the smarter way to broadband
 
plusnet plc  annual report and accounts year ended 31 december 2005
technology building
terry street
sheffield
s9 2bu
wwwplusnet
plusnet plc      annual report and accounts year ended 31 december 2005           the smarter way to broadband contents
01 highlights of 2005
02 plusnet at a glance
04 chairman’s statement
05 chief executive’s strategic review
09 finance director’s review
12 board of directors and senior management
14 directors’ report
16 corporate governance report
19 remuneration committee report
23 statement of directors’ responsibilities  
24 report of the independent auditors
25 consolidated profit and loss account
26 balance sheet
27 consolidated statement of cash flows
28 notes to the financial statements
43 company information and advisers
44 glossary 
 
about plusnet plc
plusnet is the uk’s best value internet service provider its unique 
highly automated operating system workplace enables it to offer 
excellent broadband services at the lowest prices 
plusnet’s selfdeveloped operating system workplace is highly 
automated flexible and scalable allowing plusnets products to be 
competitively priced whilst delivering a high quality of service and 
maintaining low operating costs 
in 2005 plusnet launched wireless network access services and  
its voip product plustalk which represent a further step towards  
plusnet’s converged broadband offering encompassing voice data  
and entertainment services at home at work or on the move
plusnet listed on aim a market operated by the london stock exchange 
on 14 july 2004 at an issue price of 90p under the ric code pntl
for further information about plusnet please visit the company’s investor 
relations site httpwwwplusnetinvestors plusnet plc  annual report and accounts year ended 31 december 2005
 broadband customer numbers up 96 to 176000
 turnover up £74m to £352m
 operating profit before exceptional costs up £20m to £49m
 earnings per share before exceptional costs up 78 to 135p 2004 76p
 acquisition of metronet
 launch of voip and wireless access services
highlights of 2005
broadband users
up  96 
to  176000
05 04 03 02 0 100000 0 200000
numbers
turnover
up  27 
to  £352m
05 04 03 02 0 20 0 40
£m
gross profit
up  33 
to  £120m
05 04 03 02 0 7 0 14
£m
financial summary
year ended 3 december  2005 2004
broadband customer numbers  76000 90000
turnover   £352m £278m
gross profit   £ 20m £90m
operating profit before exceptional costs £49m £29m
operating profit after exceptional costs £42m £17m
profit for the year  £34m £09m
earnings per share  basic   8p 32p
  before exceptional costs  35p 76p
  fully diluted  4p 31p
operating profit  
up  69
to  £49m
05 04 03 02 0 0 5
£m
before exceptional items  plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
long distance long distance
devices
multiple
offers
services
ip
wireless
ip
mobile
voice
not ip ip
broadband
content  communications  applications  networking
internet service aggregation
entertainment
voice
broadband
entertainment
voice
not ip
mobile
broadband
not ip broadcast tv
ip
fixed
mobile
workplace
workplace
portal
monitoring
pms
employee
sales
provisioning
support
maintenance
billing
cancellation
crm
alerting
fms
cms
customer
portal
1
2
1
2
customer
customer
customer
devices
contacts
services
workplace
mobile
not ip not ip
broadcast tv
infrastructure application
workplace
aggregates and delivers
customer
fixed
network
wireless
network
service wrap
quality of service
content
enablement
collaboration
uniﬁed messaging
one 
subscription 
relationship
quality 
of service
flexibility
choice
value
trust
multiple
technologies
multiple
devices
confusing
sales
multiple
suppliers
multiple
bills
monitoring
sales
provisioning
support
maintenance
billing
cancellation
customer
employees
convergent services today  
 not really convergence
long distance long distance
devices
multiple
offers
services
ip
wireless
ip
mobile
voice
not ip ip
broadband
content  communications  applications  networking
internet service aggregation
entertainment
voice
broadband
entertainment
voice
not ip
mobile
broadband
not ip broadcast tv
ip
fixed
mobile
workplace
workplace
portal
monitoring
pms
employee
sales
provisioning
support
maintenance
billing
cancellation
crm
alerting
fms
cms
customer
portal
1
2
1
2
customer
customer
customer
devices
contacts
services
workplace
mobile
not ip not ip
broadcast tv
infrastructure application
workplace
aggregates and delivers
customer
fixed
network
wireless
network
service wrap
quality of service
content
enablement
collaboration
uniﬁed messaging
one 
subscription 
relationship
quality 
of service
flexibility
choice
value
trust
multiple
technologies
multiple
devices
confusing
sales
multiple
suppliers
multiple
bills
monitoring
sales
provisioning
support
maintenance
billing
cancellation
customer
employees
long distance long distance
devices
multiple
offers
services
ip
wireless
ip
mobile
voice
not ip ip
broadband
content  communications  applications  networking
internet service aggregation
entertainment
voice
broadband
entertainment
voice
not ip
mobile
broadband
not ip broadcast tv
ip
fixed
mobile
workplace
workplace
portal
monitoring
pms
employee
sales
provisioning
support
maintenance
billing
cancellation
crm
alerting
fms
cms
customer
portal
1
2
1
2
customer
customer
customer
devices
contacts
services
workplace
mobile
not ip not ip
broadcast tv
infrastructure application
workplace
aggregates and delivers
customer
fixed
network
wireless
network
service wrap
quality of service
content
enablement
collaboration
uniﬁed messaging
one 
subscription 
relationship
quality 
of service
flexibility
choice
value
trust
multiple
technologies
multiple
devices
confusing
sales
multiple
suppliers
multiple
bills
monitoring
sales
provisioning
support
maintenance
billing
cancellation
customer
employees
convergence  customers win through plusnet
operating models count convergence
plusnet at a glance
how will true convergence be delivered
•  services not delivered via internet ip
•  multiple billing relationships
•  multiple delivery mechanisms
•  multiple networks
•  multiple and complex service platforms
•  aggregated services delivered via internet ip
•  streamlined service relationships
•  aggregated networks
•  greater convenience and better value for money
•  efficient billing relationships
•  quality of service assurance qos
other isps not convergence ready
plusnet uses its unique operating model
to address true convergence
• complex customer journey
• people intensive
• fractured systems and infrastructure
• customer satisfaction through end to end 
customer experience
• highly automated self serve operation
• interoperating systems
long distance long distance
devices
multiple
offers
services
ip
wireless
ip
mobile
voice
not ip ip
broadband
content  communications  applications  networking
internet service aggregation
entertainment
voice
broadband
entertainment
voice
not ip
mobile
broadband
not ip broadcast tv
ip
fixed
mobile
workplace
workplace
portal
monitoring
pms
employee
sales
provisioning
support
maintenance
billing
cancellation
crm
alerting
fms
cms
customer
portal
1
2
1
2
customer
customer
customer
devices
contacts
services
workplace
mobile
not ip not ip
broadcast tv
infrastructure application
workplace
aggregates and delivers
customer
fixed
network
wireless
network
service wrap
quality of service
content
enablement
collaboration
uniﬁed messaging
one 
subscription 
relationship
quality 
of service
flexibility
choice
value
trust
multiple
technologies
multiple
devices
confusing
sales
multiple
suppliers
multiple
bills
monitoring
sales
provisioning
support
maintenance
billing
cancellation
customer
employees plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
3
convergence  customers win through plusnet
convergence  myth or reality
in the main convergent services are being delivered by bringing 
together disparate technologies within the home and it is 
generally left to the consumer to resolve and manage the 
complex interoperating of multiple services using multiple 
devices this leads to the consumer having to deal with disparate 
suppliers and therefore having to negotiate multiple experiences 
which increases the hassle factor and the general apathy towards 
convergence as being too hard and difficult to achieve coupled 
with this is the disadvantage of creating a world of multiple bills 
being received by the customer
plusnet uses workplace to aggregate networks and technologies 
without the cost associated with ownership of infrastructure 
by providing a single customer experience to the customer 
and crucially one bill plusnet will use workplace to enable 
convergence to its true potential
workplace enables a converged world
a web based transactional relationship with plusnet 
customers providing the most effective mechanism of 
delivering maxium choice of new products and services
a web based customer support system which puts the 
customer in control driving an excellent customer service 
experience
lowcost of operation allowing plusnet to offer new products 
and services at highly competitive prices whilst maintaining 
profitability
cost effective aggregation of third party networks giving 
flexibility in a converging communications world and 
minimising capital expenditure requirements
comprehensive automated network traffic management 
allowing plusnet to assure quality of service to its customers  
while optimising network costs 
•
•
•
•
•
long distance long distance
devices
multiple
offers
services
ip
wireless
ip
mobile
voice
not ip ip
broadband
content  communications  applications  networking
internet service aggregation
entertainment
voice
broadband
entertainment
voice
not ip
mobile
broadband
not ip broadcast tv
ip
fixed
mobile
workplace
workplace
portal
monitoring
pms
employee
sales
provisioning
support
maintenance
billing
cancellation
crm
alerting
fms
cms
customer
portal
1
2
1
2
customer
customer
customer
devices
contacts
services
workplace
mobile
not ip not ip
broadcast tv
infrastructure application
workplace
aggregates and delivers
customer
fixed
network
wireless
network
service wrap
quality of service
content
enablement
collaboration
uniﬁed messaging
one 
subscription 
relationship
quality 
of service
flexibility
choice
value
trust
multiple
technologies
multiple
devices
confusing
sales
multiple
suppliers
multiple
bills
monitoring
sales
provisioning
support
maintenance
billing
cancellation
customer
employees
customers perceptions
convergent services today confusing
plusnet delivers clarity through workplace
• value for money across multiple services
• single customer service relationship
plusnet wins through by
• delivering multiple services in a lowcost way
• managing multiple network relationships to ensure quality  
of service alongside cost efficiency
long distance long distance
devices
multiple
offers
services
ip
wireless
ip
mobile
voice
not ip ip
broadband
content  communications  applications  networking
internet service aggregation
entertainment
voice
broadband
entertainment
voice
not ip
mobile
broadband
not ip broadcast tv
ip
fixed
mobile
workplace
workplace
portal
monitoring
pms
employee
sales
provisioning
support
maintenance
billing
cancellation
crm
alerting
fms
cms
customer
portal
1
2
1
2
customer
customer
customer
devices
contacts
services
workplace
mobile
not ip not ip
broadcast tv
infrastructure application
workplace
aggregates and delivers
customer
fixed
network
wireless
network
service wrap
quality of service
content
enablement
collaboration
uniﬁed messaging
one 
subscription 
relationship
quality 
of service
flexibility
choice
value
trust
multiple
technologies
multiple
devices
confusing
sales
multiple
suppliers
multiple
bills
monitoring
sales
provisioning
support
maintenance
billing
cancellation
customer
employees



