TIDMIOM
RNS Number : 0193H
Iomart Group PLC
01 December 2020
1 December 2020
iomart Group plc
("iomart" or the "Group" or the "Company")
Half Yearly Results
Continued resilience, benefiting from high levels of recurring
revenue and cash generation
iomart (AIM:IOM), the cloud computing company, is pleased to
report its consolidated half yearly results for the period ended 30
September 2020 (H1 2021).
FINANCIAL HIGHLIGHTS
H1 2021 H1 2020 Change
Revenue GBP56.3m GBP55.1m +2%
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% of recurring revenue(1) 90% 87% +3%
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Adjusted EBITDA(2) GBP20.8m GBP21.8m -4%
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Adjusted profit before tax(3) GBP9.8m GBP11.5m -15%
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Profit before tax GBP6.0m GBP8.4m -29%
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Adjusted diluted EPS(4) 7.2p 8.4p -14%
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Basic EPS 4.4p 6.4p -31%
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Cash generation from operations GBP23.1m GBP20.6m +12%
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Interim dividend per share 2.6p 2.6p 0%
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-- Group benefiting from strong levels of recurring revenues(1)
-- Revenue up by 2% to GBP56.3m. Contribution from the two
smaller acquisitions made in the final month of the last financial
year offsets some small decline in organic revenues, reflecting the
impact of Covid-19 on discretionary on-premise projects together
with a reduction in revenues from some legacy areas
-- Order levels from existing managed cloud services customers consistent with H1 2020
-- Decrease in adjusted EBITDA (2) margin reflects, as expected,
the greater uptake of lower-margin but strategically valuable
managed cloud solutions. Margin expected to benefit in second half
from cost base adjustments and integration of recently acquired
businesses
-- Adjusted profit before tax(3) and adjusted diluted EPS(4)
reflect higher depreciation and software amortisation charges
-- Cash generated from operations in the period increased with
retention of the consistently strong profit to cash conversion
resulting in GBP20.1m of closing cash
-- Period end net debt of GBP58.1m, comfortable at 1.36 times annualised EBITDA(5)
-- Interim dividend maintained at 2.6 pence per share
OPERATIONAL HIGHLIGHTS
-- Successful launch of iomart Managed Security Service
("iMSS"), with first new customers secured
-- Completion of >GBP1m transformational IT consultancy
project for local government customer, supporting deployment of
modern workplace technology
-- Planning consent agreed for investment in our London
datacentre, in turn reducing our environmental impact
-- Investment in operational team to continue delivering first class service to customers
-- Smooth transition to new CEO, Reece Donovan, appointed post period-end
-- Strategy refresh to "one iomart" commenced with simplified structure and value proposition
OUTLOOK
-- Increase in new business discussions in recent months,
indicating returning confidence in longer-term IT and digital
transformation projects
-- Revenue and profit margins expected to benefit in H2 FY2021
from growth from existing customers and operational
efficiencies
Statutory Equivalents
A full reconciliation between adjusted and statutory profit
before tax is contained within this statement. The largest item is
the consistent add back of the non-cash amortisation of acquired
intangible assets. The largest variance, period on period, is a
GBP0.4m lower gain on the revaluation of contingent consideration
relating to historic acquisitions.
Reece Donovan, CEO commented,
"Whilst we have exciting plans for the future of iomart, the
focus in the first half of the year had to be the protection of our
people, customers and stakeholders in the face of Covid-19. I am
pleased to report such a resilient set of results and would like to
thank our team for their continued efforts and commitment. iomart's
business model has stood us in good stead and despite the global
slowdown in corporate activity, we continue to perform well.
"The previous investments into our sales and operational teams
provide us with a strong foundation to accelerate growth once
companies regain the economic confidence to make infrastructure
transformation decisions. We have no doubt the transition to the
cloud will continue for many years to come and that we can play a
considerable role in being the enablers of that journey for our
customers. We remain confident in the long-term prospects for
iomart."
(1) Recurring revenue is the revenue that repeats either under
long-term contractual arrangement or on a rolling basis by
predictable customer habit.
(2) Throughout this statement adjusted EBITDA is earnings before
interest, tax, depreciation and amortisation (EBITDA) before share
based payment charges, acquisition costs and gain on revaluation of
contingent consideration. Throughout this statement acquisition
costs are defined as acquisition related costs and non-recurring
acquisition integration costs.
(3) Throughout this statement adjusted profit before tax is
profit before tax, amortisation charges on acquired intangible
assets, share based payment charges, acquisition costs and gain on
revaluation of contingent consideration.
(4) Throughout this statement adjusted earnings per share is
earnings per share before amortisation charges on acquired
intangible assets, share based payment charges, acquisition costs,
gain on revaluation of contingent consideration and the taxation
effect of these.
(5) Annualised EBITDA is the last 12 months of EBITDA for the period ended 30 September 2020.
This interim announcement contains forward-looking statements,
which have been made by the directors in good faith based on the
information available to them up to the time of the approval of
this report and such information should be treated with caution due
to the inherent uncertainties, including both economic and business
risk factors, underlying such forward-looking information.
For further information:
iomart Group plc Tel: 0141 931 6400
Reece Donovan, Chief Executive Officer
Scott Cunningham, Chief Financial Officer
Peel Hunt LLP (Nominated Adviser and Joint Tel: 020 7418 8900
Broker)
Edward Knight, Paul Gillam, Nick Prowting
Investec Bank PLC (Joint Broker) Tel: 020 7597 4000
Patrick Robb, Virginia Bull, Sebastian Lawrence
Alma PR Tel: 020 3405 0212
Caroline Forde, Helena Bogle, Joe Pederzolli
About iomart Group plc
For over 20 years iomart Group plc (AIM: IOM) has been helping
growing organisations to maximise the flexibility, cost
effectiveness and scalability of the cloud. From data centres we
own and operate in the U.K., and from connected facilities across
the globe, we can provide multiple secure infrastructure solutions
from branch office backups, to hyper cloud migrations, and
everything in between, delivered typically with a 24/7 managed
service. Our team of over 400 dedicated staff work with our
customers at the strategy stage through to delivery and ongoing
management, to implement the secure cloud solutions that deliver to
their business requirements.
Chief Executive's Statement
Introduction
I am delighted to be presenting the first set of financial
results as the Company's new CEO, having joined the Company as COO
during lockdown in April 2020, before taking over from founder and
long-standing CEO Angus MacSween on 1 October 2020. Angus has led
iomart fantastically for the past 20 years, building a GBP100m
turnover business, with industry leading margins and a growing
reputation in the private cloud market. It is a privilege to start
the Company's next chapter.
