million) expires after 
two years. 66 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
22  SHARE CAPITAL
Group
2005 2004
£000 £000
Authorised:
Equity
Ordinary shares of 25p each: 329,752,000 (2004: 329,752,000) 82,438 82,438
82,438 82,438
Issued:
Equity
Ordinary shares of 25p each 248,731,441 (2004: 248,543,424) 62,183 62,136
62,183 62,136
The increase in the issued ordinary share capital of the Company is due to the exercise during the year of executive and savings-related share options over a total 
of 188,017 shares.
As at 31 March 2005, there were 19,520,139 ordinary shares (2004: 17,840,000) under option under executive share option schemes, 1,628,342 (2004: 1,624,080) 
under option under the Company’s savings-related share option schemes and 981,571 (2004: nil) under option under the Company’s Performance Share Plan.
The following table shows aggregate option entitlements under the executive share option schemes outstanding at 31 March 2005. It also includes information 
as to whether performance measures are applicable and, if so, whether they have yet been met. ANNUAL REPORT 2005 67
22  SHARE CAPITAL CONTINUED
Status of
Number of shares Performance measure(s)
Date of grant Option price 31 March 2005 31 March 2004 as at 31 March 2005
1994 Scheme
03.08.94 30.5p – 133,000 met
20.12.95 25p 99,000 99,000 met
30.07.97 33p 115,000 115,000 met
28.11.97 39p 34,000 34,000 met
26.06.98 48.75p 103,500 103,500 met
02.12.98 49.5p 50,000 110,000 met
26.07.99 78.5p 61,500 61,500 under measurement
29.10.99 80.25p 55,000 55,000 under measurement
31.05.00 135.5p 56,014 56,014 under measurement
31.10.00 206.0p 61,047 61,047 under measurement
1996 Scheme
29.08.96 35p 80,000 80,000 met
30.07.97 33p 75,000 75,000 met
28.11.97 39p 91,000 91,000 met
26.06.98 48.75p 1,190,500 1,190,500 met
02.12.98 49.5p 111,000 135,000 met
05.01.99 58.25p 250,000 250,000 under measurement
26.07.99 78.5p 2,198,500 2,281,500 under measurement
29.10.99 80.25p 550,000 550,000 under measurement
30.05.00 135.5p 2,712,986 2,795,986 under measurement
30.10.00 206.0p 308,953 308,953 under measurement
2001 Scheme
13.08.01 70p 2,274,000 2,324,000 under measurement
13.08.01 70.52p 130,000 130,000 under measurement
06.06.02 44.5p 2,940,000 3,070,000 under measurement
03.07.02 42p 275,000 275,000 under measurement
05.06.03 35p 2,975,000 3,065,000 under measurement
27.06.03 43p 380,000 390,000 under measurement
27.07.04 45.75p 2,086,695 – under measurement
23.08.04 44p 157,398 – under measurement
25.11.04 53p 99,046 – under measurement
19,520,139 17,840,000 68 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
22  SHARE CAPITAL CONTINUED
The following table shows entitlements outstanding under the savings-related share option schemes as at 31 March 2005.
Three, five or Number of shares Normal exercise
seven year options Date of grant Option price 31 March 2005 31 March 2004 period
1987 Scheme
Seven year 1.8.97 25p – 49,920 01.10.04 to 31.03.05
1997 Scheme
Seven year 17.7.98 39p 7,000 7,000 01.10.05 to 31.03.06
Five year 25.6.99 59.75p – 89,808 01.10.04 to 31.03.05
Seven year 25.6.99 59.75p 101,484 101,484 01.10.06 to 31.03.07
Three year 28.6.00 119.25p – – 01.10.03 to 31.03.04
Five year 28.6.00 119.25p 11,603 11,603 01.10.05 to 31.03.06
Three year 29.6.01 82.75p – 13,107 01.10.04 to 31.03.05
Five year 29.6.01 82.75p 10,196 10,196 01.10.06 to 31.03.07
Three year 03.7.02 37.5p 166,383 174,489 01.10.05 to 31.03.06
Five year 03.7.02 37.5p 177,413 187,122 01.10.07 to 31.03.08
Seven year 03.7.02 37.5p 95,865 95,865 01.10.09 to 31.03.10
Three year 03.7.03 30.5p 559,225 608,960 01.10.06 to 31.03.07
Five year 03.7.03 30.5p 172,299 240,175 01.10.08 to 31.03.09
Seven year 03.7.03 30.5p 34,351 34,351 01.10.10 to 31.03.11
Three year 08.7.04 38p 135,911 – 01.10.07 to 31.03.08
Five year 08.7.04 38p 156,612 – 01.10.09 to 31.03.10
1,628,342 1,624,080
The following table shows aggregate option entitlements under the Performance Share Plan outstanding at 31 March 2005. It also includes information as to whether
performance measures are applicable and, if so, whether they have yet been met.
