MacLellan Group plc
Annual Report and Accounts
31 December 2005
MacLellan Group plc Annual Report and Accounts 2005 1 Financial Highlights
3 Group at a Glance
4 Chairman’s Statement
6 Chief Executive’s Review
8 Directors, Officers and 
Advisers
23 Balance Sheets
24 Group Statement of Total Recognised Gains and Losses
24 Reconciliation of Movements in Group Shareholders’ Funds
25 Group Statement of Cash Flows
26 Notes to the Group Statement of Cash Flows
MacLellan Group plc provides a wide
range of facilities services to customers
in the retail, industrial, commercial and
public sectors in the UK and the
Republic of Ireland
Service
9 Report of the Directors
12 Corporate Governance
14 Remuneration Report
19 Statement of Directors’ responsibilities
20 Independent Auditors’ Report
22 Group Profit and Loss Account
Contents
We self perform over 60 different facilities services.
We employ in excess of 13,500 people.
We have more than 1,000 customers.
We can deliver both multiple services on large contracts
at multiple locations or a bespoke, single service to a
customer on just one site.
28 Accounting Policies
30 Notes to the Financial Statements
47 Financial Summary
48 Notice of Annual General Meeting MacLellan Report & Accounts 2005    1
2005 2004
turnover (millions)
– continuing operations £232.8 £190.2 +22%
EBITDA (millions) £12.8 £6.8 +88%
profit (millions)
– underlying (note a) £8.8 £4.3 +107%
– before tax £5.0 £1.5 +244%
earnings per share (note b)
– underlying diluted 6.0p 5.2p +16%
– basic 2.4p 0.0p
proposed dividend per share 1.25p 1.00p +25%
notes:
a underlying profit is measured before goodwill amortisation and taxation
b earnings per share is calculated as shown in note 8 on page 34
Financial highlights
delivered 2 MacLellan Report & Accounts 2005
Service capability
The single key factor which sets us apart in the facilities services marketplace is our ability to effectively
manage the self performed services we provide to our customers
Security Services
Manned Guarding 
Investigative Screening
Event Security & Stewarding
Plain Clothes Security
– Store Detectives/Test Purchase
Electronic Security
Loss Prevention
Electronic Article Surveillance
– RF & AM Systems
CCTV Systems
Access Control Entry Systems
Catering & Hospitality Services
Full Catering & Vending Services
Meeting Hospitality including Buffet &
Executive Lunches/Refreshments
Meeting Room Booking/Management
Cleaning Services
Critical Process Cleaning
Daily Office Cleaning
Retail Cleaning
Food Hygiene Cleaning
Kitchen Cleaning 
Specialist Cleaning
Window Cleaning
Technical Services
HVAC
Refrigeration
Water Treatment & Plumbing
Electrical Services
Electronic Surveillance Systems
Small M & E Works Installations
Building Fabric Maintenance
Building Refurbishment
– Project management
Specialist Services
High Level Window & Atria Cleaning
using a wide range of access
equipment/techniques including:
– Reach & Wash
– Cradles
– Hydraulic Platforms
Industrial Rope Access Window Cleaning
IRATA Qualified Rope Technicians
Specialist Surface Cleaning 
eg. Marble, Terrazzo
Chewing Gum Removal
Graffiti Removal
High Pressure Water Jetting
Carpet Cleaning
High Level Lamp Cleaning & Replacement
Installation, Repair & Maintenance of:
– Safety Eyebolt Systems
– Cradles
– Safety Ladder Tie Systems
Office Support Services
Reception
Mailroom
Switchboard
Porterage
Secretarial, Administration and 
Typing Services
Document & Record Management
Conference Room Management
Reprographics
Help Desk Management
Other Services
Health & Safety and Environmental
Management & Consultancy
Waste Management
Internal Planting
Car Park Management
Grounds Maintenance
Laundry & Linen Services
Occupational Nursing
Concierge/Information Services MacLellan Report & Accounts 2005    3
We have not only increased our turnover by 87% in the last five years but we have also
increased our underlying fully diluted earnings per share by 94% in the same period
01 02 03 04 05 01 02 03 04 05 01 02 03 04 05 01 02 03 04 05
Underlying fully diluted
earnings per share
6.0p
Profit before exceptional
items, goodwill amortisation
and taxation £10.2m
EBITDA
£12.8m
Turnover 
£232.8m
MacLellan Report & Accounts 2005    3
Group at a glance 4 MacLellan Report & Accounts 2005
Results
I am delighted to report a record set of results for the
year ended 31 December 2005. These results show
the effectiveness of the operating structure which was
put in place in the final quarter of 2004 and the
Group is now in excellent shape.
The financial highlights for the year are:-
• Turnover from continuing operations up by 22% 
to £232.8 million (2004: £190.2 million)
• EBITDA up by 88% to £12.8 million (2004:
£6.8 million)
• Profit before goodwill amortisation and taxation 
up by 107% to £8.8 million (2004: £4.3 million)
• Profit before taxation up by 244% to £5.046
million (2004: £1.465 million)
• Operating margin before goodwill amortisation,
other income, interest and taxation increased to
4.4% (2004: 2.5%)
• Fully diluted underlying earnings per share
increased by 16% to 6.04 pence (2004: 5.2 pence)
• Basic earnings per share increased to 2.4 pence
(2004: 0.0 pence)
• Net cash inflow from operating activities increased
to £13.2 million (2004: £8.9 million)
• Year end net debt reduced to £8.2 million (2004:
£14.1 million) with net interest covered 7.6 times
by operating profit before goodwill amortisation
and other income (2004: 5.5 times)
Proposed dividend
The improved financial performance of the Group
during 2005 allows the Board to propose a
significantly improved dividend of 1.25 pence which,
subject to Shareholder approval, will be paid on 3 July
2006. This is a 25% increase on the last dividend paid
to shareholders on 4 July 2005.
Operational review
2005 was a year of consolidation in order to drive the
benefits from the integration of the previous year’s
acquisitions into the Group’s new operating structure.
2005’s results include new segmental reporting
disclosures which reflect the reporting structures now
implemented within the Group.
Our Security and Specialist Services operations
performed extremely well in 2005 reporting an
operating profit before goodwill amortisation of
£5.3 million on a turnover of £68.9 million
(2004: £1.7 million operating profit before goodwill
amortisation on a turnover of £30.3 million). The
performances of both First Security Group Limited
and TASS (Europe) Limited which were both
acquired in the second half of 2004 have exceeded
our expectations.
Our Integrated Services operations reported an
operating profit before goodwill amortisation of
£4.8 million on a turnover of £163.9 million
(2004: £3.0 million operating profit before goodwill
amortisation on a turnover of £159.8 million) despite
Chairman’s Statement
A L R Morton Chairman 
All key financial indicators
demonstrate very healthy
growth in 2005 MacLellan Report & Accounts 2005    5
suffering a £0.4 million “hit” to profits caused by the April 2005
administrative receivership of the Rover Group. The Chief Executive’s
Review sets out the many significant contract wins which our operations
secured in 2005 and we are particularly pleased that 2006 will see the
commencement of a new five year relationship with Prudential Property
Investment Managers to provide operational and facilities management
services at 14 retail destinations across the UK. The annual value of this
contract is expected to be in the region of £20 million.
Strategy
We are well positioned to benefit from the further consolidation which
is likely to occur in the outsourced business services markets in which
we operate. Although these markets are competitive, we see many
exciting opportunities for profitable growth including “bolt on”
acquisitions. Our immediate focus, however, is to continue to
expand organically in 2006 and produce further healthy growth in
earnings per share.
Outlook
The Board is encouraged by current trading and is enthusiastic and
confident about the Group’s prospects for 2006.
A L R Morton
Chairman
15 March 2006
We see many exciting opportunities for profitable growth
  6 MacLellan Report & Accounts 2005
Overview
We provide over 60 different facilities services to 
more than 1,000 customers at some 3,500 different
locations across the UK and the Republic of Ireland.
We employ in excess of 13,500 people.
We aim to be the facilities provider of choice to
customers in the retail, industrial, commercial and
public sectors in the UK and the Republic of Ireland.
We deliver both multiple services on large contracts at
multiple locations or a bespoke, single service to a
customer on just one site. Our service breadth is wide
enough to include the provision of facilities services to
Sainsbury’s at 395 of their stores throughout the UK and
the provision of stewarding services to Chelsea Football
Club for every match they play at Stamford Bridge.
Approach
We strongly believe in the benefits of self performance
which means that, wherever possible, the services we
provide are undertaken by our own employees. The
single key factor which sets us apart in the facilities
services market place is our ability to effectively manage
the self performed services we provide to our customers.
It is our ability to deliver a wide range of high quality
self performed services which leads to close working
relationships with our customers. We become an
effective partner with our customers through our
willingness to understand their business needs. This
leads to high retention rates when contracts are
retendered and strong forward order visibility. Strong
earnings visibility provides us with the confidence to
invest in our own employees, their training needs and
the support structures which sit behind the front line
of service provision.
Our operating model sounds simple. After ten
acquisitions and three disposals since 1998, we know
what we can do and we have developed an operating
model which works. The results for 2005 show that
our operating model is working very effectively.
Financial review of 2005
Turnover in 2005 increased by 22% over 2004.
Operating profit before goodwill amortisation
increased by 88% over 2004 to £10.2 million. Net
operating margins before goodwill amortisation were
4.4% in 2005 (2.7% in 2004). Profit before goodwill
amortisation and taxation increased by 107% to 
£8.8 million. Fully diluted underlying earnings per
share were 6.04 pence (2004: 5.2 pence).
Net Group debt at 31 December 2005 was 
£8.2 million which included £6.9 million of net bank
borrowings. Net Group debt reduced by £5.9 million
during 2005 mainly as a result of £13.2 million of 
net cash inflow from operating activities. The Group
enjoys banking facilities of £29.2 million and our net
debt position is forecast to reduce further in 2006 
as our operations continue to generate cash. The
management of debtors showed healthy improvement
in 2005 and the 31 December 2005 debtor position
was £1.84 million lower than the position at the
previous year end despite rising turnover levels.
We have introduced a segmental analysis for 2005
which separately shows the results of our Integrated
Services activities and our Security and Specialist
Services activities. The segmental analysis reflects the
reporting structures now established within the Group.
Our Integrated Services activities increased operating
profit before goodwill amortisation by 62.8% over
2004 on turnover which increased by 2.6% over
2004. 2004 had been a difficult year for our
Integrated Services activities because of the loss of
work at the Bluewater and Touchwood Shopping
centres and the completion of the reorganisation
exercises which were required to integrate the
acquisitions made in previous years. 2005’s budget
was, therefore, consciously set with low turnover
growth but with significant profit improvement and
we are delighted that this has been successfully
achieved. Turnover growth will increase in 2006 as a
Chief Executive’s Review
John R Foley Chief Executive
We have close working
relationships with our
customers which lead to 
high retention rates MacLellan Report & Accounts 2005    7
All of our operations enjoyed a number of significant
contract wins in 2005
 
result of the significant number of new contracts secured in
the second half of 2005 and profit will grow accordingly.
