PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
INSPIRING
PARTNERSHIP
13508PHOENIXCVR CH:13508PHOENIXCVR CH  26/7/07  07:52  Page 1 INSPIRING
PARTNERSHIP
Companies in the Phoenix Group provide
managed IT infrastructure support services,
including systems management, communications,
remote telephone support, high-touch field
services, project and consultancy services and
business continuity.
Phoenix’s support services are increasingly sold and delivered
as a managed service. In addition to providing individual
support service solutions, Phoenix collaborates with Partners to
manage the End User’s entire IT infrastructure.
During the year, Servo Computer Services, a provider of IT
service solutions predominantly for the SME market, joined the
Phoenix Group enhancing both the portfolio of services and the
market reach of the Group.
CONTENTS
01 Financial Highlights and Operational Highlights
02 Overview of Operations
08 Chairman’s Statement
10 Chief Executive‘s Review
12 Financial Review
14 Board of Directors
16 Directors’ Report
20 Corporate Governance
22 Corporate Social Responsibility
23 Audit Committee Report
24 Directors’ Remuneration Report
27 Independent Auditors’ Report on the Group Financial Statements
28 Consolidated Statement of Income
29 Consolidated Statement of Changes in Shareholders’ Equity
30 Consolidated Balance Sheet
31 Consolidated Cash Flow Statement
32 Notes to the Consolidated Financial Statements
53 Independent Auditors’ Report on the Company Financial Statements
54 Company Balance Sheet
55 Notes to the Company Financial Statements
60 Five Year Summary
61 Notice of Annual General Meeting
63 Appendix
IBC Advisers and Financial Calendar
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OPERATIONAL HIGHLIGHTS
HIGHLIGHTS
– ORDER BOOK INCREASED BY 24.1% TO £191.5m (2006: £154.3m)
– ACQUISITION OF SERVO COMPUTER SERVICES IN NOVEMBER
2006, BROADENING THE GROUP’S CUSTOMER BASE AND
MARKETS SERVED
01
FINANCIAL HIGHLIGHTS
PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
REVENUE
16.3%
to £126.7m
(2006: £108.9m)
PROFIT BEFORE TAX
7.4%
to £19.3m
(2006: £17.9m)
FREE CASH FLOW
2
8.4%
to £23.6m
(2006: £21.7m)
SECOND INTERIM
DIVIDEND PER SHARE
15.0%
to 3.174p
(2006: Final dividend
of 2.76p)
DILUTED EARNINGS
PER SHARE
6.7%
to 22.2p
(2006: 20.8p)
CASH GENERATED
BY OPERATIONS
15.9%
to £31.0m
1
(2006: £26.8m)
PROFIT FROM OPERATIONS
BEFORE AMORTISATION OF
ACQUIRED INTANGIBLES
6.0%
to £22.7m
(2006: £21.4m)
PROFIT FROM
OPERATIONS
6.8%
to £20.7m
(2006: £19.4m)
1
See note 28.
2
See page 13.
140
120
100
80
60
40
20
0
03 04 05 06 07
TURNOVER (£’000)
25
20
15
10
5
0
03 04 05 06 07
PROFIT FROM
OPERATIONS (£’000)
UK GAAP
IFRS
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Phoenix is different
02
OVERVIEW OF OPERATIONS
Phoenix Group companies understand the
importance of partnerships with customers,
Shareholders, staff, suppliers and the wider
environment in which they operate. The Group
provides a wide range of IT services through two
complementary routes to market: Phoenix IT
Services works exclusively with Partners to
provide the managed IT services solutions that
complement Partners’ own service offerings,
helping Partners win more business; NDR and
Servo provide their services predominantly
directly to the SME market.
A flexible approach to service delivery, tailored to the
requirements of both the Partner and the End User, enables
the Group to deliver services in four key ways:
THE PHOENIX APPROACH TO MANAGED IT SOLUTIONS
As a MANAGED SERVICE, where all or
part of the IT infrastructure of an End
User’s business is managed by Phoenix
in conjunction with a Partner.
As a SUBCONTRACT, where Phoenix
provides individual support services as part
of the range of services delivered by the
Partner to the End User.
As a DIRECT CONTRACT, where
specific services such as business
continuity and disaster recovery
services are delivered directly to End
User organisations.
As a FULLY OUTSOURCED SERVICE, where
a Partner transfers an entire service delivery
function to Phoenix, including the assets and people
necessary to provide the services across a wide
customer base.
PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
ROUTES TO SERVICE DELIVERY
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03
PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
Wipro is among the top 3 Offshore Information Technology
Service Providers in the world, with over 600 global clients
and in excess of 72,000 employees. Phoenix IT Services
and Wipro have formed a strategic partnership to deliver
onshore IT Services to some of Wipro’s UK-based
customers. This helps Wipro to deliver an even more
comprehensive range of Managed Services to its clients.
Phoenix IT Services provides support to Wipro in delivering
‘touch’ services to a growing number of its clients in the UK
which includes, for example, a leading Water Utility
company in the South of England.
Wipro is responsible for the overall engagement and service
provision and covers the 247 Service Desk, Datacenter
Support, Remote Infrastructure and Applications Management
Services. Phoenix complements Wipro’s core services by
delivering the onshore components of the Managed Service
contract providing deskside support, hardware maintenance,
IMAC, data centre hosting and disaster recovery services.
As a result of this strategic partnership with a non-
competitive partner, Wipro is able to deliver a more
complete service to their customers whilst still supporting
their offshore cost model.
WIPRO
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OVERVIEW OF OPERATIONS CONTINUED
04
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ANNUAL REPORT AND ACCOUNTS 2007
PHOENIX’S COMPREHENSIVE SERVICE PROVISION INCLUDES:
MANAGED SERVICES
Providing services which are
fully managed allows Phoenix
to control the quality of service
provision to the End User.
COMMUNICATIONS
SERVICES
The design, configuration,
installation and support of
voice and data networks in
complex multi-vendor
environments.
HIGH-TOUCH FIELD
SERVICES
Over 600 permanently
employed field and site-based
skilled service engineers
support network, server and
installations 24 hours a day,
every day of the year.
PROJECT AND
CONSULTANCY SERVICES
The management and delivery
of project implementation,
configuration and roll-out of
Partner-developed information
technology solutions.
REMOTE SUPPORT
Dedicated call teams deliver
first line support and guidance
for End Users, 24 hours a day,
seven days a week.
BUSINESS CONTINUITY
Business continuity and
disaster recovery services and
facilities covering all major
platforms across a wide range
of vendors.
NETWORK & SYSTEMS
MANAGEMENT
Monitoring, managing and
administering local and wide-
area voice and data
networks through remote
management centres.
13508PHOENIX:Layout 1  26/7/07  07:53  Page 4 Wolseley UK is the UK operating company of Wolseley plc,
the world's number one distributor of heating and plumbing
products to the professional market, and a leading supplier of
building materials and services. Wolseley UK trades as well-
known brands such as Plumb Center, Build Center and
Bathstore with 1,800 branches across the UK, four major
distribution centres and offices at Leamington Spa and Ripon.
After considerable research and planning Wolseley
UK signed a 3 year contract with NDR for Disaster
Recovery Services.
The contract includes many of NDR’s flexible recovery
options that enable the customer to choose the method of
recovery most appropriate for a disaster or failure at the time
it occurs, whether it be power failure to a computer room,
loss of access to premises, hardware failure or any potential
event. These options include mobile recovery units, off-load
of equipment to a customer location, remote connectivity or
relocation to an NDR business recovery centre.
This allows Wolseley UK to be the best prepared it can be
in the event of a disaster. It now has a backup plan that
enables the company to have the reassurance that whatever
occurs, it has the flexibility of a service that has the right
solution at the right time.
WOLSELEY UK
05
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1.03 CHAIRMAN’S STATEMENT
6
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06
OVERVIEW OF OPERATIONS CONTINUED
The Phoenix Group strategy is to enter into large outsourcing
contracts while developing niche services for niche markets.
STRATEGIC DIRECTION
STRENGTHENING EXISTING PARTNER RELATIONSHIPS
AND BUILDING NEW PARTNER SECTORS: Phoenix is
focused on reinforcing and increasing the depth of its
relationships with key existing Partners, sustaining levels of
repeat revenues from contracts, and extending its portfolio
of contracts with existing Partners, together with developing
the breadth of Partner relationships.
EXPANDING THE RANGE OF
SERVICES: Phoenix continues to
pursue opportunities that offer high
levels of profitable recurring revenue.
Increasing the range of IT support
services in the Phoenix portfolio
enables the development of cross-
selling opportunities, enhancing
relationships with our Partners and
End Users.
THE SME MARKET: The acquisition of
Servo has added a significant business into
the Phoenix Group that is focused on
providing a wide range of IT solutions and
services to a large market of predominantly
small and medium sized organisations
previously not addressed by Phoenix.
PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
DEVELOPING ROUTES FOR GROWTH
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With staff operating from its Head Office in Harrow, five
regional offices and 80 plus project sites in the UK, along
with nine mainland European offices and another 40
construction sites, Bovis Lend Lease needed to centralise its
corporate email by upgrading from Exchange 5.5 to
Exchange 2003 and manage the Head Office data lifecycle.
Bovis Lend Lease also faced a second issue of the
management of project information with a particular
requirement to ensure access and availability to
documentation at all times.
Servo’s solution focused on providing the centralised
infrastructure to enable Bovis Lend Lease to migrate existing
Microsoft Exchange 5.5 servers from their many construction
sites. The single high availability Exchange 2003 Cluster
with a Front End Outlook Web Access server farm has
greatly improved data security and significantly reduced
management overheads and complexity of maintaining
project sites and regional centres.
Servo also recommended file archiving technology to
migrate data automatically to lower cost storage in the first
instance and then to NAS storage as data access
requirements diminish. File retention is only maintained for
legal and compliance requirements.
Bovis Lend Lease has made considerable cost savings by
ensuring SAN technology is better utilised for critical data,
while taking advantage of lower cost storage for data that no
longer changes and is accessed less frequently.
BOVIS LEND LEASE
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CHAIRMAN’S STATEMENT
08
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ANNUAL REPORT AND ACCOUNTS 2007
PETER BERTRAM
Chairman
“The Group took a major step forward with
the acquisition of Servo Computer Services
Limited in November 2006.”
REVIEW OF THE YEAR
I am pleased to report that 2007 was another
year of continued progress. The Group took a
major step forward with the acquisition of Servo
Computer Services Limited in November 2006.
Servo has greatly broadened the Group’s
customer base and markets served and the Board
is confident that this acquisition will contribute
significantly to the future growth of the Group.
Group revenues increased by 16.3% to
£126.7m (2006: £108.9m) and operating profit
before amortisation of acquired intangibles (see
page 28) increased by 6.0% to £22.7m (2006:
£21.4m). Profit from operations (after
amortisation of acquired intangibles) increased
by 6.8% to £20.7m (2006: £19.4m) and profit
before tax increased by 7.4% to £19.3m (2006:
£17.9m). The Group has continued to be highly
cash generative during the year with the free
cash flow
1
increasing by 8.4% to £23.6m
(2006: £21.7m).
Since the year end the Group has made a
recommended offer for ICM Computer
Group plc.
1
See page 13.
DIVIDEND
In view of the potential acquisition of ICM, the
Group declared a second interim dividend rather
than recommending a final dividend for the year
ended 31 March 2007. This dividend of 3.174p
per share was declared on 27 April 2007 and will
be paid on 15 June 2007 which, together with
the first interim dividend of 1.59p per share paid
on 2 February 2007, makes a total dividend for
the year to 31 March 2007 of 4.764p per share
(2006: 4.14p), an increase of 15.1%.
BOARD CHANGES
During the year we announced the appointment
of Jeremy Stafford as Chief Operating Officer.
Jeremy joined the Board on 24 April 2007 and
we are delighted to welcome him to the Group.
Jeremy’s experience in a range of senior
executive positions within BT will be of immense
value in the future development of the Group.
EMPLOYEES
We are fortunate to have a strong team of
talented and hardworking people in the Group
who have delivered the successful
performance achieved in the year and I thank
them all on behalf of the Board and the
Shareholders. I am also pleased to formally
welcome the management and staff of Servo to
Phoenix IT Group.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at the
Group’s registered office, Technology House,
Hunsbury Hill Avenue, Northampton on
Wednesday, 22 August at 10.30 a.m. Formal
notice of this meeting and the necessary proxy
forms are enclosed with these financial
statements.
OUTLOOK
Market conditions and the performance of our
businesses since the year end are in line with
our expectations. The Board is confident that
the Group has the financial and commercial
base to continue its stated strategy of targeting
growth, both organically and by selective
acquisitions, as in the case of Servo. In
addition, the Board believes that the potential
acquisition of ICM would also create value for
Shareholders.
PETER BERTRAM
Chairman
18 May 2007
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PHOENIX IT GROUP plc
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NICK ROBINSON
Chief Executive
CHIEF EXECUTIVE’S REVIEW
“In order to increase the added value we generate, we
are continually seeking to increase both the range and
the depth of the services provided to existing customers,
in addition to attracting new customers or addressing
new sectors of the IT services market.”
SUMMARY OF THE GROUP’S ACTIVITIES
As one of the UK’s leading IT service providers,
the Group provides a growing range of
complementary IT infrastructure support
services including systems management,
communications, remote telephone support,
high-touch field services, project and
consultancy services and business continuity
and disaster recovery services. Often these
services are sold and delivered as a managed
service where we manage complex IT
infrastructures to agreed levels of service under
long-term contracts.
The Group differentiates itself by focusing on
niche customer groups and niche markets.
Phoenix IT Services specialises in supporting
major IT services organisations (‘Partners’) in
support of their customers (‘End Users’). This
strategy allows Phoenix IT Services to access
the largest proportion of spending on IT
Services in the UK which we believe could not
be achieved as efficiently by selling direct to the
largest End Users. Servo sells a similar portfolio
of IT services predominately to the small and
medium size enterprise (‘SME’) market, which is
considered to be the fastest growing area of IT
services in the UK. NDR operates in the
business continuity market, which continues to
grow strongly as a result of increased
awareness of terrorism and disaster risks to
commercial centres following events such as
the 2005 London terrorist attacks and the
Buncefield fuel depot explosion, together with
increased awareness of the need for improved
corporate risk management and demands from
insurers.
In order to increase the added value we
generate, we are continually seeking to increase
both the range and the depth of the services
provided to existing customers, in addition to
attracting new customers or addressing new
sectors of the IT services market. This
continuous development of new services has
been one of our key differentiators and success
factors historically and we believe it will
continue to be so in the future.
Alongside large outsourcing contracts, the
Group’s strategy is to develop niche services,
commanding high margins, and to sell these
services into niche markets, a strategy that is
proving successful. The large and growing
UK market offers significant opportunities for
the Group and the Board believes that a
continuing focus on the UK for the foreseeable
future will best maximise the growth potential
of the Group.
PHOENIX IT SERVICES
The underlying performance of the Group’s UK
‘Partner’ business has been encouraging. Despite
the ongoing effect of two significant changes to
contract revenue during the year, the order book
grew strongly year-on-year to £152.7m
representing an 18.9% increase from 2006 and
the annual contract value increased by 8.1% to
£77.1m. Phoenix IT Services won new contracts
throughout the year with significant contract
awards from a wide range of Partners, including
our portfolio of offshore service provider Partners.
It is particularly pleasing to be able to report that
new contracts with key mid-range equipment
vendors were won during the year with one
transferring 96 engineers under TUPE to Phoenix
IT Services, thereby outsourcing its entire field
engineering function. We have continued to
expand in the growing area of Voice over Internet
Protocol Telephony (VoIP), and have entered into
contracts with Partners to provide VoIP-related
services to two major UK organisations. Also, for
the first time, contracts were won supporting
complete data centres. The business continues to
develop its service offerings in these areas.
Service delivery quality remained consistently
high at 98%, providing a solid platform for
growth. Phoenix IT Services became one of
the first businesses in the UK to be accredited
to the new ISO 20000 standard: IT Service
Management Specification. ISO 20000 is an
integrated framework for delivering and
managing IT services to the customer. The
10
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standard is based on the best practice of the
IT Infrastructure Library (ITIL) and the
accreditation is an important platform for the
ongoing maintenance of the high service
standards.
Our small French operation, which focuses on
IT industry partners and the mid-range
equipment areas, has continued to develop over
the period and is both modestly profitable and
cash generative.
NDR
NDR provides consultancy advice, real time data
backup, office and mobile facilities, computer
equipment and support for customers in case of
disaster or major business interruption. NDR
has performed very strongly since its
acquisition in 2005. During the year the
business has successfully developed a strategy
for targeting larger opportunities in addition to
the SME market where it already has an
excellent reputation, resulting in an increase in
the average contract value of new business
wins and a major three-year contract with a
FTSE 100 company. To support this growth and
facilitate further expansion, NDR has made a
number of infrastructure investments during the
year including a new East Midlands disaster
recovery (DR) facility utilising available space in
an existing Phoenix building, the doubling in
size of the City of London DR facility and the
commissioning of a new mobile unit, enabling
service to be provided to the more remote parts
of the UK.
