Annual Report and Accounts 2009
The natural choice for hosting
iomart group plc Annual Report 2009
“Hosting? It's all we do. We've
been doing it for over 10 years
and we're good at it."
Angus MacSween CEO
iomart group plc Annual Report 2009
Financial Statements for year ended 31March 2009
Highlights
º £5.2M Acquisition of RapidSwitch post year end
º Re-establishment of a dividend policy with the
Board proposing to pay 0.3p per share
º Successful disposal of non core Directory
business to BT for £20M
º Revenue
• Group revenues increased by 45% to £11.8M from
continuing operations
• iomart Hosting revenues increased by 155% to £4.6M
• Easyspace revenues increased by 14% to £7.2M
º Profitability
• Post tax profit £11.2M from total operations
• Group EBITDA losses before share based payments
improved to (£0.3M) from (£1.4M) from continuing operations
• 52% Gross margin maintained
º Operational
• All 4 UK data centres fully commissioned and operational
• Achievement of ISO 9001 & ISO 27001 quality certification
• iomart Hosting gains 60 new corporate customers
iomart group plc Annual Report 2009
45% Increase in Revenue155% Growth iomart Hosting14% Growth Easyspace£11.2M Post Tax Profit£13.9M Cash
"We are beginning to see the benefit of our
geographically spread UK network of data
centres, and we are able to offer a uniquely
resilient high availability ‘infrastructure as
a service’ solution for organisations on an
outsourced basis at lower cost
than in-house.”
iomart group plc Annual Report 2009
1
Contents
Business Review
Chairman’s statement ...................................................................... 3
Chief Executive Officer’s report ......................................................... 4
Finance Director's report ................................................................... 6
Corporate Governance
Corporate governance ..................................................................... 8
Report of the board to the members on directors’ remuneration ........ 10
Directors' report ............................................................................. 13
Statement of directors' responsibilities .............................................. 15
Board of directors .......................................................................... 17
Independent auditors’ report ........................................................... 18
Financial Statements
Consolidated income statement ...................................................... 20
Consolidated balance sheet ........................................................... 21
Consolidated cash flow statement ................................................... 22
Consolidated statement of changes in equity ................................... 23
Notes to the financial statements ..................................................... 25
Holding company financial statements ............................................. 53
Other Information
Notice of annual general meeting ................................................... 60
Officers and professional advisers ................................................... 68
www.iomart.com
iomart group plc Annual Report 2009
"Our business is selling hotels throughout the world online - if our website is down we don't get any business. iomart's managed hosting service gives me nothing but complete confidence.”Doug Anderson, Technical Director, Onhotels.com“iomart hosting have made sure that we have never had downtime. Moving servers and domains can be harder than moving house and it’s something we’ve not had to worry about because it’s all been done within the confines of iomart hosting’s services to us” Richard Walkling, Managing Director, Manic Monday “we have established solid foundations from which to
continue to grow our managed hosting business.”
Ian Ritchie, Chairman
I am pleased to report that iomart is in a strong and healthy position. We have a clearly
defined strategy to become one of the UK’s foremost managed hosting operators with owned
datacentres and have made substantial progress in executing that strategy during the year.
A key component of this progress was the successful disposal of the Ufindus operation to BT,
the proceeds of which allowed us to accelerate our growth as a managed hosting operation
both organically and, after the year end, through acquisition.
With an excellent level of organic revenue growth from our main hosting divisions and
with the post year end acquisition of leading UK server hosting company Rapidswitch, we
have established solid foundations from which to continue to grow our managed hosting
business.
Of course, the successful execution of the Group’s strategy is entirely dependent on the
ability and commitment of our senior management team and indeed all employees within
the Group. On behalf of the Board and all shareholders I am pleased to acknowledge the
contribution they have all made to a successful year and look forward to their continued hard
work and commitment in the future.
In June 2007 the Board made the decision not to pay a dividend going forward but rather
to concentrate the available cash resources on establishing, at that time, our newly acquired
start-up datacentre operation. We did, however, make a commitment to shareholders to
keep the situation under review and to consider re-introducing dividend payments at an
appropriate time. I am therefore pleased to announce that the Board has concluded that we
are now in a position to re-establish a dividend policy. Accordingly, the Board is proposing to
pay a dividend of 0.3p per share on 3 September 2009 to shareholders on the register on 12
June 2009. It is our intention, depending on the underlying profitability and cash generation
of the business, to continue to pay dividends going forward.
Last year I concluded my inaugural Chairman’s statement by saying that I believed we could
look to the future with confidence. Based on our future prospects and what we have achieved
over the year despite challenging economic times, I see no reason other than to reach the
same conclusion this year.
In fact, I believe I can say that we now look to the future with increased confidence.
Ian Ritchie, Chairman.
2 June 2009
3
Chairman's Statement
“I believe
I can say
that we now
look to the
future with
increased
confidence.”
www.iomart.com
4
Chief Executive Officer's Report
“We have enjoyed strong organic growth during the
year and we continue to establish ourselves as a first
class provider of managed hosting services to the SME
& Corporate markets.”
Angus MacSween, Chief Executive Officer
Introduction
Despite the global recession I am delighted by the progress we are making towards our
strategic goal of becoming one of the UK’s foremost hosting groups. Since the disposal of
our on-line directory operation Ufindus I believe that we are now benefiting from being able
to focus solely on the achievement of that goal.
During the year there were two main elements to that progress. Firstly, the excellent
developments we have made in growing our organic business. Revenues have grown from
both segments of our continuing operations resulting in a 45% overall increase. The second
was achieved through the sale of our on-line directory operation Ufindus to BT in July 2008
for £20m in cash, resulting in a gain from the disposal of £12.6m.
As we indicated at the time of that disposal this had the double benefit of removing a non-core
operation whilst providing significant cash resources to accelerate our growth into managed
hosting. Our strategy has always been to deliver both organic and acquisitive growth and
after the year end we were delighted to conclude the acquisition of Rapidswitch Limited, a
market leader in the provision of dedicated server hosting within the UK. In RapidSwitch we
have acquired a fast growing and profitable business with a strong brand that we expect to
continue to thrive within our group environment.
Review of the year – Continuing Operations
Overall revenues from continuing operations, which are now made up exclusively of managed
hosting services grew from £8.1m to £11.8m, a 45% increase over the year.
Our Easyspace operation, which serves the SME market, had revenues of £7.2m, an increase
of 14% over the year. We continued to add customers over the period and now have around
235,000 customers to whom we provide a range of services including domain names,
shared, dedicated and virtual hosting.
There is currently much hype around cloud computing with the continued shift of much of the
economy onto using some form of web based solution. The context of cloud computing from
iomart’s perspective is to deliver “infrastructure as a service” providing all of, or extensions
of a company’s existing or growing online infrastructure with enterprise class features such as
redundancy, high availability and disaster recovery on a fully managed, outsourced basis at
lower cost than can be achieved internally.
iomart group plc Annual Report 2009
The datacentre owning Hosting business, which addresses the needs of the corporate market,
had revenues of £4.6m in its first full year of operation, up 155% from £1.8m in the previous
year. We now offer a range of managed services to this market sector, including our software
as a service (“SaaS”) internet security product Netintelligence. Our focus continues to be on
winning managed service sales and good progress was made in this area with over 60 new
customers acquired during the year. We are beginning to see the benefit of the geographical
spread of our datacentres across the UK where we are able to offer the corporate market what
we believe is a uniquely resilient solution in terms of both location and network.
Review of the year – Discontinued Operations
Ufindus was part of the Group until early July 2008 and in that period continued to deliver
the contribution which it had displayed in previous years.
Rapidswitch
The acquisition of Rapidswitch after the year end has provided the Group with a very strong
brand, particularly in the dedicated server market. With an already impressive record of
revenue growth and profitability we are confident that this will continue into the future and
are pleased that the management team responsible for growing the business has agreed
to continue to drive it under our ownership. The datacentre facility in Maidenhead, which
Rapidswitch brings to the Group, increases our overall datacentre capacity to around 50,000
sq ft of high quality datacentre space.
Current trading and outlook
We have enjoyed strong organic growth during the year and we continue to establish
ourselves as a first class provider of managed hosting services to the SME and corporate
markets from our own fully networked UK datacentres. The acquisition of RapidSwitch post
year end will further accelerate this process, and we look forward to the coming year with
increased confidence.
Angus MacSween, Chief Executive Officer.
2 June 2009
5
Chief Executive Officer's Report
“I am delighted
by the progress
we are making
towards our
strategic goal
of becoming
one of the UK’s
foremost hosting
groups.”
www.iomart.com
6
Finance Directors' Report
“Our high level of recurring revenue and our low level
of customer attrition are evidence of our ability to
provide the level of service required.”
Richard Logan, Finance Director
Trading Results – Total operations
The post tax profit for the year from total operations was £11.2m (2008: £0.4m), including
a gain on sale of £12.6m arising out of the disposal of our on-line directory operation
Ufindus.
Trading Results – Continuing Operations
Revenues for the year from continuing operations of £11.8m have grown by 45% (2008:
£8.1m) with both of our main operating units having contributed to this growth. Easyspace
revenues grew by 14% to £7.2m (2008: £6.3m) and our Hosting operation grew its revenues
by 155% to £4.6m (2008: £1.8m).
Our gross margin, which is calculated by deducting variable cost of sales such as domain
costs and sales commission and the relatively fixed costs of operating the datacentres from
revenue, was £6.1m (2008: £4.2m). This substantial increase was as a direct result of higher
revenues from both Easyspace and Hosting. In percentage terms the gross margin was
maintained at 52% of revenue (2008: 52%). Within this our Hosting operation showed an
improved gross margin percentage due to the fixed cost element of operating our datacentres
not increasing as revenues increased. Easyspace gross margin percentage reduced due to
sales mix and a stronger US Dollar.
EBITDA loss for the year from continuing operations, before share based payment charges,
of £0.3m (2008: loss of £1.4m) showed substantial improvement over the previous year.
This expected improvement was as a direct result of the growth in absolute gross margin
delivered by both of our operating units offset by an increase in staffing, particularly sales,
and marketing expenses in the first full year of operating our datacentres.
Depreciation charges of £1.0m (2008: £0.6m) have increased as we bring more of our
datacentre capacity on stream, amortisation of intangibles £0.1m (2008: £0.1m) has
remained stable and share based payment charges £0.2m (2008: £0.1m) have increased
reflecting a charge for the additional share options issued during the year. Net finance income
was £0.4m (2008: £nil) due to the interest earned on the proceeds from the disposal of
Ufindus during the year.
Consequently, the loss for the year for continuing operations before taxation was £1.2m
(2008: £2.3m).
The taxation charge for the year of £0.7m (2008: taxation credit of £0.5m) relates to the
Group’s recognition of deferred tax assets and is a result of the Group expecting to use up
accumulated tax losses less quickly than previously anticipated.
The loss for the year from continuing operations after taxation was £1.9m (2008: £1.8m).
Trading Results - Discontinued Operations
The Group disposed of the Ufindus operation in July 2008. The post tax profit for Ufindus for
the three month period was £0.5m (2008: profit for 12 months £2.1m) and in addition the
Group made a gain from the disposal of £12.6m.
Earnings per share
Basic earnings per share from total operations was 11.27p (2008: 0.35p).
iomart group plc Annual Report 2009
Acquisition
In May 2009 the company acquired Rapidswitch Limited for a total consideration of £5.25m.
Details of this are shown in note 27 to the accounts.
Cash flow and net cash
Net increase in cash balances over the year was £13.2m (2008: £3.9m), including operating
cash flow generated from continuing operations of £0.3m (2008: outflow of £2.2m). The major
reason for the net cash balance increase was the receipt of £15.2m from the net proceeds from
the disposal of Ufindus. Cash balances at the year-end totalled £13.9m (2008: £0.7m) and
borrowings of £0.2m (2008: £1.2m).
