thus annual report 2004
people productivity profit 5 april
advanced data solution for gwr
gwr the uk’ s largest commercial
radio station and home to classic
fm goes live with a new advanced
34 site mpls data network from
thus connecting both studio 
and office facilities across the uk 
this makes gwr the first radio
broadcaster in the uk to multicast
live audio over mpls
28 january
free cash flow positive
thus turns sustainably free cash flow
positive
1
in q3 we believe the first
uk alternative telecommunication
operator to have achieved this goal
31 march
on track for profit
thus confirms the group is on track
to deliver positive operating profit 
in the second half of the new financial
year ending 31 march 2005
12 january
virgin switches to thus 
virgin group selects thus as its
preferred supplier of voice services
linking 200 sites across the uk
belonging to 10 virgin businesses
27 october
london grid for learning
equinox thus and bt announce that
more than half of london’ s schools –
almost 1800 sites and more than
800000 pupils plus libraries and
council offices – are connected to the
london grid for learning broadband
network giving teachers access to 
online learning materials and pupils
the power to extend their learning
outside the classroom
3 november
broadband adsl customers 
reach 50000 
the extensive range of demon adsl
internet access services attracts more
than 50000 customers
22 december 
tele2
thus wins significant contract 
to provide the network services
required to support t ele2’ s entry 
in the uk residential voice market
29 may
broadband links for 
scottish education
ukerna in alliance with thus
enables the delivery of broadband
content to scotland’ s local 
authorities with a new network
linking local authorities and 
national education agencies
22 september
thus manages premium rate
minutes for greenland interactive
greenland interactive one 
of the uk’s top five providers of
interactive services offering voting
competitions information and
entertainment lines selects thus 
to meet its telecommunications needs
20 august
scottish borders broadband network
thus is providing wireless
broadband connections for 
residents and businesses in the
scottish borders in an innovative
project run by scottish borders 
rural broadband ltd on behalf 
of scottish enterprise borders
1
cash flow after returns on investments 
and servicing of finance and capital 
expenditure and financial investment
contents
01 corporate highlights
02 thus at a glance
04 chairman’ s letter 
05 chief executive’ s review
07 operating and 
financial review
14 board of directors
16 directors’ report 
18 corporate governance report
21 directors’ remuneration report
27 independent auditor’ s report to 
the members of thus group plc
28 accounting policies and definitions
30 group profit and loss account
31 consolidated statement of total
recognised gains and losses
31 reconciliation of movements 
in shareholders’ funds
32 balance sheets
33 group cash flow statement
33 reconciliation of net cash flow 
to movement in net debt
34 notes to the accounts
45 five year financial summary
46 notice of annual 
general meeting
47 general information 
for shareholders attending 
the annual general meeting
48 shareholder and 
contact information 1
corporate highlights
•strong doubledigit
turnover growth
•continued ebitda
1
expansion
•cash flow
3
positive
for second half 
of year 
•sustained 
progress towards
operating profit
thus group plc provides telecommunication
solutions to business customers throughout 
the uk under the thus and demon brands 
in an industry driven by reliability and 
innovation thus can draw upon experience 
established over more than a decade in 
the delivery of voice data internet contact 
centre and interactive response services
delivering both standard and bespoke 
solutions thus addresses customers’ 
existing business needs and works hand 
in hand with customers to develop new 
business opportunities 
the company’ s record in the creation 
of innovative new services is complemented 
by an awardwinning focus on quality and full
certification under the iso9001 2000 standard
wwwthusnet 
1
earnings before interest tax depreciation and
amortisation see note 3 to the accounts on page 34
2
excludes £32 million exceptional restructuring costs
3
cash flow after returns on investments and servicing 
of finance taxation and capital expenditure and 
financial investment
turnover 
year ended 31 march 
£ millions
00 01 02 03 04
2139
2293
2684
2912
3324
00 01 02 03 04
1309
1913
1068
367
26
00 01 02 03 04
113
246
31
2
271
436
ebitda
1
year ended 31 march
£ millions
cash flow
3
year ended 31 march
£ millions 2
thus at a glance
thus provides telecommunication
solutions to business customers
throughout the uk under the
thus and demon brands during
the past 12 months we have
increased momentum from new
customer contracts adding to 
our scale and productivity uk
wide our service innovation is
complemented by full certification
for voice data internet and
contact centres under the
iso90012000 standard which 
is testament to the people skills
application and commitment 
to quality within our business
data
data technology has continued to grow
and develop over the past year and
within the broad range of data services
we offer  we have seen demand for both
ethernet and mpls multiprotocol label
switching services accelerate customers
are taking advantage of our true end
toend ukwide ethernet capabilities and 
we now have more than 2000 ethernet
connections in place these private
ethernet connections enable our customers
such as imperial college london and
scottish executive to link sites across the
uk while operating at the same high
speed as their office network ethernet is
becoming one of the most reliable and
costeffective ways to deliver broadband
applications and services providing
companies with cost and efficiency savings 
when we initially designed our mpls
platform it was essential that it was built 
to allow us to offer a range of interoperable
technologies in the future and with the
growth of ethernet technology we are
now able to realise this and combine these
services in 2003 we launched mpls
based ip vpn internet protocol virtual
private network services using ethernet
as the access technology this enables 
an organisation to securely link its various
locations – headquarters offices and
remote users using costeffective ipbased
voice services and data connectivity 
mpls enables packets of information 
to be transmitted in a particular order and
within a specified timeframe making it
ideal for the delivery of time sensitive data
when combined with the simplicity and
affordability of ethernet access mpls ip
vpns are ideal for corporate voice data
and internet communications
telecoms
traditional voice services continue 
to be a key requirement for uk businesses
and companies today are continually
looking to their telecoms suppliers 
to provide them with a flexible range 
of voice services at the same time 
as providing cost efficiencies one such
customer is virgin group which has
chosen thus as its preferred supplier 
for 200 sites across the uk we will 
be providing virgin group with a range 
of voice services and also providing data
services such as leased lines our flexible
approach and specifically designed
package of services is enabling virgin
group to reduce its costs across the group
while meeting the differing needs of each
individual business
the introduction of carrier preselect cps
voice services last year led to a change 
in the way that traditional voice services
are delivered in the uk cps technology
allows customers to bypass the bt 
network and have their calls carried 
by an alternative telecoms supplier without
the need to dial a prefix before each call
t ele2 was one such company to take
advantage of these changes and launch 
a new consumer voice service in the uk –
it chose thus to provide the systems 
and routing technology to carry tele2’s
domestic voice traffic over our national
fibre optic network
mpls ip vpn services securely 
link customers’ various locations –
headquarters branch offices and 
remote users – using costeffective 
ipbased voice services and data
connectivity furthermore it enables
customers to pick and mix the 
most appropriate technology and
bandwidth at each site resulting in 
a reduction in total network costs
data services have seen some 
of the fastest growth in our portfolio 
of products rapid take up of ethernet
services launched in the autumn 
of 2002 has seen more than 2000
ethernet circuits provided to corporate
customers including baillie gifford
total ep uk and uhi millennium
institute the higher education institution
“in thus we found a like
minded company committed 
to providing excellent customer 
service and able to move 
quickly to get the job done”
jennie beament 
group procurement director  
virgin management ltd
“we chose to work with 
thus because its innovative 
approach and expertise means 
our customers will get exactly 
the service they demand” 
bill butler  managing director  t ele2
“thus is the first provider of
national ethernet services on a
ukwide basis to carry the cisco
powered network designation
this status helps thus’ s
customers to understand that 
its services are delivered over 
a reliable high performance
architecture designed with
quality of service applications 
in mind”
duncan mitchell vice president 
and managing director  
uk and ireland cisco systems 3
internet
through our demon brand thus offers
the full range of internet access services
including email hosting ecommerce 
and of course dsl digital subscriber 
line technology services which continue
to dominate growth in the internet sector 
there has been a rapid take up of adsl
asymmetric digital subscriber line 
also known as broadband with nearly
100000 customers now using demon
adsl products in the uk and the
netherlands broadband offers 
a high bandwidth low cost alternative 
to dedicated leased lines or the more
traditional dialup services customers 
are being more innovative in their
deployment of broadband and we
recently provided 90 adsl broadband
connections to jessops for the rollout 
of digital photo kiosks in its stores 
these kiosks provide jessops’ customers
with an easytouse and reliable way 
to purchase professionally printed 
digital photographs
dsl is no longer just a high bandwidth
internet connection and we have developed
and launched private access dsl 
to provide customers with an alternative 
to traditional leased lines and isdn access
technologies for their virtual private or
wide area networks providing the same
levels of security at a significantly reduced
cost in addition we have worked with
scottish borders rural broadband ltd 
to provide wireless broadband connections
for businesses and residents in a number
of rural towns in the borders region
network and quality
behind all of the products and services 
we offer sits our technologically 
advanced national fibre optic network
this was designed and built with the
foresight to enable today’ s technologies 
to be seamlessly integrated whilst
continuing to offer superior quality of
service to our customers we now believe
that after bt  we offer the best ukwide
coverage and connectivity from the 
far north of scotland to the southeast 
of england compared to any other
alternative carrier in the uk 
contact centre services
thus provides a range of inbound 
and outbound contact centre services 
and was recently awarded the energysure
accreditation for its telemarketing
operations – only the third contact centre
employer in the uk to receive the award
this means that all thus employees
selling utility services in our contact 
centres are trained to adhere to best
practice guidelines
interactive 
thus interactive services create and
provide a range of telephone based
marketing promotions targeted at the
consumer market
“the broadband digital photo 
kiosks enabled by thus will 
for the first time give the mass 
market the means to get the very 
most from their digital camera”
alistair brown business development
manager  jessops
•fibre optic cable length now
approaches 8000km including
61 00km of trunk network
•more than1 00 points of presence
•1 5 metropolitan area networks
•thus’ s fibre optic network 
stretches from the south 
of england to the shetland 
islands and the hebrides
•thus has connectivity to 
12 telehouses in london
manchester and edinburgh
amserve ltd has renewed our 
contract to provide telecommunications 
services for its amstrad emiler and 
emilerplus products until 2009 
thus first started working with 
amstrad in 2001 when it developed 
the platform for the emiler and 
in april 2003 thus enabled an
important enhancement to the service
allowing twoway sms texting between
the emiler and mobile phones 
in december 2003 thus worked 
with amstrad to introduce the 
copymail function allowing users 
to nominate an email address which 
then automatically receives copies 
of all messages sent or received 
by the emiler 
lerwick
stornowaykirkwall
thurso
inverness
aberdeen
stirlingperthdundee
glasgowfalkirk
edinburgh
dumfries
newcastlesunderland
durham
middlesbrough
preston
liverpoolwarringtonmanchesterleedsyork
chestersheffield
stokeontrent
nottingham
birmingham
gloucester
bristolmilton keynes
swindon
reading
london
southamptoncroydon
brighton
“energysure provides a quality
assurance where sales centres
conform to a minimum standard 
of recruitment training and
performance management
scottishpower is delighted that 
thus’ s contact centre working 
handinhand with scottishpower 
has not only met these standards 
but has surpassed many 
of the measures laid down 
by energysure” 
keith jones national compliance 
manager  scottishpower 4
chairman’ s letter
dear shareholders this has been another remarkable year
of progress and achievement for your company in a challenging
market it has been a year where we have reinforced our position 
in the uk by extending our relationships with our customers 
and by meeting our financial milestones
the success of your company in a challenging market environment is a huge tribute 
to all our staff and we thank them greatly for their continued loyalty and commitment 
to growing your company 
thus is a company that believes in integrity at all levels i believe we apply high
corporate governance accounting and ethical standards to our business we also 
take our social responsibilities and commitment to the communities where we operate
extremely seriously
this year your company has continued to support the women’s aid domestic
abuse campaign more recently we have provided support to emmaus a charity
to help homeless people in glasgow to which we will continue to provide support
on an ongoing basis we are now playing a small role in supporting business in the
community with our staff engaging with pupils at lochend community high school
in easterhouse glasgow and we have recently supported the prince’ s trust none
of these involve large charitable donations but they do involve our employees giving
time and commitment in the support of others
after three years of service on your board i have decided to retire the board has
commenced a search for a suitable successor and plans an orderly handover of
responsibility we expect this change to occur during the course of this year  i have
enjoyed being part of thus’ s formative years as a public company and i shall take 
an avid interest in its future development 
we expect the trends from last year to continue throughout this financial year  despite
market conditions which continue to be challenging the board remains comfortable
with market expectations for the year ahead and of achieving our next key financial
objective of operating profit in the second half of this financial year 
roy brown 
chairman
roy brown chairman and
william allan chief executive  5
chief executive’ s 
review
thus is a young business approaching its fifth anniversary as a listed
company the strength and viability of our business becomes more
evident with each passing year 
uncertainty in our market from competitive intensity remains as tough as before yet
thus continues to prevail thus’s strength in providing innovative new services and
being responsive to our customers’ needs and expectations is our key differentiator 
we believe our service innovation record in the uk is second to none and our
responsiveness to our customers is a strong measure of the quality of our employees 
in 1999 we set out our strategy for the uk market this strategy involved a heavy 
upfront investment in network and service capability throughout the uk it is a tenyear
journey and in november of this year we will have reached the halfway point our
business model defined the financial metrics we needed to deliver to prove the financial
viability of our business ebitda
1
positive cash flow
2
positive operating profit and
finally a return on capital employed greater than our cost of capital we are on target 
at this halfway point we became cash flow positive in q3 a quarter earlier than we
had originally anticipated – and we remain convinced that our strategy is robust and
focused to deliver sustainable shareholder value
our headline revenue growth was 14 for the year and 18 in the second half 
our ebitda increased by 61 our operating loss reduced by 58 and cash
outflow before financing was reduced by £341 million with a positive net inflow 
of £57 million in the second half we believe that these are impressive results
and justify our confidence that we will achieve an attractive return on investment
in the longerterm
the consistency of our reputation for quality and service innovation coupled to the
scalability of our network and services have now positioned us strongly in the managed
services arena where lasting value is created in this segment our contracted revenue 
grew strongly with the average contract increasing in value during the year we won
significant managed services contracts with capital radio southern water gwr
group and preferred supplier status with glasgow city council these contracts
coupled to our existing customer relationships and other new contracts such as virgin
group t ele2 and amserve accelerated growth in our key data and telecoms division 
to 24 over the course of the year 
internet services enjoyed strong doubledigit growth with revenue from our broadband
dsl portfolio now exceeding revenue from our dialup customer base this is a key
milestone as we transition our business from old to new with a new generation of 
ipenabled services for the corporate market and small and medium sized businesses
our strength in winning new contracts coupled to our focused and disciplined approach
to our operating costs has proven the flexibility and robustness of our business model
growth from incremental revenue now exceeds capital expenditure we believe thus
is the first alternative carrier to have achieved this and become sustainably free cash flow
positive these are two critical measures to prove the viability of the alternative carrier
business model to achieve the longerterm goal of a return on capital employed greater
than our cost of capital this year our achievements demonstrate that we are well
on track towards that objective 
our balance sheet is strong our quality of service remains class leading our service
innovation record is consistently impressive and our list of blue chip customers continues
to grow longer each year as our credibility and reputation wins wider respect our
objective is to become the preeminent alternative to bt in the uk business services
market we remain firmly focused on achieving that goal
william allan 
chief executive
1
earnings before interest tax depreciation and amortisation
2
cash flow after returns on investments and servicing of finance
and capital expenditure and financial investment 6
people
our commitment to teamwork enables us to work
passionately as one team with one vision and
one voice keeping us ahead of the competition 7
ebitda margin expanded from 9 
to 13 and capital expenditure fell from
15 to12 of turnover  with approximately
55 of capital expenditure now driven 
by growth in turnover 
for an alternative carrier to sustain
profitable growth we believe the ratio 
of increase in turnover to capital
expenditure must exceed 11 in order 
to deliver the scale required to provide 
a proper return on invested capital during
the year  we achieved this – we believe 
we are the first alternative carrier 
to do so this represents another important
validation point for our business model
we have continued to grow business 
with existing customers and to win new
customers millions of consumers in the 
uk now use our services daily without
knowing about thus’s key role 
this is illustrated by the large and 
diverse customer bases of for example 
• sky active through the “red button” 
and skyt alk 
• amstrad via the amstrad 
emiler and 
•t ele2 through its residential 
voice resale services 
this approach of supporting the growth 
of our corporate customers but not having
to directly support or market to large
consumer bases remains one of four key
legs in the delivery of our business model
it complements our direct sales to uk
centric corporates and smes as well 
as our active reseller channel
with the delivery this year of positive free
cash flow it is now time to replace ebitda
a primary measure which was strongly
linked to our access to financing with our
next key milestone of operating profit
we have set out a series of longerterm
targets based on asset utilisation and
profit margin to ensure we achieve our
goal of delivering a return to shareholders
above our weighted average cost of
capital t o achieve this we believe that 
our company will have to approximately
double its turnover by the end of the
decade 2009 this will provide
additional scale to expand operating
margins leveraging our low operating
cost base and existing investments given
our focus on customers our strengths in 
a range of services and consistent quality
we believe that this is a realistic and
achievable target which representing 
less than 5 market share of the uk
telecommunications market leaves plenty
of potential for longerterm growth
overview of the year
thus made good progress against 
its objectives during the year  we grew
turnover by 14 representing we believe
more than double the market growth rate
leading to reduced operating losses of
£212 million from £508 million last year 
this puts us on track to go operating profit
positive in the second half of the financial
year ending 31 march 2005 
cash flow was also positive in the second
half of the year  we believe that we are 
the first infrastructure based altnet in the
uk to have achieved this on a sustainable
basis realising a key validation point 
of our business model
thus’ s business objectives 
and strategy
thus aims to be the leading alternative
provider of telecommunication and
internet services for business customers 
in the uk 
we believe we can deliver this aim 
on the back of the large scale investment
we have made in previous years we built
and developed our own advanced service
capability including 8000km in total 
of network linking the major industrial and
commercial centres throughout the uk
this allows us to control the quality of our
services to innovate more quickly with
new and differentiated services and 
to protect margins against competitive
pressures as more of our major corporate
customers become directly connected 
we become increasingly efficient by
carrying a greater proportion of their
traffic over our own network minimising
delivery costs and reducing payments 
to other operators
this year has been another successful 
year in delivering our targets set over 
a decade as our company grows to
maturity from its flotation on the london
stock exchange in november 1999 
the heavy investment made between 1 999
and 2001 putting our ukwide capability
into place depressed our headline profit
and cash flow metrics since then thus
has delivered sustainable positive ebitda
and now sustainable positive free cash
flow
1
 with operating and pretax losses
also narrowing significantly our continued
progression will be tracked by three key
financial measures – turnover  operating
profit and cash flow 
operating and 
financial review 
john maguire 
chief financial officer
1
cash flow after returns on investments and servicing of finance
and capital expenditure and financial investment 8
dialup base but we have migration plans
in place and expect the churn to greatly
reduce next year  
uk broadband customers more than
doubled year on year to 58000 attracted
by our wide and expanding range of
product options competitive pricing and
targeted marketing promotions to business
customers under the demon brand 
for adsl services we typically wholesale
from bt but add enhanced features and
functionality for our customers adsl 
is gross margin dilutive but operating
profit expansive due to low incremental
operating and capital costs we continue
to review options to expand the margin
profile of this growing customer base
including local loop unbundling once the
economic case justifies this investment
our uk broadband success was replicated
in demon netherlands which grew its
adsl customer base fivefold to 38000
reflecting a higher consumer content
while thus continues to focus on the 
uk the netherlands operation at 4 
of turnover remains a growing and
successful core adjunct to existing activities
new innovations to our broadband
product portfolio were implemented
including a range of highspeed cost
effective selfinstall options and the
addition of private access dsl that allows
customers to use broadband as a secure
connection into private networks
contact centre services
contact centre turnover for the full year 
fell to £217 million from £246 million
although turnover in the first half fell
below that in the previous year following
the loss of the microsoft account the
in a technology that we believe has
compelling advantages to corporate users
of more traditional telecoms data services 
new users in the year include imperial
college london the scottish executive and
total ep uk part of the total global
energy company
we also continue to make advances 
with mpls data services including the
provision of a managed network for gwr
group enabling it to become the first
radio broadcaster in the uk to multicast
live commercial audio broadcasts over
mpls this builds on thus’s success 
with capital radio and our expansion 
into data services for main national radio
operators outside the bbc
facilities management represents 
an expanded area this year  previously
this has largely represented trading 
with our former parent company
scottishpower  contracts qualifying for
inclusion in facilities management are
typically of longer than average duration
and involve a range of services requiring
a dedicated thus team for their
implementation our recent contract 
win of southern water and our award 
of preferred bidder status with glasgow
city council illustrate our scale and
capability in this area for example 
the glasgow city council contract will 
run for a minimum of six years with 
an estimated value of £42 million 
internet
internet turnover grew by 10 to £991
million during the year  the rapid market 
growth in the development of broadband
internet access via asymmetric digital
subscriber line adsl services continued
this strong growth was partly masked 
by continued churn in our narrowband
segmental analysis of turnover
data and telecoms including facilities
management
turnover in these services grew by 24 
to £1986 million and was the main
engine of growth for thus
the expansion of voice volumes was
particularly robust due to carrier 
preselect services cps which improve
the capture of indirectly connected
customer calls by automatically routing
this traffic over thus’ s network changes
by the regulator have enabled thus 
to move voice services from bt without
requiring the customer to use special
equipment or the inconvenience of access
codes we are also able to provision 
these services more effectively than before
while cps was introduced in its current
form in 2002 this year has seen more
widespread adoption of the service
cps has also been used to support the
retail telephony products of other operators
including t ele2’ s launch into the uk in the
second half of the year  t ele2 is europe’ s
largest supplier of indirect voice telephony
to consumers and its choice of thus 
to carry its uk services is a reflection 
of our scale and the classleading quality
of our facilities and services
cps will remain an important source 
of growth in the next year  whilst in the
shortterm it may dilute our gross margin
the low level of incremental operating 
and capital costs required to support 
this scalable service makes it a strong
contributor to operating profit progression
in data services wide area ethernet
services grew strongly with over 
2000 circuits now provisioned thus 
has a strong firstmover advantage 
fixed asset turnover 
year ended 31 march 
times
02 03 04
057
067
080
02 03 04
1
2
13
02 03 04
29
15
12
02 03 04
6
operating profit margin
year ended 31 march

ebitda
1
margin
year ended 31 march

capital investmentturnover
year ended 31 march

1
earnings before interest tax depreciation 
and amortisation
2
excludes £32 million restructuring costs
19 
improvement
11 
improvement 
4 
improvement 
3 
improvement 
17
24
9 9
productivity
day in day out we constantly strive to increase
our effectiveness by utilising all of our resources
people technology and knowledge to generate
shareholder value 10
profit
our focus on generating value and quality
services for our customers leads to profitable
growth for our company this enables us to
deliver on our promises and consistently achieve
strong financial performance 11
statutory gross profit increased 8 to
£695 million after depreciation included
within cost of sales with a margin 
of 21 and the operating loss reduced
from £508 million to £212 million
net interest fell from £69 million 
to £53 million
the loss before tax showed significant
improvement down 57 from £588
million last year to £250 million
earnings per share and dividends
the basic loss per ordinary share reduced
by 57 from 444p per share to 190p
given our company’ s stage of development
and the accumulated losses from the
network deployment the board is not 
yet able to recommend a dividend
capital investment
capital investment continued to be tightly
managed and was £411 million
compared with £449 million last year 
falling to 12 of turnover from 15
approximately 55 of capital expenditure
was tied to turnover growth either through
customer connections product development
or platform capacity upgrades non
turnovergrowth capital expenditure
includes billing platform replacements 
and other back office functions
no individual project accounted for more 
than 10 of the total spend reflecting 
the diverse and customerlinked nature 
of our investment programme during the
year  capitalised labour and overhead
costs required to deliver this programme
amounted to £87 million in the year 
slightly to 21 after these items given our
change in product mix with strong growth
in cps and broadband dsl we do not
expect any progression in gross margin
during this financial year  whilst in the
shortterm cps and broadband dsl may
dilute our gross margin the low level of
incremental operating and capital costs
required to support these scalable services
make them strong contributors to operating
profit progression in line with our business
model we view this as an opportunity 
for growth and as part of the service
transition that is currently taking place 
in the telecommunications market
sda selling distribution and
administration costs excluding
depreciation and amortisation but
including other operating income fell 
from 28 to 22 of turnover and by 
10 in absolute terms to £731 million
the year saw the benefits of the full 
annual impact of actions taken in the prior
period as well as rationalisation of the
back office billing platforms 
combining turnover growth and cost
efficiencies ebitda grew strongly 
to £436 million compared with £271
million in the year ended 31 march 2003
and £31 million
1
in the year ended 
31 march 2002 
depreciation and amortisation for the
year at £648 million was £131 million
lower than the previous year’ s charge 
this mainly reflected lower impairment
charges of £86 million year on year 
there was an impairment of £48 million
in the year  mainly reflecting accelerated
depreciation on the 300km out of
6100km of trunk network which 
was provisioned on overhead cable 
division recovered ground in the 
second half as indicated at the interim
results principally through the expansion
of existing accounts and the successful
renewal of our major contract with
hewlettpackard our focus remains 
on the top end of the market providing
support for customers who have complex
needs and whose operations must 
be based in the uk
interactive 
turnover for the interactive division
providing premium rate services and
competition formats declined by 18 
to £130 million reflecting a steep decline
in turnover in the second half of the year 
resulting from a marked increase in
competition although turnover has fallen
this division contributes both operating
profit and positive cash flow for the group
margin expansion and progress to profit
with the achievement of positive cash 
flow in the second half of the year our
focus with respect to margin is now 
on operating profit operating losses
more than halved to £212 million and 
we are on a solid trajectory to achieve
operating profit in the second half of the
next financial year ending 31 march
2005 the contributors to operating profit
expansion are considered below
gross profit excluding depreciation 
and amortisation showed good absolute
growth up 8 to £1167 million excluding
the contact centre and interactive divisions
underlying gross profit increased 13
broadly in line with turnover growth
gross margins excluding depreciation
and amortisation fell 2 to 35
compared with 37 last year  and down
operating and 
financial review 
1
excludes £32 million exceptional restructuring costs 12
our ukwide deployment of capability
and are consequently deriving significant
benefits of scale our quality and service
innovation are classleading and well
respected we are financially strong 
we believe we are also the only alternative
carrier to have a strong “isp inside” with
the demon brand merging the best of
internet and telecommunication cultures 
we believe these factors position us well to
withstand the continued sector turmoil and
enhance our ability to address concerns
relating to growth and competitive intensity
our model implies that we need 