Whilst we have exciting plans for the future of iomart, the
focus in these six months under review had to be the protection of
our people and the business in the face of Covid-19. The six months
covered by this report coincided almost to the day with the onset
of the pandemic in the UK. As with all businesses, the pandemic
caused much to be asked of our teams and they have responded with
commitment, resilience, and dedication, ensuring our customers have
received unwavering levels of support and service. I would like to
take this opportunity to thank them for their efforts and continued
support in these unusual times.
iomart's business model has stood it in good stead and, despite
the global slowdown in corporate activity, continues to perform
well. Group revenue was up by 2% for the six months to GBP56.3m (H1
2020: GBP55.1m), benefiting from the strong performance of the two
acquisitions made at the end of the prior year. Organic revenue was
down 4%, as customers delayed discretionary projects and we saw the
ongoing small decline in self-managed infrastructure revenue.
Reassuringly, order levels from existing managed cloud customers
continued at the same levels as in H1 of the prior year, signalling
the ongoing health of the business and the value our customers
place on the services we deliver. The mix of revenue, some
additional investment in our service team and integration of the
acquired lower-margin businesses, resulted in adjusted EBITDA of
GBP20.8m (H1 2020: GBP21.8m) and adjusted profit before tax of
GBP9.8m (H1 2020: GBP11.5m).
As with many businesses across multiple industries, we saw new
business discussions being delayed, but we have subsequently seen
those conversations come back onto the table in recent months,
indicating that confidence in longer-term IT and digital
transformation projects may now be returning. However,
conversations of this nature do take time to come to fruition which
combined with our revenue recognition policies, means any
acceleration in revenue growth from new customer wins will only be
seen in FY22. We anticipate some near-term growth in revenues in
the second half of the year from within our existing customer
base.
Strategy
iomart has delivered on a very consistent basis over a long
period. As a result, whilst a review of the strategy is being
performed under the new leadership, our expectation is that this
will be about refinement, focus and optimisation as opposed to a
radical shift in direction. We remain focused on supporting
customers on the journey to cloud based solutions, be that of a
public, private or hybrid nature or indeed "on premise", as a
substantial number of organisations are still at the very early
stages of digital transformation. Current new initiatives underway
include a review of how the organisation can be simplified via the
building of a single team and brand: "one iomart", accelerating the
integration of the various brands across the Group. In addition, a
project is underway to simplify our value proposition, which is
often very technical in approach, aiming to present our solutions
and services in a clearer way to allow alignment to our customers'
business challenges. Over the coming months we will provide more
details on our strategic actions to all stakeholders.
Market
With the insatiable growth in data requirements from across all
industries, the demand for computer power, storage and connectivity
continues to expand. Organisations are increasingly outsourcing
these requirements to experts, who can help them navigate a
constantly evolving and complex technical landscape, providing high
levels of customer support, flexibility and technical knowledge.
These requirements increasingly come with greater security and
compliance needs.
Public cloud and the hyperscale giants are now well established,
and as is well documented, continue to see high growth globally as
many organisations look for Cloud infrastructure and capabilities.
Future market growth will continue to be driven by public cloud
consumption, however hybrid or multi cloud models will remain a key
market feature for many use cases and iomart is well positioned
given a long established capability in designing and running
private cloud solutions complemented with skills & capabilities
for both on-premise solutions and public cloud provisioning and
management. The complex and untidy nature of the vast majority of
the world's IT infrastructure and demands including security, data
sovereignty and compliance provides us with the reassurance there
will always be customers who are looking for a long-term, trusted
partner in this space.
Operational Review
Cloud Services
The Cloud Services operation entered the year in a good position
with the investment and re-organisation of the commercial
operations complete and momentum being achieved in organic growth
in the second half of the last financial year. Cloud managed
services customer relationships and revenue has remained steady in
the current period as Covid-19 impacted new customer wins,
preventing traditional marketing routes and causing large scale
migration plans to be put temporarily on hold. Business development
and expansion with existing customers has been easier to achieve
and are in line with our expectations.
Cloud Services revenues increased by 3% to GBP50.3m (H1 2020:
GBP48.8m), benefitting from the acquisitions made in the prior
period. Organic Cloud Services revenue declined by 4%, or GBP2.0m,
due to a GBP1.5m reduction in non-recurring revenue, with higher
reductions in on-premise project revenues, due to the impact of
Covid-19 on corporate spend, being partially offset by completion
of a GBP1m consultancy project for a local government customer,
supporting deployment of modern workplace technology. This was
combined with a GBP0.5m net reduction in recurring revenue driven
by a GBP0.8m reduction in self-managed infrastructure revenues,
primarily from smaller legacy customers. This was partially offset
by some growth in recurring cloud managed services where our
investments are focussed. Cloud Services EBITDA (before share based
payments, acquisition costs and central group overheads) was
GBP20.2m being 40.3% of revenue (H1 2020: GBP20.7m (42.5% of
revenue)).
The two acquisitions made in the final month of the last
financial year are making a positive contribution to the Group.
Despite the restrictions on physically meeting our new colleagues
and customers, the integrations of Memset and ServerChoice have
progressed well, with improved profitability being delivered during
the latter months of the half year.
There were no material changes to our infrastructure in the
period, other than the previously reported extension of the London
datacentre property lease to 2035. After some delayed planning
permission, we have now commenced the replacement of the cooling
system in our London datacentre with around GBP2.0m investment
expected during the second half of the year. This investment will
continue to reduce the environmental impact of our operations. In
the last few months we completed the addition of a third level of
diversity into our core fibre network, providing market leading
resilience to our services.
Our iomart Managed Security Service ("iMSS") which offers a
comprehensive managed service capability across the spectrum of
security, with a fully resourced security operation centre ("SOC")
was fully launched during the period. While our customers have
always benefited from security, a number of new and existing
customers have already signed up for this standalone enhanced
security offering. Given the ever-increasing threats from
cyberattacks on systems and data we expect to see continued
uptake.
We continue to expect cloud managed services to be the driver of
revenue and profit growth going forward and we are confident the
investments made in this area in recent years, and the ongoing
strategic initiatives around our value proposition and brand, will
drive accelerated organic growth rates in future years.
Easyspace
Easyspace provides a range of products to the small and micro
business community including domain names, shared hosting, emails
and dedicated servers. The Easyspace segment has performed as
expected during the period, delivering revenues and EBITDA (before
share based payments, acquisition costs and central group
overheads) of GBP6.0m (H1 2020: GBP6.3m) and GBP2.9m (H1 2020:
GBP3.0m), respectively. This represents a small revenue reduction
of 4% from the prior period, partially offset by a slightly better
margin performance.
Easyspace is competing in a large mass market against some very
large competitors. We cannot expect to compete head to head with
these larger organisations in terms of new business generation, but
we believe we have good levels of renewal rates and customer
satisfaction, ensuring that Easyspace will continue to make a
positive contribution to the Group's profitability and cash
generation.
M&A Activity
M&A activity has been a core element of iomart's strategy,
with more than 20 acquisitions completed over the last ten years,
funded primarily from our own annual cash generation. During the
period we saw less inbound acquisition opportunities as most
businesses focussed on dealing with the initial impact of Covid-19
and some potential sale processes were delayed. There were
therefore no acquisitions completed in the period under review. We
believe that M&A will continue as a core element of our
strategy both in terms of acquiring "sticky" recurring customer
bases but also the potential to add capabilities and skills to our
existing customer offering.
