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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Iomart Group Plc | LSE:IOM | London | Ordinary Share | GB0004281639 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -1.50 | -1.13% | 131.50 | 131.00 | 135.50 | 132.50 | 131.50 | 132.50 | 14,096 | 13:30:06 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Services, Nec | 115.64M | 7M | 0.0624 | 21.07 | 147.36M |
From Apr 2019 to Apr 2024
TIDMIOM
RNS Number : 3584Y
Iomart Group PLC
05 December 2017
5 December 2017
iomart Group plc
("iomart" or the "Group" or the "Company")
Half Yearly Results
iomart (AIM:IOM), the cloud computing company, is pleased to report its consolidated half yearly results for the period ended 30 September 2017.
FINANCIAL HIGHLIGHTS
-- Revenue growth of 12% to GBP47.0m (H1 2017: GBP42.1m)
o Cloud Services growth of 13% (H1 2017: 13%)
-- Adjusted EBITDA(1) growth of 9% to GBP19.2m (H1 2017: GBP17.6m) -- Adjusted profit before tax(2) growth of 9% to GBP11.6m (H1 2017: GBP10.6m)
-- Adjusted diluted earnings per share(3) from operations increased by 10% to 8.82p (H1 2017: 8.03p)
-- Maiden interim dividend of 2.25p per share
OPERATIONAL HIGHLIGHTS
-- Ongoing investment in cloud skills -- Further improvements and investment in automation of server deployment -- Significant investment in software defined network -- Development of skills in major niche verticals, particularly in the eCommerce sector -- Acquisition of two eCommerce cloud businesses, one during period and one post period end
Statutory Equivalents
The above highlights are based on adjusted results. A full reconciliation between adjusted and statutory results is contained within this statement. The statutory equivalents of the above results are as follows:
-- Profit before tax growth of 9% to GBP7.8m (H1 2017: GBP7.1m) -- Basic earnings per share from operations increased by 10% to 5.96p (H1 2017: 5.43p)
Angus MacSween, CEO commented,
"The Group has enjoyed another good period of trading in the first half of the year, with growing recurring revenues in line with our business model. The market opportunity remains significant and we continue to invest in our skills, infrastructure and capabilities to meet the evolving demands of the market. We are firmly on track to deliver another year of material growth and we remain confident in our prospects."
(1) Throughout this statement adjusted EBITDA is earnings before interest, tax, depreciation and amortisation (EBITDA) before share based payment charges and acquisition costs. Throughout this statement acquisition costs are defined as acquisition related costs and non-recurring acquisition integration costs.
(2) Throughout this statement adjusted profit before tax is profit before tax, amortisation charges on acquired intangible assets, share based payment charges, mark to market adjustments in respect of interest rate swaps, interest charges in respect of contingent consideration due and acquisition costs.
(3) Throughout this statement adjusted earnings per share is earnings per share before amortisation charges on acquired intangible
assets, share based payment charges, mark to market adjustments in respect of interest rate swaps, interest charges in respect of contingent consideration due and acquisition costs including the taxation effect of these.
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 Angus MacSween, Chief Executive Richard Logan, Finance Director Peel Hunt LLP Tel: 020 7418 8900 (Nominated Adviser and Broker) Edward Knight Nick Prowting Alma PR Tel: 020 8004 4217 Hilary Buchanan John Coles Helena Bogle
About iomart Group plc
iomart Group Plc (AIM: IOM) helps organisations maximise the flexibility, cost effectiveness and security of the cloud. From strategy to delivery, our 300+ consultants and solutions architects provide the cloud expertise to transform your business. With a dynamic range of managed cloud services that integrate with the public clouds of AWS and Azure, our agnostic approach delivers solutions tailored to your exact needs. iomart is a long term supplier to G-Cloud and our infrastructure and cloud and backup services are designed to meet the requirements of the UK public sector.
For further information about the Group, please visit www.iomart.com
Chief Executive's Statement
Introduction
We have again enjoyed a very good trading period with Group revenue having grown by 12% to GBP47.0m (H1 2017: GBP42.1m). Our adjusted EBITDA has grown by 9% to GBP19.2m (H1 2016: GBP17.6m) and our adjusted profit before tax also by 9% to GBP11.6m (H1 2017: GBP10.6m).
Market
There is still a long term and large market opportunity in preparing and managing enterprises for transformation and deployment to cloud platforms.
iomart continues to invest in the skills required to architect, migrate, manage, monitor, secure and scale private cloud, public cloud, and any combination of the two in order to capitalise on this significant opportunity.
IT is increasingly evolving project by project, application by application, with a view to maximising value, not being locked into any one technology vendor, and being able to migrate services at will.
This plays into the strengths we have established around agility and flexibility alongside the right expertise and infrastructure, with an ability to manage the mix of public and private cloud and hybrids of both effectively.
Within the overall growth of cloud, eCommerce is one of the fastest growing areas. We have always had an exposure to the online retail market and we are building our expertise in this area to position ourselves as eCommerce cloud leaders.
Operational review
Cloud Services
The Cloud Services operation continues to perform well, delivering an overall revenue growth rate of 13%. The organic growth rate in the period was 4% which has been weighed down by a low margin public cloud consultancy project coming to an end. Adjusting for the effect of that project the organic growth rate was 8% which is greater than the comparable growth rate for the same period last year.
We have long since recognised that the management of compute power for our customers and prospects may involve elements of on premise infrastructure, private or dedicated infrastructure within our estate of datacentres, shared infrastructure within our datacentres and public cloud infrastructure from the hyper cloud vendors. The addition of Cristie Data ("Cristie") into the Group in August 2016 gave us more exposure to the support of on premise infrastructure and in our March 2017 accounts we showed the performance of that unit separately within a non-recurring revenue segment. As this period has progressed the operation of Cristie has become more integrated into our Cloud Services operation. We have provided consultancy services, through SystemsUp, to customers of Cristie, focusing on cloud strategy. In addition, Cristie has also won contracts to provide solutions from our datacentres on a dedicated cloud basis. Consequently, in this period, nearly half of the revenue generated and orders won by Cristie has been of a recurring nature. Therefore, we have concluded that it is no longer appropriate to include the results of Cristie separately, particularly in a non-recurring revenue segment, from the rest of our Cloud Services operations and we will report it within this segment from now on.
As expected and indeed as we indicated in our March 2017 results, the direct revenue generated through our consultancy operation SystemsUp, which is not as recurring in nature as the rest of our Cloud Services activities, has declined due to one low margin public cloud project coming to an end. Whilst, to some extent, this is the nature of consultancy services, the rationale behind the acquisition of a consultancy unit was to seek to engage at an earlier stage with customers and prospects on their cloud strategy and as a result to generate additional recurring revenue within the Group through the provision of cloud solutions. This strategy has worked and we are now providing solutions and generating recurring revenue as a consequence of consultancy assignments.