to approximately double in size to develop
the scale to deliver an attractive return 
on capital with a growing business
telecoms market in the uk which 
we believe to be in excess of £10 billion 
per annum this is a sufficiently sized
opportunity for us to grow into thus has
hit critical mass in key areas allowing 
us to benefit from architecture decisions
that support a full range of activities 
and enable a doubling of network capacity 
for just 5 of the original cost 
there is no doubt that the market remains
extremely competitive with a large number
and variety of operators still active in the
marketplace however with a strong
service development capability we are
able to develop and launch higher value
services in market segments in which 
few competitors operate this also allows
us to differentiate at the commodity end 
of services where the capability to offer 
a migration path to higher value products
of finance and capital expenditure and
financial investment was positive in the
second half of the financial year on a
sustainable basis
at the year end net debt stood at £354
million compared with £327 million 
last year and gearing was 16 our
drawdowns under our £600 million loan
facility stood at £570 million which
converted to an amortising term loan on 
1 april 2004 repayments commence on
31 march 2005 and are complete on 31
march 2008 with a balloon repayment
profile the loan continues to be governed
by standard covenants
with a cash balance of £264 million 
a positive cash flow operating business 
and stable financing thus has the
capacity and financial resilience to meet 
the requirements of large new business
opportunities or unforeseen external
economic shocks to the sector 
or national economy
statement of recognised gains and losses
the main movement in prior years apart
from trade losses has related to gains
from the sale of capacity under iru
indefeasible rights of use agreements
the market for irus has contracted since
2002 and consequently there continues 
to be limited activity in this area
thus’ s differentiating factors 
and operating environment 
thus is firmly focused on the uk 
market without the distraction of major
international investments or foreign
regulatory regimes and operating
environments we have completed 
tax 
a small tax charge of £02 million arises
from trading activities in the netherlands
uk trading losses give rise to a deferred
tax asset of £72 million with accelerated
capital allowances and other timing
differences of £378 million giving a
total deferred tax asset not recognised 
of £450 million
as disclosed in our open offer document
to shareholders during our demerger
process from scottishpower in 2002 
if our company trades during the period
from 19 march 2002 to 30 september
2005 on a material and noncommercial
basis with members or former members 
of the scottishpower group our former
parent company a tax liability of up to
£570 million may be triggered arising
from the original flotation of thus in
1999 this payment would fall on thus
under section 179 of the t axation of
chargeable gains act 1992 any trigger
caused by events prior to 19 march 2002
is covered by an existing indemnity with
scottishpower  a strong control regime is
in place to manage this remote risk 
cash flows
net cash flow from continuing operating
activities was positive at £374 million
compared with £261 million last year 
underpinning this was ebitda of £436
million cash flow before financing costs
1
was positive at £08 million for the first
time in our company’ s history compared
with an outflow in the prior year of £283
million in addition cash flow after
returns on investments and servicing 
operating and 
financial review  13
under uk gaap  the urgent issues 
t ask force issued uitf 38 “accounting 
for esop trusts” this does not come into
effect until june 2004 but while early
adoption is recommended due to the
unique nature of events during the
telecoms “bubble” when most of these
shares in thus were purchased early
adoption is not appropriate for thus
guidance notes were also issued on
financial reporting standards “reporting
the substance of transactions” frs 5
relating to revenue recognition but these
have not changed the interpretation of
thus’ s accounting policies in these areas
outlook
the strategy we outlined at the time 
of our listing has enabled us to deliver 
our business model to date scaling 
and flexing our business according 
to changing market conditions assuming 
the macro environment remains broadly
unchanged we remain comfortable with
our shortterm goal of becoming operating
profit positive in the second half of the new
financial year and our longerterm goal 
of at least returning our cost of capital
accounting policies 
the major event of the year relates 
to the introduction of international 
financial reporting standards ifrs 
from 31 december 2005 year ends
onwards mandated by the european
union for all listed companies within 
the eu at the moment and for the year
ending 31 march 2005 thus reports
under uk gaap 
thus intends to publish its first 
ifrs results at the half year ending 
30 september 2005 this requires
comparatives for the prior year including
therefore a 31 march 2004 ifrs balance
sheet consequently during the year 
we have been reviewing our position 
with staff training and a diagnostic review
to highlight key points of difference
between ifrs and uk gaap  we are
currently quantifying these areas and 
in march 2004 the audit committee met
to consider our ifrs accounting policies
new and revised versions of ifrs 
have been issued up to march 2004 
as standards have evolved in addition 
a convergence project for revenue
recognition between us gaap and ifrs 
is under way and due to report in 2005
this has the potential to change the way
all european companies account for
certain aspects of revenue recognition
consequently as thus looks at its key
measures of turnover  operating profit and
cash flow detailed guidance on possible
changes cannot be made at this point 
the key primary measure of cash flow 
is unaffected by the adoption of ifrs 
is important this gives customers such 
as amserve the confidence to renew 
and grow services on major longterm
contracts – in their case until 2009 
we also have to grow our margins
leveraging increasing revenues 
on our scalable network and operating
platforms provides a powerful driver 
for our new focus on operating profit 
our company’s activities are affected 
by the rulings and actions of ofcom 
the industry’ s regulator  this year ofcom
has taken on the role of oftel and initiated
a review of the market european
regulation also plays an important role 
in promoting and defining the framework
under which ofcom operates and this 
is likely to increase thus continues to
raise specific areas of concern with ofcom
policy issues
treasury
thus’ s treasury policy aims mainly to
manage financial risks arising from limited
foreign currency exposure from our small
netherlands operation and limited supplier
payments in us dollars and euros
hedging in the form of a “cap” is in place
to minimise interest rate exposure on our
loan facility where drawdowns are
charged at libor plus 35
tight control exists over treasury activities
and any nonstandard instruments require
approval from the chief financial officer
or board thus has no off balance sheet
financing or special purpose vehicles 
and maintains a simple and transparent
corporate structure 
1
representing cash outflow before financing of £26 million 
2003 £367 million and returns on investments and 
servicing of finance of £34 million 2003 £84 million 14
nonexecutive directors
roy brown 
1
57 was appointed 
as a nonexecutive director of thus 
in january 2001 and became chairman
on 10 july 2002 until may 2001 
mr brown was a main board director 
of unilever and president of unilever’ s
european foods and beverages division
in addition he has held the role of regional
director of unilever’ s africa middle east
central and eastern europe division 
mr brown will become nonexecutive
chairman of gkn plc on 21 may 2004
having been a nonexecutive director  
and is also a nonexecutive director 
of brambles industries plc bupa hmv
group plc and lloyds franchise board 
ian chippendale 
2
55 was appointed 
as a nonexecutive director of thus 
in october 1999 mr chippendale 
is executive chairman of rbs insurance
having previously been chief executive of
direct line group ltd and has considerable
experience in the insurance and financial
services industry prior to joining direct 
line in 1996 mr chippendale was chief
executive of privilege insurance from 
1994 and before that he was a director 
of provident financial plc 
michael de karesilver 
3
47 joined 
the board of thus as a nonexecutive
director in september 2000 he is
currently managing director of modem
media europe and before that was head
of ebusiness services at pa consulting
group prior to that he was group 
ecommerce director at great universal
stores plc gus prior to joining gus 
mr de karesilver was senior partner 
of the strategy consulting firm the kalchas
group which was acquired by computer
sciences corp in september 1997 
mr de karesilver is visiting professor 
at middlesex university business school 
of computing sciences 
jo connell 
4
56 joined the board 
of thus as a nonexecutive director 
in january 2001 mrs connell was until
march 2003 managing director of xansa
plc she joined xansa in 1977 after five
years at cmg limited and an early career
with mars group she became a member 
of the xansa board in 1991 and was
subsequently appointed chief operating
officer in july 1997 prior to being
appointed group managing director 
in november 1999 mrs connell is also 
a nonexecutive director of london
bridge software holdings plc and synstar
plc and is a governor of the university 
of hertfordshire
margaret ford 
5
46 was appointed 
as a nonexecutive director of thus 
in november 2002 she is the chairman
of english partnerships founder and
deputy chairman of good practice ltd
and a nonexecutive director of serco plc
from 1993 to 2002 she was managing
director and then chairman of eglinton
management centre from 1997 to 2001
she was chairman of lothian health
board and from 2000 to december 
2003 she was a nonexecutive director 
of ofgem she is an expert in change
management and leadership issues
board of directors 15
executive directors
william allan 
6
50 is chief executive of
thus he joined a predecessor company
in december 1998 as chief operating
officer and was appointed managing
director in february 1999 mr allan has
more than 25 years’ experience in the
telecommunications industry in 1997 
mr allan was appointed chief executive
of cable  wireless regional businesses
he was a director on the boards 
of t elecommunications of jamaica 
entel panama the barbados t elephone
company and the barbados external
t elecommunications company between
1995 and 1997 mr allan was regional
director for cable  wireless north east
asia region president and representative
director of cable  wireless japan 
and chairman of cable  wireless
communications services limited japan
he was also a director on the boards 
of international digital communications 
idc japan sakhalin electrosvyaz
sakhalin t elecom sakhalin t elecom
mobile and nakhodka t elecom
philip male 
7
37 is chief operating
officer  he joined a predecessor company
originally as t echnical director of demon
internet limited in october 1997 mr male
has previous experience as t echnical
director of computer newspaper services
and pa data design part of the press
association group and has held the
positions of head of research and
development and prior to joining demon
director of strategic research with the
press association group with advanced
knowledge of data networking
technologies programming languages
and operating systems mr male has been
involved in the development of internet
services in the uk since 1990 
john maguire 
8
38 a chartered
accountant joined thus as chief
financial officer in december 2000 
prior to joining thus mr maguire was
vice president finance japan and asia
for cable  wireless global this
included leading the finance team in
cable  wireless idc japan’ s second
largest international carrier  mr maguire
has extensive financial and international
telecommunications experience having
held a number of other key financial
positions within the cable  wireless
group since 1991 including that 
of regional finance director of cable 
wireless asia pacific based in singapore 
audit committee
ian chippendale chairman
jo connell
michael de karesilver
nomination committee
roy brown chairman
william allan
ian chippendale
remuneration committee
michael de karesilver  chairman
ian chippendale
jo connell
margaret ford
senior independent
nonexecutive director
ian chippendale
1 2 3 4
5 6 7 8 16
directors’ report
the directors are pleased to present their annual report together with the
audited accounts for the year ended 31 march 2004 
activities
thus is a provider of voice data internet and contact centre services to
corporate and small and medium sized enterprise markets primarily in the uk 
a review of the business and its future development is contained in the chairman’ s
letter and chief executive’ s review on pages 4 and 5 and in the operating and
financial review on pages 7 to 13
results and dividend
the loss transferred to reserves for the year amounted to £252 million 2003 
£590 million details of which are set out in the group profit and loss account 
on page 30
the company has not declared or paid a dividend on its share capital 2003
£nil the company intends to retain future earnings to expand the growth and
development of its business accordingly it does not anticipate paying dividends
in the foreseeable future in addition given the company’ s stage of development
and the accumulated losses built up during the network deployment the
company is not yet able to pay a dividend
share capital
details of thus group’ s authorised and issued share capital as at 31 march
2004 all of which was fully paid or credited as fully paid are contained 
in note 19 to the accounts on page 39
loan facility
the company reduced its loan facility from £90 million to £60 million with effect
from 28 may 2003 further details are contained in note 15 to the accounts 
on pages 36 and 37
environment
our environmental policy principles remain unchanged and continue 
to meet the criteria set by ftse4good we believe communications technology
can help reduce adverse environmental impact we believe that proper fiscal
management operational management and risk management are all facets 
of good corporate governance we believe good environmental management 
is a key part of this responsibility and that it adds value for all our stakeholders 
• our environmental management system is being integrated with the 
health and safety management system this together with environmental
management training in the risk management team will aid efficient control
of these complementary risk areas 
•we recognise our responsibility to properly manage redundant and obsolete
equipment hence we maintain our endeavours to have electronic and
electrical equipment reused or recycled in preference to disposal
•we are committed to reducing environmental impacts and continue 
to work with our specialist energy management advisors to reduce waste 
and cut costs our preference is to procure energy from renewable sources
and energy efficient equipment where available and financially viable 
• thus recently secured energy from renewable supplies that provides
electricity to 33 of our site portfolio 
•we have installed intelligent meters at a number of selected sites to allow our
specialist advisors to analyse usage patterns the programme of installation
continues as this will help us identify and rectify consumption inefficiencies
and set targets for the coming years
• thus is encouraging its shareholders to receive documentation 
electronically via the web please see the back of the annual report
board of directors
the names and details of the directors of the company are shown on pages
14 and 15
in accordance with the articles of association william allan michael de kare
silver and jo connell are retiring from office at the annual general meeting
these directors being eligible offer themselves for reelection 
directors’ interests
details of the directors’ service contracts letters of appointment and remuneration
are set out in the directors’ remuneration report on pages 21 to 26 other than
as disclosed therein none of the directors had a material interest in any contract
of significance with the company and its subsidiaries during or at the end of the
financial year  
the directors’ interests all beneficial in the ordinary shares of the company 
at the year end including awards and options under the thus group plc
discretionary share option scheme the thus group performance share plan
the thus group plc sharesave scheme the thus plc employee sharesave
scheme the thus plc executive share option scheme and the thus plc
discretionary share option scheme 2000 are contained in the directors’
remuneration report on pages 21 to 26 
in addition to the interests referred to above william allan john maguire and
philip male as executive directors are to be regarded as having an interest 
as trustees in the 17 600525 ordinary shares held in trust to satisfy entitlements
under the company’ s various share incentive arrangements and the excess shares
held in trust these interests are also disclosed in the directors’ remuneration
report on pages 21 to 26
directors’ and officers’ liability insurance
thus group plc maintains liability insurance for the directors and officers 
of the company and its subsidiaries 
substantial shareholdings
the company has been notified of the following interests representing 3 or more
of the issued share capital of the company as at 30 april 2004 
percentage of 
number of shares issued share capital
meditor capital 
management limited 63943900 474
legal  general group plc 53739011 398
prudential plc 41142455 305
littledown nominees ltd
a nominee for zurich financial 
services group 40865000 303 17
employees
our employees have yet again responded well to the challenges we set ourselves
for the year and in the main our objectives were met
our ability to meet the challenges in the year ahead will be dependent on all 
of us maintaining the same levels of commitment and performance and the need 
to continue to attract develop and retain the very best talent will again be critical
the company continues to operate within very tight cost controls but has 
ensured that money spent on development activities has been focused on the
areas of improving leadership and personal development and we have yet 
again seen an increased usage of the cool elearning system
we have focused the business on improving the key measures of staff turnover
and sickness both of these measures have seen significant improvement over 
the year and are now considered to be extremely low for our market sector 
and industry in general
recruitment activity has remained steady and we are seeing a greater interest
externally from experienced candidates from within our market sector keen 
to join us 
our employee policies and processes are continually reviewed to ensure our
commitment to providing equal opportunities to all our staff is maintained within
all areas of the business and to support our position that performance and ability
remain the basis for progression within the business
a followup employee survey was conducted in september 2003 and whilst 
it highlighted areas of focus for future improvement we also found that the
majority of questions answered demonstrated improvements during the year 
plans are in hand to ensure this key piece of feedback is used to further enhance
our employee proposition for the coming years
our policy in respect of the employment of disabled persons is the same 
as that relating to all other employees in matters of training career development
and promotion where employees become disabled during the period of their
employment we will endeavour to continue to provide employment
health and safety
we remain convinced that moral and economic drivers are compatible 
in occupational risk management we recognise that efficient management
systems are safe management systems because the human and economic costs 
of accidents are greater than effective risk control costs
our health and safety management system modelled on the principles set out 
in the health and safety executive’ s “successful health and safety management” 
continues to evolve 
•we have implemented an initiative called “serious about safety”  which
provides access to information and helps build a positive safety culture 
high quality document folders containing information risk assessment forms
and guidance have been distributed to employees enabling them to conduct
personal risk assessments operational documentation can be included 
in the system emphasising the ethos of safety as an integral part of work
• in light of new legislation we published our occupational driving safety
code of practice our position is clear thus employees are not required 
to use a mobile phone whilst driving and the use of hand held devices whilst
driving is prohibited
•we continue to revise our policy and process documentation as required 
for example the procedure for assessing and controlling occupational risks 
to our employees who are mothers or expectant mothers and their infants
once again our occupational injury rates remain very low when compared 
to industry sector standards which is a tribute to our employees’ professionalism
thus employees reported seven minor injuries and two lost time injuries over 
the 2003 calendar year  with the approximate average number of employees
across the year this gives a frequency rate of 028 thus has not been the subject
of any enforcement action this record is reflected in the strong relationships 
we have built with our insurers
charitable and political donations
during the financial year the group made a charitable donation amounting 
to £7 500 plus gifts in kind to emmaus an organisation which provides help
to longterm unemployed homeless people to rebuild their lives the group also
donated £10587 to the prince’ s trust as well as providing the telephone lines 
free of charge to women’ s aid to support its domestic abuse campaign it made
no donations for political purposes the group and members of staff provided
assistance during the year to comic relief 
creditor payment policy and practice
the group’s current policy and practice concerning the payment of the 
majority of its trade creditors is to follow the better payment practice code 
copies are available upon request from the company secretary for other
suppliers the group’s policy and practice is to settle terms of payment when
agreeing the terms of the transaction to include the terms in contracts and 
to pay in accordance with its contractual and legal obligations the group’s
“creditor days” at 31 march 2004 were 51 days the company did not have 
any trade creditors at 31 march 2004 
auditors
a resolution to reappoint kpmg audit plc as auditors to the company and
to authorise the directors to fix their remuneration will be put to shareholders
at the annual general meeting 
annual general meeting
the annual general meeting will be held at the radisson sas hotel 301 argyle
street glasgow g2 8dl on friday 9 july 2004 at 1100 am details of the
resolutions to be proposed at the annual general meeting are contained in the
notice of annual general meeting on page 46 
by order of the board
david macleod
secretary
30 april 2004 the table below sets out the number of meetings of the board and its main
committees during the period from 1 april 2003 until 30 april 2004 and the
attendance of individual directors the shaded areas indicate no meeting took
place full attendance by board members at meetings of the board and by the
members of the committees at each committee meeting is marked with a tick
those directors unable to attend the meetings in may january and february
mainly because the dates of those meetings had to be rescheduled at shorter
than normal notice are as specified in the table
william allan attended all of the meetings of the remuneration committee 
and all but one of the audit committee meetings john maguire attended all 
of the audit committee meetings and margaret ford attended one of the audit
committee meetings as an observer 
audit remuneration nomination
board committee committee committee
tuesday 22 april ✓✓
t uesday 27 may ian chippendale
thursday 19 june ✓ tuesday 8 july ✓✓
wednesday 9 july ✓ t uesday 19 august ✓ wednesday 24 september✓✓
t uesday 28 october ✓✓✓
t uesday 9 december ✓✓
monday 22 december ✓ friday 9 january margaret ford
t uesday 27 january ✓✓
friday 27 february margaret ford margaret ford
t uesday 30 march ✓✓✓✓
friday 30 april ✓✓✓
all directors have access to the advice and services of the company secretary
who is responsible for ensuring that all board procedures are observed any
director wishing to do so in furtherance of his duties may take independent
professional advice at the group’ s expense 
board committees
the board has three principal standing committees the audit committee
nomination committee and remuneration committee the composition 
purpose and function of each of these committees are described below 
audit committee
the audit committee is comprised of three nonexecutive directors and is chaired
by ian chippendale the senior independent nonexecutive director it meets 
at least quarterly has written terms of reference and its remit is to review the
annual and interim accounts and the appropriateness of accounting policies 
to review internal controls and financial reporting and to make recommendations
on these matters to the board it also considers the appointment and fees of the
external and internal auditors and reviews the risk management framework 
the internal audit plan and resulting reports the audit committee discusses the
action taken on problem areas identified by board members or in the internal 
and external audit reports the committee reviewed its own terms of reference
and effectiveness in january and march 2004 some adjustments were made 
to the terms of reference to reflect the provisions of the new combined code 
and its performance was assessed as effective the committee’ s terms of reference
are displayed on the company’ s website at wwwthusnet
18
corporate governance report
the company directors set the policy to be followed by the group and continue 
to be committed to high standards of corporate governance the group supports
the new combined code on corporate governance published in july 2003 
the board has conducted a review of how it operates with regard to the new
requirements as set out in the revised code a number of these requirements 
had already or have now been implemented and details of the group’s
compliance is set out in the appropriate sections of this report the board
continues to work towards meeting the other requirements of the code with 
a view to the full implementation of the code by the completion of the next
financial year in accordance with the requirement to comply or explain for
reporting years beginning on or after 1 november 2003
the following describes how the principles of corporate governance are applied
within the group and reports the group’ s compliance with the provisions of the
combined code
board of directors
the separation of the nonexecutive chairman and the chief executive 
ensures that there is a well established division of authority and responsibility 
at the most senior level within the group at the year end the board comprised 
three executive and five nonexecutive directors including a nonexecutive
chairman the nonexecutive directors are from varied business and other
backgrounds and all directors have the benefit of induction visits and briefings
following their appointment to the board 
the nonexecutive directors are considered by the board to be independent and
free from any business or other relationship which could materially interfere with
the exercise of their independent judgement all of the nonexecutive directors
have held office throughout the year 
ian chippendale has been identified as the senior independent 
nonexecutive director  
all directors retire by rotation such that approximately onethird of the board
seeks reappointment each year  therefore at the forthcoming annual general
meeting to be held on 9 july 2004 william allan michael de karesilver and 
jo connell will be required to retire as directors and offer themselves up for 
reelection to the thus group plc board following evaluation of the performance
of each of those directors it is confirmed that each continues to perform effectively
in the role and demonstrates commitment to the role they are therefore
recommended by the board for reelection
details of directors’ remuneration together with the group’ s remuneration policy
and the principles under which they have been formulated and applied are
described in the directors’ remuneration report as set out on pages 21 to 26
the board recognises that it is responsible for the group’ s system of internal
control and for reviewing its effectiveness such a system can only provide
reasonable assurance and not absolute assurance against material misstatement
or loss as it is designed to manage rather than eliminate the risk of failure 
to achieve business objectives 
the board meets monthly and has a schedule of matters concerning key aspects 
of the group’ s activities which are specifically referred to it for its collective
decision principally relating to the strategy direction and financial performance
of the group the board agrees its objectives on an annual basis and reviewed 
its performance and processes including those of its committees during the year  19
the committee has established a policy on the provision of nonaudit services 
by the external auditors which requires the committee to approve specifically 
the provisions of any such services within defined parameters details of the 
nonaudit services performed during the year and the fees for those services 
are contained in note 2 to the accounts on page 34 the committee in january
and march 2004 assessed the effectiveness of the external audit service and
independence of the external auditors the committee’ s conclusion was that the
service continued to be effective and that the auditors remained independent
demonstrating effectiveness and commitment in the role
the chairman of the audit committee reports the outcome of the audit committee
meetings to the board which receives and considers the minutes of all audit
committee meetings
nomination committee
the nomination committee is chaired by the group’ s nonexecutive chairman
and also comprises the chief executive and the senior independent non
executive director it has written terms of reference and its remit is to consider 
and make recommendations to the board on the appointment and reelection 
of directors having regard to the overall balance and composition of the board
and to review and advise upon issues of succession planning 
the committee and the board are reviewing the committee’s terms 
of reference and composition in light of the provisions of the new combined
code the committee’s terms of reference are displayed on the company’s
website at wwwthusnet
in relation to board appointments the committee in liaison with the board
prepares a profile of the requirements of the role in order to brief external 
search consultants to provide a list of suitable candidates both external and 
where appropriate internal for the committee to interview leading then 
to a short list and ultimate selection of the most suitable candidate for
recommendation to the board for appointment the proposed candidate 
is provided with the opportunity to meet board members and the senior
management team prior to acceptance of the appointment
remuneration committee
the remuneration committee is comprised exclusively of four independent 
nonexecutive directors is chaired by michael de karesilver and meets
regularly the remit is to make recommendations to the board on the company’ s
framework for the remuneration of the company’ s executives and its cost and 
on behalf of the board to determine and review specified remuneration packages
for the chairman the executive directors and designated senior managers 
the committee is committed to the provisions of the combined code and seeks 
to design policies which will attract retain and motivate executive directors and
senior managers of the required calibre the committee also has responsibility 
for reviewing the operation of the group’ s bonus and incentive schemes the
chairman of the remuneration committee reports the outcome of the committee
meetings to the board and the board receives the minutes of all remuneration
committee meetings the directors’ remuneration report for the year is set out 
on pages 21 to 26
the committee has reviewed and adjusted its terms of reference to reflect 
the provisions of the new combined code and the terms are displayed 
on the company’s website at wwwthusnet
relations with shareholders
as at 31 march 2004 the company had 13486 million shares in issue
approximately 77 of which were held by institutions and corporate
shareholders with the remainder being held by private investors 
there is a regular dialogue with shareholders through the annual report and
through a supplementary investor relations programme focused around the
company’ s preliminary and interim results announcements and periodic trading
updates the executive directors’ presentation of results and trading updates 
is broadcast via webcast or telephone conference following this the executive
directors undertake a series of formal presentations to existing and potential
investors in london edinburgh and glasgow during the year  the company also
arranged a number of operational tours for institutional and private investors 
to develop an understanding of the views of major shareholders the board
receives monthly an investor relations report compiled with input from the
company’s brokers setting out key features and trends in relation to trading 
in the company’s shares and share price movements analysts’ reports on the
company its competitors and the telecommunications sector are circulated 
to board members on a regular basis feedback from investors and analysts 
after the company’s results announcements and presentations are regularly
reported to the board frequently accompanied by an analysis by the company’ s
advisers of investor reaction in comparison with its peers in the sector  the board
