manx telecom plc  annual report and accounts 2015
manx telecom plc
annual report and accounts
2015
smart world,
smart business The world is connected. First we had the 
smartphone, now we talk about smart 
homes and smart cities. Devices talk to us 
and increasingly, to each other.
Manx Telecom has been investing heavily 
in technology and infrastructure to help 
deliver this vision. A more connected 
island, more connected businesses 
and more connected consumers.
contents
strategic report
 1 financial highlights
 2 manx telecom at a glance
 4 technology update
 6 chairman’s statement
 8 ceo’s review
 12 strategic insight
 14 our strategy in action
 18 financial review
 20 risk management & principal risks
 2 2 our responsibility to the isle of man
governance
 24 board of directors
 25 executive committee
 26 directors’ report
 29 corporate governance report
 3 1 report of the audit committee
 33 directors’ remuneration report
 39 statement of directors’ responsibilities
financial statements
 4 0 report of the independent auditors
 4 1 financial statements and notes
other
 79 directors, secretary, registered office 
and advisers
manx telecom plc
annual report and accounts 2015 strategic report
financial  
highlights
2013 2014 2015
80
40
60
20
0
79.6 79.3
76.0
2013 2014 2015
30
10
20
0
25.4
27.0
25.5
2013 2014 2015
30
10
20
0
27.7
27.1
27.5
2013 2014 2015
20
10
15
5
0
18.6
17.6
18.1
Revenue (£m)
£79.6m
+0.4%
Cash generated (£m)
£25.4m
-5.8%
Interim dividend per share (p)
3.5p
Underlying EBITDA (£m)
£27.7m
+2.0%
Underlying operating profit (£m)
£18.6m
+5.5%
Final dividend per share (p)
6.9p
Total dividend per share (p)
10.4p
2014 2015
4
1
3
2
0
3.5
3.3
2014 2015
8
2
6
4
0
6.9
6.6
2014 2015
12
3
9
6
0
10.4
9.9
1
manx telecom plc
annual report and accounts 2015 manx telecom at a glance
We are the leading communications 
solutions provider on the Isle of Man.  
Our operations touch the lives of almost 
every individual and business on the Island.
our 
network
Manx Telecom’s network 
infrastructure is engineered to  
the highest quality standard, 
which in turn supports our  
vision of richly enhancing lives  
and businesses at home and 
overseas.
Broadband – Our VDSL high-speed 
broadband service is now available to 
around 91% of homes and businesses on 
the Island. In early 2015 we launched a 
VDSL Plus service to 50% of the Island, 
offering speeds of 80Mbps download 
and 10Mbps upload. On 1 September 
2015, we opened up our fixed line 
network, providing a wholesale fixed 
line product to our competitors.
our 
services
We offer a wide range of fixed 
line, broadband, mobile and 
data centre services to 
businesses, consumers and the 
public sector on the Isle of Man. 
We also provide a growing 
portfolio of innovative Smart 
SIM solutions to international 
customers. In every area of our 
business, we offer class-leading 
technology, delivered with a 
passion and a dedication to our 
customers’ best interests.
4G Mobile – We launched the Island’s 
first 4G service in the summer of 2014 
and now provide high-speed mobile 
broadband to 99% of the Island’s 
population, at speeds up to ten times 
faster than 3G. Our 4G network received 
the accolade of ‘Best use of Technology’ 
in the prestigious Isle of Man Newspaper 
Awards for Excellence in November 2015.
Fixed line, 
broadband  
and data
Mobile Global 
Solutions
Data Centre Other  
Services
We provide fixed line, broadband and 
connectivity services, connecting 
approximately 37,000 homes and 4,000 
businesses locally and internationally. 
Our Ultima and Ultima Plus high-speed 
broadband services are now available 
to 91% of households; adoption rates are 
increasing, driven by higher in-home 
use of smart TVs, tablets and gaming 
consoles.
Our mobile business offers pre-paid and 
post-paid tariffs to all market segments, 
supports inbound roaming traffic from 
international visitors and also sells 
mobile handsets and accessories. 
In early 2015, our 4G service was 
extended to include our pre-paid 
customers, which has helped increase 
4G adoption across our entire mobile 
customer base.
Using our domestic mobile technology 
platform, we enable UK and 
international wholesale and corporate 
partners to offer a variety of innovative 
Smart SIM mobile services using Manx 
Telecom SIM cards. 
Increasingly we are targeting the Internet 
of Things sectors as well as international 
traveller markets and critical connection 
sectors, such as lone workers.
Our data centre business offers 
co-location, managed hosting, cloud, 
storage and disaster recovery services 
to an international and local corporate 
client base, via three data centres on the 
Island at Douglas North, Douglas Central 
and Greenhill Data Centre. 
Key customers include e-gaming 
companies, financial services companies 
and the Isle of Man Government.
Includes advertising revenue  
from the Manx Telecom phone  
book and business directory as  
well as from our own online news  
channel MTTV and online portal 
manx.net, which is the most popular 
Isle of Man based website. 
This area also includes hardware 
equipment sales, managed services  
and interconnection fees.
Fixed line, broadband and data revenue
£32.0m
Mobile revenue
£20.1m
Global solutions revenue
£14.1m
Data centre revenue
£8.0m
Other
£5.4m
2
manx telecom plc
annual report and accounts 2015 strategic report
The Isle of Man is a self-governing British Crown 
Dependency with its own Government, laws and 
currency and it is closely linked to the UK through  
a shared history, community and economic 
partnerships.
Home to 86,000 people and 4,000 businesses, the 
Isle of Man is a leading international business centre, 
best known for its financial services industry and for 
having successfully diversified its economy in recent 
years to a wide range of sectors, including aviation, 
marine, bio-med, space, e-business and e-gaming. 
The Island has enjoyed 31 years of unbroken GDP 
growth and has 2% unemployment with a clear 
and simple tax regime.
our island
Connectivity – We provide world-class 
private circuit and internet connectivity 
for customers, both on and off-island, 
a key part of the Global Solutions 
Infrastructure. Our high capacity 
Cisco-powered Multi-protocol Label 
Switching (‘MPLS’) off-island network 
is fully resilient, supplied via a 10Gbps 
backbone which connects the Isle of 
Man directly to London, just 
12 milliseconds away.
Fixed line, 
broadband  
and data
Mobile Global 
Solutions
Data Centre Other  
Services
We provide fixed line, broadband and 
connectivity services, connecting 
approximately 37,000 homes and 4,000 
businesses locally and internationally. 
Our Ultima and Ultima Plus high-speed 
broadband services are now available 
to 91% of households; adoption rates are 
increasing, driven by higher in-home 
use of smart TVs, tablets and gaming 
consoles.
Our mobile business offers pre-paid and 
post-paid tariffs to all market segments, 
supports inbound roaming traffic from 
international visitors and also sells 
mobile handsets and accessories. 
In early 2015, our 4G service was 
extended to include our pre-paid 
customers, which has helped increase 
4G adoption across our entire mobile 
customer base.
Using our domestic mobile technology 
platform, we enable UK and 
international wholesale and corporate 
partners to offer a variety of innovative 
Smart SIM mobile services using Manx 
Telecom SIM cards. 
Increasingly we are targeting the Internet 
of Things sectors as well as international 
traveller markets and critical connection 
sectors, such as lone workers.
Our data centre business offers 
co-location, managed hosting, cloud, 
storage and disaster recovery services 
to an international and local corporate 
client base, via three data centres on the 
Island at Douglas North, Douglas Central 
and Greenhill Data Centre. 
Key customers include e-gaming 
companies, financial services companies 
and the Isle of Man Government.
Includes advertising revenue  
from the Manx Telecom phone  
book and business directory as  
well as from our own online news  
channel MTTV and online portal 
manx.net, which is the most popular 
Isle of Man based website. 
This area also includes hardware 
equipment sales, managed services  
and interconnection fees.
Fixed line, broadband and data revenue
£32.0m
Mobile revenue
£20.1m
Global solutions revenue
£14.1m
Data centre revenue
£8.0m
Other
£5.4m
Voice lines
50.2K
Broadband customers
25.8K
Data hosting – Manx Telecom is the  
only on-island operator with two  
Tier 3 designed data centres (according 
to Telecommunications Industry 
Association Standards) which have 
security and resilience built into every 
part of their infrastructure. During 2015 
we completed the development of  
the second phase of our Greenhill 
Data Centre.
3
manx telecom plc
annual report and accounts 2015 technology update
We work in a truly global, dynamic 
market with a relentless pace of  
change, where product life cycles can 
be measured in months rather than 
years. Innovation is in our DNA and 
we are constantly striving to invest in 
technology which fulfils our desire to 
lead and grow in our markets.
the world is 
mobile
The world is seeing a rapid 
technology migration to both  
higher speed mobile broadband 
networks and to feature-packed 
smartphones and other connected 
devices. Mobile is at the heart of a 
new digital ecosystem fuelled by 
trends such as digital content, social 
networking and online commerce.
What is Manx Telecom 
doing about it?
We know that a high quality mobile 
network drives differentiation and 
customer satisfaction. That’s why 
we worked with Huawei to invest 
£10m in a new 4G network whilst 
increasing the capability of our 2G 
and 3G services which delivers high 
speed mobile broadband to 99%  
of the Island’s population. It’s also 
why we’re investing in LTE-A or 
4G-Advanced services to deliver  
an even better performance.
4
manx telecom plc
annual report and accounts 2015 strategic report
traditional 
network 
infrastructure to 
software-based 
solutions
Innovation can be ‘under the 
bonnet’ as well as being visible to 
customers. To drive efficiency, more 
telecommunications providers are 
considering software-centric, all-IP, 
cloud-based solutions as an 
alternative to traditional exchange 
based telecommunications 
equipment.
What is Manx Telecom 
doing about it?
Hand in hand with leading provider 
Metaswitch, Manx Telecom has 
over the last 18 months become one 
of the first operators worldwide  
to seamlessly move its entire fixed 
line customer base onto a virtual 
software based core housed in our 
own Data Centre. This is a reflection 
of our determination to adopt 
some of our industry’s leading 
technologies now and in 
the future.
the ‘Internet of 
Things’ (IoT) has 
become a reality
There are increasingly tangible 
benefits for consumers and 
businesses from the growing range 
of new connected services, with  
a strong focus on both wearable 
devices and the potential of  
the Smart Home. Connected 
devices and sensors can deliver  
a smarter, more efficient home, 
with smartphones and tablets 
interacting with various connected 
objects and devices, from lighting to 
basic security systems.
What is Manx Telecom 
doing about it?
Our Global Solutions business  
is actively engaged with UK 
companies at the very heart of the 
IoT market. Our smart SIM solutions 
are perfectly positioned to provide 
the ‘always-on’ connectivity that 
providers in this space demand. It’s 
an important part of our current 
and future growth strategy.
the rise of cloud 
services and 
big data
Cloud services are services made 
available to users on demand via 
the internet from a cloud computing 
provider’s servers as opposed to 
being provided from a company’s 
own on-premises servers. This 
means easy, flexible, scalable and 
efficient access to applications and 
resources.
What is Manx Telecom 
doing about it?
Our two Tier 3 designed data 
centres offer the highest levels  
of resilience, security and cloud 
capacity to support virtualised 
services for businesses worldwide. 
We are working on a range of 
cloud-based business services 
offering storage, back-up and 
virtualised desktop infrastructure 
(‘VDI’) services amongst others.
5
manx telecom plc
annual report and accounts 2015 Revenue increase
+0.4%
EBITDA
+2.0%
Dividend for the year
+5.1%
Profit after tax
+27.9%
Diluted earnings per share
+19.4%
chairman’s statement
I am pleased to report a positive set 
of results for 2015 which are in line with 
the Board’s expectations. The core 
business performed particularly well 
with good growth from our broadband 
and mobile businesses.
Introduction
I am pleased to report a positive set of 
results for 2015 which are in line with the 
Board’s expectations. The core business 
performed particularly well with good 
growth from our broadband and mobile 
businesses.
Results
Revenue grew by 0.4% in the year to 
£79.6m and underlying EBITDA was 2.0% 
higher than the same period last year at 
£27.7m. Cash generation from operating 
activities was strong at £25.4m and we 
continue to make significant investment to 
support future growth.
Underlying profit before tax was 27.9% 
higher at £16.6m (2014: £12.9m). This was 
due to the higher level of EBITDA coupled 
with lower interest costs as a result of 
reduced debt and improved terms under 
the renegotiated debt facility. There was 
also lower depreciation due to mobile 
asset decommissioning in 2014. 
Underlying diluted earnings per share 
increased by 19.4% to 14.5p. 
6
manx telecom plc
annual report and accounts 2015 strategic report
Trading performance
It has been a busy year operationally for the 
business, with the introduction of several 
new exciting products for our customers 
and the retention of key strategic customers 
for the Group. At the beginning of the year 
we launched a superfast broadband 
product, Ultima Plus, offering customers 
broadband with download speeds of up to 
80Mbps and upload speeds of 10Mbps, and 
this has been adopted by 26% of the Ultima 
customer base by the end of the year . We 
also launched our 4G pay as you go service, 
which provides speeds up to ten times 
faster than the previous 3G network service, 
and this has helped to drive an increase in 
our pre-paid data revenue by over 50% 
compared to last year .
In February 2015, we announced the 
renewal of a contract with our biggest 
customer, the Isle of Man Government, for 
mobile, local area network, wide area 
network, fixed line, internet and network 
services for five years. We announced in 
April that the Isle of Man Government 
would be the anchor tenant for Phase 1 
of our Greenhill Data Centre. In Q4 we 
completed Phase 2 at the Greenhill Data 
Centre, before welcoming an anchor 
tenant into the facility in October. Both 
facilities are now over 50% occupied and 
our focus is on continuing to attract 
further co-location and managed service 
business into our data centre portfolio.
As expected, Global Solutions 
experienced revenue headwinds at the 
start of 2015 as a result of a reduction in 
termination revenues. Following targeted 
investment into this area of the business 
and the implementation of specific 
initiatives, including additional resource, 
we saw an improvement in performance 
in the second half, with momentum 
continuing into the current financial year.
Our people
The solid performance during 2015 
is once again a testament to the 
excellent customer service that 
our experienced and professional 
workforce at Manx Telecom provides. 
During the period we wished our former 
Chief Executive Officer , Mike Dee, a happy 
retirement and welcomed Gary Lamb, our 
former Chief Financial Officer , following a 
thorough selection process, into the role of 
Chief Executive Officer . We have recently 
announced the appointment of Danny 
Bakhshi as Chief Financial Officer , who 
joined us on 1 February 2016. Danny has an 
excellent track record in the industry and 
will be a valuable addition to the Board.
On 12 May 2016 we announced that Sir Miles 
Walker , who has been a Non-Executive 
Director of Manx Telecom since 2001, initially 
as a director and then as Chairman of 
Manx Telecom Holdings Ltd and following 
our IPO as a Director of Manx Telecom plc, 
is to retire at our Annual General Meeting. 
We are pleased that after a selection 
process Christopher Hall, who was 
Managing Director of Manx Telecom Ltd 
until April 2011, has agreed to join us as 
an Independent Non-Executive Director , 
subject to his election at the Annual General 
Meeting. He brings strong local relations and 
a strong technological background.
Dividend
The Board has declared a full year 
dividend of 10.4p per share (2014: 9.9p), 
and intends to pay a final dividend of 
6.9p on 24 June 2016. The shares will 
trade ex-dividend on 26 May 2016 and 
will have a record date of 27 May 2016.
Outlook
We will continue to follow the dual 
strategy of strengthening our position 
in our core market on the Isle of Man 
through high quality customer service and 
value for money offerings, whilst looking 
for growth on and off island by exploiting 
our data centre capacity and leveraging 
our mobile technology platform.
The completion of Phase 2 at the Greenhill 
Data Centre provides additional capacity to 
the data centre business and we will focus 
on increasing occupancy by attracting new 
customers looking for a full-service offering.
We have seen a good start to the year  
in Global Solutions where we have 
continued to build a good pipeline of 
business, continuing the momentum  
seen throughout the second half of 2015. 
Steady performance during the period, 
combined with the solid start to trading 
this year, confirming our confidence in the 
Company’s prospects for the year. This, 
together with our outlook for continued 
strong cash generation, allows us to 
reiterate our progressive dividend policy. 
Kevin Walsh
Non-Executive Chairman
key milestones 2015
5 January
4G service launched to Pay as you 
go customers
1 February
Launch of our superfast broadband 
product, Ultima Plus
12 February
All major telecommunications and 
managed service agreements renewed 
with Isle of Man Government
27 March
We won the ‘Best 
Telecommunications PLC’ category of 
the prestigious UK Stock Market 
Awards
7 April
We welcomed the 5,000th customer 
to our superfast Ultima service
14 April
With a contract for 25 racks to support 
front-line services, the Isle of Man 
Government was announced as the 
anchor tenant for Phase 1 of our 
Greenhill Data Centre
8 June
Our ‘Strongest Signal SIM’ was made 
available for direct sale to  
the UK for the first time under the 
brand name Chameleon Direct 
1 July
Gary Lamb was appointed Chief 
Executive Officer of Manx Telecom
4 August
Anchor tenant agreed a three year 
hosting contract with us for a total 
of 48 data hosting racks 
10 December
We won the ‘Best New Share Plan’ 
category at the ‘ifs ProShare’ Annual 
Awards 
21 December
Danny Bakhshi was announced as 
our new Chief Financial Officer
7
manx telecom plc
annual report and accounts 2015 ceo’s review
Looking ahead, we remain confident  
in the outlook for the Group, reflected  
in our commitment to maintain our 
progressive dividend policy. 
Overview
Following my appointment as Chief 
Executive Officer on 1 July 2015, I am 
delighted to present the full year results, 
after another good 12-month period for 
the business. It has been a busy year 
with a number of achievements  
to report.
The Company continues to provide 
a wide range of telecommunications 
services to consumers, businesses and 
the public sector on the Isle of Man, and 
we pride ourselves on our excellent 
customer service. Our core domestic 
business performed well during the 
year, with growth in fixed, broadband 
and data services, and mobile revenues. 
Following the launch of our 4G mobile 
network in 2014 we have seen an 
increase in the number of customers 
returning to Manx Telecom, high customer 
satisfaction levels and a resultant increase 
in mobile revenue for the year.
8
manx telecom plc
annual report and accounts 2015 strategic report
Growth in broadband revenues
+4.3%
Take up of high speed 
broadband
29%
Increase in post-paid 
customers
+4.3%
Growth in mobile revenues
9.3%
The Data Centre business has seen 
strong revenue growth during the period. 
This reflects a higher than usual level of 
equipment sales, as customers moved 
into the first phase of the Greenhill Data 
Centre (‘GDC 1’). We completed the second 
phase of our Greenhill Data Centre (‘GDC 
2’) and welcomed our anchor tenant into 
the facility in the fourth quarter. Both GDC 
1 and GDC 2 are now over 50% occupied 
and we continue to focus on attracting 
further co-location and managed service 
business into the portfolio.
The Global Solutions business has seen 
good growth in its core products, M2M, 
Strongest Signal Mobile (branded 
Chameleon) and the international 
traveller market, which helped to partially 
offset the expected decline in our SMS 
termination business.
The renewal of our long-term contract 
with the Isle of Man Government for 
mobile, local area network, wide area 
network, fixed line, internet and network 
services and securing them as an anchor 
tenant for phase 2 of our Greenhill Data 
Centre development are testament to the 
hard work of our teams on the ground 
and strong business partnerships on the 
Isle of Man.
The Isle of Man economy continues to 
perform well, with unemployment at 1.9%, 
31 years of unbroken GDP growth and 
economic growth forecast to continue. 
We look to support the Isle of Man 
Government in attracting business to 
the Island, and our telecommunications 
infrastructure and the services we 
provide form an important part of 
the Island’s continued success.
The Company was also pleased to have 
renegotiated its £80m credit facility on 
improved terms and extended the term 
to June 2020.
Results overview
The Company’s performance for the 
period was in line with the Board’s 
expectations. Revenue grew by 0.4%  
to £79.6m, driven by increases in fixed, 
broadband and data, mobile and data 
centre services, partially offset by a 
decline in Global Solutions revenues.
Underlying EBITDA was 2.0% higher 
than last year at £27.7m and the margin 
was maintained at 34.7% (2014: 34.2%). 
A reduction in the lower margin, 
wholesale SMS and voice elements 
of the Global Solutions business 
was partly offset by a high level of 
equipment sales and increases in the 
broadband and mobile business.
Cash generation has remained strong 
with cash generated from operations of 
£25.4m (2014: £27.0m), equating to cash 
conversion of 92% of EBITDA. 
Underlying profit after tax increased by 
27.9% to £16.6m (2014: £12.9m) primarily 
due to the increased EBITDA, lower 
interest costs (£1.3m reduction), lower 
depreciation (£0.4m reduction) and 
a positive movement in the fair value 
of interest rate swaps (£1.6m positive 
variance to prior year). This resulted in 
a 19.4% increase in underlying diluted 
earnings per share to 14.53p (2014: 12.17p).
We continue to invest in capital projects 
on the Isle of Man and have spent £8.0m 
(2014: £12.6m) in the year. This includes the 
development of the second phase of the 
GDC and the upgrade of our CRM billing 
and charging platform, which will 
enhance our consumer offering on the 
Isle of Man from 2016.
9
manx telecom plc
annual report and accounts 2015 Fixed, broadband and data services
Fixed, broadband and data services 
provide fixed line voice, broadband and 
connectivity services for customers, 
connecting approximately 37,000 homes 
and 4,000 businesses on the Isle of 
Man. Fixed, broadband and data is our 
largest business, representing 40% of 
all Company revenues. In 2015 revenue 
increased by 2.2% to £32m (2014: £31.3m).
On 1 September 2015 we opened up our 
fixed network, providing a wholesale 
fixed line product to our competitors.  
As part of this process, we rebalanced 
our tariffs, with fixed line tariffs increasing 
and VDSL broadband tariffs reducing. 
This has brought a competitive fixed line 
product to the market and a further 
incentive for customers to move to our 
higher speed broadband products. 
Fixed line revenues remained flat in the 
year, as the decline in fixed line usage 
was offset by line rental increases.
We continue to roll-out high speed VDSL 
broadband services (up to 40Mbps 
download) across the Island and now 
reach 91% of households, and is now  
at 29% penetration. Earlier this year we 
launched VDSL plus superfast broadband 
– Ultima Plus – which delivers download 
speeds of up to 80Mbps and upload 
speeds of 10Mbps. The sale of Ultima and 
Ultima Plus has helped broadband 
revenues to increase by 4.3% to £8.7m.
Mobile
Mobile had a strong year, with revenue 
up 9.3% to £20.1m (2014: £18.4m), driven 
primarily by increased inbound roaming 
revenue and increased post-paid  
contract revenue.
Our 4G network, which provides 99% 
population coverage at speeds of up to  
ten times faster than 3G services, is now 
available to contract and pay as you go 
customers who have a 4G-compatible 
handset. Launched in 2014, it continues  
to achieve high levels of customer 
satisfaction with adoption rates growing 
steadily across both the pay as you go 
and contract bases.
By the end of 2015, we had approximately 
34.5k pre-paid customers (2014: 35.1k) and 
30.1k post-paid customers (2014: 28.9k). 
The introduction of 4G and general 
up-selling of data packages has 
contributed to a 2.0% increase in post-
paid Average Revenue Per User (‘ARPU’) 
and 4.3% increase in pre-paid ARPU over 
the past 12 months.
Data centre
The data centre business offers co-
location, managed hosting, cloud  
and disaster recovery services to an 
international and local corporate client 
base. These services are supplied by 
three data centres at Douglas North, 
Douglas Central and Greenhill Data 
Centre. The data centres at GDC and 
Douglas North are Tier 3 designed data 
centres (according to Telecommunications 
Industry Association standards). This 
provides high standards of data security, 
resilience, and expandable hosting 
capacity, including business continuity 
and distributed denial of service 
protection (‘DDoS’).
During 2015 we completed the 
development of the second phase of our 
Greenhill Data Centre and welcomed 
an anchor tenant into the facility during 
the fourth quarter. Both GDC 1 and GDC 
2 are now over 50% occupied. Data 
centre revenues increased by 20.3% 
in the period, to £8.0m (2014: £6.6m), 
however this was driven by lower 
margin equipment sales as a result 
of new customers entering GDC 1.
We have seen a trend towards co-
location data centre business and our 
focus is to secure more managed service 
business to better utilise our investment.
Revenue
2015  
£’000
%  
Total 
revenue
2014  
£’000
%  
Total 
revenue
Y-o-Y 
%
Fixed, Broadband and Data 32,027 40.2% 31,338 39.5% 2.2%
Mobile 20,058 25.2% 18,357 23.2% 9.3%
Data Centre 7,951 10.0% 6,607 8.3% 20.3%
Global Solutions 14,122 17.7% 16,669 21.0% –15.3%
Other 5,440 6.8% 6,283 7.9% –13.4%
Total Revenue 79,598 79,254 0.4%
CEO review
continued
10
manx telecom plc
annual report and accounts 2015 strategic report
Global solutions
The Global Solutions business generates 
revenue from services which run 
on our domestic mobile technology 
platform and utilise our international 
roaming agreements. This enables 
us to offer a variety of products to 
UK and international partners who 
use our Global Solutions sim cards. 