Our Security and Specialist Services operations reported an
operating profit before goodwill amortisation of £5.3 million
on turnover of £68.9 million (2004: operating profit before
goodwill amortisation of £1.7 million on turnover of 
£30.3 million). The net operating margin before goodwill
amortisation increased from 5.6% in 2004 to 7.7% in 2005.
TASS and SSD remain the subject of earn out arrangements
which we anticipate will eventually result in £4.25 million 
of further payments to the vendors if the stretching profit
performance targets are achieved.
The Group entered 2005 with a £1.7 million loan stock
investment in Booth Industries Group PLC. £0.529 million 
of the loan stock was redeemed in March 2005 with a
related premium and we have been notified that a further
£0.5 million will be redeemed in March 2006.
Operational review
The major challenges which faced us at the start of 2005
concerned the management of the introduction of licensing
of all employed security officers throughout our security
operations and the continuing upgrading of our support
systems so that we can continue to improve the quality of
service delivery to our customers through the use of the
latest technology and equipment.
Licensing has been the dominant issue facing all
organisations which operate in the security marketplace.
We have three operations which employ a significant number
of officers (First Security, MacLellan Attlaw and MacLellan
International). All three operations have made great efforts
to be on top of the relevant training and vetting issues so
that we fully comply with the Security Industry Authority’s
requirements. We are confident that we will obtain Approved
Contractor Status at the earliest possible opportunity.
Our Integrated Services activities continued to make further
positive advances on the systems development front and
MacLellan International’s IT Steering Group was particularly
busy during the year. New business analytics software has
been successfully introduced which provides for both a
speedier and more detailed level of financial and operational
information to be available to our managers. The “Order
Point” System introduced in 2004 which raises orders within
a single, safe electronic catalogue portal has been rolled out
throughout the company. The MacLellan Audit Process
System has been successfully introduced to many of our
larger multi site contracts and the response from our
customers has been very positive.
Our Security operations further developed their control 
room capabilities and increased the scope of their services 
to provide a range of very specific value added services 
to complement their core manned guarding capabilities.
Growth
All of our operations enjoyed a number of significant
contract wins in 2005.
MacLellan International secured major new contracts with
Sainsbury’s, Somerfield, Superdrug, Southwark Council,
BAe Systems, BMI, Cushman Wakefield, Mellon Bank and
Prudential Property Investment Managers. MacLellan
International’s confirmed forward order book currently sits 
at approximately £470 million and over 90% of its 2006
turnover budget is already secured.
First Security has extended the range of its operations outside
the M25 and along the M4 corridor with contract wins at Sony
and Newbury Business Park as well as securing new work for
Reuters, Somerset House, CSFB and Societe Generale.
MacLellan Attlaw commenced new work with South West
Trains during 2005 and continues to develop its integrated
security offering into the retail sector with a combination of
a specialist training service capability, an electronic security
offering and a nationwide manned guarding capability.
MacLellan Attlaw is also a Specialist at events security and
has secured a major contract win at the new Wembley
Stadium where work is expected to commence late in 2006.
TASS continued to secure a number of significant contract
wins in the cradle maintenance and fall arrest markets in
which it operates and 90% of its turnover budget for 2006 is
already secured. SSD Window Cleaning won new contracts
during 2005 with Bruntwood Estates, Mainstay Housing
Corporation and ABN Amro.
Our employees
I would like, on behalf of the Board, to thank our
management and employees for their continuing
commitment and hard work.
In addition, the courage and willingness to help others of
many of our employees is also something which the Board
would like to recognise. Last summer was of course
dominated by the dreadful events of 7 July. Above and
beyond the call of duty is perhaps an over used and clichéd
phrase but it certainly applies in the case of our employees’
response to the Tavistock Square bombing where a number
of First Security’s officers and MacLellan International
employees were working at the BMA. In addition, many
MacLellan Attlaw security officers were working at rail
network locations. Throughout the City of London on that
day many of our employees were called upon in ways they
had never experienced before and, hopefully, will never
experience again. Their actions showed real courage and 
we are proud to have such strong characters in our team.
Challenges for 2006
I said last year that the biggest single challenge for 2005
was to deliver significant growth at the earnings per share
level through continuing organic growth and improved
operating performance. The same applies for 2006; once
again, management is looking forward to the challenge.
John R Foley
Chief Executive
15 March 2006 8 MacLellan Report & Accounts 2005
Directors:
A L R Morton
Non-executive Chairman and Chairman of
Audit and Remuneration Committees
Age 64. Appointed a Director and Chairman
in August 1996. Other directorships include
Armour Group plc, Harrier Group plc,
Systems Union Group plc and Vislink plc.
Alan M Howarth
Non-executive Director
Member of Audit and Remuneration
Committees
Age 60. Appointed a Director in March 2003.
Also a director of Gresham Computing plc
and several private limited companies.
Graham W S Lockyer
Non-executive Director
Member of Audit and Remuneration
Committees
Age 58. Appointed a Director in 
October 1998.
John R Foley
Chief Executive
Age 50. Appointed a Director and Chief
Executive in November 1994.
John L Ellis
Managing Director
Integrated Services
Age 56. Appointed a Director in May 2000
and Managing Director of the Integrated
Services business.
Stephen R Shipley
Finance Director
Age 55. Appointed Group Finance Director 
in May 1995.
Registered Number - 02279581
Secretary and Registered Office
S R Shipley FCA
Enterprise House
Castle Street
Worcester WR1 3AD
Nominated Adviser
Investec Investment Banking
2 Gresham Street
London EC2V 7QP
Brokers
Joint Corporate:
Investec Investment Banking
Williams de Broë plc
1st Floor, Innovation Court
121 Edmund Street
Birmingham
B3 2HJ
Insurance:
Alexander Forbes Risk Services
12th Floor, Bank House
8 Cherry Street
Birmingham
B2 5AL
Auditors
PricewaterhouseCoopers LLP
Donington Court
Pegasus Business Park
Castle Donington
East Midlands DE74 2UZ
Principal Bankers
Barclays Bank plc
PO Box 729
Eagle Point
1 Capability Green
Luton LU1 3US
Registrars
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 0LA
Tel: 0870 162 3131
E mail:
shareholder.services@capitaregistrars.com
Directors, Officers and Advisers MacLellan Report & Accounts 2005    9
The Directors present their report together with the audited financial statements of the Company and of the Group for the year ended 31 December 2005.
Activities
MacLellan Group plc is the holding company of a group which provides specialist facilities management, support and security services to retail, commercial, industrial, travel and public sector
clients in the United Kingdom and, through a branch, in Eire. The principal subsidiary undertakings are set out on page 37.
The Chairman’s statement on page 4 and the Chief Executive’s review on page 6 give a review of the results for the year, the Group’s present position, future prospects and strategy.
Results and dividends
On turnover for the year of £232,781,000 (2004: £190,165,000) the Group’s profit after interest but before goodwill, exceptional items and taxation amounted to £8,830,000
(2004: £6,731,000); there were no exceptional items in the year (2004: £2,471,000). The Group’s profit for the financial year amounted to £2,406,000 (2004: £30,000).
The new Financial Reporting Standard (FRS 21) requires dividends to be debited to the profit & loss account when they are paid or approved at an Annual General Meeting. Previously, the
Companies Act 1985 required that proposed dividends be reported in the profit & loss account. In applying this change in accounting practice, the previously reported figures for 2004 have
been restated. The retained profit for the financial year amounts to £1,392,000 (2004 restated: loss of £553,000).
The Directors recommend the payment of a dividend for the year of 1.25p per ordinary share and 0.4375p per preference share amounting in aggregate to £1,269,000 (2004: £1,014,000);
a resolution to declare a final dividend will be proposed at the Annual General Meeting.
Directors
The Directors of the Company at the date of this report are shown on page 8. Further information on their interests in the share capital of the Company and their contractual arrangements
is given in the Remuneration Report on page 14.
The Directors retiring by rotation are A L R Morton and S R Shipley who, being eligible, offer themselves for re-election.
Share capital
Changes in the authorised and issued share capital of the Company are set out in note 16 to the financial statements.
Resolutions will be proposed at the Annual General Meeting to renew for a maximum of fifteen months the authority for the Directors to allot ordinary shares and to exclude shareholders’
pre-emption rights in certain specified circumstances subject, in both cases, to the limits set out in the resolutions. Save for the allotment of shares to satisfy contractual obligations relating 
to additional consideration payable on acquisitions made during 2003 and 2004, the exercise of share options or any conversion of the convertible preference shares, the Directors have 
no present intention of making allotments pursuant to these proposed authorities.
In addition, the Directors are seeking a general authority for the Company to purchase its own shares up to a maximum of approximately 10% of the existing issued ordinary shares within the
parameters set out in the resolution and in accordance with Stock Exchange and other regulatory conditions. Any exercise of the authority for the Company to purchase its own shares would
be subject, under the Company’s articles of association, to the consent of the convertible preference shareholders. The Directors consider it important to have the flexibility of this authority for
future planning; however, there are no intentions to act on this authority in the immediate future.
Report of the Directors 10 MacLellan Report & Accounts 2005
Substantial shareholdings
At 14 March 2006, the Company had been notified of the following interests in holdings of shares in excess of 3% of the ordinary share capital which at that date comprised 99,803,624
shares of 5 pence each:
Name Percentage shareholding Number of shares
BriTel Fund Trustees Limited 10.2% 10,166,667
Axa S.A. and its group companies 10.1% 10,056,562
Fidelity International Limited and its direct and indirect subsidiaries 9.97% 9,945,914
Morley Fund Management Limited 6.1% 6,097,373
(a subsidiary of Aviva plc)
Seraffina Holdings Limited 6.0% 6,000,000
Canada Life Marketing Group 4.1% 4,098,333
F&C Institutional UK Smaller Companies Fund 3.1% 3,118,000
The convertible preference share capital comprising 5,000,000 shares of 10 pence each is registered in the name of National Westminster Bank Plc. As explained in note 16 to the financial
statements, these shares are regarded as equity.
So far as the Board is aware, there are no other holdings of 3% or more in the share capital of the Company which are required to be disclosed.
Creditor payment policy
The Group does not follow any code or standard on payment practice. It is the responsibility of each business segment in the Group to agree appropriate terms and conditions for its transactions
with suppliers; these range from standard written terms to individually negotiated contracts. Payments to suppliers should be made in accordance with those terms and conditions, provided that
the supplier has met its obligations under those terms and conditions. Group trade creditors at 31 December 2005 represented 32 days (2004: 41 days) of purchases. MacLellan Group plc is 
a holding company and has creditors only in respect of that activity.
Treasury
Policy
The Group’s treasury policy is to match the relevant financial instrument with the returns expected from the related investment. This policy enables the use of short-term funding for ongoing
operations and longer-term funding for significant capital investment and for significant acquisitions. Consequently, the Directors have negotiated access to overdraft and term loan facilities
with the Company’s bankers, as well as other asset financing arrangements.