During the year the company spent £0.7m on the purchase of 3,294,547 of its own shares at an
average price of 20.46 pence per share. These shares are held in treasury.
Subsequent to the year-end the Group paid an initial sum of £4.3m to acquire Rapidswitch
Limited and that company had net debt of £0.8m at acquisition. A further amount of £0.95m is
due to be paid at the end of March 2010.
Financial position
We continue to find ourselves in the enviable position of having sufficient funding to fully
underwrite our current business plans and therefore have no need to rely on the availability of
borrowing facilities.
Principal risks and uncertainties
Section 417(3) of the Companies Act 2006 provides that the business review must contain a
description of the principal risks and uncertainties.
The board has established a formal process to identify risks and uncertainties through the
production and maintenance of a risk register. There are a number of potential risks and
uncertainties which have been identified as a result of this process which could have a material
impact on the Group’s future performance. These are not all the risks which the board has
identified but those that the Directors currently consider to be the most material.
Staff
As with any service organisation iomart is dependent on the skill, experience and commitment of
its employees and especially a relatively small number of senior staff. The Group seeks to recruit
and retain suitably skilled and experienced staff by offering a challenging and rewarding work
environment. This includes competitive and innovative reward packages and a strong commitment
to training and development.
Datacentre operation
Any downtime experienced at our datacentres would immediately have an impact on our ability to
provide customers with the level of service they demand. Our ongoing investment in preventative
maintenance and lifecycle replacement programme ensures our datacentres continue to deliver
operational efficiency and effectiveness.
Customers
The Group provides an essential service to an extensive client base many of whom rely on the
provision of that service for their major internet presence. Any diminution in the level of service
could have serious consequences for customer acquisition and retention. Our high level of
recurring revenue and our low level of customer attrition are evidence of our ability to provide
the level of service required.
Key suppliers
The Group is dependent on certain key suppliers for the continued operation of its business.
The most significant of which are those for electricity, bandwidth and servers. In all cases these
supplies are obtained from reputable organisations chosen after a thorough selection process.
After selection, the Group actively seeks to maintain good relationships with the chosen suppliers.
The Group also seeks to maintain either several sources of supply or in the case of electricity
alternative sources of power.
Richard Logan, Finance Director.
2 June 2009
7
Finance Directors' Report
“We continue to
find ourselves
in the enviable
position of
having sufficient
funding to fully
underwrite
our current
business plans.”
www.iomart.com
8
Corporate Governance
As the company is listed on the Alternative Investment
Market it is not required to comply with the provisions of
the Combined Code. However, the board is committed to
ensuring that proper standards of corporate governance
operate and has established governance procedures and
policies that are considered appropriate to the nature and
size of the Group. Your board considers that at this stage in
the Group’s development, the expense of full compliance
with the Combined Code and with the further provisions of
the Revised Combined Code is not appropriate.
Directors and the board
The board directs the Group's activities in an effective
manner through regular monthly board meetings and
timely and relevant
through
monitors performance
reporting procedures. Where it deems it necessary the
board requests reports on specific areas outwith the normal
reporting regime. All directors have access to advice from
the company secretary and independent professionals at
the company’s expense. Training is available for new and
other directors as necessary.
The board at present comprises three executive and three
non-executive directors. The size of the board is considered
to be appropriate to the current size and character of the
Group. The non-executive directors are independent
of management and any business or other relationships
which could interfere with the exercise of their independent
judgement. The roles of chairman and chief executive are
separate appointments and it is board policy that this will
continue.
The board has established three committees, the audit
committee, the remuneration committee and the nominations
committee. Membership of both the audit committee and
the remuneration committee is exclusively non-executive
while membership of the nominations committee comprises
the chairman, two non-executive directors and the chief
executive officer. Ian Ritchie is chairman of the nominations
committee, Fred Shedden of the remuneration committee
and Chris Batterham of the audit committee.
Under the company’s articles of association, the nearest
number to one third of the board shall retire each year by
rotation.
Accountability and audit
The board considers that the annual report presents a
balanced and understandable assessment of the Group’s
performance and prospects.
The audit committee has written terms of reference setting
out its authority and duties and has meetings, at which the
executive directors also have the right to attend, at least
three times a year with the external auditors.
The audit committee reviews the independence and
objectivity of the external auditors. The committee reviews
the nature and amount of the non-audit work undertaken
by the auditors to satisfy itself that there is no effect on
their independence. The committee is satisfied that Grant
Thornton UK LLP are independent.
Risk management
The board established a risk register in 2006 which is
formally reviewed during each calendar year.
Going concern
On the basis of a review of facilities available to the
Group together with a review of forecasts, the directors
have a reasonable expectation that the Group 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.
Internal financial control
The Group has established policies covering the key areas
of internal financial control and the appropriate procedures,
controls, authority levels and reporting requirements which
must be applied throughout the Group. The key procedures
that have been established in respect of internal financial
control are as follows:
A separate report on directors’ remuneration is set out on
pages 10 to 12, this to be approved by the shareholders
at the annual general meeting.
• Financial reporting: there is in place a comprehensive
system of financial reporting based on the annual
budget which the board approves. The results for
iomart group plc Annual Report 2009
the Group as a whole and each business segment
are reported monthly, along with an analysis of key
variances. Year-end forecasts are updated on a
regular basis.
• Investment appraisal: applications
for capital
expenditure are made in a prescribed format which
places emphasis on the commercial and strategic
as well as the financial justification. All significant
projects require specific board approval.
No system can provide absolute assurance against material
misstatement or loss but the Group's systems are designed
to provide reasonable assurance as to the reliability of
financial information, ensuring proper control over income
and expenditure, assets and liabilities.
Relations with shareholders
The company values the views of its shareholders
and recognises their interest in the Group’s strategy
and performance, board membership and quality of
management.
The annual general meeting is used to communicate
with all shareholder and investor groups, and they are
encouraged to participate. The chairmen of the audit,
remuneration and nominations committees are available
to answer questions. Separate resolutions are proposed on
each issue so that they can be given proper consideration
and there are resolutions to receive the annual report and
accounts and the report on directors’ remuneration. The
company counts all proxy votes and will indicate the level
of proxies lodged on each resolution, after it has been
dealt with by a show of hands.
The company uses its website, www.iomartgroup.com, as a
means of providing information to shareholders and other
related parties. The company’s annual report and accounts,
interim reports and other relevant announcements are
maintained on the website.
9
Corporate Governance
www.iomart.com
10
Report of the board to the members on directors'
remuneration
• Pensions
Pension contributions to individuals’ personal pension
arrangements are payable by the Group at the rate of
twice the contribution made by the director subject to a
maximum employer contribution of 10% of basic salary.
• Share options
Executive directors are entitled to participate in share
option schemes.
• Other benefits
The executive directors are entitled to a car allowance, life
insurance cover and to participate in the Group’s Private
Medical Insurance scheme.
All the executive directors are engaged under service
contracts which require a notice period of 6 or 12
months.
Remuneration of non-executive directors
The fees paid to the non-executive directors are determined
by the board. They are not entitled to receive any bonus or
other benefits.
Non-executive directors’ letters of appointment are on a 6
month rolling basis.
The remuneration committee has given consideration
to the Combined Code issued by the Financial Services
Authority in framing its remuneration policy. As the
company is listed on the Alternative Investment Market, it
is not required to comply with the provisions of Schedule
7a of the Companies Act 1985. The following disclosures
are voluntary as is resolution 2 to approve this report at the
annual general meeting.
Remuneration committee
The remuneration committee determines, on behalf of
the board, the Group’s policy for executive remuneration
and the individual remuneration packages for executive
directors. In setting the Group’s remuneration policy, the
remuneration committee considers a number of factors,
including the following:
• salaries and benefits available to executive
directors of comparable companies;
• the need to attract and retain executives of an
appropriate calibre; and
• the continued commitment of executives to the
Group’s success through appropriate incentive
schemes.
The committee meets at least twice a year.
Remuneration of executive directors
The remuneration packages of the executive directors
comprise the following elements:
• Base salary
The remuneration committee sets base salaries to reflect
responsibilities and the skill, knowledge and experience
of the individual. The executive directors do not receive
directors’ fees.
• Bonus scheme
The executive directors are eligible to receive a bonus
on top of basic salary dependent on individual and
Group performance at the discretion of the remuneration
committee. Performance conditions are set individually for
each director to ensure they are relevant and stretching.
iomart group plc Annual Report 2009
Report of the board to the members on directors' remuneration
11
Directors’ remuneration
Details of individual directors’ emoluments for the year are as follows:
Name of director
Angus MacSween
Chris Batterham
Sarah Haran
Richard Logan
Ian Ritchie (appointed 21 December 2007)
Fred Shedden
Stuart Forrest (resigned 31 March 2008)
Mark Hallam (resigned 31 March 2008)
Nick Kuenssberg (resigned 31 January 2008)
Salary or fees
£
155,600
30,000
114,000
114,000
50,000
30,000
-
-
-
Bonus
£
150,000
-
95,000
107,000
-
-
-
-
-
Benefits
£
1,557
-
412
1,409
-
-
-
-
-
Pension
contributions
£
14,560
-
10,400
10,400
-
-
-
-
-
Year
ended
Year
ended
31 March 31 March
2008
Total
£
259,658
30,000
202,574
163,991
13,333
30,000
184,899
199,811
40,000
2009
Total
£
321,717
30,000
219,812
232,809
50,000
30,000
-
-
-
493,600 352,000
3,378
35,360
884,338 1,124,266
Included within the above bonus payments Angus MacSween received £100,000 and Richard Logan £50,000 in respect of the
disposal of Ufindus Limited.
Directors’ interests in shares
The interests of the directors in the shares of the company at 31 March 2009, together with their interests at 1 April 2008 were as
follows:
Name of director
Angus MacSween
Chris Batterham
Sarah Haran
Richard Logan
Ian Ritchie
Fred Shedden
Number of ordinary shares
31 March 2009
At 1 April 2008
19,686,304
45,621
745,704
135,500
107,000
744,588
19,286,304
45,621
720,704
45,500
Nil
744,588
www.iomart.com
12
Report of the board to the members on directors' remuneration
Directors’ interests in share options
The interests of the directors at 31 March 2009 in options over the ordinary shares of the company were as follows:
Name of
director
Angus MacSween
Sarah Haran
At
1 April
2008
Granted
in year
At
31 March Exercise
price
2009
Lapsed
Date of
Date from
which
Grant exerciseable
Expiry
date
1,750,000
12,302
-
-
-
-
- (1,300,000)
-
-
-
150,000
-
250,000
-
350,000
-
450,000
450,000
12,302
150,000
250,000
350,000
450,000
78.5p 17/11/2004 17/11/2007 17/11/2014
76.0p 01/03/2006 01/03/2009 01/09/2009
46.5p 06/10/2008 31/03/2009 06/10/2018
46.5p 06/10/2008 31/03/2010 06/10/2018
46.5p 06/10/2008 31/03/2011 06/10/2018
46.5p 06/10/2008 31/03/2012 06/10/2018
1,762,302
1,200,000 (1,300,000) 1,662,302
159,746
159,747
159,747
850,000
4,921
500,000
-
-
-
-
-
-
-
-
-
-
150,000
250,000
350,000
450,000
-
-
-
(600,000)
-
-
-
-
-
-
159,746
159,747
159,747
250,000
4,921
500,000
150,000
250,000
350,000
450,000
5.0p 11/05/2000 11/05/2000 29/03/2010
5.0p 11/02/2001 11/02/2001 29/03/2010
5.0p 11/02/2002 11/02/2002 29/03/2010
78.5p 17/11/2004 17/11/2007 17/11/2014
76.0p 01/03/2006 01/03/2009 01/09/2009
50.5p 27/09/2007 27/09/2010 27/09/2017
46.5p 06/10/2008 31/03/2009 06/10/2018
46.5p 06/10/2008 31/03/2010 06/10/2018
46.5p 06/10/2008 31/03/2011 06/10/2018
46.5p 06/10/2008 31/03/2012 06/10/2018
1,834,161
1,200,000
(600,000) 2,434,161
Richard Logan
200,000
500,000
-
-
-
-
-
-
150,000
250,000
350,000
450,000
(150,000)
-
-
-
-
-
50,000
500,000
150,000
250,000
350,000
450,000
74.0p 24/08/2006 24/08/2009 24/08/2016
50.5p 27/09/2007 27/09/2010 27/09/2017
46.5p 06/10/2008 31/03/2009 06/10/2018
46.5p 06/10/2008 31/03/2010 06/10/2018
46.5p 06/10/2008 31/03/2011 06/10/2018
46.5p 06/10/2008 31/03/2012 06/10/2018
700,000
1,200,000
(150,000) 1,750,000
The options granted in the current year vest over the period 31 March 2009 to 31 March 2012 subject to continuous employment
criteria. No share options were exercised by directors during the year.
