essential to 
our customers’ success
annual report and  
accounts 2014 contents
strategic report
results  highlights 1
chairman’s statement 2
phoenix at a glance 4
chief executive’s review 7
market trends 11
what we do 12
our business model 13
our strategy 15
business and financial review 19
principal risks and uncertainties 26
operational review 28
our governance
board of directors 32
corporate governance 34
nomination committee report 38
audit committee report 40
remuneration committee report 44
report of the directors 58
directors’ responsibility statement 61
corporate social responsibility 62
our financials
independent auditors’ report on the 
group financial statements 64
consolidated statement of income 68
consolidated statement of 
comprehensive incomeexpense 69
consolidated balance sheet 70
consolidated statement of changes in equity 71
consolidated cash flow statement 72
notes to the consolidated financial statements 73
independent auditors’ report on the  
company financial statements 110
company balance sheet 112
notes to the company financial statements 113
five year summary 119
shareholder information
notice of annual general meeting 120
advisers and financial calendar 124
follow us at phoenixcouk strategic report our financials our governance shareholder information
1
results  highlights
financial results
underlying
• group revenues £2334m 2013 £2500m
• underlying
1
 ebitda
3
 £305m 2013 £330m
•  net debt including finance leases significantly 
reduced to £561m 2013 £713m
•  underlying
1
 profit from operations £177m 2013 
£190m 
• underlying
2
 profit before tax £126m 2013 £149m
•  underlying
2
 diluted earnings per share 121p 2013 
139p
•  proposed final dividend of 10p 2013 40p per share 
and total dividend of 26p 2013 77p per share 
statutory
• loss before tax £292m 2013 £588m loss
• diluted loss per share 400p 2013 791p loss
• basic loss per share 400p 2013 791p loss
• nonrecurring costs £408m 2013 £721m
 
1  underlying is adjusted for nonrecurring items £406m 2013 £718m and 
amortisation of acquired intangibles £10m 2013 £16m
2  underlying is adjusted for nonrecurring items £408m 2013 £721m and 
amortisation of acquired intangibles £10m 2013 £16m
3  ebitda is group underlying
1
 profit from operations £177m 2013 £190m 
plus depreciation £123m 2013 £138m plus share option costs £05m 
2013 £02m
operational overview
financial performance 
• net debt reduced to lowest for seven years by 
combination of equity placing and improved working 
capital management
• revenue and profitability adversely impacted by a 
previously announced supplier contract termination
• oneoff noncash charge of £331m for impairment 
of goodwill and intangible assets in respect of 
the partner cash generating unit 31 march 2013 
£681m impairment in managed services
operations now increasingly stable and 
important achievements secured across  
the group
• managed services returned to profitability
• cloudsure uk cloud platform launched 
complementing significant existing hosting 
capabilities
• several of our largest business continuity client 
mandates successfully renewed
management and board strengthened and 
funds raised to better position phoenix  
for growth
• steve vaughan appointed in march 2014 as 
chief executive bringing 30 years of tech sector 
experience to the group
• robin taylor appointed as a nonexecutive 
member of the board
• successful placing raised £83m net accelerating 
debt reduction and enhancing balance sheet 
flexibility
• final dividend reduced this year and dividend 
policy for future years to be more closely linked to 
business performance
clear and focused three year strategy for 
phoenix drawn up and being implemented
• focus on emerging opportunity to provide cloud 
services to middle market customers in both 
business continuity and managed services 
segments
• service lines and sales approach to focus on 
making phoenix increasingly essential to its 
customers’ it operations
• scale and reach of the group’s partner segment 
will support these efforts chairman’s statement
this year this is not an easy statement for me to write as 
i look back on a year filled with no small share of challenge 
it is right for me to talk about those challenges but at the 
same time i do want to focus attention very clearly on our 
group’s future 
overall trading this year has been disappointing difficult 
trading conditions combined with the loss of a supplier 
contract negatively impacted the financial performance 
revenue for the year was £2334m 2013 £2500m a 67 
reduction from the prior year our profitability also reduced 
with underlying operating profit of £177m 2013 £190m 
and underlying ebitda of £305m 2013 £330m however 
at 31 march 2014 we can point to a net debt including 
finance leases of £561m a reduction of £152m on the 
prior year aided by our equity placing and by improvements 
in working capital management
our energy as a board is now focused on repositioning the 
group so it is better placed to compete in the markets we 
address phoenix it has a strong heritage and excellent 
experience in the uk it services market whilst this year has 
not been without challenge a good number of the right kinds 
of achievement have also been made on 17 march 2014 we 
raised £83m net proceeds in an equity placing we have 
achieved platinum partner status with hewlett packard 
and have been named bt ict partner of the year we have 
increased the level of business with some customers to the 
largest it has ever been new services such as cloudsure 
uk our cloud infrastructure service are bringing new 
customers to the group and reenergising our team’s belief 
in what phoenix it can achieve
what we must do now is ensure that all of these assets 
relationships and differentiators are pointed squarely at 
where the opportunities lie this is what steve sets out in his 
first chief executive’s review
dividend
the board is proposing a final dividend of 10p per share 
2013 40p per share which if approved at the annual 
general meeting of the group will be paid on 29 september 
2014 to shareholders on the register as at 22 august 2014 
combined with the interim dividend of 16p per share  
2013 37p per share paid on 8 january 2014 this results 
in a total dividend for the year of 26p per share 2013 77p 
per share
looking ahead the board has resolved to realign its dividend 
policy this year we have resolved to favour the further 
reduction of our debt ahead of dividend payment in future 
years we will seek to operate a new dividend policy which 
will be aligned with measures of the underlying performance 
of the group
board changes
we have a strengthened management team in place to take 
the group forward that team is headed by steve vaughan 
who joined our board on 12 march 2014 as chief executive 
steve has already achieved a great deal in his first few 
months most notably the development of a plan to improve 
the group’s fortunes steve brings to phoenix it over  
30 years of experience in the technology sector including a 
14 year career at eds uk steve has built bolstered and 
energised several public companies including synstar plc 
from 2001 to 2005 communisis plc from 2006 to 2010 and 
served between july 2013 and february 2014 as chairman 
of charteris plc leading that firm’ s successful sale my board 
colleagues and i are pleased to welcome him to the group
turning to other changes on 30 october 2013 david warnock 
stepped down from our board as a nonexecutive director 
robin taylor was appointed as a new nonexecutive 
member of our board on 1 november 2013 and i am 
delighted that robin has also taken the role of chairman  
of our audit committee i have also changed my role 
moving from executive to nonexecutive chairman on  
1 april 2014
finally we have one further change to announce with effect 
from 10 june 2014 brian sellwood is stepping down from 
his nonexecutive position on our board on behalf of the 
board i want to thank both he and david warmly for their 
many contributions
2 strategic report our financials our governance shareholder information
employees
i would like to thank each of our employees for their 
continued commitment and energy this year and wish 
them all the very best for the year ahead
annual general meeting
the annual general meeting of the group will be held on 
25 september 2014 at 0930 and will take place at our 
group’s office at oakwell way birstall leeds
outlook
i believe that the future is more assured today than it 
has been for many months we now have a strong 
focused executive and senior management team in place  
a plan to drive the business forward and a lower net debt 
position than for many years
peter bertram
nonexecutive chairman
9 june 2014
“i believe that the future is more assured today  
than it has been for many months 
”
3 4 5
we keep businesses going
our business continuity business helps customers avoid significant disruption to their business 
when things go wrong  from it maintenance to loss of a building we help keep them delivering 
we help customers create a more resilient business our flexible remote working solutions enable 
customer staff to work from virtually any location uninterrupted
we make businesses more agile 
our managed services business provides hardware support and helps customers run their 
businesses from wherever and whenever they want to we implement cloudbased or virtual 
environments for our customers in the middle market we provide a complete range of services 
from the desktop through the network to hosting and the cloud few organisations have the 
experience that we do in designing and delivering rightsized solutions
 
we help our partners deliver more
our partner business manages highly complex business critical it service processes for our 
partners’ customers to make them perform better and be more efficient our ‘enterprise strength 
and scale it solutions’ better manage the difficult dispersed manual it service processes on our 
channel partners’ behalf optimising and streamlining these processes to create efficiency and 
unlock value
we are one of the uk’s leading providers of it infrastructure 
services we provide essential services to help customers  
run and grow their businesses from our own teams and  
hubs based in the uk we deliver services and solutions 
designed to empower our customers to improve and optimise 
daytoday operational tasks reduce risk and control costs
phoenix at a glance 4 5
strategic report our financials our governance shareholder information
we provide our services 
to over 3300 businesses 
in the uk and have built 
and grown a worldclass 
capability that serves 
customers at multiple 
stages of their it services 
needs this enables us to 
develop and maintain strong 
and profitable customer 
relationships
revenue
£2334m
2013 £2500m
business continuity
partner
managed services
22
29
49
underlying profit from 
operations
£177m
2013 £190m
business continuity partner
managed services
60
6
34
revenue
£1144m
2013 £1133m
revenue
£684m
2013 £847m
revenue
£506m
2013 £520m
by successfully 
blending the 
capabilities of these 
three areas we provide 
a seamless it 
infrastructure service 6
 “a new strategy to generate 
meaningful sustainable and 
ultimately profitable change”
being essential strategic report our financials our governance shareholder information
7
chief executive’s 
review
i joined the group as chief executive on 12 march 2014  
a few days later the company successfully raised £83m in  
net new money from shareholders this was an important 
development for two reasons firstly it strengthened the balance 
sheet secondly the fundraising epitomises a new resolve by the 
board to commit to a long term improvement strategy 
i have used my first few months in the group to review its 
performance thoroughly assess its strengths and  
weaknesses and devise a strategy to improve its fortunes  
a sale or breakup is not the right approach for phoenix  
in this review i outline why and why now is the time  
to implement a new strategy to generate meaningful 
sustainable and ultimately profitable change 8 9
why the group fits together
the foundation to our strategy must be a clearly  
articulated plan to exploit the capabilities of the group’s 
three segments  business continuity managed services 
and partner
the business continuity and managed services segments 
largely address a similar marketplace mediumsized 
customers over 2300 of them we define mediumsized 
customers or the middle market as customers with 
between 100 and 5000 it users these two segments 
complement each other because both are concerned with 
the converging cloudbased market the middle market 
is beginning to adopt the cloud for infrastructure services 
provided by managed services and at the same time 
business continuity is increasingly being provided through 
the cloud remote online backup mirrored data centres and 
so on according to idc spend on cloud by the middle 
market will grow at over 20 annually over time we should 
expect these two segments to fully converge in the cloud
the partner segment adds over £100m of revenue and 
important capabilities to the group partner adds scale to 
our offerings in the other two segments allowing us credibly 
to offer ‘enterprise strength it for the middle market’ some 
of the skills we currently use in managed services can also 
be of value in some of our partner contracts if deployed 
properly  this is unexploited opportunity
a strategy that successfully blends the capabilities of these 
three segments has the potential to unlock considerable 
value that value is not reflected in the current share price 
in my view this does not represent a fair price for a business 
that has high levels of annuity revenue and a reduced net 
debt position 
review findings
in my review of the group i have been impressed by our 
scale  we have hosting capacity for nearly 2000 racks in 
our infrastructure our service desks across partner and 
managed services combined took nearly 300000 calls 
during the year i have also been impressed by the benefits 
we bring to customers and by what we might be capable of 
doing for them in the future despite those positives there 
has been scant attention paid to the quality of some of our 
delivery assessment of contract profitability and lack of 
discipline on return on the valuable capital we employed 
a series of restructurings have left a group that is overly 
complicated in structure and too diverse in the services 
provided  it needs to better focus
two issues come to the fore the first is the need for stability 
and a long term direction so that the business can develop 
towards a clearly understood objective without constant 
upheaval and distraction we need a clearly articulated 
strategy the second is the need to deliver on our promises 
for too long there have been disappointments shortfalls 
and surprises these have undermined investor confidence 
and the faith of our customers and employees the group 
needs to get back to basics and build much stronger 
foundations
a new strategy
our strategy makes clear to our customers investors  
and employees that phoenix has the offering and capability 
to address the way it services will develop over the next 
few years 
we will approach our two channels to market  large 
system integration partners and mediumsized companies 
 public bodies  by providing services that sit at the heart 
of our customers’ business we will become an essential 
foundation for their own success where we do this and 
work with our customers to develop forward looking resilient 
infrastructure we will create the most value our mission 
therefore is
to become an essential ingredient in our customers’ 
success by providing scalable resilient forward looking 
it managed services
by being essential to our customers we will add to those 
who already see us as their trusted adviser this is the best 
way to maintain strong business and to make increased 
profits based on the quality of the service that we provide 
trust once earned will also allow us to grow relationships in 
size and broaden them by selling additional services
this trust will be earned by responding to the key trends 
in the market as we see them and improving the value 
we deliver to customers our managed services and 
business continuity segments will converge as our middle 
market customers exploit cloudbased services in our 
partner business we want increasingly to move away 
from headcountbased provision towards service level 
agreements this will improve retention profitability and 
competitiveness in this segment
we need strong foundations to build on and we need to 
concentrate on the basics to build well so in this sense 
the message of ‘being essential’ works well for phoenix it 
too the plan for delivering our strategy has this theme 
throughout  focus on the basics eliminate complexity 
concentrate investment and resources on the important 
parts of the business 
chief executive’s review
8 8 9
strategic report our financials our governance shareholder information
delivering the strategy
our plan to implement the strategy of ‘becoming essential’ 
runs for three years during that time real change and 
improvement can be delivered without looking too far ahead 
in the context of a fast changing market for technology 
each of the three years has a distinct focus
the focus for year 1 will be stability efficiency and 
quality our aim for this period will be to generate cash 
improve the efficiency and reliability of the business thereby 
improving its profitability and to lay the foundations for 
changes to the sales process in year 2 convergence of 
managed services and business continuity will only occur if 
we can crosssell between the two segments so year 1 will 
also need to prove our abilities here
the focus for year 2 will be account management and 
standardised services account management is the best 
way to achieve crossselling systematically to achieve this 
we need a more standardised set of services making us 
easier to do business with we will grow the middle market 
business using these standard services and show good 
examples of converting business continuity customers to 
a fuller range of services account management will also 
help to move the partner business away from headcount 
related revenues towards a more compelling servicebased 
model the outcome will be profit growth not necessarily 
revenue growth and better cash generation return on 
capital employed will be a very important metric to show 
that we have an improving infrastructure through which we 
can drive long term profit growth
the focus for year 3 will be integrated services with an 
account management model bedded down we will be able 
to credibly build a business that offers customers greater 
value than our competitors for example as the business 
continuity and managed services segments converge our 
account management model needs to convert clients to 
additional services in a systematic way our proposition of 
enterprise strength it for the middle market will emphasise 
those client relationships where we provide a managed 
service for a range of infrastructure requirements including 
delivery of projects to improve that infrastructure making 
it more resilient and forward looking in the same way our 
partner business will concern itself more with transformation 
of services when they transfer to us making them more 
efficient and responsive 
“our mission therefore is 
to become an essential 
ingredient in our customers’ 
success by providing 
scalable resilient  
forward looking it  
managed services”
the investment case
in recent years the phoenix strategy has not been properly 
articulated or carefully implemented we are now at a point 
where that has to change there are plenty of opportunities 
to improve and develop from within and there are trends 
in the market that we can exploit better than many of our 
competitors it will not be a straightforward or a riskfree 
path but the potential to create sustainable shareholder 
value over a three year timeframe is good based upon a 
strong order book and good use of capital employed and 
a proper use of the strong complementary fit to our three 
interlinked segments 
steve vaughan
chief executive
9 june 2014
“there are plenty of opportunities to improve and develop 
from within and there are trends in the market that we can 
exploit better than many of our competitors”
9 10
 “the key trend in our market 
is the rapid development of 
cloudbased services”
being essential strategic report our financials our governance shareholder information
11
market trends
phoenix delivers it managed services to 
customers in the uk all our services relate 
to the it infrastructure part of our clients’ 
spending 
the market is changing leading market 
analysts say it is growing at the rate of 
inflation at best and there is longterm decline 
in some of our historic service lines such 
as mobile disaster recovery and hardware 
break fix these trends are affecting our 
business with end customers and also the 
work traditionally subcontracted to us by our 
system integrator customers in the partner 
business therefore we must improve our 
efficiency and develop new higher value 
service lines to replace lost revenue and 
grow our profits there are encouraging 
trends in the market which indicate where to 
direct this change in focus
the key trend in our market is the rapid 
development of cloudbased services 
the cloud is a combination of internet 
based servers storage and network 
technologies that allow computing power 
data and applications to be consumed 
on a utility basis and on any device the 
increased availability of high capacity data 
communications strong security protocols 
and the development of the necessary 
software and hardware architectures have 
each enabled this shift to the cloud to take 
hold cloud services can either be delivered 
enmasse public or to a single business 
private security and data residency are 
key considerations for firms considering 
moving to the cloud according to idc 
research about 50 of midsized firms plan 
to implement either public or private cloud 
solutions in the next twelve months they 
predict spending on cloud solutions by the 
middle market to grow threefold over the 
next seven years
cloudbased services open up an entirely 
new way for businesses to think about and 
consume it  at its simplest the cloud brings 
a new balance to it purchasing it enables 
businesses to purchase only those services 
they really need quickly safely flexibly and 
in the knowledge that they are secure and 
highly dependable all it requirements from 
email and office applications right through 
to sophisticated and complex business 
critical applications can be bought in from 
cloud service providers like phoenix it 
cloudbased it also provides a new way to 
provide business continuity early adoption 
of the cloud was driven by large global or 
government it users as these technologies 
mature they are being increasingly adopted 
by smaller users in our target customer base
a second and supportive trend is an 
end to the era of large total outsourcing 
deals where one big service provider was 
contracted to provide all of a customer’s it 
these deals are increasingly broken up 
and acquired in parts which might now 
be of a small enough size for phoenix to 
bid for directly research from gigaom 
highlights that deals in the £36m range 
have increased by 21 in the last year  
this increases our addressable market
underlying all of this our key customer 
decision makers  cios  are focusing 
increasingly on making a difference to their 
businesses by delivering change growth and 
collaboration rather than just cost reduction 
by finding ways to help cios deliver real 
transformation to their business we will 
create a valuebased enduring proposition 12 13
what we do
our business continuity segment helps customers avoid 
significant disruption to their businesses when things go 
wrong whether it’s a minor issue such as short term it 
maintenance or something significant like the loss of a major 
building we provide backup resources and alternative work 
locations that can be brought on stream very quickly to keep 
our customers’ business going we are pleased to have been 
awarded business continuity provider of the year 2014 by the 
european business continuity institute
the main customers for business continuity are in the middle 
market and the size of our operations fits this customer 
base well we also offer dedicated seat recovery which is a 
significant niche service to much larger customers notably the 
tier 1 financial services firms around london and edinburgh 
our recovery centres in farnborough romford and hamilton 
are mostly devoted to specially equipped trading floor and 
back office system recovery for these firms and with 2821 
positions at the year end we are a leading provider of these 
facilities
our managed services segment is also largely involved with 
customers in the middle market historically this business 
has grown from providing hardware breakfix support desks 
hosting and monitoring services to become increasingly 
involved in the implementation of cloudbased or virtual 
environments even where clients are not yet ready to embrace 
the cloud their decisions are influenced by the need to move 
in that direction the combination of our extensive investment 
in this segment and the scale provided in combination with 
our other segments increases the efficacy of our proposition 
here we have hosting capacity for nearly 2000 racks in our 
infrastructure and our service desks took nearly 300000 
calls during the year in essence we offer enterprisequality 
it services to the middle market 
in our partner segment we work with large it service 
providers to become an essential part of their service to 
their end customers we do this by managing the difficult 
dispersed mainly manual it service processes on their behalf 
making them better and more efficient currently much of 
this business is headcount related however in places we 
contract to provide a service level and even in one case to 
develop and rollout an infrastructure management solution 
which we then run
phoenix is split into three segments 
reflecting our different services and 
customers in each segment we 
provide services that run our clients’ it 
infrastructure but with a different focus 
and capability per segment in each 
case the services that we provide are in 
general based in the uk and we deliver 
them from our own sites in the uk  
this is seen by many of our customers 
as an important differentiator for us 12 13
strategic report our financials our governance shareholder information
our business 
model
phoenix it has invested considerably in infrastructure 
this investment begins with a range of business continuity 
centres across the country providing workarea recovery 
and standby computing power in our managed services 
business we own most of our data centre capacity and 
manage it through a network of control centres all of which 
provides very high availability services that can be deployed 
to a wide variety of customer needs all of this is based in 
the uk
it is our investment in staff and processes that differentiates 
the phoenix it business model in business continuity our 
team is very skilled in planning and rehearsing recovery 
requirements including using our own proprietary 
shadowplanner software in managed services we design 
and implement customer system requirements and then 
manage them actively during the contract in many cases 
our service is far more than simply data centre space  
in our partner business we frequently contract to take on a 
workforce delivering handson it services and then to improve 
the way those services are delivered to make them more 
efficient our ability to deliver this improvement in working 
across all our segments is a key way that we deliver value
in each of our segments the foundation 
of our business model is the longterm 
contract in most cases about 74 
our customers engage our services for a 
period of several years with three years 
being the average term in some cases 
our contracts can last for ten years 
this positions us well to win additional 
business from our clients in the form of 
implementation projects product sales 
and short term labour requirements 
where we have been astute at doing 
this our average contract value and 
often the margin increases during the 
engagement 14
 “the plan for delivering our 
strategy has this theme 
throughout  focus on the 
basics eliminate complexity 
concentrate investment and 
resources on the important 
parts of the business”
being essential strategic report our financials our governance shareholder information
15
our strategy
phoenix it’s new strategy to become essential to our customers covers the development of the group for 
the next three years properly exploits the considerable capabilities we have in it infrastructure service and 
is aligned to emerging market trends
in this document we set out a strategy that meets all those tests exploiting the considerable capabilities 
we have in it infrastructure services the first cornerstone of our strategy is to be clear about why the three 
parts of phoenix fit together and how each adds to the value of the group as well as being separately 
important businesses they come together so that they are more valuable jointly and develop so as to 
increase the value of the whole
why the parts fit together
we keep our customers’ computers going whether 
someone has forgotten their password or their 
data centre has burned down we also help our 
customers to improve their it infrastructure to take 
advantage of new developments in technology 
particularly where these can help our customers to 
succeed in their business goals we can help them 
to save money to work more flexibly to convert 
fixed to variable cost and to deploy applications 
that give them competitive advantage this is a 
compelling proposition that speaks in part and as a 
whole to a particular target market
the business continuity and managed services 
segments on the whole address a generally similar 
marketplace – mediumsized customers these 
two segments also fit well together because they 
are both concerned with the converging opportunity 
that is the cloud managed services is increasingly 
involved with the implementation of cloudbased 
or virtual environments business continuity is also 
increasingly being provided through the cloud  
remote online backup mirrored data centres and 
so on over time we should expect these two 
segments to converge fully
the partner segment brings considerable scale to the 
group without it we could not offer the full range of 
geography  technology and infrastructure that we do  
we maintain extensive supplier relationships 
including platinum partner status with both hewlett 
packard and microsoft partly because of this scale 
as well as being profitable in its own right the partner 
segment increases our ability to address the middle 
market with strong differentiated propositions  
‘enterprise strength it for the middle market’ 
the partner segment also gives us an excellent 
channel into large public sector deals bolstering 
exposure to public it spend which currently is 
underrepresented in business continuity and 
managed services 
how we expect the segments  
to develop
our customers in the middle market tend not to 
be at the leading edge in their adoption of new 
technology we have seen the development of large 
scale virtual infrastructures in global organisations 
for both daytoday infrastructure needs and to 
provide for resilience and business continuity we 
are now beginning to see the same trends take 
hold in the middle market with customers building 
resilience into infrastructure designs by using the 
cloud as the way to provide business continuity 
we expect this trend to accelerate over the next few 
years
phoenix it is well placed perhaps uniquely  
placed in the uk to exploit this convergence  
we are already a significant player in the business 
continuity marketplace we have a wide range of 
skills and existing customers in managed services 
providing key components of the cloud our new 
strategy will focus our energies in these segments 
on capitalising on this trend
the strategy for our partner business must be to 
remain relevant competitive and efficient in what 
we do  the provision of dispersed difficult to 
manage mainly manual it processes to our large 
outsource partners much of this business currently 
is contracted on a resource basis which does 
not make value easy to measure or to provide  
our new strategy will see us move increasingly 
towards contracting partner work on a service 
level basis not just headcount our skills from the 
managed services segment will help us to offer 
this and experience shows that we deliver better 
services make better margins and retain customers 
for longer when we do this  positioning the group to make this happen
delivery of our strategy will require a concerted effort to 
align everything we do to one mission the mission we have 
chosen is
to become an essential ingredient in our customers’ 
success by providing scalable resilient forward looking 
it managed services
by being essential to our customers we will earn the status 
of trusted adviser this is the best way to maintain strong 
business and to make profits based on the quality of the 
service that we provide 
our plan describes how each aspect of phoenix will align 
towards the goal of ‘becoming essential’ as the plan is 
executed it will be possible to measure our progress based 
on these developments
evolving our service portfolio towards 
‘becoming essential’
phoenix already has a strong portfolio of services this is 
shown by the wide variety of customers that buy from us 
and renew with us regularly to deliver real growth however 
this portfolio must be more focused 
the group tries to do too many things as a result our 
impact is diluted our chosen set of services should be  
wellmatched and joinedup and focused on three key 
attributes scalable resilient and forward looking during 
year 1 we will review our portfolio and if necessary withdraw 
from offerings that do not conform to these attributes we 
will also seek to add new services at the top end of the 
value hierarchy there is no shortage of ideas  it security 
and technical architecture planning to name just two some 
will be developed internally others later in the plan may be 
gained by small bolton acquisitions
our portfolio of services must become more relevant to 
our customers’ business agendas by that token we can 
already describe how we expect in general terms each of 
our service lines to develop
in business continuity we expect our business to expand 
rapidly in online data backup there is scope for expansion 
of dedicated seat recovery in london the provision of fully 
mirrored data centre facilities for mediumsized customers 
will become part of our standard portfolio in due course 
our existing cloudsure uk platform or something very 
like it will form part of the resilience solution for smaller 
business continuity customers although we anticipate that 
customers will continue to buy mobile disaster recovery  
for some time to come ‘resilience as a service’ will become 
our greater focus over the three year time frame
in managed services we expect our services to develop 
into a more integrated set of infrastructure management 
services we add more value when we wrap a whole 
service package around commodity facilities like floor 
space in the data centre or network bandwidth service 
desk skilled technical support and upgrades remote 
network management and online backup are all part of 
this package and will become our standard way of doing 
business our new cloudsure uk platform for smaller 
customers to access cloudbased services is a good 
example of this packaged approach we will develop our 
services along similar lines for the bulk of our customers 
who are somewhat larger than the current cloudsure uk  
implementation can service taken together this will provide 
a comprehensive version of ‘infrastructure as a service’ to 
complement the development of ‘resilience as a service’ in 
business continuity
in partner our aim should be to ‘own the call’ in our 
relationships we will aim to take the it support call ourselves 
assign it to the most appropriate resource and see that 
work through to the end of the process we already have 
these services in our portfolio but they need to be tailored 
to suit the large fixedsite environment more commonly 
encountered in our partner business we now have some 
good case studies of partner customers selecting our 
technology for managing service and we should see more 
of this over time
evolving the sales model towards 
‘becoming essential’
we need to get much better at selling a range of services 
to our customers we need to sell services which make a 
virtue of the fact that we have both a business continuity 
and managed services offering we need to expand 
the range of relationships we have built up in the partner 
business and grow new ones at present we find  
this difficult
account management is the right model for a business of 
this type and it will be the cornerstone for delivering a cross
selling strategy account management means that each 
customer has a single identified individual the account 
manager who is responsible both for the delivery of 
service to that customer and the identification and delivery 
of new sales to that customer the account manager is 
incentivised on the profit from their customer or group of 
customers they are responsible for selling and delivering all 
of phoenix services to help the customer to transform their 
it to improve its efficiency availability and resilience in this 
way they become the face of the ‘trusted adviser’ status for 
which we will now aim
our strategy
16 strategic report our financials our governance shareholder information
account management will take time to implement 
the organisation needs to change to support this role 
we need more of our technical skills close to the customer 
management information needs refining to get a truer 
picture of customer profitability there is also a considerable 
staff training and development process to complete it will 
take a year to put these foundations in place
in year 2 we will be ready to implement account 
management some accounts and individuals can be early 
adopters during year 1 particularly in our partner business 
our technical support staff need to be organised correctly 
to support account managers in their role and we can 
migrate this structure during year 1 as well
once account management is in place we will be  
wellplaced in year 3 to fully merge the business continuity 
and managed services segments from a customer point 
of view there will still be distinct delivery components but 
customers will be managed in a uniform way to ensure  
that we exploit the convergence of buying behaviour 
between business continuity and other infrastructure 
elements in the middle market growth will be easier in our 
partner business too
evolving the business model towards 
‘becoming essential’
most of our business is on long term contracts with good 
payment terms we will do nothing to alter that however 
we do need to get much better at adding additional projects 
and incremental services to that base more importantly we 
need to run the business with a focus on delivering profit 
rather than simply a pursuit of revenue 
this will be a fundamental change in the way that managers 
and salesmen are rewarded at phoenix and will be 
implemented at once experience has shown that this 
drives considerable behavioural change and improvement 
in the business model efficiency and high margin add
on business will receive the attention that they deserve 
high revenue low margin business such as product sales 
absolutely have a part to play if by winning this business we 
can further a client relationship but it ceases to become the 
beallandendall of any sales process 
selective use of cash collection targets in parts of the 
business should also improve our working capital employed 
investment decisions will be improved by a rigorous 
use of return on capital employed as 
the measure of success 
in our capital intensive business areas this behavioural 
change takes time to take effect but over the three year term 
of the strategy it should drive considerable improvement
as we move into year 2 and 3 we will put considerable 
effort into delivering more standardised services at present 
much of what we do is bespoke while this is a good 
approach to large customer requirements it is far too costly 
for the vast bulk of our customers and makes it harder to 
sell more standardised services will reduce our own costs 
accelerate time to market and make it easier for customers 
to engage with us
evolving our culture towards  
‘becoming essential’
it is no surprise given the recent history of phoenix that 
the culture within the business needs attention fortunately 
we can improve it over the coming year with some relatively 
simple actions having a clearly articulated strategy will be  
a big part of this process we will avoid disruptive  
upheavals and endless changes in priorities stability has a 
powerful effect
however some particular focus will be needed to develop 
a culture of highest quality and continuous improvement 
in our service delivery we need to get more technical 
people closer to the customer so they can talk about future 
developments and encourage that soughtafter ‘trusted 
partner’ status we need to get rather better at giving our 
staff clear responsibilities holding people accountable for 
those responsibilities and recognising those who excel 
there are several concrete steps to take quickly to reinforce 
these changes we will definitely not embark on a major 
reorganisation however our delivery teams need to have 
a clear ‘line of sight’ to the customer and we have already 
made one or two tweaks to improve this the behaviour 
change with better focus on efficiency and quality should 
become visible during the year  we will improve management 
information throughout the group 
the key change needed from all of these developments 
must be the end to surprises phoenix has a poor record for 
delivering unexpected bad news with the strategy we have 
developed in time we can bring this to an end and deliver 
what we have said we will deliver
”
“by being essential to our customers 
we will earn the status of trusted adviser this is the best 
way to maintain strong business and to make profits based 
on the quality of the service that we provide 
17 18
 “a successful equity placing 
along with tight working 
capital management has 
given us the lowest year 
end net debt position for 
seven years”
being essential strategic report our financials our governance shareholder information
19
business and  
financial review
summary of results
on 17 march 2014 the group successfully 
completed an equity placing which raised £83m 
of net proceeds these proceeds along with tight 
working capital management helped to bring our 
year end net debt to £561m £152m lower than 
at the previous year end this took our net debt to 
ebitda ratio to less than 2 times at 184 this is the 
lowest year end net debt position the group has 
had for 7 years 
profit performance was however disappointing 
with underlying ebitda down by 79 to 
£305m the group suffered revenue attrition 
following the termination of a supplier contract 
which restricted the sale of certain products 
and services to some of our customers the 
year did however see the return to profit  
of our managed services business and the launch of  
our new cloud platform – cloudsure uk 
revenue for the year was £2334m a 67 
reduction from £2500m last year underlying profit 
from operations
3
 decreased to £177m for the year 
compared to £190m last year underlying ebitda
2 
was £305m compared to £330m last year
in october we announced that we had lost the 
major supplier contract referred to above which 
affected the revenue and operating profit in both 
our partner and managed services segments 
in addition revenue decreased in the managed 
services segment due to the continued wind down 
of a large labouronly professional services contract 
to one customer this contract was at a relatively 
low margin and therefore this did not significantly 
adversely affect the profit in the segment in 
addition to these two events revenue and profit 
also reduced as a result of contract attrition and 
negotiated contract renewal discounts in the partner 
and business continuity segments however 
significant contract wins and a one off contract to 
transition services and transfer intellectual property 
to a customer that was insourcing its services at 
the end of a contract in the partner segment offset 
some of this reduction
underlying profit before tax
4
 reduced yearonyear 
as a result of the lower underlying profitability as 
explained above and increased finance costs which 
is explained in further detail below
nonrecurring items in the year were £408m  
2013 £721m relating to an impairment of 
goodwill and intangibles in the partner business 
costs relating to reorganising the group and items 
relating to the previously announced supplier 
contract termination 
the group renegotiated its banking arrangements 
at the beginning of the financial year and continues 
to operate well within its facility and financial 
covenants on 17 march 2014 the group 
successfully completed a placing of 7547934 
ordinary shares with institutional investors which 
raised net proceeds of £83m 
net debt including finance leases at 31 march 
2014 was £561m which was a significant 
reduction from £713m at 31 march 2013 this 
reduction is as a result of improved working capital 
management throughout the year along with the 
acceleration of debt reduction brought about by 
the equity placing 20 21
a summary of the group’s financial performance for the year 
is provided in the table below
underlying
1 
2014 
£m
2013 
£m
change
revenue 2334 2500 67
underlying ebitda
2
305 330 79
underlying profit from  
operations
3
177 190 73
underlying finance costs 51 41 228
underlying profit before tax
4
126 149 157
underlying profit after tax
4
96 110 132
underlying diluted earnings 
per share
4
121p 139p 18p
dividend 26p 77p 51p
statutory
loss before tax 292 588 £296m
loss from operations 239 544 £305m
diluted loss per share 400p 791p 391p
basic loss per share 400p 791p 391p
nonrecurring costs 408 721 435
other key performance indicators
net debt  
including finance leases
561 713 £152m
annual contract value 1810 1919 £109m
order book 3049 3186 £137m
1  to assist in the understanding of the underlying performance of the group 
statutory profit has been adjusted to exclude nonrecurring items and 
amortisation of acquired intangibles
2  ebitda is group underlying profit from operations £177m 2013 £190m plus 
depreciation £123m 2013 £138m plus share option cost £05m 2013 £02m
3   underlying  adjusted for nonrecurring items £406m 2013 £718m and 
amortisation of acquired intangibles £10m 2013 £16m
4  underlying  adjusted for nonrecurring items £408m 2013 £721m and 
amortisation of acquired intangibles £10m 2013 £16m
segmental review
we have realigned our business segments this year to be 
in line with our internal reporting and recognition of profits 
the major differences are that we no longer recognise 
a profit on the provision of field services from the partner 
segment to the managed services and business continuity 
segments in addition we now classify our revenues 
between the segments in the first instance according to 
the type of customer by splitting the business between 
sales to partners and sales directly to end users we then 
split the end user market between managed services and 
business continuity in this way we have slightly redefined 
our segments to ensure they are now in line with the internal 
management of the business 
the group is therefore comprised of three segments at  
the end of the year business continuity managed services 
and partner these performed as follows for the year under 
review
business continuity
year ended 
31 march 
2014
year ended 
31 march 
2013
change
revenue £506m £520m £14m
underlying profit from  
operations 
£124m £132m £08m
underlying operating 
margin
245 254
order book £856m £851m £05m
annual contract value £511m £519m £08m
 31 march 2013 has been restated to be calculated on a comparable basis to  
31 march 2014
business continuity provides the design implementation 
and hosting of work area  it disaster recovery services 
and business resilience and data backup the business 
also provides business continuity and it service continuity 
consulting and ongoing program management
the underlying contract base has remained reasonably 
stable in the year and several of our largest contracts have 
been successfully renegotiated to significantly add to future 
revenues for the segment certain customers renewed 
at reduced contract scope or terms in addition to some 
contract attrition this has had the effect of reducing revenue 
by £14m in the year to £506m order book has increased 
slightly despite being reduced by the year’s revenue and 
annual contract value has decreased slightly both reflecting 
the effect of the contract renewals 
underlying profit from operations decreased by 61 to 
£124m 2013 £132m largely as a result of the reduced 
revenue underlying operating margin has remained broadly 
flat at 245 compared to 254 last year
the business provides both syndicated and dedicated work 
area solutions syndicated seat utilisation increased in the 
year to 501 from 484 in the year ended 31 march 2013 
this increase is mostly as a result of an increase in the number 
of positions sold combined with the impact of the closure of 
our old street facility in london dedicated seat utilisation 
reduced to 893 from 956 at 31 march 2013 mostly due 
to an increase in capacity at one of our sites
business and financial review 20 21
strategic report our financials our governance shareholder information
managed services
year ended 
31 march 
2014
year ended 
31 march 
2013
change
revenue £684m £847m £163m
underlying profitloss 
from operations 
£12m £08m £20m
underlying operating 
margin
17 09
order book £540m £567m £27m
annual contract value £358m £379m £21m
 31 march 2013 has been restated to be calculated on a comparable basis to  
31 march 2014
the managed services business comprises the provision 
of managed services professional services and hosting 
services together with product sales directly to end users in 
the middle market
revenues reduced by £163m to £684m 2013 £847m 
largely as a result of the continued reduction in one large 
labouronly low margin professional services contract  
in addition during the year two contracts moved from  
being a direct sale to end users to being sales via  
partners and as a result were transferred from the 
managed services segment to the partner segment 
managed services was also impacted by a loss of revenue 
as a result of the loss of the supplier contract that restricted 
the sale of certain products and services to some of our 
customers this loss will continue to have an impact on  
our results during the current year as the loss of revenue 
was mostly annuity based and has contributed to the 
reduction in the order book and the annual contract value of 
£27m and £21m
managed services generated a profit from operations in  
the year of £12m an improvement of £20m from  
the loss from operations the segment made last year  
the improvement in the segment’ s profitability is the result of 
an ongoing focus on cost reduction during the year the new 
management team have continued to improve processes 
around commercial pricing particularly at the contract 
renewal stage particular attention has also been placed on 
replacing lower margin colocation hosting contracts with 
higher margin managed hosting contracts during the year
during the second half of the year the business launched 
cloudsure uk a next generation enterprise class 
infrastructure that will enable us to deliver it resources as 
a service cloudsure uk will be delivered exclusively from 
phoenix it’s uk data centres and includes the elements of a 
cloud offering that our customers most frequently request 
in a secure private cloud environment
partner
year ended 
31 march 
2014
year ended 
31 march 
2013
change
revenue £1144m £1133m £11m
underlying profit from  
operations 
£70m £90m £20m
underlying operating 
margin
61 79
order book £1653m £1768m £115m
annual contract value £941m £1021m £80m
 31 march 2013 has been restated to be calculated on a comparable basis to  
31 march 2014
the partner business provides a full range of it support 
services to large systems integrators and other outsourcers 
partner revenue has increased from £1133m to £1144m 
in the year ended 31 march 2014 revenue in this segment 
has benefited from the transfers from the managed 
services segment referred to above and also from desk 
side support contract wins in the current year and the 
full year effect of those won in the previous financial year  
the partner segment also benefited from a oneoff contract 
to transition services and transfer intellectual property  
to a customer who was insourcing their services at the 
end of a contract however the segment has suffered this 
year from contract attrition largely as a result of the supplier 
contract termination discussed previously this supplier 
contract termination is a key factor in the £115m reduction 
in the order book and the £80m decrease in the annual 
contract value
the underlying operating margin has reduced from 79 
to 61 contract attrition at the beginning of the year 
on some higher margin annuity contracts and later in the 
year as a result of the supplier contract termination has 
adversely affected the margin in the year the syndicated 
nature of some areas of our service delivery cost base 
leads to difficulties in reducing our costs in line with revenue 
reductions
earnings and dividends
underlying diluted earnings per share
4
 decreased by 129 
to 121p 2013 139p on a statutory basis the diluted loss 
per share was 400p 2013 791p loss and the basic loss 
per share was 400p 2013 791p loss
the board is proposing a final dividend of 10p per share 
2013 40p which combined with the interim dividend of 
16p per share 2013 37p would give a total dividend per 
share for the year of 26p 2013 77p if approved the final 
dividend will be paid on 29 september 2014 to shareholders 
on the register at 22 august 2014 22 23
investment income and finance costs
underlying finance costs net of investment income 
increased by £10m in the year to £51m 2013 £41m 
interest on bank overdrafts and loans increased by £08m 
in the year as a result of the increased margin payable on 
the group’s banking facility following the renegotiation of the 
group’s banking arrangements in may 2013 other items 
included in finance costs are finance lease interest of £02m 
2013 £02m net pension income of £nil 2013 £01m and 
amortisation of loan issue costs of £07m 2013 £05m
nonrecurring interest costs were £02m 2013 £03m 
and relate to the £01m writeoff of unamortised loan costs 
resulting from the repayment of the group’s previous debt 
facility in advance of its due date and £01m swap break 
fee as a result of the early termination of one of the group 
interest rate hedges 
nonrecurring items
total nonrecurring items during the year were £408m 
2013 £721m a full analysis of nonrecurring items is set 
out in note 7 of the consolidated financial statements and 
are also summarised in the table below
charge to income 
statement
cash paid in 
the year
2014 
£m
2013 
£m
2014 
£m
2013 
£m
impairment of goodwill 
and other intangible 
assets a
331 681  
costs of reorganisation 
of the group b
48 17 28 49
contract provisions c 27 05 14 12
impairment loss on  
property held for sale 
 01  
legal and professional 
fees in relation to  
pension equalisation 
 01  02
costs relating to the 
restatement 
 13 06 07
nonrecurring interest 
costs d
02 03 03 
total nonrecurring 
items
408 721 51 70
the net charge for nonrecurring items in the year of £408m 
2013 £721m related to the following
a  an impairment of the carrying value of goodwill and 
intangible assets in the partner segment of £331m 
2013 £681m impairment in the managed services 
segment following the supplier contract termination in 
the year the group undertook a review of the carrying 
value of assets in the partner cash generating unit 
“cgu” the review concluded that the goodwill and 
intangible assets being carried in the partner cgu 
relates to certain contracts which have been diminishing 
over time whilst the value in use of the partner cgu 
would support the carrying value of some goodwill 
the reduction of these contracts to which the goodwill 
specifically related has led management to fully impair 
the goodwill and intangible assets as detailed in note 
15 of the consolidated financial statements
b  in the year a further £48m 2013 £17m of charges 
relating to the reorganisation of the group were 
incurred during the reorganisation higher revenue 
attrition levels led to surplus inventory which has  
now been recorded at its net realisable value where  
it is deemed to be lower than cost resulting in a 
£24m 2013 £nil writeoff of excess inventory  
held in the group in addition to the inventory  
writeoff £12m 2013 £16m has been charged  
in respect of headcount reductions further items of 
£12m 2013 £01m were also incurred in the year
c  following the announced supplier contract termination 
a review of the group’s contract portfolio and related 
balances was carried out and a nonrecurring expense of 
£27m 2013 £05m has been recorded £12m of this 
relates to a provision relating to a contract which ends 
in april 2015 which requires a provision for expected 
lifetime contract losses the contract incurred a loss of 
£03m in the year ended 31 march 2014 further items 
mostly relate to the writeoff of current assets as a result 
of the supplier contract termination
d  on 31 may 2013 the group successfully refinanced its 
debt facilities and repaid its existing facility in advance 
of its due date resulting in the writeoff of unamortised 
loan costs of £01m 2013 £nil on 26 june 2013 the 
group terminated a £100m swap arrangement with an 
existing lender and replaced this with a new £100m 
swap arrangement with the same lender the cost of 
early termination will be expensed over the period of the 
outgoing arrangement resulting in a £01m 2013 £nil 
charge in the year
during the year ended 31 march 2014 the group paid a total 
of £51m 2013 £70m of cash in respect of nonrecurring 
items of this £51m £10m related to nonrecurring items 
charged in the year ended 31 march 2014 and £41m 
related to nonrecurring items charged in the year ended 31 
march 2013 or before
interest rate swaps
at the beginning of the year the group had three interest 
rate swaps split equally amongst three of its lenders  
hedging £300m until 29 april 2014 and £150m between 
30 april 2014 and 30 april 2016
on 26 june 2013 the group entered into an additional 
£100m of interest rate swap contracts with two of its 
business and financial review 22 23
strategic report our financials our governance shareholder information
existing lenders to hedge the risks associated with interest 
rate fluctuations on variable rates in respect of its £400m 
term loan the new swap arrangements under which the 
group receives interest at a variable rate and pays interest 
at a fixed rate hedge an additional £50m with each lender 
from 30 april 2014 to 30 april 2016 
on the same date the group also terminated a £100m 
swap arrangement with an existing lender and replaced 
this with a new £100m swap arrangement with the 
same lender the new swap arrangement under which  
the group receives interest at a variable rate and pays 
interest at a fixed rate hedges £100m from 26 june 2013 
to 29 may 2015 
the group monitors movements in the swap market and 
has hedged the risk associated with interest fluctuations  
on £300m of the facility the amount hedged by interest 
swap arrangements will reduce by £100m to £200m on 
29 may 2015 and the remaining arrangements are due to 
expire on 30 april 2016 the weighted average interest rate 
on all of the group’s fixed interest rate swap arrangements 
is 25 
taxation
the underlying
4
 effective tax rate for the year was 240 
compared to the 2013 rate of 263 on a statutory basis 
the taxation charge for the year was £11m 2013 £08m 
a full analysis of which is set out in note 12 
the finance act 2013 was enacted during the year and 
included a reduction in the main rate of corporation tax from 
23 to 21 with effect from 1 april 2014 and 20 from 
1 april 2015 the impact on the annual effective rate is a 
reduction of 02 2013 02
net debt and cash flow
net debt including finance leases decreased by £152m 
to £561m at 31 march 2014 net cash from operating 
activities which is set out in more detail in note 35 of the 
financial statements increased to £194m in the year 2013 
£158m largely due to improved management of working 
capital during the year the working capital benefit has been 
partly offset by increased interest paid in the year of which 
£24m relates to the one off loan issue costs incurred in 
order to refinance the group’s debt facilities in may 2013
net cash used in investing activities decreased to £78m 
net of proceeds on disposals 2013 £88m and largely 
relates to capital expenditure incurred in the year an 
additional £22m of capital expenditure has been financed 
by finance leases 2013 £08m the group has expanded 
its hosting capacity in the managed services segment and 
during the year launched cloudsure uk a next generation 
enterprise class infrastructure that will enable the group to 
deliver it resources as a service furthermore the group 
has continued to invest in capital expenditure to support 
customer contracts in both the business continuity and 
managed services segments and has maintained the 
ongoing level of maintenance expenditure which is in line 
with expenditure in previous financial years a further £09m 
2013 £13m of capital expenditure had been incurred but 
not paid for at 31 march 2014 
net cash generated from financing activities in the year 
was £12m which reflects a significant improvement on 
the £62m of net cash used in financing activities in the 
previous financial year this was largely due to a lower  
level of dividends paid during the year and the net 
proceeds of the share placing phoenix it group plc issued  
7547934 new ordinary shares of 1 pence each at a price 
of 114 pence per placing share during the year the placing 
raised net proceeds after fees of £83m the placing was 
affected through a structure which resulted in a merger 
reserve arising under section 612 of the companies act 
2006 following receipt of the cash proceeds through the 
structure the excess of the net proceeds over the nominal 
value of the share capital issued was transferred from the 
merger reserve to retained losses
borrowing facilities 
at 31 march 2014 the group had total available facilities 
of £1000m consisting of a £500m revolving credit facility 
a £400m term loan and a £100m overdraft at the year 
end the group had excluding any unamortised loan issue 
costs £445m 2013 £850m drawn down on the revolving 
credit facility a £400m 2013 nil term loan and £288m 
2013 £160m of cash and cash equivalents the group’s 
net bank borrowings were £557m 2013 £690m further 
details of the group’s current banking facility are set out in 
note 25 of the financial statements
at 31 march 2014 the leverage financial ratio net 
debtebitda was 184x and the interest cover ratio 
ebitdanet finance costs was 666x both within the 
covenant limits 
going concern
the group’s business activities together with the factors 
likely to affect its future development performance and 
position are set out above along with the financial position 
of the group its cash flows liquidity position and borrowing 
facilities in addition notes 18 and 19 to the financial 
statements include the group’s objectives policies 
and processes for managing its capital its financial risk 
management objectives details of its financial instruments 
and hedging activities and its exposure to market credit 
and liquidity risk 
alongside the factors noted above the directors have  24 25
considered the group’s future cash forecasts and revenue 
projections for a period in excess of 12 months from the 
date of signing the accounts which they believe are based 
on prudent market data and past experience reasonably 
possible sensitivities have been carried out on these 
projections which have taken into account the principal risks 
and uncertainties of the group 
the directors are satisfied that the group has an acceptable 
level of headroom within the new facility and covenants 
the directors therefore have formed a judgement that 
at the time of approving these financial statements 
there is a reasonable expectation that the group has 
adequate resources to continue in operational existence 
for the foreseeable future for this reason they continue to 
adopt the going concern basis in preparing the financial 
statements
assets held for sale
the group has several freehold properties that continue 
to be held for sale despite active marketing throughout 
the year none of the properties were sold independent 
valuations were performed on the properties at 31 march 
2014 which indicated that the book value of the assets was 
appropriate and as such no impairment has been recorded 
2013 £01m impairment 
pension schemes
the group currently has two defined benefit pension 
schemes being the “fpp scheme” and “icm scheme” 
during the year the group has recognised a liability for the 
fpp scheme arising from the transfer of employees under 
tupe transfer of undertakings protection of employment 
regulations the group began accruing pension benefits 
and paying regular contributions in the previous financial 
year however the assets and liabilities both individually and 
in aggregate were not deemed material and as such no 
disclosure was made the assets and liabilities have now 
been recognised on the group balance sheet the fpp 
pension deficit at 31 march 2014 was £01m 2013 £nil and 
further details relating to the pension scheme are presented 
in note 10 to the consolidated financial statements
the icm scheme pension surplus at 31 march 2014 was 
£19m 2013 £nil and this has been recognised as an asset 
on the balance sheet as the group has an unconditional right 
to a refund of any scheme surplus further details relating 
to this pension scheme are also presented in note 10 the 
group made incremental contributions of £16m into the 
icm scheme in the year the last triennial actuarial review of 
the icm pension in april 2012 identified that the group has a 
deficit of £65m on a funding basis compared to the ias19 
accounting basis shown in note 10 the group agreed with 
the trustees that it would aim to eliminate the deficit over a 
four year period and the group will contribute £17m to the 
defined benefit pension scheme annually
treasury policies and objectives 
the group operates within policies and guidelines approved 
by the board using conventional financial instruments and 
specified derivatives it is the board’s preference to manage 
market risks without the use of derivatives but they will be 
used where necessary and appropriate to reduce the levels 
of volatility to both income and equity the use of derivatives 
is strictly controlled and they are not permitted to be used 
for speculative or trading purposes
the group’s main treasury risks relate to the availability of 
funds to meet its future requirements the group’s policy 
with respect to facilities is to ensure that these are sufficient 
to cover the expected needs of the group having reflected 
the inherent uncertainty of projections and forecasts
whilst the group maintains uncommitted facilities to maintain 
shortterm flexibility its principal debt funding comprises 
committed bank facilities which are detailed above 
business and financial review 24 25
strategic report our financials our governance shareholder information
key performance 
indicators  
‘kpis’
annual contract value
this represents the annualised value of the group’s contracted 
revenue in place at any given time annual contract value 
decreased in the year by 57 to £1810m 2013 £1919m
order book value
this represents the minimum value of the group’s contracted 
revenue in place at any given time order book value decreased 
in the year by 43 to £3049m 2013 £3186m
net debt including finance leases
the group monitors the net debt position in order to ensure 
it has sufficient facilities to support future growth net debt 
including finance leases decreased by £152m to £561m at 
31 march 2014 2013 £713m
we intend to increase the number of nonfinancial kpis used 
within the group during the coming year and expect to be able 
to more fully report on both financial and nonfinancial kpis in 
the future
1  to assist in the understanding of the underlying performance of the group statutory 
profit has been adjusted to exclude nonrecurring items and amortisation of acquired 
intangibles
2  ebitda is group underlying profit from operations £177m 2013 £190m 
plus depreciation £123m 2013 £138m plus share option cost £05m  
2013 £02m
3   underlying  adjusted for nonrecurring items £406m 2013 £718m and 
amortisation of acquired intangibles £10m 2013 £16m
4   underlying  adjusted for nonrecurring items £408m 2013 £721m and 
amortisation of acquired intangibles £10m 2013 £16m
jane aikman
chief operating officer  chief financial officer
9 june 2014
the group uses a number of kpis 
to monitor the performance of the 
business the more important kpis are 
set out below
profitability
the group’s principal profitability kpis are underlying
1
 
