The smarter way to broadband
PlusNet plc  Annual report and accounts, year ended 31 December 2004
Technology Building
Terry Street
Shefﬁeld
S9 2BU
www.plus.net
The smarter way to broadband   PlusNet plc  Annual report and accounts, year ended 31 December 2004 About PlusNet
PlusNet is an industry leading Internet Service Provider (“ISP”)
offering quality services to residential and business customers.
PlusNet provides award winning Broadband connectivity together
with a host of related products and services and Narrowband
connectivity; a choice of offerings that few, if any, ISPs can match.
PlusNet is well-known within the UK’s web community for offering
exceptional customer service and value-for-money - combining
service reliability and outstanding support with some of the UK’s
lowest Broadband prices.
PlusNet has a unique low-cost operating model, based on a ﬂexible
and scalable self-developed operating system, which allows it to
record high proﬁtability, whilst delivering competitively priced, high
quality products. PlusNet utilises its own Carrier class network
platform to aggregate purchased national network, principally from
BT. This network strategy minimises capital expenditure and leaves
the business ﬂexible to purchase network from any national provider,
whether ﬁxed line or wireless.
PlusNet aims to be at the centre of its customers’ Broadband world;
their ﬁrst choice for Broadband-enabled services, such as security,
VoIP and content.
Contents
1 Highlights
2 Chairman’s Statement
4 Chief Executive’s Strategic Review
10 Finance Director’s Review
12 Board of Directors and Advisers
14 Directors’ Report
16 Corporate Governance
18 Statement of Directors’ Responsibilities
19 Remuneration Committee Report
24 Report of the Independent Auditors to the Members of PlusNet plc
25 Consolidated Proﬁt and Loss Account
26 Balance Sheets
27 Consolidated Statement of Cash Flows
28 Notes to the Financial Statements
39 Glossary Flotation on AIM on 14 July
Successful placing in December
Strengthening relationship with BT
Broadband user numbers up 98% to 89,825
Turnover up £10.4m to £27.8m
Operating profit before exceptional item up 58% to £2.9m
Cash up £4.3m to £6.8m
Highlights of 2004 1
PlusNet plc
Annual report and accounts, year ended 31 December 2004
“In 2004 PlusNet has led a price revolution in 
the consumer market, and most importantly 
has continued to deliver in the key areas of
reliability, speed and customer service.”
Dan McNamara, Editor of Internet & Broadband Advisor
Financial Summary
Year ended 31 December 2004 2003
Broadband customer numbers 89,825 45,364
Turnover £27.8m £17.4m
Gross profit £9.0m £6.2m
Operating profit before exceptional cost of flotation £2.9m £1.8m
Operating profit after exceptional cost of flotation £1.7m £1.8m
Earnings per share - basic 3.23p 5.26p
- before exceptional cost of flotation 7.63p 5.26p
- fully diluted 3.06p 5.00p
Broadband users
Number
100,000
80,000
60,000
40,000
20,000
0
00 01 02 03 04
Turnover
£000’s
30,000
25,000
20,000
15,000
10,000
0
5,000
3000
2500
2000
1500
1000
500
00 01 02 03 04
Gross Profit
£000’s
10,000
8,000
6,000
4,000
2,000
0
00 01 02 03 04
Operating Profit
*
£000’s
0
00 01 02 03 04
*Before exceptional cost of flotation Introduction
My first report as Chairman and PlusNet’s first report to
shareholders as an AIM listed Company marks the end of an
extremely important and successful year in PlusNet’s history.
PlusNet has reported record operating profit before exceptional
item of £2.9m for the financial year, and ended the year with
89,825 Broadband customers. The popularity of our Broadband
products bears testament to their high quality and exceptional
value – our Broadband growth has been achieved entirely
through referrals and our reputation. Our financial success is a
clear endorsement of the strength of our low-cost and efficient
operating model.
Corporate developments
The key event of the year was the successful flotation on AIM 
on 14 July 2004. The placing of the Company’s shares raised
£0.5m of new money for the Company net of expenses and
reduced the shareholding of Insight Enterprises Inc. to 45%. 
In December we announced a further placing of the remainder 
of Insight’s holding in PlusNet. Insight has been able to meet its
objective of exiting its 95% holding in PlusNet in less than six
months following IPO – far more quickly than it had expected.
We were particularly pleased with the market’s reaction to 
the placing in December, with a significant appetite from a 
range of investors. We now have an excellent spread of
institutional shareholders and a clear mandate to pursue our
business strategy.
2004 has seen PlusNet established as a truly independent
business.
BT Relationship
On 13 December 2004, PlusNet entered into a memorandum of
understanding with BT Retail, which confirms the strong existing
working relationship between BT and PlusNet. The strategic
insight afforded by the BT Retail relationship has already
benefited PlusNet, and the working relationship is no better
Chairman’ s Statement 2
PlusNet plc
Annual report and accounts, year ended 31 December 2004
Kevin Adams
Chairman
“PlusNet has reported record
operating profit before
exceptional item of £2.9m
for the financial year, and
ended the year with 89,825
Broadband customers” exemplified than with the successful Teleworker product, 
which was jointly developed by BT Retail and PlusNet. Under our
strategic relationship we plan to develop a number of Broadband
solutions and customer offerings with BT Retail. Closely aligning
PlusNet with BT Retail will help PlusNet remain at the forefront of
developments in the Broadband market in the UK.
Team
The PlusNet management team working with Lee Strafford 
has applied extraordinary efforts in 2004 to deliver the IPO, a
successful separation from Insight as well as an excellent trading
result. However, PlusNet’s success in the Broadband market is
dependent upon the efforts and dedication of all of our
employees. A fundamental tenet of our success is maximising
automation through the continual development of our hardware
and software platforms in line with the rapidly developing
Broadband market. This demands excellent teamwork, focus,
technical expertise and execution. PlusNet has long recognised
the importance of its employees in driving the long-term success
of the business and I am delighted that the IPO has allowed us to
introduce new share option schemes which will properly reward
their efforts over the years. Options have been granted widely
across the business to reward the hard work demanded from 
our entire team.
Corporate Governance
At flotation, Michael Sherwin and I joined Bob Moya on the
PlusNet Board as Non-executive Directors, with one of our key
objectives being the formal introduction of appropriate corporate
governance practices. PlusNet’s experience as a separate
reporting segment of a NASDAQ listed business was good
preparation for AIM, as many important disciplines had already
been adopted. It is the Board’s intention to comply with the
Combined Code, where practicable, and where full compliance 
is not appropriate, due to the size of PlusNet, we will follow
guidance issued by the Quoted Companies Alliance. On flotation
we established an audit committee, a remuneration committee
and a nomination committee, more details of which are set out
later in this report.
Outlook
The Broadband market is continuing to grow rapidly. Whilst our
growth in 2004 has been driven by new customers demanding
basic Broadband connectivity, new opportunities lie in the
extension of our connectivity products and the delivery of new
Broadband enabled products and services. PlusNet is well
positioned to meet the evolving demands of its residential and
business customers as they seek to fully utilise the power of
Broadband. We have a comprehensive roadmap of emerging
Broadband products and services. We expect our commitment 
to choice, quality and value to position us as the one-stop-shop
for all of our customers’ Broadband services.
Kevin Adams
Chairman
3
PlusNet plc
Annual report and accounts, year ended 31 December 2004
“Our financial success 
is a clear endorsement of
the strength of our low-cost
and efficient operating
model” Operational overview
I am delighted with the progress PlusNet has made in 2004. 
The clearest measures of our progress are displayed in customer
numbers and operating profit before exceptional item where we
have enjoyed record growth. However, less apparent but more
important progress has been made in the further development of
PlusNet to take advantage of the future opportunities and meet
the challenges presented by the Broadband market. The next few
years will see the emergence of new Broadband enabled
products and services, with appeal, availability and pricing to
drive significant demand in the residential and business markets.
PlusNet intends to be a leader in delivering a broad choice of
these new products and services to market. I will focus my review
on the development of our business strategy to win in the rapidly
changing Broadband world.
Narrowband and Broadband Connectivity
Developments in 2004
2004 has seen huge growth in the number of Broadband
connections in the UK surpassing most analysts’ original
estimates of take-up by a significant margin.
PlusNet’s Broadband customer numbers increased to 89,825 at
31 December 2004, an increase of 44,461 in the year compared
to an increase of 30,847 in the year ended 31 December 2003.
Approximately 70% of our new broadband customers were new
PlusNet customers.
Broadband connectivity and services now make up 76% of our
turnover at £21.2m up from £9.9m in 2003.
In line with our expectations Narrowband revenues have declined
from £6.7m in 2003 to £5.6m in 2004, despite an increase in
Narrowband customer numbers from 108,132 to 113,213. This
reflects a reduction in average revenue per Narrowband user, as
heavier Narrowband users move more quickly to Broadband.