The market price of the company’s shares at the end of the financial period was 32.5p and the range of prices during the period was
between 26.5p and 48.5p.
By order of the board
Fred Shedden, Chairman, Remuneration committee
2 June 2009
iomart group plc Annual Report 2009
Directors' Report
The directors present their annual report on the affairs
of the Group, together with the financial statements and
auditors’ report, for the year ended 31 March 2009.
Principal activity
The principal activity of the Group is the provision of
webhosting and managed hosting services through a
network of owned data centres.
Business review
The chairman’s statement, chief executive officer’s and
finance director’s reports contain a review of trading.
The Group is focused on building a managed hosting
business using its own carrier neutral datacentre capacity
to allow the full set of vertical components from domain
names through space, power and bandwidth to complex
application hosting.
Key performance indicator review
Revenue
2009
2008
45% increase 16% increase
Revenue from continuing operations revenue grew by 45%
over the year compared to a growth of 16% in the previous
year. Our Hosting operation grew revenues by 155% and
our Easyspace operation by 14%.
EBITDA margin
(excluding share based payments) -3%
2009
2008
-18%
The EBITDA margin which is calculated before share based
payments has shown a substantial improvement as the
Hosting operation moves towards EBITDA profitability.
Datacentre usage
2009
23%
2008
19%
Datacentre usage is calculated by comparing the actual
usage of racks to the total rack capacity of the datacentres.
The increase in the year is due to new sales which have
predominately been of a high margin managed service
nature.
13
Financial instruments
The Group’s financial instruments comprise cash and liquid
resources and finance leases together with various items
such as trade debtors and trade creditors that arise directly
from its operations. The main purpose of these financial
instruments is to provide finance for the Group’s operations.
The main risk to the Group is interest rate risk arising from
floating rate interest rates. The Group’s borrowings at
31 March 2009 comprise finance leases totalling £0.2m
(2008 - £0.4m). The interest rates on the finance leases
are fixed for the term of the lease at between 7.7% and
9.75%. The Group has exposure to movements in the
exchange rate of the US dollar as certain domain name
purchases are transacted in this currency. To protect cash
flows against the level of exchange rate risk, the Group
entered into forward exchange contracts to hedge foreign
exchange exposures arising on the forecast payments. The
majority of transactions of the holding company and the
UK subsidiaries are in UK sterling and, with the exception
of forward foreign exchange contracts, the Group does
not use derivative instruments. Additional information on
financial instruments is included in Note 26.
Dividend
The directors have recommended a final dividend for the
year ended 31 March 2009 of 0.3p per share (2008 –
nil).
Directors and their interests
The present membership of the board is set out on
page 68. In accordance with the company’s Articles of
Association, Angus MacSween and Richard Logan will
offer themselves for re-election at the forthcoming annual
general meeting.
Details of directors’ interests in the company’s shares
are set out in the report of the board to the members on
directors’ remuneration on pages 10 to 12.
www.iomart.com
14
Directors' Report
Substantial shareholdings
At 29 May 2009 the following interests in 3% or more
of the issued ordinary share capital, excluding treasury
shares, had been notified to the company:
Shareholder
Shares
Percentage held
Angus MacSween
19,686,304
20.31%
16,995,397
17.53%
6,909,911
7.13%
6,146,000
6.34%
4,177,000
4.31%
Gartmore
Investment Limited
Majedie
Asset Management
British Steel
Pension Scheme
Universities
Superannuation
Scheme
Legal & General
Investment
Management
3,485,000
Bill Dobbie
3,361,369
Noble Grossart
Investment Limited
2,925,000
3.59%
3.47%
3.02%
Acquisition of own ordinary shares
During the year the Company acquired its own ordinary
shares to be held in treasury. 1,500,000 ordinary shares
at 21p per share were acquired on 12 January 2009
and 1,794,547 ordinary shares at 20p per share were
acquired on 21 January 2009. The total cost of acquiring
the treasury shares was £678,000. No ordinary shares
were acquired in the previous year. At the end of the year
the Company held 3,294,547 of its own ordinary shares
(2008 – nil) in treasury.
Employee involvement
The Group regularly communicates with all staff providing
information on developments within the Group including
updates on the Group’s strategy and details of new
products and services provided by the Group.
Staff are eligible to receive share options in the company
under the Group’s share option schemes and it is the board’s
policy to make specific option awards as appropriate to
attract and retain the best available people.
Employment of disabled persons
Full and fair consideration is given to applications for
employment made by disabled persons having regard to
their particular aptitudes and abilities. Appropriate training
is arranged for disabled persons, including retraining for
alternative work of employees who become disabled, to
iomart group plc Annual Report 2009
promote their career development within the organisation.
Supplier payment policy and practice
The company and its subsidiaries agree the terms of
payment when negotiating the terms and conditions for
their transactions with their suppliers. Payment is made
in compliance with those terms, subject to the terms and
conditions of the relevant transaction having been met by
the supplier. Trade creditor days of the Group at 31 March
2009, calculated in accordance with the requirements
of the Companies Act 1985, were 25 days (2008 – 26
days), and of the company were 6 days (2008 – 27 days).
This represents the ratio, expressed in days, between
the amounts invoiced to the company in the year by its
suppliers and the amounts due, at the year end, to trade
creditors falling due for payment within one year.
Political and charitable donations
The Group did not make any charitable or political
donations in either the current or the previous year.
Awareness of relevant audit information
So far as each of the directors, at the time the report is
approved, is aware:
• there is no relevant audit information of which the
auditors are unaware, and
• the directors have taken all the steps they ought
to have taken to make themselves aware of any
relevant audit information and to establish that the
auditors are aware of that information.
Website disclaimer
The maintenance and integrity of the iomart Group plc
website is the responsibility of the directors. The work
carried out by the auditor does not involve consideration
of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the
financial statements since they were initially presented on the
website. Legislation in the United Kingdom governing the
preparation and dissemination of the financial statements
may differ from legislation in the other jurisdictions.
Auditors
Grant Thornton UK LLP have expressed their willingness to
continue in office as auditors and a resolution to reappoint
them will be proposed at the forthcoming annual general
meeting.
By order of the board
Bruce Hall, Company Secretary
2 June 2009
Statement of Directors' Responsibilities
15
The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any
time the financial position of the company and to enable
them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible
for the Group’s system of internal financial control, for
safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
The directors are responsible for preparing the Annual
Report, the Directors’ Remuneration Report and the
Group and the Parent Company Financial Statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the Group Financial Statements in
accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union, and the
Parent Company Financial Statements in accordance with
applicable law and United Kingdom Accounting Standards
(United Kingdom Generally Accepted Accounting Practice).
In preparing the Group Financial Statements, the Directors
have also elected to comply with the IFRSs, issued by the
International Accounting Standards Board (IASB). The
Group and Parent Company Financial Statements are
required by law to give a true and fair view of the state of
affairs of the Company and the Group and of the profit
or loss of the Group for that period. In preparing those
financial statements, the Directors are required to:
•
select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable
and prudent;
•
state that the Group Financial Statements comply
with IFRSs as adopted by the European Union
and IFRSs issued by the IASB and, with regard
to the Parent Company’s Financial Statements,
that applicable UK Accounting Standards have
been followed, subject to any material departures
disclosed and explained in the financial statements
whether applicable accounting standards have been
followed subject to any material departures disclosed
and explained in the financial statements; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group will continue in business.
www.iomart.com
iomart group plc Annual Report 2009
Board of Directors
Ian Ritchie
58, appointed 2008; currently Chairman of Computer Application Services Ltd, Caspian
Learning Ltd, Interactive Design Institute Ltd, and Scapa Technologies Ltd. He is also a past
President of the British Computer Society. Ian was founding chairman of several technology
companies, including Voxar Ltd (now part of Toshiba), Orbital Software Group plc (now part
of Sopheon plc), Digital Bridges Ltd (now part of Oberon Inc) and Sonaptic Ltd (now part of
Wolfson Microelectronics plc).
Angus MacSween
52, appointed 2000; after a short service commission in the Royal Navy, Angus started his first
business selling telephone systems in 1984. Since selling this first business he has established,
grown and sold 5 profitable businesses in the telephony and internet sector. Following the
sale of Teledata Limited, the UK’s leading telephone information services company to Scottish
Telecom plc, Angus spent two years on the executive of Scottish Telecom plc where he was
responsible for the development of the company's Internet division. In December 1998 Angus
founded iomart.
Chris Batterham
54, appointed 2005; Chris was finance director of Unipalm plc, the first internet company to
IPO and stayed with the company for 5 years following its takeover by UUnet. He was CFO
of Searchspace until 2005 and is currently a non executive director of SDL plc, DRS Group
plc, office2office plc, The Risk Advisory Group and Betfair Limited. Chris has also served on
the boards of Staffware plc, DBS Management plc and The Invesco Techmark Enterprise Trust
plc.
Sarah Haran
43, appointed 2000; Sarah has spent her career implementing and managing operations
centres for large corporations such as Microsoft Inc, Compaq Inc, Scottish Power plc
and Prestel Limited. She joined iomart in 1998, from Scottish Telecom plc and has been
responsible for developing the day-to-day business processes and technical operations to
support the Group’s customer base.
Richard Logan
51, appointed 2006; Richard is a chartered accountant having qualified with Arthur Young in
1984. Richard then spent 7 years with Ben Line Group initially as Group treasurer and latterly
as financial director of Ben Line’s main container shipping division. From 1992 to 2002
Richard served as finance director of Kingston SCL a company which provided administration
and billing software to the mobile communications market during which time he was involved
in a management buy-out and subsequent trade sale of the company. Immediately prior to
joining iomart Richard served as finance director of ePOINT Group, a technology company
based in Scotland.
Fred Shedden
64, appointed 2000; independent director of Murray International Trust plc; vice-chair of
Glasgow Housing Association and Glasgow School of Art; formerly chairman of Halladale
Group plc and senior partner of McGrigors.
17
Board of Directors
www.iomart.com
18
Report of the independent auditor to the members
of iomart group plc
We have audited the group financial statements of iomart
Group Plc for the year ended 31 March 2009 which
comprise the principal accounting policies, the consolidated
income statement, the consolidated balance sheet, the
consolidated cash flow statement, the consolidated
statement of changes in shareholders' equity and notes 1 to
27. These group financial statements have been prepared
under the accounting policies set out therein.
We have reported separately on the parent company
financial statements of iomart Group Plc for the year ended
31 March 2009.
This report is made solely to the company’s members, as
a body, in accordance with Section 235 of the Companies
Act 1985. Our audit work has been undertaken so that
we might state to the company’s members those matters
we are required to state to them in an auditor's 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 and the company’s members as a body,
for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual Report
and the group financial statements in accordance with
United Kingdom law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union are
set out in the Statement of Directors' Responsibilities.
