Annual report and accounts 2009
GROW
INTEGRATE
ACQUIRE SpiriT el is a fully integrated business communications group 
which enables its customers to take advantage of the opportunities 
created by rapidly changing telecoms markets as the migration 
to Internet Protocol (IP) based services accelerates.
The Group is a consolidator of the highly fragmented UK telecoms 
reseller market and is building a substantial customer base and scale 
through selective acquisitions. We are organised into two divisions: 
SpiriT el T echnologies, which focuses on networking and IP products  
and services and SpiriT el Business, which provides services directly  
to our Business customers.
L
Network services Mobile IP Communications Wholesale voice Managed services IP networking
L
Introduction  Contents
01 Financial highlights
02 Chairman’ s statement
04 Chief Executive’ s review
10 Board of Directors
11 Report of the Directors
15 Directors’ remuneration report
18 Independent auditor’ s report
19 Consolidated income statement
20  Consolidated statement of changes 
 in shareholders’ equity
21 Consolidated balance sheet
22 Consolidated statement of cash flows
23 Notes to the consolidated 
 financial statements
52 Company balance sheet
53 Notes to the Company 
 financial statements
62 Notice of Annual General Meeting
64 Company information and advisers
Revenue £000
13,649
16,674
19,718
07 08 09
+18%
EBITDA £000
(861)
938
1,514
07
08 09
+6 1%
Gross proﬁt £000
2,036
6,415
7,631
07 08 09
+19%
Customers No.
715
1,525
2,337
07 08 09
+53%
01
Financial highlights I am pleased to report on a further year  
of growth and development at SpiriT el.  
The Company has made significant  
progress despite an increasingly tough 
operating environment which has seen several 
competitors fall by the wayside. 
SpiriT el made its sixth acquisition during  
the year to 30 April 2009, acquiring and fully 
integrating ED Communications (“EDC”)  
into the SpiriT el Business Division. The Group 
is now a well established, fully integrated 
business communications provider. During the 
year the Company has proven the value of its 
integrated offering to the enlarged customer 
base by successfully cross-selling its 
expanded range of products and services. 
These results include full year contributions 
from all six acquisitions with the exception  
of EDC, which is included for the eight months 
since acquisition. 
Results
As a result of both acquisitive and organic 
growth – including initial sales from over  
£7 million of cross-selling contract wins signed 
during the year – revenues are up markedly,  
by 18% to £19.7 million (2008: £16.7 million). 
Most significantly, underlying EBITDA (defined 
as operating profit after adding back charges 
for depreciation, amortisation, share-based 
payments and exceptional costs) increased  
by 61% to £1.5 million (2008: £0.9 million).  
The results, and in particular the impressive 
growth in earnings, demonstrate ongoing 
success in the execution of the Company’ s 
“Acquire, Integrate, Grow” strategy.  
The economies of selectively bolting on 
acquired assets are now evident.
“During the year the Company has proven the 
value of its integrated offering to the enlarged 
customer base by successfully cross-selling its 
expanded range of products and services.”
02
Lord St John of Bletso, Chairman
Chairman’ s statement The previously reported decline in profitability 
from the T echnologies Division continues  
to adversely impact Group profits. However, 
this decline, combined with rapid growth in  
the Business Division, has reduced our 
exposure to riskier and more volatile wholesale 
markets. 52% of overall Group revenues in 
2009 result from the Business Division’ s higher 
quality, contracted B2B revenues, compared 
to 40% in 2008. This trend has continued 
since the year end.
Dividend 
SpiriT el is still pursuing its acquisition, integration 
and growth strategy and is continuing to  
invest funds into the business. The Directors 
are therefore not recommending the payment 
of a dividend for the year to 30 April 2009.
Proposed debt conversion 
Since the year end, we have agreed a further 
planned restructuring of the indebtedness  
to Penta Capital Partners (“Penta”) in our 
balance sheet, the terms of which will be 
communicated to shareholders in a circular 
that also convenes a shareholder meeting to 
approve the transaction. The proposals include 
Penta converting up to £6.9 million of debt into 
equity at a price of 0.6p per ordinary share. 
The Directors consider that the proposals will 
significantly strengthen the balance sheet and 
better position the Company to raise capital for 
acquisitions. This is an important step for the 
Group and we value Penta’ s support through 
their proposed debt for equity conversion.
Outlook
Whilst the Business Division has continued  
to perform in line with expectations, trading 
remains challenging for the T echnologies 
Division and we do not foresee a significant 
turnaround in its core wholesale markets. 
However, the T echnologies Division continues 
to add significant value through managing  
our IP-based infrastructure, on which several  
of the Business Division’ s product solutions  
are based.
The Group now benefits from much higher 
levels of earnings visibility, due to the  
Business Division’ s emphasis on contracted 
and recurring revenues from SMEs and larger 
corporate customers. This, combined with  
a wide range of business-critical products  
and services, means SpiriT el is well positioned 
to weather the ongoing economic storm. 
Through a combination of further earnings 
enhancing acquisitions for the Business 
Division and organic growth, driven by the 
cross-selling of an integrated product portfolio, 
we expect to continue to increase revenue  
and earnings for the benefit of all shareholders.
Lord St John of Bletso
Chairman 
30 September 2009
“Through a combination of further earnings 
enhancing acquisitions we expect to continue  
to increase revenue and earnings for the  
benefit of all shareholders.”
03 “We operate in a dynamic sector and the Board 
believes that we now stand at a particularly 
exciting point in the Company’ s development.”
SpiriT el has matured considerably in the year 
under review. Our sixth acquisition further 
enhances our reputation as a leading 
consolidator of the telecoms reseller sector 
and together with our success in cross-sales 
demonstrates our ability to deliver organic  
and acquisitive growth. As a management 
team, we are constantly reviewing acquisition 
opportunities that can grow earnings,  
enhance the product set and provide more 
cross-selling opportunities. We operate in  
a dynamic sector and the Board believes that 
we now stand at a particularly exciting point in 
the Company’ s development. The accelerating 
migration to converged communications  
is a driving force behind increased levels of 
corporate activity in the sector. Convergence  
is also changing customer behaviour with 
more businesses insisting that their supplier 
offers the full range of fixed, mobile, voice  
and data services. For those companies that 
have capital to deploy for acquisitions and  
an integrated product range to sell to business 
customers, these are exciting times.
Financial highlights
The year to 30 April 2009 represents  
a full year’ s contribution from all of SpiriT el’ s 
acquisitions to date, apart from EDC. This  
is reflected in significantly improved financial 
results despite one of the most challenging 
trading environments seen for many years, 
particularly in the T echnologies Division’ s 
wholesale markets. Performance was improved 
in each of the following key financial metrics:
Our acquisition strategy involves buying quality 
businesses with attractive customer bases, integrating 
them swiftly and driving forward the resulting synergy 
benefits of cost savings and new sales opportunities.
ACQUIRE
04
Alastair Mills, Chief Executive
Chief Executive’ s review –  Revenue up 18% to £19.7 million  
(2008: £16.7 million).
–  Gross profit up 19% to £7.6 million  
(2008: £6.4 million).
–  Underlying EBITDA* up 61% to £1.5 million 
(2008: £0.9 million).
The 18% increase in Group revenue is pleasing 
given the difficult economic conditions, but 
even more so is the 53% growth in Business 
Division revenues largely offsetting a 5% 
decline in the lower margin, wholesale services 
from the T echnologies Division. The increasing 
contribution from our Business Division 
represents a significant change in the Group’ s 
earnings profile. The majority of the Business 
Division’ s revenues are generated from 
long-term contracts, of up to seven years, 
providing a greater level of earnings visibility  
to the Group as a whole. 
The 61% increase in underlying EBITDA* 
demonstrates the success of our “Acquire, 
Integrate, Grow” model. 
 In particular, we are able to convert significant 
elements of gross profit directly into EBITDA 
by bolting acquisitions quickly and efficiently 
onto our already established operations and 
existing cost base. By effective profiling of 
newly-acquired customers, we then identify 
and pursue cross-sale opportunities.
The loss before taxation for the year was 
£1.7million (2008: £4.0million loss), after 
deducting non-cash finance charges of 
£0.8million (2008: £3.1million). The non-cash 
finance charges relate to IFRS costs on 
modification and conversion of indebtedness 
to Penta.
Since the year end we have agreed a 
proposed balance sheet restructuring with 
Penta converting up to £6.9 million of debt into 
equity at a price of 0.6p per ordinary share. 
This follows on from a similar £2.6 million debt 
to equity conversion by Penta in May 2008. 
The Directors believe that the proposed 
conversion of Penta debt will benefit SpiriT el  
in a number of ways. The Company will have a 
much stronger balance sheet, unencumbered 
by £6.9 million of Penta indebtedness and, at 
the conversion price, the proposed conversion 
will significantly increase the market 
capitalisation of the Company. In addition,  
the Company will not be liable for the £550,000  
annual interest cost which is due to accrue 
from May 2010. With a stronger balance sheet 
SpiriT el will be better positioned to raise capital 
and continue its recent successful acquisitive 
strategy, focusing on earnings enhancing 
transactions. Penta’ s support for SpiriT el is 
invaluable and we thank them for their 
continued faith in our business model and 
management team. 
We also continue to benefit from the support 
of Clydesdale Bank. During the year under 
review we secured an extension to our loan 
facility to fund the acquisition of ED 
Communications and at the year end we had 
a total facility of £3.4million with the bank. In 
May 2009 the Group’ s facilities were increased 
to £4.5million, repayable over five years. 
Strategy
Despite the ongoing consolidation in our 
sector, the UK telecommunications market 
remains highly fragmented. This, alongside  
the accelerating demand from customers  
for converged, IP-based services, provides  
the opportunity for us to further execute  
the Group’ s “Acquire, Integrate, Grow” strategy.  
Our strategy is to grow shareholder value 
through selective, earnings enhancing 
acquisitions, followed by consistent organic 
growth being driven by cross-selling our 
integrated product portfolio.
* Operating profit after adding back charges for depreciation, 
amortisation, share-based payments and exceptional costs.
05 SpiriT el continues to pursue selective 
acquisitions as we look to build a business  
with the operational scale and the broad 
product offering that business and corporate 
consumers increasingly demand. Having 
completed six acquisitions, led by the same 
management team, not only are we clear  
on the type of businesses that we are looking 
for in terms of quickly adding value to the 
Group, but we are also experienced in the 
critical phase of integration, which commences  
well in advance of completion of the deal.  
All acquisitions now follow the same integration 
framework which was developed internally  
to meet our corporate objectives. The process 
is led by a senior member of the management 
team and helps ensure that we maximise  
both cost and revenue synergy opportunities, 
whilst minimising disruption to the Group  
and the newly-acquired business.
We expect to continue to target growth 
through earnings enhancing acquisitions and 
following the proposed restructure of our 
balance sheet, we expect to be well positioned 
to raise new capital to deploy in the acquisition 
of new customers and products in order  
to enhance earnings. 
 In recent months we have been particularly 
encouraged by our successes in cross-sales 
of our growing product range to existing 
customers. During the 12 month period to 
April 2009, we secured cross-sales contracts 
valued at more than £7 million. This is 
contracted and recurring revenue and delivers 
a new level of earnings visibility to the Group. 
During the year we profiled our expanded 
customer base and estimated that our existing 
customers are spending a total of over  
£80 million on telecoms services that SpiriT el 
could potentially provide from our current 
product portfolio. Although rapidly growing, 
our penetration of this spend is currently less 
than 15% which illustrates the upside 
opportunity which we intend to exploit by 
deploying our successful cross-selling strategy. 
The quick and efficient integration of our acquisitions  
is key to the rapid delivery of their earnings potential 
and the successful cross-selling of our broadening 
product offering into existing and new customers.  
We have demonstrated our ability to speedily integrate 
new businesses into the SpiriT el Business 
infrastructure, creating cost savings and generating 
new cross-selling opportunities.
INTEGRATE
06
Alastair Mills, Chief Executive
Chief Executive’ s review continued Acquisitions
SpiriT el continued its recent series of 
acquisitions this year with the purchase of ED 
Communications, which added approximately 
700 business customers who were rapidly 
integrated into our Networks line of business. 
This acquisition provides a typical example  
of how the Group is now able to bolt on a 
customer base efficiently and then enhance  
its contribution through cost synergies and 
cross-selling. The total consideration for  
this company will total £1.4 million, including 
earn out.
The full year contribution from mobile business 
WN1, acquired in April 2008, proved even 
more successful than we had hoped and this 
line of business continues to deliver strong 
organic growth. WN1 is highly profitable and,  
by adding a range of mobile voice and data 
services, the transaction completed our 
integrated product portfolio. Since the year 
end, converged voice and data mobile 
solutions have grown to over one third of our 
total mobile sales. Not only are we delighted 
with the earnings contribution from WN1, now 
integrated as SpiriT el Mobile, but the mobility 
offering is a differentiator in comparison to 
many competitors who are limited to a fixed 
line offering. 
During the year we looked closely at a number 
of acquisition opportunities, including several 
larger companies. We believe we have 
demonstrated our ability to grow shareholder 
value from the selective addition of bolt on 
acquisitions and we continue to actively 
pursue opportunities which deliver short-term 
earnings enhancement benefits and cross-sell 
opportunities. 
Operations
SpiriT el’ s customer base now numbers some 
2,300 separate accounts for business and 
public sector companies and organisations. 
Greater customer numbers result in increased 
cross-selling opportunities and although we 
focus on larger customers more than many  
of our competitors, the size of the base is an 
obvious, yet important key performance 
indicator for the Business Division. The current 
customer base is 53% larger than at April 
2008 and 227% above 2007 levels. 
Our customers are served by our two 
complementary Divisions: SpiriT el Business 
and SpiriT el T echnologies – working alongside 
and supporting each other. The Business 
Division has three lines of business: IP 
Communications, Networks and Mobile. 
SpiriT el IP Communications provides an 
advanced range of IP networking services  
to business customers alongside traditional 
structured cabling, equipment and 
maintenance services. SpiriT el Networks offers 
fixed line services including calls, lines and 
broadband. SpiriT el Mobile provides mobile 
voice and data services, including BlackBerry 
and other converged voice and data services.
SpiriT el has achieved the highest O2 
accreditation and is one of just a few O2 
Centre of Excellence (CoE) partners in the UK.  
The O2 Centre of Excellence is an industry 
leading programme which continues to set 
demanding qualifying criteria, including 
exceptional customer service and commitment 
to the business sector. 
SpiriT el is also a member of the BlackBerry 
Alliance. SpiriT el provides the BlackBerry® 
solution allowing users to stay connected  
with wireless access to email, corporate data, 
phone, web and organiser features. With  
a BlackBerry solution, you can enhance the 
productivity of your organisation by pushing 
data out to where it’ s needed most – your 
mobile workforce.
SpiriT el has a longstanding relationship  
with Mitel, one of the world’ s leading providers  
of IP based communications solutions for 
business customers. After a continued period 
of investment in training and support on  
both sides, SpiriT el has achieved the highest 
accreditation possible – Premier Partner.  
Using a Mitel 3600 platform, SpiriT el also  
rolled out two of the UK’ s largest hosted VoIP 
contracts for Regent Inns and Youngs. We are 
also an accredited Mitel Hospitality specialist.
07 SpiriT el has experienced rapid growth in revenues, 
earnings and customer numbers. Among our 
expanding customer base are a number of diverse  
blue chip companies with whom we have longstanding 
relationships. Our organic growth strategy includes 
selling more products into each of our customers.
GROW
Whilst ensuring our team delivers an 
exceptional level of customer service, during 
the year we have focused on cost control  
and despite the EDC acquisition and the 
associated addition of 700 new customers 
staff numbers have only risen to 109 at the 
year end. (2008: 104). We continue to offer 
nationwide engineering coverage to our 
customers along with 24/7/365 support.  
We have also been able to reduce our cost 
base through the utilisation of our own 
technological expertise in the remote 
management of customer sites. Over 70%  
of customer faults reported to our IP 
Communications service team are now  
fixed remotely from our operations centres  
in London and Wigan, with no employee  
visit to the customer’ s site being required. 
A key aspect of our Business Division is  
its ability to act as a one stop shop for 
business customers by providing a fully 
integrated product offering. Whilst we remain 
cautious on heavy investment in the research 
and development of new technology, our 
strategic partnerships with leading vendors 
such as O2 and Mitel enable us to remain  
well positioned to capitalise on the rapidly  
changing telecoms market. 
Of particular note is the continued growth  
of our hosted VoIP offering, where extensions 
sold and supported grew by 86% over the 
year. Major contract wins included hosted 
VoIP , as part of a managed services contract, 
across Young & Co Brewery’ s estate and 
SpiriT el’ s success was recognised when we 
won the VoIP Solution of the Year award in 
October 2008 at the National Comms 
Business Awards. SpiriT el also won a number 
of other industry awards over the past year 
and continues to build on the excellent 
relationships that we have forged with industry 
leading partners including 02, BlackBerry and 
Mitel. Our newly acquired Mobile business also 
achieved 02 Centre of Excellence status in 
August 2008. 
T o support integration of acquisitions and 
ensure we maximise the cross-sell opportunity 
for all acquired customer bases, we 
implemented a Group-wide CRM facility during 
the year. Following several notable cross-selling 
wins in early 2009, we achieved our largest 
cross-sale to date in May 2009, a 30 month 
network services deal with a global hotel group 
that is expected to generate up to £4 million  
in revenue over the contract term. The deal 
involved SpiriT el replacing BT , who still has  
an estimated 50% total market share, as 
supplier. The contract win provides evidence  
of our ability to service major corporates  
as well as our 2,300 SME customers and  
also illustrates clearly the steps we are taking  
to maximise the significant cross-sell 
opportunities we are identifying. 
Awards
National Business  
Awards 2008 
SpiriT el named finalists.
Channel Networks 
Awards 2009 
SpiriT el and Alastair Mills 
named finalists.
International  
Directories Awards 
Virgin Mobile Directory 
Enquiry service  
provided by SpiriT el  
wins Best Newcomer. 
VoIP Solution  
of the Y ear Award 
SpiriT el wins. 
Wigan Business  
Awards 2008 
SpiriT el and Alastair Mills 
named finalists.
Channel Entrepreneur  
of the Y ear Award 
SpiriT el wins. 
Enterprise Convergence 
Solution Award 2009 
SpiriT el wins.
08
Alastair Mills, Chief Executive
Chief Executive’ s review continued Summary and outlook
The year to 30 April 2009 was a year of 
significant progress for SpiriT el. We delivered 
strong revenue growth and an even greater 
uplift in underlying EBITDA*. We also continued 
to gain widespread recognition for the quality 
of our IP-based services and the innovation  
we have demonstrated in the delivery of 
converged communications services. 
Our strategy of targeted acquisitions  
which bring immediate earnings enhancement, 
and ongoing cross-sell opportunities, has seen 
revenue and profits rise substantially in the 
past year, as we start to benefit from full 
contributions from acquisitions. We have a 
highly scalable model where we can bolt  
on new, earnings enhancing assets whilst 
maintaining the delivery of consistent  
organic growth.
Whilst we have felt the challenges of a severe 
economic downturn and more specifically an 
ongoing, declining profitability in the wholesale 
markets, the contribution from our rapidly 
growing Business Division is very encouraging. 
We have demonstrated our ability to enhance 
earnings through acquisitions, followed up by 
significant cross-selling successes from our 
range of converged products and services  
into both new and existing customer bases. 
Although we are not immune to the impact  
of a recessionary economic environment,  
our product set is naturally defensive and our 
downside exposure is mitigated. We are 
witnessing a renewed and growing interest  
in cost savings that are prompting new  
sales opportunities. Our ability to add value  
to our customers through innovative and cost 
effective solutions, gives us confidence about 
our prospects through the economic downturn.
SpiriT el has an experienced and energised 
management team, and a highly skilled  
and committed staff who have together 
proved their ability to execute strategy.  
The foundations are in place to deliver ongoing 
value to shareholders and I look forward to  
the coming year with confidence.
Alastair Mills
Chief Executive 
30 September 2009
* Operating profit after adding back charges for depreciation, 
amortisation, share-based payments and exceptional costs.
09 4. Steven Maine (57)  
Non-Executive Deputy Chairman
Steven has extensive experience in the 
telecommunications and media sectors, 
having served as Chief Executive Officer  
of Kingston Communications Plc between 
1997 and 2003 and having previously held 
senior positions in the satellite and video 
communications businesses of BT Plc. 
Currently Chief Executive of Solaris Mobile,  
a pan-European, satellite-based mobile  
TV venture. 
5. Steven Scott (44)  
Non-Executive Director
Steve is a Chartered Accountant, having 
trained with Arthur Andersen after graduating 
from the University of Glasgow. He is a 
founding Director of Penta Capital, a venture 
capital fund manager that has invested  
in SpiriT el. Prior to establishing Penta, he was  
a Director in The Royal Bank of Scotland’ s 
private equity division.
6. Anthony Vose (54)  
Non-Executive Director
Anthony founded Ashland T elephones  
in 1989 and oversaw its successful growth  
into a leading provider of telephony systems 
with a particular focus on the hospitality  
sector. Ashland Group was acquired by 
SpiriT el in March 2007.
1. Lord St John of Bletso (52)  
Non-Executive Chairman
Anthony St John qualified as an attorney in 
South Africa. Since 1985 he has worked as a 
stockbroker in the City and currently consults 
to Merrill Lynch. He served as Managing 
Director at Globix, a managed services 
web-hosting business from 1998–2002  
and consults to several IT companies.
2. Alastair Mills (36)  
Chief Executive
Alastair joined SpiriT el in 2004 as Managing 
Director of Expo Communications, now part of 
the T echnologies Division. Alastair joined from 
T elewest Communications, having previously 
worked in consultancy and corporate finance 
for KPMG. He has been CEO since 2005, 
when he commenced the restructure of the 
Group including five recent acquisitions. In 
2008, Alastair was a finalist in the Ernst & 
Young Entrepreneur of the Year Award. 
3. Ronnie Smith (45)  
Chief Financial Officer
Ronnie qualified as a Chartered Accountant  
in 1988 with Arthur Young (now Ernst & Young) 
following graduation from The University of 
Glasgow. Ronnie has held senior finance  
roles in a number of listed and private equity 
backed UK and US businesses, including 
Sigma Aldrich Inc., ICN Biomedicals Inc.,  
The Ritchie Group Plc and The Rope 
Company Group Limited.
3.
2.
1.
6.
4.
5.
10
Board of Directors  
 
