SpiriTel plc
18 King William Street
London EC4N 7BP
T +44 (0)20 7160 0100
F +44 (0)20 7929 5469
www.spiritelplc.com
Annual report and accounts 2008
SpiriTel plc Annual report and accounts 2008
Annual report and accounts 2008
12500_R&A_2008_Cover.qxd:Layout 1  22/8/08  13:06  Page 1 SpiriTel is a fully integrated business communications group
which enables its customers to take advantage of the opportunities
created by rapidly changing telecoms markets as the migration
to Internet Protocol (IP) based services accelerates.
The Group is a consolidator of the highly fragmented UK telecoms
reseller market and is building a substantial customer base and scale
through selective acquisitions. We are organised into two divisions:
SpiriTel Technologies, which focuses on networking and IP products
and services and SpiriTel Business, which provides services directly
to our Business customers.
SpiriTel plc
Annual report and accounts 2008
Introduction
Managed services Wholesale voice IP Communications Mobile Network services
s ss s s
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Design and production by Radley Yeldar
www.ry.com
12500_R&A_2008_Cover.qxd:Layout 1  27/8/08  08:30  Page 2 01
SpiriTel plc
Annual report and accounts 2008
Financial highlights
Revenue
2008:
£1 6.7m
2007:
£1 3.6m
Gross profit
2008:
£6.42m
2007:
£2.04m
Underlying EBITDA
2008:
£938,000 profit
2007:
£861 ,000 loss
Cash from operations
2008:
£0.9m inflow
2007:
£1 .2m outflow
Contents
01 Financial highlights
02 Chairman’ s statement
10 Chief Executive’ s review
13 Board of Directors
14 Report of the Directors
18 Directors’ Remuneration report
21 Report of the independent auditor
22 Consolidated income statement
23 Consolidated statement of changes
in shareholders’ equity
24 Consolidated balance sheet
25 Consolidated statement of cash flows
26 Notes to the consolidated
financial statements
59 Company balance sheet
60 Notes to the Company
financial statements
70 Notice of Annual General Meeting
72 Company information and advisers
+2 2 % +2 1 5 %
+£ 1 .8m +£2 . 1m 02
SpiriTel plc
Annual report and accounts 2008
Chairman’s statement
Introduction
I am pleased to report on a further year
of growth and development for SpiriTel plc.
The Group is now a fully integrated business
communications provider delivering fixed and
mobile, voice, data and networking services
to a wide range of business customers across
the UK.
SpiriTel has made significant progress this
year and is a radically transformed business.
The Group is currently profitable with strong
cash flows and a robust debt and equity
structure following the initial £2.6 million Penta
debt conversion in May 2008. The operational
restructuring and rebuilding of the business
that we began some two years ago was
only completed during the year under review
and so this set of results reflects only partially
the transformation achieved by the
management team.
Results
Underlying EBITDA* has moved from a loss
in 2007 of £0.9 million to a profit of £0.9 million
and revenue was up 22% to £16.7 million
(2007: £13.6 million). Gross profit increased
by 215% to £6.4 million (2007: £2.0 million)
with gross profit margins up to 38.5% from
14.9% in 2007. These margin improvements
are a result of both enhanced margins
on continued operations and an improving
product mix towards higher margin products
and services. Acquisitions have also contributed
to the increased profits of the business and
the level of operational gearing has enabled
us to deliver higher earnings from these
acquired businesses.
“The Group is now very well placed to
progress its chosen strategy further towards
robust, accelerating profitability and value
delivery to our shareholders.”
Lord St John of Bletso, Chairman
* Operating profit after adding back charges for depreciation,
amortisation, share-based payments and exceptional costs. 03
SpiriTel plc
Annual report and accounts 2008
These results are a significant achievement
for SpiriTel and demonstrate that the progress
made in restructuring and realigning the
business is now flowing through to revenue
and profit enhancement. The two acquisitions
made in the year under review, tdotcom
Limited and WN1 Limited, contributed for
only six months and one month respectively.
We look forward to incorporating a full year’s
earnings from these businesses, which
should deliver a significantly enhanced level
of profitability in the current financial year.
Dividend
SpiriTel is still pursuing its acquisition strategy
and therefore reinvesting funds generated from
operations into the business. The Directors are
not recommending the payment of a dividend
for the year to 30 April 2008.
Board
As reported in our interim statements,
we appointed Ronnie Smith to the Board as
the Group’s Chief Financial Officer following his
tenure as Finance Director. We also appointed
David Anahory as Managing Director of SpiriTel
Business. David joined us from Carphone
Warehouse where he was the Commercial
Director responsible for over 100,000 customers
in their Business division.
Both Ronnie and David are integral to the
success of the business and played significant
roles over the course of the financial year
in the delivery of much improved financial and
operational performance.
I am also pleased to report that our Chief
Executive, Alastair Mills, received personal
recognition for the Group’s progress with
a nomination as a finalist for the 2008 Ernst
& Young Entrepreneur of the Year award.
The award is recognised globally and marks
entrepreneurial spirit, innovation and outstanding
leadership and drive. I congratulate him
on this achievement.
Current year and outlook
Revenues and profitability are currently running
at levels significantly above those of a year
ago with earnings visibility from contracted
revenue continuing to grow. This is a reflection
of our acquisitions and the strong organic
growth being driven by our push to cross-sell
products and services into our expanded
customer base. We also achieved substantial
improvement in margins during the year under
review and these strong margins have been
maintained into the current financial year.
In June 2008, we completed the integration
of our most recent acquisition, mobile
specialist WN1 Communications, which has
now been fully re-branded as SpiriTel Mobile
and relocated to our Business division’s
Wigan office. We look forward to reporting
a full six months contribution from the WN1
acquisition in our next interim results.
During the year, we have successfully executed
our “Acquire, Integrate, Grow” strategy
and as a result the business has delivered
much improved financial and operational results.
The Group is now very well placed to further
progress its chosen strategy towards robust,
accelerating profitability and value delivery
to its shareholders.
Lord St John of Bletso
Chairman
3 August 2008
ACQUIRE
INTEGRATE
GROW
“During the year we have successfully executed
our strategy. Revenues and profitability are
currently running at levels significantly above
those of a year ago with earnings visibility from
contracted revenue continuing to grow”
q q
q
q
08-09
06-07
04-05 Lines of business
Over the last 19 years SpiriTel has grown
to become one of the UK’s leading providers
of integrated communications services for
business customers. Through our Business
Division, we provide a full range of voice, data,
networking and equipment product to over
1,500 customers. The Business division is
organised around three complementary lines
of business: IP Communications, Network
Services and Mobile.
04
SpiriTel plc
Annual report and accounts 2008
Our acquisition strategy involves buying quality
businesses with attractive customer bases,
integrating them swiftly and driving forward
the resulting synergy benefits of cost savings
and new sales opportunities.
ACQUIRE 05
SpiriTel plc
Annual report and accounts 2008
IP Communications
Network Services
The UK communications market is seeing
a rapid migration of its products and services
onto an IP based infrastructure. Through
our Technologies Division we have a market
leading next generation IP network that
underpins the Business Division’s product
offerings. IP Communications’ services include:
hosted VoIP and Wi-Fi services, structured
cabling, SIP lines and system sales and
maintenance. We have tier one IP interconnects
with many of the UK’ s leading carriers and have
the highest level of accreditation with Mitel,
one of the world’s largest IP communication
system vendors.
Alongside our leading edge IP based
product offering, we continue to service
our business customers with traditional calls,
lines and broadband services. Leveraging
our own switching infrastructure and five
points of presence, we can offer a competitive
cost base and the highest levels of service
quality through our longstanding relationships
with BT , Cable & Wireless, T elstra, Virgin Media,
Thus and other leading carriers.
L
Mobile
SpiriTel now offers a full mobile voice and data
offering to customers following the acquisition
of WN1 in April 2008. The Company has
been rebranded as SpiriTel Mobile and sits
within our rapidly growing Business Division.
The addition of mobile services to our
product portfolio has opened the opportunity
for the cross-selling of mobile voice, data
and converged services to our existing
customer base.
Companies acquired
CallPlan September 06
Networks Direct October 06
Ashland March 07
tdotcom October 07
WN1 April 08
5 06
SpiriTel plc
Annual report and accounts 2008 06
SpiriTel plc
Annual report and accounts 2008
2+2=5
Our acquisition strategy involves buying
quality businesses with attractive customer
bases, integrating them swiftly and driving
forward the resulting synergy benefits of cost
savings and new sales opportunities. We have
developed a bespoke integration framework
that is tailored to each transaction. Through
detailed planning and ongoing evaluation,
our framework ensures we prepare for and
execute each transaction to maximise the
anticipated synergies. We are proud of our track
record of successful transaction integration.
INTEGRATE
The quick and efficient integration of our acquisitions
is key to the rapid delivery of their earnings potential
and the successful cross-selling of our broadening
product offering into existing and new customers.
During the year we have demonstrated our ability
to speedily integrate two new businesses into SpiriTel
Business’ infrastructure, creating cost savings and
generating new cross-selling opportunities.
Underlying EBITDA £000
2006
(294)
(861)
938
2007 2008 07
SpiriTel plc
Annual report and accounts 2008
45 25
Days taken to integrate tdotcom Days taken to integrate WN1
In April 2008 we acquired WN1. WN1 is
a leading reseller of mobile voice, data and
BlackBerry services, and holds key industry
accreditations as an O2 Advance Partner,
T -Mobile Business Partner and a BlackBerry
Alliance Member. We completed the
integration of WN1 within 45 days including
it’s re-branding as SpiriTel Mobile within our
Business Division and its staff having moved
into our Wigan office with a number of back
office functions being merged.
tdotcom WN1
tdotcom, acquired in October 2007, was a loss
making business which we turned around,
following a 25 day integration, into a business
with an operating profit margin in excess of
30%. The process of integration involved cost
saving measures alongside cross selling
upsides and clearly demonstrated the success
of our model which we consider to be highly
replicable for future acquisitions. tdotcom
now forms part of our IP Communications
line of business. 08
SpiriTel plc
Annual report and accounts 2008
Customer growth
Alongside our ongoing strategy of growth through
selective, earnings enhancing acquisitions,
we are also delivering strong organic growth
across the Group. In our Technologies Division,
revenue and profit growth has been delivered
from an expanded product set and increased
spend from key customers. The Business Division
is seeing increasing organic growth opportunities
from the rapid expansion of its customer
numbers through acquisitions and the resulting
cross-selling opportunities. Having completed
five acquisitions in quick succession, product
penetration per customer is currently low
and we look forward to driving organic growth
by encouraging our customers to take more
products and services from the expanding
SpiriTel Business portfolio. Over the last three
years, our customer numbers have increased
rapidly and today we service the communication
needs of over 1,500 business customers.
SpiriTel has experienced rapid growth in revenues,
earnings and customer numbers. Among our
expanding customer base are a number of diverse
blue chip companies with whom we have longstanding
relationships. Our organic growth strategy includes
selling more products into each of our customers.
GROW
SpiriTel customers
2006
19
715
1,525
2007 2008 09
SpiriTel plc
Annual report and accounts 2008
810
New customers this year
Lufthansa
Wigan F .C. BlackBerry
Lufthansa is the internationally renowned airline
with activities spread over several divisions
ranging from passenger and freight transport
to aircraft maintenance and preparations.
In the UK, SpiriT el Mobile provides its staff with
a range of mobile voice and data services.
Wigan Athletic have been playing in the
Premiership since their promotion in 2005.
Alongside providing mobile voice and data
services to many of the players, SpiriT el IP
Communications installs and maintains the
fixed line telephone systems for the club.
As a BlackBerry® Alliance member, SpiriTel
is recognised as a BlackBerry Solution Provider
and has access to a large number of third
party applications and services for BlackBerry.
Our services include software and hardware
procurement and implementation.
Virgin Mobile
Virgin Mobile is the UK's leading mobile virtual
network operator (MVNO) with more than four
million customers. In November, Virgin Mobile
launched a new directory enquiries service as part
of its social investment program. 118 918 gives
20p from every call to two charities supporting
young people in the UK. 118 918 is a managed
service provided by SpiriT el T echnologies.
Red Carnation
Red Carnation is an award-winning, highly
acclaimed global collection of family-run five
and four star hotels. SpiriT el provides a full range
of voice, data, maintenance and networking
services to the Group.
Whitbread
Whitbread Plc is the UK’ s largest hotel and
restaurant company operating market-leading
businesses in the budget hotels and restaurant
sectors, employing over 33,000 people across
1,500 outlets. SpiriT el IP Communications
has been a supplier to the Group since 1999. 10
SpiriTel plc
Annual report and accounts 2008
Chief Executive’s review
2007/08 has been a year of considerable
progress for SpiriTel and I am delighted
to be able to provide the most positive review
since the current management team took
charge of SpiriTel’s strategy. Our restructure
of the Group is complete and the combination
of organic growth alongside selective earnings
enhancing acquisitions is now reflected in
improved operational and financial performance
across the Group. Whilst growing overall
customer numbers, we have also sold more
products to our existing customers, which
is now a key focus for the management team.
During the year, we also reached agreement
for an important balance sheet restructure
which was approved at our EGM post year
end in May 2008.
During the year, we completed our fourth
and fifth acquisitions with tdotcom Limited
and WN1 Limited. The acquisition of WN1,
now fully re-branded as SpiriTel Mobile,
completed our B2B communications product
set, adding mobile to our existing fixed line,
data and networking services. The tdotcom
transaction leveraged our existing operational
infrastructure, enabling us to rapidly integrate
the value of tdotcom’ s services and customers
into SpiriTel Business. Both acquisitions
are good examples of our acquisition strategy:
buy quality businesses with attractive
customer bases, integrate them swiftly and
drive forward the resulting synergy benefits
of cost savings and new sales opportunities.
Results
Revenue for the year to 30 April 2008 was
up 22% to £16.7 million (2007: £13.6 million)
and gross profit increased to £6.42 million
(2007: £2.04 million), a rise of 215%. Underlying
EBITDA* increased significantly to £938,000
profit (2007: £861,000 loss), albeit there was
only a part year contribution from the two
acquisitions, tdotcom and WN1. As a result
of the timing of these acquisitions, the Group is
currently performing at a level that is significantly
ahead of the year ended 30 April 2008.
At a divisional level, SpiriT el Business’
revenue increased by 314% to £6.74 million
(2007: £1.63 million) while Underlying
EBITDA* increased more than fourfold
to £1,125,000 (2007: £236,000), Our other
division, SpiriTel Technologies, increased
Underlying EBITDA* to £1,024,000
(2007: £40,000 loss).
“This has been a year of genuine turnaround
for SpiriT el. We are profitable in the new financial
year, turnover has increased markedly and we
have achieved widespread recognition for the
quality and pioneering nature of our services.”
Alastair Mills, Chief Executive
* Operating profit after adding back charges for depreciation,
amortisation, share-based payments and exceptional costs. 1 1
SpiriTel plc
Annual report and accounts 2008
SpiriT el is one of the few O2 Advance Partners
in the UK. The O2 Advance programme
sets demanding qualifying criteria, including
excellent customer service and commitment
to the business sector. O2 Advance partners
have a proven track record in delivering mobile
voice and data solutions tailored to the
customer’s specific business requirements.
SpiriTel is also a member of the BlackBerry
Alliance. SpiriTel provides the BlackBerry
®
solution allowing users to stay connected with
wireless access to email, corporate data,
phone, web and organiser features. With a
BlackBerry solution, you can enhance the
productivity of your organisation by pushing
data out to where it’s needed most – your
mobile workforce.
SpiriTel has a longstanding relationship with
Mitel, one of the world’s leading providers
of IP based communications solutions for
business customers. Mitel operates from
over 100 locations in over 90 countries.
After a continued period of investment in
training and support on both sides, SpiriTel
has achieved the highest accreditation
possible – Premier Partner. Using a Mitel
3600 platform, SpiriT el also rolled out the
UK’ s largest hosted VoIP contract for
Regent Inns in November 2007.
The loss before taxation for the year
was £4.0 million (2007: £3.1 million), after
non-cash interest charges of £3.1 million
(2007: £0.6 million). The non-cash interest
charges relate to redemption premiums
charged by Penta Capital Partners (“Penta”)
on the granting of conversion rights, waiver
of accrued interest costs and finance
charges related to the adoption of IFRS.
Balance sheet
Post year end, we successfully agreed on
the restructuring of the Group’s balance sheet.
Conversion rights were granted over the
Group’s total indebtedness of £11 million
to Penta in exchange for a waiver of all interest
costs from 1 November 2007 until 1 May 2010.
An initial conversion of £2.6 million of
indebtedness took place on 22 May 2008
at 1.1p per ordinary share (a premium to the
then share price) which increased Penta’s
shareholding to 49.99%. The remaining
indebtedness of £8.4 million is convertible
at the higher of the most recent placing price
and 1.5p per ordinary share, subject to
Penta’s shareholding not exceeding 49.99%.
The waiver of interest costs will save the
Group approximately £0.8 million in annual
interest charges and will result in a credit
to profits of £0.4 million in the current year
to 30 April 2009. This is a milestone for SpiriT el
that significantly strengthens the Group’s
balance sheet and improves our ability
to attract future funding partners. I would like
to take this opportunity to thank Penta for
their support, encouragement and advice
during our restructure of the Group’ s business.
During the year, we secured an initial
£1.0 million loan and overdraft facility from
Clydesdale Bank to support our acquisition
strategy. The successful negotiation of this
facility represented a welcome endorsement
of both our progress and our acquisition
strategy. The facility was extended
by £500,000 on 31 January 2008 and by
a further £1,200,000 on 2 April 2008 giving
a total facility of £2.7 million, of which
£1.95 million is repayable over five years.
Strategy
The UK communications market remains
highly fragmented on the supply side whilst
the demand from customers for converged
IP based services is accelerating and
these are key drivers behind the ongoing
consolidation in our sector.
SpiriT el continues to play a significant role in this
consolidation through our “Acquire, Integrate,
Grow” strategy as we build a business with
the operational scale and the broad product
offering that corporate customers demand.
During the year, we successfully executed two
earnings enhancing acquisitions that expanded
both our product portfolio and customer base.
Our bespoke and proven integration framework
was used effectively to incorporate these
acquisitions swiftly and efficiently, as illustrated
by the full integration of tdotcom into SpiriTel
Business in just 25 working days.
We continue to target growth by selective
acquisition in order to leverage the scale
of our operations and breadth of our product
portfolio. Increasingly, our focus is on
cross-selling our now complete integrated
suite of voice and data services into our
expanding customer base. Cross-selling is
a major focus during the current year as many
of our acquired customers have only ever
taken one or two products from the Group.
As a result, product penetration is currently
low and we are confident of our ability to benefit
from the considerable upside opportunity that
cross-selling presents. As customers start
to migrate to hosted and managed services
under long-term contracts, we are also
benefiting from a much increased visibility
of future earnings.
Acquisitions
During the year we completed two
acquisitions that added both scale and new
product lines and services to our Business
division. The first of these was tdotcom,
a London based value added maintainer
and supplier of telecommunications systems,
acquired in October 2007. This was a loss
making business which we turned around,
post integration, into a business with an
operating profit margin in excess of 30% that
contributed immediately to Group earnings.
The process of integration involved cost
saving measures alongside cross-selling
upsides and clearly demonstrated the success
of our model which we consider to be highly
replicable for future acquisitions. tdotcom
brought to SpiriTel a number of high profile
clients such as The City of London and BBC
Worldwide and also strengthened our
strategic relationship with Mitel. tdotcom was
combined with Wigan-based Ashland Group,
acquired in March 2007, to form our IP
Communications product line within SpiriTel’s
Business division.
The second acquisition, in April 2008,
was WN1 Limited. WN1 is a leading reseller
of mobile voice, data and BlackBerry services,
and holds key industry accreditations
as an O2 Advance Partner, T -Mobile Business
Partner and a BlackBerry Alliance Member. 1 2
SpiriTel plc
Annual report and accounts 2008
Chief Executive’s review continued
It services exclusively business customers,
which include Lufthansa, Servisair and Wigan
Athletic Football Club. At the time of writing,
we have completed the re-branding of WN1
as SpiriTel Mobile, also within the Business
division, and have moved their staff into our
Wigan office with a number of back office
functions being merged.
Both acquisitions were immediately earnings
enhancing for SpiriTel and in line with our
organic growth strategy they have provided
many significant cross-selling opportunities for
the Group. For example, we have had several
wins in providing fixed line services to tdotcom
(now SpiriTel IP Communications) clients and
WN1 (now SpiriTel Mobile) has successfully
tendered for the supply of mobile voice and
data services to existing Group customers.
We currently have a strong pipeline of
acquisition targets that meet our criteria of being
quickly earnings enhancing with additional
upside opportunity from cost savings
and cross-selling. All acquisitions add scale
in terms of customer numbers and some add
engineering resource (for instance, tdotcom).
Others, such as WN1, add new product lines
as well as expanding our customer base
which, in turn, provides further cross-selling
opportunities. In a rapidly consolidating sector,
the opportunity to acquire complementary
businesses is compelling. We remain selective
in our evaluation of targets so as to ensure
we minimise execution risk through adding
the right customers, products and staff to our
existing base. Furthermore, the restructuring
of the balance sheet and the Penta Debt
