Xploite plc Annual Report 2008
pantone 193C
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consolidate
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Annual Report    2008
Xploite plc 
First Point 
Buckingham Gate 
Gatwick 
West Sussex 
RH6 0PP
www.xploite.com
c99861_Cover.indd   1 10/2/09   12:16:59 Contents
Highlights 01
Chairman’s statement 02
Chief executive’s review 03
Business and financial review 05
Directors’ report 10
Independent auditors’ report to the 
members of Xploite plc (group opinion) 14
Consolidated income statement 15
Consolidated balance sheet 16
Consolidated statement of 
changes in equity 17
Consolidated cash flow statement 18
Notes to the consolidated 
cash flow statement 19
Notes to the financial statements 20
Independent auditors’ report 
to the members of Xploite plc 
(parent company opinion) 59
Parent company balance sheet  60
Notes to the parent company 
financial statements 61
Company information  66
Xploite identifies acquires, consolidates 
and develops businesses in the IT services 
marketplace.
Produced by Imprima +44 (0) 20 7105 0300
c99861_Cover.indd   2 10/2/09   12:16:59  Annual Report 2008 Xploite plc 01
HigHligHts 428%
Increase in adjusted** earnings per share
231%
Increase in adjusted* EBITDA (including 
discontinued operations)
101%
Increase in gross profit from continuing operations
60%
Increase in revenues from continuing operations
51%
IRR on disposal of part of Itheon
*  Adjusted to add back integration and strategic costs
** Adjusted for add back of integration and strategic costs and amortisation 
of intangible assets
c99861Book.indb   1 11/2/09   13:18:02 02 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 03
CHairman’s statement I am delighted to report results ahead of expectations for 
2008, with total revenues from continuing operations up 
60% to £46.3m, gross profits from continuing operations 
up 101% to £12.6m and an adjusted EBITDA from 
continuing operations up 436% to £3.7m. The group 
also made a profit on the disposal of part of the Itheon 
business of £1.1m. The Group has benefited from the 
combined effects of tight working capital management, 
the successful integration of the businesses acquired over 
the previous year and the disposal of part of the Itheon 
business, so that as at 31 October 2008 net debt was 
£0.2m.
This is a considerable achievement by the management 
team, particularly when set against the backdrop of the 
prevailing adverse macro-economic conditions and the 
fact that the Group was also in an offer period from 11 
December 2007 to 27 March 2008.
Our strategy is to identify, acquire, consolidate and 
develop innovative, high growth businesses in the IT 
services marketplace. We create shareholder value by 
identifying and acquiring underperforming businesses, 
integrating and developing them, and improving their 
performance through ‘active management’. It is our 
strategy that, at an appropriate time, we will exit these 
businesses returning profits to shareholders. We continue 
to believe this remains a sound strategy, particularly 
in the current market where there are significant new 
opportunities for consolidation.
In our 2007 financial year we acquired four businesses 
which satisfied our strategic requirements: Anix, Posetiv, 
Red Squared and Itheon. The 2008 financial year has seen 
us deliver on the integration and development of these 
businesses. Our stewardship has begun to build significant 
shareholder value by shifting the focus of these businesses 
onto recurring revenue sources, improving margins, 
winning major contracts and disposing of non-core 
activities. We focussed our acquisitions into two divisions 
Anix and Itheon (now Storage Fusion) and both have 
made substantial progress in the 2008 financial year.
The consolidation of three of the acquired businesses 
(Anix, Red Squared and Posetiv) under the single Anix 
brand was completed in January 2008 and we have 
installed a single operating board for that operation. The 
objective for the enlarged Anix business is to become 
the UK’s leading mid-market managed service provider in 
the storage and server infrastructure sector, focused on 
building strong recurring revenue streams. The ability of 
the business to secure a number of high value managed 
services contracts during the year and post year end has 
demonstrated that there is a strong customer demand for 
managed services and enabled us to build a business with 
long term, visible revenues and improving margins.
The Group’s fourth acquisition, Itheon, was acquired for 
its software development skills rather than what was then 
the bulk of its business. In the 2008 financial year, we 
split its activities and renamed the retained part, being 
the Storage Resource Analysis (SRA) software business 
Storage Fusion. The legacy monitoring software solutions 
operation was sold in October 2008 and with it the Itheon 
brand, to Bluechip Customer Engineering for £3.3m, 
realising a profit on disposal of this business before tax of 
£1.1m.
Storage Fusion is gaining considerable traction from its 
SRA business; we recently announced some significant 
license and royalty agreements. Anix has also successfully 
integrated Itheon’s innovative monitoring software into its 
own service offerings.
As a specialist service company it is imperative that we 
retain high quality employees. The high level of service 
that our customers expect has always been maintained 
and it is thanks to the dedication of our colleagues that 
this has been possible.
The Group’s trading to date in the current financial year 
is line with the Board’s expectations, with good cash 
generation. As our forward visibility grows, the Directors 
remain confident that the Group’s strategic focus will 
continue to provide attractive returns for shareholders.
John Standen 
Chairman
c99861Book.indb   2 11/2/09   13:18:03 02 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 03
CHief exeCutive’s review
Strategic overview
Our objective is to identify, acquire, consolidate and 
develop underperforming companies and businesses in 
which we see opportunities to create value through a 
combination of integration, investment and enhancing 
both corporate and operational infrastructure. The 
Board aims to grow the Group both organically and by 
acquisition, and to convert this growth into higher profit 
and cash flow, through increased margins achieved by 
careful cost control and management of the revenue mix.
Xploite’s management team first adopted its buy and 
build strategy in 2003. Between 2003 and 2006 it 
acquired nine businesses in the network integration sector 
of the IT industry. These were consolidated into two 
operating divisions.
In February 2006 and June 2006 the two operating 
divisions were sold realising a profit of £19.2m and 
shortly thereafter £10.3m was returned to shareholders. 
Since February 2007 Xploite has begun to acquire and 
consolidate in the managed services and software as a 
service (SaaS) sector of the IT industry. Since then the 
Group has acquired four and disposed of two businesses.
Following the disposal of the Itheon brand in October 
2008, the Group operates two trading businesses Anix 
and Storage Fusion. Anix is a leading implementer of 
advanced storage solutions and one of IBM’s leading 
partners in the UK. Our strategy is to develop Anix into 
the UK’s number one mid market managed services 
provider. Storage Fusion is a software company focussed 
entirely on the SaaS model for storage analytics with a 
range of tools focussed on storage analytics.
The current world market place makes for a potentially 
difficult time for IT services businesses. However, in an 
economic downturn all companies look to save cost and 
in both Anix and Storage Fusion we have businesses that 
allow our customers to do just that.
Demand for managed services in both the public and 
private sector is increasing as organisations look to third 
parties with the necessary specialist skills and scale to 
implement and host key applications on a cost effective 
basis.
As a result, the Board expects demand for the Group’s 
services to increase as more companies recognise the 
benefits of having their data networks actively managed 
by a trusted third party.
Anix
Our objective for Anix has been to become the UK’s 
number one mid market managed services partner with 
a focus on storage and server infrastructure. The key 
performance indicator of our success against this objective 
is the significant underlying growth in recurring revenues 
and gross margin achieved throughout the year.
During the year, the revenue from services (the majority 
of which are recurring revenues) represented 51% (2007: 
36%) of total Anix revenues. In addition, gross margin 
from services grew by 119% from £10.4m to £22.8m. 
Notable wins across the year included a major European 
bank, Speedy Hire, Wyevale Garden Centres, Atos Orgin 
and a major high street retailer.
In the year, Anix was also awarded IBM Server Services 
SPL strategic supplier status, demonstrating the depth 
of relationship Anix enjoys with its largest supplier. Our 
pipeline of new business is strong and already in the 
2009 financial year we have announced new contract 
wins totalling £10m. Our Total Contract Value (TCV) per 
contract is also increasing with an average value now of 
circa £3m on new contracts won.
In the current economic climate, managed services are 
becoming more attractive to both new and existing 
customers. The opportunity to replace capital expenditure 
with operating expenditure allows companies to preserve 
cash for their core business and also removes the fear of 
running under staffed or under budgeted IT departments. 
Our experience has shown the greatest driver for our 
customers is not cost savings per se, but the assurance of 
the smooth running of their IT systems, backed by near 
100% service level agreements.
Despite the growth of its managed services revenues, 
hardware reselling remains an important feature of the 
Anix business and brings substantial benefits to the 
managed services strategy. For example, it helps the 
business to secure high level discounts by virtue of our 
tier one hardware and software relationships with leading 
vendors, and provides a built-in prospect base for the 
managed services practice.
Storage Fusion
This business was born out of the Storage Resource 
Analysis (SRA) software business components of Itheon 
which was acquired in late 2007.
One of the reasons Itheon was originally acquired was 
to deliver cost savings into the Anix managed services 
operation. The core technology of Itheon was based 
around server monitoring which is a key function of 
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CHief exeCutive’s review continued
running a managed service. During the year we migrated 
away from using expensive IBM Tivoli licences in our 
operations and replaced them with the Itheon server 
monitoring technology.
Towards the year end we identified the opportunity to 
sell Itheon, whilst at the same time retaining the core SRA 
technology within the Group, at the same time enabling 
Anix to continue to utilise Itheon at the same price point. 
We took this opportunity and realised disposal proceeds 
of £3.3m and a gain of £1.6m after tax. The opportunity 
resulted in an overall Internal Rate of Return (IRR) of 51% 
for the Itheon business.
The second reason for the acquisition of Itheon was the 
potential we saw to deliver its SRA solution. We have 
invested heavily in the development of this software 
which enables us to provide storage analytics as a SaaS 
solution.
This software is very powerful and enables the customer 
to identify and recover large areas of reclaimable capacity 
within their existing infrastructure thereby saving and 
deferring capital outlay. We believe this will prove to be 
a very compelling proposition particularly in the current 
economic environment.
SRA has been successfully trialled by IT Vendors, IBM, 
Sun Microsystems, EMC and Dell in the UK. End user 
customers have included T-Mobile, Reuters, Johnson 
and Johnson and ING among many others. These trials 
have been successful and are now beginning to deliver 
revenues. As an indication the minimum revenue from 
such a client could be £1,500 per report with the largest 
so far in the region of £40,000. In order to really extract 
the full value from this system many customers will elect 
to run regular reports.
SRA was successfully sold to two USA companies on a 
licence basis at the end of the 2008 year. This gives these 
customers the ability to host the software on their own 
platform and sell the service to their own customers on 
a non-exclusive basis. Fees per report will also arise from 
these sales.
Our expectation in the year to 31 October 2009 is to sell 
more licences of this nature. We also anticipate setting up 
our own portal which will allow any customer anywhere 
in the world to log in and utilise the software on a regular 
basis paid for on an as used basis. In addition to this, 
we are also in discussion with major storage vendors to 
deliver branded open SRA portals.
Post year end events
On 15 December 2008, the group completed the 
acquisition of Blue River Systems Limited (‘Blue River’) 
from Cantono plc (‘Cantono’) and the assets of three of 
Cantono’s managed services businesses, following the 
approval of Cantono’s shareholders. The main reason 
for this transaction was to acquire Cantono’s existing 
managed service contract base. These managed service 
contracts are expected to increase the value of annuity 
revenues in the group which is in line with our overall 
objectives.
c99861Book.indb   4 11/2/09   13:18:03 04 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 05
Business and finanCial review Business review
Xploite is a company that identifies, acquires, consolidates 
and develops businesses in the IT services sector.
Strategy and objectives of the business
The strategy of the business is to continue to grow both 
organically and by acquisition and to convert this growth 
into higher profit and cash flow through increased 
margins achieved by cost control and careful management 
of revenue mix .
The company first adopted its buy and build strategy in 
2003 when Matrix Communications (as the business was 
then called) acquired the AiM shell Offshore Telecom plc.
Between 2003 and 2006 the company acquired nine 
businesses in the network integration sector of the IT 
industry. These were consolidated into two operating 
divisions.
In February 2006 and June 2006 the company disposed of 
two of its operating divisions realising a profit of £19.2m. 
In November 2006 the Company returned £10.3m to 
shareholders.
In February 2007 the group embarked on a new phase 
by announcing its plans to acquire and consolidate in 
the managed services sector of the IT industry. In the 
year ended 31 October 2007, the group acquired four 
businesses pursuant to this strategy. The acquisitions 
were:
•	 Posetiv	Limited 
•	 Anix	Holdings	Limited 
•	 Itheon	Limited 
•	 Red	Squar ed	plc
The group has disposed of two businesses, the first 
disposal in September 2007 was of Fujin Technology 
Trading Limited. The second in October 2008 was of a 
part of the Itheon business.
During 2008 the group focussed on the integration of the 
businesses acquired in 2007 and is now in the process of 
developing the businesses further.
Brands and market position
The company is consolidating its acquisitions under two 
brands, Anix and Storage Fusion.
The Anix brand represents the hardware distribution and 
managed services business and Storage Fusion the storage 
analytics technology business.
Anix (hardware and services business segment) is a 
leading implementer of advanced storage solutions and 
one of IBM’s leading partners in the UK.
Storage Fusion (software business segment) has a range 
of tools that are focussed on storage analytics. These tools 
are offered using a SaaS business model.
The industry, market and competitive environment
There are two distinct areas of “The industry, market and 
competitive environment” that have a bearing on the 
company’s performance.
The first is the environment that influences the company’s 
ability to source and fund acquisitions and the second is 
the market and competitive environment in which the 
companies that have been acquired, operate.
The company’s ability to source and fund acquisitions that 
will be complimentary to the existing group companies is 
a function of the “pipeline” of acquisition opportunities 
that the company has. This is built up and constantly 
revised by a program of research, meetings and industry 
networking by the board and its advisors. The company 
has funded the four acquisitions it has made during the 
prior year from its own cash resources and from bank 
debt.
The second area is the market and competitive 
environment in which the acquired companies operate. 
Demand for managed services in both the public and 
private sector is increasing as organisations look to third 
parties with the necessary specialist skills and scale to 
implement and host key applications on a cost effective 
basis.
The board expects the demand for the group’s services 
to increase as more companies recognise the benefits of 
having their data networks actively managed by a third 
party.
In order to give a meaningful review of the company’s 
achievement against its objectives two separate elements 
will be considered.
The first is the “identify and acquire” objective and the 
second is the “consolidate and develop” objective.
Throughout this review these objectives will be considered 
separately as our ability to identify and acquire businesses 
that fit our strategic objective is different to our ability to 
consolidate and develop the businesses once they have 
been acquired.
c99861Book.indb   5 11/2/09   13:18:03 06 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 07
Business and finanCial review continued
Resources
The Group has the following key resources which assist in 
its pursuit of its key objectives:
“Identify and acquire”
•	 Extensive	knowledge	of	our	local	markets; 
•	 Str ong	financial	r esour ces	and	cash	generation; 
•	 	 Employees	who	have	extensive	knowledge	of	the	key	
markets and therefore can assist in the development of 
the business;
“Consolidate and develop”
•	 Incr easingly	well-established	and	r espected	brands; 
•	 	 Str ong	distribution	channels	and	established	working	
relationships with business partners;
•	 	 Quality	pr oducts	and	services	with	str ong	market	
positions;
•	 	 Employees	who	have	extensive	knowledge	of	the	key	
markets and therefore can assist in the development of 
the business.
•	 	 Str ong	corporate	r eputation	for	quality	pr oducts	and	
services.
•	 	 Highly	qualified	and	stable	employee	base.
Relationships and principal risks
“Identify and acquire”
The company’s critical relationships are with the business 
community and the providers of capital be it our bankers 
or our shareholders.
Acquisitions play a key role in the strategy and the 
successful integration and operation of the acquired 
businesses represent a commercial risk to the group. 
The risk is mitigated by a very structured approach to 
the integration process using a detailed project plan, 
dedicated teams and careful monitoring of performance 
post acquisition.
“Consolidate and develop”
The company’s critical external relationships are with its 
major customers and its major suppliers.
The company’s customer base is diverse with no single 
customer accounting for more than 12% (2007:15%) of 
revenues, and the top 10 customers accounting for 40% 
(2007:42%) of the total net revenues.
The company maintains its relationships with its customers 
through the efforts of its sales force, including key 
account managers.
The principal market risks are that the current slowdown 
in the demand for new hardware may continue, 
competition may reduce the company’s market share and 
margins.
In order to mitigate these market risks, the group 
constantly monitors the market through its own sales 
force, by attendance at industry groups and monitoring 
of competitors. This information enables us to make 
informed decisions about where the sales force should be 
targeted and informs our discussions with suppliers.
The principal operational risks are that key management 
may leave, that unfavourable economic or business 
conditions may adversely disrupt operations, or a major 
failure may occur at one of the network operation 
centres.
In order to mitigate these operational risks, the group 
aims to create a rewarding working environment that 
will attract staff by offering competitive salaries and 
benefits, structured career paths, tailored training and 
by encouraging free thinking and innovation. The group 
prepares recovery plans for most foreseeable situations 
so that our business operations would continue should a 
major failure occur.
Commercial relationships
The principal risks around our commercial relationships are 
that some of our products utilise software licensed to us 
by independent, third-party software developers. We also 
depend on third parties to enhance their current products, 
to develop new products on a timely and cost-effective 
basis and to respond to rapid technological change. Any 
absence or failure of key third-party products could have 
a material effect on our business. To mitigate this risk, 
we keep under review all key commercial relationships 
and developments in technology in our marketplace. As 
well as working with IBM we also work with a number 
of other partners to mitigate the risk inherent in working 
with a single partner.
Financial review
These results have been prepared under International 
Financial Reporting Standards (IFRS) as adopted by the EU. 
These are the first full financial statements to be prepared 
under IFRS. The impact of this on previously reported 
numbers and an explanation of the main accounting 
policy differences between UK GAAP and IFRS are shown 
in note 31.
The layout used in the statutory numbers is prescribed 
by IFRS. In order to highlight numbers that management 
consider important and that management use to manage 
the business, the table below has been prepared in order 
to show the relationship between the statutory accounts 
and those numbers referred to in this review.
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Sales and gross margin
  2008   2007
 Continuing Discontinued Total Continuing Discontinued Total 
 £’000 £’000 £’000 £’000 £’000 £’000
Sales 46,315 1,692 48,007 28,927 2,300 31,227
Cost of sales (33,690) (395) (34,085) (22,641) (1,326) (23,967)
Gross margin 12,625 1,297 13,922 6,286 974 7,260
 27% 77% 29% 22% 42% 23%
 