We are investing in our infrastructure to refresh and upgrade our network and other systems to provide further automation and efficiencies within our environment. This investment will help us streamline our own services for customers and prospects. We are also seeing growing interest from resellers who are being asked for cloud products by their customers but who don't have the capacity, appetite or ability to invest in the substantial infrastructure required.
The acquisition of Dediserve Limited ("Dediserve") in May 2017 provides us with an operation in the European Union post Brexit together with a much greater spread of cloud infrastructure in locations across the world. We now have a significant global footprint.
We also acquired Tier 9 Limited Limited (which trades as Simple Servers") in July 2017 and Sonassi Holding Company Limited ("Sonassi") in November 2017. Both specialise in the provision of infrastructure for eCommerce applications and in particular for the Magento eCommerce platform. We have always had exposure to the online retail sector which is a fast growing area of the market. We believe eCommerce is an area of the market which provides a good opportunity for future growth and we plan to use the acquisition of both of these operations to firmly establish the Group as a provider of choice in this significant market sector.
Our revenues have grown to GBP40.3m (H1 2017: GBP35.6m) as a result of our acquisitive and organic activities and we continue to expect Cloud Services to be the driver of growth going forward.
Easyspace
The Easyspace segment has performed well and continues to deliver a modest level of organic growth.
Easyspace provides a range of products to the small and micro business community including an ever wider range of domain names, shared hosting, emails and dedicated servers.
Our revenues have grown by 2.3% to GBP6.7m (H1 2017: GBP6.6m) all of which is organic.
M&A Activity
On 17 May 2017 we acquired the entire share capital of Dediserve on a no debt, no cash, normalised working capital basis for a total purchase price of EUR7.9m (GBP6.7m). An initial payment of EUR7.8m (GBP6.7m) in cash less the sum of EUR0.25m (GBP0.21m) in cash as an interim settlement of the expected amount due by the vendors in respect of the no debt, no cash, normalised working capital adjustment was made on acquisition. The initial payment was funded by a draw down from the Group's revolving credit facility. A further payment of EUR0.11m (GBP0.10m) was made in respect of the final no debt, no cash, normalised working capital adjustment. In November a final amount of deferred consideration of EUR0.1m (GBP0.09m) was paid.
On 26 July we acquired the entire share capital of Tier 9 Limited (which trades as "Simple Servers") on a no debt, no cash, normalised working capital basis. Simple Servers provides cloud solutions for the Magento eCommerce application. On completion an initial payment of GBP3.0m in cash was made. The initial payment was funded by a draw down from the Group's revolving credit facility. In October a further payment of GBP0.37m was made in respect of the no debt, no cash, normalised working capital position at the time of completion. There is also an earn out which runs through until March 2018 which may result in a maximum additional amount due of GBP3.0m depending on the profitability of Simple Servers. The maximum purchase price is therefore GBP6.0m, excluding any sums due in respect of the no debt no cash, normalised working capital adjustment.
After the period end, on 17 November 2017 we acquired the entire share capital of Sonassi Holding Company Limited ("Sonassi") on a no debt, no cash, normalised working capital basis using a locked box mechanism at 30 September 2017 and a daily contribution from then until completion with the benefit of trading during that period accruing to the vendors. Sonassi provides cloud solutions for the Magento eCommerce application. At completion, an initial payment of GBP10.0m in cash was made. In addition, an amount of GBP3.1m in cash was paid in settlement of the amount due in respect of the no debt, no cash, normalised working capital and daily contribution adjustment. The initial payment was funded by a draw down from the Group's revolving credit facility. A further sum of GBP1.0m is contingent on the completion of an element of software development and a final sum of no more than another GBP5.5m on the profitability of the business in the year ending 31 July 2018. The maximum purchase price is therefore GBP16.5m, excluding any sums due in respect of the no debt, no cash, normalised working capital, daily contribution adjustment.
The M&A market continues to provide opportunities and we remain committed to complementing our organic growth through further acquisitions.
Dividend
As we indicated in our trading update at the end of September we have decided to introduce an interim dividend payment as part of our overall dividend policy. We will pay a maiden interim dividend of 2.25p per share on 31 January 2018 to shareholders on the register on 22 December 2017, based on an ex-dividend date of 21 December 2017. We continue to offer shareholders the option to participate in a Dividend Reinvestment Plan (DRIP) as an alternative to receiving cash. Details of the DRIP scheme can be found by visiting our website at the following address www.iomart.com/investors and clicking on the Shareholder Services icon.
Financial Performance
Revenue
Overall revenues from our operations grew 12% to GBP47.0m (H1 2017: GBP42.1m).
Our Cloud Services segment, which now includes the operation of Cristie which was reported within the non-recurring revenue segment at March 2017, grew revenues by 13% to GBP40.3m (H1 2017: GBP35.6m). The increase includes the contribution for the full six-month period from the acquisition of Cristie in August 2016 and contributions from the acquisitions of Dediserve and Simple Servers during the period.
Our Easyspace segment grew revenues by 2% to GBP6.7m (H1 2017: GBP6.6m). This increase was solely due to organic growth and is around the same level as the comparable period last year.
Gross Margin
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 8% to GBP30.0m (H1 2017: GBP27.7m). This substantial increase in gross profit was a direct result of the contribution from the additional revenue generated over the period, including the impact of acquisitions.
In percentage terms the gross margin was 63.9% (H1 2017: 65.8%). The reduction in the percentage margin is largely within the Cloud Services segment. The operation of Cristie involves the sale of hardware and software which is then delivered to and installed on customers' premises. As a result, the cost of that hardware and software is included in cost of sales and thereby the overall percentage margin reduces. Offsetting that, due to the public cloud consultancy project coming to an end, we have seen a decline in the amount of public cloud costs and as a result an improvement in our percentage margin.
The Easyspace segment also saw a decrease in its gross margin percentage mainly due to an adverse impact of exchange rates on domain costs.
Adjusted EBITDA
The Group's adjusted EBITDA grew by 9% to GBP19.2m (H1 2017: GBP17.6m) reflecting a significantly improved performance. In percentage terms the adjusted EBITDA margin reduced to 40.7% (H1 2017: 41.8%) with both segments showing very modest reductions.
Cloud Services increased its adjusted EBITDA by 10% to GBP18.0m (H1 2017: GBP16.3m). The continued improvement in adjusted EBITDA is largely due to the additional gross margin contribution arising from our organic sales growth, a full period contribution from the acquisition of Cristie in August 2016 and the contribution of both Dediserve and Simple Servers since their respective acquisitions offset by continued investment in staffing levels. In percentage terms the margin reduced to 44.6% (H1 2017: 45.8%). The primary reasons for this modest percentage margin reduction were the reduction in the Cloud Services gross margin percentage previously discussed, the inclusion of Cristie for the full six-month period offset by relatively static organic staff costs and the favourable percentage margin impact of both Dediserve and Simple Servers since their respective acquisitions.
