Half-year Report
6 December 2016
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 2016.
FINANCIAL HIGHLIGHTS
· Revenue growth of 16% to £42.1m (H1 2016: £36.4m)
o Cloud Services organic growth of 10% (H1 2016: 10%)
· Adjusted EBITDA1 growth of 13% to £17.6m (H1 2016: £15.5m)
· Adjusted profit before tax2 growth of 23% to £10.6m (H1 2016: £8.7m)
· Adjusted diluted earnings per share3 from operations increased by 19% to 8.03p (H1 2016: 6.75p)
· Cashflow from operations increased by 22% to £16.7m (H1 2016: £13.6m)
· Operating cash conversion rate increased to 95% of adjusted EBITDA (H1 2016: 88%)
OPERATIONAL HIGHLIGHTS
· Ongoing investment in all forms of cloud skills
· Continuing to develop relationships with major Public Cloud suppliers leading to growth in Public Cloud revenues
· Consultancy division, SystemsUp, gains AWS Public Sector Partner for Government status
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 26% to £7.1m (H1 2016: £5.7m)
· Basic earnings per share from operations increased by 19% to 5.43p (H1 2016: 4.57p)
Angus MacSween, CEO commented,
"Trading in the first half of the year has been very good and we remain focussed on building our recurring revenues in line with our business model. We are uncovering an increasing breadth of opportunities to constantly grow that recurring revenue and remain confident in our future 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, acquisition costs and in the previous period the accelerated write off of arrangement fees on the restructuring of our bank borrowing facility.
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, acquisition costs and in the previous period the accelerated write off of arrangement fees on the restructuring of our bank borrowing facility 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:
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iomart Group plc |
Tel: 0141 931 6400 |
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Angus MacSween |
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Richard Logan |
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Peel Hunt LLP (Nominated Adviser and Broker) |
Tel: 020 7418 8900
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Richard Kauffer Euan Brown |
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Alma PR |
Tel: 020 8004 4217 |
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Caroline Forde |
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Hilary Buchanan |
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About iomart Group plc
iomart Group Plc (AIM: IOM) designs, builds and manages cloud environments. Expert in all types of managed cloud - public, private and hybrid - iomart is vendor, platform and technology agnostic and will recommend the cloud environment to meet your specific business needs.
With a global infrastructure of 10 UK and 6 Global data centres, fully certified to supply services to both the public and private sectors, and with over 200 technical experts on hand, iomart delivers Any Cloud Your Way.
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 16% to £42.1m (H1 2016: £36.4m). Our adjusted EBITDA has grown by 13% to £17.6m (H1 2016: £15.5m) and our adjusted profit before tax by 23% to £10.6m (H1 2016: £8.7m).
Market
The move to the cloud continues to be at the centre of attention within IT departments.
iomart continues to invest in the skills required to architect, migrate, manage, monitor, secure and scale public cloud, private cloud, hybrid IT and traditional IT, with a view to enabling organisations to transform, innovate, and scale their operations.
There is a long term and large market opportunity in preparing and managing enterprises for transformation and deployment to cloud platforms. The IT environment has become more complex with more choice and we see a growing requirement for the skills associated with cloud adoption.
Our ongoing challenge and opportunity is to navigate through these early days of the further evolution of cloud adoption to ensure we continue to develop the assets, skills and resources necessary to be successful in that space.
As we have broadened the scope of our services to include professional services, we have begun to see the benefits of having the skill sets around consulting and managing cloud transformation. We are entering into more strategic conversations with IT departments who are looking for 'joined up thinking' when it comes to looking at moving applications or services to the cloud.
There is a growing trend to manage IT in a more fragmented way. Gone are the days when large organisations or departments would outsource their entire IT departments and magically believe that things would somehow be better.
IT evolution now tends to be 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.
This is a very long term market opportunity. We are only now starting to see back office workloads move to cloud environments and this is a trend that will continue for many years. It is, after all, only day 2 of the internet.
Operational review
Cloud Services
The Cloud Services operation continues to perform well, delivering an overall revenue growth rate of 13% with an encouraging 10% organic growth rate.
During the period we have continued to win new business in both the private and public cloud arenas. Our positioning as an agnostic supplier of cloud solutions together with our wide range of skills and experience makes us the ideal partner for companies that are considering moving some or all of their infrastructure into the cloud.
We have continued to develop our relationships with the main vendors in the market including Microsoft, Dell/ EMC and AWS. Our consultancy division, SystemsUp, has recently been named as an AWS Public Sector Partner for Government. The public cloud vendors led by AWS and Microsoft continue to win market share and it is clear that they require an ecosystem of organisations, such as iomart, to provide services and support to the users of these public clouds.
This has led to the generation of revenue from the provision of Public Cloud solutions. As expected this has modestly affected some of our percentage profit margins and the impact of this has been a reduction in our percentage margins at both gross profit and adjusted EBITDA level but compensated by an improvement in our adjusted and reported profit before tax percentage margins. This is due to the fact that as we provide Public Cloud solutions to our customers we incur a charge from the Public Cloud service provider which is included within our cost of sales. The increased cost of providing Public Cloud solutions has offsetting savings elsewhere within our income statement with lower charges for power, which is also included in cost of sales and depreciation. On private or hybrid cloud solutions we acquire and operate the infrastructure ourselves and thereby incur depreciation and power charges for their operation, whereas the charge from the Public Cloud service provider includes these costs.