Financial Performance
Revenue
Overall revenues from our operations grew by 2% to GBP56.3m (H1
2020: GBP55.1m). We saw a greater share of recurring revenue at 90%
(H1 2020: 87%) compared to prior periods as on-premise related
sales reduced in the period as customers delayed projects.
Recurring revenue growth was 4% driven by the acquisitions in the
prior period.
Our Cloud Services segment revenues were up by 3% to GBP50.3m
(H1 2020: GBP48.8m). The increase includes the contribution for the
full six-month period from the two acquisitions of the ServerChoice
managed private cloud business and Memset Limited, with a 4%
revenue reduction from the underlying business. This reduction is
split between reduction in the non-recurring revenue consisting
mainly of lower on-premise hardware sales as customers conserved
discretionary project spend and reductions from the long tail of
smaller customers who utilise mainly self-service dedicated
servers. The reduction in the level of dedicated servers from
legacy customers continues a trend experienced last year, although
at that time this was, to a greater extent, compensated for by new
business wins from more complex managed cloud services.
Our Easyspace segment has performed in line with expectations
over the period, with revenues for the first half only reducing by
GBP0.3m to GBP6.0m (H1 2020: GBP6.3m).
Gross Profit
The gross profit in the period, which is calculated by deducting
from revenue variable cost of sales such as domain costs, public
cloud costs, the cost of hardware and software sold, power, sales
commission and the relatively fixed costs of operating our
datacentres, increased by 2% to GBP34.4m (H1 2020: GBP33.8m) at a
consistent 61% of revenue. We have not seen any material individual
price change in any of the components of the purchased cost base in
the last six months although power costs have seen a generally
upward trend for us based on specific fixed electricity contracts
which were above market during H1 plus to some degree more general
increases across licences and support agreements from the larger
software/hardware vendors which have not yet been fully passed
through to customers.
Adjusted EBITDA
The Group's adjusted EBITDA reduced by 4% to GBP20.8m (H1 2020:
GBP21.8m) which in EBITDA margin terms translates to 36.9% (H1
2020: 39.5%), broadly consistent with the second half of last year
(H2 2020: 37.9%) reflecting the investments made in our
organisation last year and broader mix of business. The impact of
the acquisitions is the main factor behind the increase in the
administration expense (before depreciation, amortisation, share
based payment charges and acquisition cost) of GBP1.6m versus the
previous period comparative with only a GBP0.5m (2.0%) increase
within the underlying business. We have made some efficiency
adjustments to our own cost base, including within the recently
acquired businesses, with only partial impact in the reporting
period.
Cloud Services saw a 2% reduction in its adjusted EBITDA to
GBP20.2m (H1 2020: GBP20.7m). In percentage terms the Cloud
Services margin decreased to 40.3% (H1 2020: 42.5%). This EBITDA
profitability reflects the reducing revenue contribution from the
higher margin legacy self-managed infrastructure, which cannot be
fully replaced by the initial profitability of wins within the more
complex managed cloud services, along with some investments in the
service team in the period plus only a partial benefit from
efficiency adjustments made to our cost base.
The adjusted EBITDA of Easyspace reduced in line with the small
drop in revenue to GBP2.9m (H1 2020: GBP3.0m). In percentage terms
the margin increased slightly to 47.8% (H1 2020: 47.4%).
Group overheads, which are not allocated to segments, include
the cost of the Board, all the running costs of the headquarters in
Glasgow, and Group led functions such as human resources,
marketing, finance and design. Group overheads saw a small increase
to GBP2.3m (H1 2020: GBP2.0m). The main factor behind this was the
increase from two to three Executive Directors in the first six
months, reverting to two from 1 October 2020.
Adjusted profit before tax
Depreciation charges of GBP8.5m (H1 2020: GBP8.1m) have
increased in absolute terms due to the additional datacentre assets
within the recent acquisitions but is a consistent percentage of
our recurring revenue in the period. The charge for the
amortisation of intangible assets, excluding amortisation of
intangible assets resulting from acquisitions ("amortisation of
acquired intangible assets") has increased to GBP1.5m (H1 2020:
GBP1.1m) due to the software purchased during the last financial
year linked to customer platforms.
Net finance costs have remained stable at GBP1.1m (H1 2020:
GBP1.1m).
After deducting the charges for depreciation, amortisation,
excluding the amortisation of acquired intangible assets, and
finance costs from the adjusted EBITDA, the adjusted profit for the
period before tax decreased by 15% to GBP9.8m (H1 2020: GBP11.5m)
representing an adjusted profit before tax margin of 17.3% (H1
2020: 20.8%).
Profit before tax
The measure of adjusted profit before tax is a non-statutory
measure which is commonly used to analyse the performance of
companies where M&A activity forms a significant part of their
activities.
A reconciliation of adjusted profit before tax to reported
profit before tax is shown below:
6 months 6 months Year
Reconciliation of adjusted profit before to 30/09/2020 to 30/09/2019 to 31/03/2020
tax to profit before tax GBP'000 GBP'000 GBP'000
Adjusted profit before tax 9,759 11,489 22,768
Less: Share based payments (814) (701) (1,243)
Less: Amortisation of acquired intangible
assets (2,835) (3,084) (6,159)
Less: Acquisition costs (383) - (428)
Add: Gain on revaluation of contingent
consideration 290 709 1,856
Profit before tax 6,017 8,413 16,784
-------------------------------------------- ---------------- --------------- ----------------
The adjusting items in the current period are:
-- share based payment charges in the period which increased
slightly to GBP0.8m (H1 2020: GBP0.7m) as a result of the issue of
additional share options;
-- charges for the amortisation of acquired intangible assets of
GBP2.8m (H1 2020: GBP3.1m) which have decreased by GBP0.3m; and
-- gain of GBP0.3m relating to the reassessment of the provision
for contingent consideration on the Memset Limited acquisition
given an updated estimate for a particular portion of the monthly
recurring revenue which is due to be measured in the month of
December 2020.
After deducting the charges for share based payments, the
amortisation of acquired intangible assets, acquisition costs and
the gain on revaluation of contingent consideration, the reported
profit before tax is GBP6.0m (H1 2020: GBP8.4m).
Taxation and profit for the period
There is a tax charge in the period of GBP1.2m (H1 2020:
GBP1.4m), which comprises a current taxation charge of GBP1.9m (H1
2020: GBP2.3m), and a deferred taxation credit of GBP0.7m (H1 2020:
GBP0.9m). The headline effective tax rate has increased to 20%
versus 17% in the prior period due to the movement in the tax
effect of share based remuneration and the reduction in the
non-taxable gain on revaluation of contingent consideration in the
current period. This results in a profit for the period from total
operations of GBP4.8m (H1 2020: GBP7.0m).
Earnings per share
Adjusted diluted earnings per share, which is based on profit
for the period attributed to ordinary shareholders before share
based payment charges, amortisation of acquired intangible assets,
acquisition costs and the tax effect of these items, and the gain
on revaluation of contingent consideration, was 7.2p (H1 2020:
8.4p).
