innovative solutions nationwide
thus annual report 2007 thus group plc annual report 2007
contents
1 achievements in 200607
2 thus at a glance
4 delivering quality innovative nextgeneration
solutions for customers
6 delivering managed solutions 
nationwide drives growth
8 directors’ report
8 chairman’ s statement
9 chief executive’ s review
10 business environment strategy and structure
12 performance review
18 principal risks and uncertainties
20 other financial issues
23 board of directors
24 other information
25 corporate governance report
29 directors’ remuneration report
34 independent auditors’ report to the 
members of thus group plc
35 consolidated income statement
36 consolidated statement of recognised 
income and expense
37 balance sheets
38 consolidated and parent company statement 
of cash flows
39 notes to the consolidated and parent company 
financial statements
65 five y ear financial summary
66 notice of annual general meeting 
68 general information for shareholders 
attending the annual general meeting
69 shareholder and contact information
thus group plc delivers advanced
telecommunications services to large
business customers and public sector
organisations throughout the uk it tailors
these services to suit small and midsized
businesses through its demon branded
product range
our objective is to be the preeminent
alternative telecommunication provider 
for business customers in the uk
financial highlights
continuing operations
1
• revenue up 52 to £5327m 
• ebitda
2
up 14 to £429m
• ebitda
2
up 33 to £429m on a pro forma
3
basis
• operating loss
4
reduced 18 to £95m 
total group
• posttax profit for the year of £839m including recognition 
of deferred tax asset and gain on sale of demon netherlands
• net debt £258m and net gearing 55 
revenue
 £m
continuing operations
1
5327
2006
2007
3500
operating loss
4
  £m
continuing operations
1
–116
–95
2006
2007
ebitda
2
 £m
continuing operations
1
429
2006
2007
376
1
excludes contact centre sold on 4 august 2004 and demon netherlands sold on 15 june 2006
2
earnings before interest tax depreciation including impairment amortisation and restructuring costs see note 8 to the
financial statements
3
pro forma ebitda includes 12 months’ ebitda for y our communications and legend communications and excludes 
contact centre and demon netherlands for both years
4
operating loss before restructuring costs
5
the highlands and islands pathfinder broadband procurement project represents the five councils making up the region
namely highland moray orkney shetland  argyll and bute councils
6
bespoke contracts typically covering higher value sales nextgeneration services exclude traditional fixed switched voice
services leased lines frame relay and atm data services thus group plc annual report 2007 1
integration of y our communications
and legend communications
integration ahead of plan with additional
savings identified 
demon netherlands disposal
successfully completed disposal in june 2006
and £30m of proceeds used to repay debt 
achievements in 200607
contract win
5
nextgeneration services contract for seven
years worth £70m
contract win
ukwide nextgeneration services contract
for five years worth £77m
contract win
nextgeneration services contract for seven
years worth up to £32m
nextgeneration services
77 of new major corporate and public
sector contracts for nextgeneration services
6
 
ebitda
23
on a pro forma basis –
continuing operations
1
up 33 from £323m to £429m
revenue – continuing operations
1
up 52 from £3500m to £5327m
52 33
77 2 thus group plc annual report 2007
thus at a glance
managed
solutions 
2007 2006
£m £m
revenue 950 731 
operating profit
2
189 85 
operating profit margin
2
20 12 
highlights
• revenue grew 30 to £950m driven 
by recent contract wins and the inclusion 
of united utilities as a managed 
solutions customer 
• segmental operating profit
2
increased 
from £85m to £189m with margins
2
improving to 20 
• during the year  major nextgeneration
services contracts were secured with hsbc
the highland council
3
lead partner for the
pathfinder north project and dumfries 
galloway and scottish borders councils for
the pathfinder south project in total these are
expected to deliver up to £179m of revenue
over the next seven years
• a threeyear contract worth more than £13m
was signed with united utilities in may 2007 
following competitive tender 
thus transformation
the integration of y our communications yc and legend communications lc which 
were acquired in february and march 2006 respectively continues to proceed ahead of the
original plan during the year we announced that the integration is now expected to deliver 
£30m of annualised savings previously £25m for expected implementation costs of less than
£25m previously £30m
the successful disposal of demon netherlands in june 2006 marked another important milestone
and the consideration gave rise to a posttax gain on sale of £290m the proceeds received were
used to strengthen the company’ s balance sheet and repay £30m of the secured loan
continuing operations
as a result of the acquisition of yc and lc and the disposal of demon netherlands thus 
records results for its continuing operations in four established segments comprising managed
solutions 18 of 2007 revenue data and telecoms 59 internet 16 and mobile 7
managed solutions are run as a separate unit within thus they comprise large corporate
accounts with complex service needs typically combining delivery of several different standard
services an element of outsource to thus and longer than average contract duration
in contrast the data and telecoms internet and mobile segments record revenue and results 
for more standard product sales to a wide customer base including corporate small and mid
sized customers channel resellers and other telecommunication companies
within each segment the principal costs comprise payments to other telecommunication
companies for interconnect and use of their network to collect and deliver services to thus
customers other directly variable costs directly attributable selling distribution and administrative
costs and depreciation on assets directly attributable to that segment 
however  as the majority of services are sold provisioned and run from a unified infrastructure
thus maintains a large pool of central costs in 2007  these costs totalled £1172m
1
2006
£917m
1
 and comprised £434m of depreciation impairment and amortisation 2006 £415m
£273m of network operations and maintenance costs 2006 £217m and £465m of corporate
overheads 2006 £285m
1
excludes £16m of restructuring costs in 2007 2006 £104m
2
segmental operating profit excludes central costs not allocated to individual segments
3
the highlands and islands pathfinder broadband procurement project represents the five
councils making up the region namely highland moray orkney shetland  argyll and
bute councils thus group plc annual report 2007 3
mobile data 
and telecoms 
internet
2007 2006
£m £m
revenue 3125 2038 
operating profit
2
615 433 
operating profit margin
2
20 21 
highlights
• revenue grew 53 to £3125m the
segment benefited from the inclusion of 
12 months’ revenues from the acquisitions
amounting to £1197m of predominantly
legacy services
• segmental operating profit
2
rose from
£433m to £615m with margins
2
of 20
21 last year 
• notable new customers for nextgeneration
services included wolseley uk london
metropolitan network university of central
england vodat international audit
commission university of westminster 
and digica 
2007 2006
£m £m
revenue 847 693 
operating profit
2
231 277 
operating profit margin
2
27 40 
highlights
• revenue grew 22 to £847m and included
£190m from the acquisitions this year
compared to £15m last year  excluding 
the impact of the acquisitions for both 
years revenue from nextgeneration 
services increased by £38m and legacy
services declined by £59m principally 
from the continued and expected decline 
in dialup internet
• segmental operating profit
2
fell from £277m
to £23 1m with margins
2
of 27 40 last
year principally due to the decline in high
margin dialup internet 
• broadband customers grew 3 to 130700
march 2006126500
• several innovative services were launched
this year including up to 8mbps demon
business broadband demon voice voice
over ip enhanced hosting and mobile
services including blackberry
2007 2006
£m £m
revenue 405 38 
operating profit
2
42 05 
operating profit margin
2
10 12 
highlights
• the mobile segment was established in 
march 2006 following the acquisition 
of y our communications
• revenue for the year was £405m pro forma
revenue for 2006 was £407m with 
a segmental operating profit
2
of £42m
representing a 10 margin
2
 
• the division continues to be vodafone’ s
largest independent uk businesstobusiness
service provider and had 90000 active
connections at the year end march 2006
78000 
• as well as providing mobile email and 3g
services our customers realise significant
business benefit through the use of business
t ext location services and field force
automation which are delivered via our
managed service platform next year we
expect to launch additional managed
services to enhance our existing services 
for customers with a greater focus on
converged services 4
thus wins “network operator of the y ear” at the
comms channel awards
thus wins “service provider channel programme”
for 2nd year running at channel network awards
thus w an service solution for university of
w estminster won the “communications in business
best public sector w an project”
thus wins “gold award for utility services to 
the city of london” for the 3rd consecutive year
4
1
bespoke contracts typically covering higher value sales
delivering quality innovative
nextgeneration solutions 
for customers
quality exceptional service and utilising our expertise to deliver innovative
solutions for customers differentiate us from our competitors and ensure we 
are strongly positioned within the marketplace 
first and foremost is our focus on listening to customers and working in collaboration with them
to deliver the most appropriate and effective solutions to meet their business needs by aligning
technology with operational requirements 
we remain at the forefront of service innovation and are leveraging our strengths to manage 
and deliver larger and more complex solutions for customers enabling us to successfully 
grow our business each year  we are committed to enhancing our established reputation as
innovators and continually look beyond today’s needs to the next generation of advanced
communications solutions
our nextgeneration network is one of the most technologically advanced telecommunications
networks in the uk extending to some 10500km of fibre optic cable more than 190 points of
presence reaching into substantially all of the uk’s major business centres its capability enables 
our increasingly sophisticated service offerings that are at the heart of our proposition for customers
and are underpinned by comprehensive service level agreements 
with network capability to support both legacy and nextgeneration services we are strongly
positioned for the current service transition momentum for nextgeneration services has continued
this year representing 77 of our new major corporate and public sector contracts
1
 
wolseley uk
building sector
wolseley uk part of the wolseley plc group
and the largest distributor of heating plumbing
and building products in the uk selected thus
to deliver all its voice requirements to 1700 
sites in the uk this managed solution will
support wolseley’ s rapidly growing retail
business help to improve customer service 
and deliver cost savings
london metropolitan network
education sector
london metropolitan network lmn extended
its existing relationship with thus who will
provide lmn with a nextgeneration network
connecting over 130 higher and further
education colleges across greater london 
the network will support a number of
applications including remote data storage
email filtering and access to superjanet  the
uk’s education and research network enabling 
more than one million students to have access 
to advanced services that will support 
their learning
university of central england
education sector
thus was chosen by the university of central
england in birmingham uce to deploy a
scalable short message service sms to enable
more efficient and secure communications
between the faculty and students the service 
will enable uce to provide instant updates on
amendments to scheduled lectures to their
students and complements existing services
supplied by thus to uce
digica 
it sector
digica a leading provider of outsourced 
and managed it services selected thus to
deliver a national ethernet solution for one 
of its customers enabling connectivity between
four sites throughout the uk the ethernet
solution will support remote server hosting 
and management and facilitate a significant
improvement in disaster recovery and 
business continuity resilience
thus group plc annual report 2007 thus group plc annual report 2007 5 6 thus group plc annual report 2007
1
the highlands and islands pathfinder broadband
procurement project represents the five councils 
making up the region namely highland moray 
orkney shetland  argyll and bute councils
2
multiprotocol label switching internet protocol virtual
private network mpls ip vpn
delivering managed 
solutions nationwide 
drives growth
nextgeneration networks ngns are based on a genuinely innovative set of
technologies that are already transforming the way businesses communicate
today  and will ultimately revolutionise how communication services are
delivered in the future the key to this lies in the difference between what
existing networks and ngns have to offer the majority of traditional voice 
and data networks are underpinned by multiple network platforms that
employ a variety of different transmission protocols each of these platforms
dedicates itself to supplying a single type of traffic such as voice data or
internet access this mixandmatch approach is complex to support and
expensive to scale
in comparison ngns take a converged approach to network services all types of network traffic –
whether it’ s voice video or data – are transmitted on a single coherent platform based purely on a
single common protocol this simplifies information and communication infrastructures enormously
reducing not only the amount of network devices needed to create the network but also the cost and
resources required to maintain it
a general trend for the internet protocol ip to be adopted as the common protocol of choice for
converged networks has helped drive the move toward wholesale acceptance of nextgeneration
networks this in part is due to the fact that over the last decade ip has grown in stature becoming 
a standard across the entire telecoms industry ip’s rise to prominence has largely been due to 
the huge impact and importance of the internet alongside developments in ipbased voice and 
video services
thus is committed to providing nextgeneration solutions for our customers that are adaptable 
meet their business needs and exceed expectations – both today and into the future
thus’ extensive experience expertise and collaborative approach to tailoring solutions to meet
individual customers’ needs was evidenced again this year  major managed solutions contracts 
were won with the highland council lead partner for the pathfinder north project dumfries 
galloway and scottish borders councils for the pathfinder south project and hsbc t ogether 
these contracts are worth up to £179m and will contribute towards driving future growth whilst 
also extending our network reach and enhancing our nationwide presence
hsbc bank plc hsbc
thus was chosen by hsbc for the replacement
of its legacy national network in the uk the
solution from thus will deliver nextgeneration
network functionality for the group’ s uk business
operations at more than 2000 sites and is worth
£77m over five years
the highland council
1
thus was selected by the highland council
lead partner for the pathfinder north project
for a seven year  £70m project to provide high
capacity broadband links to schools libraries
and other council buildings throughout the
highlands and islands our success in winning
this contract was testament to our capabilities 
in the local government sector and the provision
of the optimum solution that fully met the
aspirations of the customer 
the highlands and islands pathfinder
broadband procurement project is based 
on an mpls ip vpn
2
solution and will extend
to some 850 sites with a focus on providing
schools with access to stateoftheart teaching
and learning support
dumfries  galloway and scottish
borders councils
thus won the south of scotland broadband
pathfinder project worth up to £32m over
seven years for the provision of high capacity
broadband links to schools libraries and other
council sites throughout dumfries  galloway
and the scottish borders this project is based on
an mpls ip vpn
2
solution to over 400 sites
including some 200 educational institutions
completion of the network rollout is expected by
2008 and is intended to increase the availability
of highspeed broadband services to businesses
across the area helping these rural economies
to compete in the global marketplace thus group plc annual report 2007 7 8 thus group plc annual report 2007
directors’ report chairman’ s statement
last year we announced a transformation for your company as we made our first two acquisitions
disposed of demon netherlands and restructured our balance sheet the period since that
announcement has been highly successful for your company with our financial and operational
performance more than meeting our expectations
the integration of the two acquisitions has proceeded ahead of the original plan we announced 
to the market the benefits are measurable and are beginning to feed into our financial results 
our balance sheet remains strong with net debt at the end of the year unchanged from the opening
position this is particularly pleasing since we settled our tax bill in the netherlands closed the gap 
in our pension fund invested in the integration activities yet still tied 77 of our capital expenditure
to future customer related growth but it is our second half financial performance that is most
encouraging as we entered the new financial year on a growth trajectory – just as we said we would
our market remains tough and challenging the sector consolidation we discussed last year
continues several of our competitors are embarking on new strategies to compete for position 
and new entrants from overseas have entered the uk market but our business strategy is robust 
and delivering results as more of our customers enjoy the benefits from converged nextgeneration
services where your company is particularly strong
as a result of the 1 0 to 1 share consolidation undertaken in march 2006 we retained a small surplus
of shares which we have now committed to charitable and educational ventures our staff also
continue to support a number of good causes through a variety of initiatives overall i am pleased
that we are able to play a larger part in the communities where we operate
our commitment to maintaining the environment recycling of surplus computer hardware green
energy and carbon reduction is embedded in our culture as business as usual activities nevertheless
we can do more and plan to reduce further our consumption of paper and disposables travel and
overall energy and carbon consumption
during the year simon batey the former group finance director of united utilities briefly served 
on your board simon played a valued part in the early integration activity of y our communications
for which he has our thanks simon has been replaced on the board as the united utilities nominated
nonexecutive director by martin beesley in addition we were pleased to appoint rick medlock to
the board as a new nonexecutive director and chairman of the audit committee rick is the chief
financial officer at inmarsat and offers considerable finance expertise and experience of the
telecommunication sector  ian chippendale who was formerly chairman of the audit committee
continues as our senior independent nonexecutive director and chairman of the remuneration
committee replacing michael de karesilver who resigned last year 
over the year i have been greatly impressed by the professionalism of your company thus 
sets high standards and demanding targets y et our ability to retain and recruit talented employees
in a tough recruitment market as we simultaneously grew new sources of revenue and integrated 
two acquisitions ahead of plan is testament to the quality of our employees and their commitment 
to your company i offer them all my heartiest thanks and congratulations for a particularly 
successful year 
philip rogerson 
chairman thus group plc annual report 2007 9
as we entered this financial year we were firmly focused on the integration of our two acquisitions
y our communications and legend communications to create a company with greater scale and
opportunities for growth throughout the uk business services market these events reinforced our
position in the northwest and added new capability to your company
at the outset of the year we forecast synergy savings of about £25m per annum upon integration
completion for a oneoff investment of about £30m midway through the year  as we gained
confidence in the savings from the implementation and the management of our costs we upgraded
our forecast to £30m per annum of savings for less than £25m of upfront investment ie £5m more
per annum for £5m less cost
we had also forecast that our revenues would be broadly flat over the course of the year as our
management focused on extracting value from the acquisitions the reality proved to be somewhat
better from our improved revenue mix accelerated nextgeneration services growth and winning
three of our largest ever managed solutions contracts
previously we had announced that the majority of our variable gross margin was being derived 
from nextgeneration services more than compensating for the decline in our legacy base even with
the addition of the legacy revenues from y our communications we exited the year with more margin
and more revenue being derived from nextgeneration services this is what we had always planned
and designed our network and service capability to deliver  it is now a reality in our market that next
generation service capability will drive growth managed solutions and converged services is our
future we are well equipped and strongly positioned to capitalise on new growth from our increased
scale and presence in the uk business market
our second half performance has demonstrated that the enlarged thus has returned to growth
second half revenue was up 5 on the first half and our operating losses
1
reduced by 60 to 
£27m second half ebitda
1
increased by 28 demonstrating that we are well on track to deliver
our financial objectives
we were particularly proud to become involved in the two “pathfinder” projects to implement next
generation services to schools and public buildings in the highlands and islands and south of
scotland regions these two projects will extend our network and service reach in scotland and use
radio technology to reach the more remote regions indeed some of our capability on these new
contracts builds on our experience in designing and building a radio network for the north west
development agency  the “pathfinder” projects will run for seven years and are worth over £100m
in addition we were delighted to be selected by hsbc to build and manage nextgeneration
services to connect more than 2000 locations throughout the uk in a contract worth £77m over 
the next five years united utilities has also renewed its contracts with us for a further three years
worth more than £13m all of this underpins revenue for the next financial year 
new contract growth has been extremely encouraging in a tough and demanding market i am
extremely proud of our achievements and convinced that we have the correct strategy skills
management and employees to deliver lasting shareholder value thus is strongly positioned for
future growth and our performance this year reinforces my confidence that we remain firmly on track
to meet our expectations in the new financial year 
william allan
chief executive
directors’ report chief executive’ s review
1
operating losses and earnings before interest tax
depreciation including impairment and amortisation
ebitda exclude £16m of restructuring costs for the year  10 thus group plc annual report 2007
directors’ report business environment strategy and structure
principal activities
thus is focused on the provision of fixed line telecommunication services to large business customers
and public sector organisations while tailoring services to small and midsized businesses under the
demon brand these fixed line service offerings are complemented by the provision of mobile
solutions by our mobile division following the acquisition of y our communications
market size and service transition
the total uk business telecoms market is estimated at £133b
1
or excluding business spending on
mobile services is estimated at £81b
1
 down from £83b
1
the previous year  the fixed line segment is
experiencing a transition in demand patterns in particular  demand is moving away from traditional
or legacy telecommunication services including fixed switched voice frame relay and atm data as
well as narrowband internet access towards nextgeneration ipbased services such as broadband
ethernet mpls ip virtual private networks and voice over ip  thus is well positioned for the
provision of nextgeneration services
market structure
twentyfive years after liberalisation the fixed line business market in the uk remains dominated 
by the incumbent provider bt  
although many infrastructurebased market entrants have emerged none has yet developed
sufficiently to deliver sustained growth and meaningful returns in particular  an overinvestment
in legacy networks has resulted in an oversupply of legacy services and inhibited competitors
from developing sufficient scale to thrive 
the transition to nextgeneration services has put additional pressure on established revenue 
and margin from legacy services for all operators most suppliers now face significant network
investment to enable them to offer nextgeneration services thus made this investment when 
it put in place a nextgeneration network as part of its national network rollout in the early part 
of the decade
thus has differentiated itself by delivering compound annual growth in continuing operations
2
revenues of 22 over the last five years 13 over the fouryear period from 1 april 2002 to 
31 march 2006 and continues to invest judiciously to increase its capabilities further maximise 
the leverage of its assets and deliver future growth and operating efficiencies thus is therefore 
well positioned to benefit as demand consolidates around market participants with nextgeneration
capability over the longer term
regulation
in 2005 communications regulator ofcom completed its strategic review of t elecommunications
culminating in a new regulatory settlement for the industry
the new settlement continues to support infrastructurebased competition but seeks to promote
equality of access to those parts of the bt network where investment in competing infrastructure is 
not sustainable a new bt division called openreach has been created to provide access to these
regulated services
although the creation of openreach caused significant disruption to bt’ s customers thus remains
optimistic that the regulatory settlement will eventually enhance competition
additional obligations have been placed on bt to ensure that it does not foreclose competition as 
it implements its nextgeneration network
thus is a founder and executive member of the industry body “ngnuk” which aims to define
commercial and operational interconnects to ensure full and equitable interoperability between
competing nextgeneration networks including bt’ s
fixed voice
internet
data
mobile
business spending on telecoms services
1
£b 
2005 2004 2003 2002 2001
133
129
125
122
118
53
49
44
39
54
22 23 25 26
21
10
12
14
16
09
37
41
46
52
34
the thus national network
thus has the uk’ s first operational national next
generation telecommunications network designed to deliver
nextgeneration ipbased services with some 10500km 
of fibre optic cable and more than 190 points of presence
the network reaches substantially all of the uk’ s major
business centres thus group plc annual report 2007 11
objective and strategies
our objective is to be the preeminent alternative telecommunication provider for business customers
in the uk
t o achieve this objective our principal strategies have focused around
• deployment of an advanced national nextgeneration telecommunications network this allows
us to improve our control over the quality of our service delivery lower our ongoing traffic
delivery costs and control the rate of service evolution
• development and sale of a comprehensive service portfolio capable of supporting business
customers through the transition from legacy to ipbased and converged telecommunications
• attainment of consistently high levels of quality in our service delivery 
• achievement of scale and operating leverage across our network and supporting systems
financial targets
following heavy upfront investment in network rollout our financial plan is focused on delivering 
a return on capital employed greater than our weighted average cost of capital 
the group has already achieved two important financial milestones moving ebitda
3
positive in
200102 and free cash flow
4
positive in 200405 our next goal is to become profitable on a
sustainable basis and we have increased confidence that the group will move into positive operating
profit during the next financial year 
organisation structure sales and service delivery
thus is structured along functional lines to support the business segments with staff organised into
sales product operations and support services in addition thus maintains a central capability 
for management of finance human resources and government and regulatory affairs
revenue and results are recorded in four continuing operations segments comprising managed
solutions data and telecoms internet and mobile
businesses disposed of are classed as discontinued operations and reported accordingly 
further details of the achievements of thus’ business segments this year are set out on 
pages 2 and 3
disposals
t o consolidate its uk focus thus disposed of its demon netherlands internet service provider 
in june 2006 the results of demon netherlands in the current and previous financial year are
included within discontinued operations the gross consideration received at multiples of 24 times 
2006 revenue and some 21 times ebitda
3
gave rise to a £290m posttax gain on sale 
the proceeds were used to strengthen the company’ s balance sheet and repay £300m of the
secured loan
1
source ofcom the communications market 2006 
2
excludes contact centre interactive and demon netherlands
3
earnings before interest tax depreciation including
impairment and amortisation ebitda ebitda is stated
before restructuring costs of £16m in 2007 and £88m 
in 2006
4
operating cash after taxation interest and capital expenditure
5
ratio of revenue to property plant equipment and 
intangible assets
6
2006 included only one month of revenues for the acquisitions
7
calculations based on continuing operations excluding 
contact centre and demon netherlands ebitda excludes
£16m of restructuring costs in 2007 and £88m in 2006
financial targets – 
continuing operations
long term 2007 2006
15– 119 079
asset turnover
5
20 times times times
6
ebitda
3

revenue 20 8
7
11
7
capital 
investment
revenue c10 11
7
9
7
the two acquisitions at the end of 2006 increased
asset turnover but depressed the ebitda margin 
in 2007 while operating cost synergies are 
being delivered 12 thus group plc annual report 2007
directors’ report performance review 
results and financial position
results 
the focus of our performance review is on our continuing operations
1
which are based solely in the uk
continuing operations
1
revenue increased by 52 to £5327m with gross profit up 58 to £897m and gross profit
margins improved to 168 2006 162 
ebitda
2
was up 14 from £376m to £429m and on a pro forma
3
basis was up 33 2006
£323m new business and synergies delivered from the integration programme contributed
£184m to the improvement in ebitda
2
and compensated for the £78m decline in ebitda
2
from
dialup and the loss of t ele 2 as a customer following its acquisition by carphone warehouse
this year’s results included 12 months’ revenues from the acquisition of y our communications 
and legend communications excluding the expected decline in both dialup and carrier preselect
cps services revenues grew by 4 year on year on a pro forma
3
basis
revenue for the second half of the year increased by 5 to £2727m and ebitda
2
increased by 
28 to £241m compared to the first half the revenue growth was principally due to the managed
solutions segment which benefited from the inclusion of revenues for recent contract wins with 
the highland council lead partner for the pathfinder north project hsbc and dumfries 
galloway and scottish borders councils for the pathfinder south project
after depreciation and amortisation charges
4
of £524m 2006 £492m operating losses before
restructuring costs and an intangible asset writeoff last year  reduced by £21m to £95m whilst
operating losses including these costs reduced from £220m to £111m when compared 
to the first half of the year operating losses before restructuring costs for the second half reduced 
by 60 to £27m whilst operating losses including restructuring costs reduced by 48 to £38m
net financing costs reduced by £23m to £40m this was principally due to lower financial
expenses following the receipt of the proceeds from the disposal of demon netherlands
a deferred tax asset of £696m was recognised during the year  resulting in a profit for the 
year of £545m compared to a loss of £283m last year the recognition of the deferred tax asset 
on the balance sheet at the year end reflects increased momentum in the operating performance 
of the business and the delivery of the majority of the integration programme relating to last year’ s
acquisitions basic earnings per share for continuing operations were 3029p compared to a loss 
per share of 2055p last year 
discontinued operations
discontinued operations represent the results of demon netherlands in the current year and the
results of both demon netherlands and the contact centre in the prior year  
the contact centre division was disposed of in the financial year ended 31 march 2005 however 
as disclosed previously a number of contracts did not transfer with the disposal and thus continued
to fulfil its obligations as principal using subcontract arrangements until september 2005
discontinued operations revenue was £32m compared to £221m last year and operating profit
was £04m compared to £12m last year reflecting the sale of demon netherlands in june 2006
and the inclusion of results for the contact centre until september 2005
the gross consideration received for the sale of demon netherlands gave rise to a pretax gain on 
sale of £423m £290m posttax the proceeds were used to strengthen the company’ s balance
sheet and repay £300m of the secured loan in the prior year a posttax gain on sale of £02m 
was recognised relating to the sale of the interactive division the prior year also benefited from 
an income tax credit of £07m
the profit for the year for discontinued operations was £294m up from £21m last year
dividend
the company has not declared or paid a dividend on its share capital 2006 £nil given 
the company’ s stage of development and the accumulated losses from the network deployment 
the board is not yet able to declare a dividend
capital expenditure
capital expenditure including expenditure on intangible assets for continuing operations
1
was £593m compared with £322m last yearthis is equivalent to 11 of revenue in continuing
operations
1
compared with 9 last year and is in line with our stated longterm financial target 
of approximately 10 of revenue
1
continuing operations exclude the results of demon
netherlands and contact centre for both 2007 and 2006
2
earnings before interest tax depreciation including
impairment and amortisation ebitda is stated before
restructuring costs of £16m in 2007 and £88m in 2006 
3
pro forma results include 12 months’ contribution from
y our communications and legend communications
acquired in february and march 2006 and exclude the
contact centre and demon netherlands for both years
4
excludes £16m in 2006 for intangible asset writeoff
5
interest excludes loan costs written off loan amortisation
costs and net interest associated with the thus 
pension scheme
unless otherwise stated financial data for the charts and
tables on pages 1 2 and13 is prepared under ifrs for
2005–2007 and uk gaap for prior years continuing
operations exclude interactive contact centre and demon
netherlands for all years
continuing operations
revenue
£m
2415
2836
3202
3500
5327
2003
2004
2005
2006
2007 thus group plc annual report 2007 13
financial position and capital structure
thus is predominantly funded by equity together with an element of bank debt and a small 
amount of other loans and finance leases
cash flows
the cash generated from operations of £390m compared to an ebitda
2
of £429m for continuing
operations net cash flows from trade and other receivables and inventories improved significantly
year on year resulting in a net inflow of £75m 2006 outflow £58m however  this inflow was
offset by a cash outflow for trade and other payables and provisions principally as a result of
integration costs the cash generated from operations was utilised for £43m of net interest and 
tax payments a onetime payment into the defined benefit pension scheme of £75m and capital
expenditure of £529m resulting in a free cash outflow of £257m
cash flows from investing activities benefited from the receipt of £320m of net proceeds from 
the sale of demon netherlands which were used to repay £300m of the secured loan
other movements in net debt totalled £58m and included £34m relating to the payment of
acquisition expenses as a result net debt reduced by £05m from 1 april 2006 to £258m 
at 31 march 2007
credit metrics
with the capital structure representing the financial foundations of the business thus has taken 
a conservative stance to funding 
gearing throughout the year has been below 7 and was 55 at 31 march 2007 31 march
2006 68 our financial position remains strong with net debt to ebitda
2
of 06 times and
ebitda
2
net interest
5
cover of 115 times for continuing operations
equity
as a result of the company’ s share price having reached the 190p threshold agreed in the share 
and asset purchase agreement relating to the company’ s acquisition of y our communications 
227m new ordinary shares of 25p each were issued to united utilities in february 2007 this issue
was additional consideration for the acquisition 
as a result thus had approximately 18303m ordinary shares in issue at 31 march 2007 
31 march 2006 18076m and a market capitalisation of £337m 31 march 2006 £292m
united utilities controls 2263 of the enlarged issued share capital of thus up to a further 97m
shares are due to be issued to united utilities should the thus share price increase in stages from
200p up to 270p during the period to 31 december 2007 specifically united utilities will be
entitled to a further 233m shares if the price reaches 200p or more plus an additional 240m
shares if the price reaches 215p or more a further 246m shares if the price reaches 240p or 
more plus 253m shares if the price reaches 270p or more further details of the issued share
capital is included in note 26 to the financial statements
bank debt 
as at 31 march 2007 thus had total indebtedness of £571m 31 march 2006 £899m
comprising £532m of bank debt and £39m of finance leases
thus’ main bank debt is governed by standard banking covenants relating to the ratio of total 
debt to ebitda and interest cover  with interest charged in a range from libor plus 15 to 325
depending on the ratio of total debt to ebitda of the £532m bank debt £62m is repayable within
one year and £47m is due between one and five years further detail is included in note 22 to the
financial statements
working capital
thus has a strong track record in management of working capital and integration of the two
acquisitions presented further opportunities to manage and improve the debtor position down 
from debtor days of 75 at 31 march 2006 to 49 at 31 march 2007
cash balance 
the cash balance at the end of the year was £313m the balance is adequate to meet working
capital and forecast loan repayments for the foreseeable future
pro forma ebitda reconciliation
£m 2006
group ebitda
2
395
acquisitions 53
disposals 19
continuing operations
1
pro forma ebitda
2
323
 group ebitda for 2006 included one month for the
acquisitions of £14m ebitda for the acquisitions for the
12 months to 31 march 2006 was negative £39m an
adjustment for £53m has been made to arrive at the pro
forma ebitda for 2006
thus credit metrics
2007 2006
gross debt ebitda
2
13 times 24 times
net debt ebitda
2
06 times 07 times
net gearing 55  68
ebitda net interest
25
115 times 84 times
continuing operations 
ebitda
£m
210
416
367
376
429
2003
2004
2005
2006
2
2007
2 14 thus group plc annual report 2007
directors’ report performance review
measuring success
achieving a successful financial performance relies on the business achieving growth minimising
cost of sales driving scale efficiencies targeting incremental investment to support growth over the
core backbone network and maintaining high standards of quality t o ensure overall progress 
thus targets initiatives in each of these key areas and tracks performance to measure success
growth
thus must continue to build market share successfully in order to meet our longerterm objectives
based on continuing operations
1
revenue growth thus improved its estimated market share from
approximately 4 to approximately 6 during the year  reflecting our success in winning new
business and the contribution from the acquisitions completed at the end of the last financial year 
this resulted in an increase in the ratio of continuing operations
1
revenue to assets
2
from 079
to 119 times compared with our longterm target of 15 to 20 times
growth was underpinned both by development in nextgeneration services and expansion in
traditional switched voice services however  in terms of major new corporate and public sector
contracts signed in the year  77 were for nextgeneration services
the success in delivering nextgeneration contract growth was focused around developments and
marketing campaigns in key services areas including managed solutions multiprotocol label
switching internet protocol virtual private networks mpls ip vpn ethernet broadband and high
speed internet
cost of sale
although network reach is extensive it is not economically feasible to carry all customers’ traffic end
toend and payments to other operators for customer connection and service interconnect are the
largest component of our cost of sales
since flotation thus has made successive improvements to contain the increase in payments by
increasing interconnect points with other operators improving traffic routing across the network 
and participating in a wholesale market for the provision of last mile access 
the integration of the thus network with those of last year’ s acquisitions particularly that of y our
communications has delivered further network efficiency this year  after the first three months of 
the integration programme the thus and y our communications networks had been physically
joined and the switches linked to allow traffic to pass between the two networks for more efficient
routing the rationalisation of last mile access circuits continues and it is intended that the y our
communications core network in the northwest of england will be completely integrated into the
wider thus network
1
continuing operations exclude demon netherlands and
contact centre for both years 
2
represents property plant equipment and intangible 
asset balances
3
operating costs exclude depreciation and amortisation
including impairment restructuring costs and other
operating income
unless otherwise stated financial data for the charts on
pages14 and 1 5 is prepared under ifrs for 2005–2007 
and uk gaap for prior years continuing operations
exclude interactive contact centre and demon netherlands
for all years
scale efficiencies –
 