Conversion agreement lends further support
to the strategy, as further fund raisings
will also enable Penta to convert further debt
and thereby reduce SpiriTel’s gearing.
Operations
SpiriTel is structured into two complementary
divisions: SpiriTel Business and SpiriTel
Technologies – working alongside and
supporting each other. Both divisions have
undergone a period of expansion and
enhancement in the past year and the Group
now employs over 120 staff (2007: 102).
SpiriTel Business has grown dramatically over
the course of the financial year. The Business
division now has three lines of business:
IP Communications, Networks and Mobile.
SpiriTel IP Communications provides an
advanced range of IP networking services
to business customers alongside traditional
structured cabling, equipment and
maintenance services. SpiriTel Networks offers
fixed line services including calls, lines and
broadband. SpiriTel Mobile provides mobile
voice and data, including BlackBerry services.
The acquisition of WN1 completed the
integrated communications portfolio that
SpiriTel Business now offers.
SpiriTel Business has substantially increased
its customer numbers from 700 at the
beginning of the year and currently has over
1,500 business customers. These range from
smaller UK SMEs, to high profile customers
such as Wigan Athletic Football Club and blue
chips like Whitbread, Marriott, and Lufthansa.
These customers are supported by a team
of 45 accredited engineers, providing 24/7
nationwide engineering coverage.
SpiriTel Business has developed a particularly
close relationship with Mitel, and this
relationship was key in the VoIP and WiFi
solution that SpiriTel developed for Regent
Inns, the UK’s largest converged VoIP/WiFi
deal. SpiriTel won this contract against fierce
competition from much larger companies.
Our solution provides Regent Inns with
a complex and pioneering service that
encompasses all their voice and data services
across over 100 sites. I am delighted
to report that in June 2008, this solution won
both the “UK’s Best Converged Solution”
at the 2008 national Comms Business Awards
and also the Federation of Communication
Services “Best VoIP Solution” 2008 award.
We are confident of our ability to roll this
award winning solution out to other major
corporate customers in the current year.
We see ongoing scope for rapid growth –
both organic and acquisitive – in our Business
division. We are particularly focused on
cross-selling opportunities to our existing
customer base and we hope to increase
significantly the product penetration of the
division’s 10 core products and services.
SpiriTel Technologies continues to play a
critical role in the development of the Group,
both on its own account and in its support
of SpiriTel Business. The Technologies team
sees the Business division as a key customer
and their IP infrastructure and experience
is a key differentiator for SpiriTel. SpiriTel
Technologies provides the platform and
credibility for us to deliver large scale, managed
IP solutions for UK wide customers.
Technologies was particularly instrumental
in the hosted solution provided for Regent Inns
where our next generation IP network
architecture was the key component that
enabled the Business division to deliver
the necessary high level of service to the
customer. Technologies has built a robust
and dynamic IP network that has three
operation centres, five points of presence
and several Tier 1 carrier interconnects.
It provides the backbone for the support and
development of the products and network
infrastructure that the Business division takes
to market.
In addition to the development and maintenance
of the Group’ s IP network infrastructure, SpiriT el
Technologies also generates a significant
revenue stream from the provision of wholesale
voice services to its own blue chip customers,
including most of the UK’s largest telecoms
companies with whom the Business division
has established long-term relationships. In the
past year, the Business division has grown
into a 24/7 service with higher levels of traffic
from a broader customer base and this has
resulted in enhanced earnings and margins.
In November 2007, SpiriTel re-launched its
charity directory inquiry service with Richard
Branson’s Virgin Mobile. 118 918 is now fully
branded as a Virgin Mobile number and gives
20p from every call to charity, the highest
amount of any charity 118 service. This is
a managed service for Virgin Mobile provided
by SpiriTel Technologies.
Summary and outlook
The year to 30 April 2008 was a year of
genuine turnaround for SpiriTel. We moved
from losses to underlying EBITDA* profitability,
revenue has increased markedly and we have
earned widespread recognition for the quality
of the communications services that we
can and are delivering to a broad range of
business customers across the UK. Following
two further acquisitions, the Group is now
a fully integrated business communications
provider that is delivering the full range of
fixed, mobile, data and networking services.
This integrated capability is crucial in a market
where customers are increasingly looking to
suppliers to provide the full range of services
they need from a one-stop shop supplier.
In a highly fragmented marketplace, in which
there are up to a thousand resellers with less
than £5 million of turnover, we are among
the few that can offer this scale and range
of products and services. Customers
recognise this as a differentiator in a competitive
marketplace and we are enjoying the benefits
of providing a fully converged offering.
We have completed the process of
restructure and rebuilding, begun two years
ago, and now have a level of revenues and
earnings that provide the perfect springboard
to take SpiriTel to the next stage in its rapid
development. We have a highly replicable
model where we can bolt on new, earnings
enhancing acquisitions alongside consistent
organic expansion. We are now
demonstrating the benefits of our “Acquire,
Integrate, Grow” strategy which translates
into a robust business model, an expanded
product portfolio and ever increasing
customer base.
SpiriTel has an energised management
team and highly skilled and committed staff.
The foundations are now in place to deliver
ongoing value to shareholders. I look forward
to the coming year with real confidence.
Alastair Mills
Chief Executive
3 August 2008
Alastair Mills, Chief Executive 1 3
SpiriTel plc
Annual report and accounts 2008
Board of Directors
6. 5.
1. Lord St John of Bletso (51)
Non-Executive Chairman
Anthony St John qualified as an attorney
in South Africa. Since 1985 he has worked
as a stockbroker in the City and currently
consults to Merrill Lynch. He served
as Managing Director at Globix, a managed
services web-hosting business from 1998–2002
and consults to several IT companies.
2. Alastair Mills (35)
Chief Executive
Alastair joined SpiriTel in 2004 as Managing
Director of Expo Communications, now part
of the Technologies Division. Alastair joined
from Telewest Communications, having
previously worked in consultancy and corporate
finance for KPMG. He has been CEO since
2005, when he commenced the restructure
of the Group including five recent acquisitions.
In 2008, Alastair was a finalist in the Ernst
& Young Entrepreneur of the Year Award.
3. Ronnie Smith (44)
Chief Financial Officer
Ronnie qualified as a Chartered Accountant
in 1988 with Arthur Young (now Ernst & Young)
following graduation from The University
of Glasgow. Ronnie has held senior finance
roles in a number of listed and private equity
backed UK and US businesses, including
Sigma Aldrich Inc., ICN Biomedicals Inc.,
The Ritchie Group Plc and The Rope Company
Group Limited.
3. 2.
1.
7.
4.
4. David Anahory (34)
Managing Director – SpiriTel Business
Prior to joining SpiriTel in November 2007,
David was Commercial Director at Carphone
Warehouse with responsibility for the delivery
of their extensive communications portfolio
to large and small business customers.
David has also held several senior positions
in telecommunications at AT&T, Telco
Global and Onetel. David led the integration
of Onetel’s business unit after its acquisition
by Carphone Warehouse and developed
its aggressive expansion strategy.
5. Steven Maine (56)
Non-Executive Deputy Chairman
Steven has extensive experience in the
telecommunications and media sectors, having
served as Chief Executive Officer of Kingston
Communications Plc between 1997 and 2003
and having previously held senior positions
in the satellite and video communications
businesses of BT Plc. Currently Chief Executive
of Solaris Mobile, a pan-European, satellite-
based mobile TV venture.
6. Steven Scott (43)
Non-Executive Director
Steve is a Chartered Accountant, having
trained with Arthur Andersen after graduating
from the University of Glasgow. He is a
founding Director of Penta Capital, a venture
capital fund manager that has invested
in SpiriTel. Prior to establishing Penta, he was
a Director in The Royal Bank of Scotland’s
private equity division.
7. Anthony Vose (53)
Non-Executive Director
Anthony founded Ashland Telephones
in 1989 and oversaw its successful growth
into a leading provider of telephony systems
with a particular focus on the hospitality
sector. Ashland Group was acquired by
SpiriT el in March 2007. 14 
Report of the Directors 
The Directors submit their report and financial statements for the year ended 30 April 2008.  
Results and dividends 
The Group loss for the year after taxation amounted to £3,758,000 (2007: loss £2,961,000), after exceptional items of £620,000  
(2007: £991,000).  
The Directors do not recommend the payment of a dividend (2007: £nil). 
Principal activities and review of business 
The principal activity is the provision of telecommunication services. 
SpiriTel is a fully integrated business communications group which enables its customers to take advantage of the opportunities created  
by rapidly changing telecoms markets as the migration to Internet Protocol (IP) based services accelerates. The Group is a consolidator of the 
UK telecoms reseller market and is building a substantial customer base and scale through selective acquisitions. The Group is organised into 
two divisions, SpiriTel Technologies – focused on networking and IP products and services – and SpiriTel Business, which provides services 
directly to our business customers. 
SpiriTel offers fixed and mobile voice and data communications solutions including Voice over IP (VoIP), data networking, telephone systems 
and ISP services to an expanding customer base. The Group is a leader in the provision of new, but proven, VoIP solutions that are based on 
the old-fashioned service values that run throughout the Group. 
The Chairman’s Statement and Chief Executive’s review on pages 2 to 12 provide further information about the Group’s principal activities,  
the business and financial performance during the year. 
Due to the embryonic stage of development the Directors do not consider it appropriate to provide information on key performance indicators. 
Post balance sheet events 
Post balance sheet events are disclosed in note 29 to the financial statements. 
Political and charitable contributions 
No political contributions were made during the year (2007: £nil). Charitable contributions made during the year amounted to £6,000  
(2007: £nil). 
Directors and their interests 
The Directors in office and their interests in the ordinary shares of the Company are shown below. None of the Directors has had any beneficial 
interest in the redeemable preference shares at any time. Each Director served throughout the year unless otherwise indicated. 
Note 
Number 
30 April  
2008 
Number
30 April 
2007
Lord St John of Bletso  823,333 823,333
A R Mills  1,390,000 140,000
R W Smith (appointed 23 May 2007)  625,000 –
D Anahory (appointed 24 January 2008)  625,000 –
S Maine  – –
S Scott 1 39,413,799 39,413,799
A J Vose  45,703,600 45,703,600
Notes: 
1) S Scott’s interest is non-beneficial, as a Director of the manager of the Penta funds. 
Employees 
The Group aims for fair reward and recognition for all employees.  
The Group has continued its practice of keeping employees informed of matters affecting them as employees and the financial and economic 
factors affecting the performance of the Group. 
Applications for employment by disabled persons are given full and fair consideration for all vacancies in accordance with their particular 
aptitudes and abilities. 
In the event of employees becoming disabled, every effort is given to retrain them in order that their employment with the Group may continue. 
It is the policy of the Group that training, career development and promotion opportunities should be available to all employees.  15 
Financial risk management objectives and policies 
The Group uses various financial instruments which include cash and items such as trade debtors and trade creditors that arise directly from  
its operations. The main purpose of these financial instruments is to raise finance for the Group’s operations. 
The main risks arising from the Group’s financial instruments are market risk, cash flow interest rate risk, credit risk and liquidity risk.  
The Directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained 
unchanged from previous years.  
Market risk 
Market risk encompasses three types of risk, being currency risk, fair value interest rate risk and price risk. The Group’s policies for managing 
fair value interest rate risk are considered along with those for managing cash flow interest rate risk and are set out in the subsection entitled 
“interest rate risk” below. 
Currency risk 
The Group has limited exposure to translation and transaction foreign exchange risk.  
Liquidity risk 
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets  
safely and profitably. The Group finances its investment in tangible fixed assets primarily through cash balances. 
Interest rate risk 
The Group finances its operations through a combination of cash balances and loans. The Group manages its exposure to interest rate 
fluctuations by entering into fixed rate agreements with the lender and, with the majority of its loans by value has secured a waiver of interest  
by agreeing with the lender fixed redemption premium terms and conversion rights into ordinary shares of the Company. Similar arrangements 
have been secured in relation to the outstanding preference shares. 
Credit risk 
The Group’s principal financial assets are cash and trade debtors. The principal credit risk arises from trade debtors. The Directors manage 
credit risk by setting limits for customers based on a combination of payment history and third party credit references. Credit limits, debtor 
ageing and collection history are reviewed by the finance department on a regular basis. 
Supplier payment policy 
The Group’s policy, in relation to all its suppliers, is to settle the terms of payment when agreeing the terms of the transaction and to abide  
by those terms provided that it is satisfied that the supplier has provided the goods or services in accordance with the agreed terms and 
conditions. The Group does not follow any specific code or statement of payment practice. The number of days’ billings from suppliers 
outstanding at 30 April 2008 was 30 days (2007: 31 days). 
Corporate governance 
The Directors are committed to maintaining high standards of corporate governance. Although, as an AIM listed company, the Company  
is not required to comply with the provisions of the Combined Code, the Board recognises the importance of, and is committed to, ensuring 
that effective corporate governance procedures relevant to smaller listed companies are in place. 
The Board 
The Board consists of a Non-Executive Chairman, three Executive Directors and three Non-Executive Directors and meets approximately  
every four to six weeks throughout the year. 
The Board reviews the performance of the Company and its subsidiaries through the use of management accounts, Key Performance 
Indicators and other regular reports and information presented to it by the executive team. A formal schedule of matters specifically reserved  
to it for decision is in place, including overall strategy, acquisition and divestment policy, approval of major capital expenditure projects and 
general and risk management policies. 
To enable the Board to discharge its duties all Directors have full access to all relevant information and to the advice and services of the 
Company Secretary. In addition, there is a procedure in place for Directors to take independent professional advice in the furtherance of  
their duties, if necessary at the Company’s expense. 
The Board has established the following committees to which it has delegated specific responsibilities: 
The Nominations Committee 
The Nominations Committee, consisting of the Chairman and two Non-Executive Directors, is responsible for reviewing the size, structure and 
composition of the Board, succession planning and identifying and monitoring candidates for all Board vacancies. Appointments to the Board 
of Directors are made by the Board of Directors. The Non-Executive Directors currently serving on the Committee are Lord St John of Bletso, 
Steven Maine and Steven Scott.  16 
Report of the Directors continued 
The Remuneration Committee 
The composition and activities of the Remuneration Committee are described in the Directors’ Remuneration Report on pages 18 to 20. 
The Audit Committee 
The Audit Committee, which comprises the Chairman and two Non-Executive Directors, meets on a six-monthly basis. The Committee 
considers all aspects of the Group’s system of internal control and reviews the interim and annual financial statements before submission to  
the Board for approval. The Committee has unrestricted access to the Group’s auditors and ensures that auditor objectivity and independence 
has not been compromised. It will also recommend the appointment of and review the fees of the external auditors. The Committee does not 
believe an internal audit function can be justified for the Group at the current time. The Non-Executive Directors currently serving on the 
Committee are Lord St John of Bletso, Steven Scott and Steven Maine. 
Relations with shareholders 
Communications with shareholders are given high priority. The Company encourages the participation of both institutional and private  
investors. There is a regular dialogue with shareholders and potential shareholders including presentations after the Company’s preliminary 
announcement of its year end results. The Board also uses the Annual General Meeting to communicate with investors and maintains an  
up-to-date record of news releases and other information of interest to shareholders on its web site at www.spiritelplc.com. 
Transition to International Financial Reporting Standards (“IFRS”) 
The Group has completed its program for adopting IFRS and presented its interim statements to 31 October 2007 under IFRS. The financial 
statements included in this Annual Report are the first full set of accounts and notes presented under IFRS. 
Going concern 
Having made reasonable enquiries, the Directors are of the opinion that the Group has adequate resources to continue in operational existence 
for the foreseeable future and hence these financial statements have been prepared on a going concern basis. 
Major shareholdings 
At 1 August 2008 the following had shareholdings in 3% or more of the ordinary share capital of the Company: 
Shareholder 
% of total
Penta Capital Partners Limited 49.99
A J Vose 8.26
I.N.D. Holdings Limited 4.88
  17 
Statement of Directors’ responsibilities 
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. 
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to  
prepare Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union 
and financial statements for the parent company in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP).  
The financial statements are required by law to give a true and fair view of the state of affairs of the Group and Company and of the profit  
or loss of the Group for that period. In preparing these financial statements, the Directors are required to: 
– select suitable accounting policies and then apply them consistently; 
– make judgements and estimates that are reasonable and prudent; 
– state whether applicable International Financial Reporting Standards as adopted by the European Union have been followed for the 
preparation of the Group financial statements and UK GAAP for the preparation of the parent company financial statements, subject  
to any material departures disclosed and explained in the financial statements; and 
– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue  
in business. 
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position  
of the Group and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for 
safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.  
In so far as the Directors are aware: 
– there is no relevant audit information of which the Group’s auditors are unaware; and 
– the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish 
that the auditors are aware of that information. 
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. 
Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in  
other jurisdictions. 
Auditors 
Grant Thornton UK LLP offer themselves for reappointment as auditors in accordance with Section 385 of the Companies Act 1985.  
Signed on behalf of the Board 
RW Smith 
Chief Financial Officer 
3 August 2008 18 
Directors’ Remuneration Report 
General information 
The Remuneration Committee is made up solely of Non-Executive Directors. None of them has any personal financial interest in the matters to 
be decided (other than as shareholders or holders of options over ordinary shares), potential conflicts of interest arising from cross-directorships 
nor any day-to-day involvement in running the business. The names of the Directors who have served on the Remuneration Committee during 
the year are as follows: 
Lord St John of Bletso 
S Scott 
S Maine 
The Committee’s role is to review the performance of the Executive Directors and to set the scale and structure of their remuneration, paying 
due regard to the interests of shareholders as a whole and the performance of the Group. Specifically, the Remuneration Committee agrees  
the principal terms of their service contracts, including salaries and other benefits, such as bonuses and share options, and other terms and 
conditions of employment. 
General policy 
The Committee’s executive remuneration policy is designed to attract, retain and motivate individuals to ensure the success of the Group 
relative to other UK businesses of similar size and complexity. External comparisons look at comparable roles in similar organisations, in terms 
of size, market sector, and business complexity. Remuneration packages are designed to reward Directors and Executive Group members 
fairly for their contributions whilst remaining within the range of benefits offered by similar companies in the sector. The Remuneration 
Committee seeks to structure total benefits packages which align the interests of shareholders and senior executives. Executive remuneration 
will continue to be the subject of regular review in accordance with this policy. 
Bonus schemes 
The Group operates discretionary bonus schemes for certain senior managers and other employees. Individual payments made under the 
schemes are partially dependent on the achievement of financial targets and also on the achievement of predetermined individual objectives. 
The Group also tailors bonus arrangements for certain Directors and staff members so as to provide incentivisation for the achievement of  
On Target Earnings commensurate with comparable roles within the industry sector. 
Policy on service contracts 
The Directors all have service contracts, which require between one and six months’ notice of termination.  
Executive Directors’ service contracts provide for remuneration in the form of salary, bonus and other customary benefits, such as permanent 
health insurance and life assurance as appropriate. The Company also facilitates contributions to personal pension schemes for Directors 
wishing to take part of their benefits in that form. 
Directors’ service contracts 
Details of the Directors’ service contracts are as follows: 
Name 
Commencement 
of service Initial period Notice period
Lord St John of Bletso 28 July 2004 36 months 1 month
A R Mills 20 July 2005 None 6 months
D Anahory 1 November 2007 None 3 months
R W Smith 23 May 2007 None 3 months
S Maine 5 April 2006 36 months 1 month
S Scott 28 July 2004 36 months 1 month
A J Vose 27 July 2007 None 1 month
  19 
Directors’ emoluments  
The following table sets out details of the emoluments paid during the year to each Director. The following information forms part of the audited 
financial statements. 
Name 
Note
Salary 
and fees 
£’000
Benefits
in kind
£000
Bonus
£000
 