There are four key revenue areas: 
wholesale SMS and voice, international 
traveller market, M2M and strongest 
signal mobile (branded Chameleon).
As expected, revenues declined in the 
period, with turnover down 15.3% during 
the year to £14.1m, (2014: £16.7m) driven by 
the decline in SMS termination revenue.  
A number of initiatives including 
additional resource, helped to increase 
revenues in the second half of the year 
and generate momentum into 2016. The 
higher margin core revenue from M2M 
and Chameleon, increased by 20% during 
the year, helping to offset some of the 
decline from reducing termination 
revenues and supporting the positive 
long-term outlook for Global Solutions.
Other revenues
Other revenues include the advertising 
revenue from our telephone directory, 
hardware equipment sales, 
interconnection fees and managed 
services.
Other revenue declined by 13.4% during 
the year to £5.4m (2014: £6.3m). This was 
primarily due to lower hardware 
equipment sales and the expected 
decline in directory advertising revenues, 
which accounted for 10% of the revenue 
decline in the period.
Gary Lamb
Chief Executive Officer
We continue to generate strong cash 
flow, which enables us to create value 
for shareholders, while continuing to 
invest in our infrastructure projects at 
an average of £10m per year over the 
last three years.
11
manx telecom plc
annual report and accounts 2015 Our objectives 2015 progress
strategic insight
Our vision is to provide the most complete 
advanced communication service, richly 
enhancing lives and businesses at home 
and overseas.
Maintain our leading 
position in core markets by 
innovating and maintaining 
the highest levels of 
customer service.
Grow by exploiting new 
market opportunities on 
and off-island with 
our market leading mobile 
platform and data centre 
capability.
 – 4G services launched to pre-paid customers and 
growing rates of 4G adoption overall. High levels of 
mobile customer satisfaction and network coverage 
have supported retention and win-back.
 – Superfast broadband service Ultima Plus launched, 
offering customers speeds of up to 80Mbps 
(download) and 10Mbps (upload) to around 50% of 
homes and businesses on the Island, which has 
driven increased up-sell.
 – We renewed our contract with our biggest customer, 
the Isle of Man Government, for mobile, local area 
network, wide area network, fixed line, internet and 
network services for five years.
 – After a competitive tender, and a complex and 
successful migration from their own premises, the 
Isle of Man Government became the anchor tenant in 
Phase 1 of our Greenhill Data Centre. The five year 
contract for 25 racks supports a variety of front-line 
Government services.
 – In the final quarter of 2015, we completed the second 
phase of our Greenhill Data Centre, and welcomed a 
prestige anchor tenant on a three-year data hosting 
contract for 48 data hosting racks.
 – We saw good sales momentum in a number of our 
Global Solutions segments; in particular the 
international traveller market, machine to machine 
and ‘strongest signal’ SIM services, branded 
Chameleon.
12
manx telecom plc
annual report and accounts 2015 strategic report
2016 objectives Key performance indicators
 – Further growth in our high-speed broadband 
and mobile businesses through up-selling to 
higher speed packages.
 – Trialling of LTE-A or 4G Advanced technologies 
offering significantly higher 4G speeds on 
selected smartphones and tablets.
 – Upgrade of our billing and customer care 
systems to ‘convergent’ capability, providing 
customers with more flexible and dynamic 
tariff plans.
 – Further uptake of co-location and managed 
hosting services driven by new data centre 
customers.
 – Introduction of a new suite of cloud-based 
solutions appealing to business customers 
on and off-island.
 – Continued growth in critical connection 
solutions, especially in developing UK Internet 
of Things segments as well as traditional 
strongest signal roaming (branded 
Chameleon) sectors.
 – Further growth in our existing Mobile Virtual 
Network Enabler (‘MVNE’) partnerships.
2013 2014 2015
30
10
20
0
29
19
11
2013 2014 2015
600
200
400
0
510
390
287
Penetration of high-speed broadband
29%
Data centre rack capacity
510
13
manx telecom plc
annual report and accounts 2015 our strategy in action 
relying on a world-class 4G network
14
manx telecom plc
annual report and accounts 2015 strategic report
More and more island businesses are 
switching on to how 4G superfast mobile 
broadband can help them to improve 
efficiency, save time and money, and 
provide better customer service.
Anyone in the farming and 
agriculture sectors can now  
have superfast internet access 
wherever they happen to be 
working. With 4G they can perform 
tasks on their smartphone or 
tablet device which previously 
may only have been possible by 
returning to their home or office.
Milan Veterinary Practice which 
has clinics across the Island with  
a total of 19 staff, including seven 
vets switched to Manx Telecom’s 
4G service soon after the network 
was launched.
Making a fast and accurate 
diagnosis is vitally important in 
providing the best possible 
treatment, and in getting the 
animal back to good health as 
soon as possible. Ray Cox, Practice 
Principal, says that 4G has made a 
massive difference in improving 
the diagnostic process. “We use  
4G to send and receive large 
image files such as X-ray images 
or photos of animals with skin 
conditions which can be difficult  
to diagnose. Being able to send 
these images from any location  
to colleagues can significantly 
reduce the time it takes to make 
the correct diagnosis”.
Manx Telecom’s 4G technology  
is helping Milan Vets do its most 
important job – reducing the  
time that an animal has to suffer 
with an illness or injury. “4G has 
enabled us to fast track treatment, 
especially for horses. It has 
definitely made a big difference  
to the service we can provide, 
which is good for the practice,  
our customers, and – most 
importantly – the animals we 
care for.”
15
manx telecom plc
annual report and accounts 2015 our strategy in action 
a virtual desktop environment,  
scalable for the future
16
manx telecom plc
annual report and accounts 2015 strategic report
RL360º is a leading provider of 
investment, protection and tax-
planning solutions. It’s a genuine 
global business based here on the 
Island with 300 staff worldwide 
overseeing £7bn in assets. 
A commitment to achieving the 
highest international standards  
is at the heart of all aspects  
of the business, including its  
IT requirements.
Manx Telecom dispensed with a 
traditional desktop computing environment 
for its own staff many years ago. Many 
Isle of Man businesses are now making 
the switch to a virtualised desktop 
computing environment.
In early 2015 we were delighted  
to complete the migration of 
RL360º’s desktop infrastructure to 
a virtualised environment which 
delivers excellent performance, 
scalability and capability utilising 
infrastructure from Cisco, Nimble 
and VMWare. The solution 
provides simplified management 
and control, a rich desktop 
experience on any device or over 
any network medium, all without 
compromising security.
Linda Karran, IT Contracts & 
Procurement Specialist at RL360°, 
commented: “The VDI solution 
provides much greater flexibility 
and makes it much easier to add 
new staff to the network, and for 
staff to work remotely. It makes 
the admin process much more 
efficient too. The installation went 
smoothly, and in operation the VDI 
solution has matched or exceeded 
all of the performance criteria 
outlined in the initial tender.”
17
manx telecom plc
annual report and accounts 2015 financial review
I was delighted to be appointed CFO  
of Manx Telecom on 1 February 2016  
and I am pleased to be presenting my  
first financial review to shareholders.
The fixed line, broadband and data 
business continued to perform well, with 
steady revenue growth of 2.2% to £32.0m 
(2014: £31.3m). The data centre business 
saw a significant increase in revenue to 
£8.0m (2014: £6.6m), primarily driven by 
one-off kit sales. Mobile revenues also 
increased significantly in 2015 to £20.1m 
(2014: £18.4m) driven by increased post 
paid contract revenue, sales of mobile 
handsets and inbound roaming revenue. 
Global Solutions had a challenging 2015 
with full year revenue of £14.1m (2014: 
£16.7m), a fall of 15.3%, as a result of a 
decline in mobile termination rates. Some 
of this decline has been offset by growth 
in the Chameleon product and 
international traveller market. Other 
revenues were down 13.4% to £5.4m 
(2014: £6.3m) due to one-off revenues for 
hardware equipment sales which were 
not repeated from 2014 and declining 
revenue from directory sales.
The Group generated underlying EBITDA 
of £27.7m (2014: £27.1m), in line with 
expectations which was up 2.0% on the 
previous year. The Group’s EBITDA 
margin increased 50bp to 34.7% (2014: 
34.2%) due to good performance from the 
core business and changing business mix 
within Global Solutions towards more 
sustainable products.
Depreciation and amortisation was £9.1m 
(2014: £9.5m), down £0.4m primarily due 
to network assets being fully written 
down in 2014. This includes charges for 
network infrastructure (fixed network, 
broadband network and mobile 
network) as well as IT equipment and 
office equipment.
Underlying operating profit increased 
by 5.5% to £18.6m (2014: £17.6m) aided 
by the lower depreciation and 
amortisation charge.
Underlying profit before tax increased by 
27.9% to £16.6m (2014: £12.9m) primarily 
due to the higher EBITDA, lower 
depreciation and lower interest charges 
due to improved terms following the 
renegotiation of the lending facility 
effective from 30 June 2015.
Group revenue increased by 0.4% to 
£79.6m (2014: £79.3m), with growth in 
our core on-island fixed, broadband and 
data business supplemented by good 
growth in our data centre business, 
which was offset by a decline in global 
solutions and other revenue streams.
Free cash flow
+5.1%
Net debt reduction
2.9%
Underlying operating profit
+5.5%
18
manx telecom plc
annual report and accounts 2015 strategic report
Underlying diluted EPS was up 19.4%, in 
line with the Board’s expectations at 
14.53p (2014: 12.17p).
The Company paid an interim dividend 
of 3.5p per share in November 2015 and 
declared a final dividend for 2015 of 6.9p 
per share on 30 March 2016 resulting 
in a full year dividend for 2015 of 10.4p 
per share, a 5.1% increase from 2014.
Costs
Costs of sales decreased by 2.7% in the 
year as a result of the reduction in Global 
Solutions revenue and the associated 
18.1% reduction in roaming costs.
Administrative expenses increased 
by 25.4% to £29.1m (2014: £23.2m) 
predominantly due to a one-off credit of 
£7.0m in the prior year arising from the 
closure of the defined benefit pension 
scheme to future accrual. Adjusting for 
this, administration expenses reduced 
by £1.1m, primarily due to various 
exceptional items in 2014, including a 
£0.6m impairment charge and the cost 
of transferring members of the defined 
benefit pension scheme to the defined 
contribution scheme (£0.8m). The main 
component of administrative costs is staff, 
the cost of which decreased by 3.2% in 
the period, including bonus payments.
Energy costs were up 4.6% during 2015 
reflecting increased occupancy of our 
new data centre. Mobile handset costs 
were 21.9% higher due to significant 
increase in corporate customer sales, 
whilst maintenance charges increased 
very slightly by less than 2%.
Net finance costs
Net finance costs reduced to £2.4m 
(2014: £8.4m) mainly as a result of a 
£4.6m charge in 2014 against previously 
capitalised transaction charges, following 
the changes to financing arising from 
the IPO in February 2014. Included in 
this figure is the cost of interest at £2.3m 
(2014: £3.3m), the reduction being due 
to lower interest rates secured from 
the renegotiation of external lending 
facilities. Interest payable on shareholder 
loan notes reduced to nil (2014: £0.3m).
One-off costs associated with the IPO 
and related restructuring, charged to the 
income statement, were nil (2014: £8.0m).
We recorded an unrealised gain of £0.3m 
on interest rate swaps due to increases 
in market interest rates since the prior 
year end. No swaps have been exited 
during the year, therefore there are no 
realised gains or losses.
Taxation
There is no corporate taxation payable 
on our profits for either 2015 or the 
comparative year. We have the benefit of 
an Isle of Man 0% corporate tax rate.
Cash flow
Cash generated from operating activities 
decreased by 5.8% to £25.4m (2014: 
£27.0m). This year-on-year reduction, 
despite the increase in EBITDA, is due 
to a working capital outflow of £1.7m, 
mainly caused by large trade and 
roaming debtor balances at the year end, 
compared to an inflow of £1.6m in 2014. 
Our free cash flow after investing 
activities was 5.1% higher at £15.6m (2014: 
£14.8m), out of which we serviced our 
borrowings and paid our dividend to 
shareholders.
Good cash generation enabled us to 
reduce our net debt to £52.2m, equivalent 
to 1.9 times underlying EBITDA.
Capital expenditure
The 2015 capital expenditure, including 
intangibles, was £8.0m (2014: £12.6m). Prior 
year included a £3.0m accrual for our 4G 
mobile network relating to final payments 
due in 2015. Adjusting for the 4G accrual, 
capital expenditure including intangibles 
for current and prior year averaged 
£10.3m per year, in line with our guidance.
Significant capital expenditure in the 
period included the completion of Phase 
2 of our new data centre in September 
2015 which cost £2.7m and £2.3m on fixed 
voice and mobile network upgrades.
The remaining capital expenditure was 
spread across a number of business 
areas including network enhancements, 
an upgrade to our CRM, billing and 
charging platform and customer projects.
Balance sheet
Property, plant and equipment 
decreased during the year by £1.1m to 
£64m. Capital additions were £7.9m (2014: 
£12.4m), of which £2.7m related to GDC 2 
and £2.3m on fixed and mobile networks. 
Depreciation of £8.9m (2014: £9.3m) was 
lower than last year by £0.4m.
We retain goodwill of £84.3m on the 
balance sheet arising from the purchase 
of Manx Telecom from Telefónica in 2010, 
which is robustly supported by current 
valuations.
The Group operates two pension 
schemes, a defined benefit scheme, and 
a defined contribution plan. During 2014 
the defined benefit scheme was closed to 
future accruals, and all current members 
transferred to a defined contributions 
scheme. Under accounting standard IAS 
19 the defined benefit scheme is shown 
as an asset of £0.4m (2014: £2.2m).
Current assets increased to £36.4m 
(2014: £32.7m). Cash held at the end of 
the period, increased to £16.6m (2014: 
£15.2m). Trade and other receivables 
increased by £2.5m, of which trade 
receivables increased by £1.6m, due 
to late settlements of some key trade 
debts and an increase in roaming 
debtors compared to prior year.
Current liabilities reduced to £24.9m  
(2014: £26.5m).
Non-current liabilities reduced to £69.6m 
(2014: £70.0m). Interest bearing loans and 
borrowings were relatively unchanged at 
£68.8m (2014: £68.9m). In September 2015 
the Company entered an interest rate 
swap which covered £50m of its banking 
debt (£70m) from July 2018 through to 
its maturity in June 2020, extending 
the period for which interest rates are 
hedged to match the lending terms. 
The fair value of the previously existing 
interest rate swaps was a £0.8m liability 
(2014: £1.0m), while the new interest rate 
swap fair value was a £0.1m asset.
Net debt at the period end was £52.2m 
(2014: £53.7m), aided by good cash 
generation, resulting in net debt to 
underlying EBITDA of 1.9 times.
Danny Bakhshi
Chief Financial Officer
19
manx telecom plc
annual report and accounts 2015 risk management  
& principal risks
The Board has the ultimate responsibility for determining 
the nature and extent of the significant risks it is willing to 
take in achieving its strategic objectives, as well as ensuring 
that risks are managed effectively across the Group by 
systems of risk management and internal control. 
The main focus of the Board is on ensuring that the 
response to these risks is appropriate and ensuring that 
the Group’s residual risk position is within its risk appetite. 
Since the last Annual Report we have further developed 
our risk management processes and management 
now analyses and reports on risks more systematically 
and with a process of deep dives, the output of which 
is communicated to and reviewed by the Board. 
Risk management process
Our risk management process aims to support the delivery 
of the Board’s strategy by managing the risk of failing 
to achieve our business objectives. By focusing our risk 
management system on the early identification of key risks, 
it enables us to consider the existing level of mitigation and 
the management actions required to either reduce or 
remove the risk. Where the reduction or removal of the risk 
is not possible, the Group formulates a management action 
plan to respond to the risk should the risk materialise. 
While the Board has the ultimate responsibility, the 
Audit Committee, as described in the Audit Committee 
report, is charged with ensuring that appropriate 
measures are in place to validate the strength of 
internal controls and risk mitigation. In doing so it is 
supported by both Internal Audit and External Audit. 
Ongoing monitoring
The Board performs regular reviews of the most significant 
risks, with interim updates from management if significant 
issues arise. It evaluates key areas of risk through a 
series of presentations from management and functional 
leads on matters most relevant to the organisation e.g. 
Regulation, Pensions, Cyber attacks and information 
security, Technology and the Competitive environment.
The quality and consistency of risk reporting is 
supported through a number of other monitoring 
and reporting processes including:
 – Annual Group strategy process and Board presentations;
 – Monthly Chief Executive business review reports of the key 
financial and operational performance levels within each 
area of the business; and
 – Monthly detailed finance reviews.
Group Operating Executive and Senior Leadership Team
There are also defined roles within the process for the Group 
Operating Executive and the Group Senior Leadership Team.
The Group Operating Executive reviews summary reports 
based on the information submitted on a quarterly basis by 
the operational and functional leads from each area, each 
of whom perform a detailed risk review exercise and update 
the Group risk register. The register ensures consistency of 
approach in reporting of risks and requires management to:
 – Identify and classify each risk as financial, operational,  
or strategic;
 – Assess the inherent risk impact and likelihood;
 – Identify mitigation measures;
 – Allocate an owner who has responsibility for the  
timely implementation of the agreed action plan; and
 – Report on implementation of strategies to address  
residual risk exposures.
Audit and  Risk 
Committees
Business areas –  
management team
Risk identification and 
analysis.
Working with middle 
management and team 
leaders to identify and 
quantify principle areas 
of risk.
Leadership team – review 
and prioritisation
The leadership team review 
and challenge the findings 
of the Management Team 
quarterly.
Review of the impact and 
probability of risks 
supports informed 
decision making regarding 
prioritisation and 
mitigation strategies.
Audit Committee –  
validation of controls 
and mitigations
Suitability of controls and 
mitigations is validated, 
and where necessary 
Internal Audit and other 
independent bodies as 
appropriate will provide 
further assurance.
Main Board – review
Regular review of the 
significant risks, agree 
how these can best be 
controlled and mitigated 
and determine the 
extent to which residual 
risks are acceptable.
Board Executive   
Committee
Group Risk 
Coordinator
20
manx telecom plc
annual report and accounts 2015 strategic report
Risk
Underlying  
risk level Impact Mitigation Changes in the year
Regulation
Stable Manx Telecom operates under  
licence from the Isle of Man 
Communications Commission, which 
regulates the telecoms market on  
the Island. An adverse change to our 
licence or in the focus of regulation 
remains a principal risk to the business.
We remain committed to open dialogue and 
transparent reporting with the regulator so 
that we might work to support the continuing 
growth of the economy, through investing in 
the business to support the introduction of 
new and innovative products. 
Further investment in data 
centre facilities, and the 
deployment of high speed 
broadband continue to 
reinforce our commitment  
to the Island. The launch of a 
wholesale fixed line product 
has enabled us to further 
open the market.
Increased 
competition
Stable Competition in the domestic and  
wider markets has the potential to 
significantly impact our revenue 
streams.
A strategy to continue focusing on Customer 
Service and Value Added propositions across 
the portfolio of our products means that we 
are able to maintain market share and build 
customer loyalty, rather than try to compete 
purely on price.
The Group regularly benchmark product 
pricing against domestic competition, and 
against other markets to ensure that our 
Strategy remains effective.
We also recognise the importance of key 
customers to our business and apply 
ourselves to developing relationships to 
ensure that we can understand and  
support their strategic objectives.
Our principle competitors 
have continued to focus  
their efforts on gaining 
market share. 
The launch of wholesale 
fixed line products into the 
market has provided the 
opportunity for further 
competition. However, the 
impact on the Group has 
been marginal.
Legislative 
change 
(principally 
tax)
Stable Current corporate tax arrangements 
make the Isle of Man an attractive 
economy in which to invest and do 
business. The Group benefits from this 
environment both directly from the  
zero % corporate tax rate, and also  
from the wider economic benefit that 
arises from a growing economy. 
Significant changes to legislation both on 
the Isle of Man and further afield could 
result in a deterioration of the economy.
The Group has limited opportunity to directly 
influence Government Policy or legislation, 
although we communicate our position 
through regular discussion with members  
of the legislature.
The principal legislation 
affecting the Group has  
not changed. 
Technology 
and 
information 
risk
Increasing The market in which the Group 
operates creates a high reliance on 
technology for the provision of services 
to our Customers. In the event that 
elements of the service provision fail  
as a result of failures in our network,  
or there are breaches in our 
information security systems, the 
impact is likely to be felt beyond any 
initial revenue loss. It is also likely to 
extend to reputational damage and a 
loss of Customer confidence, with the 
attendant impact on future business.
The technology strategy focuses on network 
resilience, future proofing wherever possible, 
decreasing the dependency on single supplier, 
and the use of ‘off the shelf’ technologies, 
rather than bespoke solutions. It also places 
significant emphasis on information security 
systems and mitigating the risk of cyber-attack 
and other threats to confidential data. 
Investment during the year 
has been directed towards 
the continuing reduction in 
technology risk, further 
reducing key supplier and 
bespoke technology 
dependency.
Arising from the heightened 
threat of cyber-attacks we 
have carried out a detailed 
preparedness review, which 
has been used to input into 
the risk management 
process.
Pension
fund
Stable The Group supports a defined benefit 
pension scheme for some employees 
and changes to investment returns and 
actuarial assumptions could cause an 
increase in funding requirements.
Regular review of the scheme’s funding 
strategy provides an opportunity to ensure 
that the scheme operates efficiently, and that 
any issues that arise can be addressed in a 
timely manner. The Trustees are provided 
with support to ensure that the scheme 
continues to deliver the necessary returns  
to fund its ongoing liabilities.
There have been no 
significant changes to the 
scheme since it was closed  
to future accrual in 2014.
Principal risks 
We acknowledge that our processes can only provide reasonable assurance that the principal risks facing the business are 
identified and that we can subsequently manage these risks so that any potential impacts are reduced appropriately. We 
recognise that we cannot guarantee that all risks are identified, or that the nature of identified risks will remain constant.
21
manx telecom plc
annual report and accounts 2015 our responsibility to  
the isle of man
At Manx Telecom, we know that it’s  
not enough to provide great products 
and services. As well as supporting  
the community through a range of 
sponsorships and charitable initiatives, 
our responsibility to the Isle of Man goes 
much further and embraces wider 
social, environmental, and ethical goals, 
especially through the use of technology.
community
It’s our community
This is our initiative that supports 
a wide range of local community 
projects with cash awards. Since it 
began in 2008 Manx Telecom’s ‘It’s 
our community’ scheme has donated 
tens of thousands of pounds to local 
charities and community groups, with 
some of the recipients being groups 
our employees are closely involved in.
In 2015, 15 organisations from across  
the Island benefited from the scheme, 
including the local Duke of Edinburgh’s 
award scheme, Friends of the Curraghs 
Wildlife Park and the Isle of Man Live at 
Home Scheme.
‘It’s our community’ is a simple 
and effective way to ensure a small 
donation can make a big difference 
and we are pleased to confirm that 
the scheme will continue in 2016.
We seek to sponsor and support activities 
that by definition strive to build a stronger 
local community, that are consistent with 
our values and are relevant to our 
employees. Annual funding is also 
provided to community initiatives that our 
employees are actively involved in.
‘Staying safe online’ continues to be 
an important cause for us. We have a 
raft of initiatives designed to help young 
people stay safe, both when using 
the internet, and their mobile phone. 
In early 2015, and in conjunction with 
the Isle of Man College and the Isle of 
Man Constabulary, we created a new 
guide specifically aimed at teenagers, 
to help them stay safe online. We also 
supported ‘Crucial Crew’, an island-wide 
initiative from multiple organisations 
and companies to help children learn 
important life skills and stay safe.
Manx Telecom is delighted to work 
with the Isle of Man Government on 
the ‘Digital Inclusion’ initiative; the 
use of technology to help reduce social 
isolation amongst the elderly. After a 
successful trial in 2015, this is a cause 
which will be expanded further in 2016, 
with the active support of employees 
from across the company.
22
manx telecom plc
annual report and accounts 2015 strategic report sponsorships
Parish Walk
The 85 mile walk starts at the National 
Sports Centre in Douglas at 8 am on 
Saturday 18 June 2016 and entrants have 
24 hours to walk the 85 miles checking in 
at the 17 Island Parish Churches. Now in 
its 103rd year, the event brings out the 
very best in our community and every 
year those who take part raise large 
sums for a host of charities and good 
causes. We provide the event organisers 
with technical, logistical, marketing and 
financial support.
www.parishwalk.com
Tough Mann Challenge
Tough Mann is a team-oriented 
10k obstacle course designed to  
test physical strength and mental 
courage with many of the obstacles 
requiring participants to help each 
other. It’s hard to put the Tough 
Mann experience into words, it’s  
a feeling like no other and a day 
where lifelong memories are 
created. Manx Telecom is pleased 
to support this year’s event as 
headline sponsor on 6 August 2016.
www.toughmann.com
End 2 end Mountain Bike 
Challenge
Now in its 20th year the end 2 end 
provides a unique 75km endurance 
challenge from the North to the 
South of the Island, through 
plantations, across heather clad 
moors, forest trails, sharp climbs 
and breathtaking descents. Manx 
Telecom assists the event with both 
funding and technical support. 
