thus annual report 2005
beyond communications contents
01 key highlights
02 beyond communications
06 chairman’ s statement 
07 chief executive’ s review
08 operating and financial review
14 board of directors
16 directors’ report 
18 corporate governance report
21 directors’ remuneration report
27 independent auditors’ report to 
the members of thus group plc
28 accounting policies and definitions
30 group profit and loss account
31 consolidated statement of t otal recognised 
gains and losses
31 reconciliation of movements in shareholders’ funds
32 balance sheets
33 group cash flow statement
33 reconciliation of net cash flow 
to movement in net debt
34 notes to the accounts
45 five y ear financial summary
46 notice of annual general meeting
48 general information for shareholders attending 
the annual general meeting
49 shareholder and contact information
thus supports the communication needs of 
business customers throughout the uk we provide 
a comprehensive range of services and individual
solutions to corporate customers
our demon brand portfolio provides communication
services tailored to small and medium sized businesses
wwwthusnet wwwdemonnet  1
summary results


Summary:
 7
chief executive’ s review
this has been a challenging year for the
uk business telecommunication market it
has been a year of aggressive pricing and
revenue substitution as the fight for market
share became fiercer  and next generation
broadband and internet protocol based
services increasingly replaced more
traditional telecommunication services
against this background thus maintained
its focus and increased turnover in its
continuing operations by 14 to £3406m
with strong growth in key managed
solutions data and telecoms and internet
divisions headline turnover grew by 8
to £3600m and we delivered our first full
financial year of positive free cash flow
1
of £37m 
in the first half our profit performance 
was negatively impacted by two oneoff
factors first contact centre and interactive
divisions moved from a combined
operating profit last year to an operating
loss following poor trading and asset
impairment both were successfully
disposed in addition we made an
exceptional impairment of £81m on
transatlantic cable capacity following
a decision by a uk based supplier to
place its us subsidiary into bankruptcy
price competition was extremely
aggressive over the course of the year
we successfully renewed all 11 of the top
20 customer contracts that came up for
renewal this was a higher than usual
number of renewals although all were
successfully won in most instances it was
with slimmer margins than before
all of these events coupled to the
revenue substitution of higher margin
narrowband internet access for
broadband triggered our downgrade
to full year profit expectations albeit
the company’ s cash flow remained
in line with market expectations
thus’ s increasing ability to differentiate
its capability by building and managing
complex services for its customers resulted
in the formation of a new managed
solutions division revenue from managed
solutions now accounts for 21 of the
company’ s continuing operations this
is a key area for future growth as we
increasingly manage complex services
for our customers and integrate discrete
applications such as voice data email
video and internet and carry it over
a single service platform – we call
this “converged services” it was our
anticipation of this service evolution
which underpinned our network design
and service philosophy at the time of the
thus flotation in 1999 and where we
focused capital investment to build uk
wide service capability
our service focus shows that we can
win and manage complex contracts
glasgow city council is one of the largest
egovernment local authority initiatives
currently in the uk and our innovative
multicast radio broadcast solution for
gwr group
2
is the first application
of its type for the uk broadcast radio
industry our ability to adapt existing
technology for new applications resulted
in the deployment of private access
dsl technology as part of a network
implementation for a major newspaper
and internet publisher throughout the uk
indeed new services growth was
encouraging ethernet circuits climbed
38 to 2750 and broadband dsl
growth was buoyant with total broadband
customers climbing to over 150000 and
uk customers up 59 to 92000 of the
eight major new contracts we announced
in the year  five were for internet protocol
based services
in many ways these results reflect an
industry in transition thus built the uk’ s
first “next generation network” we have
always believed that all telecommunication
services would be conveyed over a single
service platform – and the pace of change
to this technology is now evident in our
market we remain at the forefront of
service innovation and we are strongly
positioned to benefit as the market
increasingly adopts the new generation
of services now available 
our new services growth helped offset
intense price competition and the
migration from old to new services
such as narrowband to broadband
internet services as a result the
company’ s continuing operations
were stronger in the second half with
full year ebitda
3
and preexceptional
operating loss held broadly stable at
£399m and £242m respectively
the year was tough and demanding with
its share of success and disappointment
nevertheless our performance did
demonstrate our underlying strengths
in winning new customers and successfully
transitioning our revenue from old to
new services
we remain cautious on the market
structure for telecommunication services
in the uk and we expect the aggressive
pricing environment to continue
throughout the year  however  we have
been encouraged by the strong growth
in our core activities and in our capability
to win implement and manage complex
integrated telecommunication contracts
for our customers compared to the year
just ended there are few major contract
renewals scheduled and these contracts
are principally focused in the provision
of lower margin carrier preselect services
against this background the board
remains confident thus will continue to
grow and generate positive cash flows
william allan
chief executive
william allan chief executive 
1 cash flow before acquisitions and disposals liquid resources 
and financing
2 gwr group who now trade as gcap media plc after their
merger with capital radio which completed on 9 may 2005
3 earnings before interest tax depreciation including impairment
and amortisation