Fibernet Group plc Annual Report & Accounts 2004
Annual Report & Accounts 2004
Moving 
Forward
Fibernet Group plc
Rosalind House, Jays Close
Viables, Basingstoke
Hampshire RG22 4BS
United Kingdom
T +44 (0)1256 858685
F +44 (0)1256 858601
info@fibernet.co.uk
www.fibernet.co.uk
Fibernet GmbH
Gutleutstr . 175
60327 Frankfurt am Main
Germany
T +49 (0) 69 238 05 90
F +49 (0)69 238 05 926
info@fibernet.de
www.fibernet.de
01 Financial Highlights
02 Chairman’s Statement
04 Chief Executive’s Review
12 Financial Director’s Review
16 Board of Directors
18 Directors’ Report
20 Remuneration Report
25 Corporate Governance
27 Statement of Directors’ Responsibilities
28 Independent Auditors’ Report
30 Consolidated Profit and Loss Account
31 Consolidated Balance Sheet
32 Company Balance Sheet
33 Consolidated Cash Flow Statement
34 Notes to the Financial Statements
53 Notice of Annual General Meeting
Fibernet combines the skills
of both network integrator
and network service provider.
Our goal is to help customers
in our niche market sectors
increase their profitability
through more effective
application of advanced
communications technologies
and services.
Who we work with
Enterprise sector
We provide complex, mission critical
communications services within and
between the premises of blue chip
organisations that have a significant
UK presence.
These bespoke, long term, high
value network services contracts
support the core business transactions
of our customers.
Service Provider sector
We provide managed network
services within and between major
towns and cities that allow other
service providers to extend the
geographic reach of their own
networks. These services are used
both to connect end customers and
also to facilitate connections
between operators.
Representative customers
3i Abbey Alexander Forbes
AXA Barclays Cadbury
Schweppes Capita Chase de V ere
CIBA Citigroup CFS Credit
Lyonnais Credit Suisse First Boston
Debenhams Deloitte Direct Line
Epson Fujitsu Goldman Sachs
HSBC IBM JP Morgan Lazard
Lloyds TSB Magnox Nationwide
NEXT Nottingham Building Society
PPP Prudential Scottish Executive
Standard Chartered Bank Siemens
Symbian T elegraph Group T esco
T exaco Thomson Financial T otal Oil
Winterthur
Representative customers 
AT&T BBC Belgacom BT
Cable and Wireless Centrica
Channel 4 Eircom Energis
Equant Esat Eutex France
T elcom Gamma Global Crossing
IDT GNT Jazztel Kingston
Communications KPN Level 3
LINX MFS Mistral NTL NTT
One.Tel OPAL PIPEX PRIMUS
REACH SINGTEL SPRINT ST AR
Sunguard Swisscom T-Systems
Tele2 T ele Danmark T elefonica
T eleglobe T elekom Austria T elenor
T elewest T eliaSonera T elstra
Thus Tiscali Tyco Verizon VTL
Wavecrest Y our Communications Fibernet Group plc Annual Report & Accounts 2004
Annual Report & Accounts 2004
Moving 
Forward
Fibernet Group plc
Rosalind House, Jays Close
Viables, Basingstoke
Hampshire RG22 4BS
United Kingdom
T +44 (0)1256 858685
F +44 (0)1256 858601
info@fibernet.co.uk
www.fibernet.co.uk
Fibernet GmbH
Gutleutstr . 175
60327 Frankfurt am Main
Germany
T +49 (0) 69 238 05 90
F +49 (0)69 238 05 926
info@fibernet.de
www.fibernet.de
01 Financial Highlights
02 Chairman’s Statement
04 Chief Executive’s Review
12 Financial Director’s Review
16 Board of Directors
18 Directors’ Report
20 Remuneration Report
25 Corporate Governance
27 Statement of Directors’ Responsibilities
28 Independent Auditors’ Report
30 Consolidated Profit and Loss Account
31 Consolidated Balance Sheet
32 Company Balance Sheet
33 Consolidated Cash Flow Statement
34 Notes to the Financial Statements
53 Notice of Annual General Meeting
Fibernet combines the skills
of both network integrator
and network service provider.
Our goal is to help customers
in our niche market sectors
increase their profitability
through more effective
application of advanced
communications technologies
and services.
Who we work with
Enterprise sector
We provide complex, mission critical
communications services within and
between the premises of blue chip
organisations that have a significant
UK presence.
These bespoke, long term, high
value network services contracts
support the core business transactions
of our customers.
Service Provider sector
We provide managed network
services within and between major
towns and cities that allow other
service providers to extend the
geographic reach of their own
networks. These services are used
both to connect end customers and
also to facilitate connections
between operators.
Representative customers
3i Abbey Alexander Forbes
AXA Barclays Cadbury
Schweppes Capita Chase de V ere
CIBA Citigroup CFS Credit
Lyonnais Credit Suisse First Boston
Debenhams Deloitte Direct Line
Epson Fujitsu Goldman Sachs
HSBC IBM JP Morgan Lazard
Lloyds TSB Magnox Nationwide
NEXT Nottingham Building Society
PPP Prudential Scottish Executive
Standard Chartered Bank Siemens
Symbian T elegraph Group T esco
T exaco Thomson Financial T otal Oil
Winterthur
Representative customers 
AT&T BBC Belgacom BT
Cable and Wireless Centrica
Channel 4 Eircom Energis
Equant Esat Eutex France
T elcom Gamma Global Crossing
IDT GNT Jazztel Kingston
Communications KPN Level 3
LINX MFS Mistral NTL NTT
One.Tel OPAL PIPEX PRIMUS
REACH SINGTEL SPRINT ST AR
Sunguard Swisscom T-Systems
Tele2 T ele Danmark T elefonica
T eleglobe T elekom Austria T elenor
T elewest T eliaSonera T elstra
Thus Tiscali Tyco Verizon VTL
Wavecrest Y our Communications Group at a glance
1986
Fibernet founded as a
systems integrator ,
providing Local Area
Network (LAN) solutions
1995
Fibernet granted Public
T elecommunications
Licence (PTO)
1996
Fibernet lists on AIM,
raising £10m of funding
towards construction of
its national fibre-optic
network, TANet
1998
Fibernet moves up
to the full list of the
London Stock Exchange
1999
Launch of London
metropolitan network,
including London
Carrier Ring
Where we operate
Network routes provide
coverage for 95% of UK
businesses
UK London
Frankfurt
Fibernet operates a niche strategy
We provide high value voice and
data networking services on long
term contacts within and between
the premises of our customers and
their customers. We are distinguished
by our capability , our focus, the quality
of our customers and the quality of
the business we do with them.
Our specialist customer teams
are best considered as integrators
that own a customisable national
network rather than as a smaller
version of an incumbent operator .
Our flexibility , willingness and
responsiveness together with our
specialisation in advanced
technologies helps our customers
differentiate their own services.
The underground routes our fibre
optic networks follow allow us to target
the largest and most demanding
businesses in the UK. With nearly
100 UK points of presence and
reaching more than 50 towns and
cities the national network routes
provide a hugely powerful conduit
for information destined to travel
between the headquarters, branch
and retail premises of our customers.
Our London metropolitan
network is one of the most pervasive
in the city , taking us within economic
reach of many of the major data
centres and headquarters operations
we look to serve. We have further
metropolitan networks in all major
UK cities, designed to take us as
close as possible to customers who
are headquartered regionally . It is
the close proximity of our network to
our target customers that enables us
to provide more cost effective services
than many of our competitors.
Our London and Frankfurt
metropolitan networks are also
home to our “Carrier Ring” services
– probably the busiest telecoms
hubs in Europe.
Many customers also appreciate
our willingness to upgrade and
integrate their local area network
technologies into a single, managed,
national network service.
95
%
2001
Awards:
Voice and Data Provider
of the Y ear
First national Ethernet
and IP VPN services
launched
Launch of Frankfurt
metropolitan network,
including Frankfurt
Carrier Ring
2002
Awards:
Voice and Data Service
Provider of the year
– 2nd consecutive year
Carrier Rings top 20
billion switched minutes
2003
Fibernet customer
CoOperative Bank
wins “Best T elecoms
Strategy”
Network investment
trebles London metro
coverage
Launch of TANet
Callchoice service
for contact centres
Launch of Ethersphere
2nd generation
Ethernet services
How we operate
We focus on two markets
Our Enterprise customers are
typically the largest commercial
organisations in the UK. We focus
upon those with multiple premises
and a need to continually move very
large quantities of information within
and between them. Such organisations
are typically not prepared to accept
“off the shelf” service.
Our Service Provider customers
are typically other telecoms operators,
ISPs or integrators, who can benefit
from extremely high service levels,
the geographic reach of our network,
the capacity it has available, and the
technologies that distinguish it.
We focus on accommodating
individual customer needs by
designing and building “Bespoke”
services. Our services must dovetail
precisely with equipment they plan
to retain and provide clearly visible
advantages over services we plan
to replace.
The services below provide
a snapshot of some of the main
applications that drove our business
growth in 2004.
Enterprise Customers
Business Continuity:
Orders for TANet Optical services
represented more than £35m TCV
over the last 2 years.
With a TANet Optical Service, the
largest commercial organisations
are able to confirm that their business
continuity obligations may be met by
ensuring that failures at main
processing centres can be recovered
without pause at geographically
separate backup centres.
Server Consolidation:
T ANet Ethernet services deliver 5 times
more bandwith for the same price.
Fibernet’s Ethersphere service
makes it sensible for large organisations
to relocate branch office “server”
computers back to a central location.
As well as seeing strong customer
growth in this area in 2004 it was also
rewarding to be recognised as the
“European Ethernet Service Provider
of the Y ear” by international standards
group The Metro Ethernet Forum.
Voice and data convergence:
Voice over IP (VoIP) brings many
benefits to corporate customers.
It is widely considered inevitable that
over time all current generation PBX
(switchboard) systems will migrate to
VoIP . Fibernet’s 2nd generation MPLS
IPVPN service has supported not
only encouraging growth in the number
of Enterprise customers but also a
successful new resale initiative.
Non-geographic call management:
TANet Callchoice
Callchoice has been well received
by large contact centres, including
a major new Retail customer signing,
demanding improved customer
experience, lower costs and more
effective call management for their
inbound telephony services.
Service Provider Customers
National Access:
Many ISPs and Voice operators
provide service on a national basis,
yet do not own national network
assets of their own. Fibernet provide
a fast and cost effective alternative to
“self building” national infrastructure.
Our investment in a DSL and PPC
(wholesale leased line interconnects
with BT) infrastructure in 2003 has
led to several major customer signings
in 2004. During the year , our new
Ethersphere services have hosted
an almost wholesale migration by
ISPs from older SDH technology to
this newer , more cost effective service.
Our TANet Optical services have
also seen significant new orders
from Integrators like IBM and Fujitsu.
Interconnect:
Membership of Fibernet’s Carrier
Rings grew by 20% in 2004.
Membership of Fibernet’s London
and Frankfurt Carrier Rings grew by
20% and broke through the 100 barrier
in 2004. It currently stands at 105
international telecoms operators
who exchange in excess of 25 billion
minutes of voice calls with each other
annually . 2004 also saw the introduction
of the Fibernet sponsored “Carrier
Exchange Club” – a bi-annual “trading
floor” event designed to encourage
further business between members.
Designed by navyblue
Photography by Patrick Harrison
Printed by St Ives Westerham Press Group at a glance
1986
Fibernet founded as a
systems integrator ,
providing Local Area
Network (LAN) solutions
1995
Fibernet granted Public
T elecommunications
Licence (PTO)
1996
Fibernet lists on AIM,
raising £10m of funding
towards construction of
its national fibre-optic
network, TANet
1998
Fibernet moves up
to the full list of the
London Stock Exchange
1999
Launch of London
metropolitan network,
including London
Carrier Ring
Where we operate
Network routes provide
coverage for 95% of UK
businesses
UK London
Frankfurt
Fibernet operates a niche strategy
We provide high value voice and
data networking services on long
term contacts within and between
the premises of our customers and
their customers. We are distinguished
by our capability , our focus, the quality
of our customers and the quality of
the business we do with them.
Our specialist customer teams
are best considered as integrators
that own a customisable national
network rather than as a smaller
version of an incumbent operator .
Our flexibility , willingness and
responsiveness together with our
specialisation in advanced
technologies helps our customers
differentiate their own services.
The underground routes our fibre
optic networks follow allow us to target
the largest and most demanding
businesses in the UK. With nearly
100 UK points of presence and
reaching more than 50 towns and
cities the national network routes
provide a hugely powerful conduit
for information destined to travel
between the headquarters, branch
and retail premises of our customers.
Our London metropolitan
network is one of the most pervasive
in the city , taking us within economic
reach of many of the major data
centres and headquarters operations
we look to serve. We have further
metropolitan networks in all major
UK cities, designed to take us as
close as possible to customers who
are headquartered regionally . It is
the close proximity of our network to
our target customers that enables us
to provide more cost effective services
than many of our competitors.
Our London and Frankfurt
metropolitan networks are also
home to our “Carrier Ring” services
– probably the busiest telecoms
hubs in Europe.
Many customers also appreciate
our willingness to upgrade and
integrate their local area network
technologies into a single, managed,
national network service.
95
%
2001
Awards:
Voice and Data Provider
of the Y ear
First national Ethernet
and IP VPN services
launched
Launch of Frankfurt
metropolitan network,
including Frankfurt
Carrier Ring
2002
Awards:
Voice and Data Service
Provider of the year
– 2nd consecutive year
Carrier Rings top 20
billion switched minutes
2003
Fibernet customer
CoOperative Bank
wins “Best T elecoms
Strategy”
Network investment
trebles London metro
coverage
Launch of TANet
Callchoice service
for contact centres
Launch of Ethersphere
2nd generation
Ethernet services
How we operate
We focus on two markets
Our Enterprise customers are
typically the largest commercial
organisations in the UK. We focus
upon those with multiple premises
and a need to continually move very
large quantities of information within
and between them. Such organisations
are typically not prepared to accept
“off the shelf” service.
Our Service Provider customers
are typically other telecoms operators,
ISPs or integrators, who can benefit
from extremely high service levels,
the geographic reach of our network,
the capacity it has available, and the
technologies that distinguish it.
We focus on accommodating
individual customer needs by
designing and building “Bespoke”
services. Our services must dovetail
precisely with equipment they plan
to retain and provide clearly visible
advantages over services we plan
to replace.
The services below provide
a snapshot of some of the main
applications that drove our business
growth in 2004.
Enterprise Customers
Business Continuity:
Orders for TANet Optical services
represented more than £35m TCV
over the last 2 years.
