Fibernet Group plc Annual Report 2003
Communicating our business…
Fibernet Group plc Annual Report 2003
Fibernet Group plc
Rosalind House, Jays Close
Viables, Basingstoke
Hampshire RG22 4BS
United Kingdom
T +44 (0)1256 858685
F +44 (0)1256 858601
info@fibernet.co.uk
www.fibernet.co.uk
Fibernet GmbH
Gutleutstr . 175
60327 Frankfurt am Main
Germany
T +49 (0) 69 238 05 90
F +49 (0)69 238 05 926
info@fibernet.de
www.fibernet.de 03
02
7.3
5.0
EBITDA**
£m
03
02
5.0
92.4
Loss before tax
£m
Revenue*
£m
03
02
36.3
36.7
* From continuing operations
** EBITDA is shown pre exceptional from continuing operations and is reconciled to operating loss in note 7 to the Financial Statements
01 At a glance
02 Chairman’s Statement
04 Chief Executive’s Strategy Review
08 A Consultative Approach
10 Technical Expertise
12 Lifetime support
14 Financial Director’s Review
18 Board of Directors
20 Directors’ report
22 Remuneration report
26 Corporate Governance
28 Directors’ responsibilities
29 Independent auditors’ report
30 Consolidated profit and loss account
31 Consolidated balance sheet
32 Company balance sheet
33 Consolidated cash flow statement
34 Notes to the financial statements
53 Notice of Annual General Meeting
Contents
Designed by navyblue
Photography by Nick David and Lee Funnell
Printed by Nimmos
Five year summary
for the years ended 31 August
2002
1999 2000 2001 (restated) 2003
£’000 £’000 £’000 £’000 £’000
Results
Turnover 14,596 41,808 54,547 39,505 36,348
EBITDA before exceptional items 1,322 14,299 16,709 (1,019) 7,293
EBITDA 1,322 14,299 16,709 (12,031) 11,375
Operating profit/(loss) (2,232) 6,822 5,194 (24,277) (7,189)
Pre tax profit/(loss) (4,593) 3,365 3,613 (92,416) (4,994)
Profit/(loss) for the financial year (4,593) 3,365 2,892 (91,845) (4,994)
Assets employed
Fixed assets 41,000 77,348 116,052 89,670 87,779
Net current assets/(liabilities) (5,191) 37,293 81,739 23,910 15,195
Net assets 9,575 76,024 157,101 66,520 61,556
Cash flows
Net cash inflow/(outflow) from operating activities 3,531 17,836 26,140 (1,982) 9,045
Capital expenditure 10,087 30,601 40,579 56,612 14,005
Increase/(decrease) in cash 719 8,949 85,081 (61,419) (9,416)
The results for 1999 to 2001 have not been restated to reflect the introduction of UITF 36 ‘Contracts for sale of capacity’. With a focus on continuous innovation, Fibernet is committed
to providing customers with tailored network services that
deliver improved performance, resilience and security .
At a glance
Fibernet specialises in deliv ering bespoke network services to large
organisations and other service providers in the UK and Germany .
Enterprise market
Typical applications
Business continuity
Data replication
Network convergence
Server consolidation
New customers
Nationwide
NEXT
Transbus
Alexander Forbes
I
I
I
I
I
I
I
I
Service Provider market
Typical applications
National access networks
Carrier Rings
Network extension
Peering & Interconnect
New customers
Sprint
IBM
Belgacom
IP Infrastructure
03
02
58.0
36.7
Total value of new contracts signed
£m
1 Chairman’s statement
2
Lord Wolfson of Sunningdale,
Chairman 3
increase in
long-term
contracted
revenue
2003: £97.8m
2002: £71.9m
During 2002 we announced
the costly but necessary
closure of our operations in
France, and the reduction of
operations in Germany to the
now profitable Frankfurt
Carrier Ring. These decisions
were successfully executed
well within our budgeted costs
during 2003, and I am pleased
to report a year of considerable
progress for the Group.
The strength of Fibernet’s core
business is that existing and
new customer revenues are
derived from long term
(typically 3-7 years) contracts
with predominantly blue chip
organisations from both our
Enterprise and Service
Provider target markets.
Revenue is recognised evenly
over the contract period.
During the year ended 31 August
2003, we signed a further £58.0m
of such long-term contracts;
an increase of £21.3m from the
level of £36.7m signed last year .
These new contract wins exclude
the positive effects of contract
renewals with existing customers.
The value of our long-term
contracted revenue as at 
31 August 2003 was £97.8m,
an increase of £25.9m over the
prior period comparative of
£71.9m. Of this contracted
revenue, £28.8m is expected to
be recognised in the year ending
31 August 2004, an improvement
of £6.8m over the prior year
comparative of £22.0m
Y ou will see, however , that full-year
revenues from continuing
operations of £36.3m are 1%
below the £36.7m from the
previous year . Previous year
revenues included a one-off
amount of £2.3m derived from
early cancellation of a customer
contract.
During 2003 we reduced the
costs of our UK organisation,
achieved significant exceptional
and ongoing savings, including
a rebate from the renegotiation
of our national business rates
charge. Loss before tax was
£5.0m compared to £92.4m
in the prior year .
EBITDA from continuing
operations, before exceptional
items increased by 46% to
£7.3m for the current year as
compared to £5.0m in the prior
period. Including the effects
of exceptional items, EBITDA
increased to £11.4m.
We finished the year with a cash
balance of £24.9m, against
£34.3m last year . Although our
cash balance is expected to
reduce in 2004, we remain
confident that we have substantial
cash headroom to execute our
business plan.
We have achieved significant
progress during 2003. Our
strategy has remained the same.
We continue to provide
specialised high value services
to large Enterprise customers
along with cost effective, flexible
and innovative products to
Service Providers. We have the
financial strength to continue
to execute this strategy and are
optimistic for the future.
36
%
“The strength of Fibernet’s
core business is that existing
and new customer revenues
are derived from long term
contracts with blue chip
organisations.” Chief Executive’s Strategy Review
“We have delivered a strong
performance in all of the key
areas of the business.”
2003 has been a year of
consolidation for Fibernet.
Having successfully completed
the restructuring of the business,
we have continued our rigid
focus on the key components
of securing increasing volumes
of new customer contracts,
maintaining a high renewal rate
for existing customer contracts,
prudent cash management
and rigorous cost control.
I am pleased to report that the
results of these endeavours,
together with the achievement
of a number of exceptional
benefits, are better than were
expected at the beginning of
the year , particularly considering
the relatively unfavourable
climate that has prevailed in
the telecommunications market
generally .
Of the £58.0m of new contracts
won in the year , £32.2m came
in the second half; this compares
favourably with £26.9m in the
same period the year before.
Contract renewals for existing
customers during the year
continued to be excellent.
We finished the year with almost
£25m of cash. This strong cash
position has been helped by a
profitability can also be seen in
the increase in EBITDA before
exceptional items from continuing
operations from £5.0m in 2002
to £7.3m this year .
Overall, I am pleased with the
Group’s progress for the year .
growth has been driven by the
new contracts secured in the
second half of last year and
the first half of 2003.
Normally it takes between one
and six months from the signing
of a contract to completing the
installation and initial billing to
the customer . As a result, many
of the contracts signed in the
second half of 2003 have yet to
be handed over to customers
and accordingly , such contracts
will start to contribute to revenues
in 2004.
In addition, with revenues being
recognised equally over the life
of each contract, we have yet to
enjoy a full year’s worth of benefit
from services installed during
the year . With long-term contracted
revenues having increased by
£25.9m from £71.9m to £97.8m,
I am confident that our service
contract revenues for next year
will exceed this year’s, assuming
that contract renewals continue
at the current rate.
The improvements in our
performance over last year have
also translated into a marked
reduction in our loss before tax
from £92.4m to £5.0m. In
addition, the improvements in
combination of increased
installation fees, diligent collection
from customers, the recovery
of VAT in France and Germany
and funds received as a result
of our network rates rebate.
Whilst we have achieved positive
operating cash flow , and whilst
we expect to achieve positive
net cash flow in the medium term,
we will continue to prudently
invest our cash in connecting
new customers onto our network
as new contracts are signed.
We remain confident that we
have sufficient funds to execute
our business plan.
In addition, we have continued
to successfully manage our
operating expenses relevant
to the Group’s requirements in
order to maintain its growth.
F ollowing the decline in underlying
revenues caused by a slowing
of new orders and the demise
of some of our Service Provider
customers almost two years 
ago, I am pleased to report that
the combined effect of our
achievements is that we have
seen service contract revenues
increase this year from £7.9m
in quarter one to £9.0m in
quarter four . Specifically , this
4 Charles McGregor
Chief Executive
5 Customers and Markets
The UK market remains the core
of our business and the ever-
increasing use of communications
services for the exchange of
information continues to fuel its
growth. Whilst we have continued
to takeadvantage of new
opportunities such as the
increasing need of our customers
to back-up and store information,
much of our new business has
been derived from the
replacement of services hitherto
provided by competitors.
Our sustained ability to provide
innovative, reliable and cost
effective services to our key
markets of Enterprise and
Service Provider customers
is underpinned by the bespoke
way in which we design them,
not just at a technical level but
also from commercial and
contractual standpoints.
Evidence of this can be seen
in the new customer contracts
that have been won during
the year . Within the Enterprise
sector , these include the
Nationwide Building Society ,
T ransbus and NEXT , together
with new Service Provider
customers including Sprint,
IP Infrastructure and IBM.
to either improve our
competitiveness to win new
customers or to provide additional
services to existing customers
by taking advantage of the
original connection investment.
During the year , we have launched
two new national Ethernet
services, which have involved
a new deployment of technology
on our national network.
TANet Ethersphere provides
a low cost, high performance
service for the connection of
data users across a shared
resource. TANet Etherline
offers a higher guaranteed
quality of service and an
enhanced ability to combine
voice and video with computer
(data) traffic. Both of these
services have now achieved
new live customers and show
significant promise.
In London, we have more than
doubled the reach of our
metropolitan network with the
procurement of additional
network routes from another
service provider . This transaction
significantly increases the
market for all of our London
services, including applications
such as metropolitan Ethernet.
The London Carrier Ring (LCR)
has grown impressively during
the year with the average circuit
usage increasing by 30% and
has achieved new member
growth too. New customers
include Smartcom, Expo
Communications and Rasmitel.
In Germany , we retained our core
business in Frankfurt after the
re-organisation last year . This
business concentrates primarily
on Service Providers within the
city and as well as providing
bespoke metropolitan services
and links to London, derives
the majority of its business from
the Frankfurt Carrier Ring (FCR).
New customer wins include
Belgacom, Primus, T eleDanmark,
Digital Networks and Czech
Telecom.
I am pleased to report that this
part of our business is now
profitable, despite continuing
difficult market conditions and,
as with the UK, has a strong
pipeline going forward.
Product Development
This year has seen a record
number of new services being
developed and released to our
markets. All of them are designed
We also continued to sign
additional contracts with existing
customers. These include Opal
T elecom, Mistral and BT Wholesale
in our Service Provider market.
Enterprise customers include
the Co-operative Bank, Direct
Line and HSBC.
The renewing of existing customer
contracts remains key to our
success, not only from the rev enue
and profitability standpoints,
but also as a testament to our
ability to provide successful
and highly reputable services
to our customers. As I mentioned
earlier , renewal rates have been
excellent during the year across
both of our market sectors and
include, Cadbury Schweppes,
Deloitte & T ouche, Best People,
3i and NTL.
As we start our new financial
year , the pipeline for new and
additional business continues to
be healthy . We have traditionally
been strong in the financial
services part of our market,
and whilst we expect to continue
this, we have also been successful
in developing business in other
areas including Retail, T ransport
and with the increasingly
popular Outsourcing/Facilities
Management industry .
6
“This year has seen a record
number of new services being
developed and released to
our markets.”
Chief Executive’s Strategy Review (continued) Stakeholders
In what has been another year
of uncertainty for the
telecommunications market,
our stakeholders have once
again shown great resilience in
their support for our business
and I take this opportunity of
thanking them all, especially
our dedicated employees.
I am sure that this underlying
confidence in Fibernet will, over
time, be fully justified.
Conclusion
The Group has achieved a
great deal this year . We have
delivered a strong performance
in all the key areas of the
business and have reached 
a significant milestone in our
business model. Our revenues
from long term, high quality
customer contracts now cover
our ongoing operating expenses.
As we recognise revenues 
from recent and forthcoming
contracts, we have the prospect
of a return to sustainable
profitability firmly in our sights.
Furthermore, the markets for
our services and the pipeline 
of business both remain strong,
which, together with our
considerable financial reserves,
place us in an excellent position
going forward.
Our traditional method of
connecting our customers onto
the network is via direct optical
fibre links from the customer
premises into the nearest Point
of Presence. This remains the
case for much of our business
where very high speeds of
network are needed. However ,
where the end user is a small to
medium sized business, or the
branch office of a large company ,
fibre is not usually cost effective
given that the speed requirement
will be relatively low .
In order f or Fibernet to competitiv ely
reach this market we have
developed a range of services
under the T ANet Access umbrella.
Initially , we began the rollout of
our own SDSL services using
equipment to attach to British
Telecommunications (BT)
copper wires. Whilst meeting
with some success, this proved
to be a slow process. T o address
this, we have now reached an
arrangement with BT under the
Partial Private Circuits (PPC)
initiative where we can rent
leased line circuit equivalents
at competitive wholesale rates
from them. In addition, we are
now rolling out a substantial
number of connections to the
BT network in order to deliver
these circuits to our customers.
I am very pleased with progress
in this regard with initial services
now coming on stream.
With the success of the London
and Frankfurt Carrier Ring 
(LCR and FCR) services we have
now launched a National Carrier
Ring (NCR), which extends 
the benefits across the United
Kingdom.
As mentioned at the half year ,
T ANet Callchoice, the call centre
voice service, has been
launched following successful
trials. I expect that resulting from
initial customer interest live
users will be contracted in the
coming months.
Looking forward, we are
developing further the capabilities
of our services. Our original
concept of providing full T otal
Area Networking services
(T ANet) where Fibernet fulfils all 
of the networking requirements
between the desktops of our
customers, moves closer with
each additional service. Y ou
may be assured that this
strategy will continue with the
announcement of further
service developments in the
coming year .
