THUS Annual Report 2005
beyond communications Contents
01 Key Highlights
02 Beyond Communications
06 Chairman’ s Statement 
07 Chief Executive’ s Review
08 Operating and Financial Review
14 Board of Directors
16 Directors’ Report 
18 Corporate Governance Report
21 Directors’ Remuneration Report
27 Independent Auditors’ Report to 
the Members of THUS Group plc
28 Accounting Policies and Definitions
30 Group Profit and Loss Account
31 Consolidated Statement of T otal Recognised 
Gains and Losses
31 Reconciliation of Movements in Shareholders’ Funds
32 Balance Sheets
33 Group Cash Flow Statement
33 Reconciliation of Net Cash Flow 
to Movement in Net Debt
34 Notes to the Accounts
45 Five Y ear Financial Summary
46 Notice of Annual General Meeting
48 General Information for Shareholders Attending 
the Annual General Meeting
49 Shareholder and Contact Information
THUS supports the communication needs of 
business customers throughout the UK. We provide 
a comprehensive range of services and individual
solutions to corporate customers.
Our DEMON brand portfolio provides communication
services tailored to small and medium sized businesses.
www.thus.net www.demon.net  1
Summary results
 Continuing operations
1
turnover up 1 4% to £340.6m (T otal: £360.0m)
 Continuing operations EBITDA
2
£39.9m (T otal: £39.1m)
 Cash flow
3
positive for first full financial year
 Net debt £31.0m, with £28.5m cash balance
 £35.4m capital investment
Customer and service growth
 New customers in the year include GWR Group
4
, Chrysalis Radio, Johnston
Press, Archant, T eletext, Glasgow City Council, South London and Maudsley
NHS Trust, Scottish Prison Service and Hymans Robertson
 100% retention rate on major customer renewals. Service provision expanded
with Standard Life, London Metropolitan Network, ScottishPower , Stirling
Council and Amserve
 T otal Demon broadband customers up 56% to over 150,000, with UK customers
up 59% to 92,000. Ethernet circuits up 38% to 2,750. Service range augmented
to include new symmetric, private access and home office broadband options
Disposals
 Contact centre and interactive divisions sold
1 Excludes contact centre (sold on 4 August 2004) and interactive (sold on 7 October 2004)
2 Earnings before interest, tax, depreciation (including impairment) and amortisation
3 Cash flow before acquisitions and disposals, liquid resources and financing
4 GWR Group, who now trade as Gcap Media plc, after their merger with Capital Radio which completed on 9 May 2005
5 Excludes £3.2m exceptional restructuring costs
Key Highlights
2005
2004
2003
2002
2001 179.1
224.3
250.8
297.7
340.6
Turnover – continuing operations
1
year ended 31 March 
£m
2005
2004
2003
2002
2001 -24.0
5.0
5
22.7
40.5
39.9
EBITDA
2
 – continuing operations
1
year ended 31 March 
£m
2005
2004
2003
2002
2001 -191.3
-106.8
-36.7
-2.6
3.7
Cash flow
3
year ended 31 March 
£m Never before has the role of communications within an organisation been more
intrinsic to the success of that business.
As one of the UK’ s leading providers of voice, data, video and Internet services, 
no one is more experienced in providing individual, integrated and dynamic
applications, in collaboration with its customers, than THUS.
Beyond communications, THUS applies expertise, innovation and exceptional
service to solutions that help enterprising business to look beyond today’ s needs.
beyond 
communications 3
THUS is at the leading edge of the trend towards converged telecommunication
services. Convergence allows voice, data, video, email and other applications 
to be carried seamlessly across a single integrated network. Convergence provides
customers with long term cost savings, increased business agility and access to new
service features.
leadership
Service innovation 
THUS is at the forefront of service innovation. 
THUS offers customers a full range of traditional
telecommunication services and provides access
to some of the most recent innovations, including
broadband, Ethernet and Multi Protocol Label
Switch networks.
Commitment to quality
Innovation and expertise are nothing without
impeccable levels of service and reliability. At THUS,
all processes are certified to international quality
standard ISO 9001:2000. In addition, THUS has
regularly topped industry-wide Comparable
Performance Indicator surveys recognised by Ofcom.
A renowned national network
Our service and quality promise are backed 
by one of the most technologically advanced
telecommunication networks in the UK. Spanning
6,100km, the THUS network is designed and
operated as a series of connected rings to enhance
network resilience and reliability. Capacity is
expandable to 1,200 gigabits and the network
is scaleable to support future growth and next
generation service capability.
Lerwick
Stornoway|Kirkwall
Thurso
Inverness
Aberdeen
Stirling|Perth|Dundee
Glasgow|Falkirk
Edinburgh
Dumfries
Newcastle|Sunderland
Durham
Middlesbrough
Preston
Liverpool|Warrington|Manchester|Leeds|York
Chester|Sheffield
Stoke-on-Trent
Nottingham
Birmingham
Gloucester
Bristol|Milton Keynes
Swindon
Reading
London
Southampton|Croydon
Brighton 4
understanding
Our business is built on understanding the needs of enterprise customers and 
public sector organisations. We design and develop communication solutions 
that enhance business effectiveness. Our sales, service and operations teams 
work relentlessly to deliver solutions that build business advantage.
Commercial radio turns to THUS
Working with THUS, GWR Group
1
, which owns
Classic FM as well as more than 31 local FM stations
across the country, became the first radio broadcaster
in the UK to multicast commercial audio broadcasts
over a Multi Protocol Label Switch network. One
GWR site can now send broadcasts to few, several
or all sites simultaneously. Voice, data and broadcast
traffic are consolidated on one network, simplifying
network management and reducing cost.
21st century city
By understanding the objectives behind Glasgow
City Council’ s Access Glasgow vision, THUS won
a £42m, six year contract to upgrade and replace
the Council’ s communications network. The new
network will improve cost and efficiency by merging
voice, data and video over one path while enhancing
citizens’ access to public services. 
Publishing success
UK newspaper and Internet publisher Johnston Press
relies heavily on the transfer of data in its day to day
business. Stories, photographs, advertisements and
even complete newspaper pages need to be moved
quickly across sites to ensure that Johnston’ s 240
newspapers are printed on time and the websites
updated continuously. Johnston Press selected THUS
to provide a 160-site, advanced Multi Protocol Label
Switch network to improve performance and
resilience of data communications and provide
a voice over Internet Protocol enabled platform for
the future. 
1 GWR Group, who now trade as Gcap Media plc, after their merger
with Capital Radio which completed on 9 May 2005 5
Maintaining and growing customer relationships is essential for long term success.
Strong customer relationships are based on commitment evidenced through trust,
growth and continuous improvement.
commitment
Customers
This year , THUS successfully renewed business with
11 of its major customers and announced eight new
corporate accounts.
Managed solutions
We manage fully outsourced or partnered network
solutions and bespoke services for a growing
number of customers including ScottishPower ,
Southern Water , Glasgow City Council, and
Amserve. T o support further expansion in this
area, we have introduced a new managed
solutions focus with dedicated sales, operations
and service management capability.
Continuous improvement
Customers are often unaware of the improvements
that go on behind the scenes. This year , we significantly
improved the resilience of our most advanced Multi
Protocol Label Switch network services and launched
eight new services. 6
Chairman’ s Statement
Philip Rogerson Chairman
I joined THUS because of the many
opportunities, qualities and strengths 
I saw in your Company. The past five
years, including the disappointment of
the downgrade to profit expectations in
the first half of the financial year ended
31 March 2005, have not been easy and
have taken their toll on the THUS share
price. Y et over the past five years, THUS
has successfully grown its business every
year , retained its focus on its business plan
and, this year , generated its first full
financial year of positive cash flow
1
. 
Over that same period, trading conditions
in the telecommunication market have
been very difficult, with too many
companies chasing the available business
at low prices. A number of companies
have suffered financial distress, but
nevertheless have maintained their
presence in the market, unlike in many
other industries where such conditions
of over supply would lead to industry
consolidation.
The business philosophy I observed in
THUS was, simply, to retain focus on
profitably selling and managing services
on behalf of its customers. THUS has 
a good track record and is winning larger
and more complex contracts every year .
The UK national network was the first
“next generation network” to offer fully
integrated services based on Internet
Protocol technology throughout the UK.
This investment is paying off as the market
transitions from traditional discrete
services to the new world where all
services are carried over a single
operating platform. And this is where
THUS is increasing its market share and
increasingly differentiating its capability.
It is my duty as Chairman to ensure 
that your Company retains its strong
competitive position. We expect our
industry to rationalise its market structure
and improve its overall financial viability
through consolidation in the UK
and internationally. The market will
increasingly differentiate and reward
companies with the skills to innovate
successfully and evolve services for their
customers. I believe your Company’ s track
record on innovation, quality, and its
ability to leverage its assets to manage
complex service requirements will be
recognised as the key ingredients for
future success.
On behalf of the Board, I would like to
take this opportunity to extend my thanks
to Roy Brown, your former Chairman 
who retired this year , for his contribution
in leading THUS since its demerger
from ScottishPower in 2002. I would
also like to thank all our staff who,
despite the continued difficult trading
environment, have demonstrated
unstinting commitment and dedication
to the Company and remained focused
on serving our customers. 
I am confident that I made the right
decision to become your Chairman. I do
not expect the market to be significantly
easier in the year ahead. Our market will
remain tough and demanding but I do
believe THUS has the integrity, strengths,
and capability to succeed.
Philip Rogerson, 
Chairman
This is my first year as
Chairman of your Company. 
It has been a demanding year,
full of challenge and change 
in UK telecommunications
and, yet, it has been a year
which has presented new
opportunities for THUS.
“I believe your Company’ s track
record on innovation, quality,
and its ability to leverage its
assets to manage complex
service requirements will
be recognised as the key
ingredients for future success.”  7
Chief Executive’ s Review
This has been a challenging year for the
UK business telecommunication market. It
has been a year of aggressive pricing and
revenue substitution as the fight for market
share became fiercer , and next generation
broadband and Internet Protocol based
services increasingly replaced more
traditional telecommunication services.
Against this background THUS maintained
its focus and increased turnover in its
continuing operations by 14% to £340.6m,
with strong growth in key managed
solutions, data and telecoms, and Internet
divisions. Headline turnover grew by 8%
to £360.0m and we delivered our first full
financial year of positive free cash flow
1
of £3.7m. 
In the first half, our profit performance 
was negatively impacted by two, one-off
factors. First, contact centre and interactive
divisions moved from a combined
operating profit last year to an operating
loss following poor trading and asset
impairment. Both were successfully
disposed. In addition, we made an
exceptional impairment of £8.1m on
transatlantic cable capacity following
a decision by a UK based supplier to
place its US subsidiary into bankruptcy.
Price competition was extremely
aggressive. Over the course of the year
we successfully renewed all 11 of the top
20 customer contracts that came up for
renewal. This was a higher than usual
number of renewals. Although all were
successfully won, in most instances it was
with slimmer margins than before.
All of these events, coupled to the
revenue substitution of higher margin
narrowband Internet access for
broadband, triggered our downgrade
to full year profit expectations, albeit
the Company’ s cash flow remained
in line with market expectations.
THUS’ s increasing ability to differentiate
its capability by building and managing
complex services for its customers resulted
in the formation of a new managed
solutions division. Revenue from managed
solutions now accounts for 21% of the
Company’ s continuing operations. This
is a key area for future growth as we
increasingly manage complex services
for our customers and integrate discrete
applications such as voice, data, email,
video, and Internet, and carry it over
a single service platform – we call
this “converged services”. It was our
anticipation of this service evolution
which underpinned our network design
and service philosophy at the time of the
THUS flotation in 1999, and where we
focused capital investment to build UK
wide service capability.
Our service focus shows that we can
win and manage complex contracts:
Glasgow City Council is one of the largest
e-government local authority initiatives
currently in the UK; and our innovative
multicast radio broadcast solution for
GWR Group
2
is the first application
of its type for the UK broadcast radio
industry. Our ability to adapt existing
technology for new applications resulted
in the deployment of private access
DSL technology as part of a network
implementation for a major newspaper
and Internet publisher throughout the UK.
Indeed, new services growth was
encouraging. Ethernet circuits climbed
38% to 2,750 and broadband DSL
growth was buoyant with total broadband
customers climbing to over 150,000 and
UK customers up 59% to 92,000. Of the
eight major new contracts we announced
in the year , five were for Internet Protocol
based services.
In many ways these results reflect an
industry in transition. THUS built the UK’ s
first “next generation network”. We have
always believed that all telecommunication
services would be conveyed over a single
service platform – and the pace of change
to this technology is now evident in our
market. We remain at the forefront of
service innovation and we are strongly
positioned to benefit as the market
increasingly adopts the new generation
of services now available. 
Our new services growth helped offset
intense price competition, and the
migration from old to new services,
such as narrowband to broadband
Internet services. As a result, the
Company’ s continuing operations
were stronger in the second half, with
full year EBITDA
3
and pre-exceptional
operating loss held broadly stable at
£39.9m and £24.2m respectively.
The year was tough and demanding with
its share of success and disappointment.
Nevertheless our performance did
demonstrate our underlying strengths
in winning new customers and successfully
transitioning our revenue from old to
new services.
We remain cautious on the market
structure for telecommunication services
in the UK, and we expect the aggressive
pricing environment to continue
throughout the year . However , we have
been encouraged by the strong growth
in our core activities and in our capability
to win, implement and manage complex
integrated telecommunication contracts
for our customers. Compared to the year
just ended, there are few major contract
renewals scheduled, and these contracts
are principally focused in the provision
of lower margin carrier pre-select services.
Against this background, the Board
remains confident THUS will continue to
grow and generate positive cash flows.
William Allan
Chief Executive
William Allan Chief Executive 
1 Cash flow before acquisitions and disposals, liquid resources 
and financing
2 GWR Group, who now trade as Gcap Media plc, after their
merger with Capital Radio which completed on 9 May 2005
3 Earnings before interest, tax, depreciation (including impairment)
and amortisation 8
We welcome these announcements since
they add to our service credibility and
encourage customer confidence in new
service areas.
Competition in the UK telecommunication
market remains intense with excess
capacity affecting the overall returns to 
our industry. Pricing has been particularly
aggressive as competitors fight for market
share to retain major contracts. Over the
past few years, many of our competitors
have suffered turnover decline. Indeed,
our industry as a whole has seen a margin
squeeze from a combination of price
declines and changing turnover mix as the
transition from traditional to new Internet
Protocol based services takes effect.
However our industry is changing,
THUS remains strongly positioned to
differentiate on service innovation, quality
and the ability to manage complex service
requirements for our customers. 
Our business strategy defined a ten year
plan, with a financial objective to generate
a return on capital employed greater than
our weighted average cost of capital.
As expected, during the initial years of 
our plan, THUS incurred losses. However ,
we also made it clear in our Annual
Report last year that to deliver attractive
returns to shareholders, the Company
anticipates a doubling of turnover and
improvement in margins over the next
five years. The Company’ s network and
service offering have the requisite scale
and operational flexibility to manage
a doubling in turnover . The Company’ s
choice of network technology has also
proven correct so that the Company can
continue to expand its portfolio of Internet
Protocol enabled services without making
any significant incremental capital
investment in new network technology
or change to its network design.
Our objective is to be the leading
alternative provider of telecommunication
and Internet services for business customers
in the UK. Our advanced network and
Internet Protocol service capability position
us strongly for future growth from converged
services and managed solutions.
The year under review was another year
of sustained turnover growth. It was also
a year of improved cash generation
enabling us to achieve our first full
financial year of positive cash flow
1
.
Notwithstanding the above, the
performance was affected by a number
of one-off and short term issues and
THUS did not move into operating profit
during the year as originally anticipated.
Differentiating factors and
operating environment
Our ability to differentiate from our
competitors is based on our capability
to innovate and offer customers advanced
services. THUS designed and built the UK’ s
first “next generation network” offering 
Internet Protocol and Multi Protocol Label
Switch enabled services into the UK market.
Two of our largest competitors have now
announced plans to follow this deployment.
Operating and Financial Review 
John Maguire Chief Financial Officer
Regulation
The UK telecommunication regulator ,
Ofcom, is currently undertaking a review
of the telecommunication market. We
expect this review to be supportive of
infrastructure based competition and 
to encourage investment in competitive
service provision in the UK business 
and consumer markets.
Although the review has focused on the
competitive dynamics and the industry
relationship with the largest fixed line
operator BT , the review does create some
uncertainty for our industry as Ofcom
implements a new regulatory settlement
with BT . THUS has played an active part
in contributing to this debate and
submitted papers to the regulator directly
and through our industry body, UKCTA.
Ofcom has the power to make a
Competition Commission referral as part
of its deliberation in arriving at a new
form of engagement with BT . Assuming
this does not prove to be necessary, 
a decision on the new form of regulation
is expected over the summer months. 
Ofcom has also initiated a consultation 
on access and interconnect arrangements
between BT and other operators for BT’ s
proposed “next generation network”. The
upgrade of BT’ s core network will change
the way all fixed line telecommunication
operators interconnect and carry each
other’ s traffic and will result in significant
changes in the methods and quantum 
of tariffing and working. From a service
perspective, THUS encourages BT’ s core
network upgrade. We maintain a note
of caution however in respect of the need
for equitable and transparent practices,
procedures and commercial arrangements
to be implemented during the time of
transition and subsequent operation
to ensure that shortcomings in the
interconnect regime are not prolonged. 
1 Cash flow before acquisitions and disposals, liquid resources
and financing 9
Overview of operating
performance
While overall Group turnover grew 8% 
to £360.0m, EBITDA
1
fell £4.5m to £39.1m
and the operating loss increased by
£15.1m to £36.3m. 
T urnover from continuing operations 
grew 14% to £340.6m and the EBITDA
and pre-exceptional operating loss from
continuing operations were held broadly
stable at £39.9m (2004: £40.5m) and
£24.2m (2004: £23.2m) respectively.
Performance was negatively impacted by
two distinct, one-off factors. First, non-core
contact centre and interactive divisions,
now disposed and shown as discontinued
operations, moved from a combined
£2.0m operating profit to a £4.0m
operating loss as a result of poor trading
and asset impairment. Second, an
exceptional £8.1m impairment was made
on transatlantic cable assets following a
UK based competitor’ s decision to place
its US subsidiary into bankruptcy. 
Year ended 31 March 2005 Y ear ended 31 March 2004
Continuing Discontinued
Continuing Discontinued operations operations Total
operations operations Total (Restated) (Restated) (Restated)
£m £m £m £m £m £m
Turnover 340.6 19.4 360.0 297.7 34.7 332.4
Cost of sales before depreciation (238.5) (16.4) (254.9) (191.2) (24.5) (215.7)
Gross profit before depreciation 102.1 3.0 105.1 106.5 10.2 116.7
S,D&A expenses before depreciation (63.6) (3.8) (67.4) (66.3) (7.1) (73.4)
Other operating income 1.4 – 1.4 0.3 – 0.3
EBITDA 39.9 (0.8) 39.1 40.5 3.1 43.6
Depreciation and amortisation before exceptional item (64.1) (3.2) (67.3) (63.7) (1.1) (64.8)
Operating loss before exceptional item (24.2) (4.0) (28.2) (23.2) 2.0 (21.2)
Exceptional impairment cost (8.1) – (8.1) – – –
Operating loss (32.3) (4.0) (36.3) (23.2) 2.0 (21.2)
Cash flow before disposals and financing 3.7 (2.6)
Within continuing operations, THUS
successfully retained all 11 of its top
20 customer accounts that came up for
renewal in the period and delivered
growth across a combination of traditional
switched voice services, new service areas
and managed solutions. 
Operating costs for continuing operations
were tightly controlled and, excluding
depreciation, fell £2.7m to £63.6m, down
from 22% to 19% of sales. 
However , the underlying performance
was further depressed by short term
factors. These included faster than
anticipated customer churn in traditional,
high margin narrowband Internet access
and aggressive pricing from rivals felt
during contract renewals and in competition
for traditional telecommunication services. 
The migration of customers from traditional
narrowband Internet access to broadband
DSL alternatives, although a short term
phenomenon, had a particularly acute
impact on profit. UK narrowband turnover
fell 33% to £19.2m, reducing gross profit
before depreciation by some £8.2m 
and masking underlying growth.
0
25
50
75
100
2005 2004 2003 2002 2001
£m
% of sales
Selling, distribution and administration
expenses before depreciation and 
amortisation – continuing operations
year ended 31 March 
10
20
30
40
50
1 Earnings before interest, tax, depreciation (including impairment)
and amortisation 10
Operating and Financial Review 
During the second half, overall turnover
was flat compared with the first half as the
division absorbed the regulatory reduction
in fixed to mobile termination rates and
a decline in lower margin carrier pre-
select traffic.
Good business wins during the year
included the Scottish Prison Service,
Archant and Hymans Robertson for Multi
Protocol Label Switch network services.
THUS also won a new contract with
T eletext to provide non-geographic
number response services and expanded
its relationship with Stirling Council to
become exclusive supplier of voice
services. While this new business
underpins the division’ s growth in the
current financial year , overall turnover
growth will be determined by the outcome
of renewal discussions on two of our lower
margin carrier pre-select contracts.