With a TANet Optical Service, the
largest commercial organisations
are able to confirm that their business
continuity obligations may be met by
ensuring that failures at main
processing centres can be recovered
without pause at geographically
separate backup centres.
Server Consolidation:
T ANet Ethernet services deliver 5 times
more bandwith for the same price.
Fibernet’s Ethersphere service
makes it sensible for large organisations
to relocate branch office “server”
computers back to a central location.
As well as seeing strong customer
growth in this area in 2004 it was also
rewarding to be recognised as the
“European Ethernet Service Provider
of the Y ear” by international standards
group The Metro Ethernet Forum.
Voice and data convergence:
Voice over IP (VoIP) brings many
benefits to corporate customers.
It is widely considered inevitable that
over time all current generation PBX
(switchboard) systems will migrate to
VoIP . Fibernet’s 2nd generation MPLS
IPVPN service has supported not
only encouraging growth in the number
of Enterprise customers but also a
successful new resale initiative.
Non-geographic call management:
TANet Callchoice
Callchoice has been well received
by large contact centres, including
a major new Retail customer signing,
demanding improved customer
experience, lower costs and more
effective call management for their
inbound telephony services.
Service Provider Customers
National Access:
Many ISPs and Voice operators
provide service on a national basis,
yet do not own national network
assets of their own. Fibernet provide
a fast and cost effective alternative to
“self building” national infrastructure.
Our investment in a DSL and PPC
(wholesale leased line interconnects
with BT) infrastructure in 2003 has
led to several major customer signings
in 2004. During the year , our new
Ethersphere services have hosted
an almost wholesale migration by
ISPs from older SDH technology to
this newer , more cost effective service.
Our TANet Optical services have
also seen significant new orders
from Integrators like IBM and Fujitsu.
Interconnect:
Membership of Fibernet’s Carrier
Rings grew by 20% in 2004.
Membership of Fibernet’s London
and Frankfurt Carrier Rings grew by
20% and broke through the 100 barrier
in 2004. It currently stands at 105
international telecoms operators
who exchange in excess of 25 billion
minutes of voice calls with each other
annually . 2004 also saw the introduction
of the Fibernet sponsored “Carrier
Exchange Club” – a bi-annual “trading
floor” event designed to encourage
further business between members.
Designed by navyblue
Photography by Patrick Harrison
Printed by St Ives Westerham Press Financial Highlights
42.2
36.3
36.7
7.3
EBITDA from continuing operations, before exceptional items**
£m
* From continuing operations.
** EBITDA is reconciled to operating loss in note 7.
2004
2003
2002
5.0
Revenue*
£m
2004
2003
2002
2004
Awards:
Metro Ethernet Service
Provider of the Y ear
Best Carrier of the Year
Awarded ISO9001:2000
Carrier Rings top 100
customers and
25 billion switched
minutes
2nd generation MPLS IP
VPN services introduced
Loss before tax from continuing operations, before exceptional items
£m
2004
2003
2002
-10.2
-13.8
-5.7
120.9
97.8
71.9
Long Term Contracted Revenues
£m
2004
2003
2002
1
12.6
  Chairman’s Statement
2 3
I am pleased to report another year 
of progress for the Company.
Revenues increased year on year by
16 per cent from £36.3m to £42.2m.
Gross margins before exceptional
items* improved year on year from
26.6 per cent to 35.3 per cent.
Administrative expenses before
exceptional items* were contained 
to a 5 per cent increase. Losses 
from continuing operations before
exceptional items* have progressively
improved from £13.8m in the year 
to August 2002 to £10.2m in the 
year to August 2003 and £5.7m in the
year ended August 2004. The loss for
the financial year including exceptional
items was £5.1m as compared to
£5.0m in the prior period.
The strength of Fibernet’s core
business continues to be that existing
and new customer revenues are
derived from long-term (typically 3-7
years) contracts with predominantly
blue chip organisations in both our
Enterprise and Service Provider target
markets. Revenue is recognised
evenly over the contract period.
During the year ended August 2004,
we signed a further £53.6m of such
new contracts. These new contract
wins are in addition to the positive
effects of contract renewals with
existing customers. The value of our
long-term contracted revenue as at
31 August 2004 was £120.9m, an
increase of £23.1m over the prior
period figure of £97.8m.
EBITDA** before exceptional items
increased to £12.6m for the current
year as compared to £7.3m in the prior
period. We finished the year with a cash
balance of £15.7m as compared to
£24.9m for the prior period. We have
adequate cash headroom to execute
our current business plan.
We have achieved significant
progress during 2004. We continue to
focus on niche markets where we can
demonstrate clear competitive strength.
We have the financial resources
needed to continue to execute this
strategy and are optimistic for the future.
Lord Wolfson of Sunningdale
Chairman
13 October 2004
* Exceptional items are detailed
in note 3.
** EBITDA is reconciled to operating
loss in note 7.
Revenues increased by 1 6%,
gross margins improved
to 35.3%.
We have achieved significant
progress during 2004.
  2004 has been a year of significant
achievement for Fibernet.
Our continued focus on winning new
customers, maintaining a high rate
of renewals, cash management and
cost control has delivered a strong
performance. In the year to August
2003 we reduced losses before
exceptional items* through cost
reduction measures. In the year to
August 2004 we have reduced such
losses* further through revenue growth
and gross margin improvement.
We have focused on signing new
business across a broader range 
of vertical markets with both existing
and new services.
As the positive effect of the
sustained high levels of new
contracts signed and installed over
the last two years is now being felt,
I am pleased to report an increase
in revenues for the year from £36.3m
to £42.2m. Combined with our close
control of costs, this has reduced
our loss for the financial year before
exceptional items* from £10.2m in
2003 to £5.7m in 2004. EBITDA**
before exceptional items rose from
£7.3m in 2003 to £12.6m this year .
The loss for the financial year
including exceptional items was
£5.1m as compared to £5.0m in
the prior period.
Chief Executive’s Review
An increase in revenue,
combined with our close
control of costs has greatly
improved our bottom line
performance.
Losses before exceptional
items have reduced from
£10.2m in 2003 to £5.7m
in 2004.
4 The total value of new contracts
signed in the year was £53.6m. Whilst
this was below the £58.0m achieved in
2003, the annual revenue contribution
of the 2004 orders shows an increase
on 2003 attributable to marginally
lower average contract lengths. The
important figure of total long-term
contracted revenues of the business
rose significantly from £97.8m at the
end of 2003 to £120.9m at the 2004
year end.
The renewal of customer contracts
nearing expiry has also gone to plan
during the year both with the expected
number of re-signings and their actual
revenue value. The fact that we are
able to achieve these renewal levels is
not only a result of our competitiveness
but also a testament to the high quality
of service and the close relationships
that we keep with our customers.
Cash reserves at the end of the year
were as expected at £15.7m compared
with £24.9m a year ago and £20.5m 
at the half year . Our operating 
cash flow improved from £9.0m to
£12.2m during the period and capital
expenditure was £15.8m. It continues
to be the case that the majority of
capital expenditure is related to the
acquisition of new customers.
Against a continuing background
of relative uncertainty in the general
telecommunications market, I believe
that Fibernet’s continued focus on its
market niche has produced a very
satisfactory result for the year .
Looking forward, we continue 
to expect a return to a position 
of sustainable profitability in the
medium-term with losses reducing
further in the year to August 2005.
We have made an encouraging start
to 2005 with significant contracts signed
from customers in the Banking and
Pharmaceuticals sectors and our
underlying contract renewal rate is as
expected. However , it should be noted
that one of our larger customer contracts
is due for renewal in the year ahead
and our current expectation is that this
renewal will be significantly lower than
the normal renewal rate; being due to
exceptional changes in the customer’s
own business. This being the case, the
rate of improvement would slow for the
second half of the year ahead.
* Exceptional items are detailed 
in note 3.
** EBITDA is reconciled to operating
loss in note 7.
5 6
During the year we were successful
in signing new contracts with many
corporates including Deloitte, Royal Bank
of Scotland and Co-Operative Financial
Services and I am pleased to report
strong rates of contract renewals with
customers including Goldman Sachs
and Standard Chartered Bank.
The services we provide to these
markets continue to be dominated 
by combined data, voice and video
transfer between the major centres 
of our customers. We have also signed
increasing numbers of contracts for
services that are designed to facilitate
the efficient storage and retrieval of
data. Fibernet is particularly well
placed in this part of the market, both
with a long experience in the area 
and also assisted by our Advanced
T echnology Partnership with Cisco
Systems for supply of the specialised
optical networking components that
are required to provide the service 
to the customer .
It has been pleasing to see the
take up of the new services that we
developed last year including our
Callchoice product and the expanded
TANet Access portfolio which allows
us to serve not only the high
speed/head office requirements of
our customers, but also, their branch
offices and retail outlets.
Customers and Markets
It is our enduring ability to provide
innovative, reliable and cost effective
services to our Enterprise and Service
Provider customers that provides us
with our competitiveness. However,
what sets us apart is the bespoke
nature of the way we design, install and
care for the service that our customers
use. Crucially , this also extends to the
commercial and contractual matters
and provides for flexibility over the life
of the relationship.
Our Service Provider market has
continued to develop well during the
year . Significant new contract wins
include Energis, AT&T and Fujitsu.
Renewals of contracts in the period
include Pipex and PSInet. The London
and Frankfurt Carrier Rings (LCR and
FCR) have continued to perform well
and membership numbers are at
record levels.
Our Enterprise market, as ever , is
characterised by longer sales cycles
and installation lead times than our
Service Provider market but continues
to provide a positive balance in terms
of longer-term contract lengths.
In 2004 we have continued to see
our sales develop well both in terms 
of our traditional Financial Services
markets and also Retail, Manufacturing
and Facilities Management /Outsourcing.
Chief Executive’s Review continued
“The new network increases performance
and resilience, thus reducing costs
and improving efficiency”.
Peter Shepherd
Head of IT
Nottingham Building Society
Bespoke Managed Solutions –
Nottingham Building Society
Fibernet consultants designed
a bespoke managed IP virtual private
network (IP VPN), spanning over
30 branch offices based in the East
Midlands, South Y orkshire and London
for Nottingham Building Society .
Now live, the managed wide area
network links the Society’s main city
offices, disaster recovery site and 33
branch offices via Fibernet’s national
fibre optic network, providing a
complete managed IP VPN service.
This flexible solution provides 
any-to-any connectivity for all offices
and branches without having to route
all communications through the central
head office. It enables the building
Society to greatly improve inter-office
communications and customer
service, eliminating performance
bottlenecks and providing a network
suitable for future applications.
Customer service is keynote to
Nottingham Building Society’s ethos,
so dual connectivity has been provided
to every location to ensure high
availability of the service. The
bespoke design also enables the
society to implement IP T elephony . Innovative, reliable and cost
effective service provides our
competitiveness.
What sets us apart is the
bespoke way we deliver them.
“Our ISO9001:2000 accreditation
provides customers like Nottingham
Building Society with an initial indication 
of our commitment to service excellence.
The real proof of the pudding however
is the extremely high rates of service
contract renewals that we get”.
Tony Frewer
Operations Director
7 8
Chief Executive’s Review continued
“In an intensively competitive market,
staff retention, motivation and skills
development become integral
components of our customer proposition.”
Isabel Gibb
Associate Director
of Human Resources
Fibernet’ s Commitment to staff
Managerial development 
100% of line management staff
have commenced an ongoing
management skills development
programme.
Technical skills development
13% of all staff have studied for and
passed external technical exams 
in the last year .
We were confirmed this year as 
a Cisco Silver Partner , recertified 
as a Cisco Powered Network partner
and a Cisco Advanced T echnology
Partner in two disciplines.
Individual skills development 
All staff now participate in personal
skills development programs.
10% of all staff were promoted into
more demanding roles.
Quality process improvement
All offices are now ISO9001:2000
certified.
New automated workflow processes
improve customer service and staff
effectiveness.
Working environment improvement
Refurbishment of satellite offices
complete.
“Green” recycling policies extended
to all offices. 9
It has been pleasing to see
the take up of new services.
We now have products that
occupy all positions of the
market lifecycle.
Company Operations
2004 has been a year of considerable
progress on internal matters.
We have further developed and
expanded the underlying infrastructure
of the network to handle an ever
increasing customer demand for
bandwidth and new features.
Our MIS and IT department have
produced and launched enhanced
extranet facilities during the year to
customers who require online facilities
from us for order management and
service reporting. I expect that this
will be accelerated in 2005.
Fibernet’s own internal systems
and procedures across all departments
and offices have continued to progress
both to improve our efficiency and to
accommodate the continuing growth
in the business. We are now ISO9001:
2000 accredited throughout the 
entire Group.
Our network and the people that
operate it have provided our customers
with industry leading levels of care
and reliability . As a testament to this,
we have won “Best Carrier” at the
Internet Services Provider (ISPA)
awards and also the Metro Ethernet
Forum’s “Best European Ethernet
Service Provider of 2004” award.`
Product Development
We have continued our focus on
developing new services that both
complement the existing ones and
require levels of capital and marketing
expenditure that can be recovered
relatively quickly .
These include the provision 
of wholesale Internet access for 
our largest Enterprise Customers,
advanced telephony services using
the internet protocol (IP), and new
entry levels of membership for the
London and Frankfurt Carrier Rings.
In addition, we have strengthened
our supplier base to include a key
agreement with Huawei T echnologies
that will provide us with very cost
effective access to a broader range 
of networking electronics and
associated facilities.
As we continue to add new services
to our portfolios, (and within our niche)
we move ever closer to our long-term
goal of providing a total “end to end”
networking service for our customers.
We now have products which occupy
all positions of the market lifecycle
thereby maintaining a good balance
of emerging, new and mature streams
of income from our customers. 10
Chief Executive’s Review continued
Stakeholders
My appreciation goes out to all those
involved with our business for their
fortitude in what continue to be
challenging circumstances for our
industry generally . Our closely knit
team of people together with our highly
valued customers remain the bedrock
of the success of our business.
Conclusion
Our performance this year has yielded
a significant advance toward our goal
of a return to sustainable profitability .
The market for our services remains
strong and the pipeline for new
business looks promising for the 
new financial year .
Our financial reserves remain
adequate for our plans and our
business is underpinned by a high
quality customer base and long-term
contracted revenues.
We have achieved significant
progress during 2004 and remain
optimistic for the future.
Charles McGregor
Chief Executive
13 October 2004
The market for our
services remains strong.
I retain my
confident outlook.
£23. 1m
Improvement in long term
contracted revenues RPR technology helps reduce time
to market for smartphones using
Symbian OS™
Fibernet won a contract to provide
a fully managed network for global
software licensing company , Symbian
Software Limited during the year .
Fibernet designed and built a resilient
2.5Gbps ring-based network, using
advanced Cisco switch/routers
equipped with Resilient Packet Ring
technology , which will allow Symbian
high-speed connectivity between its
London based headquarters at
Boundary Row and its new offices
in Friars House.