profit from operations and underlying
1
 diluted earnings per 
share underlying profit from operations
3
 decreased in the 
year by 73 to £177m 2013 £190m while underlying 
diluted earnings per share
4
 have decreased by 129 to 
121p 2013 139p
underlying ebitda
2
 
this represents the group’s underlying profit from 
operations
3
 plus depreciation plus share option expense 
group underlying ebitda decreased from £330m at 31 
march 2013 to £305m at 31 march 2014 
operating margin
this represents the group’ s underlying profit from operations
3
 
divided by group revenues for the year ended 31 march 
2014 group underlying operating margin
3
 remained 
consistent with the prior year at 76 2013 76 26 27
principal risks  
and uncertainties
risk potential impact mitigation
macroeconomic risk
the group may be negatively 
affected by economic 
conditions in its principal 
markets in the uk
the volatility of these markets may 
result in reduced levels of demand 
for our products and services a 
lengthening of the decision making 
cycle between prospect and new 
contract a greater risk of customers 
defaulting on payment terms and 
an increased risk of inventory 
obsolescence
the group has a high proportion of longterm contracted 
annuity business meaning that we could withstand a certain 
level of reduced demand for our products and services
the group has a broad spread of customers across several 
different market sectors
we have policies in place to ensure that customers are 
given an appropriate level of credit based on their trading 
history and financial status and a prudent approach is 
adopted towards credit control
technological change
some of the markets within 
which the group operates 
are subject to operational and 
technological change
we must continue to react and 
adapt to meet the requirements 
of our customers in a changing 
technological marketplace failure 
to change our customer offerings 
systems and infrastructure quickly 
enough in response to these 
changes in technology may limit our 
ability to serve our customers and 
restrict our ability to execute our 
strategy resulting in a reduction of 
future profitability and cash flow
we have access to key forward looking industry trends 
through our key vendor relationships which are mostly at 
gold and platinum levels
we closely monitor industry developments and attend and 
participate in appropriate industry events
we work closely with our existing customers to understand 
their strategies and changing needs to assist us to develop 
new products and services and longterm customer 
relationships that will enable us to differentiate our products 
and services and protect our margins
loss of key locations
the group is dependent on a 
number of facilities in strategic 
locations around the uk
the loss of a significant operational 
site primary datacentre or 
business continuity centre 
through fire natural catastrophe 
act of vandalism or critical failure 
could cause damage to the 
group’s reputation and damage to 
customers’ businesses potentially 
leading to a reduction in future 
profitability and cash flow
primary sites that are critical to the group’s success have 
been identified and provisions put in place to manage the 
impact of any disruptive events 
a programme of maintenance and testing is used including 
scenario tests which are conducted on an annual basis 
to simulate the loss of a business continuity centre the 
business continuity business has iso22301 accreditation 
service delivery risk 
the group is reliant on the 
delivery of goods and services 
to agreed specification 
timetable and contract 
specification 
the management of contractual 
relationships with customers 
entails potential risks including 
mispricing failure to appreciate 
risks being taken on and poor 
control of costs or service 
delivery
failure to deliver good customer 
service can be caused by failures 
in supply and quality requirements 
and also the effectiveness of 
communication and response
deterioration in quality or service 
levels on contracts may cause 
serious reputation damage with 
financial consequences such as the 
loss of a customer and the cost of 
damages or litigation
we are committed to continue to develop processes to 
ensure that services delivered to customers are of an 
appropriate standard and comply with the appropriate 
contract terms and conditions
the group has iso9001 iso14001 iso27001 and 
iso22301 we also have an ongoing roll out of the itil 
processes across the service delivery organisation
health and safety 
a major health and safety 
incident could occur which 
would impact our customers or 
employees 
potential loss of life or major injury 
the imposition of substantial penalties 
or other actions that could have a 
material adverse effect on the group’s 
business financial condition results 
of operations and future prospects
we have health and safety reporting in place across the 
group and this receives executive level attention we are 
committed to the continued improvement of our health 
and safety practices across the group with the planned 
introduction of full near miss and potential hazard reporting 
in the coming year
the board is responsible for maintaining the group’s risk management systems which are designed to identify manage and mitigate 
potential material risks to the achievement of the group’s strategic and business objectives the table below lists the principal risks and 
uncertainties that may affect the group in the short to medium term and highlights the mitigating actions that are being taken to provide 
a reasonable level of protection against them the content of the table however is not intended to be an exhaustive list of all risks and 
uncertainties that may arise 26 27
strategic report our financials our governance shareholder information
risk potential impact mitigation
data protection and backup 
the group holds a significant 
volume of confidential data 
failure to comply with data privacy 
regulations and standards or 
weakness in internet security may 
result in a major data privacy breach 
causing reputational damage to our 
brands and financial loss
breach of it security may cause 
data to be lost corrupted or 
accessed by unauthorised users 
impacting the group’s reputation 
this could give rise to legal or 
regulatory penalties as well as 
commercial costs
the group has iso27001 accreditation across its key 
operational sites 
we have processes and procedures in place to monitor 
effectiveness of customer backup and are continually 
upgrading security equipment and software and 
improvements in physical security processes penetration 
testing is performed on a regular basis to test the security 
of our sites and data thorough investigations are carried 
out of any incidents arising and corrective action is taken
employee risk
the ongoing success of 
the group is dependent on 
attracting and retaining high 
quality senior management and 
staff retaining and attracting 
good people is key to delivering 
superior performance and 
customer service
excessive staff turnover is likely 
to impact the group’s ability to 
maintain the appropriate quality 
of service to our customers and 
ultimately impact our financial 
performance adversely
we are committed to addressing the issue of loss of 
key staff and have implemented short and longterm 
management incentives and where necessary retention 
initiatives effective communication with employees has 
become a focus informing them of the strategy progress 
and policies of the group we have a renewed focus on the 
areas of training appraisal and development to ensure that 
our colleagues see a good future with the group
key supplier and customer 
relationships
a number of the group 
subsidiaries derive a substantial 
part of their revenue from key 
suppliers and customers 
the group benefits from close 
commercial relationships with a 
number of key customers and 
suppliers 
the loss of any of these key 
customers or suppliers or a 
significant worsening in commercial 
terms could result in a material 
impact on the group’s results
the group continues to invest resources aimed at 
maintaining strong relationships to drive value and to 
minimise risk for both itself and its key customers and 
suppliers
the group as a whole trades with a very broad supplier 
and customer base and there is no significant customer 
dependency
pension obligations
the group’s defined benefit 
pension funds are exposed to 
the risk of changes in interest 
rates and the market values of 
investments as well as inflation 
and the increasing longevity of 
scheme members
the recent volatility in worldwide 
equity markets has highlighted the 
risk of retirement obligations
this volatility may result in higher 
cash contributions to cover funding 
shortfalls
these risks are mitigated by paying contributions into 
the funds and through balanced investment strategies 
designed to avoid a material worsening of the current 
surplus or deficit in each fund 
the group has closed its largest defined benefit pension 
schemes to new members and to future accrual
assumptions to calculate the funding position of the pension 
funds are set using the recommendations of actuaries
the board discusses pension fund strategy as part of the 
threeyear pension valuation cycle
liquidity risk
the group may fail to comply 
with its financial andor non 
financial covenants in its existing 
banking facility consequently 
the group may not have access 
to sufficient funds
failure to comply with existing 
banking or a renegotiation of this 
facility at a higher margin would 
adversely impact the group’s 
liquidity position and ability to meet 
payments when they fall due and 
limit the group’s ability to execute its 
strategy
the group maintains strong relationships with banks and 
shareholders in order to maintain access to funds 
additional equity was raised during the year from the 
placing of ordinary shares
there is a strong focus on management of our leverage 
and maintenance of sufficient cash balances to fund our 
working capital which is monitored by the board
interest rate risk
borrowings incur variable interest 
rates based on market rates 
market rates could fluctuate 
significantly and are likely to 
increase in the near future
costs could increase thereby 
reducing future profitability and 
cash flows
current and forward interest rate exposure is actively 
monitored in line with the group’s hedging policy interest 
rate swaps are used to mitigate interest rate risk 
the group entered into interest rate swaps in june 2013 
which hedge £30m of the group’s drawn facility until may 
2015 and £20m until april 2016
financial control risk
financial controls could be 
inadequate and as such do 
not ensure accurate and timely 
financial information
a failure to maintain sufficient 
financial controls may lead to 
reputational damage financial loss 
or incorrect financial information 
being used to manage the business
strengthening of the internal audit function and a revised risk 
based approach on the group’s new risk review process
new audit committee chairman with recent and relevant 
financial experience appointed during the year
restructuring of the group’s finance function and the 
recruitment of experienced employees
established a new centralised shared services function with 
a single finance system and common processes
an external audit is performed on the financial statements 28 29
operational review
being an essential ingredient
for over 35 years phoenix it has become an increasingly 
‘essential ingredient’ in the success of our customers’ 
growth helping them to achieve their potential often 
resulting in their growth towards leadership positions in their 
industries
working behind the scenes yet essentially we help to 
design build and deploy it solutions to some of the most 
businesscritical and complex challenges helping to keep 
our customers ahead
in a world where everything is connected and moving at 
increasing speed phoenix it provides dynamic endtoend 
solutions that can host services in the cloud simplify 
desktop management and build secure reliable networks 
our business availability services keep you working at all 
times
whatever your challenges our professional experts can 
advise plan and deploy  while our considerable infrastructure 
and nationwide network of engineers are there for you when 
you need them
joining things up to unlock more
phoenix it serves customers through the three parts of the 
group business continuity managed services and partner
we address the demands of business growth by scaling 
resources as your business expands we will be with you 
every step of your development – integrating our services to 
simplify growing complexity in your organisation
we keep your systems running whether you have forgotten 
your password or your data centre has flooded out  
our alwayson cloud services let you work where and when 
you want and pay for resources only when you need them
phoenix it plays a significant role in enabling organisations to succeed
we are where leading organisations from the uk come to improve their business
critical it infrastructures including business continuity hosting cloud and fully 
managed it services
phoenix it 
amazingly
essential
in scalable it 
solutions
this year we
served over 
3300
businesses in the uk
we are where you are
28
regional sites
and business continuity
centres in the uk
2300 staff trained 
to keep your 
systems going
phoenix it has been named  
business  continuity  
provider  of the year   
at european  bci awards 2014 
for phoenix virtual disaster recovery vdr platform
we maintain  
2100  
ticket machines at the 
uk’s railway stations 28 29
strategic report our financials our governance shareholder information
phoenix it helps customers around 
the uk keep going and get back 
on track when disaster hits
when customers face significant disruption to 
their business phoenix it is there to help we 
can replace your systems quickly give you a 
new place to work keep your data safe and 
always online or parachute in new computing 
power from the cloud our awardwinning 
cloudbased recovery services are the best in 
the business
phoenix creates more resilient organisations 
helping get customers back to business quickly 
by ensuring missioncritical data applications 
and infrastructures are fully available
what we offer
• cloud data backup and recovery
• cloud to cloud backup and recovery
• virtual disaster recovery
• data replication
• phoenix data mirror
• data discovery
• emergency office
• mobile it recovery
• ship to site recovery
• network recovery
•  email recovery
our business continuity solutions 
keep organisations going
stops trouble 
brewing
phoenix it is protecting 
martson’s brewing group 
to keep the beer flowing 
across the uk with 
more effective business 
continuity planning
30
of all sms text 
messages sent in the 
uk are handled through 
phoenix it’s own uk 
based data centres
48000
the number of people who continue to enjoy council 
services in the borough of melton
phoenix it’s work area recovery is helping melton 
borough council to keep serving its population
keeping the lights on
for uk business
phoenix it is looking after  
haven power by designing their  
business continuity plans to enable  
uk organisations to stay open for business
in fy201314
53296 
people used our bc 
centres to help keep 
their businesses going
we managed  
529 tbytes  
of data in  
our centres 30 31
operational review
phoenix it has unrivalled experience 
and capability to help customers 
run their organisations wherever 
and whenever they want to
we go way beyond simply providing hardware 
support  we implement cloudbased or virtual 
environments for our customers in the middle 
market with our scale we bring ‘enterprise 
strength it to the middle market’
we provide a complete range of services from 
the desktop through the network to hosting 
and the cloud few organisations have the 
experience that we have in designing and 
delivering rightsized solutions
phoenix creates more flexibility and agility 
helping midsized organisations in need of 
innovation  flexibility in it infrastructure our new 
cloudsure uk service brings cloud computing 
and applications as a service within the reach of 
small and mediumsized customers
what we offer
• outsourcing feasibility
• business case and justification
• multisource or insource
• strategic consulting
• it consulting
• infrastructure – assessment and audit
• business continuity consulting
• infrastructure optimisation
• hosting
• cloud services
• virtualisation
• hosted desktop
• managed it lifecycle
• desktop and lifecycle
• phoenix data centres
our managed services
make organisations more agile
247
phoenix it keeps 
welcome break 
motorway services 
going all day every day
 
