REG - Iomart Group PLC - Half Yearly Results
07/12/2021 07:00
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RNS Number : 7510U Iomart Group PLC 07 December 2021
7 December 2021
iomart Group plc
("iomart" or the "Group" or the "Company")
Half Yearly Results
On track - Strategy implemented and progressing well
iomart (AIM: IOM), the cloud computing company, is pleased to report its
consolidated half yearly results for the period ended 30 September 2021 (H1
2022).
FINANCIAL HIGHLIGHTS
H1 2022 H1 2021 Change
Revenue £51.9m £56.3m -8%
% of recurring revenue(1) 93% 90% +3%
Adjusted EBITDA(2) £19.6m £20.8m -6%
Adjusted profit before tax(3) £9.1m £9.8m -7%
Profit before tax £6.0m £6.0m 0%
Adjusted diluted EPS(4) 6.5p 7.0p -7%
Basic EPS 4.4p 4.4p 0%
Cash generation from operations £17.9m £23.1m -23%
Interim dividend per share 2.42p 2.60p -7%
· The Group continues to benefit from very strong levels of
recurring revenues of 93%(1) of Group revenues
· Reduction in revenue reflects lower non-recurring equipment and
consultancy sales, along with lower customer renewals. The Board is confident
that this short-term impact on revenue will be reversed
· Profitability percentile remains positive and stable with
adjusted EBITDA(2) and adjusted profit before tax(3) at 37.7% (H1 2021: 36.9%)
and 17.5% (H1 2021: 17.3%) of revenue, respectively with the absolute
reductions of £1.2m and £0.7m, respectively a function of the revenue trend
· Strong cash generation from operations in the period of £17.9m
with a consistent cash conversion(6) (91%), after recognising one-off items
with a value of £4m in the prior period
· Period end net debt of £49.3m, comfortable at 1.2 times
annualised EBITDA(5)
· Successful refinancing with an increased £100m revolving bank
facility from a new group of four leading banks, underpinning the Group's
five-year growth strategy
OPERATIONAL HIGHLIGHTS
· Launch of the new iomart brand well received by all stakeholders,
providing a core foundation for current and future growth initiatives
· Established a new Group product team and launched new products
targeted at both new and existing customers
o Successful Microsoft Azure campaign launched in September which resulted
in securing a multi-year, six figure annual revenue managed Azure customer,
alongside a well-qualified pipeline of additional opportunities
o Secure Connectivity Services offering developed and sales campaign
launched in September, and developed a well-qualified pipeline with first
sales targeted within the current financial year
· Enhancements made to core operational and service-based systems
and tools, with a primary focus on improved levels of service excellence
· Ongoing investment in the Group's datacentre estate as previously
announced, to strengthen this valuable strategic and operational capability
· All electricity for our UK data centres is now sourced under
Renewable Energy Guarantees of Origin ("REGO") certified renewable electricity
· M&A - positive progress in evaluating targeted opportunities
to extend the Group's technology and product capabilities, while enhancing
revenue, profitability and EPS
OUTLOOK
· High degree of confidence in achieving results in line with the
Board's expectations and executing against the Group's five-year growth
strategy
· The launch of the enhanced set of product offering, coupled with
a clearly defined brand and targeted go to market capability has provided for
a positive sales environment to deliver future growth
STATUTORY EQUIVALENTS
A full reconciliation between adjusted and statutory profit before tax is
contained within this statement. The largest item is the consistent add back
of the non-cash amortisation of acquired intangible assets. The largest
variance, period on period, is a £0.5m lower amortisation of acquired
intangible assets as the amortisation periods expire on historic acquisitions.
Reece Donovan, CEO commented,
"We are energised by our refreshed strategy, new brand and clear focus. The
early customer wins from the new sales campaigns are excellent signs that the
strategy is on track and starting to deliver tangible results. iomart's high
level of recurring revenue remains a considerable strength, providing good
visibility for the remainder of the year. Current trading is in line with the
Board's expectations for the full year.
"The journey to the cloud for many is long and complex and iomart is well
positioned to support existing and new customers on the multiple paths open to
them, ensuring we respond to their specific business requirements and provide
exceptional service and reliability. It is the blend of our straightforward
approach, owned infrastructure assets, people and relationship focus, and
agile technology-agnostic solution model, along with extensive customer base
and more than 20 years' experience, that gives us confidence that we will
continue to participate successfully within the wider growing Cloud sector."
(1 )Recurring revenue is the revenue that repeats either under long-term
contractual arrangement or on a rolling basis by predictable customer habit.
(2 )Throughout this statement adjusted EBITDA is earnings before interest,
tax, depreciation and amortisation (EBITDA) before share based payment
charges, acquisition costs and gain on revaluation of contingent
consideration. Throughout this statement acquisition costs are defined as
acquisition related costs and non-recurring acquisition integration costs.
(3 )Throughout this statement adjusted profit before tax is profit before
tax, amortisation charges on acquired intangible assets, share based payment
charges, acquisition costs and gain on revaluation of contingent
consideration.
(4 )Throughout this statement adjusted diluted earnings per share is
earnings per share before amortisation charges on acquired intangible assets,
share based payment charges, acquisition costs, gain on revaluation of
contingent consideration and the taxation effect of these.
(5 ) Annualised EBITDA is the last 12 months of EBITDA for the period ended
30 September 2021.
(6 )Cash conversion is calculated as cash flow from operations divided
by adjusted EBITDA.
This interim announcement contains forward-looking statements, which have been
made by the directors in good faith based on the information available to them
up to the time of the approval of this report and such information should be
treated with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying such forward-looking
information.
For further information:
iomart Group plc Tel: 0141 931 6400
Reece Donovan, Chief Executive Officer
Scott Cunningham, Chief Financial Officer
Peel Hunt LLP (Nominated Adviser and Joint Broker) Tel: 020 7418 8900
Edward Knight, Paul Gillam, James Smith
Investec Bank PLC (Joint Tel: 020 7597 4000
Broker)
Patrick Robb, Virginia Bull, Sebastian Lawrence
Alma PR Tel: 020 3405 0205
Caroline Forde, Hilary Buchanan, Joe Pederzolli
About iomart Group plc
iomart Group plc (AIM: IOM) is a cloud computing and IT managed services
business providing hybrid cloud infrastructure, network connectivity,
security, and digital workplace capability. Our mission is simple: to make our
customers unstoppable by enabling them to connect, secure and scale anywhere,
anytime. From our portfolio of data centres we own and operate across the UK
to connected sites around the world, our 400-strong team can design and deploy
the right cloud solution for our customers.
For further information about the Group, please visit www.iomart.com
(http://www.iomart.com/)
Chief Executive's Statement
Introduction
We have continued to make positive progress against the key milestones
announced in May, as part of the refreshed strategy to build on our existing
strong position in the private cloud space at the same time as re-positioning
our offering around the growing hybrid cloud market. This includes the launch
of a new iomart brand, the release of new products and our first larger
managed Azure customer win. Our teams are firmly in execution mode and
following the launch of several new sales campaigns we can see momentum
building.