Chief Executive’ s Strategic Review 4
“Important progress has
been made in the further
development of PlusNet
to take advantage of the
future opportunities and
meet the challenges
presented by the
Broadband market”
PlusNet plc
Annual report and accounts, year ended 31 December 2004
Lee Strafford
Chief Executive While market commentators have commonly referred to 
our market in negative terms as being subject to significant
‘downward pricing pressure’, we have improved our Broadband
margins from 19% in 2003 to 23% in 2004 and maintained very
competitive pricing. We have achieved this principally by
leveraging our highly automated and customer responsive
operating model. In addition, we have passed on a proportion of
savings from each change in network wholesale costs over the
years to fuel competitive pricing, whilst retaining some of the
benefit to strengthen our business platform and maintain our
efficient, high quality customer service.
PlusNet’s Broadband connectivity products
We have continued to develop our Broadband connectivity
product range to offer our customers a broad choice of high
quality products and services at highly competitive prices.
PlusNet’s product range includes Broadband connectivity with
speed and usage options, as well as differentiated products for
residential and business users. We currently offer Fixed cost 
and Pay as you go connectivity products which cater for the
requirements of different segments of our customer base.
Fixed cost
PlusNet’s fixed cost products allow business and residential
customers to pay a fixed subscription for Broadband
connectivity with no further variable payments for usage.
These products are targeted at customers who demand a
high quality service and want the certainty of a fixed cost
regardless of their usage.
Pay as you go
Pay as you go products allow business and residential
customers to select and pay for their Broadband 
connectivity according to the amount of information
downloaded each month. These products offer customers 
the lowest subscription entry point to Broadband
connectivity, and appeal particularly to first-time, light
Broadband users. 
New Broadband connections have continued to dominate
sign-ups in 2004 and, consequently, our Pay as you go
products have been hugely popular, accounting for
approximately half of total Broadband sign-ups since their
launch in June. PlusNet’s revenues from Pay as you go
Broadband products vary directly with capacity utilisation,
thus driving a direct relationship between cost of sales and
income, which allows PlusNet to optimise network utilisation
and, hence, profitability.
We will continually review our range of product offerings 
for business and residential customers and will introduce new
connectivity options as and when network developments at the
wholesale level create opportunities and if we believe they would
have appeal to the prospective PlusNet customer and are
commercially viable.
Monthly subscription levels across all of our product ranges 
are highly competitive compared with other significant ISPs.
Moreover, our efficient operating model and optimal network
utilisation allow PlusNet to drive attractive gross profits across 
the whole product range.
Migrations
While the majority of new Broadband customers in 2004 are
experiencing Broadband for the first time, increasing levels of
migrations of Broadband customers from other ISPs have been 
an important new feature. As the population of experienced
internet users expands, more users become discerning and seek
value and quality in their internet connection service. Our
strategy of offering high quality service and low subscription
prices makes PlusNet an attractive proposition for Broadband
users dissatisfied with their current ISP , or simply seeking a better
deal. Changes in the migration process and associated costs by
BT in June 2004 have been catalysts for growth in migrations. 
The process is now automated and the cost was reduced from
£50 ex VAT to £11 ex VAT per user. Since June 2004 PlusNet has
not charged new customers for inbound migrations. Migrations
in 2004 have increased more than seven-fold from 2003.
5
PlusNet plc
Annual report and accounts, year ended 31 December 2004
“Our strategy of offering high quality service
and low subscription prices makes PlusNet an
attractive proposition for Broadband users
dissatisfied with their current ISP , or simply
seeking a better deal” Broadband connectivity growth in 2005
The outlook for growth in Broadband connectivity revenues 
is very positive. I expect continued growth in new Broadband
connections in 2005. I also expect existing Broadband users to
increasingly demand improvements in their services, as they
experience the benefits of faster speeds and seek better value.
Our philosophy of offering a broad choice of products at highly
competitive prices will drive further migrations to PlusNet.
Supplying Broadband connectivity is just the first leg of our
customer journey. Broadband is the gateway to a whole range of
new products and services, which will become available to our
residential and business customers; these new services will form
the next leg of our customer journey and the next phase in
PlusNet’s development.
Broadband market developments
Two trends in the Broadband world point the way for the next
phase in PlusNet’s development: communications convergence
and the emergence of new Broadband enabled products and
services.
Communications convergence
True communications convergence will occur when a user is 
able to access diverse Broadband enabled services whether at
home, at work or on the move. After many years of hype,
technical advances and increased co-operation between
communications businesses will mean true convergence will
become reality for Broadband users in the next few years.
Chief Executive’ s Strategic Review
6
PlusNet plc
Annual report and accounts, year ended 31 December 2004
Communications convergence
Broadband 
ISP
Voice and messaging
Voice, SMS, VoFi etc VoIP , Instant Messaging etc
Basic Web, ringtones, MP3, 
Video Clips, Basic Animation etc Web, Music, Video, Animation etc
Fixed ADSL  SDSL 3G  Wi-Fi  WiMAX Mobile
Content A number of developments highlight the inexorable move
towards converged communications in the UK.
Advances in Broadband networks Delivery of multiple services
through a Broadband gateway will require increases in
Broadband speeds, improved network capabilities and 
co-operation between fixed line and mobile networks. 
These improvements will start to be delivered during 2005.
4MB and 8MB services will become more widely 
available in the UK in 2005. On our current 2MB 
service simultaneous access to browsing email and 
VoIP is feasible. At 4MB, video streaming will become 
practicable simultaneously with these other services.
BT announced in May 2004 that it was joining forces with
Vodafone to offer the first fully converged fixed-mobile
communications service in the world.
BT set out specific proposals for its 21st Century Network
last year, which is expected to facilitate innovative new
services offering greater control and personalisation, ease
of migration between services as well as continuity for
existing PSTN services.
New devices We have already seen the introduction of new
devices which begin to offer converged services, such as the
Blackberry 7100 series handset, Creative’s Zen portable media
player and Motorola’s iTunes enabled mobile phone. We expect
more new devices to be introduced which will offer mobile or
fixed network access. BT’s Bluephone, due to be launched in the
UK in 2005, promises ordinary mobile phone functionality when
away from the home or office. When in range of the user's fixed
terminal, calls can be made and received via a Broadband link.
Communications convergence will enable a whole range of new
services to be delivered via a user’s Broadband connection.
Emergence of Broadband enabled products and services
It is now possible to use a Broadband connection not only to
access the internet but also to transfer data, access software
applications, receive television and radio stations, buy and
download songs and videos, or make voice calls. However, 
few of these new products and services are offered through
mainstream retail channels, leaving them inaccessible to all but
the highly technical user or those who can afford to purchase a
bespoke solution.
The environment for the commercial launch of new Broadband
services through mainstream retail channels is rapidly becoming
more favourable. Communications convergence, network
improvements and increased Broadband speeds will enable
delivery of high quality new services, and the mass take-up of
Broadband in the UK will fuel demand and the economies of
scale to enable affordable pricing.
Seizing new product and service opportunities
I expect the Broadband ISP with the ability to aggregate a broad
range of services to play a central role in the new converged
communications world. We believe the true Broadband services
business must be able to offer its chosen market a single source
relationship for all Broadband enabled products and services.
PlusNet plans to be a true Broadband services business offering 
its residential and business customers a wide choice of fixed and
mobile Broadband connectivity options, value added services,
applications and content.
I believe PlusNet is well positioned to succeed in the new
converged communications world.
Our web-based sales and customer support methodology
provides the most effective mechanism of delivering maximum
choice of new products and services;
Our web-based customer support system puts the customer 
in control, driving an excellent customer service experience;
Our low-cost operating system will allow us to offer new
products and services at highly competitive prices, whilst
maintaining profitability;
Our relationship with BT gives us insight into market
developments and access to new products;
Our customer base of more experienced internet users and 
our reputation for excellent customer service and quality in 
the Broadband community gives us access to a ready market 
for new products and services; and
Aggregation of third party networks will give us flexibility in a
converging communications world, and minimise capital
expenditure requirements.
7
PlusNet plc
Annual report and accounts, year ended 31 December 2004 PlusNet plans to be its customers’ first choice for Broadband-
enabled products and services. Consistent with our business
strategy, our new Broadband connectivity and associated products
and services will aim to deliver high quality at very competitive prices.
We will continually evaluate new and complementary Broadband
enabled products and services, which we will launch as soon as
they meet our customers’ requirements and are commercially
viable. We are currently evaluating VoIP , WiFi, Mobile and content
services which we plan to launch in 2005 as long as they meet
these criteria.
BT relationship
BT Retail and PlusNet have enjoyed a strong working relationship
in recent years, which has already produced the Teleworker
product. The relationship is based upon our businesses’
complementary markets and technological capabilities. BT Retail
recognises our unique ability to automate customer service,
which forms the back-bone of the Teleworker product, and our
access to more experienced internet users, who are likely to be
early-adopters of new products and services. We recognise the
huge influence BT will have in the development of the Broadband
market, including Project Bluephone and the 21st Century
network discussed above.
BT Retail and PlusNet have agreed to work together and share
technical knowledge on the development and marketing of each
other’s proposed new Broadband products and services including
fixed access, wireless access, mobile services and VoIP . By working
with BT Retail on proposed new Broadband products and
services, PlusNet is well positioned to become the preferred
reseller for early launch of relevant new products and services.
