REG - Iomart Group PLC - Final Results
Thu 07:00
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RNS Number : 3571S Iomart Group PLC 24 July 2025
24 July 2025
iomart Group plc
("iomart" or the "Group" or the "Company")
Final Results
iomart (AIM: IOM), the secure cloud services company, reports its final
results for the year ended 31 March 2025 (FY2025).
FINANCIAL HIGHLIGHTS
FY2025 FY2024 Change
Revenue £143.5m £127.0m +13%
% of recurring revenue(1) 89% 91% -2pp
Adjusted EBITDA(2) £34.3m £37.7m -9%
Adjusted EBIT(3) £12.8m £19.2m -33%
Adjusted profit before tax(4) £6.5m £15.0m -57%
(Loss)/profit before tax (£53.2m) £8.7m n/a
Adjusted diluted EPS(5) 3.4p 9.8p -65%
Basic EPS (49.0p) 5.8p n/a
Cash generation from operations £27.2m £36.6m -26%
Proposed final dividend per share - 3.0p n/a
Net debt £101.9m £42.3m 152%
· Acquisitions completed in FY24 and the contribution of 6 months of Atech
trading delivered overall revenue growth of 13% to £143.5m (2024: £127.0m).
· Atech delivered strong revenue growth on an annual basis of 27% (unaudited),
driven by the continued expansion of services within its existing customer
base.
· iomart cloud services revenue declined 7%, mainly due to previously reported
churn in self-managed and certain private cloud managed services. Growth from
new customer wins and increased spend from existing customers helped offset
some of the impact.
· Group adjusted EBIT reduced to £12.8m (2024: £19.2m), a margin of 8.9%
(2024: 15.1%) reflecting evolving revenue mix and increase in VMware license
amortisation expense.
· Adjusted PBT reduced to £6.5m (2024: £15.0m) reflecting reduction in
adjusted EBIT and the higher interest charges on bank debt post the Atech
acquisition.
· Statutory loss before tax impacted by exceptional non-cash goodwill impairment
charge of £52.9m resulting in a loss before tax of £53.2m.
· Good cash generation, with an adjusted EBITDA to operating cash flow (before
exceptional items) conversion ratio of 85% (2024: 100%). As previously
reported six larger vendors payments overlapped the opening position, with an
impact of around £2.5m, thus a more normalised basis of cash flow from
operations would result in a conversion ratio of around 93% in both years.
· Net debt increased to £101.9m (31 March 2024: £42.3m) following the cash
outflow of approximately £57m associated with the acquisition of Atech,
representing a proforma net debt leverage ratio of c. 2.7 times (FY24: 1.1
times) or 2.3 times (excluding IFRS lease liabilities of c. £18m).
· New £115m revolving credit facility agreed post year end, with a two-year
term to 30 June 2027 and covenants reflecting current leverage levels and
plans for the future.
· The Board believes it is in the best interest of shareholders to forego the
payment of a final dividend, with future dividends restored based on improved
operating profitability and a reduced overall level of indebtedness.
OPERATIONAL HIGHLIGHTS
· iomart cloud services order bookings for recurring revenue activity in the
year, excluding any Atech contribution, grew strongly, totalling £20
million in annualised recurring revenue (FY24: £16.5 million proforma
equivalent).
· Atech acquisition completed on 1 October 2024, significantly strengthening the
Group's public cloud and security proposition.
· Consolidation of marketing, sales, sales operations and pre-sales technical
teams into one group under the leadership of the Group's Chief Revenue
Officer, working closely with the business unit leaders of Atech and iomart
· Deepening of the Group's strategic alliances with Microsoft, Broadcom VMware
and Commvault, including achieving Azure Expert MSP status and obtaining the
final Microsoft solution partner designation to now hold all six designations.
These continued achievements make iomart Group one of the most accredited MSP
partners in the UK.
OUTLOOK
· Actions taken to deliver annualised cost savings of around £4m, with the
benefits becoming visible in H2 FY2026. Approximately 40% of the anticipated
savings identified and actioned in Q1 FY2026.
· Improved Cloud managed services net order bookings have provided a more stable
start to the FY26 year.
· Q1 trading was in line with the Board's expectations, recognising that cost
reductions are more H2 weighted. Full year effect of net churn in FY25 will
impact run-rate into FY26 but Q1 has achieved positive net order bookings.
· The Board is reviewing further medium-term opportunities to enhance efficiency
and reduce the cost base and debt position, including a review of the Group's
data centre footprint and the expansion of its Indian offshoring operations.
· While mindful of macroeconomic uncertainty, the market dynamics around the IT
cloud landscape continue to validate the Group's strategic direction and
reinforce the Board's confidence in iomart's ability to grow and develop.
Richard Last, Executive Chair commented,
"The year has been one of both challenge and transformation for iomart. The
Group's trading performance was mixed, with customer churn impacting revenue
and profits. On the positive side we have seen good order bookings growth in
the year, which gives the Board confidence in achieving our medium-term growth
strategy.
"The acquisition of Atech during the year was a significant milestone,
substantially enhancing the Group's scale, credibility, and capabilities in
public cloud and security. Since acquisition, Atech has delivered revenue
growth and profitability in line with our expectations, reinforcing the value
of this strategic move.
"Our focus for FY26 will be to improve the operating efficiency of the Group,
address churn in our self-managed and private cloud customer base, increase
sales momentum in high-growth service areas, including providing Atech with
the support to flourish, and to reduce our level of debt. The Board is
committed to delivering disciplined execution, operational efficiency, and
improved value for shareholders."
STATUTORY EQUIVALENTS
A full reconciliation between adjusted and statutory profit before tax is
contained within this statement. The largest item is the current year £52.9m
non-cash goodwill impairment charge relating to the iomart Cloud Services Cash
Generating Unit ("CGU"). This non-cash charge has no impact on the Group's
operational performance or cash flows but does result in a large statutory
loss before tax of £53.2m in the year to 31 March 2025.
Notes:
(1) Throughout this statement Recurring revenue is the revenue that repeats
either under long-term contractual arrangement or on a rolling basis by
predictable customer habit. % of recurring revenue is defined as Recurring
Revenue (as disclosed in note 3) / Revenue (as disclosed in the consolidated
statement of comprehensive income)
(2) Throughout this statement Adjusted EBITDA (as disclosed in the
consolidated statement of comprehensive income) is earnings before interest,
tax, depreciation and amortisation (EBITDA) before share-based payment
charges, acquisition costs, goodwill impairment charge exceptional
non-recurring costs. Throughout these financial statements acquisition costs
are defined as acquisition related costs and non-recurring acquisition
integration costs.
(3) Throughout this statement Adjusted EBIT is earnings before interest and
tax (EBIT) before amortisation charges on acquired intangible assets,
share-based payment charges, acquisition costs, goodwill impairment charge and
exceptional non-recurring costs. Throughout these financial statements
acquisition costs are defined as acquisition related costs and non-recurring
acquisition integration costs.
(4) Throughout this statement Adjusted profit before tax is profit before tax,
amortisation charges on acquired intangible assets, share-based payment
charges, acquisition costs and exceptional non-recurring costs.
(5) Throughout this statement adjusted diluted earnings per share, as
disclosed in note 7, is earnings per share before amortisation charges on
acquired intangible assets, share based payment charges, acquisition costs and
exceptional non-recurring costs and the taxation effect of these /weighted
average number of ordinary shares - diluted (as disclosed in note 7).
(6)Throughout this statement Gross profit margin % is defined as Gross Profit
/ Revenue as a % (both as disclosed in the consolidated statement of
comprehensive income)
(7)Throughout this statement Adjusted EBITDA margin % is defined as adjusted
EBITDA (as disclosed in the consolidated statement of comprehensive income) /
Revenue (as disclosed in the consolidated statement of comprehensive income)
as a %
(8)Throughout this statement Adjusted EBIT margin% is defined as adjusted EBIT
/ Revenue (as disclosed in the consolidated statement of comprehensive income)
as a %
(9) Throughout this statement EBIT is earnings before interest and tax
(10) Throughout this statement Order booking value being the annual revenue
value of the customer order at the time of booking, as opposed to the total
contract value or the actual revenue realised in the reporting period, which
will be influenced by the timing of order booking and the billing commencement
date.
(11) Net Debt is disclosed on note 11 and is the total of bank revolver loan,
lease liabilities and cash and cash equivalents. This includes £18m of lease
liabilities at 31 March 2025.
(12) Proforma net debt leverage ratio is defined as Net Debt (as disclosed on
note 11) / Adjusted EBITDA (as disclosed in the consolidated statement of
comprehensive income) along with 6 months of pre-acquisition Adjusted Atech
EBITDA being earnings before interest, tax, depreciation, amortisation,
acquisition related costs, non-recurring items and other costs particular to
Atech's previous ownership structure.
(13) Throughout this statement (loss)/profit before tax margin % is defined as
(loss)/profit before Tax / Revenue (both as disclosed in the consolidated
statement of comprehensive income) as a %
(14) Throughout this statement Adjusted profit before tax margin % is defined
as adjusted profit before tax / Revenue (as disclosed in the consolidated
statement of comprehensive income) as a %
For further information:
iomart Group plc Tel: 0141 931 6400
Richard Last, Executive Chair
Scott Cunningham, Chief Financial Officer
Investec Bank PLC (Nominated Adviser and Tel: 020 7597 4000
Broker)
Patrick Robb, Virginia Bull, James Smith
Alma Strategic Communications Tel: 020 3405 0205
Caroline Forde, Hilary Buchanan, Kinvara Verdon
About iomart Group plc
iomart Group plc (AIM: IOM) is one of the UK's leading providers of secure
cloud managed services, simplifying the complexities of modern technology for
businesses, with the majority of Group revenue derived from the UK. Our team
of 650+ experts deliver cutting-edge solutions in cloud infrastructure, modern
workplace management, and managed security services that enable our customers
to innovate, protect, and scale their businesses.
We proudly hold one of the UK's most extensive sets of Microsoft credentials,
including Azure Expert MSP, six Solution Designations, and membership in
Microsoft's Intelligent Security Association (MISA). As well as being a
top-tier Broadcom Pinnacle Partner for VMware Cloud. Which means we can bring
the latest technologies in hybrid cloud, data protection, and cyber resiliency
to meet the evolving needs of our customers.
For further information about the Group, please visit www.iomart.com
(http://www.iomart.com/)
CHAIR'S STATEMENT
I am pleased to present my first report to shareholders since being appointed
Chair of iomart Group plc ("iomart or Group") on 12 June 2024. The year to 31
March 2025 has been one of both challenge and transformation for iomart. The
Group's trading performance, as previously communicated, was mixed with
disappointingly higher than anticipated customer churn within our self-managed
and private cloud businesses adversely impacting revenue and profits. On the
positive side we have seen good order bookings growth in the year, which gives
the Board confidence in achieving our medium-term growth strategy.
The acquisition of Atech on 1 October 2024 was a significant milestone,
substantially enhancing the Group's scale, credibility, and capabilities,
particularly in Microsoft Azure, modern work, and cyber security solutions,
which are central to our focus on higher growth areas. Since acquisition,
Atech has delivered revenue growth and profitability in line with our
expectations, reinforcing the value of this strategic move. Atech has
experienced strong growth over the past year, driven by the continued
expansion of services within its existing customer base. As part of the iomart
Group, Atech now benefits from access to a broader customer network with a
high demand for its specialist expertise. Additionally, the company is
leveraging the Group's sales infrastructure to accelerate new customer wins.
In response to our reduced profitability, we have taken action to improve the
efficiency of our operations thereby reducing our ongoing cost base, including
targeted adjustments to our workforce, and improvements to the efficiency of
our data centres and supply chain operations. These actions are expected to
deliver annualised cost savings of around £4m, with the benefits becoming
visible in the second half of FY26. We are also exploring further medium-term
opportunities to enhance efficiency and reduce our cost base beyond this first
phase, including a review of our data centre footprint and the expansion of
our Indian offshoring operations.