The adjusted EBITDA of Easyspace was maintained at GBP3.1m (H1 2017: GBP3.1m). In percentage terms the margin reduced slightly to 45.9% (H1 2017: 46.8%) due to the reduction in the Easyspace gross margin percentage previously discussed offset by administration costs continuing to be tightly controlled.
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 of GBP1.9m have increased modestly in the period (H1 2017: GBP1.8m).
Adjusted profit before tax
Depreciation charges of GBP6.0m (H1 2017: GBP5.4m) have increased due to a combination of continued investment in our datacentre estate and the purchase of equipment to provide services to our new and existing customers, offset by assets bought in previous periods becoming fully depreciated in this period and therefore no longer contributing to the ongoing depreciation charge. The charge for the amortisation of intangible assets, excluding amortisation of intangible assets resulting from acquisitions ("amortisation of acquired intangible assets") has increased to GBP1.1m (H1 2017: GBP0.9m) as a result of increased charges for software licenses and the additional development activity within the enlarged Group.
Net finance costs, excluding the mark to market adjustment on interest swaps on the Company's loans and the interest charge on contingent consideration due, were GBP0.5m (H1 2017: GBP0.7m).
After deducting the charges for depreciation, amortisation, excluding the amortisation of acquired intangible assets, and finance costs, excluding the interest charges in respect of contingent consideration due and the mark to market adjustment on interest rate swaps, from adjusted EBITDA the adjusted profit for the period before tax increased by 9% to GBP11.6m (H1 2017: GBP10.6m).
The adjusted profit before tax margin for the period was 24.6% (H1 2017: 25.2%). The decrease in percentage margin of 0.6% is largely due to a combination of the reduction in the adjusted EBITDA margin over the period of 1.1% offset by the reduction in net finance costs as a percentage of revenue of 0.6%.
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:
Reconciliation of adjusted profit before tax to profit 6 months 6 months Year before tax to 30/09/2017 to 30/09/2016 to 31/03/2017 Adjusted profit before tax 11,589 10,632 22,406 Less: Share based payments (398) (557) (1,844) Less: Amortisation of acquired intangible assets (2,831) (2,697) (5,558) Less: Acquisition costs (573) (102) (104) Add: Mark to market adjustment on interest rate swaps 28 43 84 Less: Interest on contingent consideration (51) (177) (330) Profit before tax 7,764 7,142 14,654 --------------------------------- ---------------- --------------- ----------------
The adjusting items are: share based payment charges in the period which decreased to GBP0.4m (H1 2017: GBP0.6m) as a result of options granted in previous periods not vesting, offset by the issue of additional share options; charges for the amortisation of acquired intangible assets of GBP2.8m (H1 2017: GBP2.7m) which have remained at similar levels to the previous period as a result of the net impact of a full period effect of acquisitions made in previous periods, acquisitions made in the current period and reduced charges for acquisitions made in previous periods; costs of GBP0.6m (H1 2017: GBP0.1m) as a result of acquisitions, including increased professional fees; a finance cost credit of GBP0.03m (H1 2017: GBP0.04m) in respect of mark to market adjustments relating to interest rate swaps on the Company's loans and interest charges on contingent consideration due of GBP0.1m (H1 2017: GBP0.2m).
After deducting the charges for share based payments, the amortisation of acquired intangible assets, acquisition costs, the mark to market adjustment on interest rate swaps and the interest charges in respect of contingent consideration, the reported profit before tax increased by 9% to GBP7.8m (H1 2017: GBP7.1m).
In percentage terms the profit before tax margin was 16.5% (H1 2017: 17.0%). This decrease in percentage margin of 0.5% is largely due to the reduction in the adjusted EBITDA margin over the period of 1.1% plus the impact of the increase in acquisition related costs offset by relative reductions in finance and share based payment charges.
Profit for the period from total operations
There is a tax charge in the period of GBP1.3m (H1 2017: GBP1.3m), which comprises a current taxation charge of GBP2.5m (H1 2017: GBP2.1m), and a deferred taxation credit of GBP1.1m (H1 2017: GBP0.8m). The tax charge for the period has increased because of the increase in profitability of the Group. This results in a profit for the period from total operations of GBP6.4m (H1 2017: GBP5.8m) an increase of 10%.
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, the mark to market adjustment on interest rate swaps, the interest charges in respect of contingent consideration due and acquisition costs and the tax effect of these items, was 8.82p (H1 2017: 8.03p) an increase of 10%.
The measure of adjusted 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 5.96p (H1 2017: 5.43p), an increase of 10%.
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 GBP17.0m (H1 2017: GBP16.7m), representing 89% of our adjusted EBITDA (H1 2017: 95%) which has been adversely affected by the advance payment for maintenance services on a major network upgrade. Expenditure on taxation in the period was GBP2.4m (H1 2017: GBP1.2m), the comparative figure having been reduced due to the receipt of a tax refund, resulting in net cash flow from operating activities in the period of GBP14.6m (H1 2017: GBP15.5m).
Expenditure on investing activities of GBP20.9m (H1 2017: GBP8.5m) was incurred in the period. GBP8.4m (H1 2017: GBP4.6m), net of related finance lease drawdown and trade creditors, was incurred on the acquisition of property, plant and equipment principally to provide services to our customers. This includes a substantial payment in respect of a major network upgrade which will provide network resources to the Group for several years into the future. We made purchases of intangible assets of GBP0.7m (H1 2017: GBP1.4m) in the period, with the decrease largely due to the advance purchase of additional software licences for storage and backup purposes which was incurred in the previous period. In respect of M&A activity, GBP2.0m (H1 2017: GBP1.2) was paid out for contingent consideration due on acquisitions made in previous periods and GBP8.9m (H1 2017: GBP0.7m) was incurred on the acquisitions of Dediserve and Simple Servers in the period, as described above, net of cash acquired of GBP0.7m. We also incurred GBP0.9m (H1 2017: GBP0.7m) in respect of the capitalisation of development costs during the period.
There was net cash generated from financing activities of GBP4.5m (H1 2017: GBP6.7m net cash used). We generated GBP0.1m (H1 2017: GBP0.6m) from the issue of shares as a result of the exercise of options by staff. We made drawdowns under our bank facility of GBP15.0m (H1 2017: GBPnil) and we made repayments of GBP3.0m (H1 2017: GBP3.0m) during the period. We repaid GBP0.2m (H1 2017: GBP0.3m) of finance leases and incurred GBP0.9m (H1 2017: GBP0.6m) of finance charges. We also made a dividend payment of GBP6.5m (H1 2017: GBP3.4m). As a result, cash and cash equivalent balances at the end of the period were GBP7.1m (H1 2017: GBP10.6m).