Many of the Company’s employees 
will be among the 1,500 competitors 
from the Isle of Man, UK and 
beyond lining up at the start on 
11 September 2016.
www.end2end.com.im
The Royal Manx 
Agricultural show
The Royal Manx Agricultural Show  
is arguably the biggest community 
event on the Island, and a 
longstanding Manx institution 
offering a prestigious annual 
agricultural show alongside a 
weekend of fun, entertainment and 
attractions for the entire family. We 
are delighted to sponsor the show 
for the fourth year in succession. 
This year’s show falls on Friday 
12 and Saturday 13 August 2016.
www.royalmanx.com
23
manx telecom plc
annual report and accounts 2015 4. 5.
board of directors
1. Kevin Walsh Non-Executive Chairman
Kevin was appointed Chairman on the Company’s admission to 
AIM in February 2014. He is also Chairman of the Remuneration 
Committee.
Kevin was an Executive Director of KCOM Group plc, between May 
2004 and August 2014. In addition he was the Chief Executive for the 
KC brand, which is the market-leading internet and telecoms provider 
for Hull and East Yorkshire. Prior to joining KCOM in 2000 Kevin was 
Managing Director of an internet startup and held a number of 
Divisional Managing Director roles within the Electrolux group.
Committee membership
Kevin is Chairman of the Remuneration Committee and a member 
of the Audit and Nomination Committees.
2. Gary Lamb Chief Executive Officer
Gary Lamb joined the business in October 2011 as Chief Financial 
Officer, and on 1 July 2015 became the Chief Executive Officer for 
the Manx Telecom Group. Gary is a qualified accountant (CIMA) 
who has gained extensive business experience over the past  
20 years in numerous senior roles. Prior to joining Manx Telecom, 
Gary was a Founder Director of Bladon Jets Limited and remains  
a Non-Executive Director. Prior to this, Gary was the Finance & 
IT Director of Strix Limited, a world-leading innovator and 
manufacturer of thermostatic controls for water boiling appliances.
Committee membership
None
3. Danny Bakhshi Chief Financial Officer
Danny Bakhshi was appointed Chief Financial Officer for the Manx 
Telecom Group in February 2016 having gained extensive 
experience in the Telecoms industry after holding various senior 
leadership roles in BT, Vodafone and latterly Virgin Media where 
he held the position of Executive Commercial Director. Danny is a 
Fellow of the Association of Chartered Certified Accountants (FCCA).
Committee membership
None
4. Jeffrey Hume Senior Independent Non-Executive Director
Jeffrey Hume joined the business as a Non-Executive Director and 
the Chairman of its Audit Committee in January 2013. He became 
the Senior Independent Director of Manx Telecom plc on its IPO and 
subsequently the Chairman of the Nomination Committee. He is 
also the Deputy Chairman of the Dover Harbour board, the Senior 
Independent Director of the housing association Moat Homes Ltd,  
a member of the London Stock Exchange’s Primary Markets Group, 
and was the Chairman of Hyder Consulting plc until its sale in 2014. 
He is a Fellow of both the Institute of Chartered Accountants and 
the Association of Corporate Treasurers.
Committee membership
Jeffrey is Chairman of the Audit Committee and the Nomination 
Committee, and also a member of the Remuneration Committee.
5. Sir Miles Walker, CBE, LLD (hc) Non-Executive Director
Sir Miles was awarded a Knight Batchelor in 1997 for services to the 
Government of the Isle of Man and was honoured as Commander 
of the British Empire in 1990. He became a Director of the family 
company, which was involved with dairy farming and the retail 
dairy industry. From 1976 to 2001, Sir Miles was a member of the Isle 
of Man Government, having been re-elected in 1981, 1986, 1991 and 
1996. Highlights of his career include being in First Ministerial Office 
from 1981 to 1986, Chief Minister from 1986 to 1996 and a Member of 
Treasury from 1996 to 2001.
Committee membership
Sir Miles is a member of the Audit, Remuneration and Nomination 
Committees.
1. 2. 3.
24
manx telecom plc
annual report and accounts 2015 3. 4.
governance
executive committee
4. David Smith Marketing Director
David joined Manx Telecom in 2011 and leads the marketing 
communications, product management and consumer sales 
teams. Prior to joining Manx Telecom, David was Regional Vice 
President Marketing Communications for Cable & Wireless in  
the Caribbean where he played a major role in developing and 
launching new brand propositions across 13 countries. He has also 
held senior marketing positions for telecoms operators in the UK, 
the Channel Islands, the Caribbean and Pakistan.
1. John McChesney Human Resources Director
Prior to joining Manx Telecom in 2003, John held a number of key 
HR roles, primarily within the finance sector. He spent 16 years with 
the Zurich Financial Services group, and moved to live on the Island 
in 1995 to review and build the HR function within Allied Dunbar.  
He also spent time at Mi Research Ltd, an international consultancy 
group specialising in organisational culture change.
2. Fergal McKenna Sales Director
Fergal joined Manx Telecom as Sales Director in January 2012. He 
has extensive sector experience gained working first with Siemens 
Nixdorf and more recently with Cable & Wireless and Colt in 
leadership positions in Ireland, the UK and Europe. He was Director 
of Corporate Sales in Ireland and also led Colt’s sales team in the  
UK finance sector, focusing on major international banks.
3. Kevin Paige Customer Services and Technology Director
Kevin has more than 30 years’ experience in the telecoms and IT 
industries and joined Manx Telecom in 2013 with responsibility for  
all technology aspects of Manx Telecom’s product portfolio, and 
service delivery on and off the Island. Before joining Manx Telecom, 
Kevin was with eircom, Ireland’s largest telecommunications 
operator. From 2007 to 2010, Kevin worked for Level 3 
Communications as Senior Vice President Technology Services 
– Europe and prior to that, held senior positions with  
Cable & Wireless and Vodafone UK.
1. 2.
25
manx telecom plc
annual report and accounts 2015 directors’ report
The Directors are pleased to present their Annual Report 
and consolidated financial statements of Manx Telecom plc 
for the year ended 31 December 2015.
The Group’s business activities, together with the factors likely to 
affect its future development, performance and position are set 
out in the Strategic Report on pages 1 to 23 which is 
incorporated into this report by reference together with the 
Corporate Governance Report on pages 24 and 40. These 
together contain certain forward-looking statements and 
forecasts with respect to the financial condition, results, 
operations and business of Manx Telecom plc which may 
involve risk and uncertainty because they relate to events and 
depend upon circumstances that will occur in the future. There 
are a number of factors that could cause actual results or 
developments to differ materially from those expressed or 
implied by these forward-looking statements and forecasts. 
Nothing in this Annual Report to shareholders should be 
construed as a profit forecast.
Results and dividends
Results for the year are set out in the financial statements on 
pages 41 to 78. The financial position of the Group, its cash flows 
and liquidity position are further described in the Financial 
Review on pages 18 to 19.
Details of the proposed final dividend for the year ended 
31 December 2015 are given in the Strategic Report on page 7. 
An interim dividend of 3.5p per share for the six months ended 
30 June 2015 was paid on 9 November 2015.
Directors
The names and biographies of the current Directors of the 
Company are set out on page 24 of this Annual Report.
Mike Dee resigned as Chief Executive Officer on 30 June 2015 
and Gary Lamb was promoted to CEO with effect from 1 July 
2015. Danny Bakhshi, the new Chief Financial Officer was 
appointed to the Board on 1 February 2016.
Directors’ share interests
Particulars of the number of ordinary shares of the Company in 
which the Directors were beneficially interested during the year 
are set out below.
At 1 January 
2015
At 31 December 
2015
Mike Dee 576,228 *
Gary Lamb 500,000 500,000
Danny Bakhshi – –
Jeffrey Hume 70,422 70,422
Sir Miles Walker 63,523 63,523
Kevin Walsh 70,422 70,422
*  Mike Dee resigned as Chief Executive Officer of the Company on 30 June 2015. 
Consequently his shareholding at 31 December 2015 is not presented above. At 
30 June 2015 his beneficial interest in ordinary shares of the Company was 
576,228 and he had 192,076 outstanding CIP awards.
Directors’ remuneration
The Directors’ Remuneration Report is set out on pages 33 to 38.
Related parties
The Group has no related parties other than the Directors and 
key management personnel.
Directors’ indemnities
The Articles permit the Board to grant the Directors indemnities 
in relation to their duties as Directors, including third party 
indemnity provisions (within the meaning of the Isle of Man 
Companies Act 2006) in respect of any liabilities incurred by 
them in connection with any negligence, default, breach of duty 
or breach of trust in relation to the Company. Deeds of 
indemnity have been granted to each Director, but do not cover 
criminal acts.
Directors’ and Officers’ liability insurance
Directors’ and Officers’ Liability Insurance cover is in place at the 
date of this report. The Board remains satisfied that an 
appropriate level of cover is in place and a review of cover will 
take place on an annual basis.
Articles of Association
The Articles of Association (‘Articles’), adopted on 3 February 
2014, may only be amended by special resolution of the 
shareholders. A copy of the Articles is available on request from 
the Company Secretary.
Share capital: structure, rights and restrictions
Details of the Company’s share capital are set out in note 16 to 
the financial statements on pages 67 to 68. The Company has a 
single class of share capital divided into 112,972,286 ordinary 
shares of £0.002 each. The rights and obligations attaching to 
these shares are governed by Isle of Man law and the 
Company’s Articles.
Voting rights attaching to shares
Ordinary shareholders are entitled to receive notice and to 
attend and speak at any general meeting of the Company. On a 
show of hands every shareholder present in person or by 
proxy (or being a corporation represented by a duly authorised 
representative) shall have one vote, and on a poll every 
shareholder who is present in person or by proxy shall have 
one vote for every share of which he is the holder. The Notice of 
Annual General Meeting specifies deadlines for exercising voting 
rights and appointing a proxy or proxies.
Deadlines for exercising voting rights attaching to shares
The Articles provide a deadline for the submission of proxy 
forms (whether by an instrument in writing or electronically) of 
not less than 48 hours before the time appointed for the holding 
of the meeting or the adjourned meeting.
Shares in uncertificated form
Directors may determine that shares may be held in 
uncertificated form and title to such shares may be transferred 
by means of a relevant system or that shares should cease to 
be so held and transferred.
26
manx telecom plc
annual report and accounts 2015 governance
Variation of rights attaching to shares
The Articles provide that rights attached to any class of shares 
may be varied with the written consent of the holders of not 
less than three quarters in nominal value of the issued shares, 
or with the sanction of a special resolution passed at a 
separate general meeting of the holders of those shares. At 
every such separate general meeting, the quorum shall be two 
persons holding or representing by proxy at least one third in 
nominal value of the issued shares (calculated excluding any 
shares held in treasury). The rights conferred upon the holders 
of any shares shall not, unless otherwise expressly provided in 
the rights attaching to those shares, be deemed to be varied  
by the creation or issue of further shares ranking pari passu 
with them.
Restrictions on the transfer of shares and voting rights 
attaching to shares
There are no restrictions on the transfer of the ordinary shares 
other than:
 – awards made at Admission under the Co-Investment Plan 
are conditional upon there being only limited disposals by the 
participants of their own investment shares;
 – where, from time to time, certain restrictions may become 
imposed by laws and regulations (for example, insider 
trading laws); and
 – pursuant to the Listing Rules of the Financial Conduct 
Authority whereby certain Directors, officers and employees 
of the Company require the approval of the Company to 
deal in the ordinary shares.
No shareholder holds securities carrying special rights as to the 
control of the Company. There are no limitations on the holding 
of securities. There are no restrictions on voting rights or any 
arrangements by which, with the Company’s cooperation, 
financial rights carried by securities are held by a person other 
than the holder of the securities. There are no agreements 
between holders of securities that are known to the Company 
which may result in restrictions on the transfer of voting rights.
Authority to purchase own shares
The Directors have been authorised to purchase up to 10% of 
the Company’s issued ordinary share capital as at the Annual 
General Meeting held on 8 June 2015. This authority will expire 
at the Annual General Meeting in 2016 at which a resolution to 
renew the authority for a further year will be proposed. No 
shares have been purchased by the Company during the year.
As at 29 April 2016, being the latest practicable date prior to the 
publication of this report, the Company did not hold any shares 
in treasury.
Appointment and replacement of Directors
Unless determined by ordinary resolution of the Company, the 
number of Directors shall not be less than two. A Director is not 
required to hold any shares in the Company by way of 
qualification.
The Board may appoint any person to be a Director and such 
Director shall hold office only until the next AGM, when he or 
she shall be eligible for appointment by the shareholders. The 
Articles provide that at each AGM, one third of the Directors for 
the time being (or, if their number is not a multiple of three, then 
the number nearest to but not exceeding one third) shall retire 
from office. A Director who retires at any AGM shall be eligible 
for reappointment. In addition, any Director appointed by the 
Board shall hold office only until the next following AGM and 
shall then be eligible for appointment.
Power of Directors
Subject to the Articles, the Isle of Man Companies Act 2006 and 
any directions given by special resolution, the business of the 
Company shall be managed by the Board who may exercise all 
the powers of the Company to, for example: borrow money; 
mortgage or charge any of its undertakings, property and 
uncalled capital; and issue debentures and other securities, 
whether outright or as collateral security for any debt, liability or 
obligation of the Company.
Political donations
The Company has made no political donations during the year 
and intends to continue its policy of not doing so for the 
foreseeable future.
Post-balance sheet events
Post-balance sheet events are set out in note 25 to the financial 
statements on page 78.
Major interests in shares
As at 29 April 2016, the Company had been advised, in 
accordance with the Disclosure and Transparency Rules of the 
Financial Conduct Authority, of the following notifiable interests 
(whether directly or indirectly held) in 3% or more of its voting 
rights:
Number of securities in issue – 112,972,286. AIM securities not in 
public hands – 2.16%.
Identity of significant shareholders (over 3%) as follows: 
%
Standard Life Investments Limited 7.35
FIL Investment Services (UK) Limited 6.52
AXA Investment Managers UK Limited 5.65
Aberdeen Fund Managers Limited 5.54
Unicorn Asset Management Limited 5.06
Santander Asset Management UK 5.02
Hargreave Hale Limited 4.78
Premier Fund Managers Limited 4.71
Oakley Capital Management Limited 3.43
27
manx telecom plc
annual report and accounts 2015 Going concern
After making enquiries, the Directors have a reasonable 
expectation that the Group has adequate resources to continue 
in operational existence for the foreseeable future. In making 
this assessment they have considered the Company and Group 
budgets, and cash flow forecasts for the period to December 
2017. The Group has considerable financial resources, minimal 
liquidity risk and is operating within a sector that is experiencing 
relatively stable demand for its products. The Directors 
therefore have a reasonable expectation that the Company 
and the Group have adequate resources to continue in 
operational existence for the foreseeable future. Thus they 
continue to adopt the going concern basis of accounting in 
preparing the annual financial statements.
Audit information
Each of the Directors at the date of the approval of this report 
confirms that:
 – so far as he is aware, there is no relevant audit information 
of which the Company’s auditors are unaware; and
 – he has taken all the reasonable steps that he ought to have 
taken as a Director to make himself aware of any relevant 
audit information and to establish that the Company’s 
auditors are aware of the information.
Registered agent
The registered agent of the Company at 31 December 2015 was 
Estera Trust (Isle of Man) Limited (formerly Appleby Trust (Isle of 
Man) Limited) who served throughout the year and has 
continued to date.
Auditors
The Auditors, KPMG Audit LLC, have indicated their willingness 
to continue in office and a resolution seeking to reappoint them 
will be proposed at the Annual General Meeting.
Annual General Meeting
The Company’s Annual General Meeting will be held at the 
Company’s main office at the Isle of Man Business Park, Cooil 
Road, Braddan, Isle of Man IM99 1HX on 15 June 2016 at 9am. 
Details of the meeting venue and the resolutions to be proposed 
are set out in a separate Notice of Meeting.
The Directors’ Report has been approved by the Board of Manx 
Telecom plc.
By order of the Board
Danny Bakhshi
Company Secretary
12 May 2016
Manx Telecom plc
Registered Office:
33-37 Athol Street
Douglas
Isle of Man IM1 1LB
Company No: 005328V
directors’ report 
continued
28
manx telecom plc
annual report and accounts 2015 governance
corporate governance 
report
Dear Shareholder
Principles of Corporate Governance
As a Board we recognise that applying sound governance 
principles in running the Company is essential to provide a solid 
platform for growth and to maintain the trust of our 
stakeholders. The Directors have decided to apply the principles 
set out in the QCA Code, which is a similar but simplified version 
of the UK Corporate Governance Code (‘the Code’). The 
Directors also acknowledge the importance of the principles set 
out in the Code and, although adherence to the Code is not 
compulsory, the Directors aim for the Company to apply the 
Code to a greater extent, relative to its size.
The Board
The Board has arranged a schedule of meetings to consider 
strategy, performance and the framework of internal controls. 
We have a Board that has and will support and challenge 
management to deliver its objectives. The Company has 
established Audit, Remuneration and Nomination Committees 
of the Board with formally delegated duties and responsibilities. 
To enable the Board and its Committees to discharge their 
duties, all Directors receive appropriate and timely information. 
Briefing papers are distributed to all Directors in advance of 
Board meetings. All Directors have access to the advice and 
services of the Company Secretary, who is responsible for 
ensuring that the Board procedures are followed and that 
applicable rules and regulations are complied with.
As Chairman I would like to state my full commitment to 
maintaining high standards of corporate governance and to 
being transparent about our arrangements.
Kevin Walsh
Chairman
Operation of the Board and its Committees
The role of the Board
The Board has an approved Schedule of Matters Reserved for 
the Board which sets out the Board’s responsibilities. The key 
tasks of the Board are:
 – setting the Company’s values and standards;
 – approval of the Group’s strategic aims and objectives;
 – approval of operating and capital expenditure budgets;
 – oversight of operations ensuring adequate systems of 
internal controls and risk management are in place, ensuring 
maintenance of accounting and other records and 
compliance with statutory and regulatory obligations;
 – review of performance in light of strategy and budgets 
ensuring any necessary corrective actions are taken;
 – approval of the financial statements, Annual Report and 
accounts, material contracts and major projects;
 – approval of dividend policy;
 – changes to structure, size and composition of the Board;
 – determining remuneration policy for the Directors and senior 
executives and approval of the remuneration of the 
Non-Executive Directors; and
 – approval of communications with shareholders and the market.
Composition of the Board
The Board comprises five Directors, two of whom are Executive 
Directors, and three of whom are Non-Executive Directors, 
reflecting a blend of different experience and backgrounds.  
A majority of the Directors are resident on the Isle of Man. 
Notwithstanding Sir Miles Walker’s involvement with the Group 
prior to the IPO, each Non-Executive Director is deemed 
independent for the purposes of the QCA Code. Details of each 
of the Directors’ experience and background is given in their 
biographies on page 24, apart from Chris Hall whose biography 
is given in the Notice of Annual General Meeting.
Appointments to the Board and re-election
Danny Bakhshi and Christopher Hall will stand for election and 
Jeffrey Hume will stand for re-election at the 2016 Annual 
General Meeting. The process for re-election of Directors of the 
Company is governed by its Articles. At each Annual General 
Meeting of the Company one third of the Directors who are 
subject to retirement by rotation or, if their number is not three 
or a multiple of three, the number nearest to but not exceeding 
one third, shall retire from office. If there are fewer than three 
Directors who are subject to retirement by rotation, one 
Director shall retire from office. Under the Articles, the Board 
has the power to appoint a Director during the year but any 
person so appointed must stand for election at the next Annual 
General Meeting.
Division of responsibilities
Chairman and Chief Executive Officer
The division of responsibilities between the Chairman and Chief 
Executive Officer has been agreed by the Board.
Senior Independent Director
The Senior Independent Director is Jeffrey Hume who is 
available to shareholders as a communication channel if 
required.
Non-Executive Directors
The Non-Executive Directors’ letters of appointment set out the 
duties of the Director and commitment expected. Non-
Executive Directors are appointed for an initial three-year term 
with typical tenure expected of two three-year terms, subject to 
re-election by shareholders. They are expected to commit at 
least 24 days per annum to their role. Key elements of the 
Non-Executive Director’s role are:
 – Strategy – Constructively challenge and develop proposals.
 – Performance – Scrutinise the performance of management 
in meeting agreed goals and objectives and monitor 
reporting of performance.
 – Risk – Non-Executive Directors should satisfy themselves on 
the integrity of financial information and that financial 
controls and systems of risk management are robust.
 – People – Determine appropriate levels of remuneration of 
Executive Directors and prime role in appointing Executive 
Directors and succession planning.
29
manx telecom plc
annual report and accounts 2015 Development, information and support
The Directors are encouraged to attend training and continuing 
professional development courses as required.
The Chief Financial Officer, Danny Bakhshi, is also the Company 
Secretary and supports the Chairman in ensuring that the 
Board receive the information and support they need in order 
to carry out their roles.
Conflicts of interest
A process has been developed to identify any of the Directors’ 
potential or actual conflicts of interest. This includes declaring 
any new conflicts before the start of each Board meeting.
Performance evaluation
An internal performance evaluation of the Board and its 
Committees was carried out and the results were analysed in 
order to identify areas for improvement. The outcome of these 
reviews indicated that the Board and its Committees were 
effective in carrying out their duties.
Board and committee attendance
The number of formal scheduled Board and committee 
meetings held and attended by Directors during the year was 
as follows:
Board Audit Remuneration Nomination
Kevin Walsh 7/7 3/3 5/5 3/3
Mike Dee* 3/3 – – –
Gary Lamb 7/7 – – –
Jeffrey Hume 7/7 3/3 5/5 3/3
Sir Miles Walker** 6/7 3/3 4/5 3/3
* Mike Dee resigned as a Director of the Company on 30 June 2015.
** Sir Miles Walker was unable to attend the meetings held on 2 November 2015 
due to a prior commitment.
The Board Committees
Membership of all three Board Committees is composed of the 
Chairman and the two Non-Executive Directors. As such they 
are compliant with both the UK Corporate Governance and 
QCA Codes.
Members of the Committees are authorised to obtain, at the 
Company’s expense, professional advice on any matter within 
their terms of reference and to have access to sufficient 
resources in order to carry out their duties. The role of the 
Nomination Committee is set out below. A report of the Audit 
Committee is provided separately on pages 31 to 32 and the 
Directors’ Remuneration Report is provided on pages 33 to 38.
The Role of the Nomination Committee
The Nomination Committee consists entirely of independent 
Non-Executive Directors. The Chairman is Jeffrey Hume.
During the year, the Nomination Committee addressed the 
requirement to select a new Chief Executive Officer following 
the announcement on 12 February 2015 that Mike Dee would 
retire. The selection process was rigorous and as a result the 
Nomination Committee were able to select an outstanding 
candidate to replace the outgoing CEO. The appointment of 
Gary Lamb as Chief Executive Officer, was announced on 
27 May 2015.
The Nomination Committee then considered the selection of 
a Chief Financial Officer as a replacement for Gary Lamb. 
A further rigorous selection process was undertaken, and on 
21 December 2015, the Company was able to announce that 
Danny Bakhshi had been selected, and would be joining the 
Board on 1 February 2016. The biography of Danny Bakhshi can 
be found on page 24 of this Annual Report.
The Committee subsequently concluded a process to recruit a 
successor to Sir Miles Walker as a Non-Executive Director who 
will retire at the 2016 Annual General Meeting. The biography of 
Christopher Hall can be found in the notes to the Notice of that 
meeting.
Duties
The main duties of the Nomination Committee are set out in its 
Terms of Reference and include:
 – to regularly review the structure, size and composition 
(including the skills, knowledge, experience and diversity) of 
the Board and make recommendations to the Board with 
regard to any changes;
 – to give full consideration to succession planning for Directors 
and other senior executives, taking into account the 
challenges and opportunities facing the Company, and the 
skills and expertise needed on the Board in the future;
 – to keep under review the leadership needs of the 
organisation, both executive and non-executive, with a view 
to ensuring the continued ability of the organisation to 
compete effectively in the marketplace;
 – to keep up to date and fully informed about strategic issues 
and commercial changes affecting the Company and the 
market in which it operates;
 – to be responsible for identifying and nominating for the 
approval of the Board, candidates to fill Board vacancies as 
and when they arise;
 – to evaluate the balance of skills, knowledge, experience and 
diversity on the Board and prepare a description of the role 
and capabilities required for a particular appointment before 
any appointment is made by the Board.
 – to review the results of the Board evaluation process that 
relate to the composition of the Board and discuss the 
outcome with the full Board; and
 – to review annually the time required from Non-Executive 
Directors.
corporate governance report 
continued
30
manx telecom plc
annual report and accounts 2015 governance
report of the 
audit committee
Dear Shareholder
I have been the Chairman of the Audit Committee since early 
2013, and am pleased to set out below an account of our role 
and activities during 2015 and up to the publication of this 
Annual Report.
