Interim Results
Iomart Group PLC
16 August 2000
iomart Group plc
Interim results for the six months ended 30 June 2000
iomart Group plc ('iomart'), the Glasgow based telecommunications
and internet services business, presents its consolidated interim
results, which include the results of its subsidiary, iomart
Limited, for the six month period ended 30 June 2000.
Financial Highlights
* Six month turnover of £1.53 million, on target
* Loss before tax of £1.61 million, less than anticipated
* June 2000 monthly access minutes 100% up from December 1999
* Number of business web sites paying recurring subscriptions
up to 1250 at period end, 34% with e-commerce capability
* £19 million net raised from new investors following
successful AIM flotation in April 2000
Business Development Highlights
* Launch of ADSL broadband services announced
* Strategic partnership agreed with Sendmail Inc for provision
of secure and reliable business class e-mail
* Madasafish portal enhanced with introduction of new content
partnerships
* New unmetered access services to be launched shortly
* Staff numbers increased from 76 at 31 December 1999 to 126
at 30 June 2000
* Glasgow office moved to new purpose built facility
Angus MacSween, Chief Executive Officer, commented : -
'iomart has made strong progress. The numbers of users for both
ISP and web hosting services have increased dramatically. Our
overriding aim is to ensure our customers receive a very high
quality service and we have continued to invest in our network
and infrastructure, as well as successfully recruiting a pool of
talented and experienced management.
The imminent arrival of ADSL broadband services creates new
opportunities for iomart in what we believe will be a rapidly
growing market. We intend to position iomart as a significant
player in bringing this exciting technology to the UK market.'
16 August 2000
Enquiries:
iomart group plc Tel: 020 7457 2020
(today)
Angus MacSween, Chief Executive 0141 931 7000
(thereafter)
David Harrison, Finance Director
College Hill Tel: 020 7457 2020
Chelsea Allen
Email:chelsea.allen@collegehill.com
iomart Group plc
Interim Report
Six Months Ended 30 June 2000
Chief Executive Officer's Review
On 19 April 2000, shares in iomart Group plc were admitted to and
issued on the Alternative Investment Market (AIM), raising £19
million net after expenses through a placing and public offer.
These results represent our first as a publicly listed company.
They also cover our first full six month period of revenue
generation - although trading began late 1998, first customer
revenues only started in August 1999.
Financial Results
Turnover for the six months ended 30 June 2000 was £1.53 million,
of which £0.72 million was from the consumer market and £0.81
million from our business services. Analysed on a product basis,
internet access contributed £0.94 million and web hosting £0.59
million.
Total operating expenses amounted to £3.10 million. The main
categories of expenditure were staff costs of £0.98 million,
revenue share of £0.24 million, marketing costs of £0.62 million,
depreciation/amortisation of £0.38 million and other costs of
£0.88 million.
Other operating income of £0.17 million relates to grants
received.
The operating loss for the period was £1.40 million and the loss
before tax was £1.61 million. Loss per share was 4.1 pence on
both a basic and a diluted basis.
Cash balances at 30 June 2000 amounted to £16.88 million.
Consumer Market
Our user base has grown strongly during the period. The
Madasafish ISP has recorded 105,000 new signups and the number of
access minutes for the month of June 2000 at 29 million minutes
is double the December 1999 figure. The user churn rate has
remained relatively constant over the period, averaging 3.2%.
Very significant progress has been made in establishing the
Madasafish brand as a distinctive offering with high appeal to
its target market. The Madasafish portal has benefited from
several important new content partnerships, including those with
travelstore.com for travel services, anytimenow.com for on-line
diaries and fool.com for financial information. Following an
agreement with yack.com, Madasafish launched its unique MadLive
channel, effectively a 'Radio Times' guide to the internet,
informing users about live internet events and providing access
to them.
The past few months have seen considerable turbulence in the UK
ISP market caused by the appearance of 'unmetered' access
offered at unsustainable prices. Whilst a number of major ISPs
have announced their unmetered products, these have generally
experienced considerable start up problems and have struggled to
deliver reliable customer service. In our view many of these
services are unlikely to be financially viable in the long term.
iomart has chosen to delay its own unmetered service until it can
be confident of delivering a suitable high quality product at a
sensible price. An announcement on the launch of this product is
due shortly.
At the time of flotation, we outlined plans for an additional
ISP, to be called 'Jings' and with a focus on regional content.