 uk’s nuclear  
 capacity
phoenix it helped cape to seamlessly relocate its uk 
headquarters to a new it infrastructure – providing 
business as usual
safest hands
for a 1bn insurance firm
phoenix it relocates 
refreshes and upgrades 
it infrastructure for 
markel international one 
of the world’s leading 
insurance organisations
better bau  
at phones4u
with 500 stores and 36000 mobile devices
available for demonstration phoenix it  
takes care of this major retailer’s entire 
backoffice it infrastructure and stock  
management systems
first 
choice
getting people 
on holiday easier with 
improved hardware  
and it support for  
first choice
delivering 
best in class
phoenix it helps 
berkshire college to 
completely overhaul 
their it capabilities to a 
21
st
 century standard
87
ensuring  30 31
strategic report our financials our governance shareholder information
phoenix it manages highly complex 
business critical it service processes 
for our partners’ customers to make 
them perform better and be more 
efficient
we manage the difficult dispersed manual 
it service processes on our channel partners’ 
behalf we bring strong experience of how to 
carry out these processes better faster and to 
more demanding service levels than before 
our partner customers include most of the 
largest systems integrators at work in the uk 
and their end customers to whom we deliver 
include global corporations government 
numerous high street brands and key parts of 
the transport infrastructure
what we offer
• deskside support on customer sites
• customer service desks
• ukwide field engineering
• bespoke helpdesk services
• large scale rollout programs
our partner business
helps partners deliver at scale
fco
phoenix it and detica 
work together to provide 
the it all over the  
world for the  
foreign and 
commonwealth  
office
making  
small work  
of big data
phoenix it is trusted to manage  
secure data networks for  
big government agencies
call 
centres
our support  
desks took 
293296 
calls in  
201314
voted best in  
the business
named bt ict  
partner of the year  
for 2014
1 st
we  
can house 
1996 
racks in our data  
centres
tenovus 
managing 600gb 
of data for a leading 
cancer charity in wales 32 33
peter bertram
nonexecutive chairman
peter reverted to his role as non
executive chairman on 1 april 2014 
after the appointment of steve vaughan 
as chief executive prior to 1 april 
2014 peter served as executive 
chairman since 4 october 2012  
after serving as nonexecutive 
chairman from 1 october 2011  
and as executive chairman from  
22 november 2007 he joined phoenix 
in october 2004 as nonexecutive 
chairman peter was chief executive 
of azlan group plc from 1998 until its 
takeover in 2003 and was previously 
the nonexecutive chairman of 
attentiv systems group plc he is also 
chairman of ten alps plc and non
executive director of microgen plc  
he is a fellow of the institute of 
chartered accountants in england and 
wales since peter reverted to his role 
as nonexecutive chairman he is also 
a member of the audit committee
steve vaughan
chief executive
steve has over 30 years of experience 
in the technology sector during 
a 14 year career with eds uk 
ltd he held a number of senior 
executive roles he was subsequently  
chief executive of synstar plc from 
2001 to 2005 where he implemented 
a major change programme culminating 
in the acquisition of the business by 
hewlett packard in his position as 
chief executive of communisis plc from 
2006 until 2010 steve successfully 
launched a new strategy which gave 
rise to a significant turnaround in the 
company’s performance from july 
2013 to february 2014 steve was 
chairman of charteris plc and led its 
successful sale to french group sword 
through an agreed cash offer steve 
is also a nonexecutive director of 
progressive equity research ltd
jane aikman
chief operating officer  
chief financial officer
jane joined the phoenix board as 
chief financial officer on 6 august 
2012 and became chief operating 
officer  chief financial officer on 
4 october 2012 previously jane was 
chief financial officer of infinis plc 
wilson bowden plc and pressac plc 
she spent five years in south east asia 
with asia pulp and paper co limited 
and three years as an internal audit 
manager with gec alsthom jane 
qualified as a chartered accountant 
with ernst  young and has a degree 
in civil engineering from birmingham 
university jane is a nonexecutive 
director and chair of the audit 
committee of halma plc
board of directors
32 32 33
strategic report our financials our governance shareholder information
david garman
senior nonexecutive director
david joined phoenix as a non
executive director on 1 december 
2008 david is chairman of options 
holdings group limited the senior 
independent director of mouchel 
limited and a director of several 
other private companies david was 
until october 2008 group chief 
executive of tdg plc which he joined 
in 1999 from associated british 
foods plc where he was an executive 
director having previously held senior 
positions in a number of leading uk 
food companies between 2004 and 
2011 he was the senior independent 
director of carillion plc david is senior 
independent director and chairman 
of the remuneration committee and 
the nomination committee and a 
member of the audit committee
brian sellwood
nonexecutive director
brian joined phoenix as a non
executive director on 1 april 2006 
after working with ibm where he 
held a variety of senior positions 
and was instrumental in establishing 
ibm’s global services business in 
europe brian is a member of the 
audit remuneration and nomination 
committees
brian sellwood stepped down from the board on  
10 june 2014
robin taylor
nonexecutive director
robin joined phoenix as a non
executive director and chair of the 
audit committee on 1 november 2013 
bringing many years’ experience as a 
plc director robin is currently a non
executive director of emis group plc 
and fusionex international plc and was 
formerly chief financial officer of main 
market publicly listed companies intec 
telecom systems plc itnet plc and 
jba holdings plc prior to that robin 
held a variety of financial and general 
management roles in both europe and 
north america robin is a member of 
the institute of chartered accountants 
of scotland robin is also a member 
of the remuneration and nomination 
committee 
33 34 35
the board is committed to the principles of corporate governance contained in the uk corporate governance code issued 
in 2012 by the financial reporting council the “code” for which the board is accountable to shareholders 
the board has sought to comply with the main and supporting principles with due regard to the size and needs of the 
company and with reference to best practice
statement of compliance
throughout the year ended 31 march 2014 the 
company has been in compliance with the principles set 
out in the code save in relation to section a31 of the 
code concerning the appointment of peter bertram as 
executive chairman on 4 october 2012 having previously 
acted as an executive director of the company at the  
time the board considered that as a result of the 
resignation of david courtley the then ceo and  
steve clutton the then cfo the details of which are set 
out on page 16 in the 2013 annual report it was important 
to return to a period of stability as quickly as possible and 
accordingly appointed peter bertram who had previously 
served as executive chairman from 22 november 2007 
to 1 october 2011 as executive chairman since the 
appointment of steve vaughan as chief executive  
peter bertram reverted to his role as nonexecutive 
chairman on 1 april 2014 and as such ensured that the 
company is now fully in compliance with the code
further explanation of how the main principles of the code 
have been applied including the composition and operation 
of the board the remuneration of the directors relations 
with shareholders and procedures for financial reporting and 
internal control is set out below and in the remuneration 
committee report and in the audit committee report
how the board works
the board of directors
the group is controlled by a board of directors which 
meets regularly and currently comprises two executive 
directors and three nonexecutive directors all the non
executive directors are considered by the board to be 
independent of management and free from any business or 
other relationship which could materially interfere with the 
exercise of their independent judgement 
a clear and formalised division of responsibility at the head 
of the group is established agreed in writing and approved 
by the board 
the board is aware of the other commitments of its directors 
and is satisfied that these do not conflict with their duties as 
directors of the company the nonexecutive chairman’s 
other main commitments are disclosed on page 56 of the 
report
the board process
the board normally schedules at least 9 meetings throughout 
the year additional meetings are held as and when required 
in advance of each meeting the directors are provided with 
or have full and timely access to information in relation to the 
matters to be discussed
at board meetings the directors receive presentations 
from the senior executives on the implementation of the 
company’s strategies and the board receives regular 
updates on changes to the business and legislative and 
regulatory environments
the board is responsible to the shareholders for the 
proper management of the group and for its system of 
corporate governance it receives information on a monthly 
basis to enable it to review trading performance forecasts 
and strategy and it has a schedule of matters specifically 
reserved for its decision the most significant of these are
•  changes to the structure size and composition of  
the board
•  consideration of the independence of nonexecutive 
directors
•  review of management structure and senior 
management responsibilities
•  with the assistance of the remuneration committee 
approval of remuneration policies across the group
•  approval of strategic plans profit plans and budgets 
and any material changes to them
•  oversight of the group’s operations ensuring 
competent and prudent management sound planning 
an adequate system of internal control and adequate 
accounting and other records
•  final approval of annual accounts and accounting 
policies
• approval of the dividend policy
•  approval of the acquisition or disposal of subsidiaries 
and major investments and capital projects
•  delegation of the board’s powers and authorities 
including the division of responsibilities between the 
executive chairman since 1 april 2014 the chief 
executive and the chief operating officer  chief 
financial officer and
•  receiving reports on the views of the company’s 
shareholders
corporate governance 34 35
strategic report our financials our governance shareholder information
operational management of the group is delegated to the 
chief executive prior to the appointment of steve vaughan 
as chief executive this was peter bertram in his then 
capacity as executive chairman and the chief operating 
officer  chief financial officer
the board receives a regular flow of information to enable it 
to discharge its duties including a monthly report detailing 
current and forecasted trading results and treasury positions 
it also receives regular updates on shareholders’ views as 
part of the monthly report and more formal briefings on 
shareholders’ views are given to the board following the 
presentation of the company’s interim and annual results 
board papers are generally distributed not less than five days 
in advance of the relevant meeting to allow the directors 
to fully prepare for meetings and minutes of committee 
meetings are circulated the board is kept fully informed of 
developments within the company’s businesses through 
regular presentations by divisional management induction 
programmes for newlyappointed directors are devised to 
ensure that directors spend time with divisional management 
and can visit operational sites
the nonexecutive directors regularly meet independently 
of management
procedures exist to allow the directors to seek independent 
legal advice in respect of their duties at the company’s 
expense where the circumstances are appropriate all 
directors have access to the company secretary who is a 
qualified solicitor
committees of the board
the following three committees constitute the principal 
committees each of which deals with specific aspects of 
the group’s affairs in accordance with their written terms of 
reference which have been reviewed in light of the code 
and are available on request and on the group’s website 
all committees and all directors have the authority to seek 
information from any group director or employee and to 
obtain professional advice the company secretary also 
acts as secretary to each committee
the audit committee  the audit committee’s purpose 
is to assist the board in the discharge of its responsibilities 
for financial reporting and corporate control and to  
provide a forum for reporting by the external auditor  
the committee chaired by brian sellwood up to 31 october 
2013 and from 1 november 2013 by robin taylor meets at 
least three times a year 
a report on its activities is given on pages 40 to 43
the remuneration committee  the remuneration 
committee is chaired by david garman it is responsible 
for reviewing remuneration arrangements for members of 
the board and all senior reports of the chief executive  
up to 1 april 2014 the executive chairman and the  
chief operating officer  chief financial officer for 
providing general guidance on aspects of remuneration 
policy throughout the group and for the group’s share 
incentive plans 
a report on its activities is given on pages 44 to 57
the nomination committee  the nomination committee 
is chaired by david garman the committee is responsible 
for effective succession planning and proposes candidates 
to the board having regard to the balance and structure 
of the board the committee determines the terms of 
reference of new appointments and uses independent 
external advisers to identify suitable candidates 
a report on its activities is given on pages 38 to 39
effectiveness
board performance and evaluation
during the year the chairman of the nomination committee 
undertook an evaluation of the performance of the board and 
of its committees the nomination committee concluded 
that overall the board and its committees operated 
effectively the board considered that the evaluation 
process was satisfactory 
board appointments
every decision to appoint directors to the board is 
taken by the entire board in a formal meeting on a 
recommendation from the nomination committee  
the nomination committee consults with professional 
advisers and uses the services of external recruitment 
consultants when appropriate new members of the  
board are provided with initial induction and ongoing training 
appropriate to the individual’s needs in respect of their role 
and duties as directors of a listed company
the service agreements of the executive directors and 
the letters of appointment of the nonexecutive directors 
are available for inspection at the registered offices of the 
company during normal business hours including the  
15 minutes immediately prior to the agm 
reelection of directors
all directors are required to submit themselves for  
reelection at regular intervals and at least every three years 
details of the directors who are up for reelection are set out 
in the nomination committee report on page 39 36 37
attendance at board and committee meetings
the number of board meetings and committee meetings attended by each director in the year to 31 march 2014 was  
as follows
board audit committee
remuneration 
committee
nomination 
committee
eligible 
to attend attended
eligible 
to attend attended
eligible 
to attend attended
eligible 
to attend attended
chairman
p bertram 9 9      
executive directors
s vaughan
1
1 1      
j aikman 9 9      
nonexecutive directors
b sellwood
2
9 9 3 3 2 2 5 5
d garman 9 9 3 3 2 2 5 5
d warnock
3
5 4 1 1 1 1 3 2
r taylor
4
4 4 2 2 1 1  
1 s vaughan joined the board on 12 march 2014 
2 b sellwood resigned fom the board on 10 june 2014
3 d warnock resigned from the board on 30 october 2013 
4 r taylor joined the board on 1 november 2013
communication with shareholders
the company values the views of its shareholders 
and recognises their interests in the group’s strategy 
and performance it holds briefings with institutional 
fund managers analysts and other investors primarily 
following the announcement of interim and preliminary 
results as well as at other times during the year as may 
be appropriate the company’s programme of investor 
relations activities is designed to ensure that the investing 
community receives a balanced and consistent view of  
the group’s performance all shareholders are welcome  
to attend the annual general meeting at which the  
board of directors will be available to answer questions 
from shareholders
provision e12 of the code requires the board to ensure 
that its members and in particular the nonexecutive 
directors develop an understanding of the views of major 
shareholders about the company during the year the 
chairman has met with a range of major shareholders to 
discuss governance and strategy the senior nonexecutive 
director has been available for all such meetings if requested 
the views of major shareholders are communicated to the 
board as a whole by the chairman in addition the board 
receives reports from the company’s broker communicating 
feedback from major shareholders the board also reviews 
analyst coverage of the company every month
internal control
the board with the assistance of the audit committee is 
responsible for reviewing the effectiveness of the group’s 
systems of internal control formal responsibility for risk 
matters set out in the group risk register is divided between 
the board and the audit committee 
during the year the board has reviewed the effectiveness of 
the systems of internal control and risk management based 
on a review of significant risks identified the results and 
other reports from management as well as the internal and 
external audit reports following the review and an update 
of the risk management process the board concluded 
that the systems are appropriate for the group but the 
board continues to seek to ensure that steps are taken to 
embed internal control and risk management further into the 
operations of the group’s business and to deal with any 
areas of improvement which come to its attention as set 
out in the audit committee report
the group’s internal audit function and key elements of 
the internal control system and the information used during 
the review are described on pages 40 to 41 of the audit 
committee report
a summary of the principal risks and uncertainties within the 
business are set out on pages 26 to 27
36 36 37
strategic report our financials our governance shareholder information
capital structure
details of the company’s capital structure are set out in the 
report of the directors on page 58
auditor independence
the company has a formal policy designed to ensure that 
the auditor’s independence is not compromised by them 
undertaking inappropriate nonaudit work all significant 
nonaudit work commissioned from the external auditor 
requires the audit committee’s formal approval the 
external auditor is only selected to undertake nonaudit 
work where the nature of the advice makes it more timely 
and cost effective to select advisers who already have a 
good understanding of the group 
the audit committee has undertaken a review of the 
nature and amount of nonaudit work undertaken by  
the external auditor to satisfy itself that there is no effect on  
the auditor’s independence there were minimal fees paid 
for nonaudit work during the year
note 8 to the consolidated financial statements includes 
disclosure of the remuneration of the audit firm during the 
year including an analysis of the audit services 
by order of the board
dirk toulmin – van sittert
company secretary
9 june 2014
37 38 39
members of the committee
the nomination committee “the committee” comprises
• david garman “the chairman”
• robin taylor
•  brian sellwood was a member of this committee up to 
10 june 2014 when he left office
•  david warnock was a member of this committee up to 
30 october 2013 when he left office
appointment and role
the committee is appointed by the board the chairman 
of the board attends the committee by invitation unless the 
committee is considering matters related to the chairman 
of the board in which event the chairman of the board does 
not attend the chairman does not chair or attend when the 
committee is considering matters relating to his position 
in which circumstances the committee is chaired by the 
chairman of the board
the committee reviews the composition of the board and 
makes recommendations on the board’s membership  
the committee also monitors succession planning for 
directors and evaluates board and committee performance 
the committee furthermore determines terms of reference 
of new appointments and uses independent external 
advisers to identify suitable candidates the committee also 
ensures that future changes in the board’s membership are 
anticipated and properly managed and that in the event 
of unforeseen changes management and oversight of the 
group’s business and strategy will not be disrupted
the committee interviews shortlisted candidates before 
recommending appointments for board approval prior 
to any appointment being made during the recent 
recruitment of our new chief executive steve vaughan 
major shareholders’ views were also sought throughout the 
selection process
succession planning 
during the year the committee considered the appointment 
of steve vaughan and robin taylor as chief executive and 
nonexecutive director respectively both were appointed by 
the board following recommendation by the committee and 
a formal selection process conducted with the assistance 
of independent external recruitment specialists having no 
other connections with the company the process involved 
a shortlist of candidates being prepared by the nomination 
committee from which the board then made the appointment 
after interviewing the candidates in line with the established 
committee practice due to the group’s need for long term 
stability and growth it was of importance for the group to 
ensure that in the appointment of the chief executive the 
right candidate was identified and appointed and as a result 
the appointment was only made early in march 2014 after 
completion of a thorough recruitment process once the 
appointment was made the new chief executive was able 
to start immediately
notwithstanding the fact that the services agreement 
entered into between peter bertram and the company 
when he was appointed as executive chairman contained 
a stipulation that confirmed peter bertram’s reversion to his 
role as nonexecutive chairman should he so elect at the 
appointment of a chief executive the committee considered 
and recommended the reversion of peter bertram to his 
role as nonexecutive chairman when steve vaughan was 
appointed as chief executive the board appointed peter 
bertram with effect from 1 april 2014 as nonexecutive 
chairman following the recommendation of the committee
board performance and evaluation
the chairman of the committee undertook an evaluation of 
the performance of the board and its committees while the 
chairman’s performance was evaluated by the chairman 
of the board it was concluded that overall the board 
and its committees operated effectively however 
nomination  
committee report
38 38 39
strategic report our financials our governance shareholder information
there were specific recommendations for enhancing the 
board’s effectiveness which have been actioned notably 
the appointment of a new audit committee chairman 
succession planning and particularly the commencement 
of the recruitment process for the appointment of a new 
chief executive and a commitment to establish clarity with 
regard to future strategic priorities the board accepted 
the conclusion of the chairman during the evaluation the 
chairman specifically took into account
•  the identification of the board and committee’s  
main priorities
•  the dynamics of the board and committees including 
the engagement of directors in the affairs of the group
• the environment in the boardroom
• the board’s oversight of operations
•  the management of time planning of the annual cycle 
of work and agenda
•  the management of risk review and testing of risk 
management policies and
• the composition and performance of the committees
directors standing for reelection
no directors are due to retire by rotation this year but  
in the interests of providing some degree of rotation  
peter bertram jane aikman and david garman offer 
themselves for reappointment to the board at the 
forthcoming annual general meeting steve vaughan  
who joined the company on 12 march 2014 and robin 
taylor who joined the company on 1 november 2013 also 
offer themselves for election to the board at the annual 
general meeting
the chairman considers that
•  each director other than the chairman subject to  
reelection continues to operate as an effective member 
of the board and
•  each director other than the chairman subject to  
reelection has the skill knowledge and experience that 
enables them to discharge their duties properly and 
contribute to the effective operation of the board 
in relation to the reelection of the chairman the chairman 
of the board considers that
•  the chairman continues to operate as an effective 
member of the board and
•  the chairman has the skill knowledge and experience 
that enables him to discharge his duties properly and 
contribute to the effective operation of the board
the board on the advice of the committee recommends 
their reappointments on the grounds of the experience and 
knowledge that each bring to the company
this report of the committee was approved by the 
committee for release on 10 june 2014 and signed on its  
behalf by
david garman
chairman nomination committee
9 june 2014
39 40 41
composition
the audit committee comprised three independent  
nonexecutive directors  robin taylor david garman  
and brian sellwood as at 31 march 2014 biographical 
details and remuneration are set out on pages 33 and 52 
respectively 
we had some changes during the year with  
david warnock stepping down from the board with 
effect from 30 october 2013 i joined the board from  
1 november 2013 becoming the chairman of the  
audit committee with brian sellwood stepping down  
but remaining as a nonexecutive director and a member of 
the audit committee 
the board believes that the current members of the 
committee have sufficient skills qualifications and 
experience to discharge their duties in accordance with  
the terms of reference and in particular that at least  
one of the members has recent and relevant financial 
experience in accordance with the code provision c31 
the terms of reference for the committee were reviewed 
during the year and are in line with current best practice 
and approved by the board members are offered training to 
ensure such skills are up to date and our external auditors 
have recently held an update seminar for audit committee 
members
meetings
the audit committee met three times during the year 
ended 31 march 2014 two of these meetings were 
specifically designed to approve announcements and 
trading statements of the company for the half and  
full year 
the chairman the chief operating officer  chief financial 
officer and senior members of our external auditors 
attended all meetings and the chief executive attended 
those meetings following the date of his appointment
role responsibilities and related activities 
of the audit committee
in light of the accounting irregularities discovered in the prior 
year a primary focus of the audit committee has been to 
support and oversee the significant improvements to the 
group’s internal control arrangements in particular the 
strengthening of the group’s internal control processes and 
the centralisation of the group’s finance function a new 
accounting system has been implemented bringing the 
group onto the same system resulting in more efficient 
controls focused processes the audit committee has 
also reviewed and monitored the implementation of the 
recommendations made by kpmg who undertook an 
internal audit effectiveness review in the prior year 
throughout the year both the board and the audit committee 
have monitored movements in working capital and the 
forecast and actual cash flow of the group to ensure that 
there was a clear link between profit and cash and that there 
was sufficient liquidity maintained for the group’s activities
this year has seen the introduction of a number of relevant 
regulatory changes including the updated uk corporate 
governance code issued in september 2012 which has 
increased the responsibilities of the audit committee we 
have met these enhanced responsibilities by ensuring that 
we are effective in our monitoring and review role and have 
provided specific assurance to the board on the integrity 
of the interim and full year financial statements of the 
group results announcements of the company and any 
other formal announcement relating to the group’s financial 
performance 
during the year we reviewed the integrity of the 31 march 
report and financial statements the halfyear interim 
results and the interim management statements including 
the significant financial reporting judgements contained 
therein 
in reviewing the interim and annual financial statements 
and in determining whether they were fair balanced 
and understandable we considered the work and 
recommendations of management including a paper 
prepared by the chief operating officer  chief financial 
officer on key judgements in addition we received reports 
from the external auditors setting out their view on the 
accounting treatments and judgements included in the 
financial statements the external auditors’ reports are 
based on a full audit of the annual financial statements 
and a review of the interim financial statements
audit committee report 40 41
strategic report our financials our governance shareholder information
the significant issues considered by the audit committee were as follows
significant issue considered by the committee how the issues were addressed by the committee
goodwill impairment
during the year management reported to the committee the 
results of its impairment review which determined whether the 
recoverable amount of goodwill was higher than its carrying 
amount in the accounts the review concluded that the goodwill 
being carried in the partner business relates to certain contracts 
in the cash generating unit “cgu” which have been diminishing 
over time whilst the value in use of the partner cgu would 
support the carrying value of some goodwill the reduction of 
the contracts to which the goodwill specifically related has led 
management to fully impair the goodwill and intangible assets as 
detailed in note 15 of the consolidated financial statements
we reviewed and challenged management’s key assumptions 
including the approved budget for the year ending 31 march 2015 
and management’s projections for the following two years long
term growth rates and discount rates to understand their impact 
on the cgus’ recoverable amounts 
the auditor explained their audit procedures to test management’s 
impairment assessment and considered the disclosures on the 
subject 
we were satisfied with the treatment proposed and the impairment 
disclosures in the financial statements refer to page 92 for 
further details
provisioning
the reasonableness of provisions for future obligations
we have reviewed management’s estimates involved in 
recording provisions and considered their judgements regarding 
future results and events the auditor has explained their 
audit procedures to test management’s assumptions used to 
determine provisions we are satisfied that provisions in place at 
31 march 2014 are reasonable
accounting for nonrecurring items
the group has an established policy of separately disclosing 
items that are either exceptional or detract from the readers’ 
understanding of the underlying performance of the group
we considered management’s presentation of separately 
disclosed items and having considered the matter the committee 
agreed to adopt management’s proposed presentation refer to 
page 22 for further details
going concern
the appropriateness of preparing the group financial statements 
for the half year and full year on a going concern basis
we considered papers prepared by management which 
reviewed the group’s future cash forecasts and revenue 
projections the committed facility facility headroom and 
covenant testing taking this into account along with the external 
auditors’ review of these papers the committee concluded that 
the directors’ recommendation to prepare accounts on a going 
concern basis was appropriate
the effectiveness of the group’s internal 
audit function
our work included a review of the following
•  the internal audit function’s terms of reference 
reporting lines and access to the audit committee and 
all members of the board 
•  internal audit’ s plans and its achievement of the planned 
activity
•  the results of key audits and other significant findings 
the adequacy of management’s response and the 
timeliness of resolution and
•  the statistics on staff numbers qualifications and 
experience and timeliness of reporting
while we believe there has been a considerable improvement 
in the internal audit function during the year there are  
plans to further enhance this function during the next  
12 months including strengthening the team and combining 
it with the management and monitoring of other key risks in 
the group
the group’s systems for internal financial 
control and risk management
the board with the assistance of the audit committee  
is responsible for maintaining the group’s risk management 
and internal control systems to ensure that the nature 
and extent of risks taken by the group are aligned with its 
strategic objectives internal control systems are designed 
to meet the particular needs of the group and the risk to 
which it is exposed by their nature however internal control 
systems are designed to manage rather than eliminate 
the risk of failure to achieve business objectives and can 
provide only reasonable and not absolute assurance against 
material misstatement or loss
during the year the risk management process has been 
updated to ensure that it adequately identifies evaluates 
manages and monitors the risks facing the business going 
forward in addition the internal audit plan is determined 
by reference to the primary business risks those risks 
identified as significant in addition to the associated 
mitigating controls were reviewed by the audit committee 
on behalf of the board 42 43
audit committee report
management consider that the following control systems 
have all been in place throughout the year and up to the date 
of this report these have been considered and monitored 
by the audit committee and the board
•  ongoing procedures to identify evaluate and manage 
significant risks faced by the business in accordance 
with the guidance of the turnbull committee on internal 
controls and procedures to monitor the control systems 
in place to reduce these risks to an acceptable level
•  clearly defined management structure and delegation 
of authority to committees of the board and the 
executive directors
•  clearly documented internal procedures set out in the 
group’s iso9001 accredited quality manual
•  high recruitment standards and formal career 
development and training to ensure the integrity and 
competence of staff
•  regular and comprehensive information provided  
to management covering financial performance  
and key performance indicators including nonfinancial 
measures
•  a budgeting process covering budgets for the coming 
year which are approved by the board
•  procedures for the approval of capital expenditure 
investments and acquisitions
•  monthly monitoring and reforecasting of results 
against budget with major variances followed up and 
management action taken where appropriate
•  regular internal audits of key processes and 
procedures under the group’s iso9001 accredited 
quality assurance process and
•  review of risks  uncertainties facing the business 
in reviewing the effectiveness of the system of internal 
control the audit committee has used information drawn 
from a number of different sources
• internal audit reports
•  monitoring management’ s responsiveness to the findings 
and recommendations of the head of internal audit
• reports from internal audit advisers
• discussions with the external auditors
in respect of group financial reporting the group has a 
thorough assurance process in place in respect of the 
preparation verification and approval of periodic financial 
reports the finance department who have the appropriate 
qualifications are responsible for preparing the group 
financial statements all financial information published by 
the group is subject to approval by the committee
following the review of the effectiveness of the system of 
internal control the board with advice from the committee 
concluded that the systems are in accordance with the 
turnbull guidance 
improvements in both internal control and risk management 
will continue to be implemented and embedded across 
the group and this area will remain a key point of focus for 
the audit committee further details of risk management 
frameworks and specific material risks and uncertainties 
facing the business can be found on pages 26 to 27
external audit
the board appointed pricewaterhousecoopers “pwc” 
as auditor of the group with effect from 3 october 2012 
and following their reelection at the 2013 agm they 
continued to act as external auditors throughout the year 
pwc were appointed without any tendering process on 
the grounds that in the circumstances of the accounting 
irregularities that came to light in september 2012 there 
was insufficient time to undertake such a process and that 
the experience and known capabilities of pwc merited 
their prompt appointment the committee has noted the 
recommendation to put the external audit out to tender at 
least every 10 years and will carry out a review every 5 years 
with a view as to whether the external audit should go out to 
tender before the 10 year period 
the audit committee has kept under review
•  the qualification expertise and resources of the 
external auditors the effectiveness of the audit 
process including the external auditor’s quality control 
procedures
•  the independence and objectivity of the external 
auditor taking into account relevant uk professional 
and regulatory requirements and the relationship with 
the audit firm as a whole including the provision of  
nonaudit services
•  compliance with the group’s policy on audit fees and 
fees for other nonaudit services which follows the 
recommendation from the eu to cap nonaudit service 
fees at 70 of the audit fee
in order to assess the effectiveness of the external audit 
process the committee
•  reviewed the audit plan and shared any feedback on 
the process with the external auditor 
•  challenged the auditor’s approach in light of the 
accounting irregularities in the year ended 31 march 
2013
•  evaluated the timely identification and resolution of 
areas of accounting judgement by management of the 
auditor 
•  reviewed the quality and timeliness of papers and 
reports analysing those judgements and
•  held separate meetings with the external auditor in the 
absence of management to discuss further issues
42 42 43
strategic report our financials our governance shareholder information
pwc continue to comply with the partner rotation 
requirement set out in the ethical standards for auditors 
there are no contractual obligations to restrict the choice of 
external auditors 
we believe that the relationship is working well and we have 
recommended to the board that pwc be reappointed 
there were minimal fees paid for nonaudit services to the 
auditors pwc during the year
the group’s ‘whistleblowing’ policy
the audit committee reviewed the arrangements by 
which employees may raise concerns regarding potential 
impropriety in confidence and ensured these concerns were 
investigated appropriately
overview
as a result of its work during the year the audit committee 
has concluded that it has acted in accordance with its 
terms of reference and has ensured the independence 
and objectivity of the external auditor it also provides 
comfort that the annual report and accounts taken as a 
whole is fair balanced and understandable and provides 
the information necessary for shareholders to assess the 
company’s performance business model and strategy 
the chairman of the audit committee will be available at the 
annual general meeting to answer any questions about the 
work of the audit committee 
robin taylor
chairman audit committee
9 june 2014 
43 44 45
annual statement
on behalf of the board i am pleased to present the 
remuneration committee’s “the committee” report “the 
report” for the year ended 31 march 2014
following recent changes in the law that came into force 
on 1 october 2013 and subsequent guidance covering  
the reporting of directors’ remuneration this report is divided 
into the following two sections which we believe provides 
shareholders with a comprehensive clear and informative 
report
• directors’ remuneration policy
•  directors’ annual remuneration report
the directors’ remuneration policy “the policy”  
contains details of the remuneration policy that we  
propose will apply from the 2014 annual general meeting 
on 25 september 2014 “the agm” the policy will be  
subject to a binding vote at the agm if approved by 
shareholders the policy will take effect from the date  
of the agm and will apply until a subsequent remuneration 
policy is approved
the directors’ annual remuneration report sets out details 
of how our existing director’s remuneration policy was 
implemented in the year ended 31 march 2014 and how 
we intend for the policy to be implemented in the year 
ended 31 march 2015 it details the base salary benefits 
and incentives awarded to executive directors and the fees 
paid to nonexecutive directors during the year ended  
31 march 2014 this will be subject to an advisory vote at 
the agm 
members of the committee
the committee comprises
• david garman chairman
• robin taylor since 1 november 2013
•  brian sellwood was a member of the committee up to 
10 june 2014 when he left office
•  david warnock was a member of the committee up to 
30 october 2013 when he left office
about the remuneration committee
the remuneration committee members are appointed by 
the board the uk corporate governance code provides 
that all members of the committee should be independent 
nonexecutive directors it is considered that each 
member of the committee is independent and that each 
has the relevant skills and experience to fulfil their role  
for further details see the directors’ biographies on  
pages 32 and 33
the board has delegated responsibility to the committee 
for determining the framework and broad policy for the 
remuneration of the executive directors and their senior 
direct reports as designated and makes recommendations 
thereon to the board within agreed terms of reference  
the terms of reference of the committee are available on 
request from the company secretary 
the structure and levels of remuneration of the group’s 
executive directors are critically important to the group 
successfully achieving its strategic aims the committee sets 
the strategy structure and levels of directors’ remuneration 
and reviews the remuneration of the other members of the 
senior management team we do this in the context of  
the group’s strategy and goals in doing so we aim to align 
the financial interests of the executive directors with those 
of our shareholders
in addition to setting the remuneration structure and levels for 
the new directors detailed below the committee reviewed 
the remuneration packages for all executive directors to 
assess whether they were appropriate in helping the group 
achieve its objectives 
the committee has recognised the continued need to 
incentivise and retain key staff as a result awards were 
granted to some members of senior management in june 
and december 2013 under the group’s performance 
share plan 2004 “the psp” in addition to the award to  
steve vaughan the new chief executive on his appointment
the committee also carries out an annual review of the 
group’s overall remuneration policy it has also reviewed the 
revised remuneration reporting regulations and prepared 
this report
remuneration  
committee report 44 45
strategic report our financials our governance shareholder information
changes to the board
on 12 march 2014 steve vaughan was appointed as  
chief executive details of his remuneration package are set 
out on page 51 following steve vaughan’s appointment 
from 1 april 2014 peter bertram reverted back to his previous 
role as nonexecutive chairman details of his remuneration 
package are set out on page 52 on 1 november 2013 
robin taylor was appointed as nonexecutive director  
the committee set his remuneration package in line with 
both group policy and david warnock his predecessor
2014 remuneration
the year ended 31 march 2014 was a challenging one  
for the group and the committee has ensured that 
executive directors’ remuneration arrangements reflect this  
during the year the group’s executive directors received 
no bonuses or salary increases and the only awards made 
to executive directors under the psp were those made to 
steve vaughan our new chief executive on appointment 
furthermore there have been no significant changes made 
to the existing directors’ remuneration policy during the 
year ended 31 march 2014
2015 remuneration
for the year ending 31 march 2015 the committee 
determined it appropriate to retain the same incentive 
structures and levels which applied in the prior year  however  
as a result of the 2004 performance share plan reaching the 
end of its 10 year life shareholder approval is being sought 
for a replacement plan which has been updated for best 
practice at the forthcoming agm the committee feels that 
the structure is appropriate in helping the group meet its 
objectives as set out on pages 8 and 9 
compliance with regulations 
this report has been prepared by the committee and 
approved by the board for the year ended 31 march 
2014 in accordance with the requirements of the large 
and mediumsized companies and groups regulations 
2008 the “accounting regulations” under the companies 
act 2006 as amended in 2013 the provisions of the uk 
corporate governance code september 2012 and the 
listing rules of the uk listing authority 
the act requires the auditor to report to the company’s 
members on certain parts of the report and to state whether 
in their opinion those parts of the report have been properly 
prepared in accordance with the accounting regulations 
the report therefore highlights those parts which have 
been audited
shareholder engagement
the committee continues to take an active interest in 
shareholder views on our executive remuneration policy 
and is mindful of the concerns of shareholders and other 
stakeholders major shareholders and representative bodies 
were consulted on the proposed 2014 performance share 
plan furthermore this is the first report written under the 
new rules and the committee welcomes any comments 
that shareholders may have to help improve the report in 
future years
in the meantime i hope that this report meets with 
shareholder approval at the agm where the policy will 
be put to a binding shareholder vote and the directors’ 
annual remuneration report will be put to an advisory 
shareholder vote
in conclusion we firmly believe that our policy continues to 
be uncomplicated performancerelated and aligned with the 
strategic goal of the group in delivering shareholder value 
david garman
chairman remuneration committee  46 47
directors’ remuneration policy
subject to shareholder approval the directors’ 
remuneration policy set out in this report will take effect 
and become binding on 25 september 2014 
remuneration policy overview
the policy is designed to ensure that executive directors’ 
total remuneration is competitive and linked to both 
individual performance and business performance  
in addition the group’s policy is to provide appropriate 
incentives to encourage enhanced performance and to 
reward contributions to the success of the group in a fair 
and responsible manner this will ensure the group is able 
to attract engage motivate and retain executive directors of 
the quality required to manage the group’s future success
in order to achieve this remuneration packages comprise 
a fixed element made up of basic salary benefits and 
pensions and a variable “at risk” element which reflects group 
performance and individual achievement made up of an annual 
performance related bonus and participation in the psp  the 
performancerelated elements form a significant proportion of 
the total executive directors’ remuneration packages
following a review in the year the committee is satisfied 
that the policy which is designed to ensure that executive 
directors’ total remuneration is competitive performance
linked and provides appropriate incentives to encourage 
enhanced performance remains appropriate 
remuneration future policy table 
the table below summarises the policy the components 
of which are unchanged from the prior year subject to 
shareholder approval it will apply to any remuneration and 
loss of office payments made to directors from the agm 
and annual bonus plans implemented and psp awards 
made from that date onwards 
purpose and link to strategy operation maximum opportunity performance measures
 basic salary
–  supports the recruitment retention 
and motivation of executive 
directors of the calibre required to 
operate and develop the group’ s 
business and to develop and 
deliver the group’ s strategy
–  provides an appropriate level 
of basic fixed income avoiding 
excessive risk taking arising from 
over reliance on variable income
–  determined by taking 
account of rates of salary 
for similar roles in selected 
groups of comparable 
companies
–  normally reviewed annually 
with changes effected from 
1 april
–  normally paid in cash on 
a monthly basis which is 
pensionable
–  no maximum salary or 
salary increase applies
–  annual increases normally 
linked to those of the wider 
workforce
–  if there is a significant 
increase in responsibility 
change in scope of a role 
or size of the business 
then the basic salary may 
increase by more than 
this level 
–  not performance related
 benefits
–  to provide marketcompetitive 
noncash benefits
–  provide insured benefits to 
support the individual and their 
family during periods of ill health 
accidents or death 
–  provide car allowances to 
facilitate effective travel to enable 
appropriate performance of 
duties
–  executive directors receive 
benefits
–  benefits provided through 
third party providers
–  benefits consist primarily 
of car allowance car fuel 
benefits death in service 
assurance income protection 
in the event of longterm ill 
health and private medical 
insurance
–  benefits may vary from 
role to role and are set at a 
level which the committee 
considers provide a 
sufficient level of benefit 
based on the role and 
individual circumstances
–  not performance related
 pension
–  provides competitive retirement 
benefits in order to help attract and 
retain executive directors of the 
calibre required to help deliver the 
group’ s strategy
–  to provide executive directors 
with an opportunity to build up 
income after retirement
–  defined contribution or salary 
supplement
–  up to 20 of basic salary –  not performance related 46 47
strategic report our financials our governance shareholder information
1  selection of performance measures – annual bonus  the performance measures under 
the bonus scheme are selected annually to reflect kpis and strategic priorities for the 
group and operating businesses
2  psp  the committee operates the psp in accordance with the plan rules and the listing 
rules and the committee consistent with market practice retains discretion over a 
number of areas relating to the operation and administration of the plan
3  selection of performance measures – psp  the committee’s policy is to set performance 
targets aligned to the delivery of shareholder return which are both stretching and 
achievable and the maximum outcomes are only available for outstanding performance 
4  all employee share plans  executive directors may also participate in any allemployee 
share plan operated by the company up to hmrc prevailing limits
purpose and link to strategy operation maximum opportunity performance measures
 annual bonus
–  provides focus on delivering
exceeding annual budget
–  incentivises and rewards strong 
performance and helps retain key 
executives and is aligned to the 
group’s risk profile 
–  performance targets are 
set and approved by the 
committee in the first quarter 
of the financial year
–  the committee assess actual 
performance compared to the 
performance targets following 
completion of the financial year
–  normally payable in cash
–  nonpensionable
–  maximum 100 of salary –  performance period 
1 year
–  majority based on profit 
related targets
–  minority based on 
strategic and personal 
objectives
–  clawback pr ovisions 
apply
 performance share plan
–  aligned to main strategic 
objectives of delivering long term 
value creation for shareholders
–  align executive directors’ 
interests with those of 
shareholders
–  rewards and helps retain key 
executives and is aligned to the 
group’s risk profile
–  psp awards with a three year 
vesting period
–  annual grant of nil cost 
options or conditional share 
awards to executive directors 
and senior management
–  awards are also normally 
made on appointment of a 
new executive director
annual grant policy to apply 
under normal circumstances
–  up to 100 of salary pa
maximum annual limit for 
exceptional performance
–  150 of salary pa
exceptional limit – where 
required to ensure 
appointment of an external 
candidate for example
–  200 of salary pa
–  performance period 
normally 3 years
–  performance conditions 
linked to relative 
shareholder return andor 
financial related metrics
–  clawback pr ovisions 
apply
  share ownership guidelines
–  to provide alignment of interests 
between executive directors and 
shareholders
–  executive directors are 
expected to meet a 
meaningful shareholding 
guideline through the 
retention of vested share 
awards under the psp andor 
shares purchased
–  aim to hold a shareholding 
equal to 100 of base 
salary
–  not performance related
  nonexecutive directors’ fees
–  reflects time commitment of 
each role
–  reflects fees paid by similarly 
sized companies
–  cash fee normally paid 
monthly
–  additional fees may be 
payable for chairing a 
committee
–  three month notice periods
–  no maximum fee or fee 
increase applies
–  annual increases normally 
linked to those of the wider 
workforce
–  if there is a significant 
increase in responsibility 
change in scope of a role 
or size of the business 
then the fee may increase 
by more than this level 
–  not performance related 48 49
remuneration committee report
illustration of our remuneration policy for the year ended 31 march 2015
the bar charts below set out an illustration of the potential total remuneration for the year ended 31 march 2015 for each 
executive director based on their current roles at different levels of performance under the policy as a percentage of the 
total remuneration opportunity and as a total value three scenarios have been illustrated for each executive director
scenario description
fixed –  salary benefits and pension
–  no annual bonus
on target –  salary benefits and pension
–  annual bonus of 50 of salary
–  psp award 50 of normal grant
maximum –  salary benefits and pension
–  annual bonus of 100 of salary
–  psp award 100 of normal grant
steve vaughan – chief executive
jane aikman – chief operating officer  chief financial officer
value of package £
fixed
on target
maximum
 0 02m 04m 06m 08m 1m 12m 14m
value of package £
fixed
on target
maximum
 0 02m 04m 06m 08m 1m 12m 14m
fixed 
on target 
maximum  
salary 84 45 31
pension 13 7 5
benefits 3 2 2
bonus  23 31
ltips  23 31
total 100 100 100
fixed 
on target 
maximum  
salary 80 44 31
pension 16 9 5
benefits 4 3 2
bonus  22 31
ltips  22 31
total 100 100 100
£414500
£408000
£764500
£733000
£1114500
£1058000
1   the fixed performance scenario comprises the fixed elements of remuneration only including salary pension and estimated benefits as per fy2014
2  the on target level of bonus is taken to be 50 of the maximum bonus opportunity 100 of salary only and the on target level of psp vesting is assumed to be 50 of 
the face value assuming a normal grant level 100 of salary only these values are included in addition to the componentsvalues of fixed remuneration
3  maximum performance assumes a full bonus pay out 100 of salary only and the full face value of the psp 100 of salary only vesting in addition to the fixed 
components of remuneration
4 no share price growth has been factored into the calculations 48 49
strategic report our financials our governance shareholder information
approach to recruitment and promotions 
the committee’s objective is to attract candidates  
of the appropriate calibre at competitive salaries  
when determining the remuneration of a newlyappointed 
executive director the committee will apply the policy 
therefore base salary levels would be set at an appropriate 
level to reflect the individual’s experience and market rate 
and incentive pay would be limited to the maximum levels 
stated in the remuneration future policy table 
where the executive director forfeits awards incentives  
or pay from a previous employer the committee  
may consider offering awards in compensation for the 
value foregone this will be made either as an award  
under an existing psp or a bespoke award under the  
listing rules exemption available for this purpose  
it would seek to ensure where possible that these  
awards would be consistent with awards forfeited  
in terms of vesting periods expected value and performance 
conditions
for an internal executive director appointment any variable 
pay element awarded in respect of the prior role may be 
allowed to pay out according to its original terms
for external and internal appointments the committee may 
agree that the company will meet certain relocation andor 
incidental expenses as appropriate
in all instances of executive director recruitment the 
committee will apply the following principles
•  offer a package which is sufficiently competitive to 
attract retain and motivate executive directors to help 
deliver the longterm strategic goals of the group
•  take into account advice received from independent 
sources on the rates of salary and other benefits 
for similar roles in a selected group of comparable 
companies and
•  ensure that the performancerelated element of 
remuneration aligns the executives’ interests with those 
of shareholders
in accordance with the remuneration future policy table on 
page 46 new nonexecutive directors will be paid a base 
fee plus fees for chairing certain committees
executive directors’ nonexecutive 
appointments 
the committee’s policy is that executive directors may 
by agreement with the board serve as nonexecutives of 
one other company and retain any fees payable for their 
services
service contracts
the executive directors’ service contracts including 
arrangements for early termination are carefully considered 
by the committee and are designed to recruit retain and 
motivate executive directors of the quality required to 
manage the company the committee considers that a 
rolling contract with a 12 month notice period is normally 
appropriate 
material provisions
the details of directors’ service contracts on 31 march 2014 are set out below
contract start 
date
notice period by 
company
notice period  
by director
unexpired term  
of contract
executive directors
1
steve vaughan march 2014 12 months 12 months na
jane aikman august 2012 12 months 6 months na
nonexecutive directors
2
peter bertram april 2014
3
 3 months 3 months 12 months
brian sellwood may 2012 3 months 3 months 14 months
david garman december 2011 3 months 3 months 9 months
robin taylor november 2013 3 months 3 months 32 months
there is no default retirement age 
1  executive directors are employed on a continuous employment basis nonexecutive directors are normally appointed for a fixed term of 3 years
2  peter bertram since 1 april 2014 in his capacity as nonexecutive chairman brian sellwood david garman and robin taylor have letters of appointment terminable by 
either party on three months’ notice copies of their letters of appointment are available on request details of payments made to those directors who left office during the 
year are also set out in the directors’ annual remuneration report
3  peter bertram reverted to his previous role as nonexecutive chairman on 1 april 2014 his appointment is for a period of 12 months prior to this peter’s notice period 
was 6 months under his contract as executive chairman 50 51
remuneration committee report
exit payments policy
posttermination restrictions exist for a period of 6 months 
after termination the group may pay salary and the value of 
contractual benefits in lieu of any unexpired period of notice 
and would seek to apply the principles of mitigation following 
termination and the right to make termination payments on 
a monthly basis
an annual bonus may be payable with respect to the period  
of the financial year served although it will be prorated for  
time and paid at the normal payout date any sharebased 
entitlements granted to an executive director under the 
company’s share plans will be determined based on 
the relevant plan rules however in certain prescribed 
circumstances death disability injury illhealth the 
participant’s employing company ceasing to be under 
the control of the company or any other reason that the 
committee determines appropriate  “good leaver” status 
may be applied  for good leavers awards will normally vest 
at the normal vesting date subject to the satisfaction of the 
relevant performance conditions at that time and reduced 
prorata to reflect the proportion of the performance period 
actually served however the remuneration committee has 
the discretion to determine that awards vest at cessation of 
employment andor not to prorate awards
in addition to the above the committee may agree that the 
company will meet legalother expenses as appropriate
consideration of shareholder views
the committee continues to take an active interest in 
shareholder views on our remuneration policy and is mindful 
of the concerns of shareholders and other stakeholders  
the committee takes into account the views of shareholders 
when formulating the policy 
major shareholders and representative bodies were 
consulted in respect of the proposed 2014 performance 
share plan which is being introduced as a result of the 2004 
psp reaching the end of its 10 year life
consideration of pay and conditions for 
the wider group
the committee has not specifically canvassed the views of 
the company’s employees on the policy although the views 
of employees on matters that include pay and conditions 
generally are canvassed through management feedback 
when setting the policy for directors’ remuneration 
the committee has regard to the pay and employment 
considerations elsewhere within the group this includes 
consideration of
• wider economic conditions 
• salary increases for the wider workforce
• overall spend on annual bonus
•  participation levels in the annual bonus and any psps
• groupwide pay and benefit offerings and
•  any other relevant factors as determined by  
the committee 50 51
strategic report our financials our governance shareholder information
directors’ annual remuneration report
implementation of the remuneration policy for the year ending 31 march 2015
executive directors
base salary  benefits
the basic salaries for the executive directors from 1 april 2014 are as follows
executive director from 1 april 2014 
£’000s
from 1 april 2013 
£’000s
 increase
steve vaughan 350 350 
jane aikman 325 325 
 or date of appointment where later steve vaughan was appointed as chief executive on 12 march 2014
executive directors may continue to receive certain benefits such as a company car or equivalent allowance life assurance 
and private medical insurance
pensions
the executive directors will be entitled to receive personal 
pension contributions up to 20 of basic salary or salary 
in lieu steve vaughan will receive a 15 payment in lieu of 
pension contributions while jane aikman will receive 20 
company pension contributions
annual bonus
for 201415 the maximum bonus potential will continue to 
be set at 100 of salary with 75 to be based on profit 
related targets and 25 to be based on net debt related 
targets targets have not been disclosed as they are 
deemed to be commercially sensitive although the targets 
and the performance against the targets will be disclosed 
next year
long term incentives
as a result of the current psp 2004 performance  
share plan reaching the end of its 10 year life shareholder 
consent for a new plan based on the existing arrangements 
but updated in a number of areas to comply with best 
practice including the reduction of award limits and 
introduction of clawback will be sought at the 2014 agm 
reflecting market practice for a ftse smallcap company 
the individual annual award limits under the current 2004 
psp will subject to shareholder approval be reduced in the 
2014 psp from 175 of salary to 150 of salary further 
the exceptional limit of 400 of salary in the current psp will 
be reduced to 200 of salary that said actual award levels 
to executive directors are expected to be in the region of 
100 of base salary 
consistent with past awards under the 2004 psp the 
performance awards to be granted in 2014 to executive 
directors will be based on relative tsr measured against 
the constituents of the ftse allshare excluding ftse 
100 companies and investment trusts as at the date of 
grant 25 of an award will vest if the company’s tsr is 
at a median of the ranking of the tsrs of the comparator 
group with full vesting of an award for upper quartile 
performance a sliding scale operates between these 
points in addition an award will only vest if the directors 
are satisfied that the underlying financial performance of 
the company has been satisfactory over the performance 
period the committee will review performance metrics 
and targets for future awards to ensure they remain 
appropriately linked to the business strategy as such  
the committee may consider the introduction of a  
financialbased target eg earnings per share for part  
of future awards to the extent that robust three year  
targets can be set
awards will be subject to clawback provisions
further details of the 2014 psp can be found in the notice 
of agm
  52 53
nonexecutive directors
current fee levels are as follows
nonexecutive director position 2015
£’000s
2014
£’000s
peter bertram chairman of the board 125 350
brian sellwood
1
nonexecutive director 42 42
david garman chair of the remuneration committee 45 45
robin taylor chair of the audit committee 42 18
 peter bertram received remuneration as an executive chairman for 2014
 robin taylor was only appointed as a nonexecutive director on 1 november 2013 
from 1 april 2014 the nonexecutive directors’ fees were not increased
directors’ remuneration – single figure of total remuneration 
the table below sets out a single figure of remuneration for each of the directors in respect of the years ended 31 march 
2013 and 2014
£’000s salaryfees annual bonus benefits pension share awards total
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
executive directors
steve vaughan
2
19    1  3    23 
peter bertram
3
350 235   28 12     378 247
jane aikman
4
325 212   22 14 65 43   412 269
david courtley
5
 245    10      255
steve clutton
6
 45    4  9    58
nonexecutive directors
brian sellwood
1
42 42         42 42
david garman 45 43         45 43
david warnock
7
22 37         22 37
robin taylor
8
18          18 
annual bonus award for 201314
of the executive directors employed in the year under review only jane aikman participated in the annual bonus scheme 
steve vaughan who was appointed on 12 march 2014 did not participate in the 2014 annual bonus scheme but will do 
so going forward
bonus targets were determined by reference to a stretching performance target set in relation to ebitda no bonus was 
paid to jane aikman for the year ended 31 march 2014 due to the performance target not being met
1 brian sellwood left office on 10 june 2014
2 steve vaughan was appointed as chief executive on 12 march 2014
3 peter bertram reverted to his role as nonexecutive chairman on 1 april 2014
4 jane aikman was appointed as chief financial officer on 6 august 2012 and took on the additional role of chief operating officer from 4 october 2012
5 david courtley stepped down from the board as chief executive on 4 october 2012
6 steve clutton stepped down from the board as chief financial officer on 25 may 2012
7 david warnock stepped down from the board as a nonexecutive director on 30 october 2013
8 robin taylor was appointed as a nonexecutive director on 1 november 2013
remuneration committee report 52 53
strategic report our financials our governance shareholder information
psp awards with a performance period ending in the year ended 31 march 2014
the psp awards granted on 7 june 2010 were based on relative tsr performance to 7 june 2013 as follows
metric performance condition threshold 
target
stretch 
target
actual  vesting
relative tsr relative tsr measured against the 
constituents of the ftse allshare excluding 
ftse 100 companies and investment trusts 
as at the date of grant 25 of an award will 
vest if the company’s tsr is at a median of 
the ranking of the tsrs of the comparator 
group with full vesting of an award for upper 
quartile performance a sliding scale operates 
between these points 
median upper quartile below median 0
based on the vesting percentage above details of the shares under award and the value at vesting is as follows
director number of shares at grant number of shares vested number of shares lapsed value at vesting
peter bertram 73000  73000 £nil
psp awards granted in the year ended 31 march 2014
steve vaughan was appointed chief executive on 12 march 2014 as part of his recruitment package he received a psp 
award over 500000 shares on 18 march 2014
director scheme date of 
grant
basis of 
award
maximum 
shares 
under 
award
share 
price at 
grant
vesting  
period
performance condition
steve 
vaughan
2004 psp 180314 150 of 
salary
500000 1250p 180314 
to 
180317
relative tsr measured against the 
constituents of the ftse allshare 
excluding ftse 100 companies 
and investment trusts as at the 
date of grant 25 of an award 
will vest if the company’s tsr is 
at a median of the ranking of the 
tsrs of the comparator group with 
full vesting of an award for upper 
quartile performance a sliding scale 
operates between these points 
payments to former directors and compensation for loss of office 
there were no payments to past directors who were not in position as a director at the time a relevant payment was 
accrued there were also no loss of office payments made within the year 54 55
tsr performance graph
the graph below shows the group’s tsr performance compared to the ftse small cap and the ftse all share indices 
the graph covers the period from 31 march 2009 to 31 march 2014 and the values show the share price growth plus 
reinvested dividends from a hypothetical £100 holding of ordinary shares in the group and in the indices at the start of the 
period the ftse small cap index has been selected as a comparator because the group believes it is the most meaningful 
market index for comparison
total shareholder return
historic chief executive remuneration
the table below summarises the total pay for each of the persons who have performed the role of chief executive or 
executive chairman for the previous five financial years the single figure of total remuneration has been calculated using 
the same methodology as that used in the single figure of total remuneration table on page 52
2010 
£’000
2011 
£’000
2012 
£’000
2013 
£’000
2014 
£’000
nick robinson
1
358 359 132  
david courtley
2
  311 255 
peter bertram
3
   247 378
steve vaughan
4
    23
none of the persons listed in the table above have received an annual bonus or psp payout in the period covered
change in remuneration of chief executive compared to group employees
the table below sets out the increase in total remuneration excluding psps and pensions of the persons performing the 
role of chief executive and that of our employees as a whole excluding increases based on promotionchange of role
change in basic salary 
2013 to 2014
change in benefits 
2013 to 2014
change in bonus 
2013 to 2014
chief executive
5
0 0 0
group employees 0 0 0
 