PlusNet is BT Retail’s preferred partner for projects demanding
automated customer relationship management, which is
fundamental to Teleworker. Teleworker is a Broadband access
solution for organisations to enable their employees to work
remotely and allow the organisation to maintain the
management of their employees' internet connection. The
Teleworker product, which was launched by BT in August 2003,
has been adopted by over 30 of BT’s blue-chip corporate
customers. BT intends to accelerate growth in the number of
Teleworker end-users in 2005.
Our relationship with BT underlines PlusNet’s technical expertise
and positions PlusNet as an integral part of BT Retail’s strategy
going forward. I expect the strategic relationship with BT Retail 
to bring new product and service opportunities to PlusNet as well
as valuable insight into infrastructure developments. 
Chief Executive’ s Strategic Review
8
“I expect the strategic relationship 
with BT Retail to bring future product 
and service opportunities to PlusNet”
PlusNet plc
Annual report and accounts, year ended 31 December 2004 Outlook for 2005
2004 was an exciting year for PlusNet and the Broadband market
as a whole. Subscription prices were reduced to levels that made
Broadband connectivity affordable across residential and business
markets. Broadband internet connectivity achieved huge market
penetration, extending the user base to levels which will facilitate
the launch of new products – applications which to date have
been surrounded by hype rather than practical features.
We plan to launch new connectivity products in 2005, which 
will drive continued rapid growth in our Broadband customer
numbers.
Users will start to enjoy the fuller capabilities of Broadband, 
as new products and services are brought to market. We will
launch new products and services in 2005 complementing our
connectivity services, which will extend PlusNet’s reputation as a
quality Broadband services provider. We do not expect significant
financial return from new services in 2005; our financial growth
will be driven by continued expansion in Broadband customer
numbers. Our investment in new services will be rewarded by
financial return in future years.
We will continue to explore acquisitions that would add
significant value to the PlusNet business in 2005. A combination
of an increased customer base and PlusNet’s low cost model, will
allow us to derive substantial benefits from an acquired business.
However, we will only pursue an acquisition if it brings a brand
and customer base that will generate long term growth. As we
intend to continue to utilise any acquired brand, it is critical that
the brand is strong enough to sustain growth. We will also only
pursue an acquisition if we are confident that it will enhance
shareholder value and not dilute PlusNet’s profitability. We will 
be selective.
I am looking forward to the challenges of the next year, 
which will present us with huge opportunities as Broadband
technologies become more and more central to the lives of 
our customers.
Lee Strafford
Chief Executive
9
PlusNet plc
Annual report and accounts, year ended 31 December 2004
“PlusNet plans to be its customers’ first choice 
for Broadband-enabled products and services.
Consistent with our business strategy, our new
Broadband connectivity and associated products
and services will deliver high quality at very
competitive prices” Financial overview
2004 2003 Change %
Narrowband users 113,213 108,132 4.7
Broadband users 89,825 45,364 98.0
2004 2003
£000 £000 Change %
Revenue 27,811 17,395 59.9
Gross profit 9,001 6,176 45.7
Administrative expenses* (6,142) (4,364) 40.7
Operating profit before
exceptional item 2,859 1,812 57.8
Operating profit after
exceptional item 1,692 1,812 (6.6)
PBT 1,848 1,832 0.9
Tax (992) (517) 91.9
Profit after tax 856 1,315 (34.9)
Basic EPS 3.23p 5.26p** (38.6)
Adjusted EPS* 7.63p 5.26p** 45.1
Capital expenditure 2,453 1,830 34.0
Cash 6,771 2,475 173.6
* Before exceptional item
** Restated for share consolidation
Financial Overview
2004 has been a year in which PlusNet became totally
independent and at the same time was able to achieve
outstanding results in revenue, gross profit, pre-exceptional
operating profit and cash.
Revenue
Revenue for the year was £27.8m, a 60% increase from £17.4m
in 2003, primarily due to the growth in Broadband customer
numbers. Revenue from Broadband connectivity and other
services represented approximately 76% of this total, compared
to 57% for the comparable period in 2003. Average revenue per
user across our customer base increased from £113 to £137,
again reflecting the increasing share of Broadband subscriptions
in turnover. This is despite pricing reductions in Broadband services.
Gross Profit
There has been a continued shift in product mix from
Narrowband towards Broadband over the year. Most of our
Narrowband revenues are generated as a share of the call
charges from the telecoms carrier, which bears the majority of 
the cost of sale. Our Narrowband percentage margins are
therefore higher than our Broadband margins. PlusNet’s gross
margin percentages have decreased between 2003 (36%) and
2004 (32%) as a result. However, because the absolute gross
profit from Broadband is higher than that of Narrowband,
PlusNet’s gross profits have shown a healthy increase from 
£6.2m to £9.0m over the same period. The financial strength 
of our Broadband offering is evidenced by the increase in gross
profit per user from £40 in 2003 to £44 in 2004.
Administrative expenses
Administrative expenses excluding the exceptional item were
£6.1m, an increase of 41% over 2003. This resulted partly from
building depth in our management team in late 2003 and early
2004 to allow us to take advantage of the organic and acquisitive
growth opportunities open to us. In the second half of 2004 our
administrative expenses increased as a result of the additional
costs of being a listed company and also additional costs 
from establishing arms length costs on certain services and
facilities supplied by Insight Enterprises Inc.
Profitability
The strength of PlusNet’s low-cost operating model is no better
demonstrated than in our growth in operating profit before
exceptional item from £1.8m to £2.9m. Operating profit after the
exceptional cost of flotation was £1.7m. Despite the increase in
administrative expenses referred to above, our business model
continues to generate economies of scale evidenced by growth in
financial performance per employee:
Finance Director’ s Review 10
“The strength of
PlusNet’s low-cost
operating model is no
better demonstrated
than in our growth in
operating profit before
exceptional item from
£1.8m to £2.9m”
PlusNet plc
Annual report and accounts, year ended 31 December 2004
Ashok Makanji
Finance Director PlusNet plc
Annual report and accounts, year ended 31 December 2004
11
2004 2003 Change %
Average headcount 122 120 1.7
2004 2003
££ Change %
Turnover per employee 227,959 144,958 57.3
Gross profit per employee 73,779 51,467 43.4
Operating profit* per employee 23,434 15,100 55.2
* Before exceptional item
Exceptional costs
Total costs of flotation of £1.7m were incurred, of which 
£1.2m was charged to the profit and loss account as an
exceptional item, representing professional fees in respect of
obtaining a listing on AIM, and the remaining £0.5m, relating to
the cost of issuing new shares, was charged to the share
premium account.
Taxation
PlusNet’s tax charge was £1.0m in 2004, compared to £0.5m 
in 2003. This represents an effective tax rate of 54% in 2004
compared to 28% in 2003. After deducting prior year items of
£0.1m charged in 2004 and disallowable expenses the effective
rate of tax for the year was 32%.
Earnings per share
Basic EPS is 3.23p compared to 5.26p in 2003. This is based 
on 26.5m shares in 2004 compared to 25m shares in 2003 (as
restated upon share consolidation at flotation). Taking out the
exceptional costs of obtaining a listing the adjusted EPS is 7.63p
(2003: 5.26p).
Capital Expenditure
PlusNet has continued to invest in the development of both 
its physical and software infrastructure. The PlusNet strategy of
utilising third party wholesale networks, principally from BT, has
limited exposure to significant capital expenditure requirements,
although we continue to invest in our own Carrier class hardware
and our Workplace platform to maintain operating performance
and quality of service.
PlusNet has adopted a policy of capitalising software
development costs relating to the continued automation of
existing business functionality and extensions to facilitate new
Broadband connectivity products and services.
T otal capital expenditure was £2.5m, compared to £1.8m in 2003
including capitalised development costs of £0.7m (2003: £1.3m).
Cashflow
Cash increased by £4.3m during the year (2003: £1.0m). 
PlusNet benefits from a favourable working capital cycle in which
customers pay in advance and suppliers are paid in arrears. The
cash balance at 31 December 2004 was £6.8m (2003: £2.5m).
Strong cashflow and increased cash holdings have boosted
interest receivable to £0.2m in 2004 (2003: £0.02m).
PlusNet will apply its cash resource to fund capital expenditure,
tax obligations and corporate acquisitions, when appropriate
opportunities arise. No dividends have been recommended.
Share based payments
As part of the flotation new share option schemes were
introduced. The expense that would be recognised in respect 
of these share based payments when FRS20/IFRS2 becomes
effective has not been accounted for in the year ended 
31 December 2004. FRS20 will become mandatory for 
PlusNet from 1 January 2006.
Transition to International Accounting Standards
As an AIM listed company we will adopt IAS for our financial
statements for the year ending 31 December 2007. Our IAS
evaluation is ongoing. As mentioned above, accounting for 
share based payments will be taken into consideration.
Ashok Makanji
Finance Director Kevin Adams, Non-executive Chairman
Kevin was appointed to the PlusNet Board in July 2004.