SERVO
Servo was acquired in November 2006 to
enable the Group to sell IT services to the fast
growing SME market. Since acquisition the
management team of this business has been
strengthened by the appointment of a new
Finance Director and a new Sales & Marketing
Director. Servo continues to evolve away from
product sales to services, which accounted for
48% of revenues in the year ended 31 March
2006, and 53% in the year ended 31 March
2007. Servo has met our expectations to date.
RECOMMENDED OFFER FOR ICM
Since the year end the Group has made a
recommended offer for ICM Computer Group plc.
We believe there is a strong strategic logic for
the combination of Phoenix and ICM. In
particular, given the complementary nature of
disaster recovery, business continuity and IT
solutions and support services, we believe that
the combination and integration of the two
businesses will provide the potential to exploit a
significant opportunity in the market for the
provision of IT support and disaster recovery
services. We already have significant experience
in growing the Group both organically and
through acquisition and believe that the
acquisition of ICM will be earnings enhancing
(before amortisation of intangible assets and
one-off integration costs) in the first full
financial year following completion of the
acquisition.
1
As described in the Offer Document posted to
ICM Shareholders on 27 April 2007, the First
Closing Date of the Offer is 3.00 p.m. on
25 May 2007 and an Extraordinary General
Meeting will be held at which approval will be
sought from Phoenix Shareholders for, among
other things, the acquisition. The Extraordinary
General Meeting will be held at 9.00 a.m. on
25 May 2007 at the offices of UBS Limited at
1 Finsbury Avenue, London EC2M 2PP.
NICK ROBINSON
Chief Executive
18 May 2007
1
This statement regarding earnings enhancement does not constitute a profit forecast nor should it
be interpreted to mean that earnings per share of Phoenix for the current or future years will
necessarily match or exceed the historical published earnings per share of Phoenix or ICM.
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ANNUAL REPORT AND ACCOUNTS 2007
GROUP RESULTS FOR THE YEAR
The acquisition of Servo Computer Services
Limited was completed on 3 November 2006
for a total consideration, excluding acquisition
costs of £0.6m, of £30.25m consisting of
£28.0m gross (£25.8m net of cash acquired) in
cash and the issue of 708,103 ordinary shares
in the share capital of Phoenix IT Group plc.
Accordingly, five months’ results from the Servo
business are included in these financial
statements.
SUMMARY OF RESULTS
The Group regards its profit and cash
generation as the most appropriate measures of
its financial performance.
The 2007 results represent another positive year
for the Group. Taking into account the Servo
acquisition, revenues, profit before tax and cash
generation were all at their highest ever levels.
This performance was achieved in an
environment of competitive market conditions,
particularly in the increasingly commoditised
desktop services and networks services markets
where our customers naturally demand the
maintenance of our high service standards
together with market competitive pricing.
REVENUE AND PROFITS
Revenues increased by 16.3% to £126.7m
(2006: £108.9m). Adjusting for the effect of the
acquisition of Servo, the like-for-like increase
was 1.3%.
Phoenix IT Services revenues declined by 1.5%
to £91.5m (2006: £92.9m) as a result of the
increased commoditisation of certain service
lines and the ongoing effect of the two
significant changes in contract revenue
compared to the previous financial year.
However, it is encouraging to be able to report
that the underlying revenues generated by our
UK Partner model business (excluding the effect
of these two significant changes) increased by
9.5% to £79.9m (2006: £73.0m) and that the
forward order book for this business increased
by 18.9% to £152.7m (2006: £128.5m) giving a
strong platform for sustainable growth.
NDR, our business continuity and disaster
recovery business, grew strongly in what
continues to be a buoyant and growing market.
NDR contributed £18.8m of revenues, an
increase of 17.5% on the 2006 revenues of
£16.0m for the period 19 April 2005 to
31 March 2006.
After share option charges of £0.8m (2006:
£0.6m), profit from operations before
amortisation of acquired intangibles increased
by 6.0% to £22.7m (2006: £21.4m). This
includes £1.7m contributed by Servo in the five
months since acquisition. Adjusting for the
effect of the Servo acquisition the like-for-like
profit from operations before amortisation of
acquired intangibles was comparable to that
achieved in the prior year, with strong profit
growth in NDR being offset by declines in the
Phoenix businesses.
Group operating profit margins have remained
strong in a competitive market for IT services.
Group operating profit margin before amortisation
of acquired intangibles reduced to 17.9% (2006:
19.6%) primarily because of the lower operating
margins of Servo compared to the rest of the
Group. Servo’s 10.4% operating margin reflects
the relatively high proportion of low margin
product sales required within the often composite
product and higher margin IT services sales to
the predominately mid-tier market that it serves.
Profit from operations increased by 6.8% to
£20.7m (2006: £19.4m). In accordance with the
requirements of IFRS 3: Business Combinations,
customer relationships intangible assets arising
on both the NDR and Servo acquisitions have
been identified out of the total goodwill arising
on each acquisition. A valuation of £2.1m has
been attributed to the value of the Servo
customer relationships intangible asset,
resulting in an additional £0.4m amortisation
charge in the period.
Profit before tax increased by 7.4% to £19.3m
(2006: £17.9m).
INVESTMENT INCOME AND FINANCE COSTS
Although the Group arranged an additional five-
year term loan for £15.0m immediately prior to
the acquisition of Servo, the strong cash
generation of the Group resulted in the net
financing costs being maintained at £1.4m.
Interest charges on borrowings and overdrafts
totalled £1.3m for the year (2006: £1.4m), and
other finance costs, relating primarily to finance
leases for computer equipment, were £0.4m
(2006: £0.3m). The Group places surplus cash
on deposit as appropriate in order to maximise
the short-term return on cash balances which
generated investment income of £0.2m in the
year (2006: £0.2m).
TAXATION
The effective tax rate for the year was 28.7%
(2006: 29.9%) of profit before tax. The
decrease in the effective tax rate was due
mainly to non-recurring adjustments to prior
year charges, in particular a release of a tax
provision previously held in relation to
exposures now resolved.
DAVID SIMPSON
Group Finance Director
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13
BALANCE SHEET
The significant changes to the Group balance
sheet arise as a result of the acquisition of
Servo. A full analysis of the book and
provisional fair values of the identifiable assets
and liabilities acquired is given in note 27 to the
consolidated financial statements.
CASH FLOW
Strong control is exercised over the Group’s
working capital and the conversion of profit into
cash. Consequently, the Group continued to be
highly cash generative. Cash generated by
operations was up 15.9% to £31.0m
1
(2006:
£26.8m) representing 150% of profit from
operations (2006: 138%) and the free cash flow
for the year increased by 8.4% to £23.6m
(2006: £21.7m). The Group ended the year with
net borrowings, including finance leases of
£27.7m (2006: £18.2m).
Information about the Group’s financial assets and
liabilities, including details of the Group’s exposure
to credit risk, is provided in Notes 17, 18 and 33
to the consolidated financial statements.
Since the year end the Group has made a
recommended offer for ICM Computer Group plc.
In the event that the offer is successful, the
enlarged Group will have new banking facilities with
Royal Bank of Scotland plc (replacing all existing
facilites) comprising five-year term loans totalling
£100m and a £30m revolving credit facility,
together with a further £10m overdraft facility.
SHAREHOLDERS’ RETURNS
EARNINGS PER SHARE
Diluted earnings per share increased by 6.7%
to 22.2p (2006: 20.8p). Comparable basic
earnings per share were 23.0p, 8.0% higher than
2006 (21.3p). Adjusted diluted earnings per share
excluding amortisation of acquired intangible
assets increased by 5.6% to 24.4p (2006: 23.1p).
2
DIVIDEND
The Board has declared a second interim
dividend of 3.174p per share, giving a total
dividend for the year of 4.764p per share
(including the interim dividend of 1.59p paid to
Shareholders on 2 February 2007), compared to
4.14p for 2006. The total dividend for the year
is covered 4.8 times by basic earnings per
share, and Shareholders’ funds at the end of the
financial year were £56.4m (2006: £41.8m).
DAVID SIMPSON
Group Finance Director
18 May 2007
1
See note 28.
2
See note 10.
2007 2006
£’000 £’000
Profit from operations before amortisation of acquired intangibles 22,695 21,401
Depreciation 4,104 4,044
Loss on disposal of property, plant and equipment 39 74
Equity settled share plans 814 437
Working capital changes 3,404 824
Net interest paid (1,449) (1,522)
Income taxes paid (6,053) (3,534)
Free cash flow 23,554 21,724
Net capital expenditure (4,404) (3,622)
Net dividends (2,600) (2,239)
Acquisitions (26,468) (27,567)
Borrowings of business acquired — (14,846)
Loan arrangement fees movement 15 68
Issue of share capital 342 297
Cash flow before exchange rate movement (9,561) (26,185)
Exchange rate movement (7) 2
Net borrowings at beginning of period (18,172) 8,011
Net borrowings at end of period (27,740) (18,172)
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ANNUAL REPORT AND ACCOUNTS 2007
BOARD OF DIRECTORS
< PETER BERTRAM NON-EXECUTIVE CHAIRMAN
Aged 53. Peter joined Phoenix as Non-Executive Chairman
on 21 October 2004. Peter was Chief Executive of Azlan
Group plc from 1998 until its takeover in 2003 and was
previously the Non-Executive Chairman of AttentiV Systems
Group plc. He is a Non-Executive Chairman of Alphameric
plc and Non-Executive Director of Anite Group plc,
office2office plc and Microgen plc. He is a fellow of the
Institute of Chartered Accountants in England and Wales.
> NICK ROBINSON CHIEF EXECUTIVE
Aged 47. Nick became Sales Director of Phoenix (then
Phoenix Computers Limited) when he bought into the
business in 1993. In December 1997, Nick
became Chief Executive of Phoenix.
Before joining Phoenix, Nick spent six years at Digital
Computer Services Limited, as sales director.
< DAVID SIMPSON GROUP FINANCE DIRECTOR
Aged 46. David joined Phoenix in November 2001 as Group
Financial Controller and has held his current position since
April 2006. Prior to joining Phoenix he was a divisional
finance director of QinetiQ plc. Between 1990 and 2000 he
held a number of senior financial positions at Misys plc. He
is a member of the Institute of Chartered Accountants in
England and Wales.
> JEREMY STAFFORD CHIEF OPERATING OFFICER
Aged 44. Jeremy joined Phoenix as Chief Operating Officer
on 24 April 2007. Prior to joining he was the non-statutory
managing director of Government Services for British
Telecommunications plc. Between 1991 and 2005, he held
a number of senior positions within the BT Group and,
between 1985 and 1991, Jeremy was employed by British
Airways plc and Corporate Positioning Services.
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< JOHN SUSSENS NON-EXECUTIVE DIRECTOR
Aged 61. John joined Phoenix as a Non-Executive Director
on 21 October 2004. Until he retired on 31 May 2004,
John had been an Executive Director of Misys plc since
July 1989 and Group Managing Director since 1998.
Prior to joining Misys plc, John was Managing Director of
JCB Manufacturing. He is a Non-Executive Director of
Cookson Group plc, Admiral Group plc and Anglo &
Overseas Trust plc and was previously a Non-Executive
Director of Chubb plc (now Chubb Limited). John is also a
Non-Executive Director of Searchspace Limited.
> BRIAN SELLWOOD NON-EXECUTIVE DIRECTOR
Aged 59. Brian joined Phoenix as a Non-Executive Director
on 1 April 2006 after a career of over 30 years with IBM
where he held a variety of senior positions and was
instrumental in establishing IBM’s Global Services business
in Europe.
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PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
The Directors present their report together
with the audited financial statements for the
Group and the Company for the year ended
31 March 2007.
PRINCIPAL ACTIVITY AND REVIEW OF
THE BUSINESS
The Group’s principal activity is the provision of
information technology and business continuity
services. A review of the Group’s performance
and future prospects is provided in the Chief
Executive’s Review and the Financial Review.
DIVIDENDS
A second interim dividend of 3.174p per share
was declared on 27 April 2007 and will be paid
on 15 June 2007 which together with the
interim dividend of 1.59p per share paid on
2 February 2007 made a total dividend for the
year to March 2007 of 4.764p (2006: 4.14p),
an increase of 15.1%.
RISKS AND UNCERTAINTIES
There are a number of potential risks and
uncertainties which could have an adverse
impact on the Group’s long-term performance.
However, there are sufficient systems in place
to monitor and control these issues so that they
can be appropriately addressed if they arise.
COMPETITOR RISK
The IT services industry is highly competitive.
Several competitors, including in some cases,
Phoenix’s Partners, have longer operating
histories, higher brand recognition, greater
financial, technical, marketing, personnel and
other resources and a larger established base of
Partners than the Group. The Group’s
competitors have, and other potential
competitors may have, well-established
relationships and current and potential partners
of the Group. As a result, these competitors
may be able to respond more quickly to new or
emerging technology and changes in Partner
requirements, or to devote greater resources to
the development, promotion and sale of their
services, than the Group. In addition, the Group
may experience increased competition from low
cost outsourcing centres, including offshore
centres, and new or existing niche market
participants whose costs, particularly for labour
and for service desk may be lower. Increased
competition could lead to the loss of market
share, loss of material contracts, renegotiation
of price levels or a general reduction in
turnover of the Group.
COMMERCIAL RELATIONSHIPS
The section of Phoenix’s business comprised in
Phoenix IT Services has, and is likely to
continue to have, a high degree of reliance on a
limited number of Partners. In any particular
year, a small number of Partners may account
for a majority proportion of turnover. Loss of
turnover from any one of these Partners (either
as a result of external factors such as the
economic environment or other factors such as
performance on contracts or a breakdown of a
Partner relationship) could substantially reduce
the industry credentials Phoenix has in its
markets and its ability to attract new Partners
or retain existing Partners and may adversely
affect Phoenix’s business, results of operations
or financial condition.
If Phoenix’s Partners decide to integrate
vertically, or if Partners consolidate operations
with each other rather than using outsourcing
firms to provide services, Phoenix’s business,
results of operations or financial condition
would be materially adversely affected.
Many of the large, managed service contracts
permit the Partner to terminate the contract
with Phoenix if the contract between the Partner
and the End User has been terminated, which is
beyond Phoenix’s control. Although in most
cases the managed service contracts allow for
payment of early termination fees to Phoenix
which are intended to compensate it for costs
incurred as a result of termination, not all the
contracts compensate Phoenix for profit it
would have received if the contract had not
been terminated. In general, support service
contracts are renewable annually and are
typically terminable by the Partner without
cause, upon short notice periods and without
termination fees.
In addition, Phoenix has derived, and believes it
will continue to derive, the majority of its
turnover in any given year from a limited
number of large contracts. In addition, at any
given time, other contracts are the subject of
ongoing negotiations or amendments regarding
the scope of work to be performed and price. If
these or other contracts are not renewed or are
terminated (including as a result of external
factors such as the Partner’s or End User’s
decision to in-source the services rather than
using outsourcing firms) or if contract
negotiations, amendments or documentation are
not satisfactorily resolved and if Phoenix is not
able to replace lost turnover with new contracts
in a timely manner, Phoenix’s business, results
of operations or financial condition could be
materially adversely affected.
ACQUISITION RISK
The Group is an active acquirer. Acquisitions
can involve risks that might have a material
impact on the Group. Although these risks are
usually mitigated by extensive due diligence
and, where practical, by contractual
representations, warranties and indemnities
from the vendors, there is nevertheless a risk
that a poorly judged or unsuccessful acquisition
could have an adverse effect on the Group.
TECHNOLOGICAL AND REGULATORY CHANGE
Any significant change in the technology or
regulatory environment affecting the markets in
which the Group operates could have an adverse
effect on the Group’s financial performance.
KEY PERFORMANCE INDICATORS
FINANCIAL KPIs
TURNOVER
Our aim is to increase turnover each year
through a combination of price and volume
growth, organic expansion and acquisitions. For
the year ended 31 March 2007, Group revenues
increased by 16.3% to £126.7m (2006:
£108.9m). Organic growth, excluding the effect
of acquisitions, contributed 1.3%.
OPERATING MARGIN
This represents the Group’s profit from
operations before amortisation of acquired
intangibles divided by Group turnover. For the
year ended 31 March 2007, Group operating
profit margin was 17.9% a reduction on the
prior year margin which was 19.6%. This
reduction was primarily due to the lower
operating profit margins of Servo compared to
the rest of the Group.
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PROFITABILITY
Our main profitability KPIs are profit from
operations before amortisation of acquired
intangibles and diluted earnings per share.
These measures increased in the year by 6.0%
and 6.7% respectively to £22.7m and 22.2p
(2006: £21.4m and 20.8p).
CASH GENERATED FROM OPERATIONS
Strong control is exercised over the Group’s
working capital and conversion of profit into
cash. For the year ended 31 March 2007, cash
generated by profit from operations was up
15.9% to £31.0m
1
(2006: £26.8m), representing
150% of profit from operations (2006: 138%).
NON-FINANCIAL KPIs
ORDER BOOK
The order book grew strongly year on year to
£191.5m, an increase of 24.1% on the prior
year figure of £154.3m.