Foreign currency risk
The majority of the Group’s trade and transactions are carried out in sterling and carry no exchange risk. The Group’s foreign exchange risks arise principally as a result of the operations
carried out in Eire. The Group’s policy is to not hedge the translation exposure of the profits and balance sheets of the foreign business back into sterling; however, overseas acquisitions and
businesses would normally be financed with debt in the relevant currency of that business. These are not viewed as a significant area of risk by the Directors because of the relative size of
the business to the Group, but are continually monitored so that appropriate action can be taken.
Report of the Directors continued MacLellan Report & Accounts 2005    11
Interest rate risk
The Directors seek to minimise the effect of changes in interest rates on the Group’s earnings by retaining the flexibility to adjust the mix of interest bearing financial instruments between
fixed and variable rate instruments.
Employees
The Group gives full consideration to applications for employment made by persons with reduced mobility, bearing in mind the respective aptitudes and abilities of the applicant concerned.
In the event that an employee becomes disabled, every effort is made to ensure their continued employment and to arrange appropriate training. It is the policy of the Group that the
training, career development and promotion of a person with reduced mobility should, as far as practicable, be identical to that of a person who does not suffer from a disability. The Group
has continued its policy of regularly consulting and communicating with its employees through newsletters, briefing meetings, announcements on notice boards and distribution of the
annual report.
Donations
Charitable donations amounted to £11,540 (2004: £2,800). There were no political contributions in either year.
Auditors
PricewaterhouseCoopers LLP have indicated their willingness to continue in office and a resolution concerning their re-appointment as auditors will be proposed at the Annual 
General Meeting.
By order of the Board
Stephen R Shipley
Secretary
15 March 2006
Report of the Directors continued 12 MacLellan Report & Accounts 2005
Corporate Governance
As the company is listed on the Alternative Investment Market of the London Stock Exchange, compliance with “the Code” is not mandatory . However, the Board is mindful of its
recommendations and believes in providing a framework for establishing good corporate governance and accountability; the following is a summary of procedures supporting this approach.
Board of Directors
The Board comprises three executive and three non-executive Directors one of whom is the Chairman. This composition and the operation of the Board is adequate to ensure a balance of
power and authority with the Company’s non-executive Directors representing an influential and independent element on the Board. The Board meets regularly during the year and has a
schedule of matters reserved for its approval. It is responsible for overall Group strategy, acquisition and divestment policy and for authorising significant financial and legal transactions.
It reviews and approves the operational plans of the trading businesses and monitors progress towards achievement of those plans.
The Remuneration and Audit Committees comprise the non-executive Directors and have met at the appropriate times during the year; Mr Morton is chairman of both Committees. There is
no nomination committee as any new Board appointments are managed by the Board rather than delegated to a committee.
The Remuneration Committee is responsible for ensuring that the remuneration packages of executive directors are appropriate to attract, motivate and retain the correct calibre of individuals.
The Audit Committee monitors the effectiveness of internal controls and reviews the interim results and annual financial statements. The Company’s Auditors attend meetings to discuss the
results and the annual audit, and are available to the Audit Committee throughout the year as and when required.
Directors’ remuneration
The Group’s policy on the remuneration of Directors and senior executives is given in the Remuneration Report on page 14.
Relations with shareholders
The Chief Executive and executive Directors hold regular meetings with major shareholders to discuss the Group’s strategy and financial performance.
Annual General Meeting
All Directors attend the Annual General Meeting and are available to answer questions put to them by shareholders.
Internal control
The Directors acknowledge their responsibility for the Group’s system of internal control and for reviewing its effectiveness. The internal control system has been developed to meet the specific
needs of the Group and the particular business risks to which it is exposed. However, by its nature any system of internal control can only provide reasonable but not absolute assurance
against material misstatement or loss.
During the year the Board has defined and maintained procedures as part of a continuous review of the Group’s internal controls. These procedures have been designed to assist in the
achievement of business objectives, to safeguard the Group’s assets against unauthorised use or disposition, to ensure compliance with regulations and to maintain proper accounting records
and reliable financial information for use within the business or for publication. Key procedures that have been established are: MacLellan Report & Accounts 2005    13
• Control environment
There is an established Group organisation structure which clearly defines lines of responsibility and delegation of authority.
• Risk management
Operating company management has a clear responsibility for identifying risks facing the business and for putting in place procedures to mitigate and monitor these. Risks are assessed
during the business planning and annual budgeting processes which are monitored by management and the Board.
• Financial control procedures
The Group has a comprehensive system of financial reporting. The annual Group budget, which defines the structure, size and expenditure levels of the business, is presented to the Board
for approval. Monthly actual results are reported against budget and any significant variances are examined by management and remedial action taken. The Group has in place control
procedures including authorisation limits for transactions, procedures to ensure complete and accurate accounting, reliability of data processed and the control of assets.
• Monitoring processes
A number of processes are in place whereby control is monitored. These include the exercise of authority by the Board of Directors, the monthly reporting processes which include regular
senior management meetings, review of business issues and risks, financial results and working capital, contract status reviews, resource allocation and health and safety issues.
Going concern
After making enquiries, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future.
For this reason, they continue to adopt the going concern basis in preparing the financial statements.
Corporate Governance continued 14 MacLellan Report & Accounts 2005
Remuneration Report
The Committee
The Remuneration Committee comprises A L R Morton (Committee Chairman), A M Howarth and G W S Lockyer. By invitation, J R Foley (Chief Executive) assists the Committee in its
deliberations on remuneration appropriate for the Group.
Remuneration policy
The Committee is responsible for determining remuneration packages for each of the executive directors. The Group’s terms of employment for executive directors and senior management 
are designed to attract, retain and motivate an executive team with qualities appropriate for their responsibilities to achieve the Group’s strategic objectives and to position the executives’
interests in the Group alongside those of shareholders by rewarding them for enhancing shareholder value.
Executive remuneration
The principal components of executive remuneration are basic annual salary with benefits, annual bonus payments, share option incentives and pension contributions.
Basic salary
Salaries for executives are reviewed annually by the Remuneration Committee and are effective from 1 April in each year. This review ensures that basic salaries remain at appropriate levels for
the responsibilities involved. Benefits include private medical insurance and life assurance together with motor expense and permanent health insurance benefits where contractually entitled.
Discretionary annual bonus
Annual bonus payments are restricted to an appropriate percentage of basic salary for each executive and mainly take into account the trading performance and earnings per share
performance of the Group. The annual bonuses are set to incentivise executives to achieve predetermined targets.
Pension benefits
The Company contributes to the personal pension plan of one Director and operates an executive pension plan (money purchase) for another Director; there has been no change in the basis
of these plans during the year. No pension contributions are paid by the Company for any other Directors of the Company. In addition, the Group operates a number of pension plans to
ensure that all employees in the Group are able to join a scheme after an initial qualifying period; further details of these schemes are given in note 18 to the financial statements.
Share incentive schemes
Share options are used to encourage participants to identify with the interests of shareholders. The Company operates two schemes approved by the Inland Revenue and one scheme
established outside the Inland Revenue requirements. In addition, stand alone options were approved by shareholders in 1996 in respect of two executive Directors.
Options granted under these schemes have been at the mid-market closing share price on the business day prior to the date of grant. Options are normally exercisable between three and ten
years from the date of grant. Grants to individuals are phased over a number of years. At 31 December 2005 there were options over a total of 5,007,500 ordinary shares that remain capable
of being exercised in accordance with the rules of the schemes at prices ranging from 34.0 pence to 96.83 pence per share. MacLellan Report & Accounts 2005    15
The MacLellan Sharesave Scheme 2001, a SAYE share option scheme, was approved by the Inland Revenue on 20 June 2001 and an offer to employees took place in July 2001 with 
savings contracts of three or five years’ duration; there have been no further offers to employees since that date. The price at which options may be granted under the scheme is not less 
than 80% of the mid-market price immediately prior to the offer date. At 31 December 2005 there were 30 participants in the scheme (2004: 77) with options to acquire a total of 207,485
(2004: 329,632) ordinary shares of 5p each at a price of 58p per share. During the year, 8 participants exercised options over 41,009 shares and the remaining options are exercisable on 
the completion of the five year savings contracts during 2006.
Options held by the Directors under these schemes are set out on page 17.
Service contracts
The Company’s present policy on the duration of Directors’ service contracts is as follows:
• executive Directors have rolling contracts terminable on no more than one year’s notice served by the Company except in the event of a change in control of the Company when the
required notice period is doubled and on six to twelve months written notice by the Director;
• non-executive Directors are appointed on fixed term contracts of two years duration and thereafter terminable on three months written notice by either party. The Chairman’s appointment 
is terminable at any time on six months written notice served by either party.
All Directors are appointed subject to the Articles of Association of the Company, which requires Directors to retire and to seek election at the first AGM following their appointment;
thereafter, one third (or the number nearest thereto) of the Board, being those who have been longest in office since last re-elected, must retire and offer themselves for re-election.
Non-executive Directors
The basic fees payable to non-executive Directors are set by the Board. Where a non-executive Director provides services to the Company which are outside the normal scope of the
directorship this may be remunerated separately.
Details of fees payable in respect of non-executive Directors are set out below.
Remuneration Report continued 16 MacLellan Report & Accounts 2005
Remuneration Report continued
Directors’ emoluments
Salary 2005 2004
and fees Bonus Benefits Total Total
Note £000 £000 £000 £000 £000
Executive Directors
J R Foley 1 233 59 – 292 277
J L Ellis 187 43 1 231 221
S R Shipley 109 25 1 135 115
Non-executive Directors
A L R Morton (Chairman) 2 10 – – 10 40
A M Howarth 25 – – 25 25
G W S Lockyer 3 25 – – 25 35
Emoluments 718 713
Pension contributions 40 45
Total emoluments 758 758
Notes:
1 The services of Mr Foley are provided under a service agreement with Trelawne Services Limited, a private company in which Mr Foley has a controlling interest. The aggregate amount
paid in 2005 to Trelawne Services Limited, comprising salary, fees and expenses, was £262,400.
2 Mr Morton has waived his entitlement to any further remuneration with effect from 1 April 2005. During the year the Company entered into an agreement with Hawk Consulting Limited
for Mr Morton to supply consultancy services to the Company. Mr Morton is the owner of Hawk Consulting Limited and payments totalling £33,750 were made to Hawk Consulting
Limited in 2005 for services rendered.
3 Services provided to the Company that are outside the scope of Mr Lockyer’s directorship are provided by Coldelm Management Services Limited, a private company in which Mr Lockyer
has a controlling interest. Payments totalling £63,000 were made to Coldelm Management Services Limited for services rendered. MacLellan Report & Accounts 2005    17
Pension contributions
The Group contributed the following amounts to the pension arrangements of executive Directors:
2005 2004
£000 £000
J R Foley ––
J L Ellis 26 24
S R Shipley 14 21
40 45
The Group makes no contributions to the pension arrangements of non-executive Directors.