The TANet Ethernet/bespoke
network will enable the company to
run all of its applications, including
the development of its market leading
mobile telephone operating system
Symbian OS, across a state of the art,
secure, scalable and resilient platform.
The private Metropolitan Area
Network (MAN) then extends from London
out to Symbian's Cambridge offices
via a robust, dedicated point-to-point
Ethernet service - TANet Etherline ,
providing a diversely routed 100Mbps
service between the company’s
locations via Fibernet's TANet national
fibre optic network. The infrastructure
is flexible, scalable and future proof,
and will provide true any-to-any
connectivity , enabling effective utilisation
of bandwidth and providing a common
transport for all applications.
“Our partnership with Cisco Systems
and our status as Silver Partner ,
Advanced T echnology Partner and
Cisco Powered Network partner helps
to reassure our customers of our
commitment to advanced technology
and our capability in its deployment
and operation.”
Nigel Pitcher
Marketing Director
11 Financial Director’s Review
Revenues grew by 16% to £42.2m
in 2004 as compared to £36.3m in the
prior period. We saw a significant
upturn in reported revenues in the
second half of this year. Second half
year revenues were £23.8m compared
to £18.4m in the first half year.
During the year we signed £53.6m of
new customer contracts. Fibernet
continues to operate a prudent policy
in that we do not recognise revenues
from service contracts until the service
is fully installed. Many of these new
orders are for complex services with
large enterprise and service provider
customers. Given that such services
take a significant time to install, many
orders signed in the year have yet to have
an impact on our reported revenues.
We have again achieved good
contract renewals with existing
customers. Given the long-term nature
of customer contracts, only a proportion
of existing revenues come up for renewal
in a financial year .
1 6
%
Increase in revenues
12 During the year we signed a WAN
product contract with a major customer
for a total value of £4.3m. Revenue
recognition against this contract is
on a percentage completion basis.
Out of the total contract value of £4.3m,
£3.0m of revenue has been recognised
in the current year . T otal product sales
of £3.2m in the current year compare
to £2.6m for the prior period.
Gross profit for the full year , excluding
exceptional items* was £14.9m or
35.3% of revenues as compared the
prior year number of £9.7m or 26.6%.
Administrative expenses before
exceptional items* increased 5.1%
year on year driven predominantly by
additional staff costs to support the
growth of the business.
During the year , we concluded our
exit from France at lower costs than
expected generating a gain of £0.2m.
In addition, we utilised previously
impaired equipment to the value
of £0.5m. Both benefits are shown
in the profit and loss account as
exceptional items.
Earnings before exceptional items,
interest, taxation, depreciation and
amortisation (EBITDA**) increased 
to £12.6m for the group. Including
exceptional items, EBITDA increased
to £13.3m.
Profitability
The positive impacts of the above
achievements combined to reduce
our full year loss, excluding exceptional
items*, to £5.7m as compared to the
prior period loss of £10.2m. Including
exceptional items the net reported
losses were £5.0m. The prior period
result contained £5.2m of exceptional
benefits, notably arising from a rates
rebate and the write back of previous
impairment reserves.
13
Earnings per share and dividends
The loss per share was 8.2p as compared
with a loss of 8.1p last year . The Board
is currently unable to recommend the
payment of a dividend.
Taxation
No tax was payable in the period and
the group has significant tax losses
carried forward. During the period we
agreed and closed the tax computations
with the Inland Revenue for the period
to August 2001.
Cash flow, capital spending
and gearing
At the year-end, our cash balance
stands at £15.7m, a reduction of £9.2m
on the prior year . Capital expenditure
for the year was £15.8m as compared
to £14.2m in the prior period. The vast
majority of capital expenditure relates
to the cost of attaching new customers
to our existing network.
No funds were raised in the period
and the group has sufficient resources
for its stated plans.
Treasury
The Group’s treasury policies aim to
manage the financial risks that arise
from trading in a number of foreign
currencies and also to maximise the
interest income on cash deposits.
The Group places all sterling and
foreign currency cash balances not
immediately required on short-term
deposit. An external treasury manager
is utilised to assist in obtaining an
acceptable risk/return balance on excess
deposits. The Group does not intend to
speculate with financial instruments.
During the year we signed £53.5m
of new customer contracts.
Many orders have yet to have 
an impact on reported revenues.
* Exceptional items are detailed in note 3.
** EBITDA is reconciled to operating
loss in note 7. 14
Financial Director’s Review continued
Outlook
We have achieved a good level of new
order intake and existing customer
contract renewals over the past two
years. Both factors have contributed
to the revenue growth in the current
year 2004. With momentum now
established, service contract revenues
are again expected to increase in the
year ahead.
We have maintained a firm control
of administrative expenses and we
will continue to do so in the year ahead.
Cost increases are expected but of a
similar magnitude to the current year ,
again driven by new hires to support
the expected growth of the business.
The vast majority of our staff, including
main Board Directors, received a
base salary review of 2.5% effective
1st September 2004.
Whilst our cash balance is
expected to reduce next year , we still
have adequate cash headroom to
execute our business plan. With EBITDA
increasing, we are moving closer to
a position of achieving free cash flow
positive after capital spend.
Our key financial goal is to return to
a position of sustained profitability within
the medium term. We are demonstrating
clear progress towards our goal.
Nick Bray
Financial Director
and Company Secretary
13 October 2004
+
£5.3m
Improvement in EBITDA**,
before exceptional items
+
£4.5m
Improvement in loss before tax,
before exceptional items
* Exceptional items are detailed in note 3.
** EBITDA is reconciled to operating
loss in note 7. 15
Return on Capital Investment 
The vast majority of capital expenditure
is driven by the requirements of attaching
new customers to our existing network
infrastructure. Such incremental
expenditure is always recovered over
the term of the initial customer contract.
Fibernet rarely invests in speculative
infrastructure build.
One exception of note was the
decision last year to acquire 220Km
of ducting in and around the city of
London. The duct was acquired for
£0.9m and trebled the reach of our
metropolitan network. The fibre routes
pass many buildings in our target markets
and were purchased to widen the market
opportunity for our Enterprise storage
and business continuity services.
Since the purchase, we have already
signed contracts in excess of £5.5m
that utilise this asset. As with the
majority of our products and services,
the service levels required are of such
a magnitude that they can only be
provided using owned assets over
which we have direct control of the
complete end to end solution.
“Our cautious approach to expenditure
and our careful qualification of customers’
needs and opportunity ensures that
we can provide not only reliable but
also very cost effective solutions.
The breadth, depth and cost profile
of our network infrastructure is a key
differentiator in winning new business.”
Derek Lister
Sales Director
  16
Board of Directors
1 Nick Bray
Financial Director and
Company Secretary
Aged 39 Nick Bray was appointed
Financial Director of Fibernet in
February 2001. Nick has considerable
experience in the IT sector , both in the
USA and Europe. Prior to Fibernet,
Nick was Group Chief Financial
Officer of Gentia Software plc.
2 Lady Robin Innes Ker
Non-Executive Director
Aged 44 Lady Robin joined Fibernet
on1st August 2000, and is Chairman
of the Remuneration Committee, and
Senior Independent Director . She is
a Director of T aylor Woodrow , The
T elevision Corporation and Williams
Lea. Lady Robin was formerly Director
of SBC Warburg and Dresdner
Kleinwort Benson, specialising in the
media and technology sectors.
3 Lord Wolfson of Sunningdale
Non-Executive Director
Aged 69 Lord Wolfson was formerly
Chairman of Next plc and Great Universal
Stores. Lord Wolfson was appointed
to Fibernet’s Board in March 2001 and
became Chairman of the board at the
AGM in January 2002.
4 Charles McGregor
Chief Executive 
Aged 46 Charles McGregor was one
of the founders of Fibernet in 1986.
Prior to joining Fibernet, Charles
spent six years working in the
international data communications
sector both in Europe and the USA.
He became Managing Director of
Fibernet in 1993 and Chief Executive
on its flotation in 1996.
Financial advisers
and stockbrokers
Arbuthnot Securities Ltd
2 Lambeth Hill
London EC4V 4GG
Solicitors
Lawrence Graham
190 Strand
London WC2R 1JN
Auditors
Deloitte & T ouche LLP
Abbots House
Abbey St, Reading
Berkshire RG1 3BD
Registrars
Capita Registrars
The Registry 
34 Beckenham Road
Beckenham
Kent BR3 4TU
Registered office
Fibernet Group plc
Rosalind House, Jays Close
Viables, Basingstoke
Hampshire RG22 4BS
Registered number: 3151663
5 Roger Chovil
Non-Executive Director
Aged 59 Roger Chovil joined Fibernet
as a Non-Executive Director in January
2002 and is Chairman of the Audit
Committee. Roger is also a Director of
The T elevision Corporation and Brown
& Jackson plc. Roger was formerly
a Senior Client Service Partner at
PricewaterhouseCoopers and has
extensive experience of advising
telecommunications and technology
companies including Cable &
Wireless plc and Misys plc.
6 Tony Frewer
Operations Director
Aged 45 T ony Frewer has served on
Fibernet’s senior management team
as Director of Network Operations since
1991. T ony’s responsibilities include
the network operations and strategy ,
customer service, project management,
pre-sales, engineering and new
product implementation functions.
Prior to joining Fibernet, T ony was
network manager for leading investment
bank, Kleinwort Benson (now part of
Dresdner Kleinwort Wasserstein).
2
3
4
5
6
1  17
Moving forward...
we have the financial resources
needed to continue to execute
our strategy and are optimistic
for the future. 18
Directors’ Report
The Directors present their report and Group ﬁnancial statements for the year ended 31 August 2004.
Principal activity, review of the business and future developments
Fibernet is a communications solutions company dedicated to the design, supply , installation, management and support
of bespoke high speed digital networks. The review of the business and future developments are contained in the Chairman’s
Statement on pages 2 and 3, and the Chief Executive’s Review on pages 4 to 10.
Financial results and dividends
The Group’s results and transfers to reserves are as follows:
£’000
Loss for the ﬁnancial year (5,066)
Loss on foreign currency translation (21)
Gain on sale of treasury shares 29
Proﬁt and loss account at 1 September 2003 (97,497)
Proﬁt and loss account at 31 August 2004 (102,555)
The Directors have not declared a dividend (2003: Nil).
Directors and their interests
The Directors who served during the year were as follows:
D Wolfson
C S McGregor
K C M Innes Ker
E R C Chovil
N P S Bray
A P Frewer (appointed 9 January 2004)
The following Directors at 31 August 2004 had beneﬁcial interests in the shares of the Company as follows:
10 pence 10 pence
ordinary shares ordinary shares
31 August 2004 31 August 2003*
number number
D Wolfson 270,000 270,000
C S McGregor 7,312,811 7,312,811
K C M Innes Ker 11,910 1,910
E R C Chovil 5,000 5,000
N P S Bray 25,000 –
A P Frewer 48,643 48,643
*Date of appointment if later .
Between the balance sheet date and the approval of these ﬁnancial statements, the Directors’ beneﬁcial interests in shares
in the Company have not changed.
In addition to the above shareholdings, N P S Bray and A P Frewer had options to subscribe for shares in the Company .
N P S Bray , A P Frewer and C S McGregor have been granted potential awards under the Long T erm Incentive Plan.
Details of all such awards are disclosed in the remuneration report on pages 20 to 24.
The mid-market price of the shares at 31 August 2004 was 88.0p and during the year the price varied between 81.0p 
and 164.5p. 19
Substantial shareholdings
On 1 October 2004 the Company was notiﬁed, in accordance with Sections 198 to 208 of the Companies Act 1985, of the
following disclosable interests which amounted to 3 per cent or more of the issued ordinary share capital of the Company:
Name of holder Number Percentage held
C S McGregor 7,312,811 11.9
Clydesdale Bank (Head Ofﬁce) Nominees Limited 6,399,000 10.4
HSBC Global Custody Nominee (UK) Limited 3,220,000 5.2
Barclayshare Nominees Limited 2,311,247 3.8
Hannover Nominees Limited 2,256,464 3.7
Kettley International Limited 2,016,556 3.3
Policy in respect of payments to suppliers
The Company’s policy , which is also applied to the Group, is to decide upon the terms of payment with suppliers when
agreeing the terms of each transaction to ensure that suppliers are made aware of the terms of payment and to abide 
by the terms of payment.
T rade creditors of the Company at 31 August 2004 were the equivalent of 38 days’ purchases (2003: 28 days’).
International Accounting Standards
The Directors note the current transition to International Accounting Standards being undertaken by the United Kingdom’s
authorities. The Group is continuing its preparations for this transition, and is working with its advisors towards ensuring
that it will be in a position to meet the current timetable for the transition to reporting results under International Financial
Reporting Standards.
Charitable donations
The Group contributed £4,410 to charities (2003: £1,000) and made no contributions for political purposes in either year .
Disabled employees
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicants
concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment
with the Group continues and that appropriate training is arranged. It is the policy of the Group that the training, career
development and promotion of disabled persons should, as far as possible, be identical with that of other employees.
Employee consultation
The Group places considerable value on the involvement of its employees and has continued to keep them informed on
matters affecting them as employees and on the various factors affecting the performance of the Group. This is achieved
through formal and informal meetings and other forms of communication including email and the Group intranet.
Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests.
The employee share scheme has been running successfully since its inception in 1996. It is open to all UK employees.
Auditors
A resolution for the re-appointment of Deloitte and T ouche LLP will be proposed at the forthcoming Annual General Meeting.
Annual General Meeting
The notice of the Company’s Annual General Meeting is set out on pages 53 to 56 of this report.
This report was approved by the Board on 13 October 2004.
Nick Bray
Financial Director 20
Remuneration Report
Introduction
The Company complies with the relevant conditions of the 2003 Combined Code on Corporate Governance relating 
to Directors’ remuneration as published by the London Stock Exchange and the Directors’ Remuneration Report
Regulations 2002.
The Regulations require the Auditors to report to the Company’s members on the “auditable part” of the Director’s
Remuneration Report and to state whether in their opinion that part of the report has been properly prepared in
accordance with the Companies Act 1985 (as amended by the regulations). The report has therefore been divided 
into separate sections for audited and unaudited information.
Unaudited information
Remuneration Committee
The members of the Remuneration Committee at any time when Directors’ remuneration was considered were 
K C M Innes Ker (Committee Chairman), E R C Chovil and D Wolfson. The Committee’s role is to set levels of remuneration 
to attract and retain Executive Directors and members of the Senior Management T eam (Group Operating Board) 
and, in doing this, takes into account the level of remuneration throughout the Group and the T elecommunications
industry generally .
No Director plays a part in any discussions about his own remuneration.