The acquisition of Cristie Data Limited ("Cristie") towards the end of the period provides us with access to an excellent customer base many of whom are in the public sector.
Our revenues have grown to £35.6m (H1 2016: £31.5m) 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 as expected and with the addition of United Communications Limited (which trades as "United Hosting") from November 2015 has recorded substantial growth in both revenue and profitability.
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 33% to £6.6m (H1 2016: £4.9m) mainly as a result of our acquisitions, although we have also seen organic growth of 3% (H1 2016: organic decline of 9.5%) during this period.
M&A Activity
On 25 August we acquired the entire share capital of Cristie on a no debt, no cash, normalised working capital basis. Cristie provides storage and backup solutions and has a significant presence in the public sector market. On completion a payment of £3.8m, including adjustments required in respect of normalised working capital, was made to acquire Cristie which at the time had £3.1m of cash resulting in a net outflow of funds of £0.7m to acquire the company.
The M&A market continues to provide opportunities and we remain committed to continuing to complement our organic growth through further acquisitions.
Financial Performance
Revenue
Overall revenues from our operations grew 16% to £42.1m (H1 2016: £36.4m).
Our Cloud Services segment grew revenues by 13% to £35.6m (H1 2016: £31.5m). This increase was largely due to organic growth of 10% (H1 2016: 10%) added to which was the contribution for the full six month period from the acquisition of SystemsUp in June 2015 and a modest contribution from the acquisition of Cristie.
Our Easyspace segment grew revenues by 33% to £6.6m (H1 2016: £4.9m). This increase was mainly due to the impact of the acquisition of United Hosting although the segment did record organic revenue growth of 3% in the period (H1 2016: 9.5% organic revenue decline).
Gross Margin
The gross profit in the period, which is calculated by deducting from revenue variable cost of sales such as domain costs, power and sales commission and the relatively fixed costs of operating our datacentres, increased by 12% to £27.7m (H1 2016: £24.7m). 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 65.8% (H1 2016: 67.7%). As explained above Cloud Services saw a reduction in gross margin percentage as we begin to provide Public Cloud solutions which incur a charge from the Public Cloud service provider with offsetting savings elsewhere within our income statement.
The gross profit margin within our traditional private and hybrid cloud solutions continues to rise due to our relatively static datacentre costs which to some extent are fixed in nature and therefore do not rise in line with revenue growth.
The Easyspace segment saw an increase in its gross margin percentage mainly due to the favourable impact of the acquisition of United Hosting in November 2015.
Whilst the provision of Public Cloud solutions into our range of services has, as expected, impacted our gross and adjusted EBITDA percentage margins, due to offsetting savings elsewhere within our income statement, it has not had an adverse effect on our adjusted profit before tax percentage margin which increased to 25.2% (H1 2016: 23.8%).
Adjusted EBITDA
The Group's adjusted EBITDA grew by 13% to £17.6m (H1 2016: £15.5m) reflecting a significantly improved performance. In percentage terms the adjusted EBITDA margin reduced to 41.8% (H1 2016: 42.6%) with the reduction arising in the Cloud Services segment whilst the Easyspace segment recorded an improved gross margin percentage.
Cloud Services increased its adjusted EBITDA by 8% to £16.3m (H1 2016: £15.0m). The continued improvement in adjusted EBITDA is largely due to the additional gross margin contribution arising from our organic sales growth offset by continued investment in staffing levels and a full period contribution from the acquisition of SystemsUp in June 2015. In percentage terms the margin reduced to 45.8% (H1 2016: 47.8%). The primary reasons for the percentage margin reduction were the reduction in the Cloud Services gross margin percentage previously described and inclusion of SystemsUp for the full six month period. Whilst we have initially included the activities of Cristie within the Cloud Services segment we intend to consider this further in due course and may not include it within this segment in the future.
The adjusted EBITDA of Easyspace increased by 38% to £3.1m (H1 2016: £2.2m) largely as a result of the impact of the acquisition of United Hosting in November 2015. In percentage terms the margin increased to 46.8% (H1 2016: 44.9%) which again was predominantly due to the impact of the acquisition of United Hosting.
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 £1.8m have increased modestly in the period (H1 2016: £1.7m).
Adjusted profit before tax
Depreciation charges of £5.4m (H1 2016: £5.6m) have slightly reduced. This is a combination of additional depreciation charges as a result 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. In addition we have not incurred any capital expenditure on the provision of public cloud solutions which has had the effect of reducing our depreciation charge in absolute terms and also in it falling as a percentage of our revenue to 12.7% (H1 2016: 15.3%). In addition this percentage reduction is also due to the impact of the mix of assets which we have acquired, with differing useful lives causing reduced depreciation charges and the fact that not all of our operations require the same level of capital expenditure to generate revenue. For example, our SystemsUp consultancy operation requires no significant capital expenditure and thereby does not generate a depreciation charge related to its revenues. The charge for the amortisation of intangible assets, excluding amortisation of intangible assets resulting from acquisitions ("amortisation of acquired intangible assets") has increased to £0.9m (H1 2016: £0.6m) 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, the interest charge on contingent consideration due and in the previous period the accelerated write off of arrangement fees on restructuring of our bank borrowing facility were £0.7m (H1 2016: £0.6m).
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, the accelerated write off of arrangement fees in the previous period and the mark to market adjustment on interest rate swaps, from adjusted EBITDA the adjusted profit for the period before tax increased by 23% to £10.6m (H1 2016: £8.7m).