7
Underlying Revenue Growth
£m
30
%
growth in
L CR traffic
03
03
Q4
Q1
9.0
7.9
Service contracts 8
“Fibernet delivers bespoke
network services to large
organisations and other
service providers in the UK
and Germany .”
For each and every customer
requirement, there are many
ways that different network
technologies may be applied
to deliver a result. Each of those
technologies develop at their own
pace - some are reaching the
end of their life cycles, some are
just reaching their prime and
others are only just emerging. Each
organisation has its own business
and technical requirements.
The multiplicity of choices can
cause customers concern.
Fibernet addresses this by
taking a consultative approach.
From the very first meeting,
Fibernet aims to understand
each customer’s unique needs
and provide an individually
designed network service to
suit them. The larger the
business, the more demanding
those needs become.
“Fibernet is a specialist
company in a market
dominated by generalists.”
The “bespoke” business model
sets Fibernet apart from
telecommunications operators
who market themselves with
a catalogue and rate card
approach. It is one of the reasons
why Fibernet consistently 
wins business to provide many
of the world’s largest blue-chip
organisations with mission critical
data networks.
The consultative culture
demonstrates Fibernet’s great
strength – it’s people. It also sets
the tone for the whole of the
customer relationship cycle from
the outset and allows Fibernet
to build the strong customer
relationships on which the
business is based.
In our Enterprise sector , large
organisations use Fibernet’s
managed network services to
inter-connect computer
systems within and between
their premises. These networks
operate at great speeds and
with levels of resilience, security ,
scalability and reliability that
mean that the delivery of
information, often between
thousands of people, is never
compromised.
These Enterprise networks are
used, amongst other things, to
deliver business applications
to the desktops of employees,
to secure and replicate data
traffic for disaster recovery
purposes, to deliver voice
traffic between offices, to make 
data storage systems accessible
to users across the company ,
to deliver business services to
the Internet and to connect to
suppliers and partners.
The networks are critical to the
day-to-day functioning of the
businesses they support and
are often the means by which
our customers deliver their
own products and services
to their customers. For such
organisations, a differentiated
network can mean a differentiated
product or service experience
for their own customers.
Fibernet’s goal in its Service
Provider market is to be the
wholesale network provider of
choice for other operators and
ISPs. Fibernet currently serves
nearly 150 customers in this mark et,
including the majority of the
UK’s and many of Germany’s
leading Internet Service Providers
(ISPs) and telecoms companies.
Fibernet provides these
companies with geographic
coverage that their own networks
do not have, allowing them to
reach customers that would
otherwise be inaccessible.
This market gives Fibernet
indirect access to the thousands
A Consultative Approach
NEXT – New customer 2003
Fibernet designed a bespoke
IP VPN service for leading
retailer NEXT . Richard Everingham
manages the account from the
Fibernet office in Leeds.
Jeff Smith
Originally from New Zealand,
Jeff is the product manager
for IP and Ethernet services,
and has been with Fibernet
since 2002. 9
250
customers
232staff
20billion
voice minutes
per annum
of “Small and Medium size
Enterprises” (SMEs) across the
UK and Germany .
Managed services in our Service
Provider market are customised
to use the latest and most
appropriate technology to allow
each customer to make best use
of our network. Fibernet sets
itself apart from other wholesale
service providers by constructing
tailor-made commercial and
technical models that allow each
customer to scale the cost and
coverage of the network services
they buy proportionately with
the revenues they receive from
their customers.
Fibernet also helps Service
Provider customers connect
to, and then exchange “traffic”
with, other telecoms companies.
With such a large number of
service providers using our
network, it has become a natural
platform for such companies
to do business with each other:
to exchange telephone calls or
emails between their respective
customers, for example.
Our London and Frankfurt
Carrier Rings are prime examples
of this functionality . More than
90 individual operators are now 
“members” of the service and
they collectively trade between
them more than 20 billion minutes
of voice calls per annum. 10
“It is the practical and
commercial expertise of
Fibernet’s team of technical
consultants that helps each
customer to understand
the many options available
to them.”
Deloitte & Touche
Managed by Richard Malizia
from Fibernet’s office in the
City of London, Deloitte & T ouche
has been a customer for over
three years and were one of the
first customers for Fibernet’s
new Ethersphere service.
25
%
Technical Expertise
3700
km
UK Network
UK Internet traffic 11
Our customers are large and
demanding companies, whose
data networks are mission critical
and often serve thousands of
people. New opportunities and
threats often face the network
manager , not least of which 
are data security and business
continuity . Evaluation, selection
and subsequent large-scale
deployment of a network are
challenges that require a high
level of technical skill.
From an early stage in the
sales process, it is the practical
and commercial expertise of
Fibernet’s team of technical
consultants that helps each
customer to understand the many
options available to them. Site
visits, surveys, workshops and
rigorous tests result in a proposed
network design based on the
deployment of the latest and
most appropriate technology .
In the last financial year ,
Fibernet was awarded the status
of Advanced T echnology Partner
(A TP) by Cisco . The accreditation
is an invitation-only , industry
accreditation recognising skill
in the provision of high-end
managed optical services.
Of the five organisations that
have been awarded ATP status 
in the UK, Fibernet is the only
one that is a telecoms company
operating its own national and
metropolitan network.
This is one of the most
significant indications to date
of Fibernet’s status as a leader
in the deployment of the latest
network technology for high-
bandwidth business applications
such as data storage and
network consolidation.
Building the building blocks
Keeping our products and
services at the leading edge
demands continual attention.
Our technical consultants and
product experts are constantly
informed of how to deploy the
latest technologies and are
aware of the benefits that they
may bring to our customers.
Fibernet’s products and services
are the building blocks on
which a bespoke customer
service is designed. It is these
building blocks that give the
company its ability to uniquely
differentiate its services.
Using the latest advances in
network technology , our highly
qualified and trained team set
out to develop Fibernet’s
product portfolio.
Each new product is thoroughly
researched in advance and is
implemented on the basis of the
commercial relevance to both
Fibernet and our customers.
Such a product may represent
either a first point of contact
with a new customer or an
incremental business opportunity
with an existing customer . In both
cases new products and services
provide Fibernet the potential
to significantly increase our
addressable market.
This year has seen the introduction
of several new members of the
portfolio. New Ethernet services
for Enterprise and Service Pro vider
customers provide a radically
new foundation for high speed
metropolitan and national data
services. Our London Carrier
Ring proposition has been
enhanced to extend service
across the UK. Most recently
we have announced the launch
of services that mark our entry
into the Call Centre market.
Under development at present
are alternative mechanisms for
connecting customer premises
to our network, greatly increasing
our addressable market and
also development of our second
generation of IPVPN services.
T estimony to this technical
expertise is the fact that the
company and its customers
have enjoyed several awards in
recent history . The Co-Operative
Bank were awarded the Financial
Sector T echnology Award for
best T elecommunications
Strategy for their “Nautilus” project
that re-equipped their entire
business with a state of the art
national Ethernet service based
upon Fibernet managed services.
In 2003 we were awarded the
Voice and Data Service Provider
of the Y ear award for the second
year running at the Network
Industry Awards in Birmingham.
As industry events, these awards
serve as recognition from our
peers of the recent achievements
of the business, in which all of
our staff are proud.
10 6
Points of
presence 12
Fibernet operates its own state
of the art fibre-optic network
and deploys the latest technology
to provide customers with the
highest levels of performance,
security and reliability .
Installation of a bespoke
customer network is not simply
a question of “flicking a switch”
and turning on the power .
Attaching some of the larger
enterprise customers to our
network can represent a complex
and extremely large engineering
project. This often involves
significant amounts of civil
engineering, cabling, equipment
procurement, installation and
systems integration.
In all such cases, Fibernet
invests a significant amount
of time and effort to ensure
that the process of installing
new network infrastructure is
efficiently run from beginning
to end. Fibernet only bills a
customer once the network is
fully installed and running.
Project managers continue the
close customer relationships
established by the sales
and technical consultants
to ensure that the network is
installed on time and to the
highest level of expectation.
“Using the technical skills
acquired in over 1 7 years of
experience, Fibernet builds
long-term relationships with
customers and provides
them with the highest quality
of service.”
Phil Murray
Head of Network Operations
Centre
Phil and his team watch over
the service we provide 24
hours a day , 365 days a year .
Henry Akuffo
Account Manager, HSBC
Henry has been a key account
manager for over four years.
In that time, HSBC have tripled
the value of their business with
Fibernet, using national and
metropolitan services for
applications such as storage
area networks.
Lifetime support 13
The date of service handover
to a customer marks only the
start of our relationship. Our
goal is to help our customers to
deliver upon their commitments
to their own organisations to
such a level of satisfaction that 
they will automatically consider
renewing their contracts when
they approach expiry .
Renewals count for a significant
proportion of Fibernet’s annual
revenues. As a measure of our
success, the reliability of service
and strength of customer
relationship has consistently
allowed Fibernet to achieve a
rate of renewals that is second
to none.
Furthermore, these relationships
allow Fibernet to work with
customers to provide additional
services during the lifecycle of
a contract. Customers frequently
open and close office locations,
relocate data centres, introduce
new applications and react to
regulatory requirements.
Services often require upgrading
to cope, for example, with
the increased success of our
customers business. This might
necessarily increase either data
traffic, the number of employees
requiring service or both.
Quality of service is our prime
consideration. Fibernet’s
networks are monitored 24
hours a day , 365 days a year
by highly trained specialist staff .
F rom their management systems,
they monitor the status of all
elements of each customer’s
network, provisioning new
circuits, pre-empting failures,
conducting initial diagnoses,
and deploying engineers in the
field. Our network availability
statistics consistently show
performance at 100% levels.
Throughout the lifecycle, our
customer service teams ensure
that we achieve the agreed
service levels and performance
standards. They are focussed,
responsive teams. Service is
personalised. Customers are
recognised as real people,
rather than simply records in
a database. Relationships are
usually on first name terms.
24x7x365
Network Operations Centre
17
years
experience Nick Bray
Financial Director
Financial Director’s Review
14 “We have been encouraged
by the trend of renewals with
existing customers… our
reported re v e n ues are e xpected
to increase next year .”
Revenues from continuing
operations were £36.3m in 
2003 as compared to £36.7m 
in the prior period. Our 2002
reported revenue benefited
from an additional £2.3m on 
the cancellation of a customer
contract, monies being paid
upfront to exit the remaining
obligation. T aking this into
account, full year like for like
revenues grew by 5.5%.
During the year we signed £58.0m
of new contracts. Fibernet
operates a policy where we do
not recognise revenues from
contracts signed until the
service is fully installed. Many
of these new orders are for
complex services with large
enterprise and service provider
customers. Given that such
services take a significant time
to install, many orders signed
in the year have yet to have an
impact on our reported revenues.
We have been encouraged by
the trend of contract renewals
with existing customers. Given
the long-term nature of customer
contracts, only a proportion of
existing revenues come up for
renewal in a financial year . Nearly
all customers in a position to
renew did so.
Revenues from new customer
contracts are now significantly
exceeding lost revenues on
customer renewals. Our reported
rev enues are expected to increase
next year .
Gross profit from continuing
operations for the full-year ,
excluding exceptional items was
£9.7m or 26.6% of revenues as
compared to the prior year
number of £9.5m or 26.0%.
Excluding the effects of the
contract cancellation in 2002
referred to above, gross profits
improved by 2.6% from 24.0% of
revenues in 2002. Including the
beneficial effect of exceptional
items, gross profit was £11.6m,
compared to £9.5m last year .
We have a highly leveraged
business model. Incremental
revenues flow through to
significantly improve gross
margins, net profitability , and
EBITDA*.
In addition to the level of new
order intake, we have been very
encouraged by the effects of
the cost reduction measures.
The effects can be clearly seen
on the face of the profit and
loss account. Whilst we have
significantly reduced costs,
we have taken care to ensure
that we have not detracted in
any way from service delivering
areas of the business.
One particular area of note is
that of cost reduction relating
to our network business rates.
We started the year paying
£3.0m per annum in regard
to this charge. Following a
successful appeals process,
concluded in July 2003, this
charge was reduced to £1.5m
per annum. In addition to savings
made relating to the current
year charge, the appeal also
generated a rebate of some
£1.9m relating to prior periods.
During the period we successfully
negotiated the exit of the Group
from two IRU (Indefeasible Rights
Of Use) contracts resulting in
a benefit of £2.0m. In addition
we successfully exited from
numerous obligations in France
and Germany at a lower cost
than expected generating a
benefit of £0.7m in this years’
profit and loss account.
* EBITDA is reconciled to
operating loss in note 7
to the Financial Statements
46
%
increase
in EBITDA
15 “At the year end, our cash
balance stood at £24.9m.
We expect to be fully cash
flow positive by August 2005.”
Financial Director’s Review (continued)
16
£9
m
cash inflow from
operating activities
Asset Impairment
During the year we reassessed
the valuation of our fixed assets.
Whilst concluding that the total
position was appropriate, we
conducted a detailed review of
individual asset categories and
considered that it was appropriate
to make provisions in two
specific instances.
During the year the Group
launched a new UK national
Partial Private Circuit (PPC)
product. For many applications
this product effectively replaces
the Group’s Digital Subscriber
Line (DSL) product, resulting
in a significant reduction in the
expected demand for DSL
services. Accordingly the Group
has reviewed its DSL operations
and identified a number of
onerous commitments in respect
of circuit rentals and other
supplier commitments, relating
to unprofitable DSL points of
presence (POPs). Provision
has been made for these costs.
Fixed assets relating to these
POPs have also been impaired
in full. In addition, we have
identified a small element of
the network for which no future
use is anticipated. Charges of
£2.2m have been included for 
the above.
EBITDA from continuing
operations increased by 46%
to £7.3m for the Group . Including
the effects of exceptional items,
EBITDA rose to £11.4m. The
prior period EBITDA figure of
£5.0m for continuing operations
included £2.1m arising from a
significant customer contract
cancellation. On a like for like
basis, EBITDA of the continuing
operations has increased from
£2.9m to £7.3m.