Kevin is chief executive officer of Intec Telecom Systems PLC. 
Prior to joining Intec Telecom in 1997, Kevin worked at Logica plc
where he was telecommunications software and services
international business unit director. Between 1994 and 1996,
Kevin worked as a vice president for Blyth, an American owned
products and services company. Between 1989 and 1994 Kevin
worked for Admiral Software Limited where he was managing
director between 1991 and 1994. Prior to 1989, Kevin held a
number of positions with Hoskyns plc, a supplier of computer
services in the UK, and he worked for the Michelin Tyre 
Company Plc.
Lee Strafford, Chief Executive
Lee joined PlusNet in 1997, as commercial and sales director, 
and was promoted to managing director in 1999. Prior to joining
PlusNet Lee ran his own telecoms consultancy and contracting
business for 5 years and before that, he worked for a private
telecoms contractor. Lee has over 15 years experience in the
telecoms industry.
Ashok Makanji, Finance Director and Company Secretary
Ashok joined PlusNet in April 2004, after 5 years as VP of 
finance for Europe for PlusNet’s former parent Company, 
Insight Enterprises Inc. During this time he was PlusNet’s
Company Secretary and oversaw its finance function. 
He joined the Board as Finance Director in July 2004.
From 1999 to 2004 Ashok worked for Insight Direct (UK) Ltd 
as the VP of finance and company secretary. Between 1992 and
1999, Ashok worked for Shell Gas Limited in a number of
different positions including financial controller, project manager
and assistant to the general manager and the financial director.
Ashok worked for Fraser & Russell Chartered Accountants
between 1987 and 1992. Ashok is a qualified chartered
accountant.
Neil Comer, Commercial Director
Neil joined PlusNet in May 2004, following three years advising
the business on corporate finance and strategy. He joined the
Board in July 2004.
Neil previously worked for Bentley Jennison, an accounting, 
audit and business support services firm, as a corporate finance
director since 2001. Neil worked for KPMG from 1981 to 2001.
Between 1993 and 2001 he worked as a corporate finance
advisor for KPMG in Reading, London and subsequently Leeds.
Prior to 1993, Neil worked in the Reading, London and Atlanta
offices of KPMG audit. Neil is a qualified chartered accountant.
Board of Directors and Advisers 12
PlusNet plc
Annual report and accounts, year ended 31 December 2004
Kevin Adams
Chairman
Lee Strafford
Chief Executive 
Ashok Makanji
Finance Director
Neil Comer
Commercial Director Michael Sherwin, Non-executive Director
Michael joined the PlusNet Board as a Non-executive Director 
in July 2004.
Michael is currently finance director of Games Workshop Group
PLC. Prior to joining Games Workshop in June 1999, Michael was
Group financial controller of Courtaulds Textiles plc where he had
worked for six years. He was previously with Price Waterhouse for
12 years where he qualified as a chartered accountant in 1984.
Michael is also Visiting Fellow in Durham Business School.
Robert Moya, Non-executive Director
Bob has been a Non-executive Director of PlusNet since 2003.
Bob’s involvement with PlusNet dates from his service as an
officer of Insight, PlusNet’s former parent company, from 2002
through 2004. He served as executive vice president, general
counsel and corporate secretary of Insight from 2002 and was
also designated as Insight’s chief administrative officer in 2003.
Prior to joining Insight, Bob practiced law as a partner with three
major US law firms. Immediately prior to joining Insight, Bob
spent 10 years as a partner in the Phoenix, Arizona office of the
Quarles & Brady LLP law firm, where he was a member of the
National Executive Committee and the Arizona Management
Committee and the Co-Chairman of the Corporate and Securities
Law Group. Currently he is a partner of Quarles & Brady in
transition to retirement. He has acted as Chairman of the
Securities Section and the Law Practice Management Section of
the State Bar of Arizona and as a Councilman of the Town of
Paradise Valley, Arizona. Bob joined the board of NASDAQ listed
Duraswitch Industries Inc. in February 2005 as a non-executive
director.
Corporate Information
Company number
3279013
Registered office and
investor relations
Technology Building
Terry Street
Sheffield
S9 2BU
Auditors
KPMG Audit Plc
1 The Embankment
Neville Street
Leeds
LS1 4DW
Investment bankers, broker 
and nominated adviser
Robert W Baird Limited
Mint House
77 Mansell Street
London
E1 8AF
Financial PR advisor
Buchanan Communications
107 Cheapside
London
EC2V 6DN
Registrar and transfer office
Lloyds TSB Registrars
The Causeway
Worthing
West Sussex
BN99 6DA
Bankers
HSBC
17 Church Street
Sheffield
S1 1HH
Bank of Scotland Corporate
2nd Floor 
The Portergate
257 Ecclesall Road
Sheffield
S11 8NX
13
PlusNet plc
Annual report and accounts, year ended 31 December 2004
Michael Sherwin
Non-executive Director
Robert Moya
Non-executive Director The Directors submit their annual report and the audited accounts of the Group for the year ended 31 December 2004.
Principal activity & business review
The principal activity of the Group is the provision of internet access services in the UK.
The operational and financial activity of the Group in the year is discussed in more detail on pages 2 to 11.
Results and dividends
The profit on ordinary activities before tax was £1.8m (2003: £1.8m).
Profit before exceptional item and tax for the year was £3.0m (2003: £1.8m).
The Directors do not recommend the payment of a dividend (2003: £nil).
Fixed Assets
The Directors are of the opinion that there is no significant difference between the book value and the market value of the fixed assets
of the Group.
Directors and directors’ interests
The Directors who held office during the year were as follows:
K Adams Non-executive Chairman (appointed 7 July 2004)
LA Strafford Chief Executive
A Makanji Financial Director (appointed 7 July 2004)
N Comer Commercial Director (appointed 7 July 2004)
M Sherwin Non-executive Director (appointed 7 July 2004)
PR Moya Non-executive Director
TA Crown Non-executive Director (resigned 7 July 2004)
S Laybourne Non-executive Director (resigned 7 July 2004)
Details of Directors’ service contracts and the interests of the Directors in the shares of the Company and in options over such shares
are disclosed in the Remuneration Committee Report on pages 19 to 23.
At the forthcoming Annual General Meeting K Adams, LA Strafford, A Makanji, N Comer, M Sherwin, and PR Moya will retire in
accordance with the Company’s Articles of Association and, being eligible, offer themselves for re-election.
Political and charitable contributions
The Company made no political or charitable contributions during the year (2003: £nil).
Substantial shareholdings
The Company has been informed that on 4 February 2005 the following shareholders held substantial holdings of the issued ordinary
shares of the Company:
Holding of ordinary shares Issued share capital
number %
Framlington Investment Management 3,735,385 13.29
J O Hambro Capital Management Group 2,275,000 8.10
Dexia Asset Management Belgium 2,152,926 7.66
Insight Investment 1,954,486 6.96
Marlborough Fund Managers 1,903,555 6.77
Scottish Widows Investment Partnership 1,877,908 6.68
LA Strafford 1,500,933 5.34
Fidelity 1,357,911 4.83
INVESCO Asset Management Ltd 1,146,417 4.08
14
PlusNet plc
Annual report and accounts, year ended 31 December 2004
Directors’ Report 15
PlusNet plc
Annual report and accounts, year ended 31 December 2004
Going concern
The Directors confirm that they are satisfied that the Company and the Group have adequate resources to continue in business for 
the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.
Environmental policy
The Group’s environmental policy is to meet the statutory requirements placed upon it and to apply good environmental practice in
operations.
Creditor payment policy
The Group’s strategy is to develop mutually beneficial relationships with key suppliers. The Group’s policy in relation to all of its
suppliers is to settle 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 average number of days’ purchases outstanding for payment by the Group was 37 days (2003: 42 days)
Annual General Meeting
The Annual General Meeting will be held on 20 April 2005 at 11.00am at Robert W Baird Limited, Mint House, 77 Mansell Street,
London, E1 8AF .
Auditors
In accordance with Section 384 of the Companies Act 1985, a Resolution for the re-appointment of KPMG Audit Plc as auditors of the
Company is to be proposed at the forthcoming Annual General Meeting.
This report was approved by the Board on 22 February 2005
A Makanji
Company Secretary
Technology Building
Terry Street
Sheffield
S9 2BU Compliance statement
The Group is not required to comply with the provisions of the June 1998 Combined Code on Corporate Governance (“the Combined
Code”) and the ‘Revised code’ for reporting periods commencing on or after 1 November 2003. The Board of Directors recognise the
importance of, and is committed to, ensuring that effective corporate governance procedures relevant to smaller listed Groups are in
place. The Group has therefore complied with the Revised Code, except in respect of internal controls. Details of the Group’s approach
to internal controls are detailed below. This statement considers how the relevant principles of the Revised Code have been applied to
the Group throughout the year to 31 December 2004.
Internal control and risk management process
Following flotation in July 2004, the Board is in the process of identifying, evaluating and managing the risks faced by the Group. As a
result, the processes required to comply with the Revised Code in this area have not been in operation for the whole of the year under
review, and in this respect, the Group has not complied with the Revised Code. The Board of Directors intends to instigate a review of
internal controls during the year to 31 December 2005.