The adjusted profit before tax margin for the period was 25.2% (H1 2016: 23.8%). The increase in percentage margin of 1.4% is due to a combination of the reduction in the adjusted EBITDA margin over the period of 0.8% offset by the reduction in deprecation charge as a percentage of revenue of 2.6%.
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 before tax |
|
6 months to 30/09/2016 |
6 months to 30/09/2015 |
Year to 31/03/2016 |
|
Adjusted profit before tax |
|
10,632 |
8,677 |
18,970 |
|
Less: Share based payments |
|
(557) |
(338) |
(1,081) |
|
Less: Amortisation of acquired intangible assets |
|
(2,697) |
(2,417) |
(5,354) |
|
Less: Acquisition costs |
|
(102) |
(129) |
(116) |
|
Less: Accelerated write off of arrangement fees on restructuring of facility |
|
- |
(177) |
(177) |
|
Add: Mark to market adjustment on interest rate swaps |
|
43 |
67 |
64 |
|
Less: Interest on contingent consideration |
|
(177) |
- |
(152) |
|
Add: Gain on revaluation of contingent consideration |
|
- |
- |
870 |
|
Profit before tax |
|
7,142 |
5,683 |
13,024 |
The adjusting items are: share based payment charges in the period which increased to £0.6m (H1 2016: £0.3m) as a result of the issue of additional share options; charges for the amortisation of acquired intangible assets of £2.7m (H1 2016: £2.4m) which have increased mainly as a result of the full period effect of acquisitions made in previous periods; costs of £0.1m (H1 2016: £0.1m) as a result of acquisitions; finance charges of £nil (H1 2016: £0.2m) due to the accelerated release of arrangement fees on the bank borrowing facility which was restructured in the previous period; a finance cost credit of £0.04m (H1 2016: £0.07m) 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 £0.2m (H1 2016: £nil).
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, the interest charges in respect of contingent consideration due and the accelerated write off of arrangement fees on the bank borrowing facility which was restructured during the previous period from the adjusted profit before tax, the reported profit before tax increased by 26% to £7.1m (H1 2016: £5.7m).
In percentage terms the profit before tax margin was 17.0% (H1 2016: 15.6%). This increase in percentage margin of 1.4% is similar to the increase in the adjusted profit before tax percentage margin and is due to the same reasons as the adjusted profit before tax margin increase previously explained.
Profit for the period from total operations
There is a tax charge in the period of £1.3m (H1 2016: £0.8m), which comprises a current taxation charge of £2.1m (H1 2016: £1.7m), and a deferred taxation credit of £0.8m (H1 2016: £0.9m). 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 £5.8m (H1 2016: £4.9m) an increase of 20%.
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 accelerated write off of arrangement fees on the restructuring of the bank facility in the previous period, 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 8.03p (H1 2016: 6.75p) an increase of 19%.
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 5.43p (H1 2016: 4.57p) an increase of 19%.
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 £16.7m (H1 2016: £13.6m), which is 95% of our adjusted EBITDA (H1 2016: 88%). Expenditure on taxation in the period was £1.2m (H1 2016: £1.8m), which was reduced due to the receipt of a tax refund relating to previous periods, resulting in net cash flow from operating activities in the period of £15.5m (H1 2016: £11.8m).
Expenditure on investing activities of £8.5m (H1 2016: £16.3m) was incurred in the period. £4.6m (H1 2016: £6.6m), 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. We made purchases of intangible assets of £1.4m (H1 2016: £0.4m) in the period, with the increase largely due to the advance purchase of additional software licences for storage and backup purposes. In respect of M&A activity £1.2m (H1 2016: £nil) was paid out for contingent consideration due on acquisitions made in previous periods and £0.7m (H1 2016: £8.7m) was incurred on the acquisition of Cristie in the period, as described above, net of cash acquired of £3.1m. We also incurred £0.7m (H1 2016: £0.6m) in respect of the capitalisation of development costs during the period.
There was net cash used in financing activities of £6.7m (H1 2016: £4.0m net cash generated). We generated £0.6m (H1 2016: £0.1m) from the issue of shares as a result of the exercise of options by staff. We made no drawdowns under our bank facility (H1 2016: £9.0m) and we made repayments of £3.0m (H1 2016: £1.0m) during the period. We repaid £0.3m (H1 2016: £0.6m) of finance leases and incurred £0.6m (H1 2016: £0.8m) of finance charges. We also made a dividend payment of £3.4m (H1 2016: £2.7m). As a result cash and cash equivalent balances at the end of the period were £10.6m (H1 2016: £7.9m).
Net Debt
The net debt position of the Group at the end of the period was £22.2m (H1 2016: £23.2m). This represents a multiple of less than one times our annual adjusted EBITDA which we believe is a very comfortable level of debt to carry.
Current trading and outlook
Trading in the first half of the year has been very good and we remain focussed on building our recurring revenues in line with our business model. We are uncovering an increasing breadth of opportunities to constantly grow that recurring revenue and remain confident in our future prospects.