ebitda  margin
 of continuing operations
 
revenue
9
15
11
11
8
2003
2004
2005
2006
1
2007
1
1
 excludes £88m for restructuring costs in 2006 and £16m 
 in 2007
scale efficiencies – ebit  margin
 of continuing operations
 
revenue
–2
2003
2004
–21
–8
–9
–3
2005
2006
1
2007
1
1
 excludes £104m for restructuring costs in 2006 and £16m 
 in 2007
asset
1
 turnover – continuing operations
longterm target 15–20
056
069
086
079
119
2003
2004
2005
2006
2
2007
1
 represents property plant equipment and intangible asset balances
2
 2006 included only one month of revenues for the acquisitions
ebitda margins were depressed in 2007 by the onetime
impact of integrating last year’ s acquisitions thus group plc annual report 2007 15
scale efficiencies
this year in continuing operations
1
 operating costs
3
were in line with last year at 17 of revenue
before the full impact of integration savings has been delivered
our focus on productivity at thus is unrelenting by applying thus productivity standards to 
the acquisitions some initial synergy savings have been delivered this year  it is anticipated that
additional operating cost synergies relating to staffing operating systems and property will result
following full integration
investment 
capital investment was 11 of continuing operations
1
revenue 2006 9 broadly in line 
with our longterm target of approximately 10 of revenue 
in the year under review growthrelated expenditure for continuing operations
1
was £456m 
or 77 of the total and was primarily focused on customer connections and further capacity
enhancements to the nationwide thus nextgeneration network nongrowth related expenditure
was £137m and included £57m related to the integration of y our communications and 
legend communications
quality
at the heart of our quality programme is our iso 90012000 accreditation this certifies our
processes to international quality standards and is subject to independent audit twice a year 
customer satisfaction
gaining feedback from customers allows us to evaluate how we can improve the products and
services we provide alongside independent thirdparty customer satisfaction surveys an online
survey has been developed to allow a greater number of customers to have their say the level of
satisfaction is generally maintained at around 90 t o add to the current broadband voice and
narrowband surveys further surveys have been designed and are currently being trialled with
customers who have nextgeneration services 
network performance
availability on the core multiprotocol label switching mpls network was consistently above our
9995 target throughout the year  enabling thus to manage sharply increasing volumes of mpls
traffic securely
scale efficiencies – operating costs
3
 of continuing operations revenue
28
21
19
17
17
2003
2004
2005
2006
2007
capital investment
 of continuing operations
 
revenue
18
14
11
9
11
2003
2004
2005
2006
2007
other growth related
network capacity upgrade
customer connections
growth
other nongrowth
integration
non–growth
capital investment 
for year ended 31 march 2007
77 of capital investment focused on growth 
300
79
77
57
80 16 thus group plc annual report 2007
directors’ report
employees
t alented and skilled employees underpin our ability to deliver telecommunication services that bring
value to our customers’ business operations providing our employees with the resources they require
to maximise their performance and drive business growth remains a priority our objective is to
ensure measures are in place to retain and develop our employees while at the same time attracting
talented individuals to join our organisation
performance culture
the performance of employees is measured against clear  businessfocused objectives and
performance criteria through our windmills appraisal process this is supported by a quarterly 
onetoone process which ensures that qualitative discussions are taking place at frequent intervals
throughout the year  
training and development 
the capability performance and commitment of our employees remain key factors in our ability 
to grow our business in the competitive market in which we operate we have a highly qualified
workforce with our employee survey indicating that almost 60 of our employees have degrees
andor professional qualifications investment in training and development of our employees
continues and our open learning facility which is available to both employees and their families
continues to be well utilised opportunities for career progression also play an important role 
in employee development a number of vacancies were filled by internal applicants affording
these employees the opportunity to broaden their skills and further develop their careers within 
our company
graduate programme
during 200607 the group introduced a graduate recruitment programme with four graduates
from technical disciplines joining our business in september 2006 a structured programme
encompassing role placements and work experience rotations has been put in place to maximise 
the potential of this initiative leading to accreditation from the institute of engineering and
t echnology iet
talent management
a “talent pool” identified during 200607 containing employees in leadership and specialist roles
has been involved in a number of group and individual development activities this has included 
a management essentials training programme and targeted external and internal course and
conference attendance as appropriate 
reward
the performance of managers and senior professional staff is linked to the group’ s financial results
by way of a bonus scheme which has targets linked to revenue ebitda and cash flow reward has
an important role to play with regard to employee retention and we continue to carry out annual
benchmarking comparing employee salaries against the market t o allow flexibility and the ability 
to react to changing market conditions salaries are reviewed quarterly to ensure remuneration is
appropriate to retain highquality employees 
for sales staff commission schemes are based on billed revenue with a weighting to increase reward
for the sale of services with higher profit margins and nextgeneration services this commission
scheme is designed to focus sales staff on value creation for our customers and shareholders
the group has offered all employees access to an annual sharesave scheme during 200607 which
allows them to save and buy shares in the company at a discounted rate therefore sharing in any
increase in the share price over the savings period the group personal pension gpp plan matches
employee contributions up to 6 affording employees the opportunity to build meaningful pension
provisions for the future while strengthening our ability to attract and retain quality employees
communication and consultation
thus encourages communication and employee involvement through its elected employee forum
xchange this forum allows thus to share business information with employees encouraging 
an awareness of the financial and economic factors affecting the company and take account of
employee views and feedback when planning change this employee forum has been integral to 
the integration and consolidation process postacquisition and is important in further facilitating
business development and evolution
equal opportunities
we are committed to ensuring equal opportunities for our employees our policy in respect of
employment of disabled persons is the same as that relating to all other employees in matters of
performance review 
employees environment and community
graduate programme
during 200607 the group introduced a graduate
recruitment programme with four graduates from technical
disciplines joining our business in september 2006  thus group plc annual report 2007 17
training and career development where employees become disabled during the course of their
employment we make every effort to make reasonable adjustments to their working environment 
to enable their continued employment 
safety  health and environment
the commitment and participation of all employees is vital to the efficient and effective implementation
and control of the safety health and environmental management systems in order to meet our
responsibility to protect the environment employees and the business thus continues to focus on
enhancing our existing safe working practices and the production of a robust risk management
strategy that will eliminate operational hazards or minimise the risks incurred by the business 
our performance reflects the success of this approach there has been one reportable threeday
accident this year  the total number of accidents remains very low with a monthly average of 11
this figure has improved on the previous year’s accident rate of 13 
improvements have been introduced to report key health and safety performance indicators to 
the board with both reactive and proactive information being provided this ensures the timely
identification and prioritisation of performance trends 
significant elements of our safety health and environmental management systems’ documentation 
have been revised to ensure that a single set of policies and procedures are adopted a range 
of supporting documents and templates has been produced to assist managers with assessment
planning and monitoring activities
the communication of safety health and environment information to managers and employees 
has been improved with the introduction of the corporate safety health and environmental forum
chaired by the chief operating officer  this addition has complemented existing employee forums
and provides a basis upon which to build upon our high standards 
environmental management 
t o enhance our environmental management systems a set of standards has been produced 
we continue to work on ways to reduce our impact on the environment the main focus being
on energy conservation and the use of renewable resources the reuse and recycling of waste 
electrical equipment a reduction in general waste going to landfill and the effects on the
environment from travel this year we generated 42460 kg of waste electrical equipment 
96 of which was reused or recycled
energy
with a commitment to reducing our impact on the environment in 200607 99 of the electricity
supply points were provided with a source of renewable energy
charitable and political donations
following the share consolidation in march 2006 the fractional share entitlements were sold 
raising net proceeds of approximately £274000 the directors’ aim was to apply these proceeds 
for gifts or donations to a range of worthy causes and a number of initiatives are under way
throughout the uk during the year  the group made the following charitable donations £2500 
to the victim support sunrise appeal £3500 to the scottish outward bound association £2500 
to the chrysalis charitable trust £10000 to emmaus and £15000 to the outward bound
association the group made no donations for political purposes
outward bound trust
the outward bound trust is an educational charity that inspires young people from all walks of life 
to fulfil their potential through challenging outdoor experiences raising selfesteem and preparing
them to face the future with confidence thus provides financial assistance in the form of bursaries
for disadvantaged young people who would not normally have access to or be able to afford an
outward bound course 
emmausfurther community projects
thus has a longestablished relationship with the emmaus foundation and has committed support
for another three years emmaus is a selfhelp and selfsupporting enterprise which offers unemployed
and homeless people opportunities for work companionship and the chance to regain selfrespect
through their own efforts thus continues to support a number of other charitable educational and
worthy causes including support of women’s aid and their domestic abuse campaigns 
university scholarship programmes
thus has committed to sponsor a number of undergraduates at the university of greenwich for 
a threeyear period supporting work placements during this period
accident statistics
0
1
2
3
mar
07
feb
07
jan
07
dec
06
nov
06
oct
06
sep
06
aug
06
jul
06
jun
06
may
06
apr
06
community support
the outward bound trust is an educational charity that
inspires young people from all walks of life to fulfil their
potential through challenging outdoor experiences
supply points provided with renewable energy sources
 