Total group revenue for the year ended 31 October 2008 was £48.0m which was up 54% on 2007 reflecting the larger 
revenues from the four new businesses acquired in the previous financial year. Overall gross margin has improved from 
23% to 29%. Gross margin for continuing businesses has grown from 22% to 27%.
In the medium term, the board expects that the anticipated change in the mix of sales i.e. greater proportion of service 
sales compared to hardware sales with a resultant improvement in overall margin. Furthermore, the board expects 
the revenue visibility of the operating business to improve as a consequence of the move towards long term customer 
contracts and away from lower margin, one-off hardware sales.
Adjusted* EBITDA and profit for the year
  2008   2007
 Continuing Discontinued Total Continuing Discontinued Total 
 £’000 £’000 £’000 £’000 £’000 £’000
Adjusted* EBITDA  3,733 583 4,316 697 564 1,261
Less depreciation (1,069) (27) (1,096) (516) (5) (521)
Adjusted EBITA  2,664 556 3,220 181 559 740
Less amortisation (1,896) (281) (2,177) (536) – (536)
Adjusted EBIT  768 275 1,043 (355) 559 204
Integration and strategic costs (1,204) (52) (1,256) (171) – (171)
Operating (loss)/profit (436) 223 (213) (526) 559 33
Net finance (costs)/income (641) – (641) 225 – 225
Gain on disposal – 1,112 1,112 – (20) (20)
(Loss)/profit before tax (1,077) 1,335 258 (301) 539 238
Taxation credit on disposal – 470 470 – (42) (42)
Tax on ordinary activities 741 72 813 51 – 51
Total tax 741 542 1,283 51 (42) 9
Total (loss)/profit for the year (336) 1,877 1,541 (250) 497 247
 
* Adjusted for integration and strategic costs. These costs are added back by management to enable an understanding 
of the underlying profitability of the businesses.
The total adjusted EBITDA for the year increased by 231% from £1.3m to £4.3m, while adjusted EBITA was up 335% 
from £0.7m to £3.2m. Integration and strategic costs, which relate to restructuring and reorganising the acquisitions 
into one coherent operation, increased from £0.2m to £1.3m.
During October 2008, the group disposed of a part of the Itheon business and realised a pre tax profit of £1.1m. This 
also resulted in a release of a deferred tax provision of £0.5m.
After net finance costs of £0.6m, the Group reported an adjusted pretax profit of £1.6m (2007: £0.4m) and an actual 
pre-tax profit of £0.3m (2007: £0.2m).
The total taxation credit for the year of £1.3m is shown in three places, the first as a credit of £0.5m relating to the 
profit on sale of Itheon, the second as credit on the trading profit of the discontinued operation of £0.1m and finally a 
credit on ordinary activities of £0.7m. £1.0m of these credits relate to the release of deferred tax provisions.
c99861Book.indb   7 11/2/09   13:18:03 08 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 09
Business and finanCial review continued
Earnings per share (EPS)
  2008   2007
 Continuing Discontinued Total Continuing Discontinued Total 
 £’000 £’000 £’000 £’000 £’000 £’000
(Loss)/profit attributable to 
equity holders  (336) 1,877 1,541 (250) 497 247
Adjustments:
Amortisation of intangible assets 1,896 281 2,177 536 – 536
Integration and strategic costs 1,204 52 1,256 171 – 171
Earnings (adjusted
and before amortisation)  2,764 2,210 4,974 457 497 954
 
 Pence Pence Pence Pence Pence Pence
Basic earnings per share  (0.87) 4.85 3.98 (0.64) 1.27 0.63
Earnings per share (adjusted
and before amortisation)  7.14 5.71 12.85 1.17 1.27 2.43
 
Earnings per share (adjusted and before amortisation) was up 428% from 2.43p per share to 12.85p per share. 
Reported basic earnings per share was up 532% from 0.63p to 3.98p.
The Board believes that retention and re-investment of capital will be beneficial for shareholders and, accordingly, will 
not be paying a dividend.
Cash flow
Net cash generated from operations was £2.2m (2007: £5.8m). The main elements of the 2008 cash generated from 
operations is adjusted EBITDA of £4.3m less integration and strategic costs of £1.3m and increased working capital 
requirements of approximately £0.8m.
As at 31 October 2008 the Group’s net debt was £0.2m of which £5.1m was bank debt. Included within the net debt 
figures is £2.2m received on the disposal of Itheon.
Balance sheet
At 31 October 2008 the Group had total shareholders equity of £17.4m, an increase of £1.7m on the previous year.
No additional equity has been raised in the year. The Group has financed its operations by increasing bank borrowings 
by £2.6m, by realising a gain on disposal of Itheon of £1.1m and judiciously managing working capital.
c99861Book.indb   8 11/2/09   13:18:03 08 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 09
Key Performance Indicators (KPIs)
The Board is focussed on a number of KPIs that are used to measure performance.
The Group’s performance against these metrics were as follows:
a.) Financial measures
Growth in recurring revenues  – increased 2007 service based revenues by £12.4m (119%)
Growth in total gross margin  – increase on 2007 by £6.6m (90%)
  – actual margin improvement from 23% in 2007 to 29% in 2008
Growth in total adjusted EBITDA  – increase on 2007 by £3.0m (231%)
Growth in total adjusted EBITA  – increase on 2007 by £2.5m (357%)
Earnings per share (adjusted
and before amortisation)  – increase on 2007 by 10.42p (429%)
IRR on business sold – 51% from the sale of part of the Itheon business
b.) Commercial measures
Total value of annuity revenue contracts signed: £14m
Performance against service level agreements for availability of servers – 99.9%. The target for this is 99% per the 
contractual customer relationships.
Group prospects and future developments
Demand for managed services in both the public and private sector is increasing as organisations look to third parties 
with the necessary specialist skills and scale to implement and host key applications on a cost effective basis. The Board 
expects the demand for the Group’s services to increase as more companies recognise the benefits of having their data 
networks actively managed by a third party.
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direCtors’ report The directors present their annual report on the affairs of 
the company and the group, together with the audited 
financial statements and the independent auditors’ report 
for the year ended 31 October 2008 in accordance with 
International Financial Reporting Standards (IFRS) as 
adopted by the EU for the first time.
Results and dividends
The trading results for the year and the group and 
company’s financial position at the end of the year are 
shown in the attached financial statements.
The directors do not recommend the payment of a 
dividend (2007: £Nil).
Business review and future developments
The requirements of the business review have been 
considered within the chairman’s statement, the chief 
executive’s review and business and financial reviews on 
pages 5 to 9.
Principal activities
The principal activity of the group is the acquisition, 
consolidation and development of businesses in the IT 
services sector.
During the year the group was engaged in three areas of 
the IT services industry. The provision of managed services, 
the sale of IT hardware and the sale of software.
Details of the business activities and disposals made 
during the year can be found in the business review 
on pages 5 to 9 and in note 25 to the group financial 
statements.
Changes in share capital
There were no changes in share capital during the year. 
In 2007, 1,311,338 ordinary shares of 10p each, totalling 
£131,134 were issued.
Post balance sheet events
For details of post balance sheet events refer to note 30 
(group), note 10 (company).
Going concern
On the basis of current financial projections, the directors 
consider that the group has adequate resources to 
continue in operational existence for the foreseeable 
future. For this reason, they continue to adopt the going 
concern basis in preparing the financial statements.
Return of capital to shareholders
During 2007 (on 22 November 2006), Xploite plc received 
approval from the High Court to return money to the 
shareholders by way of a capital reduction. As approved 
by the shareholders’ resolution, the company’s share 
premium account was reduced by approximately £10.5 
million, and shareholders received 26.78p per share from 
the company.
Policy for payment of creditors
The company’s policy, which is also applied to the 
group, is to agree terms and conditions for its business 
transactions with suppliers and endeavour to make 
payment to these terms, subject to the terms and 
conditions being met by suppliers. The company does not 
follow a specific code or standard of payment practice.
At 31 October 2008 the company’s main suppliers, in 
respect of continuing activities, had an average of 38 days 
(2007: 45 days) purchases outstanding in trade payables.
At 31 October 2008 the group’s main suppliers, in respect 
of continuing activities, had an average of 87 days (2007: 
103 days) purchases outstanding in trade payables.
Employees
The group places considerable value on the involvement 
of its employees and has continued its practice of keeping 
them informed of matters affecting them as employees 
and the various factors affecting the performance of the 
group.
The directors recognise that continued and sustained 
improvement in the performance of the group depends 
on its ability to attract, motivate and retain employees of 
the highest calibre. Furthermore, the directors believe that 
the group’s ability to sustain a competitive advantage over 
the long term depends in a large part on ensuring that all 
employees contribute to the maximum of their potential. 
The group is committed to improving the performance of 
all employees through development and training.
The group is an equal opportunity employer. The 
group’s policies seek to promote an environment free 
from discrimination, harassment and victimisation and 
to ensure that no employee or applicant is treated less 
favourably on the grounds of gender, marital status, 
age, race, colour, nationality or national origin, disability 
or sexual orientation or is disadvantaged by conditions 
or requirements, which cannot objectively be justified. 
Entry into, and progression within the group, is solely 
determined on the basis of work criteria and individual 
merit.
The group continues to give full and fair consideration to 
applications for employment made by disabled persons, 
having regard to their respective aptitudes and abilities. 
c99861Book.indb   10 11/2/09   13:18:03 10 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 11
The policy includes, where practicable, the continued 
employment of those who may become disabled during 
their employment and the provision of training and career 
development and promotion, where appropriate.
Research and development
The group has carried out research and development in 
its software division. A specific research and development 
project for 2008 was the development of the SRA 
software. £327,000 of this expenditure has been 
capitalised. In 2008 and 2007 expenditure was incurred 
on maintaining current software products. All of this 
expenditure is charged to the profit and loss account as it 
is incurred.
Donations
The group and company did not make any donations in 
the year (2007: Nil).
Directors and their interests
The directors who served the company during the year 
and to the date of signing the financial statements were 
as follows:
A I Smith 
A C Weaver 
R Arrowsmith 
J Standen 
R Ramsay
The company’s Articles of Association require that all 
directors appointed during the year retire at the AGM 
and offer themselves for election. In addition, one third 
of the directors must retire and may offer themselves 
for re-election. A I Smith and A C Weaver are offering 
themselves for re-election this year.
Substantial interests
The directors have been notified of the following 
substantial shareholdings in excess of 3% of the ordinary 
share capital of the Company as at 19 January 2009.
 No of ordinary shares Percentage
A I Smith 7,656,233 19.37%
Herald Investment Trust 2,700,000 6.83%
A C Weaver 2,003,500 5.07%
BP2S Jersey 1,450,000 3.67%
 