Angus MacSween
CEO
5 December 2016
Consolidated Interim Statement of Comprehensive Income
Six months ended 30 September 2016
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
|
6 months to 30/09/2016 |
6 months to 30/09/2015 |
Year to 31/03/2016 |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Revenue |
|
42,119 |
36,431 |
76,280 |
|
|
|
|
|
|
|
Cost of sales |
|
(14,416) |
(11,755) |
(24,650) |
|
|
|
|
|
|
|
Gross profit |
|
27,703 |
24,676 |
51,630 |
|
|
|
|
|
|
|
Administrative expenses |
|
(19,693) |
(18,217) |
(37,917) |
|
|
|
|
|
|
|
Operating profit |
|
8,010 |
6,459 |
13,713 |
|
|
|
|
|
|
|
Analysed as: |
|
|
|
|
|
Earnings before interest, tax, depreciation, amortisation, acquisition costs and share based payments |
|
17,585 |
15,520 |
32,341 |
|
Share based payments |
|
(557) |
(338) |
(1,081) |
|
Acquisition costs |
4 |
(102) |
(129) |
(116) |
|
Depreciation |
8 |
(5,365) |
(5,570) |
(10,878) |
|
Amortisation - acquired intangible assets |
|
(2,697) |
(2,417) |
(5,354) |
|
Amortisation - other intangible assets |
|
(854) |
(607) |
(1,199) |
|
|
|
|
|
|
|
Gain on revaluation of contingent consideration |
|
- |
- |
870 |
|
Finance income |
|
16 |
10 |
128 |
|
Finance costs |
5 |
(884) |
(786) |
(1,687) |
|
|
|
|
|
|
|
Profit before taxation |
|
7,142 |
5,683 |
13,024 |
|
|
|
|
|
|
|
Taxation |
6 |
(1,327) |
(803) |
(2,005) |
|
|
|
|
|
|
|
Profit for the period from total operations |
|
5,815 |
4,880 |
11,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
Currency translation differences
|
|
14 |
1 |
10 |
|
Other comprehensive expense for the period |
|
14 |
1 |
10 |
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
5,829 |
4,881 |
11,029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to equity holders of the parent |
|
5,829 |
4,881 |
11,029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
Total operations |
|
|
|
|
|
Basic earnings per share |
3 |
5.43 p |
4.57 p |
10.32 p |
|
Diluted earnings per share |
3 |
5.36 p |
4.52 p |
10.17 p |
Consolidated Interim Statement of Financial Position
As at 30 September 2016
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
|
30/09/2016 |
30/09/2015 |
31/03/2016 |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Intangible assets - goodwill |
7 |
61,724 |
55,050 |
61,123 |
|
Intangible assets - other |
7 |
22,497 |
19,366 |
23,065 |
|
Lease deposit |
|
2,760 |
2,416 |
2,760 |
|
Property, plant and equipment |
8 |
35,340 |
34,831 |
36,045 |
|
|
|
122,321 |
111,663 |
122,993 |
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
|
10,599 |
7,938 |
10,341 |
|
Trade and other receivables |
|
14,092 |
13,123 |
13,718 |
|
|
|
24,691 |
21,061 |
24,059 |
|
|
|
|
|
|
|
Total assets |
|
147,012 |
132,724 |
147,052 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Contingent consideration due on acquisitions |
9 |
- |
- |
(2,068) |
|
Non-current borrowings |
|
(740) |
(1,029) |
(826) |
|
Trade and other payables |
|
(318) |
(593) |
(455) |
|
Provisions for other liabilities and charges |
|
(2,010) |
(2,330) |
(1,879) |
|
Deferred tax liability |
|
(1,521) |
(1,521) |
(2,075) |
|
|
|
(4,589) |
(5,473) |
(7,303) |
|
Current liabilities |
|
|
|
|
|
Contingent consideration due on acquisitions |
9 |
(2,220) |
(2,655) |
(1,135) |
|
Trade and other payables |
|
(19,827) |
(17,445) |
(19,532) |
|
Provisions |
|
- |
- |
(211) |
|
Current income tax liabilities |
|
(2,506) |
(1,645) |
(1,504) |
|
Current borrowings |
|
(32,037) |
(30,078) |
(35,098) |
|
|
|
(56,590) |
(51,823) |
(57,480) |
|
|
|
|
|
|
|
Total liabilities |
|
(61,179) |
(57,296) |
(64,783) |
|
|
|
|
|
|
|
Net assets |
|
85,833 |
75,428 |
82,269 |
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Share capital |
|
1,078 |
1,078 |
1,078 |
|
Own shares |
|
(267) |
(514) |
(489) |
|
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 |
|
(23) |
(46) |
(37) |
|
Retained earnings |
|
57,795 |
47,660 |
54,467 |
|
Total equity |
|
85,833 |
75,428 |
82,269 |
Consolidated Interim Statement of Cash Flows
Six months ended 30 September 2016
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
|
6 months to 30/09/2016 |
6 months to 30/09/2015 |
Year to 31/03/2016 |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Profit before tax |
|
7,142 |
5,683 |
13,024 |
|