SHARE CAPITAL
Details of changes in the share capital of the
Company during the year are given in Note 23
to the consolidated financial statements.
DIRECTORS
The following Directors served during the year
and up to the date of this report unless
otherwise stated:
Peter Bertram
Non-Executive Chairman
Nick Robinson
Chief Executive
David Simpson
Group Finance Director
Appointed 1 April 2006
Jeremy Stafford
Chief Operating Officer
Appointed 24 April 2007
John Sussens
Non-Executive Director
Brian Sellwood
Non-Executive Director
Appointed 1 April 2006
Biographies of the Directors are set out on
pages 14 and 15. Details of the Directors’
remuneration, interests in the shares of the
Company and their share options are given in
the Directors’ Remuneration Report on pages
24 to 26. Peter Bertram, John Sussens and
Brian Sellwood have letters of appointment for
an initial term of three years unless terminated
by either party on three months’ notice. Copies
of their letters of appointment are available on
request.
John Sussens and Jeremy Stafford offer
themselves for reappointment to the Board at
the forthcoming Annual General Meeting and
the Directors recommend their reappointment
on the grounds of the considerable experience
and knowledge of the IT Services market that
both bring to the Company.
DIRECTORS’ INDEMNITIES
The Company has made qualifying third-party
indemnity provisions for the benefit of its
Directors.
SUBSTANTIAL SHAREHOLDERS
As at 18 May 2007 the Company had been
notified that the following Shareholders had an
interest of 3% or more in the issued Ordinary
Share capital of the Company.
Ordinary Shares % of issued
of 1p each Share capital
Aberforth Partners LLP 6,195,198 10.28%
N Robinson 6,163,265 10.23%
Legal & General Group plc 5,355,959 8.89%
F&C Asset Management plc 4,600,107 7.63%
UBS Global Asset Management Life Ltd 3,300,361 5.48%
EMPLOYMENT POLICY AND INVESTMENT
As a progressive service organisation,
employees at every level are critical to the
Company and its future. Management and
professional and technical expertise are the
Group’s major assets. Investment in developing
and retaining such skills is ongoing and well
established, and is supported by extensive use
of in-house and external training programmes.
The Board recognises the value of effective
communication and consultation with all
employees and informing them of the progress
and policies of the Group. This is achieved
through formal and informal meetings, briefing
groups and internal newsletters.
It is the Group’s policy to encourage the
recruitment, training and development of
disabled persons on the basis of their aptitude
and ability, and the retention and retraining of
employees who become disabled.
Consistent with the Group’s human resources
policies, the Board encourages staff to identify
with the financial success of the business
through the opportunity to acquire Ordinary
Shares. Staff can participate in the financial
prosperity of the Group through share
ownership. Employee incentive arrangements
include a Performance Share Plan, Share Option
Schemes, and Share Incentive Plan.
1
See note 28.
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PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
PAYMENTS TO SUPPLIERS
The Group’s operating companies determine
terms and conditions of payment for the supply
of capital and revenue items by agreement with
suppliers. Payment is then made on these
terms, subject to the terms and conditions being
met by the suppliers. As at 31 March 2007,
trade creditors of the Group were equivalent to
41 days (2006: 41 days) and in the Company nil
(2006: nil).
CHARITABLE DONATIONS
The total amount of charitable donations made
during the year was £26,084 (2006: £13,006).
There were no political donations.
GOING CONCERN
The Directors have considered detailed profit
and cash flow forecasts and have a reasonable
expectation that the Group has adequate
resources to continue as an operational
business for the foreseeable future. The financial
statements have therefore been prepared on a
going concern basis.
AUDITORS
An ordinary resolution to reappoint Deloitte &
Touche LLP as auditors of the Company is to be
submitted to the forthcoming Annual General
Meeting.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the
Annual Report, Directors’ Remuneration Report
and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare
financial statements for each financial year.
Under that law the Directors have elected to
prepare the Group financial statements under
International Financial Reporting Standards
(IFRSs) as adopted by the European Union and
the parent company financial statements under
United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards
and applicable law). The financial statements are
also required by law to be properly prepared in
accordance with the Companies Act 1985.
International Accounting Standard 1 requires that
IFRS financial statements present fairly for each
financial year the Company’s financial position,
financial performance and cash flows. This
requires the faithful representation of the effects
of transactions, other events and conditions in
accordance with the definitions and recognition
criteria for assets, liabilities, income and expenses
set out in the International Accounting Standards
Board’s ‘Framework for the preparation and
presentation of financial statements’. In virtually
all circumstances, a fair presentation will be
achieved by compliance with all applicable IFRSs.
However, Directors are also required to:
 properly select and apply accounting policies;
 present information, including accounting
policies, in a manner that provides relevant,
reliable, comparable and understandable
information;
 provide additional disclosures when
compliance with the specific requirements in
IFRSs are insufficient to enable users to
understand the impact of particular
transactions, other events and conditions on
the entity’s financial position and financial
performance; and
 make an assessment of the Company’s ability
to continue as a going concern.
The parent company financial statements are
required by law to give a true and fair view of
the state of affairs of the Company. In preparing
these financial statements, the Directors are
required to:
 select suitable accounting policies and then
apply them consistently;
 make judgements and estimates that are
reasonable and prudent;
 state whether applicable UK Accounting
Standards have been followed, subject to any
material departures disclosed and explained in
the financial statements; and
 prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the Company will continue in
business.
The Directors are responsible for keeping proper
accounting records that disclose with reasonable
accuracy at any time the financial position of the
Company and enable them to ensure that the
parent company financial statements comply
with the Companies Act 1985. They are also
responsible for safeguarding the assets of the
Company and hence for taking reasonable steps
for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the
maintenance and integrity of the corporate and
financial information included on the Company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination of
financial statements may differ from legislation
in other jurisdictions.
Each of the persons who is a Director at the
date of approval of this report confirms that:
(1) so far as the Director is aware, there is
no relevant audit information of which the
Company’s auditors are unaware; and
(2) the Director has taken all the steps that
he ought to have taken as a Director in
order to make himself aware of any
relevant audit information and to establish
that the Company’s auditors are aware of
that information.
This confirmation is given and should be
interpreted in accordance with the provisions of
s234ZA of the Companies Act 1985.
ANNUAL GENERAL MEETING
The Notice of the Annual General Meeting to be
held on 22 August 2007 (together with
explanatory notes) is sent to Shareholders with
this annual report. The special business of the
meeting includes the following resolutions:
AUTHORITY TO ALLOT SHARES
(RESOLUTION 6)
The Directors are seeking authority under
Section 80 of the Companies Act 1985 (‘the
Act’) to allot shares up to an aggregate nominal
value of £200,908. This amount represents
approximately one-third of the Company’s issued
share capital as at 18 May 2007. The authority
will be in substitution for the previous authority
taken at last year’s Annual General Meeting and
will expire on the earlier of the conclusion of the
next Annual General Meeting or 22 November
2008.
The Directors have no present intention to make
any such issue of shares under this authority,
other than in respect of shares that may be
issued pursuant to the Company’s share option
schemes, but consider it is desirable for them to
be given this opportunity by Shareholders.
The allotment of shares relating to the
Company’s recommended offer for ICM
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Computer Group plc will be allotted pursuant
to the resolution proposed at the Extraordinary
General meeting of the Company held on
25 May 2007.
As at 18 May 2007, the Company held no
treasury shares.
DISAPPLICATION OF PRE-EMPTIVE RIGHTS
(RESOLUTION 7)
The Directors are seeking authority from
Shareholders to allot Ordinary Shares for cash
other than on a pre-emptive basis (as required
by Section 89 of the Act) in limited
circumstances. The Directors recommend that
Section 89 of the Act should not apply to any
allotment of shares in connection with a rights
issue, open offer or other pre-emptive offer in
favour of ordinary Shareholders in accordance
with normal practice in the UK, nor to an issue
for cash of shares up to an aggregate nominal
value of £30,136 which is equivalent to 5% of
the Company’s issued share capital as at 18 May
2007. The authority sought will expire on the
earlier of the conclusion of the next Annual
General Meeting or 22 November 2008.
AUTHORITY TO MAKE MARKET PURCHASES OF
SHARES (RESOLUTION 8)
The Directors are seeking authority to make
market purchases of up to 3,013,624 ordinary
shares which is equivalent to 5% of the
Company’s issued share capital as at 18 May
2007 on such terms and in such manner as the
Directors may determine, provided that the
amount paid for each share (exclusive of
expenses) will not be more than 5% above the
average middle market quotation for Ordinary
shares as derived from the Daily Official List of
the London Stock Exchange plc for the five
business days before the date on which the
contract for the purchase is made and in any
event not less than 1p per ordinary share. The
authority sought will expire on the earlier of the
conclusion of the next annual General Meeting
or 22 November 2008.
The Directors have no present intention to make
any such market purchases but consider it is
desirable for them to be given this opportunity
by Shareholders. The authority will only be
exercised if to do so would result in an increase
in earnings per share and is in the best interests
of Shareholders generally.
As at 18 May 2007, there were a total of
2,206,576 options to subscribe for equity shares
in the Company outstanding, representing 3.7% of
the Company’s issued share capital. If the full
authority sought by this resolution is used, this
number of outstanding options would represent
3.5% of the Company’s issued share capital.
AUTHORITIES REGARDING ELECTRONIC
COMMUNICATIONS (RESOLUTIONS 9 AND 10)
With effect from 20 January 2007, new
companies legislation, which is set out in the
Companies Act 2006, was introduced to facilitate
electronic communications between companies
and their Shareholders. The principal change to
previous legislation in relation to electronic
communications is that a company is now able to
send or supply documents or information to its
Shareholders in electronic form (for example, by
email) or by means of a website provided that
each member has been asked individually by the
company to agree to such method of
communication and the company has not
received a negative response within 28 days of
such a request being made. Resolution 10
proposes that the Company amends its existing
articles of association to allow the Company to
take advantage of the provisions of the
Companies Act 2006 relating to electronic
communication. Details of the proposed
amendments are attached to the Notice of Annual
General Meeting. Resolution 9 seeks general
authority from Shareholders to take advantage of
the new legislation as regards electronic
communications. Shareholders should note that
even where Resolution 9 is passed they will
remain entitled to elect to receive notices and
certain other documents and information from the
Company in hard copy format.
A separate letter, accompanying the Company’s
2007 Report and Accounts, is being sent to
Shareholders giving further details of the
Company’s proposals as regards electronic
communications which all Shareholders are
urged to read.
AMENDMENT TO ARTICLES REGARDING
DIRECTORS’ REMUNERATION (RESOLUTION 11)
Article 72 of the existing articles of association
of the Company permits the Directors to
determine the ordinary remuneration of a
Director provided that such remuneration shall
not exceed £200,000 per annum or such higher
amount as may from time to time be
determined by ordinary resolution of the
Company. The Board, including the
Remuneration Committee, consider that it is in
the best interests of the Company to have
greater flexibility on determining the level of
ordinary remuneration of Directors and therefore
Resolution 11 seeks the amendment of
Article 72.
The Board of the Company recommends that
ordinary Shareholders vote in favour of the
resolutions to be proposed at the Annual General
Meeting and is of the opinion that they are in the
best interests of security holders as a whole.
By order of the Board.
W T MARTIN
Company Secretary
18 May 2007
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CORPORATE GOVERNANCE
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PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
The Directors consider that throughout the year
ended 31 March 2007 the Company has been in
compliance with the provisions set out in
Section 1 of the revised Combined Code on
Corporate Governance issued by the Financial
Reporting Council in July 2003. The application
of the principles of the Code, in the composition
and operation of the Board, the remuneration of
the Directors, relations with Shareholders and
procedures for financial reporting and internal
control are described below.
THE BOARD OF DIRECTORS
The Group is controlled by a Board of Directors
which meets regularly and currently comprises
three Executive and three Non-Executive
Directors. The Non-Executive Directors are Peter
Bertram who is Chairman, John Sussens who is
the Senior Independent Director and Brian
Sellwood, all of whom are considered by the
Board to be independent of management and
free from any business or other relationship
which could materially interfere with the exercise
of their independent judgement. The Non-
Executive Directors regularly meet independently
of management.
The Chairman’s other main commitments are
disclosed on page 14. The roles of Chairman
and Chief Executive are separate. The Chairman
is responsible for leadership of the Board,
ensuring its effectiveness and setting its agenda.
In advance of each meeting the Directors are
provided with or have full and timely access to
information in relation to the matters to be
discussed.
At Board meetings, the Directors receive
presentations from the senior executives on the
implementation of the Company’s strategies and
the Board receives regular updates on changes to
the business, legislative and regulatory
environments.
The Board is responsible to Shareholders for the
proper management of the Group and for its
system of corporate governance. It receives
information on a monthly basis to enable it to
review trading performance, forecasts and
strategy and it has a schedule of matters
specifically reserved for its decision. The most
significant of these are:
 Changes to the structure, size and
composition of the Board;
 Consideration of the independence of Non-
Executive Directors;
 Review of management structure and senior
management responsibilities;
 With the assistance of the Remuneration
Committee, approval of remuneration policies
across the Group;
 Approval of strategic plans, profit plans and
budgets and any material changes to them;
 Oversight of the Group’s operations ensuring
competent and prudent management, sound
planning, an adequate system of internal
control and adequate accounting and other
records;
 Final approval of annual accounts and
accounting policies;
 Approval of the dividend policy;
 Approval of the acquisition or disposal of
subsidiaries and major investments and
capital projects;
 Delegation of the Board’s powers and
authorities, including the division of
responsibilities between the Chairman and the
Chief Executive and other Executive Directors;
and
 Receiving reports on the views of the
Company’s Shareholders.
Operational management of the Group is delegated
to the Chief Executive, the Chief Operating Officer
and the Group Finance Director.
Procedures exist to allow the Directors to seek
independent legal advice in respect of their
duties at the Company’s expense where the
circumstances are appropriate. All Directors
have access to the Company Secretary who is a
qualified Solicitor.
All Directors are required to submit themselves
for re-election at regular intervals and at least
every three years.
During the year the Board undertook an
evaluation of its performance and that of its
committees. Detailed questionnaires were used
for the performance evaluation process. The
Board concluded that overall the Board and its
committees operated effectively. The
performance of each of the Directors was
evaluated while the Senior Independent Director
evaluated the performance of the Chairman.
The Board considered that the evaluation
process was satisfactory and that the use of an
external third party to assist in such evaluation
was not necessary.
COMMITTEES OF THE BOARD
The following formally constituted Committees
deal with specific aspects of the Group’s affairs
in accordance with their written terms of
reference, which have been reviewed in the light
of the Combined Code and are available on
request and on the Group’s website. The
Company Secretary also acts as secretary to
each Committee.
The Audit Committee’s purpose is to assist the
Board in the discharge of its responsibilities for
financial reporting and corporate control and to
provide a forum for reporting by the external
auditors. The Committee, chaired by Brian
Sellwood, comprises the Non-Executive Directors
and meets at least three times a year.
A report on its activities is given on page 23.
The Remuneration Committee, which is chaired
by John Sussens and comprises the Non-
Executive Directors, meets at least twice a year
and additionally as required. It is responsible for
reviewing remuneration arrangements for
members of the Board, and all senior reports of
the Chief Executive and Group Finance Director,
for providing general guidance on aspects of
remuneration policy throughout the Group and
for the Group’s Share Incentive Plans. New
Bridge Street Consultants have been appointed
by the Group to assist and advise the
Remuneration Committee in the performance of
its duties. New Bridge Street Consultants do not
provide any other service to the Group and are
independent of the Group’s auditors.
A report on its activities is given on pages
24 to 26.
The Nominations Committee is chaired by Peter
Bertram and comprises the Non-Executive
Directors. The Committee is responsible for
effective succession planning and proposes
candidates to the Board, having regard to the
balance and structure of the Board. The
Committee determines the terms of reference of
new appointments and uses external advisers to
identify suitable candidates. The process is for
the Committee to interview each candidate with
a view to preparing a shortlist for the Board, for
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PHOENIX IT GROUP plc
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further interviews to take place as appropriate
and for the Chairman to consult with the Chief
Executive and any external advisers before any
appointment is made.
INTERNAL CONTROL
The Board is responsible for establishing and
maintaining the Group’s system of internal
control. Internal control systems are designed to
meet the particular needs of the Group and the
risks to which it is exposed. By their nature,
however, internal control systems are designed to
manage rather than eliminate the risk of failure to
achieve business objectives and can provide only
reasonable and not absolute assurance against
material misstatement or loss.
Key elements of the internal control system are
described below. These have all been in place
throughout the year and up to the date of this
report and are considered and monitored regularly
by the Board (and once during the year):
 Ongoing procedures to identify, evaluate and
manage significant risks faced by the
business in accordance with the guidance of
the Turnbull Committee on Internal Controls
and procedures to monitor the control
systems in place to reduce these risks to an
acceptable level;
 Clearly defined management structure and
delegation of authority to Committees of the
Board and the Executive Directors;
 Clearly documented internal procedures set
out in the Group’s ISO 9001 accredited
quality manual;
 High recruitment standards and formal career
development and training to ensure the
integrity and competence of staff;
 Regular and comprehensive information
provided to management, covering financial
performance and key performance indicators,
including non-financial measures;
 A detailed budgeting process covering
budgets for the coming year which are
approved by the Board;
 Procedures for the approval of capital
expenditure, investments and acquisitions;
 Monthly monitoring and reforecasting of
results against budget, with major variances
followed up and management action taken
where appropriate;
 Regular internal audits of key processes and
procedures under the Group’s ISO 9001
accredited quality assurance process; and
 Formal consideration of progress made
against significant business risks at monthly
Operating Board meetings, with quarterly
briefings to the Board.