Except as referred to above, the directors are not aware of 
any person as at 31 October 2008 who was interested in 
3.0% or more of the issued share capital of the company 
or could directly or indirectly, jointly or severally, exercise 
control.
Statement of directors’ responsibilities in respect of 
the Annual Report and the financial statements
The directors are responsible for preparing the Annual 
Report and the group and parent company 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 prepared the group financial statements 
in accordance with International Financial Reporting 
Standards (IFRSs) as adopted by the European Union, and 
the parent company financial statements in accordance 
with applicable law and United Kingdom Accounting 
Standards (United Kingdom Generally Accepted 
Accounting Practice). The group and parent company 
financial statements are required by law to give a true 
and fair view of the state of affairs of the company and 
the group and of the profit or loss of the group for that 
period.
In preparing those financial statements, the Directors are 
required to:
•		 	 select	suitable	accounting	policies	and	then	apply	them	
consistently;
•		 	 make	judgements	and	estimates	that	ar e	r easonable	
and prudent;
•	 	 state	that	the	gr oup	financial	statements	comply	with	
IFRSs as adopted by the European Union and with 
regard to the parent company financial statements 
that applicable UK Accounting Standards have been 
followed, subject to any material departures disclosed 
and explained in the financial statements; and
•	 	 pr epar e	the	gr oup	and	company	financial	statements	
on the going concern basis unless it is inappropriate 
to assume that the group will continue in business, in 
which case there should be supporting assumptions or 
qualifications as necessary.
The directors confirm that they have complied with the 
above requirements in preparing the financial statements.
The directors are responsible for keeping proper 
accounting records which disclose with reasonable 
accuracy at any time the financial position of the company 
and the group and to enable them to ensure that the 
group financial statements comply with the Companies 
Act 1985 and Article 4 of the IAS Regulation and the 
parent company financial statements comply with the 
Companies Act 1985. They are also responsible for 
safeguarding the assets of the company and the group 
and hence for taking reasonable steps for the prevention 
and detection of fraud and other irregularities.
c99861Book.indb   11 11/2/09   13:18:03 12 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 13
direCtors’ report continued
The directors are responsible for the maintenance and 
integrity of the website. Legislation in the UK concerning 
the preparation and dissemination of financial statements 
may differ from legislation in other jurisdictions.
Principal risks and uncertainties
Economic uncertainty, together with a general maturing 
of the IT industry, has meant customers are now closely 
scrutinising the value that IT brings to their business. 
This has resulted in IT budgets being curtailed or more 
rigorously reviewed. Compelling business reasons are 
now required to release funds for expenditure. Thus, 
competition for these budgets is increasingly fierce.
As the group is involved in buying and selling companies 
there is a risk that the price paid or received for a business 
is not appropriate. When buying or selling businesses, the 
group will involve their professional advisors at each stage 
of the process.
For further details on principal risks and uncertainties, 
refer to the Business and financial review on pages 5 to 9.
Financial instruments
Financial risk management objectives and policies
During the year the group’s principal financial instruments 
have been long term debt, bank overdrafts and cash. The 
main purpose of these financial instruments is to raise 
finance for the group’s operations. The group has various 
other financial instruments such as trade receivables, trade 
payables which arise directly from its operations.
The main risks arising from the group’s financial 
instruments have been interest rate risk, liquidity risk and 
credit risk and price risk. The board reviews and agrees 
policies for managing each of these risks and they are 
summarised below.
Cash flow and interest rate risk
The group’s income and operating cash flows are 
substantially independent of changes in market interest 
rates.
The group’s exposure to risk for changes in interest rates 
related primarily to the group’s long-term debt and 
overdraft obligations. Bank loan and overdraft interest 
is charged on a variable rate basis. The group’s bank 
facilities are on a pooled basis and therefore interest is 
only payable/receivable on the net position.
The interest on finance leases is charged on a fixed rate 
basis.
The group analyses its variable interest rate exposure on 
an active basis. The board regularly considers whether it 
would be appropriate to hedge the interest rate risk but 
has not deemed it necessary during the 2008 financial 
year.
Credit risk
The group trades only with recognised, creditworthy 
third parties and independent credit checks and credit 
limits are managed by the trading entities. Credit limits 
can only be exceeded if authorised by the Xploite board. 
Receivable balances are monitored on an ongoing basis 
with the result that the group’s exposure to bad debts is 
not significant.
There are no significant concentrations of credit risk 
within the group.
Liquidity risk
The group’s objective is to maintain sufficient funds to 
support the ongoing strategic and trading activities of the 
group. The detailed forecasting is carried out at local level 
in the operating companies of the group. This is combined 
into a group cash flow forecast. The group forecasts are 
compared to available facilities to ensure that sufficient 
headroom is anticipated and that covenants are not 
breached.
Capital risk management
The group’s objectives when managing capital are to 
safeguard the group’s ability to continue as a going 
concern in order to provide returns for shareholders and 
benefits for other stakeholders and to maintain an optimal 
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the 
group may adjust the amount of return of capital and 
dividends paid to shareholders, issue new shares or sell 
assets/businesses to reduce debt. The group monitors 
capital on the basis of the gearing ratio.
Price risk
The main price risk that the group is exposed to is 
changes in the price of third party hardware and software 
that it uses in the solutions it supplies to customers. When 
quoting for business the group always obtains fixed price 
quotations from suppliers before submitting a price to the 
customer.
Qualifying third party indemnity provision.
There were no third party indemnity provisions in place 
for any of the directors during the year or at the date of 
approval of the financial statements.
c99861Book.indb   12 11/2/09   13:18:03 12 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 13
Auditors and disclosure of information to auditors
•	 	 so	far	as	each	dir ector	is	awar e,	ther e	is	no	r elevant	
audit information of which the company’s auditors are 
unaware.
•	 	 each	dir ector	has	taken	all	the	steps	that	they	ought	to	
have taken as a director in order to make themselves 
aware of any relevant audit information and to 
establish that the company’s auditors are aware of that 
information.
Auditors
In accordance with Section 385 of the 
Companies Act 1985, a resolution proposing that 
PricewaterhouseCoopers LLP be re-appointed will be 
proposed at the Annual General Meeting.
Annual General Meeting
Notice of the Annual General Meeting to be held on 
27 March 2009 is set out in the circular included with this 
document.
Signed by order of the board
Company Secretary
Approved by the board on
23 January 2009
c99861Book.indb   13 11/2/09   13:18:03 14 Xploite plc Annual Report 2008 
independent auditors’ report to tHe memBers of 
xploite plC
We have audited the group financial statements of Xploite 
plc for the year ended 31 October 2008 which comprise 
the consolidated income statement, the consolidated 
balance sheet, the consolidated statement of changes 
in equity, the consolidated cash flow statement and the 
related notes. These group financial statements have been 
prepared under the accounting policies set out therein.
We have reported separately on the parent company 
financial statements of Xploite plc for the year ended 
31 October 2008.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual 
Report and the group financial statements in accordance 
with applicable law and International Financial Reporting 
Standards (IFRSs) as adopted by the European Union are 
set out in the statement of directors’ responsibilities.
Our responsibility is to audit the group financial 
statements in accordance with relevant legal and 
regulatory requirements and International Standards 
on Auditing (UK and Ireland). This report, including 
the opinion, has been prepared for and only for the 
company’s members as a body in accordance with 
Section 235 of the Companies Act 1985 and for no 
other purpose. We do not, in giving this opinion, accept 
or assume responsibility for any other purpose or to any 
other person to whom this report is shown or into whose 
hands it may come save where expressly agreed by our 
prior consent in writing.
We report to you our opinion as to whether the group 
financial statements give a true and fair view and 
whether the group financial statements have been 
properly prepared in accordance with the Companies Act 
1985. We also report to you whether in our opinion the 
information given in the directors’ report is consistent 
with the group financial statements. The information 
given in the directors’ report includes that specific 
information presented in the business and financial review 
that is cross referred from the business review and future 
developments section of the directors’ report.
In addition we report to you if, in our opinion, 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 and consider whether it is consistent with the 
audited group financial statements. The other information 
comprises only the directors’ report, the chairman’s 
statement, the chief executive’s review and the business 
and financial review and all of the other information 
listed on the contents page. We consider the implications 
for our report if we become aware of any apparent 
misstatements or material inconsistencies with the group 
financial statements. Our responsibilities do not extend to 
any other information.
Basis of audit opinion
We conducted our audit in accordance with International 
Standards on Auditing (UK and Ireland) issued by the 
Auditing Practices Board. An audit includes examination, 
on a test basis, of evidence relevant to the amounts 
and disclosures in the group financial statements. It also 
includes an assessment of the significant estimates and 
judgments made by the directors in the preparation 
of the group financial statements, and of whether 
the accounting policies are appropriate to the group’s 
circumstances, consistently applied and adequately 
disclosed.
We planned and performed our audit so as to obtain all 
the information and explanations which we considered 
necessary in order to provide us with sufficient evidence 
to give reasonable assurance that the group 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 group financial 
statements.
Opinion
In our opinion:
•	 	 the	gr oup	financial	statements	give	a	true	and	fair	
view, in accordance with IFRSs as adopted by the 
European Union, of the state of the group’s affairs as at 
31 October 2008 and of its profit and cash flows for the 
year then ended;
•	 	 the	gr oup	financial	statements	have	been	pr operly	
prepared in accordance with the Companies Act 1985; 
and
•	 	 the	information	given	in	the	dir ectors’	r eport	is	
consistent with the group financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors 
Gatwick
25 January 2009
c99861Book.indb   14 11/2/09   13:18:03  Annual Report 2008 Xploite plc 15
Consolidated inCome statement Year ended 31 October 2008
    2008 2007 
   Notes £’000 £’000
Revenue   5 46,315 28,927
Cost of sales    (33,690) (22,641)
Gross profit    12,625 6,286
Administrative expenses    (13,061) (6,812)
Adjusted* EBITDA    3,733 697
Less: depreciation    (1,069) (516)
Adjusted EBITA    2,664 181
Less: amortisation and impairment of intangibles    (1,896) (536)
Less: integration and strategic costs   22 (1,204) (171)
Operating loss    (436) (526)
Finance income    147 327
Finance costs    (788) (102)
Finance (costs)/income – net   23 (641) 225
Loss before tax    (1,077) (301)
Tax credit   24 741 51
Loss for the year from continuing operations    (336) (250)
Discontinued operations
Profit for the year from discontinued operations   5 1,877 497
Profit for the year attributable to equity shareholders    1,541 247
 
Earnings per ordinary share   26
– basic    3.98 0.63
– diluted    3.88 0.59
Earnings per ordinary share from continuing operations  26
– basic    (0.87) (0.64)
– diluted    (0.87) (0.64)
*  Adjusted for integration and strategic costs (note 22)
c99861Book.indb   15 11/2/09   13:18:03 16 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 17
Consolidated BalanCe sHeet As at 31 October 2008
    2008 2007 
   Notes £’000 £’000
Assets
Non-current assets
Intangible assets   6 29,432 33,259
Property, plant and equipment   7 2,496 1,809
Deferred tax assets   16 188 371
Trade and other receivables   9 6,259 2,847
Deferred consideration on disposals   10 – 35
    38,375 38,321
Current assets
Inventories   11 – 20
Trade and other receivables   9 15,077 14,493
Deferred consideration on disposals   10 1,120 –
Cash and cash equivalents   12 7,749 4,225
    23,946 18,738
Liabilities
Current liabilities
Trade and other payables   13 (23,765) (26,739)
Deferred consideration on acquisitions   14 (3,119) –
Current tax liabilities    (1,323) (908)
Borrowings   15 (2,247) (395)
    (30,454) (28,042)
Non-current liabilities
Borrowings   15 (5,656) (2,978)
Trade and other payables   13 (6,531) (3,667)
Deferred tax liabilities   16 (2,312) (3,501)
Deferred consideration on acquisitions   14 – (3,183)
    (14,499) (13,329)
Net assets    17,368 15,688
 