Directors’ share options
Options over MacLellan Group plc ordinary shares which were granted to Directors and outstanding at 31 December 2005 were as follows:
Dates normally Exercise price Number of ordinary shares
exercisable per share 2005 2004
J L Ellis July 2003/2010 50.0p 500,000 500,000
May 2005/2012 95.67p 500,000 500,000
April 2007/2014 69.67p 200,000 200,000
J R Foley August 1996/2006 57.0p 350,000 350,000
March 2002/2009 34.0p 250,000 250,000
July 2003/2010 50.0p 725,000 725,000
April 2007/2014 69.67p 200,000 200,000
G W S Lockyer March 2002/2009 34.0p 250,000 250,000
S R Shipley *December 1998/2005 48.5p – 52,500
August 1996/2006 57.0p 87,500 87,500
March 2002/2009 34.0p 25,000 25,000
May 2005/2012 95.67p 75,000 75,000
April 2007/2014 69.67p 80,000 80,000
* Exercised during the period; the closing mid-market price on the date of exercise was 86p per share giving rise to a gain at the point of exercise of £19,650.
Remuneration Report continued 18 MacLellan Report & Accounts 2005
Remuneration Report continued
Directors’ share interests
The interests of the Directors, all of which are beneficial, are shown below. There have been no changes in these interests between 31 December 2005 and 14 March 2006.
Ordinary shares of 5p each
31 December 31 December
2005 2004
A L R Morton (Chairman) 256,753 256,753
J R Foley 593,192 593,192
J L Ellis 51,681 51,681
A M Howarth 10,000 10,000
G W S Lockyer 50,000 50,000
S R Shipley 97,681 48,500
None of the Directors has an interest in the share capital of the subsidiary undertakings.
The mid-market share price at the close of business on 31 December 2005 was 80p per share (2004: 65.0p) and during the year the price ranged from 62.5p to 87.5p (2004: 65.0p to 75.5p). MacLellan Report & Accounts 2005    19
Company law requires Directors to prepare a report and financial statements for each financial year which give a true and fair view of the state of affairs of the Group and Company and of
the profit or loss of the Group for that period. In preparing those financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors confirm that the above requirements have been complied with in the preparation of the financial statements. The Directors are responsible for keeping proper accounting records
which disclose with reasonable accuracy at any time the financial position of the Group and Company and to enable them to ensure that the financial statements comply with the Companies
Act 1985. They are also responsible for the maintenance and integrity of the Group website, for safeguarding the assets of the Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities. The Directors acknowledge that information published on the Group website is accessible in many countries and that different
legal requirements may apply to the dissemination of information through the web.
Statement of Directors’ Responsibilities 20 MacLellan Report & Accounts 2005
Independent Auditors’ Report
Independent auditors’ report to the shareholders of MacLellan Group plc
We have audited the Group and Parent Company financial statements (the “financial statements”) of MacLellan Group plc for the year ended 31 December 2005 which comprise the Group
Profit and Loss Account, the Group and Company Balance Sheets, the Group Statement of Total Recognised Gains and Losses, the Reconciliation of Movements in Group Shareholders’ Funds,
the Group Cash Flow Statement and the related notes. These financial statements have been prepared under the accounting policies set out therein.
Respective responsibilities of directors and auditors
The Directors responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice) are set out in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). This report,
including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Section 235 of the Companies Act 1985 and for no other purpose.
We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you 
if, in our opinion, the Directors’ Report is not consistent with the financial statements, if the Company has not kept proper accounting records, if we have not received all the information 
and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and other transactions is not disclosed.
We read the other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. This other information comprises the Chairman’s
Statement, the Chief Executive’s Review, the Report of the Directors, the statement on Corporate Governance and the Remuneration Report. We consider the implications for our report if 
we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the
preparation of the financial statements, and of whether the accounting policies are appropriate to the Group’s and Company’s circumstances, consistently applied and adequately disclosed. MacLellan Report & Accounts 2005    21
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements:
• give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the Group’s and the Parent Company’s affairs as at 
31 December 2005 and of the Group’s profit and cash flows for the year then ended; and
• have been properly prepared in accordance with the Companies Act 1985.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
East Midlands
15 March 2006
Independent Auditors’ Report continued 22 MacLellan Report & Accounts 2005
2005 2004
Before Before
goodwill & Goodwill & goodwill & Goodwill &
exceptional exceptional exceptional exceptional Total
items items Total items items (restated)
Note £000 £000 £000 £000 £000 £000
Turnover 1
Continuing operations 232,781 – 232,781 190,165 – 190,165
Cost of sales 5 (200,999) – (200,999) (165,237) (284) (165,521)
Gross profit 31,782 – 31,782 24,928 (284) 24,644
Administrative expenses
Goodwill amortisation – (3,784) (3,784) – (2,795) (2,795)
Exceptional items 5 –– – – (2,187) (2,187)
Other (21,620) – (21,620) (17,786) – (17,786)
(21,620) (3,784) (25,404) (17,786) (4,982) (22,768)
Other operating income 3 –– – 440 – 440
Operating profit 1
Continuing operations 10,162 (3,784) 6,378 7,582 (5,266) 2,316
Net interest 2 (1,332) – (1,332) (851) – (851)
Profit on ordinary activities before taxation 3 8,830 (3,784) 5,046 6,731 (5,266) 1,465
Tax on profit on ordinary activities 6 (2,640) – (2,640) (2,176) 741 (1,435)
Profit for the financial year 6,190 (3,784) 2,406 4,555 (4,525) 30
Dividends 7 (1,014) (583)
Profit / (loss) for the financial year retained 17 1,392 (553)
Earnings per share 8
Basic 2.4p 0.0p
Diluted 2.3p 0.0p
Earnings per share before goodwill amortisation
and exceptional items:
Basic 8 6.1p 5.4p
Diluted 8 6.0p 5.2p
The above figures are stated on an historical cost basis.
The restatement of the results for the year ended 31 December 2004 relates to the new accounting treatment for proposed dividends as required by Financial Reporting Standard 21. Further information is given in note 7.
Group Profit and Loss Account for the year ended 31 December 2005 MacLellan Report & Accounts 2005    23
Group Company
2005 2004 2005 2004
(restated) (restated)
Note £000 £000 £000 £000
Fixed assets
Intangible assets 9 64,286 68,520 – –
Tangible assets 10 7,240 7,622 1,303 1,326
Investments 11 1,380 1,924 42,670 43,648
72,906 78,066 43,973 44,974
Current assets
Stocks 12 493 790 – –
Debtors 13 37,126 38,966 30,890 40,120
Cash at bank and in hand 3,962 2,575 5,685 –
41,581 42,331 36,575 40,120
Creditors: Amounts falling due within one year
Borrowings 14 (3,505) (6,221) (2,979) (8,367)
Other creditors 14 (37,884) (40,237) (3,452) (4,314)
(41,389) (46,458) (6,431) (12,681)
Net current assets / (liabilities) 192 (4,127) 30,144 27,439
Total assets less current liabilities 73,098 73,939 74,117 72,413
Creditors: Amounts falling due after more than one year
Borrowings 15 (8,637) (10,441) (7,927) (9,216)
Other creditors 15 (2,125) (2,375) (7,130) (4,697)
Net assets 62,336 61,123 59,060 58,500
Capital and reserves
Called up share capital 16 5,490 5,482 5,490 5,482
Ordinary shares to be issued 16 2,125 2,375 2,125 2,375
Share premium account 17 48,879 48,786 48,879 48,786
Profit and loss account 17 5,842 4,480 2,566 1,857
Equity shareholders’ funds 62,336 61,123 59,060 58,500
The financial statements on pages 22 to 46 were approved by the Board on 15 March 2006 and signed on its behalf by:
S R Shipley
Director
Balance Sheets at 31 December 2005 24 MacLellan Report & Accounts 2005
Group Statement of Total Recognised Gains and Losses for the year ended 31 December 2005
Reconciliation of Movements in Group Shareholders’ Funds for the year ended 31 December 2005
2005 2004 
£000 £000
Profit for the financial year 2,406 30
Currency adjustments offset in reserves (30) 26
Total recognised gains for the year 2,376 56
2005 2004 
Note £000 £000
Profit for the financial year 2,406 30
Dividends (1,014) (583)
1,392 (553)
Ordinary shares issued including premium 16 101 12,523
Costs of share issue – (432)
Currency adjustments (30) 26
Ordinary shares to be issued
– arising on acquisitions in the year – 1,375
– earn out consideration settled in shares – (1,000)
– reduction in anticipated earn out consideration (250) (2,600)
Net increase in shareholders’ funds 1,213 9,339
Opening shareholders’ funds
– as previously reported 60,109 51,201
– prior year adjustment for restatement of dividends 7 1,014 583
Closing shareholders’ funds 62,336 61,123 MacLellan Report & Accounts 2005    25
Group Statement of Cash Flows for the year ended 31 December 2005
2005 2004 
Note £000 £000
Net cash inflow from operating activities A 13,220 8,922
Returns on investments and servicing of finance
Interest received 137 147
Interest paid (1,355) (690)
Interest element of finance lease payments (141) (143)
Loan issue costs paid – (224)
Net cash outflow from returns on investments and servicing of finance (1,359) (910)
Taxation (3,294) (478)
Capital expenditure and financial investment
Purchase of tangible fixed assets (2,437) (1,885)
Disposal of tangible fixed assets 225 163
Redemption of loan stock in unquoted company 589 28
Net cash outflow from capital expenditure and financial investment (1,623) (1,694)
Acquisitions and disposals
Purchase of subsidiary undertakings – (5,549)
Repayment of loans acquired with subsidiary undertakings – (5,604)
Bank balances acquired with subsidiary undertakings – 2,269
Earnout consideration on acquisitions made in prior year (50) (798)
Net cash outflow from acquisitions and disposals (50) (9,682)
Dividends paid (1,014) (583)
Net cash inflow / (outflow) before financing 5,880 (4,425)
Financing
Ordinary shares issued 16 101 148
Expenses incurred in issue of ordinary shares – (432)
Loans due within one year:
– increases in term debt 494 1,364
– repayments in year C (4,136) (2,602)
Loans due after one year:
– increases in term debt 1,460 8,341
Capital element of finance lease payments C (1,107) (928)
Net cash (outflow) / inflow from financing (3,188) 5,891
Increase in cash in the year B, C 2,692 1,466 26 MacLellan Report & Accounts 2005
Notes to the Group Statement of Cash Flows for the year ended 31 December 2005
A. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
2005 2004 
£000 £000
Operating activities
Operating profit 6,378 2,316
Amortisation 3,784 2,795
Depreciation 2,629 2,134
(Profit) / loss on disposal of tangible fixed assets (31) 5
Exchange differences (25) 25
Decrease / (increase) in stocks 297 (182)
Decrease / (increase) in debtors 1,535 (4,126)
(Decrease) / increase in creditors (1,347) 5,955
Net cash inflow from operating activities 13,220 8,922
B. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2005 2004 
£000 £000
Increase in cash in the year 2,692 1,466
Net cash flow from changes in debt 5,243 (5,951)
New loans to settle obligations including loan notes (1,954) (841)
New finance lease agreements (12) (1,434)
Finance leases acquired with subsidiary undertakings – (198)
Loan issue cost amortisation (65) (30)
Exchange movements 3 –
Movement in net debt in the year 5,907 (6,988)
Net debt at beginning of year (14,087) (7,099)
Net debt at end of year (8,180) (14,087) MacLellan Report & Accounts 2005    27
Notes to the Group Statement of Cash Flows continued
C. ANALYSIS OF CHANGES IN NET DEBT DURING THE YEAR
At Other At
31 December Cash non-cash 31 December
2004 flow changes 2005
£000 £000 £000 £000
Cash at bank and in hand 2,575 1,387 – 3,962
Overdraft (1,305) 1,305 – –
1,270 2,692 – 3,962
Debt due within one year (3,809) 4,136 (3,306) (2,979)
Debt due after one year (9,216) – 1,289 (7,927)
Finance lease agreements
– within one year (1,107) 1,107 (526) (526)
– after one year (1,225) – 515 (710)
(15,357) 5,243 (2,028) (12,142)
(14,087) 7,935 (2,028) (8,180)
D. NON-CASH TRANSACTIONS
During the year the Group entered into finance lease arrangements in respect of assets with a total capital value of £12,000 (2004: £1,434,000). The financial statements have been prepared under the historical cost convention, the Companies Act 1985 and in accordance with applicable Accounting Standards.