Internet
2005 2004
£m £m
Turnover 93.1 85.4
Internet turnover grew 9% to £93.1m. 
Within the total, UK broadband turnover
increased strongly, up 48% to £30.2m
as the customer base climbed 59% to
92,000. T o support broadband growth
and offset the negative impact of
narrowband Internet access decline,
THUS augmented its broadband service
portfolio to offer new and more flexible
options to business customers. In particular ,
we added private access broadband to
provide a secure alternative to leased line
connection into corporate virtual private
networks; symmetric broadband services
offering equivalent bandwidth for
information upload or download; and
simplified service options for small office
and home based workers. We expect
these new products to continue to deliver
good growth over the coming year ,
while noting continued price declines
in the market.
Outside of the UK, Demon Netherlands
had another successful year , growing
turnover by 44% to £20.4m. Performance
was underpinned by strong growth in
Analysis of turnover
All three continuing operations divisions 
of managed solutions, data and telecoms
and Internet showed strong year on 
year growth.
Managed solutions
2005 2004
£m £m
Turnover 69.8 59.5
Managed solutions turnover increased by
17% to £69.8m.
The managed solutions division was
formed during the year in recognition 
of the Company’ s growing success in
winning large, multiservice, solution-
based customer contracts. Key customers
with complex, multiservice requirements,
including ScottishPower , Southern Water ,
Glasgow City Council, Amserve and
GWR Group
1
were transferred into the
division and the results of the remaining
divisions of data and telecoms and Internet
were restated accordingly.
The implementation of our six year , £42m
contract with Glasgow City Council which
will see the City’ s existing communications
infrastructure evolve to a fully converged
Internet Protocol based network was the
largest contributor to growth. In addition,
the division also benefited from the
addition of new customers taking Multi
Protocol Label Switch network services,
including South London and Maudsley
NHS Trust and national networks for
GWR Group
1
, Chrysalis Radio and
regional publisher Johnston Press.
The division will continue to grow from
new wins as they occur and as we grow
business with existing customers in other
divisions from standard services to
managed solution provision. 
Data and telecoms
2005 2004
£m £m
Turnover 177.7 152.8 
T urnover in data and telecoms increased
16% to £177.7m. Carrier pre-select voice
services were the strongest component of
year on year growth, up 34% to £69.9m,
with Ethernet services and non-geographic
calls also delivering good growth. 
 
1
2
3
1
2
3
Analysis of turnover 
– continuing operations
year ended 31 March 2005 
£m and % change
1 Data and telecoms 177.7
+16%
2 Internet 93.1
+9%
3 Managed solutions 69.8
+17%
1 GWR Group, who now trade as Gcap Media plc, following their
merger with Capital Radio which completed on 9 May 2005 11
broadband sales, with customers
increasing from 38,000 to 60,000.
While THUS continues to focus on the
UK, the Netherlands business, at 6% of
continuing operations turnover , remains
a growing and successful adjunct to
existing activities.
Contact centre (sold 4 August 2004) 
and Interactive (sold 7 October 2004)
2005 2004
£m £m
Turnover 19.4 34.7
Operating (loss)/profit (4.0) 2.0
Following disposal during the year ,
both the contact centre and interactive
divisions are shown as discontinued
activities. However , a number of the
existing contact centre contracts did
not transfer with the sale of the division
in August and THUS continued to fulfil its
obligations as principal using sub contract
arrangements. As a result, £7.9m contact
centre turnover continued to be recorded
in the second half and some turnover
will be recorded in the first half of the
current financial year until these contracts
terminate. This business has no material
impact on earnings.
Loss before tax and loss 
per share
A £0.3m loss was recorded on the sale
of discontinued businesses and a £4.9m
interest charge was made against the
Group operating loss of £36.3m, leading
to a Group net loss before tax of £41.5m.
The loss for the financial year was
£42.2m and the loss per ordinary share
was 3.17p. This compares with a £27.0m
loss for the financial year and a 2.03p loss
per ordinary share respectively in the
prior year . 
Given the Company’ s stage of development
and the accumulated losses from the
network deployment, the Board is not 
yet able to recommend a dividend.
Capital expenditure
Capital expenditure for continuing
operations was £35.4m compared with
£40.6m last year , falling to 10% of
continuing operations turnover compared
with 14% last year . Approximately
80% of capital expenditure was tied
to turnover growth. 
No individual capital project accounted
for more than 10% of the total spend,
reflecting the diverse and customer linked
nature of our investment programme
during the year . Capitalised labour and
related overhead costs required to deliver
this programme amounted to £9.1m
compared with £8.7m in the previous year .
Significantly, THUS decided not to
deploy capital expenditure on local loop
unbundling. This involves deploying
equipment in BT’ s exchanges, mainly
for broadband services such as DSL to
reduce payments to BT . We believe the
economics for this capital investment
remain unattractive due to the continued
reductions in wholesale and retail pricing.
2005
2004
2003
2002
2001 155.1
77.9
44.4
40.6
35.4
Capital expenditure
– continuing operations
year ended 31 March 
£m
2005
2004
2003
2002
2001 87%
35%
18%
14%
10%
Capital expenditure to sales
– continuing operations
year ended 31 March 
%
2005
2004
2005
2004 58,000
92,000
38,000
60,000
Broadband DSL connections
UK
Netherlands 12
Statement of recognised gains 
and losses
A £16.6m gain was recognised relating
to a prior year adjustment for Urgent
Issues T ask Force Abstract 38, “Accounting
for ESOP Trusts” (UITF 38) which requires
an entity’ s own shares held in an Employee
Share Option Plan (ESOP) to be deducted
from shareholders’ funds at the consideration
amount paid. Prior to this, THUS had
accounted for the shares as an investment
in the balance sheet, with movements in
value being recorded through the profit
and loss account. This is a technical
accounting adjustment and has no impact
on operating performance or cash. Full
details are included in Note 1 to the
Accounts, including the impact of restating
the results for the previous year .
Tax 
A small tax charge of £0.7m arises from
trading activities in the Netherlands. UK
trading losses give rise to a deferred tax
asset of £7.1m with accelerated capital
allowances and other timing differences 
of £49.6m giving a total deferred tax
asset not recognised of £56.7m.
As disclosed in the Open Offer document
to shareholders during the demerger
process from ScottishPower in 2002, if 
the Company trades during the period
from 19 March 2002 to 19 March 2007
on a material and non commercial basis
with members or former members of the
ScottishPower Group, our former parent
company, a tax liability of up to £570m
may be triggered arising from the original
flotation of THUS in 1999. This payment
would fall on THUS under Section 179
of the T axation of Chargeable Gains Act
1992. Any trigger caused by events prior
to 19 March 2002 is covered by an
existing indemnity with ScottishPower . 
A strong control regime is in place to
manage this remote risk. 
Operating and Financial Review 
Cash flows
Net cash flow from operating activities
was £45.7m compared with £37.4m 
for the year ended 31 March 2004.
Underpinning this was EBITDA of £39.1m
and a net £6.1m cash inflow relating to
working capital changes resulting
principally from a reduction in debtors.
Cash inflow before disposals and
financing was £3.7m compared with 
an outflow of £2.6m last year . This is the
first full financial year in which THUS has
recorded positive cash flow; a significant
achievement in a challenging year . The
simple measure of EBITDA less capital
investment, which combines both the 
profit and loss account and balance sheet
impact of cash spending, was positive
at £4.5m for continuing operations. 
At the year end, the cash balance was
£28.5m. Net debt stood at £31.0m, 
an improvement of £4.4m over the year .
Gearing based on gross debt was 18%
and was 9% based on net debt. The £57m
loan facility converted to an amortising
term loan on 1 April 2004, with a capital
repayment of £1.4m due and paid on
31 March 2005. Capital repayments
complete on 31 March 2008, and will 
be £11.4m for the year ending 31 March
2006. The loan continues to be governed
by standard covenants.
2005
2004
2003
2002
2001 109
79
80
75
53
Debtor days
as at 31 March 
2005
2004
2003
2002
2001 3.5
9.5
12.1
26.4
28.5
Cash at bank and in hand
as at 31 March 
£m 13
International Financial Reporting
Standards (IFRS)
On 1 April 2005, THUS Group began
accounting under IFRS rather than UK
GAAP . The Company’ s first IFRS financial
statements will be published for the year
ending 31 March 2006. The first interim
statements prepared on the basis of IFRS
will be for the six months ending 30
September 2005. The comparatives
shown in both the interim and full year
results currently under UK GAAP will be
restated under IFRS.
THUS has engaged in a programme
to enable it to report under the new
accounting standards. The programme
is well on track to ensure that appropriate
deadlines will be met. The expected main
areas of change relating to the profit and
loss account are in respect of accounting
for share based payments and pension
costs. The estimated impact of applying
these two standards is believed to be no
greater than a charge to profit of £2m,
based on known events at 31 March
2005 and are non-cash related.
Policy issues
Treasury
THUS’ s treasury policy aims mainly to
manage financial risks arising from limited
foreign currency exposure from our
Netherlands business and limited supplier
payments in US Dollars and Euros. Hedging
in the form of a “cap” and “floor” is in
place to minimise interest rate exposure 
on our loan facility, where drawdowns
are charged at LIBOR (London Inter Bank
Offer Rate) plus 3.5%. This operates to
restrict the LIBOR rates that THUS is
exposed to from a minimum of 4.23% 
to a maximum of 6.00%.
Tight control exists over treasury activities,
and any non standard instruments require
approval from the Chief Financial Officer
or Board. THUS has no off balance sheet
financing or special purpose vehicles, 
and maintains a simple and transparent
corporate structure. Treasury is not run 
as a profit centre.
Fixed asset review 
Given the carrying value of the fixed asset
base and what has now been a sustained
period of operating losses, together with
significant asset write downs elsewhere
in the UK telecommunication sector , the
Board reviewed at the end of the year
whether there was a need to impair our
fixed asset base further . 
This review was undertaken in accordance
with and to satisfy the requirements
of Financial Reporting Standard 11
“Impairment of Fixed Assets and Goodwill”
(FRS 11). The conclusion was that no
further impairment was required beyond
that charged in respect of specific assets.
The Board also noted that THUS has been
consistent in maintaining its strategy
over the last few years and is already
in possession of an operational next
generation telecoms network, unlike
most others in the sector .  14
Non-executive Directors
Philip Rogerson
1
(60) was appointed 
Chairman of THUS on 1 September 2004.
Mr Rogerson is also Chairman of Aggreko
plc and Carillion plc and a Non-executive
Director of Northgate plc and Davis
Service Group plc. From 1992 to 1998
he was Finance Director and subsequently
Deputy Chairman of BG plc. He spent his
early career with ICI in a variety of roles
latterly as General Manager Finance.
Ian Chippendale
2
(56) was appointed 
as a Non-executive Director of THUS in
October 1999 . Mr Chippendale is
Executive Chairman of RBS Insurance,
having previously been Chief Executive 
of Direct Line Group Limited, and has
considerable experience in the insurance
and financial services industry. Prior to
joining Direct Line in 1996, Mr Chippendale
was Chief Executive of Privilege Insurance
from 1994 and before that he was 
a Director of Provident Financial plc. 
Michael de Kare-Silver
3
(48) joined the
Board of THUS as a Non-executive Director
in September 2000. He is currently
Managing Director of AKQA Europe 
and before that was Managing Director 
of Modem Media Europe. He was
formerly Head of eBusiness Services 
at PA Consulting Group. Prior to that 
he was Group e-commerce Director 
at Great Universal Stores Plc (GUS). Prior 
to joining GUS, Mr de Kare-Silver was
Senior Partner of the strategy consulting
firm, the Kalchas Group, which was
acquired by Computer Sciences Corp.
in September 1997 . Mr de Kare-Silver is
Visiting Professor at Middlesex University
Business School of Computing Sciences. 
Jo Connell
4
(57) joined the Board of THUS
as a Non-executive Director in January
2001. Mrs Connell was until March 2003
Managing Director of Xansa plc. She
joined Xansa in 1977 after five years at
CMG and an early career with Mars. She
became a member of the Xansa board 
in 1991 and was subsequently appointed
Chief Operating Officer in July 1997 
prior to being appointed Group Managing
Director in November 1999 . Mrs Connell
is also a Non-executive Director of Cornwell
Management Consultants plc, and is a
governor of the University of Hertfordshire.
Margaret Ford
5
(47) was appointed 
as a Non-executive Director of THUS in
November 2002. She is the Chairman of
English Partnerships, founder and Deputy
Chairman of Good Practice Limited and
a Non-executive Director of Serco plc. 
From 1993 to 2002 she was Managing
Director and then Chairman of Eglinton
Management Centre. From 1997 until
2001 , she was Chairman of the Lothian
Health Board and from 2000 to December
2003 she was a Non-executive Director 
of Ofgem.
Board of Directors
1
2
3
4 15
Executive Directors
William Allan
6
(51) is Chief Executive of
THUS. He joined a predecessor company
in December 1998 as Chief Operating
Officer and was appointed Managing
Director in February 1999 . Mr Allan has
more than 25 years’ experience in the
telecommunications industry. In 1997 , 
Mr Allan was appointed Chief Executive
of Cable & Wireless Regional Businesses.
He was a Director of T elecommunications
of Jamaica, Entel Panama, the Barbados
T elephone Company and the Barbados
External T elecommunications Company.
Between 1995 and 1997 , Mr Allan was
Regional Director for Cable & Wireless
North East Asia Region, President and
Representative Director of Cable &
Wireless Japan, and Chairman of Cable
& Wireless Communications Services
Limited (Japan). He was also a Director
of International Digital Communications
(IDC Japan), Sakhalin Electrosvyaz,
Sakhalin T elecom, Sakhalin T elecom
Mobile and Nakhodka T elecom.
Philip Male
7
(38) is Chief Operating Officer .
He joined a predecessor company originally
as T echnical Director of Demon Internet
Limited in October 1997 . Mr Male has
previous experience as T echnical Director
of Computer Newspaper Services and PA
Data Design, part of the Press Association
Group, and has held the positions of Head
of Research and Development and, prior
to joining Demon, Director of Strategic
Research with the Press Association Group.
With advanced knowledge of data
networking technologies, programming
languages and operating systems, Mr Male
has been involved in the development of
Internet services in the UK since 1990. 
John Maguire
8
(39) a Chartered Accountant,
joined THUS as Chief Financial Officer 
in December 2000. Prior to joining THUS,
Mr Maguire was Vice President Finance
(Japan and Asia) for Cable & Wireless
Global. This included leading the finance
team in Cable & Wireless IDC, Japan’ s
second largest international carrier . 
Mr Maguire has extensive financial 
and international telecommunications
experience, having held a number of 
other key financial positions within the
Cable & Wireless group since 1991,
including that of Regional Finance Director
of Cable & Wireless Asia Pacific, based 
in Singapore. 
Audit Committee
Ian Chippendale, Chairman
Jo Connell
Michael de Kare-Silver
Nomination Committee
Roy Brown, Chairman 
(resigned 1 September 2004)
Philip Rogerson, Chairman 
(appointed 30 November 2004)
Ian Chippendale
William Allan
Margaret Ford (appointed 8 July 2004)
Jo Connell (appointed 30 November 2004)
Remuneration Committee
Michael de Kare-Silver , Chairman
Ian Chippendale
Jo Connell
Margaret Ford
Senior Independent 
Non-executive Director
Ian Chippendale
8
6
7
5 16
Directors’ Report
Employees 
The talent, performance and commitment of our employees remain critical factors
in our ability to rise to challenges facing the business within what was and remains
a very difficult market.
We have placed considerable attention on ensuring that the performance of 
all staff is measured against clear , business focused objectives and behavioural
performance criteria. In excess of 95% of staff received year end appraisals and
a quarterly 1:1 review process was introduced to set and monitor performance
targets and development needs on a regular basis throughout the year .
Despite tight cost controls throughout the business, the Group continues to invest in
the development of its staff including its e-learning system and the introduction of 
a Learning Management System to ensure efficiency and best value for money 
in accessing external training programmes.
The Group was also proud to retain and expand its Investors in People
accreditation to cover all areas of the business in September 2004.
Our employee policies and processes have all been reviewed during 2004 to
ensure that, as well as incorporating recent legislative changes, our commitment 
to encouraging equality of opportunity for all of our staff is maintained and that
performance and ability remain the basis for progression within the business.
Our policy in respect of employment of disabled persons is the same as that
relating to all other employees in matters of training, career development and
promotion. Where employees become disabled during the period of their
employment, we make every effort to make reasonable adjustments to the working
environment to enable their continued employment and have successfully done 
so for a small number of affected staff over the past year .
The Group continues to encourage communication and involvement of staff. Our
employee forum, Xchange, has been further developed and relaunched to make it
more productive and meaningful for employees and to bring it in line with new EU
legislation with regard to employee consultation. 
The Group has offered all staff access to an annual Sharesave scheme which
allows them to save and buy shares in the Group at a discounted rate and will 
be making a further offer to staff in the financial year ending 31 March 2006. 
The Group also links the performance of its managers and senior staff to Group
results by way of a bonus scheme which has targets linked to cash flow, turnover
and EBITDA.
We completed our third annual staff survey in November 2004 with the results
indicating improvement in all main areas including recognition, development and
performance management. As in previous years, the survey has also been useful in
highlighting further areas for development which have been built into action plans
aimed towards enhancing the contribution and working lives of our employees.
The Directors are pleased to present their Annual Report, together with the audited
Accounts, for the year ended 31 March 2005. 
Activities
THUS is a provider of voice, data and Internet services to corporate and small
and medium sized enterprise markets and the public sector in the UK, and also
provides Internet services in the Netherlands. A review of the business and its future
development is contained in the Chairman’ s Statement and the Chief Executive’ s
Review on pages 6 and 7 and in the Operating and Financial Review on pages
8 to 13.
Results and dividend
The loss transferred to reserves for the year amounted to £42.2m (2004: £27.0m),
details of which are set out in the Group Profit and Loss Account on page 30.
The Company has not declared or paid a dividend on its share capital (2004:
£Nil). Given the Company’ s stage of development and the accumulated losses
from the network deployment, the Board is not yet able to recommend a dividend. 
Share capital
Details of THUS Group’ s authorised and issued share capital as at 31 March 2005
(all of the issued share capital which was fully paid or credited as fully paid) are
contained in Note 21 to the Accounts on page 40.
Directors
The names and details of the Directors of the Company are shown on pages 14
and 15. Philip Rogerson was appointed Non-executive Chairman of the Company
with effect from 1 September 2004, following the resignation of Roy Brown
from that role with effect from the same date. In accordance with the Articles
of Association, Philip Rogerson offers himself for election at the Annual
General Meeting.
In accordance with the Articles of Association, John Maguire, Ian Chippendale
and Margaret Ford are retiring from office at the Annual General Meeting and
being eligible, offer themselves for re-election. 
Directors’ interests
Details of the Directors’ service contracts, letters of appointment and remuneration
are set out in the Directors’ Remuneration Report on pages 21 to 26. Other than
as disclosed therein, none of the Directors had a material interest in any contract
of significance with the Company and its subsidiaries during or at the end of the
financial year . The Directors’ interests in the shares of the Company at the year
end are contained in the Directors’ Remuneration Report on pages 21 to 26. 
Directors’ and officers’ liability insurance
THUS Group plc maintains liability insurance for the Directors and officers of the
Company and its subsidiaries. 
Substantial shareholdings
The Company has been notified of the following interests representing 3% or more
of the issued share capital of the Company as at 20 May 2005. 
Percentage
Number of of issued 
shares share capital
Columbia Ventures Corporation 140,000,000 10.38
The Goldman Sachs Group, Inc 70,827 ,317 5.25
Legal & General Group plc 53,739,011 3.98
Prudential plc 41,142,455 3.05 17
Environmental policy 
Energy, transport and waste have been identified as our principal environmental
impact areas, although we believe we are a low risk in a relatively low impact
industry. However , THUS is convinced effective environmental management is
complementary to the management focus on cost control. Efforts are therefore
being made to ensure efficiency in energy use, travel and transportation and
waste management:
• We continue to work with our energy consultants to measure and manage
consumption. We are exploring key performance indicators for energy
consumption that will accurately reflect performance rates, rather than merely
provide arbitrary annual measures.
• We have integrated our environmental policy statement and our health
and safety policy statement, as an indication of our determination to drive
efficiency and effectiveness in these important risk management areas.
Our goal is to manage these risks effectively within a consolidated
management regime.
• We monitor employee travel and encourage alternatives, such as conference
calling and video meetings facilitated by our own network capability.
• We have formed a group that is considering the most effective ways to enable
our suppliers to meet their obligations under the impending Waste Electrical
and Electronic Equipment Regulations. This complements our existing systems
for re-use or recycling of redundant and obsolete equipment in preference to
disposal as waste.
Health and safety
Accidents are costly, in human and economic terms, so our commitment to good
health and safety management has not altered. However , we do not believe that
health and safety management must be expensive to be effective. T o this end we
endeavour to engender and maintain a risk aware, proactive corporate culture,
where safety is an integral element of operational management. 
This year our safety and health management activities have included:
• Publishing a Policy and Company Code of Practice for asbestos, as well 
as Company Codes of Practice for climbing work and lifting operations.