1  nick robinson became chief executive on 21 november 2008 having been nonexecutive deputy chairman since 1 january 2008 he resigned on 28 july 2011
2 david courtley became chief executive on 1 august 2011 he resigned on 4 october 2012
3  peter bertram became executive chairman on 4 october 2012 from his previous role as nonexecutive chairman the figures included in the above table only include the 
remuneration received from this date from 1 april 2014 he reverted back to his role as nonexecutive chairman
4 steve vaughan became chief executive on 12 march 2014
5 see the historic chief executive remuneration table above for details of who has performed the role of chief executive
remuneration committee report 54 55
strategic report our financials our governance shareholder information
relative importance of spend on pay 
the table below sets out the total remuneration for group employees as compared to other significant distributions  
and payments
2014 
£m
2013 
£m
total remuneration of group employees 966 903
dividends paid 42 82
directors’ interests
directors had the following beneficial and family interests in the issued share capital of the company as at 31 march 2014 
there have been no changes between the end of the financial year and the date of this report other than as indicated
 of salary 
under share 
ownership 
guideline 
100 of 
salary
legally owned psp awards sip total
2014 2013 unvested vested restricted 2014
steve vaughan   500000   500000 no
jane aikman   500000   500000 no
peter bertram 40000 40000 400000
1
  440000 na
brian sellwood 4932 4932    4932 na
david garman 30000 30000    30000 na
robin taylor       na
david warnock
2
100000 100000    100000 na
within a reasonable time of their appointment the group expects executive directors to purchase and maintain such 
number of shares in the group as is broadly equivalent to the total value of their base salary
dilution 
at the end of the financial year the total number of awards granted less lapsed over new issue shares under the share 
schemes since listing was 47 of the issued share capital
statement of implementation of remuneration policy in the following financial year
subject to shareholder approval the directors’ remuneration policy set out in this report will take effect and become 
binding on 25 september 2014 
1 peter bertram relinquished these awards when he reverted to his role as nonexecutive chairman on 1 april 2014
2 david warnock stepped down from the board as a nonexecutive director on 30 october 2013
 or date of appointment if later 56 57
share awards 
the interests of the directors in awards over ordinary shares under the psp were as follows 
grant date end of 
performance 
condition 
period and 
earliest 
exercise date
expiry date base average 
share 
price tsr 
performance 
condition p 
awards held 
at 31 march 
2013
granted 
during year
lapsed 
during the 
year
awards 
held at 
31 march 
2014
executive directors
peter bertram
070610 070613 060620 2581 73000  73000
1