also received during the year a detailed presentation and report from makinson
cowell independent investment research consultants following an analysis 
by them of how the company and its investor relations were perceived by the
investment community and making recommendations for future development 
of the company’ s profile and activities in that area
the annual general meeting which is normally attended by all executive 
and nonexecutive directors gives those institutional and private shareholders
attending the opportunity for communication with the board shareholders
present are encouraged to ask questions both during the meeting and after
its conclusion 
consistent with its obligations under the listing rules of the financial services
authority fsa the company makes announcements to one of the regulatory
information services approved by the fsa from time to time 
internal control
the board has adopted an approach which is in line with the guidance 
issued by the london stock exchange in establishing the group’s internal 
control procedures and policies the revised combined code requires that the
effectiveness of the system of internal control including financial operational
compliance controls and risk management is reviewed at least annually 
by the directors guidance to the directors in respect of this requirement is also
provided by the turnbull report internal control guidance for directors 
on the combined code published in september 1999
the directors of thus group plc have overall responsibility for the system 
of internal control and for reviewing the effectiveness of the system the system 
of internal control is designed to manage rather than eliminate the risk of failure 
to achieve business objectives internal control therefore can only provide
reasonable and not absolute assurance against material misstatement or loss 
the purpose authority and responsibility of the group’ s internal audit function 
is contained within a formal charter which is approved by the board the function
supports the directors in assessing key internal controls through a structured
review programme
the risk management framework adopted by the group is designed to ensure
that the key controls are and have been embedded into business processes 
the risk management and internal control systems continue to be developed
across the group and have enabled the directors to be satisfied that the group
was fully compliant with the combined code provisions on internal control 
in the course of the financial year ended 31 march 2004 20
corporate governance report continued
control environment
the group is committed to ensuring that an appropriate control environment
exists which will neither slow growth nor stifle innovation 
the organisational structure of the group is defined and communicated 
and individual objectives and authority levels are identified
each executive director has been given responsibility for specific aspects 
of the group’s business the key decisionmaking body at executive level 
in the group is the management board which is chaired by the chief executive 
the management board focuses on business plan implementation strategy
competitive positioning policy and customers and meets on a monthly basis 
in advance of the thus group plc main board the following performance
management groups meet regularly and report to the management board 
their focus is on the implementation of the year’ s annual budget
there is a margin review committee meeting monthly which considers by both
business and product lines the operational revenue and margin performance
throughout the group it also has the responsibility of improving forecasting and
budgeting procedures on an ongoing basis this committee is closely monitored
and reports to the chief financial officer cfo the cfo also conducts 
a detailed monthly review of the actual financial results 
business operations chaired by the chief operating officer  manages the 
daytoday operation of the business ensuring linkage from marketing sales
provisioning and through to operational delivery 
capital planning and programme management chaired by the support
services director ian armour tracks capital investment major bids facilities 
and major project implementation 
identification and assessment of business risk 
and evaluation of controls
the group’s risk management framework has again continued to develop 
during the year  risk assessments are completed on all key processes and quarterly
reviews are carried out by the risk management group to ensure this is a
continuous process which is embedded into the business all aspects of business
risk such as financial operational strategic compliance and business continuity
risk are covered by the risk assessments these are further supported by new
governance software which enables and requires risk owners to monitor and
review risks and associated controls within the group on a quarterly basis
the key sources of assurance over business risk have been integrated into the
group which ensures a coordinated consistent approach to the management 
of risk and advises and supports management to enable ownership of risk
management to sit within the business 
monitoring
the quarterly reviews of the group’ s risks produce an assessment of residual
risk by process across the business which is presented to the audit committee
each quarter  
under the direction of the director of risk management the effectiveness 
of internal control is audited and assessed by the internal audit function
the safety health  environment team assesses whether the health and safety
risks are being appropriately controlled and conducts audits on the operation 
of the group’ s health and safety management system 
an annual review of the effectiveness of the system of internal control and risk
management processes is carried out by the board
going concern
the directors after making appropriate enquiries confirm that they are satisfied
that thus group plc has adequate resources and committed borrowing facilities
to continue in operational existence for the foreseeable future and therefore have
adopted the going concern basis in preparing the accounts on pages 28 to 44
directors’ responsibility for the accounts
company law requires the directors to prepare accounts for each financial year 
which give a true and fair view of the state of affairs of the company and group
and of the profit or loss for that period in preparing those accounts the directors
are required to
• select suitable accounting policies and then apply them consistently
• make judgements and estimates that are reasonable and prudent
• state whether applicable accounting standards have been followed subject
to any material departures disclosed and explained in the accounts
• prepare the accounts on the going concern basis unless it is inappropriate 
to presume that the company and group will continue in business 
the directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and group and to enable them to ensure that the accounts comply 
with the companies act 1985 they have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the group and 
to prevent and detect fraud and other irregularities
auditors’ responsibilities
the group’ s registered auditors kpmg audit plc are responsible for forming an
independent opinion on the accounts of the group as presented by the directors
and for reporting their opinion to the group’ s members the independent auditor’ s
report to the members of thus group plc is set out on page 27 21
directors’ remuneration report 
constitution membership and advisors
the remuneration committee wholly comprises independent nonexecutive
directors and is chaired by michael de karesilver  the other members of the
committee who served throughout the year are ian chippendale jo connell 
and margaret ford during the course of the year  the board accepted the
recommendations made by the committee without substantial amendment
during the year  the committee received advice and input from the chairman 
the chief executive the director of business services who was responsible for
human resources and the head of reward  recognition who are from time 
to time invited to attend no individuals are involved in the determination of their 
own remuneration
the committee independently appointed towers perrin as its remuneration
advisors in october 2003 prior to this the committee had been advised 
by new bridge street consultants as was the case for new bridge street
consultants towers perrin reports directly to the committee and has not
undertaken any significant work for the company outside the area of executive
remuneration any such additional work would need to be approved by the
chairman of the committee the terms of engagement of the remuneration
advisors are available at wwwthusnet which form part of the committee’ s terms
of reference – see below
the committee’ s overall objectives and remit
the committee’ s terms of reference are also available at wwwthusnet 
the committee is responsible for making recommendations to the board 
on the company’ s executive remuneration policy and for determining each 
executive director’ s remuneration package in deciding the company’ s 
broad policy for executive remuneration the committee aims to provide
remuneration which is both competitive and appropriate the committee 
has always sought to pay no more than is necessary to motivate and retain
highlyskilled executives the committee also reviews the remuneration
arrangements of the members of the company’ s senior management team
and seeks to ensure that its decisions take into account pay and conditions
elsewhere in the company
remuneration policy
during the year the committee has continued its decision making on the basis 
of a number of underlying principles which can be summarised as follows
• executive directors and other senior executives should be paid market
competitive levels of remuneration and receive significant incentives for 
performance which significantly exceeds challenging and objective targets
• in setting base salary levels the committee has regard to a range 
of benchmark data – in particular  remuneration levels in other similar 
ftse mid250 companies and companies in the telecommunications industry 
of similar size and complexity the aim is to set salaries which are generally
around the midmarket level salaries will be above midmarket where
individual performance and skills justify it
• the committee remains strongly committed to ensuring there is an
appropriate balance between fixed and performance pay with performance
pay comprising both bonuses and share incentives it also seeks to ensure
alignment with shareholders’ interests
• the committee’ s primary goal is to ensure that executive remuneration
continues to be sufficiently attractive to retain executive directors in an
increasingly competitive market and to motivate them to deliver results 
and to enhance shareholder value 
in accordance with these principles and best practice the committee has started 
a review of total remuneration and has made a number of changes the review
will continue into the next financial year and will cover sharebased longterm
incentives and performance measures pension policy will also be considered
further in the light of the forthcoming tax reforms the committee will engage
major shareholders in the process 
the remuneration package 
basic salary
the committee sets the basic salary for each executive director by reference 
to individual performance and to external market information prepared by its
advisors any salary adjustments are generally implemented with effect from
1 april in the financial year  salaries effective from 1 april 2004 are william
allan £350000 john maguire £250000 philip male £250000 the basic
salaries of the executive directors were last increased on 1 july 2002
annual bonus
executive directors and senior executives participate in the company’ s annual 
bonus plan
the committee remains committed to ensuring that bonus targets are challenging 
and only reward demonstrably superior performance
the annual bonus plan for executive directors is based solely on corporate 
and business performance and provides a maximum total payment 
of up to 100 of salary in respect of the chief executive and up to 85 
of salary for other executive directors
the plan is based on the following key parameters
• financial measures should be used wherever possible
• the performance metrics should be linked to key corporate objectives
• whereas there may be a case for including individual performance 
criteria for more junior participants in the annual bonus plan 
the executive director population should be measured exclusively 
by reference to corporate performance
the achievement of predetermined targets determines the levels of payout under
the plan there are currently three distinct financial measures which are weighted
as follows
• 50 of the bonus is determined by reference to ebitda earnings 
before interest tax depreciation and amortisation performance
• 25 is determined by reference to turnover
• 25 is determined by reference to cash flow after interest and 
capital expenditure
the company has achieved sustainable positive ebitda has grown turnover 
by more than double the market growth rate and has achieved a cash flow positive
position during the second half of the year  in the committee’ s view this reflects
superior performance in comparison with the telecommunications sector and
demonstrates significant progress in what remain challenging market conditions
the committee considers the bonus payments determined for the year fairly and
reasonably reward the standard of achievement the committee is keen to ensure
that the executive directors further increase their longerterm shareholdings in 
the company and has therefore decided that half of the annual bonus earned
should be compulsorily deferred into shares and transferred to executive
directors after three years provided they remain with the company no bonus
was paid for the previous financial year 
the bonus plan operates for 2004 – 05 against the same financial measures 
but the weighting applied to cash flow has been increased from 25 to 50 
and that for ebitda reduced from 50 to 25 the weighting for turnover
remains at 25 the committee takes the view that an increased focus on cash
flow will further encourage prudent capital management and better support 
the company’ s business objectives for the year  22
directors’ remuneration report continued
longterm incentives
share options
the company operates an executive share option scheme the thus group plc
discretionary share option scheme under which market value options can 
be granted at the discretion of the committee to selected executive directors 
and employees the performance criterion that currently applies to the vesting 
of options is relative t otal shareholder return tsr measured against the ftse
t elecommunications sector and the ftse mid250 excluding telecommunications
companies twothirds of the options vest depending on the company’s tsr
compared against the telecommunications index and onethird depending 
on the company’s tsr compared against the ftse mid250 half the options
become exercisable when the company’ s tsr is at the median all the options 
are exercisable when the company’ s tsr is at the upper quartile the committee
must also satisfy itself that the underlying financial performance of the company
has improved during the vesting period 
relative tsr performance is calculated by t owers perrin using data supplied by
datastream to provide independent verification and is reported to the committee
no share options were granted in the financial year ended 31 march 2004
options were last granted to executive directors in the financial year ended 31
march 2002 the terms of the grant provided for the retesting of the performance
condition from a fixed point on two occasions the market value of grants made
in the next financial year will not exceed one times salary the performance test
described above will apply but for options granted thereafter  there will be no
opportunity to retest if the performance condition is not met three years from the
date of grant
relative t otal shareholder return was regarded as the most appropriate 
measure to determine the vesting of share options when the plan was approved 
it was supported by our shareholders as a measure which aligned the interests 
of executives with those of shareholders by rewarding performance relative 
to the company’ s sectoral peers
performance shares
the company also operates the thus group performance share plan under
which an award of shares can be granted at the discretion of the committee 
to selected executive directors and employees grants made during a year will
only become exercisable after three years if demanding performance targets 
set by the committee are met 
no performance share awards were granted in the financial year ended 31
march 2004 performance shares were last granted to executive directors in the
financial year ended 31 march 2003 share awards are subject to a maximum
of 100 of basic salary 
two performance criteria currently apply to the vesting of performance share
awards for half of an award of performance shares to vest thus’s tsr total
shareholder return compared to that of the constituents of the ftse allshare
telecoms sector as at the date of grant is measured over a threeyear period 
no shares vest where the company’s tsr is below the median the minimum
proportion of shares that vest at the median is 30 all the shares vest when the
company’ s tsr is at the upper decile performance is measured over three years
with no retesting opportunities the committee must also be satisfied at the time
the performance condition is met that this is consistent with the achievement 
of commensurate underlying financial performance of the company
for the remaining half of the performance share award to vest normalised
earnings per share eps performance of the company is measured over a three
year period the eps test is set with reference to broker forecasts covering the
relevant threeyear period the extent to which eps targets are satisfied after three
years will be confirmed by the committee 
relative tsr has been included as one of the performance conditions for 
the performance share awards to ensure alignment between the interests of
executives with those of shareholders for the reasons noted above the committee
has also included an eps measure as this ensures rewards are only received for
sustained improvements in the financial performance of the company the tsr
elements of the performance conditions will be calculated by t owers perrin using
data supplied by datastream and regularly reported to the committee the eps
calculations will be performed internally and audited
the committee has usually granted either share options or performance shares 
in the next financial year  it intends to make grants under both the thus group plc
discretionary share option scheme and the thus group performance share
plan this will increase the proportion of remuneration which is performance
linked in accordance with the committee’ s remuneration principles
the committee is satisfied that the combination of share options and performance
shares in the financial year ending 31 march 2005 is necessary to ensure that 
the remuneration packages for executive directors are competitive and reflect the
committee’ s underlying principles executive directors will only be rewarded 
if shareholders have gained however the remuneration review will continue 
to look carefully at the design of the company’s longterm incentives at the
vehicles used and at the performance criteria and standards
pension and other benefits
pension benefits are provided subject to inland revenue limits under the thus
group plc pension scheme the arrangements for executive directors are the
same as for all other employees the scheme is a contributory definedbenefit
scheme that provides 160th of final pensionable salary for each year of
pensionable service normal retirement age under the scheme is 60 and final
pensionable salary is defined as the highest pensionable salary averaged 
over any 12month period in the last five years of membership or the highest
threeyear average in the last 10 years if higher  pensionable salary is defined 
as basic salary only
as all the executive directors are affected by the earnings cap this means 
that their level of pension provision is significantly below market practice 
the companies against which thus benchmarks typically provide unapproved
benefits on earnings above the cap the committee has therefore decided 
to make adjustments to the pension arrangements for executive directors 
the committee will determine its approach in the light of the company’ s response 
to the pensions tax reforms for all employees but the value of the additional
provision is expected to be about 18 of base salary in the case of the chief
executive and 12 of base salary for the chief financial officer and the chief
operating officer 
executive directors are eligible for a range of benefits the value of which 
is contained within the director’ s emoluments table on page 24 these include 
the provision of a company car or car allowance fuel private medical life
permanent health and critical illness insurances
service contracts 
reflecting current market practice the executive directors have service contracts that
are terminable on one year’ s notice by either the individual or the company it is not
the committee’ s intention to appoint any new executive directors with contracts that
provide for a longer notice period 
the committee endorses the principle of mitigation of loss on early termination 
of a service contract and generally seeks to achieve that objective where possible
and appropriate 
in the event that thus wished to terminate an executive director’s contract 
other than in circumstances where the company is entitled to summarily dismiss
an executive director  it would need to either give 12 months’ notice or make 
a payment in lieu of salary and benefits
new contracts have been implemented for each of the executive directors and 
the special provisions in their contracts that provided for an enhanced termination
payment of up to 24 months’ salary and benefits if they were to leave shortly 
prior to or following a takeover or trade sale of the company have been
removed the new contracts provide for a compensation payment in the 
event of termination within 12 months of a hostile takeover equivalent to 
12 months’ remuneration 23
the dates terms and notice periods of the service contracts for executive directors
are as follows 
date of initial
date of contract appointment
commencement with thus plc notice period expiry date
william allan 01042004 22101999 12 months 29042016
john maguire 01042004 18122000 12 months 07072028
philip male 01042004 22101999 12 months 13092029
share ownership guidelines
formal guidelines provide that executive directors should retain at least 25 
of the after tax gain arising from any awards vesting pursuant to the company’ s
share incentive plans until such time as a shareholding equivalent in value to one
times basic salary has been achieved the committee will review the guidelines
not less than every two years including updating to reflect any changes in share
price and salary 
policy on outside directorships
currently no executive director holds any outside directorship the nomination
committee will consider the appropriate policy at such time as a request is made
by an executive director 
the chairman and nonexecutive directors
the chairman and nonexecutive directors have letters of appointment which are
available at wwwthusnet they have all been appointed for a term of three years
terminable at the request of the board and which renew subject to their reelection
by shareholders current terms of office began on the following dates
date of initial
commencement appointment
date of current with thus plc
term of office if applicable end of current term
roy brown chairman 11012002 04012001 10012005
nonexecutive chairman 
from 10 july 2002
ian chippendale 11012002 15101999 10012005 
senior independent director
jo connell 11012002 01012001 10012005
margaret ford 07112002 – 06112005 
michael de karesilver 11012002 22092000 10012005 
the remuneration of the chairman is determined by the remuneration
committee the fees of the nonexecutive directors are determined by the board
full details of the remuneration of the directors are contained in the directors’
emoluments table on page 24 the chairman and nonexecutive directors 
are not entitled to compensation on early termination of their term of office 
no individuals are involved in the determination of their own remuneration
performance graph
legislation introduced by the government requires this report to contain a 
graph showing the performance of the company compared with a “broad equity
market index” over the period since the company listed on 14 march 2002 the
committee has chosen the ftse allshare t elecommunications index of which
thus is a constituent this index was chosen because it shows the performance 
of the company relative to its industry peer group and is therefore particularly
relevant to shareholders 
historical tsr performance
source datastream
growth in the value of hypothetical £100 holding since listing date ftse allshare
t elecommunications services index comparison based on spot values 
thus group
ftse allshare t elecommunications service index
140
120
100
80
60
40
20
0
31 march 02 31 march 03 31 march 04 24
directors’ remuneration report continued
directors’ emoluments
the following table provides a breakdown of the total emoluments of the directors of the company in office during the year ended 31 march 2004 
compensation
basic benefits for loss total total 
salaryfees bonuses in kind of office 2004 2003
££ £ £ £ £ 
executive directors
william allan 300000 225000 15328 – 540328 303354
john maguire 230000 146625 15964 – 392589 232975
philip male 230000 146625 15122 – 391747 248985
james reid ceased to be a director 18 july 2002 –––– – 102565
nonexecutive directors fees and expenses
roy brown 80000––– 80000 66290
ian chippendale 30000––– 30000 30000
jo connell 30000––– 30000 30000
michael de karesilver 30000––– 30000 30000
margaret ford 30000––– 30000 12000
total 96000051825046414–15246641056169
 half of the bonus disclosed above is compulsorily deferred into shares which will vest after three years subject to continued employment
i aggregate emoluments in respect of qualifying services amounted to £1524664 2003 £1023169
ii all directors continue to be remunerated by thus plc after the establishment of thus group plc as the holding company of thus plc no remuneration has been
received by the directors from thus group plc
directors’ pension benefits
an overview of the pension benefits provided to all executive directors is set out in the policy section earlier 
details of pension benefits earned by the executive directors during the year ended 31 march 2004 are shown below 
increasedecrease 
definedbenefits increase in increase in transfer value transfer value transfer value in transfer value 
pension scheme accrued benefit accrued benefits accrued benefits of a less directors’ of accrued benefits of accrued benefits less directors’ 
as at 31 march 2004 at 31 march 2004 excluding inflation a including inflation contributions at 31 march 2003 at 31 march 2004 contributions
££££££ £
william allan 14517 6190 6416 63128 89443 160211 65818
john maguire 9002 3738 3881 16581 22421 51856 24485
philip male 11616 3717 3932 15148 31581 62814 26283
i the pension entitlement shown is that which would be paid annually on retirement based on service to the end of the year  or end of service assuming normal
retirement at age 60 members of the scheme have the option to pay additional voluntary contributions neither the contributions nor the resulting benefits are
included in the above table
ii the executive directors are subject to the earnings cap introduced in the finance act 1989
iii the increase in accrued pension during the year allows for an increase in inflation of rpi as measured at 28
iv the transfer value has been calculated on the basis of actuarial advice in accordance with actuarial guidance note gn11 less director’ s contributions 
the transfer value represents a liability of the pension scheme not a sum due to or paid to the director   25
directors’ interests in shares and share options
exercise market price date 
executive at at date price at date of from which 
director 1 april 2003 granted exercised lapsed 31 march 2004 exercised pence exercise exercisable expiry date
thus plc executive share option scheme – see note 1
william allan 234662 – – 234662 – – 326p – jun 2003 jun 2010
philip male 184049 – – 184049 – – 326p – jun 2003 jun 2010
thus plc discretionary share option scheme 2000 – see note 2
john maguire 1000000––– 1000000 – 72p – dec 2003 dec 2007
thus group plc discretionary share option scheme – see note 2
william allan 1569230––– 1569230 – 1625p – mar 2005 mar 2009
john maguire 1107692––– 1107692 – 1625p – mar 2005 mar 2009
philip male 1230769––– 1230769 – 1625p – mar 2005 mar 2009
thus group performance share plan – see note 3
william allan 2659615––– 2659615 – £1 total – mar 2005  mar 2005 
consideration feb 2006  feb 2006
john maguire 1991346––– 1991346 – £1 total – mar 2005  mar 2005 
consideration feb 2006  feb 2006
philip male 2052884––– 2052884 – £1 total – mar 2005 mar 2005 
consideration  feb 2006  feb 2006
thus plc employee sharesave scheme
philip male 2136 – – 2136 – – 272p – feb 2003 aug 2003
thus group plc sharesave scheme – see note 4
william allan 13842––– 13842 – 14p – may 2005 nov 2005
john maguire 13842––– 13842 – 14p – may 2005 nov 2005
philip male 13842––– 13842 – 14p – may 2005 nov 2005
– 13540 – – 13540 – 1175p – august 2006 feb 2007
the emoluments of the highest paid director mr allan including gains on the exercise of entitlements to share and shares options but excluding pension contributions 
are £540328 2003 £337363 pension contributions made by the company under approved pension arrangements for mr allan amounted to £14850
2003 £6418
the aggregate of the gains made on the exercise of share options during the year was £nil 2003 aggregate of gains made on the exercise of the puep entitlements 
and the profit sharing scheme was £52017 of which £nil 2003 £34009 related to the gains attributable to the highest paid director mr allan
1 options under the thus plc executive share option scheme were only exercisable if the following performance condition was met one half of the option was
exercisable if the company’ s tsr ranking at the third anniversary of grant was above the median for the companies who were constituent companies of the 
ftse mid250 index on the date of grant the other half was exercisable if the company’ s tsr ranking at the third anniversary of the date of grant was above 
the median for the companies who were constituent companies of the t elecoms sector as classified by the ftse actuaries allshare index at the 
date of grant no retesting provision applied to these options
2 outstanding options held by directors under the discretionary option schemes will only be exercisable if the following performance condition is met twothirds 
of the shares under option have a comparator group of the ftse telecoms sector and the remaining third have a comparator group of the ftse mid250
companies excluding telecommunications companies in both cases 50 of the shares under that part of the option are exercisable for median tsr performance
against their respective comparator group rising on a straightline basis to full vesting for upper quartile performance if the performance targets have not been
satisfied in full on the third anniversary of the grant of the option the options may be retested on two further occasions being fourth and fifth anniversaries of the
grant with retesting always from a fixed base point any part of the options not exercisable after the fifth anniversary will lapse 
3 for awards granted in the year ended 31 march 2002 under the performance share plan tsr must exceed the upper decile of a comparator group of 18 uk
telecommunications companies over a fixed threeyear period in order for the full award to vest 30 of the award vests for median tsr rising on a straightline
basis to full vesting at upper decile performance no awards vest for below median performance the market price of a share on 27 march 2002 when an award
was made was 1625p for awards granted in the year ended 31 march 2003 under the performance share plan in respect of half of the award tsr must
exceed the upper decile of a comparator group of the ftse allshare telecoms sector as at the date of grant over a fixed threeyear period in order for the full 
half of the award to vest 30 of this part of the award vests for median tsr performance rising on a straightline basis to full vesting at upper decile performance
no awards vest for below median performance for the remaining half of the award normalised earnings per share eps performance of the company will 
be measured over a threeyear period 30 of this part of the award will vest at a normalised eps in 2005 of 075p 100 vesting at a normalised eps of 05p
30 – 100 will vest on a straightline basis at a normalised eps figure between 075p and 05p the market price of a share on 11 february 2003 when 
an award was made was 8p
4 as required by the relevant legislation no performance conditions apply to options under the sharesave schemes
the market price of the shares at 31 march 2004 was 3175p and the range during the financial year ended 31 march 2004 was 91p to 385p
no awards were varied during this year 
the information and explanatory notes on pages 24 and 25 above has been audited by the company’ s auditors in line with the relevant legislation 26
directors’ remuneration report continued
directors’ interests in ordinary sharesentitlements to shares
the interests of the directors in office at the end of the year in the shares of thus group plc at the beginning of the year  or date of appointment if later  and at the end 
of the year were as follows 
ordinary shares
31 march 2004 as at 1 april 2003
chairman and executive directors 
roy brown 4500 4500
william allan 289607 289607
john maguire 75084 75084
philip male 176116 176116
nonexecutive directors
ian chippendale 53225 53225
jo connell 17097 17097
michael de karesilver 5000 5000
margaret ford 51149 –
as potential beneficiaries under the employee benefit trust the executive directors are deemed to be interested in the shares held by the trust which 