• Continuing to deliver the Serious About Safety workshops in Operations.
• Providing targeted safety training for employees, and continuing with our
comprehensive network sites induction for employees and contractors.
Our accident rates remain low, although there has been a slight rise in reported
incidents. In the year ended 31 March 2005, employees reported 12 minor
injuries and 2 lost time injuries. However , this rise must be considered in the light
of the severity of reported accidents, which consist mainly of very minor injuries.
The reporting of such injuries, together with good use of “Near Hit” reporting,
suggests a risk aware culture prevails. Once again, this has been reflected in very
favourable insurance costs.
Charitable and political donations 
During the financial year the Group made a charitable donation amounting
to £2,500 to the Victim Support Sunrise Appeal and £3,603 to the T sunami Appeal.
The Group made no donations for political purposes.
Creditor payment policy and practice
The Group’ s current policy and practice concerning the payment of the majority 
of its trade creditors is to follow the Better Payment Practice Code. Copies are
available upon request from the Company Secretary. For other suppliers, the
Group’ s policy and practice is to settle terms of payment when agreeing the terms
of the transaction, to include the terms in contracts, and to pay in accordance with
its contractual and legal obligations. The Group’ s “creditor days” at 31 March 2005
were 34 days. The Company did not have any trade creditors at 31 March 2005.
Auditors
A resolution to re-appoint KPMG Audit Plc as auditors to the Company and to
authorise the Directors to fix their remuneration will be put to shareholders at the
Annual General Meeting. 
Annual General Meeting
The Annual General Meeting will be held at the Radisson SAS Hotel, 301 Argyle
Street, Glasgow, G2 8DL on Wednesday 27 July 2005 at 11.00 a.m. Details
of the resolutions to be proposed at the Annual General Meeting are contained
in the Notice of Annual General Meeting on page 46. 
By Order of the Board
David Macleod
Secretary
20 May 2005 18
Corporate Governance Report
The Board sets the policy to be followed by the Group and continues to be
committed to high standards of corporate governance. The Group has complied
with the provisions of the Combined Code published in July 2003 in respect 
of the financial year ended 31 March 2005, except that (i) until 1 September
2004, the composition of the Nomination Committee was not fully compliant
with the Combined Code recommendation (provision A.4.1) that a majority
of its members be independent Non-executive Directors and (ii) the senior
independent Non-executive Director has not, during the year , attended, in
accordance with the Combined Code (provision D.1.1), meetings with a range
of major shareholders of the Group as explained in the section headed “Relations
with shareholders” on page 19.
Board of Directors
The separation of the roles of the Non-Executive Chairman and the Chief Executive
ensures that there is a well established division of authority and responsibility at the
most senior level within the Group. The Chairman leads the Board in the
determination of its strategy and achievement of its objectives. The Chief Executive
has direct charge of the Group on a day-to-day basis and is accountable to the
Board for the financial and operational performance of the Group. The division
of responsibilities between the Chairman and Chief Executive is set out in writing
and has been agreed by the Board. Throughout the year , the Board comprised 
a Non-executive Chairman, three Executive Directors and four Non-executive
Directors. The Non-executive Directors are from varied business and other
backgrounds. Biographies of all the Directors are set out on pages 14 and 15,
including details of professional and business commitments of a significant nature.
Induction is provided for all new directors which is tailored to their specific
requirements and includes meetings with senior management, site visits to business
locations and provision of key documentation and information. Continuing
development is provided through presentations and briefing materials in relation 
to the Group in the course of regular Board and Committee meetings and also by
external sources such as attendance by Directors at seminars conducted by the
Group’ s professional advisors and other recognised bodies.
The Non-executive Directors are considered by the Board to be independent 
and free from any business or other relationship which could materially interfere
with the exercise of their independent judgement. All of the Non-executive
Directors have held office throughout the year , with the exception of the Chairman,
Philip Rogerson, who was appointed to the Board on 1 September 2004 to replace
Roy Brown who retired from the Board with effect from the same date. On his
appointment, the Chairman was also considered by the Board to be independent.
Executive Directors normally retire at age 60 in terms of their service contracts.
Non-executive Directors are appointed for a specified term of three years which
may be renewed.
Ian Chippendale has been identified as the senior independent Non-executive
Director who is available to shareholders for concerns not resolved through the
existing mechanisms for investor communication.
Directors must stand for election at the first Annual General Meeting following their
appointment. All Directors also retire by rotation such that approximately one-third
of the Board retires and seeks re-election each year . Each Director must retire and
seek re-election at least every three years. At the forthcoming Annual General
Meeting to be held on 27 July 2005, Philip Rogerson offers himself for election
and John Maguire, Ian Chippendale and Margaret Ford will retire as Directors
and offer themselves for re-election to the Board. Following evaluation of the
performance of each of those directors it is confirmed that each individual
continues to perform effectively in the role and demonstrates commitment to the
role. Their continued appointment as Board members is therefore recommended
by the Board.
Details of Directors’ remuneration together with the Group’ s remuneration policy
and the principles under which these have been formulated and applied are
described in the Directors’ Remuneration Report as set out on pages 21 to 26.
Control of the Group is through the Board of Directors. The Board’ s main roles 
are to create shareholder value, provide leadership of the Group, approve the
Group’ s strategic objectives and promote the highest standards of ethics and
integrity in all of the Group’ s business activities.
The Board meets monthly and has a schedule of matters concerning key aspects 
of the Group’ s activities which are specifically referred to it for its collective
decision. The matters reserved to the Board for decision include the approval 
of the annual report and accounts and any other financial statements, the long term
objectives of the Group and the strategy necessary to achieve these objectives, 
the Group’ s budgets and plans, significant capital expenditure and allocation of
resources, significant investments and disposals, the arrangements for ensuring the
Group manages risks effectively, any significant change in accounting policies and
the appointment of the Group’ s main professional advisors.
The types of decision delegated to management relate principally to implementation
of the business plan and annual budget, competitive positioning and relationships
with employees, customers and suppliers.
The Board evaluates its performance and that of its Committees and individual
Directors. The process adopted in respect of the Board is by means of a Board
review of responses to a questionnaire, completed by each Director , and which
encourages the Directors to draw on their experience to endeavour to ensure that
the Group follows best practice and to suggest how the Group’ s procedures may
be improved. The Committees also assess their respective terms of reference and
effectiveness and report the conclusions to the Board, with recommendations for
change if necessary. The Chairman has a private discussion at least once a year
with each Director on a range of issues affecting the Group, including an
evaluation of the performance of the Director and any matters which the Director
wishes, individually, to raise.
The Remuneration Committee also reviews the performance of the Chief Executive
and the other Executive Directors when considering their remuneration
arrangements. The Chairman’ s performance is evaluated by the Non-executive
Directors at an annual meeting, led by the Senior Independent Director , taking
account of the views of the Executive Directors.
The table below sets out the number of meetings of the Board and its main
Committees during the year , and the attendance of individual directors. 
Audit NominationRemuneration
Board Committee Committee Committee
Number of meetings 
during the year 12 5 2 5
Current directors 
who served during 2005
William Allan 12 2
Ian Chippendale 9424
Jo Connell
1
11 515
Michael de Kare-Silver 12 5 5
Margaret Ford
2
12 2 5
Philip Male 12
John Maguire 12
Philip Rogerson
3
71
Former directors 
who served during 2005
Roy Brown
4
5
1 Appointed to the Nomination Committee on 30 November 2004
2 Appointed to the Nomination Committee on 8 July 2004
3 Appointed to the Board on 1 September 2004 and the Nomination Committee 
on 30 November 2004
4 Retired from the Board and the Nomination Committee on 1 September 2004 
The Chairman, the Chief Executive, the Chief Financial Officer and the former
Chairman attended certain meetings of the Audit Committee and Remuneration
Committee during the year at the invitation of the Chairman of those Committees.
All Directors have access to the advice and services of the Company Secretary,
who is responsible for ensuring that all Board procedures are observed. Any
Director wishing to do so, in furtherance of his duties, may take independent
professional advice at the Group’ s expense. 
Board Committees
The Board has three principal standing committees: the Audit Committee,
Nomination Committee and Remuneration Committee. The composition,
purpose and function of each of these committees are described below.  19
Audit Committee
The Audit Committee comprises three independent Non-executive Directors and 
is chaired by Ian Chippendale, the senior independent Non-executive Director . 
It met five times in the year , has written terms of reference and its remit 
is to review the annual and interim Accounts and the appropriateness of
accounting policies, to review internal controls and financial reporting, and 
to make recommendations on these matters to the Board. It also considers the
appointment and fees of the external auditors, the appointment of the director 
of Risk Management (as Head of Internal Audit) and reviews the risk management
framework, the internal audit plan and resulting reports and the Group’ s
“whistleblowing” policies. The Audit Committee discusses the action taken on
problem areas identified by Board members or in the internal and external audit
reports. The Committee reviews its terms of reference and effectiveness annually
and reports its conclusions to the Board, including any recommendations for change.
The Committee has also established a policy on the provision of non-audit services
by the external auditors which requires the Committee to approve in advance the
provision of certain kinds of those services within defined parameters. The key
principles which underpin the policy and which are designed to minimise the risk
of conflict of interest arising are that the auditors should not audit their own firm’ s
work, make management decisions for the Group, have a mutuality of financial
interest with the Group, or be put in the role of advocate for the Group. Prior
approval of the Audit Committee is also required for any services provided by the
external auditors where the cumulative annual fees in any year are likely to be in
excess of the audit fee for that year . In any case activities that may be perceived to
be in conflict with the independence of the external auditors must be submitted to
the Committee for approval prior to engagement, regardless of the amounts
involved. Details of the non-audit services performed during the year and the fees
for those services, are contained in Note 3 to the Accounts on page 35. The
Committee, during the year , assessed the effectiveness of the external audit service
and independence of the external auditors. The Committee’ s conclusion was that
the service continued to be effective and that the auditors remained independent,
demonstrating effectiveness and commitment in the role.
During the year the Committee also had a meeting with the external auditors
without executives present and a meeting with the director of Risk Management 
(in his capacity as Head of Internal Audit) alone.
The Committee has established a policy in relation to the arrangements whereby
staff of the Group may, in confidence, raise concerns about possible improprieties
in matters of financial reporting or other matters. It reviews the terms of the policy
and its operation annually.
The Chairman of the Audit Committee reports the outcome of the Audit Committee
meetings to the Board which receives the minutes of Audit Committee meetings.
The Board considers that the membership of the Audit Committee as a whole has
sufficient and relevant experience to discharge its functions and that, in particular ,
Ian Chippendale has recent and relevant financial experience. Mr Chippendale
has considerable experience in the insurance and financial services industry, as
set out in his biography on page 14 and has chaired the Audit Committee since
October 1999. The Committee’ s terms of reference are displayed on the Group’ s
website at www.thus.net.
Nomination Committee
The Nomination Committee is chaired by the Group’ s Non-executive Chairman
and comprises the Chief Executive, the senior independent Non-executive Director ,
and two other independent Non-executive Directors. It has written terms of
reference and its remit is to consider and make recommendations to the Board on
the appointment and re-election of Directors, having regard to the overall balance
and composition of the Board, and to review and advise the Board upon issues of
succession planning. The Chairman of the Nomination Committee reports the
outcome of the Committee meetings to the Board which receives the minutes of
Nomination Committee meetings.
In relation to Board appointments the Committee, in liaison with the Board,
prepares a profile of the requirements of the role in order to brief external search
consultants to provide a list of suitable candidates, both external and where
appropriate internal for the Committee to interview, leading then to a short list and
ultimate selection of the most suitable candidate for recommendation to the Board
for appointment. The proposed candidate is provided with the opportunity to meet
Board members and the senior management team prior to acceptance of the
appointment. The selection process was adopted in relation to the appointment
during the year of Philip Rogerson, the Non-executive Chairman. The previous
Chairman took no part in that process which was led by the Senior Independent
Non-executive Director . The Committee reviews annually its terms of reference and
effectiveness, and reports its conclusions to the Board, including recommendations
for any change. The Committee’ s terms of reference are displayed on the Group’ s
website at www.thus.net.
Remuneration Committee
The Remuneration Committee is comprised exclusively of four independent 
Non-executive Directors, is chaired by Michael de-Kare Silver and meets regularly.
The remit is to make recommendations to the Board on the Group’ s framework for
the remuneration of the Group’ s executives and its cost and, on behalf of the
Board, to determine and review specified remuneration packages for the Non-
executive Chairman, the Executive Directors and designated senior managers. 
The Committee seeks to design policies which will attract, retain and motivate
Executive Directors and senior managers of the required calibre. The Committee
also has responsibility for reviewing the operation of the Group’ s bonus and
incentive schemes. The Chairman of the Remuneration Committee reports the
outcome of the Committee meetings to the Board and the Board receives the
minutes of Remuneration Committee meetings. The Directors’ Remuneration Report
for the year is set out on pages 21 to 26.
The Committee reviews its terms of reference and effectiveness annually and
reports its conclusions to the Board, including any recommendations for change.
The terms of reference and those of the Committee’ s remuneration consultants,
who are independent of the Group, are displayed on the Group’ s website 
at www.thus.net.
Relations with shareholders
As at 31 March 2005, the Group had 1,348.6 million shares in issue, approximately
80% of which were held by institutions and corporate shareholders with the
remainder being held by private investors. 
There is a regular dialogue with shareholders through the Annual and Interim
Reports and through a supplementary investor relations programme focused
around the Group’ s preliminary and interim results announcements and periodic
trading updates. The Executive Directors’ presentation of results is broadcast
via webcast or telephone conference. Following results, the Executive Directors
undertake a series of formal presentations to existing and potential investors
in London, Edinburgh and Glasgow. During the year , the Group also arranged
an operational tour for institutional investors. 
T o develop an understanding of the views of major shareholders, the Board
receives monthly an investor relations report, compiled with input from the Group’ s
brokers, setting out key features and trends in relation to trading in the Group’ s
shares and share price movements. Analysts’ reports on the Group, its competitors
and the telecommunications sector are circulated to Board members on a regular
basis. Feedback from investors and analysts after the Group’ s results announcements
and presentations are regularly reported to the Board, accompanied by an
analysis by the Group’ s advisors of investor reaction in comparison with its peers
in the sector . The Chairman, on his appointment to the Board in September 2004,
provided senior representatives of the Group’ s major investors with the opportunity
to meet with him. He has met with those who wished to take up the opportunity and
has briefed the Board accordingly. The Non-executive Directors are also invited to
attend presentations of the Group’ s results. The senior independent Non-executive
Director has not, during the year , undertaken in accordance with the Combined
Code a programme of meetings with a range of major shareholders of the Group
as this has not been considered necessary by the Board.
The Annual General Meeting, which is normally attended by all Directors,
gives those institutional and private shareholders attending the opportunity for
communication with the Board. Shareholders present are encouraged to ask
questions both during and after the conclusion of the meeting.  20
Corporate Governance Report continued
Consistent with its obligations under the Listing Rules of the Financial Services
Authority (FSA), the Group makes announcements to one of the Regulatory
Information Services approved by the FSA from time to time. 
Internal control
The Board has maintained the approach adopted in previous years, which is 
in line with the guidance issued by the London Stock Exchange, in establishing
and monitoring the Group’ s internal control procedures and policies. In following
the requirement of the revised Combined Code, a review on an annual basis 
of the effectiveness of the system of internal control is carried out by the Directors.
This review includes financial, operational and compliance controls and risk
management. The T urnbull Report (Internal Control: Guidance for Directors on 
the Combined Code), published in September 1999, provides guidance to the
Directors in respect of this requirement.
Overall responsibility for the system of internal control and for reviewing the
effectiveness of the system rests with the Directors of THUS Group plc. The Internal
Audit function of the Group supports the Directors in assessing the operation 
of key internal controls through a structured review programme. The purpose,
authority and responsibility of the Group’ s Internal Audit function is contained
within a formal charter which is approved by the Board.
The system of internal control is designed to manage rather than eliminate the risk
of failure to achieve business objectives. Internal control, therefore, can only provide
reasonable and not absolute assurance against material misstatement or loss.
During the course of the year , the risk management and internal control systems
have continued to be developed across the Group. The risk management
framework is designed to ensure that the key controls are, and have been,
embedded into business processes. This has enabled the Directors to be satisfied
that the Group was fully compliant with the new Combined Code provisions on
internal control in the course of the financial year ended 31 March 2005.
Control environment
The Group is committed to ensuring that a suitable control environment exists,
which will not hinder its aim to be the leading alternative provider of
telecommunication and Internet services for business customers in the UK.
The Group has a defined organisational structure which is communicated
throughout the business. Individual objectives and authority levels are identified
and reviewed on an ongoing basis.
Each of the Executive Directors has responsibility for specific aspects of the Group’ s
business and the Management Board, which is the key decision-making body 
at Executive level in the Group is chaired by the Chief Executive. The Management
Board focuses on policy, business plan implementation, competitive positioning,
and customers, and meets on a monthly basis in advance of the THUS Group plc
main Board. The Management Board receives reports on corporate performance
from the following management groups, which meet regularly. The implementation
of the year’ s annual budget remains their focus.
The regular meeting of the Margin Review Committee considers, by both business
and product lines, the operational revenue and margin performance of the Group.
The review, monitoring and improvement of forecasting and budgeting procedures
on an ongoing basis is also the responsibility of this Committee. There is close
monitoring of the Committee which reports to the Chief Financial Officer , who
also carries out a detailed monthly review of the financial results. 
The Chief Operating Officer chairs Business Operations, which manages the 
day-to-day operation of the business, ensuring cohesion in marketing, sales,
provisioning and through to operational delivery. 
Capital investment, major bids, facilities and major project implementation within
the Group is tracked by Capital Planning and Programme Management, which
is chaired by the Support Services director .
Identification and assessment of business risk 
and evaluation of controls
Risk Assessments are completed on all key processes and quarterly reviews are
carried out by the Risk Management Group to ensure this is a continuous process
which is embedded into the business. All aspects of business risk such as financial,
operational, strategic, compliance and business continuity risk are covered by
the Risk Assessments. Reviews of financial and operational risks are also now
undertaken regularly by the respective business areas throughout the year . These
are all supported by governance software which enables and requires risk owners
to monitor and review risks and associated controls within the Group
on a quarterly basis.
Additionally, new revenue assurance software has been integrated into the risk
management processes during the year . This is designed to assure the Group’ s
revenue streams and reduce the potential for fraud.
There is a consistent approach to the management of risk across the Group,
which has been enabled by the integration, into the business, of the key sources 
of assurance over business risk.
Monitoring
An assessment of residual risk by process across the business, resulting from 
the reviews of the risks of the Group, is presented to the Audit Committee on 
a quarterly basis.
The Internal Audit function continues to assess and audit the effectiveness of
internal control, under the direction of the director of Risk Management. Similarly,
the revenue assurance function carries out a programme of review and assurance
of the Group’ s revenue streams.
Audits on the operation of the Group’ s health and safety management system are
carried out by The Safety Health & Environment team to assess whether the health
and safety risks are being appropriately controlled.
Finally, an annual review of the effectiveness of the system of internal control and
risk management processes is carried out by the Board.
Going concern
The Directors, after making appropriate enquiries, confirm that they are satisfied
that THUS Group plc has adequate resources and committed borrowing facilities
to continue in operational existence for the foreseeable future and, therefore, have
adopted the going concern basis in preparing the Accounts on pages 28 to 44.
Directors’ responsibility for the Accounts
Company law requires the Directors to prepare Accounts for each financial year ,
which give a true and fair view of the state of affairs of the Company and Group
and of the profit or loss for that period. In preparing those Accounts, the Directors
are required to:
• Select suitable accounting policies and then apply them consistently.
• Make judgements and estimates that are reasonable and prudent.
• State whether applicable accounting standards have been followed, 
subject to any material departures disclosed and explained in the Accounts.
• Prepare the Accounts on the going concern basis unless it is inappropriate 
to presume that the Company and Group will continue in business. 
The Directors are responsible for keeping proper accounting records, which
disclose with reasonable accuracy at any time the financial position of the
Company and Group and to enable them to ensure that the Accounts comply with
the Companies Act 1985. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
Auditors’ responsibilities
The Group’ s registered auditors, KPMG Audit Plc, are responsible for forming an
independent opinion on the Accounts of the Group as presented by the Directors,
and for reporting their opinion to the Group’ s members. The Independent Auditors’
Report to the Members of THUS Group plc is set out on page 27 . 21
Directors’ Remuneration Report 
Remuneration Committee
Constitution, membership and advisors
The Remuneration Committee comprises independent Non-executive Directors and
is chaired by Michael de Kare-Silver . The other members of the Committee who
served throughout the year are Ian Chippendale, Jo Connell and Margaret Ford.
During the course of the year , the Board accepted the recommendations made by
the Committee without substantial amendment.
During the year , the Committee received advice and input from the Chairman, 
the Chief Executive and the director of Human Resources who are from time 
to time invited to attend. No individuals are involved in the determination of 
their own remuneration.