Profitability
The positive impacts of the
above achievements combined
to reduce our full year loss
before tax to £5.0m as compared
to the prior period loss of
£92.4m. Our key financial goal
is to return to profitability within
the medium term.
Earnings per share
and dividends
The loss per share was 8.1p as
compared with a loss of 149.3p
last year . The Board is currently
unable to recommended the
payment of a dividend.
Taxation
No tax was payable in the period
and the Group has significant
tax losses available to carry
forward. 17
£24.9
m
cash balance
Cash flow, capital spending
and gearing
At the year-end, our cash
balance stood at £24.9m, a
reduction of £9.4m on the prior
year . We are encouraged that
this has remained relatively
static for a period of nine
months. The majority of this
reduction occurred in the first
quarter and was driven by
network capital expenditures
from commitments made in
2002 combined with the exit
costs of France and Germany .
Our cash position has been
aided by several factors in the
year including the recovery of
monies from the rates rebate,
recovery of VAT paid in prior
periods in France and Germany
and installation fees paid by
new customers.
The business generates sufficient
cash to pay for all operating
needs. T oday , we do not yet
generate sufficient cash to pay
for the capital costs of attaching
new customers to our network.
We expect to be fully cash flow
positive by August 2005.
Cash flows from capital
expenditure for the year were
£14.0m as compared to £56.6m
in the prior period. Such new
capital expenditure is
predominantly related to the
attachment of new customers
to our existing backbone network.
Our core network has significant
available capacity .
No funds were raised in the
period and the Group is well
funded for all stated plans.
Treasury
The Group’s treasury policies
aim to maximize the interest
income on cash deposits and
minimise the risks associated with
trading in foreign currencies.
The Group places all sterling
and foreign currency cash
balances not immediately
required on short-term deposit.
An external treasury manager
is utilised to assist in obtaining
an acceptable risk/return
balance on excess deposits.
The Group does not enter into
speculative transactions with
financial instruments. Board of Directors
18
Lord Wolfson of Sunningdale,
Non-Executive Director
Aged 68 Lord Wolfson is a
Director of Compco Holdings plc,
and was formerly Chairman of
Next plc and Great Universal
Stores. Lord Wolfson was
appointed to Fibernet’s Board
in March 2001 and became
Chairman of the board at the
AGM in January 2002.
Lady Robin Innes Ker,
Non-Executive Director
Aged 43 Lady Robin joined
Fibernet on1 August 2000, and
is Chairman of the Remuneration
Committee, and Senior
Independent Director . She is a
Director of T a ylor W oodrow , The
T elevision Corporation and
Williams Lea. Lady Robin was
formerly Director of SBC Warburg
and Dresdner Kleinwort Benson,
specialising in the media and
technology sectors.
Charles McGregor,
Chief Executive 
Aged 45 Charles McGregor was
one of the founders of Fibernet
in 1986. Prior to joining Fibernet,
Charles spent six years working
in the international data
communications sector both in
Europe and the USA. He became
Managing Director of Fibernet
in 1993 and Chief Executive on
its flotation in 1996.
Nick Bray,
Financial Director and
Company Secretary
Aged 38 Nick Bray was appointed
Financial Director of Fibernet
in February 2001. Nick has
considerable experience in the
IT sector , both in the USA and
Europe. Prior to Fibernet, Nick
was Group Chief Financial
Officer of Gentia Software plc. Advisers
19
Roger Chovil,
Non-Executive Director
Aged 58 Roger Chovil joined
Fibernet as a Non-Executive
Director in January 2002 and 
is Chairman of the Audit
Committee. Roger is also a
Director of The T elevision
Corporation and Brown &
Jackson plc. Roger was formerly
a Senior Client Service Partner
at PricewaterhouseCoopers and
has extensive experience of
advising telecommunications
and technology companies
including Cable & Wireless plc
and Misys plc.
Financial advisers and
stockbrokers
Arbuthnot Securities Ltd
2 Lambeth Hill
London EC4V 4GG
Solicitors
Lawrence Graham
190 Strand
London WC2R 1JN
Auditors
Deloitte & T ouche LLP
Abbots House
Abbey St, Reading
Berkshire RG1 3BD
Registrars
Capita Registrars
The Registry 
34 Beckenham Road
Beckenham
Kent BR3 4TU
Registered office
Fibernet Group plc
Rosalind House, Jays Close
Viables, Basingstoke
Hampshire RG22 4BS
Registered number: 3151663 Directors’ report
20
The Directors present their report and Group financial statements for the year ended 31 August 2003.
Principal activity, review of the business and future developments Fibernet is a communications solutions company dedicated
to the design, supply , installation, management and support of bespoke high speed digital networks. The review of the business
and future developments are contained in the Chairman’s Statement on pages 2 and 3, and the Chief Executive’s Strategy Review
on pages 4 to 7.
Financial results and dividends The Group’s results and transfers to reserves are as follows:
2003 2002
£’000 £’000
Loss for the financial year (4,994) (91,845)
Gain on foreign currency translation 30 1,031
Profit and loss account at 1 September 2002 (92,533) (1,719)
Profit and loss account at 31 August 2003 (97,497) (92,533)
The Directors have not declared a dividend.
Directors and their interests The Directors who served during the year were as follows:
D Wolfson
C S McGregor
K C M Innes Ker
E R C Chovil
N P S Bray
The following Directors at 31 August 2003 had beneficial interests in the shares of the Company as follows:
10 pence 10 pence
ordinary shares ordinary shares
31 August 2003 31 August 2002
Number Number
D Wolfson 270,000 20,000
C S McGregor 7,312,811 6,812,811
K C M Innes Ker 1,910 1,910
E R C Chovil 5,000 –
N P S Bray – 500
Between the balance sheet date and the approval of these financial statements, the Directors’ beneficial interests in shares 
in the Company have not changed.
In addition to the above shareholdings, one Director had options to subscribe for shares in the Company as disclosed in the
Remuneration report on pages 22 to 25.
The mid-market price of the shares at 31 August 2003 was 95.0p and during the year the price varied between 14.0p and 130.0p.
Substantial shareholdings On 25 September 2003 the Company was notified, in accordance with Sections 198 to 208 of
the Companies Act 1985, of the following disclosable interests which amounted to 3% or more of the issued ordinary share
capital of the Company:
Name of holder Number Percentage held
C S McGregor 7,312,811 11.9
DRKWS Nominees Limited 3,943,782 6.4
HSBC Global Custody Nominee (UK) Limited 3,220,000 5.2
BNY SG Nominees Limited 2,200,338 3.6
Sharelink Nominees Limited 2,302,358 3.7
Kettley International Limited 2,016,556 3.3
TD Waterhouse Nomineees (Europe) Limited 2,015,360 3.3 21
Policy in respect of payments to suppliers The Company’s policy , which is also applied to the Group, is to decide upon 
the terms of payment with suppliers when agreeing the terms of each transaction to ensure that suppliers are made aware 
of the terms of payment and to abide by the terms of payment.
T rade creditors of the Company at 31 August 2003 were the equivalent of 28 days’ purchases (2002: 37 days’).
Charitable donations The Group contributed £1,000 to St. Bartholomew’s Hospital (2002: £7,500 donated to ‘Business 
in the Community’).
Disabled employees Applications for employment by disabled persons are always fully considered, bearing in mind the
aptitudes of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure 
that their employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that 
the training, career development and promotion of disabled persons should, as far as possible, be identical with that 
of other employees.
Employee consultation The Group places considerable value on the involvement of its employees and has continued to keep
them informed on matters affecting them as employees and on the various factors affecting the performance of the Group.
This is achieved through formal and informal meetings and other forms of communication including email and the Group intranet.
Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests.
The employee share scheme has been running successfully since its inception in 1996. It is open to all UK employees.
Auditors On 1 August 2003, Deloitte & T ouche transferred their business to Deloitte & T ouche LLP , a limited liability partnership
incorporated under the Limited Liability Partnerships Act 2000. The Company gave its consent to treating the appointment of
Deloitte & T ouche as extending to Deloitte & T ouche LLP with effect from 1 August 2003 and accordingly the financial statements
have been signed in the name of Deloitte & T ouche LLP . A resolution for the re-appointment of Deloitte & T ouche LLP will be
proposed at the forthcoming Annual General Meeting.
Annual General Meeting The notice of the Company’s Annual General Meeting is set out on pages 53 to 55 of this report.
It is proposed by a special resolution (no.7) that the Company be authorised to purchase up to 9,239,238 of its own ordinary
shares in the market, representing 15% of the current issued ordinary share capital of the Company , at a price not less than
the nominal value of the ordinary shares and not more than 5% above the average of the middle market quotations of the
Company’s ordinary shares derived from the London Stock Exchange Daily Official List for the five business days before the
purchase is made.The authority would be given for the period ending on the date of the next Annual General Meeting of the
Company or 15 months after the date of passing of the resolution (whichever is the earlier) and it is presently intended that
a resolution for the renewal of such authority would be proposed at each succeeding Annual General Meeting. The Directors
have no present intention of making such purchases, but it is prudent to have this authority so as to be able to act at short
notice if circumstances change. The authority would however only be exercised if the Directors believe that to do so would
result in an increase in earnings per share and would be in the best interests of shareholders generally .
Options over an aggregate of 2,313,040 ordinary shares in the Company were outstanding as at 14 October 2003 representing
3.76% of the Company’s issued share capital at that date and which would represent 4.42% of the Company’s issued share
capital if the proposed authority being sought at the Annual General Meeting to buy back 9,239,238 ordinary shares was
exercised in full.
This report was approved by the Board on 13 October 2003.
Nick Bray
Financial Director Remuneration report
22
Introduction The Company complies with the relevant conditions of the Combined Code on Corporate Governance relating 
to Directors’ remuneration as published by the London Stock Exchange and the new Directors’ Remuneration report
Regulations 2002.
The Regulations require the Auditors to report to the Company’s members on the “auditable part” of the Remuneration report
and to state whether in their opinion that part of the report has been properly prepared in accordance with the Companies 
Act 1985 (as amended by the regulations). The report has therefore been divided into separate sections for audited and
unaudited information.
Unaudited information
Remuneration committee The members of the Remuneration Committee are K C M Innes Ker (Committee Chairman),
E R C Chovil and D Wolfson. The Committee’s role is to set levels of remuneration to attract and retain Executive Directors 
and members of the senior management team (Group Operating Board) and, in doing this, takes into account the level 
of remuneration throughout the Group and the telecommunications industry generally .
No Director plays a part in any discussions about his own remuneration.
The committee consulted with Charles McGregor (Chief Executive) and Nick Bray (Financial Director), with regard to the
remuneration and benefits offered to senior executives during the year .
In addition, wholly independent advice on executive remuneration and share schemes was received from
PricewaterhouseCoopers who were appointed by the Committee and who provided no other services to the Company 
during the year .
Remuneration policy The policy of the Committee is to reward senior executives competitively , enabling the Company to
recruit, motivate and retain executives of the highest calibre, whilst avoiding paying excess remuneration. Further details of
the remuneration policy followed by the Committee are set out below . In conjunction with its remuneration consultants, the
Committee considers the remuneration practices adopted by a group of like companies that, in the opinion of the Committee,
face similar remuneration issues to the Company .
It is the aim of the Committee to encourage and reward high performance. It is the opinion of the Committee that shareholders’
interests are best served by setting a moderate level of fixed pay while providing competitive potential levels of total
remuneration through short and longer-term incentive arrangements which require the satisfaction of challenging
performance conditions. During the year the Committee conducted a review of the remuneration policy and recommended the
introduction of an additional element of performance related pay , in the form of a Long T erm Incentive Plan, described below .
The intention is to reward employees for the delivery of better than planned profitability , over a three year performance period,
and reduce the proportion of fixed pay in total compensation. Subject to shareholder approval this would be introduced in the
year ended 31 August 2004.
In the year to 31 August 2003, the proportion of executive remuneration that was linked performance linked was as shown below .
Other Annual
Base salary benefits bonus Total
Year ended 31 August 2003 %%%%
Charles McGregor
At on target performance 66 7 27 100
At maximum performance 52 6 42 100
Nick Bray
At on target performance 75 6 19 100
At maximum performance 63 5 32 100
Basic salaries, pensions and other benefits Basic salaries are established by those prevailing in the market generally for
Executive Directors and Senior Managers of comparable status, skills and responsibility in comparable industries. Salaries
are reviewed on an annual basis and changes are generally implemented with effect from 1 September each year . Both
Charles McGregor and Nick Bray received a 2.5 per cent increase to basic salary effective from 1 September 2003 taking
basic salaries for the year ahead to £190,300 and £138,375 respectively .
For Executive Directors and Senior Managers of the Group, pension contributions are paid into individual money purchase
schemes at a rate of 5 per cent of gross basic salary .
In addition to basic salary and pension the other benefits included in the remuneration package are the provision of a car 
or car allowance, fuel, permanent health insurance and death in service cover . 23
Annual bonus The Company operates an annual bonus scheme providing Executive Directors and Senior Managers with an
opportunity to earn a cash reward based on the achievement of annual targets. Should targets not be achieved then no bonus
is payable. Similarly , should targets be exceeded then bonus payments can be increased up to a maximum limit.
For the year ended 31 August 2003, the Remuneration Committee established a performance bonus scheme for Senior
Managers that was based on the Group’s EBITDA performance, and for Executive Directors which was based on the Group’s
EBITDA performance combined with the value of new orders placed. Superior performance in the period resulted in the
maximum award being achieved. The maximum bonus for the year ended 31 August 2003 was 81 per cent of basic salary for
Charles McGregor and 50 per cent for Nick Bray .
For the financial year ending 31 August 2004, the plan will focus on the net profitability of the Group. For Executive Directors,
the maximum bonus for the financial year ending 31 August 2004 is 81 per cent of basic salary for Charles McGregor and
50 per cent for Nick Bray .
Long Term Incentive Plans The Company has operated both Executive and Save As Y ou Earn (SA YE) share option schemes.
Executive share options have been granted on a phased basis, at market value at the day of grant, and are exercisable only
after documented performance criteria concerning turnover growth and relative share price performance are met.
Options granted to Nick Bray during the period are subject to performance conditions requiring a significant increase in the
share price of the Company compared with the option grant price over a three year performance period.