 
 
11 
Report of the Directors 
 
SpiriTel plc  
Annual report and accounts 2009 
The Directors submit their report and financial statements for the year ended 30 April 2009.  
Results and dividends 
The Group loss for the year after taxation amounted to £934,000 (2008: loss £3,758,000), after exceptional costs of £663,000  
(2008: £620,000).  
The Directors do not recommend the payment of a dividend (2008: £nil). 
Principal activities and review of business 
The principal activity is the provision of telecommunication services. 
SpiriTel is a business communications group which is taking advantage of the opportunities created by rapidly changing telecoms markets  
in the UK as the migration to Internet Protocol (IP) based services accelerates. The Group is a consolidator of the highly fragmented UK 
telecoms reseller market and is building a substantial customer base and scale through selective earnings-enhancing acquisitions. The Group  
is organised into two divisions, SpiriTel Technologies – focused on our infrastructure and IP products and services – and SpiriTel Business, 
which provides our fully integrated range of voice and data services directly to our business customers. 
SpiriTel offers a broad range of voice and data communications products and services to a customer base of small and medium sized 
enterprises and an increasing number of larger national and international organisations. We are a recognised leader in the provision of new,  
but proven, Voice over IP (VoIP) solutions that are firmly based on the old-fashioned service values which run throughout the Group. 
The Chairman’s Statement and Chief Executive’s review on pages 2 to 9 provide further information about the Group’s principal activities,  
the business and financial performance during the year. 
Due to the embryonic stage of development the Directors do not consider it appropriate to provide information on Key Performance Indicators. 
Key risks 
Economic downturn 
The success of the business may be affected by any downturn in the general economic environment. In particular, this could influence the 
availability of bank finance and the cost of that finance, customers’ willingness and ability to invest in capital goods, customer settlement 
patterns and the incidence of bad debts. 
In response to this risk, senior management aim to keep abreast of economic conditions. Effective relationships are established with the 
Group’s bankers and other debt providers and there are regular reviews of customers’ credit worthiness and debt levels.  
Product obsolescence 
Telecommunications is a fast moving market sector and the pace of technological change is rapid. As a result, products may become obsolete 
following the development and introduction of new technology. 
The Company maintains partnerships with those of its potential suppliers which it believes will keep it to the forefront of product development  
on a sustained basis and regularly monitors trends in technological advancement so as to anticipate and plan for future changes. 
Regulatory change 
Governmental agencies, in particular Ofcom, may seek to implement or amend regulations which could affect product pricing or the nature and 
scope of activities of major industry players, such as BT. Such action could affect the Group’s profitability either directly or indirectly. 
Currently, governmental regulation only affects the Technologies division and a limited number of products within the Networks line of business. 
The Directors constantly monitor regulatory change so as to mitigate this risk. 
Future prospects 
Future prospects are outlined in the Chairman’s statement and CEO review at pages 2 to 9. 
Post balance sheet events 
Post balance sheet events are disclosed in note 29 to the financial statements. 
Political and charitable contributions 
No political contributions were made during the year (2008: £nil). Charitable contributions made during the year amounted to £8,000  
(2008: £6,000).   
 12 
Report of the Directors continued 
 
SpiriTel plc  
Annual report and accounts 2009 
Directors and their interests 
The Directors in office and their interests in the ordinary shares of the Company are shown below. None of the Directors has had any beneficial 
interest in the redeemable preference shares at any time. Each Director served throughout the year unless otherwise indicated. 
 
Note 
Number  
30 April 
2009 
Number 
30 April
2008 
Lord St John of Bletso  1,823,333 823,333
A R Mills  1,490,000 1,390,000
R W Smith  625,000 625,000
D Anahory (resigned 4 August 2009)  5,625,000 625,000
S Maine  500,000 –
S Scott 1 313,819,845 39,413,799
A J Vose  45,703,600 45,703,600
Notes: 
1) S Scott’s interest is non-beneficial, as a Director of the manager of the Penta funds. 
Employees 
The Group aims for fair reward and recognition for all employees.  
The Group has continued its practice of keeping employees informed of matters affecting them as employees and the financial and economic 
factors affecting the performance of the Group. 
Applications for employment by disabled persons are given full and fair consideration for all vacancies in accordance with their particular 
aptitudes and abilities. 
In the event of employees becoming disabled, every effort is given to retrain them in order that their employment with the Group may continue. 
It is the policy of the Group that training, career development and promotion opportunities should be available to all employees. 
Financial risk management objectives and policies 
The Group uses various financial instruments which include cash, bank and other loan facilities and items such as trade debtors and trade 
creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Group’s operations. 
The main risks arising from the Group’s financial instruments are liquidity risk, interest rate risk and credit risk. The Directors review and agree 
policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous years.  
Liquidity risk 
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely 
and profitably. The Group finances its investment in tangible fixed assets primarily through cash balances. 
Interest rate risk 
The Group finances its operations through a combination of cash balances and loans. The Group manages its exposure to interest rate 
fluctuations by entering into fixed rate agreements with the lender where possible and, with the majority of its loans by value has secured a 
waiver of interest by agreeing with the lender fixed redemption premium terms and conversion rights into ordinary shares of the Company. 
Similar arrangements have been secured in relation to the outstanding preference shares. 
Credit risk 
The Group’s principal financial assets are cash and trade debtors. The principal credit risk arises from trade debtors. The Directors manage 
credit risk by setting limits for customers based on a combination of payment history and third party credit references. Credit limits, debtor 
ageing and collection history are reviewed by the finance department on a regular basis. 
Currency risk 
The Group has limited exposure to translation and transaction foreign exchange risk.    
 13 
 
 
SpiriTel plc  
Annual report and accounts 2009 
Supplier payment policy 
The Group’s policy, in relation to all its suppliers, is to settle the terms of payment when agreeing the terms of the transaction and to abide  
by those terms provided that it is satisfied that the supplier has provided the goods or services in accordance with the agreed terms and 
conditions. The Group does not follow any specific code or statement of payment practice. The number of days’ billings from suppliers 
outstanding at 30 April 2009 was 27 days (2008: 39 days). 
Corporate governance 
The Directors are committed to maintaining high standards of corporate governance. Although, as an AIM listed company, the Company is  
not required to comply with the provisions of the Combined Code, the Board recognises the importance of, and is committed to, ensuring  
that effective corporate governance procedures relevant to smaller listed companies are in place. 
The Board 
The Board consists of a Non-Executive Chairman, two Executive Directors and three Non-Executive Directors and meets approximately every 
four to six weeks throughout the year. 
The Board reviews the performance of the Company and its subsidiaries through the use of management accounts and other regular reports 
and information presented to it by the executive team. A formal schedule of matters specifically reserved to it for decision is in place, including 
overall strategy, acquisition and divestment policy, approval of major capital expenditure projects and general and risk management policies. 
To enable the Board to discharge its duties all Directors have full access to all relevant information and to the advice and services of the 
Company Secretary. In addition, there is a procedure in place for Directors to take independent professional advice in the furtherance of their 
duties, if necessary at the Company’s expense. 
The Board has established the following committees to which it has delegated specific responsibilities: 
The Nominations Committee 
The Nominations Committee, consisting of the Chairman and two Non-Executive Directors, is responsible for reviewing the size, structure and 
composition of the Board, succession planning and identifying and monitoring candidates for all Board vacancies. Appointments to the Board 
of Directors are made by the Board of Directors. The Non-Executive Directors currently serving on the Committee are Lord St John of Bletso, 
Steven Maine and Steven Scott. 
The Remuneration Committee 
The composition and activities of the Remuneration Committee are described in the Directors’ Remuneration Report on pages 15 to 17. 
The Audit Committee 
The Audit Committee, which comprises the Chairman and two Non-Executive Directors, meets on a six-monthly basis. The Committee 
considers all aspects of the Group’s system of internal control and reviews the interim and annual financial statements before submission to the 
Board for approval. The Committee has unrestricted access to the Group’s auditor and ensures that auditor objectivity and independence has 
not been compromised. It will also recommend the appointment of and review the fees of the external auditor. The Committee does not believe 
an internal audit function can be justified for the Group at the current time. The Non-Executive Directors currently serving on the Committee are 
Lord St John of Bletso, Steven Scott and Steven Maine. 
Relations with shareholders 
Communications with shareholders are given high priority. The Company encourages the participation of both institutional and private  
investors. There is a regular dialogue with shareholders and potential shareholders including presentations after the Company’s preliminary 
announcement of its year end results. The Board also uses the Annual General Meeting to communicate with investors and maintains an  
up-to-date record of news releases and other information of interest to shareholders on its web site at www.spiritelplc.com. 
Going concern 
The current economic conditions create uncertainty over the level of demand for the Group’s services and the availability of bank finance in the 
foreseeable future. The Group currently meets its day-to-day working capital requirements through bank facilities which comprise term loan, 
overdraft and invoice discounting facilities. These facilities were renewed in May 2009, July 2009 and March 2009 respectively. There are no 
matters which have been drawn to the Directors’ attention to suggest that the continued provision of these facilities may not be forthcoming on 
acceptable terms. In addition to these bank facilities, the Group is also funded by various loan instruments from Penta Capital, as disclosed in 
note 20. The Group has received confirmation from Penta that they do not intend to seek repayment of these facilities until 31 October 2010 at 
the earliest. However, as disclosed in note 29 to the financial statements, the outstanding Penta loans will become convertible into equity share 
capital, subject to approval from the Takeover Panel and the Group’s shareholders at the forthcoming EGM. 
The Directors have prepared forecasts and projections for the Group, which take account of reasonably possible changes in trading 
performance and show that the Group should be able to operate within the level of its current facilities, and comply with all financial covenants. 
On this basis, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational 
existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.   
 14 
Report of the Directors continued 
 
SpiriTel plc  
Annual report and accounts 2009 
Major shareholdings 
At 30 September 2009 the following had shareholdings of 3% or more of the ordinary share capital of the Company: 
Shareholder 
% of total 
Penta Capital Partners Limited 49.99
A J Vose 7.28
I.N.D. Holdings Limited 4.30
Statement of Directors’ responsibilities 
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. 
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare 
Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS) and 
financial statements for the parent company in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP).  
The financial statements are required by law to 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 these financial statements, the Directors are required to: 
– select suitable accounting policies and then apply them consistently; 
– make judgements and estimates that are reasonable and prudent; 
– state whether applicable International Financial Reporting Standards as adopted by the European Union have been followed for the 
preparation of the Group financial statements and UK GAAP for the preparation of the parent company financial statements, 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 Company will continue  
in business. 
The Directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position 
of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also 
responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and  
other irregularities.  
In so far as each of the Directors is aware: 
– there is no relevant audit information of which the Group’s auditor is unaware; and 
– the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish 
that the auditor is aware of that information. 
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s web site. 
Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other 
jurisdictions. 
Auditors 
Grant Thornton UK LLP, have expressed willingness to continue in office. In accordance with Section 489(4) of the Companies Act 2006  
a resolution to reappoint Grant Thornton UK LLP will be proposed at the Annual General Meeting to be held on 30 October 2009. 
Signed on behalf of the Board 
R W Smith 
Chief Financial Officer 
30 September 2009   
 
 
 
15 
Directors’ Remuneration Report 
 
SpiriTel plc  
Annual report and accounts 2009 
General information 
The Remuneration Committee is made up solely of Non-Executive Directors. None of them has any personal financial interest in the matters to 
be decided (other than as shareholders or holders of options over ordinary shares), potential conflicts of interest arising from cross-directorships 
nor any day-to-day involvement in running the business. The names of the Directors who have served on the Remuneration Committee during 
the year are as follows: 
Lord St John of Bletso 
S Scott 
S Maine 
The Committee’s role is to review the performance of the Executive Directors and to set the scale and structure of their remuneration, paying 
due regard to the interests of shareholders as a whole and the performance of the Group. Specifically, the Remuneration Committee agrees  
the principal terms of their service contracts, including salaries and other benefits, such as bonuses and share options, and other terms and 
conditions of employment. 
General policy 
The Committee’s executive remuneration policy is designed to attract, retain and motivate individuals to ensure the success of the Group 
relative to other UK businesses of similar size and complexity. External comparisons look at comparable roles in similar organisations, in terms 
of size, market sector, and business complexity. Remuneration packages are designed to reward Directors and Executive Group members 
fairly for their contributions whilst remaining within the range of benefits offered by similar companies in the sector. The Remuneration 
Committee seeks to structure total benefits packages which align the interests of shareholders and senior executives. Executive remuneration 
will continue to be the subject of regular review in accordance with this policy. 
Bonus schemes 
The Group operates discretionary bonus schemes for certain senior managers and other employees. Individual payments made under the 
schemes are partially dependent on the achievement of financial targets and also on the achievement of predetermined individual objectives. 
The Group also tailors bonus arrangements for certain Directors and staff members so as to provide incentivisation for the achievement of  
On Target Earnings commensurate with comparable roles within the industry sector. The Executive Directors and certain senior managers  
also participate in a long-term incentive plan, details of which are given on page 17. 
Policy on service contracts 
The Directors all have service contracts, which require between one and six months’ notice of termination.  
Executive Directors’ service contracts provide for remuneration in the form of salary, bonus and other customary benefits, such as permanent 
health insurance and life assurance as appropriate. The Company also facilitates contributions to personal pension schemes for Directors 
wishing to take part of their benefits in that form. 
Directors’ service contracts 
Details of the Directors’ service contracts are as follows: 
Name 
Commencement of service Initial period Notice period 
Lord St John of Bletso 28 July 2004 36 months 1 month
A R Mills 20 July 2005 None 6 months
R W Smith 23 May 2007 None 3 months
S Maine 5 April 2006 36 months 1 month
S Scott 28 July 2004 36 months 1 month
A J Vose 27 July 2007 None 1 month
 
   
 16 
Directors’ Remuneration report continued 
 
SpiriTel plc  
Annual report and accounts 2009 
Directors’ emoluments  
The following table sets out details of the emoluments paid during the year to each Director. The following information forms part of the audited 
financial statements. 
Name 
Note 
Salary 
and fees 
£000 
Benefits 
in kind 
£000 
Bonus  
£000 
 Total  
year ended  
30 April  
2009  
£000 
Total 
year ended 
30 April 
2008 
£000 
Lord St John of Bletso 1 33 – –  33 33
A R Mills  143 1 25  169 245
D Anahory  118 1 –  119 63
R W Smith  118 2 16  136 182
S Maine 2 32 – –  32 32
S Scott 3 28 – –  28 28
A J Vose  12 – –  12 47
  484 4 41  529 630
Notes: 
1) Of the fees of Lord St John of Bletso, £14,000 was payable to Tudor Consultancy Services Limited and £12,000 was payable to Newquay 
Professional Limited. 
2) The fees of S Maine were payable to SM & Partners. 
3)  The fees of S Scott were payable to Penta Capital Partners Limited. 
    
