TIDMIOM
RNS Number : 7510U
Iomart Group PLC
07 December 2021
7 December 2021
iomart Group plc
("iomart" or the "Group" or the "Company")
Half Yearly Results
On track - Strategy implemented and progressing well
iomart (AIM: IOM), the cloud computing company, is pleased to
report its consolidated half yearly results for the period ended 30
September 2021 (H1 2022).
FINANCIAL HIGHLIGHTS
H1 2022 H1 2021 Change
Revenue GBP51.9m GBP56.3m -8%
--------- --------- -------
% of recurring revenue(1) 93% 90% +3%
--------- --------- -------
Adjusted EBITDA(2) GBP19.6m GBP20.8m -6%
--------- --------- -------
Adjusted profit before tax(3) GBP9.1m GBP9.8m -7%
--------- --------- -------
Profit before tax GBP6.0m GBP6.0m 0%
--------- --------- -------
Adjusted diluted EPS(4) 6.5p 7.0p -7%
--------- --------- -------
Basic EPS 4.4p 4.4p 0%
--------- --------- -------
Cash generation from operations GBP17.9m GBP23.1m -23%
--------- --------- -------
Interim dividend per share 2.42p 2.60p -7%
--------- --------- -------
-- The Group continues to benefit from very strong levels of
recurring revenues of 93%(1) of Group revenues
-- Reduction in revenue reflects lower non-recurring equipment
and consultancy sales, along with lower customer renewals. The
Board is confident that this short-term impact on revenue will be
reversed
-- Profitability percentile remains positive and stable with
adjusted EBITDA(2) and adjusted profit before tax(3) at 37.7% (H1
2021: 36.9%) and 17.5% (H1 2021: 17.3%) of revenue, respectively
with the absolute reductions of GBP1.2m and GBP0.7m, respectively a
function of the revenue trend
-- Strong cash generation from operations in the period of
GBP17.9m with a consistent cash conversion(6) (91%), after
recognising one-off items with a value of GBP4m in the prior
period
-- Period end net debt of GBP49.3m, comfortable at 1.2 times annualised EBITDA(5)
-- Successful refinancing with an increased GBP100m revolving
bank facility from a new group of four leading banks, underpinning
the Group's five-year growth strategy
OPERATIONAL HIGHLIGHTS
-- Launch of the new iomart brand well received by all
stakeholders, providing a core foundation for current and future
growth initiatives
-- Established a new Group product team and launched new
products targeted at both new and existing customers
o Successful Microsoft Azure campaign launched in September
which resulted in securing a multi-year, six figure annual revenue
managed Azure customer, alongside a well-qualified pipeline of
additional opportunities
o Secure Connectivity Services offering developed and sales
campaign launched in September, and developed a well-qualified
pipeline with first sales targeted within the current financial
year
-- Enhancements made to core operational and service-based
systems and tools, with a primary focus on improved levels of
service excellence
-- Ongoing investment in the Group's datacentre estate as
previously announced, to strengthen this valuable strategic and
operational capability
-- All electricity for our UK data centres is now sourced under
Renewable Energy Guarantees of Origin ("REGO") certified renewable
electricity
-- M&A - positive progress in evaluating targeted
opportunities to extend the Group's technology and product
capabilities, while enhancing revenue, profitability and EPS
OUTLOOK
-- High degree of confidence in achieving results in line with
the Board's expectations and executing against the Group's
five-year growth strategy
-- The launch of the enhanced set of product offering, coupled
with a clearly defined brand and targeted go to market capability
has provided for a positive sales environment to deliver future
growth
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
GBP0.5m lower amortisation of acquired intangible assets as the
amortisation periods expire on historic acquisitions.
Reece Donovan, CEO commented,
"We are energised by our refreshed strategy, new brand and clear
focus. The early customer wins from the new sales campaigns are
excellent signs that the strategy is on track and starting to
deliver tangible results. iomart's high level of recurring revenue
remains a considerable strength, providing good visibility for the
remainder of the year. Current trading is in line with the Board's
expectations for the full year.
"The journey to the cloud for many is long and complex and
iomart is well positioned to support existing and new customers on
the multiple paths open to them, ensuring we respond to their
specific business requirements and provide exceptional service and
reliability. It is the blend of our straightforward approach, owned
infrastructure assets, people and relationship focus, and agile
technology-agnostic solution model, along with extensive customer
base and more than 20 years' experience, that gives us confidence
that we will continue to participate successfully within the wider
growing Cloud sector."
(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 diluted 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 2021.
(6) Cash conversion is calculated as cash flow from operations
divided by adjusted EBITDA.
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, James Smith
Investec Bank PLC (Joint Broker) Tel: 020 7597 4000
Patrick Robb, Virginia Bull, Sebastian Lawrence
Alma PR Tel: 020 3405 0205
Caroline Forde, Hilary Buchanan, Joe Pederzolli
About iomart Group plc
iomart Group plc (AIM: IOM) is a cloud computing and IT managed
services business providing hybrid cloud infrastructure, network
connectivity, security, and digital workplace capability. Our
mission is simple: to make our customers unstoppable by enabling
them to connect, secure and scale anywhere, anytime. From our
portfolio of data centres we own and operate across the UK to
connected sites around the world, our 400-strong team can design
and deploy the right cloud solution for our customers.
For further information about the Group, please visit www.iomart.com
Chief Executive's Statement
Introduction
We have continued to make positive progress against the key
milestones announced in May, as part of the refreshed strategy to
build on our existing strong position in the private cloud space at
the same time as re-positioning our offering around the growing
hybrid cloud market. This includes the launch of a new iomart
brand, the release of new products and our first larger managed
Azure customer win. Our teams are firmly in execution mode and
following the launch of several new sales campaigns we can see
momentum building.
The results for the period are in line with our pre-close
statement, and while revenue shows a decline against prior periods,
our profit margins remain strong and we continue to benefit from a
large base of recurring revenue and high levels of cash generation.
These are strong foundations on which to build, and we are
confident the strategic progress being achieved will flow through
into future growth.
The successful refinancing of our revolving bank facility with
four new banks post period end underpins our five-year plan and
this ongoing support from top tier global financial institutions is
a clear endorsement of our strategy.