The Committee consulted with Charles McGregor (Chief Executive) and Nick Bray (Financial Director), with regard 
to the remuneration and beneﬁts offered to senior executives during the year .
In addition, wholly independent advice on share schemes was received from PricewaterhouseCoopers who provided 
no other services to the Company during the year .
Remuneration policy
The policy of the Committee is to reward senior executives competitively , enabling the Company to recruit, motivate and
retain executives of the highest calibre, whilst avoiding paying excess remuneration. Further details of the remuneration
policy followed by the Committee are set out below . In conjunction with its remuneration consultants, the Committee
considers the remuneration practices adopted by a group of like companies that, in the opinion of the Committee,
face similar remuneration issues to the Company .
It is the aim of the Committee to encourage and reward high performance. It is the opinion of the Committee that
Shareholders’ interests are best served by setting a moderate level of ﬁxed pay while providing competitive potential
levels of total remuneration through short and longer-term incentive arrangements which require the satisfaction 
of challenging performance conditions. Therefore, a signiﬁcant proportion of executive remuneration is performance
linked as shown below .
Base Other Annual Long T erm
Year ending 31 August 2005 salary beneﬁts bonus Incentive Plan T otal
Charles McGregor
At on target performance 45% 5% 25% 25% 100%
At maximum performance 32% 4% 32% 32% 100%
Nick Bray and Anthony Frewer
At on target performance 53% 5% 21% 21% 100%
At maximum performance 35% 3% 31% 31% 100%
  21
Basic salaries, pensions and other beneﬁts
Basic salaries are established by those prevailing in the market generally for Executive Directors and Senior Managers of
comparable status, skills and responsibility in comparable industries. Salaries are reviewed on an annual basis and changes
are generally implemented with effect from 1 September each year . Charles McGregor , Nick Bray and Anthony Frewer
received a 2.5 per cent increase to basic salary effective from 1 September 2004 taking basic salaries for the year ahead to
£195,058, £141,834 and £128,125 respectively . Effective 1 March 2004, Anthony Frewer received a basic salary increase of
13.6 per cent from £110,000 to £125,000. This increase reﬂects his additional responsibilities on promotion to the Plc Board.
For Executive Directors and Senior Managers of the Group, pension contributions are paid into individual money purchase
schemes at a rate of 5 per cent of gross basic salary .
In addition to basic salary and pension the other beneﬁts included in the remuneration package are the provision 
of a car or car allowance, fuel, permanent health insurance and death in service cover .
Annual bonus
The Company operates an annual bonus scheme providing Executive Directors and Senior Managers with an opportunity
to earn a cash reward based on the achievement of annual targets. Should targets not be achieved then no bonus is payable.
Similarly , should targets be exceeded then bonus payments can be increased up to a maximum limit.
For the year ended 31 August 2004, the Remuneration Committee established a performance bonus scheme for
Executive Directors and Senior Managers based on achievement of a signiﬁcant reduction in the underlying Group loss.
Superior performance in the period resulted in an increased award being earned. The maximum bonus for the year ended
31 August 2004 was 80 per cent for Charles McGregor and 50 per cent for Nick Bray and Anthony Frewer . Amounts earned
were 48 per cent for Charles McGregor and 30 per cent for Nick Bray and Anthony Frewer .
For the ﬁnancial year ending 31 August 2005, the plan will again focus on the net proﬁtability of the Group. For Executive
Directors, the maximum bonus for the ﬁnancial year ending 31 August 2005 is 100 per cent of salary for Charles McGregor
and 85 per cent for Nick Bray and Anthony Frewer . The upper earnings limits of the Executive Directors were adjusted
following a review of comparable compensation packages in the sector and would only be earned on the achievement 
of outstanding performance.
Long Term Incentive Plans
The Company has operated both Executive and Save As Y ou Earn (SA YE) share option schemes. Executive share options
have been granted on a phased basis, at market value at the day of grant, and are exercisable only after documented
performance criteria concerning turnover growth and relative share price performance are met. No Executive options
were granted in the period.
The performance conditions for previous option grants related to both share price performance of the Company
compared with the FTSE 250 index and a substantial increase in the turnover of the Group as reported in the published
ﬁnancial statements. The relative share price performance criterion provided an alignment of the executive’s interests
with those of the Shareholders while the requirement for increased turnover provided a focus on the key ﬁnancial metrics
for the Company .
During the year ended August 2003, the Committee reviewed the long-term incentive arrangements and proposed that
the annual award of Executive options be replaced by a new plan – the Fibernet 2003 Long T erm Incentive Plan. This plan
was approved by Shareholders at the AGM on 17 December 2003.
The Fibernet 2003 Long T erm Incentive Plan introduced the concept of annual awards of shares to Executive Directors,
Senior Managers and other key staff. Shares awarded will only vest after a three-year period on condition that stringent
performance conditions have been achieved. The maximum award is over shares having a value at grant equivalent to
100 per cent of basic salary for Executive Directors and some Senior Managers. Vesting of the 2003 award is only triggered if,
over the ﬁrst three-year performance period, cumulative audited proﬁtability (before non-operating exceptional items)
exceeds target proﬁtability (which is ﬁxed at the time the awards are made) with a further requirement for a positive
earnings per share for the year ending 31 August 2006. 40 per cent of an award will vest for target performance,
with full vesting for outstanding proﬁt achievement. Vesting between 40 per cent and 100 per cent of the award 
is on a straight-line basis by reference to cumulative proﬁtability .
  22
Remuneration Report continued
Awards were made to Executive Directors on the above basis on 18 December 2003 as disclosed on page 24 of this report.
At the time of introduction of the plan, it was expected that the awards made would be satisﬁed by the purchase of
shares in the market place, such shares being held in an Employee Beneﬁt T rust. However , following the introduction of
UITF 38 relating to the purchase and sale of own shares, and having taking appropriate advice, it has been determined
that such awards should be satisﬁed from the issue of shares by the Company . Currently the total awards of executive
share scheme options since the inception of all plans, including the ﬁrst LTIP award made on 18 December 2003 are
within the 5 per cent in ten years Association of British Insurers (“ ABI”) dilution limit guidelines included in the existing
scheme rules. However , to continue with the LTIP awards, shareholder approval is being sought for the Company to grant
discretionary awards up to 10 per cent of the issued share capital of the Company in any ten year period being the ABI
guidelines for all award schemes. This request is made as resolution 11 on page 54.
Should this resolution be passed, the Company intends to continue with annual LTIP awards that fully align the interests 
of Executives and Senior Managers with those of the Shareholders in line with the framework of the 2003 issue as
outlined above.
The Executive Directors are also eligible to participate in the Company’s Inland Revenue approved Savings Related
Share Option (SA YE) scheme. Grants of SA YE schemes are made at discounts of up to 20 per cent of the market price
and are not subject to performance criteria. SA YE options are made available to all UK employees.
Total Shareholder Return performance graph
The graphs below show the T otal Shareholder Return (TSR) performance of the Company in comparison to the 
FTSE Allshare and FTSE T elecom Services indices for both a ﬁve and a one year period.
80
90
100
110
120
130
140
150
160
170
SEP
03
OCT
03
NOV
03
DEC
03
JAN
04
FEB
04
MAR
04
APR
04
MA Y
04
JUN
04
JUL
04
AUG
04
SEP
04
FIBERNET GROUP
FTSE TELECOM SERVICES – PRICE INDEX
FSTE ALL SHARE – PRICE INDEX
Source: DATASTREAM 
0
100
200
300
400
500
600
700
SEP
99
MAR
00
SEP
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SEP
01
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SEP
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SEP
04
FIBERNET GROUP
FTSE TELECOM SERVICES – PRICE INDEX
FSTE ALL SHARE – PRICE INDEX
Source: DATASTREAM  23
Directors’ contracts
Executive Directors are appointed with contracts providing for a 12 month notice period. No Director has a ﬁxed term service
contract. Current service contracts for Executive Directors were agreed on the following dates:
Charles McGregor – 11 June 1996
Nick Bray – 8 January 2001 
Anthony Frewer – 9 January 2004
Non-Executive Directors
Non-Executive Directors are appointed on contracts expiring on one month’s notice. No Director serves for more than
three years without being reappointed.
Audited information
Directors’ remuneration
Fees/basic salary Bonus Beneﬁts T otal Pensions
2004 2003 2004 2003 2004 2003 2004 2003 2004 2003
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Executive
C S McGregor 190 186 91 150 22 21 303 357 10 9
N P S Bray 138 135 41 68 12 11 191 214 7 7
A P Frewer* 117 106 35 32 11 10 163 148 6 5
Non-Executive
D Wolfson 41 40 – – – – 41 40 – –
K C M Innes Ker 26 25 – – – – 26 25 – –
E R C Chovil 26 25 – – – – 26 25 – –
538 517 167 250 45 42 750 809 23 21
*Appointed 9 January 2004. 24
Remuneration Report continued
Directors’ share options
Number of share options
Exercise
31 August 31 August price
2003 Granted Exercised Waived 2004 (p) Dates of exercise
Executive share options:
N P S Bray 83,139 – – – 83,139 577 02/05/04 – 01/05/11
116,861 – – – 116,861 105 24/04/05 – 23/04/09
60,000 ––– 60,000 20 26/11/05 – 25/11/09
A P Frewer 10,000 – – – 10,000 1,268 19/11/02 – 18/11/06
20,000 – – –20,000 1,622 16/06/03 – 15/06/07
10,000 – – –10,000 782 04/01/04 – 03/01/08
5,000 – – – 5,000 105 24/04/05 – 23/04/09
60,000 – – –60,000 20 26/11/05 – 25/11/09
SAYE options:
N P S Bray 6,831 – – – 6,831 16.6 01/07/06 – 31/12/06
– 5,499 – – 5,499 78.5 01/01/07 – 30/06/07
A P Frewer 11,873 – –– 11,873 16.6 01/07/08 – 31/12/08
– 7,107 – – 7,107 78.5 01/01/09 – 30/06/09
Long Term Incentive Plan:
C S McGregor – 200,105 – – 200,105 Nil 18/12/06 – 17/12/13
N P S Bray – 145,505 – – 145,505 Nil 18/12/06 – 17/12/13
A P Frewer – 114,248 – – 114,248 Nil 18/12/06 – 17/12/13
Note – the Long T erm Incentive awards shown above are at the maximum award level of 100 per cent of base salary .
The number of options granted is calculated using base salary multiplied by the share price prevailing at the date the
options were granted. The target award level is 40 per cent of base salary . Vesting of the award is only triggered if,
over the ﬁrst three-year performance period, cumulative audited proﬁtability (before non-operating exceptional items)
exceeds target proﬁtability (which is ﬁxed at the time the awards are made) with a further requirement for a positive
earnings per share for the year ending 31 August 2006.
The mid-market price of the shares at 31 August 2004 was 88.0p and during the year the price varied between 81.0p 
and 164.5p.
K C M Innes Ker
Chairman of the Remuneration Committee
13 October 2004 25
Corporate Governance
Introduction
This statement, together with the Remuneration Report on pages 20 to 24, considers how the principles of good governance
as set out in Section 1 of the Combined Code for Corporate Governance issued by the London Stock Exchange in June 1998
(‘the Code’) have been applied by the Company .
Throughout the year ended 31 August 2004 the Company has been in compliance with the code set out in section 1 
of the Combined Code of Corporate Governance.
Directors
The Board comprises three Executive Directors (C S McGregor , N P S Bray and A P Frewer) and three independent 
Non-Executive Directors (D Wolfson, K C M Innes Ker and E R C Chovil). None of the Directors has served more than
three years without being submitted for re-election.
The Board, which meets at least 12 times a year , is responsible for the overall strategy and ﬁnancial performance of the
Group and has a formal schedule of matters reserved for its sole approval. Each Board meeting is preceded by a clear
agenda and with the relevant information needed to reach informed decisions at those meetings. All Directors are aware
of their right to seek independent advice and to seek advice of the Company Secretary if required.
The Board is committed to ensuring that there continues to be a clear balance of authority and decision making in its activities.
The Chairman of the Board is D Wolfson and the senior independent Non-Executive Director is K C M Innes Ker .
The Board has continued to operate its Audit and Remuneration Committees which solely comprise the Non-Executive
Directors. The Audit Committee and Remuneration Committee are chaired by E R C Chovil and K C M Innes Ker respectively.
Since there are only six Directors and as permitted by the Code, the Board have not established a nomination committee.
Any future appointments, which can be proposed by any Director , will be discussed by the full Board.
The Group Operating Board comprises the three Executive Directors of the Company , together with Senior Managers 
of the Company .
Directors’ remuneration
The Remuneration Committee reviews annually the remuneration packages of the Executive Directors and the Executive
Directors are responsible for the remuneration packages of the Non-Executive Directors. The Remuneration Report 
on pages 20 to 24 contains a detailed description of remuneration and applicable policies.
Relations with Shareholders
The Company encourages the participation of both institutional and private investors. Collective and individual presentations
to institutional investors are held regularly and tours of the Group’s Network Operations Centre are also conducted.
Communication with private individuals is maintained both through the Annual General Meeting and the ‘News Direct’
service available to investors on the Company’s website (www .ﬁbernet.co.uk). The Annual and Interim Reports are the
principal vehicles of communication, but the Company also issues two quarterly updates and a statement following the
AGM to ensure Shareholders are kept up to date.
The Company makes a presentation to Shareholders at its AGM and all Directors are available to answer questions that
arise. Any resolutions are voted on separately and proxy votes announced.
  Corporate Governance continued
Maintenance of a sound system of internal control
The Board has responsibility for the Group’s system of internal control and for reviewing its effectiveness. Such controls
are designed to manage, rather than eliminate, the risk that business objectives will not be met and can only provide
reasonable, but not absolute, assurance against material misstatement or loss.
The Board has applied Principle D.2 of the Combined Code on internal control in accordance with the guidance 
on internal controls contained in the publication ‘Internal Control: Guidance for Directors on the Combined Code’
(‘the T urnbull Report’) issued in September 1999.
An ongoing process for identifying, evaluating and managing the signiﬁcant risks faced by the Group has been in place
throughout the year and up to the date of the Annual Report and accords with the provisions of the T urnbull Report.
The Board’s monitoring covers all controls, including ﬁnancial, operational and compliance controls and risk management.
A risk management process is operated by the Group, under which the risks of not achieving their business objectives
are identiﬁed by members of the Group Operating Board. Those risks are documented in a Signiﬁcant Risk Evaluation
register which evaluates the likelihood and impact of the risks occurring. Individual members of the Group Operating
Board are allocated responsibility for managing those risks and ensuring adequate internal controls exist for that purpose,
and that weaknesses are promptly remedied.