 
2007
2006
2005
2004
2003
2002 0
7
13
81
92
99 18 thus group plc annual report 2007
directors’ report
directors’ policies for managing principal risks
there is a process for identifying evaluating and managing significant risks faced by the business
through “acertus governance” software risk reviews are undertaken regularly by the respective
business areas throughout the year to identify and assess key risks associated with the achievement 
of our business objective this software requires risk owners to regularly monitor and review risks
and associated controls and action plans to evidence the management of principal risks within 
the group 
quarterly reviews are carried out by the risk management group to ensure this is a continuous
process which is embedded in our business culture all aspects of business risk such as strategic
operational commercial financial compliance and business continuity risk are covered by the 
risk assessments the internal audit function provides assurance to the directors on the controls
applied to mitigate key business risks the quarterly reviews are reported to the audit committee 
and the board 
the risks identified and discussed within this section are not an exhaustive list of the risks faced by the
business but are considered by management to be some of the principal risks our aim is to manage
and control identified risk through our established processes but risk cannot be eliminated completely 
the main identified strategic risks are
market structure industry economics and investor confidence
the uk fixed line telecommunication market is characterised by overinvestment in infrastructure 
and networks to supply traditional telecommunication services this has created a challenging and
competitive landscape in which price competition for traditional fixed line telecommunication services
has been intense making it difficult for any individual provider to gain scale and deliver meaningful
returns while the current market structure has had a negative impact on investor confidence in the
sector  thus has a limited ability to control this risk directly instead our focus on creating value for
customers through early investment in a nextgeneration network and service portfolio has
positioned us to deliver growth in a challenging market
regulation
the group operates in a highly regulated environment although the focus of much of the regulation
is on companies with “significant market power”  such as bt plc ofcom holds powers to set 
and amend regulations for the industry and to impose sanctions including financial penalties 
as in all other eu member states it is no longer necessary to hold a licence in order to provide
communications services instead ofcom has laid down a number of “general conditions of
entitlement” which apply to all companies providing publicly available electronic communications
services our business operates within this regulatory environment and we actively work with the
regulator  contributing to various industry and government forums and debates in order to influence
regulatory outcomes 
bt’ s nextgeneration network
bt is consulting on access and interconnect arrangements between itself and other operators in
relation to its “21st century network” programme the migration of existing multiple servicespecific
networks to a single converged nextgeneration network as bt is by far the largest fixed line
operator in the uk this move impacts all other operators we are actively involved in various
working groups on this topic such as the consult21 steering board and the ofcom body ngnuk
we anticipate that many of the new interconnection products will be designated by ofcom as having
“significant market power” and therefore be subject to regulation 
risks include the prevailing uncertainty around the points of interconnect to bt’ s network uncertainty
regarding the access to be provided and the possible disruption to our operations over the last 
year  progress on these matters has been slower than desired
notably however  we already have our own nextgeneration network in place having invested 
in network and service capability to evolve our services and so maximise the opportunities from 
this development
principal risks and uncertainties thus group plc annual report 2007 19
bt openreach 
in january 2006 bt openreach was launched to promote equality of access to broadband and
wholesale products by enforcing a degree of separation between openreach and the core bt
business this major change within bt together with bt’ s 21st century network activity has had 
a significant effect on other operators most notably openreach has continuously failed to deliver
services correctly during first attempts and has been unable to repair faults on time this has on
occasion impacted service delivery to our customers the office of the t elecoms adjudicator is now
involved in ensuring that openreach service improvement plans are implemented to the benefit of
the industry however  until the service received from openreach improves there is a risk that the
service to endusers may be affected we are continuing to lobby ofcom and engage in industry
forums in order to mitigate this risk 
integration of acquired companies
in february and march 2006 thus acquired y our communications group ltd and legend
communications plc a director of integration was appointed to deliver a detailed crossfunctional
programme within the existing risk governance framework during the year  integration has
proceeded according to plan and in some areas has progressed ahead of plan with synergy
benefits now higher than originally anticipated several workstreams were established to ensure 
all resources are accounted for within the integration plans whilst most of the workstreams have
been successfully completed activity will continue into the next financial year and regular reporting
to the thus management board will continue to ensure that remaining integration risks are identified
and managed
the main identified commercial risk is
delivering growth
there is always an element of risk associated with growing a business within a market undergoing
profound change sales management monitors the effectiveness of leads into our sales pipeline 
and corresponding conversion rates the forecast level of sales and other factors required to achieve
targets are also examined regularly regular reporting within the group identifies levels of margin 
at risk in order that appropriate action can be taken 
the main identified operational risks are
maintaining access to the network
maintenance of network integrity quality and availability is a significant operational risk due to the
potential effects on customer satisfaction and service levels for this reason business continuity is of
major importance to thus and our customers our formalised policies and operating plans have
resulted in operating statistics showing that platform availability in 200607 has been consistently
better than our target of 9995 across all platforms
managing health and safety
health and safety risks are also continually assessed by the group’ s safety health and environment
team and developments are reported directly to the board
the main identified people risk is
recruiting retaining and training employees
recruiting and retaining appropriate employees can also impact business performance the human
resources department implements policy and procedures in this respect including familyfriendly
policies employee benefit initiatives and salary benchmarking
we must also ensure that our employees receive appropriate training to safeguard excellent service
and delivery to our customers we provide our employees with a mixture of inhouse and outsourced
training including the use of online facilities training requirements are identified through regular
appraisals carried out by line managers and our training processes are assessed as part of our
investors in people accreditation
the main identified financial risk is
bank covenants
thus has an outstanding bank loan of £53m the loan is used for general corporate purposes
including working capital requirements our bank debt is subject to two standard ebitdarelated
covenants while headroom in reporting against these covenants is considered more than adequate
the risk is closely monitored and reported on to ensure that any risk of breach is mitigated 20 thus group plc annual report 2007
directors’ report
accounting estimates and judgements
critical accounting judgements in applying the group’ s accounting policies and key sources 
of estimation uncertainty
the preparation of financial statements in conformity with ifrs as adopted by the eu requires the
use of accounting estimates and assumptions it also requires the directors to exercise their judgement
in the process of applying the group’ s accounting policies estimates assumptions and judgements
are continually evaluated based on available information and experience as the use of estimates 
is inherent in financial reporting actual results could differ from these estimates the areas involving
a higher degree of judgement or complexity which have a significant risk of causing material
adjustments to the carrying amounts of assets and liabilities are described below
revenue
the group earns revenue from a number of different products and services some of which are
delivered under bespoke contracts in applying the group’ s accounting policies in respect of revenue
recognition a significant degree of judgement and estimation may be required in interpreting
contracts and estimating values to be used in calculating revenue and associated costs 
in each accounting period
interconnect income and payments to other telecommunications operators
in certain instances thus relies on other operators to measure the traffic flows interconnecting with
our networks estimates are used in these cases to determine the amount of income receivable from
or payments we need to make to these other operators the prices at which these services are
charged are often regulated and are subject to retrospective adjustment and estimates are used 
in assessing the likely effect of these adjustments
providing for doubtful debts
thus provides services to substantially all customers on credit terms certain debts will not be 
paid through the default of a small number of customers estimates based on our historical
experience are used in determining the level of debts that will not in the opinion of the directors 
be collected these estimates include such factors as the current state of the uk economy and
particular industry issues
useful lives for property plant and equipment
the plant and equipment in thus’ networks is longlived with cables and switching equipment
operating for over ten years and underground ducts being used for decades the annual
depreciation charge is sensitive to the estimated service lives allocated to each type of asset 
asset lives are assessed annually and changed when necessary to reflect current thinking on 
their remaining lives in light of technological change prospective economic utilisation and 
physical condition of the assets concerned 
fair values
estimating the fair value of assets and liabilities acquired on acquisition requires judgement 
fair values have been computed as follows
t angible fixed assets have been valued at their direct replacement cost less an economic
obsolescence factor  in addition this valuation has been crosschecked against projected cash 
flows from cash generating units
intangible fixed assets for customer relationships have been valued using a residual earnings
approach which involves deducting contributory asset charges from discounted cash flow
projections to leave a value attributable to customers
cash flow projections are based on assessments of future activities and market conditions and actual
activities and market conditions may differ from those forecast resulting in actual cash flows being
different from those projected t angible and intangible asset valuations are subjective to the extent
actual cash flows differ from projected cash flows
the fair value of working capital amounts is based upon estimated anticipated recoverable amounts
other financial issues thus group plc annual report 2007 21
asset impairment
goodwill is tested annually for impairment in addition impairment tests are performed on 
an annual basis where there is an indication that impairment may exist in performing these
impairment tests management’s judgement is required in preparing future cash flow projections
and then assessing an appropriate discount rate to be applied to these cash flows
the cost of capital used to discount pretax cash flows can have a significant effect on the calculation
of the recoverable amount the cost of capital which is expressed as a percentage is derived from the
group’ s posttax weighted average cost of capital
future cash flows are based on cash flow projections for ten years extrapolated in perpetuity using 
a nominal longterm growth rate with cash flows in the first five years based on approved forecasts
as future cash flows may deviate to some degree from forecasts the results of the impairment 
review are sensitive to such changes further details are contained within note 1 to the financial
statements – “impairment” 
property arrangements
as part of the property rationalisation programme we identified a number of surplus properties 
and in the past 12 months have been successful in disposing of some of those properties efforts
continue to be made to sublet the remaining sites however it is recognised that this may not be
possible immediately in the current economic environment estimates have been made of the cost of
vacant possessions and any shortfall arising from the sublease rental income being lower than the
lease costs being borne by thus any such cost or shortfall has been recognised as a provision
deferred tax
in accordance with ias 12 “income t axes” an income tax credit of £696m was reported for
continuing operations in the income statement in 2007 which resulted in a deferred tax asset 
of £606m as at 31 march 2007 management judgement is required in determining the amounts 
to be recognised in particular  judgement is used when assessing the extent to which deferred 
tax assets should be recognised with consideration given to the timing and level of future taxable
income the recognition of the deferred tax asset on the balance sheet at the year end reflects
increased momentum in the operating performance of the business and the delivery of the majority
of the integration programme relating to last year’s acquisitions further details are contained within
notes 12 and 25 to the financial statements
postretirement benefits
the group’ s defined benefit pension scheme is assessed annually in accordance with ias 19 
the accounting valuation which was based on assumptions determined with independent actuarial
advice resulted in a deficit of £79m being recognised on the balance sheet at 31 march 2006 
an independent actuarial valuation of the defined benefit pension scheme funding was completed 
in the current financial year  as a result the directors agreed with the trustees of the defined 
benefit pension scheme to make a oneoff contribution of £75m to eliminate the deficit the size 
of any surplus or deficit is sensitive to the market value of the assets held by the scheme and to
actuarial assumptions which include price inflation pension and salary increases the discount 
rate used in assessing actuarial liabilities mortality and other demographic assumptions and the
levels of contributions with reference to the discount rate used ifrs as adopted by the eu requires
this to relate to highquality bond yields
the defined benefit pension scheme possessed assets of £754m and liabilities of £746m resulting
in a surplus of £08m at 31 march 2007 the defined benefit pension scheme sensitivities table
highlights the impact that changes in longevity assumptions and discount rates may have on the
reported surplus further details are included in note 29 to the financial statements
defined benefit pension scheme
sensitivities
£m
– 1 year change in longevity assumptions 20
– 01 change in discount rate 19
source company’ s independent pension advisors 22 thus group plc annual report 2007
other financial issues directors’ report
treasury policies and objectives
thus’ treasury policy aims to minimise the use of complex financial instruments and manage cash 
to meet the needs of a tightly managed trading company and conservative balance sheet within this
framework specific consideration is given to managing financial risks arising from limited foreign
currency exposure with supplier payments in us dollars and euros and exposure to changes in
interest rates on our banking loan with respect to the loan hedging in the form of a “cap” and
“floor” is in place this operates to restrict the libor rates that thus is exposed to and libor is
capped at 475 for £20m
tight control exists over treasury activities with any nonstandard instruments requiring approval
from the chief financial officer or board depending on their nature 
thus has no offbalance sheet financing or special purpose vehicles and treasury activities are not
run as a profit centre 
the two acquisitions made last year significantly increased the number of bank accounts operated by
the group banking arrangements were rationalised this year to ensure we maintained a simple and
transparent treasury structure 
creditor payment policy and practice
the group’ s current policy 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 2007 were 26 days 
the company did not have any trade creditors at 31 march 2007
tax 
corporation tax was only payable from trading activities in the netherlands as uk trading losses
negate the payment of corporation tax in the uk the board completed the sale of the dutch business
in june 2006 and in addition to the corporation tax payable remitted £95m of tax to the dutch tax
authorities relating to the gain on sale
an income tax credit of £696m was reported for continuing operations in the income 
statement in 2007 which resulted in a deferred tax asset of £606m at 31 march 2007 
further details are contained under “deferred tax” on page 21 and within notes 12 and 25
to the financial statements thus group plc annual report 2007 23
audit committee
rick medlock chairman 
appointed 20 november 2006
ian chippendale 
resigned 20 november 2006 as chairman 
of the audit committee
jo connell
michael de karesilver 
resigned 8 september 2006
remuneration committee
ian chippendale chairman 
appointed 20 november 2006 as chairman
of the remuneration committee
michael de karesilver
resigned 8 september 2006 as chairman of
the remuneration committee and as a member
of the committee
jo connell
rick medlock 
appointed 20 november 2006
nomination committee
philip rogerson chairman
ian chippendale
william allan
jo connell
michael de karesilver 
resigned 8 september 2006
rick medlock 
appointed 20 november 2006
senior independent 
nonexecutive director
ian chippendale
directors’ report board of directors
nonexecutive directors
philip rogerson 62 was appointed chairman
of thus on 1 september 2004 mr rogerson is
also chairman of aggreko plc carillion plc and
northgate plc and a nonexecutive director of
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 58 was appointed as a 
nonexecutive director of thus in october
1999 mr chippendale was chairman of 
rbs insurance until december 2006 having
previously been chief executive of direct line
group limited 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
he is also a nonexecutive director of
homeserve plc and transatlantic holdings inc
jo connell 59 joined the board of thus as 
a nonexecutive 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 uk plc and is a governor
of the university of hertfordshire
rick medlock 46 was appointed as a non
executive director of thus on 7 november
2006 he is chief financial officer of inmarsat
plc the mobile satellite services company
providing voice and data communications 
to industrial government military and aid
organisations worldwide prior to joining the
board of inmarsat in september 2004 he
served as chief financial officer and company
secretary of nds group plc for eight years 
mr medlock previously served as chief
financial officer of several private equity
backed technology companies in the uk and the
usa he is a fellow of the institute of chartered
accountants of england and wales
martin beesley 40 was appointed as a non
executive director of thus on 22 november
2006 reflecting the terms of the relationship
agreement between thus and its largest
shareholder  united utilities plc he has been
finance director of united utilities water plc
and united utilities electricity plc since october
2004 having previously been group financial
controller of the united utilities group he
trained and qualified as a chartered
accountant with kpmg
executive directors
william allan 53 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 40 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 41 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 secondlargest
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 
philip rogerson
jo connell
martin beesley
ian chippendale
rick medlock
william allan
philip male john maguire 24 thus group plc annual report 2007
directors’ report other information
names and details of directors
the names and details of the directors of the company who served during the year are shown on
page 23 michael de karesilver and simon batey also served as directors during the year  each
resigning as a director with effect from 8 september 2006
directors’ interests
details of the directors’ service contracts letters of appointment and remuneration are set out 
in the directors’ remuneration report on pages 29 to 33 other than as disclosed therein or in 
the corporate governance report on page 25 in relation to martin beesley or in note 33 to the
financial statements on pages 63 and 64 in relation to related party transactions 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 29 to 33
indemnification arrangements for directors and officers
article 158 of the company’ s articles of association grants subject to the provisions of the
companies acts an indemnity to any director or other officer of the company against any liability
incurred by him in defending any proceedings relating to the affairs of the company in which
judgment is given in his favour 
in addition the company may purchase and maintain for any director or other officer or auditor 
insurance against any liability incurred in the execution of his duties and the company does maintain
appropriate insurance cover against legal action brought against its directors and officers and the
directors and officers of its subsidiaries 
auditors
a resolution to reappoint kpmg audit plc as auditors to the company and to authorise the directors
to fix their remuneration will be put to the shareholders at the annual general meeting
statement as to disclosure of information to auditors
the directors who held office at the date of the approved directors’ report confirm that so far as 
they are each aware there is no relevant audit information of which the company’ s auditors are
unaware and each director has taken all the steps that he or she ought to have taken as a director to
make himself or herself aware of any relevant audit information and to establish that the company’ s
auditors are aware of that information
annual general meeting
the annual general meeting will be held at the plaisterers’ hall one london wall london
ec2y 5ju on wednesday 25 july 2007 at 1100 am details of the resolutions to be proposed 
at the annual general meeting are contained in the notice of the annual general meeting on 
pages 66 and 67
this directors’ report on pages 8 to 24 was approved by the board of directors on 18 may 2007
and was signed on its behalf by
david macleod
secretary
18 may 2007 thus group plc annual report 2007 25
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
requirements of the combined code in respect of the financial year ended 31 march
2007 except that i the composition of the nomination committee was not fully
compliant with the combined code recommendation provision a41 that a
majority of its members be independent nonexecutive directors during the brief
period following the resignation of michael de karesilver as an independent non
executive director and member of the committee on 8 september 2006 until the
appointment to the committee of rick medlock an independent nonexecutive
director  on 20 november 2006 during which period no meetings of the committee
were held and ii the senior independent nonexecutive director has not during the
year attended in accordance with the combined code provision d11 meetings
with a range of major shareholders of the group as explained in the section headed
“relations with shareholders” on page 27
board of directors
the separation of the roles of the nonexecutive 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 daytoday 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 during the year  the board comprised a non
executive chairman three executive directors and four nonexecutive directors
until the resignation of michael de karesilver as an independent nonexecutive
director on 8 september 2006 and the resignation of simon batey as a non
independent nonexecutive director with effect from the same date rick medlock
was then appointed as an independent nonexecutive director on 7 november
2006 following the appointment on 22 november 2006 of martin beesley as a non
independent nonexecutive director  nominated by united utilities plc under the
terms of the relationship agreement between the company and united utilities as 
a consequence of the acquisition of y our communications by the company from
united utilities whereby united utilities became the major shareholder of the
company the board then comprised four nonexecutive directors three of whom
were considered to be independent by the board in addition to the chairman and
the three executive directors
the nonexecutive directors are from varied business and other backgrounds
biographies of all the directors are set out on page 23 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 company’ s professional advisors and other
recognised bodies
the nonexecutive directors except martin beesley 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 nonexecutive directors have held office throughout the year  with the
exception of michael de karesilver and simon batey both of whom resigned from
the board on 8 september 2006 and rick medlock and martin beesley who were
appointed to the board on 7 and 22 november 2006 respectively executive
directors normally retire at age 63 in terms of their service contracts nonexecutive
directors are appointed for a specified term of three years which may be renewed
the group maintains liability insurance for its directors and officers
ian chippendale has been identified as the senior independent nonexecutive
director who is available to shareholders for concerns not resolved through the
existing mechanisms for investor communication
directors must stand for election by the shareholders at the first agm following their
appointment all directors also retire by rotation such that approximately onethird 
of the board retires and seeks reelection each year  each director must retire and
seek reelection at least every three years at the forthcoming agm to be held on 
25 july 2007 rick medlock and martin beesley offer themselves for election and
william allan and ian chippendale will retire as directors and offer themselves for
reelection to the board following evaluation of the performance of each of those
directors it is confirmed that each individual performs 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 29 to 33
control of the group is through the board of directors the board’ s main roles 
are to promote the success of the company for the benefit of its members 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 met ten times during the year 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 longterm
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 company’ 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  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 nonexecutive directors at an
annual meeting led by the senior independent director  taking account of the views
of the executive directors
corporate governance report 26 thus group plc annual report 2007
corporate governance report
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 nomination remuneration
board committee committee committee
number of meetings 
during the year 10 5 1 3
current directors
philip rogerson 10 1
william allan 10 1
ian chippendale 10 5 1 3
jo connell 9413
philip male 10
john maguire 10
rick medlock
1
4111
martin beesley
2
2
former directors
michael de karesilver
3
5302
simon batey
4
2
1
appointed to the board on 7 november 2006 and to the audit committee remuneration committee 
and nomination committee on 20 november 2006
2
appointed to the board on 22 november 2006
3
resigned from the board audit committee remuneration committee and nomination committee on 
8 september 2006
4
resigned from the board on 8 september 2006
the chairman the chief executive the chief financial officer and the chief
operating officer 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 
audit committee
the audit committee comprised three independent nonexecutive directors except
during the brief twomonth period between the resignation on 8 september 2006 of
michael de karesilver and the appointment of rick medlock to the committee on 20
november 2006 and is chaired by rick medlock who succeeded ian chippendale as
the committee’ s chairman with effect from 20 november 2006 the committee has
written terms of reference and met five times in the year to review the annual and
interim accounts review the appropriateness of accounting policies review internal
controls and financial reporting and made recommendations 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 policy 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 nonaudit 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 
nonaudit services performed during the year and the fees for those services are
contained in note 5 to the financial statements on page 47 the committee in
respect of 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 a resolution to reappoint
the external auditors and to authorise the directors to fix their remuneration will be
proposed at the agm on 25 july 2007
in respect of 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 
employees 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 
rick medlock has recent and relevant financial experience the committee’ s terms 
of reference are displayed on the company’ s website at wwwthusnet
nomination committee
the nomination committee is chaired by the group’ s nonexecutive chairman and
comprises the chief executive the senior independent nonexecutive director  and
except for the brief twomonth period between the resignation of michael de kare
silver and the appointment to the committee of rick medlock comprises two other
independent nonexecutive directors it has written terms of reference and its remit 
is to consider and make recommendations to the board on the appointment and 
reelection 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 shortlist 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 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 company’ s website at wwwthusnet
remuneration committee
the remuneration committee comprised exclusively three independent non
executive directors except during the brief twomonth period between the resignation
on 8 september 2006 of michael de karesilver and the appointment of rick
medlock to the committee on 20 november 2006 during which period there were 
no meetings of the committee the committee meets regularly and was chaired by
michael de karesilver until his resignation and with effect from 20 november 2006
has been chaired by ian chippendale its 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 nonexecutive chairman the executive directors and the company
secretary 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 29 to 33
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 company’ s website at wwwthusnet thus group plc annual report 2007 27
relations with shareholders
as at 31 march 2007 the company had 18303 million shares in issue
approximately 90 of which were held by institutions and corporate shareholders
with the remainder being held by private individuals the company had been
notified of the following interests representing 3 or more of the issued share 
capital and voting rights of the company as at 18 may 2007
number percentage of issued share
of shares capital and voting rights
united utilities plc 41427986 2263
columbia ventures corporation 16000000 874
amber capital investment management 15589565 852
legal and general investment 
management limited 6174261 337
t alpa beheer bv 5530000 302
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 through webcast
or telephone conference following results the executive directors undertake a series
of formal presentations to existing and potential investors in london edinburgh
glasgow and in september 2006 also in the usa 
t o develop an understanding of the views of major shareholders the board receives
regularly 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 after the group’ s results announcements and presentations
are regularly reported to the board the nonexecutive directors are also invited to
attend presentations of the group’ s results 
the senior independent nonexecutive 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 it is believed that the approach described in this section provides an efficient
method of maintaining contact with shareholders and to date the group has seen no
evidence of demand from shareholders for such meetings the situation will be kept
under review in the year ahead
the agm 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 meeting 
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 combined code a review on an annual basis of the effectiveness
of the system of internal control is carried out by the board this review includes
material financial operational and compliance controls and risk management the
t urnbull report internal control revised guidance for directors on the combined
code published in october 2005 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 risk
management charter  which is communicated to the business
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 revised combined code provisions including those of the t urnbull
report on internal control in the course of the financial year ended 31 march 2007
in 200506 this statement was not extended to the two businesses acquired in
february and march 2006 y our communications group ltd and legend
communications plc as the business was in the very early stages of integration
throughout this financial year  a comprehensive integration programme has been
implemented within the existing risk governance and reporting framework enabling
the statement to apply to the entire thus group 
control environment
the group is committed to ensuring that a suitable control environment exists which
will not hinder its aim to be the preeminent alternative telecommunications provider
for business customers in the uk
the group has a defined organisational structure and any changes are communicated
throughout the business individual objectives and authority levels are identified and
reviewed on an ongoing basis reporting models are utilised to ensure that issues are
escalated appropriately 
each of the executive directors has responsibility for specific aspects of the group’ s
business the management board is chaired by the chief executive and is the
principal forum at senior management level in the group which supports decision
making by the chief executive and the executive directors within the authorities
delegated to them by the board of thus group plc the management board focuses
on business plan implementation competitive positioning and customer requirements
and meets on a monthly basis in advance of the thus group plc main board 
the management board receives reports on corporate performance from various
management groups which meet regularly the implementation of the year’ s annual
budget remains its focus
the earnings update committee meets regularly and reviews detailed margin data
from group level down to individual product lines the committee consists of various
operational and financial business representatives including product sales and
finance during committee meetings a number of presentations are given by product
managers to the business directors on actual and forecasted margins in addition 
a detailed operating cost forecast is also produced allowing subsequent production of
an updated group ebitda forecast the committee meetings end with a review by
the executive directors of the aggregated group position the chief financial officer
also carries out a detailed monthly review of the financial results
the chief operating officer chairs business operations which manages the dayto
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 are tracked by capital planning and programme management which is
chaired by the support services director 
codes of conduct are also published within the business to ensure that employees are
educated in expected standards of behaviour  these include probity whistleblowing
and disciplinary policies 
identification and assessment of business risk and evaluation of controls
there is an ongoing process for identifying evaluating and managing the significant
risks faced by the business this process has been in place for the year under review
and up to the date of approval of the annual report the process is regularly
reviewed by the board via the audit committee and is guided by the content of the
t urnbull report 
risk assessments are completed on 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 
risk reviews are also undertaken regularly by the respective business areas
throughout the year  to identify and assess the key business risks associated with 
the achievement of strategic objectives the reviews are supported by governance
software which enables and requires risk owners to regularly monitor and review
risks within the group the reviews include consideration of the nature and extent 
of risks facing the group the likelihood of risks materialising and review of controls
and action plans associated with the risks  28 thus group plc annual report 2007
corporate governance report
revenue assurance software continues to be employed by the group and is designed
to assure revenue streams and reduce the potential for fraud during the year  the
software has been further integrated into risk management processes with activity
expanding to cover additional revenue streams
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 and of significant risks across the business resulting
from the reviews of the risks of the group is presented to the audit committee on a
quarterly basis control failings or weaknesses assessed as significant are included
within these quarterly reviews by the audit committee including discussion on
actions taken by the business to address them this ensures that necessary actions
have been or are being taken to remedy any significant control failings or weaknesses
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
the group’ s safety health and environment team manages develops and audits the
group health and safety management system the company applies the standards
set out in the health  safety executive publication hsg65 “successful health 
safety management”  to ensure that health and safety risks are 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 financial statements on pages
35 to 64 
statement of directors’ responsibilities in respect of the 
annual report and financial statements
the directors are responsible for preparing the annual report and the group 
and parent company financial statements in accordance with applicable law 
and regulations
company law requires the directors to prepare group and parent company
financial statements for each financial year  under that law they are required to
prepare the group financial statements in accordance with ifrss as adopted by the
eu and applicable law and have elected to prepare the parent company financial
statements on the same basis 
the group and parent company financial statements are required by law and ifrss
as adopted by the eu to present fairly the financial position of the group and the
parent company and the performance for that period the companies act 1985
provides in relation to such financial statements that references in the relevant part 
of that act to financial statements giving a true and fair view  are references to their
achieving a fair presentation
in preparing each of the group and parent company financial statements the
directors are required to
• select suitable accounting policies and then apply them consistently
• make judgments and estimates that are reasonable and prudent
• state whether they have been prepared in accordance with ifrss as adopted 
by the eu and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the group and the parent company will continue 
in business
the directors are responsible for keeping proper accounting records that disclose
with reasonable accuracy at any time the financial position of the parent company
and group and enable them to ensure that its financial statements 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
under applicable law and regulations the directors are also responsible for
preparing a directors’ report directors’ remuneration report and corporate
governance statement that comply with that law and those regulations 
the directors are responsible for the maintenance and integrity of the corporate 
and financial information included on the company’ s website legislation in the uk
governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions thus group plc annual report 2007 29
remuneration committee
constitution membership and advisors
at the date of this report the remuneration committee comprises the following
independent nonexecutive directors ian chippendale chairman and jo connell
who each served throughout the year and from 20 november 2006 rick medlock
michael de karesilver the former chairman of the committee retired from the
committee on 8 september 2006 being the date on which he ceased to be a non
executive director of the company 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 committee meetings 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 wwwthusnet 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 wwwthusnet 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 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 both individual
performance and external market information prepared by its advisors from a
number of comparable companies both within and outside the telecommunications
sector  the aim is to set salaries which are generally around the midmarket level
salaries will be above midmarket where individual performance and skills justify it
• the committee remains strongly committed to ensuring there is an appropriate
balance between fixed and performance pay it also seeks to ensure alignment with
shareholders’ interests a significant proportion of executive directors’
remuneration is performancerelated through annual bonus and longterm
incentives as set out below
• 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 arrangements described below are likely to continue to apply in future years
unless there are specific reasons for change the committee will continue to regularly
review arrangements to ensure that they remain effective and appropriate to the
company’ s circumstances and prospects and to monitor the level of potential awards
the remuneration package
basic salary
during the past year  there were no base salary increases for executive directors and
base salaries continued to be as follows william allan £420000 john maguire
£300000 philip male £300000 the committee have considered salaries in
relation to market data and have agreed an increase of 36 to base salaries with
effect from 1 april 2007
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
• executive directors should be measured exclusively by reference to corporate
performance 
the achievement of predetermined targets determines the levels of payout under 
the plan for the year ended 31 march 2007 there were three distinct financial
measures which were weighted as follows
• 25 is determined by reference to cash flow after interest and capital expenditure
• 50 of the bonus is determined by reference to ebitda earnings before interest
tax depreciation and amortisation performance
• 25 is determined by reference to revenue
based on the company’ s performance for 2007 the plan made a payment of 881
of maximum entitlement
the bonus plan operates for the year ending 31 march 2008 against the same
financial measures and weightings
directors’ remuneration report 30 thus group plc annual report 2007
directors’ remuneration report
longterm incentives
performance shares
the company operates the thus group performance share plan under which an
award of shares can be granted at the discretion of the committee to executive
directors and selected senior executives grants made during a year will only 
become exercisable after three years if demanding performance targets set by the
committee are met 
the two performance criteria which apply to the vesting of performance share
awards are group ebitda in respect of 50 of an award and group ebit return 
on capital employed with respect to the remaining 50 performance is measured
against targets set with reference to internal forecasts and the extent to which they are
satisfied are confirmed by the committee calculations are performed internally on
the same basis as reported in the annual accounts
the two performance criteria are recognised both internally and by analysts as key
measures of the success of the fixed line telecommunications business model and the
drivers of shareholder value and as such are recognised by the participants and we
believe following the support of shareholders in 2006 by shareholders as being
directly linked to the success of the business 
no awards were made under the performance share plan during 200607
however  the committee will consider granting awards during 200708
matching shares
following shareholder approval at the 2006 agm the coinvestment plan was
introduced under this plan executive directors are allowed to invest up to a
maximum of 25 of their base salary in company shares the offer is typically 
made to them each year shortly after bonuses are declared this means that executive
directors can use their net bonus to acquire shares at market price although there is
no direct link to the bonus paid provided that the executive director continues to hold
these shares for three years the company makes an award of matching shares 
the minimum level of match is two shares for every four the individual acquires 
the level of match can increase up to a maximum of six shares for every four shares
the individual acquires dependent on performance against the same performance
targets that apply for awards under the performance share plan participation in the
plan has been extended to selected senior executives
share options
the company has no current intention to make further grants to existing executive
directors under the thus group plc discretionary share option scheme
outstanding options and the performance criteria that apply to them are set out 
in the table and accompanying notes on pages 32 and 33
during the year ended 31 march 2007 no grants were made to the executive
directors under the share option scheme 
the rules of the various longterm incentive plans provide that the aggregate of all
sharebased awards does not exceed the guidelines laid down by the association 
of british insurers that recommend i that the number of awards granted in respect 
of all sharebased schemes should not exceed 10 of the current issued share capital
in any rolling tenyear period and ii that the number of awards granted in respect
of discretionary schemes should not exceed 5 of the current issued share capital 
in the same period
pension and other benefits
following the introduction of the new uk legislation regarding the taxation of
pensions executive directors with defined benefit pension provision were offered 
the choice of retaining their current pension plan membership or opting out of their
current arrangements and to receive instead a salary supplement paid monthly in
lieu of pension provision calculated on an individual basis to reflect the circumstances
of the executive director  these choices were framed within the general principles 
that the cost of pension provision should not increase and that thus should not
compensate executive directors for changes in the tax regime currently no executive
directors have withdrawn from the pension scheme 
the pension arrangements for the executive directors who participate in the thus
final salary scheme are the same as for all other employees who are members of the
scheme the scheme is a contributory definedbenefit arrangement that provides
pension benefits up to the maximum permitted by h m revenue  customs subject 
to an overall maximum limit of 160th of final pensionable salary for each year of
pensionable service normal retirement age under the scheme is 60 although 
the contractual retirement date for the executive directors in terms of their service
contracts is 63 and final pensionable salary is defined as the highest pensionable
salary averaged over any 12month period in the last five years of membership or
the highest threeyear average in the last ten years if higher  pensionable salary is
defined as basic salary only
in order to help ensure that a final salary pension scheme will continue to be 
available to existing scheme members the company has made some changes with
the agreement of the scheme trustees that took effect in april 2007 for all affected
employees including executive directors firstly pension accrual after this time 
will be based on 175th of final pensionable salary for each year of pensionable
service secondly normal retirement age for benefits accrued from 1 april 2007
will be age 65
in line with market practice a cash supplement is provided for executive directors 
who continue to participate in thus’ pension arrangements
executive directors are eligible for a range of benefits the value of which is contained
within the directors’ emoluments table on page 31 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
the dates terms and notice periods of the service contracts for executive directors are
as follows
date of initial
commencement appointment normal
date of current with thus plc retirement
term of office if applicable notice period date
william allan 010404 221099 12 months 290416
john maguire 010404 181200 12 months 070728
philip male 010404 221099 12 months 130929
share ownership guidelines
formal guidelines provide that executive directors should retain at least 25 of the
aftertax 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 reviews 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  thus group plc annual report 2007 31
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 allshare 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
chairman and nonexecutive directors
the appointment of the chairman and nonexecutive directors is subject to the
articles of association of the company in particular the usual provisions relating to
reelection by shareholders the chairman and nonexecutive directors have letters
of appointment which are available at wwwthusnet 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 except martin beesley who was
appointed for a term of one year  subject to renewal in terms of the relationship
agreement between the company and united utilities plc 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
philip rogerson chairman 010904 310807
ian chippendale 110102 151099 141008
jo connell 110102 010101 311207
michael de karesilver 
resigned from board 110102 220900 080906
simon batey resigned from board 260206 080906 
rick medlock 071106 061109
martin beesley 221106 211107 
the remuneration of the chairman is determined by the remuneration committee
the fees of the nonexecutive directors are determined by the board full details of
the remuneration of the directors are contained in the directors’ emoluments table
below with effect from 1 april 2007  the chairman’ s fees were increased to 
£95000 per annum and the fees of the nonexecutive directors were increased to
£33000 per annum with an additional fee of £5000 per annum payable to the
chairman of the audit committee an additional fee of £2500 per annum payable 
to the chairman of the remuneration committee and an additional fee of £2500 
per annum payable to the senior independent nonexecutive director  the chairman
and nonexecutive 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
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 2007 the information and
explanatory notes on pages 31 directors’ emoluments table to 33 directors’ interests in ordinary sharesentitlements to shares has been audited by the company’ s auditors
in line with the relevant legislation
compensation
basic benefits supplementary for loss total total 
salaryfees bonuses in kind allowances of office 2007 2006
£££ ££ £ £ 
executive directors
william allan 420000 370020 22337 74340 – 886697 610504
john maguire 300000 224655 17660 35400 – 577715 406299
philip male 300000 224655 20093 35400 – 580148 407328
nonexecutive directors fees and expenses
philip rogerson 80000–––– 80000 80000
ian chippendale 30000–––– 30000 30000
jo connell 30000–––– 30000 30000
michael de karesilver resigned 080906 13167–––– 13167 30000
simon batey resigned 080906 ––––– – –
rick medlock 12000–––– 12000 –
martin beesley ––––– – –
margaret ford resigned 141205 ––––– – 21129
total 1185167 819330 60090 145140 – 2209727 1615260
i benefits in kind include car allowance in lieu of company car  health care life assurance critical illness insurance and permanent health insurance
ii the supplementary allowance paid to the executive directors is in lieu of either formal pension provision or pensions benefits above a notional inland revenue earnings cap as appropriate
iii aggregate emoluments in respect of qualifying services amounted to £2209727 2006 £1615260
the emoluments of the highest paid director william allan including gains on the exercise of entitlements to shares and share options but excluding pension contributions
are £918518 2006 £610504 pension contributions made by the company under approved pension arrangements for william allan amounted to £16833
2006 £16533
40
60
80
100
120
140
160
180
200
220
240
mar
2007
mar
2006
mar
2005
mar
2004
mar
2003
mar
2002
historical tsr performance
source datastream
growth in the value of a hypothetical £100 holding over five years
ftse allshare telecommunications index comparison based on spot values
 thus group
 ftse allshare telecommunications index 32 thus group plc annual report 2007
directors’ remuneration report
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 2007 are shown below 
increase
increase in increase in transfer value transfer value transfer value decrease 
accrued accrued benefits accrued benefits of a less of accrued of accrued in transfer value
benefits at excluding including directors’ benefits at benefits at less directors’
31 march 2007 inflation a inflation contributions 31 march 2006 31 march 2007 contributions
defined benefit pension scheme as at 31 march 2007 £££££££
william allan 39496 12547 13683 165740 341056 545744 199258
john maguire 26199 6906 7719 44066 122025 187769 60314
philip male 29065 6507 7458 38345 133926 195533 56177
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 in respect of pensionable service before 1 august 2002
iii the increase in accrued pension during the year allows for an increase in inflation of rpi as measured at 44
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 
directors’ interests in shares and share options 
market
exercise price at date date
at at 31 date date price of exercise from which
executive director 1 april 2006 granted exercised lapsed march 2007 granted exercised £ £ exercisable expiry date
thus plc discretionary executive share option scheme – see note 1
william allan 156923 156923 – mar 02 – 162 mar 05 mar 09
135449 135449 may 04 – 258 may 07 may 11
john maguire 66667 3333 63334 dec 00 – 720 dec 03 dec 07
110769 110769 – mar 02 – 162 mar 05 mar 09
96749 96749 may 04 – 258 may 07 may 11
philip male 123077 123077 – mar 02 – 162 mar 05 mar 09
96749 96749 may 04 – 258 may 07 may 11
thus group performance share plan – see note 2
william allan 187500 50625 136875 – feb 03 6906 £1 total 122 feb 06 feb 06
consideration
135449 135449 may 04 £1 total – may 07 may 07
consideration
john maguire 143750 38813 104937 – feb 03 6906 £1 total 122 feb 06 feb 06
consideration
96749 96749 may 04 £1 total – may 07 may 07
consideration
philip male 143750 38813 104937 – feb 03 6906 £1 total 122 feb 06 feb 06
consideration
96749 96749 may 04 £1 total – may 07 may 07
consideration
thus group plc coinvestment plan – see note 3
william allan 118380 118380 sep 06 nil sep 09 sep 09
consideration
john maguire 53232 53232 sep 06 nil sep 09 sep 09
consideration
philip male 84468 84468 sep 06 nil sep 09 sep 09
consideration
thus group plc sharesave scheme – see note 4
john maguire 1998 1998 jun 04 215 aug 07 jan 08
1584 1584 jun 05 110 aug 08 jan 09
philip male 1354 1354 – jun 03 1806 1175 aug 06 jan 07
1998 1998 jun 04 215 aug 07 jan 08
1584 1584 jun 05 110 aug 08 jan 09 thus group plc annual report 2007 33
the exercise prices above except the nominal exercise prices applicable to grants under the thus group performance share plan have been appropriately adjusted following
the 10 to 1 consolidation of ordinary shares the number of shares and share options has also been adjusted accordingly
the aggregate of the gains made by the executive directors on the exercise of share options during the year was £80796 2006 £415 broken down as follows william
allan – £31821 john maguire – £24396 and philip male – £24579 the gains are notional and are calculated based on the market price at the dates of exercise of the
share options and vesting of the psp awards and after deduction of the sale proceeds of the shares sold by each of the directors to pay the tax and national insurance liability
on vesting the remaining shares have been retained by the executive directors and reinvested in the coinvestment plan and no actual gain was realised during the year 
1 outstanding options held by directors under the discretionary option scheme will only be exercisable if the following performance condition is met twothirds 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 mid250 companies excluding
investment trusts and 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 straightline 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 there is no intention to make any
further awards under this scheme however  any award of options in future would have no opportunity for retesting of the performance conditions
2 for awards granted in the year ended 31 march 2003 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 allshare t elecoms sector as at the date of grant over a fixed threeyear 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 straightline 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 threeyear period 30 of this part of the
award will vest at a normalised eps in 2005 of –075p 100 vesting at a normalised eps of 05p 30 –100 will vest on a straightline basis at a normalised eps
figure between –075p and 05p the market price of a share on 11 february 2003 when an award was made was 8p these awards lapsed during 200607
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 allshare t elecoms sector as at the date of grant over a fixed threeyear 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 straightline 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 threeyear period 30 of this part of the
award will vest at a normalised eps in 2007 of 05p 100 vesting at a normalised eps of 15p 30 –100 will vest on a straightline basis at a normalised eps figure
between 05p and 15p the market price of a share on 28 may 2004 when the award was made was 26p
3 for the awards granted in the year ended 31 march 2007 under the coinvestment plan the minimum level of match is two shares for every four the individual acquires
the level of match can increase up to a maximum of six shares for every four shares the individual acquires dependent on performance ie four shares for every four
purchased are determined by performance the performance conditions for the first grant made under the plan during 200607 are for 50 of the award of performance
shares annual compound growth in ebitda must be 35 or more for the full half of the award to vest 15 of the award vests for 20 annual compound growth in
ebitda rising on a straightline basis to full vesting at 35 no performance shares vest for annual compound growth in ebitda of less than 20 for the remaining half
of the award of performance shares ebit return on capital growth will be measured for the year ended 31 march 2009 for the full 50 of performance shares to vest
ebit return on capital growth must be 8 or more 15 of the performance shares will vest for growth of 4 rising on a straightline basis to full vesting at 8 growth 
no performance shares will vest for growth of less than 4
4 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 2007 was 18425p and the range during the year ended 31 march 2007 was 11575p to 20525p the figures relating to events
prior to 10 march 2006 have been restated to reflect the consolidation of the ordinary shares of 25p each into 25p shares that took place on that date
no awards were varied during this year 
directors’ interests in ordinary sharesentitlements 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 ordinary shares
31 march 2007 1 april 2006
chairman and executive directors
philip rogerson 16470 16470
william allan 78921 38660
john maguire 35488 15357
philip male 56315 25460
nonexecutive directors
ian chippendale 5322 5322
jo connell 4209 4209
rick medlock appointed on 7 november 2006 – –
martin beesley appointed on 22 november 2006 – –
as potential beneficiaries under the employee benefit trust the executive directors are deemed to be interested in the shares held by the trust which as at 31 march 2007
amounted to 866376 ordinary shares
no changes took place to the interests of the directors between 31 march 2007 and 18 may 2007
approved by the board on 18 may 2007 and signed on its behalf by
ian chippendale
chairman of the remuneration committee 34 thus group plc annual report 2007
we have audited the group and parent company financial statements the
“financial statements” of thus group plc for the year ended 31 march 2007 
which comprise the consolidated income statement the consolidated statement 
of recognised income and expense the consolidated and parent company balance
sheets the consolidated and parent company statement of cash flows and the
related notes these financial statements have been prepared under the accounting
policies set out therein we have also audited the information in the directors’
remuneration report that is described as having been audited 
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’ responsibilities for preparing the annual report the directors’
remuneration report and the financial statements in accordance with applicable law
and international financial reporting standards ifrss as adopted by the eu are set
out in the statement of directors’ responsibilities on page 28
our responsibility is to audit the financial statements and the part of the directors’
remuneration report to be audited in accordance with relevant legal and regulatory
requirements and international standards on auditing uk and ireland
we report to you our opinion as to whether the financial statements give a true 
and fair view and whether the financial statements and the part of the directors’
remuneration report to be audited have been properly prepared in accordance with
the companies act 1985 and as regards the group financial statements article 4
of the ias regulation we also report to you whether in our opinion the information
given in the directors’ report is consistent with the financial statements
in addition we report to you if in our opinion the company has not kept proper
accounting records if we have not received all the information and explanations 
we require for our audit or if information specified by law regarding directors’
remuneration and other transactions is not disclosed 
we review whether the corporate governance statement reflects the company’ s
compliance with the nine provisions of the 2003 combined code specified for our
review by the listing rules of the financial services authority and we report if it does
not we are not required to consider whether the board’ s statements on internal
control cover all risks and controls or form an opinion on the effectiveness of the
group’ s corporate governance procedures or its risk and control procedures
we read the other information contained in the annual report and consider whether
it is consistent with the audited financial statements we consider the implications 
for our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements our responsibilities do not extend 
to any other information
basis of audit opinion
we conducted our audit in accordance with international standards on auditing uk
and ireland issued by the auditing practices board an audit includes examination
on a test basis of evidence relevant to the amounts and disclosures in the financial
statements 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 financial statements and of whether the
accounting policies are appropriate to the group’ s and company’ s circumstances
consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with sufficient
evidence to give reasonable assurance that the financial statements and the part of
the directors’ remuneration report 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 financial
statements and the part of the directors’ remuneration report to be audited
opinion
in our opinion
• the group financial statements give a true and fair view in accordance with ifrss
as adopted by the eu of the state of the group’ s affairs as at 31 march 2007 and
of its profit for the year then ended 
• the parent company financial statements give a true and fair view in accordance
with ifrss as adopted by the eu as applied in accordance with the provisions 
of the companies act 1985 of the state of the parent company’ s affairs as at 
31 march 2007
• the financial statements and the part of the directors’ remuneration report to be
audited have been properly prepared in accordance with the companies act 1985
and as regards the group financial statements article 4 of the ias regulation and
• the information given in the directors’ report is consistent with the financial statements
kpmg audit plc 
chartered accountants 
registered auditor
8 salisbury square
london
ec4y 8bb
18 may 2007
note
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 financial statements or audit report since they were
initially presented on the website
independent auditors’ report 
to the members of thus group plc thus group plc annual report 2007 35
2007 2006
notes £’000 £’000 
continuing operations
revenue 2 532693 349987
cost of sales 7 10 442986 293390
gross profit 89707 56597
selling and distribution expenses 7 27114 19625
administrative expenses 7 10 76182 61587
other operating income 6 2479 2566
operating loss before restructuring costs 9540 11643
restructuring costs 7 1570 10406
operating loss 5 11110 22049
financial income 11 5451 4214
financial expenses 11 9426 10497
net financing costs 3975 6283
loss before income tax 15085 28332
income tax credit 12 69599 –
profitloss from continuing operations 54514 28332
discontinued operations
profit from discontinued operations net of tax 3 29414 2149
profitloss for the year attributable to the equity holders of the parent 27 83928 26183
earnings per share
basic earningsloss per share pence 13 4663 1899
diluted earningsloss per share pence 13 4616 1899
continuing operations
basic earningsloss per share pence 13 3029 2055
diluted earningsloss per share pence 13 2998 2055
the notes on pages 39 to 64 form part of the financial statements
consolidated income statement
for the year ended 31 march 2007 36 thus group plc annual report 2007
group
2007 2006
notes £’000 £’000 
foreign exchange translation differences 27 15 5 
actuarial gainslosses on defined benefit pension plan 27 2978 2390
income tax on income and expense recognised directly in equity 25 893 –
net income and expense recognised directly in equity 2070 2385
profitloss for the year 83928 26183
total recognised income and expense for the year attributable to the equity holders of the parent 85998 28568
movements in equity for the group are disclosed in note 27 to the financial statements
the parent company profit for the year is £141000 2006 £nil no income and expense has been recognised directly in equity for either 31 march 2007 or 31 march 2006
the notes on pages 39 to 64 form part of the financial statements
consolidated statement of recognised income and expense
for the year ended 31 march 2007  thus group plc annual report 2007 37
group company
2006 
2007 as restated 2007 2006
notes £’000 £’000 £’000 £’000 
assets
noncurrent assets
property plant and equipment 14 381334 372384 – – 
intangible assets 15 67577 71650 – – 
investments 16 – – 56963 69079
retirement benefit obligations 29 805 – – –
deferred tax assets 25 60643 – – –
trade and other receivables 18 – – 78095 70026 
total noncurrent assets 510359 444034 135058 139105 
current assets 
inventories 17 4213 3824 – – 
trade and other receivables 18 108481 116815 – 170 
cash and cash at bank 19 31724 60853 87 87 
assets classified as held for sale 3 – 5350 – – 
total current assets 144418 186842 87 257 
total assets 654777 630876 135145 139362 
liabilities
current liabilities
interestbearing loans and borrowings 22 6511 2822 – – 
trade and other payables 20 123533 129193 241 2578
current tax liabilities 21 537 747 – – 
provisions 24 1534 6507 – – 
liabilities classified as held for sale 3 – 4526 – – 
total current liabilities 132115 143795 241 2578
noncurrent liabilities
interestbearing loans and borrowings 22 49871 85415 – – 
retirement benefit obligations 29 – 7911 – – 
provisions 24 1572 3808 – – 
deferred tax liabilities 25 – 4300 – – 
total noncurrent liabilities 51443 101434 – – 
total liabilities 183558 245229 241 2578
net assets 471219 385647 134904 136784 
equity 
issued capital 26 45758 45189 45758 45189 
shares to be issued reserve 27 7300 12800 7300 12800 
share premium account 27 39001 36091 39001 36091 
merger reserve 27 586556 586556 19996 19996 
capital redemption reserve 27 23248 23248 23248 23248 
other reserves 27 – 3 – – 
cumulative loss reserve 27 230644 318240 399 540
total equity attributable to the equity holders of the parent 27 471219 385647 134904 136784 
the notes on pages 39 to 64 form part of the financial statements 
approved by the board on 18 may 2007 and signed on its behalf by 
william allan john maguire
chief executive chief financial officer 
balance sheets 
as at 31 march 2007  38 thus group plc annual report 2007
group company
2007 2006 2007 2006
notes £’000 £’000 £’000 £’000 
cash flows from operating activities
profitloss after tax and gain on sale of discontinued operations net of tax 83928 26183 – – 
adjustments for 
depreciation and impairment 10 48645 47819 – – 
amortisation and impairment 15 3758 3724 – – 
financial income 11 5459 4249 – – 
financial expense 11 9426 10500 – – 
movement relative to defined benefit pension scheme 1917 1079 – – 
equity settled sharebased payment expenses 31 1164 872 – – 
taxation 12 69599 673 – – 
gain on sale of discontinued operations net of tax 29032 225 – – 
cash inflow before changes in working capital and provisions 44748 32664 – – 
decreaseincrease in trade and other receivables 7915 5435 – – 
increase in inventories 404 354 – – 
decreaseincrease in trade and other payables 6091 13560 – – 
decreaseincrease in provisions 7209 7576 – – 
cash generated from operations 38959 48011 – – 
income tax paidreceived 321 234 – – 
contribution to defined benefit pension scheme fund 29 7500 – – –
net cash from operating activities 31138 48245 – – 
cash flows from investing activities
disposal of discontinued operations net of cash disposed of and net of tax 3 31966 72 – – 
interest received 1385 929 – – 
acquisition of subsidiary net of cash acquired 4 3431 12730 – – 
acquisition of property plant and equipment 51949 30563 – – 
acquisition of intangible assets 974 1480 – – 
net cash used in investing activities 23003 43772 – – 
cash flows from financing activities 
receipts from exercise of share options 419 195 – – 
proceeds from the issue of share capital net of issue costs – 8390 – – 
issue costs paid during the year 1564 – – –
proceeds from borrowings – 35125 – – 
repayment of borrowings 32472 5752 – –
payment of expenses in connection with borrowings 769 1120 – – 
payment of finance lease liabilities 324 178 – – 
interest paid 5358 6016 – – 
net cash used infrom financing activities 40068 30644 – – 
net decreaseincrease in cash and cash equivalents 31933 35117 – – 
cash and cash equivalents at the start of the year 63257 28140 87 87 
cash and cash equivalents at the end of the year 19 31324 63257 87 87 
the notes on pages 39 to 64 form part of the financial statements
consolidated and parent company statement of cash flows 
for the year ended 31 march 2007  thus group plc annual report 2007 39
1 significant accounting policies 
thus group plc is a company domiciled in the united kingdom the consolidated
financial statements of the company for the year ended 31 march 2007 comprise
the company and its subsidiaries together referred to as the “group” the parent
company financial statements present information about the company as a
separate entity and not about its group
the financial statements were authorised for issue by the directors on 18 may 2007
statement of compliance
both the consolidated financial statements and the parent company financial
statements have been prepared and approved by the directors in accordance 
with international financial reporting standards ifrss as adopted by the eu
“adopted ifrss” 
on publishing the parent company financial statements here together with the group
financial statements the parent company is taking advantage of the exemption in
section 230 of the companies act 1985 not to present its individual income statement
and related notes that form a part of these approved financial statements
basis of preparation
the financial information has been prepared in accordance with ifrs as adopted 
by the eu
the financial information is prepared on the historical cost basis except for derivative
financial instruments which from 1 april 2005 are stated at their fair values and
noncurrent assets held for sale which are stated at the lower of carrying amount and
fair value less costs to sell the financial information is presented in pounds sterling
rounded to the nearest thousand
the preparation of the financial information in conformity with ifrs requires the
directors to make judgements estimates and assumptions that affect the application
of policies and reported amounts of assets and liabilities income and expenses 
the estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances the
results of which form the basis of making the judgements about carrying values of
assets and liabilities that are not readily apparent from other sources actual results
may differ from these estimates
the estimates and underlying assumptions are reviewed on an ongoing basis revisions
to accounting estimates are recognised in the period in which the estimate is revised 
if the revision only affects that period or in the period of revision and future periods 
if the revision affects both current and future periods
judgements made by management in the application of ifrss that have significant
effect on the financial statements and estimates with a significant risk of material
adjustment in the next year are disclosed in note 34 to the financial statements
the accounting policies set out below have been applied consistently to all periods
presented in these consolidated financial statements
the balance sheet for the year ended 31 march 2006 has been restated following
the revisions of the fair values of the net assets acquired during that year  full details
are contained in note 4 to the financial statements
basis of consolidation
the group financial statements include the financial statements of the company 
and the entities controlled by the group control exists when the company has the
power  directly or indirectly to govern the financial and operating policies of an entity
so as to obtain benefits from its activities in assessing control potential voting rights
that presently are exercisable or convertible are taken into account the financial
statements of subsidiaries are included in the consolidated financial statements from
the date that control commences until the date that control ceases
all intragroup transactions balances income and expenses are eliminated 
on consolidation
revenue
revenue represents the value of goods and services supplied to customers during the
year net of value added t ax the group’ s revenue comprises revenues from voice
telephony services data services internet services mobile and managed solutions 
of a variety of communication services revenue recognition occurs when persuasive
evidence of an arrangement exists delivery has occurred the fee is fixed and
determinable and collectability is probable
voice telephony services
revenues from voice telephony services comprise call charges and associated line
rentals to customers connected directly to the thus network indirectly connected
customers customers utilising “carrier preselect” services voice over internet
protocol voip and wholesale customers call charges comprise charges for
geographical and nongeographical numbers revenue for call charges is
recognised when the service is provided rental charges are recognised on a 
straightline basis over the length of the supply contract
data services
data services comprise installation and provision of ongoing data supply products
including leased lines virtual private networks ethernet services and provision of
open fibre services installation charges are recognised where there is a contractually
identified installation charge reflecting the arm’ s length value of the cost of the
installation and the fair value of the work done in limited cases installation work
straddles an accounting period end whilst such contracts do not meet the definition
of construction contracts under ias 11 “construction contracts” ias 11 where the
outcome of the contract and stage of completion can be assessed reliably sales and
cost of sales are recognised using the percentage completion method in accordance
with ias 18 “revenue” ias 18 completion is generally measured by reference to
costs incurred to date as a percentage of estimated total installation costs connection
fees are recognised on commencement of a customer contract only where incremental
costs are incurred in connection all other connection fees are recognised over the life
of the customer contract rental charges are recognised on a straightline basis over
the length of the supply contract 
internet services
revenues from internet services comprise monthly access fees for business access
services including the provision of leased lines web design and ecommerce
services and revenues from wholesale internet services provided to virtual internet
service providers and access fees paid by internet subscribers and ingress receipts
installation revenue is recognised for the design and building of bespoke solutions
reflecting the arm’ s length value of the goods supplied in limited cases installation
work straddles an accounting period end whilst such contracts do not meet the
definition of construction contracts under ias 11  where the outcome of the contract
and stage of completion can be assessed reliably sales and cost of sales are
recognised using the percentage completion method in accordance with ias 18
completion is generally measured by reference to costs incurred to date as a
percentage of estimated total installation costs connection fees are recognised on
commencement of a customer contract only where incremental costs are incurred in
connection all other connection fees are recognised over the life of the customer
contract rental revenue is recognised on a straightline basis over the contract term
mobile
mobile revenues comprise revenues from the provision of the supply of airtime for
mobile communications equipment and the provision of such equipment revenue for
airtime is recognised when the service is provided
managed solutions
managed solutions revenues comprise revenues from the provision of voice telephony
data and internet services as part of bespoke contractual arrangements installation
revenue is recognised for the design and building of bespoke solutions reflecting the
arm’ s length value of the goods supplied in limited cases installation work straddles
an accounting period end whilst such contracts do not meet the definition of
construction contracts under ias 11  where the outcome of the contract and stage of
completion can be assessed reliably sales and cost of sales are recognised using the
percentage completion method in accordance with ias 18 completion is generally
measured by reference to costs incurred to date as a percentage of estimated total
installation costs connection fees are recognised on commencement of a customer
contract only where incremental costs are incurred in connection all other connection
fees are recognised over the life of the customer contract rental revenue is recognised
on a straightline basis over the contract term
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007  40 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
1 significant accounting policies continued
indefeasible rights of use “iru” sales
as part of its service offering the group and company periodically sell 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 and company have acquired dark fibre under iru agreements from
the same counterparties in order to complete their own network
the profit on iru sales is shown in the financial statements as a gain on the disposal
of fixed assets
cost definitions
the group and company’s costs comprise of cost of sales selling and distribution
and administrative costs
cost of sales
cost of sales consist of costs directly attributable to each type of revenue stream and
includes interconnect costs for telephony charges rental of data capacity and costs 
of equipment installed for customers other costs comprise expenditure on fixed
network infrastructure operational properties and network depreciation together 
with the salaries and associated costs of the network maintenance function
selling distribution and administrative expenses
selling and distribution expenses comprise expenditure on marketing advertising
and promotions together with the salaries and associated costs of the sales and
marketing function administrative expenses comprise expenditure on customer
services human resources information technology legal and regulatory compliance
finance department costs and nonoperational property together with depreciation 
of nonnetwork assets
segment reporting
a segment is a distinguishable component of the group that is engaged either in
providing products or services business segment or in providing products or services
within a particular economic environment geographical segment which is subject 
to risks and rewards that are different from those of other segments
segment results assets and liabilities include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis unallocated items comprise
mainly network assets and depreciation that relate to services provided by different
business segments interestbearing loans borrowings and corporate expenses
net financing costs
interest is recognised in the consolidated income statement using the effective interest
method interest on finance leases is recognised on a straightline method over the life
of the lease interest is recognised on pension assetsliabilities on an effective interest
method based on the assets and liabilities during the year 
taxation
income tax comprises current and deferred tax income tax is recognised in the
consolidated income statement except to the extent that it relates to items recognised
directly in equity in which case it is recognised in equity
current tax is the expected tax payable on the taxable income for the year  using tax
rates enacted or substantively enacted at the balance sheet date and any adjustment
to tax payable in respect of previous years
deferred tax is recognised using the balance sheet liability method providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes the 
amount of deferred tax recognised is based on the expected manner of realisation 
or settlement of the carrying amount of assets and liabilities using tax rates enacted 
or substantively enacted at the balance sheet date a deferred tax asset is recognised
only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised deferred tax assets are reduced to the extent that it is
no longer probable that the related tax benefit will be realised
intangible assets
goodwill
subject to the transitional relief in ifrs 1 “firsttime adoption of international
financial reporting standards” ifrs 1 all business combinations are accounted 
for by applying the purchase method goodwill represents amounts arising 
on acquisition of subsidiaries for those business combinations occurring prior 
to 1 april 2004 no goodwill is recognised as these business combinations were
accounted for using merger accounting principles the group has elected to take 
the exemption allowed under ifrs 1 not to restate these business combinations
goodwill is stated at cost less any accumulated impairment losses goodwill 
is allocated to cash generating units and tested annually for impairment
licence fees
licence fees including those for computer software are stated at cost less
accumulated amortisation and provision for any impairment in value and amortised
on a straightline basis over the remaining licence period of between five and ten
years once the relevant asset to which a licence relates becomes operational and the
service is utilised or available for use 
other intangibles
other intangible assets including customer lists and trade names acquired by 
the group and company are stated at cost less accumulated amortisation and
impairment losses and are amortised over their estimated useful lives as follows
• customer lists 1–15 years
• trade names 5 years
noncurrent assets held for sale and discontinued operations
an asset is classified as held for sale when it has been identified that the asset in
question is no longer required for continuing use and is therefore available for sale
and that the sale will more than likely occur  immediately before classification as held
for sale the measurement of the assets and all assets and liabilities in a disposal
group is brought up to date in accordance with applicable ifrs then on initial
classification as held for sale noncurrent assets and disposal groups are recognised
at the lower of carrying amount and fair value less costs to sell
impairment losses on initial classification as held for sale are included in the
consolidated income statement the same applies to gains and losses on 
subsequent remeasurement
a discontinued operation is a component of the group’ s business that represents a
separate major line of business or geographical area of operations or is a subsidiary
acquired exclusively with a view to resale
classification as a discontinued operation occurs upon disposal or when the
operation meets the criteria to be classified as held for sale if earlier  
research and development
development expenditure is capitalised as an intangible asset when the group
intends to complete the development and bring the product in to use the expenditure
capitalised includes the cost of materials direct labour and overhead costs that are
directly attributable to preparing the asset for its intended use the intangible asset is
measured at cost less accumulated amortisation thus group plc annual report 2007 41
1 significant accounting policies continued
property  plant and equipment
property plant and equipment is stated at historic cost less accumulated depreciation
and provision for impairments in value the cost of selfconstructed assets includes 
the cost of materials direct labour and other costs which are directly attributable 
to the construction of property plant and equipment depreciation is charged to the
consolidated income statement using the straightline basis over estimated useful
lives where parts of an item of property plant and equipment have different useful
lives they are accounted for as separate items of property plant and equipment
depreciation rates useful lives and residual values are reassessed at each 
reporting date
the estimated useful lives are as set out below
years
land and leasehold buildings
alterations to leasehold premises over lease period or useful life if shorter
plant and equipment
underground network 40
fibre optic cable and 
transmission equipment 5 to 20
electronics switching equipment 
and base stations 5 to 15
customer connections 5
tools 4
other assets
fixtures and fittings 10
vehicles 4
personal computers 3
freehold land is not depreciated
maintenance repairs and renewals are generally charged to the consolidated
income statement during the year in which they are incurred major refurbishments
and renovations are capitalised and included in the carrying amount of the related
asset when it is probable that future economic benefits in excess of the originally
assessed standard of performance of the existing asset will flow to the group and
company major refurbishments and renovations are depreciated over the remaining
life of the asset borrowing costs are not capitalised
inventories
inventories are stated at the lower of cost or net realisable value cost is determined
on a firstin firstout fifo basis net realisable value is the amount that can be
realised from the sale of the inventory in the normal course of business after allowing
for the costs of realisation
an allowance is recorded for inventory obsolescence
trade receivables
trade receivables are initially stated at fair value and subsequently carried at
amortised cost less an estimate made for impaired trade receivables based upon 
the periodic review of all outstanding amounts
cash and cash equivalents
the group and company manage their shortterm liquidity through holdings of cash
and highly liquid interest bearing deposits for the purpose of the cash flow statement
only deposits with a maturity period of three months from the date of acquisition or 
less are shown as cash and cash equivalents bank overdrafts that are repayable 
on demand and that form an integral part of the group and company’s cash
management are also included as a component of cash and cash equivalents for 
the purpose of the statement of cash flows
trade and other payables
trade and other payables are stated at cost
impairment
the carrying amount of the group’ s non financial assets are reviewed as appropriate
at each reporting date to determine whether there is any indication of impairment 
if such an indication exists then the assets recoverable amount is estimated for
goodwill and intangible assets that have indefinite lives the recoverable amount is
estimated at each reporting date 
an impairment loss is recognised if the carrying amount of an asset or its cash
generating unit exceeds its recoverable amount a cash generating unit is the smallest
identifiable asset group that generates cash flows that are largely independent from
other assets and groups the recoverable amount of an asset or cash generating unit
is the greater of its value in use and its fair value less costs to sell in assessing value in
use the estimated future cash flows are discounted to their present value using a pre
tax discount rate that reflects the time value of money and the risks specific to the
asset impairment losses are recognised in the consolidated income statement
an impairment loss in respect of goodwill is not reversed in respect of other assets 
an impairment loss recognised in prior periods is reversed if there has been a change
in the estimate used to determine the recoverable amount
finance and operating leases
leases in terms of which the group and company assume substantially all the risks
and rewards of ownership are classified as finance leases assets held under finance
leases are depreciated in line with the group and company’s depreciation policy or 
where shorter  over the term of the relevant lease the interest element of the finance
lease repayments is charged to the consolidated income statement in proportion to
the balance of the capital repayments outstanding
rentals payable under operating leases are charged to the consolidated income
statement on a straightline basis over the lease term
rentfree periods received by the group and company at the inception of new
operating leases for properties are recognised in the consolidated income
statement over the period of the lease
foreign currency
transactions in foreign currencies are translated to the respective functional currency
at the rate ruling at the date of the transaction monetary assets and liabilities
denominated in foreign currencies are translated to the functional currency 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 consolidated income statement 
the assets and liabilities of the overseas entity and branch are translated at the rate 
of exchange ruling at the balance sheet date the revenues and expenses of overseas
entities are translated at rates approximating to the foreign exchange rates ruling 
at the dates of the transactions exchange differences arising on retranslation are
recognised directly as a separate component of equity 42 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
1 significant accounting policies continued
pensions
the group and company participate in group pension arrangements consisting of
both defined benefit and defined contribution schemes 
contributions to defined contribution pension plans are charged to the consolidated
income statement in the period in which they are incurred
for defined benefit pension plans pension costs are calculated using the projected
unit method the pension obligation is measured at the present value of the estimated
future cash outflows using interest rates on highquality corporate bonds where the
terms to maturity are comparable with the terms of the related liabilities actuarial
gains and losses are recognised as incurred on an annual basis outside the
consolidated income statement and presented in the statement of recognised income
and expense in accordance with ias 19 “employee benefits” ias 19
for a minority of employees the group and company pay varying levels of
contributions to personal pension schemes these costs are charged to the
consolidated income statement as incurred
borrowings
borrowings are classified as originated loans and are recognised initially at fair
value net of transactions costs in subsequent periods they are stated at amortised cost
and any difference between net proceeds and redemption amounts are recognised in
the consolidated income statement over the life of the borrowings
sharebased payments
the share option programme allows group and company employees to acquire
shares of the ultimate parent company thus group plc the fair value of the options
granted after 7 november 2002 and those not yet vested is recognised as an
employee expense with a corresponding increase in equity the fair value is measured
at the grant date and is spread over the period during which the employees become
unconditionally entitled to the options the fair value of the options granted is
measured using a variety of different models including the blackscholes model and 
a binomial lattice model taking into account the terms and conditions upon which the
options were granted the amount recognised as an expense is adjusted to reflect the
actual number of share options that expect to and do vest except where forfeiture is
only due to share prices not achieving the threshold for vesting
the group has elected to apply ifrs2 “share based payments” only to the relevant
awards that were granted after 7 november 2002 the group has not accounted for
sharebased payments granted prior to that date
provisions
provision is made where the group and company have a present legal or constructive
obligation that can be estimated reliably as a result of past events and it is probable
that an outflow of economic benefit will be required to settle the obligation a provision
for onerous contracts is recognised when the expected benefits to be derived by the
group and company from a contract are lower than the unavoidable costs of meeting
their obligations under the contract
investments in subsidiaries
investments in subsidiaries are stated at cost less any impairment losses
derivative financial instruments
the group and company use derivative financial instruments to hedge their exposure
to interest rate risks arising from financing activities in accordance with its treasury
policy the group and company do not hold or issue derivative financial instruments
for trading purposes
derivative financial instruments are recognised initially at cost subsequent to initial
recognition derivative financial instruments are stated at fair value the gain or loss
on remeasurement to fair value is recognised immediately in the consolidated income
statement the fair value of interest rate swaps is the estimated amount that the group
and company would receive or pay to terminate the swap at the balance sheet date
taking into account market conditions
adopted ifrs not yet applied
the group and company have not applied the following standards and
interpretations that have been issued but are not yet effective
• ifrs 7 “financial instruments disclosures” and consequential amendments 
to ias 1 ifrs 1 and ifrs 4
• ifrs 8 “operating segments”
• ifric 7 “applying the restatement approach under ias 29 financial 
reporting in hyperinflationary economies”
• ifric 8 “scope of ifrs 2”
• ifric 9 “reassesment of embedded derivatives”
• ifric 10 “interim financial reporting and impairment”
• ifric 11 ”ifrs 2 – group and treasury share transactions”
• ifric 12 “service concession arrangements”
the standards and interpretations that may impact the financial statements 
are as follows
• ifrs 7 “financial instruments disclosures” is applicable for years commencing 
on or after 1 january 2007 and introduces new disclosures in relation to financial
instruments implementation of these will not affect the balance sheet or
consolidated income statement as the standard and related amendments are
concerned with disclosures
• ifric 10 “interim financial reporting and impairment” will apply to the group and
company for the year ended 31 march 2008 and will require additional disclosures
• ifric 11 “ifrs 2 – group and treasury share transactions” this is effective for
years commencing on or after 1 march 2007 and will not affect the group results
and it is anticipated that it will not materially impact the parent company results
• ifric 12 “service concession arrangements” will have no new impact on the
financial statements
2 segmental reporting
segment information is presented in the financial statements in respect of the group’ s
business and geographical segments the primary format business segments reflects
the group’ s management and internal reporting structure
segment results assets and liabilities include items directly attributable to a segment 
as well as those that can be allocated on a reasonable basis segment results include
depreciation charges on assets directly attributable to a segment unallocated
expenses comprise overheads that cannot be directly allocated to individual segments
depreciation and amortisation charges on assets not directly attributable to business
segments and restructuring costs unallocated assets include network and other fixed
assets which are used across all business segments and other corporate assets
unallocated liabilities include interestbearing loans and other corporate liabilities
business segments
the group’ s main business segments are
managed solutions – the provision of voice telephony data and internet services 
as part of a bespoke contractual arrangement
data and telecoms – the provision of voice telephony services and data 
supply products
internet – the provision of services using internetbased products
mobile – the provision of mobile services
geographical segments
the internet segment operated in two principal geographical areas united kingdom
and europe in europe the group had until june 2006 operations in the
netherlands that had operational sales marketing and corporate functions
following an announcement made on 1 february 2006 the group decided to sell
the operation based in the netherlands demon nl for the year ended 31 march
2006 this operation was classified as a disposal group held for sale
in presenting information on the basis of geographical segments segment revenue is
based on the geographical location of customers segment assets are based on the
geographical location of the assets thus group plc annual report 2007 43
2 segmental reporting continued
a primary segmental reporting
2007 2006 
business segments note £’000 £’000 
segment revenue
managed solutions 95049 73066 
data and telecoms 312452 203766 
internet 84726 69307 
mobile 40466 3848
t otal segment revenue from continuing operations 532693 349987
discontinued operations 3 3165 22067
consolidated segment revenue 535858 372054
segment result
managed solutions 18917 8506 
data and telecoms 61450 43337 
internet 23141 27716 
mobile 4192 457
t otal segment result from continuing operations 107700 80016
discontinued operations 3 374 1219
consolidated segment result 108074 81235
unallocated expenses 118810 102065
operating loss 10736 20830
net financing costs 3967 6251
income tax credit 69599 673
gain on sale of discontinued operations net of tax 29032 225
profitloss for the year 83928 26183
2006
2007 as restated 
segment assets £’000 £’000
managed solutions 34276 17421 
data and telecoms 123591 97581
internet 34695 20674 
mobile 25054 14808
discontinued operations – 5378 
unallocated assets 437161 475014
total assets 654777 630876
2006
2007 as restated
segment liabilities £’000 £’000
managed solutions 11000 4787
data and telecoms 70753 64462
internet 8671 12696
mobile 7106 7534
discontinued operations – 4977
unallocated liabilities 86028 150773
total liabilities 183558 245229
2007 2006
segment depreciation and amortisation £’000 £’000
managed solutions 1356 1459 
data and telecoms 6695 6289 
internet 550 –
mobile 394 – 
discontinued operations – 716 
unallocated depreciation and amortisation 43408 41188 
total depreciation and amortisation 52403 49652
segment impairment losses
data and telecoms – 23 
unallocated impairment losses – 1868 
total impairment losses – 1891 
segment noncash expenses
managed solutions 462 199
data and telecoms 559 320
internet 173 92
unallocated noncash expenses 1887 1340 
total noncash expenses 3081 1951 
segment capital expenditure including intangible assets
managed solutions 11334 836 
data and telecoms 6980 4716 
internet 250 – 
mobile 72 – 
discontinued operations 102 737 
unallocated capital expenditure 40618 26627 
total capital expenditure including intangible assets 59356 32916
b secondary segmental reporting 
united kingdom europe consolidated
2006 2006
2007 as restated 2007 2006 2007 as restated
geographical segments £’000 £’000 £’000 £’000 £’000 £’000 
revenue 532693 352302 3165 19752 535858 372054
segment assets 654777 625526 – 5350 654777 630876
cash flows from operating activities 31811 43747 673 4498 31138 48245 
cash flows from investing activities 54874 43086 31871 686 23003 43772
cash flows from financing activities 40068 33600 – 2956 40068 30644 
capital expenditure 59254 32179 102 737 59356 32916 
the cash flows attributable to the discontinued business of demon nl have been disclosed as europe above 44 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
3 discontinued operations and noncurrent assets held for sale
a discontinued operations
on 15 june 2006 the group completed the disposal of its operations based in the
netherlands following the announcement made on 1 february 2006 the dutch
operations represented a separate geographical business area of the group and 
therefore have been classified as a discontinued operation for the year ended 
31 march 2007
the gross proceeds from the sale of the demon netherlands operations to the dutch
telecommunications company royal kpn nv  amounted to £47m with selling costs 
of £35m and £12m representing the net assets disposed of
for the prior year  discontinued activities included the dutch operations as described
above and the results of the contact centre business which was sold on 4 august
2004 the sale of the contact centre business represented a major line of business 
of the group and therefore was also treated as a discontinued activity
a single figure is shown on the face of the consolidated income statement for the
years ended 31 march 2007 and 31 march 2006 comprising the posttax results 
of the discontinued operations and the posttax gain recognised on the disposal of 
the discontinued operations this is a change to the presentation used in the financial
statements for the year ended 31 march 2006 the change in presentation reflects
the less significant impact of the trading results of the discontinued operations in the
year ended 31 march 2007
the table below provides an analysis of the amount disclosed in the consolidated
income statement and amount of reclassification of the prior year
2007 2006
notes £’000 £’000
revenue 3165 22067 
cost of sales 1971 14622
gross profit 1194 7445 
selling and distribution expenses 553 3359
administrative expenses 267 2857
other operating income 6 – 10
operating profit 374 1219 
financial income 8 35 
financial expenses – 3
net financing income 8 32 
profit before income tax 382 1251 
income tax credit – 673
profit after income tax 382 1924
gain on sale of discontinued operations 42295 225
united kingdom income tax expense on gain
on sale of discontinued operations deferred tax 3763 –
overseas income tax expense on gain on sale 
of discontinued operations 9500 –
profit from discontinued operations net of tax 29414 2149
discontinued operations basic earnings 
per share pence 13 1634 156
discontinued operations diluted earnings 
per share pence 13 1618 156 
2007 2006 
cash flows from discontinued operations £’000 £’000 
net cash from operating activities 673 4498
net cash from investing activities 31871 686
net cash from financing activities – 2956
net cash from discontinued operations 31198 856
2007
effect of disposal on the financial position of the group £’000
property plant and equipment 1180
inventories 172
trade and other receivables 1717
cash at bank 2036
trade and other payables 3907
current tax liabilities 3
net assets disposed of 1195
consideration received satisfied in cash and net of disposal costs 43502
cash disposed of 2036
income tax paid on gain on sale of discontinued operations 9500
net cash inflow 31966
b noncurrent assets held for sale
for the year ended 31 march 2006 demon nl was presented as held for sale
following the announcement made on 1 february 2006 of the group’ s intention to
dispose of this operation to focus on its uk telecommunications activities the related
assets and liabilities were classified as held for sale as at 1 february 2006 no gain
or loss arose on the measurement to fair value less costs to sell as the anticipated
selling price was in excess of the book value of the assets and liabilities of the
operations based in the netherlands on 15 june 2006 this disposal was completed
at 31 march 2006 the disposal group comprised assets of £5350000 less liabilities
of £4526000 as follows
2006 
disposal group held for sale demon nl £’000 
assets classified as held for sale
property plant and equipment 1079 
inventories 157 
trade and other receivables 1310 
cash at bank 2804 
5350 
liabilities classified as held for sale
trade and other payables 4412 
current tax liabilities 114 
4526 
the gain on sale of discontinued businesses in the year ended 31 march 2006 of
£225000 represented additional consideration received in respect of the sale of the
interactive division which was sold in the year ended 31 march 2005
4 acquisition of subsidiaries
a details of acquisitions
i acquisition of y our communications
on 26 february 2006 the company acquired y our communications which
consisted of the entire share capital of y our communications group limited and the
assets and liabilities of y our communications limited this constituted the business of
y our communications a provider of telecom services for business customers and the
public sector and intercell limited a mobile phone operator 
the consideration for y our communications was satisfied by 391532852 ordinary
thus group shares of 25p each with a value of 155p prior to the 10 to 1 share
consolidation being the closing market price on the date closest to the acquisition
date 24 february 2006 under the terms of the purchase a possible further 
allotment of shares will be due depending on whether or not the company’ s share
price reaches certain strike prices at any time from the date of acquisition until 
31 december 2007
on 1 february 2007  a further allotment of 2274701 ordinary shares of 25p each
were issued to united utilities plc in line with the share and purchase agreement
following the thus group plc share price having reached the first strike price of 190p thus group plc annual report 2007 45
4 acquisition of subsidiaries continued
a details of acquisitions continued
ii acquisition of legend communications plc
on 1 march 2006 the company acquired legend communications plc a provider of converged communication solutions to residential business corporate and 
partner audiences
the consideration for the entire legend communications plc share capital was paid in cash at a price of 40p per legend share
in the one month to 31 march 2006 the y our communications and legend communications businesses contributed a net profit of £1049000 to the consolidated net loss 
for the year  if both acquisitions had occurred on 1 april 2005 the group revenue would have been £563148000 and the net loss would have been £65770000 
b effect of acquisitions
both acquisitions detailed above were provisionally fair valued in the 31 march 2006 financial statements in accordance with ifrs 3 “business combinations”  an adjustment
has been made for amendments to the provisional values as stated in the 31 march 2006 financial statements following the completion of a final review of all fair values
assigned at acquisition
the provisional and amended values of the net assets acquired are
i acquisition of y our communications
carrying fair value provisional amended
amounts adjustments fair values adjustments fair values
acquiree’s net assets at the acquisition date note £’000 £’000 £’000 £’000 £’000
property plant and equipment 20087 – 20087 – 20087
intangible assets – 6500 6500 – 6500
inventories 526 – 526 – 526
trade and other receivables 39618 1950 37668 2048 35620
cash and cash equivalents 879 – 879 – 879
trade and other payables 24471 3443 27914 514 28428
deferred tax liabilities – 4300 4300 – 4300
net identifiable assets and liabilities 34881 3193 31688 2562 29126
goodwill on acquisition 45542 201 45743
consideration paid 77230 2361 74869
2006 2007 total
£’000 £’000 £’000
consideration satisfied as follows
shares 60688 – 60688
deferred consideration 26c 12800 1974 10826
deal costs 3742 387 3355
77230 2361 74869
consideration satisfied in cash deal costs 343 2994 3337
overdrafts acquired 879 – 879
net cash outflow 1222 2994 4216
goodwill arose on the acquisition of y our communications group limited and the
assets and liabilities of y our communications limited as many of the potential
intangible assets identified as at the date of acquisition did not satisfy all the criteria
of identifiability control over a resource and existence of future economic benefits
required to meet the definition of an intangible asset goodwill represents the
expected synergies between assets that do not qualify for separate recognition 
in the financial statements but which the company was prepared to pay for 
the following intangible assets were not recognised separately from goodwill 
at the date of acquisition
employment contracts – these were not considered to be beneficial contracts 
as remuneration was set at market rates
supply agreements – agreements between y our communications group limited
and y our communications limited and their suppliers reflected marketnegotiated
prices no value was deemed attributable to these
insurance policies – insurance policies covering employer’ s liability public liability
and product liability were on commercial terms and have not been assigned a value
the revisions to the fair values of the net assets acquired reflect overstated accrued
revenues of £1452000 and incorrectly deferred costs of £596000 and under
accrued costs of £514000 the prepayments accrued income accruals and
deferred income balances at 31 march 2006 have been restated accordingly
the revision to the deferred consideration of £1974000 reflects an update to the
valuation as a consequence of the issue of 2274701 ordinary shares during the
year ended 31 march 2007  the remaining shares to be issued have been revalued
using the same methodology as before but with an updated share price volatility
based on the remaining vesting period of the options
the revision to deal costs follows the release of an accrual made at 31 march 2006
combined with other costs incurred being higher than anticipated 46 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
goodwill arose on the acquisition of legend communications plc as many of the
potential intangible assets identified as at the date of acquisition did not satisfy all 
the criteria of identifiability control over a resource and existence of future economic
benefits required to meet the definition of an intangible asset goodwill represents 
the expected synergies between assets that do not qualify for separate recognition 
in the financial statements but which the company was prepared to pay for 
the following intangible assets were not recognised separately from goodwill 
at the date of acquisition
employment contracts – these were not considered to be beneficial contracts 
as remuneration was set at market rates
logos – the revenues attributable to legend communications plc’ s logos were
deemed to be insignificant
supply agreements – agreements between legend communications plc and their
suppliers reflected market negotiated prices no value was deemed attributable 
to these
insurance policies – insurance policies covering employer’ s liability public liability
and product liability were on commercial terms and have not been assigned a value
the revisions to fair values of net assets acquired comprise overstated liabilities of
£247 000 the accruals and deferred income balance for 31 march 2006 has been
restated accordingly
the revision to the deal costs represents costs incurred being higher than expected
5 operating loss 
2007 2006
notes £’000 £’000 
operating loss is stated after chargingcrediting
depreciation and impairment on tangible fixed assets 
– owned assets 10 48425 47806 
– under finance leases 10 220 13 
amortisation of intangible fixed assets 
including impairment provision 15 3758 3724 
other operating lease rentals payable
– property 13661 9053
– other assets 174 221
– sublease receipts 6 1844 1627
other operating income – profit on disposal
of fixed assets 6 635 929
exchange differences 3 13
4 acquisition of subsidiaries continued
b effect of acquisitions continued
ii acquisition of legend communications plc
carrying fair value provisional amended
amounts adjustments fair values adjustments fair values
acquiree’ s net assets at the acquisition date £’000 £’000 £’000 £’000 £’000
property plant and equipment 2032 – 2032 – 2032
intangible assets 10280 7861 2419 – 2419
inventories 13 13 – – –
trade and other receivables 3803 444 3359 – 3359
cash and cash equivalents 202 – 202 – 202
interestbearing loans and borrowings 766 – 766 – 766
finance leases 426 – 426 – 426
trade and other payables 5339 1326 6665 247 6418
net identifiable assets and liabilities 9799 9644 155 247 402
goodwill on acquisition 11961 146 11815
consideration paid 12116 101 12217
2006 2007 total
£’000 £’000 £’000
consideration satisfied as follows
cash paid for shares 11530 – 11530
deal costs 586 101 687
12116 101 12217
consideration satisfied in cash including deal costs 11710 437 12147
cash acquired 202 – 202
net cash outflow 11508 437 11945 thus group plc annual report 2007 47
5 operating loss continued
fees paid to the auditors and their associates during the current and prior year are
analysed below 
2007 2006
£’000 £’000 
fees payable to the company’ s auditor for the audit of 
these financial statements 239 395
auditrelated regulatory reporting 29 25
fees payable to the company’ s auditor and its associates for 
other services
audit of the company’ s subsidiaries pursuant to legislation 40 – 
other services 109 529 
417 949
the work included in other services comprises £5000 for other advisory work and
£104000 for work relating to the disposal of the discontinued operations 2006
£524000 for acquisitionrelated costs which have been capitalised and £5000 for
other advisory work
amounts paid to the company’ s auditors in respect of services to the company other
than the audit of the company’ s financial statements have not been disclosed as the
information is required instead to be disclosed on a consolidated basis
6 other operating income 
2007 2006 
notes £’000 £’000
rents received 5 1844 1627 
profit on disposal of fixed assets 5 635 929 
2479 2556
continuing operations 2479 2566
discontinued operations 3 – 10
2479 2556
7 restructuring costs
the group has identified material oneoff or unusual items as detailed below these
have been shown to provide a more meaningful analysis of the trading results of the
group and are consistent with the way group management have assessed the
financial performance for both years
2007 2006
notes £’000 £’000 
restructuring costs a 1570 8806 
intangible asset written off b – 1600
1570 10406
these costs are recognised in the following categories in the consolidated 
income statement 
2007 2006
£’000 £’000 
cost of sales 94 3469 
selling and distribution expenses 252 1463 
administrative expenses 1224 5474 
1570 10406
a the restructuring costs for the current year represent additional redundancy 
costs not previously provided for and other costs associated with restructuring 
the group’ s operations following the integration of y our communications 
and legend communications plc in the prior year restructuring costs 
represented provisions set up for redundancy costs vacant properties and
dilapidations the redundancy provision arose following the acquisition of 
y our communications in february 2006 and represented the costs involved in
the overall reduction of 15 of the combined group’ s headcount the property
provision represented the proposed costs including dilapidations and onerous
lease costs involved in the closure of 12 sites following the rationalisation of the
combined property portfolio
b following the acquisition of y our communications the group decided not to 
use the y our communications trade name and accordingly the £1600000
intangible asset recognised at acquisition was impaired to £nil
8 earnings before interest tax depreciation 
including impairment and amortisation ebitda 
2007 2006
notes £’000 £’000
operating loss 11110 22049
depreciation charge for the year 10 48645 47103 
amortisation charge for the year 15 3758 3724 
ebitda 41293 28778
ebitda before restructuring costs is calculated as follows
operating loss 11110 22049
restructuring costs 7 1570 8806 
depreciation charge for the year 48645 47103 
amortisation charge for the year 3758 3724 
ebitda before restructuring costs 42863 37584
ebitda is a key measure used by the group’ s management to assess the
performance of the group as this is a nongaap measure and is not defined 
within international financial reporting standards as adopted by the eu this
reconciliation has been provided
9 employees 
a group employee costs 
2007 2006
notes £’000 £’000 
wages and salaries 65167 49465 
social security costs 7938 5483 
pension costs 
– increase in liability for defined benefit plans 29 5162 3872 
– contributions to defined contribution plans and others 29 909 307 
benefits in kind 1631 1375 
equity settled transactions 31 1164 872 
t otal employee costs 81971 61374 
less capitalised within property plant and equipment 12461 8476
charged to the consolidated income statement 69510 52898 
employee costs are recognised in the following categories in the consolidated 
income statement
2007 2006
£’000 £’000 
cost of sales 23839 17382 
selling and distribution expenses 21379 15249 
administrative expenses 24292 20267 
total employee costs 69510 52898
b group employee numbers 
the year end and average number of employees fulltime and parttime employed
by the group including executive directors were 
at 31 march average
2007 2006 2007 2006 
operations 758 903 761 601 
selling and distribution 284 409 294 257 
administrative and customer services 684 645 676 493 
1726 1957 1731 1351 
the number of fulltime
equivalent staff was 1705 1930 1720 1329 
 administrative and customer services includes customer services provisioning 
and corporate functions  48 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
9 employees continued
b group employee numbers continued
average
by location 2007 2006 
united kingdom 1721 1281 
europe 10 70 
1731 1351 
 the average figure for europe represents the employees based in the netherlands
up until the disposal of this operation in june 2006
c group key management compensation
2007 2006
£’000 £’000 
salaries and shortterm benefits 3443 2516
postemployment benefits 195 168 
sharebased payments 442 388 
4080 3072
the key management figures above include executive and nonexecutive directors
and management board members
details of directors’ emoluments share options longterm incentives and pension
arrangements are contained in the directors’ remuneration report on pages 29
to 33
d company employee costs 
2007 2006 
£’000 £’000 
wages and salaries 1211 – 
social security costs 150 – 
pension costs 51 – 
charged to the consolidated income statement 1412 –
e company employee numbers
the year end and average number of employees fulltime and parttime employed
by the company including executive directors were 
at 31 march average
2007 2006 2007 2006 
administrative 3 – 3 –
the number of fulltime equivalent 
staff was 3 – 3 – 
average
by location 2007 2006 
united kingdom 3 – 
f company key management compensation
2007 2006 
£’000 £’000 
salaries and shortterm benefits 1361 – 
postemployment benefits 51 – 
1412 – 
the key management figures above include executive directors only
10 depreciation and impairment charge
depreciation and impairment is charged on network and nonnetwork assets and is
included within cost of sales and administrative expenses on that basis as follows 
2007 2006
note £’000 £’000 
cost of sales 41063 35634
administrative expenses 7582 12185 
14 48645 47819 
continuing operations 48645 47103
discontinued operations – 716
48645 47819
the cost of sales depreciation charge includes asset impairment charges of £nil
2006 £291 000
11 net financing costs 
a analysis of net financing costs
2007 2006 
notes £’000 £’000 
interest on overdrafts and other borrowings 5634 7299 
interest on defined benefit pension plan obligations 29 3431 2850 
interest on finance leases 361 348 
financial expenses b 9426 10497 
interest receivable 1365 910
expected return on defined benefit pension plan assets 29 4086 3304
financial income 5451 4214
net financing costs 3975 6283 
b analysis of financial expenses
2007 2006
£’000 £’000 
secured bank loans 4465 4304 
amortisation of loan costs 518 2266 
loan costs written off 376 –
other interest payable 275 729
interest on defined benefit pension plan obligations 3431 2850 
finance leases 361 348 
9426 10497
c analysis of net financing costs between continuing and
discontinued operations
2007 2006
note £’000 £’000 
financial expenses
continuing operations 9426 10497 
discontinued operations 3 – 3 
9426 10500 
financial income
continuing operations 5451 4214
discontinued operations 3 8 35
5459 4249
net financing costsincome
continuing operations 3975 6283 
discontinued operations 3 8 32
3967 6251 thus group plc annual report 2007 49
12 income tax credit
recognised in the consolidated income statement 
2007 2006 
current tax credit £’000 £’000 
uk corporation tax charge at 30 2006 30 – –
overseas tax – current year tax charge – 114
overseas tax – adjustments in respect of prior years – 787
– 673
2007 2006
deferred tax credit £’000 £’000
origination and reversal of temporary differences 4482 –
deferred tax asset recognised in respect of 
prior year timing differences 65117 –
69599 –
2007 2006
£’000 £’000
income tax credit excluding tax on sale of 
discontinued operations 69599 673 
income tax credit from continuing operations 69599 –
income tax expense from discontinued operations 
excluding gain on sale – 673
69599 673 
income tax on gain on sale of discontinued operations 13263 –
total income tax credit 56336 673 
reconciliation of effective tax rate
the current tax charge is higher 2006 higher than the standard rate of corporation
tax in the uk 30 applied to the profitloss for the year due to the following factors
2007 2006
£’000 £’000
profitloss after tax for the year 83928 26183
t otal income tax credit 56336 673
profitloss excluding income tax 27592 26856
2007 2007 2006 2006
 £’000  £’000
income tax using uk standard rate of 
corporation tax of 30 2006 30 300 8278 300 8057
effects of
permanent differences 18 503 42 1133 
fixed asset timing differences –– 209 5613 
other timing differences –– 49 1311
deferred tax asset recognised in the 
current year in respect of prior year
timing differences 2360 65117 ––
overseas tax – current year tax charge –– 04 114 
overseas tax – adjustments in respect 
of prior years –– 29 787
2042 56336 25 673
2007 2006
income tax recognised directly in equity £’000 £’000
actuarial gains and losses 893 –
the disposals in the prior year had no material impact on the tax charge 
13 earningsloss per share 
the basic earningsloss and diluted earningsloss per ordinary share have been
calculated in accordance with international accounting standard 33 “earnings per
share” ias 33 for both years the profitloss 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 earningsloss and diluted earningsloss per
ordinary share the detailed calculations are as follows
a profitloss
2007 2006
£’000 £’000 
profitloss for the year from continuing operations 54514 28332
profit for the year from discontinued operations 29414 2149 
total profitloss for the year – attributable
to equity shareholders 83928 26183
no of shares no of shares
weighted average number of ordinary 000’s 000’s
shares in thousands notes 2007 2006
issued ordinary shares at 1 april 180757 1348613 
effect of own shares held 1476 15967
effect of share options exercised 313 –
effect of shares issued 379 46299 
effect of 10 to 1 share consolidation 26b – 1241050
basic weighted average number of
shares at 31 march 179973 137895 
effect of dilutive potential ordinary shares – 
share options c 1832 – 
diluted weighted average number of shares 
at 31 march 181805 137895 
the basic and diluted weighted average share capital excludes 866376 2006
1476879 ordinary shares held by the company under trust in connection with the
employee share schemes
the average market value of the company’s shares for the purposes of calculating the
dilutive effect of share options was based on quoted market prices for the period that
the options were outstanding
b profitloss per share for continuing and discontinued operations 
for the years ended 31 march 2007 and 31 march 2006 the earningsloss per
share for continuing and discontinued operations has been calculated using the same
figures as the overall earningsloss per share except that the profit for the year used
in the calculation for the continuing operations earnings per share is £54514000
2006 loss £28332000 and for discontinued operations the profit is £29414000
2006 profit £2149000
c potentially dilutive instruments
due to their antidilutive nature for the year ended 31march 2006 946185 share
options have been excluded from the diluted loss per share calculation 50 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
14 property  plant and equipment 
land and leasehold plant and 
buildings equipment other assets total
group notes £’000 £’000 £’000 £’000
cost 
at 1 april 2005 4990 557541 142930 705461 
acquisitions through business combinations 410 17493 4216 22119 
additions 326 24748 3221 28295 
transfer to noncurrent assets held for sale 208 2608 1980 4796
at 31 march 2006 5518 597174 148387 751079
at 1 april 2006 5518 597174 148387 751079 
reclassification – 1447 1447 – 
additions 1757 48712 7228 57697 
disposal of businesses – – 102 102
at 31 march 2007 7275 644439 156960 808674
depreciation and impairment losses
at 1 april 2005 3091 224629 106873 334593 
depreciation charge for the year 5 10 452 38332 8744 47528 
impairment losses for the year 5 10 – 291 – 291 
transfer to noncurrent assets held for sale 182 1274 2261 3717
at 31 march 2006 3361 261978 113356 378695
at 1 april 2006 3361 261978 113356 378695 
depreciation charge for the year 5 10 523 41058 7064 48645 
at 31 march 2007 3884 303036 120420 427340 
net book value
at 1 april 2005 1899 332912 36057 370868 
at 31 march 2006 2157 335196 35031 372384 
at 1 april 2006 2157 335196 35031 372384 
at 31 march 2007 3391 341403 36540 381334 
the net book value of tangible fixed assets held under finance leases by the group at 31 march 2007 was £236000 2006 £456000 the charge for depreciation against
these assets during the year was £220000 2006 £13000 see note 5
due to the changing market conditions in the telecommunication industry the group undertook a review of all categories of fixed assets and as a result an impairment charge
of £nil 2006 £291000 was recognised
all property plant and machinery of the group is secured by a bond and floating charge and a fixed and floating charge in favour of the royal bank of scotland for the
secured bank loans thus group plc annual report 2007 51
15 intangible assets 
trade customer computer
goodwill names lists software licences other total
group note £’000 £’000 £’000 £’000 £’000 £’000 £’000
cost
at 1 april 2005 – – – 4222 750 2077 7049 
acquisitions through business combinations – as restated 59532 1600 6600 – – 719 68451
additions – – 3141 700 780 – 4621 
at 31 march 2006 – as restated 59532 1600 9741 4922 1530 2796 80121
at 1 april 2006 59532 1600 9741 4922 1530 2796 80121
additions ––– 1624 – 351659
revisions to deferred consideration 1974 ––––– 1974
at 31 march 2007 57558 1600 9741 6546 1530 2831 79806
aggregate amortisation
at 1 april 2005 – – – 2167 553 2027 4747 
impairment provision 5 – 1600 – – – – 1600 
amortisation charge for the year 5 – – 1308 706 42 68 2124 
at 31 march 2006 – 1600 1308 2873 595 2095 8471
at 1 april 2006 – 1600 1308 2873 595 2095 8471 
amortisation charge for the year 5 – – 2371 921 71 395 3758 
at 31 march 2007 – 1600 3679 3794 666 2490 12229
carrying amounts
at 1 april 2005 – – – 2055 197 50 2302 
at 31 march 2006 – as restated 59532 – 8433 2049 935 701 71650
at 1 april 2006 59532 – 8433 2049 935 701 71650
at 31 march 2007 57558 – 6062 2752 864 341 67577
all intangible assets including goodwill are secured by a bond and floating charge
and a fixed and floating charge in favour of the royal bank of scotland for the
secured bank loans
the amortisation charge is recognised in the following line items in the consolidated
income statement 
2007 2006 
£’000 £’000 
cost of sales – –
administrative expenses 3758 2124 
3758 2124 
following the acquisition of y our communications the group decided not to use the
y our communications trade name and accordingly the £1600000 intangible asset
recognised at acquisition was impaired to £nil
impairment tests for cash generating units containing goodwill 
goodwill arose on acquisitions in the year ended 31 march 2006 in the prior year 
this goodwill was allocated to the y our communications legend communications plc
and intercell businesses which at 31 march 2006 were identified as separate cash
generating units cgus following the integration of these entities within the existing
operations the number of cgus has been redefined goodwill arising on acquisition
has been amended to reflect the finalisation during the year  of fair values and has
been reallocated to the following cgus
2007
£’000
managed solutions 2333
data and telecoms 27898
internet 14214
mobile 13113
57558 
the group tests goodwill annually for impairment the impairment test involves
determining the recoverable amount of cgus to which goodwill has been allocated
the recoverable amount is based on the present value of expected future cash flows
value in use as the nature of the group’s business results in a significant amount of
unallocated assets and costs the value in use of all assets has also been considered
the key assumptions underlying the cash flow projections are revenue growth
margins the level of operating expenditure the amount of capital expenditure and
the terminal value of the cgu the cash flow projections are based on formally
approved management cash flow projections for a tenyear period which for the first
five years are based on past experience and future expectations and for the next five
years are based on growth rates consistent with uk growth forecasts these are then
extrapolated into perpetuity using a nominal longterm growth rate based on the
united kingdom gdp of 30 a pretax discount rate in the range of 98 to 11
has been used the cost of capital assigned to cgus can have a significant effect on
valuation the cost of capital reflects a number of financial and economic variables
including the risk free interest rate and a premium to reflect the inherent risks these
variables are established based on management judgement
having reviewed the key assumptions used the directors do not believe that there 
is a reasonably possible change in any of the key assumptions that require 
further disclosure 52 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
16 investments 
subsidiary undertakings
2007 2006 
company £’000 £’000 
cost and net book value
at 1 april 69079 56963 
additions – 89346 
transferred to subsidiary – thus plc 12116 77230
at 31 march 56963 69079 
the investment in subsidiary undertakings represents an investment in shares of
£56963000 2006 £69079000
details of the company’ s significant subsidiary undertakings all of which are
included in the consolidation at 31 march 2007 are as follows 
19 cash and cash equivalents 
group company
2007 2006 2007 2006 
note £’000 £’000 £’000 £’000 
cash and cash at bank per 
balance sheet 31724 60853 87 87 
cash and cash equivalents 
included within assets classified 
as held for sale 3 – 2804 – – 
less deposits with a maturity 
period in excess of three months 400 400 – – 
cash and cash equivalents
per cash flow statements 31324 63257 87 87 
20 trade and other payables 
group company
2006 
2007 as restated 2007 2006
note £’000 £’000 £’000 £’000
trade payables 36991 42647 – – 
amounts due to related parties 33 1166 2074 – – 
t axation and social security 613 1556 154 – 
capital creditors and accruals 9271 3339 – –
other payables 5448 10971 87 87 
accruals and deferred income 70044 68606 – 2491 
123533 129193 241 2578
company country of incorporation class of share proportion of 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 
y our communications group limited england ordinary 100 investment holding company 
preference 100
intercell limited england ordinary 100 mobile airtime and equipment provider 
legend communications plc england ordinary 100 converged communication solutions provider
 the investment in these companies is held by a subsidiary undertaking 
17 inventories 
group company
2007 2006 2007 2006
£’000 £’000 £’000 £’000 
raw materials – replacement parts 
and consumables 4213 3824 – – 
inventories to the value of £1418000 2006 £1259000 were recognised as
expenses in the year 
included in inventories is £nil expected to be recovered in more than 12 months 
18 trade and other receivables
group company
2006 
2007 as restated 2007 2006
notes £’000 £’000 £’000 £’000
amounts falling due within one year 
trade receivables 71882 72336 – – 
amounts owed by related 
parties 33 3064 5194 – –
t axation and social security – 3322 – 170 
prepayments and accrued income 31245 34735 – –
other receivables 2290 1228 – –
108481 116815 – 170 
amounts falling due after one year 
amounts owed by 
subsidiary undertakings a – – 78095 70026
108481 116815 78095 70196 
a although amounts owed by subsidiary undertakings are repayable on demand
the directors believe that as the amounts are unlikely to be realised in the 12
months from the balance sheet date the loan is appropriately disclosed as
amounts falling due after one year  thus group plc annual report 2007 53
21 current tax liabilities
group company
2007 2006 2007 2006 
note £’000 £’000 £’000 £’000 
overseas tax liability – 124 – – 
transfer to liabilities classified 
as held for sale 3 – 114 – – 
liabilities acquired through 
business combinations 537 737 – – 
537 747 – – 
22 interestbearing loans and borrowings 
group company
2007 2006 2007 2006 
current notes £’000 £’000 £’000 £’000 
other borrowings
secured bank loans a 6000 2000 – – 
other loans b 186 475 – – 
finance lease obligations c 325 347 – –
6511 2822 – –
noncurrent 
other borrowings
secured bank loans a 46261 81320 – –
other loans b 56 239 – –
finance lease obligations c 3554 3856 – –
49871 85415 – –
a secured bank loans
the secured bank loans are stated net of unamortised issue costs of £739000 2006
£1680000 the secured bank loans 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 and machinery
securities debts bank accounts goodwill and uncalled capital and intellectual
property rights of the group
the secured bank loans are split into three separate facilities the first facility to be
repaid in full of £30000000 falls due for payment on 22 june 2007 but was 
repaid during the year on 19 june 2006 a further £15000000 is due to be paid
on 30 june 2010 to repay a second facility in full the final facility is due to be paid
on a biannual basis with the first repayment of £2000000 being made on 
31 december 2006 as scheduled and the final repayment of £8000000 falling
due 30 june 2010
the interest rate applied to the loan facilities 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 722 2006 804
b other loans
the other loans are secured by a debenture giving a fixed and floating charge over
all assets of the group
c finance lease obligations
finance lease liabilities are payable as follows
minimum lease minimum lease 
payments interest principal payments interest principal
2007 2007 2007 2006 2006 2006
£’000 £’000 £’000 £’000 £’000 £’000 
less than one year 648 323 325 687 340 347 
between one and five years 2021 1083 938 2157 1167 990 
after five years 3422 806 2616 3910 1044 2866 
total 6091 2212 3879 6754 2551 4203 54 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
23 financial instruments
a liquidity risk 
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 secured bank loans were the
group’ s main source of funding during the year and drawdowns under the facilities
were subject to various financial covenants
b credit risk 
the group and company monitor the exposures and the credit rating of their
counterparties regularly and carry out appropriate credit checks on potential customers
before sales commence to mitigate the credit risk that the group and company may
have with any one counterparty it is not anticipated that any existing counterparties 
will fail to meet their current obligations the maximum exposure to credit risk is
represented by the carrying value of each financial asset in the balance sheet
c interest rate risk 
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 secured bank
loans are hedged and this policy has been applied throughout the year  t o comply
with the group’ s secured bank loan facilities an interest rate hedge must be in place
the costs of interest rate hedges are expensed as incurred the group has an interest
rate hedge in place that caps libor at 475 for £20m of borrowings
the group classifies interest rate swaps as cash flow hedges and states them at fair
value the fair value of swaps at 1 april 2006 and 31 march 2007 was not material
effective interest rates – group
in respect of incomeearning financial assets and interestbearing financial liabilities
the following table indicates their effective interest rates at the balance sheet date and
the periods in which they mature or  if earlier  are repriced 
31 march 2007
effective 
interest 0 to 1 1 to  2 2 to  5 5 years 
rate total year years years and over 
 £’000 £’000 £’000 £’000 £’000
cash and cash 
equivalents 40 3132431324 – – –
secured bank loans 
net of unamortised 
loan costs 60 52261 52261 – – –
secured other loans 575 242 185 36 21 –
finance lease liabilities 893 3879 325 253 685 2616
25058 21447 289 706 2616
 these liabilities bear interest at a fixed rate 
31 march 2006
effective 
interest 0 to  1 1 to  2 2 to  5 5 years 
rate total year years years and over 
 £’000 £’000 £’000 £’000 £’000 
cash and cash 
equivalents 35 63257 63257 – – –
secured bank loans 
net of umamortised 
loan costs 525 83320 83320 – – –
secured other loans 575 714 624 36 54 –
finance lease 
liabilities 893 4203 347 324 666 2866
24980 21034 360 720 2866
 these liabilities bear interest at a fixed rate 
d foreign exchange risk
thus faces currency exposures in us dollars usd from operating activities in the
united states and has fixed asset expenditure in usd the group was also subject to
currency exposure in euros and incurred fixed asset expenditure in euros from its
operating activities in the netherlands until the sale of this operation during the year  
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
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
consolidated income statement
net foreign currency 
monetary assetsliabilities
us dollar euro 2007
functional currency of operation £’000 £’000 £’000
sterling 1168 28 1196
net foreign currency 
monetary assetsliabilities
us dollar euro 2006 
functional currency of operation £’000 £’000 £’000
sterling 1106421 685
e borrowing facilities 
during the year ended 31 march 2007 thus repaid the £30000000 additional
revolving loan facility on 19 june 2006 and also made the first scheduled repayment
of £2000000 of the amortising term loan in december 2006
during the prior year thus had replaced its existing £57000000 term loan
provided by the royal bank of scotland société genérale t oronto dominion and
rabobank international london with a £15000000 revolving credit facility and a
£40000000 amortising term loan with the royal bank of scotland and rabobank
international london during march 2006 a further £30000000 revolving loan
facility was made available and drawn down all loans are subject to various
financial covenants
the first repayment due of the amortising term loan was scheduled to be made on 
31 december 2006 for £2000000 and was paid accordingly with subsequent
repayments due on a halfyearly basis the £15000000 revolving credit facility 
falls due for repayment in its entirety on 30 june 2010 and the revolving loan facility
of £30000000 falls due for repayment on 22 june 2007 but following the sale 
of the netherlands operation this loan was repaid on 19 june 2006
the purpose of the replacement bank facility is for general corporate purposes
including working capital requirements the purpose of the additional facility 
was to finance the acquisition and restructuring costs and expenses as well as being
available for financing capital expenditure working capital requirements and other
general corporate purposes the bank facility incurred commitment fees based on
15 for the £15000000 revolving credit facility and £40000000 amortising term
loan and at a rate of 165 in respect of the additional £30000000 facility
the group and company have no undrawn committed borrowing facilities at either
31 march 2007or 31 march 2006 
f fair values 
the fair values together with the carrying amounts shown in the balance sheet for the
year ended 31 march 2007 are as follows 
carrying
amount fair value
group notes £’000 £’000
trade and other receivables 18 108481 108481
cash and cash equivalents 19 31324 31324
trade and other payables 20 123533 123533
secured bank loans 22 52261 52261
other loans 22 242 242
finance lease liabilities 22 3879 2348
40110 38579 thus group plc annual report 2007 55
23 financial instruments continued
f fair values continued
the fair values together with the carrying amounts shown in the balance sheet for the
year ended 31 march 2006 are as follows 
carrying fair 
amount value
as restated as restated
group notes £’000 £’000 
trade and other receivables 18 116815 116815
cash and cash equivalents 19 63257 63257 
trade and other payables 20 129193 129193
secured bank loans 22 83320 83320
other loans 22 714 714
finance lease liabilities 22 4203 2655
37358 35810
estimation of fair values
the following methods and assumptions were used to estimate the fair values 
shown above 
trade and other receivablespayables – the fair value of receivables and
payables with a remaining life of less than one year is deemed to be the same 
as the book value
cash and cash equivalents – the fair value is deemed to be the same as the
carrying amount due to the short maturity of these instruments
secured bank loans and other loans – the fair value is based on the book value
as the interest rate charged reflects the fair value of the borrowings
finance lease liabilities – the fair value is based on the discounted future cash
flows expected to be paid out by the group the fair values are based on cash flows
discounted using a rate based on borrowings of 7 68 2006 66
maturity of financial liabilities 
the maturity profile of the carrying amount of the group’ s noncurrent liabilities at 
31 march was as follows 
2007 2006 
finance finance
debt leases total debt leases total 
£’000 £’000 £’000 £’000 £’000 £’000 
in more than one 
year but not more 
than two years 10036 253 1028936078 324 36402 
in more than two 
years but not more 
than five years 37021 685 3770647138 666 47804 
in more than five years – 2616 2616 23 2866 2889 
47057 3554 50611 83239 3856 87095 
less unamortised costs 739 – 739 1680 – 1680
46318 3554 49872 81559 3856 85415
g sensitivity analysis 
in managing interest rate and currency risks the group and company aim to reduce
the impact of shortterm fluctuations on the group’ s and company’ s earnings over
the longterm however  permanent changes in foreign exchange and interest rates
would have an impact on the consolidated results
group
at 31 march 2007 it is estimated that a general increase of one percentage point 
in interest rates would decrease the group’ s profit before tax by approximately
£530000 2006 increase loss before tax £550000
it is estimated that a general increase of one percentage point in the value of the 
euro against other foreign currencies would not have materially altered the group’ s
profit before tax for the year ended 31 march 2007 2006 decrease loss before 
tax £22000
company
the company does not incur interest charges or transactions in foreign currencies
therefore no sensitivity analysis has been provided
h 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 interest rate hedges in connection with the secured
bank loans these are charged to the consolidated income statement when incurred
24 provisions 
a group
customer
contracts restructuring property total
£’000 £’000 £’000 £’000
at 1 april 2006 2044 5173 3098 10315
provisions used during the year 1100 5173 936 7209
at 31 march 2007 944 – 2162 3106
provisions are analysed between current and noncurrent as follows
2007 2006 
£’000 £’000 
current 1534 6507 
noncurrent 1572 3808 
3106 10315 
customer contracts 
the initial customer contracts provision of £2044000 represented obligations in
respect of a contract acquired as part of the y our communications acquisition this
provision will be fully utilised by the conclusion of this contract which is expected to 
be september 2007 
restructuring 
the restructuring provision arose following the acquisition of y our communications in
february 2006 and represented the costs involved in the overall reduction of 15 of
the combined group’ s headcount as expected all payments due under this provision
were made within the year ended 31 march 2007 
property 
the property provision represents costs associated with vacant properties and
dilapidations a provision of £2413000 was made in the prior year following 
the acquisition of y our communications and represented the proposed costs
including dilapidations involved in the closure of 12 sites following a rationalisation
of the combined property portfolio the costs principally relate to the rents due to 
be paid on these properties until the group can exit the leases at the next contracted
exit dates 
b company 
the company has no provisions  56 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
25 deferred tax assets and liabilities
a recognised deferred tax assets and liabilities
assets liabilities net
2007 2006 2007 2006 2007 2006
group £’000 £’000 £’000 £’000 £’000 £’000
property plant and equipment 52586 – – 3000 52586 3000
intangible assets – – 1951 1300 1951 1300 
iru deferred income – – 5019 – 5019 –
sharebased payments 450 – – – 450 –
pension – – 242 – 242 –
provisions 3040 – – – 3040 –
tax loss carryforwards 11779 – – – 11779 –
tax assetsliabilities 67855 – 7212 4300 60643 4300 
b movement of temporary differences during the year
acquired in balance at balance at
business 31 march recognised in recognised 31 march
combinations 2006 profit or loss in equity 2007
£’000 £’000 £’000 £’000 £’000
property plant and equipment 3000 3000 55586 – 52586
intangible assets 1300 1300 651 – 1951
iru deferred income –– 5019 – 5019
sharebased payments –– 450 – 450
pensions –– 651 893 242
provisions –– 3040 – 3040
tax loss carryforwards – – 11779 – 11779
4300 4300 65836 893 60643
the amount recognised in the profit and loss includes a credit of £69599000 in continuing operations and a charge of £3763000 in discontinued operations
c unrecognised deferred tax assets
t otal unrecognised deferred tax assets at 31 march 2007 and 31 march 2006
are noted below these assets were not recognised as their future recoverability
was not probable
group company
2007 2006 2007 2006
£’000 £’000 £’000 £’000 
accelerated capital allowances – 55523 – – 
other timing differences – 14449 – –
t otal deferred tax assets 
not recognised – 69972 – –
the directors have prepared longterm financial projections which highlight that the
group should make operating profits and become tax paying in the future it is
anticipated based on these projections that the group should move into operating
profit during the year ending 31 march 2008 consequently the directors are of the
view that recognition of the deferred tax asset is appropriate
t ax losses are carried forward indefinitely the deductible temporary differences 
do not expire under the current tax legislation thus group plc annual report 2007 57
26 issued capital 
group and company
2007 2006
£’000 £’000
authorised 
197478862 ordinary shares of 25p each 49370 49370 
group and company
no of shares 2007 no of shares 2006
issued and fully paid notes 000’ s £’000 000’s £’000 
at 1 april 2006 – ordinary shares of 25p each 1 april 2005 ordinary shares of 25p each 180757 45189 1348613 33715 
ordinary shares issued during the year at 25p each 2006 25p each a 2275 569 458963 11474 
share consolidation – 10 to 1 b –– 1626819 – 
at 31 march 2007 – ordinary shares of 25p each 2006 ordinary shares of 25p each 183032 45758 180757 45189 
c shares to be issued
under the terms of the acquisition of y our communications united utilities plc
may be entitled to a further allotment of consideration shares this entitlement is
dependent upon the thus group plc share price reaching or exceeding certain
strike prices from the date of completion of 26 february 2006 up to and including
31 december 2007 the maximum number of shares that may be allotted under 
the terms of the acquisition are 12001006 ordinary shares of 25p each this
represents a total nominal value of £3000000 if the maximum number of shares
are allotted under the terms of the agreement united utilities plc will have a potential
shareholding of 265 in the company at 31 march 2007 it was estimated that
following the allotment of 2274701 ordinary shares in february 2007 the total
value of these shares is £7300000 2006 £12800000 using a “monte carlo”
simulation methodology a share price volatility measure of 28 has been assumed
based on the remaining vesting period of the share options
d rights attaching to ordinary shares
the holders of ordinary shares are entitled to
i dividends – the holders of ordinary shares are entitled to dividends as declared
from time to time by the company
ii voting rights – every member is entitled to one vote per share at general meetings
of the company but only if the shares held by the member are fully paid
iii distribution of assets on liquidation – in the event of a windingup of the company
the whole or any part of the assets of the company may be divided amongst the
members in specie the liquidator is also entitled to value the assets and determine
how the division is to be carried out as between the members or different classes
of members or vest the whole or any part of the assets in trust for the benefit of
the members and determine the scope and terms of those trusts 
a issue of shares
on 1 february 2007 2274701 ordinary shares of 25p each with a total 
nominal value of £569000 were issued and allotted to united utilities plc as 
an additional consideration for the acquisition of y our communications this
consideration was valued at £3526000 using the share price at the date of
acquisition of 155p prior to the 10 to 1 share consolidation and £2957000 
was transferred to the share premium account
in the prior year the following share issues were made
on 6 february 2006 67430657 ordinary shares of 25p each and a total nominal
value of £1686000 were issued for cash for a total consideration of £9609000
expenses of £377000 were incurred by the group in connection with this issue and
these costs were transferred to the share premium account
on 27 february 2006 391532852 ordinary shares of 25p each were issued 
as part of the initial consideration for the acquisition of y our communications and
were allotted to united utilities plc these shares are deemed to rank pari passu with
the other ordinary shares issued and fully paid up this initial consideration was
valued at £60688000 with a total nominal value of £9788000 expenses of
£2359000 were incurred by the group in connection with this issue and the costs
were transferred to the share premium account and merger reserve in accordance 
with section 131 of the companies act 1985
b share consolidation
on 10 march 2006 the share capital of the company was subject to a share
consolidation whereby every ten ordinary shares of 25p each were replaced with
one ordinary share of 25p each the effect of the share consolidation was to reduce
the number of issued ordinary shares by 90 the new ordinary shares of 25p each
have the same rights including voting and dividend rights as the previous ordinary
shares of 25p each 58 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
27 reconciliation of movement in capital and reserves
a group
shares to share capital
no of issued be issued premium merger redemption other cumulative
shares capital reserve account reserve vi reserve vii reserves loss reserve total 
notes 000’s £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
balance at 1 april 2005 1348613 33715 – – 566560 23248 2 290734 332787
shares issued 458963 11474 – 36091 19996 – – – 67561
share consolidation 1626819 – – – – – – – –
shares to be issued ii – – 12800 – – – – – 12800
loss for the year – – – – – – – 26183 26183
currency translation differences 
on overseas net assets iv – – – – – – 5 – 5
actuarial loss on defined 
benefit pension scheme – – – – – – – 2390 2390
movement in own shares held v – – – – – – – 1067 1067
balance at 31 march 2006 180757 45189 12800 36091 586556 23248 3 318240 385647
balance at 1 april 2006 180757 45189 12800 36091 586556 23248 3 318240 385647
shares issued i 2275 569 – 2910 – – – – 3479
shares to be issued – shares issued ii – – 3526 – – – – – 3526
shares to be issued – reduction iii – – 1974 ––––– 1974
profitfor the year – – – – – – – 83928 83928
currency translation differences 
on overseas net assets iv – – – – – – 15 – 15
translation differences released iv –––––– 12 – 12
actuarial gain on defined 
benefit pension scheme – – – – – – – 2978 2978
income tax on defined benefit plan 
actuarial gains 25 ––––––– 893 893
movement in own shares held v – – – – – – – 1583 1583
balance at 31 march 2007 183032 45758 7300 39001 586556 23248 – 230644 471219
the number of own shares held by the esop trust and over which the 
group has de facto control as at 31 march 2007 was 866376 2006
1476879 at 31 march 2007 5570 2006 16331 shares were under
option to employees
the market value as at 31 march 2007 of the shares held under trust and 
which have not yet vested unconditionally with employees is £1596298 
2006 £2388852
the nominal value of the own shares held under trust as at 31 march 2007 
was £216594 2006 £369220
vi the opening merger reserve balance of £566560000 represents the
consideration received less expenses when the company issued shares on 
12 march 2002 at this time the group demerged from its former parent and
this restructuring was accounted for using merger accounting principles under
the then uk gaap  during the year ended 31 march 2006 £19996000 was
added to this reserve representing the element of the share issue and related
costs that are assigned to the purchase of the y our communications group
limited and intercell limited in accordance with section 131 of the companies
act 1985
vii the capital redemption reserve was created when 25000000 deferred non
voting shares of 92
343
346p each were cancelled pursuant to a special resolution
of the company passed on 19 march 2002
the cumulative loss reserve closing balance is offset by £21232000
2006 £21971000 in respect of own shares held 
i the shares issued were valued at a consideration of £3526000 with
£2957000 being transferred to the share premium account other costs
totalling £47000 were also incurred during the year ended 31 march 2007
relating to the issue of shares in the prior year 
ii the shares to be issued in respect of the acquisition of y our communications will
be satisfied in ordinary shares see note 26 c
iii the reduction in the shares to be issued follows an update of the valuation of the
remaining 9726305 shares potentially due to united utilities see note 26c
iv this represents net foreign exchange differences arising from the translation 
of the financial statements of foreign operations which have been released 
back to the consolidated income statement following the disposal of the
netherlands operations
v the movement in own shares held represents the charge to the consolidated
income statement for the year of £1164000 2006 £872000 and
£419000 2006 £195000 proceeds from the exercise of share options
the thus plc employee share trust was established at the time of thus plc’ s
flotation in november 1999 thus plc provided the trust with a £24m non
interestbearing 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 thus group plc annual report 2007 59
27 reconciliation of movement in capital and reserves continued
b company
shares to share capital
no of issued be issued premium merger redemption cumulative
shares capital reserve account reserve reserve loss reserve total
000’s £’000 £’000 £’000 £’000 £’000 £’000 £’000
balance at 1 april 2005 1348613 33715 – – – 23248 540 56423
shares issued 458963 11474 – 36091 19996 – – 67561
share consolidation 1626819 – – – – – – –
shares to be issued – – 12800 – – – – 12800
balance at 31 march 2006 180757 45189 12800 36091 19996 23248 540 136784
balance at 1 april 2006 180757 45189 12800 36091 19996 23248 540 136784
shares issued 2275 569 – 2910 – – – 3479
shares to be issued – shares issued – – 3526 – – – – 3526
shares to be issued – reduction – – 1974 –––– 1974
profit for the year – – – – – – 141 141
balance at 31 march 2007 183032 45758 7300 39001 19996 23248 399 134904
as permitted by section 230 of the companies act 1985 the company has not presented its own income statement the company’ s income statement was approved by the
board on 18 may 2007 the company made a profit of £141000 for the year ended 31 march 2007 2006 neither profit nor loss made
29 retirement benefit obligations
the pension charge for the year comprises 
2007 2006 
£’000 £’000 
defined benefit scheme 5162 3872 
defined contribution arrangements 773 228 
others 136 79 
6071 4179
the group 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
the information disclosed below is in respect of the whole of the thus group plc
pension scheme the company has no pension commitments
group
2007 2006
£’000 £’000
present value of funded defined benefit obligations 74630 69005
fair value of plan assets 75435 61094 
net assetsobligations 805 7911
unrecognised actuarial gains and losses – – 
recognised defined benefit assetliability
at the end of the year 805 7911
movements in present value of defined benefit obligations
group
2007 2006
note £’000 £’000
at 1 april 69005 52186
current service cost 5162 3872
past service cost a 1880 –
interest cost 3431 2850
actuarial gainslosses 4573 9993
benefits paid 1175 751 
contributions by members 900 855
at 31 march 74630 69005
28 analysis of net debt 
net debt includes cash and cash at bank overdrafts loans and finance leases 
as follows
at other at 
1 april noncash 31 march 
2006 cash flow changes 2007 
£’000 £’000 £’000 £’000
cash and cash at bank 63657 31933 400 31324 
overdrafts ––– –
63657 31933 400 31324 
loans – due within one year 2475 2472 6183 6186
loans – due after one year 83239 30000 6183 47056
finance leases 4203 324 – 3879
89917 32796 – 57121
total 26260 863 400 25797
the net debt figure is shown gross of unamortised issue costs of £739000 
2006 £1680000
the noncash change to cash and cash at bank of £400000 represents deposits 
held with a maturity period in excess of three months included in the opening cash
and cash at bank balance of £63657000 60 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
29 retirement benefit obligations continued
movements in fair value of plan assets 
group
2007 2006
note £’000 £’000
at 1 april 61094 47290 
expected return on plan assets 4086 3304 
actuarial lossesgains 1595 7603 
contributions by employer b 12125 2793 
contributions by members 900 855 
benefits paid 1175 751
at 31 march 75435 61094
a these costs were provided for as part of the restructuring provision created at 
31 march 2006
b during the year ended 31 march 2007 the group made a oneoff payment of
£7500000 into the defined benefit pension scheme to effectively eliminate the
deficit recorded in the december 2005 valuation of the scheme
further payments totalling £1880000 were paid into the scheme for
augmentation payments concerning former employees
expense recognised in the consolidated income statement
group
year ended y ear ended
31 march 31 march 
2007 2006
£’000 £’000
current service cost 5162 3872 
interest on defined benefit pension plan obligations 3431 2850 
expected return on defined benefit pension plan assets 4086 3304
total pension expense 4507 3418 
the expense is recognised in the following line items in the consolidated 
income statement 
group
year ended y ear ended
31 march 31 march 
2007 2006
£’000 £’000
cost of sales 3184 2284 
selling and distribution expenses 941 581 
administrative expenses 1037 1007 
finance income 4086 3304
finance expense 3431 2850 
4507 3418
cumulative actuarial losses reported in the statement of recognised income and
expenses since 1 april 2004 the transition date for adopting ifrs are £763000
2006 £3741000 
the fair value of the plan assets and the return on those assets were as follows 
group
2007 2006
fair value fair value
£’000 £’000
equities 37428 34811 
bonds 30385 25867 
other assets 7622 416 
75435 61094 
actual return on plan assets 2491 10907 
the expected rates of return on plan assets are determined by reference to relevant
indices the overall expected rate of return is calculated by weighting the individual
rates in accordance with the anticipated balance in the plan’ s investment portfolio
principal actuarial assumptions used at the measurement date were as follows 
group
31 march 31 march
2007 2006 
 per annum  per annum 
discount rate 54 50
expected rate of return on assets 64 65
future salary increases 41 38
rate of increase in pensions 31 28
inflation assumption 31 28
the average life expectancy assumptions after a retirement age of 60 are 
2007 2006
number number
of years of years 
male 251 237
female 279 269
 the expected return on scheme assets assumption was determined as the average
of the expected returns on the assets held by the scheme at 31 march 2007 the
rates of return for each class were determined as follows and are set out in the
table below 
• equities the rate adopted was derived using watson wyatt’ s global asset model
at 31 march 2007
• bonds the overall rate has been set to reflect the yields available on the gilts and
corporate bond holdings held as at 31 march 2007
• other assets this class is mostly made up of cash holdings and the rate adopted
reflects current shortterm returns on such deposits 
longterm rate of return expected on
31 march 31 march 
2007 2006
 per annum  per annum 
equities 79 79
bonds 51 47
other assets 41 38
t otal assets 64 65
history of plan
the history of the plan for the current and prior years is as follows 
group
2007 2006 2005
£’000 £’000 £’000
present value of defined benefit obligation 74630 69005 52186
fair value of plan assets 75435 61094 47290
surplusdeficit 805 7911 4896
experience adjustments 
group
2007 2006 2005
£’000 £’000 £’000
experience gainloss on plan liabilities 6760 97 106
experience lossgain on plan assets 1595 7603 1234
the group expects to contribute approximately £3200000 to its defined benefit
plan in the next financial year  
defined contribution plans
the group operates a number of defined contribution pension plans and has also
made payments to other schemes during the year  
the total expense relating to these plans in the current year was £909000 
2006 £307000  thus group plc annual report 2007 61
30 financial commitments 
a group analysis of total commitments under operating leases
2007 2006 
£’000 £’000 
leases of land and buildings
expiring within one year 612 1580 
expiring between two and five years inclusive 9254 7600 
expiring in over five years 114421 121850 
124287 131030 
other operating leases
expiring within one year – 4 
expiring in over five years 2124 2294 
2124 2298 
the group leases a number of offices network sites and other assets under operating
leases the leases have various terms and renewal options the group also leases
towers under noncancellable operating lease agreements 
twentyfour of the leased properties have been sublet by the group these leases and
subleases expire between three months and 20 years and the total future minimum
sublease payments expected to be received at 31 march 2007 are £14495000
2006 £14121000 sublet payments of £1525000 are expected to be received
in the following financial year  the group has recognised a provision of £101000 in
respect of two of these properties where the income received does not cover the rent
paid out by the group
at 31 march 2006 a further £2413000 had been provided for 12 properties
identified for closure following a rationalisation of the combined property portfolio
subsequent to the acquisition of y our communications note 24 at 31 march 2007
this provision was £1710000
b group capital commitments
2007 2006
£’000 £’000 
contracted but not provided 31164 14283 
these capital commitments are expected to be settled during the following financial year 
c company
the company had no obligations under operating leases or capital commitments
31 employee share schemes 
the company operates the thus group restricted scheme the thus group bonus
plan the thus group performance share plan the thus group plc discretionary
share option scheme and the thus group plc 2006 coinvestment plan details of
which are explained below 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
thus group restricted scheme
under this scheme awards were granted to senior employees of the group no
performance conditions apply onethird of the award may be exercised after one
year  twothirds after two years and the full award after three years if the holder of
the award leaves the employment of the group the award will lapse
thus group bonus plan
the shares awarded to the executives under this plan are of an equivalent value to
the annual bonus payment the awards which are not subject to any performance
conditions vest after three years but will be forfeited if the executive leaves the
employment of the company before the end of the vesting period the company
has the right to settle the awards in cash rather than shares
thus group performance share plan
awards are made under this plan to selected executive directors and employees 
and grants will only become exercisable after three years if demanding performance
targets are met two performance criteria currently apply to the vesting of performance
share awards for half of an award of performance shares to vest thus’ t otal
shareholder return tsr compared to that of the constituents of the ftse allshare
t elecoms sector as at the date of the grant is measured over a threeyear 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 shares vest when the
company’ s tsr is at the upper decile 
performance is measured over three years with no retesting opportunities 
the remuneration 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 threeyear period
the eps test is set with reference to broker forecasts covering the relevant threeyear
period the extent to which eps targets are satisfied after three years will be
confirmed by the remuneration committee
thus group plc discretionary share option scheme
under this scheme market value options can be granted to executive directors and
selected employees the performance criterion that currently applies to the vesting of
options is relative tsr measured against the ftse t elecommunications sector and the
ftse mid250 excluding telecommunications companies twothirds of the options
vest depending on the company’ s tsr compared against the telecommunications
index and onethird depending on the company’ s tsr compared against the ftse
mid250 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 remuneration committee must also be satisfied that the underlying
financial performance of the company has improved during the vesting period
thus group plc 2006 coinvestment plan
this plan is a coinvestment arrangement under which eligible employees who are
selected to participate are invited to contribute shares in the company which they
currently own or shares for which arrangements have been made to acquire with
funds provided by the employees to the plan “deposited shares” an award will
then be granted “matching award” to allow the participants to acquire further
shares the matching award will consist of one or both of “core shares” and
“performance shares” the number of core shares subject to a matching award
cannot exceed one half of the number of deposited shares a participant is entitled 
to the core shares if the related deposited shares are left in the plan until the end 
of a predetermined holding period the number of performance shares subject to 
a matching award cannot exceed the number of deposited shares contributed
a participant will be entitled to some or all of the performance shares if the related
deposited shares are left in the plan until the end of the holding period and the
performance conditions are satisfied
the maximum value of deposited shares that a participant can contribute to the plan
in any one year will be 25 of their gross annual basic salary the performance
conditions for the performance shares are that half of each award is subject to the
performance of group ebitda and the other half is based on group ebit return on
capital for the group ebitdarelated performance condition the annual compound
growth rate in ebitda must exceed 20 for 15 of the performance shares to vest
and rises on a straightline basis to 50 vesting for an ebitda growth rate of 35 
a year or above
for the other half of the performance shares to vest the group’ s annual compound
growth in ebit return on capital requires to exceed certain percentages for 15 
of the performance shares to vest the annual compound growth must exceed 4 
and rises on a straightline basis to 50 vesting for a ebit return on capital of 8 
or above a year 
thus group plc sharesave scheme
under this scheme in normal circumstances share options are exercisable on
completion of a three or fiveyear saveasyouearn contract as appropriate
closed schemes 
prior to the establishment of thus group plc on the demerger from its former parent
company 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 as the awards were granted before 7 november
2002 the recognition and measurement principles of international financial
reporting standard 2 “sharebased payments” ifrs 2 have therefore not been
applied to these schemes 62 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
31 employee share schemes continued
the terms and conditions of the grants are as follows
contractual life
scheme name grant date employees entitled no of shares granted vesting conditions of options
thus group restricted scheme 130103 senior employees 474193 three years’ service 3 years
010406 senior employees 317656 three years’ service 3 years
thus group bonus plan 280504 executive directors 100281 three years’ service 3 years
thus group performance share plan 110203 executive directors 475000 for one half of the award the company’ s 3 years
tsr must rank above the median relative to 
companies in the ftse allshare t elecoms 
sector  the remaining half is determined 
by an eps test 
280504 executive directors 328947 for one half of the award the company’ s 3 years
tsr must rank above the median relative to 
companies in the ftse allshare t elecoms 
sector  the remaining half is determined 
by an eps test 
thus group plc discretionary share 280504 executive directors 328947 performance of company’ s tsr relative 7 years
option scheme to the ftse allshare t elecoms sector and 
the ftse mid250 index excluding 
telecommunication companies
thus group plc 2006 coinvestment plan 270906 executive directors 367542 for performance shares one half of the 3 years
and senior employees award is subject to a performance condition
based on the company’ s ebitda and the 
remaining half of the award is subject 
to a performance condition based 
on the company’ s ebit
thus group plc sharesave scheme 130603 all employees 672880 three years’ service 3 years
110604 all employees 671889 three years’ service 3 years
270605 all employees 672913 three years’ service 3 years
170706 all employees 1258502 three years’ service 3 years
the number and weighted average exercise prices of share options is as follows
weighted average exercise price £ no of options weighted average exercise price £ no of options
2007 2007 2006 2006
outstanding at the beginning of the year 121 2590361 108 2582063 
forfeited during the year 141 414324 064 598300
exercised during the year 069 605850 011 66315
granted during the year 068 1943700 110 672913 
outstanding at the end of the year 098 3513887 121 2590361
exercisable at the end of the year 5570 251018
the options outstanding at 31 march 2007 have an exercise price in the range of £nil to £100 in total and £105 to £258 per share and a weighted average remaining
contractual life of 18 years the weighted average share price at the date of exercise during the year ended 31 march 2007 was £142 2006 £157
the fair value of services received in return for share options granted are measured by reference to the fair value of share options granted the estimate of the fair value of
services received is measured using the blackscholes model for the bonus plan restricted stock award and various sharesave schemes the remaining schemes have been
valued using a combination of blackscholes and the binomial lattice models
the assumptions used in the models are
restricted coinvestment sharesave sharesave 
scheme d plan e scheme scheme
notes 2007 2007 2007 2006
fair value per option £162 £044 £042 £060
share price £162 £130 £135 £155
exercise price £1 total for
each tranche £nil £105 £110
expected volatility a – – 40 60
option life 3 years 3 years 3 years 3 years
expected dividends b 0 0 0 0
riskfree interest rate c – – 480 410 thus group plc annual report 2007 63
31 employee share schemes continued
a the expected volatility has been based on the daily share price movements over
the three years preceding the granting of an award rounded to the nearest 10
b no dividends have been payable by the company since flotation and it has been
assumed that this will continue therefore a zero dividend yield has been used
c the risk free interest rate is the yield on zero coupon uk government bonds on
terms consistent with the option life
d the fair values for the restricted scheme have been calculated to be equal to the
face value therefore no expected volatility or riskfree interest rate has been
quoted in the table above
e the 2006 coinvestment plan performance conditions depend upon the
performance of the company and have been treated as nonmarketbased tests
and therefore are not incorporated into the fair value calculation the fair value
of this plan has been calculated to be 100 of the face value resulting in no
values for expected volatility or risk free interest rate being quoted above
the total expenses recognised for the year arising from sharebased payments are 
as follows
2007 2006
£’000 £’000
equity settled sharebased payment expense 1164 872 
1164 872
32 contingencies 
a sum of £400000 has been placed on deposit as funds for liabilities as 
required by the regulator  ofcom for reinstatement of civil construction works
by local authorities
33 related party transactions
a group
the group has a related party relationship with its directors and executive officers
and major shareholders all transactions with subsidiaries are eliminated on
consolidation in these financial statements therefore no disclosure is made
concerning these items
b company
the company has a related party relationship with its subsidiaries its directors and
executive officers and major shareholders
c transactions with key management personnel
the key management personnel compensation is disclosed in note 9 above
d transactions with subsidiaries
during the year ended 31 march 2007 the company transferred its investment in
legend communications plc at cost to thus plc this transfer  along with other
transactions between thus group plc and thus plc results in a total loan
outstanding at 31 march 2007 of £78095000
during the year ended 31 march 2006 the company acquired y our communications
and transferred this acquisition at cost to its wholly owned subsidiary thus plc 
the intercompany loan of £78095000 2006 £70026000 due from thus plc is
repayable on demand and is interest free however this loan is unlikely to be repaid
by thus plc within the next 12 months
e other related party transactions
following the acquisition of y our communications in february 2006 united utilities plc
held 217 of the company’ s issued share capital and was therefore considered to be
a related party from this date following the additional share issue in february 2007 
united utilities plc has a 2263 shareholding in thus group plc at 31 march 2007 
the following transactions were carried out with related parties
group company
2007 2006 2007 2006 
i sales of services £’000 £’000 £’000 £’000
united utilities group 15208 941 – – 
the figures shown for the prior year represent sales from the date of acquisition 
26 february 2006 only
group company
2007 2006 2007 2006 
ii purchases of services £’000 £’000 £’000 £’000
united utilities group 3108 365 – – 
the figures shown for the prior year represent purchases from the date of acquisition 
26 february 2006 only
group company
iii year end balances 
arising from sales 2007 2006 2007 2006
purchases of services notes £’000 £’000 £’000 £’000
receivables from related parties
united utilities group 18 3064 3260 – –
payables to related parties
united utilities group 20 1166 2074 – – 
these transactions and balances are all at arm’ s length and the balances will be
settled within the group’ s normal terms of settlement in relation to trade receivables 
and payables
group company
iv other balances with 2007 2006 2007 2006 
related parties note £’000 £’000 £’000 £’000
other receivables
balance due from united utilities 
group – in respect of acquisitions 18 – 1934 – –
balance due from thus plc 18 – – 78095 70026 
the balance due from united utilities group was settled during the year ended 
31 march 2007
group company
v other transactions with 2007 2006 2007 2006 
related parties notes £’000 £’000 £’000 £’000
issue of shares to united utilities plc
– 2274701 ordinary shares 
of 25p each 26 569 – 569 –
issue of shares to united utilities plc
– 39153285 ordinary 
shares of 25p each 26 – 60688 – 60688 
shares to be issued to united 
utilities plc – share issue and 
revision to estimate 26c 5500 – 5500 –
shares to be issued to united 
utilities plc – 12001006 ordinary 
shares of 25p each 26c – 12800 – 12800
acquisition of y our communications 
business 4b – 77230 – 77230 
transfer of acquisition of legend
communications plc to thus plc 16 – – 1 2 1 16 –
transfer of acquisition of y our 
communications to thus plc 16 – – – 77230
transfer of costs between 
thus plc and thus group plc – – 4047 –
under the terms of a relationship agreement entered into between united utilities
and thus united utilities is prevented subject to certain specific exceptions from
disposing of the ordinary shares for a period of 12 months from completion there 
is also a standstill obligation that prohibits united utilities or any other member of 
its group from acquiring any further shares in thus or making or announcing 
any offer in connection with acquiring further shares for a period of 18 months 
from the date of completion 64 thus group plc annual report 2007
notes to the consolidated and parent company 
financial statements 
for the year ended 31 march 2007 
33 related party transactions continued
vi other related party agreements
relationship agreement
in addition to the details disclosed above united utilities is entitled to nominate one
nonexecutive director for appointment to the board during the period of this
agreement on 26 february 2006 simon batey the then group finance director of
united utilities was appointed to the board of thus group plc simon batey resigned
from the thus group plc board on 8 september 2006 on 22 november 2006
martin beesley the finance director of united utilities water plc and united utilities
electricity plc was appointed as a nonexecutive director under this agreement
the purchase of goods and services includes costs covered by certain agreements
between thus plc and united utilities including telecoms and supply agreements 
and agreements to lease fibre and ducts on acquisition the group also entered into
a transitional services agreement for financial and payroll processing wayleave
services accounting software and switchboard operator agreements
vii guarantees
thus group plc has granted security by way of a deed of pledge of its shares in 
the capital of thus plc in favour of the royal bank of scotland plc under the loan
agreement for the secured bank loans thus group plc has guaranteed thus 
plc’ s obligations the amount outstanding at 31 march 2007 was £53000000
34 accounting estimates and judgements
critical accounting judgements in applying the group’ s accounting
policies and key sources of estimation uncertainty
the preparation of financial statements in conformity with ifrs requires the use of
accounting estimates and assumptions it also requires the directors to exercise their
judgement in the process of applying the group’ s accounting policies estimates
assumptions and judgements are continually evaluated based on available
information and experience as the use of estimates is inherent in financial reporting
actual results could differ from these estimates the areas involving a higher degree 
of judgement or complexity which have a significant risk of causing material
adjustments to the carrying amounts of assets and liabilities are described below
revenue
the group earns revenue from a number of different products and services some of
which are delivered under bespoke contracts in applying the group’ s accounting
policies in respect of revenue recognition a significant degree of judgement and
estimation may be required in interpreting contracts and estimating values to be used
in calculating revenue and associated costs in each accounting period
interconnect income and payments to other telecommunications operators
in certain instances thus relies on other operators to measure the traffic flows
interconnecting with the group’ s networks estimates are used in these cases to
determine the amount of income receivable from or payments that the group needs 
to make to these other operators the prices at which these services are charged are
often regulated and are subject to retrospective adjustment and estimates are used 
in assessing the likely effect of these adjustments
providing for doubtful debts
thus provides services to substantially all customers on credit terms certain debts
will not be paid through the default of a small number of customers estimates based
on the group’ s historical experience are used in determining the level of debts that
will not in the opinion of the directors be collected these estimates include such
factors as the current state of the uk economy and particular industry issues
fair values
estimating the fair values of assets and liabilities acquired on acquisition requires
judgement such fair values have been computed as follows
t angible fixed assets have been valued at their direct replacement cost less an
economic obsolescence factor  in addition this valuation has been crosschecked
against projected cash flows from cash generating units
intangible fixed assets for customer relationships have been valued using a residual
earnings approach which involves deducting contributory asset charges from
discounted cash flow projections to leave a value attributable to customers
cash flow projections are based on assessments of future activities and market
conditions and actual activities and market conditions may differ from those forecast
resulting in actual cash flows being different from those projected t angible and
intangible asset valuations are subjective to the extent actual cash flows differ from
projected cash flows
the fair value of working capital amounts is based upon estimated anticipated
recoverable amounts
useful lives for property  plant and equipment
the plant and equipment in thus’ networks is long lived with cables and switching
equipment operating for over ten years and underground ducts being used for
decades the annual depreciation charge is sensitive to the estimated services lives
allocated to each type of asset asset lives are assessed annually and changed when
necessary to reflect current thinking on their remaining lives in light of technological
change prospective economic utilisation and physical condition of the assets
concerned changes to service lives of assets implemented from 1 april 2005 had 
no significant impact on the results for the year ended 31 march 2006
impairment
thus tests goodwill annually for impairment in addition thus performs impairment
testing of assets on an annual basis where there is an indication that impairment
may exist in performing these impairment tests management’ s judgement is required
in preparing future cash flow projections and then assessing an appropriate discount
rate to be applied to these cash flows
the cost of capital used to discount future pretax cash flows can have a significant
effect on the calculation of the recoverable amount the cost of capital which is
expressed as a percentage is derived from the group’ s posttax weighted average
cost of capital
future cash flows are based on cash flow projections for ten years extrapolated in
perpetuity using a nominal longterm growth rate with cash flows in the first five years
based on approved forecasts as future cash flows may deviate to some degree from
forecasts the results of the impairment review are sensitive to any such changes
property arrangements
as part of the property rationalisation programme a number of surplus properties
have been identified and during the year some of these properties have been
successfully disposed of efforts continue to be made to sublet the remaining sites
it is recognised that this may not be possible immediately in the current economic
environment estimates have been made of the cost of vacant possessions and any
shortfall arising from the sublease rental income being lower than the lease costs
being borne by thus any such cost or shortfall has been recognised as a provision
deferred tax
deferred tax assets and liabilities require management judgement in determining the
amounts to be recognised in particular  judgement is used when assessing the extent
to which deferred tax assets should be recognised with consideration given to the
timing and level of future taxable income as future taxable income is likely to deviate
to some degree from forecasts the amount of the deferred tax asset carried needs to
be reviewed in the light of such variations
postretirement benefits
the group’ s defined benefit pension scheme is assessed annually in accordance with
ias 19 the accounting valuation which was based on assumptions determined with
independent actuarial advice resulted in a surplus of £08m being recognised 
on the balance sheet at 31 march 2007 2006 deficit £79m the size of the 
surplusdeficit is sensitive to the market value of the assets held by the scheme 
and to actuarial assumptions which include price inflation pension and salary 
increases the discount rate used in assessing actuarial liabilities mortality and other
demographic assumptions and the levels of contributions further details are included
in note 29 to the financial statements
35 subsequent events
on 21 march 2007 it was announced that the corporation tax in the united
kingdom would change from 30 to 28 from 1 april 2008 this change in rate
was not substantively enacted at the balance sheet date and as a result deferred tax
has been recognised at a rate of 30 should this change be enacted the impact on
the group’s financial statements will be to reduce the deferred tax asset by
approximately £4m thus group plc annual report 2007 65
ifrs uk gaap
y ear ended y ear ended 
year ended 31 march y ear ended 31 march y ear ended
31 march restated 31 march 2004 31 march
2007 2006 2005 restated 2003
results £’000 £’000 £’000 £’000 £’000 
revenue 532693 349987 360016 332372 291236 
earnings before interest tax and depreciationamortisation of fixed assets ebitda 41293 28778 37758 43563 27103 
restructuring and other nonrecurring costs 1570 10406 8126 – – 
exceptional items uk gaap only – – – 266 250 
loss before tax and gain on sale of discontinued operations 15085 28332 42101 26749 58789
profitloss after tax but before gain on sale of discontinued operations 54514 28332 42842 26961 58985
profitloss for the financial year 83928 26183 43156 26961 58985
free cash flow 25758 11115 3749 2619 36699
capital expenditure on tangible fixed assets 57697 28295 35110 41118 44910 
net debtfunds 25797 26260 30990 35354 32657
net assets 471219 385647 332787 379973 407412 
ratios and statistics
basic earningsloss per ordinary share pence – restated for share consolidation 4663 1899 3242 2030 4440
employees
number of employees fulltime equivalent at 31 march 
thus group plc 1705 1930 1421 2089 1858 
the financial summaries for the years ended 31 march 2007 31 march 2006 and 31 march 2005 are prepared using ifrs the financial summaries for all other years are
prepared using uk accounting uk gaap standards as it is not practicable to restate the amounts for periods prior to the transition date to ifrs the main differences between
ifrs and uk gaap in terms of the group’ s reported numbers relate to the basis on which
• acquisitions of subsidiaries are accounted for in 2006 no acquisitions in prior periods
• defined benefit pension schemes and sharebased payments are accounted for in all other periods
five year financial summary 66 thus group plc annual report 2007
this notice is important and requires your immediate attention
if you are in any doubt as to the action you should take you should
consult immediately your stockbroker bank manager solicitor
accountant or other independent financial advisor authorised under
the financial services and markets act 2000
if you have sold or otherwise transferred all your shares in the
company  please send this notice and the accompanying documents
to the purchaser or transferee or to the stockbroker bank or other
agent through whom the sale or transfer was effected for
transmission to the purchaser or transferee 
notice is hereby given that the annual general meeting of the company for 2007
will be held on wednesday 25 july 2007 at 1100 am at the plaisterers’ hall one
london wall london ec2y 5ju 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 2007
2 t o approve the directors’ remuneration report for the year ended 31 march 2007 
3 t o elect rick medlock as a director 
4 t o elect martin beesley as a director 
5 t o reelect william allan as a director 
6 t o reelect ian chippendale as a director 
7 t o reappoint 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 £361162375 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  25 october 2008 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 subsection 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 preemptive 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 subparagraph a above of equity
securities up to an aggregate nominal value of £228790450 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  25 october 2008
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 
10 t o consider and if thought fit to pass the following resolution which will be
proposed as an ordinary resolution
that the company may send or supply any document or information which
requires or is authorised to be sent or supplied to a shareholder or any other
person by the company under a provision of the companies acts as defined
in section 2 of the uk companies act 2006 or pursuant to the articles of
association of the company or to any other rules or regulations to which the
company may be subject by electronic means as defined in section 1168 of
the companies acts including by making it available on a website and the
provisions of schedule 5 to the companies act 2006 shall apply whether or
not any document or information is required or authorised to be sent by the
companies act 2006 and this resolution shall supersede any provision in
the company’ s articles of association to the extent that it is inconsistent with
this resolution
by order of the board registered office
david macleod 12 berkeley square
secretary 99 berkeley street
4 june 2007 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 600 pm on 23 july 2007 or by 600 pm two days
prior to the date of any adjournment of the meeting completing and returning a
form of proxy will not prevent any member from attending the meeting in person
and voting should that member so wish
ii members may register their proxy appointments or voting directions
electronically via the wwwshareviewcouk 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 providers should refer to their crest sponsor or voting service
providers 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 1100 am on 23 july 2007 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
notice of annual general meeting thus group plc annual report 2007 67
crest members and where applicable their crest sponsors or voting service
providers 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 providers to procure that his crest sponsor or voting service
provider 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 355 a of the uncertificated securities
regulations 2001
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 31 march 2007
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 
resolutions 3–6
the articles of association require that directors stand for election by the
shareholders at the first annual general meeting following their appointment 
and also that onethird of the directors retire at every annual general meeting 
the board following its evaluation of the performance of those directors standing 
for election and reelection confirms that each of those directors performs effectively
and demonstrates commitment to the role the biographical details of each of the
directors who are offering themselves for election or reelection are shown on page
23 the election and reelection of those directors shall subject to the passing of the
relevant resolutions take effect immediately upon the conclusion of the meeting
resolution 7
the reappointment 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 £361162375 which represents approximately 14446495
ordinary shares of 25 pence each or approximately 8 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
2008 or  if earlier  25 october 2008 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
• to allot shares not in connection with a rights issue up to a specific amount so that
the preemption requirement does not apply to the allotments of shares for cash 
up to that 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 preemption
rights of shareholders under section 89 of the companies act 1985 up to a
maximum nominal amount of approximately £228790450 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 of 9151618 ordinary shares 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
issued 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
resolution 10
the companies act 2006 contains provisions which enable companies to
communicate with their shareholders using electronic means provided that the
company has authority in its articles or shareholders have given consent by
ordinary resolution the company would like to be able to take advantage of 
this ability to use its website or email to communicate with shareholders who have
consented or are deemed to have consented to those forms of communications
although shareholders are currently able to receive certain documents from our
registrar by electronic means the new provisions will provide for a wider range 
of documents including the report and accounts notices of meetings and proxy 
forms to be provided electronically by default resolution 10 is an ordinary
resolution which will enable us to use the new arrangements and seeks the consent 
of shareholders to communications in such manner shareholders will be able to
receive on request paper copies of documents if they so choose
recommendation of the board of directors in respect of all 
items of business
the board is of the opinion that all of the proposed resolutions are in the best 
interests of shareholders as a whole and of the company accordingly the board
recommends that you vote in favour of each resolution as the directors intend to 
do in respect of their own beneficial shareholdings held at the time of the annual
general meeting 68 thus group plc annual report 2007
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 6rf  not later than 1100 am on 23 july 2007 if you do not
wish the form of proxy to be seen by anyone except the company and its
registrars you should post it in an envelope to lloyds tsb registrars freepost 
the causeway worthing west sussex bn99 6rf 
alternatively if you wish to register your proxy appointment electronically
through the internet please use wwwsharevotecouk 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
66 for instructions regarding the crest electronic proxy appointment service
4 copies of the executive directors’ service contracts letters of appointment for the
nonexecutive 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 2007
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 25 july 2007 and also at the place
of the agm from 1030 am 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 930 am and the meeting will start promptly at 1100 am
camerasvideo or tape recordersmobile phones
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 hall
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 930 am and 1050 am
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 25 june 2007 during normal working hours
general information for shareholders
attending the annual general meeting thus group plc annual report 2007 69
analysis of shareholders as at 31 march 2007
number of numbers
range of holdings shareholders of shares
1–100 293990 5567325
101–200 13410 1891136
201–600 8526 2980148
601–1000 2085 1711633
1001–5000 2283 4620518
5001–100000 516 9545159
100001 and above 106 156716448
financial calendar
25 july 2007 annual general meeting
november 2007 interim results for the six months ended 30 september 2007
may 2008 preliminary results for the year ended 31 march 2008
annual general meeting
the annual general meeting will be held at the plaisterers’ hall one london wall
london ec2y 5ju on wednesday 25 july 2007 at 1100 am details of the
resolutions to be proposed at the annual general meeting are contained in the
notice of annual general meeting on pages 66 and 67
dividend
the directors have not recommended the payment of a dividend for the year ended
31 march 2007
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
the share price is available from the thus website at wwwthusnet and in 
national newspapers
shareholder administration
any queries relating to the administration of shareholdings such as change of
address change of ownership and amalgamation of multiple accounts should be
referred 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 wwwshareviewcouk
sharegift
sharegift is an independent registered charity which provides a free service for
shareholders wishing to give small holdings of shares to benefit charitable causes 
it may be especially useful for those who wish to dispose of a small parcel of shares
which would cost more to sell than they are worth there are no capital gains tax
implications on gifts of shares to charity and it is also possible to obtain income tax
relief further information can be obtained at wwwsharegiftorg or from the thus
shareholder helpline on 0870 609 4531
contact information
secretary and registered office
david macleod
thus group plc
12 berkeley square
99 berkeley street
glasgow
g3 7hr
registered number sc 226738
for enquiries relating to the company’ s operations and performance please 
contact either
investor relations corporate communications
thus group plc thus group plc
12 berkeley square 12 berkeley square
99 berkeley street 99 berkeley street
glasgow glasgow
g3 7hr g3 7hr
t el 0141 566 3176 t el 0141 566 3167
thus’ services
information about thus’ services can be found on the thus website at wwwthusnet
shareholder and contact information 
designed and produced by greymatter williams and phoa 
printed in the uk thus group plc
12 berkeley square
99 berkeley street
glasgow g3 7hr
wwwthusnet innovative solutions nationwide
thus summary annual report 2007 contents
1 achievements in 200607
2 thus at a glance
4 delivering quality innovative
nextgeneration solutions
for customers
6 delivering managed solutions
nationwide drives growth
8 summary directors’ report
8 chairman’ s statement
9 chief executive’ s review
10 business environment strategy 
and structure
12 performance review
18 board of directors
19 summary corporate governance
report
20 summary directors’ remuneration
report
23 statement of the independent 
auditors to the members 
of thus group plc
24 summary consolidated income
statement
25 summary consolidated statement 
of recognised income and expense
26 summary group and parent
company balance sheets
27 summary consolidated statement 
of cash flows
28 notes to the summary financial
statement
29 notice of annual general meeting 
32 general information for shareholders 
attending the annual general 
meeting
33 shareholder and contact information
thus group plc delivers advanced
telecommunications services to large business
customers and public sector organisations
throughout the uk it tailors these services to
suit small and midsized businesses through 
its demon branded product range
our objective is to be the preeminent
alternative telecommunication provider 
for business customers in the uk
financial highlights
continuing operations
1
• revenue up 52 to £5327m 
• ebitda
2
up 14 to £429m
• ebitda
2
up 33 to £429m on a pro forma
3
basis
• operating loss
4
reduced 18 to £95m
total group
• posttax profit for the year of £839m including recognition 
of deferred tax asset and gain on sale of demon netherlands
• net debt £258m and net gearing 55 
revenue
 £m
continuing operations
1
5327
2006
2007
3500
operating loss
4
  £m
continuing operations
1
–116
–95
2006
2007
ebitda
2
 £m
continuing operations
1
429
2006
2007
376
1
excludes contact centre sold on 4 august 2004 and demon netherlands sold on 15 june 2006
2
earnings before interest tax depreciation including impairment amortisation and restructuring costs see note 2
to the summary financial statement
3
pro forma ebitda includes 12 months’ ebitda for y our communications and legend communications and excludes 
contact centre and demon netherlands for both years
4
operating loss before restructuring costs
5
the highlands and islands pathfinder broadband procurement project represents the five councils making up the region
namely highland moray orkney shetland  argyll and bute councils
6
bespoke contracts typically covering higher value sales nextgeneration services exclude traditional fixed switched voice
services leased lines frame relay and atm data services 1
integration of y our communications
and legend communications
integration ahead of plan with additional
savings identified
demon netherlands disposal
successfully completed disposal in june
2006 and £30m of proceeds used to
repay debt 
achievements in 200607
52 33
contract win
5
nextgeneration services contract for seven
years worth £70m 
contract win
ukwide nextgeneration services contract
for five years worth £77m 
contract win
nextgeneration services contract for seven
years worth up to £32m 
nextgeneration services
77 of new major corporate and 
public sector contracts for next
generation services
6