Each year the Audit Committee and the Group
Finance Director formally review the need for an
internal audit function. At the current time a
formal internal audit function is not considered
necessary for a number of reasons: the small
size of the Group; the internal controls currently
in place; the relative simplicity of the nature and
type of transactions entered into by the Group;
and the significant executive involvement in the
Group’s day-to-day business. The Board, with
the assistance of the Audit Committee, is
responsible for reviewing the effectiveness of
the Group’s systems of internal control. During
the year, the Board has reviewed the
effectiveness of the systems of internal control
and risk management based on a review of
significant risks identified and the results of
quality and other reports from management.
Following the review the Board concluded that
the systems were satisfactory and in accordance
with the Turnbull guidance. The Board seeks to
ensure that steps continue to be taken to try to
embed internal control and risk management
further into the operations of the Group’s
business and to deal with any areas of
improvement which come to its attention.
AUDITOR INDEPENDENCE
The Company has a formal policy designed to
ensure that the auditors’ independence is not
compromised by their undertaking inappropriate
non-audit work. All significant non-audit work
commissioned from the external auditors
requires the Audit Committee’s formal approval.
The external auditors are only selected to
undertake non-audit work where the nature of
the advice makes it more timely and cost-
effective to select advisers who already have a
good understanding of the Group.
The Audit Committee has undertaken a review of
the nature and amount of non-audit work
undertaken by the external auditors to satisfy
itself that there is no effect on their
independence. The split between audit and non-
audit fees is shown in Note 5 to the
consolidated financial statements.
GOING CONCERN
The Directors are satisfied that the Group has
adequate resources to continue in operational
existence for the foreseeable future, a period of
not less that twelve months from the date of
this report. For this reason, they continue to
adopt the going concern basis in preparing the
financial statements.
COMMUNICATION WITH SHAREHOLDERS
The Company values the views of Shareholders
and recognises their interests in the Group’s
strategy and performance. It holds briefings with
institutional fund managers, analysts and other
investors, primarily following the announcement
of interim and preliminary results, as well as at
other times during the year as may be
appropriate. The Company’s programme of
investor relations activities is designed to ensure
that the investing community receives a
balanced and consistent view of the Group’s
performance. All Shareholders are welcome to
attend the Annual General Meeting, at which the
Board of Directors will be available to answer
questions from Shareholders.
Code Provision D.1.1 requires the Senior Non-
Executive Director to meet with major
Shareholders. During the year, this requirement
has been undertaken by the Chairman, who has
met with a range of major Shareholders to
discuss governance and strategy. The Senior
Non-Executive Director has been available for all
such meetings if requested. The views of major
Shareholders are communicated to the Board as
a whole by the Chairman. In addition, the Board
receives reports from the Company’s broker
twice a year that communicate feedback from
major Shareholders. The Board also reviews
analyst coverage of the Company every month.
ATTENDANCE AT MEETINGS
The numbers of Board meetings and Committee
meetings attended by each Director in the year
to 31 March 2007 were as follows:
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CORPORATE GOVERNANCE CONTINUED
22
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PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
Audit Remuneration Nomination
Board Committee Committee Committee
Held Attended Held Attended Held Attended Held Attended
Chairman
P Bertram 12 12 334433
Executive Directors
N Robinson 12 12
D Simpson 12 10
Non-Executive Directors
J Sussens 12 10 334433
B Sellwood 12 11 334232
Approved by the Board and signed on its behalf.
W T MARTIN
Company Secretary
18 May 2007
The Board of Directors recognises the
importance of high standards of corporate social
responsibility, considers the social environmental
and ethical implications of the Group’s activities
and seeks continually to improve the policies and
practices in place to meet its responsibilities in
all such matters.
HEALTH AND SAFETY
The Group strives to provide and maintain a safe
environment for all employees, customers and
visitors to its premises and to comply with
relevant health and safety legislation. In addition,
the Group aims to protect the health of
employees with suitable specific work-based
strategies, seeking to minimise the risk of injury
from Group activity and ensuring that systems
are in place to address health and safety matters.
The Group also encourages the involvement of
employees and aims for continual improvement
in health and safety matters through a formal
structure with a reporting and review process.
EMPLOYEES
The welfare and safety of employees is a key
priority and the Group actively encourages staff
involvement in the development of the Group’s
business activities. Employees are treated with
fairness and respect and are encouraged and
supported in the development of their careers
and the Group continues to share its success
with them.
THE ENVIRONMENT
The Group recognises that it is part of a wider
community of employees, Shareholders,
customers, suppliers and others, and recognises
that Group companies have a responsibility to
act in a way that respects the environment. The
Group seeks to encourage staff to act in an
environmentally responsible manner, particularly
in the development of recycling and energy
conservation policies to ensure that finite
resources are not depleted.
NICK ROBINSON
Chief Executive
18 May 2007
CORPORATE SOCIAL RESPONSIBILITY
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AUDIT COMMITTEE REPORT
ROLE OF THE AUDIT COMMITTEE
The Audit Committee is a sub-committee of the
Board whose responsibilities include:
 Reviewing the interim and full year financial
statements and results announcements of the
Company and any other formal announcement
relating to the Group’s financial performance
and recommending them to the Board for
approval;
 Reviewing the Group’s systems for internal
financial control and risk management;
 Monitoring and reviewing the requirement for
an internal audit function;
 Considering the appointment of the external
auditors, overseeing the process for their
selection, and making recommendations to
the Board in relation to their appointment,
reappointment or removal;
 Monitoring and reviewing the effectiveness
and independence of the external auditors,
agreeing the nature and scope of their audit,
their remuneration, and considering their
reports on the Group’s financial statements
and systems of internal financial control and
risk management;
 Reviewing and implementing the policy on
using the auditors’ services for non-audit
advice; and
 Monitoring and reviewing the ‘whistle-blowing’
policy.
COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee comprises the independent
Non-Executive Directors. Biographical details of
the independent Directors are set out on
pages 14 and 15 and their remuneration is set
out on page 25. The Chairman of the Audit
Committee is Brian Sellwood. The Committee
invites others, including the Company’s external
auditors and the Group Finance Director, to
attend as appropriate. At least once each year
representatives of the Company’s external
auditors meet the Audit Committee without any
Executive Directors present.
MAIN ACTIVITIES OF THE AUDIT COMMITTEE
During the year the Audit Committee has met
three times. The Committee reviewed the half-
year interim results and presentation of results
to investors, and received reports from the
external auditors on their review and
subsequently met in February to receive a
presentation by the external auditors setting out
their audit approach and procedures, including
matters relating to scope, auditor independence
and audit fees.
The Audit Committee keeps under review the
relationship with external auditors, including:
 The qualification, expertise and resources of
the external auditors, the effectiveness of the
audit process including the external auditors’
quality control procedures;
 The independence and objectivity of the
external auditors taking into account relevant
UK professional and regulatory requirements
and the relationship with the audit firm as a
whole, including the provision of non-audit
services; and
 Reviewing and implementing the policy on
audit fees and fees for other non-audit
services.
BRIAN SELLWOOD
Chairman, Audit Committee
18 May 2007
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DIRECTORS’ REMUNERATION REPORT
24
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PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
INFORMATION NOT SUBJECT TO AUDIT
THE REMUNERATION COMMITTEE
The Remuneration Committee comprises the
Non-Executive Directors and is chaired by John
Sussens.
The Committee determines the remuneration
packages of the Executive Directors and their
senior direct reports and makes
recommendations thereon to the Board within
agreed terms of reference.
The Remuneration Committee has access to
executive remuneration consultants, New Bridge
Street Consultants, to assess comparability to
the IT services marketplace and in particular the
remuneration policies of the Group’s peer
companies.
REMUNERATION POLICY
The policy of the Group on Directors’
remuneration is to provide competitive market-
based packages which reward Group and
individual performance and align the interests of
Directors and Shareholders. Remuneration
packages comprise a basic salary, annual
performance related bonus, pensions and other
benefits and, where appropriate, participation in
the share incentive plans set out below. Salaries
and bonuses are reviewed annually and any
other changes effected from 1 April.
The Group introduced a number of share
incentive schemes on flotation, of which all
members of staff, including the Executive
Directors, are potential beneficiaries. These
include an Employee Share Option Scheme, a
Performance Share Plan (PSP) for senior
managers and an All-Employee Share Incentive
Plan (SIP). Since flotation, no further awards
have been granted under the Group’s pre-
flotation share schemes.
The Board determines the remuneration of the
Chairman and the other Non-Executive Directors.
Directors are not involved in decisions about
their own remuneration.
Individual components of remuneration packages
and service contracts are discussed below.
BASIC SALARY
Basic salary for each Executive Director is based
on externally benchmarked market data for
comparable companies operating in IT services,
experience and achievement of objectives. In
addition to basic salary, the Executive Directors
receive certain benefits such as a company car
(or equivalent allowance) and private medical
insurance.
The salaries of the Executive Directors who
served during the year (and Jeremy Stafford
who was appointed on 24 April 2007) are given
on page 25. Nick Robinson, David Simpson and
Jeremy Stafford have service agreements
subject to a twelve-month notice period and
include the right for the Company to make a
payment in lieu of salary and benefits for any
unexpired period of notice.
Details of the dates of appointment of Directors
appointed during the year and contract terms
are given in the Directors’ Report on page 17.
PERFORMANCE RELATED BONUSES
For Executive Directors, amounts available for
bonuses are based on financial performance
targets defined and agreed by the Remuneration
Committee.
For the year ended 31 March 2007 the target for
the payment of the maximum bonuses for the
Executive Directors was to increase profit to
£22.9m before tax, pre-share scheme charges
and amortisation of acquired intangibles. This
target included the acquisition of Servo. The
actual profit before tax, pre-share scheme
charges and amortisation of acquired intangibles
was £22.1m.
The bonuses earned for the year ended
31 March 2007 were £nil for Nick Robinson and
£nil for David Simpson.
The maximum potential bonus levels for the
year ending 31 March 2008 are capped at 100%
of basic salary for Nick Robinson, 50% of basic
salary for David Simpson and at 100% of basic
salary for Jeremy Stafford.
PENSION ARRANGEMENTS
The Executive Directors are also entitled to
receive personal pension contributions of 20%
of basic salary for Nick Robinson, 10% for
David Simpson and 20% for Jeremy Stafford.
SHARE INCENTIVES
The Group’s policy is to award share incentives
to Executive Directors in order to align their
interests with those of the Company’s
Shareholders. The Executive Directors have
participated in the Performance Share Plan
during the financial year. The performance
conditions were selected after consulting
independent share incentive advisers.
PERFORMANCE SHARE PLAN
During the year the Company granted awards
over 681,276 shares under the PSP. Nick
Robinson was granted awards over 184,211
shares and David Simpson was granted 61,404.
The awards will vest fully if the Group’s average
annual earnings per share growth over the three
years from grant (measured by reference to EPS
in the year immediately prior to grant) exceeds
20% per annum. If the average annual growth is
5% per annum, the award will vest as to 20%
of the maximum. If average annual earnings per
share grow between 5% and 20%, then the
award will vest on a progressive scale. The
award will not vest at all if average earnings per
share growth is less than 5% per annum.
SHARE INCENTIVE PLAN (SIP)
Under the Share Incentive Plan employees are
able to buy shares by deduction of up to £1,500
from their pre-tax salary in each tax year or, if
less, 10% of salary.
PERFORMANCE GRAPH
The following graph shows Phoenix’s total
Shareholder return performance compared to the
FTSE Small Cap index, of which Phoenix is a
constituent. The graph covers the period from
the date of flotation to 31 March 2007 and the
values show the share price growth plus
reinvested dividends from a hypothetical £100
holding of Ordinary Shares in Phoenix and in
the index at the start of the period.
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PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
13508 18/07/2007 Proof 7
TOTAL SHAREHOLDER RETURN
(from listing date to 31 March 2007)
THE FOLLOWING SECTIONS HAVE BEEN SUBJECT TO AUDIT
DIRECTORS’ SHAREHOLDINGS
Directors had the following beneficial and family interests in the issued share capital of the Company as at 31 March 2007. There have been no changes
between the end of the financial year and the date of this report other than as indicated.
2007 2006
Ordinary Ordinary
Shares Shares
At 31 March of 1p each of 1p each
Peter Bertram 10,000 10,000
Nick Robinson 6,163,265 6,163,803
John Sussens 8,500 8,500
REMUNERATION
The remuneration of the Directors for the year to 31 March is comprised as follows:
2007 2006
2007 2007 2007 Total excl. Total excl. 2007
Salary/fees Bonus Benefits Pension Pension Pension
Year ended 31 March £’000 £’000 £’000 £’000 £’000 £’000
Nick Robinson 350 — 33 383 734 70
Peter Bertram 100 —— 100 50 —
John Sussens 40 —— 40 30 —
Brian Sellwood 32 —— 32 — —
David Simpson 194 — 24 218 — 21
Totals 716 — 57 773 814 91
NEW DIRECTORS
Jeremy Stafford joined the Board on 24 April 2007 as Chief Operating Officer and will be standing for reappointment at the 2007 Annual General Meeting.
The Company is disclosing details of his remuneration so that Shareholders can make an informed decision.
Jeremy Stafford is entitled to a basic salary of £250,000 per annum plus company car. In addition, he will be entitled to similar benefits as other
Executive Directors as described on page 24.
David Simpson and Brian Sellwood joined the Board on 1 April 2006 as Group Finance Director and independent Non-Executive Director respectively.
170
160
150
140
130
120
110
100
90
16-Nov-04
16-Jan-05
19-Mar-05
20-May-05
20-July-05
20-Sept-05
21-Nov-05
22-Jan-06
24-Mar-06
25-May-06
26-July-06
25-Sept-06
26-Nov-06
27-Jan-07
30-Mar-07
Phoenix FTSE Smallcap
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DIRECTORS’ REMUNERATION REPORT CONTINUED
26
13508 18/07/2007 Proof 7
PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
DIRECTORS’ INTERESTS IN SHARE OPTIONS
The Group has a number of share option schemes whereby Directors and staff are able to subscribe for Ordinary Shares in the Company. The interests of
the Directors in options to subscribe for Ordinary Shares were as follows. There have been no changes between the end of the financial year and the date
of this report.
Lapsed/
Options held Granted Exercised surrendered Options held Earliest
at 1 April during during during at 31 March Exercise Performance exercise Expiry
Director 2006 year year the year 2007 price conditions date date
Nick Robinson 190,909 ——— 190,909 Nil p (i) 12/2007 12/2014
Nick Robinson 191,606 ——— 191,606 Nil p (ii) 05/2008 05/2015
Nick Robinson — 184,211 —— 184,211 Nil p (iii) 05/2009 05/2016
David Simpson 32,727 ——— 32,727 Nil p (i) 12/2007 12/2014
David Simpson 32,847 ——— 32,847 Nil p (ii) 05/2008 05/2015
David Simpson — 61,404 —— 61,404 Nil p (iii) 05/2009 05/2016
David Simpson 25,000 ——— 25,000 200 p (iv) 09/2007 08/2011
PERFORMANCE CONDITIONS
(i) Award granted under PSP. The market value at the date of grant was 275p.
(ii) Award granted under PSP. The market value at the date of grant was 274p.
(iii) Award granted under PSP. The market value at the date of grant was 285p.
(iv) In common with all options granted by the Company prior to its flotation, these options had no performance conditions attached.
The PSP awards are subject to achieving a performance condition related to average annual growth in earnings per share over a three-year period
of between 5% and 20% per annum. This results in an award of between 20% and 100% with performance between these points being on a
progressive scale.
During the year to 31 March 2007, the Company’s share price varied between 272p and 354.5p and ended the year at 347.25p.
Approved by the Board and signed on its behalf by
JOHN SUSSENS
Chairman, Remuneration Committee
18 May 2007
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ANNUAL REPORT AND ACCOUNTS 2007
13508 18/07/2007 Proof 7
INDEPENDENT AUDITORS’ REPORT ON THE GROUP FINANCIAL STATEMENTS
We have audited the Group financial statements
(the ‘financial statements’) of Phoenix IT Group plc
for the year ended 31 March 2007 which comprise
the consolidated statement of income, the
consolidated statement of changes in Shareholders’
equity, the consolidated balance sheet, the
consolidated cash flow statement and the related
Notes 1 to 35. These financial statements have
been prepared under the accounting policies set
out therein. We have also audited the information
in the Directors’ Remuneration Report that is
described as having been audited.
We have reported separately on the individual
Company financial statements of Phoenix IT
Group plc for the year ended 31 March 2007.