 4
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
kevin adams
chairman
“	 plusnets	 lowcost	 operating	 platform	 gives	 us	 a	 real	 edge	 in	 seizing	 the	 convergence	 opportunity”
introduction
plusnet is the uk’s best value internet service provider its unique 
highly automated operating system workplace enables it to offer 
excellent broadband services at the lowest prices 
 
year in review
i am delighted to present plusnet’s results for the year ended  
31 december 2005 plusnet has enjoyed continued strong 
growth in sales broadband subscribers and profitability turnover 
increased by 27 to £352m operating profit before exceptional 
item increased by 69 to £49m and earnings per share before 
exceptional costs increased by 78 to 135p we ended 2005  
with 176000 broadband customers
 
in april 2005 we increased the appeal of our broadband 
connectivity products by standardising connection speeds at  
2mb and removing the upfront cost of activation and modems  
for new broadband customers these changes heralded an 
immediate increase in new customer acquisitions
in november 2005 we acquired metronet for a consideration 
of £17m adding 16000 broadband customers to the plusnet 
business in line with our acquisition strategy the purchase of 
metronet is expected to be earnings enhancing in 2006
the convergence of communications services around broadband 
presents many opportunities but also many challenges for 
businesses in the communications industry customers will 
demand increasing value for money from their communications 
providers – total consumer spend on telecommunications internet 
and entertainment services will reduce to succeed the service 
provider will need to provide access to a full range of high quality 
communications and entertainment services at excellent price 
points i believe plusnet’s lowcost operating platform gives us  
chairman’s statement
a real edge in seizing the convergence opportunity in keeping  
with our strategy to remain at the forefront of convergence  
during 2005 we have continued to offer market leading 
broadband connectivity products and launched voip and  
wireless network access wifi services 
we are gaining market share from our competitors due to our 
market leading product suite superior broadband offering and 
highly competitive pricing 
board
i am pleased to report that neil comer took on the role of finance 
director following the departure of ashok makanji in november 
2005 neil moved across from his position of commercial director 
where he played a major role in the development of the business 
dividend policy
plusnet will apply its cash resource to fund customer growth 
capital expenditure tax obligations and corporate acquisitions 
when appropriate opportunities arise no dividends have therefore 
been recommended
summary
i am delighted with the progress we have made in 2005 and  
on behalf of the board i would like to thank all our employees  
for their enormous contribution hard work and support during 
our first full year as a listed company 
kevin adams
chairman
22 february 2006 plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
5
lee strafford
chief executive
“		 plusnet	 has	 once	 again	 enjoyed	 record	 growth	 in	 broadband	 customer	 numbers	 up	 96	 to	 176000	 and	 in	 operating	 profit	 before	 exceptional	 items	 up	 69	 to	 £49m”
introduction
our first full year as an independent company has seen plusnet 
make significant progress the group has once again enjoyed 
record growth in broadband customer numbers up 96  
to 176000 the strength and efficiency of our workplace 
operating system has allowed us to increase our preexceptional 
operating profit by 69 to £49m from a revenue increase  
of 27 we increased our standard connection speed to  
2mb removed the upfront cost of activation launched wireless 
network access services wifi and developed our own leading 
voip solution plustalk we continue to score highly in customer 
satisfaction surveys and enjoy an industry leading churn rate
we have also continued to invest in the development of 
workplace and future products to address the opportunities 
offered by communications market convergence
market background
broadband connection speeds continue to increase bt has 
announced that speeds of 8mb will be available nationally from 
april 2006 the rollout of 8mb services will be pivotal for the 
industry as a whole giving customers the connection bandwidth 
to use multiple broadband enabled services next generation 
wireless routers for the home which we expect to be available 
from q3 2006 will eliminate the signal quality issues of the first 
generation and facilitate easier use of voip 
as high speed broadband capacity increases customers’ 
multiple subscriptions to fixed line voice providers mobile 
operators and cable or satellite tv services will eventually 
converge towards one subscription relationship via a broadband 
provider the drive to convergence will result in customers 
reducing their overall spend on internet entertainment and 
voice services delivering high quality broadband connectivity 
and a full range of complementary services at attractive price 
points will be critical to winning and retaining customers
as faster speeds become prevalent we expect accessing  
of ondemand content by customers to grow dramatically  
we believe that the sheer volume of available content and the 
huge number of sources of content will lead users to demand  
the freedom to enjoy content of their choice in preference  
to purchasing access to packaged content propositions 
the availability of high speed broadband connections and the 
associated adoption of multiple applications and services will 
also accelerate growth in bandwidth utilisation in the absence 
of efficient systems and network management techniques the 
overall customer experience can be compromised and costs could 
spiral out of control we believe that managing the cost of the 
network whilst maintaining the customer experience will be 
increasingly strategically important in the industry
chief executive’s strategic review 6
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
2005 has seen a significant increase in investment in network 
infrastructure through local loop unbundling llu in response 
to regulatory action by ofcom reductions in bt’s network 
wholesale prices have been limited to encourage investment  
in llu a number of providers have announced significant  
capital investment plans to build out llu capacity across the 
more populous areas of the country however when the 
regulatory obligations imposed by ofcom are met wholesale 
broadband costs are expected to be normalised across bt and 
alternative network providers with the supply of alternative 
networks providing downward pricing pressure in the long  
term service providers face the challenge of acquiring network 
capacity cost effectively before regulatory restrictions are  
lifted either by investing themselves or purchasing from 
emerging llu wholesalers other than bt
i believe plusnet is extremely well positioned to meet the 
challenges and exploit the opportunities of the developing 
broadband market our lowcost workplace operating platform 
will give us significant advantages as we move 
towards convergence – advantages that are evident 
from our 2005 performance in the remainder of my 
statement i will set out the advantages of our low
cost operating model and the benefits it has brought 
in 2005    
 
broadband developments in 2005 
broadband	 connectivity
during the year we increased our standard connection speed 
to 2mb taking advantage of wholesale cost reductions and the 
wider availability of faster broadband services on the bt network 
to further improve our customer appeal 
our lowcost operating model has allowed us to offer market 
leading subscription prices on our new connectivity products 
whilst retaining profitability in addition we have invested in the 
introduction of the option for new broadband customers to avoid 
the upfront cost of activation and modem by forgiving the cost 
over a five year period we experienced an immediate positive 
customer response to our new broadband offers evidenced by 
acceleration in customer growth over the remainder of the year 
net customer additions excluding 16000 customers acquired 
with metronet totalled 23000 in the first six months compared 
to 47000 in the second six months of 2005 
all new customers have been generated by referral we have not 
invested in high cost low return advertising
workplace continues to deliver a high quality service experience 
evidenced by strong customer satisfaction ratings and an industry 
leading churn rate
wireless	 access
in february 2005 we launched wifi services which allow 
customers to make a broadband connection in over 1600 
hotspots around the country through their plusnet account 
once again by leveraging our workplace operating platform  
we are able to offer plusnet customers wifi at low cost  
wifi services are an important building block towards mobility 
and an essential element of a converged service offering
 
voip	 in june 2005 we launched our voip service plustalk to existing 
plusnet customers which gives customers the ability to make 
free phone calls over the internet in september 2005 we 
introduced the ability for customers to breakout from internet 
calls to traditional landlines and mobiles with four retail packages 
offering market leading pricing 
critically this solution has been developed internally and is  
fully integrated into our workplace platform giving us a seamless 
deployment capability 
bt	 teleworker
bt utilises plusnet’s workplace platform within its teleworker 
product to deliver a remote broadband access solution for 
its major corporate customers at 31 december 2005 the 
teleworker product had been adopted by over 50 of bt’s 
bluechip corporate customers and we have experienced an 
encouraging growth in the number of end users on the platform 
over the year these are not included in our published broadband 
customer numbers we are working with bt to extend the 
appeal of the teleworker product 
“	our	 workplace	 operating	 system	 continues	 to	 deliver	 a	 high	 quality	 service	 experience	 evidenced	 by	 strong	 customer	 satisfaction	 ratings	 and	 an	 industry	 leading	 churn	 rate”
chief executive’s strategic review continued plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
7
network management
in 2005 increasing speeds and wider accessing of content  
have dictated that service providers have had to manage  
network traffic closely to maintain network efficiency or bear 
the cost of excessive network capacity we have exploited 
industryleading network management techniques through 
workplace to control and optimise data traffic over the internet 
our network management expertise will be increasingly 
important to optimise performance as broadband connectivity 
speeds increase further in 2006 and beyond this expertise 
will allow us to assure service quality for customers across 
all traffic types whether they are downloading content 
using a voip service gaming or simply browsing the internet 
and accessing email the effectiveness of our network 
management techniques is demonstrated by the increase in 
our broadband margin from 23 in 2004 to 29 in 2005 
whilst bt remains plusnet’s primary network partner plusnet 
is exploring other network wholesale opportunities including 
those sourced from easynet and tiscali both of which are 
expected to develop llu significantly in 2006 we believe that 
sourcing wholesale llu to complement the supply from bt is 
the right way for plusnet to take advantage of the short term 
margin advantage available from llu without incurring the cost 
and time investment of building our own infrastructure this is 
consistent with plusnet’s stated strategy of leveraging thirdparty 
networks efficiently
growth and convergence strategy
historically workplace has driven competitive advantage 
through lower back office costs and better management 
of wholesale networks we will continue to develop 
the automation of network management functionality 
within workplace to maintain our lead in this area 
our early trials with bt’s 8mb service have been successful 
and we are also trialling 8mb services sourced from tiscali and 
easynet i expect the availability of higher connection speeds  
to fuel customer growth in 2006
alongside the continued evolution of our broadband connectivity 
products we are focusing on the enhancement of plustalk  
our voip product we intend to add email and instant messaging 
to voip thus enveloping all of our customers’ communication 
requirements into a single easytouse resource in 2006 we plan 
to offer bundled connectivity and voice packages encompassing 
our voip service further development of our voip offering  
is essential within our strategy as we see it representing  
a key element of a converged product set 
whenever possible new products and services will be developed 
by our inhouse development teams using our low cost 
production methodologies and open source tools to eliminate 
thirdparty licence costs to complement our own products and 
services we will aggregate high quality third party products and 
services where they present incremental profit opportunities  
we believe that plusnet is well positioned to succeed in the new 
converged world thanks to our unique workplace operating 
model which delivers significant competitive advantage 
allowing us to offer new products and services at highly 
competitive prices whilst maintaining profitability critically 
workplace enables
a webbased transactional relationship with our customers 
providing the most effective mechanism of delivering 
maximum choice of new products and services
a webbased customer support system which puts the 
customer in control driving an excellent customer service 
experience
lowcost of operation allowing us to offer new products 
and services at highly competitive prices whilst maintaining 
profitability
cost effective aggregation of third party networks giving 
flexibility in a converging communications world and 
minimising capital expenditure requirements  
comprehensive automated network traffic management 
allowing us to assure quality of service to our customers  
while optimising our network costs and
the operation of multiple brands providing a platform for 
consolidation and enabling partners to leverage the power  
of workplace
our strategy continues to be to offer a full range of converged 
communications products and services as the uk’s best value 
internet service provider
workplace gives us an industry leading platform to manage the 
infrastructure in a converged world and plustalk will allow us to 
service all of the communication needs of our customers 
•
•
•
•
•
•
“	 workplace	 gives	 us	 an	 industry	 leading	 platform	 to	 manage	 the	 infrastructure	 in	 a	 converged	 world	 and	 plustalk	 will	 allow	 us	 to	 service	 all	 of	 the	 communication	 needs	 	 of	 our	 customers” 8
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
acquisition of metronet 
on 28 november 2005 we completed the acquisition of 
parbin limited which trades as metronet for a consideration 
of £17m at completion metronet had approximately 16000 
broadband customers the integration of metronet was 
completed in february less than three months after the 
acquisition this involved transfer of customer support to 
sheffield migration of metronet’s customers onto plusnet’s 
network and the transfer of metronet’s operations onto our 
workplace platform critically the network migration brings 
significant efficiencies from network traffic management the 
integration has been achieved with negligible customer impact 
in order to maintain the value of the metronet brand it was 
critical that customers experienced no negative changes in 
metronet’s broadband connectivity services during integration 
and that we could demonstrate that plusnet had a clear plan to 
add value to the customer experience through enhanced service 
features and additional products such as higher broadband 
speeds voip and wifi the integration has been achieved with 
minimal disruption to customer service evidenced by continuing 
growth in customer numbers from completion to the year end 
metronet proves our ability to integrate a business quickly and 
effectively 
we continue to explore selective earningsenhancing 
acquisitions to augment our excellent rates of organic growth 
but remain committed to only consider opportunities that will 
add value and not dilute plusnet’s profitability
people
in april 2005 danny sullivan joined the management team  
as chief operating officer danny has over seven years 
experience at bt and his contribution has already proved 
invaluable in addition throughout the year we have 
strengthened our management team with a number of 
appointments to ensure that we have the best structure  
in place to take advantage of current market opportunities 
our management team combines experience from across the 
industry with technical experts instrumental in the development 
of workplace
i would like to echo the comments of kevin adams our 
employees continue to make a huge contribution to the 
development of our business model which i greatly appreciate 
in addition i would also like to acknowledge the contribution 
of our nonexecutive directors who have given us the benefit 
of their significant experience not just in the formal governance 
role but also by fully engaging in such a dynamic fast moving 
business and actively challenging and contributing to our 
strategic progression 
outlook for 2006
we expect bt’s rollout of 8mb and the availability of higher 
connection speeds from other networks to fuel plusnet’s 
customer growth in 2006 we expect the quality and value  
of our broadband products to drive continuing gains in market 
share we believe our lowcost workplace platform will position 
plusnet to be a major beneficiary of the convergence revolution 
in addition we believe that consolidation in the broadband space 
will continue and that workplace is an ideal platform upon which 
to participate in this consolidation phase 
at plusnet we are very excited to be involved in such a fast 
moving business in a fast moving space and being afforded  
the opportunity to demonstrate through our workplace platform 
the ability to deliver on the convergence opportunity better than 
our competitors 
lee strafford
chief executive
22 february 2006
chief executive’s strategic review continued plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
9 finance directors review
neil comer
finance director
“	the	 strength	 of	 plusnet’s	 lowcost	 operating	 model	 is	 demonstrated	 by	 our	 growth	 in	 operating	 profit	 before	 exceptional	 items	 from	 £29m	 to	 £49m”
financial overview
      2005 2004 change 
broadband users      76000 90000 96
 
