annual report and 
financial statements 2005
o2com
o2 plc
wellington street
slough
berkshire sl1 1yp
registered no 5310128
the paper used to produce this review is made from elemental 
chlorine free pulps sourced from fully sustainable forests
designed and produced by paufﬂey ltd
printed in england by st ives financial limited
o2 annual report and financial statements 2005
arepcoversqxd  2605  1034  page fc1 o2com   1
contents financial highlights
1
1 financial highlights
2 chairman’s statement
4 chief executive officer’s review
6 business review
19 corporate responsibility
21 operating and financial review and prospects
39 risk factors
41 board of directors
42 report of the directors
44 statement of directors’ responsibility
45 report on corporate governance
51 report on directors’ remuneration
65 report of the auditors
66 financial statements
68 notes to the financial statements
90 nonfinancial metrics
91 five year summary
92 additional information for shareholders
94 definitions
please see cautionary statement regarding forwardlooking 
statements on page 92
2005 2004 2003
£m £m £m
group turnover 6683 5646 4611
ebitda
2
1768 1367 858
exceptional operating charges 45 75 8300
group operating profitloss 341 159 8658
capital expenditure 1415 1213 885
year end net debt 78 366 549
1
continuing operations
2
ebitda is our earnings before interest tax depreciation amortisation and exceptional items excluding our share of the operating profits and
losses of our joint ventures and associates ebitda is not a measure of financial performance under uk gaap and may not be comparable
to similarly titled measures of other companies because ebitda is not uniformly defined ebitda should not be considered by investors as
an alternative to group operating profitloss or profitloss on ordinary activities before taxation as an indication of operating performance
or as an alternative to cash flow from operating activities as an indication of cash flows ebitda is one of the key financial measures used by
the group for evaluating financial performance and is discussed in the operating and financial review and prospects on page 23
group turnover
1
 £m group ebitda
1
 £m
02
4076
03
4611
04
5646
05
6683
02
484
03
858
04
1367
05
1768
across the group
• record number of customer additions – 326 million 
• customer base reached almost 24 million
• group turnover increased by over £1 billion
• pretax profit trebled over previous year
• inaugural final dividend of 225 pence per share proposed
o2arpp001qxd  6105  758 pm  page 1 o2com   2
chairman’s statement
• strong ﬁnancial performance
• first dividend earlier than planned
• capital reorganisation approved
• new company name – o2 plc
• in shape for next phase of development 
i would like to welcome you to this the ﬁrst annual report since our change of name to o2 plc and my
ﬁrst since i was appointed chairman of your company 
in 200405 all of o2’s businesses performed well and the group delivered another year of strong revenue
and proﬁt growth with turnover from continuing operations up more than 18 per cent and underlying
earnings per share 63 per cent ahead of last year since our demerger from bt in november 2001 there
has been a transformation in the group’s operational and ﬁnancial performance we have been delighted
as a result to be able to establish a policy of sustainable dividends earlier than originally expected the
group has produced both earnings growth and a positive cash ﬂow we believe strongly that shareholders
should beneﬁt directly from this and accordingly we are very pleased to be able to propose an inaugural
ﬁnal dividend of 225 pence per share
the payment of a dividend for 200405 and our new policy of sustainable dividends reﬂect our conﬁdence
in the company’s future prospects and our commitment to deliver returns for shareholders 
as you will know a capital reorganisation announced in november 2004 was required to enable us to
make the dividend payment i am pleased that shareholders overwhelmingly approved the companys
proposals at an extraordinary general meeting following court approval of the scheme of arrangement
the scheme became effective on 14 march 2005 when dealings in new o2 plc shares began on the
london stock exchange
we also recognised that as a legacy of the demerger from bt the former mmo2 share register included 
a large number of very small shareholders the cost of servicing such a large number of shareholders was
signiﬁcant and was set to rise further with the payment of dividends therefore shareholders had the
option of electing to receive in exchange for their existing shares in mmo2 plc either new shares in o2 plc
or a cash consideration in the event some 833000 holders owning up to 1000 shares each received the
cash alternative this has allowed the company to secure a longterm reduction in the costs of servicing its
shareholders whilst remaining one of the ten most widely held public companies in the uk with more
than nine out of ten shareholders being retail investors
as part of the reorganisation proposals mmo2’s american depositary receipts were delisted from 
the new york stock exchange there is no intention to seek a us listing for o2 shares in view of the
disproportionate costs arising from continued registration with the us sec we intend also to deregister
from the sec
board changes
i joined the company as a nonexecutive director in april 2003 and became chairman of mmo2 plc at 
the conclusion of the company’s annual general meeting in july 2004 when david varney stood down 
i would like to thank david varney for handing over the company in such good shape having successfully
led the company since demerger david has now taken up the new and challenging position of executive
chairman of hm revenue  customs
there have been other important changes in the board over the past year
david mcglade ceo of o2 uk stepped down from the board and left the company at the end of the
ﬁnancial year in march 2005 he has returned to america to become ceo of intelsat david led the
turnaround in o2 uk’s performance since demerger and the successful establishment of the o 2 brand in
the uk he has been succeeded as ceo of o2 uk by the former uk chief financial ofﬁcer matthew key
who has also been appointed to the executive committee of o2 plc
during the year the board was further strengthened with the appointment of patrick lupo kathleen
o’donovan and rudolf lamprecht as nonexecutive directors previously chief executive and then executive
chairman of dhl worldwide express patrick brings with him a wealth of experience in international sales
service and distribution kathleen has joined the audit committee reﬂecting her expertise in the capital
and ﬁnancial markets having been chief financial ofﬁcer at invensys plc and chair of the audit committee
of the court of the bank of england she also brings relevant experience from a number of nonexecutive
directorships which includes the music recording and publishing group emi rudolf’s deep understanding
o2arpp002005qxd  6105  759 pm  page 2 o2com   3
of sales marketing and customer segmentation as a board member at siemens ag as well as his
knowledge of the german market mean that all three will make a major contribution to our strategy 
of focusing on improving the customer experience and organic growth as we continue to drive the
company forward
three nonexecutive directors – paul myners neelie kroes and ian meakins – stepped down from the 
board paul myners decided to become chairman of marks  spencer neelie kroes left following her
nomination by the dutch government as its new eu commissioner and ian meakins wished to devote
himself to his new role as chief executive ofﬁcer of alliance unichem i would like to thank paul neelie 
and ian all of whom have contributed to the successful establishment of o2 as a ftse 100 company with 
a strong balance sheet and a powerful o
2
brand
andrew sukawaty who has made an outstanding contribution as senior independent director and deputy
chairman since the demerger has elected to stand down from these roles owing to an increase in other
business commitments he remains a key nonexecutive director and shareholders will continue to beneﬁt
from his close involvement in the business stephen hodge was appointed deputy chairman and senior
independent director and joined the nomination and governance committee patrick lupo became
chairman of the remuneration committee in place of andrew sukawaty who remained a member of 
that committee
corporate responsibility
we take seriously our responsibility to the communities in which we operate we strongly believe that
companies who respond to the needs of the communities in which they work and of the wider world are
more likely to succeed on a sustainable basis i am pleased that our efforts in these areas were recognised
last year o2 was the top scoring mobile phone operator in the dow jones sustainability indexes we were
included in the ftse4good the business in the community corporate responsibility cr index and the top
100 global sustainability reporters list 
under our can do in the community programme we have successfully developed a number of community
projects across our territories while measures to support employee fundraising and giving to charity
through payroll have been launched in total we contributed £17 million in charitable donations across the
group of which over £600000 came from ukbased companies and a further £500000 to the tsunami
appeal most importantly our employees continued to give their time and imagination to a wide range of
fundraising schemes
at o2 we are sensitive to public concerns over issues such as health and the use of mobile phones the
siting of masts and the protection of the vulnerable to help parents and others make informed choices we
have introduced measures such as age veriﬁcation parental controls ﬁlters and barring in addition we help
fund ongoing research and are committed to effective responsible communications producing leaﬂets on
subjects ranging from health issues to advice to parents on personal safety bullying and internet grooming
all of this information is available in our retail outlets and online a separate corporate responsibility report
will be published in july 2005
the excellent performance of our individual businesses also won independent recognition in the form of 
a number of important awards i am particularly proud that o2 was voted “best large company to work
for” in ireland and placed in the top 15 mediumsized employers in germany one of our key objectives 
at o2 is to improve the daytoday working lives of our employees and to ensure that work is an
environment that they enjoy we are in the process of introducing balance – a new ﬂexible approach 
to employee beneﬁts designed to help with the management of worklife choices it would allow for
example our staff to substitute extra payments for life insurance or additional childcare vouchers for
unwanted holiday time
looking ahead
we are ﬁnancially strong and have built a powerful iconic o
2
brand revenue is growing fast the company
has modest debt and with a strong management team led by peter erskine our ceo we have so far
outperformed most city expectations o2 is in a good position taking the company forward to the next
phase of its development and further strengthening its position in germany the united kingdom and ireland
will be challenging but achievable
i believe that germany represents the most signiﬁcant new opportunity for o2 and it is for this reason that
the board has authorised a substantial extra capital investment into our german business its performance
has substantially exceeded our expectations and the impressive momentum and growth in revenue and
proﬁtability that o2 germany has achieved over recent years is continuing apace
improving customer satisfaction and reducing churn are the greatest challenges that the mobile industry
faces ownership of mobile phones is now so widespread and the degree of competitiveness so intense
that we must change our emphasis from striving to acquire new customers towards retaining those we
already have i am determined that o2 will take a lead in these areas we will focus on gaining a closer
understanding of our customers’ needs and behaviour to ﬁnd the best way in which we can reward their
loyalty we will work even harder to differentiate our business by delivering intuitive easytouse and fairly
priced products and services – particularly in the data ﬁeld – that our customers value highly based on
proven technology and we will continue to ensure that we work to make a difference to the communities
in which we operate building a sustainable business for the future
we aim to grow the dividend towards our mediumterm target payout ratio of 50 per cent of underlying
earnings reﬂecting our confidence in the company’s ability to continue to grow revenue earnings and cash
ﬂow and our commitment to deliver attractive returns to shareholders
david arculus
chairman
o2arpp002005qxd  6105  759 pm  page 3 o2com   4
chief executive ofﬁcer’s review
in 200405 o2 has delivered further strong revenue and proﬁt growth across all our businesses in the face
of determined competition we had a record year for customer additions and achieved a signiﬁcant increase
in earnings before interest tax depreciation amortisation and exceptional items ebitda and operating
proﬁt group revenue from continuing operations grew by over £1 billion and pretax proﬁt more than
trebled to £309 million underlying earnings per share were 63 per cent ahead of last year and net debt 
was reduced by £288 million to £78 million
the uptake of data services accelerated these now generate revenues of over £14 billion per annum and
account for more than 23 per cent of our gross service revenues during the year we launched our business
and consumer 3g services in the uk and germany with ireland to follow later this year our data offering
will be signiﬁcantly enhanced in the second half of 2005 by our agreement with ntt docomo to provide its
mobile internet service in all our key markets 
o2 uk
in a highly competitive market with ten players o2 uk showed good momentum adding 11 million new
customers – made up of 785000 prepay and 335000 contract additions – taking its customer base to
144 million we have reduced the number of prepay net additions to allow for an element of double
counting when existing prepay customers buy a new handset or sim card despite the impact of the
termination rate cut imposed by ofcom in september 2004 service revenue showed further growth due 
to strong voice and increasing data usage texting grew by 34 per cent reinforcing our marketleading
position data is not just about texting – more than onethird of customers used a nontext data service
during the year our tesco mobile joint venture which is reported separately from o2 uk also continued to
perform well with its active customer base reaching 500000 shortly after christmas 2004 in such a
competitive market the cost of customer churn is an issue but at o2 uk ebitda rose by 14 per cent 
to £1183 million on a 14 per cent increase in service revenues
we plan to deploy signiﬁcant new resources into the customerfacing areas of our uk operations – including
the creation of 2000 new jobs opening a fourth major uk customer service centre and further expanding
our shop network by delivering a better customer experience we aim to improve customer loyalty and
develop a sustainable basis for enhanced longterm returns the cost of this expansion has been offset 
by efﬁciencies in non customerfacing activities resulting in a reduction of some 500 positions and an 
exceptional operating charge of £45 million recognised in 200405
o2 germany
the performance of o2 germany last year was outstanding the business is now recognised as the most
dynamic and innovative in the german market after what was by any measure an extremely strong 
ﬁrst half growth continued over the rest of the year service revenue increased by 28 per cent to
€2474 million and ebitda increased to €500 million our momentum in germany has been driven by a
rapid increase in the customer base – o2 germany has a very attractive range of products and services and
markets them aggressively we added nearly 2 million new customers approaching onethird of net new
additions in the german marketplace these are highvalue customers o2 germany has marketleading
arpu thanks largely to our unique o
2
genion homezone service in october 2004 we launched a new joint
venture tchibo mobilfunk which had attracted more than 250000 prepay customers by the end of the
ﬁnancial year we are now aiming to continue this growth in what is europe’s largest telecoms market over
a ﬁveyear period starting in april 2004 we aim to spend between €3billion and €35 billion on increasing
our investment in network quality and population coverage – this is €1 billion to €15 billion more than
previously planned by the end of the period we will be able to offer highquality mobile services across our
own 3g network underpinning further growth and also higher proﬁtability as we reduce our reliance on
roaming agreements with other operators 
o2 ireland
innovative and competitive services and tariffs together with the strength of the o
2
brand have continued
to drive growth in customers at o2 ireland together with an ongoing rise in usage levels customers in
ireland consistently use their mobile phones over 50 per cent more than in our other territories this growth
in customer numbers to over 15 million led to another year of strong ﬁnancial performance with service
revenue increasing by 13 per cent to €816 million and ebitda 9 per cent higher at €327 million the irish
• strong revenue and proﬁt growth
• accelerated investment in germany
• focus on enhanced customer experience
• airwave service fully operational
• increased takeup of data services
o2arpp002005qxd  6105  759 pm  page 4 o2com   5
market is becoming increasingly competitive four network operators are now active and others are
expressing an interest following proposed measures to allow mobile virtual network operators access to the
networks of existing players
o2 airwave
the rollout of our airwave network for the emergency services was completed on time and on budget
at the end of march 2005 airwave which makes communities safer by providing communication where
and when it matters most has now been delivered to all police forces in england scotland and wales
over 150000 police ofﬁcers will have access to the service together with more than 78 other public safety
agencies that have also signed up to airwave the system has already contributed to a reduction in crime
improved ofﬁcer safety and in the case of hereford  worcester ambulance trust saved over 150 lives 
o2 airwave has been shortlisted for similar contracts to provide nationwide communications for the
ambulance and fire services we see many opportunities to provide secure and reliable communications to
a wide range of new users
manx telecom
manx telecom our subsidiary on the isle of man was the ﬁrst company in europe to launch a live 3g
service in december 2001 providing o2 with a valuable learning experience and handson knowledge 
of the potential of 3g building on this success manx telecom is now set to run europe’s ﬁrst superfast 
3g service using hsdpa technology this offers communication speeds up to three times those of current
3g services once again we expect that this will provide other o2 businesses with vital insights into future
mobile services the technology will be rolled out across all of our territories from 2006
strategy
our strategic framework for the coming year is driven by the same high but realistic aspirations that have
delivered such strong growth to our business since demerger to continue to meet those aspirations we will
be addressing some key priorities in 200506
superior revenue and proﬁt growth despite the competitive landscape o2 uk continues to focus on
winning and retaining more highvalue customers in order to drive further revenue improvements in
germany there is signiﬁcant room for growth at recent rates and our accelerated investment programme
will provide a springboard to achieve this o2 airwave will be making a strong ﬁnancial contribution in its
ﬁrst full year of operation
best customer experience to give substance to our iconic o
2
brand quality value and innovation are the
keys to maintaining the strength of the o
2
brand and differentiating us from our competitors to keep the
loyalty and trust of our customers we must give them the service that they want and products that work –
which is why we have been cautious in the timing of our 3g launch we do not necessarily want to be the
ﬁrst to market but we do want to be the best our aim is to keep the o
2
brand fresh with fewer better
services all designed to enhance the customer experience – we are investing in the platforms and people 
to achieve this
operationally efﬁcient agile and innovative organisation we will be driving our businesses to realise
efﬁciency gains using our growing insight into our customers’ needs and behaviour to align our costs more
closely to what customers value most we have innovative joint ventures with tchibo in germany and tesco
in the uk and other multiterritory partnerships
mobile data services that our customers really value “texting” has become a way of life whether in 
persontoperson messages texting questions to the prime minister or voting off big brother contestants
we carried a record 50 million texts on christmas day 2004 and texting continues to grow in all markets
driven by o
2
active our awardwinning mobile internet portal we are also starting to see signiﬁcant growth
in nontext data usage revenues from which have increased by 50 per cent over the past 12 months the
mobile sector is poised for even more dramatic growth as we focus on developing 
new mobile data products and valueadded services
a highspeed network as provided by 3g is the key to future mobile data services enabling customers to
migrate to advanced contentrich applications we believe there will be a mass market for these services
starting in late 2005 and building over the next few years
we are rolling out the 3g network in all of our territories matching capacity to known mobile data demand
we have invested in training and billing systems and we have highly speciﬁed and wellfunctioning devices
to complete the picture we signed a longterm agreement with ntt docomo inc japan’s largest mobile
communications provider to launch a mobile internet service under the imode
®
brand in the uk and ireland
in autumn 2005 a similar service will be available in germany from spring 2006 this service which will
complement o
2
active has a proven track record in western europe of lifting uptake usage and revenue
from data services due to its ease of use and huge breadth and depth of tailored internet content
the appeal of these services will be signiﬁcantly enhanced through the progressive introduction of hsdpa
technology this offers speeds signiﬁcantly better than 3g and will in effect provide a true mobile
broadband experience in addition we are engaged in the uk’s ﬁrst trial of multichannel mobile tv
looking ahead
in the uk we are expecting revenues to grow at a midsingle digit rate reﬂecting the impact of the
remaining ﬁve months of the call termination rate cut in september 2004 and continuing competition in 
a highly penetrated market competitive forces coupled with o2 uk’s substantial investment in customer
facing capabilities to attract and retain longterm customers are expected to lead to a broadly stable ebitda
margin we are expecting further strong revenue growth in germany driven mainly by a continued rapid
growth in our customer base there on the back of strong revenue growth o2 germany’s ebitda margin 
is expected to rise further to around 20 per cent after absorbing the impact of umts network running
costs and ongoing national roaming costs capital expenditure overall should be broadly in line with last
year higher investment in our umts network particularly in germany will be offset by a reduction in
spending at o2 airwave following completion of its network rollout
peter erskine
chief executive ofﬁcer
o2arpp002005qxd  6105  759 pm  page 5 business review  
history and development of the company
on 14 february 2005 the shareholders of mmo2 approved the proposals for a capital reorganisation 
to create distributable reserves through a courtapproved scheme of arrangement the scheme the
reorganisation was required in order that the company could implement a sustainable dividend policy and
make distributions to shareholders following shareholder approval mmo2 was acquired by a new company
o2 which effected a reduction of its share capital to create distributable reserves the scheme became
effective on 14 march 2005 on which date dealings in o2 shares commenced on the london stock exchange
under the scheme mmo2 shareholders exchanged their existing shares in mmo2 for new shares in o2 on 
a oneforone basis mmo2 shareholders also had the option of electing to receive in exchange for 
their existing shares in mmo2 either new shares in o2 or cash consideration under a cash alternative
shareholders who took no action were deemed to have elected for the cash alternative this cash
consideration consisted of the amount received through a placing in the market of the new shares on behalf
of the shareholders electing for the cash alternative the value of the cash alternative was £130 including
the premium of 5 pence per share the cash alternative and therefore the size of the placing was limited 
to 300000000 o2 shares 
the board has also reviewed the us listing and the associated adr programme which is a legacy of the
demerger from bt as part of the reorganisation mmo2’s adrs were delisted from the new york stock
exchange on 11 march 2005 and o2 has not established an adr programme nor a us listing for the 
new shares in o2 the board is currently pursuing deregistration of o2 shares from the securities and
exchange commission
during the second half of the ﬁnancial year ended 31 march 2004 mmo2 transferred o2 online products
o2 and certain other central functions to the operating businesses to simplify lines of management reduce
costs and improve speed of execution this restructuring which reduced headcount by 200 led to an
exceptional operating charge of £75 million being incurred in the second half of the year ended 31 march
2004 as a consequence of this streamlining as from 1 april 2004 o2 online and products o2 are no
longer being operated as separate businesses
on 20 february 2004 we announced that our board of directors had received and considered a proposal by
royal kp n nv the dutch telecommunications group the board carefully considered the proposal but
rejected it as not being in the best interests of our shareholders
on 14 april 2003 we announced that we had agreed the sale of o2 netherlands to greenﬁeld capital
partners an independent private equity and ﬁnance group with interests in the telecoms sector for
€25 million in cash which was paid on completion of the transaction on 3 june 2003
our group
we are a leading provider of mobile communications services in europe with wholly owned businesses in
the united kingdom germany ireland and the isle of man 
we have almost 24 million customers and approximately 15000 employees we reported revenues for the
year ended 31 march 2005 of £6683 million data represented 233 per cent of gross service revenues for
the ﬁnancial year ended 31 march 2005 
the businesses in the uk and ireland are both established and proﬁtable with a track record of revenue and
customer growth and a strong presence in highvalue markets such as business and mobile data services 
in the uk our tesco mobile joint venture performed well reporting that its active customer base reached
500000 shortly after christmas in ireland the growth in customer numbers led to another year of strong
ﬁnancial performance
o2 germany remains the fastest growing operator in germany it experienced strong service revenue growth
for the full ﬁnancial year ended 31 march 2005 driven by the continuing rapid growth in the customer
base performance in germany has exceeded expectations thanks largely to our unique genion service
we announced on 1 april 2005 that o2 airwave had completed the nationwide network – on time and on
budget – to provide every police force in england scotland and wales with state of the art secure digital
communications the completion of the ﬁveyear programme that has rolled out the largest public safety
mobile communications network of its kind in europe is a milestone in the efforts being made to cut
bureaucracy and improve safety for the police and the general public over 100000 police ofﬁcers are 
now using airwave
manx telecom is unique within the group providing mobile ﬁxed line and internet services in the isle of
man it was also the pioneer of umts networks the platform on which we in measured stages will supply
services europewide we chose manx telecom to run europe’s ﬁrst superfast 3g trial in partnership with
lucent technologies using hsdpa technology hsdpa offers the possibility of communication speeds up to
three times faster than current commercial umts services
as we reported last year we became a founding member of starmap mobile alliance in october 2003 a
group of independent mobile phone operators who are joining forces in readiness for the international roll
out of umts services starmap aims to provide a “homeawayfromhome” experience by introducing
seamless roaming and multimedia connectivity to more than 46 million customers in ten european countries
in addition we have established the tesco mobile and tchibo mobilfunk joint venture businesses in the uk
and germany respectively
o2com   6
o2arpp006040qxd  6105  759 pm  page 6 our technology
our success in germany has encouraged us to accelerate the growth of the business by means of increased
network investment to deliver a highquality customer experience from our own umts platform at the
same time we have launched our consumer umts service in the uk a move that will be signiﬁcantly
enhanced in the second half of 2005 by our strategic agreement with ntt docomo to provide its mobile
internet service in our key markets 
we signed a longterm strategic agreement with ntt docomo japan’s largest mobile communications
provider under which we will launch a mobile internet service using imode
®
capability in the uk germany
and ireland this partnership will complement our existing expertise in data services with ntt docomo’s
experience in nonsms data and its extensive research and development capabilities customers will beneﬁt
from easytouse services rich content applications and messaging across a range of advanced handsets
under the terms of the agreement we are licensed by ntt docomo to offer the imode
®
capability to our 
24 million customers already the world’s most popular mobile internet platform with more than 
48 million subscribers using over 6100 ofﬁcial content sites in ten countries and regions we will make the
imode
®
capability available on an extensive selection of advanced multimedia handsets and devices from
major asian european and us manufacturers these currently include nec panasonic siemens motorola
and samsung amongst others
o2 uk and o2 ireland will have exclusive use of the imode
®
brand and technology in their respective
markets o2 germany will launch a service based on imode
®
technology under its own brand
the appeal of these services will be signiﬁcantly enhanced as we roll out hsdpa with speeds of up to 
1mbps compared with umts with speeds of 384kbps to all our customers offering a true mobile
broadband experience
our products and services
on 27 january 2005 we announced that we would introduce a range of attractive new handsets and an
enhanced o
2
active portal over our umts network the move builds on our leadership in nonvoice services
and unique o
2
branded handsets in the uk umts services have been available for our business users since
october 2004 and our consumers since 1 february 2005 and in germany to our business users since april
2004 and all consumers shortly thereafter
consumers who purchase umts devices from us will enjoy a wider range of new and original content
including ﬁlm from warner bros online previews behind the scenes and interviews lifestyle from titles
such as gq fhm and glamour the latest music videos and tracks from major recording artists and mtv
news from itn and sports including england rugby and arsenal football they will also beneﬁt from faster
download speeds and video calling the launch also marks the arrival of a new and improved version of the
innovative o
2
active portal which has been redesigned to take advantage of richer faster more capable
umtsbased features 
to mark the introduction of our umts service for consumers we launched the only ownbranded umts
handset in the uk market to date – the competitively priced o
2
x4
based on the highly successful design principles of our existing xrange of handsets which includes the
popular o
2
xda ii
®
 the o
2
x4 sports a sleek clamshell design with a highquality 262000colour main screen
display the o
2
x4 is equipped with a 13 megapixel camera with an 8x zoom lens and advanced “ﬂash
mechanic” it also includes an mp3 music player video downloading and streaming capabilities 10mb of
phone memory and 64mb of additional capacity via a removable memory card
in addition to the o
2
x4 we will offer umts customers a range of handsets from leading manufacturers
including the nokia 6630 samsung z107 motorola v975 and the sony erickson v800 this will be expanded
going forward through existing handset procurement channels and the ntt docomo partnership
in germany we recently launched an innovative highspeed offering o
2
surfhome a service that directly
complements o
2
genion using this innovative umts data service o2 customers are able to connect to 
the internet from their homes at ﬁxed line rates the combination of o
2
genion with o
2
surfhome will
enable complete ﬁxed line substitution and increase customer value and loyalty
our strategy
our primary goal is to create shareholder value by becoming the fastest growing major european mobile
operator in revenue and proﬁtability we have a number of speciﬁc growth opportunities including further
investment in our networks in germany improving the customer experience in the uk and ireland o2
airwave moving into full operations and maximising the potential of key partnerships such as tesco mobile
and tchibo mobilfunk
we will continue to build on the momentum created by our successful brand ensuring that whenever
customers come into contact with us the expectations created by the brand are met in this way 
we aim to become an integral part of customers’ lives and improve our ability to attract and retain 
highervalue customers
we plan to deploy signiﬁcant additional resources into the customerfacing areas of our uk operations –
including the creation of 2000 new retail and customer service staff over the next two years opening a
fourth major uk customer service centre and further expanding our retail network by delivering a better
customer experience we aim to improve customer loyalty and develop a sustainable basis for enhanced
longterm returns the cost of this expansion has been offset by efﬁciencies in non customerfacing
activities resulting in a reduction of some 500 positions and an exceptional operating charge of £45 million
recognised in the ﬁnancial year ended 31 march 2005
o2com   7
o2arpp006040qxd  6105  759 pm  page 7 business review continued
the following table represents the turnover for each of our continuing operating businesses for the three
ﬁnancial years ended 31 march
year ended 31 march
2005 2004 2003
£m £m £m
continuing operations
o2 uk 4030 3451 3025
o2 germany 1865 1508 1060
o2 ireland 585 529 442
o2 airwave 169 89 16
manx telecom 53 50 48
o2 online – 140 93
intragroup eliminations 19 121 73
total 6683 5646 4611
operations by country
o2 uk
operational performance
o2 uk delivered a strong operating and ﬁnancial performance during the ﬁnancial year ended 31 march
2005 customer numbers service revenue arpu and ebitda all showed continued growth success was
driven by innovative new services and customer propositions a series of successful marketing campaigns 
and further improvements in network quality all of these aided the continued development of the “iconic”
o
2
brand
total customer numbers grew by 11 million to 144 million helping to drive a 14 per cent growth in net
service revenue to £3627 million the quality of our customer base also continued to improve this was
evidenced by postpay arpu for the ﬁnancial year ended 31 march 2005 rising £17 compared with the
previous year to £542 while prepay arpu rose £2 on the previous year to £143 on a blended basis arpu
was £281 at year end an increase of £9 rising arpu occurred despite the impact of the regulatory price
cut in september reduced our rolling arpu by £11 by the end of the year see “regulation in the united
kingdom” on page 16 ebitda one of our key indicators of proﬁtability reached £1183 million 
a 14 per cent year on year increase 
we retained our focus on mobile “data” nonvoice services the volume of text messages carried 
on our network hit 1 billion texts per month by the end of the ﬁnancial year ended 31 march 2005 
this continued focus on text and other messaging services such as email and picture messages as well as
nonvoice services like music content downloads and information services helped data services revenue
reach 242 per cent of o2 uk service revenue an increase of 38 per cent over last year 
further development of o
2
active the simpletouse portal for news information and downloads helped
drive this success a revamped more intuitive homepage including a scrolling ticker of news headlines
received positive customer feedback and drove higher usage as at 31 march 2005 o
2
active was available
on 100 different handsets
a number of innovative o
2
sourced and branded devices helped us build increased brand differentiation and
drive service usage we extended our o
2
xda signature range of wireless personal digital assistants with the
launch of the o
2
xda ii the o
2 
xda iis and the o
2 
xda iii features include web browsing email lanwan
access camera and video functionality and a range of ofﬁce applications the o
2 
xda ii’s integrated digital
music player also allows customers to download and play music tracks making it appealing to highspending
consumers who are amongst the most intensive mobile users we also added three new phones to our “x”
range of o
2
branded handsets the o
2
x2 the o
2
x3 and the o
2
x4 our ﬁrst own branded umts phone all
are unique to o2 and have a wide range of multimedia functions
as part of our ongoing investment in service capability we rolled out the ﬁrst phase of our umts network
in the uk launching initial services to business customers in october 2004 and consumers in february 2005
the launch of our umts service is an evolution of our successful services strategy because umts technology
offers faster data speeds it allows customers with umtsenabled devices to enjoy richer information and
entertainment content and new interactive services for example o
2
active can now be accessed at faster
speeds provides 3d interactive and multiplayer games and has greater video capability and content such as
film and music videos as it is a new technology we believe umts services will initially appeal to early adopters
building towards massmarket adoption in the latter part of the ﬁnancial year ending 31 march 2006
in the mass consumer market we continued to develop innovative propositions and promotions that proved
appealing to our customers for example we introduced o
2 
friends for prepay customers halfprice calls
and messages to three chosen numbers and “happy hour” offering free messaging between 7 pm and
8pm for both prepay and postpay customers 
in the business market we grew our direct sales force and introduced new pricing and service propositions
these included the o
2
welcome service for larger corporate customers designed to make switching from
other networks troublefree by giving dedicated support advice and information at the customer’s premises
o
2
network manager another innovation for corporate customers was also launched  network manager
measures the service level given to corporate customers to an agreed standard to enable us to improve their
network experience the o
2
for business marketing campaign promoted the quality of o2’s network
these initiatives helped us acquire many new corporate customers such as dhl as well as growing business
with customers such as superdrug and west yorkshire police
in the market for small and medium sized businesses sme we launched o
2 
business zones which offered
40 per cent off calls to two chosen area codes this was introduced in response to customer feedback that
many small businesses make most of their calls within their local area we also introduced a new set of
o2com   8
o2arpp006040qxd  6105  759 pm  page 8 tariffs providing “shared minutes” and “shared bundles” for example data minutes for small businesses 
to use across all mobile phones on their account demand from businesses of all sizes for the blackberry
™
mobile email service increased
in october 2004 o2 uk launched o
2
connection manager the service provides business customers on the
move with a simple way to connect their laptop computer to the o2 data network using whichever
of our umts gprs or wlan network best suits wlan is a relatively new technology appealing to early
adopters from which we expect to see growth over time following agreements signed with wlan
operators o2 now provides wlan access in over 6700 uk locations including hotels airports coffee 
shops bars and pubs
the percentage of total sales delivered through o2’s own channels o2 stores o2 online store and o2’s
direct sales force continued to increase and we expect the proportion of sales through our own channels to
continue to rise during the ﬁnancial year ending 31 march 2006 we believe this will enable us to deliver a
better customer relationship the number of o2 retail stores grew by 26 to reach 257 by the year end
a key element of our strategy is to differentiate o2 by delivering a better overall customer experience
through amongst other things higher service quality improvements in overall service quality last year
focused on two main areas – improvements in our network performance and enhancements to our 
customer service capabilities 
our main indicator of network performance and quality is minutes per drop mpd – the number of minutes
between dropped voice calls this improved through the year and is now at its highest ever level
in the area of customer service we continued to make signiﬁcant investment in our single billing and
customer relationship management system across all o2 uk operations work already completed on 
the project has for example enabled online customers to view their bills online also a new webbased tool
in retail stores allows new customers’ mobile phones to be set up and activated on the spot as we
implemented these during the year we encountered a number of challenges around service and billing
communications we have now tackled these and put increased focus on managing service and billing quality
the strong appeal and distinctiveness of the o
2
brand also continued to help us differentiate from our
competitors brand awareness continued to climb last year and brand consideration is at an all time high
this has been assisted by o2 uk’s sponsorships of the world cup winning england rugby team the 2004 
football association premiership champions arsenal and capital radio’s drivetime and a host of music
events as well as the strong appeal of our market propositions recognising the contribution made by the
o
2
brand to its business performance o2 uk won the institute of practitioners in advertising’s ipa
prestigious grand prix award for 2004 this award recognises companies that have marketed their brand
most effectively with the best return on investment we also won the mobile data association’s “best
network of the decade” award for being the most innovative in “encouraging the uptake of mobile data
over the past ten years”
market dynamics
our performance was achieved against the backdrop of stiff and increasing competition traditional
competitors including vodafone orange and tmobile continue to grow 3 the newest network operator
with a purely umts network has built strong momentum 3 has been growing through a mixture of
aggressive tariffs and high handset subsidies and we expect them to continue this strategy tesco mobile
our 5050 joint venture with tesco has delivered sustained growth in december 2004 14 months after its
launch tesco mobile had attracted over half a million customers the joint venture addresses sections 
of the family market that we do not currently target with the o
2
brand through tesco’s network of
supermarkets and “metro” stores we expect competition to intensify again this year with several new
mvnos entering the market which coincides with slowing overall growth in new customers
corporate responsibility
we believe that companies who respond to the needs of the communities in which they work are more
likely to deliver good business results we look in particular to support initiatives where mobile services can
be used to tackle social needs where our employees can become involved and where we can raise the
proﬁle of o2 as well
in july 2004 o2 uk launched its new charity partnership with weston spirit the charity cofounded 
by simon weston obe to help young people at risk of social exclusion reach their full potential over the 
next two years our new partnership aims to deliver a groundbreaking mentoring programme to support
personal development of young people we have already recruited more than 70 o2 uk mentors who have
been trained to provide advice support and encouragement to young people assigned to them through a
series of local school partners elsewhere we are supporting hm prison service’s “prison me no way”
campaign o2 uk employees have joined forces with the emergency services to provide crime and safety
awareness workshops to schools throughout the uk following the successful “teach ur mum 2 text”
campaign during the ﬁnancial year ended 31 march 2004 o2 uk last year supported milly’s fund’s
“summer textin’ tips” campaign which provides personal safety advice to young people while they are
travelling we are also funding the development of medical devices using mobile technology to monitor
asthma and cystic ﬁbrosis patients remotely trials with asthma patients have already proved a success with
many more patients monitoring their breathing on a regular basis compared with conventional methods 
we are aware that mobile phone masts are not always popular and we work hard to address people’s
concerns opposition to masts does however have to be balanced with the strong demand from over
50 million uk users of mobile services and extensive research showing no known health risks 
we have consistently taken a proactive approach to the issue of child safety and mobile phones as the ﬁrst
mobile operator in the uk to join the internet watch foundation and a signatory to the industry’s code 
of practice for the selfregulation of new forms of content o2 uk has introduced controls to allow parents
to manage their children’s access to inappropriate content or experiences in addition we have sought to
provide customers with advice on the nature and use of mobile services and have also published a series of
o2com   9
o2arpp006040qxd  6105  759 pm  page 9 business review continued
leaﬂets giving advice to children on issues such as the sensible use of camera phones safety in chatrooms
and dealing with nuisance calls and bullying
regulatory issues
in january 2005 ofcom began consultations on the release of future mobile spectrum over the next ﬁve
years of particular importance will be the umts expansion band 2500mhz2690mhz there is likely to 
be a protracted public debate on the timing and terms for future spectrum releases 
looking ahead
we will continue our focus on improving proﬁtability by growing our base of highvalue customers and
improving business efﬁciency a key priority will be customer retention as more intense competition has
increased pressure on the rate of churn in order to deliver an enhanced customer experience and strengthen
customer loyalty we plan to redeploy signiﬁcant additional resources into customerfacing areas including
the opening of a fourth major call centre in the uk and further expanding the o2 retail network to support
these initiatives we plan to hire over 2000 new retail and customer service staff over the next two years
offsetting the cost of this expansion by targeting efﬁciencies across a wide range of managerial and
administrative functions this is expected to result in a reduction of up to 500 permanent noncustomer
facing positions in the ﬁnancial year ending 31 march 2006
investment in our umts network will continue as we expand the network across the uk initially focusing 
on the areas of greatest demand the range of umts capable phones in our handset portfolio will increase
as will the content offered through our o
2
active portal
we plan to launch a mobile internet service based on imode
®
capability later this year in an exclusive
agreement with the japanese operator ntt docomo this will give us competitive differentiation by
providing our customers with access to the most comprehensive and ﬂexible internet service available on
mobile phones on a wide range of handsets from several vendors the imode
®
capability is a mature
service that has been proved to generate higher arpus in other countries than any other competing
technology or platform already the world’s most popular mobile internet platform it has more than
48 million subscribers using over 6100 ofﬁcial content sites in ten countries we believe this will be a
compelling mobile internet service
o2 germany
operational performance
o2 germany has established itself as the most dynamic and innovative operator in the german market 
which is the largest in europe in the ﬁnancial year ended 31 march 2005 both revenues and customer
numbers grew at an accelerating pace throughout the year outstripping both our expectations and the
growth of other competitors leading to further improvements in market share by attracting a signiﬁcant
proportion of highvalue customers and tightly controlling operating costs o2 germany has translated this
rapid growth in subscribers into a substantial improvement in proﬁtability overall customer numbers grew
by 33 per cent blended arpu decreased by €3 for two reasons firstly arpu especially postpaid
decreased in the ﬁnal quarter of the ﬁnancial year ended 31 march 2005 due to termination rate cuts in the
german mobile market secondly o2 acquired a higher share of prepaid customers which had an effect on
overall blended arpu despite an increase in prepaid arpu service revenues at constant exchange rates
were 28 per cent higher at £1687 million and ebitda reached £341 million with a margin of 183 per cent
in the light of this accelerating growth over the next ﬁve years the business will step up the rate of investment
in its umts network to reduce national roaming costs enhance customer experience and secure population
coverage that is competitive with the market leaders
our customers’ experience of the o
2
brand is central to our growth strategy in addition to our increasing
focus on customer segmentation and on identifying and meeting the needs of our various customers we
have directed a stronger focus towards direct sales channels o2 has increased the number of o2 shops to
119 and other points of sale to more than 9000 our o2 online shop has continued to show a strong
performance with a high rate of net new additions as well as low sacs and good arpu our customers
also value a real facetoface presence to enhance customer experience and further build brand image the
ﬁrst ﬂagship o2 store was opened in munich in december 2004 
in october 2004 o2 germany launched the tchibo mobilfunk offer jointly with tchibo a wellestablished
consumer brand known for its valueformoney offers as branded reseller managed by a 5050 joint
venture this additional and exclusive sales channel complements o2’s target segments and has been very
successful the product proposition was unique in germany at launch a tchibo branded transparent ﬂat
prepaid tariff on very attractive terms tchibo mobilfunk has so far attracted in excess of 250000 prepay
customers in december 2004 mobilcom was the ﬁrst service provider in the german market to offer o2
prepaid products – at ﬁrst on a dealer basis new o2 offers through service provider channels will become
available in the current year
our unique o
2
genion product which continues to be a key driver of gross additions underpins our
strategic focus on more proﬁtable customers generating higher arpu and a considerably lower churn rate
than other mobile products customers attracted from other operators usually generate a higher arpu
because they change their patterns of usage with o
2
genion thanks to its advanced technology o
2
genion
offers innovative services in combination with reduced tariffs in a geographical area chosen by the customer
usually near the home or workplace this is a unique service in the german – and also european – market
in our target business market we have been winning major new customers with an expanded business unit
team and forging new partnerships with sales channels and software suppliers we also extended our range
of tariff packages and services both tailored to the speciﬁc needs of our business customers during the
year o2 germany acquired a number of new highproﬁle customers including mtu aero engines tchibo
and christian dior partnerships with our longstanding customers such as bmw have been strengthened
for example we have equipped the world’s most modern automobile manufacturing plant – the bmw
production site in leipzig – with our o
2
genion campus solution
o2com   10
o2arpp006040qxd  6105  759 pm  page 10 o2 germany seeks to bring solutions to its customers rather than just transmission capacity to this end 
we have stepped up our cooperation agreements with around 20 partner companies including siemens
sbs unisys tobit software sun microsystems and extended systems to offer our business customers
mobile solutions in such areas as ﬁeld service control and mobile data security customers can use our 
o
2
xda the laptop card umtsgprs as well as blackberry
™
 among other platforms 
internationally our business customers beneﬁt from products and services for mobile communication in
more than 150 countries and the networks of over 300 roaming partners in our partner networks within
the starmap mobile alliance we are offering uniform and especially cost attractive conditions for mobile
work and telephony
revenues from mobile data products also grew strongly with nonsms text data usage making an
increasingly important contribution the volume of sms text messages sent during the year increased 
by 33 per cent and data as a proportion of service revenue rose from 195 per cent to 218 per cent in the
ﬁnancial year ended 31 march 2005 some 24 per cent of our customers now use nonsms data services
the launch of highspeed umts services in the current ﬁnancial year should add increasing momentum 
to our mobile data revenues o2 began its umts service in april 2004 offering a umts laptop card to its
business users and followed this with laptop and umts handset surﬁng for consumers in addition to
mobile internet access which offers download speeds of up to 384kbps o2 customers on umts have been
able to make video calls and make use of a broad range of video streams
in july 2004 we launched our ﬁrst umtsenabled tariff – o
2
active in a complementary way to o
2
genion 
o
2
active enables us to target highvalue customer groups attracted by o
2
active’s simplicity and value
formoney attributes minute bundles include calls to all networks ﬁxed line and voicemail at anytime 
and anywhere extra minutes always have the same price as well as the usual o
2
surfhome wap ﬂat rate
and o
2
music packs o
2
active customers can also book sms and voice packs including the o
2
afterwork
pack allowing unlimited calls in the evening to ﬁxed and other o2 numbers and the o
2
weekend pack with
a 1000 minute bundle
the high quality and appeal of our o
2
active portal service has already gained external recognition europe´s
best selling telecom magazine “connect” gave o
2
active two awards – from both readers and experts – as
the best mobile portal in germany – ahead of vodafone live and other competitors’ services in november 
2004 this advanced version of the o
2
active portal was also rolled out to most gprs phones – with a speed
option giving the users the choice of a faster version of that portal without losing any information our
strategy has been vindicated by the subsequent strong growth in the number of monthly portal users who
bring us higher trafﬁc and premium content income
market dynamics
the german mobile phone market grew by 9 per cent last year and market penetration rose to 83 per cent
in march 2005 compared with 76 per cent in march 2004 about 7 million customers were acquired during
the ﬁnancial year leading to about 73 million mobile connections there are currently four mobile network
operators in germany – tmobile vodafone eplus and o2 germany competitiveness in the german
market has increased as a result of high penetration levels and increasing market saturation during the 
year highspeed umts services were introduced by all operators based on combined gprsumts data 
cards and since christmas umts handsets
corporate responsibility
o2 continued its engagement with the german children and youth foundation and the schola21
project following the launch of a new internet platform in english o2 developed ﬂyers handbooks and
contacts to international networks and schools o2 began a schools competition in partnership with the
german olympic association with the topic “olympia – more than olympic games” we also supported
another goa project – “kinder bewegen” – that aims to improve the movement of children making
donations to ten “kindergartens” for a threeyear period o2 is supporting new learning software “polly
and fred” that enables schoolchildren to learn how to handle their handsets properly in a play environment
looking ahead
for the coming year o2 will adhere to its target of proﬁtable growth supported by the extension of 
sales channels including service providers and tchibo at cebit in march 2005 we launched an innovative
highspeed offering o
2
surfhome a service that directly complements o
2
genion using this innovative
umts data service o2 customers are able to connect to the internet from their homes at ﬁxed line rates
the combination of o
2
genion with o
2
surfhome enables complete ﬁxed line substitution and increase
customer value and loyalty innovative tariff models such as bundle tariffs or tariffs driving prepaidpostpaid
convergence eg prepaid topup vouchers will further help to increase cost control for the customer 
but also drive arpu for o2
there will be a renewed focus on customer retention due to slower market growth and high market churn
backed by further initiatives to improve the quality of our sales channels products and customer service our
customer segmentation strategy will aim to drive up customer satisfaction by meeting the expectations of
those asking for more simplicity on the one hand and the increasing number of customers starting to use
advanced data services on the other
in response to our success we have launched an initiative to enable us to operate as a sustainable business
in the medium term we are stepping up the rate of capital spending with the aim of becoming a full
network operator by extending and accelerating the rollout of our umts network and reducing national
roaming this will enhance the customer experience by delivering higher coverage and improved download
rates while at the same time reducing our operating costs we will seek more aggressive growth with new
products for example by extending our unique o
2
genion offering and continue to attract and retain high
value customers backed by superior quality at the point of sale and customer service we aim in the
medium term to match the proﬁtability of similarly positioned network operators in other markets
o2com   11
o2arpp006040qxd  6105  759 pm  page 11 business review continued
o2 ireland
operational performance
the focus for o2 ireland over the past year has been to excel in offering our customers the best possible
experience each and every time they interact with o2 this focus has meant a renewed effort in improving
all areas where we are in contact with our customers from a commitment to “walk out working” products
to a superior customer care service and an efﬁcient and customer friendly highstreet presence through 
o2 retail
throughout the ﬁnancial year ended 31 march 2005 o2 ireland has continued to improve its business
performance maintain current market share and build upon the strength of the o
2
brand
with regard to customer acquisition up to march 2005 o2 ireland had a particularly successful year we
announced the addition of 142000 net new customers to the o2 network representing a 10 per cent
increase from the same period the previous year this was largely driven by a very strong christmas period
with over 91000 new customers joining the o2 network ahead of our competitors’ performance in
addition to gaining new customers we also succeeded in retaining our customers despite a range of
competitive tariffs in the market and despite the ease of mobile portability changing networks without
changing one’s number
with blended arpu rising 1 per cent to €565 service revenue at constant exchange rates was
13 per cent higher at £556 million and ebitda was £223 million a 7 per cent increase with 
a margin of 381 per cent
bolstered by one of the most “iconic” advertising campaigns ever conducted in ireland network powered
ireland the o
2
brand has continued to strengthen apace in the third quarter of 2004 total spontaneous
awareness of the o
2
brand stood at 91 per cent we were pleased that the network powered campaign
was named best integrated campaign by marketing magazine
brand awareness was further supported by high level sponsorships and associations these included o2 
in the park the smurﬁt european open and our association with golf and rugby sporting stars such as
padraig harrington and brian o’driscoll respectively in the business arena last year saw joint initiatives 
with dublin chamber of commerce through our sponsorship of eweek to mark the accession of 15 new
member states to the european union and our ongoing support of regional chambers of commerce
around the country
driven by our focus on improving our customer experience o2 ireland continues to excel in customer
service customer care satisfaction scores improved throughout the ﬁnancial year ended 31 march 2005
and o2 retail excelled among its peers proven by high scores in mystery shop activity we communicated
the beneﬁts to our customers of certain services for example music through innovative new initiatives such
as the opening of the experience zone at dublin’s point theatre in september 2004
a signiﬁcant new development last year was the introduction of a new retail concept called o
2
experience
three o
2
experience stores were opened – two in dublin and one in cork – which give customers the
chance to view live demonstrations of all our products reaction to the stores has been very positive
we are constantly seeking to make life and business easier for both our consumer and business customers
to this end we introduced an exciting range of new products and services for business customers these
included the fujitsu siemens – o
2
work everywhere package o
2
instant and the o
2
connection manager
these products all of which are aimed at saving time and money have been well received in the business
and corporate markets our consumer customers beneﬁted from the introduction of reduced tariffs in 2004