Net Debt
The net debt position of the Group at the end of the period was GBP24.5m (H1 2017: GBP22.2m). This represents a multiple of much less than one times our annual adjusted EBITDA which we believe is a very comfortable level of debt to carry.
Current trading and outlook
The Group has enjoyed another good period of trading in the first half of the year, with growing recurring revenues in line with our business model. The market opportunity remains significant and we continue to invest in our skills, infrastructure and capabilities to meet the evolving demands of the market. We are firmly on track to deliver another year of material growth and we remain confident in our prospects.
Angus MacSween
CEO
4 December 2017
Consolidated Interim Statement of Comprehensive Income
Six months ended 30 September 2017
Hot Features
Premium
Unaudited Unaudited Audited
---------------- ---------------- ----------------
6 months 6 months Year
to 30/09/2017 to 30/09/2016 to 31/03/2017
---------------- ---------------- ----------------
GBP'000 GBP'000 GBP'000
---------------- ---------------- ----------------
Revenue 47,036 42,119 89,573
Cost of sales (16,992) (14,416) (32,266)
--------------------------------------- ---------------- ---------------- ----------------
Gross profit 30,044 27,703 57,307
Administrative expenses (21,726) (19,693) (41,074)
--------------------------------------- ---------------- ---------------- ----------------
Operating profit 8,318 8,010 16,233
Analysed as:
Earnings before interest,
tax, depreciation, amortisation,
acquisition costs and share
based payments 19,164 17,585 36,570
Share based payments (398) (557) (1,844)
Acquisition costs 4 (573) (102) (104)
Depreciation 8 (5,953) (5,365) (10,972)
Amortisation - acquired intangible
assets (2,831) (2,697) (5,558)
Amortisation - other intangible
assets (1,091) (854) (1,859)
--------------------------------------- ---------------- ---------------- ----------------
Finance income 5 16 22
Finance costs 5 (559) (884) (1,601)
--------------------------------------- ---------------- ---------------- ----------------
Profit before taxation 7,764 7,142 14,654
Taxation 6 (1,352) (1,327) (2,571)
--------------------------------------- ---------------- ---------------- ----------------
Profit for the period from
total operations 6,412 5,815 12,083
Other comprehensive income
Currency translation differences (100) 14 22
--------------------------------------- ---------------- ---------------- ----------------
Other comprehensive (expense)/income
for the period (100) 14 22
--------------------------------------- ---------------- ---------------- ----------------
Total comprehensive income
for the period attributable
to equity
holders of the parent 6,312 5,829 12,105
Basic and diluted earnings
per share
Total operations
Basic earnings per share 3 5.96 5.43 11.27
p p p
Diluted earnings per share 3 5.87 5.36 11.08
p p p
--------------------------------------- ---------------- ---------------- ----------------
Consolidated Interim Statement of Financial Position
As at 30 September 2017
Unaudited Unaudited Audited
----------- ----------- -----------
30/09/2017 30/09/2016 31/03/2017
----------- ----------- -----------
GBP'000 GBP'000 GBP'000
----------- ----------- -----------
ASSETS
Non-current assets
Intangible assets - goodwill 7 68,461 61,724 62,000
Intangible assets - other 7 22,782 22,497 19,707
Lease deposit 2,760 2,760 2,760
Property, plant and equipment 8 38,648 35,340 35,049
132,651 122,321 119,516
Current assets
Cash and cash equivalents 7,128 10,599 8,906
Trade and other receivables 15,725 14,092 15,080
22,853 24,691 23,986
Total assets 155,504 147,012 143,502
LIABILITIES
Non-current liabilities
Non-current borrowings (664) (740) (625)
Trade and other payables - (318) (102)
Provisions for other liabilities
and charges (1,750) (2,010) (1,721)
Deferred tax liability (750) (1,521) (888)
----------------------------------- --- ----------- ----------- -----------
(3,164) (4,589) (3,336)
Current liabilities
Contingent consideration
due on acquisitions 9 (1,741) (2,220) (2,373)
Deferred consideration due
on acquisitions 10 (456) - -
Trade and other payables (23,161) (19,827) (23,368)
Provisions - - (38)
Current income tax liabilities (2,198) (2,506) (2,000)
Current borrowings (30,959) (32,037) (18,872)
(58,515) (56,590) (46,651)
Total liabilities (61,679) (61,179) (49,987)
Net assets 93,825 85,833 93,515
----------------------------------- --- ----------- ----------- -----------
EQUITY
Share capital 1,078 1,078 1,078
Own shares (70) (267) (120)
Capital redemption reserve 1,200 1,200 1,200
Share premium 21,067 21,067 21,067
Merger reserve 4,983 4,983 4,983
Foreign currency translation
reserve (115) (23) (15)
Retained earnings 65,682 57,795 65,322
----------------------------------- --- ----------- ----------- -----------
Total equity 93,825 85,833 93,515
----------------------------------- --- ----------- ----------- -----------
Consolidated Interim Statement of Cash Flows
Six months ended 30 September 2017
Unaudited Unaudited Audited
---------------- ---------------- ----------------
6 months 6 months Year
to 30/09/2017 to 30/09/2016 to 31/03/2017
---------------- ---------------- ----------------
GBP'000 GBP'000 GBP'000
---------------- ---------------- ----------------
Profit before tax 7,764 7,142 14,654
Finance costs - net 554 868 1,579
Depreciation 5,953 5,365 10,972
Amortisation 3,922 3,551 7,417
Share based payments 398 557 1,844
Movement in trade receivables (436) 186 837
Movement in trade payables (1,109) (944) 480
Cash flow from operations 17,046 16,725 37,783
Taxation paid (2,405) (1,222) (3,874)
---------------- ---------------- ----------------
Net cash flow from operating
activities 14,641 15,503 33,909
Cash flow from investing
activities
Purchase of property, plant
and equipment (8,431) (4,634) (10,189)
Capitalisation of development
costs (850) (667) (1,372)
Purchase of intangible assets (738) (1,384) (1,845)
Payment for acquisition of
subsidiary undertakings net
of cash acquired (8,903) (675) (703)
Contingent consideration
paid (1,965) (1,161) (1,161)
Finance income received 5 16 22
---------------- ---------------- ----------------
Net cash used in investing
activities (20,882) (8,505) (15,248)
Cash flow from financing
activities
Exercise of share options 58 610 1,064
Draw down of bank loans 14,956 - -
Repayment of finance leases (164) (343) (580)
Repayment of bank loans (3,000) (3,000) (16,000)
Finance costs paid (929) (632) (1,205)
Dividends paid (6,458) (3,375) (3,375)
---------------- ---------------- ----------------
Net cash generated from/(used
in) financing activities 4,463 (6,740) (20,096)
Net (decrease)/increase in
cash and cash equivalents (1,778) 258 (1,435)
Cash and cash equivalents
at the beginning of the period 8,906 10,341 10,341
---------------- ---------------- ----------------
Cash and cash equivalents
at the end of the period 7,128 10,599 8,906
================ ================ ================