The primary responsibilities of the Audit Committee are to 
provide effective governance over the appropriateness of the 
Group’s financial reporting including the adequacy of related 
disclosures, the judgement whether the Annual Report as a 
whole is ‘Fair, balanced and understandable’, the performance 
of both the Internal Audit function and the External Auditor, and 
the management of the Group’s systems of internal control and 
business risks.
As the Group has settled into operating within the environment 
of an AIM listed company, we have continued with the 
implementation of key internal controls, policies and procedures 
and ensuring the execution of a comprehensive internal audit 
plan of activity.
The Board has ultimate responsibility for determining the nature 
and extent of the significant risks facing the business, and for 
ensuring that risks are managed effectively across the Group. 
Risk management is a regular agenda item at Board and Audit 
Committee meetings and the Board considers the impact of the 
Group’s principal risks in detail during the annual Group strategy 
process. This is designed to ensure that the Board and Audit 
Committee understand the key risks within the business and 
the methods by which these risks are managed.
The Committee will continue with these priorities during the 
following year.
Jeffrey Hume
Chairman of the Audit Committee
Who we are
The Audit Committee consists entirely of independent 
Non-Executive Directors:
Jeffrey Hume (Chairman)
Kevin Walsh
Sir Miles Walker
The Board has determined that Jeffrey Hume has the recent 
and relevant financial experience, which would be required 
under the Corporate Governance Code, to chair this Committee. 
He is also a Fellow of both the Institute of Chartered 
Accountants and the Association of Corporate Treasurers.
How we meet
The Committee met three times during 2015 and has so far met 
once in 2016. KPMG Audit LLC, our External Auditor, attended 
each of these meetings. The Chief Executive Officer, Chief 
Financial Officer, the head of Internal Audit and a Secretarial 
Assistant also attended committee meetings by invitation. 
The Committee sought the views of the External Auditor and 
the head of Internal Audit, each without the other or any 
executives present.
What we have been asked to do
The Board has set Terms of Reference for the Committee which 
require us:
a) to monitor the integrity of the financial statements of the 
Company, including its annual and interim reports;
b) to review and challenge where necessary any changes to, 
and consistency of, accounting policies, whether the 
Company has followed appropriate accounting standards 
and made appropriate estimates and judgements, taking into 
account the views of the external auditor, the going concern 
assumption and all material information presented with the 
financial statements;
c) to keep under review the effectiveness of the Company’s 
internal control systems (including financial, operational and 
compliance controls and risk management) and to review 
and approve the statements to be included in the Annual 
Report concerning internal controls and risk management;
d) to review the internal audit programme;
e) to consider and make recommendations to the Board, to be 
put to shareholders for approval at the Annual General 
Meeting, in relation to the appointment, reappointment and 
removal of the Company’s external auditor;
f) to oversee the relationship with the external auditor including 
approval of their remuneration, approval of their terms of 
engagement, assessment annually of their independence 
and objectivity taking into account relevant professional and 
regulatory requirements and the relationship with the 
auditor as a whole, including the provision of any non-audit 
services;
g) to meet regularly with the external auditor and at least once 
a year, without any Executive Director or other member of 
management present to discuss any issues arising from the 
audit;
h) to review and approve the annual external audit plan and 
review the findings of the audit; and
i) to review the Company’s arrangements for its employees 
and contractors to raise concerns in confidence about 
possible improprieties in financial reporting or other matters, 
the Company’s procedures for detecting fraud and the 
Company’s anti-bribery procedures.
Financial reporting – significant issues
The Committee members reviewed the 2015 Preliminary Results 
announcement and Annual Report, the 2015 Interim Results 
announcement and reports from the external auditor, KPMG 
Audit LLC, on the planning for and outcome of their reviews 
and audit.
31
manx telecom plc
annual report and accounts 2015 We considered key accounting issues and judgements in relation 
to the Group’s financial statements and disclosures. The 
primary areas in relation to the 2015 accounts and how these 
were addressed:
a) Revenue recognition – The Committee made enquiry into 
and obtained assurance in particular over termination 
income and roaming costs;
b) Capital expenditure – The Committee satisfied itself on 
material projects that only the appropriate expenditure had 
been capitalised and that depreciation had commenced 
when the assets had been put into use, also that related 
assets had consequently been subject to an impairment 
review;
c) Defined benefit pension scheme – The Committee took 
advice from independent actuaries Towers Watson on the 
assumptions used to value the scheme and questioned the 
changes from the previous year. It also took some comfort 
from surveys by KPMG of their other clients’ Financial 
Statements; and
d) Financial instruments – The Committee examined the 
financing amendments which were negotiated during the 
year and concluded that it remained appropriate to 
capitalise the unamortised arrangement costs. 
Corporate Governance
The Board asked the Committee to formally consider whether 
the Annual Report, taken as a whole, is fair, balanced, and 
understandable; also that it provides the information necessary 
for shareholders to assess the Company’s position and 
performance, business model and strategy.
Committee members were provided with a draft copy of the 
Annual Report early in the drafting process in order to assess 
the broad direction and key messages being communicated. 
Committee members provided feedback highlighting any areas 
where they believed further clarity was required. This feedback 
was incorporated into the draft report provided to the Audit 
Committee meeting for final comment and approval and the 
External Auditor was given an opportunity to comment. The 
Committee was able to give the Board the requested assurance.
External audit
The effectiveness of the external audit process is dependent on 
appropriate audit risk identification at the start of the audit cycle. 
We received from KPMG Audit LLC a proposed audit plan which 
identified their assessment of the key risks. The audit plan set 
out the scope of the audit, areas to be targeted and audit 
timetable. This plan was reviewed and agreed in advance by 
the Audit Committee and KPMG subsequently presented their 
report on their findings to the Audit Committee for discussion.
The Audit Committee monitored the relationship with KPMG 
to ensure that auditor independence and objectivity are 
maintained. Our assessment was primarily based upon the 
reports we received, how our challenges were met, the 
enquiries we made into their work and the insights they were 
able to contribute. We also received feedback from the 
management team. As part of its review the Committee 
monitored the provision of non-audit services by KPMG which 
were small in comparison to the audit fee.
Having reviewed the auditor’s independence and performance 
the Audit Committee is recommending that KPMG Audit LLC be 
reappointed as the Company’s auditor at the June 2016 Annual 
General Meeting.
Internal audit
The Audit Committee monitored and reviewed the scope, extent 
and effectiveness of the activity of the Internal Audit department. 
Reports from Internal Audit routinely include updates on audit 
activities, progress of the audit plan, management action plans 
to address areas requiring improvement and the changing 
resource requirements of the Internal Audit department. The 
Committee discussed the implications of these reports with 
management and ensured that the recommendations and 
agreed actions received proper focus.
Internal controls and risk management
The Company has in place a system of internal financial controls 
commensurate with its current size and activities, which is 
designed to ensure that the possibility of misstatement or loss is 
kept to a minimum. A suite of internal policies and procedures is 
being compiled. These procedures include the preparation of 
management accounts, forecast variance analysis and other ad 
hoc reports. There are clearly defined authority limits 
throughout the Group, including those matters which are 
reserved specifically for the Board. Risks throughout the Group 
are considered and reviewed on a regular basis. Risks are 
identified and mitigating actions put into place as appropriate. 
The principal risks identified are set out in the Strategic Report 
on pages 1 to 23.
Further governance
The Committee also reviewed, before publication, Company 
policy statements on Data Protection, Data Control, Data 
Retention, Business Expenses, Financial Risk Management, 
Grievance and Gifts / Hospitality together with the effectiveness 
of the related procedures.
The Committee’s activities were reviewed as part of the annual 
evaluation of Board effectiveness. All members of the Board 
participated and it was determined that the Audit Committee 
was effective in performing its duties as determined by the 
Terms of Reference. 
report of the audit committee 
continued
32
manx telecom plc
annual report and accounts 2015 governance
directors’ 
remuneration report
Chairman’s statement
On behalf of the Board I am pleased to present the Directors’ 
Remuneration Report for the year ended 31 December 2015.
This report is split into two parts The first part describes our 
Directors’ remuneration policy and the second part describes 
how we intend to implement our policy for 2016 and, separately, 
the basis for the remuneration paid to Directors in respect of 
2015. In addition, following feedback from our institutional 
shareholders we will be submitting the report for shareholder 
approval at this year’s Annual General Meeting, via an advisory 
resolution. This will ensure that there is full accountability to 
shareholders for the policy and its implementation. 
Our level of disclosure and accountability on Directors’ pay 
significantly exceeds the reporting and voting requirements for 
an AIM listed Company, in line with the Board’s commitment to 
high standards of corporate governance transparency.
In relation to remuneration paid in 2015, as described elsewhere 
in this Annual Report, the Company achieved improvements in 
key areas of business performance, increasing revenue and 
EBITDA, reducing net debt, whilst continuing to invest in the 
business by creating a new data centre facility (GDC 2).
This overall performance, through a year of significant change, 
demonstrates the strength of our business model, the strong 
and effective leadership of our management team and the 
talents of our people. Stretching performance conditions were 
set at the start of the year for the bonus plan and the solid 
performance delivered resulted in an annual bonus payable 
to Executive Directors of 20% of salary out of the maximum 
opportunity of 100% of salary. There were no LTIP awards due 
to vest by reference to performance periods ending in 2015. The 
Committee believes that the overall remuneration delivered in 
relation to 2015 represents a fair outcome in relation to the 
performance delivered to shareholders and other stakeholders.
During the year Mike Dee, our Chief Executive Officer, retired 
and he was paid in line with the policy, with no additional 
payments outside the policy on his retirement. Gary Lamb, 
previously the Chief Financial Officer, was promoted to Chief 
executive on 1 July 2015 following a thorough recruitment 
process and the structure of his package is in line with our 
remuneration policy. The Committee considered carefully the 
base salary level for his role and after looking at comparative 
data, both for other positions within the Company and salary 
levels paid to other company chief executives in our sector, 
concluded that a base salary of £290,000 should be payable for 
this role. 
Gary Lamb’s promotion necessitated a search for a new Chief 
Financial Officer and we are delighted to have been able to secure 
the services of Danny Bakhshi, who joined us on 1 February 
2016. His package has been structured in line with the policy 
and his base salary set at £210,000. In order to secure his 
appointment it was necessary to buy-out some deferred share 
awards, which had achieved the performance conditions and 
would have vested had he continued in employment. 
Accordingly an award of shares will be granted worth 
£100,000, which will vest on the second anniversary of grant 
subject to continued service. This award is worth less than the 
value of the awards that Danny Bakhshi forfeited, but otherwise 
vest on similar terms.
Following the significant review of the remuneration policy for 
2015, there have been no changes in its implementation for 2016 
for Executive Directors. 
I hope that shareholders will be supportive of the resolution to 
approve this report.
Kevin Walsh
Chairman of the Remuneration Committee
33
manx telecom plc
annual report and accounts 2015 Membership of the Remuneration Committee
The members of the Committee are listed in the table below. All 
of these are independent Non-Executive Directors, as defined 
under the Corporate Governance Code with the exception of the 
Company Chairman who was independent on his appointment.
The members of the Committee during the last financial year 
and their attendance at the meetings of the Committee were:
Number of 
meetings 
attended
Kevin Walsh 5/5
Jeffrey Hume 5/5
Sir Miles Walker 4/5
Duties
The main duties of the Remuneration Committee are set out in 
its Terms of Reference and include:
 – determining the framework or broad policy for the 
remuneration of the Company’s Chief Executive, the 
Executive Directors, the Company Secretary and such other 
members of the executive management as it is designated to 
consider;
 – reviewing the ongoing appropriateness and relevance of the 
remuneration policy;
 – approving the design of, and determining targets for, any 
performance-related pay schemes;
 – determining the policy for, and scope of, pension arrangements 
for each Executive Director and other senior executives;
 – determining the total individual remuneration package of 
each Executive Director and other senior executives including 
bonuses, incentive payments and share awards; and
 – establishing the selection criteria, selecting, appointing and 
setting the terms of reference for any remuneration 
consultants who advise the Committee.
directors’ remuneration report 
continued
Part 1 – 
Remuneration Policy for Executive Directors
The objective of the Company’s remuneration policy for 
Executive Directors is to ensure that it supports the long-term 
strategy of the business and provides a strong alignment of 
interest between executives and shareholders.
The total remuneration package is structured so that a 
significant proportion is linked to performance conditions 
measured over both the short term and longer term. A high 
proportion of the potential remuneration is paid in shares, 
thereby ensuring that executives have a strong ongoing 
alignment with shareholders through the Company’s share 
price performance.
When setting the levels of short-term and long-term variable 
remuneration and the balance of cash and share-based 
elements, consideration is given to obtaining the appropriate 
balance so as not to encourage unnecessary risk-taking, whilst 
ensuring that performance hurdles are suitably challenging.
34
manx telecom plc
annual report and accounts 2015 governance
The table below summarises the key aspects of the Company’s remuneration policy for Directors:
Element
Purpose and 
link to strategy Operation Maximum opportunity
Base salary
To recruit and 
reward executives 
of a suitable calibre 
for the role and 
duties required.
Reviewed annually by the Committee, taking account of Company 
performance, individual performance, changes in responsibility and 
levels of increase for the workforce generally.
Reference is also made to comparator benchmarks from time to time.
The Committee considers the impact of any basic salary increase on 
the total remuneration package.
In relation to the policy for salary 
increases, there is no prescribed 
maximum annual increase. The 
Committee is guided by movements in 
market rates, the performance of the 
business and the general salary 
increase for the broader employee 
population, but on occasions may need 
to recognise, for example, development 
in role, change in responsibility, and/or 
specific retention issues.
Benefits
To provide 
market-competitive 
benefits and to 
ensure the wellbeing 
of employees.
The Company typically provides:
 – Car allowance
 – Medical insurance
 – Death and disability insurance
 – Other ancillary benefits, including relocation expenses (as required)
Executive Directors are also entitled to 30 days’ leave per annum.
Car allowance is determined by 
seniority. The value of other benefits is 
based on the cost to the Company and 
is not predetermined.
Pension
To provide 
market-competitive 
benefits and to assist 
post retirement 
financial planning.
A Company contribution to a money purchase pension scheme or 
provision of cash allowance in lieu of pension at the request of the 
individual.
Up to 10% of base salary.
Annual bonus
To encourage and 
reward delivery of 
the Company’s 
operational 
objectives.
The annual bonus is based on performance against a range of 
financial and non-financial metrics.
One third of any bonus earned will be paid in shares, which must be 
held for at least two years.
A recovery and withholding mechanism applies in the event of a 
material misstatement of the Group’s accounts and also for other 
defined reasons.
100% of salary at stretch performance.
Long-term 
incentives 
(‘LTIP’)
To encourage and 
reward delivery of 
the Company’s 
long-term strategic 
objectives and 
provide alignment 
with shareholders 
through the use of 
share-based 
remuneration.
Annual awards of performance shares.
Awards are released subject to continued employment and 
satisfaction of challenging performance conditions measured over 
three years.
A recovery and withholding mechanism applies to all participants in 
the event of a material misstatement of the Group’s accounts and  
also for other defined reasons.
The maximum limit in the plan rules is 
150% of salary (face value of shares at 
grant). The current policy within the plan 
limit is 100% of base salary.
25% of the award is payable for 
threshold performance.
Dividends that would be payable on the 
share awards are rolled up and paid 
out (in cash) at the end of the vesting 
period based on the proportion of the 
award that actually vests.
Non-Executive 
Director fees
To attract and retain 
a high-calibre 
Chairman and 
Non-Executive 
Directors by  
offering a market-
competitive fee level.
Fees are reviewed periodically. 
Fee levels are set as appropriate for the role and responsibility for 
each NED position and with reference to market levels in comparably 
sized public companies. Fees are paid in cash.
The Chairman is paid a single fee for all his responsibilities. The 
Non-Executives are paid a basic fee. The Senior Independent Director 
and Chairman of the Audit Committee receive an additional fee to 
reflect extra responsibilities. Currently the Chairman of the 
Remuneration Committee is also the Company Chairman. Despite the 
additional workload entailed, no additional fee is currently payable.
There is no prescribed maximum 
annual increase. Any increases to fee 
levels are guided by movements in 
market rates, the performance of the 
business and the general salary 
increase for the broader employee 
population, but on occasions may need 
to recognise, for example, change in 
responsibility, and/or time 
commitments.
35
manx telecom plc
annual report and accounts 2015 Service contracts and payments for loss of office
The Remuneration Committee reviews the contractual terms 
for new Executive Directors to ensure that these reflect best 
practice.
Service contracts normally continue until the Director’s agreed 
retirement date or such other date as the parties agree. The 
service contracts contain provision for early termination subject 
to six months’ notice from either the Company or the Executive 
Director.
A Director’s service contract may be terminated without notice 
and without any further payment or compensation, except for 
sums accrued up to the date of termination, on the occurrence 
of certain events such as gross misconduct. If the employing 
company terminates the employment of an Executive Director 
in other circumstances, compensation is limited to salary due 
for any unexpired notice period and any amount assessed by 
the Remuneration Committee as representing the value of 
other contractual benefits (including pension) which would have 
been received during the period. Payments in lieu of notice are 
not pensionable. In the event of a change of control of the 
Company there is no enhancement to contractual terms.
Service contracts are available for inspection at the Company’s 
registered office.
Part 2 – 
Annual remuneration report
How the remuneration policy will be applied in 2016
2016 salary review
The salary level for Gary Lamb and Danny Bakhshi will remain 
unchanged at £290,000 and £210,000 respectively. The next 
review date will be April 2017.
Performance targets for the 2016 annual bonus
The annual bonus plan will be based on a range of metrics, 
EBITDA, Free Cash Flow, and Revenue, with a weighting of 
40:40:20 respectively. Sliding scales will be set for each metric. 
The target rates for the 2016 annual bonus are not disclosed 
prospectively in this report as they are considered to be 
commercially sensitive. However, it is our intention that details of 
the target ranges, and achievement against them, will be set out 
in next year’s report.
Bonus will be capped at 100% of base salary, with two thirds 
payable for plan performance. One third of bonus earned must 
be invested in shares and deferred for two years.
LTIP awards to be granted in 2016
LTIP awards will be made over shares worth 100% of base 
salary and will be subject to Earnings Per Share and Free Cash 
Flow metrics, measured over the three financial years to 2018, 
with a weighting of 50:50 respectively. A sliding scale range has 
been set for each metric. As follows:
For the 50% of an award subject to EPS growth:
Compound annual EPS Growth from 2015 
year end to 2018 year end
Percentage of the half of the Award 
subject to the EPS Condition that Vests
Below 2% 0%
2% 25%
Between 2% and 6% Vesting on a straight line basis
6% or more 100%
For the 50% of the award subject to operating cash flow (‘OCF’), 
defined as cash generated from operations before capital 
expenditure and interest:
Aggregate OCF for financial years  
2016, 2017 and 2018
Percentage of the half of the Award 
subject to the OCF Condition that Vests
Below £51.62m 0%
£51.62m 25%
Between £51.62m and £54.62m Vesting on a straight-line basis
£54.62m 100%
directors’ remuneration report 
continued
36
manx telecom plc
annual report and accounts 2015 governance
Remuneration payable to Directors for the financial year 2015
The table below sets out the remuneration payable to the Directors in relation to the financial year 2015.
Salary and 
fees 
£
Benefits
(1)
£
Pension 
£
Annual 
bonus
(4)
£
Long-term
incentives
(5)
£
Total 
£
Executive Directors
Mike Dee
(2)
2015 154,932 12,136 6,000 16,667 – 189,735
2014 196,625 14,443 33,440 100,000 – 344,508
Gary Lamb
(3)
2015 235,000 13,210 23,500 38,667 – 310,377
2014 177,000 13,127 17,611 90,000 – 297,738
Non-Executive Directors
Kevin Walsh
(6)
2015 80,000 – – – – 80,000
2014 80,000 – – – – 80,000
Sir Miles Walker 2015 40,000 – – – – 40,000
2014 40,000 – – – – 40,000
Jeffrey Hume
(7)
2015 50,000 – – – – 50,000
2014 50,000 – – – – 50,000
1. Benefits are as set out in the remuneration policy.
2. The 2015 remuneration of Mike Dee, former Chief Executive Officer, relates to his employment up to 30 September. Part of his pension amount for 2014 relates to a 
one-off transition payment relating to the closure of the Defined Benefit Pension Scheme. 
3. The 2015 remuneration of Gary Lamb relates to his service as Chief Financial Officer up to 30 June 2015 and as Chief Executive Officer thereafter.
4. This relates to the achievement of the Revenue, EBITDA and Free Cash Flow metrics. The stretching minimum thresholds for free cash flow and revenue of £15.8m 
and £80.5m respectively were missed, but the threshold for EBITDA of £27.7m was achieved, reflective of profit growth over the year. Accordingly, the Committee 
determined that a bonus of 20% of salary should be payable to Executive Directors. 
 For Mike Dee his bonus amount has been scaled back pro rata for the proportion of the financial year he worked as a Chief Executive Officer and the bonus is 
payable in cash.
 For Gary Lamb two thirds of the bonus is payable in cash and one third of the net bonus is used to purchase shares on behalf of the executive, which must be held 
for two years. 
5. No long-term incentive awards were due to vest in relation to performance periods ending 31 December 2015.
6. For Kevin Walsh no additional fee was payable for chairing the Remuneration Committee.
7. For Jeffrey Hume, included in the number were additional fees of £6,000 payable for chairing the Audit Committee and £4,000 payable for the role of SID.
Directors’ interests in share-based incentive plans
Executive Scheme Grant date
Exercise 
price
Number of 
shares at 
31 December 
2014
Granted 
during year
Vested 
during year
Lapsed 
during year
Number of 
shares at 
31 December
2015
(3)
End of 
performance 
period
Vesting 
date
Mike Dee CIP
(1,2,3)
10.02.14 Nil 288,113 – – (96,037) 192,076 09.02.17 09.02.17
Gary Lamb CIP
(1,2)
10.02.14 Nil 250,000 – – – 250,000 09.02.17 09.02.17
LTIP
(4)
11.05.15 Nil – 95,576 – – 95,576 31.12.17 11.05.18
1. The awards granted under the CIP on 10 February 2014 were structured on a co-investment basis whereby executives were granted a share award for every two 
beneficially owned shares that they committed into the plan.
2. The CIP awards will vest to the extent that a total shareholder return (‘TSR’) performance condition is achieved after three years, comparing the Company’s TSR 
(based on the IPO price) against a peer group of 11 other telecoms businesses listed in the UK. 25% of the award will vest if Manx Telecom’s TSR performance is at the 
median, rising on a straight-line basis so that there is full vesting for top quartile TSR performance.
3. For Mike Dee’s CIP award, on retirement the number of shares was scaled back from his original award level to reflect the shorter period of service than the award 
originally spanned. The scaled-back number of awards will be subject to the TSR performance condition measured over the full three year period will require 
retention of a pro rata number of the committed shares.
4. Gary Lamb was granted an additional LTIP award on 28 January 2016 so that his 2015 LTIP award equated to 100% of his salary, after this was increased to £290,000 
on his promotion to Chief Executive. The terms of this additional award are identical to the terms of his 2015 LTIP award. 
37
manx telecom plc
annual report and accounts 2015 The performance conditions for the LTIP award granted in 2015 
are set out below.
For the 50% of an award subject to EPS growth:
Compound annual EPS Growth from  
2014 year end to 2017 year end
Percentage of the half of the Award 
subject to the EPS Condition that Vests
Below 2% 0%
2% 25%
Between 2% and 6% Vesting on a straight-line basis
6% or more 100%
For the 50% of the award subject to operating cash flow:
Aggregate OCF for financial years  
2015, 2016 and 2017
Percentage of the half of the Award 
subject to the OCF Condition that Vests
Below £50.18m 0%
£50.18m 25%
Between £50.18m and £53.18m Vesting on a straight-line basis
£53.18m 100%
Directors’ shareholding and share interests
To align the interests of the Executive Directors and senior 
management with shareholders, participating executives are 
required to build up shareholdings through the retention of 
shares vesting under the Company’s share plans. The Executive 
Directors are required to build up a shareholding equivalent to 
at least 100% of salary, to be achieved through retaining at least 
50% of their net of taxes gain arising from any shares vesting or 
acquired under the long-term incentive share plans, until such 
time as the share ownership target has been met. The Chairman 
and Non-Executive Directors are encouraged to hold shares in 
the Company but are not subject to a formal shareholding 
guideline. Details of the Directors’ interests in shares are shown 
in the table below:
Director
Beneficially 
owned at 
31 December 
2014
Beneficially 
owned at 
31 December 
2015
Outstanding 
CIP/LTIP 
awards
% 
Shareholding 
guideline 
achieved at 
31 December 
2015
Mike Dee
(1)
576,227 – 192,076 –
Gary Lamb 500,000 500,000 345,576 100%
Kevin Walsh 70,422 70,422 – –
Jeffrey Hume 70,422 70,422 – –
Sir Miles Walker 63,523 63,523 – –
1.  Mike Dee resigned as a director of the Company on 30 September 2015. 
Consequently his shareholding at 31 December 2015 is not presented above.  
At 30 September 2015 his beneficial interest in ordinary shares of the Company 
was 576,227 and he had 192,076 outstanding CIP awards.