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. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the Company
and the Company’s members, as a body, for our
audit work, for this report, or for the opinions
we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS
AND AUDITORS
The Directors’ responsibilities for preparing the
annual report, the Directors’ Remuneration
Report and the financial statements in
accordance with applicable law and International
Financial Reporting Standards (IFRS) as adopted
by the European Union are set out in the
statement of Directors’ responsibilities.
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 International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the
financial statements give a true and fair view in
accordance with the relevant financial reporting
framework 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 and Article 4 of the IAS
Regulation. We report to you whether in our
opinion the information given in the Directors’
Report is consistent with the Group financial
statements. We also report to you 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 other
transactions is not disclosed.
We also report to you if, in our opinion, the
Company has not complied with any of the four
Directors’ remuneration disclosure requirements
specified for our review by the Listing Rules of
the Financial Services Authority. These comprise
the amount of each element in the remuneration
package and information on share options,
details of long-term incentive schemes, and
money purchase and defined benefit schemes.
We give a statement, to the extent possible, of
details of any non-compliance.
We review whether the corporate governance
statement reflects the Company’s compliance with
the nine provisions of the 2003 FRC 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 other information contained in the
annual report including the unaudited part of the
Directors’ Remuneration Report and we consider
the implications for our report if we become
aware of any apparent misstatements or material
inconsistencies with the financial statements.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with
International Standards on Auditing (UK and
Ireland) issued by the Auditing Practices Board. An
audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures
in the financial statements 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 Company’s circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to
obtain all the information and explanations
which we considered necessary in order to
provide us with sufficient evidence to give
reasonable assurance that the financial
statements 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 Group financial statements give a true and
fair view, in accordance with IFRS as adopted
by the European Union, of the state of the
Group’s affairs as at 31 March 2007 and of
its profit for the year then ended;
 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 and Article 4 of the IAS Regulation;
and
 the information given in the Directors’ Report
is consistent with the Group financial
statements.
SEPARATE OPINION IN RELATION TO IFRS
As explained in Note 2 to the financial statements,
the Group, in addition to complying with its legal
obligation to comply with IFRS as adopted by the
European Union, has also complied with the IFRS
as issued by the International Accounting Standards
Board. Accordingly, in our opinion the financial
statements give a true and fair view, in accordance
with IFRS as adopted by the European Union, of
the state of the Group’s affairs as at 31 March
2007 and of its profit for the year then ended.
DELOITTE & TOUCHE LLP
Chartered Accountants and Registered Auditors
London
United Kingdom
18 May 2007
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ANNUAL REPORT AND ACCOUNTS 2007
135
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED 31 MARCH 2007
28
2007 2006
Note £’000 £’000
Continuing operations
Revenue 3 126,712 108,919
Cost of sales (25,690) (18,507)
Gross profit 101,022 90,412
Distribution costs (65,876) (56,926)
Administrative expenses (14,430) (14,083)
Profit from operations before amortisation of acquired intangibles 22,695 21,401
Amortisation of acquired intangibles (1,979) (1,998)
Profit from operations 5 20,716 19,403
Investment income 3, 7 270 217
Finance costs 8 (1,704) (1,671)
Profit before tax 19,282 17,949
Tax 9 (5,538) (5,365)
Profit for the period 13,744 12,584
Earnings per share
Basic 10 23.0p 21.3p
Diluted 10 22.2p 20.8p
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PHOENIX IT GROUP plc
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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEAR ENDED 31 MARCH 2007
2007 2006
£’000 £’000
Profit for the period 13,744 12,584
Exchange differences on translation of foreign operations recognised directly in equity (7) 2
Total recognised income for the period 13,737 12,586
New share capital issued 9 4
Employee share options — shares to be issued 814 437
Premium on issue of shares 344 292
New shares issued on acquisition 2,243 —
Share issue costs (4) —
Share-based payments deferred tax reserve 10 (308)
Share-based payments corporation tax reserve 82 313
Final dividend for year ended 31 March 2006 (2.76p per share) (1,642) (1,421)
First interim dividend for the year ended 31 March 2007 (1.59p per share) (958) (818)
Net increase in Shareholders’ equity 14,635 11,085
Balance at beginning of the period 41,808 30,723
Balance at end of the period 56,443 41,808
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AS AT 31 MARCH 2007
30
2007 2006
Note £’000 £’000
Non-current assets
Goodwill 12 84,090 57,820
Intangible assets 13 7,090 7,015
Property, plant and equipment 14 13,777 12,327
104,957 77,162
Current assets
Inventories 16 6,391 6,334
Trade and other receivables 17 32,934 21,618
Cash and cash equivalents 5,023 2,760
44,348 30,712
Total assets 149,305 107,874
Current liabilities
Trade and other payables 18 (29,110) (17,129)
Current tax liabilities (3,339) (3,638)
Obligations under finance leases and hire purchase contracts 19 (1,937) (1,619)
Bank loans 20 (7,000) (4,000)
Provisions 21 (47) (496)
(41,433) (26,882)
Net current assets 2,915 3,830
Non-current liabilities
Obligations under finance leases and hire purchase contracts 19 (3,909) (3,381)
Bank loans 20 (19,917) (11,932)
Provisions 21 (1,409) (741)
Deferred tax liabilities 22 (825) (1,123)
(26,060) (17,177)
Deferred income
Due in less than one year (24,946) (21,832)
Due after one year (423) (175)
(25,369) (22,007)
Total liabilities (92,862) (66,066)
Net assets 56,443 41,808
Equity
Share capital 23 602 593
Share premium account 24 37,144 36,800
Other reserves 25 3,707 661
Retained earnings 26 14,990 3,754
Total equity 56,443 41,808
The financial statements were approved by the Board of Directors and authorised for issue on 18 May 2007. They were signed on its behalf by:
DAVID SIMPSON
Group Finance Director
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CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007
31
2007 2006
Note £’000 £’000
Net cash from operating activities 28 23,547 21,726
Investing activities
Purchases of property, plant and equipment (4,437) (3,665)
Proceeds on disposal of property, plant and equipment 33 43
Acquisition of subsidiary undertaking:
— Cash consideration (28,000) (28,825)
— Costs of acquisition (648) (760)
— Cash and cash equivalents acquired 2,180 2,018
Net cash used in investing activities (30,872) (31,189)
Financing activities
Dividends paid (2,600) (2,239)
Repayments of borrowings (4,000) (23,875)
Repayments of obligations under finance leases and hire purchase contracts 846 (59)
New bank loans raised 15,000 30,000
Issue of share capital 342 297
Net cash from financing activities 9,588 4,124
Net increase/(decrease) in cash and cash equivalents 2,263 (5,339)
Cash and cash equivalents at beginning of period 2,760 8,099
Cash and cash equivalents at end of period 5,023 2,760
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32
1. General information
Phoenix IT Group plc is a company incorporated in the United Kingdom under the Companies Act 1985. The address of the registered office is given
on the inside back cover. The nature of the Group’s operations and its principal activities are set out in the Chief Executive’s Review.
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group
operates. Foreign operations are included in accordance with the policies set out in Note 2.
Judgements made by the Directors in the application of these accounting policies that have a significant effect on the Financial Statements and
estimates with a significant risk of material adjustment in the next year are discussed in Note 34.
2. Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards and International Accounting Standards
(IFRS) as adopted by the European Union and as issued by the International Accounting Standards Board.
The financial statements have been prepared on the historical cost basis except where stated below. The principal accounting policies adopted are
set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries)
made up to 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee
entity so as to obtain benefits from its activities.
On acquisition, the assets (including identifiable intangible assets, excluding goodwill) and liabilities and contingent liabilities of a subsidiary are
measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets
acquired is recognised as goodwill.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets
and liabilities of a subsidiary at the date of acquisition.
Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in profit for the period
and is not subsequently reversed.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRS as adopted by the European Union has been retained at the previous UK GAAP
amounts subject to being tested for impairment at that date. Goodwill written off to reserves under UK GAAP in the year ended 31 March 1999 and
earlier periods has not been reinstated and is not included in determining any subsequent profit or loss on disposal.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided
in the normal course of business, net of discounts, VAT and other sales-related taxes.
Sales of goods are recognised when goods are delivered and title has passed. Other revenues, apart from those falling under maintenance contracts
(shown below), are recorded as earned or as the services are performed after provision for estimated customer credits.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.
Dividend income from investments is recognised when the Shareholders’ rights to receive payment have been established.
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2. Significant accounting policies continued
Maintenance Contracts
For fixed-fee maintenance contracts the revenue arising is spread evenly over the term of the contract. Costs incurred under these contracts are
charged to the income statement as they arise.
Leasing
Assets held under finance leases and hire purchase contracts are recognised as assets of the Group at their fair value or, if lower, at the present
value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.
Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance
sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rate prevailing at
the date when the fair value was determined. Gains and losses arising on retranslation are included in net profit or loss for the period.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are classified as equity
and transferred to the Group’s profit and loss reserve. Such translation differences will be recognised as income or as expenses in the period in
which the operation is disposed of.
Borrowing costs
All borrowing costs are recognised in the income statement in the period in which they are incurred.
Retirement benefit costs
The principal subsidiary undertakings contribute to a number of Group personal pension plans in respect of certain employees. These plans are
defined contribution plans and the annual charge to the income statement is the contributions payable in the year. Differences between contributions
payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet.
Short-term employee benefits
The cost of short-term accumulating balances is charged to the income statement over the period during which the entitlement is earned, at an
average pay rate plus social security costs. Differences between the entitlement earned and the entitlement actually paid is shown as either accruals
or prepayments in the balance sheet.
Impairment policy
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the
Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss is immediately recognised as an expense.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss (other than goodwill) is
immediately recognised as income.
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34
2. Significant accounting policies continued
Taxation
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to
control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is
also dealt with in equity.
Investments
Investments are included at cost less provisions for impairment.
Property, plant and equipment
Land and buildings, fixtures and equipment are stated at cost less accumulated depreciation and recognised impairment.
Depreciation is charged so as to write off the cost of assets, other than freehold land, over their estimated useful lives, using the straight-line
method, on the following bases:
Freehold buildings 50 years
Leasehold property Period of lease
Fixtures and equipment 2 to 5 years
Motor vehicles 4 years
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the
term of the relevant lease.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in income.
Intangible assets
Intangible assets are measured initially at fair value and are amortised on a systematic basis over their estimated useful lives.
Research and development
All expenditure on research and development activities is recognised as an expense in the period in which it is incurred.
Inventories
Inventories are stated at the lower of cost and net realisable value.
Service stocks, other than consumable stocks, are systematically provided against over four years so as to reduce their value to nil at the end of the
period. Consumable stocks are expensed as they are purchased.
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2. Significant accounting policies continued
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions
of the instrument.
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable
amounts.
Financial liability and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity
instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums
payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis to the income statement using the effective
interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Trade payables
Trade payables are not interest-bearing and are stated at their nominal value.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Provisions
Provisions relate to the obligation to reinstate certain properties to their former condition at the end of their leases.
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based Payments. In accordance with the transitional provisions, IFRS 2 has been applied to
all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2005.
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the
date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the
vesting period, based on the Group’s estimate of options that will eventually vest.
Fair value is measured by use of a Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best
estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
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36
3. Revenue
An analysis of the Group’s revenue is as follows:
2007 2006
£’000 £’000
Existing operations 110,365 108,919
Acquisition in year — Servo 16,347 —
126,712 108,919
Investment income 270 217
126,982 109,136
Split between:
Services 119,198 108,539
Product supply 7,514 380
126,712 108,919
4. Geographical analysis
Essentially the entire Group’s operations are based in the UK. There is only one class of business activity undertaken by the Group, being the
provision of information technology services.
5. Profit from operations
Profit from operations has been arrived at after charging:
2007 2006
£’000 £’000
Depreciation of property, plant and equipment 4,104 4,044
Amortisation of acquired intangibles 1,979 1,998
Cost of inventories recognised as expense 3,825 4,698
Research and development expenditure 81 122
Auditors’ remuneration for audit services (see below) 146 140
Auditors’ remuneration for non-audit services (see below) 46 73
Amounts payable to Deloitte & Touche LLP and their associates by the Company and its subsidiary undertakings in respect of non-audit services
which have not been charged to the profit and loss account were £507,000 (2006: £160,000).
2007 2006
£’000 % £’000 %
Audit services:
Recurring — statutory audit 146 21 112 30
Non-recurring — IFRS restatement audit —— 28 8
146 21 140 38
Tax services:
compliance and advisory services 46 7 57 15
Other services:
acquisition of subsidiary 507 72 160 43
share option planning —— 41
other —— 12 3
507 72 176 47
699 100 373 100
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6. Staff costs
The average monthly number of employees (including Directors) was:
2007 2006
Number Number
Distribution staff 1,416 1,189
Administration staff 95 82
Directors 5 4
1,516 1,275
£’000 £’000
Their aggregate remuneration comprised:
Wages and salaries 49,317 41,327
Social security costs 5,897 4,986
Other pension costs 1,011 633
56,225 46,946
7. Investment income
2007 2006
£’000 £’000
Interest on bank deposits 200 167
Other interest 70 50
270 217
8. Finance costs
2007 2006
£’000 £’000
Interest on bank overdrafts and loans 1,339 1,365
Interest on obligations under finance leases and hire purchase contracts 300 271
Amortisation of loan issue costs 34 32
Other interest 31 3
1,704 1,671
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9. Taxation
The tax charge on profit from operations for the year was as follows:
2007 2006
£’000 £’000
Current tax:
UK corporation tax 6,175 6,112
Adjustment in respect of prior periods (527) (68)
Foreign tax 125 77
5,773 6,121
Deferred tax (Note 22):
Current year (94) (805)
Adjustment in respect of prior periods (141) 49
5,538 5,365
Corporation tax is calculated at 30% of the estimated assessable profit for the year. Based on future Government legislation the Corporation tax
will be calculated at 28% of assessable profit from 1 April 2008.
Taxation for jurisdictions other than the UK is calculated at the rates prevailing in the respective jurisdictions.
The charge for the year can be reconciled to the profit per the income statement as follows:
2007 2006
£’000 % £’000 %
Profit before tax 19,282 17,949
Tax at the UK corporation tax rate of 30% 5,785 30.0 5,385 30.0
Effects of:
Expenses that are not deductible in determining taxable profit 378 2.0 44 0.2
Tax adjustments relating to share options 10 0.0 (41) (0.2)
Adjustments in respect of prior periods (668) (3.5) (19) (0.1)
Different tax rates of subsidiaries operating in other jurisdictions 33 0.2 (4) (0.0)
Tax expense and effective tax rate for the year 5,538 28.7 5,365 29.9
In addition to the amount charged to the income statement, deferred tax of £10,000 (2006: £308,000) and current tax of £82,000 (2006:
£313,000), relating to share option charges has been credited directly to equity.
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10. Earnings per share
2007 2006
Adjusted earnings per share excluding amortisation of acquired intangibles
Basic 25.3p 23.7p
Diluted 24.4p 23.1p
The calculation of the basic and diluted earnings per share is based on the following data:
EARNINGS
2007 2006
£’000 £’000
Earnings for the purposes of basic earnings per share and diluted earnings per share
being net profit attributable to equity holders of the parent 13,744 12,584
Amortisation of acquired intangibles 1,979 1,998
Tax on amortisation of acquired intangibles (594) (599)
Earnings for the purposes of adjusted earnings per share being net profit attributable to
equity holders of the parent excluding amortisation of acquired intangibles 15,129 13,983
NUMBER OF SHARES
Number Number
’000 ’000
Weighted average number of Ordinary Shares for the purposes of basic earnings per share 59,806 59,078
Effect of dilutive potential Ordinary Shares:
Share options 2,144 1,378
Weighted average number of Ordinary Shares for the purposes of diluted earnings per share 61,950 60,456
11. Dividends
2007 2006
£’000 £’000
Amounts recognised as distributions to Shareholders in the year:
Final dividend for the year ended 31 March 2006 of 2.76p (2005: 2.4p) per share 1,642 1,421
Interim dividend for the year ended 31 March 2007 of 1.59p (2006: 1.38p) per share 958 818
2,600 2,239
Second interim dividend for the year ended 31 March 2007 of 3.174p (2006: 2.76p) per share 1,913 1,638
The second interim dividend was declared by the Board on 27 April 2007 and will be paid on 15 June 2007. It has not been included as a liability
in these financial statements.
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40
12. Goodwill
£’000
Cost and carrying amount
At 1 April 2005 21,745
Additions 36,075
At 1 April 2006 57,820
Additions 26,270
At 31 March 2007 84,090
Goodwill of £21.7m (2006: £21.7m) is allocated to Trend Network Services. The recoverable amount has been determined on the basis of the
current business plan which extends until March 2008.
Key assumptions are:
(i) Trend Network Services and Phoenix IT Services are treated as a single cash generating unit.
(ii) Operating profit has been converted into cash flows by using the cash generating units budgeted cash conversion rate.
(iii) Discount rate of 10% based on the Group’s weighted average cost of capital.
(iv) Long-term growth rate of 2.25% per annum.