as at 31 march 2004 amounted to 17 600525 ordinary shares
no changes took place to the interests of the directors between 31 march 2004 and 30 april 2004
approved by the board on 30 april 2004 and signed on its behalf by
michael de karesilver
chairman of the remuneration committee  27
independent auditor’ s report 
to the members of thus group plc
we have audited the accounts on pages 28 to 44 we have also audited the
information in the directors’ remuneration report that is described as having
been audited
this report is made solely to the company’ s members as a body in accordance
with section 235 of the companies act 1985 our audit work has been
undertaken so that we might state to the company’ s members those matters
we are required to state to them in an auditor’ s report and for no other purpose
to the fullest extent permitted by law we do not accept or assume responsibility
to anyone other than the company and the company’ s members as a body for
our audit work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
the directors are responsible for preparing the annual report and the directors’
remuneration report as described on page 20 this includes responsibility for
preparing the accounts in accordance with applicable united kingdom law and
accounting standards
our responsibilities as independent auditors are established in the united
kingdom by statute the auditing practices board the listing rules of the financial
services authority and by our profession’ s ethical guidance
we report to you our opinion as to whether the accounts give a true and fair
view and whether the accounts and the part of the directors’ remuneration
report to be audited have been properly prepared in accordance with the
companies act 1985 we also report to you if in our opinion the directors’
report is not consistent with the accounts if the company has not kept proper
accounting records if we have not received all the information and explanations
we require for our audit or if information specified by law regarding directors’
remuneration and transactions with the group is not disclosed
we review whether the statement on pages 18 to 20 reflects the company’ s
compliance with the seven provisions of the combined code specified for our
review by the listing rules and we report if it does not we are not required to
consider whether the board’ s statements on internal control cover all risks and
controls or form an opinion on the effectiveness of the group’ s corporate
governance procedures or its risk and control procedures
we read the other information contained in the annual report including the
corporate governance report and the unaudited part of the directors’
remuneration report and consider whether it is consistent with the audited
accounts we consider the implications for our report if we become aware of
any apparent misstatements or material inconsistencies with the accounts
basis of audit opinion
we conducted our audit in accordance with auditing standards issued by the
auditing practices board an audit includes examination on a test basis of
evidence relevant to the amounts and disclosures in the accounts and the part
of the directors’ remuneration report to be audited it also includes an
assessment of the significant estimates and judgements made by the directors
in the preparation of the accounts and of whether the accounting policies
are appropriate to the group’ s circumstances consistently applied and
adequately disclosed
we planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with sufficient
evidence to give reasonable assurance that the accounts and the part of the
directors’ remuneration report to be audited are free from material misstatement
whether caused by fraud or other irregularity or error  in forming our opinion we
also evaluated the overall adequacy of the presentation of information in the
accounts and the part of the directors’ remuneration report to be audited
opinion
in our opinion
• the accounts give a true and fair view of the state of affairs of the company
and the group as at 31 march 2004 and of the loss of the group for the year
then ended and
• the accounts and the part of the directors’ remuneration report to be
audited have been properly prepared in accordance with the companies
act 1985
kpmg audit plc
chartered accountants
registered auditor
8 salisbury square
london
ec4y 8bb
30 april 2004
notes
a the maintenance and integrity of the thus group plc website is the
responsibility of the directors the work carried out by the auditors does not
involve consideration of these matters and accordingly the auditors accept
no responsibility for any changes that may have occurred to the accounts
or audit report since they were initially presented on the website
b legislation in the united kingdom governing the preparation and dissemination
of accounts may differ from legislation in other jurisdictions 28
accounting policies and definitions
accounting policies
a summary of the more important group accounting policies is set out below
the following principal accounting policies have been applied consistently 
in dealing with items which are considered material in relation to the 
group’ s accounts
basis of preparation
the accounts have been prepared under the historical cost convention and
in accordance with applicable accounting standards in the uk subject to the 
true and fair override as noted below and with the requirements of the 
companies act 1985
basis of consolidation
the group accounts include the accounts of the company and its subsidiary
undertakings made up to 31 march 2004 unless otherwise stated the
acquisition method of accounting has been adopted under this method the
results of subsidiary undertakings acquired or disposed of in the year are
included in the consolidated profit and loss account from the date of acquisition
or up to the date of disposal as noted below the restructuring of the thus group
was accounted for using the principles of merger accounting set out in financial
reporting standard 6 “acquisitions and mergers” frs 6 and schedule 4a 
to the companies act 1985
the final step of the restructuring of the thus group was the redesignation 
on 19 march 2002 of the thus group plc preference shares to ordinary
shares the relative rights of shareholders at the start and end of the restructuring
process did not remain unchanged as a result the restructuring did not meet the
definition of a group reconstruction under frs 6 which would have required the
restructuring to be accounted for under acquisition accounting principles this
would have resulted in all the separate assets and liabilities of thus plc being
recorded at fair value goodwill and goodwill amortisation charges arising and
only the post acquisition results of thus plc being reported in the consolidated
profit and loss account the directors of the company did not believe that this
would have given a true and fair view of the state of affairs of the group and 
of its results as in substance the change in the relative rights of the shareholders
was incidental to the main purpose of the restructuring which was a change 
in the identity of the holding company rather than an acquisition of a business
consequently the restructuring was accounted for using merger accounting
principles as the directors of the company considered this was necessary in order
to meet the overriding requirements of the companies act 1985 to show a true
and fair view the directors of the company consider that it is not practicable 
to quantify the effect of this departure from the detailed accounting requirements
under section 230 4 of the companies act 1985 the company is exempt from
the requirement to present its own profit and loss account
turnover
turnover represents the value of goods and services supplied to customers during
the year net of value added t ax
indefeasible rights of use “iru” sales
as part of its service offering the group periodically sells dark fibre to other
network operators seeking to extend their own networks under iru agreements
these agreements extend for all of the assets’ expected useful lives and transfer
substantially all of the risks and benefits of ownership to the buyer in a number 
of cases the group has acquired dark fibre under iru agreements from the same
counterparties in order to complete its own network
where the consideration received by the group for such iru sales is in cash
and there is no separate agreement with the buyer to acquire fibre the resulting
profitloss is shown in the accounts as a gainloss on the disposal of fixed assets
turnover definitions
the group’ s turnover comprises revenues from data and telecom services 
internet services contact centre services and interactive services each of which
are defined as follows
data and telecom services
revenues are derived from communication solutions including the
provision of switched services capacity services data services and facility
management services
internet services
revenues from internet services comprise monthly access fees paid by internet 
dial up subscribers ingress receipts revenue from business access services
including the provision of leased lines web design and ecommerce services
and revenues from wholesale internet services provided to virtual internet 
service providers
contact centre services
revenues represent the provision of outsourced contact centres telemarketing
systems integration and consulting services
interactive services
revenue from interactive services comprise the group’ s share of premium 
rate call charges
cost definitions
the group’ s costs comprise cost of sales selling and distribution and
administration costs
cost of sales
cost of sales consists of interconnect costs and payments to other public
t elecommunications operators pto’ s network costs network depreciation
contact centre costs interactive royalties and related costs
selling and distribution costs 
selling and distribution costs comprise expenditure on marketing advertising 
and promotions together with the salaries and associated costs of the sales
and marketing function
administration expenses
administration expenses comprise expenditure on customer services human
resources information technology legal and regulatory compliance finance
department costs and nonoperational property together with depreciation
of nonnetwork assets
other definitions
company or thus
thus group plc
scottishtelecom businesses
the businesses acquired by the company on 30 september 1999 
together with scotland online limited
group
thus group plc and its subsidiaries and for the periods prior 
to 30 september 1999 the scottisht elecom businesses
subsidiary undertakings
entities in which the company holds a longterm controlling interest
scottishpower
scottish power plc and its subsidiaries 29
where the sale of fibre for cash has occurred and there is a separate agreement
with the buyer  involving the group acquiring fibre of a similar value at a similar
time the directors have concluded that it is most appropriate to record the sale
and purchase transactions at fair value with the gain arising on the sale treated 
as unrealised and recorded in the statement of t otal recognised gains and losses
unrealised gains and losses are recognised over the life of the agreement
interest
all interest payable and receivable is reflected in the profit and loss account
as it accrues
debt issue costs are accounted for as an adjustment to the amount of debt
outstanding and are included within finance charges over the life of the 
associated borrowings debt issue costs relating to surplus loan facilities 
are written off immediately on identification of that surplus
taxation
the charge credit for taxation is based on the results for the period and takes 
into account full provision for deferred tax using the approach set out in 
financial reporting standard 19 “deferred t ax” frs 19 in respect of timing
differences on a nondiscounted basis a recoverability test is applied to losses
intangible fixed assets
licence fees are capitalised at cost less provision for any impairment in value
and amortised over the remaining licence period once the relevant network
to which a licence relates becomes operational and a service is launched
to the public
costs associated with the development of new products or services are capitalised
and amortised over the anticipated life of the new product or service once this 
is launched to the public 
tangible fixed assets
t angible fixed assets are stated at cost less provision for any impairment 
in value and are depreciated using the straight line method over their estimated
operational lives t angible fixed assets include capitalised employee costs and
other costs which are directly attributable to the construction of fixed assets
the main depreciation periods used are as set out below
land and leasehold buildings years
alterations to leasehold premises over lease period
or useful life if shorter
buildings equipment accommodation modules 10
plant and equipment
underground network 40
fibre optic cable 20
electronics customers’ systems and base stations 10
customer connections 5
tools 4
other
furniture and fittings 10
vehicles 4
computers and related software 3 to 5
investments
investments in subsidiary undertakings are stated in the balance sheet 
of the parent company at cost less provision for any permanent diminution 
in value 
own shares held under trust
shares in the company purchased for employee share options are held under
trust and are recorded within fixed asset investments in the balance sheet at cost
less provision for any permanent diminution in value
stocks
stocks are valued at the lower of cost and net realisable value
finance and operating leases
assets leased by the group under finance leases are capitalised and depreciated
in line with the group’ s depreciation policy the interest element of the finance
lease repayments is charged to the profit and loss account in proportion to the
balance of the capital repayments outstanding rentals payable under operating
leases are charged to the profit and loss account as incurred rent free periods
received by the group at the inception of new operating leases for properties 
are recognised in the profit and loss account over the period of the lease or 
if shorter than the full lease term over the period to the renewal date at which 
the rent is first expected to be adjusted to the prevailing market rate
foreign currencies
transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction at the year end monetary assets and liabilities denominated 
in foreign currencies are translated at the rate of exchange ruling at the balance
sheet date any gain or loss arising on the restatement of such balances 
is taken to the profit and loss account the accounts of the overseas entity 
and branch are translated at the rate of exchange ruling at the balance sheet
date the exchange difference arising on the retranslation of opening net 
assets is taken directly to reserves
financial instruments
charges relating to financial instruments acquired to reduce risk to interest 
rate exposure are charged to the profit and loss account as incurred 
pensions
pension costs are accounted for on the basis of charging the expected cost 
of providing pensions over the period during which the group benefits from 
the employees’ services the effects of variations from regular costs are spread 
over the expected remaining working lifetime of the members of the scheme 
after making suitable allowances for future withdrawals contributions to 
defined contribution pension plans are charged to the profit and loss account 
in the period in which they are incurred the pension cost figures used in these
accounts comply with the current pension cost accounting standard statement 
of standard accounting practice 24 “accounting for pension costs” ssap 24 
financial reporting standard 17 “retirement benefits” frs 17 was issued on 
30 november 2000 under the transitional arrangements permitted by frs 17
the group is required to disclose the information in note 24 
for a minority of employees the group pays varying levels of contributions
to personal pension schemes the costs are charged against the profit and loss
account as incurred 30
group profit and loss account
for the year ended 31 march 2004
2004 2003 
notes £’000 £’000 
turnover from continuing operations 1 332372 291236 
cost of sales 5 262845 227039
gross profit from continuing operations 69527 64197 
selling and distribution 25917 27180
administration expenses 5 65112 87816
other operating income 2 289 – 
operating loss from continuing operations 2 21213 50799
exceptional items 
– lossgain on sale of fixed assets 266 250 
loss on ordinary activities before interest and other similar charges 21479 50549
amounts written back tooff investments 11 1740 1325
net interest payable and other similar charges 6 5270 6915
loss on ordinary activities before taxation 25009 58789
t axation on loss on ordinary activities 7 212 196
loss for the financial year 20 25221 58985
loss and diluted loss per ordinary share pence 8 190 444
there were no discontinued operations in either the current or previous year  
the accounting policies and definitions on pages 28 to 29 together with the notes on pages 34 to 44 form part of the accounts  31
consolidated statement of total recognised gains and losses
for the year ended 31 march 2004
2004 2003 
note £’000 £’000 
loss for the financial year 25221 58985
currency translation differences on overseas net assets 20 38 62
unrealised gainslosses on fixed asset disposals 20 839 507
total recognised gains and losses relating to the year 24420 59554
reconciliation of movements in shareholders’ funds 
for the year ended 31 march 2004 
2004 2003 
note £’000 £’000 
loss for the financial year 25221 58985
currency translation differences on overseas net assets 20 38 62
merger reserve movement – 814 
unrealised gainslosses on fixed asset disposals 20 839 507
net movement in shareholders’ funds 24420 58740
opening shareholders’ funds 407412 466152 
closing shareholders’ funds 382992 407412 
the accounting policies and definitions on pages 28 to 29 together with the notes on pages 34 to 44 form part of the accounts 32
balance sheets
as at 31 march 2004
group company
2004 2003 2004 2003 
notes £’000 £’000 £’000 £’000 
fixed assets 
intangible assets 9 136 301 – – 
t angible assets 10 412796 436508 – – 
investments 11 3280 – 56963 56963 
416212 436809 56963 56963 
current assets
stocks 12 3125 2867 – – 
debtors
amounts falling due within one year 13 93498 90837 – –
amounts falling due after more than one year 13 3471 – – –
96969 90837 – –
investments 11 – 1666 – – 
cash at bank and in hand 23 26421 12143 87 87 
total current assets 126515 107513 87 87 
creditors amounts falling due within one year
other creditors 14 100234 95511 627 627
loans and other borrowings 15 1583 117 – – 
total creditors falling due within one year 101817 95628 627 627
net current assetsliabilities 24698 11885 540 540
total assets less current liabilities 440910 448694 56423 56423 
creditors amounts falling due after more than one year
loans and other borrowings 15 57179 40666 – – 
total creditors falling due after more than one year 57179 40666 – – 
provisions for liabilities and charges 17 739 616 – – 
net assets 382992 407412 56423 56423 
capital and reserves 
calledup share capital 19 33715 33715 33715 33715 
merger reserve 20 566560 566560 – – 
capital redemption reserve 20 23248 23248 23248 23248 
other reserves 20 18700 18840 – – 
profit and loss account 20 259231 234951 540 540
equity shareholders’ funds 382992 407412 56423 56423 
the accounting policies and definitions on pages 28 to 29 together with the notes on pages 34 to 44 form part of the accounts 
approved by the board on 30 april 2004 and signed on its behalf by 
william allan john maguire 
chief executive chief financial officer  33
group cash flow statement
for the year ended 31 march 2004
2004 2003 
notes £’000 £’000 
net cash inflow from continuing operating activities 22 37418 26076 
returns on investments and servicing of finance 21a 3351 8413
free cash flow 34067 17663 
capital expenditure and financial investment 21b 36664 54362
cash outflow before financing 2597 36699
financing 21c 16875 39394 
increase in cash in the year 23 14278 2695 
 free cash flow represents cash flow from continuing operating activities after adjusting for returns on investments and servicing of finance 
reconciliation of net cash flow to movement in net debt 
for the year ended 31 march 2004
2004 2003 
notes £’000 £’000 
increase in cash in the year 23 14278 2695 
cash inflow from increase in debt 21c 23 16875 39394
change in net debt resulting from cash flows 23 2597 36699
other noncash movements 23 100 – 
movement in net debt in the year 2697 36699
net debtfunds at the beginning of the year 23 32657 4042 
net debt at the end of the year 23 35354 32657
the accounting policies and definitions on pages 28 to 29 together with the notes on pages 34 to 44 form part of the accounts  34
notes to the accounts 
for the year ended 31 march 2004
1 segmental reporting
turnover has been analysed below between data and telecom services internet
services contact centre services and interactive services the directors consider
these to be the same class of business and accordingly no segmental analysis 
of operating loss or net assets has been given
2004 2003 
£’000 £’000 
turnover analysis from continuing operations
data and telecom services 198644 160556 
internet services 99067 90273 
contact centre services 21 694 24631 
interactive services 12967 15776 
332372 291236 
turnover by origin 
united kingdom 318239 281920 
europe 14133 9316 
332372 291236 
turnover by destination 
united kingdom 314687 278503 
europe 17 685 12134 
usa – 599 
332372 291236 
2 operating loss from continuing operations
2004 2003 
notes £’000 £’000 
operating loss is stated after chargingcrediting 
depreciation on tangible fixed assets 
– owned assets 61478 77547 
– under finance leases 3133 190 
amortisation of intangible fixed assets 9 22 165 165 
profit on disposal of tangible fixed assets 22 – 66
hire of assets under operating leases 
– other operating lease rentals 8681 9861
other operating income
– rents received 289 – 
auditor’ s remuneration for audit of i
–group 175 160 
– company – – 
i fees paid to the auditors and their associates during the current and prior year
are analysed below
2004 2003 
all relate to the group £’000 £’000 
audit services 201 180 
further assurance services – 7 
t ax services 
– compliance services 7 – 
– advisory services 6 – 
other services 86 – 
300 187 
the work included in other services comprises £77000 for forensic work 
and £9000 in connection with systems implementation work
3 earnings before interest taxation depreciation 
and amortisation ebitda
2004 2003 
notes £’000 £’000
operating loss 21213 50799
depreciation charge for the year 5 64611 77737 
amortisation charge for the year 9 165 165 
ebitda 43563 27103 
4 employees 
a employee costs 
2004 2003 
note £’000 £’000
wages and salaries 57407 63085 
social security costs 6115 6615 
pension costs 24 3117 3144 
t otal employee costs 66639 72844 
less amounts not charged to the profit and loss account 7492 10096
charged to the profit and loss account 59147 62748 
b employee numbers 
the year end and average number of employees fulltime and parttime
employed by the group including executive directors were 
at 31 march average
2004 2003 2004 2003
operations 593 581 578 603 
selling and distribution 264 284 267 291 
administration and customer services 376 391 380 410 
contact centres 961 632 780 764 
2194 1888 2005 2068 
the number of fulltime 
equivalent staff was 2089 1858 1942 2034 
average
by location 2004 2003 
united kingdom 1933 1992 
europe 72 75 
usa – 1 
2005 2068 
5 depreciation charge
depreciation is charged on network and nonnetwork assets and is included within
cost of sales and administration expenses on that basis as follows 
2004 2003 
note £’000 £’000 
cost of sales 47152 43977 
administration expenses 17459 33760 
22 64611 77737 
the cost of sales depreciation charge includes asset impairment charges 
of £4155000 2003 £2694000 the depreciation charge for administration
expenses includes asset impairment charges of £612000 2003 £10688000 35
6 net interest payable and other similar charges 
a analysis of net interest payable and other similar charges
2004 2003
£’000 £’000
interest on overdrafts and other borrowings 5278 6879 
interest on finance leases 374 383 
total interest payable and other similar charges 5652 7262 
interest receivable 382 347
net interest payable and other similar charges 5270 6915 
b analysis of total interest payable and other similar charges
2004 2003 
£’000 £’000 
– secured credit facilities 4242 2893 
– amortisation of loan costs 1004 920 
– loan costs written off – 2469 
– other interest payable 32 597 
– finance leases 374 383 
5652 7262 
7taxation charge on loss on ordinary activities 
2004 2003 
taxation on the loss for the year £’000 £’000 
uk corporation tax charge at 30 2003 30 – – 
overseas taxation 212 196 
212 196 
the current tax charge is higher 2003 higher than the standard rate of
corporation tax in the uk 30 applied to the loss for the year due to the 
following factors 
2004 2003 
£’000 £’000 
loss before taxation 25009 58789
loss before tax at standard rate of 30 2003 30 7503 17637
effects of
permanent differences 122 1549 
fixed asset timing differences 6769 15888 
other timing differences 612 900 
prior year adjustments – 700
overseas taxation 212 196 
212 196 
the future tax charge will be impacted by the reversal of the unrecognised deferred
tax asset see note 18
8 loss per ordinary share 
the loss and diluted loss per ordinary share have been calculated in accordance
with financial reporting standard 14 “earnings per share” frs 14 for both
years the loss for the financial year  divided by the weighted average number 
of ordinary shares in issue during the financial year  has been used to calculate
both the loss and diluted loss per ordinary share
2004 2003 
loss for the financial year £’000 25221 58985
basic and diluted weighted average share
capital number of shares thousands 1329973 1329347 
the basic weighted average share capital excludes 17600525 
2003 18930284 ordinary shares held by the company under trust 
in connection with the employee share schemes 
9 intangible fixed assets 
licences other total
group note £’000 £’000 £’000
cost
at 1 april 2003 and 31 march 2004 500 2077 2577 
aggregate amortisation 
at 1 april 2003 363 1913 2276 
charge for the year 2 100 65 165 
at 31 march 2004 463 1978 2441 
net book value at 31 march 2004 37 99 136
net book value at 31 march 2003 137 164 301 
other intangible assets relates to costs associated with the development of new
products or services
10 tangible fixed assets 
land  
leasehold plant  other
buildings equipment assets total
group notes £’000 £’000 £’000 £’000 
cost
at 1 april 2003 12462 497997 140502 650961 
additions 385 28615 12118 41118 
disposals – 313 – 313
at 31 march 2004 12847 526299 152620 691766 
aggregate depreciation 
at 1 april 2003 4643 115400 94410 214453 
charge for the year 2 5 1167 44992 18452 64611 
released on disposal – 94 – 94 
at 31 march 2004 5810 160298 112862 278970 
net book value 
at 31 march 2004 7037 366001 39758 412796 
net book value at 31 march 2003 7819 382597 46092 436508 
the net book value of tangible fixed assets held under finance leases by the 
group at 31 march 2004 was £95000 2003 £3128000 the charge 
for depreciation against these assets during the year was £3133000 2003
£190000 which includes asset impairment charges of £2938000 note 2 notes to the accounts 
for the year ended 31 march 2004
36
11 investments
a company 
subsidiary undertakings
2004 
cost and net book value £’000 
at 1 april 2003 and 31 march 2004 56963 
the investment in subsidiary undertakings represents an investment in shares 
of £56963000 
details of the company’ s subsidiary undertakings at 31 march 2004 are as follows 
country of class of proportion of
company incorporation share shares held principal activity 
thus plc scotland ordinary 100 voice data 
internet and 
contact centre 
services provider
demon internet inc usa ordinary 100 us internet peering 
management
thus profit sharing 
trustees limited scotland ordinary 100 trustee 
 the investment in these companies is held by a subsidiary undertaking 
b group
the number of own shares held as fixed asset investments by the group 
as at 31 march 2004 was 17600525 2003 18930284 these shares 
were previously treated as a current asset investment and valued at the lower 
of cost and net realisable value being midmarket price at the balance sheet date 
due to a general uplift in the market price of the company’ s shares during the 
year a credit of £1740000 2003 charge £1325000 has been recognised 
as amounts written back to investments in the profit and loss account
at the 31 march 2004 the directors took the decision to reclassify the own shares
held under trust from current asset investments to fixed asset investments to reflect
the fact that these shares will now be used to satisfy share options
the nominal value of all shares held as fixed asset investments as at 31 march
2004 was £440013 2003 current asset investment £473257
12 stocks
group company
2004 2003 2004 2003 
£’000 £’000 £’000 £’000 
raw materials – replacement parts 
and consumables 3125 2867 – –
13 debtors 
group company
2004 2003 2004 2003 
£’000 £’000 £’000 £’000 
amounts falling due within 
one year
trade debtors 64395 63982 – – 
prepayments and accrued income 28786 26187 – –
other debtors 317 668 – –
93498 90837 – – 
amounts falling due after 
more than one year
trade debtors 3471 – – – 
total debtors 96969 90837 – –
14 other creditors 
group company
2004 2003 2004 2003 
£’000 £’000 £’000 £’000 
trade creditors 43844 36346 – –
corporation tax 824 612 – – 
t axation and social security 2072 3802 – –
capital creditors and accruals 7126 3852 – –
other creditors 3488 1736 87 87 
accruals and deferred income 42880 49163 – – 
amounts due to subsidiary 
undertakings – – 540 540 
100234 95511 627 627 
15 loans and other borrowings 
group company
2004 2003 2004 2003 
notes £’000 £’000 £’000 £’000 
secured credit facilities a i 53987 35983 – –
other loans 600 600 – –
finance leases 23 4175 4200 – – 
58762 40783 – – 
repayments fall due as follows 
within one year  or on demand 1583 117 – – 
after more than one year a i 57 179 40666 – –
58762 40783 – – 
repayments due after more than one year are analysed as follows
between one and two years 12203 1728 – – 
between two and five years 44689 39467 – – 
after five years 3300 3488 – – 
60192 44683 – – 
less unamortised issue costs 3013 4017 – – 
57 179 40666 – –  37
15 loans and other borrowings continued
a analysis of loans and other borrowings
group company
2004 2003 2004 2003 
note £’000 £’000 £’000 £’000 
other borrowings
secured credit facilities i 53987 35983 – – 
other loans 600 600 – – 
finance lease obligations 4175 4200 – – 
58762 40783 – – 
i the secured credit facilities are stated net of unamortised issue costs 
of £3013000 2003 £4017000 the credit facilities are secured 
by a bond and floating charge over the undertaking and all property 
and assets present and future of the group and by a fixed and floating
charge over the properties plant machinery and assets of the group
under the terms of the facility £90000000 was available for drawing 
down until 1 april 2004 however  during the year this facility was reduced 
to £60000000 the facility is refinanced by an amortising term loan facility
commencing on 1 april 2004 and maturing on 31 march 2008
a further £17000000 was drawn down during the year giving a total
drawdown at 31 march 2004 of £57000000
the first repayment of £1425000 which is calculated as 25 of the outstanding
amount is payable on 31 march 2005 subsequent repayments are due 
on a quarterly basis with the last repayment falling due on 31 march 2008 
the value of the last repayment is calculated as 10 of the outstanding amount
the interest rate applied to the loan facility is calculated as being the aggregate
of an applicable margin libor and a mandatory cost if any the mandatory
cost is defined as an addition to the interest rate to compensate the lenders for
certain compliance costs
the average interest rate charged during the year was 926 2003 894
b finance lease obligations
group company
2004 2003 2004 2003 
£’000 £’000 £’000 £’000 
falling due 
within one year 158 117 – –
between one and two years 203 128 – –
between two and five years 514 467 – –
after five years 3300 3488 – –
amounts falling due after one year 4017 4083 – – 
total 4175 4200 – –
16 derivatives and other financial instruments
a financial instruments and risk management
i overview
the main financial risks faced by the group are funding and liquidity counterparty
and credit risk interest rate risk and exchange rate risk the board has reviewed
and agreed policies for managing each of these risks as summarised below
speculative trading activities are not permitted
ii risk management
funding and liquidity management
the group’ s objective is to maintain continuity of funding for its operations using
committed facilities and overdrafts and to maximise interest on surplus funds
finance leases are also used where considered cost effective a revolving loan
facility refinanced by a term loan facility was the group’ s main source of funding
during the current year  drawdowns under the facility are subject to various
financial covenants
counterparty and credit risk management
cash placements and derivative transactions give rise to credit risk on the potential
default of counterparties the group monitors the exposures and the credit rating
of its counterparties regularly and uses limits to mitigate the credit risk that the
group may have with any one counterparty it is not anticipated that any existing
counterparties will fail to meet their current obligations
interest rate management 
the group’ s policy is to have a floating rate interest profile with the exception 
of finance leases the group’ s borrowing facilities and investments are all 
at a sterling libor floating rate of interest only the interest flows connected 
to the secured credit facility are hedged and this policy has been applied
throughout the year  t o comply with the group’ s secured borrowing facilities 
an interest rate hedge must be in place the group is required to hedge 
interest on at least 50 of the principal loan outstanding the costs of interest 
rate hedges are expensed as incurred the current arrangement in place 
caps libor at a minimum of 423 and a maximum of 6 
foreign exchange management 
thus faces currency exposures in euros and us dollars usd from operating
