Alternative Networks plc 
Annual report and accounts 2009  corporate statement alternative networks 
is a leading U k b Usiness 
commUnications 
service provider.
what we do – we offer a complete communications 
portfolio of fixed line, mobile, voice, data, systems 
and fully converged solutions. As an independent 
telecoms provider, we have industry accreditations 
and close strategic links with world-class suppliers – 
such as BT Openreach, Verizon, Cable & Wireless, 
Mitel, Avaya, O
2
 and Vodafone. As such, we provide 
our customers with a hugely experienced and highly 
knowledgeable service.
who we do it for – we support the critical business 
communications for over 5,000 small, medium 
and large enterprise companies across the UK. 
Our client base includes organisations from all 
aspects of the public and private sector, including 
Channel 4, British American T obacco, Simplyhealth, 
Allianz Insurance, ActionAid, Nestor Primecare, 
Watson Wyatt and Swinton.
results for the year to 30 september 2009
cash is king in turbulent times
     2009  2008 Change 
Statutory performance      £’000  £’000  %
Turnover      89,676 93,707 (4)
Operating profit     7,031 8,755 (20)
EBITDA*     8,907 10,750 (17)
Profit before taxation    7,115 8,901 (20)
Earnings per share  
– basic     12.0p 14.3p (16)
– diluted     11.6p 13.7p (15)
Dividend per share****    5.1p 4.6p 11
Free cash flow per share*****    18.6p 16.8p 11
 
Underlying performance
Adjusted EBITDA**     9,642 11,053 (13)
Adjusted operating profit**    8,986 10,433 (14)
Adjusted earnings per share*** 
– basic     14.4p 16.5p (13)
– diluted     13.9p 15.8p (12)
    * Earnings before interest, taxation, depreciation and amortisation. 
   **  Adjustments for operating profit (and EBITDA) relate to amortisation of acquired intangible assets, share 
option costs and impairment to freehold property, as set out in Note 32.
  *** Adjusted earnings per share are based on profits as set out in Notes 13 and 32. 
 ****  Dividend per share is the interim dividend paid and the final dividend proposed, divided by the number 
of shares in issue at the year end.
*****  Free cash flow per share is calculated as the new cash inflow after taxation, capital expenditure, and net 
interest, but before cash flows from financing activities and acquisitions, divided by the weighted number 
of shares in issue in the year, as per Note 13. 01
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
HigHligHts
£89.7m
turnover
£9.0m
adjusted operating profit
£8.9m
EBITDA
5.1p
dividend per share
A  sales of £90m, down 4% as 
the economic impact of lower 
customer spending more than 
offsets market share gains.
A  gains in market share:
 A  Mobile subscribers increased 6% to 55,299 
(2008: 51,990).
 A  Office based customers’ lines/channels 
increased 29% to 67,587 (2008: 52,262).
 A  system maintenance revenues increased 
5% to £4.6m (2008: £4.4m).
 A  High spending customers taking three 
or more products increased by 10%.
A  swift cost reductions resulted 
in £1m lower operating costs 
in the second half of the year, 
and underlying operating profits 
reduced by 14% to £9.0m 
(2008: £10.4m).
A  strong balance sheet and 
excellent cash generation:
 A  Free cash flow of £7.9m (2008: £7.6m).
 A  strong cash conversion at 110% adjusted 
EBitDA (2008: 94%).
 A  Net funds of £8.1m (2008: £3.2m), after 
returning £1.3m cash via share buy-backs.
A  Proposed full year dividend increase 
of 11% to 5.1p, supported by strong 
cash flow and high visibility of 
earnings (2008: 4.6p).
 01 HigHligHts
 02 wHAt wE Do
 04 chairman’s statement
 06  cHiEf ExEcutiv E 
OFFicer’s review
 10  fiNANciAl AND BusiNEss rEviEw
 18 BoArD of DirEctors
 20 directOrs’ repOrt
 23  corPorA tE 
govErNANcE rEPort
 27 rEMuNErA tioN rEPort
 30  st AtEMENt of 
directOrs’ respOnsibilities
 31  independent auditOrs’ repOrt
 32  coNsoliDA tED 
iNcoME st AtEMENt
 33  coNsoliDA tED AND coMPANy 
BAlANcE sHEEts
 34  coNsoliDA tED st AtEMENt 
of cHANgEs iN Equity
 35  coMPANy st AtEMENt 
of cHANgEs iN Equity
 36  coNsoliDA tED cAsH 
flow st AtEMENt
 37  coMPANy cAsH flow st AtEMENt
 38  NotEs to tHE 
fiNANciAl st AtEMENts
 IBC  DirEctors AND ADvisors 02
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
What We do
Alternative Networks provides fixed‑line, 
voice and line rental services through 
the leading UK networks, including 
BT Openreach, Cable & Wireless, 
o pal and Verizon. We ensure that tariffs  
are tailored to each organisation’s 
needs, and that they can manage 
them effectively through our online 
reporting tool, Clarity™.
Network Services
Our experience and expertise in phone 
systems and data networking solutions 
means that we can provide clients with 
advanced professional services. these 
range from simple broadband access 
to systems that allow organisations 
to run voice calls over data networks 
and link multiple sites. 
Advanced Solutions
How we add value
expert consultancy We use our technological, 
industry and regulatory expertise 
to help clients choose the best 
solution for their business. As an 
independent supplier, we are able 
to take a complete view of an 
organisation’s needs and can 
offer impartial advice on a range 
of industry-leading operators.
We provide a wide variety of mobile 
solutions, including group tariffs, 
mobile email, data and broadband.
As premier partners with both Vodafone 
and O2, we specialise in supplying the 
best products for our clients’ needs. 
Mobile 03
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
Alternative Networks holds some of 
the highest accreditation with the world’s 
biggest suppliers, including platinum 
partner status with both Mitel and Avaya 
and close relationships with HP and Cisco. 
£14.3m
sales
–£0.9m
service excellence From customising a solution and 
managing the installation, through 
to training and additional support, 
we offer a complete service 
package for our customers. 
Day-to-day enquiries are handled 
by our dedicated Client Support 
team, while Client Managers 
provide tailored, strategic advice. 
cost saving We help clients to use technology 
in smarter and more effective 
ways to help control their costs. 
Our significant buying power means 
that we can pass on competitive 
rates and can structure pricing to 
meet clients’ needs. A single supplier 
solution also reduces administration 
time, lowers costs and simplifies 
telecoms management.
reporting and 
business intelligence Our exclusive online billing and 
management tool, Clarity™, helps 
clients to measure performance 
and analyse their costs and call 
traffic. Usage alerts can be set 
and Clarity can also be used to 
audit a client’s telecoms estate. 
It places users right at the heart 
of their essential communications. 
Non‑geographic number ranges also 
enable clients to route calls effectively, 
both in contact centre environments and 
for business continuity situations. We help 
businesses make the most of their calls, 
improving their operators’ effectiveness 
and their clients’ experience.
£33.8m
sales
–£1.1m
How we add value
We also work closely with such 
market‑leading brands such 
as BlackBerry, Nokia, HTC and 
Windows Mobile to provide the 
very latest devices and products. 
Such multiple vendor partnerships mean  
we are perfectly placed to deliver all 
the benefits of mobile communications.
£41.6m
sales
–£2.0m
46.4%
15.9%
37.7% 04
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
chairman’s statement
KENNETh McGEorGE
Alternative Networks’ performance for the year 
as a whole has been very creditable, given how 
customer spending declined as the full impact 
of the economic downturn began to be felt. 
This resulted in a reduction in sales of 4%, 
from £93.7m to £89.7m. EBITDA was reduced 
from £10.8m in 2008 to £8.9m in the year.
More importantly, the business has continued 
to be strongly cash generative. Free cash flow 
actually increased year on year, and the Group 
ended the year with net funds of £8.1m, more 
than double the position of £3.2m a year earlier. 
This was after returning £3.4m of cash to 
shareholders by way of share buy-backs 
and dividends.
The strong cash position and continued high 
visibility of earnings has enabled the Board 
to increase the proposed full year dividend 
by 11% to 5.1p.
In response to the difficult market conditions, 
the Group’s management took prompt and 
sensible action. £2.5m of expected annualised 
cost savings were implemented. We retained 
most of our considerable direct sales force and 
a concerted effort was made in deriving additional 
revenues from existing customers and in keeping 
customer attrition low; and a number of significant 
new customers were signed up. In addition, the 
earlier investment in internal systems and the 
restructuring put in place in the previous year 
were well timed, as it provided the infrastructure 
to make the business leaner and more efficient, 
without detracting from the quality of service. 
All of this has enabled the Group to achieve 
its revised targets for the year, which is a tribute 
to the hard work and commitment of all staff.
Despite this environment, the Group was able 
to increase its market share, with the number of 
mobile subscribers increasing by 6% and office 
based connections up 29%. The Group’s ability 
to cross-sell its offering of services was reflected 
by a 10% increase in high spending customers 
taking three or more products. 
A  t he strong cash position and continued 
high visibility of earnings has enabled 
the Board to increase the proposed 
full year dividend by 11% to 5.1p.
A  £2.5m of expected annualised cost 
savings were implemented. we retained 
most of our considerable direct sales 
force and a concerted effort was made 
in deriving additional revenues from 
existing customers and in keeping 
customer attrition low.
A    since the year end, the group 
completed the acquisition of Aurora 
Kendrick James limited (AKJ).
Kenneth Mcgeorge NoN‑ExECuTIvE ChAIrMAN 05
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
Since the year end, the Group completed the 
acquisition of Aurora Kendrick James Limited 
(AKJ), whose billing software and products 
have been an important tool in maintaining high 
standards of customer service for the Group. 
Bringing AKJ in-house will protect a key part 
of the Group’s intellectual property, as well as 
creating additional sources of revenue. This has 
already been demonstrated through the signing 
of a new contract with a major network operator 
to manage the billing and customer services of 
over fifty larger customers. AKJ should also enable 
more efficient integration of future acquisitions.
The outlook for the Group is positive. Market 
conditions remain challenging but stable. 
With a strong balance sheet, a committed 
management team and a sound and proven 
strategy, we are optimistic of a favourable 
outcome for the current year. 
Kenneth Mcgeorge NoN‑ExECuTIvE ChAIrMAN
7 DECEMBEr 2009
6%
increase in mobile subscribers
29%
increase in office 
based connections 
10%
increase in high spending 
customers taking three 
or more products 
witH A stroNg 
BAlANcE sHEEt , 
A coMMittED 
MANAgEMENt tEAM 
AND A souND AND 
ProvEN strA tEgy , 
wE ArE oPtiMistic 
of A f AvourABlE 
outcoME for tHE 
currENt yEAr. 06
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
A   Free cash flow was £7.9m (2008: £7.6m) 
enabling the group to return a further 
£1.3m to shareholders during the year 
through a general share buy-back 
programme, and finished the year 
with £9.0m cash (2008: £4.2m). 
A   t he group has persistently pursued its 
twin strategy of organic and acquisitive 
growth with a stated ambition to become 
the leading converged communications 
partner of choice for the uK’s small and 
medium sized businesses.
A   However, the underlying success can be 
evidenced by the increase in the number 
of higher spending customers taking three 
or more products. the number of these 
customers has increased 10%.
A   our strategy has not wavered and, 
as we come into another year which 
offers similar economic uncertainty, 
we have a leaner platform and a stronger 
sales and service proposition than 
we did twelve months ago.
overview We are pleased to present a review of another 
successful year for the Group, albeit framed 
by a difficult economic environment. 
This has been a challenging period of trading 
for the Group, as average revenues of business 
customers have reduced as the economy has 
slowed. Due to the speed and depth of the slow 
down, particularly since January and February 2009, 
the impact of this reduction in customer spend has 
more than outweighed the impact of new customer 
wins. Moreover, the benefits of the cost-cutting 
initiatives implemented in the early spring only 
emerged in the second half. Throughout the period, 
the Group has continued to win market share and 
has generated very healthy cash returns, and the 
proposed increase in dividend reflects the Board’s 
confidence in the underlying business.
Financial results Group sales decreased by 4% to £89.7m 
(2008: £93.7m). The differing product sets’ results 
are analysed further below. Market share gains 
are being made in each product grouping, but 
these have been more than offset by revenue 
reductions due to lower customer usage, 
particularly in mobile services, and continuing 
price reductions for existing clients.
Gross profit margins are in line with expectations 
at 34.4% (2008: 35.0%), allowing for lower usage 
of higher margin revenues, due to diminished 
customer spend. Margins per product set are 
reviewed in detail below.
Adjusted operating profit of the Group reduced 
by 14% to £9.0m (2008: £10.4m). 
On a statutory basis, pre-tax profits decreased 
20% from £8.9m to £7.1m, with operating profits 
decreasing 20% from £8.8m to £7.0m.
Cash generation continues to be very strong and 
differentiates the Group from many of its peers. 
Net cash generated from operations was £10.6m 
(2008: £10.3m) which was 110% of adjusted EBITDA 
in the period (2008: 94%). Free cash flow was £7.9m 
(2008: £7.6m) enabling the Group to return a further 
£1.3m to shareholders during the year through a 
general share buy-back programme, and finished 
the year with £9.0m cash (2008: £4.2m). 
Adjusted earnings per share fell 13% and 12% in 
basic and diluted earnings respectively to 14.4p 
and 13.9p respectively. Statutory earnings per 
share fell 16% from 14.3p to 12.0p. A detailed 
reconciliation is set out overleaf in the Financial 
and Business Review. 
chieF executive OFFicer’s review
JAMEs MurrA y
JaMes Murray ChIEf ExECuTIvE offICEr 07
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
Briefly summarised, this was:
A  The Group has used AKJ’s software for almost ten 
years. We have invested considerable resource in 
applying it to provide customers with a bespoke, 
simple and efficient mechanism to access and control 
the billing and usage of their communications 
equipment. Bringing this software in house will protect 
the Group’s intellectual property and guarantees 
exclusivity on key elements of the software that 
are important for customer attraction and retention.
A  The acquisition will also accelerate the development 
of the Group’s customer service portal, enhancing 
the existing service offering and creating opportunities 
for new revenue streams by working with third party 
telecoms and IT services providers.
A  The acquisition provides a platform for potential new 
revenue streams working with third party telecoms and 
IT service providers. The Group intends to develop the 
portfolio of services and products that it can offer to 
European based telecoms and IT service providers, 
systems integrators, resellers and dealers, based on 
AKJ’s platform. AKJ’s current customers include over 
50 communications and IT service providers and the 
combined portfolio of services and resources of the 
Group will create the opportunity for exciting new 
revenue streams for both the Group and AKJ’s partners. 
As ever, we remain focused on acquisitions that are 
the right fit and at the right price. We are confident that 
our strong balance sheet and net cash of over £4m as 
at the balance sheet date after funding the acquisition 
above, as well as our £12m undrawn bank debt facilities, 
keeps us in a strong position in the year ahead. 
The Board has proposed a final dividend of 3.5p 
(2008: 3.1p), making a total of 5.1p for the year 
(2008: 4.6p), a growth of 11%, in line with our 
progressive dividend policy.
strategy 
The Group has persistently pursued its twin strategy 
of organic and acquisitive growth with a stated 
ambition to become the leading converged 
communications partner of choice for the UK’s 
small and medium sized businesses. 
ACquIsITIoNs
The Group has reviewed a number of acquisition 
opportunities during the year, especially in the 
IT and data services space. The Group entered 
into the second round in around five competitive 
tenders, withdrew interest on two and were outbid 
on the remainder, which demonstrates our refusal 
to overpay. Since the year end, on 30 October 2009, 
we acquired the entire share capital of AKJ, 
currently our billing services partner, for a maximum 
consideration of £5.5m; the initial consideration 
consisting of £3.75m cash and £0.8m through the 
issue of 707,076 ordinary shares. The AKJ group 
is based in Chatham, Kent and has approximately 
50 staff, of which 25 are IT developers. In the year 
ended 31 July 2009, AKJ increased sales by 4% to 
£3.6m, and the Group made a pre-tax profit of £0.3m 
and underlying EBITDA of £0.6m. The gross assets 
of the business were £2.3m. The acquisition is 
expected to be moderately earnings enhancing for 
the Group for the year ending 30 September 2010.
The deal is relatively small but strategically 
important for the Group. The rationale for 
the acquisition was set out in the original 
announcement on 2 November. 
“ In just over a year, Alternative Networks has helped 
us improve our effectiveness by introducing BlackBerry, 
taking over the entire mobile fleet and ultimately managing 
all Smiths Gore’s outbound voice traffic. It has helped 
us really make the most of our telecoms, and we look 
forward to continuing to work with them.” 
AT ThE ouTsET
A  Smiths Gore acquired 
Cluttons Rural Division – 
an existing Alternative 
Networks client – 
in March 2008.
A  Alternative Networks 
provided a fleet of 
BlackBerry smartphones.
A  All other voice, mobile 
and support provided 
by Smiths Gore’s 
incumbent provider.
how wE GrEw 
ThE ACCouNT
A  Proving their commitment 
to Alternative Networks, 
between April 2008 and 
April 2009, mobile and 
BlackBerry fleet grew 
by 100 connections.
A  In May 2009, all 200 
mobile and BlackBerry 
connections are ported 
to Alternative Networks.
A  Seeing the financial and 
administrative benefits of 
convergence, fixed line 
rental and all outbound 
voice is moved to 
Alternative Networks 
from BT Retail.
A  A new Mitel telephone 
system is installed in 
one Yorkshire branch, 
with Alternative Networks 
responsible for the 
implementation and its 
annual support contract.
fuTurE opporTuNITy
A  There is the potential for 
further data services in 
this crucial environment.
A  With the need for 
upgraded phone solutions 
comes the opportunity 
for both provision and 
maintenance of systems.
A  Fixed mobile convergence 
could be a real driver 
of efficiency over the 
coming years.
Smiths Gore is a leading rural property consultancy of chartered surveyors 
and property advisors. With over 160 years’ experience, they are recognised 
as a dynamic and diverse business, managing over 2m acres of land in the 
UK alone. Over the last ten years they have grown both commercially and 
organically, resulting in the opening of new offices in key locations across 
the UK. They now operate from 25 offices and 18 estate offices confirming 
their position as a market leader in the rural land and property sector.
case study – sMiths gore 08
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
chieF executive OFFicer’s review coNtiNuED
strategy (continued)
rEvIEw of orGANIC GrowTh f ACTors – 
upDATE oN KEy pErforMANCE INDICATors
The four key organic growth factors supporting 
our strategy remain:
foCus oN lArGEr CusToMErs 
IN sME sp ACE
The target customer in the market for the Group 
remains the business customer who spends 
between £1,000 and £10,000 per month.
The underlying success of increasing the number 
of higher spending customers is shrouded by 
the economic downturn. Over the year, there has 
been a net reduction of 25 customers spending 
over £1,000 with the total number of Group 
customers spending over £1,000 per month being 
reduced to 1,249 at 30 September 2009 from 
1,274 at 30 September 2008 (restated to eliminate 
duplication of Echo network customers). This net 
reduction has been caused by price erosion and 
decreases in traffic during the year pushing many 
customers below the £1,000 spend threshold. 
However, the underlying success can be evidenced 
by the increase in the number of higher spending 
customers taking three or more products. The 
number of these customers has increased 10% 
by 66 to 722 customers.