ebitda
23
on a pro forma basis –
continuing operations
1
up 33 from £323m to £429m
revenue – continuing operations
1
up 52 from £3500m to £5327m
77 2
thus at a glance
managed
solutions 
2007 2006
£m £m
revenue 950 731 
operating profit
2
189 85 
operating profit margin
2
20 12 
highlights
• revenue grew 30 to £950m driven 
by recent contract wins and the inclusion
of united utilities as a managed
solutions customer 
• segmental operating profit
2
increased
from £85m to £189m with margins
2
improving to 20 
• during the year  major nextgeneration
services contracts were secured with
hsbc the highland council
3
lead
partner for the pathfinder north project
and dumfries  galloway and scottish
borders councils for the pathfinder
south project in total these are expected
to deliver up to £179m of revenue over
the next seven years
• a threeyear contract worth more 
than £13m was signed with united
utilities in may 2007 following
competitive tender 
thus transformation
the integration of y our communications yc and legend communications lc which
were acquired in february and march 2006 respectively continues to proceed ahead
of the original plan during the year we announced that the integration is now expected
to deliver £30m of annualised savings previously £25m for expected implementation
costs of less than £25m previously £30m
the successful disposal of demon netherlands in june 2006 marked another
important milestone and the consideration gave rise to a posttax gain on sale of
£290m the proceeds received were used to strengthen the company’ s balance sheet
and repay £30m of the secured loan
continuing operations
as a result of the acquisition of yc and lc and the disposal of demon netherlands
thus records results for its continuing operations in four established segments
comprising managed solutions 18 of 2007 revenue data and telecoms 59
internet 16 and mobile 7
managed solutions are run as a separate unit within thus they comprise large
corporate accounts with complex service needs typically combining delivery of several
different standard services an element of outsource to thus and longer than average
contract duration
in contrast the data and telecoms internet and mobile segments record revenue and
results for more standard product sales to a wide customer base including corporate
small and midsized customers channel resellers and other telecommunication companies
within each segment the principal costs comprise payments to other telecommunication
companies for interconnect and use of their network to collect and deliver services to
thus customers other directly variable costs directly attributable selling distribution
and administrative costs and depreciation on assets directly attributable to that segment 
however  as the majority of services are sold provisioned and run from a unified
infrastructure thus maintains a large pool of central costs in 2007  these costs totalled
£1172m
1
2006 £917m
1
 and comprised £434m of depreciation impairment and
amortisation 2006 £415m £273m of network operations and maintenance costs
2006 £217m and £465m of corporate overheads 2006 £285m
1
excludes £16m of restructuring costs in 2007 2006 £104m
2
segmental operating profit excludes central costs not allocated to individual segments
3
the highlands and islands pathfinder broadband procurement project represents the five
councils making up the region namely highland moray orkney shetland  argyll and
bute councils 3
mobile data 
and telecoms 
internet
2007 2006
£m £m
revenue 3125 2038
operating profit
2
615 433
operating profit margin
2
20 21
highlights
• revenue grew 53 to £3125m the
segment benefited from the inclusion 
of 12 months’ revenues from the
acquisitions amounting to £1197m 
of predominantly legacy services
• segmental operating profit
2
rose from
£433m to £615m with margins
2
of
20 21 last year 
• notable new customers for next
generation services included wolseley
uk london metropolitan network
university of central england v odat
international audit commission
university of westminster and digica
2007 2006
£m £m
revenue 847 693
operating profit
2
231 277
operating profit margin
2
27 40
highlights
• revenue grew 22 to £847m and
included £190m from the acquisitions
this year compared to £15m last year 
excluding the impact of the acquisitions
for both years revenue from next
generation services increased by £38m
and legacy services declined by £59m
principally from the continued and
expected decline in dialup internet
• segmental operating profit
2
fell from
£277m to £23 1m with margins
2
of 27 40 last year principally 
due to the decline in highmargin 
dialup internet 
• broadband customers grew 3 to
130700 march 2006126500
• several innovative services were
launched this year including up to
8mbps demon business broadband
demon v oice v oice over ip enhanced
hosting and mobile services including
blackberry
2007 2006
£m £m
revenue 405 38 
operating profit
2
42 05 
operating profit margin
2
10 12 
highlights
• the mobile segment was established in
march 2006 following the acquisition
of y our communications
• revenue for the year was £405m
pro forma revenue for 2006 was
£407m with a segmental operating
profit
2
of £42m representing a 
10 margin
2
 