However in light of the confusion surrounding the unmetered
issue, we have chosen to delay this until the ISP market
stabilises.
A range of Premium Rate Services is also under development for
launch shortly.
Business Services
We continue to work successfully with Virgin Net supporting their
Virginbiz.net web-hosting offering targeted at the business
market. We have also extended our involvement with Freeserve and
will be supporting their new clearlybusiness.co.uk joint venture
with Barclays Bank.
At the end of June 2000, over 11,000 web sites for business
customers had been created. Of these, we had 1250 sites paying
recurring subscriptions, with the rate of monthly signups for
such sites continuing to increase. Some 34% of our subscription
sites had e-commerce capability.
We anticipate significant growth in our own web hosting services.
Following a reassessment of our branding, we have decided not to
proceed with the Winbiz brand, preferring instead to use the
iomart name for our business products.
In June 2000, we announced an agreement with globalfarmers.com
who are launching a new ISP and on-line trading platform targeted
at the agricultural community. iomart will build and host the
service, giving globalfarmers.com the benefit of iomart's world
class internet infrastructure. Similar types of arrangements are
in place with MRI Modems and 365 Corporation.
We now offer co-location services in London and Edinburgh data
centres. Several customers are already confirmed in advance of a
full launch during third quarter 2000.
We also announced a key strategic partnership with Sendmail Inc.
focussing on business e-mail applications. Sendmail are the world
leader in the provision of high volume, high security e-mail
delivery. This partnership will provide iomart with access to a
major e-mail ASP platform enabling us to attack the fast growing
business mail outsourcing market.
Broadband Launch
During the period, we have worked with BT as one of the small
number of trialists for the introduction of ADSL broadband
services in the UK. Recently, we were pleased to announce the
full commercial launch of our own ADSL service which will offer
the benefits of this new technology to both our business and
consumer markets, working through the iomart B2B channel and the
Madasafish consumer brand respectively. We foresee rapid growth
in the demand for ADSL services in the UK and plan to become a
significant player in the provision of this technology.
With the introduction of local loop unbundling in the UK during
the next year, we will invest in our own ADSL infrastructure,
ensuring that we remain at the forefront in this market. We are
working with AboveNet to arrange joint co-location in a nation-
wide spread of Points of Presence, giving iomart favourable
access to a nation-wide Internet Protocol backbone (2.5 Gbps).
Continued Recruitment
We have been recruiting very actively during the period and have
seen our workforce grow from 76 to 126 at June 2000 of whom 90
are based at our dedicated Net Centre in Stornoway.
David Harrison joined the Board as our Finance Director in May
2000, bringing wide experience in international financial
management, company acquisitions and business strategy. During
the period we have been pleased to welcome a number of talented
and experienced senior managers and continue to seek further
people of similar calibre.
In July 2000, we moved our Glasgow office to a new purpose built
10,000 square feet facility at the West of Scotland Science Park.
Strategic Update
Our objective is for iomart to be an integrated
telecommunications and internet services company with a
substantial customer base and a scalable infrastructure that can
support the delivery of a wide range of services, especially
those reliant on broadband technology. Everything we do will be
underpinned by our focus on high standards of customer care and
quality of service.
In the business market, we will use ADSL as the entry point to
build long term customer relationships to which we can add web
services, other telephony services and ASP applications such as
the Sendmail e-mail platform and Microsoft packages.
Our consumer activities will concentrate on growing the
Madasafish brand including the introduction of effective
unmetered services, offered in combination with other telephony
products.
Prospects
Our marketplace has experienced considerable change and upheaval
over the past few months and we expect this to continue for the
foreseeable future. Against this background, we are confident
that iomart has the strength and flexibility to grow rapidly,
particularly in our range of services to business customers.
iomart is totally committed to taking advantage of the
significant opportunities in our chosen markets.
Angus MacSween
Chief Executive Officer
16 August 2000
iomart Group plc
Consolidated Profit and Loss Account
Six months ended 30 June 2000
6 months ended 18
months
ended
30 June 30 June 31
December
2000 1999 1999
£ 000 £ 000 £ 000
TURNOVER: continuing 1,530 - 283
operations
Operating expenses (3,101) (709) (2,533)
Other operating income 170 7 151
OPERATING LOSS: continuing (1,401) (702) (2,099)
operations
Interest received 215 14 21
Charge on early redemption (333) - -
of loan
Interest payable and (88) (24) (85)
similar charges
Net interest (206) (10) (64)
LOSS ON ORDINARY (1,607) (712) (2,163)
ACTIVITIES BEFORE TAXATION
Tax on loss on ordinary - - -
activities
LOSS ON ORDINARY (1,607) (712) (2,163)
ACTIVITIES AFTER TAXATION
FOR THE PERIOD
Loss per ordinary share (pence)
Basic (4.1p) (2.8p) (11.0p)
Diluted (4.1p) (2.8p) (11.0p)
There have been no recognised gains and 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.