This report was approved by the Board of Directors and signed 
on its behalf by:
Kevin Walsh
Chairman of the Remuneration Committee
directors’ remuneration report 
continued
38
manx telecom plc
annual report and accounts 2015 governance
The Directors are responsible for preparing the Directors’ Report 
and the financial statements in accordance with applicable law 
and regulations. In addition, the Directors have elected to prepare 
the financial statements in accordance with International 
Financial Reporting Standards as adopted by the EU.
The financial statements are required to give a true and fair 
view of the state of affairs of the Group and Parent Company 
and of the profit or loss of the Group for that period. 
In preparing these financial statements, the Directors are 
required to:
 – select suitable accounting policies and then apply them 
consistently;
 – make judgements and estimates that are reasonable and 
prudent; 
 – state whether they have been prepared in accordance with 
International Financial Reporting Standards as adopted by 
the EU; and
 – prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the Group and 
Parent Company will continue in business.
The Directors are responsible for keeping proper accounting 
records that are sufficient to show and explain the Parent 
Company’s transactions and disclose with reasonable accuracy 
at any time its financial position. They have general responsibility 
for taking such steps as are reasonably open to them to 
safeguard the assets of the Group and to prevent and detect 
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity 
of the corporate and financial information included on the 
Company’s website. Legislation governing the preparation and 
dissemination of financial statements may differ from one 
jurisdiction to another.
By order of the Board
Danny Bakhshi
Company Secretary
12 May 2016
Manx Telecom plc
Registered Office:
33-37 Athol Street
Douglas
Isle of Man
IM1 1LB
Company No: 005328V
statement of directors’ 
responsibilities
39
manx telecom plc
annual report and accounts 2015 40
manx telecom plc
annual report and accounts 2015
report of the independent auditors 
We have audited the financial statements of Manx Telecom plc for the year ended 31 December 2015 which comprise the 
Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the 
Consolidated and Company Statement of Changes in Equity and the Consolidated Statement of Cash Flows and the related notes. 
The financial reporting framework that has been applied in their preparation is applicable law and International Financial 
Reporting Standards as adopted by the EU (‘IFRSs’).
This report is made solely to the Company’s members, as a body. Our audit work has been undertaken so that we might state to 
the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the 
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s 
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditor
As explained more fully in the Statement of Directors’ Responsibilities set out on page 39, the Directors are responsible for the 
preparation of financial statements that give a true and fair view. Our responsibility is to audit, and express an opinion on, the 
financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards 
require us to comply with the Auditing Practices Board’s (‘APB’s’) Ethical Standards for Auditors.
Scope of the audit of the financial statements
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 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. 
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the 
audited financial statements and to identify any information that is apparently materially incorrect based on, or materially 
inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent 
material misstatements or inconsistencies we consider the implications for our report.
Opinion on the financial statements
In our opinion the financial statements:
 – give a true and fair view of the state of the Group’s and Parent Company’s affairs as at 31 December 2015 and of the Group’s 
profit for the year then ended; and
 – have been properly prepared in accordance with IFRSs.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man 
IM99 1HN
12 May 2016 financial statements
41
manx telecom plc
annual report and accounts 2015
consolidated statement of 
comprehensive income
for the year ended 31 december 2015
Note
2015 
£’000
2014 
£’000
Revenue 1.12,2 79,598 79,254
Cost of sales (31,943) (32,831)
Gross profit 47,655 46,423
Administrative expenses (29,080) (23,192)
Operating profit 4 18,575 23,231
 Underlying EBITDA 27,654 27,101
 Depreciation and amortisation 7,8 (9,079) (9,490)
 Underlying operating profit 18,575 17,611
 Impairment of equipment 4,7 – (592)
 Pension scheme reorganisation 4 – 6,212
 Operating profit 18,575 23,231
Other income 7 50 140
Financial income 5 170 72
Finance costs 5 (2,576) (8,437)
Listing expenses 4 – (7,991)
Net profit/(loss) on interest rate swaps 17(d) 334 (1,299)
Profit before tax 16,553 5,716
Taxation 6 – –
Profit for the year attributable to the owners of the Group 16,553 5,716
 Underlying Profit before Tax 16,553 12,945
 Impairment of equipment 4 – (592)
 Pension scheme reorganisation 4 – 6,212
 Release of capitalised loan transaction costs 4 – (4,567)
 Refinancing costs 4,13 – (291)
 Listing expenses 4 – (7,991)
 Profit before tax 16,553 5,716
Other comprehensive income – items that will never be reclassified to profit or loss
Remeasurement of defined benefit pension scheme asset 15 (3,100) 800
Total comprehensive profit for the year attributable to the owners of the Group 13,453 6,516
Earnings per share from continuing operations
Basic 23 14.65p 5.40p
Diluted 23 14.53p 5.37p
Underlying basic 23 14.65p 12.22p
Underlying diluted 23 14.53p 12.17p
The Directors consider that all results are derived from continuing operations.
The notes on pages 46 to 78 form an integral part of these financial statements. 42
manx telecom plc
annual report and accounts 2015
Note
Group 
2015 
£’000
Group 
2014 
£’000
Company 
2015 
£’000
Company 
2014 
£’000
Non-current assets
Property, plant and equipment 7 63,968 65,098 – –
Goodwill 3 84,277 84,277 – –
Intangible assets 8 364 516 – –
Retirement benefit asset 15 400 2,200 – –
Interest rate swaps 17(d) 103 – – –
Investments in subsidiaries 9 – – 1,513 831
149,112 152,091 1,513 831
Current assets
Inventories 10 594 794 – –
Trade and other receivables 11 19,235 16,708 1 1
Due from related parties 19 – – 94,636 87,208
Cash and cash equivalents 12 16,601 15,156 – –
36,430 32,658 94,637 87,209
Current liabilities
Due to subsidiary 19 – – (9,537) (2,100)
Trade and other payables 14 (24,933) (26,475) (1) –
(24,933) (26,475) (9,538) (2,100)
Net current assets 11,497 6,183 85,099 85,109
Non-current liabilities
Interest-bearing loans and borrowings 13 (68,785) (68,948) – –
Interest rate swaps 17(d) (777) (1,008) – –
(69,562) (69,956) – –
Net assets 91,047 88,318 86,612 85,940
Equity attributable to the owners of the Group and Company
Share capital 16 226 226 226 226
Share premium 16 84,347 84,343 84,347 84,343
Own shares 16 – – – –
Retained earnings 6,474 3,749 2,039 1,371
Total equity 91,047 88,318 86,612 85,940
The notes on pages 46 to 78 form an integral part of these financial statements.
These financial statements were approved by the Board of Directors and were signed on its behalf by:
Gary Lamb  Danny Bakhshi
Director   Director
12 May 2016
consolidated and company statements of  
financial position
as at 31 december 2015 financial statements
43
manx telecom plc
annual report and accounts 2015
Note
Share 
capital 
£’000
Share 
premium 
 £’000
Own shares 
£’000
Retained 
earnings 
£’000
Total equity 
£’000
Balance at 1 January 2014 100 – – 225 325
Total comprehensive profit for the year
Profit for the year – – – 5,716 5,716
Other comprehensive income – – – 800 800
Total comprehensive profit for the year – – – 6,516 6,516
Transactions with owners of the Group, recorded directly in equity
Share-based payment transactions 22 – – – 731 731
Issue of shares 16 126 89,226 – – 89,352
Own shares acquired in the period 16 – – – – –
Listing costs recognised in equity 4,16 – (4,883) – – (4,883)
Dividend paid 24 – – – (3,723) (3,723)
Total contributions by and distributions to the owners of the Group 126 84,343 – (2,992) 81,477
Balance at 31 December 2014 226 84,343 – 3,749 88,318
Balance at 1 January 2015 226 84,343 – 3,749 88,318
Total comprehensive profit for the year
Profit for the year – – – 16,553 16,553
Other comprehensive (loss) – – – (3,100) (3,100)
Total comprehensive profit for the year – – – 13,453 13,453
Transactions with owners of the Group, recorded directly in equity
Share-based payment transactions 22 – – – 681 681
Issue of shares 16 – 4 – – 4
Dividend paid 24 – – – (11,409) (11,409)
Total contributions by and distributions to the owners of the Group – 4 – (10,728) (10,724)
Balance at 31 December 2015 226 84,347 – 6,474 91,047
The notes on pages 46 to 78 form an integral part of these financial statements.
consolidated statement of  
changes in equity
for the year ended 31 december 2015 44
manx telecom plc
annual report and accounts 2015
Note
Share 
capital 
£’000
Share 
premium 
 £’000
Own shares 
£’000
Retained 
earnings 
£’000
Total equity 
£’000
Balance at 1 January 2014 100 – – (1,932) (1,832)
Total comprehensive profit for the year
Profit for the year – – – 6,295 6,295
Total comprehensive profit for the year – – – 6,295 6,295
Transactions with the owners of the Company, recorded directly in equity
Share-based payment transactions 22 – – – 731 731
Issue of shares 16 126 89,226 – – 89,352
Own shares acquired in the period 16 – – – – –
Listing costs recognised in equity 4,16 – (4,883) – – (4,883)
Dividend paid 24 – – – (3,723) (3,723)
Total contributions by and distributions to the owners of the Company 126 84,343 – (2,992) 81,477
Balance at 31 December 2014 226 84,343 – 1,371 85,940
Balance at 1 January 2015 226 84,343 – 1,371 85,940
Total comprehensive profit for the year
Profit for the year – – – 11,396 11,396
Total comprehensive profit for the year – – – 11,396 11,396
Transactions with the owners of the Company, recorded directly in equity
Share-based payment transactions 22 – – – 681 681
Issue of shares 16 – 4 – – 4
Dividend paid 24 – – – (11,409) (11,409)
Total contributions by and distributions to the owners of the Company – 4 – (10,728) 10,724
Balance at 31 December 2015 226 84,347 – 2,039 86,612
The notes on pages 46 to 78 form an integral part of these financial statements.
company statement of  
changes in equity
for the year ended 31 december 2015 financial statements
45
manx telecom plc
annual report and accounts 2015
Note
2015 
£’000
2014 
£’000
Cash flows from operating activities
Profit for the year 16,553 5,716
Adjustments for:
 Depreciation of property, plant and equipment 7 8,886 9,299
 Amortisation of intangibles 8 193 191
 Impairment of property, plant and equipment 4 – 592
 Profit on disposal of property, plant and equipment 7 (50) (140)
 Pension (credit) 15 – (6,000)
 Finance income 5 (170) (72)
 Finance costs 5 2,576 8,437
 Listing expenses 4 – 7,991
 Net (profit)/loss on interest rate swaps 17(d) (334) 1,299
 Equity-settled share-based payments transactions 22 681 256
Pension contributions 15 (1,200) (2,100)
Changes in:
 Inventories 10 200 (251)
 Trade and other receivables 11 (2,527) 486
 Trade and other payables 14 641 1,318
8,896 21,306
Net cash generated from operating activities 25,449 27,022
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 228 123
Purchase of property, plant and equipment 7 (10,116) (12,294)
Government grants related to asset purchases 7 – 250
Purchase of intangible assets 8 (41) (345)
Interest received 5 70 72
Net cash used in investing activities (9,859) (12,194)
Cash flows from financing activities
Proceeds on issue of shares 16 4 89,352
Expenses incurred on issue of shares capitalised to equity 16 – (4,883)
Expenses incurred on issue of shares charged to profit or loss 4 – (7,516)
Proceeds from new borrowings 13 – 70,000
Transaction costs related to loans and borrowings 13 (438) (1,475)
Repayment of borrowings 13 (40) (121,081)
Proceeds from settlement of interest rate swaps 17(d) – 294
Repayment of shareholder loans – (22,128)
Interest paid (2,262) (12,018)
Dividends paid 24 (11,409) (3,723)
Net cash used in financing activities (14,145) (13,178)
Net increase in cash and cash equivalents 1,445 1,650
Cash and cash equivalents brought forward 15,156 13,506
Cash and cash equivalents at 31 December 12 16,601 15,156
The notes on pages 46 to 78 form an integral part of these financial statements.
consolidated statement of  
cash flows
for the year ended 31 december 2015 46
manx telecom plc
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1 Accounting policies
Manx Telecom plc (‘the Company’) is a company incorporated and domiciled in the Isle of Man in accordance with the Isle of Man 
Companies Act 2006. The Company, formerly Trafford Equityco Limited, changed its name on 3 February 2014.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as ‘the Group’). The 
Parent Company financial statements present information about the Company as a separate entity.
The principal accounting policies adopted are set out below.
Basis of preparation
The consolidated and Company financial statements have been prepared in accordance with International Financial Reporting 
Standards (‘IFRS’). The consolidated and Company financial statements have also been prepared in accordance with IFRSs 
adopted by the European Union. Where necessary, comparative figures have been adjusted to conform to changes in presentation 
for the current year.
Going concern
The consolidated financial statements have been prepared on the going concern basis. The Group is profit making, generating 
increased profit in both absolute terms and on a per share basis between 2014 and 2015 based on increased revenue in 2015, and 
is in a net asset and net current asset position. The Group has considerable financial resources, minimal liquidity risk and is 
operating within a sector that is experiencing relatively stable demand for its products.
The Group utilises secured lending facilities which require compliance with certain financial covenants. The Group has not 
breached any such financial covenants during the year or post year end and had significant headroom within its requirements at 
year end as detailed in note 13. Under the terms of the secured bank facility, the Group also has the ability to draw a further £10m 
of funding though currently has no intention of drawing on this facility.
Alongside the factors noted above, the Directors have considered the Group’s forecasts and budgets, including cash flow forecasts, 
together with reasonably possible risk sensitivity analysis. The Directors are satisfied that the forecasts, alongside the Group’s 
current and undrawn lending facilities, show that the Group will continue to be able to meet cash funding requirements as they fall 
due and operate for the foreseeable future.
Accordingly, after making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate 
resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of 
accounting in preparing the annual financial statements.
1.1 Measurement convention
The financial statements are prepared on the historical cost basis except for the revaluation of certain properties and financial 
instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the 
accounting policies below.
1.2 Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company 
(its subsidiaries) made up to 31 December each year. Control is achieved when the Company has the power over the investee, is 
exposed to, or has rights, to variable return from its involvement with the investee and has the ability to use its power to affect its 
returns. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition 
date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the 
consolidated financial statements from the date that control commences until the date that control ceases. Losses applicable to the 
non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling 
interests to have a deficit balance. The investments in subsidiaries are held at cost.
1.3 Foreign currency
The individual financial statements of each Group company are presented in the currency of the primary economic environment in 
which it operates (its functional currency). For the purposes of the consolidated financial statements, the results and financial 
position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the 
presentational currency for the consolidated financial statements.
notes
forming part of the financial statements  
for the year ended 31 december 2015 financial statements
47
manx telecom plc
annual report and accounts 2015
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange 
rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet 
date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences 
arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of 
historical cost in a foreign currency are not retranslated. Non-monetary assets and liabilities denominated in foreign currencies that 
are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was 
determined.
1.4 Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and 
cash equivalents, amounts due to/from Group and related companies, loans and borrowings, and trade and other payables.
Debt and equity instruments are classified as either financial liabilities or equity in accordance with the substance of the contractual 
arrangement.
The Group initially recognises financial assets such as loans and receivables and deposits on the date that they are originated. 
All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date 
at which the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the 
rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of 
ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group 
is recognised as a separate asset.
The Group initially recognises financial liabilities such as payables and liabilities designated at fair value through profit or loss on the 
trade date at which the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial liability when, and only when, the Group’s obligations are discharged, cancelled or they expire. 
Any interest in transferred financial liabilities that is created or retained by the Group is recognised as a separate liability.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than 
financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the 
financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of 
financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market 
participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation 
technique. In estimating the fair value of an asset or liability, the Group takes into account the characteristics of the asset or liability 
at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is 
determined on such a basis, except for share-based payments within the scope of IFRS 2, leasing transactions that are within the 
scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in 
IAS 2 or value in use in IAS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to 
which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurements 
are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or 
indirectly; and
Level 3: inputs for the asset or liability that are not based on observable market data
1 Accounting policies continued 48
manx telecom plc
annual report and accounts 2015
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised 
cost using the effective interest method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised 
cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise deposits with banks and highly liquid financial assets subject to an insignificant risk of changes 
in their fair value and which are used by the Group in the management of short-term commitments.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, 
interest-bearing borrowings are stated at amortised cost using the effective interest method. Changes in expected cash flows due 
to changes in applicable interest rates will be accounted for through an adjustment of the carrying amount of the liability using the 
original effective interest rate.
When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms, such 
exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, 
the Groups accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original 
financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present 
value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original 
effective rate is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. 
Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in 
profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
Own shares
Own shares represent shares in the Company held by the Group employee benefit trust and are recorded at cost deducted from 
equity. When shares vest unconditionally or are cancelled they are transferred from the own shares reserve to retained earnings at 
their weighted average cost. Other assets and liabilities of the employee benefit trust are consolidated within the assets of the Group.
1.5 Derivative financial instruments
The Group enters into derivative financial instruments to manage its exposure to interest rate risk. Further details of derivative 
financial instruments are disclosed in note 17(d). Derivative financial instruments are recognised at fair value and classified as held 
for trading. Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently 
remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised in profit or loss immediately. 
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised 
as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the 
instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented 
as current assets or current liabilities. Any interest expense arising on derivative financial instruments is recognised separately from 
the fair value movement and is included in finance costs in the statement of comprehensive income.
1.6 Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation and accumulated impairment losses except for land and 
buildings which have been revalued to fair value. Revaluations are performed with sufficient regularity such that the carrying 
amount does not differ materially from that which would be determined using fair values at the balance sheet date.
Any gain arising on the remeasurement of land and buildings is recognised in profit or loss to the extent that it reverses a previous 
impairment loss on the specific property, with any remaining gain recognised in other comprehensive income and presented in the 
revaluation reserve. The cost of property, plant and equipment includes directly attributable incremental costs incurred in their 
acquisition and installation. Depreciation on revalued land and buildings is charged to the statement of comprehensive income.
notes
continued
1 Accounting policies continued financial statements
49
manx telecom plc
annual report and accounts 2015
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable 
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
Property, plant and equipment in the course of construction are carried at cost, less any recognised impairment loss. Depreciation 
of these assets commences when the assets are ready for their intended use.
Depreciation is provided on property, plant and equipment from the date they are brought into use, in equal instalments over their 
estimated useful lives. The lives assigned to property, plant and equipment are:
Facilities (including property)  40 years
Network assets    5 to 20 years
Plant and machinery   4 to 10 years
Computers, software and office equipment 3 to 10 years
Motor vehicles    7 years
The estimated useful economic lives, residual value and depreciation method are reviewed at the end of each reporting period, 
with the effect of any changes in estimate accounted for on a prospective basis.
No depreciation is provided on freehold land or assets in course of construction. Assets in the course of construction are carried at 
cost, less any recognised impairment loss. Depreciation of assets in the course of construction commences when the assets are 
ready for their intended use.
Where there is evidence of impairment, fixed assets are written down to recoverable amounts. Any such write down is charged to 
operating profit as an impairment loss and separately disclosed if material.
Assets held under finance leases are depreciated over the shorter of their expected useful economic lives on the same basis as 
owned assets or, where shorter, over the term of the relevant lease.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to 
arise from the continued use of the asset. The gain or loss arising on the disposal or scrappage of an asset is determined as the 
difference between the sales proceeds and the carrying amount of the asset and is recognised within the statement of 
comprehensive income. When revalued assets are sold, the amounts included within the revaluation reserve are transferred to 
retained earnings.
1.7 Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not 
amortised but is tested annually for impairment by completing a goodwill assessment at the reporting date, or more frequently 
when there is an indication that the unit may be impaired. An impairment loss recognised for goodwill is not reversed in a 
subsequent period. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of 
the investment in the investee.
Other intangible assets
Software
Non-current assets which incorporate both tangible and intangible elements are assessed to determine whether they should be 
classed as an intangible asset or as property, plant and equipment. The treatment is determined by an assessment of which 
element is more significant.
Acquired software is capitalised on the basis of the costs incurred to acquire and bring into use the specific software. These costs 
are amortised over their estimated useful lives of three to five years. Amortisation is charged to cost of sales in the statement of 
comprehensive income on a straight-line basis.
Domain names
Domain names are not amortised but are assessed for impairment on an annual basis.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or 
losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the 
carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.
1 Accounting policies continued 50
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annual report and accounts 2015
1.8 Inventories
Inventories mainly comprise items of equipment held for sale or rental and consumable items. They are stated at the lower of cost, 
including appropriate overheads, and estimated net realisable value. Where necessary, provision is made for obsolete, slow moving 
and defective inventories. Inventories are shown net of any provisions made. Cost is calculated using the first-in-first-out method.
1.9 Impairment excluding inventories
Financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is 
objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after 
the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that 
can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying 
amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Interest 
on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the 
amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of 
trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is 
considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off 
are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or 
loss.
Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than inventories, are reviewed at each reporting date to determine 
whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For 
goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is 
estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In 
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that 
reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment 
testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows 
from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the ‘cash-generating unit’). 
The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units, or 
(‘CGUs’) where appropriate.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. 
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the 
carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit 
(group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods 
are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is 
reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed 
only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of 
depreciation or amortisation, if no impairment loss had been recognised.
1.10 Employee benefits
Employee benefits – pension obligations
The Group operates two pension arrangements. The Manx Telecom Trading Limited (formerly Manx Telecom Limited (see note 9) 
Combined Pension Scheme is a defined benefit scheme and the Manx Telecom Employee Retirement Plan is a defined 
contribution plan.
A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity 
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension 
plans are recognised as an expense in the income statement in the periods during which services are rendered by employees.
notes
continued
1 Accounting policies continued financial statements
51
manx telecom plc
annual report and accounts 2015
For the defined contribution plan, the Group pays fixed contributions to a privately administered pension plan on behalf of 
employees. The Group has no further payment obligations once the contributions have been paid. The contributions are 
recognised as an employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent 
that a cash refund or a reduction in the future payments is available.
A defined benefit scheme is a pension scheme that sets the amount of pension benefit that an employee will receive on retirement, 
usually dependent on one or more factors such as age, years of service and compensation.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present 
value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of 
high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to 
maturity approximating to the terms of the related pension liability.
Remeasurements of the net defined benefit asset/liability comprising actuarial gains and losses, the effect of the asset ceiling (if 
applicable) and the return on scheme assets (excluding interest) are recognised immediately in the balance sheet with a charge or 
credit to the statement of comprehensive income in the period in which they occur. Remeasurement recorded in the statement of 
comprehensive income is not recycled.
Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount 
rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
 – Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements).
 – Net interest expense or income.
 – Remeasurement.
The Group presents the first two components of defined benefit costs in profit or loss in the line item ‘Administrative expenses’. 
Curtailment gains and losses are accounted for as past service costs. Net interest expense or income is recognised within finance 
costs (see note 5).
The asset or liability recognised in the statement of financial position in respect of the defined benefit pension plan is the present 
value of the defined benefit obligation at the period end date less the fair value of plan assets. Any surplus resulting from this 
calculation is limited to the present value of any economic benefits available in the form of refunds from the scheme or reductions 
in future contributions to the scheme.
The assets of the schemes are held independently of the Group’s finances.
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is 
provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the 
Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and 
the obligation can be estimated reliably.
Share-based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the 
equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. The grant date fair 
value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding 
increase in equity. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a 
straight-line basis over the vesting period, based on the Group’s estimate of the equity instruments that will eventually vest. Fair 
value is measured using either a Black-Scholes or Monte Carlo method, whichever is most appropriate to the share-based 
payment arrangement.
At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the 
effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or 
loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured 
to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
1 Accounting policies continued 52
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annual report and accounts 2015
Awards that lapse or are forfeited result in a credit to the income statement (reversing all previously recognised charges) in the year 
in which they lapse or are forfeited. SAYE share options granted to employees are treated as cancelled when employees cease to 
contribute to the scheme. This results in accelerated recognition of the expenses that would have arisen over the remainder of the 
original vesting period.
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair 
value of the liability. At each balance sheet date until the liability is settled, and at the date of settlement, the fair value of the liability 
is remeasured, with any changes in fair value recognised in profit or loss for the year.
1.11 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable 
that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made.
1.12 Revenue
Revenue comprises of the value of services provided, equipment sales and other revenue. Revenue is measured at the fair value of 
the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course 
of business, net of discounts, VAT and other sales-related taxes. Revenue is reduced for estimated customer returns, rebates and 
other similar allowances.
Revenue is recognised on a gross basis where the Group’s role is that of principal in a transaction. The gross basis represents the 
gross value of the billing to the customer after trade discounts, with any related costs being charged to operating expenses. Where 
the Group acts as agent in a transaction, the net revenue earned is recognised as revenue.
Revenue from telecommunications services which include mobile, fixed line, broadband and data services provided to customers is 
recognised once the service is provided over the Group’s network regardless of whether the customer pays in advance or is billed in 
arrears. Prepayments made by customers are recorded in deferred income and recognised in revenue as and when usage occurs.