Goodwill of £36.1m (2006: £36.1m) is allocated to NDR (Holdings) Limited. The recoverable amount has been determined on the basis of the
current business plan which extends until March 2009.
Key assumptions are:
(i) Long-term growth rate of 2.25% per annum.
(ii) Operating profit has been converted into cash flows by using the cash generating units budgeted cash conversion rate.
(iii) Discount rate of 10% based on the Group’s weighted average cost of capital.
Goodwill of £26.3m arose on the acquisition of Servo Computer Services Limited. The recoverable amount has been determined on the basis of the
current business plan which extends until March 2009.
Key assumptions are:
(i) Long-term growth rate of 2.25% per annum.
(ii) Operating profit has been converted into cash flows by using the cash generating units budgeted cash conversion rate.
(iii) Discount rate of 13% based on the Group’s weighted average cost of capital.
13. Intangible assets
£’000
Cost
At 1 April 2005 —
Additions 9,013
At 1 April 2006 9,013
Additions 2,054
At 31 March 2007 11,067
Accumulated amortisation
At 1 April 2005 —
Charge for the year 1,998
At 1 April 2006 1,998
Charge for the year 1,979
At 31 March 2007 3,977
Net book value
At 31 March 2007 7,090
At 31 March 2006 7,015
Intangible assets arose on the acquisition of NDR (Holdings) Limited and Servo Computer Services Limited and relate to the valuation of the
acquired customer relationships expected to endure beyond the minimum contracted order terms.
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14. Property, plant and equipment
Short Fixtures
Freehold leasehold and Motor
property properties equipment vehicles Total
£’000 £’000 £’000 £’000 £’000
Cost
At 1 April 2005 1,407 782 7,240 90 9,519
Acquired with subsidiary undertaking — 1,646 6,574 223 8,443
Additions — 145 3,389 131 3,665
Disposals —— (1,560) (55) (1,615)
At 1 April 2006 1,407 2,573 15,643 389 20,012
Acquired with subsidiary undertaking (Note 27) 963 26 121 78 1,188
Additions — 635 3,556 246 4,437
Disposals —— (1,950) (175) (2,125)
At 31 March 2007 2,370 3,234 17,370 538 23,512
Accumulated depreciation
At 1 April 2005 170 135 4,828 6 5,139
Charge for the year 24 346 3,561 113 4,044
Disposals —— (1,487) (11) (1,498)
At 1 April 2006 194 481 6,902 108 7,685
Charge for the year 32 396 3,590 86 4,104
Disposals —— (1,948) (106) (2,054)
At 31 March 2007 226 877 8,544 88 9,735
Net book value
At 31 March 2007 2,144 2,357 8,826 450 13,777
At 31 March 2006 1,213 2,092 8,741 281 12,327
Included in the above is land at cost of £508,000 (2006: £206,000) which is not depreciated.
The net book value of fixed assets includes £5,470,000 (2006: £4,750,000) in respect of assets held under finance leases and hire purchase
contracts.
15. Subsidiaries
A list of the significant subsidiaries included within the Group accounts, including the name, country of incorporation and proportion of ownership
interest, is given in Note 4 to the individual Company financial statements on page 56.
16. Inventories
2007 2006
£’000 £’000
Service stocks 6,391 6,334
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17. Other financial assets
Trade and other receivables at the balance sheet date comprise:
2007 2006
£’000 £’000
Trade debtors 23,451 17,164
Other debtors 232 8
Prepayments and accrued income 9,251 4,446
32,934 21,618
The average credit period taken on sales is 43 days (2006: 42 days). An allowance has been made for estimated irrecoverable amounts from trade
receivables of £119,000 (2006: £25,000). This allowance has been determined by reference to past default experience.
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The
carrying amount of these assets approximates their fair value.
18. Other financial liabilities
Trade and other payables principally comprise the following amounts:
2007 2006
£’000 £’000
Trade creditors 10,967 6,522
Other creditors 1,197 118
Social security and other taxes 6,379 4,236
Accruals 10,567 6,253
29,110 17,129
As at 31 March 2007, trade creditors of the Group were equivalent to 41 days (2006: 41 days).
The Directors consider that the carrying amount of trade payables approximates their fair value.
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19. Obligations under finance leases and hire purchase contracts
Present value
Minimum lease of minimum
payments lease payments
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Amounts payable under finance leases and hire purchase contracts:
Within one year 2,205 1,890 1,937 1,619
In the second to fifth years inclusive 4,219 3,577 3,909 3,381
After five years — — — —
6,424 5,467 5,846 5,000
Less: future finance charges (578) (467) N/A N/A
Present value of lease obligations 5,846 5,000
Less: amounts due for settlement within 12 months (1,937) (1,619)
Amounts due for settlement after 12 months 3,909 3,381
It is the Group’s policy to lease certain of its fixtures, fittings and equipment under finance leases and hire purchase contracts. The average term is
five years. For the year ended 31 March 2007, the effective borrowing rate was 2.61% (2006: 2.69%). Interest rates are fixed at the contract date.
All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
All lease and hire purchase obligations are denominated in sterling.
There is no material difference between the minimum lease payments and the present value of the minimum lease payments.
The fair value of the Group’s lease and hire purchase obligations approximates their carrying amount.
The Group’s obligations under finance leases and hire purchase contracts are secured by the lessors’ charges over the leased assets.
20. Bank loans
2007 2006
£’000 £’000
Bank loans 26,917 15,932
The borrowings are repayable as follows:
Within one year 7,000 4,000
In more than one year but not more than two years 7,000 4,000
In more than two years but not more than five years 12,917 7,932
26,917 15,932
Less: Amounts due for settlement within 12 months (7,000) (4,000)
Amounts due for settlement after 12 months 19,917 11,932
The Group has two principal bank loans:
(i) A loan of £12m (2006: £16m). The loan was taken out on 19 April 2005. Repayments commenced in March 2006 and will continue until
March 2010. The Company and certain subsidiaries (as guarantor) have entered into a composite guarantee in favour of Bank of Scotland on
account of the Company and certain subsidiaries (as principal). The loan carries an interest rate of 0.813% above LIBOR.
(ii) A loan of £15m (2006: £nil). The loan was taken out on 3 November 2006. Repayments commence in November 2007 and will continue
until November 2011. The Company and certain subsidiaries (as guarantor) have entered into a composite guarantee in favour of Bank of
Scotland on account of the Company and certain subsidiaries (as principal). The loan carries an interest rate of 0.813% above LIBOR.
The Directors estimate the fair value of the Group’s bank borrowings to be equivalent to its book value. At 31 March 2007, the Group had available
£20m of undrawn committed borrowing facilities.
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21. Provisions
2007 2006
£’000 £’000
Balance at the start of the period 1,237 500
Additional provision in the year 247 741
Release of provision (496) (4)
Adjustment to fair values of subsidiary undertaking 468 —
Balance at the end of the period 1,456 1,237
Included in current liabilities 47 496
Included in non-current liabilities 1,409 741
1,456 1,237
The provision relates to the obligation to reinstate certain properties to their former condition at the end of their leases which end between 2008
and 2017.
22. Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior
reporting period.
Accelerated Share Rolled
Intangible tax option over
assets depreciation costs Provisions gains Total
£’000 £’000 £’000 £’000 £’000 £’000
At 1 April 2005 — 466 483 242 — 1,191
Acquisition of subsidiary (2,704) (473) — 415 — (2,762)
Charge to income 600 112 199 (155) — 756
Charge to equity —— (308) —— (308)
At 1 April 2006 (2,104) 105 374 502 — (1,123)
Acquisition of subsidiary (Note 27) (616) 96 — 595 (22) 53
Charge to income 593 (422) 251 (209) 22 235
Charge to equity —— 10 —— 10
At 31 March 2007 (2,127) (221) 635 888 — (825)
At the balance sheet date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferred
tax liabilities have not been recognised was £31,836,630 (2006: £24,429,510). No liability has been recognised in respect of these differences
because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will
not reverse in the foreseeable future.
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23. Share capital
Authorised Allotted and Fully Paid
Number £’000 Number £’000
Ordinary shares of 1p each
At 1 April 2005 100,000,000 1,000 58,895,856 589
Exercise of share options —— 445,176 4
At 1 April 2006 100,000,000 1,000 59,341,032 593
Exercise of share options —— 220,850 2
New shares issued on acquisition —— 708,103 7
At 31 March 2007 100,000,000 1,000 60,269,985 602
During the year, options were exercised on 220,850 Ordinary Shares at prices varying from 37.8p to 200p and that number of shares was issued
for a total gross consideration of £345,879 comprising £343,670 of share premium and £2,209 of capital.
The Company has one class of ordinary share capital which carry no right to fixed income.
24. Share premium account
£’000
At 1 April 2005 36,508
Premium on issue of shares 292
At 1 April 2006 36,800
Premium on issue of shares 344
At 31 March 2007 37,144
25. Other reserves
Total
Other Translation Shares to other
reserve reserve be issued reserves
£’000 £’000 £’000 £’000
At 1 April 2005 —4 218 222
Exchange difference arising on the restatement of net assets of overseas subsidiaries —2 —2
IFRS 2 share option expense —— 437 437
At 1 April 2006 —6 655 661
Exchange difference arising on the restatement of net assets of overseas subsidiaries — (7) — (7)
IFRS 2 share option expense —— 814 814
Premium on issue of shares 2,243 —— 2,243
Share issue costs (4) —— (4)
At 31 March 2007 2,239 (1) 1,469 3,707
Other reserve represents the premium on shares issued in exchange for shares of subsidiaries acquired.
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46
26. Retained earnings
£’000
At 1 April 2005 (6,596)
Share-based payment transaction deferred tax reserve (308)
Share-based payment transaction corporation tax reserve 313
Retained profit for the year 12,584
Dividends (2,239)
At 1 April 2006 3,754
Share-based payment transaction deferred tax reserve 10
Share-based payment transaction corporation tax reserve 82
Retained profit for the year 13,744
Dividends (2,600)
At 31 March 2007 14,990
27. Acquisition of subsidiary undertaking
On 3 November 2006 the Company acquired 100% of the issued share capital of Servo Computer Services Limited for a cash consideration of
£28m and the issue of 708,103 shares in Phoenix IT Group plc. The costs of acquisition amounted to £648,000. Servo Computer Services Limited
is the parent company of a group of companies involved in the provision of IT services and equipment. This transaction has been accounted for by
the purchase method of accounting.
The following table sets out the book values of the identifiable assets and liabilities acquired and their fair values to the Group:
Fair value
Book value Revaluation to Group
£’000 £’000 £’000
Fixed assets
Tangible 1,302 (114) 1,188
Intangible asset arising on acquisition — 2,054 2,054
Current assets
Stock 761 (430) 331
Trade and other receivables 7,082 502 7,584
Deferred tax asset 155 (102) 53
Cash and cash equivalents 2,180 — 2,180
Total assets 11,480 1,910 13,390
Creditors
Trade and other payables 5,212 821 6,033
Provisions — 468 468
Tax liabilities 945 (882) 63
Deferred income 2,198 — 2,198
Total liabilities 8,355 407 8,762
Net assets 3,125 1,503 4,628
Goodwill 26,270
30,898
Satisfied by:
Cash 28,000
Shares 2,250
Cash — costs of acquisition 648
30,898
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27. Acquisition of subsidiary undertaking continued
Details of the fair value adjustments to the book values of the acquired identifiable assets and liabilities are as follows:
(a) Tangible fixed assets were revalued in order to reflect their fair value to the Group.
(b) Intangible assets arising on the acquisition relate to the valuation of the acquired customer relationships expected to endure beyond the
minimum contracted order terms. The intangible asset valuation has been derived using the estimated net present value of the net future after
tax cash flows which are expected to arise from the customer relationships.
(c) Stock was adjusted to reflect the valuation on the date of acquisition.
(d) Trade debtors were revalued by £56,000 to take account of post-acquisition credit notes raised and irrecoverable amounts. Specific provisions
were established after making due allowance for cash received since acquisition.
(e) Other debtors were adjusted to take into account balances arising as a result of the exercise of employee share options.
(f) Other creditors were adjusted to take account of additional liabilities on the date of acquisition.
(g) Provision fair value adjustments comprise dilapidation provisions of £468,000.
(h) Corporation tax was adjusted to take account of the deduction available as a result of the exercise of employee share options.
(i) Deferred tax assets were revalued to take account of the deferred tax liability that arises from the other fair value adjustments and the fact that
the Company would not have a tax liability for the remainder of the period ended 31 March 2007 due to the tax deduction available as a result
of the exercise of employee share options.
(j) The goodwill recognised of £26.3m is attributable to the value of the established workforce and infrastructure, the future growth potential of
the SME IT services market, and the anticipated synergies arising from the acquisition.
Servo Computer Services Limited contributed £16.3m to the Group’s revenue and £1.7m to the Group’s profit before tax for the period between the
date of acquisition and the balance sheet date.
If the acquisition of Servo Computer Services Limited had been on the first day of the financial year, Group revenues for the year would have been
£151,192,000 and the Group profit attributable to equity holders of the parent would have been £15,021,000.
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28. Notes to the cash flow statement
2007 2006
£’000 £’000
Profit from operations 20,716 19,403
Adjustments for:
Depreciation of property, plant and equipment 4,104 4,044
Loss on disposal of property, plant and equipment 39 74
Amortisation of acquired intangibles 1,979 1,998
Share option costs 814 437
Exchange difference (7) 2
Operating cash flows before movements in working capital 27,645 25,958
Decrease/(increase) in stocks 274 (63)
(Increase)/decrease in receivables (3,733) 2,459
Increase in payables 5,699 494
Increase/(decrease) in deferred income 1,164 (2,066)
Cash generated by operations 31,049 26,782
Income taxes paid (6,053) (3,534)
Interest received 270 217
Interest paid (1,719) (1,739)
Net cash from operating activities 23,547 21,726
Additions to fixtures and equipment during the year amounting to £2,805,406 (2006: £1,774,000) were financed by new finance leases.
29. Reconciliation of net borrowings
2007 2006
£’000 £’000
Increase/(decrease) in cash and cash equivalents during the period 2,263 (5,339)
Movement in borrowings (11,831) (5,998)
Borrowings of business acquired — (14,846)
Movement in net borrowings during the period (9,568) (26,183)
Net (borrowings)/funds brought forward (18,172) 8,011
Net borrowings carried forward (27,740) (18,172)
Cash and cash equivalents 5,023 2,760
Other current borrowings (8,937) (5,619)
Non-current borrowings (23,826) (15,313)
Net borrowings carried forward (27,740) (18,172)
30. Operating lease arrangements
The Group as Lessee
2007 2006
£’000 £’000
Minimum lease payments under operating leases recognised in income for the year 3,050 2,431
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases,
which fall due as follows:
2007 2006
£’000 £’000
Within one year 2,911 2,097
In the second to fifth years inclusive 5,790 6,385
After five years 3,011 3,891
11,712 12,373
Operating lease payments represent rentals payable by the Group for land and buildings, fixtures and fittings, equipment and motor vehicles.
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31. Share-based payments
Equity-Settled Share Option Plans
The Company has operated the following equity-settled share option plans during the period:
Employee Share Plan (ESP)
Enterprise Management Incentive Plan (EMI)
Performance Share Plan (PSP)
Post-flotation, no further awards will be made under the ESP or the EMI plan.
The general terms and conditions of each plan are as follows:
ESP EMI PSP
Exercise price: Agreed market price of the All grants under the EMI plan All awards made under the PSP
Company’s shares at date of grant. were made at prices higher than have a nil exercise price. The
the agreed market price of the number of options granted to
Company’s shares at the date of eligible Group employees is
grant. The grant prices reflected determined as a proportion of
the grant prices of option rights base salary using the average of
under the ESP waived by option the middle market quotes for the
holders prior to the adoption of Company’s shares for the three
the EMI plan. days immediately prior to grant.
Vesting period: Generally three years from the Vesting of all EMI plan options Three years from the date of grant.
date of grant. was conditional upon the flotation
of the Company. Consequently,
all the EMI plan options vested
in November 2004.
Lapse date: Generally options granted under All EMI plan options automatically PSP options lapse if they remain
the ESP automatically lapse if they lapse if they remain unexercised unexercised after a period of
remain unexercised after a period after a period of 10 years from 10 years from the date of grant.
of seven years from the date of grant. the date of grant. Furthermore, Furthermore, options are
Furthermore, generally options options are forfeited if the option forfeited if the option holder
granted under the ESP are holder ceases to be a Group ceases to be a Group employee
forfeited if the option holder employee before exercising before exercising the option.
ceases to be a Group employee the option.
before exercising the option.
Performance None. None. The PSP awards are subject to
conditions: achieving a performance condition related
to average annual growth in either EPS
or profit growth over a three-year period
of between 5% and 20% per annum.
This results in between 20% and 100%
of the options granted vesting.
Performance between these points is
on a progressive scale.