The performance conditions for previous option grants related to both share price performance of the Group compared with
the FTSE 250 index and a substantial increase in the turnover of the Group as reported in the published financial statements.
The relative share price performance criterion provided an alignment of the executive’s interests with those of the
Shareholders while the requirement for increased turnover provided a focus on the key financial metrics for the Group.
During the current year , the Remuneration Committee has reviewed the remuneration scheme and in particular the long-term
incentive arrangements. The Committee has taken into account the importance to shareholders of the Company achieving
certain profitability milestones over the next three years, and of increasing the proportion of total compensation represented
by performance related pay .
F ollowing the review , the Committee proposes that the annual award of Executive options be replaced by a new plan – the Fibernet 2003
Long T erm Incentive Plan. This plan is put forward for approval by Shareholders at the AGM and is tabled as item 8. Full details
of the plan are included in the attached circular . Key features of the new plan for Executive Directors are detailed below .
The proposed Fibernet 2003 Long T erm Incentive Plan introduces the concept of annual awards of shares to Executive Directors,
Senior Managers and other key staff. Shares awarded will only vest after a three-year period on condition that stringent
performance conditions have been achieved. The maximum award is over shares having a value at grant equivalent to 100 per
cent of basic salary for Executive Directors and some Senior Managers. Vesting of the 2003 award is only triggered if, over the
first three-year performance period, cumulative audited profitability (before non-operating exceptional items) exceeds target
profitability (which is fixed at the time the awards are made) with a further requirement for a positive earnings per share for the
year ending 31 August 2006. 40 per cent of an award will vest for target performance, with full vesting for outstanding profit
achievement. Vesting between 40 per cent and 100 per cent of the award is on a straight-line basis by reference to cumulative
profitability . Future year awards will also be subject to suitably challenging performance targets set at the start of each
performance period. Inflation linked Earnings Per Share growth will be adopted as the performance condition once
profitability is achieved. Should this be approved, the potential benefits for the Executive Directors are shown in the table below.
Long Term
Other Annual Incentive
Base salary benefits bonus Plan Total
%%%%%
Charles McGregor
At on target performance 52 6 21 21 100
At maximum performance 34 4 28 34 100
Nick Bray
At on target performance 57 5 15 23 100
At maximum performance 39 3 19 39 100
The Board is seeking shareholders' approval to make minor amendments to the rules of the SA YE  and Executive Share
Option Schemes, to enable market purchased shares to be used, where appropriate, to satisfy subsisting options granted
under the schemes to aid flexibility across the Group's employee share incentive arrangements and to distinguish such
shares from the dilution limits applicable to new issue shares which remain ABI compliant. These changes are put forward
for approval by shareholders at the AGM and are tabled as items 9 to 11. Remuneration report (continued)
24
The Executive Directors are also eligible to participate in the Company’s SA YE scheme. Grants of SA YE schemes are made 
at discounts of up to 20 per cent of the market price and are not subject to performance criteria. SA YE options are made
available to all UK employees.
Total Shareholder Return performance graph The graphs below show the T otal Shareholder Return (TSR) performance of
the Company in comparison to the FTSE Allshare and FTSE T elecom Services indices for both a five and a one year period.
The Committee considers these indices to be relevant for TSR comparative purposes.
Directors’ contracts Executive Directors are appointed with contracts providing for a 12 month notice period. No Director 
has a fixed term service contract. Current service contracts for Executive Directors were agreed on the following dates:
Charles McGregor – 11 June 1996
Nick Bray – 8 January 2001*
*Amended on 13 November 2002 to increase the notice period from six to twelve months.
Non-Executive Directors Non-Executive Directors are appointed on contracts expiring on one month’s notice. No Director
serves for more than three years without being reappointed.
450
400
350
300
250
200
150
100
50
SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG
0
FIBERNET GROUP
FTSE TELECOM SERVICES – PRICE INDEX
FSTE ALL SHARE – PRICE INDEX
Source: DATASTREAM 
1,000
900
1999 2000 2001 2002 2003
800
700
600
500
400
300
200
100
0
FIBERNET GROUP
FTSE TELECOM SERVICES – PRICE INDEX
FSTE ALL SHARE – PRICE INDEX
Source: DATASTREAM  25
Audited information
Directors’ remuneration
Fees/basic salary Bonus Benefits Total Pensions
2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Executive
C S McGregor 186 180 150 – 21 21 357 201 9 9
N P S Bray 135 124 68 – 11 11 214 135 7 6
Non-Executive
D Wolfson 40 35 – – – – 40 35 – –
K C M Innes Ker 25 25 – – – – 25 25 – –
E R C Chovil 25 17 – – – – 25 17 – –
D K Anslow – 19 – – – – – 19 – –
411 400 218 – 32 32 661 432 16 15
D K Anslow resigned on 25 January 2002.
Directors’ share options
Number of share options Exercise
31 August 31 August price
2002 Granted Exercised Waived 2003 (pence) Dates of exercise
Executive share options:
N P S Bray 83,139 – – – 83,139 577 02/05/04 – 01/05/11
N P S Bray 116,861 – – – 116,861 105 24/04/05 – 23/04/09
N P S Bray – 60,000 – – 60,000 20 26/11/05 – 25/11/09
SAYE options:
N P S Bray – 6,831 – – 6,831 17 01/07/06 – 31/12/06
Options granted to Nick Bray during the period are subject to performance conditions requiring a significant increase in the
share price of the Group compared with the option grant price over a three year performance. For options granted prior 
to the current year , performance conditions related to both share price performance of the Group together with a required
increase in the turnover of the Group, as reported in the published financial statements.
The mid-market price of the shares at 31 August 2003 was 95.0p and during the year the price varied between 14.0p 
and 130.0p.
K C M Innes Ker
Chairman of the Remuneration Committee
13 October 2003 Corporate governance
26
Introduction This statement, together with the Remuneration report on pages 22 to 25, considers how the principles of good
governance as set out in Section 1 of the Combined Code for Corporate Governance issued by the London Stock Exchange 
in June 1998 (‘the Code’) have been applied by the Company .
Throughout the year ended 31 August 2003 the Company has been in compliance with the code set out in section 1 of the
Combined Code of Corporate Governance issued by the Financial Services Authority .
Directors The Board comprises two Executive Directors (C S McGregor and N P S Bray) and three independent Non-Executive
Directors (D Wolfson, K C M Innes Ker and E R C Chovil). None of the Directors has served more than three years without being
submitted for re-election.
The Board, which meets at least 12 times a year , is responsible for the overall strategy and financial performance of the Group
and has a formal schedule of matters reserved for its sole approval. Each Board meeting is preceded by a clear agenda and
with the relevant information needed to reach informed decisions at those meetings. All Directors are aware of their right to seek
independent advice and to seek advice of the Company Secretary if required.
The Board is committed to ensuring that there continues to be a clear balance of authority and decision making in its activities.
The Board has a majority of Non-Executive Directors who are independent. The senior independent Non-Executive Director
is K C M Innes Ker .
The Board has continued to operate its Audit and Remuneration Committees which solely comprise the Non-Executive Directors.
The Audit Committee and Remuneration Committee are chaired by E R C Chovil and K C M Innes Ker respectively .
Since there are only five Directors and as permitted by the Code, the Board have not established a nomination committee.
Any future appointments, which can be proposed by any Director , will be discussed by the full Board.
The Group Operating Board comprises the two Executive Directors of the Company , together with Senior Managers  of the Company .
Directors’ remuneration The Remuneration Committee reviews annually the remuneration packages of the Executive Directors
and the Executive Directors are responsible for the remuneration packages of the Non-Executive Directors. The Remuneration
report on pages 22 to 25 contains a detailed description of remuneration and applicable policies.
Relations with Shareholders The Company encourages the participation of both institutional and private investors.
Collective and individual presentations to institutional investors are held regularly and tours of the Group’s Network Operations
Centre are also conducted. Communication with private individuals is maintained both through the Annual General Meeting
and the ‘News Direct’ service available to investors on the Company’s website (www .fibernet.co.uk). The Annual and Interim Reports
are the principal vehicles of communication, but the Company also issues two quarterly updates and a statement following
the AGM to ensure Shareholders are kept up to date.
The Company makes a presentation to Shareholders at its AGM and all Directors are available to answer questions that arise.
Any resolutions are voted on separately and proxy votes announced.
Maintenance of a sound system of internal control The Board has responsibility for the Group’s system of internal control and
for reviewing its effectiveness. Such controls are designed to manage, rather than eliminate, the risk that business objectives
will not be met and can only provide reasonable, but not absolute, assurance against material misstatement or loss. 27
The Board has applied Principle D .2 of the Combined Code on internal control in accordance with the guidance on internal
controls contained in the publication ‘Internal Control: Guidance for Directors on the Combined Code’ (‘the T urnbull Report’)
issued in September 1999.
An ongoing process for identifying, evaluating and managing the significant risks faced by the Group has been in place
throughout the year and up to the date of the Annual Report and accords with the provisions of the T urnbull Report.
The Board’s monitoring covers all controls, including financial, operational and compliance controls and risk management.
A risk management process is operated by the Group, under which the risks of not achieving their business objectives are
identified by members of the Group Operating Board. Those risks are documented in a Significant Risk Evaluation register
which evaluates the likelihood and impact of the risks occurring. Individual members of the Group Operating Board are
allocated responsibility for managing those risks and ensuring adequate internal controls exist for that purpose, and that
weaknesses are promptly remedied. During the year the Directors reviewed the need for an internal audit function and decided
that taking account of the current size and nature of the Groups operations an internal audit function was not required. The Directors
will continue to evaluate the need to supplement the existing controls with an internal audit function on an annual basis. The Board
has performed a specific assessment for the purpose of this Annual Report. This assessment considers all significant aspects
of internal control arising during the period covered by the Report. The Audit Committee assists the Board in discharging its
review responsibilities.
The Group operates a management structure with established responsibilities, clear delegated authorities and reporting lines
to the Board. Budgets are set annually and detailed performance against those budgets is evaluated monthly . All capital
expenditure and major purchases are subject to appropriate authorisation processes. The overall control environment
continues to be enhanced by ongoing information technology systems enhancements, integration and implementations. Directors’ responsibilities
28
Financial statements, including adoption of going concern basis United Kingdom company law requires the Directors 
to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company
and the Group and of the profit or loss of the Group for that period.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going
concern basis in preparing the financial statements.
In preparing the financial statements, the Directors are required to: select suitable accounting policies and then apply them
consistently; make judgements and estimates that are reasonable and prudent; and state whether applicable accounting
standards have been followed, subject to any material departures disclosed and explained in the financial statements.
Other matters The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy
at any time the financial position of the Company and Group and enable them to ensure that the financial statements comply
with the Companies Act 1985. They are also responsible for the system of internal control, for safeguarding the assets of the
Company and Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Independent Auditors’ report to the members 
of Fibernet Group Plc
29
We have audited the financial statements of Fibernet Group Plc for the year ended 31 August 2003 which comprise the profit
and loss account, the balance sheets, the cash flow statement, the statement of total recognised gains and losses, and the
related notes 1 to 31. These financial statements have been prepared under the accounting policies set out therein. We have
also audited the information in the part of the Remuneration report that is described as having been audited.
This report is made solely to the Company’s members, as a body , in accordance with section 235 of the Companies Act 1985.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state
to them in an Auditors’ report and for no other purpose. T o the fullest extent permitted by law , we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body , for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of Directors and Auditors
As described in the statement of Directors’ responsibilities, the Company’s Directors are responsible for the preparation 
of the financial statements in accordance with applicable United Kingdom law and accounting standards. They are also
responsible for the preparation of the other information contained in the Annual Report including the Remuneration report.
Our responsibility is to audit the financial statements and the part of the Remuneration report described as having been
audited in accordance with relevant United Kingdom legal and regulatory requirements and auditing standards.
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial
statements and the part of the Remuneration report described as having been audited have been properly prepared in
accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors’ report is not consistent with
the financial statements, if the Company has not kept proper accounting records, if we have not received all the information
and explanations we require for our audit, or if information specified by law regarding Directors’ remuneration and
transactions with the Company and other members of the Group is not disclosed.
We review whether the corporate governance statement reflects the Company’s compliance with the seven provisions of the
Combined Code specified for our review by the Listing Rules of the Financial Services Authority , and we report if it does not.
We are not required to consider whether the Board’s statements on internal control cover all risks and controls, or form an
opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures.
We read the Directors’ report and the other information contained in the Annual Report for the above year as described in the
contents section including the unaudited part of the Remuneration report and consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom auditing standards issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements
and the part of the Remuneration report described as having been audited. It also includes an assessment of the significant
estimates and judgements made by the Directors in the preparation of the financial statements and of whether the
accounting policies are appropriate to the circumstances of the Company and the Group, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary 
in order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the
Remuneration report described as having been audited are free from material misstatement, whether caused by fraud or
other irregularity or error . In forming our opinion, we also evaluated the overall adequacy of the presentation of information 
in the financial statements and the part of the Remuneration report described as having been audited.