The measure of adjusted diluted earnings per share as described
above is a non-statutory measure which is commonly used to analyse
the performance of companies where M&A activity forms a
significant part of their activities. Basic earnings per share from
continuing operations was 4.4p (H1 2020: 6.4p). The calculation of
both adjusted diluted earnings per share and basic earnings per
share is included at note 3.
Cash flow
The Group generated cash from operations in the period of
GBP23.1m (H1 2020: GBP20.6m) with an EBITDA conversion to cash
ratio in the period of 111% (H1 2020: 95%). During the period the
Group received GBP2.3m of cash deposit back from our landlord as
part of the negotiation of the extension of the London datacentre
lease to June 2035. In line with many businesses at the start of
the pandemic, we delayed our Q1 VAT payment, being GBP1.7m, but
have subsequently repaid post the 30 September period end.
Normalising for these two items takes the EBITDA conversion to cash
ratio to 92% in the period, comparable to our historically high
levels. Cash payments for corporation taxation in the period fell
to GBP1.9m (H1 2020: GBP2.9m), resulting in net cash flow from
operating activities in the period of GBP21.3m (H1 2020:
GBP17.7m).
Expenditure on investing activities of GBP8.8m (H1 2020:
GBP9.6m) was incurred in the period. GBP7.0m (H1 2020: GBP8.4m) was
incurred on the acquisition of property, plant and equipment,
principally to provide services to our customers. We have now
received planning permission for the replacement of the cooling
system in our London data centre and investments of around GBP2.0m
are expected to be completed during the second half of the year. We
made limited purchases of intangible assets (H1 2020: GBP0.5m) and
capitalised GBP0.6m (H1 2020: GBP0.7m) in respect of development
costs during the period. In the current period, in respect of
M&A activity, GBP1.2m was paid out for contingent consideration
due on the LDEX acquisition made in December 2018. There had been
no such M&A related payments made in the six months to 30
September 2019.
During the first half of the year, net cash used in financing
activities was GBP7.9m (H1 2019: GBP9.6m). Any shares issued in the
current period under share options was at nominal value (H1 2020:
GBP0.6m). In the current period we made GBP1.2m drawdowns under our
bank facility (H1 2020: GBPnil) and we made repayments of GBP1.2m
(H1 2020: GBP2.0m) meaning no net movement in the revolver loan
drawn balance in the period. In the current period we repaid
GBP2.9m of lease liabilities (H1 2020: GBP1.8m). We paid GBP0.6m
(H1 2020: GBP1.0m) of finance charges and made a dividend payment
of GBP4.3m (H1 2020: GBP5.4m). As a result, cash and cash
equivalent balances at the end of the period were GBP20.0m (H1
2020: GBP8.6m).
Net Debt
The net debt position of the Group at the end of the period was
GBP58.1m compared to GBP57.6m at 31 March 2020 with the small
increase being a combination in the increase in the closing cash
balance to GBP20.0m (31 March 2020: GBP15.5m) net of an increase in
the lease liability to GBP25.3m (31 March 2020: GBP20.3m) primarily
relating to extensions to existing lease arrangements, including
the five-year extension to our London data centre. Our multiple of
the last 12 months of adjusted EBITDA to net debt is 1.36 times
which remains a comfortable level of leverage. We still have a
significant undrawn amount from our GBP80m credit facility which
matures in September 2022.
Dividend
Recognising our confidence in the future, we will pay an interim
dividend at the same level as last year of 2.60p per share (H1
2020: 2.60p) on 29 January 2021 to shareholders on the register on
8 January 2021, with an ex-dividend date of 7 January 2021. This
dividend represents a pay-out ratio of 37% (H1 2020: 31%) of the
adjusted diluted earnings per share for the interim period.
Current trading and outlook
iomart's high levels of recurring revenue remain a considerable
strength in these continued uncertain times, providing high
visibility for the remainder of the year. We believe the diversity
and limited concentration of our customer base, along with the
critical web centric services we provide, will continue to shelter
us from any unexpected further worsening of the economic
environment in the near future.
We saw signs of improved confidence within new and existing
customers as we completed our first half, with a stronger second
quarter in terms of orders from existing customers, which we
anticipate will have a positive impact on revenues in the second
half of the year. We have also seen signs in recent months that
business confidence may now be returning, resulting in a growing
number of new business discussions, the benefit of which, if
secured, would flow through to revenue growth in future years.
We believe it prudent to continue to exercise strong cash
management measures and have taken steps to ensure an appropriate
cost base in the situation, which alongside the integration of the
acquired businesses should result in an improvement in profit
margins in the second half of the year.
We started the year with a fully invested commercial
organisation, which has been retained, providing us with a stronger
foundation to accelerate growth once companies regain the economic
confidence to make infrastructure transformation decisions. The
Board remains confident in the outlook for the long-term prospects
for the Group.
Reece Donovan
Chief Executive Officer
1 December 2020
Consolidated Interim Statement of Comprehensive Income
Six months ended 30 September 2020
Unaudited Unaudited Audited
6 months 6 months Year
to 30 to 30 to 31
September September March
2020 2019 2020
GBP'000 GBP'000 GBP'000
----------------------------------------------- ----------- ----------- ------------------
Revenue 56,311 55,131 112,581
Cost of sales (21,897) (21,366) (44,093)
----------------------------------------------- ----------- ----------- ------------------
Gross profit 34,414 33,765 68,488
Administrative expenses (27,624) (24,968) (51,387)
Operating profit 6,790 8,797 17,101
Analysed as:
Earnings before interest, tax, depreciation,
amortisation, acquisition costs and
share based payments 20,788 21,756 43,510
Share based payments (814) (701) (1,243)
Acquisition costs 4 (383) - (438)
Depreciation 8 (8,464) (8,096) (15,635)
Amortisation - acquired intangible
assets 7 (2,835) (3,084) (6,159)
Amortisation - other intangible assets 7 (1,502) (1,078) (2,934)
----------------------------------------------- ----------- ----------- ------------------
Gain on revaluation of contingent
consideration 290 709 1,856
Finance income 13 18 39
Finance costs 5 (1,076) (1,111) (2,212)
----------------------------------------------- ----------- ----------- ------------------
Profit before taxation 6,017 8,413 16,784
Taxation 6 (1,207) (1,433) (3,135)
----------------------------------------------- ----------- ----------- ------------------
Profit for the period 4,810 6,980 13,649
Other comprehensive income
Currency translation differences (5) 107 98
----------------------------------------------- ----------- ----------- ------------------
Other comprehensive (expense)/income
for the period (5) 107 98
----------------------------------------------- ----------- ----------- ------------------
Total comprehensive income for the
period attributable to equity
holders of the parent 4,805 7,087 13,747
Basic and diluted earnings per share
Basic earnings per share 3 4.4 p 6.4 p 12.5 p
12.2
Diluted earnings per share 3 4.3 p 6.3 p p
----------------------------------------------- ----------- ----------- ------------------
Consolidated Interim Statement of Financial Position
As at 30 September 2020
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