T owers Perrin have been the Committee’ s independent remuneration advisors 
since October 2003. T owers Perrin report directly to the Committee and have not
undertaken any significant work for the Company outside the area of executive
remuneration. Any such additional work would need to be approved by the
Chairman of the Committee. The terms of engagement of the remuneration
advisors are available at www.thus.net and form part of the Committee’ s terms 
of reference.
The Committee’ s overall objectives and remit
The Committee’ s terms of reference are also available at www.thus.net. The
Committee is responsible for making recommendations to the Board on the
Company’ s executive remuneration policy and for determining each Executive
Director’ s remuneration package. In deciding the Company’ s broad policy for
executive remuneration, the Committee aims to provide remuneration which is both
competitive and appropriate. The Committee has always sought to pay no more
than is necessary to motivate and retain highly-skilled executives. The Committee
also reviews the remuneration arrangements of the members of the Company’ s
senior management team and seeks to ensure that its decisions take into account
pay and conditions elsewhere in the Company.
Remuneration policy
During the year the Committee has continued its decision making on the basis 
of a number of underlying principles which can be summarised as follows: 
• Executive Directors and other senior executives should be paid market
competitive levels of remuneration and receive significant incentives for
performance which significantly exceeds challenging and objective targets.
• In setting base salary levels, the Committee has regard to benchmark data
from a number of comparable companies both within and outside the
telecommunications sector . The aim is to set salaries which are generally
around the mid-market level. Salaries will be above mid-market where
individual performance and skills justify it.
• The Committee remains strongly committed to ensuring there is an 
appropriate balance between fixed and performance pay with performance
pay comprising both bonuses and share incentives. It also seeks to ensure
alignment with shareholders’ interests.
• The Committee’ s primary goal is to ensure that executive remuneration
continues to be sufficiently attractive to retain Executive Directors in an
increasingly competitive market and to motivate them to deliver results 
and to enhance shareholder value.
The Committee sets the basic salary for each Executive Director by reference 
to individual performance and to external market information prepared by 
its advisors. 
The remuneration package
Basic salary
Salary adjustments are generally implemented with effect from 1 April in the
financial year . Salaries effective from 1 April 2004 are: William Allan, £350,000;
John Maguire, £250,000; Philip Male, £250,000. The Committee has benchmarked
and reviewed basic salary data provided by its advisors and has concluded that
base pay levels remain competitive and in line with the market. Salaries therefore
remain unchanged from 1 April 2005.
Annual bonus
Executive Directors and senior executives participate in the Company’ s annual
bonus plan.
The Committee remains committed to ensuring that bonus targets are challenging
and only reward demonstrably superior performance.
The annual bonus plan for Executive Directors is based solely on corporate
business performance and provides a maximum total payment of up to 100% 
of salary in respect of the Chief Executive and up to 85% of salary for other
Executive Directors.
The plan is based on the following key parameters:
• Financial measures should be used wherever possible.
• The performance metrics should be linked to key corporate objectives.
• Whereas there may be a case for including individual performance criteria for
more junior participants in the annual bonus plan, the Executive Director
population should be measured exclusively by reference to corporate performance.
The achievement of pre-determined targets determines the levels of payout under
the plan. There are currently three distinct financial measures which are weighted
as follows:
• 50% is determined by reference to cash flow after interest and capital expenditure.
• 25% of the bonus is determined by reference to EBITDA (earnings before
interest, tax, depreciation and amortisation) performance.
• 25% is determined by reference to turnover .
Each element of the bonus has an explicit gating factor of the Group being
operating profit positive in the second half of the year . Although the Group has
achieved an 8% improvement in turnover year on year , with positive cash flow
for the year , no bonus payments were made to the Executive Directors due to the
operating profit positive gating factor not being achieved. For employees other than
Executive Directors, bonus arrangements allowed for payment to be made against
cash flow and turnover targets for the first half of the year .
The bonus plan operates for the year ending 31 March 2006 against the same
financial measures but the weighting applied to cash flow has been reduced from
50% to 30%; EBITDA increased from 25% to 50% and turnover reduced from 25%
to 20%. This change in weighting reflects the fact that the Company has achieved
sustained cash flow positive and the emphasis is now placed back on EBITDA, 
a well established industry measure of performance. 22
Directors’ Remuneration Report continued
Long-term incentives
Share options
The Company operates an executive share option scheme (the THUS Group plc
Discretionary Share Option Scheme), under which market value options can 
be granted, at the discretion of the Committee, to Executive Directors and selected
employees. The performance criterion that currently applies to the vesting of
options is relative T otal Shareholder Return (TSR) measured against the FTSE
T elecommunications sector and the FTSE Mid-250 (excluding telecommunications
companies). Two-thirds of the options vest depending on the Company’ s TSR
compared against the telecommunications index and one-third depending on the
Company’ s TSR compared against the FTSE Mid-250. Half the options become
exercisable when the Company’ s TSR is at the median. All the options are
exercisable when the Company’ s TSR is at the upper quartile. The Committee must
also satisfy itself that the underlying financial performance of the Company has
improved during the vesting period.
Relative TSR performance is calculated by T owers Perrin using data supplied by
Datastream to provide independent verification and is reported to the Committee.
Relative TSR was regarded as the most appropriate measure to determine the
vesting of share options when the plan was approved. It was supported by our
shareholders as a measure which aligned the interests of executives with those of
shareholders by rewarding performance relative to the Company’ s sector peers.
There will be no opportunity to retest the performance conditions attached to the
vesting of any options granted in 2005 and thereafter .
Performance shares
The Company also operates the THUS Group Performance Share Plan under which
an award of shares can be granted at the discretion of the Committee to selected
Executive Directors and employees. Grants made during a year will only become
exercisable after three years if demanding performance targets set by the
Committee are met. 
T wo performance criteria currently apply to the vesting of performance share awards.
For half of an award of performance shares to vest, THUS’ s TSR (T otal Shareholder
Return) compared to that of the constituents of the FTSE All-Share T elecoms Sector
as at the date of grant is measured over a three-year period. No shares vest where
the Company’ s TSR is below the median. The minimum proportion of shares that
vest at the median is 30%. All the shares vest when the Company’ s TSR is at the
upper decile. Performance is measured over three years with no retesting
opportunities. The Committee must also be satisfied at the time the performance
condition is met that this is consistent with the achievement of commensurate
underlying financial performance of the Company.
For the remaining half of the performance share award to vest, normalised
Earnings Per Share (EPS) performance of the Company is measured over a three-
year period. The EPS test is set with reference to broker forecasts covering the
relevant three-year period. The extent to which EPS targets are satisfied after three
years will be confirmed by the Committee. 
As with the share option scheme, relative TSR has been included as one of the
performance conditions for the performance share awards to ensure alignment
between the interests of executives with those of shareholders. The Committee also
included an EPS measure as this ensures rewards are only received for sustained
improvements in the financial performance of the Company. The TSR elements of
the performance conditions are calculated by T owers Perrin using data supplied by
Datastream and are regularly reported to the Remuneration Committee. The EPS
calculations are performed internally and on the same basis as reported in the
annual accounts. EPS and the standard of performance required to trigger the
vesting of shares will be measured as if International Financial Reporting
Standards (IFRS) had always been applied.
During the year ended 31 March 2005 grants with a face value equal to 100%
of salary were made to the Executive Directors under both the THUS Group plc
Discretionary Share Option Scheme and the THUS Group Performance Share Plan.
This increased the proportion of remuneration which is performance linked, in
accordance with the Committee’ s remuneration principles. 
Pension and other benefits
Pension benefits are provided for Executive Directors under the THUS Group plc
Pension Scheme. The arrangements for Executive Directors are the same as for all
other employees who are members of the scheme. The scheme is a contributory
defined-benefit arrangement that provides pension benefits up to the maximum
permitted by the Inland Revenue subject to an overall maximum limit of 1/60th of
final pensionable salary for each year of pensionable service. Normal retirement
age under the scheme is 60 and final pensionable salary is defined as the highest
pensionable salary averaged over any 12-month period in the last five years of
membership, or the highest three-year average in the last ten years if higher .
Pensionable salary is defined as basic salary only.
In line with market practice a cash supplement is provided on earnings above the
Inland Revenue earnings cap for all three Executive Directors.
The impact of the 2006 tax changes on executive pensions is currently under
review and will be disclosed at the appropriate time. In principle, it has been
agreed that THUS will not compensate executives for any increase in taxation 
they may face as a result of the changes. 
Executive Directors are eligible for a range of benefits, the value of which is
contained within the Directors’ emoluments table on page 24. These include 
the provision of a company car or car allowance, fuel, private medical, life,
permanent health and critical illness insurances.
Service contracts
Reflecting current market practice, the Executive Directors have service contracts
that are terminable on one year’ s notice by either the individual or the Company. 
It is not the Committee’ s intention to appoint any new Executive Directors with
contracts that provide for a longer notice period.
The Committee endorses the principle of mitigation of loss on early termination 
of a service contract and generally seeks to achieve that objective, where possible
and appropriate. 
In the event that THUS wished to terminate an Executive Director’ s contract other
than in circumstances where the Company is entitled to summarily dismiss an
Executive Director , it would need to either give 12 months’ notice or make a payment
in lieu of salary and benefits. 23
The dates, terms and notice periods of the service contracts for Executive Directors
are as follows:
Date of initial
Date of contract appointment Notice Expiry
commencement with THUS plc period dates
William Allan 01/04/2004 22/10/1999 12 months 29/04/2016
John Maguire 01/04/2004 18/12/2000 12 months 07/07/2028
Philip Male 01/04/2004 22/10/1999 12 months 13/09/2029
Share ownership guidelines
Formal guidelines provide that Executive Directors should retain at least 25% 
of the after tax gain arising from any awards vesting pursuant to the Company’ s
share incentive plans until such time as a shareholding equivalent in value to one
times basic salary has been achieved. The Committee will review the guidelines not
less than every two years, including updating to reflect any changes in share price
and salary.
Policy on outside directorships
Currently no Executive Director holds any outside directorship. The Nomination
Committee will consider the appropriate policy at such time as a request is made
by an Executive Director .
The Chairman and Non-executive Directors
The appointment of the Chairman and Non-executive Directors is subject to the
Articles of Association of the Company, in particular the usual provisions relating
to re-election by shareholders. The Chairman and Non-executive Directors have
letters of appointment which are available at www.thus.net. They were all
appointed for an initial term of three years terminable at the request of the Board
and may be renewed for a further period subject to approval by the Board.
Current terms of office began on the following dates: 
Date of initial
Commencement appointment
date of current with THUS plc End of
term of office (if applicable) current term
Roy Brown (Chairman) 11/01/2002 04/01/2001 01/09/2004
(Non-executive Chairman (retired from the Board)
from 10 July 2002)
Philip Rogerson (Chairman) 01/09/2004 – 31/08/2007
Ian Chippendale 11/01/2002 15/10/1999 14/10/2005
(Senior Independent Director)
Jo Connell 11/01/2002 01/01/2001 31/12/2006
Margaret Ford 07/11/2002 – 06/11/2005
Michael de Kare-Silver 11/01/2002 22/09/2000 21/09/2006
The remuneration of the Chairman is determined by the Remuneration Committee.
The fees of the Non-executive Directors are determined by the Board. Full details 
of the remuneration of the Directors are contained in the Directors’ emoluments
table on page 24. The Chairman and Non-executive Directors are not entitled 
to compensation on early termination of their term of office. No individuals are
involved in the determination of their own remuneration.
Performance graph
Legislation introduced by the Government requires this Report to contain a graph
showing the performance of the Company compared with a “broad equity market
index” over the period since the Company listed on 14 March 2002. The Committee
has chosen the FTSE All-Share T elecommunications Index, of which THUS is 
a constituent. This Index was chosen because it shows the performance of the
Company relative to its industry peer group and is therefore particularly relevant 
to shareholders.
Historical TSR performance
Source: Datastream
Growth in the value of a hypothetical £100 holding since listing date FTSE 
All-Share T elecommunications Services Index comparison based on spot values.
THUS Group 
FTSE All-Share T elecommunications Services Index
0
20
40
60
80
100
120
140
31 March
2005
31 March
2004
31 March 
2003
31 March 
2002 24
Directors’ Remuneration Report continued
Directors’ emoluments
The following table provides a breakdown of the total emoluments of the Directors of the Company in office during the year ended 31 March 2005. 
Compensation
Basic Supplementary Benefits for loss Total Total 
salary/fees Bonuses allowances
(ii)
in kind of office 2005 2004
(i)
££ ££ £ £ £ 
Executive Directors
William Allan 350,000 – 62,000 20,213 – 432,213 540,328
John Maguire 250,000 – 29,600 17 ,238 – 296,838 392,589
Philip Male 250,000 – 29,600 18,868 – 298,468 391,747
Non-executive Directors 
(fees and expenses)
Philip Rogerson 
(appointed 01/09/2004) 46,667–––– 46,667 –
Roy Brown (retired 01/09/2004) 33,333–––– 33,333 80,000
Ian Chippendale 30,000–––– 30,000 30,000
Jo Connell 30,000–––– 30,000 30,000
Michael de Kare-Silver 30,000–––– 30,000 30,000
Margaret Ford 30,000–––– 30,000 30,000
Total 1,050,000 –121,20056,319 –1,227,519 1,524,664
(i) The 2004 figures include an amount for bonus equivalent to £225,000 for the Chief Executive Officer and £146,625 each for the Chief Financial Officer and the
Chief Operating Officer . Half of these bonus amounts were compulsorily deferred into shares which will vest after three years subject to continued employment.
(ii) The supplementary allowance paid to the Executive Directors is in lieu of pension benefits above the Inland Revenue Earnings Cap.
(iii) Aggregate emoluments in respect of qualifying services amounted to £1,227 ,519 (2004: £1,524,664).
Directors’ pension benefits
An overview of the pension benefits provided to all Executive Directors is set out in the policy section earlier .
Details of pension benefits earned by the Executive Directors during the year ended 31 March 2005 are shown below:
Increase in Increase in Transfer value Transfer value Transfer value Increase/(decrease) 
Defined-benefits Accrued accrued benefits accrued benefits of (A) less of accrued of accrued in transfer value
pension scheme benefit at excluding including Directors’ benefits at benefits at less Directors’ 
as at 31 March 2005 31 March 2005 inflation (A) inflation contributions 31 March 2004 31 March 2005 contributions
££££££ £
William Allan 21,533 6,508 7,016 72,375 160,211 256,340 91,029 
John Maguire 13,804 4,487 4,802 22,329 51,856 84,384 27,428 
Philip Male 16,496 4,473 4,880 20,570 62,814 94,670 26,756 
(i) The pension entitlement shown is that which would be paid annually on retirement based on service to the end of the year , or end of service, assuming normal
retirement at age 60. Members of the scheme have the option to pay additional voluntary contributions; neither the contributions nor the resulting benefits are
included in the above table.
(ii) The Executive Directors are subject to the earnings cap introduced in the Finance Act 1989 .
(iii) The increase in accrued pension during the year allows for an increase in inflation of RPI as measured at 3.5%.
(iv) The transfer value has been calculated on the basis of actuarial advice in accordance with Actuarial Guidance Note GN11. The transfer value represents 
a liability of the pension scheme, not a sum due to or paid to the Director . 25
Directors’ interests in shares and share options 
Exercise Market price Date 
Executive At At 31 Date Date price at date of from which 
Director 1 April 2004 Granted Exercised Lapsed March 2005 granted exercised (pence) exercise exercisable Expiry date
THUS plc Discretionary Share Option Scheme – see Note 1
William Allan 1,569,230––– 1,569,230 Mar 2002 – 16.25p – Mar 2005 Mar 2009
– 1,354,489 – – 1,354,489 May 2004 25.84p – May 2007 May 2011
John Maguire 1,000,000––– 1,000,000 Dec 2000 – 72p – Dec 2003 Dec 2007
1,107 ,692––– 1,107 ,692 Mar 2002 – 16.25p – Mar 2005 Mar 2009
– 967 ,492 – – 967 ,492 May 2004 – 25.84p – May 2007 May 2011
Philip Male 1,230,769––– 1,230,769 Mar 2002 – 16.25p – Mar 2005 Mar 2009
– 967 ,492 – – 967 ,492 May 2004 – 25.84p – May 2007 May 2011
THUS Group Performance Share Plan – see Note 2
William Allan 784,615 – – 784,615 – Mar 2002 – £1 total – – Mar 2005
consideration
1,875,000––– 1,875,000 Feb 2003 – £1 total – Feb 2006 Feb 2006
consideration
1,354,489 – – 1,354,489 May 2004 – £1 total – May 2007 May 2007
consideration
John Maguire 553,846 – – 553,846 – Mar 2002 – £1 total – – Mar 2005 
consideration
1,437 ,500––– 1,437 ,500 Feb 2003 – £1 total – Feb 2006 Feb 2006
consideration
967 ,492 – – 967 ,492 May 2004 – £1 total – May 2007 May 2007
consideration
Philip Male 615,384 – – 615,384 – Mar 2002 – £1 total – – Mar 2005 
consideration
1,437 ,500––– 1,437 ,500 Feb 2003 – £1 total – Feb 2006 Feb 2006
consideration
967 ,492 – – 967 ,492 May 2004 – £1 total – May 2007 May 2007
consideration
THUS Group plc Sharesave Scheme – see Note 3
William Allan 13,842––– 13,842 May 2002 – 14p – May 2005 Nov 2005
John Maguire 13,842––– 13,842 May 2002 – 14p – May 2005 Nov 2005
19,989 – – 19,989 June 2004 – 21.5p – August 2007 Feb 2008
Philip Male 13,842 – 13,842 May 2002 – 14p – May 2005 Nov 2005
13,540––– 13,540 June 2003 – 11.75p – August 2006 Feb 2007
– 19,989 – – 19,989 June 2004 – 21.5p – August 2007 Feb 2008
The emoluments of the highest paid Director (Mr Allan) including gains on the exercise of entitlements to share and shares options, but excluding pension contributions are
£432,213 (2004: £540,328). Pension contributions made by the Company under approved pension arrangements for Mr Allan amounted to £15,769 (2004: £14,850).
The aggregate of the gains made on the exercise of share options during the year was £Nil (2004: £Nil).
1 Outstanding options held by Directors under the Discretionary Option Scheme will only be exercisable if the following performance condition is met. Two-thirds of 
the shares under option have a comparator group of the FTSE T elecoms Sector and the remaining third have a comparator group of the FTSE Mid-250 companies
(excluding telecommunications companies). In both cases, 50% of the shares under that part of the option are exercisable for median TSR performance against their
respective comparator group rising on a straight-line basis to full vesting for upper quartile performance for the 2002 and 2004 grants. If the performance targets
have not been satisfied in full on the third anniversary of the grant of the option, the options may be retested on two further occasions (being fourth and fifth anniversaries
of the grant), with retesting always from a fixed base point. Any part of the options not exercisable after the fifth anniversary will lapse. Any award of options in future
will have no opportunity for retesting of the performance conditions. The market price of a share on 28 May 2004 when the award was made was 26p.
2 For awards granted in the year ended 31 March 2004 under the Performance Share Plan, in respect of half of the award, TSR must exceed the upper decile of a
comparator group of the FTSE All-Share T elecoms Sector as at the date of grant over a fixed three-year period in order for the full half of the award to vest. 30% of
this part of the award vests for median TSR performance, rising on a straight-line basis to full vesting at upper decile performance. No awards vest for below median
performance. For the remaining half of the award, normalised Earnings Per Share (EPS) performance of the Company will be measured over a three-year period.
30% of this part of the award will vest at a normalised EPS in 2005 of -0.75p; 100% vesting at a normalised EPS of +0.5p; 30% – 100% will vest on a straight-line
basis at a normalised EPS figure between -0.75p and +0.5p. The market price of a share on 11 February 2003 when an award was made was 8p.
For awards granted in the year ended 31 March 2005 under the Performance Share Plan, in respect of half of the award, TSR must exceed the upper decile of
a comparator group of the FTSE All-Share T elecoms Sector as at the date of grant over a fixed three-year period in order for the full half of the award to vest. 30%
of this part of the award vests for median TSR performance, rising on a straight-line basis to full vesting at upper decile performance. No awards vest for below
median performance. For the remaining half of the award, normalised Earnings Per Share (EPS) performance of the Company will be measured over a three-year
period. 30% of this part of the award will vest at a normalised EPS in 2007 of 0.5p; 100% vesting at a normalised EPS of 1.5p; 30% – 100% will vest on a straight-
line basis at a normalised EPS figure between 0.5p and 1.5p. The market price of a share on 28 May 2004 when the award was made was 26p.
3 As required by the relevant legislation, no performance conditions apply to options under the sharesave schemes.
The market price of the shares at 31 March 2005 was 14p and the range during the financial year ended 31 March 2005 was 13p to 33p.
No awards were varied during this year .