Opinion
In our opinion:
• the financial statements give a true and fair view of the state of affairs of the Company and the Group as at 31 August 2003
and of the loss of the Group for the year then ended; and
• the financial statements and part of the Remuneration report described as having been audited have been properly prepared
in accordance with the Companies Act 1985.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
Reading
13 October 2003 Consolidated profit and loss account
for the year ended 31 August 2003
30
Continuing Discontinued
Continuing Discontinued operations operations Total
operations operations Total 2002 2002 2002
2003 2003 2003 (restated)* (restated)* (restated)*
Note £’000 £’000 £’000 £’000 £’000 £’000
Turnover 2 36,348 – 36,348 36,672 2,833 39,505
Cost of sales before exceptional items (26,680) – (26,680) (27,138) (4,922) (32,060)
Exceptional cost of sales 3 1,886 – 1,886 –––
Cost of sales (24,794) – (24,794) (27,138) (4,922) (32,060)
Gross profit/(loss) 11,554 – 11,554 9,534 (2,089) 7,445
Administrative expenses before exceptional items (16,572) – (16,572)(19,792) (6,847) (26,639)
Exceptional administrative expenses 3 (2,171) – (2,171) (5,083) – (5,083)
Administrative expenses (18,743) – (18,743) (24,875) (6,847) (31,722)
Operating loss 4 (7,189) – (7,189) (15,341) (8,936) (24,277)
Exceptional items: 3
– Adjustment to profit on sale of fixed assets 
in respect of release from obligations under
IRU contracts 1,966 – 1,966 –––
– T ermination costs (2,433) (64,084)
– Less prior year provision 3,182 –
– Impairment reversal 2,769 –
– Gain/(loss) on termination of operations 3,518 (64,084)
Finance charges (net) 5 (3,289) (4,055)
Loss on ordinary activities before taxation 2 (4,994) (92,416)
T ax on loss on ordinary activities 6 – 571
Loss for the financial year 20,21 (4,994) (91,845)
EBITDA before exceptional items 2,7 7,293 – 7,293 5,026 (6,045) (1,019)
EBITDA 7 10,626 749 11,375 5,026 (17,057) (12,031)
Basic and diluted loss per share 9 (8.1p) (149.3p)
Consolidated statement of total recognised 
gains and losses
2002
2003 (restated)*
Note £’000 £’000
Loss for the financial year (4,994) (91,845)
Gain on foreign currency translation 30 1,031
Total recognised gains and losses relating to the year (4,964) (90,814)
Prior year adjustment 10 (1,182) –
Total recognised gains and losses since last Annual Report and financial statements (6,146) (90,814)
The accompanying notes are an integral part of this Consolidated profit and loss account and Consolidated statement 
of total recognised gains and losses.
*The results for the year ended 31 August 2002 have been restated as a result of the introduction of UITF 36 ‘Contracts 
for sale of capacity’. The effect of the restatement is shown in note 10. Consolidated balance sheet
at 31 August 2003
31
2002
2003 (restated)*
Note £’000 £’000
Fixed assets
Intangible assets 11 92 111
T angible assets 12 87,687 89,559
87,779 89,670
Current assets
Stocks 14 262 1,701
Debtors: Amounts falling due within one year 15 10,425 12,707
Debtors: Amounts falling due after more than one year 15 2,738 2,311
Cash at bank and in hand 24,910 34,326
38,335 51,045
Creditors: amounts falling due within one year 16 (23,140) (27,135)
Net current assets 15,195 23,910
Total assets less current liabilities 102,974 113,580
Creditors: amounts falling due after more than one year 17 (39,596) (39,652)
Provisions for liabilities and charges 18 (1,822) (7,408)
Net assets 61,556 66,520
Capital and reserves
Called up share capital 19 6,156 6,156
Share premium account 20 155,369 155,369
Merger reserve 20 (2,472) (2,472)
Profit and loss account 20 (97,497) (92,533)
Equity shareholders’ funds 21 61,556 66,520
The accompanying notes are an integral part of this Consolidated balance sheet.
*The results for the year ended 31 August 2002 have been restated as a result of the introduction of UITF 36 ‘Contracts 
for sale of capacity’. The effect of the restatement is shown in note 10. Company balance sheet
at 31 August 2003
32
2003 2002
Note £’000 £’000
Fixed assets
T angible assets 12 770 2,699
Investments 13 2,550 2,550
3,320 5,249
Current assets
Debtors 15 69,565 62,667
Cash at bank and in hand 16,802 23,629
86,367 86,296
Creditors: amounts falling due within one year 16 (802) (1,530)
Net current assets 85,565 84,766
Net assets 88,885 90,015
Capital and reserves
Called up share capital 19 6,156 6,156
Share premium account 20 155,369 155,369
Profit and loss account 20 (72,640) (71,510)
Equity shareholders’ funds 21 88,885 90,015
The accompanying notes are an integral part of this Company balance sheet.
The financial statements on pages 20 to 52 were approved by the Board of Directors on 13 October 2003 and signed 
on its behalf by:
Nick Bray
Financial Director
13 October 2003
Charles McGregor
Chief Executive
13 October 2003 Consolidated cash flow statement
for the year ended 31 August 2003
33
2002
2003 (restated)*
Note £’000 £’000
Net cash inflow/(outflow) from operating activities 22 9,045 (1,982)
Returns on investments and servicing of finance 23 (2,980) (2,295)
Capital expenditure 24 (14,005) (56,612)
Cash outflow before management of liquid resources and financing (7,940) (60,889)
Financing 25 (1,476) (530)
Decrease in cash during the year (9,416) (61,419)
The accompanying notes are an integral part of this Consolidated cash flow statement.
*The results for the year ended 31 August 2002 have been restated as a result of the introduction of UITF 36 ‘Contracts for sale
of capacity’. The effect of the restatement is shown in note 10. Notes to the financial statements
34
1 Accounting policies
A summary of the principal accounting policies, all of which have been applied consistently throughout the year and the
previous year , is set out below .
a) Basis of accounting The financial statements are prepared under the historical cost convention and in accordance with
applicable United Kingdom accounting standards. UITF 36 ‘Contracts for sale of capacity’ has been adopted in these
financial statements. The prior year comparatives have been restated accordingly . The effect of the adoption of UITF 36 
on the prior year comparatives is shown in note 10.
b) Basis of consolidation The financial statements consolidate the financial statements of Fibernet Group Plc and all its
subsidiary undertakings made up to 31 August 2003. The results of subsidiaries acquired or sold are consolidated for 
the period from or to the date on which control passed. Acquisitions are accounted for under the acquisition method.
No profit and loss account is presented for the Company as provided by Section 230 of the Companies Act 1985.
The Company’s retained loss for the year was £1,130,000 (2002: £73,410,000).
c) T urnover Turnover is stated as the amounts receivable (net of sales taxes) for the sale of networking services and products.
Turnover arising from service contracts is recognised evenly over the life of each contract, regardless of the payment profile.
Turnover from long-term leases is accounted for according to note 1(d) below .
d) Sales of long-term leases of telecommunications infrastructure and capacity Turnover from long-term leases of
telecommunications infrastructure and capacity is accounted for in accordance with UITF 36 ‘Contracts for sale of capacity’.
e) Intangible fixed assets – goodwill Goodwill arising on the acquisition of subsidiary undertakings and businesses,
representing any excess of the fair value of the consideration given over the fair value of the identifiable assets and liabilities
acquired, is capitalised and written off on a straight line basis over its useful economic life, which is five years. Provision is
made for any impairment.
f) Intangible fixed assets – licences Licence costs are stated at cost, less amortisation and any provision for impairment 
in value. They are written off commencing upon network activation, on a straight line basis over five to 15 years.
g) Tangible fixed assets and depreciation T angible fixed assets are stated at cost, net of depreciation and any provision for
impairment. Depreciation is provided on leasehold improvements, motor vehicles, plant and equipment, office furniture and
computers to write off their cost, less estimated residual value, on a straight line basis over their estimated useful lives.
Depreciation is provided on the Group’s telecommunications network assets, commencing on activation, to write off their
cost, less estimated residual value, on a straight line basis over the shorter of their estimated useful lives or the minimum
period of related customer service contracts. The estimated useful lives are as follows:
Leasehold improvements The shorter of 5 years and lease term
T elecommunications network 5 to 20 years
Motor vehicles 5 years
Plant and equipment 5 years
Computers 5 years
Office furniture 5 years
h) Investments in subsidiary undertakings The Company’s investments in its subsidiary undertakings are stated at cost less
provision for any impairment.
i) Stocks Stocks are valued at the lower of cost and net realisable value. Cost is arrived at on a first in, first out basis and
includes freight and duty for equipment purchased from overseas. Net realisable value is based on estimated selling price
less further costs expected to completion and disposal. Provision is made for obsolete, slow moving or defective items 
where appropriate. 35
1 Accounting policies (continued)
j) Leases and hire purchase contracts Assets obtained under hire purchase contracts and leases which result in the transfer
of substantially all the risks and rewards of ownership (finance leases) are capitalised as tangible fixed assets at the estimated
present value of underlying lease payments and are depreciated over the shorter of the lease term and their useful lives.
Obligations under such agreements are included in creditors, net of finance charges allocated to future periods. The finance
element of the rental payments is charged to the profit and loss account over the period of each hire purchase contract or
lease so as to produce a constant periodic rate of charge on the outstanding balance of the net obligation in each period.
Rentals paid under other leases (operating leases) are charged against income on a straight line basis over each lease term.
k) Foreign currency T ransactions during the year have been converted at the rate ruling when each transaction occurred. Any
exchange gains or losses arising from a change in exchange rates subsequent to the date of a transaction are included within
the profit and loss account. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the
rate of exchange ruling at the balance sheet date or , if matched by forward exchange contracts, the contracted rates.
The results of overseas subsidiaries are converted at the average rates of exchange during the year and their balance sheets
at the rates ruling at the balance sheet date. Exchange differences arising on translation of the opening net assets and results
of overseas subsidiaries, and on foreign currency borrowings, to the extent that they hedge the Group’s investment in such
operations, are dealt with through reserves. All other exchange differences are included in the profit and loss account.
l) Taxation Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered)
using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date
where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have
occurred at the balance sheet date. Timing differences are differences between the Group’s taxable profits and its results as
stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from
those in which they are recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence,
it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying
timing differences can be deducted.
Deferred tax is not recognised when fixed assets are revalued unless by the balance sheet date there is a binding agreement
to sell the revalued assets and the gain or loss expected to arise on sale has been recognised in the financial statements.
Neither is deferred tax recognised when fixed assets are sold and it is more likely than not that the taxable gain will be rolled
over , being charged to tax only if and when the replacement assets are sold.
Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries only to the extent that, at the balance
sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future has been
entered into by the subsidiary .
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are
expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is not discounted.
m) Deferred income Amounts receivable under maintenance and service contracts are credited to deferred income and
released to the profit and loss account on a straight line basis over the duration of the contracts.
n) Pensions costs The Group has not contracted out of the state pension arrangements. Additional benefits for employees
are provided by a defined contribution Group pension scheme and by individual defined contribution schemes with the costs
being met in full by the Group and charged to the profit and loss account as incurred. Notes to the financial statements (continued)
36
2 T urnover and geographical segment analysis
All of the Group’s turnover and loss on ordinary activities before taxation arose from its principal activity . The Directors consider
that the Group has only one class of business. However , additional analysis is provided in respect of turnover and EBITDA,
as the Directors believe it to be informative.
The analysis of turnover in this note refers to three types of sale. These are described as follows:
Service contracts – relates to revenue from WAN contracts and from LAN maintenance contacts.
LAN products – relates to sale of and installation of LAN equipment.
WAN products – represents sales of telecommunications infrastructure.
Continuing operations Discontinued operations Total
(restated) (restated)
2003 2002 2003 2002 2003 2002
£’000 £’000 £’000 £’000 £’000 £’000
Turnover by type
Service contracts 33,749 35,372* – 297 33,749 35,669
LAN products 1,970 1,300 – 2,014 1,970 3,314
WAN products 629 – – 522 629 522
36,348 36,672 – 2,833 36,348 39,505
Continuing operations Discontinued operations Total
(restated) (restated)
2003 2002 2003 2002 2003 2002
£’000 £’000 £’000 £’000 £’000 £’000
Turnover by destination and origin
UK and Ireland 35,070 36,247* – – 35,070 36,247
France – – – 60 – 60
Germany 1,278 425 – 2,773 1,278 3,198
Rest of Europe – – – – – –
36,348 36,672 – 2,833 36,348 39,505
*During 2002, £2,340,000 of revenue was recognised as service contracts in continuing operations on the cancellation of a
customer contract, monies being paid up front to exit the remaining obligation. This contract cancellation increased revenue
by £2,340,000, net profit by £1,290,000 and EBITDA by £2,070,000. 37
2 T urnover and geographical segment analysis (continued)
Continuing operations Discontinued operations Total
(restated) (restated)
2003 2002 2003 2002 2003 2002
£’000 £’000 £’000 £’000 £’000 £’000
Geographical analysis of EBITDA before exceptional items
UK and Ireland 7,439 5,516* – – 7,439 5,516
France – – – (1,291) – (1,291)
Germany (146) (490) – (4,669) (146) (5,159)
Rest of Europe – – – (85) – (85)
7,293 5,026 – (6,045) 7,293 (1,019)
2002
2003 (restated)
£’000 £’000
Geographical analysis of (loss)/profit on ordinary activities before taxation
UK and Ireland (8,224) (15,792)
France 1,276 (21,518)
Germany 1,944 (54,811)
Rest of Europe 10 (295)
(4,994) (92,416)
2002
2003 (restated)
£’000 £’000
Geographical analysis of net operating assets
UK and Ireland 60,836 68,198
France 230 126
Germany 500 (1,903)
Rest of Europe (10) 99
61,556 66,520
*During 2002, £2,340,000 of revenue was recognised as service contracts in continuing operations on the cancellation of a
customer contract, monies being paid up front to exit the remaining obligation. This contract cancellation increased revenue
by £2,340,000, net profit by £1,290,000 and EBITDA by £2,070,000.
Continuing and discontinued operations During 2002 the Group discontinued its national network operations in France and
Germany . Accordingly these are disclosed within discontinued operations. Continuing operations comprise the Group’s UK
business plus its Frankfurt Carrier Ring operation. Notes to the financial statements (continued)
38
3 Exceptional items
2002
2003 (restated)
£’000 £’000
Cost of sales:
Network rates rebates (1,886) –
Administrative expenses:
Impairment of tangible fixed assets – DSL 1,329 –
Impairment of tangible fixed assets – other 323 5,083
Onerous leases – DSL 519 –
2,171 5,083
Adjustment to profit on sale of fixed assets in respect of release from obligations under IRU contracts (1,966) –
(Gain)/loss on termination of operations:
Termination costs* 2,433 64,084
Less prior year provision (3,182) –
Impairment reversal (2,769) –
(3,518) 64,084
Total exceptional (credit)/charge (5,199) 69,167
*T ermination costs for the current year are stated net of £1,552,000 which was included in finance lease creditors 
at 31 August 2002 and which have been terminated during the year .
There is no related tax charge/(credit) arising from the exceptional (credit)/charge.
Network rates rebates
During the year the Group successfully appealed the business rates assessment on its national fibre optic network.