During the year the Directors reviewed the need for an internal audit function and decided that taking account of the
current size and nature of the Group’s operations an internal audit function was not required. The Directors will formally
evaluate the need to supplement the existing controls with an internal audit function on an annual basis. The Board has
performed a speciﬁc assessment for the purpose of this Annual Report. This assessment considers all signiﬁcant aspects
of internal control arising during the period covered by the Report. The Audit Committee assists the Board in discharging
its review responsibilities.
The Group operates a management structure with established responsibilities, clear delegated authorities and reporting
lines to the Board. Budgets are set annually and detailed performance against those budgets is evaluated monthly .
All capital expenditure and major purchases are subject to appropriate authorisation processes. The overall control
environment continues to be enhanced by ongoing Information T echnology systems enhancements, integration 
and implementations.
26 27
Statement of Directors’ Responsibilities
Financial statements, including adoption of going concern basis
United Kingdom 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 the Group and of the proﬁt or loss of the Group for that period.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going
concern basis in preparing the ﬁnancial statements.
In preparing the 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; and state whether applicable
accounting standards have been followed, subject to any material departures disclosed and explained in the
ﬁnancial statements.
Other matters
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any
time the ﬁnancial position of the Company and Group and enable them to ensure that the ﬁnancial statements comply
with the Companies Act 1985. They are also responsible for the system of internal control safeguarding the assets of the
Company and Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Independent Auditors’ Report to the Members of Fibernet Group Plc
We have audited the ﬁnancial statements of Fibernet Group Plc for the year ended 31 August 2004 which comprise the proﬁt
and loss account, the balance sheets, the cash ﬂow statement, the statement of total recognised gains and losses, and the
related notes 1 to 30. These ﬁnancial statements have been prepared under the accounting policies set out therein. We have
also audited the information in the part of the Directors’ remuneration 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 auditors’ report and for no other purpose. T o the fullest extent permitted by law , we do not
accept or assume responsibility to anyone other than the Company and the Company’s members as a body , for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditors
As described in the statement of Directors’ responsibilities, the Company’s Directors are responsible for the preparation 
of the ﬁnancial statements in accordance with applicable United Kingdom law and accounting standards. They are also
responsible for the preparation of the other information contained in the Annual Report including the Directors’ remuneration
report. Our responsibility is to audit the ﬁnancial statements and the part of the Directors’ remuneration report described as
having been audited in accordance with relevant United Kingdom legal and regulatory requirements and auditing standards.
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 Directors’ remuneration report described as having been 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 Company and other members of the Group is not disclosed.
We review whether the corporate governance statement reﬂects the Company’s compliance with the seven provisions 
of the Combined Code speciﬁed for our review by the Listing Rules of the Financial Services Authority , and we report if
it does not. We are not required to consider whether the Board’s statements on internal control cover all risks and controls,
or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures.
We read the Directors’ report and the other information contained in the Annual Report for the above year as described 
in the contents section including the unaudited part of the Directors’ remuneration report and 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 United Kingdom 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
and the part of the Directors’ remuneration report described as having been audited. 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 circumstances of the Company and the Group, consistently
applied and adequately disclosed.
28 29
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 and the part of the
Directors’ remuneration report described as having been audited 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 and the part of the Directors’ remuneration report described as having been audited.
Opinion
In our opinion:
• the ﬁnancial statements give a true and fair view of the state of affairs of the Company and the Group as at 31 August 2004
and of the loss of the Group for the year then ended; and
• the ﬁnancial statements and part of the Directors’ remuneration report described as having been audited have been
properly prepared in accordance with the Companies Act 1985.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
Reading
13 October 2004 30
Consolidated Proﬁt and Loss Account
for the year ended 31 August 2004
2004 2003
Note £’000 £’000
T urnover from continuing operations 2 42,176 36,348
Cost of sales before exceptional items (27,301) (26,680)
Exceptional cost of sales 3 – 1,886
Cost of sales (27,301) (24,794)
Gross proﬁt 14,875 11,554
Administrative expenses before exceptional items (17,420) (16,572)
Exceptional administrative expenses 3 – (2,171)
Administrative expenses (17,420) (18,743)
Operating loss from continuing operations 4 (2,545) (7,189)
Exceptional items – continuing operations: 3
– Adjustment to proﬁt on sale of ﬁxed assets in respect of release from obligations 
under IRU contracts – 1,966
Exceptional items – discontinued operations: 3
– T ermination costs (285) (2,433)
– Less prior year provision 473 3,182
– Impairment reversal 459 2,769
– Gain on termination of operations 647 3,518
Finance charges (net) 5 (3,318) (3,289)
Loss on ordinary activities before taxation 2 (5,216) (4,994)
T ax on loss on ordinary activities 6 150 –
Loss for the ﬁnancial year before exceptional items (5,713) (10,193)
Exceptional items 647 5,199
Loss for the ﬁnancial year 19,20 (5,066) (4,994)
EBITDA before exceptional items 2,7 12,626 7,293
EBITDA 7 12,814 11,375
Basic and diluted loss per share 9 (8.2p) (8.1p)
Consolidated Statement of Total Recognised Gains and Losses
2004 2003
£’000 £’000
Loss for the ﬁnancial year (5,066) (4,994)
(Loss)/gain on foreign currency translation (21) 30
Total recognised gains and losses since last Annual Report and ﬁnancial statements (5,087) (4,964)
The accompanying notes are an integral part of this Consolidated proﬁt and loss account and Consolidated statement 
of total recognised gains and losses. 31
Consolidated Balance Sheet
at 31 August 2004
2004 2003
Note £’000 £’000
Fixed assets
Intangible assets 10 74 92
T angible assets 11 89,623 87,687
89,697 87,779
Current assets
Stocks 13 1,159 262
Debtors: amounts falling due after more than one year 14 3,906 2,738
Debtors: amounts falling due within one year 14 11,020 10,425
Cash at bank and in hand 15,746 24,910
31,831 38,335
Creditors: amounts falling due within one year 15 (26,684) (23,140)
Net current assets 5,147 15,195
Total assets less current liabilities 94,844 102,974
Creditors: amounts falling due after more than one year 16 (37,725) (39,596)
Provisions for liabilities and charges 17 (596) (1,822)
Net assets 56,523 61,556
Capital and reserves
Called up share capital 18 6,159 6,156
Share premium account 19 155,391 155,369
Merger reserve 19 (2,472) (2,472)
Proﬁt and loss account 19 (102,555) (97,497)
Equity shareholders’ funds 20 56,523 61,556
The accompanying notes are an integral part of this Consolidated balance sheet.
  32
Company Balance Sheet
at 31 August 2004
2004 2003
Note £’000 £’000
Fixed assets
T angible assets 11 473 770
Investments 12 2,550 2,550
3,023 3,320
Current assets
Debtors: amounts falling due after more than one year 14 72,800 69,274
Debtors: amounts falling due within one year 14 619 291
Cash at bank and in hand 13,068 16,802
86,487 86,367
Creditors: amounts falling due within one year 15 (565) (802)
Net current assets 85,922 85,565
Net assets 88,945 88,885
Capital and reserves
Called up share capital 18 6,159 6,156
Share premium account 19 155,391 155,369
Proﬁt and loss account 19 (72,605) (72,640)
Equity shareholders’ funds 20 88,945 88,885
The accompanying notes are an integral part of this Company balance sheet.
The ﬁnancial statements on pages 18 to 51 were approved by the Board of Directors on 13 October 2004 and signed 
on its behalf by:
Nick Bray
Financial Director
Charles McGregor
Chief Executive 33
Consolidated Cash Flow Statement
for the year ended 31 August 2004
2004 2003
Note £’000 £’000
Net cash inﬂow from operating activities 21 12,210 9,045
Returns on investments and servicing of ﬁnance 22 (3,144) (2,980)
Capital expenditure 23 (15,830) (14,005)
Cash outﬂow before management of liquid resources and ﬁnancing (6,764) (7,940)
Financing 24 (2,400) (1,476)
Decrease in cash during the year (9,164) (9,416)
The accompanying notes are an integral part of this Consolidated cash ﬂow statement.
  34
Notes to the Financial Statements
1 Accounting policies
A summary of the principal accounting policies, all of which have been applied consistently throughout the year and the
previous year , is set out below .
a) Basis of accounting
The ﬁnancial statements are prepared under the historical cost convention and in accordance with applicable United
Kingdom accounting standards.
b) Basis of consolidation
The ﬁnancial statements consolidate the ﬁnancial statements of Fibernet Group Plc and all its subsidiary undertakings
made up to 31 August 2004. The results of subsidiaries acquired or sold are consolidated for the period from or to the
date on which control passed. Acquisitions are accounted for under the acquisition method.
No proﬁt and loss account is presented for the Company as provided by Section 230 of the Companies Act 1985.
The Company’s retained proﬁt for the year is disclosed in note 20.
c) T urnover
T urnover is stated as the amounts receivable (net of sales taxes) for the sale of networking services and products.
T urnover arising from service contracts is recognised evenly over the life of each contract, regardless of the payment
proﬁle. T urnover from long-term leases is accounted for according to note 1(d) below .
T urnover applicable to long-term contracts represents the value of work completed during the year , calculated with
reference to the total expected value of the contract.
d) Sales of long-term leases of telecommunications infrastructure and capacity
T urnover from long-term leases of telecommunications infrastructure and capacity is accounted for in accordance with
UITF 36 ‘Contracts for sale of capacity’.
e) Intangible ﬁxed assets – goodwill
Goodwill arising on the acquisition of subsidiary undertakings and businesses, representing any excess of the fair value
of the consideration given over the fair value of the identiﬁable assets and liabilities acquired, is capitalised and written
off on a straight line basis over its useful economic life, which is ﬁve years. Provision is made for any impairment.
f) Intangible ﬁxed assets – licences
Licence costs are stated at cost, less amortisation and any provision for impairment in value. They are written off commencing
upon network activation, on a straight-line basis over ﬁve to 15 years.
g) Tangible ﬁxed assets and depreciation
T angible ﬁxed assets are stated at cost, net of depreciation and any provision for impairment. Depreciation is provided
on leasehold improvements, motor vehicles, plant and equipment, ofﬁce furniture and computers to write off their cost,
less estimated residual value, on a straight-line basis over their estimated useful lives. Depreciation is provided on the
Group’s telecommunications network assets, commencing on activation, to write off their cost, less estimated residual
value, on a straight line basis over the shorter of their estimated useful lives or the minimum period of related customer
service contracts. The estimated useful lives are as follows:
Leasehold improvements The shorter of 5 years and lease term
T elecommunications network 5 to 20 years
Motor vehicles 5 years
Plant and equipment 5 years
Computers 5 years
Ofﬁce furniture 5 years
  35
1 Accounting policies continued
h) Investments in subsidiary undertakings
The Company’s investments in its subsidiary undertakings are stated at cost less provision for any impairment.
i) Stocks
Stocks are valued at the lower of cost and net realisable value. Cost is arrived at on a ﬁrst in, ﬁrst out basis and includes
freight and duty for equipment purchased from overseas. Net realisable value is based on estimated selling price less
further costs expected to completion and disposal. Provision is made for obsolete, slow moving or defective items 
where appropriate.
Proﬁt is recognised on long-term contracts by reference to an assessment of the outcome and the proportion 
of work completed.
j) Leases and hire purchase contracts
Assets obtained under hire purchase contracts and leases which result in the transfer of substantially all the risks and
rewards of ownership (ﬁnance leases) are capitalised as tangible ﬁxed assets at the estimated present value of underlying
lease payments and are depreciated over the shorter of the lease term and their useful lives. Obligations under such
agreements are included in creditors, net of ﬁnance charges allocated to future periods. The ﬁnance element of the
rental payments is charged to the proﬁt and loss account over the period of each hire purchase contract or lease so as 
to produce a constant periodic rate of charge on the outstanding balance of the net obligation in each period. Rentals
paid under other leases (operating leases) are charged against income on a straight-line basis over each lease term.
k) Foreign currency
T ransactions during the year have been converted at the rate ruling when each transaction occurred. Any exchange
gains or losses arising from a change in exchange rates subsequent to the date of a transaction are included within the
proﬁt and loss account. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at
the rate of exchange ruling at the balance sheet date or , if matched by forward exchange contracts, the contracted rates.
The results of overseas subsidiaries are converted at the average rates of exchange during the year and their balance
sheets at the rates ruling at the balance sheet date. Exchange differences arising on translation of the opening net assets
and results of overseas subsidiaries, and on foreign currency borrowings, to the extent that they hedge the Group’s
investment in such operations, are dealt with through reserves. All other exchange differences are included in the proﬁt
and loss account.
l) Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using
the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet
date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the
future have occurred at the balance sheet date. Timing differences are differences between the Group’s taxable proﬁts
and its results as stated in the ﬁnancial statements that arise from the inclusion of gains and losses in tax assessments in
periods different from those in which they are recognised in the ﬁnancial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available
evidence, it can be regarded as more likely than not that there will be suitable taxable proﬁts from which the future
reversal of the underlying timing differences can be deducted.
  36
Notes to the Financial Statements continued
1 Accounting policies continued
l) Taxation continued
Deferred tax is not recognised when ﬁxed assets are revalued unless by the balance sheet date there is a binding
agreement to sell the revalued assets and the gain or loss expected to arise on sale has been recognised in the ﬁnancial
statements. Neither is deferred tax recognised when ﬁxed assets are sold and it is more likely than not that the taxable
gain will be rolled over , being charged to tax only if and when the replacement assets are sold.
Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries only to the extent that, at the
balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings 
in future has been entered into by the subsidiary .
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences
are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance
sheet date. Deferred tax is not discounted.
m) Deferred income
Amounts receivable under maintenance and service contracts are credited to deferred income and released to the proﬁt
and loss account on a straight-line basis over the duration of the contracts.
n) Pensions costs
The Group has not contracted out of the state pension arrangements. Additional beneﬁts for employees are provided 
by a deﬁned contribution Group pension scheme and by individual deﬁned contribution schemes with the costs being
met in full by the Group and charged to the proﬁt and loss account as incurred.
2 T urnover and geographical segment analysis
All of the Group’s turnover and loss on ordinary activities before taxation arose from its principal activity . The Directors
consider that the Group has only one class of business. However , additional analysis is provided in respect of turnover
and EBITDA, as the Directors believe it to be informative.
The analysis of turnover in this note refers to three types of sale. These are described as follows:
Service contracts – relates to revenue from Wide Area Network (WAN) contracts and from Local Area Network (LAN)
maintenance contacts.
LAN products – relates to sale and installation of LAN equipment.
WAN products – represents sales of telecommunications infrastructure.