The Board of Directors has reviewed the need for an internal audit function and has concluded that given the size and risk profile of
the Group such a function would not be appropriate.
The external auditors are engaged to express an opinion on the accounts. The auditors test and review the systems of internal financial
controls and information presented in the accounts to the extent required to be able to express their audit opinion.
The Board 
Details of the changes in Directors in the year are provided in the ‘Directors’ Report’ shown on page 14. At 31 December 2004 the
Board comprised 3 executive Directors, 2 Non-executive Directors and 1 Non-executive Chairman. All the non-executive members of
the Board are considered by the Board to be independent of the Company and the Group. Each non-executive possesses considerable
outside expertise, and is able to exercise detached judgement in dealing with matters before the Board. The Board considers that the
current composition provides a reasonable level of independence.
The Board, which met 5 times between flotation in July 2004 and the 31 December 2004, is responsible for the overall strategy and
financial performance of the Group and has a formal schedule of matters required for approval. Each Board meeting is preceded by a
clear agenda and any relevant information is provided to Directors in advance of the meeting.
The statement of the Directors’ responsibilities in preparing the accounts is set out on page 18 and the statement from the auditor on
its reporting responsibilities is set out on page 24. The statement on going concern can be found in the ‘Directors’ report’ on page 15
and on relations with shareholders in this section on page 17.
All Directors are required to submit themselves for re-election at an Annual General Meeting if they were not elected or re-elected at
either of the two preceding Annual General Meetings. Therefore Directors appointed during the period are required to seek re-election
at the first Annual General Meeting following their appointment.
Board performance
As the current Board was established at the recent flotation, the measurement of Board performance is under review and
communication to shareholders will be made at the appropriate time.
Auditor independence
In order to safeguard the objectivity and independence of the Company’s external auditors, the Audit Committee Chairman must
expressly authorise any engagement of those auditors on non-audit work that would entail them being paid fees in excess of 20% 
of the audit fee in any year. Careful consideration is given on each occasion as to potential conflicts and the possibility of actual or
perceived threats to the independence of the external auditors before instructing them in connection with non-audit work. 
Instructions are only given when the Company considers it to be in its best interests to use the external auditors other than in
connection with pure audit services.
Corporate Governance 16
PlusNet plc
Annual report and accounts, year ended 31 December 2004 Principal Board committees
The Board has established the following committees:
Remuneration Committee. The Committee currently comprises M Sherwin, PR Moya and is chaired by K Adams. The Remuneration
Committee is responsible for reviewing and recommending all the elements of policy on the Board’s and senior executives’
remuneration and for approving all matters relating to the remuneration of executive Directors. It meets at least 3 times per year. 
The Remuneration Committee Report on pages 19 to 23 contains a detailed description of remuneration and applicable policies.
Nominations Committee. The Committee consists of M Sherwin and PR Moya and is chaired by K Adams. The Committee’s
responsibilities are to identify, evaluate and select candidates for Board positions, and to review annually the composition and size of
the Board.
Audit Committee. The committee comprises K Adams, PR Moya and is chaired by M Sherwin. The Committee meets at least 3 times
annually. The Audit Committee assists the Board in fulfilling its oversight responsibilities, primarily in reviewing and reporting
financial and non-financial information communicated to shareholders, systems of internal control and risk management and the
audit process. It has the power to call for information from management and to consult directly with the auditors or their advisors as
considered appropriate. The Committee operates under written terms of reference and is scheduled to meet at least twice a year
with the Group’s auditors. The Committee is responsible for the independent monitoring of the effectiveness of the system of
internal control, compliance, accounting policies and published financial statements on behalf of the Board. This is achieved
primarily through a review of the annual financial statements and a review of the nature and scope of the external audit. Any
significant findings or identified risks are examined so that appropriate action may be taken. The Committee is also responsible for
keeping under review the independence and objectivity of the external auditors, including a review of non-audit services provided to
the group, consideration of any relationships with the Group that could affect independence and seeking written confirmation from 
the auditors that, in their professional judgement, they are independent.
The formal terms of reference of each of the committees can be found on www.plus.net/investors
Relations with shareholders
The Group encourages the participation of both institutional and private investors. Communication with private individuals is
maintained through the Annual General Meeting, annual and interim reports, quarterly updates and press releases. In addition further
details on the strategy and performance of the Company can be found at its website (www.plus.net).
The Chief Executive will be available to answer questions at the Annual General Meeting.
17
PlusNet plc
Annual report and accounts, year ended 31 December 2004 Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the 
state of affairs of the Company and Group and of the profit or loss of the Group for that period. In preparing those financial
statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in
the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in
business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial
position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They have
general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities.
Statement of Directors’ Responsibilities 18
PlusNet plc
Annual report and accounts, year ended 31 December 2004 Introduction
The following report provides information relating to the pay and benefits policy for the Company’s Directors. The sections of this
report which have been subject to audit are indicated with a single asterisk (*).
Members of the Remuneration Committee
Details relating to the remuneration committee can be found in the ‘Corporate Governance’ section of the annual report on pages 16
to 17.
The Committee meets during the year to determine all aspects of the remuneration of the executive Directors. The remuneration of the
Non-executive Directors is determined by the Board as a whole.
Remuneration policy
The Committee believes remuneration levels should be competitive and set at a level to attract, retain and motivate executive Directors.
The Group makes contributions to Group personal pension schemes on behalf of executive Directors.
The Company has three share option schemes in place
1) 2000 Share option scheme
2) 2004 Share option scheme
3) 2004 Performance related share option scheme
During the year the Company issued share options to the executive Directors as detailed in the table ‘Directors’ share options’ below.
The aim of this is to align the efforts of key executives with the Company’s objective of creating shareholder value in the longer term.
Director’s pay and benefits agreed prior to remuneration committee being established*
Gains on the Insight
exercise of incentive Benefits 2004 2003
Salary/fees Bonuses** share options scheme*** in kind Total Total
£000 £000 £000 £000 £000 £000 £000
Executive Directors
LA Strafford 59 – – 467 – 526 234
A Makanji**** – – 6 175 – 181 –
N Comer**** – – _ 175 – 175 –
Total executive Directors’
pay and benefits in kind 59 – 6 817 – 882 234
Remuneration Committee Report 19
PlusNet plc
Annual report and accounts, year ended 31 December 2004 Director’s pay and benefits agreed subsequent to remuneration committee being established*
Gains on the Insight
exercise of incentive Benefits 2004 2003
Salary/fees Bonuses** share options scheme*** in kind Total Total
£000 £000 £000 £000 £000 £000 £000
Executive Directors
LA Strafford 66 15 – – 1 82 _
A Makanji**** 48 45 – – 1 94 –
N Comer**** 48 42 – – 1 91 –
Total executive Directors’
pay and benefits in kind 162 102 – – 3 267 _
Non-executive Directors
K Adams**** 30 – – – – 30 –
M Sherwin**** 15 – – – – 15 –
PR Moya 15 – – – – 15 –
TA Crown _ – ––– _ –
S Laybourne – – – – – – –
Total Non-executive
Directors’ pay and
benefits in kind 60 – – – – 60 –
Total Director’s pay and benefits in the period*
Gains on the Insight
exercise of incentive Benefits 2004 2003
Salary/fees Bonuses** share options scheme*** in kind Total Total
£000 £000 £000 £000 £000 £000 £000
Executive Directors
LA Strafford 125 15 – 467 1 608 234
A Makanji**** 48 45 6 175 1 275 –
N Comer**** 48 42 – 175 1 266 –
Total executive Directors’
pay and benefits in kind 221 102 6 817 3 1,149 234
Non-executive Directors
K Adams**** 30 – – – – 30 –
M Sherwin**** 15 – – – – 15 –
PR Moya 15 – – – – 15 –
TA Crown – – ––– – –
S Laybourne – – – – – – –
Total Non-executive
Directors’ pay and
benefits in kind 60 – – – – 60 –
Remuneration Committee Report continued
20
PlusNet plc
Annual report and accounts, year ended 31 December 2004 * Audited information
** The discretionary bonuses to the Directors reflect the extraordinary efforts made to transform PlusNet from a subsidiary 
of a NASDAQ listed Company to a successful Group listed on the AIM market. In particular, the Directors’ involvement was
instrumental in separating the day to day operations of the Company from its former parent, the success of the IPO, in
establishing and maintaining clear communication with the investment community, in delivering successive quarterly
performance above budgeted expectations and in facilitating the successful placing of the Insight shareholding and thus
establishing the Group as an independent PLC.
*** Insight Enterprises UK Limited agreed to reward to the executive Directors with ordinary shares and/or cash to be invested in
ordinary shares equivalent to 12.5% per cent of the gain it made from the disposal of its shareholding in PlusNet. No costs
relating to the incentive scheme have been borne by PlusNet plc.The scheme was contractually agreed prior to flotation and has
not been subject to the approval of the Remuneration Committee.
