Interim Results

Iomart Group PLC 25 November 2003 PRESS RELEASE iomart Group plc Interim Results Announcement iomart Group plc ('iomart'), the Glasgow based software and web-services business, presents its consolidated interim results for the six month period ended 30 September 2003. Financial highlights • turnover at £2,904k, up 253% on previous year, with annualised revenues at £8m • loss reduced to £698k (1.2p per share v 2.3p per share for previous year) • increase of 10% in equity base via successful placing of 5.4m shares at 15p • net cash outflow restricted to £0.5m and cash balances of £3.5m on hand Operational highlights • NetIntelligence gaining significant reference customers • 3 sales offices fuel web-services business growth to give September break-even • successful acquisition and integration of NicNames • total of 24,000 web services customers growing at more than 1,000 per month Prospects • NetIntelligence positioning endorsed by industry analysts confirming large market and bright future. • webservices business profitability should improve during second half. • growing customer base provides platform for cross selling and further growth • cash balances sufficient to achieve group profitability. Nick Kuenssberg, chairman, commented: The tough decisions and hard work of the last two years are beginning to pay off. The NetIntelligence suite of enterprise security and content management products is increasingly relevant and we continue to win business. However the complexities associated with deployment in large corporates have deferred some of our larger opportunities for a number of months We continue to see strong organic growth in our webservices business and anticipate further acquisition opportunities in that sector. It is our intention to seek shareholder approval at our Annual General Meeting in June 2004 for a reduction of capital under Section 135 of the Companies Act 1985, subject to confirmation by the Court. The effect of the reduction would be to offset accumulated losses against share premium account and allow the group to commence the payment of dividends as and when appropriate. Enquiries: Nick Kuenssberg (Chairman) - 07860 635 191 Angus MacSween (Chief executive) - 0141 931 7000 Chief Executive Officer's review The six months since I last reported have seen very considerable progress in both our businesses. Our webservices business continues to grow organically at the rate of over 1,000 new customers per month and with the successful acquisition and integration of NicNames we now have over 24,000 customers and expect to end our financial year with over 30,000 customers. NetIntelligence sales are ahead of budget for the first half and we have gained some significant reference customers from central government, local authorities and the corporate sector. Our product positioning and functionality continues to be endorsed by commentators, industry analysts and potential customers alike, and I remain confident we can deliver significant revenue growth in the months and years ahead. NetIntelligence was devised with the large corporate in mind but with the complexities associated with deployment across these corporates, not least the cooperation of their outsourcing partners, we are finding the sales cycle remains longer than we would like. This has deferred some of our larger opportunities for several months. However, the issues that NetIntelligence addresses are rapidly becoming priorities for large organisations reinforcing our confidence for future growth. Financials Turnover on continuing operations for the period was £2,772k, up from £805k which represents an increase of 244% over the corresponding period. Turnover from Web Genie Internet Limited (NicNames) from the date of acquisition was £132k. Total gross profit margin was 86% (85%). Administrative expenses of £3,290k for the six-month period include £43k of restructuring costs in respect of the integration of NicNames. The operating loss for the period was £779k and the loss for the period after interest received was £698k. The loss per share was 1.2p, down from 2.3p. Cash balances at 30 September were £3,537k and net funds were £3,152k. Prospects Our webservices business continues to show impressive growth and we expect further acquisition opportunities in the next 12 months. Our challenge with NetIntelligence remains to gain visibility, credibility and more key reference customers within the global internet and content security market. The potential rewards of leadership in this field are high and we intend to increase our sales and marketing effort in the next half year. The group broke even in the month of September and we have confidence in the group's future prospects. Angus MacSween Chief Executive Officer 25 November 2003 Consolidated Profit and Loss Account Six