081212 081215 071222 1617 400000
2
  400000
473000  73000 400000
steve vaughan
180314 180317 170324 1198  500000  500000
 500000  500000
jane aikman
140812
3
140815 130822 1484 466321   466321
081212 081215 071222 1617 33679   33679
500000   500000
the exercise price on all awards is nil p
during the year to 31 march 2014 the group’s share price varied between 11025p and 17275p and ended the year at 
1230p the share price on 3 june 2013 was 1630p on 4 december 2013 it was 1285p and on 18 march 2014 it was 
1250p
executive directors’ external appointments
the committee’s policy is that executive directors may by agreement with the board serve as nonexecutives of other 
companies and retain any fees payable for their services
the following executive directors served as nonexecutive directors elsewhere and received fees or other benefits for the 
period covered by this report as follows 
company fees 
£’000s
peter bertram ten alps plc 50
microgen plc 50
steve vaughan progressive equity research limited nil
jane aikman halma plc 52
1  the performance targets in respect of the 2010 psp awards were not met and as a result the awards lapsed
2  peter bertram was appointed executive chairman with effect from 4 october 2012 as part of his executive chairman package he received a psp award over 400000 
shares on 8 december 2012 on 1 april 2014 he reverted back to his role as nonexecutive chairman and relinquished the 2012 award in full
3  performance targets attached to awards are determined by relative tsr performance targets normally measured over a three year period from grant measured against 
ftse all share companies excluding ftse 100 companies and investment trusts struck at the date of grant 25 of an award vests if the group’s tsr is at a median of 
the ranking of the tsrs of the comparator group with full vesting of an award for upper quartile performance following consultation with the group’s major investors it 
was agreed that the tsr performance period for jane aikman’s august 2012 psp award should start from 3 september 2012 the date of the group’s announcement in 
respect of accounting irregularities rather than from the date of grant
remuneration committee report 56 57
strategic report our financials our governance shareholder information
replacement of the performance share plan 2004 and renewal of the share incentive 
plan 2004
due to the fact that the group’s performance share plan and share incentive plans 2004 are both coming to an end 
during 2014 resolutions 16 and 17 have been included in the notice of agm the resolutions seek shareholders 
approval for a replacement performance share plan to be known as phoenix it group plc 2014 performance share plan  
“2014 psp” and renewal of the existing share incentive plan to become the phoenix it group plc share incentive plan 
“2014 sip” the committee believes that a new performance share plan and an updated share incentive plan will result 
in strategicallyfocused equitybased longterm incentive arrangements that will improve the alignment of interests between 
employees and shareholders
the proposed 2014 psp will be used for the company’s executive directors and senior management under the proposed 
2014 psp the maximum annual grant limit will be 150 with an exceptional limit of 200 awards to executive directors will 
always be subject to performance conditions with a minimum performance period of 3 years the proposed rules also now 
include clawback provisions a summary of the principal terms of the 2014 psp together with details of the performance 
conditions proposed for the first awards under the 2014 psp to the company’s executive directors is set out in the 
appendix to the notice of agm
under the proposed 2014 sip participating employees in the uk may be awarded free shares in the company worth up 
to £3600 per year participating employees in the uk may also invest up to £1800 pretax in the company’s shares 
these are called “partnership shares” matching shares may also be awarded to a participating employee in the uk  
who purchases partnership shares up to two matching shares may be awarded per partnership share purchased  
a summary of the principal terms of the 2014 sip is set out in the appendix to the notice of agm
external advisers
the committee is able to obtain independent professional advice from remuneration and other consultants in order to carry 
out its duties during the year new bridge street part of aon plc served as the independent adviser to the committee 
in the area of directors’ remuneration new bridge street advised on remuneration related issues for executive directors 
and the wider senior management population in addition they monitored the longterm incentive performance targets  
new bridge street are signatories to the remuneration consultants group’s code of conduct which has been considered 
when drafting this report separately the actuarial division of aon plc also advised the group during the year in relation to 
certain pension scheme matters
total fees paid during the year to aon plc for advice provided to the committee was £24500 the committee is satisfied 
that the advice provided by new bridge street is independent
shareholder engagement
the table below sets out the results of the vote on the directors’ remuneration report at the 2013 agm
 votes in favour  votes against number of votes 
withheld
resolution to approve the directors’ remuneration report 9036 964 1399
in conclusion we firmly believe that our remuneration policy continues to be uncomplicated performancerelated and 
aligned with the strategic goal of the group in delivering shareholders value we hope to receive your support at the 
forthcoming agm
audited sections of the report
the audited sections of this report are the single figure of total remuneration table on page 52 the compensation for loss 
of office disclosure on page 53 the directors’ interests table on page 55 and the share awards table on page 56
this remuneration committee report has been approved by the committee for release on 10 june 2014 and signed on 
its behalf by
david garman
chairman remuneration committee
9 june 2014 58 59
phoenix it group plc is incorporated as a public limited 
company and is registered in england with the registered 
number 03476115 and registered address at lakeside 
house the lakes bedford road northampton 
northamptonshire nn4 7hd united kingdom
the directors present their report together with the audited 
financial statements for the group and the company for 
the year ended 31 march 2014 references to phoenix the 
“group” and the “company” “we” or “our” are to phoenix it 
group plc and its subsidiary companies where appropriate 
strategic report
a review of the development of the group’s business during 
the year the principal activities risks and uncertainties 
facing the group and future prospects and developments 
are included in the chairman’s statement and the strategic 
report which should be read in conjunction with this report
principal risks and uncertainties
the group’s operations expose it to a variety of financial 
and other risks a review of which is provided in the 
strategic report and note 19 to the consolidated financial 
statements
dividends
the directors propose a final dividend of 10p per ordinary 
share which subject to approval at the annual general 
meeting will be paid on 29 september 2014 to shareholders 
on the register at 22 august 2014 the shares will go ex 
dividend on 20 august 2014 the final dividend together 
with the interim dividend of 16p per ordinary share paid in 
january 2014 makes a total dividend per ordinary share of 
26p 2013 77p
capital structure
details of the issued share capital together with details 
of the movements in the company’s issued share capital 
during the year are shown in note 9 to the company 
financial statements at 31 march 2014 the company’s 
issued share capital comprised 83027284 ordinary shares 
of 1 pence each with no right to fixed income each share 
carries the right to one vote at the general meetings of the 
company
during the year phoenix it group plc issued 7547934 new 
ordinary shares of 1 pence each at a price of 114 pence per 
placing share by means of a cash box structure which is 
characterised for companies act 2006 purposes as an issue  
for noncash consideration this allowed the company to issue 
the new shares under the exemption from the preemption 
requirements of section 561 of the companies act 2006 
provided by section 565 of the companies act 2006 
there are no specific restrictions on the size of a holding 
nor on the transfer of shares which are both governed 
by the company’s articles of association and prevailing 
legislation the directors are not aware of any agreements 
between holders of the company’s shares that may result in 
restrictions on the transfer of securities or on voting rights
details of employee share schemes are set out in note 
39 to the consolidated financial statements 
no person has any special rights of control over the 
company’s share capital and all issued shares are fully paid
the directors have authority to allot the company’s 
ordinary shares up to an aggregate nominal amount of 
£251298 being approximately onethird of the company’s 
issued share capital at 31 may 2013 and the power to 
disapply preemption rights in respect of the allotment 
of shares up to an aggregate nominal value of £37740 
representing 5 of the company’s issued share capital at 
31 may 2013 in addition the directors have authority on 
behalf of the company to make market purchases of up to 
3773968 ordinary shares of the company representing 
5 of the company’s issued share capital at 31 may 2013 
these authorities were conferred by approval of separate 
resolutions at the company’s last annual general meeting 
and are due to expire at the end of the forthcoming annual 
general meeting separate resolutions to renew these 
authorities will be proposed at the annual general meeting 
on 25 september 2014 details of these resolutions are 
set out in the notice of annual general meeting which is 
shown on pages 120 and 121 resolutions 12 13 and 14
directors
the following directors served during the year and up 
to the date of this report unless otherwise stated are  
peter bertram executive chairman up to 31 march 
2014 and nonexecutive chairman since 1 april 2014 
steve vaughan chief executive from 12 march 2014 
jane aikman chief operating officer  chief financial 
officer david garman senior nonexecutive director 
and chairman of the remuneration committee and the 
nomination committee david warnock nonexecutive 
director left office on 30 october 2013 brian sellwood 
chairman of the audit committee up to 31 october 
2013 and nonexecutive director until 10 june 2014  
robin taylor nonexecutive director and chairman of the 
audit committee since 1 november 2013
biographies of the directors are set out on pages 32 and 33 
details of the directors’ remuneration the terms of their service 
contracts their interests in the shares of the company and 
their share options are given in the remuneration committee 
report of the directors 58 59
strategic report our financials our governance shareholder information
report on pages 49 to 56 details of appointments are set 
out in the nomination committee report on page 38 
with regard to the appointment and replacement of 
directors the company is governed by the articles of 
association the uk corporate governance code the 
companies act and related legislation the articles of 
association may be amended by special resolution of the 
shareholders
all directors are required to submit themselves for  
reelection at regular intervals and at least every three years 
the directors who are up for reelection are listed in the 
nomination committee report on page 39
the board which is responsible for the management of 
the business may exercise all the powers of the company 
subject to the provisions of the relevant legislation and the 
company’s memorandum and articles of association read 
together with the main board terms of reference copies of 
which are available on request 
the company has made qualifying third party indemnity 
provisions for the benefit of its directors which were  
made during the year and remain in force at the date of this 
report
substantial shareholders
as at 31 march 2014 the company had been notified in accordance with chapter 5 of the disclosures and transparency 
rules that the following shareholders had an interest of 3 or more in the issued ordinary share capital of the company
ordinary shares of 1p each  of issued share capital
toscafund investment management 22652704 2728
aberforth partners llp 20710324 2494
herald investment management ltd 7053028 849
legal  general investment management 5549304 668
schroder investment management 5361890 646
majedie asset management 4518333 544
during the period between 31 march 2014 and 9 june 2014 the company did not receive further notifications under 
chapter 5 of the disclosure and transparency rules
employment and environmental matters
details of the group’s employment and environmental 
policies including information regarding greenhouse gas 
emissions are summarised in the corporate and social 
responsibility report on pages 62 and 63
change of control
the group’s bank facilities agreement contains provisions 
entitling the counterparty to terminate the contractual 
agreements in the event of a change of control of the group 
the group’s performance share plan contains provisions 
relating to the vesting and exercise subject to the discretion 
of the remuneration committee of rewards in the event of 
a change of control 
fixed assets
in the opinion of the board there is no material difference 
between the book value and the current open market value 
of the group’s interest in land and buildings and as such 
the board have not undertaken a valuation of land and 
buildings in the year
auditors
an ordinary resolution to reappoint 
pricewaterhousecoopers as auditor of the company is to 
be submitted to the forthcoming annual general meeting
each of the persons who is a director at the date of approval 
of this annual report confirms that
•  so far as the director is aware there is no relevant audit 
information of which the company’s auditor is unaware 
and
•  the director has taken all the steps that heshe ought 
to have taken as a director in order to make himself
herself aware of any relevant audit information and to 
establish that the company’s auditor is aware of that 
information
this confirmation is given and should be interpreted in 
accordance with the provisions of section 418 of the 
companies act 2006
annual general meeting
the notice of the annual general meeting together with 
explanatory notes to be held on 25 september 2014 
at phoenix house oakwell way oakwell park birstall  
west yorkshire wf17 9lu has been sent to shareholders 
with this annual report
the notice of annual general meeting sets out details of 
the business to be considered at the agm and contains 
explanatory notes on such business this has been 
dispatched to shareholders and can be found on our 
corporate website  
wwwphoenixcoukaboutinvestorrelations 60 61
the 2014 agm will include resolutions 13 to 15 as 
special business
authority to allot shares resolution 12
the directors are seeking authority under section 551 of 
the companies act 2006 ‘the act’ to allot shares up to 
an aggregate nominal value of £276757 this amount 
represents approximately onethird of the total ordinary 
share capital as at 31 may 2013 the authority will be in 
substitution for the previous authority taken at last year’s 
annual general meeting and will expire on the earlier of 
the conclusion of the next annual general meeting or 
24 december 2015
the directors have no present intention to make any such 
issue of shares other than in respect of shares that may be 
issued pursuant to the company’s share option schemes 
but consider it is desirable for them to be given this authority 
by shareholders as at 9 june 2014 the company held no 
treasury shares
disapplication of preemptive rights resolution 13
the directors are seeking authority from shareholders to 
allot ordinary shares for cash other than on a preemptive 
basis as required by section 561 of the act in limited 
circumstances the directors recommend that section 
561 of the act should not apply to any allotment of shares 
in connection with a rights issue open offer or other pre
emptive offer in favour of shareholders in accordance 
with normal practice in the uk nor to an issue for cash of 
shares up to an aggregate nominal value of £41513 which 
is equivalent to 5 of the company’s issued share capital 
as at 9 june 2014 the authority sought will expire on the 
earlier of the conclusion of the next annual general meeting 
or 24 december 2015
as at 9 june 2014 there were a total of 2591194 options 
to subscribe for equity shares in the company outstanding 
representing 31 of the company’s issued share capital 
if the full authority sought by this resolution is used this 
number of outstanding options would represent 30 of the 
company’s issued share capital
authority to make market purchases of shares 
resolution 14
the directors are seeking authority to make market 
purchases pursuant to section 701 of the act of shares 
up to 4151364 ordinary shares which is equivalent to 5 
of the company’s issued share capital as at 9 june 2014 
on such terms and in such manner as the directors may 
determine provided that the amount paid for each share 
exclusive of expenses will not be more than 5 above 
the average middle market quotation for ordinary shares 
as derived from the daily official list of the london stock 
exchange plc for the five business days before the date 
on which the contract for the purchase is made and in any 
event not less than 1p per ordinary share the authority 
sought will expire on the earlier of the conclusion of the 
next annual general meeting or 24 december 2015
the directors have no present intention to make any 
such market purchases but consider it is desirable for 
them to be given this opportunity by shareholders  
the authority will only be exercised if to do so would result 
in an increase in earnings per share and is in the best 
interests of shareholders generally
notice of general meetings resolution 15
it is proposed that the shareholders should approve the 
continued ability of the company to hold general meetings 
other than the annual general meeting on 14 clear 
days’ notice in accordance with section 307a of the act  
this provision increases the notice period for general 
meetings of the company to 21 days unless the company 
has approval from its shareholders by resolution in general 
meeting to call such meetings on 14 days’ notice
the resolution is valid up to the next annual general 
meeting of the company and so will need to be renewed 
annually the shorter notice period would not be used as a 
matter of routine for general meetings but only where the 
flexibility is merited by the business of the meeting and is 
thought to be to the advantage of shareholders as a whole
replacement of the performance share plan 2004 and 
renewal of the share incentive plan 2004 resolutions 
16 and 17
due to the fact that the group’s performance share plan 
and share incentive plan 2004 are both coming to an end 
during 2014 resolutions 16 and 17 have been included
resolution 16 seeks authority from shareholders for the 
implementation of a new longterm incentive arrangement 
currently intended to be used for the company’s executive 
directors and senior management the proposed phoenix 
it group plc 2014 performance share plan would replace 
the company’s existing performance share plan which 
is due to expire in november 2014 a summary of the 
principal terms of the 2014 psp together with details of the 
performance conditions proposed for the first awards under 
the 2014 psp to the company’s executive directors is set 
out in the appendix to the notice of annual general meeting
resolution 17 seeks authority from shareholders to extend 
the life and update the terms of the existing phoenix it group 
share incentive plan timetabled to expire in november 2014 
to become the phoenix it group plc 2014 share incentive 
plan a summary of the principal terms of the 2014 sip is set 
out in the appendix to the notice of annual general meeting
shareholders are encouraged to use their vote at this 
year’s agm either by attending the meeting in person or by 
completing and returning the form of proxy in accordance 
with the instructions set out in the form completing and 
returning the form of proxy will not prevent shareholders 
from attending and voting at the meeting 
the board of the company recommends that shareholders 
vote in favour of the resolutions to be proposed at the 
annual general meeting and is of the opinion that they are 
in the best interests of security holders as a whole
by order of the board
dirk toulmin – van sittert
company secretary
9 june 2014
report of the directors 60 61
strategic report our financials our governance shareholder information
the directors are responsible for preparing the annual 
report the remuneration committee 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 prepared the group financial statements in 
accordance with international financial reporting standards 
“ifrss” as adopted by the european union and the 
parent company financial statements in accordance with 
united kingdom generally accepted accounting practice 
united kingdom accounting standards and applicable 
law in preparing the group financial statements the 
directors have also elected to comply with ifrss issued 
by the international accounting standards board “iasb”  
under company law the directors must not approve the 
accounts unless they are satisfied that they give a true and 
fair view of the state of affairs of the company and of the 
profit or loss of the company for that period
in preparing the parent company financial statements 
the directors are required to
•  select suitable accounting policies and then apply them 
consistently
•  make judgments and accounting estimates that are 
reasonable and prudent
•  state whether the ifrss as adopted by the european 
union and ifrss issued by the iasb and applicable uk 
accounting standards have been followed subject to 
any material departures disclosed and explained in the 
financial statements and
•  prepare the financial statements on the going concern 
basis unless it is inappropriate to presume that the 
company will continue in business
the directors are responsible for keeping adequate 
accounting records that are sufficient to show and explain 
the company’s transactions and disclose with reasonable 
accuracy at any time the financial position of the company 
and enable them to ensure that the financial statements 
and the remuneration committee report comply with the 
companies act 2006 and as regards the group financial 
statements article 4 of the ias regulation they are also 
responsible for safeguarding the assets of the company 
and hence for taking reasonable steps for the prevention 
and detection of 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 united 
kingdom governing the preparation and dissemination of 
financial statements may differ from legislation in other 
jurisdictions
the directors consider that the annual report and accounts 
taken as a whole is fair balanced and understandable and 
provides the information necessary for shareholders to 
assess a company’s performance business model and 
strategy
responsibility statement
each of the directors whose names and functions are 
listed on pages 32 and 33 confirm that to the best of their 
knowledge
•  the group financial statements prepared in accordance 
with ifrss as adopted by the eu give a true and fair 
view of the assets liabilities financial position and profit 
or loss of the company and the undertakings included in 
the consolidation taken as a whole and 
•  the management report which is incorporated into 
the strategic report includes a fair review of the 
development and performance of the business and 
the position of the group together with a description 
of the principal risks and uncertainties that it faces  
a description of the principal risks and uncertainties of 
the group is set out on pages 26 and 27
statement on disclosure to auditors
in accordance with section 418 of the companies act 
2006 each of the directors confirms that to the best of 
their knowledge
•  there is no relevant audit information of which the 
company’s auditors are unaware and
•  he or she has taken all steps the he or she ought 
to have taken as a director in order to make him or 
herself aware of any relevant audit information and to 
establish that the company’s auditors are aware of that 
information
on behalf of the board
peter bertram
nonexecutive chairman
9 june 2014
directors’ responsibility 
statement 62 63
corporate social  
responsibility
policy statement 
the board continues to recognise the importance of 
corporate and social responsibility sustainable business 
practices and social responsibility therefore continue to be 
key to the group’s agenda and as such we continuously 
seek to improve our existing policies and practices 
the environment 
we recognise that we are part of a wider community of 
employees shareholders customers suppliers and others 
the group therefore continues to work on environmental 
impact and improve energy efficiency in all its operations 
as part of this process
•  facilities and building refurbishment projects look to 
utilise plant and equipment selected from the energy 
technology product list published by the department 
of energy and climate change 
•  the group entered into a new two year electricity supply 
contract during july 2014 on a green 100 renewable 
tariff extending the existing renewable tariff policy
•  we continue to monitor the group’ s energy consumption 
using half hourly metering data especially in our data 
centres and business continuity estate
•  the group continues to use the framework of 
iso140012004 environmental management system 
to enable us to further develop and implement 
environmental policies and objectives
•  we selected as our standard fleet vehicles cars that 
are 21 more fuel efficient with 176 lower emissions 
than the vehicles they replace we are also actively 
investigating telemetric vehicle tracking that will allow 
for the monitoring of and encouragement of ecologically 
responsible driving styles and optimisation of journey 
plans to ensure better fuel efficiency
•  the group implements a technology lifecycle 
management programme with a primary objective of 
determining a sustainable and ethical management of 
equipment refurbishments and recycling with disposal 
landfill only available as a last resort
•  our equipment recycling programme includes working 
through our suppliers with prison services in creating 
workshops and rehabilitation opportunities for offenders 
thus training them for future employment
greenhouse gas emissions
in compliance with the companies act 2006 strategic and 
director’ s reports regulations 2013 our group has included 
this report on material greenhouse gas “ghg” emissions 
using tonnes of co
2
equivalent “tco
2
e” to report emission 
data of the group’s operations in the uk the methodology 
used to calculate our emissions is in compliance with the 
“environmental reporting guidelines including mandatory 
greenhouse gas emissions reporting guidance” and the 
uk government’s ghg conversion factors for company 
reporting june 2013 issued by the department for 
environment food and rural affairs “defra” ghg 
emissions have been determined on the basis of measured 
or estimated energy and fuel use multiplied by the emission 
factors supplied by ricardo  aea on behalf of defra
ghg emissions have been reported for the group’s uk 
property portfolio which consists of freehold and leasehold 
properties there are no properties outside of the uk other 
than 1 small development office in lahore pakistan for which 
ghg emission data is not available ghg emission data for 
the group’s head office at lakeside house northampton 
have also not been included as the premises is fully serviced 
in a shared building where the landlord does not yet have 
the ability to separate ghg emissions on a per tenant basis
we collected data on gas and electricity consumption as 
this is deemed to be where a significant proportion of the 
group’s emissions arise we have not included emissions 
for refrigeration gas losses and fuel use from backup 
generators as they contribute in aggregate to less than 5 
of the overall scope 1 and scope 2 emissions 
the ghg emissions are split in scope 1 direct emissions 
from sources which the group owns or control and scope 
2 indirect emissions relating solely to the generation of 
purchased electricity that is consumed by the owned or 
controlled equipment or operations of the group
scope 1 emissions were calculated from data on stationary 
energy use and scope 2 emissions were calculated from 
electricity consumption data 
highlights
•  the total ghg scope 1 and 2 emissions during the year 
were 29372 tco
2
e electricity emissions accounted for 
7458 of emissions
•  the total scope 1 and 2 energy used during the year 
was 516 mwh 9522 of which was electricity 62 63
strategic report our financials our governance shareholder information
•  gas consumption went down by 1335 as a result of 
our office consolidation programme 
•  total electricity consumption is up by 345 driven by 
an increase in rack space sold in our data centres
the amount of carbon emissions in the year ended  
31 march 2014 is set out in the table below
2014 
tco
2
e
2013 
tco
2
e
scope1 
combustion of fuel and opera
tion of facilities – natural gas
combustion of fuel cars and 
vans  diesel  petrol
454
7012
524
na
1
scope 2 – electricity 21906 21866
total scope 1 and 2 emis
sions 29372 22390
intensity metric tco
2
e per 
£m of turnover 12606 8956
we intend to further improve our environmental reporting by 
including in our annual report and accounts for 20142015 
scope 3 emissions sources in so far as possible which will 
include business travel and accommodation
our people
we recognise the importance and value of our colleagues 
all of whom are playing a pivotal and vital role in providing 
the best solutions for our customers and ensuring the future 
success of the group in order to help our colleagues to 
achieve their goals and to retain the very best talent we 
remain committed to
•  ensuring that we provide a healthy and safe environment 
for our employees
•  conducting regular health and safety reviews and 
training across our portfolio
•  being an equal opportunities employer
•  ensuring that we have policies and practices in place 
that treat all employees fairly and equally
•  continuing to nurture the talents of our employees and 
the benefit they bring to our business 
•  providing continuous training and coaching 
•  considering the ability and talents of internal colleagues 
before recruiting externally and
•  providing continuous and effective communication and 
consultation with all employees and informing them of 
the progress and policies of the group
we updated our occupational health and safety policy and 
implemented a robust audit schedule to ensure continuous 
compliance with our legal and regulatory obligations 
communications across all our sites were improved and 
have promoted a positive safety culture quarterly health and 
safety meetings are taking place across business units during 
which all aspects of health and safety are discussed accident 
statistics shared compliance monitored and reporting 
encouraged emphasis is also placed on our operational 
employees to ensure that they receive the necessary task
hazard training in the areas of their work activities
we have continued to implement our human resource 
policies and procedures to ensure that we recruit retain 
and develop a diverse and high calibre workforce regardless 
of race gender religion age culture sexual orientation 
disability or background
a 24 hour a day confidential helpline manned by professional 
counsellors is also available to all our employees to help them 
with information and advice covering a range of topics from 
health family money matters to work related issues 
all managers remain responsible to ensure that the group’s 
policy on equal opportunities is applied in all areas of 
recruitment including job design recruitment advertising and 
selection methods if one of our colleagues should become 
disabled while in our employment we shall do our best to retain 
them including consulting with them about their requirements 
making reasonable and appropriate adjustments and provide 
alternative and suitable working conditions we also remain 
committed to provide training career development and 
promotion for any disabled person we may employ
during the year the group employed 1890 male and 
396 female employees 6 of which are executive directors 
1 of the executive directors is female 123 males and 
13 females are senior managers
with the support of our management teams through 
formal and informal meetings briefing groups internal 
announcements and the intranet we continue to provide 
effective communication and consultation with all employees 
this also allows us to take the views of our colleagues into 
account in the making of decisions that are likely to affect 
their interest
our employees continue to benefit from the opportunity 
to acquire ordinary shares in the capital of the company 
through participation in share ownership arrangements 
which include a performance share plan and a share 
incentive plan both of which will be renewed under 
resolutions 16 and 17 on page 60 of this report
the phoenix online shop which provides employees with 
discounts on products and supplies from over 4000 high 
street niche and specialist retailers continues to be available 
to all our employees 
human rights
no specific information about human rights issues has been 
included in this report since it is not considered necessary 
for an understanding of the development performance or 
position of the group’s business activities however we will 
consider how the group can contribute to the advancement 
of human rights in 201415 
1  detailed information for fy1213 is unfortunately not available but based on group operating trends we are of the view that combustion for fuel used by cars and vans will 
be broadly in line with fy1314 combustion levels 64 65
report on the group financial statements
our opinion 
in our opinion the group financial statements defined 
below
•  give a true and fair view of the state of the group’s 
affairs as at 31 march 2014 and of the group’s profit 
and cash flows for the year then ended
•  have been properly prepared in accordance with 
international financial reporting standards ifrss as 
adopted by the european union and
•  have been prepared in accordance with the 
requirements of the companies act 2006 and article 4 
of the ias regulation
this opinion is to be read in the context of what we say in 
the remainder of this report
what we have audited
the group financial statements which are prepared by 
phoenix it group plc comprise
•  the consolidated balance sheet as at 31 march 2014
•  the consolidated statement of income and 
consolidated statement of comprehensive income
expense for the year then ended
•  the consolidated statement of changes in equity and 
consolidated cash flow statement for the year then 
ended and
•  the notes to the group financial statements which 
include a summary of significant accounting policies 
and other explanatory information
the financial reporting framework that has been applied in 
their preparation comprises applicable law and ifrss as 
adopted by the european union
what an audit of financial statements 
involves 
we conducted our audit in accordance with international 
standards on auditing uk and ireland ‘isas uk  ireland’ 
an audit involves obtaining evidence about the amounts 
and disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free 
from material misstatement whether caused by fraud or 
error this includes an assessment of
•  whether the accounting policies are appropriate to the 
group’s circumstances and have been consistently 
applied and adequately disclosed
•  the reasonableness of significant accounting estimates 
made by the directors and 
•  the overall presentation of the financial statements 
in addition we read all the financial and nonfinancial 
information in the annual report and accounts ‘annual 
report’ to identify material inconsistencies with the audited 
group financial statements and to identify any information 
that is apparently materially incorrect based on or materially 
inconsistent with the knowledge acquired by us in the 
course of performing the audit if we become aware of any 
apparent material misstatements or inconsistencies we 
consider the implications for our report
overview of our audit approach
materiality
we set certain thresholds for materiality these helped us 
to determine the nature timing and extent of our audit 
procedures and to evaluate the effect of misstatements 
both individually and on the financial statements as a whole
based on our professional judgement we determined 
materiality for the group financial statements as a whole 
to be £09 million this is based on an average three year 
measure of adjusted ebitda which is profit before interest 
and tax adjusted for depreciation share based payment 
charges and nonrecurring items including amortisation  
in our view this is the most relevant measure of underlying 
performance and excludes the effect of volatility from our 
determination
we agreed with the audit committee that we would report 
to them misstatements identified during our audit above 
£40000 as well as misstatements below that amount that  
in our view warranted reporting for qualitative reasons
independent  
auditors’ report 
to the members of phoenix it group plc 64 65
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
overview of the scope of our audit
the group is structured along three business segments 
being business continuity managed services and partner 
the group financial statements are a consolidation of a 
number of reporting units comprising the group’s operating 
businesses centralised functions and holding companies 
within these segments 
in establishing the overall approach to the group audit we 
determined the type of work that needed to be performed 
on the reporting units accordingly of the group’s reporting 
units we identified four being phoenix it continuity 
and resilience services phoenix it managed services  
phoenix it services and the nonoperating group corporate 
cost centre which in our view required an audit of their 
complete financial information due to the fact they were 
financially significant these included the three largest 
trading entities which contributed 96 of consolidated 
revenues and 96 of consolidated adjusted ebitda this 
together with additional procedures performed at the group 
level gave us the evidence we needed for our opinion on 
the group financial statements as a whole
area of focus how the scope of our audit addressed the area of focus
impairment assessment
the group holds material goodwill and other intangible assets 
on the balance sheet loss of key contracts during the year 
indicated there was an increased risk of impairment and an 
impairment charge has been recognised in the partner segment
we focused on this area because the determination of whether 
or not an impairment charge was necessary involved significant 
management judgement about the future results of the business 
segments including future cash flow projections using revenue 
margin and cost projections the cash flow projections were 
extrapolated using assumptions for discount and long term 
growth rates
we challenged management’s assumptions used for the 
impairment recognised in the year in the partner segment 
including specifically the cash flow projections and value in use 
calculation as at 31 march 2014
in evaluating whether any impairment was necessary to the 
remaining carrying value of goodwill and other intangible 
assets our audit work involved obtaining evidence regarding its 
recoverable amount and how it compared to the amount at which 
goodwill was recorded
we evaluated the directors’ future cash flow forecasts and 
compared them to the underlying assumptions in the latest 
board approved budgets we challenged the directors’ key 
assumptions for discount and long term growth rates we also 
performed sensitivity analysis around the key drivers of the cash 
flow forecasts which included future revenue margin and cost 
projections in management’s budget 
we considered the appropriateness of the group’s disclosures 
in respect of impairment assessment and whether disclosures 
about the sensitivity to changes in key assumptions properly 
reflected the risks inherent in the valuations
provisioning
the financial statements include a number of provisions 
which require a level of judgement in particular restructuring 
onerous contracts and dilapidations we focused on these areas 
due to the subjective nature of the estimates involved and the 
requirement for management to make judgements regarding 
future results and events and the assumptions used to determine 
these provisions
we evaluated management’s valuation of obligations at the year 
end by testing the supporting calculations and also evaluated 
the likelihood of the occurrence of the future results and events 
reflected in management’s valuation
we tested management’s assumptions used in determining the 
provisions and assessed the completeness of the provisions 
through an assessment of the estimated costs or recoverability  
of assets 
we tested the underlying calculations in the provision models and 
agreed amounts to supporting documentation such as contracts 
and third party information
areas of particular audit focus
in preparing the financial statements the directors 
made a number of subjective judgements for example in 
respect of significant accounting estimates that involved 
making assumptions and considering future events that 
are inherently uncertain we primarily focused our work in 
these areas by assessing the directors’ judgements against 
available evidence forming our own judgements and 
evaluating the disclosures in the financial statements
in our audit we tested and examined information using 
sampling and other auditing techniques to the extent we 
considered necessary to provide a reasonable basis for us 
to draw conclusions we obtained audit evidence through 
testing the effectiveness of controls substantive procedures 
or a combination of both
we considered the following areas to be those that required 
particular focus in the current year this is not a complete 
list of all risks or areas of focus identified by our audit we 
discussed these areas of focus with the audit committee 
their report on those matters that they considered to be 
significant issues in relation to the financial statements is 
set out on page 41 66 67
independent auditors’ report to the members of phoenix it group plc
area of focus how the scope of our audit addressed the area of focus
accounting for nonrecurring items
the group has recognised nonrecurring items in the year 
totalling £408 million including impairment of goodwill excess 
inventory write off exceptional contract charges and group 
restructuring costs
we focused on this area because the decision to classify 
items of income and expenditure as nonrecurring is inherently 
judgemental and is considered significant in the context of 
the group’s financial statements due to the presentation of 
underlying and nonunderlying results on the face of the income 
statement
we evaluated the nature of the costs classified as nonrecurring 
and challenged management’s judgements around the 
classification we assessed the impact of material contract losses 
during the year which resulted in excess inventory write offs
we tested the accuracy validity and categorisation of a selection 
of the nonrecurring costs
we assessed the consistency of the disclosure included in 
the financial statements specifically the nonrecurring items’ 
accounting policy and note 7 to the group financial statements 
on nonrecurring items with the findings from our work
fraud in revenue recognition
isas uk  ireland presume there is a risk of fraud in revenue 
recognition because of the pressure management may feel to 
achieve the planned results we focused on the timing of revenue 
recognition because of the inherent complexities over fulfilment of 
contractual arrangements
we evaluated the management controls in place over revenue 
including business performance reviews at an operating company 
and group level
for each material revenue stream we tested the timing of revenue 
recognition taking into account contractual obligations we 
tested manual journal adjustments made to revenue accounts 
and obtained appropriate evidence for such entries 
risk of management override of internal controls
isas uk  ireland require that we consider this 
we assessed the overall control environment of the group 
including the arrangements for staff to “whistleblow” inappropriate 
actions and interviewed senior management and the group’s 
internal audit function we examined the significant accounting 
estimates and judgements relevant to the financial statements 
for evidence of bias by the directors that may represent a risk of 
material misstatement due to fraud we tested key reconciliations 
and manual journal entries based on certain risk criteria including 
size and nature we also incorporated unpredictability into our 
approach by testing some lower value items
going concern 
under the listing rules we are required to review the 
directors’ statement set out on pages 23 and 24 in 
relation to going concern we have nothing to report having 
performed our review
as noted in the directors’ statement the directors have 
concluded that it is appropriate to prepare the group’s 
financial statements using the going concern basis of 
accounting the going concern basis presumes that the 
group has adequate resources to remain in operation and 
that the directors intend it to do so for at least one year 
from the date the financial statements were signed as part 
of our audit we have concluded that the directors’ use of 
the going concern basis is appropriate
however because not all future events or conditions can be 
predicted these statements are not a guarantee as to the 
group’s ability to continue as a going concern
opinions on other matters prescribed by 
the companies act 2006
in our opinion
•  the information given in the strategic report and the 
directors’ report for the financial year for which the 
group financial statements are prepared is consistent 
with the group financial statements and
•  the information given in the corporate governance 
statement set out on pages 34 to 37 in the  
annual report with respect to internal control  
and risk management systems and about share capital 
structures is consistent with the financial statements  66 67
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
other matters on which we are required 
to report by exception
adequacy of information and explanations received
under the companies act 2006 we are required to report 
to you if in our opinion we have not received all the 
information and explanations we require for our audit  
we have no exceptions to report arising from this 
responsibility
directors’ remuneration
under the companies act 2006 we are required to report 
to you if in our opinion certain disclosures of directors’ 
remuneration specified by law have not been made we 
have no exceptions to report arising from this responsibility
corporate governance statement
under the companies act 2006 we are required to report 
to you if in our opinion a corporate governance statement 
has not been prepared by the parent company we have no 
exceptions to report arising from this responsibility
under the listing rules we are required to review the part 
of the corporate governance statement relating to the 
company’s compliance with nine provisions of the uk 
corporate governance code ‘the code’ we have nothing 
to report having performed our review
on page 61 of the annual report as required by the code 
provision c11 the directors state that they consider the 
annual report taken as a whole to be fair balanced and 
understandable and provides the information necessary 
for members to assess the group’s performance business 
model and strategy on page 41 as required by c38 of the 
code the audit committee has set out the significant issues 
that it considered in relation to the financial statements 
and how they were addressed under isas uk  ireland 
we are required to report to you if in our opinion
•  the statement given by the directors is materially 
inconsistent with our knowledge of the group acquired 
in the course of performing our audit or
•  the section of the annual report describing the work 
of the audit committee does not appropriately address 
matters communicated by us to the audit committee
we have no exceptions to report arising from this 
responsibility
other information in the annual report
under isas uk  ireland we are required to report to you 
if in our opinion information in the annual report is
•  materially inconsistent with the information in the 
audited group financial statements or
•  apparently materially incorrect based on or materially 
inconsistent with our knowledge of the group acquired 
in the course of performing our audit or
•  is otherwise misleading
we have no exceptions to report arising from this 
responsibility
responsibilities for the financial 
statements and the audit
our responsibilities and those of the directors 
as explained more fully in the directors’ responsibilities 
statement set out on page 61 the directors are responsible 
for the preparation of the group financial statements and 
for being satisfied that they give a true and fair view 
our responsibility is to audit and express an opinion on the 
group financial statements in accordance with applicable 
law and isas uk  ireland those standards require us 
to comply with the auditing practices board’s ethical 
standards for auditors 
this report including the opinions has been prepared for and 
only for the company’s members as a body in accordance 
with chapter 3 of part 16 of the companies act 2006 and 
for no other purpose we do not in giving these opinions 
accept or assume responsibility for any other purpose or 
to any other person to whom this report is shown or into 
whose hands it may come save where expressly agreed by 
our prior consent in writing
other matter 
we have reported separately on the parent company 
financial statements of phoenix it group plc for the 
year ended 31 march 2014 and on the information in the 
remuneration committee report that is described as 
having been audited
miles saunders 
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors
milton keynes
9 june 2014 68 69
consolidated statement of income 
for the year ended 31 march 2014
note
before  
amortisation  
 non 
recurring 
items  
£m
2014 
amortisation 
 non 
recurring 
items  
note 7  
£m
total  
£m
before 
amortisation 
 non 
recurring 
items 
£m
2013 
amortisation 
 non 
recurring 
items  
note 7  
£m
total 
£m
revenue 5 2334  2334 2500  2500
profitloss from operations 
before amortisation of  
intangibles
177 406 229 190 718 528
amortisation of intangibles 16  10 10  16 16
profitloss from operations 8 177 416 239 190 734 544
finance costs 11 51 02 53 41 03 44
profitloss before tax 126 418 292 149 737 588
taxation 12 30 19 11 39 31 08
profitloss for the year 34 96 399 303 110 706 596
earningsloss per share  
basic 13 126p 400p 145p 791p
diluted 13 121p 400p 139p 791p 68 69
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
consolidated statement of comprehensive incomeexpense
for the year ended 31 march 2014
note
2014  
£m
2013 
£m
loss for the year 34 303 596
items that will not be reclassified subsequently to profit or loss
movement in defined benefit pension scheme 10 02 08
tax on items that will not be reclassified subsequently 12  01
02 07
items that may be reclassified subsequently to profit or loss
gain arising in respect of cash flow hedges 33 07 
tax on items that may be reclassified subsequently 12 02 
05 
other comprehensive incomeexpenditure for the year net of tax 07 07
total comprehensive expenditure for the year 296 603 70 71
consolidated balance sheet 
as at 31 march 2014
note
2014  
£m
2013 
£m
noncurrent assets
goodwill 15 812 1142
other intangible assets 16 12 23
property plant and equipment 17 561 590
retirement benefit asset 10 19 
1404 1755
current assets
inventories 22 73 106
trade and other receivables 23 532 628
current tax assets 03 22
deferred tax assets 29 09 09
cash and cash equivalents 24 288 160
905 925
assets held for sale 20 10 10
915 935
total assets 2319 2690
current liabilities
trade and other payables 26 516 474
obligations under finance leases and hire purchase contracts 27 07 14
other loans  04
provisions 28 38 40
deferred revenue 413 513
974 1045
net current liabilities 59 110
noncurrent liabilities
obligations under finance leases and hire purchase contracts 27 15 07
bank loans 25 827 848
provisions 28 68 81
derivative financial instruments 18 08 14
deferred revenue 07 18
other noncurrent liabilities 26 40 51
retirement benefit obligations 10 01 
966 1019
total liabilities 1940 2064
net assets 379 626
equity
share capital 30 08 08
share premium account 31 377 376
merger reserve 32 575 575
other reserves 33 27 15
retained losses 34 608 348
total equity 379 626
the financial statements were approved by the board of directors and authorised for issue on 9 june 2014 they were 
signed on its behalf by
jane aikman
chief operating officer  chief financial officer 70 71
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
consolidated statement of changes in equity  
for the year ended 31 march 2014
note
share 
capital 
  