Inbound roaming revenue, earned from other mobile operators whose customers roam onto the Group’s network, and outbound 
roaming revenue, earned from customers roaming outside their domestic coverage area, is recognised upon usage.
Subscription fees are recognised evenly throughout the periods to which they relate. Hardware revenue principally consists of 
revenue from the sale of wireless mobile devices. The revenue associated with the sale of wireless handsets and accessories is 
recognised when the products are delivered and accepted by the customer. The amount of revenue recognised is the value of the 
cash received from the sale.
In revenue arrangements including more than one deliverable, the arrangements are divided into separate units of accounting. 
Deliverables are considered separate units of accounting if the following two conditions are met: (1) the deliverable has value to the 
customer on a stand-alone basis and (2) there is evidence of the fair value of the item. The arrangement consideration is allocated 
to each separate unit of accounting based on its relative fair value.
Revenue from data centre services which include co-location, managed hosting, cloud and disaster recovery services is recognised 
on a straight-line basis over the term of the contract. Power usage is recognised as the power is used by the customer. When 
services are required before related colocation services can be provided, these are recognised as they are provided.
Other revenue comprises managed services and equipment sales. All revenue is recognised when the goods and services have 
been provided and accepted by the customer. The value recognised for equipment sales is the value of the cash received from the 
sale. Managed service revenues are recognised in the period to which the services relate.
1.13 Expenses
Operating expenses
Operating expenses are recognised on an accruals basis.
Operating lease payments
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating 
leases. Rentals under operating leases are charged to the statement of comprehensive income on a straight-line basis over the 
term of the lease. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a 
liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis over the lease 
term, except where another systematic basis is more representative of the time pattern in which economic benefits from the 
leased asset are consumed.
notes
continued
1 Accounting policies continued financial statements
53
manx telecom plc
annual report and accounts 2015
Finance lease payments
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risk and rewards of 
ownership to the lessee. Assets held under finance leases are recognised as assets of the group at their fair value or, if lower, at the 
present value of the minimum lease payments, each determined at the inception of the lease. Minimum lease payments are 
apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each 
period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Financing income and expenses
Financing expenses comprise interest payable, loan repayment fee costs, finance charges on shares classified as liabilities and 
finance leases recognised in profit or loss using the effective interest method, unwinding of the discount on provisions, and net 
foreign exchange losses that are recognised in the income statement (see note 1.3).
Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that takes a substantial time 
to be prepared for use are capitalised as part of the cost of that asset. All other borrowing costs are recognised in profit or loss in 
the period in which they are incurred.
Loan arrangement fees are capitalised and amortised over the loan term.
Finance income comprises interest receivable on funds invested, dividend income, and net foreign exchange gains. Interest income 
and interest payable is recognised in profit or loss as it accrues, using the effective interest method. Dividend income is recognised in 
the income statement on the date the entity’s right to receive payments is established. Foreign currency gains and losses are 
reported on a net basis.
1.14 New currently effective requirements and forthcoming requirements
The following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not had 
any significant impact on the amounts reported in these financial statements.
IAS 19 Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)
Annual Improvements 2010-2012 cycle
Annual Improvements 2011-2013 cycle
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied 
in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
Amendments/improvements
Effective date (applicable to annual periods beginning on or 
after stated date)
IFRS 9 Financial Instruments 1 January 2018
IFRS 14 Regulatory Deferral Accounts 1 January 2016
IFRS 15 Revenue from Contracts with Customers 1 January 2018
IFRS 16 Leases 1 January 2019
Annual Improvements 2012-2014 Cycle 1 January 2016
IFRS 10, IFRS 12 
& IAS 28
Investment Entities: Applying the Consolidation Exception 
(Amendments to IFRS 10, IFRS 12 and IAS 28) 1 January 2016
IFRS 11 Accounting for Acquisitions of Interests in Joint Operations 
(Amendments to IFRS 11) 1 January 2016
IAS 1 Disclosure Initiative (Amendments to IAS 1) 1 January 2016
IAS 16 & IAS 38 Clarification of Acceptable Methods of Depreciation and 
Amortisation (Amendments to IAS 16 and IAS 38) 1 January 2016
IAS 27 Equity Method in Separate Financial Statements 
(Amendments to IAS 27) 1 January 2016
IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses 
(Amendments to IAS 12) 1 January 2017
IAS 7 Disclosure Initiative (Amendments to IAS 7) 1 January 2017
1 Accounting policies continued 54
manx telecom plc
annual report and accounts 2015
The Directors do not expect that the adoption of the Standards and Interpretations listed above will have a material impact on the 
financial statements of the Group in future periods, except as that IFRS 9 will impact both the measurement and disclosure of 
Financial Instruments, and as that IFRS 15 may have a material impact on the amounts reported and disclosures made in the 
Group’s consolidated financial statements.
Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed 
review has been completed.
1.15 Government grants
Government grants are recognised where there is a reasonable assurance that the grant will be received and all attached 
conditions complied with. When the grant relates to an expense item, it is recognised as income over the period necessary to match 
the grant on a systematic basis to the costs that it is intended to compensate.
Where the grant relates to an asset, it is recognised as a reduction in the carrying amount of the asset. The grant is then recognised 
as income over the useful life of a depreciable asset by way of a reduced depreciation charge.
1.16 Subscriber acquisition costs
Subscriber acquisition costs, which include the commission costs associated with acquiring new subscribers and other incremental 
costs of customer acquisition, are charged to the statement of comprehensive income as incurred.
1.17 Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, the Directors are required to make judgements, estimates and assumptions 
about the carrying value of assets and liabilities that are not readily apparent from other sources. The estimates and associated 
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from 
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in 
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods 
if the revision affects both current and future periods.
Management consider the key estimates and judgements used in the preparation of these financial statements to be:
 – Pension scheme assumptions used in the actuarial valuation prepared by independent actuaries Towers Watson for the 
financial year ended 31 December 2015 (and 31 December 2014). During 2011 the Isle of Man Government confirmed the use of CPI 
as the base index for pension scheme increases where the scheme provisions make direct reference to UK (as opposed to Isle 
of Man) statutory pension increase provisions. After taking legal advice, the trustees made the decision to reference CPI for 
pension increases in deferment for all sections, reference CPI for A/B section pension increases and reference RPI for section C 
pension increases. The Group’s defined benefit obligation is discounted at a rate set by reference to market yields at the end of 
the reporting period on high quality corporate bonds. Significant judgement is required when setting the criteria for bonds to be 
included in the population from which the yield curve is derived. The most significant criteria considered for the selection of 
bonds include the issue size of the corporate bonds, quality of the bonds and the identification of outliers which are excluded.
 – Recoverability of receivables (for further details on credit risk related to trade receivables see note 17(b), for details of provisions in 
respect of doubtful debts see note 11).
 – Useful lives for property, plant and equipment. Property, plant and equipment represents 34% (2014: 35%) of the Group’s total 
assets; estimates and assumptions made regarding their useful economic lives may have a material impact on their carrying 
value and related depreciation charge. The depreciation charge for an asset is derived using estimates of its useful economic life 
and expected residual value, which are reviewed annually and changed when necessary to reflect current thinking on the 
remaining lives in light of technological change, network investment plans and the condition of the assets concerned.
 – Impairment of goodwill. The Group has only one cash generating unit to which goodwill has been allocated, the investment in 
Manx Telecom Trading Limited. The recoverable amount of the investment in Manx Telecom Trading Limited has been 
determined based on an estimate of the fair value of Manx Telecom Trading Limited less costs of disposal. The key assumptions 
and estimates used in performing the annual impairment review are disclosed in note 3.
 – A number of the Group’s accounting policies and disclosures require the measurement of fair values for both financial and 
non-financial assets and liabilities. Further information about the fair value assumptions are included in the following notes:
 – Note 7 – Property, plant and equipment.
 – Note 17 – Financial instruments (derivative financial instruments).
 – Note 22 – Share-based payment.
notes
continued
1 Accounting policies continued financial statements
55
manx telecom plc
annual report and accounts 2015
2 Operating segments
The Group has five reportable revenue segments which management report on and base their strategic decisions on:
Group 
2015 
£’000
Group 
2014 
£’000
Fixed line, broadband and data 32,027 31,338
Mobile 20,058 18,357
Global solutions 14,122 16,669
Data centre 7,951 6,607
Other 5,440 6,283
79,598 79,254
The segmental analysis shows revenue classified according to market source. However, the Group is not structured on a divisional 
basis and has functional departments, processes, assets and obligations which serve each of these revenue streams. These are 
not allocated in the financial reports received by the Board and its decisions are not routinely based on any such identification. 
Consequently the analysis shown above does not extend to any segmentation of profits and net assets.
There is no inter-segmental trading.
The products and services included within each of the five segments are as follows:
Fixed line, broadband and data includes revenues from ADSL and VDSL rental and connection charges, fixed line call charges, 
fixed line rental and connection charges, and private circuit rental and connection charges.
Mobile includes revenues from mobile calls, SMS and data charges, mobile rental charges, mobile handset and accessory sales, 
and roaming.
Global solutions includes revenues from mobile termination, products such as Chameleon, strongest signal mobile and M2M 
(machine to machine).
Data centre includes revenues from hosting services provided.
Other includes kit sales, directory revenues and managed service rental charges.
3 Goodwill – Group
Cost £’000
Balance at 1 January 2014 84,277
Additions during the year –
Balance at 31 December 2014 84,277
Additions during the year –
Balance at 31 December 2015 84,277
Carrying amount
As at 31 December 2015 84,277
As at 31 December 2014 84,277
On 29 June 2010, the Group acquired all of the ordinary shares in Manx Telecom Trading Limited (previously Manx Telecom Limited) 
for £133,800,000 satisfied in cash.
Goodwill is deemed to have an indefinite life and so is not subject to amortisation. An impairment review was undertaken as at the 
reporting date to determine whether any impairment has occurred. Upon review, the Board deemed that no impairment was 
necessary (2014: nil). 56
manx telecom plc
annual report and accounts 2015
The cash-generating unit to which goodwill has been allocated is the operations of Manx Telecom Trading Limited in its entirety due 
to the structure of the Company, which operates as one telecommunications business. Goodwill is considered to be impaired if the 
carrying amount exceeds the recoverable amount. The recoverable amount of an asset is considered to be the higher of its fair less 
costs of disposal and its value in use. The Group has performed its impairment review based on an assessment of the fair value 
less costs of disposal.
In 2015, the fair value less costs of disposal of Manx Telecom Trading Limited has been determined on a market approach by 
reference to the enterprise value of Manx Telecom plc, based on the market capitalisation of Manx Telecom plc as at 31 December 
2015 (using the year end share price and shares in issue) plus debt. The enterprise value of Manx Telecom plc is considered to 
provide a comparable value to that of Manx Telecom Trading Limited as all the revenue generating operations of the Group are 
contained within Manx Telecom Trading Limited. Using this methodology fair value less costs to sell were considered to be higher 
than the total asset value (less goodwill), therefore no impairment was required. Management also performed an assessment of 
the fair value determined based on an income approach, using cash flows projected over a 20-year period, a growth rate of 1% per 
annum and an 8% discount rate. This approach also indicated that there was no impairment of goodwill. In 2014, the impairment 
review took the same approach which also indicated that there was no impairment of goodwill.
4 Operating profit
The operating profit is stated after charging the following:
2015 
£’000
2014 
£’000
Staff costs 14,670 15,142
Depreciation of property, plant and equipment – owned assets 8,886 9,299
Amortisation of software licences – intangibles 193 191
Impairment of property, plant and equipment – 592
Net operating lease rentals payable – property 254 186
Trade receivables impairment 723 403
Audit services – statutory audit 106 158
– non-audit service fees 12 94
Listing costs incurred as a result of the Admission to AIM in 2014 and refinancing costs relating to the Admission were charged to 
equity, profit or loss or capitalised as set out below:
2015 
£’000
2014 
£’000
Listing costs charged to profit or loss (see below) – 7,991
Listing costs presented in equity (see note 16) – 4,883
Transaction costs capitalised (see note 13) – 1,475
– 14,349
Listing costs were recognised as a reduction to share premium within equity to the extent that they related to the newly issued 
shares. All other costs that did not qualify for recognition in equity were recognised in financial expenses in profit or loss. The 
borrowing costs capitalised are detailed in note 13.
Non-GAAP measures
The adjustments made to reported profit before tax and operating profit are income and charges that are one-off in nature, 
significant and distort the Group’s underlying performance. No such adjustments have been made in respect of the year ended 
31 December 2015. For the year ended 31 December 2014 these adjustments included:
 – Impairment of equipment. Following the implementation of 4G which was completed during 2014, the Group made impairments 
of equipment used to provide mobile prepaid services and fixed voice network equipment, resulting in an expense of £592,000.
 – Refinancing costs. As a result of the refinancing described in note 13, net realised and unrealised losses of £291,000 were 
incurred in exiting the interest rate swap held in connection with the prior financing arrangements, which is not considered a 
regular finance cost to the Group.
 – Listing expenses. On 10 February 2014, the Company was admitted to AIM. One-off listing costs charged to profit or loss in the 
period were £7,991,000, which include £475,000 in respect of share options which vested as a result of the admission to AIM.
notes
continued
3 Goodwill – Group continued financial statements
57
manx telecom plc
annual report and accounts 2015
 – Pension scheme reorganisation. On 31 August 2014 the Manx Telecom Limited Combined Pension Scheme was closed to future 
accrual. In connection with the closure of the Manx Telecom Limited Combined Pension Scheme to future accrual, one-off 
expenses of £788,000 were incurred, including additional payments to members of the scheme of £666,000 and other related 
costs of £122,000. As a result of the changes made to the scheme, a one-off curtailment credit of £7,000,000 to past service cost 
was recorded. This credit arose from changes in actuarial assumptions regarding future salary increases, which are replaced 
with pension increases in deferment given the scheme is now closed to future accrual. See note 15 for further detail regarding 
pension schemes of the Group.
 – Release of capitalised loan transaction costs. Due to the refinancing of the Group following Admission, unamortised transaction 
costs of £4,567,000 relating to prior financing arrangements were released to the statement of comprehensive income within 
finance expenses. See note 13 for further detail regarding lending arrangements of the Group.
5 Finance income and expense
Recognised in profit or loss
2015 
£’000
2014 
£’000
Finance income
Other interest receivable 70 72
Net interest on pension asset 100 –
170 72
Finance costs
Interest on shareholder loan notes – (330)
Interest on borrowings (2,256) (2,933)
Finance lease interest (6) (6)
Net interest on pension liabilities – (300)
Amortisation of loan transaction costs (314) (301)
Release of capitalised transaction costs – (4,567)
Refinancing costs – –
Total financial expense (2,576) (8,437)
Net total finance expense (2,406) (8,365)
Refinancing costs incurred as a result of refinancing in April 2013 of £5,239,115 were capitalised in 2013. The debt was subsequently 
repaid as a result of the Admission and refinancing in February 2014 (see note 13 for further information). The remaining 
unamortised financing costs of £4,567,000 were charged to the Consolidated Statement of Comprehensive Income in 2014.
A new debt arrangement entered into in 2014 (see note 13) incurred directly related expenses of £1,475,000 which were capitalised 
in accordance with IAS 39 and amortised over the period of the loan facility. In 2015, the terms of this debt arrangement were 
amended (see note 13), incurring additional directly related expenses of £437,000 which were capitalised. These expenses, together 
with the remaining unamortised element of the initial capitalised expenses, are being amortised over the amended loan term. 
Amortisation of £314,000 is included within financial expenses in the current year.
6 Taxation
The Company’s profits are charged at the Isle of Man standard rate of 0% for 2015 (2014: 0%). Therefore no provision has been made 
for taxation for 2015 (2014: £nil). Whilst the Group is required to apply Isle of Man Retail Tax to Isle of Man retail activity, profits from 
this revenue stream are not substantial enough to meet the taxable threshold.
4 Operating profit continued 58
manx telecom plc
annual report and accounts 2015
7 Property, plant and equipment – Group
Land and 
buildings 
£’000
Plant and 
equipment 
£’000
Under 
construction 
£’000
Total 
£’000
Cost or valuation
Balance at 1 January 2014 34,018 88,774 10,366 133,158
Additions 29 172 12,180 12,381
Transfer 3,248 10,688 (13,936) –
Disposals (588) (9,777) – (10,365)
Impairment – – – –
Balance at 31 December 2014 36,707 89,857 8,610 135,174
Balance at 1 January 2015 36,707 89,857 8,610 135,174
Additions – – 7,935 7,935
Transfer 1,960 8,383 (10,343) –
Disposals (500) (7,248) – (7,748)
Impairment – – – – 
Balance at 31 December 2015 38,167 90,992 6,202 135,361
Depreciation and impairment
Balance at 1 January 2014 9,068 61,468 – 70,536
Depreciation charge for the year 1,353 7,946 – 9,299
Disposals (588) (8,579) – (9,167)
Impairment – (592) – (592)
Balance at 31 December 2014 9,833 60,243 – 70,076
Balance at 1 January 2015 9,833 60,243 – 70,076
Depreciation charge for the year 1,555 7,331 – 8,886
Disposals (500) (7,069) – (7,569)
Impairment – – – –
Balance at 31 December 2015 10,888 60,505 – 71,393
Net book value at 31 December 2015 27,279 30,487 6,202 63,968
Net book value at 31 December 2014 26,874 29,614 8,610 65,098
A formal independent valuation of the four main properties was undertaken by Dean Wood Estate Agents on 17 December 2013. 
This confirmed that the net book value at 31 December 2013 was considered to be the same as the fair value of the land and 
buildings. The fair value of the freehold land and buildings was determined based on the market comparable approach that 
reflects recent transaction prices for similar properties.
As at the end of the reporting period, the Group performed an assessment of the estimated fair value of land and buildings using 
the valuation techniques described above, which estimated that the fair value did not materially differ from the carrying value and 
as such a revaluation of the land and buildings was not required. There has been no change to the valuation techniques used 
during the year. A full, independent third party valuation was not undertaken as at 31 December 2014 or 31 December 2015 following 
the fair value estimates made by the Group.
The carrying value of land and buildings held by the Group under the revaluation model is the same as if it were held under the 
historical cost model.
notes
continued financial statements
59
manx telecom plc
annual report and accounts 2015
In 2014, following the implementation of 4G, the Group made impairments of certain equipment used to provide mobile prepaid 
services and fixed voice network equipment. No fixed asset impairments have been identified during 2015.
In 2015, the Group made a net profit on disposal of certain fixed assets of £50,000 (2014: £140,000).
During 2014, the Group received a grant of £250,000 towards the cost of construction of the Greenhill Data Centre, which in 
accordance with the Group’s accounting policy was deducted from the cost of the asset. No such grants were received during 2015.
The accounting policies set out in note 1.6 are applicable to assets under construction and the capital commitments in respect of 
assets under construction are detailed in note 21.
Fair value hierarchy
The table below analyses land and buildings carried at fair value, grouped into Levels 1 to 3 based on the degree to which the fair 
value is observable (as described in the accounting policy in note 1.4.
31 December 2015
Level 1 
£’000
Level 2 
£’000
Level 3 
£’000
Total 
£’000
Land and buildings – – 27,279 27,279
31 December 2014
Level 1 
£’000
Level 2 
£’000
Level 3 
£’000
Total 
£’000
Land and buildings – – 26,874 26,874
There were no transfers between levels during the current or prior years.
8 Intangible assets – Group
Domain 
names 
£’000
Computer 
software 
£’000
Total 
£’000
Cost
Balance at 1 January 2014 109 1,250 1,359
Additions – 345 345
Balance at 31 December 2014 109 1,595 1,704
Balance at 1 January 2015 109 1,595 1,704
Additions – 41 41
Balance at 31 December 2015 109 1,636 1,745
Amortisation and impairment
Balance at 1 January 2014 – (997) (997)
Amortisation for the year – (191) (191)
Balance at 31 December 2014 – (1,188) (1,188)
Balance at 1 January 2015 – (1,188) (1,188)
Amortisation for the year – (193) (193)
Balance at 31 December 2015 – (1,381) (1,381)
Net book value at 31 December 2015 109 255 364
Net book value at 31 December 2014 109 407 516
The domain names were acquired on 1 March 2012. The Directors have considered the carrying value of the assets at 31 December 
2015 and in their opinion there are no indicators of impairment as the revenue base is maintained.
7 Property, plant and equipment – Group continued 60
manx telecom plc
annual report and accounts 2015
9 Investments in subsidiaries – Company
The Company has the following investments in its subsidiaries:
Company Holding Principal activity
Country of incorporation 
and operation
Class of 
shares held
Ownership 
2015
Ownership 
2014
Trafford Shareholder Debtco Limited Direct Holding company Isle of Man Ordinary 100% 100%
Trafford Midco Limited Indirect Holding company Isle of Man Ordinary 100% 100%
Manx Telecom Holdings Limited Indirect Holding company Isle of Man Ordinary 100% 100%
Manx Telecom Trading Limited Indirect Telecommunications provider Isle of Man Ordinary 100% 100%
Manx Telecom Limited changed its name on 3 February 2014 to Manx Telecom Trading Limited.
During the current year, the investment by the Company in Trafford Shareholder Debtco Limited has increased by £681,000 (2014: 
£731,000) due to capital contributions made in respect of share-based payments to be settled in the equity instruments of the 
Company for services received by Manx Telecom Trading Limited, which resulted in capital contributions being made to subsidiaries 
throughout the Group structure.
10 Inventories – Group
Group 
2015 
£’000
Group 
2014 
£’000
Raw materials and consumables 84 53
Work in progress 32 53
Finished goods 478 688
594 794
11 Trade and other receivables – Group
Group 
2015 
£’000
Group 
2014 
£’000
Amounts falling due within one year:
Trade receivables 9,315 7,566
Less provisions for impairment of receivables (915) (720)
Trade receivable – net 8,400 6,846
Other receivables 7,158 6,335
Prepayments 1,737 1,294
Accrued income 1,940 2,233
19,235 16,708
An analysis of the ageing of overdue trade receivables is disclosed in note 17(b). The movement in the trade receivables provision for 
doubtful debts during the year is as follows:
£’000
Doubtful debt provision at 1 January 2014 491
Additions 229
Reductions/amount paid –
Doubtful debt provision at 31 December 2014 720
Additions 195
Reductions/amount paid –
Doubtful debt provision at 31 December 2015 915
Additions and reductions in the provision are recognised in administration costs within the Statement of Comprehensive Income.
notes
continued financial statements
61
manx telecom plc
annual report and accounts 2015
12 Cash and cash equivalents – Group
Group 
2015 
£’000
Group 
2014 
£’000
Bank balances 4,801 15,156
Call deposits 11,800 –
Cash and cash equivalents 16,601 15,156
13 Interest-bearing borrowings – Group
This note provides information about the contractual terms of the Group’s interest-bearing bank loans and borrowings, which are 
measured at amortised cost. For more information about the Group’s exposure to interest rate and liquidity risk, see note 17.
Group 
2015 
£’000
Group 
2014 
£’000
Non-current liabilities
Finance lease liability 93 133
Secured bank loans 68,692 68,815
68,785 68,948
Current liabilities
Current portion of secured bank loans – –
– –
T erms and debt repayment schedule
Currency
Nominal 
interest 
rate %
Date of  
maturity
Carrying 
amount 
2015 
£’000
Carrying 
amount 
2014 
£’000
Finance lease GBP 2.92 31 July 2018 93 133
Revolving credit facility GBP 1.50–3.00 30 June 2020 70,000 70,000
Unamortised finance costs GBP (1,308) (1,185)
68,785 68,948
In connection with the Admission on 10 February 2014, Manx Telecom Holdings Limited and Manx Telecom Trading Limited 
(previously Manx Telecom Limited) entered into an £80m revolving credit facility agreement on 3 February 2014 with Barclays Bank 
plc, Lloyds Bank plc and The Royal Bank of Scotland plc as arrangers and Lloyds Bank plc as agent and security agent (‘the Facility 
Agreement’).
The proceeds of the first drawdown under the Facility Agreement of £70m were used to (among other things) refinance the 
indebtedness existing at 31 December 2013 and to pay fees, costs and expenses in relation to the Admission process and the debt 
refinancing. Additional amounts may be drawn under the Facility Agreement for general corporate purposes and/or working 
capital purposes and the payment of fees, costs and expenses.
The loan is secured by way of a debenture in favour of the security agent providing a fixed and floating charge over certain of the 
Group’s assets, including the shares of Manx Telecom Holdings Limited and Manx Telecom Trading Limited and property, plant and 
equipment of the Group.
The initial interest rate was the applicable interbank offer rate plus a margin of 2.5% p.a. and, from 30 June 2014, was subject  
to an adjustment to the margin ranging from 2.0% p.a. to 3.5% p.a. based on the ratio of total net debt to adjusted EBITDA. As at 
31 December 2014, the margin applicable to the interest rate on the facility was 2%.
On 30 June 2015, the Group extended the term of the revolving credit facility agreement by a further two years from 30 June 2018 
to 30 June 2020. In connection with the modification to the lending arrangements, the Group also negotiated a reduction in the 
applicable margin range from 2.0% p.a. to 3.5% p.a., to 1.5% p.a. to 3% p.a. As at 31 December 2015, the margin applicable to the 
interest rate on the facility was 1.5%. The amended terms of the lending arrangement were not considered to be substantially  62
manx telecom plc
annual report and accounts 2015
different from the original terms, as such the Group has not treated the modification as an extinguishment of the original financial 
liability and the recognition of a new liability, in line with its accounting policy (see note 1.4).