2004 2003
£’000 £’000
T urnover by type
Service contracts 39,014 33,749
LAN products 124 1,970
WAN products 3,038 629
42,176 36,348
2004 2003
£’000 £’000
T urnover by destination and origin
UK and Ireland 40,667 35,070
Germany 1,509 1,278
42,176 36,348 37
2 T urnover and geographical segment analysis continued
2004 2003
£’000 £’000
Geographical analysis of EBITDA before exceptional items
UK and Ireland 12,742 7,439
Germany (116) (146)
12,626 7,293
2004 2003
£’000 £’000
Geographical analysis of loss on ordinary activities before taxation
UK and Ireland (5,722) (8,224)
France 210 1,276
Germany 296 1,944
Rest of Europe – 10
(5,216) (4,994)
2004 2003
£’000 £’000
Geographical analysis of net operating assets
UK and Ireland 56,119 60,836
France – 230
Germany 404 500
Rest of Europe – (10)
56,523 61,556
3 Exceptional items
2004 2003
£’000 £’000
Cost of sales:
Network rates rebates – (1,886)
Administrative expenses:
Impairment of tangible ﬁxed assets – DSL – 1,329
Impairment of tangible ﬁxed assets – other – 323
Onerous leases – DSL – 519
– 2,171
Adjustment to proﬁt on sale of ﬁxed assets in respect of release from obligations under IRU contracts – (1,966)
Gain on termination of operations:
T ermination costs* 285 2,433
Less prior year provision (473) (3,182)
Impairment reversal (459) (2,769)
(647) (3,518)
Total exceptional credit (647) (5,199)
There is no related tax charge arising from the exceptional credit in either year .
*T ermination costs for the prior year are stated net of £1,552,000 which was included in ﬁnance lease creditors 
at 31 August 2002 and which were terminated during 2003.
  38
Notes to the Financial Statements continued
3 Exceptional items continued
Network rates rebate
During the prior year the Group successfully appealed the business rates assessment on its national ﬁbre optic network.
The exceptional gain represents the rebates obtained in respect of prior years. The reduction in respect of the year
ended 31 August 2003 was an additional £1,500,000 and is included in cost of sales for that year .
DSL operations
During the prior year the Group launched a new UK national Partial Private Circuit (PPC) product. For many applications
this product effectively replaces the Group’s Digital Subscriber Line (DSL) product, resulting in a signiﬁcant reduction 
in the expected demand for DSL services. Accordingly the Group reviewed its DSL operations and identiﬁed a number 
of onerous commitments in respect of circuit rentals and other supplier commitments, relating to unproﬁtable DSL points
of presence (POPs). Provision has been made for the anticipated closure costs for those POPs. Fixed assets relating 
to those POPs have also been impaired in full.
Impairment of tangible ﬁxed assets – other
In accordance with accounting standards the Group regularly monitors the carrying value of its ﬁxed assets. During the
prior year a small element of the network was identiﬁed for which no future use is anticipated. Accordingly this asset was
impaired in full resulting in an exceptional cost of £323,000.
Adjustment to proﬁt on sale of ﬁxed assets in respect of release from obligations under IRU contracts
During the prior year two IRU contracts were terminated, one due to the customer going into liquidation, the other due 
to the customer no longer requiring the service. As a result the Group has been relieved from future obligations in respect
of these contracts and has released the associated provisions. The gain represents the result of writing off all assets and
liabilities held in respect of these contracts that are no longer required.
Gain on termination of operations
During 2002 the Group discontinued its national network operations in France and Germany . The exceptional gains 
in 2004 and 2003 arise due to the actual costs of terminating the activities being less than those provided by £188,000
(2003: £749,000) and as the result of the reversal of the impairment recorded in 2002 in respect of certain
telecommunications equipment. This impairment reversal gives rise to an exceptional gain of £459,000 (2003: £2,769,000)
and relates to equipment that has been redeployed within the Group.
4 Operating loss is stated after charging:
2004 2003
£’000 £’000
Depreciation
– Owned assets 12,465 11,656
– Assets held under hire purchase contracts and ﬁnance leases 2,688 2,522
Amortisation of intangible assets 18 19
Operating lease payments
– Plant and equipment 6,506 6,322
– Land and buildings 1,749 1,746
Foreign exchange losses 9 6
Auditors’ remuneration
– Statutory audit 124 121
– Further assurance 5 –
– T ax advisory 1 26
– T ax compliance 25 50 39
5 Finance charges (net)
2004 2003
£’000 £’000
i) Interest receivable
Bank interest 668 892
ii) Interest payable
Unwinding of discount on provisions and other long-term liabilities (186) (316)
Interest under hire purchase contracts and ﬁnance leases (3,800) (3,865)
(3,318) (3,289)
6 Tax on loss on ordinary activities
2004 2003
£’000 £’000
Current tax
UK corporation tax – prior year adjustment (150) –
The differences between the total current tax shown above and the amount calculated by applying the standard rate 
of UK corporation tax to the loss before tax is as follows:
2004 2003
£’000 £’000
Group loss on ordinary activities before taxation (5,216) (4,994)
T ax on Group loss on ordinary activities at standard UK corporation tax rate of 30 per cent (1,565) (1,498)
Effects of:
Expenses not deductible for tax purposes 45 (467)
Capital allowances in excess of depreciation (1,659) (1,611)
T ax losses not recognised 3,203 3,636
Adjustments to tax charge in respect of prior periods (150) –
Movement in short-term timing differences (24) (60)
(150) –
7 Earnings before interest, taxation, depreciation and amortisation (EBITDA) 
2004 2003
£’000 £’000
Operating loss (2,545) (7,189)
Exceptional cost of sales – (1,886)
Exceptional administrative expenses – 2,171
Operating loss before exceptional items (2,545) (6,904)
Depreciation charge for the year 15,153 14,178
Amortisation charge for the year 18 19
EBITDA before exceptional items 12,626 7,293
Exceptional cost of sales – 1,886
Exceptional administrative expenses – onerous leases – (519)
Adjustment to proﬁt on sale of ﬁxed assets in respect of release from obligations under IRU contracts – 1,966
T ermination gain, net of impairment charges and prior year provision 188 749
EBITDA 12,814 11,375  40
Notes to the Financial Statements continued
8 Staff costs
The average monthly number of employees (including Executive Directors) was:
2004 2003
Number Number
Administration 30 31
Sales and support 212 201
242 232
Staff costs (including Directors’ remuneration) during the year were as follows:
2004 2003
£’000 £’000
Wages and salaries 12,178 11,763
Social security costs 1,512 1,481 
Pension costs (note 29) 421 398
14,111 13,642
The Group operates Inland Revenue approved Save as Y our Earn and employee share option schemes and has taken
advantage of the exemption given in UITF Abstract 17 ‘Employee share schemes’ from recognising a charge in the proﬁt
and loss account for the discount on the options.
Remuneration paid to Directors is disclosed in the Remuneration report on pages 20 to 24 which forms part of these
ﬁnancial statements.
9 Loss per share
Loss per share is based on the loss for the ﬁnancial year of £5,066,000 (2003: £4,994,000) and on the weighted average
number of 10p ordinary shares in issue during the year to 31 August 2004 of 61,594,085 (2003: 61,558,761).
Financial Reporting Standard 14 requires presentation of diluted earnings per share when a company could be called
upon to issue shares that would decrease net proﬁt or increase net loss per share. For a loss making ﬁnancial period where
there are outstanding share options, diluted loss per share would be increased by the exercise of out-of-the-money options.
Since it seems inappropriate to assume that option holders would act irrationally , and since there are no other diluting items,
diluted loss per share equals basic loss per share.
10 Intangible ﬁxed assets
Goodwill Licences Total
£’000 £’000 £’000
Group
Cost
1 September 2003 3,578 4,037 7,615
Exchange rate adjustment (132) (142) (274)
31 August 2004 3,446 3,895 7,341
Amortisation
1 September 2003 3,578 3,945 7,523
Exchange rate adjustment (132) (142) (274)
Charge for the year – 18 18
31 August 2004 3,446 3,821 7,267
Net book value
31 August 2004 – 74 74
31 August 2003 – 92 92
  41
11 Tangible ﬁxed assets
Telecom-
munications Leasehold Motor Plant and Ofﬁce
network improvements vehicles equipment Computers furniture Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Group
Cost
1 September 2003 183,058 5,498 45 2,233 4,752 698 196,284
Exchange rate adjustment (1,442) (139) (1) (12) (29) (4) (1,627)
Additions 16,15210–110360116,633
31 August 2004 197,768 5,369 44 2,331 5,083 695 211,290
Depreciation
1 September 2003 98,661 4,742 45 1,847 2,779 523 108,597
Exchange rate adjustment (1,439) (139) (1) (12) (29) (4) (1,624)
Charge for the year 13,924 301 – 291 607 30 15,153
Impairment reversal – discontinued operations (459) – – – – – (459)
31 August 2004 110,687 4,904 44 2,126 3,357 549 121,667
Net book value
31 August 2004 87,081 465 – 205 1,726 146 89,623
31 August 2003 84,397 756 – 386 1,973 175 87,687
Included in tangible ﬁxed assets are hire purchase and leased assets with a net book value of £31,806,000 
(2003: £31,256,000).
Leasehold Ofﬁce
improvements furniture Total
£’000 £’000 £’000
Company
Cost
1 September 2003 1,295 257 1,552
Additions – 16 16
31 August 2004 1,295 273 1,568
Depreciation
1 September 2003 640 142 782
Charge for the year 271 42 313
31 August 2004 911 184 1,095
Net book value
31 August 2004 384 89 473
31 August 2003 655 115 770 42
Notes to the Financial Statements continued
12 Fixed asset investments
Shares in
subsidiary
undertakings
£’000
Company
Cost at beginning and end of year 2,550
The Group owns 100 per cent of the ordinary share capital of the following subsidiaries:
Name Principal activity Country of registration
Fibernet UK Limited* Wide area network digital communication England and Wales
Fibernet Holdings Limited* Holding Company England and Wales
Fibernet Limited* Non-trading England and Wales
Fibernet Quest Limited* Qualifying Employee Share Ownership T rust England and Wales
Fibernet GmbH Wide area network digital communication Germany
*Directly owned by the Company .
13 Stocks
Group Group Company Company
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Finished goods and goods for resale 18 262 – –
Long-term contract work in progress 1,141 – – –
1,159 262 – – 
14 Debtors
Group Group Company Company
2004 2003 2004 2003
Amounts falling due after more than one year £’000 £’000 £’000 £’000
Amounts owed by subsidiary undertakings – – 72,800 69,274 
Prepayments and accrued income 3,906 2,738 – – 
3,906 2,738 72,800 69,274
Group Group Company Company
2004 2003 2004 2003
Amounts falling due within one year £’000 £’000 £’000 £’000
T rade debtors 6,351 5,512 – –
Other debtors 83 840 – – 
Prepayments and accrued income 4,586 4,073 619 291 
11,020 10,425 619 291  43
15 Creditors: amounts falling due within one year
Group Group Company Company
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Obligations under hire purchase contracts and ﬁnance leases 3,976 2,486 – –
T rade creditors 5,406 2,351 41 19  
Other taxes and social security costs 730 1,724 16 10 
Accruals and deferred income 16,572 16,429 508 623 
Corporation tax – 150 – 150 
26,684 23,140 565 802  
16 Creditors: amounts falling due after more than one year
Group Group Company Company
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Obligations under hire purchase contracts and ﬁnance leases
– Repayable between two and ﬁve years 10,211 9,504 – – 
– Repayable in more than ﬁve years 20,675 23,338 – – 
Deferred income 6,839 6,754 – – 
37,725 39,596 – – 
For information on repayment terms and interest rates, see note 27.
Finance leases are secured on the assets to which they relate.
17 Provisions for liabilities and charges
Future Onerous Onerous
Restructuring WAN product lease commitments
provisions sales costs provision provision Total
£’000 £’000 £’000 £’000 £’000
Group
1 September 2003 598 526 459 239 1,822
Exchange rate adjustment (5) – – – (5)
Adjustment arising from discounting – 47 – – 47
Utilised in year (285) (113) (190) (157) (745)
Release to the proﬁt and loss account (188) (66) (269) – (523)
31 August 2004 120 394 – 82 596
The restructuring provision relates to the Group’s discontinued operations, the majority of which will be satisﬁed within
one year .
The provision for WAN product sales costs represents the present value of future costs relating to WAN product sales.
This provision will be utilised over the next 21 years.
The onerous lease provision at 31 August 2003 related to surplus ofﬁce space and has been satisﬁed during the year .
The onerous commitments provision relates to anticipated closure costs in respect of unproﬁtable DSL POPs (note 3).
The provision will be utilised over the next year .
  44
Notes to the Financial Statements continued
17 Provisions for liabilities and charges continued
Deferred tax assets recognised and potential are as follows:
Provided Provided Potential Potential
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Group
Accelerated capital allowances (2,773) (2,348) 20 161
Other timing differences 133 86 – – 
T ax losses available 2,640 2,262 4,562 2,012 
– – 4,582 2,173 
There is also a potential deferred tax asset relating to the losses of the German subsidiary , Fibernet GmbH, of £56,981,000.
As only a relatively small element of the German activities are continuing, the losses are unlikely ever to be used and hence
are more akin to a permanent tax difference for the Group. Consequently the tax effect of these losses has not been
included within the table of potential deferred tax assets. The Group has not recognised its deferred tax assets due 
to the uncertainty as to their recoverability .
18 Share capital
1) Authorised and allotted share capital: ordinary shares of 10p each
2004 2003
Number Number
Authorised 100,000,000 100,000,000 
Allotted, called up and fully paid 61,594,925 61,558,761 
2004 2003
£’000 £’000
Authorised 10,000 10,000 
Allotted, called up and fully paid 6,159 6,156 
During the year the Company issued 36,164 10p ordinary shares for total consideration of £25,000.