     £m £m change 
revenue     352 278 27
gross profit      20 90 33
gross margin      340 320 
administrative expenses before exceptional costs    7  61 16
operating profit analysis   
     ebitda before exceptional costs     7 48 48
     operating profit before exceptional costs    49 29 69
     exceptional costs     07 12
     operating profit     42 17 147
pbt before exceptional costs     52 30 73
pbt     45 19 136
tax        10 10
profit after tax     34 09 278
basic eps      8p 32p 269
adjusted eps before exceptional costs      35p 76p 78
capital expenditure     40 25 60
cash      50 68 26
  0
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
revenue
revenue for the year was £352m a 27 increase from £278m 
in 2004 primarily due to the growth in broadband customer 
numbers this includes £03m from metronet in the period 
following acquisition in late november 2005 the introduction 
of the offer in april 2005 to forgive new broadband customers 
the costs of activation and modem over a five year period has 
changed the profile of our revenue until april revenues from 
activation and modems were payable by customers and since 
then the vast majority of new broadband customers have taken 
advantage of the offer which generates no revenue at signup  
on a likeforlike basis broadband subscription revenues 
increased by 32 year on year revenue from broadband 
connectivity services represented approximately 86 of total 
revenue compared to 76 for the comparable period in 2004 
gross margin
plusnet’s gross margin has increased from 32 in 2004  
to 34 in 2005 with our gross margin on broadband services 
increasing from 23 to 29 our broadband margin has 
been influenced by two significant factors firstly until the 
launch of the activation and modem offer in april broadband 
margins were depressed by lower margins on activation and 
modem revenues secondly economies of scale and significant 
improvements in network management have delivered savings 
in our network cost of sale on a likeforlike basis excluding 
the gross margin effect of activation and modem costs gross 
margins from broadband services have risen from 27 in 2004  
to 31 in 2005  
administrative expenses
administrative expenses excluding exceptional costs were 
£71m an increase of 16 over 2004 our 2005 costs reflect 
a full year of the incremental overheads we took on as a result 
of flotation in july 2004 in 2005 we have strengthened the 
senior management team to develop the business to meet the 
challenges of the converging market place through automation 
we have achieved significant economies in the cost of customer 
support which is our principal variable overhead end of year 
headcount in customer support rose by only 44 over the 
year compared to a 96 increase in customer numbers  
profitability
the strength of plusnet’s lowcost operating model is 
demonstrated by our growth in operating profit before 
exceptional items from £29m to £49m our ability to deliver 
economies of scale by leveraging our workplace operating 
platform is evidenced by growth in both operating profit as  
a  of gross profit and operating profit per employee  
which we consider key performance indicators
 
finance directors review continued
 2005 2004 change 
average headcount  75 122 43
gross profit £ 20m £90m 33
operating profit as a percentage  
of gross profit 4  32 28
operating profit per employee £28000 £23000 22
 before exceptional items 
acquisition of parbin limited trading as metronet
on 28 november 2005 we acquired metronet for a total 
consideration of £17m comprising £14m in cash on completion 
and £03m due on 28 may 2006 the acquisition was financed 
from plusnet’s existing cash resources at completion metronet 
had cash resources of £04m
metronet reported turnover of £21m and operating profit  
of £40000 in the year ended 31 march 2005 
in the period from completion on 28 november 2005 to  
31 december 2005 metronet contributed turnover of £03m 
and operating profits before exceptional items of £23000
integration costs of £07m have been charged as an exceptional 
item the majority of these related to decommissioning the 
metronet wholesale network and migrating the customer  
base to the plusnet wholesale network which enables us  
to save on cost of sales by deploying plusnet’s network 
management techniques
taxation
plusnet’s tax charge was £11m in 2005 compared to £10m 
in 2004 this represents an effective tax rate of 25 in 2005 
compared to 54 in 2004 a tax credit in relation to share 
options exercised during the current and prior years and an 
adjustment to the tax charge in respect of prior years have been 
the main contributors to the variance of our 2005 effective tax 
rate of 25 from the normal corporate rate of 30 the bulk 
of the exceptional costs of obtaining a listing during 2004 were 
disallowable for corporation tax which resulted in the effective 
tax rate for 2004 being 54 
earnings per share
basic eps is 118p compared to 32p in 2004 this is based  
on 287m shares in 2005 compared to 265m shares in 2004 
as restated upon share consolidation at flotation taking out 
exceptional costs the adjusted eps increased 78 to 135p 
2004 76p plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
11
capital expenditure
plusnet has continued to invest in the development of both  
its physical and software infrastructure 
we continually develop our workplace operating platform 
to meet the demands of our market and to optimise the 
automation of routine functions during 2005 we have increased 
our investment in workplace as the pace of market change 
accelerates towards convergence our policy of capitalising 
software development costs relating to the continued 
automation of existing business functionality and extensions  
to facilitate new convergent products and services reflects 
our view that workplace will continue to deliver significant 
competitive advantage this view is supported by our budgets 
and forecasts of the future profitability of the company 
underpinned by workplace
 
total capital expenditure was £40m compared to £25m  
in 2004 representing continued development of and 
improvements to the workplace operating platform
the plusnet strategy of utilising third party wholesale networks 
limits exposure to significant capital expenditure requirements  
on network costs
deferred activations and modems
in april 2005 we started to offer customers the option to 
defer the cost of activations and modems this offer has been 
instrumental in the customer base almost doubling during 2005 
customers do not have to pay for these costs as long as they  
stay with plusnet for at least five years should they leave within  
five years then the cost is reduced by an equal instalment 
over five years with the full cost payable throughout year one 
reducing by a fifth each year to zero at the end of year five 
these costs are treated as prepayments and expensed to the 
profit and loss account on a straight line basis over four years 
during 2005 we invested cash of £27m in deferred activations 
and modems on the acquisition of new broadband customers
cashflow
cash balances reduced by £18m during 2005 
2004 £43m increase the contributors to the 
2005 cashflows are analysed below
    
 note £m
cash at 1 january 2005  68
cash at 31 december 2005  50
cash utilised in the year  18
  
bt change in payment terms i 27
deferred activations and modems  27
payments to acquire metronet net  11
capital expenditure  40
interest tax and financing  01
adjusted cash inflow from  
   operating activities ii 88
cash utilised during the year  18
  
i  during 2005 our major supplier bt changed its payment terms resulting  
in the company making 13 monthly payments in 2005 rather than the  
normal 12
ii net cash inflow from operating activities adjusted for the change in bt payment 
terms and the investment in deferred activations and modems
we have invested cash in the deferred activation and modem 
offer in 2005 but this has been paid back by the increase 
in customer numbers after nine months our basic £1499 
customers become cash positive hence we expect that 
customers who have signed up for the deferred activation  
and modem offer in 2005 will make a positive contribution  
to cashflow in 2006
 
share based payments
share based payments under the company’s 2005 performance 
share plan have resulted in a charge under uitf 17 of £6000 
which has been included in administrative expenses for the year 
ended 31 december 2005 plusnet will adopt frs 20 from  
1 january 2006
transition to international accounting standards
as an aim listed company plusnet will adopt ias from  
1 january 2007 and so we will adopt ias for our financial 
statements for the year ending 31 december 2007 our ias 
evaluation is ongoing
neil comer
finance director
22 february 2006 2
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
board of directors and senior management
kevin adams
chairman
lee strafford
chief executive
neil comer
finance director
kevin adams nonexecutive chairman 
kevin was appointed to the plusnet board in july 2004 kevin is ceo  
of intec systems plc a global software company that supplies systems 
to over 500 of the world’s leading telecoms companies as ceo of intec 
kevin is responsible for the group’s worldwide activities and is involved 
with leading telecoms companies in the wireline and wireless markets 
between 1997 and 2005 kevin steered intec through its ipo and  
10 acquisitions growing the company to 1700 staff and 28 offices  
with us200m in revenues
kevin joined intec from logica where he managed two specialist telecom 
product centres and their global sales and delivery channels
prior to logica kevin was vice president of a us software company  
blyth where he headed their emea operations kevin has a hnd  
in polymer science from manchester university
lee strafford chief executive 
lee joined plusnet in 1997 as commercial and sales director and was 
promoted to managing director in 1999 prior to joining plusnet lee ran 
his own telecoms consultancy and contracting business for five years and 
before that he worked for a private telecoms contractor lee has over  
15 years experience in the telecoms industry
neil comer finance director
neil joined plusnet in may 2004 following three years advising  
the business on corporate finance and strategy he joined the board  
in july 2004 as commercial director and was appointed finance director 
in november 2005
neil previously worked for bentley jennison an accounting audit and 
business support services firm as a corporate finance director from 2001 
neil worked for kpmg from 1981 to 2001 between 1993 and 2001 he 
worked as a corporate finance adviser for kpmg in reading london 
and subsequently leeds prior to 1993 neil worked in the reading 
london and atlanta offices of kpmg audit neil is a qualified chartered 
accountant
board of directors plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
3
michael sherwin
nonexecutive director
robert moya
nonexecutive director
danny sullivan chief operating officer
danny was appointed as plusnet’s chief operating officer in april 
2005 he has over seven years experience with bt in various senior 
roles including vice president of bt global services general manager 
for applications and hosting and most recently as uk sales director  
for syntegra danny played a key role in the development and launch 
of some of the uk’s first broadband services while with bt 
michael sherwin nonexecutive director
michael joined the plusnet board as nonexecutive director in july 2004 
michael is currently finance director of games workshop group plc  
prior to joining games workshop in june 1999 michael was group 
financial controller of courtaulds textiles plc where he had worked for 
six years he was previously with price waterhouse for 12 years where 
he qualified as a chartered accountant in 1984 michael is also a visiting 
fellow at durham business school and a member of the advisory board  
of durham business school
robert moya nonexecutive director
bob has been a nonexecutive director of plusnet since 2003  
his involvement with plusnet dates from his service as a senior officer  
of insight plusnet’s former parent company bob has practiced law as  
a partner with three major us law firms prior to this bob spent 10 years  
as a partner in the phoenix arizona office of the quarles  brady llp 
law firm currently he is a partner of quarles  brady in transition to 
retirement and engaged in active law practice he has acted as chairman 
of the securities section and the law practice management section of the 
state bar of arizona and as a councilman of the town of paradise valley 
arizona bob joined the board of nasdaq listed inplay technologies inc 
in february 2005 as a nonexecutive director 
senior management
danny sullivan
chief operating officer 4
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
directors’ report
the directors submit their annual report and the audited accounts of the group for the year ended 31 december 2005
principal activity and business review
the principal activity of the group is the provision of internet access services in the uk
the operational and financial activity of the group in the year is discussed in more detail on pages 4 to 11
results and dividends
the profit on ordinary activities before tax was £45m 2004 £18m 
profit before exceptional item and tax for the year was £52m 2004 £30m
the directors do not recommend the payment of a dividend 2004 £nil
during the year the company acquired 100 of the issued share capital of parbin limited trading as metronet following the acquisition 
plusnet plc incurred exceptional costs of £07m relating to the integration of metronet onto the plusnet platform the business assets and 
liabilities of parbin limited were transferred to plusnet plc on 31 december 2005
directors and directors’ interests
the directors who held office during the year were as follows
k adams  nonexecutive chairman  
l strafford chief executive 
a makanji  finance director  resigned 7 november 2005
n comer  finance director  role change from commercial director to finance director on 7 november 2005
m sherwin nonexecutive director  
p moya nonexecutive director
details of directors’ service contracts and the interests of the directors in the shares of the company and in options over such shares are 
disclosed in the remuneration committee report on pages 19 to 22
at the forthcoming annual general meeting n comer and k adams will retire and being eligible offer themselves for reelection
political and charitable contributions
the company made no political or charitable contributions during the year 2004 £nil
substantial shareholdings
the company has been informed that on 20 february 2006 the following shareholders held substantial holdings of the issued ordinary 
shares of the company
 holding of ordinary shares  issued share capital  
 number 
fidelity 2959160 997
scottish widows investment partnership 2655893 895
invesco asset management 2456748 828
marlborough fund managers 2150000 724
cazanove capital management 2076712 700
axa framlington investment management 2014852 679
l strafford 1500933 506
barclays private banking 905548 305
   