Transaction costs incurred as part of the debt financing are amortised over the period of the loan. Transaction costs of £1,475,000 
were capitalised in 2014 and will be amortised over the loan period (as amended from 30 June 2015). Due to the refinancing in 
connection with the Admission in 2014, unamortised transaction costs of £4,567,000 relating to prior financing arrangements were 
released to the statement of comprehensive income within finance expenses during the year ended 31 December 2014. Transaction 
costs incurred due to amendment to the facility in 2015 of £438,000 were capitalised in the current year and these expenses, 
together with the remaining unamortised element of the initial capitalised expenses, will be amortised over the amended loan term.
To mitigate the Group’s exposure to interest rate risk, the Group has entered into interest swap agreements. See note 17(d) for 
further details of the interest swap agreements.
Amounts drawn under the Facility Agreement are to be repaid on the last day of each applicable interest period unless the 
relevant borrower elects otherwise and amounts repaid will (subject to certain drawdown conditions) remain available for 
redrawing unless cancelled. The Facility Agreement will terminate and all amounts outstanding must be repaid on 30 June 2020.
The Facility Agreement also provides for the payment of a commitment fee, agency fee and arrangement fee and contains certain 
undertakings, guarantees and covenants (including financial covenants) and provides for certain events of default. During both the 
current and prior periods the Group has not breached any financial covenants contained within the Facility Agreement.
14 Trade and other payables – Group
Group 
2015 
£’000
Group 
2014 
£’000
Current
Trade payables 8,696 4,814
Other taxation and social security 2,167 3,837
Other payables 530 3,096
Accrued expenses 9,560 10,435
Deferred income 3,980 4,293
24,933 26,475
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
15 Retirement benefit obligations – Group
The Group operates two pension schemes. The Manx Telecom Limited Combined Pension Scheme is a defined benefit scheme 
that is closed to new entrants and the Manx Telecom Employee Retirement Plan is a defined contribution plan.
Defined benefit plan
The Manx Telecom Limited Combined Pension Scheme (‘the Scheme’) provides benefits based on final pensionable salary. The 
assets of the Scheme are managed by independent Trustees and are held separately from those of the Group with a Legal & 
General managed portfolio and also with cash deposits.
The Isle of Man does not have minimum funding requirements. The only requirement is for a Schedule of Contributions, agreed 
between the Company and the Trustees, to be put in place after each actuarial valuation that is deemed by the Actuary to be 
sufficient to cover any shortfall revealed by the triennial actuarial valuation.
The contributions relating to the Scheme have been assessed in accordance with the advice of independent qualified actuaries 
and are funded by the Group. Independent actuarial valuations are carried out on a triennial basis by Towers Watson (formerly 
Watson Wyatt LLP), Actuaries and Consultants. The last such full valuation was carried out at 31 March 2013 and in accordance with 
IAS 19 the defined benefit liabilities have been measured using the ‘projected unit method’.
The Group paid contributions of £1,200,000 (2014: £1,850,000) with employee contributions of £nil (2014: £250,000) to the Manx 
Telecom Combined Pension Scheme for the financial year ended 31 December 2015.
notes
continued
13 Interest-bearing borrowings – Group continued financial statements
63
manx telecom plc
annual report and accounts 2015
With effect from 1 October 2009 the Scheme changed to a career average revalued earnings basis for benefits earned from that 
date. Members had the option of choosing between a normal retirement age of 62 with an 8% employee contribution rate, or a 
normal retirement age of 65 with a 6% employee contribution rate. No changes were made to benefits earned before 1 October 
2009. The scheme was closed to new entrants in 2002.
On 31 August 2014, the Manx Telecom Combined Pension Scheme closed to future accrual. Under the terms of the plan amendment 
to close the scheme to future accrual, participants in the scheme were provided with a choice of three options regarding transition 
to the Manx Telecom Employee Retirement Plan. In connection with this transition, one-off lump sum payments of £666,000 in total 
were made in respect of participants in the scheme and other costs of £122,000 were incurred. A credit of £7,000,000 in respect of 
past service arose from the closure of the scheme to future accrual. This credit arose from changes in actuarial assumptions 
regarding future salary increases, which were replaced with pension increases in deferment given the scheme was closed to 
future accrual. The assumed rate of pension increases in deferment was lower than the assumed rate of future salary increases, 
resulting in a credit for curtailments.
The actuarial valuation of the Manx Telecom Limited Combined Pension Scheme as at 31 March 2013 has been updated to 31 
December 2015. Scheme assets are stated at fair value.
The main assumptions adopted for the Scheme under IAS 19 (per annum) are as follows:
2015 
%
2014 
%
Nominal rate of increase for in-payment benefits 2.15–2.95 2.25–3.00
Nominal rate of increase for deferred benefits 2.15 2.25
Average longevity of a member at age 60 now (years) – males 27.5 27.4
Average longevity of a member at age 60 now (years) – females 30.2 30.0
Average longevity of a member at age 60 in 2029 – males 29.4 29.3
Average longevity of a member at age 60 in 2029 – females 32.0 31.9
Discount rate 3.80 3.90
Retail Price Index (‘RPI’) 3.15 3.25
Consumer Price Index (‘CPI’) 2.15 2.25
Rate of salary increase N/A N/A
During 2011 the Isle of Man Government confirmed the use of CPI as the base index for pension scheme increases where the 
scheme provisions make direct reference to UK (as opposed to Isle of Man) statutory pension increase provisions. After taking legal 
advice, the trustees made the decision to reference CPI for pension increases in deferment for all sections, reference CPI for A/B 
section pension increases and reference RPI for section C pension increases.
The risks associated with the actuarial assumptions include longevity, inflation, interest rate and market (investment) risks. The 
Scheme is not exposed to any unusual, entity or scheme specific risks.
Each year, the trustees of the scheme review the strategic investment policies of the scheme in terms of the risk and return profiles. 
The main strategic choices that are formulated are the asset mix. The scheme does not utilise annuities or swaps to manage risk in 
relation to asset-liability matching.
The Scheme holds a large proportion of equities which are expected to outperform bonds in the long term but give exposure to 
volatility and risk in the short term. The Trustees are responsible for investment strategy, and a reasonable proportion of equity 
investment is justified, given the time horizon of the Scheme and to provide a reasonable long-term return. If equities were to fall by 
20%, the net pension asset would reduce by approximately £5,820,000 to become a liability of £5,420,000.
However, a fall in equity prices would be associated with a fall in the value of corporate bonds and a rise in corporate bond yields. 
The former would lead to a further reduction in scheme assets, just over £13,000,000 of which were invested in corporate bonds 
at 31 December 2015. However, the increase in corporate bond yields, which are used to determine the value of the defined benefit 
obligation, would lead to a reduction in liabilities which would partially or wholly offset the impact of the fall in asset values on the 
reported pension liability.
15 Retirement benefit obligations – Group continued 64
manx telecom plc
annual report and accounts 2015
Sensitivity analysis on significant actuarial assumptions
The table below illustrates the impact on the financial statements that certain changes in the actuarial assumptions would have.
31 December 2015
Mortality –
1 year 
£’000
Discount 
rate +1% 
£’000
Inflation 
(including 
CPI and 
salary) 
+0.5% 
£’000
Real salary 
escalation 
+0.25% 
£’000
CPI inflation 
only +0.25% 
£’000
Balance sheet deficit +2,100 –13,000 +7,300 N/A +2,600
Net benefit expense +100 –600 +300 N/A +100
Service cost N/A N/A N/A N/A N/A
Net interest cost +100 –600 +300 N/A +100
31 December 2014
Mortality –
1 year 
£’000
Discount 
rate +1% 
£’000
Inflation 
(including 
CPI and 
salary) 
+0.5% 
£’000
Real salary 
escalation 
+0.25% 
£’000
CPI inflation 
only +0.25% 
£’000
Balance sheet deficit +1,800 –13,000 +7,000 N/A +2,500
Net benefit expense +100 –700 +300 N/A +100
Service cost N/A N/A N/A N/A N/A
Net interest cost +100 –700 +300 N/A +100
Changes are marked ‘N/A’ above as there would be no financial impact if the salary escalation assumption is varied given the 
Scheme is now closed to future accrual. Similarly, there will also be no financial impact on the service cost.
In presenting the sensitivity analysis above, the present value of the defined benefit obligation has been calculated using the 
projected unit method, which is the same as that applied in calculating the defined benefit obligation liability recognised in the 
statement of financial position. The sensitivity analysis was conducted by altering and measuring the impact each assumption  
had on the level of expected future cash flows and discounting back to the valuation data.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years with the 
exception of the method used for the inflation assumption, which is derived by applying the expected future cash flows onto  
the full inflation curve as at 31 December 2015, and an inflation risk premium adjustment of 0.15%. In previous years, the inflation 
assumption was derived from the Bank of England spot rate at the average duration of the Scheme, and an inflation risk premium 
adjustment of 0.15%. The sensitivity analysis presented above may not be representative of the actual change in the defined benefit 
obligation, as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may 
be correlated. Extrapolation beyond the sensitivity figures shown may not be appropriate.
The amounts recognised in the statement of comprehensive income in respect of defined benefit obligation for the year ended 31 
December 2015 are as follows:
2015 
£’000
2014 
£’000
Analysis of the amount (credited)/charged to profit or loss:
Current service cost – 1,000
Past service cost – (7,000)
Net interest (income)/expense (100) 300
Total (credited) in profit before tax (100) (5,700)
notes
continued
15 Retirement benefit obligations – Group continued financial statements
65
manx telecom plc
annual report and accounts 2015
Analysis of the amount recognised in other comprehensive income:
2015 
£’000
2014 
£’000
Actuarial loss due to liability experience – –
Actuarial loss due to liability assumption changes 200 5,900
Actuarial loss arising during the period 200 5,900
Return on Scheme assets less/(greater) than discount rate 2,900 (6,700)
Remeasurement effects recognised in other comprehensive income 3,100 (800)
The pension assets and liabilities recognised in the statement of financial position are as follows:
2015 
£’000
% of total 
fair value 
of scheme 
assets 
31 Dec 2015 
%
2014 
£’000
% of total 
fair value 
of scheme 
assets 
31 Dec 2014 
%
Fair value of assets:
 – Equity instrument funds 29,100 38.7 29,800 39.1
 – Debt instrument funds 45,800 61.0 46,200 60.5
 – Cash and cash equivalents 200 0.3 300 0.4
Fair value of assets 75,100 76,300
Present value of defined benefit obligations (74,700) (74,100)
Net asset recognised in the balance sheet 400 2,200
Deferred tax assets – –
Net pension surplus 400 2,200
Assets of the scheme are held within a Legal & General managed portfolio and are therefore indirectly invested in assets in quoted 
markets with active prices. The assets held directly with Legal & General are invested in Legal & General Funds for which regular 
quoted prices are readily available and for which transactions regularly occur and are classified as level 1 instruments in the fair 
value hierarchy (see note 1.4 for further information on the fair value hierarchy).
Analysis of the movement in the statement of financial position
Movements in the present value of defined benefit obligations in the current period were as follows:
2015 
£’000
2014 
£’000
At start of year 74,100 73,200
Current service cost – 1,000
Past service cost and gains and losses on settlements – (7,000)
Interest cost 2,800 3,400
Actuarial loss due to liability experience – –
Actuarial loss due to liability financial assumption changes 200 7,500
Actuarial loss due to liability demographic assumption changes – (1,600)
Benefits paid from scheme assets (2,400) (2,400)
At end of year 74,700 74,100
15 Retirement benefit obligations – Group continued 66
manx telecom plc
annual report and accounts 2015
Movements in the fair value of scheme assets in the current and preceding year were as follows:
2015 
£’000
2014 
£’000
At start of year 76,300 66,800
Interest income on scheme assets 2,900 3,100
Return on scheme assets (less)/greater than discount rate (2,900) 6,700
Contributions from the employer 1,200 1,850
Contributions from plan participants – 250
Benefits paid (2,400) (2,400)
At end of year 75,100 76,300
The defined benefit scheme’s impact on the Group’s future cash flows is affected by:
 – Funding policy and arrangements – the Isle of Man does not have minimum funding requirements. A Schedule of Contributions 
is agreed between the Group and the Trustees and put in place following each successive actuarial valuation that is deemed by 
the actuary to be sufficient to cover any shortfall revealed by the triennial valuation.
 – Contributions to the Scheme for the next annual reporting period – expected employer contributions for the year ended 
31 December 2016 are £1,200,000 and expected benefit payments from Scheme assets are £2,100,000.
 – Timing of benefit payments and duration of the defined benefit obligation – the weighted average duration of the defined benefit 
obligation is 22.5 years (2014: 23.5 years) and benefit payments are expected as set out in the below maturity profile.
Expected benefit payments during annual reporting period ended: £’000
31 December 2016 2,100
31 December 2017 2,000
31 December 2018 2,200
31 December 2019 2,400
31 December 2020 2,400
31 December 2021 through 31 December 2025 14,500
Defined contribution plan
The Manx Telecom Employee Retirement Plan is a defined contribution pension scheme, which operates for employees who 
commenced employment after 1 July 2002. The assets of the Scheme are held separately from those of the Group in an Aviva 
administered pension plan. The total cost charged to the statement of comprehensive income for this plan during the period ended 
31 December 2015 was £1,137,000 (year ended 31 December 2014: £396,000).
notes
continued
15 Retirement benefit obligations – Group continued financial statements
67
manx telecom plc
annual report and accounts 2015
16 Capital – Company
Share capital
The Company’s shares were admitted for trading on 10 February 2014. The table below sets out the amounts recorded in equity in 
respect of existing and newly issued shares (net of listing costs as detailed in note 4.
Number 
of shares 
in issue 
(thousands)
Ordinary 
share 
capital 
£’000
Share 
premium 
£’000
Total 
£’000
Opening balance as at 1 January 2014 9,980 100 – 100
Share split 39,918 – – –
Proceeds from issue of new shares on Admission 62,924 126 89,226 89,352
Share-based payment – – – –
Shares issued to employee benefit trust 138 – – –
Listing costs (note 4) – – (4,883) (4,883)
At 31 December 2014 112,961 226 84,343 84,569
Opening balance as at 1 January 2015 112,961 226 84,343 84,569
Shares issued on exercise of SAYE share options (note 22) 3 – 4 4
At 31 December 2015 112,964 226 84,347 84,573
2015 
£’000
2014 
£’000
Allotted, called up and subject to payment
Ordinary shares of 112,963,001 @ 0.2p each (2014: ordinary shares of 112,959,787 @ 0.2p each) 226 226
226 226
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per 
share at meetings of the Company. All shares rank pari passu in all respects including voting rights and dividend entitlement.
During 2014, a share split was executed prior to the listing in the ratio of five shares for each existing share. The share split resulted 
in an additional 39,918,692 shares. Although the share split resulted in an increase in the number of shares in issue, there was no 
impact on the total value of issued share capital or reserves. 62,783,078 new shares were issued as part of the admission in 2014 
and a further 70,422 shares were issued to both Kevin Walsh and Jeffrey Hume. The total new shares issued amounted to 
62,923,922 generating total proceeds of £89,226,121.
On 2 December 2014, 137,500 new ordinary shares were issued and transferred to the Manx Telecom plc Share Incentive Plan Trust 
as part of an employee share scheme (see note 22 for further information).
The Company previously announced on 25 September 2014 that 1,000,000 new ordinary shares would be issued and transferred 
into an employee benefit trust from which shares would be granted to employees in 2014 and future years. The Board 
subsequently decided to only issue new shares in respect of awards currently due.
On 24 November 2015, the Company made a block listing application to the London Stock Exchange for admission of 30,000 
ordinary shares of 0.2p each in the Company to trading on AIM. The shares will be issued from time to time pursuant to the 
exercise of share options under the Company’s Save As You Earn share option scheme and will rank pari passu in all respects with 
the existing Ordinary Shares of the Company. On 10 December 2015, 3,214 shares were issued in respect of options exercised under 
this scheme.
See note 22 for further information regarding share-based payments which may impact the capital of the Company in future periods. 68
manx telecom plc
annual report and accounts 2015
Own shares
Own shares relate to shares in the Company held by the Group employee benefit trust, Manx Telecom plc Share Incentive Plan Trust.
Number 
of shares 
in issue 
(thousands)
Ordinary 
share 
capital 
£’000
Opening balance as at 1 January 2014 – –
Own shares issued 137,500 –
Share options vested – –
At 31 December 2014 137,500 –
Opening balance as at 1 January 2015 137,500 –
Own shares issued – –
Share options vested (3,500) –
At 31 December 2015 134,000 –
On 2 December 2014, 137,500 new ordinary shares were issued and transferred to the Manx Telecom plc Share Incentive Plan Trust 
for nil consideration. The shares are held for the benefit of employees of the Group in respect of the free share options granted 
under the Share Incentive Plan described in note 22. At the year end, the shares had a market value of £281,000 (2014: £242,000).
Capital management
The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its 
business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it in light of changes 
in economic conditions. To maintain or adjust the capital structure, the Group may make dividend payments to shareholders, return 
capital to shareholders or issue new shares. The Group ensures that banking covenants are met as part of its capital management, 
see note 13 for further details of the Group’s lending arrangements including covenant compliance.
Gearing ratio
The gearing ratio at the year end is as follows:
2015 
£’000
2014 
£’000
Secured bank loans (68,692) (68,815)
Cash and cash equivalents 16,601 15,156
Net debt (52,091) (53,659)
Equity 91,047 88,280
Net debt to equity ratio 0.57 0.61
Debt is defined as long and short-term borrowings (excluding derivatives) as detailed in note 13. Equity includes all capital and 
reserves of the Group that are managed as capital.
17 Financial instruments
17(a) Fair values of financial instruments
Trade and other receivables
The fair value of trade and other receivables, excluding construction contract debtors, is estimated as the present value of future 
cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of 
interest at the balance sheet date if the effect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it 
is not repayable on demand then the fair value is estimated at the present value of future cash flows, discounted at the market 
rate of interest at the balance sheet date.
notes
continued
16 Capital – Company continued financial statements
69
manx telecom plc
annual report and accounts 2015
Interest-bearing borrowings
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of 
interest at the balance sheet date. For finance leases the market rate of interest is determined by reference to similar lease 
agreements.
Derivative financial instruments
The fair value of interest rate swaps is based future cash flows, which are estimated based on forward interest rates (from 
observable yield curves at the end of the reporting period) and contract interest rates.
The fair values of all financial assets and financial liabilities by class, together with their carrying amounts shown in the consolidated 
statement of financial position, are as follows:
Carrying 
amount 
2015 
£’000
Fair value 
2015 
£’000
Carrying 
amount 
2014 
£’000
Fair value 
2014 
£’000
Financial assets measured at amortised cost
Cash and cash equivalents (note 12) 16,601 16,601 15,156 15,156
Trade and other receivables (note 11) 19,235 19,235 16,708 16,708
Financial assets designated as fair value through profit or loss
Derivatives (note 17d) 103 103 – –
Total financial assets 35,939 35,939 31,864 31,864
Carrying 
amount 
2015 
£’000
Fair value 
2015 
£’000
Carrying 
amount 
2014 
£’000
Fair value 
2014 
£’000
Financial liabilities measured at amortised cost
Finance leases (note 13) 93 93 133 133
Other interest-bearing loans and borrowings (note 13) 68,692 68,692 68,815 68,815
Trade and other payables (note 14) 24,933 24,933 26,475 26,475
Financial liabilities designated as fair value through profit or loss
Derivatives (note 17d) 777 777 1,008 1,008
Total financial liabilities 94,495 94,495 96,431 96,431
No financial assets or liabilities have been reclassified during the current or prior year.
Financial risk management
The Group’s operations expose it to a variety of financial risks including credit risk, currency risk, interest rate risk and liquidity risk. 
The Group’s overall risk management policies focus on the unpredictability of financial markets and seek to minimise potential 
adverse effects on the Group’s financial performance and net assets.
The principal financial risks of the Group and how the Group manages these risks are discussed below.
17(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual 
obligations, and arises principally from the Group’s receivables due from customers and cash and cash equivalents.
Trade receivables are presented in the statement of financial position net of allowances for doubtful receivables, estimated by the 
Group’s management based on prior experience and their assessment of the current economic environment. Management has a 
credit policy in place and the exposure to credit risk is monitored on an ongoing basis using credit checks. The Group manages its 
exposure to credit risk on cash and cash equivalents by only placing its financial assets with reputable financial institutions with 
strong credit ratings.
17 Financial instruments continued 70
manx telecom plc
annual report and accounts 2015
At the reporting date there were no significant concentrations of third party credit risk, with exposure spread over a large number 
of counterparties and customers. The maximum exposure to credit risk is represented by the carrying amount of each financial 
asset, including derivative financial instruments, in the statement of financial position. The Group does not require collateral in 
respect of financial assets.
The carrying amount of financial assets represents the maximum credit exposure. Therefore, the maximum exposure to credit risk 
at 31 December 2015 was £35,939,000 (2014: £31,864,000) being the total of the carrying amount of cash and cash equivalents, trade 
and other receivables and related party receivables.
The aging of trade receivables, including trade receivables past due but not impaired, is as follows:
Overdue on the reporting date
Carrying 
amount 
£’000
Not overdue 
on the 
reporting 
date 
£’000
Less than 
90 days 
£’000
Between 
90 and 
180 days 
£’000
Between 
180 and 
360 days 
£’000
Over 
360 days 
£’000
Trade receivables as at 31 December 2015 9,315 3,080 3,260 1,315 892 768
Allowance for doubtful debts (211) (120) (219) (365)
Of which past due but not impaired 3,049 1,195 673 403
Overdue on the reporting date
Carrying 
amount 
£’000
Not overdue 
on the 
reporting 
date 
£’000
Less than 
90 days 
£’000
Between 
90 and 
180 days 
£’000
Between 
180 and 
360 days 
£’000
Over 
360 days 
£’000
Trade receivables as at 31 December 2014 7,566 2,633 3,698 673 271 291
Allowance for doubtful debts (163) (173) (158) (226)
Of which past due but not impaired 3,535 500 113 65
For the debtors which are not impaired and which are overdue at the reporting date, there has been no indication that their 
payment obligations will not be met.
17(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash for the Group to meet its obligations. The Group aims to 
maintain appropriate liquidity through the regular monitoring of its actual and projected cash position. Mitigation of liquidity risk is 
also provided by the undrawn amount of £10,000,000 under the revolving credit facility described in note 13 and by the use of 
interest rate swaps to partially offset interest rate movements impacting variable rate loans and borrowings.
The following are the contractual maturities of non-derivative financial liabilities and financial instruments, including estimated 
interest payments (all cash flows are undiscounted and include both interest and principal cash flows).
2015
1 year 
or less 
£’000
1 to  
<2 years 
£’000
2 to  
<5 years 
£’000
5 years  
and over 
£’000
Total 
£’000
Carrying 
amount 
£’000
Non-derivative financial liabilities
Finance leases 46 44 16 – 106 93
Secured bank loans 1,462 1,462 73,656 – 76,580 68,692
Trade and other payables 24,933 – – – 24,933 24,933
Derivative financial instruments
Derivatives (note 17d) 561 561 1,389 – 2,511 674
27,002 2,067 75,061 – 104,130 94,392
notes
continued
17 Financial instruments continued financial statements
71
manx telecom plc
annual report and accounts 2015
2014
1 year 
or less 
£’000
1 to  
<2 years 
£’000
2 to  
<5 years 
£’000
5 years  
and over 
£’000
Total 
£’000
Carrying 
amount 
£’000
Non-derivative financial liabilities
Finance leases 46 46 60 – 152 133
Secured bank loans 1,796 1,796 72,694 – 76,286 68,815
Trade and other payables 26,475 – – – 26,475 26,475
Derivative financial instruments
Derivatives (note 17d) 573 573 859 – 2,005 1,008
28,890 2,415 73,613 – 104,918 96,431
17(d) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the 
Group’s income or the value of its holdings of financial instruments.
The Group incurs foreign currency risk on purchases that are denominated in currency other than sterling. However, the Group’s 
exposure to currencies other than sterling is not considered to be material.
The Group’s exposure to the risk of changes in market interest rates relates primarily to bank loans borrowed at floating interest 
rates. The terms of the bank loans and interest rates are disclosed in note 13.
Market risk – interest rate risk
At the balance sheet date the interest rate profile of the Group’s interest-bearing financial instruments was:
Group 
2015 
£’000
Group 
2014 
£’000
Company 
2015 
£’000
Company 
2014 
£’000
Variable rate financial instruments
Financial assets 14,378 11,721 – –
Financial liabilities (70,000) (70,000) – –
(55,622) (58,279) – –
Fixed rate financial instruments
Financial liabilities – – – –
(55,622) (58,279) – –
The Group’s exposure to interest rate risk is managed by the interest rate swaps entered into by the Group, under which the Group 
agrees to exchange floating interest rates for fixed interest rates on agreed notional principal amounts.