GBP'000 GBP'000 GBP'000
--------------------------------------- ----- ----------------------- ----------------------- ----------
ASSETS
Non-current assets
Intangible assets - goodwill 7 86,479 85,382 86,479
Intangible assets - other 7 20,924 23,669 24,631
Trade and other receivables - 2,760 2,760
Property, plant and equipment 8 76,323 67,397 72,344
183,726 179,208 186,214
Current assets
Cash and cash equivalents 20,055 8,563 15,497
Trade and other receivables 22,914 23,641 23,237
42,969 32,204 38,734
Total assets 226,695 211,412 224,948
LIABILITIES
Non-current liabilities
Trade and other payables (2,479) (2,017) (2,283)
Non-current borrowings 11 (75,058) (64,162) (70,109)
Provisions for other liabilities
and charges (2,000) (1,147) (1,956)
Deferred tax liability (398) (130) (1,146)
--------------------------------------- ----- ----------------------- ----------------------- ----------
(79,935) (67,456) (75,494)
Current liabilities
Contingent consideration due on
acquisitions 9 (989) (2,300) (2,480)
Trade and other payables (29,350) (30,644) (31,948)
Current income tax liabilities (33) (501) (3)
Current borrowings 11 (3,062) (3,138) (3,029)
(33,434) (36,583) (37,460)
Total liabilities (113,369) (104,039) (112,954)
Net assets 113,326 107,373 111,994
--------------------------------------- ----- ----------------------- ----------------------- ----------
EQUITY
Share capital 1,092 1,089 1,092
Own shares (70) (70) (70)
Capital redemption reserve 1,200 1,200 1,200
Share premium 22,147 22,150 22,147
Merger reserve 4,983 4,983 4,983
Foreign currency translation reserve 45 59 50
Retained earnings 83,929 77,962 82,592
--------------------------------------- ----- ----------------------- ----------------------- ----------
Total equity 113,326 107,373 111,994
--------------------------------------- ----- ----------------------- ----------------------- ----------
Consolidated Interim Statement of Cash Flows
Six months ended 30 September 2020
Unaudited
Unaudited 6 months Audited
6 months to Year to
to 30 September 30 September 31 March
2020 2019 2020
GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------------- -------------- ----------
Profit before tax 6,017 8,413 16,784
Gain on revaluation of contingent
consideration (290) (709) (1,856)
Finance costs - net 1,063 1,093 2,173
Depreciation 8,464 8,096 15,635
Amortisation 4,337 4,162 9,093
Share based payments 814 701 1,243
Movement in trade receivables 3,083 (2,270) (1,107)
Movement in trade payables (366) 1,087 (627)
Cash flow from operations 23,122 20,573 41,338
Taxation paid (1,850) (2,887) (4,179)
----------------- -------------- ----------
Net cash flow from operating activities 21,272 17,686 36,619
Cash flow from investing activities
Purchase of property, plant and equipment (7,021) (8,409) (14,688)
Development costs (614) (729) (1,405)
Purchase of intangible assets (4) (466) (1,065)
Payment for acquisition of subsidiary
undertakings net of cash acquired - - (4,156)
Contingent consideration paid (1,201) - -
Finance income received 11 18 39
Net cash used in investing activities (8,829) (9,586) (21,275)
Cash flow from financing activities
Issue of shares - 636 636
Drawdown of bank loans 1,150 - 6,150
Repayment of bank loans (1,150) (2,000) (2,000)
Repayment of lease liabilities (2,946) (1,750) (4,686)
Finance costs paid (652) (1,044) (1,734)
Dividends paid (4,287) (5,448) (8,282)
----------------- -------------- ----------
Net cash used in financing activities (7,885) (9,606) (9,916)
Net increase/(decrease) in cash and
cash equivalents 4,558 (1,506) (5,428)
Cash and cash equivalents at the beginning
of the period 15,497 10,069 10,069
----------------- -------------- ----------
Cash and cash equivalents at the end
of the period 20,055 8,563 15,497
================= ============== ==========
Consolidated Interim Statement of Changes in Equity
Six months ended 30 September 2020
Foreign
Capital Share currency
Share Own redemption premium Merger translation Retained
capital shares reserve account reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
April 2019 1,085 (70) 1,200 21,518 4,983 (48) 75,729 104,397
Profit in the
period - - - - - - 6,980 6,980
Currency
translation
differences - - - - - 107 - 107
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Total
comprehensive
income - - - - - 107 - 7,087
Dividends - - - - - - (5,448) (5,448)
Share based
payments - - - - - - 701 701
Issue of share
capital 4 - - 632 - - - 636
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Total
transactions
with owners 4 - - 632 - - (4,747) (4,111)
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Balance at 30
September
2019 1,089 (70) 1,200 22,150 4,983 59 77,962 107,373
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Profit in the
period - - - - - - 6,669 6,669
Currency
translation
differences - - - - - (9) - (9)
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Total
comprehensive
income - - - - - (9) 6,669 6,660
Dividends - - - - - - (2,834) (2,834)
Share based
payments - - - - - - 542 542
Deferred tax on
share
based payments - - - - - - 253 253
Issue of share
capital 3 - - (3) - - - -
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Total
transactions
with owners 3 - - (3) - - (2,039) (2,039)
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Balance at 31
March 2020 1,092 (70) 1,200 22,147 4,983 50 82,592 111,994
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Profit in the
period - - - - - - 4,810 4,810
Currency
translation
differences - - - - - (5) - (5)
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Total
comprehensive
income - - - - - (5) 4,810 4,805
Dividends - - - - - - (4,287) (4,287)
Share based
payments - - - - - - 814 814
Total
transactions
with owners - - - - - - (3,473) (3,473)
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Balance at 30
September
2020 1,092 (70) 1,200 22,147 4,983 45 83,929 113,326
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Notes to the Half Yearly Financial Information
Six months ended 30 September 2020
1. Basis of preparation
The half yearly financial information does not constitute
statutory financial statements as defined in section 434 of the
Companies Act 2006. The statutory accounts for the year ended 31
March 2020 have been delivered to the Registrar of Companies and
included an independent auditor's report, which was unqualified and
did not contain a statement under section 493 of the Companies Act
2006.
The half yearly financial information has been prepared using
the same accounting policies and estimation techniques as will be
adopted in the Group financial statements for the year ending 31
March 2021. The Group financial statements for the year ended 31
March 2020 were prepared under International Financial Reporting
Standards as adopted by the European Union. These half yearly
financial statements have been prepared on a consistent basis and
format with the Group financial statements for the year ended 31
March 2020. The provisions of IAS 34 'Interim Financial Reporting'
have not been applied in full.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chief Executive's Statement on pages 3 to 8.
iomart's business model continues to stand it in good stead and
despite the global slowdown in corporate activity driven by
Covid-19, continues to perform well. The Group's high levels of
recurring revenue remains a considerable strength in these
uncertain times, providing high levels of forecast visible revenue.
The Group continue to exercise strong cash management measures and
believe the diversity and limited concentration of our customer
base, along with the critical web centric services we provide, will
continue to shelter us from the worst of the expected economic
pressures over the coming period.