and an exciting range of handsets and devices including the new blackberry
™

maintaining the highestquality network in order to maximise customer satisfaction remains a key focus 
of our business central to the success of our business is the maintenance and development of our 
gsm and umts networks which are rated among the best in the world last year we invested almost
€3million a week in our network infrastructure we continue to build our network in a cost efﬁcient 
and environmentally friendly way and continue where possible to share existing sites of other mobile
operators and utilities providers
we made progress in the building of our umts network now extending to over 35 per cent of the
population limited trials of our umts service began in mid2004 and plans are in place to bring commercial
umts services to ireland in mid2005 
market dynamics 
the irish market continues to be a highly challenging one for the mobile industry with penetration levels 
of mobile phones in the population now standing at over 90 per cent o2 ireland holds the second 
biggest share of the market with around 40 per cent 2004 saw continued momentum by meteor mobile
communications with further gains in market share 3 entered the market in january 2004 and has begun
to rollout its umts network meanwhile potential competitors in the telecommunications sector have
expressed an interest in the mobile market following the proposed measures by comreg the irish
communications regulator in december 2004 to encourage and allow mvnos to access the networks of
both o2 ireland and vodafone ireland
corporate responsibility 
2004 saw an expansion of our csr programme with the introduction of a range of exciting initiatives 
the o2 ability awards run in conjunction with the aisling foundation is the ﬁrst awards programme to
recognise irish businesses that demonstrate best practice in the employment of people with disabilities our
support of the o2 ability awards has associated o2 in a positive way with a topical issue that is currently
high on the irish social agenda
o2com   12
o2arpp006040qxd  6105  759 pm  page 12 o2 ireland has continued to acknowledge those of its employees who work with charities outside their
working days through our can do in the community awards these awards recognise the contribution
made by employees to their local communities or selected charities outside working hours
in june 2004 o2 working closely with the irish cellular industry association icia launched the ﬁrst 
ever irish code of practice for the responsible and secure use of mobile services the icia also published 
a parents’ guide and announced a joint industry trial on content ﬁltering led by o2 ireland
we are in our second year of sponsoring national tree week in conjunction with the tree council of ireland
and coillte the irish forestry board during national tree week in march 2004 over 300 events such as
forest walks talks and tree planting ceremonies took place
2004 saw the launch of our participation in the phonerecycling scheme fonebak
®
 that enables customers
to deposit their unused or broken mobile phones in recycle bins in all our o2 retail stores throughout
ireland the scheme also provides funding for environmental charities such as national tree council of
ireland and the international charity rainforest concern
looking ahead
o2 ireland will concentrate on maintaining a competitive edge in a highly competitive market and in a 
more onerous regulatory environment we will maintain our focus on putting the needs of our customers
ﬁrst and offering them a superior service while ensuring that our products and services meet their
requirements we will continue to drive demand for data services and to increase revenue from this 
part of our business building on the momentum gained in 2004
o2 ireland will be the ﬁrst and only mobile operator in ireland to bring a mobile internet service based on
the imode
®
capability to customers from autumn 2005 this will bring a completely new customer
experience to irish consumers in terms of higher quality and fast access to content and an exciting range of
handsets progress on our umts network continues and we are on target to bring commercial umts services
to the market later in 2005
along with maintaining and improving the customer experience we will aim to lift our operational
performance again building on last year’s success by meeting our growth targets for revenue ebidta 
and customer numbers
o2 airwave
operational performance
the airwave network was completed on time and on budget at the end of march 2005 the airwave
service with its commitment to making communities safer by providing communication where and when it
matters most has now been delivered to all 51 police forces in england scotland and wales and the british
transport police the network under the terms of a £29 billion 19year contract with the home ofﬁce
signed in 2000 has been built in fewer than ﬁve years during which some 3300 masts have been erected
and over 1 million miles of road driven to test the service it is arguably one of the most successful pfi
projects to date over 99 per cent of mainland great britain is now covered by the service with 100 per cent
population coverage
by the end of march 2005 o2 airwave had more than 100000 users double the level of a year previously
in addition to the police o2 airwave has won 38 new customers outside the main police information
technology organisation contract taking the total number of additional public service customers to 78 they
include the ministry of defence police the prison service british energy mersey regional ambulance
service harley street ambulance service raf cranwell police the highways agency the uk atomic energy
authority constabulary and norfolk local authority completion of the network rollout led to a near doubling
of revenues and with tight control of costs this led to an ebitda of £72 million compared with £1 million
in the previous year we invested a further £218 million in the network last year but with completion
achieved this ﬁgure will fall signiﬁcantly in the coming 12 months
airwave is a sophisticated fully encrypted digital radio system which cannot be scanned or monitored by
outsiders it allows the police to communicate seamlessly and securely throughout england scotland and
wales airwave’s multifunctional handsets combining a digital radio and mobile phone also operate 
as data terminals – enabling ofﬁcers in the ﬁeld to access local and national databases in addition airwave
provides a common platform for public safety users giving them true interoperability and comprehensive
geographical coverage using airwave police ofﬁcers from different forces can talk to one another or to
ofﬁcers from other emergency services whatever their location who can in turn communicate directly with
one another for the ﬁrst time airwave will allow effective and potentially lifesaving coordination of
rescue efforts by the emergency services the ability of networks to keep working in times of emergency is
critical the airwave response to incidents caused by bad weather like boscastle in cornwall in august 2004
and carlisle in cumbria in january 2005 proved the network’s innate resilience – the service kept going
when other communications networks failed and was used by all the emergency services dealing with these
major incidents
growth opportunities
the continued threat of terrorism the incidence of major accidents and heightened awareness of the impact
of natural disasters all demonstrate the increasing importance of secure and “joined up” communications in
both urban and more remote areas against this background there are signiﬁcant opportunities for growth
in the airwave service
the civil contingencies act 2004 is likely to have a signiﬁcant impact on all public safety organisations in their
need to comply with the new legislation as ﬁrst or second line responders and will present airwave with a
wider target audience we will also continue to market the service to other public safety users including the
utility companies the ministry of defence health organisations fire service cctv operators ports police
and other government organisations such as the department of works and pensions customs  excise the
inland revenue the immigration service the environment agency hm prisons and local authorities
o2com   13
o2arpp006040qxd  6105  759 pm  page 13 business review continued
mobile data represents a signiﬁcant opportunity for o2 airwave in december 2004 o2 airwave began the
lancashire police data trial with the lancashire constabulary the largest ever mobile data trial in the uk
involving 280 users using the o2 airwave mobile applications gateway lancashire police ofﬁcers are able
to gain secure continuous access to databases while on the move o2 airwave is uniquely placed to develop
its market through the expansion of relevant mobile data applications for the police and other public safety
customers currently 45 police forces have direct access from their handsets over the airwave network to
the police national computer allowing interrogation of vehicle registration and peoples’ names in seconds
scottish police forces also have access to the scottish criminal records ofﬁce
in the coming year we will be offering a portfolio of mobile data products and services for deployment in
our key markets helping to meet the demand for greater visibility of the police within communities our
portfolio will consist of a range of data devices to meet both invehicle and handheld needs it will include a
suite of mobile applications designed to reduce police bureaucracy and eliminate unnecessary paperwork –
both home ofﬁce priorities networkbased gateways that enable featurerich applications will be backed by
the touchstones of unmatched technology and customer service for which o2 airwave is renowned much
of this portfolio of services has been developed from the successful experience gained from working with
trial customers such as the lancashire police force
in the case of ambulance and fire services much of their daytoday work makes use of mobile data
capabilities to deliver information to where it is needed the most hereford  worcester ambulance trust
has been using a patient telemetry service over the airwave network since may 2002 patients’ vital data can
be monitored by ambulance crews and transmitted over the airwave network directly to hospital accident 
emergency units enabling lifesaving treatment to begin at the scene of an incident for example the use of
clotremoving drugs which dramatically improve the chances of survival and recovery every minute saved in
the treatment of heart attack patients adds about 11 days to life expectancy one hundred interventions
were made by hereford and worcester ambulance trust using the airwave service in the ﬁrst six months of
service leading to patients’ lives being saved and extended
airwave need not be restricted to great britain opportunities also exist to repeat our success overseas any
venture whether approached directly or with partners would however be carefully assessed for viability
and would have to ﬁt with o2 airwave’s strategy before it went ahead
corporate responsibility
o2 airwave assesses its responsibility to its customers against key performance indicators created by those
customers which we strive to meet or exceed we have also established a reporting structure to conform
with key indices developed by the group in areas including the environment waste management employee
satisfaction and treatment of our supply chain in november 2004 we achieved our key target of complying
with the iso 14001 international standard for environmental management in may 2004 o2 airwave
participated in the corporate responsibility audit carried out by ernst  young
o2 airwave seeks to be an active participant in the community as part of our community involvement
programme we have sponsored two police dogs the lancashire fire and rescue safety help line a
sportsmobile project with bolton lads and girls club an airwave charity golf day middlesbrough under
14s rugby club and an antibullying campaign run by south wales police money has also been raised for 
a variety of good causes ranging from milly’s fund to the tsunami appeal in september 2004 an o2
airwave team climbed england’s highest mountain and rowed england’s longest lake in under 12 hours
raising £15000 for a mini for milly’s fund o2 airwave will continue to provide a secondee to the london
resilience team set up to ensure london and the regions keep working at times of disaster
looking ahead
increasing government funding into crime prevention detection and improving public safety is leading to
increased police numbers and a greater reliance on new technology as services such as ambulance and fire
modernise and replace existing technology all these developments provide opportunities for o2 airwave to
deliver new services and allow safety organisations to improve their services to the public
as emergency services customers start to take up mobile data there is likely to be increased competition in
the mobile data market from the traditional mobile operators as well as niche players however we believe 
o2 airwave is well placed to penetrate the mobile data market with our unique proposition based on the
airwave network and the mobile applications gateway mag the mag delivers fast access to numerous
databases and the intelligence to link these together providing safety ofﬁcers with on the job remote access
to critical information o2 airwave will become a true data solutions provider offering a unique range of
mobile data services to the customers it serves
the priorities for o2 airwave going forward are to grow the business by meeting the needs of existing and 
new customers through developing propositions that improve the safety of the nation we will enhance 
our service to customers through the way we manage them on a daily basis and ensure that we deliver
benchmark standards for our network and service we will invest in our operational support systems and 
the capabilities of our people to strengthen our business as we grow
manx telecom
operational performances
manx telecom is a wholly owned subsidiary of o2 on the isle of man holding licences to run ﬁxed and
mobile telephony and internet services manx telecom is an isp in its own right with a portfolio of quality
internet access and hosting products and services
because of its successful track record as the ﬁrst company in europe to launch a live umts service back in
december 2001 manx telecom was chosen by o2 to run europe’s ﬁrst superfast 3g trial in partnership
with lucent technologies using hsdpa technology hsdpa offers the possibility of communication speeds
up to three times faster than current commercial umts services
o2com   14
o2arpp006040qxd  6105  759 pm  page 14 the installation of a prepay intelligent network in platform in november 2004 is enabling the company to
offer a range of new services to its prepay mobile customers mms on prepay was launched in december
2004 wap and full web access over gprs was made available to prepay customers in march 2005 and
the launch of outbound prepay roaming is planned for early in the next financial year the average number
of sms texts sent per month increased to over 35 million by 31 march 2005
on 1 march 2005 manx telecom introduced the ﬁrst in a series of planned new tariff packages for its
ﬁxed line customers called choice the new tariff offers free calls to local ﬁxed line phones at evenings 
and weekends plus a 30 per cent reduction in local daytime call charges for a monthly line rental charge 
of £1300
manx telecom has continued with its major investment programme to make broadband available to as 
many customers on the isle of man as possible the installation of a number of “mini dslam” sites in more
remote areas around the island has increased coverage to around 99 per cent of local homes and businesses
and takeup is currently around 19 per cent
work is well under way on a major contract announced last year to design supply implement and 
support in partnership with dimension data a new islandwide network infrastructure for the isle of man
government a requirement of this contract was that manx telecom should become certiﬁed to bs7799
security standard and the company became the ﬁrst company on the isle of man to achieve this in
december 2004
capital spending during the year was £10 million compared with £9 million in the previous ﬁnancial 
year we constantly monitor how well we are performing in the view of our customers regular surveys
throughout the year measuring customer satisfaction showed that 85 per cent of customers were “very
satisﬁed” with the service they had received
market dynamics 
manx telecom is the only provider of mobile and ﬁxed telephony on the island
corporate responsibility
manx telecom in association with the isle of man government has provided a number of wireless wifi
hotspots at key locations around the island including at isle of man airport as part of the isle of man
government’s eisland strategy to encourage the use of internet technology on the island internet access 
at these sites is being provided free to users for the first year
in december 2004 manx telecom completed its certiﬁcation to iso 14001 the international standard for
environmental management
manx telecom continues to sponsor the manx telecomputer bus and a number of other local charities
organisations and events especially those involving young people information technology and sport 
these include the road to wimbledon junior tennis tournament the isle of man junior cricket team tour 
of holland a junior cricket coaching programme and a local cycling time trial league the company also
provided mobile phone equipment for a new college course relating to mobile technology for students with
learning difﬁculties 
looking ahead 
we are looking forward to offering our customers the chance to trial the new superfast 3g services which
will make available exciting new videobased applications and services we will also continue our active
support of the isle of man government in offering a worldclass telecommunications infrastructure to help
attract new companies and inward investment to the island in support of the island’s ebusiness strategy
regulation
we conduct most of our business in the united kingdom germany ireland and the isle of man we are
therefore subject to national regulation in each of those countries as well as european unionwide regulation 
regulation in the eu
regulation in the eu is governed by the eu regulatory framework for the electronic communications sector
the eu framework the eu framework comprises four principal directives amongst other things the
directives set out policy objectives and regulatory principles that national regulatory authorities nras must
follow they provide for a new authorisation system for companies which provide electronic communications
networks and services contain measures to ensure the universal provision of basic services to consumers
and set out the terms on which providers may access each other’s networks and services importantly 
the eu framework also harmonises the rules for deciding when regulation may be imposed on electronic
communications providers in particular it provides that electronic communications providers can usually only
be subject to speciﬁc regulation in markets in which they have smp smp  for these purposes is aligned to
the competition law concept of dominance which essentially means an ability to act independently of
customers suppliers and competitors 
the european commission the commission identiﬁed in a recommendation published in february 2003 a 
list of markets which may be such as to justify the application of speciﬁc regulation the recommendation
the recommendation includes the following mobile markets i access and call origination on public mobile
telephone networks ii voice call termination on individual mobile networks and iii wholesale national
market for international roaming on public mobile networks 
nras must conduct market reviews in order to determine whether any companies have smp in any of the
markets identiﬁed in the recommendation nras may also with the commission’s consent review markets
that are not listed in the recommendation where a company is found to have smp in any market the
regulator must impose one or more of the following smp conditions on it transparency nondiscrimination
o2com   15
o2arpp006040qxd  6105  759 pm  page 15 business review continued
accounting separation access price control and cost accounting in exceptional circumstances a regulator
may impose additional or alternative obligations but these have to be approved by the commission if a
company is found not to have smp in a market then smp conditions cannot be imposed on it and existing
regulation must be removed
regulation in the united kingdom
implementation of the new eu regulatory framework
the eu framework was implemented in the uk by the communications act 2003 communications act on
25 july 2003 under the communications act responsibility for the regulation of electronic communications
networks and services lies with the ofﬁce of communications ofcom
market reviews
in the uk the regulator concluded in november 2003 that no mobile network operator either individually
or jointly had smp in the market for access and call origination on public mobile telephone networks 
this meant that various regulatory obligations which had previously been imposed on us and vodafone 
were lifted 
in june 2004 ofcom completed its review of voice call termination on individual mobile networks as a
result of that review ofcom concluded that the charges we made to other operators for terminating calls on
our network call termination had to be cut from 1 september 2004 ofcom required us to lower our call
termination charges from an average of 803 pence per minute to an average of 563 pence per minute
ofcom recently indicated its intention to apply the charge control until march 2007 and to conduct a wide
ranging review of voice call termination regulation with a view to determining the regulatory regime with
effect from april 2007
ofcom has also commenced a review of the wholesale international roaming market in the uk this review
is being coordinated with a number of regulators in other eea member states all of which sent
questionnaires to operators in their respective countries in december 2004 on conclusion of the review
regulators will decide whether it is necessary to regulate wholesale roaming
national roaming
o2 uk and vodafone are subject to an obligation to negotiate a national roaming agreement with the new
entrant mobile network operator 3 the national roaming condition in accordance with this obligation
we entered into an agreement with 3 to permit it to use our second generation network to originate and
terminate calls to and from its subscribers while it builds its own umts network on 22 december 2004 
3 invited mobile operators to tender for the supply of second generation roaming services to 3 when the
exclusivity period in their agreement with o2 expires although ofcom proposed discontinuing the national
roaming condition in july 2004 its decision on this issue has been postponed pending the outcome of 3’s
tendering exercise
regulation in germany 
the eu framework was implemented in germany at the end of june 2004 by the telecommunication 
act tkg responsibility for regulation of electronic communications networks and services lies with the
telecommunications regulator regtp 
regtp is currently reviewing the three relevant mobile markets access and call origination voice call
termination and wholesale international roaming and is not expected to conclude these reviews before the
second quarter of 2005 as part of its review of voice call termination regtp has reached the preliminary
conclusion that all mobile operators have smp in the market for call termination on their own networks
regtp is currently consulting with third parties on this preliminary position
during the fourth quarter of 2004 we agreed with the german ﬁxed network operator tcom to reduce
our wholesale termination charges in germany however at the end of 2004 a ﬁxed operator known as
“01051 ” asked us to offer them a lower termination charge the matter was referred to regtp  which
approved our german termination charges 01051 has appealed regtp’s decision
regulation in ireland
the eu framework was implemented into irish law on 25 july 2003 responsibility for regulation of the
communications industry in ireland lies with a threeperson regulatory body known as the commission for
communications regulation comreg
following its market review on 22 february 2005 comreg issued a decision designating us and vodafone
with smp in the wholesale mobile access and call origination market in ireland
on 9 december 2004 comreg also issued a consultation on appropriate remedies in the wholesale mobile
access and call origination market it proposed to place obligations on us and vodafone to provide access 
to our networks on reasonable request and not to withdraw access services already provided such as the
national roaming services provided by o2 ireland to meteor as well as certain nondiscrimination cost
orientation accounting separation and cost accounting obligations comreg proposes to issue a further
consultation on the detailed draft measures relating to price control and cost accounting issues  
on 21 march 2005 we notiﬁed the minister for communications marine and natural resources and
comreg of our intention to appeal comreg’s smp decision we expect the minister to convene an appeal
panel which must endeavour to determine the appeal within four months 
in july 2003 we agreed with comreg to reduce mobile termination rates by retail price index minus 
8 per cent per annum for the period 31 august 2003 to 31 august 2005 in 2004 comreg found that 
all four mobile operators in ireland have smp on the market for call termination on their own networks 
this decision has been appealed by 3 to the national appeal panel which has yet to reach a decision on 
the matter comreg has yet to publish its decision on the remedies to be imposed
o2com   16
o2arpp006040qxd  6105  759 pm  page 16 comreg has also commenced its review of the national market for wholesale international roaming this
review is being coordinated with a number of regulators in other eea member states including ofcom in
the uk on conclusion of the review regulators will decide whether it is necessary to regulate national
markets for wholesale international roaming
regulation in the isle of man 
the isle of man is a selfgoverning crown dependency with its own parliament and is not part of the united
kingdom or the eu accordingly manx legislation and regulations predominantly govern our operations in
the isle of man
on 1 january 2004 our new licence extension awarded by the isle of man government for 15 years came
into force 
competition law
eu competition law
we are subject to the general competition law of the eu and in particular articles 81 and 82 of the ec
treaty article 81 and article 82 which prohibit anticompetitive agreements or concerted practices and the
abuse of a dominant position respectively where there is an effect on trade between eu member states 
eu competition law is enforced by the commission and since 1 may 2004 has also been enforced by
national competition authorities and national courts companies which breach eu competition law can be
subjected to ﬁnes of up to 10 per cent of a group’s worldwide annual turnover they may also be sued in
national courts by third parties which suffer loss as a result of the breach
we are also subject to the national competition law of the countries in which we operate in the uk
germany and ireland national competition law broadly mirrors the provisions of eu competition law
prohibiting anticompetitive agreements or concerted practices and the abuse of a dominant position
international roaming charges
the commission has been investigating the price of wholesale international mobile roaming services in the
uk and germany in the context of this investigation on 26 july 2004 the commission sent us and
vodafone two separate “statements of objections” in the uk the statements of objections allege that our
wholesale international roaming charges were excessive from 1998 until september 2003 and that this
amounted to an infringement of article 82 however the commission has not yet reached a ﬁnal decision
on whether there was an infringement o2 is currently responding to the statement of objections
infrastructure sharing and national roaming
we have a umts infrastructuresharing and national roaming agreement with tmobile in germany the
agreement was formally notiﬁed to the commission for negative clearance or exemption under article 81
and cleared by decision of 16 july 2003
the commission took the view that the infrastructure sharing aspects of the agreements did not restrict
competition national roaming on the other hand was considered restrictive of competition but was
granted exemption from article 81 for certain speciﬁed time periods we lodged an appeal with the
european court of first instance on 25 september 2003 
we also have a 2g national roaming agreement with tmobile in germany the german competition
authority indicated in august 1999 that national roaming agreements may infringe competition laws 
but that in the case of our agreement with tmobile this was unlikely to be the case at that time 
however it reserved the right to review this position 
key markets
europe includes some of the most advanced markets for mobile services in the world these markets are
characterised by relatively high mobile penetration rates and high gdp per capita across western europe
the proportion of total voice trafﬁc carried over mobile rather than ﬁxedline networks continues to increase
these markets are also seeing an increasing proportion of mobile revenues attributable to mobile data services
and we expect this trend to continue
our mobile businesses cover two of the largest markets in europe with the uk and german markets giving
us access to a total population of approximately 148 million people all our markets have seen growth over
the last few years in the number of mobile telephone users in large part reﬂecting strong demand for
competitively priced prepay offerings our markets are seeing the emergence of additional wholesale
opportunities for network operators through wholesale agreements network operators are able to sell
capacity and services on a large scale to other service providers and mobile virtual network operators
historically the number of customer connections to mobile telephone networks in the markets where we
are present has been greater during the second half of the ﬁnancial year than during the ﬁrst half primarily
due to increased sales during the christmas period see “operating and ﬁnancial review and prospects –
factors affecting our business”
o2com   17
o2arpp006040qxd  6105  759 pm  page 17 business review continued
the table below presents selected data regarding the principal countries in europe in which our businesses
operate
active mobile
1
customers’ o2
penetration customers
at 31 march at 31 march
population
1
2005 2005
country in millions per cent in 000’s
germany 84 83 7976
united kingdom 60 103 14384
ireland 497 1533
total 148 23893
1
source emc worldwide cellular database may 2005
note the number of customers shown in the table above is equivalent to the number of active sim cards hence where some people
have more than one active sim card it is possible for penetration to exceed 100 per cent
employees
the group had the full time equivalent of 14914 employees at 31 march 2005 as set forth by country in
the table below
country number of employees
united kingdom 9141
germany 3919
ireland 1577
isle of man 277
total 14914
for the year ended 31 march 2005 the aggregate number of temporary staff employed by our businesses
was 1686
in the united kingdom a number of our employees are represented by two recognised unions connect
which has representation rights in respect of junior management employees and the communications
workers union which has representation rights in respect of clerical engineering and technical employees
membership of these unions is individual and voluntary in addition a nonunionised employee
representative body represents certain managers our other operating businesses also meet with their
employee representative bodies or works councils regularly we believe that our businesses have a good
relationship with our employees and their representatives
network and service platform technology
transforming our networks to mobile broadband has continued with the build out of umts across the uk
germany and ireland to give data speeds up to 384kbps this is being extended into the isle of man later
this year lucent core  radio with an upgraded umts deployment that will incorporate hsdpa technology
with customer speeds up to 1mbps and ims internet protocol multimedia services that provides richer
services as this is rolled out to all our customers it will enable them to quickly and easily download dvd
quality ﬁlm clips audio and video interactive multiplayer games multimedia music tracks “pushtowatch”
services as well as access large email attachments – three times faster than today’s commercial umts
networks these speeds have already been extended this year by giving access to our customers to public
wlans in transit areas this has been added to in germany with o
2
surfhome to give home internet access
via our umts network all these enhanced capabilities require an easytouse customer experience for the
ever increasing array of internet services therefore we are adding japan’s successful ntt docomo imode
®
technology to give superior performance from a tightly speciﬁed device to network service this will be
launched in uk and ireland second half of 2005 and under our own brand in germany next year 
information technology
the information technology deployed in the group is critical to the efﬁcient and effective operation of the
businesses the focus for each business has been to
• continually raise the standard of our service to our customers and the processes within our organisation
• maintain tight cost controls
• exploit investment in new systems with development aimed at increasing our agility and
• work together to leverage crossgroup beneﬁts
it systems are fundamental to the delivery of high standards of service to our customers in our shops in
billing in customer care and in use of our services it remains a priority to ensure these systems operate
effectively and there have been a number of initiatives to ensure they perform as well as the best in the
industry additionally improvements in internal processes and reporting are being strengthened through the
group’s compliance with the sarbanesoxley act of 2002
while we have ensured that our it costs are competitive within the industry increased competition within
our geography is driving tighter controls and greater effectiveness recent strategic investments are now
onstream and are being exploited investment in new systems will continue where this is required to
support our business priorities
the it community from each of the operating businesses has continued to work together where beneﬁts
have been clearly identiﬁed this has enabled us to improve our common infrastructure use common
products and to deploy groupwide systems where a common approach is required additional framework
contracts with key suppliers have been agreed including hp  sun and oracle
o2com   18
o2arpp006040qxd  6105  759 pm  page 18 looking ahead our businesses have major it projects to underpin the business strategy these include
initiatives to improve our agility and timetomarket which are expected to impact the coming year 
and projects to further enhance billing and care and to ensure a consistently highquality endtoend
customer experience 
intellectual property
we have actively taken steps to protect our brand including the acquisition of core trade mark registrations
for the o
2
brand and related brand materials in addition we have other pending trade mark applications in
ancillary classes in the uk the european community and other countries worldwide
in the last year we have also strengthened the monitoring procedures in respect of the use of our brand and
have increased the amount of enforcement action we take in response to infringement
the steps we are taking to protect our brand include litigation and we are currently pursuing two signiﬁcant
trade mark infringement actions through the courts one in the uk for infringement of our “bubble”
imagery and one in europe for infringement of “o
2
”
insurance
we maintain the types and amounts of insurance customary in the industries and countries in which our
group operates including coverage for employeerelated accidents and injuries and property damage 
we consider our insurance coverage and that of our operating businesses to be adequate both as to the
nature of the risks covered and amounts insured for the business conducted by us
mobile communications are an everyday part of people’s lives offering exciting new ways to keep in touch
both socially and in business we focus on ﬁnding new ways to reward customer loyalty and go to great
lengths to understand their individual needs and concerns to achieve this we recognise that customers
sometimes have contrasting attitudes to their mobile phone they may see it as a vital accessory to their
lives but also have concerns about the technology and the way we behave as a company we are engaging
with a wide variety of interest groups to understand better what is expected from our business our aim is
to match our market offering with responsible and accountable policies and bring the beneﬁts of mobile
communications to society at large
we are determined to take full account of the social environmental and ethical see impacts of 
our business we approach this as a daily challenge requiring processes measurement and stretching
performance targets our key see risks are covered in this section of the report and in more detail in 
our separate corporate responsibility report
our corporate responsibility achievements have received wide external recognition we are represented in
the main sustainability indices and funds the dow jones sustainability indexes the business in the
community corporate responsibility index as the highest scoring mobile operator the ftse4good index
and as members of the ethibel investment and sustainability registers during 200405 we received the
association of chartered and certiﬁed accountants’ sustainability reporting commendation for “innovative
reporting” the charities aid foundation “corporates and communities awards for online csr reporting”
and the european strategic risk management award for “best csr programme of the year”
governance and management of corporate responsibility issues
to cope with constant change requires a commitment to risk management and we use it to identify
measure and control uncertain future events that could threaten the assets revenue brand reputation or
shareholder value of the company
we adhere to the disclosure guidelines on social responsibility set out by the association of british insurers
to manage the signiﬁcant see risks that may affect us we manage these risks by assessing their potential
impact likelihood and our appetite to manage them and develop strategies to mitigate them we update 
a groupwide risk register every month with the key risks we face supported by separate registers in each 
of our operating businesses the combined code turnbull guidance section guides our risk management
policy and procedures controls are scrutinised as part of a cyclical riskbased audit approach overseen by
our audit committee
our corporate responsibility activities are managed by fulltime practitioners in each of our operating
businesses their work is coordinated through the monthly corporate responsibility forum – chaired by
corporate affairs director richard poston signiﬁcant issues are reported to our executive committee at least
every six months and through quarterly corporate responsibility updates an executive director or senior
o2com   19
corporate responsibility
o2arpp006040qxd  6105  759 pm  page 19 corporate responsibility continued
manager champions each key see aspect and reports regularly to the group board their remuneration is
partly linked to their success in meeting key see objectives 
in 200405 the board was briefed on a range of see issues through sixmonthly corporate responsibility
reports as well as through speciﬁc reports on issues including community investment health and safety 
mast siting privacy adult content child protection environmental management diversity and general
employment issues a summary report on our conﬁdential help facility – set up to enable our employees 
to report ethical concerns in conﬁdence – was also presented at each audit committee meeting
our environmental and health and safety practices are monitored through third party audits carried out by
certiﬁcation agencies for our iso14001 and ohsas 18001 registrations an external party assesses all see
risks and this newly established risk review underpins our insurance arrangements uk compliance to the
industryagreed ten commitments on responsible mast siting is independently reviewed by deloitte 
touche on behalf of the mobile operators association assurance for our separate corporate responsibility
report is provided by ernst  young 
business principles
we have developed our own set of business principles which dictate the high standards of behaviour we set
ourselves as a company everyone within o2 is made aware of our business principles and encouraged to
take responsibility for living by them in their work uptake of mandatory training has increased in this area
during the year we issued a new compliance leaﬂet to our employees they are encouraged to report any
potential breaches of our principles in conﬁdence and we maintain a register of any concerns
marketplace
new mobile services and devices are transforming the way we live and interact but the technology poses
some important social challenges crucial among these is the protection of children and ethical sourcing
we have proactively raised awareness about child protection and helped develop industry codes of practice
on the responsible use of mobile services we do not market mobile phones to under16s we monitor our
chat rooms and offer call barring and age veriﬁcation processes to ensure proper controls we have
published a series of consumer leaﬂets on the safe and responsible use of mobile services we have also
taken part in the “prison me no way” awareness workshops in schools in the uk and have helped fund and
develop a module on the responsible use of mobiles to be included in the german curriculum o2 ireland
led europe’s ﬁrst trial in conjunction with the irish mobile industry to test the capability of software for
ﬁltering mobile camera phone images and offensive websites
we undertook our ﬁrst supplier audits in 200405 to assess ethical practices in our supply chain we
encourage our suppliers to adopt highlevel working practices and materials sourcing and refer to our
business principles in all groupwide contracts we are working through the global esustainability initiative
to establish a common framework for supplier audits and to promote ethical practices across the industry
health
although research has found no evidence of health risks from mobile technology operating below the
scientiﬁcally based exposure guidelines we respond to public concerns about handsets masts 
and cell sites o2 is committed to funding independent research in this area and helps to fund the joint 
uk industrygovernment mobile telecommunications and health research programme and the german
deutsches mobilfunk forschungsprogramm as well as contributes to the world health organisation’s
international emf project on radio frequency emissions we participate in and help fund a number of
industry groups including the uk mobile operators association moa and gsm europe gsme within
which we are chairing the health and environment working group the moa champions the ten
commitments on responsible mast siting o2 airwave and o2 uk are working openly to meet these 
our other operating companies have committed to comply with similar guidelines by gsme
we have restated our commitment to providing health and safety information to the public and published 
a new o2 advisory leaﬂet on these issues available in o2 stores and online on wwwo2comcr
environment and sustainability
the direct environmental impact of our business activities is relatively small but environmental protection is a
critical element of our operations we have set targets for each area of potential impact which we describe
in our separate corporate responsibility report 
our participation in the fonebak
®
initiative enables the recovery and recycling of mobile phones in the uk
ireland and the isle of man through our ofﬁces retail and online outlets since its launch in 2002 we have
recovered nearly 170000 phones and a growing number of corporate customers are now involved in
germany we use a similar scheme by greener solutions
during 200405 all of our operating businesses achieved registration to the international environmental
standard iso14001 a ﬁrst in our industry we continue to review and control our environmental
performance through the o2 environmental forum during 200405 our energy consumption reached
239359 tonnes of co
2
 we initiated a number of programmes reducing our carbon footprint and establishing
alternative power sources these initiatives are important to help us minimise our increasing energy
consumption following the uptake of 3g services by the end of march 2005 we were procuring 17 per
cent of our electricity from renewable sources we have reduced our waste to landﬁll by recycling and
segregating our waste streams and established a new measure for reusing and recycling it equipment 
we support a number of biodiversity projects including the work of our charity partners rainforest concern
and the national tree council of ireland and by establishing conservation areas around our ofﬁce facilities 
in germany
workplace
we nurture a highperformance workplace culture in which diverse people can thrive offering competitive
rewards opportunities for personal development a modern working environment and ﬂexible working
arrangements
o2com   20
o2arpp006040qxd  6105  759 pm  page 20 the united nations universal declaration of human rights and international labour organisation
declarations continue to guide our employment policies the wellbeing of our employees is safeguarded 
by our groupwide health and safety strategy promoted by our group health safety and environmental
champion peter richardson o2 airwave managing director 
the executive committee has endorsed an action plan to meet our aspirations for diversity and inclusion
across o2 in the uk we are working with the employers’ forum on disability the two ticks scheme and
remploy for the employment of disabled people o2 ireland sponsored the ﬁrst ever o2 ability awards
which promote the recruitment and employment of people with disabilities reﬂect o2 continues as a
channel for employee feedback and assessment of engagement levels throughout o2 79 per cent of our
employees took part in the latest survey on how people view their leaders the way they are managed the
o2 spirit and o2’s customer focus
we negotiate with employees through trade unions works councils or representative bodies we continue
to give some of our people limited paid time off to fulﬁl community roles such as business mentors school
governors and special constables during the year o2 uk won one of the guardian newspaper’s good
employer awards o2 ireland won the best company to work for with over 1000 employees award by
the great place to work institute and ranked in the top five places to work in europe o2 germany was
eleventh in the great place to work ranking published by business magazine capital
community
investment in the communities we serve is an essential part of our approach to corporate responsibility 
in 200405 we made cash donations worth £22 million to our chosen charities and community projects 
of which £636266 was made from ukbased companies in 2004 we held the inaugural o2 community 
awards to recognise people across the business who give their time and ideas to charity 
our “can do giving” giveasyouearn scheme continues to grow can do matching is our scheme to top
up employee charitable fund raising
community investment activities are devolved to our operating businesses last year we established a
mentoring partnership with weston spirit in the uk in germany we worked with schola21 and the
german olympic association o2 ireland engaged in a number of initiatives including the city youth and
technology project in dublin manx telecom helped employees raise funds for a new hospice while o2
airwave supported the lookalive road safety programme
further information can be found online in our independently veriﬁed corporate responsibility report at
wwwo2comcrreport05 or on request from the o2 plc corporate responsibility function cro2com
this commentary discusses and is based on the audited consolidated ﬁnancial statements of the group
prepared in accordance with uk generally accepted accounting principles uk gaap included on pages 66
to 89 this commentary should be read in conjunction with those ﬁnancial statements
deﬁnitions of the nonﬁnancial operating metrics including arpu churn subscriber acquisition costs 
sacs prepay customers and postpay customers used in this commentary can be found in the non
ﬁnancial metrics section on page 90 of this document
composition of our group
throughout the year we provided voice and data mobile communications services and products in the
united kingdom germany and ireland through our whollyowned mobile businesses o2 uk o2 germany
and o2 ireland respectively we also supplied ﬁxed and mobile communications services in the isle of man
through our whollyowned subsidiary manx telecom and we operate a secure national digital radio service
for the police forces of england scotland and wales through our o2 airwave business
all our businesses have been included throughout the periods covered by the consolidated ﬁnancial
statements with the exception of o2 netherlands which was included up to 3 june 2003 the date at which
our disposal of this business completed and control passed to the purchaser o2 online our internet portal
business was operated as a separate legal entity until 1 april 2004 when the main business of o2 online
was subsumed into the operations of o2 uk
capital reorganisation
merger accounting
o2 plc was incorporated on 10 december 2004 as part of the capital reorganisation described in note 19
to the ﬁnancial statements the purpose of the capital reorganisation was to create distributable reserves in
o2 plc to allow the implementation of the group’s distribution policy these ﬁnancial statements are o2 plc’s
ﬁrst company and consolidated ﬁnancial statements
on 14 march 2005 o2 plc was introduced as the new holding company of the mmo2 plc group pursuant
to a scheme of arrangement the scheme under section 425 of the companies act 1985 whereby o2 plc
issued shares in return for the existing shares in mmo2 plc shareholders were also offered the opportunity
to realise for cash their shareholding in mmo2 plc in a cost effective manner
the directors consider that in substance the scheme constituted two distinct transactions being ﬁrstly the
insertion of the new holding company o2 plc and secondly a placing of shares on behalf of certain
shareholders who elected to receive the consideration for their shares in mmo2 plc in cash the insertion of
a new holding company constitutes a group reconstruction as deﬁned by financial reporting standard frs
6 “acquisitions and mergers” and has been accounted for using merger accounting principles the premium
paid to shareholders who elected to receive their consideration in cash has been recognised as a deduction
from the group proﬁt and loss account reserve
o2com   21
operating and ﬁnancial review and prospects
o2arpp006040qxd  6105  759 pm  page 21 o2com   22
the consolidated financial statements for the year ended 31 march 2005 comprise the results of o2 plc
from incorporation to 31 march 2005 together with the results of the o2 group from the 14 march 2005 
to the end of the ﬁnancial year and the results of the mmo2 group from 1 april 2004 to 13 march 2005
the comparative information presented is as previously published for the mmo2 group except where
otherwise stated 
o2 plc purchased mmo2 plc for share consideration certain mmo2 shareholders holding 299500644
ordinary shares of mmo2 plc elected to receive the consideration for their shares in mmo2 in cash all
other shareholders holding 8403362095 ordinary shares of 01 pence each in mmo2 received the same
number of new ordinary shares of 80 pence each in the company as they previously held in mmo2 in order
to fund the cash consideration the company issued and allotted 299500644 ordinary shares in the
company via a placement with investors on the london stock exchange’s market for listed securities on
17 march 2005 this placement raised £374375805 the remaining cash consideration of £14975032
representing a premium of ﬁve pence per share owing to shareholders electing to receive the cash was
funded by the group
the board of mmo2 also reviewed the us listing and the associated adr programme which is a legacy 
of the demerger from bt as part of the reorganisation mmo2’s adrs were delisted from the new york stock
exchange at the time that the scheme became effective and o2 plc has not established an equivalent adr
programme nor a us listing for the new shares in o2 plc the board has also reviewed the consequences of
continued sec registration although the timing of any application to deregister has not yet been determined 
by the board 
factors affecting our business
certain key factors affecting our results of operations in the three years ended 31 march 2005 are discussed
below
the mobile telecommunications market
the western european mobile telecommunications market has high penetration rates and is highly 
competitive as a consequence we focus on customer retention and on generating increased usage from
existing customers through both voice services and data applications we also focus on acquiring higher
spending contract customers and sacs for certain customers in particular high value postpay customers
may increase
prepay products
prepay customers pay in advance for their usage and comprise the majority of our customer base across
the group our prepay customers account for 66 per cent of our customers in the united kingdom 45 per
cent in germany and 74 per cent in ireland 
in each of our mobile telecommunications businesses on average prepay customers spend less than post
pay customers nonetheless prepay services offer us several signiﬁcant advantages including lower sac
higher average per minute charges reduced credit risk and lower administrative costs however lower
average outgoing usage minutes for prepay customers results in lower arpu as our arpu from prepay
customers is lower than for postpay customers to maintain proﬁtability we give lower handset discounts to
prepay customers in line with general industry practice
seasonality
historically the number of new customer connections to mobile telephone networks in the markets where
we are present has been greater during the second half of the ﬁnancial year than during the ﬁrst half
primarily owing to increased sales during the christmas period therefore our revenues from equipment
sales and connection charges and the aggregate costs of customer equipment and dealer commissions and
our other related costs of sales have been greater during the second half of the ﬁnancial year than during
the ﬁrst half however this trend may not continue and it is difﬁcult to predict the seasonality of customer
connections in the future
impact of regulation
our businesses operate in highly regulated markets and governmental regulation frequently limits the
revenue we may receive from certain sources the regulatory climate in the territories in which our
businesses operate is discussed in the regulation section of our business review
foreign currency translation
the company publishes its group ﬁnancial statements in sterling £ the subsidiaries in germany and
ireland report their results and ﬁnancial position in euros € consequently ﬂuctuations in the value of
sterling against the euro affect the amount at which these items are reported in the company’s group
ﬁnancial statements even if their value has not changed in their original currency
critical accounting policies
our consolidated ﬁnancial statements are prepared in accordance with accounting principles that are
generally accepted in the uk as part of these reporting guidelines management are required to identify 
and disclose the accounting policies relating to all aspects of the results and ﬁnancial position of our group
used in preparing the ﬁnancial statements the preparation of consolidated ﬁnancial statements requires 
management to make estimates and judgements that affect the reported amounts of assets liabilities
revenues and expenses as well as the disclosure of certain contingent assets and liabilities the accounting
policies used in preparing our group’s ﬁnancial statements for the year ended 31 march 2005 are disclosed
in note 1 of those ﬁnancial statements
the following accounting policies are considered to be critical to the understanding of the consolidated
ﬁnancial statements these policies have the potential to have a signiﬁcant impact on the group’s ﬁnancial
statements either because of the signiﬁcance of the ﬁnancial statement item to which they relate or
because they require a high degree of judgement and estimation owing to the uncertainty involved in
measuring at a speciﬁc point in time events that are continuous in nature 
operating and ﬁnancial review and prospects continued
o2arpp006040qxd  6105  759 pm  page 22 tangible and intangible ﬁxed assets
we estimate the useful lives of tangible assets goodwill and other intangible assets in order to determine
the amount of depreciation and amortisation to be charged in any reporting period these useful lives are
estimated at the time the asset is acquired and are based on historical experience with similar assets as well
as taking into account future anticipated events affecting their life changes in technology or changes in the
group’s intended use of these assets may cause the estimated life or the value of these assets to change
we perform a review of the estimated useful life residual value and depreciation method for each category of
tangible ﬁxed assets being land and buildings plant and equipment and assets in the course of construction
at the end of every reporting period our review of these assets may indicate that their lives need to be
lengthened or shortened resulting in a decreased or increased depreciation charge respectively in future
periods alternatively our review may indicate a decrease in the value of the asset recognised by an
impairment charge
fixed asset impairments
in accordance with uk gaap  we assess the carrying values of our intangible ﬁxed assets including goodwill
at the end of the ﬁrst full ﬁnancial year following acquisition and all our ﬁxed assets tangible intangible
and goodwill in any accounting period if events or changes in circumstances indicate that the carrying
values may not be recoverable factors we believe are important and may trigger an impairment review
could include the following
 a signiﬁcant decline in a ﬁxed asset’s market value 
 a signiﬁcant adverse change in the business or the market in which the ﬁxed asset is involved
 a signiﬁcant adverse change in the statutory or other regulatory environment or
 signiﬁcant underperformance relative to expected or forecast operating results
under uk gaap  when a triggering event has occurred we perform an impairment review by comparing the
carrying value of the income generating unit igu with its recoverable amount the recoverable amount is
deemed to be the higher of the igu’s valueinuse and its net realisable value unless an igu is to be
disposed of the recoverable amount is deemed to be equal to its valueinuse which is determined by
calculating the net present value of its future estimated cash ﬂows
we have not identiﬁed any events requiring an impairment review to be performed in the current year 
revenue recognition
in turnover we only recognise transactions that are considered to be part of our principal ongoing
operations in particular
 voice and data service revenue is recognised in the proﬁt and loss account based on minutes of 
airtime processed over the group’s networks
 turnover derived from connection fees and subscriptions is recognised evenly over the estimated
customer relationship period or the contracted period to which they relate
 income received from sales of prepay call cards is deferred until the customer uses the value in the 
card to pay for relevant calls and
 revenues from handsets are recognised at the point of sale
the group recognises revenue on a gross basis where its role is that of principal in a transaction the gross
basis represents the gross value of the billing to the customer after trade discounts with any related costs
being charged to operating expenses where the group acts as agent in a transaction the net revenue
earned is recognised as turnover
debtor recoverability
in connection with recording revenue we maintain provisions for doubtful debts for estimated losses that
result from the inability of a portion of our customers to make required payments we base our provision on
historical results and future expectations the economic and competitive environment and other relevant
factors and review the provision regularly
mast site restoration provisions
we have certain legal obligations relating to the restoration of leased property to its original condition at the
end of the lease term this obligation relates principally to mast sites we provide for the expected costs of
restoring those sites on which we believe that we will have a material liability the provision is based on
assumptions covering the lease term the characteristics of the site the expected cost of restoring the site
and the period of time before the obligation is expected to be incurred there is inherent uncertainty given
the long period over which certain leases run and actual restoration costs may differ to those estimated
financial performance measurement
we deﬁne ebitda as our earnings before interest tax depreciation amortisation and exceptional items
excluding our share of operating proﬁts and losses of our joint ventures and associates we use ebitda 
a nongaap ﬁnancial measure as one of the key performance indicators for evaluating the ﬁnancial
performance of our business units we believe that ebitda provides an important measure of the underlying
operating performance of our group because it excludes recurring noncash items such as depreciation and
amortisation we believe that this measure is also used by readers of this annual report in order to assess
our performance against other comparable companies other measures used include revenues operating
proﬁt or loss and capital expenditure
we also believe that ebitda is one of the key indicators of our borrowing potential as indicated by the
ﬁnancial covenants attaching to some of our credit facilities which require compliance with ebitda targets
and ebitdabased ratios further details are provided in the treasury management and policies section on
page 37
as ebitda is not a measure of ﬁnancial performance under uk gaap  it may not be comparable to similarly
titled measures of other companies because ebitda is not uniformly deﬁned ebitda should not be
considered by investors as an alternative to group operating proﬁt or loss or proﬁt or loss on ordinary
activities before taxation as an indication of operating performance or as an alternative to cash ﬂow from
operating activities as an indication of cash ﬂows