Shareholders’ equity
Called up share capital   17 3,952 3,952
Share premium account   17 1,647 1,647
Merger reserve   18 3,511 3,511
Retained earnings   18 7,928 6,387
Share based payment reserve   18 330 191
Total shareholders’ equity    17,368 15,688
The financial statements on pages 15 to 58 were approved and authorised for issue by the Board on 23 January 2009 
and signed on its behalf by
A I Smith 
Director
c99861Book.indb   16 11/2/09   13:18:03 16 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 17
Consolidated statement of CHanges in equity
Year ended 31 October 2008
    2008 2007 
    £’000 £’000
Shareholders’ equity at beginning of year    15,688 25,251
Profit for the year    1,541 247
Increase in share based payment reserve    139 94
Shares issued in the year    – 132
Share premium on shares issue in the year    – 33
Issue of new shares on acquisition of subsidiary    – 243
Capital reduction    – (10,312)
Shareholders’ equity at end of year    17,368  15,688
c99861Book.indb   17 11/2/09   13:18:03 18 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 19
Consolidated CasH flow statement Year ended 31 October 2008
    2008 2007 
   Notes £’000 £’000
Cash flows from operating activities
Cash generated from operations   (a) 2,184 5,796
Interest received    87 327
Interest paid    (502) (102)
Tax received/(paid)    666 (615)
Net cash inflows from operating activities    2,435 5,406
Cash flows from investing activities
Acquisition of subsidiaries (net of cash acquired)    (123) (18,590)
Deferred consideration paid on prior period acquisitions    – (1,871)
Disposal of subsidiaries (net of cash disposed)   25 1,875 252
Deferred consideration received on prior period disposals    – 5,875
Purchase of intangible assets    (669) –
Purchase of property, plant and equipment    (597) (347)
Proceeds from sale of property, plant and equipment    – 70
Available for sale investments    – 2,000
Net cash flows from/(used in) investing activities    486 (12,611)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital    – 63
Capital repayment – reduction in share premium    – (10,312)
Net proceeds from issue of bank loan    2,970 2,500
Finance lease principal payments    (2,015) (246)
Repayment of borrowings    (352) (855)
Net cash from/(used in) financing activities    603 (8,850)
Net increase/(decrease) in cash and cash equivalents     3,524 (16,055)
Cash and cash equivalents at start of year    4,225 20,280
Cash and cash equivalents at end of year   (b) 7,749  4,225
c99861Book.indb   18 11/2/09   13:18:04 18 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 19
notes to tHe Consolidated CasH flow statement (a) Cash generated from operations
    2008 2007 
    £’000 £’000
Continuing operations
Loss before tax    (1,077) (301)
Adjustments for:
Finance cost/(income) – net    641 (225)
Depreciation    1,069 516
Amortisation     1,896 536
Share based payment charge    139 94
Decrease in inventories    20 35
Increase in trade and other receivables    (4,222) (6,465)
Increase in trade and other payables    3,461 10,828
Cash generated from continuing operations    1,927 5,018
Discontinued operations
Profit before tax    223 539
Adjustments for:
Depreciation    27 5
Amortisation    281 –
Decrease in inventories    – 487
(Increase)/decrease in trade and other receivables    (432) 1,032
Increase/(decrease) in trade and other payables    158 (1,285)
Cash generated from discontinued operations    257 778
Cash generated from operations    2,184 5,796
(b) Reconciliation of net cash flow to movement in net (debt)/funds
    2008 2007 
    £’000 £’000
Increase/(decrease) in cash in the year    3,524 (16,055)
Net cash inflow in respect of bank loan    (2,618) (1,645)
Cash outflow in respect of finance leases    2,015  246
Changes resulting from cash flows    2,921 (17,454)
Non cash changes:
Loans and finance leases acquired with subsidiaries    – (1,400)
Amortisation of loan interest costs    (12) –
New finance leases    (3,915)  (547)
Change in net debt    (1,006) (19,401)
Net funds at beginning of period    852 20,253
Net (debt)/funds at end of period    (154)  852
Analysis of net (debt)/funds
Cash and cash equivalents and bank overdrafts    7,749 4,225
Hire purchase and finance lease obligations    (2,798) (898)
Bank loan    (5,105) (2,475)
Net (debt)/funds    (154) 852
Cash and cash equivalents
Cash at bank and in hand    7,749 4,225
c99861Book.indb   19 11/2/09   13:18:04 20 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 21
notes to tHe finanCial statements For the year ended 31 October 2008
1 General information
Xploite plc (‘the company’) and its subsidiaries (together ‘the group’) identify, acquire, consolidate and develop 
businesses in the IT services sector. The Board’s aim is to create shareholder value by acquiring businesses with good 
strategic fit. These are then integrated and consolidated into existing operations. Costs are reduced through the 
efficient deployment of people and processes and technologies, and recurring revenue streams developed. Disposals are 
considered by the Board to realise value where appropriate.
The company is a public limited company which is listed on the AIM London Stock Exchange and is incorporated and 
domiciled in the UK.
The address of its registered office is 100 Fetter Lane, London, EC4A 1BN. The registered number of the company is 
3897926.
The group’s business activities, together with the factors likely to affect its future development, performance and 
position are set out in the business and financial review on pages 5 to 9. The financial position of the group, its cash 
flows, liquidity position and borrowing facilities are also described in the business and financial review. In addition, note 
3 to the financial statements includes the group’s objectives and policies and processes for managing its financial risk 
factors, and its capital risk management . It also includes details of its financial instruments and its exposures to credit, 
interest rate, liquidity and price risk.
As highlighted in note 15 to the financial statements, the group meets its day to day working capital requirements 
through an overdraft facility which is due for renewal in October 2009. The current economic conditions create some 
uncertainty particularly over (a) the level of demand for the group’s products and (b) the availability of bank finance in 
the foreseeable future.
The group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that 
the group should be able to operate within the level of its current facility. The group will open renewal negotiations 
with the bank in due course and has at this stage not sought any written commitment that the facility will be renewed. 
However, the group has held discussion with its bankers about its future borrowing needs and no matters have been 
drawn to its attention to suggest that renewal may not be forthcoming on acceptable terms.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out 
below.
Application of IFRS 1: First time adoption of International Accounting Standards
The Group is preparing its financial statements in accordance with IFRS as adopted by the European Union for the 
first time and consequently has applied IRFS 1 First-time Adoption of International Financial Reporting Standards. The 
Group’s transition date is 1 November 2006.
IFRS 1 First time adoption of International Financial Reporting Standards sets out the transition rules, which must be 
applied, when IFRS is adopted for the first time. The standard sets out certain mandatory exemptions to retrospective 
application and certain optional exemptions. The optional exemptions available and taken by the Group are as follows:
–  Deemed cost; the Group has taken the exemption not to restate individual items of property plant and equipment to 
fair value at the date of transition.
–  Business combinations; the Group adopted the business combination exemption in IFRS 1. It has not restated business 
combinations that took place prior to the 1 November 2006 transition date.
c99861Book.indb   20 11/2/09   13:18:04 20 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 21
2 Summary of significant accounting policies continued
Basis of preparation
The consolidated financial statements of Xploite plc have been prepared in accordance with International Financial 
Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC interpretations and the 
Companies Act 1985 applicable to companies reporting under IFRS. The consolidated financial statements have been 
prepared under the historical cost convention, as modified for any financial assets which are stated at fair value through 
profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. 
It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The 
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant 
to the consolidated financial statements are disclosed in note 4.
(a) Standards, amendment and interpretations effective in 2008
IFRS 7, ‘Financial instruments: Disclosures’, and the complementary amendment to IAS 1, ‘Presentation of financial 
statements – Capital disclosures’, introduces new disclosures relating to financial instruments and does not have any 
impact on the classification and valuation of the group’s financial instruments, or the disclosures relating to taxation 
and trade and other payables.
(b) Interpretation early adopted by the group and company
IFRS 8, ‘Operating segments ‘ has been early adopted by the group. The new standard requires a ‘management 
approach’, under which segment information is presented on the same basis as that used for internal reporting 
purposes.
(c) Standards, amendments and interpretations effective in 2008 but not relevant
The following standards, amendments and interpretations to published standards are mandatory for accounting periods 
beginning on or after 1 January 2007 but they are not relevant to the group or company’s operations:
Revised guidance on implementing IFRS 4, ‘Insurance contracts’.
IFRIC 11, ‘IFRS 2 – Group and treasury share transactions’, provides guidance on whether share-based transactions 
involving treasury shares or involving group entities (for example, options over a parent’s shares) should be accounted 
for as equity-settled or cash-settled share-based payment transactions in the stand-alone accounts of the parent and 
group companies. This interpretation does not have an impact on the group’s financial statements. The company’s 
accounting policy for share based compensation arrangements is already in compliance with the interpretation.
(d)  Standards, amendments and interpretations to existing standards that are not yet effective and have not been early 
adopted by the group and company
The following standards, amendments and interpretations to existing standards have been published and are 
mandatory for the group’s accounting periods beginning on or after 1 November 2008 or later periods, but the group 
and company have not early adopted them:
IAS 23 (Amendment), ‘Borrowing costs’ (effective from 1 November 2009). The amendment to the standard is still 
subject to endorsement by the European Union. It requires an entity to capitalise borrowing costs directly attributable 
to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get 
ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will 
be removed. The group will apply IAS 23 (Amended) from 1 January 2009, subject to endorsement by the EU but is 
currently not applicable to the group or company as there are no qualifying assets.
c99861Book.indb   21 11/2/09   13:18:04 22 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 23
2 Summary of significant accounting policies continued
IFRS 2 (amendment), ‘Share-based payment’ (effective from 1 November 2009). The amendment to the standard is still 
subject to endorsement by the EU. It deals with vesting conditions and cancellations. It clarifies that vesting conditions 
are service conditions and performance conditions only. Other features of a share-based payment are not vesting 
conditions. These features would need to be included in the grant date fair value for transactions with emloyees and 
others providing similiar services; they would not impact the number of awards expected to vest or valuation there 
of subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same 
accounting treatment. The group and company will apply IFRS 2 (amendment) from 1 November 2009, subject to 
endorsement by the EU. It is not expected to have a material impact on the group or company’s financial statements.
IFRS 3 (revised), ‘Business combinations’ (effective from 1 November 2009). The revised standard is still subject to 
endorsement by the EU. The revised standard continues to apply the acquisition method to business combinations, 
with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the 
acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. 
There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at 
fair vale or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs 
should be expensed. The group will apply IFRS 3 (revised) prospectively to all business combinations from 1 November 
2010, subject to endorsement by the EU.
IFRIC 12, Service Concession Arrangements (effective from 1 November 2008). IFRIC 12 sets out general principles 
on recognising and measuring the obligations and related rights in service concession arrangements. IFRIC 12 is not 
relevant to the company’s or group’s operations.
IFRIC 13, ‘Customer loyalty programmes’ (effective from1 November 2008). IFRIC 13 clarifies that where goods 
or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the 
arrangement is a multiple-element arrangement, and the consideration receivable from the customer is allocated 
between the components of the arrangement using fair values. IFRIC 13 is not relevant to the group or company’s 
operations because none of the group’s companies operate any loyalty programmes.
IFRIC 14, ‘IAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction’ (effective 
from 1 November 2008 2008). IFRIC 14 provides guidance on assessing the limit in IAS 19 on the amount of the 
surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a 
statutory or contractual minimum funding requirement. IFRIC 12 is not relevant to the group or company’s operations.
IFRIC 15, ‘Agreements for construction of real estates’ (effective from 1 November 2009). The interpretation clarifies 
whether IAS 18, ‘Revenue’, or IAS 11, ‘Construction contracts’, should be applied to particular transactions. It is likely 
to result in IAS 18 being applied to a wider range of transactions. IFRIC 15 is not relevant to the group or company’s 
operations as all revenue transactions are accounted for under IAS 18 and not IAS 11.
Consolidation
The results and net assets of all subsidiary undertakings acquired are included in the consolidated income statement 
and consolidated balance sheet using the acquisition method of accounting from the effective date at which control is 
obtained by the group. Subsidiary undertakings cease to be consolidated from the date at which the group no longer 
retains control. Control comprises the power to govern the financial and operating policies of the investee so as to 
obtain benefits from their activities, and is achieved through direct or indirect ownership of voting rights or by way 
of contractual agreement. All inter-company balances and transactions are eliminated in full. Accounting policies of 
subsidiaries are changed where necessary to ensure consistent policies across the group.
c99861Book.indb   22 11/2/09   13:18:04 22 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 23
2 Summary of significant accounting policies continued
The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities 
incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Where there is deferred 
consideration payable in cash, the amount is discounted to its present value. The present value of deferred cash 
consideration is included within the group’s financial statements as a liability. Identifiable assets acquired and liabilities 
and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition 
date. The excess of the cost of acquisition over the fair value of the group’s share of the identifiable net assets acquired 
is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, 
the difference is recognised directly in the income statement.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating 
decision-maker. The chief operating decision-maker has been identified as the board of directors which makes the 
group’s strategic decisions.
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the currency of the 
primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial 
statements are presented in UK Sterling which is the group’s functional and presentation currency. All of the group’s 
subsidiaries are based in the UK.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the 
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and 
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are 
recognised in the income statement.
Revenue recognition
Revenue comprises the fair value of sales to customers, excluding value added taxes. Revenue is recognised when the 
risks and rewards of ownership have passed to the customer.
Revenues from customers are generated through managed services agreements can be made up of a number of 
revenue streams. The revenues can include hardware, software, maintenance and support.
The fair value of the revenue for each element of the arrangement is then accounted for in accordance with the policies 
described below.
Hardware and software
Hardware revenue is recognised when the hardware is delivered and accepted by the customer. Software revenue is 
recognised depending on licensing terms:
1.  For a licence in perpetuity, where there are no further obligations, the revenue is recognised at the time the licence is 
delivered.
2.  For a licence that has a fixed term and there are further obligations the revenue is recognised over the term of the 
licence.
c99861Book.indb   23 11/2/09   13:18:04 24 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 25
2 Summary of significant accounting policies continued
Maintenance and managed services
Maintenance and managed services revenue is recognised depending on the terms of the maintenance agreement:
1.  Where the maintenance is sold for a fixed term and there is a continuing performance obligation, then the revenue is 
deferred and recognised over the term of the agreement.
2.  Where maintenance is sold for a fixed term and there is a continuing constructive obligation then revenue is deferred 
and recognised over the term of the agreement.
3.  For maintenance that is sold on behalf of a third party, and where it can be shown that there is no continuing or 
constructive obligations then the revenue is recognised at the time of sale.
Where there are pre contract costs associated with managed services set up, then the costs are capitalised when it is 
probable that the contract will be obtained. These costs are amortised over the life of the contract and the amortisation 
charge is charged to cost of sales.
Long term contracts (with respect to Fujin Technology Trading Ltd – disposed in 2007)
With longer term contracts where a contract typically covers an initial activity comprising the design, supply, 
professional services and thereafter the provision of specific support and maintenance service solutions, the contract 
value is split into a number of elements based on the fair value of each element of the contract.
The projected outcome of any given contract is necessarily based on the estimates of the revenues and costs to 
completion. Whilst the assumptions made are based on professional judgements, subsequent events may mean that 
estimates as calculated prove inaccurate, with a consequent effect on the reporting results.
Profit is recognised on the percentage of completion basis, provided the outcome of the contract can be reliably 
measured. Where the percentage completion method cannot be measured reliably, revenue is recognised when 
specified contractual milestones have been met or on project completion. Full provision is made for estimated losses.
Fair value attribution
Where a project involves the invoicing of equipment together with professional services, the recognition of revenue is in 
accordance with the following:
Hardware margin – On delivery of the equipment to the customer
Professional Services – Throughout the duration of the project on a percentage of completion basis
Deferred costs and deferred revenues
To the extent that the cost and revenue recognition differs from the contractual billing terms, costs are included in 
deferred costs or accruals and revenue is included in accrued income or deferred income.
Gross profit
Gross profit is calculated by subtracting the cost of goods sold and the salaries of technical staff involved in the delivery 
of goods and services, from revenue.
c99861Book.indb   24 11/2/09   13:18:04 24 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 25
2 Summary of significant accounting policies continued
Integration and strategic costs
(a) Integration
Integration costs are incurred by the group when integrating one trading business with another. The type of costs 
includes staff related costs such as redundancy, property costs such as lease termination penalties and re-branding 
costs.
(b) Other strategic costs
Other strategic costs include costs incurred on sourcing new acquisitions and identifying disposal opportunities which 
did not take place. The types of cost incurred are third party advisor fees including due diligence.
Both of the above costs are highlighted separately on the income statement as management believes that they need to 
be considered separately to gain an understanding of the underlying profitability of the trading businesses.
Holiday pay
The group accrues for holiday pay to the extent of what would be paid out if all employees of the group left the 
business at its reporting date.
Tax
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation 
authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax 
bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
A deferred tax liability is provided on intangible assets acquired as part of a business combination. This results in an 
increase in residual goodwill by the same amount. This liability has been recognised in accordance with IAS12, and a 
proportion will be amortised to the income statement as the related intangible asset is amortised, this liability is only 
payable if the intangible asset is sold separately and this is not expected to happen.
Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance 
sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax 
liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against 
which the temporary differences can be utilised.
c99861Book.indb   25 11/2/09   13:18:04 26 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 27
2 Summary of significant accounting policies continued
Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the net 
identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is tested annually for impairment and 
carried at cost less accumulated impairment losses. The carrying value of capitalised goodwill is reviewed if events or 
changes in circumstances indicate a potential impairment. Any impairment is charged to the income statement. Gains 
and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is 
allocated to cash-generating units for the purpose of impairment testing.
(b) Other intangible assets
Other intangible assets are carried at cost less accumulated amortisation and impairment losses.
An intangible asset acquired as part of a business combination is recognised outside goodwill if the asset is separable or 
arises from contractual or other legal rights and its fair value can be measured reliably.
Expenditure on internally developed intangible assets, excluding development costs, is taken to the income statement 
in the year in which it is incurred. Development expenditure is recognised as an intangible asset only after its reliable 
measurement, technical feasibility and commercial viability can be demonstrated.
Software and software licences are classified as intangible assets and include computer software that is not integral to a 
related item of hardware.
Intangible assets with a finite life are amortised on a straight line basis over their expected useful lives, as follows:
Brands – 5 to 15 years 
Customer contracts and related relationships – 6 to 10 years 
Software – 4 to 7 years 
Development costs – 4 years
Impairment and amortisation charges are included within the administrative expenses line in the income statement.
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually 
for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or 
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised 
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the 
higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are 
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial 
assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each 
reporting date.
c99861Book.indb   26 11/2/09   13:18:04 26 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 27
2 Summary of significant accounting policies continued
Property, plant and equipment
Tangible fixed assets are stated at cost less accumulated depreciation and impairment losses. Cost includes the original 
purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets, less their estimated residual 
value over their expected useful lives on the following basis:
Leasehold property improvements 20% per annum – straight line over period of lease
Motor vehicles 25% per annum – straight line
Fixtures, fittings and equipment 20%-50% per annum – straight line
The directors annually review the estimated useful lives of the fixed assets.
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.
Impairment
At each balance sheet date, the Company reviews the carrying amounts of its tangible assets with finite lives 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).
Financial assets
The group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the 
financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
– Loans and receivables
  Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in 
an active market. They are included in current assets, except for maturities greater than 12 months after the balance 
sheet date. These are classified as non-current assets. The group’s loans and receivables comprise ‘trade and other 
receivables’ and cash and cash equivalents in the balance sheet.
Inventories
Inventories are valued at the lower of cost and net realisable value after making allowances for any slow moving or 
obsolete items.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective 
interest method, less provision for impairment. A provision for impairment of trade receivables is established when 
there is objective evidence that the group will not be able to collect all amounts due according to the original terms 
of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or 
financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators 
that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount 
and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying 
amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in 
the income statement within administrative expenses. When a trade receivable is uncollectible, it is written off against 
the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited 
against administrative expenses in the income statement.
c99861Book.indb   27 11/2/09   13:18:04 28 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 29
2 Summary of significant accounting policies continued
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand.
For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash 
equivalents as defined above, net of outstanding bank overdrafts.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective 
interest method.
Borrowings
All borrowings are initially recognised at fair value less directly attributable transaction costs.
After initial recognition, borrowings are subsequently measured at amortised cost using the effective interest method.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of a 
liability for at least 12 months after the balance sheet date.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are 
shown in equity as a deduction, net of tax, from the proceeds.
Employee benefits
(a) Pensions
Pension contributions made into personal pension schemes are charged to the income statement as incurred.
(b) Share based payments
The group operates a number of equity-settled, share-based payment compensation plans. The fair value of the 
employee service received in exchange for the grant of the options is recognised as an expense. The total amount to 
be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the 
impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting 
conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet 
date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the 
revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and 
share premium when the options are exercised.
Leases
Assets held under leases that result in Group companies receiving substantially all the risks and rewards of ownership 
are classified as finance leases and capitalised as property plant and equipment at the lower of cost and the estimated 
present value of the underlying lease payments. The interest element of the rental obligation is allocated to the 
accounting periods to reflect a constant rate of interest on the outstanding obligation. The corresponding finance lease 
obligation is included within payables. These assets are depreciated over the term of the lease or the estimated useful 
life of the asset, whichever is shorter.
Rentals under operating leases are charged to the income statement on a straight line basis over the period of the 
lease.
Dividend distribution
Dividend distribution to the company’s shareholders is recognised as a liability in the group’s financial statements in the 
period in which the dividends are approved by the company’s shareholders.
c99861Book.indb   28 11/2/09   13:18:04 28 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 29
3 Financial risk management
Financial risk factors
The group’s activities expose it to a variety of financial risks: market risk (including cash flow and fair value interest rate 
risk), credit risk and liquidity risk. The group does not have significant foreign transactions or overseas subsidiaries so 
does not consider foreign exchange to be a key risk.
Risk management is carried out by the finance team under policies approved by the board of directors.
The board provides principles for overall risk management, as well as policies covering specific areas, such as interest 
rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments.
(a) Cash flow and fair value interest rate risk
The group’s income and operating cash flows are substantially independent of changes in market interest rates.
The group’s exposure to risk for changes in interest rates related primarily to the group’s long-term debt and overdraft 
obligations. Bank loan and overdraft interest is charged on a variable rate basis. The group’s bank facilities are pooled 
basis and therefore interest is only payable/receivable on the net position.
During 2008 and 2007, the group’s borrowings at variable rate were denominated in UK Sterling.
The group analyses its variable interest rate exposure on an active basis. A scenario is simulated taking into 
consideration renewal of existing positions. Based on these scenarios, the group calculates the impact on profit and loss 
of a defined interest rate shift. The scenario is only are run only for liabilities that represent the major interest-bearing 
positions.
Based on the simulations performed, the impact on post tax profit of a 2% shift would increase or decrease profits by 
£121,000 (2007: £28,000).
The board regularly considers whether it would be appropriate to hedge the cash flow and interest rate risk. However, 
no such instrument has been taken out in the current or prior period. The board will continue to keep this position 
under review.
(b) Credit risk
Credit risk is managed by the trading entities. Credit risk arises from exposures to outstanding customer receivables. 
Credit checking is used however, if there is no independent rating, management will assess the credit quality of the 
customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based 
on internal or external ratings in accordance with limits set by the board.
The table below shows the credit limit and balance of the six major customers at the balance sheet date.
  2008 2007
  Credit limit Balance Credit limit Balance
  £’000 £’000 £’000 £’000
Customer
Customer 1  – 1,904 – –
Customer 2  300 1,194 300 –
Customer 3  3,000 541 3,000 178
Customer 4  100 413 100 –
Customer 5  20 369 20 178
Customer 6  – 334 – 2
   3,420  4,755  3,420  358
c99861Book.indb   29 11/2/09   13:18:04 30 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 31
3 Financial risk management continued
Credit limits for Customer 1, 2, 4, 5 and 6 were exceeded in the year but this was pre-approved by the Xploite Board. 
The limits are set very low relative to the credit scores received from the external credit agency in order that each order 
is reviewed and appropriately approved. The other credit limit was not exceeded by the above customers during the 
reporting period, and management does not expect any losses from these customers.
(c) Liquidity risk
Management manages liquidity by ensuring that it maintains sufficient funds to support the ongoing strategic and 
trading activities of the group.
Management monitors rolling forecasts of the group’s expected cash flow. The detailed forecasting is carried out at 
local level in the operating companies of the group. This is combined into a group cash flow forecast. The banking 
facilities of group are with one bank and enables set off of balances and use of group facilities. The group forecasts are 
compared to available facilities to ensure that sufficient headroom is anticipated and that covenants are not breached.
The table below analyses the group’s financial liabilities into relevant maturity groupings based on the remaining 
period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual 
undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is 
not significant.
  Less than 1 year Between 1 and 2 years Between 2 and 5 years
  £’000 £’000 £’000
At 31 October 2008 
Borrowings  2,247 1,513 4,143
Trade and other payables  17,415 – –
Deferred consideration on acquisitions*  3,170 – –
  22,832   1,513 4,143
*  Subsequent to the year end a deed of variation was entered into and £2.2m was payable immediately on  
3 December 2008 with the remaining amount of £970,000 being payable on 3 December 2009.
  Less than 1 year Between 1 and 2 years Between 2 and 5 years
  £’000 £’000 £’000
At 31 October 2007 
Borrowings  395 288 2,690
Trade and other payables  18,486 – –
Deferred consideration on acquisitions  – 3,443 –
   18,881 3,731  2,690
As the amounts included in the table are the contractual undiscounted cash flows, these amounts will not reconcile to 
the amounts disclosed on the balance sheet for borrowings, deferred consideration on acquisitions and trade and other 
payables.
Capital risk management
 The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern 
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital 
structure to reduce the cost of capital.
 In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders 
and return of capital to shareholders, issue new shares or sell assets/businesses to reduce debt.
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3 Financial risk management continued
The group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. 
Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated 
balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated 
balance sheet plus net debt.
During 2008, the group’s strategy, which was unchanged from 2007, was to maintain the gearing ratio below 50%. 
The gearing ratios at 31 October 2008 and 2007 were as follows:
    2008 2007
    £’000 £’000
Capital risk management
Total borrowings    7,903 3,373
less: cash and cash equivalents    (7,749) (4,225)
Net debt/(funds)    154 (852)
Total equity    17,368 15,688
Total capital    17,522 14,836
 