• the division continues to be v odafone’ s
largest independent uk businessto
business service provider and had
90000 active connections at the year
end march 2006 78000 
• as well as providing mobile email 
and 3g services our customers realise
significant business benefit through the
use of business t ext location services
and field force automation which are
delivered via our managed service
platform next year we expect to 
launch additional managed services 
to enhance our existing services for
customers with a greater focus on
converged services 4
delivering quality innovative
nextgeneration solutions 
for customers
quality exceptional service and utilising our expertise to deliver innovative
solutions for customers differentiate us from our competitors and ensure we
are strongly positioned within the marketplace 
first and foremost is our focus on listening to customers and working in collaboration 
with them to deliver the most appropriate and effective solutions to meet their business
needs by aligning technology with operational requirements 
we remain at the forefront of service innovation and are leveraging our strengths to
manage and deliver larger and more complex solutions for customers enabling us to
successfully grow our business each year  we are committed to enhancing our established
reputation as innovators and continually look beyond today’ s needs to the next generation
of advanced communications solutions
our nextgeneration network is one of the most technologically advanced
telecommunications networks in the uk extending to some 10500km of fibre optic 
cable more than 190 points of presence reaching into substantially all of the uk’ s major
business centres its capability enables our increasingly sophisticated service offerings that
are at the heart of our proposition for customers and are underpinned by comprehensive
service level agreements 
with network capability to support both legacy and nextgeneration services we are
strongly positioned for the current service transition momentum for nextgeneration
services has continued this year representing 77 of our new major corporate and 
public sector contracts
1