The Group held the following interest rate swaps as at 31 December 2015:
Bank
Interest 
rate 
%
Expiry  
date
Notional 
amount 
£’000
Fair value 
£’000
Royal Bank of Scotland PLC 1.711 29/06/2018 25,000 (389)
Lloyds Bank PLC 1.711 29/06/2018 25,000 (388)
Lloyds Bank PLC 1.698 30/06/2020 50,000 103
(674)
17 Financial instruments continued 72
manx telecom plc
annual report and accounts 2015
The Group held the following interest rate swaps as at 31 December 2014:
Bank
Interest 
rate 
%
Expiry  
date
Notional 
amount 
£’000
Fair value 
£’000
Royal Bank of Scotland PLC 1.711 29/06/2018 25,000 (504)
Lloyds Bank PLC 1.711 29/06/2018 25,000 (504)
(1,008)
The net movement in unrealised gains/(losses) on interest rate swaps in the year gives rise to a gain of £334,000 in the current year 
(2014: loss of £1,593,000). As a result of the refinancing in 2014 described in note 13, realised gains of £294,000 were recognised in the 
year ended 31 December 2014 from exiting an interest rate swap held at 31 December 2013.
Sensitivity analysis
If interest rates had been 100 basis points higher, the Group’s profit for the year ended 31 December 2015 would have increased  
by £1,875,000 (2014: increase £1,411,000). If interest rates had been 100 basis points lower, the Group’s profit for the year ended 
31 December 2014 would have decreased by £1,875,000 (2014: decrease £1,411,000). This calculation assumes that the change 
occurred across the whole period and had been applied to risk exposures existing at the year end which were either not fixed or 
had not been mitigated by interest rate swaps.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the effect of 
financial instruments with variable interest rates and financial instruments at fair value through profit or loss (the fixed rate element 
of interest rate swaps).
Fair value hierarchy
The table below analyses financial instruments carried at fair value, grouped into Levels 1 to 3 based on the degree to which the fair 
value is observable (as described in the accounting policy in note 1.4). Interest rate swaps are valued using discounted cash flows, 
under which future cash flows are estimated based on forward interest rate yields (from observable yield curves at the end of the 
reporting period) and contract interest rates.
31 December 2015
Level 1 
£’000
Level 2 
£’000
Level 3 
£’000
Total 
£’000
Financial assets – 103 – 103
Financial liabilities – (777) – (777)
31 December 2014
Level 1 
£’000
Level 2 
£’000
Level 3 
£’000
Total 
£’000
Financial assets – – – –
Financial liabilities – (1,008) – (1,008)
There were no transfers between levels during the current or prior years.
18 Operating leases
During the year, the following lease payments under operating leases were recognised as expenses in the year:
2015 
£’000
2014 
£’000
Property operating lease payments 254 190
Site sharing operating lease payments 342 385
Sublease income of £21,000 (2014: £4,000) was recognised within income in the year.
notes
continued
17 Financial instruments continued financial statements
73
manx telecom plc
annual report and accounts 2015
At the balance sheet date, the Group had commitments for future minimum lease payments under non-cancellable land and 
buildings operating leases which fall due as follows:
2015 
£’000
2014 
£’000
Not later than one year 428 392
Later than one year not later than five years 1,352 1,256
Expiring in more than five years 626 1,290
The Group leases various offices, shops, vehicles and mast sites under non-cancellable operating lease agreements. These leases 
have various terms and renewal rights.
At the balance sheet date, the Group had contracted with tenants for the following future minimum sublease payments:
2015 
£’000
2014 
£’000
Not later than one year 6 4
Later than one year not later than five years 16 15
Expiring in more than five years 64 66
19 Related parties – Group and Company
The compensation of key management personnel including the Directors is as follows:
Group 
2015 
£’000
Group 
2014 
£’000
Company 
2015 
£’000
Company 
2014 
£’000
Salaries and short-term employee benefits 1,786 1,676 – –
Share-based payments 483 646 – –
Post-employment benefits 85 112 – –
2,354 2,434 – –
During the year, Mike Dee retired from his position as Chief Executive Officer of the Company, with no additional payments outside 
the remuneration policy on his retirement. Further information about the remuneration and shareholdings of individual Directors  
is provided in the Directors’ Remuneration Report on page 33. Dividends of £129,000 were paid in the year in respect of ordinary 
shares held by the Company’s Directors.
During the year, the Company appointed Paul Tierney as interim Chief Financial Officer. Compensation of £119,000 was paid to 
Gransha Enterprises Limited in respect of services received during 2015.
Other related party transactions – Company
Related party Relationship
Receivables  
outstanding  
2015 
£’000
Payables  
outstanding 
2015 
£’000
Receivables 
outstanding 
2014 
£’000
Payables 
outstanding 
2014 
£’000
Trafford Shareholder Debtco Limited Direct subsidiary 24,772 100 13,363 100
Manx Telecom Trading Limited (formerly Manx Telecom Limited) Indirect subsidiary 69,864 7,437 73,845 –
Manx Telecom Holdings Limited Indirect subsidiary – 2,000 – 2,000
Shareholders Shareholders – – – –
94,636 9,537 87,208 2,100
Intercompany balances arise through the capital management of the Group, as capital and financial resources are raised and 
deployed through the Group as required. The intercompany loans are unsecured, repayable on demand and non-interest bearing. 
No provisions have been made for doubtful debts in respect of amounts owed by related parties.
18 Operating leases continued 74
manx telecom plc
annual report and accounts 2015
20 Ultimate Parent Company and Parent Company
During the prior year, Manx Telecom plc (formerly Trafford Equityco Limited) was admitted to trade its shares on AIM. Subsequent 
to admission to AIM, there is not considered to be any ultimate Parent Company.
21 Capital and other financial commitments
2015 
£’000
2014 
£’000
Contracts placed for future capital expenditure relating to property, plant and equipment 1,340 2,536
22 Share-based payment
Following the Admission in 2014, the Company created three new share-based payment arrangements in 2014. In 2015, the 
Company has created a further three new schemes. The arrangements may be operated in conjunction with an employee benefit 
trust established by the Company. Any such employee benefit trust may be used to hold shares for the purposes of these share 
plans or other employee share schemes established by the Company from time to time.
Equity-settled share-based payments
The total expense in respect of equity-settled share-based payments for the year ended 31 December 2015 was £681,000 (2014: £731,000).
Equity-settled share option schemes which operated during the current and prior year are described in detail below. Details of the 
share options outstanding during the year are as follows:
2015
Outstanding  
at the 
beginning 
of the year
Granted 
during 
the year
Forfeited 
during 
the year
Exercised 
during 
the year
Expired 
during 
the year
Outstanding  
at the end of 
the year
Exercisable 
at the end of 
the year
Co-investment plan – number of shares 852,387 – (96,037) – – 756,350 –
Co-investment plan – weighted average exercise price 
(£ per share) – – – – – – –
Save as you earn – number of shares 1,287,312 – (111,423) (3,214) – 1,172,675 13,571
Save as you earn – weighted average exercise price 
(£ per share) 1.40 – 1.40 1.40 – 1.40 1.40
Share incentive plan – number of shares 137,500 – (8,000) (3,500) – 126,000 –
Share incentive plan – weighted average exercise price 
(£ per share) – – – – – – –
Long-term incentive plan – number of shares – 288,532 – – – 288,532 –
Long-term incentive plan – weighted average exercise 
price (£ per share) – – – – – – –
Shadow save as you earn – number of shares – 18,000 – – – 18,000 –
Shadow save as you earn – weighted average exercise 
price (£ per share) – 1.40 – – – 1.40 –
2014
Outstanding  
at the 
beginning 
of the year
Granted 
during 
the year
Forfeited 
during 
the year
Exercised 
during 
the year
Expired 
during 
the year
Outstanding 
at the end of 
the year
Exercisable 
at the end of 
the year
Pre-listing share options – number of shares 490,000 – – (490,000) – – –
Pre-listing share options – weighted average exercise 
price (£ per share) 0.01 – – 0.01 – – –
Co-investment plan – number of shares – 914,887 (62,500) – – 852,387 –
Co-investment plan – weighted average exercise price 
(£ per share) – – – – – – –
Save as you earn – number of shares – 1,287,312 – – – 1,287,312 –
Save as you earn – weighted average exercise price 
(£ per share) – 1.40 – – – 1.40 –
Share incentive plan – number of shares – 137,500 – – – 137,500 –
Share incentive plan – weighted average exercise price 
(£ per share) – – – – – – –
notes
continued financial statements
75
manx telecom plc
annual report and accounts 2015
Co-investment plan (‘CIP’)
Under the CIP established in connection with the Admission, on 10 February 2014 the Executive Directors of the Company received 
a total of 538,114 conditionally awarded shares and other Directors of Manx Telecom Trading Ltd (classified under IAS 24 as ‘Key 
Management’) received a total of 376,773 conditionally awarded shares, in both cases on the basis of a matching award of one 
share for every two invested shares then held by them. Such matching shares will only vest to the extent that the individual 
remains employed by the Group and that invested shares remain held by the participant on 10 February 2017, and are also subject 
to satisfaction of a three-year relative Total Shareholder Return performance condition.
On 9 February 2015, the terms of the three-year relative Total Shareholder Return performance condition were modified, to align 
the opening share price to the IPO placed at £1.42p per share. This will give rise to a total additional expense of £180,000 over the 
vesting period. On 4 June 2015, the service conditions of the award previously made to Mike Dee as Chief Executive Officer were 
modified such that the total award reduced by one third as a consequence of his retirement, whilst retaining the existing 
performance conditions. Further information is provided in the Directors’ Remuneration Report on page 37.
The estimated fair value of options granted in the year was £1.38 per share (2014: £0.93 per share). The aggregate of the estimated 
fair value of the options granted in the year under the CIP was £49,000 (2014: £859,000). Due to the modification of the awards and 
forfeiture of awards in the year, the total estimated fair value of the options outstanding to be recognised on a straight-line basis 
over the vesting period is £865,000 (2014: £800,000). The fair value has been estimated using a Monte Carlo method, the inputs for 
which are detailed below.
The total expense recognised by the Group in respect of the CIP for the year ended 31 December 2015 was £365,000 (2014: 
£238,000). As at 31 December 2015, the CIP awards had a weighted average remaining contractual life of 1.11 years (2014: 2.11 years).
Long-term incentive plan (‘L TIP’)
In 2015 the Group established an LTIP for Key Management of the Group. On 11 May 2015, 288,532 share awards were granted 
under the plan. Executive Directors of the Company received a total of 95,576 share awards. The share awards will only vest to the 
extent that the individual remains employed by the Group on 10 May 2018, and are also subject to the Group results satisfying 
three-year cumulative non-market performance conditions.
The estimated fair value of options granted in the year was £1.905 per share. The aggregate of the estimated fair value of the 
options granted in the year under the LTIP was £550,000 which will be recognised on a straight-line basis over the vesting period. 
The fair value has been estimated using a Black-Scholes method, the inputs for which are detailed below.
The total expense recognised by the Group in respect of the LTIP for the year ended 31 December 2015 was £118,000. As at 
31 December 2015, the LTIP awards had a weighted average remaining contractual life of 2.36 years.
Save as you earn (‘SAYE’)
In October 2014, the Group established a SAYE scheme for employees of the Group based in the Isle of Man. The scheme was 
open for a limited period only during the year and permits the granting of options to Isle of Man resident employees of the Group 
linked to a bank SAYE contract for a term of three years. Contributions from employees range from £10 to £500 per month. Options 
may be exercised at the end of the three year period at an exercise price of £1.40 per share if individuals continue to be employed 
by the Group at the maturity of the savings contract. The SAYE scheme contains provisions for ‘good leavers’ as defined in the SAYE 
scheme, which enable ‘good leavers’ to exercise options under the savings contract at the date the participate ceases to hold 
employment with the Group. The options must be exercised within six months of the maturity of the savings contract, otherwise 
they lapse and savings are returned to employees.
On 1 December 2014, 1,287,312 share options were granted under the scheme. During 2015, 3,214 shares options were exercised 
under good leaver provisions. At 31 December 2015 the options had a weighted average remaining contractual life of 1.92 years (2014: 
2.92 years).
The estimated fair value of options granted in 2014 was £0.35 per share. The aggregate of the initial estimated fair value of the 
options granted in 2014 under the SAYE scheme was £422,000, due to forfeiture of awards in 2015 the revised estimate at 
31 December 2015 is £369,000, which will be recognised on a straight-line basis over the vesting period (subject to further revisions 
for the estimated number of shares expected to vest and cancellations). The fair value has been estimated using a Black-Scholes 
method, the inputs for which are detailed below.
The total expense recognised by the Group in respect of the SAYE scheme for the year ended 31 December 2015 was £122,000 
(2014: £12,000).
22 Share-based payment continued 76
manx telecom plc
annual report and accounts 2015
An equivalent share option scheme for non-Isle of Man resident employees was established in 2015, see below.
Shadow save as you earn (‘Shadow SAYE’)
In 2015 the Group established a Shadow SAYE for employees of the Group based in the United Kingdom. The Shadow SAYE 
mirrors the terms of the SAYE. On 1 February 2015, 18,000 share options were granted. The estimated fair value of options granted 
was £0.387 per share. The fair value has been estimated using a Black-Scholes method, the inputs for which are detailed below. 
At 31 December 2015 the options had a weighted average remaining contractual life of 2.08 years. The aggregate of the initial 
estimated fair value of the options granted in 2014 under the Shadow SAYE scheme was £7,000 which will be recognised on 
a straight-line basis over the vesting period.
The total expense recognised by the Group in respect of the Shadow SAYE scheme for the year ended 31 December 2015 was 
£2,000 (2014: £nil).
Share incentive plan (‘SIP’)
In October 2014, the Group established a SIP for employees of the Group based in the Isle of Man. Under the SIP, all permanent Isle 
of Man resident employees of the Group as at 17 October 2014 were invited to receive 500 free shares each. 275 employees 
accepted the offer, resulting in 137,500 share options being granted on 1 December 2014.
The shares granted were issued and transferred by the Company to the Manx Telecom plc Share Incentive Plan Trust for nil 
consideration. The Manx Telecom plc Share Incentive Plan Trust is an employee benefit trust established by the Company to hold 
shares awarded under the SIP for the benefit of employees of the Group.
Options granted under the SIP may be exercised on 30 November 2017 if individuals either continue to be employed by the Group 
at that date or are considered to be ‘good leavers’ as defined in the SIP, at which point shares will be released from the Manx 
Telecom plc Share Incentive Plan Trust to the employee. During 2015, 3,500 shares were exercised under good leaver provisions. 
At 31 December 2015 the options had a weighted average remaining contractual life of 1.92 years (2014: 2.92 years).
The estimated fair value of options granted in 2014 was £1.7675 per share. The aggregate of the estimated fair value of the options 
granted in 2014 under the SIP was £224,000, due to forfeiture of awards in 2015 the revised estimate at 31 December 2015 is 
£205,000, which will be recognised on a straight-line basis over the vesting period (subject to revisions for the estimated number of 
shares expected to vest). The fair value has been estimated using a Black-Scholes method, the inputs for which are detailed below.
The total expense recognised by the Group in respect of the SIP for the year ended 31 December 2015 was £74,000 (2014: £6,000).
An equivalent cash settled share option scheme for non-Isle of Man resident employees has been established in 2015, see below.
Pre-listing share options
Subsequent to the acquisition of Manx Telecom Trading Limited by Hg Capital LLP in 2010, key management and employees were 
given the option to purchase ordinary shares in the Company at nominal value. The shares were recorded at the grant date fair 
value with the expense being recognised on a straight-line basis over the estimated vesting period.
In order for the shares to vest unconditionally, a sale or listing of the Group was required and the employee must have remained 
employed or be considered as a ‘good leaver’. The shares awarded were subject to a number of conditions, including restrictions 
on the transfer of the shares prior to a sale or listing of the Group. The vesting period was previously estimated to be the period 
from date of grant to June 2015, being the latest date by which the shares were expected to vest unconditionally.
The Company listed on AIM on 10 February 2014, and as a result the vesting conditions were met and the share options exercised. 
As such, recognition of the remaining expense was accelerated to the date of vesting such that all remaining expense was 
recognised in 2014. The total expense recognised by the Group in respect of the pre-listing share options for the year ended 
31 December 2014 was £475,000.
Cash-settled share-based payments
In 2015 the Group established a shadow share incentive plan (‘Shadow SIP’) for employees of the Group based in the United 
Kingdom. The Shadow SIP mirrors the terms of the SIP, except that employees will be issued with the cash equivalent of 500 shares 
each on the vesting date. On 1 February 2015, 2,000 share options were granted. The estimated fair value of options granted was 
£1.815 per share. The fair value has been estimated using a Black-Scholes method, the inputs for which are detailed below. 
At 31 December 2015 the options had a weighted average remaining contractual life of 2.08 years. The total expense in respect of 
cash-settled share-based payments for the year ended 31 December 2015 was £1,000 (2014: £nil).
notes
continued
22 Share-based payment continued financial statements
77
manx telecom plc
annual report and accounts 2015
Valuation model inputs
The inputs into the Monte Carlo and Black-Scholes models for purposes of estimating the fair values of the share options granted in 
the year are as follows:
CIP  
original grant 
(Monte Carlo)
CIP
modification
(1)
(Monte Carlo)
LTIP 
(Black-Scholes)
SAYE 
(Black-Scholes)
SIP 
(Black-Scholes)
Shadow SAYE 
(Black-Scholes)
Shadow SIP 
(Black-Scholes)
Grant/modification date 10/02/2014 09/02/2015 11/05/2015 01/12/2014 01/12/2014 01/02/2015 01/02/2015
Share price on grant/modification date 1.60 1.84 1.905 1.7675 1.7675 1.815 1.815
Exercise price 0.00 0.00 0.00 1.40 0.00 1.40 0.00
Expected volatility 29.06% 25.91% 29.06% 29.06% 29.06% 29.06% 29.06%
Expected life 3 years 3 years 3 years 3 years 3 years 3 years 3 years
Risk free rate 0% 0% 0% 0.95% 0% 0.95% 0%
Expected dividend yield 0% 0% 0% 5.60% 0% 5.45% 0%
1. Valuation model also used for the grant of additional shares on 4 June 2015.
Expected volatility would normally be determined by reference to share price movements (with dividends reinvested) over a period 
of time commensurate with the remaining performance period immediately prior to the date of grant. However given the 
Company was listed on 10 February 2014, there is insufficient data to calculate volatility of the Company’s share price. Therefore, a 
proxy volatility figure has been used. The proxy volatility figure has been derived from the median volatility of the 11 companies in 
the comparator group for the TSR performance condition in the CIP (as at the grant date) over the relevant period.
A risk free rate of 0% has been used for the CIP, LTIP, SIP and Shadow SIP as the valuation of awards with no exercise price is not 
affected by the risk-free rate input, as no investment is required by the recipient and therefore no gain could be derived elsewhere.
The dividends that would be paid on a share in the period between grant and vesting reduce the fair value of an award if, in not 
owning the underlying shares, a participant does not receive the dividend income on these shares during the vesting period. An 
expected dividend yield of 0% has been used in respect of the CIP, LTIP, SIP and Shadow SIP as under these plans participants are 
entitled to receive an amount equal to dividends payable to the vesting date. Accordingly, the dividend yield input has been set at nil 
so as not to discount for the loss of dividends. The expected yield used for the SAYE and Shadow SAYE schemes has been based 
on the share price on grant date and the Company’s intention to maintain a dividend yield of 7% on the Admission placing price of 
£1.42 per share.
23 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Note
31 December 
2015 
000
31 December 
2014 
000
Weighted average number of ordinary shares at 31 December (Basic) 112,960 105,908
Effect of Co-Investment plan 22 688 494
Effect of Long term incentive plan 22 45 –
Effect of Save as you earn plan 22 208 2
Effect of Share incentive plan 22 61 1
Effect of Shadow save as you earn plan 22 2 –
Effect of Shadow share incentive plan 22 1 –
Weighted average number of ordinary shares at 31 December (Diluted) 113,965 106,405
The own shares held as detailed in note 16 are excluded from the calculation of the weighted average number of shares.
None of the instruments noted above which potentially dilute earnings per share have any effects recorded within profit or loss 
which may be saved upon exercise, therefore no adjustments to earnings have been made in the calculation of diluted earnings 
per share.
22 Share-based payment continued 78
manx telecom plc
annual report and accounts 2015
23.1 Reported earnings per share
The calculation of the reported earnings per share has been based on the weighted average number of shares outstanding during 
the period (as above) and the Profit/(loss) for the period after tax attributable to the owners of the Group (‘Earnings’).
Earnings 
£’000
Thousands 
of shares 
(Basic)
Basic 
earnings 
per share
Thousand 
of shares 
(Diluted)
Diluted 
earnings 
per share
31 December 2014 5,716 105,908 5.40p 106,405 5.37p
31 December 2015 16,553 112,960 14.65p 113,965 14.53p
23.2 Underlying earnings per share
The calculation of underlying earnings per share has also been included to enable shareholders to assess the results of the Group 
excluding income and charges detailed in note 4 that are one-off in nature, significant and distort the Group’s underlying 
performance.
Earnings 
£’000
Thousands 
of shares 
(Basic)
Basic 
earnings 
per share
Thousand 
of shares 
(Diluted)
Diluted 
earnings 
per share
31 December 2014 12,945 105,908 12.22p 106,405 12.17p
31 December 2015 16,553 112,960 14.65p 113,965 14.53p
24 Dividends
The following amounts were recognised as distributions to equity holders in the year:
2015 
£’000
2014 
£’000
Final dividend for the year ended 31 December 2014 of 6.6p (2013: nil) per share 7,455 –
Interim dividend for the year ended 31 December 2015 of 3.5p (2014: 3.3p) per share 3,954 3,723
Total dividends recognised in the year 11,409 3,723
Final dividend for the year ended 31 December 2015 of 6.9p (2014: 6.6p) per share 7,794 7,455
The final dividend for the year ended 31 December 2015 was declared on 30 March 2016. The final dividend was declared after the 
reporting period and has not been included as a liability in these financial statements. The final dividend is payable to all 
shareholders on the Register of Members on 27 May 2016. The total dividend to be paid is 6.9p per share. The payment of this 
dividend will not have any tax consequences for the Group.
25 Post-balance sheet events
The following significant events occurred after the year end date of 31 December 2015 and prior to the signing of this Annual Report 
on 12 May 2016:
 – A final dividend for the year ended 31 December 2015 was declared as detailed in note 24;
 – On 1 February 2016, Danny Bakhshi was appointed as a Director of the Company;
 – On 28 January 2016, the Remuneration Committee of the Company approved a second Long Term Incentive Plan for the 
Executive Directors of the Company and Directors of the subsidiary Manx Telecom Trading Limited; and
 – On 28 January 2016, the Remuneration Committee of the Company approved a second Save As You Earn share option scheme 
for employees of the Group.
Other than as noted above, there are no events after the balance sheet date which require disclosure.
notes
continued
23 Earnings per share continued other
79
manx telecom plc
annual report and accounts 2015
Directors
Kevin Walsh (Non-Executive Chairman)
Gary Lamb (Chief Executive Officer)
Danny Bakhshi (Chief Financial Officer)
Sir Miles Walker (Non-Executive Director)
Jeffrey Hume (Senior Independent Non-Executive Director)
Company Secretary
Danny Bakhshi
Registered Agent
Estera Trust (Isle of Man) Limited –  
formerly Appleby Trust (Isle of Man) Limited 
33–37 Athol Street
Douglas
Isle of Man 
IM1 1LB
Registered office of the Company
33–37 Athol Street 
Douglas 
Isle of Man 
IM1 1LB
Head office of the Company
Isle of Man Business Park 
Cooil Road, Braddan 
Isle of Man 
IM99 1HX
Nominated Adviser and Corporate Broker to the Company
Liberum Capital Limited 
Ropemaker Place, Level 12 
25 Ropemaker Street 
London 
EC2Y 9LY
Financial Adviser to the Company
Oakley Advisory Limited
3 Cadogan Gate 
London 
SW1X 0AS
English legal advisers to the Company
Linklaters LLP 
One Silk Street 
London 
EC2Y 8HQ
Isle of Man legal advisers to the Company
Appleby (Isle of Man) LLC 
33–37 Athol Street 
Douglas 
Isle of Man 
IM1 1LB
Reporting Accountants and Auditors
KPMG Audit LLC 
Heritage Court 
41 Athol Street 
Douglas 
Isle of Man 
IM99 1HN
Registrars
Computershare Investor Services (IOM) Limited 
Millennium House 
46 Athol Street 
Douglas 
Isle of Man 
IM1 1JE
Financial PR advisers
Powerscourt
1 Tudor Street 
London 
EC4Y 0AH
directors, secretary, registered office and advisers 80
manx telecom plc
annual report and accounts 2015  manx telecom plc  annual report and accounts 2015
manx telecom 
Isle of Man Business Park 
Cooil Road, Braddan 
Isle of Man  
IM99 1HX
www.manxtelecom.com