We were delighted to announce in July the appointment to the
Board of Andrew Taylor as a Non-Executive Director of the Company,
with effect from 1 August 2021. We described in our Final Results
announcement in June, our desire to appoint a fourth independent
Non-Executive Director to add additional sector skills to support
the execution of the Group's refreshed medium term strategic plan
and we are delighted to have secured an executive of Andrew's
experience and calibre. Andrew has over 25 years' experience in the
telecommunications industry, and has a demonstrable track record of
achievement in previous roles, both in the UK and internationally.
He is the CEO of Gamma Communications plc, a leading provider of
unified communication services to the business market in Western
Europe.
Strategy
At the start of the year we announced our vision to position
iomart for the next phase of its growth as a recognised leading
secure hybrid cloud business. We were bold by stating our
aspiration to become a GBP200m revenue business within five years.
Underpinning this was a roadmap with a focus on three main
activities:
-- New services and geographies - we will focus on four new
service areas - hybrid cloud, security, the future digital
workplace and connectivity;
-- Complementary acquisitions - to expand the customer base and to acquire new skillsets; and
-- Protect and expand the existing base of run rate revenue and
EBITDA which is underpinned by our existing core private cloud
infrastructure.
We are on track to achieve the key strategic milestones which we
laid out for delivery in FY22. For the first half of the year our
focus was on brand development, new product launches and
restructuring the organisation to drive "one iomart". These are
important building blocks of success and we have made good
progress.
Brand development
We delivered a successful launch of our new iomart brand in
early September, which has been well received by all stakeholders
and provides a strong foundation for ensuring our value proposition
and marketing collateral are impactful for both existing and
potential new customers, as well as a guide for our internal
operations and ethos. Our new strapline "welcome to
straightforward" encapsulates our mission to deliver a
customer-focused service which makes the complicated world of
secure hybrid cloud simple for our customers, gives them peace of
mind, and allows them to focus on what's important to them. Our aim
is to make our brand relatable and memorable in order to increase
familiarity in the market and, ultimately, drive inbound sales.
New product development
We have established a new product team and have redefined and
launched a number of new product initiatives. These are targeted at
both new customers and upselling and cross-selling to our existing
customers. They include specific campaigns around the growth areas
of Digital Workplace, Secure Connectivity and Managed Microsoft
Azure. Pipelines are being developed from each of these campaigns
and we are confident our refined approach will give a greater
success rate. Further product releases will be made over the coming
months.
We were delighted to secure our first six figure annual
recurring revenue customer for Managed Microsoft Azure following
our successful sales campaign. The customer's IT workload will be
deployed on Azure infrastructure on a managed basis over the next 4
years. A well-qualified pipeline of other sales opportunities is
building. We are now successfully working more closely with
Microsoft and anticipate this relationship continuing to
strengthen.
The Secure Connectivity Services proposition was fully developed
and rolled out in the period, with the marketing campaign live in
September with extremely positive customer feedback. We are
confident in customer wins in this area by the end of the financial
year.
Operations, processes and values
-- one iomart team: demand for talent is high and in an effort
to both retain and attract the best possible talent, we have
updated our benefits package, formalised flexible working options
and delivered a number of wellbeing, technical and management
training programmes across the business.
-- Core Systems: we have enhanced and introduced a new control
panel to streamline our customer interaction. This enhancement
allows us to automatically align customer requests to the right
team. We have reorganised the customer support teams behind this to
ensure the right people, with the right expertise, are available
from the start of any customer support event.
M&A
As we have successfully completed in the past, we plan to use
selective M&A to augment our organic growth. As well as
acquiring new customer bases operating in recurring revenue
business models we also plan to strengthen our technology and
product capabilities. During the period we have started to evaluate
potential targets and we are pleased with the positive progress
made so far in the identification of opportunities; providing
verification that the market remains fragmented. The timing of
M&A closure is hard to predict, and we will at all times
maintain our disciplined approach.
ESG
We have had a period of high activity in terms of our
commitments to our environmental, social and governance ("ESG")
programme in the period. The main highlights include:
-- Environmental: all of the electricity used in our UK data
centres is now sourced under Renewable Energy Guarantees of Origin
("REGO") certified renewable electricity. In early November, under
our Alliance agreement signed last year with Glasgow based Katrick
Technologies, we commissioned a passive cooling system at our
Glasgow data centre. Early test results for the new cooling system
indicate the potential for a significant reduction in electrical
power consumption.
-- Social: we have committed to two new initiatives in the
period - the first providing sponsorship for the 2022 cohort, in
conjunction with ScotlandIS, of Empowering Women in Leadership, and
the second to work with a UK charity, SmartSTEMS to create more
opportunities for children from underprivileged backgrounds.
-- Governance: under remit of our Audit Committee we are in the
process of appointing an outsourced internal audit resource to
further support our risk management framework and assurance
programme.
Market
With the insatiable growth in data requirements from across all
industries, the demand for the three core building blocks of
compute 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 reliability,
customer support, flexibility and technical knowledge. These
requirements increasingly come with greater security and compliance
needs. The Covid-19 pandemic and working from home has accelerated
a number of the drivers.
The concept of "Cloud" computing is now globally recognised. The
"public cloud" giants such as Amazon, Microsoft and Google have
vastly contributed to this general awareness and consequently, as
is well documented, have seen high growth globally as many
organisations look for Cloud infrastructure and capabilities. The
reality of the situation is that a vast majority of the world's IT
infrastructure is complex and untidy in nature which means hybrid
cloud models will remain a key market feature for many use cases.
Even if businesses want to use Public Cloud infrastructure fully,
then many lack the detailed know-how, skills and resources required
to manage all the elements. iomart is well positioned to meet this
demand given a long established capability in designing and running
private clouds and supporting on premise solutions along with our
plans to continue to complement this with skills and capabilities
for public cloud provisioning and management.
No two organisations are the same, and therefore the cloud
solution mix in the future will be unique and reflect the needs of
that organisation at that time, especially for those organisations
that are running older type applications that are not public cloud
compatible. Many customers are looking for a single point of
accountability for all their cloud needs and iomart is well
positioned to provide this service going forward particularly for
medium to large enterprises.