The Group has access to a GBP80m multi option revolving credit
facility that matures on 30 September 2022 of which GBP8m
(annually) is available to be drawn on for general business
purposes should that be required. The directors are of the opinion
that the Group can operate within the current facility and comply
with its banking covenants.
At the end of the half year, the Group had net debt of GBP58.1m
(H1 2020: GBP58.7m). The Board is comfortable with the net debt
position given the strong cash generation of the Group and has
considerable financial resources together with long -- term
contracts with a number of customers and suppliers across different
geographic areas and industries. As a consequence, the directors
believe that the Group is well placed to manage its business
risks.
After making enquiries, the directors have a reasonable
expectation that the Group will be able to meet its financial
obligations and has adequate resources to continue in operational
existence for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements.
2. Operating segments
Revenue by Operating Segment
6 months 6 months Year to
to 30/09/2020 to 30/09/2019 31/03/2020
GBP'000 GBP'000 GBP'000
---------------- --------------- --------------- ------------
Easyspace 6,045 6,316 12,792
Cloud Services 50,266 48,815 99,789
--------------- --------------- ------------
56,311 55,131 112,581
----------------- --------------- --------------- ------------
Geographical Information
In presenting the consolidated information on a geographical
basis, revenue is based on the geographical location of customers.
The United Kingdom is the place of domicile of the parent company,
iomart Group plc. No individual country other than the United
Kingdom contributes a material amount of revenue therefore revenue
from outside the United Kingdom has been shown as from Rest of the
World.
Analysis of Revenue by Destination
6 months 6 months Year to
to 30/09/2020 to 30/09/2019 31/03/2020
GBP'000 GBP'000 GBP'000
------------------------- --------------- --------------- ------------
United Kingdom 45,054 46,161 95,333
Rest of the
World 11,257 8,970 17,248
--------------- --------------- ------------
Revenue from operations 56,311 55,131 112,581
-------------------------- --------------- --------------- ------------
Profit by Operating Segment
6 months to 30/09/2020 6 months to 30/09/2019 Year to 31/03/2020
EBITDA Share based EBITDA Share based EBITDA Share based
before payments, before payments, before payments,
share based acquisition share based acquisition Operating share based acquisition
payments costs, Operating payments costs, profit/(loss) payments costs, Operating
and depreciation profit/(loss) and depreciation and depreciation profit/(loss)
acquisition & acquisition & acquisition &
costs amortisation costs amortisation costs amortisation
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------------- -------------- --------------- ------------- -------------- --------------- ------------- -------------- ---------------
Easyspace 2,888 (598) 2,290 2,994 (707) 2,287 5,649 (1,459) 4,190
Cloud Services 20,247 (12,203) 8,044 20,722 (11,551) 9,171 42,307 (23,269) 19,038
Group
overheads (2,347) - (2,347) (1,960) - (1,960) (4,446) - (4,446)
Share based
payments - (814) (814) - (701) (701) - (1,243) (1,243)
Acquisition
costs - (383) (383) - - - - (438) (438)
--------------- ------------- -------------- --------------- ------------- -------------- --------------- ------------- -------------- ---------------
Profit before
tax and
interest 20,788 (13,998) 6,790 21,756 (12,959) 8,797 43,510 (26,409) 17,101
---------------
Gain on
revaluation
of contingent
consideration 290 709 1,856
Group interest
and tax (2,270) (2,526) (5,308)
--------------- ------------- -------------- --------------- ------------- -------------- --------------- ------------- -------------- ---------------
Profit for
the period 4,810 6,980 13,649
--------------- ------------- -------------- --------------- ------------- -------------- --------------- ------------- -------------- ---------------
Group overheads, share based payments, acquisition costs,
interest and tax are not allocated to segments.
3. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year, after deducting
shares held by the Employee Benefit Trust. Diluted earnings per
share is calculated by dividing the earnings attributable to
ordinary shareholders by the total of the weighted average number
of ordinary shares in issue during the year after adjusting for the
dilutive potential ordinary shares relating to share options. The
calculations of earnings per share are based on the following
results:
Year
6 months 6 months to
to 30/09/2020 to 30/09/2019 31/03/2020
GBP'000 GBP'000 GBP'000
Profit for the period and basic earnings
attributed to ordinary shareholders 4,810 6,980 13,649
No No No
Weighted average number of ordinary shares: 000 000 000
Called up, allotted and fully paid at
start of period 109,160 108,510 108,510
Shares held by Employee Benefit Trust (141) (141) (141)
Issued share capital in the period 50 305 436
Weighted average number of ordinary shares
- basic 109,069 108,674 108,805
Dilutive impact of share options 3,538 2,876 2,861
Weighted average number of ordinary shares
- diluted 112,607 111,550 111,666
--------------------------------------------- --------------- --------------- ------------
12.5
Basic earnings per share 4.4 p 6.4 p p
12.2
Diluted earnings per share 4.3 p 6.3 p p
--------------------------------------------- --------------- --------------- ------------
iomart Group plc assess the performance of the Group by
adjusting earnings per share, calculated in accordance with IAS 33,
to exclude certain non-trading items. The calculation of the
earnings per ordinary share on a basis which excludes such items is
based on the following adjusted earnings:
Adjusted earnings per share
6 months 6 months Year
to 30/09/2020 to 30/09/2019 to 31/03/2020
GBP'000 GBP'000 GBP'000
Profit for the financial period and basic
earnings attributed to ordinary shareholders 4,810 6,980 13,649
- Amortisation of acquired intangible
assets 2,835 3,084 6,159
- Acquisition costs 383 - 438
- Share based payments 814 701 1,243
- Gain on revaluation of contingent consideration (290) (709) (1,856)
- Tax impact of adjusted items (693) (718) (1,406)
--------------------------------------------------- --------------- --------------- ---------------
Adjusted profit for the period and adjusted
basic earnings attributed to ordinary
shareholders 7,859 9,338 18,227
16.8
Adjusted basic earnings per share 7.2 p 8.6 p p
Adjusted diluted earnings per share 7.0 p 8.4 p 16.3 p
--------------------------------------------------- --------------- --------------- ---------------
4. Acquisition costs
6 months 6 months Year to
to 30/09/2020 to 30/09/2019 31/03/2020
GBP'000 GBP'000 GBP'000
---------------------------------------- --------------- --------------- ------------
Professional fees - - 438
Non-recurring acquisition integration
costs 383 - -
Total acquisition costs for the
period 383 - 438
----------------------------------------- --------------- --------------- ------------
5. Finance costs
6 months 6 months Year to
to 30/09/2020 to 30/09/2019 31/03/2020
GBP'000 GBP'000 GBP'000
------------------------------- --------------- --------------- ------------
Bank loans (681) (723) (1,545)
Lease finance costs (361) (363) (649)
Other interest charges (34) (25) (18)