The principal accounting policies and estimation techniques are summarised below. Financial reporting standards in respect of retirement benefits (FRS 17), post balance sheet events (FRS 21) and financial
instruments: disclosure and presentation (FRS 25) have been implemented where applicable and information on their effect has been given in the appropriate notes to the financial statements.
Basis of consolidation
The financial statements of the Company and all of its subsidiary undertakings are included in the consolidated financial statements. The results of subsidiary undertakings and businesses acquired or
disposed of during the year are included from the date control is acquired or up to the date of disposal.
Goodwill arising on acquisition, being the excess of consideration over the fair value of the net assets acquired, is accounted for as follows:
l on acquisitions completed prior to 27 September 1998 goodwill was eliminated directly against reserves
l on acquisitions completed subsequent to 27 September 1998 goodwill is capitalised and then amortised on a straight line basis over its estimated useful economic life.
In accordance with the transitional provisions of FRS 10 goodwill previously eliminated against reserves will remain eliminated.
On the subsequent disposal or cessation of a previously acquired business, the profit or loss on disposal or cessation is calculated after charging the gross amount of any related goodwill previously taken 
to reserves.
In accordance with Section 230 of the Companies Act 1985, MacLellan Group plc has taken advantage of the exemption not to include a company profit and loss account.
Turnover
Turnover, which excludes value added tax and sales between Group undertakings, represents the invoiced value of services rendered and goods supplied and is recognised according to the value of work
done and invoiced. Whilst a number of contracts are secured for periods in excess of one year, invoicing arrangements are such that revenue is recognised as services are provided.
Intangible fixed assets
Goodwill arising on acquisitions completed subsequent to 27 September 1998 is capitalised and amortised over 20 years being the period over which the Directors estimate that the values of the
businesses acquired are expected to exceed the values of the underlying assets.
Tangible fixed assets
Tangible fixed assets are shown at cost, being purchase cost together with any incidental costs of acquisition, less accumulated depreciation. Depreciation is calculated on a straight line basis at rates
appropriate to the expected useful economic lives and estimated residual values of the assets within the following ranges:
Freehold land not depreciated
Freehold buildings 2% per annum
Leasehold land and buildings over the lesser of the period of the lease or 50 years
Plant, equipment and office fixtures 8 - 50% per annum
Motor vehicles 25 - 33% per annum
Fixed asset investments
Investments are held at cost unless, in the opinion of the Directors, any diminution in value is believed to be permanent. Income is accounted for on an accruals basis.
Stocks
Stocks, which comprise materials held for use on contracts, are stated at the lower of cost and net realisable value.
28 MacLellan Report & Accounts 2005
Accounting Policies  MacLellan Report & Accounts 2005    29
Accounting Policies continued
Trade debtors
Trade debtors are carried at their estimated realisable value after providing for debts where collection is doubtful or where there are exceptional circumstances.
Deferred tax
Deferred tax is provided for in full on all timing differences and is calculated, without applying discount factors, at the average tax rates expected to apply in the periods in which timing differences are
expected to reverse. Deferred tax assets are recognised to the extent that, in the view of the Directors, there are expected to be appropriate taxable profits within the foreseeable future from which the
asset can be deducted.
Leases
Assets obtained under finance lease contracts are included as tangible fixed assets at their capital value and depreciated over their estimated useful lives. The corresponding liability, net of finance 
charges, is recorded as a creditor and the finance element of the liability is charged to the profit and loss account over the period of the contract. Rentals payable under operating leases are charged to 
the profit and loss account in the period to which they relate.
Pensions
Costs in respect of pension contributions to money purchase schemes are charged to the profit and loss account in the period in which they are incurred. Pension costs of the MacLellan 2000 Scheme
(final salary) are charged to the profit and loss account so as to spread the cost of pensions over the expected average working lives of scheme members in accordance with the recommendations of
qualified actuaries.
Foreign exchange
The trading results of overseas businesses are translated into sterling at average rates of exchange ruling through the relevant period. The net assets of overseas businesses are expressed in sterling at the
rates of exchange ruling at the balance sheet date. Differences on exchange arising from the opening net assets of overseas businesses are taken to reserves. Exchange differences arising in the normal
course of trading and on the translation of monetary assets and liabilities are dealt with in the profit and loss account. 30 MacLellan Report & Accounts 2005
Notes to the Financial Statements 
1. SEGMENTAL INFORMATION
A. Turnover, operating profit and net operating assets by division
Operating 2005
profit before
goodwill Goodwill Net operating
Turnover amortisation amortisation Total assets
£000 £000 £000 £000 £000
Integrated services
Continuing operations 163,929 4,844 (2,021) 2,823 34,977
Security and specialist services
Continuing operations 68,852 5,318 (1,763) 3,555 35,539
Turnover 232,781 70,516
Operating profit
Operating profit before depreciation 12,791 (3,784) 9,007
Depreciation (2,629) – (2,629)
10,162 (3,784) 6,378
Other operating income –– –
Net interest and net debt (1,332) – (1,332) (8,180)
Profit on ordinary activities before taxation 8,830 (3,784) 5,046
Net assets 62,336
Operating 2004
profit before
goodwill Goodwill Net operating
Turnover amortisation amortisation Total assets
£000 £000 £000 £000 £000
Integrated services
Continuing operations 159,834 2,976 (2,027) 949 38,413
Security and specialist services
Continuing operations 30,331 1,695 (768) 927 36,797
Turnover 190,165 75,210
Operating profit
Operating profit before depreciation 6,805 (2,795) 4,010
Depreciation (2,134) – (2,134)
4,671 (2,795) 1,876
Other operating income 440 – 440
Net interest and net debt (851) – (851) (14,087)
Profit on ordinary activities before taxation 4,260 (2,795) 1,465
Net assets 61,123 MacLellan Report & Accounts 2005    31
Notes to the Financial Statements continued
1. SEGMENTAL INFORMATION – continued
B. Turnover, operating profit before goodwill amortisation and net operating assets by country of origin
2005 2004
Operating Net operating Operating Net operating
Turnover profit assets Turnover profit assets
Turnover £000 £000 £000 £000 £000 £000
United Kingdom 228,886 10,007 6,178 186,844 4,985 5,779
Rest of Europe 3,895 155 51 3,321 126 911
232,781 10,162 6,229 190,165 5,111 6,690
All of the above turnover is invoiced to customers within the country of origin.
2. NET INTEREST
2005 2004 
£000 £000
Payable:
Bank loans and overdrafts 1,295 761
Other loans 46 75
Finance leases and hire purchase agreements 141 143
1,482 979
Receivable:
Bank (16) (4)
Other loans (134) (124)
1,332 851
3. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
Profit on ordinary activities before taxation is stated after charging / (crediting):
2005 2004 
£000 £000
Amortisation of intangible fixed assets
– goodwill 3,784 2,795
Other income – (440)
Depreciation
– owned assets 1,761 1,599
– assets under finance leases 868 535
(Profit) / loss on disposal of tangible fixed assets (31) 5
Auditors’ remuneration including expenses *
– audit services 137 101
– non audit services 58 43
Operating lease rentals
– plant and machinery 820 864
– other 2,825 3,017
Exceptional items (note 5) – 2,471
* In addition to the non audit fees for tax compliance services shown above, £nil (2004: £103,000) has been capitalised in respect of acquisitions and share issues. The audit fee in respect of the Company
was £13,000 (2004: £12,000). 32 MacLellan Report & Accounts 2005
Notes to the Financial Statements continued
4. DIRECTORS AND EMPLOYEES
The average number of persons employed by the Group (including executive directors) was as follows:
2005 2004 
Number Number
Management and office 763 805
Production and site operatives 12,544 11,529
13,307 12,334
The payroll cost of these employees was as follows:
2005 2004 
£000 £000
Wages and salaries 146,787 118,061
Social security costs 10,852 8,477
Other pensions costs (note 18) 706 672
158,345 127,210
2005 2004 
£000 £000
Directors’ remuneration comprised:
Fees 94 90
Salaries and taxable benefits 594 516
Bonuses 127 107
Pension contributions 40 45
855 758
The remuneration of the highest paid director, who receives no pension benefit from the Company, was £292,000 (2004: £277,000). The Company contributes to the personal pension plan of one
(2004: one) Director and operates an executive pension plan (money purchase) for one (2004: one) other Director. Further details of Directors’ share interests, options and remuneration are set out in 
the Remuneration Report on page 14.