Operational Review
Cloud Services
Cloud Services revenues decreased by GBP4.1m (8%) to GBP46.1m
(H1 2021: GBP50.3m). Non-recurring activities represented a
disproportionate impact with a GBP2.1m drop in revenue from lower
equipment reselling and also a large scale consultancy project from
the prior year coming to an end. Cloud Services EBITDA (before
share based payments, acquisition costs and central group
overheads) was GBP18.9m being 40.9% of cloud services revenue (H1
2021: GBP20.2m (40.3% of cloud services revenue)). The underlying
profitability has been stable in the period with the reduction in
absolute EBITDA reflecting the revenue trend in the period.
The following is the disaggregation of Cloud Services revenues
of GBP46.1m (H1 2021: GBP50.3m):
Year
6 months 6 months to 31
to 30 September to 30 September March
Disaggregation of Cloud Services 2021 2020 2021
revenue GBP'000 GBP'000 GBP'000
---------------------------------- ------------------ ----------------- ----------
Cloud managed services 28,037 29,150 57,961
Self-managed infrastructure 14,408 15,354 30,311
Non-recurring revenue 3,703 5,762 11,672
46,148 50,266 99,944
---------------------------------- ------------------ ----------------- ----------
Cloud managed services (recurring revenue)
Cloud managed services includes the provision of fully managed,
complex, bespoke and resilient solutions involving private, public
and hybrid cloud infrastructure.
Over the long-term we anticipate this will be the highest growth
area for iomart, supported by the market drivers described above.
This is the part of the business which has launched the three
recent sales campaigns: Digital Workplace, Secure Connectivity and
Managed Microsoft Azure, alongside our more traditional offerings,
as we feel these are the solutions most in need across businesses
that we are well placed to offer.
We experienced new customer wins and saw existing customers
increasing their revenues with us, as they scale their own
businesses and seek support from our growing service offering.
Offsetting this was lower renewals from certain customers, with
higher immediate revenue impact, which in combination resulted in
GBP1.1m (4%) lower revenue. We are confident that the strategic
actions already delivered and near term plans outlined above will
ensure that this short-term impact on revenue will be reversed.
Self-managed infrastructure (recurring revenue)
In addition to the above, we have a customer base of over 6,500
customers who simply wish to source compute power and connectivity
via mainly the provision of dedicated servers and manage these
directly. Our own regional data centre estate and fibre network
positions us well to offer such infrastructure as a service. In the
first half of this financial year the self-managed infrastructure
revenue reduction was GBP0.9m (6%) or GBP0.5m (4%) in comparison to
the first half and second half of the last financial year,
respectively, largely attributable to a reduction in number of our
long tail of smaller customers. We will continue to allocate
resources to ensure we provide this customer base with resilient,
cost effective and increasingly automated solutions.
Our UK owned infrastructure is an important part of the delivery
of our recurring revenue services, an important differentiator in
the market and allows more of the value add to be retained by
iomart. In the period we concluded investments in a number of
projects that overlapped the prior year end, including the
replacement of the cooling system in our second largest data centre
in London and investment into next generation core routing
technology which provides 100GB capacity on our network, with the
ability to scale to 400GB. There were no larger projects commenced
in the first half of the year but we do expect to continue our
regular planned upgrades and enhancements driven at ensuring both
market leading resilience but also enhancing operational efficiency
and reducing the environmental impact of our operations. We expect
to commence the upgrade to our uninterruptible power systems
("UPS") in our core sites during the second half of the year, which
will be steadily rolled out over the next two years as part of our
standard infrastructure spend.
Non-recurring revenue
Non-recurring revenue of GBP3.7m (H1 2021: GBP5.8m) relates
primarily to on premise equipment and software reselling via our
Cristie Data brand plus consultancy projects. By their nature this
activity is lower margin but we believe it to be relevant to our
ability to offer support to our existing customer base and new
customer wins. It is often these non-recurring activities that
provide an interesting initial introduction to the wider iomart
Group and evolve customers into a higher level of recurring
services. Of the lower revenue contribution in the first half of
this year GBP1.2m comes from lower consultancy income as a large
consultancy project came to an end in December 2020 and was not
repeated. In addition, GBP0.9m can be attributed to continued
slower decision making on hardware refresh than normal, longer lead
times for equipment components, and to some degree because we saw
some leavers in our Cristie Data sales force at the start of the
year which only returned to full strength in the final month of the
period.
Easyspace
The global domain name and mass market hosting sector continues
to grow, supported by the increasing importance of an internet
presence and ecommerce for all areas of the economy, including the
small and micro business community represented within our Easyspace
division. This sector is increasingly dominated by a smaller number
of large global operators and we recognised a long time ago that
the marketing spends required to compete for new business in this
specific area was not the best use of iomart's resources. However,
we do ensure our customer base of around 60,000 customers are well
served with a good range of products and importantly a high level
of customer service ensuring high renewal rates and customer
satisfaction. The Easyspace segment has performed slightly above
expectations during the period, delivering revenues and EBITDA
(before share based payments, acquisition costs and central group
overheads) of GBP5.8m (H1 2021: GBP6.0m) and GBP2.6m (H1 2021:
GBP2.9m), respectively.
Financial Performance
Revenue
Overall revenue from our operations reduced by 8% to GBP51.9m
(H1 2021: GBP56.3m). We saw a greater share of recurring revenue at
93% (H1 2021: 90%) compared to prior periods as non-recurring
activity levels reduced by a disproportionate level. We remain
focussed on retaining our recurring revenue business model with the
combination of multi-year contracts and payments in advance
providing us with good revenue visibility. Our Cloud Services
segment revenues reduced by 8% to GBP46.1m (H1 2021: GBP50.3m). Our
Easyspace segment has performed slightly better than expectations
over the period, with revenues for the first half only reducing by
GBP0.2m to GBP5.8m (H1 2021: GBP6.0m).
Gross Profit
The gross profit in the period decreased by 9% to GBP31.3m (H1
2021: GBP34.4m). As a result, this ensured gross profit as a
percentage of revenue remained stable at 60% (H1 2021: 61%) of
revenue. Our vendor relationships have remained stable in the
period and we have not seen any material individual price change in
any of the components of the purchased cost base in the last six
months.