**** The remuneration is for the period from appointment on 7 July 2004 to 31 December 2004.
Pensions*
The following Directors have received contributions to Group personal pension schemes in the period:
Amount Amount
Contributions Contributions of company of company
paid or payable paid or payable contribution contribution
in the year by in the year by accrued/(prepaid) accrued/(prepaid)
the company the company at year end at year end
2004 2003 2004 2003
£000 £000 £000 £000
A Makanji 3 – 1 –
N Comer 3 – 1 –
* Audited information
Share interests*
The beneficial interests of the Directors in the ordinary shares of the Company as at 31 December 2004 were:
31 December 31 December
Director 2004 2003
K Adams 22,222 –
LA Strafford 1,500,933 1,250,000**
A Makanji 98,764 –
N Comer 94,099 –
M Sherwin 20,000 –
PR Moya – –
* Audited information
** Restated to reflect share consolidation described in note 16 to the financial statements.
There has been no change in the number of shares held between 31 December 2004 and the date of this report.
Remuneration Committee Report continued
21
PlusNet plc
Annual report and accounts, year ended 31 December 2004 Directors’ share options*
At 1 Jan Exercised Awarded At 31 Dec Exercise
Note 2004 in the year in the year 2004 price Exercise period
K Adams – – – – – –
LA Strafford (ii) – – 41,850 41,850 90p 13 July 2006 – 12 July 2009
(iii) – – 97,650 97,650 90p 13 July 2007 – 12 July 2014
A Makanji (i)** 12,500 12,500 – – 40p 14 July 2004 – 5 May 2006
(ii) – – 41,850 41,850 90p 13 July 2006 – 12 July 2009
(iii) – – 83,700 83,700 90p 13 July 2007 – 12 July 2014
N Comer (ii) – – 41,850 41,850 90p 13 July 2006 – 12 July 2009
(iii) – – 83,700 83,700 90p 13 July 2007 – 12 July 2014
M Sherwin – – – – – –
PR Moya – – – – – –
TA Crown (i)** 500,000 – – 500,000 40p 14 July 2004 – 5 May 2006
S Laybourne (i)** 250,000 125,000 – 125,000 40p 14 July 2004 – 5 May 2006
(i) 2000 Share option scheme – no performance criteria attached
(ii) 2004 Share option scheme – no performance criteria attached
(iii) 2004 Performance related share option scheme – with the following performance criteria
No options exercisable if earnings per share increases by less than 33.75% per annum on a cumulative basis between
1 July 2004 and 30 June 2007
10% of options exercisable if earnings per share increases by more than 33.75% but less than 36% per annum on a
cumulative basis between 1 July 2004 and 30 June 2007. The remaining 90% of the options would lapse immediately.
50% of options exercisable if earnings per share increases by more than 36% but less than 37.5% per annum on a
cumulative basis between 1 July 2004 and 30 June 2007. The remaining 50% of the options would lapse immediately.
100% of options exercisable if earnings per share increases by equal to or more than 37.5% per annum on a cumulative
basis between 1 July 2004 and 30 June 2007.
The market price in respect of the exercised options above was 90p at the time of exercise.
* Audited information
** The details provided reflect the share consolidation as explained in note 16.
Share Performance
Remuneration Committee Report continued
22
PlusNet plc
Annual report and accounts, year ended 31 December 2004
June 04 July 04 Aug 04 Sep 04 Oct 04 Dec 04 Nov 04
PlusNet
AIM
Index PlusNet:100  AIM:100 at 14 July 2004
0
50
100
150
200
Share performance since flotation against AIM index The mid-market price for the Company’s shares at 31 December 2004 was 174.50p. The high and low mid-market prices of the
ordinary shares during the period from flotation on 14 July 2004 to 31 December 2004 were 90p and 187.50p respectively.
Directors’ contracts
Details of service agreements in place for the current Directors are as follows:
Date of contract Term Notice period
K Adams 8 July 2004 1 year, continuing thereafter subject to 3 months notice
the notice period by the Company
LA Strafford 8 July 2004 2 years, continuing thereafter subject to Not less than 12 months
the notice period by either party
A Makanji 8 July 2004 2 years, continuing thereafter subject to Not less than 12 months
the notice period by either party
N Comer 8 July 2004 2 years, continuing thereafter subject to Not less than 12 months
the notice period by either party
M Sherwin 8 July 2004 1 year, continuing thereafter subject to 3 months notice
the notice period by the Company
PR Moya 8 July 2004 1 year, continuing thereafter subject to 3 months notice
the notice period by the Company
K Adams
Chairman of the Remuneration Committee
Technology Building
Terry Street
Sheffield
S9 2BU
Remuneration Committee Report continued
23
PlusNet plc
Annual report and accounts, year ended 31 December 2004 KPMG Audit Plc
1 The Embankment, Neville Street, Leeds LS1 4DW
Report of the independent auditors to the members of PlusNet plc
We have audited the financial statements on pages 25 to 38. We have also audited the information in the Remuneration Committee
Report that is described as having been audited.
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 are responsible for preparing the Annual Report and Accounts. As described on page 18, this includes the responsibility for
preparing the financial statements in accordance with applicable United Kingdom law and accounting standards. Our responsibilities,
as independent auditors, are established in the United Kingdom by statute, the Auditing Practices Board and by our profession’s ethical
guidance.
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements
and the part of the Remuneration Committee Report to be audited have been properly prepared in accordance with the Companies
Act 1985. We also report to you if, in our opinion, the Directors’ Report is not consistent with the financial statements, if the Company
has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if
information specified by law regarding directors’ remuneration and transactions with the Group is not disclosed.
We read the other information contained in the Annual Report and consider whether it is consistent with the audited financial
statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies
with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards 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 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 financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2004
and of the profit of the Group for the year then ended; and
The financial statements and the part of the Remuneration Committee Report to be audited have been properly prepared in
accordance with the Companies Act 1985.
KPMG Audit Plc
Chartered Accountants
Registered Auditor
22 February 2005
Report of the Independent Auditors
to the members of PlusNet plc
24
PlusNet plc
Annual report and accounts, year ended 31 December 2004 Note 2004 2004 2004 2003
£000 £000 £000 £000
Before Exceptional Total Total
exceptional item
item
Turnover 1 27,811 – 27,811 17,395
Cost of sales (18,810) _ (18,810) (11,219)
Gross Profit 9,001 – 9,001 6,176
Administrative expenses 2 (6,142) (1,167) (7,309) (4,364)
Operating profit 4 2,859 (1,167) 1,692 1,812
Net interest receivable 6 156 – 156 20
Profit on ordinary activities before tax 3,015 (1,167) 1,848 1,832
Tax on profit on ordinary activities 8 (992) – (992) (517)
Profit for the financial year 17,18 2,023 (1,167) 856 1,315
Earnings per share 7 7.63p _ 3.23p 5.26p
Fully diluted earnings per share 7 7.23p _ 3.06p 5.00p
There are no recognised gains or losses other than those that have passed through the profit and loss account.
The movement in reserves is set out in note 17.
In both the current and preceding period the Group made no material acquisitions and had no discontinued operations.
Consolidated Profit and Loss Account
for the year ended 31 December 2004
25
PlusNet plc
Annual report and accounts, year ended 31 December 2004 Note Group Group Company Company
2004 2003 2004 2003
£000 £000 £000 £000
Fixed Assets
Tangible assets 9 4,602 3,992 4,602 3,992
Intangible assets 10 – 53 – 53
Investment in subsidiary 11 – – – –
4,602 4,045 4,602 4,045
Current assets
Stock 12 19 128 19 128
Debtors 13 2,389 1,957 2,389 2,516
Cash at bank and in hand 6,771 2,475 6,771 2,475
9,179 4,560 9,179 5,119
Creditors: amounts falling due within one year 14 (5,730) (3,364) (5,730) (3,364)
Net current assets 3,449 1,196 3,449 1,755
Total assets less current liabilities 8,051 5,241 8,051 5,800
Deferred Income (529) (584) (529) (584)
Net assets 7,522 4,657 7,522 5,216
Capital and reserves
Called up share capital 16 56 – 56 –
Share premium account 17 2,003 – 2,003 –
Profit and loss account 17 5,463 4,657 5,463 5,216
Equity shareholders’ funds 18 7,522 4,657 7,522 5,216
These financial statements were approved by the Board of Directors on 22 February 2005 and were signed on its behalf by:
LA Strafford
Chief Executive
A Makanji
Finance Director
Balance Sheets
At 31 December 2004
26
PlusNet plc
Annual report and accounts, year ended 31 December 2004 Note 2004 2003
£000 £000
Net cash inflow from operating activities 19 5,675 3,687
Returns on investments and servicing of finance
Interest received 156 20
Net cash inflow from returns on investments
and servicing of finance 156 20
Taxation (1,091) (1,080)
Capital expenditure
Payments to acquire tangible fixed assets (2,453) (1,830)
Receipts from sale of tangible fixed assets – 314
Net cash outflow from capital expenditure (2,453) (1,516)
Net cash inflow before financing 2,287 1,111
Financing
Repayment of inter-Company borrowings – (87)
Issue of ordinary share capital 22 2,513 –
Expenses paid in connection with share issues 22 (504) _
Net cash inflow/(outflow) from financing 2,009 (87)
Increase in cash in the year 20,21 4,296 1,024
Consolidated Statement of Cash Flows
Y ear ended 31 December 2004
27
PlusNet plc
Annual report and accounts, year ended 31 December 2004 1 Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to 
the financial statements.