Cross ‑sEllING 
The Group has made solid progress in cross-selling 
the product set. Of the total customer base at 
30 September 2009, over 40% took more than 
one product (2008: 36%). 
Of all customers spending more than £1,000 per 
month, 75% (2008: 70%) took more than one 
product and, most encouragingly, 58% (2008: 50%) 
took three products or more. Mobile services are 
currently treated as one product whether data, 
voice or ancillary services.
rEDuCTIoN IN ChurN
2009 was a challenging year for reducing churn. 
Our key metric of mobile network subscriber churn 
was increased from 16.4% in 2008 to 19.7% in 
2009, as more customers switched networks in 
search of better deals, and were more discerning 
in disconnecting surplus lines as they reduced 
headcount. Nonetheless this result remains in 
the Group’s long held target band of 16–20%. 
Stripping out the increase in customers who 
switched networks but stayed with us, being 
around 1,400 connections, the network churn 
number is closer to 17%.
We also monitor customer attrition by value. 
This was much steadier and remained at a low 
level of 15% as also achieved in 2008. 
proDuCT DEvElopMENT
Our organic growth depends on widening our 
share of our customers’ communications spend 
and we rely on using our strategic partnerships to 
consistently deliver new growth opportunities.
During the past year, our suppliers have each tried 
to bring their own unified communications (“UC”) 
products to market; we have spent a lot of time with 
them establishing which ones fit into our portfolio, 
how they integrate with existing infrastructure, and 
reviewing the return on investment.
UC products launched, trialled, or evaluated include:
Supplier Product Status
Avaya One-X Launched
Mitel    Series-X, Unified  
Communicator Advanced,  
and Dynamic Extension Launched
Cable & 
Wireless FMC Trial
Vodafone One-net Evaluation
A number of SIP trunking and Hosted IP telephony 
propositions are also in trial phase.
We look forward to bringing more of these products 
to market as we continue to improve our UC offering, 
and offer deeper and more flexible integration to 
our customers.
In the data space, we launched our offering of 
Cisco products, registering as a select partner, 
and gaining the assistance of a new contracted 
partner specialising in the more advanced UC 
arena, we have won our first customer. 
Mobile communication has continued to be an 
area of vendor development:
The BlackBerry 8520 “Curve”, a lower-priced 
edition of the popular 8900 device which shares 
many of the same features, was the first device 
to feature the more robust trackpad instead of the 
trackball. This device has been a great success 
due to the challenging economic conditions, and 
has allowed us to push BlackBerry connections 
further down the food chain within our customers. 09
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
New improved smartphones from HTC and Nokia 
both offering mobile applications to field operators, 
combined with the impending availability of the 
Apple “i-phone” through most mobile networks, 
and the revised models of the BlackBerry “Storm” 
and “Bold” should help drive further growth in the 
number of converged devices in our customer 
base and lead to increased data revenues. 
Finally, a key focus has been on our customer 
billing and service portal, Clarity™. We launched 
a range of updates to Clarity™ our online billing, 
reporting and asset management tool. Most notably, 
we have developed the ability to separate out 
“business” from “personal” calls, and manage 
this process using a hosted database with 
automated sign off. 
The Group has planned a 24 month development 
roadmap to bring many new services through 
an Alternative Networks’ branded portal to corporate 
customers, including estate management, 
diagnostics, hosted online services, and online 
interactive customer services. The acquisition 
of AKJ is expected to help deliver these faster 
and more effectively.
business resilience
Last year we reviewed the key characteristics 
of what makes this business so resilient: firstly, 
our strong balance sheet, strong cash flow, 
and low fixed asset base. Secondly we provide 
business critical services to a diverse number 
of UK businesses in a wide variety of industries. 
Finally, there is good visibility of future revenue 
streams as customers’ contracts typically last 
at least two years. We also discussed how our 
products would help our customers save money 
in a downturn. This was within the context of the 
Group having industry leading suppliers, and 
a strong management team that has consistently 
delivered organic growth over 10 years together. 
We set some targets for modest growth in sales 
and profits.
The resilience of our business model was truly 
tested in the financial year, following a fierce 
downturn in customer spend over January and 
February 2009, which has remained flat at best 
since then. We took appropriate action:
A  We cut costs quickly to adjust to the broader 
economic conditions. Savings expected to be 
£2.5m over a full year were implemented without 
cutting too deep.
A  We set some revised targets for the business, 
based around a cost improvement plan.
A  We have continued to win new business and 
have grown market share at the underlying 
level in all our product sets, albeit somewhat 
more slowly than previously. Winning major 
new accounts like Nestor Healthcare plc and 
Parfumes Christian Dior (UK) Limited, together 
with developing multi-product accounts like the 
Welsh Ambulance Service, MacMillan Cancer 
Support, Smiths Gore and Weightman solicitors 
have helped keep revenues at close to last 
year’s levels, as well as offering more potential 
in future years.
A  We have managed to cross-sell more products 
into our existing customer base, which is expected 
to improve loyalty.
A  We improved relations with key suppliers 
and that has helped keep margins in line 
with expectations in spite of the worse mix 
of revenues due to lower voice and data 
usage charges.
A  In August 2009, we decided to invest further 
in the growth of our public sector and health 
(“Blue Lights”) teams, recruiting sales, pre-sales 
and engineering expertise.
As a result of the above, we were able to achieve 
our revised targets. Our strategy has not wavered 
and, as we come into another year which offers 
similar economic uncertainty, we have a leaner 
platform and a stronger sales and service 
proposition than we did twelve months ago. 
outlooK
Since the year end, we have acquired AKJ, 
which has sound strategic purpose, and we 
have won a multi-million pound contract from 
a major network operator to service 50 of their 
high spending SME customers. Both are 
contributing well to Group revenues.
We remain cautious in respect of our prospects 
of returning to rapid organic growth. This is due 
to the continued threat of a possible further dip in 
spending by existing customers, and is dependent 
on the recovery of the UK economy. However, in the 
longer term, as we move out of recession, we will 
have an opportunity to grow revenues more quickly. 
We anticipate this may be accompanied by further 
acquisitions offering complementary services to 
our existing products. We therefore remain excited 
over the prospects for future growth.
JaMes Murray ChIEf ExECuTIvE offICEr
7 DECEMBEr 2009 10
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
trading review by products
MoBIlE   
     2009 2008
Turnover (£’m)    41.6 43.6
Gross profit (£’m)    12.4 12.9
Gross margin %   29.9% 29.7%
Subscribers at 30 September  55,299 51,990
Monthly ARPU (£)      53 60
Monthly average contract length  22m 22m
Gross new connections in year  16,429 18,465
Network churn    20% 16%
Customer churn by value  15% 15%
% subscribers in-contract  82% 85%
Data connections  
(included in above)   23,146 17,362
Data connections as  
% of total subscribers   41.9% 33.4%
Group mobile revenues decreased by 5% to £41.6m 
(2008: £43.6m), as average revenue per user (ARPU) 
of existing customers declined 12%, but this was 
offset by some new revenues arising from an 
encouraging net increase in customer numbers, 
as the Group made gains in market share. 
“ARPU” represents the average spend in line 
rental and usage charges per live connection 
per month. It has reduced by 12% to £53 in this 
period. In our interim announcement, we spent 
some time explaining the ARPU drop to £55, 
citing the reduced roaming of business employees 
abroad, increase in zero usage devices, with the 
balance of the negative impact on ARPU being 
attributed to the lower level of UK activity, and 
more competitive tariffs in the market place. 
When reviewing the impact over a full year, it is 
clear that over half the impact has come from 
lower international revenue whether roamed 
or originating in the UK. 
A   ARPU levels for international call revenues 
are £4 lower on average. Nearly a third of the 
reduction seems to be due to lower volume of 
calls which were down nearly 4% year on year. 
The remainder is due to tariff changes. Some 
is due to the July 2009 regulatory reduction 
in EU SMS prices, but the majority is due 
to lower tariffs, set by the major operators. 
A   The remainder of the reduction in ARPU was 
caused by lower use of mobile devices in the 
UK, and lower tariffs. The main tariffs introduced 
by the networks in 2009 brought in free calls 
between same network users and also total fleet 
bundles. Both had an ARPU reducing impact.
Assuming no pick up in economic activity, the trends 
on ARPU reduction are set to continue into 2010, 
but at a lower rate. The ARPU in September 2009 
was £51.50.
The business subscriber base for the Group has 
increased 6% from 51,990 to 55,299 subscribers:
A  Net additions in the year were 3,309 (2008: 6,270), 
reflecting continued gains in market share by the 
Group. Significant new clients included Fidessa plc 
and British Car Auctions Limited. The second half 
of the year was somewhat weaker than the first 
half, with only just over 1,000 net gains. Gross 
connection gains held up well in a quieter summer 
period with 7,900 compared to 8,500 in the first half. 
Overall new gross connections were 12% behind 
2008, which is considered a solid performance 
when companies were contracting and new 
connections which previously arose from natural 
expansion had ceased. The lower level of net gains 
in the second half are reflected in the increased 
network churn as companies reduced their fleets 
due to downsizing their businesses. 
fiNANciAl AND BusiNEss rEviEw
EDwArD spurrIEr 11
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
A  Data connections grew rapidly and ahead 
of expectations. They now represent 41.9% 
(2008: 33.4%), of total connections. “Converged 
devices” (this is measured as a data connection 
which has passed voice traffic in the last three 
months e.g. BlackBerry/MS mail), continue 
to gain widespread currency with cheaper 
BlackBerry models launched this year. The 
number of converged devices has grown 
over 40% (2008: 50%) in the year to over 
15,000 connections (2008: 10,700), and they 
now account for over one in four of existing 
connections. This trend is expected to continue 
over the year ahead. Data-only devices such 
as “dongles” increased to 8,100, up from over 
6,000 last year. These continue to dilute ARPU 
but remain a core part of servicing and retaining 
business clients.
A  Churn – it was a solid performance in keeping 
churn under control. Network churn for the Group 
was 19.7% up from 16% in 2008. Nearly 2.5% of 
this increase was due to customers switching 
networks in the hunt for lower prices, but remaining 
with the Group. It remained in line with expectations 
set by the Board. The customer churn by value 
we also measure was reassuringly consistent 
and low at 15% as in 2008.
Mobile gross margins performed well in spite of the 
drop in ARPU, and came in slightly ahead of 2008 
and expectations. Margins on line rental and usage 
charges were each ahead of 2008, in spite of the 
reduced spend, due largely to better buying and 
less discounting on the networks’ new products. 
In the Interim Report, we highlighted the £0.3m 
lower level of network contributions than 2008 
which was pulling margins down below 30%. 
This continued in the second half, but margins 
were helped by bundled tariffs which required 
lower hardware subsidies to customers. The 
outlook for margins remains steady and we look 
to remain in the target band of 29–31% we have 
occupied in the last four years.
A  t he healthy cash conversion continues 
to highlight the Group’s strong control 
over working capital and its prudent 
accounting policies. 
A  Mobile
 A  gross margins performed well in spite of the 
drop in ArPu , and came in slightly ahead 
of 2008 and expectations. Margins on line 
rental and usage charges were each ahead 
of 2008, in spite of the reduced spend.
 A  t he customer churn by value we also measure 
was reassuringly consistent and low at 15% 
as in 2008.
A  Network services
 A  wlr revenues increased from £8.8m 
to £10.7m, an increase of 22%.
A  Advance solutions
 A  Maintenance revenues have increased 5% 
from £4.4m in 2008 to £4.6m in 2009. this 
was a positive performance after the loss of 
two of the largest Echo customers in 2008.
09 08 07 06 05 04 03 02 01 00
£89.7m
£93.7m
£72.1m
£66.0m
£46.4m
£41.0m
£35.2m
£26.4m
£18.4m
£11.7m
Group turnover 
ten years (£’m)
edward spurrier 
ChIEf fINANCIAl offICEr 12
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
fiNANciAl AND BusiNEss rEviEw coNtiNuED
ouTB ouND sErvICEs
Outbound revenues declined 3.5% to £26.8m 
(2008: £27.8m). Usage charges declined even 
further, falling 16% from £18.6m to £15.7m. 
Offsetting this was the growth in line rental 
revenues highlighted below. It is worth noting that 
while minutes revenues have continued to decline 
due to lower activity levels and reduced prices, 
there was overall growth in revenues in the second 
half of 2009 against the first half, albeit marginal. 
Some major customer wins such as Hydrogen 
Group and Nestor Healthcare Group have helped 
reverse the prevailing economic trend.
Usage revenues’ decline has been reviewed in 
detail. It was noted that in spite of the number of 
lines growing by 29%, the number of minutes fell 
5% year on year, indicating a significant economic 
reduction as well as the ongoing impact of changes 
in technology and the ascendancy of mobile in 
the workspace. The average call value fell 15% 
year on year, with price drops spread across the 
main destinations. 
WLR revenues increased from £8.8m to £10.7m, 
an increase of 22%, The lines under contract grew 
29% on a like for like basis across the Group, with 
ISDN30 channels growing by the same rate and 
continuing to account for 53% of total lines. WLR 
now accounts for 40% and at the year end, the 
run rate was for nearly £12m of WLR revenues.
Monthly ARPU has fallen £21 to £1,080 over the 
year. Essentially, it is holding fairly steady, with 
continued cross-selling of WLR and the addition 
of larger customers to the base offsetting the impact 
of lower usage across the entire customer base.
Average new contract lengths have increased to 
19 months, as increasing numbers of customers 
also taking mobile services sign up for two years. 
INBouND sErvICEs
Inbound services could not match its growth of 
2008, when it was up 13% organically. In spite 
of new client wins and very few client losses, 
revenues were also down marginally, by 3% to 
£6.9m. The major impact on revenues was the 
migration by several of the top spending clients 
to lower revenues number ranges such as 0844 
and 0845, and then the removal of 0870 revenue 
share in August 2009. This was long heralded. 
The run rate of revenues following the regulation 
changes in August 2009 and some key number 
translations is closer to £6m than £7m, albeit with 
slightly higher margins.
networK services
     2009 2008
Turnover (£’m)    £33.8 £34.9
Gross profit (£’m)      £12.9 £14.4
Gross margin %   38.2% 41.1%
outbound KpIs  
Outbound – monthly ARPU (£)     1,080   1,101 
WLR as a % of total  
outbound revenues   40% 32%
Number of lines/channels   67,587   52,262 
Average new customer  
contract length (months = “m”)  19m 16m
Inbound KpIs  
Turnover (£’m)    £6.9 £7.1
Gross margin %   53.7% 58.4%
Group sales decreased marginally by 3% from £34.9m 
to £33.8m. As in prior periods, the decline in call 
revenues continues to overshadow the increased 
momentum in customer wins as is illustrated by the 
increased Wholesale Line Rental (WLR) base size.
Gross margins were overall down 2.9%, and were 
in line with revised expectations. The reasons for 
the decline were as follows:
A  1.2% was due to a change in outbound sales mix 
substituting £2m of minutes with new line rentals.
A  1.0% was due to reduced outbound minutes 
revenues, both tariff reductions and lower volumes.
A  0.3% was due to loss of commissions due 
from BT for MPLS circuits: Echo used to receive 
commissions from BT , which were discontinued 
in late 2008. The gross profits and revenues 
in 2008 benefited from an additional £125,000 
at 100% margin, which accounted for 0.3% 
margin reduction.
A  0.4% was due to modest margin erosion in 
the inbound 0870 revenues as the customer 
base substituted to less profitable products.  13
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
Maintenance revenues have increased 5% from 
£4.4m in 2008 to £4.6m in 2009. This was a positive 
performance after the loss of two of the largest 
Echo customers in 2008, which were serving out 
their final year’s notice at the time of the acquisition. 
The outlook for maintenance revenues, which 
continue to be a key focus for management, 
remains mixed. There are plenty of opportunities 
to win market share with some competitors focused 
on other aspects of their business. However, there 
is continued pressure on renewal pricing and with 
customers continuing to close sites, churn has 
tracked slightly ahead of original management 
expectations last year, albeit still at a low level.
Data circuit revenues have remained flat year on 
year at £2.0m. A range of managed services were 
provided for new customers, including MPLS, 
Ethernet, and ADSL being sourced from a selection 
of suppliers, including principally in this period, 
Telstra, Viatel and Easynet. The Group also sold 
its first Cisco deal. Data remains an area of obvious 
potential growth to the business, and the Group 
has recently established a specialist sales team 
to focus on selling into our existing customers.
Margins have improved to 38.4%, up 2.3% on 
2008. 1.4% of the increase is due to the change 
in sales mix as maintenance has much higher 
margins and was increased year on year. The 
remainder of 0.9% was due to improved buying 
of data circuits and improved margins on 
hardware kit sold to smaller customers. 
In August 2009, the Group recruited a team of 
specialist sales and engineering skills to cover the 
“blue lights” market, building on the success with 
London and Welsh Ambulance services and also to 
cover the NHS trusts. To date, three new accounts 
have been won and this is seen as an area of growth 
for the Group. The Group is currently waiting for the 
outcome of the renewal of the necessary PASA 
accreditation which is due March 2010. 
advanced solutions     2009 2008
Turnover (£’m)    £14.3 £15.2
Gross profit (£’m)    £5.5 £5.5
Gross margin %   38.4% 36.1%
sales breakdown   £’m £’m
IP PBX installs    7.7  8.8 
IP PBX support (maintenance)  4.6  4.4 
Data circuit rentals   2.0  2.0 
IP PBX support GP   4.2  4.2 
Engineering cost base   (2.4) (2.5)
IP PBX install revenues were down £1.1m year on 
year from £8.8m to £7.7m in 2009. This was a good 
performance relative to the market. The larger 
installations (over £0.1m) have seen extended 
sales cycles with some defaults due to lack of 
availability of lease finance. 
Sales of enhancements (“add-ons”) to existing 
customers’ systems have reduced by over 25% 
year on year, as many larger enterprises put on 
hold upgrades to their systems and are reducing 
system requirements rather than adding to them. 
We are seeing a gradual increase in our pipeline 
as these customers tentatively return to the market. 
However, the impact of this has been reduced by 
solid sales of smaller IP based systems (less than 
£0.1m) which have been ahead of expectations, 
with many of these vendor-financed or purchased 
for cash, justified by a rapid payback in terms 
of cheaper telecoms spend across many sites. 
Many of these new sales have been assisted 
by multi-product offerings and cross subsidies 
being built into our customer base. 14
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
fiNANciAl AND BusiNEss rEviEw coNtiNuED
cash Flow Cash inflow from operations was excellent bringing 
in £10.6m (2008: £10.3m), representing a cash 
conversion of 110% adjusted EBITDA (2008: 94%). 
This included a working capital inflow of £1.0m 
(2008: outflow of £0.7m), mainly due to increased 
provisions of £0.6m for mobile hardware (being the 
costs of renewal or acquisition of customer contracts), 
reduced trade debtors £0.5m, and reduced stock 
levels £0.2m. Up to £0.4m has been identified as 
potentially reversing as working capital outflows 
next year.
The healthy cash conversion continues to highlight 
the Group’s strong control over working capital 
and its prudent accounting policies. The policy of 
writing off customer acquisition costs immediately 
to the income statement, often in respect of two 
year contracts, has meant a further increase in the 
provision from £1.6m in 2008 to £2.2m in 2009. 