   
   
   
    plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
5
going concern
the directors confirm that they are satisfied that the company and the group have adequate resources to continue in business  
for the foreseeable future for this reason they continue to adopt the going concern basis in preparing the accounts
environmental policy
the group’s environmental policy is to meet the statutory requirements placed upon it and to apply good environmental practice  
in operations
creditor payment policy
the group’s strategy is to develop mutually beneficial relationships with key suppliers the group’s policy in relation to all of its suppliers  
is to settle the terms of the transaction and to abide by those terms provided that it is satisfied that the supplier has provided the goods  
or services in accordance with the agreed terms and conditions
the average number of days’ purchases outstanding for payment by the group was 12 days 2004 37 days
annual general meeting
the annual general meeting will be held on 26 april 2006 at 1000am at sheffield hilton victoria quays furnival road sheffield s4 7ya
auditors
in accordance with section 384 of the companies act 1985 a resolution for the reappointment of kpmg audit plc as auditors of the 
company is to be proposed at the forthcoming annual general meeting
this report was approved by the board on 22 february 2006
n comer
company secretary 
technology building
terry street
sheffield
s9 2bu
directors’ report continued 6
plusnet plc  annual report and accounts year ended 31 december 2005
corporate governance report
the group is not required to comply with the provisions of the june 1998 combined code on corporate governance the combined code 
and the ‘revised code’ for reporting periods commencing on or after 1 november 2003 however the board of directors recognise the 
importance of and is committed to ensuring that effective corporate governance procedures relevant to smaller listed groups are in place 
this statement together with the remuneration committee report on pages 19 to 22 explains how the company has applied the 
principles and complied with the provisions set out in the combined code
the board 
details of the changes in directors in the year are provided in the directors’ report shown on page 14 at 31 december 2005 the board 
comprised two executive directors two nonexecutive directors and one nonexecutive chairman all the nonexecutive members of the 
board are considered by the board to be independent of the company and the group each nonexecutive director possesses considerable 
outside expertise and is able to exercise detached judgement in dealing with matters before the board as well as undertaking formal 
governance roles the nonexecutive directors are involved in the mentoring of the executive directors and challenge and agreement  
of corporate strategy the board considers that the current composition provides an appropriate level of independence
the senior independent director is michael sherwin 
the board which met 12 times during the year is responsible for the overall strategy and financial performance of the group and has  
a formal schedule of matters required for approval each board meeting is preceded by a clear agenda and any relevant information  
is provided to directors in advance of the meeting
the statement of the directors’ responsibilities in preparing the accounts is set out on page 23 and the statement from the auditor on  
its reporting responsibilities is set out on page 24 the statement on going concern can be found in the directors’ report on page 15  
and on relations with shareholders in this section on page 18
all directors are required to submit themselves for reelection at an annual general meeting if they were not elected or reelected at either 
of the two preceding annual general meetings therefore directors appointed during the period are required to seek reelection at the first 
annual general meeting following their appointment 
one third of the current directors are required to retire by rotation each year to include any directors required to submit themselves for  
reelection and can offer themselves for reelection if one third is not a whole number then the number of directors to retire is the number 
nearest to but not exceeding one third the selection of directors to retire by rotation shall include any director who wishes to retire 
and not offer himself for reelection the selection of further directors to retire by rotation are those directors who have at the date of 
the meeting been longest in office since their last reelection or appointment in the case of persons who became or were last reelected 
directors on the same day the directors to retire are selected by lot 
internal control and risk management process
the board is ultimately responsible for the group’s system of internal control and for reviewing its effectiveness it is the role of 
management to implement the board’s policies on risk and control through design and operation of appropriate internal control  
systems collectively all employees have some responsibility for internal control as part of their accountability for achieving objectives
the board monitors the effectiveness of the systems of internal control principally through the regular review of financial information  
and the work of the audit committee
however such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide 
reasonable assurance against material misstatement or loss 17
plusnet plc  annual report and accounts year ended 31 december 2005
the board follows key principles of corporate governance for the group these include
an ongoing process for identifying evaluating and managing the significant risks faced by the group the process is reviewed regularly 
by the board 
a comprehensive financial reporting structure including a detailed formal budgeting process which culminates in quarterly budgets 
which are reviewed by the board
the major elements of the internal control system and the process of review are as follows
an organisational structure with clearly defined lines of responsibility and delegation of authority to executive management
a comprehensive process of planning budgeting and reporting the group’s monthly results monthly results are reported against 
budget and forecasts which are revised regularly
weekly meetings between the chief operating officer and the senior management team
prescribed procedures for capital expenditure approval
a biannual review of internal controls and risks facing the group
the processes have been in place for the year under review and up to the date of approval of the annual report and accounts
the group maintains a control framework comprising clear structures and accountabilities well understood policies and procedures and 
budgeting and review processes the board meets monthly to consider financial performance business development plans financial and 
operating budgets and forecasts capital expenditure proposals and other key performance indicators 
the audit committee has reviewed the need for an internal audit function and has concluded that given the size and risk profile of the 
group such a function would not be appropriate
the external auditors are engaged to express an opinion on the accounts the auditors test and review the systems of internal financial 
controls and information presented in the accounts to the extent required to be able to express their audit opinion
auditor independence
in order to safeguard the objectivity and independence of the company’s external auditors the audit committee chairman must expressly 
authorise any engagement of those auditors on nonaudit work that would entail them being paid fees in excess of 20 of the audit fee 
in any year careful consideration is given on each occasion as to potential conflicts and the possibility of actual or perceived threats to the 
independence of the external auditors before instructing them in connection with nonaudit work instructions are only given when the 
company considers it to be in its best interests to use the external auditors other than in connection with pure audit services
board performance
the board has conducted an evaluation of its own performance and its committees the performance of the nonexecutive chairman  
has been assessed by the two remaining independent directors and the chief executive  the performance of the chief executive has been 
assessed by the independent directors the performance of the finance director has been assessed by the chairman and chief executive 
in association with the independent directors the independent directors’ performance has been assessed by the chairman and  
chief executive
•
•
•
•
•
•
•
corporate governance report continued 18
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
corporate governance report continued
principal board committees
the board has established the following committees which operate under written terms of reference
remuneration committee the committee currently comprises m sherwin and p moya and during 2005 was chaired by k adams  
from 1 january 2006 the committee will be chaired by p moya the remuneration committee is responsible for reviewing and 
recommending all the elements of policy on the board’s and senior executives’ remuneration and for approving all matters relating  
to the remuneration of executive directors the committee meets at least three times per year and met eight times during 2005  
the remuneration committee report on pages 19 to 22 contains a detailed description of remuneration and applicable policies 
nominations committee the committee consists of m sherwin and p moya and is chaired by k adams the committee’s 
responsibilities are to identify evaluate and select candidates for board positions and to review annually the composition and size  
of the board the committee meets annually and met twice in 2005 
audit committee the committee comprises k adams and p moya and is chaired by m sherwin the committee meets at least twice  
a year and met twice during 2005 the audit committee assists the board in fulfilling its oversight responsibilities primarily in reviewing 
and reporting financial and nonfinancial information communicated to shareholders systems of internal control and risk management 
and the audit process it has the power to call for information from management and to consult directly with the auditors or their 
advisers as considered appropriate the committee is scheduled to meet at least twice a year with the group’s auditors the committee 
is responsible for the independent monitoring of the effectiveness of the system of internal control compliance accounting policies and 
published financial statements on behalf of the board this is achieved primarily through a review of the annual financial statements 
and a review of the nature and scope of the external audit along with attending board meetings throughout the year any significant 
findings or identified risks are examined so that appropriate action may be taken the committee is also responsible for keeping under 
review the independence and objectivity of the external auditors including a review of nonaudit services provided to the group 
consideration of any relationships with the group that could affect independence and seeking written confirmation from the auditors 
that in their professional judgement they are independent
the formal terms of reference of the board committees can be found on wwwplusnetinvestors
communication with shareholders
the group encourages the participation of both institutional and private investors communication with investors is maintained through 
the annual general meeting  annual and interim reports quarterly updates and press releases in addition further details on the strategy 
and performance of the company can be found at its website wwwplusnet
the chief executive will be available to answer questions at the annual general meeting 
statement of compliance with the combined code
provision b12 of the combined code requires that executive share options are not offered at a discount during the year the company 
granted options to one executive director and 14 senior employees under the 2005 performance share plan psp assuming that the 
performance conditions of these options are met the psp allows participants to purchase plusnet shares at the nominal value of the  
shares £0002 which was below the market value of the shares at the time of grant the remuneration committee believes that this type  
of scheme has a number of distinct advantages over traditional option schemes as described in the remuneration committee report 
provision b24 of the combined code requires that shareholders are invited to approve all new long term incentive schemes  
during the year the company introduced a psp as described above the scheme has not been formally approved by shareholders 
however a number of major investors were consulted as part of the implementation of the scheme
save as set out above the company has complied throughout the year with the provisions set out in section 1 of the combined code 
•
•
• plusnet plc  annual report and accounts year ended 31 december 2005
19
plusnet plc  annual report and accounts year ended 31 december 2005
remuneration committee report
introduction
the following report provides information relating to the pay and benefits policy for the company’s directors the sections of this report 
which are required by the companies act 1985 are indicated with a single asterisk 
members of the remuneration committee
details relating to the remuneration committee can be found in the corporate governance report on pages 16 to 18
the committee meets during the year to determine all aspects of the remuneration of the executive directors the remuneration  
of the nonexecutive directors is determined by the board as a whole following recommendations made by the executive directors
remuneration policy
the committee believes remuneration levels should be competitive and set at a level to attract retain and motivate executive directors 
and to align the interests of executive directors as closely as possible with the interests of shareholders the pay and benefits packages of 
executive directors are compared against data in relation to other similar companies and independent advice has also been sought from 
pricewaterhousecoopers 
the group makes contributions to group personal pension schemes on behalf of executive directors
the company operates four share option schemes 
1 2000 share option scheme
2 2004 share option scheme
3 2004 performance related share option scheme
4 2005 performance share plan
during the year the company issued share options to an executive director as detailed in the table ‘directors’ share options’ on page 21 
the aim of the option grants is to align the efforts of key executives with the company’s objective of creating shareholder value in the 
longer term therefore options along with salary will remain a key element of the remuneration of executive directors in the short to 
medium term during this time regular bonuses will not form a key element of remuneration
total directors pay and benefits in the period to 31 december 2005
  salaryfees bonuses
i
 gains on the  compensation benefits  2005  
    exercise of for loss  total 
    share options of office
  £000 £000 £000 £000 £000 £000
       
executive directors       
l strafford  140 56 – – 1 197
a makanji
ii
  100 – – 158 1 259
n comer   100 – – – 1 101
       
total executive directors’ pay  
and benefits in kind  340 56 – 158 3 557
       
nonexecutive directors       
k adams  60 – – – – 60
m sherwin  30 – – – – 30
p moya  30 – – – – 30
       
total nonexecutive directors’  
pay and benefits in kind  120 – – – – 120
i the discretionary bonus was determined by the board after recommendation by the remuneration committee in recognition of the success of the company during  
2005 and the chief executives performance in strengthening the senior management team 
ii  ashok makanji resigned 7 november 2005 20
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
remuneration committee report continued
total directors pay and benefits in the period to 31 december 2004
  salaryfees bonuses
iii
 gains on the  insight benefits 2004 
    exercise of incentive in kind  total
     share option scheme
iv
   