The results for the period are in line with our pre-close statement, and while
revenue shows a decline against prior periods, our profit margins remain
strong and we continue to benefit from a large base of recurring revenue and
high levels of cash generation. These are strong foundations on which to
build, and we are confident the strategic progress being achieved will flow
through into future growth.
The successful refinancing of our revolving bank facility with four new banks
post period end underpins our five-year plan and this ongoing support from top
tier global financial institutions is a clear endorsement of our strategy.
We were delighted to announce in July the appointment to the Board of Andrew
Taylor as a Non-Executive Director of the Company, with effect from 1 August
2021. We described in our Final Results announcement in June, our desire to
appoint a fourth independent Non-Executive Director to add additional sector
skills to support the execution of the Group's refreshed medium term strategic
plan and we are delighted to have secured an executive of Andrew's experience
and calibre. Andrew has over 25 years' experience in the telecommunications
industry, and has a demonstrable track record of achievement in previous
roles, both in the UK and internationally. He is the CEO of Gamma
Communications plc, a leading provider of unified communication services to
the business market in Western Europe.
Strategy
At the start of the year we announced our vision to position iomart for the
next phase of its growth as a recognised leading secure hybrid cloud business.
We were bold by stating our aspiration to become a £200m revenue business
within five years. Underpinning this was a roadmap with a focus on three
main activities:
· New services and geographies - we will focus on four new service
areas - hybrid cloud, security, the future digital workplace and connectivity;
· Complementary acquisitions - to expand the customer base and to
acquire new skillsets; and
· Protect and expand the existing base of run rate revenue and
EBITDA which is underpinned by our existing core private cloud infrastructure.
We are on track to achieve the key strategic milestones which we laid out for
delivery in FY22. For the first half of the year our focus was on brand
development, new product launches and restructuring the organisation to drive
"one iomart". These are important building blocks of success and we have
made good progress.
Brand development
We delivered a successful launch of our new iomart brand in early September,
which has been well received by all stakeholders and provides a strong
foundation for ensuring our value proposition and marketing collateral are
impactful for both existing and potential new customers, as well as a guide
for our internal operations and ethos. Our new strapline "welcome to
straightforward" encapsulates our mission to deliver a customer-focused
service which makes the complicated world of secure hybrid cloud simple for
our customers, gives them peace of mind, and allows them to focus on what's
important to them. Our aim is to make our brand relatable and memorable in
order to increase familiarity in the market and, ultimately, drive inbound
sales.
New product development
We have established a new product team and have redefined and launched a
number of new product initiatives. These are targeted at both new customers
and upselling and cross-selling to our existing customers. They include
specific campaigns around the growth areas of Digital Workplace, Secure
Connectivity and Managed Microsoft Azure. Pipelines are being developed from
each of these campaigns and we are confident our refined approach will give a
greater success rate. Further product releases will be made over the coming
months.
We were delighted to secure our first six figure annual recurring revenue
customer for Managed Microsoft Azure following our successful sales campaign.
The customer's IT workload will be deployed on Azure infrastructure on a
managed basis over the next 4 years. A well-qualified pipeline of other sales
opportunities is building. We are now successfully working more closely with
Microsoft and anticipate this relationship continuing to strengthen.
The Secure Connectivity Services proposition was fully developed and rolled
out in the period, with the marketing campaign live in September with
extremely positive customer feedback. We are confident in customer wins in
this area by the end of the financial year.
Operations, processes and values
· one iomart team: demand for talent is high and in an effort to
both retain and attract the best possible talent, we have updated our benefits
package, formalised flexible working options and delivered a number of
wellbeing, technical and management training programmes across the business.
· Core Systems: we have enhanced and introduced a new control panel
to streamline our customer interaction. This enhancement allows us to
automatically align customer requests to the right team. We have reorganised
the customer support teams behind this to ensure the right people, with the
right expertise, are available from the start of any customer support event.
M&A
As we have successfully completed in the past, we plan to use selective
M&A to augment our organic growth. As well as acquiring new customer bases
operating in recurring revenue business models we also plan to strengthen our
technology and product capabilities. During the period we have started to
evaluate potential targets and we are pleased with the positive progress made
so far in the identification of opportunities; providing verification that the
market remains fragmented. The timing of M&A closure is hard to predict,
and we will at all times maintain our disciplined approach.
ESG
We have had a period of high activity in terms of our commitments to our
environmental, social and governance ("ESG") programme in the period. The main
highlights include:
· Environmental: all of the electricity used in our UK data centres
is now sourced under Renewable Energy Guarantees of Origin ("REGO") certified
renewable electricity. In early November, under our Alliance agreement signed
last year with Glasgow based Katrick Technologies, we commissioned a passive
cooling system at our Glasgow data centre. Early test results for the new
cooling system indicate the potential for a significant reduction in
electrical power consumption.
· Social: we have committed to two new initiatives in the period -
the first providing sponsorship for the 2022 cohort, in conjunction with
ScotlandIS, of Empowering Women in Leadership, and the second to work with a
UK charity, SmartSTEMS to create more opportunities for children from
underprivileged backgrounds.
· Governance: under remit of our Audit Committee we are in the
process of appointing an outsourced internal audit resource to further support
our risk management framework and assurance programme.
Market
With the insatiable growth in data requirements from across all industries,
the demand for the three core building blocks of compute power, storage and
connectivity continues to expand. Organisations are increasingly outsourcing
these requirements to experts, who can help them navigate a constantly
evolving and complex technical landscape, providing high levels of
reliability, customer support, flexibility and technical knowledge. These
requirements increasingly come with greater security and compliance needs. The
Covid-19 pandemic and working from home has accelerated a number of the
drivers.
The concept of "Cloud" computing is now globally recognised. The "public
cloud" giants such as Amazon, Microsoft and Google have vastly contributed to
this general awareness and consequently, as is well documented, have seen high
growth globally as many organisations look for Cloud infrastructure and
capabilities. The reality of the situation is that a vast majority of the
world's IT infrastructure is complex and untidy in nature which means hybrid
cloud models will remain a key market feature for many use cases. Even if
businesses want to use Public Cloud infrastructure fully, then many lack the
detailed know-how, skills and resources required to manage all the elements.
iomart is well positioned to meet this demand given a long established
capability in designing and running private clouds and supporting on premise
solutions along with our plans to continue to complement this with skills and
capabilities for public cloud provisioning and management.
No two organisations are the same, and therefore the cloud solution mix in the
future will be unique and reflect the needs of that organisation at that time,
especially for those organisations that are running older type applications
that are not public cloud compatible. Many customers are looking for a single
point of accountability for all their cloud needs and iomart is well
positioned to provide this service going forward particularly for medium to
large enterprises.