The exceptional gain represents the rebates obtained in respect of prior years. The reduction in respect of the year ended 
31 August 2003 was an additional £1,500,000 and is included in cost of sales.
DSL operations
During the year the Group launched a new UK national Partial Private Circuit (PPC) product. For many applications this
product effectively replaces the Group’s Digital Subscriber Line (DSL) product, resulting in a significant reduction in the
expected demand for DSL services. Accordingly the Group has reviewed its DSL operations and identified a number of
onerous commitments in respect of circuit rentals and other supplier commitments, relating to unprofitable DSL points of
presence (POPs). Provision has been made for the anticipated closure costs for these POPs. Fixed assets relating to these
POPs have also been impaired in full.
Impairment of tangible fixed assets – other
In accordance with accounting standards the Group regularly monitors the carrying value of its fixed assets. During the year 
a small element of the network was identified for which no future use is anticipated. Accordingly this asset has been impaired
in full resulting in an exceptional cost of £323,000. The prior year charge relates to the impairment of the Group’s Frankfurt
Carrier Ring operation.
Adjustment to profit on sale of fixed assets in respect of release from obligations under IRU contracts
During the year two IRU contracts have been terminated, one due to the customer going into liquidation, the other due to the
customer no longer requiring the service. As a result the Group has been relieved from future obligations in respect of these
contracts and has released the associated provisions. The gain represents the result of writing off all assets and liabilities
held in respect of these contracts that are no longer required.
Gain on termination of operations
During 2002 the Group discontinued its national network operations in France and Germany . Accordingly these are disclosed
within discontinued operations. The exceptional gain in 2003 arises due to the actual costs of terminating the activities being
less than those provided by £749,000 and as the result of the reversal of the impairment recorded in 2002 in respect of
certain telecommunications equipment. This impairment reversal gives rise to an exceptional gain of £2,769,000 and relates
to equipment that has been redeployed within the Group or is expected to be deployed during the year ended 31 August 2004. 39
4 Operating loss is stated after charging:
2002
2003 (restated)
£’000 £’000
Depreciation
– owned assets 11,656 14,832
– assets held under hire purchase contracts and finance leases 2,522 2,725
Amortisation of intangible assets 19 618
Impairment of tangible fixed assets 1,652 5,083
Operating lease payments
– plant and equipment 6,322 6,593
– land and buildings 1,746 2,941
Foreign exchange losses/(gains) 6 (36)
Auditors’ remuneration
Arthur Andersen:
– audit services – 53
– other services – 26
Deloitte & T ouche:
– audit services 121 85
– other services 76 31
5 Finance charges (net)
2003 2002
£’000 £’000
i) Interest receivable
Bank interest 892 2,300
ii) Interest payable
Bank interest and similar charges – (1,030)
Unwinding of discount on provisions and other long-term liabilities (316) (713)
Interest under hire purchase contracts and finance leases (3,865) (4,612)
(3,289) (4,055)
6 Tax on loss on ordinary activities
2003 2002
£’000 £’000
Current tax
UK corporation tax – prior year adjustment – 150
Deferred tax (note 18)
Origination and reversal of timing differences – (721)
– (571) Notes to the financial statements (continued)
40
6 Tax on loss on ordinary activities (continued)
The differences between the total current tax shown above and the amount calculated by applying the standard rate of UK
corporation tax to the loss before tax is as follows:
2002
2003 (restated)
£’000 £’000
Group loss on ordinary activities before taxation (4,994) (92,416)
T ax on Group loss on ordinary activities at standard UK corporation tax rate of 30 per cent (1,498) (27,725)
Effects of:
Expenses not deductible for tax purposes (467) 120
Capital allowances in excess of depreciation (1,611) (593)
Overseas losses not recognised 3,636 22,203
UK losses not recognised – 5,995
Adjustments to tax charge in respect of prior periods – 150
Movement in short-term timing differences (60) –
– 150
7 Earnings before interest, taxation, depreciation and amortisation (EBITDA) 
Continuing Discontinued
Continuing Discontinued operations operations Total
operations operations Total 2002 2002 2002
2003 2003 2003 (restated) (restated) (restated)
£’000 £’000 £’000 £’000 £’000 £’000
Operating loss (7,189) – (7,189) (15,341) (8,936) (24,277)
Exceptional cost of sales (1,886) – (1,886) –––
Exceptional administrative expenses 2,171 – 2,171 5,083 – 5,083
Operating loss before exceptional items (6,904) – (6,904) (10,258) (8,936) (19,194)
Depreciation charge for the year 14,178 – 14,178 15,279 2,278 17,557
Amortisation charge for the year 19 – 19 5 613 618
EBITDA before exceptional items 7,293 – 7,293 5,026 (6,045) (1,019)
Exceptional cost of sales 1,886 – 1,886 –––
Exceptional administrative expenses
– onerous leases (519) – (519) –––
Adjustment to profit on sale of fixed assets in respect 
of release from obligations under an IRU contract 1,966 – 1,966 –––
Termination gain/(charge), net of impairment charges 
and prior year provision – 749 749 –(11,012) (11,012)
EBITDA 10,626 749 11,375 5,026 (17,057) (12,031)  41
8 Staff costs
The average monthly number of employees (including Executive Directors) was:
2003 2002
Number Number
Administration 31 54
Sales and support 201 284
232 338
Staff costs (including Directors’ remuneration) during the year were as follows:
2003 2002
£’000 £’000
Wages and salaries 11,763 14,181
Social security costs 1,481 1,799 
Pension costs (note 30) 398 626
13,642 16,606 
The Group operates an Inland Revenue approved employee share option scheme and has taken advantage of the exemption
given in UITF Abstract 17 ‘Employee share schemes’ from recognising a charge in the profit and loss account for the discount
on the options.
Remuneration paid to Directors is disclosed in the Remuneration report on pages 22 to 25 which forms part of these financial statements.
9 Basic and diluted loss per share
Basic and diluted loss per share is based on the loss for the financial year of £4,994,000 (2002: (restated) £91,845,000) and on the
weighted average number of 10p ordinary shares in issue during the year to 31 August 2003 of 61,558,761 (2002: 61,531,950).
Financial Reporting Standard 14 requires presentation of diluted earnings per share when a company could be called upon
to issue shares that would decrease net profit or increase net loss per share. For a loss making financial period where there
are outstanding share options, diluted loss per share would be increased by the exercise of out-of-the-money options.
Since it seems inappropriate to assume that option holders would act irrationally , and since there are no other diluting items,
diluted loss per share equals basic loss per share.
10 Prior year adjustment
On 27 March 2003 UITF 36 ‘Contracts for sale of capacity’ was released. The Group’s accounting policy in respect of sales 
of IRU contracts has been revised to reflect the principles of UITF 36, under which the proceeds from transactions in capacity
are reported as turnover in only very limited circumstances. For exchange or reciprocal transactions, turnover and gains 
are recognised only if the assets or services have a readily ascertainable market value as defined in FRS 10 ‘Goodwill 
and Intangible Assets’, and this readily ascertainable market value test is now added to the Group’s accounting policy .
For non-reciprocal IRU transactions, subject to certain criteria being met, gains are recognised as a sale of fixed assets.
The effects of the change in policy are summarised below:
2003 2002
£’000 £’000
Consolidated profit and loss account
Decrease in turnover – (3,571)
(Increase)/decrease in cost of sales (1,893) 1,390
Reduction in loss on termination of operations – 999
Adjustment to profit on sale of fixed assets in respect of release from obligations under IRU contracts 1,966 –
Decrease/(increase) in loss for the year 73 (1,182)
Consolidated balance sheet
Decrease in tangible fixed assets (883) (941)
Decrease in debtors (226) (241)
Decrease in net assets, being reduction in profit and loss reserve and shareholders’ funds (1,109) (1,182) Notes to the financial statements (continued)
42
11 Intangible fixed assets
Goodwill Licences Total
£’000 £’000 £’000
Group
Cost
1 September 2002 3,283 4,201 7,484
Exchange rate adjustment 295 361 656
Disposals – (525) (525)
31 August 2003 3,578 4,037 7,615
Amortisation
1 September 2002 3,283 4,090 7,373
Exchange rate adjustment 295 361 656
Charge for the year –1919
Disposals – (525) (525)
31 August 2003 3,578 3,945 7,523
Net book value
31 August 2003 –9292
31 August 2002 – 111 111
Company
The Company has no intangible fixed assets
12 Tangible fixed assets
Telecom- Leasehold
munications improve- Motor Plant and Office
network ments vehicles equipment Computers furniture Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Group
Cost
1 September 2002 (restated) 170,212 5,135 42 2,110 4,473 690 182,662
Exchange rate adjustment 4,216 311 3 28 66 8 4,632
Additions 10,82952–95213–11,189
Disposals (2,199) ––––– (2,199)
31 August 2003 183,058 5,498 45 2,233 4,752 698 196,284
Depreciation
1 September 2002 (restated) 85,115 4,104 42 1,410 2,023 409 93,103
Exchange rate adjustment 4,216 311 3 28 66 8 4,632
Charge for the year 12,850 327 – 343 552 106 14,178
Impairment – continuing operations 1,448 – – 66 138 – 1,652
Impairment reversal – discontinued operations (2,769) ––––– (2,769)
Disposals (2,199) ––––– (2,199)
31 August 2003 98,661 4,742 45 1,847 2,779 523 108,597
Net book value
31 August 2003 84,397 756 – 386 1,973 175 87,687
31 August 2002 85,097 1,031 – 700 2,450 281 89,559
Included in tangible fixed assets are hire purchase and leased assets with a net book value of £31,256,000 (2002: £33,778,000). 43
12 Tangible fixed assets (continued)
Leasehold Office
improvements Computers furniture Total
£’000 £’000 £’000 £’000
Company
Cost
1 September 2002 1,274 2,279 257 3,810
Additions 21 – – 21
T ransfers to subsidiary companies – (2,279) – (2,279)
31 August 2003 1,295 – 257 1,552
Depreciation
1 September 2002 380 641 90 1,111
Charge for the year 260 – 52 312
T ransfers to subsidiary companies – (641) – (641)
31 August 2003 640 – 142 782
Net book value
31 August 2003 655 – 115 770
31 August 2002 894 1,638 167 2,699
13 Fixed asset investments
Shares in
subsidiary
undertakings
£’000
Company
Cost at beginning and end of year 2,550
The Group owns 100 per cent of the ordinary share capital of the following principal subsidiaries:
Name Principal activity Country of registration
Fibernet UK Limited* Wide area network digital communication England and Wales
Fibernet Holdings Limited* Holding Company England and Wales
Fibernet Limited* Non-trading England and Wales
Fibernet Quest Limited* Qualifying Employee Share Ownership T rust England and Wales
Fibernet GmbH Wide area network digital communication Germany
*Directly owned by the Company .
14 Stocks
Group Group Company Company
2003 2002 2003 2002
£’000 £’000 £’000 £’000
Finished goods and goods for resale 262 1,701 – – Notes to the financial statements (continued)
44
15 Debtors
Group 
Group 2002 Company Company
2003 (restated) 2003 2002
Amounts falling due within one year £’000 £’000 £’000 £’000
T rade debtors 5,512 5,436 – –
Amounts owed by subsidiary undertakings – – 69,274 62,380 
Other debtors 840 4,454 – 13 
Prepayments and accrued income 4,073 2,817 291 274
10,425 12,707 69,565 62,667
Group Group Company Company
2003 2002 2003 2002
Amounts falling due after more than one year £’000 £’000 £’000 £’000
Prepayments and accrued income 2,738 2,311 – –
Accrued income at 31 August 2003 and 31 August 2002 includes turnover earned from WAN product sales due to be invoiced
after the year end.
16 Creditors: amounts falling due within one year
Group Group Company Company
2003 2002 2003 2002
£’000 £’000 £’000 £’000
Obligations under hire purchase contracts and finance leases 2,486 1,726 – –
T rade creditors 2,351 5,835 19 526 
Other taxes and social security costs 1,724 569 10 15 
Accruals and deferred income 16,429 18,855 623 839 
Corporation tax 150 150 150 150 
23,140 27,135 802 1,530 
17 Creditors: amounts falling due after more than one year
Group Group Company Company
2003 2002 2003 2002
£’000 £’000 £’000 £’000
Obligations under hire purchase contracts and finance leases
– repayable between two and five years 9,504 9,907 – –
– repayable in more than five years 23,338 26,723 – –
Accruals and deferred income 6,754 3,022 – –
39,596 39,652 – –
For information on repayment terms and interest rates, see note 28.
Finance leases are secured on the assets to which they relate.
The Group leases a certain amount of its core network capacity from the UK business of Global Crossing. The US parent
company of Global Crossing filed for chapter 11 bankruptcy on 28 January 2002. On 8 October 2003, it was announced
that the Federal Communications Commission had approved Global Crossing’s application for transfer of control to
Singapore T echnologies T elemedia. This was the last regulatory requirement which Global Crossing were required to satisfy
to allow them to emerge from Chapter 11. Global Crossing are expected to emerge from Chapter 11 shortly .
The Directors have prepared a contingency plan should all or an element of the capacity from Global Crossing 
become unavailable. 45
18 Provisions for liabilities and charges
Future WAN Onerous Onerous
Restructuring product lease commitments
provisions sales costs provision provision Total
£’000 £’000 £’000 £’000 £’000
Group
1 September 2002 3,541 3,247 620 – 7,408
Charge to profit and loss account – 34 130 239 403
Exchange rate adjustment 239 – – – 239
Adjustment arising from discounting – 168 – – 168
Utilised in year (3,985) (410) (291) – (4,686)
Finance lease terminations 1,552 – – – 1,552
Release to profit and loss account (749) (2,513) – – (3,262)
31 August 2003 598 526 459 239 1,822
The restructuring provision relates to the Group’s discontinued operations the majority of which will be satisfied within one year .
The provision for WAN product sales costs represents the present value of future costs relating to WAN product sales.
This provision will be settled over the next 22 years.
The onerous lease provision relates to surplus office space. The provision will be utilised over the next three years.
The onerous commitments provision relates to anticipated closure costs in respect of unprofitable DSL POPs (note 3).
The provision will be utilised over the next two years.