5. EXCEPTIONAL ITEMS
2005 2004 
£000 £000
Exceptional items comprise: 
Contract debt provision and cessation costs * – 1,556
Redundancy and rationalisation costs – 915
– 2,471
* The figure in 2004 of £1.56 million includes £1.25 million in respect of a contract debt provision. MacLellan Report & Accounts 2005    33
Notes to the Financial Statements continued
6. TAXATION
2005 2004 
£000 £000
UK corporation tax at 30% (2004: 30%)
– charge on results for the year 2,694 1,493
– adjustment in respect of prior period (372) (4)
Total current tax 2,322 1,489
Deferred tax
– origination and reversal of timing differences 70 (148)
– adjustment in respect of prior period 248 94
Total deferred tax 318 (54)
2,640 1,435
Current tax
The current tax charge for the current year is higher than the standard rate of corporation tax in the UK (30%). The difference is explained as follows:
2005 2004 
£000 £000
Profit on ordinary activities before tax 5,046 1,465
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK at 30% (2004: 30%) 1,514 440
Effects of:
Expenses not deductible for tax purposes including goodwill amortisation 1,251 906
Utilisation of tax losses (163) (59)
Depreciation in excess of capital allowances 79 26
Adjustment to tax charge in respect of previous years (372) (4)
Other timing differences 13 180
2,322 1,489
Deferred tax
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
The deferred tax asset recognised comprises:
Accelerated capital allowances 781 663 1 1
Short-term timing differences 69 378 27 13
Losses 88 215 – 55
938 1,256 28 69
At 1 January 2005 1,256 1,003 69 114
Business acquired – 199 – –
Profit and loss account (318) 54 (41) (45)
At 31 December 2005 938 1,256 28 69
Further tax losses which have not been included above, calculated at 30%, amount to: Group - £417,000 (2004: £462,000) and Company - £nil (2004: £nil). These are available for deduction from future
taxable profits and will be included as a debtor when, in the view of the Directors, their utilisation is more likely than not. 34 MacLellan Report & Accounts 2005
Notes to the Financial Statements continued
7. DIVIDENDS
2005 2004 
£000 £000
Ordinary shares: 1.0 pence per 5 pence share (2004: 0.75 pence) 996 570
Convertible preference shares: 0.35 pence per 10 pence share (2004: 0.2625 pence) 18 13
1,014 583
The new Financial Reporting Standard (FRS 21) requires dividends to be debited to the profit and loss account when they are paid or approved at an Annual General Meeting. Previously, the Companies 
Act 1985 required that proposed dividends be reported in the profit and loss account. In applying this change in accounting practice, the previously reported figures for 2004 have been restated with the
effect that shareholders’ funds at 31 December 2004 have been increased by £1,014,000 (2003: £583,000).
No interim dividend has been declared. In 2004 there was no interim dividend; the final dividends of 1.0 pence per ordinary share and 0.35 pence per convertible preference share were approved at 
the Annual General Meeting held on 5 May 2005 and paid on 4 July 2005 (2004: final dividends of 0.75 pence per ordinary share and 0.2625 pence per convertible preference share were approved 
at the Annual General Meeting held on 6 May 2004 and paid on 1 July 2004).
8. EARNINGS PER SHARE
The basic and diluted earnings per share have been calculated on the following earnings and weighted average number of shares in issue:
2005 2004
Number of Number of
Earnings shares Earnings shares
£000 ‘000 £000 ‘000
Basic EPS: Earnings available to equity shareholders 2,406 101,437 30 85,969
Effect of dilutive securities:
Options – 989 – 857
Diluted EPS: Adjusted earnings 2,406 102,426 30 86,826
Under FRS 25, equity shareholders now includes both ordinary shareholders and convertible preference shareholders; the number of ordinary shares is the aggregate of ordinary shares in issue and the
ordinary shares that would be issued on the conversion of the convertible preference shares. It is intended that part of the earnout consideration will be settled in shares which, therefore, are potentially
dilutive; however these are not included above as, at the balance sheet date, no earnout settlements in shares were certain.
The Directors consider that a more appropriate measure of the performance of the Group excludes, principally, the effect of goodwill which is a non-cash item. This measure of the underlying earnings per
share has been calculated on the above profit available to equity shareholders adjusted for restructuring and non-recurring items, goodwill amortisation and related taxation. The calculations of earnings
per share can be reconciled as follows:
Diluted Undiluted
2005 2004 2005 2004
pence pence pence pence
Basic EPS 2.3 0.0 2.4 0.0
Effect of:
– goodwill amortisation 3.7 3.2 3.7 3.3
– contract debt provision and cessation costs – 1.3 – 1.3
– redundancy and rationalisation costs – 0.7 – 0.8
Underlying EPS 6.0 5.2 6.1 5.4 MacLellan Report & Accounts 2005    35
Notes to the Financial Statements continued
9. INTANGIBLE FIXED ASSETS
Goodwill
£000
Group
Cost
At 1 January 2005 76,342
Reassessment of earn out consideration payable (450)
At 31 December 2005 75,892
Aggregate amortisation
At 1 January 2005 7,822
Charge for the year 3,784
At 31 December 2005 11,606
Net book amount
At 31 December 2005 64,286
At 31 December 2004 68,520
The Company has no intangible fixed assets.
10. TANGIBLE FIXED ASSETS
Plant, equipment,
Freehold land Leasehold land vehicles and
and buildings and buildings office fixtures Total
Group £000 £000 £000 £000
Cost
At 1 January 2005 1,379 123 21,189 22,691
Exchange adjustments – – (16) (16)
Additions – – 2,449 2,449
Disposals – – (590) (590)
At 31 December 2005 1,379 123 23,032 24,534
Accumulated depreciation
At 1 January 2005 66 83 14,920 15,069
Exchange adjustments – – (8) (8)
Charge for the year 21 12 2,596 2,629
Disposals – – (396) (396)
At 31 December 2005 87 95 17,112 17,294
Net book amount
At 31 December 2005 1,292 28 5,920 7,240
At 31 December 2004 1,313 40 6,269 7,622
The value of land, which is not depreciated, is £340,000 (2004: £340,000). Leasehold land and buildings includes short leasehold land and buildings with a cost of £123,000 (2004: £123,000) and
accumulated depreciation of £95,000 (2004: £83,000); depreciation charged in the year amounted to £12,000 (2004: £7,000).
The total net book amount includes within plant, equipment, vehicles and office fixtures assets held under finance leases which have a capital cost of £7,643,000 (2004: £6,543,000) and accumulated
depreciation of £3,680,000 (2004: £2,975,000). 10. TANGIBLE FIXED ASSETS – continued
Freehold Plant, equipment
land and buildings and office fixtures Total
Company £000 £000 £000
Cost
At 1 January 2005 1,379 29 1,408
Additions –1 1
Disposals – (8) (8)
At 31 December 2005 1,379 22 1,401
Accumulated depreciation
At 1 January 2005 66 16 82
Charge for the year 21 3 24
Disposals – (8) (8)
At 31 December 2005 87 11 98
Net book amount
At 31 December 2005 1,292 11 1,303
At 31 December 2004 1,313 13 1,326
11. INVESTMENTS
Group Company
£000 £000
Subsidiary undertakings
Cost
At 1 January 2005 – 61,621
Reassessment of earn out consideration payable – (450)
At 31 December 2005 – 61,171
Provisions for diminution in value
At 1 January 2005 and at 31 December 2005 – (19,870)
Other investments at cost
At 1 January 2005 1,924 1,897
Redemptions (544) (528)
At 31 December 2005 1,380 1,369
Net book amount
At 31 December 2005 1,380 42,670
At 31 December 2004 1,924 43,648
Further information on other investments is given in note 19.
36 MacLellan Report & Accounts 2005
Notes to the Financial Statements continued MacLellan Report & Accounts 2005    37
Notes to the Financial Statements continued
11. INVESTMENTS – continued
Adjustment to provisional fair values
The Directors have reviewed the provisional fair values of the net assets acquired with First Security Group Limited and TASS (Europe) Limited and consider that no adjustment is necessary to the 
provisional values established at acquisition.
Additionally, the Directors have reviewed the performance targets required for earnout consideration to become payable in respect of businesses acquired in 2003 and 2004. As a result of this review, 
the earnout liabilities of the Group have been reduced by £0.4 million.
The total liability for earn out consideration in respect of Tasker (U.K.) Limited and TASS (Europe) Limited is included in these financial statements at £4.25 million of which the Directors estimate that 
a total of £2.125 million will be satisfied in shares to be issued.
Subsidiary undertakings
The subsidiary undertakings of MacLellan Group plc, which are incorporated in Great Britain and registered in England and Wales, are as follows:
Trading
MacLellan International Limited First Security (Guards) Limited*
MacLellan International Airport Services Limited* MacLellan Attlaw Security Limited
MacLellan Limited* SSD UK Limited*
MacLellan Management Services Limited TASS (Europe) Limited
One Real Estate Services Limited*
Dormant
Alpha Excellence Limited ITECS Limited *
Baker Blythe & Company Limited* Janitoria Limited*
Bateman’s Cleaning Services Limited* Jordec Management Services Limited
Bateman’s Glass Cleaning Limited* MacLellan Facilities Management Limited
Broadreach Food Hygiene Services Limited* MacLellan Integrated Services Limited
Broadreach Group Limited MacLellan Specialist Services Limited
Broadreach Leisure Support Services Limited* MacLellan Ventures Limited
Broadreach Retail Services Limited* Norman White (City) Limited
City & Provincial Cleaning Services Limited* Quadro Specialist Cleaning Services Limited*
Excellence Limited Ramoneur Cleaning and Support Services Limited*
Excellence Support Services Limited* Skycaps Limited*
First Security Group Limited SSD Group Limited
Industrial Services International Limited* The Ramoneur Company Limited*
Isovel Limited* Two Flags Connect Business Services Limited*
Isovel Services Limited Unique Cleaning Services Limited*
Unless otherwise stated, MacLellan Group plc owns directly or indirectly 100% of the voting and equity shares in each of the subsidiaries and all subsidiary undertakings are included in the consolidated
Group accounts. The share capital of the companies marked * are held through subsidiary undertakings. The Company owns 100% of the non-voting equity share capital of Broadreach Group Limited; 
the fixed rate preference voting share capital is registered in the name of the MacLellan Group plc Employee Share Trust. 38 MacLellan Report & Accounts 2005
Notes to the Financial Statements continued
12. STOCKS
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Raw materials and consumables 493 790 ––
13. DEBTORS
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Amounts falling due within one year
Trade debtors 33,679 33,744 – –
Amounts owed by Group undertakings – – 831 2,910
Other debtors 96 87 49 2
Corporation tax – – 1,599 1,084
Deferred tax (note 6) 538 696 28 69
Prepayments and accrued income 1,963 3,379 17 23
36,276 37,906 2,524 4,088
Amounts falling due after more than one year
Amounts owed by Group undertakings – – 27,916 35,532
Other debtors 450 500 450 500
Deferred tax (note 6) 400 560 – –
850 1,060 28,366 36,032
37,126 38,966 30,890 40,120
Trade debtors is net of a provision of £1.25 million in respect of a contract debt dispute. This debt continues to be vigorously pursued by the Directors who have commenced legal proceedings but, in
view of the time elapsed, they consider it appropriate to retain the provision in full.
14. CREDITORS: Amounts falling due within one year
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Borrowings
Bank overdraft – 1,305 – 4,558
Bank loans 2,867 2,643 2,867 2,643
Loan notes 112 1,166 112 1,166
Obligations under finance leases 526 1,107 – –
3,505 6,221 2,979 8,367
The bank overdraft and loan facilities are secured by fixed and floating charges over certain of the Group’s assets. Bank loans are net of issue costs of £229,000 (2004: £293,000). The loan notes are
guaranteed by the Group’s bankers. Amounts owing under finance leases are secured against the assets acquired under these arrangements and are repayable within five years.