Gain on revaluation of contingent consideration |
|
- |
- |
(870) |
|
Finance costs - net |
|
868 |
776 |
1,559 |
|
Depreciation |
|
5,365 |
5,570 |
10,878 |
|
Amortisation |
|
3,551 |
3,024 |
6,553 |
|
Share based payments |
|
557 |
338 |
1,081 |
|
Movement in trade receivables |
|
186 |
(1,111) |
(1,612) |
|
Movement in trade payables |
|
(944) |
(634) |
298 |
|
Cash flow from operations |
|
16,725 |
13,646 |
30,911 |
|
Taxation paid |
|
(1,222) |
(1,826) |
(4,311) |
|
Net cash flow from operating activities |
|
15,503 |
11,820 |
26,600 |
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
|
|
|
Purchase of property, plant and equipment |
|
(4,634) |
(6,643) |
(12,385) |
|
Capitalisation of development costs |
|
(667) |
(577) |
(1,123) |
|
Purchase of intangible assets |
|
(1,384) |
(406) |
(1,207) |
|
Payment for acquisition of subsidiary undertakings net of cash acquired |
|
(675) |
(8,651) |
(15,924) |
|
Contingent consideration paid |
|
(1,161) |
- |
(1,650) |
|
Payment of deposits |
|
- |
- |
(300) |
|
Finance income received |
|
16 |
10 |
33 |
|
Net cash used in investing activities |
|
(8,505) |
(16,267) |
(32,556) |
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
Exercise of share options |
|
610 |
54 |
91 |
|
Draw down of bank loans |
|
- |
9,000 |
16,500 |
|
Repayment of finance leases |
|
(343) |
(577) |
(984) |
|
Repayment of bank loans |
|
(3,000) |
(1,000) |
(3,500) |
|
Finance costs paid |
|
(632) |
(771) |
(1,489) |
|
Dividends paid |
|
(3,375) |
(2,668) |
(2,668) |
|
Net cash (used in)/generated from financing activities |
|
(6,740) |
4,038 |
7,950 |
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
258 |
(409) |
1,994 |
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period |
|
10,341 |
8,347 |
8,347 |
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period |
|
10,599 |
7,938 |
10,341 |
Consolidated Interim Statement of Changes in Equity
Six months ended 30 September 2016
|
Changes in equity |
Share capital |
Own shares EBT |
Own shares Treasury |
Foreign currency translation reserve |
Capital redemption reserve |
Share premium account |
Merger reserve |
Retained earnings |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 1 April 2015 |
1,078 |
(70) |
(468) |
(47) |
1,200 |
21,067 |
4,983 |
44,936 |
72,679 |
|
|
|
|
|
|
|
|
|
|
|
|
Profit in the period |
- |
- |
- |
- |
- |
- |
- |
4,880 |
4,880 |
|
Currency translation differences |
- |
- |
- |
1 |
- |
- |
- |
- |
1 |
|
Total comprehensive income |
- |
- |
- |
1 |
- |
- |
- |
4,880 |
4,881 |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
- |
- |
- |
- |
- |
- |
- |
(2,668) |
(2,668) |
|
Share based payments
|
- |
- |
- |
- |
- |
- |
- |
338 |
338 |
|
Deferred tax on share based payments
|
- |
- |
- |
- |
- |
- |
- |
144 |
144 |
|
Issue of own shares for option redemption
|
- |
- |
24 |
- |
- |
- |
- |
30 |
54 |
|
Total transactions with owners |
- |
- |
24 |
- |
- |
- |
- |
(2,156) |
(2,132) |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 September 2015 |
1,078 |
(70) |
(444) |
(46) |
1,200 |
21,067 |
4,983 |
47,660 |
75,428 |
|
|
|
|
|
|
|
|
|
|
|
|
Profit in the period |
- |
- |
- |
- |
- |
- |
- |
6,139 |
6,139 |
|
Currency translation differences |
- |
- |
- |
9 |
- |
- |
- |
- |
9 |
|
Total comprehensive income |
- |
- |
- |
9 |
- |
- |
- |
6,139 |
6,148 |
|
|
|
|
|
|
|
|
|
|
|
|
Share based payments
|
- |
- |
- |
- |
- |
- |
- |
743 |
743 |
|
Deferred tax on share based payments
|
- |
- |
- |
- |
- |
- |
- |
(87) |
(87) |
|
Issue of own shares for option redemption
|
- |
- |
25 |
- |
- |
- |
- |
12 |
37 |
|
Total transactions with owners |
- |
- |
25 |
- |
- |
- |
- |
668 |
693 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 March 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 |
Notes to the Half Yearly Financial Information
Six months ended 30 September 2016
1. Accounting policies
The financial information for the year ended 31 March 2016 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 2016 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 2017. The Group financial statements for the year ended 31 March 2016 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 2016. The provisions of IAS 34 'Interim Financial Reporting' have not been applied in full.