-------------------------------- --------------- --------------- ------------
Finance costs for the period (1,076) (1,111) (2,212)
-------------------------------- --------------- --------------- ------------
6. Taxation
6 months 6 months Year to
to 30/09/2020 to 30/09/2019 31/03/2020
GBP'000 GBP'000 GBP'000
---------------------------------------- --------------- --------------- ------------
Corporation Tax:
Tax charge for the period (1,955) (2,341) (3,976)
Effect of different statutory tax
rates of overseas jurisdictions - 21 -
Adjustment relating to prior periods - - 357
----------------------------------------- --------------- --------------- ------------
Total current taxation charge (1,955) (2,320) (3,619)
Deferred Tax:
----------------------------------------- --------------- --------------- ------------
Origination and reversal of temporary
differences 718 861 367
Adjustment relating to prior periods - - 266
Effect of different statutory tax
rates of overseas jurisdictions 30 26 (13)
Effect of changes in tax rates - - (136)
----------------------------------------- --------------- --------------- ------------
Total deferred taxation credit 748 887 484
Total taxation charge for the period (1,207) (1,433) (3,135)
----------------------------------------- --------------- --------------- ------------
7. Intangible assets
Domain
Acquired Acquired names
Customer Development beneficial & IP
Goodwill relationships Costs Software contract addresses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- ---------------- ------------ --------- ------------ ----------- ---------
Cost:
At 1 April 2019 85,382 52,766 9,193 8,039 86 280 155,746
Additions in the
period - 51 729 1,840 - - 2,620
At 30 September
2019 85,382 52,817 9,922 9,879 86 280 158,366
Additions in the
period - - 676 650 - - 1,326
Acquisition of
subsidiary 1,097 4,559 - - - 56 5,712
Disposals - - - (173) - - (173)
Currency translation
differences - 38 - (33) - - 5
At 31 March 2020 86,479 57,414 10,598 10,323 86 336 165,236
Additions in the
period - - 614 4 - - 618
Currency translation
differences - (29) - (19) - - (48)
At 30 September
2020 86,479 57,385 11,212 10,308 86 336 165,806
-------------------------- --------- ---------------- ------------ --------- ------------ ----------- ---------
Accumulated amortisation:
At 1 April 2019 - (33,795) (6,866) (4,164) (48) (280) (45,153)
Charge for the
period - (3,080) (718) (360) (4) - (4,162)
At 30 September
2019 - (36,875) (7,584) (4,524) (52) (280) (49,315)
Charge for the
period - (3,079) (789) (1,060) (3) - (4,931)
Disposals - - - 173 - - 173
Currency translation
differences - - - (53) - - (53)
At 31 March 2020 - (39,954) (8,373) (5,464) (55) (280) (54,126)
Charge for the
period - (2,835) (751) (747) (4) - (4,337)
Currency translation
differences - 29 - 31 - - 60
At 30 September
2020 - (42,760) (9,124) (6,180) (59) (280) (58,403)
-------------------------- --------- ---------------- ------------ --------- ------------ ----------- ---------
Carrying amount:
At 30 September
2020 86,479 14,625 2,088 4,128 27 56 107,403
-------------------------- --------- ---------------- ------------ --------- ------------ ----------- ---------
At 31 March 2020 86,479 17,460 2,225 4,859 31 56 111,110
At 30 September
2019 85,382 15,942 2,338 5,355 34 - 109,051
-------------------------- --------- ---------------- ------------ --------- ------------ ----------- ---------
During the six month period to 30 September 2020, there were no
additions of intangible assets in relation to leased assets. The
total amortisation charge on leased assets is GBP0.1m. See note 12
for further details of right-of-use assets.
8. Property, plant and equipment
Leasehold
Freehold property Datacentre Computer Office Motor
property and improve-ments equipment equipment equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ---------- ------------------- ----------- ----------- ----------- ---------- ----------
Cost:
At 1 April 2019 8,910 7,943 23,457 81,611 2,920 31 124,872
Additions in
the period - 19,910 1,211 7,323 27 11 28,482
Disposals in
the period - (16) - (465) (61) (9) (551)
Currency
translation
differences - - - 16 - - 16
At 30 September
2019 8,910 27,837 24,668 88,485 2,886 33 152,819
Additions in
the period - 1,377 271 7,524 30 - 9,202
Acquisition
of subsidiary - 457 1,192 1,540 - 2 3,191
Disposals in
the period - - (18) (157) (145) (12) (332)
Currency
translation
differences - - - 200 - - 200
At 31 March
2020 8,910 29,671 26,113 97,592 2,771 23 165,080
Additions in
the period - 7,834 282 4,460 26 - 12,602
Disposals in
the period - - - (36) - - (36)
Currency
translation
differences - (66) - (123) - - (189)
At 30 September
2020 8,910 37,439 26,395 101,893 2,797 23 177,457
-------------------- ---------- ------------------- ----------- ----------- ----------- ---------- ----------
Accumulated
depreciation:
At 1 April 2019 (418) (3,510) (13,635) (58,372) (1,868) (24) (77,827)
Charge for the
period (140) (1,963) (654) (5,201) (134) (4) (8,096)
Disposals in
the period - 16 - 465 61 9 551
Currency
translation
differences - - - (58) - - (58)
At 30 September
2019 (558) (5,457) (14,289) (63,166) (1,941) (19) (85,430)
Charge for the
period (139) (1,647) (1,199) (4,424) (128) (2) (7,539)
Disposals in
the period - - 18 157 145 12 332
Currency
translation
differences - - - (99) - - (99)
At 31 March
2020 (697) (7,104) (15,470) (67,532) (1,924) (9) (92,736)
Charge for the
period (133) (2,302) (699) (5,207) (119) (4) (8,464)
Disposals in
the period - - - 36 - - 36
Currency
translation
differences - 2 - 28 - - 30
At 30 September
2020 (830) (9,404) (16,169) (72,675) (2,043) (13) (101,134)
-------------------- ---------- ------------------- ----------- ----------- ----------- ---------- ----------
Carrying amount:
At 30 September
2020 8,080 28,035 10,226 29,218 754 10 76,323
-------------------- ---------- ------------------- ----------- ----------- ----------- ---------- ----------
At 31 March
2020 8,213 22,567 10,643 30,060 847 14 72,344
At 30 September
2019 8,360 22,380 10,379 25,319 945 14 67,397
-------------------- ---------- ------------------- ----------- ----------- ----------- ---------- ----------
During the six month period to 30 September 2020, there were
additions of GBP3.4m to leasehold property and improvements and
GBP4.2m to datacentre equipment in relation to leased assets. The
total depreciation charge on leased assets is GBP1.9m. See note 12
for further details of right-of-use assets.
9. Contingent consideration due on acquisitions
30/09/2020 30/09/2019 31/03/2020
GBP'000 GBP'000 GBP'000
------------------------------------- ---------- ---------- ----------
Contingent consideration due on
acquisitions
* ServerChoice (779) - (827)
* Memset Limited (210) - (500)
* LDeX Group Limited - (2,300) (1,153)
Total contingent consideration due
on acquisitions (989) (2,300) (2,480)
-------------------------------------- ---------- ---------- ----------
Subsequent to the period end, the ServerChoice deferred
consideration was settled in full at the value provided at 31 March
2020. In the current period, the gain on revaluation of contingent
consideration of GBP0.3m relates to the reassessment of the
provision for contingent consideration on the Memset Limited
acquisition from GBP0.5m to GBP0.2m given an updated estimate for a
particular portion of the monthly recurring revenue which is due to
be measured in the month of December 2020.