Operational Review
Cloud Services
Cloud Services revenues decreased by £4.1m (8%) to £46.1m (H1 2021:
£50.3m). Non-recurring activities represented a disproportionate impact with
a £2.1m drop in revenue from lower equipment reselling and also a large scale
consultancy project from the prior year coming to an end. Cloud Services
EBITDA (before share based payments, acquisition costs and central group
overheads) was £18.9m being 40.9% of cloud services revenue (H1 2021: £20.2m
(40.3% of cloud services revenue)). The underlying profitability has been
stable in the period with the reduction in absolute EBITDA reflecting the
revenue trend in the period.
The following is the disaggregation of Cloud Services revenues of £46.1m (H1
2021: £50.3m):
Disaggregation of Cloud Services revenue 6 months to 30 September 2021 6 months to 30 September 2020 Year to 31
£'000 £'000 March
2021
£'000
Cloud managed services 28,037 29,150 57,961
Self-managed infrastructure 14,408 15,354 30,311
Non-recurring revenue 3,703 5,762 11,672
46,148 50,266 99,944
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.
Over the long-term we anticipate this will be the highest growth area for
iomart, supported by the market drivers described above. This is the part of
the business which has launched the three recent sales campaigns: Digital
Workplace, Secure Connectivity and Managed Microsoft Azure, alongside our more
traditional offerings, as we feel these are the solutions most in need across
businesses that we are well placed to offer.
We experienced new customer wins and saw existing customers increasing their
revenues with us, as they scale their own businesses and seek support from our
growing service offering. Offsetting this was lower renewals from certain
customers, with higher immediate revenue impact, which in combination resulted
in £1.1m (4%) lower revenue. We are confident that the strategic actions
already delivered and near term plans outlined above will ensure that this
short-term impact on revenue will be reversed.
Self-managed infrastructure (recurring revenue)
In addition to the above, we have a customer base of over 6,500 customers who
simply wish to source compute power and connectivity via mainly the provision
of dedicated servers and manage these directly. Our own regional data centre
estate and fibre network positions us well to offer such infrastructure as a
service. In the first half of this financial year the self-managed
infrastructure revenue reduction was £0.9m (6%) or £0.5m (4%) in comparison
to the first half and second half of the last financial year, respectively,
largely attributable to a reduction in number of our long tail of smaller
customers. We will continue to allocate resources to ensure we provide this
customer base with resilient, cost effective and increasingly automated
solutions.
Our UK owned infrastructure is an important part of the delivery of our
recurring revenue services, an important differentiator in the market and
allows more of the value add to be retained by iomart. In the period we
concluded investments in a number of projects that overlapped the prior year
end, including the replacement of the cooling system in our second largest
data centre in London and investment into next generation core routing
technology which provides 100GB capacity on our network, with the ability to
scale to 400GB. There were no larger projects commenced in the first half of
the year but we do expect to continue our regular planned upgrades and
enhancements driven at ensuring both market leading resilience but also
enhancing operational efficiency and reducing the environmental impact of our
operations. We expect to commence the upgrade to our uninterruptible power
systems ("UPS") in our core sites during the second half of the year, which
will be steadily rolled out over the next two years as part of our standard
infrastructure spend.
Non-recurring revenue
Non-recurring revenue of £3.7m (H1 2021: £5.8m) relates primarily to on
premise equipment and software reselling via our Cristie Data brand plus
consultancy projects. By their nature this activity is lower margin but we
believe it to be relevant to our ability to offer support to our existing
customer base and new customer wins. It is often these non-recurring
activities that provide an interesting initial introduction to the wider
iomart Group and evolve customers into a higher level of recurring services.
Of the lower revenue contribution in the first half of this year £1.2m comes
from lower consultancy income as a large consultancy project came to an end in
December 2020 and was not repeated. In addition, £0.9m can be attributed to
continued slower decision making on hardware refresh than normal, longer lead
times for equipment components, and to some degree because we saw some leavers
in our Cristie Data sales force at the start of the year which only returned
to full strength in the final month of the period.
Easyspace
The global domain name and mass market hosting sector continues to grow,
supported by the increasing importance of an internet presence and ecommerce
for all areas of the economy, including the small and micro business community
represented within our Easyspace division. This sector is increasingly
dominated by a smaller number of large global operators and we recognised a
long time ago that the marketing spends required to compete for new business
in this specific area was not the best use of iomart's resources. However, we
do ensure our customer base of around 60,000 customers are well served with a
good range of products and importantly a high level of customer service
ensuring high renewal rates and customer satisfaction. The Easyspace segment
has performed slightly above expectations during the period, delivering
revenues and EBITDA (before share based payments, acquisition costs and
central group overheads) of £5.8m (H1 2021: £6.0m) and £2.6m (H1 2021:
£2.9m), respectively.
Financial Performance
Revenue
Overall revenue from our operations reduced by 8% to £51.9m (H1 2021:
£56.3m). We saw a greater share of recurring revenue at 93% (H1 2021: 90%)
compared to prior periods as non-recurring activity levels reduced by a
disproportionate level. We remain focussed on retaining our recurring revenue
business model with the combination of multi-year contracts and payments in
advance providing us with good revenue visibility. Our Cloud Services
segment revenues reduced by 8% to £46.1m (H1 2021: £50.3m). Our Easyspace
segment has performed slightly better than expectations over the period, with
revenues for the first half only reducing by £0.2m to £5.8m (H1 2021:
£6.0m).
Gross Profit
The gross profit in the period decreased by 9% to £31.3m (H1 2021:
£34.4m). As a result, this ensured gross profit as a percentage of revenue
remained stable at 60% (H1 2021: 61%) of revenue. Our vendor relationships
have remained stable in the period and we have not seen any material
individual price change in any of the components of the purchased cost base in
the last six months.
Adjusted EBITDA
The Group's adjusted EBITDA reduced by 6% to £19.6m (H1 2021: £20.8m) which
in EBITDA margin terms translates to a stable performance of 37.7% (H1 2021:
36.9%). Administration expenses (before depreciation, amortisation, share
based payment charges and acquisition costs) of £11.8m is £1.9m lower than
the previous period comparative. An element of this reflects the secured
synergy savings achieved from the two bolt on acquisitions in February and
March 2020 and some relates to the specific timings of staff adjustments in
our team as, like the wider sector, we saw a period of higher staff attrition
and recruitment activity at the start of the year.
Cloud Services saw a 7% reduction in its adjusted EBITDA to £18.9m (H1 2021:
£20.2m). In percentage terms the Cloud Services margin increased to 40.9% (H1
2021: 40.3%). The adjusted EBITDA of Easyspace reduced in line with the small
drop in revenue to £2.6m (H1 2021: £2.9m). In percentage terms the margin
decreased to 45.8% (H1 2021: 47.8%).