Comparative information for the 6 months ended 30 June 1999 has
been extracted from the management accounts of iomart Limited,
and for the 18 months ended 31 December 1999 from iomart Limited
statutory accounts.
iomart Group plc
Consolidated Balance Sheet
30 June 2000
30 June 30 June 31
December
2000 1999 1999
£ 000 £ 000 £ 000
FIXED ASSETS
Tangible assets 1,555 1,083 1,291
Intangible assets 130 265 198
1,685 1,348 1,489
CURRENT ASSETS
Debtors 857 307 370
Cash at bank and in hand 16,884 360 475
17,741 667 845
CREDITORS: amounts falling (1,999) (647) (1,387)
due within one year
NET CURRENT ASSETS/ 15,742 20 (542)
(LIABILITIES)
TOTAL ASSETS LESS CURRENT 17,427 1,368 947
LIABILITIES
CREDITORS: amounts falling (517) (580) (1,610)
due after more than one year
16,910 788 (663)
CAPITAL AND RESERVES
Called up share capital 538 1,500 1,500
Capital redemption reserve 1,200 - -
Share premium account 18,942 - -
Profit and loss account (3,770) (712) (2,163)
TOTAL EQUITY SHAREHOLDERS' 16,910 788 (663)
FUNDS
Comparative information for 30 June 1999 has been extracted from
the management accounts of iomart Limited, and for 31 December
1999 from iomart Limited statutory accounts.
The results for the period ended 31 December 1999 are not
statutory accounts. The profit and loss account for the period
ended and the balance sheet at 31 December 1999 are an abridged
statement of the full accounts of iomart Limited for that period,
which have been delivered to the Registrar of Companies and on
which the report of the auditors was unqualified and did not
contain a statement under section 237 (2) or (3) of the Companies
Act 1985.
iomart Group plc
Reconciliation of movements in shareholders' funds
Six months ended 30 June 2000
6 months ended 18
months
ended
30 June 30 June 31 December
2000 1999 1999
£ 000 £ 000 £ 000
Loss for the financial (1,607) (712) (2,163)
period
New share capital subscribed 19,180 1,500 1,500
Net increase/(reduction) in 17,573 788 (663)
shareholders funds
Opening shareholders funds (663) - -
Closing shareholders funds 16,910 788 (663)
Analysis of movements in shareholders' funds
Six months ended 30 June 2000
Capital Share Profit
Share redempti premium and loss
on
capita reserve account account
l
£ 000 £ 000 £ 000 £ 000
Loss for the - - - (1,607)
financial period
Shares redeemed (1,200) 1,200 - -
New share capital 238 - 18,942 -
subscribed
Net (962) 1,200 18,942 (1,607)
increase/(reduction)
Opening balance 1,500 - - (2,163)
Closing balance 538 1,200 18,942 (3,770)
Comparative information for the 6 months ended 30 June 1999 has
been extracted from the management accounts of iomart Limited,
and for the 18 months ended 31 December 1999 from iomart Limited
statutory accounts.
iomart Group plc
Consolidated Cash Flow Statement
Six months ended 30 June 2000
6 months ended 18
months
ended
30 June 30 June 31
December
2000 1999 1999
£ 000 £ 000 £ 000
Net cash outflow from (1,066) (453) (1,001)
operating activities
Returns on investments and
servicing of finance
Bank interest received 215 14 21
Charge on early redemption (333) - -
of loan
Bank and other loan (33) (1) (13)
interest paid
Finance lease and hire (55) (23) (72)
purchase interest paid
Net cash outflow from
returns on (206) (10) (64)
investments and servicing
of finance
Capital expenditure
Payments to acquire (230) (22) (215)
tangible fixed assets
Payments to acquire - (282) (282)
intangible fixed assets
Net cash outflow from (230) (304) (497)
capital expenditure
Cash outflow before (1,502) (767) (1,562)
financing
Financing
Issue of share capital 19,180 1,500 1,500
New loans - - 1,000
Repayment of loans (1,000) - -
Repayment of hire purchase (269) (373) (463)
and finance leases
Net cash inflow from 17,911 1,127 2,037
financing
Increase in cash in the 16,409 360 475
period
Comparative information for the 6 months ended 30 June 1999 has
been extracted from the management accounts of iomart Limited,
and for the 18 months ended 31 December 1999 from iomart Limited
statutory accounts.