Deferred tax assets/(liabilities) recognised and potential are as follows:
Provided Provided Potential Potential
2003 2002 2003 2002
£’000 £’000 £’000 £’000
Group
Accelerated capital allowances – (552) 161 (552)
Other timing differences – – – 127 
T ax losses available – 552 2,012 6,517 
– – 2,173 6,092 
There is also a potential deferred tax asset relating to the losses of the overseas subsidiaries of £76,145,000. As operations 
in France are discontinued and only a relatively small element of the German activities are continuing, the losses are unlikely
ever to be used and hence are more akin to a permanent tax difference for the Group. Consequently the tax effect of these
losses has not been included within the table of potential deferred tax assets. The Group has not recognised its deferred tax
assets due to the uncertainty as to their recoverability . Notes to the financial statements (continued)
46
19 Called up share capital
1) Authorised and allotted share capital: ordinary shares of 10p each
2003 2002
Number Number
Authorised 100,000,000 100,000,000 
Allotted, called up and fully paid 61,558,761 61,558,761 
2003 2002
£’000 £’000
Authorised 10,000 10,000 
Allotted, called up and fully paid 6,156 6,156 
2) Share options Share options have been granted to subscribe for ordinary shares of the Company as follows:
i) Approved executive share option scheme
Subscription
Number of shares under option price per share Exercise period
27,671 131p 03/06/00 – 02/06/07
19,923 79p 19/12/00 – 18/12/07
30,715 358p 08/06/01 – 07/06/08
13,282 295p 24/12/01 – 23/12/08
13,005 419p 03/06/02 – 02/06/09
7,501 1183p 18/11/02 – 17/11/09
50,147 1514p 15/06/03 – 14/06/10
30,300 782p 03/01/04 – 02/01/11
30,306 577p 02/05/04 – 01/05/11
92,454 435p 22/11/04 – 21/11/11
315,304
ii) Unapproved executive share option scheme
Subscription
Number of shares under option price per share Exercise period
168,517 358p 08/06/01 – 07/06/05
11,068 295p 24/12/01 – 23/12/05
36,802 419p 03/06/02 – 02/06/06
107,687 1183p 18/11/02 – 17/11/06
164,156 1514p 15/06/03 – 14/06/07
183,800 782p 03/01/04 – 02/01/08
97,883 577p 02/05/04 – 01/05/08
158,546 435p 22/11/04 – 21/11/08
141,861 105p 24/04/05 – 23/04/09
300,000 20p 26/11/05 – 25/11/09
1,370,320 47
19 Called up share capital (continued)
iii) Save As You Earn share option scheme
Subscription
Number of shares under option price per share Exercise period
59,004 73p 01/04/03 – 30/09/03
2,291 288p 18/07/01 – 17/01/04
1,110 1544p 30/05/03 – 29/11/05
586 601p 22/12/03 – 21/06/06
1,841 462p 25/05/04 – 24/11/06
16,361 274p 16/11/04 – 15/05/07
206,822 87p 28/05/05 – 27/11/07
398,405 17p 08/05/06 – 07/11/08
686,420
20 Reserves
Share Profit
Merger premium and loss
reserve account account
£’000 £’000 £’000
Group
At 1 September 2002 as previously stated (2,472) 155,369 (91,351)
Prior year adjustment –– (1,182)
At 1 September 2002 as restated (2,472) 155,369 (92,533)
Loss for the year –– (4,994)
Gain on foreign currency translation – – 30
31 August 2003 (2,472) 155,369 (97,497)
Share Profit
premium and loss
account account
£’000 £’000
Company
1 September 2002 155,369 (71,510)
Loss for the year –(1,130)
31 August 2003 155,369 (72,640) Notes to the financial statements (continued)
48
21 Reconciliation of movements in shareholders’ funds
Group Company
£’000 £’000
At 1 September 2002 as previously stated 67,702 90,015
Prior year adjustment (1,182) –
At 1 September 2002 as restated 66,520 90,015
Loss for the year (4,994) (1,130)
Gain on foreign currency translation 30 –
31 August 2003 61,556 88,885
22 Reconciliation of operating loss to net cash inflow/(outflow) from operating activities
Group Group
2003 2002
£’000 £’000
Operating loss (7,189) (24,277)
Depreciation and amortisation 14,197 18,175
Impairment 1,652 5,083 
Decrease in stocks 1,439 450 
Decrease in debtors 1,234 12,723
Increase/(decrease) in creditors 1,022 (9,866)
(Decrease)/increase in provisions for liabilities and charges (130) 1,395 
Cash outflow from termination of operations (3,180) (5,665)
Net cash inflow/(outflow) from operating activities 9,045 (1,982) 
23 Returns on investments and servicing of finance
Group Group
2003 2002
£’000 £’000
Interest received 892 2,327 
Bank interest and similar charges – (10)
Interest under hire purchase contracts and finance leases (3,872) (4,612)
Net cash outflow from returns on investments and servicing of finance (2,980) (2,295)
24 Capital expenditure
Group Group
2003 2002
£’000 £’000
Purchase of tangible and intangible fixed assets (14,005) (56,612)
25 Financing
Group Group
2003 2002
£’000 £’000
Issue of ordinary share capital – 233 
Capital element of finance lease rental payments (1,476) (763)
Net cash outflow from financing (1,476) (530) 49
26 Reconciliation of net cash flow to movement in net debt
2003 2002
£’000 £’000
Decrease in cash during the year (9,416) (61,419)
Payments under finance leases 1,476 763
Change in net debt resulting from cash flows (7,940) (60,656)
New finance leases – (10,608)
Termination of finance leases 1,552 8,159
Movement in net debt during the year (6,388) (63,105)
Net (debt)/funds as at beginning of the year (4,030) 59,075
Net debt at end of year (10,418) (4,030)
27 Analysis of net debt
Termination
1st September of finance 31st August
2002 Cash flows leases 2003
£’000 £’000 £’000 £’000
Cash at bank and in hand 34,326 (9,416) – 24,910
Hire purchase contracts and finance leases (38,356) 1,476 1,552 (35,328)
(4,030) (7,940) 1,552 (10,418)
28 Financial instruments
1) Overview The Group’s financial instruments comprise finance leases and cash, and various items, such as trade debtors
and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to fund the
Group’s operations.
It is, and has been throughout the period under review , the Group’s policy that no trading in financial instruments shall 
be undertaken.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and foreign currency risk.
The Board reviews and agrees policies for managing each of these risks and they are summarised below . These policies 
are periodically reviewed in line with changes to the Group’s financial circumstances.
As permitted by Financial Reporting Standard 13 ‘Derivatives and other financial instruments’, short-term debtors and
creditors have been excluded from the disclosures, other than the currency disclosures.
i) Interest rate risk The Group finances its operations through a mixture of finance leases, operating cash flows and share
issues. The Group had a net debt position at the year end. The Group does not consider that its current exposure to
movements in interest rates is sufficient to necessitate hedging.
ii) Liquidity risk The Group’s objective is to ensure adequate funding for its operations. The Group considers that it has
sufficient funding for its short and medium-term funding requirements.
iii) Foreign currency risk The Group’s operations are principally Sterling based. During the year the major exposure was 
in respect to the translation of the net assets or liabilities of its subsidiaries.
The UK operations involve certain purchases denominated in US Dollars and in Euros. The Group’s policy has been to settle
these liabilities at the ruling spot rate. This policy is periodically reviewed in line with changes in exchange rates and
expectations of future foreign currency transactions. Notes to the financial statements (continued)
50
28 Financial instruments (continued)
2) Currency and interest profile of financial instruments
i) Financial assets The Group’s financial assets were as follows:
At 31 August 2003
Non-
Floating interest
Total rate bearing
£’000 £’000 £’000
Cash at bank and in hand:
Currency:
Sterling 24,282 24,282 –
Euros 615 123 492
US Dollars 13 13 –
Accrued income due after more than one year 176 – 176
25,086 24,418 668
At 31 August 2002
Non-
Floating interest
Total rate bearing
£’000 £’000 £’000
Cash at bank and in hand:
Currency:
Sterling 33,862 33,682 180
Euros 457 – 457
US Dollars 7– 7
Accrued income due after more than one year 391 – 391
34,717 33,682 1,035
The floating rate cash financial assets include those subject to fixed rates with a term of less than one year , as defined by FRS 13.
Accrued income represents the amounts receivable in more than one year from customers that have not yet been invoiced.
The benchmark rate for floating interest rates is a seven day London Inter-bank Bid Rate (LIBID).
ii) Financial liabilities The Group’s financial liabilities were as follows:
At 31 August 2003
Weighted Weighted
Floating average average
Total Fixed rate rate interest period
£’000 £’000 £’000 % Years
Finance leases – Sterling 35,051 35,051 – 10 12.9
– Euros 277 277 – 22.4 17.9
35,328 35,328 – 51
28 Financial instruments (continued)
At 31 August 2002
Weighted Weighted
Floating average average
Total Fixed rate rate interest period
£’000 £’000 £’000 % Years
Finance leases – Sterling 36,533 36,533 – 10 13.9
– Euros 1,823 1,823 – 22.4 18.9
38,356 38,356 –
3) Maturity of financial instruments The maturity profile of the Group’s financial liabilities was as follows:
2003 2002
Finance Finance
leases leases
£’000 £’000
Within one year , or on demand 2,486 1,726
Between one and two years 2,209 2,039
Between two and five years 7,295 7,868
After five years 23,338 26,723
35,328 38,356
4) Fair values of financial assets and liabilities There is no material difference between the fair and book values of the Group’s
financial assets and liabilities. Fair value is the amount at which a financial instrument could be exchanged in an arm’s length
transaction between willing and informed parties, other than a forced liquidation sale and excludes accrued interest. Where
possible market values are used to determine fair values.
5) Currency exposure The following table shows the Group’s exposure to monetary assets and liabilities in currencies other
than the local currency of the operating companies involved. Such monetary assets and liabilities can cause foreign
exchange gains and losses, which are taken to the profit and loss account in the year in which they arise.
31 August 31 August
2003 2002
£’000 £’000
Functional currency of operation: Sterling
US Dollar assets/(liabilities) (net) 23 (131)
Euro (liabilities)/assets (net) (377) 9
(354) (122)
Functional currency of operation: Euro
US Dollar liabilities (net) – (265)
– (265) Notes to the financial statements (continued)
52
29 Financial commitments
1) Operating leases The minimum lease payments under non-cancellable operating leases, due in the next financial year ,
are as follows:
Group Group
2003 2003 2003 2002 2002 2002
Land and Land and
buildings Other Total buildings Other Total
£’000 £’000 £’000 £’000 £’000 £’000
Leases expiring:
Within one year 42 1,592 1,634 11 2,569 2,580 
Between two and five years 262 1,625 1,887 176 1,080 1,256 
In more than five years 1,120 1,641 2,761 1,306 1,600 2,906 
1,424 4,858 6,282 1,493 5,249 6,742 
Company Company
2003 2003 2003 2002 2002 2002
Land and Land and
buildings Other Total buildings Other Total
£’000 £’000 £’000 £’000 £’000 £’000
Leases expiring:
Within one year ––– –––
Between two and five years ––– –––
In more than five years 432 – 432 453 – 453 
432 – 432 453 – 453 
2) Capital commitments The Group had contracted capital commitments of £10,007,000 at 31 August 2003 (2002:
£12,771,000). The Company had contracted capital commitments of £3,752,000 at 31 August 2003 (2002: £10,952,000)
entered into on behalf of subsidiary undertakings.
The Company’s commitment comprises a call off commitment with one of the Group’s suppliers of network equipment,
which is payable on or before 30 April 2006.
3) Other commitments The Company has pledged to provide sufficient working capital resources to certain of its subsidiary
undertakings in order to ensure that they can meet their debts as they fall due in the normal course of business.
30 Pension commitments
The Group operates a defined contribution company pension scheme and individual defined contribution personal pension
schemes administered through insurance companies for all employees. Contributions for the year amounted to £398,000
(2002: £626,000).
31 Related party transactions
There were no related party transactions during 2003 or 2002. 53
Notice of Annual General Meeting
Notice is hereby given
that the 8th Annual General Meeting of Fibernet Group plc will be held on 17 December 2003 at 2 pm. The meeting will take place at
Fibernet Head Office, Rosalind House, Jays Close, Viables, Basingstoke, Hampshire RG22 4BS for the following purposes:
1 To receive the Financial Statements, together with the Directors’ and Auditors’ reports, for the year ended 31 August 2003.
2 To appoint Deloitte & T ouche LLP as auditors to the Company until the conclusion of the next Annual General Meeting and to authorise
the Directors to fix their remuneration.
3 To receive and adopt the Remuneration Report for the year ended 31 August 2003.
4 To re-elect Lady Robin Innes Ker , who retires by rotation as a Director .
To transact any other ordinary business of the Company .
As special business, to consider and if thought fit pass the following resolutions which will be proposed, as to resolutions 5 and resolutions
8 to 11, as ordinary resolutions and, as to resolutions 6 and 7, as special resolutions:
5 That the Directors be and they are hereby generally and unconditionally authorised in accordance with Section 80 of the Companies Act 1985
to exercise all the powers of the Company to allot relevant securities (within the meaning of Section 80 of that Act) up to a maximum nominal
amount of £2,000,000 and so that such authority (unless previously revoked or varied by the Company in general meeting) shall expire
on the date of the next Annual General Meeting of the Company or 31 March 2004 (whichever is the earlier), save that the Directors may allot
relevant securities pursuant to this authority after that date pursuant to an offer or agreement made by the Company on or before that date.
6 That (subject to the passing of resolution 5 above) the Directors be and they are hereby empowered pursuant to Section 95 of the
Companies Act 1985 to allot equity securities (as defined in Section 94 of that Act) pursuant to the authority conferred by resolution 5
above as if Section 89(1) of that Act did not apply to any such allotment, provided that this power shall be limited to:
6.1The allotment of equity securities in connection with or pursuant to an offer by way of rights to the holders of ordinary shares and other
persons entitled to participate therein in proportion to their then respective holdings of ordinary shares, subject to such exclusions or
other arrangements as the Directors may consider necessary or expedient to deal with fractional entitlements or legal or practical problems
under the laws of any territory or the regulations or requirements of any regulatory authority or any stock exchange in any territory; and
6.2The allotment (otherwise than pursuant to sub-paragraph 6.1 above) of equity securities up to an aggregate nominal amount of £300,000;
and such power shall expire on the date of the next Annual General Meeting of the Company or 31 March 2004 (whichever is the earlier), but so
that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such
expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired.