Adjusted EBITDA
The Group's adjusted EBITDA reduced by 6% to GBP19.6m (H1 2021:
GBP20.8m) which in EBITDA margin terms translates to a stable
performance of 37.7% (H1 2021: 36.9%). Administration expenses
(before depreciation, amortisation, share based payment charges and
acquisition costs) of GBP11.8m is GBP1.9m lower than the previous
period comparative. An element of this reflects the secured synergy
savings achieved from the two bolt on acquisitions in February and
March 2020 and some relates to the specific timings of staff
adjustments in our team as, like the wider sector, we saw a period
of higher staff attrition and recruitment activity at the start of
the year.
Cloud Services saw a 7% reduction in its adjusted EBITDA to
GBP18.9m (H1 2021: GBP20.2m). In percentage terms the Cloud
Services margin increased to 40.9% (H1 2021: 40.3%). The adjusted
EBITDA of Easyspace reduced in line with the small drop in revenue
to GBP2.6m (H1 2021: GBP2.9m). In percentage terms the margin
decreased to 45.8% (H1 2021: 47.8%).
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 decrease to
GBP1.9m (H1 2021: GBP2.3m).
Adjusted profit before tax
Depreciation charges of GBP8.2m (H1 2021: GBP8.5m) have
decreased slightly in absolute terms 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 decreased to GBP1.3m (H1 2021:
GBP1.5m) simply due to the specific historic timing of investments
made.
Net finance costs have reduced slightly to GBP0.9m (H1 2021:
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 7% to GBP9.1m (H1 2021: GBP9.8m)
representing an adjusted profit before tax margin of 17.5% (H1
2021: 17.3%).
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:
Year
6 months 6 months to 31
to 30 September to 30 September March
Reconciliation of adjusted profit 2021 2020 2021
before tax to profit before tax GBP'000 GBP'000 GBP'000
Adjusted profit before tax 9,104 9,759 19,628
Less: Share based payments (620) (814) (1,247)
Less: Amortisation of acquired intangible
assets (2,312) (2,835) (5,457)
Less: Acquisition costs (136) (383) (493)
Add: Gain on revaluation of contingent
consideration - 290 33
Profit before tax 6,036 6,017 12,464
-------------------------------------------- ------------------ ----------------- ----------
The larger adjusting items in the current period are:
-- share based payment charges in the period which decreased
slightly to GBP0.6m (H1 2021: GBP0.8m) as a result of the timing of
share options lapsing; and
-- charges for the amortisation of acquired intangible assets of
GBP2.3m (H1 2021: GBP2.8m) which have decreased by GBP0.5m
reflecting the expiry of the amortisation period from older
historic acquisitions.
After deducting the charges for share based payments, the
amortisation of acquired intangible assets and acquisition costs,
the reported profit before tax is GBP6.0m (H1 2021: GBP6.0m).
Taxation and profit for the period
There is a tax charge in the period of GBP1.2m (H1 2021:
GBP1.2m), which comprises a current taxation charge of GBP1.8m (H1
2021: GBP1.9m), and a deferred taxation credit of GBP0.6m (H1 2021:
GBP0.7m). The headline effective tax rate has remained stable at
20%. This results in a profit for the period from total operations
of GBP4.9m (H1 2021: GBP4.8m).
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, was 6.5p (H1
2021: 7.0p).
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 2021: 4.4p). 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
GBP17.9m (H1 2021: GBP23.1m) with an EBITDA conversion to cash
ratio in the period of 91% (H1 2021: 111%). This is yet another
period of consistently high operating cash conversion. The higher
headline conversion ratio in prior period was augmented by two
one-off items: receipt of GBP2.3m cash deposit returned by our
landlord as part of the negotiation of the extension of the London
data centre lease plus a delayed Q1 VAT payment of GBP1.7m.
Normalising for these two items takes the EBITDA conversion to cash
ratio to 92% in the prior period. Cash payments for corporation
taxation in the period fell to GBP1.4m (H1 2021: GBP1.9m),
resulting in net cash flow from operating activities in the period
of GBP16.4m (H1 2021: GBP21.3m).
Expenditure on investing activities of GBP5.3m (H1 2021:
GBP8.8m) was incurred in the period. GBP4.7m (H1 2021: GBP7.0m) was
incurred on the acquisition of property, plant and equipment,
principally to provide specific services to our customers. We
incurred GBP0.6m (H1 2021: GBP0.6m) in respect of development costs
during the period. There were no payments made concerning M&A
activity, with all prior deferred or earn-out consideration sums
settled before 31 March 2021. In the prior period, GBP1.2m was paid
out for contingent consideration due on the LDEX acquisition made
in December 2018.
During the first half of the year, net cash used in financing
activities was GBP7.9m (H1 2021: GBP7.9m). Any shares issued in the
current period under share options were at nominal value. In the
current period we made no drawdowns under our bank facility (H1
2021: GBP1.2m) and we made no repayments (H1 2021: GBP1.2m) meaning
no movement in the revolver loan drawn balance in the period. In
the current period we repaid GBP2.5m of lease liabilities (H1 2021:
GBP2.9m). We paid GBP0.5m (H1 2021: GBP0.6m) of finance charges and
made a dividend payment of GBP4.9m (H1 2021: GBP4.3m). As a result,
cash and cash equivalent balances at the end of the period were
GBP26.3m (H1 2021: GBP20.0m).
Net Debt
The net debt position of the Group at the end of the period was
GBP49.3m compared to GBP54.6m at 31 March 2021 with the decrease
being a combination of the increase in the closing cash balance to
GBP26.3m (31 March 2021: GBP23.0m) and a decrease in the lease
liability to GBP22.8m (31 March 2021: GBP24.9m). Our multiple of
the last 12 months of adjusted EBITDA to net debt is 1.2 times
which remains a comfortable level of leverage. The analysis of the
net debt is shown below:
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Bank revolver loan 52,791 52,791 52,791
Lease liabilities 22,792 25,329 24,867
Less: cash and cash equivalents (26,273) (20,055) (23,038)
Net Debt 49,310 58,065 54,620
---------------------------------- -------------- -------------- ----------
Subsequent to the period end, on 2 December 2021, we
successfully refinanced and increased the Group's existing single
bank Revolving Credit Facility of GBP80m that was due to mature on
30 September 2022. The new GBP100m Revolving Credit Facility
("RCF") was provided by a new four bank group consisting of HSBC,
Royal Bank of Scotland, Bank of Ireland and Clydesdale Bank. The
new facility has an initial maturity date of 30 June 2025, with a
12-month extension option and benefits from a GBP50m Accordion
Facility. The RCF has a borrowing cost at the Group's current
leverage levels of 180 basis points over SONIA, compared to 150
basis points over LIBOR on the prior facility. An arrangement fee
will be payable upfront in addition to a commitment fee on the
undrawn portion of the new RCF on equivalent terms to the previous
facility. The RCF and the Accordion Facility (if exercised) provide
the Group with additional liquidity which will be used for general
business purposes and to fund investments, in accordance with the
Group's five-year strategic plan.