The continuing increase in these provisions, 
together with the share option costs of £0.6m 
(2008: £0.3m), are the main contributors to the 
high cash conversion rate of EBITDA averaging 
around 100% in the last two years. 
The operating cash flow of the Group was applied 
as follows:
     2009 2008 
     £’m £’m
Net operating inflow       10.6   10.3 
Investment returns    0.1   0.1 
Taxation    (2.5) (1.9)
Capital expenditure   (0.3) (0.9)
Free cash flow        7.9   7.6 
Acquisitions/disposals    0.3  (0.3)
Dividends    (2.1) (1.8)
Equity finance from staff options    0.1  — 
Loan repayment   (0.1) (0.6)
Share buy-backs   (1.3) (4.1)
Net cash inflow      4.8   0.8 
Net funds at 30 September   8.1   3.2 
capital investMent The Group invested £0.34m (2008: £0.92m) in 
tangible fixed assets and intangible software assets 
during the year. Expenditure was kept within target, 
and a breakdown of spend is as follows:
     2009 2008 
     £’m £’m
New office space at Ivory House    — 0.1**
New City and  
Manchester office space    0.1 —
IT hardware    — 0.1
CRM software    0.1 0.3
Clarity™ and workflow software    0.1 0.1
IP phone system and LAN upgrade — 0.2
**
Other – motor, furniture etc.  — 0.1
The items marked ** were identified last year as non-routine expenditure.
In July 2009, the Group moved its City of London 
operations from serviced offices in Bunhill Row to 
105 Bishopsgate where it has taken a minimum three 
year term lease on larger and cheaper premises.
Capital expenditure in 2010 is expected to be less 
than £0.5m. 
frEEholD propErTy
On 31 March 2009, the Board decided that Echo’s 
former headquarters, previously held for resale 
would be partially brought back into use for storage 
and the upper floors of offices leased. T o date there 
has been some interest at a discounted rent on the 
upper floors, but requiring a change of use 
planning application.
Recently, an unsolicited offer to purchase the freehold 
was received for £725,000, and the Board has 
decided it would be appropriate to revalue the 
property at that level and accordingly an impairment 
charge of £0.17m has been booked to the profit 
and loss account. The Board is considering this 
offer. The cost to the Group of the property was 
less than £0.7m, but was revalued to £0.88m 
on acquisition. 15
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
earnings per share 
Fully diluted adjusted earnings per share have 
decreased by 12% to 13.9p (2008: 15.8p). Basic 
adjusted earnings per share have decreased 13% 
from 16.5p to 14.4p. 
The statutory or unadjusted fully diluted earnings 
per share have decreased 15% from 13.7p to 11.6p, 
and the basic statutory earnings per share have 
decreased 16% from 14.3p to 12.0p.
Set out below is a reconciliation to show how the 
basic earnings per share reconciles to the adjusted 
earnings per share. The two main factors are the 
amortisation of acquired intangible assets (principally 
the effect of amortising Echo’s intangibles), and 
the impairment of the freehold property, acquired 
with Echo.
rECoNCIlIATIoN of BAsIC EArNINGs 
pEr shArE — sTATuTory To ADJusTED
     2009 2008 
     Pence Pence
Reported basic earnings  
per share at 30 September  12.0  14.3 
Amortisation on acquired  
assets/intangibles (taxed)  2.0  2.2 
Impairment of freehold property  0.4  —
Adjusted basic earnings  
per share at 30 September  14.4  16.5 
In terms of share issues and share buy-backs it 
has been a busy year:
shArE IssuEs/Buy ‑BACKs 
Number of ordinary shares  
at 30 September 2008    44,963,355
Share options exercised   154,069
Share buy-backs: October 2008   (387,500)
Share buy-backs: February 2009  (129,149)
Share buy-backs: July 2009   (650,154)
Number of ordinary shares  
at 30 September 2009   43,950,621
Shares held in treasury    1,000,000
ECho EArN ouT AND w ArrANTy ClAIMs
On 24 January 2009, the Group finalised the deferred 
consideration due to the sellers of The Telecom 
Centre Limited (“Echo”), with a payment agreed 
at £58,000. On 24 March 2009, the Group received 
£300,000 from the same sellers in respect of warranty 
claims. As a result of these two transactions, the 
cash flow statement shows a net receipt to the 
Group of £0.3m in respect of purchase of subsidiary 
undertakings (“Acquisitions/Disposals” in table 
on page 14). The net balance has been allocated 
against goodwill arising on consolidation in the 
balance sheet.
t ax The effective tax rate was 28.5% (2008: 27.0%). 
Note 10 on page 46 sets out the reconciliation 
back to the standard rate of profits being 28% 
in the year to 30 September 2009 (2008: 29%). 
The main reason for the slightly higher than standard 
rate tax charge was the disallowable operating 
costs, the largest of which was the provision for 
impairment to freehold property £0.17m. 
share buy-bacKs Pursuant to the authority granted at an EGM 
on 24 July 2008, the Group announced on 
18 August 2008 that it would commence a 
programme of share repurchases, limited to 
4,771,162 ordinary shares. Between 16 and 
20 October 2008, the Group repurchased 
387,500 shares, each at 135p and subsequently 
cancelled them. In addition, on 11 February 2009, 
the Group repurchased 129,149 ordinary shares, 
each at 140p and they were subsequently cancelled. 
Between 1 and 2 July 2009, the Group repurchased 
a further 650,154 ordinary shares, at 100p and they 
were subsequently cancelled.
During the year, in aggregate the Group returned 
£1.35m to shareholders (2008: £4.04m) at an average 
repurchase share price of 116p (2008: 140p).
The 1 million shares held in treasury will continue 
to be held for potential use in satisfying share 
option exercises and equity issued as part of 
an acquisition.
The Board will continue to monitor levels of 
cash and whilst these excess levels of cash 
have historically been used for acquisitions, the 
possibility of returning excess levels of cash to 
shareholders via a special dividend or further 
share buy-backs will remain under consideration. 
Since the year end, the Group has further 
repurchased and cancelled 320,000 shares 
at an average price of 112p. 16
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
fiNANciAl AND BusiNEss rEviEw coNtiNuED
business risK assessMent The Group’s Risk Management Framework 
requires a regular review of the key risks facing 
the Group. Aside from the economic downturn, 
the specific risks thought to affect the Group the 
most in 2010 have not changed from 2009:
CoNTrACTs wITh supplIErs 
The Group resells the products of its suppliers and 
whilst many of the Group’s products are supplier 
agnostic and there exists a freedom to substitute 
various suppliers’ products, the Group acknowledges 
that it has reliance in particular on the contracts 
with the mobile networks, O
2
 and Vodafone. 
These contracts are up for renewal in July 2011 
and December 2010 respectively.
The Group mitigates this risk by maintaining 
strong relationships with its suppliers at various 
levels of the business, as well as paying close 
attention to ensuring the expectations of suppliers 
are met and where possible exceeded. 
ACquIsITIoN INTEGrATIoN ExECuTIoN
The Group has set out that its strategy includes 
the acquisition of businesses where they are 
earnings enhancing. The Board acknowledges 
that there is a risk of operational disturbance in 
the course of integrating acquired businesses with 
existing operations. The Group mitigates this risk 
by careful planning, rigorous due diligence and 
segregation of the target operations where possible. 
Where there is full integration of acquired businesses, 
the Group receives a report on the effectiveness of 
the integration and variances from business plan.
TEChNoloGICAl ChANGE
The Group operates in a market of rapid and dynamic 
technology changes, and there is a risk that the 
Group fails to secure the necessary contracts 
to supply its customers with a new technology 
(disruptive) which substitutes existing technology. 
The Group mitigates this risk by maintaining close 
relationships with its suppliers, and by employing 
a product marketing team whose duties include 
research, review and procurement of appropriate 
new technology products for testing prior to 
release to our customers. 
earnings per share (continued)
The earnings per share enhancing benefits of the 
share buy-backs in 2008 and 2009 are shrouded 
by a higher effective tax rate in 2009 and the 
increased share option costs in 2009. Adjusted 
earnings per share is calculated after deducting 
share option costs which are otherwise added 
back in our adjusted figures. These costs were 
increased from £0.3m to £0.6m in 2009.
In spite of lower rates of corporation tax (dropping 
from 29% composite rate in 2008 to 28% in 2009), 
the effective tax rate is up 1.5% to 28.5%. 1% of 
the increase is due to 2008 having a lower charge 
than normal due to prior year adjustment for Echo 
losses, and 2009’s charge is 0.5% higher due to 
the disallowance of the freehold property 
impairment charge.
Assuming level tax rates, and adding back the 
share option costs, adjusted earnings per share 
would have been 15.3p compared to 16.6p in 2008, 
which is only down 8% year on year, compared to 
profits down 14%.
dividend per share 
The Board has proposed a final dividend of 
3.5p per share (2008: 3.1p per share) making 
a total dividend of 5.1p per share for the full year 
(2008: 4.6p per share). The total dividend for the 
full year equates to approximately 35% of adjusted 
earnings per share (2008: 28%), which more 
appropriately reflects the cash earnings of the 
Group. The increase in payout to the upper end 
of the range set by the Group’s policy is due to 
the continued strong cash generation by the 
Group and when considering dividend-per-share 
progression, also takes into account the fewer shares 
ranking for dividend due to the share buy-backs 
both before and after the balance sheet date. 
The dividend will be paid on 26 January 2010 to 
shareholders on the register as of 18 December 2009.  17
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
ABIlITy To CoNTINuE To ATTrACT 
AND rETAIN KEy sAlEs AND 
ClIENT MANAGEMENT ExECuTIvEs 
The Group is a direct sales and marketing business 
and whilst the revenues of the Group largely recur 
on a monthly basis, the Group depends on being 
able to recruit and retain staff of the right calibre in 
order to win and service key contracts. The Group 
has sought to mitigate this risk by investing in 
a clear succession and training plan for career 
development, and improving the employee benefits 
and remuneration over the last three years, including 
commissions, and specifically share options and 
pension contributions. The Board monitors the 
results of exit interviews, recruitment statistics and 
staff attrition by department on a regular basis.
rEGulATory rIsK
The Group acknowledges that the pricing of products 
and services can be affected by regulatory bodies 
in the UK and the EU. In recent years, pence per 
minute pricing from fixed to mobile destinations 
and EU roaming mobile voice and data retail prices 
have been substantially altered and this has had 
an impact on the results of the business. In 2009, 
there was a substantial change to inbound telephony 
product pricing as 0870 prices were regulated. 
This meant that the revenue stream of a “revenue 
share” where the operators used to pass back a 
percentage of the call costs to the customer, who 
receives the call, was effectively terminated. The 
Board believes that where the pricing regulations 
are directed at wholesale prices, the Group is better 
able to mitigate the risk through its own buying 
and pricing policies. Where the regulator imposes 
price caps at the retail level, the Group is more 
exposed to a reduction in margin where the operators 
do not substantially reduce their wholesale prices. 
The Group mitigates the risks by careful and detailed 
research on the future regulations, and has been 
involved in lobbying where applicable. The Group 
will assess each risk and build it into its forecasts 
of income as soon as possible and will amend its 
pricing policies accordingly.
The Board is confident that there is a satisfactory 
framework for monitoring, assessing and reporting 
on these risks. There is also a robust regular framework 
for reporting on predictive KPIs in the business.
edward spurrier 
ChIEf fINANCIAl offICEr
7 DECEMBEr 2009 18
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
BoArD of DirEctors
JaMes Murray , 39
chieF executive oFFicer
James Murray co-founded Alternative Networks 
in 1994 following several sales and engineering 
positions within London based telecoms dealers. 
He held the position of Joint Managing Director 
from 1994 until 2000 when he moved to the 
position of Managing Director. In 2003 he 
became Chief Executive Officer. James was 
awarded the title of Ernst and Young’s “Young 
Entrepreneur of the Year” Award in 2005.
ben MarnhaM, 37
chieF operating oFFicer
Ben Marnham graduated from the University of York 
in 1994 and joined Alternative Networks at its inception 
in October 1994. His role expanded from Sales Manager 
in 1996 to include management of the Telemarketing 
and Account Management operations in 1997. In 1998 
Ben was promoted to Network Resale Director to 
manage the Group’s supplier relationships. Ben joined 
the Board of Directors in 1999 as Commercial Director 
and was thereafter appointed Chief Operating Officer 
in 2004, with a revised remit covering Group Operations, 
Commercial and Supplier Relationships, Client Services 
and Service Delivery.
tiMothy holland-bosworth, 71
non-executive director
Timothy Holland-Bosworth has spent almost his 
entire working life in the financial services industry, 
including 25 years as a director of corporate finance 
in Kleinwort Benson Limited and five years within the 
Guinness Mahon Group until he retired two years after 
its acquisition by Investec Bank. He was a chairman 
of Henderson Crosthwaite Corporate Finance and 
a director of other Henderson Crosthwaite group 
companies, now part of the Investec Group. 19
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
edward spurrier, 44
chieF Financial oFFicer
Edward Spurrier joined Alternative Networks as 
Finance Director in 1999. A member of the Institute 
of Chartered Accountants in England and Wales, 
he trained and qualified at Coopers and Lybrand 
(now PricewaterhouseCoopers) in London. Prior to 
joining Alternative Networks, he had over 12 years’ 
prior experience in public practice, with a focus 
on advising entrepreneurs on managing growth. 
He led the establishment of the billing, finance, 
legal and business development departments 
within Alternative Networks. In addition to heading 
up the finance function, Edward’s day to day 
responsibilities include M&A, business strategy 
development, IT operations and development, 
and legal. He is also the Group Company Secretary. 
JiM sewell, 38
group sales and MarKeting director
Jim Sewell graduated from Manchester University in 
1993 and joined Alternative Networks in October 1994. 
In 1996 he became Sales Manager of one of the two 
sales teams, before setting up and managing the 
NGN Solutions division in 1997. In 1998 he took over 
management of the Managed Voice Solutions sales 
team, and in 1999 joined the Board as Sales Director. 
Appointed Group Sales and Marketing Director in 2004, 
Jim is now responsible for new sales from the network 
and system sales teams, the telemarketing team and 
the cross-selling and client retention undertaken by 
the client management team. Jim is also responsible 
for the marketing, products and training teams.
tony caplin, 58
non-executive director
T ony Caplin is currently chairman of Urban Wimax PLC 
and North West London Hospitals NHS Trust and 
chairs the audit committee of the Medical Research 
Council. In addition he is a non-executive director 
of Northamber plc. He is also a commissioner on 
the Public Works Loan Board.
Kenneth Mcgeorge, 61
non-executive chairMan Kenneth McGeorge retired from Vodafone in 2004 
after 21 years, having joined in 1984 some six months 
before the commencement of the original service. 
He held a series of senior sales, marketing and 
general management positions, culminating in 
head of enterprise business unit which brought 
together the acquired businesses of Project T elecom, 
4U Corporate and Vodafone Business Direct into 
a single entity. He is also a non-executive director 
of MPX Ltd (Mobile PhoneXchange). 20
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Annual report and accounts 2009 
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Directors’ report
for the yeAr eNded 30 September 2009
The Directors present their report and audited financial statements of Alternative Networks plc 
and its subsidiaries (the “Group”) for the year ended 30 September 2009.
PrinciP al activities
The principal activity of the Group continues to be business communications focused on service provision 
and systems integration. 
As a service provider, the Group supplies a range of services including managed network services, 
non‑geographic number services, mobile phone and data services, and internet and broadband service 
provision. The Group also supplies, installs and maintains business telephone systems and associated 
integrated communications applications. 
Business review
Please refer to the Financial and Business Review on pages 10 to 17 which discusses key performance 
indicators, principal risks and uncertainties, and future outlook.
DiviDenDs The Company paid a 2009 interim dividend of 1.60p per 0.125p ordinary share, with a total payment value 
of £705,000 (2008: £715,000). This was paid on 17 July 2009 to shareholders on the register on 3 July 2009.
In addition, the Directors are proposing a final dividend in respect of the financial year ended 30 September 2009 
of 3.50p per 0.125p ordinary share which will absorb an estimated £1,552,000 (2008: £1,383,000) of shareholders’ 
funds. It will be paid on 26 January 2010 to shareholders who are on the register of members at 18 December 2009.
Post Balance sheet events
Subsequent to the year end, the Company carried out three further share repurchases for cancellation. 
These took place on the 2, 6 and 8 October 2009. On these dates a total of 320,000 shares were bought 
back by the Company for an aggregate sum of £359,100. These shares were purchased as a means of 
returning excess levels of cash to shareholders.
On 30 October 2009 the Group acquired 100% ordinary shares of AKJ. AKJ is a provider of software and 
consultancy specialising in the telecommunications industry. This acquisition will help the Group to accelerate 
the development of its market‑leading customer service portal and protect its existing exclusive rights over 
elements of the software. It also provides a platform for new revenue streams working with third party telecoms 
and IT service providers. Further details are provided in the Chief Executive’s Review on page 6 and in Note 31.
The Group has also won by tender, a three year contract from October 2009 onwards, to bill and service 
50 business clients with an annual turnover of £2.5m. Further details are provided in the Chairman’s 
Statement on page 4.
Directors 
The Directors who held office during the year and up to the date of signing these financial statements 
are given below:
J Murray 
E Spurrier 
J Sewell 
B Marnham 
T Holland‑Bosworth 
T Caplin 
K McGeorge
share schemes
The Directors believe that a key element in attracting, motivating and retaining employees of the highest 
calibre is employee involvement in the performance of the Group through participation in share schemes. 
By doing so, the Directors believe that employees’ interests will be more closely aligned with those of the 
shareholders. The schemes are described in the Remuneration Report. 21
Alternative Networks plc 
Annual report and accounts 2009 
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environmental rePort The Directors recognise the importance and responsibility of ensuring that the Group’s businesses are conducted with respect 
and care for the environment. Environmental management is regularly monitored by the Board through internal control risk 
management process.
corPorate social resPonsiBility (csr) statement 
The Group is committed to operating in a socially and environmentally responsible manner and structures its policies, initiatives 
and practices accordingly, as we evolve as a business.
employee welf Are
All employees are afforded equal opportunities in an environment which is free from unlawful or unfair discrimination. We strive 
to create a positive, nurturing and progressive employee experience, and offer a flexible reward and benefits package that encourages 
a healthy work/life balance and general well‑being.
The Group takes pride in offering outstanding consultation and service, and therefore places great importance upon training 
and development. The business has a well‑established in‑house training academy, and over 89% (2008: 83%) of management 
roles are filled by internal applicants.
Effective two‑way communication and teamwork is also critical in creating a positive and productive working environment and, 
in addition to conducting team building events and initiatives, we actively encourage regular employee feedback through staff 
committees. The Group also informs employees of the business’ activities and performance through face‑to‑face briefings, 
weekly bulletins, and through Directors operating an open‑door policy.
our eNviroNmeNt Al commitmeNt
The Group appreciates the importance of sound environmental practice, and has implemented a structured programme of green 
campaigns to help increase awareness and change employee behaviour. Members of staff share responsibility for improving the 
Group’s practices, and our aim is to progressively reduce our environmental impact.