7 That the Company be and is hereby generally and unconditionally authorised to make market purchases (as defined by Section 163(3)
of the Companies Act 1985) on the London Stock Exchange of ordinary shares of 10p each (“ordinary shares”) in the capital of the
Company provided that:
7.1 the maximum aggregate number of ordinary shares authorised to be purchased is 9,233,814;
7.2 the minimum price which shall be paid for the ordinary shares is 10p for each share and the maximum price (exclusive of expenses)
which may be paid for such shares is 5% above the average of the middle market quotations derived from the London Stock Exchange
Daily Official List for the five business days before the purchase is made;
7.3 unless previously renewed, varied or revoked, the authority hereby conferred shall expire on the date of the next Annual General
Meeting of the Company or 15 months after the date of passing of this resolution (whichever is the earlier); and
7.4 the Company may , before such expiry , make a contract to purchase its own shares under the authority hereby conferred which will
or may be executed wholly or partly after the expiry of such authority , and may make a purchase of its own shares in pursuance of
such a contract.
8 That the rules of The Fibernet Group plc 2003 Long T erm Incentive Plan (“the Plan”), the main features of which are summarised in the
circular accompanying the Notice of Annual General Meeting, dated 4 November 2003, in the form (or substantially in the form) of the
draft produced to this meeting and initialled by the Chairman hereof for the purposes of identification, be and are hereby approved
and that the remuneration committee of the Company be and it is hereby authorised to do all acts and things necessary or expedient  to
carry the same into effect; and in addition that the remuneration committee be authorised to establish such further plans for the
benefit of future employees outside the UK based on the plan subject to such modifications as may be necessary or expedient to take
account of local tax, exchange control or securities laws in any one or more overseas territories.
9 That subject to approval by the Inland Revenue, the rules of the Company’s 1996 Employee (Savings Related) Share Option Scheme
be amended as follows:
9.1The definition of Aggregate Option Price shall be amended to “the amount payable as consideration for the Shares to be issued or transferred
upon the exercise of an Option in full, being the product of the Option Price and the number of Shares over which that Option subsists”.
9.2 A definition of Employees’ Share Scheme shall be inserted which shall state “the meaning given to that expression by section 743 of
the Companies Act 1985”. 54
9.3 The definition of Option shall be amended to “a right to acquire Shares pursuant to this Scheme”.
9.4 The definition of Option Price shall be amended to “the amount per Share payable on the exercise of an Option determined by the
Board in accordance with Rule 2.2”.
9.5 A definition of T rustees shall be inserted which shall state “the trustees of any trust created by the Company which, when taken
together with this Scheme, constitutes an Employees’ Share Scheme”.
9.6 Rule 3.2.4 shall be inserted and shall state “for the purpose of the limits contained in this rule 3:
a) there shall be disregarded any Shares which the T rustees have purchased, or determined that they will purchase, in order to satisfy
Options; and
b) there shall be disregarded any Shares that the Company has purchased and holds, or has determined that it will purchase and
hold, as treasury shares in order to satisfy Options”.
9.7 Rule 6.2 shall be amended to state “Subject to receipt by the Company of the appropriate Option Price in full in cleared funds,
within 30 days of receipt by the Company of the notice of exercise, the Board, on behalf of the Company shall allot or transfer , or
procure the allotment or transfer to the Option Holder the number of Shares in respect of which the Option has been exercised”.
9.8 Rule 10.5 shall be amended to state “The Company shall keep available for issue sufficient unissued Shares to satisfy in full all rights
remaining exercisable under the Scheme which the Company has determined will be satisfied by the issue of Shares”.
10 That subject to approval by the Inland Revenue, the rules of the Company’s 1996 Approved Executive Share Option Scheme be
amended as follows:
10.1 A definition of Employees’ Share Scheme shall be inserted which shall state “the meaning given to that expression by section 743 of
the Companies Act 1985”.
10.2 The definition of Option shall be amended to “a right granted to an Eligible Employee to acquire Shares pursuant to the Scheme
and each right granted on a different date to the same Eligible Employee shall be treated hereunder as a separate Option but the term
Option shall not include Surrendered Options”.
10.3 A definition of T rustees shall be inserted which shall state “the trustees of any trust created by the Company which, when taken
together with the Scheme, constitutes an Employees’ Share Scheme”.
10.4 Rule 3.2.4 shall be inserted and shall state “for the purpose of the limits contained in this rule 3:
a) there shall be disregarded any Shares which the T rustees have purchased, or determined that they will purchase, in order to satisfy
Options; and
b) there shall be disregarded any Shares that the Company has purchased and holds, or has determined that it will purchase and hold,as
treasury shares in order to satisfy Options”.
10.5.Rule 6.2 shall be amended to state “Subject to:
(i) such consents as may be necessary; and
(ii) compliance with the terms of the Option,
the Company shall as soon as practicable but in any event within 30 days from the date of exercise of an Option as aforesaid, allot or transfer ,
or procure the allotment or transfer , of the relevant Shares to the Option Holder and deliver to the Option Holder a definitive share certificate”.
10.6 Rule 10.4 shall be amended to state “The Company shall keep available for issue sufficient unissued Shares to satisfy in full all
rights remaining exercisable under the Scheme which the Company has determined will be satisfied by the issue of Shares, taking
into account any further obligations of the Company to issue Shares”.
11 That the rules of the Company’s 1996 Unapproved Executive Share Option Scheme be amended as follows:
11.1 A definition of Employees’ Share Scheme shall be inserted which shall state “the meaning given to that expression by section
743 of the Companies Act 1985”.
11.2 The definition of Option shall be amended to “a right granted to an Employee to acquire Shares pursuant to the Scheme and
each right granted on a different date to the same Employee shall be treated hereunder as a separate Option but (except for rule 4)
the term Option shall not include Surrendered Options”.
11.3 A definition of T rustees shall be inserted which shall state “the trustees of any trust created by the Company which, when taken
together with the Scheme, constitutes an Employees’ Share Scheme”.
11.4 Rule 3.2.4 shall be inserted and shall state “for the purpose of the limits contained in this rule 3:
a) there shall be disregarded any Shares which the T rustees have purchased, or determined that they will purchase, in order to satisfy
Options; and
Notice of Annual General Meeting (continued) 55
b) there shall be disregarded any Shares that the Company has purchased and holds, or has determined that it will purchase and hold,as
treasury shares in order to satisfy Options” .
11.5 Rule 6.2 shall be amended to state “Subject to:
(iii) such consents as may be necessary; and
(iv) compliance with the terms of the Option,
the Company shall as soon as practicable but in any event within 30 days from the date of exercise of an Option as aforesaid, allot or transfer ,
or procure the allotment or transfer , of the relevant Shares to the Option Holder and deliver to the Option Holder a definitive share certificate”.
11.6 Rule 10.4 shall be amended to state “The Company shall keep available for issue sufficient unissued Shares to satisfy in full all
rights remaining exercisable under the Scheme which the Company has determined will be satisfied by the issue of Shares, taking
into account any further obligations of the Company to issue shares”.
By Order of the Board
Nick Bray
Company Secretary
Fibernet Group plc
Rosalind House, Jays Close
Viables, Basingstoke
Hampshire RG22 4BS
United Kingdom
4 November 2003
Notes to the Notice of Annual General Meeting
1 Any member entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and, on a poll,
to vote in his stead. A proxy need not be a member of the Company .
2 Any form of proxy and power of attorney or other authority under which it is signed, or a notarially certified or office copy of such
power or authority , in order to be valid, must reach the Company’s Registrars not less than 48 hours before the time of the meeting.
Completion and return of the form of proxy will not preclude a member from attending and voting at the meeting.
3 Persuant to Regulation 41 of the Uncertificated Securities Regulations 2001, only those members registered in the register of members
of the Company at 2 pm on 15 December 2003 are entitled to attend and vote at the meeting in respect of the number of ordinary
shares registered in their name at that time. Changes to entries in the register made after that time shall be disregarded in
determining the right to attend and vote at the meeting.
4 Copies of service contracts between the Directors and the Company or any subsidiary of the Company , and the register of Directors’
shareholdings and transactions will be available for inspection at the registered office of the Company during usual business hours
on any weekday (Saturdays and public holidays excluded) from the date of this notice until the date of the Annual General Meeting
and at the place of the Annual General Meeting for at least 15 minutes prior to and until the conclusion of the Annual General Meeting.
5 Explanation of the reasons for the adoption of the Long T erm Incentive Plan as detailed in ordinary resolution 7 above is provided in
the Remuneration Report on Pages 22 to 25. In addition a summary of the terms of the Long T erm Incentive Plan is set out in the circular which
accompanies the Notice of Annual General Meeting. Copies of the draft rules of the Long T erm Incentive Plan will be available for
inspection at the offices of PricewaterhouseCoopers at Plumtree Court, London, EC4A 4HT during normal business hours on any
weekday (Saturdays and public holidays excluded) from the date of this notice until the date of the Annual General Meeting and at
the place of the Annual General Meeting for at least 15 minutes prior to and until the conclusion of the Annual General Meeting.
6 Explanation of the proposed authority to purchase own shares as detailed in resolution 6 above is provided in the Directors' report
on pages 20 and 21.
7 The Board is seeking shareholders’ approval to make minor amendments to the rules of the SA YE and Executive Share Option
Schemes, to enable market purchased shares to be used, where appropriate, to satisfy subsisting options granted under the schemes
to aid flexibility across the Group's employee share incentive arrangements and to distinguish such shares from the dilution limits
applicable to new issue shares which remain ABI compliant. These changes are put forward for approval by shareholders at the AGM
and are tabled as items 9 to 11. 56
How to find us
Fibernet Head Office, Rosalind House, Jays Close, Viables, Basingstoke, Hampshire RG22 4BS
From M3 – Junction 6 – from London
At the main roundabout, Black Dam Roundabout, take the first left. At Hackwood Roundabout turn left, then at Venture Roundabout
turn right taking the third exit, pass the petrol stations. At the next roundabout, Golden Lion Roundabout, turn left. Follow the road
round through Viables Industrial Park for approximately 400m. Y ou will see Fibernet on the right hand side.
From M3 – Junction 7 – from South Coast
From the main roundabout, take the first exit towards Basingstoke – at mini roundabout (Sainsbury’s) go straight across. At Kempshott
Roundabout, go straight across, then at the next roundabout, Brighton Hill Roundabout take the fourth exit into Harrow Way . At Viables
Roundabout take the third exit into Jays Close, turn right at the end of the road and turn right into Fibernet’s car park.
From M4 – Junction 11 – East and Reading
Take the A33 towards Basingstoke. At the end of the A33, take the third exit at the first roundabout, at the second turn left. Continue
along the dual carriageway , at the roundabout take second exit towards the M3 and town centre. At Black Dam Roundabout, turn right
(third exit). At Hackwood Roundabout turn left, then at V enture Roundabout turn right taking the third exit, pass the petrol stations. At the next
roundabout, Golden Lion Roundabout, turn left. Follow the road round through Viables Industrial Park for approximately 400m. Y ou will
see Fibernet on the right hand side.
By train
Regular services from London Waterloo to Basingstoke. Fibernet’s office is a five minute taxi journey from the station. 03
02
7.3
5.0
EBITDA**
£m
03
02
5.0
92.4
Loss before tax
£m
Revenue*
£m
03
02
36.3
36.7
* From continuing operations
** EBITDA is shown pre exceptional from continuing operations and is reconciled to operating loss in note 7 to the Financial Statements
01 At a glance
02 Chairman’s Statement
04 Chief Executive’s Strategy Review
08 A Consultative Approach
10 Technical Expertise
12 Lifetime support
14 Financial Director’s Review
18 Board of Directors
20 Directors’ report
22 Remuneration report
26 Corporate Governance
28 Directors’ responsibilities
29 Independent auditors’ report
30 Consolidated profit and loss account
31 Consolidated balance sheet
32 Company balance sheet
33 Consolidated cash flow statement
34 Notes to the financial statements
53 Notice of Annual General Meeting
Contents
Designed by navyblue
Photography by Nick David and Lee Funnell
Printed by Nimmos
Five year summary
for the years ended 31 August
2002
1999 2000 2001 (restated) 2003
£’000 £’000 £’000 £’000 £’000
Results
Turnover 14,596 41,808 54,547 39,505 36,348
EBITDA before exceptional items 1,322 14,299 16,709 (1,019) 7,293
EBITDA 1,322 14,299 16,709 (12,031) 11,375
Operating profit/(loss) (2,232) 6,822 5,194 (24,277) (7,189)
Pre tax profit/(loss) (4,593) 3,365 3,613 (92,416) (4,994)
Profit/(loss) for the financial year (4,593) 3,365 2,892 (91,845) (4,994)
Assets employed
Fixed assets 41,000 77,348 116,052 89,670 87,779
Net current assets/(liabilities) (5,191) 37,293 81,739 23,910 15,195
Net assets 9,575 76,024 157,101 66,520 61,556
Cash flows
Net cash inflow/(outflow) from operating activities 3,531 17,836 26,140 (1,982) 9,045
Capital expenditure 10,087 30,601 40,579 56,612 14,005
Increase/(decrease) in cash 719 8,949 85,081 (61,419) (9,416)
The results for 1999 to 2001 have not been restated to reflect the introduction of UITF 36 ‘Contracts for sale of capacity’. Fibernet Group plc Annual Report 2003
Communicating our business…
Fibernet Group plc Annual Report 2003
Fibernet Group plc
Rosalind House, Jays Close
Viables, Basingstoke
Hampshire RG22 4BS
United Kingdom
T +44 (0)1256 858685
F +44 (0)1256 858601
info@fibernet.co.uk
www.fibernet.co.uk
Fibernet GmbH
Gutleutstr . 175
60327 Frankfurt am Main
Germany
T +49 (0) 69 238 05 90
F +49 (0)69 238 05 926
info@fibernet.de
www.fibernet.de