Status of
Number of shares performance measure(s)
Date of grant 31 March 2005 31 March 2004 as at 31 March 2005
27.07.04 905,849 – under measurement
23.08.04 26,199 – under measurement
25.11.04 49,523 – under measurement
981,571 – ANNUAL REPORT 2005 69
23  RESERVES
Share premium Own Revaluation Profit and loss Total 
account shares reserve account reserves 
£000 £000 £000 £000 £000
Group
At 1 April 2,979 (10,500) 951 (4,620) (11,190)
Exchange rate adjustments – – 19 464 483
Premium on shares issued 8–––8
Movements in respect of own shares – 105 – – 105
Cost of employee share schemes – 143 – – 143
Retained loss for the year – – – (2,739) (2,739)
At 31 March 2,987 (10,252) 970 (6,895) (13,190)
Company
At 1 April 2,979 (10,500) 15 52,491 44,985
Premium on shares issued 8–––8
Movements in respect of own shares – 105 – – 105
Cost of employee share schemes – 143 – – 143
Retained loss for the year – – – (7,872) (7,872)
At 31 March 2,987 (10,252) 15 44,619 37,369
“Own shares” represent 10,938,043 (2004: 11,192,920) ordinary shares in the Company held by the Chloride Group Employee Benefit Trust as noted in the directors’
report on page 24, having a market value at 31 March 2005 of £6.7 million (2004: £5.4 million).The Trust holds these shares to meet long-term commitments in relation 
to employee share plans.
The cumulative amount of goodwill resulting from acquisitions which has been written off to reserves is £26.3 million (2004: £26.3 million).
The retained profits of foreign subsidiary undertakings, if distributed as dividends, would be liable to UK and/or foreign taxes and subject to double tax relief.
24  MINORITY INTERESTS
2005 2004
£000 £000
At 1 April (468) (213)
Acquisition 75 98 
Exchange differences 4 –
Profit and loss account (358) (353)
At 31 March (747) (468) 70 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
25  FINANCIAL COMMITMENTS
2005 2004
£000 £000
a) Net finance lease obligations repayable:
Within one year 85 96
Over one and under two years 85 79
Over two and under five years 193 230
Over five years 48 88
411 493
b) The Group is committed to make payments totalling £3,080,000 (2004: £2,825,000) in the following year in respect of operating leases which expire:
Plant and machinery
and other
Land and buildings operating leases
2005 2004 2005 2004
£000 £000 £000 £000
Within one year 860 716 188 170
Over one and under five years 996 499 406 370
After five years 1,224 1,070 – –
3,080 2,285 594 540
26  CASH FLOW STATEMENT SUPPORTING INFORMATION
2005 2004
a) Reconciliation of net cash flow to movements in net funds £000 £000
Increase/(decrease) in cash in the period 12,367 (564)
Net cash (inflow)/outflow from (increase)/decrease in debt and lease financing (14,845) 5,437
Cash outflow/(inflow) from increase/(decrease) in liquid resources 1,060 (10,111)
Change in net funds resulting from cash flows (1,418) (5,238)
Exchange rate translation differences (448) (346)
Decrease in net funds in the period (1,866) (5,584)
Net debt at 1 April (14,429) (8,845)
Net debt at 31 March (16,295) (14,429) ANNUAL REPORT 2005 71
26  CASH FLOW STATEMENT SUPPORTING INFORMATION CONTINUED
2005 2004
b) Reconciliation of operating profit to net cash flow £000 £000
Operating profit 4,893 5,740
Depreciation 3,094 3,677
Goodwill amortisation 2,500 2,654
Book (gain)/loss on sale of tangible fixed assets (24) 221
Decrease in stocks 214 1,892
Increase in debtors (6,034) (5,002)
Increase in creditors and provisions 6,237 1,126
Cash inflow from operating activities 10,880 10,308
Exchange At
At 1 April translation 31 March
2004 Cash flow differences 2005
c) Analysis of net debt £000 £000 £000 £000
Cash 9,614 5,944 154 15,712
Overdrafts (6,908) 6,423 (311) (796)
2,706 12,367 (157) 14,916
Debt due within one year (1,131) (16,582) (137) (17,850)
Debt due after more than one year (15,034) 1,039 (139) (14,134)
Discounted trade bills (855) 601 (21) (275)
Finance lease obligations (493) 97 (15) (411)
Liquid resources 378 1,060 21 1,459
Net debt (14,429) (1,418) (448) (16,295)
Liquid resources comprise short-term bank and money market deposits. In the Group balance sheet, cash at bank and in hand comprises the amounts for cash and liquid
resources stated in the above table. 72 ANNUAL REPORT 2005