months ended 30 September 2003 6 months ended Year Restated ended 30 September 30 September 31 March 2003 2002 2003 Unaudited Unaudited Audited £ 000 £ 000 £ 000 TURNOVER Continuing operations 2,772 805 2,174 Acquisitions 132 - - Discontinued - 18 18 --------- -------- -------- Total turnover 2,904 823 2192 Cost of sales (393) (126) (312) --------- -------- -------- GROSS PROFIT Continuing operations 2,388 688 1,871 Acquisitions 123 - - Discontinued - 9 9 --------- -------- -------- Gross profit 2,511 697 1,880 --------- -------- -------- Administrative expenses (3,247) (1,988) (3,809) Restructuring expenses (43) (76) (466) --------- -------- -------- Total administrative expenses (3,290) (2,064) (4,275) --------- -------- -------- OPERATING LOSS Continuing operations (755) (1,367) (2,395) Acquisitions (24) - - Discontinued - - - --------- -------- -------- LOSS ON ORDINARY ACTIVITIES BEFORE INTEREST (779) (1,367) (2,395) Net interest 61 99 171 --------- -------- -------- LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (718) (1,268) (2,224) Tax on loss on ordinary activities - - 334 --------- -------- -------- LOSS ON ORDINARY ACTIVITIES AFTER TAXATION FOR THE PERIOD (718) (1,268) (1,890) Equity minority interests 20 18 18 --------- -------- -------- LOSS FOR THE FINANCIAL PERIOD (698) (1,250) (1,872) ========= ======== ======== Loss per ordinary share (pence) Basic (1.2p) (2.3p) (3.5p) There have been no recognised gains or losses attributable to the shareholders other than the loss for the current financial period and accordingly, no statement of total recognised gains and losses is shown. Consolidated Balance Sheet 30 September 2003 30 September 30 September 31 March 2003 2002 2003 Unaudited Unaudited Audited £ 000 £ 000 £ 000 FIXED ASSETS Intangible assets 471 221 13 Tangible assets 466 809 376 -------- -------- -------- 937 1,030 389 -------- -------- -------- CURRENT ASSETS Debtors 1,406 1,124 793 Cash at bank and in hand 3,537 5,032 4,042 -------- -------- -------- 4,943 6,156 4,835 CREDITORS: amounts falling due within one year (1,739) (2,417) (1,170) -------- -------- -------- NET CURRENT ASSETS 3,204 3,739 3,665 -------- -------- -------- TOTAL ASSETS LESS CURRENT 4,141 4,769 4,054 LIABILITIES CREDITORS: amounts falling due after more than one year (268) (385) (292) EQUITY MINORITY INTERESTS - 30 30 -------- -------- -------- 3,873 4,414 3,792 ======== ======== ======== CAPITAL AND RESERVES Called up share capital 592 538 538 Capital redemption reserve 1,200 1,200 1,200 Share premium account 19,812 19,087 19,087 Profit and loss account (17,731) (16,411) (17,033) -------- -------- -------- TOTAL EQUITY SHAREHOLDERS' FUNDS 3,873 4,414 3,792 ======== ======== ======== This report was approved by the board of directors on 24 November 2003. The comparative figures for the financial year ended 31 March 2003 are an extract of the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. Consolidated Cash Flow Statement Six months ended 30 September 2003 6 months ended Year ended 30 September 30 September 31 March 2003 2002 2003 Unaudited Unaudited Audited Notes £ 000 £ 000 £ 000 Net cash outflow from operating activities 3 (870) (1,024) (1,822) -------- -------- -------- Returns on investments and servicing of finance Bank interest received 63 118 204 Bank and other loan interest paid - - (1) Finance lease and hire purchase interest paid (22) (58) (32) -------- -------- -------- Net cash inflow from returns on investments and servicing of finance 41 60 171 -------- -------- -------- Capital expenditure Payments to acquire tangible fixed assets (210) (43) (92) -------- -------- -------- Net cash outflow from capital expenditure (210) (43) (92) -------- -------- -------- Acquisitions and disposals Acquisition of subsidiary 4 (308) - - Net cash acquired with subsidiary 169 - - -------- -------- -------- (139) - - -------- -------- -------- Cash outflow before financing (1,178) (1,007) (1,743) -------- -------- -------- Financing Share placing 779 - - Increase in minority share capital 50 - - Repayment of hire purchase and finance leases (156) (480) (734) -------- -------- -------- Net cash inflow/(outflow) from financing 673 (480) (734) -------- -------- -------- Decrease in cash in the period (505) (1,487) (2,477) ======== ======== ======== Reconciliation of net cash flow to movement in net funds Decrease in cash in period (505) (1,487) (2,477) Cash outflows from debt and lease 156 480 734 financing -------- -------- -------- Change in net funds from cash flows (349) (1,007) (1,743) Opening net funds 3,501 5,244 5,244 -------- -------- -------- Closing net funds 3,152 4,237 3,501 ======== ======== ======== Notes to the Accounts Six months ended 30 September 2003 1. Accounting policies The interim financial information does not constitute statutory