2. Operating segments
Revenue by Operating Segment
|
|
6 months to 30/09/2016 |
6 months to 30/09/2015 |
Year to 31/03/2016 |
||||||
|
|
External |
Internal |
Total |
External |
Internal |
Total |
External |
Internal |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Easyspace |
6,550 |
- |
6,550 |
4,936 |
- |
4,936 |
10,883 |
- |
10,883 |
|
Cloud Services |
35,569 |
846 |
36,415 |
31,495 |
481 |
31,976 |
65,397 |
1,114 |
66,511 |
|
|
42,119 |
846 |
42,965 |
36,431 |
481 |
36,912 |
76,280 |
1,114 |
77,394 |
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 to 30/09/2016 |
6 months to 30/09/2015 |
Year to 31/03/2016 |
|
|
|
|
|
£'000 |
£'000 |
£'000 |
|
United Kingdom |
|
|
|
35,062 |
30,072 |
64,218 |
|
Rest of the World |
|
|
|
7,057 |
6,359 |
12,062 |
|
Revenue from operations |
|
|
42,119 |
36,431 |
76,280 |
|
2. Operating segments (continued)
Profit by Operating Segment
|
|
6 months to 30/09/2016 |
6 months to 30/09/2015 |
Year to 31/03/2016 |
||||||
|
|
EBITDA before share based payments and acquisition costs |
Share based payments, acquisition costs, depreciation & amortisation |
Operating profit/(loss) |
EBITDA before share based payments and acquisition costs |
Share based payments, acquisition costs, depreciation & amortisation |
Operating profit/(loss) |
EBITDA before share based payments and acquisition costs |
Share based payments, acquisition costs, depreciation & amortisation |
Operating profit/(loss) |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Easyspace |
3,067 |
(840) |
2,227 |
2,215 |
(198) |
2,017 |
5,094 |
(815) |
4,279 |
|
Cloud Services |
16,287 |
(8,076) |
8,211 |
15,041 |
(8,396) |
6,645 |
31,084 |
(16,616) |
14,468 |
|
Group overheads |
(1,769) |
- |
(1,769) |
(1,736) |
- |
(1,736) |
(3,837) |
- |
(3,837) |
|
Share based payments |
- |
(557) |
(557) |
- |
(338) |
(338) |
- |
(1,081) |
(1,081) |
|
Acquisition costs |
- |
(102) |
(102) |
- |
(129) |
(129) |
- |
(116) |
(116) |
|
|
17,585 |
(9,575) |
8,010 |
15,520 |
(9,061) |
6,459 |
32,341 |
(18,628) |
13,713 |
|
Gain on revaluation of contingent consideration |
|
|
- |
|
|
- |
|
|
870 |
|
Group interest and tax |
|
|
(2,195) |
|
|
(1,579) |
|
|
(3,564) |
|
Profit for the period |
17,585 |
(9,575) |
5,815 |
15,520 |
(9,061) |
4,880 |
32,341 |
(18,628) |
11,019 |
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 to 30/09/2016 |
6 months to 30/09/2015 |
Year to 31/03/2016 |
|
|
|
|
|
|
Total Operations |
|
|
|
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
|
Profit for the financial period and basic earnings attributed to ordinary shareholders |
5,815 |
4,880 |
11,019 |
|
|
|
|
|
|
|
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 |
(619) |
(932) |
(898) |
|
Shares held by Employee Benefit Trust |
(141) |
(141) |
(141) |
|
Weighted average number of ordinary shares - basic |
107,043 |
106,730 |
106,764 |
|
Dilutive impact of share options |
1,390 |
1,245 |
1,609 |
|
Weighted average number of ordinary shares - diluted |
108,433 |
107,975 |
108,373 |
|
|
|
|
|
|
Basic earnings per share |
5.43 p |
4.57 p |
10.32 p |
|
Diluted earnings per share |
5.36 p |
4.52 p |
10.17 p |
|
Adjusted earnings per share |
6 months to 30/09/2016 |
6 months to 30/09/2015 |
Year to 31/03/2016 |
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
|
Profit for the financial period and basic earnings attributed to ordinary shareholders |
5,815 |
4,880 |
11,019 |
|
- Amortisation of acquired intangible assets |
2,697 |
2,417 |
5,354 |
|
- Acquisition costs |
102 |
129 |
116 |
|
- Share based payments |
557 |
338 |
1,081 |
|
- Mark to market interest adjustment |
(43) |
(67) |
(64) |
|
- Accelerated finance cost due to refinancing |
- |
177 |
177 |
|
- Finance charge on contingent consideration |
177 |
- |
152 |
|
- Gain on revaluation of contingent consideration |
- |
- |
(870) |
|
- Tax impact of adjusted items |
(597) |
(590) |
(1,311) |
|
Adjusted profit for the financial period and adjusted basic earnings attributed to ordinary shareholders |
8,708 |
7,284 |
15,654 |
|
|
|
|
|
|
Adjusted basic earnings per share |
8.14 p |
6.82 p |
14.66 p |
|
Adjusted diluted earnings per share |
8.03 p |
6.75 p |
14.44 p |
4. Acquisition costs
|
|
|
|
6 months to 30/09/2016 £'000 |
6 months to 30/09/2015 £'000 |
Year to 31/03/2016 £'000 |
|
|
|
|
|
|
|
|
Professional fees |
|
98 |
113 |
263 |
|
|
Non-recurring integration costs |
|
|
|
|
|
|
- Onerous lease provisions |
|
- |
- |
(169) |
|
|
- Other |
|
4 |
16 |
22 |
|
|
Total acquisition costs for the period |
|
102 |
129 |
116 |
|
During the period costs of £98,000 (H1 2016: £113,000) were incurred in respect of professional fees on an acquisition. In addition to these professional fees, one-off costs of £4,000 (H1 2016: £16,000) directly related to the integration of acquisitions into the Group were also incurred.