o2com   23
o2arpp006040qxd  6105  759 pm  page 23 operating and ﬁnancial review and prospects continued
group operating proﬁt is considered to be the uk gaap ﬁnancial measure most directly comparable 
to ebitda the reconciliation of ebitda to group operating proﬁtloss including o2 netherlands for 
the three years ended 31 march 2005 is as follows
2005 2004 2003
£m £m £m
ebitda 1768 1367 859
depreciation
1
931 926 932
goodwill amortisation 200 201 374
umts licence amortisation 169 ––
other amortisation 82 7 31
operating proﬁtloss before exceptional items 386 233 478
exceptional items 45 75 8300
group operating proﬁtloss 341 158 8778
1
in the years ended 31 march 2005 and 2004 excludes depreciation of £6 million and £2 million respectively charged as exceptional items
as part of the reorganisation and restructuring discussed in the exceptional items section on page 28
sale of o2 netherlands
the sale of o2 netherlands our whollyowned dutch subsidiary to greenﬁeld capital partners completed
on 3 june 2003 for €25 million in cash the total loss on sale arising on completion was £1369 million which
after utilisation of the provision recognised in 2003 resulted in a nonoperating exceptional loss of £5 million in
the year ended 31 march 2004
in accordance with financial reporting standard 3 frs 3 “reporting ﬁnancial performance”  the results 
of o2 netherlands for the two years ended 31 march 2004 and 31 march 2003 have been classiﬁed 
as discontinued
the summarised results of the group excluding o2 netherlands for the three years ended 31 march 2005 are
year ended 31 march
2005 2004 2003
£m £m £m
group turnover 6683 5646 4611
cost of sales 3799 3291 2854
gross proﬁt 2884 2355 1757
administrative expenses before exceptional items 2498 2121 2115
group operating proﬁtloss before exceptional items 386 234 358
exceptional items 45 75 8300
group operating proﬁtloss 341 159 8658
deﬁnition of segments
in the year ended 31 march 2004 we undertook a restructuring of our central functions and rationalisation
of our property portfolio in the year ended 31 march 2005 the activities of o2 online and products o2
which were previously reported as the “mobile internet services” segment are reported within the segments
in which they now reside as the information is not readily available the comparatives have not been
restated and these businesses are reported separately in line with daytoday managerial and budgetary
control at that time
operating results
introduction to results of operations
the main components of turnover cost of sales and administrative expenses which form our results of
operations are described below
turnover
our turnover from operations can be analysed into two areas service and other revenues including
equipment with service revenue our principal source of income these income streams are brieﬂy 
described below
 service revenue is derived from our customers’ use of our mobile networks this includes both voice
related airtime and data services such as sms and gprs it also includes interconnection fees from
other networks terminating calls on our customers’ mobile phones and roaming fees from other
network customers using our networks
 other revenue includes equipment revenue derived from the sale of handsets and other accessories
income we recognise when acting as a service provider for nono2 customers national roaming and
wholesale contracts revenue it also includes connection charges and revenue from other sources such
as voice messaging and paging services
cost of sales
the principal items within cost of sales are
 service cost of sales which consists principally of interconnection charges and operation and
maintenance costs relating to our networks interconnection charges are payments made by us to other
ﬁxed line or mobile network operators domestically and abroad when our customers use voice or data
services which terminate on other networks these costs are variable in nature increasing as the usage
of the network increases costs relating to the operation and maintenance of our networks mainly
comprise core transmission costs mast site leases network equipment maintenance and depreciation
charges related to our network assets these costs are more ﬁxed in nature and depend on the size of
the network not the usage of the network although they will increase as we depreciate our umts
networks from the date of launch of commercial services
 other cost of sales includes the cost of purchasing handsets and other hardware items costs associated
with the provision of roaming and wholesale contracts and the network cost of providing voice
messaging and paging services
o2com   24
o2arpp006040qxd  6105  759 pm  page 24 administrative expenses before exceptional items
principal administrative expenses are
 promotional and advertising expenses primarily comprising bonuses and commissions paid to retailers
for the acquisition and retention of customers they also include expenditure on advertising marketing
and loyalty programmes
 overhead expenses including personnel costs relating to functions such as ﬁnance planning network
regulatory legal marketing and customer care they also include property charges facilities training and
information technology support
 depreciation charges on nonnetwork assets and
 amortisation charges on goodwill arising on the acquisition of businesses on our umts telecommunications
licences from the date of market launch of umts services and on other intangible assets
exceptional items
exceptional items are large nonrecurring incomes or expenses that have been disclosed separately to avoid
distortion of the underlying trading result
o2 consolidated results of operations for the three years ended 31 march 2005 2004 and 2003
the following table presents certain ﬁnancial data for our group including o2 netherlands for the years
ended 31 march 2005 2004 and 2003 extracted from our consolidated ﬁnancial statements
2005 2004 2003
£m £m £m
group turnover 6683 5694 4874
cost of sales 3799 3314 3060
gross proﬁt 2884 2380 1814
administrative expenses before exceptional items 2498 2147 2292
exceptional items 45 75 8300
group operating proﬁtloss 341 158 8778
group’s share of operating result of joint ventures and associates 3 –5
total operating proﬁtloss 338 158 8773
costs of capital reorganisation 20 ––
total loss on sale of business – 5 1364
net interest payable and similar charges 9 58 66
proﬁtloss on ordinary activities before taxation 309 95 10203
taxation 8 71 55
proﬁtloss for the ﬁnancial year 301 166 10148
dividends 196 ––
retained proﬁtloss for the year 105 166 10148
1
ebitda is our earnings before interest tax depreciation amortisation and exceptional items excluding our share of operating proﬁts and
losses of our joint ventures and associates the use of ebitda as a ﬁnancial performance measure is discussed on page 23
year ended 31 march 2005 compared to the year ended 31 march 2004
group turnover
the following table shows contributions of our businesses to group turnover
year ended 31 march
2005 2004 per cent
£m £m variation
continuing operations
o2 uk 4030 3451 17
o2 germany 1865 1508 24
o2 ireland 585 529 11
o2 airwave 169 89 90
o2 online – 140 –
manx telecom 53 50 6
intragroup eliminations 19 121 84
6683 5646 18
discontinued operations
o2 netherlands – 48 100
total 6683 5694 17
group turnover from continuing operations increased by 18 per cent from £5646 million for the year ended
31 march 2004 to £6683 million for the year ended 31 march 2005 all our businesses contributed to the
rise in group turnover the principal reasons for the increases in our mobile telecommunications businesses
were the overall rise in subscriber numbers in the current year and the increased usage of the group’s
services by subscribers 
a description of the signiﬁcant new products and services offered by the group during the year and the
development of the o
2
brand are given in the business review on pages 6 to 19
o2 uk
o2 uk’s overall turnover increased by 17 per cent from £3451 million for the year ended 31 march 2004 
to £4030 million for the year ended 31 march 2005 o2 uk’s total active customer base increased from
133 million at 31 march 2004 to 144 million at 31 march 2005 an increase of over 8 per cent 
o2com   25
o2arpp006040qxd  6105  759 pm  page 25 operating and ﬁnancial review and prospects continued
the following table provides an analysis of o2 uk’s turnover
year ended 31 march
2005 2004 per cent
£m £m variation
service 3627 3183 14
equipment and other 403 268 50
total 4030 3451 17
service revenues service revenue is the principal element of o2 uk’s turnover comprising 90 per cent of
o2 uk’s group turnover for the year ended 31 march 2005 o2 uk’s service revenue increased by 14 per
cent from £3183 million for the year ended 31 march 2004 to £3627 million for the year ended 31 march
2005 of this service revenue from postpay customers remains the principal source of income accounting
for 66 per cent of the total service revenue for the year ended 31 march 2005 2004 65 per cent
o2 uk’s service revenue has grown as a result of a combination of an increase in the subscriber base and 
an increase in arpu
at 31 march 2005 our postpay customer base totalled 49 million compared to 46 million at 31 march 2004
which represents 335000 net additions for the year our mix of brand devices and propositions has
continued to appeal to new customers despite this postpay churn for the year ended 31 march 2005 was
31 per cent which is a rise of 5 percentage points from the churn of 26 per cent recorded for the year ended
31 march 2004 this reﬂects the increasingly competitive market in the uk and the loss of the bt employee
corporate account which in itself contributed 2 per cent to churn
arpu for both postpay and prepay customers has grown in the year despite the impact of the termination
rate cut imposed by the regulator in september 2004 postpay arpu has increased from £525 for the year
ended 31 march 2004 to £542 for the year ended 31 march 2005 prepay arpu has increased from £141
for the year ended 31 march 2004 to £143 for the year ended 31 march 2005 voice usage continued to
increase and average voice minutes of use per customer increased by 11 per cent to 137 minutes per month
during the year ended 31 march 2005 data arpu also grew £13 yearonyear to leave total blended arpu
£9 higher than last year at £281 data revenue as a proportion of total service revenues was driven by a
34 per cent yearonyear growth in the number of sms messages handled from 80 billion in the 2004
ﬁnancial year to 107 billion in the 2005 ﬁnancial year along with an increasing contribution from nonsms
revenues which accounted for 37 per cent of service revenue in the fourth quarter
equipment and other revenues equipment revenues have increased over the 2004 ﬁnancial year reﬂecting
the higher level of gross customer connections than in 2004 other revenues have increased owing to the
continued growth in national roaming and wholesale contracts
o2 germany
o2 germany’s overall turnover increased by 24 per cent from £1508 million for the year ended 31 march
2004 to £1865 million for the year ended 31 march 2005 o2 germany’s total active customer base
increased by 33 per cent from 60 million at 31 march 2004 to 80 million at 31 march 2005
the following table provides an analysis of o2 germany’s turnover
year ended 31 march
2005 2004 per cent
£m £m variation
service 1687 1347 25
equipment and other 178 161 11
total 1865 1508 24
service service revenue is the principal element of o2 germany’s turnover comprising 90 per cent of total
turnover for the year ended 31 march 2005 o2 germany’s service revenue increased by 25 per cent from
£1347 million for the year ended 31 march 2004 to £1687 million for the year ended 31 march 2005 
of this service revenue from postpay customers is the principal source of income with postpay revenue for
the year ended 31 march 2005 accounting for 83 per cent of the total 2004 84 per cent
this increase in service revenue is principally the result of a signiﬁcant increase in the active subscriber base
described above in particular the net postpay customer additions in the year ended 31 march 2005 were
890000 representing 45 per cent of total net additions the prepay customer base increased by 44 per
cent from the 2004 ﬁnancial year to the 2005 ﬁnancial year with prepay customers totalling 36 million 
at 31 march 2005 of this the new tchibo mobilfunk channel has contributed in excess of 250000 prepay
customers since its launch in october 2004 the growth in service revenue is also affected by foreign
exchange and translating o2 germany’s service revenue in 2005 at the exchange rates prevailing in the 
prior year would increase the reported growth in turnover by £31 million
in the postpay market o2 germany’s active bundles were launched in july 2004 and proved very successful
with high value customers with approximately 40 per cent of new contract customers in the second half of
the 2005 ﬁnancial year subscribing to an active bundle in the year ended 31 march 2005 the popular
o
2
genion homezone service our location based tarifﬁng technology accounted for 50 per cent of new
contract customers these propositions contributed to the proportion of contract customers in o2 germany’s
customer base at 31 march 2005 being nearly 55 per cent
postpay arpu has decreased from £375 for the year ended 31 march 2004 to £362 for the year ended
31 march 2005 in local currency the fall is less signiﬁcant from €540 in the ﬁnancial year 2004 to €531 
in the ﬁnancial year 2005 which is a function of the weakening of the euro during the 2005 ﬁnancial year
average customer voice minutes of use remained constant yearonyear at 118 minutes per month the 
fall in blended arpu can be ascribed to the cut in termination rates suffered in the year and the increasing
number of prepay customers as a proportion of the overall customer base who on average generate lower
arpu than our postpay customers
o2com   26
o2arpp006040qxd  6105  759 pm  page 26 the proportion of data revenues compared to total service revenues rose to 218 per cent for the year ended
31 march 2005 compared to 195 per cent for the year ended 31 march 2004 the principal element of
data revenue is generated by text messages and o2 germany recorded nearly 24 billion text messages in
the year ended 31 march 2005 an increase of one third over the previous year the success of data
propositions also drove nonsms data uptake and usage and the number of customers at the yearend who
had used a nonsms data service during the previous 90 days was 19 million 24 per cent of the total base 
equipment and other revenues within this category equipment revenues have risen by 9 per cent to 
£160 million compared to the prior year which is principally owing to the increase in gross additions in the
2005 year compared to the 2004 year
o2 ireland
o2 ireland’s revenue has increased by 11 per cent from £529 million for the year ended 31 march 2004 to
£585 million for the year ended 31 march 2005 this increase in revenue is attributable to an increase of
142000 in the customer base postpay customer numbers increased from 381000 at 31 march 2004 to
403000 active subscribers at 31 march 2005 and the prepay customer base increased from 1010000 at
31 march 2004 to 1130000 at 31 march 2005
o2 airwave
revenue at our o2 airwave business has increased by 90 per cent from £89 million for the year ended 
31 march 2004 to £169 million for the year ended 31 march 2005 on 1 april 2005 o2 airwave
announced that the rollout of the secure digital communication network for the police forces of england
scotland and wales was complete in all 51 forces across england scotland and wales
net operating expenses before exceptional items
net operating expenses before exceptional items comprises cost of sales and administrative expenses net
operating expenses from continuing operations excluding o2 netherlands increased by 16 per cent from
£5412 million for the 2004 ﬁnancial year to £6297 million for the 2005 ﬁnancial year this reﬂects the
increase in the cost of sales arising from the growth in turnover described earlier and the commencement of
amortisation of the umts licences in our uk and german businesses following commercial launch of umts
services during the year foreign exchange has also had an effect and translating the net operating expenses
of our overseas businesses at the exchange rates prevailing in the prior year would increase these costs by
£43 million
group cost of sales
group cost of sales from continuing operations increased by 15 per cent from £3291 million for the year
ended 31 march 2004 to £3799 million for the year ended 31 march 2005 the increase in cost of sales for
the 2005 ﬁnancial year is lower than the increase in group turnover of 17 per cent owing to the
improvement in gross margin percentage in our businesses the gross proﬁt margin of the group 
excluding o2 netherlands increased by one percentage point to 43 per cent
the gross margin percentage gross proﬁt divided by turnover of our newer business in germany is 
lower than those of our more established businesses in the uk and ireland o2 germany is still building 
its customer base and as revenues grow additional contribution is made towards the ﬁxed element of cost
of sales which increases the margin as a consequence in the year ended 31 march 2005 o2 germany
increased its gross margin by 6 percentage points to 44 per cent as our o2 airwave business matures 
we expect its gross margin to improve similarly
group administrative expenses before exceptional items
group administrative expenses before exceptional items from continuing operations which exclude 
o2 netherlands have increased by £377 million from £2121 million for the year ended 31 march 2004 to
£2498 million for the year ended 31 march 2005 during the year o2 uk and o2 germany have launched
commercial umts services and in line with group accounting policy the umts licences held by these
businesses have commenced amortisation the charge for the year ended 31 march 2005 is £169 million
additionally amortisation in o2 germany also includes £78 million in respect of the tmobile network
sharing agreement
administrative expenses have also increased owing to a rise in marketing expenditure reﬂecting the
competitive environment in which our businesses operate and the continued growth in the size of the
business administrative expenses excluding umts licence and other amortisation and marketing
expenditure have risen only 4 per cent 
an analysis of the net operating expenses before exceptional items between our operating companies is
provided in the table below
year ended 31 march
2005 2004 per cent
£m £m variation
continuing operations
o2 uk 3464 2899 19
o2 germany 1955 1579 24
o2 ireland 430 389 11
o2 online – 224 –
o2 airwave 151 119 27
other operations and central costs 97 1–
goodwill amortisation 200 201 –
total 6297 5412 16
o2com   27
o2arpp006040qxd  6105  759 pm  page 27 operating and ﬁnancial review and prospects continued
o2 uk
o2 uk’s net operating expenses before exceptional items have increased by 19 per cent from £2899 million
for the year ended 31 march 2004 to £3464 million for the year ended 31 march 2005
o2 uk’s gross proﬁt margin being gross proﬁt expressed as a proportion of o2 uk’s group turnover has
declined from 44 per cent in the year ended 31 march 2004 to 41 per cent for the year ended 31 march
2005 this is attributable to ﬁrstly the integration of the business of o2 online and products o2 on 1 april
2004 discussed above and secondly the increasing cost of supplying devices to customers handsets are
increasingly sophisticated and we have experienced greater demand for more costly devices with additional
features such as cameras
o2 uk’s depreciation charge has increased from £488 million in the year ended 31 march 2004 to
£558 million in the year ended 31 march 2005 an increase of 14 per cent this reﬂects the commencement
of depreciation on the umts network assets and a larger ﬁxed asset base as well as a review of certain asset
lives mainly software 
advertising and marketing expenditure for the year ended 31 march 2005 has increased year on year
reﬂecting the general level of competition in the market postpay sacs have increased from £160 to £172
per subscriber and prepay sacs have increased from £16 to £19 per subscriber
o2 germany
o2 germany’s net operating expenses before exceptional items increased from £1579 million for the year
ended 31 march 2004 to £1955 million for the year ended 31 march 2005
under a longstanding agreement tmobile deutschland gmbh tmobile currently provides national
roaming capacity to o2 germany in areas where o2 germany has not developed its own network the cost
of the contract is determined based on a ﬁxed number of minutes available to o2 germany and includes
certain capital payments to tmobile
in november 2004 o2 germany announced a strategy to deliver faster customer growth and to step up 
the level of investment in its umts network to sustain the rapid growth in subscribers experienced in o2
germany we aim to deliver umts network quality and population coverage competitive with the two
market leaders this will require additional capital expenditure on our umts network which we expect to a
signiﬁcant extent to be offset by a reduction in operating costs including lower national roaming costs 
and by faster revenue growth
the total depreciation charge for both network and nonnetwork ﬁxed assets was £241 million for the 
year ended 31 march 2005 a 18 per cent decrease over the charge for the year ended 31 march 2004 of
£295 million
blended subscriber acquisition costs have fallen by 8 per cent from £119 per subscriber for the year ended
31 march 2004 to £110 per subscriber for the year ended 31 march 2005 the fall in blended sac is mainly
attributable to the increasing proportion of prepay customers in the new connections mix
o2 ireland
net operating expenses before exceptional items for o2 ireland have increased by 11 per cent from 
£389 million for the year ended 31 march 2004 to £430 million for the year ended 31 march 2005 
the increase is consistent with the growth of this business and reﬂects the stable margins reported by
o2 ireland
o2 airwave
the net operating expenses of our o2 airwave business have increased by 27 per cent or £32 million from
2004 to 2005 as the business has expanded and the rollout of the network has been completed
goodwill amortisation
the group’s goodwill amortisation charge was £200 million for the year ended 31 march 2005 which is
consistent year on year and reﬂects the systematic charge recognised against our group’s goodwill value
exceptional items
in the year ended 31 march 2005 we incurred an exceptional operating charge of £45 million and an
exceptional nonoperating charge of £20 million the exceptional operating charge related to the
redeployment of resources within o2 uk into customer facing areas and away from noncustomer facing
areas this is in line with o2 uk’s strategy of delivering an enhanced customer experience and increasing
customer loyalty the charge comprises redundancy and property costs no cash was expended in the 
year ended 31 march 2005 the exceptional nonoperating charge related to the costs of the capital
reorganisation described in note 19 to the ﬁnancial statements this charge gave rise to a cash outﬂow 
of £15 million in the year
in the year ended 31 march 2004 we incurred an exceptional operating charge of £75 million in respect of
the restructuring of central functions and the resultant rationalisation of our property portfolio this arose on
the transfer of o2 online products o2 and certain other central functions to our operating businesses in the
uk germany and ireland and included provisions relating to redundancies and the termination of property
leases this charge gave rise to a cash outﬂow of £17 million in that year 
the sale of o2 netherlands to greenﬁeld capital partners completed on 3 june 2003 for €25 million in
cash the total loss on sale arising on completion was £1369 million which after utilisation of the provision
recognised in 2003 resulted in an exceptional nonoperating loss of £5 million in the year ended 31 march 2004
the impairment review performed during the year ended 31 march 2003 resulted in an exceptional non
cash operating charge in respect of our continuing businesses of £8300 million this comprised charges
relating mainly to the impairment of umts licences and goodwill in o2 uk and o2 germany totalling 
o2com   28
o2arpp006040qxd  6105  759 pm  page 28 £2300 million and £4700 million respectively and the impairment of goodwill in o2 ireland of
£1300 million
ebitda
ebitda is our earnings before interest tax depreciation amortisation and exceptional items excluding our
share of operating proﬁts and losses of our joint ventures and associates all our mobile telecommunications
businesses have generated positive ebitda over the last three ﬁnancial years
the reconciliation of ebitda to group operating proﬁtloss the closest uk gaap ﬁnancial measure by
business is as follows
group operating exceptional
proﬁtloss depreciation amortisation items ebitda
2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
£m £m £m £m £m £m £m £m £m £m
continuing operations
o2 uk 371 346 558 488 209 150 45 57 1183 1041
o2 germany 90 72 241 295 190 – – 2 341 225
o2 ireland 106 87 65 67 52 53 – 1 223 208
o2 airwave 19 31 53 31 – – – 1 72 1
o2 online – 93 – 36 – 4 – 10 – 43
other operations 65 78 14 8 – 1 – 4 51 65
341 159 931 925 451 208 45 75 1768 1367
discontinued operations
o2 netherlands – 1 – 1 – – – – – –
341 158 931 926 451 208 45 75 1768 1367
the following table shows contributions of our businesses to group ebitda
year ended 31 march
2005 2004 per cent
£m £m variation
continuing operations
o2 uk 1183 1041 14
o2 germany 341 225 52
o2 ireland 223 208 7
o2 airwave 72 1–
o2 online – 43 –
other operations and central costs 51 65 22
1768 1367 29
discontinued operations
o2 netherlands – ––
total 1768 1367 29
group ebitda from continuing operations has increased by 29 per cent from £1367 million for the year
ended 31 march 2004 to £1768 million for the year ended 31 march 2005 the increased ebitda
contribution has come from all the trading operations of the group
group operating proﬁt
in the year ended 31 march 2004 we recorded our ﬁrst ever group operating proﬁt of £158 million 
this has increased by 116 per cent to £341 million in the year ended 31 march 2005 excluding exceptional
items our group’s total operating proﬁt has increased by 66 per cent from £233 million in the 2004
ﬁnancial year to £386 million in the 2005 ﬁnancial year
net interest
net interest payable relates to the ﬁnance charges payable on external debt net of interest received on
amounts invested in the 2005 ﬁnancial year we incurred a net interest charge of £9 million a decrease 
of 84 per cent over the 2004 ﬁnancial year which reﬂects the decrease in net debt over that period in the
2005 ﬁnancial year the principal elements of our interest charge were the interest on our revolving credit
facility “rcf” amounting to £4 million 2004 £8 million and interest of £57 million 2004 £62 million
accruing on our longterm bonds which we issued in january 2002 in accordance with uk gaap  we are
amortising the issue costs of our bank facility and our bonds over the lives of the facilities ﬁve and ten years
respectively through the interest line in the proﬁt and loss account amortisation of these costs amounted
to £8 million in the 2005 ﬁnancial year 2004 £4 million with the increase representing an accelerated
charge arising from the reduction in our rcf during the year we also incur interest charges on the o2 uk
loan notes and on our ﬁnance leases and other borrowings and have received interest on our shortterm
investments further details are contained in the liquidity and capital resources section on page 35
tax on loss on ordinary activities
we recognised a tax charge of £8 million for the year ended 31 march 2005 compared to a credit of 
£71 million for the year ended 31 march 2004 the overall charge reﬂects a prudent view of the utilisation
of our group’s tax losses in the uk and germany and the related deferred tax assets overall we continue 
to recognise a net deferred tax liability
dividends
we have proposed an inaugural ﬁnal dividend of 225 pence per share for the year ended 31 march 2005 
this dividend totalling £196 million will be paid on 26 august 2005 to shareholders on the register on 
5 august 2005
o2com   29
o2arpp006040qxd  6105  759 pm  page 29 operating and ﬁnancial review and prospects continued
year ended 31 march 2004 compared to the year ended 31 march 2003
group turnover
the following table shows contributions of our businesses to group turnover
year ended 31 march
2004 2003 per cent
£m £m variation
continuing operations
o2 uk 3451 3025 14
o2 germany 1508 1060 42
o2 ireland 529 442 20
o2 online 140 93 51
other operations 139 64 117
intragroup eliminations 121 73 66
5646 4611 22
discontinued operations
o2 netherlands 48 263 82
total 5694 4874 17
group turnover from continuing operations increased by 22 per cent from £4611 million for the year ended
31 march 2003 to £5646 million for the year ended 31 march 2004 all our businesses contributed to the
rise in group turnover the principal reasons for the increases in our mobile telecommunications businesses
were the overall rise in subscriber numbers in the current year and the increased usage of the group’s
services by subscribers the rise in turnover of our other operations is due mainly to our airwave business
which contributed £73 million of the increase 
the strengthening of the euro during 2004 also improved the growth translating the results of our overseas
business at the exchange rates prevailing in the prior year would have reduced the reported growth in
turnover by £153 million
o2 uk
o2 uk’s overall turnover increased by 14 per cent from £3025 million for the year ended 31 march 2003 
to £3451 million for the year ended 31 march 2004 o2 uk’s total active customer base increased from
121 million at 31 march 2003 to 133 million at 31 march 2004 an increase of 10 per cent this included 
a net increase in postpay subscribers of over half a million customers
the following table provides an analysis of o2 uk’s turnover
year ended 31 march
2004 2003 per cent
£m £m variation
service 3183 2738 16
equipment and other 268 287 7
total 3451 3025 14
service revenues service revenue is the principal element of o2 uk’s turnover comprising 92 per cent of
total turnover for the year ended 31 march 2004 o2 uk’s service revenue increased by 16 per cent from
£2738 million for the year ended 31 march 2003 to £3183 million for the year ended 31 march 2004 
of this service revenue from postpay customers remains the principal source of income accounting for 
over 65 per cent of the total this represents a decrease from the 67 per cent recorded for the year ended 
31 march 2003 and is a function of the strong growth in prepay arpu in the year ended 31 march 2004
o2 uk’s revenue has grown as a result of a combination of an increase in the subscriber base partly arising
from improving levels of retention of existing postpay users and an increase in postpay arpu
postpay subscriber gross additions for the year ended 31 march 2004 total 17 million taking our total post
pay customer base to 46 million representing 516000 net additions for the year postpay churn for the
year ended 31 march 2004 was 26 per cent a fall of two percentage points from the churn of 28 per cent
recorded for the year ended 31 march 2003 this reﬂects our efforts to attract higherspending customers
through innovative products and services as well as targeted and successful campaigns in the business market 
we have also increased our use of arpushare incentive arrangements with independent distributors to
increase revenue and reduce churn
arpu for both postpay and prepay customers grew strongly in the year postpay arpu increased from
£503 for the year ended 31 march 2003 to £525 for the year ended 31 march 2004 prepay arpu
increased from £121 for the year ended 31 march 2003 to £141 for the year ended 31 march 2004
data revenues as a proportion of total service revenues increased steadily through the year from 171 per
cent for the year ended 31 march 2003 to 204 per cent for the year ended 31 march 2004 data revenue
as a proportion of total service revenue for the ﬁnal quarter of the year ended 31 march 2004 was 223 per
cent included within these statistics the popularity of text messages continued to grow with in excess of 
8 billion messages sent during the year ended 31 march 2004 compared with 58 billion during the year
ended 31 march 2003
equipment and other revenues equipment revenues increased marginally in the 2004 ﬁnancial year
compared to the 2003 ﬁnancial year although the level of gross additions to our subscriber base has
remained level in 2004 compared to 2003 handset prices have generally decreased year on year the effect 
of which has been offset by the sales mix other revenues have fallen by almost onequarter from 2003 to
o2com   30
o2arpp006040qxd  6105  759 pm  page 30 2004 reﬂecting a reduction in service provider and nonmobile retail revenues which is partially offset by
increased revenue from national roaming and wholesale contracts
o2 germany
o2 germany’s overall turnover increased by 42 per cent from £1060 million for the year ended 
31 march 2003 to £1508 million for the year ended 31 march 2004 o2 germany’s total active customer
base increased by 24 per cent from 48 million at 31 march 2003 to slightly less than 60 million at 
31 march 2004 
the following table provides an analysis of o2 germany’s turnover
year ended 31 march
2004 2003 per cent
£m £m variation
service 1347 944 43
equipment and other 161 116 39
total 1508 1060 42
service service revenue is the principal element of o2 germany’s turnover comprising 89 per cent of total
turnover for the year ended 31 march 2004 o2 germany’s service revenue increased by 43 per cent from
£944 million for the year ended 31 march 2003 to £1347 million for the year ended 31 march 2004 
of this service revenue from postpay customers is the principal source of income with postpay revenue
accounting for 84 per cent of the total
this increase in service revenue is principally the result of a signiﬁcant increase in the active subscriber base
described above in particular the postpay customer additions in the year ended 31 march 2004 were
836000 representing 71 per cent of total net additions the prepay customer base increased by 15 per
cent from the 2003 ﬁnancial year to the 2004 ﬁnancial year with prepay customers totalling 25 million 
at 31 march 2004 a further contributory factor in the growth in service revenue is the effect of foreign
exchange translating o2 germany’s service revenue in 2004 at the exchange rates prevailing in the prior
year would reduce the reported growth in turnover by £101 million
a large proportion of the postpay additions during the year relate to customers who have subscribed to the
o
2
genion homezone service our locationbased tarifﬁng technology which allows reduced call rates within
a small geographical area usually at home o2 germany also offers an equivalent service to business
customers both o
2
genion home and business are part of our drive across the group to attract highvalue
customers at 31 march 2004 over 42 per cent of the total customer base subscribed to the o
2
genion
service compared with 30 per cent at 31 march 2003
postpay arpu has increased from £341 for the year ended 31 march 2003 to £375 for the year ended
31 march 2004 this rise is a function of the continuing drive to win higher spending customers 
o2 germany have continued to offer advanced data services during the 2004 ﬁnancial year this has been
reﬂected in the increase in the proportion of data revenues compared to total service revenues which have
risen to 195 per cent during the year ended 31 march 2004 the proportion for the three months ended
31 march 2004 reached 207 per cent the principal element of data revenue is generated by text messages
and o2 germany recorded in excess of 18 billion text messages in the year ended 31 march 2004 an
increase of 466 million messages over last year 
equipment revenues equipment revenues have risen by 56 per cent to £147 million compared to the prior
year this is principally owing to the increase of almost 500000 gross additions in the 2004 year compared 
to the 2003 year
o2 ireland
o2 ireland’s revenue has increased by 20 per cent from £442 million for the year ended 31 march 2003 to
£529 million for the year ended 31 march 2004 this increase in revenue is a combination of an increase 
of 136000 in the customer base and an 11 per cent rise in blended arpu postpay customer numbers
increased from 366000 at 31 march 2003 to 381000 active subscribers at 31 march 2004 and the prepay
customer base increased from 889000 at 31 march 2003 to 1010000 at 31 march 2004
a further contributory factor in the growth in revenue is the effect of foreign exchange translating o2
ireland’s revenue in 2004 at the exchange rates prevailing in the prior year would reduce the reported
growth in turnover by £40 million
o2 airwave
revenue at our airwave business has increased by over 450 per cent from £16 million for the year 
ended 31 march 2003 to £89 million for the year ended 31 march 2004 the rollout of the secure digital
communication network for the police forces of england scotland and wales continued during the year 
and by 31 march 2004 had achieved live status in 35 of the country’s 51 forces
o2 online
during the year ended 31 march 2004 o2 online acted as the online sales channel for o2 uk and as the
developer of the group’s mobile data capability subsequent to the year end the operations of o2 online
and products o2 have been transferred to o2 uk as part of the reorganisation undertaken in the year ended
31 march 2004
o2 online generated internal revenue mainly from connection fees airtime voucher sales and the provision
of wap gateway and portal services to other group companies external revenues include sales of devices
outside the group’s territories paidfor alerts and ringtones and advertising
in the current year gross connections through the online channel doubled compared to the 2003 year to
over 10 million
o2com   31
o2arpp006040qxd  6105  759 pm  page 31 operating and ﬁnancial review and prospects continued
net operating expenses before exceptional items
net operating expenses before exceptional items comprises cost of sales and administrative expenses net
operating expenses from continuing operations excluding o2 netherlands increased by 8 per cent from
£4969 million for the 2003 ﬁnancial year to £5412 million for the 2004 ﬁnancial year this reﬂects the
increase in the cost of sales arising from the growth in turnover described earlier translating the net
operating expenses of our overseas businesses at the exchange rates prevailing in the prior year would
reduce these costs by £147 million
group cost of sales
group cost of sales from continuing operations increased by 15 per cent from £2854 million for the year
ended 31 march 2003 to £3291 million for the year ended 31 march 2004 the increase in cost of sales for
the 2004 ﬁnancial year is commensurate with the increase in group turnover of 22 per cent partly offset by
the improvement in gross margin percentage in our businesses the gross proﬁt margin of the group
excluding o2 netherlands increased by 4 percentage points to 42 per cent
the gross margin percentage gross proﬁt divided by turnover of our newer business in germany is lower
than those of our more established businesses in the uk and ireland o2 germany is in the process of
building its customer base and as revenues grow additional contribution is made towards the ﬁxed element
of cost of sales which increases the margin as a consequence in the year ended 31 march 2004 o2
germany increased its gross margin by 10 percentage points to 38 per cent
group administrative expenses before exceptional items
group administrative expenses before exceptional items from continuing operations which exclude o2
netherlands have increased from £2115 million for the year ended 31 march 2003 to £2121 million for
the year ended 31 march 2004 given the growth in subscribers and revenues in 2004 the static level of
administrative expenses before exceptional items reﬂects the beneﬁt of a full year of cost savings following
the restructuring undertaken by the group in the 2002 and 2003 ﬁnancial years and certain savings already
realised from the reorganisation started in 2004 translating the administrative expenses of our overseas
business at the exchange rates prevailing in the prior year would reduce them by £62 million from the
£2121 million reported
group administrative expenses before exceptional items from continuing operations as a percentage 
of turnover have decreased from 46 per cent in the 2003 ﬁnancial year to 38 per cent in the 2004 
ﬁnancial year
an analysis of the net operating expenses before exceptional items between our operating companies is
provided in the table below
year ended 31 march
2004 2003 per cent
£m £m variation
o2 uk 2899 2691 8
o2 germany 1579 1295 22
o2 ireland 389 356 9
o2 online 224 216 4
other operations and central costs 120 71 69
goodwill amortisation 201 340 41
total 5412 4969 9
o2 uk
o2 uk’s net operating expenses before exceptional items have increased by 8 per cent from £2691 million
for the year ended 31 march 2003 to £2899 million for the year ended 31 march 2004
the variable element of o2 uk’s service cost of sales has increased in line with the network usage
interconnection charges increased signiﬁcantly during the ﬁnancial year 2004 compared to the year ended
31 march 2003 reﬂecting increased calls from o2 uk customers terminating on other networks including
other mobile networks whose termination charges are generally higher than charges levied by ﬁxedline
network providers
o2 uk’s depreciation charge has increased from £477 million in the year ended 31 march 2003 to 
£488 million in the year ended 31 march 2004 an increase of 2 per cent 
the advertising and marketing spend for the year ended 31 march 2004 has remained static year on year
reﬂecting the focused nature of the spend in this area within this subscriber acquisition costs have fallen as
the unit cost of connections has declined despite an increase in the volume of gross subscribed additions
postpay sacs have decreased from £177 to £160 per subscriber and prepay sacs have decreased from
£25 to £16 per subscriber
compared to the year ended 31 march 2003 o2 uk’s overheads have increased by 8 per cent for the year
ended 31 march 2004 which despite the increased turnover and concentration on improving customer
service reﬂects the cost control measures during the year and the cost savings which continue to be derived
from the restructuring of the business announced in february 2002
o2 germany
o2 germany’s net operating expenses before exceptional items increased from £1295 million for the year
ended 31 march 2003 to £1579 million for the year ended 31 march 2004
o2com   32
o2arpp006040qxd  6105  759 pm  page 32 tmobile deutschland gmbh tmobile provides national roaming capacity to o2 germany in areas where
o2 germany has not developed its own network the cost of the contract is determined based on a ﬁxed
number of minutes available to o2 germany in february 2003 an extension to this agreement gave o2
germany access to tmobile’s 3g network over a longer period the access provides us with an effective
route to provide umts services to our customers in germany
net operating expenses as a percentage of turnover was 122 per cent for the 2003 ﬁnancial year and for
the 2004 ﬁnancial year has fallen to 105 per cent this reﬂects the rapid growth in revenues at o2 germany
for o2 germany we expect this ratio to be higher than the same ratio of our more established businesses
as it is a newer business and is in the process of building up its customer base 
the total depreciation charge for both network and nonnetwork ﬁxed assets was £295 million for the 
year ended 31 march 2004 a 14 per cent increase over the charge for the year ended 31 march 2003 of
£259 million this reﬂects the continuing investment by o2 germany in their network 
blended subscriber acquisition costs have increased by 11 per cent from £107 per subscriber for the year
ended 31 march 2003 to £119 per subscriber for the year ended 31 march 2004 the eurodenominated
sac has remained static for both prepay and postpay connections from 2003 to 2004 the increase in
blended sac is mainly attributable to the strengthening of the euro against sterling from 2003 to 2004
which increases the sac when translated into sterling for reporting purposes
o2 ireland
net operating expenses before exceptional items for o2 ireland have increased by 9 per cent from 
£356 million for the year ended 31 march 2003 to £389 million for the year ended 31 march 2004
the principal reason for the increase is the expansion of the business in the 2004 ﬁnancial year as the total
turnover of o2 ireland has grown by 20 per cent from the 2003 ﬁnancial year to the 2004 ﬁnancial year
the effect of the revenue increase was reduced as a result of the continuing cost control measures 
o2 online
o2 online’s net operating expenses before exceptional items increased by 4 per cent from £216 million for
the year ended 31 march 2003 to £224 million for the year ended 31 march 2004 this reﬂects the group’s
continued focus on developing mobile data capability while at the same time minimising expenditure prior
to the transfer of the trade to o2 uk immediately after the 2004 year end
o2 airwave
within other operations and central costs the net operating expenses of our o2 airwave business have
increased by £68 million from 2003 to 2004 as the business has expanded
goodwill amortisation
the group’s goodwill amortisation charge relating to continuing operations before the exceptional
impairment charge recognised in the 2003 ﬁnancial year decreased from £340 million in the 2003 ﬁnancial
year to £201 million in the 2004 ﬁnancial year this is due to the impairment charge recognised in 2003
which reduced the ongoing annual amortisation charge
exceptional items
in the year ended 31 march 2004 we incurred an exceptional operating charge of £75 million in respect 
of the restructuring of central functions and the resultant rationalisation of our property portfolio and a
nonoperating exceptional charge of £5 million relating to the completion of the sale of o2 netherlands
these are discussed earlier in this operating and ﬁnancial review and prospects
in 2003 we recognised an exceptional noncash charge relating to the impairment of ﬁxed assets in our
continuing businesses being our uk german and irish businesses of £8300 million
ebitda
ebitda is our earnings before interest tax depreciation amortisation and exceptional items excluding our
share of operating proﬁts and losses of our joint ventures and associates our businesses with larger market
shares in their countries of operation o2 uk and o2 ireland have generated positive ebitda over the last
three ﬁnancial years o2 germany a newer business has historically made ebitda losses until the 2003
ﬁnancial year during which o2 germany achieved a positive ebitda result for the ﬁrst time and in the 2004
ﬁnancial year has achieved an ebitda margin of 15 per cent
the following table shows contributions of our businesses to group ebitda
year ended 31 march
2004 2003 per cent
£m £m variation
continuing operations
o2 uk 1041 837 24
o2 germany 225 27 733
o2 ireland 208 157 32
o2 online 43 73 41
other operations 64 90 29
1367 858 59
discontinued operations
o2 netherlands – 1–
total 1367 859 59
group ebitda from continuing operations has increased by 59 per cent from £858 million for the year
ended 31 march 2003 to £1367 million for the year ended 31 march 2004 the increased ebitda
contribution has come from all the trading operations of the group
o2com   33
o2arpp006040qxd  6105  759 pm  page 33 operating and ﬁnancial review and prospects continued
the reconciliation of ebitda to group operating proﬁtloss the most directly comparable uk gaap
ﬁnancial measure by business is as follows
group operating exceptional
proﬁtloss depreciation amortisation items ebitda
2004 2003 2004 2003 2004 2003 2004 2003 2004 2003
£m £m £m £m £m £m £m £m £m £m
continuing operations
o2 uk 346 2116 488 478 150 175 57 2300 1041 837
o2 germany 72 4979 295 259 – 47 2 4700 225 27
o2 ireland 87 1331 67 67 53 121 1 1300 208 157
o2 online 93 122 36 34 4 15 10 – 43 73
other businesses 109 110 39 20 1 – 5 – 64 90
159 8658 925 858 208 358 75 8300 1367 858
discontinued operations
o2 netherlands 1 120 1 74 – 47 – – – 1
158 8778 926 932 208 405 75 8300 1367 859
total operating proﬁtloss
we recorded our ﬁrst ever total operating proﬁt in the year ended 31 march 2004 of £158 million this
compares with a total operating loss of the group for the year ended 31 march 2003 of £8773 million
which included the exceptional impairment charge of £8300 referred to above excluding exceptional items
the total operating loss recorded in 2003 of £473 million reversed to a proﬁt of £233 million in 2004 this
can be ascribed to both increased revenues generated by all our businesses arising from the increased
number of subscribers and the rise in arpus and to the continuing cost control exhibited by our businesses
net interest payable
net interest payable relates to the ﬁnance charges payable on external debt net of interest received on
amounts invested in the 2004 ﬁnancial year we incurred an interest charge totalling £58 million a decrease
of 12 per cent over the 2003 ﬁnancial year reﬂecting the decrease in net debt over that period in the 2004
ﬁnancial year the principal elements of our interest charge were the interest on our revolving credit facility
amounting to £8 million 2003 £12 million and the interest accrued of £62 million 2003 £63 million on
our longterm bonds which we issued in january 2002 in accordance with uk gaap  we are amortising the
issue costs of our bank facility and our bonds over the lives of the facilities ﬁve and ten years respectively
through the interest line in the proﬁt and loss account amortisation of these costs amounted to £4 million
in the 2004 ﬁnancial year 2003 £3 million we also incur interest charges on the o2 uk loan notes and on
our ﬁnance leases and other borrowings and have received interest on our shortterm investments see the
liquidity and capital resources section on page 35
tax on proﬁt and ordinary activities
we have recognised a tax credit of £71 million for the year ended 31 march 2004 compared to a credit of
£55 million for the year ended 31 march 2003 the increase in the tax credit is principally as a result of the
improved ﬁnancial performance of the group for the 2004 ﬁnancial year and the related recognition of
certain losses as deferred tax assets however overall the group continues to have a net deferred tax liability
balance sheets as at 31 march 2005 and 31 march 2004
our group’s summary balance sheet is presented below
2005 2004
£m £m
fixed assets
intangible assets 7045 7354
tangible assets 4449 3996
investments 2 5
11496 11355
current assets 2473 2043
creditors amounts falling due within one year 2031 1678
net current assets 442 365
creditors amounts falling due after more than one year 1403 1375
provisions for liabilities and charges 254 251
net assets 10281 10094
shareholders’ funds 10281 10094
intangible ﬁxed assets comprise goodwill umts licences and other intangible assets their aggregate
carrying value has fallen from £7354 million at 31 march 2004 to £7045 million at 31 march 2005 this 
is a result of amortisation charges of £200 million against goodwill £169 million against umts licences 
and £82 million against other intangibles these charges are partially offset by gains on foreign exchange
which arise on the retranslation of our eurodenominated intangible assets into sterling and £59 million 
of additions
the carrying value of tangible ﬁxed assets has increased from £3996 million at 31 march 2004 to
£4449 million at 31 march 2005 as a result of £1356 million of additions partly offset by depreciation
charges of £937 million and currency movements of £36 million
investments comprise our investments in joint ventures and associates where the carrying value is positive
net current assets have increased from £365 million at 31 march 2004 to £442 million at 31 march 2005
primarily as a result of an increase in cash and current asset investments during the year which is partially
offset by the amount owing for the proposed ﬁnal dividend
o2com   34
o2arpp006040qxd  6105  759 pm  page 34 creditors falling due after more than one year comprise principally our group’s longterm bonds and have
increased from £1375 million at 31 march 2004 to £1403 million at 31 march 2005 this is primarily
owing to the weakening of the euro during the 2005 ﬁnancial year which has increased the reported
sterling value of our eurodenominated bonds we have also entered into additional ﬁnance leases which 
is partly offset by the movement of amounts nearing maturity into current liabilities
liquidity and capital resources
the following table sets forth our cash ﬂows for the years ended 31 march 2005 2004 and 2003 extracted
from our consolidated ﬁnancial statements
2005 2004 2003
£m £m £m
net cash inﬂow from operating activities 1755 1391 1033
returns on investments and servicing of ﬁnance 43 62 63
tax paid 15 13 4
net cash outﬂow from capital expenditure and ﬁnancial investment 1348 1114 868
acquisitions and disposals 2 6 –
cash inﬂow before management of liquid resources and ﬁnancing 347 196 98
management of liquid resources 302 191 3
net cash outﬂow from ﬁnancing 27 50 47
increasedecrease in cash in the year 18 45 48
net cash inﬂow from operating activities
our operating activities provided cash of £1755 million £1391 million and £1033 million during the 
three years ended 31 march 2005 2004 and 2003 respectively our group operating proﬁt of £341 million
£158 million and loss of £8778 million in each of the years were offset by signiﬁcant noncash depreciation
and amortisation charges totalling £1388 million £1136 million and £9637 million including in 2005 and
2004 exceptional depreciation of £6 million and £2 million respectively and in 2003 an operating exceptional
charge of £8300 million
returns on investment and servicing of ﬁnance
net cash outﬂows for servicing of ﬁnance in the 2005 year have decreased from £62 million to £43 million
in comparison to the 2004 ﬁnancial year the reduction is mostly attributable to higher shortterm
investments generating an increase in interest income of £15 million a dividend of £7 million received 
from our associate and a oneoff cash inﬂow of £22 million arising from the settlement of the crosscurrency
element of our interest rate swaps these inﬂows were offset by cash outﬂows of £32 million on the
settlement of forward foreign exchange contracts as part of our group’s hedging strategy which is discussed
in note 26 to the ﬁnancial statements the cash outﬂow for the year ended 31 march 2005 in respect of
interest paid was £71 million 2004 £78 million 2003 £81 million mostly in relation to our longterm
bonds 
tax paid
the total tax paid by our group in the year ended 31 march 2005 was £15 million an increase over 2004
and 2003 during which the group paid £13 million and £4 million respectively
net cash outﬂow from capital expenditure and ﬁnancial investment
cash outﬂow in respect of capital expenditure for the 2005 ﬁnancial year was £1348 million an increase 
of 21 per cent over the equivalent outﬂow of £1114 million for the 2004 ﬁnancial year this increase 
arises principally in our mobile telecommunications businesses in the uk and germany the increase is a
consequence of the ongoing expenditure on rolling out our planned umts networks which accounted for
35 per cent of capital expenditure at o2 uk and 30 per cent at o2 germany in the year ended 31 march
2005 around 15 per cent of capital expenditure by o2 uk in the 2005 ﬁnancial year related to investment
in new customer care systems
capital expenditure at our o2 airwave business fell in the year ended 2005 from the level in 2004 as the
rollout of the network completed
capital expenditure in the year ended 31 march 2003 of £885 million related mainly to tangible ﬁxed asset
purchases across our footprint in respect of network expansion and improvement 
across our group there are generally timing differences between the recognition of a new ﬁxed asset in our
ﬁnancial statements and the cash payment because we are often able to secure delayed noninterest
bearing payment terms with our capital suppliers 
the following table presents the capital additions recognised for each of the years in the threeyear period
ended 31 march 2005
2005 2004 2003
£m £m £m
continuing operations
o2 uk 638 502 362
o2 germany 388 308 141
o2 ireland 100 52 59
o2 airwave 218 243 163
o2 online – 14 21
other operations 14 11 8
umts licences and other intangible assets 57 83 131
1415 1213 885
discontinued operations
o2 netherlands – 559
total 1415 1218 944
o2com   35
o2arpp006040qxd  6105  759 pm  page 35 operating and ﬁnancial review and prospects continued
total capital expenditure by continuing operations excluding o2 netherlands for the year ended 31 march
2005 has increased by 17 per cent to £1415 million from £1213 million for the year ended 31 march
2004 in 2005 capital expenditure included a network sharing agreement payment in germany of
£57 million in addition to a payment of £83 million made in 2004 in the 2003 ﬁnancial year the group
purchased a umts licence in ireland for £73 million
we expect to incur signiﬁcant capital expenditure in the medium term a material portion of which relates to
the rollout of our umts networks we expect to fund our future capital spend from our bank facilities and
longterm bonds described below and from net cash ﬂows from operations the group will maintain tight
control of its investment programme and in particular will aim to match the timing and quantum of capital
expenditure on our umts network rollout with the emerging demand for mobile data services
acquisitions and disposals
during the year ended 31 march 2005 we invested £2 million in a new joint venture tchibo mobilfunk
during the year ended 31 march 2004 we sold o2 netherlands for €25 million the sale proceeds net of
cash disposed with o2 netherlands were £7 million in 2004 we also invested £5 million in tesco mobile
limited our joint venture with tesco 
financing
during the year ended 31 march 2005 we incurred a net cash outﬂow from ﬁnancing of £27 million 
this was principally in relation to loan repayments of £21 million and the costs of the capital reorganisation
and premium paid to mmo2 shareholders totalling £30 million offset by cash received for issued shares
vesting under various employee share option schemes which realised an inﬂow of £24 million the cash
outﬂow in the year ended 31 march 2004 was £50 million being mainly in relation to loan repayments of
£53 million we also issued shares vesting under various employee option schemes which realised a cash
inﬂow of £3 million the cash outﬂow in the year ended 31 march 2003 was £47 million being mainly the
redemption of o2 uk loan notes during the ﬁrst half of the 2003 ﬁnancial year our ﬁnancing activities are
further described below 
sources of liquidity and capital resources
our principal sources of liquidity are cash from operating activities bank ﬁnancing and bond ﬁnancing
described below 
total gross debt at 31 march 2005 amounted to £1404 million 2004 £1382 million including the o2 uk
hire purchase obligations the qte leases the obligations of which are fully offset by cash deposits held in
trust net debt was £78 million 2004 £366 million included in the total gross debt are €1000 million and
£375 million of eurobonds issued in january 2002 which have a ﬁve year and ten year term respectively
loan notes outstanding in aggregate amounted to £7 million 2004 £8 million and are redeemable at any
time at the option of the holder
as at 31 march 2005 bank ﬁnancing comprised a syndicated facility totalling £1000 million with a ﬁnal
maturity date of 15 october 2009 during the year both the previous £1725m syndicated facility and the
£100m bilateral facility maturing in september 2006 were cancelled as at 31 march 2005 the syndicated
facility was undrawn 
interest on loans drawn under the syndicated facility is calculated at a margin above libor or in the case 
of euro advances euribor the margin varies according to the longterm credit rating assigned to o2 plc
by major credit rating agencies but is subject to a maximum of 06 per cent as at 31 march 2005 the
syndicated facility bears a margin under 05 per cent
interest on our eurobonds is at a ﬁxed rate at 6375 per cent per annum and 7625 per cent per annum 
on the euro and the sterling bond issues respectively interest on the €1000 million bond issue has been
swapped to ﬂoating rate and calculated at a margin above euribor as at 31 march 2004 interest on
€500 million of the eurobond was calculated at a margin above sterling libor as a result of crosscurrency
swaps the cancellation of the crosscurrency element of those swaps as detailed below in foreign 
exchange management resulted in €500 million of the eurobond reverting to a ﬂoating rate calculated
above euribor
the group’s contractual obligations including commitments for future payments under hire purchase
contracts and long and shortterm debt arrangements are summarised in the table below details of these
obligations are fully disclosed in notes 15 16 17 and 23 to the group’s ﬁnancial statements
payments due by period
less than 1 to 3 3 to 5 after
total 1 year years years 5 years
future commitments at 31 march 2005 £m £m £m £m £m
debentures 1056 – 683 – 373
obligations under ﬁnance leases and 
hire purchase contracts 308 40 60 100 108
loan notes 7 7 – – –
other loans and borrowings 33 9 15 9 –
other creditors 55 – 13 6 36
commitments provided in the accounts 1459 56 771 115 517
operating lease commitments
1
1931 205 358 308 1060
other commitments
1
112 25 46 41 –
total future commitments excluding capital 3502 286 1175 464 1577
1
not recognised as a liability by the group in accordance with uk gaap 
o2com   36
o2arpp006040qxd  6105  759 pm  page 36 treasury management and policies
group treasury treasury operates as a centralised service for the group the role of treasury is to identify
monitor and manage ﬁnancial risk within the framework of board approved policies and delegated
authorities treasury is not permitted to add to the ﬁnancial risks inherent in our business and may not
undertake speculative activity
the principal ﬁnancial risks of our group are identiﬁed below
banking covenants
our current policy is to fully fund our business plan through access to the debt capital markets and other
sources of funding borrowing is centralised and there are no material local facilities the group is
committed to maintaining the key ﬁnancial ratios as set out in the covenants relating to the multicurrency
revolving credit facility of group ebitda to interest and net debt to group ebitda as at 31 march 2005
actual ratios were group ebitda to interest of 8840 times 2004 236 times 2003 130 times and net
debt of 004 times group ebitda 2004 03 times 2003 06 times as at 31 march 2005 the group’s
projected funding requirements were fully funded through a combination of bonds issued under the group’s
bond ﬁnancing programme £375 million and €1000 million and committed bank facilities £1 billion
foreign exchange management
the policy of the group is to hedge primarily by the use of forward foreign exchange contracts identiﬁed
foreign exchange ﬂows although the current level of transaction risk exposure is low due to the fact that
cash ﬂows are primarily domestic in each group company the policy of the group regarding foreign
exchange translation risk is to manage material risk on the translation of foreign currency assets and
liabilities into pounds sterling primarily through natural offsets and the use of currency debt crosscurrency
and foreign exchange swaps and forwards at 31 march 2004 the majority of net debt was denominated 