 17 
 
 
SpiriTel plc  
Annual report and accounts 2009 
Directors’ share options 
The following table sets out details of options over ordinary shares of the Company which have been granted to each Director: 
 
1 May  
2008 Forfeited Granted 
30 April  
2009 
Exercise  
price in pence Exercise period 
Option Agreement   
R W Smith 1,666,667 (1,666,667) – – 3.00 January 2008 – January 2017
A R Mills 32,941,177 (32,941,177) – – 2.125 May 2008 – May 2017
SpiriTel Share Option 
Scheme   
A R Mills 3,571,428 (3,571,428) – – 7.00 August 2008 – August 2015
Lord St John of Bletso 1,333,333 (1,333,333) – – 3.00 January 2008 – January 2017
Lord St John of Bletso – – 4,000,000 4,000,000 1.25 May 2009 – May 2018
S Maine 1,333,333 (1,333,333) – – 3.00 January 2008 – January 2017
S Maine – – 4,000,000 4,000,000 1.25 May 2009 – May 2018
EMI Share Option 
Agreement   
A R Mills 2,000,000 (2,000,000) – – 5.00 July 2007 – July 2016
A R Mills 3,333,333 (3,333,333) – – 3.00 January 2008 – January 2017
Long-term incentive plan 
On 22 August 2008, the Company introduced a long-term incentive plan for the Executive Directors and certain senior managers (the “Plan”). 
Upon demanding levels of shareholder value being realised, the participants in the Plan will be entitled to receive an amount equal to a 
maximum of 16% of the aggregate of the issued equity and convertible equity value. The participants agreed to the cancellation of all of  
their existing share option arrangements upon introduction of the Plan. 
Non-Executive Directors 
The remuneration of the Non-Executive Directors is determined by the Executive Directors and the Deputy Chairman within the limits set out  
in the Company’s Articles of Association. 
Lord St John of Bletso 
Chairman of the Remuneration Committee 
30 September 2009 
   
 
 18 
Independent auditor’s report to the members of SpiriTel plc 
 
 
SpiriTel plc  
Annual report and accounts 2009 
We have audited the Group and parent company financial statements of SpiriTel plc for the year ended 30 April 2009 which comprise the 
consolidated income statement, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated statement 
of cash flows, the parent company balance sheet and notes 1 to 29 of the consolidated financial statements and notes 1 to17 of the parent 
company financial statements. The financial reporting framework that has been applied in the preparation of the Group financial statements is 
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework 
that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting 
Standards (United Kingdom Generally Accepted Accounting Practice). 
This report is made solely to the Company’s members, as a body, in accordance with Sections 495 and 496 of the Companies Act 2006.  
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in  
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone  
other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. 
Respective responsibilities of Directors and auditors 
As explained more fully in the Statement of Directors’ Responsibilities set out on page 14, the Directors are responsible for the preparation  
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in 
accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the 
Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. 
Scope of the audit of the financial statements 
A description of the scope of an audit of financial statements is provided on the APB's web site at www.frc.org.uk/apb/scope/UKNP. 
Opinion on financial statements 
In our opinion: 
– the financial statements give a true and fair view of the state of the Group's and of the parent company's affairs as at 30 April 2009 and  
of the Group's loss for the year then ended;  
– the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; 
– the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting 
Practice; and 
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. 
Opinion on other matter prescribed by the Companies Act 2006 
In our opinion the information given in the Report of the Directors for the financial year for which the financial statements are prepared is 
consistent with the financial statements. 
Matters on which we are required to report by exception 
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: 
– adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from 
branches not visited by us; or 
– the parent company financial statements are not in agreement with the accounting records and returns; or 
– certain disclosures of Directors’ remuneration specified by law are not made; or 
– we have not received all the information and explanations we require for our audit. 
Kevin Engel 
Senior Statutory Auditor 
for and on behalf of Grant Thornton UK LLP 
Statutory Auditor, Chartered Accountants 
Manchester 
30 September 2009   
 
 19 
Consolidated income statement 
SpiriTel plc  
Annual report and accounts 2009 
Year ended 30 April 2009 
 Note 
2009
£000 
2008
£000 
Continuing operations  
Revenue 3 19,718 16,674
Cost of sales   (12,087) (10,259)
Gross profit   7,631 6,415
Administrative expenses  (8,280) (7,261)
  
Underlying EBITDA  1,514 938
Depreciation  (212) (180)
Share-based payments  (204) (190)
Exceptional costs 5 (663) (620)
Amortisation of other intangible assets  (1,084) (794)
Operating loss 3, 4 (649) (846)
  
Operating loss 3, 4 (649) (846)
Finance income 7 – 5
Finance costs 8 (1,059) (3,206)
Loss before taxation  (1,708) (4,047)
Tax credit 9 774 289
Loss for the financial year  (934) (3,758)
  
Loss per share in pence  
Basic and diluted 10 (0.16) (1.19)
The notes on pages 23 to 51 are an integral part of these consolidated financial statements.    
 20 
Consolidated statement of changes in shareholders’ equity 
SpiriTel plc  
Annual report and accounts 2009 
 
Share capital
£000 
Share premium
£000 
Reverse 
acquisition 
reserve 
£000 
Other 
reserves 
£000 
Retained  
losses 
£000 
Total
£000 
Balance at 1 May 2007 3,162 4,550 (5,763) 97 (6,107) (4,061)
Loss and total recognised loss for the financial year –––– (3,758) (3,758)
Credit for equity-settled share-based payments  – – – 190 – 190
Equity component of compound financial instruments  – – – 333 – 333
Transfer between reserves – – – (55) 55 –
Balance at 30 April 2008 3,162 4,550 (5,763) 565 (9,810) (7,296)
Loss and total recognised loss for the financial year –––– (934) (934)
Credit for equity-settled share-based payments  – – – 204 – 204
Issue of share capital (net of expenses) 3,114 385 – – – 3,499
Modification and conversion of financial instruments – 
equity component  – – – 1,545 – 1,545
Transfer between reserves – – – (349) 349 –
Balance at 30 April 2009 6,276 4,935 (5,763) 1,965 (10,395) (2,982)
The notes on pages 23 to 51 are an integral part of these consolidated financial statements.    
 
 21 
Consolidated balance sheet 
SpiriTel plc  
Annual report and accounts 2009 
As at 30 April 2009 
 Note 
2009
£000 
2008
£000 
Assets  
Non-current assets  
Goodwill 11 5,695 5,292
Other intangible assets 12 4,484 4,392
Property, plant and equipment  13 696 438
  10,875 10,122
Current assets  
Inventories  16 384 353
Trade and other receivables 17 2,493 2,151
Cash and cash equivalents  18 – 1,058
  2,877 3,562
Total assets   13,752 13,684
 
Current liabilities  
Trade and other payables 19 (4,471) (4,595)
Borrowings 20 (1,536) (457)
Obligations under finance leases  21 (61) (84)
Current tax payable  (36) (442)
  (6,104) (5,578)
Non-current liabilities  
Trade and other payables  19 (116) (432)
Borrowings  20 (9,468) (13,603)
Obligations under finance leases 21 – (55)
Deferred tax liabilities  22 (1,046) (1,312)
  (10,630) (15,402)
Total liabilities   (16,734) (20,980)
Net liabilities  (2,982) (7,296)
 
Equity attributable to equity holders of the parent  
Capital and reserves   
Share capital   6,276 3,162
Share premium  4,935 4,550
Reverse acquisition reserve  (5,763) (5,763)
Other reserves   1,965 565
Retained losses  (10,395) (9,810)
Total equity   (2,982) (7,296)
The notes on pages 23 to 51 are an integral part of these consolidated financial statements. 
These financial statements were approved by the Board of Directors on 30 September 2009 and signed on its behalf by: 
A R Mills   R W Smith  
Chief Executive Officer Chief Financial Officer    
 22 
Consolidated statement of cash flows 
SpiriTel plc  
Annual report and accounts 2009 
Year ended 30 April 2009 
 Note 
2009 
£000 
2008
£000 
Cash flows from operating activities    
Loss before taxation   (1,708) (4,047)
Adjustments for:    
Net finance costs  1,059 3,201
Depreciation and amortisation  1,296 974
Impairment of tangible fixed assets   – 64
Impairment of intangible fixed assets  113 –
Impairment of goodwill  199 –
(Increase)/decrease in inventory   (31) 63
Increase in receivables   (146) (17)
(Decrease)/increase in payables   (1,168) 617
Equity-settled share-based payments   204 190
Interest paid  (230) (135)
Cash (used in)/from operating activities  (412) 910
Income taxes paid  (259) –
Net cash (used in)/from operating activities  (671) 910
 
Cash flows from investing activities    
Acquisition of subsidiaries net of cash acquired  15 (797) (998)
Payment of deferred and contingent consideration  (382) (1,227)
Purchase of property, plant and equipment   (470) (229)
Net cash used in investing activities  (1,649) (2,454)
 
Cash flows from financing activities    
Net proceeds from issue of share capital   333 –
Proceeds from borrowings (net)  480 2,347
Payment of finance lease liabilities  (78) (67)
Net cash from financing activities  735 2,280
 
Net (decrease)/increase in cash and equivalents  (1,585) 736
Cash and equivalents at beginning of year   1,058 322
Cash and equivalents at end of year  18 (527) 1,058
The notes on pages 23 to 51 are an integral part of these consolidated financial statements.  
 
 23 
Notes to the consolidated financial statements 
SpiriTel plc  
Annual report and accounts 2009 
1. Basis of preparation 
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the 
European Union (EU) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC). 
These financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments. 
The accounting policies have been applied consistently throughout the Group for the purposes of the preparation of these consolidated  
financial statements. 
Standards and interpretations not yet applied 
The following new Standards and Interpretations, which are yet to become mandatory, have not been applied in the Group’s 2009 
consolidated financial statements: 
Standard or Interpretation Applicable* 
IFRIC 13 Customer loyalty programmes 1 July 2008 
IFRIC 15 Agreements for the construction of real estate 1 January 2009 
IFRIC 16 Hedges of a net investment in a foreign operation 1 October 2008 
IFRIC 17 Distribution of non-cash assets to owners 1 July 2009 
IFRIC 18 Transfers of assets from customers 1 July 2009 
IAS 1 Presentation of financial statements (revised 2007) 1 January 2009 
IAS 23 Borrowing costs (revised 2007) 1 January 2009 
IAS 27 Consolidated and separate financial statements (revised 2008) 1 July 2009 
IAS 32 (amended) Financial instruments: Presentation and IAS 1 Presentation of financial statements 2009 1 January 2009 
IAS 39 (amended) Financial Instrument and Measurement – Eligible hedged items 1 July 2009 
IFRS 1 (amended) First time adoption of IFRS and IAS 27 Consolidated and separate financial statements – 
cost of investment in a subsidiary, jointly controlled entity or associate 
1 January 2009 
IFRS 2 (amended) Share-based payment – vesting conditions and cancellation 1 January 2009 
IFRS 2 (amended) Group cash-settled share-based payment transactions 1 January 2010 
IFRS 3 Business combinations (revised 2008) 1 July 2009 
IFRS 7 (amended) Financial instruments disclosures – Improving disclosures 1 January 2009 
IFRS 8 Operating segments 1 January 2009 
*Applicable to accounting periods beginning on or after the following dates. 
The Directors consider that the adoption of these standards and interpretations in future periods will have no material financial impact  
on the consolidated financial statements other than the revised approach to accounting for business combinations under IFRS 3 “Business 
Combinations (revised 2008)”.  
In addition, further disclosures will be required on operating segments when IFRS8 comes into effect and changes will be required to the 
presentation of the financial statements when IAS1 comes into effect.  
General information 
Spiritel plc is a company incorporated in the UK under the Companies Act 1985. The address and registered office is 18 King William Street, 
London EC4N 7BP. The nature of the Group’s operations and its principal activities are set out in the Directors’ Report.   
 24 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
2. Accounting policies 
The accounting policies adopted in relation to IFRS are set out below. There have been no changes to these accounting policies during the 
current financial year.  
Significant accounting judgements and sources of estimation uncertainty 
In applying the Group’s accounting policies, management makes certain judgements and estimates. Estimates focus on areas such as the 
carrying values and estimated lives of non-current assets. 
The accounting policy descriptions include descriptions of areas where judgement is exercised and in consequence might have a significant  
risk of causing material adjustment within the next financial year. In this regard, the key areas are impairment of goodwill, revenue recognition, 
intangible assets, valuation of financial liabilities and share based compensation.  
Impairment of goodwill 
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been 
allocated. The “value in use” calculation requires management to estimate the future cash flows expected to arise from the cash-generating  
unit and a suitable discount rate in order to calculate present value (see note 11). 
The carrying value of goodwill at the balance sheet date was £5,695,000 (2008: £5,292,000). 
Revenue recognition 
In making their judgement, management has considered the detailed criteria for the recognition of revenue from the sale of goods as outlined  
in IAS 18 “Revenue” and, in particular, where the Group has transferred to the customer the significant risks and rewards of ownership of the 
goods and whether the Group has fulfilled its contractual obligations. Management is satisfied that recognition of all such revenue in the current 
year is appropriate. 
Intangible assets 
In establishing the initial values of intangible assets separately identified on acquisition as required by IFRS 3 “Business Combinations” 
management has estimated the future cash flows attributable to assets acquired and their estimated useful economic lives and applied  
a suitable weighted average cost of capital to calculate present values. 
The carrying value of intangible assets at the balance sheet date was £4,484,000 (2008: £4,392,000). 
Share-based compensation 
The assumptions on the expected life of share options, volatility of share price, risk free yield to maturity and expected dividend yield on shares 
are used in the fair value calculation of the Group’s share options outstanding at the balance sheet date (see note 27). 
Financial instruments 
The valuation of embedded derivatives contained within the Group’s borrowings is performed using option modelling techniques and requires 
assumptions to be made including expected life of options, volatility of share prices, risk free yield to maturity and expected dividend yields  
on shares. 
Basis of consolidation 
The consolidated financial statements incorporate the financial statements of the Company and all of its subsidiary undertakings, together  
with the Group’s share of the net assets and results of joint ventures. The financial statements of all Group companies are adjusted, where 
necessary, to ensure the use of consistent accounting policies. The results of companies acquired or disposed of are included in the Group 
income statement from or up to the date that control passes respectively.  
Acquisitions are accounted for under the acquisition method. The acquisition of Spiritel Technologies during 2005 has been accounted for 
under the reverse acquisition method, on the basis that the substance of the business combination was that Spiritel Technologies Limited 
acquired Spiritel Plc by a reverse acquisition.  
For business combinations completed prior to the date of transition to IFRS (1 May 2006) the Group has elected not to apply IFRS 3  
“Business Combinations” retrospectively.  
Accordingly, the classification of the combination (acquisition, reverse acquisition or merger) remains unchanged from that used under  
UK GAAP. Assets and liabilities are recognised at date of transition if they would be recognised under IFRS, and are measured using  
their UK GAAP carrying amount immediately post-acquisition as deemed cost under IFRS, unless IFRS requires fair value measurement. 
Deferred tax and minority interest are adjusted for the impact of any consequential adjustments after taking advantage of the  
transitional provisions.  
The transitional provisions used for past business combinations apply equally to past acquisitions of interests in associated and joint ventures.    
 25 
 