Gearing ratio    1% (6)%
Gearing has increased in 2008 as further borrowings (bank borrowings and finance leases ) were entered into during 
2008.
Price risk
The main price risk that the Group is exposed to is changes in the price of third party hardware and software that 
it uses in the solutions it supplies to customers. When quoting for business the Group always obtains fixed price 
quotations from suppliers before submitting a price to the customer.
Fair value estimation
Techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial 
instruments.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair 
values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual 
cash flows at the current market interest rate that is available to the group for similar financial instruments.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including 
expectations of future events that are believed to be reasonable under the circumstances.
The group makes estimates and judgement concerning the future. The resulting accounting estimates will, by 
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing 
a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed 
below.
Revenue recognition
The contractual arrangements of sales are often complex with multiple elements e.g. hardware and maintenance. 
Management have to make appropriate judgements and estimates in relation to the fair value of each of these 
elements in accordance with the guidance set out in IAS 18.
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notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 33
4 Critical accounting estimates and judgements continued
Impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy. The 
recoverable amounts of cash-generating units have been determined based on value-in-use. These calculations require 
the use of estimates.
Valuation of intangible assets
Management have to make a number of estimates and judgements when valuing intangible assets. For example 
expected growth rates, attrition rates, useful economic lives and royalty rates.
5 Segmental information
Management has determined the operating segments based on the reports reviewed by the Board that are used to 
make strategic decisions.
The Board only considers the business from a provision of products and services basis. The group operates almost 
exclusively in the UK and geographic location within the UK does not have a significant bearing on the group.
The reportable operating segments derive their revenue primarily from the sale of hardware, services, software and 
mobile internet solutions (this was discontinued in 2007).
The sale of hardware and services segment (which includes support and maintenance and managed services) represents 
the group of businesses under the brand of Anix. The hardware and services business is integrated from an overhead 
cost perspective and therefore it is not possible to allocate specific overheads to each of these segments. The software 
segment represents the Itheon business.
The Board assesses the performance of the operating segments based on a measure of adjusted EBITDA and adjusted 
EBITA. This measurement basis excludes the effects of non-recurring expenditure from the operating segments such as 
costs of integration.
Central costs segment represents the cost of the head office function. This operates as an independent function to the 
trading businesses. It is reported separately and includes one off costs in relation to items such as aborted due diligence 
costs on acquisitions and advisor costs on potential disposals to enable the Board to understand the ongoing cost of 
the head office function.
The amounts provided to the Board with respect to total assets and liabilities are measured in a manner consistent 
with that of the financial statements. Assets and liabilities are allocated to segments based on the operations of the 
segment.
Goodwill and intangible assets arising on business combinations are allocated to central head office costs which is 
consistent with the allocation of the amortisation in the income statement segmental analysis below.
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5 Segmental information continued
The segment information provided to the Board for the reportable segments for the year ended 31 October 2008 is as 
follows:
2008   Total
   hardware
 Hardware Services and services Software Central  Total
 £’000 £’000 £’000 £’000 £’000 £’000
Continuing operations
Revenue 21,754 22,901 44,655 1,800 – 46,455
Less: intersegment sales – (140) (140) – – (140)
Total revenue from third parties 21,754 22,761 44,515 1,800 – 46,315
Cost of sales (18,458) (15,232) (33,690) – – (33,690)
Gross profit 3,296 7,529 10,825 1,800 – 12,625
Total administrative expenses   (8,675) (175) (4,211) (13,061)
Adjusted EBITDA      4,300 1,625 (2,192) 3,733
Depreciation   (1,009) – (60) (1,069)
Adjusted EBITA     3,291 1,625 (2,252) 2,664
Less: amortisation and impairment   (22) – (1,874) (1,896)
Less: integration and strategic costs      (1,119) – (85) (1,204)
Total operating profit/(loss)   2,150 1,625 (4,211) (436)
Finance income   60 – 87 147
Finance cost   (116) (1) (671) (788)
Finance income – net   (56) (1) (584) (641)
Profit/(loss) before tax   2,094 1,624 (4,795) (1,077)
Tax credit   86 – 655 741
Profit/(loss) for the year from  
continuing operations   2,180 1,624 (4,140) (336)
Discontinued operations
Profit for the year from discontinued operations   – 450 1,427 1,877
Profit/(loss) for the year attributable  
to equity shareholders   2,180 2,074 (2,713) 1,541
 
Discontinued operations
Revenue   – 1,692 – 1,692
Adjusted EBITDA     – 583 – 583
Depreciation   – (27) – (27)
Adjusted EBITA   – 556 – 556
Less: Amortisation    – (54) (227) (281)
Less: integration and strategic costs     – (52) – (52)
Total operating profit/(loss)   – 450 (227) 223
Tax credit   – 8 64 72
Post tax result from discontinued operations   – 458 (163) 295
(Loss)/gain on sale of company   – (8) 1,120 1,112
Tax credit   – – 470 470
Profit for the year from discontinued operations  – 450 1,427 1,877
 
Segment assets   30,693 14 31,614 62,321
Segment liabilities   (29,086) – (15,867) (44,953)
Segment net assets   1,607 14 15,747 17,368
 
Additions in the year by segment
Intangible assets   40 670 10 719
Property plant and equipment   1,709 16 62 1,787
c99861Book.indb   33 11/2/09   13:18:04 34 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 35
5 Segmental information continued
2007   Total  Mobile
   hardware  internet
 Hardware Services and services Software solutions Central  Total
 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Continuing operations
Revenue 18,531 10,396 28,927 – – – 28,927
Less: intersegment sales – – – – – – –
Total revenue from  
third parties 18,531 10,396 28,927 – –  – 28,927
Cost of sales (15,726) (6,915) (22,641) – – – (22,641)
Gross profit 2,805 3,481 6,286 – –  – 6,286
Total administrative expenses   (4,921) – – (1,891) (6,812)
Adjusted EBITDA     2,032 – –  (1,335) 697
Depreciation   (496) – – (20) (516)
Adjusted EBITA   1,536 – – (1,355) 181
Less: amortisation    – – – (536) (536)
Less: integration and strategic costs     (171) –  – – (171)
Total operating profit/(loss)   1,365 – – (1,891) (526)
Finance income   127 – – 200 327
Finance cost   (56) – – (46) (102)
Finance income – net   71 – – 154 225
Profit/(loss) before tax   1,436 – – (1,737) (301)
Tax credit   – – – 51 51
Profit/(loss) for the year from  
continuing operations   1,436 – – (1,686) (250)
Discontinued operations
Profit for the year from discontinued  
operations   – 67 430 – 497
Profit/(loss) for the year attributable  
to equity shareholders   1,436 67 430 (1,686) 247
 
Discontinued operations
Revenue    171 2,129  2,300
Adjusted EBITDA     72 492   564
Depreciation    (5) –  (5)
Adjusted EBITA    67 492  559
Less: amortisation     – –  –
Less: integration and strategic costs     – –  –
Total operating profit    67 492  559
Post tax results from discontinued  
operations    67 492  559
Loss on disposal of company    – (20)  (20)
Taxation    – (42)  (42)
Net gain on disposal   – – (62) – (62)
Total   – 67 430 – 497
 
Segment assets   21,959 1,606  33,494 57,059
Segment liabilities   (27,532) (908)  (12,931) (41,371)
Segment net assets   (5,573) 698  20,563 15,688
 
Additions in the year by segment
Intangible assets   70    33,455 33,525
Property plant and equipment   543    232 775
c99861Book.indb   34 11/2/09   13:18:04 34 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 35
5 Segmental information continued
All of the group is domiciled in the UK. The results include revenue from customers from countries other than the UK 
totalling £934,000 (2007: £20,000).
All non-current assets are located in the UK.
Revenues of approximately £5,358,000 (12% of total) (2007: £2,078,000 (7% of total)) are derived from a single 
customer. These revenues are attributable to the hardware and services segment.
6 Intangible assets
At 31 October 2008
   Customer
   and related  Development
 Goodwill Brands contracts Software costs Total
 £’000 £’000 £’000 £’000 £’000 £’000
Cost
At 1 November 2007 21,523 3,758 7,346 1,168 – 33,795
Adjustments to fair value of  
consideration* (201) – – – – (201)
Additions – – – 392 327 719
Disposals – sale of subsidiary (200) (606) (656) (999) – (2,461)
At 31 October 2008 21,122 3,152 6,690 561 327 31,852
Amortisation and impairment
At 1 November 2007 – 103 425 8 – 536
Amortisation  – 283 1,037 219 – 1,539
Impairment** – 638 – – – 638
Disposals – sale of subsidiary – (64) (76) (153) – (293)
At 31 October 2008 – 960 1,386 74 – 2,420
Net book amount at
31 October 2008 21,122 2,192 5,304 487 327 29,432
At 31 October 2007
Cost
At 1 November 2006 – – – – – –
Additions 21,523 3,758 7,346 1,168 – 33,795
At 31 October 2007 21,523 3,758 7,346 1,168 – 33,795
Amortisation and impairment
At 1 November 2006 – – – – – –
Amortisation  – 103 425 8 – 536
At 31 October 2007 – 103 425 8 – 536
Net book amount at
31 October 2007 21,523 3,655 6,921 1,160 – 33,259
 
*   The value of the assets has been adjusted subsequent to a change in the deferred consideration payable. This change 
was agreed by the Directors and the vendors prior to the year end. This amendment was formally agreed in a deed 
of variation (see note14).
**The carrying amount of the Red Squared brand has been impaired to £nil on its integration into the Anix Brand.
c99861Book.indb   35 11/2/09   13:18:04 36 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 37
6 Intangible assets continued
The net book amount of software includes £327,000 (2007: £Nil) internally generated capitalised software 
development costs that meet the definition of an intangible asset.
The amortisation charge of £1,539,000 (2007: £536,000) and the impairment charge of £638,000 (2007: £Nil) are 
included in the administrative expenses in the income statement.
Impairment tests for goodwill
Goodwill is allocated to the group’s cash-generating units (CGUs) identified. A summary of the goodwill allocation is 
presented below.
  2008   2007
 Hardware   Hardware
 and services Software Total and services Software Total
 £’000 £’000 £’000 £’000 £’000 £’000
Goodwill  17,717  3,405 21,122 17,706  3,817  21,523 
 
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax cash 
flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond 
the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed 
the long-term average growth rate for the business in which the CGU operates.
The key assumptions used for value-in-use calculations are as follows:
    Hardware and 
    services Software
Budgeted gross margin    28% 67%
Growth rate*    2% 2%
Discount rate**    16% 17%
 
* Growth rate used to extrapolate cash flows beyond the budget period.
** Pre tax discount rate applied to the cash flow projections
These assumptions have been used for the analysis of each CGU within the business segment. Management 
determined budgeted gross margin based on past performance and its expectations of market development. The 
growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and 
reflect specific risks relating to the relevant segments.
c99861Book.indb   36 11/2/09   13:18:05 36 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 37
7 Property plant and equipment
  Leasehold property   Furniture, fittings
  improvements Motor vehicles  and equipment Total
  £’000 £’000 £’000 £’000
At 31 October 2008 
Cost
At 1 November 2007  155 180 1,982 2,317
Additions   – 50 1,737 1,787
Disposal of subsidiary  – – (12) (12)
At 31 October 2008  155 230 3,707 4,092
Depreciation
At 1 November 2007  18 8 482 508
Charge for the year   27 60 1,009 1,096
Disposal of subsidiary  – – (8) (8)
At 31 October 2008  45 68 1,483 1,596
Net book amount at
31 October 2008  110 162 2,224 2,496
 
At 31 October 2007
Cost
At 1 November 2006  – 38 34 72
Additions  – 231 544 775
Acquisitions of subsidiaries  155 – 1,416 1,571
Disposals  – (89) – (89)
Disposal of subsidiary  – – (12) (12)
At 31 October 2007  155 180 1,982 2,317
Depreciation
At 1 November 2006  – 6 4 10
Charge for the year  18 16 482 516
Disposals  – (14) – (14)
Disposal of subsidiary  – – (4) (4)
At 31 October 2007  18 8 482 508
Net book amount at 31 October 2007  137 172 1,500 1,809
 
Depreciation expense of £1,096,000 (2007: £516,000) has been charged in administrative expenses.
Included within net book amounts of £2,496,000 (2007: £1,809,000) is £1,550,000 (2007: £923,000) relating to 
assets held under hire purchase and finance lease agreements.
c99861Book.indb   37 11/2/09   13:18:05 38 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 39
8 Financial instruments
(a) Financial instruments by category
The accounting policies for financial instruments have been applied to the line items below:
    Loans and 
    receivables Total
    £’000 £’000
At 31 October 2008
Assets as per balance sheet
Trade and other receivables    8,892 8,892
Deferred consideration on disposals    1,120 1,120
Cash and cash equivalents    7,749 7,749
Total    17,761 17,761
    Other financial
    liabilities Total
    £’000 £’000
At 31 October 2008
Liabilities as per balance sheet
Trade and other payables    9,254 9,254
Borrowings    7,903 7,903
Total    17,157 17,157
    Loans and 
    receivables Total
    £’000 £’000
At 31 October 2007
Assets as per balance sheet
Trade and other receivables    8,612 8,612
Deferred consideration on disposals    35 35
Cash and cash equivalents    4,225 4,225
Total    12,872 12,872
    Other financial
    liabilities Total
    £’000 £’000
At 31 October 2007
Liabilities as per balance sheet
Trade and other payables    11,429 11,429
Borrowings    3,373 3,378
Total    14,802 14,802
c99861Book.indb   38 11/2/09   13:18:05 38 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 39
8 Financial instruments continued
(b) Credit quality of financial assets
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external 
credit rating (if available) or to historical information about customer default rates:
Trade receivables
    2008 2007
    £’000 £’000
Customers without external credit rating:
– Group 1     3,261 939
– Group 2     1,255 1,999
– Group 3     2,832 3,117
     7,348  6,055
 