One of the Group’s key policies is to reduce the amount of waste generated by 30% over the next two years. We expect to achieve 
this target through measures such as producing electronic rather than hard‑copy communications; using reusable utensils instead 
of disposable items; and operating printing restrictions, such as duplex printing. We have already reduced the amount of paper 
our invoices use by 15%, and will significantly reduce our paper consumption with the launch of a paperless billing system in 
December 2009. 
The Group understand the vital role of recycling in the treatment of unavoidable waste, and in 2009 recycled around 8 tonnes of 
waste. We have introduced additional recycling stations across all sites and are increasing the amount and type of materials we 
recycle. Consequently, we have seen an increase in the recycling of cans and plastics by 110%. The Group is working to double 
the volume of waste that is recycled and is implementing a recycling service for clients’ unwanted mobile devices. 
Having targeted lowering our water consumption, the Group is now within the good practice benchmark set out by the Carbon Trust. 
This was achieved within the 12 months promised, and equates to a usage reduction of 7% per person. We are also actively seeking 
to lower our energy use.
Although travel to and between offices is inevitable, the Group is committed to reducing the environmental impact of such transportation. 
We have developed conferencing facilities within all offices and have introduced a central London office designed for flexible workers 
with hot desking facilities. Home working and flexible hours have been introduced for applicable members of staff, while a series 
of employee benefits – an extra holiday purchase scheme and sabbaticals for long‑term staff, for example – also encourages less 
business travel. 
Restricting flights between offices to Board‑approved emergencies only and the operation of a Ride‑to‑Work cycle scheme further 
help reduce our carbon footprint. Scheduling for field engineers has also been revised to minimise time spent on the road. 
In addition to concentrating on our environmental record, the Group has continued its policy of inspecting our suppliers’ green 
credentials. By examining the CSR statement of prospective suppliers, we ensure we work with companies with comparable 
environmental and ethical standards. We have increased the number of environmentally friendly products we use – including 
recycled paper, energy from renewable sources, energy efficient appliances, and company vehicles with low CO
2
 emissions 
and fuel consumption – and strive to find new ways to lower the business impact of the Group. 
commuNity iNvolvemeNt
As a multi‑site business, the Group has chosen to forge links with smaller local charities, including most recently, the Paul D’Auria 
Cancer Support Centre and Centrepoint. In addition to the Group making financial donations, our Charity Committee organises 
and manages regular fundraising activities and events.
charitaBle Donations During the year charitable donations of £7,962 (2008: £7,340) were made to local and health related charities. This includes 
donations of £2,000 to Centrepoint and £2,450 to the Anthony Nolan Trust. 22
Alternative Networks plc 
Annual report and accounts 2009 
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Payment to creDitors The Group has a variety of payment terms with its suppliers. The Group agrees payment terms with its 
suppliers when it enters into binding purchasing contracts for the supply of goods and services. Its 
suppliers are made aware of these terms. The Group seeks to abide by these payment terms when it is 
satisfied that the supplier has provided the goods or services in accordance with the agreed terms and 
conditions. At 30 September 2009 the amount of trade payables shown in the balance sheet represents 47.3 
days of average purchases of the Group (2008: 49.7 days) and 50.6 days for the Company (2008: 55.1). 
emPloyees The Directors believe that the Group’s employees are a source of competitive advantage. The Directors 
recognise that continued and sustained improvement in the performance of the Group depends on its ability 
to attract, motivate and retain employees of the highest calibre. 
The Group is committed to the principle of equal opportunity in employment. It seeks to ensure that no 
employee or applicant is treated less favourably on the grounds of gender, marital status, nationality, race, 
colour, ethnic or national origin, religion, disability or sexual orientation or is disadvantaged by conditions 
or requirements, including age limits, which cannot be objectively justified. Entry into and progression within 
the Group are solely determined by the application of job criteria, personal attitude and competence.
It is the Group’s policy to apply best practice in the employment of disabled people. Full and fair consideration 
is given to every application for employment from disabled persons whose aptitude and skills can be utilised 
in the business and to their training and career development. This includes, wherever possible, the retraining 
and retention of staff who become disabled during their employment.
All staff members are informed of matters concerning their interest as employees and the financial and economic 
factors affecting the business. Established management communication channels have been supplemented 
by direct presentations to staff by Directors to explain developments of particular significance.
Financial risk management Financial risk management is disclosed within Note 3 of the accounts.
St AtemeNt of diScloSure of iNformA tioN to AuditorS
Each Director of the Group, in office at the time of approval of this report, acknowledges that:
A  so far as the Director is aware, there is no relevant audit information of which the Group's auditors 
are unaware; and
A  he has taken all the steps that he ought to have taken as a Director in order to make himself aware 
of any relevant audit information and to establish that the Group's auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 
of the Companies Act 2006.
inDePenDent a uDitors A resolution to reappoint PricewaterhouseCoopers LLP as auditors of the Group will be submitted 
to the forthcoming Annual General Meeting.
share rePurchase 
The Company continued its share buy‑back scheme that it began in the last financial year. The scheme was 
entered into as the Company had funds surplus to the operational requirements of its continuing activities. 
In arriving at the level of cash available to be returned to shareholders, the Board took into account the levels 
of funding remaining in the Group to enable it to meet its working capital requirements.
During the financial year the Group bought back 1,166,803 ordinary shares for cancellation that each had 
a nominal value of 0.125p. These made up approximately 2.60% of shares in issue at the time and were 
for a total consideration of £1,356,202.
eD warD sPurrier comp ANy Secret Ary ANd chief fiNANciAl officer
7 december 2009
Directors’ report continueD
for the yeAr eNded 30 September 2009 23
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
introDuction
The Board of Alternative Networks plc is committed to the highest standards of corporate governance in so far 
as it is practical for a Group of its size and although not a requirement of the Alternative Investment Market (AIM), 
the Group has complied with the provisions of the Combined Code 2008 (the “Code”) except as explained 
in the report below. The Group though is not required to adhere to the provisions of the Code and this report 
is a voluntary statement.
The Group has applied the exemption applicable to smaller companies (outside the FTSE350) in the Code 
that states that no one Non‑executive Director should sit on all three principal Board Committees simultaneously. 
In addition, it has also applied the concession that smaller companies can have only two Non‑executive Directors, 
rather than Non‑executive Directors representing half of the Board. Although the Audit Committee does not 
meet the Code’s requirement to have recent relevant financial experience, a senior representative from the 
finance department attends all Audit Committee meetings by invitation providing advice to the Committee 
members when required.
BoarD oF Directors
The Board is responsible for the overall management of the Group and is accountable to shareholders for 
the creation and delivery of strong sustainable financial performance and long‑term shareholder value.
There is a clear division of the roles and responsibilities of the Chairman and the Chief Executive Officer 
which are set out in writing and have been agreed by the Board.
The Chairman is responsible for leading the Board and ensuring its effectiveness, setting the agenda for and 
conducting Board meetings, ensuring that all Directors receive sufficient, accurate and relevant information 
on financial business and corporate issues and maintaining effective communication with shareholders.
The Chief Executive Officer is responsible for the executive management and performance of the Group’s 
business, the development, recommendation and implementation of the Group’s strategy and budget and 
setting the overall policy and direction of all business operations.
The Board has a formal schedule of matters reserved for its decisions. The specific issues include the Group’s 
overall strategy, the Group’s acquisition and divestment policy, approval of key suppliers, approval of major 
capital expenditure projects and significant financing matters and all corporate governance and compliance 
matters. It monitors the exposure to key business risks and reviews the strategic direction of the business, 
annual budgets, progress towards achievement of those budgets and their capital expenditure programmes. 
The Board also considers employee issues and key appointments.
Subject to the matters which it has reserved for itself, the Board has delegated authority for the management 
of the Group’s business to the Chief Executive Officer who exercises this authority through delegation to 
members of the senior management team.
The Company Secretary is responsible for advising the Chairman and the Board on all matters concerning 
corporate governance. He supports the Chairman in ensuring the provision of accurate and relevant information 
to the Board and for ensuring that there is a flow of information within the Board and its Committees, and 
between senior management and Non‑executive Directors.
The Group maintains appropriate insurance cover in respect of Directors’ and officers’ liabilities. This insurance 
cover does not provide cover in the event that the Director is proved to have acted fraudulently or dishonestly. 
The Board, which is scheduled to meet monthly, met on eleven occasions in the current year, in addition 
to two off‑site strategy meetings.
   Number of  
   meetings     T Holland‑ 
   in year J Murray E Spurrier J Sewell B Marnham Bosworth T Caplin K McGeorge
Board   11 11 9 9 11 7 11 10
Audit Committee   2 — 2 — — 2 2 2
Remuneration Committee 3 — — — — 3 3 3
Nomination Committee 1 — — — — 1 1 1
corporate governance report 24
Alternative Networks plc 
Annual report and accounts 2009 
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corporate governance report continueD
BoarD Balance anD inDePenDence
The Board of Directors of the Group comprises a Non‑executive Chairman, four Executive Directors and two 
independent Non‑executive Directors. Their biographical details on pages 18 to 19, demonstrate the range 
of experience and judgement they bring to bear on Board matters. The Board is satisfied that the Executive 
and Non‑executive elements of the Board are well balanced, that no individual or group is or has been in 
a position to dominate the Board’s decision making and that there is a substantial degree of independence 
and diversity.
Each of the Non‑executive Directors is considered by the Board to be independent of management and free 
from any business or other relationship which could materially interfere with the exercise of his judgement. 
The Non‑executive Directors are up for re‑election on 19 January 2010 and as part of the re‑election process, 
the Board will consider the independence of Timothy Holland‑Bosworth, owing to his tenure since May 1999. 
Related party transactions are listed in Note 30. Despite the above, the Board still currently consider all the 
Non‑executive Directors to be independent.
Having considered the position of each Non‑executive Director, the Board is of the view that no current interests 
or prior interests of the Non‑executive Directors will either influence or prejudice their objective and independent 
judgement or their ability to act in the best interests of the Group.
The Board is satisfied that each of the Non‑executive Directors commits sufficient time to the fulfilment 
of his duties as a Director of the Group.
PerFormance evaluation A performance evaluation of the Board is undertaken annually by the Group’s Business Excellence department 
using a detailed questionnaire and follow up interviews with Board members. The questionnaire includes 
consideration of the behaviour of the Board and its processes. The report on the evaluation of the Board 
is considered and discussed by the Board and specific actions agreed.
The Board has established a framework for the induction of all newly appointed Directors which includes the 
provision of corporate information and meetings with Directors and members of the senior executive team.
BoarD committees The Board has established a number of standing committees and has delegated certain responsibilities to each 
of those committees. The principal Board Committees are the Audit, Remuneration and Nomination Committees.
remuneration committee The membership and a summary of the terms of reference of the Remuneration Committee can be found 
in the Remuneration Report on page 27.
a uDit committee During the year the membership of the Committee comprised: T ony Caplin (Chairman), Timothy Holland‑Bosworth 
and Kenneth McGeorge. The members of the Committee are considered by the Board to be independent 
Non‑executive Directors.
role of the A udit committee
The Board has delegated to the Committee responsibility for overseeing, on behalf of the Board, 
the financial reporting and internal control of the Group.
To this end, the Committee is responsible for:
A  Reviewing the form and content and monitoring the integrity of the Group’s financial statements.
A  Reviewing the effectiveness of the Group’s internal control system (including financial, operation 
and compliance controls and risk management).
A  Reviewing the effectiveness of the Group’s internal audit function.
A  Selecting and recommending to the Board the appointment, reappointment or removal of the external auditors.
A  Reviewing the independence and objectivity of the external auditors and the effectiveness of the audit process.
A  Approving the remuneration and terms of engagement of the external auditors.
A  Approving and subsequently reviewing a policy of engagement on the appointment of auditors to supply 
non-audit services.
A  Agreeing annually with the auditors the nature and scope of the audit process. 25
Alternative Networks plc 
Annual report and accounts 2009 
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a uDit committee (continueD)
Audit committee meetiNgS
The Committee met on two occasions during the financial year.
Attendees at Committee meetings held included: Chief Financial Officer, Financial Controller, and representatives of the external auditors. 
All of these attended at the invitation of the Chairman of the Committee.
mAiN ActivitieS of the Audit committee iN the yeAr eNded 30 September 2009
On one of the two occasions the Committee met with the Group’s external auditors in the absence of executive management.
The principal issues addressed by the Committee during 2008/9 were:
A  The external auditors’ year‑end report for 2008, the review of the Group’s preliminary results and Annual Report disclosures.
A  The external audit plan for the 2009 financial statements, which included a review of the audit objectives, scope, timetable, 
deliverables and audit fee.
A  The Group’s risk management process.
A  The impact of International Financial Reporting Standards (IFRS) as adopted by the EU, which were adopted by the Group 
for this year’s interim and Annual Reports.
A  The reappointment of PricewaterhouseCoopers LLP as external auditors.
A  The Group’s internal audit activities and the effectiveness of internal controls, including the consideration of the internal auditors’ 
findings and recommendations and the external auditors’ observations on internal financial controls arising from their annual 
audit and interim review.
inDePenDence oF external auDitors The Committee has adopted a policy on non‑audit services designed to ensure that the provision of such services by the external 
auditors does not impair the auditors’ objectivity and independence. The policy is based on the ICAEW Guidance for Audit Committees 
and defines both the type and value of services that require prior authorisation of the Committee and the services that the external 
auditors are prohibited from providing. The Committee annually reviews all non‑audit services provided by the external auditors to ensure 
compliance with the policy. The Committee remains satisfied with the objectivity and independence of the Group’s external auditors.
PricewaterhouseCoopers LLP have been the Company’s auditors since 2000. The Audit Committee manages the relationship with 
the external auditors on behalf of the Board. It considers the reappointment of the external auditors each year, as well as remuneration 
and other terms of engagement, and makes a recommendation to the Board. The last competitive audit review was in 2008, when 
PricewaterhouseCoopers LLP were reappointed by the Board on the recommendation of the Audit Committee. There are no contractual 
obligations that restrict the Audit Committee to recommend a particular firm for appointment as auditors.
nomination committee During the year, the membership of the Committee comprised: Timothy Holland‑Bosworth (Chairman), Tony Caplin and 
Kenneth McGeorge. The members of the Committee are considered by the Board to be independent Non‑executive Directors.
During the year, the Committee met on one occasion and the Chief Executive Officer and Chief Financial Officer were invited 
to attend. The Committee meets as necessary to make recommendations to the Board on all new Board appointments and 
to consider executive and Board succession planning. The Committee has written terms of reference which are available 
from the Company Secretary.
internal control
The Directors are responsible for the Group’s system of internal controls and for maintaining and reviewing its effectiveness. 
The Group’s systems and controls are designed to safeguard the Group’s assets and to ensure the reliability of information 
used within the business and for publication.
Systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide only 
reasonable and not absolute assurance against material misstatement or loss. The key features of the internal control systems, 
which operated throughout the period covered by financial statements and to the date of signing the accounts, are described below.
The Board has put in place an organisation structure with clearly defined lines of responsibility and delegation of authority 
to executive management. Individuals are formally made aware of their level of authority. The Group appoints experienced 
and professional staff of the necessary calibre to fulfil their allotted responsibilities.
Executive managers are required to produce a business plan for approval by the Board prior to the beginning of each financial 
year and detailed financial forecasts are formally produced during the year and reviewed by the Board.
Management accounts are produced each month and the financial results are measured against the business plan to identify 
any significant variations. The Board discusses financial and operational performance at its monthly meetings. 26
Alternative Networks plc 
Annual report and accounts 2009 
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corporate governance report continueD
internal control (continueD)
The Group has an internal audit function whose responsibilities include ensuring that internal controls are 
complied with. The Group’s internal controls framework is reinforced by the Group’s successful certification to 
both the ISO27001:2005 international information security standard and the ISO9001:2000 international quality 
management standard. During the year, four external ISO audits were conducted by the British Standards Institute 
and four billing and metering audits were conducted by the British Approvals Board for T elecommunications.
In addition to the above, the Group were also awarded the Metering and Billing certification by the 
British Approvals Board for Telecommunications for Mobile Services in July 2009.
The Group procedure for approving and controlling capital expenditure and investment appraisal requires 
approval of initial capital expenditure in the budgets by the Board. Approval of budgeted capital expenditure 
projects is made at various levels of senior management including the Board where required.
Throughout the year, the Group conducts an ongoing risk management evaluation process covering both 
financial and non‑financial risks. This involves senior management and Executive Directors identifying areas 
of perceived risk and the existing control mechanisms in place to monitor those risks. Through a series of 
management workshops, attended by all Executive Directors and senior executives, the Board has reached 
consensus on those risks facing the Group that are considered business critical. The Group has implemented, 
and continues to implement, actions intended to manage and mitigate those key risks. During 2010, the 
Board will continue to review its risks and implement the necessary mitigating steps as those risks evolve 
and change.
Financial rePorting A review of the performance and financial position of the Group is included in the Business Review on 
pages 10 to 17. The Board uses this, together with the Chairman’s Statement, Chief Executive Officer’s 
Review and the Directors’ Report, to present a balanced and clear assessment of the Group’s position 
and prospects. 
relations with shareholDers The Board is committed to and recognises the importance of effective communication with shareholders. 
Ongoing communication is achieved mainly through the publication of the Annual and Interim Reports, trading 
statements, the announcement of significant developments within the Group and the Annual General Meeting.
In addition to regular financial reporting, significant matters relating to trading or development of the business 
are released to the market by way of Stock Exchange announcements.
The Board is responsible for ensuring that dialogue with the shareholders takes place and is based on a mutual 
understanding of objectives. A series of meetings and presentations take place during the year with institutional 
investors to review the Group’s performance and prospects. These presentations are made available via 
the Company’s website.
The Annual General Meeting provides shareholders with an opportunity to meet the Chairman and other 
Directors, receive an update on the development of the business and to ask questions of the Board. 
The Annual Report and Accounts and the Notice of Annual General Meeting are sent to shareholders 
at least 21 days prior to the date of the Annual General Meeting. Shareholders have the opportunity 
to vote on each substantially different issue by the proposal of a separate resolution for each item 
of business. The results of the proxy votes received by the Group, including abstentions, are declared 
at the meeting, following votes by shareholders on a show of hands.
going concern
After considering the Group’s financial projections, borrowing facilities and other relevant financial matters, 
the Board is satisfied that on the date of approving the financial statements, that there is a reasonable 
expectation that the Group has adequate resources to continue in operational existence for the foreseeable 
future. For this reason the Directors continue to adopt the going concern basis in preparing the financial 
statements. The Group’s trading performance during these difficult economic conditions has been 
discussed in the Chairman’s and Chief Executive’s Statements.
tony caPlin chAirmAN of the Audit committee
7 december 2009  27
Alternative Networks plc 
Annual report and accounts 2009 
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remuneration report
scoPe oF the rePort The Remuneration Report summarises the Group’s remuneration policy and particularly its application 
in connection with the Directors. The report also describes how the Group applies the principles of good 
corporate governance in relation to Directors’ remuneration. This report is not mandatory for companies 
listed on AIM but has been voluntarily included as a matter of best practice. 
the remuneration committee The Remuneration Committee is appointed by the Board and comprises only Non‑executive Directors, 
including the Non‑executive Chairman. The Committee meets regularly to determine, on behalf of the 
Board, the framework of executive remuneration.