Compensation 
for loss  
of office 
£000 
 Total
year ended
30 April
2008
£000
Total
year ended
30 April
2007
£000
Lord St John of Bletso 1 33 – – –  33 33
A R Mills 138 2 105 –  245 172
D Anahory (from 24 January 2008) 36 1 26 –  63 –
R W Smith (from 23 May 2007) 108 1 73 –  182 –
S Maine 2 32 – – –  32 29
S Scott 3 28 – – –  28 28
A J Vose 34 – – 13  47 15
M T Willard – – – –  – 149
J D Vergopoulos – – – –  – 12
 409 4 204 13  630 438
Notes: 
1) The fees of Lord St John of Bletso were payable to Tudor Consultancy Services Limited. 
2) The fees of S Maine were payable to SM & Partners. 
3) The fees of S Scott were payable to Penta Capital Partners Limited.  20 
Directors’ remuneration report continued 
Directors’ share options 
The following table sets out details of options over ordinary shares of the Company which have been granted to each Director: 
 
1 May
2007 Granted
30 April 
2008
Exercise 
price in pence Exercise period
Option Agreement 
R W Smith 1,666,667 – 1,666,667 3.00 January 2008 – January 2017
A R Mills – 32,941,177 32,941,177 2.125 May 2008 – May 2017
SpiriTel Share Option Scheme 
A R Mills 3,571,428 – 3,571,428 7.00 August 2008 – August 2015
Lord St John of Bletso 1,333,333 – 1,333,333 3.00 January 2008 – January 2017
S Maine 1,333,333 – 1,333,333 3.00 January 2008 – January 2017
EMI Share Option Agreement 
A R Mills 2,000,000 – 2,000,000 5.00 July 2007 – July 2016
A R Mills 3,333,333 – 3,333,333 3.00 January 2008 – January 2017
Notes: 
On 7 May 2008, Lord St John of Bletso and Steven Maine each agreed to the cancellation of their grants under the SpiriTel Share Option 
Scheme. Also on 7 May 2008, Lord St John of Bletso and Steven Maine were each granted new options under the SpiriTel Share Option 
Scheme over 4,000,000 ordinary shares at an exercise price of 1.25 pence per share, exercisable between May 2009 and May 2018. 
The quantum of the grant of options made to A R Mills during the year reflects the desire of the Remuneration Committee to ensure that the 
Chief Executive be given appropriate long term incentivisation aligned with the interests of shareholders. 
Non-Executive Directors 
The remuneration of the Non-Executive Directors is determined by the Executive Directors and the Deputy Chairman within the limits set out  
in the Company’s Articles of Association. 
Lord St John of Bletso 
Chairman of Remuneration Committee 
3 August 2008  21 
Report of the independent auditor to the members of Spiritel plc 
We have audited the Group and parent company financial statements (“the financial statements”) of SpiriTel plc for the year ended 30 April 
2008 which comprise the consolidated income statement, the consolidated statement of changes in shareholders’ equity, the consolidated and 
parent company balance sheets, the consolidated statement of cash flows and notes 1 to 30 of the consolidated financial statements and 
notes 1 to 18 of the parent company financial statements. These financial statements have been prepared under the accounting policies set out 
therein.  
This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work 
has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report 
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company 
and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. 
Respective responsibilities of Directors and auditors 
The Directors’ responsibilities for preparing the Annual Report and the Group financial statements in accordance with United Kingdom law  
and International Financial Reporting Standards (IFRSs) as adopted by the European Union, and for preparing the parent company financial 
statements in accordance with United Kingdom law and Accounting Standards (United Kingdom Generally Accepted Accounting Practice)  
are set out in the Statement of Directors’ Responsibilities.  
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards 
on Auditing (UK and Ireland). 
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements have been 
properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the 
Report of the Directors is consistent with the financial statements. The information given in the Report of the Directors includes that specific 
information presented in the Chairman’s statement and Chief Executive’s review that is cross referred from the principal activities and review  
of business section of the Report of the Directors. 
In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information 
and explanations we require for our audit, or if information specified by law regarding Directors’ remuneration and other transactions is not 
disclosed. 
We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements.  
This other information comprises only the Financial highlights, the Chairman’s statement, the Chief Executive’s review, the Report of the 
Directors and the Directors’ Remuneration Report. We consider the implications for our report if we become aware of any apparent 
misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. 
Basis of audit opinion 
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board.  
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes 
an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether 
the accounting policies are appropriate to the Group’s and Company’s circumstances, consistently applied and adequately disclosed.  
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide  
us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused  
by fraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the 
financial statements. 
Opinion 
In our opinion: 
– the Group financial statements give a true and fair view, in accordance with International Financial Reporting Standards as adopted by  
the European Union, of the state of the Group’s affairs as at 30 April 2008 and of its loss for the year then ended; 
– the parent company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting 
Practice, of the state of the parent company’s affairs as at 30 April 2008;  
– the Group financial statements have been properly prepared in accordance with the Companies Act 1985; 
– the parent company financial statements have been properly prepared in accordance with the Companies Act 1985; and  
– the information given in the Report of the Directors is consistent with the financial statements. 
Grant Thornton UK LLP 
Registered Auditors 
Chartered Accountants 
Manchester 
3 August 2008  22 
Consolidated income statement 
Year ended 30 April 2008 
Note 
2008 
£000 
2007
£000
Continuing operations   
Revenue 3 16,674 13,649
Cost of sales   (10,259) (11,613)
Gross profit   6,415 2,036
Administrative expenses  (7,261) (4,503)
   
Underlying EBITDA  938 (861)
Depreciation  (180) (322)
Share based payments  (190) (45)
Exceptional costs  (620) (991)
Amortisation of other intangible assets  (794) (248)
Operating loss 3, 4 (846) (2,467)
   
Operating loss 3, 4 (846) (2,467)
Finance income 7 5 5
Finance costs 8 (3,206) (594)
Loss before taxation  (4,047) (3,056)
Tax credit 9 289 95
Loss for the financial year  (3,758) (2,961)
Attributed to:   
Equity holders of the parent  (3,758) (2,827)
Minority interest  – (134)
  (3,758) (2,961)
Loss per share in pence   
Basic and diluted 10 (1.19) (1.30)
The notes on pages 26 to 58 are an integral part of these consolidated financial statements.   23 
Consolidated statement of changes in shareholders’ equity 
Share capital
£000
Additional 
paid in capital
£000
Reverse 
acquisition 
reserve  
£000 
Other 
reserves 
£000 
Retained 
losses
£000
Total
£000
Balance at 1 May 2006 1,654 2,850 (5,763) 15 (3,360) (4,604)
Loss for the financial year  – – – – (2,961) (2,961)
Minority interest – – – – 134 134
Issue of share capital 1,508 1,700 – – – 3,208
Credit for equity settled share based payments  – – – 62 – 62
Equity component of compound financial instruments  – – – 100 – 100
Transfer between reserves – – – (80) 80 –
Balance at 1 May 2007 3,162 4,550 (5,763) 97 (6,107) (4,061)
Loss for the financial year – – – – (3,758) (3,758)
Credit for equity settled share based payments  – – – 190 – 190
Equity component of compound financial instruments  – – – 333 – 333
Transfer between reserves – – – (55) 55 –
Balance at 30 April 2008 3,162 4,550 (5,763) 565 (9,810) (7,296)
The notes on pages 26 to 58 are an integral part of these consolidated financial statements.   24 
Consolidated balance sheet 
As at 30 April 2008 
Note 
2008 
£000 
2007
£000
Assets   
Non-current assets   
Goodwill 11 5,292 2,357
Other intangible assets 12 4,392 3,579
Property, plant and equipment  13 438 408
  10,122 6,344
Current assets   
Inventories  16 353 392
Trade and other receivables 17 2,151 3,007
Cash and cash equivalents  18 1,058 322
  3,562 3,721
Total assets   13,684 10,065
 
Current liabilities   
Trade and other payables 19 (4,595) (3,890)
Borrowings 20 (457) (4,037)
Obligations under finance leases  21 (84) (60)
Current tax payable  (442) (236)
  (5,578) (8,223)
Non-current liabilities   
Trade and other payables  19 (432) –
Borrowings  20 (13,603) (4,695)
Obligations under finance leases 21 (55) (117)
Deferred tax liabilities  22 (1,312) (1,091)
  (15,402) (5,903)
Total liabilities   (20,980) (14,126)
Net liabilities  (7,296) (4,061)
 
Equity attributable to equity holders of the parent   
Capital and reserves    
Share capital   3,162 3,162
Additional paid in capital  4,550 4,550
Reverse acquisition reserve  (5,763) (5,763)
Other reserves   565 97
Retained losses  (9,810) (6,107)
Total equity   (7,296) (4,061)
The notes on pages 26 to 58 are an integral part of these consolidated financial statements. 
These financial statements were approved by the Board of Directors on 3 August 2008 and signed on its behalf by: 
A R Mills   R W Smith  
Chief Executive Officer Chief Financial Officer   25 
Consolidated statement of cash flows 
Year ended 30 April 2008 
 Note 
2008
£000
2007
£000
Cash flows from operating activities   
Loss before taxation   (4,047) (3,056)
Adjustments for:   
Net finance costs  3,201 589
Depreciation and amortisation  974 570
Impairment of tangible fixed assets   64 422
Impairment of goodwill  – 269
Loss on disposal of property, plant and equipment  – 12
Decrease in inventory   63 2
(Increase)/decrease in receivables   (17) 14
Increase/(decrease) in payables   617 (44)
Equity settled share based payments   190 45
Interest paid  (135) (1)
Cash from/(used in) operating activities  910 (1,178)
Income taxes paid  – (9)
Net cash from/(used in) operating activities  910 (1,187)
 
Cash flows from investing activities   
Acquisition of subsidiaries net of cash acquired  15 (998) (2,810)
Payment of deferred and contingent consideration  (1,227) –
Purchase of property, plant and equipment   (229) (101)
Proceeds from sale of property, plant and equipment   – 6
Net cash used in investing activities  (2,454) (2,905)
 
Cash flows from financing activities   
Net proceeds from issue of share capital   – 1,223
Proceeds from borrowings   2,347 3,100
Payment of finance lease liabilities  (67) (7)
Net cash from financing activities  2,280 4,316
 
Net increase in cash and equivalents  736 224
Cash and equivalents at beginning of year   322 98
Cash and equivalents at end of year  18 1,058 322
The notes on pages 26 to 58 are an integral part of these consolidated financial statements. 26 
Notes to the consolidated financial statements 
1. Basis of preparation 
Spiritel Plc’s consolidated financial statements were prepared in accordance with UK GAAP for the year ended 30 April 2007. For the year 
ended 30 April 2008, the Group has prepared final financial statements in accordance with International Financial Reporting Standards (IFRS), 
as adopted by the European Union (EU), for the first time.  
In relation to IFRS 1, “First-time Adoption of International Financial Reporting Standards”, the date of transition for the 2008 consolidated 
financial statements was 1 May 2006. The comparative figures in respect of 30 April 2007 have been restated to reflect changes in accounting 
policies as a result of the adoption of IFRS. The disclosures required by IFRS 1 concerning the transition from UK GAAP and IFRS are given in 
the reconciliation schedules, presented and explained in note 30. 
These financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments. 
The accounting policies have been applied consistently throughout the Group for the purposes of the preparation of these consolidated  
financial statements. 
Transition to IFRS  
These consolidated financial statements show the results for the years ended 30 April 2008 and 30 April 2007. The results for the year ended 
30 April 2007 have been extracted from the financial statements for that year and have been adjusted for the effects of changes in accounting 
policies on transition to IFRS. 
IFRS 1 “First Time Adoption of IFRS” sets out the procedures that the Group must follow when it adopts IFRS for the first time as the basis  
for preparing its consolidated financial statements.  
The Group has identified its IFRS accounting policies as at 30 April 2008 and has applied these retrospectively to determine the IFRS opening 
balance sheet at its date of transition, 1 May 2006. The standard provides a number of optional and mandatory exemptions to this general 
principle. The only exemptions adopted by the Group are set out below. 
IFRS 3 – Business combinations 
The Group has elected not to apply IFRS 3 to the business combinations that took place prior to the date of transition. Accordingly, 
combinations prior to 1 May 2006 have not been restated. As a result the carrying value of goodwill is frozen as at 1 May 2006 but accounted 
for thereafter in accordance with IFRS. 
IFRS 2 – Share based payments 
The Group has elected to apply IFRS 2 only to relevant share based payment transactions granted after 7 July 2005 and not vested  
at 1 May 2006. Previously share based payments were accounted for under FRS 20.   27 
 
 
1. Basis of preparation continued 
Standards and interpretations not yet applied 
The following new Standards and Interpretations, which are yet to become mandatory, have not been applied in the Group’s 2008 
consolidated financial statements:           
Standard or Interpretation Applicable* 
IFRIC 12 Service concession arrangements 1 January 2008 
IFRIC 13 Customer loyalty programmes 1 July 2008 
IFRIC 14 (IAS 19) The limit on a defined benefit asset, minimum funding requirements and their 
interaction 
1 January 2008 
IFRIC 15 Agreements for the construction of real estate 1 January 2009 
IFRIC 16 Hedges of a net investment in a foreign operation 1 October 2008 
IAS 1 Presentation of financial statements (revised 2007) 1 January 2009 
IAS 23 Borrowing costs 1 January 2009 
IAS 27 Consolidated and separate financial statements (revised 2008) 1 July 2009 
IAS 32 (amended) Financial instruments: Presentation and IAS 1 Presentation of financial statements – 
Puttable financial instruments and obligations arising on liquidation 
1 January 2009 
IFRS 1 (amended) First time adoption of IFRS and IAS 27 Consolidated and separate financial 
statements – cost of investment in a subsidiary, jointly controlled entity or associate 
1 January 2009 
IFRS 2 (amended) Share based payment – vesting conditions and cancellation 1 January 2009 
IFRS 3 Business combinations (revised 2008) 1 July 2009 
IFRS 8 Operating segments 1 January 2009 
*Applicable to accounting periods beginning on or after the following dates. 
The Directors consider that the adoption of these standards and interpretations in future periods will have no material financial impact  
on the consolidated financial statements other than the revised approach to accounting for business combinations under IFRS 3 “Business 
Combinations (revised 2008)”.  
In addition, a number of disclosure changes will arise on the adoption of these standards and interpretations.  28 
Notes to the consolidated financial statements continued 
 
2. Accounting policies 
The accounting policies adopted in relation to IFRS are set out below. These have been applied consistently to all periods presented in the IFRS 
consolidated financial statements and in preparing an opening IFRS balance sheet at 1 May 2006 for the purposes of the transition to IFRS. 
Where relevant, the impact of changes from UK GAAP to IFRS has been explained.  
Significant accounting judgements and sources of estimation uncertainty 
In applying the Group’s accounting policies, management makes certain judgements and estimations: 
– Judgements include classification of transactions between the income statement and balance sheet; and 
– Estimations focus on areas such as the carrying values and estimated lives of non-current assets. 
The accounting policy descriptions include descriptions of areas where judgement is exercised and in consequence might have a significant  
risk of causing material adjustment within the next financial year. In this regard, the key areas are impairment of goodwill, revenue recognition, 
intangible assets, valuation of financial liabilities and share based compensation.  
Impairment of goodwill 
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been 
allocated. The “value in use” calculation requires management to estimate the future cash flows expected to arise from the cash-generating  
unit and a suitable discount rate in order to calculate present value (see note 11). 
The carrying value of goodwill at the balance sheet date was £5,292,000 (2007: £2,357,000) 
Revenue recognition 
In making their judgement, management has considered the detailed criteria for the recognition of revenue from the sale of goods as outlined  
in IAS 18 “Revenue” and, in particular, where the Group has transferred to the customer the significant risks and rewards of ownership of the 
goods and whether the Group has fulfilled its contractual obligations. Management is satisfied that recognition of all such revenue in the current 
year is appropriate. 
Intangible assets 
In establishing the initial values of intangible assets separately identified on acquisition as required by IFRS 3 “Business Combinations” 
management has estimated the future cash flows attributable to assets acquired and their estimated useful economic lives and applied  
a suitable weighted average cost of capital to calculate present values. 
The carrying value of intangible assets at the balance sheet date was £4,392,000 (2007: £3,579.000). 
Share based compensation 
The assumptions on the expected life of share options, volatility of share price, risk free yield to maturity and expected dividend yield on shares 
are used in the IFRS fair value calculation of the Group’s share options outstanding at the balance sheet date (see note 27). 
Financial instruments 
The valuation of embedded derivatives contained within the Group’s borrowings is performed using option modelling techniques and requires 
assumptions to be made including expected life of options, volatility of share prices, risk free yield to maturity and expected dividend yields  
on shares. 
Basis of consolidation 
The consolidated financial statements incorporate the financial statements of the Company and all of its subsidiary undertakings, together  
with the Group’s share of the net assets and results of joint ventures. The financial statements of all Group companies are adjusted, where 
necessary, to ensure the use of consistent accounting policies. The results of companies acquired or disposed of are included in the Group 
income statement from or up to the date that control passes respectively.  
Acquisitions are accounted for under the acquisition method. The acquisition of Spiritel Technologies Limited (formerly Expo Communications 
Limited) during 2005 has been accounted for under the reverse acquisition method, on the basis that the substance of the business 
combination was that Spiritel Technologies Limited acquired Spiritel Plc by a reverse acquisition.  
For business combinations completed prior to the date of transition to IFRS (1 May 2006) the Group has elected not to apply IFRS 3  
“Business Combinations” retrospectively.  
Accordingly, the classification of the combination (acquisition, reverse acquisition or merger) remains unchanged from that used under UK 
GAAP. Assets and liabilities are recognised at date of transition if they would be recognised under IFRS, and are measured using their UK 
GAAP carrying amount immediately post-acquisition as deemed cost under IFRS, unless IFRS requires fair value measurement. Deferred  
tax and minority interest are adjusted for the impact of any consequential adjustments after taking advantage of the transitional provisions.  
The transitional provisions used for past business combinations apply equally to past acquisitions of interests in associated and joint ventures.   29 
 