– Group 1 – New customers (less than 12 months)
– Group 2 – Existing customers (more than 12 months) not exceeding credit limit in the past
– Group 3 – Existing customers (more than 12 months) exceeding credit limit in the past but fully recovered
None of the financial assets that are fully performing have been renegotiated in the last year.
Cash at bank
    2008 2007
    £’000 £’000
AAA    7,749 4,225
9 Trade and other receivables
Non-current
    2008 2007
    £’000 £’000
Trade receivables    635 –
Deferred costs on maintenance contracts     5,624 2,847
    6,259 2,847
 
The effective interest rate on non-current trade receivables was 6.5%.
Current
    2008 2007
    £’000 £’000
Trade receivables    8,257 8,612
Less: Provision for impairment of trade receivables    (115) (150)
    8,142 8,462
Deferred costs on maintenance contracts    4,142 4,880
Receivables due from related parties     1,519 –
Other receivables    696 311
Prepayments    578 840
     15,077 14,493
 
The fair value of the group’s trade and other receivables is the same as its book amount stated above. The group’s trade 
and other receivables are all denominated in UK pounds.
c99861Book.indb   39 11/2/09   13:18:05 40 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 41
9 Trade and other receivables continued
At 31 October 2008, trade receivables of £7,348,000 (2007: £6,056,000) were fully performing.
At 31 October 2008, trade receivables of £1,544,000 (2007: £2,556,000) were past due but not impaired. The ageing 
analysis of these customers is set out below. The balances relate to customers where there is no history of default and 
management believe that the receivables balance will be paid.
    2008 2007
    £’000 £’000
Up to 3 months overdue    1,511 2,324
3 to 6 months overdue    25 110
6 to 12 months overdue    3 94
> 12 months overdue    5 28
     1,544 2,556
 
As of 31 October 2008, trade receivables of £115,000 were impaired (2007: £150,000) and provided for. The provision 
relates to a number of small receivables.
The ageing of these receivables are as follows:
    2008 2007
    £’000 £’000
3 to 6 months overdue    115 150
 
Movements on the group provision for impairment of trade and receivables are as follows:
    2008 2007
    £’000 £’000
At 1 November    150 –
Acquisitions    – 195
Unused amounts reversed    (35) (45)
At 31 October    115 150
 
The creation and release of provision for impaired receivables have been included in administrative expenses in the 
income statement.
The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable noted above. 
The group does not hold any collateral as security.
c99861Book.indb   40 11/2/09   13:18:05 40 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 41
10 Deferred consideration on disposals
    2008 2007
    £’000 £’000
Deferred consideration on disposals – Fujin Technology Trading Limited   35 35
Deferred consideration on disposals – Itheon Limited    1,085 –
    1,120 35
 
The deferred consideration for Fujin Technology Trading Limited is due on 14 August 2009. The deferred consideration 
for Itheon Limited is due on 31 October 2009.
11 Inventories
    2008 2007
    £’000 £’000
Work in progress    – 20
 
The cost of inventories recognised as an expense and included in ‘cost of sales’ amounted to £20,000 (2007: 
£861,000). The group did not make any provisions against inventory in the year (2007: nil).
12 Cash and cash equivalents
    2008 2007
    £’000 £’000
Cash at bank and in hand    7,749 4,225
13 Trade and other payables
Current    2008 2007
    £’000 £’000
Trade payables    9,254 11,429
Other taxation and social security    664 1,409
Other payables    37 97
Accruals    7,460 5,551
Deferred income on maintenance contracts    6,350 8,253
     23,765 26,739
Non – current    2008 2007
    £’000 £’000
Deferred income on maintenance contracts    6,531 3,667
14 Deferred consideration on acquisitions
Current    2008 2007
    £’000 £’000
Deferred consideration on acquisitions    3,119 –
Non – current    2008 2007
    £’000 £’000
Deferred consideration on acquisitions    –  3,183
 
Total fair value of deferred consideration of £3,119,000 (2007: £3,183,000) arose on the acquisition of Itheon Limited 
(acquired on 12 October 2007). The fair value was calculated using a discount rate of 5%. Subsequent to the year 
end, a deed of variation dated 3 December 2008 was entered into which gave rise to £2,200,000 of the deferred 
consideration being payable on that date, with the remainder of £970,000 being payable on 3 December 2009.
c99861Book.indb   41 11/2/09   13:18:05 42 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 43
15 Borrowings
    2008 2007
    £’000 £’000
Current
Bank borrowings    600 –
Finance leases    1,647 395
     2,247 395
 
Non – current
Bank borrowings    4,505 2,475
Finance leases    1,151 503
     5,656 2,978
Total borrowings    7,903 3,373
 
The maturity of total borrowings is as follows:
2008    Hire purchase
   Bank loans and finance
   and overdrafts  leases Total
   £’000 £’000 £’000
Within one year   600 1,647 2,247
Between one and two years   600 913 1,513
Between two and five years   3,905 238 4,143
   5,105 2,798 7,903
 
2007    Hire purchase
   Bank loans and finance
   and overdrafts  leases Total
   £’000 £’000 £’000
Within one year   – 395 395
Between one and two years   – 288 288
Between two and five years   2,475 215 2,690
   2,475 898 3,373
 
Bank borrowings
Interest on the bank overdraft is charged at 1.75% over HSBC’s base rate. Interest on the other bank borrowings is 
based on a scale depending on the Group’s net debt to EBITDA ratio, varying from 1.25% to 1.75% over HSBC’s base 
rate.
Total bank borrowings are secured by a debenture comprising a fixed and floating charge over all the assets of the 
group including all present and future freehold and leasehold property, book and other debts, chattels, goodwill and 
uncalled capital both present and future. The group also has banking covenants that it has to meet.
The bank overdraft was undrawn at the year end and at 31 October 2007.
Finance leases
Finance leases are secured on the specific asset subject to finance. The weighted average fixed rate on the finance 
leases is 4.1% (2007: 6.1%).
c99861Book.indb   42 11/2/09   13:18:05 42 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 43
15 Borrowings continued
Fair values
The fair value of current borrowings equals their carrying amount as the impact of discounting is not significant. The 
carrying amounts and fair value of the non-current borrowings are as follows:
   Carrying amount  Fair value
  2008 2007 2008 2007
  £’000 £’000 £’000 £’000
Bank borrowings  5,105 2,475 5,105 2,475
Finance leases  2,798 898 2,798 898
   7,903 3,373 7,903 3,373
 
Foreign currency
The carrying amounts of all the group’s borrowings in both 2008 and 2007 are denominated in UK Sterling.
Facilities
The group had no undrawn borrowing facilities at either 31 October 2008 or 31 October 2007. In addition to the bank 
loans and finance leases, the group has a floating rate overdraft facility of £2,500,000.
The overdraft facility is renewable in October 2009.
16 Deferred tax
Deferred tax (assets) and liabilities are offset when there is a legally enforceable right to offset current tax assets against 
current tax liabilities when the deferred tax relates to the same tax authority. The offset amounts are as follows:
    2008 2007
    £’000 £’000
Deferred tax assets
Deferred tax asset to be recovered within 12 months    (160) (120)
Deferred tax asset to be recovered after more than 12 months   (28) (251)
     (188) (371)
Deferred tax liabilities
Deferred tax liability to be recovered within 12 months    435 462
Deferred tax liability to be recovered after more than 12 months   1,877 3,039
     2,312 3,501
Deferred tax liabilities (net)    2,124 3,130
 
The gross movement on the deferred income tax account is as follows:
    2008 2007
    £’000 £’000
Beginning of year    3,130 84
Acquisitions – Goodwill adjustments    – 3,635
Disposal of subsidiary – transfer of asset    25 –
Income statement charge    (1,031) (218)
Acquisition of subsidiary    – (371)
End of year    2,124 3,130
c99861Book.indb   43 11/2/09   13:18:05 44 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 45
16 Deferred tax continued
The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of 
balances is as follows:
   Intangible assets
    in business  Other timing
   combinations differences Total
   £’000 £’000 £’000
Deferred tax liabilities 
At 1 November 2006   – 99 99
Acquisitions – adjustment to goodwill   3,635 – 3,635
Credited to income statement   (161) (72) (233)
At 31 October 2007   3,474 27 3,501
(Credited)/charged to income statement   (1,199) 10 (1,189)
At 31 October 2008   2,275 37 2,312
    Fixed
   Other timing asset timing
  Losses differences differences Total
  £’000 £’000 £’000 £’000
Deferred tax (assets) 
At 1 November 2006  – (15) – (15)
Acquisition of subsidiary – losses  (346) – (25) (371)
Charged to income statement  – 15 – 15
At 31 October 2007  (346) – (25) (371)
Charged to income statement  158 – – 158
Disposals – deferred tax asset transfer  – – 25 25
At 31 October 2008  (188) – – (188)
 
Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax 
benefit through future taxable benefits is probable. The group did not recognised deferred tax assets of £630,000 in 
respect to losses amounting to £2,250,000 that can be carried forward against future taxable income.
17 Share capital and share premium
    2008 2007
    £’000 £’000
Authorised
50,000,000 ordinary shares of 10p each    5,000 5,000
 
    Number Number
Allotted, called up and fully paid 
Ordinary shares of 10p each    39,516,955 39,516,955
 
    £’000 £’000
Ordinary shares of 10p each    3,952 3,820
 
The market price of the shares at 31 October 2008 was 35p (2007: 46p).
c99861Book.indb   44 11/2/09   13:18:05 44 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 45
17 Share capital and share premium continued
   Allocated
   called up and
  Number of fully paid Share
  shares shares premium Total
   £’000 £’000 £’000
At 1 November 2006  38,205,617 3,820 11,926 15,746
Employee share option scheme
 – Proceeds from shares issued  300,000 30 33 63
Capital reduction  – – (10,312) (10,312)
Acquisition of subsidiary  1,011,338 102 – 102
At 31 October 2007  39,516,955 3,952 1,647 5,599
At 31 October 2008  39,516,955 3,952 1,647 5,599
 
For details of the group’s share option scheme, refer to note 18.
18 Retained earnings and other reserves
  Retained Share based Merger 
  earnings payments reserve Total
  £’000 £’000 £’000 £’000
At 1 November 2006  6,140 97 3,268 9,505
Profit for the year  247 – – 247
Share based payment charge  – 94 – 94
Shares issued on acquisition of subsidiary  – – 243 243
At 31 October 2007  6,387 191 3,511 10,089
Profit for the year  1,541 – – 1,541
Share based payment charge  – 139 – 139
At 31 October 2008  7,928 330 3,511 11,769
 
The merger reserve represents the premium arising on share issues to acquire subsidiary undertakings.
Share based payments
The total charge for the year relating to share based payment plans was £139,000 (2007: £94,000).
Options are granted with a fixed exercise price equal to the market price of the shares under option at the date of 
grant. The contractual life of an option is ten years for those granted under the Employee Management Incentive 
Scheme (EMI scheme) and five years for those granted under the Company Share Option Plan (CSOP scheme). Options 
granted will become exercisable one year from the date of grant and are exercisable in three equal tranches. The first 
tranche when the share price reaches 58 pence, the second when the share price reaches 87 pence and the third when 
the share price reaches 116 pence.
Options have been valued using the Black Scholes option pricing model together with the Monte Carlo valuation 
approach to incorporate the share price condition attached to the awards.
Options granted under the EMI scheme must be exercised within 10 years of being granted and those granted under 
the CSOP within five years.
c99861Book.indb   45 11/2/09   13:18:05 46 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 47
18 Retained earnings and other reserves continued
Further details with respect to the options outstanding at 31 October 2008 and 31 October 2007 are provided below.
Option number   Notes EMI Scheme CSOP Scheme
Grant date    19/03/2007 19/03/2007
Number of awards granted    1,034,484 2,250,000
Share price at grant (£)    £0.28 £0.28
Exercise price (£)    £0.29 £0.29
Expected volatility (% p.a.)   a 93% 79%
Dividend yield (% p.a.)   b 0% 0%
Risk free interest rate (% p.a.)   c 5.092% 5.176%
Expected term (years)   d 5.5 4.0
Fair value per share     £0.212 £0.116
Fair value (as % of share price)     76% 42%
Total fair value    £219,500 £261,900
Notes:
a) The normal approach is to look at historic volatility of the share price over the most recent period that is 
commensurate with the expected option term
b) No dividends have been paid and therefore dividend yield has been set to 0%.
c) UK Gilt Rates at the date of grant, matched to the expected term of the award.
d) The EMI option has an option life of 10 years. The CSOP option has an option life of 5 years.
For the EMI Scheme the Expected term has been calculated as: Vesting period + [(Option life-Vesting period)/2]
The expected volatility is based on historical volatility of the share price over the most recent period that is 
commensurate with the expected option term. The expected life is the average expected period to exercise. The risk 
free rate of return is the yield on zero coupon UK Government bonds of a term consistent with the assumed option life.
The average vesting period for the above options is 7.5 years.
A reconciliation of option movements over 2007 and 2008 is shown below:
     Weighted 
     Average
    Number Exercise price
Outstanding 1 November 2006     740,728 55p
Granted    3,456,898 29p
Forfeited    (613,142) 78p
Exercised    (300,000) 21p
Outstanding at 31 October 2007     3,284,484 29p
Exercisable at 31 October 2007    1,034,484 29p
 
Outstanding at 31 October 2008     3,284,484 29p
Exercisable at 31 October 2008    1,034,484 29p
c99861Book.indb   46 11/2/09   13:18:05 46 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 47
19 Expenses by nature
    2008 2007
    £’000 £’000
Changes in inventory and work in progress    – 861
Third party costs of goods and services    28,563 18,760
Employee benefit expense – included in cost of sales    5,522 3,020
Employee benefit expense – included in administrative expenses   6,558 6,291
Depreciation    1,096 516
Amortisation of intangible assets    1,539 536
Impairment of intangible assets    638 –
Operating lease payments    1,139 487
Other    3,492 720
Less capitalised staff costs: research and development    (327) –
Total cost of sales and administration expenses    48,220 31,191
 
20 (a) Employee benefit expense    2008 2007
    £’000 £’000
Wages and salaries (including termination benefits)    9,718 8,001
Termination benefits    860 285
Social security costs    1,335 927
Pension costs – contributions to personal pension plans    28 4
Share based payments charge    139 94
    12,080 9,311
 
20 (b) Average number of people employed    2008 2007
    Number Number
Average number of people (including executive directors) employed
Technical     100 59
Sales    33 30
Administration and management    28 19
    161 108
 
21 Auditors’ remuneration
During the year the group obtained the following services from the company’s auditors and its associates:
    2008 2007
    £’000 £’000
Fees payable for the audit of the consolidated financial statements   25 26
Fees payable for other services
 – The audit of the parent company pursuant to legislation    15 15
 – The audit of the Company’s subsidiaries pursuant to legislation   70 62
 – Tax services    123 89
 – Other services    49 54
 – Prior year under provision for fees – 2007 audit    47 –
    329 246
The 2008 ‘Other services’ include procedures carried out on the half year statement and IFRS transition.
The 2007 ‘Other services’ include procedures carried out on the half year statement, investigation work on potential 
acquisition that did not complete and work on a management incentive scheme. In addition in 2007, £159,000 due 
diligence fees were paid to the company’s auditor and this was included in acquisition costs.
c99861Book.indb   47 11/2/09   13:18:05 48 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 49
22 Integration and strategic costs
In accordance with the group’s policy for integration and strategic costs, the following charges/(credits) were included 
in this category for the year:
    2008 2007
    £’000 £’000
Costs of integration
 – Staff redundancy costs and compromise agreements    860 285
 – Staff costs incurred in notice periods/gardening leave    226 –
 – Other costs    85 89
Other strategic costs
 – Costs of aborted acquisitions    35 –
 – Costs of potential disposals    50 –
Credit on settlement of liability    – (203)
    1,256 171
 