Dividend
Last year we updated our dividend policy to a maximum pay-out of
50% of adjusted diluted earnings per share. Given the recurring
nature of the Group, the level of operating cash which we have
delivered and low level of indebtedness within the Group we have
applied the maximum pay-out ratio in our assessment of the
appropriate level of interim dividend to be made and we will pay an
interim dividend of 2.42p per share (H1 2021: 2.60p) on 28 January
2022 to shareholders on the register on 7 January 2022, with an
ex-dividend date of 6 January 2022. This dividend represents a
pay-out ratio of 37% (H1 2021: 37%) of the adjusted diluted
earnings per share for the interim period.
Current trading and outlook
As a business we are energised by our refreshed strategy, new
brand and clear focus. The early customer wins from the new sales
campaigns are excellent signs that the strategy is on track and
starting to deliver tangible results. iomart's high level of
recurring revenue remains a considerable strength, providing good
visibility for the remainder of the year. Current trading is in
line with the Board's expectations for the full year.
The journey to the cloud for many is long and complex and iomart
is well positioned to support existing and new customers on the
multiple paths open to them, ensuring we respond to their specific
business requirements and provide exceptional service and
reliability. It is the blend of our straightforward approach, owned
infrastructure assets, people and relationship focus, and agile
technology-agnostic solution model, along with extensive customer
base and more than 20 years' experience, that gives us confidence
that we will continue to participate successfully within the wider
growing Cloud sector.
Reece Donovan
Chief Executive Officer
7 December 2021
Consolidated Interim Statement of Comprehensive Income
Six months ended 30 September 2021
Unaudited Unaudited Audited
6 months 6 months Year to
to 30 September to 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
------------------------------------------- ----------------- ----------------- ---------------
Revenue 51,930 56,311 111,883
Cost of sales (20,591) (21,897) (44,241)
------------------------------------------- ----------------- ----------------- ---------------
Gross profit 31,339 34,414 67,642
Administrative expenses (24,401) (27,624) (53,230)
Operating profit 6,938 6,790 14,412
Analysed as:
Earnings before interest, tax,
depreciation, amortisation, acquisition
costs and share based payments 19,568 20,788 41,408
Share based payments (620) (814) (1,247)
Acquisition costs 4 (136) (383) (493)
Depreciation 8 (8,227) (8,464) (16,882)
Amortisation - acquired intangible
assets 7 (2,312) (2,835) (5,457)
Amortisation - other intangible
assets 7 (1,335) (1,502) (2,917)
------------------------------------------- ----------------- ----------------- ---------------
Gain on revaluation of contingent
consideration - 290 33
Finance income - 13 19
Finance costs 5 (902) (1,076) (2,000)
------------------------------------------- ----------------- ----------------- ---------------
Profit before taxation 6,036 6,017 12,464
Taxation 6 (1,224) (1,207) (2,260)
------------------------------------------- ----------------- ----------------- ---------------
Profit for the period/year 4,812 4,810 10,204
Other comprehensive income
Currency translation differences 59 (5) (94)
------------------------------------------- ----------------- ----------------- ---------------
Other comprehensive income/(expense)
for the period/year 59 (5) (94)
------------------------------------------- ----------------- ----------------- ---------------
Total comprehensive income for
the period/year attributable to
equity holders of the parent 4,871 4,805 10,110
Basic and diluted earnings per share
Basic earnings per share 3 4.4 p 4.4 p 9.3 p
Diluted earnings per share 3 4.3 p 4.3 p 9.1 p
------------------------------------------- ----------------- ----------------- ---------------
Consolidated Interim Statement of Financial Position
As at 30 September 2021
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
--------------------------------------- ----- -------------- ----------------------- ----------
ASSETS
Non-current assets
Intangible assets - goodwill 7 86,479 86,479 86,479
Intangible assets - other 7 15,052 20,924 18,101
Trade and other receivables 194 - 502
Property, plant and equipment 8 73,494 76,323 77,012
Deferred tax asset 721 - 138
175,940 183,726 182,232
Current assets
Cash and cash equivalents 26,273 20,055 23,038
Trade and other receivables 23,161 22,914 22,979
Current income tax asset - - 235
49,434 42,969 46,252
Total assets 225,374 226,695 228,484
LIABILITIES
Non-current liabilities
Trade and other payables (1,882) (2,479) (2,662)
Non-current borrowings 10 (19,420) (75,058) (74,221)
Provisions for other liabilities
and charges (2,335) (2,000) (2,097)
Deferred tax liability - (398) -
--------------------------------------- ----- -------------- ----------------------- ----------
(23,637) (79,935) (78,980)
Current liabilities
Contingent consideration due on - (989) -
acquisitions
Trade and other payables (28,392) (29,350) (29,495)
Current income tax liabilities (51) (33) -
Current borrowings 10 (56,163) (3,062) (3,437)
(84,606) (33,434) (32,932)
Total liabilities (108,243) (113,369) (111,912)
Net assets 117,131 113,326 116,572
--------------------------------------- ----- -------------- ----------------------- ----------
EQUITY
Share capital 1,097 1,092 1,097
Own shares (70) (70) (70)
Capital redemption reserve 1,200 1,200 1,200
Share premium 22,495 22,147 22,495
Merger reserve 4,983 4,983 4,983
Foreign currency translation reserve 15 45 (44)
Retained earnings 87,411 83,929 86,911
--------------------------------------- ----- -------------- ----------------------- ----------
Total equity 117,131 113,326 116,572
--------------------------------------- ----- -------------- ----------------------- ----------
Consolidated Interim Statement of Cash Flows
Six months ended 30 September 2021
Unaudited Unaudited Audited
6 months 6 months Year to
to 30 September to 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------------- ----------------- ----------
Profit before tax 6,036 6,017 12,464
Gain on revaluation of contingent
consideration - (290) (33)
Finance costs - net 902 1,063 1,981
Depreciation 8,227 8,464 16,882
Amortisation 3,647 4,337 8,374
Share based payments 620 814 1,247
Movement in trade receivables 126 3,083 2,516
Movement in trade payables (1,710) (366) 268
Cash flow from operations 17,848 23,122 43,699