 
2. Accounting policies continued 
Investments in joint ventures 
Entities whose economic activities are controlled jointly by the Group and by other ventures independent of the Group are accounted for using 
the equity method. 
Investments in joint ventures are recognised initially at cost and subsequently accounted for using the equity method. Acquired investments in 
joint ventures are also subject to purchase method accounting. However, any goodwill or fair value adjustment attributable to the share in the 
joint ventures is included in the amount recognised as investment in joint ventures. 
All subsequent changes to the share of interest in the equity of the joint ventures are recognised in the Group’s carrying amount of the 
investment.  
Changes resulting from the profit or loss generated by the joint ventures are reported in “share of profits of joint ventures” in the consolidated 
income statement and therefore affect net results of the Group. These changes include subsequent depreciation, amortisation or impairment  
of the fair value adjustments of assets and liabilities. 
Items that have been recognised directly in the joint venture’s equity are recognised in the consolidated equity of the Group. However, when  
the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture, including any unsecured receivables, the Group 
does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures. If the joint venture 
subsequently reports profits, the investor resumes recognising its share of those profits only after its share of the profits equals the share of 
losses not recognised. 
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint 
ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts 
reported in the financial statements of joint ventures have been adjusted where necessary to ensure consistency with the accounting policies 
adopted by the Group. 
Revenue  
Revenue is recognised to the extent that it is probable that the economic benefit will flow to the Group and can be reliably measured.  
The following specific recognition criteria must also be met before revenue is recognised:  
Managed services  
Revenue from managed services is recognised in the month in which the services are provided. Services provided in the year but not billed  
are accrued within receivables as accrued income.  
Call termination  
Revenue from call termination is recognised in the month in which it occurs. Call termination services provided in the year but not billed  
are recognised within receivables as accrued income.  
Networks services 
Revenue from telephony network services is recognised in the month in which the services are provided. Calls made in the year but not billed 
are recognised within receivables as accrued income.  
IP Communications 
IP Communications revenues comprise the sale of goods, including installation, and the provision of maintenance and hosting services. 
Revenue from the sale of goods, including installation, is recognised when the significant risks and benefits of ownership of the product have 
transferred to the buyer, which may be upon shipment or completion of the installation as determined by the contract terms. Revenue from 
maintenance and hosting contracts and other fixed term service agreements is recognised evenly over the period of the contract with revenue 
for the unexpired period of the contract being recognised as deferred income. 
Mobile 
Mobile revenue comprises connection commissions received from mobile network operators and a share of the network operators’ ongoing 
revenue. Connection commissions are recognised when the customer is connected to the mobile network after providing for expected future 
rebates. Ongoing revenue share, based on end user call volumes, is recognised in the period in which it is earned.   30 
Notes to the consolidated financial statements continued 
 
2. Accounting policies continued 
Goodwill 
Goodwill representing the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is 
capitalised and reviewed annually for impairment. Goodwill is carried at cost less accumulated impairment losses. Any excess of the acquirer’s 
interest in the net fair value of the acquiree’s identifiable assets and liabilities and contingent liabilities in comparison to cost is recognised 
immediately after acquisition in the income statement. 
Goodwill written off to reserves prior to the date of transition to IFRS remains in reserves. There is no re-instatement of goodwill that was 
amortised prior to transition to IFRS. Goodwill previously written off to reserves is not written back to profit and loss on subsequent disposal. 
Property, plant and equipment 
Property, plant and equipment are included at cost, less accumulated depreciation and any provision for impairment. Depreciation is provided 
on these assets on a straight line basis to write off their historical cost, less estimated residual value, over their estimated useful economic lives 
as follows: 
Leasehold improvements  – over the period of the lease 
Office and computer equipment – 10% to 33% straight line 
Motor vehicles   – 33% straight line 
Intangible assets  
In accordance with IFRS 3 – “Business Combinations”, an intangible asset acquired in a business combination is deemed to have a cost to  
the Group of its fair value at the date of acquisition. The fair value of the intangible asset reflects the market expectations about the probability 
that the future economic benefits embodied in the asset will flow to the Group. 
The acquisitions of CallPlan Limited, Networks Direct (UK) Limited, Ashland Group Limited, tdotcom Limited and WN1 Limited have resulted  
in the following categories of intangible assets being identified: 
Customer relationships 
Marketing assistance 
Customer order backlog 
Trade names   
Amortisation 
The estimated useful lives of intangible assets are as follows:  
Customer relationships  – 6 years 
Third party marketing assistance – 3 years 
Customer order backlog  – over the period that the orders will be invoiced    
Trade names   – 1 or 2 years 
Impairment testing of goodwill, other intangible assets and property, plant and equipment.  
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows  
(cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. 
Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and 
represent the lowest level within the Group at which management monitors the related cash flows. 
Goodwill, other individual assets or cash-generating units that include goodwill and other intangible assets with an indefinite useful life are tested 
for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in 
circumstances indicate that the carrying amount may not be recoverable. 
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable 
amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal 
discounted cash flow evaluation. Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited 
initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash generating unit. 
With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no 
longer exist.  31 
 
 
2. Accounting policies continued 
Leased assets 
Finance leases and hire purchase agreements 
Where the Group enters into a lease that transfers substantially all the risks and rewards of ownership of an asset to the lessee, the lease is 
treated as a finance lease. The asset is recorded in the balance sheet as property, plant and equipment at the present value of the minimum 
lease payments and is depreciated over the shorter of the lease term and the asset’s useful economic life. Future instalments under such 
leases, net of finance charges, are included in creditors. Rentals payable are apportioned between the finance element, which is charged to  
the income statement at a constant rate of charge on the balance of capital repayments outstanding, and the capital element, which reduces 
the outstanding obligation. 
Operating lease agreements 
Leases where substantially all of the risks and rewards of ownership are not transferred to the Group are treated as operating leases.  
Rentals under operating leases are charged against profits on a straight-line basis over the period of the lease. 
Inventories 
Inventories are stated at the lower of cost and net realisable value, after provisions are made in respect of obsolete and slow moving items.  
Net realisable value is the estimated selling price less all further costs to complete and all costs to be incurred in marketing, selling and 
distribution. Cost is assigned on a first-in, first-out basis. 
Current tax 
The current tax charge is based on the profit or loss for the year and is measured at the amounts expected to be paid based on the tax  
rates and laws substantively enacted by the balance sheet date. Current and deferred tax is recognised in the income statement for the period 
except to the extent that it is attributable to a gain or loss that is or has been recognised directly in the statement of total recognised gains  
and losses. 
Deferred tax 
Deferred tax is recognised on all temporary differences where the transactions or events that give the Group an obligation to pay more tax  
in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. 
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the 
underlying deductible temporary differences will be able to be offset against future taxable income. Deferred tax assets and liabilities are 
calculated at tax rates that are expected to apply to their respective period of realisation, provided that they are enacted or substantively 
enacted by the balance sheet date. 
Deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction  
is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and 
joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not 
occur in the foreseeable future. 
Cash and cash equivalents 
For the purposes of the consolidated statement of cash flows, cash and cash equivalents, comprises cash in hand and deposits repayable  
on demand, less overdrafts payable on demand. 
Foreign currency 
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in 
foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Any exchange differences arising on the settlement  
of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the 
income statement in the period in which they arise. 
Contributions to pension schemes 
The Group contributes to the personal pension schemes of certain Directors and employees. The pension costs are charged against operating 
profit in the relevant accounting period. 
Exceptional items 
Exceptional items are material items which individually, or if a similar type, in aggregate, need to be disclosed by virtue of their size or incidence 
in order to understand the Group’s financial performance.  32 
Notes to the consolidated financial statements continued 
 
2. Accounting policies continued 
Financial instruments 
Financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities are 
obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the 
instrument. Financial liabilities categorised as at fair value through profit or loss are recorded initially at fair value and all transaction costs  
are recognised immediately in the income statement. All other financial liabilities are recorded initially at fair value, net of direct issue costs. 
Financial liabilities categorised as at fair value through profit or loss are re-measured at each reporting date at fair value, with changes in fair 
value being recognised in the income statement. A financial liability is classified as held for trading if it is a derivative that is not designated and 
effective as a hedging instrument 
All other financial liabilities are recorded at amortised cost using the effective interest method, with interest-related charges recognised as an 
expense in finance cost in the income statement. Finance charges, including premiums payable on settlement or redemption and direct issue 
costs, are charged to the income statement on an accruals basis using the effective interest method and are added to the carrying amount  
of the instrument to the extent that they are not settled in the period in which they arise. 
Classification as equity or financial liability 
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. 
A financial liability exists where there is a contractual obligation to deliver cash or another financial asset to another entity, or to exchange 
financial assets or financial liabilities under potentially unfavourable conditions. In addition, contracts which result in the entity delivering a variable 
number of its own equity instruments are financial liabilities. Shares containing such obligations are classified as financial liabilities. 
Finance costs and gains or losses relating to financial liabilities are included in the income statement. The carrying amount of the liability  
is increased by the finance cost and reduced by payments made in respect of that liability. 
Finance costs are calculated so as to produce a constant rate of charge on the outstanding liability. 
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Dividends  
and distributions relating to equity instruments are debited directly to reserves. 
Compound instruments 
Compound instruments comprise both a liability and an equity component. The elements of a compound instrument are classified in 
accordance with their contractual provisions. At the date of issue, the liability component is recorded at fair value, which is estimated using  
the prevailing market interest rate for a similar debt instrument without the equity feature. Thereafter, the liability component is accounted for  
as a financial liability in accordance with the accounting policy set out above. 
The residual is the equity component, which is accounted for as an equity instrument. 
Embedded derivatives 
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and 
characteristics are not closely related to those of the host contracts and the host contracts are not measured at their fair value with changes  
in fair value recognised in profit or loss. 
Where there have been significant modifications to the terms of existing financial liabilities these are accounted for as an extinguishment of  
the original financial liability and the recognition of a new financial liability. The gain/loss arising on the modification is included in the income 
statement and is calculated as the fair value of the new financial liability compared to the fair value of the original financial liability immediately 
prior to the modification. Where equity instruments have been issued as part of the modification, the issue of the equity is accounted for as a 
transaction with equity holders and no gain/loss is recognised in that respect. 
Equity 
Equity comprises the following: 
– Share capital represents the nominal value of equity shares. 
– Additional paid in capital represents the excess over nominal value of the fair value of consideration received for equity shares, net of 
expenses of the share issue. 
– Other reserves represent equity-settled share-based employee remuneration until such share options are exercised and the equity 
component of compound financial instruments. 
– Reverse acquisition reserve represents the amount recognised in respect of the reverse acquisition accounting treatment of the acquisition  
of Spiritel plc by Spiritel Technologies Limited (formerly Expo Communications Limited) in 2005. 
– Retained losses represent retained losses.  33 
 
 
2. Accounting policies continued 
Government grants 
Government grants in respect of capital expenditure are held in liabilities and released to the income statement to match against the 
depreciation on the related assets. 
Share-based payments 
Equity settled share-based payment 
The Group issues equity settled benefits to certain Directors and employees. All share-based payment arrangements granted after 7 July 2005 
that had not vested prior to 1 May 2006 are recognised in the financial statements. Where employees are rewarded using share-based 
payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the instrument granted to the 
employee. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions. All equity settled share-
based payments are ultimately recognised as an expense in the profit and loss account with a corresponding credit to other reserves. 
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available 
estimate of the number of share options expected to vest. Estimates are revised subsequently if there is any indication that the number of  
share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. 
No adjustment is made to any expense recognised in prior periods if share options that have vested are not exercised. 
Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital and, where 
appropriate, additional paid in capital. 
3. Revenue and segmental information  
Spiritel plc has two operating business units, Business and Technologies. There is also a Central division that supplies back office functions  
and executive management to support the Group’s operations. The business units deliver independent products and services although Spiritel 
Technologies provides support to Spiritel Business through its network architecture and capabilities. 
SpiriTel Technologies  
SpiriTel Technologies provides call termination services on a limited number of niche routes to many of the UK’s major carriers. It also provides 
managed services to SpiriTel Business and third parties using its IP infrastructure, including its three network operation centres, five points of 
presence and several Tier 1 voice and data carrier interconnects. 
SpiriTel Business 
SpiriTel Business operates three lines of business, namely IP Communications, Network Services and Mobile. The business unit is 
headquartered in Wigan but provides national engineering coverage and customer support on a 24/7 basis. 
SpiriTel IP Communications 
SpiriTel IP Communications provides a range of voice and data services to business customers, including hosted VoIP and WiFi, traditional 
telephony equipment, maintenance and structured cabling. SpiriTel IP Communications was formed with the acquisition of Ashland Group 
Limited in March 2007 and expanded by the subsequent acquisition of tdotcom Limited during the current financial year. SpiriTel IP 
Communications supplies all business sizes, including large corporates and has particular expertise in the hospitality sector. The business  
also holds the highest level of Mitel accreditation. 
SpiriTel Networks 
SpiriTel Networks provides fixed line telephony services, including inbound and outbound calls, line rental and broadband to business users. 
SpiriTel Networks was formed following the acquisition of Networks Direct (UK) Limited in October 2006. SpiriTel Networks also includes 
SpiriTel CallPlan, which resells a broad telephony portfolio on behalf of Telstra Europe Limited. 
SpiriTel Mobile 
SpiriTel Mobile was formed in April 2008 with the acquisition of WN1 Limited. Spiritel Mobile is an accredited T-mobile and 02 Partner that 
provides mobile voice and data, including Blackberry services to business users.  34 
Notes to the consolidated financial statements continued 
 
3. Revenue and segmental information continued 
Year ended 30 April 2008 
SpiriTel
Technologies
£000
SpiriTel 
Business 
£000  
Other/ 
Central costs 
£000  
Total
£000
Continuing operations      
Revenue 9,930 6,744  –  16,674
     
Underlying EBITDA  1,024 1,125  (1,211)  938
Depreciation (128) (48)  (4)  (180)
Share based payments – –  (190)  (190)
Exceptional administrative expenses (note 5) (104) (305)  (211)  (620)
Amortisation of other intangible assets – (794)  –  (794)
Operating profit/(loss) 792 (22)  (1,616)  (846)
     
Operating profit/(loss) 792 (22)  (1,616)  (846)
Net finance costs     (3,201)
Loss before taxation     (4,047)
Tax credit     289
Loss for the financial year     (3,758)
Assets and liabilities     
Total assets 944 5,461  7,279  13,684
Total liabilities (3,146) (3,530)  (14,304)  (20,980)
Net assets/(liabilities) (2,202) 1,931  (7,025)  (7,296)
Other segmental information     
Property, plant and equipment     
– additions during the year 45 170  14  229
– acquired on business combinations – 45  –  45
– depreciation 128 48  4  180
– impairment (included in exceptional administrative expenses) 64 –  –  64
Other intangible assets     
– acquired on business combinations – 1,607  –  1,607
– amortisation  – 794  –  794
Goodwill     
– acquired on business combinations – 2,935  –  2,935
  35 
 
 
3. Revenue and segmental information continued 
Year ended 30 April 2007 
SpiriTel 
Technologies 
£000 
SpiriTel 
Business 
£000 
Other/
Central costs
£000
Total
£000
Continuing operations    
Revenue 12,022 1,627 – 13,649
   
Underlying EBITDA (40) 236 (1,057) (861)
Depreciation (307) (2) (13) (322)
Share based payments – – (45) (45)
Exceptional administrative expenses (note 5) (840) – (151) (991)
Amortisation and impairment of goodwill and intangible assets – (248) – (248)
Operating loss (1,187) (14) (1,266) (2,467)
   
Operating loss (1,187) (14) (1,266) (2,467)
Net finance costs   (589)
Loss before taxation   (3,056)
Tax credit   95
Loss for the financial year   (2,961)
Assets and liabilities   
Total assets 826 3,383 5,856 10,065
Total liabilities (3,422) (2,208) (8,496) (14,126)
Net assets/(liabilities) (2,596) 1,175 (2,640) (4,061)
Other segmental information   
Property, plant and equipment   
– additions during the year 101 – – 101
– acquired on business combinations – 205 – 205
– depreciation 307 2 13 322
– impairment (included in exceptional administrative expenses) 422 – – 422
Other intangible assets   
– acquired on business combinations – 3,827 – 3,827
– amortisation  – 248 – 248
Goodwill   
– acquired on business combinations – 2,593 – 2,593
– impairment (included in exceptional administrative expenses) 269 – – 269
  36 
Notes to the consolidated financial statements continued 
 
3. Revenue and segmental information continued 
Analysis of the Group’s revenue by geographical market is as follows: 
 
2008 
£000 
2007
£000
United Kingdom 16,561 13,424
Europe 113 199
United States – 26
 16,674 13,649
4. Operating loss 
Operating loss is stated after charging: 
 
2008 
£000 
 2007
£000
Charges in respect of equity settled share based payments 190 45
Depreciation  
– owned assets 150 312
– assets held under finance leases 30 10
Auditors’ remuneration  
as auditors of the parent company and group consolidated financial statements 20 18
other services  
– audit of subsidiary company financial statements 37 38
– review of Group’s interim results 3 2
– advice on transition to IFRS 10 3
Operating lease costs  
– land and buildings  143 91
– other  19 30
Loss on disposal of property, plant and equipment – 12
Amortisation of other intangible assets 794 248
Exceptional administrative expenses (note 5)  620 991
  37 
 
 
5.  Exceptional administrative expenses 
Exceptional expenses included within administrative expenses are summarised below: 
 Note 
2008
£000
 2007
£000
Reorganisation and restructuring costs, including debt restructuring (i) 432 129
Aborted acquisition costs  124 22
Impairment charges – tangible fixed assets (ii)  64 422
Impairment charges – goodwill  – 269
Impairment charges – other  – 63
Bad debts written off  – 86
Total exceptional administrative expenses  620 991
Notes: 
(i)  Reorganisation and restructuring costs include the costs of integration of the acquired businesses. 
(ii) The impairment charge relates to a write down of £64,000 in relation to the billing platform developed by SpiriTel Managed Services Limited 
which was abandoned during the year. 
6. Staff costs 
The average number of employees in the Group during the financial year amounted to:  
 
2008
Number
 2007
Number
Administrative and operational staff 82 33
Management 2 2
 84 35
The aggregate staff costs for the year including Directors were as follows:  
 
2008
£000
2007
£000
Wages and salaries 2,992 1,463
Social security costs 305 139
 3,297 1,602
The total number of employees (including Directors) at 30 April 2008 was 104 (2007: 84). 
Wages and salaries include the following amounts in respect of performance related bonuses, inclusive of national insurance and share-based 
payments charged to the income statement. 
 