 
SpiriTel plc  
Annual report and accounts 2009 
2. Accounting policies continued 
Revenue  
Revenue is recognised to the extent that it is probable that the economic benefit will flow to the Group and can be reliably measured.  
The following specific recognition criteria must also be met before revenue is recognised:  
Managed services  
Revenue from managed services is recognised in the month in which the services are provided. Services provided in the year but not billed  
are accrued within receivables as accrued income.  
Call termination  
Revenue from call termination is recognised in the month in which it occurs. Call termination services provided in the year but not billed  
are recognised within receivables as accrued income.  
Networks services 
Revenue from telephony network services is recognised in the month in which the services are provided. Calls made in the year but not billed 
are recognised within receivables as accrued income.  
IP Communications 
IP Communications revenues comprise the sale of goods, including installation, and the provision of maintenance and hosting services. 
Revenue from the sale of goods, including installation, is recognised when the significant risks and benefits of ownership of the product have 
transferred to the buyer, which may be upon shipment or completion of the installation as determined by the contract terms. Revenue from 
maintenance and hosting contracts and other fixed term service agreements is recognised evenly over the period of the contract with revenue 
for the unexpired period of the contract being recognised as deferred income. 
Mobile 
Mobile revenue comprises connection commissions received from mobile network operators and a share of the network operators’ ongoing 
revenue. Connection commissions are recognised when the customer is connected to the mobile network after providing for expected future 
rebates. Ongoing revenue share, based on end user call volumes, is recognised in the period in which it is earned.  
Goodwill 
Goodwill representing the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is 
capitalised and reviewed annually for impairment. Goodwill is carried at cost less accumulated impairment losses. Any excess of the acquirer’s 
interest in the net fair value of the acquiree’s identifiable assets and liabilities and contingent liabilities in comparison to cost is recognised 
immediately after acquisition in the income statement. 
Goodwill written off to reserves prior to the date of transition to IFRS remains in reserves. There is no re-instatement of goodwill that was 
amortised prior to transition to IFRS. Goodwill previously written off to reserves is not written back to profit and loss on subsequent disposal. 
Property, plant and equipment 
Property, plant and equipment are included at cost, less accumulated depreciation and any provision for impairment. Depreciation is provided 
on these assets on a straight-line basis to write off their historical cost, less estimated residual value, over their estimated useful economic lives 
as follows: 
Leasehold improvements  – over the period of the lease 
Office and computer equipment – 10% to 33% straight line 
Plant and equipment  – 20% to 33% straight line 
Motor vehicles   – 33% straight line 
Intangible assets  
In accordance with IFRS 3 – “Business Combinations”, an intangible asset acquired in a business combination is deemed to have a cost to  
the Group of its fair value at the date of acquisition. The fair value of the intangible asset reflects the market expectations about the probability 
that the future economic benefits embodied in the asset will flow to the Group. 
Acquisitions during the current and prior financial years have resulted in the following categories of intangible assets being identified: 
Customer relationships 
Marketing assistance 
Customer order backlog 
Trade names     
 26 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
2. Accounting policies continued 
Amortisation 
The estimated useful lives of intangible assets are as follows:  
Customer relationships  – 6 years 
Third party marketing assistance – 3 years 
Customer order backlog  – over the period that the orders will be invoiced    
Trade names   – 1 or 2 years 
Impairment testing of goodwill, other intangible assets and property, plant and equipment  
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows  
(cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. 
Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and 
represent the lowest level within the Group at which management monitors the related cash flows. 
Goodwill, other individual assets or cash-generating units that include goodwill and other intangible assets with an indefinite useful life are tested 
for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in 
circumstances indicate that the carrying amount may not be recoverable. 
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable 
amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal 
discounted cash flow evaluation. Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited 
initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. 
With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no 
longer exist. 
Leased assets 
Finance leases and hire purchase agreements 
Where the Group enters into a lease that transfers substantially all the risks and rewards of ownership of an asset to the lessee, the lease is 
treated as a finance lease. The asset is recorded in the balance sheet as property, plant and equipment at the present value of the minimum 
lease payments and is depreciated over the shorter of the lease term and the asset’s useful economic life. Future instalments under such 
leases, net of finance charges, are included in creditors. Rentals payable are apportioned between the finance element, which is charged to  
the income statement at a constant rate of charge on the balance of capital repayments outstanding, and the capital element, which reduces 
the outstanding obligation. 
Operating lease agreements 
Leases where substantially all of the risks and rewards of ownership are not transferred to the Group are treated as operating leases.  
Rentals under operating leases are charged against profits on a straight-line basis over the period of the lease. 
Inventories 
Inventories are stated at the lower of cost and net realisable value, after provisions are made in respect of obsolete and slow moving items.  
Net realisable value is the estimated selling price less all further costs to complete and all costs to be incurred in marketing, selling and 
distribution. Cost is assigned on a first-in, first-out basis. 
Current tax 
The current tax charge is based on the profit or loss for the year and is measured at the amounts expected to be paid based on the tax  
rates and laws substantively enacted by the balance sheet date. Current and deferred tax is recognised in the income statement for the  
period except to the extent that it is attributable to a gain or loss that is or has been recognised directly in the statement of total recognised 
gains and losses.   
 27 
 
 
SpiriTel plc  
Annual report and accounts 2009 
2. Accounting policies continued 
Deferred tax 
Deferred tax is recognised on all temporary differences where the transactions or events that give the Group an obligation to pay more tax  
in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. 
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the 
underlying deductible temporary differences will be able to be offset against future taxable income. Deferred tax assets and liabilities are 
calculated at tax rates that are expected to apply to their respective period of realisation, provided that they are enacted or substantively 
enacted by the balance sheet date. 
Deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction  
is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and 
joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not 
occur in the foreseeable future. 
Cash and cash equivalents 
For the purposes of the consolidated statement of cash flows, cash and cash equivalents, comprises cash in hand and deposits repayable  
on demand, less overdrafts payable on demand. 
Foreign currency 
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in 
foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Any exchange differences arising on the settlement of 
monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the income 
statement in the period in which they arise. 
Contributions to pension schemes 
The Group contributes to the personal pension schemes of certain Directors and employees. The pension costs are charged against operating 
profit in the relevant accounting period. 
Exceptional items 
Exceptional items are material items which individually, or if a similar type, in aggregate, need to be disclosed by virtue of their size or incidence 
in order to understand the Group’s financial performance. 
Financial instruments 
Financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities are 
obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the 
instrument. Financial liabilities categorised as at fair value through profit or loss are recorded initially at fair value and all transaction costs  
are recognised immediately in the income statement. All other financial liabilities are recorded initially at fair value, net of direct issue costs. 
Financial liabilities categorised as at fair value through profit or loss are re-measured at each reporting date at fair value, with changes in fair 
value being recognised in the income statement. A financial liability is classified as held for trading if it is a derivative that is not designated and 
effective as a hedging instrument. 
All other financial liabilities are recorded at amortised cost using the effective interest method, with interest-related charges recognised as an 
expense in finance cost in the income statement. Finance charges, including premiums payable on settlement or redemption and direct issue 
costs, are charged to the income statement on an accruals basis using the effective interest method and are added to the carrying amount of 
the instrument to the extent that they are not settled in the period in which they arise.   
 28 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
2. Accounting policies continued 
Classification as equity or financial liability 
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. 
A financial liability exists where there is a contractual obligation to deliver cash or another financial asset to another entity, or to exchange 
financial assets or financial liabilities under potentially unfavourable conditions. In addition, contracts which result in the entity delivering a  
variable number of its own equity instruments are financial liabilities. Shares containing such obligations are classified as financial liabilities. 
Finance costs and gains or losses relating to financial liabilities are included in the income statement. The carrying amount of the liability  
is increased by the finance cost and reduced by payments made in respect of that liability. 
Finance costs are calculated so as to produce a constant rate of charge on the outstanding liability. 
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.  
Dividends and distributions relating to equity instruments are debited directly to reserves. 
Compound instruments 
Compound instruments comprise both a liability and an equity component. The elements of a compound instrument are classified in 
accordance with their contractual provisions. At the date of issue, the liability component is recorded at fair value, which is estimated using  
the prevailing market interest rate for a similar debt instrument without the equity feature. Thereafter, the liability component is accounted for  
as a financial liability in accordance with the accounting policy set out above. 
The residual is the equity component, which is accounted for as an equity instrument. 
Embedded derivatives 
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and 
characteristics are not closely related to those of the host contracts and the host contracts are not measured at their fair value with changes  
in fair value recognised in profit or loss. 
Where there have been significant modifications to the terms of existing financial liabilities these are accounted for as an extinguishment of  
the original financial liability and the recognition of a new financial liability. The gain/loss arising on the modification is included in the income 
statement and is calculated as the fair value of the new financial liability compared to the fair value of the original financial liability immediately 
prior to the modification. Where equity instruments have been issued as part of the modification, the issue of the equity is accounted for as  
a transaction with equity holders and no gain/loss is recognised in that respect. 
Equity 
Equity comprises the following: 
– Share capital represents the nominal value of equity shares. 
– Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the 
share issue. 
– Other reserves represent equity-settled share-based employee remuneration until such share options are exercised and the equity 
component of financial instruments. 
– Reverse acquisition reserve represents the amount recognised in respect of the reverse acquisition accounting treatment of the acquisition  
of Spiritel plc by Spiritel Technologies Limited (formerly Expo Communications Limited) in 2005. 
Government grants 
Government grants in respect of capital expenditure are held in liabilities and released to the income statement to match against the 
depreciation on the related assets.   
 29 
 
 
SpiriTel plc  
Annual report and accounts 2009 
2. Accounting policies continued 
Share-based payments 
Equity-settled share-based payment 
The Group issues equity-settled benefits to certain Directors and employees. All share-based payment arrangements granted after 7 July 2005 
that had not vested prior to 1 May 2006 are recognised in the financial statements. Where employees are rewarded using share-based 
payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the instrument granted to the 
employee. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions. All equity-settled share-
based payments are ultimately recognised as an expense in the profit and loss account with a corresponding credit to other reserves. 
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available 
estimate of the number of share options expected to vest. Estimates are revised subsequently if there is any indication that the number of  
share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. 
No adjustment is made to any expense recognised in prior periods if share options that have vested are not exercised. 
Upon exercise of share options, the proceeds received net of attributed transaction costs are credited to share capital and, where appropriate, 
additional paid in capital 
Cash-settled share-based payment 
For cash-settled share-based payments the goods and services received and the liability incurred are measured at the fair value of the liability 
and allocated as an expense over the vesting period. The liability is then re-measured until settlement with changes being recognised in the 
income statement.  
3. Revenue and segmental information  
Spiritel plc has two operating business units, Business and Technologies. There is also a Central division that supplies back office functions  
and executive management to support the Group’s operations. The business units deliver independent products and services although Spiritel 
Technologies provides support to Spiritel Business through its network architecture and capabilities. All segments are located in the United 
Kingdom. 
SpiriTel Technologies  
SpiriTel Technologies provides call termination services on a limited number of niche routes to many of the UK’s major carriers. It also provides 
managed services to SpiriTel Business and third parties using its IP infrastructure, including its three network operation centres, five points of 
presence and several Tier 1 voice and data carrier interconnects. 
SpiriTel Business 
SpiriTel Business operates three lines of business, namely IP Communications, Network Services and Mobile. The business unit is 
headquartered in Wigan but provides national engineering coverage and customer support on a 24/7 basis. 
SpiriTel IP Communications 
SpiriTel IP Communications provides a range of voice and data services to business customers, including hosted VoIP and WiFi, traditional 
telephony equipment, maintenance and structured cabling. SpiriTel IP Communications was formed with the acquisition of Ashland Group 
Limited in March 2007 and expanded by the subsequent acquisition of tdotcom Limited in October 2007. SpiriTel IP Communications supplies 
all business sizes, including large corporates and has particular expertise in the hospitality sector. The business also holds the highest level of 
Mitel accreditation. 
SpiriTel Networks 
SpiriTel Networks provides fixed line telephony services, including inbound and outbound calls, line rental and broadband to business users. 
SpiriTel Networks was formed following the acquisition of Networks Direct (UK) Limited in October 2006. SpiriTel Networks also includes 
SpiriTel CallPlan, which resells a broad telephony portfolio on behalf of Telstra Europe Limited. Spiritel Networks (London) Limited (formerly  
ED Communications Limited) became part of Spiritel Networks on 4 August 2008 (see note 15). 
SpiriTel Mobile 
SpiriTel Mobile was formed in April 2008 with the acquisition of WN1 Limited. Spiritel Mobile is an accredited T-mobile and 02 Partner that 
provides mobile voice and data, including BlackBerry services to business users.   
 30 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
3. Revenue and segmental information continued 
Year ended 30 April 2009 
 
SpiriTel
Technologies
£000 
SpiriTel 
Business 
£000  
Other/ 
Central costs 
£000  
Total
£000 
Continuing operations      
Revenue 9,403 10,315  –  19,718
     
Underlying EBITDA  1,103 1,799  (1,388)  1,514
Depreciation (46) (160)  (6)  (212)
Share-based payments – –  (204)  (204)
Exceptional administrative expenses (note 5) (28) (568)  (67)  (663)
Amortisation of other intangible assets – (1,084)  –  (1,084)
Operating profit/(loss) 1,029 (13)  (1,665)  (649)
     
Operating profit/(loss) 1,029 (13)  (1,665)  (649)
Net finance costs     (1,059)
Loss before taxation     (1,708)
Tax credit     774
Loss for the financial year     (934)
Assets and liabilities     
Total assets 1,483 5,718  6,551  13,752
Total liabilities (2,738) (3,099)  (10.897)  (16,734)
Net assets/(liabilities) (1,255) 2,619  (4,346)  (2,982)
Other segmental information     
Property, plant and equipment     
– additions during the year 18 438  14  470
– depreciation 46 160  6  212
Other intangible assets     
– acquired on business combinations – 1,289  –  1,289
– impairment (included in exceptional administrative expenses) – 113  –  113
– amortisation  – 1,084  –  1,084
Goodwill     
– impairment (included in exceptional administrative expenses) – 199  –  199
– acquired on business combinations – 506  –  506
   
 31 
 
 
SpiriTel plc  
Annual report and accounts 2009 
3. Revenue and segmental information continued 
Year ended 30 April 2008 
 
SpiriTel 
Technologies 
£000 
SpiriTel 
Business 
£000 
Other/
Central costs
£000 
Total
£000 
Continuing operations    
Revenue 9,930 6,744 – 16,674
   
Underlying EBITDA 1,024 1,125 (1,211) 938
Depreciation (128) (48) (4) (180)
Share-based payments – – (190) (190)
Exceptional administrative expenses (note 5) (104) (305) (211) (620)
Amortisation and impairment of goodwill and intangible assets – (794) – (794)
Operating profit/(loss) 792 (22) (1,616) (846)
   
Operating profit/(loss) 792 (22) (1,616) (846)
Net finance costs   (3,201)
Loss before taxation   (4,047)
Tax credit   289
Loss for the financial year   (3,758)
Assets and liabilities   
Total assets 944  5,461 7,279 13,684
Total liabilities (3,146) (3,530) (14,304) (20,980)
Net assets/(liabilities) (2,202) 1,931 (7,025) (7,296)
Other segmental information   
Property, plant and equipment   
– additions during the year 45 170 14 229
– acquired on business combinations – 45 – 45
– depreciation 128 48 4 180
– impairment (included in exceptional administrative expenses) 64 – – 64
Other intangible assets   
– acquired on business combinations – 1,607 – 1,607
– amortisation  – 794 – 794
Goodwill   
– acquired on business combinations – 2,935 – 2,935
   
 32 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
3. Revenue and segmental information continued 
Analysis of the Group’s revenue by geographical market (by destination) is as follows: 
 
2009 
£000 
2008
£000 
United Kingdom 19,692 16,561
Europe 21 113
United States 5 –
 19,718 16,674
4. Operating loss 
Operating loss is stated after charging: 
 
2009 
£000 
 2008
£000 
Charges in respect of equity-settled share-based payments 204 190
Depreciation  
– owned assets 154 150
– assets held under finance leases 58 30
Auditor’s remuneration  
as auditor of the parent company and Group consolidated financial statements 42 20
other services  
– audit of subsidiary company financial statements 38 37
– review of Group’s interim results 4 3
– other services 3 10
Operating lease costs  
– land and buildings  171 143
– other  – 19
Amortisation of other intangible assets 1,084 794
Exceptional administrative expenses (note 5)  663 620
5.  Exceptional administrative expenses 
Exceptional expenses included within administrative expenses are summarised below: 
 Note 
2009 
£000 
 2008
£000 
Reorganisation and restructuring costs (i) 289 432
Aborted acquisition costs  – 124
Impairment charges – property, plant and equipment  – 64
Impairment charges – goodwill  (see note 11)  199 –
Impairment charges – other intangible assets (see note 12)  113 –
Bad debts written off  62 –
Total exceptional administrative expenses  663 620
Notes: 
(i)  Reorganisation and restructuring costs include the costs of integration of the acquired businesses.   
 33 
 
 
SpiriTel plc  
Annual report and accounts 2009 
6. Staff costs 
The average number of employees in the Group during the financial year amounted to:  
 
2009
Number 
 2008
Number 
Administrative and operational staff 104 82
Management 3 2
 107 84
The aggregate staff costs for the year including Directors were as follows:  
 
2009
000 
2008
£000 
Wages and salaries 3,433 2,992
Social security costs 396 305
Share based payments 204 190
 4,033 3,487
The total number of employees (including Directors) at 30 April 2009 was 109 (2008: 104). 
Wages and salaries include the following amounts in respect of performance related bonuses, inclusive of national insurance and share-based 
payments charged to the income statement. 
 