Further information on borrowings is given in note 19. MacLellan Report & Accounts 2005    39
Notes to the Financial Statements continued
14. CREDITORS: Amounts falling due within one year – continued
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Other creditors
Trade creditors 4,326 7,581 129 555
Amounts owed to Group undertakings – – 266 1,163
Corporation tax 1,030 2,002 – –
Taxation and social security 13,988 13,947 2,164 1,941
Other creditors 200 140 22 –
Accruals and deferred income 18,340 16,567 871 655
37,884 40,237 3,452 4,314
15. CREDITORS: Amounts falling due after more than one year
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Borrowings
Bank loans 7,927 9,216 7,927 9,216
Obligations under finance leases 710 1,225 – –
8,637 10,441 7,927 9,216
Further information on borrowings is given in note 19.
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Other creditors
Amounts owed to Group undertakings – – 5,005 2,322
Other creditors 2,125 2,375 2,125 2,375
2,125 2,375 7,130 4,697 40 MacLellan Report & Accounts 2005
Notes to the Financial Statements continued
16. CALLED UP SHARE CAPITAL
2005 2004
Number £000 Number £000
Authorised
Ordinary shares of 5 pence each 130,000,000 6,500 130,000,000 6,500
Convertible preference shares of 10 pence each 5,000,000 500 5,000,000 500
7,000 7,000
Allotted, issued and fully paid
Ordinary shares of 5 pence each 99,803,624 4,990 99,635,115 4,982
Convertible preference shares of 10 pence each 5,000,000 500 5,000,000 500
5,490 5,482
Allotments
Ordinary shares of 5 pence each were allotted during the year as a result of the exercise of options under the Group’s share option schemes as follows:
Date Number Price Consideration
£000
1 March 2005 15,392 58p 9
19 April 2005 21,507 58p 12
19 July 2005 4,110 58p 2
18 October 2005 75,000 69.67p 52
15 November 2005 52,500 48.5p 26
168,509 101
Ordinary shares to be issued
Under the terms of the agreements for the acquisition of Tasker (U.K.) Limited and of TASS (Europe) Limited, further consideration is payable dependent upon the performance of the businesses. 
This further consideration may be satisfied by cash and/or the issue of shares. The Directors have reassessed the consideration payable and estimate that £2.125 million (2004: £2.375 million) of that
consideration will be satisfied in shares and £2.125 million in cash (included in other creditors).
Convertible preference shares
The holder of the convertible preference shares is entitled, pari passu with the holders of ordinary shares, to share in dividends paid by the Company. In the event of a winding up or other return of capital
by the Company, the surplus assets shall be applied first in paying to the holder of the convertible preference shares an amount equal to the issue price of the shares; the balance shall be divided amongst
the holders of ordinary shares.
On the basis of their entitlement to dividends and other rights, these shares are regarded as equity shares under FRS 25 and accordingly the analysis shown in previous years of equity and non-equity
shareholders’ funds is no longer applicable.
The convertible preference shares are convertible by the shareholder at any time on the basis of 35 ordinary shares of 5 pence for every 100 convertible preference shares held. Upon conversion, the
ordinary shares thereby issued shall rank pari passu in all respects and form one class with the existing ordinary shares. The holder is eligible to vote on any resolution which varies the rights of the
convertible preference shares. MacLellan Report & Accounts 2005    41
Notes to the Financial Statements continued
16. CALLED UP SHARE CAPITAL – continued
Share schemes
At 31 December 2005, the following options to subscribe for ordinary shares of 5 pence each in the Company were outstanding:
Dates normally exercisable At At Exercise
1January Granted/ 31 December price
2005 (exercised) Lapsed 2005 per share
Executive share options:
Inland Revenue approved schemes
December 1998/2005 52,500 (52,500) – – 48.5p
July 2003/2006 110,000 – – 110,000 50.0p
August 2004/2007 46,875 – (46,875) – 64.0p
September 2004/2007 186,430 – (42,660) 143,770 70.3p
May 2005/2008 298,370 – (133,920) 164,450 96.83p
694,175 (52,500) (223,455) 418,220
Unapproved schemes
August 1996/2006 437,500 – – 437,500 57.0p
March 2002/2009 525,000 – – 525,000 34.0p
July 2003/2010 1,240,000 – – 1,240,000 50.0p
September 2004/2011 84,120 – (17,890) 66,230 70.3p
May 2005/2012 1,238,590 – (163,040) 1,075,550 95.67p
April 2007/2014 1,495,000 (75,000) (175,000) 1,245,000 69.67p
5,020,210 (75,000) (355,930) 4,589,280
Sharesave scheme:
August 2004 97,130 (24,383) (72,747) – 58.0p
August 2006 232,502 (16,626) (8,391) 207,485 58.0p
329,632 (41,009) (81,138) 207,485
Total 6,044,017 (168,509) (660,523) 5,214,985 17. RESERVES
Share premium Profit and
account loss account
£000 £000
Group
At 1 January 2005 as previously reported 48,786 3,466
Prior year adjustment for dividends – 1,014
At 1 January 2005 – 4,480
Exchange adjustments – (30)
On issue of new ordinary shares 93 –
Profit for the financial year – 1,392
At 31 December 2005 48,879 5,842
The total of goodwill written off relating to acquisitions made prior to 27 September 1998 is £2.68 million of which £1.98 million and £0.7 million has been written off against an other reserve and profit
and loss account respectively.
Share premium Profit and 
account loss account
£000 £000
Company
At 1 January 2005 as previously reported 48,786 843
Prior year adjustment for dividends – 1,014
At 1 January 2005 48,786 1,857
Exchange adjustments –4
On issue of new ordinary shares 93 –
Profit for the financial year – 705
At 31 December 2005 48,879 2,566
The profit for the financial year dealt with in the financial statements of the Company is £319,000 (2004: £240,000). The share premium account includes £1.5 million in relation to the premium arising
from the issue of the convertible preference shares.
18. PENSIONS
The MacLellan Group originally set up three pension schemes during 2000 for various categories of employee. Each of these schemes had been written under trust and approved under the Income and
Corporation Taxes Act 1998.
During 2004, a radical and strategic review of the pension scheme arrangements was carried out. The aim of the review was to enable the Group to consolidate and reduce the number of pension
schemes it administered and to provide employees with:
l a national firm of independent financial advisers to work with employees across the UK
l cost effective pension solutions
l easy and clear information to aid membership into a pension scheme with structured individual advice.
Consequently, the MacLellan Personal Pension Plan was introduced for all categories of employee within the Integrated Services business (subject to eligibility). This defined contribution plan is provided
through Scottish Widows and ensures compliance with Stakeholder Pension Legislation. In addition, the Group contributes to stand alone money purchase schemes of certain senior employees.
42 MacLellan Report & Accounts 2005
Notes to the Financial Statements continued MacLellan Report & Accounts 2005    43
Notes to the Financial Statements continued
18. PENSIONS – continued
The MacLellan Group 2000 Retirement Benefits Scheme, set up in July 2000, is a funded final salary (defined benefit) scheme and offers guaranteed pension benefits based upon salary and service, and
broadly matches the Principal Civil Service Pension Scheme. The scheme is offered only to employees joining the company who are entitled by legislation to receive benefits on this basis. The scheme
continues to operate alongside the MacLellan Personal Pension Plan.
Costs are charged to the profit and loss account in the period in which they are incurred and amounted to £628,000 (2004: £595,000) in respect of defined contribution schemes and £78,000 
(2004: £77,000) in respect of the defined benefit scheme. At 31 December 2005 there were outstanding contributions of £64,000 (2004: £68,000).
Financial Reporting Standard 17
Under the provisions of FRS 17, the Group has accounted for pensions using the following information concerning the MacLellan 2000 defined benefit scheme. At 31 December 2005 the scheme had
thirty five active members (2004: thirty four) and its assets and liabilities are not material in the context of the Group. However, the information below has been provided for use by readers of the financial
statements.
The contribution levels are determined by an independent qualified actuary using the projected unit method. The main assumptions used by the actuary for FRS 17 purposes at 31 December were 
as follows:
2005 2004
Rate of inflation 2.8% 3.0%
Rate of salary increases 3.8% 4.0%
Rate of increase in pensions in payment 2.8% 3.0%
Revaluation of deferred pensions 2.8% 3.0%
Discount rate 4.7% 5.25%
The scheme assets are invested in Scottish Life insurance policies which had a market value at 31 December 2005 of £387,000 (2004: £266,000). The summary of scheme funds, measured in accordance
with the requirements of FRS 17, at 31 December 2005 were as follows:
2005 2004
£000 £000
Total market value of assets 387 266
Present value of scheme liabilities (423) (272)
Deficit in scheme (36) (6)
Related deferred tax liability 11 –
Net scheme liability (25) (6)
As the impact of these amounts are not material in the context of the Group, no prior year adjustment has been made and the above net scheme liability has been included in creditors and the cost has
been included in other pension costs.
19. FINANCIAL INSTRUMENTS
A summary of the Group’s treasury policy is given in the Report of the Directors.
As part of the Group’s policy to manage interest rate risks, the Group has entered into an interest rate cap in respect of approximately £5 million of its term loan liability limiting interest payable to 5.5%
plus the margin. As permitted by FRS 13, short term debtors and creditors have not been included in this note, unless otherwise stated. Except where noted, the Directors are of the opinion that the fair
values of financial assets and financial liabilities are not materially different from their book values. Financial liabilities and financial assets are denominated in sterling except for Euro denominated 
accounts of £675,000 (2004: overdraft of £28,000) translated at the year end rate. 44 MacLellan Report & Accounts 2005
Notes to the Financial Statements continued
19. FINANCIAL INSTRUMENTS – continued
Financial liabilities
The maturity profile of the Group’s financial liabilities is as follows:
Finance
Debt leases Total
£000 £000 £000
At 31 December 2005:
Within 1 year or on demand 2,979 526 3,505
Between 1 and 2 years 2,529 485 3,014
Between 2 and 5 years 5,279 225 5,504
After 5 years 119 – 119
10,906 1,236 12,142
At 31 December 2004:
Within 1 year or on demand 5,114 1,107 6,221
Between 1 and 2 years 2,457 487 2,944
Between 2 and 5 years 6,533 738 7,271
After 5 years 226 – 226
14,330 2,332 16,662
The financial liabilities attract interest on the following bases:
Variable Fixed
rate rate Total
£000 £000 £000
At 31 December 2005 10,906 1,236 12,142
At 31 December 2004 14,330 2,332 16,662
The variable rate financial instruments attract interest charges based upon the clearing banks’ or Euribor base rates. Fixed rate financial liabilities consist of finance leases with interest based on market 
rates at their inception.