Financial performance
Acquisitions completed in FY24 and the contribution of 6 months of Atech
trading, saw the Group deliver overall revenue growth of 13% and record
revenues of £143.5m (2024: £127.0m). Excluding acquisitions, the core
business experienced a revenue decline of 7% year-on-year predominantly due to
customer churn in our self-managed and certain private cloud managed services,
outweighing new customer wins and increased revenue from existing customers.
The resulting mix of revenue weighed heavily on our adjusted EBIT margin, as
did the change following Broadcom's acquisition of VMware which saw license
amortisation expense increase due to a new £2.9m charge (comparable £1.5m
recognised as operating expenses in FY24). As a result, the Group adjusted
EBIT reduced to £12.8m (2024: £19.2m) and adjusted profit before tax reduced
to £6.5m (2024: £15.0m) reflecting higher interest charges on the bank debt
taken on to fund the Atech acquisition.
The statutory results include a £52.9m non-cash exceptional goodwill
impairment charge relating to the iomart Cloud Services Cash Generating Unit
("CGU"). This reflects both the shift away from low growth, heritage product
areas and the previously disclosed accelerated customer churn in certain areas
of this CGU. This non-cash charge has no impact on the Group's operational
performance or cash flows but does result in a large statutory loss after tax
of £55.1m in the year to 31 March 2025 (2024: £6.4m profit).
The Group's cash generation continued to be strong with an adjusted EBITDA to
operating cash flow (before exceptional items) conversion ratio of 85% (2024:
100%). Certain supplier payments overlapped the closing and opening positions,
distorting both years somewhat, therefore an average of the two years of 93%
is more representative. This is a strength of the business, as has been
demonstrated for more than a decade, and is testament to the Group's largely
recurring revenue business model.
Net debt increased to £101.9m as at 31 March 2025 (31 March 2024: £42.3m),
following the cash outflow of approximately £57m associated with the
acquisition of Atech. This represents a proforma net debt leverage ratio of
approximately 2.7 times (FY24: 1.1 times) or 2.3 times (excluding IFRS lease
liabilities of approximately £18m). Following the year-end, in June 2025,
iomart renewed its banking facilities and has put in place a new £115m
revolving credit facility with a two-year term to 30 June 2027 and covenants
reflecting current leverage levels and plans for the future.
Dividend
An interim dividend of 1.30p per share was paid to shareholders in January
2025. In light of our full-year results and current leverage position, the
Board believes it is in the best interest of shareholders to forego the
payment of a final dividend, with future dividends to be restored depending on
improved operating profitability and a reduced overall level of indebtedness.
Strategy
Our vision remains clear and consistent: to establish iomart as the UK's
leading provider of secure hybrid cloud services to our market. The cloud
landscape continues to expand rapidly, with customer needs becoming
increasingly complex as they seek to harness the latest technologies. iomart,
with the acquisition of Atech, is well-positioned to meet this demand, with
deep expertise across private, public, and hybrid cloud infrastructures, cyber
security expertise, and a comprehensive suite of managed services that support
our customers' digital transformation agendas.
People
Our people are at the heart of iomart's success. I would like to thank our
talented team for their continued commitment, adaptability and support during
a year of challenges and significant change. We also welcome the Atech team,
both in the UK and in India, to the iomart Group.
Following the departure of Group CEO, Lucy Dimes, in May 2025, I have assumed
the role of Executive Chairman, supported by a strong executive leadership
team and an experienced Board. The search for a CEO successor will commence
later in the year following a full review of our business growth plans and
options.
Outlook
Our focus for FY26 is clear. We intend to improve the operating efficiency of
the Group, address churn in our self-managed and private cloud customer base,
increase sales momentum in high-growth service areas, including providing
Atech with the support to flourish, and to reduce our level of debt. Although
it is early days, I am pleased to report that Q1 trading is progressing in
line with the Board's expectations, recognising that cost reductions are more
H2 weighted. Full year effect of net churn in FY25 will impact run-rate into
FY26 but Q1 FY26 has achieved a positive net order bookings.
While we remain mindful of macroeconomic uncertainty, the market dynamics
around the IT cloud landscape continues to validate our strategic direction
and reinforce our confidence in iomart's ability to grow and develop. The
Board is committed to delivering disciplined execution, operational efficiency
and improved value for shareholders.
Richard Last
Executive Chair
24 July 2025
OPERATIONAL REVIEW
Sales Momentum
FY25 has been a pivotal year as we transitioned our portfolio, added
significant capability, made operational enhancements, and brought a sharper
focus to our value proposition.
Order bookings for recurring revenue activity in the year, excluding any Atech
contribution, grew strongly, totalling £20 million((11)) in annualised
recurring revenue (FY24: £16.5 million proforma equivalent). Growth was led
by Microsoft related solutions, with demand for the Group's core offerings in
managed private cloud and back-up & data protection services providing a
stable foundation. These results reflect the initial success of our pivot
toward higher-growth cloud segments and our position as a relevant and trusted
partner for both existing and new customers. Growth was also strong within our
Oriium indirect channel business which currently focuses on data protection
via Commvault product solutions. Our ability to extend our indirect channel
remains an untapped sales opportunity and one which will see more attention in
the next 12 months.
Momentum in order bookings was tempered by accelerated customer churn from
legacy self-managed infrastructure, plus some private managed cloud customers.
Specifically on the self-managed infrastructure revenue reductions, through
our reprioritisation of this customer base, we have lost business with a
year-on-year revenue impact of £1.6m from Bytemark and Memset combined
customers. These businesses were acquired in 2020 and 2021, respectively.
Rapidswitch, the largest of iomart's sub brands in this area, while still
seeing revenue declines, was maintained at a consistent level. The segment has
now dropped as a proportion of Group revenue from 22.4% to 16.5%. Although
the dedicated server market remains under pressure, we continue to explore
opportunities to mitigate the rate of decline in this segment. This includes
more dedicated sales focus on the wider data centre services, which would
include Rapidswitch offerings serviced primarily from our Maidenhead site.
Atech Sales Performance
Atech delivered revenue growth to 31 March 2025 of 27% reaching a 12 month
revenue position of £40m (unaudited). This growth was across all of the
strategic areas of Azure infrastructure, modern workplace and security. Of
this revenue, 73% were recurring services, broadly consistent with the prior
year. The greatest area of success arose on growing existing customers'
revenues at the same time as seeing low levels of customer churn. Given the
proximity of the acquisition, this revenue growth had limited benefit as yet
from being part of the iomart Group.
Following the Atech acquisition we have consolidated our marketing, sales,
sales operations and pre-sales technical teams into one group under the
leadership of our Chief Revenue Officer, working closely with the CEO of the
Atech business which retains the Microsoft specialist technical knowledge and
deployment capabilities. This will ensure we provide a coherent and consistent
message to the market, maximise the cross-selling opportunities whilst
retaining deep sector specialist knowledge and capabilities.
Enhanced Portfolio & Technology Partnerships
This year we have taken strides to enhance our end-to-end proposition and
product portfolio. Our enlarged group and combined capabilities will allow us
to compete more effectively in the market with enhanced services, top-tier
vendor partnerships, greater scale and references across cloud managed
services, modern work, data protection and cyber security, cementing our
position as a leading UK secure cloud provider.
FY25 also saw the deepening of our strategic alliances with Microsoft,
Broadcom VMware (iomart has Pinnacle Partner status) and Commvault (iomart has
Elite MSP Partner status). The Atech team achieved the privileged position of
being awarded Azure Expert MSP status, as well as obtaining the final
Microsoft solution partner designation to now hold all six. These continued
efforts make iomart Group one of the most accredited MSP partners in the UK.
These partnerships not only enhance our go-to-market capabilities but also
enable joint innovation and continued initiatives.
Operational Excellence & People
We will continue to invest in systems integration, cost efficiency, and
automation to build a more scalable, modern service organisation, whilst
recognising that many of our legacy brands can, with renewed support and
focus, continue to generate good opportunities for iomart. The investment we
have made in streamlining and improving our operations has delivered
measurable improvements in customer service around satisfaction scores, 'right
first time' deployment and service delivery turnaround times, benefitting
customer retention and generating sales opportunities. With the acquisition of
Atech we have also expanded our 24/7 service capabilities via our new
colleagues in its India operation.
During the year we invested in our first Apprentice Scheme in our service desk
function, launched our DEI Council and Women's Network, and upgraded our
offices in Glasgow, London and India to support a high-performance culture.
As previously outlined, we have implemented a series of strategic measures
aimed at enhancing operational efficiency and reducing our ongoing cost base.
These include targeted workforce adjustments, optimisation of our data centre
operations, and improvements across our supply chain processes. Collectively,
these initiatives are projected to deliver annualised cost savings of
approximately £4 million.
In the first quarter of the new financial year, we have already secured around
40% of these anticipated savings. We remain confident that continued progress
in the second quarter will enable us to realise the full annualised run rate
benefit during the second half of the financial year.
Commitment to ESG and sustainability
We believe that integrating environmental, social and governance ("ESG")
considerations across our business enables us to improve customer satisfaction
whilst benefiting the environment and society and improving our profitability.
Our ongoing commitment is for iomart to be aligned with UK Government targets
and as such we have committed to achieve Net Zero by 2050, or earlier, if
possible. We commenced purchasing Renewable Energy Guarantees of Origin
("REGO") certified renewable electricity across our UK data centre estate in
2021, which significantly reduces our carbon emissions. We continue to look at
ways to increase the energy efficiency across our UK data centre estate.
During FY25 we commenced the replacement of our cooling system in our Gosport
data centre which will reduce like for like energy consumption on our cooling
requirements on this site by at least 30%.
In terms of our social agenda, we continued our support of the charity
SmartSTEMs who organise and host events to inspire and engage young people
from underprivileged backgrounds with the range of careers in STEM. This also
leverages their partnership with Generation, a company that transforms
education to employment systems to prepare, place and support people from
disadvantaged backgrounds into careers that would otherwise be inaccessible.
We recognise, like many technology companies, that our gender balance in the
workplace needs to improve; we have continued our sponsorship of the
"Empowering Woman in Leadership" programme which is designed to address the
lack of gender diversity in leadership roles across the technology sector.
The Company continues to adopt the Quoted Companies Alliance (QCA) Corporate
Governance Code and we have aligned with the updated Code, which was published
on 13 November 2023, to be applied to financial years beginning on or after 1
April 2024.
Our operational focus for FY26
Our continued focus in the next year will be on:
Portfolio: We will maximise on the opportunity in high-growth services such as
public cloud, modern workplace and cyber security through Atech, and our data
protection services in Oriium. We will continue to optimise our private cloud
and data centre services offerings within the iomart brand. Our self-managed
infrastructure and colocation businesses will be given renewed focus helping
to drive data centre utilisation and productivity.
Operational Scalability: We will continue to improve operational and cost
efficiencies in our group-wide sales, customer service and delivery functions
creating a more scalable, modern service organisation.
Customer Retention & Growth: We will become more visible to our customers,
engaging with them proactively to address their existing and future technology
requirements. Through our enhanced product and services portfolio, we can
support our customers for the long-term.
CHIEF FINANCIAL OFFICER'S REPORT
The past year has presented significant challenges as we continue to
reposition iomart in higher-growth segments of the IT services sector. Our
focus on transforming our market position and product offering is central to
driving sustainable, organic revenue growth. Encouragingly, even before the
Atech acquisition, strong order booking trends laid a solid foundation. At the
same time, we have taken proactive steps to address margin pressures stemming
from shifts in our revenue mix and also customer renewal levels. While the
benefits of product realignment and cost optimisation will take time to fully
materialise, these actions position us well for a return to revenue and profit
growth in FY27 and beyond.
The results include a material £52.9m non-cash exceptional goodwill
impairment charge relating to the iomart Cloud Services Cash Generating Unit
("CGU") which prior to the impairment had a carrying value of £83.1m. This
goodwill was an accumulation of many acquisitions over the years, including
those focussed on the provision of dedicated servers and hosted infrastructure
areas in which we are now seeing lower growth and customer churn from more
heritage product areas. This non-cash charge has no impact on the Group's
operational performance or cash flows but does result in a large statutory
loss after tax of £55.1m in the year to 31 March 2025.