Consolidated Interim Statement of Changes in Equity
Six months ended 30 September 2017
Foreign
Own Own currency Capital Share
Changes in Share shares shares translation redemption premium Merger Retained
equity capital EBT Treasury reserve reserve account reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 April 2016 1,078 (70) (419) (37) 1,200 21,067 4,983 54,467 82,269
Profit in
the period - - - - - - - 5,815 5,815
Currency
translation
differences - - - 14 - - - - 14
--------------- --------- -------- ---------- ------------ ------------ --------- --------- ---------- --------
Total
comprehensive
income - - - 14 - - - 5,815 5,829
Dividends - - - - - - - (3,375) (3,375) Share based payments - - - - - - - 557 557 Deferred tax on share based payments - - - - - - - (57) (57) Issue of own shares for option redemption - - 222 - - - - 388 610 Total transactions with owners - - 222 - - - - (2,487) (2,265) Balance at 30 September 2016 1,078 (70) (197) (23) 1,200 21,067 4,983 57,795 85,833 --------------- --------- -------- ---------- ------------ ------------ --------- --------- ---------- -------- Profit in the period - - - - - - - 6,268 6,268 Currency translation differences - - - 8 - - - - 8 --------------- --------- -------- ---------- ------------ ------------ --------- --------- ---------- -------- Total comprehensive income - - - 8 - - - 6,268 6,276 Share based payments - - - - - - - 1,287 1,287 Deferred tax on share based payments - - - - - - - (335) (335) Issue of own shares for option redemption - - 147 - - - - 307 454 Total transactions with owners - - 147 - - - - 1,259 1,406 Balance at 31 March 2017 1,078 (70) (50) (15) 1,200 21,067 4,983 65,322 93,515 --------------- --------- -------- ---------- ------------ ------------ --------- --------- ---------- -------- Profit in the period - - - - - - - 6,412 6,412 Currency translation differences - - - (100) - - - - (100) --------------- --------- -------- ---------- ------------ ------------ --------- --------- ---------- -------- Total comprehensive income - - - (100) - - - 6,412 6,312 Dividends - - - - - - - (6,458) (6,458) Share based payments - - - - - - - 398 398 Issue of own shares for option redemption - - 50 - - - - 8 58 Total transactions with owners - - 50 - - - - (6,052) (6,002) Balance at 30 September 2017 1,078 (70) - (115) 1,200 21,067 4,983 65,682 93,825 --------------- --------- -------- ---------- ------------ ------------ --------- --------- ---------- --------
Notes to the Half Yearly Financial Information
Six months ended 30 September 2017
1. Accounting policies
The financial information for the year ended 31 March 2017 set out in this half yearly report does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. The figures for the year ended 31 March 2017 have been extracted from the Group financial statements for that year. Those financial statements 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 2018. The Group financial statements for the year ended 31 March 2017 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 2017. The provisions of IAS 34 'Interim Financial Reporting' have not been applied in full.
2. Operating segments
Revenue by Operating Segment
In our September 2016 Half Year Report, which was published shortly after the acquisition of Cristie, the results of Cristie were incorporated into the Cloud Services segment. In that report we advised that the inclusion of Cristie within Cloud Services was under review and subsequently, in our March 2017 annual report, Cristie was included in a separate non-recurring revenue segment. In this Half Yearly report, for the reasons outlined in the Operational Review section of the Chief Executive Officer's Statement, the results of Cristie have been included in the Cloud Services segment and it is our intention to continue to report in this way in the future.
Year to 31/03/2017
6 months to 30/09/2017 6 months to 30/09/2016 (restated)
------------------------------ ------------------------------ ------------------------------
External Internal Total External Internal Total External Internal Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- --------- --------- -------- --------- --------- -------- --------- --------- --------
Easyspace 6,702 2 6,704 6,550 - 6,550 13,249 12 13,261
Cloud
Services 40,334 716 41,050 35,569 846 36,415 76,324 1,538 77,862
--------- --------- -------- --------- --------- -------- --------- --------- --------
47,036 718 47,754 42,119 846 42,965 89,573 1,550 91,123
----------- --------- --------- -------- --------- --------- -------- --------- --------- --------
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 30/09/2017 to 30/09/2016 to 31/03/2017
GBP'000 GBP'000 GBP'000
------------------------- --------------- --------------- ---------------
United Kingdom 38,875 35,062 75,163
Rest of the
World 8,161 7,057 14,410
--------------- --------------- ---------------
Revenue from operations 47,036 42,119 89,573
-------------------------- --------------- --------------- ---------------
2. Operating segments (continued)
Profit by Operating Segment
6 months to 30/09/2017 6 months to 30/09/2016 Year to 31/03/2017
---------------------------------------------- ---------------------------------------------- ---------------------------------------------
Share
Share Share based
EBITDA based EBITDA based EBITDA payments,
before payments, before payments, before acquisition
share acquisition share acquisition Operating share costs,
based costs, Operating based costs, profit/(loss) based depreciation Operating
payments depreciation profit/(loss) payments depreciation payments & profit/(loss)
and & and & and amortisation
acquisition amortisation acquisition amortisation acquisition
costs costs costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------- -------------- --------------- ------------- -------------- --------------- ------------- ------------- ---------------
Easyspace 3,075 (814) 2,261 3,067 (840) 2,227 6,244 (948) 5,296
Cloud
Services 17,981 (9,061) 8,920 16,287 (8,076) 8,211 34,006 (17,441) 16,565
Group
overheads (1,892) - (1,892) (1,769) - (1,769) (3,680) - (3,680)
Share based
payments - (398) (398) - (557) (557) - (1,844) (1,844)
Acquisition
costs - (573) (573) - (102) (102) - (104) (104)
------------- -------------- --------------- ------------- -------------- --------------- ------------- ------------- ---------------
19,164 (10,846) 8,318 17,585 (9,575) 8,010 36,570 (20,337) 16,233
Group
interest
and tax (1,906) (2,195) (4,150)
------------- ------------- -------------- --------------- ------------- -------------- --------------- ------------- ------------- ---------------
Profit for
the period 19,164 (10,846) 6,412 17,585 (9,575) 5,815 36,570 (20,337) 12,083
------------- ------------- -------------- --------------- ------------- -------------- --------------- ------------- ------------- ---------------
Group overheads, share based payments, acquisition costs, interest and tax are not allocated to segments.