During the year, the membership of the Committee comprised: Kenneth McGeorge (Chairman), 
Tony Caplin and Timothy Holland‑Bosworth. The members of the Committee are considered 
by the Board to be independent Non‑executive Directors.
During the current year, the Committee met on three occasions, with the attendance of all members.
The Committee’s terms of reference are reviewed regularly and approved by the Board. These are available 
for inspection at the Group’s registered address. The members of this Committee do not have any conflicts 
from cross‑directorships that relate to the business of the Committee. The members do not have any day‑to‑day 
involvement in the running of the Group. Kenneth McGeorge is the sole member not regarded as being 
independent, as defined by the Combined Code on Corporate Governance, for the reason that he is the 
Group’s Non‑executive Chairman. However, he is considered to be independent by the Board.
To assist the work of the Committee, the views of the Chief Executive Officer, Chief Financial Officer 
and Head of Human Resources are also invited where appropriate. These individuals did not however 
participate in any decision related to their own remuneration.
remuneration Policy
The Group is committed to the governing objective of maximising shareholder value over time. Each year 
the remuneration framework and the packages of the Directors are reviewed to ensure they continue to 
achieve this objective.
The Group’s policy is to attract, retain and incentivise Executive Directors to run the Group and 
meet the expectations of shareholders whilst adopting a prudent approach to overall remuneration.
Basic salary anD BeneFits The Group’s policy for Executive Directors’ salaries is that they should be maintained at competitive levels 
for those in comparable positions, with variations to reflect individual performance, experience and job size. 
Benefits in kind consist of car allowances, private medical and health insurance, employer pension contributions 
and health club membership.
emPloyee BeneFit trust (eBt)
An EBT was established during the year ended 30 September 2005 and Jim Sewell, Edward Spurrier 
and Ben Marnham were each awarded interests in 638,400, 0.125p shares held by the trust.
These shares are held on trust for them absolutely subject to the trustees retaining a lien on the shares. 
The lien is in respect of the trustees’ obligation to settle the loan from the Company used to acquire the shares 
(which is the equivalent to £277,000 each, £831,000 being the total loan) plus any premium. The premium 
arises in the event that the lien is settled within the initial two year period and is equal to the increase in the 
value of the shares at that time.
Directors’ l ong term incentive Plan (ltiP)
An LTIP was established on the 25 April 2008. Under the scheme Jim Sewell, Edward Spurrier and 
Ben Marnham were each awarded share options which are subject to meeting specific performance 
criteria. As at the 30 September 2009, options were outstanding over 1,388,919 ordinary shares 
(2008: 1,388,919) under this scheme. 28
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
remuneration report continueD
all emPloyee share anD share oPtion Plans (note 29)
The Group’s Enterprise Management Incentive (EMI) scheme was adopted on the 22 December 2004 
(EMI 2004). Under the Group’s EMI scheme, options which are qualifying options under the EMI regime 
and also unapproved options may be granted. As at the 30 September 2009 there were no options 
outstanding (2008: 30,800).
A second EMI scheme was established on 18 January 2006 (EMI 2006). As at 30 September 2009, options 
were outstanding over 165,305 ordinary shares (2008: 288,574) under this scheme.
A third EMI scheme was established on 17 January 2007 (EMI 2007). As at 30 September 2009, options 
were outstanding over 913,067 ordinary shares (2008: 962,385) under this scheme.
A fourth EMI scheme was established on 3 July 2008 (EMI 2008). As at 30 September 2009, options were 
outstanding over 243,018 ordinary shares (2008: 243,018) under this scheme.
At 30 September 2009 options were outstanding over a total of 1,321,390 ordinary shares (2008: 1,524,777) 
under all four schemes.
Options under the EMI 2004 scheme were eligible to be exercised from 31 December 2006 based on the 
conditions that the option holder is still an employee of the Group and the Group had achieved certain 
performance criteria in the period 1 October 2004 to 30 September 2006. The exercise price was 25p 
per share. During the year ended 30 September 2009, the remaining 30,800 options were exercised.
Options under the EMI 2006 scheme were eligible to be exercised from 3 December 2008 based on the 
conditions that the option holder is still an employee of the Group and the Group had achieved certain 
performance criteria in the period 1 October 2005 to 30 September 2008. The exercise price is £1.025 
per share which was the market value at the date of the grant. During the year ended 30 September 2009, 
there were 123,269 options exercised and nil options lapsed.
Options under the EMI 2007 scheme can be exercised from 31 December 2009 based on the conditions 
that the option holder is still an employee of the Group and the Group has achieved certain performance 
criteria in the period 1 October 2006 to 30 September 2009. The exercise price is £1.505 per share which 
was the market value at the date of the grant. During the year ended 30 September 2009, there were nil 
options exercised and 49,318 options lapsed.
Options under the EMI 2008 scheme can be exercised from 3 July 2011 based on the conditions that the 
option holder is still an employee of Alternative Networks plc and the Group has achieved certain performance 
criteria in the period 1 October 2007 to 30 September 2010. The exercise price is £1.355 per share which 
was the market value at the date of the grant. During the year ended 30 September 2009, there were nil 
options exercised and nil options lapsed.
service agreements Each of the Executive Directors has a Service Agreement with the Group. These are rolling agreements which 
can be terminated by either party giving not less than six months’ notice in writing at any time. If the Group 
terminates the contract by notice but other than on giving full notice, the Service Agreements provide for the 
payment of the fixed amount equal to the salary and other contractual benefits for the unexpired proportion 
of the duration of the appointment or entitlement to notice, as the case may be. It is the Committee’s view 
that they should not change the term of the existing Directors’ Service Agreements.
non-executive Directors’ remuneration The remuneration of the Chairman and Non‑executive Directors is determined by the Board on the 
recommendation of the Chief Executive Officer on an annual basis and takes into account market rates 
based on independent advice, as required. The Chairman and Non‑executive Directors concerned do 
not participate in this process.
Tony Caplin, Timothy Holland‑Bosworth and Kenneth McGeorge have fixed one year appointments until 
19 January 2010. The appointments may be terminated by either party giving three months’ notice at any 
time without compensation.
As Chairman, Kenneth McGeorge is entitled to receive a fee of £34,320 per annum with no pension, 
bonus, benefits or share options.
The Non‑executive Directors, other than the Chairman, receive a basic fee of £22,880 per annum. 
The Non‑executive Directors do not participate in any incentive, pension or benefit scheme. 29
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
Directors’ remuneration       Salary and  
       fees paid or Bonus paid Pension  Other 2009 2008 
       receivable or receivable contributions benefits total total 
       £ £ £ £ £ £
K McGeorge       34,320  — — — 34,320 33,000
J Murray        267,713   22,350   14,400   22,962  327,425 411,950
E Spurrier      253,347  22,350   11,956   19,123  306,776 393,882
B Marnham       190,455   22,350   5,714   18,291  236,810 327,916
J Sewell        190,455   22,350   5,714   18,570  237,089 328,152
A Caplin        22,880  — — — 22,880 22,000
T Holland‑Bosworth       22,880  — — — 22,880 22,000
t otals       982,050 89,400 37,784 78,946 1,188,180 1,538,900
Directors’ share oPtions in alternative networks Plc
      Options at   Options at    
      1 October Awarded Options 30 September Option   
     Option 2008 in year exercised 2009 price  Exercise 
     scheme Number Number Number Number £  dates
B Marnham    EMI 64,500 — — 64,500 1.505 31 December 2009
E Spurrier    EMI 64,500 — — 64,500 1.505 31 December 2009
J Sewell     EMI 64,500 — — 64,500 1.505 31 December 2009
      Options at   Options at    
      1 October Awarded Options 30 September Option   
     Option 2008 in year exercised 2009 price  Exercise 
     scheme Number Number Number Number £  dates
B Marnham    LTIP 462,973 — — 462,973 0.125 25 April 2010
E Spurrier    LTIP 462,973 — — 462,973 0.125 25 April 2010
J Sewell     LTIP 462,973 — — 462,973 0.125 25 April 2010
Subject to the conditions described in the note overleaf on page 28.
In addition the above three Directors also have interests in an EBT as described above on page 27. 
Directors’ interests in the orDinary shares oF alternative networks Plc
 2009 2008 
 Number of shares Number of shares
J Murray         14,958,105 15,058,105
E Spurrier and family        2,498,277 2,898,277
J Sewell          1,689,191 1,889,191
B Marnham and family        1,689,191 1,889,191
Signed by and approved on behalf of the Board.
kenneth m cgeorge chAirmAN of the remuNerA tioN committee
7 december 2009 30
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
statement of Directors’ responsibilities
iN reSpect of the ANNu Al report ANd the fiNANciAl St AtemeNtS
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 the Group and Parent Company financial statements in accordance 
with IFRS as adopted by the European Union. Under Company law the Directors must not approve the 
financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the 
Group and the Company and of the profit or loss of the Group for that period. In preparing these financial 
statements, the Directors are required to:
A  select suitable accounting policies and then apply them consistently;
A  make judgements and accounting estimates that are reasonable and prudent;
A  state whether applicable IFRS as adopted by the European Union have been followed, subject 
to any material departures disclosed and explained in the financial statements; and
A  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 are sufficient to show and 
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position 
of the Company and the Group 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 Company and the Group 
and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation 
in the United Kingdom governing the preparation and dissemination of financial statements may differ 
from legislation in other jurisdictions.
By order of the Board.
eD warD sPurrier comp ANy Secret Ary ANd chief fiNANciAl officer
7 december 2009 31
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
We have audited the Group and Parent Company financial statements (the "financial statements") of Alternative 
Networks for the year ended 30 September 2009 which comprise the Consolidated and Company Balance 
Sheets, the Consolidated Income Statement, the Consolidated and Company Cash Flow Statement and the 
Consolidated and Company Statement of Changes in Equity and the related notes. The financial reporting 
framework that has been applied in their preparation is applicable law and International Financial Reporting 
Standards (IFRSs) as adopted by the European Union and, as regards the Parent Company financial statements, 
as applied in accordance with the provisions of the Companies Act 2006.
resPective resPonsiBilities oF Directors anD auDitors As explained more fully in the Directors’ Responsibilities Statement set out on page 30, 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 Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company’s members as a body 
in accordance with Sections 495 and 496 of the Companies Act 2006 and for no other purpose. We do not, 
in giving these opinions, accept or assume responsibility for any other purpose or to any other person to 
whom this report is shown or into whose hands it may come save where expressly agreed by our prior 
consent in writing.
scoPe oF the auDit oF the Financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient 
to give reasonable assurance that the financial statements are free from material misstatement, whether 
caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate 
to the Group’s and Parent Company’s circumstances and have been consistently applied and adequately 
disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall 
presentation of the financial statements.
oPinion on Financial statements In our opinion: 
A  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 September 2009 and of the Group’s profit and Group’s and Parent Company’s cash flows 
for the year then ended;
A  the Group financial statements have been properly prepared in accordance with IFRS as adopted by the 
European Union; 
A  the Parent Company financial statements have been properly prepared in accordance with IFRS as adopted 
by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
A  the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. 
oPinion on other matter PrescriBeD B y the comP anies act 2006
In our opinion the information given in the Directors’ Report 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 B y 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: 
A  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 
A  the Parent Company financial statements are not in agreement with the accounting records and returns; or
A  certain disclosures of Directors’ remuneration specified by law are not made; or
A  we have not received all the information and explanations we require for our audit.
nigel reynolDs (senior statutory a uDitor) 
For anD on BehalF oF PricewaterhousecooPers llP
chArtered AccouNt ANtS ANd St Atutory AuditorS
l oNdoN
7 december 2009
inDepenDent auDitors’ report
to the memberS of AlterNA tive NetworkS plc 32
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
        Year ended Year ended 
        30 September 30 September 
         2009 2008 
       Notes £’000 £’000
revenue          2, 4   89,676   93,707 
Cost of sales         (58,852) (60,913)
Gross profit        5  30,824   32,794 
Operating costs         (23,793) (24,039)
Operating profit        6  7,031   8,755 
Operating profit – analysed:    
Adjusted operating profit         8,986   10,433 
Share‑based payments       29 (565) (303)
Amortisation of purchased customer contracts and other    14 (1,220) (1,375)
intangibles (excluding computer software)    
Impairment of freehold property       (170) —
Operating profit          7,031   8,755 
Finance income        8  105   223 
Finance costs        9 (21) (77)
Profit on ordinary activities before taxation       7,115   8,901 
Taxation on profit on ordinary activities      10 (2,024) (2,402)
Profit on ordinary activities after taxation       5,091   6,499 
Attributable to:    
Equity shareholders of the Company        5,091   6,497 
Minority interest         —  2 
         5,091   6,499 
Earnings per ordinary share   
Basic       13 12.0p 14.3p
Diluted       13 11.6p 13.7p
consoliD ateD income statement for the yeAr eNded 30 September 2009 33
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
       Group  Company
      30 September 30 September 30 September 30 September 
      2009 2008 2009 2008 
     Notes £’000 £’000 £’000 £’000
ASSetS     
Non-current assets     
Intangible assets     14  17,755   19,416   2,509   2,742 
Property, plant and equipment    15  2,708   2,204   1,939   2,082 
Investments     16 — —  11,495   11,834 
Deferred tax asset     17  428   675   355   580 
Assets held for resale    18 —  887  — —
Property deposits       14   14   1   2 
       20,905   23,196   16,299   17,240 
current assets     
Inventories     19  168   382   2   9 
Trade and other receivables    20  12,535   14,450   13,383   14,073 
Cash and cash equivalents    21  9,015   4,227   8,478   3,216 
       21,718   19,059   21,863   17,298 
t otal assets       42,623   42,255   38,162   34,538 
eQuity ANd liAbilitieS     
Equity     
Called up share capital    22  56   57   56   57 
Share premium       4,855   4,721   4,855   4,721 
Capital redemption reserve      4   3   4   3 
Merger reserve       1,905   1,905  — — 
Treasury shares held     (1,422) (1,422) (1,422) (1,422)
Retained earnings       16,607   14,791   16,462   14,140 
       22,005   20,055   19,955   17,499 
Current liabilities     
Borrowings       50   35   50   35 
Contingent consideration    25 —  97  —  97 
Current tax liabilities       1,335   1,380   1,224   1,332 
Trade and other payables    23  17,269   18,391   16,059   14,621 
       18,654   19,903   17,333   16,085 
Non-current liabilities     
Borrowings     24  874   960   874   954 
Deferred tax liabilities    17  1,090   1,337  — —
       1,964   2,297   874   954 
Total liabilities       20,618   22,200   18,207   17,039 
Total equity and liabilities      42,623   42,255   38,162   34,538 
The financial statements on pages 32 to 60 were approved by the Board of Directors on 7 December 2009 
and were signed on its behalf by:
James murray chief executive officer
7 december 2009
consoliD ateD anD company balance sheets
AS At 30 September 2009 34
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
   Capital  Shares 
 Share Share redemption Merger held in Retained  Minority Total 
 capital premium reserve  reserve treasury earnings Total  interest equity 
 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 October 2007  60   4,577  —  1,905  —  12,217   18,759   7  18,766 
Shares issued —  19  — — — —  19  —  19 
IFRS 2 share‑based payments — — — — —  303   303  —  303 
Share buy‑back (3) —  3  — (1,422) (2,681) (4,103) — (4,103)
Shares issued to  
purchase minority interest —  188  — — — —  188  (9)  179 
Share expenses — (63) — — — — (63) — (63)
Deferred tax on share options — — — — —  266   266  —  266 
Profit for the year — — — — —  6,497   6,497   2   6,499 
Dividends paid — — — — — (1,811) (1,811) — (1,811)
b alance at  
30 September 2008  57   4,721   3   1,905  (1,422)  14,791   20,055  —  20,055 
Shares issued —  134  — — — —  134  —  134 
IFRS 2 share‑based payments — — — — —  565   565  —  565 
Share buy‑back (1) —  1  — — (1,356) (1,356) — (1,356)
Deferred tax on share options — — — — — (396) (396) — (396)
Profit for the year — — — — —  5,091   5,091  —  5,091 
Dividends paid — — — — — (2,088) (2,088) — (2,088)
balance at          
30 September 2009  56   4,855   4   1,905  (1,422)  16,607   22,005  —  22,005 
The balance classified as share capital includes the proceeds arising on issue of the Company’s equity share 
capital, comprising 0.125p ordinary shares and the cancellation of shares purchased during the year.
Capital redemption reserve arose from the purchase of own share capital.
The merger reserve results from the previous acquisitions of Integrated Communications for Business (UK) Limited 
and The Telecom Centre Limited and represents the difference between the value of the shares acquired 
(nominal value plus related share premium) and the nominal value of the shares issued.
Shares acquired in relation to the employee Share Incentive Plan are held in treasury until such time as the 
awards vest. At 30 September 2009 the number of shares held in treasury was 1,000,000 (2008: 1,000,000). 
These had a nominal value of £1,250 and a market value of £1.04 million. 
consoliD ateD statement of changes in equity
for the yeAr eNded 30 September 2009 35
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
      Capital Shares  
    Share Share redemption  held in Retained 
    capital premium reserve treasury earnings Total 
    £’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 October 2007    60   4,577  — —  9,623   14,260 
Shares issued    —  19  — — —  19 
IFRS 2 share‑based payments   — — — —  303   303 
Share buy‑back    (3) —  3  (1,422) (2,681) (4,103)
Shares issued to purchase minority interest —  188  — — —  188 
Share expenses    — (63) — — — (63)
Deferred tax on share options   — — — —  266   266 
Profit for the year    — — — —  8,440   8,440 
Dividends paid    — — — — (1,811) (1,811)
Balance at 30 September 2008   57   4,721   3  (1,422)  14,140   17,499 
Shares issued    —  134  — — —  134 
IFRS 2 share‑based payments   — — — —  565   565 
Share buy‑back    (1) —  1  — (1,356) (1,356)
Deferred tax on share options   — — — — (396) (396)
Profit for the year    — — — —  5,597   5,597 
Dividends paid    — — — — (2,088) (2,088)
Balance at 30 September 2009   56   4,855   4  (1,422)  16,462   19,955 
company statement of changes in equity
for the yeAr eNded 30 September 2009 36
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
        Year ended Year ended 
        30 September 30 September 
         2009 2008 
       Notes £’000 £’000
Cash flows from operating activities   
Cash generated from operations     27  10,605   10,335 
Income tax paid        (2,458) (1,940)
Interest paid        (21) (77)
Net cash inflow from operating activities       8,126   8,318 
Cash flows from investing activities   
Purchase of property, plant and equipment    15 (170) (510)
Purchase of intangible assets (software)     14 (172) (409)
Proceeds from sale of property, plant and equipment      45  —
Interest received         98   223 
Purchase of subsidiary undertaking      (58) (276)
Proceeds from vendors under sale and purchase agreement     300  —
Net cash generated/(used) in investing activities      43  (972)
Cash flows from financing activities   
Dividends paid       12 (2,088) (1,811)
Proceeds from issue of share capital       134   19 
Payments made for share buy‑backs      (1,356) (4,102)
Share expenses        — (63)
Repayments of borrowings       (71) (584)
Net cash used in financing activities      (3,381) (6,541)
Increase in cash and cash equivalents       4,788   805 
Cash and cash equivalents at start of period      4,227   3,422 
Cash and cash equivalents at end of period      9,015   4,227 
consoliD ateD cash flow statement for the yeAr eNded 30 September 2009 37
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
        Year ended Year ended 
        30 September 30 September 
         2009 2008 
       Notes £’000 £’000
Cash flows from operating activities 
Cash generated from operations     27  10,938   9,416 
Income tax paid        (2,311) (1,831)
Interest paid        (21) (69)
Net cash inflow from operating activities       8,606   7,516 
Cash flows from investing activities   
Purchase of property, plant and equipment    15 (154) (466)
Purchase of intangible assets (software)     14 (172) (385)
Proceeds from sale of property, plant and equipment      9  —
Interest received         106   207 
Purchase of subsidiary undertaking      (58) (276)
Proceeds from vendors under sale and purchase agreement     300  —
Net cash generated in (absorbed by) investing activities     31  (920)
Cash flows from financing activities   
Dividends paid       12 (2,088) (1,811)
Proceeds from issue of share capital       134   19 
Payments made for share buy‑backs      (1,356) (4,102)
Share expenses        — (63)
Repayments of borrowings       (65) (33)
Net cash used in financing activities      (3,375) (5,990)
Increase in cash and cash equivalents       5,262   606 
Cash and cash equivalents at start of year       3,216   2,610 
Cash and cash equivalents at end of year      8,478   3,216 
company cash flow statement for the yeAr eNded 30 September 2009 38
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
1 Basis oF PreP aration Alternative Networks plc is a company incorporated and domiciled in the United Kingdom under 
the Companies Act 2006. The address of the registered office is Chatfield Court, 56 Chatfield Road, 
London SW11 3UL. 