2008
£000
2007
£000
Performance related bonuses 327 27
Equity settled share-based payment schemes 190 45
 517 72
  38 
Notes to the consolidated financial statements continued 
 
6. Staff costs continued 
Directors’ remuneration 
Remuneration in respect of the Directors was as follows: 
 
2008 
£000 
2007
£000
Emoluments and benefits in kind 617 309
Compensation for loss of office 13 129
 630 438
Remuneration in respect of the highest paid Director was £245,000 (2007: £172,000). Further details of Directors’ remuneration are given in the 
Directors’ Remuneration Report on pages 18 to 20.  
7. Finance income  
 
2008 
£000 
2007
£000
Bank interest receivable 5 5
8. Finance costs  
 
2008 
£000 
2007
£000
Interest payable on bank loans and overdrafts 125 –
Interest on finance leases 7 1
Interest paid on Director’s loan 8 –
Interest on Penta loans 1,204 593
Loss arising on modification of preference shares 2,521 –
Change in fair value of embedded derivatives (659) –
 3,206 594
  39 
 
 
9. Taxation  
(a) Tax on loss on ordinary activities  
Tax charged in the income statement: 
 
2008
£000
 2007
£000
Current tax: 
Charge for current year 30 –
Adjustment in respect of prior years (90) (1)
Total current tax credit  (60) (1)
Total deferred tax credit  (229) (94)
Total tax credit in income statement (289) (95)
(b) Reconciliation of the total tax credit  
The tax credit in the income statement for the year is the standard rate of corporation tax in the UK of 29.8% (2007: 30%). The differences are 
reconciled below:  
 
2008
£000
2007
£000
Loss on ordinary activities before taxation  (4,047) (3,056)
Accounting loss multiplied by UK standard rate of corporation tax of 29.8% (2007: 30%) (1,205) (917)
Deferred tax timing differences  (38) 47
Expenses not deductible for tax purposes 630 66
Trade losses carried forward – 710
Tax losses 414 –
Adjustment in respect of prior years  (90) (1)
Total tax credit (289) (95)
10. Loss per share 
The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of 
shares in issue during the period. The share options are not dilutive and therefore diluted earnings per share has not been presented.  
The loss and weighted average number of shares used in the calculation are set out below:  
Continuing and total operations  
Loss  
£000  
Weighted 
average 
number of 
shares
Per share 
amount 
pence
Year ended 30 April 2008   
Loss after tax (3,758)  
Loss attributable to ordinary shareholders  (3,758)  
Weighted average number of shares   316,233,646
Loss per share (pence)   (1.19)
Year ended 30 April 2007   
Loss after tax (2,961)  
Loss attributable to ordinary shareholders  (2,827)  
Weighted average number of shares   217,231,927
Loss per share (pence)   (1.30)
  40 
Notes to the consolidated financial statements continued 
 
11. Goodwill 
 £000
Cost  
At 1 May 2006 33
Additions 2,593
At 1 May 2007 2,626
Additions 2,935
At 30 April 2008 5,561
Accumulated impairment 
At 1 May 2006 –
Impairment charge for the year 269
At 1 May 2007 269
Impairment charge for the year –
At 30 April 2008 269
Carrying amount 
Net book amount at 30 April 2008 5,292
Net book amount at 30 April 2007 2,357
Net book amount at 1 May 2006 33
The additions to goodwill in the prior financial year arose on the purchase of minority shares of SpiriTel Technologies Limited, increasing the 
Group’s interest in the company from 82% to 100%, together with the purchase of 100% of the issued ordinary share capital of Ashland Group 
Limited, CallPlan Limited and Networks Direct (UK) Limited.  
The addition to purchased goodwill in the current financial year is analysed as follows: 
 
2008
£000
WN1 Limited (see note 15) 1,365
tdotcom Limited (see note 15) 220
Ashland Group Limited  1,350
Total purchased goodwill capitalised 2,935
Prior to its acquisition by the Group, Ashland Group Limited had carried out a purchase of its own shares for £1,350,000. However, the 
transaction did not follow the correct procedures as set out in the Companies Act and was determined as void by the Directors of Spiritel plc. 
During the current financial year, Spiritel plc has entered into a further purchase agreement to acquire the outstanding share capital. The 
deemed consideration for this transaction was £1,350,000, equivalent to the monies paid out to the former shareholder of Ashland Group, 
which was disclosed within debtors in the prior financial year pending resolution of the legal position on the share buyback. This amount has 
been treated as additional consideration and has been added to goodwill in the consolidated financial statements. 
Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value  
may be impaired. Goodwill was allocated for impairment testing purposes to cash generating units (CGUs), based on the following  
acquired businesses: 
– SpiriTel Mobile (formerly WN1 Limited) 
– SpiriTel IP Communications (formerly Ashland Group Limited and tdotcom Limited) 
– SpiriTel Networks (formerly Networks Direct (UK) Limited and CallPlan Limited)   41 
 
 
11. Goodwill continued 
These CGUs, and specifically the separable acquisitions inherent in each CGU, represent the lowest level within the Group at which goodwill 
was monitored by management for internal reporting purposes, and the level that represented the smallest identifiable group of assets which 
generated largely independent cash inflows. 
The recoverable amount of all the CGUs was based on a value in use calculation using cash flow projections based on the 2009 forecast  
which was approved by the Board and extrapolated for a further 6 – 9 years by a growth rate applicable to each unit. The projections are  
based on growth rates of between 0% and 15%. Cost growth was projected at levels below sales growth as the Directors anticipate that the 
CGUs will be able to increase revenues without corresponding increases in costs. A discount rate of 10% was applied to these projections.  
The discounted cash flow projections exceed the carrying value of each CGU and therefore there has been no impairment of goodwill during 
the financial year. Sensitivity analysis has indicated that no reasonably foreseeable change in the key assumptions used in the impairment 
calculations would result in any impairment charge being recorded in the consolidated financial statements. 
The carrying amount of goodwill is split as follows: 
 
2008
£000
2007
£000
SpiriTel Mobile 1,365 –
SpiriTel IP Communications 2,716 1,146
SpiriTel Networks 1,211 1,211
 5,292 2,357
12. Other intangible assets  
Customer 
relationships 
£000
Marketing 
assistance 
£000 
Customer  
order backlog 
£000 
Trade names
£000
Total
£000
Cost    
At 1 May 2006 – – – – –
Additions 3,496222 57 523,827
At 1 May 2007 3,496 222 57 52 3,827
Additions 1,607– – –1,607
At 30 April 2008 5,103 222 57 52 5,434
Amortisation   
At 1 May 2006 – – – – –
Charge for year 185 43 7 13 248
At 1 May 2007 185 43 7 13 248
Charge for year 647 65 43 39 794
At 30 April 2008 832 108 50 52 1,042
Net book value at 30 April 2008 4,271 114 7 – 4,392
Net book value at 30 April 2007 3,311 179 50 39 3,579
Net book value at 1 May 2006 – – – – –
  42 
Notes to the consolidated financial statements continued 
 
13. Property, plant and equipment  
Leasehold
improvements
£000
Office and 
computer 
equipment 
£000 
Motor 
vehicles 
£000 
Total
£000
Cost    
At 1 May 2006 29 1,744 – 1,773
Additions – 101 – 101
Acquisitions – 204 1 205
Disposals – (35) – (35)
At 30 April 2007 29 2,014 1 2,044
Additions 11 218 – 229
Acquisitions  – 2 43 45
At 30 April 2008 40 2,234 44 2,318
Depreciation   
At 1 May 2006 17 892 – 909
Charge for the year 7 315 – 322
Impairment charge – 422 – 422
Disposals – (17) – (17)
At 30 April 2007 24 1,612 – 1,636
Charge for the year 6 173 1 180
Impairment charge – 64 – 64
At 30 April 2008 30 1,849 1 1,880
Net book value at 30 April 2008 10 385 43 438
Net book value at 30 April 2007 5 402 1 408
Net book value at 1 May 2006 12 852 – 864
Included within office and computer equipment are assets held under hire purchase agreements with a net book value of £139,000  
(2007: £169,000). Depreciation charged on those assets during the year amounted to £30,000 (2007:£10,000). 
Details of the impairment charge for the current year are disclosed in note 5. 
14. Investments  
The Group holds a 50% interest In MyPhone (UK) Limited, a joint venture undertaking. At 30 April 2008, the Group’s share of the losses of the 
joint venture exceeded its interest in the company, and therefore in accordance with IAS 28, the Group has not recognised these losses on the 
basis that the Group has not incurred obligations on behalf of the joint venture. At 30 April 2008, the Group’s share of the accumulated losses 
of the joint venture undertaking was £47,000 (2007: £41,000).  43 
 
 
15. Business combinations 
Companies acquired during the year are as described below.  
(a) tdotcom Limited 
On 22 October 2007, SpiriTel plc acquired 100% of the issued share capital of tdotcom Limited, a company based in the UK. The total cost 
includes the components stated below. The purchase price was settled in cash.  
£000
Purchase price  80
Contingent consideration under earn out agreement payable in cash  150
Due diligence fees  10
Other professional fees  23
 263
Up to a further £150,000 of consideration may become payable in the event that the acquired business achieves certain earn-out sales  
targets during the eighteen months following the date of acquisition. In the opinion of the Directors, the likely amount payable is £150,000. 
The share purchase agreement includes a payment of £70,000 due on 1 May 2008 against which any deficit in target net assets can be  
offset. The final net asset amount has not been agreed with the vendors but in the opinion of the Directors this amount will not be payable.  
The assessment of the fair values of the assets and liabilities of tdotcom Limited was only provisionally completed at 30 April 2008 due to 
ongoing discussions with the vendor on the completion accounts. The amounts provisionally recognised for each class of the acquiree’s  
assets and liabilities recognised at the acquisition date are as follows: 
 
Book value  
£000 
Fair value 
adjustments
£000
Provisional fair 
value to the 
Group
£000
Intangible fixed assets identified – 615 615
Trade and other receivables 86 – 86
Inventories 7 – 7
Current tax assets 29 – 29
Cash and cash equivalents 11 – 11
Total assets 133 615 748
Trade payables (258) – (258)
Deferred income (133) – (133)
Other taxes  (39) – (39)
Other payables  (103) – (103)
Deferred tax – (172) (172)
Total liabilities (533) (172) (705)
Net (liabilities)/assets acquired (400) 443 43
Provisional goodwill arising on the acquisition  220
Consideration  263
 
Satisfied by:   
Cash  113
Contingent consideration to be settled in cash  150
  263
During the period from the date of acquisition to 30 April 2008, tdotcom Limited generated revenue of £685,000 and an operating profit  
of £127,000. 
Goodwill on the acquisition of tdotcom Limited is largely attributable to the workforce acquired, cross-selling opportunities and geographical 
coverage.  44 
Notes to the consolidated financial statements continued 
 
15. Business combinations continued 
(b) WN1 Limited  
On 2 April 2008, SpiriTel Plc acquired 100% of the issued share capital of WN1 Limited, a company based in the UK. The total cost includes 
the components stated below. The purchase price was settled by a combination of cash and loan notes.  
 £000
Purchase price  2,260
Loan notes repayable on 1 May 2009 (discounted) 248
Contingent consideration under earn out agreement payable in cash (discounted) 432
Due diligence fees  25
Other professional fees  202
 3,167
Up to a further £550,000 of consideration may become payable in the event that the acquired business achieves certain earn-out sales and 
profit targets during the twelve months following the date of acquisition. In the opinion of the Directors, the likely amount payable is £550,000. 
Due to the proximity of the acquisition to the Group’s year end, the assessment of the fair values of the assets and liabilities of WN1 Limited  
was only provisionally completed at 30 April 2008. The amounts provisionally recognised for each class of the acquiree’s assets and liabilities 
recognised at the acquisition date are as follows: 
Book value 
£000 
Fair value 
adjustments 
£000 
Provisional fair 
value
to the Group
£000
Intangible fixed assets identified – 992 992
Property, plant and equipment  45 – 45
Inventories  17 – 17
Trade and other receivables 391 – 391
Cash and cash equivalents 1,591 – 1,591
Total assets 2,044 992 3,036
Trade payables (110) – (110)
Other payables (522) – (522)
Current tax liabilities  (295) – (295)
Deferred tax – (278) (278)
Hire purchase agreements (29) – (29)
Total liabilities (956) (278) (1,234)
Net assets acquired 1,088 714 1,802
Provisional goodwill arising on the acquisition   1,365
Consideration   3,167
 
Satisfied by:   
Cash   2,487
Loan notes repayable on 1 May 2009 (discounted)   248
Contingent consideration to be settled in cash (discounted)   432
   3,167
During the period from the date of acquisition to 30 April 2008, WN1 Limited generated revenue of £229,000 and an operating profit  
of £77,000. 
Goodwill on the acquisition of WN1 is largely attributable to the workforce acquired, cross-selling opportunities and geographical coverage.  45 
 
 
15. Business combinations continued 
Due to the lack of IFRS specific data for tdotcom Limited and WN1 Limited prior to their acquisitions, the pro forma revenue and profit  
of the Group, had these acquisitions taken place on 1 May 2007, have not been disclosed as they cannot be determined reliably.  
Reconciliation to the consolidated statement of cash flows: 
£000
Cash consideration 2,600
Cash and cash equivalents acquired (1,602)
Net cash outflow arising on acquisition 998
16. Inventories 
 
2008
£000
2007
£000
Finished goods for resale 353 392
During the financial year, the Group’s write-down of inventories amounted to £nil (2007: £nil).  
The value of inventory consumed in cost of sales during the year amounted to £1,153,000 (2007: £156,000). 
17. Trade and other receivables  
 
2008
£000
2007
£000
Trade debtors 1,062 941
Amounts owed by related parties (note 28) 64 345
Other debtors 438 1,218
Prepayments and accrued income 587 503
 2,151 3,007
All the above fall due within one year. 
All trade and other receivables have been reviewed for indicators of impairment and a provision of £212,000 (2007: £158,000) has been 
recorded accordingly. 
The age of receivables past due but not impaired is as follows: 
 
2008
£000
2007
£000
Up to 30 days overdue 191 130
Over 30 days and up to 60 days overdue 52 18
Over 60 days and up to 90 days overdue 18 4
Over 90 days overdue 16 5
 277 157
  46 
Notes to the consolidated financial statements continued 
 
18. Cash and cash equivalents 
 
2008 
£000 
2007
£000
Cash at bank and in hand 1,058 322
19. Trade and other payables  
 
2008 
£000 
2007
£000
Amounts falling due within one year:  
Trade payables  1,793 1,066
Amounts owed to related parties (note 28) 89 70
Other taxes and social security payable 244 148
Accruals and deferred income 1,588 709
Other payables  731 670
Deferred and contingent consideration  150 1,227
 4,595 3,890
Amounts falling due after one year:  
Deferred and contingent consideration 432 –
 432 –
20. Borrowings 
 
2008 
£000 
2007
£000
Unsecured borrowing at amortised cost  
Bank loans 1,747 –
Director’s loan 100 –
Loan notes – Other 248 –
Loan notes – Penta 770 595
Other loans – Penta 5,566 4,037
Debt component of redeemable preference shares (note 23)  5,629 4,100
 14,060 8,732
Total borrowings  
Amounts due for settlement within 12 months 457 4,037
Amounts due for settlement after 12 months 13,603 4,695
Bank loans comprise a term loan from Clydesdale Bank plc of £1,912,500 (2007: £nil) repayable quarterly in June, September, December and 
March. As at 30 April 2008, the amount outstanding comprises 19 payments of £37,500 and 20 payments of £60,000, with the final payments 
due on 31 December 2012 and 31 March 2013 respectively. The Group also has a £250,000 overdraft facility repayable on demand. The loans 
and overdraft carry interest charged at approximately 2.75% above the Clydesdale Bank base rate. 
Other loan notes comprise an interest free loan note of £300,000 issued to the vendors of WN1 Limited, repayable on 1 May 2009 which has 
been discounted to £248,000.  
The Director’s loan of £100,000 is from AJ Vose and has no fixed repayment date. Interest accrues at 10% per annum until 16 January 2008, 
at 15% per annum from 17 January 2008 until 16 April 2008, at 25% per annum from 17 April 2008 until 16 October 2008 and at 40% 
thereafter. The loan was repaid in full on 1 May 2008.   47 
 
 
20. Borrowings continued 
Penta loans comprise unsecured facilities of £5,566,000 (2007: £4,057,000) from Penta Fund 1 Limited Partnership which are repayable  
on demand. The loans of £5,566,000 (2007: £1,900,000) carry the right of conversion into the Company’s ordinary shares. These have been 
classified as compound financial instruments.  
The Penta loan notes are unsecured, interest free and are repayable at any time at the Company’s option. The holder of the loan notes,  
Penta Capital Partners Limited waived its entitlement to interest from 1 May 2005 and was granted a redemption premium of 35%.  
Currently, the terms of the redeemable preference shares are as follows: 
The redeemable preference shares are redeemable at any time at the option of the Company. 
The redeemable preference shares do not entitle the holders to any dividend but whilst they are in issue the holders of ordinary 1p shares  
will not be entitled to receive any dividends or other distributions. On a return of capital, redeemable preference shareholders will be repaid  
the nominal capital paid up on the redeemable preference shares together with an amount equal to the amount of any redemption fee then 
outstanding in priority to any repayment to the ordinary shareholders. Holders of redeemable preference shares have the right to receive  
notice of all general meetings, but only to attend, speak and vote if a resolution is proposed, inter alia, for the winding up or reduction of  
capital of the Company or varying their rights or privileges as holders of redeemable preference shares or certain other matters to be proposed 
by the Company. 
The redeemable preference shares are convertible into ordinary 1p shares of the Company as to the first £1 million of nominal value at 2p per 
ordinary share and in respect of all subsequent conversions at a rate being the lower of (a) a 10% discount to the prevailing market price on the 
last business day prior to conversion and (b) the price at which the last subscribers for ordinary shares had subscribed, in both cases subject  
to a minimum price of 3p per ordinary share. The holders of the redeemable preference shares are entitled to receive a redemption fee of 25% 
of the principal amount outstanding on the redeemable preference shares at the time of redemption or conversion. 
The Company’s Articles of Association include various provisions to allow for re-classification or subdivision in order to facilitate the  
conversion process. 
21. Obligations under finance leases 
 
2008
£000
2007
£000
Amounts payable under finance leases: 
Within one year 94 67
In the second to fifth years (inclusive)  63 130
 157 197
Less: future finance charges (18) (20)
 139 177
Disclosed as: 
Current liabilities 84 60
Non-current liabilities 55 117
 139 177
The fair value of the Group’s lease obligations approximates to their carrying value. 
The Group’s obligations under finance leases are secured by the lessors’ rights over the leased assets disclosed in note 13.  48 
Notes to the consolidated financial statements continued 
 