As previously reported, the acquisition of Atech on 1 October 2024 has four
clear financial benefits to the Group. Firstly, the proportion of Group
revenues derived from the growth areas of the cloud market has considerably
increased. Secondly, it is anticipated that renewal levels within our existing
customer base will stabilise, as there is now a clearer pathway for customers
to adopt public cloud and security solutions while remaining with iomart.
Thirdly, we have gained access to a high quality offshore operation enhancing
scalability and delivery capability, and finally, capital expenditure
requirements as a proportion of revenue have decreased, improving the Group's
scalability and financial flexibility.
Key Performance
Indicators
2025 2024
Revenue £143.5m £127.0m
% of recurring revenue(1) 89% 91%
Gross profit %(2) 49.1% 54.8%
Adjusted EBITDA(3) £34.3m £37.7m
Adjusted EBITDA margin %(4) 23.9% 29.7%
Adjusted EBIT(5) £12.8m £19.2m
Adjusted EBIT margin %(6) 8.9% 15.1%
Adjusted profit before tax(7) £6.5m £15.0m
Adjusted profit before tax margin %(8) 4.5% 11.8%
EBIT(10) (£46.8m) £13.0m
(Loss)/profit before tax (£53.2m) £8.7m
(Loss)/profit before tax margin %(9) (37.1%) 6.9%
Basic earnings per share (49.0p) 5.8p
Adjusted earnings per share (diluted) (14) 3.4p 9.8p
Cash flow from operations (before exceptional items) / Adjusted EBITDA %(12) 85% 100%
Net debt / Adjusted Proforma EBITDA leverage ratio(13) 2.7 1.1
Revenue
Overall revenue from operations increased by 13% to £143.5m (2024: £127.0m).
We continued to maintain a high level of recurring revenue at 89% (2024: 91%),
with the slight reduction on the prior year, a function of Atech having a
higher level of non-recurring revenue activities, including professional
services within the area of cyber security. We remain focussed on retaining
our high recurring revenue business model with the combination of multi-year
contracts and payments in advance providing us with good revenue visibility.
The revenue growth includes contributions from acquisitions, including £21.5m
from Atech and a £4.2m revenue benefit from the full-year impact of small
acquisitions completed in FY24. Excluding acquisitions, the core business
experienced a revenue decline of £9.2m or 7% year-on-year. As previously
disclosed, this decline was driven by elevated churn levels among the Group's
self-managed customer base and certain private cloud managed services. This
is shown more clearly in the disaggregated revenue disclosure below.
In the current year reporting, given the proximity of the Atech acquisition,
we have shown Atech revenue as a separate Cash Generating Unit ("CGU") in the
segmental reporting. We expect this disclosure will evolve in our reporting
over FY26 to align with the finalisation of our operating model and the
business unit structures. Retention of historic groupings for our FY25
reporting allows comparability of year-on-year trends and clarity on
underlying organic revenues.
iomart Cloud Services
The following is the disaggregation of iomart Cloud Services revenues of
£110.0m (2024: £114.6m).
Disaggregation of iomart Cloud Services revenue 2025 2024
£'000 £'000
iomart 76,363 75,212
Cloud managed services (recurring)
Self-managed infrastructure (recurring) 23,686 28,429
Non-recurring revenue 9,949 10,937
Total iomart 109,998 114,578
iomart Cloud managed services (recurring revenue)
Cloud managed services includes the provision of fully managed, complex,
bespoke and resilient solutions involving private, public and hybrid cloud
infrastructure. Revenue within cloud managed services increased by £1.2m or
1.5% to £76.4m (2024: £75.2m). This includes the full-year impact of small
acquisitions completed in FY24 (Extrinsica on 5 June 2023 and Accesspoint on 5
December 2023) being around £3.4m of revenue benefit meaning underlying
organic revenue was a reduction of around £2.2m or 3%.
Our order bookings in this area of the business grew well over the year, as
both existing customers and prospects have responded positively to our broader
solution set and our re-invigorated focus on customer service. However, as
previously reported the run-rate entering FY25 was lower than the previous
year and as the year progressed, we also saw some customer losses and lower
levels of renewals from some existing customers which, in combination, negated
the growth in order bookings. While we enter FY26 with a monthly recurring
revenue lower than this time last year, monthly levels have been more stable
in the last 6 months and we have a higher order book than this time last year
from strong bookings in the last quarter. This gives an improved starting
point to support the path to organic growth in this specific area.
iomart self-managed infrastructure (recurring revenue)
The self-managed infrastructure revenue of £23.7m (2024: £28.4m) decreased
by £4.7m (reduction in 2024: £1.2m). We have seen organic reductions within
this area for a number of years as dedicated servers, being the largest
product in this area, is most susceptible to a move to public cloud
infrastructure as the customers have retained their own technical IT skills
and an infrastructure only service is more transactional. The last 12 months
has seen an acceleration of customer churn especially from the long tail of
our customer base and also on a disproportionate basis from the smaller
acquired brands of Memset and Bytemark as we sought to consolidate platforms
and service teams to more resilient core offerings.
As well as being the largest area of revenue reduction impacting the Group,
this £4.7m revenue reduction has been very impactful on profitability as this
established infrastructure activity attracts an inherently high margin,
benefiting from optimised capital deployment and long-term customer durations.
As part of the review and alignment of services to business unit groupings, of
the £23.7m of revenue disclosed as self-managed infrastructure approximately
£5.6m of customer revenue has been identified as better served within our
managed services core team. The largest element being data centre colocation
related services which we are seeking to consolidate into a small, focussed
team. This change will be reflected in our disaggregated revenue disclosures
going forward. As the Group continues its evolution towards a broader
portfolio of managed service offerings, the impact of a potential lower level
of renewals in the self-managed infrastructure area will decrease.
iomart Non-recurring revenue
Non-recurring revenue of £9.9m (2024: £10.9m) relates primarily to hardware
and licence reselling plus professional services / consultancy projects. This
includes the full-year impact of the smaller acquisitions completed in FY24
which in combination supported headline revenue by around £0.8m, meaning
underlying organic non-recurring revenue reduction was around £1.8m, with a
weaker second half for such activity. These non-recurring activities can
provide a useful introduction to the wider Group and evolve customers into a
higher level of recurring services, but we do not allocate significant sales
effort in lead generation for this area and by its very nature we see more
variability over shorter periods. Increasing our professional services
activity levels is being targeted ahead of simple product reselling but only
within the context of this being the up-front work which leads to recurring
managed services.
Atech
The following is the split of Atech revenue for the post acquisition 6 months
to 31 March 2025 between recurring and non-recurring revenue
Disaggregation of Atech revenue 2025
£'000
Atech
Cloud managed services (recurring) 15,520
Non-recurring revenue 5,943
Total Atech 21,463
Atech (recurring revenue)
Atech recurring revenue for the 6 months to 31 March 2025 post acquisition was
£15.5m representing a continuation of strong underlying growth. On a 12
months basis to 31 March 2025 (including 6 months pre-acquisition), recurring
revenues increased 18% to £29.3m (unaudited). Atech has a higher customer
concentration then pre-existing iomart, with the Top 20 customers being around
80% of the recurring revenue and has experienced strong renewal levels and
growth from these existing customers.
Atech (non-recurring revenue)
Atech non-recurring revenue for the 6 months to 31 March 2025 post acquisition
was £5.9m which is 28% of the total Atech revenue, being a relatively higher
percentage split compared to the pre-existing iomart business. The highest
element of this is consultancy projects within cyber security, including with
one large financial services customer for which £2.9m revenue was recognised
in the six month post-acquisition. Atech has received repeated business from
this customer over several years with the current scope of work running to
December 2025. It is expected that this contract will continue, the exact
scope , scale and timing though will not be determined until later this
calendar year. This area of the Atech business has also shown growth since the
acquisition, with around £1.2m more revenue compared to the immediate 6
months preceding the acquisition.
Easyspace
Our Easyspace segment has performed relatively well over the year with
revenues remaining broadly consistent, with only a £0.5m reduction to £12.0m
(2024: £12.5m). The domain name and web hosting business is an area in
which we do not invest heavily in but it was pleasing to see a solid
performance with a high level of renewals from our base of c56,000 customers.
The activity remains highly profitable and cash generative.
Gross Profit
Gross profit in the year, which is calculated by deducting from revenue
variable cost of sales such as power, software licences, connectivity charges,
domain costs, public cloud costs, sales commission, the relatively fixed
operating costs of operating our data centres plus, for non-recurring revenue,
the cost of hardware and software sold, increased by £0.9m to £70.5m (2024:
£69.6m). In percentage terms, gross margin(2) overall reduced on the prior
year to 49.1% (2024: 54.8%).
The specific revenue mix as outlined earlier is dilutive on gross margin. The
Atech acquisition accelerated this in the second half, significantly
increasing Microsoft licence consumption in our customer solutions. As
outlined below, offsetting some of these factors is the change in
classification on software expenses following the new commercial arrangements
with Broadcom VMware which is favourable to gross margin.
Our key vendor relationships have remained stable in the period with any cost
increases following more general inflationary trends. Our energy hedging
strategy, which we entered into around the end of the calendar year 2022,
means we have seen stability in the year although at levels above current spot
market rates. During December 2024 we entered into extended energy pricing
arrangements which have also now fixed our energy cost for FY26 and FY27.
Adjusted EBITDA(3)
The Group's adjusted EBITDA decreased by £3.4m to £34.3m (2024: £37.7m)
translating to an adjusted EBITDA margin(4) of 23.9% (2024: 29.7%). This
included a strong six-month EBITDA contribution from Atech of £3.2m being an
adjusted EBITDA margin(4) of 15.0%.
The lower margin percentage is a function of the gross margin profile, the
high fixed cost base nature of our private cloud business activity, the as
expected dilutive impact of acquisitions and the administration expenses
(before depreciation, amortisation, share based payment charges, acquisition
costs and exceptional non-recurring costs) of £36.2m. Administration expenses
were £3.0m higher than the previous year due to the inclusion of staff plus
overhead costs for the full year from the FY24 smaller acquisitions plus 6
months from the Atech acquisition. Outside of the acquisitions, we have seen a
period of relatively stable overall headcount numbers and other overhead costs
meaning the underlying administrative expenses are consistent with FY24. We
expect administrative expenses to fall in FY26 on a like for like basis as we
execute on cost optimisation measures during the year, with the full
annualised impact of around £4m expected in FY27 and onwards.
A further unique feature to the current year is the change in income statement
classification on software expenses following the new commercial arrangements
with Broadcom VMware plus the overall higher cost imposed. Due to the
long-term commitments made, these software costs are capitalised and reported
as intangible asset amortisation to a value of £2.9m, replacing the previous
license consumption cost of sales classification (comparable £1.5m recognised
as operating expenditure in FY24).
The iomart Cloud Services segment saw a 17.8% decrease in adjusted EBITDA to
£30.2m (2024: £36.7m). In percentage terms the Cloud Services margin
decreased to 27.5% (2024: 32.1%) primarily as noted earlier due to both the
revenue mix and our business model becoming less capital intensive over time.
Atech's EBITDA contribution of £3.2m is a 15.0% of total Atech revenue which
given the limited capital expenditure is also very close to its EBIT
contribution. The Easyspace segment's adjusted EBITDA was £5.7m (2024:
£6.2m) reflecting the relatively more stable revenue performance in the year,
which in percentage terms remained strong although dropping somewhat to 47.5%
(2024: 49.4%).
Group overheads decreased by £0.4m in the year to £4.8m (2024: £5.2m).
These are costs which are not allocated to segments, including the cost of the
Board, the running costs of the headquarters in Glasgow, Group marketing,
human resource, finance, legal, and professional fees for the year.