£m
share 
premium 
account 
£m
merger 
reserve  
 
£m
other  
reserves 
 
£m
retained 
earnings
losses 
£m
total  
equity 
 
£m
at 1 april 2012 08 376 575 15 336 1310
loss for the year     596 596
actuarial loss on defined benefit pension scheme 10     08 08
tax on items taken directly to equity 12     01 01
total comprehensive expenditure     603 603
share option expense 39    02  02
dividends 14     82 82
deferred tax on share options 12    01  01
transfer to retained earnings on exercise of 
share options
   01 01 
total transactions with owners     81 81
at 1 april 2013 08 376 575 15 348 626
loss for the year     303 303
gain recognised on cash flow hedge    07  07
actuarial gain on defined benefit pension scheme 10     02 02
tax on items taken directly to equity 12    02  02
total comprehensive incomeexpenditure    05 301 296
exercise of share options  01    01
share option expense 39    07  07
dividends 14     42 42
issue of share capital 3032   83   83
transfer of premium on issue of shares 3234   83  83 
total transactions with owners  01  07 41 49
at 31 march 2014 08 377 575 27 608 379 72 73
consolidated cash flow statement 
for the year ended 31 march 2014
note
2014  
£m
2013 
£m
net cash from operating activities 35 194 158
investing activities
purchases of property plant and equipment 79 98
proceeds on disposal of property plant and equipment 01 03
proceeds on disposal of asset held for sale 20  07
net cash used in investing activities 78 88
financing activities
dividends paid 14 42 82
repayment of revolving credit facility 25 900 
new term loan raised 25 400 
new revolving credit facility raised 25 500 
net repaymentdrawdown on revolving credit facility 05 50
new other loan raised  10
repayment of other loan 04 06
repayment of obligations under finance leases and hire purchase contracts 21 34
issue of share capital 30 84 
net cash generatedused in financing activities 12 62
net increase in cash and cash equivalents 128 08
cash and cash equivalents at beginning of year 160 152
cash and cash equivalents at end of year 24 288 160 72 73
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
notes to the consolidated financial statements
for the year ended 31 march 2014
1 general information
phoenix it group plc is a company incorporated and domiciled in the united kingdom under the companies act 2006  
the address of the registered office is given on page 124 the nature of the group’s operations and its principal activities 
are set out in note 6 and in the strategic report on pages 1 to 31
these financial statements are presented in pounds sterling because that is the currency of the primary economic 
environment in which the group operates 
2 adoption of new and revised standards 
the accounting policies adopted are consistent with those of the annual financial statements for the year ended  
31 march 2013 except as described below
the following new standards amendments to standards or interpretations are mandatory for the first time for the year 
ending 31 march 2014 and have been adopted in these financial statements
•  ias 1 presentation of financial statements amended – amended to revise the way other comprehensive income is 
presented to distinguish between those items that may be reclassified or recycled to profit or loss at a future point in 
time and those items that will never be reclassified the amendment affected presentation only and had no impact on 
the group’s financial position or performance ias 1 has also been amended to clarify the requirements for comparative 
information this has not had an impact on the group’s financial statements
•  ias 16 property plant and equipment amended – amended to clarify the treatment of major spare parts and servicing 
equipment this change has not had an effect on the group’s financial statements
•  ias 19 employee benefits revised – revised to provide a clearer indication of an entity’s obligations resulting from the 
provision of defined benefit plans and how those obligations will affect its financial position financial performance and 
cash flow the revision includes 
 •  the replacement of the expected return on pension plan assets and interest expense on pension plan liabilities with 
a single net interest component calculated on the net defined benefit liability or asset using the discount rate used 
to determine the defined benefit obligation and
 •  additional disclosures to explain the characteristics of a company’s defined benefit plans the amounts recognised 
in the financial statements and the risk arising from these plans
  the revision requires retrospective adoption but as the effect on the net interest cost and other comprehensive income 
for the year ended 31 march 2013 is not material the comparative figures have not been restated the finance cost 
disclosure has been restated to net the £11m interest cost on the defined pension scheme liabilities against the 
£12m investment income relating to the expected return on defined benefit pension scheme assets for the year ended  
31 march 2013 under a new heading called net interest on defined benefit liabilities also the disclosure required in note 
10 has been updated to reflect the changes to ias 19 employee benefits revised
•  ias 32 financial instruments presentation amended – amended to clarify that income taxes arising from distributions 
to equity holders are accounted for in accordance with ias 12 income taxes this change has not had a material 
impact on the group’s financial statements
•  ias 34 interim financial reporting amended – amended to clarify the requirements relating to segment information 
for total assets and liabilities for each reportable segment to enhance consistency with the requirements in ifrs 8 
operating segments this has not had an effect on the group’s operating segments disclosed in the group’s financial 
statements
•  ifrs 7 financial instruments disclosures amended – amended to enhance the disclosures required relating to the 
offsetting of assets and liabilities this change has not had a material impact on the group’s financial statements
•  ifrs 13 fair value measurement – aims to improve consistency and reduce complexity by providing a precise 
definition of fair value and a single source of fair value measurement and disclosure requirements for use across ifrss  
the introduction of the standard has not had a material impact on the group’s financial position or performance  
ifrs 13 also requires additional disclosures which are given in note 18 74 75
2 adoption of new and revised standards continued
at the date of authorisation of these financial statements certain new standards interpretations and amendments to 
existing standards are not yet effective and have not been early adopted by the group those of which are considered 
relevant to the group’s operations are as follows
accounting periods  
beginning on or after
• ias 16 property plant and equipment amended 1 july 2014
• ias 19 employee benefits amended 1 july 2014
•  ias 24 related party disclosures amended 1 july 2014
•  ias 27 separate financial statements 
   previously ias 27 ‘consolidated and separate financial statements’ 1 january 2014
•  ias 32 financial instruments presentation 
   amendments relating to the offsetting of assets and liabilities 1 january 2014 
•  ias 36 impairment of assets amended 1 january 2014
•  ias 38 intangible assets amended 1 july 2014
•  ias 39 financial instruments recognition and measurement amended 1 january 2014
•  ifrs 2 sharebased payment amended 1 july 2014
•  ifrs 3 business combinations amended 1 july 2014
•  ifrs 7 financial instruments disclosures amended 1 january 2018
•  ifrs 8 operating segments amended 1 july 2014
•  ifrs 9 financial instruments 1 january 2018
•  ifrs 10 consolidated financial statements 1 january 2014
•  ifrs 13 fair value measurement amended 1 july 2014
the adoption of these standards is not expected to have a material impact on the reported results or financial statements
3 significant accounting policies
basis of accounting
the consolidated financial statements have been prepared in accordance with international financial reporting standards 
ifrss as adopted by the european union eu ifric interpretations and the companies act 2006 applicable to companies 
reporting under ifrs
the consolidated financial statements have been prepared on the historical cost basis except for the defined benefit 
pension scheme note 10 derivative financial instruments note 18 assets held for sale note 20 and share based payments 
note 39 the principal accounting policies adopted are set out below
basis of consolidation
subsidiaries are all entities including special purpose entities over which the group has the power to govern the financial 
and operating policies generally accompanying a shareholding of more than one half of the voting rights the existence 
and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the 
group controls another entity subsidiaries are fully consolidated from the date on which control is transferred to the group 
they cease to be consolidated from the date that control ceases
the group uses the acquisition method of accounting to account for business combinations the consideration transferred 
for the acquisition of a subsidiary is the fair value of the assets transferred the liabilities incurred and the equity interests 
issued by the group the consideration transferred includes the fair value of any asset or liability resulting from a contingent 
consideration agreement acquisition related costs are expensed as incurred identifiable assets acquired and liabilities and 
contingent liabilities assumed on a business combination are measured initially at their fair values at the acquisition date
goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of  
noncontrolling interest over the net identifiable assets acquired and liabilities assumed if this consideration is lower than the 
fair value of the net assets of the subsidiary acquired the difference is recognised in profit or loss
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 74 75
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
3 significant accounting policies continued
intercompany transactions balances income and expenses on transactions between group companies are eliminated 
profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated
going concern
the directors have at the time of approving the financial statements a reasonable expectation that the group has adequate 
resources to continue in operational existence for the foreseeable future thus they continue to adopt the going concern basis 
of accounting in preparing the financial statements further detail is contained in the strategic report on pages 2 to 31
assets held for sale
cashflows and expenditure that relate to assets classified as held for sale are shown separately from continuing operations
assets classified as held for sale are measured at the lower of carrying value and fair value less costs to sell no depreciation 
is charged on assets classified as held for sale
assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through 
continuing use this condition is regarded as met only when the sale is highly probable and the asset is available for 
immediate sale in its present condition management must be committed to the sale which should be expected to qualify 
for recognition as a completed sale within one year from the date of classification
where an asset held for sale has not sold within one year the asset may remain classified as held for sale provided that the 
delay is caused by events or circumstances beyond the group’s control and management are still committed to the sale 
and the above criteria are still met
goodwill
goodwill arising on consolidation represents the excess of the cost of acquisition over the group’s interest in the fair value 
of the identifiable assets and liabilities of a subsidiary at the date of acquisition
goodwill is recognised as an asset and reviewed for impairment at least annually with cash generating units assessed by 
segment see note 15 any impairment is recognised immediately in profit for the year and is not subsequently reversed
on disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on 
disposal
goodwill arising on acquisitions before the date of transition to ifrs as adopted by the european union has been retained 
at the previous uk gaap amounts subject to being tested for impairment at that date goodwill written off to reserves under 
uk gaap in the year ended 31 march 1999 and earlier periods has not been reinstated and is not included in determining 
any subsequent profit or loss on disposal 
revenue recognition
revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for 
goods and services provided in the normal course of business net of discounts vat and other salesrelated taxes
where a contract contains several elements the individual elements are accounted for separately where appropriate and 
revenue thereon is measured at the fair value of the consideration received
provision is made for all anticipated contract losses as soon as they are identified
product revenue
revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer usually on 
delivery of goods
contract revenue
for fixedfee maintenance contracts the revenue arising is spread evenly over the term of the contract the amount by which 
revenue differs from payments on account is shown under receivables as accrued income or under payables as deferred 
revenue as appropriate costs related to the delivery of services under these contracts are charged to the consolidated 
statement of income as they arise typically these contracts are annual and costs arise evenly over the contract term  
an element of costs incurred in the initial set up transition or transformation phase of the contract are deferred and recorded 
within current assets these costs are then recognised in the consolidated statement of income on a straight line basis 
over the remaining contractual term these costs are directly attributable to specific contracts relate to future activity will 
generate future economic benefits and are assessed for recoverability on a regular basis
if the performance pattern is other than straight line revenue is recognised as services are provided usually on an output 
or consumption basis 76 77
3 significant accounting policies continued
other revenues
other revenues are recognised when receivable following delivery of a service
leasing
assets held under finance leases and hire purchase contracts are recognised as assets of the group at their fair  
value or if lower at the present value of the minimum lease payments each determined at the inception of the lease  
the corresponding liability to the lessor is included in the balance sheet as a finance lease obligation lease payments are 
apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on 
the remaining balance of the liability finance charges are charged directly to the consolidated statement of income
rentals payable under operating leases are charged to income on a straightline basis over the term of the relevant lease
benefits received and receivable as an incentive to enter into an operating lease are also spread on a straightline basis over 
the lease term
foreign currencies 
transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the 
transactions at each balance sheet date monetary assets and liabilities that are denominated in foreign currencies are 
retranslated at the rates prevailing on the balance sheet date nonmonetary assets and liabilities carried at fair value that 
are denominated in foreign currencies are translated at the rate prevailing at the date when the fair value was determined 
gains and losses arising on retranslation are included in net profit or loss for the year
borrowing costs
borrowing costs directly attributable to the acquisition construction or production of qualifying assets which are assets 
that necessarily take a substantial period of time to get ready for their intended use or sale are added to the cost of those 
assets until such time as the assets are substantially ready for their intended use or sale
all other borrowing costs are recognised in the consolidated statement of income in the period in which they are incurred
retirement benefit costs 
defined contribution pension schemes
the principal subsidiary undertakings contribute to a number of group personal pension plans in respect of certain employees 
these plans are defined contribution plans and the annual charge to the statement of income is the contributions payable in 
the year differences between contributions payable in the year and contributions actually paid are shown as either accruals 
or prepayments in the consolidated balance sheet
defined benefit pension schemes
the group operates two defined benefit pension schemes one was entered into during the previous year resulting from the 
transfer of employees under tupe transfer of undertakings protection of employment regulations since the transfer the 
employees have been accruing pension benefits and the group has been paying regular contributions into the scheme the 
icm computer group pension and assurance scheme has been closed to future service accrual
the costs of providing pensions under the defined benefit funded pension scheme are estimated on the basis of independent 
actuarial advice with full actuarial valuations carried out on a triennial basis and updated at each balance sheet date
the operating and finance costs of the scheme are recognised separately within the consolidated statement of income 
actuarial gains and losses are recognised in full in the period in which they occur and are presented in the consolidated 
statement of comprehensive incomeexpense 
the retirement benefit obligation recognised in the consolidated balance sheet represents the present value of the defined 
benefit obligation as adjusted for unrecognised past service costs and as reduced by the fair value of scheme assets 
any asset resulting from the calculation is limited to the present value of economic benefits available on the refunds and 
reduction in future contributions to the plan
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 76 77
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
3 significant accounting policies continued
shortterm employee benefits
the cost of shortterm accumulating balances is charged to the consolidated statement of income over the period during 
which the entitlement is earned at an average pay rate plus social security costs differences between the entitlement 
earned and the entitlement actually paid are shown as either accruals or prepayments in the consolidated balance sheet
taxation
the tax currently payable is based on taxable profit for the year taxable profit differs from net profit as reported in the 
consolidated statement of income because it excludes items of income or expense that are taxable or deductible in other 
years and it further excludes items that are never taxable or deductible the group’s liability for current tax is calculated 
using tax rates that have been enacted or substantively enacted by the consolidated balance sheet
deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets 
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and 
is accounted for using the balance sheet liability method deferred tax liabilities are generally recognised for all taxable 
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be 
available against which deductible temporary differences can be utilised such assets and liabilities are not recognised if the 
temporary difference arises from goodwill or from the initial recognition other than in a business combination of other assets 
and liabilities in a transaction that affects neither the tax profit nor the accounting profit
deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where 
the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not 
reverse in the foreseeable future
the carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no 
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered
deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset 
is realised deferred tax is charged or credited in the consolidated statement of income except when it relates to items 
charged or credited directly to equity in which case the deferred tax is also dealt with in equity
property plant and equipment 
property plant and equipment are stated at cost less accumulated depreciation and recognised impairment
cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition 
for its intended use
depreciation is charged so as to write off the cost of assets other than freehold land over their estimated useful lives using 
the straightline method on the following bases
freehold buildings 50 years
leasehold property  period of lease
fixtures and equipment 2 to 5 years
motor vehicles 4 years
assets held under finance leases and hire purchase contracts are depreciated over their expected useful lives on the same 
basis as owned assets or where shorter over the term of the relevant lease
the gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds 
and the carrying amount of the asset and is recognised in other operating charges
intangible assets
intangible assets are stated at cost less accumulated amortisation and any accumulated impairment losses
development costs
expenditure incurred in the development of software products or enhancements and their related intellectual property rights 
is capitalised as an intangible asset only when the future economic benefits expected to arise are deemed probable and the 
costs can be reliably measured development costs not meeting these criteria and all research costs are expensed in the 
consolidated statement of income as incurred capitalised development costs are amortised on a straight line basis over 
five years being their useful economic lives once the related software product or enhancement is available for use 78 79
3 significant accounting policies continued
other intangible assets
intangible assets acquired through a business combination are initially measured at fair value and are amortised on a 
systematic basis over their estimated useful lives on the following bases
value of brand name   15 years
customer contracts and relationships 5 to 10 years
impairment policy
at each balance sheet date the group reviews the carrying amounts of its property plant and equipment and intangible 
assets to determine whether there is any indication that those assets have suffered an impairment loss if any such indication 
exists the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss if any 
where the asset does not generate cash flows that are independent from other assets the group estimates the recoverable 
amount of the cashgenerating unit to which the asset belongs an intangible asset with an indefinite useful life is tested for 
impairment annually and whenever there is an indication that the asset may be impaired
the recoverable amount is the higher of fair value less costs to sell and value in use in assessing value in use the 
estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market 
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have 
not been adjusted
if the recoverable amount of an asset or cashgenerating unit is estimated to be less than its carrying amount the carrying 
amount of the asset cashgenerating unit is reduced to its recoverable amount an impairment loss is immediately 
recognised as an expense
where an impairment loss on assets other than goodwill subsequently reverses the carrying amount of the asset  
cashgenerating unit is increased to the revised estimate of its recoverable amount but so that the increased carrying 
amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for 
the asset cashgenerating unit in prior years a reversal of an impairment loss is immediately recognised in the consolidated 
consolidated statement of income
inventories
inventories are stated at the lower of cost and net realisable value
service stocks other than consumable stocks are provided against over four years so as to reduce their value to nil at the 
end of the period consumable stocks are expensed as they are purchased
financial instruments
financial assets and financial liabilities are recognised on the consolidated balance sheet when the group becomes party 
to the contractual provisions of the instrument
financial assets
trade receivables are recognised initially at fair value which is usually the original invoiced amount and are subsequently 
measured at amortised cost using the effective interest method less provision for impairment a provision for impairment is 
established when there is evidence of a risk of nonpayment taking into account ageing previous losses experienced and 
general economic conditions
cash and cash equivalents comprise cash on hand and demand deposits and other shortterm highly liquid investments 
that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value 
financial liabilities and equity
financial liabilities and equity instruments are classified according to the substance of the contractual arrangements  
entered into
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 78 79
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
3 significant accounting policies continued
trade payables are recognised initially at fair value which is usually the original invoiced amount and are subsequently 
measured at amortised cost using the effective interest method
borrowings are initially measured at fair value net of direct issue costs they are subsequently measured at amortised cost 
finance charges including premiums payable on settlement or redemption and direct issue costs are accounted for on an 
accrual basis to the consolidated statement of income using the effective interest method and are added to the carrying 
amount of the instrument to the extent that they are not settled in the period in which they arise
equity instruments are any contract that evidences a residual interest in the assets of the group after deducting all of its 
liabilities equity instruments issued by the company are recorded at the proceeds received net of direct issue costs 
derivative financial instruments and hedge accounting
the group uses derivative financial instruments such as interest rate swaps to hedge risks associated with interest rate 
fluctuations such derivative financial instruments are stated at fair value the fair values of interest rate swaps are determined 
by reference to market rates for similar instruments
in order to qualify for hedge accounting the group is required to document from inception the relationship between the item 
being hedged and the hedging instrument the group is also required to document and demonstrate an assessment of the 
relationship between the hedged item and the hedging instrument which shows that the hedge will be highly effective on an 
ongoing basis this effectiveness testing is performed at each period end to ensure that the hedge remains highly effective
hedge accounting is discontinued when the hedging instrument expires or is sold terminated or exercised or no longer qualifies 
for hedge accounting at that time any cumulative gain or loss on the hedging instrument recognised in equity is retained in 
equity until the highly probable forecast transaction occurs if a hedged transaction is no longer expected to occur the net 
cumulative gain or loss recognised in equity is transferred to the consolidated statement of income for the period
cash flow hedges 
changes in the effective portion of the fair value of derivative financial instruments that are designated as hedges of future 
cash flows are recognised directly in equity and the ineffective portion is recognised immediately in the consolidated 
statement of income where relevant if the cash flow hedge of a firm commitment or forecast transaction results in the 
recognition of a nonfinancial asset or liability then at the time it is recognised the associated gains or losses on the 
derivative that had previously been recognised in equity are included in the initial measurement for hedges that result in 
the recognition of a financial asset or liability amounts deferred in equity are recognised in the consolidated statement of 
income in the same period in which the hedged item affects net profit or loss
provisions and contingent liabilities
provisions are recognised when the group has a present obligation legal or constructive as a result of a past event it is 
probable that the group will be required to settle the obligation and a reliable estimate can be made of the amount of the 
obligation the provision is discounted to its present value where the effect is material
contingent liabilities are possible obligations which arise from past events and whose existence will be confirmed only by the 
occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the group
onerous contract provision
an onerous contract is considered to exist where the group has a contract under which the unavoidable costs of meeting 
the obligations under the contract exceed the economic benefits expected to be received under it
restructuring provision
a restructuring provision is recognised when the group has developed a detailed formal plan for the restructuring and 
has raised a valid expectation to those affected that it will carry out the restructuring by starting to implement the plan  
the measurement of a restructuring provision includes only the direct expenditures arising from the restructuring which are those 
amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity
dilapidation provision
the provision relates to the obligation to reinstate certain properties to their former condition at the end of the lease term 80 81
3 significant accounting policies continued
nonrecurring items
nonrecurring items are items of income or expenditure that in management’s judgement should be disclosed separately 
on the basis that they are material either by their nature or their size such items are included within the statement of income 
caption to which they relate and are separately disclosed either in the notes to the consolidated financial statements or 
on the face of the consolidated statement of income
sharebased payments
the group has applied the requirements of ifrs 2 sharebased payments in accordance with the transitional 
provisions ifrs 2 has been applied to all grants of equity instruments after 7 november 2002 that were unvested as of  
1 january 2005
the group issues equitysettled sharebased payments to certain employees equitysettled sharebased payments are 
measured at fair value at the date of grant the fair value determined at the grant date of the equitysettled sharebased 
payments is expensed on a straightline basis over the vesting period based on the group’s estimate of options that will 
eventually vest
the fair value of the sharebased payments except for the total shareholder return scheme is measured by the use of the 
blackscholes model the fair value of the total shareholder return tsr sharebased payment scheme is measured by 
the use of a stochastic model the expected life used in these models have been adjusted based on management’s best 
estimate for the effects of nontransferability exercise restrictions and behavioural considerations 
shares purchased through the employee benefit trust ebt are held at cost and are deducted from shareholders’ equity 
the right to a dividend on these shares has been waived 
4 critical accounting judgements and key sources of estimation uncertainty
the preparation of the financial statements requires management to make estimates and assumptions that affect the 
reported amounts of assets and liabilities disclosure of contingent assets and liabilities and the reported amounts of 
revenues and expenses during the reporting period actual results could differ from these estimates information about such 
judgements and estimation is contained in the accounting policies or the notes to the consolidated financial statements 
and the key areas are summarised below
areas of judgement that have the most significant effect on the amounts recognised in the financial statements are
nonrecurring items
nonrecurring items are items of income or expenditure that in management’ s judgement should be disclosed separately on 
the basis that they are material either by their nature or their size to an understanding of the group’s financial performance 
and significantly distort the comparability of financial performance between periods items of income or expense that are 
considered by management for designation as nonrecurring items include such items as significant restructuring and 
impairments of assets details of nonrecurring items are included in note 7
valuation of intangible assets and useful life
the group holds goodwill and other intangible assets on the consolidated balance sheet following the supplier contract 
termination in the year the group undertook a review of the carrying value of assets in the partner cash generating unit 
“cgu” the review concluded that the goodwill being carried in the partner cgu relates to certain contracts which have 
been diminishing over time whilst the value in use of the partner cgu would support the carrying value of some goodwill 
the reduction of the contracts to which the goodwill specifically related has led management to fully impair the goodwill and 
intangible assets as detailed in note 15 for the remaining goodwill and other intangible assets management has made 
assumptions in relation to the potential future cash flows discount rates and long term growth rates to determine the value 
in use by cgu 
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 80 81
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3 significant accounting policies continued 
provisions
onerous contract provision
the onerous contract provision has been derived on the basis of the most recent assessment of the likely net unavoidable 
costs to the end of the contract term management have considered the future costs of the contracts which can be 
determined with a high degree of accuracy however the future economic benefits expected to be received are based on 
forecasts which include uncertainties with regards to revenue assumptions detailed sensitivity analysis has been carried 
out on these calculations and management is confident the liability is the best estimate of the net unavoidable costs  
the total provisions are disclosed in note 28
4 critical accounting judgements and key sources of estimation uncertainty
restructuring provision
the group has developed a detailed formal plan for the restructuring which is management’s best estimate of the group’s 
liability the total provisions are disclosed in note 28
dilapidation provisions
dilapidation provisions have been derived on the basis of the most recent assessment of likely cost many of these obligations 
will not arise for a number of years and the costs are difficult to predict accurately in making these assessments the group 
has sought the aid of independent experts where appropriate the total provisions are disclosed in note 28
key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts 
of assets and liabilities within the next financial year are
retirement benefits
the group operates two defined benefit pension schemes which have been accounted for in accordance with ias 19 – 
employee benefits application of ias 19 requires the exercise of judgement in relation to various assumptions including 
future pay rises in excess of inflation employer and pensioner demographics and the future expected return on assets  
the group determines the assumptions to be adopted in discussion with its actuaries and believes these assumptions 
to be in line with uk practice generally but the application of different assumptions could have a significant effect on the 
amounts reflected in the financial statements further details can be found in note 10
derivative financial instruments
ias 39 requires interest rate swap contracts to be recorded on the balance sheet at their fair value changes in the fair 
value of derivatives are recorded each period in reserves when specific hedge accounting criteria are met the fair values of 
derivative instruments are determined using forward price curves forward price curves represent the group’s estimates of 
the prices at which a buyer or seller could contract today for delivery or settlement of the contracts at future dates and are 
therefore subjective further details can be found in note 18
5 revenue
an analysis of the group’s revenue is as follows
2014 
£m
2013 
£m
revenue  continuing operations
product 202 200
contract 1724 1883
other revenues 408 417
2334 2500 82 83
6 segmental reporting
the board who is considered to be the chief operating decision maker has determined its operating segments by business 
line based on the group’s management and internal reporting structure the principal activities are as follows
business continuity provision of business continuity and it disaster recovery services
managed services provision of information technology services and systems
partner provision of information technology services networking support and infrastructure services
we have realigned our business segments this year to be in line with our internal reporting and recognition of profits  
the major differences are that we no longer recognise a profit on the provision of field services from the partner segment to 
the managed services and business continuity segments in addition we now classify our revenues between the segments 
in the first instance according to the type of customer by splitting the business between sales to partners and sales directly 
to end users we then split the end user market between managed services and business continuity in this way we have 
slightly redefined our segments to ensure they are now in line with the internal management of the business the prior year 
revenue and profit from operations before amortisation of intangibles and nonrecurring items split between segments has 
been restated accordingly
the group’s operations are based entirely in the uk the group has no significant concentration of sales to a particular 
individual external customer
segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable 
basis corporate costs relate to central group costs including finance legal and employee costs that are not directly 
attributable to the operating segments
inter segment turnover has been eliminated
year ended 31 march 2014
business  
continuity
£m
managed 
services
£m
partner 
£m
corporate
£m
total
£m
revenue 506 684 1144  2334
profitloss from operations before amortisation of 
intangibles and nonrecurring items 124 12 70 29 177
amortisation of other intangible assets
nonrecurring items
10
406
loss from operations 239
finance costs including nonrecurring items 53
loss before tax 292
capital expenditure on segment assets
depreciation and amortisation in year
impairment of goodwill
impairment of other intangible assets
39
84


43
37


15
12
330
01




97
133
330
01
balance sheet
segment assets
unallocated assets
1258 380 380 01 2019
300
total assets 2319
segment liabilities
unallocated liabilities
428 245 433 01 1105
835
total liabilities 1940
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 82 83
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business  
continuity
managed 
services partner 
restated restated restated corporate total
year ended 31 march 2013 £m £m £m £m £m
revenue 520 847 1133  2500
profitloss from operations before amortisation of 
intangibles and nonrecurring items 132 08 90 24 190
amortisation of other intangible assets
nonrecurring items
16
718
loss from operations 544
finance costs including nonrecurring item 44
loss before tax 588
capital expenditure on segment assets
depreciation and amortisation in year
impairment loss recognised on property held for sale
impairment of goodwill
impairment of other intangible assets
48
91



39
50
01
672
09
15
13








102
154
01
672
09
balance sheet
segment assets
unallocated assets
1311 413 773 01 2498
192
total assets 2690
segment liabilities
unallocated liabilities
454 297 445 06 1202
862
total liabilities 2064
the analysis of total assets and liabilities excludes intersegment balances unallocated assets comprise of taxation and 
cash and cash equivalents and unallocated liabilities comprise of bank loans and overdrafts and derivative financial liabilities
6 segmental reporting continued 84 85
7 nonrecurring items
 2014 2013
£m £m
impairment loss on property held for sale note 20  01
legal and professional fees in relation to pension equalisation a  01
costs of reorganisation of the group b 48 17
contract provisions c 27 05
impairment of goodwill note 15 330 672
impairment of other intangible assets note 16 01 09
costs relating to the restatement d  13
406 718
nonrecurring items included in finance costs
refinancing finance costs e 02 
nonrecurring interest costs f  03
408 721
nonrecurring items in the years ending 31 march 2014 and 31 march 2013 comprise
a  the assumption regarding the 1997 effective date of the equalisation of retirement ages between men and women was challenged 
by the trustees of the scheme who believed that the effective date of equalisation may be 2005 the group sought direction from 
the courts during the year and the case was resolved in the company’s favour avoiding the need for further legal costs in the year 
2013 £01m
b  in the year  a further £48m 2013 £17m of charges relating to the reorganisation of the group were incurred during the reorganisation 
higher attrition levels led to surplus inventory which has now been recorded at its net realisable value where it is deemed to be lower 
than cost resulting in a £24m 2013 £nil writeoff of excess inventory held in the group in addition to the inventory writeoff £12m 
2013 £16m has been charged in respect of headcount reductions further items of £12m 2013 £01m were also incurred in the 
year
c  following the supplier contract termination a review of the group’s contract portfolio and related balances was carried out and 
a nonrecurring expense of £27m 2013 £05m has been recorded £12m of this relates to a contract with 1 year to run which 
requires a provision for expected lifetime contract losses the contract incurred a loss of £03m in the year ended 31 march 2014 
further items relate to the writeoff of current assets in respect of the previously announced supplier contract termination
d  there have been no costs incurred in the year in relation to the independent forensic investigation 2013 £13m
e  on 31 may 2013 the group successfully refinanced its bank facilities with its existing lenders unamortised loan costs of £01m and 
swap break costs of £01m have been incurred in the year 2013 £nil
f  the accounting irregularities and subsequent restatement increased the historic margin on the banking facility thus crystallising a 
further £03m of interest costs in the prior year no further costs have been incurred in the year
8 loss from operations
2014 2013
£m £m
revenue 2334 2500
raw materials and consumables 57 71
staff costs note 9 966 903
depreciation of property plant and equipment note 17 123 138
amortisation of other intangible assets note 16 10 16
impairment of goodwill note 15 330 672
impairment of intangible assets note 16 01 09
loss on disposal of property plant and equipment  03
inventory writeoff note 22 36 
other operating charges 1050 1232
239 544
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 84 85
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the following fees were paid or are payable to the company’s auditors pricewaterhousecoopers llp
2014 2013
£m £m
fees payable to the company’s auditor for the audit of the parent company  
and consolidated financial statements 01 01
fees payable to the company’s auditor for other services to the group
audit of the company’s subsidiaries 01 01
total audit fees 02 02
other services  11
total nonaudit fees  11
02 13
other services represent fees payable to pricewaterhousecoopers llp for their independent forensic investigation into the accounting 
irregularities and a review of the group’s accounting and control processes
9 staff costs
2014 2013
£m £m
their aggregate remuneration comprised
wages and salaries 831 784
social security costs 99 93
other pension costs note 10 31 24
sharebased payments note 39 05 02
966 903
the average monthly number of employees including directors was
number number
business continuity 237 196
managed services 493 418
partner 1599 1636
central administration 15 15
2344 2265
the remuneration of the key management personnel of the group is set out below in aggregate for each of the categories specified in 
ias 24 related party disclosures further information about the remuneration of individual directors is provided in the audited part of the 
remuneration committee report on page 52
2014 2013
£m £m
directors
shortterm employee benefits 09 09
postemployment benefits 01 01
termination benefits  03
share based payments 03 01
13 12
10 retirement benefit schemes
defined contribution scheme
the group operates a defined contribution retirement benefit scheme the assets of this scheme are held separately from 
those of the group
pension costs for defined contribution schemes are as follows
2014 2013
£m £m
defined contribution scheme 25 24
8 loss from operations continued 86 87
10 retirement benefit schemes continued
defined benefit schemes
the group operates two defined benefit pension schemes the federated pension plan “fpp scheme” and the icm 
computer group pension and assurance scheme “icm scheme” for certain of its employees the fpp scheme was 
entered into during the previous year resulting from the transfer of employees under tupe transfer of undertakings 
protection of employment regulations since the transfer the employees have been accruing pension benefits and the 
group has been paying regular contributions into the scheme
the icm scheme was closed to future service accrual with an effective date of 30 september 2010 members of this scheme 
have been invited to make contributions into the defined contribution plan in calculating the defined benefit obligation under 
ias 19 the actuary has assumed that the equalisation of retirement benefits between men and women was effective from 
1997 this assumption was challenged by the trustees of the scheme who believed that the effective date of equalisation 
may be 2005 the group sought direction from the courts during the year and the case was resolved in the company’s 
favour
the defined benefit schemes are administered by separate funds that are legally separate from the company the trustees 
of the pension fund are required by law to act in the interest of the fund and of all relevant stakeholders in the scheme 
the trustees of the pension fund are responsible for the investment policy with regard to the assets of the fund under the 
icm scheme the employees are entitled to retirement benefits varying between 125 and 167 of final salary multiplied 
by number of years of pensionable service on attainment of a retirement age of 65 no other post retirement benefits are 
provided the schemes are both funded
the schemes typically expose the company to actuarial risks such as investment risk inflation risk and longevity risk
investment risk
the present value of the defined benefit plans’ liabilities is calculated using a discount rate determined by 
reference to high quality corporate bond yields if the return on plan assets is below this rate it will create a 
plan deficit currently the plans have a relatively balanced investment in equity securities and debt instruments
the investment return in relation to equity securities is variable and as such they are considered riskier 
investments this results in ‘the equity risk premium’ which is included in the yield on the equity investment 
and compensates investors for the additional risk of holding this type of investment there is significant 
uncertainty about the expected size of this risk premium and this risk is managed by holding assets which are 
less risky in nature but have a corresponding lower return 
this risk of default on the assets invested in bonds is considered to be small
inflation risk
the defined benefit plans’ liabilities are linked to inflation a higher inflation rate would lead to higher liabilities 
the majority of the plans’ assets are either unaffected by or loosely correlated with inflation meaning that an 
increase in inflation will also increase any deficit or reduce any surplus
longevity risk
the present value of the defined benefit plans’ liabilities is calculated by reference to the best estimate of the 
mortality of plan participants an increase in the life expectancy of the plan participants will increase the plans’ 
liability
the most recent full actuarial valuation of the icm scheme’s defined benefit obligation was carried out at 6 april 2012 and 
updated to 31 march 2014 by a qualified independent actuary for ias 19 purposes the projected unit method was used in 
all valuations and assets were taken into account using market values in both schemes
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 86 87
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10 retirement benefit schemes continued
the weighted average major assumptions used by the actuaries were
2014 2013
 
discount rate 447 470
expected rate of salary increases 410 415
future pension increases 317 325
inflation rpi 349 350
inflation cpi 262 250
mortality tables used 100 of s1pxa
with cmi2011
improvements
12 pa
100 of s1pxa
with cmi2011
improvements
12 pa
and
110 of pnxa00
10 pa

the group uses cpi as the measure for inflation in increasing deferred pensions prior to retirement
the current life expectancies post retirement in years underlying the value of the accrued liabilities for the defined benefit 
pension schemes are
2014 2013
male female male female
member currently age 65 228 251 225 247
member currently age 40 246 270 246 270
amounts recognised in the consolidated statement of income in respect of the defined benefit schemes are as follows
2014 2013
£m £m
net interest on defined benefit assetsliabilities  01
amounts recognised in the consolidated statement of comprehensive incomeexpense in respect of the defined benefit 
schemes are as follows
2014 2013
£m £m
remeasurement losses 12 07
return on assets less interest income 04 17
recognitionnonrecognition of surplus 18 18
actuarial gainloss on defined benefit pension schemes 02 08
the amounts included in the consolidated balance sheet arising from the group’s defined benefit schemes are as follows
2014 2013
£m £m
present value of defined benefit obligations 284 250
fair value of scheme assets 302 268
surplus in plan 18 18
unrecognised surplus  18
net defined benefit asset 18 
amounts recognised on the balance sheet
retirement benefit asset 19 
retirement benefit obligation 01 
18 
at 31 march 2013 the group did not recognise the £18m surplus on the icm scheme this has been reversed at  
31 march 2014 as the group has an unconditional right to a refund  88 89
10 retirement benefit schemes continued
the group expects to contribute £17m 2013 £17m to the icm scheme in the next financial year to eliminate the deficit 
over a four year period there is no deficit recovery plan in place for the fpp scheme
fpp scheme
movements in the present value of defined benefit obligations were as follows
2014 2013
£m £m
at 1 april 2013 and 2012  
current service cost 06 
contributions by plan participants 01 
remeasurement gainslosses
actuarial gains from changes in financial assumptions 01 
actuarial losses from experience adjustments 02 
benefits received 08 
at 31 march 2014 and 2013 16 
movements in the fair value of scheme assets were as follows
2014 2013
£m £m
at 1 april 2013 and 2012  
contributions by the employer 06 
contributions by plan participants 01 
benefits received 08 
at 31 march 2014 and 2013 15 
icm scheme
movements in the present value of defined benefit obligations were as follows
2014 2013
£m £m
at 1 april 2013 and 2012 250 234
interest cost 12 11
remeasurement gainslosses
actuarial gains from changes in demographic assumptions  03
actuarial losses from changes in financial assumptions 11 09
actuarial losses from experience adjustments  01
benefits paid 05 02
at 31 march 2014 and 2013 268 250
movements in the fair value of scheme assets were as follows
2014 2013
£m £m
at 1 april 2013 and 2012 268 226
interest income 12 12
contributions by the employer 16 15
return on assets less interest income 04 17
benefits paid 05 02
at 31 march 2014 and 2013 287 268
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 88 89
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the major categories and fair values of the fpp and icm schemes’ assets at the balance sheet date for each category are 
as follows
2014 2013
£m £m
equities 152 135
bonds 145 131
cash and cash equivalents 05 02
302 268
the schemes’ assets do not include any of the group’s own financial instruments nor any property occupied or other 
assets used by the group all equity and debt instruments have quoted prices in active markets
the sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below
assumption change in assumption
impact on 
scheme liabilities 
£m
discount rate decrease by 05ppts increase by 35
inflation increase by 025ppts increase by 11
mortality mortality improvements increased from a long term rate of 12 to 15 increase by 04
the sensitivity to the mortality assumptions represents the following life expectancies post retirement in years
2014
male female
member currently age 65 228 251
member currently age 40 246 270
11 finance costs
2014 2013
£m £m
finance costs
interest on bank overdrafts and loans 42 34
interest on obligations under finance leases and hire purchase contracts 02 02
amortisation of loan issue costs 07 05
other interest 02 01
net interest on defined benefit liabilities  01
53 41
less amounts included in the cost of qualifying assets 02 
total interest expense excluding nonrecurring items 51 41
nonrecurring finance costs
refinancing finance costs 02 
nonrecurring interest costs  03
02 03
total finance costs 53 44
the net interest on defined benefit liabilities for the year is £nil 2013 £01m the ias 19 employment benefits amendment 
requires retrospective adoption as a result the finance cost disclosure has been amended to net the £11m interest cost on 
the defined benefit pension scheme liabilities against the £12m investment income related to the expected return on defined 
benefit pension scheme assets for the year ended 31 march 2013 
borrowing costs included in the cost of qualifying assets during the year arose on the general borrowing pool and are 
calculated by applying a capitalisation rate of 6090 2013 5060 to expenditure on such assets
10 retirement benefit schemes continued 90 91
12 taxation
the tax charge on loss from operations for the year was as follows
2014 2013
£m £m
current tax
uk corporation tax 12 15
adjustment in respect of prior years 01 07
total current tax 13 22
deferred tax note 29
origination and reversal of temporary differences 02 05
adjustment in respect of prior years 01 08
change of rate 01 01
total deferred tax 02 14
tax expense for the year 11 08
corporation tax is calculated at 23 2013 24 of the estimated assessable profit for the year 
the charge for the year can be reconciled to the loss per the consolidated statement of income as follows
2014 2013
£m  £m 
loss before tax 292 588
tax at the uk corporation tax rate of 23 2013 24 67 230 141 240
effects of
expenses that are not deductible in determining taxable profit 78 265 150 256
income not taxable in determining taxable profit 02 07 02 03
tax adjustments relating to share options 01 06 03 06
adjustments in respect of prior periods  01 01 03
change in tax rate 01 02 01 02
tax expense and effective tax rate for the year 11 35 08 14
the underlying
1
 effective tax rate of 240 2013 263 is based on the forecast annual effective rate applied to underlying
1
 