Group overheads, which are not allocated to segments, include the cost of the
Board, all the running costs of the headquarters in Glasgow, and Group led
functions such as human resources, marketing, finance and design. Group
overheads saw a decrease to £1.9m (H1 2021: £2.3m).
Adjusted profit before tax
Depreciation charges of £8.2m (H1 2021: £8.5m) have decreased slightly in
absolute terms but is a consistent percentage of our recurring revenue in the
period. The charge for the amortisation of intangible assets, excluding
amortisation of intangible assets resulting from acquisitions ("amortisation
of acquired intangible assets") has decreased to £1.3m (H1 2021: £1.5m)
simply due to the specific historic timing of investments made.
Net finance costs have reduced slightly to £0.9m (H1 2021: £1.1m).
After deducting the charges for depreciation, amortisation, excluding the
amortisation of acquired intangible assets, and finance costs from the
adjusted EBITDA, the adjusted profit for the period before tax decreased by 7%
to £9.1m (H1 2021: £9.8m) representing an adjusted profit before tax margin
of 17.5% (H1 2021: 17.3%).
Profit before tax
The measure of adjusted profit before tax is a non-statutory measure which is
commonly used to analyse the performance of companies where M&A activity
forms a significant part of their activities.
A reconciliation of adjusted profit before tax to reported profit before tax
is shown below:
Reconciliation of adjusted profit before tax to profit before tax 6 months to 30 September 2021 6 months to 30 September 2020 Year to 31
£'000 £'000 March
2021
£'000
Adjusted profit before tax 9,104 9,759 19,628
Less: Share based payments (620) (814) (1,247)
Less: Amortisation of acquired intangible assets (2,312) (2,835) (5,457)
Less: Acquisition costs (136) (383) (493)
Add: Gain on revaluation of contingent consideration - 290 33
Profit before tax 6,036 6,017 12,464
The larger adjusting items in the current period are:
· share based payment charges in the period which decreased
slightly to £0.6m (H1 2021: £0.8m) as a result of the timing of share
options lapsing; and
· charges for the amortisation of acquired intangible assets of
£2.3m (H1 2021: £2.8m) which have decreased by £0.5m reflecting the expiry
of the amortisation period from older historic acquisitions.
After deducting the charges for share based payments, the amortisation of
acquired intangible assets and acquisition costs, the reported profit before
tax is £6.0m (H1 2021: £6.0m).
Taxation and profit for the period
There is a tax charge in the period of £1.2m (H1 2021: £1.2m), which
comprises a current taxation charge of £1.8m (H1 2021: £1.9m), and a
deferred taxation credit of £0.6m (H1 2021: £0.7m). The headline effective
tax rate has remained stable at 20%. This results in a profit for the period
from total operations of £4.9m (H1 2021: £4.8m).
Earnings per share
Adjusted diluted earnings per share, which is based on profit for the period
attributed to ordinary shareholders before share based payment charges,
amortisation of acquired intangible assets, acquisition costs and the tax
effect of these items, was 6.5p (H1 2021: 7.0p).
The measure of adjusted diluted earnings per share as described above is a
non-statutory measure which is commonly used to analyse the performance of
companies where M&A activity forms a significant part of their activities.
Basic earnings per share from continuing operations was 4.4p (H1 2021: 4.4p).
The calculation of both adjusted diluted earnings per share and basic earnings
per share is included at note 3.
Cash flow
The Group generated cash from operations in the period of £17.9m (H1 2021:
£23.1m) with an EBITDA conversion to cash ratio in the period of 91% (H1
2021: 111%). This is yet another period of consistently high operating cash
conversion. The higher headline conversion ratio in prior period was
augmented by two one-off items: receipt of £2.3m cash deposit returned by
our landlord as part of the negotiation of the extension of the London data
centre lease plus a delayed Q1 VAT payment of £1.7m. Normalising for these
two items takes the EBITDA conversion to cash ratio to 92% in the prior
period. Cash payments for corporation taxation in the period fell to £1.4m
(H1 2021: £1.9m), resulting in net cash flow from operating activities in the
period of £16.4m (H1 2021: £21.3m).
Expenditure on investing activities of £5.3m (H1 2021: £8.8m) was incurred
in the period. £4.7m (H1 2021: £7.0m) was incurred on the acquisition of
property, plant and equipment, principally to provide specific services to our
customers. We incurred £0.6m (H1 2021: £0.6m) in respect of development
costs during the period. There were no payments made concerning M&A
activity, with all prior deferred or earn-out consideration sums settled
before 31 March 2021. In the prior period, £1.2m was paid out for contingent
consideration due on the LDEX acquisition made in December 2018.
During the first half of the year, net cash used in financing activities was
£7.9m (H1 2021: £7.9m). Any shares issued in the current period under share
options were at nominal value. In the current period we made no drawdowns
under our bank facility (H1 2021: £1.2m) and we made no repayments (H1 2021:
£1.2m) meaning no movement in the revolver loan drawn balance in the
period. In the current period we repaid £2.5m of lease liabilities (H1
2021: £2.9m). We paid £0.5m (H1 2021: £0.6m) of finance charges and made
a dividend payment of £4.9m (H1 2021: £4.3m). As a result, cash and cash
equivalent balances at the end of the period were £26.3m (H1 2021: £20.0m).
Net Debt
The net debt position of the Group at the end of the period was £49.3m
compared to £54.6m at 31 March 2021 with the decrease being a combination of
the increase in the closing cash balance to £26.3m (31 March 2021: £23.0m)
and a decrease in the lease liability to £22.8m (31 March 2021: £24.9m). Our
multiple of the last 12 months of adjusted EBITDA to net debt is 1.2 times
which remains a comfortable level of leverage. The analysis of the net debt is
shown below:
30 September 2021 30 September 2020 31 March
£'000 £'000 2021
£'000
Bank revolver loan 52,791 52,791 52,791
Lease liabilities 22,792 25,329 24,867
Less: cash and cash equivalents (26,273) (20,055) (23,038)
Net Debt 49,310 58,065 54,620
Subsequent to the period end, on 2 December 2021, we successfully refinanced
and increased the Group's existing single bank Revolving Credit Facility of
£80m that was due to mature on 30 September 2022. The new £100m Revolving
Credit Facility ("RCF") was provided by a new four bank group consisting of
HSBC, Royal Bank of Scotland, Bank of Ireland and Clydesdale Bank. The new
facility has an initial maturity date of 30 June 2025, with a 12-month
extension option and benefits from a £50m Accordion Facility. The RCF has a
borrowing cost at the Group's current leverage levels of 180 basis points over
SONIA, compared to 150 basis points over LIBOR on the prior facility. An
arrangement fee will be payable upfront in addition to a commitment fee on the
undrawn portion of the new RCF on equivalent terms to the previous facility.