5. Finance costs
|
|
|
|
6 months to 30/09/2016 £'000 |
6 months to 30/09/2015 £'000 |
Year to 31/03/2016 £'000 |
|
|
|
|
|
|
|
|
Bank loans |
|
(628) |
(505) |
(1,109) |
|
|
Finance leases |
|
(99) |
(135) |
(251) |
|
|
Other interest charges |
|
(23) |
(36) |
(62) |
|
|
Mark to market adjustment on interest rate swaps |
|
43 |
67 |
64 |
|
|
Accelerated write off of arrangement fees on restructuring of facility |
|
- |
(177) |
(177) |
|
|
Finance charge on contingent consideration |
|
(177) |
- |
(152) |
|
|
Finance costs for the period |
|
(884) |
(786) |
(1,687) |
|
6. Taxation
|
|
|
|
6 months to 30/09/2016 £'000 |
6 months to 30/09/2015 £'000 |
Year to 31/03/2016 £'000 |
|
|
|
|
|
|
|
|
Tax charge for the period |
|
(2,126) |
(1,720) |
(3,663) |
|
|
Adjustment relating to prior periods |
|
- |
(12) |
52 |
|
|
Total current taxation |
|
(2,126) |
(1,732) |
(3,611) |
|
|
|
|
|
|
|
|
|
Origination and reversal of temporary differences |
|
871 |
933 |
1,482 |
|
|
Adjustment relating to prior periods |
|
(4) |
- |
31 |
|
|
Effect of different statutory tax rates of overseas jurisdictions |
|
12 |
(4) |
61 |
|
|
Effect of changes in tax rates |
|
(80) |
- |
32 |
|
|
Total deferred taxation credit |
|
799 |
929 |
1,606 |
|
|
|
|
|
|
|
|
|
Taxation charge for the period |
|
(1,327) |
(803) |
(2,005) |
|
The Group has no unused tax losses (H1 2016: £0.5m) available for offset against future profits and therefore no corresponding deferred tax asset has been recognised (H1 2016: £0.5m).
7. Intangible assets
|
|
Goodwill |
Development costs |
Customer relationships |
Software |
Beneficial contracts |
Domain names & IP addresses |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
Cost: |
|
|
|
|
|
|
|
|
At 1 April 2015 |
47,342 |
3,709 |
26,431 |
2,114 |
86 |
280 |
79,962 |
|
Additions in the period |
- |
- |
- |
264 |
- |
- |
264 |
|
Currency translation differences |
- |
- |
(12) |
(2) |
- |
- |
(14) |
|
Acquired on acquisition of subsidiary |
7,708 |
- |
2,516 |
- |
- |
- |
10,224 |
|
Development costs capitalised |
- |
577 |
- |
- |
- |
- |
577 |
|
At 30 September 2015 |
55,050 |
4,286 |
28,935 |
2,376 |
86 |
280 |
91,013 |
|
Additions in the period |
- |
- |
- |
756 |
- |
- |
756 |
|
Currency translation differences |
- |
- |
35 |
5 |
- |
- |
40 |
|
Acquired on acquisition of subsidiary |
6,073 |
- |
5,912 |
- |
- |
- |
11,985 |
|
Development costs capitalised |
- |
546 |
- |
- |
- |
- |
546 |
|
At 31 March 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 |
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation: |
|
|
|
|
|
|
|
|
At 1 April 2015 |
- |
(2,496) |
(9,945) |
(1,003) |
(19) |
(116) |
(13,579) |
|
Currency translation differences |
- |
- |
5 |
1 |
- |
- |
6 |
|
Charge for the period |
- |
(384) |
(2,413) |
(195) |
(4) |
(28) |
(3,024) |
|
At 30 September 2015 |
- |
(2,880) |
(12,353) |
(1,197) |
(23) |
(144) |
(16,597) |
|
Currency translation differences |
- |
- |
(21) |
(5) |
- |
- |
(26) |
|
Charge for the period |
- |
(314) |
(2,934) |
(251) |
(3) |
(27) |
(3,529) |
|
At 31 March 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) |
|
|
|
|
|
|
|
|
|
|
Carrying amount: |
|
|
|
|
|
|
|
|
At 30 September 2016 |
61,724 |
1,863 |
17,877 |
2,619 |
56 |
82 |
84,221 |
|
|
|
|
|
|
|
|
|
|
At 31 March 2016 |
61,123 |
1,638 |
19,574 |
1,684 |
60 |
109 |
84,188 |
|
|
|
|
|
|
|
|
|
|
At 30 September 2015 |
55,050 |
1,406 |
16,582 |
1,179 |
63 |
136 |
74,416 |
8. Property, plant and equipment
|
|
Freehold property |
Leasehold improve-ments |
Datacentre equipment |
Computer equipment |
Office equipment |
Motor vehicles |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost: |
|
|
|
|
|
|
|
|
|
At 1 April 2015 |
2,062 |
6,857 |
18,367 |
37,978 |
2,144 |
48 |
67,456 |
|
|
Additions in the period |
- |
227 |
444 |
4,773 |
98 |
- |
5,542 |
|
|
Acquisition of subsidiary |
- |
- |
- |
9 |
- |
20 |
29 |
|
|
Disposals in the period |
- |
- |
- |
(15) |
- |
- |
(15) |
|
|
Currency translation differences |
- |
- |
- |
(18) |
- |
- |
(18) |
|
|
At 30 September 2015 |
2,062 |
7,084 |
18,811 |
42,727 |
2,242 |
68 |
72,994 |
|
|
Additions in the period |
- |
239 |
1,661 |
4,330 |
111 |
- |
6,341 |
|
|
Acquisition of subsidiary |
- |
- |
- |
143 |
3 |
- |
146 |
|
|
Currency translation differences |
- |
- |
- |
42 |
- |
- |
42 |
|
|
At 31 March 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 |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation: |
|
|
|
|
|
|
|
|
|
At 1 April 2015 |
(150) |
(1,858) |
(6,253) |
(23,196) |
(1,112) |
(41) |
(32,610) |
|
|
Charge for the period |
(20) |
(256) |
(769) |
(4,379) |
(139) |
(7) |
(5,570) |
|
|
Disposals in the period |
- |
- |
- |
15 |
- |
- |
15 |
|
|
Currency translation differences |
- |
- |
- |
2 |
- |
- |
2 |
|
|
At 30 September 2015 |
(170) |
(2,114) |
(7,022) |
(27,558) |
(1,251) |
(48) |
(38,163) |
|
|
Charge for the period |
(21) |
(223) |
(917) |
(4,020) |