Taxation paid (1,434) (1,850) (3,643)
----------------- ----------------- ----------
Net cash flow from operating activities 16,414 21,272 40,056
Cash flow from investing activities
Purchase of property, plant and equipment (4,673) (7,021) (15,192)
Proceeds received from disposal of
property, plant and equipment - - 260
Development costs (601) (614) (1,306)
Purchase of intangible assets (1) (4) (561)
Proceeds received from disposal of
intangible assets - - 73
Contingent consideration paid - (1,201) (2,447)
Finance income received - 11 19
Net cash used in investing activities (5,275) (8,829) (19,154)
Cash flow from financing activities
Issue of shares - - 353
Drawdown of bank loans - 1,150 1,150
Repayment of bank loans - (1,150) (1,150)
Repayment of lease liabilities (2,466) (2,946) (5,435)
Finance costs paid (506) (652) (1,147)
Dividends paid (4,932) (4,287) (7,132)
----------------- ----------------- ----------
Net cash used in financing activities (7,904) (7,885) (13,361)
Net increase in cash and cash equivalents 3,235 4,558 7,541
Cash and cash equivalents at the beginning
of the period 23,038 15,497 15,497
----------------- ----------------- ----------
Cash and cash equivalents at the end
of the period 26,273 20,055 23,038
================= ================= ==========
Consolidated Interim Statement of Changes in Equity
Six months ended 30 September 2021
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 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
(unaudited) 1,092 (70) 1,200 22,147 4,983 45 83,929 113,326
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Profit in the
period - - - - - - 5,394 5,394
Currency
translation
differences - - - - - (89) - (89)
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Total
comprehensive
income - - - - - (89) 5,394 5,305
Dividends - - - - - - (2,845) (2,845)
Share based
payments - - - - - - 433 433
Issue of share
capital 5 - - 348 - - - 353
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Total
transactions
with owners 5 - - 348 - - (2,412) (2,059)
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Balance at 31
March 2021
(audited) 1,097 (70) 1,200 22,495 4,983 (44) 86,911 116,572
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Profit in the
period - - - - - - 4,812 4,812
Currency
translation
differences - - - - - 59 - 59
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Total
comprehensive
income - - - - - 59 4,812 4,871
Dividends - - - - - - (4,932) (4,932)
Share based
payments - - - - - - 620 620
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Total
transactions
with owners - - - - - - (4,312) (4,312)
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Balance at 30
September
2021
(unaudited) 1,097 (70) 1,200 22,495 4,983 15 87,411 117,131
---------------- ---------- --------- ------------- ---------- ---------- ------------- ----------- --------
Notes to the Half Yearly Financial Information
Six months ended 30 September 2021
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 2021 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 2022. The Group financial statements for the year ended 31
March 2021 were prepared in accordance with the international
accounting standards in conformity with the requirements of the
Companies Act 2006. 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 2021. 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 9.
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 remain a considerable strength, providing high
levels of forecast visible revenue across a diversified customer
base.
At the period end, 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.
On 2 December 2021 the Group replaced the existing single bank
Revolving Credit Facility of GBP80 million, with a new GBP100m
Revolving Credit Facility. The Facility is provided by a new four
bank group consisting of HSBC, Royal Bank of Scotland, Bank of
Ireland and Clydesdale Bank. The new facility has an initial
maturity date of 30 June 2025, with a 12-month extension option and
benefits from a GBP50m Accordion Facility in addition to the
GBP100m committed facility.
At the end of the half year, the Group had net debt of GBP49.3m
(H1 2021: GBP58.1m). The Board is comfortable with the net debt
position given the strong cash generation and considerable
financial resources of the Group, 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
Year
6 months to 6 months to 31
30 September to 30 September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
---------------- -------------- ----------------- --------
Easyspace 5,782 6,045 11,939
Cloud Services 46,148 50,266 99,944
-------------- ----------------- --------
51,930 56,311 111,883
----------------- -------------- ----------------- --------
Cloud Services revenue during the period/year can be further
disaggregated as follows:
Year
6 months to 6 months to 31
30 September to 30 September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
----------------------------- -------------- ----------------- --------
Cloud managed
services 28,037 29,150 57,961
Self-managed infrastructure 14,408 15,354 30,311
Non-recurring
revenue 3,703 5,762 11,672
-------------- ----------------- --------
46,148 50,266 99,944
------------------------------ -------------- ----------------- --------
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
Year
6 months to 6 months to 31
30 September to 30 September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
------------------- -------------- ----------------- --------
United Kingdom 44,202 47,882 97,113
Rest of the World 7,728 8,429 14,770
-------------- ----------------- --------
51,930 56,311 111,883
-------------------- -------------- ----------------- --------
Recurring and Non-Recurring Revenue
The amount of recurring and non-recurring revenue recognised
during the year can be summarised as follows:
Year
6 months to 6 months to 31
30 September to 30 September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
------------------ -------------- ----------------- --------
Recurring - over
time 48,227 50,549 100,211
Non-recurring
- point in time 3,703 5,762 11,672
-------------- ----------------- --------
51,930 56,311 111,883
------------------- -------------- ----------------- --------
Profit by Operating Segment
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31 March 2021
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 2,647 (453) 2,194 2,888 (598) 2,290 5,343 (1,165) 4,178
Cloud Services 18,854 (11,421) 7,433 20,247 (12,203) 8,044 40,482 (24,091) 16,391
Group
overheads (1,933) - (1,933) (2,347) - (2,347) (4,417) - (4,417)
Share based