With respect to the above cost £1,204,000 (2007: £171,000) is included in continuing operations and £52,000 (2007: 
£Nil) is included in discontinued operations.
The 2008 ‘other costs’ include costs incurred with re-structuring the Network Operation Centres at Yate and 
Altringham.
The 2007 ‘other costs’ include £57,500 re-branding costs, £21,000 early termination of lease and £10,500 legal costs.
2007 – Finance income 
In 2007, an exceptional credit arose with respect to the write back of a creditor on the early settlement of a liability (see 
note 23).
23 Finance income and costs
    2008 2007
    £’000 £’000
Finance income
Bank interest receivable    – 200
Other interest receivable    87 –
Interest receivable on fair value calculations    60 –
Interest written back on settlement of liability (see note 22)    – 127
     147 327
Finance costs
Interest expense
 – bank borrowings    (406) (63)
 – hire purchase and finance leases    (128) (39)
 – unwinding of discounts on fair value calculations    (210) –
 – other interest    (32) –
Amortisation of debt issue costs    (12) –
    (788) (102)
Net finance cost    (641) 225
c99861Book.indb   48 11/2/09   13:18:05 48 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 49
24 Tax credit
    2008 2007
    £’000 £’000
Continuing operations
Current tax    (180) 167
Deferred tax (note 16)    (561) (218)
    (741) (51)
Discontinued operations
Current tax    (72) 51
Deferred tax (note 16)    (470) –
    (542) 51
Total tax credit    1,283 –
 
The tax on the group’s profit before tax differs from the theoretical amount that would arise using the weighted 
average tax rate applicable to the consolidated entities as follows:
    2008 2007
    £’000 £’000
Loss before tax – continuing operations    (1,077) (301)
Profit before tax – discontinued operations    223 559
Profit before tax – gain/(loss) on sale of company – discontinued operations  1,112 (20)
    258 238
Loss before tax multiplied by the average effective rate of tax in the  
UK of 28.9% (2007: 30%)    75 71
Timing differences between depreciation and capital allowances   5 30
Items disallowed for tax    88 5
Brought forward losses utilised    (237) (105)
Profit on disposal of subsidiaries    (368) (93)
Enhanced research and development expenditure    (49) –
Release of deferred tax liability on intangibles on sale of subsidiary   (470) –
Other timing differences    – 25
Movement on deferred tax asset – utilisation of losses    158 –
Prior year adjustment    (252) 67
Change in rate of deferred tax from 30% to 28%    (233) –
    (1,283) –
 
Following the 2007 Budget the Chancellor announced that as at 1 April 2008 the rate of corporation tax was reduced 
from 30% to 28% therefore deferred tax balances which were previously measured at 30% are now measured at 
28%.
c99861Book.indb   49 11/2/09   13:18:05 50 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 51
25 Discontinued operations
On 31 October 2008, the group sold its 100% interest in the share capital of Itheon Ltd to Bluechip Engineering Ltd. 
Prior to the sale, the software and assets in relation to SRA software were transferred to Storage Fusion Ltd (a group 
company). A summary of the gain on disposal is set out below:
     £’000
Proceeds received     2,200
Fair value of deferred consideration     1,073
Total consideration     3,273
Costs of disposal
Professional fees    104
Directors’ disposal bonus    169
      (273)
Net consideration     3,000
Net book value of acquired intangibles disposed     1,880
Purchased intangibles disposed      288
Other net liabilities disposed     (280)
     1,888
Profit on disposal     1,112
Reconciliation to consolidated cash flow statement
Proceeds received     2,200
Costs of disposal     (273)
Cash disposed     (52)
     1,875
Details of the results for the year for the discontinued operations are set out in note 5.
2007
On 4 September 2007, the Group sold its 100% interest in the ordinary share capital of Fujin Technology Trading Ltd 
for cash consideration of £952,000 and deferred consideration of £35,000 payable.
c99861Book.indb   50 11/2/09   13:18:05 50 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 51
26. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the 
weighted average number of ordinary shares in issue during the year.
  2008   2007
 Continuing Discontinued Total Continuing Discontinued Total
 £’000 £‘000 £’000 £’000 £’000 £’000
Profit attributable to equity holders  (336) 1,877 1,541 (250) 497 247
Adjustments:
Amortisation of intangible assets 1,896 281 2,177 536 – 536
Integration and strategic costs 1,204 52 1,256 171 – 171
Adjusted profit before amortisation  
of intangible assets 2,764 2,210 4,974 457 497 954
 
 
 Number Number Number Number Number Number
Basic weighted average  
number of shares 38,715,830 38,715,830 38,715,830 39,202,070 39,202,070 39,202,070
Impact of share options 1,184,719 1,184,719 1,184,719 2,485,303 2,485,303 2,485,303
Diluted weighted average  
number of shares 39,900,549 39,900,549 39,900,549 41,687,373 41,687,373 41,687,373
 
Earnings per share – pence
Basic (0.87) 4.85 3.98 (0.64) 1.27 0.63
Diluted  (0.87) 4.73 3.88 (0.64) 1.19 0.59
Adjusted and before  
amortisation – Basic 7.14 5.71 12.85 1.17 1.27 2.43
Adjusted and before  
amortisation- Diluted 6.96 5.56 12.52 1.10 1.19 2.29
 
Where there is a loss per share from continuing operations, the share options are not dilutive and hence the diluted 
earnings per share is the same as the basic.
27 Commitments
(a) Capital commitments
Capital expenditure contracted for but not yet incurred at 31 October 2008 – Nil (2007: Nil).
(b) Operating lease commitments
The future aggregated minimum lease payments under on-cancellable operating leases are as follows:
    2008 2007
    £’000 £’000
No later than one year    1,017 623
Later than one year but no later than five years    3,581 1,502
Later than five years    2,171 2,476
    6,769 4,601
c99861Book.indb   51 11/2/09   13:18:05 52 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 53
28 Related-party transactions
(a) Key management compensation
    2008 2007
    £’000 £’000
Salaries and other short-term employment benefits    1,539 1,048
Termination benefits    107 –
Share based payments    139 143
    1,785 1,191
(b) Directors
    2008 2007
    £’000 £’000
Aggregate emoluments    1,015 664
Fees paid to non-executive directors    69 61
    1,084 725
 
The above emoluments include a £150,000 (2007: £150,000) bonus which is included within the gain/(loss) on disposal 
of discontinued operations. These are bonuses which are specific to the performance of the disposal. Bonuses with 
respect to ongoing activities are included within overheads.
No pension contributions were paid on behalf of directors (2007: nil). No gains were made on share options in the year 
(2007: nil)
    2008 2007
    £’000 £’000
Emoluments of the highest paid director    346  250
(c) Controlling party
There is no one party which controls the group.
29 Principal subsidiaries of the group as at 31 October 2008
 
  Description and Description and
  proportion of proportion of Country of
  share capital held share capital incorporation Nature of
Subsidiary undertakings  by Xploite plc held by group or registration business
Posetiv Limited  – Ordinary 100%  Great Britain IT infrastructure
Anix Holdings Limited  – Ordinary 100%  Great Britain Holding company
Anix Group Limited  – Ordinary 100%  Great Britain Holding company
Anix Computers Limited  – Ordinary 100%  Great Britain IT infrastructure and  
     managed services
Anix Business Systems Limited  – Ordinary 100%  Great Britain Dormant
Storage Fusion Limited  – Ordinary 100%  Great Britain IT Business Service 
     Assurance Solutions
Red Squared Limited  – Ordinary 100%  Great Britain IT infrastructure and  
     managed services
Xploite IHC Limited   Ordinary 100%  Great Britain Holding company
VBHG Limited  – Ordinary 100%  Great Britain Holding company
c99861Book.indb   52 11/2/09   13:18:05 52 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 53
30 Post balance sheet events
On 16 December 2008, Xploite plc completed the acquisition of 100% of the share capital of Blue River Systems 
Limited (‘Blue River’) from Cantono plc (‘Cantono’) and the assets of three of Cantono’s managed services businesses, 
following the approval of Cantono’s shareholders.
The total consideration was £3m. The initial £2m was payable on completion and the further £1m is payable subject 
to verification work on the completion balance sheet. Since the work on the completion balance sheet is still to be 
finalised it would be impracticable to provide any further financial information with respect to this transaction.
31 Transition to IFRS
(a)  Application of IFRS 1: First time adoption of International Accounting Standards
IFRS 1 First time adoption of International Financial Reporting Standards sets out the transition rules, which must be 
applied, when IFRS is adopted for the first time. The standard sets out certain mandatory exemptions to retrospective 
application and certain optional exemptions. The optional exemptions available and taken by the Group are as follows:
(i)  Deemed cost; the Group has taken the exemption not to restate individual items of property, plant and equipment 
to fair value at the date of transition.
(ii) Business combinations; the Group adopted the business combinations exemption in IFRS 1. It has not restated 
business combinations that took place prior to the 1 November 2006 transition date.
(b) Main policy differences between IFRS and UK GAAP 
(i) Acquisition of subsidiaries; IFRS 3 Business Combinations and IAS 12 Income taxes
Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of the 
acquired subsidiary at the date of acquisition. Goodwill is not amortised, instead it is subject to annual impairment 
tests, or more frequently if there is an indication of impairment. An adjustment has therefore been made to reverse the 
goodwill amortisation previously charged.
IFRS 3 also requires that intangible assets acquired are identified separately from goodwill. Hence for the business 
combinations after 1 November 2006, part of the cost of acquisition has been allocated to intangible assets. This 
element is then amortised through the income statement over the useful economic life as noted in the detailed 
accounting policies. An adjustment has been made for the reallocation to intangible assets along with the appropriate 
amortisation charge.
A deferred tax liability has been provided against these intangible assets, resulting in an increase in residual goodwill by 
this amount. Although this liability has been recognised in accordance with IAS 12, and a proportion will be amortised 
to the income statement as the related intangible asset is amortised, this liability is only payable if the intangible asset is 
sold separately and this is not expected to happen.
(ii) Deferred tax; IAS 12 Income taxes
Deferred tax is provided in full using the liability method, on temporary differences arising between the tax base of 
assets and liabilities and their carrying amounts in the consolidated accounts.
Deferred tax impacts arise on all the IFRS adjustments made as noted in the reconciliations including the intangible 
assets as noted above.
c99861Book.indb   53 11/2/09   13:18:06 54 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 55
31 Transition to IFRS continued
(iii) Computer software; IAS 38 Intangible assets
Under UK GAAP , all capitalised computer software is included within tangible fixed assets on the balance sheet. Under 
IFRS, only computer software that is integral to a related item of hardware should be included as property, plant and 
equipment. All other computer software should be recorded as an intangible asset. Accordingly, a reclassification has 
been made from tangible assets to intangible assets for this software.
(iv) Fair value of available for sale financial assets; IAS 39 Financial instruments: Recognition and 
measurement
Under IFRS, available for sale financial assets must be reported in the balance sheet at their fair values with the 
corresponding entry to the income statement. Under UK GAAP these assets were stated at historic cost. The impact 
of this change is to increase the fair value at the date of transition. Increasing the fair value at the date of transition, 
increased the loss to the income statement on their subsequent sale.
(v) Holiday pay accrual; IAS 19 Employee Benefits
IAS 19 requires the recording of a holiday pay accrual. This has been included in the acquisition balance sheets with 
a corresponding entry to goodwill. There are income statement impacts when comparing a position at 31 October to 
30 April. On an annual basis, no significant impact is expected.
(c) Reconciliations between IFRS and UK GAAP 
(i) Reconciliation of UK GAAP loss to IFRS profit
     Year ended
     31 October 2007
    Note £’000
Loss for the year as reported under UK GAAP     (565)
Adjustments for:
Reinstatement of goodwill amortisation    (i) 1,357
Amortisation of intangible assets    (i) (536)
Deferred tax on amortisation of intangible assets    (i) 161
Movement on fair value of financial instruments    (iv) (331)
Deferred tax on movement on fair value of financial instruments   (ii) 99
Movement on holiday pay accrual    (v) 89
Deferred tax on movement on holiday pay accrual    (ii) (27)
Net impact of adjustments     812
Total profit for the year as reported under IFRS     247
c99861Book.indb   54 11/2/09   13:18:06 54 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 55
31 Transition to IFRS continued
(ii) Reconciliation of equity from UK GAAP to IFRS
    31 October 31 October
    2006  2007
   Note £’000 £’000
Total equity as reported under UK GAAP    25,019 14,644
Adjustments for:
Transfer to intangible assets from goodwill   (i) – 12,115
Transfer from goodwill to intangible assets   (i) – (12,115)
Deferred tax liability on intangibles to goodwill   (i) – 3,635
Deferred tax liability   (i) – (3,635)
Reinstatement of goodwill amortisation   (i) – 1,357
Amortisation of intangible assets   (i) – (536)
Deferred tax on amortisation of intangible assets   (i) – 161
Transfer of software costs to intangible assets   (iii) – 157
Transfer of software costs from tangible assets to intangible assets  (iii) – (157)
Movement on fair value of financial instruments   (iv) 331 –
Deferred tax on movement on fair value of financial instruments  (ii) (99) –
Adjustment to goodwill re: holiday pay accrual   (v) – 156
Accrual for holiday pay   (v) – (156)
Movement on holiday pay accrual   (v) – 89
Deferred tax on movement on holiday pay accrual   (ii) – (27)
Net impact of adjustments    232 1,044
Total equity as reported under IFRS    25,251 15,688
(iii) Reconciliation of cash flows from UK GAAP to IFRS
The consolidated statement of cash flows prepared under IFRS presents substantially the same information as that 
required under UK GAAP .
Under IFRS only three categories of cash flow activity are required to be reported: operating, investing and financing. 
Cash flows from returns on investments and servicing of finance under UK GAAP are included as operating activities 
and investing activities respectively under IFRS. There are no other material differences between the cash flow 
statement presented under IFRS and the cash flow statement presented under UK GAAP .
c99861Book.indb   55 11/2/09   13:18:06 56 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
 Annual Report 2008 Xploite plc 57
31 Transition to IFRS continued
(d) Detailed reconciliations between IFRS and UK GAAP
(i) Reconciliations of UK GAAP consolidated profit and loss account to IFRS consolidated income statement
Year ended 31 October 2007 (last period presented under UK GAAP)
   UK GAAP
   Audited  IFRS
   Year ended Effect of Unaudited
   31 October transition to Year ended
   2007 IFRS 31 October 2007
   £’000 £’000 £’000
Continuing operations
Revenue   28,927 – 28,927
Cost of sales   (22,641) – (22,641)
Gross profit   6,286 – 6,286
Administrative expenses (excluding depreciation, 
amortisation and costs of integration)   (5,765) 89 (5,586)
Depreciation   (519) – (519)
Amortisation    (1,357) 821 (536)
Costs of integration   (171) – (171)
Total administrative expenses   (7,722) 910 (6,812)
Operating loss   (1,436) 910 (526)
Finance income   327 – 327
Finance cost   (102) – (102)
Finance income – net   225 – 225
Loss before tax   (1,211) 910 (301)
Tax (expense)/credit   (182) 233 51
Loss for the year from continuing operations   (1,393) 1,143 (250)
Discontinued operations
Profit for the year from discontinued operations   828 (331) 497
(Loss)/profit for the year attributable to equity shareholders  (565) 812 247
Post tax results from discontinued operations   559 – 559
Gain/(loss) on disposal of net tangible assets   311 (331) (20)
Taxation charge   (42) – (42)
Net gain/(loss) on disposal   269 (331) (62)
Total profit for the year from discontinued operations   828 (331) 497
c99861Book.indb   56 11/2/09   13:18:06 56 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 57
31 Transition to IFRS continued
(ii) Reconciliations of equity at 31 October 2006 (end of last period under UK GAAP) from UK GAAP to IFRS 
As at 31 October 2006 (date of transition)
   UK GAAP  
   Audited Effect of IFRS
   31 October transition to Unaudited
   2006 IFRS 31 October 2006
   £’000 £’000 £’000
Assets
Non-current assets
Property, plant and equipment   62 – 62
Deferred tax assets   15 – 15
Available for sale financial assets   2,000 331 2,331
   2,077 331 2,408
Current assets
Inventories   861 – 861
Trade and other receivables   1,885 – 1,885
Deferred consideration on disposals   5,875 – 5,875
Cash and cash equivalents   20,280 – 20,280
   28,901 – 28,901
Liabilities
Current liabilities
Trade and other payables   (2,973) – (2,973)
Deferred consideration on acquisitions   (1,871) – (1,871)
Current tax liabilities   (1,088) – (1,088)
Borrowings   (9) – (9)
   (5,941) – (5,941)
Non current liabilities
Borrowings   (18) – (18)
Deferred tax liabilities   – (99) (99)
   (18) (99) (117)
Net assets   25,019 232 25,251
Shareholders’ equity
Called up share capital   3,820 – 3,820
Share premium account   11,926 – 11,926
Merger reserve   3,268 – 3,268
Profit and loss account   6,005 232 6,237
Total shareholder equity   25,019 232 25,251
c99861Book.indb   57 11/2/09   13:18:06 58 Xploite plc Annual Report 2008 
notes to tHe finanCial statements continued
For the year ended 31 October 2008
31 Transition to IFRS continued
(iii) Reconciliations of equity at 31 October 2007 (end of last period presented under UK GAAP) from UK 
GAAP to IFRS 
As at 31 October 2007
    Effect of 
   UK GAAP transition to IFRS
   Audited IFRS Unaudited
   £’000 £’000 £’000
Assets
Non-current assets
Goodwill   28,490 (6,967) 21,523
Intangible assets   – 11,736 11,736
Property, plant and equipment   1,966 (157) 1,809
Deferred tax assets   371 – 371
Trade and other receivables   2,847 – 2,847
Deferred consideration on disposals   35 – 35
   33,709 4,612 38,321
Current assets
Inventories   20 – 20
Trade and other receivables   14,493 – 14,493
Cash and cash equivalents   4,225 – 4,225
   18,738 – 18,738
Liabilities
Current liabilities
Trade and other payables   (26,672) (67) (26,739)
Current tax liabilities   (908) – (908)
Borrowings   (395) – (395)
   (27,975) (67) (28,042)
Non-current liabilities
Borrowings   (2,978) – (2,978)
Trade and other payables   (3,667) – (3,667)
Deferred tax liabilities   – (3,501) (3,501)
Deferred consideration on acquisitions   (3,183) – (3,183)
   (9,828) (3,501) (13,329)
Net assets   14,644 1,044 15,688
Shareholders’ equity
Called up share capital   3,952 – 3,952
Share premium account   1,647 – 1,647
Merger reserve   3,511 – 3,511
Profit and loss account   5,343 1,044 6,387
Share based payment reserve   191 – 191
Total shareholder equity   14,644 1,044 15,688
c99861Book.indb   58 11/2/09   13:18:06  Annual Report 2008 Xploite plc 59
independent auditors‘ report to tHe memBers of 
xploite plC
We have audited the parent company financial statements 
of Xploite plc for the year ended 31 October 2008 which 
comprise the balance sheet, accounting policies and the 
related notes. These parent company financial statements 
have been prepared under the accounting policies set out 
therein.
We have reported separately on the group financial 
statements of Xploite plc for the year ended 31 October 
2008.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual 
Report and the parent 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 parent company 
financial statements in accordance with relevant legal 
and regulatory requirements and International Standards 
on Auditing (UK and Ireland). This report, including 
the opinion, has been prepared for and only for the 
company’s members as a body in accordance with 
Section 235 of the Companies Act 1985 and for no 
other purpose. We do not, in giving this opinion, accept 
or assume responsibility for any other purpose or to any 
other person to whom this report is shown or into whose 
hands it may come save where expressly agreed by our 
prior consent in writing.
We report to you our opinion as to whether the parent 
company financial statements give a true and fair view 
and whether the parent company financial statements 
have been properly prepared in accordance with the 
Companies Act 1985. We also report to you whether 
in our opinion the information given in the directors’ 
report is consistent with the parent company financial 
statements. The information given in the directors’ 
report includes that specific information presented in the 
business and financial review that is cross referred from 
the business review and future developments section of 
the directors’ report.
In addition we report to you if, in our opinion, the 
company has not kept proper accounting records, if we 
have not received all the information and explanations we 
require for our audit, or if information specified by law 
regarding directors’ remuneration and other transactions 
is not disclosed.
We read other information contained in the Annual 
Report and consider whether it is consistent with the 
audited parent company financial statements. The 
other information comprises only the directors’ report, 
the chairman’s statement, the chief executive’s review, 
the business and financial review and all of the other 
information listed on the contents page. We consider 
the implications for our report if we become aware of 
any apparent misstatements or material inconsistencies 
with the parent company financial statements. Our 
responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International 
Standards on Auditing (UK and Ireland) issued by the 
Auditing Practices Board. An audit includes examination, 
on a test basis, of evidence relevant to the amounts and 
disclosures in the parent company financial statements. 
It also includes an assessment of the significant estimates 
and judgments made by the directors in the preparation 
of the parent 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 parent 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 parent 
company financial statements.
Opinion
In our opinion:
l  the parent company financial statements give a true 
and fair view, in accordance with United Kingdom 
Generally Accepted Accounting Practice, of the state of 
the company’s affairs as at 31 October 2008;
l  the parent company financial statements have been 
properly prepared in accordance with the Companies 
Act 1985; and
l  the information given in the Directors’ Report 
is consistent with the parent company financial 
statements.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Gatwick
25 January 2009
c99861Book.indb   59 11/2/09   13:18:06 60 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 61
Company BalanCe sHeet As at 31 October 2008
   Note 2008 2007 
    £’000 £’000
Fixed assets
Tangible assets   2 191 189
Investments   3 – –
    191  189
Current assets
Debtors   4 24,471 24,410
Cash at bank and in hand    871 11
     25,342 24,421
Creditors: Amounts falling due within one year   5 (5,369) (7,562)
Net current assets    19,973 16,859
Total assets less current liabilities    20,164 17,048
Creditors: Amounts falling due after more than one year   6 (4,935) (2,606)
Net assets     15,229 14,442
Capital and reserves
Called up share capital   8 3,952 3,952
Share premium account   9 1,647 1,647
Merger reserve   9 3,511 3,511
Share based payments reserve   9 330 191
Profit and loss account   9 5,789 5,141
Total Shareholders’ funds   9  15,229 14,442
 