profit before tax for the year and takes into account the impact of the enactment of the finance act 2013 which includes a 
reduction in the rate of corporation tax from 23 to 21 from 1 april 2014 and 20 from 1 april 2015 this has reduced 
the deferred tax asset by £01m 2013 £nil the impact on the effective tax rate is a reduction of 02
the group’s total tax charge of £11m represents an effective rate of 35 march 2013 14 the reduction from the 
underlying
1
 effective tax rate of 240 to the effective tax rate of 35 reflects the tax impact of some of the nonrecurring 
items being the impairment of goodwill which is not deductible for taxation purposes
notes to the consolidated financial statements
for the year ended 31 march 2014 continued
1 
underlying – adjusted for nonrecurring items £408m 2013 £721m and amortisation of acquired intangibles £10m 2013 £16m 90 91
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12 taxation continued
in addition to the amount charged to the consolidated statement of income the following amounts have been charged
credited directly to equity
2014 2013
£m £m
deferred tax note 29
tax on share options  01
tax on actuarial losses  01
tax on cash flow hedge 02 
02 
13 earnings per share
2014 2013
underlying earnings per share excluding amortisation of intangibles and nonrecurring items
basic 126p 145p
diluted 121p 139p
the calculation of the basic and diluted earnings per share is based on the following data
earnings
2014 2013
£m £m
loss for the purposes of basic earningsloss per share and diluted earningsloss per share being 
net profit attributable to equity holders of the parent 303 596
amortisation of intangibles 10 16
nonrecurring items 408 721
tax on amortisation of intangibles and nonrecurring items 19 31
earnings for the purposes of underlying earnings per share being net profit attributable to equity hold
ers of the parent excluding amortisation of intangibles and nonrecurring items 96 110
number of shares
2014
m
2013
m
weighted average number of ordinary shares for the purposes of basic earnings per share 756 754
effect of dilutive potential ordinary shares
share options 29 30
weighted average number of ordinary shares for the purposes of diluted  
earnings per share 785 784
14 dividends
2014 2013
£m £m
amounts recognised as distributions to shareholders in the year
final dividend for the year ended 31 march 2013 of 400p 2012 720p per share 30 54
interim dividend for the year ended 31 march 2014 of 160p 2013 370p per share 12 28
42 82
proposed final dividend for the year ended 31 march 2014 of 100p 2013 400p per share 08 30 92 93
14 dividends continued
the interim dividend was recommended by the board on 26 november 2013 and was paid on 8 january 2014
the proposed final dividend was recommended by the board on 9 june 2014 and if approved will be paid on  
29 september 2014 
the proposed final dividend is subject to approval by shareholders at the annual general meeting and accordingly has not 
been included as a liability in these financial statements
15 goodwill
£m
cost and carrying amount
at 1 april 2012 1814
impairment of goodwill 672
at 1 april 2013 1142
impairment of goodwill 330
at 31 march 2014 812
goodwill acquired in a business combination is allocated at acquisition to the cash generating units “cgu”s that are 
expected to benefit from that business combination cgus represent the group’s operating segments by business line 
based on the group’s management and internal reporting structure after the recognition of impairment losses the carrying 
amount of goodwill has been allocated as follows
31 march 2014 31 march 2013
business 
continuity
managed 
services partner total
business 
continuity
managed 
services partner total
£m £m £m £m £m £m £m £m
goodwill 812   812 812  330 1142
the group tests goodwill annually for impairment at 31 march or more frequently if there are indications that goodwill might 
be impaired 
impairment loss
a £331m impairment charge was recognised as a nonrecurring expense in the year £330m related to goodwill and 
£01m related to other intangible assets 2013 £672m impairment of goodwill and £09m impairment of other intangible 
assets were recognised in the managed services cgu following the supplier contract termination the group undertook a 
review of the carrying value of assets in the partner cgu the review concluded that the goodwill and other intangible assets 
being carried in the partner cgu relates to certain contracts which have been diminishing over time whilst the value in use 
of the partner cgu would support the carrying value of some goodwill the reduction of the contracts to which the goodwill 
specifically related has led management to fully impair the goodwill and intangible assets
impairment review
an impairment review has been performed at 31 march 2014 for the remaining carrying value of each cgu the recoverable 
amount of a cgu is determined on value in use calculations the key assumptions used in determining the value in use 
calculations are set out below
cash flow projections
the group prepares riskadjusted cash flow forecasts derived from the most recent detailed financial budget approved 
by the directors the cash flow projections reflect the directors’ expectations of revenue ebitda growth and capital 
expenditure based on past experience and future expectations of business performance cash flows beyond the one year 
period have been extrapolated using perpetuity growth rates 
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 92 93
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discount rate
the discount rate applied to a cgu represents the group pretax weighted average cost of capital adjusted for the risk 
profile of the individual cgu
longterm growth rate
the longterm growth rates are determined with reference to current market conditions external forecasts and historical 
trends for the group’s key end markets the directors have made the judgement that this longterm growth rate does not 
exceed the longterm average growth rate for the industry
the assumptions used for each cgu are set out below
at 31 march 2014 at 31 march 2013
business 
continuity
managed 
services partner 
business 
continuity
managed 
services partner
     
growth rate 225 na na 225 225 225
pretax discount rate 110 na na 110 120 120
in assessing goodwill for impairment as at 31 march 2014 the directors made use of the most recent detailed calculations 
of the recoverable amount of the group’s cgus those calculations resulted in recoverable amounts exceeding the carrying 
values for each of the group’s cgus 
sensitivity to changes in assumptions 
whilst the directors consider that their assumptions are realistic it is possible that an impairment would be identified if any 
of the above key assumptions were changed significantly the group’s impairment review is sensitive to a change in the key 
assumptions used based on the group’s sensitivity analysis an increase in the discount rate in the most sensitive cgu 
of 46 or a decrease in the forecast ebitda of 290 in isolation would lead to the carrying amount of the cgu being 
equal to its recoverable amount 
using a discounted cash flow methodology necessarily involves making numerous estimates and assumptions regarding 
revenue growth operating margins tax rates appropriate discount rates capital expenditure levels and working capital 
requirements these estimates will likely differ from future actual results of operations and cash flows and it is possible that 
these differences could be material in addition judgements are applied by the directors in determining the level of cash
generating unit identified for impairment testing and the criteria used to determine which assets should be aggregated  
a difference in assumptions could affect whether an impairment is recorded and the extent of any impairment loss 
changes in business activities or structure may also result in changes to the level of testing in future periods further future 
events could cause the group to conclude that impairment indicators exist and that the asset values associated with a given 
operation have become impaired 
16 other intangible assets
customer 
contracts   
relationships
£m
computer 
software  
development
£m
total
£m
cost
at 1 april 2012 1 april 2013 and 31 march 2014 204 10 214
accumulated amortisation
at 1 april 2012 164 02 166
charge for the year 14 02 16
impairment note 7 09  09
at 1 april 2013 187 04 191
charge for the year 08 02 10
impairment note 7 01  01
at 31 march 2014 196 06 202
net book value
at 31 march 2014 08 04 12
at 31 march 2013 17 06 23
at 31 march 2012 40 08 48
following the supplier contract termination the group undertook a review of the carrying value of assets in the partner cgu 
resulting in an impairment charge of £01m to fully write down its other intangible assets see note 15 for further details
15 goodwill continued 94 95
17 property plant and equipment
freehold 
property 
£m
short 
leasehold 
properties 
£m
fixtures 
and 
equipment 
£m
motor 
vehicles 
£m
total 
£m
cost
at 1 april 2012 208 90 876 06 1180
reclassifications  02 02  
reclassified from held for sale note 20 07    07
additions  20 81 01 102
disposals   18  18
at 1 april 2013 215 108 941 07 1271
reclassifications 13 03 08  08
additions 02 10 85  97
disposals  12 70  82
at 31 march 2014 204 103 964 07 1278
accumulated depreciation
at 1 april 2012 21 45 483 04 553
reclassified from held for sale note 20 02    02
charge for the year 03 09 125 01 138
disposals   12  12
at 1 april 2013 26 54 596 05 681
reclassifications 06    06
charge for the year 03 10 110  123
disposals  12 69  81
at 31 march 2014 23 52 637 05 717
net book value
at 31 march 2014 181 51 327 02 561
at 31 march 2013 189 54 345 02 590
at 31 march 2012 187 45 393 02 627
included in the current year reclassifications are amounts to reanalyse assets between classes and between cost and 
accumulated depreciation and £02m relating to reclassifications between balance sheet accounts 
included in freehold property is land at cost of £43m 2013 £43m which is not depreciated 
included in additions to fixtures and equipment was £22m 2013 £08m that were financed by new finance leases and 
hire purchase contracts
the net book value of fixtures and equipment includes £48m 2013 £50m in respect of assets held under finance leases 
and hire purchase contracts
at 31 march 2014 the group had entered into contractual capital commitments amounting to £05m 2013 £07m
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 94 95
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18 derivative financial instruments 
2014 2013
liability liability
fair value notional fair value notional
£m £m £m £m
cash flow hedges
interest rate swaps
08 300 14 300
at the beginning of the year the group had three interest rate swaps split equally amongst three of its lenders hedging 
£300m until 29 april 2014 and £150m between 30 april 2014 and 30 april 2016 
on 26 june 2013 the group entered into additional £100m interest rate swap contracts with two of its existing lenders 
to hedge the risks associated with interest rate fluctuations on variable rates in respect of its £400m term loan the new 
swap arrangements under which the group receives interest at a variable rate and pays interest at a fixed rate hedge an 
additional £50m with each lender from 30 april 2014 to 30 april 2016 
on the same date the group also terminated a £100m swap arrangement with an existing lender and replaced this with a 
new £100m swap arrangement with the same lender the new swap arrangement under which the group receives interest 
at a variable rate and pays interest at a fixed rate hedges £100m from 26 june 2013 to 29 may 2015 
the amount hedged by interest swap arrangements will reduce by £100m to £200m on 29 may 2015 and the remaining 
arrangements are due to expire on 30 april 2016 the weighted average interest rate on all of the group’s fixed interest rate 
swap arrangements is 2462 2013 2665  
the group has recognised a £01m nonrecurring expense as a result of terminating its existing interest rate swap contract
fair value measurements
financial instruments that are measured at fair value subsequent to their initial recognition are grouped into levels 1 to 3 
based on the degree to which the fair value is observable
•  level 1 fair value measurements are those derived from quoted prices unadjusted in active markets for identical 
assets or liabilities
•  level 2 fair value measurements are those derived from inputs other than quoted prices included within level  
1 that are observable for the asset or liability either directly or indirectly and
•  level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or 
liability that are not based on observable market data
the fair value of the group’s financial assets and financial liabilities that are measured at fair value on a recurring and  
nonrecurring basis are
financial assetsfinancial 
liabilities
basis fair value fair value 
hierarchy
valuation technique and 
key inputs
2014 
£m
2013 
£m
assets held for sale nonrecurring asset 10 asset 10 level 2 the market approach has 
been used to value the 
properties by observing 
prices for similar properties
interest rate swaps recurring liability 08 liability 14 level 2 they are valued using the 
hypothetical derivative 
technique which incorporates 
observable market interest 
rates
there were no financial instruments measured at fair value included in level 1 or level 3 and there were no transfers between 
categories during the year 96 97
19 financial risk management
the group’s activities expose it to a variety of financial risks market risk including currency risk and interest rate risk  
credit risk and liquidity risk
funding and treasury risk management is carried out under a framework of policies and guidelines approved by the board 
the board is responsible for regular review and monitoring of treasury activity and for approval of specific transactions the 
authority of which may be delegated the group accounting function provides regular update reports of treasury activity to 
the board of directors 
the group does not enter into or trade financial instruments including derivative financial instruments for speculative purposes
capital risk management
the group seeks to match long term assets with long term funding and short term assets with short term funding 
equity retained profits and long term fixed interest debt are used primarily to finance intangible assets and property plant 
and equipment short term borrowings are required primarily to finance current assets
the group capitalisation policy seeks to maintain a strong credit rating and an appropriate funding structure whilst 
safeguarding the group’s ability to continue as a going concern
the group’s capital structure consists of net debt and total equity the following analysis summarises the components 
which the group manages as capital
2014 2013
£m £m
net debt 561 713
total equity 379 626
market risk
a foreign exchange risk
the group publishes its consolidated financial statements in sterling but also conducts some business in foreign currencies 
mainly the us dollar as a result it is subject to foreign exchange currency risk due to exchange rate movements which will 
affect the group’s transaction costs 
the board periodically reviews the net exchange risk and implements strategies as appropriate due to the relative stability 
of the foreign currencies in which the group deal and size of the foreign exchange transactions the group does not hedge 
the foreign exchange risk as the potential exposure is considered not to be material to the group’s results
the carrying amounts of the group’s foreign currency denominated monetary assets and liabilities at the reporting date are 
as follows
assets liabilities
2014 2013 2014 2014
£m £m £m £m
us dollar 15 02 02 14
norwegian kroner 01 02  
16 04 02 14
b interest rate risk
the group’s policy aims to manage the interest cost of the group within the constraints of its budget and its financial 
covenants at the year end £545m of the group’ s borrowings were subject to a floating rate the group monitors movements 
in the swap market and so took out interest rate swaps to hedge risks associated with interest rate fluctuations on £300m 
of the revolving credit facility
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 96 97
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the table below sets out the carrying amount of borrowings that are exposed to interest rate risk
2014 2013
£m £m
fixed interest rate borrowings 300 300
floating interest rate borrowings 545 550
total borrowings 845 850
the contractual maturity of these borrowings can be found in note 25
credit risk
credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the 
group the group monitors its credit exposures to its counterparties via their credit rating where applicable or through 
other publicly available financial information and its own trading records
the group does not have any significant credit risk exposure to any single counterparty or group of counterparties having 
similar characteristics the group defines counterparties as having similar characteristics if they are connected entities 
concentration of credit risk with respect to trade receivables is limited due to the group’s customer base being large and 
unrelated the credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks 
with high creditratings assigned by international credit rating agencies
the carrying amounts of financial assets recorded in the financial statements which is net of impairment losses represents 
the group’s maximum exposure to credit risk
liquidity risk
the group manages its liquidity requirements by maintaining adequate reserves banking facilities and reserve borrowing 
facilities by continuously monitoring forecast and actual cash flows all borrowing is agreed and monitored by the board 
of directors the group’s undrawn committed borrowing facilities are shown in note 25 the group has a policy of pooling 
group cash flows in order to maximise the return on surplus cash and also utilise cash within the group 
the following is an analysis of the contractual undiscounted cash flows payable under financial liabilities and derivative 
financial instruments as at the balance sheet date the table includes both interest and principal cash flows
due within 
one year 
£m
due  
between 
one and 
two years 
£m
due  
between 
two and 
three years 
£m
due in over 
three years 
£m
total 
£m
non derivative financial liabilities
bank loans 40 40 855  935
finance lease liabilities 08 05 04 07 24
other non interestbearing liabilities 418 02 01 02 423
466 47 860 09 1382
derivative financial instruments
net settled interest rate swaps 05 03   08
total as at 31 march 2014 471 50 860 09 1390
non derivative financial liabilities
bank loans 29 862   891
finance lease liabilities 15 06 01  22
other loan 04    04
other non interestbearing liabilities 372 07   379
420 875 01  1296
derivative financial instruments
net settled interest rate swaps 07 04 03  14
total as at 31 march 2013 427 879 04  1310
notional interest is included for the period from the year end up to the contractual maturity date of the debt calculated on 
the amount of debt drawn down at the year end
19 financial risk management continued 98 99
19 financial risk management continued
floating rate interest has been estimated using a future interest rate curve as at 31 march the cash flow movements in the 
interest rate swap are expected to affect the consolidated statement of income in the same period in which they occur
sensitivity analysis
financial instruments affected by market risk include borrowings deposits and derivative financial instruments the following 
analysis required by ifrs 7 is intended to illustrate the sensitivity to changes in market variables being uk interest rates 
and the us dollar euro and norwegian kroner to sterling exchange rates on the group’s financial instruments
the analysis excludes the impact of movements in market variables on the carrying value of pension and other  
postretirement benefits obligations and provisions
the sensitivity analysis has been prepared on the basis that the amount of net debt the ratio of fixed to floating interest rates 
of the debt and the derivative portfolio and the proportion of financial instruments in foreign currencies are all constant on 
the basis of the hedge designations in place at 31 march 2014 and 31 march 2013 respectively
the following table shows the illustrative effect on the consolidated statement of income and items that are recognised 
directly in equity that would result from reasonably possible movements in changes in uk interest rates before the effects 
of tax
2014 2013
consolidated 
statement of 
income 
 £m
equity 
 £m
consolidated 
statement of 
income 
 £m
equity 
 £m
uk interest rates  050ppts 03  03 
us dollar exchange rate  10 02   
a 10 change in the euro and norwegian kroner to sterling exchange rates has a minimal impact on the consolidated 
statement of income and equity
20 assets held for sale
assets held for sale of £10m 2013 £10m consist of properties held in the managed services division
during the prior year one of the properties classed as held for sale was sold for £07m another property was brought back 
into use and was reclassified to property plant and equipment at its carrying amount of £05m see note 17 
the remainder of the assets were classed as held for sale from 31 march 2008 due to market conditions outside of the 
group’s control they remained unsold at 31 march 2014 management are still committed to selling the remaining assets 
are actively marketing them at a price reasonable given the change in market conditions and anticipate the sale will occur 
in the next financial year
an impairment loss of £nil 2013 £01m has been recognised in the year on properties held for sale and reflects the 
difference between their carrying value and their estimated fair value in the market less costs of sale 
21 subsidiaries
a list of the significant subsidiaries included within the group accounts including the name country of incorporation and 
proportion of ownership interest is given in note 4 to the individual company financial statements on page 115
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 98 99
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22 inventories
2014 2013
£m £m
service stocks 73 106
during the year £45m 2013 £58m was recognised as an expense to the consolidated statement of income in relation 
to the systematic write down of service stock over the period of its consumption within the business an inventory write off 
of £36m 2013 £nil was also charged to nonrecurring £24m of which related to excess inventory held in the group as 
a result of higher attrition levels during the reorganisation this inventory has now been recorded at its net realisable value 
where it is deemed to be lower than cost
23 trade and other receivables
trade and other receivables at the balance sheet date comprise
2014 2013
£m £m
included within current assets
trade receivables 365 417
other receivables 07 42
prepayments and accrued income 160 169
532 628
the group’s trade receivables are stated after allowances for bad and doubtful debts based on management’s assessment 
of creditworthiness an analysis of which is as follows
2014 2013
£m £m
balance at the beginning of the year
09 22
increase in provision 
05 12
amounts utilised 
05 25
balance at the end of the year
09 09
as at 31 march 2014 trade receivables of £55m 2013 £58m were past due but not impaired the ageing of these trade 
receivables from due date is as follows
2014 2013
£m £m
under 30 days 30 36
30 – 60 days 11 10
60 – 90 days  04
90 – 120 days 12 02
over 120 days 02 06
total 55 58
concentration of credit risk with respect to trade receivables is limited due to the group’s customer base being large and 
unrelated therefore the directors believe the credit quality of the assets that are neither past due nor impaired are good 
and no further provision is required
the directors consider that the carrying amount of trade and other receivables approximates their fair value due to their 
short maturities 100 101
24 cash and cash equivalents
2014 
£m
2013 
£m
cash and cash equivalents
288 160
cash and cash equivalents comprise cash held by the group and shortterm bank deposits with an original maturity of three 
months or less the carrying amount of these assets approximates their fair value 
net cash and cash equivalents are held in the following currencies those held in currencies other than sterling have been 
converted into sterling at yearend exchange rates
2014 
£m
2013 
£m
sterling
272 157
us dollar
15 01
norwegian kroner
01 02
288 160
25 bank loans
the following table analyses bank borrowings excluding bank overdrafts 
2014 
£m
2013 
£m
noncurrent 
bank loans 827 848
total borrowings 827 848
total borrowings are repayable as follows
2014 
£m
2013 
£m
in more than one year but not more than two years  848
in more than two years but not more than five years 827 
827 848
all bank borrowings are denominated in sterling and are stated net of unamortised issue costs
the group refinanced its facilities on 31 may 2013 and entered into a £400m term loan and a £500m revolving credit 
facility with its existing lenders barclays bank plc hsbc bank plc the royal bank of scotland plc and clydesdale bank 
plc the limit on the revolving credit facility will be reduced by £50m on 30 november 2014 to £450m and a further £50m 
on 30 november 2015 taking the facility to £400m the term loan and remaining £400m on the revolving credit facility is 
due for repayment in full on 30 june 2016 interest is charged at libor plus margin where the margin is dependent upon 
the group’s net debt ebitda ratio ranging from 285 to 395 the company and certain subsidiaries as guarantor have 
entered into a composite guarantee in favour of the syndicated lenders on account of the company and certain subsidiaries 
as principal
the directors estimate the fair value of the group’s bank borrowings to be equivalent to its book value at 31 march 2014 
of the total committed borrowing facilities of £900m 2013 £900m the group had available £55m 2013 £50m of 
undrawn facilities
in addition the group has an uncommitted overdraft facility at the balance sheet date of £100m which has been reduced 
by £25m to £75m from 1 april 2014 and by a further £25m to £50m from 1 august 2014 this facility was undrawn at 
31 march 2014
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 100 101
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26 trade and other payables
trade and other payables principally comprise the following amounts 
2014 2013
£m £m
included within noncurrent liabilities
other payables 40 51
included within current liabilities
trade payables 184 223
other payables 107 48
social security and other taxes 89 90
accruals 136 113
516 474
as at 31 march 2014 trade payables of the group were equivalent to 43 days 2013 53 days
the directors consider that the carrying amount of trade payables approximates their fair value
27 obligations under finance leases and hire purchase contracts
minimum lease payments
present value of minimum 
lease payments
2014 
£m
2013 
£m
2014 
£m
2013 
£m
amounts payable under finance leases and hire purchase contracts
within one year 08 15 07 14
in the second to fifth years inclusive 16 07 15 07
24 22 22 21
less future finance charges 02 01
present value of lease obligations 22 21
less amounts due for settlement within 12 months 07 14
amounts due for settlement after 12 months 15 07
it is the group’s policy to lease certain of its fixtures and equipment under finance leases and hire purchase contracts 
the average term is 5 years interest rates are fixed at the contract date all leases are on a fixed repayment basis and no 
arrangements have been entered into for contingent rental payments 
all lease and hire purchase obligations are denominated in sterling
there is no material difference between the minimum lease payments and the present value of the minimum lease payments
the fair value of the group’s lease and hire purchase obligations approximates their carrying amount
the group’s obligations under finance leases and hire purchase contracts are secured by the lessors’ charges over the 
leased assets 102 103
28 provisions
2014 2013
£m £m
onerous contract provision 43 52
restructuring provision 11 16
dilapidation provision 52 53
106 121
current 38 40
noncurrent 68 81
106 121
onerous  
contract
provision 
£m
restructuring
provision 
£m
dilapidation
provision 
£m
total 
£m
balance at the start of the year 52 16 53 121
additional provision in the year 13 12 02 27
reclassification of provision 02  02 
utilisation of provision 19 13 01 33
reversal of provision 05 04  09
balance at the end of the year 43 11 52 106
included in the onerous contract provision is £26m 2013 £42m relating to a single loss making contract for a licensed 
colocation facility the contract has 2 years left until expiry and the provision represents management’s best estimate of 
the group’s liability the onerous contract provision also includes £08m in relation to a contract with 1 year to run which 
requires a provision for expected lifetime contract losses and an onerous lease provision relating to leasehold properties 
which end between june 2014 and february 2016
the restructuring provision is management’s best estimate in relation to redundancy costs which have been incurred as a 
result of the reorganisation it is expected to be used within the next 12 months
the dilapidations provision relates to the obligation to reinstate certain properties to their former condition at the end of their 
leases which end between january 2015 and september 2022
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 102 103
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29 deferred tax
the following are the major deferred tax assets and liabilities recognised by the group and movements thereon during the 
current and prior year
accelerated share retirement 
intangible tax option benefit
hedging assets depreciation costs provisions obligations total
£m £m £m £m £m £m £m
at 1 april 2012 03 03 19 07 04 03 05
creditcharge to income   11 02 09 04 14
chargecredit to equity    01  01 
at 1 april 2013 03 03 08 04 13  09
creditcharge to income  02 05   04 03
chargecredit to equity 02      02
effect of change in tax rate
  statement of income   01 01 01  01
at 31 march 2014 01 01 02 03 12 04 09
deferred tax assets and liabilities are offset where the group has a legally enforceable right to do so the following is the 
analysis of the deferred tax balances after offset for financial reporting purposes
2014 2013
£m £m
deferred tax assets 16 20
deferred tax liabilities 07 11
09 09
a net deferred tax asset of £09m 2013 £09m has been recognised as the group considers it is probable that there will 
be sufficient taxable profits for the future deductions to be utilised
at 31 march 2014 £03m 2013 £15m of the deferred tax asset and £06m 2013 £09m of the deferred tax liability is 
expected to be settled after more than one year
at 31 march 2014 the group had capital losses carried forward in respect of which no deferred tax assets were recognised 
amounting to £27m 2013 £36m the group’s capital losses have no expiry date restrictions
30 share capital
allotted 
and fully 
paid
number £m
ordinary shares of 1p each
at 1 april 2012 and 1 april 2013 75380350 08
new shares issued 7547934 
exercise of share options 99000 
at 31 march 2014 83027284 08
on 17 march 2014 a total of 7547934 new ordinary shares with a nominal value of 1 pence each were issued at a price 
of 114 pence per share raising gross proceeds of £86m these shares were fully paid and rank pari passu in all respects 
with the existing ordinary shares of the company including the right to receive all dividends and other distributions declared 
made or paid after the date of issue
a total of 65978 ordinary shares are held by the employee benefit trust 2013 61468 for which the right to receive 
dividends has been waived
the company has one class of ordinary share capital which carries no right to fixed income 104 105
31 share premium account
£m
at 1 april 2012 and 1 april 2013 376
exercise of share options 01
at 31 march 2014 377
32 merger reserve 
£m
at 1 april 2012 and 1 april 2013 575
premium on issue of shares 86
share issue costs 03
transfer to retained losses 83
at 31 march 2014 575
in accordance with section 612 of the companies act 2006 the premium on ordinary shares issued in relation to acquisitions 
is recorded as a merger reserve the reserve is not distributable but can be used to make a bonus issue on fully paid shares 
or to make a transfer to retained earningslosses an amount equal to the amount that has become realised on either the 
disposal or write down of the related investment
on 17 march 2014 phoenix it group plc issued 7547934 new ordinary shares of 1 pence each at a price of 114 pence 
per placing share the placing raised net proceeds after fees of £83m the placing was effected through a structure which 
resulted in a merger reserve arising under section 612 of the companies act 2006 following receipt of the cash proceeds 
through the structure the excess of the net proceeds over the nominal value of the share capital issued was transferred 
from the merger reserve to retained losses  
33 other reserves
hedging 
reserve 
£m
share option 
reserve 
£m
total 
£m
at 1 april 2012 11 26 15
share option expense  02 02
transfer to retained earnings on exercise of share options  01 01
deferred tax on share option reserve  01 01
at 1 april 2013 11 26 15
share option expense  07 07
gain recognised on cash flow hedges 07  07
deferred tax on cash flow hedges 02  02
at 31 march 2014 06 33 27
other reserves are shown net of taxation as appropriate
hedging reserve
the hedging reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges  
the cumulative deferred gain or loss on the hedge is recognised in profit or loss when the hedged transaction impacts 
the profit or loss or is included as a basis adjustment to the nonfinancial hedged item consistent with the applicable 
accounting policy
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 104 105
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33 other reserves continued
share option reserve
the share option reserve represents amounts expensed in the consolidated statement of income in connection with 
awards made under the group’s share option scheme less exercises or lapses of any non tsr awards
34 retained earningslosses
£m
at 1 april 2012 336
movement on defined benefit pension schemes 08
deferred tax on pension reserve 01
exercise of share options 01
loss for the year 596
dividends 82
at 1 april 2013 348
movement on defined benefit pension schemes 02
loss for the year 303
transfer from merger reserve 83
dividends 42
at 31 march 2014 608
35 notes to the cash flow statement
2014 2013
£m £m
loss from operations 239 544
adjustments for
depreciation of property plant and equipment 123 138
loss on disposal of property plant and equipment  03
impairment of property held for sale  01
impairment of goodwill 330 672
impairment of other intangible assets 01 09
amortisation of intangibles 10 16
share option costs 07 02
retirement benefit  difference between contribution and amounts charged 15 15
operating cash flows before movements in working capital 217 282
decrease in inventories 33 25
decreaseincrease in receivables 96 53
increasedecrease in payables 26 49
decrease in deferred income 111 27
cash generated by operations 261 178
income taxes refund 06 16
interest paid 73 36
net cash from operating activities 194 158
included in interest paid was £24m 2013 £nil relating to loan issue costs incurred in order to refinance the group’s debt 
facilities and £03m 2013 £nil as a result of the increased margin payable on the banking facility following the accounting 
irregularities and subsequent restatement 106 107
36 reconciliation of net borrowings
2014 2013
£m £m
increase in cash and cash equivalents during the year 128 08
movement in borrowings 24 33
movement in net borrowings during the year 152 25
net borrowings brought forward 713 688
net borrowings carried forward 561 713
cash and cash equivalents 288 160
other current borrowings 07 18
noncurrent borrowings 842 855
net borrowings carried forward 561 713
37 operating lease arrangements
the group as lessee
2014 2013
£m £m
minimum lease payments under operating leases recognised in income for the year 87 87
at the balance sheet date the group had outstanding commitments for future minimum lease payments under non
cancellable operating leases which fall due as follows
2014 2013
£m £m
within one year 133 117
in the second to fifth years inclusive 330 316
after five years 161 182
624 615
operating lease payments represent rentals payable by the group for land and buildings fixtures and fittings equipment 
and motor vehicles
38 contingent liabilities
provision is made for the directors’ best estimate of all known legal claims and all legal actions in progress the group takes 
legal advice as to the likelihood of success of claims and actions and no provision is made where the directors consider 
based on advice that the action is unlikely to succeed or a sufficiently reliable estimate of the potential obligation cannot be 
made the group has no material claims or actions as at 31 march 2014 31 march 2013 £nil other than an outstanding 
potential claim relating to the prior year which the board believe is fully covered by insurance 
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 106 107
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39 sharebased payments
equitysettled share option plans
the group has operated the following equitysettled share option plans during the year
enterprise management incentive emi plan
performance share plan psp
post flotation no further awards have been made under the emi plan
the general terms and conditions of each plan are as follows
emi psp
exercise price all grants under the emi plan were made 
at prices higher than the agreed market 
price of the company’s shares at the 
date of grant 
all awards made under the psp have a 
nil exercise price the number of options 
granted to eligible group employees is 
determined as a proportion of base salary 
using the average of the middle market 
quotes for the company’s shares for the 
three days immediately prior to grant
vesting period vesting of all emi plan options was 
conditional upon the flotation of the 
company consequently all the emi 
plan options vested in november 2004
three years from the date of grant
lapse date all emi plan options automatically 
lapse if they remain unexercised after 
a period of ten years from the date of 
grant being 16 may 2003 furthermore 
options are forfeited if the option holder 
ceases to be a group employee before 
exercising the option
psp options lapse if they remain 
unexercised after a period of ten years 
from the date of grant furthermore 
options are forfeited if the option holder 
ceases to be a group employee before 
exercising the option
performance conditions none i scheme 1 eps
the psp awards are subject to 
achieving a performance condition 
related to average annual growth in 
either eps or profit growth over a 
threeyear period of between 5 and 
20 per annum this results in between 
20 and 100 of the options granted 
vesting performance between these 
points is on a progressive scale
ii scheme 2 tsr
the extent to which options vest depend 
on the group’s performance over the 
threeyear period following the award 
date the psp awards are subject to the 
group’s total shareholder return tsr 
performance which will be measured 
against the companies comprising 
the ftse all share index excluding 
ftse 100 index and investment trust 
companies 108 109
39 sharebased payments continued
emi
2014 2013
options
weighted
average
exercise 
price options
weighted
average
exercise 
price 
balance at the start of the year 99500 82p 108500 79p
exercised during the year 99000 82p  
forfeited during the year 500 96p 9000 51p
outstanding at the end of the year   99500 82p
exercisable at the end of the year   99500 82p
the weighted average share price at the date of exercise for share options exercised during the year was 134p for emi
on 15 may 2013 all remaining options under the emi scheme lapsed
psp
2014 2013
options
weighted
average
exercise 
price options
weighted
average
exercise 
price 
balance at the start of the year 2709452  3204876 
granted during the year 1385000  1805000 
exercised during the year 8215  39327 
forfeited during the year 677043  1497097 
expired during the year 418000  764000 
outstanding at the end of the year 2991194  2709452 
exercisable at the end of the year 36409  61453 
the weighted average share price at the date of exercise for share options exercised during the year was 151p for psp 
the options outstanding at 31 march 2014 had a weighted average exercise price of nil p and a weighted average remaining 
contractual life of 9 years in 2013 options were granted on 14 august 2012 and 7 december 2012 on 25 october 2012 
the options granted on 14 august 2012 were modified to reflect an averaging period of 1 month beginning 3 september 
2012 rather than the 3 months prior to the grant date the aggregate of the estimated fair values of the options granted on  
14 august 2012 and 7 december 2012 was £17m including the incremental fair value as a result of the modification the 
aggregate of the estimated fair values of the options granted during the year was £19m
in the year options were granted on 3 june 2013 4 december 2013 and 18 march 2014 the aggregate of the estimated 
fair values of the options granted on those dates was £12m
the weighted average fair value of the share options granted during the year was calculated using a stochastic model with 
the following assumptions and inputs
notes to the consolidated financial statements
for the year ended 31 march 2014 continued 108 109
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
2014 2013
weighted average share price £148 £195
weighted average exercise price nil nil
expected volatility 42 39
expected life 3 years 3 years
weighted average riskfree rate na na
weighted average dividend yield 462 562
expected volatility was determined by calculating the historical volatility of the group’s share price over the previous  
three years and by comparison with comparable companies 
other sharebased plans
the company introduced a share incentive plan on flotation all employees were entitled to apply for free shares up to a 
value of £1250 depending on their period of service the company issued 259558 shares in connection with this award
in addition employees are able to buy shares by deduction from their pretax salary under the current sip legislation this 
is restricted to a maximum of £1500 in each tax year or if less 10 of salary from 6 april 2014 the maximum value that 
can be purchased has increased to £1800 in each tax year or if less 10 of salary
the group recognised total expense in the consolidated statement of income of £05m relating to equitysettled  
sharebased payment transactions in 2014 2013 £02m
40 related party transactions
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation 
and are disclosed in note 17 to the individual company financial statements transactions with directors who are the key 
management personnel are disclosed in the remuneration committee report
39 sharebased payments continued 110 111
report on the parent company financial 
statements
our opinion
in our opinion the financial statements defined below
•  give a true and fair view of the state of the parent 
company’s affairs as at 31 march 2014
•  have been properly prepared in accordance with united 
kingdom generally accepted accounting practice and
•  have been prepared in accordance with the requirements 
of the companies act 2006
this opinion is to be read in the context of what we say in 
the remainder of this report
what we have audited
the parent company financial statements the “financial 
statements” which are prepared by phoenix it group plc 
comprise
•  company balance sheet as at 31 march 2014
•  the notes to the financial statements which include a 
summary of significant accounting policies and other 
explanatory information
the financial reporting framework that has been applied 
in their preparation is applicable law and united kingdom 
accounting standards united kingdom generally accepted 
accounting practice
certain disclosures required by the financial reporting 
framework have been presented elsewhere in the annual 
report and accounts the “annual report” rather than in 
the notes to the financial statements these are cross
referenced from the financial statements and are identified 
as audited
what an audit of financial statements involves
we conducted our audit in accordance with international 
standards on auditing uk and ireland “isas uk  ireland” 
an audit involves obtaining evidence about the amounts 
and disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free 
from material misstatement whether caused by fraud or 
error this includes an assessment of
•  whether the accounting policies are appropriate to 
the parent company’s circumstances and have been 
consistently applied and adequately disclosed
•  the reasonableness of significant accounting estimates 
made by the directors and
•  the overall presentation of the financial statements
in addition we read all the financial and nonfinancial 
information in the annual report to identify material 
inconsistencies with the audited financial statements and 
to identify any information that is apparently materially 
incorrect based on or materially inconsistent with  
the knowledge acquired by us in the course of performing 
the audit if we become aware of any apparent material 
misstatements or inconsistencies we consider the 
implications for our report
opinions on other matters prescribed by 
the companies act 2006
in our opinion
•  the information given in the strategic report and the 
directors’ report for the financial year for which the 
financial statements are prepared is consistent with 
the financial statements and
•  the part of the directors’ remuneration report to be 
audited has been properly prepared in accordance with 
the companies act 2006
independent  
auditors’ report 
to the members of phoenix it group plc 110 111
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
other matters on which we are required 
to report by exception
adequacy of accounting records and information and 
explanations received
under the companies act 2006 we are required to report to 
you if in our opinion
•  we have not received all the information and explanations 
we require for our audit or
•  adequate accounting records have not been kept by 
the parent company or returns adequate for our audit 
have not been received from branches not visited by 
us or
•  the financial statements and the part of the directors’ 
remuneration report to be audited are not in agreement 
with the accounting records and returns
we have no exceptions to report arising from this 
responsibility
directors’ remuneration
under the companies act 2006 we are required to report 
to you if in our opinion certain disclosures of directors’ 
remuneration specified by law are not made we have no 
exceptions to report arising from this responsibility
other information in the annual report
under isas uk  ireland we are required to report to you if 
in our opinion information in the annual report is
•  materially inconsistent with the information in the 
audited financial statements or
•  apparently materially incorrect based on or materially 
inconsistent with our knowledge of the company 
acquired in the course of performing our audit or
• is otherwise misleading
we have no exceptions to report arising from this 
responsibility
responsibilities for the financial 
statements and the audit
our responsibilities and those of the directors
as explained more fully in the directors’ responsibilities 
statement set out on page 61 the directors are responsible 
for the preparation of the financial statements and for being 
satisfied that they give a true and fair view
our responsibility is to audit and express an opinion on  
the financial statements in accordance with applicable  
law and isas uk  ireland those standards require us 
to comply with the auditing practices board’s ethical 
standards for auditors
this report including the opinions has been prepared for and 
only for the company’s members as a body in accordance 
with chapter 3 of part 16 of the companies act 2006 and 
for no other purpose we do not in giving these opinions 
accept or assume responsibility for any other purpose or 
to any other person to whom this report is shown or into 
whose hands it may come save where expressly agreed by 
our prior consent in writing
other matter
we have reported separately on the group financial 
statements of phoenix it group plc for the year ended  
31 march 2014
miles saunders senior statutory auditor
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors
milton keynes
9 june 2014 112 113
company balance sheet 
as at 31 march 2014
2014 2013
note £m £m
fixed assets
investments 4 1750 1844
current assets
debtors 5 666 687
cash at bank and in hand 02 06
668 693
creditors amounts falling due within one year 6 386 462
net current assets 282 231
total assets less current liabilities 2032 2075
creditors amounts falling due after more than one year 7 827 848
provisions for liabilities 8 03 
net assets 1202 1227
capital and reserves
called up share capital 9 08 08
share premium account 10 377 376
merger reserve 11 575 575
hedging reserve 12 07 14
share option reserve 13 33 26
profit and loss account 14 216 256
total shareholders’ funds 15 1202 1227
the financial statements of phoenix it group plc registered number 03476115 were approved by the board of directors 
and authorised for issue on 9 june 2014 they were signed on its behalf by
jane aikman
chief operating officer  chief financial officer 112 113
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
1 accounting policies
basis of accounting
the financial statements are prepared under the historical cost convention as modified by the measurement of share based 
payments and the revaluation of certain financial instruments and have been prepared in accordance with the companies 
act 2006 and applicable united kingdom accounting standards as permitted by the companies act 2006 the company 
has not presented its own profit and loss account
the directors have presented the financial statements on a going concern basis which assumes that the company and 
group will have sufficient resources to meet liabilities as they fall due for at least the next 12 months
in forming their view the directors have considered the forecasts prepared and the facilities available from the group’s 
bankers for a period in excess of 12 months from the date of these accounts based on these forecasts and after taking into 
consideration all relevant matters that should be taken into consideration the directors have concluded that it is appropriate 
to present the financial statements on a going concern basis
the principal accounting policies adopted are set out below they have all been applied consistently throughout the year 
and the preceding year
foreign currencies
monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance 
sheet date transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of 
transaction exchange differences are taken into account in arriving at the operating result 
taxation
deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets 
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit 
and is accounted for using the balance sheet liability method deferred tax assets are recognised to the extent that it is 
probable that taxable profits will be available against which deductible temporary differences can be utilised such assets 
are not recognised if the temporary difference arises from goodwill or from the initial recognition other than in a business 
combination of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit
the carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no 
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered
deferred tax is calculated at the tax rates that are expected to apply in the period when the asset is realised deferred tax is 
credited in the profit and loss account except when it relates to items credited directly to equity in which case the deferred 
tax is also dealt with in equity
investments
investments are included in the balance sheet at cost less any provision for permanent impairment
financial instruments
financial assets and financial liabilities are recognised on the company’s balance sheet when the company becomes party 
to the contractual provisions of the instrument
financial assets
cash at bank and in hand comprise cash on hand and demand deposits and other shortterm highly liquid investments 
that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value 
notes to the company financial statements
for the year ended 31 march 2014 114 115
1 accounting policies continued
financial liabilities and equity
financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered 
into
trade creditors are recognised initially at fair value which is usually the original invoiced amount and are subsequently 
measured at amortised cost using the effective interest method
borrowings are initially measured at fair value net of direct issue costs they are subsequently measured at amortised cost 
finance charges including premiums payable on settlement or redemption and direct issue costs are accounted for on an 
accrual basis to the profit and loss account using the effective interest method and are added to the carrying amount of the 
instrument to the extent that they are not settled in the period in which they arise
equity instruments are any contract that evidences a residual interest in the assets of the group after deducting all of its 
liabilities equity instruments issued by the company are recorded at the proceeds received net of direct issue costs
bank borrowings
interestbearing bank loans are recorded at the proceeds received less any direct issue costs finance charges and direct 
issue costs are accounted for on an accruals basis in the profit and loss using the effective interest method and are added 
to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise
sharebased payments
the company has applied the requirements of frs 20 ‘sharebased payments’ in accordance with the transitional 
provisions frs 20 has been applied to all grants of equity instruments after 7 november 2002 that were unvested as of  
1 january 2005
the company issues equitysettled sharebased payments to certain employees equitysettled sharebased payments are 
measured at fair value at the date of grant the fair value is expensed on a straightline basis over the vesting period based 
on the estimate of shares that will eventually vest
at each reporting date estimates regarding the future probability of service and nonmarket performance conditions being 
met are revised on a basis consistent with recent experience any resultant revisions of original estimates are recorded 
as an adjustment to the cost of investments in employing group entities or in the profit and loss as appropriate and the 
share option reserve
derivative financial instruments and hedge accounting
the company uses derivative financial instruments to reduce exposure to interest rate movements the company does not 
hold or issue derivative financial instruments for speculative purposes
for an interest rate swap to be treated as a hedge the instrument must be related to actual assets or liabilities or a probable 
commitment and must change the nature of the interest rate by converting variable rate to fixed rate or vice versa interest 
differentials under these swaps are recognised by adjusting new interest payable over the period of the contracts
if an instrument ceases to be a hedge for example because the underlying hedged position is eliminated the instrument is 
marked to market and any resulting profit or loss recognised at that time 
2 staff costs
the directors were the only employees during the year and they received all of their remuneration as disclosed in the 
remuneration committee report on page 52 from phoenix it services limited a subsidiary entity
notes to the company financial statements
for the year ended 31 march 2014 continued 114 115
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
3 profit of parent company
as permitted by section 408 of the companies act 2006 the profit and loss account of the parent company is not 
presented as part of these accounts the parent company’s loss after tax for the financial year amounted to £81m  
2013 profit after tax of £62m
the fees paid or are payable to the company’s auditors pricewaterhousecoopers llp for the audit of the company and 
the consolidated financial statements is shown in note 8 to the consolidated financial statements
4 investments
total
£m
cost 
at 1 april 2013 1856
additions in respect of sharebased payments 03
at 31 march 2014 1859
accumulated impairment
at 1 april 2013 12
impairment 97
at 31 march 2014 109
net book value
at 31 march 2014 1750
at 31 march 2013 1844
at 31 march 2014 the company held directly or indirectly 100 of the allotted share capital of the following principal 
undertakings which are all included in the consolidation
name of subsidiary country of registration
class of share 
capital held nature of business
phoenix it services limited england and wales ordinary provision of information 
technology services
trend network services england and wales ordinary provision of information 
technology networking 
support and infrastructure 
services
phoenix it continuity and resilience services 
limited formerly icm business continuity 
services limited
england and wales ordinary provision of business 
continuity and it disaster 
recovery services
phoenix it continuity consulting limited 
formerly icm continuity consulting limited
england and wales ordinary software development and 
support
phoenix it managed services limited 
formerly servo limited
england and wales ordinary provision of information 
technology services and 
systems
phoenix it computer group scotland 
limited formerly icm computer group 
scotland limited
scotland ordinary provision of information 
technology services and 
systems
aghoco 1000 limited england and wales ordinary provision of information 
technology services
5 debtors amounts falling due within one year
2014 
£m
2013 
£m
amounts owed by group undertakings note 17 644 664
prepayments 20 21
deferred tax asset 02 02
666 687
the deferred tax asset relates to accelerated capital allowances and deferred tax on share options 116 117
6 creditors amounts falling due within one year
2014 2013
£m £m
trade creditors 01 09
amounts owed to group undertakings note 17 364 422
social security and other taxes 01 01
accruals 12 16
hedging liability 08 14
386 462
7 creditors amounts falling due after more than one year
2014 2013
£m £m
bank loans 827 848
the borrowings are repayable as follows
in more than one year but not more than two years  848
in more than two years but not more than five years 827 
827 848
the group refinanced its facilities on 31 may 2013 and entered into a £400m term loan and a £500m revolving credit 
facility with its existing lenders barclays bank plc hsbc bank plc the royal bank of scotland plc and clydesdale 
bank plc the limit on the revolving credit facility will be reduced by £50m on 30 november 2014 to £450m and a 
further £50m on 30 november 2015 taking the facility to £400m the term loan and remaining £400m on the revolving  
credit facility is due for repayment in full in june 2016 interest is charged at libor plus margin where the margin is 
dependent upon the group’s net debt ebitda ratio ranging from 285 to 395 the company and certain subsidiaries  
as guarantor have entered into a composite guarantee in favour of the syndicated lenders on account of the company and 
certain subsidiaries as principal
8 provisions for liabilities
£m
at 1 april 2013 
additional provision in the year 03
at 31 march 2014 03
the restructuring provision is management’s best estimate in relation to redundancy costs which have incurred as a result 
of the reorganisation it is expected to be used within the next 12 months
notes to the company financial statements
for the year ended 31 march 2014 continued 116 117
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
9 called up share capital
allotted 
and fully 
paid
number £m
ordinary shares of 1p each
at 1 april 2013 75380350 08
new shares issued 7547934 
exercise of share options 99000 
at 31 march 2014 83027284 08
on 17 march 2014 phoenix it group plc issued 7547934 new ordinary shares of 1 pence each at a price of 114 pence 
per placing share the placing raised net proceeds after fees of £83m the placing was effected through a structure which 
resulted in a merger reserve arising under section 612 of the companies act 2006 following receipt of the cash proceeds 
through the structure the excess of the net proceeds over the nominal value of the share capital issued was transferred from 
the merger reserve to the profit and loss account these shares were fully paid and rank pari passu in all respects with the 
existing ordinary shares of the company including the right to receive all dividends and other distributions declared made 
or paid after the date of issue
10 share premium account
£m
at 1 april 2013 376
exercise of share options 01
at 31 march 2014 377
11 merger reserve
£m
at 1 april 2013 575
premium on issue of shares 86
share issue costs 03
transfer to profit and loss account 83
at 31 march 2014 575
12 hedging reserve
£m
at 1 april 2013 14
gain recognised on cash flow hedge 07
at 31 march 2014 07
13 share option reserve
£m
at 1 april 2013 26
share option expense 07
at 31 march 2014 33
14 profit and loss account
£m
at 1 april 2013 256
loss for the year 81
transfer from merger reserve 83
dividends note 14 in the notes to the consolidated financial statements 42
at 31 march 2014 216 118 119
15 reconciliation of movements in shareholders’ funds
2014 2013
£m £m
opening shareholders’ funds 1227 1245
lossprofit for the financial year 81 62
dividends note 14 in the notes to the consolidated financial statements 42 82
1104 1225
exercise of share options 01 
gain recognised on cash flow hedge 07 
share option expense 07 02
premium on issue of shares 86 
share issue costs 03 
closing shareholders’ funds 1202 1227
16 sharebased payments
details of share options granted by group companies to employees and that remain outstanding over the 
company’s shares are set out in note 39 to the phoenix it group plc consolidated financial statements on page 107  
the company recognised a charge of £03m to the profit and loss account relating to equitysettled sharebased payment 
transactions in 2014 2013 credit of £02m which is recharged from phoenix it services limited a subsidiary of the 
company as the employees’ contracts of employment are with this company
17 related party transactions
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation 
and are below
amounts owed by related parties 2014 2013
£m £m
phoenix it services limited 374 371
icm computer group limited 270 270
phoenix it managed services limited formerly servo limited  23
644 664
amounts owed to related parties 2014 2013
£m £m
trend network services 194 199
phoenix international holdings limited 06 06
phoenix it continuity and resilience services limited formerly icm business continuity services 
limited
114 213
phoenix it continuity consulting limited formerly icm continuity consulting limited 08 04
phoenix it managed services limited formerly servo limited 42 
364 422
the transactions with related parties include the receipt of dividends from subsidiaries totalling £100m and loans  
as above both payable by the company to subsidiaries and repayable to the company by subsidiaries which carry  
no interest and are repayable on demand the amounts outstanding are unsecured and will be settled in cash  
no guarantees have been given or received no provisions have been made for doubtful debts in respect of  
the amounts owed by related parties
notes to the company financial statements
for the year ended 31 march 2014 continued 118 119
strategic report our financials our governance shareholder information strategic report our financials our governance shareholder information
five year summary 
for the year ended 31 march 2014
2014 2013 2012 2011 2010
£m £m £m £m £m
results
revenue 2334 2500 2608 2690 2445
profit from operations excluding amortisation of intangibles and 
nonrecurring items
177 190 241 284 295
amortisation of intangibles 10 16 29 31 31
nonrecurring items 406 718 220 33 12
lossprofit from operations 239 544 08 220 252
net interest payable including nonrecurring finance costs 53 44 41 43 49
lossprofit before tax 292 588 49 177 203
key statistics
lossearnings per ordinary share 400p 791p 49p 176p 208p
diluted lossearnings per ordinary share 400p 791p 49p 171p 201p
underlying earnings per ordinary share 126p 145p 201p 243p 253p
underlying diluted earnings per ordinary share 121p 139p 194p 235p 245p
underlying earnings per ordinary share and underlying diluted earnings per ordinary share exclude the effect of amortisation of intangibles and nonrecurring items 120 121
notice is hereby given that the annual general meeting of phoenix it group plc the “company” will be 
held at phoenix house oakwell way oakwell business park birstall west yorkshire wf17 9lu on thursday 25 
september 2014 at 0930 am for the following purposes  resolutions 1 to 12 and 16 and 17 will be proposed as 
ordinary resolutions  resolutions 13 to 15 will be proposed as special resolutions
1  to receive the report of the directors the accounts and the auditors’ report on the accounts and on the auditable 
part of the remuneration committee report for the year ended 31 march 2014
2  to approve the remuneration committee report other than the part containing the directors’ remuneration policy in 
the form set out in the company’s annual report and accounts for the year ended 31 march 2014
3  to approve the directors’ remuneration policy in the form set out in the remuneration committee report in the 
company’s annual report and accounts for the year ended 31 march 2014 
4  to declare a final dividend for the year ended 31 march 2014 of 1p per ordinary share to be paid on 29 september 
2014 to shareholders on the register at the close of business on 22 august 2014
5  to reappoint pricewaterhousecoopers llp as auditors to the company to hold office until the conclusion of the next 
general meeting at which accounts are laid before the company
6  to authorise the directors to determine the remuneration of the auditors of the company 
7  to reelect peter bertram as a director of the company
8  to reelect david garman as a director of the company 
9  to reelect jane aikman as a director of the company 
10  to elect robin taylor who was appointed since the last annual general meeting as a director of the company
11  to elect steve vaughan who was appointed since the last annual general meeting as a director of the company
12  that the directors be generally and unconditionally authorised in accordance with section 551 of the companies act 
2006 in substitution for any existing authority to exercise all the powers of the company to allot shares in the company 
or to grant rights to subscribe for or to convert any security into shares in the company together “relevant securities” 
or otherwise deal with or dispose of relevant securities up to an aggregate nominal amount of £276757 provided that 
such authority shall expire on the conclusion of the annual general meeting of the company to be held in 2015 or 24 
december 2015 whichever is earlier but so that the company may before such expiry make an offer or agreement 
which would or might require relevant securities to be allotted after such expiry and the directors may allot relevant 
securities in pursuance of such offer or agreement as if the authority conferred by this resolution had not expired
13  that subject to the passing of resolution 12 as set out in the notice of this meeting the directors be empowered 
pursuant to section 570 of the companies act 2006 to allot equity securities as defined in section 560 of the companies 
act 2006 for cash pursuant to the general authority conferred by resolution 12 as set out in the notice of this meeting 
or by way of a sale of treasury shares as if section 5611 of the companies act 2006 did not apply to such allotment 
provided that this power shall be limited to allotments of equity securities 
a  in connection with or pursuant to an offer by way of rights open offer or other preemptive offer to the holders of 
shares in the company and other persons entitled to participate therein in proportion as nearly as practicable to 
their respective holdings subject to such exclusions or other arrangements as the directors may consider necessary 
or expedient to deal with fractional entitlements or legal or practical problems under the laws of any territory or the 
regulations or requirements of any regulatory authority or any stock exchange in any territory 
b  otherwise than pursuant to subparagraph a above up to an aggregate nominal amount of £41513  
and such power shall expire on the conclusion of the annual general meeting of the company to be held in 2015 
notice of annual  
general meeting
this document is important and requires your immediate attention if you are in any doubt as to what action you 
should take you should consult your stockbroker bank manager solicitor accountant or other professional adviser  if 
you have sold or transferred all your shares in phoenix it group plc please pass this document and the accompanying 
form of proxy to the stockbroker bank or other agent through whom you made the sale or transfer for transmission to the 
purchaser or transferee 120 121
strategic report our financials our governance shareholder information
or on 24 december 2015 whichever is earlier but so that the company may before such expiry make an offer or 
agreement which would or might require equity securities to be allotted after such expiry and the directors may allot 
equity securities in pursuance of such offer or agreement as if the power conferred by this resolution had not expired
14  that the company be generally and unconditionally authorised pursuant to section 701 of the companies act 2006 to 
make market purchases as defined in section 6934 of the companies act 2006 of up to 4151364 ordinary shares 
of 1p each in the capital of the company being approximately five per cent of the company’s issued share capital as 
at 31 may 2014 on such terms and in such manner as the directors of the company may from time to time determine 
provided that
a  the amount paid for each share exclusive of expenses payable by the company shall not be more than the higher of 
1 five per cent above the average of the middle market quotation for the company’s ordinary shares as derived from 
the daily official list of london stock exchange plc for the five business days before the date on which the contract for 
the purchase is made and 2 an amount equal to the higher of the price of the last independent trade and the highest 
current independent bid as derived from the london stock exchange trading system and in any event not less than 1p 
per ordinary share and 
b  the authority herein contained shall expire at the conclusion of the annual general meeting of the company to be held 
in 2015 or on 24 december 2015 whichever is earlier provided that the company may before such expiry make 
a contract to purchase its own shares which would or might be executed wholly or partly after such expiry and the 
company may make a purchase of its own shares in pursuance of such contract as if the authority conferred by this 
resolution had not expired
15  that the company be authorised pursuant to section 307a of the companies act 2006 to call any general meeting 
of the company other than the annual general meeting of the company by notice of at least 14 clear days provided 
that the authority of this resolution shall expire on the conclusion of the annual general meeting of the company to be 
held in 2014
16  that the rules of the phoenix it group plc 2014 performance share plan the “2014 psp” produced in draft to 
this meeting and for the purposes of identification initialled by the chairman be approved and the directors be 
authorised to
a  make such modifications to the 2014 psp as they may consider appropriate to take account of the requirements of 
best practice and for the implementation of the 2014 psp and to adopt the 2014 psp as so modified and to do all such 
other acts and things as they may consider appropriate to implement the 2014 psp and
b  establish further plans based on the 2014 psp but modified to take account of local tax exchange control or securities 
laws in overseas territories provided that any shares made available under such further plans are treated as counting 
against the limits on individual or overall participation in the 2014 psp 
17  that the proposed updated form of the rules of the phoenix it group share incentive plan 2004 produced in draft to 
this meeting and for the purposes of identification initialled by the chairman be approved to become the phoenix it 
group plc 2014 share incentive plan the “2014 sip” and the directors be authorised to
a  make such modifications to the 2014 sip as they may consider appropriate to procure taxfavoured treatments for the 
2014 sip and to take account of the requirements of best practice and for the implementation of the 2014 sip and 
to adopt the 2014 sip as so modified and to do all such other acts and things as they may consider appropriate to 
implement the 2014 sip and
b  establish further plans based on the 2014 sip but modified to take account of local tax exchange control or securities 
laws in overseas territories provided that any shares made available under such further plans are treated as counting 
against the limits on individual or overall participation in the 2014 sip 
dated 04 july 2014
registered office
lakeside house
the lakes
bedford road
northampton
northamptonshire
nn4 7hd
by order of the board
dirk toulmin – van sittert
secretary 122 123
notes
1  any member entitled to attend and vote at the annual general meeting is entitled to appoint one or more proxies who 
need not be a member of the company to attend and on a poll to vote instead of the member completion and 
return of a form of proxy will not preclude a member from attending and voting at the meeting in person should he 
subsequently decide to do so a member can appoint more than one proxy in relation to the meeting provided that 
each proxy is appointed to exercise the rights attaching to different shares held by him 
2  your proxy could be the chairman another director of the company or another person who has agreed to attend to 
represent you your proxy will vote as you instruct and must attend the meeting for your vote to be counted details of 
how to appoint the chairman or another person as your proxy using the proxy form are set out in the notes to the 
proxy form
3  in order to be valid any form of proxy and power of attorney or other authority under which it is signed or a notarially 
certified or office copy of such power or authority must reach the company’s registrars equiniti ltd aspect house 
spencer road lancing bn99 6da not less than 48 hours before the time of the meeting or of any adjournment of the 
meeting 
4  to change your proxy instructions you may return a new proxy appointment using the methods set out above where 
you have appointed a proxy using the hard copy proxy form and would like to change the instructions using another hard 
copy proxy form please contact the company’s registrars see note 3 the deadline for receipt of proxy appointments 
see above also applies in relation to amended instructions any attempt to terminate or amend a proxy appointment 
received after the relevant deadline will be disregarded where two or more valid separate appointments of proxy are 
received in respect of the same share in respect of the same meeting the one which is last sent shall be treated as 
replacing and revoking the other or others
5  crest shareholders who wish to appoint a proxy or proxies by utilising the crest electronic proxy appointment 
service may do so by utilising the procedures described in the crest manual available via wwweuroclearcom  
crest personal shareholders or other crest sponsored shareholders and those crest shareholders who have 
appointed a voting service providers should refer to their crest sponsor or voting service providers who will be 
able to take the appropriate action on their behalf
6  in order for a proxy appointment made by means of crest to be valid the appropriate crest message a “crest 
proxy instruction” must be properly authenticated in accordance with euroclear uk  ireland’s specifications and must 
contain the information required for such instructions as described in the crest manual the message regardless of 
whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed 
proxy must in order to be valid be transmitted so as to be received by the issuer’s agent id ra 19 by the latest times 
for receipt of proxy appointments specified in the notice of meeting for this purpose the time of receipt will be taken 
to be the time as determined by the timestamp applied to the message by the crest applications host from which 
the issuer’s agent is able to retrieve the message by enquiry to crest in the manner prescribed by crest
7  the company may treat as invalid a crest proxy instruction in the circumstances set out in regulation 355a of the 
uncertificated securities regulations 2001
8  crest shareholders and where applicable their crest sponsors or voting service providers should note that euroclear 
uk  ireland does not make available special procedures in crest for any particular messages normal system timings 
and limitations will therefore apply in relation to the input of crest proxy instructions it is the responsibility of the 
crest member concerned to take or if the crest member is a crest personal member or sponsored member or 
has appointed a voting service providers to procure that his crest sponsor or voting service providers takes such 
action as shall be necessary to ensure that a message is transmitted by means of the crest system by any particular 
time in this connection crest shareholders and where applicable their crest sponsors or voting service providers 
are referred in particular to those sections of the crest manual concerning practical limitations of the crest system 
and timings
notice of annual general meeting continued 122 123
strategic report our financials our governance shareholder information
9  as permitted by regulation 41 of the uncertificated securities regulations 2001 shareholders who hold shares in 
uncertificated form must be entered on the company’s share register at 600 pm on 23 september 2014 in order to be 
entitled to attend and vote at the annual general meeting such shareholders may only cast votes in respect of shares 
held at such time changes to entries on the relevant register after that time shall be disregarded in determining the 
rights of any person to attend or vote at the meeting
10  the total number of ordinary shares of 1p in issue as at 31 may 2014 the last practicable day before printing this 
document was 83027284 ordinary shares and the total level of voting rights was 83027284 none of which were 
attached to shares held in treasury by the company
11  shareholders satisfying the thresholds in section 527 of the companies act 2006 can require the company to publish 
a statement on its website setting out any matter relating to
111  the audit of the company’s accounts including the auditor’s report and the conduct of the audit that are to be 
laid before the meeting or
112  any circumstances connected with an auditor of the company ceasing to hold office since the last annual 
general  meeting that the shareholders propose to raise at the meeting  
 