Our responsibility is to audit the group financial statements in
accordance with relevant legal and regulatory requirements
and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the group
financial statements give a true and fair view and whether the
group financial statements have been properly prepared in
accordance with the Companies Act 1985. We also report
to you whether in our opinion the information given in the
Directors' Report is consistent with the financial statements.
The information given in the Directors' Report includes that
specific information presented in the Chairman's Statement,
Chief Executive Officer's Report and the Finance Director's
Report. In addition we report to you if, in our opinion, we
have not received all the information and explanations we
require for our audit, or if information specified by law
regarding directors' remuneration and other transactions
is not disclosed.
We read other information contained in the Annual Report
and consider whether it is consistent with the audited group
financial statements. The other information comprises only
the Chairman's Statement, the Chief Executive Officer's
Report, the Finance Director's Report, the Director's Report,
the Statement of Director's Responsibilities, Report of the
Board to the Members on Directors' Remuneration and
the Corporate Governance Statement. We consider the
implications for our report if we become aware of any
apparent misstatements or material inconsistencies with
the group financial statements. Our responsibilities do not
extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the
Auditing Practices Board. An audit includes examination,
on a test basis, of evidence relevant to the amounts
and disclosures in the group financial statements. It also
includes an assessment of the significant estimates and
judgments made by the directors in the preparation of the
group financial statements, and of whether the accounting
policies are appropriate to the group's circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all
the information and explanations which we considered
necessary in order to provide us with sufficient evidence
to give reasonable assurance that the group financial
statements are free from material misstatement, whether
caused by fraud or other irregularity or error. In forming
our opinion we also evaluated the overall adequacy of
the presentation of information in the group financial
statements.
iomart group plc Annual Report 2009
Report of the independent auditor to the members of iomart group plc
19
Opinion
In our opinion:
•
the group financial statements give a true and
fair view, in accordance with IFRSs as adopted by
the European Union, of the state of the group's
affairs as at 31 March 2009 and of its profit for the
year then ended;
•
the group financial statements have been properly
prepared in accordance with the Companies Act
1985; and
•
the information given in the Directors' Report is
consistent with the financial statements.
Separate opinion in relation to IFRSs
As explained in Note 2 to the group financial statements,
the group in addition to complying with its legal obligation
to comply with IFRSs as adopted by the European
Union, has also complied with the IFRSs as issued by the
International Accounting Standards Board.
In our opinion the group financial statements give a true
and fair view, in accordance with IFRSs, of the state of the
group's affairs as at 31 March 2009 and of its profit for
the year then ended.
GRANT THORNTON UK LLP
REGISTERED AUDITOR
CHARTERED ACCOUNTANTS
GLASGOW
2 June 2009
www.iomart.com
20
Consolidated Income Statement
Year ended 31March 2009
CONTINUING OPERATIONS
Note
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss
Analysed as:
Earnings before interest, tax, depreciation, amortisation and share based payments
Share based payments
Depreciation
Amortisation
Finance income
Finance costs
Loss before taxation
Taxation
Loss for the year from continuing operations
DISCONTINUED OPERATIONS
Profit for the year from discontinued operations
Profit on disposal of discontinued operations
4
4
4
4
6
6
8
2009
£’000
Restated
2008
£’000
11,797
8,116
(5,718)
(3,920)
6,079
4,196
(7,728)
(6,463)
(1,649)
(2,267)
(318)
(231)
(959)
(141)
497
(49)
(1,447)
(143)
(618)
(59)
73
(122)
(1,201)
(2,316)
(731)
528
(1,932)
(1,788)
10
10
516
12,598
2,141
-
Net result from discontinued operations
13,114
2,141
TOTAL OPERATIONS
Profit for the year from total operations
11,182
353
Basic and diluted earnings per share
Continuing operations
Basic
Diluted
Total operations
Basic
Diluted
iomart group plc Annual Report 2009
11
11
11
11
(1.95)p
(1.95)p
(1.80)p
(1.80)p
11.27p
11.17p
0.35p
0.35p
21
Consolidated Balance Sheet
31March 2009
Note
2009
£’000
2008
£’000
ASSETS
Non-current assets
Intangible assets – goodwill
Intangible assets – other
Deferred tax asset
Lease deposit
Deferred consideration receivable on disposal
Property, plant and equipment
Current assets
Cash and cash equivalents
Trade and other receivables
Total assets
LIABILITIES
Non-current liabilities
Deferred consideration due on acquisition
Borrowings
Current liabilities
Deferred consideration due on acquisition
Trade and other payables
Borrowings
Total liabilities
Net assets
EQUITY
Share capital
Own shares
Capital redemption reserve
Share premium
Retained earnings
Total equity
These financial statements were approved by the board of directors on 2 June 2009.
Signed on behalf of the board of directors
Angus MacSween
Director and Chief Executive Officer
12
12
9
13
10
15
17
16
19
20
19
18
20
22
16,550
363
20
884
1,000
8,672
27,489
13,910
2,184
16,094
18,525
720
826
884
-
8,310
29,265
743
3,121
3,864
43,583
33,129
-
(54)
(54)
(4,800)
(5,190)
(148)
(10,138)
(4,800)
(187)
(4,987)
-
(4,789)
(672)
(5,461)
(10,192)
(10,448)
33,391
22,681
1,002
(678)
1,200
17,583
14,284
33,391
994
-
1,200
17,541
2,946
22,681
www.iomart.com
22
Consolidated Cash Flow Statement
Year ended 31March 2009
Loss before taxation
Finance (income)/expense net
Depreciation
Amortisation
Share based payments
Movement in deposits
Movement in trade receivables
Movement in trade payables
Cash flow from operations
Cash generated from discontinued operations
Net cash flow from operating activities
Cash flow from investing activities
Purchase of property, plant and equipment
Capitalisation of development costs
Purchase of intangible assets - software
Purchase of intangible assets – domain names
Payment for acquisition of business
Receipt from disposal of discontinued operation
Interest received
Investing activities of discontinued operation
Net cash from/(used in) investing activities
Cash flow from financing activities
Issue of shares
Repayment of finance leases
Repayment of borrowings
Receipt of cash from share placing
Purchase of own shares
Interest paid
Financing activities of discontinued operation
Net cash (used in)/from financing activities
Note
6
4
4
23
15
12
12
12
10
6
22
20
20
6
2009
£’000
(1,201)
(448)
959
141
231
-
(453)
1,087
316
463
779
(1,519)
(238)
(10)
(31)
-
15,235
389
(99)
13,727
50
(210)
(432)
-
(678)
(49)
(20)
(1,339)
Restated
2008
£’000
(2,316)
49
618
59
92
(884)
(34)
238
(2,178)
2,702
524
(393)
(250)
(23)
-
(4,800)
-
73
(496)
(5,889)
-
(197)
(876)
10,466
-
(124)
(9)
9,260
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
13,167
3,895
743
(3,152)
Cash and cash equivalents at the end of the year
17
13,910
743
iomart group plc Annual Report 2009
Consolidated Statement of Changes in Equity
Year ended 31March 2009
23
Share
capital
Own
shares
Note
£’000
£’000
Capital
redemption
reserve
£’000
Share
premium
account
£’000
Retained
earnings
Total
£’000
£’000
23
9
23
9
994
-
-
-
994
-
-
-
-
8
-
-
-
-
-
-
-
-
(678)
-
1,200
17,541
2,375
22,110
-
-
-
-
-
-
353
143
353
143
75
75
1,200
17,541
2,946 22,681
-
-
-
-
-
-
-
-
-
42
11,182
231
11,182
231
(75)
(75)
-
-
(678)
50
Changes in equity
Balance at 1 April 2007
Profit in the period and total
recognised income and expense
Share based payments
Deferred tax on share based
remuneration
Balance at 1 April 2008
Profit in the period and total
recognised income and expense
Share based payments
Deferred tax on share based
remuneration
Acquisition of own shares
Issue of shares for option redemption
Balance at 31 March 2009
1,002
(678)
1,200
17,583
14,284 33,391
www.iomart.com
“We are continually taking steps to reduce the costs of power,
costs to the environment and cost of providing an overall data centre
service for our customers.”
iomart group plc Annual Report 2009
25
Notes to the Financial Statements
Year ended 31March 2009
1. GENERAL INFORMATION
iomart Group plc is a company incorporated in the United
Kingdom under the Companies Act 1985. The address
of the registered office is given on the outer back cover
of this report. The nature of the Group’s operations and
its principal activities are set out in the Chief Executive
Officer’s report, Finance Director’s report and Directors’
report.
The financial statements are presented in pounds sterling
because that is the currency of the primary economic
environment in which each of the Group’s subsidiaries
operates. Foreign operations are included in accordance
with the policies set out in note 2.
2. ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements have been prepared
in accordance with applicable International Financial
Reporting Standards (IFRS) as adopted by the EU and
issued by the International Accounting Standards Board
(IASB). The measurement bases and principal accounting
policies of the Group are set out below. These policies
have been consistently applied to all years presented unless
otherwise stated.
Basis of consolidation
The Group financial statements consolidate those of the
company and all of its subsidiary undertakings drawn up
to 31 March 2009. Subsidiaries are entities over which
the Group has the power to control the financial and
operating policies so as to obtain benefits from its activities.
The Group obtains and exercises control through voting
rights.
Unrealised gains on transactions between the Group and
its subsidiaries are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Amounts reported in
the financial statements of subsidiaries have been adjusted
where necessary to ensure consistency with the accounting
policies adopted by the Group.
Acquisitions of subsidiaries are dealt with by the purchase
method. The purchase method involves the recognition at
fair value of all identifiable assets and liabilities, including
contingent liabilities of the subsidiary, at the acquisition
date, regardless of whether or not they were recorded in the
financial statements of the subsidiary prior to acquisition.
On initial recognition, the assets and liabilities of the
subsidiary are included in the consolidated balance sheet
at their fair values, which are also used as the bases for
subsequent measurement in accordance with the Group
accounting policies. Goodwill is stated after separating
out identifiable intangible assets. Goodwill represents
the excess of acquisition cost over the fair value of the
Group's share of the identifiable net assets of the acquired
subsidiary at the date of acquisition.
At the date of transition, namely 1 April 2005, the Group
elected not to apply IFRS 3 Business Combinations
retrospectively to business combinations prior to date of
transition.
Accordingly the classification of the combination remains
unchanged from that used under UK GAAP. Assets and
liabilities are recognised at date of transition if they would
be recognised under IFRS, and are measured using their
UK GAAP carrying amount immediately post-acquisition
as deemed cost under IFRS, unless IFRS requires fair value
measurement.
Standards, amendments, and interpretations effective
in year
IFRIC 12, ‘Service Concession Arrangements’, provides
revised guidance for service concession operators on how
to account for the obligations they undertake and rights
they receive in service concession arrangements. This
interpretation does not have any impact on the Group’s
financial statements.
IFRIC 14, ‘IAS 19 – The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction’,
clarifies how entities should account for the effect of
any statutory or contractual funding requirements. This
interpretation does not have any impact on the Group’s
financial statements.
New standards and interpretations of existing
standards that are not yet effective and have not been
adopted early by the Group
IAS 1 (revised) Presentation of Financial Statements prohibits
the presentation of income and expenses in the Statement
of Changes in Equity. The Group will adopt IAS 1 (revised)
from 1 April 2009.
www.iomart.com
26
Notes to the Financial Statements. Year ended 31March 2009.
IAS 23 Borrowing Costs requires the capitalisation of
borrowing costs attributable to qualifying assets but is not
expected to have an impact on the Group’s consolidated
financial statements. The Group will adopt IAS 23 from
1 April 2009.
IAS 27 Consolidated and Separate Financial Statements
requires the effects of all transactions with non-controlling
interests to be recorded in equity if there is no change
in control and these transactions will no longer result
in goodwill or gains and losses. It is not expected to
have any impact on the Group’s consolidated financial
statements.