The RCF and the Accordion Facility (if exercised) provide the Group with
additional liquidity which will be used for general business purposes and to
fund investments, in accordance with the Group's five-year strategic plan.
Dividend
Last year we updated our dividend policy to a maximum pay-out of 50% of
adjusted diluted earnings per share. Given the recurring nature of the
Group, the level of operating cash which we have delivered and low level of
indebtedness within the Group we have applied the maximum pay-out ratio in our
assessment of the appropriate level of interim dividend to be made and we will
pay an interim dividend of 2.42p per share (H1 2021: 2.60p) on 28 January 2022
to shareholders on the register on 7 January 2022, with an ex-dividend date of
6 January 2022. This dividend represents a pay-out ratio of 37% (H1 2021: 37%)
of the adjusted diluted earnings per share for the interim period.
Current trading and outlook
As a business we are energised by our refreshed strategy, new brand and clear
focus. The early customer wins from the new sales campaigns are excellent
signs that the strategy is on track and starting to deliver tangible results.
iomart's high level of recurring revenue remains a considerable strength,
providing good visibility for the remainder of the year. Current trading is in
line with the Board's expectations for the full year.
The journey to the cloud for many is long and complex and iomart is well
positioned to support existing and new customers on the multiple paths open to
them, ensuring we respond to their specific business requirements and provide
exceptional service and reliability. It is the blend of our straightforward
approach, owned infrastructure assets, people and relationship focus, and
agile technology-agnostic solution model, along with extensive customer base
and more than 20 years' experience, that gives us confidence that we will
continue to participate successfully within the wider growing Cloud sector.
Reece Donovan
Chief Executive Officer
7 December 2021
Consolidated Interim Statement of Comprehensive Income
Six months ended 30 September 2021
Unaudited Unaudited Audited
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31 March 2021
£'000 £'000 £'000
Revenue 51,930 56,311 111,883
Cost of sales (20,591) (21,897) (44,241)
Gross profit 31,339 34,414 67,642
Administrative expenses (24,401) (27,624) (53,230)
Operating profit 6,938 6,790 14,412
Analysed as:
Earnings before interest, tax, depreciation, amortisation, acquisition costs 19,568 20,788 41,408
and share based payments
Share based payments (620) (814) (1,247)
Acquisition costs 4 (136) (383) (493)
Depreciation 8 (8,227) (8,464) (16,882)
Amortisation - acquired intangible assets 7 (2,312) (2,835) (5,457)
Amortisation - other intangible assets 7 (1,335) (1,502) (2,917)
Gain on revaluation of contingent consideration - 290 33
Finance income - 13 19
Finance costs 5 (902) (1,076) (2,000)
Profit before taxation 6,036 6,017 12,464
Taxation 6 (1,224) (1,207) (2,260)
Profit for the period/year 4,812 4,810 10,204
Other comprehensive income
Currency translation differences 59 (5) (94)
Other comprehensive income/(expense) for the period/year 59 (5) (94)
Total comprehensive income for the period/year attributable to 4,871 4,805 10,110
equity holders of the parent
Basic and diluted earnings per share
Basic earnings per share 3 4.4 p 4.4 p 9.3 p
Diluted earnings per share 3 4.3 p 4.3 p 9.1 p
Consolidated Interim Statement of Financial Position
As at 30 September 2021
Unaudited Unaudited Audited
30 September 30 September 2020 31 March 2021
2021 £'000 £'000
£'000
ASSETS
Non-current assets
Intangible assets - goodwill 7 86,479 86,479 86,479
Intangible assets - other 7 15,052 20,924 18,101
Trade and other receivables 194 - 502
Property, plant and equipment 8 73,494 76,323 77,012
Deferred tax asset 721 - 138
175,940 183,726 182,232
Current assets
Cash and cash equivalents 26,273 20,055 23,038
Trade and other receivables 23,161 22,914 22,979
Current income tax asset - - 235
49,434 42,969 46,252
Total assets 225,374 226,695 228,484
LIABILITIES
Non-current liabilities
Trade and other payables (1,882) (2,479) (2,662)
Non-current borrowings 10 (19,420) (75,058) (74,221)
Provisions for other liabilities and charges (2,335) (2,000) (2,097)
Deferred tax liability - (398) -
(23,637) (79,935) (78,980)
Current liabilities
Contingent consideration due on acquisitions - (989) -
Trade and other payables (28,392) (29,350) (29,495)
Current income tax liabilities (51) (33) -
Current borrowings 10 (56,163) (3,062) (3,437)
(84,606) (33,434) (32,932)
Total liabilities (108,243) (113,369) (111,912)
Net assets 117,131 113,326 116,572
EQUITY
Share capital 1,097 1,092 1,097
Own shares (70) (70) (70)
Capital redemption reserve 1,200 1,200 1,200
Share premium 22,495 22,147 22,495
Merger reserve 4,983 4,983 4,983
Foreign currency translation reserve 15 45 (44)
Retained earnings 87,411 83,929 86,911
Total equity 117,131 113,326 116,572
Consolidated Interim Statement of Cash Flows
Six months ended 30 September 2021
Unaudited Unaudited Audited
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31 March 2021
£'000 £'000 £'000
Profit before tax 6,036 6,017 12,464
Gain on revaluation of contingent consideration - (290) (33)
Finance costs - net 902 1,063 1,981
Depreciation 8,227 8,464 16,882
Amortisation 3,647 4,337 8,374
Share based payments 620 814 1,247
Movement in trade receivables 126 3,083 2,516
Movement in trade payables (1,710) (366) 268
Cash flow from operations 17,848 23,122 43,699
Taxation paid (1,434) (1,850) (3,643)
Net cash flow from operating activities 16,414 21,272 40,056
Cash flow from investing activities
Purchase of property, plant and equipment (4,673) (7,021) (15,192)
Proceeds received from disposal of property, plant and equipment - - 260
Development costs (601) (614) (1,306)
Purchase of intangible assets (1) (4) (561)
Proceeds received from disposal of intangible assets - - 73
Contingent consideration paid - (1,201) (2,447)
Finance income received - 11 19
Net cash used in investing activities (5,275) (8,829) (19,154)
Cash flow from financing activities
Issue of shares - - 353
Drawdown of bank loans - 1,150 1,150
Repayment of bank loans - (1,150) (1,150)
Repayment of lease liabilities (2,466) (2,946) (5,435)
Finance costs paid (506) (652) (1,147)
Dividends paid (4,932) (4,287) (7,132)
Net cash used in financing activities (7,904) (7,885) (13,361)
Net increase in cash and cash equivalents 3,235 4,558 7,541
Cash and cash equivalents at the beginning of the period 23,038 15,497 15,497
Cash and cash equivalents at the end of the period 26,273 20,055 23,038
Consolidated Interim Statement of Changes in Equity
Six months ended 30 September 2021
Foreign currency translation reserve
Capital redemption reserve Share premium account
Share capital Own Merger reserve Retained earnings
shares Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2020 1,092 (70) 1,200 22,147 4,983 50 82,592 111,994
Profit in the period - - - - - - 4,810 4,810
Currency translation differences - - - - - (5) - (5)
Total comprehensive income - - - - - (5) 4,810 4,805
Dividends - - - - - - (4,287) (4,287)
Share based payments - - - - - - 814 814
Total transactions with owners - - - - - - (3,473) (3,473)
Balance at 30 September 2020 (unaudited) 1,092 (70) 1,200 22,147 4,983 45 83,929 113,326
Profit in the period - - - - - - 5,394 5,394
Currency translation differences - - - - - (89) - (89)
Total comprehensive income - - - - - (89) 5,394 5,305
Dividends - - - - - - (2,845) (2,845)
Share based payments - - - - - - 433 433
Issue of share capital 5 - - 348 - - - 353
Total transactions with owners 5 - - 348 - - (2,412) (2,059)
Balance at 31 March 2021 (audited) 1,097 (70) 1,200 22,495 4,983 (44) 86,911 116,572
Profit in the period - - - - - - 4,812 4,812
Currency translation differences - - - - - 59 - 59
Total comprehensive income - - - - - 59 4,812 4,871
Dividends - - - - - - (4,932) (4,932)
Share based payments - - - - - - 620 620
Total transactions with owners - - - - - - (4,312) (4,312)
Balance at 30 September 2021 (unaudited) 1,097 (70) 1,200 22,495 4,983 15 87,411 117,131
Notes to the Half Yearly Financial Information
Six months ended 30 September 2021
1. Basis of preparation
The half yearly financial information does not constitute statutory financial
statements as defined in section 434 of the Companies Act 2006. The
statutory accounts for the year ended 31 March 2021 have been delivered to the
Registrar of Companies and included an independent auditor's report, which was
unqualified and did not contain a statement under section 493 of the Companies
Act 2006.