Adjusted EBIT(5)
The Group depreciation charge of £14.7m (2024: £15.7m) fell by £1.0m in the
year and as a percentage of recurring revenue is 11.5% (2024: 13.5%). This is
the third year in a row in which we have seen this percentage value drop. The
Group charge for amortisation of intangibles, excluding amortisation of
intangible assets resulting from acquisitions ("amortisation of acquired
intangible assets"), increased to £6.8m (2024: £2.8m) due to the
reclassification and price increase on the Broadcom VMware licence
arrangements of £2.9m plus £0.6m of expansion expenditure for new customer
arrangements opened up by our pinnacle partner status with Broadcom. This
means that the Group's adjusted EBIT decreased by £6.4m to £12.8m (2024:
£19.2m) which in adjusted EBIT margin(6) terms translates to 8.9% (2024:
15.1%).
Adjusted profit before tax(7)
Finance costs of £6.4m (2024: £4.3m) have increased year-on-year by £2.1m
due to the £57m bank debt drawn to support the Atech acquisition. The
revolving credit facility in place during the year had a borrowing cost at the
Group's current leverage levels of 250 basis points over SONIA (2024: 180
basis points).
After deducting the charges for depreciation, amortisation (excluding the
charges for the amortisation of acquired intangible assets), exceptional
non-recurring costs and finance costs from the adjusted EBITDA, the Group's
adjusted profit before tax decreased to £6.5m (2024: £15.0m), representing
an adjusted profit before tax margin(8) of 4.5% (2024: 11.8%).
Earnings before interest and tax and (loss)/ profit before tax
The measure of adjusted profit before tax is an alternative profit measure
which is commonly used to analyse the performance of companies particularly
where M&A activity forms a significant part of their activities.
A reconciliation of adjusted profit before tax to reported (loss)/profit
before tax is shown below:
Reconciliation of adjusted profit before tax to (loss)/profit before tax 2025 2024
£'000 £'000
Adjusted profit before tax(7) 6,455 14,956
Less: Amortisation of acquired intangible assets (4,902) (4,226)
Less: Acquisition costs (1,674) (1,010)
Less: Share-based payments (198) (517)
Less: Administrative expenses - exceptional non-recurring costs - (462)
Less: Exceptional non-cash goodwill write-off (52,900) -
(Loss)/profit before tax (53,219) 8,741
The adjusting items in the current year are:
· charges for the amortisation of acquired intangible assets of
£4.9m (2024: £4.2m). Acquired intangible assets have increased by £0.7m due
to the Atech acquisition;
· acquisition costs of £1.7m (2024: £1.0m) which includes £0.9m
of professional fees associated with the Atech acquisition;
· share-based payment charges of £0.2m (2024: £0.5m), the lower
charge driven by the number of forfeited options in the year; and
· exceptional non-cash goodwill impairment charge of £52.9m which
was recognised within the Cloud Services segment. This followed an impairment
review triggered by the loss of customers, a decline in segment profitability
during the year to 31 March 2025, and the decline in the share price.
After deducting these items from the adjusted profit before tax, the reported
loss before tax was £53.2m (2024: £8.7m profit).
Earnings before interest and tax ("EBIT") in the year was a £46.8m loss
(2024: £13.0m profit), the decrease consistent with the Adjusted EBIT(5)
movement and the large exceptional non-cash goodwill write off.
Taxation
The tax charge for the year is £1.9m (2024: £2.3m). The tax charge for the
year is made up of a corporation tax charge of £0.6m (2024: £2.7m) with a
deferred tax charge of £1.3m (2024: credit of £0.4m). The effective rate of
tax or the year is (0.04%) (2024: 26%). In the current year, the headline
effective tax rate is heavily distorted by the large number of non-taxable
charges in the year, especially the goodwill non-cash impairment, plus the net
impact of revisions to cumulative brought forward positions on capital
allowance pools, making the effective tax rate in the current year somewhat
redundant as a disclosed metric. As a predominately UK business our underlying
tax rate mirrors the UK corporation tax rates.
Loss for the year
After deducting the tax charge for the year from the loss before tax the Group
has recorded a loss for the year of £55.1m (2024: £6.4m profit).
Earnings per share
The calculation of both adjusted earnings per share and basic earnings per
share is included at note 7.
Basic earnings per share from continuing operations was 49p loss (2024: 5.8p
profit). This negative position is driven by the £52.9m exceptional non-cash
goodwill impairment charge.
Adjusted diluted earnings per share(11), based on profit for the year
attributed to ordinary shareholders before amortisation charges of acquired
intangible assets, acquisition costs, share-based payment charges, exceptional
non-recurring costs, and the tax effect of these items was 3.4p (2024: 9.8p),
a reduction of 65%. This reduction is driven by the lower adjusted profit
before tax plus the unfavourable impact of the prior period deferred tax
adjustments.
Dividends
Our dividend policy, which has been in place for several years now, is based
on the profitability of the business in the period measured with reference to
the adjusted diluted earnings per share we deliver in a financial year. For
the last few years, we have been paying dividends at the maximum level allowed
by our stated policy. The current policy is a maximum pay-out of 50% of
adjusted diluted earnings per share.
The Directors are proposing not to declare a final dividend (2024: 3.00p)
reflecting the higher level of indebtedness in the Group following the Atech
acquisition and reduced profitability in the current year. As a result, for
the current year the total dividend will consist of the interim dividend of
1.3p paid in January 2025 (2024: 4.94p total of interim and final combined).
Acquisitions
Atech
We completed the acquisition of Kookaburra Topco Limited, the holding company
of Atech Support Limited ("Atech") on 1 October 2024 for a total enterprise
valuation of £57m, on a cash free, normalised working capital and debt free
basis under a locked box completion mechanism. The final consideration paid
included £6.2m of debt repayments and a balance of £51.7m paid to the
previous shareholders. The full purchase price was financed through a
combination of existing bank facilities and cash on the Company's balance
sheet. There is no deferred or contingent consideration.
Cash flow and net debt
Net cash flows from operating activities
The Group continued to generate high levels of operating cash over the year.
Cash flow from operations was £27.2m (2024: £36.6m) which represents an 80%
conversion(12) of adjusted EBITDA (2024: 97%) or 85% of adjusted EBITDA to
operating cash flow (2024; 100%) (before exceptional items). In the current
year this has been impacted by the exact timing of payments to six larger
vendors which overlapped the opening and closing period ends with an impact of
around £2.5m being 7% of EBITDA meaning, taking into account both exceptional
cash flow items of £1.6m and the specific vendor payments, a more normalised
basis of cash flow from operations would result in a conversion ratio of
around 93%.
Cash payments for corporation tax in the year were £1.9m (2024: £0.7m),
resulting in net cash flow from operating activities in the year of £25.4m
(2024: £35.9m).
Cash flow from investing activities
Expenditure on investing activities of £62.2m (2024: £21.7m) was incurred in
the year. £8.3m (2024: £9.5m) was incurred on the acquisition of property,
plant and equipment, principally to provide specific services to our
customers, £2.9m (2024: £2.2m) incurred in respect of development costs and
£0.1m (2024: £0.1m) paid in relation to software license arrangements during
the period. In the current year, M&A related payments were dominated by
the £48.5m of equity consideration paid for the Atech acquisition (net of
cash acquired) along with a smaller contingent consideration payment of £0.4m
of deferred consideration on a historic acquisition by Atech, such amount
being funded as a "debt like" item in the share purchase agreement ("SPA")
mechanics plus £2.1m of deferred consideration payments on Extrinsica and
Accesspoint acquisitions (2024: £4.2m on Extrinsica and Concepta
acquisitions). This compares to a much lower £9.9m on M&A related
payments in the prior year.
Cash flow from financing activities
In the current year, loan drawdowns of £57.0m (2024: £7.6m to support the
initial equity consideration for the Extrinsica and Accesspoint acquisitions)
were made from the revolving credit facility to support the Atech acquisition
on 1 October 2024. Payments under long-term intangible asset licence
agreements £2.6m (2024: £nil) this being the first year instalment on the
Broadcom VMware five year partnership commitments. We also repaid £6.2m of
bank loans acquired from Atech at completion. Other than bank loan repayments
connected to the completion of acquisitions, we made no bank loan repayments
in the year (2024: £2.0m). As a result, the movement in the drawn bank loan
of £97.0m (2024: £40.0m) at the year-end consists solely of the £57m drawn
to support the Atech acquisition. Cash received in the year from issue of
shares was £4k (2024: £7k). We also made dividend payments of £4.8m
(2024: £6.1m); paid finance costs of £4.8m (2024: £3.1m and made lease
repayments of £4.4m (2024: £5.0m).
Net cash flow
As a consequence of the above component elements and working capital movements
in the year, our overall cash position was an outflow of £2.6m (2024: £1.9m
inflow) which resulted in cash and cash equivalent balances at the end of the
year of £13.1m (2024: £15.8m).
Net Debt
The net debt position of the Group at the end of the year was £101.9m (2024:
£42.3m) as shown below, heavily impacted by the M&A-related cash payments
of approximately £57m. The net debt position represents a multiple of 2.7
times(13) our adjusted proforma EBITDA (2024: 1.1 times) or 2.3 times
(excluding IFRS 16 lease liabilities of approximately £18.0m).
2025
£'000 2024
£'000
Bank revolver loan 97,000 40,000
Lease liabilities 18,006 18,091
Less: cash and cash equivalents (13,088) (15,755)
Net Debt 101,918 42,336
At the year end, the Group had access to a £125m Revolving Credit Facility
("RCF") provided by a banking group consisting of HSBC, Royal Bank of
Scotland, Bank of Ireland and Clydesdale Bank, that matures on 30 June 2026.
The RCF had a borrowing cost at the Group's current leverage levels of 250
basis points over SONIA. As noted below, subsequent to the year end this
bank facility was refinanced.
The decrease in the lease liability to £18.0m (2024: £18.1m) reflects
expected payments on property arrangement. There were no material revisions to
existing leases.
Post balance sheet event
On 27 June 2025, a new Revolving Credit Facility ("RCF"), totaling £115
million, has been secured from a syndicate, comprising The Royal Bank of
Scotland plc, HSBC UK Bank plc, and Clydesdale Bank plc (trading as Virgin
Money). The facility extends to 30 June 2027 and includes financial covenants,
limited to debt cover and interest cover, which are aligned with the Group's
current leverage position and strategic objectives. This RCF replaces the
facility which existed at the 31 March 2025 described above.
At current leverage levels, the bank margin under the new RCF is 3.0% above
SONIA. The RCF includes a margin ratchet mechanism, enabling reduced interest
costs as the Group deleverages.
Scott Cunningham
Chief Financial Officer
24 July 2025
Definition of alternative performance measures:
(1) Recurring revenue is the revenue that repeats either under long-term
contractual arrangement or on a rolling basis by predictable customer habit. %
of recurring revenue is defined as Recurring Revenue (as disclosed in note 3)
/ Revenue (as disclosed in the consolidated statement of comprehensive income)
(2) Gross profit margin % is defined as Gross Profit / Revenue as a % (both as
disclosed in the consolidated statement of comprehensive income)
(3) Adjusted EBITDA (as disclosed in the consolidated statement of
comprehensive income) is earnings before interest, tax, depreciation and
amortisation (EBITDA) before share-based payment charges, acquisition costs
and exceptional non-recurring costs. Throughout these financial statements
acquisition costs are defined as acquisition related costs and non-recurring
acquisition integration costs.
(4) Adjusted EBITDA margin % is defined as adjusted EBITDA (as disclosed in
the consolidated statement of comprehensive income) / Revenue (as disclosed in
the consolidated statement of comprehensive income) as a %
(5) Adjusted EBIT is earnings before interest and tax (EBIT) before
amortisation charges on acquired intangible assets, share-based payment
charges, acquisition costs and exceptional non-recurring costs. Throughout
these financial statements acquisition costs are defined as acquisition
related costs and non-recurring acquisition integration costs.
(6) Adjusted EBIT margin% is defined as adjusted EBIT / Revenue (as disclosed
in the consolidated statement of comprehensive income) as a %
(7) Adjusted profit before tax is profit before tax, amortisation charges on
acquired intangible assets, share-based payment charges, acquisition costs and
exceptional non-recurring costs.