IAS 39 and IFRIC 9 Financial Instruments: Recognition
and Measurement: Eligible Hedged Items requires that
the date to assess the existence of an embedded
derivative is the date that an entity first becomes a party
to the contract, with reassessment only if there is a change
to the contract that significantly modifies the cash flows.
As the Group has no embedded derivatives requiring
separation from the host contract, it is not expected to
have any impact on the Group’s consolidated financial
statements.
IFRS 2 (amendment), Share-based Payment clarifies that
vesting conditions are service conditions and performance
conditions only. It is not expected to have any impact on
the Group’s consolidated financial statements. The Group
will adopt IFRS 2 (amendment) from 1 April 2009.
IFRS 3 Business Combinations (revised) continues to apply
the acquisition method to business combinations. It is not
expected to have any impact on the Group’s consolidated
financial statements.
IFRS 7 Financial Instruments: Disclosures – Improving
Disclosures About Financial Instruments (amendment)
requires disclosures that enable users of the financial
statements to evaluate the significance of the Group’s
financial instruments and the nature and extent of risks
arising from those financial instruments. The Group will
adopt IFRS 7 (amendment) from 1 April 2009.
IFRS 8 Operating Segments extends the scope of segmental
reporting but is not expected to have any impact on the
Group’s consolidated financial statements. The Group
will adopt IFRS 8 from 1 April 2009.
IFRIC 13 Customer Loyalty Programme is not expected
to have an impact on the Group’s consolidated financial
statements. The Group will adopt IFRIC 13 from 1 April
2009.
IFRIC 15 Agreements for the Construction of Real Estate
is not expected to have an impact on the Group’s
consolidated financial statements. The Group will adopt
IFRIC 15 from 1 April 2009.
IFRIC 16 Hedges of a Net Investment in a Foreign
Operation is not expected to have an impact on the
Group’s consolidated financial statements. The Group
will adopt IFRIC 16 from 1 April 2009.
IFRIC 17 Distributions of Non-cash Assets to Owners is not
expected to have an impact on the Group’s consolidated
financial statements.
IFRIC 18 Transfers of Assets from Customers is not
expected to have an impact on the Group’s consolidated
financial statements.
Goodwill
Goodwill representing the excess of the cost of acquisition
over the fair value of the Group's share of the identifiable
net assets acquired is capitalised and reviewed annually for
impairment. Goodwill is carried at cost less accumulated
impairment losses. Any excess of the Group’s interest in
the net fair value of the identifiable net assets acquired
over cost is recognised immediately after acquisition in
the income statement.
Revenue
Revenue comprises the fair value of the consideration
received or receivable for the sale of goods and services
in the ordinary course of the Group’s activities. Revenue
is shown net of value-added tax, returns, rebates and
discounts and after eliminating sales within the Group.
The Group recognises revenue when the amount of
revenue can be reliably measured, it is probable that
future economic benefits will flow from the transaction
and specific criteria have been met for each of the
Group’s activities as described below. The amount of
revenue is not considered to be reliably measurable until
all contingencies relating to the sale have been resolved.
The Group bases its estimates on prior experience, taking
into consideration the type of customer and the type of
transaction.
iomart group plc Annual Report 2009
Notes to the Financial Statements. Year ended 31March 2009.
27
Continuing Operations
Easyspace
This operating segment provides domain name registration
and web hosting services. Revenue from the provision of
domain names is recognised at the time the title to the
domain name passes. Revenue from the provision of web
hosting is recognised evenly over the period of the service
and only after all significant obligations in relation to the
sale have been fulfilled. Any unearned portion of revenue
is included in payables as deferred revenue.
Hosting
This operating segment provides managed hosting facilities
and services. Revenue from the sale of facilities and
services is spread evenly over the period of the agreement
and only after all significant obligations in relation to the
sale have been fulfilled. Any unearned portion of revenue
is included in payables as deferred revenue.
Interest
Interest is recognised on a time-proportion basis using the
effective interest method.
Discontinued Operations
Ufindus
This operating segment sold web based marketing
services comprising the creation, maintenance and
ongoing promotion of websites on an internet directory.
Revenue for the initial creation and design of websites
was recognised when the website had been created
and all significant obligations in relation to the sale had
been fulfilled. Revenue for the ongoing maintenance and
promotion of websites was then recognised evenly over
the period of the service.
Intangible assets
Research and development
Expenditure on research (or the research phase of an
internal project) is recognised as an expense in the
period in which it is incurred. Development costs incurred
are capitalised when all the following conditions are
satisfied:
• completion of the intangible asset is technically
feasible so that it will be available for use or sale
• the Group intends to complete the intangible
asset and use or sell it
• the Group has the ability to use or sell the
intangible asset
• the intangible asset will generate probable future
economic benefits
• there are adequate technical, financial and other
resources to complete the development and to
use or sell the intangible asset, and
• the expenditure attributable to the intangible
asset during its development can be measured
reliably.
Development costs not meeting the criteria for capitalisation
are expensed as incurred. The only development costs
which are deemed to meet these criteria in the Group are
in relation to developments by specific teams to develop
products in the hosting asset management control system
and internet security. Development costs capitalised are
amortised on a straight-line basis over the estimated
useful life of the asset. The estimated useful life is deemed
to be three years from the month of expenditure for
all developments capitalised. Amortisation charges are
recognised in administration expenses in the income
statement.
Software
Software is recognised at fair value on purchase and
amortised on a straight-line basis over its useful economic
life, which does not generally exceed four years.
Assets acquired as part of a business combination
In accordance with IFRS 3 Business Combinations, an
intangible asset acquired in a business combination is
deemed to have a cost to the Group of its fair value
at the acquisition date. The fair value of the intangible
asset reflects market expectations about the probability
that the future economic benefits embodied in the asset
will flow to the Group. Where an intangible asset might
be separable, but only together with a related tangible or
intangible asset, the group of assets is recognised as a
single asset separately from goodwill where the individual
fair values of the assets in the group are not reliably
measurable. Where the individual fair values of the
complementary assets are reliably measurable, the Group
recognises them as a single asset provided the individual
assets have similar useful lives.
www.iomart.com
28
Notes to the Financial Statements. Year ended 31March 2009.
Property, plant and equipment
Property, plant and equipment is stated at cost net of
depreciation and any provision for impairment. Leasehold
property is included in property, plant and equipment only
where it is held under a finance lease.
Disposal of assets
The gain or loss arising on the disposal of an asset
is determined as the difference between the disposal
proceeds and the carrying amount of the asset and is
recognised in the income statement.
Depreciation
Depreciation is calculated to write down the cost of all
property, plant and equipment to the expected residual
value by equal annual instalments over their estimated
useful economic lives. All items of plant and equipment
are deemed to have immaterial residual values. The rates
generally applicable are:
Freehold property
Leasehold improvements
Computer equipment
Office equipment
Datacentre equipment
3.33% per annum
25% per annum
Between 20% and
50% per annum
Between 10% and
25% per annum
Between 6% and
10% per annum
Impairment testing of goodwill, other intangible
assets and property, plant and equipment
For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). As a
result, some assets are tested individually for impairment
and some are tested at cash-generating unit level.
Goodwill is allocated to those cash-generating units
that are expected to benefit from synergies of the related
business combination and represent the lowest level
within the Group at which management monitors the
related cash flows.
Goodwill, other individual assets or cash-generating units
that include goodwill, and those intangible assets not
yet available for use are tested for impairment at least
annually. All other individual assets or cash-generating
units are tested for impairment whenever events or
changes in circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised for the amount by
which the asset's or cash-generating unit's carrying
amount exceeds its recoverable amount. The recoverable
amount is the higher of fair value, reflecting market
conditions less costs to sell, and value in use based on
an internal discounted cash flow evaluation. Impairment
losses recognised for cash-generating units, to which
goodwill has been allocated, are credited initially to the
carrying amount of goodwill. Any remaining impairment
loss is charged pro rata to the other assets in the cash
generating unit. With the exception of goodwill, all
assets are subsequently reassessed for indications that
an impairment loss previously recognised may no longer
exist.
Details of the key assumptions and judgements are shown
in note 12.
Leased assets
In accordance with IAS 17 Leases, the economic ownership
of a leased asset is deemed to have been transferred to
the Group (the lessee) if the Group bears substantially
all the risks and rewards related to the ownership of the
leased asset. The related asset is recognised at the time
of inception of the lease at the fair value of the leased
asset or, if lower, the present value of the minimum lease
payments plus incidental payments, if any, to be borne by
the lessee. A corresponding amount is recognised as a
finance lease liability.
The interest element of leasing payments represents a
constant proportion of the capital balance outstanding
and is charged to the income statement over the period
of the lease.
All other leases are regarded as operating leases and the
payments made under them are charged to the income
statement on a straight line basis over the lease term.
Lease incentives are spread over the term of the lease.
Where a lease is for land and buildings there is a split
between land and buildings in the consideration as to
whether there is a finance lease within the lease.
Taxation
Current tax is the tax currently payable based on taxable
profit for the year. Deferred income taxes are calculated
using the liability method on temporary differences.
Deferred tax is generally provided on the difference
between the carrying amounts of assets and liabilities and
their tax bases. However, deferred tax is not provided
iomart group plc Annual Report 2009
Notes to the Financial Statements. Year ended 31March 2009.
29
on the initial recognition of goodwill, nor on the initial
recognition of an asset or liability unless the related
transaction is a business combination or affects tax or
accounting profit. Deferred tax on temporary differences
associated with shares in subsidiaries is not provided if
reversal of these temporary differences can be controlled
by the Group and it is probable that reversal will not
occur in the foreseeable future. In addition, tax losses
available to be carried forward as well as other income
tax credits to the Group are assessed for recognition as
deferred tax assets.
Deferred tax liabilities are provided in full, with no
discounting. Deferred tax assets are recognised to the
extent that it is probable that the underlying deductible
temporary differences will be able to be offset against
future taxable income. Current and deferred tax assets
and liabilities are calculated at tax rates that are expected
to apply to their respective period of realisation, provided
they are enacted or substantively enacted at the balance
sheet date.
Changes in deferred tax assets or liabilities are recognised
as a component of tax expense in the income statement,
except where they relate to items that are charged
or credited directly to equity (such as share based
remuneration) in which case the related deferred tax is
also charged or credited directly to equity.
Financial assets
All financial assets are recognised when the Group
becomes a party to the contractual provisions of the
instrument. Financial assets other than those categorised
as at fair value through the income statement are
recognised at fair value plus transaction costs on initial
recognition. Financial assets categorised as at fair value
through the income statement are recognised initially at
fair value with transaction costs expensed through the
income statement.
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted
in an active market. Trade and other receivables
are classified as loans and receivables. Loans and
receivables are measured subsequent to initial recognition
at amortised cost using the effective interest method,
less provision for impairment. Any change in their
value through impairment or reversal of impairment is
recognised in the income statement.
Provision against trade and other receivables is made
when there is objective evidence that the Group will not
be able to collect all amounts due to it in accordance
with the original terms of those receivables. The amount
of the write-down is determined as the difference between
the asset's carrying amount and the present value of
estimated future cash flows. An assessment for impairment
is undertaken at least at each balance sheet date.
Financial derivatives such as forward foreign exchange
contracts are carried at fair value through the income
statement.
A financial asset is derecognised only where the
contractual rights to the cash flows from the asset
expire or the financial asset is transferred and that
transfer qualifies for derecognition. A financial asset is
transferred if the contractual rights to receive the cash
flows of the asset have been transferred or the Group
retains the contractual rights to receive the cash flows
of the asset but assumes a contractual obligation to pay
the cash flows to one or more recipients. A financial
asset that is transferred qualifies for derecognition if the
Group transfers substantially all the risks and rewards of
ownership of the asset, or if the Group neither retains
nor transfers substantially all the risks and rewards of
ownership but does transfer control of that asset.