These financial statements have been prepared in accordance with IFRS as adopted by the EU and IFRIC 
interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The financial 
statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting 
estimates. It also requires management to exercise its judgement in the process of applying the Company's 
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions 
and estimates are significant to the financial statements are disclosed in Note 2.
2 PrinciP al accounting Policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. 
These policies have been consistently applied to all the years presented, unless otherwise stated.
AmeNdmeNtS to publiShed St ANd ArdS effective iN 2009
Amendment to IAS 39 and IFRS 7 “Reclassification of financial assets”. This standard does not have 
any impact on the Group’s financial statements.
IFRIC 12 “Service concession arrangements”. This standard does not have any impact on the Group’s 
or Company’s financial statements.
IFRIC 13 “Customer loyalty programmes”. This standard does not have any impact on the Group’s 
or Company’s financial statements.
IFRIC 14 IAS 19 “The limit on a defined benefit asset, minimum funding requirements and their interaction”. 
This standard does not have any impact on the Group’s or Company’s financial statements.
IFRIC 16 “Hedges of a net investment in a foreign operation”. This standard does not have any impact 
on the Group’s or Company’s financial statements.
St ANd ArdS, iNterpret AtioNS ANd AmeNdmeNtS which Are Not yet effective ANd hA ve 
Not beeN eArly Adopted by the group or comp ANy The following standards and amendments to current standards have been published and are mandatory 
for accounting periods beginning on or after 1 October 2009, but have not been early adopted by the 
Group or Company: 
IAS 1 (revised) “Presentation of financial statements”. This standard requires the Group to choose whether 
to rename the primary statements and whether to present the new statement of comprehensive income 
as a single statement, replacing the income statement, or as two statements.
IAS 23 (amendment) “Borrowing costs” (effective from 1 January 2009). This is not expected to have 
a material effect on the results of the Group.
IFRS 8 “Operating segments” (effective from 1 January 2009) uses a “management approach” under which 
segment information is presented on the basis as that used for internal reporting purposes. This standard 
will require additional disclosures to be added into the financial statements when it comes into effect.
IFRS 3 (revised) “Business combinations” (effective from 1 July 2009) has been amended in relation 
to the accounting for business combinations. This standard will have an impact on the Group’s accounting 
for acquisitions and disposals.
St ANd ArdS, iNterpret AtioNS ANd AmeNdmeNtS which Are Not yet effective ANd Not 
relev ANt to the group’S operA tioNS
The following interpretations to current standards have been published and are mandatory for accounting 
periods beginning on or after 1 October 2009, but are not relevant to the Group’s operations:
IFRS 2 (amendment) “Share‑based payments”
IAS 27 (revised) “Consolidated and separate financial statements”
IAS 32 (amendment) “Financial instruments: presentation”
IFRIC 15 “Agreements for the construction of real estate”
IAS 23 (amendment) “Annual improvements to IFRS”
notes to the financial statements for the yeAr eNded 30 September 2009 39
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
2 PrinciP al accounting Policies (continueD)
bASiS of coNSolid AtioN
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying 
a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable 
or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the 
date on which control is transferred to the Group. They are de‑consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition 
is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, 
plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in 
a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority 
interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired 
is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the 
difference is recognised directly in the income statement.
Inter‑company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised 
losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries 
have been changed where necessary to ensure consistency with the policies adopted by the Group.
reveNue recogNitioN
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and can be reliably measured. 
The following specific recognition criteria must also be met before revenue is recognised:
Revenue from calls, which excludes value added tax and trade discounts, is recognised in the income statement at the time the 
call is made with the exception of international roamed calls which are recognised when the data is supplied by the UK networks. 
Calls made in the year, but not billed by year end, are accrued within receivables as accrued income with the exception of international 
roamed calls as noted above.
Revenue from line rentals is recognised in the month that the charge relates to, commencing with a full month’s charge 
in the month of connection. Revenue and related costs from the sale of handsets are recognised on the date of connection.
Connection commissions received by mobile network operators are recognised when the customer is connected to the mobile 
network after providing for expected future clawbacks. Mobile commissions in respect of ARPU are recognised at the end of the 
relevant performance period.
Revenue and related costs from the sale of accessories are recognised when despatched.
Revenue arising from the provision of internet and other services is recognised evenly over the periods in which the service 
is provided to the customer.
Income and related expenditure is recognised upon completion of work for systems installations, and maintenance income 
in respect of systems is recognised evenly over the period to which it relates.
Interest income is recognised on an accruals basis.
property , plANt ANd eQuipmeNt
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. Cost includes the 
original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. 
Depreciation, down to residual value, is calculated on a straight‑line basis over the estimated useful lives of the asset as follows:
Building element of long leaseholds  2% per annum 
Leasehold improvements    over the lease term 
Equipment, fixtures and fittings  20%–33% per annum 
Motor vehicles    25% per annum
The useful economic lives attributable to each class of asset are reviewed and adjusted if appropriate at each balance sheet date.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances 
indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the 
estimated recoverable amount, the assets or cash‑generating units are written down to their recoverable amount.
An item of property, plant and equipment is removed upon disposal or when no future economic benefits are expected to arise 
from the continued use of the asset. Any gain or loss arising on de‑recognition of the asset (calculated as the difference between 
the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year the item is derecognised.
Land is not depreciated and is held at historical cost. 40
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
notes to the financial statements continueD
for the yeAr eNded 30 September 2009
2 PrinciP al accounting Policies (continueD)
leASeS
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are 
classified as operating leases. Operating lease payments are recognised as an expense in the income 
statement on a straight‑line basis over the lease term.
iNt ANgible ASSetS
goodwill is accounted for by recognising identifiable assets (including previously unrecognised 
intangible assets) and liabilities (including contingent liabilities and excluding future restructuring) of the 
acquired business at fair value. Goodwill is initially measured at cost, being the excess of the fair value of 
payments made, assets transferred and future payments, over the Group's interest in the net fair value of 
the acquiree's identifiable assets, liabilities and contingent liabilities. The results of the acquired entities 
are included in the Group’s results from the date when control of the Company passes to the Group.
Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances 
indicate that the carrying value of goodwill assigned to a cash‑generating unit may be impaired. Impairment 
is determined by assessing the recoverable amount of the cash‑generating unit, to which the goodwill relates. 
Where recoverable amount of the cash‑generating unit is less than the carrying amount, an impairment loss 
is recognised. In the event that management forecasts do not facilitate accurate impairment testing at divisional 
level, goodwill will be held centrally and reflected as such in the segment reporting.
purchASed cuStomer coNtrActS are capitalised at cost and amortised on a straight‑line basis over 
their estimated useful economic life, from the date of acquisition, as considered reasonable by the Directors.
Softw Are ANd Softw Are liceNceS includes computer software that is not integral to a related item 
of hardware. These assets are stated at cost less accumulated amortisation and any impairment in value. 
Amortisation is calculated on straight‑line basis over the estimated useful life of the asset.
INTANGIBlE ASSETS – OThEr includes the fair value of customer relationships, supplier relationships 
and trade names (acquired after 1 October 2006) determined by the net present value of the future cash flow 
benefits anticipated to arise from the intangible assets less accumulated amortisation and impairment losses.
AmortiSA tioN of other iNt ANgibleS is charged to the income statement on a straight ‑line basis 
over the estimated useful lives of intangible assets. Goodwill is tested systematically for impairment at each 
annual balance sheet date. Other intangible assets are amortised from the date that they are available for 
use. The estimated useful lives are as follows:
Customer relationships  7 years 
Trade name   1.5 years 
Purchased customer contracts 3–5 years 
Software    3–5 years
iNveStmeNtS
All investments are initially recognised at cost, being the fair value of the consideration given and including 
acquisition charges associated with the investment. Investments are tested for impairment at each reporting 
date or if events indicate that the carrying value has been diminished.
iNveNtorieS
Inventories are valued at the lower of cost and net realisable value after making allowance for any obsolete 
or slow moving items. Net realisable value is reviewed regularly to ensure accurate carrying values. Cost is 
determined on a first‑in‑first‑out basis and includes transportation and handling costs.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated 
costs necessary to make the sale.
Work in progress is valued at the lower of cost and net realisable value less any payments received on account. 
Costs include materials and other expenses incurred on the contract at the date of the balance sheet. 41
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
2 PrinciP al accounting Policies (continueD)
trAde ANd other receiv AbleS
Trade receivables, which generally have 14–60 day terms, are recognised and carried at original invoice amount less provision 
for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group 
will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of 
the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are 
considered indicators that the trade receivable is impaired. The provision is the difference between the asset’s carrying amount 
and the original invoice amount less bad debts written‑off. The carrying amount of the asset is reduced through the use of the provision 
and the amount of the loss is recognised in the income statement. When a trade receivable is uncollectible, it is written‑off against the 
allowance account for trade receivables. Subsequent recoveries of amounts previously written‑off are credited in the income statement. 
cASh ANd cASh eQuiv AleNtS
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short‑term deposits. 
NoN-curreNt ASSetS held for re-SAle
Non‑current assets are classified as held for re‑sale if their carrying amount will be recovered through sale rather than continuing 
use. The condition is regarded as not in use only when the sale is highly probable and the asset is available for immediate sale 
in its present condition. The sale should be expected to be complete within one year of the date of classification.
Non‑current assets classified as held for sale are measured at the lower of carrying amount and their value less cost to sell.
derecogNitioN of fiNANciAl ASSetS ANd liAbilitieS
A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.
trAde p Ay AbleS
Trade payables are stated at their nominal value, recognised initially at fair value and subsequently valued at amortised cost.
ShAre cApit Al
Equity instruments issued by the Group are recorded at proceeds received, net of direct issue costs.
curreNt t AxA tioN
Current income tax expense is recognised based on management’s best estimate of the weighted average annual tax rate 
expected for the full financial year.
SegmeNt Al reportiNg
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and 
returns that are different from those of other business segments. A geographical segment is engaged in providing products or 
services within a particular economic environment that are subject to risks and rewards that are different from those of segments 
operating in other economic environments.
deferred t AxA tioN
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets 
and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted 
for, if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of 
the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) 
that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred 
income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which 
the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where 
the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference 
will not reverse in the foreseeable future.
peNSioNS ANd other poSt-employmeNt beNefitS
The Group operates a defined contribution scheme and contributes to an independent stakeholder pension. Contributions 
are recognised as an expense in the income statement as they become payable in accordance with the rules of the scheme.
employee beNefitS
In accordance with IAS 19, the Group provides for accrued holiday benefit. The cost is measured as the additional amount 
that the Group expects to pay as a result of the unused holiday entitlement that has accumulated at the balance sheet date. 42
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
notes to the financial statements continueD
for the yeAr eNded 30 September 2009
2 PrinciP al accounting Policies (continueD)
ShAre-bASed p AymeNt trANSActioNS
The Group’s management awards certain employees bonuses in the form of equity‑settled, share‑based 
compensation plans on a discretionary basis. These options are subject to between two and three‑year 
vesting conditions. 
The fair value of the employee services received in exchange for the grant of the options is recognised as an 
expense. The total amount to be expensed over the vesting period is determined by reference to the fair value 
of the options granted, excluding the impact of any non‑market vesting conditions (for example, profitability 
and sales growth targets). Non‑market vesting conditions are included in assumptions about the number of 
options that are expected to vest. At each balance sheet date, the entity revises its estimates of the number 
of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the 
income statement, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital 
(nominal value) and share premium when the options are exercised.
The Group has applied IFRS 2 “Share‑based payments” and has adopted the Black‑Scholes model for 
the purposes of computing “fair value” for the EMI schemes. The LTIP scheme has been valued using 
the Monte Carlo model (Note 29).
Deferred tax is also provided based upon the expected future tax deductions relating to share‑based 
payment transactions and is recognised over the vesting period of the scheme concerned.
SigNificANt AccouNtiNg judgemeNtS, eStimA teS ANd ASSumptioNS
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance 
sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets 
and liabilities within the next financial year are discussed below.
impAirmeNt of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation 
of the “value in use” of the cash‑generating units to which the goodwill is allocated. Estimating a value in use 
amount requires management to make an estimate of the expected future cash flows from the cash‑generating 
unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. 
deferred t Ax ASSetS
Deferred tax assets are recognised for timing differences to the extent that it is more likely than not that taxable 
profit will be available against which the timing differences can be utilised. Management judgement is required 
to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level 
of future taxable profits together with future tax planning strategies.
ShAre-bASed p AymeNt
The estimation of the fair value of share options and other equity instruments at the date of their grant requires 
management to make estimates concerning the number of employees likely to exercise together with the 
expected volatility of, and dividends payable on the underlying shares and the time at which employees 
are likely to exercise vested options.
receiv AbleS
Debts are recognised to the extent that they are judged recoverable. Management reviews are performed 
to estimate the level of provision required for irrecoverable debt. Provisions are made specifically against 
invoices where recoverability is uncertain.
3 Financial risk management
The Group’s operations expose it to a variety of financial risks. The Group has in place a risk management 
programme that seeks to limit adverse effects on the financial performance of the Group by using a mix 
of financial instruments.
foreigN exchANge riSk 
The Group is not exposed to foreign exchange risk as the Group operates almost wholly within the 
United Kingdom. The Group has no exposure to foreign currencies as no billing is carried out in foreign 
currencies. In addition, all of the Company assets and liabilities are held in Pounds Sterling so sensitivity 
analysis is deemed unnecessary regarding foreign exchange risk. 43
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
3 Financial risk management (continueD)
iNtereSt rA te riSk
Although the Group has interest‑bearing assets, the Group’s income and operating cash flows are substantially independent 
of changes in market interest rates, due to the nature of the underlying business. 
If interest rates had been 0.5% higher/lower and all other variables were held constant, the Group’s profit for the period would 
increase/decrease by £45,000 (2008: £20,000). This is attributable to the Group’s exposure to interest rates on its variable rate 
borrowings and cash deposits.
credit rA te riSk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. 
The Group has adopted a policy of only dealing with credit worthy counterparties and this policy has been implemented by 
requiring staff to carry out appropriate credit checks on customers before sales commence. The amount of exposure to any 
individual counterparty is subject to a limit, which is reassessed at least annually. The Group also insures all debts greater 
than £3,000 where accepted, with a leading credit insurance company.
Trade receivables consist of a large number of customers, spread across diverse industries across the United Kingdom. Ongoing 
credit evaluation is performed on the financial condition of accounts receivable. The Group does not have any significant credit risk 
exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties 
as having similar characteristics if they are connected entities.
Credit risk may also arise from deposits with banks. It is the Group’s policy that deposits are only made with banks that have high 
credit scores and deposits are split between multiple banks.
liQuidity riSk
Ultimate responsibility for liquidity risk management rests with the Board of Directors. They have built an appropriate liquidity risk 
management framework for the management of the Group’s short, medium and long‑term funding and liquidity risk management 
requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities 
through cash flow forecasting, acquisition planning and monitoring working capital and capital expenditure requirements on an 
ongoing basis. 
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the 
balance to the contractual maturity date. These amounts disclosed in the table are the contracted undiscounted cash flows. 
Discounting is not required as this has no material effect on the financial statements.
group
            More 
         Within 1 year 1–2 years 2–5 years  than 5 years 
 Year ended 30 September 2009       £’000 £’000 £’000 £’000
borrowings        50   51   156   667 
Trade and other payables        17,269  — — —
Current tax liabilities        1,335  — — —
            More 
         Within 1 year 1–2 years 2–5 years than 5 years 
Year ended 30 September 2008       £’000 £’000 £’000 £’000
Borrowings         35   43   127   790 
Trade and other payables        18,391  — — —
Current tax liabilities         1,380  — — —
Contingent consideration        97  — — —
comp ANy            More 
         Within 1 year 1–2 years 2–5 years  than 5 years 
 Year ended 30 September 2009       £’000 £’000 £’000 £’000
borrowings        50   51   156   667 
Trade and other payables        16,059  — — —
Current tax liabilities        1,224  — — —
            More 
         Within 1 year 1–2 years 2–5 years than 5 years 
Year ended 30 September 2008       £’000 £’000 £’000 £’000
Borrowings         35   37   127   790 
Trade and other payables        14,621  — — —
Current tax liabilities         1,332  — — —
Contingent consideration        97  — — — 44
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
notes to the financial statements continueD
for the yeAr eNded 30 September 2009
3 Financial risk management (continueD)
cApit Al riSk mANAgemeNt 
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going 
concern in order to provide returns to shareholders. The Group defines capital as share capital plus reserves. 
The Group is not subject to any externally imposed capital requirements.
4 segmental inFormation In accordance with IAS 14 “Segment reporting” and the entity’s risks and returns, which are reflected within 
the internal financial reporting structures of the Group, the Board considers that the primary reporting format is 
business segment. There are two business segments, being the Network Services division and the Advanced 
Solutions division. Disclosures are given for each of the business segments below.
Risks and rewards associated with revenue streams within these two segments are deemed to be materially 
consistent, hence further breakdown of the individual components is not given. Since all sales are made within 
the United Kingdom, the Group does not consider any secondary segmental reporting to be appropriate.