The information and explanatory notes on pages 24 and 25 above, has been audited by the Company’ s auditors in line with the relevant legislation. 26
Directors’ Remuneration Report continued
Directors’ interests in ordinary shares/entitlements to shares
The interests of the Directors in office at the end of the year in the shares of THUS Group plc at the beginning of the year , or date of appointment if later , 
and at the end of the year were as follows:
Ordinary shares
31 March 2005 As at 1 April 2004
Chairman and Executive Directors 
Philip Rogerson (appointed 01/09/2004) 100,000 –
Roy Brown (retired 01/09/2004) – 4,500
William Allan 321,907 289,607
John Maguire 107 ,384 75,084
Philip Male 208,416 176,116
Non-executive Directors
Ian Chippendale 53,225 53,225
Jo Connell 42,097 17 ,097
Michael de Kare-Silver 5,000 5,000
Margaret Ford 51,149 51,149
As potential beneficiaries under the Employee Benefit T rust, the Executive Directors are deemed to be interested in the shares held by the T rust, which, as at 31 March 2005,
amounted to 16,772,979 ordinary shares.
No changes took place to the interests of the Directors between 31 March 2005 and 20 May 2005.
Approved by the Board on 20 May 2005 and signed on its behalf by
Michael de Kare-Silver
Chairman of the Remuneration Committee 27
Independent Auditors’ Report 
to the Members of THUS Group plc
We have audited the Accounts on pages 28 to 44. We have also audited 
the information in the Directors’ Remuneration Report that is described as having
been audited.
This report is made solely to the Company’ s members, as a body, in accordance
with Section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the Company’ s members those matters we are required 
to state to them in an auditor’ s 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
The Directors are responsible for preparing the Annual Report and the Directors’
Remuneration Report. As described on page 20, this includes responsibility
for preparing the Accounts in accordance with applicable United Kingdom
law and accounting standards. Our responsibilities, as independent auditors,
are established in the United Kingdom by statute, the Auditing Practices Board,
the Listing Rules of the Financial Services Authority, and by our profession’ s
ethical guidance.
We report to you our opinion as to whether the Accounts give a true and 
fair view and whether the Accounts and the part of the Directors’ Remuneration
Report to be audited have been properly prepared in accordance with the
Companies Act 1985. We also report to you if, in our opinion, the Directors’
Report is not consistent with the Accounts, if the Company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law regarding Directors’
remuneration and transactions with the Group is not disclosed.
We review whether the Corporate Governance Statement on pages 18 to 20
reflects the Company’ s compliance with the nine provisions of the 2003 FRC Code
specified for our review by the Listing Rules, and we report if it does not. We are
not required to consider whether the Board’ s statements on internal control cover 
all risks and controls, or form an opinion on the effectiveness of the Group’ s
corporate governance procedures or its risk and control procedures. 
We read the other information contained in the Annual Report, including 
the Corporate Governance Statement and the unaudited part of the Directors’
Remuneration Report, and consider whether it is consistent with the audited
Accounts. We consider the implications for our report if we become aware 
of any apparent misstatements or material inconsistencies with the Accounts.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the Accounts and the part of
the Directors’ Remuneration Report to be audited. It also includes an assessment 
of the significant estimates and judgements made by the Directors in the preparation
of the Accounts, and of whether the accounting policies are appropriate to the
Group’ s circumstances, consistently applied and adequately disclosed. 
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with sufficient
evidence to give reasonable assurance that the Accounts and the part of the
Directors’ Remuneration Report to be 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
Accounts and the part of the Directors’ Remuneration Report to be audited.
Opinion
In our opinion:
• the Accounts give a true and fair view of the state of affairs of the Company
and the Group as at 31 March 2005 and of the loss of the Group for the 
year then ended; and
• the Accounts and the part of the Directors’ Remuneration Report to be audited
have been properly prepared in accordance with the Companies Act 1985.
KPMG Audit Plc
Chartered Accountants
Registered Auditor
8 Salisbury Square
London
EC4Y 8BB
20 May 2005
Notes
(a) The maintenance and integrity of the THUS Group plc website is the
responsibility of the Directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept 
no responsibility for any changes that may have occurred to the Accounts 
or audit report since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of Accounts may differ from legislation in other jurisdictions. 28
Accounting Policies and Definitions
Accounting Policies
A summary of the more important Group Accounting Policies is set out below:
The following principal accounting policies have been applied consistently, except
as explained in Note 1 to the Accounts, in dealing with items which are considered
material in relation to the Group’ s Accounts.
Basis of preparation
The Accounts have been prepared under the historical cost convention and 
in accordance with applicable accounting standards in the UK, subject to the 
true and fair override as noted below, and with the requirements of the Companies
Act 1985.
Basis of consolidation
The Group Accounts include the Accounts of the Company and its subsidiary
undertakings made up to 31 March 2005. Unless otherwise stated, the acquisition
method of accounting has been adopted. Under this method, the results of
subsidiary undertakings acquired or disposed of in the year are included in the
consolidated Group Profit and Loss Account from the date of acquisition or up
to the date of disposal. As noted below, the restructuring of the THUS Group
was accounted for using the principles of merger accounting set out in Financial
Reporting Standard 6 “Acquisitions and Mergers” (FRS 6) and Schedule 4A to the
Companies Act 1985.
The final step of the restructuring of the THUS Group was the redesignation 
(on 19 March 2002) of the THUS Group plc Preference Shares to ordinary
shares, the relative rights of shareholders at the start and end of the restructuring
process did not remain unchanged. As a result, the restructuring did not meet
the definition of a group reconstruction under FRS 6 which would have required
the restructuring to be accounted for under acquisition accounting principles.
This would have resulted in all the separate assets and liabilities of THUS plc being
recorded at fair value, goodwill or negative goodwill and goodwill amortisation
charges or credits arising and only the post acquisition results of THUS plc being
reported in the consolidated Profit and Loss Account. The Directors of the Company
did not believe that this would have given a true and fair view of the state of affairs
of the Group and of its results as, in substance, the change in the relative rights
of the shareholders was incidental to the main purpose of the restructuring which
was a change in the identity of the holding company rather than an acquisition
of a business.
Consequently, the restructuring was accounted for using merger accounting
principles as the Directors of the Company considered this was necessary in order
to meet the overriding requirement of the Companies Act 1985 to show a true 
and fair view. The Directors of the Company consider that it is not practicable to
quantify the effect of this departure from the detailed accounting requirements
without incurring significant and disproportionate cost.
The market capitalisation of THUS plc on 12 March 2002 adjusted for preference
shares was approximately £210m. On 15 March 2002, and after a share
issue of £275m, which was substantially applied to debt repayment the
market capitalisation of THUS plc, adjusted for preference shares was
approximately £285m.
The adjusted market capitalisation of THUS plc would potentially indicate a fair
value of consideration of a similar amount, compared to net assets acquired at
their book value of approximately £475m (post share issue and debt repayment).
In order to quantify the difference between merger accounting applied and
acquisition accounting, fair values would have to have been computed for both
the consideration and all acquired assets. Sector issues current in March 2002,
including a major UK based competitor breaching its banking covenants and
delisting from the London Stock Exchange and also a number of international
telecommunications companies with presence in the UK experiencing significant
business difficulties made it difficult to determine realistic or meaningful fair
values from market values. As a result of these sector issues, the market value
of THUS plc suffered significant fluctuations, and asset values were difficult to
assess, as a relevant price between a willing buyer and a willing seller could
not be easily ascertained. 
Under Section 230 (4) of the Companies Act 1985 the Company is exempt from
the requirement to present its own Profit and Loss Account.
Turnover definitions
The Group’ s turnover comprises revenues from data and telecom services, managed
solutions services, Internet services, contact centre services and interactive services,
each of which are defined as follows:
Data and telecom services
Revenues are derived from communication solutions, including the provision 
of switched services, capacity services, and data services.
Managed solutions services
Managed solutions services comprise revenues from the provision of voice
telephony, data and Internet services as part of a bespoke contractual arrangement
and are managed by a dedicated group set up for this purpose.
Internet services
Revenues from Internet services comprise monthly access fees paid by Internet dial
up subscribers, ingress receipts, revenue from business access services (including
the provision of leased lines, web design and e-commerce services) and revenues
from wholesale Internet services.
Contact centre services
Revenues represent the provision of outsourced contact centres and related
telemarketing, systems integration and consulting services activities.
Interactive services
Revenue from interactive services comprise the Group’ s share of premium rate 
call charges.
Cost definitions
The Group’ s costs comprise cost of sales, selling and distribution and
administration costs.
Cost of sales
Cost of sales consists of interconnect costs and payments to other Public
T elecommunications Operators (PTO’ s), network costs, network depreciation,
contact centre costs, interactive royalties and related costs.
Selling and distribution costs 
Selling and distribution costs comprise expenditure on marketing, advertising 
and promotions, together with the salaries and associated costs of the sales and
marketing function.
Administration expenses
Administration expenses comprise expenditure on customer services, human
resources, information technology, legal and regulatory compliance, finance
department costs and non-operational property together with depreciation 
of non-network assets.
Other definitions
Company (or THUS)
THUS Group plc
ScottishTelecom Businesses
The businesses acquired by the Company on 30 September 1999 together with
Scotland On-Line Limited.
Group
THUS Group plc and its subsidiaries and, for the periods prior to 30 September
1999, the ScottishT elecom businesses.
Subsidiary undertakings
Entities in which the Company holds a long-term controlling interest.
ScottishPower
Scottish Power plc and its subsidiaries. 29
Turnover
T urnover represents the value of goods and services supplied to customers during
the year (net of Value Added T ax).
The Group earns revenue from the transmission of content on its network
originated by third party providers. The Group assesses whether revenue should
be recorded gross as principal or net as agent, based on the features of such
arrangements including the following indicators:
• whether the Group holds itself out as agent
• establishment of the price
• provision of customer remedies
• performance of part of the service
• assumption of credit risk
Revenues from sales of telecommunication equipment are recognised upon
delivery to the customer . Connection revenues are recognised upon connection
of the customer to the network. Costs of connecting a customer to a network are
also charged to the Profit and Loss Account at the point when the customer
connects to the network.
All other revenue is recognised as earned.
Indefeasible Rights of Use (“IRU”) sales
As part of its service offering, the Group periodically sells dark fibre to other
network operators seeking to extend their own networks under IRU agreements.
These agreements extend for all of the assets’ expected useful lives and transfer
substantially all of the risks and benefits of ownership to the buyer . In a number 
of cases, the Group has acquired dark fibre under IRU agreements from the same
counterparties in order to complete its own network.
Where the consideration received by the Group for such IRU sales is in cash
and there is no separate agreement with the buyer to acquire fibre, the resulting
profit/(loss) is shown in the Accounts as a gain/(loss) on the disposal of fixed assets.
Where the sale of fibre for cash has occurred and there is a separate agreement
with the buyer , involving the Group acquiring fibre of a similar value at a similar
time, the Directors have concluded that it is most appropriate to record the sale 
and purchase transactions at fair value with the gain arising on the sale treated 
as unrealised and recorded in the Statement of T otal Recognised Gains and Losses.
Unrealised gains and losses are recognised over the life of the agreement.
Interest
All interest payable and receivable is reflected in the Profit and Loss Account
as it accrues.
Debt issue costs are accounted for as an adjustment to the amount of debt
outstanding and are included within finance charges over the life of the associated
borrowings. Debt issue costs relating to surplus loan facilities are written off
immediately on identification of that surplus.
Tax
The charge for tax is based on the results for the period and takes into account
full provision for deferred tax, using the approach set out in Financial Reporting
Standard 19 “Deferred T ax” (FRS 19) in respect of timing differences on a non-
discounted basis. A recoverability test is applied to deferred tax assets.
Intangible fixed assets
Licence fees are capitalised at cost, less provision for any impairment in value, 
and amortised over the remaining licence period once the relevant network
to which a licence relates becomes operational and a service is launched
to the public.
Costs associated with the development of new products or services are capitalised
and amortised over the anticipated life of the new product or service once this 
is launched to the public. 
Investments
Investments in subsidiary undertakings are stated in the Balance Sheet of the 
Parent Company at cost less provision for any permanent diminution in value. 
Own shares held under trust
Own shares held represent shares in the Company purchased for employee 
share options and are presented in the Balance Sheet as a deduction from equity.
No gain or loss is recognised in the Profit and Loss Account on the sale, issuance 
or cancellation in connection with these shares.
The impact of this accounting policy change is detailed in Note 1 to the Accounts.
Tangible fixed assets
T angible fixed assets are stated at cost, less provision for any impairment in value,
and are depreciated using the straight line method over their estimated operational
lives. T angible fixed assets include capitalised employee costs and other costs which
are directly attributable to the construction of fixed assets. The main depreciation
periods used are as set out below:
Land and leasehold buildings Years
Alterations to leasehold premises Over lease period
or useful life if shorter
Buildings: Equipment accommodation modules 10
Plant and equipment
Underground network 40
Fibre optic cable 20
Electronics, customers’ systems and base stations 10
Customer connections 5
Tools 4
Other 
Furniture and fittings 10
Vehicles 4
Computers and related software 3 to 5
Stocks
Stocks are valued at the lower of cost and net realisable value.
Finance and operating leases
Assets leased by the Group under finance leases are capitalised and depreciated
in line with the Group’ s depreciation policy. The interest element of the finance
lease repayments is charged to the Profit and Loss Account in proportion to the
balance of the capital repayments outstanding. Rentals payable under operating
leases are charged to the Profit and Loss Account on a straight line basis. Rent free
periods received by the Group, at the inception of new operating leases for
properties, are recognised in the Profit and Loss Account over the period of the
lease or , if shorter than the full lease term, over the period to the renewal date
at which the rent is first expected to be adjusted to the prevailing market rate.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction. At the year end, monetary assets and liabilities denominated 
in foreign currencies are translated at the rate of exchange ruling at the Balance
Sheet date. Any gain or loss arising on the restatement of such balances is taken 
to the Profit and Loss Account. The Accounts of the overseas entity and branch are
translated at the rate of exchange ruling at the Balance Sheet date. The exchange
difference arising on the retranslation of opening net assets is taken directly
to reserves.
Financial instruments
Charges relating to financial instruments acquired to reduce risk to interest 
rate exposure are charged to the Profit and Loss Account as incurred. 
Pensions
Pension costs for the defined benefit pension scheme are accounted for on the basis
of charging the expected cost of providing pensions over the period during which
the Group benefits from the employees’ services. The effects of variations from
regular costs are spread over the expected remaining working lifetime of the
members of the scheme after making suitable allowances for future withdrawals.
Contributions to defined contribution pension plans are charged to the Profit and
Loss Account in the period in which they are incurred. The pension cost figures
used in these Accounts comply with the current pension cost accounting standard,
Statement of Standard Accounting Practice 24 “Accounting for Pension Costs”
(SSAP 24). 
Financial Reporting Standard 17 “Retirement Benefits” (FRS 17) was issued on 
30 November 2000. Under the transitional arrangements permitted by FRS 17 , 
the Group is required to disclose the information in Note 26. 
For a minority of employees the Group pays varying levels of contributions
to personal pension schemes. The costs are charged against the Profit and 
Loss Account as incurred. 30
Group Profit and Loss Account
for the year ended 31 March 2005
2005 
Continuing
operations 
before 2005 2005 2005 
exceptional Exceptional Continuing Discontinued 2005
item item operations operations Total 
Notes £’000 £’000 £’000 £’000 £’000 
Turnover 2340,605 – 340,605 19,411 360,016 
Cost of sales 5, 7 (287 ,448) (8,126) (295,574) (16,650) (312,224)
Gross profit 53,157 (8,126) 45,031 2,761 47,792
Selling and distribution (22,045) – (22,045) (803) (22,848)
Administration expenses 7 (56,701) – (56,701) (5,957) (62,658)
Other operating income 3 1,415 – 1,415 – 1,415 
Operating loss 3 (24,174) (8,126) (32,300) (3,999) (36,299)
Loss on sale of fixed assets – continuing operations ––––– 
Loss on sale of discontinued businesses – – – (314) (314)
Loss on ordinary activities before interest and other similar charges (24,174) (8,126) (32,300) (4,313) (36,613)
Net interest payable and other similar charges 8 (4,862)
Loss on ordinary activities before tax (41,475)
T ax on loss on ordinary activities 9 (741)
Loss for the financial year 22 (42,216)
Loss and diluted loss per ordinary share (pence) 10 (3.17)
The comparative year is shown below.
Group Profit and Loss Account
for the year ended 31 March 2004 
2004 2004 
Continuing Discontinued 2004 
Notes operations operations Total 
1 (Restated) (Restated) (Restated) 
£’000 £’000 £’000 
Turnover 2 297,711 34,661 332,372 
Cost of sales 7 (238,251) (24,594) (262,845)
Gross profit 59,460 10,067 69,527 
Selling and distribution (24,215) (1,702) (25,917)
Administration expenses 7 (58,729) (6,383) (65,112)
Other operating income 3 289 – 289 
Operating loss 3 (23,195) 1,982 (21,213)
Loss on sale of fixed assets – continuing operations (266) – (266)
Loss on sale of discontinued businesses ––– 
Loss on ordinary activities before interest and other similar charges (23,461) 1,982 (21,479)
Net interest payable and other similar charges 8 (5,270)
Loss on ordinary activities before tax (26,749)
T ax on loss on ordinary activities 9 (212)
Loss for the financial year (26,961)
Loss and diluted loss per ordinary share (pence) 10 (2.03)
There were no acquisitions in either the current or previous year .
The Accounting Policies and Definitions on pages 28 and 29, together with the Notes on pages 34 to 44 form part of the Accounts.  31
Consolidated Statement of T otal Recognised Gains and Losses 
for the year ended 31 March 2005 
Notes 2004 
1 2005 (Restated)
£’000 £’000 
Loss for the financial year (42,216) (26,961)
Currency translation differences on overseas net assets 22 36 (38)
Unrealised gains on fixed asset disposals – 839 
Total recognised gains and losses relating to the year (42,180) (26,160)
Prior year adjustment for UITF 38 1 16,645 
Total recognised gains and losses recognised since the last annual report (25,535)
Reconciliation of Movements in Shareholders’ Funds 
for the year ended 31 March 2005 
Notes 2004 
1 2005 (Restated)
£’000 £’000 
Loss for the financial year (42,216) (26,961)
Currency translation differences on overseas net assets 22 36 (38)
Unrealised gains on fixed asset disposals – 839 
Receipts from exercise of share options 22 26 22
Share option charge 22 588 365 
Net movement in shareholders’ funds (41,566) (25,773)
Opening shareholders’ funds at beginning of year as previously stated 382,992 407 ,412 
Prior year adjustment for UITF 38 1 (3,019) (1,666)
Shareholders’ funds at beginning of year as restated 379,973 405,746 
Closing shareholders’ funds 338,407 379,973 
The Accounting Policies and Definitions on pages 28 and 29, together with the Notes on pages 34 to 44 form part of the Accounts.  32
Balance Sheets
as at 31 March 2005
Group Company
Notes 2004 
1 2005 (Restated) 2005 2004 
£’000 £’000 £’000 £’000 
Fixed assets 
Intangible assets 11 247 136 – – 
T angible assets 12 372,923 412,796 – – 
Investments 13 – – 56,963 56,963 
373,170 412,932 56,963 56,963 
Current assets 
Stocks 14 3,101 3,125 – – 
Debtors: 
Amounts falling due within one year 15 74,436 93,498 – – 
Amounts falling due after more than one year 15 2,400 3,471 – – 
76,836 96,969 – – 
Cash at bank and in hand 25 28,548 26,421 87 87 
Total current assets 108,485 126,515 87 87 
Creditors: amounts falling due within one year 
Loans and other borrowings 17 (11,549) (1,583) – – 
Other creditors 16 (84,924) (99,973) (627) (627)
Total creditors falling due within one year (96,473) (101,556) (627) (627)
Net current assets/(liabilities) 12,012 24,959 (540) (540)
Total assets less current liabilities 385,182 437 ,891 56,423 56,423
Creditors: amounts falling due after more than one year 
Loans and other borrowings 17 (45,980) (57 ,179) – – 
Total creditors falling due after more than one year (45,980) (57 ,179) – – 
Provisions for liabilities and charges 19 (795) (739) – – 
Net assets 338,407 379,973 56,423 56,423 
Capital and reserves 
Called-up share capital 21 33,715 33,715 33,715 33,715 
Merger reserve 22 566,560 566,560 – – 
Capital redemption reserve 22 23,248 23,248 23,248 23,248 
Other reserves 22 17 ,713 18,700 – – 
Profit and loss account 22 (302,829) (262,250) (540) (540)
Equity shareholders’ funds 338,407 379,973 56,423 56,423 
The Accounting Policies and Definitions on pages 28 and 29, together with the Notes on pages 34 to 44 form part of the Accounts. 
Approved by the Board on 20 May 2005 and signed on its behalf by
William Allan John Maguire
Chief Executive Chief Financial Officer  33
Group Cash Flow Statement 
for the year ended 31 March 2005 
2004 
2005 (Restated) 
Notes £’000 £’000 
Net cash inflow from operating activities 24 45,677 37 ,418 
Returns on investments and servicing of finance 23a (3,379) (3,351)
Tax (1,002) – 
Free cash flow* 41,296 34,067 
Capital expenditure 23b (37 ,547) (36,686)
Cash inflow/(outflow) before disposals 3,749 (2,619)
Disposals 23c (11) – 
Cash inflow/(outflow) before financing 3,738 (2,619)
Financing 23d (1,619) 16,897
Increase in cash in the year 25 2,119 14,278 
* Free cash flow represents cash flow from operating activities after adjusting for returns on investments and servicing of finance and tax. 