accounts for the purpose of section 240 of the Companies Act 1985. The figures for the year ended 31 March 2003 have been extracted from the Group accounts for that year. Those financial statements have been delivered to the Registrar of Companies and included an auditors' report, which was unqualified. The interim financial information has been prepared using the same accounting policies and estimation techniques as set out in the Group accounts for the year ended 31 March 2003. Certain comparative figures have been re-presented to be consistent with the year end presentation. Turnover has been reduced by £28,000 and cost of sales and administrative expenses have been reduced by £11,000 and £17,000 respectively. This change in presentation has no effect on the loss for the period or the net assets of the group. 2. Diluted earnings per share FRS 14 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. For a loss making company with outstanding share options, net loss per share would only be increased by the exercise of out-of-the-money options. Since it seems inappropriate to assume that option holders would act irrationally and there are no other diluting future share issues, diluted EPS has not been presented. The basic loss per share has been calculated based on the profit on ordinary activities after taxation and the weighted average number of ordinary shares of 0.1p each in issue for the period of six months to 30 September of 55,823,950 (September 2002: 53,795,614 and March 2003: 53,795,614). 3. Reconciliation of operating loss to net cash outflow from operating activities 6 months ended Year ended 30 September 30 September 31 March 2003 2002 2003 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Operating loss (779) (1,367) (2,395) Depreciation 137 245 497 Amortisation of intangible assets 19 58 118 Write down of tangible fixed assets - - 230 Write down of intangible fixed assets - - 148 (Increase)/decrease in debtors (573) (197) 468 Increase/(decrease) in creditors 326 237 (888) --------- --------- --------- Net cash outflow from operating (870) (1,024) (1,822) activities ========= ========= ========= Notes to the Accounts Six months ended 30 September 2003 4. Purchase of subsidiary Net assets acquired: Tangible fixed assets 17 - - Debtors 40 - - Cash at bank 169 - - Creditors (246) - - --------- -------- --------- (20) - - Goodwill 477 - - --------- -------- --------- 457 - - ========= ======== ========= Satisfied by: Cash 308 - - Deferred consideration 149 - - --------- -------- --------- 457 - - ========= ======== ========= On 24 July 2003 the group acquired 100% of the issued share capital of Web Genie Internet Limited, trading as NicNames, through its 75% subsidiary, iomart Internet Limited. Notes to the Accounts Six months ended 30 September 2003 5. Analysis of change in net funds At At 31 March Cash 30 September 2003 flow 2003 £ 000 £ 000 £ 000 Cash at bank and in 4,042 (505) 3,537 hand Finance leases and (541) 156 (385) hire purchase --------- -------- --------- Net funds 3,501 (349) 3,152 ========= ======== ========= 6. Availability of interim reports Interim reports will be sent to all shareholders on 2 December 2003. Copies of the interim report will be available for collection from the offices of KBC Peel Hunt Ltd, 62 Threadneedle Street, London, EC2R 8HP, for a period of 1 month from the date of despatch. INDEPENDENT REVIEW REPORT TO IOMART GROUP PLC Introduction We have been instructed by the company to review the financial information for the six months ended 30 September 2003 which comprises the consolidated profit and loss account, the consolidated balance sheet, the consolidated cash flow statement, the reconciliation of net cash flow to movement in net funds and related notes 1 to 6. We have read the other information contained in the interim report 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 Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them 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. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are also responsible for ensuring that the accounting polices and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2002. Deloitte & Touche LLP Chartered Accountants Glasgow 25 November 2003 Notes: A review does not provide assurance on the maintenance and integrity of the Group's website, including controls used to achieve this, and in particular on whether any changes may have occurred to the financial information since first published. These matters are the responsibility of the directors but no control procedures can provide absolute assurance in this area. Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions. This information is provided by RNS The company news service from the London Stock Exchange

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