the company cannot require the shareholders requesting the publication to pay its expenses any statement 
placed on the website must also be sent to the company’s auditors no later than the time it makes its statement 
available on the website the business which may be dealt with at the meeting includes any statement that the 
company has been required to publish on its website
12  copies of the service contracts of each of the directors and the articles of association of the company will be available 
for inspection at the registered office of the company during usual business hours on any weekday saturdays and 
public holidays excluded from the date of this notice until the date of the annual general meeting and at the place of 
the annual general meeting from at least 15 minutes prior to and until the conclusion of the annual general meeting
13  copies of the rules of the 2014 psp and the 2014 sip will be available for inspection at the company’s registered 
offices and at the offices of new bridge street at 10 devonshire square london ec2m 4yp during normal business 
hours on any weekday saturdays sundays and english public holidays excepted until the close of the annual general 
meeting and at the place of the annual general meeting for at least 15 minutes prior to and during the annual general 
meeting
14  any member attending the meeting has the right to ask questions the company must cause to be answered any such 
question relating to the business being dealt with at the meeting but no such answer need be given if to do so would 
interfere unduly with the preparation for the meeting or involve the disclosure of confidential information or the answer 
has already been given on a website in the form of an answer to a question or it is undesirable in the interests of the 
company or the good order of the meeting that the question be answered
nb
15  a copy of this notice and other information required by section 311a of the companies act 2006 can be found on the 
company’s website wwwphoenixcoukaboutinvestorrelations
16  you must not use any electronic address provided either in the notice of meeting or any related documents including 
the form of proxy to communicate with the company for any purposes other than those expressly stated
17  a person who is not a member of the company but has been nominated by a member of the company the ‘relevant 
member’ to enjoy information rights the ‘nominated person’ does not have a right to appoint any proxies under note 1 
above however a nominated person may have a right under an agreement with the relevant member to be appointed 
or to have somebody else appointed as a proxy for the meeting if a nominated person does not have such a right or 
has such a right and does not wish to exercise it he may have a right under an agreement with the relevant member to 
give instructions as to the exercise of voting rights 124 125 124
advisers
phoenix it group plc independent auditors solicitors
registered in england 03476115 pricewaterhousecoopers llp nabarro llp
 chartered accountants and lacon house
registered office statutory auditors 84 theobalds road
lakeside house exchange house london
the lakes central business exchange wc1x 8rw
bedford road midsummer boulevard
northampton central milton keynes financial public relations
nn4 7hd mk9 2df fti consulting
  holborn gate
financial advisers  stockbrokers registrars 26 southampton buildings
investec investment banking equiniti limited london
2 gresham street aspect house wc2a 1pb
london spencer road
ec2v 7qp lancing remuneration consultants
 west sussex new bridge street
numis securities limited bn99 6da an aon plc company
the london stock exchange building  6 more london place
10 paternoster square principal bankers london
london royal bank of scotland se1 2da
ec4m 7lt 152 silbury boulevard
 milton keynes
 mk9 1lt
financial calendar
annual general meeting 25 september 2014
ex dividend date 20 august 2014
record date for dividend 22 august 2014
dividend payment date 29 september 2014    124 125 126 pb
phoenix it group plc
lakeside house
the lakes
bedford road
northampton nn4 7hd
t 44 0 8448 630000
f 44 0 8448 630002
wwwphoenixcouk


Summary:
 strategic report our financials our governance shareholder information
7
chief executive’s 
review
i joined the group as chief executive on 12 march 2014  
a few days later the company successfully raised £83m in  
net new money from shareholders this was an important 
development for two reasons firstly it strengthened the balance 
sheet secondly the fundraising epitomises a new resolve by the 
board to commit to a long term improvement strategy 
i have used my first few months in the group to review its 
performance thoroughly assess its strengths and  
weaknesses and devise a strategy to improve its fortunes  
a sale or breakup is not the right approach for phoenix  
in this review i outline why and why now is the time  
to implement a new strategy to generate meaningful 
sustainable and ultimately profitable change 8 9
why the group fits together
the foundation to our strategy must be a clearly  
articulated plan to exploit the capabilities of the group’s 
three segments  business continuity managed services 
and partner
the business continuity and managed services segments 
largely address a similar marketplace mediumsized 
customers over 2300 of them we define mediumsized 
customers or the middle market as customers with 
between 100 and 5000 it users these two segments 
complement each other because both are concerned with 
the converging cloudbased market the middle market 
is beginning to adopt the cloud for infrastructure services 
provided by managed services and at the same time 
business continuity is increasingly being provided through 
the cloud remote online backup mirrored data centres and 
so on according to idc spend on cloud by the middle 
market will grow at over 20 annually over time we should 
expect these two segments to fully converge in the cloud
the partner segment adds over £100m of revenue and 
important capabilities to the group partner adds scale to 
our offerings in the other two segments allowing us credibly 
to offer ‘enterprise strength it for the middle market’ some 
of the skills we currently use in managed services can also 
be of value in some of our partner contracts if deployed 
properly  this is unexploited opportunity
a strategy that successfully blends the capabilities of these 
three segments has the potential to unlock considerable 
value that value is not reflected in the current share price 
in my view this does not represent a fair price for a business 
that has high levels of annuity revenue and a reduced net 
debt position 
review findings
in my review of the group i have been impressed by our 
scale  we have hosting capacity for nearly 2000 racks in 
our infrastructure our service desks across partner and 
managed services combined took nearly 300000 calls 
during the year i have also been impressed by the benefits 
we bring to customers and by what we might be capable of 
doing for them in the future despite those positives there 
has been scant attention paid to the quality of some of our 
delivery assessment of contract profitability and lack of 
discipline on return on the valuable capital we employed 
a series of restructurings have left a group that is overly 
complicated in structure and too diverse in the services 
provided  it needs to better focus
two issues come to the fore the first is the need for stability 
and a long term direction so that the business can develop 
towards a clearly understood objective without constant 
upheaval and distraction we need a clearly articulated 
strategy the second is the need to deliver on our promises 
for too long there have been disappointments shortfalls 
and surprises these have undermined investor confidence 
and the faith of our customers and employees the group 
needs to get back to basics and build much stronger 
foundations
a new strategy
our strategy makes clear to our customers investors  
and employees that phoenix has the offering and capability 
to address the way it services will develop over the next 
few years 
we will approach our two channels to market  large 
system integration partners and mediumsized companies 
 public bodies  by providing services that sit at the heart 
of our customers’ business we will become an essential 
foundation for their own success where we do this and 
work with our customers to develop forward looking resilient 
infrastructure we will create the most value our mission 
therefore is
to become an essential ingredient in our customers’ 
success by providing scalable resilient forward looking 
it managed services
by being essential to our customers we will add to those 
who already see us as their trusted adviser this is the best 
way to maintain strong business and to make increased 
profits based on the quality of the service that we provide 
trust once earned will also allow us to grow relationships in 
size and broaden them by selling additional services
this trust will be earned by responding to the key trends 
in the market as we see them and improving the value 
we deliver to customers our managed services and 
business continuity segments will converge as our middle 
market customers exploit cloudbased services in our 
partner business we want increasingly to move away 
from headcountbased provision towards service level 
agreements this will improve retention profitability and 
competitiveness in this segment
we need strong foundations to build on and we need to 
concentrate on the basics to build well so in this sense 
the message of ‘being essential’ works well for phoenix it 
too the plan for delivering our strategy has this theme 
throughout  focus on the basics eliminate complexity 
concentrate investment and resources on the important 
parts of the business 
chief executive’s review
8 8 9
strategic report our financials our governance shareholder information
delivering the strategy
our plan to implement the strategy of ‘becoming essential’ 
runs for three years during that time real change and 
improvement can be delivered without looking too far ahead 
in the context of a fast changing market for technology 
each of the three years has a distinct focus
the focus for year 1 will be stability efficiency and 
quality our aim for this period will be to generate cash 
improve the efficiency and reliability of the business thereby 
improving its profitability and to lay the foundations for 
changes to the sales process in year 2 convergence of 
managed services and business continuity will only occur if 
we can crosssell between the two segments so year 1 will 
also need to prove our abilities here
the focus for year 2 will be account management and 
standardised services account management is the best 
way to achieve crossselling systematically to achieve this 
we need a more standardised set of services making us 
easier to do business with we will grow the middle market 
business using these standard services and show good 
examples of converting business continuity customers to 
a fuller range of services account management will also 
help to move the partner business away from headcount 
related revenues towards a more compelling servicebased 
model the outcome will be profit growth not necessarily 
revenue growth and better cash generation return on 
capital employed will be a very important metric to show 
that we have an improving infrastructure through which we 
can drive long term profit growth
the focus for year 3 will be integrated services with an 
account management model bedded down we will be able 
to credibly build a business that offers customers greater 
value than our competitors for example as the business 
continuity and managed services segments converge our 
account management model needs to convert clients to 
additional services in a systematic way our proposition of 
enterprise strength it for the middle market will emphasise 
those client relationships where we provide a managed 
service for a range of infrastructure requirements including 
delivery of projects to improve that infrastructure making 
it more resilient and forward looking in the same way our 
partner business will concern itself more with transformation 
of services when they transfer to us making them more 
efficient and responsive 
“our mission therefore is 
to become an essential 
ingredient in our customers’ 
success by providing 
scalable resilient  
forward looking it  
managed services”
the investment case
in recent years the phoenix strategy has not been properly 
articulated or carefully implemented we are now at a point 
where that has to change there are plenty of opportunities 
to improve and develop from within and there are trends 
in the market that we can exploit better than many of our 
competitors it will not be a straightforward or a riskfree 
path but the potential to create sustainable shareholder 
value over a three year timeframe is good based upon a 
strong order book and good use of capital employed and 
a proper use of the strong complementary fit to our three 
interlinked segments 
steve vaughan
chief executive
9 june 2014
“there are plenty of opportunities to improve and develop 
from within and there are trends in the market that we can 
exploit better than many of our competitors”
9 10
 “the key trend in our market 
is the rapid development of 
cloudbased services”
being essential