(8) Adjusted profit before tax margin % is defined as adjusted profit before
tax / Revenue (as disclosed in the consolidated statement of comprehensive
income) as a %
(9) Profit before tax margin % is defined as Profit before Tax / Revenue (both
as disclosed in the consolidated statement of comprehensive income) as a %
(10) EBIT is earnings before interest and tax
(11) Order booking value being the annual revenue value of the customer order
at the time of booking, as opposed to the total contract value or the actual
revenue realised in the reporting period, which will be influenced by the
timing of order booking and the billing commencement date.
(12) Cash flow from operations / Adjusted EBITDA % is defined as cash flow
from operations (as disclosed in the consolidated statement of cash flows) /
Adjusted EBITDA (as disclosed in the consolidated statement of comprehensive
income) as a %
(13) Net debt / Adjusted EBIDTA level ratio is defined as Net Debt (as
disclosed in note 11) / Adjusted EBITDA (as disclosed in the consolidated
statement of comprehensive income)
(14) Throughout this statement adjusted diluted earnings per share, as
disclosed in note 7, is earnings per share before amortisation charges on
acquired intangible assets, share based payment charges, acquisition costs and
exceptional non-recurring costs and the taxation effect of these /weighted
average number of ordinary shares - diluted (as disclosed in note 7)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME YEAR ENDED 31 MARCH 2025
Note 2025 2024
£'000 £'000
Revenue 3 143,460 127,049
Cost of sales (72,997) (57,469)
Gross profit 70,463 69,580
Administrative expenses (117,312) (56,552)
Operating (loss)/profit (46,849) 13,028
Analysed as:
Earnings before interest, tax, depreciation, amortisation, acquisition costs, 34,312 37,728
share-based payments and non-recurring costs
Share-based payments (198) (517)
Acquisition costs (1,674) (1,010)
Administrative expenses - non-recurring costs - (462)
Depreciation (14,730) (15,715)
Amortisation - acquired intangible assets (4,902) (4,226)
Amortisation - other intangible assets (6,757) (2,770)
Goodwill impairment charge (52,900) -
Finance costs - net (6,370) (4,287)
(Loss)/profit before taxation (53,219) 8,741
Taxation 4 (1,898) (2,300)
(Loss)/profit for the year attributable to equity holders of the parent (55,117) 6,441
Other comprehensive expenses
Amounts which may be reclassified to profit or loss
Currency translation differences (31) (25)
Currency hedge loss (84) -
Other comprehensive expenses for the year (115) (25)
Total comprehensive (expenses)/income for the year attributable to equity (55,232) 6,416
holders of the parent
Basic and diluted earnings per share
Basic (loss)/earnings per share 7 (49.0)p 5.8p
Diluted (loss)/earnings per share 7 (49.0)p 5.6p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2025
2025
2024
Note £'000 £'000
ASSETS
Non-current assets
Intangible assets - goodwill 8 103,536 109,821
Intangible assets - other 8 40,769 15,231
Trade and other receivables 111 111
Property, plant and equipment 9 59,515 63,492
203,931 188,655
Current assets
Cash and cash equivalents 13,088 15,755
Trade and other receivables 36,833 26,460
Current tax asset 842 -
50,763 42,215
Total assets 254,694 230,870
LIABILITIES
Non-current liabilities
Trade and other payables 10 (15,210) (2,834)
Non-current borrowings 11 (112,132) (55,582)
Provisions (2,486) (3,052)
Deferred tax 5 (10,084) (4,884)
(139,912) (66,352)
Current liabilities
Contingent consideration due on acquisitions (364) (2,080)
Trade and other payables 10 (48,012) (35,728)
Current tax liability - (804)
Current borrowings 11 (2,874) (2,509)
(51,250) (41,121)
Total liabilities (191,162) (107,473)
Net assets 63,532 123,397
EQUITY
Share capital 1,128 1,124
Own shares (70) (70)
Capital redemption reserve 1,200 1,200
Share premium 22,500 22,500
Merger reserve 6,967 6,967
Hedging reserve (84) -
Foreign currency translation reserve (10) 21
Retained earnings 31,901 91,655
Total equity 63,532 123,397
CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED 31 MARCH 2025
2025 2024
Note £'000 £'000
(Loss)/profit before taxation (53,219) 8,741
Finance costs - net 6,370 4,287
Depreciation 14,792 15,764
Amortisation 11,659 6,996
Exceptional goodwill impairment charge 8 52,900 -
Share-based payments 198 517
Research and development tax credit (532) (364)
Unrealised foreign exchange (gain)/loss (76) -
Non cash exceptional items (39) -
Exceptional items - operating cash flow impact (361) -
Movement in trade receivables 419 1,620
Movement in trade payables (4,899) (914)
Cash flow from operations 27,212 36,647
Taxation paid (1,866) (710)
Net cash flow from operating activities 25,346 35,937
Cash flow from investing activities
Purchase of property, plant and equipment 9 (8,252) (9,513)
Development costs 8 (2,907) (2,178)
Purchase of intangible assets 8 (87) (113)
Payment for current period acquisitions net of cash acquired (48,465) (5,710)
Payment of contingent consideration (2,500) (4,180)
Net cash used in investing activities (62,211) (21,694)
Cash flow from financing activities
Issue of shares 4 7
Drawdown of bank loans 11 57,000 7,600
Payments under lease liabilities (4,352) (5,017)
Payments under long-term intangible asset licence agreements 8 (2,559) -
Repayment of bank loans 11 - (2,000)
Repayment of debt acquired on acquisition 11 (6,244) (3,728)
Finance costs paid (4,816) (3,069)
Dividends paid (4,835) (6,099)
Net cash from/(used in) financing activities 34,198 (12,306)
Net (decrease)/increase in cash and cash equivalents (2,667) 1,937
Cash and cash equivalents at the beginning of the year 15,755 13,818
Cash and cash equivalents at the end of the year 13,088 15,755
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY YEAR ENDED 31 MARCH 2025
Foreign currency translation reserve
Own shares EBT Capital redemption reserve Share premium account
Share capital Merger reserve Hedge reserve Retained earnings
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 March 2023 1,106 (70) 46 1,200 22,495 4,983 - 90,796 120,556
Profit for the year - - - - - - - 6,441 6,441
Currency translation differences - - (25) - - - - - (25)
Total comprehensive income - - (25) - - - - 6,441 6,416
Dividends - final (paid) - - - - - - - (3,922) (3,922)
Dividends - interim (paid) - - - - - - - (2,177) (2,177)
Share-based payments - - - - - - - 517 517
Issue of share capital 18 - - - 5 1,984 - - 2,007
Total transactions with owners 18 - - - 5 1,984 - (5,582) (3,575)
Balance at 31 March 2024 1,124 (70) 21 1,200 22,500 6,967 - 91,655 123,397
Loss for the year - - - - - - - (55,117) (55,117)
Currency hedge loss - - - - - - (84) - (84)
Currency translation differences - - (31) - - - - - (31)
Total comprehensive income - - (31) - - - (84) (55,117) (55,232)
Dividends - final (paid) - - - - - - - (3,371) (3,371)
Dividends - interim (paid) - - - - - - - (1,464) (1,464)
Share-based payments - - - - - - - 198 198
Issue of share capital 4 - - - - - - - 4
Total transactions with owners 4 - - - - - (4,637) (4,633)
-
Balance at 31 March 2025 1,128 (70) (10) 1,200 22,500 6,967 (84) 31,901 63,532
1. GENERAL INFORMATION
iomart Group plc is a public listed company, limited by shares, listed on the
Alternative Investment Market ("AIM"), incorporated and domiciled in the
United Kingdom and registered in Scotland under the Companies Act 2006. The
address of the registered office is 6 Atlantic Quay, 55 Robertson Street,
Glasgow, G2 8JD.
The financial statements are presented in UK Pounds Sterling because that is
the currency of the primary economic environment in which the Group operates.
2. ACCOUNTING POLICIES
Basis of preparation
The financial information set out in the announcement does not constitute the
Group's statutory accounts for the years ended 31 March 2025 and 31 March 2024
within the meaning of section 434 of the Companies Act 2006. The financial
information for the year ended 31 March 2024 is derived from the statutory
accounts for that year which have been delivered to the Registrar of
Companies. The financial information for the year ended 31 March 2025 is
derived from the statutory accounts for that year which were approved by the
Directors on 24 July 2024. The statutory accounts for the year ended 31 March
2025 will be delivered to the Registrar of Companies following the Company's
Annual General Meeting. The auditors reported on those accounts; their report
was unqualified and did not contain a statement under Section 498(2) or (3) of
the Companies Act 2006.
The Group's financial statements have been prepared in accordance accordance
with UK-adopted international accounting standards.
The Group's financial statements have been prepared on the historical cost
basis.
Adoption of new and revised Standards - amendments to IFRS that are
mandatorily effective for the current year
In the current year, the Group has applied a number of amendments to IFRS
Accounting Standards issued by the International Accounting Standards Board
(IASB) that are mandatorily effective for an accounting period that begins on
or after 1 January 2024. Their adoption has not had any material impact on the
disclosures or on the amounts reported in these financial statements.
Going concern
The Consolidated Financial Statements have been prepared on a going concern
basis, which the Directors consider appropriate for the reasons set out below.
The Group meets its day-to-day working capital requirements through
operational cash flows, cash reserves, a £115 million Revolving Credit
Facility ("RCF"), and leasing arrangements. As at 31 March 2025, £97
million of the RCF was drawn, primarily to fund historical acquisitions,
including the £57 million acquisition of Atech on 1 October 2024. The Group
held £13.1 million in cash and cash equivalents at year-end, which is the
primary source of funding for day-to-day operations. The RCF was successfully
refinanced on 27 June 2025 with a syndicate comprising Royal Bank of Scotland,
HSBC, and Clydesdale Bank, extending the facility to 30 June 2027. The revised
covenants reflect the Group's current leverage and strategic plans.
The Directors have prepared cash flow forecasts covering a period of at least
12 months from the date of approval of these financial statements (the "going
concern assessment period"). These forecasts, which incorporate reasonably
possible downside scenarios, demonstrate that the Group and Company is
expected to have sufficient liquidity and covenant headroom to meet their
obligations as they fall due.
The Group is required to comply with financial covenants for adjusted leverage
(reported net debt to adjusted EBITDA) and interest cover (adjusted EBITDA to
reported net interest expense and adjusted for certain IFRS 9 interest
expenses). Covenants are tested quarterly each year and income statement
items are on a last 12 month basis (including pre-acquisition adjusted EBITDA
as appropriate). The Directors are satisfied that there is no severe but
plausible downside scenario in which the Group would breach its covenants for
at least 12 months from the date of approval of these financial statements.
The Directors' forecasts in respect of the going concern assessment period
have been built from the Board approved budget for the year ending 31 March
2026, and a forecast for the year ending 31 March 2027, and the going concern
assessment takes account of the financial covenant requirements.
The forecasts include a number of assumptions in relation to order intake,
renewal and churn rates, cost base reductions and improved electricity pricing
which are now fixed via hedging arrangements through FY26 and FY27 at forward
rates favourable to those achieved in FY25. Revenue assumptions reflect levels
achieved in FY25 plus organic growth in our Microsoft and security practice,
underpinned by the enhancement to our skills and credentials from the recent
Atech acquisition, and have been adjusted for the accelerated trend seen in
customer churn within the self-managed infrastructure product group.
Whilst the Group's trading and cash flow forecasts have been prepared using
current trading assumptions, the Directors acknowledge ongoing macroeconomic
and operational risks. These risks include, but are not limited to, achieving
lower than forecast levels of new order intake, lower than expected customer
renewals from larger customers plus evolution of product mix or cost pressures
which impact margin quality. In making their going concern assessment in
light of these risks, the Directors have also modelled a combined severe but
plausible downside scenario when preparing the forecasts.