The half yearly financial information has been prepared using the same
accounting policies and estimation techniques as will be adopted in the Group
financial statements for the year ending 31 March 2022. The Group financial
statements for the year ended 31 March 2021 were prepared in accordance with
the international accounting standards in conformity with the requirements of
the Companies Act 2006. These half yearly financial statements have been
prepared on a consistent basis and format with the Group financial statements
for the year ended 31 March 2021. The provisions of IAS 34 'Interim
Financial Reporting' have not been applied in full.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chief
Executive's Statement on pages 3 to 9.
iomart's business model continues to stand it in good stead and despite the
global slowdown in corporate activity driven by Covid-19, continues to perform
well. The Group's high levels of recurring revenue remain a considerable
strength, providing high levels of forecast visible revenue across a
diversified customer base.
At the period end, the Group has access to a £80m multi option revolving
credit facility that matures on 30 September 2022 of which £8m (annually) is
available to be drawn on for general business purposes should that be
required. The directors are of the opinion that the Group can operate within
the current facility and comply with its banking covenants.
On 2 December 2021 the Group replaced the existing single bank Revolving
Credit Facility of £80 million, with a new £100m Revolving Credit Facility.
The Facility is provided by a new four bank group consisting of HSBC, Royal
Bank of Scotland, Bank of Ireland and Clydesdale Bank. The new facility has an
initial maturity date of 30 June 2025, with a 12-month extension option and
benefits from a £50m Accordion Facility in addition to the £100m committed
facility.
At the end of the half year, the Group had net debt of £49.3m (H1 2021:
£58.1m). The Board is comfortable with the net debt position given the
strong cash generation and considerable financial resources of the Group,
together with long‐term contracts with a number of customers and suppliers
across different geographic areas and industries. As a consequence, the
directors believe that the Group is well placed to manage its business risks.
After making enquiries, the directors have a reasonable expectation that the
Group will be able to meet its financial obligations and has adequate
resources to continue in operational existence for the foreseeable future.
For this reason, they continue to adopt the going concern basis in preparing
the financial statements.
2. Operating segments
Revenue by Operating Segment
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31 March 2021
£'000 £'000 £'000
Easyspace 5,782 6,045 11,939
Cloud Services 46,148 50,266 99,944
51,930 56,311 111,883
Cloud Services revenue during the period/year can be further disaggregated as
follows:
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31 March 2021
£'000 £'000 £'000
Cloud managed services 28,037 29,150 57,961
Self-managed infrastructure 14,408 15,354 30,311
Non-recurring revenue 3,703 5,762 11,672
46,148 50,266 99,944
Geographical Information
In presenting the consolidated information on a geographical basis, revenue is
based on the geographical location of customers. The United Kingdom is the
place of domicile of the parent company, iomart Group plc. No individual
country other than the United Kingdom contributes a material amount of revenue
therefore revenue from outside the United Kingdom has been shown as from Rest
of the World.
Analysis of Revenue by Destination
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31 March 2021
£'000 £'000 £'000
United Kingdom 44,202 47,882 97,113
Rest of the World 7,728 8,429 14,770
51,930 56,311 111,883
Recurring and Non-Recurring Revenue
The amount of recurring and non-recurring revenue recognised during the year
can be summarised as follows:
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31 March 2021
£'000 £'000 £'000
Recurring - over time 48,227 50,549 100,211
Non-recurring - point in time 3,703 5,762 11,672
51,930 56,311 111,883
Profit by Operating Segment
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31 March 2021
EBITDA before share based payments and acquisition costs Share based payments, acquisition costs, depreciation & amortisation EBITDA before share based payments and acquisition costs Share based payments, acquisition costs, depreciation & amortisation EBITDA before share based payments and acquisition costs Share based payments, acquisition costs, depreciation & amortisation
Operating profit/(loss)
Operating profit/(loss) Operating profit/(loss)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Easyspace 2,647 (453) 2,194 2,888 (598) 2,290 5,343 (1,165) 4,178
Cloud Services 18,854 (11,421) 7,433 20,247 (12,203) 8,044 40,482 (24,091) 16,391
Group overheads (1,933) - (1,933) (2,347) - (2,347) (4,417) - (4,417)
Share based payments - (620) (620) - (814) (814) - (1,247) (1,247)
Acquisition costs - (136) (136) - (383) (383) - (493) (493)
Profit before tax and interest 19,568 (12,630) 6,938 20,788 (13,998) 6,790 41,408 (26,996) 14,412
Gain on revaluation of contingent consideration - 290 33
Group interest and tax (2,126) (2,270) (4,241)
Profit for the period/year 4,812 4,810 10,204
Group overheads, share based payments, acquisition costs, interest and tax are
not allocated to segments.