Financial liabilities
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Group
becomes a party to the contractual provisions of the
instrument. Financial liabilities categorised as at fair
value through profit or loss are recorded initially at fair
value, all transaction costs are recognised immediately
in the income statement. All other financial liabilities are
recorded initially at fair value, net of direct issue costs.
Financial liabilities categorised as at fair value through
profit or loss are re-measured at each reporting date at
fair value, with changes in fair value being recognised in
the income statement. All other financial liabilities are
recorded at amortised cost using the effective interest
method, with interest-related charges recognised as an
expense in finance cost in the income statement. Finance
charges, including premiums payable on settlement or
redemption and direct issue costs, are charged to the
income statement on an accruals basis using the effective
interest method and are added to the carrying amount of
www.iomart.com
30
Notes to the Financial Statements. Year ended 31March 2009.
the instrument to the extent that they are not settled in the
period in which they arise.
Financial liabilities are categorised as at fair value through
profit and loss on initial recognition. A financial liability
is derecognised only when the obligation is extinguished,
that is, when the obligation is discharged or cancelled or
expires.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and
demand deposits, together with other short-term, highly
liquid investments that are readily convertible into known
amounts of cash and which are subject to an insignificant
risk of changes in value. Where there is a legal right to
offset cash at bank against bank overdrafts held with the
same financial institution, cash and cash equivalents are
shown net in the Consolidated Balance Sheet.
Dividends
Dividend distributions payable to equity shareholders are
included in “other short term financial liabilities” when the
dividends are approved in general meeting prior to the
balance sheet date. Scrip dividends are recognised at the
fair value of the cash alternative.
Equity
Equity comprises the following:
• “Share capital” represents the nominal value of
equity shares.
• “Own shares” represents the amount of the
company’s own equity shares, plus attributable
transaction costs, that is held by the company as
treasury shares.
• “Share premium” represents the excess over
nominal value of the fair value of consideration
received for equity shares, net of expenses of the
share issue.
• “Capital redemption reserve” represents set aside
reserves in relation to previous redemption of own
shares.
• “Retained earnings” represents retained profits.
Share-based payment
All share-based payment arrangements granted after 7
November 2002 that had not vested prior to 1 April 2005
are recognised in the financial statements. All share-based
payment arrangements in the Group are equity settled.
All goods and services received in exchange for the grant
of any share-based payment are measured at their fair
values. Where employees are rewarded using share-
based payments, the fair values of employees’ services
are determined indirectly by reference to the fair value of
the instrument granted to the employee. This fair value is
appraised at the grant date and excludes the impact of
non-market vesting conditions (for example, profitability
and sales growth targets).
All equity-settled share-based payments are ultimately
recognised as an expense in the income statement with a
corresponding credit to “Profit and loss reserve”.
If vesting periods or other non-market vesting conditions
apply, the expense is allocated over the vesting period,
based on the best available estimate of the number
of share options expected to vest. Estimates are
subsequently revised if there is any indication that the
number of share options expected to vest differs from
previous estimates. Any cumulative adjustment prior
to vesting is recognised in the current period. No
adjustment is made to any expense recognised in prior
periods if share options ultimately exercised are different
to that estimated on vesting.
Upon exercise of share options the proceeds received
net of attributable transaction costs are credited to share
capital, and where appropriate share premium.
Segmental reporting
The Group’s primary reporting format is business segments
and its secondary format is geographical segments. The
Group is primarily UK based and focused with sales to
and costs in relation to other countries accounting for
less than 10% of the Group’s total. All assets are located
in the UK. Therefore in line with IAS 14 para 69, no
geographical breakdown is provided.
Employee benefits
The Group operates a stakeholder pension scheme
and also contributes to a number of personal pension
schemes on behalf of executive directors and some senior
employees. The pension costs charged against operating
profit are the contributions payable to the schemes in
respect of the accounting period.
Restatement of comparative figures
During the year the Group disposed of its Ufindus
operation and consequently, Ufindus has been treated as
a discontinued operation within these financial statements.
As a result the comparative amounts for the 2008
financial year for both the income statement and cashflow
statement have been restated to remove the effect of the
iomart group plc Annual Report 2009
Notes to the Financial Statements. Year ended 31March 2009.
31
3. SEGMENTAL ANALYSIS
Following an internal reorganisation resulting from the
disposal of the non-core online directory business,
Ufindus, the Netintelligence division was merged with the
Hosting division, where previously it had been disclosed
as a separate business segment. Consequently, as at 31
March 2009, the Group is primarily organised into two
main business segments, which are detailed below.
• Easyspace – a range of managed web hosting
services and domain name registration services.
• Hosting – provision of managed hosting facilities
and services, through a network of owned data
centres.
There are no other services provided by the Group which
would constitute a separately disclosable segment.
discontinued operation. In addition the Ufindus operation
has been shown as discontinued within the segmental
analysis at note 3.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other
key sources of estimation uncertainty at the balance sheet
date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below.
Impairment of goodwill
Determining whether goodwill is impaired requires an
estimation of the value in use of the cash-generating
units to which goodwill has been allocated. The value
in use calculation requires the entity to estimate the
future cash flows expected to arise from the cash-
generating unit and to select a suitable discount rate
in order to calculate the present value. Full details of
the assumptions used in the calculation are disclosed
in note 12.
Recoverability of deferred consideration on
disposal of subsidiary
In assessing the recoverability of the full amount of
deferred consideration receivable in relation to the
disposal of Ufindus Limited an assumption has been
made that no warranty claim that could reduce this
amount will arise.
Estimated accruals
Estimates have been made of a number of accruals
relating to premises used in the Group’s operations.
These estimates are based on previous experience of
costs incurred in similar situations.
Deferred tax
The Group has substantial tax losses available to
offset future taxable profits. In assessing the amount
of deferred tax to be recognised as an asset the
Group has estimated future profitability of the relevant
operating unit.
www.iomart.com
32
Notes to the Financial Statements. Year ended 31March 2009.
Primary Reporting Segment – Business
Assets and Liabilities by Primary
Segment
2009
2008
Easyspace
Hosting
Discontinued operations
Net Assets
(Liabilities)
Liabilities
£000’s
£000’s
11,029
(1,790)
8,993
(7,424)
3,485
-
23,507
(9,214)
(826)
(978)
22,681
(10,192)
The assets and liabilities of each business segment are derived using the same classifications as management reporting, excluding inter-
segment balances.
Net Assets
(Liabilities)
£000’s
11,317
8,021
-
19,338
14,053
33,391
Total Assets
£000’s
12,963
15,624
4,519
33,106
23
33,129
Total Assets
£000’s
13,107
15,445
-
28,552
15,031
43,583
Liabilities
£000’s
(1,934)
(6,631)
(1,034)
(9,599)
(849)
(10,448)
Group assets
Non-current assets acquired
in the period by Primary Segment
Easyspace
Hosting
Continuing operations
Discontinued operations
Revenue by Primary Segment
Easyspace
Hosting
Continuing operations
Discontinued operations
Profit by Primary Segment
Easyspace
Hosting
Group overheads
Group interest and tax
Total continuing
Gain on disposal
Discontinued operations
Profit for the year
assets
Tangible
2009
Intangible
non-current non-current
assets
acquired in acquired in
period
£000’s
36
242
278
93
371
period
£000’s
70
1,453
1,523
7
1,530
Total
£000’s
106
1,695
1,801
100
1,901
assets
Tangible
2008
Intangible
non-current non-current
assets
acquired in acquired in
period
£000’s
-
261
261
381
642
period
£000’s
53
594
647
133
780
External
£000’s
7,224
4,573
11,797
3,321
15,118
2009
Internal
£000’s
-
572
572
-
572
Total
£000’s
7,224
5,145
12,369
3,321
15,690
External
£000’s
2008
Internal
£000’s
6,320 -
1,796
8,116
11,933
20,049
524
524
-
524
2009
Share based
payments,
2008
Share based
payments,
Total
£000’s
53
855
908
514
1,422
Total
£000’s
6,320
2,320
8,640
11,933
20,573
depreciation & Operating
EBITDA amortisation (loss)/profit
£000’s
£000’s
£000’s
2,105
(38)
2,143
(1,851)
(1,062)
(789)
(1,903)
(231)
(1,672)
(1,649)
(1,331)
(318)
(283)
(1,932)
12,598
516
11,182
(1,331)
-
(99)
(1,430)
(318)
12,598
615
12,895
EBITDA
£000’s
1,996
(1,733)
(1,710)
(1,447)
(1,447)
-
2,554
1,107
£000’s
(18)
(659)
(143)
(820)
depreciation & Operating
amortisation (loss)/profit
£000’s
1,978
(2,392)
(1,853)
(2,267)
477
(1,790)
-
2,143
353
(820)
-
(411)
(1,231)
Group overheads (including share based payments), interest and tax are not allocated to segments.
iomart group plc Annual Report 2009
Notes to the Financial Statements. Year ended 31March 2009.
33
4.OPERATING COSTS
The profit for the year from total operations is stated after charging the following
operating costs:
Staff cost excluding development costs capitalised and research and
development costs written off the income statement
Depreciation of property plant and equipment
- Owned assets (continuing operations: £787,000; discontinued operations: £34,000)
- Leased assets
Property, plant and equipment hire
- Land and buildings
- Plant and machinery
Amortisation of intangible assets (continuing operations: £141,000; discontinued operations: £66,000)
R&D written to income statement
Marketing and sales
Infrastructure
Provision for doubtful debts
Premises and office
Auditors’ remuneration
- Fees payable for the audit of the consolidation and the parent company accounts
- Fees payable for audit of subsidiaries, pursuant to legislation
- Tax compliance fees
- Corporate finance and advisory transactions
2009
£’000
2008
£’000
9,808
10,249
821
172
1,078
57
207
56
955
188
56
2,640
611
206
1,406
53
271
92
768
448
553
2,171
2009
£’000
2008
£’000
21
19
12
22
74
21
28
11
14
74
www.iomart.com
34
Notes to the Financial Statements. Year ended 31March 2009.
5. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
Directors’ emoluments
Aggregate emoluments
Pension contributions to personal money purchase schemes
Share based payments
Emoluments payable to the highest paid director are as follows:
Aggregate emoluments
Pension contributions to personal money purchase schemes
2009
£’000
849
35
192
307
15
2008
£’000
1,095
29
143
246
14
During the year the company made personal pension contributions to the personal pension schemes of 3 directors (2008: 3).
The aggregate amount of gains realised by directors on the exercise of share options during the year was nil (2008: £nil).
The detailed numerical analysis of directors’ remuneration and share options is included in the report of the board to the members on
directors’ remuneration on pages 10 to 12.
Average number of persons employed by the Group (including directors):
Technical
Customer services
Sales and marketing
Administration
Number of persons employed by the Group at the year end
Technical
Customer services
Sales and marketing
Administration
Continuing
operations
2009
£’000
Discontinued
operations
2009
£’000
Staff costs of the Group during the year in respect of
employees and directors were:
Wages and salaries
Social security costs
Other pension costs
Share based payments
4,274
476
56
231
5,037
4,613
532
-
-
5,145
No.
51
32
86
35
204
48
23
28
26
125
No.
36
78
231
55
400
38
72
277
60
447
Total
2009
£’000
2008
£’000
8,887
1,008
56
231
9,705
978
29
143
10,182 10,855
Included within the above staff costs from discontinued operations are management incentive payments totalling £3,231,000 (see note
10) which related to the disposal of the discontinued operations.