wolseley uk
building sector
wolseley uk part of the wolseley plc
group and the largest distributor of
heating plumbing and building products
in the uk selected thus to deliver all its
voice requirements to 1700 sites in the
uk this managed solution will support
wolseley’ s rapidly growing retail business
help to improve customer service 
and deliver cost savings
london metropolitan network 
education sector
london metropolitan network lmn
extended its existing relationship with
thus who will provide lmn with a next
generation network connecting over 130
higher and further education colleges
across greater london the network will
support a number of applications 
including remote data storage email
filtering and access to superjanet  the
uk’ s education and research network
enabling more than one million students 
to have access to advanced services that
will support their learning
thus wins “network operator of the 
y ear” at the comms channel awards
thus wins “service provider channel
programme” for 2nd year running at
channel network awards
thus w an service solution for 
university of westminster won the
“communications in business best
public sector w an project”
thus wins “gold award for utility 
services to the city of london” for 
the 3rd consecutive year
1
bespoke contracts typically covering higher value sales
university of central england 
education sector
thus was chosen by the university of
central england in birmingham uce to
deploy a scalable short message service
sms to enable more efficient and secure
communications between the faculty and
students the service will enable uce to
provide instant updates on amendments 
to scheduled lectures to their students and
complements existing services supplied by
thus to uce
digica 
it sector
digica a leading provider of outsourced
and managed it services selected thus 
to deliver a national ethernet solution for 
one of its customers enabling connectivity
between four sites throughout the uk the
ethernet solution will support remote server
hosting and management and facilitate a
significant improvement in disaster recovery
and business continuity resilience 5 6
delivering managed solutions
nationwide drives growth
nextgeneration networks ngns are based on a genuinely innovative set of
technologies that are already transforming the way businesses communicate
today  and will ultimately revolutionise how communication services are
delivered in the future the key to this lies in the difference between what
existing networks and ngns have to offer  the majority of traditional voice
and data networks are underpinned by multiple network platforms that
employ a variety of different transmission protocols each of these platforms
dedicates itself to supplying a single type of traffic such as voice data or
internet access this mixandmatch approach is complex to support and
expensive to scale
in comparison ngns take a converged approach to network services all types of network
traffic – whether it’ s voice video or data – are transmitted on a single coherent platform
based purely on a single common protocol this simplifies information and communication
infrastructures enormously reducing not only the amount of network devices needed to
create the network but also the cost and resources required to maintain it
a general trend for the internet protocol ip to be adopted as the common protocol of
choice for converged networks has helped drive the move toward wholesale acceptance
of nextgeneration networks this in part is due to the fact that over the last decade ip 
has grown in stature becoming a standard across the entire telecoms industry ip’ s rise 
to prominence has largely been due to the huge impact and importance of the internet 
alongside developments in ipbased voice and video services
thus’ extensive experience expertise and collaborative approach to tailoring solutions 
to meet individual customers’ needs was evidenced again this year  major managed
solutions contracts were won with the highland council lead partner for the pathfinder
north project dumfries  galloway and scottish borders councils for the pathfinder
south project and hsbc t ogether these contracts are worth up to £179m and will
contribute towards driving future growth whilst also extending our network reach and
enhancing our nationwide presence
hsbc bank plc hsbc
thus was chosen by hsbc for the
replacement of its legacy national network
in the uk the solution from thus will
deliver nextgeneration network functionality
for the group’ s uk business operations 
at more than 2000 sites and is worth
£77m over five years
the highland council
1
thus was selected by the highland
council lead partner for the pathfinder
north project for a seven year  
£70m project to provide high capacity
broadband links to schools libraries and
other council buildings throughout the
highlands and islands our success in
winning this contract was testament to our
capabilities in the local government sector
and the provision of the optimum solution
that fully met the aspirations of the customer 
1
the highlands and islands pathfinder broadband
procurement project represents the five councils making
up the region namely highland moray orkney
shetland  argyll and bute councils
2
multiprotocol label switching internet protocol virtual
private network mpls ip vpn
the highlands and islands pathfinder
broadband procurement project is based
on an mpls ip vpn
2
solution and will 
extend to some 850 sites with a focus on
providing schools with access to stateof
theart teaching and learning support
dumfries  galloway and scottish
borders councils
thus won the south of scotland
broadband pathfinder project worth 
up to £32m over seven years for the
provision of high capacity broadband 
links to schools libraries and other council
sites throughout dumfries  galloway 
and the scottish borders this project is
based on an mpls ip vpn
2
solution 
to over 400 sites including some 200
educational institutions completion of 
the network rollout is expected by 2008
and is intended to increase the availability
of highspeed broadband services to
businesses across the area helping 
these rural economies to compete in 
the global marketplace 7 8
summary directors’ report 
chairman’ s statement
last year we announced a transformation for your company as we made our first 
two acquisitions disposed of demon netherlands and restructured our balance sheet 
the period since that announcement has been highly successful for your company with 
our financial and operational performance more than meeting our expectations
the integration of the two acquisitions has proceeded ahead of the original plan we
announced to the market the benefits are measurable and are beginning to feed into 
our financial results our balance sheet remains strong with net debt at the end of the year
unchanged from the opening position this is particularly pleasing since we settled our 
tax bill in the netherlands closed the gap in our pension fund invested in the integration
activities yet still tied 77 of our capital expenditure to future customer related growth 
but it is our second half financial performance that is most encouraging as we entered the
new financial year on a growth trajectory – just as we said we would
our market remains tough and challenging the sector consolidation we discussed last 
year continues several of our competitors are embarking on new strategies to compete 
for position and new entrants from overseas have entered the uk market but our business
strategy is robust and delivering results as more of our customers enjoy the benefits from
converged nextgeneration services where your company is particularly strong
as a result of the 10 to 1share consolidation undertaken in march 2006 we retained 
a small surplus of shares which we have now committed to charitable and educational
ventures our staff also continue to support a number of good causes through a variety 
of initiatives overall i am pleased that we are able to play a larger part in the communities
where we operate
our commitment to maintaining the environment recycling of surplus computer hardware
green energy and carbon reduction is embedded in our culture as business as usual
activities nevertheless we can do more and plan to reduce further our consumption 
of paper and disposables travel and overall energy and carbon consumption
during the year simon batey the former group finance director of united utilities briefly 
served on your board simon played a valued part in the early integration activity of 
y our communications for which he has our thanks simon has been replaced on the board
as the united utilities nominated nonexecutive director by martin beesley in addition we
were pleased to appoint rick medlock to the board as a new nonexecutive director and
chairman of the audit committee rick is the chief financial officer at inmarsat and offers
considerable finance expertise and experience of the telecommunication sector  ian
chippendale who was formerly chairman of the audit committee continues as our senior
independent nonexecutive director and chairman of the remuneration committee
replacing michael de karesilver who resigned last year 
over the year i have been greatly impressed by the professionalism of your company
thus sets high standards and demanding targets y et our ability to retain and recruit
talented employees in a tough recruitment market as we simultaneously grew new sources
of revenue and integrated two acquisitions ahead of plan is testament to the quality of our
employees and their commitment to your company i offer them all my heartiest thanks and
congratulations for a particularly successful year 
philip rogerson 
chairman 9
as we entered this financial year we were firmly focused on the integration of our two
acquisitions y our communications and legend communications to create a company 
with greater scale and opportunities for growth throughout the uk business services 
market these events reinforced our position in the northwest and added new capability 
to your company
at the outset of the year we forecast synergy savings of about £25m per annum upon
integration completion for a oneoff investment of about £30m midway through the year  
as we gained confidence in the savings from the implementation and the management of our
costs we upgraded our forecast to £30m per annum of savings for less than £25m of upfront
investment ie £5m more per annum for £5m less cost
we had also forecast that our revenues would be broadly flat over the course of the year 
as our management focused on extracting value from the acquisitions the reality proved 
to be somewhat better  from our improved revenue mix accelerated nextgeneration services
growth and winning three of our largest ever managed solutions contracts
previously we had announced that the majority of our variable gross margin was being
derived from nextgeneration services more than compensating for the decline in our 
legacy base even with the addition of the legacy revenues from y our communications 
we exited the year with more margin and more revenue being derived from nextgeneration
services this is what we had always planned and designed our network and service
capability to deliver  it is now a reality in our market that nextgeneration service capability
will drive growth managed solutions and converged services is our future we are well
equipped and strongly positioned to capitalise on new growth from our increased scale 
and presence in the uk business market
our second half performance has demonstrated that the enlarged thus has returned to
growth second half revenue was up 5 on the first half and our operating losses
1
reduced
by 60 to £27m second half ebitda
1
increased by 28 demonstrating that we are well 
on track to deliver our financial objectives
we were particularly proud to become involved in the two “pathfinder” projects to implement
nextgeneration services to schools and public buildings in the highlands and islands and
south of scotland regions these two projects will extend our network and service reach
in scotland and use radio technology to reach the more remote regions indeed some of 
our capability on these new contracts builds on our experience in designing and building 
a radio network for the north west development agency the “pathfinder” projects will 
run for seven years and are worth over £100m
in addition we were delighted to be selected by hsbc to build and manage nextgeneration
services to connect more than 2000 locations throughout the uk in a contract worth £77m
over the next five years united utilities has also renewed its contracts with us for a further
three years worth more than £13m all of this underpins revenue for the next financial year 
new contract growth has been extremely encouraging in a tough and demanding market 
i am extremely proud of our achievements and convinced that we have the correct strategy
skills management and employees to deliver lasting shareholder value thus is strongly
positioned for future growth and our performance this year reinforces my confidence that
we remain firmly on track to meet our expectations in the new financial year 
william allan
chief executive
summary directors’ report 
chief executive’ s review
1
operating losses and earnings before interest tax
depreciation including impairment and amortisation
ebitda exclude £16m of restructuring costs for 
the year 10
summary directors’ report 
business environment strategy and structure
principal activities
thus is focused on the provision of fixed line telecommunication services to large business
customers and public sector organisations while tailoring services to small and midsized
businesses under the demon brand these fixed line service offerings are complemented
by the provision of mobile solutions by our mobile division following the acquisition of
y our communications
market size and service transition
the total uk business telecoms market is estimated at £133b
1
or excluding business
spending on mobile services is estimated at £81b
1
 down from £83b
1
the previous 
year  the fixed line segment is experiencing a transition in demand patterns in particular 
demand is moving away from traditional or legacy telecommunication services including
fixed switched voice frame relay and atm data as well as narrowband internet access
towards nextgeneration ipbased services such as broadband ethernet mpls ip virtual 
private networks and voice over ip  thus is well positioned for the provision of next
generation services
market structure
twentyfive years after liberalisation the fixed line business market in the uk remains
dominated by the incumbent provider bt  
although many infrastructurebased market entrants have emerged none has yet
developed sufficiently to deliver sustained growth and meaningful returns in particular  
an overinvestment in legacy networks has resulted in an oversupply of legacy services
and inhibited competitors from developing sufficient scale to thrive 
the transition to nextgeneration services has put additional pressure on established
revenue and margin from legacy services for all operators most suppliers now face
significant network investment to enable them to offer nextgeneration services thus
made this investment when it put in place a nextgeneration network as part of its national
network rollout in the early part of the decade
thus has differentiated itself by delivering compound annual growth in continuing
operations
2
revenues of 22 over the last five years 13 over the fouryear period from 
1 april 2002 to 31 march 2006 and continues to invest judiciously to increase its
capabilities further maximise the leverage of its assets and deliver future growth and
operating efficiencies thus is therefore well positioned to benefit as demand consolidates
around market participants with nextgeneration capability over the longer term
regulation
in 2005 communications regulator ofcom completed its strategic review of
t elecommunications culminating in a new regulatory settlement for the industry
the new settlement continues to support infrastructurebased competition but seeks to
promote equality of access to those parts of the bt network where investment in competing
infrastructure is not sustainable a new bt division called openreach has been created to
provide access to these regulated services
although the creation of openreach caused significant disruption to bt’ s customers thus
remains optimistic that the regulatory settlement will eventually enhance competition
additional obligations have been placed on bt to ensure that it does not foreclose
competition as it implements its nextgeneration network
thus is a founder and executive member of the industry body “ngnuk”  which aims 
to define commercial and operational interconnects to ensure full and equitable
interoperability between competing nextgeneration networks including bt’ s
the thus national network
thus has the uk’s first operational national
nextgeneration telecommunications network
designed to deliver nextgeneration ipbased
services with some 10500km of fibre optic
cable and more than 190 points of presence
the network reaches substantially all of the
uk’s major business centres
fixed voice
internet
data
mobile
business spending on telecoms services
1
£b 
2005 2004 2003 2002 2001
133
129
125 122
118
53
49
44
39
54
22 23 25 26
21
10 12
14
16
09
37 41
46
52
34 11
objective and strategies
our objective is to be the preeminent alternative telecommunication provider for business
customers in the uk
t o achieve this objective our principal strategies have focused around
• deployment of an advanced national nextgeneration telecommunications network
this allows us to improve our control over the quality of our service delivery  lower our
ongoing traffic delivery costs and control the rate of service evolution
• development and sale of a comprehensive service portfolio capable of supporting
business customers through the transition from legacy to ipbased and converged
telecommunications
• attainment of consistently high levels of quality in our service delivery  
• achievement of scale and operating leverage across our network and 
supporting systems
financial targets
following heavy upfront investment in network rollout our financial plan is focused 
on delivering a return on capital employed greater than our weighted average cost 
of capital 
the group has already achieved two important financial milestones moving ebitda
3
positive in 200102 and free cash flow
4
positive in 200405 our next goal is to become
profitable on a sustainable basis and we have increased confidence that the group will
move into positive operating profit during the next financial year 
disposals
t o consolidate its uk focus thus disposed of its demon netherlands internet service
provider in june 2006 the gross consideration received gave rise to a £290m posttax
gain on sale the proceeds were used to strengthen the company’ s balance sheet and
repay £300m of the secured loan
financial targets – 
continuing operations
long term 2007 2006
15– 119 079
asset turnover
5
20 times times times
6
ebitda
3