2009
£000 
2008
£000 
Performance related bonuses 308 327
Equity-settled share-based payment schemes 204 190
 512 517
Directors’ remuneration 
Remuneration in respect of the Directors was as follows: 
 
2009
£000 
2008
£000 
Emoluments and benefits in kind 529 617
Compensation for loss of office – 13
 529 630
Remuneration in respect of the highest paid Director was £169,000 (2008: £245,000). Further details of Directors’ remuneration are given in the 
Directors’ Remuneration Report on pages 15 to 17. 
7. Finance income  
 
2009
£000 
2008
£000 
Bank interest receivable – 5
   
 34 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
8. Finance costs  
 
2009 
£000 
2008
£000 
Interest payable on bank loans and overdrafts 273 125
Interest on finance leases 8 7
Interest paid on Director’s loan – 8
Interest on Penta loans – 1,204
Unwinding of discount on deferred and contingent consideration 181 –
Loss arising on modification and conversion of convertible preference shares 1,026 2,521
Change in fair value of embedded derivatives (429) (659)
 1,059 3,206
9. Taxation  
(a) Tax on loss on ordinary activities  
Tax charged in the income statement: 
 
2009 
£000 
 2008
£000 
Current tax:  
Charge for current year – 30
Adjustment in respect of prior years (147) (90)
Total current tax credit  (147) (60)
Deferred tax:  
Credit for current year (273) (229)
Adjustment in respect of prior years (354) –
Total deferred tax credit (627) (229)
Total tax credit in income statement (774) (289)
(b) Reconciliation of the total tax credit  
The tax credit in the income statement for the year is the standard rate of corporation tax in the UK of 28% (2008: 29.8%). The differences are 
reconciled below:  
 
2009 
£000 
2008
£000 
Loss on ordinary activities before taxation  (1,708) (4,047)
Accounting loss multiplied by UK standard rate of corporation tax of 28% (2008: 29.8%) (478) (1,205)
Deferred tax temporary differences  – (38)
Expenses not deductible for tax purposes 353 630
Tax losses (148) 414
Adjustment in respect of prior years  (501) (90)
Total tax credit (774) (289)
   
 35 
 
 
SpiriTel plc  
Annual report and accounts 2009 
10. Loss per share 
The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number  
of shares in issue during the period. The share options are not dilutive and therefore diluted earnings per share has not been presented.  
The loss and weighted average number of shares used in the calculation are set out below:  
Continuing and total operations 2009 2008 
Loss after tax attributable to ordinary shareholders (£000) (934) (3,758)
Weighted average number of shares 578,661,793 316,233,646
Loss per share (pence) (0.16) (1.19)
11. Goodwill 
 £000 
Cost  
At 1 May 2007 2,626
Additions 2,935
At 30 April 2008 5,561
Additions 506
Other adjustments  96
At 30 April 2009 6,163
Accumulated impairment 
At 1 May 2007 269
Impairment charge –
At 30 April 2008 269
Impairment charge 199
At 30 April 2009 468
Net book amount 
At 30 April 2009 5,695
At 30 April 2008 5,292
The addition to purchased goodwill in the current financial year relates to the acquisitions of ED Communications Limited (see note 15). 
The other adjustment to goodwill relates to (i) fair value adjustments to the book value of liabilities acquired on the acquisition of WN1 Limited  
of £145,000 to account for unrecorded liabilities; and (ii) a completion accounts reduction to the consideration of £49,000.   
 36 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
11. Goodwill continued 
Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value  
may be impaired. Goodwill was allocated for impairment testing purposes to cash generating units (CGUs), based on the following  
acquired businesses: 
– SpiriTel Mobile 
– SpiriTel IP Communications 
– SpiriTel Networks  
These CGUs, and specifically the separable acquisitions inherent in each CGU, represent the lowest level within the Group at which goodwill 
was monitored by management for internal reporting purposes, and the level that represented the smallest identifiable group of assets which 
generated largely independent cash inflows. 
The recoverable amount of all the CGUs was based on a value in use calculation using cash flow projections based on the 2010 forecast  
which was approved by the Board and extrapolated for a further 6 – 15 years by a growth rate applicable to each unit. The projections are 
based on the following revenue growth rates, up to and including year five:  
– SpiriTel Mobile   7% 
– Spiritel IP Communications 6% 
– Spiritel IP Networks  5% 
Cost growth was projected at levels below sales growth as the Directors anticipate that the CGUs will be able to increase revenues without 
corresponding increases in costs. A discount rate of 10% was applied to these projections, based on the Directors’ assessment of the 
weighted average cost of capital for the company. 
Based on this impairment review, the Directors have made an impairment charge of £199,000 against Spiritel CallPlan Limited which is included 
with the Spiritel Networks CGU. 
With the exception of Spiritel CallPlan, as disclosed above, the discounted cash flow projections exceed the carrying value of each CGU  
and therefore there has been no other impairment of goodwill during the financial year. Sensitivity analysis has indicated that no reasonably 
foreseeable change in the key assumptions used in the impairment calculations would result in any impairment charge being recorded in the 
consolidated financial statements. 
The carrying amount of goodwill is split as follows: 
 
2009 
£000 
2008
£000 
SpiriTel Mobile 1,461 1,365
SpiriTel IP Communications 2,716 2,716
SpiriTel Networks 1,518 1,211
 5,695 5,292
   
 37 
 
 
SpiriTel plc  
Annual report and accounts 2009 
12. Other intangible assets  
 
Customer 
relationships 
£000 
Marketing 
assistance 
£000 
Customer  
order backlog 
£000 
Trade names
£000 
Total
£000 
Cost    
At 1 May 2007 3,496 222 57 52 3,827
Additions 1,607– – –1,607
At 30 April 2008 5,103 222 57 52 5,434
Additions (see note 15) 1,289 – – – 1,289
At 30 April 2009 6,392 222 57 52 6,723
Amortisation   
At 1 May 2007 185 43 7 13 248
Charge for year 647 65 43 39 794
At 30 April 2008 832 108 50 52 1,042
Charge for year 1,012 65 7 – 1,084
Impairment charge 64 49 – – 113
At 30 April 2009 1,908 222 57 52 2,239
Net book amount   
At 30 April 2009 4,484 – – – 4,484
At 30 April 2008 4,271 114 7 – 4,392
As part of the impairment review performed during the year, as disclosed in note 11, the Directors have also made an impairment charge of 
£113,000 against the intangible assets attributed to Spiritel CallPlan Limited. 
The remaining amortisation period of the Customer relationships as at 30 April 2009 is between three and six years.    
 38 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
13. Property, plant and equipment  
 
Leasehold
improvements
£000 
Office and
computer
equipment
£000 
Motor 
vehicles 
£000 
Plant and 
equipment 
£000 
Total
£000 
Cost    
At 1 May 2007 29 2,014 1 – 2,044
Additions 11218– – 229
Acquisitions –243 – 45
At 30 April 2008 40 2,234 44 – 2,318
Additions 103225– 142 470
At 30 April 2009 143 2,459 44 142 2,788
Depreciation   
At 1 May 2007 24 1,612 – – 1,636
Charge for the year 6 173 1 – 180
Impairment charge – 64 – – 64
At 30 April 2008 30 1,849 1 – 1,880
Charge for the year 17 149 21 25 212
At 30 April 2009 47 1,998 22 25 2,092
Net book amount   
At 30 April 2009 96 461 22 117 696
At 30 April 2008 10 385 43 – 438
Included within office and computer equipment are assets held under hire purchase agreements with a net book value of £170,000  
(2008: £139,000). Depreciation charged on those assets during the year amounted to £58,000 (2008: £30,000). 
14. Investments  
The Group holds a 50% interest In MyPhone (UK) Limited, a joint venture undertaking. At 30 April 2009, the Group’s share of the losses of the 
joint venture exceeded its interest in the company, and therefore in accordance with IAS 28, the Group has not recognised these losses on the 
basis that the Group has not incurred obligations on behalf of the joint venture. At 30 April 2009, the Group’s share of the accumulated losses 
of the joint venture undertaking was £47,000 (2008: £47,000).   
 39 
 
 
SpiriTel plc  
Annual report and accounts 2009 
15. Business combinations 
On 4 August 2008, SpiriTel plc acquired 100% of the issued share capital of ED Communications Limited, a company based in the UK.  
The total cost includes the components stated below. The purchase price was settled in cash.  
 £000 
Purchase price  800
Contingent consideration under earn out agreement payable in cash (discounted) 90
Deferred consideration payable in cash (discounted) 426
Due diligence fees  36
Other professional fees  54
 1,406
A maximum of £1,700,000 of consideration may become payable depending on the level of gross profit achieved by the business during July 
2009. In the opinion of the Directors, the likely amount of contingent consideration payable is £100,000. 
The assessment of the fair values of the assets and liabilities of ED Communications Limited for each class of the acquiree’s assets and liabilities 
recognised at the acquisition date are as follows: 
 
Book value  
£000 
Fair value 
adjustments
£000 
Fair value to the 
Group
£000 
Intangible fixed assets identified – 1,289 1,289
Property, plant and equipment 97 (97) –
Trade and other receivables 196 – 196
Cash and cash equivalents 44 – 44
Total assets 337 1,192 1,529
Trade payables (53) – (53)
Other taxes  (40) – (40)
Other payables  (175) – (175)
Deferred tax – (361) (361)
Total liabilities (268) (361) (629)
Net assets acquired 69 831 900
Goodwill arising on the acquisition  506
Consideration  1,406
 
Satisfied by:   
Cash  890
Deferred and contingent consideration to be settled in cash (discounted)  516
  1,406
Goodwill on the acquisition of ED Communications Limited is largely attributable to the cross-selling opportunities. 
During the period from the date of acquisition to 30 April 2009, ED Communications Limited generated revenue of £1,121,000 and an 
operating profit of £287,000. Due to the lack of IFRS specific data for ED Communications Limited prior to its acquisition, the pro-forma revenue 
and profit of the Group, had this acquisition taken place on 1 May 2008, have not been disclosed as they cannot be reliably determined. 
Reconciliation to the consolidated statement of cash flows: 
Cash consideration 890
Cash and cash equivalents acquired (44)
Refund of WN1 Limited consideration – completion accounts adjustments (note 11) (49)
Net cash flow arising on acquisitions 797
   
 40 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
16. Inventories 
 
2009 
£000 
2008
£000 
Finished goods for resale 384 353
During the financial year, the Group’s write-down of inventories amounted to £58,000 (2008: £nil).  
The value of inventory consumed in cost of sales during the year amounted to £2,148,000 (2008: £1,153,000). 
17. Trade and other receivables  
 
2009 
£000 
2008
£000 
Trade debtors 1,121 1,062
Amounts owed by related parties (note 28) 10 64
Other debtors 242 438
Prepayments and accrued income 1,120 587
 2,493 2,151
All the above fall due within one year. 
All trade and other receivables have been reviewed for indicators of impairment and a provision of £129,000 (2008: £212,000) has been 
recorded accordingly. 
Movements of the Group provision for impairment of receivables are as follows: 
 
2009 
£000 
2008
£000 
At 1 May 212 158
Amounts written off (172) (58)
On acquisitions – 17
Amounts provided during year 89 95
At 30 April 129 212
The age of receivables past due but not impaired is as follows: 
 
2009 
£000 
2008
£000 
Up to 30 days overdue 131 191
Over 30 days and up to 60 days overdue 50 52
Over 60 days and up to 90 days overdue 15 18
Over 90 days overdue 25 16
 221 277
   
 41 
 
 
SpiriTel plc  
Annual report and accounts 2009 
18. Cash and cash equivalents 
 
2009
£000 
2008
£000 
Cash at bank and in hand – 1,058
The total cash and cash equivalents as disclosed in the cash flow statement is as follows: 
 
2009
£000 
2008
£000 
Cash at bank and in hand – 1,058
Bank overdraft (527) –
 (527) 1,058
19. Trade and other payables  
 
2009
£000 
2008
£000 
Amounts falling due within one year: 
Trade payables  1,983 1,793
Amounts owed to related parties (note 28) 14 89
Other taxes and social security payable 467 244
Accruals and deferred income 1,086 1,588
Other payables  140 731
Deferred and contingent consideration  781 150
 4,471 4,595
Amounts falling due after one year: 
Deferred and contingent consideration 116 432
20. Borrowings 
 
2009
£000 
2008
£000 
Borrowing at amortised cost 
Bank loans 2,326 1,747
Bank overdraft 527 –
Director’s loan – 100
Loan notes – Other 300 248
Loan notes – Penta 770 770
Other loans – Penta 5,122 5,566
Redeemable preference shares (note 23)  1,959 5,629
 11,004 14,060
Total borrowings 
Amounts due for settlement within 12 months 1,536 457
Amounts due for settlement after 12 months 9,468 13,603
   
 42 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
20. Borrowings continued 
Bank loans 
Bank loans comprise a term loan from Clydesdale Bank plc of £2,527,500 (2008: £1,912,500). Deferred arrangement fees of £201,000  
(2008: £165,000) have been netted against the amount disclosed above. 
Under a loan agreement dated 27 July 2007, Clydesdale Bank plc provided a term loan of £750,000. As at 30 April 2009, the amount 
outstanding was £562,500 comprising 15 quarterly payments of £37,500 with the final payment due on 31 December 2012. 
Under a loan agreement dated 2 April 2008, Clydesdale Bank plc provided a term loan of £1,200,000. As at 30 April 2009, the amount 
outstanding was £960,000 comprising 16 quarterly payments of £60,000 with the final payment due on 31 March 2013. 
Under a loan agreement dated 4 August 2008, Clydesdale Bank plc provided a term loan facility of £1,900,000 of which £1,100,000 has  
been drawn down at 30 April 2009, with the balance to be drawn to pay amounts due as deferred consideration and earn-out on acquisitions. 
As at 30 April the amount outstanding was £1,005,000 and the undrawn amount is £800,000. This loan is repayable in 20 instalments of 
£95,000 with one instalment having been paid at 30 April 2009. The final payment date will depend on the final amount drawn but will be  
no later than 30 November 2013.  
The Group also has a £250,000 overdraft facility, repayable on demand, and an invoicing discounting facility of £650,000. The loans and 
overdraft carry interest charged at approximately 2.75% above the Clydesdale Bank base rate. 
All Clydesdale Bank plc facilities are secured by debentures over the assets of the Group. 
Other loans 
Other loan notes comprise an interest free loan note of £300,000 issued to the vendors of WN1 Limited, repayable on 1 May 2009. 
Penta loans, loan notes and redeemable preference shares (the “Penta facilities”) 
Modification and conversion during the year 
At 1 May 2008, the company had outstanding loans and loan notes in favour of Penta amounting to £5,566,000 and £770,000 respectively. 
These loans carried the right of conversion into the company's ordinary shares under terms which meet the definition of equity and hence were 
classified as compound financial instruments.  
In addition, at 1 May 2008 the company had £4,100,000 of outstanding redeemable preference shares, together with an accrued redemption 
premium of £1,025,000. These shares, together with the redemption premium, also carried the right of conversion into the company's ordinary 
shares as follows: 
– the first £1m of nominal value, together with a redemption premium of £250,000, were convertible at 2p per ordinary share; and 
– the remaining £3.1m of nominal value, together with the associated redemption premium of £775,000, were convertible at the lower of;  
(a) a 10% discount to the prevailing market price; and (b) the latest subscription price for ordinary shares, in both cases subject to a 
minimum price of 3p per ordinary share. 
The £1m preference shares were classified as a compound financial instrument. Since the conversion terms on the £3.1m preference shares 
meet the definition of a financial liability, this instrument was classified as a host debt with an embedded derivative. The fair value of the 
embedded derivative at 1 May 2008 was £504,000. 
On 22 May 2008 the shareholders of the company, at an Extraordinary General Meeting ('EGM'), approved a modification to the terms of the 
outstanding Penta facilities. The modified terms were that Penta could convert 2,611,467 preference shares at a price of 1.1p per ordinary 
share immediately on EGM approval (the 'Initial Conversion') and that the remaining Penta facilities could be converted into ordinary shares at 
the higher of; (a) 1.5p per ordinary share; and (b) the latest subscription price for ordinary shares, subject to a restriction that Penta's holding  
of the company's ordinary shares cannot exceed 49.99%. Since these terms meet the definition of a financial liability, all the outstanding Penta 
facilities subsequent to modification have been classified as a host debt with an embedded derivative. 
On 22 October 2008, Penta converted a further 555,000 preference shares into ordinary shares at 1.5p per ordinary share.  
A reconciliation of the movements on the carrying value of the loans and loan notes (together “debt”) and the preference shares during the year 
is as follows: 
 
Debt 
£000 
Preference 
shares 
£000 
Total
£000 
Carrying value at 1 May 2008 6,336 5,629 11,965
Accrued interest waived on modification (444) – (444)
Change in fair value of embedded derivative pre-modification – (429) (429)
Change in fair value of embedded derivative on modification – (75) (75)
Preference shares converted during the year – (3,166) (3,166)
Carrying value at 30 April 2009 5,892 1,959 7,851
   
 43 
 
 
SpiriTel plc  
Annual report and accounts 2009 
20. Borrowings continued 
The modification and conversion of the Penta facilities has resulted in the following charge/credit to the income statement and equity  
(other reserves). 
 