        Network  Advanced 
        Services  Solutions Total 
 Year ended 30 September 2009      £’000 £’000 £’000
t otal segment revenue       75,390   14,286   89,676 
Adjusted operating profit       8,252   734   8,986 
Allocated Group charges     
Amortisation of intangibles excluding computer software (Note 14)  (957) (263) (1,220)
Impairment of freehold property (Note 15)     (143) (27) (170)
Share‑based payments      (565) — (565)
Operating profit        6,587   445   7,031 
Finance income        95   10   105 
Finance costs       (21) — (21)
Taxation        (1,882) (142) (2,024)
Profit for the year        4,779   313   5,091 
ebitd A         8,080  828   8,907 
Other information     
Segment assets        37,755   4,868   42,623 
Segment liabilities        16,053  4,565   20,618 
Capital expenditure (including intangibles)      328   15   343 
Depreciation and amortisation       1,493   383   1,876 
        Network  Advanced 
        Services  Solutions Total 
 Year ended 30 September 2008      £’000 £’000 £’000
t otal segment revenue       78,519   15,188   93,707 
Adjusted operating profit       9,001   1,432   10,433 
Allocated Group charges   
Amortisation of intangibles excluding computer software (Note 14)  (1,037) (338) (1,375)
Share‑based payments      (303) —  (303)
Operating profit        7,661   1,094   8,755 
Finance income        161   62   223 
Finance costs       (22) (54) (77)
Taxation        (2,258) (145) (2,402)
Profit for the year        5,542   957   6,499 
ebitd A         9,167   1,583   10,750 
Other information   
Segment assets        34,634   7,621   42,255 
Segment liabilities        14,899   7,300   22,199 
Capital expenditure (including intangibles)      851   68   919 
Depreciation and amortisation       1,505   490   1,995  45
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
5 analysis oF cost oF sales, gross ProFit anD aDministrative exPenses           30 September 30 September  
           2009  2008 
            £’000  £’000
Total turnover          89,676 93,707
Cost of sales          (58,852) (60,913)
Gross profit          30,824 32,794
Selling and distribution costs         (9,319) (9,225)
Administrative expenses         (14,474) (14,814)
Operating profit          7,031 8,755
6 oPerating ProFit Operating profit is stated after charging/(crediting):
 30 September  30 September 
 2009 2008 
  £’000  £’000
Depreciation of property, plant and equipment       375  358 
Amortisation of intangible assets        1,501  1,637 
(Profit)/loss on disposal of fixed assets          (45) 3 
Operating lease charges – land and buildings        581  532 
Operating lease charges – motor vehicles        34  —
Auditors’ remuneration  
– fees payable to the Company’s auditors for the audit of Parent Company and consolidated accounts  68  76 
– fees payable to the Company’s auditors for the audit of the Company’s subsidiaries pursuant to legislation  20  13 
Fees payable to the Company’s auditors and associates for other services:  
– services relating to taxation         — 60 
– all other services          5  31 
7 key management costs anD emPloyee inFormation Key management is defined as members of the Group’s Operational Board as well as Executive Board members.
           30 September  30 September 
           2009 2008 
            £’000  £’000
Key management compensation  
Salaries and short‑term employee benefits         2,145   2,375 
Post‑employment benefits          61   60 
Share‑based payments          461   209 
            2,667   2,644 
           30 September  30 September 
           2009 2008 
            £’000  £’000
directors’ aggregate emoluments  
Salaries and bonuses          1,071   1,331 
Contributions to money purchase pension scheme        38   36 
            1,109   1,367 
The amounts set out above include remuneration in respect of the highest paid Director of £294,000 (2008: £366,000).
The average monthly number of persons (including Executive Directors) employed by the Group and Company during the year was:
         Group  Company
         30 September 30 September 30 September 30 September 
         2009  2008 2009 2008
By activity    
Selling and distribution        216   235   120   143 
Administration         184   195   159   168 
          400   430   279   311  46
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
notes to the financial statements continueD
for the yeAr eNded 30 September 2009
8 Finance income
         30 September  30 September 
         2009 2008 
          £’000  £’000
 Interest receivable on bank deposits      105  223 
9 Finance costs
         30 September  30 September 
         2009 2008 
          £’000  £’000
Interest payable on bank loans        21   77 
10 t axation on ProFit on orDinary activities
         30 September  30 September 
         2009 2008 
          £’000  £’000
Current tax
Tax on profit in the year        2,413  2,595 
Adjustments in respect of prior years      7  (158)
Total current tax        2,420  2,437 
Deferred tax  
Origination and reversal of timing differences     (396) (407)
Utilisation of tax losses       — 372 
Total deferred tax credit       (396) (35)
Total tax charge        2,024  2,402 
The current tax assessed for the period is higher (2008: lower) than the average rate of corporation tax in the 
UK of 28% (2008: 29%) applied to the profits before tax for the year. The differences are explained below:
         30 September  30 September 
         2009 2008 
          £’000  £’000
Profit on ordinary activities before tax      7,115  8,901 
Profit on ordinary activities multiplied by standard  
rate of corporation tax in the UK of 28% (2008: 29%)     1,992  2,581 
Effects of:  
Expenses not deductible for tax purposes      14  12 
Schedule 23 deduction in respect of share options     (26) (27)
Impairment of freehold property      48  —
Other timing differences       (11) (6)
Adjustments in respect of prior years      7  (158)
Total tax charge        2,024  2,402 
11 ProFit For the Financial year
As permitted by Section 408 of the Companies Act 2006, the Parent Company’s income statement has not been 
shown separately in these financial statements. The Parent Company’s profit after taxation for the financial 
year was £5,597,000 (2008: £8,440,000). Last year’s result includes an inter‑company dividend of £3,008,000. 47
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
12 DiviDenDs           30 September  30 September 
           2009 2008 
            £’000  £’000
2008 final paid – 3.10p (2007: 2.30p) per 0.125p ordinary share       1,383   1,096 
2009 interim paid – 1.60p (2008: 1.50p) per 0.125p ordinary share      705   715 
            2,088   1,811 
The 2008 proposed final dividend of 3.10p per 0.125p ordinary share was paid on 29 January 2009. The amount of dividend paid 
was £1,383,000 (2007: £1,096,000). 
The Directors also paid a 2009 interim dividend of 1.60p per 0.125p ordinary share, with a total payment value of £705,000 
(2008: £715,000). This was paid on 17 July 2009 to shareholders on the register on 3 July 2009.
In addition, the Directors are proposing a final dividend in respect of the financial year ended 30 September 2009 of 3.50p per 0.125p 
ordinary share which will absorb an estimated £1,552,000 of shareholders’ funds. Assuming it is approved by the shareholders 
at the Annual General Meeting on 25 January 2010, it will be paid on 26 January 2010 to shareholders who are on the register 
of members at 18 December 2009.
13 earnings Per share
The calculation of basic and fully diluted earnings per ordinary share is based on the profit attributable to equity holders of the 
Company divided by the weighted average number of ordinary shares in issue during the year.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all 
dilutive potential ordinary shares. The Group has one category of potential ordinary shares: those share options granted to employees 
where the exercise price is less than the average price of the Company’s ordinary share during the year.
The profit and weighted average number of shares used in the calculations are set out below:
        Weighted average 
       Profit attributable  of 0.00125p Per share 
       to shareholders ordinary shares amount 
Basic and fully diluted earnings per share      £’000 Number Pence
2009 earnings per share – basic     5,091   42,541,495  12.0 
Potentially dilutive shares     —  1,292,806  (0.4)
2009 earnings per share – diluted     5,091   43,834,301  11.6 
2008 earnings per share – basic      6,497   45,337,790  14.3 
Potentially dilutive shares      —  1,955,157  (0.6)
2008 earnings per share – diluted      6,497   47,292,947  13.7 
The adjusted earnings per share is based on the adjusted profit before tax as set out in Note 32, and the weighted average 
number of shares as described above.
        Weighted average 
       Adjusted of 0.00125p Per share 
       profit ordinary shares amount 
Basic and fully diluted earnings per share      £’000 Number Pence
2009 earnings per share – basic     6,113   42,541,495  14.4 
Potentially dilutive shares     —  1,292,806  (0.5)
2009 earnings per share – diluted     6,113   43,834,301  13.9 
2008 earnings per share – basic      7,462   45,337,790  16.5 
Potentially dilutive shares      —  1,955,157  (0.7)
2008 earnings per share – diluted      7,462   47,292,947  15.8 
Share option costs included within adjusted profit attributable to shareholders are reducing the earnings per share in 2009 
by 0.9p (2008: 0.4p).
As in prior periods, the calculation of the weighted average number of shares in issue excludes the shares held by the Alternative 
Networks Employee Benefit Trust of 1,915,200. These shares are then added to the total of extant options when calculating the 
fully diluted weighted average number of shares.
There were 44,950,621 shares in issue at 30 September 2009 including 1,000,000 shares held in treasury. On 30 September 2008 
there were 45,963,355 shares (inclusive of 1,000,000 shares held in treasury). The weighted average number of shares during the 
year was 42,541,495 (2008: 45,337,790).
The potentially dilutive shares figure does not include shares relating to the LTIP (Note 29) as these options include a total 
shareholder return test which is not being met as at 30 September 2009. 48
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
notes to the financial statements continueD
for the yeAr eNded 30 September 2009
14 intangiBle assets group
      Purchased  
      customer  Computer Other 
      contracts software intangibles Goodwill Total  
      £’000 £’000 £’000 £’000 £’000
cost     
At 1 October 2007     1,662  1,060  5,865  12,313  20,900 
Fair value adjustments    — — — 345  345 
Additions      — 409  — 316  725 
At 1 October 2008     1,662  1,469  5,865  12,974  21,970 
Additions      — 172  — — 172 
Adjustment to contingent consideration   — — — (339) (339)
Transfers from tangibles (Note 15)   — 26  — — 26 
At 30 September 2009    1,662  1,667  5,865  12,635  21,829 
Amortisation     
At 1 October 2007      454  377  86  — 917 
Charge for period     341  262  1,034  — 1,637 
At 1 October 2008     795  639  1,120  — 2,554 
Charge for period     339  281  881  — 1,501 
Charges on transfer from tangibles   — 19  — — 19 
At 30 September 2009    1,134  939  2,001  — 4,074 
Net book amount     
At 30 September 2009    528  728  3,864  12,635  17,755 
At 30 September 2008    867  830  4,745  12,974  19,416 
Amortisation has been charged through the income statement within operating costs. Transfers of £26,000 
relate to computer software transferred to intangibles from property, plant and equipment during the year. 
This also applies to the Company, shown below. The Group has also made an adjustment of £339,000 to 
goodwill as a result of the finalisation of the contingent consideration relating to the Echo Communications 
Limited acquisition (Note 16).
comp ANy       Purchased  
       customer  Computer 
       contracts software Goodwill Total  
       £’000 £’000 £’000 £’000
cost    
At 1 October 2007      759  1,032  1,436  3,227 
Additions       — 385  327  712 
At 1 October 2008      759  1,417  1,763  3,939 
Additions       — 172  — 172 
Transfers from tangibles (Note 15)    — 26  — 26 
At 30 September 2009     759  1,615  1,763  4,137 
Amortisation    
At 1 October 2007       433  376  — 809 
Charge for period      145  243  — 388 
At 1 October 2008      578  619  — 1,197 
Charge for period      145  267  — 412 
Charges on transfers from tangibles    — 19  — 19 
At 30 September 2009     723  905  — 1,628 
Net book amount    
At 30 September 2009     36  710  1,763  2,509 
At 30 September 2008     181  798  1,763  2,742 
The carrying amounts of goodwill by acquisition are as follows:
       Group  Company
       30 September 30 September 30 September 30 September 
       2009 2008 2009 2008 
       £’000 £’000 £’000 £’000
ICB (UK)       5,685   5,685   1,436   1,436 
Echo Communications      6,634   6,973  — — 
AN Technical Services      316   316   327   327 
        12,635   12,974   1,763   1,763  49
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
14 intangiBle assets (continueD)
comp ANy (coNtiNued)
During the year the goodwill in respect of each of the cash‑generating units which include the above were tested for impairment 
in accordance with IAS 36. All were assessed to have a value in use in excess of their respective carrying values, and hence 
no other adjustments to goodwill were considered necessary.
The key assumptions in the value in use calculations were:
The forecasts were based on pre‑tax cash flows derived from approved budgets for the 2009–2010 financial year. Management 
believes the forecasts are reasonably achievable.
Subsequent cash flows were increased over the next two years in line with management forecasts and thereafter at 1% in perpetuity.
The pre‑tax discount rate used to assess the carrying value of goodwill is 10.3% (2008: 10.0%) which approximates the Group’s 
weighted average cost of capital. This discount rate is consistent with prior year and has been calculated to take into account 
specific factors of the Group.
The review performed at the year end did not result in the impairment of goodwill for any cash‑generating unit as the estimated 
recoverable amount exceeded the carrying amount in all cases.
15 ProPerty , Plant anD equiPment group
        Land and  Leasehold Plant and Motor 
        buildings improvements equipment vehicles Total 
        £’000 £’000 £’000 £’000 £’000
cost     
At 1 October 2007       2,846  394  1,768  139  5,147 
Fair value adjustment      (300) — — — (300)
Additions        — 112  378  20  510 
Disposals       — (25) (15) (8) (48)
Transfer to assets held for sale      (900) — — — (900)
At 1 October 2008       1,646  481  2,131  151  4,409 
Additions        — 70  100  — 170 
Disposals       — — (72) (62) (134)
Transfer to intangibles (Note 14)     — — (26) — (26)
Transfer from assets held for sale     900  — — — 900 
At 30 September 2009      2,546  551  2,133  89  5,319 
depreciation     
At 1 October 2007       120  294  1,468  24  1,906 
Charge for year       31  57  207  63  358 
Disposals       — (25) (12) (8) (45)
Transfer to assets held for sale      (14) — — — (14)
At 1 October 2008       137  326  1,663  79  2,205 
Charge for year       24  69  235  47  375 
Disposals       — — (72) (62) (134)
Transfers to intangibles (Note 14)     — — (19) — (19)
Transfer from assets held for sale     14  — — — 14 
Impairment       170  — — — 170 
At 30 September 2009      345  395  1,807  64  2,611 
Net book amount     
At 30 September 2009      2,201  156  326  25  2,708 
At 30 September 2008      1,509  155  468  72  2,204 
Post year end, an unsolicited offer was received for the Burr Road freehold property which was below the carrying value. As a result 
a £170,000 impairment charge has been recognised to reflect the fair value of the property. 50
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
notes to the financial statements continueD
for the yeAr eNded 30 September 2009
15 ProPerty , Plant anD equiPment (continueD)
comp ANy      Land and  Leasehold Plant and Motor 
      buildings improvements equipment vehicles Total 
      £’000 £’000 £’000 £’000 £’000
cost     
At 1 October 2007     1,646  394  1,637  19  3,696 
Additions      — 112  354  — 466 
Disposals     — (25) — (8) (33)
At 1 October 2008     1,646  481  1,991  11  4,129 
Additions      — 67  87  — 154 
Transfers to intangibles (Note 14)   — — (26) — (26)
Disposals     — — (53) (3) (56)
At 30 September 2009    1,646  548  1,999  8  4,201 
depreciation     
At 1 October 2007     119  294  1,404  19  1,836 
Charge for year     18  57  169  — 244 
Disposals     — (25) — (8) (33)
At 1 October 2008     137  326  1,573  11  2,047 
Charge for year     18  68  204  — 290 
Transfers to intangibles (Note 14)   — — (19) — (19)
Disposals     — — (53) (3) (56)
At 30 September 2009    155  394  1,705  8  2,262 
Net book amount     
At 30 September 2009    1,491  154  294  — 1,939 
At 30 September 2008    1,509  155  418  — 2,082 
16 investments in suBsiDiary unDertakings During the year contingent consideration relating to the Echo Communications Limited acquisition was 
finalised after the completion of the earn‑out period.
          Company 
          £’000
At 1 October 2007         15,757 
Fair value adjustment to contingent consideration      (105)
Write‑off following hive‑up        (3,818)
At 1 October 2008         11,834 
Finalisation of contingent consideration       (339)
At 30 September 2009        11,495 
The finalisation of deferred consideration relating to the acquisition of Echo Communications Limited 
has resulted in a £339,000 reduction in goodwill. This is due to earn‑out targets not being achieved.
The following are the principal subsidiary undertakings of the Group:
       Holding Subsidiary 
   Country of Class of   company  company 
Subsidiary undertakings  incorporation holdings Principal activities  % %
Echo Communication Limited England and Wales Ordinary Telephone Systems  — 100%
Telecom Technology  
Maintenance Limited England and Wales Ordinary Dormant  — 100%
Telecoms Centre Limited England and Wales Ordinary Non‑trading  100% —
The Directors believe that the carrying value of the investments is supported by their underlying net assets. 51
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
17 DeFerreD taxation Deferred taxation provided for in the financial statements is set out below. There were no un‑provided amounts of deferred tax 
at 30 September 2009 (2008: £nil).
The movement in the deferred tax during the period was as follows:
ASSet 
        Accelerated tax Share‑based Tax   
        depreciation payments losses Other Total 
        £'000 £'000 £'000 £'000 £'000
group     
At 1 October 2007       146  169  372  (8) 679 
Credited/(charged) to income statement     10  84  (372) 8  (270)
Credited to equity       — 266  — — 266 
At 1 October 2008       156  519  — — 675 
Credited to income statement      12  137  — — 149 
Debited to equity       — (396) — — (396)
At 30 September 2009      168  260  — — 428 
Company     
At 1 October 2007       82  169  — (8) 243 
(Charged)/credited to income statement     (21) 84  — 8  71 
Credited to equity       — 266  — — 266 
At 1 October 2008       61  519  — — 580 
Credited to income statement      34  137  — — 171 
Debited to equity       — (396) — — (396)
At 30 September 2009      95  260  — — 355 
liAbility 
           Intangible  
           assets Total 
           £'000 £'000
group  
At 1 October 2007          (1,643) (1,643)
Credited to income statement         306  306 
At 1 October 2008          (1,337) (1,337)
Credited to income statement         247  247 
At 30 September 2009         (1,090) (1,090)
There is no deferred tax liability (2008: £nil) recognised in the Company.
Deferred tax assets and liabilities are analysed as follows:
         Group  Company
         30 September 30 September 30 September 30 September 
         2009  2008 2009 2008 
          £’000  £’000  £’000  £’000
Deferred tax assets    
Deferred tax assets to be recovered after more than 12 months    90  544  54  497 
Deferred tax assets to be recovered within 12 months     338  131  301  83 
Asset at 30 September       428  675  355  580 
Deferred tax liabilities    
Deferred tax liabilities to be recovered after more than 12 months   (868) (1,085) — —
Deferred tax liabilities to be recovered within 12 months    (222) (252) — —
liability at 30 September       (1,090) (1,337) — —
Net deferred tax (liability)/asset      (662) (662) 355  580  52
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
notes to the financial statements continueD
for the yeAr eNded 30 September 2009
18 assets helD For resale 
       Group  Company
       30 September 30 September 30 September 30 September 
       2009  2008 2009 2008 
        £’000  £’000  £’000  £’000
Property        —  887  — —
As at 31 March 2009, the Group ceased marketing the Echo Communications freehold property. As a result 
the Directors believe it is no longer an asset held for resale and therefore it has been reclassified as property, 
plant and equipment.