  £000 £000 £000 £000 £000 £000
executive directors      
l strafford  125 15 – 467 1 608
n comer
v
  48 42 – 175 1 266
a makanji
v 
  48 45 6 175 1 275
      
total executive directors’ pay  
and benefits in kind  221 102 6 817 3 1149
      
nonexecutive directors
v
      
t crown   – – – – – –
s laybourne   – – – – – –
p moya  15 – – – – 15
k adams   30 – – – – 30
m sherwin  15 – – – – 15
      
total nonexecutive directors’  
pay and benefits in kind  60 – – – – 60
iii the bonuses paid to the executive directors in 2004 reflected the extraordinary efforts made to transform plusnet from a subsidiary of a nasdaq listed company to 
a successful group listed on the aim market in particular the directors’ involvement was instrumental in the success of the ipo in establishing and maintaining clear 
communication with the investment community in delivering successive quarterly performance above budgeted expectations and in facilitating the successful placing  
of the insight shareholding and thus establishing the group as an independent plc 
iv following admission to aim pursuant to the insight enterprises uk limited incentive scheme insight gb agreed to reward to the executive directors with ordinary 
shares andor cash to be invested in ordinary shares equivalent to 125 percent of the gain made by insight gb from the disposal of its shareholding in plusnet  
no costs relating to the incentive scheme have been borne by plusnet plc the scheme was contractually agreed prior to flotation and has not been subject to the 
approval of the remuneration committee
v the remuneration of the nonexecutive directors along with n comer and a makanji is for the period from appointment on 7 july 2004 to 31 december 2004
pensions
the following directors have received contributions to group personal pension schemes in the period
   contributions paid or payable  amount of company contribution 
   in the year by the company  accruedprepaid at year end
   2005 2004  2005 2004
   £000 £000  £000 £000
    
a makanji    14 3  – 1
n comer    7 3  – 1
share interests
the beneficial interests of the directors in the ordinary shares of the company as at 31 december 2005 were
     
director     31 december 2005  31 december 2004
     number of shares  number of shares
     
k adams      37200  22222
l strafford     1500933  1500933
n comer      94099  94099
m sherwin     20000  20000
p moya     –  –
      plusnet plc  annual report and accounts year ended 31 december 2005
21
plusnet plc  annual report and accounts year ended 31 december 2005
there has been no change in the number of shares held between 31 december 2005 and the date of this report
directors’ share options
 
 note at 1 jan  exercised awarded cancelled in at 31 dec exercise exercise period
  2005 in the year in the year in the year 2005 price
   
 
k adams   – – – – – – –
l strafford i 41850 – – – 41850 900p 13 july 2006  12 july 2009
 ii 97650 – – – 97650 900p 13 july 2007  12 july 2014
n comer  i 41850 – – – 41850 900p 13 july 2006  12 july 2009
 ii 83700 – – – 83700 900p 13 july 2007  12 july 2014
 i – – 19167 – 19167 2765p 22 dec 2007  21 dec 2010
 iii – – 38333 – 38333 02p 22 dec 2010  21 dec 2015 
m sherwin  – – – – – – –
p moya  – – – – – – –
i 2004 share option scheme – no performance criteria attached
ii  2004 performance related share option scheme with the following performance criteria
  no options exercisable if earnings per share increases by less than 3375 per annum on a cumulative basis between 1 july 2004 and 30 june 2007
  10 of options exercisable if earnings per share increases by more than 3375 but less than 36 per annum on a cumulative basis between 1 july 2004  
and 30 june 2007 the remaining 90 of the options would lapse immediately
  50 of options exercisable if earnings per share increases by more than 36 but less than 375 per annum on a cumulative basis between 1 july 2004  
and 30 june 2007 the remaining 50 of the options would lapse immediately
  100 of options exercisable if earnings per share increases by equal to or more than 375 per annum on a cumulative basis between 1 july 2004 and 30 june 2007
iii  2005 performance share plan with performance criteria based on the company’s earnings per share for the financial years ending on 31 december 2006 2007  
and 2008 being equal to or greater than the target earnings per share figure for each of those financial years
  if in any of the years the earnings per share figure exceeds the target the options will vest as to one third
  if in any of the years the earnings per share figure is equal to or less than 90 of the target then options will lapse as to one third for each year in which 90  
of the target was not achieved
  if in any of the years the earnings per share figure is less than the target but is greater than 90 of the target then one third of the options will vest subject to  
a sliding scale reduction based on the percentage of the target achieved for example if in a year the earnings per share achieved is 95 of target then 50  
of one third of the options will vest
 the earnings per share target for 2006 is 210p the earnings per share targets for 2007 and 2008 will be set by the remuneration committee following the first  
and second anniversary of grant when trading targets have been established for those years 
  for the purposes of determining the extent to which the performance criteria have been met the remuneration committee has the discretion to adjust the company’s 
earnings per share from that disclosed in the financial statements targets and measurements of performance will be based on consistent accounting policies for 
example in respect of 2006 the remuneration committee will adjust the earnings per share figure for the charge arising under frs20 in respect  
of employee share options
2005 performance share plan
during the year the company introduced a performance share plan note iii above this plan has been established for the executive 
directors and senior management of the company to help recruitment and to encourage retention following the initial grant in 
december 2005 there were 15 option holders at 31 december 2005 
the rationale behind the grant of such options is to incentivise as well as to strengthen the links between the interests of the option 
holders and those of the shareholders the options retain value in cyclical or turbulent markets and are therefore not subject to the risk 
associated with traditional options where exercise prices can go ‘underwater’ leaving little incentive value in the instrument furthermore 
equivalent value can be given to participants with less dilution on existing shareholders 
because of the rapidly changing environment in which plusnet operates the remuneration committee has decided to set target earnings 
per share levels initially for 2006 only in respect of 2007 and 2008 the remuneration committee will set target earnings per share levels at 
the beginning of these accounting periods when trading budgets have been established the remuneration committee believes that this 
approach will help to ensure that earnings per share targets are relevant and provide a meaningful incentive to the option holders in this 
rapidly changing sector of the economy
remuneration committee report continued 22
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
employee benefit trust
during the year the company established an employee benefit trust ebt the purpose of the trust is to acquire shares from the open 
market to satisfy the demand for shares following the exercise of specific employee share options the grant of options over shares held 
by the ebt will therefore not dilute the holding of existing shareholders it is anticipated that during 2006 and beyond the ebt will acquire 
shares over which employee share options will be granted in accordance with best practise the ebt will not acquire more than 5 of the 
issued share capital up to 31 december 2005 the ebt did not grant any share options or acquire any ordinary shares in plusnet plc
share performance
the graph below shows a comparison of plusnet plc share price performance against the aim index considered to be an appropriate 
comparator group over the period from flotation in july 2004 to december 2005
 
the mid–market price for the company’s shares at 31 december 2005 was 2815p the high and low mid–market prices of the ordinary 
shares during the year to 31 december 2005 were 293p and 160p respectively
directors’ contracts
details of service agreements in place for the current directors are as follows
 date of contract unexpired term at 31 december 2005 notice period
k adams i  8 july 2004 18 months 1 month notice by either party
l strafford 8 july 2004 6 months not less than 12 months by either party
n comer i 8 july 2004 6 months not less than 12 months by either party
m sherwin 8 july 2004 18 months 1 month notice by either party
p moya 8 july 2004 18 months  1 month notice by either party
     
i k adams and n comer will retire at the forthcoming agm and offer themselves for reelection
p moya
chairman of the remuneration committee 
22 february 2006
remuneration committee report continued
350
0
300
250
200
150
100
50
jun 04 dec 04 jun 05 dec 05
index plusnet 100 aim at 14 july 2004
aim
plusnet plusnet plc  annual report and accounts year ended 31 december 2005
23
plusnet plc  annual report and accounts year ended 31 december 2005
statement of directors’ responsibilities 
in respect of the directors’ report and the financial statements to the members of plusnet plc
the directors are responsible for preparing the directors’ report and the financial statements in accordance with applicable law  
and regulations 
company law requires the directors to prepare financial statements for each financial year under that law the directors have elected  
to prepare the group and parent company financial statements in accordance with uk accounting standards 
the group and parent company financial statements are required by law to give a true and fair view of the state of affairs of the group  
and the parent company and of the profit or loss for that period 
in preparing these financial statements the directors are required to 
select suitable accounting policies and then apply them consistently
make judgements and estimates that are reasonable and prudent and
state whether applicable accounting standards have been followed subject to any material departures disclosed and explained  
in the financial statements
the directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial 
position of the parent company and to enable them to ensure that the 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 
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 
•
•
• 24
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
report of the independent auditors
to the members of plusnet plc
kpmg audit plc
1 the embankment neville street leeds ls1 4dw
independent auditors’ report to the members of plusnet plc
we have audited the group and parent company financial statements the financial statements of plusnet plc for the year ended  
31 december 2005 which comprise the consolidated profit and loss account the consolidated and company balance sheets the 
consolidated cash flow statement and the related notes these financial statements have been prepared under the accounting policies  
set out therein 
this report is made solely to the company’s members as a body in accordance with section 235 of the companies act 1985  
our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to 
them in an auditors report and for no other purpose to the fullest extent permitted by law we do not accept or assume responsibility  
to anyone other than the company and the company’s members as a body for our audit work for this report or for the opinions  
we have formed 
respective responsibilities of directors and auditors 
the directors’ responsibilities for preparing the annual report and the financial statements in accordance with applicable law and  
uk accounting standards uk generally accepted accounting practice are set out in the statement of directors’ responsibilities  
on page 23 
our responsibility is to audit the financial statements 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 are properly prepared in accordance  
with the companies act 1985 we also report to you if in our opinion the directors’ report is not consistent with the financial statements 
if the company has not kept proper accounting records if we have not received all the information and explanations we require for our 
audit or if information specified by law regarding directors’ remuneration and other transactions is not disclosed 
we read 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 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 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 
opinion 
in our opinion the financial statements 
 give a true and fair view in accordance with uk generally accepted accounting practice of the state of the group’s and the parent 
company’s affairs as at 31 december 2005 and of the group’s profit for the year then ended and 
 have been properly prepared in accordance with the companies act 1985 
kpmg audit plc  22 february 2006
chartered accountants 
registered auditor
•
• plusnet plc  annual report and accounts year ended 31 december 2005
25
plusnet plc  annual report and accounts year ended 31 december 2005
consolidated profit and loss account
for the year ended 31 december 2005
           continuing 
  note  2005 2005 2005 2004
    £000 £000 £000 £000
     acquisitions total total
        
turnover  1  34867 326 35193 27811
       
cost of sales    22907 277 23184 18810
       
gross profit    11960 49 12009 9001
       
administrative expenses 
before exceptional item    7077 26 7103 6142
exceptional item  2  – 682 682 1167 
       
total administrative expenses    7077 708 7785 7309
       
operating profitloss     4883 659 4224 1692
       
net interest receivable  4    286 156
       
profit on ordinary activities before tax  6    4510 1848
tax on profit on ordinary activities  7    1112 992
       
profit for the financial year  1819    3398 856
       
earnings per share  8    1182p 323p
 
fully diluted earnings per share  8    1138p 306p
there are no recognised gains or losses other than those that have passed through the profit and loss account
the movement in reserves is set out in note 18
all of the results above relate to continuing operations
  26
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
   note   2005 2004
      £000 £000
    
fixed assets       
intangible assets    
   goodwill   9   1734 –
tangible assets   10   6457 4602
investments   11   – –
      8191 4602
     
current assets      
stock   12   – 19
debtors   including £2074000 2004 £nil 
            due after more than one year   13   5027 2389
cash at bank and in hand      4971 6771
    