The downside scenario assumes economic downturn in FY26, primarily impacting
recurring new order intake. In this scenario, recurring monthly order intake
is forecast to reduce by 10% compared to base case budget. Over the last
three years we have seen order bookings growth and high achievement of order
booking targets. An additional and potentially more impactful factor that
can impact the revenue and gross margin assumptions is the level of customer
churn. Whilst known, near-term customer cancellations have been modelled,
coupled with an underlying level of customer cancellations based on historic
trends, there remains a risk that unexpected, medium to large customer
cancellations could occur in the near-term. The Group is protected
contractually to a large extent within the managed services area of the
business with notice periods and cancellation clauses, however a residual risk
remains. An additional level of customer cancellations has therefore been
modelled each quarter in the downside scenario to reflect this risk with 20%
higher absolute annualised customer revenue churn assumed from the iomart
managed services area. Non-recurring revenue which includes reselling of
hardware and software plus consultancy services could be subject to reduced
investment levels from customers more so on consultancy services which are
likely to be more discretionary in nature. In our downside scenario we have
assumed certain repeating consultancy services may not continue at the current
level and this represents around 25% of total non-recurring revenue on an
annualised basis. In addition, the downside scenario also assumes the new
business obtained does not achieve the gross margin planned, with a 10%
reduction to the planned gross margin achievement across all new recurring
revenue modelled.
Power prices are 100% fixed (at current volumes) through to March 2027. As a
result, this reduces risk on our largest variable cost outside of people costs
and software licencing. However there remains a risk that periods of
sustained higher summer temperatures, considering the impacts of wider
climate-related factors, could increase energy usage at sites. A 5% increase
in forecasted usage has been modelled across a period of three months over the
summer to reflect this risk.
Given external market analysis indicates an expectation that interest rates
have stabilised and some reductions in SONIA rates are to be expected, no
sensitivity on interest rates has been included in the plausible downside
scenario. Both the base case and severe but plausible downside forecast
scenarios assumes no payment of dividends. The Directors will continue to
monitor this in relation to leverage levels and appropriate allocation of
capital.
In addition to the base case and severe but plausible downside forecasts, the
Directors have modelled an overlay scenario to recognise the mitigation
available to the Directors in the event some of the downside scenarios
materialise. S. Such actions, which could mitigate both earnings and
leveraging levels, include but are not limited to, the rephasing of
discretionary capital expenditure, potential strategic reassessment of certain
assets, reduction in people related costs including discretionary bonus
payments and expenditure investments plus further management of discretionary
cost areas such as marketing, training and travel.
Even under the downside scenario, the Group is forecast to maintain sufficient
liquidity and comply with all financial covenants without requiring mitigating
actions.
Accordingly, and in line with the FRC guidance, the Directors have a
reasonable expectation that the Group and Company have adequate resources to
continue in operational existence for the foreseeable future and for a period
of at least 12 months from the date of approval of these financial statements.
In performing their analysis, the Directors have not identified any material
uncertainties that may cast significant doubt on the Group's ability to
continue as a going concern.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in accordance with IFRS requires the
Directors to make critical accounting estimates and judgements that affect the
amounts reported in the financial statements and accompanying notes. The
estimates and assumptions that have a significant risk of causing material
adjustment to the carrying value of assets and liabilities within the next
financial year are discussed below:
Judgements
The Group do not consider that there are any critical accounting judgements in
the preparation of the financial statements.
Estimates
Goodwill impairment assessment: the Group tests annually whether Goodwill has
suffered any impairment. This requires an estimation of the recoverable amount
of the applicable cash generating unit to which the Goodwill relate.
Estimating the recoverable amount requires the Group to make an estimate of
the expected future cash flows from the specific cash generating unit using
certain key assumptions including growth rates and a discount rate. These
assumptions resulted in a material £52.9m impairment charge being recognised
in the current year. See note 8
3. SEGMENTAL ANALYSIS
The Chief Operating Decision-Maker has been identified as the Chief Executive
Officer ("CEO") of the Company. As at 31 March 2025, the Group has three
operating segments and the CEO reviews the Group's internal reporting which
recognises these three segments in order to assess performance and to allocate
resources. The Group has determined its reportable segments are also its
operating segments based on these reports.
The Group currently has three operating and reportable segments being
Easyspace, Cloud Services and Atech.
· Easyspace - this segment provides a range of shared hosting and domain
registration services to micro and SME companies.
· Cloud Services - this segment provides managed cloud computing
facilities and services, through a network of owned data centres, to the
larger SME and corporate markets.
· Atech - this segment is a Microsoft Solutions Partner and delivers
multi-platform solutions, digital transformation and specialised managed
security services to mid-sized enterprises. This is a new segment given the
acquisition in the year.
Information regarding the operation of the reportable segments is included
below. The CEO assesses the performance of the operating segments based on
revenue and a measure of earnings before interest, tax, depreciation and
amortisation (EBITDA) before any allocation of Group overheads, charges for
share-based payments, costs associated with acquisitions, any gain or loss on
revaluation of contingent consideration and material non-recurring items. This
segment EBITDA is used to measure performance as the CEO believes that such
information is the most relevant in evaluating the results of the segment.
The Group's EBITDA for the year has been calculated after deducting Group
overheads from the EBITDA of the three segments as reported internally. Group
overheads include the cost of the Board, all the costs of running the premises
in Glasgow, the Group marketing, human resource, finance and design functions
and legal and professional fees.
The segment information is prepared using accounting policies consistent with
those of the Group as a whole.
The assets and liabilities of the Group are not reviewed by the Chief
Operating Decision-Maker on a segment basis. Therefore, none of the Group's
assets and liabilities are segmental assets and liabilities and are all
unallocated for segmental disclosure purposes. For that reason, the Group has
not disclosed details of segmental assets and liabilities.
All segments are continuing operations. No customer accounts for 10% or more
of external revenues. Inter-segment transactions are accounted for using an
arms-length commercial basis.
Operating Segments
Revenue by Operating Segment
2024
2025 £'000
£'000
Easyspace 11,999 12,471
iomart Cloud Services 109,998 114,578
Atech 21,463 -
143,460 127,049
iomart Cloud Services revenue can be further disaggregated as follows:
2025 2024
£'000 £'000
iomart Cloud managed services 76,363 75,212
Self-managed infrastructure 23,686 28,429
Non-recurring revenue 9,949 10,937
109,998 114,578
The nature of these three offerings are explained within the Chief Financial
Officer's report.
Recurring and Non-recurring Revenue
The amount of recurring and non-recurring revenue recognised during the year
can be summarised as follows:
2025 2024
£'000 £'000
Recurring - over time 127,569 116,112
Non-recurring - point in time 15,891 10,937
143,460 127,049
Geographical Information
In presenting the consolidated information on a geographical basis, revenue is
based on the geographical location of customers. There is no single country
where revenues are individually material other than the United Kingdom. The
United Kingdom is the place of domicile of the parent company, iomart Group
plc.
Analysis of Revenue by Destination
2025 2024
£'000 £'000
United Kingdom 126,272 107,864
Rest of the World 17,188 19,185
Revenue from operations 143,460 127,049
Profit by Operating Segment
2025 2024
Adjusted EBITDA Depreciation, amortisation, acquisition costs, share-based payments and Impairment charge Operating profit/(loss) Adjusted EBITDA Depreciation, amortisation, acquisition costs, share-based payments and Operating profit/(loss)
exceptional non-recurring costs exceptional non-recurring costs
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Easyspace 5,671 (461) - 5,210 6,161 (570) 5,591
iomart Cloud Services* 30,207 (24,131) (52,900) (46,824) 36,729 (22,141) 14,588
Atech 3,211 (1,797) - 1,414 - - -
Group overheads (4,777) - - (4,777) (5,162) - (5,162)
Administrative expenses - exceptional non-recurring cost - - - - (462) (462)
Acquisition costs - (1,674) - (1,674) - (1,010) (1,010)
Share-based payments - (198) - (198) - (517) (517)
Subtotal 34,312 (28,261) (52,900) (46,849) 37,728 (24,700) 13,028
Group interest and tax - - - (8,268) - - (6,587)
(Loss)/profit for the year (55,117) 6,441
Group overheads, acquisition costs, share-based payments, interest and tax are
not allocated to segments.
* The iomart Cloud Services combined depreciation & amortisation charge of
£24,131,000 consists of £14,580,000 and £9,551,000 of depreciation &
amortisation respectively (March 2024: £22,141,000 combined charge consisting
of £15,759,000 and £6,382,000 of depreciation & amortisation
respectively).
4. TAXATION
2025 2024
£'000 £'000
Corporation Tax:
Tax charge for the year (1,024) (2,536)
Adjustment relating to prior years 414 (130)
Total current taxation charge (610) (2,666)
Deferred Tax:
Origination and reversal of temporary differences 24 387
Adjustment relating to prior years (1,312) (21)
Total deferred taxation credit/(charge) (1,288) 366
Total taxation charge (1,898) (2,300)
The adjustment relating to prior years are amendments recognised on the
finalisation of annual taxation computations. The differences between the
total taxation charge shown above and the amount calculated by applying the
standard rate of UK corporation tax to the profit before tax are as follows:
2025 2024
£'000 £'000
(Loss)/Profit before tax (53,219) 8,741
Tax (credit)/charge @ 25% (2024: 25%) (13,305) 2,185
Expenses disallowed for tax purposes 13,505 135
R&D expenditure credits 6 -
Adjustments in current tax relating to prior years (414) 130
Tax effect of different statutory tax rates of overseas jurisdictions 42 (7)
Tax effect of share-based remuneration 574 (207)
Movement in deferred tax related to property, plant and equipment 203 43
Income not taxable for tax purposes (90) -
Movement in deferred tax not recognised 65 -
Movement in deferred tax relating to prior years 1,312 21
Total taxation charge for the year 1,898 2,300
The weighted average applicable tax rate for the year ended 31 March 2025 was
25% (2024: 25%). The effective rate of tax for the year, based on the
taxation charge for the year as a percentage of the (loss)/profit before tax
is (0.04)% (2024: 26%). The effective rate of tax is heavily distorted by
the large number of non-taxable charges in the year, especially the goodwill
non-cash impairment, plus the impact of the prior year adjustments, making the
effective tax in the current year somewhat redundant as a disclosed metric. As
a predominately UK business our underlying tax rate does mirror the headline
corporation tax rates.
Deferred tax assets and liabilities at 31 March 2025 have been calculated
based on the rate of 25% enacted at the reporting date (2024: 25%).
5. DEFERRED TAX
The Group recognised deferred tax assets/(liabilities) as follows:
2025 2024
£'000 £'000
Share-based remuneration 197 891
Capital allowances temporary differences (3,177) (1,687)
Deferred tax on development costs (1,224) (720)
Deferred tax on customer relationships (5,955) (3,286)
Deferred tax on intangible software (35) (82)
Brought forward tax losses 107 -
Other short-term timing differences 3 -
Deferred tax liability (10,084) (4,884)
At the year end, the Group had £2.9m (2024: £2.4m) of brought forward tax
losses. Of this amount only £0.4m has recognised to have a deferred tax value
(2024: £nil). This amount is expected to be recoverable by the group in
future years.
Other short term timing differences
Capital allowances temporary differences £'000
£'000
Share-based remuneration Development costs Customer relationships Intangible software
£'000 £'000 £'000 £'000 Brought forward tax losses Total
£'000 £'000
Balance at 31 March 2023 638 (319) (648) - (2,762) (130) - (3,221)
Acquired on acquisition of subsidiary - (578) - - (1,451) - - (2,029)
Movement relating to prior year - (21) - - - - - (21)
Credited/(charged) to statement of comprehensive income 253 (769) (72) - 927 48 - 387
Balance at 1 April 2024 891 (1,687) (720) - (3,286) (82) - (4,884)
Acquired on acquisition of subsidiary - (21) - - (3,891) - - (3,912)
Movement relating to prior year - (963) (349) - - - (1,312)
Credited/(charged) to statement of comprehensive income (694) (506) (155) 3 1,222 47 107 24
Balance at 31 March 2025 197 (3,177) (1,224) 3 (5,955) (35) 107 (10,084)
The movement in the deferred tax account during the year was:
The deferred tax asset in relation to share-based remuneration arises from the
anticipated future tax relief on the exercise of share options.