in pounds sterling after taking account of the effect of derivative and non derivative hedging instruments
as anticipated in the 2004 annual report and accounts the cash ﬂows in the euro denominated overseas
businesses and the improved visibility of their future ﬁnancial proﬁle has led us to increase the level of
hedging of our overseas assets this was achieved through the redenomination of our existing euro debt
through the cancellation of crosscurrency and foreign exchange swaps and the use of forward foreign
exchange contracts totalling €1800 million the ongoing effect of this hedging is that the €1000 million
of euro borrowings and the forward foreign exchange contracts are exposed to foreign exchange rate
ﬂuctuations which are recognised in the statement of total recognised gains and losses as they hedge net
investments in overseas businesses 
interest rate management
the debt level within the group is a key determinant of the impact of interest rates it is current policy to ﬁx
or protect expected interest ﬂows where group proﬁts or key ﬁnancial ratios would be materially at risk
from interest rate movements treasury maintains the proportion of ﬁxed rate debt within a board approved
range of 25 to 75 per cent by the issuance of ﬁxed rate debt and the use of derivative instruments primarily
interest rate swaps as at 31 march 2005 and after taking into account the effect of derivative instruments
38 per cent 2004 39 per cent 2003 36 per cent of gross borrowings excluding the qte lease which is
fully defeased were ﬁxed for a period of at least three years 2004 three years 2003 three years based 
on the net debt as at 31 march 2005 a one per cent rise in market interest rates would increase debt costs
which would be more than offset by investment deposit returns the effect on our group’s proﬁt before 
tax of a one per cent rise in market interest rates would be an increase of £3 million 2004 nil 2003
adverse effect £7 million
credit risk management
it is our current policy to mitigate credit risk to our ﬁnancial counterparties through the application of strict
counterparty limits counterparty limits are based on credit ratings issued by the main credit rating agencies
and outstanding transactions are weighted according to potential risk to the group counterparty limits are
reviewed on a regular basis by treasury
off balance sheet arrangements
we do not participate in or secure ﬁnancing for any unconsolidated special purpose entities
research and development patents and licences
we have not engaged in any signiﬁcant research and development activities during any of the last three
ﬁnancial years
outlook and prospects
in o2 uk we expect midsingle digit growth in net service revenue reﬂecting the remaining ﬁve months’
impact of the september 2004 termination rate cut and continuing competition in what is now a highly
penetrated mobile market the ebitda margin is expected to remain broadly stable reﬂecting the
competitiveness of the market and o2 uk’s programme to allocate substantial resources to develop additional
customerfacing capabilities and achieve higher longterm customer retention
in o2 germany we expect to deliver further strong service revenue growth mainly driven by continued rapid
growth of the customer base the ebitda margin is expected to improve further to around 20 per cent
reﬂecting o2 germany’s continuing prioritisation of revenue growth as well as the impact of umts network
running costs and the continued costs of national roaming
capital expenditure is expected to be broadly in line with the total incurred in the year ended 31 march 2005
excluding the network sharing agreement payments in germany with higher umts network investment
particularly in germany offsetting the reduction in o2 airwave capital expenditure due to completion of the
police network rollout
in the ﬁveyear period from 1 april 2004 o2 germany is expected to incur total capital expenditure in the
range €3 billion to €35 billion which is €1 billion to €15 billion higher than previously planned
o2com   37
o2arpp006040qxd  6105  759 pm  page 37 operating and ﬁnancial review and prospects continued
international financial reporting standards
the council of the european union announced in june 2002 that listed companies in europe would be
required to adopt international financial reporting standards ifrs for accounting periods beginning on or
after 1 january 2005 the adoption of ifrs will apply to the group for the ﬁrst time for the year ending
31 march 2006 
in 2003 the group formed a project team to manage the transition from existing uk generally accepted
accounting principles uk gaap to ifrs the project is sponsored by the chief financial ofﬁcer and involves
specialists from the group finance function as well as representatives from each of the group’s operating
businesses the project is mostly complete and we expect to publish our ﬁrst ifrs reconciliation comprising
our transition balance sheet at 1 april 2004 and the proﬁt and loss account and balance sheet for the six
months ended 30 september 2004 and the year ended 31 march 2005 in july 2005 at the time of our ﬁrst
quarter nonﬁnancial metrics press release
the initial phase of the project involved a high level assessment of potential issues the preparation of a
project plan and identiﬁcation of the key work streams in the operating businesses and at a group level
supported by work programmes in these areas we also considered which if any of the optional transitional
provisions within ifrs 1 “first time adoption of international financial reporting standards” to adopt the
second phase of the project involved the restatement and reconciliation of opening balances to ifrs and the
adjustment of reporting systems to capture new data requirements for ongoing ifrs reporting
in preparing the discussion below we have used our knowledge of the expected standards and
interpretations which we expect to apply in our ﬁrst full ifrs ﬁnancial statements however the facts
circumstances and accounting policies we adopt could change by that date ifrs is subject to ongoing
review and endorsement by the european union and possible amendment by interpretative guidance from
the international accounting standards board may occur ifrs is also being applied in the united kingdom
and in a large number of other countries simultaneously for the ﬁrst time  owing to a number of new 
and revised standards in ifrs there is not yet a signiﬁcant body of established practice to use in forming
opinions regarding interpretation and application accordingly practice is continuing to evolve at this
preliminary stage therefore the full ﬁnancial effect of reporting under ifrs as it will be applied and 
reported on in our group’s ﬁrst ifrs ﬁnancial statements cannot be determined with certainty and 
may be subject to change
however our work on the project indicates that the major areas of difference between uk gaap and ifrs
which will impact our group comprise the following 
goodwill
ifrs 3 “business combinations” prohibits the annual amortisation of goodwill and instead subjects such
goodwill to an annual impairment review the carrying value of our goodwill at the date of transition to 
ifrs is ﬁxed and the amortisation ceases from that date
intangible assets
ias 38 “intangible assets” considers inter alia whether an asset which incorporates both tangible and
intangible elements should be classed as a tangible ﬁxed asset or an intangible ﬁxed asset the treatment is
determined by an assessment of which element is more signiﬁcant certain elements of our software which
are currently classed as a tangible ﬁxed asset will be reclassiﬁed to intangible ﬁxed assets 
pension accounting
under uk gaap  we account for our pension schemes using ssap 24 “pension costs” and have elected
under the transitional rules of frs 17 “retirement beneﬁts” to make disclosures only ias 19 “employee
beneﬁts” is similar but not identical to frs 17 ias 19 and frs 17 are conceptually different to ssap 24 
as they require any deﬁned beneﬁt pension scheme surplus or deﬁcit to be recognised on our group’s
balance sheet
on transition to ifrs we expect to recognise the full assets and liabilities of our deﬁned beneﬁt pension
schemes on our balance sheet thereafter ias 19 permits two approaches for the recognition of actuarial
gains and losses under the ﬁrst option a portion of actuarial gains and losses are recognised on our
balance sheet based on the application of a “corridor” this corridor is deﬁned as the greater of 10 per cent
of the scheme’s assets or liabilities and actuarial gains and losses below this threshold are not required to be
recognised any actuarial gains and losses exceeding the corridor are recognised in the proﬁt and loss
account over a period representing the expected average remaining working lives of employees participating
in the scheme under the second option actuarial gains and losses are recognised in full in the statement of
changes in equity rather than in the proﬁt and loss account in the period in which they arise the proﬁt and
loss account charge comprises an operating cost and an interest cost our principal pension scheme the
o2 pension plan operates for the majority of uk employees and is divided into deﬁned beneﬁt and deﬁned
contribution sections the deﬁned beneﬁt section comprises mainly active members because all deferred and
pensioner members at 30 june 2002 remained in the bt pension scheme following our demerger from bt in
november 2001 
accounting for share schemes
we have historically accounted for share scheme costs under uk gaap using the intrinsic value ifrs 2
“share based payments” requires the value of all share based payments to be measured and an expense
recognised in the proﬁt and loss account based on fair value the fair value of the share schemes is
estimated using a valuation model and involves complex mathematical modelling it is often but not always
the case that the fair value is higher than the intrinsic value additionally under uk gaap  inland revenue
approved saye schemes are exempt from the requirement to recognise a charge whereas under ifrs there is
no such exemption 
financial instruments
ias 39 “financial instruments recognition and measurement” details how to value and account for all
ﬁnancial instruments including derivative instruments such as interest rate swaps crosscurrency swaps and
forward contracts used to reduce exposure to interest rate and currency risk under ias 39 all ﬁnancial
o2com   38
o2arpp006040qxd  6105  759 pm  page 38 instruments are required to be recognised on the balance sheet at fair value if a derivative ﬁnancial
instrument is designated as a hedge the movement in the fair value of the derivatives can be recognised
directly through reserves in certain circumstances which offsets the opposite movement in the fair value of
the hedged item also in reserves all other movements in the fair value of ﬁnancial instruments must be
recognised as an income or expense in the proﬁt and loss account
we have prepared documentation in line with the provisions of ias 39 for all hedging instruments and have
established an ongoing procedure for testing the effectiveness of these hedges which should permit the
adoption of hedge accounting for our ﬁnancial instruments
deferred taxation
ias 12 ”income taxes“ bases the calculation of the deferred tax assets and liabilities on the difference
between tax carrying values and balance sheet carrying values rather than the income statement approach
required by frs 19 ”deferred tax“ as a result the scope of ias 12 is wider than that of frs 19
ias 12 requires a deferred tax liability in respect of rolled over gains to be recognised irrespective of whether
there is an expectation that the gain will crystallise we expect to recognise a deferred tax liability on
transition to ifrs relating to a gain arising prior to our demerger from bt the gain arose on bts disposal 
of the uk yell business and was rolled over into the goodwill purchased on the acquisition of o2 germany 
on the subsequent disposal of this goodwill for tax purposes the deferred tax liability will reverse and be
recognised as a credit in the proﬁt and loss account of the group in the period in which it reverses
business risks
we face increasing competition from new and existing providers of mobile services
we are competing increasingly with new mobile service providers virtual network operators and resellers 
of mobile services also competition from existing service providers may be more intense than anticipated
driving down prices failure to compete effectively could result in a decrease in our customers revenues 
and proﬁtability
we face competing technologies
we face competition from communications technologies that are under development or that will be
developed in the future including cordless technologies and private and shared radio networks as a 
result of current trends in the telecommunications industry in europe such as the rapid convergence of
technologies we expect there to be further technological advances in the future failure to compete could
result in a decrease in our customers revenues and proﬁtability
alleged health risks associated with mobile telecommunications could lead to decreased usage of
our services and products increased difﬁculty in obtaining transmitter sites or potential liability
public concern about the alleged or perceived health risks of mobile communications could have a
detrimental impact on our business through negative customer perception of our brand services or
products difﬁculties in retaining or attracting customers reduced usage times per customer of our mobile
telecommunications services or increased difﬁculty in obtaining transmitter sites there can be no assurance
that further medical research and studies will refute a link between the radio frequency emissions of wireless
handsets and base stations and these health concerns government authorities could increase regulation of
wireless handsets and base stations as a result of these health concerns or wireless companies including us
could be held liable for costs or damages associated with these concerns which could have a negative
impact on our business
in addition regulators may reduce the prescribed limits for exposure to electromagnetic radiation in the
countries in which we operate which would mean that the exclusion areas around our antennas in those
countries may have to increase in some situations in this event we may suffer additional costs associated
with repositioning our network equipment and we may experience delays in the rollout of our networks
we fail to maintain the momentum necessary to achieve economic scale in germany
if our increased network investment fails to deliver a highquality customer experience from our own 
umts platform this could have a signiﬁcant negative impact on the proﬁtability of our business
implementation of a new billing and operational system for o2 uk
implementation may affect operational performance and customer satisfaction if the major releases are not
completed successfully our reputation may be damaged by real or implied failure of our billing systems
resulting in a signiﬁcant negative impact on the proﬁtability of our businesses
o2com   39
risk factors
o2arpp006040qxd  6105  759 pm  page 39 we may fail to achieve our strategic goal of earning revenues from more sophisticated 
data services
if the market for nonsms data services does not grow as quickly as we currently anticipate and sms yields
fall faster than we currently anticipate and voice price erosion increases faster than we currently anticipate
and if we do not build the correct business model and capabilities to remain competitive in the dataworld
we could experience a negative impact on our business and results of operations
we may be disadvantaged by our umts offerings
our umts offerings may suffer as a consequence of later launches this could have a negative impact on
our business and our results of operations
misuse of our networks by our customers through fraud or in a way that damages our reputation
certain customers may misuse our networks in ways which damage our reputation for example using the
network to make inappropriate contact with children spamming or propagation of viruses certain
customers may also misuse our networks in ways which impact our costs or revenues including fraud 
this could have a negative impact on our business
we may fail to positively differentiate our customer experience andor fail to implement our
customer plan
slower implementation timetables higher costs and poorer customer experience may undermine the value
of our brand and could limit our ability to attract and retain high value customers which in turn could have
a negative impact on our business and our results of operation
competition law and regulatory risks
we operate in highly regulated markets that limit our ﬂexibility to manage our business
we must comply with an extensive range of requirements that regulate and supervise the licensing
construction and operation of our networks and the provision and pricing of our products and services in
countries in which we operate we must also cooperate with agencies or other governmental authorities
that regulate and supervise the allocation of frequency spectrum and which monitor and enforce regulation
and competition laws which apply to the mobile telecommunications industry our business and results of
operations could be materially adversely affected by changes in the law regulation or government policies
directed at the mobile telecommunications markets in which we operate in particular decisions by
regulators and competition authorities relating to tariffs interconnection or the effects of expansion into
new markets or the accessibility of our network to mobile virtual network operators or service providers
could have a negative impact on our business and results of operations 
action by the commission or regulators may result in ﬁnes and a decrease in roaming revenues
if the commission ﬁnds that there have been infringements of article 82 ec treaty in the markets for
international roaming services in which we operate it may ﬁne us the commission could also require us to
reduce our wholesale charges for international roaming or to change the way in which such charges are set
in addition national regulators in the uk germany or ireland may seek to regulate our international roaming
charges if they ﬁnd that we have smp on the wholesale roaming market 
any ﬁnes or future regulation of roaming charges could have a negative impact on our business and results
of our operations
we may be subject to new regulatory obligations 
new or more onerous regulatory obligations may be imposed on us under the eu regulatory framework in
germany the uk and ireland depending upon the obligations imposed this could have a signiﬁcant effect
on the proﬁtability of our businesses
we face increased regulation in ireland
in ireland comreg has determined that we have smp in the mobile access and origination market and has
required us to meet reasonable requests for wholesale access including national roaming by third parties 
on a nondiscriminatory basis comreg has reserved the right to intervene in the event that commercial
negotiations fail or should intervention otherwise be required if this happens comreg may require us to
comply with cost orientation cost accounting and accounting separation obligations we are appealing both
the smp and remedies decisions but if unsuccessful we will continue to be subject to this increased
regulation in the market which could have a signiﬁcant effect on the proﬁtability of our business in ireland
o2com   40
risk factors continued
o2arpp006040qxd  6105  759 pm  page 40 o2com   41
board of directors
david arculus 58 chairman
b d
david arculus was appointed to the board in 2003 and became chairman on 28 july 2004 at the conclusion
of mmo2’s 2004 annual general meeting mr arculus is chairman of the better regulation task force and 
a nonexecutive director of barclays he has also served as chairman of severn trent mr arculus was
previously chairman of ipc group limited and before that group managing director of emap  
executive directors
peter erskine 53 chief executive ofﬁcer
b c
peter erskine was appointed to the board in 2001 as chief executive ofﬁcer he joined the company from
bt where since march 1993 he held a number of senior positions including director of bt mobile president
and chief executive of concert and from 1998 managing director of bt cellnet prior to joining bt he 
was european vice president of sales and customer service for mars and senior vice president sales and
marketing for unitel mr erskine is also a member of the advisory board of the university of reading
business school
david finch 49 chief financial ofﬁcer
b c
david finch was initially appointed to the board in 2001 mr finch is the company’s chief financial ofﬁcer
and has extensive experience in ﬁnancial management having previously held senior ﬁnance positions at
exel novar formerly caradon and grand metropolitan in addition to group finance he has direct
responsibility for the group treasury and investor relations functions
rudolf gröger 50 ceo o2 germany
c
rudolf gröger was appointed to the board in 2003 he joined the company in october 2001 as chief
executive ofﬁcer of o2 germany prior to this he was managing director of tsystems international gmbh
a subsidiary of deutsche telekom from 1999 to 2001 he played a key role in the acquisition of debis
systemhaus gmbh and its integration into deutsche telekom he has also worked for siemens and was
head of its german information and communication product operations
nonexecutive directors
stephen hodge 63
a d e
stephen hodge was appointed to the board in 2001 mr hodge was director of finance of the royal
dutchshell group prior to his retirement in september 2001 where he had responsibility for all ﬁnancial
and investor relations issues for the shell group and its parent companies he has extensive knowledge of
the ﬁnancial management of international companies having worked throughout the world including
australia the netherlands venezuela and argentina in a variety of ﬁnancial positions he is chairman of
shell pensions trust limited and deputy chairman of the franchise board of lloyd’s of london mr hodge
was appointed as nonexecutive deputy chairman and senior independent director on 1 january 2005
david chance 48
a d
david chance was appointed to the board in 2003 mr chance was deputy managing director of bskyb
until june 1998 and is chairman of modern times group and top up tv limited and is a nonexecutive
director of itv and sunderland afc he previously held senior marketing and business development roles at
us telecoms companies scientiﬁc atlanta and grass valley group and european satellite broadcaster ses 
rudolf lamprecht 56 
rudolf lamprecht was appointed to the board on 30 march 2005 he is presently a member of the
management committee of siemens with responsibility for osram lighting the fujitsu joint venture and
household appliances he was previously a board member at siemens and held a number of senior positions
including president of information and communications products he is highly experienced in complex
businesstobusiness technology sales cycles and multiple channels to market 
patrick lupo 54
e
patrick lupo was appointed to the board on 10 august 2004 mr lupo was previously chief executive and
then executive chairman of dhl worldwide express he is currently a nonexecutive director of hilton group
and was also until march 2004 a nonexecutive director of wh smith patrick lupo held a number of
senior positions at dhl airways inc and dhl worldwide express between 1984 and 2001 where he was
instrumental in establishing it as the global market leaders in international express and logistics
kathleen o’donovan 47
a
kathleen o’donovan was appointed to the board on 30 march 2005 she currently chairs both the audit
committee of the court of the bank of england and the pension fund of invensys the engineering group
where she was previously chief financial ofﬁcer she is also deputy chairman and senior nonexecutive
director of great portland estates and holds nonexecutive directorships at prudential and emi group
andrew sukawaty 49
d e
andrew sukawaty was appointed to the board in 2001 mr sukawaty was the nonexecutive deputy
chairman of the company and senior independent director until 31 december 2004 he is chairman and
chief executive ofﬁcer of inmarsat group he is president of cable partners europe llc which invests 
in and operates cable television services in europe he is chairman of xyratex group limited he is a 
former chairman of telenet he has considerable experience in the mobile telephone industry and
telecommunications industries in the united states and europe having at different times in those periods
held the offices of chief executive and president of sprint pcs chief executive ofﬁcer of ntl and chief
operating ofﬁcer of mercury one2one he has also been a former chairman of the cellular telephone and
internet association ctia in the united states
company secretary and general counsel
philip bramwell 48
philip bramwell joined the company from bt where he was employed since 1998 initially as legal manager
group strategy and development and then as chief counsel corporate development before joining 
bt he was a partner in ddv a european specialist telecommunications consultancy ﬁrm prior to this 
he held the position of vice president and general counsel at bellsouth europe and legal advisor at
smithklinebeecham pharmaceuticals international division he was called to the bar in 1983
key to membership of board committees
a audit committee 
b chairman’s committee 
c executive committee 
d nomination and governance committee 
e remuneration committee
all of the nonexecutive directors are considered independent of the management of the company
o2arpp041qxd  6105  759 pm  page 41 o2com   42
report of the directors
the directors have pleasure in presenting to shareholders their report and the audited ﬁnancial statements
of o2 plc for the year ended 31 march 2005 
new holding company
o2 plc was incorporated on 10 december 2004 and it became the holding company of mmo2 plc and the
mmo2 group of companies on 14 march 2005 pursuant to a scheme of arrangement under section 425 of
the companies act 1985 the scheme 
scheme of arrangement 
the scheme was overwhelmingly approved by shareholders at a court meeting and extraordinary general
meeting of mmo2 plc held on 14 february 2005 under the scheme shares in mmo2 plc were exchanged
for shares in o2 plc on a oneforone basis shareholders also had the option of electing to receive in
exchange for their existing shares in mmo2 either new shares in o2 plc or cash consideration under the
cash alternative shareholders who took no action were deemed to have elected for the cash alternative
the o2 plc shares of holders who successfully elected for the cash alternative were placed in the market
this was limited to 300000000 o2 plc shares
references to the company and the board throughout this annual report and financial statements refer to
o2 plc from 14 march 2005 onwards and prior to that to mmo2 plc references to the group refer to o2
plc and its subsidiaries from 14 march 2005 onwards and prior to that to mmo2 plc and its subsidiaries
as part of the scheme mmo2 adrs were delisted from the new york stock exchange on 11 march 2005
and neither an adr programme nor a us listing has been established for the shares in o2 plc
the board is currently pursuing deregistration of o2 plc shares from the securities and exchange
commission in order to facilitate this deregistration process the o2 articles of association include
temporary provisions to limit ownership of o2 plc shares by us resident shareholders 
principal activity
the group is a leading provider of mobile communications services in europe and has traded through its
whollyowned subsidiaries in the uk germany ireland and the isle of man throughout the year the group
also provides a nationwide mobile radio service designed to serve the needs of the police and other
emergency services in england wales and scotland through o2 airwave o2 uk has a 50 per cent interest
in a joint venture tesco mobile to sell exclusively tesco branded mobile services in tesco stores across the
uk using o2’s technology and network in addition o2 germany has a 50 per cent interest in tchibo
mobilfunk a joint venture with tchibo gmbh which is selling an o2 prepay mobile service in germany it is
also a founding member of the starmap mobile alliance a group of independent mobile phone operators
who have joined forces in readiness for the international rollout of umts services the business review on
pages 6 to 19 and the operating and ﬁnancial review and prospects on pages 21 to 39 contain a review of
the business during the year and an indication of future developments and form part of this report
results 
the audited ﬁnancial statements are presented on pages 66 to 89 the directors are pleased to recommend
an inaugural ﬁnal dividend of 225 pence per share for the year ended 31 march 2005 this dividend will be
paid on 26 august 2005 to shareholders on the register on 5 august 2005
directors
the names and biographical details of the current directors of o2 plc are given on page 41
all the directors of mmo2 plc who held ofﬁce on 4 january 2005 were appointed to the board of o2 plc by
shareholders’ resolution on 4 january 2005 rudolf lamprecht and kathleen o’donovan were additionally
appointed on 30 march 2005 and ian meakins and david mcglade resigned on 30 march 2005 and 
31 march 2005 respectively peter king and adrian knight were directors of o2 plc from incorporation 
until their resignations on 5 january 2005
during the year david varney retired as a director and chairman of mmo2 plc on 28 july 2004 at the
conclusion of the 2004 annual general meeting and david arculus became chairman from that time 
paul myners and neelie kroes resigned from the board on 10 august 2004 and 31 august 2004 respectively
and patrick lupo who was appointed to the board on 10 august 2004 was elected a director of the
company by shareholders at the extraordinary general meeting of mmo2 plc held on 14 february 2005
the company’s articles of association provide that directors are required to retire by rotation every three
years it is the board’s intention that shareholders will be given the opportunity to reelect directors within
that timescale david chance and rudolf gröger will retire by rotation this year and are proposed for 
reelection at the 2005 annual general meeting together with david arculus who changed his role during
the year in addition any director appointed during the year is required to retire and seek election by
shareholders at the next annual general meeting accordingly rudolf lamprecht and kathleen o’donovan
will seek election at the forthcoming annual general meeting
details of the directors’ service contracts emoluments and share interests as at the ﬁnancial yearend can be
found in the report on directors’ remuneration on pages 51 to 64
share capital
details of the authorised and issued share capital of the company at 31 march 2005 and details of share
allotments made during the year are given in note 19 to the ﬁnancial statements
by a special resolution of the shareholders dated 5 january 2005 02 plc was authorised to make market
purchases of up to 871175625 of its own ordinary shares this authority expires at the conclusion of the
2005 annual general meeting and a similar authority will be sought at that meeting for a further year
based on approximately 10 per cent of the company’s issued share capital as at 31 march 2005 
o2arpp042044qxd  6105  759 pm  page 42 o2com   43
substantial shareholdings
at 10 may 2005 the following notiﬁcations had been received by the company in respect of holdings of
three per cent or more of the company’s issued share capital
number of percentage of
o2 plc issued ordinary
shareholder ordinary shares share capital 
the capital group companies inc 649424088 746
legal  general investment management limited 308947551 354
interest of management in certain transactions
during and at the end of the 2005 ﬁnancial year none of the company’s directors had a signiﬁcant interest
in any material transaction in relation to the group’s business
employees 
the company operates a number of employee share schemes including savingsrelated option schemes
which encourage regular saving and enable employees to acquire options over shares in the company and
an all employee share ownership plan in the uk allowing employees to buy shares in the company 
the company has a wide range of communication channels with employees including facetoface
meetings team brieﬁngs audio conferences and a comprehensive company intranet that includes a regular
newsletter the aim of all these channels is to ensure employees fully understand the group’s objectives and
its operational and ﬁnancial performance in addition the company conducts annual attitude surveys and
maintains a constructive dialogue with unions employee representative bodies and works councils 
the company continues to be committed to the development of all people in the organisation and actively
promotes this through many training and development initiatives people are encouraged and supported in
maintaining personal development plans the company has invested in elearning technology to give people
better access to a wide range of learning opportunities
the group is committed to employment policies that follow best practice based on equal opportunities for
all and recognises that a diverse workforce is a strength in a competitive marketplace the company has a
diversity champion at executive committee level and integrates equal opportunity into all its management
processes this approach extends to the fair treatment of people with disabilities in relation to their
recruitment training and development full consideration and every effort are given to the retention of people
who become disabled during employment o2 uk is a member of the employers’ forum on disability
policy on the payment of suppliers 
the group aims to pay all of its creditors promptly the payment terms for major contracts are agreed at the
same time as other terms are negotiated with individual suppliers it is the group’s policy to make payments
for other purchases within 30 working days of the invoice date provided that the relevant invoice is
presented in a timely fashion and is complete
the group had 35 days’ purchases outstanding as at 31 march 2005 2004 34 days based on the average
daily amount invoiced by suppliers during the year
corporate governance
a report on corporate governance is set out on pages 45 to 50
community involvement
during the ﬁnancial year the group made cash donations to charitable and community organisations
totalling £2239795 of which £636266 was made from ukbased companies as in previous years no
political donations were made further details regarding the company’s involvement in the community 
are set out in the corporate responsibility section of this report on pages 19 to 21
auditors
resolutions concerning the appointment of the auditors and authorising the directors to set their
remuneration will be proposed at the annual general meeting
annual general meeting 
the resolutions to be proposed at the annual general meeting to be held on wednesday 27 july 2005
together with explanatory notes appear in the separate notice of annual general meeting sent to all
shareholders
by order of the board
philip bramwell
company secretary and general counsel
17 may 2005
registered ofﬁce wellington street slough 
berkshire sl1 1yp
registered number 5310128
o2arpp042044qxd  6105  759 pm  page 43 o2com   44
statement of directors’ responsibility
company law requires the directors to prepare ﬁnancial statements for each ﬁnancial year that give a true
and fair view of the state of affairs of the company and the group and of the proﬁt or loss of the group for
that period
in preparing these ﬁnancial statements the directors are required to
 select suitable accounting policies and then apply them consistently
 make judgements and estimates that are reasonable and prudent
 state whether applicable accounting standards have been followed subject to any material departures
disclosed and explained in the ﬁnancial statements
the directors conﬁrm that they have complied with the above requirements in preparing the ﬁnancial
statements the ﬁnancial statements have complied with uk disclosure requirements in this report in order
to present a consistent picture to all shareholders
the directors are responsible for keeping proper accounting records that disclose with reasonable accuracy
at any time the ﬁnancial position of the company and the group and to enable them to ensure the ﬁnancial
statements comply with the companies act 1985 they are also responsible for safeguarding the assets of
the company and the group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities
the directors are responsible for the maintenance and integrity of the group website the directors
understand that uncertainty regarding legal requirements is compounded as information published on the
internet is accessible in many countries with different legal requirements relating to the preparation and
dissemination of ﬁnancial statements
by order of the board
philip bramwell 
company secretary and general counsel
o2arpp042044qxd  6105  759 pm  page 44 o2com   45
report on corporate governance
the board supports high standards in corporate governance the application during the ﬁnancial year of the
principles in section 1 of the july 2003 combined code on corporate governance the combined code is
described in the appropriate sections of this statement and in the report on directors’ remuneration on
pages 51 to 64 
the directors consider that the company has fully complied with the provisions set out in section 1 of the
combined code except in the following respects david arculus was also chairman of severn trent plc at
the time of his appointment on 28 july 2004 mr arculus conﬁrmed before his appointment that he would
relinquish his chairmanship of severn trent plc by 31 december 2004 and has done so the service contract
in respect of rudolf gröger is now terminable on 12 months’ notice however in the event of termination 
of mr gröger’s employment within 12 months of a change of control of o2 or its german business the
employer is obliged to make a cash payment equal to two times his base salary and a payment equal to 
the bonus expected for an ontarget performance
the board
the directors’ biographies appear on page 41
the board currently comprises the chairman chief executive ofﬁcer chief financial ofﬁcer one further
executive director and six nonexecutive directors which is considered to be an effective size and balance
for the company the board considers that all the nonexecutive directors are independent under the 
criteria set out in the combined code in determining that position the board in particular had regard
to rudolf lamprecht’s membership of the management committee of siemens which has a business
relationship with the o2 group the level of that business relationship is not considered material in the
overall o2 group context and therefore would not affect or interfere with or compromise his independent
judgement as a director of the company the board also considered that david arculus was independent
at the date of the announcement of his appointment as chairman in 2004
the division of responsibilities between the chairman and the chief executive ofﬁcer has been set out in
writing and agreed by the board 
during the year stephen hodge replaced andrew sukawaty as deputy chairman and senior independent
director the deputy chairman is recognised as the senior independent director to whom concerns can be
conveyed independently of the chairman chief executive ofﬁcer or chief financial ofﬁcer by other
directors or by shareholders
the differing roles of executive directors and nonexecutive directors are clearly delineated with both having
ﬁduciary duties towards shareholders
nonexecutive directors are appointed initially for three years the nonexecutive directors’ letters of
appointment set out their expected time commitment and key elements of the role their appointment is
subject to one month’s notice from either the company or the director towards the end of the threeyear
period the board will consider whether to continue the appointment for a further threeyear period where
appropriate the threeyear period commences from the time the nonexecutive director ﬁrst became a
director of mmo2 plc
at the time of a director’s appointment to the board an internal induction programme is provided on the
group’s strategic and business plans and developments to date the content of this induction programme
and where appropriate any additional training which may be required by the director is kept under review
directors are also advised of their legal and other obligations as a director of a listed company 
in accordance with the combined code and the company’s articles of association all directors submit
themselves for reelection every three years 
the board as a whole is collectively responsible for the success of the company and provides entrepreneurial
leadership of the company within a framework of prudent and effective controls which enables risk to be
assessed and managed it sets out the company’s values and standards and ensures that its obligations to its
shareholders and other stakeholders are understood and met 
the board has regular scheduled meetings throughout the year together with an annual offsite conference
to review and discuss corporate strategy main board meetings are also held periodically at the premises of
the operating countries of the group additional meetings are held as necessary during the ﬁnancial year
ended 31 march 2005 the board had eight scheduled board meetings 
the board has a formal schedule of matters speciﬁcally reserved to it for decision including the approval of
strategic plans and the annual operating plan signiﬁcant investments and capital projects and treasury and
risk management policies all directors take decisions objectively in the interests of the company 
guidelines are in place concerning the content presentation and timely delivery of papers by management
to directors for each board meeting so that the directors have enough information to be properly briefed
where issues arise at board meetings the chairman ensures that all directors are properly briefed and
where necessary appropriate further enquiries are made 
all directors have access to the advice and services of the company secretary who under the direction of
the chairman is responsible to the board for ensuring that board procedures are followed maintaining
compliance with all applicable rules and regulations and advising the board on all governance matters 
the appointment and removal of the company secretary is a matter for the board as a whole there is 
an agreed procedure for enabling the directors to take independent professional advice at the company’s
expense should they consider this to be necessary 
o2arpp045050qxd  6105  800 pm  page 45 o2com   46
report on corporate governance continued
whilst not actively involved in the daytoday management of the company the nonexecutive directors play
an important role in bringing their independent judgement and considerable knowledge and experience to
the board’s deliberations with their advice being reﬂected in management meetings they have regular
contact with senior managers in the businesses 
during the ﬁnancial year the chairman met regularly with nonexecutive directors without the executive
directors present and the nonexecutive directors also met without the chairman present under the
leadership of the senior independent director the deputy chairman carried out a review of the chairman’s
performance
during the ﬁnancial year the board conducted an internal review of its performance and that of its principal
board committees and individual directors each director completed a comprehensive questionnaire and
there were onetoone interviews between the chairman and each director directors were asked to
comment on matters such as the culture and approach of the board the effective setting of strategy based
on information about the business and how the market operates the quality and timeliness of information
provided the composition of the board the role of the senior independent director board meeting
processes the form of continuing professional development and communication of board decisions and
discussions the results of this review were considered in onetoone discussions with the chairman and
collectively at a board meeting the directors concluded that the board and its committees operated
effectively and that as individuals the directors were each contributing to the overall effectiveness of 
the board
there is a programme of regular dialogue with major institutional shareholders and fund managers and
summaries of these discussions and meetings are provided to the board these summaries and reports
enable the directors to gain an understanding of the views and opinions of those with an interest in the
company
the company maintains directors’ and ofﬁcers’ liability insurance in respect of legal action that might be
brought against its directors the companies audit investigations and community enterprise act 2004
came into force on 6 april 2005 this act amends the companies act 1985 by permitting the grant of
qualifying third party indemnity provisions qtpip by a company to its directors such indemnities extend
amongst other things to the payment of a director’s defence costs in an action brought by the company or
by a third party subject to the repayment of such costs in certain circumstances the board believes that it is
in the best interests of the company to attract and retain the services of the most able directors by offering
competitive terms of engagement including the granting of indemnities on terms consistent with the latest
statutory provisions accordingly on 13 may 2005 the board approved the granting of indemnities in the
form permitted by the qtpip to all directors further details of the indemnities will be included in the
directors’ report in the company’s 2006 annual report
the board has adopted appropriate governance policies dealing with the conduct of board affairs and has
delegated responsibility for monitoring the daytoday performance of the group as a whole allocation of
resources within agreed plans implementation of policies and decisions relating to speciﬁc valuerelated
commitments to the executive committee and designated managers in accordance with a schedule of
delegated authorities
attendance
the attendance of directors at programmed board and principal board committee meetings held during the
year is detailed in the table below
nomination and 
governance remuneration
director board audit committee committee committee
held attended held attended held attended held attended
d arculus 8 8 2 2 4 3 na na
d chance 8 8 4 4 4 3 na na
p erskine 8 8 na na na na na na
d finch 8 8 na na na na na na
r gröger 8 7 na na na na na na
s hodge 8 8 4 4 2 2 8 7
n kroes 4 3 2 2 na na 3 2
r lamprecht – – na na na na na na
p lupo 5 4 na na na na 5 5
d mcglade 8 8 na na na na na na
i meakins 8 6 4 2 na na 7 5
p myners 4 3 na na 2 2 3 2
k o’donovan – – – – na na na na
a sukawaty 8 7 na na 4 4 8 8
d varney 3 3 na na 1 1 na na
during the period a director was in ofﬁce or a member of a committee
the board also met as required in relation to the scheme of arrangement of mmo2 plc arrangements were
made for any directors who were unable to attend meetings to discuss the agenda items with the relevant
chairman of that meeting in advance
board committees
the board has delegated authority to the committees described below on speciﬁc matters all of the
committees have formal terms of reference minutes of meetings are formally recorded 
the terms of reference of the audit nomination and governance and remuneration committees are
posted on the company’s website and are available on request from the company secretary and general
counsel who acts as secretary to these committees the board reviews the membership of the committees
on an annual basis at the start of each ﬁnancial year or more frequently as circumstances require 
o2arpp045050qxd  6105  800 pm  page 46 o2com   47
chairman’s committee
chairman david arculus 
the chairman’s committee advises and assists the chairman in the preparation for board meetings 
the committee also acts on behalf of the board between scheduled board meetings in exceptional
circumstances where it is not possible or practicable to convene a meeting of the board in addition to the
chairman peter erskine and david finch are members of the committee david arculus became a member
and chairman of the committee on 28 july 2004 when david varney retired from the board
audit committee
chairman stephen hodge 
the committee comprises stephen hodge david chance and kathleen o’donovan appointed 30 march
2005 during the year neelie kroes and ian meakins were members of the committee until their
resignations from the board on 31 august 2004 and 30 march 2005 respectively in addition david 
arculus was a member of the committee until 28 july 2004 when he became chairman of the company
since that time he has attended meetings of the committee in his capacity as chairman at the invitation 
of the committee
the committee monitors the integrity of the company’s ﬁnancial statements reviews the company’s 
internal control system and risk management systems monitors and reviews the effectiveness of the
company’s internal audit function makes recommendations to the board in relation to the appointment 
of the external auditors and recommends the audit fee and terms of engagement to the board following
appointment by the shareholders in general meeting monitors and reviews the external auditor’s
independence objectivity and effectiveness considers management’s response to any major external or
internal audit recommendations approves the appointment or dismissal of the head of internal audit 
reviews the company’s procedure for responding to calls made to its conﬁdential helpline facility and
considers other topics such as the company’s policies for preventing or detecting fraud and its code 
of corporate conductbusiness ethics 
further details of the committee and a report of its work during the ﬁnancial year are set out below
audit committee report
the composition of the committee is as described above further details of the members of the committee
and their relevant ﬁnancial experience are set out in the biographies of the directors on page 41 
stephen hodge as chairman of the committee is considered by the board to be the audit committee
ﬁnancial expert and the member of the committee with recent and relevant ﬁnancial experience prior 
to becoming deputy chairman he received an additional fee of £5000 for acting as chairman of the
committee which is included in the directors’ remuneration table contained in the report on directors’
remuneration on page 58
the company secretary and general counsel is secretary to the committee and minutes of meetings 
are circulated to all board members regular attendees at committee meetings at the invitation of the
committee include the chairman chief executive ofﬁcer chief financial ofﬁcer the head of internal audit
and representatives of the external auditors the committee has authority to seek any information that it
requires from any employee authority to obtain independent professional advice and access to sufﬁcient
resources generally to carry out its activities
the committee undertook a review of its work and its terms of reference during the year and reported back
to the board 
the committee met four times during the ﬁnancial year following each meeting the committee members
met with the external auditors in private the committee members have also met privately with the head 
of internal audit
the committee worked to a structured programme of activities with agenda matters focused to coincide
with key events of the annual ﬁnancial reporting cycle together with standing items that the committee 
is required to consider at each meeting the committee reviewed the following matters and reported its
conclusions to the board
 the ﬁnancial disclosures contained in the company’s annual and interim reports to shareholders and
other interested parties
 various accounting matters including the company’s accounting policies raised by management and
the external auditor in the context of the ﬁnancial disclosures
 the group’s risk management process including monitoring and progress on the management of key
risks identiﬁed by the company and within the group’s operating businesses 
 the effectiveness of internal controls and measures to detect and prevent fraud
 the annual external audit plan for the group’s auditors this review included the audit objectives
auditor independence and objectivity policies partner rotation audit scope team composition
timetable deliverables and fee proposal 
 the amount and purpose of nonaudit fees the board has a formal policy governing the independence
of the company’s external auditors and deﬁning those nonaudit services that may be provided to the
group including those which require the prior approval of the committee details of nonaudit services
are reviewed at each meeting of the committee further details of the statutory audit and nonaudit
services fees are set out in note 27 to the ﬁnancial statements the policy also covers employment of
former auditor employees by the company and audit partner rotation
 the external auditors’ yearend report and the ﬁndings of their work and conﬁrmation that all
signiﬁcant matters had been satisfactorily resolved
 the performance of the external auditor which resulted in the committee recommending the
appointment of pricewaterhousecoopers llp as auditors to the company and
 the internal audit plan and resources for the internal audit function this review included detailed
reports from the head of internal audit on progress on matters identiﬁed in the plan current resources
of the internal audit function and updates on matters requested by the committee
o2arpp045050qxd  6105  800 pm  page 47 o2com   48
report on corporate governance continued
the committee noted during its review of nonaudit services by the external auditors that the level of 
nonaudit service fees for this ﬁnancial year was higher than that for the last ﬁnancial year due to the
company’s external auditors’ involvement in the scheme of arrangement and related matters
the committee received brieﬁngs from the chief financial ofﬁcer on the implications for ﬁnancial reporting
of international financial reporting standards which will apply to the company in respect of the ﬁnancial
year 200506
the committee reviewed the policy for the handling of complaints received by the company regarding
accounting internal accounting controls or auditing matters and for the conﬁdential anonymous submission
by employees of concerns regarding questionable accounting auditing employment ethical or other matters
the committee also reviewed for recommendation to the board the company’s compliance programme to
ensure the group complies with its business principles and relevant regulatory and legal obligations
the committee received regular updates from the company secretary and general counsel on corporate
governance issues in the uk and us principally those arising from the combined code and the us
sarbanesoxley act of 2002 it also received regular reports from a project team responsible for the
establishment of a control framework consistent with the requirements of section 404 of the 
sarbanesoxley act
the committee also received minutes of all meetings of the disclosure committee details of the remit of
this committee are provided in the internal control section of this report
nomination and governance committee
chairman david arculus
the committee comprises david arculus david chance stephen hodge and andrew sukawaty during 
the year david varney and paul myners were members of the committee until they ceased to be directors
on 28 july 2004 and 10 august 2004 respectively stephen hodge was appointed to the committee on 
11 november 2004 and david arculus replaced david varney as chairman of the committee on 28 july
2004 the committee is responsible for reviewing the structure size and composition of the board and for
recommending candidates for board membership for the approval of the board 
in the appointment of new directors the committee reviews the current balance of skills on the board it
draws up a speciﬁcation to include any speciﬁc knowledge or expertise it considers of future beneﬁt to the
board having regard to the business throughout the group and the overall strategy external search agents
are used during the recruitment process the agents put forward a shortlist of candidates for the committee
to review before submitting its recommendation to the board whilst the chairman of the board chairs this
committee he is not permitted to chair meetings when the appointment of his successor is being reviewed
the committee ensures that the performance of the chairman senior independent director and other
directors is regularly reviewed
during the ﬁnancial year the committee met four times it recommended to the board those directors 
who should retire by rotation and seek reelection at the 2004 annual general meeting and considered 
the leadership needs and succession plans of the group as a whole it has a subcommittee comprising all 
the nonexecutive directors to review the performance evaluation processes and succession plans for all
directors the process relating to the selection of the new chairman in 2004 was conducted by an adhoc
committee of independent directors headed by the deputy chairman and advised by an independent
executive search agency
remuneration committee
chairman patrick lupo
the committee comprises patrick lupo stephen hodge and andrew sukawaty during the year paul
myners neelie kroes and ian meakins were members of the committee until they ceased to be directors on
10 august 2004 31 august 2004 and 30 march 2005 respectively patrick lupo joined the committee on
10 august 2004 and assumed the chairmanship of the committee from andrew sukawaty on 11 november
2004 the committee is responsible for determining the framework and broad policy for the remuneration
of the chairman all executive directors the company secretary and general counsel and members of 
the executive committee and for determining within agreed terms of reference speciﬁc remuneration
packages for each of these including any pension rights any compensation payments and the
implementation of executive incentive schemes the committee operates on the principle that members 
of the executive management should be provided with appropriate incentives to encourage superior
performance and should in a fair and responsible manner be rewarded for their individual contributions 
to the success of the group the report on directors’ remuneration is set out on pages 51 to 64
the executive committee chaired by peter erskine and comprising the other executive directors and his
senior executive team is responsible for the executive daytoday running of the company the preparation
and maintenance of strategic plans for the group and monitoring the daytoday performance of the group
as a whole
us corporate governance compliance
the company is required to comply with those provisions of the sarbanesoxley act of 2002 implemented
by the securities and exchange commission as applicable to foreign issuers during the period it remains
registered with the securities and exchange commission
dialogue with shareholders
the company is committed to ongoing development of open and effective communications with
shareholders the chief executive ofﬁcer and the chief financial ofﬁcer regularly meet with institutional
shareholders and analysts and the company’s annual general meeting is used as an opportunity to
communicate with private investors and encourage their participation all substantial issues including the
adoption of the annual report and ﬁnancial statements are proposed at the annual general meeting on
separate resolutions all of the resolutions proposed at the 2004 annual general meeting were conducted
o2arpp045050qxd  6105  800 pm  page 48 o2com   49
by way of a poll in accordance with best practice the poll results were notiﬁed to the uk listing authority
and published on the company’s website following veriﬁcation by the company’s share registrar all the
resolutions to be proposed at the 2005 annual general meeting will also be proposed by way of a poll it is
intended that the chairmen of the audit nomination and governance and remuneration committees will
be available to answer questions at the annual general meeting
the company’s website provides ﬁnancial and other business information about the group it contains an
archive of past announcements and annual reports share price information and a calendar of events as well
as information on o2’s approach to corporate responsibility and the company’s business principles
going concern 
the directors have reviewed the group’s liquid resources and borrowing facilities and the group’s budget
and cash ﬂow forecast for the year to 31 march 2006 and outline projections for the subsequent year 
on the basis of this review the directors are satisﬁed that the group has adequate resources to continue 
in operational existence for the foreseeable future for this reason the directors adopt the goingconcern
basis in the preparation of the ﬁnancial statements 
internal control 
responsibility
the board has overall responsibility for the group’s systems of internal control and risk management and 
for reviewing their effectiveness these systems are designed to manage rather than eliminate the risk of
failure to achieve business objectives any system can provide only reasonable assurance against material
misstatement or loss not absolute assurance
the audit committee on behalf of the board considers the effectiveness of the operation of internal
control procedures in the group during the ﬁnancial year
control environment 
the board sets policies on internal control and risk management that are implemented by management
these policies are in accordance with “the guidance on internal control the turnbull guidance” section 
of the combined code
following an extensive internal consultation and external benchmarking exercise the group risk
management policy has been reviewed updated and authorised by the board during the year
risk management internal control compliance and internal audit are the responsibility of separate functions
within the company but operate holistically to deliver an effective internal control system
risk management
the group has a detailed ongoing risk management process for identifying evaluating and managing 
the signiﬁcant risks faced by the company and embedding a risk awareness and management culture
throughout the group
risk assessment and evaluation take place as an integral part of the group’s strategic planning cycle and 
this includes the consideration of major business risks by senior management
the risk management process comprises the following key elements
 group operating companies and key functions in the business carry out risk assessments to determine
the nature and extent of risks facing the company
 the executive committee undertakes a formal groupwide risk review every six months which is
reviewed by the board risk management is a formal item at each executive committee meeting
 registers are produced which detail signiﬁcant risks and indicate likelihood impact and the level of
controls together with mitigating actions
 the proﬁles of the signiﬁcant risks from the registers are summarised and tracked using a consolidated
risk map
 senior management is accountable and responsible for managing risks within the group supported by
dedicated risk managers these risk managers assist in embedding risk management within the business