3. Earnings per 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 shares 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 adjusting for the
dilutive potential ordinary shares relating to share options. The
calculations of earnings per share are based on the following results:
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31 March 2021
£'000 £'000 £'000
Profit for the period/year and basic earnings attributed to ordinary 4,812 4,810 10,204
shareholders
No No No
Weighted average number of ordinary shares: 000 000 000
Called up, allotted and fully paid at start of period 109,671 109,160 109,160
Shares held by Employee Benefit Trust (141) (141) (141)
Issued share capital in the period 29 50 230
Weighted average number of ordinary shares - basic 109,559 109,069 109,249
Dilutive impact of share options 3,086 3,538 2,416
Weighted average number of ordinary shares - diluted 112,645 112,607 111,665
Basic earnings per share 4.4 p 4.4 p 9.3 p
Diluted earnings per share 4.3 p 4.3 p 9.1 p
iomart Group plc assess the performance of the Group by adjusting earnings per
share, calculated in accordance with IAS 33, to exclude certain non-trading
items. The calculation of the earnings per ordinary share on a basis which
excludes such items is based on the following adjusted earnings:
Adjusted earnings per share
6 months to 30 September 6 months to 30 Year to 31 March
2021 September 2021
£'000 2020 £'000
£'000
Profit for the period/year and basic earnings attributed to ordinary 4,812 4,810 10,204
shareholders
- Amortisation of acquired intangible assets 2,312 2,835 5,457
- Acquisition costs 136 383 493
- Share based payments 620 814 1,247
- Gain on revaluation of contingent consideration - (290) (33)
- Tax impact of adjusted items (557) (693) (1,341)
Adjusted profit for the period/year and adjusted basic earnings attributed to 7,323 7,859 16,027
ordinary shareholders
Adjusted basic earnings per share 6.7 p 7.2 p 14.7 p
Adjusted diluted earnings per share 6.5 p 7.0 p 14.4 p
4. Acquisition costs
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31 March 2021
£'000 £'000 £'000
Professional fees - - (44)
Non-recurring acquisition integration costs (136) (383) (449)
(136) (383) (493)
5. Finance costs
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31 March 2021
£'000 £'000 £'000
Bank loans (526) (681) (1,190)
Lease finance costs (332) (361) (732)
Other interest charges (44) (34) (78)
(902) (1,076) (2,000)
6. Taxation
6 months to 30 September 2021 6 months to 30 September 2020 Year to 31
£'000 £'000 March
2021
£'000
Corporation Tax:
Tax charge for the period/year (1,802) (1,955) (3,448)
Adjustment relating to prior periods - - (100)
Total current taxation charge (1,802) (1,955) (3,548)
Deferred Tax:
Origination and reversal of temporary differences 379 718 1,266
Adjustment relating to prior periods - - 18
Effect of different statutory tax rates of overseas jurisdictions 20 30 4
Effect of changes in tax rates 179 - -
Total deferred taxation credit 578 748 1,288
Total taxation charge for the period/year (1,224) (1,207) (2,260)
Deferred tax assets and liabilities at 30 September 2021 have been calculated
based on the rate enacted at the balance sheet date of 25% (2020: 19%).
7. Intangible assets
Goodwill Acquired customer relationships Development costs Software Acquired beneficial contract Domain names & IP addresses Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost:
At 1 April 2020 86,479 57,414 10,598 10,323 86 336 165,236
Additions in the period - - 614 4 - - 618
Currency translation differences - (29) - (19) - - (48)
At 30 September 2020 86,479 57,385 11,212 10,308 86 336 165,806
Additions in the period - - 692 557 - - 1,249
Disposals - (73) - - - - (73)
Currency translation differences - (49) - (38) - - (87)
At 31 March 2021 86,479 57,263 11,904 10,827 86 336 166,895
Additions in the period - - 601 1 - - 602
Currency translation differences - 18 - 13 - - 31
At 30 September 2021 86,479 57,281 12,505 10,841 86 336 167,528
Accumulated amortisation:
At 1 April 2020 - (39,954) (8,373) (5,464) (55) (280) (54,126)
Charge for the period - (2,835) (751) (747) (4) - (4,337)
Currency translation differences - 29 - 31 - - 60
At 30 September 2020 - (42,760) (9,124) (6,180) (59) (280) (58,403)
Charge for the period - (2,622) (695) (708) (3) (9) (4,037)
Disposals - 13 - - - - 13
Currency translation differences - 53 - 59 - - 112
At 31 March 2021 - (45,316) (9,819) (6,829) (62) (289) (62,315)
Charge for the period - (2,312) (667) (660) (4) (4) (3,647)
Currency translation differences - (18) - (17) - - (35)
At 30 September 2021 - (47,646) (10,486) (7,506) (66) (293) (65,997)
Carrying amount:
86,479 9,635 2,019 3,335 20 43 101,531
At 30 September 2021
At 31 March 2021 86,479 11,947 2,085 3,998 24 47 104,580
At 30 September 2020 86,479 14,625 2,088 4,128 27 56 107,403
Note 11 provides the movements in the period relating to IFRS 16 right-of-use
assets included in the above table.
8. Property, plant and equipment
Freehold property Leasehold property and improve-ments Datacentre equipment Computer equipment Office equipment Motor vehicles Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost:
At 1 April 2020 8,910 29,671 26,113 97,592 2,771 23 165,080
Additions in the period - 7,834 282 4,460 26 - 12,602
Disposals in the period - - - (36) - - (36)
Currency translation differences - (66) - (123) - - (189)
At 30 September 2020 8,910 37,439 26,395 101,893 2,797 23 177,457
Additions in the period - 1,323 1,684 6,044 14 - 9,065
Disposals in the period (179) - - 36 - - (143)
Currency translation differences - (68) - 250 - - 182
At 31 March 2021 8,731 38,694 28,079 108,223 2,811 23 186,561
Additions in the period - 307 1,321 3,250 37 - 4,915
Disposals in the period - (201) - (48) (13) - (262)
Currency translation differences - 48 - 119 - - 167
At 30 September 2021 8,731 38,848 29,400 111,544 2,835 23 191,381
Accumulated depreciation:
At 1 April 2020 (697) (7,104) (15,470) (67,532) (1,924) (9) (92,736)
Charge for the period (133) (2,302) (699) (5,207) (119) (4) (8,464)
Disposals in the period - - - 36 - - 36
Currency translation differences - 2 - 28 - - 30
At 30 September 2020 (830) (9,404) (16,169) (72,675) (2,043) (13) (101,134)
Charge for the period (132) (2,239) (1,054) (4,882) (107) (4) (8,418)
Disposals in the period 25 - - (36) - - (11)
Currency translation differences - (32) - 46 - - 14
At 31 March 2021 (937) (11,675) (17,223) (77,547) (2,150) (17) (109,549)
Charge for the period (128) (2,218) (616) (5,160) (101) (4) (8,227)
Disposals in the period - - - 15 - - 15
Currency translation differences - (28) - (98) - - (126)
At 30 September 2021 (1,065) (13,921) (17,839) (82,790) (2,251) (21) (117,887)
Carrying amount:
At 30 September 2021 7,666 24,927 11,561 28,754 584 2 73,494
At 31 March 2021 7,794 27,019 10,856 30,676 661 6 77,012
At 30 September 2020 8,080 28,035 10,226 29,218 754 10 76,323
Note 11 provides the movements in the period relating to IFRS 16 right-of-use
assets included in the above table.