activities generated in the netherlands and united states and has fixed asset
expenditure in euros and usd in addition on consolidation thus is exposed 
to risk from the translation of net assets and profits earned in its us subsidiary
thus does not hedge either the currency exposure on the operating activities 
to date which are not considered to be material or the translation exposure on
consolidation as this is considered to be an accounting rather than cash exposure
b borrowing facilities 
thus had a revolving £90000000 facility provided by the royal bank 
of scotland société générale toronto dominion bank europe limited and
rabobank which was reduced to £60000000 on 28 may 2003 the facility 
was available to 1 april 2004 when it was then refinanced by an amortising 
term loan facility on 1 april 2004 with the same banks and matures on 31 march
2008 repayments on the term loan will commence on 31 march 2005 with
repayments increasing over time to march 2008 the facility and loan are subject
to financial covenants principally relating to ebitda
the purpose of the bank facility is to finance capital expenditure working 
capital requirements and for general corporate purposes as at 31 march 2004
£57000000 had been drawn down and under the terms of the facility no further
drawdowns are possible
the group has the following undrawn committed borrowing facilities 
at 31 march 
2004 2003 
£’000 £’000 
expiring between one and two years – 50000  notes to the accounts 
for the year ended 31 march 2004
38
16 derivatives and other financial instruments continued
c financial assets and liabilities
the only significant financial assets are the cash at bank and in hand with a net
book amount of £26421000 at 31 march 2004 2003 £12143000 of which
£25612000 was denominated in sterling 2003 £11519000 £670000 
was denominated in euros 2003 £597000 and £139000 was denominated 
in us dollars 2003 £27000 and the longterm trade debtor of £3471000
which was denominated in sterling 2003 £nil
the financial liabilities of the group at 31 march 2004 are secured credit 
facilities of £57000000 2003 £40000000 finance leases of £4175000
2003 £4200000 and other loans of £600000 2003 £600000
the maturities of the group’ s financial liabilities at 31 march were 
as follows 
other 
finance financial total 
debt leases liabilities 2004 
£’000 £’000 £’000 £’000 
in one year or less or on demand 1425 158 – 1583 
in more than one year  but not more 
than two years 12000 203 – 12203 
in more than two years but not more 
than five years 44175 514 –44689
in more than five years – 3300 – 3300 
total financial liabilities 57600 4175 – 61775 
unamortised issue costs 3013 – – 3013
54587 4175 – 58762 
other 
finance financial total 
debt leases liabilities 2003 
£’000 £’000 £’000 £’000 
in one year or less or on demand – 117 – 117 
in more than one year  but not more 
than two years 1600 128 – 1728 
in more than two years but not more 
than five years 39000 467 – 39467 
in more than five years – 3488 – 3488 
t otal financial liabilities 40600 4200 – 44800 
unamortised issue costs 4017 – – 4017
36583 4200 – 40783 
for the purpose of the disclosures which follow in this note shortterm debtors 
and creditors which arise directly from the group’ s operations have been excluded
as permitted by financial reporting standard 13 “derivatives and other financial
instruments disclosures” frs 13
d the interest rate risk profile of the group’ s financial assets 
and financial liabilities was 
i financial assets
weighted average 
floating rate fixed rate average period for 
financial financial interest which rate 
total assets assets rate is fixed 
at 31 march 2004 £’000 £’000 £’000  years 
currency sterling 
– cash at bank and in hand 25612 25612 –
– longterm trade debtor 3471 – 3471 52 3
currency euros 
– cash at bank and in hand 670 670 –
currency us dollars 
– cash at bank and in hand 139 139 –
gross financial assets 29892 26421 3471
weighted average 
floating rate fixed rate average period for 
financial financial interest which rate 
total assets assets rate is fixed 
at 31 march 2003 £’000 £’000 £’000  years 
currency sterling 
– cash at bank and in hand 11519 11519 –
currency euros 
– cash at bank and in hand 597 597 –
currency us dollars 
– cash at bank and in hand 27 27 –
gross financial assets 12143 12143 –
the floating rate financial assets in the current and prior year  comprise sterling
denominated cash at bank and in hand euro denominated cash at bank and 
in hand and us dollar denominated cash at bank and in hand the sterling
denominated cash at bank and in hand attracts interest based on libor less 
an applicable margin and the euro denominated cash at bank and in hand 
attracts interest based on euribor less an applicable margin
ii financial liabilities 
weighted average 
floating rate fixed rate average period for 
financial financial interest which rate 
total liabilities liabilities rate is fixed 
at 31 march 2004 £’000 £’000 £’000  years 
currency sterling 
– secured credit facilities 57000 57000 – 
–other loans 600 600 – 
– finance leases 4175 – 4175 10 20
gross financial 
liabilities 61775 57600 4175 
average 
floating rate fixed rate weighted period for 
financial financial average which rate 
total liabilities liabilities interest rate is fixed 
at 31 march 2003 £’000 £’000 £’000  years 
currency  sterling 
– secured credit facilities 40000 40000 – 
– other loans 600 600 – 
– finance leases 4200 – 4200 10 20
gross financial liabilities 44800 40600 4200 
the floating rate liabilities in the current and prior year comprise sterling denominated
secured credit facilities and other loans the sterling denominated secured credit
facilities bear interest at rates based on libor plus an applicable margin  39
16 derivatives and other financial instruments continued
e fair values of financial assets and financial liabilities
the following table provides a comparison by category of the carrying amounts
and the fair values of the group’ s financial assets and financial liabilities as at 
31 march 2004 and 31 march 2003 fair value is the amount at which a financial
instrument could be exchanged in an arm’ s length transaction between informed
and willing parties other than a forced liquidation sale and excludes accrued
interest where available market values have been used to determine fair values
2004 2004 2003 2003 
book value fair value book value fair value 
notes £’000 £’000 £’000 £’000 
primary financial instruments held or issued to finance the group’ s operations
financial assets 
cash at bank and in hand 26421 26421 12143 12143
longterm trade debtor 13 3471 3210 –– 
financial liabilities 
borrowings 
– shortterm 15 1583 1583 117 117 
– longterm 15 60192 60359 44683 44683 
61775 61942 44800 44800
less unamortised issue costs 3013 3013 4017 4017
58762 58929 40783 40783 
the following methods and assumptions were used to estimate the fair values
shown above
shortterm deposits and borrowings – the fair value of shortterm deposits
loans and overdrafts approximate to the carrying amount because of the short
maturity of these instruments
longterm trade debtors – the fair value of the longterm trade debtor 
has been based on the discounted value of the future cash flows expected 
to be received
longterm borrowings – in the case of the new finance lease the estimated fair
value was based on the book value as the finance lease was negotiated during the
year  the fair value of the other finance leases has been based on the discounted
value of the future cash flows expected to be paid out by the group the fair value
of the secured credit facility approximates to the carrying value as the loan falls
due for repayment in one to five years and the directors consider it unlikely that
there would be a significant variation between the fair value and the settlement
value as the group is marked at libor rates
f currency exposure
the table below shows the extent to which group companies have net monetary
assets and liabilities in currencies other than their local currency foreign exchange
differences on retranslation of these assets and liabilities are taken to the group’ s
profit and loss account
net foreign currency 
monetary assetsliabilities
functional currency us dollar euro 2004
of operation £’000 £’000 £’000
sterling 1005 319 686
net foreign currency
monetary assetsliabilities
functional currency us dollar euro 2003
of operation £’000 £’000 £’000
sterling 1219941278
g hedge accounting 
hedge accounting is only applicable for the tangible fixed asset purchases that 
are denominated in a foreign currency the group also has an interest rate hedge
in connection with the secured credit facilities 
17 provisions for liabilities and charges 
at provided utilised at 
1 april in the during the 31 march 
2003 year year 2004 
group £’000 £’000 £’000 £’000 
property 264 500 25 739
restructuring costs 352 – 352 –
balance at the end of the year 616 500 377 739
the property provision represents costs associated with the centralisation of the
glasgow and london offices 
the restructuring costs provision related to anticipated severance costs advised 
at 31 march 2003 but not actioned at that date 
18 deferred taxation
t otal potential deferred tax assets computed at the rate of corporation tax 
at 31 march 2004 of 30 2003 30 are noted below these assets have not
been recognised as their future recoverability is not certain
group company
2004 2003 2004 2003 
£’000 £’000 £’000 £’000 
accelerated capital allowances 34747 21875 – – 
other timing differences 10209 15700 – – 
t otal deferred tax assets 
not recognised 44956 37575 – – 
19 share capital
group and company
2004 2003 
£’000 £’000 
authorised
1974788625 2003 1974788625 
ordinary shares of 25p each 49370 49370 
allotted called up and fully paid
1348613156 2003 1348613156 
ordinary shares of 25p each 33715 33715  notes to the accounts 
for the year ended 31 march 2004
40
20 analysis of movements in shareholders’ funds 
a group
number of merger capital redemption other profit and loss 
shares share capital reserve reserve reserves account total
notes 000’ s £’000 £’000 £’000 £’000 £’000 £’000
at 1 april 2003 1348613 33715 566560 23248 18840 234951 407412
retained loss for the year – – – – – 25221 25221
unrealised gains on fixed 
asset disposals i –––– 839 – 839
transfer ii –– –– 979 979 –
currency translation differences 
on overseas net assets ––––– 38 38
at 31 march 2004 1348613 33715 566560 23248 18700 259231 382992 
i the unrealised gains on fixed asset disposals represent sales made under indefeasible rights of use arrangements during the financial year 
ii the transfer from other reserves to the profit and loss account reserve represents the element of previously unrealised gains on fixed asset disposals attributable 
to the current year  
b company
capital redemption profit and loss
share capital reserve account total 
£’000 £’000 £’000 £’000 
at 1 april 2003 and 31 march 2004 33715 23248 540 56423 
c as permitted by section 230 of the companies act 1985 the company has not presented its own profit and loss account the company’ s profit and loss account was
approved by the board on 30 april 2004 the company did not make a profit or loss during the current or prior year 
21 analysis of cash flows
a returns on investments and servicing of finance
2004 2003 
note £’000 £’000 
interest received 232 346 
interest paid 3059 2812
interest element of finance lease rental payments 374 383
expenses paid in connection with issue of debt 150 5564
net cash outflow for returns on investments 
and servicing of finance 3351 8413
b capital expenditure and financial investment
purchase of tangible fixed assets 37744 54825
sale of tangible fixed assets 1058 463
receipt from sale of own shares 22 –
net cash outflow for capital expenditure
and financial investment 36664 54362
c financing 
secured credit facilities 23 17000 40000 
other loans – 500
capital element of finance lease rental payments 23 125 106
increase in debt 23 16875 39394 
net cash inflow from financing 16875 39394 
22 reconciliation of operating loss to net cash inflow from continuing
operating activities 
2004 2003 
notes £’000 £’000
operating loss 21213 50799
depreciation on tangible fixed assets 5 64611 77737 
amortisation of intangible fixed assets 2 165 165 
profit on disposal of tangible fixed assets 2 – 66
movements in provisions for liabilities and charges 123 284
increasedecrease in stocks 258 2456 
increase in debtors 6248 7961
increase in creditors 238 4828 
net cash inflow from 
continuing operating activities 37418 26076  41
23 analysis of net debt
at other at
1 april cash noncash 31 march
2003 flow changes 2004 
note £’000 £’000 £’000 £’000 
cash at bank and in hand 12143 14278 – 26421
loans – due within one year – – 1425 1425
loans – due after one year 21c 40600 17000 1425 56175
finance leases 21c 4200 125 100 4175
44800 16875 100 61775
total 32657 2597 100 35354
24 pensions
the pension charge for the year comprises
2004 2003
£000 £000
defined benefit scheme 2845 2067
scottishpower defined benefit schemes to 1 august 2002 – 901
defined contribution arrangements 201 100
scottishpower defined contribution arrangements – 76
others 71 –
3117 3144
the company operates two pension schemes
• the thus group plc pension scheme “the scheme” a funded defined benefit
scheme the assets of the scheme are held in a trust fund which is
independent of the group’ s own assets
• the thus group personal pension plan a funded defined contribution
arrangement
in determining the level of contributions required to be made to the scheme and 
the relevant charges to the group’ s profit and loss account the group has been
advised by watson wyatt llp  actuaries and consultants the most recently
published formal valuation of the scheme was an initial valuation at 1 august
2002 the main assumptions adopted in making this valuation were as follows
rates per annum
future price inflation 25
return on new investments 66
increases in earnings 40
increases in pensions 25
the pension costs for accounting purposes have been calculated using the same
assumptions as those adopted for the initial valuation at the valuation date the
scheme had just commenced and therefore had no assets or liabilities the regular
pension charge calculated using the projected unit method of valuation was 15
of pensionable salaries or £2845000 for the year 
until 31 july 2002 the group participated in four defined benefit pension schemes
and one defined contribution pension scheme operated by the scottishpower
group the amount payable in respect of all schemes by thus group plc was
defined in the pensions agreement between thus plc and scottish power uk plc
and was known as the adjusted regular pension cost the calculation was based
on the percentage of ordinary shares in thus held by scottishpower and the
regular pension scheme rate determined by the actuary for each pension scheme
contributions for the defined contribution scheme were based on age and ranged
from 3 to 5 of pensionable salaries a charge of 1 of salaries was added 
to cover administration expenses for all schemes and paid to scottish power uk plc
the benefits accruing to members of the scottishpower pension schemes were
transferred to the thus group plc pension scheme during the year  following
election by the members   notes to the accounts 
for the year ended 31 march 2004
42
24 pensions continued
frs 17 
disclosures in accordance with the transitional arrangements for the
implementation of frs 17 are set out below this information is for disclosure
purposes only pension costs have been recognised in line with ssap 24 
as described above the results of the actuarial valuation of the thus group plc
pension scheme as at 31 december 2002 updated by the actuary to take account
of the requirements of frs 17 and to assess the assets and liabilities of the scheme
as at 31 march 2004 have been used in assessing the frs 17 disclosures
scheme assets are stated at their market value at 31 march 2004 and 31 march
2003 a bulk transfer payment of an amount known at 31 march 2003 was paid
to the scheme from the scottishpower pension arrangements after the end of the
prior year  the scheme’ s assets and liabilities as at 31 march 2003 were increased
to take account of the payment of this sum and the associated transfer of members’
benefits the liabilities of the scheme under frs 17 as at 31 march 2004 and 
31 march 2003 and the current service cost for the periods ending on those 
dates were calculated using the projected unit method and the following 
financial assumptions
rates per rates per rates per 
annum annum annum
31 march 31 march 1 august 
2004 2003 2002
future price inflation 27 23 23
discount rate 57 56 59
rate of increase in salaries 42 38 38
rate of increase in pensions in payment 27 23 23
 pre april 1997 pension increases are in respect of pensions in excess 
of guaranteed minimum pensions
the assumptions used by the actuary are the best estimates chosen from a range 
of possible actuarial assumptions which due to the timescales covered may not
necessarily be borne out in practice 
the scheme is closed to new entrants under the projected unit method the current
service cost will increase as members of the scheme approach retirement 
the assets of the scheme and the expected rates of return at 31 march were
longterm longterm 
expected rate value at expected rate 
of return per 31 march of return per value at 31
annum at 31 2004 annum at 31 march 2003
march 2004 £’000 march 2003 £’000
equities 82 20786 82 20565 
bonds 54 17059 48 5017 
property –– 65 1598 
other 36 9 36 253 
the fair value of the scheme’ s assets which are not intended to be realised in the
shortterm and may be subject to significant change before they are realised 
and the present value of the scheme’ s liabilities which are derived from cash flow
projections over a long period and are thus inherently uncertain were
total market value of assets 69 37854 74 27433 
present value of liabilities of the scheme 40600 30764 
deficit in the scheme 2746 3331
potential deferred tax asset 824 999
net pension liability 1922 2332
the amount of this net pension liability would have a consequent effect on reserves 
the movement in the deficit in the scheme can be analysed as follows 
year ended y ear ended
31 march 2004 31march 2003
£’000 £’000
deficit in the scheme at the 
start of the year 3331 – 
contributions paid 2845 2067 
current service cost 3880 2685
other finance income 469 –
actuarial gainloss 1151 2713
deficit in the scheme at end of year 2746 3331
 the scheme commenced on 1 august 2002 with no assets and no liabilities
components of defined benefit cost
year ended y ear ended
31 march 2004 31 march 2003
£’000 £’000 
analysis of amount that would fall to be charged to operating profit 
current service cost 3880 2685 
past service cost – –
total charged to operating profit 3880 2685 
analysis of amount that would fall to be charged to other 
finance income 
interest on pension scheme liabilities 1721 – 
expected return on assets in pension scheme 2190 – 
net credit to other finance income 469 – 
total profit and loss charge before 
deduction of tax 3411 2685  43
24 pensions continued
frs 17 continued
analysis of amounts that would be recognised in the statement 
of total recognised gains and losses strgl
year ended y ear ended
31 march 2004 31 march 2003
£’000 £’000 
gainloss on assets 4821 – 
experience loss on liabilities 770 2713 
loss on change of assumptions 
financial and demographic 2900 – 
total gainloss recognised in 
strgl before adjustment for tax 1151 2713 
history of experience gains and losses
year ended y ear ended
31 march 2004 31 march 2003
gainloss on scheme assets 
amount £’000 4821 – 
 of scheme assets at end of year 13 – 
experience gainloss on scheme liabilities 
amount £’000 770 2713 
 of scheme liabilities at end of year 2 9
total actuarial gainloss recognised in strgl 
amount £’000 1151 2713 
 of scheme liabilities at end of year 3 9
25 financial commitments
a group analysis of annual commitments under operating leases
2004 2003
£’000 £’000 
leases of land and buildings
expiring within one year 191 548 
expiring between two and five years inclusive 1207 812 
expiring in over five years 7086 7008 
8484 8368 
other operating leases
expiring within one year – – 
expiring between two and five years inclusive – – 
expiring in over five years 170 170 
170 170 
b group capital commitments
contracted but not provided 8835 4437 
26 employee share schemes
the company operates the thus group performance share plan and the thus
group plc discretionary share option scheme details of which are included 
in the directors’ remuneration report
in addition the company also recognises the importance of encouraging share
ownership amongst all employees and to that extent the company operates the
thus group plc sharesave scheme which provides the opportunity for employees
to exercise options at the end of a savings contract options are exercisable 
in normal circumstances on completion of a three or five year saveasyouearn
contract as appropriate no performance criteria are attached to the exercise 
of these options
closed schemes
prior to the establishment of thus group plc on the demerger from scottish 
power plc thus plc operated a number of share incentive plans pursuant 
to which awards over shares in thus group plc continue to subsist no further
awards will be made under any of these schemes
thus plc employee sharesave scheme
under this scheme in normal circumstances share options are exercisable 
on completion of a three or five year saveasyouearn contract as appropriate 
thus plc executive share option scheme
options under this scheme did not meet the associated performance condition 
and have now lapsed
thus plc discretionary share option scheme 2000
the performance conditions described under the thus group plc discretionary
share option scheme also apply to this scheme in addition a grant over 
2000 shares was made to each employee excluding executive directors 
on 6 december 2000 without any performance conditions applying notes to the accounts 
for the year ended 31 march 2004
44
26 employee share schemes continued
a summary of movements in share options in thus group plc shares which will be satisfied by new issue shares
thus group thus group plc
performance discretionary thus group plc 
share share option sharesave
plan scheme scheme total
number of number of number of number of
note shares 000’ s shares 000’ s shares 000’ s shares 000’ s
outstanding at 1 april 2003 7104 7495 11501 26100 
granted –– 6729 6729
exercised i –– 99 99 
lapsed 400 1088 2199 3687
outstanding at 31 march 2004 6704 6407 15932 29043 
i the shares exercised during the year were satisfied using lapsed shares from the employee benefit trust
b analysis of share options outstanding at 31 march 2004 which will be satisfied by new issue shares
number 
date of number of of shares option price
grant participants 000’ s pence normal exercisable date
thus group performance share plan 270302 3 1954 £1 total mar 2005 
consideration 
110203 3 4750 £1 total feb 2006
consideration
thus group plc discretionary share option scheme 270302 41 6407 1625 mar 2005 – mar 2009 
thus group plc sharesave scheme 010502 635 9505 14 may 2005 – may 2007
130603 512 6427 1175 aug 2006 – feb 2007
all options are exercisable over thus group plc shares
27 contingent liabilities
a contingent liability exists in respect of an amount of corporation tax 
on chargeable gains calculated as the difference between the market value 
at 30 september 1999 of the assets and liabilities of the scottishtelecom 
businesses acquired by thus plc on that date and the indexed base cost of those
assets and liabilities as at 30 september 1999 multiplied by the percentage 
rate of corporation tax applicable to the profits of the company in the accounting
period in which thus plc ceased to be a member of the scottishpower capital
gains t ax group management estimated that such liability would be up to £570
million management’ s estimate was subject to the following principal uncertainties
i the rate of corporation tax applicable at the time of exit from the scottishpower
group and 
ii the valuation attributable to the acquired businesses by the inland revenue 
as at 30 september 1999
the contingent liability may crystallise in the event that thus plc makes 
a “chargeable payment” to any member of the scottishpower group where 
there is parental holding of at least 75 of the ordinary share capital which for
capital gains tax purposes would include participating preference shares where 
applicable or vice versa a payment is made to thus by any member of the
scottishpower group again where the above shareholding relationship applies 
the contingent liability expires on 19 march 2007
a “chargeable payment” is defined as any payment made otherwise than for
bona fide commercial reasons or forming part of a scheme of arrangement the
main purpose or one of the main purposes of which is the avoidance of tax and
which has to be an amount significant enough to change the valuation of either
party management of both thus and scottishpower have put in place procedures
to monitor and minimise the exposure
thus and scottishpower have jointly agreed that neither party will make or agree
to make any chargeable payment within five years of the date of the demerger 
this agreement is governed by a tax indemnity deed entered into between
scottishpower and thus whereby voluntary acts of or omissions that result in a
chargeable payment being made will not be indemnified by the innocent party five year financial summary 
45
y ear ended y ear ended 
year ended y ear ended y ear ended 31 march 31 march 
31 march 31 march 31 march 2001 2000 
2004 2003 2002 restated restated
results £’000 £’000 £’000 £’000 £’000
turnover 332372 291236 268354 229322 213903 
earnings before interest tax and 
depreciationamortisation of fixed assets ebitda 43563 27103 3144
1
24635 11257 
exceptional items 266 250 2233 – 43467
loss before taxation 25009 58789 104254 70163 66113
loss after taxation 25221 58985 104670 56336 59726
loss for the financial year 25221 58985 103756 55263 59696
appropriations – non equity – – 2425 2500 1127
free cash flow 34067 17663 20920 2528 9463
capital expenditure on tangible fixed assets 41118 44910 77919 158920 160855 
net debtfunds 35354 32657 4042 167772 24502 
net assets before minority interests 382992 407412 466152 281679 347936 
ratio and statistics
basic loss per ordinary share before exceptional items pence 190 444 1476 831 271
employees
number of employees fulltime equivalent at 31 march
thus group plc 2089 1858 2185 2614 2472 
 this is the basic loss per ordinary share after exceptional items pence
1
before £32 million exceptional restructuring costs 46
notice of annual general meeting
notice is hereby given that the annual general meeting of the company for 
2004 will be held on friday 9 july 2004 at 1100 am at the radisson sas hotel
301 argyle street glasgow g2 8dl for the following purposes
ordinary business
1t o receive and adopt the report of the directors and accounts 
for the year ended 31 march 2004
2t o approve the directors’ remuneration report for the year ended 
31 march 2004
3t o reelect william allan as a director 
4t o reelect michael de karesilver as a director 
5t o reelect jo connell as a director 
6t o reappoint kpmg audit plc as auditors of the company 
and to authorise the directors to fix their remuneration
special business
7t o consider and if thought fit to pass the following resolution which will 
be proposed as an ordinary resolution
that the board be and it is hereby generally and unconditionally authorised 
in substitution for the authority conferred on it by all subsisting authorities 
to exercise all powers of the company to allot relevant securities within 
the meaning of section 80 of the companies act 1985 up to an aggregate
nominal amount of £1123844296 which authority shall expire at the
conclusion of the next annual general meeting of the company after the
passing of this resolution unless previously revoked or varied by the company
in general meeting or  if earlier  9 october 2005 save that the company may
before such expiry make an offer or agreement which would or might require
relevant securities to be allotted after such expiry and the board may allot
relevant securities in pursuance of such an offer or agreement as if the authority
conferred hereby had not expired
8 t o consider and if thought fit to pass the following resolution which will be
proposed as a special resolution
that the board be and it is hereby empowered pursuant to section 95 
of the companies act 1985 to allot equity securities within the meaning 
of section 94 of the said act for cash pursuant to the authority conferred 
by resolution 7 as set out in the notice of the meeting as if subsection 1 
of section 89 of the said act did not apply to any such allotment provided 
that this power shall be limited to
a the allotment of equity securities in connection with a rights issue open
offer or any other preemptive offer in favour of ordinary shareholders
and in favour of holders of any other class of equity security in
accordance with the rights attached to such class where the equity
securities respectively attributable to the interests of such persons 
on a fixed record date are proportionate as nearly as may be to the
respective numbers of equity securities held by them or are otherwise
allotted in accordance with the rights attaching to such equity securities
subject in either case to such exclusions or other arrangements 
as the board may deem necessary or expedient to deal with fractional
entitlements or legal or practical problems arising in any overseas
territory the requirements of any regulatory body or stock exchange 
or any other matter whatsoever and
b the allotment otherwise than pursuant to subparagraph a above 
of equity securities up to an aggregate nominal value of £168576644 
or  if less 5 of the issued ordinary share capital from time to time 
and shall expire at the conclusion of the next annual general meeting of the
company after the passing of this resolution or  if earlier  9 october 2005 save
that the company may before such expiry make an offer or agreement which
would or might require equity securities to be allotted after such expiry and the
board may allot equity securities in pursuance of such an offer or agreement 
as if the power conferred hereby had not expired
any member entitled to attend and vote at the meeting is entitled to appoint a proxy
to attend and on a poll to vote instead of him a proxy need not be a member 
of the company a separate form of proxy is enclosed pursuant to regulation 41 
of the uncertificated securities regulations 2001 members will be entitled 
to attend and vote at the meeting if they are registered on the company’ s register 
of members by 600 pm on 7 july 2004 or by 600 pm two days prior to the
date of any adjournment of the meeting
notes
resolution 1
the directors are required by law to present to the meeting the accounts and the
report of the directors and auditors for the year ended 31 march 2004
resolution 2
the shareholders are being asked to vote on the remuneration report relating 
to directors and senior executives the vote is advisory and the directors’
entitlement to remuneration is not conditional on the resolution being passed
resolution 3–5
the articles of association require onethird of directors to retire at every annual
general meeting the board following its evaluation of the performance of those
directors standing for reelection confirms that each of those directors continues 
to perform effectively and demonstrates commitment to the role
resolution 6
the reappointment of the auditors is proposed following assessment of the audit
service by the audit committee the board considers the auditors to be effective
and independent in their role
resolution 7
under the companies act 1985 section 80 the directors of a company may only
allot unissued shares if authorised to do so passing this resolution will continue the
directors’ flexibility to act in the best interests of shareholders when opportunities
arise by issuing new shares
in resolution 7 the company is seeking authority to allot shares with a nominal
value of up to £1123844296 which represents approximately 3333 
of the company’ s issued ordinary share capital the directors intend to use this
authority which will lapse at the conclusion of the next annual general meeting 
of the company to be held in 2005 or  if earlier  9 october 2005 for general 
corporate purposes
resolution 8
if shares are to be offered for cash the companies act 1985 requires that those
shares are offered first to the existing shareholders in proportion to the number 
of shares they hold at the time of the offer  however  it may sometimes be in the
interests of the company for the directors to allot shares other than to shareholders
in proportion to their existing holdings at last year’ s annual general meeting
shareholders authorised the board subject to specified limits
• to allot shares in connection with a rights issue defined in summary as an offer
of equity securities to shareholders which is open for a period decided by the
board subject to any limits or restrictions which the board thinks are necessary
or appropriate
• for allotments of shares not in connection with a rights issue so that the 
preemption requirement does not apply to the allotments of shares for cash 
up to a specific amount
this authority requires to be renewed annually the directors will be empowered
by resolution 8 to allot equity securities within the meaning of section 94 of the
companies act 1985 for cash without complying with the statutory preemption
rights of shareholders under section 89 of the companies act 1985 up to a
maximum amount of £1123844296 this disapplication is limited to allotments
made to ordinary shareholders and holders of any other class of equity security 
in proportion as nearly as may be to their holdings and otherwise to allotments
up to a maximum nominal amount of £168576644 representing approximately
5 of the company’ s issued ordinary share capital
this means that the interests of existing shareholders are protected if a share issue
is not a rights issue the proportionate interest of existing shareholders could not
without their agreement be reduced by more than 5 of the value of the new
shares in cash to new shareholders by reference to the issued share capital at the
date of this notice there are no current plans to allot shares except in connection
with the employee share schemes
by order of the board
david macleod
secretary
14 may 2004
registered office
12 berkeley square