(120) |
(7) |
(5,308) |
|
|
Currency translation differences |
- |
- |
- |
(7) |
- |
- |
(7) |
|
|
At 31 March 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) |
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount: |
|
|
|
|
|
|
|
|
|
At 30 September 2016 |
1,850 |
4,794 |
11,923 |
15,729 |
1,039 |
5 |
35,340 |
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2016 |
1,871 |
4,986 |
12,533 |
15,657 |
985 |
13 |
36,045 |
|
|
|
|
|
|
|
|
|
|
|
|
At 30 September 2015 |
1,892 |
4,970 |
11,789 |
15,169 |
991 |
20 |
34,831 |
|
9. Contingent consideration due on acquisitions
|
|
|
|
30/09/2016 |
30/09/2015 |
31/03/2016 |
|
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Contingent consideration due on acquisitions |
|
|
|
|
|
|
- ServerSpace Limited |
|
- |
(1,650) |
- |
|
|
- Systems Up Limited |
|
- |
(1,005) |
(135) |
|
|
- United Communications Limited |
|
(2,220) |
- |
(3,068) |
|
|
|
|
|
|
|
|
|
Total contingent consideration due on acquisitions |
|
(2,220) |
(2,655) |
(3,203) |
|
10. Analysis of change in net debt
|
|
|
Cash and cash equivalents £'000 |
Bank loans £'000 |
Finance leases and hire purchase £'000 |
Total £'000 |
|
|
|
|
|
|
|
|
At 1 April 2015 |
|
8,347 |
(21,457) |
(2,284) |
(15,394) |
|
|
|
|
|
|
|
|
Repayment of bank loans |
|
- |
1,000 |
- |
1,000 |
|
New bank loans |
|
- |
(9,000) |
- |
(9,000) |
|
Impact of effective interest rate |
|
- |
46 |
- |
46 |
|
Cash flow |
|
(409) |
- |
587 |
178 |
|
At 30 September 2015 |
|
7,938 |
(29,411) |
(1,697) |
(23,170) |
|
|
|
|
|
|
|
|
Repayment of bank loans |
|
- |
2,500 |
- |
2,500 |
|
New bank loans |
|
- |
(7,500) |
- |
(7,500) |
|
Inception of finance leases |
|
- |
- |
(97) |
(97) |
|
Impact of effective interest rate |
|
- |
(114) |
- |
(114) |
|
Acquired on acquisition of subsidiary |
|
4,476 |
- |
- |
4,476 |
|
Currency translation difference |
|
- |
- |
(2) |
(2) |
|
Cash flow |
|
(2,073) |
- |
397 |
(1,676) |
|
At 31 March 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) |
11. Acquisitions
Cristie Data Limited
The Group acquired 100% of the issued share capital of Cristie Data Limited ("Cristie") on 25 August 2016.
Cristie is a Stroud based data storage, backup and virtualisation solutions provider, which has operated across all sectors of industry from SMEs to large enterprises, and public sector to private sector for over 40 years. Cristie is particularly active in the UK public sector especially in education and health, which offers the opportunity for the Group to increase its presence in these areas. The acquisition is in line with the Group's strategy to grow its operations both organically and by acquisition.
During the current period the Group incurred £98,000 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 2016.
The following table summarises the consideration to acquire Cristie and the amounts of identified assets acquired and liabilities assumed at the acquisition date:
|
|
£'000 |
|
Recognised amounts of assets acquired and liabilities assumed (provisional): |
|
|
Cash and cash equivalents |
3,104 |
|
Trade and other receivables |
571 |
|
Property, plant and equipment |
206 |
|
Intangible assets |
982 |
|
Trade and other payables |
(1,361) |
|
Current borrowings |
(25) |
|
Current income tax liabilities |
(99) |
|
Deferred tax liability |
(200) |
|
Identifiable net assets |
3,178 |
|
Goodwill |
601 |
|
Total consideration |
3,779 |
|
|
|
|
Satisfied by: |
|
|
Cash - paid on acquisition |
3,779 |
|
Total consideration to be transferred |
3,779 |
The recognised amounts of all the assets acquired and liabilities assumed are provisional.
The agreed purchase price for the shares, on a cash-free, debt-free, normalised working capital basis was £1,250,000. On the date of the acquisition a payment of £3,779,000 was made in cash, including an amount of £2,529,000 in settlement in respect of the additional debt assumed, cash acquired and normalised working capital position of Cristie at completion.
Cristie earned revenue of £388,000 and generated profits before tax of £31,000 in the period since acquisition.
United Communications Limited
The fair values of acquired assets and liabilities, including goodwill, previously disclosed as provisional for United Communications Limited have been finalised in the current period with no changes to the fair values disclosed in the Annual Report and Accounts 2016.
13. Availability of half yearly reports
Half yearly reports will be sent to all shareholders on 11 January 2017. 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 2016 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 13 set out on pages 8 to 19. 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 Ireland) 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 2016 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
5 December 2016
This information is provided by RNS
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