Income 
statement
£000 
Other reserve
£000 
Accrued interest waived on modification 444 –
Change in fair value of embedded derivative on modification 75 –
Charge on Initial Conversion (see note (i) below) (1,554) 1,554
Difference between fair value of shares issued on conversion and carrying value of debt converted 9 (9)
Loss arising on modification and conversion of preference shares  (1,026) 1,545
Change in fair value of embedded derivative pre-modification 429 –
Total charged to income statement/credited to equity (597) 1,545
 
Notes: 
(i) This charge is based on the fair value of the incremental number of shares issued on conversion, compared to the number of shares which 
would have been issued under the previous conversion terms. 
Management has applied certain judgements and estimates in arriving at the fair value of the embedded derivative under the modified terms  
of conversion, both at the date of modification and as at 30 April 2009. Taking into account the restriction on Penta's ability to convert the 
outstanding debt (since Penta hold the maximum 49.99% of the company's ordinary shares), the current share price of the company and the 
price at which Penta are able to convert the outstanding debt, management has concluded that the fair value of the embedded derivative is £nil, 
both at the date of modification and at 30 April 2009.  
At 30 April 2009 
The Penta loans comprise secured facilities of £5,122,000 (2008: £5,566,000) from Penta Fund 1 Limited Partnership which are repayable  
on demand.  
The Penta loan notes of £770,000 (2008: £770,000) are secured, interest free and are repayable at any time at the Company’s option.  
The terms of the redeemable preference shares are as follows: 
– Redeemable at any time at the option of the Company. 
– Do not entitle the holders to any dividend but whilst they are in issue the holders of ordinary 1p shares will not be entitled to receive any 
dividends or other distributions. 
– On a return of capital, redeemable preference shareholders will be repaid the nominal capital paid up on the redeemable preference  
shares together with an amount equal to the amount of any redemption fee then outstanding in priority to any repayment to the  
ordinary shareholders. 
– Holders of redeemable preference shares have the right to receive notice of all general meetings, but only to attend, speak and vote if a 
resolution is proposed, inter alia, for the winding up or reduction of capital of the Company or varying their rights or privileges as holders  
of redeemable preference shares or certain other matters to be proposed by the Company. 
The conversion terms of the Penta loans, loan notes and redeemable preference shares are detailed above. 
The Company’s Articles of Association include various provisions to allow for re-classification or subdivision in order to facilitate the  
conversion process. 
The Penta facilities are secured by second-ranking debentures over certain assets of the Group.   
 44 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
21. Obligations under finance leases 
 
2009 
£000 
2008
£000 
Amounts payable under finance leases:  
Within one year 72 94
In the second to fifth years (inclusive)  – 63
 72 157
Less: future finance charges (11) (18)
 61 139
Disclosed as:  
Current liabilities 61 84
Non-current liabilities – 55
 61 139
The fair value of the Group’s lease obligations approximates to their carrying value. 
The Group’s obligations under finance leases are secured by the lessors’ rights over the leased assets disclosed in note 13. 
22. Deferred taxation 
 
2009 
£000 
2008
£000 
Liability at 1 May 1,312 1,091
Acquisitions 361 450
Credit for the year (627) (229)
Liability as at 30 April (non-current) 1,046 1,312
The rate at which deferred tax is expected to unwind is 28% (2008: 28%) and this rate has been used to calculate the deferred tax assets  
and liabilities. 
The deferred tax liability comprises the following: 
 
As at 
1 May 2008
£000 
Credited 
to income 
£000 
Acquisitions  
(see note 15) 
£000 
As at 
30 April 2009
£000 
Intangible assets 1,230 (335) 361 1,256
Trade losses 102 (283) – (181)
Capital allowances exceeding depreciation (20) (9) – (29)
 1,312 (627) 361 1,046
 
 
As at 
1 May 2007
£000 
(Credited)/ 
charged 
to income 
£000 
Acquisitions  
£000 
As at 
30 April 2008
£000 
Intangible assets 1,074 (294) 450 1,230
Trade losses – 102 – 102
Capital allowances exceeding depreciation 17 (37) – (20)
 1,091 (229) 450 1,312
Deferred tax assets have been recognised in respect of temporary differences to the extent that it is probable that these assets will be 
recovered. In addition to the above, the Group has a potential deferred tax asset which has not been recognised in the financial statements  
of £2,354,000 (2008: £1,773,000) in respect of tax losses.   
 45 
 
 
SpiriTel plc  
Annual report and accounts 2009 
23. Share capital 
The ordinary share capital of the Company consists only of shares of par value of 1p each. All ordinary shares are equally eligible to receive 
dividends and represent one vote at the shareholder meetings of the Company. 
The preference share capital of the Company consists only of redeemable preference shares with a par value of £1 each. The preference 
shares are convertible, together with a redemption premium of £1,025,000, into ordinary shares at a price which is the higher of (i) 1.5p;  
and (ii) the price at which the last subscribers for ordinary shares had subscribed. 
The authorised share capital of the Company was increased by the creation of 500,000,000 new ordinary 1p shares as a result of a resolution 
passed by the shareholders at an Extraordinary General Meeting held on 22 May 2008. 
Ordinary shares 
 
2009
Number 
2009 
£000 
2008
Number 
2008
£000 
Authorised:  
Ordinary shares of 1p each 2,000,000,000 20,000 1,500,000,000 15,000
Allotted, called up and fully paid:  
Shares classified as equity  
Ordinary shares of 1p each  627,639,692 6,276 316,233,646 3,162
The Company has issued and allotted ordinary 1p shares (“Shares”) during the year as follows:  
– on 22 May 2008, Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership converted an aggregate of 2,611,467 
preference shares at 1.1p per Share, into 237,406,046 Shares following the approval by the Company’s shareholders in an Extraordinary 
General Meeting of the grant by the Panel on Takeovers and Mergers of a waiver in favour of the Penta Funds of any obligation on them  
to make a mandatory offer for the company in the event that they implement conversion rights attaching to loan instruments held by them 
which could result in them holding up to an aggregate of 49.99% of the Company’s issued ordinary share capital. 
– on 16 October 2008, 37,000,000 Shares at 1p per Share to raise net proceeds of £370,000. 
– on 20 October 2008, 37,000,000 Shares to the Penta Funds at 1.5p per Share to convert an aggregate of 555,000 preference shares. 
Preference shares 
The terms of the preference shares give to the holder (Penta Capital) rights of conversion to ordinary shares as described above. In accordance 
with IAS 32 the preference shares are considered to be a host debt with an embedded derivative. The carrying value of the preference shares  
in the financial statements is analysed below. 
 
2009
Number 
2008
Number 
Authorised: 
Redeemable preference shares of £1 each 933,533 4,100,000
Allotted, called up and fully paid: 
Shares classified as financial liabilities 
Redeemable preference shares of £1 each 933,533 4,100,000
The changes in the number of issued preference shares during the year are as explained under the heading Ordinary shares, above.  
   
2009
£000 
2008
£000 
Principal 934 4,100
Redemption premium 1,025 1,025
Fair value of embedded derivative and other modification adjustments – 837
 1,959 5,962
Presented as: 
Debt 1,959 5,629
Equity (other reserves) – 333
 1,959 5,962  
 46 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
24. Financial instruments 
24.1 Capital management policies and procedures 
The Group manages its capital with the objective of ensuring that entities within the Group will be able to continue as going concerns while 
seeking to improve the return to stakeholders through the management of the debt and equity balance. 
As a result of the significant level of loans and other financial instruments outstanding in favour of the Penta Funds, the continuing co-operation 
and support of Penta is critical to the flexibility and scope with which the Group is able to manage its capital. 
During September 2009 the Company reached an agreement with the Penta Funds, subject to shareholder approval at an EGM, for the 
amendment of conversion rights over all indebtedness. See note 29 – Post balance sheet events for fuller details.  
In May 2009 the Company secured new and increased facilities with Clydesdale Bank plc. The Directors expect the Group will comply with all 
financial covenants required by these facilities. 
The Directors consider that the borrowings payable to Penta do not represent debt for the purposes of calculating gearing and so no gearing 
ratios have been disclosed. 
24.2 Significant accounting policies 
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement, and the 
basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are 
disclosed in note 2 to the financial statements. 
24.3 Categories of financial instruments 
The IAS 39 categories of financial asset included in the balance sheet and the headings in which they are included are as follows: 
 
2009 
£000 
2008
£000 
Loans and other receivables - cash and cash equivalents – 1,058
Loans and other receivables - other 1,373 1,564
 1,373 2,622
The carrying amount reflected above represents the Group’s maximum exposure to credit risk.  
The IAS 39 categories of financial liabilities included in the balance sheet and the headings in which they are included are as follows: 
 
2009 
£000 
2008
£000 
Amortised cost 13,700 17,757
Fair value through profit and loss – 504
 13,700 18,261
24.4 Interest rate and liquidity risk management 
The Group is exposed to interest rate risk as it borrows funds at both fixed and variable rates. Details of borrowings are provided in note 20  
to these financial statements. 
The following tables detail the Group’s remaining contractual maturity for its financial liabilities. The tables have been drawn up on the 
undiscounted cash flows of financial liabilities based upon the earliest date on which the Group can be required to pay, which may differ  
from the carrying value of the liabilities at the balance sheet date. The tables include both interest and principal cash flows.   
 47 
 
 
SpiriTel plc  
Annual report and accounts 2009 
24. Financial instruments continued 
24.4 Interest rate and liquidity risk management continued 
At 30 April 2009, the Group’s liabilities have contractual maturities which are summarised below: 
 
Within  
6 months 
£000  
6 to 12 months
£000 
1 to 5 years
£000 
Trade payables 1,983  – –
Amounts owed to related parties 14  – –
Accruals and deferred income 986  100 –
Deferred and contingent consideration 820  – 150
Bank loans 385  385 1,757
Bank overdraft 527  – –
Loan notes – Penta –  – 770
Other loans – Penta –  – 5,122
Redeemable preference shares (note 23)  –  – 1,959
Loan notes – other 300  – –
Finance leases 36  36 –
 5,051  521 9,758
This compares to the maturity of the Group’s financial liabilities in the previous reporting period as follows: 
 
Within  
6 months 
£000 
6 to 12 months
£000 
1 to 5 years
£000 
Trade payables 1,421 372 –
Amounts owed to related parties 89 – –
Accruals and deferred income 1,476 112 –
Deferred and contingent consideration 150 – 550
Bank loans 178 179 1,390
Directors’ loan 100 – –
Loan notes – Penta – – 770
Other loans – Penta – – 5,566
Redeemable preference shares (note 23)  – – 5,125
Loan notes – other – – 300
Finance leases 47 47 63
 3,461 710 13,764
The Directors do not consider that any of the Penta loan notes, the Penta loans or the redeemable preference shares (together “the Penta 
borrowings”) will result in any cash outflows but they will be converted into ordinary shares of the Company. No interest arises on any  
of the Penta borrowings. Hence no cash flows have been included in the above maturity analysis in respect of the Penta borrowings.   
 48 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
24. Financial instruments continued 
24.5 Interest rate sensitivity analysis 
The Group’s variable rate borrowings at 30 April 2009 were £2,527,500 (2008: £1,912,500).  
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments  
at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the balance sheet 
date was outstanding for the whole of the year. 
If interest rates had been 50 basis points higher/lower and all other variables remained constant, the impact on the Group’s loss for the year 
ended 30 April 2009 would be £13,000 (2008: £9,000). 
24.6 Foreign currency risk management 
The Group does not have any foreign currency denominated trade receivables or payables and is therefore not subject to any significant  
level of foreign exchange rate risk. 
24.7 Credit risk management 
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The principal 
credit risk arises from the Group’s trade receivables. The trade receivables balance included 2 (2008: 4) customers who represented more  
than 5% of the total balance. In order to manage to credit risk, the Directors set limits for customers based upon a combination of payment 
history, third party credit references and an independent rating agency. The Group’s exposure and the credit rating of its counterparties are 
continuously monitored.  
Ongoing evaluation is performed on the financial condition of the accounts receivable. 
24.8 Fair value of financial instruments 
The fair value of financial assets and liabilities are determined as follows: 
– the fair value of financial assets and liabilities (excluding derivative instruments) is determined in accordance with generally accepted  
pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes  
for similar instruments. 
– the fair value of optional derivative instruments is calculated using option pricing models. 
The fair value of the Group’s financial assets and liabilities are not materially different from the amount at which they are recorded in the  
financial statements.  
25. Leasing commitments  
At 30 April 2009, the Group had commitments under non-cancellable operating leases as set out below: 
 
2009 
£000 
2008
£000 
Land and buildings:   
Within one year 205 175
Between two and five years 519 727
 724 902
Other assets:  
Within one year 87 20
Between two and five years 52 13
 139 33
 863 935
26. Capital commitments 
Outstanding capital commitments at 30 April 2009 were £nil (2008: £nil).   
 49 
 
 
SpiriTel plc  
Annual report and accounts 2009 
27. Share-based payments 
Equity settled share-based payments 
The Group’s equity-settled share-based payments comprise the grant of nil-cost options granted under the Group’s Share Option Scheme, 
EMI Share Option Scheme and individual Share Option Agreements. Details of the share options subject to equity-settled share-based 
payments are set out below. In accordance with IFRS 2, the Group has recognised an expense to the income statement for the year ended  
30 April 2008 representing the fair value of outstanding equity-settled share-based payment awards to employees which have not vested  
as at 1 May 2006. 
Those fair values will be charged to the income statement over the relevant vesting period adjusted to reflect actual and expected vesting levels. 
The Group has calculated the fair market value of the nil-cost options as being based on the market value of a Company share at the date of 
grant adjusted to reflect the fact that an employee is not entitled to receive dividends over the relevant holding period. 
The estimated fair values of options which fall under the IFRS 2 accounting charge and inputs used in the Black-Scholes model to calculate 
those fair values are as follows: 
Date of grant 
Number  
granted 
Share price on 
grant date  
Pence 
Exercise
price
Pence 
Fair value
on grant date
Pence 
Vesting
period
Years 
Expected life 
Years 
Lapse rate 
% 
Risk free rate
% Volatility 
30 Aug 05 1,190,476 6.88 7.00 4.74 1 4.667 22 4.50 87.66
30 Aug 05 1,190,476 6.88 7.00 4.74 2 4.667 45 4.50 87.66
30 Aug 05 1,190,476 6.88 7.00 4.74 3 4.667 70 4.50 87.66
28 Nov 05 100,000 6.88 7.25 4.284 0 4.417 0 4.50 78.90
21 Jul 06 4,900,000 3.20 5.00 1.450 1 3.75 20 4.50 74.49
21 Jul 06 4,900,000 3.20 5.00 1.450 2 3.75 40 4.50 74.49
31 Jan 07 5,926,666 2.38 3.00 1.13 1 3.25 18 5.25 73.64
31 Jan 07 5,926,666 2.38 3.00 1.13 2 3.25 18 5.25 73.64
9 May 07 9,411,765 2.13 2.13 1.06 1 2.975 0 5.25 70.36
9 May 07 23,529,412 2.13 2.13 1.06 2 2.975 0 5.25 70.36
3 Apr 08 14,000,000 0.70 1.25 0.380 1 3.00 20 5.25 105.20
3 Apr 08 14,000,000 0.70 1.25 0.380 2 3.00 40 5.25 105.20
7 May 08 4,000,000 1.19 1.25 0.798 1 3.00 20 5.00 108.73
7 May 08 4,000,000 1.19 1.25 0.798 2 3.00 40 5.00 108.73
1 Jun 08 600,000 1.20 1.25 0.805 1 3.00 20 5.00 108.46
1 Jun 08 600,000 1.20 1.25 0.805 2 3.00 40 5.00 108.46
23 Sep 08 600,000 1.25 1.25 0.854 1 3.00 20 5.00 109.70
23 Sep 08 600,000 1.25 1.25 0.854 2 3.00 40 5.00 109.70
1 Nov 08 400,000 0.95 1.25 0.541 1 3.00 20 4.50 97.19
1 Nov 08 400,000 0.95 1.25 0.541 2 3.00 40 4.50 97.19
1 Dec 08 2,000,000 0.90 1.25 0.483 1 3.00 20 4.50 93.28
1 Dec 08 2,000,000 0.90 1.25 0.483 2 3.00 40 4.50 93.28
   
 50 
Notes to the consolidated financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
27. Share-based payments continued 
Expected dividend yield 
The expected dividend yield used in the model is nil. 
Expected volatility 
The volatility of the Company’s share price on each grant was calculated as the average of annualised standard deviation of daily continuously 
compounded returns on the Company’s stock, calculated one year back from the date of the grant, where applicable. 
Risk free rate 
The risk free rate is the Bank of England base lending rate on the date of grant. 
Expected life 
The expected life used in the model is the average expected period to exercise and has been adjusted, based on management’s best estimate, 
for the effects of non-transferability, exercise restrictions and behavioural considerations. 
The following is a summary of the Company’s share options in issue during the financial year: 
 2009 2009 2008 2008 
 