The deferred tax on capital allowances temporary differences arises mainly
from plant and equipment in the Cloud Services segment where the tax written
down value varies from the net book value.
The deferred tax on development costs arose from development expenditure on
which tax relief was received in advance of the amortisation charge.
The deferred tax on customer relationships and intangible software arises from
permanent differences on acquired intangible assets.
The deferred tax asset in relation to the brought forward tax losses relates
to recoverable tax losses which are seen as having high probability of
recovery against future tax profits of the Group.
6. ACQUISITIONS
Atech Group Limited
On 1 October 2024, the Group acquired the entire issued share capital of
Kookaburra Topco Limited, the holding company of Atech Support Limited and
other subsidiaries ("Atech"). The acquisition was a significant strategic
milestone, substantially enhancing the Group's scale, credibility, and
capabilities, particularly in Microsoft Azure, modern work and cyber security
solutions, which are central to our to our future strategic focus. Atech is
one of the UK's most highly accredited Microsoft Solution Partners.
During the current year, the Group incurred £866,000 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 and in cash flow from operating activities for the period
ended 31 March 2025.
The following table summarises the consideration to acquire Atech, the amounts
of identified assets acquired, and liabilities assumed at the acquisition
date.
£'000
Recognised amounts of net assets acquired and liabilities assumed:
Cash and cash equivalents 3,403
Trade receivables 6,072
Other receivables, prepayments and accrued income 3,600
Property, plant and equipment 447
Intangible assets 15,588
Borrowings (6,244)
Provisions (84)
Trade and other payables (12,563)
Lease liabilities (256)
Corporation tax (201)
Deferred considerations from historic acquisitions (784)
Deferred tax liability (3,912)
Identifiable net assets 5,066
Goodwill 46,615
Total consideration 51,681
Satisfied by:
Cash - paid on acquisition 51,681
Total consideration to be transferred 51,681
The acquisition of Atech was completed using a "locked box completion"
mechanism, on a no cash, no debt, and normalised working capital basis.
The cash paid on the acquisition was £51,681,000 to the previous
shareholders, £6,244,000 of debt repayments and £187,000 of stamp duty.
The goodwill arising on the acquisition of Atech is attributable to the
premium payable for a pre-existing, rapidly growing, Microsoft Solutions
Partner, delivering complex, multi-platform solutions, digital transformation
and specialised managed security services to mid-sized enterprises, together
with the benefits to the Group in merging the business with its existing
infrastructure and the anticipated future revenue synergies from the
combination. The goodwill is not expected to be deductible for tax purposes.
Included in intangible assets is the fair value included in respect of the
acquired customer relationships intangible asset of £13,770,000. To estimate
the fair value of the customer relationships intangible asset, a discounted
cash flow method, specifically the income approach, was used with reference to
the directors' estimates of the level of revenue, which will be generated from
them. A pre-tax discount rate of 11.49% was used for the valuation. Customer
relationships are being amortised over an estimated useful life of 16 years.
Included within intangible assets is the Atech brand, recognised at a fair
value of £1,794,000 as at the acquisition date. The fair value was determined
using the Relief-from-Royalty Method, a valuation technique commonly accepted
for brand and trademark assets. This method estimates the value of the brand
by reference to the hypothetical royalty payments that would be avoided
through ownership of the brand, rather than licensing it from a third party.
The valuation was based on the directors' forecast of future revenues
attributable to the brand, an appropriate notional royalty rate applied to
those revenues and a pre-tax discount rate of 11.5%. The brand is being
amortised on a straight-line basis over its estimated useful life of 16
years.
Atech earned revenue of £21,463,000 and generated profit, before allocation
of group overheads, exceptional items and tax, of £3,179,000 in the period
since acquisition.
If Atech had been part of the iomart Group from 1 April 2024, revenue earned
for the twelve month period for iomart would have been £40,138,000 and profit
before tax would have been £1,760,000 for the year ended 31 March 2025.
This profit includes exceptional items, interest expense and costs associated
with the previous ownership structure which aggregates to £3,980,000.
7. EARNINGS PER ORDINARY SHARE
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares in
issue during the year, after deducting any own shares held in Treasury and
held by the Employee Benefit Trust. Diluted earnings per share is calculated
by dividing the earnings attributable to ordinary shareholders by the total of
the weighted average number of ordinary shares in issue during the year, after
deducting any own shares, and adjusting for the dilutive potential ordinary
shares relating to share options.
2025 2024
£'000 £'000
(Loss)/profit for the financial year and basic earnings attributed to ordinary (55,117) 6,441
shareholders
Weighted average number of ordinary shares: 000 000
Called up, allotted and fully paid at start of year 112,342 110,422
Own shares held by Employee Benefit Trust (141) (141)
Issued share capital in the year 244 1,391
Weighted average number of ordinary shares - basic 112,445 111,672
Dilutive impact of share options 1,128 2,710
Weighted average number of ordinary shares - diluted 113,573 114,382
Basic (loss)/earnings per share (49.0p) 5.8 p
Diluted (loss)/earnings per share (49.0p) 5.6 p
Adjusted (loss)/earnings per share 2025 2024
£'000 £'000
(Loss)/profit for the financial year and basic (loss)/earnings attributed to (55,117) 6,441
ordinary shareholders
- Amortisation of acquired intangible assets 4,902 4,226
- Acquisition costs 1,674 1,010
- Administrative expenses - exceptional non-recurring costs - 462
- Share-based payments 198 517
- Exceptional goodwill impairment charge 52,900 -
- Tax impact of adjusted items (734) (1,421)
Adjusted profit for the financial year and adjusted earnings attributed to 3,823 11,235
ordinary shareholders
Adjusted basic earnings per share 3.4p 10.0 p
Adjusted diluted earnings per share 3.4p 9.8 p
8. INTANGIBLE ASSETS
Acquired customer relationships Acquired brand Software Domain names & IP addresses Total
Goodwill Development costs Beneficial contracts
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost
At 31 March 2023 99,950 15,302 61,809 - 11,028 86 336 188,511
Acquired on acquisition of subsidiary 9,871 1,055 5,803 - 97 - - 16,826
Additions - - - - 113 - - 113
Disposals - (112) - - - - - (112)
Currency translation differences - - (16) - (12) - - (28)
Development cost capitalised - 2,178 - - - - - 2,178
At 31 March 2024 109,821 18,423 67,596 - 11,226 86 336 207,488
Acquired on acquisition of subsidiary 46,615 - 13,770 1,794 24 - - 62,203
Additions - - - - 18,711 - - 18,711
Disposals - - - - - - - -
Currency translation differences - - (20) - (15) - 2 (33)
Development cost capitalised - 2,907 - - - - - 2,907
At 31 March 2025 156,436 21,330 81,346 1,794 29,946 86 338 291,276
Accumulated amortisation:
At 31 March 2023 - (12,600) (53,325) - (9,274) (77) (304) (75,580)
Disposals - 112 - - - - - 112
Charge for the year - (1,892) (4,226) - (864) (6) (8) (6,996)
Currency translation differences - - 14 - 14 - - 28
At 31 March 2024 - (14,380) (57,537) - (10,124) (83) (312) (82,436)
Disposals - - - - - - - -
Charge for the year - (2,219) (4,828) (74) (4,527) (3) (8) (11,659)
Impairment charge (52,900) - - - - - - (52,900)
Currency translation differences - - 21 - 3 - - 24
At 31 March 2025 (52,900) (16,599) (62,344) (74) (14,648) (86) (320) (146,971)
Carrying amount:
At 31 March 2025 103,536 4,731 19,002 1,720 15,298 - 18 144,305
At 31 March 2024 109,821 4,043 10,059 - 1,102 3 24 125,052
Of the total additions in the year of £18,711,000 (2024: £114,000), no
amounts related to leases under IFRS 16 (note 12) (2024: £nil). There were
£16,065,000 amounts included in trade payables at the year end (2024: £nil).
As a result, the total cash outflow in relation to these additions was
£2,646,000 (2024: £114,000) of which £87,000 is disclosed within investing
activities and £2,559,000 is disclosed within financing activities. The
latter cash flow classification is due to the long term, multi year commercial
arrangements with the technology providers.
Included within customer relationships are the following significant net book
values: £9.2m in relation to the acquisition of Atech Group Limited with a
remaining useful life of 16 years, £2.8m in relation to the acquisition of
Extrinsica Global Holdings Limited and £1.2m in relation to the acquisition
of Accesspoint Group Holdings Limited both with a remaining useful life of 6
years, £1.9m in relation to the acquisition of Concepta Capital Limited with
a remaining useful life of 5 years, £0.3m in relation to the acquisitions of
Memset Limited with a remaining useful life of 3 years, Bytemark Limited with
a net book value of £0.1m and LDeX Group Limited of £0.3 both with a
remaining useful life of 2 years, Sonassi Limited of £0.2m with a remaining
useful life of 2 years.
Goodwill, as allocated to individual Cash Generating Units ("CGU"), was
reviewed for impairment in accordance with IAS 36 "Impairment of Assets". An
impairment charge £52,900,000 (2024: £nil) arose in relation to the iomart
Cloud Services CGU as a result of this review. The impairment charge within
the iomart Cloud Services CGU reflects both the strategic shift away from low
growth, heritage product areas and the accelerated customer churn in certain
areas of this CGU.
The carrying value of goodwill by each CGU is as follows:
Cash Generating Units (CGU) 2025 2024
£'000 £'000
Easyspace 26,685 26,685
iomart Cloud Services 30,236 83,136
Atech 46,615 -
103,536 109,821
The recoverable amount of a CGU is determined based on value-in-use
calculations. These calculations use post-tax cash flow projections based on
financial budgets approved by the Board covering a five year period. These
projections are the result of detailed planning and assume similar levels of
organic growth as the Group has experienced in the previous years.
The growth rates and margins used to extrapolate estimated future performance
continue to be based on past growth performance adjusted downwards to take
into account the additional risk associated with customer renewal levels. The
growth rate does not exceed the long-term average growth rate for the business
in which the CGU operates. The growth rates used to estimate future
performance beyond the periods covered by the annual and strategic planning
processes do not exceed the long-term average growth rates for similar
products.
In determining the value-in-use, the estimated post-tax future cash flows are
discounted to their present value using a post-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset.
Management continue to apply the judgement at 31 March 2025 that there are
three distinct CGUs within the Group, namely Cloud Services, Easyspace and
Atech which have been derived with due consideration to IAS 36. The
assumptions used for the CGU included within the impairment reviews are as
follows:
Easyspace iomart cloud services
Atech
31 March 2025 31 March 2024 31 March 2025 31 March 2024
31 March 2025
Discount rate (pre tax) 14,8% 14.8% 14.9% 14.8% 14.9%
Discount rate (post-tax) 11.1% 11.1% 11.2% 11.1% 11.2%
5 year average EBITDA growth 29% -2% -3% 0% 5%
Future perpetuity rate 2.5% 0.0% 0.0% 2.5% 2.5%
Initial period for which cash 5 5 5 5
flows are estimated (years) 5
The perpetual growth rate adopted for each CGU is consistent with the market
that each entity operates in for real growth. Whilst the iomart Cloud Services
CGU has been impacted by customer churn in some legacy product areas, we
continue to see growth in our order bookings from both new and existing
customers which supports the adoption of a perpetual growth rate in this area.
Plausible downside sensitivities have been considered as part of the
impairment analysis, with specific sensitivities applied to both the discount
rate and forecast EBITDA cash flow projections within the iomart Cloud
Services CGU. A range of reasonably possible downside sensitivities have been
applied being an increase in the discount rate to 11.75% discount rate and a
reduction in the forecast EBITDA cash flows of 10%. A reasonably possible
increase in the discount rate to 11.75% would result in an additional
impairment charge of £6.8m, a reasonably possible 10% reduction in the
forecast EBITDA would result in an additional impairment charge of £13.2m and
in combination these downsides would result in an additional impairment charge
of £19.8m.