2) Share options
Share options have been granted to subscribe for ordinary shares of the Company as follows:
i) Approved executive share option scheme
Subscription
Number of shares under option price per share Exercise period
19,370 131p 03/06/00 – 02/06/07
19,923 79p 19/12/00 – 18/12/07
7,471 419p 03/06/02 – 02/06/09
5,036 1183p 18/11/02 – 17/11/09
42,432 1514p 15/06/03 – 14/06/10
30,300 782p 03/01/04 – 02/01/11
22,607 577p 02/05/04 – 01/05/11
57,700 435p 22/11/04 – 21/11/11
204,839 45
18 Share capital continued
2) Share options continued
ii) Unapproved executive share option scheme
Subscription
Number of shares under option price per share Exercise period
34,035 419p 03/06/02 – 02/06/06
78,006 1183p 18/11/02 – 17/11/06
110,259 1514p 15/06/03 – 14/06/07
149,700 782p 03/01/04 – 02/01/08
93,082 577p 02/05/04 – 01/05/08
113,300 435p 22/11/04 – 21/11/08
141,861 105p 24/04/05 – 23/04/09
240,000 20p 26/11/05 – 25/11/09
960,243
iii) Long Term Incentive Plan
Subscription 
Number of shares under option price per share Exercise period
1,208,834 Nil 18/12/06 – 17/12/13
iv) Save As You Earn share option scheme
Subscription
Number of shares under option price per share Exercise period
1,227 462p 25/05/04 – 24/11/06
12,221 274p 16/11/04 – 15/05/07
159,512 87p 28/05/05 – 27/11/07
354,682 17p 08/05/06 – 07/11/08
317,287 79p 01/01/07 – 30/06/09
844,929 46
Notes to the Financial Statements continued
19 Reserves
Share Proﬁt 
Merger premium and loss
reserve account account
£’000 £’000 £’000
Group
At 1 September 2003 (2,472) 155,369 (97,497)
Loss for the year – – (5,066)
Issue of shares – 22 –
Loss on foreign currency translation – – (21)
Gain on sale of treasury shares – – 29
31 August 2004 (2,472) 155,391 (102,555)
Share Proﬁt 
premium and loss
account account
£’000 £’000
Company
1 September 2003 155,369 (72,640)
Proﬁt for the year – 6
Issue of shares 22 –
Gain on sale of treasury shares – 29
31 August 2004 155,391 (72,605)
20 Reconciliation of movements in shareholders’ funds
Group Company
£’000 £’000
At 1 September 2003 61,556 88,885
(Loss)/proﬁt for the year (5,066) 6
Issue of shares 25 25
Loss on foreign currency translation (21) –
Gain on sale of treasury shares 29 29
31 August 2004 56,523 88,945
21 Reconciliation of operating loss to net cash inﬂow from operating activities
Group Group
2004 2003
£’000 £’000
Operating loss (2,545) (7,189)
Depreciation and amortisation 15,171 14,197
Impairment – 1,652
(Increase)/decrease in stocks (897) 1,439
(Increase)/decrease in debtors (1,751) 1,234
Increase in creditors 3,265 1,022
Decrease in provisions for liabilities and charges (748) (130)
Cash outﬂow from termination of operations (285) (3,180)
Net cash inﬂow from operating activities 12,210 9,045 47
22 Returns on investments and servicing of ﬁnance
Group Group
2004 2003
£’000 £’000
Interest received 656 892
Interest under hire purchase contracts and ﬁnance leases (3,800) (3,872)
Net cash outﬂow from returns on investments and servicing of ﬁnance (3,144) (2,980)
23 Capital expenditure
Group Group
2004 2003
£’000 £’000
Purchase of tangible and intangible ﬁxed assets (15,830) (14,005)
24 Financing
Group Group
2004 2003
£’000 £’000
Issue of ordinary share capital 25 – 
Capital element of ﬁnance lease rental payments (2,454) (1,476)
Gain on sale of treasury shares 29 –
Net cash outﬂow from ﬁnancing (2,400) (1,476)
25 Reconciliation of net cash ﬂow to movement in net debt 
2004 2003
Note £’000 £’000
Decrease in cash during the year (9,164) (9,416)
Payments under ﬁnance leases 2,454 1,476
Change in net funds resulting from cash ﬂows (6,710) (7,940)
New ﬁnance leases (1,998) –
T ermination of ﬁnance leases – 1,552
Exchange rate adjustment 10 –
Movement in net debt during the year (8,698) (6,388)
Net debt at beginning of the year (10,418) (4,030)
Net debt at end of year 26 (19,116) (10,418) 48
Notes to the Financial Statements continued
26 Analysis of net debt
Exchange
1 September  rate New ﬁnance 31 August
2003 adjustment Cash ﬂows leases 2004
£’000 £’000 £’000 £’000 £’000
Cash at bank and in hand 24,910 – (9,164) – 15,746
Hire purchase contracts and ﬁnance leases (35,328) 10 2,454 (1,998) (34,862)
(10,418) 10 (6,710) (1,998) (19,116)
27 Financial instruments
1) Overview
The Group’s ﬁnancial instruments comprise ﬁnance leases and cash, and various items, such as trade debtors and 
trade creditors that arise directly from its operations. The main purpose of these ﬁnancial instruments is to fund the
Group’s operations.
It is, and has been throughout the period under review , the Group’s policy that no trading in ﬁnancial instruments shall 
be undertaken.
The main risks arising from the Group’s ﬁnancial instruments are interest rate risk, liquidity risk and foreign currency risk.
The Board reviews and agrees policies for managing each of these risks and they are summarised below . These policies
are periodically reviewed in line with changes to the Group’s ﬁnancial circumstances.
As permitted by Financial Reporting Standard 13 ‘Derivatives and other ﬁnancial instruments’ (“FRS 13”), short-term debtors
and creditors have been excluded from the disclosures, other than the currency disclosures.
i) Interest rate risk
The Group ﬁnances its operations through a mixture of ﬁnance leases, operating cash ﬂows and share issues. The Group
had a net debt position at the year end. The Group does not consider that its current exposure to movements in interest
rates is sufﬁcient to necessitate hedging.
ii) Liquidity risk
The Group’s objective is to ensure adequate funding for its operations. The Group considers that it has sufﬁcient funding
for its short and medium-term funding requirements.
iii) Foreign currency risk
The Group’s operations are principally Sterling based. During the year the major exposure was in respect of the translation
of the assets and liabilities of its subsidiaries.
The UK operations involve certain purchases denominated in US Dollars and in Euros. The Group’s policy has been 
to settle these liabilities at the prevailing spot rate. This policy is periodically reviewed in line with changes in exchange
rates and expectations of future foreign currency transactions.
  49
27 Financial instruments continued
2) Currency and interest proﬁle of ﬁnancial instruments
i) Financial assets
The Group’s ﬁnancial assets were as follows:
31 August 2004
Non-
Floating interest
Total rate bearing
£’000 £’000 £’000
Cash at bank and in hand:
Currency:
Sterling 15,210 15,210 –
Euros 460 107 353
US Dollars 76 76 –
15,746 15,393 353
31 August 2003
Non-
Floating interest
Total rate bearing
£’000 £’000 £’000
Cash at bank and in hand:
Currency:
Sterling 24,282 24,282 –
Euros 615 123 492
US Dollars 13 13 –
Accrued income due after more than one year 176 – 176
25,086 24,418 668
The ﬂoating rate cash ﬁnancial assets include those subject to ﬁxed rates with a term of less than one year , as deﬁned 
by FRS 13. Accrued income represents the amounts receivable in more than one year from customers that have not yet
been invoiced.
The benchmark rate for ﬂoating interest rates is ten basis points above the Bank of England base rate. In the prior year 
the benchmark rate was a seven day London Inter-bank bid rate (LIBID).
ii) Financial liabilities
The Group’s ﬁnancial liabilities were as follows:
31 August 2004
Weighted Weighted
Floating average average
Total Fixed  rate rate interest period
£’000 £’000 £’000 % Years
Finance leases – Sterling 34,597 34,597 – 9.7 10.6
– Euros 265 265 – 22.4 17.0
34,862 34,862 –
31 August 2003
Weighted Weighted
Floating average average
T otal Fixed  rate rate interest period
£’000 £’000 £’000 % Years
Finance leases – Sterling 35,051 35,051 – 10 12.9
– Euros 277 277 – 22.4 17.9
35,328 35,328 –
  50
Notes to the Financial Statements continued
27 Financial instruments continued
iii) Maturity of ﬁnancial instruments
The maturity proﬁle of the Group’s ﬁnancial liabilities was as follows:
2004 2003
Finance Finance
leases leases
£’000 £’000
Within one year , or on demand 3,976 2,486
Between one and two years 2,736 2,209
Between two and ﬁve years 7,475 7,295
After ﬁve years 20,675 23,338
34,862 35,328
iv) Fair values of ﬁnancial assets and liabilities
There is no material difference between the fair and book values of the Group’s ﬁnancial assets and liabilities. Fair value
is the amount at which a ﬁnancial instrument could be exchanged in an arm’s length transaction between willing and
informed parties, other than a forced liquidation sale and excludes accrued interest. Where possible market values are
used to determine fair values.
v) Currency exposure
The following table shows the Group’s exposure to monetary assets and liabilities in currencies other than the local
currency of the operating companies involved. Such monetary assets and liabilities can cause foreign exchange gains
and losses, which are taken to the proﬁt and loss account in the year in which they arise.
31 August 31 August
2004 2003
£’000 £’000
Functional currency of operation: Sterling
US Dollar assets 84 23
Euro liabilities (217) (377)
(133) (354) 51
28 Financial commitments
i) Operating leases
The minimum lease payments under non-cancellable operating leases, due in the next ﬁnancial year , are as follows:
Group Group
2004 2004 2004 2003 2003 2003
Land and Land and
buildings Other Total buildings Other Total
£’000 £’000 £’000 £’000 £’000 £’000
Leases expiring:
Within one year 53 2,262 2,315 42 1,592 1,634
Between two and ﬁve years 295 2,925 3,220 262 1,625 1,887
In more than ﬁve years 1,077 1,546 2,623 1,120 1,641 2,761
1,425 6,733 8,158 1,424 4,858 6,282
Company Company
2004 2004 2004 2003 2003 2003
Land and Land and
buildings Other Total buildings Other Total
£’000 £’000 £’000 £’000 £’000 £’000
Leases expiring:
In more than ﬁve years 432 – 432 432 – 432
ii) Capital commitments 
The Group had contracted capital commitments of £3,803,000 at 31 August 2004 (2003: £10,007,000). The Company
had contracted capital commitments of £923,000 at 31 August 2004 (2003: £3,752,000) entered into on behalf of
subsidiary undertakings.
The Company’s commitment comprises a call off commitment with one of the Group’s suppliers of network equipment,
which is payable on or before 30 April 2006.
iii) Other commitments
The Company has pledged to provide sufﬁcient working capital resources to certain of its subsidiary undertakings 
in order to ensure that they can meet their debts as they fall due in the normal course of business.
29 Pension commitments
The Group operates a deﬁned contribution company pension scheme and individual deﬁned contribution personal
pension schemes administered through insurance companies for all employees. Contributions for the year amounted 
to £421,000 (2003: £398,000).
30 Related party transactions
There were no related party transactions during 2004 or 2003.
  52
Five Year Summary
for the years ended 31 August
2000 2001 2002 2003 2004
£’000 £’000 £’000 £’000 £’000
Results
Turnover 41,808 54,547 39,505 36,348 42,176
EBITDA before exceptional items 14,299 16,709 (1,019) 7,293 12,626
EBITDA 14,299 16,709 (12,031) 11,375 12,814
Operating proﬁt/(loss) 6,822 5,194 (24,277) (7,189) (2,545)
Pre tax proﬁt/(loss) 3,365 3,613 (92,416) (4,994) (5,216)
Proﬁt/(loss) for the ﬁnancial year 3,365 2,892 (91,845) (4,994) (5,066)
Assets employed
Fixed assets 77,348 116,052 89,670 87,779 89,697
Net current assets 37,293 81,739 23,910 15,195 5,147
Net assets 76,024 157,101 66,520 61,556 56,523
Cash ﬂows
Net cash inﬂow/(outﬂow) from operating activities 17,836 26,140 (1,982) 9,045 12,210
Capital expenditure 30,601 40,579 56,612 14,005 15,830
Increase/(decrease) in cash 8,949 85,081 (61,419) (9,416) (9,164) 53
Notice of Annual General Meeting
Notice is hereby given 
that the 9th Annual General Meeting of Fibernet Group Plc will be held on 21 December 2004 at 2pm. The meeting 
will take place at Fibernet Head Ofﬁce, Rosalind House, Jays Close, Viables, Basingstoke, Hampshire RG22 4BS for 
the following purposes:
1 T o receive the Financial Statements, together with the Directors’ and Auditors’ reports, for the year ended 31 August 2004.
2 T o appoint Deloitte & T ouche LLP as Auditors to the Company until the conclusion of the next Annual General Meeting
and to authorise the Directors to ﬁx their remuneration.
3 T o receive and adopt the Remuneration Report for the year ended 31 August 2004.
4 T o elect A P Frewer as a Director .
5 T o re-elect D Wolfson as a Director .
6 T o re-elect C S McGregor as a Director .
7 T o re-elect N P S Bray as a Director .
T o transact any other ordinary business of the Company .
As special business, to consider and if thought ﬁt pass the following resolutions which will be proposed, as to resolutions 8
and resolutions 11 to 14, as ordinary resolutions and, as to resolutions 9 and 10, as special resolutions:
8 That the Directors be and they are hereby generally and unconditionally authorised in accordance with Section 80 
of the Companies Act 1985 to exercise all the powers of the Company to allot relevant securities (within the meaning 
of Section 80 of that Act) up to a maximum nominal amount of £2,000,000 and so that such authority (unless previously
revoked or varied by the Company in general meeting) shall expire on the date of the Annual General Meeting of the
Company to be held in 2005 or 15 months after the passing of this resolution (whichever is the earlier), save that the
Directors may allot relevant securities pursuant to this authority after that date pursuant to an offer or agreement made 
by the Company on or before that date.
9 That (subject to the passing of resolution 8 above) the Directors be and they are hereby empowered pursuant to
Section 95 of the Companies Act 1985 to allot equity securities (as deﬁned in Section 94 of that Act) pursuant to the
authority conferred by resolution 8 above as if Section 89(1) of that Act did not apply to any such allotment, provided 
that this power shall be limited to:
9.1 The allotment of equity securities in connection with or pursuant to an offer by way of rights to the holders of ordinary
shares and other persons entitled to participate therein in proportion to their then respective holdings of ordinary shares,
subject to such exclusions or other arrangements as the Directors may consider necessary or expedient to deal with
fractional entitlements or legal or practical problems under the laws of any territory or the regulations or requirements 
of any regulatory authority or any stock exchange in any territory; and 
9.2 The allotment (otherwise than pursuant to sub-paragraph 9.1 above) of equity securities up to an aggregate nominal
amount of £300,000; and such power shall expire on the date of the Annual General Meeting of the Company to be held
in 2005 or 15 months after the passing of this resolution (whichever is the earlier), but so 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 such offer or agreement as if the power conferred hereby
had not expired. 54
Notice of Annual General Meeting continued
10 That the Company be and is hereby generally and unconditionally authorised to make market purchases (as deﬁned
by Section 163(3) of the Companies Act 1985) on the London Stock Exchange of ordinary shares of 10p each (“ordinary
shares”) in the capital of the Company provided that:
10.1 the maximum aggregate number of ordinary shares authorised to be purchased is 9,239,238;
10.2 the minimum price which shall be paid for the ordinary shares is 10p for each share and the maximum price (exclusive
of expenses) which may be paid for such shares is 5 per cent above the average of the middle market quotations derived
from the London Stock Exchange Daily Ofﬁcial List for the ﬁve business days before the purchase is made;
10.3 unless previously renewed, varied or revoked, the authority hereby conferred shall expire on the date of the Annual
General Meeting of the Company to be held in 2005 or 15 months after the passing of this resolution (whichever is the
earlier); and
10.4 the Company may , before such expiry , make a contract to purchase its own shares under the authority hereby
conferred which will or may be executed wholly or partly after the expiry of such authority , and may make a purchase 
of its own shares in pursuance of such a contract.