3. Earnings per share
The calculations of earnings per share are based on the following results and numbers:
6 months 6 months Year
to 30/09/2017 to 30/09/2016 to 31/03/2017
---------------- ---------------- ----------------
Total Operations
---------------- ---------------- ----------------
GBP'000 GBP'000 GBP'000
Profit for the financial period
and basic earnings attributed
to ordinary shareholders 6,412 5,815 12,083
No No No
Weighted average number of
ordinary shares: 000 000 000
Called up, allotted and fully
paid at start of period 107,803 107,803 107,803
Own shares held in Treasury (54) (619) (465)
Shares held by Employee Benefit
Trust (141) (141) (141)
Weighted average number of
ordinary shares - basic 107,608 107,043 107,197
Dilutive impact of share options 1,621 1,390 1,808
Weighted average number of
ordinary shares - diluted 109,229 108,433 109,005
---------------------------------- ---------------- ---------------- ----------------
Basic earnings per share 5.96 5.43 11.27
p p p
Diluted earnings per share 5.87 5.36 11.08
p p p
---------------------------------- ---------------- ---------------- ----------------
6 months 6 months Year
Adjusted earnings per share to 30/09/2017 to 30/09/2016 to 31/03/2017
---------------- ---------------- ----------------
GBP'000 GBP'000 GBP'000
Profit for the financial period
and basic earnings attributed
to ordinary shareholders 6,412 5,815 12,083
- Amortisation of acquired
intangible assets 2,831 2,697 5,558
- Acquisition costs 573 102 104
- Share based payments 398 557 1,844
- Mark to market interest adjustment (28) (43) (84)
- Finance charge on contingent
consideration 51 177 330
- Tax impact of adjusted items (608) (597) (1,313)
-------------------------------------- ---------------- ---------------- ----------------
Adjusted profit for the financial
period and adjusted basic earnings
attributed to ordinary shareholders 9,629 8,708 18,522
Adjusted basic earnings per 8.95 8.14 17.28
share p p p
Adjusted diluted earnings per 8.82 8.03 16.99
share p p p
-------------------------------------- ---------------- ---------------- ----------------
4. Acquisition costs
6 months 6 months Year
to 30/09/2017 to 30/09/2016 to 31/03/2017
GBP'000 GBP'000 GBP'000
---------------------------- --------------- --------------- ---------------
Professional fees 573 98 99
Non-recurring integration
costs - 4 5
Total acquisition costs
for the period 573 102 104
----------------------------- --------------- --------------- ---------------
During the period costs of GBP573,000 (H1 2017: GBP98,000) were incurred in respect of professional fees on acquisitions and there were no costs (H1 2017: GBP4,000) directly related to the integration of acquisitions into the Group.
5. Finance costs
6 months 6 months Year
to 30/09/2017 to 30/09/2016 to 31/03/2017
GBP'000 GBP'000 GBP'000
---------------------------------- --------------- --------------- ---------------
Bank loans (439) (628) (1,131)
Finance leases (70) (99) (172)
Other interest charges (27) (23) (52)
----------------------------------- --------------- --------------- ---------------
(536) (750) (1,355)
Items affecting adjusted profit
before tax calculation:
Mark to market adjustment
on interest rate swaps 28 43 84
Finance charge on contingent
consideration (51) (177) (330)
----------------------------------- --------------- --------------- ---------------
Finance costs for the period (559) (884) (1,601)
----------------------------------- --------------- --------------- ---------------
6. Taxation
6 months 6 months Year
to 30/09/2017 to 30/09/2016 to 31/03/2017
GBP'000 GBP'000 GBP'000
--------------------------------------- --------------- --------------- ---------------
Tax charge for the period (2,468) (2,126) (4,349)
Effect of different statutory
tax rates of overseas jurisdictions 21 - -
Adjustment relating to prior
periods - - (12)
---------------------------------------- --------------- --------------- ---------------
Total current taxation (2,447) (2,126) (4,361)
Origination and reversal
of temporary differences 1,013 871 1,751
Adjustment relating to prior
periods 84 (4) 227
Effect of different statutory
tax rates of overseas jurisdictions 3 12 27
Effect of changes in tax
rates (5) (80) (215)
---------------------------------------- --------------- --------------- ---------------
Total deferred taxation
credit 1,095 799 1,790
Taxation charge for the
period (1,352) (1,327) (2,571)
---------------------------------------- --------------- --------------- ---------------
7. Intangible assets
Domain
names
Development Customer Beneficial & IP
Goodwill costs relationships Software contracts addresses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- ------------ --------------- --------- ----------- ----------- ---------
Cost:
At 1 April
2016 61,123 4,832 34,882 3,137 86 280 104,340
Additions in
the period 601 - - 1,315 - - 1,916
Currency translation
differences - - 65 25 - - 90
Acquired on
acquisition
of subsidiary - - 982 - - - 982
Development
costs capitalised - 667 - - - - 667
At 30 September
2016 61,724 5,499 35,929 4,477 86 280 107,995
Additions in
the period 276 - - 355 - - 631
Currency translation
differences - - 36 15 - - 51
Development
costs capitalised - 705 - - - - 705
---------------------- --------- ------------ --------------- --------- ----------- ----------- ---------
At 31 March
2017 62,000 6,204 35,965 4,847 86 280 109,382
Additions in
the period 6,461 - - 662 - - 7,123
Disposals in
the period - - - (10) - - (10)
Currency translation
differences - - (51) (26) - - (77)
Acquired on
acquisition
of subsidiary - - 5,501 - - - 5,501
Development
costs capitalised - 850 - - - - 850
At 30 September
2017 68,461 7,054 41,415 5,473 86 280 122,769
---------------------- --------- ------------ --------------- --------- ----------- ----------- ---------
Accumulated
amortisation:
At 1 April
2016 - (3,194) (15,308) (1,453) (26) (171) (20,152)
Currency translation
differences - - (51) (20) - - (71)
Charge for
the period - (442) (2,693) (385) (4) (27) (3,551)
At 30 September
2016 - (3,636) (18,052) (1,858) (30) (198) (23,774)