culture via risk forums team meetings training sessions and the company’s intranet
 the internal audit function also promotes effective risk management in the business’ operations and
 a fast track process exists for identifying and responding to evolving risks and signiﬁcant changes to
existing risks so that they are reported to an appropriate level of management and corrective action 
is taken
review of effectiveness 
at the half and full year the chief executive ofﬁcer requests a formal conﬁrmation of the review and
assessment of internal controls and other aspects of corporate governance in the form of a corporate
governance certiﬁcate from the chief executive ofﬁcer and the chief ﬁnancial ofﬁcer of each operating
business together with each of the members of the executive committee and the company secretary 
and general counsel
a report is then provided to the audit committee which includes
 the group risk registers risk maps and dashboards
 the group corporate governance certiﬁcates signed by the chief executive ofﬁcer and chief 
financial ofﬁcer
in order to perform its review of the effectiveness of the system of internal control across the group 
the audit committee uses this information together with
 any signiﬁcant failings that may have been identiﬁed during the internal control reporting process
o2arpp045050qxd  6105  800 pm  page 49 o2com   50
report on corporate governance continued
 the  regular assessments of the quality of the internal control and risk management process carried out
by the group head of internal audit as part of a cyclical riskbased audit approach and
 the external auditors’ reports
the audit committee then reports its conclusions to the board
joint ventures
in the case of joint ventures and associated undertakings where the group does not have operating
responsibility our policy is to inﬂuence and encourage adoption of our own standards of internal control
and risk management and to offer practical advice wherever appropriate 
disclosure 
the company has a disclosure committee which considers the materiality of information and the respective
disclosure obligations in releases made to regulatory bodies this committee assists the chief executive
ofﬁcer and chief financial ofﬁcer to evaluate the effectiveness of the group’s disclosure controls and
procedures to ensure that material information relating to the group is made known to them by others
annual assessment
the board has reviewed the nature extent and changes to the signiﬁcant risks to the business the group’s
current key risks are summarised in risk factors on pages 39 and 40
on behalf of the board the audit committee has reviewed regularly the effectiveness of the system of
internal controls and reported its ﬁndings to the board
the chief executive ofﬁcer and chief financial ofﬁcer have concluded after evaluating the effectiveness 
of the group’s internal and disclosure controls within the past 90 days that o2’s internal and disclosure
controls and procedures are effective in ensuring that material information relating to the company is made
known to them by others within the group the procedures provide reasonable assurance that problems are
identiﬁed on a timely basis and dealt with accordingly 
there were no signiﬁcant changes to the company’s internal controls or to other factors that could
signiﬁcantly affect internal controls subsequent to the date of the most recent evaluation 
these processes have been in place for the whole of the ﬁnancial year and have continued up to the date
on which this document was approved  
business principles
to reinforce our commitment to achieve best practice in our standards of business ethics and corporate
governance o2 has a set of business principles covering the whole group including its directors and senior
ﬁnancial ofﬁcers which have been endorsed by the chairman there have been no waivers or changes to
these business principles during the year the company also continues to require its business partners and
suppliers to apply these principles when dealing with o2 a copy is available on the company’s website
these highlevel principles are supported by a conﬁdential help facility comprising telephone post and
email which is available to employees who want to report incidents and for those who have questions
regarding the application of the principles
the company’s conﬁdential help policy has been externally benchmarked and updated during the year
compliance programme
it is o2’s policy to be fully compliant with its business principles and local legal and regulatory requirements
the board has approved a detailed compliance policy which describes the compliance programme
online and direct training is available to ensure that all employees are aware of our business principles and
know how they should be applied
executive committee members are required to conﬁrm compliance with our business principles as part of
the corporate governance certiﬁcation process
corporate responsibility
the board takes account of signiﬁcant social environmental and ethical issues that affect the group this
includes risks and opportunities that relate to our people our supply chain our customers the environment
and society around us
the management of these issues is covered in the corporate responsibility section of this report on pages 
19 to 21 which contains information in accordance with the disclosure guidelines on social responsibility
issued by the association of british insurers
we are also producing a separate externallyveriﬁed corporate responsibility report which will be 
available in july 2005 or on the company’s website wwwo2comcrreport05 or on request from the
company secretary
o2arpp045050qxd  6105  800 pm  page 50 report on directors’ remuneration
this report has been prepared by the remuneration committee the committee and approved by the
board a resolution will be put to shareholders at the 2005 annual general meeting to invite them to
consider and vote on this report
remuneration committee
role
the committee is responsible for determining policy on the remuneration and performance of the
chairman executive directors and the senior management team comprising the other members of the
executive committee and the company secretary and general counsel it determines within agreed terms
of reference speciﬁc remuneration packages for each of the roles above including
 service contracts
 salaries
 beneﬁts
 pension rights
 any compensation payments and 
 the operation of the o2 executive share portfolio 
membership and meetings
the committee consists of independent nonexecutive directors no member of the committee has any
personal ﬁnancial interest other than as a shareholder in the matters to be decided by the committee 
the committee comprises patrick lupo stephen hodge and andrew sukawaty during the year neelie
kroes ian meakins and paul myners were members of the committee until they ceased to be directors on
31 august 2004 30 march 2005 and 10 august 2004 respectively patrick lupo joined the committee on
10 august 2004 and assumed the chairmanship of the committee from andrew sukawaty on 11 november
2004 the chairman and chief executive ofﬁcer are invited to attend meetings of the committee except
when their own remuneration is discussed the committee had eight programmed meetings during the year
and also met on two further occasions
advisers
the committee takes advice from both inside and outside the group on a range of remuneration matters
to ensure that it is able to exercise informed judgement in determining a remuneration policy that supports
the business is market competitive and represents good practice
the committee consulted the chief executive ofﬁcer on matters relating to the remuneration of the other
executive directors who report to him the chairman and group hr director were consulted in relation to
the remuneration of all executive directors
the advisers listed in the table overleaf provided services to the committee in the year ended 
31 march 2005
o2com   51
dear shareholder
as you know o2 operates in highly competitive and rapidly changing markets but has delivered
outstanding revenue and proﬁt growth in 200405 of particular note have been the announcement 
of our distribution policy the restructuring of the company and the continued strong growth of o2
germany this success has allowed the committee to build on its remuneration strategy in support of
the group’s strategic goals the delivery of sustainable returns for our shareholders remains key and 
we continue to ensure that our performance measures for reward are closely linked to improvements in
revenue growth proﬁtability operational efﬁciency and providing a better experience for our customers
o2 is a maturing business with a progressive and innovative business strategy however there are
considerable challenges ahead whilst quarter on quarter performance improvements are encouraging
we continue to face increasingly tough competition in the uk it is therefore critical that we maintain
this momentum through the continuity of our management team which has largely been stable since
demerger
on that basis during 200405 we continued the dialogue with our shareholders regarding our
remuneration strategy and policy the feedback highlighted speciﬁc concerns which we have addressed
through a revised remuneration approach which addresses the strategic objectives of the business
reward at o2 will focus on exceptional annual operational performance year on year progress towards
longer term business growth and delivery of longterm shareholder value we will achieve this through
an increase in the annual bonus opportunity delivered in deferred o2 shares in addition to making
performance share awards the performance share plan will be the longterm incentive scheme used 
in 200506 and beyond
i am greatly encouraged by the active dialogue with our shareholders and have every conﬁdence that
our remuneration approach for the forthcoming ﬁnancial year will link to and support the business
strategy as well as ensure the retention of our management team and continued creation of longterm
shareholder value
patrick lupo
chairman of the remuneration committee
o2arpp051065qxd  6105  800 pm  page 51 report on directors’ remuneration continued
advisers services provided other services provided to o2 plc
deloitte  touche llp appointed by the committee to audit services in relation to the 
provide independent advice on o2 pension plan and specialist 
executive remuneration matters corporation tax vat and expatriate
services
new bridge street independently monitor and measure none
consultants llp the total shareholder return 
performance of the company
towers perrin provision of market remuneration data advice on beneﬁts policy
freshﬁelds bruckhaus deringer legal advice on longterm incentives legal advice on certain corporate
and directors’ service contracts matters
lane clark  peacock provision of data for pension actuaries for the group
accounting and disclosures and 
advice in respect of executive 
pension provision
hewitt bacon and woodrow pensions advice in relation to the none
forthcoming changes in pensions 
legislation
remuneration policy
this section of the report sets out the group’s policy on executive directors’ remuneration for the year
ending 31 march 2006 and as far as possible for subsequent years o2 has a sufﬁciently ﬂexible
remuneration approach to support the changing needs of the business any changes in policy for
subsequent years will be described in future reports on directors’ remuneration
the committee has adopted the following principles
 the committee sets base salaries which reﬂect contribution criticality to the business and general wage
levels elsewhere in the group decisions are made with reference to a range around the median of the
relevant market for the individual although the company may pay more to recruit a highcalibre executive
 emphasis is placed on rewarding business performance and therefore we seek to position the total
compensation packages at upper quartile for superior performance and
 performancerelated incentives with stretching business performance targets to drive and reward
superior performance from our executives whilst at the same time aligning the interests of the
leadership team with those of our shareholders
these principles are applied to all employees to recruit retain and motivate the highest calibre of employee
throughout the business on an annual basis the committee reviews the relationship between the base pay
of the executive directors with the base pay of reporting levels below executive directors’ level
total reward approach
we adopt a total reward approach which comprises a combined focus on base pay short and longterm
incentives pension and beneﬁt provision we believe that total reward should encourage superior
performance at all levels group operating business and individual the committee considers it vital to
align the interests of the leadership team with those of shareholders by linking a signiﬁcant proportion of
the package to the creation of shareholder value the chart below shows that on the basis of achievement
of “on target” bonus and longterm incentives the balance between ﬁxed and performancerelated pay 
is 3763
when determining total reward levels the committee takes account of the uk market and looks wider 
than simply the telecoms sector this approach allows us to structure reward appropriately with the right
level of performancerelated remuneration rather than reﬂecting solely the remuneration practices adopted 
in our industry
fixed vs performancerelated pay 
annual bonus
longterm
incentives
performance
related
fixed
salary
benefits
o2com   52
o2arpp051065qxd  6105  800 pm  page 52 each element of remuneration has been designed to support the overall reward strategy in turn helping to
deliver business performance success
reward element purpose measuresinﬂuencing factors
base salary reﬂects position within the company individual contribution and market review
performance and contribution to the 
success of the organisation
annual incentives incentivises participants towards superior group and operating business key 
annual business performance and aligns performance indicators kpis
employee interests with those of 
shareholders
longterm incentives ensures alignment with shareholder total shareholder return tsr – compares 
interests and incentivises towards the net return of an o2 shareholder 
share price growth share price growth and assumed 
reinvestment of any dividends with that 
of a shareholder in each of a group of 
comparator companies
beneﬁts an integral element of total reward market driven
reﬂecting competitive market provision 
the main beneﬁts are a company car 
or cash equivalent healthcare for the 
executive and family dental care and 
a personal tax and ﬁnancial planning 
allowance
pensions the core beneﬁt in maintaining standard market driven
of living after employment
total reward the constituents of the above provide combination of all of the above
for a total reward package that has
the potential to be at the upper quartile 
level for superior performance
elements of executive directors’ remuneration
base salary
base pay is reviewed but not necessarily increased annually by the committee with effect from 1 june 
as at 31 march 2005 the annual salaries payable to the chief executive ofﬁcer chief financial ofﬁcer ceo
of o2 germany and ceo of o2 uk were £675000 £430000 €650000 and £420000 respectively the
annual salaries for the chief executive ofﬁcer chief financial ofﬁcer and ceo of o2 germany with effect
from 1 june 2005 can be found on page 58 the ceo of o2 uk resigned from the board on 31 march
2005 his successor to this role is not an executive director
annual incentives
annual incentive arrangements are based on a balance of kpis that the committee considers to be key
drivers of shareholder value including ebitda and ebit indicators of strong ﬁnancial performance net
service revenue data arpu and customer satisfaction targets crucial to future growth and proﬁtability 
the committee sets demanding targets which we believe represent results consistent with shareholder
expectations stretch bonus targets represent superior performance
as outlined on page 51 following dialogue with our shareholders annual bonus opportunity will increase 
by half and the resulting bonus will be delivered twothirds in cash and onethird in deferred o2 shares 
the deferred shares will be held in trust for three years and vesting will generally depend on the executive
remaining in service no further performance condition will apply on vesting delivering the additional
annual bonus opportunity in shares aligns our executives’ interests with those of our shareholders and
provides a means of retention
the ﬁrst award of deferred shares under this arrangement will be made in july 2005 this represents the
transition from the deferred equity incentive plan which included a deferred share element for retention 
in 2004 see page 55 and the proposed longterm incentive arrangements in 2005 see page 54
for the year ended 31 march 2005 and the year ending 31 march 2006 the bonus opportunity as a
percentage of base salary including the deferred shares element payable to the ceo and cfo is 100 per cent
of salary for ontarget performance and 150 per cent of salary for maximum performance the ceos of
operating businesses each have an ontarget and maximum bonus potential of 120 per cent of salary and
180 per cent of salary
bonuses are not pensionable the chairman does not participate in annual incentive arrangements details
of the actual cash annual bonuses payable in respect of the year ended 31 march 2005 can be found on
page 58
longterm incentives
the committee believes it is important to adapt the incentive arrangements offered in future years to
support the group’s fast changing business requirements this will be achieved through the use of a ﬂexible
longterm incentive portfolio the o2 executive share portfolio described overleaf which the committee
actively reviews to ensure that incentives remain appropriate to the needs of the business other than in
exceptional circumstances executives will only be made an award under one plan in any year
all employees of the o2 group are eligible to participate in longterm incentives at the discretion of the
committee the committee determines the appropriate performance targets and reviews the extent to
which they have been met awards and options are not pensionable
o2com   53
o2arpp051065qxd  6105  800 pm  page 53 report on directors’ remuneration continued
share ownership 
the committee has introduced shareholding guidelines which require executive directors to build up 
a shareholding of one times base salary and for the senior management team to build a shareholding 
of 50 per cent of base salary
longterm incentives for 200506
following consultation with shareholders the committee has recommended that the performance share 
plan will be the primary form of longterm incentive for the year ending 31 march 2006 the committee
proposes to make awards of performance shares linked to the company’s tsr performance for most of our
executives as it believes that tsr is the most appropriate means of aligning the interests of executives with
those of shareholders
in the case of the ceo of o2 germany and a small number of senior o2 germany employees performance
share awards will be made based solely on controllable ebit margin and net service revenue growth of 
o2 germany over a threeyear performance period this is due to the major growth opportunity that the
german mobile market represents for o2 with clear potential to increase shareholder value the company
intends to increase its investment in germany and accelerate the buildout of the 3g network these
performance measures have been chosen because
 service revenue is both a measure of absolute size and of growth and can be correlated to proﬁtability 
 controllable ebit is a similar measure to underlying earnings which is the key ﬁnancial measure in
determining regular dividends for our shareholders
a stretching achievement level will be set for each measure for which 30 per cent of the total award will
vest below this level none of the award will vest for achievement of the maximum performance level
which will represent superior performance and we believe signiﬁcant shareholder value 100 per cent of
the award will vest both measures must be achieved at maximum for the full award to vest the maximum
vesting level under this arrangement would represent compound annual revenue growth in the region of 
20 per cent in the threeyear period to 200708 and an ebitda margin by that time in the midtwenties
the committee will determine the level of vesting from this incentive and will set review and measure each
of the targets and performance against the targets to satisfy itself that any payout is a genuine reﬂection
of underlying ﬁnancial performance over the period at the time of vesting the committee will explain the
rationale for any payout
performance share plan
purpose to focus performance on the creation of longterm and sustained shareholder value
year ended 31 march 2005
performance shares were not awarded to executive directors but were made to senior managers in
200405
performance measure
 vesting is subject to the company’s tsr performance against a comparator group over a ﬁxed
threeyear period as set out below
tsr ranking  performance shares vest
below median 0
median 30 
upper quartile 100 
vesting on a straight line basis between median and upper quartile performance
 the comparator group consists of the constituents of the ftseuroﬁrst 300 telecommunications
index formerly known as the ftse e300 telecoms service index at the time awards are made
shown below this index was chosen by the committee as it closely compares the company
with its business sector
bt group tele2 b
cable  wireless telecom italmobl
cosmote mobile telecom italia
deutsche telekom xet telecom italia rnc
france telecom telefonica
otehellenic telc telekom austria
pt telecom sgps telenor
kpn kon teliasonera
swisscom r vodafone group
tdc o2
 awards will only vest to the extent that the committee is satisﬁed that the company’s tsr
performance is a genuine reﬂection of the company’s underlying ﬁnancial performance over 
the period
 there are no retesting opportunities
year ending 31 march 2006
awards of performance shares will be made to executive directors the senior management team 
and other senior managers at the discretion of the committee
the vesting schedule performance condition and comparator group will be as set out above for
executive directors except for the ceo of o2 germany and a small number of senior o2 germany
employees as outlined opposite
o2com   54
o2 executive share portfolio – summary of plans
o2arpp051065qxd  6105  800 pm  page 54 deferred equity incentive plan deip
purpose to drive shortterm business goals through the deferred award and focus performance on
the creation of shareholder value over the long term through the performance uplift award
year ended 31 march 2005
executive directors received a deferred award and performance uplift details of awards made to
executive directors can be found on page 60
there are two parts to the deip
deferred award
 the deferred award is an entitlement to shares equal in value to half of the annual bonus 
earned in respect of the preceding ﬁnancial year ie 200304 vesting is subject to continued
employment but no further corporate performance condition
performance uplift
 the maximum performance uplift is equal to twice the deferred award vesting is subject to the
longterm performance of the company
performance measure
 vesting of the performance uplift is subject to the company’s tsr performance against a
comparator group over a ﬁxed threeyear period as set out below
tsr ranking  performance uplift vests
below median 0
median 30 
upper quintile top 20 100 
vesting on a straight line basis between median and upper quintile performance
 the comparator group for performance uplift awards made in 200405 consisted of the
constituents of the ftseuroﬁrst 300 telecommunications index at the date of award the
constituents are the same as those shown on page 54 for awards made under the performance
share plan in 200405 this index was chosen by the committee as it closely compares the
company with its business sector 
 the performance uplift will only vest to the extent that the committee is satisﬁed that the
company’s tsr performance is a genuine reﬂection of the company’s underlying ﬁnancial
performance over the period 
 there are no retesting opportunities
year ending 31 march 2006
there are no plans to operate the deip in the forthcoming year 
share option plan 
purpose to focus on share price growth and the creation of longterm shareholder value  
year ended 31 march 2005
share options were not granted under this plan
year ending 31 march 2006
there are currently no intentions to make any awards to executive directors under this plan however
the committee will retain the ﬂexibility to grant options in exceptional circumstances for example if
required to secure an appointment should options be granted in the future the committee will have
regard to best practice at the time on retesting and performance conditions 
options previously granted had the following provisions
performance measure
 vesting of options is subject to the company’s tsr performance against a comparator group over
a ﬁxed threeyear period as set out below
tsr ranking  of options exercisable
below median 0
median 50 
upper quartile top 25 100 
vesting on a straight line basis between median and upper quartile performance
 if the performance goal is not satisﬁed in full on the ﬁrst performance test it can be retested on
two subsequent occasions on the fourth and ﬁfth anniversaries of grant extending the length of
the performance period at each test the proportion of options that can be exercised will
increase if the company’s tsr performance improves between the test dates
 the comparator group consisted of the constituents of the ftse 100 index at the time the
options were granted 
 the options will only become exercisable to the extent that the committee is satisﬁed that the
company’s tsr performance is a genuine reﬂection of the company’s underlying ﬁnancial
performance over the period
o2com   55
o2 executive share portfolio – summary of plans
o2arpp051065qxd  6105  800 pm  page 55 o2com   56
report on directors’ remuneration continued
restricted share plan 
purpose to encourage personal investment in the company and act as a retention tool
year ended 31 march 2005
 restricted shares were not awarded to executive directors
 the company made a oneoff award of restricted shares to the chairman upon his appointment
details of which can be found on pages 57 and 60
 awards over restricted shares were made to a small number of senior managers restricted
shares will usually vest on the third anniversary of grant if the conditions below are met
performance measure
 in order for the restricted shares to vest in full participants must personally build and maintain an
equivalent number of o2 shares until the vesting date as well as remaining in employment with
the o2 group until this time 
 the awards vest on a pro rata basis if the participant builds up a lower personal investment
year ending 31 march 2006
there is currently no intention to make any awards to executive directors under this plan however
the committee will retain the ﬂexibility to grant awards in exceptional circumstances for example 
if required to secure an appointment
capital reorganisation of the company
as a result of the capital reorganisation which became effective on 14 march 2005 all options and awards
granted over mmo2 plc shares under the executive share portfolio were automatically rolled over into
options and awards over an identical number of o2 plc shares there was no change to option prices to the
number of shares under optionaward or to the length of the vesting period where optionsawards over
shares are subject to tsr this will be measured in respect of mmo2’s performance and o2’s performance
over the relevant period as necessary 
legacy longterm incentives
outstanding awards under longterm incentive arrangements originally implemented prior to the company’s
demerger from bt are described on pages 62 and 63
pension beneﬁts 
there are pension arrangements in place in the main jurisdictions in which the o2 group operates 
schemes vary in accordance with local market practices in each jurisdiction and as such there are various
arrangements in place for executive directors and the senior management team
peter erskine and david finch are entitled to ﬁnal salary related pension beneﬁts up to the uk statutory
earnings cap in addition they are entitled to supplementary pension beneﬁts in respect of earnings above
the statutory earnings cap comprising unfunded ﬁnal salary related beneﬁts in the case of peter erskine and
funded deﬁned contribution beneﬁts in the case of david finch
these arrangements will be affected by changes to the current uk pension regime resulting from the
finance act 2004 the committee is currently reviewing appropriate actions to take in response to these
changes and will report further next year
peter erskine’s pension arrangements provide for a total pension of twothirds of ﬁnal salary at age 60
inclusive of any retained beneﬁts from his previous employment and a widow’s pension of twothirds of 
his pension the majority of his pension is provided outside the o2 pension plan as an unfunded beneﬁt
promise from the company
david finch’s pension arrangements provide for an annual accrual of 130 of the earnings cap within the 
o2 pension plan subject to any restriction due to retained beneﬁts in addition he is entitled to a
supplementary deﬁned contribution beneﬁt the level of which is determined on an annual basis for the
year to 31 march 2005 this was equal to 325 per cent of basic salary 21 per cent was paid to a funded
unapproved retirement beneﬁt scheme furbs and 115 per cent was paid as a cash supplement 
rudolf gröger’s pension arrangements provide for a pension at age 60 of 20 per cent of salary after the ﬁrst
three years of service and an annual pension accrual of 15 per cent of salary thereafter the beneﬁt is
provided by the company as an unfunded pension promise
david mcglade received a cash allowance in lieu of pension beneﬁts of 20 per cent of basic salary from 
1 april 2004 to 31 may 2004 and 30 per cent of basic salary from 1 june 2004
david varney who retired as chairman on 28 july 2004 did not participate in any o2 plc pension
arrangements david arculus’s pension arrangements are set out on pages 57 and 59
life cover of four times salary is provided for david arculus peter erskine david finch and david mcglade 
whilst he was a director and was provided for david varney whilst he was chairman
details of pension arrangements within o2 are set out in note 30 to the ﬁnancial statements
contracts and notice periods
it is the committee’s general policy that executive directors will have contracts and service agreements with
similar provisions
o2 executive share portfolio – summary of plans
o2arpp051065qxd  6105  800 pm  page 56 the service contracts and notice periods for the executive directors are set out below
effective date of
director service agreement notice period
p erskine
1
24 october 2001 12 months
d finch
1
19 november 2001 12 months
r gröger
1
1 april 2003 12 months
d mcglade
2
1 april 2003 12 months
1
peter erskine and david finch are employed by mmo2 plc but have each entered into an amendment letter with effect from 14 march
2005 to reﬂect the implementation of the reorganisation to establish o2 plc as the holding company for the group with effect from 
that date rudolf gröger’s contract is with o2 germany management gmbh and has been amended in similar respects
2
david mcglade left the company on 31 march 2005
the company may in its discretion terminate without notice and make a payment in lieu of notice equal to
the sum of 12 months’ pay including the value of employers’ pension contributions beneﬁts and a bonus
payment of not less than the previous year’s bonus this payment in lieu of notice provision does not prevent
the company from terminating as a result of breach of contract which may enable the company to pay a
reduced amount by requiring greater mitigation
on termination of employment within 12 months following a change of control the company is obliged to
make a payment equal to the base salary the value of employer pension contributions and beneﬁts for the
notice period plus additional payments generally equal to the annual bonus potential for that year and in
respect of the loss of rights under share incentive schemes
in the event of termination of rudolf gröger’s employment within 12 months following a change of control
of o2 or its german business the employer is obliged to make a cash payment equal to two times his base
salary and bonus the amount of bonus payable will be that expected for ontarget performance this
reﬂects german market practice for senior executives 
david arculus who served previously as a nonexecutive director of the company agreed to serve as
chairman with effect from 28 july 2004 under an agreement dated 4 may 2004 his time commitment is 
an average of two days per week although in practice the chairman is available at any time the notice
period required by the company to terminate this agreement is 12 months on a change of control in the
event that his agreement is terminated he will be entitled to 12 months’ pay in lieu of notice this can be
subject to mitigation in the event that he ﬁnds a comparable alternative role
chairman’s remuneration
the chairman’s remuneration is determined by the committee upon appointment he was entitled to an
annual fee of £325000 as chairman of which £28254 is at his request paid into his personal pension
arrangements following a review of the remuneration of the chairman it was agreed that with effect from
1 june 2005 the annual fee payable will be £355000 the chairman does not participate in o2 plc annual
incentive arrangements the chairman has agreed to invest 15 per cent of his aftertax fee in the company’s
shares to be retained until his retirement as chairman
the chairman has been granted a onetime award of restricted shares the vesting of which is subject to him
building a substantial personal shareholding in the company details of the award can be found on page 60
remuneration of nonexecutive directors
the fees of nonexecutive directors are determined by the chairman and executive directors who have
access to independent advice 
each nonexecutive director has agreed that a portion of their aftertax fee equivalent to a minimum of
50 per cent and up to a maximum of 100 per cent would be invested in shares this arrangement was
approved by the board in 2002 but was suspended for the period 1 october 2003 to 31 december 2004
fees are paid quarterly in arrears and the shares are allotted on the same basis the nonexecutive directors
do not participate in any of o2’s pension or incentive arrangements and receive no beneﬁts 
as at 31 march 2005
a the basic annual fee payable to the nonexecutive directors was £40000 plus an additional fee of
£5000 for membership of the audit and remuneration committees £3000 for the nomination and
governance committee and an additional fee of £5000 per annum for chairmanship of a committee
and
b the annual fee payable to the deputy chairman of the company was £100000 
following a review of the remuneration of the nonexecutive directors it was agreed that with effect from 
1 april 2005 the annual fees payable to the nonexecutive directors will be as follows
a the basic annual fee payable will be £50000 plus an additional fee of £7500 for membership of the
audit and remuneration committees £3750 for the nomination and governance committee and an
additional fee of £7500 per annum for chairmanship of a committee and
b the annual fee payable to the deputy chairman of the company remains unchanged
each nonexecutive director has a letter of appointment with o2 plc covering amongst other items their
terms of appointment and expected time commitment together with a general statement of their role and
duties nonexecutive directors are appointed initially for three years unless otherwise terminated earlier by
and at the discretion of either party upon one month’s written notice nonexecutive directors are typically
expected to serve two threeyear terms subject to satisfactory performance and reelection by shareholders 
changes to the board
as previously reported david varney retired as chairman at the conclusion of the company’s agm on
28 july 2004 no compensation for loss of ofﬁce was paid to david varney on his retirement david arculus 
has served as chairman with effect from that date
david mcglade stepped down from the board on 31 march 2005 no compensation for loss of ofﬁce was paid
patrick lupo was appointed as a nonexecutive director on 10 august 2004 rudolph lamprecht and
kathleen o’donovan were appointed as nonexecutive directors on 30 march 2005 paul myners neelie
kroes and ian meakins resigned as nonexecutive directors on 10 august 2004 31 august 2004 and
30 march 2005 respectively
o2com   57
o2arpp051065qxd  6105  800 pm  page 57 o2com   58
directors’ remuneration excluding pension arrangements for the year ended 31 march 2005 
beneﬁts excluding
salary and fees annual bonus pensions
1
total total salaryfees as at
2005 2004 2005 2004 2005 2004 2005
2
2004
3
1 june 2005
£ £ £ £ £ £ £ £ £
current directors
d arculus 280847
4
48000 – – 16787 – 297634 48000 355000
p erskine
5
665833 607500 568404 564200 35241 40602 1269478 1212302 725000
d finch 425000 395833 430000 364000 28222 24705 883222 784538
6
460000
r gröger
7
439992 399211 534847 499896 25146 20543 999985 919650 473134
d mcglade 414167 372500 391980 462000 24162 100047 830309 934547 –
d chance 48000 48000 – – – – 48000 48000 61250
s hodge 66667
8
55000 – – – – 66667 55000 100000
r lamprecht
9
– – – – – – – – 50000
p lupo
10
30856 – – – – – 30856 – 65000
k o’donovan
9
– – – – – – – – 57500
a sukawaty 87000
11
100000 – – – – 87000 100000 61250
former directors
d varney
12
113844 350000 – – 42911
13
36125 156755 386125 –
n kroes
14
20833 50000 – – – – 20833 50000 –
i meakins
15
50000 50000 – – – – 50000 50000 –
p myners
16
17290 48000 – – – – 17290 48000 –
1
benefits include car provision or cash allowance healthcare ﬁnancial planning dental care home security and life cover 
2
certain directors received pension supplements for the year ended 31 march 2005 details of these payments can be found on page 59 below the pensions table
3
total aggregate remuneration for 2004 excludes longterm incentive gains which were included in the report for the year ended 31 march 2004
4
includes aggregate fees earned as a nonexecutive director and chairman designate for the period 1 april 2004 to 28 july 2004
5
highest paid director 
6
excludes £146717 gains from longterm incentives which were included in the report for the year ended 31 march 2004
7
rudolf gröger’s remuneration has been converted from euro to sterling at an exchange rate of £1  €145836
8
appointed as deputy chairman of the company on 1 january 2005
9
appointed on 30 march 2005
10
appointed on 10 august 2004
11
andrew sukawaty stepped down as deputy chairman of the company on 31 december 2004 but remains on the board
12
retired at the conclusion of the company’s agm on 28 july 2004
13
in addition to the beneﬁts listed in note 1 david varney received a payment for outstanding holiday entitlement
14
resigned from the board on 31 august 2004
15
resigned from the board on 30 march 2005
16
resigned from the board on 10 august 2004
aggregate remuneration paid to the senior management team 
the aggregate remuneration of the senior management team for services in all capacities during the 2005 ﬁnancial year was £26 million in addition loans outstanding to senior ofﬁcers of the company as 
at 31 march 2005 were £119643
report on directors’ remuneration continued
o2arpp051065qxd  2605  1243  page 58 o2com   59
pensions
the table below includes the information required in relation to deﬁned beneﬁt schemes under the ukla listing rules and schedule 7a of the companies act 1985
increase in
transfer value of real increase transfer
total accrued pension
1
transfer value
23
real increase in increase in accrued pension in accrued beneﬁt value less
at at at at accrued pension during year less directors’ directors’ directors’
31 march 31 march 31 march 31 march during year including inﬂation contributions
23
contri contri
2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 butions butions
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
peter erskine
o2 pension plan 41 37 490 407 3 3 4 4 25 20 68 15
unfunded plan 246 203 4161 3124 36 39 43 43 606 598 1037 –
total 287 240 4651 3531 39 42 47 47 631 618 1105 15
david finch 12 9 114 72 3 3 3 4 31 27 42 –
rudolf gröger
4
93 69 2281 1540 23 35 24 35 545 744 741 –
1
the accrued annual pension represents the maximum deﬁned beneﬁt liability for o2 the amounts will be reduced by any retained beneﬁts
from previous employment
2
the transfer values have been calculated on the basis of actuarial advice the transfer values of the inland revenue approved beneﬁts have
been calculated in accordance with actuarial guidance note gn11 using the assumptions adopted by the o2 pension plan actuary 
the unapproved element of pension beneﬁts has been valued using assumptions appropriate to the frs17 accounting standard which are
consistent with gn11 principles the increase in transfer values has been caused by each executive director’s increase in salary and length 
of service
3
these ﬁgures represent liabilities of the company and the o2 pension plan not sums paid or due to the individual
4
the ﬁgures in £ sterling have been converted from euros at an exchange rate of €1£06803 as at 31 march 2005 and €1£06943 as at
31 march 2004
for the year ended 31 march 2005 david arculus received employer’s contributions of £16482 £28254
per annum into his personal pension arrangements for the year ended 31 march 2005 in respect of david
finch £89250 £83125 for the year ended 31 march 2004 was paid to a deﬁned contribution funded
unapproved retirement beneﬁt scheme furbs and £48875 £45521 for the year ended 31 march 2004
was paid as a cash supplement for the year ended 31 march 2005 david mcglade received a cash
allowance of £117833 £74500 for the year ended 31 march 2004 in lieu of pension beneﬁts
directors’ interests in the shares of the company
beneﬁcial interests 
the beneﬁcial interests of the directors and their immediate families in ordinary shares of 01p each in the company as at 31 march 2005 as set out in the table below
as at 31 march 2005 as at 1 april 2004
david arculus 338281
12
24078
peter erskine 965910
12
537027
david finch 1028768 812816
rudolf gröger 63944 –
david mcglade 670986 335496
david chance 15029 15029
stephen hodge 91914 91914
rudolf lamprecht – –
patrick lupo 73048 –
kathleen o’donovan – –
andrew sukawaty 83576 83576
1
since 31 march 2005 peter erskine and david finch have each acquired 208 additional ordinary shares under the terms of the o2 share ownership plan there have been no other changes in the directors’ beneﬁcial and nonbeneﬁcial interests in share capital including options to
subscribe for shares or in the debentures of the company and its subsidiaries between 31 march 2005 and 10 may 2005
2
includes shares held by trustee of the o2 share ownership plan
the senior management team beneﬁcially own less than 1 per cent of the company’s outstanding ordinary shares
o2arpp051065qxd  6105  800 pm  page 59 o2com   60
performance share plan
the table below shows the number of performance shares which remained outstanding to executive directors as at 31 march 2005
granted 
during the
number year ended number
at 1 april 31 march at 31 march
date of award 2004 2005 vested lapsed 2005 vesting date
peter erskine 310703 1403773 – – – 1403773 310706
david finch 310703 905660––– 905660 310706
rudolf gröger 310703 859245––– 859245 310706
david mcglade 310703 815094 – – 815094
1
– –
1
david mcglade left the company on 31 march 2005 and his award over performance shares lapsed in full
a summary of the performance condition can be found on page 54
deferred equity incentive plan
the table below shows the number of deferred equity shares awarded to executive directors during the year ended 31 march 2005
granted during the year ended 31 march 2005
number number of number of total number
at 1 april deferred award performance uplift number at 31 march
date of award 2004 shares shares of shares vested lapsed 2005 vesting date
peter erskine 290704 – 329941 659883 989824 – – 989824 290707
david finch 290704 – 212865 425730 638595 – – 638595 290707
rudolf gröger 290704 – 282105 564210 846315 – – 846315 290707
david mcglade 290704 – 270175 540350 810525 – 810525
1
– –
1
david mcglade left the company on 31 march 2005 and his award over deferred equity shares lapsed in full
a summary of the performance condition can be found on page 55
restricted share plan
the table below shows the number of restricted shares which remained outstanding to directors during the year ended 31 march 2005
market price number awarded during number
on date of at 1 april the year ended at 31 march vesting price on date
date of award award 2004 31 march 2005 vested lapsed 2005 lapse date of vesting
david arculus
1
290704 855p – 292397 – – 292397 290707 –
peter erskine
2
231101 – 575815 – 575815 – – 231104 11550p
david finch
23
231101 – 201536 – 201536 – – 231104 11625p
rudolf gröger
2
231101 – 156592 – – 156592 – 231104 –
david mcglade
245
231101 – 38579 – 33549 5030 – 231104 2161
1
david arculus was granted a restricted share award over 292397 shares with a market value of 855p at the time of grant with effect from 29 july 2004 this represents an amendment to the original award terms involving a reduction in the number of shares under award and 
the removal of a corporate performance condition to which the original award was subject the restricted share award will vest on 29 july 2007 provided mr arculus builds up a personal shareholding of 350877 shares by 28 july 2005 and remains with the company until the vesting date
2
restricted share awards were granted on terms that they will only vest on the third anniversary of grant if a signiﬁcant personal shareholding in the company equal to the number of shares under award is built within 18 months of grant and retained until the vesting date as well as
remaining in employment with the group the awards vest on a prorata basis if the participant builds up a lower personal investment
3
the personal shareholding requirement for david finch was equal to onethird of the shares under award at 23 november 2001
4
the restricted share award granted to david mcglade on 23 november 2001 was in the form of adss one mmo2 ads equalled 10 ordinary shares
5
the dollarsterling exchange rate on the date of vesting was £1  18688
report on directors’ remuneration continued
o2arpp051065qxd  6105  800 pm  page 60 o2com   61
share option plan
the table below shows the number of executive share options which remained outstanding to directors during the year ended 31 march 2005 vesting is subject to the satisfaction of corporate performance criteria as
detailed on page 55
options
granted during price on 
number at the year ended number at option date of period
grant date 1 april 2004 31 march 2005 exercised lapsed 31 march 2005 price exercise exercisable
peter erskine 23 nov 01
1
1724137 – – – 1724137 87p – 23 nov 04
22 nov 11
25 jul 02
2
3554347 – – – 3554347 46p – 25 jul 05
24 jul 12
david finch 23 nov 01
1
1206896 – – – 1206896 87p – 23 nov 04
22 nov 11
25 jul 02
2
2445652 – – – 2445652 46p – 25 jul 05
24 jul 12
rudolf gröger 23 nov 01
1
625168 – 462624 – 162544 87p 123p 23 nov 04
22 nov 11
25 jul 02
2
1763373 – – – 1763373 46p – 25 jul 05
24 jul 12
david mcglade 23 nov 01
13
122059 – 90323 31736 – 11873 126p –
25 jul 02
24
2184782 – – – 2184782 46p – 25 jul 05
31 mar 06
david varney 23 nov 01
15
1724137 – 1275860 – 448277 87p 114p 23 nov 04
28 jul 05
25 jul 02
25
3260869 – – – 3260869 46p – 25 jul 05
18 oct 05
1
for options granted in the year ended 31 march 2002 ie 23 november 2001 the ﬁrst performance test took place in november 2004 tsr performance from 19 november 2001 the start of the performance period to 18 november 2004 placed the company at 31st position within
the comparator group and resulted in 74 per cent of share options becoming exercisable performance will be tested in respect of the unexercisable portion of the option on 18 november 2005 should the remaining portion of the option not be exercisable at that time a ﬁnal retest
will occur on 18 november 2006 in the case of david mcglade who resigned from the board on 31 march 2005 the balance of his option outstanding lapsed in full
2
for options granted in the year ended 31 march 2003 ie 25 july 2002 the ﬁrst performance test is expected to be july 2005 tsr performance from 18 july 2002 the start of the performance period to 31 march 2005 placed the company at ﬁrst position within the comparator group
3
the options granted to david mcglade on 23 november 2001 were in the form of adss one mmo2 ads equalled 10 ordinary shares the value realisable from shares acquired on exercise is the difference between the price on the date of exercise and the option price david mcglade
converted his option over adss to ordinary shares on exercise and made a gain of £576622 the sterlingdollar exchange rate on 7 march 2005 was £1  19114
4
on resigning as a director of o2 plc on 31 march 2005 the committee permitted david mcglade to retain his options for the maximum periods referred to in the ﬁnal column above the exercisability of these options is dependent on the applicable performance targets being met
5
on retiring as chairman of the company on 28 july 2004 the committee permitted david varney to retain his options for the maximum periods referred to in the ﬁnal column above the exercisability of these options is dependent on the applicable performance targets being met
o2arpp051065qxd  6105  800 pm  page 61 o2com   62
sharesave
the table below shows the sharesave options over ordinary shares in the company held by directors during the year ended 31 march 2005
number at number at
1 april 31 march exercise price on
grant date 2004 granted exercised lapsed 2005 price date of exercise period exercisable
peter erskine 21 dec 2001 12978 – 12978 – – 732p 1235p 14 feb 2005
13 aug 2005
17 dec 2004 – 18040 – – 18040 916p – 1 feb 2010
31 jul 2010
david finch 21 dec 2001 12978 – 12978 – – 732p 1235p 14 feb 2005
13 aug 2005
17 dec 2004 – 10343 – – 10343 916p – 1 feb 2008
31 jul 2008
david mcglade
1
20 dec 2002 21477 – – 21477 – 44p – –
david varney
2
21 dec 2001 12978 – – 12978 – 732p – –
1
david mcglade resigned from the board on 31 march 2005 and his sharesave options lapsed in full
2
david varney resigned from the board on 28 july 2004 and his sharesave options lapsed in full
legacy longterm incentives
peter erskine had the following o2 shares under award from bt legacy share awards following demerger these awards were adjusted to relate solely to o2 shares and any performance measure has been translated into
a measure of o2 performance from demerger to the end of the performance period
number of
o2 shares number at price on
1 april 31 march date of
name plan year of award 2004 vested lapsed 2005 vesting vesting date
peter erskine bt executive share plan 1999
1
144198 – 144198 – – 2004
peter erskine bt deferred bonus plan 2001
2
127656 127656 – – 8825p 2004
1
the performance period for the 1999 bt executive share plan ended on 31 march 2004 the tsr performance condition was not met and as a result the award over 144198 shares lapsed in may 2004
2
the vesting of shares awarded under the bt deferred bonus plan was subject only to continued employment with the company
report on directors’ remuneration continued
o2arpp051065qxd  6105  800 pm  page 62 o2com   63
legacy option plan
subsisting options over bt shares granted under bt executive share option plans have been replaced with options over o2 shares granted under the o2 legacy option plan for those participants now employed by o2 
the replacement options were granted on the same terms and are exercisable between the same dates as the options for which they were exchanged 
there are no performance conditions relating to the vesting of these options other than continued employment with the o2 group this reﬂects the terms of the underlying bt option plan the legacy options will be
satisﬁed using new issue shares and options granted under this plan do not count towards the dilution limits established for o2 share option plans no further options will be granted under this plan
the table below shows options over bt shares held by david varney and david mcglade prior to demerger
number at number at
1 april 31 march option price on 
grant date 2004 exercised lapsed 2005 price date of exercise date exercisable
david mcglade
1
1 october 2000 113440 113440 – – 23243 126p 1 oct 2001
30 sept 2006
david varney 22 june 2001 491272 491272 – – 1017p 114p 2004
28 july 2005
1
david mcglade’s legacy options were awarded in the form of adss one mmo2 ads equalled 10 ordinary shares and on exercise the adss were converted into ordinary shares david mcglade made a gain of £48893 the sterlingdollar exchange rate on 7 march 2005 was £1  19114
0
20
40
60
80
120
100
160
140
value £
 mmo2o2 ftse 100 index
total shareholder return against the ftse 100 index and ftseurofirst 300 telecommunications index
source thomson financial
19 nov 
2001
31 mar 
2002
31 mar 
2003
31 mar 
2004
31 mar 
2005
ftseurofirst 300 telecommunications index
share price
the closing market price of the company’s shares at 31 march 2005 was 11925p and the range from
1 april 2004 to that date was 8425p to 13125p
nonbeneﬁcial interests
at 31 march 2005 all executive directors had a nonbeneﬁcial interest in 956316 o2 plc ordinary shares
held in trust by hill samuel offshore trust company limited as trustee of the o2 restricted share plan 
o2 performance share plan and o2 deferred equity incentive plan
performance graph 
the performance graph illustrates the company’s tsr performance for the period from 19 november 2001
when the company was ﬁrst listed following its demerger from bt to 31 march 2005 compared to the
ftse 100 index and the ftseuroﬁrst 300 telecommunications index the ftse 100 index was selected by the
committee because it is recognised as an externally valid and robust comparator group of ukbased companies
of similar size to the company in terms of market capitalisation the ftseuroﬁrst 300 telecommunications
index was chosen because it more closely compares the company within its sector the graph relates to
mmo2 plc’s performance prior to 14 march 2005 and o2 plc’s performance thereafter
the graph shows the growth in value of £100 invested on 19 november 2001 including the reinvestment
of dividends it does not relate to the company’s tsr performance as reﬂected in o2 longterm incentives
o2arpp051065qxd  6105  800 pm  page 63 o2com   64
allemployee share schemes
the committee believes that it is in the interests of all employees across the business to be given the
opportunity to own o2 shares and wishes to encourage this by taking advantage of favourable tax
treatment where available for employees
executive directors are eligible to participate in the group’s allemployee share schemes on the same terms
as other employees details of their interests can be found on page 62 there are no performance conditions
attached to the schemes and both operate within speciﬁc tax legislation 
 the o2 sharesave plan under which the directors can grant options to all employees across the
business to acquire shares at an exercise price set at a discount of up to 20 per cent to the market value
of a share at the time of invitation and
 the o2 share ownership plan under which uk employees can acquire o2 shares on taxfavoured terms
policy on outside appointments 
it is the group’s policy to support executive directors and senior managers taking external directorships or
similar roles where it is beneﬁcial for both the individual concerned and the group and does not detract
from their responsibilities to the group the number of such appointments must not exceed two only one
of which may be with a ftse 100 company appointments relating to executive directors and executive
committee members require the prior approval of the board appointments relating to other senior
executives require the prior approval of the chairman the company permits the executive director or senior
executive concerned to retain any fees earned from such a position provided they are at a reasonable level
peter erskine is a member of the university of reading business school advisory board david mcglade
who left the board on 31 march 2005 is a nonexecutive director of a usbased company called
purematrix none of the executive directors received fees in respect of these external directorships
compliance 
this report complies with the directors’ remuneration report regulations 2002 the regulations the
regulations require the group’s auditors to report to shareholders on the auditable part of the report and 
to state whether in their opinion that part of the report has been properly prepared in accordance with the
companies act 1985 as amended by the regulations the auditable sections of the report are the tables
relating to directors’ remuneration directors’ pensions and directors’ interests in share schemes on pages 60
to 63 and the accompanying footnotes the company’s compliance with the combined code is set out in
the report on corporate governance
by order of the board
patrick lupo
chairman of the remuneration committee
17 may 2005
report on directors’ remuneration continued
o2arpp051065qxd  6105  800 pm  page 64 report of the auditors
independent auditors’ report to the members of o2 plc
we have audited the ﬁnancial statements which comprise the proﬁt and loss account the balance sheet 
the cash ﬂow statement the statement of total recognised gains and losses and the related notes which
have been prepared under the historical cost convention and the accounting policies set out in the
statement of accounting policies we have also audited the disclosures required by part 3 of schedule 7a 
to the companies act 1985 contained in the report on directors’ remuneration “the auditable part”
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report and the ﬁnancial statements in accordance 
with applicable united kingdom law and accounting standards are set out in the statement of directors’
responsibilities the directors are also responsible for preparing the report on directors’ remuneration
our responsibility is to audit the ﬁnancial statements and the auditable part of the report on directors’
remuneration in accordance with relevant legal and regulatory requirements and united kingdom auditing
standards issued by the auditing practices board this report including the opinion has been prepared for
and only for the company’s members as a body in accordance with section 235 of the companies act 1985
and for no other purpose we do not in giving this opinion accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing
we report to you our opinion as to whether the ﬁnancial statements give a true and fair view and whether
the ﬁnancial statements and the auditable part of the report on directors’ remuneration 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 ﬁnancial statements if the company has not kept proper
accounting records if we have not received all the information and explanations we require for our audit 
or if information speciﬁed by law regarding directors’ remuneration and transactions is not disclosed
we read the other information contained in the annual report and consider the implications for our 
report if we become aware of any apparent misstatements or material inconsistencies with the ﬁnancial
statements the other information comprises only the directors’ report the unaudited part of the directors’
remuneration report the chairman’s statement the chief executive ofﬁcer’s review the operating and
ﬁnancial review and prospects and the corporate governance statement 
we review whether the corporate governance statement reﬂects the company’s compliance with the nine
provisions of the 2003 frc combined code speciﬁed for our review by the listing rules of the financial
services authority and we report if it does not we are not required to consider whether the board’s
statements on internal control cover all risks and controls or form an opinion on the effectiveness of the
group’s corporate governance procedures or its risk and control procedures
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 ﬁnancial statements and the auditable part of the report on directors’ remuneration it also includes 
an assessment of the signiﬁcant estimates and judgements made by the directors in the preparation 
of the ﬁnancial statements and of whether the accounting policies are appropriate to the company’s
circumstances consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufﬁcient evidence to give reasonable assurance that the
ﬁnancial statements and the auditable part of the report on directors’ remuneration are free from material
misstatement whether caused by fraud or other irregularity or error in forming our opinion we also
evaluated the overall adequacy of the presentation of information in the ﬁnancial statements
opinion
in our opinion
 the ﬁnancial statements give a true and fair view of the state of affairs of the company and the group
at 31 march 2005 and of the proﬁt and cash ﬂows of the group for the year then ended
 the ﬁnancial statements have been properly prepared in accordance with the companies act 1985 and
 those parts of the report on directors’ remuneration required by part 3 of schedule 7a to the
companies act 1985 have been properly prepared in accordance with the companies act 1985
pricewaterhousecoopers llp
chartered accountants and registered auditors
london
17 may 2005
the maintenance and integrity of the o2 plc website is the responsibility of the directors the work carried
out by the auditors does not involve consideration of these matters and accordingly the auditors accept no
responsibility for any changes that may have occurred to the ﬁnancial statements since they were initially
presented on the website
legislation in the united kindom governing the preparation and dissemination of ﬁnancial statements may
differ from legislation in other jurisdictions
o2com   65 group profit and loss account
year ended 31 march 2005
group balance sheet
as at 31 march 2005
2005 2004 2003
note £m £m £m
turnover group and share of joint ventures and associates 6890 5859 5020
group’s share of joint ventures and associates turnover 207 165 146
group turnover 2 6683 5694 4874
net operating expenses including exceptional items 3 6342 5536 13652
ebitda
1
1768 1367 859
depreciation before exceptional items 931 926 932
goodwill amortisation 200 201 374
umts licences amortisation 169 ––
other amortisation 82 7 31
operating profitloss before exceptional items 386 233 478
exceptional items 5 45 75 8300
group operating profitloss 34 341 158 8778
group’s share of operating lossprofit of joint ventures and associates 3 –5
total operating profitloss 338 158 8773
costs of capital reorganisation 5 20 ––
loss on sale of business – discontinued operation 5 – 5 1364
net interest payable and similar charges 6 9 58 66
profitloss on ordinary activities before taxation 309 95 10203
tax on profitloss on ordinary activities 7 8 71 55
profitloss for the financial year 20 301 166 10148
dividends 820 196 ––
retained profitloss for the year 105 166 10148
basic earningsloss per share pence 9 35 19 1170
diluted earningsloss per share pence 9 34 19 1170
dividend per share 225 ––
all results in the current year derive from continuing operations
1
ebitda is our earnings before interest tax depreciation amortisation and exceptional items excluding our share of the operating profits and
losses of our joint ventures and associates ebitda is not a measure of financial performance under uk gaap and may not be comparable