Number 
of shares 
under option 
Weighted 
average  
exercise price  
Pence 
Number  
of shares  
under option 
Weighted 
average
exercise price 
Pence 
Outstanding at 1 May 2008 82,317,015 2.37 35,999,645 4.08
Granted during the year 15,200,000 1.25 61,274,510 1.73
Forfeited during the year (51,912,605) 2.89 (8,816,665) 3.54
Lapsed during the year (1,200,000) 1.25 (6,140,475) 4.27
Outstanding at 30 April 2009 44,404,410 1.42 82,317,015 2.37
Exercisable at 30 April 2009 15,804,410 1.72 11,135,365 4.30
Cash settled share-based payments 
There has been no charge to the income statement during the year in respect of the Long Term Incentive Plan as the fair value of the liability  
at 30 April 2009 is considered to be £nil. 
28. Related party transactions 
Other related party transactions 
The Company’s related parties include its Directors and companies controlled by or associated with its Directors, as disclosed below. 
Transactions with Directors and related parties in respect of their services as Directors are disclosed in the Directors’ Remuneration Report  
on pages 15 to 17. 
Other related party transactions during the year were as follows: 
1) Penta Capital Partners Limited, through its managed funds Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership  
(the “Penta Funds”) is the holder of 49.99% of the Company’s issued ordinary 1p shares and all of the Company’s issued redeemable 
preference shares. Steven Scott, a Director of the Company is also a Director of Penta Capital Partners Limited. During the year, the Penta 
Funds converted preference shares into ordinary shares in the Company as detailed in note 23. Loan notes, all of which are outstanding to 
the Penta Funds, are described in note 20. Penta Fund 1 Limited Partnership held options over 100,000 ordinary shares of the Company  
at an exercise price of 7.25p per ordinary 1p share as at 30 April 2009. Fees paid to Penta Capital Partners Limited in respect of Steven 
Scott’s services as a Director of the Company are detailed in the Directors’ Remuneration Report on pages 15 to 17. At 30 April 2009, the 
outstanding balance within creditors in respect of these fees was £14,000 (2008: £89,000). The prior year balance includes outstanding 
amounts in respect of loan arrangement fees due to Penta Capital Partners Limited. 
2) The Company had outstanding at 30 April 2009 a rent deposit of £10,000 (2008: £64,000) with Anthony J Vose Properties, an enterprise  
of which A J Vose, a Director of the Company, is the proprietor. The Company also waived a rent deposit of £40,000 held by Anthony  
Vose in exchange for the repayment of pre-paid rents. Rents paid to Anthony J Vose Properties during the year amounted to £100,000 
(2008: £59,000). During the year, the Company repaid an unsecured loan of £100,000 from A J Vose. Interest of £nil was charged on the 
loan during the financial year (2008: £8,000).    
 51 
 
 
SpiriTel plc  
Annual report and accounts 2009 
28. Related party transactions continued 
Transactions with key management personnel 
Key management personnel remuneration includes the following expenses: 
 
2009
£000 
2008
£000 
Short-term employee benefits 
Salaries, bonuses and commissions 107 171
Social security costs 12 16
 119 187
Share-based payments – 3
 119 190
29. Post balance sheet events 
During September 2009, the Company entered into an agreement with Penta Capital LLP, the manager of the Penta Funds, for the 
modification of the conversion terms attaching to the Penta loans, loan notes and redeemable preference shares. The agreement is conditional 
upon the following: 
– the granting of a waiver by the Panel on Takeovers and Mergers of the requirement under Rule 9 of the City Code on Takeovers and 
Mergers, that would otherwise arise on Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership (the “Penta Funds”),  
to make a general offer to shareholders of the Company as a result of the allotment of new ordinary shares to the Penta Funds which  
would take the aggregate holding of the Penta Funds to greater than 50% of the issued ordinary share capital. 
– a review of the conversion terms by the Company’s nominated adviser and confirmation that the directors consider the terms of conversion 
are fair and reasonable so far as the SpiriTel shareholders are concerned. 
– approval of the waiver and modification of the conversion terms by the ordinary shareholders at an Extraordinary General Meeting. 
Subject to shareholder approval at an Extraordinary General Meeting:  
– all of the current rights to convert the Company’s indebtedness to the Penta Funds into ordinary shares will lapse immediately 
– all of the current rights to interest on the Company’s indebtedness to the Penta Funds will lapse immediately 
– the Penta Funds will immediately convert up to £6.85 million of the Company’s indebtedness into ordinary shares of the Company at the 
price of 0.6p per ordinary share so that, following this conversion, the Penta Funds aggregate holding will represent up to 82.3% of the 
Company’s issued ordinary share capital. 
   
 52 
Company balance sheet 
 
SpiriTel plc  
Annual report and accounts 2009 
As at 30 April 2009 
 
Note 
2009 
£000 
2008
£000 
Fixed assets   
Tangible assets 5 21 14
Investments  6 12,662 19,683
  12,683 19,697
Current assets   
Debtors  7 2,174 2,328
  2,174 2,328
Creditors: amounts falling due within one year 8 (5,880) (3,941)
Net current liabilities  (3,706) (1,613)
Total assets less current liabilities  8,977 18,084
Creditors: amounts falling due after more than one year 9 (9,585) (14,693)
Net (liabilities)/assets  (608) 3,391
   
Capital and reserves   
Called up share capital 10 6,276 3,162
Share premium 11 4,935 4,550
Other reserves 11 1,965 565
Profit and loss account  11 (13,784) (4,886)
Shareholders’ (deficit)/funds 13 (608) 3,391
These financial statements were approved by the Board of Directors on 30 September 2009 and signed on its behalf by: 
A R Mills   R W Smith 
Chief Executive Officer Chief Financial Officer 
 
 
 
The notes on pages 53 to 61 are an integral part of these financial statements.  
 53 
Notes to the Company financial statements 
 
SpiriTel plc  
Annual report and accounts 2009 
1. Accounting policies 
Basis of preparation 
The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom  
accounting standards. 
Share-based payments 
Equity-settled share-based payment  
The Company issues equity-settled benefits to certain Directors and employees. All share-based payment arrangements granted after  
7 July 2005 that had not vested prior to 1 May 2006 are recognised in the financial statements. Where employees are rewarded using  
share-based payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the instrument granted  
to the employee. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions. All equity-settled  
share-based payments are ultimately recognised as an expense in the profit and loss account with a corresponding credit to other reserves. 
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available 
estimate of the number of share options expected to vest. Estimates are revised subsequently if there is any indication that the number of  
share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period.  
No adjustment is made to any expense recognised in prior periods if share options that have vested are not exercised. 
Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate 
additional paid in capital. 
Tangible fixed assets and depreciation 
Tangible fixed assets are included at cost, less accumulated depreciation and any provision for impairment. Depreciation is provided on tangible 
fixed assets, excluding land, on a straight line basis to write off their historical cost, less estimated residual value, over their estimated useful 
economic lives as follows: 
Leasehold improvements  – over the period of the lease 
Office and computer equipment – 10% or 33% straight line 
Investments 
Investments are included at cost less provisions for impairment. 
Leased assets 
Finance leases and hire purchase agreements 
Where the Company enters into a lease that transfers substantially all the risks and rewards of ownership of an asset to the lessee, the lease  
is treated as a finance lease. The asset is recorded in the balance sheet as a tangible fixed asset at the present value of the minimum lease 
payments and is depreciated over the shorter of the lease term and the asset’s useful economic life. Future instalments under such leases,  
net of finance charges, are included in creditors. Rentals payable are apportioned between the finance element, which is charged to the profit 
and loss account at a constant rate of charge on the balance of capital repayments outstanding, and the capital element, which reduces the 
outstanding obligation. 
Operating lease agreements 
Leases where substantially all of the risks and rewards of ownership are not transferred to the Company are treated as operating leases.  
Rentals under operating leases are charged against profits on a straight-line basis over the period of the lease.   
 54 
Notes to the Company financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
1.  Accounting policies continued 
Current tax 
The current tax charge is based on the profit or loss for the year and is measured at the amounts expected to be paid based on the tax rates 
and laws substantively enacted by the balance sheet date. Current and deferred tax is recognised in the profit and loss account for the period 
except to the extent that it is attributable to a gain or loss that is or has been recognised directly in the statement of total recognised gains and 
losses. 
Deferred tax 
Deferred tax is recognised on all timing differences where the transactions or events that give the Company an obligation to pay more tax in  
the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised when it is more 
likely than not that they will be recovered. Deferred tax is measured on an undiscounted basis using rates of tax that have been enacted or 
substantially enacted by the balance sheet date. 
Foreign currency 
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in 
foreign currencies are translated at the rate of exchange ruling at the balance sheet date. All exchange differences are dealt with through the 
profit and loss account. 
Contributions to pension schemes 
The Company contributes to the personal pension schemes of certain Directors and employees. The pension costs are charged against 
operating profit in the relevant accounting period.  
Financial instruments 
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are 
obligations to pay cash or other financial assets and are recognised when the Company becomes a party to the contractual provisions of the 
instrument. Financial liabilities categorised as at fair value through profit or loss are recorded initially at fair value and all transaction costs are 
recognised immediately in the profit and loss account. All other financial liabilities are recorded initially at fair value, net of direct issue costs. 
Financial liabilities categorised as at fair value through profit or loss are re-measured at each reporting date at fair value, with changes in fair value 
being recognised in the profit and loss account. All other financial liabilities are recorded at amortised cost using the effective interest method, 
with interest-related charges recognised as an expense in finance cost in the profit and loss account. Finance charges, including premiums 
payable on settlement or redemption and direct issue costs, are charged to the profit and loss account on an accruals basis using the effective 
interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. 
Classification as equity or financial liability 
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. 
A financial liability exists where there is a contractual obligation to deliver cash or another financial asset to another entity, or to exchange financial 
assets or financial liabilities under potentially unfavourable conditions. In addition, contracts which result in the entity delivering a variable number 
of its own equity instruments are financial liabilities. Shares containing such obligations are classified as financial liabilities. 
Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. The carrying amount of the liability is 
increased by the finance cost and reduced by payments made in respect of that liability.  
Finance costs are calculated so as to produce a constant rate of charge on the outstanding liability.  
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.  
Dividends and distributions relating to equity instruments are debited directly to reserves. 
Compound instruments 
Compound instruments comprise both a liability and an equity component. The elements of a compound instrument are classified in 
accordance with their contractual provisions. At the date of issue, the liability component is recorded at fair value, which is estimated using  
the prevailing market interest rate for a similar debt instrument without the equity feature. Thereafter, the liability component is accounted for  
as a financial liability in accordance with the accounting policy set out above. 
The residual is the equity component, which is accounted for as an equity instrument. 
Embedded derivatives 
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and 
characteristics are not closely related to those of the host contracts. Embedded derivatives are recorded initially at fair value, net of issue costs.   
 55 
 
 
SpiriTel plc  
Annual report and accounts 2009 
2.  Employees 
The average number of employees of the Company (including Directors) was made up as follows: 
 
2009
Number 
 2008
Number 
Administration 7 5
Management 3 2
 10 7
 
 
2009
£000 
2008
£000 
Staff costs (including Directors) amounted to: 
Wages and salaries 629 546
Social security costs 78 59
Share-based payments 204 150
 911 755
The total number of employees (including Directors) at 30 April 2009 was 10 (2008: 8). 
3. Directors’ remuneration 
Remuneration in respect of the Directors was as follows: 
 
2009
£000 
 2008
£000 
Emoluments and benefits in kind 529 617
Compensation for loss of office – 13
 529 630
Remuneration in respect of the highest paid Director was £169,000 (2008: £245,000). Further details of Directors’ remuneration are given in the 
Directors’ Remuneration Report on pages 15 to 17. 
4. Loss attributable to the Company 
The loss for the financial year of the Company was £9,247,000 (2008: £4,532,000). 
In accordance with Section 408 of the Companies Act 2006, the Company is exempt from the requirements to present its own profit and  
loss account.   
 56 
Notes to the Company financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
5. Tangible fixed assets 
 
Leasehold 
Improvements 
£000 
Office and 
computer 
equipment 
£000 
Total 
£000 
Cost   
At 1 May 2008 11 9 20
Additions 8 5 13
At 30 April 2009 19 14 33
Depreciation   
At 1 May 2008 1 5 6
Charge for the year 3 3 6
At 30 April 2009 4 8 12
Net book amount at 30 April 2009 15 6 21
Net book amount at 30 April 2008 10 4 14
6. Fixed asset investments  
 
Subsidiary
undertakings
£000 
Cost  
At 1 May 2008 19,800
Additions 1,406
Other adjustments (49)
At 30 April 2009 21,157
Amounts written off 
At 1 May 2008 117
Amounts written off during the year 8,378
At 30 April 2009 8,495
Net book amount at 30 April 2009 12,662
Net book amount at 30 April 2008 19,683
The additions in the year relate principally to the purchase of the whole of the issued share capital of ED Communications Limited (£1,406,000). 
Immediately following its acquisition, the name of ED Communications Limited was changed to SpiriTel Networks (London) Limited. Further 
detail concerning this acquisition is given in note 15 to the consolidated financial statements. 
The other adjustment to investment relates to a refund of purchase consideration in respect of WN1 Limited following agreement of the 
completion accounts. 
Amounts written off during the year comprises £7,820,000 in respect of SpiriTel Technologies Limited and £558,000 in respect of SpiriTel 
CallPlan Limited as a result of an impairment review by management of the carrying value of the investments in the Company’s subsidiaries.   
 57 
 
 
SpiriTel plc  
Annual report and accounts 2009 
6. Fixed asset investments continued 
At 30 April 2009, the Company had interests in the following subsidiary companies, all of which are registered in England and Wales. To avoid  
a disclosure of excessive length, dormant subsidiaries have been excluded: 
Name of subsidiary Trading activity 
Class of share
capital held 
Holding
% 
SpiriTel Technologies Limited Provision of telecommunication services Ordinary100
SpiriTel Managed Services Limited Provision of telecommunication services Ordinary 100
Expo Communications Limited Intermediate holding company Ordinary 100
SpiriTel IP Communications Limited**  Provision of telecommunications services Ordinary 100
SpiriTel IP Communications (London) Limited Provision of telecommunication services Ordinary 100
SpiriTel Networks Limited Provision of telecommunication services Ordinary100
Spiritel Networks (London) Limited Provision of telecommunication services Ordinary 100
SpiriTel CallPlan Limited Provision of telecommunication services Ordinary100
Spiritel Mobile Limited Provision of telecommunication services Ordinary100
**The holding in Spiritel IP Communications Limited is indirect, through Expo Communications Limited, an intermediate holding company. 
7. Debtors 
 
2009
£000 
2008
£000 
Amounts owed by subsidiary undertakings 2,071 2,157
Other debtors – 57
Prepayments and accrued income 103 114
 2,174 2,328
All the above fall due within one year. 
8. Creditors: amounts falling due within one year 
 
2009
£000 
2008
£000 
Bank loans (see note 9) 708 357
Overdrafts (see note 9) 34 135
Director’s loan – 100
Other loans  300 –
Trade creditors 56 409
Amounts owed to subsidiary undertakings 3,888 2,372
Accruals and deferred income 103 405
Deferred and contingent consideration  781 150
Other creditors 10 13
 5,880 3,941
   
 58 
Notes to the Company financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
9. Creditors: amounts falling due after more than one year 
 
2009 
£000 
2008
£000 
Loan notes – Penta 770 770
Loan notes – other – 248
Other loans – Penta 5,122 5,566
Redeemable preference shares 1,959 6,287
Bank loans 1,618 1,390
Deferred and contingent consideration 116 432
 9,585 14,693
The terms of all the borrowings noted above are detailed in note 20 to the consolidated financial statements. 
The bank loans bear interest at 2.75% above the Clydesdale Bank base rate. 
The bank loans and overdrafts are secured by debentures over all of the assets and undertaking of the Company and its subsidiaries, supported 
by cross guarantees between the Company and those subsidiaries. The Company participates with its subsidiaries in a Group overdraft facility 
of up to £250,000, of which £nil was available to the Group and undrawn at 30 April 2009 (2008: £84,000). The Company has no other 
undrawn, committed borrowing facilities available to it at 30 April 2009 (2008: £nil) 
The Penta loans and loan notes carry the right of conversion into the Company’s ordinary shares and have been classified as a host debt with 
an embedded derivative in accordance with FRS 25. The carrying value of the host debt at 30 April 2009 is £5,892,000 and the value of the 
embedded derivative is £nil. 
The treatment of the redeemable preference shares is detailed in note 10 to the Company financial statements. The creditors falling due after 
more than one year are repayable as follows: 
 
2009 
£000 
2008
£000 
Between one and two years:  
– debt component of redeemable preference shares 1,959 6,287
– other loans (Penta) 5,122 5,566
– loan notes 770 1,018
– bank loans 709 357
– deferred and contingent consideration 116 432
 8,676 13,660
Between two and five years  
– bank loans 909 1,033
 9,585 14,693
   
 59 
 
 
SpiriTel plc  
Annual report and accounts 2009 
10. Share capital 
The ordinary share capital of the Company consists only of shares of par value of 1p each. All ordinary shares are equally eligible to receive 
dividends and represent one vote at the shareholder meetings of the Company. 
The preference share capital of the Company consists only of redeemable preference shares with a par value of £1 each. The preference shares 
are convertible, together with a redemption premium of £1,025,000, into ordinary shares at a price which is the higher of (i) 1.5p; and (ii) the price 
at which the last subscribers for ordinary shares had subscribed. 
Ordinary shares 
 