Basis of preparation
The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost
accounting rules.
Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiary undertaking made up to 
31 December 2004. As permitted by Section 230(4) of the Companies Act 1985 the Company is exempt from the requirement to
present its own profit and loss account.
Intangible assets and amortisation
Expenditure on research is written off against profits in the year in which it is incurred.
Development expenditure on software applications is capitalised to the extent that its recovery is reasonably assured. These costs are
amortised over the period to which revenue is expected to be derived from the application, subject to a maximum period of 5 years.
Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less depreciation. Depreciation is provided to write off the cost less the estimated residual value
of tangible fixed assets by equal instalments over their estimated useful economic lives as follows:
Computer equipment 5 years
Internal software development costs 5 years
Network development costs 5 years
Fixtures & fittings 2 - 15 years
Internal software development costs and network development costs include capitalised employee costs directly attributable to either
bringing computer equipment into working condition for its intended use within the business or developing and enhancing business
operating systems.
Pensions
The Company contributes to a defined contribution group personal pension scheme on behalf of employees. The assets of the scheme
are held separately from those of the Company in an independently administered fund. The amount charged against profits represents
the contributions payable to the scheme in respect of the accounting period.
Leases
Operating lease rentals are charged to the profit and loss account on a straight line basis over the period of the lease.
Taxation
Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation
and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS19.
Turnover
Service subscription income is recognised over the period to which it relates. Call revenue is recognised on the accruals basis. 
Turnover excludes value added tax. All turnover has arisen from activities within the UK.
Deferred income
Deferred income represents that portion of subscription fees paid by customers but relating to a future period.
Stocks
Stocks are stated at the lower of cost and net realisable value.
Notes to the Financial Statements 28
PlusNet plc
Annual report and accounts, year ended 31 December 2004 2 Exceptional item
The exceptional item represents professional fees of £1,167,000 incurred in obtaining a listing on AIM to establish PlusNet as an
independent PLC. Additional professional fees of £504,000 relating to share issue costs have been charged to the share premium
account in accordance with FRS4.
3 Segmental information
The Group had a single class of business during all periods reported on, and consequently does not present a segmental analysis.
The net assets of the Group at the end of each period were all attributable to the United Kingdom.
The profit before tax of the Group during each period was attributable to the United Kingdom.
4 Profit on ordinary activities before taxation
2004 2003
£000 £000
Depreciation and other amounts written off tangible fixed assets 1,843 1,686
Amortisation and other amounts written off intangible fixed assets 53 50
Operating leases – land & buildings 171 76
Fees paid to auditors – audit 30 20
– taxation advice 6 –
– transaction services 220 –
– other 6 –
5 Employees
The average number of persons employed by the Group (including Directors) during the year, analysed by category, was as follows:
2004 2003
Customer support 55 47
Marketing 15 15
Network services 18 15
Application development 23 36
Administration 11 7
122 120
Notes to the Financial Statements continued
29
PlusNet plc
Annual report and accounts, year ended 31 December 2004 5 Employees continued
The aggregate payroll costs of these persons were as follows:
2004 2003
£000 £000
Wages and salaries 3,400 2,698
Social security costs 402 261
Other pension costs 31 17
3,833 2,976
Disclosures on Directors’ emoluments, share options, long term incentive plans and pension contributions required by the Companies
Act 1985 are on pages 19 to 23 within the Remuneration Committee Report.
6 Net interest receivable
2004 2003
£000 £000
Bank interest 156 20
156 20
7 Earnings per share
2004 2003
Earnings Net Weighted Earnings Net Weighted
per share earnings average number per share earnings average number
of shares of shares
pence £000 no. of shares pence £000 no. of shares
Basic earnings per share 3.23 856 26,503,675 5.26 1,315 25,000,000
Earnings per share – pre exceptional 7.63 2,023 26,503,675 5.26 1,315 25,000,000
Fully diluted earnings per share 3.06 856 27,986,075 5.00 1,315 26,313,790
Fully diluted earnings per share – pre exceptional 7.23 2,023 27,986,075 5.00 1,315 26,313,790
Notes to the Financial Statements continued
30
PlusNet plc
Annual report and accounts, year ended 31 December 2004 The diluted weighted average number of shares is made up as follows:
2004 2003
Weighted average number of shares in issue 26,503,675 25,000,000
Add: maximum dilution from share options 1,482,400 1,313,790
Diluted weighted average number of shares in issue 27,986,075 26,313,790
The number of shares in issue and the diluted number of shares in issue for the year to 31 December 2003 and the period 1 January
2004 to 7 July 2004 have been restated to reflect the number of shares in issue following the share reorganisation on 7 July 2004.
Before restatement there were 50 million shares in issue for the year to 31 December 2003 and a diluted weighted average number 
of shares in issue of 52,627,850.
8 Taxation
2004 2003
£000 £000
UK corporation tax – current year 989 –
Group relief – current year – 547
Group relief – prior year 76 (30)
1,065 517
Deferred taxation
Excess of depreciation over tax allowances (18) –
Other timing differences (24) 2
Prior year adjustment (31) (2)
992 517
The corporation tax rate for 2004 is 54% (2003: 28%) compared with a standard UK corporation tax rate of 30% (2003: 30%). 
The differences are explained below:
2004 2003
£000 £000
Profit on ordinary activities before tax 1,848 1,832
Current tax at 30% (2003: 30%) 554 550
Adjustment to tax charge in respect of prior years 76 (30)
Expenses disallowed 393 –
Excess of depreciation over capital allowances 18 –
Other timing differences 24 (3)
Total current tax charge (see above) 1,065 517
Notes to the Financial Statements continued
31
PlusNet plc
Annual report and accounts, year ended 31 December 2004 9 Tangible Fixed Assets (Group & Company)
Computer Internal Network Fixtures Total
equipment software development & fittings
development costs
costs
£000 £000 £000 £000 £000
Cost
At beginning of year 5,629 2,342 927 344 9,242
Additions 1,490 719 240 4 2,453
At end of year 7,119 3,061 1,167 348 11,695
Depreciation
At beginning of year 3,890 836 428 96 5,250
Charge for year 1,068 524 192 59 1,843
At end of year 4,958 1,360 620 155 7,093
At 31 December 2004 2,161 1,701 547 193 4,602
At 31 December 2003 1,739 1,506 499 248 3,992
10 Intangible assets (Group & Company)
Development costs
£000
Cost
At beginning of year 249
At end of year 249
Amortisation
At beginning of year 196
Charge for year 53
At end of year 249
At 31 December 2004 –
At 31 December 2003 53
Notes to the Financial Statements continued
32
PlusNet plc
Annual report and accounts, year ended 31 December 2004 11 Fixed asset investments (Company)
Details of the Company’s dormant subsidiary undertaking which is included in the Company’s records at the original cost of £100 
is provided below:
Name Proportion of ordinary share capital held Country of registration Nature of business
PlusNet ASP Limited 100% England & Wales Dormant
(Formerly Insight ASP Limited)
12 Stock (Group & Company)
2004 2003
£000 £000
Goods held for resale 19 128
13 Debtors
Group Group Company Company
2004 2003 2004 2003
£000 £000 £000 £000
Trade debtors 583 537 583 537
Amounts owed by Group undertakings – – – 956
Other debtors 584 416 584 19
Prepayments and accrued income 920 775 920 775
Deferred tax (see note 15) 302 229 302 229
2,389 1,957 2,389 2,516
14 Creditors (Group & Company)
2004 2003
£000 £000
Trade creditors 2,647 1,650
Corporation tax 445 471
Other tax & social security 1,053 417
Other creditors 142 70
Accruals 1,443 756
5,730 3,364
Notes to the Financial Statements continued
33
PlusNet plc
Annual report and accounts, year ended 31 December 2004 15 Deferred tax
£000
Deferred tax asset at beginning of year (229)
Excess depreciation over capital allowances (45)
Other timing differences (28)
Deferred tax asset at end of year (see note 13) (302)
The amounts provided for deferred taxation:
2004 2003
£000 £000
Difference between accumulated depreciation and capital allowances (274) (229)
Other timing differences (28) –
Deferred tax asset at end of year (see note 13) (302) (229)
16 Share capital
2004 2003
££
Authorised
At 1 January 2004 150 150
Authorised during the year 99,850 –
At 31 December 2004 100,000 150
Note Number of shares Nominal value
£
Issued
At 1 January 2004 50,000,000 100
Consolidation of share capital (i) (49,950,000) –
Capitalisation of Company’s profit and loss account (ii) 24,950,000 49,900
New shares issued (iii) 2,450,102 4,900
Share options exercised (iv) 638,000 1,276
In issue at 31 December 2004 28,088,102 56,176
(i) On 7 July 2004, the Company consolidated the issued share capital of 50,000,000 ordinary shares of 0.0002p each into 
50,000 ordinary shares of 0.2p each.