22. Deferred taxation 
 
2008 
£000 
2007
£000
Liability at 1 May 1,091 18
Acquisitions 450 1,167
Credit for the year (229) (94)
Liability as at 30 April  1,312 1,091
 
Included in:  
Non-current liabilities 1,312 1,091
The rate at which deferred tax is expected to unwind is 28% (2007: 30%) and this rate has been used to calculate the deferred tax assets  
and liabilities. 
The deferred tax liability comprises the following: 
As at 
1 May 2007
£000
(Credited)/ 
charged 
to income 
£000 
Acquisitions 
£000 
As at 
30 April 2008
£000
Intangible assets 1,074 (294) 450 1,230
Capital allowances exceeding depreciation 17 65 – 82
 1,091 (229) 450 1,312
Deferred tax assets have been recognised in respect of temporary differences to the extent that it is probable that these assets will be 
recovered. In addition to the above, the Group has a potential deferred tax asset which has not been recognised in the financial statements  
of £1,773,000 (2007: £806,000) in respect of tax losses.  49 
 
 
23. Share capital 
The ordinary share capital of the Company consists only of shares of par value of 1p each. All ordinary shares are equally eligible to receive 
dividends and represent one vote at the shareholder meetings of the Company. 
The preference share capital of the Company consists only of redeemable preference shares with a par value of £1 each. 1 million of the 
preference shares are convertible, together with a redemption premium of 25 percent., into ordinary shares at a price of 2p per ordinary share. 
3.1 million of the preference shares are convertible, together with a redemption premium of 25 percent., into ordinary shares at a price which  
is the lower of (i) a price 10 percent. below the middle market price of an ordinary share at the date of conversion; and (ii) the price at which  
the last subscribers for ordinary shares had subscribed (subject in each case to a minimum price of 3p per ordinary share). 
The terms attaching to the preference shares have been amended since the financial year end (see note 29). 
The authorised share capital of the Company was increased by the creation of 500,000,000 new ordinary 1p shares as a result of a resolution 
passed by the shareholders at an Extraordinary General Meeting held on 27 June 2007. 
Ordinary shares 
2008
Number
2008 
£000 
2007
Number
2007
£000
Authorised:  
Ordinary shares of 1p each 1,500,000,000 15,000 1,000,000,000 10,000
Allotted, called up and fully paid:  
Shares classified as equity  
Ordinary shares of 1p each  316,233,646 3,162 316,233,646 3,162
Preference shares 
The terms of the preference shares give to the holder (Penta Capital) rights of conversion to ordinary shares as described above. In accordance 
with IAS 32 the preference shares are considered to be a compound instrument consisting of both a debt component and an equity 
component, which is analysed below: 
 
2008
Number
2007
Number
Authorised, allotted, called up and fully paid: 
Redeemable preference shares of £1 each 4,100,000 4,100,000
    
 
2008
£000
2007
£000
Principal 4,100 4,100
Loss arising on modification of terms 2,521 –
Change in fair value of embedded derivative (659) –
 5,962 4,100
Presented as: 
Debt 5,629 4,100
Equity (other reserves) 333 –
 5,962 4,100
  50 
Notes to the consolidated financial statements continued 
 
24. Financial instruments 
24.1 Capital management policies and procedures 
The Group manages its capital with the objective of ensuring that entities within the Group will be able to continue as going concerns while 
seeking to improve the return to stakeholders through the management of the debt and equity balance. 
As a result of the significant level of loans and other financial instruments outstanding in favour of the Penta Funds, the continuing co-operation 
and support of Penta is critical to the flexibility and scope with which the Group is able to manage its capital. 
During the year the Company reached an agreement with the Penta Funds, subject to shareholder approval at an EGM, for the granting  
of conversion rights over all indebtedness including the waiver of interest charges from 1 November 2007. The subsequent approval at the 
EGM on 22 May 2008 resulted in conversion of £2,611,000 of preference shares into 237 million ordinary shares which was the maximum 
allowed under the agreement. See note 29 – Post balance sheet events for fuller details.  
During the year the Company secured a debt facility with Clydesdale Bank plc. The Group has complied with all covenants governing its loans 
from Clydesdale Bank plc throughout the year and expects to continue to do so.  
The Directors consider that the borrowings payable to Penta do not represent debt for the purposes of calculating gearing and so no gearing 
ratios have been disclosed. 
24.2 Significant accounting policies 
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement, and the 
basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are 
disclosed in note 2 to the financial statements. 
24.3 Categories of financial instruments 
The IAS 39 categories of financial asset included in the balance sheet and the headings in which they are included are as follows: 
 
2008 
£000 
2007
£000
Loans and other receivables (including cash and cash equivalents) 2,622 2,826
The IAS 39 categories of financial liabilities included in the balance sheet and the headings in which they are included are as follows: 
 
2008 
£000 
2007
£000
Other financial liabilities  
Trade and other payables 5,027 3,890
Borrowings 14,060 8,732
  51 
 
 
24. Financial instruments continued 
24.4 Interest rate and liquidity risk management 
The Group is exposed to interest rate risk as it borrows funds at both fixed and variable rates. Details are provided in note 20 to these  
financial statements. 
The following tables detail the Group’s remaining contractual maturity for its financial liabilities. The tables have been drawn up on the 
undiscounted cash flows of financial liabilities based upon the earliest date on which the Group can be required to pay, which may differ  
from the carrying value of the liabilities at the balance sheet date. The tables include both interest and principal cash flows. 
At 30 April 2008, the Group’s liabilities have contractual maturities which are summarised below: 
Within  
6 months 
£000  
6 to 12 months
£000
1 to 5 years
£000
Trade payables 1,421  372 –
Amounts owed to related parties 89  – –
Accruals and deferred income 1,476  112 –
Deferred and contingent consideration 150  – 550
Bank loans 178  179 1,390
Directors’ loan 100  – –
Loan notes – other –  – 300
Finance leases 47  47 63
 3,461  710 2,303
This compares to the maturity of the Group’s financial liabilities in the previous reporting period as follows: 
 
Within  
6 months 
£000 
6 to 12 months
£000
1 to 5 years
£000
Trade payables 1,058 8 –
Amounts owed to related parties 70 – –
Accruals and deferred income 647 62 –
Deferred and contingent consideration 727 500 –
Bank loans – – –
Directors’ loan – – –
Loan notes – other – – –
Finance leases 34 34 129
 2,536 604 129
The Directors do not consider that any of the Penta loan notes, the Penta loans or the redeemable preference shares (together ‘the Penta 
borrowings’) will result in any cash outflows but they will be converted into ordinary shares of the Company. No interest arises on any  
of the Penta borrowings. Hence no cash flows have been included in the above maturity analysis in respect of the Penta borrowings.  52 
Notes to the consolidated financial statements continued 
 
24. Financial instruments continued 
24.5 Interest rate sensitivity analysis 
The Group’s variable rate borrowings at 30 April 2008 were £1,747,000 (2007: £nil).  
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments  
at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the balance sheet 
date was outstanding for the whole of the year. 
If interest rates had been 50 basis points higher/lower and all other variables remained constant, the Group’s loss for the year ended  
30 April 2008 would decrease/increase by £9,000 (2007 – £nil). 
24.6 Foreign currency risk management 
The Group does not have any foreign currency denominated trade receivables or payables and is therefore not subject to any significant  
level of foreign exchange rate risk. 
24.7 Credit risk management 
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The principal 
credit risk arises from the Group’s trade receivables. The trade receivables balance included 3 (2007 – 4) customers who represented more 
than 5% of the total balance. In order to manage to credit risk, the Directors set limits for customers based upon a combination of payment 
history, third party credit references and an independent rating agency. The Group’s exposure and the credit rating of its counterparties are 
continuously monitored.  
Ongoing evaluation is performed on the financial condition of the accounts receivable. 
24.8 Fair value of financial instruments 
The fair value of financial assets and liabilities are determined as follows: 
– the fair value of financial assets and liabilities (excluding derivative instruments) is determined in accordance with generally accepted  
pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes  
for similar instruments. 
– the fair value of optional derivative instruments is calculated using option pricing models. 
The fair value of the Group’s financial assets and liabilities are not materially different from the amount at which they are recorded in the  
financial statements.  
25. Leasing commitments  
At 30 April 2008, the Group had commitments under non-cancellable operating leases as set out below: 
 
2008 
£000 
2007
£000
Land and buildings:   
Within one year 175 144
Between two and five years 727 320
 902 464
Other assets:  
Within one year 20 42
Between two and five years 13 10
 33 52
 935 516
26. Capital commitments 
Outstanding capital commitments at 30 April 2008 were £nil (2007: £nil).  53 
 
 
27. Share-based payments 
The Group’s equity-settled share-based payments comprise the grant of nil-cost options granted under the Group’s Share Option Scheme, 
EMI Share Option Scheme and individual Share Option Agreements. Details of the share options subject to equity-settled share-based 
payments are set out below. In accordance with IFRS 2, the Group has recognised an expense to the income statement for the year ended  
30 April 2008 representing the fair value of outstanding equity-settled share-based payment awards to employees which have not vested  
as at 1 May 2006. 
Those fair values will be charged to the income statement over the relevant vesting period adjusted to reflect actual and expected vesting levels. 
The Group has calculated the fair market value of the nil-cost options as being based on the market value of a Company share at the date of 
grant adjusted to reflect the fact that an employee is not entitled to receive dividends over the relevant holding period. 
The estimated fair value of options which fall under the IFRS 2 accounting charge and inputs used in the Black-Scholes model to calculate 
those fair values are as follows: 
Date of grant 
Number  
granted 
Share price on 
grant date  
£ 
Exercise
price
£
Fair value
on grant date
£
Vesting
period
Years
Expected 
life 
Years 
Lapse rate 
% 
Risk free rate
% Volatility
7 Jul 05 171,429 0.118 0.110.07957 1 4.75 30 4.75 80.55
7 Jul 05 171,429 0.118 0.110.07957 2 4.75 30 4.75 80.55
7 Jul 05 171,429 0.118 0.110.07957 3 4.75 30 4.75 80.55
30 Aug 05 1,190,476 0.0688 0.07 0.05 1 4.667 22 4.50 87.66
30 Aug 05 1,190,476 0.0688 0.07 0.05 2 4.667 45 4.50 87.66
30 Aug 05 1,190,476 0.0688 0.07 0.05 3 4.667 70 4.50 87.66
21 Jul 06 1,700,000 0.032 0.05 0.01 1 3.75 30 4.50 74.49
21 Jul 06 1,700,000 0.032 0.05 0.01 2 3.75 35 4.50 74.49
21 Jul 06 4,900,000 0.032 0.05 0.01 1 3.75 20 4.50 74.49
21 Jul 06 4,900,000 0.032 0.05 0.01 2 3.75 40 4.50 74.49
25 Jul 06 200,000 0.032 0.05 0.01 1 3.75 30 4.50 74.33
25 Jul 06 200,000 0.032 0.05 0.01 2 3.75 50 4.50 74.33
27 Jul 06 1,000,000 0.032 0.05 0.01 2 3.75 75 4.50 73.53
31 Jan 07 666,666 0.0238 0.03 0.01 1 3.25 20 5.25 73.64
31 Jan 07 666,667 0.0238 0.03 0.01 2 3.25 40 5.25 73.64
31 Jan 07 1,500,000 0.0238 0.03 0.01 1 3.25 20 5.25 73.64
31 Jan 07 1,500,000 0.0238 0.03 0.01 2 3.25 40 5.25 73.64
31 Jan 07 5,926,666 0.0238 0.03 0.01 1 3.25 18 5.25 73.64
31 Jan 07 5,926,666 0.0238 0.03 0.01 2 3.25 18 5.25 73.64
29 Mar 07 1,691,666 0.0213 0.03 0.01 1 3.083 20 5.25 71.07
29 Mar 07 1,691,666 0.0213 0.03 0.01 2 3.083 40 5.25 71.07
9 May 07 9,411,765 0.0213 0.02125 0.01 1 3.00 0 5.25 70.36
9 May 07 23,529,412 0.0213 0.02125 0.01 2 3.00 0 5.25 70.36
10 Jul 07 166,666 0.0188 0.03 0.01 1 3.00 20 5.75 65.44
10 Jul 07 166.667 0.0188 0.03 0.01 2 3.00 40 5.75 65.44
3 Apr 08 14,000,000 0.007 0.0125 0.008 1 3.00 20 5.25 105.20
3 Apr 08 14,000,000 0.007 0.0125 0.008 2 3.00 40 5.25 105.20
Expected dividend yield 
The expected dividend yield used in the model is nil. 
Expected volatility 
The volatility of the Company’s share price on each grant was calculated as the average of annualised standard deviation of daily continuously 
compounded returns on the Company’s stock, calculated one year back from the date of the grant, where applicable.  54 
Notes to the consolidated financial statements continued 
 
27. Share-based payments continued 
Risk free rate 
The risk free rate is the Bank of England base lending rate on the date of grant. 
Expected life 
The expected life used in the model is the average expected period to exercise and has been adjusted, based on management’s best estimate, 
for the effects of non-transferability, exercise restrictions and behavioural considerations. 
The following is a summary of the Company’s share options in issue during the financial year: 
2008 2008 2007 2007
Number 
of shares 
under option
Weighted 
average  
exercise price  
Pence 
Number  
of shares  
under option 
Weighted 
average
exercise price 
Pence
Outstanding at 1 May 2007 35,999,645 4.08 6,411,553 7.89
Granted during the year 61,274,510 1.73 35,016,665 3.89
Forfeited during the year (8,816,665) 3.54 (800,002) 11.00
Lapsed during the year (6,140,475) 4.27 (4,628,571) 6.70
Outstanding at 30 April 2008 82,317,015 2.37 35,999,645 4.08
Exercisable at 30 April 2008 11,135,365 4.30 1,902,028 5.55
28. Related party transactions 
Other related party transactions 
The Company’s related parties include its Directors and companies controlled by or associated with its Directors, as disclosed below. 
Transactions with Directors and related parties in respect of their services as Directors are disclosed in the Directors’ Remuneration Report  
on pages 18 to 20. 
Other related party transactions during the year were as follows: 
1) Penta Capital Partners Limited, through its managed funds Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership  
(the “Penta Funds”) is the holder of 49.99% of the Company’s issued ordinary 1p shares and all of the Company’s issued redeemable 
preference shares. Steven Scott, a Director of the Company is also a Director of Penta Capital Partners Limited. During the year, the Penta 
Funds advanced loan facilities to the Company, details of which are described in note 20. Loan notes, all of which are outstanding to the 
Penta Funds, are described in note 20. Penta Fund 1 Limited Partnership holds options over 100,000 ordinary shares of the Company at  
an exercise price of 7.25p per ordinary 1p share. Fees paid to Penta Capital Partners Limited in respect of Steven Scott’s services as a 
Director of the Company are detailed in the Directors’ Remuneration Report on pages 18 to 20. The Company also paid loan arrangement 
fees of £47,500 to Penta Capital Partners Limited during the year. At 30 April 2008, the outstanding balance within creditors in respect of 
these fees was £89,000 (2007: £70,000). 
2) The Company had outstanding at 30 April 200 pre-paid rents and rent deposits totalling £64,000 (2007: £345,000) with Anthony J Vose 
Properties, an enterprise of which A J Vose, a Director of the Company, is the proprietor. Rents paid to Anthony J Vose Properties during 
the year amounted to £59,000 (2007: £16,000). AJ Vose advanced an unsecured loan to the Company during the year. The amount of  
the loan outstanding within creditors at 30 April 2008 was £100,000. Interest of £8,000 was charged on the loan during the financial year. 
Transactions with key management personnel 
Key management personnel remuneration includes the following expenses: 
 
2008 
£000 
2007
£000
Short term employee benefits  
Salaries, bonuses and commissions 171 30
Social security costs 16 3
 187 33
Share based payments 3 1
 190 34
  55 
 
 
29. Post balance sheet events 
On 22 May 2008, the Company’s shareholders in an Extraordinary General Meeting approved the grant by the Panel on Takeovers and 
Mergers of a waiver in favour of Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership (the “Penta Funds”) of any 
obligation on them to make a mandatory offer for the Company in the event that they implement conversion rights attaching to loan instruments 
held by them which could result in them holding up to an aggregate of 49.99% of the Company’s issued ordinary share capital. The conversion 
rights over facilities outstanding to the Penta Funds following the shareholder approval can be summarised as follows: 
– of the £11,017,000 of outstanding indebtedness at 31 October 2007, such of the indebtedness as shall be required to be converted in order 
for the Penta Funds to hold 49.99% of the shares carrying voting rights shall be convertible at 1.1p per ordinary share 
– thereafter, any remaining indebtedness shall be convertible at a price per share which is the higher of (i) the then most recent placing  
price of ordinary shares and (ii) 1.5p per ordinary share. However, the Penta Funds have undertaken to limit their rights to convert into 
ordinary shares so that after any subsequent conversion their aggregate holdings of ordinary shares shall be less than 50% of the issued 
ordinary shares. 
On 22 May 2008, the Penta Funds converted 2,611,467 preference shares into 237,406,046 ordinary shares, as a result of which the  
Penta Funds held 49.99% of the issued shares carrying voting rights. 
As a result of the shareholder approval mentioned above, the Penta Funds agreed to waive interest and redemption premiums on the 
outstanding indebtedness of £11,017,000 accruing after 1 November 2008. Accrued interest of £473,000 charged to the profit and loss 
account in 2007/08 will consequently be written back in the consolidated financial statements for the year ended 30 April 2009. 
With effect from 1 May 2010, any outstanding indebtedness subject to the agreement with the Penta Funds will accrue interest in respect  
of any month at the rate of 8 per cent per annum if, for that month, the average closing mid-market price of the ordinary shares is below 1.5p.  
If the average closing mid-market price of the ordinary shares is above 1.5p for that month, the Company shall have no liability for interest. 
30. Explanation of transition to IFRS  
As stated in note 1, these are the Group’s first consolidated annual financial statements that have been prepared under IFRS. An explanation  
of how the transition from UK GAAP to IFRS has affected the Group’s financial position and financial performance is set out below. 
Reconciliation of loss for the year ended 30 April 2007 
 
UK GAAP
£000
(a)
£000
(b) 
£000 
(c) 
£000 
(d)
£000
IFRS
£000
Continuing operations   
Revenue 13,649–– – –13,649
Cost of sales  (11,613) – – – – (11,613)
Gross profit  2,036 – – – – 2,036
Administrative expenses (4,432)–177 (248) –(4,503)
Operating loss (2,396) – 177 (248) – (2,467)
Share of operating loss of joint venture (25) – – – 25 –
Finance costs (589) – – – – (589)
Loss before taxation (3,010) – 177 (248) 25 (3,056)
Tax credit 21 – – 74 – 95
Loss for the financial year (2,989) – 177 (174) 25 (2,961)
  56 
Notes to the consolidated financial statements continued 
 