Reconciliation of Net Cash Flow to Movement in Net Debt 
for the year ended 31 March 2005 
2005 2004 
Notes £’000 £’000 
Increase in cash in the year 25 2,119 14,278 
Cash outflow/(inflow) from reduction/(increase) in debt 23d, 25 1,645 (16,875)
Change in net debt resulting from cash flows 25 3,764 (2,597)
Other non-cash movements 25 600 (100)
Movement in net debt in the year 4,364 (2,697)
Net debt at the beginning of the year 25 (35,354) (32,657)
Net debt at the end of the year 25 (30,990) (35,354)
The Accounting Policies and Definitions on pages 28 and 29, together with the Notes on pages 34 to 44 form part of the Accounts.  34
Notes to the Accounts 
for the year ended 31 March 2005
1 Prior year adjustment
The Group has changed its accounting policy for accounting for the Employee
Share Ownership Plan (ESOP) trust following the adoption of Urgent Issues T ask
Force Abstract 38 “Accounting for ESOP Trusts” (UITF 38). In prior years own
shares held under Trust were recorded within Investments in the Balance Sheet
at cost less provision for any permanent diminution in value, with changes to the
carrying value of the shares being recognised through the Profit and Loss Account.
UITF 38 requires that an entity’ s own shares held in an ESOP trust are deducted
from shareholders’ funds at the consideration amount paid and no gain or loss
should be recognised through the Profit and Loss Account.
The prior year adjustment reflects the restatement of the shares held to their original
cost and, therefore, the removal from the Profit and Loss Account of amounts
written off, and back to, investments and the provision held in creditors for the
share option cost being reclassified to the Profit and Loss Reserve. The total amount
written off to reserves at 31 March 2004 of £16,645,000 included an amount
written back to reserves in the comparative year of £1,740,000. The effect of this
adjustment is to increase the loss for the year ended 31 March 2004 as set out
below and to increase the loss per ordinary share by 0.13p for the same period.
In addition, the Profit and Loss Reserve has been restated to reduce the balance
by the amount of the own shares held net of provisions.
The comparative figures for the year to 31 March 2004 have been restated.
The effect of the adjustment on the Group Profit and Loss Account and the Group
Balance Sheet is shown below:
2004
Group Profit and Loss Account £’000 
Reversal of Amounts written back to investments (1,740)
Increase in loss for the year (1,740)
2004 
Group Balance Sheet £’000
Decrease in Investments (3,280)
Decrease in Other creditors 261 
Decrease in Net assets (3,019)
Had UITF 38 not been applied there would have been no impact on the Profit and
Loss Account in the current year and net assets would have been £3,019,000 higher .
2 Segmental reporting 
T urnover has been analysed below between data and telecom services, Internet
services, and managed solutions services for continuing operations and contact
centre services and interactive services for discontinued operations. Contact centre
and interactive services, were identified by the Directors as being operations
that were non core and hence were disposed of. The Directors consider these
operations to be the same class of business and accordingly no segmental analysis
of operating loss or net assets has been given. 
During the year a new division was introduced, namely managed solutions
services, to highlight the business growth drivers. The figures for the year ended
31 March 2004 have therefore been restated accordingly.
2004 
2005 (Restated)
£’000 £’000 
Turnover from continuing operations
Data and telecom services 177 ,691 152,814 
Internet services 93,130 85,398 
Managed solutions services 69,784 59,499 
340,605 297 ,711 
Turnover from discontinued operations 
Contact centre services 16,608 21,694 
Interactive services 2,803 12,967 
19,411 34,661 
Total turnover 360,016 332,372 
Turnover by origin 
Continuing operations 
United Kingdom 320,197 283,578 
Europe 20,408 14,133 
340,605 297 ,711 
Discontinued operations 
United Kingdom 19,411 34,661 
19,411 34,661 
Total turnover 360,016 332,372 
Turnover by destination 
Continuing operations
United Kingdom 313,891 281,264 
Europe 26,714 16,447 
340,605 297 ,711 
Discontinued operations
United Kingdom 19,004 33,423 
Europe 407 1,238 
19,411 34,661 
Total turnover 360,016 332,372  35
3 Operating loss
2005 2004 
Notes £’000 £’000 
Operating loss is stated after charging/(crediting): 
Depreciation on tangible fixed assets 
– Owned assets 75,208 61,478 
– Under finance leases 95 3,133 
Amortisation of intangible fixed assets 11, 24 139 165 
Hire of assets under operating leases 
– Other operating lease rentals 8,666 8,681 
Other operating income 
– Rents received (1,415) (289)
Auditors’ remuneration for audit of (i)
– Group 205 175 
– Company – – 
(i) Fees paid to the auditors and their associates during the current and prior year
are analysed below:
2005 2004 
£’000 £’000 
Audit services 
– Statutory audit 205 175
– Audit-related regulatory reporting 26 26
231 201
T ax services 
– Compliance services – 7 
– Advisory services – 6 
Other services 33 86 
264 300 
The work included in Other services comprises £19,000 for sector analysis
and £14,000 for a review of processes relating to systems implementation
(2004: £77 ,000 for forensic work and £9,000 in connection with systems
implementation work).
4 Earnings before interest, tax, depreciation (including impairment)
and amortisation (EBITDA)
2005 2004 
Notes £’000 £’000 
Operating loss (36,299) (21,213)
Depreciation charge for the year 7 75,303 64,611 
Amortisation charge for the year 11 139 165 
EBITDA 39,143 43,563 
Continuing operations 39,946 40,506 
Discontinued operations (803) 3,057 
EBITDA 39,143 43,563 
5 Exceptional item 
2005 2004 
£’000 £’000 
Impairment of fixed asset 8,126 – 
The impairment charge relates to transatlantic capacity purchased in 1998 to
2000 in the Gemini cable and follows the bankruptcy of the underlying supplier .
6 Employees
(a) Employee costs
2005 2004 
Note £’000 £’000 
Wages and salaries 53,314 57 ,407 
Social security costs 6,006 6,115 
Pension costs 26 3,040 3,117 
T otal employee costs 62,360 66,639 
Less: charged as capital expenditure (7 ,861) (7 ,492)
Charged to the Profit and Loss Account 54,499 59,147 
(b) Employee numbers 
The year end and average number of employees (full-time and part-time) employed
by the Group, including Executive Directors, were: 
At 31 March Average
2005 2004 2005 2004 
Operations 599 593 604 578 
Selling and distribution 243 264 254 267 
Administration and customer services 446 376 427 380 
Internal contact centres 145 157 150 159
Contact centres – 804 270 621 
1,433 2,194 1,705 2,005 
The number of full-time 
equivalent staff was: 1,421 2,089 1,660 1,942 
Average
By location 2005 2004 
United Kingdom 1,607 1,933 
Europe 98 72 
1,705 2,005 
7 Depreciation charge 
Depreciation is charged on network and non-network assets and is included within
cost of sales and administration expenses on that basis as follows: 
2005 2004 
Notes £’000 £’000 
Cost of sales 57 ,391 47 ,152 
Administration expenses 17 ,912 17 ,459 
12, 24 75,303 64,611 
The cost of sales depreciation charge includes asset impairment charges of
£15,817 ,000 (2004: £4,155,000) of which £8,126,000 (2004: £Nil) are
exceptional (see Note 5). The depreciation charge for administration expenses
includes asset impairment charges of £2,629,000 (2004: £612,000).
Impairments recorded are not based on a value in use calculation. 36
Notes to the Accounts 
for the year ended 31 March 2005
8 Net interest payable and other similar charges 
(a) Analysis of net interest payable and other similar charges
2005 2004 
£’000 £’000
Interest on overdrafts and other borrowings 5,655 5,278 
Interest on finance leases 375 374 
Total interest payable and other similar charges 6,030 5,652 
Interest receivable (1,168) (382)
Net interest payable and other similar charges 4,862 5,270 
(b) Analysis of total interest payable and other similar charges 
2005 2004 
£’000 £’000 
– T erm loan facilities 4,268 4,242 
– Amortisation of loan costs 1,004 1,004 
– Other interest payable 383 32 
– Finance leases 375 374 
6,030 5,652 
9 Tax charge on loss on ordinary activities 
2005 2004 
Tax on the loss for the year £’000 £’000 
UK Corporation tax charge at 30% (2004: 30%) – – 
Overseas tax – current year tax charge 596 212 
Overseas tax – adjustments in respect of prior years 145 – 
741 212 
The current tax charge is higher (2004: higher) than the standard rate of corporation
tax in the UK (30%) applied to the loss for the year due to the following factors: 
2004
2005 (Restated) 
£’000 £’000 
Loss before tax (41,475) (26,749)
Loss before tax at standard rate of 30% (2004: 30%) (12,443) (8,025)
Effects of: 
Permanent differences 733 122 
Fixed asset timing differences 11,818 7 ,291 
Other timing differences (108) 612 
Overseas tax – current year tax charge 596 212 
Overseas tax – adjustments in respect of prior years 145 –
741 212
The future tax charge will be impacted by the reversal of the unrecognised deferred
tax asset (see Note 20).
The disposal in the year had no material impact on the tax charge.
10 Loss per ordinary share 
The loss and diluted loss per ordinary share have been calculated in accordance
with Financial Reporting Standard 14 “Earnings per Share” (FRS 14) for both
years. The loss for the financial year , divided by the weighted average number 
of ordinary shares in issue during the financial year , has been used to calculate
both the loss and diluted loss per ordinary share.
2004
2005 (Restated) 
Loss for the financial year (£’000) (42,216) (26,961)
Basic and diluted weighted average share capital 
(number of shares, thousands) 1,331,193 1,329,973 
The basic weighted average share capital excludes 16,772,979 (2004: 17 ,600,525)
ordinary shares held by the Company under Trust in connection with the Employee
Share Schemes. 
11 Intangible fixed assets 
Licences Other Total 
Group Note £’000 £’000 £’000 
Cost 
At 1 April 2004 500 2,077 2,577 
Additions 250 – 250 
At 31 March 2005 750 2,077 2,827 
Aggregate amortisation 
At 1 April 2004 463 1,978 2,441 
Charge for the year 3 90 49 139 
At 31 March 2005 553 2,027 2,580 
Net book value at 31 March 2005 197 50 247 
Net book value at 31 March 2004 37 99 136 
Other intangible assets relates to costs associated with the development of new
products or services. 
12 Tangible fixed assets 
Land and
leasehold Plant and
buildings equipment Other assets Total
Group Note £’000 £’000 £’000 £’000 
Cost 
At 1 April 2004 12,847 526,299 152,620 691,766 
Reclassification (7,711)5,1802,531– 
Additions 631 26,785 8,01435,430 
Disposal of businesses (777) (723) (16,013) (17 ,513)
At 31 March 2005 4,990 557 ,541 147 ,152 709,683 
Aggregate depreciation 
At 1 April 2004 5,810 160,298 112,862 278,970 
Reclassification (2,775)6,891(4,116)–
Charge for the year 7 833 58,163 16,307 75,303 
Disposal of businesses (777) (723) (16,013) (17 ,513)
At 31 March 2005 3,091 224,629 109,040 336,760 
Net book value 
at 31 March 2005 1,899 332,912 38,112 372,923 
Net book value at 31 March 2004 7 ,037 366,001 39,758 412,796 
The net book value of tangible fixed assets held under finance leases by the
Group at 31 March 2005 was £Nil (2004: £95,000). The charge for depreciation
against these assets during the year was £95,000 (2004: £3,133,000) (see Note
3) which includes asset impairment charges of £88,000 (2004: £2,938,000).
The depreciation charge for the year includes asset impairment charges of
£18,446,000 (2004: £4,767 ,000).
During the year , the Group undertook a review of all categories of fixed assets and
their estimated useful lives. Following this review, the depreciation charge for the
financial year has been reduced by £3,829,000 and in addition certain assets
were reclassified. Had similar useful lives been applied in calculating depreciation
in the prior year , the charge for that year would have been reduced by £3,917 ,000. 37
13 Investments
Subsidiary undertakings
Company 2005
Cost and net book value £’000
At 1 April 2004 and 31 March 2005 56,963 
The investment in subsidiary undertakings represents an investment in shares
of £56,963,000.
Details of the Company’ s subsidiary undertakings at 31 March 2005 are as follows: 
Country of Class of Proportion of
Company incorporation share shares held Principal activity
THUS plc Scotland Ordinary 100% Voice, data, 
Internet and 
managed solutions 
services provider
Demon Internet, Inc* USA Ordinary 100% US Internet 
peering 
management
Thus Profit Sharing 
Trustees Limited* Scotland Ordinary 100% Trustee 
* The investment in these companies is held by a subsidiary undertaking. 
14 Stocks 
Group Company
2005 2004 2005 2004 
£’000 £’000 £’000 £’000
Raw materials – replacement parts 
and consumables 3,101 3,125 – – 
15 Debtors 
Group Company
2005 2004 2005 2004 
£’000 £’000 £’000 £’000
Amounts falling due within 
one year:
Trade debtors 50,209 64,395 – – 
Prepayments and accrued income 23,277 28,786 – – 
Other debtors 950 317 – – 
74,436 93,498 – – 
Amounts falling due after more 
than one year: 
Trade debtors 2,400 3,471 – – 
Total debtors 76,836 96,969 – – 
16 Other creditors 
Group Company
2004 
2005 (Restated) 2005 2004
£’000 £’000 £’000 £’000
Trade creditors 33,731 43,844 – – 
Corporation tax 563 824 – – 
T axation and social security 1,943 2,072 – – 
Capital creditors and accruals 5,259 7 ,126 – – 
Other creditors 3,811 3,227 87 87 
Accruals and deferred income 39,617 42,880 – – 
Amounts due to subsidiary
undertakings – – 540 540 
84,924 99,973 627 627 
17 Loans and other borrowings 
Group Company
2005 2004 2005 2004 
Notes £’000 £’000 £’000 £’000
Bank loans and overdrafts 25 8 – – – 
T erm loan facilities (a) (i) 53,566 53,987 – – 
Other loans – 600 – – 
Finance leases (b), 25 3,955 4,175 – – 
57 ,529 58,762 – – 
Group Company
2005 2004 2005 2004 
Note £’000 £’000 £’000 £’000
Repayments fall due as follows: 
Within one year , or on demand 11,549 1,583 – – 
After more than one year 45,980 57 ,179 – – 
(a) (i) 57 ,529 58,762 – – 
Repayments due after more than one year are analysed as follows:
Between one and two years 21,530 12,203 – – 
Between two and five years 23,365 44,689 – – 
After five years 3,094 3,300 – – 
47 ,989 60,192 – – 
Less: unamortised issue costs (2,009) (3,013) – – 
45,980 57 ,179 – –  38
Notes to the Accounts 
for the year ended 31 March 2005
17 Loans and other borrowings continued
(a) Analysis of loans and other borrowings
Group Company
2005 2004 2005 2004 
Notes £’000 £’000 £’000 £’000
Bank loans and overdrafts due 
within one year or on demand:
Unsecured 8 – – –
Other borrowings: 
T erm loan facilities (i) 53,566 53,987 – – 
Other loans – 600 – – 
Finance lease obligations (b) 3,955 4,175 – – 
57 ,529 58,762 – – 
(i) The term loan facilities are stated net of unamortised issue costs of £2,009,000
(2004: £3,013,000). The term loan facilities are secured by a bond and
floating charge over the undertaking and all property and assets, present and
future, of the Group and by a fixed and floating charge over the properties,
plant, machinery and assets of the Group.
The first repayment of £1,425,000, which was calculated as 2.5% of the total
outstanding amount, was paid on 31 March 2005. Subsequent repayments
are due on a quarterly basis with the last repayment falling due on 31 March
2008. The value of the last repayment is calculated as 10% of the total drawn
amount and equates to £5,700,000.
The interest rate applied to the loan facility is calculated as being the aggregate
of an applicable margin, LIBOR and a mandatory cost, if any. The mandatory
cost is defined as an addition to the interest rate to compensate the lenders for
certain compliance costs.
The average interest rate charged during the year was 8.19% (2004: 9.26%).
(b) Finance lease obligations 
Group Company
2005 2004 2005 2004 
£’000 £’000 £’000 £’000
Falling due: 
Within one year 141 158 – – 
Between one and two years 155 203 – – 
Between two and five years 565 514 – – 
After five years 3,094 3,300 – – 
Amounts falling due after one year 3,814 4,017 – – 
Total 3,955 4,175 – – 
18 Derivatives and other financial instruments
(a) Financial instruments and risk management
(i) Overview
The main financial risks faced by the Group are funding and liquidity, counterparty
and credit risk, interest rate risk and exchange rate risk; the Board has reviewed
and agreed policies for managing each of these risks as summarised below.
Speculative trading activities are not permitted.
(ii) Risk management
Funding and liquidity management
The Group’ s objective is to maintain continuity of funding for its operations using
committed facilities and overdrafts and to maximise interest on surplus funds.
Finance leases are also used where considered cost effective. A term loan facility
was the Group’ s main source of funding during the current year and drawdowns
under the facility were subject to various financial covenants.
Counterparty and credit risk management
Cash placements and derivative transactions give rise to credit risk on the potential
default of counterparties. The Group monitors the exposures and the credit rating 
of its counterparties regularly and uses limits to mitigate the credit risk that the
Group may have with any one counterparty. It is not anticipated that any existing
counterparties will fail to meet their current obligations.
Interest rate management 
The Group’ s policy is to have a floating rate interest profile, with the exception
of finance leases. The Group’ s borrowing facilities and investments are all at a
Sterling LIBOR floating rate of interest. Only the interest flows connected to the term
loan facility are hedged and this policy has been applied throughout the year .
T o comply with the Group’ s term loan facilities, an interest rate hedge must be in
place. The Group is required to hedge interest on at least 50% of the principal
loan outstanding. The costs of interest rate hedges are expensed as incurred. The
current arrangement in place caps LIBOR at a minimum of 4.23% and a maximum
of 6.0%. There has been no change to this arrangement during the current
financial year .
Foreign exchange management 
THUS faces currency exposures in Euros and US Dollars (USD) from operating
activities generated in the Netherlands and United States and has fixed asset
expenditure in Euros and USD. In addition, on consolidation, THUS is exposed 
to risk from the translation of net assets and profits earned in its US subsidiary.
THUS does not hedge either the currency exposure on the operating activities 
to date, which are not considered to be material, or the translation exposure on
consolidation as this is considered to be an accounting rather than cash exposure. 
(b) Borrowing facilities 
THUS had a revolving £90,000,000 facility provided by the Royal Bank
of Scotland, Société Générale, T oronto Dominion Bank Europe Limited and
Rabobank which was reduced to £60,000,000 on 28 May 2003 and at
31 March 2004 the total drawn down on the facility was £57 ,000,000. The facility
was available to 1 April 2004 when it was then refinanced by an amortising
term loan facility on the same date with the same banks with a maturity date of
31 March 2008. Repayments on the term loan commenced on 31 March 2005,
and the repayments increase over time to 31 March 2008. The loan is subject
to various financial covenants.
The purpose of the bank facility was to finance capital expenditure, working 
capital requirements and for general corporate purposes. As at 31 March 2005
the first repayment due of £1,425,000 has been made.
The Group has no undrawn committed borrowing facilities at 31 March 2005,
and had no undrawn committed facilities at 31 March 2004.
(c) Financial assets and liabilities
The only significant financial assets are the cash at bank and in hand with a net
book amount of £28,548,000 at 31 March 2005 (2004: £26,421,000) of which
£26,600,000 was denominated in Sterling (2004: £25,612,000), £1,948,000
was denominated in Euros (2004: £670,000) and £Nil was denominated in 
US Dollars (2004: £139,000) and the long-term trade debtor of £2,400,000
which was denominated in Sterling (2004: £3,471,000).
The financial liabilities of the Group at 31 March 2005 are bank overdrafts 
of £8,000 (2004: £Nil) denominated in US Dollars, term loan facilities 
of £55,575,000 (2004: £57 ,000,000), finance leases of £3,955,000 (2004:
£4,175,000), and other loans of £Nil (2004: £600,000) all of which are
denominated in Sterling.
The maturities of the Group’ s financial liabilities were as follows:
Finance 
Debt leases Total 
At 31 March 2005: £’000 £’000 £’000 
In one year or less, or on demand 11,408 141 11,549 
In more than one year , but not more
than two years 21,375 155 21,530 
In more than two years, but not more 
than five years 22,800 565 23,365
In more than five years – 3,094 3,094
Total financial liabilities 55,583 3,955 59,538 
Less: unamortised issue costs (2,009) – (2,009)
53,574 3,955 57,529  39
18 Derivatives and other financial instruments continued
(c) Financial assets and liabilities continued
Finance 
Debt leases Total
At 31 March 2004: £’000 £’000 £’000 
In one year or less, or on demand 1,425 158 1,583 
In more than one year, but not more 
than two years 12,000 203 12,203 
In more than two years, but not more 
than five years 44,175 514 44,689 
In more than five years – 3,300 3,300 
T otal financial liabilities 57 ,600 4,175 61,775 
Less: unamortised issue costs (3,013) – (3,013)
54,587 4,175 58,762 
For the purpose of the disclosures which follow in this Note, short-term debtors and
creditors which arise directly from the Group’ s operations have been excluded as
permitted by Financial Reporting Standard 13 “Derivatives and Other Financial
Instruments: Disclosures” (FRS 13). 