10 . Analysis of change in net cash/(debt)
Cash and
cash equivalents Bank Total net
GBP'000 loans Lease liabilities cash/(debt)
GBP'000 GBP'000 GBP'000
---------------------------------- ------------------ --------- ----------------- ------------
At 1 April 2019 10,069 (48,536) (777) (39,244)
Lease liabilities on transition
to IFRS 16 - - (20,421) (20,421)
Additions to lease liabilities - - (1,146) (1,146)
Repayment of bank loans - 2,000 - 2,000
Impact of effective interest
rate - 207 - 207
Currency translation difference - - (15) (15)
Cash and cash equivalents
cash outflow (1,506) - - (1,506)
Lease liabilities cash outflow - - 1,388 1,388
----------------------------------- ------------------ --------- ----------------- ------------
At 30 September 2019 8,563 (46,329) (20,971) (58,737)
Additions to lease liabilities - - (398) (398)
New bank loans - (6,150) - (6,150)
Impact of effective interest
rate - (312) - (312)
Acquired on acquisition
of subsidiary - - (1,705) (1,705)
Currency translation difference - - 15 15
Cash and cash equivalents
cash inflow 6,934 - - 6,934
Lease liabilities cash outflow - - 2,712 2,712
----------------------------------- ------------------ --------- ----------------- ------------
At 31 March 2020 15,497 (52,791) (20,347) (57,641)
Additions to lease liabilities - - (7,622) (7,622)
New bank loans - (1,150) - (1,150)
Repayment of bank loans - 1,150 - 1,150
Cash and cash equivalents
cash inflow 4,558 - - 4,558
Lease liabilities cash outflow - - 2,640 2,640
At 30 September 2020 20,055 (52,791) (25,329) (58,065)
----------------------------------- ------------------ --------- ----------------- ------------
11. Borrowings
30/09/2020 30/09/2019 31/03/2020
GBP'000 GBP'000 GBP'000
------------------------------- ---------- ---------- ----------
Current:
Lease liabilities (note 12) (3,062) (3,138) (3,029)
Total current borrowings (3,062) (3,138) (3,029)
Non-current:
Lease liabilities (note 12) (22,267) (17,833) (17,318)
Bank loans (52,791) (46,329) (52,791)
Total non-current borrowings (75,058) (64,162) (70,109)
Total borrowings (78,120) (67,300) (73,138)
--------------------------------- ---------- ---------- ----------
The Group has an GBP80m multi option revolving credit facility
which expires on 30 September 2022 and can be used by the Group to
finance acquisitions, capital expenditure, general business
purposes and for the issue of guarantees, bonds or indemnities.
Each draw down made under this facility can be for either 3 or 6
months and can either be repaid or continued at the end of the
period. Given the terms of the revolving credit facility and the
ability for any drawdowns made to be extended beyond 30 September
2021 at the discretion of the Company, the total amount outstanding
has been classified as non-current.
Details of the Group's lease liabilities are included in note
12.
12. Leases
The Group leases assets including buildings, fibre contracts,
colocation and software contracts. Information about leases for
which the Group is a lessee is presented below:
Right-of-use assets
Leasehold Datacentre Software Total
property equipment
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ---------- ----------- --------- ---------
Cost at 1 April 2019 19,748 1,182 - 20,930
Additions - - 1,425 1,425
Depreciation charge (1,374) (232) - (1,606)
Amortisation charge - - (47) (47)
--------------------------------------- ---------- ----------- --------- ---------
Net book value at 30 September 2019 18,374 950 1,378 20,702
Additions 47 72 - 119
Acquired on acquisition of subsidiary 457 - - 457
Depreciation charge (1,384) (234) - (1,618)
Amortisation charge - - (143) (143)
--------------------------------------- ---------- ----------- --------- ---------
Net book value at 31 March 2020 17,494 788 1,235 19,517
Additions 3,438 4,184 - 7,622
Depreciation charge (1,229) (638) - (1,867)
Amortisation charge - - (143) (143)
--------------------------------------- ---------- ----------- --------- ---------
Net book value at 30 September 2020 19,703 4,334 1,092 25,129
--------------------------------------- ---------- ----------- --------- ---------
The right-of-use assets in relation to leasehold property and
datacentre equipment are disclosed as non-current assets and are
disclosed within property, plant and equipment at 30 September 2020
(note 8). The right-of-use assets in relation to software are
disclosed as non-current assets and are disclosed within
intangibles at 30 September 2020 (note 7).
The largest element of the additions to the right-of-use assets
in the six month period to 30 September 2020 relates to extensions
to existing lease arrangements including the five year extension to
our main London data centre.
Lease liabilities
Lease liabilities for right-of-use assets are presented in the
balance sheet within borrowings as follows:
30/09/2020 30/09/2019 31/03/2020
GBP'000 GBP'000 GBP'000
Lease liabilities (current) (note 11) (3,062) (3,138) (3,029)
Lease liabilities (non-current) (note
11) (22,267) (17,833) (17,318)
----------------------------------------- ------------- ------------- -------------
Total lease liabilities (25,329) (20,971) (20,347)
----------------------------------------- ------------- ------------- -------------
The maturity analysis of undiscounted lease liabilities are
shown in the table below:
30/09/2020 30/09/2019 31/03/2020
Amounts payable under leases: GBP'000 GBP'000 GBP'000
Within one year (3,705) (3,636) (3,536)
Between two to five years (13,176) (10,115) (9,823)
After more than five years (12,569) (10,279) (9,709)
------------------------------- ------------- ------------- -------------
(29,450) (24,030) (23,068)
Add: unearned interest 4,121 3,059 2,721
------------------------------- ------------- ------------- -------------
Total lease liabilities (25,329) (20,971) (20,347)
------------------------------- ------------- ------------- -------------
13. Availability of half yearly reports
The Company's Interim Report for the six months ended 30
September 2020 will shortly be available to view on the Company's
website ( www.iomart.com ).
INDEPENT REVIEW REPORT TO iomart Group plc
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2020 which comprises the Consolidated
Interim Statement of Comprehensive Income, the Consolidated Interim
Statement of Changes in Equity, the Consolidated Interim Statement
of Financial Position, the Consolidated Interim Cash Flow Statement
and related notes 1 to 13. We have read the other information
contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report have been prepared in
accordance with the accounting policies the group intends to use in
preparing its next annual financial statements.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the set of financial statements in the half-yearly financial report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2020 is not prepared, in all material respects, in
accordance with accounting policies the group intends to use in
preparing its next annual financial statements and the AIM Rules of
the London Stock Exchange.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
Glasgow, United Kingdom
1 December 2020
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END
IR KKKBNDBDBCDN
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