Currency translation
differences - - (26) (9) - - (35)
Charge for
the period - (547) (2,858) (430) (3) (28) (3,866)
At 31 March
2017 - (4,183) (20,936) (2,297) (33) (226) (27,675)
Disposals in
the period - - - 10 - - 10
Currency translation
differences - - 44 17 - - 61
Charge for
the period - (588) (2,827) (476) (4) (27) (3,922)
At 30 September
2017 - (4,771) (23,719) (2,746) (37) (253) (31,526)
---------------------- --------- ------------ --------------- --------- ----------- ----------- ---------
Carrying amount:
At 30 September
2017 68,461 2,283 17,696 2,727 49 27 91,243
---------------------- --------- ------------ --------------- --------- ----------- ----------- ---------
At 31 March
2017 62,000 2,021 15,029 2,550 53 54 81,707
At 30 September
2016 61,724 1,863 17,877 2,619 56 82 84,221
---------------------- --------- ------------ --------------- --------- ----------- ----------- ---------
8. Property, plant and equipment
Freehold Leasehold Datacentre Computer Office Motor
property 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
2016 2,062 7,323 20,472 47,242 2,356 68 79,523
Additions
in the period - 34 312 3,884 148 - 4,378
Acquisition
of subsidiary - - - 179 27 - 206
Disposals
in the period - (3) - (58) - - (61)
Currency
translation
differences - - - 134 - - 134
At 30 September
2016 2,062 7,354 20,784 51,381 2,531 68 84,180
Additions
in the period - 613 385 4,231 83 - 5,312
Currency
translation
differences - - - (9) - - (9)
At 31 March
2017 2,062 7,967 21,169 55,603 2,614 68 89,483
Additions
in the period - 670 600 7,362 10 - 8,642
Acquisition
of subsidiary - - - 945 2 - 947
Disposals
in the period - - - (908) (100) (48) (1,056)
Currency
translation
differences - - - (103) - - (103)
At 30 September
2017 2,062 8,637 21,769 62,899 2,526 20 97,913
----------------- ---------- --------------- ----------- ----------- ----------- ---------- ---------
Accumulated
depreciation:
At 1 April
2016 (191) (2,337) (7,939) (31,585) (1,371) (55) (43,478)
Charge for
the period (21) (226) (922) (4,067) (121) (8) (5,365)
Disposals
in the period - 3 - 58 - - 61
Currency
translation
differences - - - (58) - - (58)
At 30 September
2016 (212) (2,560) (8,861) (35,652) (1,492) (63) (48,840)
Charge for
the period (46) (214) (902) (4,303) (137) (5) (5,607)
Currency
translation
differences - - - 13 - - 13
At 31 March
2017 (258) (2,774) (9,763) (39,942) (1,629) (68) (54,434)
Charge for
the period (24) (248) (959) (4,591) (131) - (5,953)
Disposals
in the period - - - 908 100 48 1,056
Currency
translation
differences - - - 66 - - 66
At 30 September
2017 (282) (3,022) (10,722) (43,559) (1,660) (20) (59,265)
----------------- ---------- --------------- ----------- ----------- ----------- ---------- ---------
Carrying
amount:
At 30 September
2017 1,780 5,615 11,047 19,340 866 - 38,648
----------------- ---------- --------------- ----------- ----------- ----------- ---------- ---------
At 31 March
2017 1,804 5,193 11,406 15,661 985 - 35,049
At 30 September
2016 1,850 4,794 11,923 15,729 1,039 5 35,340
----------------- ---------- --------------- ----------- ----------- ----------- ---------- ---------
9. Contingent consideration due on acquisitions
30/09/2017 30/09/2016 31/03/2017
GBP'000 GBP'000 GBP'000
--------------------------------------- ---------- ---------- ----------
Contingent consideration
due on acquisitions
* Simple Servers Limited (1,741) - -
* United Communications Limited - (2,220) (2,373)
Total contingent consideration
due on acquisitions (1,741) (2,220) (2,373)
---------------------------------------- ---------- ---------- ----------
10. Deferred consideration due on acquisitions
30/09/2017 30/09/2016 31/03/2017
GBP'000 GBP'000 GBP'000
-------------------------------- ---------- ---------- ----------
Deferred consideration due
on acquisitions
* Simple Servers Limited (370) - -
* Dediserve Limited (86) - -
Total deferred consideration
due on acquisitions (456) - -
--------------------------------- ---------- ---------- ----------
11. Analysis of change in net debt
Finance
Cash leases
and cash Bank and hire
equivalents loans purchase Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------- --------- --------- --------
At 1 April 2016 10,341 (34,525) (1,399) (25,583)
Repayment of bank
loans - 3,000 - 3,000
Impact of effective
interest rate - (147) - (147)
Acquired on acquisition
of subsidiary 3,104 - (25) 3,079
Currency translation
difference - - (24) (24)
Cash flow (2,846) - 343 (2,503)
--------------------------- ------------- --------- --------- --------
At 30 September 2016 10,599 (31,672) (1,105) (22,178)
Repayment of bank
loans - 13,000 - 13,000
Impact of effective
interest rate - 33 - 33
Currency translation
difference - - 10 10
Cash flow (1,693) - 237 (1,456)
--------------------------- ------------- --------- --------- --------
At 31 March 2017 8,906 (18,639) (858) (10,591)
New bank loans - (14,956) - (14,956)
Repayment of bank
loans - 3,000 - 3,000
Impact of effective
interest rate - 139 - 139
Acquired on acquisition
of subsidiaries 718 - (283) 435
Currency translation
difference - - (190) (190)
Cash flow (2,496) - 164 (2,332)
At 30 September 2017 7,128 (30,456) (1,167) (24,495)
--------------------------- ------------- --------- --------- --------
12. Acquisitions
Dediserve Limited
The Group acquired 100% of the issued share capital of Dediserve Limited, ("Dediserve") on 17 May 2017 for EUR7.9m on a no debt, no cash, normalised working capital basis.
Dediserve is a company registered in the Republic of Ireland based in Dublin which provides cloud hosting services to over 1,500 customers from 10 locations world-wide. The acquisition is in line with the Group's strategy to grow its hosting operations both organically and by acquisition. It also provides the Group with an additional European Union place of operation.
The Group incurred GBP426,000 of third party acquisition related costs in respect of this acquisition. These expenses are included in administrative expenses in the Group's consolidated statement of comprehensive income for the 6 months ended 30 September 2017.