The financial statements on pages 60 to 65 were approved and authorised for issue by the Board on 23 January 2009 
and signed on its behalf by
A I Smith
Director
c99861Book.indb   60 11/2/09   13:18:06 60 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 61
notes to tHe parent Company finanCial statements
For the year ended 31 October 2008
Accounting policies
Basis of accounting
The financial statements have been prepared on the going concern basis under the historical cost convention, in 
accordance with the Companies Act 1985 and applicable accounting standards in the United Kingdom. As permitted 
by section 230 of the Companies Act 1985, no separate profit and loss account is presented for the Company. The 
company loss for the year was £648,000, (2007: profit of £8,000).
A summary of the more important accounting policies which have been consistently applied is set out below together 
with an explanation of where changes have been made to previous policies on the adoption of new accounting 
standards in the year.
Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation and impairment losses. Cost includes the original 
purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets, less their estimated residual 
value over their expected useful lives on the following basis:
Leasehold property improvements 20% per annum – straight line over period of lease 
Motor vehicles 25% per annum – straight line 
Fixtures, fittings and equipment 20%-50% per annum – straight line
The directors annually review the estimated useful lives of the fixed assets.
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.
Impairment of fixed assets
Impairment reviews are conducted in accordance with Financial Reporting Standard 11 (Impairment of fixed assets and 
goodwill). Any impairment losses are recognised in the profit and loss account. Impairment write downs are determined 
by reference to the higher of net realisable value or value in use.
Fixed asset investments
Fixed asset investments in group undertakings are carried at cost less any provision for impairment.
Share based payments
The company operates a number of equity-settled, share-based payment compensation plans. The fair value of the 
employee service received in exchange for the grant of the options is recognised as an expense. The total amount to 
be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the 
impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting 
conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet 
date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the 
revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and 
share premium when the options are exercised.
Leases
Assets held under leases that result in group companies receiving substantially all the risks and rewards of ownership 
are classified as finance leases and capitalised as tangible fixed assets at the estimated present value of the underlying 
lease payments. The interest element of the rental obligation is allocated to the accounting periods to reflect a constant 
rate of interest on the outstanding obligation The corresponding finance lease obligation is included within creditors.
c99861Book.indb   61 11/2/09   13:18:06 62 Xploite plc Annual Report 2008  Annual Report 2008 Xploite plc 63
notes to tHe parent Company finanCial statements continued
For the year ended 31 October 2008
Accounting policies continued
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet 
date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in 
the future have occurred at the balance sheet date.
A net deferred tax asset is recognised as recoverable and therefore recognised only when, on the basis of all available 
evidence, it can be regarded as more likely than not that there will be suitable taxable profits against which to recover 
carried forward tax losses and from which the reversal of underlying timing differences can be extracted.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing 
differences are expected to reverse based on tax rates and laws that have been enacted or substantially enacted by the 
balance sheet date. Deferred tax is measured on an undiscounted basis.
Related party transactions
The Company has taken advantage of the exemption provided by FRS 8, related party disclosures and not disclosed 
transactions with subsidiary undertakings where over 90% of the shares in the subsidiary are owned by the Company.
Cash flow statement
The Company is the parent company of the Xploite plc group and is included in the consolidated financial statements 
of Xploite plc. Consequently the Company has taken advantage of the exemption from preparing a cash flow 
statement under the terms of Financial Reporting Standard 1 (Revised 1996).
1. Profit and loss account notes
1a.) Directors’ remuneration
Remuneration is paid directly by the company to the directors. Details of this are provided in note 28 to the group 
financial statements.
1b.) Employee information
Staff costs
    2008 2007 
    £’000 £’000
Wages and salaries     1,018 582
Social security costs    166 48
    1,184 630
 
The average monthly number of persons (including executive directors) employed by the company during the year were 
as follows:
    2008 2007 
    Number Number
Administration and management    4 4
 
1c.) Auditors’ remuneration
Fees payable to the company’s auditor for the audit of the Company’s annual financial statements is £15,000 (2007: 
£15,000).
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2. Tangible fixed assets
    Fixtures, 
   Motor fittings and 
   vehicles equipment Total 
   £’000 £’000 £’000
Cost
Balance at 1 November 2007   180 23 203
Additions   62 – 62
Balance at 31 October 2008   242 23 265 
 
Accumulated depreciation
Balance at 1 November 2007   8 6 14
Charge for the year   55 5 60
Balance at 31 October 2008   63 11  74 
 
Net book amount
At 31 October 2008   179 12 191
At 31 October 2007   172 17 189
 
Included within the net book amount of £191,000 (2007: £189,000), is £179,000 (2007:172,000) relating to assets 
held under finance leases and hire purchase contracts.
3. Investments
     Total 
     £
Shares in group undertakings
At 31 October 2007 and 31 October 2008     3
 
Details of the principal subsidiaries are provided in note 29 of the group financial statements.
4. Debtors
    2008 2007 
    £’000 £’000
Trade debtors    – 2
Amounts due from subsidiary undertakings    22,763 24,232
Deferred consideration on disposals    35 35
Other debtors    1,629 71
Prepayments and accrued income    44 70
    24,471 24,410
 
Debtors due after more than one year included in above 
    2008 2007 
    £’000 £’000
Deferred consideration on disposals     – 35
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notes to tHe parent Company finanCial statements continued
For the year ended 31 October 2008
5. Creditors: amounts falling due within one year
    2008 2007 
    £’000 £’000
Bank loans and overdrafts    601 4,462
Trade creditors    195 425
Amounts owed to group undertakings    939 939
Hire purchase and finance lease arrangements    1,071 27
Taxation and social security    24 11
Corporation tax    1,549 726
Other creditors    6 6
Accruals    984 966
    5,369 7,562
 
Amounts owed to group undertakings bear interest at 1% above the Bank of England Base Rate, are unsecured and 
payable on demand.
6. Creditors: amounts falling due after more than one year
    2008 2007 
    £’000 £’000
Revolving credit facilities    4,505 2,475
Finance leases    430 131
    4,935 2,606
 
7. Loans and other borrowings
    2008 2007 
    £’000 £’000
Bank loans and overdrafts    5,106 6,937
Finance leases    1,501 158
    6,607 7,095
 
The bank borrowings are secured by a debenture comprising a fixed and floating charge over all the assets and 
undertakings of the group.
Maturity of loans and other borrowings
Within one year    1,970 4,489
Between one and two years    30 27
Between two and five years    4,607 2,579
    6,607 7,095
 
Finance leases
Future minimum payments under finance leases are as follows:
Within one year    1,970 4,489
Between one and two years    30 27
Between two and five years    4,607 2,579
    6,607 7,095
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8. Called up share capital
    2008 2007 
    £’000 £’000
Authorised
50,000,000 ordinary shares of 10p each    5,000 5,000
 
 
Allotted, called up and fully paid    Number Number
Ordinary shares of 10p each    39,516,955  39,516,955
    £’000 £’000
Ordinary shares of 10p each    3,952 3,820
 
The market price of the shares at 31 October 2008 was 35p (2007: 46p).
9. Reconciliation of movements in shareholders’ funds
    Share based 
 Share Share Merger payments Profit and 
 capital premium reserve reserve loss account Total 
 £’000 £’000 £’000 £’000 £’000 £’000
At 1 November 2007 3,952 1,647 3,511 191 5,141 14,442
Retained profit for the year – – – – 648 648
Movement on share based 
payment reserve – – – 139 – 139
At 31 October 2008 3,952 1,647 3,511 330 5,789 15,229
     
    Share based 
 Share Share Merger payments Profit and 
 capital premium reserve reserve loss account Total 
 £’000 £’000 £’000 £’000 £’000 £’000
At 1 November 2006 3,820 11,926 3,268 – 5,230 24,244
Retained profit for the year – – – – 8 8
Prior year adjustment – – – 97 (97) –
Capital reduction – (10,312) – – – (10,312)
Issue of shares 132 33  243 – – 408
Movement on share based 
payment reserve – – – 94 – 94
At 30 November 2007 3,952 1,647 3,511 191 5,141 14,442
10. Post balance sheet events
On 16 December 2008, Xploite plc completed the acquisition of 100% of the share capital of Blue River Systems 
Limited (‘Blue River’) from Cantono plc (‘Cantono’) and the assets of three of Cantono’s managed services businesses, 
following the approval of Cantono’s shareholders.
The total consideration was £3m. The initial £2m was payable on completion and the further £1m is payable subject 
to verification work on the completion balance sheet. Since the work on the completion balance sheet is still to be 
finalised it would be impracticable to provide any further financial information with respect to this transaction.
c99861Book.indb   65 11/2/09   13:18:06 66 Xploite plc Annual Report 2008 
Company information Directors
A I Smith Chief Executive 
A C Weaver Director 
R G Arrowsmith Director 
J Standen Chairman 
R Ramsay Non executive director
Secretary
Beach Secretaries Ltd
Company number
3897926
Registered address
100 Fetter Lane 
London 
EC4A 1BN
Auditors
PricewaterhouseCoopers LLP 
First Point 
Buckingham Gate 
Gatwick 
West Sussex 
RH6 0PP
Bankers
HSBC Bank plc 
69 Pall Mall 
London 
SW1Y 5EY
Nominated advisor
KBC Peel Hunt 
100 
London 
EC
Legal advisor
Beachcroft LLP 
100 Fetter Lane 
London 
EC4A 1BN
Registrars
Capita Registrars Plc 
Northern House 
Woodsome Park 
Fenay Bridge 
Huddersfield 
HD8 0LA
www.capitaregistrars.com
c99861Book.indb   66 11/2/09   13:18:06 Contents
Highlights 01
Chairman’s statement 02
Chief executive’s review 03
Business and financial review 05
Directors’ report 10
Independent auditors’ report to the 
members of Xploite plc (group opinion) 14
Consolidated income statement 15
Consolidated balance sheet 16
Consolidated statement of 
changes in equity 17
Consolidated cash flow statement 18
Notes to the consolidated 
cash flow statement 19
Notes to the financial statements 20
Independent auditors’ report 
to the members of Xploite plc 
(parent company opinion) 59
Parent company balance sheet  60
Notes to the parent company 
financial statements 61
Company information  66
Xploite identifies acquires, consolidates 
and develops businesses in the IT services 
marketplace.
Produced by Imprima +44 (0) 20 7105 0300
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pantone 193C
c=0
m=100
y=66
k=13
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consolidate
develop
acquire
identify
Annual Report    2008
Xploite plc 
First Point 
Buckingham Gate 
Gatwick 
West Sussex 
RH6 0PP
www.xploite.com
c99861_Cover.indd   1 10/2/09   12:16:59