ESP 2007 2006
Weighted Weighted
average average
exercise exercise
Options price Options price
Balance at the start of the period 604,500 170p 767,250 173p
Granted during the period —— ——
Exercised during the period 170,000 178p 14,250 52p
Expired during the period 131,000 172p 148,500 194p
Outstanding at the end of the period 303,500 165p 604,500 170p
Exercisable at the end of the period 106,000 130p 22,000 170p
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50
31. Share-based payments continued
EMI 2007 2006
Weighted Weighted
average average
exercise exercise
Options price Options price
Balance at the start of the period 194,350 81p 625,776 71p
Granted during the period —— ——
Exercised during the period 50,850 87p 430,926 67p
Expired during the period 500 96p 500 96p
Outstanding at the end of the period 143,000 78p 194,350 81p
Exercisable at the end of the period 143,000 78p 194,350 81p
PSP 2007 2006
Weighted Weighted
average average
exercise exercise
Options price Options price
Balance at the start of the period 1,241,623 — 669,305 —
Granted during the period 681,279 — 766,855 —
Exercised during the period —— ——
Expired during the period 105,247 — 194,537 —
Outstanding at the end of the period 1,817,655 — 1,241,623 —
Exercisable at the end of the period —— ——
The weighted average share price at the date of exercise for share options exercised during the period was:
ESP 307p
EMI 288p
The inputs into the Black-Scholes model are as follows:
PSP
Weighted average share price £2.85
Weighted average exercise price Nil
Expected volatility 30%
Expected life 4 years
Weighted average risk-free rate 4.69%
Weighted average dividend yield 0.69%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous six months and by
comparison with comparable companies, due to the limited data available for the Group. The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
Other share-based plans
The Company introduced a Share Incentive Plan on flotation. All employees were entitled to apply for free shares up to a value of £1,250
depending on their period of service. The Company issued 259,558 shares in connection with this award.
In addition, employees are able to buy shares by deduction from their pre-tax salary. Under the current SIP legislation this is restricted to
a maximum of £1,500 in each tax year or, if less, 10% of salary.
The Group recognised total expenses of £835,000 relating to equity-settled share-based payment transactions in 2007 (2006: £617,000).
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32. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are disclosed in Note
15 to the individual Company financial statements.
During the year the Group sold a motor vehicle to Peter Bertram, Non-Executive Chairman, for £32,190. The sale was at open market value and
there were no amounts outstanding relating to this transaction at the year end.
Remuneration of key management personnel
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories
specified in IAS 24 Related Party Disclosures. Further information about the remuneration of individual Directors is provided in the audited part of
the Directors’ Remuneration Report.
2007 2006
£’000 £’000
Short-term employee benefits 773 1,138
Post-employment benefits 91 90
Share-based payment 636 204
1,500 1,432
33. Financial risk management
The main risks arising from the Group’s financial instruments are foreign exchange risk, interest rate risk, credit risk and liquidity risk.
The Group’s policies for these risks are set out below:
(a) Foreign exchange risk
The Group manages currency exposures by maintaining, where possible, a broadly equivalent revenue and expense stream in the relevant currency.
The Board periodically reviews the net risk and implements strategies as appropriate. During the year the Group has not entered into any
derivatives.
(b) Interest rate risk
The Group is funded by equity, bank loans and hire purchase agreements. All borrowing is agreed and monitored by the Board. The Group seeks
to maximise its interest return on surplus funds by investing in short-term deposits at the relevant national bank’s commercial interest rate.
(c) Credit risk
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for
doubtful debts, estimated by the Group’s management based on prior experience and their assessment of the current economic environment.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating
agencies.
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.
(d) Liquidity risk
The Group monitors its liquidity requirements and places surplus funds on short-term deposits. All borrowing is agreed and monitored by
the Board.
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52
34. Accounting estimates, assumptions and judgements
The principal accounting estimates, assumptions and judgements employed in the preparation of these Financial Statements which could affect the
carrying amounts of assets and liabilities at the Balance Sheet date are as follows:
Impairment of goodwill and intangible assets
Determining whether goodwill and intangible assets have been impaired requires an estimation of the value in use of the cash-generating units to
which they have been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-
generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill and intangible assets at the balance
sheet date was £84.1m and £7.1m respectively.
Share-based payments
In valuing the share-based payments realised in the Group’s accounts, the Company has used the Black-Scholes calculation model, which makes
various assumptions on factors outside the Group’s control, such as share price volatility and risk-free interest rates. Details of the options and
assumptions used in deriving the share-based payments are disclosed in Note 31.
Dilapidation provisions
Dilapidation provisions have been derived on the basis of the most recent assessment of likely cost. Many of these obligations will not arise for a
number of years and the costs are difficult to predict accurately. In making these assessments, the Group has sought the aid of independent experts
where appropriate.
35. Standards and Interpretations in issue but not yet effective
At the date of authorisation of these financial statements, the following relevant Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet effective:
IFRS 7 Financial Instruments: Disclosures, and the related amendment to IAS 1 on capital disclosures
IFRS 8 Operating Segments
IFRIC 8 Scope of IFRS 2 Share-based Payment
IFRIC 9 Reassessment of embedded derivatives
IFRIC 10 Interim reporting and impairments
IFRIC 12 Service concession arrangements
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial
statements of the Group except for additional disclosures on financial instruments when the relevant Standard comes into effect for periods
commencing on or after 1 January 2007.
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53
PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
13508 18/07/2007 Proof 7
We have audited the individual Company
financial statements of Phoenix IT Group plc for
the year ended 31 March 2007 which comprise
the balance sheet and the related Notes 1 to 15.
These individual Company financial statements
have been prepared under the accounting
policies set out therein.
The corporate governance statement and the
Directors’ Remuneration Report are included in
the Group annual report of Phoenix IT Group plc
for the year ended 31 March 2007. We have
reported separately on the Group financial
statements of Phoenix IT Group plc for the year
ended 31 March 2007 and on the information in
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. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the Company
and the Company’s members, as a body, for our
audit work, for this report, or for the opinions
we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS
AND AUDITORS
The Directors’ responsibilities for preparing the
annual report and the individual Company
financial statements in accordance with
applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted
Accounting Practice) are set out in the
statement of Directors’ responsibilities.
Our responsibility is to audit the individual
Company financial statements in accordance
with relevant United Kingdom legal and
regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the
individual Company financial statements give a
true and fair view in accordance with the
relevant financial reporting framework and
whether the individual Company financial
statements have been properly prepared in
accordance with the Companies Act 1985. We
report to you whether in our opinion the
information given in the Directors’ Report is
consistent with the individual Company financial
statements. We also report to you 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 other
transactions is not disclosed.
We read the other information contained in the
annual report for the above year as described in
the contents section and consider the
implications for our report if we become aware
of any apparent misstatements or material
inconsistencies with the individual Company
financial statements.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with
International Standards on Auditing (UK and
Ireland) issued by the Auditing Practices Board.
An audit includes examination, on a test basis,
of evidence relevant to the amounts and
disclosures in the individual Company financial
statements. It also includes an assessment of
the significant estimates and judgements made
by the Directors in the preparation of the
individual Company financial statements, and of
whether the accounting policies are appropriate
to the Company’s circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to
obtain all the information and explanations
which we considered necessary in order to
provide us with sufficient evidence to give
reasonable assurance that the individual
Company financial statements are free from
material misstatement, whether caused by fraud
or other irregularity or error. In forming our
opinion we also evaluated the overall adequacy
of the presentation of information in the
individual Company financial statements.
OPINION
In our opinion:
 the individual Company financial statements
give a true and fair view, in accordance with
United Kingdom Generally Accepted
Accounting Practice, of the state of the
Company’s affairs as at 31 March 2007;
 the individual Company financial statements
have been properly prepared in accordance
with the Companies Act 1985; and
 the information given in the Directors’ Report
is consistent with the financial statements.
DELOITTE & TOUCHE LLP
Chartered Accountants and Registered Auditors
London
United Kingdom
18 May 2007
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AS AT 31 MARCH 2007
54
2007 2006
Note £’000 £’000
Fixed assets
Investments 4 109,868 78,970
Current assets
Debtors 5 12,424 9,940
Creditors: Amounts falling due in one year 6 (43,491) (26,299)
Net current liabilities (31,067) (16,359)
Total assets less current liabilities 78,801 62,611
Creditors: Amounts falling due after more than one year 7 (19,917) (11,932)
Net assets 58,884 50,679
Capital and reserves
Share capital 8 602 593
Share premium account 9 37,144 36,800
Other reserves 10 2,239 —
Shares to be issued reserve 11 1,365 482
Profit and loss account 12 17,534 12,804
Shareholders’ funds 13 58,884 50,679
The financial statements were approved by the Board of Directors and authorised for issue on 18 May 2007. They were signed on its behalf by:
DAVID SIMPSON
Group Finance Director
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55
1. Accounting Policies
Accounting convention
The financial statements are prepared under the historical cost convention and have been prepared in accordance with the applicable United Kingdom
accounting standards. As permitted by the Companies Act 1985 the Company has not presented its own profit and loss account.
The principal accounting policies adopted are set out below. They have all been applied consistently throughout the year and the preceding year.
Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions
in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account
in arriving at the operating result.
Group undertakings
Investments are included in the balance sheet at cost less any provision for permanent diminution in value.
Share-based payments
The Company has applied the requirements of FRS 20 ‘Share-based payments’. In accordance with the transitional provisions, FRS 20 has been
applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2005.
The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value
at the date of grant. The fair value is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will
eventually vest.
2. Staff costs
The Directors were the only employees during the period and they received all of their remuneration, as disclosed in the Directors’ Remuneration
Report on page 24, from Phoenix IT Services Limited.
3. Profit of parent company
As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the Parent Company is not presented as part of these
accounts. The Parent Company’s profit before dividends for the financial year amounted to £7,330,000 (2006: £7,130,000).
PHOENIX IT GROUP plc
ANNUAL REPORT AND ACCOUNTS 2007
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FOR THE YEAR ENDED 31 MARCH 2007
56
4. Investments
Shares in Loans to
Group Group
undertakings undertakings Total
£’000 £’000 £’000
Cost
At 1 April 2006 57,970 22,000 79,970
Additions 30,898 — 30,898
At 31 March 2007 88,868 22,000 110,868
Accumulated impairment
At 1 April 2006 and 31 March 2007 1,000 — 1,000
Net book value
At 31 March 2007 87,868 22,000 109,868
At 31 March 2006 56,970 22,000 78,970
Difficult trading conditions in France continued. As a result, the Directors have reviewed the carrying value of the Company’s investments and
retained the provision for impairment of £1,000,000.
At 31 March 2007 the Company held directly or indirectly 100% of the allotted share capital of the following principal undertakings:
Name of subsidiary Country of registration Class of share capital held Nature of business
Phoenix IT Services Limited England and Wales Ordinary Provision of information
technology services
Phoenix IT Services SA France Ordinary Provision of information
technology services
Trend Network Services England and Wales Ordinary Provision of information
technology, networking support
and infrastructure services
Network Disaster Recovery Limited England and Wales Ordinary Provision of business continuity
and IT disaster recovery services
Servo Computer Services Limited England and Wales Ordinary Provision of information
technology services and systems
Criffel Micro Business Systems Limited Scotland Ordinary Provision of information
technology services and systems
5. Debtors: Amounts falling due within one year
2007 2006
£’000 £’000
Amounts owed by Group undertakings 9,940 9,940
Prepayments 2,484 —
12,424 9,940
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6. Creditors: Amounts falling due within one year
2007 2006
£’000 £’000
Amounts owed to Group undertakings 33,723 22,294
Accruals 2,768 5
Bank loans 7,000 4,000
43,491 26,299
7. Creditors: Amounts falling due after more than one year
2007 2006
£’000 £’000
Bank loans 19,917 11,932
The borrowings are repayable as follows:
In more than one year but not more than two years 7,000 4,000
In more than two years but not more than five years 12,917 7,932
19,917 11,932
8. Share capital
Authorised Allotted and Fully Paid
Number £’000 Number £’000
Ordinary shares of 1p each
At 1 April 2006 100,000,000 1,000 59,341,032 593
Options exercised —— 220,850 2
New shares issued on acquisition —— 708,103 7
At 31 March 2007 100,000,000 1,000 60,269,985 602
9. Share premium account
£’000
At 1 April 2006 36,800
Premium on issue of shares 344
At 31 March 2007 37,144
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58
10. Other reserves
£’000
At 1 April 2006 —
Premium on issue of shares 2,243
Share issue costs (4)
At 31 March 2007 2,239
11. Shares to be issued reserve
£’000
At 1 April 2006 482
FRS 20 share option expense 883
At 31 March 2007 1,365
12. Profit and loss account
£’000
At 1 April 2005 7,913
Retained profit for the year 7,130
Dividends (2,239)
At 1 April 2006 12,804
Retained profit for the year 7,330
Dividends (2,600)
At 31 March 2007 17,534
13. Reconciliation of movements in Shareholders’ funds
2007 2006
£’000 £’000
At 1 April 2006 50,679 45,124
Profit for the financial year 7,330 7,130
Dividends (2,600) (2,239)
55,409 50,015
Share-based payment 883 367
Share capital issue 9 4
Premium on issue of shares 2,587 293
Share issue costs (4) —
Closing Shareholders’ funds 58,884 50,679
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14. Share-based payments
Details of share options granted by Group companies to employees, and that remain outstanding, over the Company’s shares are set out in Note
31 to the Phoenix IT Group plc consolidated financial statements on pages 49 and 50. The Company did not recognise any expense related to
equity-settled share-based payment transactions in the current or preceding year.
15. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are below.
Amounts owed Amounts owed
by related to related
parties parties
£’000 £’000
Phoenix IT Services Limited — 16,749
Phoenix IT Services SA — 373
Trend Network Services — 2,322
Phoenix Systems Management Limited — 2,875
Phoenix Computer Group Limited — 3,288
Phoenix IT Services (Europe) Limited — 1,000
Phoenix International Holdings Limited 64 —
Network Disaster Recovery Limited — 3,116
NDR (Holdings) Limited 9,876 —
Servo Computer Services Limited — 4,000
At 31 March 2007 9,940 33,723
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been made for
doubtful debts in respect of the amounts owed by related parties.
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FIVE YEAR SUMMARY
FOR THE YEAR ENDED 31 MARCH 2007
60
IFRS IFRS IFRS UK GAAP UK GAAP UK GAAP
2007 2006 2005 2005 2004 2003
£’000 £’000 £’000 £’000 £’000 £’000
Results
Revenue 126,712 108,919 88,331 88,331 58,311 52,730
Profit from operations excluding goodwill amortisation,
amortisation of acquired intangibles and non-recurring costs 22,695 21,401 15,009 15,056 10,818 9,020
Goodwill amortisation — —— (1,061) — (2,091)
Amortisation of acquired intangibles (1,979) (1,998) ————
Non-recurring costs — — (1,979) (1,979) — (362)
Profit from operations 20,716 19,403 13,030 12,016 10,818 6,567
Net interest payable (1,434) (1,454) (1,946) (1,946) (1,501) (778)
Profit before tax 19,282 17,949 11,084 10,070 9,317 5,789
Key statistics
Earnings per ordinary share 23.0p 21.3p 15.7p 13.6p 15.5p 8.4p
Diluted earnings per ordinary share 22.2p 20.8p 15.4p 13.3p 15.0p 8.1p
Adjusted earnings per ordinary share* 25.3p 23.7p 18.9p 18.7p 15.5p 14.1p
* Adjusted earnings per Ordinary Share excludes the effect of goodwill amortisation, amortisation of acquired intangibles and non-recurring costs.
The amounts disclosed for 2004 and earlier periods are stated on the basis of UK GAAP because it is not practicable to restate amounts for periods
prior to the date of transition to IFRS.
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NOTICE is hereby given that the ANNUAL GENERAL MEETING of Phoenix IT Group plc will be held at Technology House, Hunsbury Hill Avenue,
Northampton, Northamptonshire, NN4 8QS on Wednesday, 22 August 2007 at 10.30 am, for the following purposes:
Ordinary Business
1. To receive and adopt the accounts for the year ended 31 March 2007, together with the Reports of the Directors and of the Auditors thereon.
2. (a) To reappoint Deloitte & Touche LLP as auditors to the Company, to hold office until the conclusion of the next general meeting at which
accounts are laid before the Company;
(b) To authorise the Directors to determine the remuneration of the auditors of the Company.
3. To re-elect as a Director John Sussens, who retires by rotation, in accordance with Article 80 of the Company’s Articles of Association.
4. To reappoint Jeremy Stafford as a Director.
5. To approve the Directors’ Remuneration Report for the year ended 31 March 2007.
To transact any other ordinary business of the Company.
Special Business
As special business, to consider and if thought fit pass the following resolutions which will be proposed as to resolutions 6 and 9 as ordinary
resolutions and as to resolutions 7, 8, 10 and 11 as special resolutions:
6. THAT, subject to and in accordance with Article 9.2 of the Articles of Association of the Company, the Directors be generally and unconditionally
authorised in accordance with section 80 of the Companies Act 1985 (in substitution for any existing authority to allot relevant securities) to
exercise all the powers of the Company to allot relevant securities (within the meaning of section 80 of the Companies Act 1985) up to a
maximum nominal amount of £200,908 (being approximately one-third of the Company’s issued share capital as at 18 May 2007) provided that
such authority shall expire on the conclusion of the Annual General Meeting of the Company to be held in 2008 or 22 November 2008, whichever
is earlier, but so that the Company may before such expiry make an offer or agreement which would or might require relevant securities to be
allotted after such expiry, and the Directors may allot relevant securities in pursuance of such offer or agreement as if the authority conferred by
this resolution had not expired.