99 berkeley street
glasgow g3 7hr 47
general information for shareholders attending 
the annual general meeting
1 the notice of meeting is being issued to all shareholders enclosed with 
this notice you will find an attendance card and a form of proxy
2 if you are attending the meeting you should bring the attendance card
3a shareholder is entitled to appoint one or more proxies to attend and upon 
a poll vote instead of him a proxy need not be a shareholder  if you wish 
to appoint a proxy you must complete the enclosed form of proxy which 
must be deposited with the registrars lloyds tsb registrars the causeway
worthing west sussex bn99 6uu not later than 1100 am on 7 july 2004
4 copies of the executive directors’ service contracts letters of appointment 
for the nonexecutive directors a statement of all transactions of directors 
and of their families in the share capital of the company in the year ended 
31 march 2004 a copy of the register of directors’ and their families’
interests in the share capital of the company and a copy of the company’ s
memorandum and articles of association will be available for inspection 
at the company’ s registered office during normal business hours on each 
day except saturday sunday and any public holidays from the date of the
notice of meeting until 9 july 2004 and also at the place of the agm from
1030 am on the day of the meeting until the conclusion of the meeting
copies of the same will also be available on the same days at the offices 
of the company’ s solicitors biggart baillie dalmore house 310 st vincent
street glasgow g2 5bb
introduction
after his opening remarks the chairman will explain in detail the procedures 
for the conduct of the meeting particularly for asking questions and voting 
on resolutions the resolutions which are set out in the notice of annual general
meeting will then be put to the meeting
how to ask questions
at the meeting shareholders will be given the opportunity to ask questions from
question points which will be clearly indicated
at each question point a member of staff will be available to help you please tell
the member of staff the nature of your question and give your name and address
y ou may be asked to wait until called upon to speak please remember to state your
name before asking your question
how to vote
you should raise above your head your voting card which you will receive when
you register indicating that you are voting either for or against each resolution 
as it is put to the vote by the chairman only shareholders or authorised
representatives of corporate shareholders may vote on a show of hands if you 
are attending as a proxy for a shareholder  you will receive an appropriate
identification card at registration
time
the doors will open at 930 am and the meeting will start promptly 
at 1100 am
camerastape recorders etc
no cameras video recorders or tape recorders will be allowed into the meeting
mobile phones must be switched off during the meeting
registration
to ensure your entrance to the meeting is dealt with promptly please bring your
attendance card with you and register at the registration desk inside the hotel
customer enquiries
company personnel will be available if you have any questions as a customer 
of the company
shareholder information
if you have any questions concerning your shareholding please speak to the staff
at the shareholders’ enquiry desk
disabled persons
special arrangements have been made to offer every assistance to people 
with disabilities if you have a companion to assist you they will be admitted 
to the meeting as a guest guide dogs will also be permitted the auditorium 
has an induction loop system and headsets are available on request if you are 
deaf or hard of hearing
first aid
first aid facilities are available ask any member of staff for assistance
emergency precautions
an announcement will be made if there is a fire warning or other emergency
emergency exits are marked clearly around the auditorium in case of a medical
emergency please contact a member of staff
refreshments
refreshments will be available between 930 am and 1050 am
important
if you have any questions about the meeting or if you need any assistance please
telephone the annual general meeting enquiry line on 020 7763 3156 from
monday 7 june 2004 during normal working hours 48
shareholder and contact information 
analysis of shareholders as at 31 march 2004
range of holdings number of shareholders numbers of shares
1–100 141591 11227353
101–200 98752 13035625
201–600 64378 22913290
601–1000 22273 17609261
1001–5000 26595 55013665
5001–100000 6506 101765064
100000 and above 481 1127048898
financial calendar
9 july 2004 annual general meeting
november 2004 interim results for the six months 
ending 30 september 2004
aprilmay 2005 preliminary results for the year ending 31 march 2005
shareholder information
annual general meeting
the annual general meeting will be held at the radisson sas hotel 301 argyle
street glasgow g2 8dl on friday 9 july 2004 at 1100 am details of the
resolutions to be proposed at the annual general meeting are contained in the
notice of annual general meeting on page 46
dividend
the directors have not recommended the payment of a dividend for the year
ended 31 march 2004
listing
ordinary shares of thus group plc have been admitted to the official list 
of the uk listing authority and are traded on the london stock exchange
share price details
the share price is available from the thus website at wwwthusnet and 
in national newspapers
secretary and registered office
david macleod
thus group plc
12 berkeley square
99 berkeley street
glasgow g3 7hr
registered number sc 226738
registrars
all administrative enquiries relating to shareholdings should be directed 
to the registrar  lloyds tsb registrars the causeway worthing west sussex 
bn99 6da t el 0870 609 4531 fax 01903 833 371
share dealing
thus group’ s shares may be bought or sold at competitive rates by post 
or telephone for further details please contact stocktrade on 0845 601 0995
quoting lowc0078
company information
for enquiries relating to the company’ s operations and performance please
contact either
• investor relations thus group plc finsbury t ower  103–105 bunhill row
london ec1y 8la t el 020 7763 31560141 566 3051
• corporate communications thus group plc 12 berkeley square 
99 berkeley street glasgow g3 7hr t el 0141 566 31060141 566 3051
thus’ s services
information about thus’ s services can be found on the thus website 
at wwwthusnet  designed and produced by williams and phoa 
printed in the uk ecommunications 
care for the environment
each year your company sends tens of thousands of paper
based annual reports but there is a better and more costeffective
way for you to receive this information which is also kinder 
on the environment 
thus shareholders can choose to receive shareholder documentation
from us electronically by registering with shareview  a free web
based enquiry and portfolio management service offered by our
registrars lloyds tsb registrars
this service enables you to
• view your shareholding at any time
• view recent movements in your shareholding
• obtain a regularly updated valuation on your shareholding
• receive shareholder information electronically  including 
annual reports and accounts and notices of general meetings
• maintain your details online
for further details please visit wwwthusnetshareview
thus group plc
12 berkeley square
99 berkeley street
glasgow g3 7hr
wwwthusnet thus summary 
annual report 2004
people productivity profit contents
01 corporate highlights
02 thus at a glance
04 chairman’ s letter 
05 chief executive’ s review
07 operating and financial review
12 board of directors
13 summary directors’ report
14 summary corporate governance report
15 summary directors’ remuneration report
17 statement of the independent auditors 
to the members of thus group plc
18 summary financial statement
22 notice of annual general meeting
24 general information for shareholders 
attending the annual general meeting
25 shareholder and contact information
27 october
london grid for learning
equinox thus and bt announce
that more than half of london’ s
schools – almost 1800 sites and
more than 800000 pupils plus
libraries and council offices – are
connected to the london grid 
for learning broadband network 
giving teachers access to online
learning materials and pupils 
the power to extend their learning
outside the classroom
29 may
broadband links for 
scottish education 
ukerna in alliance with thus
enables the delivery of broadband
content to scotland’ s local
authorities with a new network
linking local authorities and
national education agencies
20 august
scottish borders 
broadband network
thus is providing wireless
broadband connections for
residents and businesses in the
scottish borders in an innovative
project run by scottish borders 
rural broadband ltd on behalf 
of scottish enterprise borders
22 september
thus manages premium rate 
minutes for greenland interactive 
greenland interactive one 
of the uk’ s top five providers of
interactive services offering voting
competitions information and
entertainment lines selects thus to
meet its telecommunications needs
3 november
broadband adsl customers 
reach 50000 
the extensive range of 
demon adsl internet access
services attracts more than 
50000 customers
22 december 
tele2
thus wins significant contract 
to provide the network services
required to support t ele2’ s entry 
in the uk residential voice market
12 january
virgin switch to thus
virgin group selects thus as its
preferred supplier of voice services
linking 200 sites across the uk
belonging to 10 virgin businesses
28 january
free cash flow positive
thus turns sustainably free 
cash flow positive
1
in q3 we
believe the first uk alternative
telecommunications operator 
to have achieved this goal
31 march
on track for profit 
thus confirms the group is on
track to deliver positive operating
profit in the second half of the 
new financial year ending 
31 march 2005
1
cash flow after returns on investments 
and servicing of finance and capital 
expenditure and financial investment
5 april
advanced data solution for gwr
gwr the uk’ s largest commercial
radio station and home to classic
fm goes live with a new advanced
34 site mpls data network from
thus connecting both studio and
office facilities across the uk 
this makes gwr the first radio
broadcaster in the uk to multicast
live audio over mpls 1
turnover 
year ended 31 march 
£ millions
ebitda
1
year ended 31 march
£ millions
corporate highlights
• strong doubledigit
turnover growth
• continued ebitda
1
expansion
• cash flow
3
positive 
for second half 
of year 
• sustained 
progress towards
operating profit
cash flow
3
year ended 31 march
£ millions
thus group plc provides telecommunication 
solutions to business customers throughout 
the uk under the thus and demon brands 
in an industry driven by reliability and 
innovation thus can draw upon experience 
established over more than a decade in 
the delivery of voice data internet contact 
centre and interactive response services
delivering both standard and bespoke solutions
thus addresses customers’ existing business
needs and works hand in hand with customers
to develop new business opportunities 
the company’ s record in the creation 
of innovative new services is complemented 
by an awardwinning focus on quality and full
certification under the iso90012000 standard
wwwthusnet 
00 01 02 03 04
2139
2293
2684
2912
3324
00 01 02 03 04
1913
1068
367
26
00 01 02 03 04
113
31
2
271
436
1
earnings before interest tax depreciation and
amortisation see note 2 to the summary financial
statement on page 21
2
excludes £32 million exceptional restructuring costs
3
cash flow after returns on investments and servicing 
of finance taxation and capital expenditure and 
financial investment
246
1309 2
thus at a glance
thus provides telecommunication
solutions to business customers
throughout the uk under the
thus and demon brands 
during the past 12 months we
have increased momentum from
new customer contracts adding
to our scale and productivity 
ukwide our service innovation
is complemented by full
certification for voice data
internet and contact centres 
under the iso90012000
standard which is testament 
to the people skills application
and commitment to quality 
within our business
data
data technology has continued to grow
and develop over the past year and
within the broad range of data services
we offer  we have seen demand for 
both ethernet and mpls multiprotocol
label switching services accelerate
customers are taking advantage of 
our true endtoend ukwide ethernet
capabilities and we now have more
than 2000 ethernet connections in
place these private ethernet connections
enable our customers such as imperial
college london and scottish executive
to link sites across the uk while operating
at the same high speed as their office
network ethernet is becoming one of
the most reliable and costeffective ways
to deliver broadband applications and
services providing companies with cost
and efficiency savings 
when we initially designed our mpls
platform it was essential that it was 
built to allow us to offer a range 
of interoperable technologies in the
future and with the growth of ethernet
technology we are now able to realise
this and combine these services 
in 2003 we launched mplsbased ip
vpn internet protocol virtual private
network services using ethernet as the
access technology this enables an
organisation to securely link its various
locations – headquarters offices 
and remote users using costeffective 
ipbased voice services and data
connectivity mpls enables packets 
of information to be transmitted in a
particular order and within a specified
timeframe making it ideal for the
delivery of time sensitive data when
combined with the simplicity and
affordability of ethernet access mpls 
ip vpns are ideal for corporate voice
data and internet communications
telecoms
traditional voice services continue 
to be a key requirement for uk
businesses and companies today are
continually looking to their telecoms
suppliers to provide them with a flexible
range of voice services at the same 
time as providing cost efficiencies 
one such customer is virgin group
which has chosen thus as its preferred
supplier for 200 sites across the uk
we will be providing virgin group 
with a range of voice services and also
providing data services such as leased
lines our flexible approach and
specifically designed package 
of services is enabling virgin group 
to reduce its costs across the group
while meeting the differing needs 
of each individual business
the introduction of carrier preselect
cps voice services last year led 
to a change in the way that traditional
voice services are delivered in the uk
cps technology allows customers to
bypass the bt network and have their
calls carried by an alternative telecoms
supplier without the need to dial 
a prefix before each call t ele2 was 
one such company to take advantage
of these changes and launch a new
consumer voice service in the uk – 
it chose thus to provide the systems 
and routing technology to carry t ele2’ s
domestic voice traffic over our national
fibre optic network
mpls ip vpn services securely 
link customers’ various locations –
headquarters branch offices and 
remote users – using costeffective 
ipbased voice services and data
connectivity furthermore it enables
customers to pick and mix the 
most appropriate technology and
bandwidth at each site resulting in 
a reduction in total network costs
data services have seen some of 
the fastest growth in our portfolio of
products rapid take up of ethernet
services launched in the autumn
of 2002 has seen more than
2000 ethernet circuits provided
to corporate customers including
baillie gifford total ep uk and
uhi millennium institute the higher
education institution
“ in thus we found a like
minded company committed 
to providing excellent customer 
service and able to move 
quickly to get the job done”
jennie beament 
group procurement director 
virgin management ltd
“we chose to work with 
thus because its innovative 
approach and expertise means 
our customers will get exactly 
the service they demand” 
bill butler  managing director  t ele2
“ thus is the first provider of
national ethernet services on a
ukwide basis to carry the cisco
powered network designation
this status helps thus’ s
customers to understand that 
its services are delivered over 
a reliable high performance
architecture designed with
quality of service applications 
in mind”
duncan mitchell vice president 
and managing director  
uk and ireland cisco systems lerwick
stornowaykirkwall
thurso
inverness
aberdeen
stirlingperthdundee
glasgowfalkirk
edinburgh
dumfries
newcastlesunderland
durham
middlesbrough
preston
liverpoolwarringtonmanchesterleedsyork
chestersheffield
stokeontrent
nottingham
birmingham
gloucester
bristolmilton keynes
swindon
reading
london
southamptoncroydon
brighton
3
contact centre services
thus provides a range of inbound 
and outbound contact centre services 
and was recently awarded the energysure
accreditation for its telemarketing
operations – only the third contact centre
employer in the uk to receive the award
this means that all thus employees 
selling utility services in our contact
centres are trained to adhere to best
practice guidelines
interactive 
thus interactive services create and
provide a range of telephone based
marketing promotions targeted 
at the consumer market
“ the broadband digital photo
kiosks enabled by thus will 
for the first time give the mass
market the means to get the very
most from their digital camera”
alistair brown business development 
manager  jessops
• fibre optic cable length now
approaches 8000km including
6 1 00km of trunk network
• more than1 00 points of presence
•15 metropolitan area networks
• thus’ s fibre optic network
stretches from the south 
of england to the shetland 
islands and the hebrides
• thus has connectivity 
to 12 telehouses in london
manchester and edinburgh
“ energysure provides a quality
assurance where sales centres
conform to a minimum standard 
of recruitment training and
performance management
scottishpower is delighted that 
thus’ s contact centre working 
handinhand with scottishpower 
has not only met these standards 
but has surpassed many 
of the measures laid down 
by energysure” 
keith jones national compliance 
manager  scottishpower
amserve ltd has renewed our 
contract to provide telecommunications 
services for its amstrad emiler and 
emilerplus products until 2009 
thus first started working with 
amstrad in 2001 when it developed 
the platform for the emiler and 
in april 2003 thus enabled an
important enhancement to the service
allowing twoway sms texting between
the emiler and mobile phones 
in december 2003 thus worked 
with amstrad to introduce the 
copymail function allowing users 
to nominate an email address which 
then automatically receives copies 
of all messages sent or received 
by the emiler 
internet
through our demon brand thus offers
the full range of internet access services
including email hosting ecommerce and
of course dsl digital subscriber line
technology services which continue to
dominate growth in the internet sector 
there has been a rapid take up of adsl
asymmetric digital subscriber line 
also known as broadband with nearly
100000 customers now using demon
adsl products in the uk and the
netherlands broadband offers a high
bandwidth low cost alternative to
dedicated leased lines or the more
traditional dialup services customers are
being more innovative in their deployment
of broadband and we recently provided
90 adsl broadband connections to
jessops for the rollout of digital photo
kiosks in its stores these kiosks provide
jessops’ customers with an easytouse
and reliable way to purchase professionally
printed digital photographs
dsl is no longer just a high bandwidth
internet connection and we have
developed and launched private access
dsl to provide customers with an
alternative to traditional leased lines and
isdn access technologies for their virtual
private or wide area networks providing
the same levels of security at a significantly
reduced cost in addition we have worked
with scottish borders rural broadband ltd
to provide wireless broadband connections
for businesses and residents in a number 
of rural towns in the borders region
network and quality
behind all of the products and services 
we offer sits our technologically advanced
national fibre optic network this was
designed and built with the foresight to
enable today’ s technologies to be
seamlessly integrated whilst continuing 
to offer superior quality of service to our
customers we now believe that after bt 
we offer the best ukwide coverage and
connectivity from the far north of scotland
to the southeast of england compared 
to any other alternative carrier in the uk  4
chairman‘s letter
dear shareholders this has been another remarkable year of
progress and achievement for your company in a challenging
market it has been a year where we have reinforced our position
in the uk by extending our relationships with our customers 
and by meeting our financial milestones
the success of your company in a challenging market environment is a huge tribute 
to all our staff and we thank them greatly for their continued loyalty and commitment
to growing your company 
thus is a company that believes in integrity at all levels i believe we apply high
corporate governance accounting and ethical standards to our business we also
take our social responsibilities and commitment to the communities where we
operate extremely seriously
this year your company has continued to support the women’s aid domestic 
abuse campaign more recently we have provided support to emmaus a charity 
to help homeless people in glasgow to which we will continue to provide support
on an ongoing basis we are now playing a small role in supporting business
in the community with our staff engaging with pupils at lochend community high
school in easterhouse glasgow and we have recently supported the prince’ s trust
none of these involve large charitable donations but they do involve our employees
giving time and commitment in the support of others
after three years of service on your board i have decided to retire the board has
commenced a search for a suitable successor and plans an orderly handover of
responsibility we expect this change to occur during the course of this year  i have
enjoyed being part of thus’ s formative years as a public company and i shall take
an avid interest in its future development 
we expect the trends from last year to continue throughout this financial year 
despite market conditions which continue to be challenging the board remains
comfortable with market expectations for the year ahead and of achieving our next
key financial objective of operating profit in the second half of this financial year 
roy brown
chairman
roy brown chairman and
william allan chief executive  5
chief executive’ s
review
thus is a young business approaching its fifth anniversary as a
listed company the strength and viability of our business becomes
more evident with each passing year 
uncertainty in our market from competitive intensity remains as tough as before 
yet thus continues to prevail thus’s strength in providing innovative new
services and being responsive to our customers’ needs and expectations is our
key differentiator  we believe our service innovation record in the uk is second
to none and our responsiveness to our customers is a strong measure of the
quality of our employees 
in 1999 we set out our strategy for the uk market this strategy involved a heavy 
upfront investment in network and service capability throughout the uk it is a ten
year journey and in november of this year we will have reached the halfway point
our business model defined the financial metrics we needed to deliver to prove the
financial viability of our business ebitda
1
positive cash flow
2
positive operating
profit and finally a return on capital employed greater than our cost of capital 
we are on target at this halfway point we became cash flow positive in q3 
a quarter earlier than we had originally anticipated – and we remain convinced
that our strategy is robust and focused to deliver sustainable shareholder value
our headline revenue growth was 14 for the year  and 18 in the second half 
our ebitda increased by 61 our operating loss reduced by 58 and cash
outflow before financing was reduced by £341 million with a positive net inflow
of £57 million in the second half we believe that these are impressive results
and justify our confidence that we will achieve an attractive return on investment
in the longerterm
the consistency of our reputation for quality and service innovation coupled to 
the scalability of our network and services have now positioned us strongly in the
managed services arena where lasting value is created in this segment and where
our contracted revenue grew strongly with the average contract increasing in value
during the year we won significant managed services contracts with capital radio
southern water gwr group and preferred supplier status with glasgow city
council these contracts coupled to our existing customer relationships and other
new contracts such as virgin group tele2 and amserve accelerated growth
in our key data and telecoms division to 24 over the course of the year 
internet services enjoyed strong doubledigit growth with revenue from our
broadband dsl portfolio now exceeding revenue from our dialup customer base
this is a key milestone as we transition our business from old to new with a new
generation of ipenabled services for the corporate market and small and medium
sized businesses
our strength in winning new contracts coupled to our focused and disciplined
approach to our operating costs has proven the flexibility and robustness 
of our business model growth from incremental revenue now exceeds capital
expenditure we believe thus is the first alternative carrier to have achieved this
and become sustainably free cash flow positive these are two critical measures
to prove the viability of the alternative carrier business model to achieve the longer
term goal of a return on capital employed greater than our cost of capital this year
our achievements demonstrate that we are well on track towards that objective 
our balance sheet is strong our quality of service remains class leading our service
innovation record is consistently impressive and our list of blue chip customers
continues to grow longer each year as our credibility and reputation wins wider
respect our objective is to become the preeminent alternative to bt in the uk
business services market we remain firmly focused on achieving that goal
william allan
chief executive
1
earnings before interest tax depreciation 
and amortisation
2
cash flow after returns on investments and 
servicing of finance and capital expenditure 
and financial investment people
our commitment to teamwork enables
us to work passionately as one team
with one vision and one voice keeping
us ahead of the competition
profit
our focus on generating value and
quality services for our customers leads
to profitable growth for our company
this enables us to deliver on our
promises and consistently achieve
strong financial performance
productivity
day in day out we constantly 
strive to increase our effectiveness 
by utilising all of our resources 
people technology and knowledge 
to generate shareholder value
6 cash flow was also positive in the
second half of the year  we believe 
that we are the first infrastructure based
altnet in the uk to have achieved this 
on a sustainable basis realising a key
validation point of our business model
ebitda margin expanded from 
9 to 13 and capital expenditure 
fell from 15 to 12 of turnover  
with approximately 55 of capital
expenditure now driven by growth 
in turnover 
for an alternative carrier to sustain
profitable growth we believe the ratio 
of increase in turnover to capital
expenditure must exceed 11 in order 
to deliver the scale required to provide
a proper return on invested capital
during the year  we achieved this – 
we believe we are the first alternative
carrier to do so this represents another
important validation point for our
business model
we have continued to grow business 
with existing customers and to win new
customers millions of consumers in the 
uk now use our services daily without
knowing about thus’ s key role this 
is illustrated by the large and diverse
customer bases of for example 
• sky active through the “red button”  
and skyt alk 
• amstrad via the amstrad 
emiler and 
•t ele2 through their residential 
voice resale services 
thus’ s business objectives 
and strategy
thus aims to be the leading alternative
provider of telecommunication and
internet services for business customers 
in the uk 
we believe we can deliver this aim on 
the back of the large scale investment 
we have made in previous years 
we built and developed our own
advanced service capability including
8000km in total of network linking 
the major industrial and commercial
centres throughout the uk this allows
us to control the quality of our services
to innovate more quickly with new and
differentiated services and to protect
margins against competitive pressures
as more of our major corporate
customers become directly connected
we become increasingly efficient 
by carrying a greater proportion 
of their traffic over our own network
minimising delivery costs and reducing
payments to other operators
this year has been another successful
year in delivering our targets set over 
a decade as our company grows to
maturity from its flotation on the london
stock exchange in november 1999 
the heavy investment made between
1999 and 2001  putting our ukwide
capability into place depressed our
headline profit and cash flow metrics
since then thus has delivered
sustainable positive ebitda and 
now positive sustainable free cash flow
1
with operating and pretax losses also
narrowing significantly our continued
progression will be tracked by three
7
operating and 
financial review 
key financial measures – turnover 
operating profit and cash flow 
with the delivery this year of positive
free cash flow it is now time to replace
ebitda a primary measure which 
was strongly linked to our access to
financing with our next key milestone 
of operating profit
we have set out a series of longerterm
targets based on asset utilisation 
and profit margin to ensure we achieve
our goal of delivering a return to
shareholders above our weighted
average cost of capital t o achieve this
we believe that our company will have
to approximately double its turnover 
by the end of the decade 2009 this
will provide additional scale to expand
operating margins leveraging our 
low operating cost base and existing
investments given our focus on
customers our strengths in a range 
of services and consistent quality 
we believe that this is a realistic and
achievable target which representing
less than 5 market share of the uk
telecommunication market leaves plenty
of potential for longerterm growth
overview of the year
thus made good progress against 
its objectives during the year  we grew
turnover by 14 representing we
believe more than double the market
growth rate leading to reduced
operating losses of £212 million from
£508 million last year  this puts us 
on track to go operating profit positive
in the second half of the financial year
ending 31 march 2005 
john maguire 
chief financial officer
1
cash flow after returns on investments and
servicing of finance and capital expenditure 
and financial investment 8
for inclusion in facilities management
are typically of longer than average
duration and involve a range of services
requiring a dedicated thus team 
for their implementation our recent
contract win of southern water and
our award of preferred bidder status
with glasgow city council illustrate
our scale and capability in this area
for example the glasgow city council
contract will run for a minimum 
of six years with an estimated value
of £42 million 
internet
internet turnover grew by 10 to £991
million during the year the rapid
market growth in the development 
of broadband internet access via
asymmetric digital subscriber line
adsl services continued this strong
growth was partly masked by continued
churn in our narrowband dialup base
but we have migration plans in place
and expect the churn to greatly reduce
next year 
uk broadband customers more 
than doubled year on year to 58000
attracted by our wide and expanding
range of product options competitive
pricing and targeted marketing
promotions to business customers 
under the demon brand 
for adsl services we typically
wholesale from bt but add enhanced
features and functionality for our
customers adsl is gross margin
dilutive but operating profit expansive
due to low incremental operating and
this approach of supporting the growth
of our corporate customers but not
having to directly support or market 
to large consumer bases remains one
of four key legs in the delivery of our
business model it complements our
direct sales to ukcentric corporates
and smes as well as our active 
reseller channel
segmental analysis of turnover
data and telecoms including facilities
management
turnover in these services grew 
by 24 to £1986 million and was 
the main engine of growth for thus
the expansion of voice volumes was
particularly robust due to carrier 
preselect services cps which improve
the capture of indirectly connected
customer calls by automatically routing
this traffic over thus’ s network
changes by the regulator have enabled
thus to move voice services from bt
without requiring the customer to use
special equipment or the inconvenience
of access codes we are also able to
provision these services more effectively
than before while cps was introduced
in its current form in 2002 this year 
has seen more widespread adoption 
of the service
cps has also been used to support 
the retail telephony products of other
operators including t ele2’ s launch into 
the uk in the second half of the year 
t ele2 is europe’ s largest supplier of
indirect voice telephony to consumers
and its choice of thus to carry its uk
services is a reflection of our scale 
and the classleading quality of our
facilities and services
cps will remain an important source 
of growth in the next year  whilst in 
the shortterm it may dilute our gross
margin the low level of incremental
operating and capital costs required 
to support this scalable service makes 
it a strong contributor to operating
profit progression
in data services wide area ethernet