 
      9998 9179
    
creditors amounts falling due within one year  14   6605 6259
    
 
net current assets      3393 2920
    
total assets less current liabilities      11584 7522
    
 
net assets      11584 7522
    
capital and reserves    
    
called up share capital   16   59 56
share premium account   18   2658 2003
profit and loss account   18   8867 5463
    
 
equity shareholders’ funds   19   11584 7522
    
    
these financial statements were approved by the board of directors on 22 february 2006 and were signed on its behalf by
l strafford
chief executive
n comer
finance director
balance sheet group and company
at 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
27
plusnet plc  annual report and accounts year ended 31 december 2005
consolidated statement of cash flows
for the year ended 31 december 2005
  note  2005 2005 2004 2004
    £000 £000 £000 £000
      
net cash inflow from operating activities 20   3364  5675
      
returns on investments  
and servicing of finance      
interest received    286  156 
      
net cash inflow from returns on  
investments and servicing of finance     286  156
      
taxation     995  1091
      
capital expenditure      
payments to acquire tangible fixed assets    3999  2453 
      
net cash outflow from capital expenditure    3999  2453
      
acquisitions      
purchase of subsidiary undertaking  17  1057  – 
net cash outflow from acquisitions     1057  –
      
      
net cash outflowinflow before financing    2401  2287
financing      
issue of ordinary share capital at flotation    –  2205 
expenses paid in connection with share issues   –  504 
exercise of share options  21  658  308 
capital element of finance lease payments    7  – 
repayment of loan    50  – 
      
      
net cash inflow from financing     601  2009
       
decreaseincrease in cash in the year  2223   1800  4296
       28
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
1 accounting policies
 the following accounting policies have been applied consistently in dealing with items which are considered material in relation to the 
financial statements
 
basis of preparation
 the financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting 
rules
 
basis of consolidation
 the consolidated financial statements include the financial statements of the company and its subsidiary undertakings made up to  
31 december 2005 as permitted by section 2304 of the companies act 1985 the company is exempt from the requirement to present 
its own profit and loss account
goodwill
 goodwill arising on consolidation represents the excess of the fair value of the consideration given over the fair value of the separately 
identifiable net assets acquired 
goodwill arising on acquisition of subsidiaries and businesses is capitalised as an asset and amortised over its useful economic life  
the useful economic life of goodwill is assessed separately for each acquisition and is currently estimated to be ten years 
goodwill is reviewed for impairment at the end of the first full financial year following the acquisition and in other periods if events  
or changes in circumstances indicate the carrying value may not be recoverable 
 
tangible fixed assets and depreciation
 tangible fixed assets are stated at cost less depreciation depreciation is provided to write off the cost less the estimated residual value  
of tangible fixed assets by equal instalments over their estimated useful economic lives as follows
 
computer equipment  5 years
internal software development costs  5 years
network development costs  5 years
fixtures and fittings  215 years
internal software development costs and network development costs include capitalised employee costs directly attributable to either 
bringing computer equipment into working condition for its intended use within the business or developing and enhancing business 
operating systems 
investments
investments in subsidiary undertakings are shown at cost less provision for any impairment in value
pensions
the company contributes to a defined contribution group personal pension scheme on behalf of employees the assets of the scheme  
are held separately from those of the company in an independently administered fund the amount charged against profits represents  
the contributions payable to the scheme in respect of the accounting period
share options
the cost of awards to employees that take the form of share options are recognised over the period of the employee’s related performance 
in accordance with uitf 17
 
leases
assets acquired under finance leases are capitalised and the outstanding future lease obligations are shown in creditors operating lease 
rentals are charged to the profit and loss account on a straight line basis over the period of the lease
notes to the financial statements plusnet plc  annual report and accounts year ended 31 december 2005
29
plusnet plc  annual report and accounts year ended 31 december 2005
taxation
deferred tax is recognised without discounting in respect of all timing differences between the treatment of certain items for taxation 
and accounting purposes which have arisen but not reversed by the balance sheet date except as otherwise required by frs 19
turnover
service subscription income is recognised over the period to which it relates call revenue is recognised on the accruals basis  
turnover excludes value added tax 
deferred income
deferred income represents that portion of subscription fees paid by customers but relating to a future period
deferred activation and modem costs
where network activation and modem costs are not recharged to the end customer on the inception of a contract they are deferred  
and held as an asset in the balance sheet in debtors these costs are charged to the profit and loss account over a period commensurate 
with the contractual arrangement with the customer
2 exceptional item
the current year exceptional item of £682000 represents integration and restructuring costs in respect of the acquisition of parbin limited 
note 17
the prior year exceptional item represents professional fees of £1167000 incurred in obtaining a listing on aim
3 segmental information
the group had a single class of business during all periods reported on and consequently does not present a segmental analysis
the net assets of the group at the end of each period were all attributable to the united kingdom
the turnover and profit before tax of the group during each period were attributable to activities wholly carried out in  
the united kingdom
 
4 net interest receivable
     2005  2004
     £000  £000
    
bank interest     286  156
notes to the financial statements continued 30
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
5 employees
the average number of persons employed by the group including directors during the year analysed by category was as follows
     2005  2004
    
customer support     76  55
marketing     12  15
network services     17  18
application development     50  23
administration      20  11
     175  122
    
the aggregate payroll costs of these persons were as follows
     2005  2004
     £000  £000
    
wages and salaries     4791  3400
social security costs     535  402
other pension costs     76  31
     5402  3833
    
disclosures on directors’ emoluments share options long term incentive plans and pension contributions required by the companies act 
1985 is shown on pages 19 to 22 within the remuneration committee report
6 profit on ordinary activities before taxation
     2005  2004
     £000  £000
    
after charging
depreciation of tangible fixed assets    2126  1843
loss on disposal of fixed assets    18  –
amortisation of intangible fixed assets    15  53
operating leases – land and buildings    304  171
fees paid to auditors – audit    35  30
 – taxation advice    9  6
   – transaction services    25  220
 – other    –  6 
share option charge       6  –
    
notes to the financial statements continued plusnet plc  annual report and accounts year ended 31 december 2005
31
plusnet plc  annual report and accounts year ended 31 december 2005
7 taxation
     2005  2004
     £000  £000
   
uk corporation tax – current year     1234  989
uk corporation tax – prior year     145  –
group relief – prior year     –  76
     1089  1065 
  
deferred taxation   
timing differences relating to fixed assets     14  18
other timing differences     9  24
prior year adjustment     –  31
     1112  992
    
the corporation tax rate for 2005 is 25 2004 54 compared with a standard uk corporation tax rate of 30 2004 30  
the differences are explained below
     2005  2004
     £000  £000
    
profit on ordinary activities before tax     4510  1848
     
current tax at 30 2004 30     1353  554
       
expenses not deductible for tax purposes     36  393
tax relief on share options exercised     73  –
timing differences relating to fixed assets     36  18
other timing differences     46  24
adjustment to tax charge in respect of prior years    145  76
 
total current tax charge see above     1089  1065
    
 
notes to the financial statements continued 32
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
8 earnings per share
  2005 2005 2005 2004 2004 2004
  earnings net weighted earnings net weighted
  per share earnings average per share earnings average
    number of   number of
    shares   shares
  pence £000 no of shares pence £000 no of shares
      
basic earnings per share  1182 3398 28740857 323 856 26503675
      
earnings per share – pre exceptional  1354 3893 28740857 763 2023 26503675
      
fully diluted earnings per share  1138 3398 29868283 306 856 27986075
      
fully diluted earnings per share – pre exceptional 1303 3893 29868283 723 2023 27986075
      
      
earnings per share before exceptional items are disclosed above to highlight underlying trading performance basic and diluted earnings 
per share may be reconciled to earnings per share before exceptional items as follows
  2005 2005 2005 2004 2004 2004
   basic diluted  basic diluted
  £000 pence pence £000 pence pence
      
earnings per share before exceptional item  3398 1182 1138 856 323 306
exceptional item  682 237 228 1167 440 417
taxation arising on exceptional item  187 065 063 – – –
      
earnings per share excluding exceptional item 3893 1354 1303 2023 763 723
      
the diluted weighted average number of shares is made up as follows
     2005  2004
    
weighted average number of shares in issue     28740857  26503675
add maximum dilution from share options     1127426  1482400
 
diluted weighted average number of shares in issue    29868283  27986075
    
in respect of 2004 the number of shares in issue and the diluted number of shares in issue for the period 1 january 2004 to 7 july 2004 
have been restated to reflect the number of shares in issue following the share reorganisation on 7 july 2004 
 
notes to the financial statements continued plusnet plc  annual report and accounts year ended 31 december 2005
33
plusnet plc  annual report and accounts year ended 31 december 2005
9 intangible assets
goodwill
     group  company
   note  £000  £000
       
cost        
at beginning of year     –  –
arising on acquisition of subsidiary undertaking    1749  –
arising on transfer of trade and assets  
from subsidiary undertaking   1117  –  1749
       
at end of year     1749  1749
        
amortisation       
at beginning of year     –  –
charge for year     15  15
 
at end of year     15  15
        
at 31 december 2005     1734  1734
        
at 31 december 2004     –  –
        
goodwill is being amortised over 10 years being the directors estimate of the period over which benefits will arise 
10 tangible fixed assets group and company
   computer internal network fixtures total
   equipment software development and fittings
    development costs
    costs
    £000 £000 £000 £000 £000
     
cost     
at beginning of year   7119 3061 1167 348 11695
additions   1524 1892 560 23 3999
disposals   – 22 – – 22
     
at end of year   8643 4931 1727 371 15672
     
depreciation     
at beginning of year   4958 1360 620 155 7093
charge for year   914 836 244 132 2126
disposals   – 4 – – 4
     
at end of year   5872 2192 864 287 9215
     
at 31 december 2005   2771 2739 863 84 6457
     
at 31 december 2004   2161 1701 547 193 4602
     
 the group and company did not hold any of the above assets under finance leases at any time during the financial year 
notes to the financial statements continued 34
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
11 fixed asset investments company
    2005
    interest in subsidiary undertakings 
    £000
    
cost  
at beginning of year       –
additions       1733
return of capital from subsidiary undertaking      1733
 
at end of year       –
  
additions in the year of £1733000 relate to the acquisition of parbin limited see note 17 the trade assets and liabilities of parbin 
limited were transferred at market value to plusnet plc on 31 december 2005 and the company is no longer trading parbin limited  
is expected to be dormant for the year ending 31 december 2006 prior to the transfer parbin limited was engaged in the provision  
of internet services
the company’s principal subsidiary undertakings included in the consolidated financial statements are as follows
name proportion of ordinary share capital held country of registration nature of business
   
parbin limited 100 england and wales no longer trading
plusnet ebt limited 100 england and wales trustee of plusnet  
   employee benefit trust
plusnet asp limited  100 england and wales dormant
   
12 stock group and company
     2005  2004
     £000  £000
    
goods held for resale     –  19
    
notes to the financial statements continued plusnet plc  annual report and accounts year ended 31 december 2005
35
plusnet plc  annual report and accounts year ended 31 december 2005
notes to the financial statements continued
13 debtors group and company
     2005  2004
     £000  £000
  
amounts falling due within one year  
trade debtors     790  583
prepayments and accrued income      1082  920
deferred activation and modem costs     802  –
deferred tax see note 15     279  302
other debtors     –  584
    