9. Analysis of change in net cash/(debt)
Lease liabilities Total net debt
Cash and cash equivalents £'000 £'000
£'000 Bank
loans
£'000
At 1 April 2020 15,497 (52,791) (20,347) (57,641)
Additions to lease liabilities - - (7,622) (7,622)
New bank loans - (1,150) - (1,150)
Repayment of bank loans - 1,150 - 1,150
Cash and cash equivalents cash outflow 4,558 - - 4,558
Lease liabilities cash outflow - - 2,640 2,640
At 30 September 2020 20,055 (52,791) (25,329) (58,065)
Additions to lease liabilities - - (1,061) (1,061)
Currency translation difference - - 169 169
Cash and cash equivalents cash inflow 2,983 - - 2,983
Lease liabilities cash outflow - - 1,354 1,354
At 31 March 2021 23,038 (52,791) (24,867) (54,620)
Additions to lease liabilities - - (33) (33)
Disposal of lease liabilities - - 179 179
Currency translation - - (22) (22)
Cash and cash equivalents cash inflow 3,235 - - 3,235
Lease liabilities cash outflow - - 1,951 1,951
At 30 September 2021 26,273 (52,791) (22,792) (49,310)
10. Borrowings
30 30 31
September September March
2021 2020 2021
£'000 £'000 £'000
Current:
Lease liabilities (note 11) (3,372) (3,062) (3,437)
Bank loans (52,791) - -
Total current borrowings (56,163) (3,062) (3,437)
Non-current:
Lease liabilities (note 11) (19,420) (22,267) (21,430)
Bank loans - (52,791) (52,791)
Total non-current borrowings (19,420) (75,058) (74,221)
Total borrowings (75,583) (78,120) (77,658)
At 30 September 2021, the Group has an £80m multi option revolving credit
facility which expires on 30 September 2022 and can be used by the Group to
finance acquisitions, capital expenditure, general business purposes and for
the issue of guarantees, bonds or indemnities. Each draw down made under
this facility can be for either 3 or 6 months and can either be repaid or
continued at the end of the period.
On 2 December 2021 the Group replaced the existing single bank revolving
credit facility of £80 million, with a new £100m revolving credit facility.
The Facility is provided by a new four bank group consisting of HSBC, Royal
Bank of Scotland, Bank of Ireland and Clydesdale Bank. The new facility has an
initial maturity date of 30 June 2025, with a 12-month extension option and
benefits from a £50m Accordion Facility in addition to the £100m committed
facility.
As at the balance sheet date, the Group had a committed revolving credit
facility in place and were engaged in refinancing discussions with various
banks. Given the level of interest from lenders, there was no indication at 30
September 2021 that the refinancing would not be successful, which was
subsequently confirmed with the signing of a new increased committed revolving
credit facility post period end. However, as the existing facility in place
at the balance sheet date had 365 days left to expiry, the total amount of
£52.8m at 30 September 2021 has been classified as current in the balance
sheet.
Details of the Group's lease liabilities are included in note 11.
11. 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:
Right-of-use assets
Leasehold property Datacentre Software Total
equipment
£'000 £'000 £'000 £'000
Cost at 1 April 2020 17,494 788 1,235 19,517
Additions 3,438 4,184 - 7,622
Depreciation charge (1,229) (638) - (1,867)
Amortisation charge - - (143) (143)
Net book value at 30 September 2020 19,703 4,334 1,092 25,129
Additions 417 644 - 1,061
Currency translation differences (162) - - (162)
Depreciation charge (1,099) (756) - (1,855)
Amortisation charge - - (142) (142)
18,859 4,222 950 24,031
Net book value at 31 March 2021
- 33 - 33
Additions
- (179) - (179)
Disposals
(1,024) (703) - (1,727)
Depreciation charge
- - (143) (143)
Amortisation charge
17,835 3,373 807 22,015
Net book value at 30 September 2021
The right-of-use assets in relation to leasehold property and datacentre
equipment are disclosed as non-current assets and are disclosed within
property, plant and equipment at 30 September 2021 (note 8). The
right-of-use assets in relation to software are disclosed as non-current
assets and are disclosed within intangibles at 30 September 2021 (note 7).
Lease liabilities
Lease liabilities for right-of-use assets are presented in the balance sheet
within borrowings as follows:
30 September 2021 30 September 31 March
2020 2021
£'000 £'000 £'000
(3,372) (3,062) (3,437)
Lease liabilities (current) (note 10)
Lease liabilities (non-current) (note 10) (19,420) (22,267) (21,430)
Total lease liabilities (22,792) (25,329) (24,867)
The maturity analysis of undiscounted lease liabilities is shown in the table
below:
30 September 30 September 31 March
2021 2020 2021
Amounts payable under leases: £'000 £'000 £'000
(3,945) (3,705) (4,215)
Within one year
Between two to five years (10,166) (13,176) (11,552)
After more than five years (12,193) (12,569) (13,068)
(26,304) (29,450) (28,835)
Add: unearned interest 3,512 4,121 3,968
Total lease liabilities (22,792) (25,329) (24,867)
12. Availability of half yearly reports
The Company's Interim Report for the six months ended 30 September 2021 will
shortly be available to view on the Company's website (www.iomart.com).
INDEPENDENT REVIEW REPORT TO iomart Group plc
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2021 which comprises the Consolidated Interim Statement of
Comprehensive Income, the Consolidated Interim Statement of Financial
Position, the Consolidated Interim Statement of Cash Flows, the Consolidated
Interim Statement of Changes in Equity and related notes 1 to 12. We have read
the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the AIM Rules of the London
Stock Exchange.
As disclosed in note 1, the annual financial statements of the group will be
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report have been prepared in accordance with the
accounting policies the group intends to use in preparing its next annual
financial statements.
Our responsibility
Our responsibility is to express to the Company a conclusion on the set of
financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Financial
Reporting Council for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2021 is not prepared,
in all material respects, in accordance with the accounting policies the group
intends to use in preparing its next annual financial statements and the AIM
Rules of the London Stock Exchange.
Use of our report
This report is made solely to the company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity"
issued by the Financial Reporting Council. Our work has been undertaken so
that we might state to the company those matters we are required to state to
it in an independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company, for our review work, for this report, or for the
conclusions we have formed.
Deloitte LLP
Statutory Auditor
Glasgow, United Kingdom
7 December 2021
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