(d) The interest rate risk profile of the Group’ s financial assets and
financial liabilities was: 
(i) Financial assets 
Weighted Average 
Floating rate Fixed rate average period for 
financial financial interest which rate
Total assets assets rate is fixed
At 31 March 2005: £’000 £’000 £’000 % Years
Currency: Sterling 
– Cash at bank and in hand 26,600 26,600 – 
– Long-term trade debtor 2,400 – 2,400 5.2 2
Currency: Euro 
– Cash at bank and in hand 1,948 1,948 –
Gross financial assets 30,948 28,548 2,400 
Average 
Floating rate Fixed rate Weighted period for 
financial financial average which rate
Total assets assets interest rate is fixed
At 31 March 2004: £’000 £’000 £’000 % Years
Currency: Sterling 
– Cash at bank and in hand 25,612 25,612 –
– Long-term trade debtor 3,471 – 3,471 5.2 3 
Currency: Euro
– Cash at bank and in hand 670 670 – 
Currency: US Dollar 
– Cash at bank and in hand 139 139 – 
Gross financial assets 29,892 26,421 3,471 
The floating rate financial assets, in the current year , comprise Sterling denominated
cash at bank and in hand and Euro denominated cash at bank and in hand. The
Sterling denominated cash at bank and in hand attracts interest based on LIBOR less
an applicable margin and the Euro denominated cash at bank and in hand attracts
interest based on EURIBOR less an applicable margin.
The floating rate financial assets, in the prior year , comprised Sterling denominated
cash at bank and in hand Euro denominated cash at bank and in hand and US
Dollar denominated cash at bank and in hand. The Sterling denominated cash at
bank and in hand attracted interest based on LIBOR less an applicable margin and
the Euro denominated cash at bank and in hand attracted interest based on
EURIBOR less an applicable margin.
(ii) Financial liabilities
Weighted Average 
Floating rate Fixed rate average period for 
financial financial interest which rate
Total liabilities liabilities rate is fixed
At 31 March 2005: £’000 £’000 £’000 % Years
Currency: Sterling 
– T erm loan facilities 55,575 55,575 – 
– Finance leases 3,955 – 3,955 10 14
Currency: US Dollar
– Bank loans and overdrafts 88 –
Gross financial liabilities 59,538 55,583 3,955 
Average 
Floating rate Fixed rate Weighted period for 
financial financial average which rate
T otal liabilities liabilities interest rate is fixed
At 31 March 2004: £’000 £’000 £’000 % Years
Currency: Sterling 
– Secured credit facilities 57 ,000 57 ,000 – 
– Other loans 600 600 – 
– Finance leases 4,175 – 4,175 10 15
Gross financial liabilities 61,775 57 ,600 4,175 
The floating rate liabilities, in the current year , comprise Sterling denominated 
term loan facilities and a US Dollar denominated bank overdraft. The Sterling
denominated term loan facilities bear interest at rates based on LIBOR plus 
an applicable margin. The US Dollar denominated bank overdraft bears interest
based on the Federal Reserve Central Bank short-term interest rate plus an
applicable margin.
The floating rate liabilities, in the prior year , comprised Sterling denominated
secured credit facilities and other loans. The Sterling denominated secured 
credit facilities bore interest based on LIBOR plus an applicable margin.
(e) Fair values of financial assets and financial liabilities
The following table provides a comparison by category of the carrying amounts
and the fair values of the Group’ s financial assets and financial liabilities as at 
31 March 2005 and 31 March 2004. Fair value is the amount at which a financial
instrument could be exchanged in an arm’ s length transaction between informed
and willing parties, other than a forced liquidation sale and excludes accrued
interest. Where available, market values have been used to determine fair values.
2005 2005 2004 2004 
Book value Fair value Book value Fair value 
Notes £’000 £’000 £’000 £’000 
Primary financial instruments held or issued to finance the Group’ s operations: 
Financial assets 
Cash at bank and in hand 28,548 28,548 26,421 26,421 
Long-term trade debtor 15 2,400 2,067 3,471 3,210 
30,948 30,615 29,892 29,631
Financial liabilities 
Borrowings: 
– Short-term 17 11,549 11,549 1,583 1,583 
– Long-term 17 47,989 46,152 60,192 60,359 
59,538 57,701 61,775 61,942 
Less: unamortised issue costs (2,009) (2,009) (3,013) (3,013)
57,529 55,692 58,762 58,929  40
Notes to the Accounts 
for the year ended 31 March 2005
18 Derivatives and other financial instruments continued
(e) Fair values of financial assets and financial liabilities continued
The following methods and assumptions were used to estimate the fair values 
shown above.
Short-term deposits and borrowings – The fair value of short-term deposits,
loans and overdrafts approximate to the carrying amount because of the short
maturity of these instruments.
Long-term trade debtors – The fair value of the long-term trade debtor 
has been based on the discounted value of the future cash flows expected 
to be received.
Long-term borrowings – The fair value of the finance leases has been based on
the discounted value of the future cash flows expected to be paid out by the Group.
The fair value of the term loan facility approximates to the carrying value as the
loan falls due for repayment within three years and the Directors consider it unlikely
that there would be a significant variation between the fair value and the settlement
value as the loan is marked at LIBOR rates.
(f) Currency exposure
The table below shows the extent to which Group companies have net monetary
assets and liabilities in currencies other than their local currency. Foreign exchange
differences on retranslation of these assets and liabilities are taken to the Group’ s
Profit and Loss Account.
Net foreign currency
monetary assets/(liabilities)
US Dollar Euro 2005
Functional currency of operation £’000 £’000 £’000
Sterling (1,116) 1,289 173
Net foreign currency
monetary assets/(liabilities)
US Dollar Euro 2004
Functional currency of operation £’000 £’000 £’000
Sterling (1,005)319 (686)
(g) Hedge accounting 
Hedge accounting is only applicable for the tangible fixed asset purchases that 
are denominated in a foreign currency where forward exchange contracts have
been taken out. The Group also has an interest rate hedge in connection with the
term loan facilities.
19 Provisions for liabilities and charges 
At Provided Utilised At 
1 April in the during the 31 March 
2004 year year 2005 
Group £’000 £’000 £’000 £’000 
Property 739 400 (344) 795
The property provision represents costs associated with vacant properties and
dilapidations. These liabilities are expected to be discharged within four years.
20 Deferred tax
T otal potential deferred tax assets computed at the rate of corporation tax 
at 31 March 2005 of 30% (2004: 30%) are noted below. These assets have 
not been recognised as their future recoverability is not certain.
Group Company
2005 2004 2005 2004 
£’000 £’000 £’000 £’000
Accelerated capital allowances (48,434) (34,747) – –
Other timing differences (8,304) (10,209) – – 
T otal deferred tax assets 
not recognised (56,738) (44,956) – – 
21 Share capital
Group and Company
2005 2004 
£’000 £’000
Authorised:
1,974,788,625 (2004: 1,974,788,625) 
ordinary shares of 2.5p each 49,370 49,370 
Allotted, called-up and fully paid:
1,348,613,156 (2004: 1,348,613,156) 
ordinary shares of 2.5p each 33,715 33,715 
22 Analysis of movements in shareholders’ funds and movement on reserves
Capital
Number of Merger redemption Other Profit and loss 
shares Share capital reserve reserve reserves account Total
(a) Group Notes 000’ s £’000 £’000 £’000 £’000 £’000 £’000
Opening balance as previously stated 1,348,613 33,715 566,560 23,248 18,700 (259,231) 382,992 
Prior year adjustment 1 – – – – – (3,019) (3,019)
Restated opening balance at 1 April 2004 1,348,613 33,715 566,560 23,248 18,700 (262,250) 379,973 
Loss for the year – – – – – (42,216) (42,216)
Transfer (i) – – – – (987) 987 – 
Currency translation differences on overseas net assets – – – – – 36 36 
Movement in own shares held (ii) – – – – – 614 614 
At 31 March 2005 1,348,613 33,715 566,560 23,248 17 ,713 (302,829) 338,407 
The Profit and Loss Account Reserve closing balance is offset by £17 ,234,000 (2004: £19,925,000) in respect of own shares held.
(i) The transfer from Other Reserves to the Profit and Loss Account Reserve represents the element of previously unrealised gains on fixed asset disposals attributable 
to the current year . 
(ii) The movement in own shares held represents the charge to the Profit and Loss Account for the year of £588,000 and £26,000 proceeds from the exercise
of share options.
(iii) The THUS plc Employee Share Trust was established at the time of the Company’ s flotation in November 1999. THUS plc provided the Trust with a £24m non interest
bearing loan to purchase shares in THUS plc to satisfy the various share option schemes in existence at the time. When the new holding company, THUS Group plc,
was established and the THUS plc shares were delisted, all THUS plc shares were converted to THUS Group plc shares. Shares held by the Trust are transferred to
employees on payment of the option price. 41
22 Analysis of movements in shareholders’ funds continued
(a) Group continued
(iii) continued
The number of own shares, held by the ESOP T rust and over which the Group has
de facto control, as at 31 March 2005 was 16,772,979 (2004: 17 ,600,525).
As detailed in Note 1 to the Accounts, these shares are now deducted from
reserves in line with the accounting treatment required by UITF 38.
At 31 March 2005, 20,215 shares were under option to employees.
The market value as at 31 March 2005 of the shares held under trust and
which have not yet vested unconditionally in employees is £2,348,217
(2004: £5,588,166).
The nominal value of the own shares held under trust as at 31 March 2005
was £419,324 (2004: £440,013).
(iv) The capital redemption reserve was created when the 25,000,000 deferred 
non-voting shares of 92 
343
/ 346p each were cancelled pursuant to a Special
Resolution of the Company passed on 19 March 2002.
Capital Profit 
redemption and loss
Share capital reserve account Total 
(b) Company £’000 £’000 £’000 £’000 
At 1 April 2004 
and 31 March 2005 33,715 23,248 (540) 56,423 
(c) As permitted by Section 230 of the Companies Act 1985, the Company has 
not presented its own Profit and Loss Account. The Company’ s Profit and Loss
Account was approved by the Board on 20 May 2005. The Company did 
not make a profit or loss during either the current or prior year .
23 Analysis of cash flows 
2004 
2005 (Restated)
Note £’000 £’000 
(a) Returns on investments and servicing of finance
Interest received 1,312 232 
Interest paid (4,316) (3,059)
Interest element of finance lease rental payments (375) (374)
Expenses paid in connection with issue of debt – (150)
Net cash outflow for returns on investments 
and servicing of finance (3,379) (3,351)
(b) Capital expenditure 
Purchase of tangible and intangible fixed assets (37 ,547) (37 ,744)
Sale of tangible fixed assets – 1,058 
Net cash outflow for capital expenditure (37 ,547) (36,686)
(c) Disposals
Sale of discontinued businesses (11) – 
Net cash outflow from disposals (11) – 
The cash flows connected with the disposals are an inflow of cash from sales
proceeds of £1,031,000 net of disposal expenses.
The cash flow from discontinued businesses is not separately recorded but EBITDA
in the year was negative at £803,000.
(d) Financing 
Receipts from exercise of share options 26 22
26 22
T erm loan facilities 25 (1,425) 17 ,000 
Capital element of finance lease rental payments 25 (220) (125)
(Reduction)/increase in debt 25 (1,645) 16,875 
Net cash (outflow)/inflow from financing (1,619) 16,897 
The cash flows for the comparative year have been restated following the
reallocation of the £22,000 receipts from exercise of share options from capital
expenditure to financing.
24 Reconciliation of operating loss to net cash inflow from 
operating activities 
2004 
2005 (Restated)
Notes £’000 £’000 
Operating loss (36,299) (21,213)
Depreciation on tangible fixed assets 7 75,303 64,611 
Amortisation of intangible fixed assets 3 139 165 
Share option charge 588 365
Movements in provisions for liabilities and charges (194) 123 
Decrease/(increase) in stocks 24 (258)
Decrease/(increase) in debtors 19,989 (6,248)
Decrease in creditors (13,873) (127)
Net cash inflow from operating activities 45,677 37 ,418 
25 Analysis of net debt
At Other At
1 April non-cash 31 March
2004 Cash flow changes 2005
Notes £’000 £’000 £’000 £’000
Cash at bank and in hand 26,421 2,127 – 28,548 
Overdrafts 17 – (8) – (8)
26,421 2,119 – 28,540 
Loans – due within one year 23d (1,425) 1,425 (11,400) (11,400)
Loans – due after one year (56,175) – 12,000 (44,175)
Finance leases 23d(4,175) 220 – (3,955)
23d(61,775) 1,645 600 (59,530)
Total (35,354) 3,764 600 (30,990)
26 Pensions
The pension charge for the year comprises:
2005 2004 
£’000 £’000 
Defined benefit scheme 2,775 2,845 
Defined contribution arrangements 232 201 
Others 33 71 
3,040 3,117 
The Company operates two pension schemes: 
• The THUS Group plc Pension Scheme (the “Scheme”), a funded defined 
benefit scheme. The assets of the Scheme are held in a Trust Fund which 
is independent of the Group’ s own assets. 
• The THUS Group Personal Pension Plan, a funded defined contribution
arrangement. 
In determining the level of contributions required to be made to the Scheme 
and the relevant charges to the Group’ s Profit and Loss Account, the Group has
been advised by Watson Wyatt LLP , Actuaries and Consultants. The most recently
published formal valuation of the Scheme was a valuation as at 31 December
2002. The main financial assumptions adopted in making this valuation were 
as follows:
Rates per annum
Future price inflation 2.5%
Return on new investments 6.6%
Increases in earnings 4.0%
Increases in pensions 2.5% 42
Notes to the Accounts 
for the year ended 31 March 2005
26 Pensions continued
The pension costs for accounting purposes have been calculated using the same
assumptions as those adopted for the 31 December 2002 valuation. At the
valuation date, the Scheme had just commenced, and therefore had no assets or
liabilities. The regular pension charge, calculated using the projected unit method
of valuation, was 15.5% of pensionable salaries, or £2,775,000 for the year .
Contributions to the THUS Group Personal Pension Plan are made in accordance
with the Plan rules. There were no outstanding contributions at the year end 
(2004: £Nil).
FRS 17 
Disclosures in accordance with the transitional arrangements for the
implementation of FRS 17 are set out below. This information is for disclosure
purposes only. Pension costs have been recognised in line with SSAP 24 as
described above. The results of the actuarial valuation of the THUS Group plc
Pension Scheme as at 31 December 2002, updated by the actuary to take account
of the requirements of FRS 17 and to assess the assets and liabilities of the Scheme
as at 31 March 2005, have been used in assessing the FRS 17 disclosures.
Scheme assets are stated at their market value at 31 March 2005, 31 March 2004
and 31 March 2003. The liabilities of the Scheme under FRS 17 as at 31 March
2005, 31 March 2004 and 31 March 2003 and the current service cost for the
periods ended on those dates, were calculated using the Projected Unit method
and the following financial assumptions:
Rates per Rates per Rates per
annum annum annum
31 March 31 March 31 March
2005 2004 2003
Inflation assumption 2.7% 2.7% 2.3%
Discount rate 5.5% 5.7% 5.6%
Rate of increase in salaries 4.2% 4.2% 3.8%
Rate of increase in pensions in payment* 2.7% 2.7% 2.3%
* Pre April 1997 pension increases are in respect of pensions in excess 
of Guaranteed Minimum Pensions. 
The assumptions used by the actuary are the best estimates chosen from a range 
of possible actuarial assumptions which, due to the timescales covered, may not
necessarily be borne out in practice.
The Scheme is closed to new entrants. Under the Projected Unit method, the current
service cost will increase as members of the Scheme approach retirement. 
The assets of the Scheme and the expected rates of return at 31 March were: 
Long-term Long-term Long-term
rate of return Value at rate of return Value at rate of return Value at
expected at 31 March 2005 expected at 31 March 2004 expected at 31 March 2003
31 March 2005 £’000 31 March 2004 £’000 31 March 2003 £’000
Equities 8.0% 26,709 8.2% 20,786 8.2% 20,565 
Bonds 5.3% 21,080 5.4% 17,059 4.8% 5,017 
Property –% – –% – 6.5% 1,598 
Other 3.6% 32 3.6% 9 3.6% 253
Total 47 ,821 37 ,854 27 ,433
The fair value of the Scheme’ s assets, which are not intended to be realised in the short-term, and may be subject to significant change before they are realised, and the
present value of the Scheme’ s liabilities, which are derived from cash flow projections over a long period and are thus inherently uncertain, were:
T otal market value of assets 6.8% 47 ,821 6.9% 37,854 7.4% 27,433 
Present value of Scheme liabilities (52,186) (40,600) (30,764)
Deficit in the Scheme (before allowance for deferred tax) (4,365) (2,746) (3,331)
Potential deferred tax asset 1,310 824 999 
Net pension liability (3,055) (1,922) (2,332)
The amount of the deficit in the Scheme (before allowance for deferred tax) would have a consequent effect on reserves if recognised.  43
26 Pensions continued
The movement in the deficit in the Scheme can be analysed as follows: 
Year ended Y ear ended
31 March 31 March 
2005 2004
£’000 £’000 
Deficit in the Scheme at the start of the year (2,746) (3,331)
Contributions paid 2,775 2,845 
Current service cost (3,918) (3,880)
Other finance income 452 469 
Actuarial (loss)/gain (928) 1,151 
Deficit in the Scheme at the end of the year (4,365) (2,746)
Components of defined benefit cost
Year ended Y ear ended
31 March 31 March 
2005 2004
£’000 £’000 
Analysis of amount that would fall to be charged to operating profit 
Current service cost 3,918 3,880 
Total charged to operating profit 3,918 3,880 
Analysis of amount that would fall to be charged to other finance income 
Interest on pension scheme liabilities 2,366 1,721 
Expected return on pension Scheme assets (2,818) (2,190)
Net credit to other finance income (452) (469)
Total Profit and Loss charge before deduction of tax 3,466 3,411 
Analysis of amounts that would be recognised in the 
Statement of Total Recognised Gains and Losses (STRGL) 
Year ended Y ear ended
31 March 31 March 
2005 2004
£’000 £’000 
Gain on assets (1,657) (4,821)
Experience loss on liabilities 106 770 
Loss on change of assumptions 
(financial and demographic) 2,479 2,900 
Total loss/(gain) recognised in STRGL 
before adjustment for tax 928 (1,151)
History of experience gains and losses 
Year ended Y ear ended Y ear ended
31 March 31 March 31 March
2005 2004 2003
(Gain)/loss on Scheme assets 
Amount (£’000) (1,657) (4,821) – 
% of Scheme assets at end of year 3% 13% –%
Experience (gain)/loss on Scheme liabilities 
Amount (£’000) 106 770 2,713 
% of Scheme liabilities at end of year –% 2% 9%
Total actuarial (gain)/loss recognised in STRGL 
Amount (£’000) 928 (1,151) 2,713 
% of Scheme liabilities at end of year 2% 3% 9%
27 Financial commitments
2005 2004 
£’000 £’000 
(a) Group analysis of annual commitments under operating leases
Leases of land and buildings
Expiring within one year 311 191 
Expiring between two and five years inclusive 1,558 1,207 
Expiring in over five years 6,606 7 ,086 
8,475 8,484 
Other operating leases
Expiring in over five years 170 170 
170 170 
(b) Group capital commitments
Contracted but not provided 6,096 8,835 
28 Employee share schemes
The Company operates the THUS Group Performance Share Plan and the THUS
Group plc Discretionary Share Option Scheme, details of which are included 
in the Directors’ Remuneration Report. In addition, the Company also recognises
the importance of encouraging share ownership amongst all employees and to
that extent, the Company operates the THUS Group plc Sharesave Scheme which
provides the opportunity for employees to exercise options at the end of a savings
contract. Options are exercisable, in normal circumstances, on completion of 
a three- or five-year save-as-you-earn contract as appropriate. No performance
criteria are attached to the exercise of these options.
Closed Schemes
Prior to the establishment of THUS Group plc on the demerger from Scottish 
Power plc, THUS plc operated a number of share incentive plans pursuant 
to which awards over shares in THUS Group plc continue to subsist. No further
awards will be made under any of these schemes.
THUS plc Employee Sharesave Scheme
Under this Scheme, in normal circumstances, share options are exercisable on
completion of a three- or five-year save-as-you-earn contract as appropriate. 