7. THAT, subject to the passing of resolution 6 as set out in the notice of this meeting, and in accordance with Article 9.2 of the Articles of
Association of the Company, the Directors be empowered pursuant to section 95 of the Companies Act 1985 to allot equity securities (as defined
in section 94 of the Companies Act 1985) for cash pursuant to the general authority conferred by resolution 6 as set out in the notice of this
meeting as if section 89(1) of the Companies Act 1985 did not apply to such allotment, provided that this power shall be limited to allotments of
equity securities:
(a) in connection with or pursuant to an offer by way of rights, open offer or other pre-emptive offer to the holders of shares in the Company
and other persons entitled to participate therein in proportion (as nearly as practicable) to their respective holdings, 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;
(b) otherwise than pursuant to sub-paragraph (a) above, up to an aggregate nominal amount of £30,136
and such power shall expire on the conclusion of the Annual General Meeting of the Company to be held in 2008 or on 22 November 2008,
whichever is 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 by
this resolution had not expired.
8. THAT the Company be generally and unconditionally authorised, pursuant to Article 6 of the Articles of Association of the Company and pursuant
to section 166 of the Companies Act 1985, to make market purchases (as defined in section 163 of the Companies Act 1985) of up to 3,013,624
Ordinary Shares of 1p each in the capital of the Company (being approximately five per cent of the Company’s issued share capital as at 18 May
2007) on such terms and in such manner as the Directors of the Company may from time to time determine, provided that:
(a) the amount paid for each share (exclusive of expenses) shall not be more than five per cent above the average of the middle market
quotation for Ordinary Shares as derived from the Daily Official List of London Stock Exchange plc for the five business days before the date
on which the contract for the purchase is made, and in any event not less than 1p per ordinary share; and
This document is important and requires your immediate attention. If you are in any doubt as to what action you should take, you should consult
your stockbroker, bank manager, solicitor, accountant or other professional adviser. If you have sold or transferred all your shares in Phoenix IT
Group plc, please pass this document and the accompanying form of proxy to the stockbroker, bank or other agent through whom you made the
sale or transfer, for transmission to the purchaser or transferee.
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(b) the authority herein contained shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2008 or on
22 November 2008, whichever is earlier, provided that the Company may, before such expiry, make a contract to purchase its own shares
which would or might be executed wholly or partly after such expiry, and the Company may make a purchase of its own shares in
pursuance of such contract as if the authority conferred by this resolution had not expired.
9. THAT the Company be authorised to send all documents, notices and information by electronic means (as such term is defined in the Financial
Services Authority’s Disclosure and Transparency Rules) including by means of a website and in all electronic forms.
10. THAT with effect from the passing of this resolution the Articles of Association of the Company be updated to permit electronic communication
with its shareholders as set out in the Appendix to this Notice.
11. THAT with effect from the passing of this resolution, the content of Article 72 of the Articles of Association of the Company be deleted and
replaced with “The ordinary remuneration of the Directors shall from time to time be determined by the Directors”.
Dated: 18 May 2007
Registered Office: By Order of the Board
Technology House WILLIAM MARTIN
Hunsbury Hill Avenue Secretary
Northampton
Northamptonshire
NN4 8QS
Notes:
Any member entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more proxies (who need not be a member of the
Company) to attend and, on a poll, to vote instead of the member. Completion and return of a form of proxy will not preclude a member from attending
and voting at the meeting in person, should he subsequently decide to do so.
In order to be valid, 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, must reach the Company’s Registrars, Lloyds TSB Registrars, The Causeway, Worthing, West Sussex, BN99 9DA not less than 48
hours before the time of the meeting or of any adjournment of the meeting.
As permitted by Regulation 41 of the Uncertificated Securities Regulations 2001, shareholders who hold shares in uncertificated form must be entered on
the Company’s share register at 6.00 pm on 20 August 2007 in order to be entitled to attend and vote at the Annual General Meeting. Such shareholders
may only cast votes in respect of shares held at such time. Changes to entries on the relevant register after that time shall be disregarded in determining
the rights of any person to attend or vote at the meeting.
Copies of the service contracts of each of the Directors, 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 from at least 15 minutes prior to and until the conclusion of the Annual General Meeting.
Biographical details of each Director who is being proposed for reappointment or re-election by shareholders, including their membership of Board
committees, are set out on pages 14 to 15 and page 20 of the 2007 Annual Report and Accounts.
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Proposed amendments to the Company’s Articles of Association to allow the Company to communicate electronically with its shareholders
Article
Number Amendment
Cover Insertion of “as amended on 22 August 2007”
Various Reference in the Articles to the “Act” to be changed to “Companies Act 1985”
2 “Act” to be amended to the “Companies Act 1985” and the definition be amended to include “(as amended from time to time)”.
2 The following definitions to be inserted:
the “Company” Phoenix IT Group plc
the “Companies Act 2006” the Companies Act 2006 (as amended from time to time)
“electronic address” any address or number used for the purposes of sending or receiving
documents or information by electronic means
“electronic copy”, “electronic form” and “electronic means” have the meaning given in section 1168 of the Companies Act 2006
“hard copy” and “hard copy form” have the meaning given in section 1168 of the Companies Act 2006
2 “in writing” to be amended to “hard copy form or to the extent agreed (or deemed to be agreed by provision of the Statutes) and as
permitted by any applicable rules or regulations electronic form or website communication”.
2 Deletion of the definition of “Statutes” and replacement with “the Companies Act as defined in section 2 of the Companies Act 2006 and
every other statute, order, regulation, instrument or other subordinate legislation for the time being in force relating to the companies and
affecting the Company”.
2 Deletion of the interpretation clause defining the expressions “communication” and “electronic communication”.
2 Insertion of “the Companies Act 2006” after the words “the Act” and before “or the CREST Regulations”.
2 Inclusion of the following two paragraphs at the end of the interpretation clause:
“The provisions of the Statutes relating to sending documents apply where any provision in these Articles uses the words ‘sent’, ‘supplied’,
‘delivered’, ‘provided’, ‘given’, ‘produced’, ‘circulated’ or any derivation of those words.
The word ‘address’ where it appears in these Articles includes postal address and ‘electronic address’ and ‘registered address’ and ‘address
for service’ shall be construed accordingly.”
46 Article 46 to be renumbered as 46.1 and the following new Articles to be added:
“46.2 For the purpose of this Article 46 a notice of meeting must be given in accordance with the Companies Act 2006, that is in hard
copy form, electronic form or by means of a website.
46.3 Electronic Communication
(a) If notice of meeting is sent in electronic form the person entitled to receive such notice must have agreed that the notice can
be sent to him in that way and not revoked that agreement or, in the case of a company, be deemed to have agreed to
receive notice in that way by a provision in the Statutes; and
(b) the notice must be sent to the address specified by the person entitled to receive such notice or, in the case of notice sent to
a company, an address which is deemed to have been specified by any provision of the Statutes.
46.4 Notice of meeting on a website
Provided that the Company has complied with all applicable regulatory requirements the Company may send or supply a notice of
meeting by making it available on a website and where the Company intends to make that notice of meeting available on a website,
the Company must:
(a) comply with the provisions of Article 135;
(b) notify persons entitled to receive such notice that the notice of meeting has been published on the website, such notification
to state that it concerns a notice of meeting; and
(c) ensure the notice is available on the website throughout the period beginning with the date of notification and ending with the
conclusion of the meeting.
46.5 A notice which is treated as given to a person by virtue of Article 46.2 is treated as given at the same time as the notification
referred to in Article 46.4(b).”
61.2 Deletion of the reference to “Section 212 of the Act” and replacement with “Section 793 of the Companies Act 2006”.
61.7(b)(i) Deletion of the reference to “Section 428 of the Act” and replacement with “Section 974 of the Companies Act 2006”.
61.8 Addition at the end of Article 61.8 of “and the Companies Act 2006”.
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Article
Number Amendment
65 The first paragraph of Article 65 to be renumbered as 65.1 and the words “(including in electronic form)” be inserted after “in any other
form” in the first sentence.
65 The final paragraph of Article 65 to be renumbered as 65.2.
66.1 The words “that is not being sent in electronic form” to be added after the words “The appointment of a proxy” in the first sentence.
66.2 Article 66.2 to be renumbered as 66.8 and the following new Articles to be added:
“66.2 A proxy appointment which is being sent in electronic form must be received at an address specified by the Company for the
purpose of receiving communications in electronic form:
(a) in (or by way of a note to) the notice convening the meeting; or
(b) in any form of proxy appointment sent out by the Company; or
(c) in any invitation contained in an electronic form to appoint a proxy issued by the Company;
in each case not less than 48 hours before the time of the meeting or adjourned meeting at which the person named in the proxy
form proposes to vote.
66.3 In the case of a poll, where the poll is not taken during or immediately following the meeting at which it was demanded, but is taken
less than 48 hours after it is demanded, the proxy appointment must (unless already deposited or received in accordance with Article
66.1 or 66.2) be delivered to, or received by, either the chairman of such meeting or the Secretary or to any one of the directors.
66.4 If a proxy appointment is not deposited, delivered or received in accordance with this Article 66 it will be invalid.
66.5 Unless a proxy appointment says otherwise, if a proxy appointment relates to more than one meeting or adjournment and is
deposited, delivered or received in accordance with this Article 66, it does not need to be deposited, delivered to or received at any
subsequent meeting and is valid both for any adjourned meeting and any poll demanded at that adjourned meeting.
66.6 The deposit, delivery or receipt of a proxy appointment shall not prevent a member from attending and voting in person or on a poll
at the meeting or any adjourned meeting.
66.7 The provisions of this Article 66 apply to the deposit, delivery or receipt of any power of attorney or authority under which the proxy
appointment is given, or to a duly certified copy of the power of attorney or authority, or, in the case of a power of attorney or
authority executed outside the United Kingdom to a notarially authenticated copy, as they do to the proxy appointment.”
79.1 Deletion of the reference to “paragraph 79.2” and replacement with “Article 79.2”.
94.2(c) Deletion of the reference to “Sections 198 to 211 of the Companies Act 1985” and replacement with “Sections 791 to 828 of the Companies
Act 2006”.
94.3 Deletion of the reference to “paragraph 94.2(c)” and replacement with “Article 94.2(c)”.
103.3.4 (xiii) Deletion of the reference to “paragraph 103.3.1” and replacement with “Article 103.3.1”.
103.3.6 (v) Deletion of the reference to “paragraph 103.3.4 by virtue of sub-paragraph 103.3.4(ix)” and replacement with “Article 103.3.4 by virtue of
Article 103.3.4 (ix)”.
127 Addition at the end of Article 127 of “and the provisions of Article 46 relating to the sending of notices in electronic form or by means of a
website apply to notices of meeting sent under this Article 127”.
128.1 Addition of the words “(or where permitted by these Articles in electronic form)” after the words “in writing”.
128.2 Deletion of Article 128.2 in its entirety and replacement with:
“128.2 Any notice or document (including the share certificate) may be served on or delivered to any member by the Company:
(a) personally; or
(b) by sending it by post in a pre-paid cover addressed to such member at his registered address, or (if he has no registered
address within the United Kingdom) to the address, if any, within the United Kingdom supplied by him to the Company as his
address for the service of notices, or by delivering it to such address addressed as foresaid; or
(c) in electronic form; or
(d) by making them available on a website.”
128.3 Deletion of Article 128.3 in its entirety and replacement with:
“128.3 Any document or notice which, in accordance with these Articles, may be sent by the Company in electronic form shall, if so sent,
be deemed to be served or delivered on the day of transmission. Proof (in accordance with in the formal recommendations for best
practice contained in the guidance issued by the Institute of Chartered Secretaries and Administrators) that a notice or other
document sent in electronic form was sent shall be conclusive evidence that notice was given.”
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Article
Number Amendment
128.5 Addition of new Article 128.5 “A notice or document served or delivered by making it available on a website, shall be deemed to be served
or delivered when it is first made available on the website or when the member received or was deemed to have received notice of the fact
that the document or notice was available on the website.”
128.5 Existing Article 128.5 be renumbered to Article 128.6.
129 Deletion of Article 129 in its entirety and replacement with:
“129 Any notice or document sent to one of the joint holders of a share whose name stands first in the Register in respect of the share
shall be sufficient notice to all the joint holders in their capacity as such. Where the Statutes or these Articles require agreement of a
member to electronic means of communication or website communication the holder who is named first in the Register may give
agreement on behalf of both joint holders.”
130 The words “a postal” in the fourth line to be deleted and the words “or documents (or an address where notices or documents may be sent
in electronic form)” be inserted after “service of notices” in the fifth line.
131 Deletion of Article 131 in its entirety and replacement with:
“A member who (having no registered address within the United Kingdom) has not supplied to the Company an address within the United
Kingdom for the service of notices or an address where notices may be sent in electronic form shall not be entitled to receive notices or
documents from the Company.”
132 Replacement of references to “by electronic communication” with “in electronic form”.
133 Replacement of reference to “the form of an electronic communication” with “electronic form”.
134 Deletion of Article 134 in its entirety and replacement with:
“Documents or notices sent in electronic form
134 Documents or notices sent by the Company
Subject to any requirement of the Statutes and provided that the Company has complied with all applicable regulatory requirements,
the Company may send any documents or notices to its members in electronic form and such documents or notices will be validly
sent provided that:
134.1 the member has agreed (generally or specifically) (or in the case of a company is deemed to have agreed by a provision in the
Statutes) that documents or notices can be sent in electronic form;
134.2 the documents are documents to which the agreement applies; and
134.3 copies of the documents are sent in electronic form to the address notified by the member to the Company for that purpose.
135 Documents communicated by website
135.1 Subject to any requirement of the Statutes and provided that the Company has complied with all applicable regulatory requirements,
the Company may send documents or notices to its members by means of a website and any such documents or notices will be
validly sent provided that:
(a) the member has expressly agreed (generally or specifically) that documents or notices may be sent by means of a website to
him or he has been asked (individually) to agree that documents and notices can be sent by means of a website and the
Company has received no response to that request within 28 days from the date on which the request was sent; and
(b) the documents are documents to which the agreement applies; and
(c) the member is notified of the presence of the documents on the website, the address of the website, the place on the website
where the documents may be accessed and how they may be accessed.
135.2 Documents must be available on the website for a period of not less than 28 days from the date of notification unless the Statutes
make provision for any other time period.
135.3 If the documents are published on the website for a part only of the period of time referred to in Article 135.1(c), they will be treated
as being published throughout the period if the failure to publish throughout that period is wholly attributable to circumstances which
it would not be reasonable to have expected the Company to prevent or avoid.
136 Right to hard copies
Where the Company sends documents to members otherwise than in hard copy form, any member can require the Company to send
him a hard copy version and the Company must do so free of charge and within 21 days of the date of the member’s request.
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Article
Number Amendment
137 Documents sent to the Company
137.1 Where the Statutes permit documents to be sent to the Company, only such documents as are specified by the Company may be
sent to the Company in electronic form to the address specified by the Company for that purpose.
137.2 If the document in electronic form is sent by hand or by post, it must be sent to the Company’s Registered Office.
137.3 A document sent to the Company in electronic form is sufficiently authenticated if the identity of the sender is confirmed in the way
the Company has specified.”
135 Article 135 to be renumbered as 138.
136 Article 136 to be renumbered as 139.
137 Article 137 to be renumbered as 140.
138 Article 138 to be renumbered as 141.
139 Article 139 to be renumbered as 142.
139.2 Deletion of the reference to “paragraph 139.1” and replacement with “Article 142.1”.
139.3 Deletion of the reference to “paragraph 139.2” and replacement with “Article 142.2”.
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Registered in England 3476115
Registered office
Technology House
Hunsbury Hill Avenue
Northampton
NN4 8QS
Financial advisers & stockbrokers
UBS Limited
1 Finsbury Avenue
London
EC2M 2PP
Auditors
Deloitte & Touche LLP
Hill House
1 Little New Street
London
EC4A 3TR
Registrars
Lloyds TSB Registrars
The Causeway
Worthing
West Sussex
BN99 9DA
Principal Bankers
Royal Bank of Scotland
152 Silbury Boulevard
Milton Keynes
MK9 1LT
Solicitors
Eversheds LLP
115 Colmore Row
Birmingham
B3 3AL
Financial public relations
Financial Dynamics
Holborn Gate
26 Southampton Buildings
London
WC2A 1PB
Remuneration consultants
New Bridge Street Consultants LLP
20 Little Britain
London
EC1A 7DH
FINANCIAL CALENDAR
Annual General Meeting 22 August 2007
ADVISERS AND FINANCIAL CALENDAR
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Technology House, Hunsbury Hill Avenue,
Northampton, NN4 8QS
t: +44 (0) 1604 769000
f: +44 (0) 1604 764323
www.phoenixitgroup.com
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