revenue 20 8
7
11
7
capital 
investment
revenue c10 11
7
9
7
the two acquisitions at the end of 2006
increased asset turnover but depressed the
ebitda margin in 2007 while operating
cost synergies are being delivered
1
source ofcom the communications market 2006 
2
excludes contact centre interactive and demon
netherlands
3
earnings before interest tax depreciation including
impairment and amortisation ebitda ebitda is 
stated before restructuring costs of £16m in 2007 
and £88m in 2006
4
operating cash after taxation interest and capital
expenditure
5
ratio of revenue to property plant equipment and
intangible assets
6
2006 included only one month of revenues for 
the acquisitions
7
calculations based on continuing operations excluding 
contact centre and demon netherlands ebitda
excludes £16m of restructuring costs in 2007 
and £88m in 2006 12
summary directors’ report 
performance review – results and financial position
results 
the focus of our performance review is on our continuing operations
1
which are based
solely in the uk
continuing operations
1
revenue increased by 52 to £5327m with gross profit up 58 to £897m and
gross profit margins improved to 168 2006 162 
ebitda
2
was up 14 from £376m to £429m and on a pro forma
3
basis was up 33
2006 £323m new business and synergies delivered from the integration programme
contributed £184m to the improvement in ebitda
2
and compensated for the £78m
decline in ebitda
2
from dialup and the loss of t ele 2 as a customer following its
acquisition by carphone warehouse
this year’ s results included 12 months’ revenues from the acquisition of y our
communications and legend communications excluding the expected decline in both
dialup and carrier preselect cps services revenues grew by 4 year on year on 
a pro forma
3
basis
revenue for the second half of the year increased by 5 to £2727m and ebitda
2
increased by 28 to £241m compared to the first half the revenue growth was principally
due to the managed solutions segment which benefited from the inclusion of revenues for
recent contract wins with the highland council lead partner for the pathfinder north
project hsbc and dumfries  galloway and scottish borders councils for the pathfinder
south project
after depreciation and amortisation charges
4
of £524m 2006 £492m operating
losses before restructuring costs and an intangible asset writeoff last year  reduced by
£21m to £95m whilst operating losses including these costs reduced from £220m 
to £111m when compared to the first half of the year operating losses before
restructuring costs for the second half reduced by 60 to £27m whilst operating 
losses including restructuring costs reduced by 48 to £38m
net financing costs reduced by £23m to £40m this was principally due to lower financial
expenses following the receipt of the proceeds from the disposal of demon netherlands
a deferred tax asset of £696m was recognised during the year  resulting in a profit for 
the year of £545m compared to a loss of £283m last year  the recognition of the
deferred tax asset on the balance sheet at the year end reflects increased momentum in the
operating performance of the business and the delivery of the majority of the integration
programme relating to last year’s acquisitions
basic earnings per share for continuing operations were 3029p compared to a loss per
share of 2055p last year 
discontinued operations
discontinued operations represent the results of demon netherlands in the current year
and the results of both demon netherlands and the contact centre in the prior year  
the contact centre division was disposed of in the financial year ended 31 march 2005
however  as disclosed previously a number of contracts did not transfer with the disposal
and thus continued to fulfil its obligations as principal using subcontract arrangements
until september 2005
discontinued operations revenue was £32m compared to £221m last year and
operating profit was £04m compared to £12m last year reflecting the sale of demon
netherlands in june 2006 and the inclusion of results for the contact centre until
september 2005
the gross consideration received for the sale of demon netherlands gave rise to a pretax 
gain on sale of £423m £290m posttax the proceeds were used to strengthen the
company’ s balance sheet and repay £300m of the secured loan in the prior year a post
tax gain on sale of £02m was recognised relating to the sale of the interactive division
the prior year also benefited from an income tax credit of £07m
the profit for the year for discontinued operations was £294m up from £21m last year 
continuing operations 
ebitda
£m
210
416
367
376
429
2003
2004
2005
2006
2
2007
2
continuing operations
revenue
£m
2415
2836
3202
3500
5327
2003
2004
2005
2006
2007 13
dividend
the company has not declared or paid a dividend on its share capital 2006 £nil 
given the company’ s stage of development and the accumulated losses from the network
deployment the board is not yet able to declare a dividend
capital expenditure
capital expenditure including expenditure on intangible assets for continuing operations
1
was £593m compared with £322m last year  this is equivalent to 11 of revenue in
continuing operations
1
compared with 9 last year and is in line with our stated longterm
financial target of approximately 10 of revenue
cash flows
the cash generated from operations was £390m 2006 £480m after payments 
of £75m into the defined benefit pension scheme £43m for interest and tax and £529m
for capital expenditure free cash flow was an outflow of £257m compared to an inflow 
of £111m last year  net debt reduced by £05m from £263m at 1 april 2006 to
£258m at 31 march 2007
financial position and capital structure
with the capital structure representing the financial foundations of the business thus has
taken a conservative stance to funding 
gearing throughout the year has been below 7 and was 55 at 31 march 2007 
31 march 2006 68 our financial position remains strong with net debt to ebitda
2
of 06 times and ebitda
2
net interest
5
cover of 115 times the cash balance was £313m
at the year end
equity
in february 2007  227m new ordinary shares of 25p each were issued to united utilities
this issue was additional consideration for the acquisition of y our communications as a
result thus had approximately 18303m ordinary shares in issue at 31 march 2007 31
march 2006 18076m and a market capitalisation of £337m 31 march 2006 £292m
up to a further 97m shares are due to be issued to united utilities should the thus share
price increase in stages from 200p up to 270p during the period to 31 december 2007
bank debt 
as at 31 march 2007  thus had total indebtedness of £571m 31 march 2006
£899m comprising £532m of bank debt and £39m of finance leases
working capital 
thus has a strong track record in management of working capital and integration of 
the two acquisitions presented further opportunities to manage and improve the debtor
position down from debtor days of 75 at 31 march 2006 to 49 at 31 march 2007
1
continuing operations exclude the results of demon
netherlands and contact centre for both 2007 
and 2006
2
earnings before interest tax depreciation including
impairment and amortisation ebitda is stated before
restructuring costs of £16m in 2007 and £88m 
in 2006 
3
pro forma results include 12 months’ contribution from
y our communications and legend communications
acquired in february and march 2006 and exclude
the contact centre and demon netherlands for 
both years
4
excludes £16m in 2006 for intangible asset writeoff
5
interest excludes loan costs written off loan amortisation
costs and net interest associated with the thus 
pension scheme
unless otherwise stated financial data for the charts and
table on pages 12 and 13 is prepared under ifrs for
2005–2007 and uk gaap for prior years continuing
operations exclude interactive contact centre and demon
netherlands for all years
thus credit metrics
2007 2006
gross debt ebitda
2
13 times 24 times
net debt ebitda
2
06 times 07 times
net gearing 55  68
ebitda net interest
25
115 times 84 times 14
summary directors’ report 
performance review – measuring success
achieving a successful financial performance relies on the business achieving growth
minimising cost of sales driving scale efficiencies targeting incremental investment to
support growth over the core backbone network and maintaining high standards of
quality t o ensure overall progress thus targets initiatives in each of these key areas 
and tracks performance to measure success
growth
thus must continue to build market share successfully in order to meet our longerterm
objectives based on continuing operations
1
revenue growth thus improved its estimated
market share from approximately 4 to approximately 6 during the year  reflecting our
success in winning new business and the contribution from the acquisitions completed at
the end of the last financial year  this resulted in an increase in the ratio of continuing
operations
1
revenue to assets
2
from 079 to 119 times compared with our longterm
target of 15 to 20 times
growth was underpinned both by development in nextgeneration services and expansion
in traditional switched voice services however  in terms of major new corporate and public
sector contracts signed in the year  77 were for nextgeneration services
the success in delivering nextgeneration contract growth was focused around
developments and marketing campaigns in key services areas including managed
solutions multiprotocol label switching internet protocol virtual private networks 
mpls ip vpn ethernet broadband and high speed internet
cost of sale
although network reach is extensive it is not economically feasible to carry all customers’
traffic endtoend and payments to other operators for customer connection and service
interconnect are the largest component of our cost of sales
since flotation thus has made successive improvements to contain the increase 
in payments by increasing interconnect points with other operators improving traffic
routing across the network and participating in a wholesale market for the provision 
of last mile access 
the integration of the thus network with those of last year’ s acquisitions particularly that
of y our communications has delivered further network efficiency this year  after the first
three months of the integration programme the thus and y our communications networks
had been physically joined and the switches linked to allow traffic to pass between the 
two networks for more efficient routing the rationalisation of last mile access circuits
continues and it is intended that the y our communications core network in the northwest
of england will be completely integrated into the wider thus network
scale efficiencies – ebitda  margin
 of continuing operations
 
revenue
9
15
11
11
8
2003
2004
2005
2006
1
2007
1
1
 excludes £88m for restructuring costs in 2006 and £16m in 2007
ebitda margins were depressed in 2007 
by the onetime impact of integrating last 
year’ s acquisitions 15
scale efficiencies
this year in continuing operations
1
 operating costs
3
were in line with last year at 17 
of revenues before the full impact of integration savings has been delivered
our focus on productivity at thus is unrelenting by applying thus productivity standards
to the acquisitions some initial synergy savings have been delivered this year  it is
anticipated that additional operating cost synergies relating to staffing operating systems
and property will result following full integration
investment 
capital investment was 11 of continuing operations
1
revenue 2006 9 broadly 
in line with our longterm target of approximately 10 of revenue 
in the year under review growthrelated expenditure for continuing operations
1
was 
£456m or 77 of the total and was primarily focused on customer connections and
further capacity enhancements to the nationwide thus nextgeneration network non
growthrelated expenditure was £137m and included £57m related to the integration 
of y our communications and legend communications
quality
at the heart of our quality programme is our iso 90012000 accreditation this certifies
our processes to international quality standards and is subject to independent audit twice 
a year 
customer satisfaction 
gaining feedback from customers allows us to evaluate how we can improve the products
and services we provide alongside independent thirdparty customer satisfaction surveys
an online survey has been developed to allow a greater number of customers to have their
say the level of satisfaction is generally maintained at around 90 t o add to the current
broadband voice and narrowband surveys further surveys have been designed and are
currently being trialled with customers who have nextgeneration services 
network performance
availability on the core multiprotocol label switching mpls network was consistently
above our 9995 target throughout the year  enabling thus to manage sharply
increasing volumes of mpls traffic securely
1
continuing operations exclude demon netherlands 
and contact centre for both years 
2
represents property plant equipment and intangible
asset balances
3
operating costs exclude depreciation and amortisation
including impairment restructuring costs and other
operating income
unless otherwise stated financial data for the charts on
pages 14 and15 is prepared under ifrs for 2005–2007
and uk gaap for prior years continuing operations
exclude interactive contact centre and demon netherlands
for all years
capital investment
 of continuing operations
 