to similarly titled measures of other companies because ebitda is not uniformly defined ebitda should not be considered by investors as an
alternative to group operating profit or profit on ordinary activities before taxation as an indication of operating performance or as an
alternative to cash flow from operating activities as an indication of cash flows ebitda is one of the key financial measures used by the
group for evaluating financial performance and is discussed in the operating and financial review and prospects on page 23
2005 2004
as restated
note £m £m
fixed assets
intangible assets 10 7045 7354
tangible assets 11 4449 3996
investments 12 2 5
11496 11355
current assets
stocks 87 84
debtors 13 1060 943
investments 14 1285 993
cash at bank and in hand 41 23
2473 2043
creditors amounts falling due within one year 15 2031 1678
net current assets 442 365
total assets less current liabilities 11938 11720
creditors amounts falling due after more than one year 16 1403 1375
provisions for liabilities and charges 18 254 251
net assets 10281 10094
capital and reserves
called up share capital 19 9 9
share premium 20 375 3
other reserves 20 2913 11074
profit and loss account 20 6984 992
shareholders’ funds 10281 10094
the company balance sheet is shown in note 31
these financial statements were approved by the board of directors on 17 may 2005 and were signed on
its behalf by
petererskine davidfinch 
chief executive officer chief financial officer
the accompanying notes are an integral part of these financial statements
o2com   66
o2arpp066067qxd  6105  800 pm  page 66 2005 2004 2003
note £m £m £m
profitloss for the financial year 301 166 10148
currency translation differences arising on foreign currency 
net investments less translation differences on debt 
designated as a hedge of foreign currency net investments 20 68 144 1333
premium paid to shareholders electing for cash alternative in 
capital reorganisation 1920 15 ––
total recognised gains and losses relating to the year 354 22 8815
group net debt
as at 31 march 2005
2005 2004
note £m £m
cash at bank and in hand 41 23
current asset investments 14 1285 993
1326 1016
euro mediumterm notes net of issue costs 16 1056 1012
loan notes 15 7 8
obligations under finance leases and hire purchase contracts 17 308 325
other loans and borrowings 1516 33 37
net debt 78 366
2005 2004 2003
£m £m £m
group operating profitloss 341 158 8778
depreciation and amortisation charges 1388 1136 9637
loss on disposal of fixed assets 2 58
increase in stocks 2 17 5
increasedecrease in debtors 84 88 166
increase in creditors 98 142 58
increasedecrease in provisions 12 55 53
net cash inflow from operating activities 1755 1391 1033
group cash flow statement
year ended 31 march 2005
2005 2004 2003
note £m £m £m
net cash inflow from operating activities 1755 1391 1033
returns on investments and servicing of finance 21 43 62 63
taxation 21 15 13 4
capital expenditure and financial investment 21 1348 1114 868
acquisitions and disposals 21 2 6 –
cash inflow before management of liquid resources 
and financing 347 196 98
management of liquid resources 21 302 191 3
financing 21 27 50 47
increasedecrease in cash in the year 22 18 45 48
group statement of total recognised gains and losses
year ended 31 march 2005
the accompanying notes are an integral part of these financial statements
reconciliation of group operating profit to operating cash flows
year ended 31 march 2005
o2com   67
o2arpp066067qxd  6105  800 pm  page 67 notes to the ﬁnancial statements
1 accounting policies
accounting conventions
the ﬁnancial statements are prepared under the historical cost convention and in accordance with applicable
accounting standards and generally accepted accounting principles in the united kingdom uk gaap
the ﬁnancial statements include the results of o2 plc and its subsidiaries all principal subsidiary undertakings’
financial years are coterminous with those of o2 plc on consolidation all intercompany balances and
transactions have been eliminated
certain amounts relating to the prior year have been reclassiﬁed to conform to the current year presentation
basis of preparation
merger accounting
o2 plc was incorporated on 10 december 2004 as part of the capital reorganisation described in note 19
the purpose of the capital reorganisation was to create distributable reserves in o2 plc to allow the
implementation of the group’s distribution policy these ﬁnancial statements are o2 plc’s ﬁrst company 
and consolidated ﬁnancial statements
on 14 march 2005 o2 plc was introduced as the new holding company of the mmo2 plc group pursuant
to a scheme of arrangement the scheme under section 425 of the companies act 1985 whereby o2 plc
issued shares in return for the existing shares in mmo2 plc subsequently o2 plc effected a reduction in 
its share capital to create distributable reserves shareholders were also offered the opportunity to realise for
cash their shareholding in mmo2 plc in a cost effective manner
the directors consider that in substance the scheme constituted two distinct transactions being ﬁrstly the
insertion of the new holding company o2 plc and secondly a placing of shares on behalf of certain
shareholders who elected to receive the consideration for their shares in mmo2 plc in cash the insertion of
a new holding company constitutes a group reconstruction as deﬁned by financial reporting standard frs
6 “acquisitions and mergers” and has been accounted for using merger accounting principles the premium
paid to shareholders who elected to receive their consideration in cash has been recognised as a deduction
from the group proﬁt and loss account reserve
the consolidated ﬁnancial statements for the year ended 31 march 2005 comprise the results of o2 plc
from incorporation to 31 march 2005 together with the results of the o2 plc group from the 14 march
2005 to the end of the ﬁnancial year and the results of the mmo2 group from 1 april 2004 to 13 march
2005 the comparative information presented is as previously published for the mmo2 plc group except
where otherwise stated 
change in accounting policy
the group has adopted the urgent issues task force abstract 38 uitf 38 “accounting for esop trusts” in
the year ended 31 march 2005 which requires that a company’s own shares held through an esop trust be
shown as a deduction from shareholders’ funds until such time as the shares vest unconditionally previously
these shares were recorded at cost less amortisation charged to date and shown as a ﬁxed asset investment
the comparative ﬁgures have been restated to reﬂect the adoption of uitf 38 the aggregate impact on
the previously reported ﬁgures is to reduce total equity shareholders’ funds at 1 april 2002 by £3 million
31 march 2003 £3 million 31 march 2004 increase by £3 million the adoption of uitf 38 has no effect
on the proﬁt and loss account
turnover
group turnover which excludes value added tax and other sales taxes comprises the value of services
provided equipment sales and other revenue
mobile telecommunications service turnover includes turnover earned for usage of the group’s wireless
network for voice and data transmission by the group’s customers subscription fees and interconnect
revenue postpay customers are billed in arrears based on usage and turnover is recognised when the
service is rendered turnover for prepay customers is recorded as deferred revenue prior to
commencement of services and is recognised as the prepay services are rendered inbound roaming
revenue earned from other mobile operators whose customers roam onto the o2 network and outbound
roaming revenue earned from customers roaming outside their domestic coverage area are recognised
based upon usage subscription fees are recognised evenly throughout the periods to which they relate
hardware turnover principally consists of revenue from the sale of wireless mobile devices the revenue
and related expenses associated with the sale of wireless handsets and accessories are recognised when
the products are delivered and accepted by the customer other sales include connection charges which
are deferred and recognised over the estimated customer relationship period
revenue is recognised on a gross basis where the group’s role is that of principal in a transaction the
gross basis represents the gross value of the billing to the customer after trade discounts with any related
costs being charged to operating expenses where the group acts as agent in a transaction the net
revenue earned is recognised as turnover
subscriber acquisition costs
subscriber acquisition costs which include the commission costs associated with acquiring new subscribers
and other incremental costs of customer acquisition are charged to the proﬁt and loss account as incurred
research and development
expenditure on research and development is written off in the year in which it is incurred
foreign currencies
transactions denominated in foreign currencies are translated at the exchange rate on the day the
transaction occurred or at the contracted forward rate of exchange if hedged by a forward exchange
contract or similar hedging arrangement monetary assets and liabilities denominated in foreign currencies
are translated at the rates ruling at the balance sheet date or at the forward rate of exchange if hedged
net assets of foreign subsidiary undertakings including related goodwill are translated into sterling at the
rates ruling at the balance sheet date the proﬁt or loss and cash ﬂows for the year of foreign subsidiary 
o2com   68
o2arpp068089qxd  6105  800 pm  page 68 undertakings are translated at the average rates of exchange for the year exchange adjustments arising on
the translation into sterling of the opening net assets and proﬁts or losses for the year retained by foreign
subsidiary undertakings are recognised in reserves and reported in the statement of total recognised gains
and losses exchange gains and losses arising on foreign currency net borrowings used to hedge the group’s
foreign currency net investments are also recognised directly in reserves
all other exchange gains or losses are dealt with in the proﬁt and loss account
goodwill
goodwill arising from the purchase of subsidiary undertakings and interests in joint ventures and 
associates represents the excess of the fair value of the purchase consideration over the fair value 
of the net assets acquired
for all acquisitions arising on or after 1 april 1998 the goodwill arising is capitalised as an intangible asset
the goodwill is amortised on a straightline basis from the time of acquisition over a period estimated by
management to be its useful economic life the useful economic life is normally 20 years and is subject to
review if and when an event or change occurs which may affect the asset life
for acquisitions made before the adoption of frs 10 “goodwill and intangible assets” on 1 april 1998
the goodwill arising was written off directly to reserves the goodwill written off directly to reserves will be
charged to the proﬁt and loss account on the subsequent disposal of the business to which it relates
other intangible ﬁxed assets
licence fees paid to governments which permit telecommunication activities to be operated for deﬁned
periods are capitalised at cost and are amortised from the market launch of service to the end of the licence
period on a straightline basis other licences are amortised over the period of the licence on a straightline
basis other intangible assets are amortised over their estimated useful economic life on a straightline basis
tangible ﬁxed assets
tangible ﬁxed assets are stated at historical cost less depreciation the cost of tangible ﬁxed assets includes
directly attributable incremental costs incurred in their acquisition and installation
depreciation is provided on tangible ﬁxed assets from the date they are brought into use over their
estimated useful lives on a straightline basis taking into account any residual values the lives assigned to
tangible ﬁxed assets are
freehold buildings 40 years
leasehold land and buildings unexpired portion of lease or 40 years whichever is the shorter
network assets 5 to 15 years
computers software and ofﬁce equipment 2 to 6 years
motor vehicles 5 years
no depreciation is provided on freehold land or assets in course of construction
joint ventures and associates
investments in joint ventures and associates are included in the consolidated ﬁnancial statements using the
equity method of accounting the proﬁt and loss account includes the group’s share of the proﬁts or losses
of joint ventures and associates in instances in which the group holds an interest in the net liabilities of its
joint ventures and associates such interests are recognised in creditors amounts falling due within one year
fixed asset impairment
goodwill and other intangible assets are reviewed for impairment at the end of the ﬁrst full ﬁnancial year
following acquisition and together with tangible ﬁxed assets in other periods if events or changes in
circumstances indicate that the carrying values may not be recoverable such events may include continuing
operating losses technological obsolescence or signiﬁcant adverse changes in the business or the market in
which the ﬁxed asset is used
the impairment review is performed by comparing the carrying value of the asset or group of assets with
their recoverable amount for assets used in the continuing operations of the group the recoverable amount
is the assets’ value in use which is estimated by calculating the present value of its future cash ﬂows for
assets to be disposed the recoverable amount is the assets’ net realisable value impairment charges are
recognised in the proﬁt and loss account to the extent that the carrying value exceeds the recoverable
amount in the period in which the impairment is identiﬁed
stocks
stocks comprise mainly handsets and are stated at the lower of cost and net realisable value which reﬂects
the value to the business of the handset in the hands of the subscriber on a ﬁrstin ﬁrstout basis after
provisions for obsolescence
debtors
debtors are stated at estimated net realisable value net realisable value is the invoiced amount less
provisions for bad and doubtful debtors provisions are made speciﬁcally against debtors where there is
evidence of a dispute or an inability to pay an additional provision is made based on an analysis of balances
by age previous losses experienced and general economic conditions
provisions
provisions are recognised by the group when three criteria are met i the group has a constructive or legal
obligation as a result of a past event ii if it is probable that a transfer of economic beneﬁts will be required
to settle the obligation and iii a reliable estimate of the obligation can be made
a provision is made for the present value of the cost of restoration of mast sites at the date of acquisition of
the site in accordance with frs 12 “provisions contingent liabilities and contingent assets”
share based payments
the cost of awards to employees of shares or share options is recognised as an operating expense over 
the period of the employees’ performance to which the award relates the cost of the award is based on 
o2com   69
o2arpp068089qxd  6105  800 pm  page 69 notes to the ﬁnancial statements continued
the difference between the award or option exercise price and the market value of the shares at the date of
grant and is adjusted for the likelihood of performance criteria being achieved the proﬁt and loss account
charge is matched by a reserve recognised within shareholders’ funds for equity settled awards
the group has taken advantage of the exemption available under uitf 17 revised ”employee share
schemes“ not to account for inland revenue approved saveasyouearn saye schemes
the assets and liabilities of esop trusts are included in the accounts of the sponsoring employer until such
time as own shares vest unconditionally in employees the consideration paid for the shares is deducted from
the proﬁt and loss account reserve
postretirement beneﬁts
the group operates a number of pension schemes as disclosed in note 30 to the ﬁnancial statements 
all pension schemes are accounted for in accordance with the provisions of statement of standard
accounting practice ssap 24 “accounting for pension costs” the group continues to apply the
transitional disclosure requirements set out in frs 17 ”retirement beneﬁts”
for funded and unfunded deﬁned beneﬁt schemes the expected costs of providing pensions and other
postretirement beneﬁts as calculated periodically by professionally qualiﬁed independent actuaries are
charged to the proﬁt and loss account so as to spread the cost over the service lives of employees in the
schemes in such a way that the pension cost is a substantially level percentage of current and expected
future pensionable payroll for the funded schemes the assets of the schemes are held separately from
those of the principal employer for the unfunded schemes no contributions are made by either employees
or the employer to a separate pension fund and a provision is recorded on the balance sheet to recognise
the cumulative accrued liability of the group
the group also supports a number of deﬁned contribution pension schemes where the beneﬁts are based
on the level of contributions paid costs arising from these schemes are charged to the proﬁt and loss
account in the period to which they relate
deferred taxation
deferred tax is provided in full on all timing differences which result in an obligation at the balance sheet
date to pay more tax or a right to pay less tax at a future date at rates expected to apply when they
crystallise based on current tax rates and law timing differences arise from the inclusion of items of income
and expenditure in taxation computations in periods different from those in which they are included in the
ﬁnancial statements deferred tax assets are recognised to the extent that it is regarded as more likely than
not that they will be recovered deferred tax assets and liabilities are not discounted
debt issue costs
debt instruments are stated at the amount of net proceeds received debt issue costs are amortised over the
term of the debt to ensure a constant rate of charge
derivative ﬁnancial instruments
derivative ﬁnancial instruments are used to manage the group’s exposure to ﬂuctuations in interest rates
and foreign currency exchange rates interest rate swaps currency swaps and forward exchange contracts
are accounted for as hedges when they alter the risk proﬁle of an existing underlying exposure of 
the group
all derivative ﬁnancial instruments held for hedging purposes are identiﬁed as hedges of the underlying
asset or liability from inception to qualify as a hedge the derivative must be established in accordance with
speciﬁc guidelines and must be effective on inception and throughout its life
forward exchange contracts used to hedge net foreign currency investments in overseas businesses are
translated at the closing rates of exchange net realised and unrealised gains and losses arising on these
hedging instruments are recognised in the statement of total recognised gains and losses to offset the
translation gains or losses arising on the net investments being hedged forward points comprising the
interest rate differential between the currencies inherent in forward exchange contracts are recognised in
the proﬁt and loss account over the term of the contracts 
interest rate differentials on interest rate swaps qualifying as hedges are recognised by adjusting
interest payable
other forward exchange contracts hedging transaction exposures are revalued at the year end at the
prevailing forward rate with net unrealised gains and losses being matched to the underlying transactions
being hedged
leases and hire purchase contracts
rentals under operating leases are charged to the proﬁt and loss account in equal annual instalments over
the periods of the leases
assets held under ﬁnance leases and hire purchase contracts are capitalised at the present value of the
minimum lease payments on the inception of the leases and depreciated over the shorter of the period 
of the lease and the estimated useful economic lives of the assets finance charges are allocated over 
the period of the lease in proportion to the capital amount outstanding and are charged to the proﬁt 
and loss account
o2com   70
1 accounting policies continued
o2arpp068089qxd  6105  800 pm  page 70 o2com   71
2 segmental analysis
the group’s operations have been divided internally into two classes of business in line with daytoday managerial and budgetary control during the year
1 the supply of mobile telecommunications services and products and
2 other businesses comprising o2 airwave a secure national radio service business and manx telecom a ﬁxed and mobile telecommunications business in the isle of man
businesses within the mobile telecommunications services segment mainly derive their turnover from the calls made and received by their customers using mobile telephones from subscription fees charged to their
contract customers and from handset equipment sales
in the year ended 31 march 2004 the group undertook a restructuring of its central functions and rationalised its property portfolio as described in note 5 for the year ended 31 march 2005 the activities of o2 online
and products o2 which were previously reported as the “mobile internet services” segment are reported within the segments in which they now reside as the information is not readily available the comparatives have
not been restated and these businesses are reported separately in line with daytoday managerial and budgetary control at that time
turnover is based on the country of invoice origination which is not materially different to turnover by destination central overheads and adjustments includes central costs and other consolidation adjustments
the segmental disclosures in respect of proﬁt and loss account items are presented below
year ended 31 march 2005 year ended 31 march 2004 year ended 31 march 2003
total total depreciation total
group depreciation and operating group depreciationand operating group amortisation operating
turnover amortisation
1
proﬁtloss turnover amortisation
1
proﬁtloss turnover and impairment
1
loss
£m £m £m £m £m £m £m £m £m
continuing operations
mobile telecommunications uk 4030 773 370 3451 638 346 3025 2953 2111
germany 1865 431 92 1508 295 72 1060 5006 4979
ireland 585 117 106 529 120 87 442 1488 1331
total mobile telecommunications 6480 1321 384 5488 1053 361 4527 9447 8421
mobile internet services uk 140 42 93 93 49 122
other businesses uk 222 61 35 139 37 13 64 19 23
central overheads and adjustments –6 81 –3 96 – 1 87
intersegment eliminations 19 – – 121 – – 73 – –
6683 1388 338 5646 1135 159 4611 9516 8653
discontinued operation
mobile telecommunications the netherlands ––– 48 1 1 263 121 120
group total 6683 1388 338 5694 1136 158 4874 9637 8773
1
in the years ended 31 march 2005 and 2004 depreciation includes a charge of £6 million and £2 million respectively included within the exceptional operating cost disclosed in note 5 in the year ended 31 march 2003 the exceptional depreciation amortisation and impairment
charged to total operating proﬁt of £8300 million comprised a charge of £2401 million in respect of impairment of goodwill and £5899 million in respect of impairment of telecommunication licences and investments held in the group’s businesses
o2arpp068089qxd  6105  800 pm  page 71 o2com   72
notes to the ﬁnancial statements continued
the segmental disclosures in respect of balance sheet items are presented below
year ended and as at 31 march 2005 year ended and as at 31 march 2004 year ended and as at 31 march 2003
net operating net operating net operating
capital tangible assets capital tangible assets capital tangible assets
expenditure
1
ﬁxed assets liabilities
2
expenditure
1
ﬁxed assets liabilities
2
expenditure
1
ﬁxed assets liabilities
2
£m £m £m £m £m £m £m £m £m
continuing operations
mobile telecommunications uk 637 2210 5744 502 2118 5945 362 2111 6226
germany 388 1229 3203 308 1051 3160 141 1072 3203
ireland 100 273 1078 52 233 1086 57 257 1186
total mobile telecommunications 1125 3712 10025 862 3402 10191 560 3440 10615
mobile internet services uk ––– 12 22 13 17 48 20
other businesses uk 228 735 656 252 568 450 170 353 295
central assets and adjustments 32 190 24 62 1 3 109
1356 4449 10491 1128 3996 10592 748 3844 10821
discontinued operation
mobile telecommunications the netherlands ––– 5–– 593112
group total 1356 4449 10491 1133 3996 10592 807 3875 10833
1
capital expenditure comprises tangible ﬁxed asset additions
2
net operating assetsliabilities comprise tangible and intangible ﬁxed assets including goodwill stocks debtors creditors excluding debt falling due within and after more than one year and provisions excluding deferred tax
group turnover year ended 31 march 2005 year ended 31 march 2004 year ended 31 march 2003
intersegment intersegment intersegment
uk germany ireland eliminations total uk germany ireland eliminations total uk germany ireland eliminations total
£m £m £m £m £m £m £m £m £m £m £m £m £m £m £m
continuing operations
mobile telecommunications
service turnover 3627 1687 556 – 5870 3183 1347 500 – 5030 2738 944 415 – 4097
equipment and other turnover 403 178 29 – 610 268 161 29 – 458 287 116 27 – 430
total mobile telecommunications 
turnover 4030 1865 585 – 6480 3451 1508 529 – 5488 3025 1060 442 – 4527
mobile internet services ––––– 140––– 140 93––– 93
other businesses 222––– 222 139––– 139 64––– 64
intersegment eliminations ––– 19 19 ––– 121 121 – – – 73 73
4252 1865 585 19 6683 3730 1508 529 121 5646 3182 1060 442 73 4611
discontinued operations
mobile telecommunications – 
the netherlands – 48 263
group turnover 6683 5694 4874
joint ventures and associates
total turnover for the year ended 31 march 2005 was £6890 million 2004 £5859 million 2003 £5020 million and included £196 million 2004 £165 million 2003 £146 million representing the group’s share 
of the turnover of its joint ventures and associates in the uk mobile telecommunications business and £11 million 2004 nil 2003 nil representing the group’s share of the turnover of its joint venture in the german 
mobile telecommunications business the group’s share of the operating loss of its joint ventures and associates was £3 million 2004 nil 2003 £5 million proﬁt the group’s interest in the aggregate liabilities of its joint
ventures and associates at 31 march 2005 was £1 million 2004 assets of £5 million 2003 nil
2 segmental analysis continued
o2arpp068089qxd  6105  800 pm  page 72 o2com   73
3 net operating expenses year ended 31 march 2005 year ended 31 march 2004 year ended 31 march 2003
 continuing discontinued continuing discontinued continuing discontinued
operations operation total operations operation total operations operation total
£m £m £m £m £m £m £m £m £m
year ended 31 march 2005
group turnover 6683 – 6683 5646 48 5694 4611 263 4874
cost of sales 3799 – 3799 3291 23 3314 2854 206 3060
gross proﬁt 2884 – 2884 2355 25 2380 1757 57 1814
administrative expenses 2543 – 2543 2196 26 2222 10415 177 10592
administrative expenses before exceptional items 2498 – 2498 2121 26 2147 2115 177 2292
exceptional items 45 – 45 75 – 75 8300 – 8300
group operating proﬁt 341 – 341 159 1 158 8658 120 8778
net operating expenses comprise cost of sales and administrative expenses including exceptional operating items and total £6342 million in 2005 2004 £5536 million 2003 £13652 million
4 group operating proﬁt
group operating proﬁtloss is stated after chargingcrediting 2005 2004 2003
£m £m £m
depreciation of tangible ﬁxed assets
owned
1
904 900 907
held under hire purchase contracts 33 28 25
amortisation of intangible ﬁxed assets before impairment
goodwill 200 201 374
umts licences 169 ––
other 82 731
rentals under operating leases
hire of plant and machinery 12 10 12
other operating leases 154 158 171
staff costs note 29 613 548 521
own work capitalised 118 106 62
loss on disposal of ﬁxed assets 2 58
research and development costs 8 10 9
1
includes exceptional depreciation of £6 million in 2005 and £2 million in 2004
5 exceptional items
in the year ended 31 march 2005 the group incurred an exceptional operating charge of £45 million and
an exceptional nonoperating charge of £20 million
the exceptional operating charge relates to the redeployment of resources within o2 uk into customer
facing areas and away from noncustomer facing areas this is in line with o2 uk’s strategy of delivering
an enhanced customer experience and increasing customer loyalty the charge comprises redundancy and
property costs no cash was expended in the year ended 31 march 2005 the exceptional nonoperating
charge relates to the costs of the capital reorganisation described in note 19 this charge gave rise to a 
cash outﬂow of £15 million in the year
in the year ended 31 march 2004 the group incurred an exceptional operating charge of £75 million in
respect of the restructuring of central functions and the resultant rationalisation of the group’s property
portfolio this arose on the transfer of o2 online products o2 and certain other central functions to the
group’s operating businesses in the uk germany and ireland and includes provisions relating to redundancies
and the termination of property leases this charge gave rise to a cash outﬂow of £17 million in that year
the impairment review performed by the group during the year ended 31 march 2003 resulted in an
exceptional noncash operating charge in respect of the group’s continuing businesses of £8300 million
this comprised charges relating mainly to the impairment of umts licences and goodwill in o2 uk and 
o2 germany totalling £2300 million and £4700 million respectively and the impairment of goodwill in 
o2 ireland of £1300 million
the sale of o2 netherlands to greenﬁeld capital partners completed on 3 june 2003 for €25 million in cash
the total loss on sale arising on completion was £1369 million which after utilisation of the provision
recognised in 2003 resulted in a nonoperating exceptional loss of £5 million in the year ended 31 march
2004 in accordance with frs 3 “reporting ﬁnancial performance” the results of o2 netherlands have been
classiﬁed as discontinued
o2arpp068089qxd  6105  800 pm  page 73 notes to the ﬁnancial statements continued
6 net interest payable and similar charges 2005 2004 2003
£m £m £m
group
interest receivable and similar income
cash and current asset investment deposits 33 17 16
forward foreign exchange contracts note 26 24 ––
other 6 33
interest payable and similar charges
bank loans overdrafts and other borrowings 8 13 19
amortisation of debt issue costs 8 4 3
debentures 57 62 63
group net interest payable 10 59 66
share of joint ventures and associates
interest receivable and similar income 1 1–
net interest payable 9 58 66
7 tax on proﬁt on ordinary activities 2005 2004 2003
£m £m £m
current tax
nonunited kingdom tax 14 13 8
adjustments in respect of prior periods 1 1–
tax on group’s share of results of joint ventures and associates 1 1 2
total current tax charge 14 13 10
deferred tax
origination and reversal of timing differences 1 86 72
adjustments in respect of prior periods 5 2 7
total deferred tax credit 6 84 65
tax chargecredit on proﬁtloss on ordinary activities 8 71 55
current tax
in the year ended 31 march 2005 the proﬁt on ordinary activities before taxation was £309 million 
2004 £95 million 2003 loss of £10203 million
the tax assessed for the year varied from the amount computed by applying the corporation tax rate to
proﬁt or loss on ordinary activities before taxation the differences were attributable to the following factors
2005 2004 2003
£m £m £m
united kingdom corporation tax on proﬁtloss at 30 93 29 3061
nondeductible depreciation amortisation and impairment 122 78 2387
nondeductible nonunited kingdom losses 1 – 23
nonunited kingdom tax rate differences 35 16 7
capital allowances in excessdeﬁcit of depreciation 31 1 14
losses carried forward – 30 657
losses brought forward and utilised 134 138 –
nondeductible losses on sale of discontinued operations – 2 –
other timing differences and adjustments 1 28 3
prior year adjustments 1 1–
current tax charge for year 14 13 10
the group expects to be able to claim capital allowances in excess of depreciation in future years which will
affect future tax charges
deferred tax
the deferred taxation credit arises as follows
2005 2004 2003
£m £m £m
excess capital allowances 22 15 4
other timing differences 21 101 76
adjustments in respect of prior periods 5 2 7
total deferred tax credit 6 84 65
other timing differences include the recognition of a deferred tax asset of £55 million in respect of uk tax
losses carried forward owing to sufﬁcient certainty regarding the availability of future taxable proﬁts
deferred tax assets in respect of certain other uk and german losses carried forward and other timing
differences totalling £5185 million have not been recognised due to insufﬁcient certainty regarding the
availability of appropriate future taxable proﬁts
no deferred tax is recognised on the unremitted earnings of overseas subsidiaries
o2com   74
o2arpp068089qxd  6105  800 pm  page 74 8 dividends
2005
pence per share £m
proposed ﬁnal 225 196
the ﬁnal dividend of 225 pence per share will be paid on 26 august 2005 to shareholders on the register at
the close of business on 5 august 2005
9 earnings per share
earnings per share has been calculated by dividing the proﬁt for the year by the weighted average number
of ordinary shares in issue during that year as follows
2005 2004 2003
proﬁtloss for the ﬁnancial year £ million 301 166 10148
weighted average number of ordinary shares in issue during the year and 
used to calculate basic earnings per share number of shares millions 8681 8671 8670
dilutive potential ordinary shares number of shares millions 120 44 –
weighted average number of ordinary shares outstanding and used to 
calculate diluted earnings per share number of shares millions 8801 8715 8670
basic earnings per share pence 35 19 1170
diluted earnings per share pence 34 19 1170
underlying earnings per share has been calculated by dividing the underlying proﬁt for the year by the
weighted average number of ordinary shares in issue during that year underlying proﬁt is calculated 
as follows
2005 2004 2003
£m £m £m
proﬁtloss for the ﬁnancial year 301 166 10148
goodwill amortisation 200 201 374
umts licences amortisation 169 ––
operating exceptional items 45 75 8300
nonoperating exceptional items 20 5 1364
underlying earnings 735 447 110
underlying earnings per share pence 85 52 13
in accordance with the principles of merger accounting as applicable to group reorganisations described in
note 1 earnings per share has been calculated as if o2 plc had in issue the share capital of mmo2 plc prior
to 14 march 2005
10 intangible assets umts
goodwill licences other total
£m £m £m £m
cost
at 1 april 2004 9704 9797 151 19652
additions – – 59 59
currency movements 178 164 1 343
at 31 march 2005 9882 9961 211 20054
amortisation
at 1 april 2004 6515 5778 5 12298
charge for the year 200 169 82 451
currency movements 156 103 1 260
at 31 march 2005 6871 6050 88 13009
net book value
at 31 march 2005 3011 3911 123 7045
at 31 march 2004 3189 4019 146 7354
o2com   75
o2arpp068089qxd  6105  800 pm  page 75 notes to the ﬁnancial statements continued
11 tangible assets assets in
land and plant and course of
buildings equipment construction total
£m £m £m £m
cost
at 1 april 2004 349 6482 708 7539
additions 5 562 789 1356
transfers 24 963 987 –
disposals 7 194 – 201
currency movements 1 71 3 75
at 31 march 2005 372 7884 513 8769
depreciation
at 1 april 2004 146 3397 – 3543
charge for the year
1
40 897 – 937
disposals 7 192 – 199
currency movements – 39 – 39
at 31 march 2005 179 4141 – 4320
net book value
at 31 march 2005 193 3743 513 4449
at 31 march 2004 203 3085 708 3996
1
the charge for the year includes an exceptional charge of £6 million relating to the reorganisation described in note 5
the net book value of land and buildings comprises 2005 2004
£m £m
freehold 73 76
long leases 26 23
short leases 94 104
net book value 193 203
the net book value of assets held under ﬁnance leases and hire purchase contracts comprises
cost 748 733
accumulated depreciation 401 368
net book value 347 365
12 fixed asset investments interests in
joint ventures own
and associates shares total
group £m £m £m
cost
at 1 april 2004 98 6 104
prior period adjustment relating to uitf 38 note 1 – 6 6
at 1 april 2004 as restated 98 – 98
additions 4 – 4
dividend received from associate 7 – 7
loss retained for the year 3 – 3
reclassiﬁcations
1
3– 3
at 31 march 2005 95 – 95
provisions
at 1 april 2004 93 6 99
prior period adjustment relating to uitf 38 note 1 – 6 6
at 1 april 2004 as restated and at 31 march 2005 93 – 93
net book value
at 31 march 2005 2 – 2
at 31 march 2004 5 – 5
1
represents the reclassiﬁcation of the group’s interest in the net liabilities of our joint ventures and associates to creditors amounts falling
due within one year
shares in
subsidiary
undertakings
parent company £m
cost and net book value
on incorporation –
additions 7116
at 31 march 2005 7116
the directors consider that disclosing full particulars of all subsidiary undertakings would lead to a statement
of excessive length a list of principal subsidiary undertakings is given in note 25
o2com   76
o2arpp068089qxd  6105  800 pm  page 76 13 debtors parent
group company
2005 2004 2005
£m £m £m
trade debtors 578 508 –
other debtors 93 25 1
prepayments 112 166 –
accrued income 277 244 –
1060 943 1
14 current asset investments group
2005 2004
£m £m
money market deposits 953 631
money market funds 57 69
other deposits 275 293
1285 993
other deposits of £275 million 2004 £293 million are funds held in trust to meet the o2 uk hire purchase
obligations disclosed in note 17 a further us79 million 2004 us102 million in money market deposits is
cash collateral for the bank guarantees issued to cover speciﬁc risks under the same hire purchase obligations
15 creditors amounts falling due within one year parent
group company
2005 2004 2005
£m £m £m
other loans note 17 9 6 –
loan notes note 17 7 8 –
obligations under ﬁnance leases and hire purchase contracts note 17 40 40 –
trade creditors 595 497 –
amounts owed to group undertakings – – 4
corporation tax 7 9 –
other taxation and social security 75 61 –
other creditors 29 39 –
accrued expenses 846 816 –
deferred income 227 202 –
dividend payable 196 – 196
2031 1678 200
16 creditors amounts falling due after more than one year parent
group company
2005 2004 2005
£m £m £m
debentures note 17 1056 1012 –
other loans note 17 24 31 –
obligations under ﬁnance leases and hire purchase contracts note 17 268 285 –
amounts owed to group undertakings – – 18
other creditors 55 47 –
1403 1375 18
17 debentures and other borrowings group
2005 2004
£m £m
analysis of loan repayments
within one year or on demand 16 14
between one and two years 690 7
between two and ﬁve years 17 663
after ﬁve years 373 373
1096 1057
in january 2002 mmo2 plc issued two debentures in the form of a €1000 million 6375 ﬁxed rate 
bond and a £375 million 7625 ﬁxed rate bond which have a ﬁve and ten year term respectively the
debentures are recognised at the amount of net proceeds received and after the effects of any related
hedging instruments at 31 march 2005 the carrying value includes unamortised issue costs of £4 million 
2004 £5 million
loan notes of £132 million were issued by o2 uk between march 1999 and april 2000 for the purchase 
of certain businesses at 31 march 2005 loan notes totalling £7 million 2004 £8 million were outstanding
and repayable on demand
obligations under ﬁnance leases and hire purchase contracts group
2005 2004
£m £m
within one year 41 41
between one and ﬁve years 191 138
after ﬁve years 166 254
398 433
less ﬁnance charges allocated to future periods 90 108
308 325
obligations under ﬁnance leases and hire purchase contracts are mainly in respect of hire purchase
agreements for plant and equipment on 30 march 2001 and 9 april 2001 hire purchase ﬁnancing contracts
o2com   77
o2arpp068089qxd  6105  800 pm  page 77 notes to the ﬁnancial statements continued
were signed between o2 uk and a number of us leasing trusts under the contracts o2 uk sold and
repurchased material portions of its gsm radio and switching equipment o2 uk has deposited sufﬁcient
funds with a trust company to meet the future hire purchase obligations the deposit account is included in
current asset investments the hire purchase agreement is for 16 years with an early buy out option after
12 years in accordance with the separation agreement signed on demerger bt continues to guarantee all
future hire purchase obligations of o2 uk which has provided a counter indemnity to bt for this guarantee
future gross ﬁnance lease and hire purchase payments payable by the group as at 31 march 2005 are as follows
£m
payable in the year ending 31 march
2005 41
2006 34
2007 31
2008 43
2009 83
thereafter 166
total future gross ﬁnance lease and hire purchase payments 398
18 provisions for liabilities and charges
deferred other
taxation restructuring provisions total
£m £m £m £m
at 1 april 2004 137 54 60 251
creditcharge for the year 6 39 5 28
utilised in the year – 24 1 25
at 31 march 2005 131 69 54 254
deferred taxation
the elements of deferred taxation provided for in the ﬁnancial statements are as follows
2005 2004
£m £m
accelerated capital allowances 194 281
other 4 22
unrelieved tax losses carried forward 67 122
total provision for deferred taxation 131 137
the restructuring provision arises in respect of the exceptional operating charges recognised in the years
ended 31 march 2005 and 31 march 2004 and described in note 5
other provisions includes £16 million 2004 £26 million in respect of mast site restoration costs and
£18 million 2004 £16 million in respect of unfunded pensions liabilities it also includes amounts provided
for legal claims
19 called up share capital 2005 2005
number of shares £m
authorised
ordinary shares of 01 pence each 20000000000 20
called up allotted and fully paid
ordinary shares of 01 pence each 8704068599 9
o2 plc was incorporated as a public limited company on 10 december 2004 with an authorised share
capital of £51000 comprising 10000 ordinary shares of 10 pence each and 50000 redeemable preference
shares of £1 each of these shares 2 ordinary shares of 10 pence each were taken up by the subscribers to
the memorandum of association by ordinary resolution passed on 21 december 2004 50000 nonvoting
redeemable preference shares of £1 each were issued and allotted at par on 5 january 2005 a further
14 ordinary shares of 10 pence each were issued and allotted at par by extraordinary general meeting on
5 january 2005 the ordinary shares of 10 pence each were consolidated at a ratio of 8 to 1 into ordinary
shares of 80 pence each and the authorised share capital was increased from £51000 to £16000050000
by the creation of 19999998750 additional ordinary shares of 80 pence each
on 14 march 2005 pursuant to a court approved scheme of arrangement under section 425 of the
companies act 1985 the company purchased mmo2 plc mmo2 for share consideration certain mmo2
shareholders holding 299500644 ordinary shares of mmo2 plc elected to receive the consideration for
their shares in mmo2 in cash all other shareholders holding 8403362095 ordinary shares of 01 pence
each in mmo2 received the same number of new ordinary shares of 80 pence each in the company as 
they previously held in mmo2 in order to fund the cash consideration the company issued and allotted
299500644 ordinary shares in the company via a placement with investors on the london stock
exchange’s market for listed securities on 17 march 2005 this placement raised £374375805 the
remaining cash consideration of £14975032 representing a premium of ﬁve pence per share owing to
shareholders electing to receive the cash was funded by the group
further on 14 march 2005 the two 80 pence ordinary shares arising on the share consolidation on 
5 january 2005 were transferred to the company at par value and were cancelled in accordance with
sections 1461b and 1462a of the companies act 1985
on 16 march 2005 the share capital of the company was reduced by cancelling paid up share capital to
the extent of 799 pence on each issued ordinary share and reducing the nominal value of each such share
from 80 pence to 01 pence and reducing the nominal value of each unissued ordinary share of 80 pence
to 01 pence this created distributable reserves of £6714286314
on 17 march 2005 50000 £1 redeemable preference shares were redeemed at par
during the period from 1 april 2004 to 13 march 2005 mmo2 issued 282 million ordinary shares of
01 pence each for a total cash consideration of £234 million since the court approved capital reduction
on 14 march 2005 the company has issued 12 million ordinary shares of 01 pence each for a total cash
consideration of £09 million all proceeds received during the year arose on the exercise of employee
including director share options details of the share option and share award schemes operated by the
group are described in note 29
o2com   78
17 debentures and other borrowings continued
o2arpp068089qxd  6105  800 pm  page 78 20 reconciliation of movements in shareholders’ funds
total
called up share other proﬁt and shareholders’
share capital premium reserves loss account funds
group £m £m £m £m £m
at 1 april 2002 as previously reported 9 – 22656 3831 18834
prior period adjustment relating to uitf 38 note 1 ––– 3 3
at 1 april 2002 as restated 9 – 22656 3834 18831
retained loss for the year – – – 10148 10148
reinstatement of goodwill previously 
written off to reserves – – – 47 47
purchase of mmo2 plc ordinary shares – – – 2 2
share schemes charge for the year – – – 2 2
transfer from proﬁt and loss account – – 10569 10569 –
currency translation differences – – – 1333 1333
at 31 march 2003 as restated 9 – 12087 2033 10063
retained proﬁt for the year – – – 166 166
shares issued on share scheme exercises – 3 – – 3
share schemes charge for the year – – – 6 6
transfer from proﬁt and loss account – – 1013 1013 –
currency translation differences – – – 144 144
at 31 march 2004 as restated 9 3 11074 992 10094
proﬁt for the ﬁnancial year – – – 301 301
dividends – – – 196 196
purchase of mmo2 plc ordinary shares – – – 1 1
shares issued on share scheme exercises – 24 – – 24
share schemes charge for the year – – – 6 6
issue of shares in exchange for shares in mmo2 plc
1
6714 26 7062 15 389
placing of o2 plc shares on 17 march 2005
1
– 374 – – 374
court approved capital reduction
1
6714 – – 6714 –
transfer from proﬁt and loss account – – 1099 1099 –
currency translation differences – – – 68 68
at 31 march 2005 9 375 2913 6984 10281
1
transaction arising during capital reorganisation described in note 19
other reserves originally arose on the group’s demerger from british telecommunications plc bt they
relate to the difference between the carrying value of the group held by bt prior to demerger representing
bt’s investments and funding in the group and amounts settled with bt on demerger to acquire the assets 
and liabilities of the group the merger difference arising in the year ended 31 march 2005 during the
capital reorganisation has been offset against these other reserves
aggregate goodwill as at 31 march 2005 in respect of acquisitions completed prior to 1 april 1998 of
£15 million 2004 £15 million 2003 £15 million has been written off against reserves in accordance with
the accounting policy existing prior to the adoption of frs 10 “goodwill and intangible assets”
total
called up share proﬁt and shareholders’
share capital premium loss account funds
company £m £m £m £m
on incorporation ––––
proﬁt for the ﬁnancial period – – 1 1
dividends – – 196 196
shares issued on share scheme exercises – 1 – 1
transfer of shares held by the o2 plc share ownership trust – – 1 1
issue of shares in exchange for shares in mmo2 plc
1
6723 – – 6723
court approved capital reduction
1
6714 – 6714 –
placing of o2 plc shares on 17 march 2005
1
– 374 – 374
at 31 march 2005 9 375 6518 6902
1
transaction arising during capital reorganisation described in note 19
the company has taken advantage of section 230 of the companies act 1985 not to present the
company’s own proﬁt and loss account the proﬁt attributable to the shareholders of the company for the
period from incorporation on 10 december 2004 to 31 march 2005 was £1 million
disclosures under uitf 38
the o2 plc share ownership trust the trust was established in 2001 to encourage and facilitate the
holding and distribution of shares and other beneﬁts for certain group employees the shares are
conditionally gifted to employees under certain share award plans and held in the trust
2005 2004
number of shares held
1
number of shares million 10 27
market value of shares held
2
£ million 1 3
proﬁt and loss account reserve reduction in relation to own shares £ million 1 2
1
shares which have not vested unconditionally to employees at the end of the year
2
based on respective year end share prices
o2com   79
o2arpp068089qxd  6105  800 pm  page 79 notes to the ﬁnancial statements continued
21 analysis of cash ﬂows for headings netted in the cash ﬂow statement
2005 2004 2003
£m £m £m
returns on investments and servicing of ﬁnance
interest received 28 16 18
settlement of crosscurrency swaps 22 ––
dividend received from associate 7 ––
interest paid 68 78 81
settlement of forward foreign exchange contracts note 26 32 ––
43 62 63
taxation
nonunited kingdom corporation tax paid 15 13 4
capital expenditure and ﬁnancial investment
purchase of tangible ﬁxed assets 1287 1035 779
purchase of intangible ﬁxed assets 60 85 89
purchase of own shares 1 ––
sale of tangible ﬁxed assets – 6–
1348 1114 868
acquisitions and disposals
deferred consideration arising on purchase of subsidiary undertakings – 8 –
sale of subsidiary undertakings 2004 disposed net of £10 million cash – 7–
investment in joint venture 2 5 –
2 6 –
management of liquid resources
increase in money market deposits and money market funds 302 191 3
financing
issue of ordinary share capital 24 3–
premium paid to mmo2 shareholders in capital reorganisation note 19 15 ––
costs of capital reorganisation note 19 15 ––
loan repayments 21 53 47
27 50 47
22 analysis of net debt at 1 april noncash at 31 march
2004 cash ﬂow changes 2005
£m £m £m £m
cash at bank and in hand 23 18 – 41
current asset investments 993 302 10 1285
1016 320 10 1326
debt due after one year 1043 – 37 1080
debt due within one year 14 8 10 16
obligations under ﬁnance leases and hire purchase contracts 325 13 4 308
366 341 53 78
reconciliation of net cash ﬂow to movements in net debt 2005 2004 2003
£m £m £m
increasedecrease in cash in the year 18 45 48
management of liquid resources 302 191 3
cash outﬂow from decrease in debt 21 53 47
change in net debt resulting from cash ﬂows 341 199 98
other noncash movements 53 16 30
decrease in net debt in the year 288 183 68
net debt at beginning of year 366 549 617
net debt at end of year 78 366 549
noncash changes relate principally to the inception of new ﬁnance leases interest accrued thereon and
foreign exchange gains and losses arising in relation to items of net debt held in foreign currencies
23 financial commitments and contingent liabilities
operating lease commitments
at 31 march 2005 the group was committed to making the following payments during the next year in
respect of operating leases
2005 2004 
land and land and 
buildings other buildings other 
£m £m £m £m 
leases which expire
within one year 45 21 
between one and ﬁve years 33 10 31 12 
after ﬁve years 146 7 148 – 
183 22 181 13 
o2com   80
o2arpp068089qxd  6105  800 pm  page 80 o2com   81
future minimum operating lease payments due by the group as at 31 march 2005 are as follows
£m 
payable in the year ending 31 march
2006 205
2007 185
2008 173
2009 162
2010 146
thereafter 1060
total future minimum operating lease payments 1931
other commitments 2005 2004 
£m £m 
contracts placed for capital expenditure not provided in the accounts 414 353 
contracts placed for noncapital expenditure not provided in the accounts 112 113
total other commitments 526 466 
mmo2 plc has provided a guarantee of all liabilities of airwave o2 limited under its contracts with
the police information technology organisation pito and the police force customers
other than as detailed in note 17 the group has no contingent liabilities or guarantees on which material
losses are expected the group has insurance cover to certain limits for major risks on property and major
claims in connection with legal liabilities arising in the course of its operations
the group does not believe there are any pending legal proceedings which would have a material adverse
effect on the ﬁnancial position or results of operations of the group
24 related party disclosures
during the year the group entered into transactions with related parties as follows
2005 2004 
£m £m 
turnover
the link stores limited 22 39 
tesco mobile limited 12 3 
purchases
the link stores limited 33 47
tchibo mobilfunk gmbh  cp kg 4 –
total net transactions 3 5
during the year ended 31 march 2005 the group provided partly paid equity totalling £4 million to its joint
venture tchibo mobilfunk the balance outstanding at 31 march 2005 was £2 million
during the year ended 31 march 2005 the group provided a combination of loans and partly paid 
equity totalling £3 million 2004 £6 million to its joint venture tesco mobile limited the loan balance
outstanding at 31 march 2005 was £2 million 2004 £3 million the group also provided other services to
tesco mobile limited with a value of £7 million 2004 £3 million and equipment and other services to
tchibo mobilfunk with a value of £15 million at 31 march 2005 tchibo mobilfunk owed £6 million to the
group all transactions were at arm’s length rates
related party transactions with directors are detailed in the report on directors’ remuneration from page 51
to 64
25 principal subsidiary undertakings and associates
the principal operating subsidiary undertakings are detailed below all of which are included in the group
ﬁnancial statements
portion of 
country of incorporation ordinary shares held 
name and operation activity  
mmo2 plc england and wales intermediate holding company 100
o2 holdings limited
1
england and wales intermediate holding company 100
o2 uk limited england and wales mobile cellular telephone system 
provider and operator 100
o2 germany gmbh  co ohg germany mobile cellular telephone system 
provider and operator 100
o2 communications ireland limited ireland mobile cellular telephone system 
provider and operator 100
airwave o2 limited
2
england and wales secure digital radio service for public 
safety organisations 100
manx telecom limited isle of man telecommunication services supplier 100
1
o2 limited changed its name to o2 holdings limited on 10 december 2004
2
airwave mmo2 limited changed its name to airwave o2 limited on 14 march 2005
the shares held in mmo2 plc are held directly by o2 plc the shares in o2 holdings limited are held directly
by mmo2 plc the shares of the other operating companies are held by o2 holdings limited or its wholly
owned subsidiaries the accounting reference date of the principal operating subsidiary undertakings is
31 march
the group also owns a 50 per cent stake in two joint ventures tesco mobile limited and tchibo mobilfunk
gmbh  cp kg and a 40 per cent stake in an associate the link stores limited tesco mobile limited
supplies mobile electronic communications and related services to consumers and is incorporated in england
and wales and operates throughout the united kingdom the accounting reference date of tesco mobile
limited is 28 february tchibo mobilfunk is a telecommunications equipment retailer and is incorporated 
in and operates in germany the link stores limited is a telecommunications equipment retailer which is
incorporated and operates in england and wales
o2arpp068089qxd  6105  800 pm  page 81 notes to the ﬁnancial statements continued
26 financial instruments and risk management
financial risks are identiﬁed and managed by a centralised group treasury function the group’s treasury
policy including details of the nature terms and credit risk associated with ﬁnancial instruments with 
offbalance sheet risk are described in the treasury management and policies section of the operating 
and ﬁnancial review and prospects on page 37
the group holds or issues ﬁnancial instruments principally to ﬁnance its operations for the temporary
investment of shortterm funds and to manage currency and interest rate risks arising from its operations
further details on the ﬁnancing of operations is contained in the source of liquidity and capital resources
section of the operating and ﬁnancial review and prospects on page 36
the group uses derivative ﬁnancial instruments to manage its exposure to market risks such as changes in
interest rates and foreign exchange rates the objective is to match the proﬁle and characteristics of group
funding of equity and debt to that of the assets funded and to mitigate foreign exchange risk under the
guidelines approved by the board of directors in accordance with the group’s treasury policy
shortterm debtors and creditors where permitted by frs 13 “derivatives and other financial instruments
disclosures” have been excluded from the following disclosures which are after taking account of interest
rate and currency swaps where applicable
fair value of ﬁnancial instruments
the book and fair values of the group’s ﬁnancial assets and ﬁnancial liabilities at 31 march 2005 are
2005 2004
book value fair value book value fair value
£m £m £m £m 
liabilities
debentures 1060 1146 1042 1135
hire purchase contracts 308 319 325 334
loan notes 7 7 8 8
other loans and borrowings 33 33 37 37
total ﬁnancial liabilities 1408 1505 1412 1514
assets
hire purchase contracts 275 298 293 315 
shortterm deposits 953 953 631 631 
money market funds 57 57 69 69 
cash at bank and in hand 41 41 23 23 
total ﬁnancial assets 1326 1349 1016 1038 
derivative ﬁnancial instruments held to manage the interest rate and currency proﬁle of the group are
as follows
2005 2004 
book value fair value book value fair value 
£m £m £m £m 
interest rate swaps –24 – 17 
crosscurrency swaps –– 25 44 
forward foreign exchange contracts 24 25 44 
24 49 29 65 
fair value
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 in a forced or liquidation sale book values are stated before
deducting any unamortised issue costs which are disclosed in note 17
the fair value of interest rate swaps currency swaps and forward foreign exchange contracts is based on 
the market price of comparable instruments where available or if not available by the discounting of future
cash ﬂows to net present values using appropriate interest and currency rates
the fair value of the shortterm deposits money market funds cash at bank and shortterm borrowings
approximates to the book carrying value due to the shortterm or on demand maturity of these instruments
for longterm borrowings the fair value of the sterling and euro denominated bonds have been estimated
using quoted market prices
hedging activities
under the group’s accounting policy detailed in note 1 to the ﬁnancial statements certain gains and losses
on derivative instruments used for hedging are not recognised in the ﬁnancial statements the gains and
losses are as follows
gains 
£m 
unrecognised gains at 1 april 2004 36 
gains arising in previous years that were recognised in the year –
gains arising in previous years that were not recognised in the year 36
losses arising in the year that were not recognised in the year 11
unrecognised gains on hedges at 31 march 2005 25
of which
gains expected to be recognised in the year ended 31 march 2006 1
gains expected to be recognised after 31 march 2006 24
currency exposures
at 31 march 2005 the net foreign currency exposure comprising of monetary assets and liabilities of the
group that are not denominated in the functional currency of the individual group company was £7 million
2004 £4 million denominated primarily in us
o2com   82
o2arpp068089qxd  6105  800 pm  page 82 financial instruments held for trading purposes
the group does not trade in ﬁnancial instruments
financial assets
financial assets consist of sterling and euro denominated cash at bank shortterm money market deposits
and investments in a aaarated money market fund money market deposits have a maturity proﬁle between
overnight and three months and earn interest at market rates investments in the money market fund can be
called on either a same day or next day basis and yield income or interest on the basis of performance of the
underlying assets measured against oneweek and threemonth libor or euribor benchmarks
hire shortterm 2005 hire shortterm 2004
cash at purchase deposits cash at purchase deposits 
bank and related and money bank and related and money 
in hand assets market funds total in hand assets market funds total 
£m £m £m £m £m £m £m £m 
currency
sterling 7– 711 718 3 – 461 458 
euro 24 – 257 281 22 – 184 206 
other 10 275 42 327 4 293 55 352 
at 31 march 2005 41 275 1010 1326 23 293 700 1016 
at 31 march 2005 the group had no ﬁxed rate ﬁnancial assets
financial liabilities
2005 
noninterest floating fixed rate fixed rate ﬁnancial 
bearing fixed rate rate ﬁnancial liabilities liabilities weighted 
ﬁnancial ﬁnancial ﬁnancial weighted average average period for 
liabilities liabilities liabilities total interest rate which rate is ﬁxed 
£m £m £m £m  years 
currency
sterling – 427 7 434 73 63 
euro 2– 686 688 – –
other – 286 – 286 74 55
at 31 march 2005 2 713 693 1408 73 60
2004
floating fixed rate fixed rate ﬁnancial 
fixed rate rate ﬁnancial liabilities liabilities weighted 
ﬁnancial ﬁnancial weighted average average period for 
liabilities liabilities total interest rate which rate is ﬁxed 
£m £m £m  years
currency
sterling 431 5701001 73 72 
euro – 80 80 – – 
other 306 – 306 74 61 
at 31 march 2004 737 650 1387 74 67 
the cash ﬂows of the group’s overseas businesses o2 germany and o2 ireland and the improved visibility
of the future ﬁnancial proﬁle of the group has resulted in a decision to increase the level of hedging of our
overseas assets this was achieved through the redenomination of the group’s existing euro borrowings and
through the use of €1800 million of forward foreign exchange contracts which commenced in june 2004
the ongoing effect of the hedge implementation is that the euro borrowings totalling €1000 million 
which are a component of net debt are exposed to foreign exchange rate ﬂuctuations and the interest
charge is impacted by the forward foreign exchange contracts which has reduced the current year net
interest charge by £24 million additionally the foreign exchange gains or losses arising on the retranslation
of the euro borrowings and on the forward foreign exchange contracts are recognised in the statement of
total recognised gains and losses as they hedge certain assets of the overseas businesses
the group has €1000 million of euro borrowings that are classiﬁed as ﬂoating rate at 31 march 2005
2004 €500 million the group had €500 million of cross currency interest rate swaps which classiﬁed
€500 million of euro borrowings as ﬂoating rate in sterling for the year ended 31 march 2004 the cross
currency element was cancelled during the year realising a oneoff cash inﬂow of £22 million which when
combined with the revaluation of the relevant euro denominated debt at that time had no material impact
on net debt
floating rate ﬁnancial liabilities bear interest rates based on relevant euribor equivalents which are ﬁxed in
advance for periods of six months
borrowing facilities
at 31 march 2005 the group had an undrawn committed ﬂoating rate syndicated facility totalling
£1000 million which matures in 2009 this facility incurs commitment fees at market rates at 31 march
2005 all conditions precedent had been met
o2com   83
o2arpp068089qxd  6105  800 pm  page 83 notes to the ﬁnancial statements continued
27 auditors’ remuneration
the aggregate fees paid to auditors during the year for audit and other services is analysed below
2005 2004 2003 
£000 £000 £000 