POWER PROTECTION
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 MARCH
27  CURRENCY AND INTEREST RATE EXPOSURE OF FINANCIAL ASSETS AND LIABILITIES
The currency and interest rate exposure of the financial assets and liabilities of the Group at 31 March was:
2005 2004
Assets Liabilities Net Assets Liabilities Net 
£000 £000 £000 £000 £000 £000 
Sterling 418 (6,500) (6,082) 459 (7,414) (6,955)
Euro 11,183 (21,281) (10,098) 5,197 (11,434) (6,237)
US dollars 3,274 (2,406) 868 2,360 (2,925) (565)
Other 2,296 (3,004) (708) 1,976 (1,793) 183
17,171 (33,191) (16,020) 9,992 (23,566) (13,574)
Of which – cash 17,171 – 17,171 9,992 – 9,992
– borrowings falling due within one year – (18,646) (18,646) – (8,039) (8,039)
– borrowings falling due after more than one year – (14,134) (14,134) – (15,034) (15,034)
– obligations under finance leases – (411) (411) – (493) (493)
17,171 (33,191) (16,020) 9,992 (23,566) (13,574)
At 31 March 2005 the Group did not have any interest-free borrowings (2004: nil). All amounts shown above are at floating interest rates based on the relevant national
LIBOR equivalents, with the exception of £1.2 million euro denominated borrowings (2004: £7.2 million), which are fixed at an average rate of 2.3% (2004: 4.9%) (see
note 19). At 31 March 2005 the ratio of fixed debt to total outstanding debt was approximately 3% and the weighted average remaining period for which this debt was
fixed was 99 months. As permitted by FRS 13, short-term debtors and creditors have been excluded from the above statement.
Details of the Group’s treasury objectives and policies are set out on pages 20 and 21 in the financial review.
28  FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is defined as the amount at which a financial instrument could be exchanged in an arm’s length transaction between informed and willing parties, excluding
accrued interest, and is calculated by reference to market rates discounted to current value.
For borrowings not at fixed rates of interest, the carrying amount is approximately equal to the fair value. Accordingly, the Group believes that there is no material
difference between the carrying amount and the fair value of its financial instruments (cash at bank or bank borrowings).
The fair value of foreign exchange contracts entered into to provide hedging against transactional exposure represents the estimated net effect of closing out all outstanding
contracts at 31 March 2005. On this basis fair value would have been £55,000 less than book value (2004: £104,000). Outstanding forward contracts at 31 March 2005 and
31 March 2004 have value dates of less than 24 months.The fair value amount that would be expected to be recognised in the following year is £72,000 (2004: £104,000). ANNUAL REPORT 2005 73
28  FAIR VALUE OF FINANCIAL INSTRUMENTS CONTINUED
The fair value of interest rate swaps entered into to provide hedging against interest rate risk on outstanding debt represents the effect of revaluing these swaps 
over their remaining lives at the floating rate at 31 March 2005. On this basis, fair value would have been £nil less than book value (2004: £177,000).
There are no other unrecognised gains or losses on instruments used for hedging. Forward contracts outstanding at 31 March 2005 amounted to £18.9 million 
(2004: £14.2 million).The book value of these forward contracts was £nil (2004: nil). At 31 March 2005 the Company had no interest rate swaps in respect of 
outstanding debt (2004: £6.0 million).
As permitted by FRS 13, short-term debtors and creditors have been excluded from the above statement.
29  CURRENCY ANALYSIS OF NET ASSETS
2005
Operating Dividends Net cash/ 2004
assets and other (borrowing) Total T otal
£000 £000 £000 £000 £000
Sterling 4,657 (2,653) (6,082) (4,078) (5,782)
Euro 20,493 – (10,098) 10,395 12,472
US dollars 6,082 – 867 6,949 5,003
Other 3,053 – (707) 2,346 3,238
Sub total 34,285 (2,653) (16,020) 15,612 14,931
Unallocated 32,634 – – 32,634 35,547
Total net assets 66,919 (2,653) (16,020) 48,246 50,478
Net currency assets are hedged where practicable by matching local currency assets with local currency borrowings.There are no material unhedged transactional
currency exposures in the Group.