11 That the rules of the Company’s Long T erm Incentive Plan 2003 be amended as follows:
11.1 a new rule 2.5.2 shall be inserted which shall read “the approval of amendments to the rules of the Plan by the
Company in general meeting” and the current rule 2.5.2 shall be renumbered accordingly;
11.2 the sentence in rule 3.1 which currently states “in the event of any conﬂict between the limits in this rule 3, the lower
limit shall prevail” shall be deleted;
11.3 the reference to “limits” in the ﬁnal sentence of rule 3.1 shall be amended to “limit” and the reference to “rule 3.4”
in the same sentence shall be amended to state “rule 3.3”;
11.4 rule 3.3 shall be deleted and rules 3.4 and 3.5 shall be renumbered accordingly;
11.5 the reference to “either of the limits” in the current rule 3.5 shall be amended to state “the limit”; and
11.6 in rule 4.2.2 the words “or rule 2.5.3” shall be inserted after the reference to rule 2.5.2 and the reference to 2004 shall
be changed to 2005.
12 That, subject to approval by the Inland Revenue, the rules of the Company’s 1996 Approved Executive Share Option
Scheme be amended as follows:
12.1 rule 3.1 shall be deleted;
12.2 rules 3.2 and 3.3 shall be renumbered accordingly; and
12.3 reference to “limits” in the current rule 3.3 shall be changed to the singular and the reference to rule 3.2 shall be deleted.
  55
13 That the rules of the Company’s 1996 Unapproved Executive Share Option Scheme be amended as follows:
13.1 rule 3.1 shall be deleted;
13.2 rules 3.2 and 3.3 shall be renumbered accordingly; and
13.3 reference to “limits” in the current rule 3.3 shall be changed to the singular and the reference to rule 3.2 shall be deleted.
14 That, subject to approval by the Inland Revenue, the rules of the Company’s 1996 Employee (Savings Related) 
Share Option Scheme be amended as follows:
14.1 rule 3.3 shall be deleted;
14.2 rules 3.4, 3.5 and 3.6 shall be renumbered accordingly;
14.3 the reference to rule 3.3 in the current rule 3.4 shall be deleted; and
14.4 the references in rules 2.4.3 and 4.1 to rule 3.5 shall be changed to rule 3.4.
By Order of the Board
Nick Bray
Company Secretary
Fibernet Group Plc
Rosalind House, Jays Close
Viables, Basingstoke
Hampshire RG22 4BS
United Kingdom
11 November 2004 56
Notice of Annual General Meeting continued
Notes to the Notice of Annual General Meeting
1 Any member entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and,
on a poll, to vote in his stead. A proxy need not be a member of the Company .
2 Any form of proxy and power of attorney or other authority under which it is signed, or a notarially certiﬁed or ofﬁce
copy of such power or authority , in order to be valid, must reach the Company’s Registrars not less than 48 hours before
the time of the meeting. Completion and return of the form of proxy will not preclude a member from attending and voting
at the meeting.
3 Persuant to Regulation 41 of the Uncertiﬁcated Securities Regulations 2001, only those members registered in the
register of members of the Company at 2pm on 19 December 2004 are entitled to attend and vote at the meeting in
respect of the number of ordinary shares registered in their name at that time. Changes to entries in the register made
after that time shall be disregarded in determining the right to attend and vote at the meeting.
4 Copies of service contracts between the Directors and the Company or any subsidiary of the Company , and the
register of Directors’ shareholdings and transactions will be available for inspection at the registered ofﬁce of the
Company during usual business hours on any weekday (Saturdays and public holidays excluded) from the date of this
notice until the date of the Annual General Meeting and at the place of the Annual General Meeting for at least 15 minutes
prior to and until the conclusion of the Annual General Meeting.
5 The LTIP and the Approved, Unapproved and Savings Related Schemes currently provide that commitments to issue
new shares to satisfy awards made under them or any other discretionary employees’ share scheme in the preceding 
ten (or , in the case of the Savings Related Scheme any other employees’ share scheme in the preceding ﬁve) year period
cannot exceed more than 5 per cent of the Company’s issued share capital at that time. Additionally , the LTIP and the
Approved, Unapproved and Savings Related Schemes provide that commitments to issue new shares to satisfy awards
made under them or any other employees’ share scheme in the preceding ten year period cannot exceed more than 
10 per cent of the Company’s issued share capital at that time.
T o enable the Company to continue to be able to incentivise executives and key employees via share awards and/or options,
Shareholder approval is being sought for the 5 per cent in 10 (or , in the case of the Savings Related Scheme, 5) year limit
to be removed from each set of rules.
The Company is currently unable to purchase shares in the market to satisfy employee share awards or options since
the introduction of Urgent Issues T ask Force Abstract 38 (UITF 38) on “ Accounting for ESOP T rusts”, which requires
companies to deduct any contributions made to an employee beneﬁt trust (EBT) for the purpose of the purchase of
shares from distributable reserves.
Awards made under the LTIP and options granted under the Approved, Unapproved and Savings Related Schemes will
remain subject to the existing provision that commitments to issue new shares to satisfy awards made/options granted
under them or any other employees’ share scheme (whether or not discretionary) made in the preceding ten year period
cannot exceed more than 10 per cent of the Company’s issued share capital at that time.
The Company anticipates that the level of awards to be made in 2004 will be broadly similar to levels in previous years.
The levels of awards will be reviewed annually to take into account available headroom under the 10 per cent in ten 
years limit and the ability of the Company in the future to buy shares from the market. Additionally , all awards will continue 
to be subject to stringent performance conditions based on the Company’s key ﬁnancial metrics.
The changes to the LTIP numbered 11.1 to 11.6 are required to ensure that this year’s awards may be made under the
LTIP following the AGM, assuming that Shareholders approve the amendment of the rules.
  Group at a glance
1986
Fibernet founded as a
systems integrator ,
providing Local Area
Network (LAN) solutions
1995
Fibernet granted Public
T elecommunications
Licence (PTO)
1996
Fibernet lists on AIM,
raising £10m of funding
towards construction of
its national fibre-optic
network, TANet
1998
Fibernet moves up
to the full list of the
London Stock Exchange
1999
Launch of London
metropolitan network,
including London
Carrier Ring
Where we operate
Network routes provide
coverage for 95% of UK
businesses
UK London
Frankfurt
Fibernet operates a niche strategy
We provide high value voice and
data networking services on long
term contacts within and between
the premises of our customers and
their customers. We are distinguished
by our capability , our focus, the quality
of our customers and the quality of
the business we do with them.
Our specialist customer teams
are best considered as integrators
that own a customisable national
network rather than as a smaller
version of an incumbent operator .
Our flexibility , willingness and
responsiveness together with our
specialisation in advanced
technologies helps our customers
differentiate their own services.
The underground routes our fibre
optic networks follow allow us to target
the largest and most demanding
businesses in the UK. With nearly
100 UK points of presence and
reaching more than 50 towns and
cities the national network routes
provide a hugely powerful conduit
for information destined to travel
between the headquarters, branch
and retail premises of our customers.
Our London metropolitan
network is one of the most pervasive
in the city , taking us within economic
reach of many of the major data
centres and headquarters operations
we look to serve. We have further
metropolitan networks in all major
UK cities, designed to take us as
close as possible to customers who
are headquartered regionally . It is
the close proximity of our network to
our target customers that enables us
to provide more cost effective services
than many of our competitors.
Our London and Frankfurt
metropolitan networks are also
home to our “Carrier Ring” services
– probably the busiest telecoms
hubs in Europe.
Many customers also appreciate
our willingness to upgrade and
integrate their local area network
technologies into a single, managed,
national network service.
95
%
2001
Awards:
Voice and Data Provider
of the Y ear
First national Ethernet
and IP VPN services
launched
Launch of Frankfurt
metropolitan network,
including Frankfurt
Carrier Ring
2002
Awards:
Voice and Data Service
Provider of the year
– 2nd consecutive year
Carrier Rings top 20
billion switched minutes
2003
Fibernet customer
CoOperative Bank
wins “Best T elecoms
Strategy”
Network investment
trebles London metro
coverage
Launch of TANet
Callchoice service
for contact centres
Launch of Ethersphere
2nd generation
Ethernet services
How we operate
We focus on two markets
Our Enterprise customers are
typically the largest commercial
organisations in the UK. We focus
upon those with multiple premises
and a need to continually move very
large quantities of information within
and between them. Such organisations
are typically not prepared to accept
“off the shelf” service.
Our Service Provider customers
are typically other telecoms operators,
ISPs or integrators, who can benefit
from extremely high service levels,
the geographic reach of our network,
the capacity it has available, and the
technologies that distinguish it.
We focus on accommodating
individual customer needs by
designing and building “Bespoke”
services. Our services must dovetail
precisely with equipment they plan
to retain and provide clearly visible
advantages over services we plan
to replace.
The services below provide
a snapshot of some of the main
applications that drove our business
growth in 2004.
Enterprise Customers
Business Continuity:
Orders for TANet Optical services
represented more than £35m TCV
over the last 2 years.
With a TANet Optical Service, the
largest commercial organisations
are able to confirm that their business
continuity obligations may be met by
ensuring that failures at main
processing centres can be recovered
without pause at geographically
separate backup centres.
Server Consolidation:
T ANet Ethernet services deliver 5 times
more bandwith for the same price.
Fibernet’s Ethersphere service
makes it sensible for large organisations
to relocate branch office “server”
computers back to a central location.
As well as seeing strong customer
growth in this area in 2004 it was also
rewarding to be recognised as the
“European Ethernet Service Provider
of the Y ear” by international standards
group The Metro Ethernet Forum.
Voice and data convergence:
Voice over IP (VoIP) brings many
benefits to corporate customers.
It is widely considered inevitable that
over time all current generation PBX
(switchboard) systems will migrate to
VoIP . Fibernet’s 2nd generation MPLS
IPVPN service has supported not
only encouraging growth in the number
of Enterprise customers but also a
successful new resale initiative.
Non-geographic call management:
TANet Callchoice
Callchoice has been well received
by large contact centres, including
a major new Retail customer signing,
demanding improved customer
experience, lower costs and more
effective call management for their
inbound telephony services.
Service Provider Customers
National Access:
Many ISPs and Voice operators
provide service on a national basis,
yet do not own national network
assets of their own. Fibernet provide
a fast and cost effective alternative to
“self building” national infrastructure.
Our investment in a DSL and PPC
(wholesale leased line interconnects
with BT) infrastructure in 2003 has
led to several major customer signings
in 2004. During the year , our new
Ethersphere services have hosted
an almost wholesale migration by
ISPs from older SDH technology to
this newer , more cost effective service.
Our TANet Optical services have
also seen significant new orders
from Integrators like IBM and Fujitsu.
Interconnect:
Membership of Fibernet’s Carrier
Rings grew by 20% in 2004.
Membership of Fibernet’s London
and Frankfurt Carrier Rings grew by
20% and broke through the 100 barrier
in 2004. It currently stands at 105
international telecoms operators
who exchange in excess of 25 billion
minutes of voice calls with each other
annually . 2004 also saw the introduction
of the Fibernet sponsored “Carrier
Exchange Club” – a bi-annual “trading
floor” event designed to encourage
further business between members.
Designed by navyblue
Photography by Patrick Harrison
Printed by St Ives Westerham Press Fibernet Group plc Annual Report & Accounts 2004
Annual Report & Accounts 2004
Moving 
Forward
Fibernet Group plc
Rosalind House, Jays Close
Viables, Basingstoke
Hampshire RG22 4BS
United Kingdom
T +44 (0)1256 858685
F +44 (0)1256 858601
info@fibernet.co.uk
www.fibernet.co.uk
Fibernet GmbH
Gutleutstr . 175
60327 Frankfurt am Main
Germany
T +49 (0) 69 238 05 90
F +49 (0)69 238 05 926
info@fibernet.de
www.fibernet.de
01 Financial Highlights
02 Chairman’s Statement
04 Chief Executive’s Review
12 Financial Director’s Review
16 Board of Directors
18 Directors’ Report
20 Remuneration Report
25 Corporate Governance
27 Statement of Directors’ Responsibilities
28 Independent Auditors’ Report
30 Consolidated Profit and Loss Account
31 Consolidated Balance Sheet
32 Company Balance Sheet
33 Consolidated Cash Flow Statement
34 Notes to the Financial Statements
53 Notice of Annual General Meeting
Fibernet combines the skills
of both network integrator
and network service provider.
Our goal is to help customers
in our niche market sectors
increase their profitability
through more effective
application of advanced
communications technologies
and services.
Who we work with
Enterprise sector
We provide complex, mission critical
communications services within and
between the premises of blue chip
organisations that have a significant
UK presence.
These bespoke, long term, high
value network services contracts
support the core business transactions
of our customers.
Service Provider sector
We provide managed network
services within and between major
towns and cities that allow other
service providers to extend the
geographic reach of their own
networks. These services are used
both to connect end customers and
also to facilitate connections
between operators.
Representative customers
3i Abbey Alexander Forbes
AXA Barclays Cadbury
Schweppes Capita Chase de V ere
CIBA Citigroup CFS Credit
Lyonnais Credit Suisse First Boston
Debenhams Deloitte Direct Line
Epson Fujitsu Goldman Sachs
HSBC IBM JP Morgan Lazard
Lloyds TSB Magnox Nationwide
NEXT Nottingham Building Society
PPP Prudential Scottish Executive
Standard Chartered Bank Siemens
Symbian T elegraph Group T esco
T exaco Thomson Financial T otal Oil
Winterthur
Representative customers 
AT&T BBC Belgacom BT
Cable and Wireless Centrica
Channel 4 Eircom Energis
Equant Esat Eutex France
T elcom Gamma Global Crossing
IDT GNT Jazztel Kingston
Communications KPN Level 3
LINX MFS Mistral NTL NTT
One.Tel OPAL PIPEX PRIMUS
REACH SINGTEL SPRINT ST AR
Sunguard Swisscom T-Systems
Tele2 T ele Danmark T elefonica
T eleglobe T elekom Austria T elenor
T elewest T eliaSonera T elstra
Thus Tiscali Tyco Verizon VTL
Wavecrest Y our Communications