19 inventories 
       Group  Company
       30 September 30 September 30 September 30 September 
       2009  2008 2009 2008 
        £’000  £’000  £’000  £’000
Finished goods      168 382 2 9
20 traDe anD other receivaBles       Group  Company
       30 September 30 September 30 September 30 September 
       2009  2008 2009 2008 
        £’000  £’000  £’000  £’000
Trade receivables       5,024   5,522   3,928   3,983 
Amounts owed by Group undertakings    —  —  3,223   3,423 
Prepayments       1,532   2,584   1,037   1,156 
Accrued income       5,937   6,297   5,164   5,473 
Other receivables        42   47   31   38 
        12,535   14,450   13,383   14,073 
As at 30 September 2009, trade receivables of £997,000 (2008: £1,767,000) were impaired and fully provided for. 
The Group is satisfied that the majority of its clients are of sound creditworthiness. This view is supported by 
the willingness of our credit insurers to provide cover in the majority of cases. Management noted, however, 
that during the year there was a growing trend by the underwriters to reduce or remove cover on certain clients. 
The aging of the trade receivables which are past due and not impaired is as follows: 
       Group  Company
       30 September 30 September 30 September 30 September 
       2009  2008 2009 2008 
        £’000  £’000  £’000  £’000
31–60 days       1,031   566   387   301 
61–90 days       506   430   364   243 
Over 90 days       434   532   366   336 
        1,971   1,528   1,117   880  53
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
20 traDe anD other receivaBles (continueD)
Movement of the Group and Company provisions for impairment of trade receivables is as follows:
            Group Company 
           £'000 £'000
At 1 October 2007          926  760 
Receivable written‑off during the year as uncollectible      (188) (188)
Unused amounts reversed         (165) (165)
Provision for receivables impairment        1,194  1,109 
At 1 October 2008          1,767  1,516 
Receivable written‑off during the year as uncollectible      (1,097) (881)
Unused amounts reversed         (180) (164)
Provision for receivables impairment        507  400 
At 30 September 2009         997  871 
The creation and release of a provision for impaired receivables has been included in “administration expenses” in the income 
statement. Amounts charged to the allowance account are generally written‑off when there is no expectation of recovering 
additional cash.
Management regularly reviews the outstanding receivables and does not consider that any further impairment is required.
The other asset classes within trade and other receivables do not contain impaired assets. 
21 cash anD cash equivalents         Group  Company
         30 September 30 September 30 September 30 September 
         2009  2008 2009 2008 
          £’000  £’000  £’000  £’000
Cash          9,015   4,227   8,478   3,216 
22 calleD uP share caPital           Group and Group and 
           Company Company 
           30 September 30 September 
           2009 2008 
           £'000 £'000
Authorised  
80,000,000 (2008: 80,000,000) ordinary shares of 0.125p (2008: 0.125p) each    100  100 
Allotted and fully paid up  
44,950,621 (2008: 45,963,355) ordinary shares of 0.125p (2008: 0.125p) each    56  57 
movemeNt iN ShAreS iN iSSue
         2009 2008 
         Shares Shares
Ordinary shares of 0.125p each  
At 1 October         45,963,355   47,633,220 
Allotted under share option schemes       154,069   78,400 
Repurchased and cancelled under buy‑back scheme     (1,166,803) (1,888,419)
Acquisition of 10% of AN Technical Services Limited      —  140,154 
At 30 September         44,950,621   45,963,355 
During the year 1,166,803 shares (representing approximately 3% of the issued share capital) were purchased by the Company 
for £1,356,202 at an average cost per share of £1.16.
The effect of the buy‑back programme is to enhance earnings per share in the current and future years.
During the year 154,069 shares were allotted under share option schemes as follows:
30,800 issued at 25p resulting in a share premium of £7,662.
123,269 issued at 102.5p resulting in a share premium of £126,197. 54
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
notes to the financial statements continueD
for the yeAr eNded 30 September 2009
23 traDe anD other P ayaBles       Group  Company
       30 September 30 September 30 September 30 September 
       2009  2008 2009 2008 
        £’000  £’000  £’000  £’000
Trade payables        7,627   8,289   6,937   7,070 
Amounts owed to Group undertakings    — —  2,539   1,383 
Other taxation and social security costs     947   1,489   629   967 
Other payables       388   278   244   184 
Accruals and deferred income      8,307   8,335   5,710   5,017 
        17,269   18,391   16,059   14,621 
Secured p Ay AbleS
Included in trade payables are the following secured balances:
       Group  Company
       30 September 30 September 30 September 30 September 
       2009  2008 2009 2008 
        £’000  £’000  £’000  £’000
O
2
 UK Limited       2,834   2,781   2,834   2,781 
Vodafone Limited       1,460   2,168   1,460   1,719 
On 27 May 2002, the Group granted legal charges to each of the above companies in respect of the 
balances owing to them under the terms of the service provider agreements both dated 27 May 2002.
The legal charges are secured on the subscriber bases of the Group on each network, and the book debts 
arising thereon, together with any amount standing to the credit of the companies in any designated account.
In addition, on 27 May 2009 the Group gave a guarantee to Barclays Bank plc in favour of O
2
 UK Limited, in 
respect of £100,000 which replaces the previous guarantee, in respect of £225,000. The guarantee is secured 
on the bank’s existing first charge over the freehold of Chatfield Court, 56 Chatfield Road, London SW11 3UL, 
together with a fixed and floating charge on the assets of the Company, registered on 19 December 2002.
24 non-current liaBilities       Group  Company
       30 September 30 September 30 September 30 September 
       2009  2008 2009 2008 
        £’000  £’000  £’000  £’000
Bank loans – secured      874   960   874   954 
        874   960   874   954  55
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
25 contingent consiDeration 
The contingent consideration of £97,000 was payable upon the achievement of certain minimum targets which were not fully met 
during the year. This has been released against goodwill.
           Group Company 
           £'000 £'000
At 1 October 2007          447  447 
Fair value adjustments         (350) (350)
At 1 October 2008          97  97 
Release of consideration         (97) (97)
At 30 September 2009         — —
26 Financial instruments
The Group’s financial instruments comprise cash, bank loans, contingent consideration, and various items such as trade receivables 
and trade payables that arise directly from its operations. All financial instruments are denominated in Pounds Sterling. The main 
purpose of holding cash is to finance the Group’s future growth and operations.
It is (and has been throughout the periods under review) the Group’s policy that no trading in financial instruments 
shall be undertaken. The fair value of financial assets and liabilities is approximately equal to their book values. 
Financial risk management is disclosed within Note 3.
group
         30 September 2009  30 September 2008
         Loans and  Loans and  
         receivables Total receivables Total 
         £'000 £'000 £'000 £'000
Financial assets per balance sheet    
Trade and other receivables (less prepayments)     11,003  11,003  11,866  11,866 
Cash         9,015  9,015  4,227  4,227 
         20,018  20,018  16,093  16,093 
comp ANy 
         30 September 2009  30 September 2008
         Loans and  Loans and  
         receivables Total receivables Total 
         £'000 £'000 £'000 £'000
Financial assets per balance sheet    
Trade and other receivables (less prepayments)     12,346  12,346  12,917  12,917 
Cash         8,478  8,478  3,216  3,216 
         20,824  20,824  16,133  16,133 
The Group’s financial assets comprise cash at bank and deposits at the year end. Interest is received on cash deposits at variable 
rates primarily based on the relevant bank rate. All cash at bank and cash deposits are held in Pounds Sterling. 56
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
notes to the financial statements continueD
for the yeAr eNded 30 September 2009
26 Financial instruments (continueD)
group
       30 September 2009  30 September 2008
       Other financial  Other financial  
       liabilities Total liabilities Total 
       £'000 £'000 £'000 £'000
Financial liabilities per balance sheet    
Echo contingent consideration (Note 25)    — — 97  97 
Trade and other payables (less deferred income)   14,906  14,906  15,696  15,696 
Secured bank loans       924   924  995  995 
Current tax liabilities       1,333   1,333  1,380  1,380 
       17,163  17,163  18,168  18,168 
comp ANy 
       30 September 2009  30 September 2008
       Other financial  Other financial  
       liabilities Total liabilities Total 
       £'000 £'000 £'000 £'000
Financial liabilities per balance sheet    
Echo contingent consideration (Note 25)    — —   97   97 
Trade and other payables (less deferred income)    16,060   16,060   14,523   14,523 
Secured bank loans       924   924   989   989 
Current tax liabilities      1,223   1,223   1,332   1,332 
        18,207   18,207   16,941   16,941 
Secured bank loans are secured by fixed charges over the long leasehold property at Chatfield Court. 
Interest is payable at a variable rate of 1.0% per annum over the Bank of England base rate.
The Chatfield Road loan is repayable in quarterly instalments over a 25 year period commencing February 2001.
       Group  Company
       30 September 30 September 30 September 30 September 
       2009  2008 2009 2008 
        £’000  £’000  £’000  £’000
In one year or less      16,288  17,208  17,332  15,987 
In more than one year but not more than two years   51  43  51  37 
In more than two years but not more than five years   156  127  156  127 
In more than five years     667  790  667  790 
       17,162  18,168  18,206  16,941 
During the year ended 30 September 2009, £62,000 (2008: £584,000) of capital repayments were made 
on the loans above.
       Group  Company
       30 September 30 September 30 September 30 September 
       2009  2008 2009 2008 
        £’000  £’000  £’000  £’000
Undrawn facilities    
Secured bank overdraft     6,000  6,000  6,000  6,000 
Secured bank drawdown facility    6,000  6,000  6,000  6,000 
       12,000  12,000  12,000  12,000 
These are both part of a multi‑option facility which is due for renewal on 17 January 2011. 57
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
27 cash generateD From oPerations group 
           Year ended Year ended 
           30 September 30 September 
           2009 2008 
           £'000 £'000
Operating profit           7,031   8,755 
Adjustments for:  
Depreciation of property, plant and equipment        375   358 
Impairment of freehold property         170  —
Amortisation of intangible assets         1,501   1,637 
Employee share scheme charges         565   303 
(Profit)/loss on sale of tangible assets        (44)  3 
Movements in working capital: 
Decrease in property deposits         —  51 
Decrease/(increase) in inventories         214  (113)
Decrease/(increase) in trade and other receivables        1,915  (201)
Decrease in trade and other payables        (1,122) (458)
Cash generated from operations         10,605   10,335 
comp ANy 
           Year ended Year ended 
           30 September 30 September 
           2009 2008 
           £'000 £'000
Operating profit           7,543   10,583 
Adjustments for:  
Dividends from subsidiaries not yet received       — (2,708)
Depreciation of property, plant and equipment        290   244 
Amortisation of intangible assets         412   388 
Employee share scheme charges         565   303 
Profit on sale of tangible assets         (8) —
Movements in working capital: 
Decrease in property deposits          1   63 
Decrease/(increase) in inventories        7  (6)
Increase/(decrease) in trade and other receivables        690  (266)
Increase/(decrease) in trade and other payables        1,438  (3,003)
Write‑off investment following hive‑up of ICB       —  3,818 
Cash generated from operations         10,938   9,416  58
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
notes to the financial statements continueD
for the yeAr eNded 30 September 2009
28 other commitments
At 30 September 2009 the Group and Company had minimum future lease commitments under non‑cancellable 
operating leases as follows:
       Group  Company
       30 September 30 September 30 September 30 September 
       2009  2008 2009 2008 
       £'000 £'000 £'000  £'000
land and buildings
Expiry date:    
Within one year        532   463   512   453 
Between one and two years      467   430   467   430 
Between two and five years       471   792   471   792 
        1,470   1,685   1,450   1,675 
Motor vehicles    
Expiry date:    
Within one year        37  —  — — 
Between one and two years      37  —  —  — 
Between two and five years       6  —  —  — 
        80  —  —  — 
29 share-BaseD P ayments ShAre optioN Scheme
The Group’s EMI scheme was adopted on the 22 December 2004 (EMI 2004). Under the Group’s EMI scheme, 
options which are qualifying options under the EMI regime and also unapproved options may be granted. 
There were 2,167,200 granted at this date. As at the 30 September 2009 there were no options outstanding 
(2008: 30,400).
On 18 January 2006, the Group granted a further series of 429,307 EMI scheme options (EMI 2006). The options 
can be exercised from December 2008 if the option holder is still an employee of the Group and subject to 
certain performance criteria all of which were met. There were 165,305 EMI 2006 options outstanding as at 
30 September 2009 (2008: 288,574).
On 17 January 2007, the Group granted a further series of 1,147,907 EMI scheme options (EMI 2007). 
The options can be exercised in December 2009 if the option holder is still an employee of the Group 
and certain performance criteria have been met. There were 913,067 EMI 2007 options outstanding 
as at 30 September 2009 (2008: 962,385).
On 3 July 2008, the Group granted a further series of 243,018 EMI scheme options (EMI 2008). The options can 
be exercised in July 2011 if the option holder is still an employee of the Group and certain performance criteria 
have been met. All 243,018 EMI 2008 options were outstanding as at 30 September 2009 (2008: 243,018).
On 25 April 2008, the Group granted a series of 1,388,919 LTIP options (LTIP 2008). The options can be 
exercised in April 2010 if the option holder is still an employee of the Group and certain performance criteria 
have been met. 55% of the options are subject to a 20% increase in total shareholder return, with the remaining 
45% being subject to a 4% increase in total shareholder return. All 1,388,919 LTIP 2008 options were outstanding 
as at 30 September 2009.
      Exercise 
      price Exercise 30 September 30 September 
Date of grant    Scheme  (pence) period 2009 2008
22 December 2004   EMI 25.0 2006–2014 —  30,800 
18 January 2006   EMI 102.5 2008–2016  165,305   288,574 
17 January 2007   EMI 150.5 2009–2017  913,067   962,385 
3 July 2008    EMI 135.5 2011–2018  243,018   243,018 
25 April 2008    LTIP 0.125 2010–2018  1,388,919   1,388,919 
         2,710,309   2,913,696 
ShAre optioN chArge
         30 September 30 September 
         2009 2008 
         £'000  £'000
Share option charge       565   303 
Details of the Group’s EBT and EMI schemes are contained in the Remuneration Report on page 27.  59
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
29 share-BaseD P ayments (continueD)
ShAre optioN chArge (coNtiNued)
The expected volatility is based on historical volatility over the last three years. The expected life is the average expected period 
to exercise. The risk free rate of return is the yield on zero‑coupon UK Government bonds of a term consistent with the assumed 
option life. A reconciliation of option movements over the year ended 30 September 2009 is shown below:
       2009   2008
        Weighted  Weighted 
        exercise  average 
       Number average price Number exercise price
Outstanding at 1 October      2,913,696  71.3p 1,503,714  130.9p
Granted        — — 1,631,937  20.1p
Forfeited       (49,318) 150.5p (143,555) 136.5p
Exercised       (154,069) 87.0p (78,400) 25.0p
Outstanding at 30 September     2,710,309  69.2p 2,913,696  71.3p
Exercisable at 30 September     165,305  102.5p 30,800  25.0p
As no share options were granted in the year the weighted average fair value of options granted in the year was £nil (2008: £862,000).
The total charge for the year relating to employee share‑based payment plans was £565,000 (2008: £303,000), all of which related 
to equity‑settled share‑based payment transactions.
30 relateD P arty transactions
Tony Caplin was a director of Hand Picked Hotels Ltd until 30 September 2008. The Group’s turnover from Hand Picked Hotels 
during the year was £56,000 (2008: £113,000) (Company: 2009: £56,000, 2008; £112,000). The Group and Company receivable 
was £nil (2008: £7,000).
All transactions were made at an arm’s length basis and at full market value.
In the opinion of the Board, key management is defined as members of the Group’s Operational Board as well as Executive Board 
members. For further disclosure see Note 7.
31 Post Balance sheet events
Subsequent to the year end the Company carried out three further share repurchases for cancellation. These took place on the 
2, 6 and 8 October 2009. On these dates 320,000 shares were bought back by the Company for an aggregate sum of £359,100. 
These shares were purchased as a means of returning excess levels of cash to shareholders.
On 30 October 2009 the Group acquired 100% ordinary shares of AKJ and obtained control of the company. AKJ is a provider 
of software and consultancy specialising in the telecommunications industry and was purchased for a maximum of £5.5m and 
an initial consideration of £3.75m cash and £0.8m through the issue of 707,076 ordinary shares. Deferred consideration of £0.75m 
payable in cash and £0.2m payable in shares will be payable in 2010 subject to certain revenue and profit targets being achieved. 
Further details of the strategic benefits of this acquisition are provided in the Chief Executive’s Review on page 6.
At the date of issue of these financial statements, neither the completion accounts nor the intangible valuations were complete. 
A full report of acquired assets and consideration, including contingent consideration, will be published in the next financial statements. 
The Group had no prior interest in AKJ prior to the acquisition, and no minority interest exist following the combination.
The Group has also won by tender, a three year contract from October 2009 onwards, to bill and service 50 business clients 
with an annual turnover of £2.5m. 60
Alternative Networks plc 
Annual report and accounts 2009 
www .alternativenetworks.com
notes to the financial statements continueD
for the yeAr eNded 30 September 2009
32 reconciliation to aDJusteD PerFormance
recoNciliA tioN of AdjuSted ebitd A 
         30 September 30 September 
         2009 2008 
         £'000 £'000
Profit before tax        7,115  8,901 
Amortisation of purchased customer contracts  
and other intangibles (excluding computer software)     1,220  1,375 
Share‑based payments       565  303 
Add back impairment of freehold property      170  — 
Adjusted profit before tax       9,070  10,579 
Finance income        (105) (223)
Finance costs        21  77 
Adjusted operating profit       8,986  10,433 
Add: depreciation of property, plant and equipment     375  358 
Add: amortisation of software (intangibles)      281  262 
Adjusted EBITDA        9,642  11,053 
recoNciliA tioN of AdjuSted profitS for eArNiNgS per ShAre 
         30 September 30 September 
         2009 2008 
         £'000 £'000
Adjusted profit before tax (see above)      9,070 10,579
Less: share‑based payments       (565) (303)
Less: taxation per profit and loss accounts      (2,024) (2,402)
Less: taxation on amortisation of purchased customer  
contracts and other intangibles (excluding computer software)    (342) (385)
Less: exceptional deduction on exercise of AN share options    (26) (27)
Adjusted profit after tax        6,113   7,462 
Adjusted earnings per share is calculated on adjusted earnings after deduction of share option costs.
This analysis is provided as the Group considers it provides a truer reflection of the underlying performance 
of the business, and is common practice in the investment analyst community. directors J Murray 
E Spurrier 
J Sewell 
B Marnham
non-executive directors
T Holland-Bosworth 
T Caplin 
K McGeorge
company secretary E Spurrier
registered office
Chatfield Court 
56 Chatfield Road 
London SW11 3UL
independent auditors Pricew AterhousecooPers LLP
No 1 Embankment Place 
London WC2N 6RH
principal banker
BArcLA ys BANk PLc
1 Churchill Place 
Canary Wharf 
London E14 5HP
principal legal advisors Bird & Bird
90 Fetter Lane 
London EC4A 1JP
corporate brokers
iNvestec
2 Gresham Street 
London EC2V 7QP
registrar cAPit A irG
7th floor Phoenix House 
18 King William Street 
London EC4N 7HE
directors and advisors Alternative Networks plc
Chatfield Court 
56 Chatfield Road 
London SW11 3UL
Tel: 0800 316 8866 
Fax: 0800 316 8867
www.alternativenetworks.com