30  CONTINGENT LIABILITIES
Contingent liabilities of the Group amounting to £8,716,000 (2004: £5,570,000) are mainly in respect of bank performance bonds, operating leases and other contractual
commitments.Those of the Company amounting to £6,456,000 (2004: £2,540,000) are mainly in respect of guarantees of leases, borrowings, bank performance bonds
and other contractual commitments of subsidiary undertakings. No losses are expected to arise.
31  POST BALANCE SHEET EVENT
On 15 April 2005 the Company purchased 100% of the share capital of Harath Engineering Services Limited, a UK based critical power protection service provider 
for £9.9 million in cash. 74 ANNUAL REPORT 2005
POWER PROTECTION
PRINCIPAL SUBSIDIARY UNDERTAKINGS
AT 31 MARCH
Company Country of incorporation Principal activity
Chloride Electronics Limited England Sales and service, power protection solutions
Chloride España, S.A.U. Spain Sales and service, power protection solutions
Chloride France S.A. France Manufacture, sales and service, power protection solutions
Chloride Power Protection Pty Limited Australia Sales and service, power protection solutions
Chloride Masterguard Power Systems Limited China Manufacture, sales and service, telecom power systems 
and power protection solutions
Chloride Portugal – Artigos Electronicos, Limitada Portugal Sales and service, power protection solutions
Chloride Power Protection (Thailand) Limited Thailand Sales and service, power protection solutions
Chloride S.p.A. Italy Manufacture, sales and service, power protection solutions
Continuous Power International Limited England Sales and service, power protection solutions
Masterguard do Brasil Limitada Brazil Sales and service, power protection solutions
Masterguard GmbH Germany Manufacture, sales and service, power protection solutions
Masterguard Güç Kaynaklari Limited Sirketi Turkey Sales and service, power protection solutions
Oneac Corporation US Manufacture, sales and service, power conditioning solutions
SAED S.A. (Chloride T elecom Systems) France Manufacture, sales and service, telecom power protection solutions
UP Systems, Incorporated US Sales and service, power protection solutions
Notes
1 The results of each subsidiary undertaking are included in the consolidated Group results for 2004/2005.
2 Except in the case of Chloride Power Protection Pty Limited, which has a class of preference shares in issue, shares in these principal subsidiary undertakings are ordinary
shares or their local equivalent.
3 Except in the case of Chloride Masterguard Power Systems Limited, the entire ordinary share capital of these principal subsidiary undertakings is held directly by the
Company, or indirectly by one of the Company’s subsidiaries. ANNUAL REPORT 2005 75
FIVE YEAR SUMMARY
FOR THE YEAR ENDED 31 MARCH
2005 2004 2003 2002 2001
Notes £000 £000 £000 £000 £000
T urnover
Continuing operations 163,028 150,564 142,967 148,967 166,271
Discontinued operations 1,977 2,607 – – 25,467
T otal 165,005 153,171 142,967 148,967 191,738
Operating profit before goodwill amortisation and exceptional items
Continuing operations 11,565 8,611 7,062 5,040 15,782
Discontinued operations (712) (217) – – 1,027
T otal 10,853 8,394 7,062 5,040 16,809
Goodwill amortisation (2,500) (2,654) (2,587) (3,029) (2,862)
Exceptional items (3,460) – – (19,627) –
Operating profit/(loss) 4,893 5,740 4,475 (17,616) 13,947
Profits/(losses) on sale or termination of operations (289) – – – 19,054
Profit/(loss) on ordinary activities before interest 4,604 5,740 4,475 (17,616) 33,001
Net interest (payable)/receivable (1,078) (835) (725) (559) (551)
Profit/(loss) on ordinary activities before taxation 3,526 4,905 3,750 (18,175) 32,450
Tax on profit/(loss) on ordinary activities (2,227) (2,281) (1,712) (862) (15,791)
Attributable to minority interests 358 353 48 (33) –
Profit/(loss) for the financial year 1,657 2,977 2,086 (19,070) 16,659
Capital expenditure 6,218 8,083 1,992 2,263 6,246
Assets employed
Fixed assets and investments 53,778 53,715 55,227 55,851 69,636
Net current assets 1 10,763 11,192 8,848 8,348 4,453
Net assets employed 1 64,541 64,907 64,075 64,199 74,089
Source of finance
Equity shareholders’ funds 48,993 50,946 55,443 56,027 78,973
Minority interests (747) (468) (213) 48 –
Net borrowings/(cash) 16,295 14,429 8,845 8,124 (4,884)
Source of finance 1 64,541 64,907 64,075 64,199 74,089
Debt:equity ratio 2 33.2% 28.3% 16.0% 14.5% –
Earnings per 25p ordinary share
Adjusted 3.16p 2.37p 1.98p 1.41p 4.80p
Basic 0.70p 1.26p 0.88p (8.05p) 7.04p
Diluted 0.70p 1.25p 0.88p (8.05p) 7.00p
Net dividend per ordinary share 1.85p 1.65p 1.60p 1.60p 1.60p
Return on net assets 3 45.1% 37.2% 32.6% 18.7% 53.9%
Notes
1 For the purpose of this summary: a) net current assets comprise current assets, less cash balances and other creditors and provisions for liabilities and charges; b) net borrowings, which comprise bank overdrafts 
and bank loans less cash balances, have been excluded from net assets employed and treated as a source of finance.