At 31 December 2005 the Group had undrawn but committed borrowing facilities repayable within one year of £14,469,000 (2004: £13,344,000). Financial liabilities also include £2.125 million of 
earnout consideration that is estimated to be payable in cash and loan notes; no interest arises on this liability. MacLellan Report & Accounts 2005    45
Notes to the Financial Statements continued
19. FINANCIAL INSTRUMENTS – continued
Financial assets
The financial assets of the Group include the following investments:
2005 2004
£000 £000
Cash 3,962 2,575
Deferred consideration 450 500
Unlisted investment in quoted company:
– Unsecured loan stock 2003/2006 57 86
– Unsecured convertible loan stock 2003/2006 1,100 1,600
Other debentures 11 26
Investments in unquoted companies:
– Ordinary shares 212 212
5,792 4,999
Interest is receivable on net cash balances at short-term money market rates. The deferred consideration is receivable in ten equal annual instalments commencing 6 January 2006. Interest is receivable
after that date on the outstanding balance at progressively increasing rates of 1% to 3% above clearing bank base rate.
The unsecured convertible loan stock earns interest at a fixed rate of 6%; the unsecured loan stock issued on 19 March 2002 is at a variable rate of clearing bank base rate plus a margin of 0.5% to 
the second anniversary of the date of issue, increasing to a maximum margin of 4.5% in the fifth year following issue. The unsecured convertible loan stock may convert, at the request of the holder, 
into ordinary shares in Booth Industries Group PLC (“Booth”) at any time following the second anniversary of the issue at rates ranging between 2.6 and 2.3 ordinary shares per £1 of loan stock or,
alternatively, may be redeemed at the request of Booth at any time between the second and fifth anniversary of issue at rates ranging from £1.09 to £1.27 per £1 of principal sum. Booth redeemed
£500,000 of stock at a rate of £1.09 per £1 of principal sum in March 2005 and has given notice of redemption in March 2006 of a further £500,000 of stock at a rate of £1.18 per £1 of principal 
sum. The unsecured loan stock is redeemable at par in four equal annual instalments commencing on the second anniversary following issue.
20. COMMITMENTS
Group Company
2005 2004 2005 2004
£000 £000 £000 £000
Capital commitments
Contracted but not provided – 221 – –
Annual commitments under non-cancellable operating leases are as follows:
2005 2004
Land and Land and
buildings Other buildings Other
Group £000 £000 £000 £000
Operating leases which expire:
Within one year 69 463 115 350
In the second to fifth year 331 1,341 231 1,751
After five years 392 – 446 –
792 1,804 792 2,101
Company
The Company has annual commitments of £25,000 under a property lease expiring after five years (2004: £24,000). 21. CONTINGENCIES
The Group’s bankers and insurers have given guarantees to customers amounting to £735,000 (2004: £735,000) which relate to the execution of contracts. The Company has given guarantees amounting
to £364,000 (2004: £810,000) in respect of contracts entered into by subsidiary companies in the normal course of business.
22. RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption in FRS 8 not to disclose transactions with companies within the same group where such transactions are fully eliminated on consolidation. Transactions
with companies in which certain Directors have an interest are disclosed in the Remuneration Report on page 14. In 2004, fees amounting to £440,000 (excluding VAT) had been charged to TASS (Europe)
Limited in respect of services provided to that company by the Group prior to legal completion of the acquisition.
46 MacLellan Report & Accounts 2005
Notes to the Financial Statements continued MacLellan Report & Accounts 2005    47
Financial Summary Financial results for the periods ended
December December December December December
2005 2004 2003 2002 2001
(restated) (restated) (restated) (restated)
£000 £000 £000 £000 £000 
Turnover 232,781 190,165 153,268 141,538 124,323
Operating profit before exceptional items and goodwill amortisation 10,162 7,582 5,843 4,541 3,025
Exceptional items – (2,471) (108) (27) –
10,162 5,111 5,735 4,514 3,025
Goodwill amortisation (3,784) (2,795) (2,139) (1,580) (727)
Net interest (1,332) (851) (317) (288) (283)
Profit on ordinary activities before taxation 5,046 1,465 3,279 2,646 2,015
Taxation (2,640) (1,435) (1,263) (804) (892)
Profit for the financial period 2,406 30 2,016 1,842 1,123
Dividends (1,014) (583) (388) – –
Retained profit / (loss) for the financial period 1,392 (553) 1,628 1,842 1,123
Earnings per share:
Underlying diluted 6.0p 5.2p 5.0p 4.4p 3.1p
Basic 2.4p 0.0p 2.6p 2.6p 2.0p
Fixed assets 72,906 78,066 57,456 45,367 22,047
Net current assets / (liabilities) 192 (4,127) 319 795 4,424
Long term liabilities (10,762) (12,816) (5,991) (3,173) (3,253)
Net assets employed 62,336 61,123 51,784 42,989 23,218
Called up share capital 5,490 5,482 4,464 4,291 3,271
Reserves and shares to be issued (restated) 56,846 55,641 47,320 38,698 19,947
Total shareholders’ funds 62,336 61,123 51,784 42,989 23,218
Notes:
1. The above figures comprise continuing (including acquisitions) and discontinued activities.
2. The presentation of Dividends, Net current liabilities and Reserves have been restated for the implementation of FRS 21.
3. The figures for 2001 have been restated for the implementation of FRS 19.
4. Earnings per share are based on the weighted average number of shares in issue in each period. NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at MacLellan House, Clews Road, Oakenshaw, Redditch, Worcestershire, B98 7ST at 12 noon on Wednesday 
3 May 2006 for the following purposes:
As Ordinary Business
To consider and if thought fit pass the following resolutions which will be proposed as ordinary resolutions:
1 To receive the Report of the Directors, the Financial Statements and the Auditors’ Report thereon for the year ended 31 December 2005.
2 To declare a final dividend for the year ended 31 December 2005.
3 To re-elect as a Director of the Company, Mr A L R Morton, who retires by rotation.
4 To re-elect as a Director of the Company, Mr S R Shipley, who retires by rotation.
5 To re-appoint PricewaterhouseCoopers LLP as auditors and to authorise the Directors to fix their remuneration.
As Special Business
To consider and if thought fit pass the following resolutions, of which resolution 6 will be proposed as an ordinary resolution and resolutions 7 and 8 will be proposed as special resolutions:
6 That the Directors of the Company be and are hereby generally and unconditionally authorised pursuant to Section 80 of the Companies Act 1985 (the “Act”) to exercise all powers of the Company
to allot relevant securities, as defined in that section, up to an aggregate nominal amount of £1,509,818.80; provided that the authority conferred by this resolution shall expire on the date being
fifteen months from the date of the passing of this resolution or, if earlier, the conclusion of the next annual general meeting of the Company; but such authority shall allow the Company to make 
an offer or agreement which will or might require relevant securities to be allotted after the authority expires and, in that event, the Directors may allot relevant securities in pursuance of such an 
offer or agreement made by the Company before the authority expires, notwithstanding that by the time of such allotment the authority has expired; and such authority shall be in substitution 
for any authority conferred upon the Directors in accordance with the said Section 80 prior to the date of the passing of this resolution, which authority (to the extent that it remains in force and
unexercised) is hereby revoked.
7 That, subject to the passing of the previous resolution, the Directors of the Company be and are hereby empowered pursuant to Section 95 (1) of the Act to allot equity securities (within the meaning
of Section 94 of the Act) wholly for cash pursuant to the general authority conferred by the previous resolution as if Section 89 (1) of the Act did not apply to any such allotment; provided that this
power shall be limited to the allotment of equity securities:
(i) in connection with an offer of such securities by way of rights to holders of shares in proportion (as nearly as may be practicable) to their respective holdings of such shares (but subject to such
exclusions and/or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements and/or any legal or practical difficulties under the
laws of any overseas territory or the requirements of any regulatory body or stock exchange);
(ii) otherwise than pursuant to sub paragraph (i) above, up to an aggregate nominal amount of £253,884; and
provided that the power conferred by this resolution shall expire on the date being fifteen months from the date of the passing of this resolution or, if earlier, the conclusion of the next annual general
meeting of the Company; but such power shall enable the Company to make an offer or agreement which will or might require equity securities to be allotted after the power expires and, in that
event, the Directors may allot equity securities in pursuance of such an offer or agreement made by the Company before the power expires, notwithstanding that by the time of such allotment the
power has expired.
8 That the Company be and is generally and unconditionally authorised for the purposes of section 166 of the Act to make one or more market purchases (within the meaning of section 163(3) of the
Act) on the London Stock Exchange of ordinary shares of 5 pence each in the capital of the Company provided that:
(a) the maximum aggregate number of ordinary shares authorised to be purchased is 9,980,000 (representing approximately 10 per cent. of the Company’s issued ordinary share capital);
(b) the minimum price which may be paid for such shares is 5 pence per share;
48 MacLellan Report & Accounts 2005
Notice of Annual General Meeting MacLellan Report & Accounts 2005    49
Notice of Annual General Meeting continued
(c) the maximum price which may be paid for an ordinary share shall not be more than 5 per cent. above the average of the middle market quotations for an ordinary share as derived from the
London Stock Exchange Daily Official List for the five business days immediately preceding the date on which the ordinary share is purchased;
(d) unless previously renewed, varied or revoked, the authority conferred shall expire at the conclusion of the Company’s next annual general meeting or fifteen months from the date of passing 
this resolution, if earlier;
(e) the Company may make a contract or contracts to purchase ordinary shares under the authority conferred prior to the expiry of such authority which will or may be executed wholly or partly 
after the expiry of such authority and may make a purchase of ordinary shares in pursuance of any such contract or contracts.
By order of the Board
Registered Office:
Stephen R Shipley Enterprise House
Secretary Castle Street
Worcester
7 April 2006 WR1 3AD
Notes
1 Any member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and, on a poll, to vote in his place. A proxy need not be a member of the Company.
Appointment of a proxy does not preclude a member of the Company from attending and voting at the above meeting. Holders of ordinary shares present in person or (being a corporation) 
by a representative shall, upon a show of hands, each have one vote and, if present in person or by proxy or (being a corporation) by a representative shall, upon a poll, have one vote for every
ordinary share held.
2 A form of proxy is enclosed; to be effective, it must be deposited at the office of the Company’s registrars so as to be received not later than 48 hours before the time appointed for holding the
annual general meeting.
3 In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, only those members entered on the Company’s register of members not later than 12 noon on 1 May 2006 
(or, if the meeting is adjourned, shareholders entered on the Company’s register of members not later than 48 hours before the time fixed for the adjourned meeting) shall be entitled to attend 
and vote at the meeting.
4 The following documents are available for inspection at the Company’s registered office during normal business hours on any weekday (excluding Saturdays and Public holidays) from the date of 
this notice until the conclusion of the annual general meeting:
(a) a register of interests of Directors (including family interest where disclosable under the Companies Act 1985) in the shares of the Company;
(b) copies of Directors’ service or consultancy agreements. MacLellan Group plc Annual Report and Accounts 2005
MacLellan Group plc
Enterprise House
Castle Street 
Worcester
WR1 3AD
www.maclellan-group.plc.uk
T.  01905 744400
F.  01905 611686