30. Explanation of transition to IFRS continued  
Reconciliation of equity at 30 April 2007 
 
UK GAAP
£000
(a)
£000
(b)
£000
(c) 
£000 
(d) 
£000 
IFRS
£000
Assets   
Non-current assets   
Goodwill 4,859(2,679)177– – 2,357
Other intangible assets – 3,827 – (248) – 3,579
Property, plant and equipment 408 – – – – 408
 5,2671,148177(248) – 6,344
Current assets   
Inventories 392––– – 392
Trade and other receivables 3,007 – – – – 3,007
Cash and cash equivalents 322 – – – – 322
 3,721––– – 3,721
Total assets  8,988 1,148 177 (248) – 10,065
Current liabilities   
Trade and other payables  (3,931) – – – 41 (3,890)
Borrowings (4,097)––– – (4,097)
Current tax payable (236) – – – – (236)
 (8,264)––– 41 (8,223)
Non-current liabilities   
Borrowings  (4,812) – – – – (4,812)
Deferred tax liabilities  (17) (1,148) – 74 – (1,091)
 (4,829)(1,148)–74 – (5,903)
Total liabilities  (13,093) (1,148) – 74 41 (14,126)
Net liabilities (4,105) – 177 (174) 41 (4,061)
Equity    
Capital and reserves    
Share capital  3,162 – – – – 3,162
Additional paid in capital  4,550 – – – – 4,550
Reverse acquisition reserve (5,763) – – – – (5,763)
Other reserves  97 – – – – 97
Retained losses (6,151) – 177 (174) 41 (6,107)
Total equity (4,105) – 177 (174) 41 (4,061)
  57 
 
 
30. Explanation of transition to IFRS continued  
Reconciliation of equity at 30 April 2006 
 
UK GAAP 
£000 
(d)
£000
IFRS
£000
Assets  
Non-current assets  
Goodwill 33 – 33
Property, plant and equipment 864 – 864
 897 – 897
Current assets  
Trade and other receivables 1,016 – 1,016
Cash and cash equivalents 98 – 98
 1,114 – 1,114
Total assets  2,011 – 2,011
Current liabilities  
Trade and other payables  (1,469) 16 (1,453)
Borrowings (450) – (450)
 (1,919) 16 (1,903)
Non-current liabilities  
Borrowings  (4,694) – (4,694)
Deferred tax (18) – (18)
 (4,712) – (4,712)
Total liabilities  (6,631) 16 (6,615)
Net liabilities (4,620) 16 (4,604)
Equity   
Capital and reserves   
Share capital  1,654 – 1,654
Additional paid in capital  2,850 – 2,850
Reverse acquisition reserve (5,763) – (5,763)
Other reserves  15 – 15
Retained losses (3,376) 16 (3,360)
Total equity (4,620) 16 (4,604)
  58 
Notes to the consolidated financial statements continued 
 
30. Explanation of transition to IFRS continued  
Notes to the reconciliations: 
(a) The Group acquired CallPlan Limited (renamed SpiriTel CallPlan Limited) on 11 September 2006. Application of IFRS 3 to this business 
combination resulted in the identification of a number of intangible assets other than goodwill, including customer relationships and a 
marketing contract. Under IFRS, these have been recognised separately in the balance sheet at their fair value at the date of combination. 
Under UK GAAP, these intangible assets were included within goodwill. The result of this adjustment is to decrease goodwill and increase 
intangible assets by £559,000 at the date of combination. 
 The Group acquired Networks Direct (UK) Limited (renamed SpiriTel Networks Limited) on 13 October 2006. Application of IFRS 3 to this 
business combination resulted in the identification of a number of intangible assets other than goodwill, including customer relationships. 
Under IFRS, these have been recognised separately in the balance sheet at their fair value at the date of combination. Under UK GAAP, 
these intangible assets were included within goodwill. The result of this adjustment is to decrease goodwill and increase intangible assets  
by £1,072,000 at the date of combination. 
 The Group acquired Ashland Group Limited (renamed SpiriTel IP Communications Limited) on 2 March 2007. Application of IFRS 3 to this 
business combination resulted in the identification of a number of intangible assets other than goodwill, including customer lists. Under IFRS 
these have been recognised separately in the balance sheet at their fair value at the date of combination. 
 Under UK GAAP these intangible assets were included within goodwill. The result of this adjustment is to decrease goodwill and increase 
intangible assets by £2,196,000 at the date of combination. 
 At 30 April 2007 the value of intangible assets was increased by £3,827,000. 
(b) Goodwill recognised by the Group on the acquisitions of CallPlan Limited, Networks Direct (UK) Limited and Ashland Group Limited under 
UK GAAP was amortised over a period of 10 years. Under IFRS goodwill is not amortised but is tested annually for impairment. Under UK 
GAAP, a goodwill amortisation charge of £219,000 was recorded in the year ended 30 April 2007 together with a goodwill impairment 
charge of £227,000. Goodwill amortisation of £177,000 has been written back and the goodwill impairment charge subsequently increased 
by £42,000. 
(c) In accordance with IFRS 3 as described above, intangible assets, other than goodwill, identified on these business combinations, are 
amortised in accordance with the accounting policy explained in note 2. The result of these adjustments is to increase the amortisation 
charge in the income statement for the year ended 30 April 2007 by £248,000 and decrease the carrying value of those intangible assets  
by the same amount. 
(d) Under UK GAAP the Group continued to recognise its share of the losses of its joint venture undertaking, MyPhone (UK) Limited, when  
its share of the losses exceeded its interest in the joint venture. Under IFRS, the Group does not continue to recognise further losses unless  
it has incurred obligations on behalf of the joint venture. Since there are no such obligations, the Group’s share of the net liabilities of the  
joint venture have been restated to zero, and the Group’s share of the loss of the joint venture recognised in the profit and loss account  
has been reversed.  59 
Company balance sheet 
  
 Note 
2008
£000
2007
£000
Fixed assets   
Tangible assets 5 14 2
Investments  6 19,683 14,903
  19,697 14,905
Current assets   
Debtors  7 2,328 3,132
Cash at bank and in hand  – 9
  2,328 3,141
Creditors: amounts falling due within one year 8 (3,941) (5,951)
Net current liabilities  (1,613) (2,810)
Total assets less current liabilities  18,084 12,095
Creditors: amounts falling due after more than one year 9 (14,693) (4,695)
Net assets  3,391 7,400
   
Capital and reserves   
Called up share capital 11 3,162 3,162
Additional paid in capital 12 4,550 4,550
Other reserves 12 565 97
Profit and loss account  12 (4,886) (409)
Shareholders’ funds 14 3,391 7,400
These financial statements were approved by the Board of Directors on 3 August 2008 and signed on its behalf by: 
A R Mills   R W Smith 
Chief Executive Officer Chief Financial Officer 
 
 
 
The notes on  pages 60 to 69 are an integral part of these financial statements. 60 
Notes to the Company financial statements 
1. Accounting policies 
Basis of preparation 
The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom  
accounting standards. 
Share-based payments 
Equity-settled share-based payment  
The Company issues equity-settled benefits to certain Directors and employees. All share-based payment arrangements granted after 7 July 
2005 that had not vested prior to 1 May 2006 are recognised in the financial statements. Where employees are rewarded using share-based 
payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the instrument granted to the 
employee. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions. All equity-settled  
share-based payments are ultimately recognised as an expense in the profit and loss account with a corresponding credit to other reserves. 
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available 
estimate of the number of share options expected to vest. Estimates are revised subsequently if there is any indication that the number of  
share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period.  
No adjustment is made to any expense recognised in prior periods if share options that have vested are not exercised. 
Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate 
additional paid in capital. 
Tangible fixed assets and depreciation 
Tangible fixed assets are included at cost, less accumulated depreciation and any provision for impairment. Depreciation is provided on tangible 
fixed assets, excluding land, on a straight line basis to write off their historical cost, less estimated residual value, over their estimated useful 
economic lives as follows: 
Leasehold improvements  – over the period of the lease 
Office and computer equipment – 10% or 33% straight line 
Investments 
Investments are included at cost less provisions for impairment. 
Leased assets 
Finance leases and hire purchase agreements 
Where the Company enters into a lease that transfers substantially all the risks and rewards of ownership of an asset to the lessee, the lease  
is treated as a finance lease. The asset is recorded in the balance sheet as a tangible fixed asset at the present value of the minimum lease 
payments and is depreciated over the shorter of the lease term and the asset’s useful economic life. Future instalments under such leases,  
net of finance charges, are included in creditors. Rentals payable are apportioned between the finance element, which is charged to the profit 
and loss account at a constant rate of charge on the balance of capital repayments outstanding, and the capital element, which reduces the 
outstanding obligation. 
Operating lease agreements 
Leases where substantially all of the risks and rewards of ownership are not transferred to the Company are treated as operating leases.  
Rentals under operating leases are charged against profits on a straight-line basis over the period of the lease.  61 
 
 
1.  Accounting policies continued 
Current tax 
The current tax charge is based on the profit or loss for the year and is measured at the amounts expected to be paid based on the tax rates 
and laws substantively enacted by the balance sheet date. Current and deferred tax is recognised in the profit and loss account for the period 
except to the extent that it is attributable to a gain or loss that is or has been recognised directly in the statement of total recognised gains  
and losses. 
Deferred tax 
Deferred tax is recognised on all timing differences where the transactions or events that give the Company an obligation to pay more tax in  
the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised when it is more 
likely than not that they will be recovered. Deferred tax is measured on an undiscounted basis using rates of tax that have been enacted or 
substantially enacted by the balance sheet date. 
Foreign currency 
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in 
foreign currencies are translated at the rate of exchange ruling at the balance sheet date. All exchange differences are dealt with through the 
profit and loss account. 
Contributions to pension schemes 
The Company contributes to the personal pension schemes of certain Directors and employees. The pension costs are charged against 
operating profit in the relevant accounting period.  
Financial instruments 
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are 
obligations to pay cash or other financial assets and are recognised when the Company becomes a party to the contractual provisions of the 
instrument. Financial liabilities categorised as at fair value through profit or loss are recorded initially at fair value and all transaction costs are 
recognised immediately in the profit and loss account. All other financial liabilities are recorded initially at fair value, net of direct issue costs. 
Financial liabilities categorised as at fair value through profit or loss are re-measured at each reporting date at fair value, with changes in fair value 
being recognised in the profit and loss account. All other financial liabilities are recorded at amortised cost using the effective interest method, 
with interest-related charges recognised as an expense in finance cost in the profit and loss account. Finance charges, including premiums 
payable on settlement or redemption and direct issue costs, are charged to the profit and loss account on an accruals basis using the effective 
interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. 
Classification as equity or financial liability 
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. 
A financial liability exists where there is a contractual obligation to deliver cash or another financial asset to another entity, or to exchange financial 
assets or financial liabilities under potentially unfavourable conditions. In addition, contracts which result in the entity delivering a variable number 
of its own equity instruments are financial liabilities. Shares containing such obligations are classified as financial liabilities. 
Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. The carrying amount of the liability  
is increased by the finance cost and reduced by payments made in respect of that liability.  
Finance costs are calculated so as to produce a constant rate of charge on the outstanding liability.  
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.  
Dividends and distributions relating to equity instruments are debited directly to reserves. 
Compound instruments 
Compound instruments comprise both a liability and an equity component. The elements of a compound instrument are classified in 
accordance with their contractual provisions. At the date of issue, the liability component is recorded at fair value, which is estimated using  
the prevailing market interest rate for a similar debt instrument without the equity feature. Thereafter, the liability component is accounted for  
as a financial liability in accordance with the accounting policy set out above. 
The residual is the equity component, which is accounted for as an equity instrument. 
Embedded derivatives 
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and 
characteristics are not closely related to those of the host contracts and the host contracts are not measured at their fair value with changes  
in fair value recognised in profit or loss. Embedded derivatives are recorded initially at fair value, net of issue costs.  62 
Notes to the Company financial statements continued 
 
2.  Employees 
The average number of employees of the Company (including Directors) was made up as follows: 
 
2008 
Number 
 2007
Number
Administration 5 5
Management 2 2
 7 7
 
 
2008 
£000 
2007
£000
Staff costs (including Directors) amounted to:  
Wages and salaries 546 563
Social security costs 59 11
Share based payments 150 27
 755 601
The total number of employees (including Directors) at 30 April 2008 was 8 (2007: 6). 
3.  Directors’ remuneration 
Remuneration in respect of the Directors was as follows: 
 
2008 
£000 
 2007
£000
Emoluments and benefits in kind 617 309
Compensation for loss of office 13 129
 630 438
Remuneration in respect of the highest paid Director was £245,000 (2007: £172,000). Further details of Directors’ remuneration are given in the 
Directors’ Remuneration Report on pages 18 to 20. 
4.  Loss attributable to the Company 
The loss for the financial year of the Company was £4,532,000 (2007: £635,000). 
In accordance with Section 230(4) of the Companies Act 1985, the Company is exempt from the requirements to present its own profit and  
loss account.  63 
 
 
5.  Tangible fixed assets 
 
Leasehold 
Improvements 
£000 
Office and
computer
equipment
£000
Total
£000
Cost    
At 1 May 2007 – 5 5
Additions 11 4 15
At 30 April 2008 11 9 20
Depreciation  
At 1 May 2007 – 3 3
Charge for the year 1 2 3
At 30 April 2008 1 5 6
Net book value at 30 April 2008 10 4 14
Net book value at 30 April 2007 – 2 2
6.  Fixed asset investments  
 
Subsidiary
undertakings
£000
Cost  
At 1 May 2007 15,020
Additions 4,780
At 30 April 2008 19,800
Amounts written off 
At 1 May 2007 and 30 April 2008 117
Net book value at 30 April 2008 19,683
Net book value at 30 April 2007 14,903
The additions in the year relate principally to the purchase of the whole of the issued share capital of tdotcom Limited (£263,000) and WN1 
Limited (£3,167,000) and additional consideration in respect of Expo Communications Limited (formerly Ashland Group Limited) (£1,350,000). 
Further detail concerning these acquisitions is given in the consolidated financial statements at pages 43 to 45.  64 
Notes to the Company financial statements continued 
 
6.  Fixed asset investments continued 
At 30 April 2008, the Company had interests in the following subsidiary companies, all of which are registered in England and Wales: 
Name of subsidiary Trading activity 
Class of share 
capital held 
Holding
%
SpiriTel Technologies Limited Provision of telecommunication services Ordinary 100
SpiriTel Managed Services Limited Provision of telecommunication services Ordinary 100
Expo Communications Limited Intermediate holding company Ordinary 100
SpiriTel IP Communications Limited**  Provision of telecommunications services Ordinary 100
SpiriTel IP Communications (London) Limited Provision of telecommunication services Ordinary 100
SpiriTel Networks Limited Provision of telecommunication services Ordinary 100
SpiriTel CallPlan Limited Provision of telecommunication services Ordinary 100
SpiriTel Business Limited  Dormant Ordinary 100
WN1 Limited Provision of telecommunication services Ordinary 100
**The holding in Spiritel IP Communications Limited is indirect, through Expo Communications Limited, an intermediate holding company. 
7.  Debtors 
 
2008 
£000 
2007
£000
Amounts owed by subsidiary undertakings 2,157 3,031
Other debtors 57 41
Prepayments and accrued income 114 60
 2,328 3,132
All the above fall due within one year. 
8.  Creditors: amounts falling due within one year 
 
2008 
£000 
2007
£000
Bank loans (see note 10) 357 –
Overdrafts (see note 10) 135 –
Director’s loan 100 –
Other loans – Penta – 4,037
Trade creditors 409 389
Amounts owed to subsidiary undertakings 2,372 62
Accruals and deferred income 405 118
Deferred and contingent consideration  150 1,227
Other creditors 13 118
 3,941 5,951
  65 
 
 
9.  Creditors: amounts falling due after more than one year 
 
2008
£000
2007
£000
Loan notes – Penta 770 595
Loan notes – other 248 –
Other loans – Penta 5,566 –
Redeemable preference shares 6,287 4,100
Bank loans 1,390 –
Deferred and contingent consideration 432 –
 14,693 4,695
The terms of all the borrowings noted above are detailed in note 20 to the consolidated financial statements.  
The Penta loans carry the right of conversion into the Company’s ordinary shares and have been classified as compound financial instruments  
in accordance with FRS 25. The carrying value of the debt component at 30 April 2008 is £5,566,000 and the value of the equity component  
is £nil. 
The treatment of the redeemable preference shares is detailed in note 11 to the Company financial statements.The creditors falling due after 
more than one year are repayable as follows: 
 
2008
£000
2007
£000
Between one and two years: 
– debt component of redeemable preference shares 6,287 4,100
– other loans (Penta) 5,566 –
– loan notes 1,018 595
– bank loans 357 –
– deferred and contingent consideration 432 –
 13,660 4,695
Between two and five years 
– bank loans 1,033 –
 14,693 4,695
10. Financial instruments 
The Company’s treasury policy is the achievement of the maximum rate of return on cash balances whilst maintaining an acceptable level  
of risk. Income and expenditure arising on financial instruments is recognised on the accruals basis and credited or charged to the profit and  
loss account in the financial period to which it relates. 
The fair values of the Company’s long-term debtors and creditors and preference shares have been reviewed by the Directors and, where 
appropriate, adjustments made to amend the historical cost so as to reflect the fair value as assessed. 
For the purposes of the following disclosures, short-term debtors and creditors have been excluded, as permitted by FRS 13.  
The bank loans bear interest at 2.75% above the Clydesdale Bank base rate. 
The bank loans and overdrafts are secured by debentures over all of the assets and undertaking of the Company and its subsidiaries, supported 
by cross guarantees between the Company and those subsidiaries. The Company participates with its subsidiaries in a Group overdraft facility 
of up to £250,000, of which £84,000 was available to the Group and undrawn at 30 April 2008. (2007: £nil). The Company has no other 
undrawn, committed borrowing facilities available to it at 30 April 2008 (2007: £nil) 
The Company’s other financial liabilities comprise of loan notes, redeemable preference shares and other loans.  66 
Notes to the Company financial statements continued 
 
11. Share capital 
Ordinary shares 
2008
Number
2008
£000
2007 
Number 
2007
£000
Authorised:  
Ordinary shares of 1p each 1,500,000,000 15,000 1,000,000,000 10,000
Allotted, called up and fully paid:  
Shares classified as equity  
Ordinary shares of 1p each  316,233,646 3,162 316,233,646 3,162
The authorised share capital of the Company was increased by the creation of 500,000,000 new ordinary 1p shares as a result of a resolution 
passed by the shareholders at an Extraordinary General Meeting held on 27 June 2007. 
Preference shares 
The terms of the preference shares give to the holder (Penta Capital) rights of conversion to ordinary shares as described in note 20 to the 
consolidated financial statements. In accordance with FRS 25 the preference shares are considered to be a compound instrument consisting  
of both a debt component and an equity component, which is analysed below: 
 
2008 
Number 
2007
Number
Redeemable preference shares of £1 each  
Principal 4,100,000 4,100,000
 
 
2008 
£000 
2007
£000
Principal 4,100 4,100
Loss arising on modification of terms 2,520 –
 6,620 4,100
Presented as:  
Debt 6,287 4,100
Equity (other reserves) 333 –
 6,620 4,100
12.  Reserves 
Company  
Additional paid in 
capital 
£000 
Other 
reserves 
£000 
Profit and
loss account
£000
At 1 May 2007 4,550 97 (409)
Retained loss for the year – – (4,532)
Credit for equity settled share based payments – 190 –
Equity component of compound financial instrument – 333 –
Transfer between reserves – (55) 55
At 30 April 2008 4,550 565 (4,886)
  67 
 