The following table summarises the consideration to acquire Dediserve and the amounts of identified assets acquired and liabilities assumed at the acquisition date and are provisional:
GBP'000
------------------------------------------- --------
Recognised amounts of net assets acquired
and liabilities assumed (provisional):
Cash and cash equivalents 250
Trade and other receivables 99
Property, plant and equipment 791
Intangible assets 3,680
Trade and other payables (290)
Borrowings (283)
Current income tax liabilities (120)
Deferred tax liability (588)
------------------------------------------- --------
Identifiable net assets 3,539
Goodwill 3,130
------------------------------------------- --------
Total consideration 6,669
------------------------------------------- --------
Satisfied by:
Cash - paid on acquisition 6,485
Deferred consideration - paid 98
Deferred consideration - payable 86
Total consideration transferred 6,669
------------------------------------------- --------
The share purchase agreement, in respect of the acquisition of Dediserve, includes a provision under which the total consideration payable was adjusted by a payment to be made either to or by the Company, depending on the level of cash, debt and working capital shown in an agreed set of accounts (the Completion Accounts) made up to, and as at, the completion date. The initial payment to acquire the company was EUR7,800,000 (GBP6,700,000) in cash and in addition an amount of EUR250,000 (GBP215,000) in cash was deducted as an interim settlement of the expected amount due in respect of the no debt, no cash, normalised working capital adjustment. Following agreement of the Completion Accounts an additional payment of EUR113,000 (GBP98,000) was paid in respect of the no debt, no cash, normalised working capital adjustment. An amount of EUR100,000 (GBP86,000) was deferred and paid 6 months after the completion date in November 2017. The initial payment of EUR7,550,000 (GBP6,485,000) was funded by a draw down from the revolving credit facility of GBP6,485,000.
Dediserve earned revenue of GBP1,076,000 and generated profits, before allocation of group overheads, third party acquisition related costs and tax, of GBP389,000 in the period since acquisition.
Tier 9 Limited
The Group acquired 100% of the issued share capital of Tier 9 Limited (which trades as "Simple Servers") on 26 July 2017. Tier 9 Limited is a non-trading holding company with two 100% owned subsidiaries: Cloudfuel Limited, which is also non-trading, and Simple Servers Limited.
Simple Servers is a Redditch based hosting company, which specialises in providing hosting solutions for the Magento eCommerce application which is used extensively by online retailers. This is hosted on various cloud platforms for all sectors of industry from SMEs to larger enterprises. The acquisition is in line with the Group's strategy to grow its operations both organically and by acquisition and gives the group access to a rapidly growing eCommerce market.
During the current period the Group incurred GBP106,000 of third party acquisition related costs in respect of this acquisition. These expenses are included in administrative expenses in the Group's consolidated statement of comprehensive income for the 6 months ended 30 September 2017.
The following table summarises the consideration to acquire Simple Servers and the amounts of identified assets acquired and liabilities assumed at the acquisition date and are provisional.
GBP'000
----------------------------------------------- --------
Recognised amounts of net assets acquired
and liabilities assumed (provisional):
Cash and cash equivalents 469
Trade and other receivables 117
Property, plant and equipment 156
Intangible assets 1,821
Trade and other payables (287)
Current income tax liabilities (94)
Deferred tax liability (363)
----------------------------------------------- --------
Identifiable net assets 1,819
Goodwill 3,331
----------------------------------------------- --------
Total consideration 5,150
----------------------------------------------- --------
Satisfied by:
Cash - paid on acquisition 3,039
Deferred consideration - paid in October 2017 370
Contingent consideration - payable 1,741
Total consideration to be transferred 5,150
----------------------------------------------- --------
The share purchase agreement, in respect of the acquisition of Simple Servers, included a provision under which the total consideration payable may have been adjusted by a payment to be made either to or by the Company, depending on the level of cash, debt and normalised working capital shown in an agreed set of accounts (the Completion Accounts) made up to, and as at, the completion date. The initial payment to acquire the company was GBP3,039,000 in cash. Following agreement of the Completion Accounts a total payment of GBP370,000 was due by the Company in respect of the no debt, no cash, normalised working capital adjustment and this amount was paid in cash in October 2017.
The contingent consideration arrangements require the Company to pay the former shareholders of Simple Servers an additional amount contingent on the level of profitability delivered by Simple Servers in the year ending 31 March 2018 ("the Earn-out Payment").
The potential undiscounted amount of the Earn-out Payment that the Company could be required to pay is between GBPnil and GBP2,961,000. The amount of contingent consideration payable which was recognised as of the acquisition date was GBP1,741,000.
The level of profitability for the Earn-out Payment was estimated by applying the income approach to different scenarios based on historic performance and forecasts. Those scenarios reviewed had a range of outcomes for the amount of the Earn-out Payment of GBP1,046,000 to GBP2,339,000. A weighted average, based on management estimates of the probability of the achievement of the various levels of profitability, was then calculated to give the expected outcome of the amount of the Earn-out Payment of GBP1,741,000.
Simple Servers earned revenue of GBP283,000 and generated profits, before allocation of group overheads, share based payments and tax, of GBP148,000 in the period since acquisition.
13. Post balance sheet events
After the period end, on 17 November, we acquired the entire share capital of Sonassi Holding Company Limited ("Sonassi") on a no debt, no cash, normalised working capital basis using a locked box mechanism as at 30 September 2017 and a daily contribution from then until completion with the benefit of trading during that period accruing to the vendors. At completion, an initial payment of GBP10.0m in cash was made and in addition an amount of GBP3.1m in cash was paid in settlement of the amount due in respect of the no debt, no cash, normalised working capital and daily contribution adjustment. The initial payment was funded by a draw down from the Group's revolving credit facility. A further sum of GBP1.0m is contingent on the completion of an element of software development and a final sum of no more than another GBP5.5m on the profitability of the business in the year ending 31 July 2018. The maximum purchase price is therefore GBP16.5m, excluding any sums due in respect of the no debt no cash, normalised working capital, daily contribution adjustment.
14. Availability of half yearly reports
Half yearly reports will be sent to all shareholders on 10 January 2018. Copies of the half yearly report will be available for collection from the offices of Peel Hunt LLP, 120 London Wall, London, EC2Y 5ET, for a period of one month from the date of despatch and in accordance with Rules 20 and 26 of the AIM Rules, available from the Company's website at www.iomart.com.
INDEPENDENT REVIEW REPORT TO IOMART GROUP PLC
Introduction
We have been engaged by the company to review the financial information in the half-yearly financial report for the six months ended 30 September 2017 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 the related notes 1 to 14 set out on pages 9 to 22. We have read the other information contained in the half yearly financial report which comprises only the interim results announcement and the chief executive's statement and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.
This report is made solely to the company in accordance with guidance contained in Independent Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our review 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 conclusion we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The AIM rules for Companies of the London Stock Exchange require that the accounting policies and presentation applied to the financial information in the half-yearly report are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.
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 financial information in the half-yearly financial report has been prepared in accordance with the basis of preparation in Note 1.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the financial information 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 Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, 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 financial information in the half-yearly financial report for the six months ended 30 September 2017 is not prepared, in all material respects, in accordance with the basis of accounting described in Note 1.
GRANT THORNTON UK LLP
Statutory auditor, Chartered Accountants
Glasgow
4 December 2017
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The company news service from the London Stock Exchange
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IR OKQDNKBDBBBK
(END) Dow Jones Newswires
December 05, 2017 02:00 ET (07:00 GMT)
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