     2953  2389
amounts falling due after more than one year  
deferred activation and modem costs     2074  –
  
     5027  2389
  
 
14 creditors amounts falling due within one year group and company
  
 2005 2004
 £000 £000
   
 
finance leases  43 –
trade creditors 1115 2647
corporation tax 539 445
other tax and social security 599 1053
other creditors – 142
accruals 2754 1443
deferred income 1555 529
      
     6605  6259
     36
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
notes to the financial statements continued
15 deferred tax group and company
    
       2005
       £000
  
deferred tax asset at beginning of year       302
excess depreciation over capital allowances       14
other timing differences       9
 
deferred tax asset at end of year see note 13      279
  
the amounts provided for deferred taxation    
 2005 2004
 £000 £000
difference between accumulated depreciation and capital allowances 260 274
other timing differences 19 28
  
deferred tax asset at end of year see note 13 279 302
    
16 share capital 
 
 2005 2004 
ii
 
 £ £
  
authorised ordinary shares of 02p each   
at 1 january 2005 100000 150
authorised during the year – 99850
  
at 31 december 2005 100000 100000
   
 note number of shares nominal value
   £
   
allotted called up and fully paid ordinary shares of 02p each   
at 1 january 2005  28088102 56176
share options exercised  i 1546289 3093
   
in issue at 31 december 2005  29634391 59269
   
i during the year share options were exercised for consideration of £658000
ii share capital at 1 january 2004 consisted of 50000000 shares of 00002p on 7 july 2004 the company consolidated the issued share capital into 50000 ordinary 
shares of 02p each
 shares that will have to be issued in the future as a result of the exercise of share options are of the same class and carry the same rights as 
the shares already in issue plusnet plc  annual report and accounts year ended 31 december 2005
37
plusnet plc  annual report and accounts year ended 31 december 2005
notes to the financial statements continued
share options
at 31 december 2005 rights to options over 2446418 ordinary shares of the company were outstanding as follows
 at 1 jan  granted in exercised  cancelled at 31 dec exercise exercise period
 2005 the year lapsed in in the year 2005 price
   the year
       
2000 share  
option scheme 1487000 – 1461500 – 25500 £040 14 july 2004–5 may 2006
 53750 – 50500 – 3250 £064 14 july 2004–5 may 2006 
2004 share  
option scheme 709323 – 27900 65333 616090 £090 13 july 2006–12 july 2009
 91225 – – 13250 77975 £154 15 dec 2006–14 dec 2009
 – 33333 – – 33333 £1825 21 april 2007–20 april 2010
 – 8700 – – 8700 £1715 9 may 2007–8 may 2010
 – 13333 – – 13333 £1725 19 may 2007–18 may 2010
 – 5000 – – 5000 £1875 6 june 2007–5 june 2010
 – 6667 – – 6667 £1995 16 june 2007–15 june 2010
 – 88933 – 14033 74900 £2295 27 july 2007–26 july 2010
 – 106695 6389 6389 93917 £250 26 sept 2007–25 sept 2010
 – 6666 – – 6666 £2625 25 nov 2007–24 nov 2010
 – 38334 – – 38334 £2765 22 dec 2007–21 dec 2010
 – 20000 – – 20000 £277 29 dec 2007–28 dec 2010
2004 performance  
related share  
option scheme 864900 – – 153450 711450 £090 13 july 2007–12 july 2014
 198000 – – 31500 166500 £154 15 dec 2007–14 dec 2014
 – 66667 – – 66667 £1825 21 april 2008–20 april 2015
 – 21300 – – 21300 £1715 9 may 2008–8 may 2015
 – 13333 – – 13333 £1995 16 june 2008–15 june 2015
 – 10000 – – 10000 £1875 6 june 2008–5 june 2015
 – 26667 – – 26667 £1725 19 may 2008–18 may 2015
 – 106167 – 17167 89000 £2295 27 july 2008–26 july 2015
 – 13334 – – 13334 £2625 25 nov 2008–24 nov 2015
 – 40000 – – 40000 £277 29 dec 2008–28 dec 2015
performance  
share plan – 264502 – – 264502 £0002 22 dec 2010–21 dec 2015
       
 3404198 889631 1546289 301122 2446418  
during 2005 options were granted to existing employees and also to some senior recruits at the point of their employment commencing 
it is anticipated that in 2006 and beyond options will be granted biannually and only in exceptional circumstances will options be granted 
outside of these main grant allocations 38
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
notes to the financial statements continued
17 acquisitions
on 28 november 2005 the company acquired the entire share capital of parbin limited
the assetsliabilities acquired were as follows
       2005
       £000
      
debtors  prepayments       391
bank balances       426
creditors       733
finance leases       50
other loan       50
      
goodwill       1749
consideration       1733
       
satisfied by      
deferred consideration       250
cash       1444
costs of acquisition       39
      
       1733
      
effects on group cash flow      
cash consideration       1444
costs of acquisition       39
cash balances on acquisition       426
      
       1057
      
      
the fair values of the assets and liabilities acquired and consideration payable have been assessed on a provisional basis no fair value 
adjustments have been made in these accounts
 
the acquisition cost of £1733000 includes deferred consideration of £250000 which is payable on 28 may 2006 subject to certain 
conditions within the sale and purchase agreement being achieved
the business assets and liabilities of parbin limited were transferred to plusnet plc on 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
39
plusnet plc  annual report and accounts year ended 31 december 2005
notes to the financial statements continued
18  share capital and reserves group and company
 share  share  profit and loss total
 capital premium account 2005
 £000 £000 £000 £000
at 1 january 2005 56 2003 5463 7522
    
issue of ordinary shares 3 655 – 658
    
share option charge – – 6 6
    
retained profit – – 3398 3398
    
at 31 december 2005 59 2658 8867 11584
 
19 reconciliation of movements in shareholders’ funds
 group group company company
 2005 2004 2005 2004
 £000 £000 £000 £000
    
shareholders’ funds at beginning of year 7522 4657 7522 5216
    
retained profit for the year 3398 856 3398 297
    
issue of ordinary shares 658 2513 658 2513
    
issue costs of ordinary shares – 504 – 504
    
share option charge 6 – 6 –
    
shareholders’ funds at end of year 11584 7522 11584 7522
20 reconciliation of operating profit to net cash inflow from operating activities
 2005 2004
 £000 £000
  
operating profit 4224 1692
depreciation – owned assets 2126 1843
loss on disposal of tangible assets 18 –
amortisation 15 53
share option charge non cash 6 –
decrease in stocks 19 109
decreaseincrease in debtors 605 359
increase in deferred activation and modem costs 2876 –
decreaseincrease in creditors 1799 2392
increasedecrease in deferred income 1026 55
  
net cash inflow from operating activities 3364 5675
   40
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
notes to the financial statements continued
21 proceeds from issue of ordinary share capital
      2005 2004
      £000 £000
   
proceeds from issue of new shares at flotation     – 2205
proceeds from issue of new shares in respect of options exercised    658 308
   
proceeds from issue of ordinary share capital      658 2513
   
expenses paid in connection with share issue     – 504
   
exceptional costs relating to professional advice in respect of the flotation    – 1167
   
net proceeds received by the company in the year     658 842
   
22 analysis of net funds
 
 at 1 january arising on cash flows at 31 december
 2005 acquisition  2005
  excluding cash
 £000 £000 £000 £000
    
cash at bank and in hand 6771 – 1800 4971
    
debt    
other loans – 50 50 –
finance leases – 50 7 43
    
net funds 6771 100 1743 4928
    
    
23 reconciliation of net cash flow to movement in net funds
   2005 2004
   £000 £000
    
decreaseincrease in cash in the year   1800 4296
repayment of other loan   50 –
cash outflow from lease financing   7 –
    
change in net funds resulting from cash flows   1743 4296
    
finance leases acquired with subsidiary   50 –
other loan acquired with subsidiary   50 –
    
opening net funds    6771 2475
    
closing net funds    4928 6771
    
     plusnet plc  annual report and accounts year ended 31 december 2005
41
plusnet plc  annual report and accounts year ended 31 december 2005
24 capital commitments group and company
there were no capital commitments as at 31 december 2005 2004 £nil
25 leasing commitments group and company
annual commitments in respect of noncancellable operating leases relating to land and buildings are as follows
     2005  2004
     £000  £000
    
operating leases which expire       
within one year     52  95
over five years     96  76
    
     148  171
    
26 pensions
the company operates a defined contribution group personal pension scheme the pension cost charge for the period represents 
contributions payable by the company to the fund and amounted to £76266 2004 £30759 the amount of outstanding contributions 
at the year end amounted to £nil 2004 £7391
27 ultimate controlling party
at 31 december 2005 there was no ultimate controlling party and the company was not a subsidiary undertaking  
of a parent undertaking
  42
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
43
plusnet plc  annual report and accounts year ended 31 december 2005
company information and advisers
company number 3279013
company secretary registered 
office and investor relations
n comer
technology building
terry street
sheffield
s9 2bu
wwwplusnetinvestors
auditors
kpmg audit plc
1 the embankment
neville street
leeds
ls1 4dw
investment bankers broker 
and nominated adviser
bridgewell securities limited
old change house
128 queen victoria street
london
ec4v 4bj
financial pr adviser
smithfield communications
10 aldersgate street
london
ec1a 4hj
registrar and transfer office
lloyds tsb registrars
the causeway
worthing
west sussex
bn99 6da
bankers
bank of scotland corporate
2nd floor
the portergate
257 ecclesall road
sheffield
s11 8nx 44
plusnet plc  annual report and accounts year ended 31 december 2005
glossary
bandwidth capacity of data concurrently transmitted permissible on a network circuit
broadband  internet connectivity speeds of more than 128 kilo bits per second
cms customer management system
connectivity  connection to the internet
crm customer relationship management
 
fms financial management system
ip internet protocol a standardised method of transporting information across the internet in packets 
of data
llu local loop unbundling the process where the incumbent operators mainly bt in the uk makes 
its local network the copper cables that run from customers premises to the telephone exchanges 
available to other companies operators are then able to upgrade individual lines using dsl 
technology to offer services such as always on high speed internet access direct to the customer 
often at a lower cost
pms product management system
ofcom  the regulator for the uk communications industries with responsibilities across television radio and 
wireless communication services
voip  voice telephony delivered over internet protocol
wireless access or wifi  wireless fidelity otherwise known as wireless networking
workplace  plusnet’s inhouse developed operational system contents
01 highlights of 2005
02 plusnet at a glance
04 chairman’s statement
05 chief executive’s strategic review
09 finance director’s review
12 board of directors and senior management
14 directors’ report
16 corporate governance report
19 remuneration committee report
23 statement of directors’ responsibilities  
24 report of the independent auditors
25 consolidated profit and loss account
26 balance sheet
27 consolidated statement of cash flows
28 notes to the financial statements
43 company information and advisers
44 glossary 
 
about plusnet plc
plusnet is the uk’s best value internet service provider its unique 
highly automated operating system workplace enables it to offer 
excellent broadband services at the lowest prices 
plusnet’s selfdeveloped operating system workplace is highly 
automated flexible and scalable allowing plusnets products to be 
competitively priced whilst delivering a high quality of service and 
maintaining low operating costs 
in 2005 plusnet launched wireless network access services and  
its voip product plustalk which represent a further step towards  
plusnet’s converged broadband offering encompassing voice data  
and entertainment services at home at work or on the move
plusnet listed on aim a market operated by the london stock exchange 
on 14 july 2004 at an issue price of 90p under the ric code pntl
for further information about plusnet please visit the company’s investor 
relations site httpwwwplusnetinvestors the smarter way to broadband
 
plusnet plc  annual report and accounts year ended 31 december 2005
technology building
terry street
sheffield
s9 2bu
wwwplusnet
plusnet plc      annual report and accounts year ended 31 december 2005           the smarter way to broadband