audit services
uk 665 600 500 
other countries 370 400 500 
total statutory audit fees 1035 1000 1000 
auditrelated regulatory reporting 32 32 17 
sarbanesoxley compliance reporting 279 ––
international financial reporting standards reporting 150 ––
total audit and auditrelated fees 1496 1032 1017 
nonaudit fees
other assurance services 869 339 687 
tax compliance 180 166 125 
tax advisory 338 280 171 
systems implementation – – 176 
total nonaudit fees 1387 785 1159
other nonaudit assurance services includes fees totalling £630000 in respect of the capital reorganisation
described in note 19 nonaudit fees arising in the uk were £991000 2004 £498000 2003 £490000
the audit fees for the company were £10000
28 directors’ emoluments
the emoluments of the directors for the year ended 31 march 2005 were in summary as follows
2005 2004 2003 
£000 £000 £000 
salaries 2336 2405 1408 
performance related bonus 1925 2265 593 
other beneﬁts 172 249 102 
4433 4919 2103 
payments to nonexecutive directors 325 399 251 
total emoluments 4758 5318 2354 
during the year three directors 2004 three 2003 two accrued retirement beneﬁts under a deﬁned beneﬁt
pension plan in addition contributions of £89250 2004 £83125 2003 £77875 in respect of one
director 2004 one 2003 one were paid to a deﬁned contribution pension plan
gains arising during the year ended 31 march 2005 on the exercise of share options were £1214442 and
on the vesting of longterm incentive plans were £1399955 2004 share options nil longterm incentive
plans £146717 2003 share options nil longterm incentive plans £157636
more detailed information concerning directors’ remuneration shareholdings pension entitlement share options
and longterm incentive plans is shown in the report on directors’ remuneration on pages 51 to 64
29 employees 2005 2004 2003 
no no no 
average number of full time employee equivalents including 
executive directors by class of business
mobile telecommunications 13005 11133 11643 
mobile internet services – 301 269 
other businesses 906 913 866 
total employees 13911 12347 12778 
average number of full time employee equivalents including 
executive directors by geographic area
uk 8709 7328 7081 
germany 3675 3494 3527 
other 1527 1525 2170 
total employees 13911 12347 12778 
the costs incurred in respect of these employees were 2005 2004 2003 
£m £m £m 
wages and salaries 514 456 446 
social security costs 64 58 47 
employee share ownership scheme 9 84 
pension costs note 30 26 26 24 
total staff costs 613 548 521 
at 31 march 2005 the group employed 14914 2004 12905 2003 12476 full time employee equivalents
the group operates a number of employee incentive schemes including a sharesave plan a share ownership
plan and various executive and employee option schemes the report on directors’ remuneration on pages
51 to 64 contains full details of the directors’ interests in these schemes
as a result of the capital reorganisation described in note 19 on 14 march 2005 all mmo2 plc options and
awards outstanding at that date were replaced by options and awards over o2 plc shares
the share option plans operated by the group are
o2 sharesave plan
the o2 sharesave plan is a savings related share option scheme available to all uk isle of man and irish
employees the scheme enables employees to acquire shares in the company at an agreed price through
monthly savings at the end of a three or ﬁve year saye contract a sharesave scheme also operates
in germany
o2com   84
o2arpp068089qxd  6105  800 pm  page 84 o2 executive share option plan
executive share options have been granted to certain employees of the group on terms such that they
usually become exercisable on the third anniversary of grant subject to the achievement of certain
performance criteria if these criteria are not met on the third anniversary of grant they are retested on the
fourth and ﬁfth anniversaries all such options have an exercise price equal to the market value at grant date
and have a life of ten years in the year ended 31 march 2005 no options were granted to employees under
this plan 2004 nil 2003 1041 employees for nil consideration
o2 legacy option plan
options over bt shares granted under bt executive share option plans were replaced with options over o2
shares granted under the legacy option plan for those participants now employed by o2 the replacement
options were granted on the same terms and are exercisable between the same dates as the options for
which they were exchanged the exercise price of these options equals the market value as at original grant
date options are normally exercisable up until the tenth anniversary of the date of the original grant 
options outstanding under the o2 sharesave plan o2 executive share option plan and o2 legacy option
plan as at 31 march 2005 together with their exercise prices and vesting periods are as follows
options outstanding over options exercisable over
ordinary shares ordinary shares
weighted
average weighted weighted
remaining average average
number contractual exercise number exercise
outstanding life price exercisable price
range of exercise prices m years £ m £
£044 32 1 044 – –
£046 70 7 046 – –
£048 1 8 048 – –
£054 13 2 054 – –
£064069 4 7 068 3 069
£073 3 1 073 1 073
£087 18 7 087 9 087
£092 9 3 092 – –
£116193 1 6 161 1 161
151 5 055 14 083
options granted exercised and lapsed during the years ended 31 march 2005 and 2004 under these share
option plans were as follows
options over ordinary shares options over adss
ordinary shares ads
1
savings weighted weighted
related other average other average
share share exercise share exercise
options options price options price
m m £ m £
balance at 31 march 2003 45 138 060 3 149
granted 15 – 054 – –
lapsed 5 23 076 1 169
exercised – 4 070 – –
balance at 31 march 2004 55 111 057 2 093
granted 9 – 092 – –
lapsed 4 – 060 1 082
exercised 3 17 077 1 063
balance at 31 march 2005 57 94 055 – –
1
share options over american depositary shares adss have exercise prices termed in us dollars for purposes of disclosure these options’
exercise prices have been translated into sterling at the year end exchange rate as each ads represents ten ordinary shares the number
of options and exercise prices have been adjusted by this ratio to reﬂect the options on a like for like basis as a consequence of the
implementation of the capital reorganisation in march 2005 the mmo2 ads programme was terminated and all adss have been
converted into either o2 plc ordinary shares or cash
share award plans
the share award plans operated by the group are
o2 restricted share plan
restricted share awards have been granted to a small group of senior executives on terms that they will
normally only vest on the third anniversary of grant if the participant builds up a predetermined personal
shareholding in the group and remains in employment with the group the weighted average market value 
at grant date of the 2 million shares granted under this plan in the year ended 31 march 2005 was £088
no shares were granted under this plan in the years ended 31 march 2004 and 31 march 2003 
o2 performance share plan
performance related share awards were granted to certain senior employees during the year ended 
31 march 2005 and 31 march 2004 these awards will vest on the third anniversary of grant if the
company meets certain performance criteria and the participant remains in employment with the group
the weighted average market value at grant date of the 12 million 2004 264 million shares granted
under this plan in the year ended 31 march 2005 was £088 2004 £053
o2com   85
29 employees continued
o2arpp068089qxd  6105  800 pm  page 85 notes to the ﬁnancial statements continued
o2 deferred equity incentive plan deip
participants in the deip receive share awards that include a deferred element and a performance element
the deferred element generally vests three years after grant subject to continued employment with the group
the performance element is subject to the longterm performance of the group and continued employment
with the group deip awards have been granted to a small group of senior executives during the year ended
31 march 2005 the weighted average market value at grant date of the 8 million shares in the year ended
31 march 2005 was £088
30 pension costs
the group operates a number of pension schemes in its businesses all the group’s pension schemes are
provided through either deﬁned beneﬁt or deﬁned contribution arrangements deﬁned beneﬁt schemes
generally provide pensions based on the employee’s length of service and their ﬁnal pensionable salary
deﬁned contribution schemes offer employees individual funds which are converted into pension beneﬁts 
on retirement the assets of the schemes are held independently of the group’s ﬁnances 
the o2 pension plan
the o2 pension plan o2 pp provides the pension beneﬁts for the majority of uk employees and is divided
into deﬁned contribution and deﬁned beneﬁt sections
deﬁned contribution section
prior to 1 july 2002 the group participated in the bt retirement plan btrp a deﬁned contribution scheme
established by bt members of the btrp could elect to transfer their funds under management 
into the new o2 plan deﬁned contribution section on its inception these funds were transferred on
14 march 2003
deﬁned beneﬁt section
following the group’s demerger from bt and until 30 june 2002 the group was a participating employer in
the bt pension scheme btps a funded deﬁned beneﬁt pension scheme while participating the group paid
to the btps a predetermined percentage of the pensionable payroll costs of those group employees 
who were members of the scheme these costs have been charged in the period to which they relate
on 1 july 2002 the o2 pp was established for employees in the united kingdom and a share of the assets of
the btps of the members electing to transfer their beneﬁts to the new plan were transferred to the o2 pp on
17 march 2003 the beneﬁts of all deferred and pensioner members at 30 june 2002 remain in the btps
from 1 july 2002 the group has been the principal employer of the o2 pp  the pension costs have been
assessed in accordance with the advice of a qualiﬁed independent actuary using the projected unit method
and taking assets at market value the deﬁned beneﬁt sections of the o2 pp are closed to new entrants and
therefore the current service cost is likely to increase as the members approach retirement
actuarial valuation
the ﬁrst full actuarial valuation of the deﬁned beneﬁt sections of the o2 pp was undertaken at 30 june
2003 by a professionally qualiﬁed independent actuary using the projected unit method the purpose of 
this valuation was to design a future funding plan to ensure that contributions to the plan are sufﬁcient 
to meet future liabilities as at 30 june 2003 the assets of the o2 pp had a market value of £230 million 
and were sufﬁcient to cover 86 per cent of the beneﬁts accrued to members at that date on the ongoing
funding measure as a result of the valuation the group has increased the employer’s regular contribution
rate from 116 per cent to 131 per cent of pensionable salaries with effect from 1 april 2004 in order to
meet the deﬁcit additional annual payments of £44 million are payable for 13 years subject to review at
future valuations the employee’s contribution rate remains at 6 per cent of pensionable salary
the main actuarial assumptions used in the valuation were as follows

nominal rate of increase in salaries 375425 
nominal rate of increase of pensions in payment 250 
investment return pre retirement 700 
investment return post retirement 550 
inﬂation assumption 250
other group pension plans
the group operates several other deﬁned beneﬁt pension schemes in the isle of man beneﬁts are provided
by a funded deﬁned beneﬁt pension scheme that is closed to new entrants the group also operates
unfunded deﬁned beneﬁt schemes in the uk and in germany a provision determined in accordance 
with ssap 24 is recorded on the balance sheet to recognise the cumulative accrued liability for the
unfunded schemes as disclosed in note 18
until may 2001 the o2 germany main scheme was unfunded this scheme has been changed to a 
funded arrangement with payments being made to provide for previously unfunded liabilities over the
period to the active members’ retirements the vast majority of members of the o2 germany main scheme
are now accruing beneﬁts under an insured arrangement the other deﬁned beneﬁt schemes in germany
are unfunded 
the group operates deﬁned contribution schemes in germany ireland and the isle of man the assets of
these deﬁned contribution arrangements are held separately from those of the group in independently
administered funds
o2com   86
29 employees continued
o2arpp068089qxd  6105  800 pm  page 86 disclosures under ssap 24 “accounting for pension costs”
the total cost charged to the proﬁt and loss account for all the group’s pension schemes is as follows
2005 2004 2003 
£m £m £m 
o2 pension plan cost 16 16 12 
contributions to the bt pension scheme – –4 
other deﬁned beneﬁt schemes 3 34 
deﬁned contribution schemes 7 74 
26 26 24 
within the total cost analysed above the regular cost is £23 million 2004 £24 million 2003 £24 million
the group has recognised an asset of £5 million 2004 nil 2003 nil representing the excess of cumulative
funding over the accumulated pension cost on the o2 pp and amounts totalling a net liability of £16 million
2004 £15 million 2003 £11 million representing the excess of cumulative pension cost over accumulated
funding on other schemes
as at 30 june 2003 the assets of the o2 pp were sufﬁcient to cover 95 per cent of the beneﬁts accrued to
members based on the ssap 24 accounting basis which is used to calculate the pension charge recognised
in the proﬁt and loss account
the number of members in each of the group’s main pension schemes is as follows
2005 2004
active total active total
no no no no
o2 pp 5113 6133 4014 4596
o2 germany schemes 3148 3267 2996 3008
isle of man scheme 273 448 281 437
o2 ireland scheme 996 1481 918 1112
uk unfunded arrangement 13 23 15 23
9543 11352 8224 9176
the principal assumptions used to determine the pension cost under ssap 24 for the deﬁned beneﬁt section
of the o2 pp for the year were
2005 2004 
  
nominal rate of increase in salaries 375425 375425 
nominal rate of increase of pensions in payment 250 250 
investment return pre retirement 750 750 
investment return post retirement 570 570 
inﬂation assumption 250 250 
the assumptions for the other deﬁned beneﬁt schemes around the group are consistent with those used for
the o2 pp 
disclosures under frs 17 “retirement beneﬁts”
in accordance with the transitional arrangements of frs 17 “retirement beneﬁts” certain information
regarding the group’s pension arrangements are disclosed below
the actuarial valuation of the o2 pp as at 30 june 2003 has been updated to 31 march 2005 by an
independent qualiﬁed actuary in accordance with the transitional arrangements of frs 17 in accordance
with frs 17 the deﬁned beneﬁt liabilities have been measured using the projected unit method plan assets
are stated at their market value
the main assumptions adopted for the o2 pp under frs 17 are as follows
2005 2004 2003
 
nominal rate of increase in salaries 415465 405455 375
nominal rate of increase of pensions in payment
– pension increases with inﬂation 290 280 250
– pension increases with inﬂation limited to 5 per cent pa 270 260 240
discount rate 550 570 580
inﬂation assumption 290 280 250
expected longterm return for
– equities 770 780 750
– uk government bonds 470 470 –
– other bonds 550 570 –
– other 470 460 380
the assumptions adopted for frs 17 purposes for the other deﬁned beneﬁt schemes around the group are
consistent with those used for the o2 pp 
o2com   87
30 pension costs continued
o2arpp068089qxd  6105  800 pm  page 87 o2com   88
notes to the ﬁnancial statements continued
the assets and liabilities of the deﬁned beneﬁt pension schemes are 
2005 2004 2003
o2 pp  other schemes total o2 pp other schemes total o2 pp other schemes total
£m £m £m £m £m £m £m £m £m
fair value of assets comprises
– equities 306 13 319 245 12 257 177 11 188
– uk government bonds 17 7 24 14 6 20 –55
– other bonds 16 2 18 14 2 16 –55
– other 426 516 20 – 20
fair value of assets 343 24 367 278 21 299 197 21 218
present value of liabilities 444 51 495 362 42 404 268 39 307
deﬁcit 101 27 128 84 21 105 71 18 89
related deferred tax asset 30 8 38 25 6 31 21 5 26
net pension liability 71 19 90 59 15 74 50 13 63
the following table sets out the amounts which would be charged to the proﬁt and loss account for the year ended 31 march 2005 and statement of total recognised gains and losses in accordance with the requirements
of frs 17 for the group’s deﬁned beneﬁt plans 
2005 2004
o2 pp  other schemes total o2 pp other schemes total
£m £m £m £m £m £m
analysis of the amount charged to operating proﬁt
current service cost employers 20 2 22 16 2 18
curtailment and settlement
1
3 – 3 – 2 2
vested past service cost 5– 5 2– 2
total operating charge 22 2 24 18 – 18
analysis of the amount creditedcharged to net interest
expected return on pension plan assets 22 1 23 15 1 16
interest on pension plan liabilities 22 2 24 16 2 18
net return – 1 1 1 1 2
analysis of the amount recognised in the statement of total recognised gains and losses
actual return less expected return on pension plan assets
2
17 1 18 39 2 41
experience gains and losses arising on plan liabilities –1 1 6 1 5
changes in assumptions underlying the present value of plan liabilities 33 4 37 57 4 61
actuarial loss recognised in the statement of total recognised gains and losses 16 4 20 12 3 15
1
in 2004 relates to the disposal of o2 netherlands
2
excluding the returns on assets of the group’s deﬁned contribution arrangements which do not affect the balance sheet liability
30 pension costs continued
o2arpp068089qxd  6105  800 pm  page 88 o2com   89
the group has applied the transitional provision of frs 17 the analysis of the proﬁt and loss account that
would have arisen had frs 17 been fully implemented is as follows
2005 2004 
£m £m 
proﬁt and loss account 6984 992
amounts recognised under ssap 24 11 15
pension deﬁcit under frs 17 net of related deferred tax asset 90 74
proﬁt and loss account including pension deﬁcit 6905 1051
31 parent company balance sheet of o2 plc at 31 march 2005 2005
note £m
fixed assets
investments in subsidiary undertakings 12 7116 
current assets
debtors 13 1 
cash at bank and in hand 3 
4 
creditors amounts falling due within one year 15 200
net current assets 196
total assets less current liabilities 6920
creditors amounts falling due after more than one year 16 18
net assets 6902
capital and reserves
called up share capital 19 9 
share premium 20 375 
proﬁt and loss account 20 6518
shareholders’ funds 6902
o2 plc was incorporated on 10 december 2004 and these are o2 plc’s ﬁrst ﬁnancial statements
these financial statements were approved by the board of directors on 17 may 2005 and were signed on its
behalf by
peter erskine david finch
chief executive ofﬁcer chief financial ofﬁcer
other
o2 pp schemes total
movement in deﬁcit during the year £m £m £m
deﬁcit at 1 april 2003 71 18 89
total current service cost
1
24 3 27
total contributions
1
26 2 28
curtailment and settlement gain – 2 2
vested past service costs 2 – 2
other ﬁnance income 1 1 2
actuarial loss recognised in the statement of total recognised gains 
and losses 12 3 15
deﬁcit in plan at 31 march 2004 84 21 105
total current service cost 27 3 30
total contributions 28 2 30
curtailment and settlement gain 3 – 3
vested past service costs 5 – 5
other ﬁnance cost – 1 1
actuarial loss recognised in the statement of total recognised gains 
and losses 16 4 20
deﬁcit in plan at 31 march 2005 101 27 128
1
includes £2 million in respect of the restructuring disclosed in note 5
2005 2004 2003
other other other
o2 pp schemes o2 pp schemes o2 pp schemes
history of experience gains and losses £m £m £m £m £m £m
difference between the expected and actual return on plan assets
amount – gainloss 17 1 39 2 62 7
percentage of plan assets 5 3 14 11 32 33
experience gains and losses on plan liabilities
amount – lossgain – 1 6 2 4 2
percentage of the present value of 
plan liabilities –1 2 4 1 5
total amount recognised in statement of total recognised gains and losses
amount – loss 16 4 12 3 40 6
percentage of the present value of 
plan liabilities 4 7 3 8 15 15
o2arpp068089qxd  6105  800 pm  page 89 o2com   90
nonﬁnancial metrics
2005 2004 2003 2005 2004 2003 
o2 uk
customer numbers thousands
1
arpu £
2
prepay 9472 8687 7989 prepay 143 141 121 
postpay 4912 4577 4061 postpay 542 525 503 
total 14384 13264 12050 blended 281 272 247
churn
3
sac per connection £
4
prepay 37 33 31 prepay 19 16 25 
postpay 31 26 28 postpay 172 160 177 
blended 35 30 30 blended 66 64 79 
data as a percentage of service revenue
5
242 204 171
2005 2004 2003 2005 2004 2003 
o2 ireland
customer numbers thousands
1
arpu £
2
prepay 1130 1010 889 prepay 244 248 220
postpay 403 381 366 postpay 762 736 656
total 1533 1391 1255 blended 385 388 351
data as a percentage of service revenue
5
212 199 153 
2005 2004 2003 2005 2004 2003 
o2 germany
customer numbers thousands
1
arpu £
2
prepay 3620 2516 2182 prepay 95 96 83
postpay 4356 3466 2630 postpay 362 375 341
total 7976 5982 4812 blended 248 254 219 
churn
3
sac per connection £
4
prepay 16 17 16 prepay 22 17 16 
postpay 15 17 16 postpay 190 175 161 
blended 16 17 16 blended 110 119 107 
data as a percentage of service revenue
5
218 195 193 
2005 2004 2003 2005 2004 2003 
manx telecom
customer numbers thousands
1
arpu £
2
prepay 41 42 38 prepay 128 123 115
postpay 22 21 21 postpay 630 623 556
total 63 63 59 blended 297 289 288
notes on nonﬁnancial metrics
1
customer numbers – represent customers who are active customers are treated as being active if they have used the network in the preceding three months
2
average revenue per user arpu – is calculated by dividing total service revenue from sales to customers for the preceding 12 months by the weighted average number of active customers for the same period total service revenue includes revenue from inbound roaming arpu is
calculated using gross service revenue before deduction of wholesale discounts o2 uk arpu includes mobile number portability mnp revenue
3
churn – is calculated by expressing the sum of disconnections for the preceding 12 months as a percentage of the weighted average number of active customers for the same period
4
subscriber acquisition cost sac per connection – is calculated by dividing the total cost of acquisition comprising total cost of handset including handset costs sim costs and packaging less handset revenue plus commissions paid to sales channels for the preceding 12 months by
the total number of connections over the same period
5
data as a percentage of service revenue – data revenue comprises revenue generated from the sale of sms wap  gprs and umts services
o2arpp090091qxd  6105  801 pm  page 90 o2com   91
five year summary
selected proﬁt and loss account information
2005 2004 2003 2002 2001 
£m £m £m £m £m 
group turnover 6683 5694 4874 4276 3200 
net operating expenses before exceptional items 6297 5461 5352 4982 3543
exceptional items 45 75 8300 150 2821
ebitda
1
1768 1367 859 433 317 
group operating proﬁtloss 341 158 8778 856 3164
group’s share of operating result of joint ventures 
and associates 3 – 5 8 286
costs of capital reorganisation 20 – – – – 
lossprovision for loss on sale of business – 51364 – – 
net interest payable and similar charges 9 58 66 25 9
proﬁtloss on ordinary activities before taxation 309 95 10203 873 3459
tax on proﬁtloss on ordinary activities 8 71 55 23 70
proﬁtloss on ordinary activities after taxation 301 166 10148 850 3529
minority interests – – – – 4
proﬁtloss for the ﬁnancial year 301 166 10148 850 3533
dividends 196 ––––
retained proﬁtloss for the year 105 166 10148 850 3533
basic earningsloss per share pence 35 19 1170 98 407
underlying earningsloss per share pence 85 52 13 38 49
dividend per share 225 ––––
1
ebitda is our earnings before interest tax depreciation amortisation and exceptional items excluding our share of operating proﬁts and
losses of our joint ventures and associates
selected balance sheet information
2005 2004 2003 2002 2001 
£m £m £m £m £m 
fixed assets
intangible assets 7045 7354 7582 15992 15624 
tangible assets 4449 3996 3875 4094 3727 
investments 2 5 – 34 33 
total ﬁxed assets 11496 11355 11457 20120 19384 
current assets 2473 2043 1913 2037 1785 
creditors amounts falling due within one year 2031 1678 1572 1521 1504
creditors amounts falling due after more than 
one year 1403 1375 1451 1403 399
provisions for liabilities and charges 254 251 284 402 206
net assets 10281 10094 10063 18831 19060 
shareholders’ funds 10281 10094 10063 18831 19068 
equity minority interests – – – – 8
10281 10094 10063 18831 19060
o2arpp090091qxd  6105  801 pm  page 91 o2com   92
additional information for shareholders
third party trade marks
third parties’ trade marks used in this document remain the property of the third party concerned
cautionary statement regarding forwardlooking statements
this annual report and ﬁnancial statements contains certain forwardlooking statements we may also make
written or oral forwardlooking statements in
 our periodic reports to the us securities and exchange commission also known as the sec on forms
20f and 6k
 our halfyearly reports
 our press releases and other written materials and
 oral statements made by our ofﬁcers directors or employees to third parties
we have based these forwardlooking statements on our current plans expectations and projections about
future events these forwardlooking statements are subject to risks uncertainties and assumptions about
us forwardlooking statements speak only as of the date they are made
statements that are not historical facts including statements about our beliefs and expectations are forward
looking statements words like “believe” “anticipate” “expect” “intend” “seek” “will” “plan”
“could” “may” “might” “project” “goal” “target” and similar expressions often identify forward
looking statements but are not the only ways we identify these statements
these statements may be found in “risk factors” “business review” “operating and ﬁnancial review 
and prospects” and in this annual report generally our actual results could differ materially from those
anticipated in these forwardlooking statements as a result of various factors including all the risks discussed
in the abovementioned sections
if any one or more of the foregoing assumptions are ultimately incorrect our actual results may differ from
our expectations based on these assumptions also the sector and markets in which we operate may not
grow over the next several years as expected or at all the failure of these markets to grow as expected may
have a material adverse effect on our business operating results and ﬁnancial condition and the market
price of our ordinary shares
the information on our website any website mentioned in this annual report or any website directly or
indirectly linked to our or any other website mentioned in this annual report is not incorporated by reference
into this annual report and you should not rely on it
listings
the ordinary shares of o2 plc were listed on the london stock exchange on 14 march 2005 pursuant to
the scheme of arrangement of mmo2 plc
analysis of shareholdings
ordinary shares
of 01p each
size of shareholding number of percentage number of percentage
at 31 march 2005 shareholders of total shares held of total
1 – 500 266127 3558 74594694 086
501 – 999 157118 2101 110913190 127
1000 – 9999 319193 4268 649306837 746
10000 – 99999 4289 057 79278779 091
100000 – 999999 643 009 243357671 280
1000000 – 4999999 333 004 772646728 888
5000000 and above 217 003 6773970700 7782
total 747920 10000 8704068599 10000
at 31 march 2005 the number of holders of record of o2 plc ordinary shares in the usa was 1067 with
holdings of 1459834 ordinary shares
capital gains tax
at the time of the demerger of mmo2 plc from bt the conﬁrmed ofﬁcial opening prices for mmo2 plc
ordinary shares and bt group plc ordinary shares for capital gains tax “cgt” purposes were 8275 pence
and 28575 pence respectively this means that of the total value of 3685 pence 22456 per cent was
attributable to mmo2 and 77544 per cent to bt group
accordingly for cgt calculations the base cost of your mmo2 plc ordinary shares is calculated by
multiplying the acquisition cost of your bt shareholding by 22456 per cent and the base cost of your 
bt group plc ordinary shares is calculated by multiplying the acquisition cost of your bt shareholding 
by 77544 per cent
following the scheme of arrangement of mmo2 plc dated on 12 january 2005 becoming effective on
14 march 2005 reference to mmo2 plc shares should be read as reference to o2 plc shares
sharegift
the orr mackintosh foundation sharegift operates a charity share donation scheme for shareholders with
small parcels of shares whose value makes it uneconomic to sell them details of the scheme are available on
the sharegift internet site wwwsharegiftorg
cassettes for visually impaired shareholders
the company’s annual review is available on audio cassette copies can be obtained free of charge from
the registrar lloyds tsb registrars by calling freefone 0808 100 4102
o2arpp092096qxd  6105  801 pm  page 92 o2com   93
annual report and financial statements
further copies of our annual report and financial statements can be obtained by contacting our registrar
lloyds tsb registrars on freefone 0808 100 4102
annual general meeting
the annual general meeting will be held at the hexagon queens walk reading berkshire rg1 7ua on
wednesday 27 july 2005 at 1100 am
dividend
to register your bank details and allow dividend payments to be sent directly to a bank account please
contact lloyds tsb registrars or complete and return the mandate form that will be attached to your
dividend cheque in august 2005
shareview
many shareholders prefer to receive their reports online rather than through the post you can do this by
registering with shareview which is easy and free go to shareview at wwwshareviewcouk – click on
“register now” and complete the onscreen application form
shareview which is operated by lloyds tsb registrars gives o2 shareholders access to special services over
the internet you will be able to check the details of your o2 shareholding at any time as a shareview user
you will be able to view indicative prices of shares of other companies of which you are a shareholder and
who use lloyds tsb as their registrar
an email will be sent to you when there is an item for you to view on the shareholder pages on
wwwo2com
in future when a dividend payment is made it will be possible to download your tax voucher in respect of
dividend payments by logging on to shareview’s website at wwwshareviewcouk with your access number
and password and click on “etax vouchers” you can print or save the details if you need to enter them in
selfassessment forms there will also be a useful summary showing the details of payments within a given
tax period
o2 plc offers its uk shareholders shareview dealing an internet and telephone share sale and purchase
service operated by lloyds tsb registrars log on to wwwshareviewcoukdealing or call them on 0870 850
0852 between 830 am and 430 pm monday to friday for more information about the service and for
details of their rates
lloyds tsb registrars is a division of lloyds tsb bank plc authorised and regulated by the financial services
authority and a signatory to the banking codes
duplicate mailings 
you may have received separate sets of documents as it may not have been possible to combine your
records any shareholder who now wishes to stop the additional mailings by combining their records should
contact lloyds tsb registrars
financial calendarresults announcements
annual general meeting 27 july 2005
proposed dates
q1 trading statement and publication july 2005
of ifrs ﬁnancial information
proposed inaugural final dividend 26 august 2005
of 225 pence per share payable to 
shareholders who are on the register 
on 5 august 2005
interim results november 2005
interim dividend january 2006
q3 trading statement february 2006
preliminary announcement may 2006
publication of the annual report and june 2006
financial statements
shareholder enquiries
lloyds tsb registrars maintain the company’s share register and provide a shareholder helpline service
details below shareholders should contact the registrar if they have any enquiries about their
shareholding
the registrar
lloyds tsb registrars 3501 o2 plc shareholder helpline
the causeway freefone 0808 100 4102
worthing fax 01903 833371
west sussex bn99 6da from outside the uk
tel 44 121 415 7102
fax 44 1903 833371
general enquiries
o2 plc
wellington street
slough 
berkshire sl1 1yp
email shareholderso2com
o2arpp092096qxd  6105  801 pm  page 93 deﬁnitions
the following deﬁnitions apply throughout this document unless the context requires otherwise
“airwave” a secure tetra communications system for the emergency services and other
public safety users
“analogue” the ﬁrst generation of mobile telecommunications technology in which radio
signals are modulated proportionally by the strength and frequency of audio
sounds
“arpu” average revenue per user
“crm” customer relationship management
“gprs” general packet radio service a technology sometimes referred to as 25g that
allows customers to remain connected to the network between calls for the
receipt and transmission of data
“gsm” the global system for mobile communications originally deﬁned as a pan
european standard for digital cellular telephone networks to support roaming 
it is now one of the world’s main digital mobile standards
“hsdpa” high speed downlink packet access widely regarded as the next enhancement
to 3g also referred to as superfast 3g
“ifrs” international financial reporting standards
“isp” internet service provider
“manx telecom” manx telecom limited a company incorporated in the isle of man with
registered number 28059
“mmo2” mmo2 plc a company incorporated in england and wales with registered
number 4190833
“mms” multimedia messaging services
“mvno” mobile virtual network operators mobile operators that do not own spectrum
and usually do not have their own network infrastructure
“o2 ordinary shares” 
or “ordinary shares” ordinary shares of 01 pence each in the capital of o2
“o2” o2 plc a company incorporated in england and wales with registered number
5310128 or where the context requires a reference to its subsidiaries or
associated undertakings
“o
2
”areference to our trade name or brand
“o2 group” o2 plc and its subsidiary undertakings from time to time
“o2 airwave” airwave o2 limited a company incorporated in england and wales with a
registered number 3985643
“o2 germany” o2 germany gmbh  co ohg a company incorporated in germany
“o2 ireland” o2 communications ireland limited a company incorporated in ireland
“o2 netherlands” o2 netherlands bv a company incorporated in the netherlands
“o2 uk” o2 uk limited a company incorporated in england and wales with registered
number 1743099
“pda” personal digital assistant
“public safety users” any organisation as determined by ofcom which has broadly fulﬁlled the
or “psu” following criteria a responds to emergencies b is involved in emergency
situations reasonably frequently c is civilian or is required to respond to 
civilian emergencies and d requires interaction with those who respond 
to emergencies
“sac” subscriber acquisition cost
“smp” signiﬁcant market power
“sms” a service sometimes known as text messaging which enables mobile telephone
users to send and receive written messages on their handsets
“tetra” terrestrial trunked radio radio technology used in networks that require a high
level of security and availability
“umts” universal mobile telecommunications system an international standard of third
generation or 3g mobile telecommunications
“wap” wireless application protocol a global open standard for accessing online
services through mobile devices
“we” or “us” or “our” o2 andor if the context so requires one or more members of the o2 group
o2com   94
o2arpp092096qxd  6105  801 pm  page 94 notes
o2com   95
o2arpp092096qxd  6105  801 pm  page 95 notes
o2com   96
o2arpp092096qxd  6105  801 pm  page 96 annual report and 
financial statements 2005
o2com
o2 plc
wellington street
slough
berkshire sl1 1yp
registered no 5310128
the paper used to produce this review is made from elemental 
chlorine free pulps sourced from fully sustainable forests
designed and produced by paufﬂey ltd
printed in england by st ives financial limited
o2 annual report and financial statements 2005
arepcoversqxd  2605  1034  page fc1 annual review 2005
c12020arevouterqxd  2605  1007  page fc1 o2com   ifc
surprisingly for a mobile communications
company we’re not about technology
we’re about people how we can continue
to make people’s lives easier to engage
their imaginations and deliver even greater
experiences through our products services
and knowhow 
this report is based on our commitment 
to listen to people’s wants and needs 
to respond to them and to bring the
resulting beneﬁts to all our customers
employees and shareholders
listen
respond
c12020arevifc03qxd  6105  622 pm  page ifc o2com   1
beneﬁt
contents
2 introduction by the chairman and chief executive ofﬁcer
4 listen
6 business review
8 respond
10 business review continued
12 beneﬁt
14 board of directors
15 summary directors’ report
17 summary directors’ remuneration report
19 summary ﬁnancial statement
20 independent auditors’ statement
20 additional information for shareholders
please see cautionary statement regarding forwardlooking 
statements on page 21
c12020arevifc03qxd  6105  623 pm  page 1 o2com   2
introduction by the
chairman and chief executive ofﬁcer
an operationally efﬁcient agile and innovative
organisation we will be driving our businesses to
realise efﬁciency gains using our growing insight
into our customers’ needs and behaviour to align
our costs more closely to what customers value
most we have innovative joint ventures with tchibo
in germany and tesco in the uk and other multi
territory partnerships 
mobile data services that our customers really
value texting has become a way of life – whether
in persontoperson messages texting questions 
to the prime minister or voting off big brother
contestants we carried a record 50 million texts on
christmas day 2004 and texting continues to grow
in all markets driven by o
2
active our award
winning mobile internet portal we are also starting
to see signiﬁcant growth in nontext data usage
revenues from which have increased by 50 per cent
over the past 12 months
with a powerful new relationship now in place 
with ntt docomo we are poised for even more
dramatic growth as we develop new mobile data
products and valueadded services
leading technology
3g a highspeed network as provided by 3g is 
the key to future mobile data services enabling
customers to migrate to advanced contentrich
applications during 200405 we launched 3g
consumer and business services in germany and 
the uk with ireland to follow later this year 
welcome to our fourth annual review and our ﬁrst
as o2 plc one of our ﬁrst acts as o2 will be to pay
a dividend to our shareholders 
as a shareholder in mmo2 you have exchanged
your existing shares for shares in o2 plc we are
delighted that you have joined us and are conﬁdent
about our company’s future prospects
as part of our reorganisation mmo2 was delisted
from the new york stock exchange there is no
intention to seek a us listing for o2 shares
strategy
our strategic framework for the coming year is
driven by the same high aspirations that have
delivered such strong momentum to our business
since demerger to continue to meet those
aspirations we will be addressing some key
priorities in 200506
revenue and proﬁt growth superior to our
competitors despite the competitive landscape 
o2 uk continues to focus on winning and retaining
more highvalue customers in order to drive further
revenue improvement in germany there is
signiﬁcant room for growth and our accelerated
network investment programme will provide a
springboard to achieve this in addition o2 airwave
will make a strong ﬁnancial contribution in its ﬁrst
full year of operation
best customer experience to express the iconic
o
2
brand quality value and innovation are the keys
to maintaining the strength of the o
2
brand and
differentiating us from our competitors to maintain
the loyalty and trust of our customers we must
give them the service that they want and products
that work – which is why we have been cautious in
the timing of our 3g launch we do not necessarily
want to be the ﬁrst to market but we do want to
be the best our aim is keep the o
2
brand fresh
with fewer better services all designed to enhance
the customer experience we are investing in the
systems and people to achieve this
we are rolling out the 3g network across all our
territories matching capacity to known mobile data
demand we have also invested in training and
billing systems and developed highly speciﬁed
wellfunctioning devices 
mobile internet to complete the picture we
signed a longterm agreement with ntt docomo
inc japans largest mobile communications provider
to launch a mobile internet service branded imode
®
in the uk and ireland in autumn 2005 a similar
service will be available in germany from spring
2006 this service which will complement o
2
active has a proven track record in western europe
of lifting uptake usage and revenue from data
services due to its ease of use and huge breadth
and depth of tailored internet content
corporate responsibility
we have a responsibility to the communities in
which we operate we believe that companies who
respond to the needs of those communities and of
the wider world are more likely to maintain long
term success we produce a separate report
detailing our cr strategy and activities here are
some highlights from 200405
industry recognition o2 was the topscoring
mobile operator in the dow jones sustainability
indexes which track the ﬁnancial performance of
the leading sustainabilitydriven companies world
wide in addition we were included in the
ftse4good index the business in the community
corporate responsibility cr index and the top 100
global sustainability reporters list 
• strong revenue and proﬁt growth
• first dividend earlier than planned
• focus on enhanced customer experience
• accelerated investment in germany
• building a sustainable business
c12020arevifc03qxd  6105  623 pm  page 2 o2com   3
internet grooming these are available in our retail
outlets and online 
looking ahead
we are ﬁnancially strong and have built a powerful
iconic o
2
brand revenue is growing fast the
company has modest debt and led by a strong
management team we have so far outperformed
most city expectations o2 is in a good position 
taking the company forward and further
strengthening its position in the united kingdom
germany and ireland will be challenging but
achievable we will
•continue to focus on gaining a closer
understanding of our customers’ needs and
behaviour in order to further improve their
satisfaction and loyalty
•work even harder to differentiate our business by
delivering intuitive easytouse and fairly priced
products and services – particularly in the data
ﬁeld – that our customers value highly and that
are based on proven technology
•continue to ensure that we work to make a
difference to the communities in which we operate
building a sustainable business for the future
community activities our activities are focused on
programmes that aim to improve the conditions
and prospects for children and young people
around the world
a number of community projects and programmes
that support employee fund raising and giving have
been successfully developed under our “can do in
the community” programme across the group
we contributed £17 million in charitable donations
over £600000 of which came from ukbased
companies and £500000 to the tsunami appeal
our employees continue to give their time and
imagination to a wide range of fundraising schemes 
health and safety issues we are sensitive to
public concerns over health issues such as the siting
of masts and issues concerning mobile phone use
including the protection of the vulnerable to help
parents and others make informed choices we
have introduced measures such as age veriﬁcation
parental controls ﬁlters and barring in addition we
help fund ongoing research and are committed to
effective responsible communications producing
leaﬂets on subjects ranging from health issues to
advice to parents on personal safety bullying and
we aim to grow the dividend towards our medium
term target payout ratio of 50 per cent of
underlying earnings reﬂecting our conﬁdence in
the company’s ability to continue to increase
revenue earnings and cashﬂow and our
commitment to deliver attractive returns to
shareholders 
group turnover
1
 £m group ebitda
1
 £m
02
4076
03
4611
04
5646
05
6683
02
484
03
858
04
1367
05
1768
continuing operations
1
board changes
david arculus joined the board as a non
executive director in april 2003 and became
chairman of mmo2 plc at the conclusion of its
annual general meeting in july 2004 when
david varney stood down to take up a new
position as executive chairman of hm revenue
 customs 
there have been other important changes over
the past year david mcglade chief executive
ofﬁcer of o2 uk stepped down from the
board and left the company at the end of the
ﬁnancial year to take up a new opportunity in
his native america david led the turnaround in
o2 uk’s performance since demerger and the
successful establishment of the o
2
brand in 
the uk he has been succeeded as ceo of 
o2 uk by the former uk chief financial
ofﬁcer matthew key who has also been
appointed to the executive committee of o2 
we are delighted to welcome patrick lupo
kathleen o’donovan and rudolf lamprecht to
the board as nonexecutive directors all have
held senior executive and nonexecutive
positions for a number of major international
companies and bring to the board a wealth 
of ﬁnancial and business management
experience they will make a major
contribution to our strategy
three nonexecutive directors paul myners
neelie kroes and ian meakins stepped down
from the board paul myners decided to
become chairman of marks  spencer 
neelie kroes left following her nomination 
by the dutch government as their new eu
commissioner and ian meakins is devoting
himself to his role as ceo of alliance unichem
paul neelie and ian have all contributed to the
successful establishment of o2 as a ftse 100
company with a strong balance sheet and a
powerful brand
we aim to grow our dividend towards
50 per cent of underlying earnings reﬂecting
our conﬁdence in the company
david arculus
chairman
peter erskine 
chief executive ofﬁcer
c12020arevifc03qxd  6105  623 pm  page 3 listen
consulting the experts
what business wouldn’t say that it listens to its
customers it’s a “given”
but at o2 we believe it’s vital that we know
exactly what our customers are thinking and
understand their needs likes and dislikes 
what may be a barelyformed wish or niggle 
in a customer’s mind now can have a huge
impact in an industry as competitive as ours 
– in a surprisingly short time 
o2’s advantage is that we’re structured to be
agile to monitor and respond quickly to
emerging trends from a solid base
we have a range of mechanisms for listening
to customers around the group o2 germany
has “scouts” – opinion leaders who help us test
and develop new products and services such as
o
2
active in the uk we worked extensively
with customers to ﬁnetune our 3g services
ahead of launchand o2 ireland redesigned 
the online shop in line with feedback from
customer focus groups 
o2com   4
c12020arev0411qxd  6105  624 pm  page 4 o2com   5
most of our consumer insights come from
ongoing research overwhelmingly this is 
what people tell us they want
“simplicity – not confusing myriad offers or
technology i have to jump through hoops for”
“value for money – i don’t necessarily want 
the cheapest deal but i do want to know and
appreciate what i’m paying for”
“network quality – so i can make a call
whenever wherever and always get through”
“clear accurate bills and mistakes put right
quickly without fuss”
“a company that acts like it values my custom –
rewarding my loyalty and treating me as an
individual”
“a company i can trust to behave well in the
wider world”
further on we’ll show how we’ve responded to
what our customers are telling us
c12020arev0411qxd  6105  624 pm  page 5 o2com   6
feedback and drove higher usage as at 31 march
2005 o
2
active was available on 100 different
handsets
increasing our own retail sales
the percentage of total sales delivered through 
o2’s own channels o2 stores o2 online store and
direct sales continued to increase and we expect
this trend to be maintained in 200506 we believe
this will enable us to deliver a better customer
relationship the number of o2 retail stores grew 
by 26 to reach 257 by the year end
strengthening business customer relationships
in the business market we grew our direct sales
force and introduced new pricing and service
propositions for our customers these initiatives
helped us acquire many new corporate customers
such as dhl as well as growing business with
customers including superdrug and west 
yorkshire police
in october 2004 we launched o
2
connection
manager the uk’s ﬁrst integrated mobile
connection software to incorporate 3g wireless
lan wlan and gprs this provides a simple
interface that automatically connects business 
users to the fastest available network following
agreements signed with wlan operators o2 now
offers wlan access in over 6700 uk locations
including hotels airports coffee shops bars 
and pubs
improving customer service
providing our customers with a superior quality of
service is one way that we aim to differentiate the
o
2
brand this commitment is demonstrated by 
o2 uk
our performance
increasing proﬁtability in a highly competitive
market o2 uk delivered a strong operating and
ﬁnancial performance customer numbers service
revenue average revenue per user arpu and
ebitda all showed continued growth success was
driven by innovative new services and customer
propositions a series of successful marketing
campaigns and further improvements in network
quality
total customer numbers grew by 11 million to
144 million helping to drive a 14 per cent growth
in net service revenue to £3627 million the quality
of our customer base also continued to improve
with blended arpu reaching £281 at year end an
increase of £9 over the previous year this occurred
despite the impact of a signiﬁcant regulatory 
price cut in september 2004 overall ebitda 
one of our key indicators of proﬁtability reached
£1183 million a 14 per cent yearonyear increase
leading technology 
as part of our ongoing investment in service
capability we rolled out the ﬁrst phase of our 3g
network in the uk launching initial services to
business customers in october 2004 and consumers
in february 2005 our approach to 3g is an
evolution of our successful data services strategy
because it offers faster speeds 3g allows customers
to enjoy richer entertainment content and new
interactive services as 3g is a new technology 
we believe services will initially appeal to early
adopters building towards massmarket adoption
over the next year
building on text success
we retained our focus on mobile data ie non
voice services the volume of text messages carried
on our network hit 1 billion texts per month by the
end of 200405 this continued focus on text and
other messaging services such as email and picture
messages as well as nonvoice services like music
content downloads and information services
helped data services revenue reach 242 per cent 
of o2 uk service revenue an increase of 38 per
cent over last year
o
2
active – better than ever
further developments of o
2
active the simpleto
use portal for news information and downloads
helped drive this success a revamped more
intuitive homepage including a scrolling ticker of
news headlines received positive customer
our investment in a single billing and customer
relationship management crm system in the uk
now roughly twothirds towards completion the
programme will enable us to predict and meet
customer needs in a more consistent manner by
better aligning our billing customer service and
crm activities to an individual customer’s
behaviour work already completed has enabled
“online” customers to view their bills online in
addition a new webbased tool in retail stores
allows new customers’ mobile phones to be
activated on the spot finally we are recruiting
2000 additional retail and customer service staff
and opening a fourth major uk call centre to
further improve our response levels
differentiating our brand the distinctive appeal
of our brand and market propositions – aided by
our sponsorship of the world cup winning england
rugby team the 2004 football association premiership
champions arsenal capital radio’s drivetime
programme and a host of music events – continued
to help us differentiate against our competitors
business review
all our businesses performed well in 200405
here we report on their activities in the past
year and look at their challenges for the future
o
2
x4 built for 3g and equipped with the newimproved o
2
active
portal offers greater access to compelling content and services
c12020arev0411qxd  6105  624 pm  page 6 o2com   7
after an extremely strong ﬁrst half growth
continued over the rest of the year service revenue
was up by 28 per cent to €2474 million and
ebitda increased to €500 million this was 
driven by a rapid increase in the customer base –
o2 germany has a very attractive range of products
and services and markets them aggressively 
we added 890000 new postpay customers
accounting for 45 per cent of net new customers
in germany o2 germany has marketleading
blended arpu of €363 driven largely by our
unique o
2
genion homezone service
attracting highvalue customers by attracting a
signiﬁcant proportion of highvalue customers and
tightly controlling operating costs o2 germany 
has translated rapid growth in subscribers into a
substantial improvement in proﬁtability over the
next ﬁve years we will step up investment in our
network to reduce national roaming costs enhance
customer experience and secure population
coverage to rival that of the market leaders
improving the customer experience our
customers’ personal experience of the o
2
brand is
central to our growth strategy our o2 online shop
has continued to show a strong performance
bringing us new customers with good arpu at low
cost customers also value the opportunity for face
toface interaction and the ﬁrst ‘ﬂagship’ o2 store
was opened in munich in december 2004 
in october 2004 o2 germany launched a 5050
joint venture tchibo mobilfunk with tchibo – a
wellestablished consumer brand known for its
valueformoney offers this additional and exclusive
sales channel complements o2’s target segments
and by the yearend had added more than 250000
new prepay customers 
our unique o
2
genion service continues to attract
new customers o
2
genion’s advanced technology
offers reduced tariffs in the customer’s chosen
geographical area – usually near the home or
workplace with its higher revenues and
considerably lower churn rate compared to other
mobile products o
2
genion is key to our focus on
more proﬁtable customers 
recognising the impact of the o
2
brand on our
business performance o2 uk won the institute 
of practitioners in advertising’s ipa prestigious
grand prix award for 2004 we also won the
mobile data association’s “best network of the
decade” award for being the most innovative in
“encouraging the uptake of mobile data over 
the past ten years”
extending our reach tesco mobile our 5050 joint
venture with tesco has shown sustained growth
tesco mobile addresses sections of the family market
not currently targeted by o2 through tesco’s 
nationwide network of supermarkets and smaller
“metro” shops in december 2004 14 months after
its launch it had attracted over half a million
customers
market dynamics
our strong
performance was
achieved against a
backdrop of stiff
and increasing
competition with
ten operators now
active in a highly
saturated market
looking ahead
we expect
competition to
intensify in 200506
coinciding with
slowing overall
growth in new
customers as mobile penetration exceeds 100 per
cent a key priority will be customer retention
including through marketing initiatives aimed at
increasing customer loyalty we will nonetheless
continue to focus on improving proﬁtability
taking care of customers the cornerstone of our
strategy going forward is simple – to attract and
retain highvalue customers by giving them the best
possible experience this will be achieved through
among other things further improvements in
service quality the launch of innovative new
services and loyalty programmes signiﬁcant
investment in customer service and crm and
continued development of the o
2
brand
imode
®
as reported in the chairman and ceo’s
statement we plan to launch a mobile internet
service based on imode
®
capability later this year
in an exclusive agreement for the uk this will give
users access to the most comprehensive and ﬂexible
internet service available on mobile phones and
has proven to generate higher revenues than any
other competing technology or platform
o2 germany
our performance
an exciting year o2 germany has established
itself as the most dynamic and innovative operator
in the german market – the largest in europe in
200405 both revenues and customer numbers
accelerated throughout the year outstripping both
our expectations and our competitors and leading
to further growth in market share 
improving our offer
to business
customers our
business unit team has
been winning major
new business
customers and forging
new partnerships with
sales channels and
software suppliers we
also extended our
range of tariffs and
services offering
packages tailored to
the speciﬁc needs of
business customers
we acquired a number
of new highproﬁle
customers including
mtu aero engines
tchibo and christian
dior and strengthened relationships with long
standing customers such as bmw 
mobile data goes from strength to strength
revenues from mobile data products grew strongly
with the volume of text messages sent during the
year increasing by a third at the same time non
text data usage made an increasingly important
contribution with nearly a quarter of our customers
now using these services 
the launch of highspeed 3g services last year
should raise mobile data revenues further we
launched our 3g service in april 2004 offering a
laptop card to business users following this with
laptop and 3g handset surﬁng for consumers in
addition to fast mobile internet access our 3g
customers can make video calls and use a broad
range of video streaming
the appeal and impact of our o
2
active portal
service has already won external recognition
europe’s bestselling telecom magazine connect
gave o
2
active two awards – from both readers and
experts – as the best mobile portal in germany an
advanced version of the o
2
active portal was
launched in november 2004 
data services now generate revenues
of over £14 billion per year
happy hour offered o2 customers 
free texts and picture messages
between 78pm every day
o
2
surfhome – enabling customers 
to connect to the internet from 
their homes at ﬁxed line rates
c12020arev0411qxd  6105  624 pm  page 7 doing fewer things better
having a really clear idea of what our
customers want has transformed our business
here are the key ways in which we’ve
responded to what they’ve told us 
“simplicity”
when it comes to technology we’re focusing
on products that give the customer better not
just more choice and we only launch a new
product when we’re absolutely sure it works
take 3g we’re not rushing to be ﬁrst to
market instead we’re focusing our coverage
on areas of greatest demand and we’re
working with customers to ensure we get 
3gcapable phones “right ﬁrst time”
we will continue to hone our tariffs and
promotions to make them the clearest on the
market with no hidden charges or reams of
small print
“value for money”
with our tailored price plans such as o
2
bolt
ons in the uk customers can talk and text 
in the way that suits them best – so no nasty
surprises when the bill comes weve also
teamed up with the best retailers – tesco in 
the uk and tchibo in germany – to launch
simple valueformoney mobile services
“network quality”
with an almost 100 per cent call success rate
we’re the network choice for millions of
customers and as a founder of the starmap
mobile alliance we’re delivering a ”home
awayfromhome“ experience across europe too
respond
o2com   8
c12020arev0411qxd  6105  624 pm  page 8 o2com   9
“clear accurate bills mistakes quickly put right”
our customer relationship management crm
systems are streamlining the billing process
we’re also expanding the number of our uk
call centres so that customers are served
promptly and effectively
“a company that values my custom”
when it comes to rewarding loyalty o2 uk
leads the way since spring 2005 prepay
customers get 10 per cent of their o
2
top ups
back every three months while postpay
customers get 50 per cent extra minutes and
texts on renewing their contract these and
future loyalty initiatives are backed by a major
advertising campaign delivering the key
message the longer you stay with o2 the
better it gets 
across all our businesses crm is bringing us
closer to our customers – giving us information
about their usage and preferences that will
help us meet their needs even more precisely
facetoface contact really matters to
customers and we are going to expand our
highstreet presence in ireland three
o
2
experience stores which encourage
customers to try out the latest technology and
chat to advisors were launched with great
success in the past 12 months 
“a company i can trust”
we are committed to behaving responsibly as 
a business we respond to public concerns in 
a number of areas affecting our industry –
particularly in health education and child
protection for example
• o2 germany runs a number of programmes
with educational organisations its “polly and
fred” information pack promotes responsible
mobile phone use by young people 
• o2 uk produces a wide range of literature on
mobilerelated topics for children parents
teachers and drivers and on general health
issues – all of which is available in stores and
online
• o2 ireland launched the o2 ability awards
to recognise organisations that see disability
and diversity as part of their success
c12020arev0411qxd  6105  625 pm  page 9 o2com   10
competitive services and tariffs are driving growth
in customers in this mature market mobile phone
usage in ireland is over 50 per cent higher than in
our other territories – resulting in continued strong
blended arpu of €565 142000 new customers
joined the o2 network during the year – representing
a 10 per cent increase in the customer base over
the previous year this growth led to another year
of robust ﬁnancial performance with service
revenues up by 13 per cent to €816 million and
ebitda 9 per cent higher at €327 million
we have focused on offering customers the best
possible experience with products that work ﬁrst
time superior service and an efﬁcient customer
friendly highstreet presence
customer care satisfaction scores improved
throughout 200405 and o2 retail excelled among
its peers it has been a particularly successful year
for acquiring customers but we also succeeded in
retaining them – despite a range of competitive
tariffs in the market and the ease with which users
can change networks in ireland
raising brand awareness o
2
brand recognition
continues apace bolstered by a groundbreaking
advertising campaign “network powered ireland”
was named best integrated campaign by marketing
magazine
brand awareness was further supported by high
level sponsorships and associations these included
o2 in the park the smurﬁt european open golf
tournament and our association with golf and
rugby sporting stars in the business arena we
undertook joint initiatives with dublin chamber of
market dynamics
the german mobile phone market grew by 9 per