The Group operates a stakeholder pension scheme and also contributes to a number of personal pension schemes on behalf of
executive directors and some senior employees. In the case of executive directors, details of the pension arrangements are given
within the Directors’ Remuneration Report on pages 10 to 12. In the case of senior employees, pension contributions to individuals’
personal pension arrangements are payable by the Group at a rate equal to the contribution made by the senior employee subject to
a maximum employer contribution of 5% of basic salary.
iomart group plc Annual Report 2009
6. NET FINANCE COST
Finance income:
Bank interest receivable
Finance expenses:
Bank overdraft and other borrowings
Finance leases
Net finance cost
7. DIVIDENDS ON SHARES CLASSED AS EQUITY
Proposed
Equity dividends on ordinary shares of 0.3p per share (2008: nil)
Notes to the Financial Statements. Year ended 31March 2009.
35
2009
£’000
497
497
(26)
(23)
(49)
448
2008
£’000
73
73
(96)
(28)
(124)
(51)
2009
£’000
2008
£’000
291
-
www.iomart.com
36
Notes to the Financial Statements. Year ended 31March 2009.
8. TAXATION
Research and development tax credit write-off
Tax charge for the year
Deferred tax (charge)/credit
Taxation (charge)/credit for the year
2009
£’000
-
-
(731)
(731)
2008
£’000
(53)
(53)
581
528
The Group has a deferred tax asset which has been recognised in respect of tax losses within one of the subsidiary companies, which has
generated taxable profits and is expected to continue to do so.
The differences between the total current tax shown above and the amount calculated by applying the standard rate of UK corporation
tax to the profit/(loss) before tax is as follows:
Profit/(loss) before tax
Tax charge/(credit) @ 28% (2008 – 30%)
Expenses not deductible for tax purposes
Research and development tax credit write-off
Tax effect of share based remuneration
Movement in other deferred tax not recognised
Gain on disposal of subsidiary undertaking not subject to corporation tax
Non-taxable income on discontinued operations
Consolidation adjustments
Utilisation of tax losses
Depreciation in excess of capital allowances
Tax losses carried forward
Reduction in tax losses recognised
2009
£’000
11,913
3,336
30
-
25
(12)
(3,527)
(77)
(36)
(9)
-
207
794
2008
£’000
(175)
(53)
16
53
(88)
26
-
-
(8)
(473)
(1)
-
-
Taxation charge/(credit) for the year
731
(528)
The weighted average applicable tax rate for the year ended 31 March 2009 was 28% (2008: 30%)
9. DEFERRED TAX
The Group had recognised deferred tax assets, liabilities and potential unrecognised deferred tax assets as follows:
2009
Recognised Unrecognised
£’000
£’000
2008
Recognised Unrecognised
£’000
£’000
Tax losses carried forward
Share based remuneration
Deferred tax on acquired assets with no capital allowances
Deferred tax
1,590
79
(1,649)
20
3,270
-
-
3,270
2,384
205
(1,763)
826
2,192
-
-
2,192
iomart group plc Annual Report 2009
Notes to the Financial Statements. Year ended 31March 2009.
37
9. DEFERRED TAX (CONTINUED)
The movement in the deferred tax account during the year was:
Tax losses carried
forward
£’000
Share based
remuneration
£’000
Deferred tax on
acquired assets
with no capital
allowances
£’000
Opening balance
(Charged)/credited to income statement
Charged directly to equity
Closing balance
2,384
(794)
-
1,590
205
(51)
(75)
79
(1,763)
114
-
(1,649)
Total
£’000
826
(731)
(75)
20
The deferred tax asset in relation to tax losses carried forward arises from the unutilised tax losses of the hosting trade. The deferred tax
asset has been recognised in line with future projections of the hosting company over a three year period. The basis of these projections
are:
• The consistent success of the sales teams in generating new business
• Expectations about the retention of customers
• Continued success in achieving a particular product mix and maintaining price yield
Based on the current profitability of the hosting company, an assessment of projections and the expectations of sustainable profits in future
years, a deferred tax asset in relation to the utilisation of these losses is recognised in line with IAS, ’12 Income Taxes’.
The deferred tax asset in relation to share based remuneration arises from the anticipated future tax relief on the exercise of share options.
During the year share options were exercised on which the related £75,000 deferred tax asset had previously been recognised directly
in equity and therefore has resulted in a movement in retained earnings.
The deferred tax on acquired assets arises from the datacentre equipment acquired through the acquisition of Ezee DSL Limited on which
depreciation is charged but on which there are no capital allowances available.
10. DISCONTINUED OPERATIONS
The Group announced on 9 July 2008 the sale of the Ufindus business unit. The Ufindus operation represents an identifiable division
of the Group and as such has been disclosed as a discontinued operation for the year ended 31 March 2009. A single amount is
shown on the consolidated income statement representing the post-tax result of the discontinued operation for the period until disposal.
Additionally the post-tax profit arising from the disposal of the operation has been recognised within the Discontinued Operations section
of the consolidated income statement.
The table below provides further detail of the amounts shown in the income statement.
Discontinued operation financial performance
Revenue
Cost of sales
Gross profit
Administrative expenses
Profit on disposal before taxation
Finance costs
Profit from discontinued operation before taxation
Taxation
Profit from discontinued operation after taxation
Period to 9
July 2008
£’000
3,321
(521)
2,800
(2,284)
516
-
516
-
516
Year to 31
March 2008
£’000
11,933
(1,581)
10,352
(8,209)
2,143
(2)
2,141
-
2,141
www.iomart.com
38
Notes to the Financial Statements. Year ended 31March 2009.
10. DISCONTINUED OPERATIONS (CONTINUED)
Disposal of discontinued operation
Total consideration
Payment received to settle intercompany debt
Net consideration for shares
Less: Assets associated with discontinued operations
Costs associated with disposal
- Management incentive payments (including employers’ NIC)
- Professional fees
- Other expenses and provisions
Profit on disposal before taxation
Taxation
Profit on disposal after taxation
Note
2009
£’000
5
(3,231)
(643)
(435)
2009
£’000
20,006
(2,347)
17,659
(752)
(4,309)
12,598
-
12,598
During the year the Ufindus business unit contributed £463,000 (2008: £2,702,000) to the Group’s net operating cash flows, paid
£99,000 (2008: £496,000) in respect of investing activities and paid £20,000 (2008: £9,000) in respect of financing activities.
A profit of £12,598,000 arose on the disposal of the Ufindus business unit as noted above. Of the total consideration, £2,000,000 was
placed into escrow against warranty claims. In January 2009, £1,000,000 was released as planned and subject to any warranty claims
the remainder will be released in July 2010. Amounts held in escrow accrue interest at prevailing market rates and the Group is due to
receive such interest on any sums released under these escrow arrangements.
Management incentive payments to current and former directors of the Group totalling £3,231,000 were incurred in respect of the
disposal as follows:
Management incentive payments
A.MacSween
R.Logan
S.Forrest
M.Hallam
Bonus
£’000
100
50
1,357
1,357
2,864
Employers'
NIC
£’000
13
6
174
174
367
Total
£’000
113
56
1,531
1,531
3,231
The bonus amounts, excluding employers’ NIC, paid to A.MacSween and R.Logan are also shown within the Directors’ Remuneration
report.
In addition professional fees of £643,000 and other expenses and provisions of £435,000 were incurred resulting in total costs
associated with the disposal of £4,309,000.
A reconciliation of the profit on disposal to the cash flow from the disposal is given in the table below.
Receipt from disposal of discontinued operations
Profit on disposal after taxation
Payment received to settle intercompany debt
Deferred consideration not yet received
Assets associated with discontinued operations
Costs associated with disposal not yet paid
Cash inflow from disposal of discontinued operations
iomart group plc Annual Report 2009
£’000
12,598
2,347
(1,000)
752
538
15,235
Notes to the Financial Statements. Year ended 31March 2009.
39
11. 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 shares held in treasury. Fully 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 and the dilutive potential ordinary shares relating to share options.
Continuing operations
Loss from continuing operations for the financial year and basic earnings
attributed to ordinary shareholders
2009
£’000
2008
£’000
(1,932)
(1,788)
Weighted average number of ordinary shares:
For basic earnings per share
Exercise of share options
For diluted earnings per share
Basic earnings per share
Fully diluted earnings per share
Discontinued operations
Profit from discontinued operations for the financial year and basic earnings
attributed to ordinary shareholders
Profit on disposal of discontinued operations
Total profit from discontinued operations
Weighted average number of ordinary shares:
For basic earnings per share
Exercise of share options
For diluted earnings per share
Basic earnings per share
Fully diluted earnings per share
Total operations
Profit for the financial year and basic earnings attributed to ordinary shareholders
Weighted average number of ordinary shares:
For basic earnings per share
Exercise of share options
For diluted earnings per share
Basic earnings per share
Fully diluted earnings per share
No
000
99,183
-
99,183
(1.95)p
(1.95)p
2009
£’000
516
12,598
13,114
No
000
No
000
99,458
-
99,458
(1.80)p
(1.80)p
2008
£’000
2,141
-
2,141
No
000
99,183
902
100,085
99,458
1,759
101,217
13.22p
13.10p
2009
£’000
11,182
No
000
99,183
902
100,085
11.27p
11.17p
2.15p
2.12p
2008
£’000
353
No
000
99,458
1,759
101,217
0.35p
0.35p
For periods where the Group made a loss, there was no dilutive effect from the potential exercise of options.
www.iomart.com
40
Notes to the Financial Statements. Year ended 31March 2009.
12. INTANGIBLE ASSETS
Cost
At 1 April 2007
Additions
Development cost capitalised
At 31 March 2008
Accumulated amortisation
At 1 April 2007
Charge for the year
At 31 March 2008
Carrying amount
At 31 March 2008
At 31 March 2007
Goodwill Development
costs
£’000
£’000
18,525
-
-
18,525
-
-
-
18,525
18,525
422
-
606
1,028
(112)
(247)
(359)
669
310
2008
Software
£’000
240
36
-
276
(201)
(24)
(225)
51
39
Domain
Names
£’000
-
-
-
-
-
-
-
-
-
Goodwill Development
costs
£’000
£’000
2009
Software
£’000
Domain
Names
£’000
Cost
At 1 April 2008
Additions
Development cost capitalised
Derecognised on disposal of subsidiary
At 31 March 2009
Accumulated amortisation
At 1 April 2008
Derecognised on disposal of subsidiary
Charge for the year
At 31 March 2009
Carrying amount
At 31 March 2009
At 31 March 2008
18,525
-
-
(1,975)
16,550
-
-
-
16,550
18,525
1,028
-
318
(867)
479
(359)
378
(188)
(169)
310
669
276
22
-
(77)
221
(225)
45
(19)
(199)
22
51
-
31
-
-
31
-
-
-
-
Total
£’000
19,187
36
606
19,829
(313)
(271)
(584)
19,245
18,874
Total
£’000
19,829
53
318
(2,919)
17,281
(584)
423
(207)
(368)
31
16,913
-
19,245
All amortisation and impairment charges are included in the depreciation, amortisation and impairment of non-financial assets
classification, which is disclosed as administration expenses in the income statement. On 9 July 2008 the online directory business Ufindus
was disposed of and the associated goodwill of £1,975,000 has been deducted from the carrying value.
During the year, goodwill was reviewed for impairment in accordance with IAS 36 “Impairment of Assets”. No impairment charges (2008:
nil) arose as a result of this review.
For this review goodwill was allocated to individual Cash Generating Units (CGU) on the basis of the Group’s operations. During the
year, the CGUs of Internetters, Nicnames and Easyspace were amalgamated under the Easyspace brand. The carrying value of goodwill
by each CGU is as follows:
iomart group plc Annual Report 2009
12. INTANGIBLE ASSETS (CONTINUED)
Cash Generating Units (CGU)
Easyspace
Ufindus
Hosting
Notes to the Financial Statements. Year ended 31March 2009.