(ii) On 7 July 2004 the Company capitalised £49,900 of profit and loss account reserves into 24,950,000 new shares of 0.2p each.
(iii) On 14 July 2004 the Company allotted and issued 2,450,102 ordinary shares pursuant to a placing on the AIM market. 
As a result of the issue of shares consideration of £2,205,092 was received.
(iv) During the period 14 July 2004 to 31 December 2004 638,000 share options were exercised for consideration of £308,334.
Shares that will have to be issued in the future as a result of the exercise of share options are of the same class and carry the same
rights as the shares already in issue.
Notes to the Financial Statements continued
34
PlusNet plc
Annual report and accounts, year ended 31 December 2004 Share options
At 31 December 2004 rights to options over 3,404,198 ordinary shares of the Company were outstanding as follows:
At 1 Jan 2004* Granted Exercised/ Cancelled At 31 Dec Exercise Exercise period
in the year Lapsed in the year 2004 price
in the year
2000 Share option scheme 1,910,000 – (417,000) (6,000) 1,487,000 40p 14 July 2004 – 5 May 2006
306,500 – (221,000) (31,750) 53,750 64p 14 July 2004 – 5 May 2006
2004 Share option scheme – 850,356 – (141,033) 709,323 90p 13 July 2006 – 12 July 2009
– 91,225 – _ 91,225 154p 15 Dec 2006 – 14 Dec 2009
2004 Performance related – 1,074,150 – (209,250) 864,900 90p 13 July 2007 – 12 July 2014
share option scheme – 198,000 – – 198,000 154p 15 Dec 2007 – 14 Dec 2014
2,216,500 2,213,731 (638,000) (388,033) 3,404,198
* Restated to reflect share consolidation described above.
17 Reserves
Share capital Share premium Profit and Total
loss account 2004
Group £000 £000 £000 £000
At 1 January 2004 – – 4,657 4,657
Capitalisation of reserves 50 – (50) –
Issue of ordinary shares 6 2,507 – 2,513
Issue costs – (504) – (504)
Retained profit – – 856 856
At 31 December 2004 56 2,003 5,463 7,522
Share capital Share premium Profit and Total
loss account 2004
Company £000 £000 £000 £000
At 1 January 2004 – – 5,216 5,216
Capitalisation of reserves 50 – (50) –
Issue of ordinary shares 6 2,507 – 2,513
Issue costs – (504) – (504)
Retained profit – – 297 297
At 31 December 2004 56 2,003 5,463 7,522
Notes to the Financial Statements continued
35
PlusNet plc
Annual report and accounts, year ended 31 December 2004 18 Reconciliation of movement in shareholders’ funds
Group Group Company Company
2004 2003 2004 2003
£000 £000 £000 £000
Shareholders’ funds at the beginning of year 4,657 3,342 5,216 3,901
Retained profit for the year 856 1,315 297 1,315
Issue of ordinary shares 2,513 – 2,513 –
Issue costs of ordinary shares (504) (504)
Shareholders’ funds at end of year 7,522 4,657 7,522 5,216
19 Reconciliation of operating profit to net cash inflow from operating activities
2004 2003
£000 £000
Operating profit 1,692 1,812
Depreciation 1,843 1,686
Amortisation 53 50
Decrease/(increase) in stocks 109 (75)
Increase in debtors (359) (274)
Increase in creditors 2,392 311
Decrease/(increase) in deferred income (55) 177
Net cash inflow from operating activities 5,675 3,687
20 Analysis of net funds
At 1 January 2004 Cash flow At 31 December 2004
£000 £000 £000
Cash at bank and in hand 2,475 4,296 6,771
Total 2,475 4,296 6,771
21 Reconciliation of net cash flow to movement in net funds
£000
Increase in cash in the year 4,296
Net funds at 1 January 2004 2,475
Net funds at 31 December 2004 6,771
Notes to the Financial Statements continued
36
PlusNet plc
Annual report and accounts, year ended 31 December 2004 22 Proceeds from issue of ordinary share capital
£000
Proceeds from issue of new shares at flotation 2,205
Proceeds from issue of new shares in respect of options
exercised during the period 14 July 2004 to 31 December 2004 308
Proceeds from issue of ordinary share capital 2,513
Expenses paid in connection with share issue (504)
Exceptional costs relating to professional advice in respect of the flotation (1,167)
Net proceeds received by the Company in the year 842
23 Capital commitments
There were no capital commitments as at 31 December 2004 (2003: £nil)
24 Leasing commitments
Annual commitments in respect of non-cancellable operating leases relating to land & buildings are as follows:
2004 2003
£000 £000
Operating leases which expire:
Within one year 95 –
Over five years 76 76
171 76
25 Pensions
The Company operates a defined contribution group personal pension scheme. The pension cost charge for the period represents
contributions payable by the Company to the fund and amounted to £30,759 (2003: £17,437). The amount of outstanding
contributions at the year end amounted to £7,391 (2003: £2,753).
Notes to the Financial Statements continued
37
PlusNet plc
Annual report and accounts, year ended 31 December 2004 26 Related Party Transactions
At 1 January 2004 Insight UK Limited owned 95% of the issued share capital of PlusNet plc. Insight UK Limited reduced its
shareholding to 45% through divestment on flotation. On 13 December 2004 Insight UK Limited sold the remaining amount of its
investment in PlusNet plc of 45%. During the period in 2004 in which the two parties were related the following transactions
occurred:
PlusNet plc made purchases of goods and services from Insight UK Limited totalling £667,030 (2003: £1,048,257).
Insight UK Limited purchased services from PlusNet plc totalling £131,248 (2003: £287,768).
At 31 December 2004 PlusNet plc was owed £514,499 by Insight UK Limited (2003: PlusNet plc owed £112,701 to Insight UK Limited).
27 Transactions with Directors
The following Directors received interest free loans during the year; Lee Strafford £1,000, Ashok Makanji £1,000, Neil Comer £1,000.
All loans were repaid before the year end.
28 Ultimate controlling party
At 31 December 2004 there was no ultimate controlling party and the Company was not a subsidiary undertaking of a parent
undertaking.
At 31 December 2003 the parent undertaking and controlling party was Insight Enterprises Inc. The largest Group in which the results
of the Company were consolidated was that headed by Insight Enterprises Inc, incorporated in the USA. The smallest Group in which
they were consolidated is that headed by Insight Enterprises UK Limited, incorporated in England and Wales. The consolidated
accounts of Insight Enterprises Inc., are available to the public and may be obtained from Insight Enterprises Inc., Investor Relations,
1305 West Auto Drive, Tempe, Arizona, 85284 USA or alternatively from the web-site at www.insight.com.
Notes to the Financial Statements continued
38
PlusNet plc
Annual report and accounts, year ended 31 December 2004 “ADSL”
Asymmetric Digital Subscriber Line
“Bandwidth”
Capacity of data concurrently transmitted permissible on 
a network circuit
“Broadband”
Internet connectivity speeds of more than 128 kilo bits 
per second
“BT Retail”
The division of BT that aggregates internet wholesale services
and interfaces with the End user
“BT Wholesale”
The division of BT that owns the telecommunications network
in the UK and provides access to the internet infrastructure on 
a wholesale basis
“Carrier class”
Infrastructure that has the inherent scalability, performance,
resilience and inherent redundancy demanded of major
Telecoms carriers
“Connectivity”
Connection to the internet
“Internet Protocol” or “IP”
A standardised method of transporting information across 
the internet in packets of data
“ISP”
Internet service provider
“Narrowband”
Internet connectivity speeds of up to 128 kilo bits per second
“Ofcom”
The regulator for the UK communications industries, 
with responsibilities across television, radio and wireless
communication services
“PSTN”
Public Switched Telephone Network, a standard telephone
service that most households use
“SDSL”
Symmetric Digital Subscriber Line
“SMS”
Short Message Service
“Teleworker”
The platform PlusNet has supplied for and operates on BT’s
behalf to address and administer BT’s corporate customers
teleworking requirements
“VoFI”
Voice over WiFi
“Voice over IP” or “VoIP”
Voice telephony delivered over Internet Protocol
“WiFi”
Wireless fidelity, otherwise known as Wireless Networking
“WiMAX”
Broadband wireless standard to extend local WiFi networks
across greater distances or to deliver last mile connectivity
“Workplace”
PlusNet’s in-house developed operational system
Glossary 39
PlusNet plc
Annual report and accounts, year ended 31 December 2004 Notes 40
PlusNet plc
Annual report and accounts, year ended 31 December 2004 The smarter way to broadband
PlusNet plc  Annual report and accounts, year ended 31 December 2004
Technology Building
Terry Street
Shefﬁeld
S9 2BU
www.plus.net
The smarter way to broadband   PlusNet plc  Annual report and accounts, year ended 31 December 2004