revenue
18
14
11
9
11
2003
2004
2005
2006
2007
other growth related
network capacity upgrade
customer connections
growth
other nongrowth
integration
non–growth
capital investment 
for year ended 31 march 2007
77 of capital investment focused on growth 
300
79
77
57
80 16
summary directors’ report 
performance review – employees environment and community
employees
talented and skilled employees underpin our ability to deliver telecommunication services
that bring value to our customers’ business operations providing our employees with the
resources they require to maximise their performance and drive business growth remains
a priority our objective is to ensure measures are in place to retain and develop our
employees while at the same time attracting talented individuals to join our organisation
performance culture
the performance of employees is measured against clear  businessfocused objectives 
and performance criteria through our windmills appraisal process this is supported by 
a quarterly onetoone process which ensures that qualitative discussions are taking place
at frequent intervals throughout the year  
training and development 
the capability performance and commitment of our employees remain key factors in our
ability to grow our business in the competitive market in which we operate we have a
highly qualified workforce with our employee survey indicating that almost 60 of our
employees have degrees andor professional qualifications investment in training and
development of our employees continues and our open learning facility which is available
to both employees and their families continues to be well utilised 
opportunities for career progression also play an important role in employee development
a number of vacancies were filled by internal applicants affording these employees the
opportunity to broaden their skills and further develop their careers within our company
graduate programme
during 200607 the group introduced a graduate recruitment programme with four
graduates from technical disciplines joining our business in september 2006 a structured
programme encompassing role placements and work experience rotations has been put in
place to maximise the potential of this initiative leading to accreditation from the institute
of engineering and t echnology iet
talent management
a “talent pool” identified during 200607  containing employees in leadership and
specialist roles has been involved in a number of group and individual development
activities this has included a management essentials training programme and targeted
external and internal course and conference attendance as appropriate 
reward
the performance of managers and senior professional staff is linked to the group’ s
financial results by way of a bonus scheme which has targets linked to revenue ebitda
and cash flow 
reward has an important role to play with regard to employee retention and we 
continue to carry out annual benchmarking comparing employee salaries against 
the market t o allow flexibility and the ability to react to changing market conditions
salaries are reviewed quarterly to ensure remuneration is appropriate to retain high
quality employees 
for sales staff commission schemes are based on billed revenue with a weighting to
increase reward for the sale of services with higher profit margins and nextgeneration
services this commission scheme is designed to focus sales staff on value creation for 
our customers and shareholders
the group has offered all employees access to an annual sharesave scheme during
200607 which allows them to save and buy shares in the company at a discounted 
rate therefore sharing in any increase in the share price over the savings period 
the group personal pension gpp plan matches employee contributions up to 6
affording employees the opportunity to build meaningful pension provisions for the 
future while strengthening our ability to attract and retain quality employees
graduate programme
during 200607 the group introduced a
graduate recruitment programme with four
graduates from technical disciplines joining
our business in september 2006 17
communication and consultation
thus encourages communication and employee involvement through its elected
employee forum xchange this forum allows thus to share business information with
employees encouraging an awareness of the financial and economic factors affecting 
the company and take account of employee views and feedback when planning change
this employee forum has been integral to the integration and consolidation process post
acquisition and is important in further facilitating business development and evolution
equal opportunities
we are committed to ensuring equal opportunities for our employees our policy in
respect of employment of disabled persons is the same as that relating to all other
employees in matters of training and career development where employees become
disabled during the course of their employment we make every effort to make reasonable
adjustments to their working environment to enable their continued employment 
safety  health and environment
the commitment and participation of all employees is vital to the efficient and effective
implementation and control of the safety health and environmental management systems
in order to meet our responsibility to protect the environment employees and the business
thus continues to focus on enhancing our existing safe working practices and the
production of a robust risk management strategy that will eliminate operational hazards 
or minimise the risks incurred by the business 
environmental management 
t o enhance our environmental management systems a set of standards has been
produced we continue to work on ways to reduce our impact on the environment 
the main focus being on energy conservation and the use of renewable resources 
the reuse and recycling of waste electrical equipment a reduction in general waste 
going to landfill and the effects on the environment from travel this year we generated
42460 kg of waste electrical equipment 96 of which was reused or recycled
charitable and political donations
following the share consolidation in march 2006 the fractional share entitlements 
were sold raising net proceeds of approximately £274000 the directors’ aim was 
to apply these proceeds for gifts or donations to a range of worthy causes and a number
of initiatives are under way throughout the uk during the year  the group made the
following charitable donations £2500 to the victim support sunrise appeal £3500 
to the scottish outward bound association £2500 to the chrysalis charitable trust
£10000 to emmaus and £15000 to the outward bound association the group 
made no donations for political purposes
outward bound trust
the outward bound trust is an educational charity that inspires young people from 
all walks of life to fulfil their potential through challenging outdoor experiences raising 
selfesteem and preparing them to face the future with confidence thus provides
financial assistance in the form of bursaries for disadvantaged young people who 
would not normally have access to or be able to afford an outward bound course 
emmausfurther community projects
thus has a longestablished relationship with the emmaus foundation and has committed
support for another three years emmaus is a selfhelp and selfsupporting enterprise
which offers unemployed and homeless people opportunities for work companionship
and the chance to regain selfrespect through their own efforts thus continues to support
a number of other charitable educational and worthy causes including support of
women’s aid and their domestic abuse campaigns 
university scholarship programmes
thus has committed to sponsor a number of undergraduates at the university of
greenwich for a threeyear period supporting work placements during this period
community support
the outward bound trust is an educational
charity that inspires young people from 
all walks of life to fulfil their potential through
challenging outdoor experiences 18
summary directors’ report
board of directors
nonexecutive directors
philip rogerson 62 was appointed
chairman of thus on 1 september 2004
mr rogerson is also chairman of aggreko
plc carillion plc and northgate plc and 
a nonexecutive director of 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 58 was appointed as 
a nonexecutive director of thus in october
1999 mr chippendale was chairman of
rbs insurance until december 2006 having
previously been chief executive of direct line
group limited 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 he is also a nonexecutive director 
of homeserve plc and t ransatlantic 
holdings inc
jo connell 59 joined the board of thus
as a nonexecutive 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 nonexecutive director of uk plc
and is a governor of the university 
of hertfordshire
rick medlock 46 was appointed as 
a nonexecutive director of thus on 7
november 2006 he is chief financial
officer of inmarsat plc the mobile satellite
services company providing voice and data
communications to industrial government
military and aid organisations worldwide
prior to joining the board of inmarsat in
september 2004 he served as chief
financial officer and company secretary 
of nds group plc for eight years mr
medlock previously served as chief
financial officer of several private 
equitybacked technology companies 
in the uk and the usa he is a fellow 
of the institute of chartered accountants 
of england and wales
martin beesley 40 was appointed as 
a nonexecutive director of thus on 
22 november 2006 reflecting the terms of
the relationship agreement between thus
and its largest shareholder  united utilities
plc he has been finance director of united
utilities w ater plc and united utilities
electricity plc since october 2004 having
previously been group financial controller 
of the united utilities group he trained 
and qualified as a chartered accountant 
with kpmg
executive directors
william allan 53 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 40 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 p a
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 41 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 secondlargest 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
rick medlock chairman 
appointed 20 november 2006
ian chippendale 
resigned 20 november 2006 as chairman 
of the audit committee
jo connell
michael de karesilver 
resigned 8 september 2006
remuneration committee
ian chippendale chairman 
appointed 20 november 2006 as chairman
of the remuneration committee
michael de karesilver
resigned 8 september 2006 as chairman 
of the remuneration committee and as a
member of the committee
jo connell
rick medlock 
appointed 20 november 2006
nomination committee
philip rogerson chairman
ian chippendale
william allan
jo connell
michael de karesilver 
resigned 8 september 2006
rick medlock 
appointed 20 november 2006
senior independent 
nonexecutive director
ian chippendale 19
summary corporate governance report
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 combined code a review on an annual basis
of the effectiveness of the system of internal control is carried out by
the board this review includes material financial operational and
compliance controls and risk management the t urnbull report
internal control revised guidance for directors on the combined
code published in october 2005 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 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
there is an ongoing process for identifying evaluating and
managing the significant risks faced by the business this process
has been in place for the year under review and up to the date of
approval of the annual report the process is regularly reviewed
by the board via the audit committee and is guided by the
content of the t urnbull report 
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 risk management charter  which is communicated
to the business
risk assessments are completed on key processes and quarterly
reviews are carried out by the risk management group 
risk reviews are also undertaken regularly by the respective
business areas throughout the year  to identify and assess the 
key business risks associated with the achievement of strategic
objectives the reviews are supported by governance software
which enables and requires risk owners to regularly monitor and
review risks within the group the reviews include consideration 
of the nature and extent of risks facing the group the likelihood 
of risks materialising and review of controls and action plans
associated with the risks 
an assessment of residual risk and of significant risks across the
business resulting from the reviews of the risks of the group is
presented to the audit committee on a quarterly basis control
failings or weaknesses assessed as significant are included 
within these quarterly reviews by the audit committee including
discussion on actions taken by the business to address them 
this ensures that necessary actions have been or are being taken
to remedy any significant control failings or weaknesses
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 revised combined code provisions
including those of the t urnbull report on internal control in the
course of the financial year ended 31 march 2007 in 200506
this statement was not extended to the two businesses acquired 
in february and march 2006 y our communications group ltd
and legend communications plc as the business was in the 
very early stages of integration throughout this financial year  
a comprehensive integration programme has been implemented
within the existing risk governance and reporting framework
enabling the statement to apply to the entire thus group  20
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 both
individual performance and external market information
prepared by its advisors from a number of comparable
companies both within and outside the telecommunications
sector  the aim is to set salaries which are generally around the
midmarket level salaries will be above midmarket where
individual performance and skills justify it
• the committee remains strongly committed to ensuring there is
an appropriate balance between fixed and performance pay  
it also seeks to ensure alignment with shareholders’ interests 
a significant proportion of executive directors’ remuneration 
is performancerelated through annual bonus and longterm
incentives as set out below
• 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 arrangements described below are likely to continue to 
apply in future years unless there are specific reasons for change
the committee will continue to regularly review arrangements 
to ensure that they remain effective and appropriate to the
company’ s circumstances and prospects and to monitor 
the level of potential awards
the remuneration package
basic salary
during the past year  there were no base salary increases for
executive directors and base salaries continued to be as follows
william allan £420000 john maguire £300000 philip male
£300000 the committee have considered salaries in relation to
market data and have agreed an increase of 36 to base salaries
with effect from 1 april 2007
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
• executive directors should be measured exclusively by reference
to corporate performance 
the achievement of predetermined targets determines the levels 
of payout under the plan for the year ended 31 march 2007 
there were three distinct financial measures which were weighted
as follows
• 25 is determined by reference to cash flow after interest and
capital expenditure
• 50 of the bonus is determined by reference to ebitda
earnings before interest tax depreciation and amortisation
performance
• 25 is determined by reference to revenue
based on the company’ s performance for 2007 the plan made 
a payment of 881 of maximum entitlement
the bonus plan operates for the year ending 31 march 2008
against the same financial measures and weightings 
longterm incentives
performance shares
the company operates the thus group performance share 
plan under which an award of shares can be granted at the
discretion of the committee to executive directors and selected
senior executives grants made during a year will only become
exercisable after three years if demanding performance targets 
set by the committee are met 
the two performance criteria which apply to the vesting of
performance share awards are group ebitda in respect of 50
of an award and group ebit return on capital employed with
respect to the remaining 50 performance is measured over 
a threeyear period against targets set with reference to internal
forecasts and the extent to which they are satisfied are confirmed
by the committee calculations are performed internally on the
same basis as reported in the annual accounts
the two performance criteria are recognised both internally 
and by analysts as key measures of the success of the fixed 
line telecommunications business model and the drivers of
shareholder value and as such are recognised by the participants
and we believe following the support of shareholders in 2006 
by shareholders as being directly linked to the success of 
the business 
no awards were made under the performance share plan during
200607 however  the committee will consider granting awards
during 200708
summary directors’ remuneration report 21
matching shares
following shareholder approval at the 2006 agm the co
investment plan was introduced under this plan executive
directors are allowed to invest up to a maximum of 25 of 
their base salary in company shares the offer is typically
made to them each year shortly after bonuses are declared 
this means that executive directors can use their net bonus to
acquire shares at market price although there is no direct link 
to the bonus paid provided that the executive director continues 
to hold these shares for three years the company makes an
award of matching shares 
the minimum level of match is two shares for every four the
individual acquires 
the level of match can increase up to a maximum of six shares 
for every four shares the individual acquires dependent on
performance against the same performance targets that apply 
for awards under the performance share plan participation 
in the plan has been extended to selected senior executives
share options
the company has no current intention to make further grants 
to existing executive directors under the thus group plc
discretionary share option scheme
during the year ended 31 march 2007  no grants were made 
to the executive directors under the share option scheme 
the rules of the various longterm incentive plans provide that 
the aggregate of all sharebased awards does not exceed the
guidelines laid down by the association of british insurers that
recommend i that the number of awards granted in respect of 
all sharebased schemes should not exceed 10 of the current
issued share capital in any rolling tenyear period and ii that 
the number of awards granted in respect of discretionary schemes
should not exceed 5 of the current issued share capital in the
same period
pension and other benefits
following the introduction of the new uk legislation regarding 
the taxation of pensions executive directors with defined benefit
pension provision were offered the choice of retaining their 
current pension plan membership or opting out of their current
arrangements and to receive instead a salary supplement paid
monthly in lieu of pension provision calculated on an individual
basis to reflect the circumstances of the executive director  these
choices were framed within the general principles that the cost of
pension provision should not increase and that thus should not
compensate executive directors for changes in the tax regime
currently no executive directors have withdrawn from the 
pension scheme 
the pension arrangements for the executive directors who
participate in the thus final salary scheme are the same as 
for all other employees who are members of the scheme 
the scheme is a contributory definedbenefit arrangement that
provides pension benefits up to the maximum permitted by the 
h m revenue  customs subject to an overall maximum limit of
160th of final pensionable salary for each year of pensionable
service normal retirement age under the scheme is 60 although
the contractual retirement date for the executive directors in terms
of their service contracts is 63 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
threeyear average in the last ten years if higher  pensionable
salary is defined as basic salary only
in order to help ensure that a final salary pension scheme 
will continue to be available to existing scheme members the
company has made some changes with the agreement of the
scheme trustees that took effect in april 2007 for all affected
employees including executive directors firstly pension accrual
after this time will be based on 175th of final pensionable salary
for each year of pensionable service secondly normal retirement
age for benefits accrued from 1 april 2007 will be age 65
in line with market practice a cash supplement is provided
for executive directors who continue to participate in thus’
pension arrangements
executive directors are eligible for a range of benefits
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 22
40
60
80
100
120
140
160
180
200
220
240
mar
2007
mar
2006
mar
2005
mar
2004
mar
2003
mar
2002
historical tsr performance
source datastream
growth in the value of a hypothetical £100 holding over five years
ftse allshare telecommunications index comparison based on spot values
 thus group
 ftse allshare telecommunications index
summary of emoluments made to directors £’000
aggregate emoluments paid to directors 2210
aggregate notional gains made by directors on exercise 
of share options 81
aggregate value of assets receivable under 
longterm incentive schemes 0
aggregate company contributions in respect of 
directors to money purchase pension schemes 0
number of directors with retirement benefits
money purchase schemes 0
defined benefit schemes 3
summary directors’ remuneration report
chairman and nonexecutive directors
the appointment of the chairman and nonexecutive directors 
is subject to the articles of association of the company in
particular the usual provisions relating to reelection by
shareholders the chairman and nonexecutive directors have
letters of appointment which are available at wwwthusnet 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 except martin beesley who was
appointed for a term of one year  subject to renewal in terms of
the relationship agreement between the company and united
utilities plc
the remuneration of the chairman is determined by the
remuneration committee the fees of the nonexecutive directors
are determined by the board with effect from 1 april 2007  the
chairman’ s fees were increased to £95000 per annum and the
fees of the nonexecutive directors were increased to £33000 
per annum with an additional fee of £5000 per annum payable
to the chairman of the audit committee an additional fee of
£2500 per annum payable to the chairman of the remuneration
committee and an additional fee of £2500 per annum payable 
to the senior independent nonexecutive director 
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 allshare 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 23
statement of the independent auditors to the members 
of thus group plc
we have examined the summary financial statement which
comprises the summary consolidated income statement the
summary consolidated statement of recognised income and
expense the summary group and parent company balance
sheets the summary consolidated statement of cash flows 
the notes to the summary financial statement and the summary
directors’ remuneration report set out on pages 20 to 22
this statement is made solely to the company’ s members 
as a body in accordance with section 251 of the companies 
act 1985 our work has been undertaken so that we might 
state to the company’ s members those matters we are required 
to state to them in such a statement 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 work for 
this statement or for the opinions we have formed
respective responsibilities of directors and auditors
the directors are responsible for preparing the summary annual
report in accordance with applicable united kingdom law
our responsibility is to report to you our opinion on the
consistency of the summary financial statement within the
summary annual report with the full annual financial statements
the directors’ report and the directors’ remuneration report and
its compliance with the relevant requirements of section 251 of the
companies act 1985 and the regulations made thereunder
we also read the other information contained in the summary
annual report and consider the implications for our report if 
we become aware of any apparent misstatements or material
inconsistencies with the summary financial statement
basis of opinion
we conducted our work in accordance with bulletin 19996 
“the auditors’ statement on the summary financial statement”
issued by the auditing practices board our report on the group’ s
full annual financial statements describes the basis of our audit
opinion on those financial statements and the directors’
remuneration report
opinion
in our opinion the summary financial statement is consistent 
with the full annual financial statements the directors’ report 
and the directors’ remuneration report of thus group plc for 
the year ended 31 march 2007 and complies with the applicable
requirements of section 251 of the companies act 1985 and the
regulations made thereunder 
kpmg audit plc
chartered accountants
registered auditor
8 salisbury square
london
ec4y 8bb
18 may 2007
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 financial statements or
audit report since they were initially presented on the website
b legislation in the united kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions 24
summary consolidated income statement 
for the year ended 31 march 2007
2007 2006
£’000 £’000
continuing operations
revenue 532693 349987
operating loss before restructuring costs 9540 11643
restructuring costs 1570 10406
operating loss 11110 22049
net financing costs 3975 6283
loss before income tax 15085 28332
income tax credit 69599 –
profitloss from continuing operations 54514 28332
discontinued operations
profit from discontinued operations net of tax 29414 2149
profitloss for the year attributable to the equity 
holders of the parent 83928 26183
basic earningsloss per share pence 4663 1899
diluted earningsloss per share pence 4616 1899
directors’ emoluments pounds 2209727 1615260 25
summary consolidated statement of recognised income
and expense for the year ended 31 march 2007
2007 2006 
£’000 £’000 
foreign exchange translation differences 15 5 
actuarial gainslosses on defined benefit pension plan 2978 2390
income tax on income and expense recognised directly in equity 893 –
net income and expense recognised directly in equity 2070 2385
profitloss for the year 83928 26183
total recognised income and expense for the year
attributable to the equity holders of the parent 85998 28568
the parent company profit for the year is £141000 2006 £nil no income and expense has been recognised directly in equity 
for either 31 march 2007 or 31 march 2006 26
summary group and parent company balance sheets 
as at 31 march 2007
group company
2006 
2007 as restated 2007 2006
£’000 £’000 £’000 £’000 
assets 
total noncurrent assets 510359 444034 135058 139105 
total current assets 144418 186842 87 257 
total assets 654777 630876 135145 139362 
liabilities
total current liabilities 132115 143795 241 2578
total noncurrent liabilities 51443 101434 – –
total liabilities 183558 245229 241 2578
net assets 471219 385647 134904 136784 
equity
issued capital 45758 45189 45758 45189 
shares to be issued reserve 7 300 12800 7 300 12800 
share premium account 39001 36091 39001 36091 
merger reserve 586556 586556 19996 19996 
capital redemption reserve 23248 23248 23248 23248 
other reserves – 3 – –
cumulative loss reserve 230644 318240 399 540
total equity attributable to the 
equity holders of the parent 471219 385647 134904 136784 
approved by the board on 18 may 2007 and signed on its behalf by 
william allan john maguire 
chief executive chief financial officer 
the summary financial statement on pages 24 to 28 is only a summary of information in the company’ s annual report and financial
statements they do not contain sufficient information to allow for as full an understanding of the results of the group and state of affairs
of the parent company or of the group and of their policies and arrangements concerning directors’ remuneration as would be
provided by the full annual report and financial statements members requiring more detailed information have the right to obtain 
free of charge a copy of the company’ s full annual report and financial statements
the statutory financial statements have been delivered to the registrar of companies and the auditors have reported on them their
report was unqualified and did not contain statements under sections 235 3 237 2 or 237 3 of the companies act 1985
for further information the full financial statements and the independent auditors’ report on those financial statements should be
consulted copies of the full annual report and financial statements may be obtained free of charge on request from the company
secretary at the company’ s registered office members may elect to receive the full annual report and financial statements in place 
of the summary financial statement for future years by writing to the company secretary 27
2007 2006 
£’000 £’000 
profitloss after tax and gain on sale of discontinued operations net of tax 83928 26183
cash inflow before changes in working capital and provisions 44748 32664 
cash generated from operations 38959 48011 
net cash from operating activities 31138 48245 
net cash used in investing activities 23003 43772
net cash used infrom financing activities 40068 30644 
cash and cash equivalents at the start of the year 63257 28140 
cash and cash equivalents at the end of the year 31324 63257 
summary consolidated statement of cash flows 
for the year ended 31 march 2007 2 earnings before interest tax depreciation including
impairment and amortisation ebitda
2007 2006 
£’000 £’000 
operating loss 11110 22049
depreciation charge for the year 48645 47 103 
amortisation charge for the year 3758 3724 
ebitda 41293 28778 
ebitda before restructuring costs 
is calculated as follows 
operating loss 11110 22049
restructuring costs 1570 8806 
depreciation charge for the year 48645 47 103 
amortisation charge for the year 3758 3724 
ebitda before restructuring costs 42863 37 584 
ebitda is a key measure used by the group’ s management to
assess the performance of the group as this is a nongaap
measure and is not defined within international financial
reporting standards as adopted by the eu this reconciliation 
has been provided
the figures quoted for 2006 above are for continuing 
operations only
3 directors’ emoluments and interests
the aggregate amount of emoluments and gains on the exercise of
share options but excluding pensions of the highestpaid director
was £918518 2006 £610504 the aggregate of the gains
made on the exercise of share options by the highestpaid director
was £31821 after deducting tax and ni borne by the director
2006 £nil
the aggregate of the gains made on the exercise of share 
options by the directors during the year was £80796 after
deducting tax and ni borne by the directors 2006 £415 the
2003 sharesave scheme and the 2003 performance share plan
options were exercisable during the current year and the 2002
sharesave scheme options were exercisable in the prior year 
28
notes to the summary financial statement 
for the year ended 31 march 2007
1 basis of preparation
the financial information has been prepared in accordance with
ifrs as adopted by the eu
the financial information is prepared on the historical cost basis
except for derivative financial instruments which from 1 april
2005 are stated at their fair values and noncurrent assets held 
for sale which are stated at the lower of carrying amount and fair
values less costs to sell the financial information is presented in
pounds sterling rounded to the nearest thousand
the preparation of the financial information in conformity with
ifrs requires the directors to make judgements estimates and
assumptions that affect the application of policies and reported
amounts of assets and liabilities income and expenses the
estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances the results of which form the
basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources
actual results may differ from these estimates
the estimates and underlying assumptions are reviewed on an
ongoing basis revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision only
affects that period or in the period of revision and future periods 
if the revision affects both the current and future periods
judgements made by management in the application of ifrss 
that have a significant effect on the financial statements and
estimates with a significant risk of material adjustment in the 
next year are disclosed in note 34 in the full annual report 
and financial statements 29
this notice is important and requires your immediate
attention
if you are in any doubt as to the action you should take
you should consult immediately your stockbroker bank
manager solicitor accountant or other independent
financial advisor authorised under the financial services
and markets act 2000
if you have sold or otherwise transferred all your 
shares in the company  please send this notice and the
accompanying documents to the purchaser or transferee
or to the stockbroker bank or other agent through whom
the sale or transfer was effected for transmission to the
purchaser or transferee
notice is hereby given that the annual general meeting of the
company for 2007 will be held on wednesday 25 july 2007 
at 1100 am at the plaisterers’ hall one london wall 
london ec2y 5ju 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 2007
2 t o approve the directors’ remuneration report for the year
ended 31 march 2007
3 t o elect rick medlock as a director 
4 t o elect martin beesley as a director 
5 t o reelect william allan as a director 
6 t o reelect ian chippendale as a director 
7 t o reappoint 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
tha t 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 £361162375 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  25 october 2008 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 
tha t 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 subsection 1 of section 89 of the said act did
not apply to any such allotment provided tha t this power
shall be limited to
a the allotment of equity securities in connection with a rights
issue open offer or any other preemptive 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 subparagraph a
above of equity securities up to an aggregate nominal value
of £2287 90450 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  25 october 2008 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 
10 t o consider and if thought fit to pass the following resolution
which will be proposed as an ordinary resolution
tha t the company may send or supply any document or
information which requires or is authorised to be sent or
supplied to a shareholder or any other person by the company
under a provision of the companies acts as defined in section
2 of the uk companies act 2006 or pursuant to the articles of
association of the company or to any other rules or regulations
to which the company may be subject by electronic means as
defined in section 1168 of the companies acts including by
making it available on a website and the provisions of schedule
5 to the companies act 2006 shall apply whether or not any
document or information is required or authorised to be sent 
by the companies act 2006 and this resolution shall supersede
any provision in the company’ s articles of association to the
extent that it is inconsistent with this resolution
by order of the board registered office
david macleod 12 berkeley square
secretary 99 berkeley street
4 june 2007 glasgow g3 7hr
notice of annual general meeting notice of annual general meeting
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 600 pm on 23 july
2007 or by 600 pm two days prior to the date of any
adjournment of the meeting completing and returning a 
form of proxy will not prevent any member from attending 
the meeting in person and voting should that member so wish
ii members may register their proxy appointments or voting
directions electronically via the wwwshareviewcouk 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
providers should refer to their crest sponsor or voting service
providers 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 1100 am on 23 july
2007 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 providers 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 providers to
procure that his crest sponsor or voting service provider 
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 355 a of the
uncertificated securities regulations 2001
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 31 march 2007
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 
resolutions 3–6
the articles of association require that directors stand for election
by the shareholders at the first annual general meeting following
their appointment and also that onethird of the directors retire 
at every annual general meeting the board following its
evaluation of the performance of those directors standing for
election and reelection confirms that each of those directors
performs effectively and demonstrates commitment to the role 
the biographical details of each of the directors who are offering
themselves for election or reelection are shown on page 18 
the election and reelection of those directors shall subject to the
passing of the relevant resolutions take effect immediately upon
the conclusion of the meeting
resolution 7
the reappointment 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
30 31
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 £361162375 which represents
approximately 14446495 ordinary shares of 25 pence each 
or approximately 8 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 2008 or  if earlier  25 october 2008 
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
• to allot shares not in connection with a rights issue up to a
specific amount so that the preemption requirement does not
apply to the allotments of shares for cash up to that 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 preemption rights of
shareholders under section 89 of the companies act 1985 up to
a maximum nominal amount of approximately £2287 90450
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 of 9151618 ordinary shares
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
issued 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
resolution 10
the companies act 2006 contains provisions which enable
companies to communicate with their shareholders using
electronic means provided that the company has authority 
in its articles or shareholders have given consent by ordinary
resolution the company would like to be able to take advantage
of this ability to use its website or email to communicate with
shareholders who have consented or are deemed to have
consented to those forms of communications although
shareholders are currently able to receive certain documents 
from our registrar by electronic means the new provisions will
provide for a wider range of documents including the report and
accounts notices of meetings and proxy forms to be provided
electronically by default resolution 10 is an ordinary resolution
which will enable us to use the new arrangements and seeks the
consent of shareholders to communications in such manner 
shareholders will be able to receive on request paper copies 
of documents if they so choose
recommendation of the board of directors in respect 
of all items of business
the board is of the opinion that all of the proposed resolutions 
are in the best interests of shareholders as a whole and of the
company accordingly the board recommends that you vote in
favour of each resolution as the directors intend to do in respect 
of their own beneficial shareholdings held at the time of the
annual general meeting 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 6rf  not later than 1100 am 
on 23 july 2007 if you do not wish the form of proxy to be seen
by anyone except the company and its registrars you should
post it in an envelope to lloyds tsb registrars freepost  the
causeway  worthing west sussex bn99 6rf 
alternatively  if you wish to register your proxy 
appointment electronically through the internet please use
wwwsharevotecouk 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 30 for instructions regarding the crest
electronic proxy appointment service
4 copies of the executive directors’ service contracts letters of
appointment for the nonexecutive 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 2007  
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 25 july 2007 and also at the
place of the agm from 1030 am 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 930 am and the meeting will start
promptly at 1100 am
camerasvideo or tape recordersmobile phones
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 hall
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 930 am and 1050 am
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 25 june 2007 during
normal working hours
32 33
analysis of shareholders as at 31 march 2007
number of numbers
range of holdings shareholders of shares
1–100 293990 5567 325
101–200 13410 1891136
201–600 8526 2980148
601–1000 2085 1711633
1001–5000 2283 4620518
5001–100000 516 9545159
100001 and above 106 156716448
financial calendar
25 july 2007 annual general meeting
november 2007 interim results for the six months ended 
30 september 2007
may 2008 preliminary results for the year ended 
31 march 2008
annual general meeting
the annual general meeting will be held at the plaisterers’ hall
one london wall london ec2y 5ju on wednesday 25 july
2007 at 1100 am details of the resolutions to be proposed 
at the annual general meeting are contained in the notice of
annual general meeting on pages 29 to 31
dividend
the directors have not recommended the payment of a dividend
for the year ended 31 march 2007
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
the share price is available from the thus website at
wwwthusnet and in national newspapers
shareholder administration
any queries relating to the administration of shareholdings such
as change of address change of ownership and amalgamation 
of multiple accounts should be referred 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 wwwshareviewcouk
sharegift
sharegift is an independent registered charity which provides 
a free service for shareholders wishing to give small holdings 
of shares to benefit charitable causes 
it may be especially useful for those who wish to dispose of a small
parcel of shares which would cost more to sell than they are worth
there are no capital gains tax implications on gifts of shares to
charity and it is also possible to obtain income tax relief further
information can be obtained at wwwsharegiftorg or from the
thus shareholder helpline on 0870 609 4531
contact information
secretary and registered office
david macleod
thus group plc
12 berkeley square
99 berkeley street
glasgow
g3 7hr
registered number sc 226738
for enquiries relating to the company’ s operations and
performance please contact either
investor relations corporate communications
thus group plc thus group plc
12 berkeley square 12 berkeley square
99 berkeley street 99 berkeley street
glasgow glasgow
g3 7hr g3 7hr
t el 0141 566 3176 t el 0141 566 3167
thus’ services
information about thus’ services can be found on the thus
website at wwwthusnet
shareholder and contact information
designed and produced by greymatter williams and phoa 
printed in the uk thus group plc
12 berkeley square
99 berkeley street
glasgow g3 7hr
wwwthusnet


Summary:
 2 thus group plc annual report 2007
thus at a glance
managed
solutions 
2007 2006
£m £m
revenue 950 731 
operating profit
2
189 85 
operating profit margin
2
20 12 
highlights
• revenue grew 30 to £950m driven 
by recent contract wins and the inclusion 
of united utilities as a managed 
solutions customer 
• segmental operating profit
2
increased 
from £85m to £189m with margins
2
improving to 20 
• during the year  major nextgeneration
services contracts were secured with hsbc
the highland council
3
lead partner for the
pathfinder north project and dumfries 
galloway and scottish borders councils for
the pathfinder south project in total these are
expected to deliver up to £179m of revenue
over the next seven years
• a threeyear contract worth more than £13m
was signed with united utilities in may 2007 
following competitive tender 
thus transformation
the integration of y our communications yc and legend communications lc which 
were acquired in february and march 2006 respectively continues to proceed ahead of the
original plan during the year we announced that the integration is now expected to deliver 
£30m of annualised savings previously £25m for expected implementation costs of less than
£25m previously £30m
the successful disposal of demon netherlands in june 2006 marked another important milestone
and the consideration gave rise to a posttax gain on sale of £290m the proceeds received were
used to strengthen the company’ s balance sheet and repay £30m of the secured loan
continuing operations
as a result of the acquisition of yc and lc and the disposal of demon netherlands thus 
records results for its continuing operations in four established segments comprising managed
solutions 18 of 2007 revenue data and telecoms 59 internet 16 and mobile 7
managed solutions are run as a separate unit within thus they comprise large corporate
accounts with complex service needs typically combining delivery of several different standard
services an element of outsource to thus and longer than average contract duration
in contrast the data and telecoms internet and mobile segments record revenue and results 
for more standard product sales to a wide customer base including corporate small and mid
sized customers channel resellers and other telecommunication companies
within each segment the principal costs comprise payments to other telecommunication
companies for interconnect and use of their network to collect and deliver services to thus
customers other directly variable costs directly attributable selling distribution and administrative
costs and depreciation on assets directly attributable to that segment 
however  as the majority of services are sold provisioned and run from a unified infrastructure
thus maintains a large pool of central costs in 2007  these costs totalled £1172m
1
2006
£917m
1
 and comprised £434m of depreciation impairment and amortisation 2006 £415m
£273m of network operations and maintenance costs 2006 £217m and £465m of corporate
overheads 2006 £285m
1
excludes £16m of restructuring costs in 2007 2006 £104m
2
segmental operating profit excludes central costs not allocated to individual segments
3
the highlands and islands pathfinder broadband procurement project represents the five
councils making up the region namely highland moray orkney shetland  argyll and
bute councils thus group plc annual report 2007 3
mobile data 
and telecoms 
internet
2007 2006
£m £m
revenue 3125 2038 
operating profit
2
615 433 
operating profit margin
2
20 21 
highlights
• revenue grew 53 to £3125m the
segment benefited from the inclusion of 
12 months’ revenues from the acquisitions
amounting to £1197m of predominantly
legacy services
• segmental operating profit
2
rose from
£433m to £615m with margins
2
of 20
21 last year 
• notable new customers for nextgeneration
services included wolseley uk london
metropolitan network university of central
england vodat international audit
commission university of westminster 
and digica 
2007 2006
£m £m
revenue 847 693 
operating profit
2
231 277 
operating profit margin
2
27 40 
highlights
• revenue grew 22 to £847m and included
£190m from the acquisitions this year
compared to £15m last year  excluding 
the impact of the acquisitions for both 
years revenue from nextgeneration 
services increased by £38m and legacy
services declined by £59m principally 
from the continued and expected decline 
in dialup internet
• segmental operating profit
2
fell from £277m
to £23 1m with margins
2
of 27 40 last
year principally due to the decline in high
margin dialup internet 
• broadband customers grew 3 to 130700
march 2006126500
• several innovative services were launched
this year including up to 8mbps demon
business broadband demon voice voice
over ip enhanced hosting and mobile
services including blackberry
2007 2006
£m £m
revenue 405 38 
operating profit
2
42 05 
operating profit margin
2
10 12 
highlights
• the mobile segment was established in 
march 2006 following the acquisition 
of y our communications
• revenue for the year was £405m pro forma
revenue for 2006 was £407m with 
a segmental operating profit
2
of £42m
representing a 10 margin
2
 
• the division continues to be vodafone’ s
largest independent uk businesstobusiness
service provider and had 90000 active
connections at the year end march 2006
78000 
• as well as providing mobile email and 3g
services our customers realise significant
business benefit through the use of business
t ext location services and field force
automation which are delivered via our
managed service platform next year we
expect to launch additional managed
services to enhance our existing services 
for customers with a greater focus on
converged services