Easyspace has a strong track record of achieving cash flow projections whilst
Atech has also performed in line with expectations post-acquisition, as a
result management consider the most plausible downside to be in respect of the
discount rate. Both CGUs continue to have headroom in excess of the respective
carrying amount when a discount rate of 11.75% is applied.
All amortisation and impairment charges are included in the depreciation,
amortisation and impairment of non-financial assets classification, which is
disclosed as administrative expenses in the statement of comprehensive income.
9. PROPERTY, PLANT AND EQUIPMENT
Freehold property Leasehold property and improve-ments Data centre equipment Computer equipment Office equipment Motor vehicles Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost:
At 31 March 2023 8,236 41,516 31,843 121,238 2,986 46 205,865
Acquired on acquisition of subsidiary - 16 - 345 25 - 386
Additions in the year - 6,316 2,624 5,876 83 48 14,947
Disposals in the year - (2,129) - - - (5) (2,134)
Currency translation differences - (49) - (167) - - (216)
At 31 March 2024 8,236 45,670 34,467 127,292 3,094 89 218,848
Acquired on acquisition of subsidiary - 357 - 12 78 - 447
Additions in the year - 3,171 2,326 4,814 78 - 10,389
Disposals in the year - (312) (1,630) (72) (217) (4) (2,235)
Currency translation differences - (72) - (181) - - (253)
At 31 March 2025 8,236 48,814 35,163 131,865 3,033 85 227,196
Accumulated depreciation:
At 31 March 2023 (1,295) (20,951) (18,711) (97,403) (2,520) (26) (140,906)
Charge for the year (238) (4,984) (1,591) (8,754) (184) (13) (15,764)
Disposals in the year - 1,117 - - - 5 1,122
Currency translation differences - 41 - 151 - - 192
At 31 March 2024 (1,533) (24,777) (20,302) (106,006) (2,704) (34) (155,356)
Charge for the year (237) (4,880) (1,665) (7,808) (187) (15) (14,792)
Disposals in the year - 312 1,630 72 215 4 2,233
Currency translation differences - 58 - 176 - - 234
At 31 March 2025 (1,770) (29,287) (20,337) (113,566) (2,676) (45) (167,681)
Carrying amount:
At 31 March 2025 6,466 19,527 14,826 18,299 357 40 59,515
At 31 March 2024 6,703 20,893 14,165 21,286 390 55 63,492
Depreciation charge in the current year is comprised of £14,730,000 as
disclosed in the statement of comprehensive income and £62,000 of accelerated
depreciation in respect of the closure of offices in the current year, as
included in non-recurring administrative costs.
During the year there were additions of £nil (2024: £231,000) in respect of
reinstatement provisions and additions of £3,080,000 (2024: £4,270,000) in
respect of leases under IFRS 16 (note 12). Of the total remaining additions
in the year of £7,309,000 (2024: £10,446,000), £552,000 (2024: £1,247,000)
was included in trade payables as unpaid invoices at the year-end resulting in
a net increase of £943,000 (2024: net decrease of £933,000) in trade
payables. Consequently, the consolidated statement of cash flows discloses a
figure of £8,252,000 (2024: £9,513,000) as the cash outflow in respect of
property, plant and equipment additions in the year.
See note 12 for movements in the year relating to right-of-use assets under
IFRS 16 as included in the above table.
10. TRADE AND OTHER PAYABLES
2025 2024
£'000 £'000
Trade payables (22,286) (12,163)
Other taxation and social security (2,471) (2,538)
Accruals (8,685) (8,437)
Deferred income (13,315) (11,536)
Other creditors (1,255) (1,054)
Trade and other payables - current (48,012) (35,728)
The carrying amount of trade and other payables approximates to their fair
value. Current trade payables and accruals are non-interest bearing and
generally mature within three months.
2025 2024
£'000 £'000
Trade payables (11,909) -
Deferred income (3,055) (2,834)
Other creditors (246) -
Trade and other payables - non-current (15,210) (2,834)
Non-current deferred income in the year predominantly relates to support
contracts that span over one year.
Revenue of £11,536,000 (2024: £12,117,000) recognised in the current year
was included in deferred income at 31 March 2024 (2024: 31 March 2023).
The future annual payments for intangible software assets acquired via
industry standard, multi-year, licence arrangements from technology providers
are included in current and non-current trade payables above. At 31 March
2025, the total value is £17,372,000; split £5,463,000 current and
£11,909,000 non-current. The largest element relates to the Broadcom 5 year
commitment entered into at the start of FY25 such that all of the non-current
element will be paid between two and five years.
11. BORROWINGS
2025 2024
£'000 £'000
Current:
Lease liabilities (note 12) (2,874) (2,509)
Current borrowings (2,874) (2,509)
Non-current:
Lease liabilities (note 12) (15,132) (15,582)
Bank loans (97,000) (40,000)
Total non-current borrowings (112,132) (55,582)
Total borrowings (115,006) (58,091)
The carrying amount of borrowings approximates to their fair value.
At the start of the year there was £40.0m (2024: £34.4m) outstanding on the
revolving credit facility and drawdowns of £57.0m (2024: £7.6m) were made
from the facility during the year. Repayments totalling £nil (2024: £2.0m)
were made in the year resulting in a balance outstanding at the end of the
year of £97.0m (2024: £40.0m).
At the year end, the Group had access to a £125m revolving credit facility
that matures on 30 June 2026, which also benefited from a £50m Accordion
Facility. The revolving credit facility has a borrowing cost at the Group's
current leverage levels of 2.5% (2024: 1.8%) margin over SONIA. The
revolving credit facility incurs a non-utilisation fee of 35% of the bank
margin. The effective interest rate for the revolving credit facility in the
current year was 6.90% (2024: 6.85%).
Given the terms of the revolving credit facility and the ability for any
drawdowns made to be extended beyond 31 March 2026 at the discretion of the
Group, the total amount outstanding has been classified as non-current.
The obligations under the revolving credit facility are repayable as follows:
2025 2024
Capital Interest Total Capital Interest Total
Group and Company only £'000 £'000 £'000 £'000 £'000 £'000
Due within one year - (1,681) (1,681) - (698) (698)
Due within two to five years (97,000) - (97,000) (40,000) - (40,000)
(97,000) (1,681) (98,681) (40,000) (698) (40,698)
The revolving credit facility was refinanced on 27 June 2025 and replaced by a
new revolving credit facility which extends to 30 June 2027. The new
revolving credit facility provides the Group with additional liquidity which
will be used for general business purposes and to fund investments, in
accordance with the Group's three-year strategic plan. The Directors are of
the opinion that the Group can operate within the facility and comply with its
bank covenants.
Lease liabilities Total net debt
Cash and cash equivalents £'000 £'000
Analysis of change in net debt £'000 Bank Total liabilities
loans £'000
£'000
At 31 March 2023 13,818 (34,400) (19,180) (53,580) (39,762)
Acquired on acquisition of subsidiary - (3,728) - (3,728) (3,728)
Repayment of debt acquired on acquisition 3,728 - 3,728 3,728
Additions to lease liabilities - - (4,148) (4,148) (4,148)
Disposals from lease liabilities - - 1,063 1,063 1,063
Drawdown of bank loans - (7,600) - (7,600) (7,600)
Repayment of bank loans - 2,000 - 2,000 2,000
Bank loan interest charged - 3,062 - 3,062 3,062
Bank loan interest paid - (3,062) - (3,062) (3,062)
Currency translation - - 11 11 11
Cash and cash equivalent cash inflow 1,937 - - - 1,937
Lease liabilities cash outflow* - - 4,163 4,163 4,163
At 31 March 2024 15,755 (40,000) (18,091) (58,091) (42,336)
Acquired on acquisition of subsidiary 3,403 (6,244) - (6,244) (2,841)
Repayment of debt acquired on acquisition - 6,244 - 6,244 6,244
Additions to lease liabilities - - (3,336) (3,336) (3,336)
Disposals from lease liabilities - - - - -
Drawdown of bank loans - (57,000) - (57,000) (57,000)
Repayment of bank loans - - - - -
Bank loan interest charged - 4,968 - 4,968 4,968
Bank loan interest paid - (4,968) - (4,968) (4,968)
Currency translation - - (3) (3) (3)
Cash and cash equivalent cash outflow (6,070) - - - (6,070)
Lease liabilities cash outflow* - - 3,424 3,424 3,424
At 31 March 2025 13,088 (97,000) (18,006) (115,006) (101,918)
* Lease liabilities cash outflow in the year is reconciled as £4,352k
payments to lease provider as disclosed in the consolidated cash flow
statement netted with lease interest of £928k.
12. LEASES
The Group leases assets including buildings, fibre contracts, colocation and
software contracts. Information about leases for which the Group is a lessee
is presented below:
Leasehold Property Data centre equipment Total
Right-of-use assets £'000 £'000 £'000
Software
£'000
Balance at 31 March 2024 15,915 1,327 95 17,337
Additions 587 2,493 - 3,080
Acquired on acquisition of subsidiary 256 - - 256
Disposals - - - -
Currency translation differences 7 (10) - (3)
Depreciation and amortisation (2,122) (1,677) (95) (3,894)
Balance at 31 March 2025 14,643 2,133 - 16,776
The right-of-use assets in relation to leasehold property and data centre
equipment are disclosed as non-current assets and are disclosed within
property, plant and equipment (note 9). The right-of-use assets in relation
to software are disclosed as non-current assets and are disclosed within
intangibles (note 8).
Lease liabilities
Lease liabilities are presented in the consolidated statement of financial
position within borrowings as follows:
2025 2024
£'000 £'000
Current:
Lease liabilities (note 11) (2,874) (2,509)
Non-current:
Lease liabilities (note 11) (15,132) (15,582)
Total lease liabilities (18,006) (18,091)
The largest area of liability relates to physical land & buildings of the
date centre estate, plus the office location.
The maturity analysis of undiscounted lease liabilities are shown in the table
below:
2025 2024
£'000 £'000
Amounts payable under leases:
Within one year (3,699) (3,332)
Between two to five years (10,416) (9,294)
After more than five years (7,389) (9,477)
(21,504) (22,103)
Add: future interest 3,498 4,012
Total lease liabilities (18,006) (18,091)
The Group has elected not to recognise a lease liability for short-term leases
(leases with an expected term of 12 months or less) or for leases of low value
assets. Payments made under such leases are expensed on a straight line
basis. During the year, in relation to leases under IFRS 16, the Group
recognised the following amounts in the consolidated statement of
comprehensive income:
2025 2024
£'000 £'000
Short-term and low value lease expense (1,830) (1,711)
Depreciation charge (3,799) (3,933)
Amortisation charge (95) (285)
Interest expense (928) (854)
(6,652) (6,783)
Amounts recognised in the consolidated statement of cash flows:
2025 2024
£'000 £'000
Amounts payable under leases:
Short-term and low value lease expense (1,830) (1,711)
Payments under lease liabilities within cash flows from financing (4,352) (5,017)
activities
(6,182) (6,728)
Payments under lease liabilities within cash flows in the year is represented
by £3,424k (2024 £4,163k) of cash payments for the principal portion and
£928k (2024 £854k) for the interest portion of the lease liability.
13. POST BALANCE SHEET EVENTS
Directorate Change
On 29 May 2025, Lucy Dimes stood down as Chief Executive Officer and left the
company. Richard Last, Non-Executive Chair, became Executive Chair.
Refinancing
On 27 June 2025, a new Revolving Credit Facility ("RCF"), totalling £115
million, has been secured from a syndicate comprising The Royal Bank of
Scotland plc, HSBC UK Bank plc, and Clydesdale Bank plc (trading as Virgin
Money). The facility extends to 30 June 2027 and includes financial covenants,
limited to debt cover and interest cover, which are aligned with the Group's
current leverage position and strategic objectives.
At current leverage levels, the bank margin under the new RCF is 3.0% above
SONIA. The RCF includes a margin ratchet mechanism, enabling reduced interest
costs as the Group deleverages.
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