Summary:
 plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
5
lee strafford
chief executive
“		 plusnet	 has	 once	 again	 enjoyed	 record	 growth	 in	 broadband	 customer	 numbers	 up	 96	 to	 176000	 and	 in	 operating	 profit	 before	 exceptional	 items	 up	 69	 to	 £49m”
introduction
our first full year as an independent company has seen plusnet 
make significant progress the group has once again enjoyed 
record growth in broadband customer numbers up 96  
to 176000 the strength and efficiency of our workplace 
operating system has allowed us to increase our preexceptional 
operating profit by 69 to £49m from a revenue increase  
of 27 we increased our standard connection speed to  
2mb removed the upfront cost of activation launched wireless 
network access services wifi and developed our own leading 
voip solution plustalk we continue to score highly in customer 
satisfaction surveys and enjoy an industry leading churn rate
we have also continued to invest in the development of 
workplace and future products to address the opportunities 
offered by communications market convergence
market background
broadband connection speeds continue to increase bt has 
announced that speeds of 8mb will be available nationally from 
april 2006 the rollout of 8mb services will be pivotal for the 
industry as a whole giving customers the connection bandwidth 
to use multiple broadband enabled services next generation 
wireless routers for the home which we expect to be available 
from q3 2006 will eliminate the signal quality issues of the first 
generation and facilitate easier use of voip 
as high speed broadband capacity increases customers’ 
multiple subscriptions to fixed line voice providers mobile 
operators and cable or satellite tv services will eventually 
converge towards one subscription relationship via a broadband 
provider the drive to convergence will result in customers 
reducing their overall spend on internet entertainment and 
voice services delivering high quality broadband connectivity 
and a full range of complementary services at attractive price 
points will be critical to winning and retaining customers
as faster speeds become prevalent we expect accessing  
of ondemand content by customers to grow dramatically  
we believe that the sheer volume of available content and the 
huge number of sources of content will lead users to demand  
the freedom to enjoy content of their choice in preference  
to purchasing access to packaged content propositions 
the availability of high speed broadband connections and the 
associated adoption of multiple applications and services will 
also accelerate growth in bandwidth utilisation in the absence 
of efficient systems and network management techniques the 
overall customer experience can be compromised and costs could 
spiral out of control we believe that managing the cost of the 
network whilst maintaining the customer experience will be 
increasingly strategically important in the industry
chief executive’s strategic review 6
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
2005 has seen a significant increase in investment in network 
infrastructure through local loop unbundling llu in response 
to regulatory action by ofcom reductions in bt’s network 
wholesale prices have been limited to encourage investment  
in llu a number of providers have announced significant  
capital investment plans to build out llu capacity across the 
more populous areas of the country however when the 
regulatory obligations imposed by ofcom are met wholesale 
broadband costs are expected to be normalised across bt and 
alternative network providers with the supply of alternative 
networks providing downward pricing pressure in the long  
term service providers face the challenge of acquiring network 
capacity cost effectively before regulatory restrictions are  
lifted either by investing themselves or purchasing from 
emerging llu wholesalers other than bt
i believe plusnet is extremely well positioned to meet the 
challenges and exploit the opportunities of the developing 
broadband market our lowcost workplace operating platform 
will give us significant advantages as we move 
towards convergence – advantages that are evident 
from our 2005 performance in the remainder of my 
statement i will set out the advantages of our low
cost operating model and the benefits it has brought 
in 2005    
 
broadband developments in 2005 
broadband	 connectivity
during the year we increased our standard connection speed 
to 2mb taking advantage of wholesale cost reductions and the 
wider availability of faster broadband services on the bt network 
to further improve our customer appeal 
our lowcost operating model has allowed us to offer market 
leading subscription prices on our new connectivity products 
whilst retaining profitability in addition we have invested in the 
introduction of the option for new broadband customers to avoid 
the upfront cost of activation and modem by forgiving the cost 
over a five year period we experienced an immediate positive 
customer response to our new broadband offers evidenced by 
acceleration in customer growth over the remainder of the year 
net customer additions excluding 16000 customers acquired 
with metronet totalled 23000 in the first six months compared 
to 47000 in the second six months of 2005 
all new customers have been generated by referral we have not 
invested in high cost low return advertising
workplace continues to deliver a high quality service experience 
evidenced by strong customer satisfaction ratings and an industry 
leading churn rate
wireless	 access
in february 2005 we launched wifi services which allow 
customers to make a broadband connection in over 1600 
hotspots around the country through their plusnet account 
once again by leveraging our workplace operating platform  
we are able to offer plusnet customers wifi at low cost  
wifi services are an important building block towards mobility 
and an essential element of a converged service offering
 
voip	 in june 2005 we launched our voip service plustalk to existing 
plusnet customers which gives customers the ability to make 
free phone calls over the internet in september 2005 we 
introduced the ability for customers to breakout from internet 
calls to traditional landlines and mobiles with four retail packages 
offering market leading pricing 
critically this solution has been developed internally and is  
fully integrated into our workplace platform giving us a seamless 
deployment capability 
bt	 teleworker
bt utilises plusnet’s workplace platform within its teleworker 
product to deliver a remote broadband access solution for 
its major corporate customers at 31 december 2005 the 
teleworker product had been adopted by over 50 of bt’s 
bluechip corporate customers and we have experienced an 
encouraging growth in the number of end users on the platform 
over the year these are not included in our published broadband 
customer numbers we are working with bt to extend the 
appeal of the teleworker product 
“	our	 workplace	 operating	 system	 continues	 to	 deliver	 a	 high	 quality	 service	 experience	 evidenced	 by	 strong	 customer	 satisfaction	 ratings	 and	 an	 industry	 leading	 churn	 rate”
chief executive’s strategic review continued plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
7
network management
in 2005 increasing speeds and wider accessing of content  
have dictated that service providers have had to manage  
network traffic closely to maintain network efficiency or bear 
the cost of excessive network capacity we have exploited 
industryleading network management techniques through 
workplace to control and optimise data traffic over the internet 
our network management expertise will be increasingly 
important to optimise performance as broadband connectivity 
speeds increase further in 2006 and beyond this expertise 
will allow us to assure service quality for customers across 
all traffic types whether they are downloading content 
using a voip service gaming or simply browsing the internet 
and accessing email the effectiveness of our network 
management techniques is demonstrated by the increase in 
our broadband margin from 23 in 2004 to 29 in 2005 
whilst bt remains plusnet’s primary network partner plusnet 
is exploring other network wholesale opportunities including 
those sourced from easynet and tiscali both of which are 
expected to develop llu significantly in 2006 we believe that 
sourcing wholesale llu to complement the supply from bt is 
the right way for plusnet to take advantage of the short term 
margin advantage available from llu without incurring the cost 
and time investment of building our own infrastructure this is 
consistent with plusnet’s stated strategy of leveraging thirdparty 
networks efficiently
growth and convergence strategy
historically workplace has driven competitive advantage 
through lower back office costs and better management 
of wholesale networks we will continue to develop 
the automation of network management functionality 
within workplace to maintain our lead in this area 
our early trials with bt’s 8mb service have been successful 
and we are also trialling 8mb services sourced from tiscali and 
easynet i expect the availability of higher connection speeds  
to fuel customer growth in 2006
alongside the continued evolution of our broadband connectivity 
products we are focusing on the enhancement of plustalk  
our voip product we intend to add email and instant messaging 
to voip thus enveloping all of our customers’ communication 
requirements into a single easytouse resource in 2006 we plan 
to offer bundled connectivity and voice packages encompassing 
our voip service further development of our voip offering  
is essential within our strategy as we see it representing  
a key element of a converged product set 
whenever possible new products and services will be developed 
by our inhouse development teams using our low cost 
production methodologies and open source tools to eliminate 
thirdparty licence costs to complement our own products and 
services we will aggregate high quality third party products and 
services where they present incremental profit opportunities  
we believe that plusnet is well positioned to succeed in the new 
converged world thanks to our unique workplace operating 
model which delivers significant competitive advantage 
allowing us to offer new products and services at highly 
competitive prices whilst maintaining profitability critically 
workplace enables
a webbased transactional relationship with our customers 
providing the most effective mechanism of delivering 
maximum choice of new products and services
a webbased customer support system which puts the 
customer in control driving an excellent customer service 
experience
lowcost of operation allowing us to offer new products 
and services at highly competitive prices whilst maintaining 
profitability
cost effective aggregation of third party networks giving 
flexibility in a converging communications world and 
minimising capital expenditure requirements  
comprehensive automated network traffic management 
allowing us to assure quality of service to our customers  
while optimising our network costs and
the operation of multiple brands providing a platform for 
consolidation and enabling partners to leverage the power  
of workplace
our strategy continues to be to offer a full range of converged 
communications products and services as the uk’s best value 
internet service provider
workplace gives us an industry leading platform to manage the 
infrastructure in a converged world and plustalk will allow us to 
service all of the communication needs of our customers 
•
•
•
•
•
•
“	 workplace	 gives	 us	 an	 industry	 leading	 platform	 to	 manage	 the	 infrastructure	 in	 a	 converged	 world	 and	 plustalk	 will	 allow	 us	 to	 service	 all	 of	 the	 communication	 needs	 	 of	 our	 customers” 8
plusnet plc  annual report and accounts year ended 31 december 2005 plusnet plc  annual report and accounts year ended 31 december 2005
acquisition of metronet 
on 28 november 2005 we completed the acquisition of 
parbin limited which trades as metronet for a consideration 
of £17m at completion metronet had approximately 16000 
broadband customers the integration of metronet was 
completed in february less than three months after the 
acquisition this involved transfer of customer support to 
sheffield migration of metronet’s customers onto plusnet’s 
network and the transfer of metronet’s operations onto our 
workplace platform critically the network migration brings 
significant efficiencies from network traffic management the 
integration has been achieved with negligible customer impact 
in order to maintain the value of the metronet brand it was 
critical that customers experienced no negative changes in 
metronet’s broadband connectivity services during integration 
and that we could demonstrate that plusnet had a clear plan to 
add value to the customer experience through enhanced service 
features and additional products such as higher broadband 
speeds voip and wifi the integration has been achieved with 
minimal disruption to customer service evidenced by continuing 
growth in customer numbers from completion to the year end 
metronet proves our ability to integrate a business quickly and 
effectively 
we continue to explore selective earningsenhancing 
acquisitions to augment our excellent rates of organic growth 
but remain committed to only consider opportunities that will 
add value and not dilute plusnet’s profitability
people
in april 2005 danny sullivan joined the management team  
as chief operating officer danny has over seven years 
experience at bt and his contribution has already proved 
invaluable in addition throughout the year we have 
strengthened our management team with a number of 
appointments to ensure that we have the best structure  
in place to take advantage of current market opportunities 
our management team combines experience from across the 
industry with technical experts instrumental in the development 
of workplace
i would like to echo the comments of kevin adams our 
employees continue to make a huge contribution to the 
development of our business model which i greatly appreciate 
in addition i would also like to acknowledge the contribution 
of our nonexecutive directors who have given us the benefit 
of their significant experience not just in the formal governance 
role but also by fully engaging in such a dynamic fast moving 
business and actively challenging and contributing to our 
strategic progression 
outlook for 2006
we expect bt’s rollout of 8mb and the availability of higher 
connection speeds from other networks to fuel plusnet’s 
customer growth in 2006 we expect the quality and value  
of our broadband products to drive continuing gains in market 
share we believe our lowcost workplace platform will position 
plusnet to be a major beneficiary of the convergence revolution 
in addition we believe that consolidation in the broadband space 
will continue and that workplace is an ideal platform upon which 
to participate in this consolidation phase 
at plusnet we are very excited to be involved in such a fast 
moving business in a fast moving space and being afforded  
the opportunity to demonstrate through our workplace platform 
the ability to deliver on the convergence opportunity better than 
our competitors 
lee strafford
chief executive
22 february 2006
chief executive’s strategic review continued