cent and market penetration rose to 83 per cent in
march 2005 as a result the market has become
increasingly competitive
looking ahead
extending sales channels in the coming year
we will focus on our target of proﬁtable growth
we will extend our sales channels including service
providers and tchibo we have launched an
innovative highspeed 3g data service
o
2
surfhome that directly complements
o
2
genion this will enable o2 customers to
connect to the internet from their homes at ﬁxed
line rates the combination of o
2
genion and
o
2
surfhome will enable complete ﬁxedline
substitution and increase customer value and loyalty
innovative tariff models such as bundles and pre
paid topup vouchers will give customers greater
control of costs while driving revenues for o2 
keeping our customers satisﬁed we aim to
increase customer satisfaction by meeting the
expectations of those wanting more simplicity 
on the one hand and those demanding advanced
data services on the other we will continue to
attract and retain highvalue customers supporting
this with superior quality of service at the point of
sale and beyond
investing for growth building on our success to
date we are stepping up capital expenditure with
the aim of becoming a full network operator
extending and accelerating the rollout of our 3g
network and reducing national roaming this will
enhance the customer experience by delivering
higher coverage and faster services while reducing
our operating costs we will also seek more
aggressive growth with new products
o2 ireland
our performance
it’s all about the customer throughout 200405
o2 ireland has continued to improve its business
performance maintain current market share and
build on the strength of the o
2
brand 
commerce – sponsoring “eweek” – and continued
to support regional chambers of commerce
another important development was the opening
of three o
2
experience stores with its exciting
styling friendly service and “try before you buy”
offer this new retail concept has proved highly
effective in bringing us closer to customers 
exciting new products and services that make
life easier business customers can save time and
money with the fujitsusiemens work everywhere
package o
2
instant and the o
2
connection
manager – all of which have been well received 
in the business and corporate markets consumer
customers beneﬁted from the introduction of
reduced tariffs in 2004 and an appealing range 
of handsets and devices including the new
blackberry™
maintaining network quality our success is
underpinned by our networks which are rated
among the best in the world we continue to build
our network in a costefﬁcient and environmentally
friendly way and where possible to share existing
sites with other mobile operators and utilities
providers
our 3g network now extends to over 35 per cent
of the population limited trials of the service
began in mid2004 and we plan to bring
commercial 3g services to ireland in mid2005 
market dynamics
the irish mobile market continues to be highly
challenging with close to 100 per cent of the
business review continued
send and receive messages while on the
move with the new blackberry
tm
7100x
our aim is to keep the o
2
brand fresh with 
fewer better services all designed to enhance
the customer experience 
c12020arev0411qxd  6105  625 pm  page 10 the growth opportunities in mobile data – reducing
paperwork for ofﬁcers and thus increasing the time
available for policing – are considerable airwave
represents a secure nationwide and resilient
network solution for these requirements 
looking ahead
the government is increasingly investing in new
technology to improve crime prevention and
detection and public safety measures giving
o2 airwave a signiﬁcant opportunity to help 
safety organisations develop their services 
manx telecom
trialling future technology
manx telecom is a wholly owned subsidiary of o2
on the isle of man licensed to run ﬁxed and mobile
telephony and internet services an internet service
provider in its own right manx telecom has a
portfolio of quality internet access and hosting
products and services
because of its successful track record as the ﬁrst
company in europe to launch a live 3g service in
december 2001 manx telecom was chosen by 
o2 to run europe’s ﬁrst superfast 3g trial in
partnership with lucent technologies this will offer
the possibility of communication speeds up to three
times faster than current commercial 3g services 
extending our service with the installation of a
prepay intelligent network platform in november
2004 we can offer a range of new services to our
prepay customers picture messaging was launched
in december 2004 and mobile web access became
available in march 2005 we plan to launch
outbound prepay roaming early in 200506
population now owning a mobile phone o2 ireland
holds the second largest share of the market with
around 40 per cent last year meteor made further
gains in market share while “3” entered the market
in january 2004 and began to roll out its 3g
network potential competitors have also expressed
an interest in the mobile market following
proposed measures by comreg the irish
communications regulator to encourage and allow
mvnos mobile virtual network operators to
access the networks of existing operators
looking ahead
o2 ireland will concentrate on maintaining its edge
in a highly competitive and increasingly regulated
environment we will continue to put our
customers ﬁrst and to build on the growing
demand for data services
we will be the ﬁrst and only mobile operator in
ireland to offer a mobile internet service based on
imode
®
capability – a completely new experience
for irish consumers – from autumn 2005 
we aim to build on last year’s success by meeting
our growth targets for revenue ebitda and
customer numbers 
o2 airwave
our performance
promising results for a unique service the
airwave network was completed on time and 
on budget at the end of march 2005 the o2
airwave service – designed to make communities
safer by enabling the emergency services to
communicate freely with each other – has now
been delivered to all police forces in england
scotland and wales 
the network under the terms of a £29 billion 
19year contract with the home ofﬁce signed in
2000 has been built in less than ﬁve years over 
99 per cent of mainland great britain is covered by
the service with 100 per cent population coverage
the service has won more than 75 new public
safety customers outside the home ofﬁce contract
including the british transport police mod and 
the highways agency o2 airwave has been
shortlisted for similar contracts to provide
nationwide communications for the ambulance 
and ﬁre services
the invisible lifeline airwave is a fully encrypted
digital radio system it will enable police forces to
communicate with each other and with other
emergency services even from radio “cold spots”
for the ﬁrst time in their history in addition
airwave delivers major beneﬁts to the health service
– allowing ambulance crews to transmit patient
vital signs directly to hospital staff so they can
authorise the administration of lifesaving drugs 
growth opportunities
the continued threat of terrorism the incidence of
major accidents and heightened awareness of the
impact of natural disasters all demonstrate the
increasing importance of secure “joinedup”
communications in both urban and remote areas 
going underground although airwave was not
originally speciﬁed to operate in the london
underground we have tested interim solutions with
the police information technology organisation
pito and london underground and are exploring
ways in which we can improve underground
communications for the emergency services 
mobile data on the beat in december 2004
o2 airwave and the lancashire constabulary
embarked on the largest ever mobile data trial with
the police in the uk this gave lancashire police
ofﬁcers secure continuous access to databases
while on the move now many police forces can
access the police national computer from their
handsets allowing them to check names and
vehicle registrations in seconds
manx telecom has continued its major investment
programme to make broadband available to as many
customers on the isle of man as possible increasing
coverage to around 99 per cent of homes and
businesses 
work is well under way on a major contract
announced last year to build a new islandwide
network infrastructure for the isle of man
government 
looking ahead
we look forward to offering our customers the
chance to experience the exciting videobased
applications and services that superfast 3g can
offer and we will continue to support the isle 
of man government’s ebusiness strategy of
developing a worldclass telecommunications
infrastructure to attract companies and investment
to the island
o2 airwave the invisible lifeline – designed 
to make communities safer by enabling the
emergency services to communicate freely 
with each other
the network powered campaign was rated as the “best integrated
campaign”

in ireland

marketing magazine media awards in january 2005
o
2
xda iii – more advanced more powerful with highspeed
internet and email on the move and built in wiﬁ capability
o2com   11
c12020arev0411qxd  6105  625 pm  page 11 making a difference
the commercial beneﬁts of listening to our
customers are evident in our performance
ﬁgures and business growth but it doesn’t 
end there by listening to what people tell us
and acting upon it we will 
•provide products and services that customers
really want
•deliver increased revenues for the business
producing a strong company able to sustain
dividends for shareholders
•play an active role in the communities in
which we operate
•create a rewarding environment for
employees
these commitments will drive our evolution as
an innovative sustainable business here are
just some examples of its beneﬁts in practice
technology for our times
in developing airwave – our secure reliable
communication network for the police ﬁre 
and ambulance services – we’re setting
performance standards in line with our
customers’ key performance indicators giving
them tangible beneﬁts for example
beneﬁt
o2com   12
c12020arev1218qxd  6105  625 pm  page 12 o2com   13
• hereford  worcester ambulance trust crews
have saved more than 150 lives since airwave
was introduced in may 2002 the timely use
of clotremoving drugs by paramedics
dramatically improves the chances of survival
and recovery after a heart attack
• the airwave response to incidents caused 
by bad weather – such as boscastle cornwall
in august 2004 and carlisle in cumbria in
january 2005 – proved the network’s
resilience it kept going when other
communications networks failed and was
used by all the emergency services dealing
with these major incidents
research by the police information technology
organisation pito shows the beneﬁts airwave
has brought to police forces respondents
report huge improvements on the previous
analogue service in every aspect from security
to voice quality and interference levels 
an agent for change
in 200405 o2 ireland in conjunction with 
the aisling foundation launched the o2
ability awards this is the ﬁrst awards
programme to recognise irish businesses that
demonstrate best practice in the employment
of people with disabilities – an issue currently
high on the irish social agenda  
rewarding employees
in 200405 we introduced a new package of
beneﬁts following feedback from the “reﬂect”
employee survey meanwhile our “balance”
programme is helping our people maintain a
healthy worklife balance we were also voted
“best large company to work for” in ireland
and listed among the top 15 mediumsized
employers in germany 
c12020arev1218qxd  6105  626 pm  page 13 board of directors
1 david arculus 58 chairman
bd
david arculus was appointed to the board in 2003 and
became chairman on 28 july 2004 at the conclusion of
mmo2’s 2004 annual general meeting mr arculus is
chairman of the better regulation task force and a nonexecutive
director of barclays he has also served as chairman of severn
trent mr arculus was previously chairman of ipc group
limited and before that group managing director of emap 
executive directors
2 peter erskine 53 chief executive ofﬁcer
bc
peter erskine was appointed to the board in 2001 as chief
executive ofﬁcer he joined the company from bt where since
march 1993 he held a number of senior positions including
director of bt mobile president and chief executive of
concert and from 1998 managing director of bt cellnet
prior to joining bt he was european vice president of sales 
and customer service for mars and senior vice president sales
and marketing for unitel mr erskine is also a member of the
advisory board of the university of reading business school
3 david finch 49 chief financial ofﬁcer
bc
david finch was initially appointed to the board in 2001 
mr finch is the company’s chief financial ofﬁcer and 
has extensive experience in ﬁnancial management having
previously held senior ﬁnance positions at exel novar formerly
caradon and grand metropolitan in addition to group
finance he has direct responsibility for the group treasury 
and investor relations functions 
4 rudolf gröger 50 ceo o2 germany
c
rudolf gröger was appointed to the board in 2003 he joined
the company in october 2001 as chief executive ofﬁcer of o2
germany prior to this he was managing director of tsystems
international gmbh a subsidiary of deutsche telekom from
1999 to 2001 he played a key role in the acquisition of debis
systemhaus gmbh and its integration into deutsche telekom
he has also worked for siemens and was head of its german
information and communication product operations
nonexecutive directors
5 stephen hodge 63 
ade
stephen hodge was appointed to the board in 2001 mr hodge
was director of finance of the royal dutchshell group prior to
his retirement in september 2001 where he had responsibility
for all ﬁnancial and investor relations issues for the shell group
and its parent companies he has extensive knowledge of the
ﬁnancial management of international companies having
worked throughout the world including australia the
netherlands venezuela and argentina in a variety of ﬁnancial
positions he is chairman of shell pensions trust limited and
deputy chairman of the franchise board of lloyd’s of london
mr hodge was appointed as nonexecutive deputy chairman
and senior independent director on 1 january 2005
6 david chance 48
ad
david chance was appointed to the board in 2003 mr chance
was deputy managing director of bskyb until june 1998 and 
is chairman of modern times group and top up tv limited
and is a nonexecutive director of itv and sunderland afc 
he previously held senior marketing and business development
roles at us telecoms companies scientiﬁc atlanta and grass
valley group and european satellite broadcaster ses 
7 rudolf lamprecht 56
rudolf lamprecht was appointed to the board on 30 march
2005 he is presently a member of the management
committee of siemens with responsibility for osram lighting
the fujitsu joint venture and household appliances he was
previously a board member at siemens and held a number 
of senior positions including president of information and
communications products he is highly experienced in complex
businesstobusiness technology sales cycles and multiple
channels to market  
8 patrick lupo 54 
e
patrick lupo was appointed to the board on 10 august 2004
mr lupo was previously chief executive and then executive
chairman of dhl worldwide express he is currently a non
executive director of hilton group and was also until march
2004 a nonexecutive director of wh smith patrick lupo 
held a number of senior positions at dhl airways inc and dhl
worldwide express between 1984 and 2001 where he was
instrumental in establishing it as the global market leaders in
international express and logistics
9 kathleen o’donovan 47 
a
kathleen o’donovan was appointed to the board on 30 march
2005 she currently chairs both the audit committee of the
court of the bank of england and the pension fund of
invensys the engineering group where she was previously
chief financial ofﬁcer she is also deputy chairman and senior
nonexecutive director of great portland estates and holds
nonexecutive directorships at prudential and emi group  
10 andrew sukawaty 49 
de
andrew sukawaty was appointed to the board in 2001 
mr sukawaty was the nonexecutive deputy chairman of the
company and senior independent director until 31 december
2004 he is chairman and chief executive ofﬁcer of inmarsat
group he is president of cable partners europe llc which
invests in and operates cable television services in europe he is
chairman of xyratex group limited he is a former chairman
of telenet he has considerable experience in the mobile
telephone industry and telecommunications industries in the
united states and europe having at different times in those
periods held the ofﬁces of chief executive and president of
sprint pcs chief executive ofﬁcer of ntl and chief operating
ofﬁcer of mercury one2one he has also been a former
chairman of the cellular telephone and internet association
ctia in the united states
company secretary and general counsel
11 philip bramwell 48 
philip bramwell joined the company from bt where he was
employed since 1998 initially as legal manager group strategy
and development and then as chief counsel corporate
development before joining bt he was a partner in ddv a
european specialist telecommunications consultancy ﬁrm 
prior to this he held the position of vice president and 
general counsel at bellsouth europe and legal advisor at
smithklinebeecham pharmaceuticals international division 
he was called to the bar in 1983
key to membership of board committees
a audit committee 
b chairman’s committee 
c executive committee 
d nomination and governance committee 
e remuneration committee
all of the nonexecutive directors are considered independent 
of the management of the company
1 2 3 3 4 5 6
78 10 11 9 78 10 11 9
o2com   14
c12020arev1218qxd  6105  627 pm  page 14 o2com   15
the directors have pleasure in presenting their summary directors’ report and ﬁnancial statement for the
year ended 31 march 2005
this ﬁnancial statement is a summary of the information in the group’s full annual report and ﬁnancial
statements annual report it does not contain sufﬁcient information to allow as full an understanding 
of the results of the group and the state of affairs of the company or the group as the annual report
members can view the annual report on the company’s website – wwwo2com – or obtain a copy free
of charge by contacting the registrar as detailed on page 20 in addition members can elect to receive the
annual report in future years by writing to the registrar
new holding company o2 plc was incorporated on 10 december 2004 and it became the holding
company of mmo2 plc and the mmo2 group of companies on 14 march 2005 pursuant to a scheme 
of arrangement under section 425 of the companies act 1985 the scheme
scheme of arrangement the scheme was overwhelmingly approved by shareholders at a court meeting 
and extraordinary general meeting of mmo2 plc held on 14 february 2005 under the scheme shares in
mmo2 plc were exchanged for shares in o2 plc on a oneforone basis shareholders also had the option
of electing to receive in exchange for their existing shares in mmo2 either new shares in o2 plc or cash
consideration under the cash alternative shareholders who took no action were deemed to have elected
for the cash alternative the o2 plc shares of holders who successfully elected for the cash alternative
were placed in the market this was limited to 300000000 o2 plc shares
references to the company and the board throughout this annual review refer to o2 plc from 14 march
2005 onwards and prior to that to mmo2 plc references to the group refer to o2 plc and its subsidiaries
from 14 march 2005 onwards and prior to that to mmo2 plc and its subsidiaries
as part of the scheme mmo2 adrs were delisted from the new york stock exchange on 11 march 2005
and neither an adr programme nor a us listing has been established for the shares in o2 plc
the board is currently pursuing deregistration of o2 plc shares from the securities and exchange commission
in order to facilitate this deregistration process the o2 articles of association include temporary provisions
to limit ownership of o2 plc shares by us resident shareholders 
activity the group is a leading provider of mobile communications services in europe and has traded
through its wholly owned subsidiaries in the uk germany ireland and the isle of man throughout the year
the group also provides a nationwide mobile radio service designed to serve the needs of the police and
other emergency services in england wales and scotland through o2 airwave o2 uk has a 50 per cent
interest in a joint venture tesco mobile to sell exclusively tesco branded mobile services in tesco stores
across the uk using o2’s technology and network in addition o2 germany has a 50 per cent interest 
in tchibo mobilfunk a joint venture with tchibo gmbh which is selling an o2 prepay mobile service in
germany it is also a founding member of the starmap mobile alliance a group of independent mobile
phone operators who have joined forces in readiness for the international rollout of 3g services
dividend the directors are pleased to recommend an inaugural ﬁnal dividend of 225 pence per share 
for the year ended 31 march 2005 this dividend will be paid on 26 august 2005 to shareholders on the
register on 5 august 2005
directors the names and biographical details of the current directors of o2 plc are given on page 14  
all the directors of mmo2 plc who held ofﬁce on 4 january 2005 were appointed to the board of o2 plc by
shareholders’ resolution on 4 january 2005 rudolf lamprecht and kathleen o’donovan were additionally
appointed on 30 march 2005 and ian meakins and david mcglade resigned on 30 march 2005 and 
31 march 2005 respectively peter king and adrian knight were directors of o2 plc from incorporation 
until their resignations on 5 january 2005
during the year david varney retired as a director and chairman of mmo2 plc on 28 july 2004 at the
conclusion of the 2004 annual general meeting and david arculus became chairman from that time 
paul myners and neelie kroes resigned from the board on 10 august 2004 and 31 august 2004
respectively and patrick lupo who was appointed to the board on 10 august 2004 was elected a 
director of the company by shareholders at the extraordinary general meeting of mmo2 plc held on
14 february 2005
in addition stephen hodge replaced andrew sukawaty as deputy chairman and senior independent
director the deputy chairman is recognised as the senior independent director to whom concerns can 
be conveyed independently of the chairman chief executive ofﬁcer or chief financial ofﬁcer by other
directors or by shareholders
the company’s articles of association provide that directors are required to retire by rotation every three
years it is the board’s intention that shareholders will be given the opportunity to reelect directors within
that timescale david chance and rudolf gröger will retire by rotation this year and are proposed for 
reelection at the 2005 annual general meeting together with david arculus who changed his role during
the year in addition any director appointed during the year is required to retire and seek election by
shareholders at the next annual general meeting rudolf lamprecht and kathleen o’donovan will seek
election at the forthcoming annual general meeting
substantial shareholdings at 10 may 2005 the following notiﬁcations had been received by the
company in respect of holdings of three per cent or more of the company’s issued share capital
number of percentage of
o2 plc issued ordinary
shareholder ordinary shares share capital
the capital group companies inc 649424088 746
legal  general investment management limited 308947551 354
corporate governance the board supports high standards in corporate governance the application
during the ﬁnancial year of the principles in section 1 of the july 2003 combined code on corporate
governance the combined code is described in the report on corporate governance in the annual
report the directors consider that the company has fully complied with the provisions set out in section 1
of the combined code except in the following respects david arculus was also chairman of severn trent
at the time of his appointment on 28 july 2004 mr arculus conﬁrmed before his appointment that he
would relinquish his chairmanship of severn trent by 31 december 2004 and has done so the service
contract in respect of rudolf gröger is now terminable on 12 months’ notice however in the event of
termination of mr gröger’s employment within 12 months of a change of control of o2 plc or its german
business the employer is obliged to make a cash payment equal to two times his base salary and a
payment equal to the bonus expected for an ontarget performance 
summary directors’ report
c12020arev1218qxd  6105  627 pm  page 15 o2com   16
the board as a whole is collectively responsible for the success of the company and provides
entrepreneurial leadership of the company within a framework of prudent and effective controls which
enables risk to be assessed and managed it sets out the company’s values and standards and ensures that
its obligations to its shareholders and other stakeholders are understood and met 
board committees the board has delegated authority to the committees described below on speciﬁc
matters the committees have formal terms of reference minutes of meetings are formally recorded 
the terms of reference of the audit nomination and governance and remuneration committees are
posted on the company’s website and are available on request from the company secretary and 
general counsel 
the membership of the committees is shown alongside the biographical details of the directors on page 14
details of the attendance by directors at board and principal board committee meetings held during the
year ended 31 march 2005 are contained in the report on corporate governance in the annual report the
board reviews the membership of the committees on an annual basis at the start of each ﬁnancial year or
more frequently as circumstances require
the chairman’s committee chaired by david arculus since he became chairman on 28 july 2004
advises and assists the chairman in the preparation for board meetings it also acts on behalf of the board
between scheduled board meetings in exceptional circumstances where it is not possible or practicable to
convene a meeting of the board 
the audit committee chaired by stephen hodge reviews the effectiveness of internal controls matters
raised by the internal and external auditors in their regular reports to the committee and the full and half
year ﬁnancial statements prior to their release the committee reviews the programme and effectiveness 
of risk management within the group as well as ensuring that an appropriate relationship between o2 plc
and the external auditors is maintained the committee also approves the appointment or dismissal of the
head of internal audit and reviews the procedures for handling complaints from whistleblowers a full
report of the activities of the committee during the year is contained in the report on corporate
governance in the annual report
the nomination and governance committee chaired by david arculus since he became chairman 
on 28 july 2004 and previously by david varney is responsible for reviewing the structure size and
composition of the board and for recommending candidates for board membership for the approval of 
the board the process leading to the selection of the new chairman in 2004 was conducted by an adhoc
committee of independent directors headed by the deputy chairman and advised by an independent
executive search agency 
the remuneration committee chaired by patrick lupo since 11 november 2004 and previously by
andrew sukawaty is responsible for determining the framework and broad policy for the remuneration 
of the chairman all executive directors the company secretary and general counsel and members 
of the executive committee and for determining within agreed terms of reference speciﬁc remuneration
packages for each of these including any pension rights any compensation payments and the
implementation of executive incentive schemes a summary report on directors’ remuneration is set 
out on pages 17 and 18 the full report on directors’ remuneration is published in the annual report 
the executive committee chaired by peter erskine and comprising the other executive directors and his
senior executive team is responsible for the executive daytoday running of the company the preparation
and maintenance of strategic plans for the group and monitoring daytoday performance of the group
as a whole 
us corporate governance compliance the company is required to comply with those provisions of the
sarbanesoxley act of 2002 implemented by the securities and exchange commission as applicable to
foreign issuers during the period it remains registered with the securities and exchange commission
internal control the board is responsible for the maintenance of the group’s system of internal control
and for reviewing its effectiveness it has established an ongoing process for identifying evaluating and
managing key risks there is a formal sixmonthly review of key risks by the executive committee audit
committee and the board the audit committee undertakes a sixmonthly review of reports submitted by
senior executives on internal controls risk management and reports from internal audit these procedures
are designed to identify and manage those risks that could adversely impact the achievement of the
group’s objectives whilst they do not provide total assurance against material misstatement or loss the
directors following a review of the systems described are of the opinion that a proper system of internal
control is in place within the group 
the company has a disclosure committee which considers the materiality of information and the
respective disclosure obligations in releases made to regulatory bodies 
summary directors’ report continued
o2 germany’s ﬁrst o2 ﬂagship store was opened in munich in
december 2004
c12020arev1218qxd  6105  627 pm  page 16 o2com   17
summary directors’ remuneration report
this summary of the report on directors’ remuneration has been prepared by the remuneration committee
the committee further details on all aspects of this summary are provided in the full report found in the
annual report and financial statements 2005 
remuneration policy o2 has a sufﬁciently ﬂexible remuneration approach to support the changing needs
of the business the committee considers it vital to align the interests of the leadership team with those of
shareholders by linking a signiﬁcant proportion of the package to the creation of shareholder value 
the committee has adopted the following principles
• the committee sets base salaries which reﬂect contribution criticality to the business and general wage
levels elsewhere in the group decisions are made with reference to a range around the median of the
relevant market for the individual although the company may pay more to recruit a highcalibre executive
• emphasis is placed on rewarding business performance and therefore we seek to position the total
compensation packages at upper quartile for superior performance and
•performancerelated incentives with stretching business performance targets to drive and reward superior
performance from our executives whilst at the same time aligning the interests of the leadership team with
those of our shareholders
base salary reﬂects position within the company performance and contribution to the success of the
organisation base salaries are reviewed but not necessarily increased annually by the committee 
annual incentives the annual incentive arrangements are based on a balance of key performance
indicators that the committee considers to be the main drivers of shareholder value including ebitda and
ebit indicators of strong ﬁnancial performance net service revenue data arpu and customer satisfaction
targets crucial to future growth and proﬁtability
during the year the committee reviewed bonus opportunity for executive directors and senior executives 
following dialogue with shareholders the committee concluded that bonus opportunity will increase by
half and the resulting bonus will be delivered twothirds in cash and onethird in deferred o2 plc shares
the shares will be deferred for three years and subject to continued employment for the year ended
31 march 2005 and the year ending 31 march 2006 the bonus opportunity as a percentage of base salary
including the deferred shares element payable to the chief executive ofﬁcer and chief financial ofﬁcer is
100 per cent of salary for ontarget performance and 150 per cent of salary for maximum performance
the ceos of operating businesses each have an ontarget and maximum bonus opportunity of 120 per
cent of salary and 180 per cent of salary
longterm incentives the committee believes it is important to adapt the incentive arrangements offered
in future years to support the group’s fastchanging business requirements it achieves this through an
appropriate and ﬂexible portfolio of longterm incentives the portfolio comprises performance shares
share options restricted shares and deferred equity shares other than under exceptional circumstances
executives will only be made an award under one plan in any year
following consultation with shareholders the committee has recommended that the performance share
plan will be the primary form of longterm incentive for the year ending 31 march 2006 performance share
awards will normally vest on the third anniversary of grant subject to continued employment with the
company and the total shareholder return tsr performance of the company compared to the tsr
performance of the constituent companies of the ftseuroﬁrst 300 telecommunications index formerly
known as the ftse e300 telecoms service index over a ﬁxed threeyear period
the performance share awards made to the ceo of o2 germany and a small number of senior 
o2 germany employees will be based on controllable ebit margin and net service revenue growth of o2
germany over a threeyear period
share ownership the committee has introduced guidelines that require the executive directors to build a
shareholding of one times base salary
pensions peter erskine and rudolf gröger accrue retirement beneﬁts under deﬁned beneﬁt schemes
david finch accrues beneﬁts under both a deﬁned beneﬁt and a deﬁned contribution scheme for the
year ended 31 march 2005 £89250 was paid to a deﬁned contribution funded unapproved retirement
scheme and £48875 was paid as a cash supplement in respect of david finch during the year £16482
was paid to david arculus’s personal pension arrangements david varney retired on 28 july 2004 and did
not participate in any of the company’s pension plans david mcglade received a cash allowance of
£117833 in lieu of pension beneﬁts for the year under review
contracts and notice periods the notice period required by the company to terminate executive directors’
service agreements is 12 months the company may in its discretion terminate without notice and make a
payment in lieu of notice equal to the sum of 12 months’ pay including the value of employer’s pension
contributions beneﬁts and a bonus payment of not less than the previous year’s bonus speciﬁc provisions
apply following a change of control of the company
performance graph the performance graph below illustrates the company’s tsr performance versus the
ftse 100 index and the ftseuroﬁrst 300 telecommunications index over the period from 19 november
2001 when the company was ﬁrst listed following its demerger from bt to 31 march 2005 
0
20
40
60
80
120
100
160
140
value £
 mmo2o2 ftse 100 index
total shareholder return against the ftse 100 index and ftseurofirst 300 telecommunications index
source thomson financial
19 nov 
2001
31 mar 
2002
31 mar 
2003
31 mar 
2004
31 mar 
2005
ftseurofirst 300 telecommunications index
c12020arev1218qxd  6105  627 pm  page 17 o2com   18
nonexecutive directors’ remuneration the remuneration of nonexecutive directors is reviewed
annually by the chairman and executive directors each nonexecutive director has a letter of
appointment with o2 plc covering amongst other items their terms of appointment and expected time
commitment together with a general statement of their role and duties nonexecutive directors are
appointed initially for three years unless otherwise terminated earlier by and at the discretion of either
party upon one month’s written notice
following a review of the remuneration of nonexecutive directors it was agreed that with effect 
from 1 april 2005 the annual fees payable to nonexecutive directors would be a basic annual fee 
of £50000 plus an additional fee of £7500 for membership of the audit and remuneration
committees £3750 for the nomination and governance committee and an additional fee of £7500
for chairmanship of a committee the annual fee of £100000 payable to the deputy chairman of the
company remains unchanged
summary directors’ remuneration report continued
directors’ remuneration excluding pension arrangements for the year to 31 march 2005
salary and fees
1
annual bonus beneﬁts excluding pensions
2
total total
2005 2004 2005 2004 2005 2004 2005
3
2004
4
£ £ £ £ £ £ £ £
current directors
d arculus 280847
5
48000 – – 16787 – 297634 48000
p erskine
6
665833 607500 568404 564200 35241 40602 1269478 1212302
d finch 425000 395833 430000 364000 28222 24705 883222 784538
7
r gröger
8
439992 399211 534847 499896 25146 20543 999985 919650
d mcglade
9
414167 372500 391980 462000 24162 100047 830309 934547
d chance 48000 48000 – – – – 48000 48000
s hodge 66667
10
55000 – – – – 66667 55000
r lamprecht
11
– – – – – – – –
p lupo
12
30856 – – – – – 30856 –
k o’donovan
11
– – – – – – – –
a sukawaty 87000
13
100000 – – – – 87000 100000
former directors
d varney
14
113844 350000 – – 42911
15
36125 156755 386125
n kroes
16
20833 50000 – – – – 20833 50000
i meakins
17
50000 50000 – – – – 50000 50000
p myners
18
17290 48000 – – – – 17290 48000
1
salaries are reviewed in june each year nonexecutive directors’ fees are reviewed in april each year
2
beneﬁts include car provision or cash allowance healthcare ﬁnancial planning dental care home security and life cover
3
certain directors received pension supplements for the year ended 31 march 2005 details of these payments can be found on page 17
4
total aggregate remuneration for 2004 excludes longterm incentive gains which were included in the summary directors’ remuneration
report for the year ended 31 march 2004
5
includes aggregate fees earned as a nonexecutive director and chairman designate for the period 1 april 2004 to 28 july 2004
6
highest paid director
7
excludes £146717 gains from longterm incentives which were included in the summary directors’ remuneration report for the year
ended 31 march 2004
8
rudolf gröger’s remuneration has been converted from euro to sterling at an exchange rate of £1  €145836
9
resigned on 31 march 2005 no compensation for loss of ofﬁce was paid
10
appointed as deputy chairman of the company on 1 january 2005
11
appointed as a nonexecutive director on 30 march 2005
12
appointed as a nonexecutive director on 10 august 2004
13
andrew sukawaty stepped down as deputy chairman of the company on 31 december 2004 but remains on the board
14
retired at the conclusion of the company’s agm on 28 july 2004 no compensation for loss of ofﬁce was paid
15
in addition to the beneﬁts listed in note 2 david varney received a payment for outstanding holiday entitlement
16
resigned from the board as a nonexecutive director on 31 august 2004
17
resigned from the board as a nonexecutive director on 30 march 2005
18
resigned from the board as a nonexecutive director on 10 august 2004
o
2
connection manager  the uks ﬁrst integrated mobile connection
software to incorporate 3g wireless lan wlan and gprs
c12020arev1218qxd  2605  1008  page 18 o2com   19
summary group proﬁt and loss account 
year ended 31 march 2005
2005 2004
2
£m £m 
group turnover 6683 5694
ebitda
1
1768 1367
group operating proﬁt before exceptional items 386 233
exceptional items 45 75
group operating proﬁt 341 158
group share of operating result of joint ventures and associates 3 –
costs of capital reorganisation 20 –
loss on sale of business – discontinued operation – 5
net interest payable and similar charges 9 58
proﬁt on ordinary activities before taxation 309 95
tax on proﬁt on ordinary activities 8 71
proﬁt for the ﬁnancial year 301 166
dividends
3
196 –
retained proﬁt for the year 105 166
all results in the current year derive from continuing operations
2005 2004
£000 £000
directors’ emoluments
4
4758 5318
2005 2004
basic earnings per share pence 35 19
diluted earnings per share pence 34 19
dividend per share pence 225 –
1
ebitda is our earnings before interest tax depreciation amortisation and exceptional items excluding our share of the operating result of 
our joint ventures and associates
2
o2 netherlands was sold on 3 june 2003 included within the 2004 results is turnover of £48 million ebitda of nil and an operating
loss of £1 million which are classiﬁed as a “discontinued operation” in accordance with financial reporting standard 3 “reporting
financial performance”
3
the proposed ﬁnal dividend of 225 per share will be paid on 26 august 2005 to shareholders on the register at 5 august 2005
4
includes payments to nonexecutive directors
basis of preparation
o2 plc was incorporated on 10 december 2004 as part of the capital reorganisation undertaken by the group and on 14 march 2005 was
introduced as the new holding company of the mmo2 plc group pursuant to a scheme of arrangement the scheme under section 425 of
the companies act 1985 the purpose of the capital reorganisation was to create distributable reserves in o2 plc to allow the
implementation of the group’s distribution policy
the directors consider that in substance the scheme constituted two distinct transactions being ﬁrstly the insertion of the new holding
company o2 plc and secondly a placing of shares on behalf of certain shareholders who elected to receive the consideration for their shares
in mmo2 plc in cash the insertion of a new holding company constitutes a group reconstruction as deﬁned by financial reporting
standard 6 “acquisitions and mergers” and has been accounted for using merger accounting principles the premium paid to shareholders
who elected to receive their consideration in cash has been recognised as a deduction from the group proﬁt and loss account reserve
summary group balance sheet 
as at 31 march 2005
2005 2004 
£m £m
cash and current asset investments 1326 1016
euro mediumterm notes 1056 1012
loan notes 7 8
obligations under ﬁnance leases and hire purchase contracts and other borrowings 341 362
net debt 78 366
this summary ﬁnancial statement was approved by the board of directors on 17 may 2005 and was signed 
on its behalf by
peter erskine david finch
chief executive ofﬁcer chief financial ofﬁcer
summary group net debt 
as at 31 march 2005
2005 2004 
£m £m
intangible assets 7045 7354
tangible assets 4449 3996
investments 2 5
fixed assets 11496 11355
current assets 2473 2043
creditors amounts falling due within one year 2031 1678
net current assets 442 365
total assets less current liabilities 11938 11720
creditors amounts falling due after more than one year 1403 1375
provisions for liabilities and charges 254 251
net assets 10281 10094
shareholders’ funds 10281 10094
c12020arev19ibcqxd  6105  627 pm  page 19 o2com   20
independent auditors’ statement to the members of o2 plc
we have examined the summary ﬁnancial statement of o2 plc
respective responsibilities of directors and auditors
the directors are responsible for preparing the annual review in accordance with applicable law our
responsibility is to report to you our opinion on the consistency of the summary ﬁnancial statement within
the annual review with the annual ﬁnancial statements the directors’ report and the report on directors’
remuneration 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 annual
review and consider the implications for our report if we become aware of any apparent misstatements 
or material inconsistencies with the summary ﬁnancial statement
this statement including the opinion has been prepared for and only for the company’s members as a
body in accordance with section 251 of the companies act 1985 and for no other purpose we do not 
in giving this opinion accept or assume responsibility for any other purpose or to any other person to
whom this statement is shown or into whose hands it may come save where expressly agreed by our prior
consent in writing
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
opinion
in our opinion the summary ﬁnancial statement is consistent with the annual ﬁnancial statements the
directors’ report and the report on directors’ remuneration of o2 plc for the year ended 31 march 2005
and complies with the applicable requirements of section 251 of the companies act 1985 and the
regulations made thereunder
pricewaterhousecoopers llp
chartered accountants and registered auditors
london
17 may 2005
the ﬁnancial information contained in the summary ﬁnancial statement on page 19 does not constitute
the group’s statutory accounts for the years ended 31 march 2005 or 31 march 2004 the ﬁnancial
information is derived from the statutory accounts which were approved by the board of directors on 
17 may 2005 the auditors have reported on those accounts their report was unqualiﬁed and did 
not contain a statement under sections 2372 or 2373 of the companies act 1985 the 2005 
statutory accounts will be delivered to the registrar of companies following the company’s annual 
general meeting
the maintenance and integrity of the o2 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 summary ﬁnancial statement since it was
initially presented on the website
legislation in the united kindom governing the preparation and dissemination of ﬁnancial statements may
differ from legislation in other jurisdictions
o
2
xda iis – the ofﬁce in the palm of your hand
listings
the ordinary shares of o2 plc were listed on the london stock exchange on 14 march 2005 pursuant to
the scheme of arrangement of mmo2 plc
financial calendarresults announcements
annual general meeting 27 july 2005
proposed dates
q1 trading statement and publication of july 2005
ifrs ﬁnancial information
proposed inaugural final dividend 26 august 2005
of 225 pence per share payable to shareholders 
who are on the register on 5 august 2005
interim results november 2005
interim dividend january 2006
q3 trading statement february 2006
preliminary announcement may 2006
publication of the annual report and financial statements june 2006
sharegift
the orr mackintosh foundation sharegift operates a charity share donation scheme for shareholders 
with small parcels of shares whose value makes it uneconomic to sell them details of the scheme are
available on the sharegift internet site wwwsharegiftorg
cassettes for visually impaired shareholders
the company’s annual review is available on audio cassette copies can be obtained free of charge 
from the registrar lloyds tsb registrars by calling freefone 0808 100 4102
annual report and financial statements
copies of our annual report and financial statements can be obtained by contacting our registrar 
lloyds tsb registrars on freefone 0808 100 4102
annual general meeting
the annual general meeting will be held at the hexagon queens walk reading berkshire rg1 7ua 
on wednesday 27 july 2005 at 1100 am 
additional information for shareholders o2com   21
duplicate mailings 
you may have received separate sets of documents as it may not have been possible to combine your
records any shareholder who now wishes to stop the additional mailings by combining their records
should contact lloyds tsb registrars
dividend
to register your bank details and allow dividend payments to be sent directly to a bank account please
contact lloyds tsb registrars or complete and return the mandate form that will be attached to your
dividend cheque in august 2005
shareview
many shareholders prefer to receive their reports online rather than through the post you can do this by
registering with shareview which is easy and free go to shareview at wwwshareviewcouk – click on
“register now” and complete the onscreen application form
shareview which is operated by lloyds tsb registrars gives o2 shareholders access to special services 
over the internet you will be able to check the details of your o2 shareholding at any time as a shareview
user you will be able to view indicative prices of shares of other companies of which you are a shareholder
and who use lloyds tsb as their registrar
an email will be sent to you when there is an item for you to view on the shareholder pages on
wwwo2com
in future when a dividend payment is made it will be possible to download your tax voucher in respect of
dividend payments by logging on to shareview’s website at wwwshareviewcouk with your access number
and password and click on “etax vouchers” you can print or save the details if you need to enter them
in selfassessment forms there will also be a useful summary showing the details of payments within a
given tax period
o2 plc offers its uk shareholders shareview dealing an internet and telephone share sale and purchase
service operated by lloyds tsb registrars log on to wwwshareviewcoukdealing or call them on 0870
850 0852 between 830 am and 430 pm monday to friday for more information about the service
and for details of their rates
lloyds tsb registrars is a division of lloyds tsb bank plc authorised and regulated by the financial services
authority and a signatory to the banking codes
contacts
shareholder enquiries
lloyds tsb registrars maintain the company’s share register and provide a shareholder helpline 
service details below shareholders should contact the registrar if they have any enquiries about 
their shareholding
the registrar
lloyds tsb registrars 3501 o2 plc shareholder helpline
the causeway freefone 0808 100 4102
worthing fax 01903 833371
west sussex bn99 6da from outside the uk
tel 44 121 415 7102
fax 44 1903 833371
general enquiries
general enquiries should be addressed to the company at
o2 plc
wellington street
slough
berkshire sl1 1yp
email shareholderso2com
third party trade marks
third parties’ trade marks used in this document remain the property of the third party concerned
cautionary statement regarding forwardlooking statements
this document contains certain forwardlooking statements we may also make written or oral forward
looking statements in
• our periodic reports to the us securities and exchange commission also known as the sec on forms
20f and 6k
• our annual report and financial statements and halfyearly reports
• our press releases and other written materials and
• oral statements made by our ofﬁcers directors or employees to third parties
we have based these forwardlooking statements on our current plans expectations and projections about
future events these forwardlooking statements are subject to risks uncertainties and assumptions about
us forwardlooking statements speak only as of the date they are made statements that are not historical
facts including statements about our beliefs and expectations are forwardlooking statements words like
“believe” “anticipate” “expect” “intend” “seek” “will” “plan” “could” “may” “project” “goal”
“target” and similar expressions often identify forwardlooking statements but are not the only ways we
identify these statements
these statements may be found in this document generally our actual results could differ materially from
those anticipated in these forwardlooking statements as a result of various factors including all the risks
discussed in the abovementioned reports releases and statements
if any one or more of the foregoing assumptions are ultimately incorrect our actual results may differ from
our expectations based on these assumptions also the sector and markets in which we operate may not
grow over the next several years as expected or at all the failure of these markets to grow as expected
may have a material adverse effect on our business operating results and ﬁnancial condition and the
market price of our ordinary shares
the information on our website any website in this document or any website directly or indirectly linked to
our or any other website mentioned in this document is not incorporated by reference into this document
and you should not rely on it
c12020arev19ibcqxd  2605  1019  page 21 o2com
o2 plc
wellington street
slough
berkshire sl1 1yp
registered no 5310128
the paper used to produce this review is made from elemental 
chlorine free pulps sourced from fully sustainable forests
designed and produced by paufﬂey ltd
printed in england by st ives financial limited
c12020arevouterqxd  6105  622 pm  page bc2


Summary:
 o2com   4
chief executive ofﬁcer’s review
in 200405 o2 has delivered further strong revenue and proﬁt growth across all our businesses in the face
of determined competition we had a record year for customer additions and achieved a signiﬁcant increase
in earnings before interest tax depreciation amortisation and exceptional items ebitda and operating
proﬁt group revenue from continuing operations grew by over £1 billion and pretax proﬁt more than
trebled to £309 million underlying earnings per share were 63 per cent ahead of last year and net debt 
was reduced by £288 million to £78 million
the uptake of data services accelerated these now generate revenues of over £14 billion per annum and
account for more than 23 per cent of our gross service revenues during the year we launched our business
and consumer 3g services in the uk and germany with ireland to follow later this year our data offering
will be signiﬁcantly enhanced in the second half of 2005 by our agreement with ntt docomo to provide its
mobile internet service in all our key markets 
o2 uk
in a highly competitive market with ten players o2 uk showed good momentum adding 11 million new
customers – made up of 785000 prepay and 335000 contract additions – taking its customer base to
144 million we have reduced the number of prepay net additions to allow for an element of double
counting when existing prepay customers buy a new handset or sim card despite the impact of the
termination rate cut imposed by ofcom in september 2004 service revenue showed further growth due 
to strong voice and increasing data usage texting grew by 34 per cent reinforcing our marketleading
position data is not just about texting – more than onethird of customers used a nontext data service
during the year our tesco mobile joint venture which is reported separately from o2 uk also continued to
perform well with its active customer base reaching 500000 shortly after christmas 2004 in such a
competitive market the cost of customer churn is an issue but at o2 uk ebitda rose by 14 per cent 
to £1183 million on a 14 per cent increase in service revenues
we plan to deploy signiﬁcant new resources into the customerfacing areas of our uk operations – including
the creation of 2000 new jobs opening a fourth major uk customer service centre and further expanding
our shop network by delivering a better customer experience we aim to improve customer loyalty and
develop a sustainable basis for enhanced longterm returns the cost of this expansion has been offset 
by efﬁciencies in non customerfacing activities resulting in a reduction of some 500 positions and an 
exceptional operating charge of £45 million recognised in 200405
o2 germany
the performance of o2 germany last year was outstanding the business is now recognised as the most
dynamic and innovative in the german market after what was by any measure an extremely strong 
ﬁrst half growth continued over the rest of the year service revenue increased by 28 per cent to
€2474 million and ebitda increased to €500 million our momentum in germany has been driven by a
rapid increase in the customer base – o2 germany has a very attractive range of products and services and
markets them aggressively we added nearly 2 million new customers approaching onethird of net new
additions in the german marketplace these are highvalue customers o2 germany has marketleading
arpu thanks largely to our unique o
2
genion homezone service in october 2004 we launched a new joint
venture tchibo mobilfunk which had attracted more than 250000 prepay customers by the end of the
ﬁnancial year we are now aiming to continue this growth in what is europe’s largest telecoms market over
a ﬁveyear period starting in april 2004 we aim to spend between €3billion and €35 billion on increasing
our investment in network quality and population coverage – this is €1 billion to €15 billion more than
previously planned by the end of the period we will be able to offer highquality mobile services across our
own 3g network underpinning further growth and also higher proﬁtability as we reduce our reliance on
roaming agreements with other operators 
o2 ireland
innovative and competitive services and tariffs together with the strength of the o
2
brand have continued
to drive growth in customers at o2 ireland together with an ongoing rise in usage levels customers in
ireland consistently use their mobile phones over 50 per cent more than in our other territories this growth
in customer numbers to over 15 million led to another year of strong ﬁnancial performance with service
revenue increasing by 13 per cent to €816 million and ebitda 9 per cent higher at €327 million the irish
• strong revenue and proﬁt growth
• accelerated investment in germany
• focus on enhanced customer experience
• airwave service fully operational
• increased takeup of data services
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market is becoming increasingly competitive four network operators are now active and others are
expressing an interest following proposed measures to allow mobile virtual network operators access to the
networks of existing players
o2 airwave
the rollout of our airwave network for the emergency services was completed on time and on budget
at the end of march 2005 airwave which makes communities safer by providing communication where
and when it matters most has now been delivered to all police forces in england scotland and wales
over 150000 police ofﬁcers will have access to the service together with more than 78 other public safety
agencies that have also signed up to airwave the system has already contributed to a reduction in crime
improved ofﬁcer safety and in the case of hereford  worcester ambulance trust saved over 150 lives 
o2 airwave has been shortlisted for similar contracts to provide nationwide communications for the
ambulance and fire services we see many opportunities to provide secure and reliable communications to
a wide range of new users
manx telecom
manx telecom our subsidiary on the isle of man was the ﬁrst company in europe to launch a live 3g
service in december 2001 providing o2 with a valuable learning experience and handson knowledge 
of the potential of 3g building on this success manx telecom is now set to run europe’s ﬁrst superfast 
3g service using hsdpa technology this offers communication speeds up to three times those of current
3g services once again we expect that this will provide other o2 businesses with vital insights into future
mobile services the technology will be rolled out across all of our territories from 2006
strategy
our strategic framework for the coming year is driven by the same high but realistic aspirations that have
delivered such strong growth to our business since demerger to continue to meet those aspirations we will
be addressing some key priorities in 200506
superior revenue and proﬁt growth despite the competitive landscape o2 uk continues to focus on
winning and retaining more highvalue customers in order to drive further revenue improvements in
germany there is signiﬁcant room for growth at recent rates and our accelerated investment programme
will provide a springboard to achieve this o2 airwave will be making a strong ﬁnancial contribution in its
ﬁrst full year of operation
best customer experience to give substance to our iconic o
2
brand quality value and innovation are the
keys to maintaining the strength of the o
2
brand and differentiating us from our competitors to keep the
loyalty and trust of our customers we must give them the service that they want and products that work –
which is why we have been cautious in the timing of our 3g launch we do not necessarily want to be the
ﬁrst to market but we do want to be the best our aim is to keep the o
2
brand fresh with fewer better
services all designed to enhance the customer experience – we are investing in the platforms and people 
to achieve this
operationally efﬁcient agile and innovative organisation we will be driving our businesses to realise
efﬁciency gains using our growing insight into our customers’ needs and behaviour to align our costs more
closely to what customers value most we have innovative joint ventures with tchibo in germany and tesco
in the uk and other multiterritory partnerships
mobile data services that our customers really value “texting” has become a way of life whether in 
persontoperson messages texting questions to the prime minister or voting off big brother contestants
we carried a record 50 million texts on christmas day 2004 and texting continues to grow in all markets
driven by o
2
active our awardwinning mobile internet portal we are also starting to see signiﬁcant growth
in nontext data usage revenues from which have increased by 50 per cent over the past 12 months the
mobile sector is poised for even more dramatic growth as we focus on developing 
new mobile data products and valueadded services
a highspeed network as provided by 3g is the key to future mobile data services enabling customers to
migrate to advanced contentrich applications we believe there will be a mass market for these services
starting in late 2005 and building over the next few years
we are rolling out the 3g network in all of our territories matching capacity to known mobile data demand
we have invested in training and billing systems and we have highly speciﬁed and wellfunctioning devices
to complete the picture we signed a longterm agreement with ntt docomo inc japan’s largest mobile
communications provider to launch a mobile internet service under the imode
®
brand in the uk and ireland
in autumn 2005 a similar service will be available in germany from spring 2006 this service which will
complement o
2
active has a proven track record in western europe of lifting uptake usage and revenue
from data services due to its ease of use and huge breadth and depth of tailored internet content
the appeal of these services will be signiﬁcantly enhanced through the progressive introduction of hsdpa
technology this offers speeds signiﬁcantly better than 3g and will in effect provide a true mobile
broadband experience in addition we are engaged in the uk’s ﬁrst trial of multichannel mobile tv
looking ahead
in the uk we are expecting revenues to grow at a midsingle digit rate reﬂecting the impact of the
remaining ﬁve months of the call termination rate cut in september 2004 and continuing competition in 
a highly penetrated market competitive forces coupled with o2 uk’s substantial investment in customer
facing capabilities to attract and retain longterm customers are expected to lead to a broadly stable ebitda
margin we are expecting further strong revenue growth in germany driven mainly by a continued rapid
growth in our customer base there on the back of strong revenue growth o2 germany’s ebitda margin 
is expected to rise further to around 20 per cent after absorbing the impact of umts network running
costs and ongoing national roaming costs capital expenditure overall should be broadly in line with last
year higher investment in our umts network particularly in germany will be offset by a reduction in
spending at o2 airwave following completion of its network rollout
peter erskine
chief executive ofﬁcer
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