services grew strongly with over 
2000 circuits now provisioned thus
has a strong firstmover advantage 
in a technology that we believe has
compelling advantages to corporate
users of more traditional telecoms data
services new users in the year include
imperial college london the scottish
executive and total ep uk part 
of the total global energy company
we also continue to make advances 
with mpls data services including the
provision of a managed network for
gwr group enabling it to become 
the first radio broadcaster in the uk 
to multicast live commercial audio
broadcasts over mpls this builds 
on thus’ s success with capital radio 
and our expansion into data services
for main national radio operators
outside the bbc
facilities management represents an
expanded area this year  previously 
this has largely represented trading 
with our former parent company
scottishpower  contracts qualifying 
operating and 
financial review  9
cps and broadband dsl may dilute
our gross margin the low level of
incremental operating and capital 
costs required to support these scalable
services make them strong contributors
to operating profit progression in line
with our business model we view 
this as an opportunity for growth 
and as part of the service transition 
that is currently taking place in the
telecommunications market
sda selling distribution and
administration costs excluding
depreciation and amortisation but
including other operating income 
fell from 28 to 22 of turnover and by 
10 in absolute terms to £731 million
the year saw the benefits of the full
annual impact of actions taken in the
prior period as well as rationalisation
of the back office billing platforms 
combining turnover growth and cost
efficiencies ebitda grew strongly to
£436 million compared with £271
million in the year ended 31 march
2003 and £31 million
2
in the year
ended 31 march 2002 
depreciation and amortisation for the
year at £648 million was £131 million
lower than the previous year’ s charge
this mainly reflected lower impairment
charges of £86 million year on year
there was an impairment of £48
million in the year mainly reflecting
accelerated depreciation on the
300km out of 6100km of trunk
network which was provisioned 
on overhead cable 
capital costs we continue to review
options to expand the margin profile of
this growing customer base including
local loop unbundling once the
economic case justifies this investment
our uk broadband success was
replicated in demon netherlands which
grew its adsl customer base fivefold 
to 38000 reflecting a higher consumer
content while thus continues to focus
on the uk the netherlands operation 
at 4 of turnover  remains a growing
and successful core adjunct 
to existing activities
new innovations to our broadband
product portfolio were implemented
including a range of highspeed cost
effective selfinstall options and the
addition of private access dsl that
allows customers to use broadband as a
secure connection into private networks
contact centre services
contact centre turnover for the full year
fell to £217 million from £246 million
although turnover in the first half fell
below that in the previous year
following the loss of the microsoft
account the division recovered ground
in the second half as indicated at the
interim results principally through the
expansion of existing accounts and the
successful renewal of our major contract
with hewlettpackard our focus
remains on the top end of the market
providing support for customers who
have complex needs and whose
operations must be based in the uk
interactive 
turnover for the interactive division
providing premium rate services and
competition formats declined by 18
to £130 million reflecting a steep
decline in turnover in the second half 
of the year  resulting from a marked
increase in competition although
turnover has fallen this division
contributes both operating profit 
and positive cash flow for the group
margin expansion and progress to profit
with the achievement of positive cash
flow in the second half of the year  our
focus with respect to margin is now on
operating profit operating losses more
than halved to £212 million and we
are on a solid trajectory to achieve
operating profit in the second half of the
next financial year ending 31 march
2005 the contributors to operating
profit expansion are considered below
gross profit excluding depreciation
and amortisation showed good
absolute growth up 8 to £1167
million excluding the contact centre
and interactive divisions underlying
gross profit increased 13 broadly 
in line with turnover growth
gross margins excluding depreciation
and amortisation fell 2 to 35
compared with 37 last year  and
down slightly to 21 after these items
given our change in product mix with
strong growth in cps and broadband
dsl we do not expect any progression
in gross margin during this financial
year  whilst in the shortterm 
fixed asset turnover 
year ended 31 march 
times
02 03 04
080
02 03 04
1
2
02 03 04
29
15
02 03 04
17
24
operating profit margin
year ended 31 march

ebitda
1
margin
year ended 31 march

capital investmentturnover
year ended 31 march

1
earnings before interest tax depreciation 
and amortisation
2
excludes £32 million restructuring costs
19 
improvement
11 
improvement 
4 
improvement 
3 
improvement 
057 9
13
12
6
067 10
the loan continues to be governed
by standard covenants
with a cash balance of £264 million 
a positive cash flow operating business
and stable financing thus has 
the capacity and financial resilience 
to meet the requirements of large new
business opportunities or unforeseen
external economic shocks to the sector 
or national economy
statement of recognised gains 
and losses
the main movement in prior years
apart from trade losses has related 
to gains from the sale of capacity 
under iru indefeasible rights 
of use agreements the market for 
irus has contracted since 2002 
and consequently there continues 
to be limited activity in this area
thus’ s differentiating factors
and operating environment 
thus is firmly focused on the uk
market without the distraction of major
international investments or foreign
regulatory regimes and operating
environments we have completed our
ukwide deployment of capability and
are consequently deriving significant
benefits of scale our quality and
service innovation are classleading
and well respected we are financially
strong we believe we are also the 
only alternative carrier to have a strong 
“isp inside” with the demon brand
merging the best of internet and
telecommunication cultures 
we believe these factors position 
us well to withstand the continued 
sector turmoil and enhance our ability
to address concerns relating to growth
and competitive intensity
our model implies that we need to
approximately double in size to develop
the scale to deliver an attractive return
on capital with a growing business
telecoms market in the uk which we
statutory gross profit increased 8 
to £695 million after depreciation
included within cost of sales with 
a margin of 21 and the operating 
loss reduced from £508 million 
to £212 million
net interest fell from £69 million 
to £53 million
the loss before tax showed significant
improvement down 57 from £588
million last year to £250 million
earnings per share and dividends
the basic loss per ordinary share
reduced by 57 from 444p per share
to 190p given our company’ s stage 
of development and the accumulated
losses from the network deployment 
the board is not yet able to recommend
a dividend
capital investment
capital investment continued to be
tightly managed and was £411 million
compared with £449 million last year 
falling to 12 of turnover from 
15 approximately 55 of capital
expenditure was tied to turnover growth
either through customer connections
product development or platform
capacity upgrades non turnover
growth capital expenditure includes
billing platform replacements and other
back office functions
no individual project accounted 
for more than 10 of the total spend
reflecting the diverse and customer
linked nature of our investment
programme during the year  capitalised
labour and overhead costs required 
to deliver this programme amounted 
to £87 million in the year 
tax 
a small tax charge of £02 million
arises from trading activities in the
netherlands uk trading losses give rise
to a deferred tax asset of £72 million
with accelerated capital allowances and
other timing differences of £378 million
giving a total deferred tax asset not
recognised of £450 million
as disclosed in our open offer
document to shareholders during our
demerger process from scottishpower 
in 2002 if our company trades during
the period from 19 march 2002 to 
30 september 2005 on a material and
noncommercial basis with members 
or former members of the scottishpower
group our former parent company 
a tax liability of up to £570 million may
be triggered arising from the original
flotation of thus in 1999 this payment
would fall on thus under section 179
of the t axation of chargeable gains
act 1992 any trigger caused by events
prior to 19 march 2002 is covered 
by an existing indemnity with
scottishpower  a strong control regime
is in place to manage this remote risk 
cash flows
net cash flow from continuing
operating activities was positive at
£374 million compared with £261
million last year  underpinning this 
was ebitda of £436 million cash 
flow before financing costs
1
was positive 
at £08 million for the first time in our
company’ s history compared with 
an outflow in the prior year of £283
million in addition cash flow after
returns on investments and servicing 
of finance and capital expenditure 
and financial investment was positive 
in the second half of the financial year
on a sustainable basis
at the year end net debt stood at £354
million compared with £327 million
last year and gearing was 16 our
drawdowns under our £600 million
loan facility stood at £570 million
which converted to an amortising term
loan on 1 april 2004 repayments
commence on 31 march 2005 and
are complete on 31 march 2008
with a balloon repayment profile 11
account for certain aspects of revenue
recognition consequently as thus
looks at its key measures of turnover 
operating profit and cash flow detailed
guidance on possible changes cannot
be made at this point the key primary
measure of cash flow is unaffected 
by the adoption of ifrs 
under uk gaap  the urgent issues 
t ask force issued uitf 38 “accounting
for esop trusts” this does not come
into effect until june 2004 but while
early adoption is recommended due 
to the unique nature of events during
the telecoms “bubble” when most of
these shares in thus were purchased
early adoption is not appropriate 
for thus
guidance notes were also issued 
on financial reporting standards
“reporting the substance of
transactions” frs 5 relating to
revenue recognition but these have not
changed the interpretation of thus’ s
accounting policies in these areas
outlook
the strategy we outlined at the time 
of our listing has enabled us to deliver
our business model to date scaling 
and flexing our business according to
changing market conditions assuming
the macro environment remains broadly
unchanged we remain comfortable 
with our shortterm goal of becoming
operating profit positive in the second
half of the new financial year and our
longerterm goal of at least returning
our cost of capital
believe to be in excess of £10 billion 
per annum this is a sufficiently sized
opportunity for us to grow into 
thus has hit critical mass in key areas
allowing us to benefit from architecture
decisions that support a full range 
of activities and enable a doubling 
of network capacity for just 5 of the
original cost 
there is no doubt that the market
remains extremely competitive with 
a large number and variety of operators
still active in the marketplace however 
with a strong service development
capability we are able to develop and
launch higher value services in market
segments in which few competitors
operate this also allows us to
differentiate at the commodity end 
of services where the capability 
to offer a migration path to higher 
value products is important this 
gives customers such as amserve the
confidence to renew and grow services
on major longterm contracts – in their
case until 2009 
we also have to grow our margins
leveraging increasing revenues 
on our scalable network and operating
platforms provides a powerful driver 
for our new focus on operating profit 
our company’ s activities are affected 
by the rulings and actions of ofcom 
the industry’ s regulator  this year
ofcom has taken on the role of oftel
and initiated a review of the market
european regulation also plays 
an important role in promoting 
and defining the framework under 
which ofcom operates and this is likely 
to increase thus continues to raise
specific areas of concern with ofcom
policy issues
treasury
thus’ s treasury policy aims mainly 
to manage financial risks arising from
limited foreign currency exposure from
our small netherlands operation and
limited supplier payments in us dollars
and euros hedging in the form of 
a “cap” is in place to minimise interest
rate exposure on our loan facility
where drawdowns are charged 
at libor plus 35
tight control exists over treasury
activities and any nonstandard
instruments require approval from 
the chief financial officer or board
thus has no off balance sheet
financing or special purpose vehicles
and maintains a simple and transparent
corporate structure 
accounting policies 
the major event of the year relates 
to the introduction of international
financial reporting standards ifrs
from 31 december 2005 year ends
onwards mandated by the european
union for all listed companies within 
the eu at the moment and for the year
ending 31 march 2005 thus reports
under uk gaap 
thus intends to publish its first 
ifrs results at the half year ending 
30 september 2005 this requires
comparatives for the prior year
including therefore a 31 march 2004
ifrs balance sheet consequently
during the year we have been reviewing
our position with staff training and a
diagnostic review to highlight key points
of difference between ifrs and uk
gaap  we are currently quantifying
these areas and in march 2004 the
audit committee met to consider our
ifrs accounting policies
new and revised versions of ifrs 
have been issued up to march 2004 
as standards have evolved in addition 
a convergence project for revenue
recognition between us gaap and
ifrs is under way and due to report in
2005 this has the potential to change
the way all european companies
1
representing cash outflow before financing 
of £26 million 2003 £367 million and returns
on investments and servicing of finance of £34
million 2003 £84 million 12
nonexecutive directors
roy brown 57 was appointed as a nonexecutive 
director of thus in january 2001 and became chairman 
on 10 july 2002 until may 2001 mr brown was a main
board director of unilever and president of unilever’ s
european foods and beverages division in addition 
he has held the role of regional director of unilever’ s africa
middle east central and eastern europe division mr brown
will become nonexecutive chairman of gkn plc on 21 
may 2004 having been a nonexecutive director  and 
is also a nonexecutive director of brambles industries plc 
bupa hmv group plc and lloyds franchise board 
ian chippendale 55 was appointed as a nonexecutive
director of thus in october 1999 mr chippendale 
is executive chairman of rbs insurance having previously
been chief executive of direct line group limited and has
considerable experience in the insurance and financial
services industry prior to joining direct line in 1996 
mr chippendale was chief executive of privilege insurance
from 1994 and before that he was a director of provident
financial plc 
michael de karesilver 47 joined the board of thus as 
a nonexecutive director in september 2000 he is currently
managing director of modem media europe and before 
that was head of ebusiness services at pa consulting 
group prior to that he was group ecommerce director 
at great universal stores plc gus prior to joining gus 
mr de karesilver was senior partner of the strategy
consulting firm the kalchas group which was acquired 
by computer sciences corp in september 1997 
mr de karesilver is visiting professor at middlesex 
university business school of computing sciences 
jo connell 56 joined the board of thus as a nonexecutive
director in january 2001 mrs connell was until march 2003
managing director of xansa plc she joined xansa in 1977
after five years at cmg limited and an early career with
mars group she became a member of the xansa board 
in 1991 and was subsequently appointed chief operating
officer in july 1997 prior to being appointed group
managing director in november 1999 mrs connell 
is also a nonexecutive director of london bridge software
holdings plc and synstar plc and is a governor of the
university of hertfordshire
margaret ford 46 was appointed as a nonexecutive
director of thus in november 2002 she is the chairman 
of english partnerships founder and deputy chairman of
good practice ltd and a nonexecutive director of serco plc
from 1993 to 2002 she was managing director and then
chairman of eglinton management centre from 1997 to
2001 she was chairman of lothian health board and from
2000 to december 2003 she was a nonexecutive director
of ofgem she is an expert in change management and
leadership issues
executive directors
william allan 50 is chief executive of thus he joined 
a predecessor company in december 1998 as chief
operating officer and was appointed managing director 
in february 1999 mr allan has more than 25 years’
experience in the telecommunications industry in 1997 
mr allan was appointed chief executive of cable  wireless
regional businesses he was a director on the boards 
of telecommunications of jamaica entel panama the 
barbados t elephone company and the barbados external
telecommunications company between 1995 and 1997 
mr allan was regional director for cable  wireless north
east asia region president and representative director of
cable  wireless japan and chairman of cable  wireless
communications services limited japan he was also a
director on the boards of international digital communications
idc japan sakhalin electrosvyaz sakhalin t elecom
sakhalin t elecom mobile and nakhodka t elecom
philip male 37 is chief operating officer  he joined 
a predecessor company originally as t echnical director 
of demon internet limited in october 1997 mr male has
previous experience as t echnical director of computer
newspaper services and pa data design part of the press
association group and has held the positions of head 
of research and development and prior to joining demon
director of strategic research with the press association
group with advanced knowledge of data networking
technologies programming languages and operating
systems mr male has been involved in the development 
of internet services in the uk since 1990 
john maguire 38 a chartered accountant joined thus 
as chief financial officer in december 2000 prior to joining
thus mr maguire was vice president finance japan and
asia for cable  wireless global this included leading the
finance team in cable  wireless idc japan’ s second largest
international carrier mr maguire has extensive financial 
and international telecommunications experience having
held a number of other key financial positions within 
the cable  wireless group since 1991 including that 
of regional finance director of cable  wireless asia
pacific based in singapore 
audit committee
ian chippendale chairman
jo connell
michael de karesilver
nomination committee
roy brown chairman
william allan
ian chippendale
remuneration committee
michael de karesilver  chairman
ian chippendale
jo connell
margaret ford
senior independent
nonexecutive director
ian chippendale
board of directors 13
summary directors’ report
activities
thus is a provider of voice data internet and contact centre
services to corporate and small and medium sized enterprise
markets primarily in the uk a review of the business and 
its future development is contained in the chairman’s letter
and chief executive’ s review on pages 4 and 5 and in the
operating and financial review on pages 7 to 11
results and dividend
the loss transferred to reserves for the year amounted 
to £252 million 2003 £590 million details of which 
are set out in the summary group profit and loss account 
on page 18
the company has not declared or paid a dividend on its
share capital 2003 £nil the company intends to retain
future earnings to expand the growth and development 
of its business accordingly it does not anticipate paying
dividends in the foreseeable future in addition given the
company’s stage of development and the accumulated 
losses built up during the network deployment the company 
is not yet able to pay a dividend
board of directors
the names and details of the directors of the company are
shown on page 12
in accordance with the articles of association william allan
michael de karesilver and jo connell are retiring from 
office at the annual general meeting these directors being
eligible offer themselves for reelection 
directors’ interests
details of the directors’ service contracts letters of
appointment and remuneration are set out in the summary
directors’ remuneration report on pages 15 to 17 
other than as disclosed therein none of the directors 
had a material interest in any contract of significance with 
the company and its subsidiaries during or at the end 
of the financial year  
employees
our employees have yet again responded well to the
challenges we set ourselves for the year and in the main 
our objectives were met
our ability to meet the challenges in the year ahead will 
be dependent on all of us maintaining the same levels 
of commitment and performance and the need to continue 
to attract develop and retain the very best talent will again 
be critical
the company continues to operate within very tight cost
controls but has ensured that money spent on development
activities has been focused on the areas of improving
leadership and personal development and we have yet again
seen an increased usage of the cool elearning system
we have focused the business on improving the key measures
of staff turnover and sickness both of these measures have
seen significant improvement over the year and are now
considered to be extremely low for our market sector and
industry in general
recruitment activity has remained steady and we are seeing 
a greater interest externally from experienced candidates
from within our market sector keen to join us 
our employee policies and processes are continually reviewed
to ensure our commitment to providing equal opportunities 
to all our staff is maintained within all areas of the business
and to support our position that performance and ability
remain the basis for progression within the business
a followup employee survey was conducted in september
2003 and whilst it highlighted areas of focus for future
improvement we also found that the majority of questions
answered demonstrated improvements during the year  
plans are in hand to ensure this key piece of feedback 
is used to further enhance our employee proposition for 
the coming years 
our policy in respect of the employment of disabled
persons is the same as that relating to all other employees
in matters of training career development and promotion
where employees become disabled during the period 
of their employment we will endeavour to continue 
to provide employment
environment
our environmental policy principles remain unchanged 
and continue to meet the criteria set by ftse4good 
we believe communications technology can help reduce 
adverse environmental impact we believe that proper fiscal
management operational management and risk management
are all facets of good corporate governance we believe 
good environmental management is a key part of this
responsibility and that it adds value for all our stakeholders 
• our environmental management system is being
integrated with the health and safety management system
this together with environmental management training 
in the risk management team will aid efficient control 
of these complementary risk areas
•we recognise our responsibility to properly manage
redundant and obsolete equipment hence we maintain
our endeavours to have electronic and electrical
equipment reused or recycled in preference to disposal
•we are committed to reducing environmental impacts 
and continue to work with our specialist energy
management advisors to reduce waste and cut costs 
our preference is to procure energy from renewable
sources and energy efficient equipment where available
and financially viable 
• thus recently secured energy from renewable supplies
that provides electricity to 33 of our site portfolio 
•we have installed intelligent meters at a number of
selected sites to allow our specialist advisors to analyse
usage patterns the programme of installation continues
as this will help us identify and rectify consumption
inefficiencies and set targets for the coming years
• thus is encouraging its shareholders to receive
documentation electronically via the web please see 
the back of the summary report 14
summary directors’ report continued
health and safety
we remain convinced that moral and economic drivers are
compatible in occupational risk management we recognise
that efficient management systems are safe management
systems because the human and economic costs of accidents
are greater than effective risk control costs
our health and safety management system modelled on 
the principles set out in the health and safety executive’ s
”successful health and safety management”  continues 
to evolve 
•we have implemented an initiative called “serious about
safety”  which provides access to information and helps
build a positive safety culture high quality document
folders containing information risk assessment forms 
and guidance have been distributed to employees
enabling them to conduct personal risk assessments
operational documentation can be included in the 
system emphasising the ethos of safety as an integral 
part of work
•in light of new legislation we published our occupational
driving safety code of practice our position is clear
thus employees are not required to use a mobile phone
whilst driving and the use of hand held devices whilst
driving is prohibited
•we continue to revise our policy and process
documentation as required for example the procedure 
for assessing and controlling occupational risks to our
employees who are mothers or expectant mothers 
and their infants
once again our occupational injury rates remain very low
when compared to industry sector standards which is a
tribute to our employees’ professionalism thus employees
reported seven minor injuries and two lost time injuries over
the 2003 calendar year  with the approximate average
number of employees across the year this gives a frequency
rate of 028 thus has not been the subject of any
enforcement action this record is reflected in the strong
relationships we have built with our insurers
summary corporate governance
report
internal control
the board has adopted an approach which is in line 
with the guidance issued by the london stock exchange 
in establishing the group’ s internal control procedures 
and policies the revised combined code requires that 
the effectiveness of the system of internal control 
including financial operational compliance controls 
and risk management is reviewed at least annually 
by the directors guidance to the directors in respect 
of this requirement is also provided by the t urnbull report
internal control guidance for directors on the 
combined code published in september 1999
the directors of thus group plc have overall responsibility
for the system of internal control and for reviewing the
effectiveness of the system the system of internal control 
is designed to manage rather than eliminate the risk of failure
to achieve business objectives internal control therefore can
only provide reasonable and not absolute assurance against
material misstatement or loss 
the purpose authority and responsibility of the group’ s
internal audit function is contained within a formal charter
which is approved by the board the function supports 
the directors in assessing key internal controls through 
a structured review programme
the risk management framework adopted by the group 
is designed to ensure that the key controls are and have
been embedded into business processes the risk
management and internal control systems continue to be
developed across the group and have enabled the directors
to be satisfied that the group was fully compliant with the
combined code provisions on internal control in the course
of the financial year ended 31 march 2004 15
summary directors’ 
remuneration report
during the year the committee has continued its decision
making on the basis of a number of underlying principles
which can be summarised as follows
• executive directors and other senior executives should 
be paid marketcompetitive levels of remuneration and
receive significant incentives for performance which
significantly exceeds challenging and objective targets 
•in setting base salary levels the committee has regard to
a range of benchmark data – in particular  remuneration
levels in other similar ftse mid250 companies and
companies in the telecommunications industry of similar
size and complexity the aim is to set salaries which are
generally around the midmarket level salaries will be
above midmarket where individual performance and
skills justify it
• the committee remains strongly committed to ensuring
there is an appropriate balance between fixed and
performance pay with performance pay comprising 
both bonuses and share incentives it also seeks 
to ensure alignment with shareholders’ interests 
• the committee’ s primary goal is to ensure that executive
remuneration continues to be sufficiently attractive to
retain executive directors in an increasingly competitive
market and to motivate them to deliver results and to
enhance shareholder value 
in accordance with these principles and best practice the
committee has started a review of total remuneration and 
has made a number of changes the review will continue into
the next financial year and will cover sharebased longterm
incentives and performance measures pension policy will
also be considered further in the light of the forthcoming tax
reforms the committee will engage major shareholders in
the process 
the remuneration package 
basic salary
the committee sets the basic salary for each executive
director by reference to individual performance and 
to external market information prepared by its advisors
salaries effective from 1 april 2004 are william allan
£350000 john maguire £250000 philip male £250000
the basic salaries of the executive directors were last
increased on 1 july 2002 
annual bonus
executive directors and senior executives participate in the
company’ s annual bonus plan the annual bonus plan for
executive directors is based solely on corporate and business
performance and provides a maximum total payment 
of up to 100 of salary in respect of the chief executive 
and up to 85 of salary for other executive directors with
performance measured against ebitda earnings before
interest tax depreciation and amortisation turnover and cash
flow targets set at the outset of the financial year 
the company has achieved sustainable positive ebitda 
has grown turnover by more than double the market growth
rate and has achieved a cash flow positive position during 
the second half of the year  in the committee’ s view this
reflects superior performance in comparison with the
telecommunications sector and demonstrates significant
progress in what remain challenging market conditions
the committee considers the bonus payments determined
for the year fairly and reasonably reward the standard 
of achievement the committee is keen to ensure that the
executive directors further increase their longerterm
shareholdings in the company and has therefore decided
that half of the annual bonus earned should be compulsorily
deferred into shares and transferred to executive directors
after three years provided they remain with the company
no bonus was paid for the previous financial year 
the bonus plan operates for 2004 – 05 against the same
financial measures but the weighting applied to cash flow 
has been increased from 25 to 50 and that for ebitda
reduced from 50 to 25 the weighting for turnover
remains at 25 the committee takes the view that an
increased focus on cash flow will further encourage prudent
capital management and better support the company’ s
business objectives for the year  
longterm incentives
share options
the company operates an executive share option scheme
the thus group plc discretionary share option scheme
under which market value options can be granted at the
discretion of the committee to selected executive directors
and employees the performance criterion that currently
applies to the vesting of options is relative t otal shareholder
return tsr measured against the ftse t elecommunications
sector and the ftse mid250 excluding telecommunications
companies twothirds of the options vest depending on the
company’ s tsr compared against the telecommunications
index and onethird depending on the company’s tsr
compared against the ftse mid250 half the options
become exercisable when the company’s tsr is at the
median all the options are exercisable when the company’ s
tsr is at the upper quartile the committee must also satisfy
itself that the underlying financial performance of the
company has improved during the vesting period relative
tsr performance is calculated by t owers perrin using data
supplied by datastream to provide independent verification
and is reported to the committee
no share options were granted in the financial year 
ended 31march 2004 options were last granted 
to executive directors in the financial year ended 31 march
2002 the terms of the grant provided for the retesting of the
performance condition from a fixed point on two occasions
the market value of grants made in the next financial year
will not exceed one times salary the performance test
described above will apply but for options granted thereafter 
there will be no opportunity to retest if the performance
condition is not met three years from the date of grant
relative total shareholder return was regarded as the 
most appropriate measure to determine the vesting of share
options when the plan was approved it was supported  16
by our shareholders as a measure which aligned the interests