 
13.  Share-based payments 
The Company’s equity-settled share-based payments comprise the grant of nil-cost options granted under the Company’s Share Option 
Scheme, EMI Share Option Scheme and individual Share Option Agreements. Details of the share options subject to equity-settled share-based 
payments are set out below. In accordance with FRS 20, the Company has recognised an expense to the profit and loss account for the year 
ended 30 April 2008 representing the fair value of outstanding equity-settled share-based payment awards to employees which have not vested 
as at 1 May 2006. 
Those fair values will be charged to the profit and loss account over the relevant vesting period adjusted to reflect actual and expected vesting 
levels. The Company has calculated the fair market value of the nil-cost options as being based on the market value of a Company share at the 
date of grant adjusted to reflect the fact that an employee is not entitled to receive dividends over the relevant holding period. 
The estimated fair value of options which fall under the FRS 20 accounting charge and inputs used in the Black-Scholes model to calculate 
those fair values are as follows: 
Date of grant 
Number granted 
Share price on 
grant date  
£ 
Exercise
price
£
Fair value
on grant date
£
Vesting
period
Years
Expected 
life 
Years 
Lapse rate 
% 
Risk free rate
% Volatility
7 Jul 05 171,429 0.118 0.110.07957 1 4.75 33 4.75 80.55
7 Jul 05 171,429 0.118 0.110.07957 2 4.75 50 4.75 80.55
7 Jul 05 171,429 0.118 0.110.07957 3 4.75 75 4.75 80.55
30 Aug 05 1,190,476 0.0688 0.07 0.05 1 4.667 30 4.50 87.66
30 Aug 05 1,190,476 0.0688 0.07 0.05 2 4.667 50 4.50 87.66
30 Aug 05 1,190,476 0.0688 0.07 0.05 3 4.667 75 4.50 87.66
21 Jul 06 1,700,000 0.032 0.05 0.01 1 3.75 30 4.50 74.49
21 Jul 06 1,700,000 0.032 0.05 0.01 2 3.75 50 4.50 74.49
21 Jul 06 4,900,000 0.032 0.05 0.01 1 3.75 30 4.50 74.49
21 Jul 06 4,900,000 0.032 0.05 0.01 2 3.75 50 4.50 74.49
25 Jul 06 200,000 0.032 0.05 0.01 1 3.75 30 4.50 74.33
25 Jul 06 200,000 0.032 0.05 0.01 2 3.75 50 4.50 74.33
27 Jul 06 1,000,000 0.032 0.05 0.01 2 3.75 50 4.50 73.53
31 Jan 07 666,666 0.0238 0.03 0.01 1 3.25 20 5.25 73.64
31 Jan 07 666,667 0.0238 0.03 0.01 2 3.25 40 5.25 73.64
31 Jan 07 1,500,000 0.0238 0.03 0.01 1 3.25 20 5.25 73.64
31 Jan 07 1,500,000 0.0238 0.03 0.01 2 3.25 40 5.25 73.64
31 Jan 07 5,926,666 0.0238 0.03 0.01 1 3.25 20 5.25 73.64
31 Jan 07 5,926,666 0.0238 0.03 0.01 2 3.25 40 5.25 73.64
29 Mar 07 1,691,666 0.0213 0.03 0.01 1 3.083 20 5.25 71.07
29 Mar 07 1,691,666 0.0213 0.03 0.01 2 3.083 40 5.25 71.07
9 May 07 9,411,765 0.0213 0.02125 0.01 1 3.00 0 5.25 70.36
9 May 07 23,529,412 0.0213 0.02125 0.01 2 3.00 0 5.25 70.36
10 Jul 07 166,666 0.0188 0.03 0.01 1 3.00 20 5.75 65.44
10 Jul 07 166,667 0.0188 0.03 0.01 2 3.00 40 5.75 65.44
3 Apr 08 14,000,000 0.007 0.0125 0.008 1 3.00 20 5.25 105.20
3 Apr 08 14,000,000 0.007 0.0125 0.008 2 3.00 40 5.25 105.20
Expected dividend yield 
The expected dividend yield used in the model is nil. 
Expected volatility 
The volatility of the Company’s share price on each grant was calculated as the average of annualised standard deviation of daily continuously 
compounded returns on the Company’s stock, calculated one year back from the date of the grant, where applicable.  68 
Notes to the Company financial statements continued 
 
13.  Share-based payments continued 
Risk free rate 
The risk free rate is the Bank of England base lending rate on the date of grant. 
Expected life 
The expected life used in the model is the average expected period to exercise and has been adjusted, based on management’s best estimate, 
for the effects of non-transferability, exercise restrictions and behavioural considerations. 
The following is a summary of the Company’s share options in issue during the financial year: 
2008 2008 2007 2007
Number of 
shares under 
option
Weighted 
average 
exercise price 
Pence 
Number of  
shares under  
option 
Weighted
average
exercise price
Pence
Outstanding at 1 May 2007 35,999,645 4.08 6,411,553 7.89
Granted during the year 61,274,510 1.73 35,016,665 3.89
Forfeited during the year (8,816,665) 3.54 (800,002) 11.00
Lapsed during the year (6,140,475) 4.27 (4,628,571) 6.70
Outstanding at 30 April 2008 82,317,015 2.37 35,999,645 4.08
Exercisable at 30 April 2008 11,135,365 4.30 1,902,028 5.55
14.  Reconciliation of movements in shareholders’ funds 
 
2008 
£000 
2007
£000
Retained loss for the financial year (4,532) (635)
Credit for equity settled share based payments 190 62
Equity component of compound financial instrument 333 100
Issue of share capital (net of expenses) – 3,208
Net (decrease)/increase in shareholders’ funds (4,009) 2,735
Opening shareholders’ funds 7,400 4,665
Closing shareholders’ funds 3,391 7,400
15.  Capital commitments 
There were outstanding capital commitments of £nil at 30 April 2008 (2007: £nil). 
16.  Leasing commitments 
 
2008 
£000 
2007
£000
Annual commitments under non-cancellable operating leases are as follows:  
Leases of land and buildings expiring:   
Within one year – 44
Between two and five years 105 –
 105 44
  69 
 
 
17.  Transactions with related parties 
Other related party transactions 
Transactions with Directors and related parties in respect of their services as Directors are disclosed in the Directors’ Remuneration Report  
on pages 18 to 20. 
Penta Capital Partners Limited, through its managed funds Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership  
(the “Penta Funds”) is the holder of 49.99% of the Company’s issued ordinary 1p shares and all of the Company’s issued redeemable 
preference shares. Steven Scott, a Director of the Company is also a Director of Penta Capital Partners Limited. During the year, the Penta 
Funds advanced loan facilities to the Company, details of which are described in note 9. Loan notes, all of which are outstanding to the Penta 
Funds, are described in note 9. Penta Fund 1 Limited Partnership holds options over 100,000 ordinary shares of the Company at an exercise 
price of 7.25p per ordinary 1p share. Fees paid to Penta Capital Partners Limited in respect of Steven Scott’s services as a Director of the 
Company are detailed in the Directors’ Remuneration Report on pages 18 to 20. The Company also paid loan arrangement fees of £47,500 to 
Penta Capital Partners Limited during the year. At 30 April 2008, the outstanding balance within trade creditors in respect of these fees was 
£89,000 (2007: £70,000). 
18.  Post balance sheet events 
On 22 May 2008, the Company’s shareholders in an Extraordinary General Meeting approved the grant by the Panel on Takeovers and  
Mergers of a waiver in favour of Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership (the “Penta Funds”) of any 
obligation on them to make a mandatory offer for the Company in the event that they implement conversion rights attaching to loan instruments 
held by them which could result in them holding up to an aggregate of 49.99% of the Company’s issued ordinary share capital. The conversion 
rights over facilities outstanding to the Penta Funds following the shareholder approval can be summarised as follows: 
– of the £11,017,000 of outstanding indebtedness at 31 October 2007, such of the indebtedness as shall be required to be converted in order 
for the Penta Funds to hold 49.99% of the shares carrying voting rights shall be convertible at 1.1p per ordinary share 
– thereafter, any remaining indebtedness shall be convertible at a price per share which is the higher of (i) the then most recent placing price of 
ordinary shares and (ii) 1.5p per ordinary share. However, the Penta Funds have undertaken to limit their rights to convert into ordinary shares 
so that after any subsequent conversion their aggregate holdings of ordinary shares shall be less than 50% of the issued ordinary shares. 
On 22 May 2008, the Penta Funds converted 2,611,467 preference shares into 237,406,046 ordinary shares, as a result of which the Penta 
Funds held 49.99% of the issued shares carrying voting rights. 
As a result of the shareholder approval mentioned above, the Penta Funds agreed to waive interest and redemption premiums on the 
outstanding indebtedness of £11,017,000 accruing after 1 November 2007. Accrued interest of £473,000 charged to the profit and loss 
account in 2007/08 will consequently be written back in the financial statements for 2008/09. 
With effect from 1 May 2010, any outstanding indebtedness subject to the agreement with the Penta Funds will accrue interest in respect  
of any month at the rate of 8 per cent per annum if, for that month, the average closing mid-market price of the ordinary shares is below 1.5p.  
If the average closing mid-market price of the ordinary shares is above 1.5p for that month, the Company shall have no liability for interest.  70 
Notice of Annual General Meeting 
 
NOTICE IS HEREBY GIVEN that an ANNUAL GENERAL MEETING of the shareholders of the Company will be held at the offices  
of Lane & Partners LLP, 15 Bloomsbury Square, London WC1A 2LS at 10 a.m. on 29 September 2008 for the following purposes: 
Ordinary business 
1. to receive the Directors’ Report and Accounts for the year ended 30 April 2008 and the Auditors’ Report thereon; 
2. to reappoint as a Director Alastair Mills, who retires in accordance with Article 88 of the Articles of Association; 
3. to reappoint as a Director Steven Scott, who retires in accordance with Article 88 of the Articles of Association; 
4. to reappoint as a Director David Anahory, who retires in accordance with Article 94 of the Articles of Association;  
5. to reappoint Grant Thornton UK LLP of 4 Hardman Square, Spinningfields, Manchester M3 3EB as the Auditors of the Company  
and to authorise the Directors to fix their remuneration; and 
Ordinary resolution 
6. the Directors of Spiritel plc be and are hereby generally and unconditionally authorised for the purpose of Section 80 of the Companies Act 
1985 (the “Act”) to exercise all or any of the powers of the Company to allot relevant securities (within the meaning of Section 80(2) of the Act) up 
to a maximum nominal amount of £14,000,000 provided that this authority shall, unless previously revoked or varied by the Company in general 
meeting, expire at the conclusion of the next Annual General Meeting of the Company or 15 months after the passing of this resolution (if earlier) 
unless renewed or extended prior to such time except that the Directors of the Company may before the expiry of such period make an offer or 
agreement which would or might require relevant securities to be allotted after the expiry of such period and the Directors of the Company may 
allot relevant securities in pursuance of such offer or agreement as if the authority conferred by this resolution had not expired. This authority  
is in substitution for all previous authorities granted pursuant to Section 80 of the Act, to the extent unused. 
Special business 
Special resolutions 
7. the Directors of Spiritel plc be and they are hereby generally empowered pursuant to Section 95 of the Act to allot equity securities (within the 
meaning of Section 94 of the Act) wholly for cash pursuant to the authority conferred by Resolution 6. as if Section 89(1) of the Act did not apply 
to any such allotment provided that this power shall be limited to the allotment of equity securities: 
 (i) in connection with an offer of such securities by way of rights to holders of ordinary shares in proportion (as nearly as may be practicable)  
to their respective holdings of such shares, but subject to such exclusions or other arrangements as the Directors may deem necessary or 
expedient in relation to fractional entitlements or any legal or practical problems under the laws of any territory, or the requirements of any 
regulatory body or stock exchange; and 
 (ii) otherwise than pursuant to paragraph (i) above, up to an aggregate nominal amount of £14,000,000; 
and shall expire on the conclusion of the next Annual General Meeting of the Company after the passing of this resolution save that the 
Company may, before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry  
and the Directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this 
resolution has expired. 
8. the Company’s Articles of Association be amended to include the following new Articles: 
Article 99.1A 
If the Statutes allow, the directors can, in accordance with the Statutes and any further terms and conditions which they choose to impose at 
any time (but they will still have the right to reconsider change or revoke any authorisation given under this article 99.1A or otherwise) authorise: 
– anything which would otherwise give rise to a director being in a situation in which he has or can have a direct interest that conflicts or may 
conflict with the interests of the Company and which may reasonably be regarded as likely to give rise to a conflict of interest (including a 
conflict of interest and a duty or conflict of duties); 
– a director to accept or remain in office in another company in addition to his office as a director of the Company and may authorise the way  
in which a conflict of interest arising from such office is dealt with either before or at the time that it arises 
But the authorisation is only effective if: 
– any requirement as to the quorum at the meeting at which the matter is considered is met without counting the director in question  
or any other interested director; and 
– the matter was agreed to without any vote of theirs being counted.  71 
 
 
 
If a matter or office or employment or position has been authorised under this article 99.1A then (subject to any further terms and conditions 
which the directors may choose to impose from time to time and to their right to reconsider change or revoke such authorisation or the 
permissions set out below): 
– the director will not be required to disclose any confidential information relating to such matter or such office employment or position to the 
Company if this would be a breach of duty or a confidentiality obligation owed by him in relation to that matter or that office employment or 
position; 
– the director may choose not to attend discussions (in meetings of the directors or otherwise) and exclude himself from information which  
will or may relate to that matter or that office employment or position; and 
– a director does not have to hand over to the Company any benefit he receives from any such matter or from any such office employment  
or position authorised under this article 99.1A 
Article 140.2.2(c) 
A member shall be deemed to have agreed that the Company may send or supply a document or information by means of a website if the 
conditions set out in the Statutes have been satisfied. 
 
By Order of the Board 
 
 
A A Booth 
Company Secretary 
Registered Office: 18 King William Street, London EC4N 7BP 
3 August 2008 
Notes: 
1 A Shareholder is entitled to appoint another person as his proxy to exercise all or any of his rights to attend and speak and vote at the Annual General Meeting. A Shareholder may appoint 
more than one proxy in relation to the Annual General Meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that Shareholder.  
A member wishing to appoint more than one proxy should photocopy the proxy card and indicate on each copy the name of the proxy he appoints and the number of shares in respect of 
which that proxy is appointed. 
2 The appointment of a proxy must be in writing in any usual or common form or in any other form which the Directors may approve and (i) in the case of an individual must either be signed 
by the appointor or his attorney; and (ii) in the case of a corporation must be either given under its common seal or be signed on its behalf by an attorney or a duly authorised officer of the 
corporation. Any signature on or authentication of such appointment need not be witnessed. Where an appointment of a proxy is signed on behalf of the appointor by an attorney, the power 
of attorney or a copy thereof certified notarially or in some other way approved by the Directors must (failing previous registration with the Company) be submitted to the Company, failing 
which the appointment may be treated as invalid. 
3 A Form of Proxy is enclosed with this Annual Report and Accounts. The appointment of a proxy will not prevent a Shareholder from subsequently attending and voting at the Annual 
General Meeting in person. 
4 To be effective, the instrument appointing a proxy, and any power of attorney or other authority under which it is executed (or a duly certified copy of any such power of authority), must 
either be (a) sent to the Company’s Registrars, Neville Registrars of 18 Laurel Lane, Halesowen, West Midlands, B63 3DA so as to arrive no later than 6.00 p.m. on 27 September 2008 or,  
if the Annual General Meeting is adjourned, 48 hours before the time fixed for the adjourned Annual General Meeting or (b) lodged using the CREST Proxy Voting Service – see note 7 below. 
5 Holders of Ordinary Shares are entitled to attend and vote at general meetings of the Company. The total number of issued Ordinary Shares in the Company on 15 August 2008, which is 
the latest practicable date before the publication of this Notice, is 553,639,692. On a vote by show of hands every member who is present shall have one vote. On a poll vote every member 
who is present in person or by proxy shall have one vote for every Ordinary Share of which he is the holder. 
6 Entitlement to attend and vote at the meeting, and the number of votes which may be cast at the meeting, will be determined by reference to the Company’s register of members at  
10.00 a.m. on 27 September 2008 or, if the meeting is adjourned, 48 hours before the time fixed for the adjourned meeting (as the case may be). In each case, changes to the register  
of members after such time will be disregarded. 
7 In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated  
in accordance with EuroClear’s applications and must contain the information required for such instructions, as described in the CREST Manual. The message (regardless of whether it 
constitutes the appointment of a proxy, the revocation of a proxy appointment or an amendment to the instruction given to a previously appointed proxy) must, in order to be valid, be 
transmitted so as to be received by the issuer’s agent (ID 7RA11) by the latest time(s) for receipt of proxy appointments specified in Note 4 above. For this purpose, the time of receipt  
will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by 
enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to a proxy appointed through CREST should be communicated to him by other means. 
8 CREST members (and, where applicable, their CREST sponsors or voting service providers) should note that EuroClear does not make available special procedures in CREST for any 
particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned  
to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that his CREST proxy or voting service  
provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members  
(and, where applicable, their CREST sponsors or voting service providers) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST 
system and timings. 
9 The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.  72 
Company information and advisers 
Secretary and registered office: 
A A Booth 
18 King William Street 
London EC4N 7BP 
Registered number: 
5035921 
Nominated advisers and brokers: 
Daniel Stewart & Company 
Becket House 
36 Old Jewry 
London 
EC2R 8DD 
Bankers: 
Clydesdale Bank PLC 
30 St Vincent Place 
Glasgow G1 2HL 
Solicitors: 
Lane & Partners LLP 
15 Bloomsbury Square 
London WC1A 2LS 
 
Auditors: 
Grant Thornton UK LLP 
4 Hardman Square 
Spinningfields 
Manchester M3 3EB 
Public relations advisers: 
Tavistock Communications Limited 
131 Finsbury Pavement 
London EC2A 1NT 
Registrars: 
Neville Registrars Limited 
Neville House 
18 Laurel Lane 
Halesowen B63 3DA 
  SpiriTel is a fully integrated business communications group
which enables its customers to take advantage of the opportunities
created by rapidly changing telecoms markets as the migration
to Internet Protocol (IP) based services accelerates.
The Group is a consolidator of the highly fragmented UK telecoms
reseller market and is building a substantial customer base and scale
through selective acquisitions. We are organised into two divisions:
SpiriTel Technologies, which focuses on networking and IP products
and services and SpiriTel Business, which provides services directly
to our Business customers.
SpiriTel plc
Annual report and accounts 2008
Introduction
Managed services Wholesale voice IP Communications Mobile Network services
s ss s s
L
O
s s
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Design and production by Radley Yeldar
www.ry.com
12500_R&A_2008_Cover.qxd:Layout 1  27/8/08  08:30  Page 2 SpiriTel plc
18 King William Street
London EC4N 7BP
T +44 (0)20 7160 0100
F +44 (0)20 7929 5469
www.spiritelplc.com
Annual report and accounts 2008
SpiriTel plc Annual report and accounts 2008
Annual report and accounts 2008
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