2009
Number 
2009 
£000 
2008
Number 
2008
£000 
Authorised:  
Ordinary shares of 1p each 2,000,000,000 20,000 1,500,000,000 15,000
Allotted, called up and fully paid:  
Shares classified as equity  
Ordinary shares of 1p each  627,639,692 6,276 316,233,646 3,162
The authorised share capital of the Company was increased by the creation of 500,000,000 new ordinary shares as a result of a resolution 
passed by the shareholders at an Extraordinary General Meeting held on 22 May 2008. 
The Company issued and allotted ordinary 1p shares (“Shares”) during the year as follows: 
– On 22 May 2008, Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership converted an aggregate of 2,611,467 
preference shares at 1.1p per Share into 237,406,046 Shares following the approval by the Company’s shareholders in an Extraordinary 
General Meeting of the grant by the Panel on Takeovers and Mergers of a waiver in favour of the Penta Funds of any obligation on them  
to make a mandatory offer for the company in the event that they implement conversion rights attaching to loan instruments held by them 
which could result in them holding up to an aggregate of 49.99% of the Company’s issued ordinary share capital. 
– On 16 October 2008, 37,000,000 Shares to a group of private investors, Directors and employees in order to raise net proceeds  
of £370,000. 
– On 20 October 2008, 37,000,000 Shares to the Penta Funds at 1.5p per Share to convert an aggregate of 555,000 preference shares. 
Preference shares 
The terms of the preference shares give to the holder (Penta Capital) rights of conversion to ordinary shares as described above. In accordance 
with FRS 25 the preference shares are considered to be a host debt with an embedded derivative. The carrying value of the preference shares  
in the financial statements is analysed below: 
 
2009
Number 
2008
Number 
Authorised: 
Redeemable preference shares of £1 each 933,533 4,100,000
Allotted, called up and fully paid: 
Shares classified as financial liabilities  
Redeemable preference shares of £1 each 933,533 4,100,000
 
 
2009
£000 
2008
£000 
Principal 934 4,100
Redemption premium 1,025 1,025
Embedded derivative and other modification adjustments – 1,495
 1,959 6,620
Presented as: 
Debt 1,959 6,287
Equity (other reserves) – 333
 1,959 6,620  
 60 
Notes to the Company financial statements continued 
 
SpiriTel plc  
Annual report and accounts 2009 
11. Reserves 
Company  
Share premium 
£000 
Other 
reserves 
£000 
Profit and
loss account
£000 
At 1 May 2008 4,550 565 (4,886)
Retained loss for the year – – (9,247)
Issue of share capital (net of expenses) 385 – –
Credit for equity-settled share-based payments – 204 –
Modification and conversion of financial instruments – equity component – 1,545 –
Transfer between reserves – (349) 349
At 30 April 2009 4,935 1,965 (13,784)
12.  Share-based payments 
Information regarding equity settled and cash settled share-based payments is provided in note 27 to the consolidated financial statements. 
13.  Reconciliation of movements in shareholders’ (deficit)/funds 
 
2009 
£000 
2008
£000 
Retained loss for the financial year (9,247) (4,532)
Credit for equity settled share-based payments 204 190
Modification and conversion of financial instruments – equity component 1,545 333
Issue of share capital (net of expenses) 3,499 –
Net decrease in shareholders’ (deficit)/funds (3,999) (4,009)
Opening shareholders’ funds 3,391 7,400
Closing shareholders’ (deficit)/funds (608) 3,391
14. Capital commitments 
There were outstanding capital commitments of £nil at 30 April 2009 (2008: £nil). 
15. Leasing commitments 
 
2009 
£000 
2008
£000 
Annual commitments under non-cancellable operating leases are as follows:  
Leases of land and buildings expiring:   
Between two and five years 105 105
   
 61 
 
 
SpiriTel plc  
Annual report and accounts 2009 
16. Transactions with related parties 
Other related party transactions 
The Company’s related parties include its Directors and companies controlled by or associated with its Directors, as disclosed below. 
Transactions with Directors and related parties in respect of their services as Directors are disclosed in the Directors’ Remuneration Report  
on pages 15 to 17. 
Other related party transactions during the year were as follows: 
Penta Capital Partners Limited, through its managed funds Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership  
(the “Penta Funds”) is the holder of 49.99% of the Company’s issued ordinary 1p shares and all of the Company’s issued redeemable 
preference shares. Steven Scott, a Director of the Company is also a Director of Penta Capital Partners Limited. During the year, the Penta 
Funds converted preference shares into ordinary shares in the Company as detailed in note 11. Loan notes, all of which are outstanding to  
the Penta Funds, are described in note 9. Penta Fund 1 Limited Partnership held options over 100,000 ordinary shares of the Company at  
an exercise price of 7.25p per ordinary 1p share as at 30 April 2009. Fees paid to Penta Capital Partners Limited in respect of Steven Scott’s 
services as a Director of the Company are detailed in the Directors’ Remuneration Report on pages 15 to 17. At 30 April 2009, the outstanding 
balance within creditors in respect of these fees was £14,000 (2008: £89,000). The prior year balance includes outstanding amounts in respect 
of loan arrangement fees due to Penta Capital Partners Limited. 
17. Post balance sheet events 
During September 2009, the Company entered into an agreement with Penta Capital LLP, the manager of the Penta Funds, for the modification 
of the conversion terms attaching to the Penta loans, loan notes and redeemable preference shares. The agreement is conditional upon  
the following: 
– the granting of a waiver by the Panel on Takeovers and Mergers of the requirement under Rule 9 of the City Code on Takeovers and 
Mergers, that would otherwise arise on Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership (the “Penta Funds”)  
to make a general offer to shareholders of the Company as a result of the allotment of new ordinary shares to the Penta Funds which  
would take the aggregate holding of the Penta Funds to greater than 50% of the issued ordinary share capital. 
– a review of the conversion terms by the Company’s nominated adviser and confirmation that the directors consider the terms of conversion 
are fair and reasonable so far as the SpiriTel shareholders are concerned. 
– approval of the waiver and modification of the conversion terms by the ordinary shareholders at an Extraordinary General Meeting. 
Subject to shareholder approval at an Extraordinary General Meeting: 
– all of the current rights to convert the Company’s indebtedness to the Penta Funds into ordinary shares will lapse immediately 
– all of the current rights to interest on the Company’s indebtedness to the Penta Funds will lapse immediately 
– the Penta Funds will also immediately convert up to £6.85 million of the Company’s indebtedness into ordinary shares of the Company at  
the price of 0.6p per ordinary share so that, following this conversion, the Penta Funds aggregate holding will represent up to 82.3% of the 
Company’s issued ordinary share capital.   
 62 
Notice of Annual General Meeting  
 
SpiriTel plc  
Annual report and accounts 2009 
NOTICE IS HEREBY GIVEN that an ANNUAL GENERAL MEETING of the shareholders of the Company will be held at the offices  
of Hammonds LLP, 7 Devonshire Square, London EC2M 4YH at 10-30 a.m. on 30 October 2009 for the following purposes: 
Ordinary business 
1. to receive the Directors’ Report and Accounts for the year ended 30 April 2009 and the Auditors’ Report thereon; 
2. to reappoint as a Director Ronnie Smith, who retires in accordance with Article 88 of the Articles of Association; 
3. to reappoint as a Director Lord St John of Bletso, who retires in accordance with Article 88 of the Articles of Association; 
4. to reappoint Grant Thornton UK LLP of 4 Hardman Square, Spinningfields, Manchester M3 3EB as the Auditors of the Company  
and to authorise the Directors to fix their remuneration; and 
Ordinary resolutions 
5. the authorised share capital of the Company be and is hereby increased from £49,100,000 to £74,100,000 by the creation of 2,500,000,000 
new ordinary shares of 1p each, each ranking pari passu in all respects with the existing ordinary shares of 1p each in the capital of the 
Company and having the rights and being subject to the restrictions set out in the Company’s Articles of Association. 
It is expected that, at the time that resolution 5 is to be proposed, the Company’s authorised share capital will be £49,100,000, the share capital 
having been increased pursuant to resolutions to be proposed at the Company’s general meeting proposed to be held on 30 October 2009  
(the “EGM”). If the resolution to increase share capital is not passed at the EGM, the authority proposed to be taken pursuant to this resolution  
is to increase the share capital of the Company from £24,100,000 to £74,100,000 by the creation of 5,000,000,000 new ordinary shares of  
1p each, each ranking pari passu in all respects with the existing ordinary shares of 1p each in the capital of the Company and having rights  
and being subject to the resolutions set out in the Company’s Articles of Association. 
6. the Directors of SpiriTel plc be and they are hereby generally and unconditionally authorised for the purpose of Section 551 of the Companies 
Act 2006 (the “2006 Act”) to exercise all or any of the powers of the Company to allot Relevant Securities (as defined below) up to the nominal 
amount of £250,000. 
The authorities conferred by this resolution shall expire at the conclusion of the next Annual General Meeting of the Company (unless  
previously renewed, revoked or varied by the Company in general meeting) provided that the Company may before such expiry make an  
offer or agreement which would or might require Relevant Securities to be allotted after such expiry and the Directors of the Company may  
allot Relevant Securities in pursuance of such offer or agreement notwithstanding that the authority conferred hereby has expired. 
In this resolution the expression “Relevant Securities” means: 
– shares in the Company other than shares allotted pursuant to: 
– an employee share scheme (as defined by Section 1166 of the 2006 Act); 
– a right to subscribe for shares in the Company where the grant of the right itself constituted a Relevant Security; or 
– a right to convert securities into shares in the Company where the grant of the right itself constituted a Relevant Security. 
– any right to subscribe for or to convert any security into shares in the Company other than rights to subscribe for or convert any security 
allotted pursuant to an employee share scheme (as defined by Section 1166 of the 2006 Act). References to the allotment of Relevant 
Securities in the resolution include the grant of such rights. 
If the resolutions to reorganise the share capital are not passed at the EGM, the authority proposed to be taken pursuant to this resolution is  
to be £25,000,000. 
Special business 
Special resolutions 
7. the Directors of SpiriTel plc be and they are hereby empowered pursuant to Section 570 of the 2006 Act to allot equity securities (as defined 
in Section 560 of the 2006 Act) wholly for cash pursuant to the authority conferred by Resolution 6 above as if Section 561(1) of the 2006 Act 
did not apply to any such allotment provided that this power shall be limited to: 
(i) the allotment of equity securities in connection with a rights issue, open offer or other offer in favour of the holders of ordinary shares in  
the Company on the register of members at such record dates as the Directors may determine and other persons entitled to participate 
therein where the equity securities respectively attributable to the interests of the ordinary shareholders are proportionate (as nearly as  
may be practicable) to the respective numbers of ordinary shares in the Company held or deemed to be held by them on any such record 
dates (which shall include the allotment of equity securities to any underwriter in respect of such issue or offer) subject to such exclusions 
or other arrangements as the Directors may deem necessary or expedient to deal with fractional entitlements or any legal or practical 
problems arising under the laws of any overseas territory, or the requirements of any regulatory body or stock exchange or by virtue of 
shares being represented by depositary receipts or any other matter whatever; and 
(ii) the allotment of equity securities (otherwise than pursuant to paragraph (i) above), to any person or persons up to an aggregate nominal 
amount of £250,000;   
 
 63 
 
SpiriTel plc  
Annual report and accounts 2009 
SpiriTel plc  
Annual report and accounts 2009 
The authorities conferred by this resolution shall expire at the conclusion of the next Annual General Meeting of the Company (unless previously 
renewed, revoked or varied by the Company in general meeting) save that the Company may, before such expiry, make an offer or agreement 
which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any 
such offer or agreement notwithstanding that the power conferred hereby has expired and this power applies in relation to a sale of shares 
which is an allotment of equity securities by virtue of Section 560(2)(b) of the 2006 Act as if in the first paragraph of this resolution the words 
“pursuant to the authority conferred by resolution 6 above” were omitted. 
If the resolutions to reorganise share capital and to allot new shares are not passed at the EGM, the authority proposed to be taken pursuant  
to this resolution (other than on a rights issue or other pre-emptive issue of shares) is to be £25,000,000. 
8. the Company’s Articles of Association be amended by the deletion in Article 51.1 of the words “and any other General Meeting at which  
it is proposed to pass a Special Resolution or (save as provided by the Statutes) a resolution of which special notice has been given to  
the Company”. 
 
By Order of the Board 
 
 
A A Booth 
Company Secretary 
Registered Office: 18 King William Street, London EC4N 7BP 
30 September 2009 
Notes: 
1 A Shareholder is entitled to appoint another person as his proxy to exercise all or any of his rights to attend and speak and vote at the Annual General Meeting. A Shareholder may appoint 
more than one proxy in relation to the Annual General Meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that Shareholder.  
A member wishing to appoint more than one proxy should photocopy the proxy card and indicate on each copy the name of the proxy he appoints and the number of shares in respect of 
which that proxy is appointed.   If you submit more than one valid proxy appointment in relation to the same shares, the appointment received last before the latest time for receipt of proxies 
will take precedence. 
2 The appointment of a proxy must be in writing in any usual or common form or in any other form which the Directors may approve and (i) in the case of an individual must either be signed 
by the appointor or his attorney; and (ii) in the case of a corporation must be either given under its common seal or be signed on its behalf by an attorney or a duly authorised officer of the 
corporation. Any signature on or authentication of such appointment need not be witnessed. Where an appointment of a proxy is signed on behalf of the appointor by an attorney, the power 
of attorney or a copy thereof certified notarially or in some other way approved by the Directors must (failing previous registration with the Company) be submitted to the Company, failing 
which the appointment may be treated as invalid. 
3 A Form of Proxy is enclosed with this Annual Report and Accounts. The appointment of a proxy will not prevent a Shareholder from subsequently attending and voting at the Annual 
General Meeting in person. 
4 To be effective, the instrument appointing a proxy, and any power of attorney or other authority under which it is executed (or a duly certified copy of any such power of authority), must 
either be (a) sent to the Company’s Registrars, Neville Registrars of 18 Laurel Lane, Halesowen, West Midlands B63 3DA so as to arrive no later than 6.00 p.m. on 28 October 2009 or,  
if the Annual General Meeting is adjourned, 48 hours before the time fixed for the adjourned Annual General Meeting or (b) lodged using the CREST Proxy Voting Service – see note 7 below. 
5 Holders of ordinary shares are entitled to attend and vote at general meetings of the Company. The total number of issued ordinary shares in the Company on 30 September 2009,  
which is the latest practicable date before the publication of this Notice, is 617,639,692. On a vote by show of hands every member who is present shall have one vote. On a poll vote  
every member who is present in person or by proxy shall have one vote for every ordinary share of which he is the holder. 
6 Entitlement to attend and vote at the meeting, and the number of votes which may be cast at the meeting, will be determined by reference to the Company’s register of members at  
10.30 a.m. on 28 October 2009 or, if the meeting is adjourned, 48 hours before the time fixed for the adjourned meeting (as the case may be). In each case, changes to the register  
of members after such time will be disregarded. 
7 In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated  
in accordance with EuroClear’s applications and must contain the information required for such instructions, as described in the CREST Manual. The message (regardless of whether it 
constitutes the appointment of a proxy, the revocation of a proxy appointment or an amendment to the instruction given to a previously appointed proxy) must, in order to be valid, be 
transmitted so as to be received by the issuer’s agent (ID 7RA11) by the latest time(s) for receipt of proxy appointments specified in note 4 above. For this purpose, the time of receipt  
will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by 
enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to a proxy appointed through CREST should be communicated to him by other means. 
8 CREST members (and, where applicable, their CREST sponsors or voting service providers) should note that EuroClear does not make available special procedures in CREST for any 
particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned  
to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that his CREST proxy or voting service  
provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members  
(and, where applicable, their CREST sponsors or voting service providers) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST 
system and timings. 
9 The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 
10 In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted.  
Seniority is determined by the order in which the names of the joint holders appear in SpiriTel's register of members in respect of the joint holding (the first-named being the most senior).   
 64 
Company information and advisers 
SpiriTel plc  
Annual report and accounts 2009 
Secretary and registered office: 
A A Booth 
18 King William Street 
London EC4N 7BP 
Registered number: 
5035921 
Nominated advisers and brokers: 
JM Finn Capital Markets Limited 
4 Coleman Street 
London 
EC2R 5TA 
Bankers: 
Clydesdale Bank PLC 
30 St Vincent Place 
Glasgow G1 2HL 
Solicitors: 
Hammonds LLP 
2 Park Lane 
Leeds LS3 1ES 
 
Auditors: 
Grant Thornton UK LLP 
4 Hardman Square 
Spinningfields 
Manchester M3 3EB 
Public relations advisers: 
Tavistock Communications Limited 
131 Finsbury Pavement 
London EC2A 1NT 
Registrars: 
Neville Registrars Limited 
Neville House 
18 Laurel Lane 
Halesowen B63 3DA 
  Design and production by Radley Yeldar
www.ry.com Annual report and accounts 2009
SpiriT el plc 
18 King William Street 
London EC4N 7BP 
T +44 (0)20 7160 0100 
F +44 (0)20 7929 5469 
www.spiritelplc.com