payments - (620) (620) - (814) (814) - (1,247) (1,247)
Acquisition
costs - (136) (136) - (383) (383) - (493) (493)
--------------- ------------- -------------- --------------- ------------- -------------- --------------- ------------- -------------- ---------------
Profit before
tax and
interest 19,568 (12,630) 6,938 20,788 (13,998) 6,790 41,408 (26,996) 14,412
---------------
Gain on
revaluation
of contingent
consideration - 290 33
Group interest
and tax (2,126) (2,270) (4,241)
--------------- ------------- -------------- --------------- ------------- -------------- --------------- ------------- -------------- ---------------
Profit for
the
period/year 4,812 4,810 10,204
--------------- ------------- -------------- --------------- ------------- -------------- --------------- ------------- -------------- ---------------
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:
6 months 6 months to 30 Year to
to 30 September September 2020 31 March
2021 GBP'000 2021
GBP'000 GBP'000
----------------------------------------------- ----------------- --------------- ----------
Profit for the period/year and basic
earnings attributed to ordinary shareholders 4,812 4,810 10,204
No No No
Weighted average number of ordinary shares: 000 000 000
Called up, allotted and fully paid at
start of period 109,671 109,160 109,160
Shares held by Employee Benefit Trust (141) (141) (141)
Issued share capital in the period 29 50 230
Weighted average number of ordinary shares
- basic 109,559 109,069 109,249
Dilutive impact of share options 3,086 3,538 2,416
Weighted average number of ordinary shares
- diluted 112,645 112,607 111,665
------------------------------------------------- ----------------- --------------- ------------
Basic earnings per share 4.4 p 4.4 p 9.3 p
Diluted earnings per share 4.3 p 4.3 p 9.1 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 September to 30 to 31
2021 September March
GBP'000 2020 2021
GBP'000 GBP'000
------------ ------------------------------------------------------------ ----------- ---------
Profit for the period/year and basic
earnings attributed to ordinary shareholders 4,812 4,810 10,204
- Amortisation of acquired intangible
assets 2,312 2,835 5,457
- Acquisition costs 136 383 493
- Share based payments 620 814 1,247
- Gain on revaluation of contingent consideration - (290) (33)
- Tax impact of adjusted items (557) (693) (1,341)
------------------------------------------------------------------ ------- ----------- -----------
Adjusted profit for the period/year and
adjusted basic earnings attributed to
ordinary shareholders 7,323 7,859 16,027
14.7
Adjusted basic earnings per share 6.7 p 7.2 p p
Adjusted diluted earnings per share 6.5 p 7.0 p 14.4 p
------------------------------------------------------------------ ------- ----------- -----------
4. Acquisition costs
Year
6 months to 6 months to 31
30 September to 30 September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
--------------------------------------- -------------- ----------------- --------
Professional fees - - (44)
Non-recurring acquisition integration
costs (136) (383) (449)
-------------- ----------------- --------
(136) (383) (493)
---------------------------------------- -------------- ----------------- --------
5. Finance costs
Year
6 months to 6 months to 31
30 September to 30 September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
---------------- -------------- ----------------- --------
Bank loans (526) (681) (1,190)
Lease finance
costs (332) (361) (732)
Other interest
charges (44) (34) (78)
-------------- ----------------- --------
(902) (1,076) (2,000)
----------------- -------------- ----------------- --------
6. Taxation
6 months 6 months Year to
to 30 September to 30 September 31
2021 2020 March
GBP'000 GBP'000 2021
GBP'000
-------------------------------------------- ----------------- ----------------- ---------
Corporation Tax:
Tax charge for the period/year (1,802) (1,955) (3,448)
Adjustment relating to prior periods - - (100)
--------------------------------------------- ----------------- ----------------- ---------
Total current taxation charge (1,802) (1,955) (3,548)
Deferred Tax:
--------------------------------------------- ----------------- ----------------- ---------
Origination and reversal of temporary
differences 379 718 1,266
Adjustment relating to prior periods - - 18
Effect of different statutory tax
rates of overseas jurisdictions 20 30 4
Effect of changes in tax rates 179 - -
--------------------------------------------- ----------------- ----------------- ---------
Total deferred taxation credit 578 748 1,288
Total taxation charge for the period/year (1,224) (1,207) (2,260)
--------------------------------------------- ----------------- ----------------- ---------
Deferred tax assets and liabilities at 30 September 2021 have
been calculated based on the rate enacted at the balance sheet date
of 25% (2020: 19%).
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 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
Additions in the
period - - 692 557 - - 1,249
Disposals - (73) - - - - (73)
Currency translation
differences - (49) - (38) - - (87)
At 31 March 2021 86,479 57,263 11,904 10,827 86 336 166,895
Additions in the
period - - 601 1 - - 602
Currency translation
differences - 18 - 13 - - 31
At 30 September
2021 86,479 57,281 12,505 10,841 86 336 167,528
------------------------- --------- ---------------- ------------ --------- ------------ ----------- ----------
Accumulated
amortisation:
At 1 April 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)
Charge for the
period - (2,622) (695) (708) (3) (9) (4,037)
Disposals - 13 - - - - 13
Currency translation
differences - 53 - 59 - - 112
At 31 March 2021 - (45,316) (9,819) (6,829) (62) (289) (62,315)
Charge for the
period - (2,312) (667) (660) (4) (4) (3,647)
Currency translation
differences - (18) - (17) - - (35)
At 30 September
2021 - (47,646) (10,486) (7,506) (66) (293) (65,997)
------------------------- --------- ---------------- ------------ --------- ------------ ----------- ----------
Carrying amount:
At 30 September
2021 86,479 9,635 2,019 3,335 20 43 101,531
------------------------- --------- ---------------- ------------ --------- ------------ ----------- ----------
At 31 March 2021 86,479 11,947 2,085 3,998 24 47 104,580
At 30 September
2020 86,479 14,625 2,088 4,128 27 56 107,403
------------------------- --------- ---------------- ------------ --------- ------------ ----------- ----------
Note 11 provides the movements in the period relating to IFRS 16
right-of-use assets included in the above table.