iomart Group plc
Notes to the Consolidated Cash Flow Statement
Six months ended 30 June 2000
1. Reconciliation of operating loss to net cash outflow from
operating activities
6 months 18
ended months
ended
30 June 30 June 31 December
2000 1999 1999
£ 000 £ 000 £ 000
Operating loss (1,401) (702) (2,099)
Depreciation 307 101 327
Amortisation of intangible 68 18 84
assets
Increase in debtors (487) (307) (370)
Increase in creditors 447 437 1,057
Net cash outflow from (1,066) (453) (1,001)
operating activities
2. Reconciliation of net cash flow to movement in net debt
6 months 18
ended months
ended
30 June 30 June 31 December
2000 1999 1999
£ 000 £ 000 £ 000
Increase in cash in period 16,409 360 475
Cash inflows/(outflows) from
debt and lease financing 1,269 373 (537)
Change in net debt from cash 17,678 733 (62)
flows
New hire purchase and finance (197) (1,163) (1,404)
leases
Opening net debt (1,466) - -
Closing net funds/ (debt) 16,015 (430) (1,466)
3. Analysis of change in net debt
At Other At
31December Cash non-cash 30 June
1999 flow changes 2000
£ 000 £ 000 £ 000 £ 000
Cash at bank and in 475 16,409 - 16,884
hand
Bank loan (1,000) 1,000 - -
Finance leases and (941) 269 (197) (869)
hire purchase
Total debt (1,941) 1,269 (197) (869)
Net funds/ (debt) (1,466) 17,678 (197) 16,015
Comparative information for the 6 months ended 30 June 1999 has
been extracted from the management accounts of iomart Limited,
and for the 18 months ended 31 December 1999 from iomart Limited
statutory accounts.
iomart Group plc
Accounting policies for the Consolidated Interim Statements
Six months ended 30 June 2000
The interim statements are prepared in accordance with the
accounting standards applicable at 31 December 1999, subject to
the additional implications of new Financial Reporting Standards
15 and 16. The implementation of FRS 15 and 16 has had no effect
on the results. The particular accounting policies adopted are
described below. These interim statements do not comprise
statutory accounts.
Accounting convention
The interim statements are prepared under the historical cost
convention.
Basis of consolidation
iomart Group plc was incorporated on 28 February 2000 and on 14
March 2000 it acquired all of the issued share capital of iomart
Limited by way of a share for share exchange. The group interim
statements consolidate the interim statements of iomart Group plc
and its subsidiary, iomart Limited, under merger accounting
principles as if the company had always owned iomart Limited and
as though iomart Group plc had always existed. There was no
difference between the nominal value of the shares issued by the
company and the nominal value of the shares acquired in the
purchase of its subsidiary.
Intangible fixed assets
Software licences are capitalised as intangible assets and
amortised over the period of the licence.
Tangible fixed assets
Depreciation is provided on cost in equal annual instalments over
the estimated useful lives of the assets. The rates of
depreciation are as follows:
Short-term leasehold improvements 25% per annum
Computer software and equipment Between 25% and 50%
per annum
Office equipment and vehicles 25% per annum
Grants
Amounts receivable as capital grants are treated as deferred
income and credited to the profit and loss account by instalments
on a basis consistent with the depreciation policy. Revenue
grants are credited to the profit and loss account in line with
the expenditure to which they relate.
Deferred taxation
Deferred taxation is provided on timing differences, arising from
the different treatment of items for accounts and taxation
purposes, which are expected to reverse in the future, calculated
at rates at which it is estimated that tax will arise.
Leases
Assets obtained under finance leases and hire purchase contracts
are capitalised at their fair value on acquisition and
depreciated over their estimated useful lives. The finance
charges are allocated over the period of the lease in proportion
to the capital element outstanding.
Operating lease rentals are charged to profit and loss account in
equal annual amounts over the lease term.
Development expenditure
Development expenditure is charged to the profit and loss account
as incurred.
Copies are available for collection from the offices of Peel
Hunt, 62 Threadneedle Street, London EC2R 8HP for the next 14
days.
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