THUS plc Discretionary Share Option Scheme (2000)
The performance conditions described under the THUS Group plc Discretionary
Share Option Scheme also apply to this Scheme. In addition, a grant of
2,000 shares was made to each employee (excluding Executive Directors), 
on 6 December 2000 without any performance conditions applying. 44
Notes to the Accounts 
for the year ended 31 March 2005
28 Employee share schemes continued
(a) Summary of movements in share options in THUS Group plc shares which will be satisfied by new issue shares
THUS Group THUS Group plc
Performance Discretionary THUS Group plc
Share Share Option Sharesave
Plan Scheme Scheme Total
(number of (number of (number of (number of
Note shares 000’ s) shares 000’ s) shares 000’ s) shares 000’ s)
Outstanding at 1 April 2004 6,704 6,407 15,932 29,043 
Granted 3,289 3,289 6,719 13,297 
Exercised (i) – – (195) (195) 
Lapsed (1,954) (81) (2,633) (4,668) 
Outstanding at 31 March 2005 8,039 9,615 19,823 37,477 
(i) The shares exercised during the year were satisfied using lapsed shares from the ESOP Trust.
(b) Analysis of share options outstanding at 31 March 2005 which will be satisfied by new issue shares
Number of Option
Date of Number of shares price
grant participants (000’ s) (pence) Normal exercisable date
THUS Group Performance Share Plan 11.02.03 3 4,750 £1 total consideration Feb 2006 
28.05.04 3 3,289 £1 total consideration May 2007 
THUS Group plc Discretionary Share Option Scheme 27.03.02 39 6,326 16.25 Mar 2005 – Mar 2009 
28.05.04 3 3,289 25.84 May 2007 – May 2011
THUS Group plc Sharesave Scheme 01.05.02 548 8,268 14 May 2005 – May 2007 
13.06.03 445 5,652 11.75 Aug 2006 – Feb 2007
11.06.04 448 5,903 21.50 Aug 2007 – Feb 2008 
All options are exercisable over THUS Group plc shares.
29 Contingent liabilities
(a) A contingent liability exists in respect of an amount of corporation tax on
chargeable gains calculated as the difference between the market value
at 30 September 1999 of the assets and liabilities of the ScottishT elecom
Businesses acquired by THUS plc on that date and the indexed base cost
of those assets and liabilities as at 30 September 1999, multiplied by the
percentage rate of corporation tax applicable to the profits of the Company
in the accounting period in which THUS plc ceased to be a member of the
ScottishPower Capital Gains T ax group. Management estimated that such
liability would be up to £570m. Management’ s estimate was subject to the
following principal uncertainties:
(i) The rate of corporation tax applicable at the time of exit from the
ScottishPower Group; and
(ii) The valuation attributable to the acquired businesses by the Inland
Revenue as at 30 September 1999.
The contingent liability may crystallise in the event that THUS plc makes a
“chargeable payment” to any member of the ScottishPower Group where
there is parental holding of at least 75% of the ordinary share capital (which
for capital gains tax purposes would include participating Preference Shares
where applicable) or vice versa, a payment is made to THUS by any member
of the ScottishPower Group, again where the above shareholding relationship
applies. The contingent liability expires on 19 March 2007.
A “chargeable payment” is defined as any payment made otherwise than for
bona fide commercial reasons or forming part of a scheme of arrangement
the main purpose or one of the main purposes of which is the avoidance of tax
and which has to be an amount significant enough to change the valuation of
either party. Management of both THUS and ScottishPower have put in place
procedures to monitor and minimise the exposure.
THUS and ScottishPower have jointly agreed that neither party will make or
agree to make any chargeable payment within five years of the date of the
demerger . This agreement is governed by a T ax Indemnity Deed entered into
between ScottishPower and THUS whereby voluntary acts of or omissions that
result in a chargeable payment being made, will not be indemnified by the
innocent party.
(b) A sum of £400,000 has been placed on deposit as Funds for Liabilities as
required by the regulator , Ofcom, for reinstatement of civil construction works
by Local Authorities. 45
Five Y ear Financial Summary 
Y ear ended Y ear ended 
Year ended 31 March Y ear ended Y ear ended 31 March 
31 March 2004 31 March 31 March 2001
2005 (Restated) 2003 2002 (Restated)
Results £’000 £’000 £’000 £’000 £’000
Turnover 360,016 332,372 291,236 268,354 229,322 
Earnings before interest, tax and depreciation/amortisation of fixed assets (EBITDA) 39,143 43,563 27,103 3,144
1
(24,635)
Exceptional items (8,440) (266) 250 (2,233) – 
Loss before tax (41,475) (26,749) (58,789) (104,254) (70,163)
Loss after tax (42,216) (26,961) (58,985) (104,670) (56,336)
Loss for the financial year (42,216) (26,961) (58,985) (103,756) (55,263)
Appropriations – non equity – – – (2,425) (2,500)
Free cash flow 41,296 34,067 17,663 (20,920) (2,528)
Capital expenditure on tangible fixed assets 35,430 41,118 44,910 77,919 158,920 
Net (debt)/funds (30,990) (35,354) (32,657) 4,042 (167,772)
Net assets (before minority interests) 338,407 379,973 407,412 466,152 281,679 
Ratio and statistics
Basic loss per ordinary share (pence) (3.17) (2.03) (4.44) (14.76) (8.31)*
Employees
Number of employees (full-time equivalent) at 31 March:
THUS Group plc 1,421 2,089 1,858 2,185 2,614 
* This is the basic loss per ordinary share before exceptional items (pence).
1
Before £3.2m exceptional restructuring costs. 46
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of the Company for 2005
will be held on Wednesday 27 July 2005 at 11.00 a.m.at the Radisson SAS Hotel,
301 Argyle Street, Glasgow, G2 8DL for the following purposes:
Ordinary business
1 T o receive and adopt the Report of the Directors and Accounts for the 
year ended 31 March 2005.
2 T o approve the Directors’ Remuneration Report for the year ended 
31 March 2005.
3 T o elect Philip Rogerson as a Director .
4 T o re-elect John Maguire as a Director .
5 T o re-elect Ian Chippendale as a Director .
6 T o re-elect Margaret Ford as a Director .
7 T o re-appoint KPMG Audit Plc as auditors of the Company and to authorise
the Directors to fix their remuneration.
Special business
8 T o consider and if thought fit to pass the following resolution which will be
proposed as an ordinary resolution:
THAT the Board be and it is hereby generally and unconditionally authorised
in substitution for the authority conferred on it by all subsisting authorities 
to exercise all powers of the Company to allot relevant securities (within the
meaning of Section 80 of the Companies Act 1985) up to an aggregate
nominal amount of £11,238,442.96, which authority shall expire at the
conclusion of the next Annual General Meeting of the Company after the
passing of this resolution (unless previously revoked or varied by the Company
in general meeting) or , if earlier , 27 October 2006, save that the Company
may before such expiry make an offer or agreement which would or might
require relevant securities to be allotted after such expiry and the Board may
allot relevant securities in pursuance of such an offer or agreement as if the
authority conferred hereby had not expired.
9 T o consider and if thought fit to pass the following resolution which will be
proposed as a special resolution:
THAT the Board be and it is hereby empowered, pursuant to Section 95 of 
the Companies Act 1985, to allot equity securities (within the meaning of
Section 94 of the said Act) for cash, pursuant to the authority conferred by the
previous resolution, as if sub-section (1) of Section 89 of the said Act did not
apply to any such allotment, PROVIDED THAT this power shall be limited to:
A the allotment of equity securities in connection with a rights issue, open offer
or any other pre-emptive offer in favour of ordinary shareholders 
and in favour of holders of any other class of equity security in accordance
with the rights attached to such class where the equity securities respectively
attributable to the interests of such persons on a fixed record date are
proportionate (as nearly as may be) to the respective numbers of equity
securities held by them or are otherwise allotted in accordance with the
rights attaching to such equity securities (subject in either case to such
exclusions or other arrangements as the Board may deem necessary or
expedient to deal with fractional entitlements or legal or practical problems
arising in any overseas territory, the requirements of any regulatory body or
stock exchange or any other matter whatsoever); and
B the allotment (otherwise than pursuant to sub-paragraph A above) of equity
securities up to an aggregate nominal value of £1,685,766.44 or if less, 
5% of the issued ordinary share capital from time to time; 
and shall expire at the conclusion of the next Annual General Meeting of the
Company after the passing of this resolution or , if earlier , 27 October 2006,
save 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 Board may allot equity securities in pursuance of such an offer or
agreement as if the power conferred hereby had not expired.
By order of the Board Registered office:
David Macleod 1/2 Berkeley Square
Secretary 99 Berkeley Street
2 June 2005 Glasgow, G3 7HR
(i) Any member entitled to attend and vote at the meeting is entitled to appoint 
a proxy to attend and, on a poll, to vote instead of him. A proxy need not be 
a member of the Company. A separate form of proxy is enclosed. Pursuant 
to regulation 41 of the Uncertificated Securities Regulations 2001, members 
will be entitled to attend and vote at the meeting if they are registered on 
the Company’ s register of members by 6.00 p.m.on 25 July 2005 or by 
6.00 p.m. two days prior to the date of any adjournment of the meeting.
(ii) Members may register their proxy appointments or voting directions
electronically via the www.sharevote.co.uk website, where full details of the
procedure are given. Members will need the reference number , card ID and
account number set out on the enclosed form of proxy. If more than one proxy
appointment is returned, either by paper or by electronic communication,
those received last by the registrar before the latest time for the receipt of
proxies will take precedence. The Company will not accept any
communication that is found to contain a computer virus.
(iii) CREST members who wish to appoint a proxy or proxies through the CREST
electronic proxy appointment service may do so by using the procedures
described in the CREST Manual. CREST personal members or other CREST
sponsored members and those CREST members who have appointed a voting
service provider(s), should refer to their CREST sponsor or voting service
provider(s) who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service
to be valid, the appropriate CREST message (a “CREST Proxy Instruction”)
must be properly authenticated in accordance with CRESTCo’ s specifications
and must contain the information required for such instructions, as described
in the CREST Manual. The message, regardless of whether it constitutes
the appointment of a proxy or an amendment to the instruction given to a
previously appointed proxy, must, in order to be valid, be transmitted so as to
be received by Lloyds TSB Registrars (ID 7RA01) by no later than 6.00 p.m.on
25 July 2005. No such message received through the CREST network after this
time will be accepted. For this purpose, the time of receipt will be taken to be
the time (as determined by the timestamp applied to the message by the CREST
Applications Host) from which our registrars are able to retrieve the message
by enquiry to CREST in the manner prescribed by CREST . After this time, any
change of instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting
service provider(s) should note that CRESTCo does not make available special
procedures in CREST for any particular messages. Normal system timings 
and limitations will therefore apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member concerned to take 
(or , if the CREST member is a CREST personal member or sponsored member
or has appointed a voting service provider(s) to procure that his CREST
sponsor or voting service provider(s) take) such action as shall be necessary 
to ensure that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where applicable,
their CREST sponsors or voting service providers are referred, in particular , 
to those sections of the CREST Manual concerning practical limitations of the
CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001. 47
Notes
Resolution 1
The Directors are required by law to present to the meeting the Accounts and 
the Report of the Directors and Auditors for the year ended 31March 2005.
Resolution 2
The shareholders are being asked to vote on the Remuneration Report relating 
to the Directors and senior executives. The vote is advisory and the Directors’
entitlement to remuneration is not conditional on the resolution being passed.
Resolution 3–6
The Articles of Association require one-third of the Directors to retire at every
Annual General Meeting. The Board, following its evaluation of the performance
of those Directors standing for election and re-election, confirms that each of those
Directors continues to perform effectively and demonstrates commitment to the role.
Resolution 7
The re-appointment of the Auditors is proposed. Following assessment of the audit
service by the Audit Committee, the Board considers the Auditors to be effective
and independent in their role.
Resolution 8
Under the Companies Act 1985 (Section 80) the Directors of a Company may only
allot unissued shares if authorised to do so. Passing this Resolution will continue the
Directors’ flexibility to act in the best interests of shareholders when opportunities
arise by issuing new shares.
In Resolution 8 the Company is seeking authority to allot shares with a nominal
value of up to £11,238,442.96, which represents approximately 33.33% of the
Company’ s issued ordinary share capital. The Directors intend to use this authority,
which will lapse at the conclusion of the next Annual General Meeting of the
Company (to be held in 2006), or , if earlier , 27 October 2006, for general
corporate purposes.
Resolution 9
If shares are to be offered for cash, the Companies Act 1985 requires that those
shares are offered first to the existing shareholders in proportion to the number 
of shares they hold at the time of the offer . However , it may sometimes be in the
interests of the Company for the Directors to allot shares other than to shareholders
in proportion to their existing holdings. At last year’ s Annual General Meeting
shareholders authorised the Board, subject to specified limits:
• to allot shares in connection with a rights issue, defined in summary as an 
offer of equity securities to shareholders which is open for a period decided by
the Board subject to any limits or restrictions which the Board thinks are
necessary or appropriate.
• for allotments of shares not in connection with a rights issue so that the 
pre-emption requirement does not apply to the allotments of shares for 
cash up to a specific amount.
This authority requires to be renewed annually. The Directors will be empowered
by Resolution 9 to allot equity securities (within the meaning of Section 94 of the
Companies Act 1985) for cash without complying with the statutory pre-emption
rights of shareholders under Section 89 of the Companies Act 1985, up to a
maximum amount of £11,238,442.96. This disapplication is limited to allotments
made to ordinary shareholders and holders of any other class of equity security in
proportion (as nearly as may be) to their holdings and, otherwise, to allotments up
to a maximum nominal amount of £1,685,766.44 (representing approximately
5% of the Company’ s issued ordinary share capital).
This means that the interests of existing shareholders are protected. If a share issue
is not a rights issue the proportionate interest of existing shareholders could not
without their agreement be reduced by more than 5% of the value of the new
shares in cash to new shareholders by reference to the issued share capital at the
date of this notice. There are no current plans to allot shares except in connection
with the employee share schemes. 48
General Information for Shareholders
Attending the Annual General Meeting
1 The Notice of Meeting is being issued to all shareholders. Enclosed with this
notice, you will find an attendance card and a form of proxy.
2 If you are attending the meeting, you should bring the attendance card.
3 A shareholder is entitled to appoint one or more proxies to attend and, upon 
a poll, vote instead of him. A proxy need not be a shareholder . If you wish to
appoint a proxy, you must complete the enclosed form of proxy which must be
deposited with the Registrars, Lloyds TSB Registrars, The Causeway, Worthing,
West Sussex, BN99 6UU, not later than 11.00 a.m. on 25 July 2005.
Alternatively, if you wish to register your proxy appointment electronically
through the Internet, please use www.sharevote.co.uk where details of the
procedure are provided. Y ou will have to disclose the reference number , 
card ID and account number shown on the enclosed proxy form.
CREST members should refer to the Notice of Annual General Meeting 
(on page 46) for instructions regarding the CREST electronic proxy
appointment service.
4 Copies of the Executive Directors’ service contracts, letters of appointment 
for the Non-executive Directors, a statement of all transactions of Directors
(and of their families) in the share capital of the Company in the year ended
31 March 2005, a copy of the Register of Directors’ (and their families’)
interests in the share capital of the Company and a copy of the Company’ s
Memorandum and Articles of Association will be available for inspection at
the Company’ s registered office during normal business hours on each day
(except Saturday, Sunday and any public holidays) from the date of the 
Notice of Meeting until 27 July 2005 and also at the place of the AGM 
from 10.30 a.m. on the day of the meeting until the conclusion of the meeting.
Copies of the same will also be available on the same days at the offices of the
Company’ s solicitors, Biggart Baillie, Dalmore House, 310 St Vincent Street,
Glasgow, G2 5BB.
Introduction
After his opening remarks and following a presentation from the Chief Executive,
the Chairman will explain in detail the procedures for the conduct of the meeting,
particularly for asking questions and voting on resolutions. The resolutions which
are set out in the Notice of Annual General Meeting will then be put to the meeting.
How to ask questions
At the meeting, shareholders will be given the opportunity to ask questions from
Question Points which will be clearly indicated.
At each Question Point, a member of staff will be available to help you. Please tell
the member of staff the nature of your question and give your name and address.
Y ou may be asked to wait until called upon to speak. Please remember to state your
name before asking your question.
How to vote
Y ou should raise above your head your voting card (which you will receive 
when you register) indicating that you are voting either for or against each
resolution as it is put to the vote by the Chairman. Only shareholders, or authorised
representatives of corporate shareholders, may vote on a show of hands. If you are
attending as a proxy for a shareholder , you will receive an appropriate
identification card at registration.
Time
The doors will open at 9.30 a.m. and the meeting will start promptly at 11.00 a.m.
Cameras/tape recorders, etc.
No cameras, video recorders or tape recorders will be allowed into the meeting.
Mobile phones must be switched off during the meeting.
Registration
T o ensure your entrance to the meeting is dealt with promptly, please bring your
attendance card with you and register at the registration desk inside the hotel.
Customer enquiries
Company personnel will be available if you have any questions as a customer 
of the Company.
Shareholder information
If you have any questions concerning your shareholding, please speak to the staff
at the shareholders’ enquiry desk.
Disabled persons
Special arrangements have been made to offer every assistance to people with
disabilities. If you have a companion to assist you, they will be admitted to the
meeting as a guest. Guide dogs will also be permitted. The auditorium has an
induction loop system and headsets are available on request if you are deaf or
hard of hearing.
First aid
First aid facilities are available. Ask any member of staff for assistance.
Emergency precautions
An announcement will be made if there is a fire warning or other emergency.
Emergency exits are marked clearly around the auditorium. In case of a medical
emergency, please contact a member of staff.
Refreshments
Refreshments will be available between 9.30 a.m. and 10.50 a.m.
Important
If you have any questions about the meeting, or if you need any assistance, 
please telephone the Annual General Meeting enquiry line on 0141 566 3051
from Monday 20 June 2005 during normal working hours. 49
Shareholder and Contact Information 
Analysis of shareholders (as at 31 March 2005)
Number of Numbers
Range of holdings shareholders of shares
1–100 138,879 10,988,992
101–200 96,259 12,712,034
201–600 61,970 21,985,437
601–1,000 20,882 16,508,126
1,001–5,000 25,020 52,181,869
5,001–100,000 6,998 114,664,977
100,000 and above 476 1,119,571,721
Financial calendar
27 July 2005 Annual General Meeting
21 November 2005 Interim Results for the six months ending 
30 September 2005
April/May 2006 Preliminary Results for the year ending 
31 March 2006
Shareholder information
Annual General Meeting
The Annual General Meeting will be held at the Radisson SAS Hotel, 301 Argyle
Street, Glasgow, G2 8DL on Wednesday 27 July 2005 at 11.00 a.m. Details of
the resolutions to be proposed at the Annual General Meeting are contained in
the Notice of Annual General Meeting on page 46.
Dividend
The Directors have not recommended the payment of a dividend for the year
ended 31 March 2005.
Listing
Ordinary shares of THUS Group plc have been admitted to the Official List 
of the UK Listing Authority and are traded on the London Stock Exchange.
Share price details
The share price is available from the THUS website at www.thus.net and in
national newspapers.
Secretary and registered office
David Macleod,
THUS Group plc,
1/2 Berkeley Square
99 Berkeley Street
Glasgow, G3 7HR
Registered number SC 226738
Registrars
All administrative enquiries relating to shareholdings should be directed to 
The Registrar , Lloyds TSB Registrars, The Causeway, Worthing, West Sussex,
BN99 6DA T el: 0870 609 4531 , Fax: 01903 833 371 .
Share dealing
THUS Group’ s shares may be bought or sold at competitive rates. For further
details, please contact Stocktrade on 0845 601 0995, quoting LOWC0078.
Alternatively, please contact Lloyds TSB Registrars on 0870 850 0852 or at
www.shareview.co.uk.
Sharegift is a charity operated by the Orr Mackintosh Foundation whose main
purpose is to collect shares, sell them and use the proceeds to make donations 
to a wide range of UK charities. Many people have small holdings of shares
for various reasons. These holdings can be difficult to dispose of because of the
costs involved. Even if you have just a few shares, Sharegift provides the perfect
solution – give them to charity. Details of the scheme are available from
www.sharegift.org.uk or by telephone on 020 7337 0501
Company Information
For enquiries relating to the Company’ s operations and performance, please
contact either:
• Investor Relations, THUS Group plc, Finsbury T ower , 103–105 Bunhill Row,
London, EC1Y 8LA T el: 020 7763 3126/0141 566 3051
• Corporate Communications, THUS Group plc, 1/2 Berkeley Square, 
99 Berkeley Street, Glasgow, G3 7HR T el: 0141 566 3106/
0141 566 3051
THUS’ s services
Information about THUS’ s services can be found on the THUS website at
www.thus.net.
Designed and produced by williams and phoa,
printed in the UK. THUS Group plc
1/2 Berkeley Square
99 Berkeley Street
Glasgow G3 7HR
www.thus.net
E-Communications
Care for the environment
Each year , your company sends hundreds of thousands of paper-based Annual
Reports but there is a better and more cost-effective way for you to receive this
information which is also kinder on the environment.
THUS shareholders can choose to receive shareholder documentation from us
electronically by registering with Shareview, a free web-based enquiry and
portfolio management service offered by our registrars, Lloyds TSB Registrars.
This service enables you to:
• View your shareholding at any time
• View recent movements in your shareholding
• Obtain a regularly updated valuation on your shareholding
• Receive shareholder information electronically , including
Annual Reports and Accounts and Notices of General Meetings
• Maintain your details on-line
For further details please visit www.thus.net/shareview