of executives with those of shareholders by rewarding
performance relative to the company’s sectoral peers
performance shares
the company also operates the thus group performance
share plan under which an award of shares can be granted
at the discretion of the committee to selected executive
directors and employees grants made during a year will
only become exercisable after three years if demanding
performance targets set by the committee are met no
performance share awards were granted in the financial 
year ended 31 march 2004 performance shares were last
granted to executive directors in the financial year ended 
31 march 2003 share awards are subject to a maximum 
of 100 of basic salary 
two performance criteria currently apply to the vesting 
of performance share awards for half of an award 
of performance shares to vest thus’ s tsr t otal shareholder
return compared to that of the constituents of the ftse 
allshare t elecoms sector as at the date of grant is measured
over a threeyear period no shares vest where the company’ s
tsr is below the median the minimum proportion of shares
that vest at the median is 30 all the shares vest when 
the company’s tsr is at the upper decile performance 
is measured over three years with no retesting opportunities
the committee must also be satisfied at the time the
performance condition is met that this is consistent with 
the achievement of commensurate underlying financial
performance of the company
for the remaining half of the performance share award to
vest normalised earnings per share eps performance of the
company is measured over a threeyear period the eps test
is set with reference to broker forecasts covering the relevant
threeyear period the extent to which eps targets are
satisfied after three years will be confirmed by the committee 
relative tsr has been included as one of the performance
conditions for the performance share awards to ensure
alignment between the interests of executives with those 
of shareholders for the reasons noted above the committee
has also included an eps measure as this ensures rewards
are only received for sustained improvements in the financial
performance of the company the tsr elements of the
performance conditions will be calculated by t owers perrin
using data supplied by datastream and regularly reported 
to the committee the eps calculations will be performed
internally and audited
the committee has usually granted either share options 
or performance shares in the next financial year it intends 
to make grants under both the thus group plc discretionary
share option scheme and the thus group performance
share plan this will increase the proportion of remuneration
which is performancelinked in accordance with the
committee’ s remuneration principles
the committee is satisfied that the combination of share
options and performance shares in the financial year ending
31 march 2005 is necessary to ensure that the remuneration
packages for executive directors are competitive and reflect
the committee’ s underlying principles executive directors 
will only be rewarded if shareholders have gained however 
the remuneration review will continue to look carefully at the
design of the company’ s longterm incentives at the vehicles
used and at the performance criteria and standards
pension and other benefits
pension benefits are provided subject to inland revenue 
limits under the thus group plc pension scheme the
arrangements for executive directors are the same as for all
other employees the scheme is a contributory definedbenefit
scheme that provides 160th of final pensionable salary 
for each year of pensionable service normal retirement 
age under the scheme is 60 and final pensionable salary 
is defined as the highest pensionable salary averaged over 
any 12month period in the last five years of membership 
or the highest threeyear average in the last 10 years if higher 
pensionable salary is defined as basic salary only
as all the executive directors are affected by the earnings cap
this means that their level of pension provision is significantly
below market practice the companies against which thus
benchmarks typically provide unapproved benefits on earnings
above the cap the committee has therefore decided to 
make adjustments to the pension arrangements for executive
directors the committee will determine its approach in the
light of the company’ s response to the pensions tax reforms 
for all employees but the value of the additional provision 
is expected to be about 18 of base salary in the case of the
chief executive and 12 of base salary for the chief financial
officer and the chief operating officer  
executive directors are eligible for a range of benefits
these include the provision of a company car or car
allowance fuel private medical life permanent health
and critical illness insurances
service contracts
reflecting current market practice the executive directors
have service contracts that are terminable on one year’ s
notice by either the individual or the company it is not the
committee’ s intention to appoint any new executive directors
with contracts that provide for a longer notice period 
the committee endorses the principle of mitigation of loss 
on early termination of a service contract and generally seeks
to achieve that objective where possible and appropriate 
in the event that thus wished to terminate an executive
director’s contract other than in circumstances where the
company is entitled to summarily dismiss an executive
director it would need to either give 12 months’ notice 
or make a payment in lieu of salary and benefits
new contracts have been implemented for each of the
executive directors and the special provisions in their
contracts that provided for an enhanced termination
payment of up to 24 months’ salary and benefits if they
were to leave shortly prior to or following a takeover 
or trade sale of the company have been removed 
the new contracts provide for a compensation payment 
in the event of termination within 12 months of a hostile
takeover equivalent to 12 months’ remuneration  17
statement of the independent 
auditors to the members of thus
group plc pursuant to section 251 
of the companies act 1985
we have examined the summary financial statement set out
on pages 18 to 21
this statement is made solely to the company’ s members as
a body in accordance with section 251 of the companies act
1985 our work has been undertaken so that we might state
to the company’ s members those matters we are required to
state to them in such a statement and for no other purpose
to the fullest extent permitted by law we do not accept or
assume responsibility to anyone other than the company
and the company’ s members as a body for our work for
this statement or for the opinions we have formed
respective responsibilities of directors
and auditors
the directors are responsible for preparing the summary
annual report in accordance with applicable united
kingdom law
our responsibility is to report to you our opinion on the
consistency of the summary financial statement within the
summary annual report with the full annual accounts the
directors’ report and the directors’ remuneration report
and its compliance with the relevant requirements of section
251 of the companies act 1985 and the regulations made
thereunder  we also read the other information contained
in the summary annual report and consider the implications
for our report if we become aware of any apparent
misstatements or material inconsistencies with the summary
financial statement
basis of opinion
we conducted our work in accordance with bulletin 19996
“the auditors’ statement on the summary financial statement”
issued by the auditing practices board for use in the united
kingdom our report on the group’ s full annual accounts
describes the basis of our audit opinion on those accounts
opinion
in our opinion the summary financial statement is consistent
with the full annual accounts the directors’ report and the
directors’ remuneration report of thus group plc for the
year ended 31 march 2004 and complies with the applicable
requirements of section 251 of the companies act 1985 and
the regulations made thereunder 
kpmg audit plc
chartered accountants
registered auditor
8 salisbury square
london
ec4y 8bb
30 april 2004
notes
a the maintenance and integrity of the thus group plc website is the responsibility
of the directors the work carried out by the auditors does not involve
consideration of these matters and accordingly the auditors accept no
responsibility for any changes that may have occurred to the accounts or audit
report since they were initially presented on the website
b legislation in the united kingdom governing the preparation and dissemination
of accounts may differ from legislation in other jurisdictions
the chairman and nonexecutive directors
the chairman and nonexecutive directors have letters of
appointment which are available at wwwthusnet they have
all been appointed for a term of three years terminable at 
the request of the board and which renew subject to their re
election by shareholders the remuneration of the chairman
is determined by the remuneration committee the fees 
of the nonexecutive directors are determined by the board
the chairman and nonexecutive directors are not entitled 
to compensation on early termination of their term of office
no individuals are involved in the determination of their 
own remuneration
performance graph
legislation introduced by the government requires this 
report to contain a graph showing the performance of the
company compared with a “broad equity market index”
over the period since the company listed on 14 march 
2002 the committee has chosen the ftse allshare
telecommunications index of which thus is a constituent
this index was chosen because it shows the performance 
of the company relative to its industry peer group and 
is therefore particularly relevant to shareholders 
summary of emoluments paid to directors
£’000
aggregate emoluments paid to directors 1525
aggregate gains made by directors 
on exercise of share options 0
aggregate value of assets receivable 
under longterm incentive schemes 0
aggregate company contributions in respect 
of directors to money purchase pension schemes 0
number of directors with retirement 
benefits accruing under
money purchase schemes 0
definedbenefit schemes 3
historical tsr performance
source datastream
growth in the value of hypothetical £100 holding since listing date
ftse allshare t elecommunications services index comparison based on spot values
thus group
ftse allshare t elecommunications service index
31 march 02 31 march 03 31 march 04
140
120
100
80
60
40
20
0 18
summary group profit and loss account
for the year ended 31 march 2004
2004 2003
£’000 £’000 
turnover from continuing operations 332372 291236
operating loss from continuing operations 21213 50799
exceptional items 
– lossgain on sale of fixed assets 266 250 
loss on ordinary activities before interest and other similar charges 21479 50549
amounts written back tooff investments 1740 1325
net interest payable and other similar charges 5270 6915
loss on ordinary activities before taxation 25009 58789
t axation on loss on ordinary activities 212 196
loss for the financial year 25221 58985
loss and diluted loss per ordinary share pence 190 444
directors’ emoluments pounds 1524664 1056169
summary consolidated statement of total recognised gains and losses
for the year ended 31 march 2004
2004 2003
£’000 £’000 
loss for the financial year 25221 58985
currency translation differences on overseas net assets 38 62
unrealised gainslosses on fixed asset disposals 839 507 
total recognised gains and losses relating to the year 24420 59 554 19
summary reconciliation of movements in shareholders’ funds
for the year ended 31 march 2004
2004 2003
£’000 £’000 
loss for the financial year 25221 58985
currency translation differences on overseas net assets 38 62
merger reserve movement – 814
unrealised gainslosses on fixed asset disposals 839 507
net movement in shareholders’ funds 24420 58740 
opening shareholders’ funds 407 412 466152
closing shareholders’ funds 382992 407412 
summary balance sheets
as at 31 march 2004
group company
2004 2003 2004 2003
£’000 £’000 £’000 £’000 
fixed assets 416212 436809 56963 56963 
current assets 126515 107513 87 87
creditors amounts falling due within one year 101817 95628 627 627
net current assetsliabilities 24698 11885 540 540
total assets less current liabilities 440910 448694 56423 56423 
creditors amounts falling due after
more than one year 57179 40666 – –
provisions for liabilities and charges 739 616 – –
net assets 382992 407412 56423 56423 
capital and reserves 
calledup share capital 33715 33715 33715 33715 
merger reserve 566560 566560 – –
capital redemption reserve 23248 23248 23248 23248
other reserves 18700 18840 – – 
profit and loss account 259231 234951 540 540
shareholders’ funds 382992 407412 56423 56423  20
summary group cash flow statement
for the year ended 31 march 2004
2004 2003
£’000 £’000 
net cash inflow from continuing operating activities 37418 26076
returns on investments and servicing of finance 3351 8413
free cash flow 34067 17663 
capital expenditure and financial investment 36664 54362
cash outflow before financing 2597 36699
financing 16875 39394
increase in cash in the year 14278 2695 
movement in net debt in the year 2697 36699 
approved by the board on 30 april 2004 and signed on its behalf by 
william allan john maguire 
chief executive chief financial officer 
the summary financial statement on pages 18 to 21 is only a summary of information in the company’ s annual report 
and accounts they do not contain sufficient information to allow for as full an understanding of the results of the group and state 
of affairs of the company or of the group and of their policies and arrangements concerning directors’ remuneration as would
be provided by the full annual report and accounts
the statutory financial statements have been delivered to the registrar of companies and the auditors have reported on them 
their report was unqualified and did not contain statements under section 237 2 or 3 of the companies act 1985
for further information the full annual accounts and the independent auditor’ s report on those accounts should be consulted
copies of the full annual report and accounts may be obtained free of charge on request from the company secretary at the
company’ s registered office members may elect to receive the full annual report and accounts in place of the summary
financial statement for future years by writing to the company secretary 21
notes to the summary 
financial statement
for the year ended 31 march 2004
1 basis of preparation
the group restructuring was accounted for in accordance
with the principles of merger accounting set out in financial
reporting standard 6 “acquisitions and mergers” 
frs 6 and schedule 4a to the companies act 1985 
the final step of the restructuring of the thus group was the
redesignation on 19 march 2002 of the thus group plc
preference shares to ordinary shares the relative rights of
shareholders at the start and end of the restructuring process
did not remain unchanged as a result the restructuring did
not meet the definition of a group reconstruction under frs 6
which would have required the restructuring to be accounted
for under acquisition accounting principles this would have
resulted in all the separate assets and liabilities of thus plc
being recorded at fair value goodwill and goodwill
amortisation charges arising and only the post acquisition
results of thus plc being reported in the consolidated profit
and loss account the directors of the company did not
believe that this would have given a true and fair view of the
state of affairs of the group and of its results as in substance
the change of the relative rights of the shareholders was
incidental to the main purpose of the restructuring which was
a change in the identity of the holding company rather than
an acquisition of a business
consequently the restructuring was accounted for using
merger accounting principles as the directors of the company
considered this was necessary in order to meet the overriding
requirements of the companies act 1985 to show a true and
fair view the directors of the company consider that it is not
practicable to quantify the effect of this departure from the
detailed accounting requirements
2 earnings before interest taxation
depreciation and amortisation ebitda
2004 2003
£’000 £’000 
operating loss 21213 50799
depreciation charge for the year 64611 77737 
amortisation charge for the year 165 165 
ebitda 43563 27103 
3 directors’ emoluments and interests
the aggregate amount of emoluments and gains on 
the exercise of the performance unit equity plan puep
entitlements and the profit sharing scheme but excluding
pensions of the highest paid director was £540328 
2003 £337 363
half of the bonus £112500 awarded during the year 
to the highest paid director is compulsorily deferred 
into shares which will vest after three years subject 
to continued employment
the aggregate of the gains made on exercise of the puep
entitlements and the profit sharing scheme during the year
was £nil 2003 £52017 no other share options or awards
were exercisable in the current or prior year  22
notice of annual general meeting
notice is hereby given that the annual general meeting 
of the company for 2004 will be held on friday 9 july 2004 
at 1100 am at the radisson sas hotel 301 argyle street
glasgow g2 8dl for the following purposes
ordinary business
1t o receive and adopt the report of the directors and
accounts for the year ended 31 march 2004
2t o approve the directors’ remuneration report for the
year ended 31 march 2004
3t o reelect william allan as a director 
4t o reelect michael de karesilver as a director 
5t o reelect jo connell as a director 
6t o reappoint kpmg audit plc as auditors of the company
and to authorise the directors to fix their remuneration
special business
7t o consider and if thought fit to pass the following
resolution which will be proposed as an ordinary
resolution
that the board be and it is hereby generally and
unconditionally authorised in substitution for the authority
conferred on it by all subsisting authorities to exercise all
powers of the company to allot relevant securities within
the meaning of section 80 of the companies act 1985
up to an aggregate nominal amount of £1123844296
which authority shall expire at the conclusion of the next
annual general meeting of the company after the
passing of this resolution unless previously revoked or
varied by the company in general meeting or  if earlier  
9 october 2005 save that the company may before such
expiry make an offer or agreement which would or might
require relevant securities to be allotted after such expiry
and the board may allot relevant securities in pursuance 
of such an offer or agreement as if the authority conferred
hereby had not expired
8 t o consider and if thought fit to pass the following
resolution which will be proposed as a special resolution
that the board be and it is hereby empowered 
pursuant to section 95 of the companies act 1985 
to allot equity securities within the meaning of section 
94 of the said act for cash pursuant to the authority
conferred by the previous resolution as if subsection 1
of section 89 of the said act did not apply to any such
allotment provided that this power shall be limited to
athe allotment of equity securities in connection with 
a rights issue open offer or any other preemptive offer 
in favour of ordinary shareholders and in favour of holders
of any other class of equity security in accordance with 
the rights attached to such class where the equity securities
respectively attributable to the interests of such persons 
on a fixed record date are proportionate as nearly as
may be to the respective numbers of equity securities held
by them or are otherwise allotted in accordance with the
rights attaching to such equity securities subject in either
case to such exclusions or other arrangements as the
board may deem necessary or expedient to deal with
fractional entitlements or legal or practical problems
arising in any overseas territory the requirements of any
regulatory body or stock exchange or any other matter
whatsoever and
b the allotment otherwise than pursuant to subparagraph
a above of equity securities up to an aggregate nominal
value of £168576644 or if less 5 of the issued
ordinary share capital from time to time
and shall expire at the conclusion of the next annual general
meeting of the company after the passing of this resolution
or  if earlier  9 october 2005 save that the company may
before such expiry make an offer or agreement which would
or might require equity securities to be allotted after such
expiry and the board may allot equity securities in pursuance
of such an offer or agreement as if the power conferred
hereby had not expired
by order of the board
david macleod
secretary
14 may 2004
registered office
12 berkeley square
99 berkeley street
glasgow g3 7hr
any member entitled to attend and vote at the meeting 
is entitled to appoint a proxy to attend and on a poll 
to vote instead of him a proxy need not be a member of the
company a separate form of proxy is enclosed pursuant 
to regulation 41 of the uncertificated securities regulations
2001 members will be entitled to attend and vote at the
meeting if they are registered on the company’s register 
of members by 600 pm on 7 july 2004 or by 600 pm 
two days prior to the date of any adjournment of the meeting 23
notes
resolution 1
the directors are required by law to present to the meeting
the accounts and the report of the directors and auditors 
for the year ended 31 march 2004
resolution 2
the shareholders are being asked to vote on the remuneration
report relating to directors and senior executives the vote 
is advisory and the directors’ entitlement to remuneration is not
conditional on the resolution being passed
resolution 3–5
the articles of association require onethird of directors
to retire at every annual general meeting the board
following its evaluation of the performance of those
directors standing for reelection confirms that each 
of those directors continues to perform effectively and
demonstrates commitment to the role
resolution 6
the reappointment of the auditors is proposed following
assessment of the audit service by the audit committee the
board considers the auditors to be effective and independent
in their role
resolution 7
under the companies act 1985 section 80 the directors 
of a company may only allot unissued shares if authorised 
to do so passing this resolution will continue the directors’
flexibility to act in the best interests of shareholders when
opportunities arise by issuing new shares
in resolution 7 the company is seeking authority to allot
shares with a nominal value of up to £1123844296 
which represents approximately 3333 of the company’ s
issued ordinary share capital the directors intend to use 
this authority which will lapse at the conclusion of the next
annual general meeting of the company to be held 
in 2005 or  if earlier  9 october 2005 for general 
corporate purposes
resolution 8
if shares are to be offered for cash the companies act 1985
requires that those shares are offered first to the existing
shareholders in proportion to the number of shares they hold
at the time of the offer  however  it may sometimes be in the
interests of the company for the directors to allot shares other
than to shareholders in proportion to their existing holdings
at last year’ s annual general meeting shareholders
authorised the board subject to specified limits
• to allot shares in connection with a rights issue defined 
in summary as an offer of equity securities to shareholders
which is open for a period decided by the board subject
to any limits or restrictions which the board thinks are
necessary or appropriate
• for allotments of shares not in connection with a rights
issue so that the preemption requirement does not 
apply to the allotments of shares for cash up to a 
specific amount
this authority requires to be renewed annually the directors
will be empowered by resolution 8 to allot equity securities
within the meaning of section 94 of the companies act 1985
for cash without complying with the statutory preemption
rights of shareholders under section 89 of the companies 
act 1985 up to a maximum amount of £1123844296
this disapplication is limited to allotments made to ordinary
shareholders and holders of any other class of equity security
in proportion as nearly as may be to their holdings and
otherwise to allotments up to a maximum nominal amount 
of £168576644 representing approximately 5 of the
company’ s issued ordinary share capital
this means that the interests of existing shareholders 
are protected if a share issue is not a rights issue the
proportionate interest of existing shareholders could not
without their agreement be reduced by more than 5 
of the value of the new shares in cash to new shareholders 
by reference to the issued share capital at the date of this
notice there are no current plans to allot shares except 
in connection with the employee share schemes  24
general information for 
shareholders attending the 
annual general meeting
1 the notice of meeting is being issued to all shareholders
enclosed with this notice you will find an attendance card
and a form of proxy
2 if you are attending the meeting you should bring the
attendance card
3a shareholder is entitled to appoint one or more proxies 
to attend and upon a poll vote instead of him a proxy
need not be a shareholder  if you wish to appoint a proxy
you must complete the enclosed form of proxy which must
be deposited with the registrars lloyds tsb registrars
the causeway worthing west sussex bn99 6uu not
later than 1100 am on 7 july 2004
4 copies of the executive directors’ service contracts 
letters of appointment for the nonexecutive directors 
a statement of all transactions of directors and of their
families in the share capital of the company in the year
ended 31 march 2004 a copy of the register of
directors’ and their families’ interests in the share 
capital of the company and a copy of the company’ s
memorandum and articles of association will be
available for inspection at the company’ s registered 
office during normal business hours on each day except
saturday sunday and any public holidays from the date
of the notice of meeting until 9 july 2004 and also at the
place of the agm from 1030 am on the day of the
meeting until the conclusion of the meeting copies of the
same will also be available on the same days at the offices
of the company’ s solicitors biggart baillie dalmore
house 310 st vincent street glasgow g2 5bb
introduction
after his opening remarks the chairman will explain in detail
the procedures for the conduct of the meeting particularly 
for asking questions and voting on resolutions the resolutions
which are set out in the notice of annual general meeting
will then be put to the meeting
how to ask questions
at the meeting shareholders will be given the opportunity 
to ask questions from question points which will be 
clearly indicated
at each question point a member of staff will be available 
to help you please tell the member of staff the nature of your
question and give your name and address y ou may be
asked to wait until called upon to speak please remember 
to state your name before asking your question
how to vote
y ou should raise above your head your voting card which
you will receive when you register indicating that you are
voting either for or against each resolution as it is put to the
vote by the chairman only shareholders or authorised
representatives of corporate shareholders may vote on 
a show of hands if you are attending as a proxy for a
shareholder  you will receive an appropriate identification
card at registration
time
the doors will open at 930 am and the meeting will start
promptly at 1100 am
camerastape recorders etc
no cameras video recorders or tape recorders will be
allowed into the meeting mobile phones must be switched 
off during the meeting
registration
to ensure your entrance to the meeting is dealt with promptly
please bring your attendance card with you and register 
at the registration desk inside the hotel
customer enquiries
company personnel will be available if you have any
questions as a customer of the company
shareholder information
if you have any questions concerning your shareholding
please speak to the staff at the shareholders’ enquiry desk
disabled persons
special arrangements have been made to offer every
assistance to people with disabilities if you have a
companion to assist you they will be admitted to the meeting
as a guest guide dogs will also be permitted the auditorium
has an induction loop system and headsets are available 
on request if you are deaf or hard of hearing
first aid
first aid facilities are available ask any member of staff 
for assistance
emergency precautions
an announcement will be made if there is a fire warning or
other emergency emergency exits are marked clearly around
the auditorium in case of a medical emergency please
contact a member of staff
refreshments
refreshments will be available between 930 am and 
1050 am
important
if you have any questions about the meeting or if you 
need any assistance please telephone the annual 
general meeting enquiry line on 020 7763 3156 from
monday 7 june 2004 during normal working hours 25
shareholder and contact information
analysis of shareholders as at 31 march 2004
range of holdings number of numbers of 
shareholders shares
1–100 141591 11227353
101–200 9875213035625
201–600 6437822913290
601–1000 2227317609261
1001–5000 2659555013665
5001–100000 6506101765064
100000 and above 481 1127048898
financial calendar
9 july 2004 annual general meeting
november 2004 interim results for the six months 
ending 30 september 2004
aprilmay 2005 preliminary results for the year ending 
31 march 2005
shareholder information
annual general meeting
the annual general meeting will be held at the radisson sas
hotel 301 argyle street glasgow g2 8dl on friday 9 july
2004 at 1100 am details of the resolutions to be proposed
at the annual general meeting are contained in the notice 
of annual general meeting on pages 22 and 23
dividend
the directors have not recommended the payment 
of a dividend for the year ended 31 march 2004
listing
ordinary shares of thus group plc have been admitted 
to the official list of the uk listing authority and are traded
on the london stock exchange
share price details
the share price is available from the thus website 
at wwwthusnet and in national newspapers
secretary and registered office
david macleod
thus group plc
12 berkeley square
99 berkeley street
glasgow g3 7hr
registered number sc 226738
registrars
all administrative enquiries relating to shareholdings should
be directed to the registrar  lloyds tsb registrars the
causeway worthing west sussex bn99 6da t el 0870
609 4531 fax 01903 833 371
share dealing
thus group’ s shares may be bought or sold at competitive
rates by post or telephone for further details please contact
stocktrade on 0845 601 0995 quoting lowc0078
company information
for enquiries relating to the company’ s operations and
performance please contact either
• investor relations thus group plc finsbury t ower 
103–105 bunhill row london ec1y 8la 
tel 020 7763 31560141 566 3051
• corporate communications thus group plc 
1 2 berkeley square 99 berkeley street glasgow g3 7hr
tel 0141 566 31060141 566 3051
thus’ s services
information about thus’ s services can be found on the thus
website at wwwthusnet 
designed and produced by williams and phoa 
printed in the uk ecommunications 
care for the environment
each year your company sends tens of thousands of paper
based annual reports but there is a better and more costeffective
way for you to receive this information which is also kinder 
on the environment 
thus shareholders can choose to receive shareholder documentation
from us electronically by registering with shareview  a free web
based enquiry and portfolio management service offered by our
registrars lloyds tsb registrars
this service enables you to
• view your shareholding at any time
• view recent movements in your shareholding
• obtain a regularly updated valuation on your shareholding
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thus group plc
12 berkeley square
99 berkeley street
glasgow g3 7hr
wwwthusnet


Summary:
 4
chairman’ s letter
dear shareholders this has been another remarkable year
of progress and achievement for your company in a challenging
market it has been a year where we have reinforced our position 
in the uk by extending our relationships with our customers 
and by meeting our financial milestones
the success of your company in a challenging market environment is a huge tribute 
to all our staff and we thank them greatly for their continued loyalty and commitment 
to growing your company 
thus is a company that believes in integrity at all levels i believe we apply high
corporate governance accounting and ethical standards to our business we also 
take our social responsibilities and commitment to the communities where we operate
extremely seriously
this year your company has continued to support the women’s aid domestic
abuse campaign more recently we have provided support to emmaus a charity
to help homeless people in glasgow to which we will continue to provide support
on an ongoing basis we are now playing a small role in supporting business in the
community with our staff engaging with pupils at lochend community high school
in easterhouse glasgow and we have recently supported the prince’ s trust none
of these involve large charitable donations but they do involve our employees giving
time and commitment in the support of others
after three years of service on your board i have decided to retire the board has
commenced a search for a suitable successor and plans an orderly handover of
responsibility we expect this change to occur during the course of this year  i have
enjoyed being part of thus’ s formative years as a public company and i shall take 
an avid interest in its future development 
we expect the trends from last year to continue throughout this financial year  despite
market conditions which continue to be challenging the board remains comfortable
with market expectations for the year ahead and of achieving our next key financial
objective of operating profit in the second half of this financial year 
roy brown 
chairman
roy brown chairman and
william allan chief executive