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 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
Additions in
the period - 1,323 1,684 6,044 14 - 9,065
Disposals in
the period (179) - - 36 - - (143)
Currency
translation
differences - (68) - 250 - - 182
At 31 March 2021 8,731 38,694 28,079 108,223 2,811 23 186,561
Additions in
the period - 307 1,321 3,250 37 - 4,915
Disposals in
the period - (201) - (48) (13) - (262)
Currency
translation
differences - 48 - 119 - - 167
At 30 September
2021 8,731 38,848 29,400 111,544 2,835 23 191,381
-------------------- ---------- ------------------- ----------- ----------- ----------- ---------- ----------
Accumulated
depreciation:
At 1 April 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)
Charge for the
period (132) (2,239) (1,054) (4,882) (107) (4) (8,418)
Disposals in
the period 25 - - (36) - - (11)
Currency
translation
differences - (32) - 46 - - 14
At 31 March 2021 (937) (11,675) (17,223) (77,547) (2,150) (17) (109,549)
Charge for the
period (128) (2,218) (616) (5,160) (101) (4) (8,227)
Disposals in
the period - - - 15 - - 15
Currency
translation
differences - (28) - (98) - - (126)
At 30 September
2021 (1,065) (13,921) (17,839) (82,790) (2,251) (21) (117,887)
-------------------- ---------- ------------------- ----------- ----------- ----------- ---------- ----------
Carrying amount:
At 30 September
2021 7,666 24,927 11,561 28,754 584 2 73,494
-------------------- ---------- ------------------- ----------- ----------- ----------- ---------- ----------
At 31 March 2021 7,794 27,019 10,856 30,676 661 6 77,012
At 30 September
2020 8,080 28,035 10,226 29,218 754 10 76,323
-------------------- ---------- ------------------- ----------- ----------- ----------- ---------- ----------
Note 11 provides the movements in the period relating to IFRS 16
right-of-use assets included in the above table.
9 . Analysis of change in net cash/(debt)
Cash and
cash equivalents Bank Total net
GBP'000 loans Lease liabilities debt
GBP'000 GBP'000 GBP'000
---------------------------------- ------------------ --------- ----------------- ---------
At 1 April 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 outflow 4,558 - - 4,558
Lease liabilities cash outflow - - 2,640 2,640
----------------------------------- ------------------ --------- ----------------- ---------
At 30 September 2020 20,055 (52,791) (25,329) (58,065)
Additions to lease liabilities - - (1,061) (1,061)
Currency translation difference - - 169 169
Cash and cash equivalents
cash inflow 2,983 - - 2,983
Lease liabilities cash outflow - - 1,354 1,354
----------------------------------- ------------------ --------- ----------------- ---------
At 31 March 2021 23,038 (52,791) (24,867) (54,620)
Additions to lease liabilities - - (33) (33)
Disposal of lease liabilities - - 179 179
Currency translation - - (22) (22)
Cash and cash equivalents
cash inflow 3,235 - - 3,235
Lease liabilities cash outflow - - 1,951 1,951
At 30 September 2021 26,273 (52,791) (22,792) (49,310)
----------------------------------- ------------------ --------- ----------------- ---------
10. Borrowings
30 30 31
September September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
------------------------------- ---------- ---------- --------
Current:
Lease liabilities (note 11) (3,372) (3,062) (3,437)
Bank loans (52,791) - -
Total current borrowings (56,163) (3,062) (3,437)
Non-current:
Lease liabilities (note 11) (19,420) (22,267) (21,430)
Bank loans - (52,791) (52,791)
Total non-current borrowings (19,420) (75,058) (74,221)
Total borrowings (75,583) (78,120) (77,658)
--------------------------------- ---------- ---------- --------
At 30 September 2021, 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.
On 2 December 2021 the Group replaced the existing single bank
revolving credit facility of GBP80 million, with a new GBP100m
revolving credit facility. The Facility is provided by a new four
bank group consisting of HSBC, Royal Bank of Scotland, Bank of
Ireland and Clydesdale Bank. The new facility has an initial
maturity date of 30 June 2025, with a 12-month extension option and
benefits from a GBP50m Accordion Facility in addition to the
GBP100m committed facility.
As at the balance sheet date, the Group had a committed
revolving credit facility in place and were engaged in refinancing
discussions with various banks. Given the level of interest from
lenders, there was no indication at 30 September 2021 that the
refinancing would not be successful, which was subsequently
confirmed with the signing of a new increased committed revolving
credit facility post period end. However, as the existing facility
in place at the balance sheet date had 365 days left to expiry, the
total amount of GBP52.8m at 30 September 2021 has been classified
as current in the balance sheet.
Details of the Group's lease liabilities are included in note
11.
11. 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 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
Additions 417 644 - 1,061
Currency translation differences (162) - - (162)
Depreciation charge (1,099) (756) - (1,855)
Amortisation charge - - (142) (142)
--------------------------------------- ---------- ----------- --------- ---------
Net book value at 31 March 2021 18,859 4,222 950 24,031
Additions - 33 - 33
Disposals - (179) - (179)
Depreciation charge (1,024) (703) - (1,727)
Amortisation charge - - (143) (143)
Net book value at 30 September 2021 17,835 3,373 807 22,015
--------------------------------------- ---------- ----------- --------- ---------
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 2021
(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 2021 (note 7).
Lease liabilities
Lease liabilities for right-of-use assets are presented in the
balance sheet within borrowings as follows:
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Lease liabilities (current) (note
10) (3,372) (3,062) (3,437)
Lease liabilities (non-current) (note
10) (19,420) (22,267) (21,430)
--------------------------------------- --------------- --------------- -----------
Total lease liabilities (22,792) (25,329) (24,867)
--------------------------------------- --------------- --------------- -----------
The maturity analysis of undiscounted lease liabilities is shown
in the table below:
30 September 30 September 31 March
2021 2020 2021
Amounts payable under leases: GBP'000 GBP'000 GBP'000
Within one year (3,945) (3,705) (4,215)
Between two to five years (10,166) (13,176) (11,552)
After more than five years (12,193) (12,569) (13,068)
------------------------------- --------------- --------------- -----------
(26,304) (29,450) (28,835)
Add: unearned interest 3,512 4,121 3,968
------------------------------- --------------- --------------- -----------
Total lease liabilities (22,792) (25,329) (24,867)
12. Availability of half yearly reports
The Company's Interim Report for the six months ended 30
September 2021 will shortly be available to view on the Company's
website (www.iomart.com).
INDEPENDENT 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 2021 which comprises the Consolidated
Interim Statement of Comprehensive Income, the Consolidated Interim
Statement of Financial Position, the Consolidated Interim Statement
of Cash Flows, the Consolidated Interim Statement of Changes in
Equity and related notes 1 to 12. 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 AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the
group will be prepared in accordance with United Kingdom adopted
international accounting standards. 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 2021 is not prepared, in all material respects, in
accordance with the 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
7 December 2021
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END
IR BQLLBFLLXFBE
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