2 Debt:equity represents net borrowings as a percentage of shareholders’ funds.
3 This represents the profit on ordinary activities before interest excluding exceptional items and goodwill amortisation expressed as a percentage of the average of the net assets employed less goodwill. 76 ANNUAL REPORT 2005
SHAREHOLDERS’ ENQUIRIES
Matters relating to shareholdings, such as a request for a replacement share certificate, notification of a change of name or address, enquiries regarding dividend payments
or amalgamation of shareholdings should be addressed, quoting reference 489, to Lloyds TSB Registrars, whose contact details are set out below.The registrar’s website
address for a range of shareholder services is www.shareview.co.uk.
GIFTING YOUR SHARES
If you wish to transfer shares as a gift, perhaps to another member of your family, please apply for an appropriate transfer form to the Company’s secretarial department
at the address set out below. Completed transfer forms should be returned to the registrar, quoting reference 489.
If you have a small number of shares and would like to donate them to charity through ShareGift, please ask the Company’s secretarial department for a ShareGift
transfer form. Completed ShareGift transfer forms should be returned direct to ShareGift,The Orr Mackintosh Foundation, 46 Grosvenor Street, London W1K 3HN.
UK CAPITAL GAINS TAX
Section 35 of the Taxation of Chargeable Gains Act 1992 provides for the rebasing of capital gains tax at 31 March 1982 in relation to assets held on that date and
disposed of after 5 April 1988.The date of 31 March 1982 is also relevant in determining the indexation allowances.The respective market values of Chloride securities
on 31 March 1982 were as follows:
Ordinary shares held at 31 March 1982 25.5p
Ordinary shares derived from the conversion of 7.5% cumulative convertible preference shares in August 1987 23.9p
Or, for shareholders who were at that time taxed under section 34 of the Finance (No. 2) Act 1975 in respect of the capitalisation issue connected 
with the conversion 33.1p
LOW-COST SHARE DEALING SERVICES
Low-cost share dealing services are available to private investors, in respect of purchases or sales of shares in the Company through:
– The Share Centre Limited. Details of the service may be obtained by telephoning The Share Centre Limited on +44 (0)1296 414144.
– Stocktrade, a division of Brewin Dolphin Securities Limited. Details of the service may be obtained by telephoning Stocktrade on +44 (0)845 601 0995 
and quoting reference LOW C0124.
Secretary and Registered Office
Susan Williams
Ebury Gate, 23 Lower Belgrave Street, London SW1W 0NR
Registered in England number 35389
Telephone +44 (0)20 7881 1440
Facsimile +44 (0)20 7730 5085
E-mail enquiries@chloridegroup.com
Website www.chloridegroup.com
Advisers
Auditors Stockbroker and financial adviser
Deloitte & Touche LLP Dresdner Kleinwort Wasserstein Limited
Banks Registrars
Fortis Bank Lloyds TSB Registrars
Bank of Scotland The Causeway,Worthing
Royal Bank of Scotland West Sussex BN99 6DA
HSBC Telephone 0870 600 3970 (from UK)
+44 121 415 7047 (from outside UK)
POWER PROTECTION
SHAREHOLDER INFORMATION, SECRETARY AND ADVISERS Designed and produced by 85four. Board photography by Robert Wheeler. Printed in England by Westerham Press ISO 14001.This report is printed in vegetable-based
inks on paper which is made from 50% chlorine-free pulp from plantation forests, and from 50% recycled and de-inked fibres. It can be recycled and is bio-degradable. Edbury Gate
23 Lower Belgrave Street
London SW1W ONR
www.chloridegroup.com
ANNUAL REPORT 2005