41
2009
£’000
12,314
-
4,236
16,550
2008
£’000
12,314
1,975
4,236
18,525
No goodwill in the Group is attributable to Netintelligence.
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow
projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period
are extrapolated using the estimated growth rates stated below.
The growth rates and margins used to estimate future performance are based on past performance and the experience of growth rates.
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.
The assumptions used for the CGU included within the impairment reviews are as follows:
Discount rate
Future perpetuity rate
Years for growth
Hosting
12%
2.5%
5
Easyspace
9%
2.5%
5
Based on an analysis of the impairment calculation’s sensitivities to changes in key parametres (growth rate, discount rate and pre-tax
cash flow projections) there was no probable scenario where the CGU’s recoverable amount would fall below its carrying amount.
13. LEASE DEPOSIT
The lease deposit of £884,000 (2008- £884,000) is due to be repaid at the end of the lease which at the earliest is July 2020. The
Group is due to receive interest on the lease deposit at the prevailing market rate.
14. PRINCIPAL SUBSIDIARIES
The following subsidiaries have been consolidated in the Group financial statements:
Ordinary share capital
iomart Limited
iomart Hosting Limited
Netintelligence Limited
iomart Virtual Servers Hosting Limited
Easyspace Datacentres (UK) Limited
Easyspace Limited
Ezee DSL Limited
Internetters Limited
NicNames Limited
Web Genie Internet Limited
Country of
registration
and operation
Scotland
Scotland
Scotland
Scotland
Scotland
England
England
England
England
England
Activity
Dormant
Managed hosting services
Network security
Dormant
Dormant
Webservices
Datacentre services
Webservices
Dormant
Webservices
Owned by the
company
%
100
100
100
100
100
100
99.8
Owned by
subsidiary
undertakings
%
100
100
100
www.iomart.com
42
Notes to the Financial Statements. Year ended 31March 2009.
15. PROPERTY, PLANT AND EQUIPMENT
2008
Freehold
Property
£’000
Leasehold
improve-
ments
£’000
Datacentre
Equipment
£’000
Computer
equipment
£’000
Office
equipment
£’000
Total
£’000
837
-
-
837
-
-
-
521
23
-
544
(367)
(92)
(459)
6,297
283
-
6,580
(48)
(176)
(224)
2,200
435
(33)
2,602
811
39
-
850
10,666
780
(33)
11,413
(1,375)
(471)
(1,846)
(496)
(78)
(574)
(2,286)
(817)
(3,103)
837
85
6,356
756
276
8,310
Cost
At 1 April 2007
Additions in the year
Disposals
At 31 March 2008
Accumulated depreciation
At 1 April 2007
Charge for the year
At 31 March 2008
Carrying amount
At 31 March 2008
At 31 March 2007
837
154
6,249
825
315
8,380
2009
Freehold
Property
£’000
Leasehold
improve-
ments
£’000
Datacentre
Equipment
£’000
Computer
equipment
£’000
Office
equipment
£’000
Total
£’000
837
-
-
837
-
(12)
-
(12)
825
837
544
-
(184)
360
(459)
(46)
159
(346)
14
85
6,580
1,004
-
7,584
(224)
(453)
-
(677)
2,602
416
(1,149)
1,869
(1,846)
(436)
1,036
(1,246)
850
110
(283)
677
11,413
1,530
(1,616)
11,327
(574)
(46)
246
(374)
(3,103)
(993)
1,441
(2,655)
6,907
623
303
8,672
6,356
756
276
8,310
Cost
At 1 April 2008
Additions in the year
Disposals
At 31 March 2009
Accumulated depreciation
At 1 April 2008
Charge for the year
Eliminated on disposal
At 31 March 2009
Carrying amount
At 31 March 2009
At 31 March 2008
The net book value of computer equipment held under finance lease at 31 March 2009 was £91,000 (2008: £225,000).
iomart group plc Annual Report 2009
16. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Provision for impairment
Trade receivables (net)
Other receivables
Prepayments and accrued income
Trade and other receivables
Notes to the Financial Statements. Year ended 31March 2009.
43
2009
£’000
764
(67)
697
233
1,254
2,184
2008
£’000
3,255
(1,608)
1,647
92
1,382
3,121
The carrying amount of trade and other receivables approximates to their fair value, which has been calculated based on expectations
of debt recovery from historic performances feeding into impairment provision calculations. Some of the higher value trade receivables
in the Hosting division are reviewed individually for impairment and judgment made as to any likely impairment based on historic trends
and the latest communication with specific customers. The balance of trade receivables in the Group are individually small in terms of
value, so are considered for impairment by business unit specific provision calculations and are not individually impaired.
To consider the total exposure to credit risks, the Group uses figures net of VAT. At 31 March 2009, £317,000 (2008: £614,000) of
net trade receivables were fully performing. Net trade receivables of £380,000 (2008: £293,000) were past due, but not impaired. The
aging below shows that almost all are less than three months old. Historic performance indicates a high probability of payment for debts
in this aging. Those over three months relate to a small number of larger customers without history of default.
Up to 3 months
Over 3 months but less than 6 months
Over 6 months but less than 1 year
Total unimpaired trade receivables which are past due
17. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Bank overdrafts (note 20)
Cash and cash equivalents
The credit risk on cash and cash equivalents is negligible because the counter parties are banks.
18. TRADE AND OTHER PAYABLES
Trade payables
Other taxation and social security
Deferred grants
Accruals
Deferred income
Trade and other payables
2009
£’000
278
59
43
380
2009
£’000
13,910
-
13,910
2009
£’000
(746)
(476)
-
(1,923)
(2,045)
(5,190)
2008
£’000
273
20
-
293
2008
£’000
1,105
(362)
743
2008
£’000
(792)
(907)
(2)
(1,024)
(2,064)
(4,789)
The carrying amount of trade and other payables approximates to their fair value. Trade payables and accruals are non-interest bearing
and generally mature within three months.
www.iomart.com
44
Notes to the Financial Statements. Year ended 31March 2009.
19. DEFERRED CONSIDERATION
The Group continues to hold a deferred consideration in relation to the acquisition of Ezee DSL Limited. The Group currently owns 99.8%
of the issued share capital of Ezee DSL Limited. Within the provisions of the Investment Agreement, the vendor was issued with a put option
under which it can require iomart Group plc to purchase the remaining 0.2% of Ezee DSL Limited’s share capital in the future. The vendor
also issued a corresponding call option to the Group, under which the Group can require the vendor to sell the remaining 0.2% of Ezee
DSL Limited’s share capital in the future. These options have the same exercise dates and use the same pre-determined calculations to
value the business and, subject to certain obligations which the vendor is required to fulfil, have a minimum value of £4.8m.
The Group believes that the maximum amount which will be paid to acquire the remaining 0.2% of the shares of Ezee DSL is the £4.8m
minimum value which has been agreed within the Investment Agreement and has taken this to be the fair value of the put option held
by the vendor. It is deemed highly probable that this put option will be exercised. The Group believes the value of the call option to be
nil. As it is highly probable that the put option will be exercised, Ezee DSL Limited has been accounted for as a 100% subsidiary with no
minority interest even although the Group is only the registered owner of 99.8% of Ezee DSL Limited as of the balance sheet date.
20. BORROWINGS
Current:
Obligations under finance leases
Bank loan
Current borrowings
Bank overdraft (included in cash and cash equivalents note 17)
Non-current:
Obligations under finance leases
Total non-current borrowings
Total borrowings
2009
£’000
2008
£’000
(148)
-
(148)
(240)
(432)
(672)
-
(362)
(54)
(54)
(187)
(187)
(202)
(1,221)
The carrying amount of trade and other payables approximates to their fair value.
Finance leases
2009
2008
Leases which expire:
Within one year
Within two to five years
Carrying
amount
£’000
54
148
202
Fair value
£’000
54
148
202
Carrying
amount
£’000
240
187
427
Fair value
£’000
240
187
427
The obligations under finance leases are secured by the related assets and are repayable as follows:
Due within one year
Due between one and five years
Capital
£’000
148
54
202
2009
Interest
£’000
9
1
10
Total
£’000
157
55
212
Capital
£’000
240
187
427
2008
Interest
£’000
20
10
30
Total
£’000
260
197
457
iomart group plc Annual Report 2009
Notes to the Financial Statements. Year ended 31March 2009.
45
20. BORROWINGS (CONTINUED)
The Group in its ordinary course of business enters into hire purchase and finance lease agreements to fund or re-finance the purchase
of computer equipment and software. The lease agreements are typically for periods of 2 to 3 years and do not have contingent rent or
escalation clauses. The agreements have industry standard terms and do not contain any restrictions on dividends, additional debt or
further leasing.
The finance lease liability has an effective interest rate of 7.1% (2008: 7.0%). Lease payments are made on a monthly basis. The future
lease obligation of £212,000 (2008: £457,000) has present value of £198,000 (2008: £443,000).
21. OPERATING LEASES
The Group has outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due
as follows:
Within one year
Within two to five years
After five years
2009
2008
Land
and buildings
£’000
1,078
4,311
5,944
11,333
Other
£’000
57
91
-
148
Land
and buildings
£’000
1,324
4,985
7,988
14,297
Other
£’000
46
18
-
64
Lease terms for land and buildings
Operating leases do not contain any contingent rent clauses. None of the operating leases contain renewal of purchase options or
escalation clauses or any restrictions regarding further leasing or additional debt.
22. SHARE CAPITAL
Authorised
At 31 March 2007, 2008, and 2009
Called up, allotted and fully paid
At 31 March 2007
Exercise of options
At 31 March 2008
Exercise of options
At 31 March 2009
Ordinary shares of 1p each
Number of shares
200,000,000
99,432,635
6,667
99,439,302
800,000
100,239,302
£’000
2,000
994
-
994
8
1,002
During the year the company issued an additional 800,000 (2008: 6,667) ordinary shares of 1p each in respect of the exercise of
options, for which a net total of £50,000 (2008: £416) was received.
At 31 March 2009 the company held 3,294,547 (2008: nil) shares in treasury which are accounted for in the Own Shares reserve and
had a nominal value of £32,945 (2008: £nil) and a market value of £1,070,728 (2008: £nil). This represented 3.4% (2008 – nil) of
the issued share capital as at 31 March 2009 excluding treasury shares.
The share capital of iomart Group plc consists of ordinary shares with a par value of 1p. All shares, excluding treasury shares, are equally
eligible to receive dividends and represent one vote at the shareholders' meetings of iomart Group plc. All shares issued at 31 March
2009 are fully paid.
www.iomart.com
46
Notes to the Financial Statements. Year ended 31March 2009.
23. SHARE BASED PAYMENTS
The Group operates the following share based payment employee share option schemes; Enterprise Management Incentive scheme,
Sharesave scheme, a number of other approved schemes and a number of unapproved schemes. All schemes are settled in equity only
and are summarised below.
Vesting period
Maximum term
Performance criteria
Required to remain
in employment
Enterprise Management
Incentive scheme
Up to 3 years
from grant
10 years after date
of grant
As set by Remuneration
Committee
Sharesave scheme
3 years from
grant
6 months after
vesting period
No
Other approved schemes
Between 1 and 3
years from grant
10 years after
date of grant
As set by Remuneration
Committee
Unapproved schemes
3 years from
grant
10 years after
date of grant
As set by Remuneration
Committee
Yes
No
Yes
Yes
The performance criteria as set by the Remuneration Committee are based on the achievement of annual objectives and continuous
employment.
In accordance with the transitional provisions of IFRS, the requirements of IFRS 2 Share Based Payment have not been applied to
equity instruments that were granted before 7 November 2002 or equity instruments that were granted after 7 November 2002 that
had vested before the date of transition, being 1 April 2005. Therefore the following disclosures relate only to awards made after 7
November 2002 that had not vested by 1 April 2005.
During the year, options over 800,000 ordinary shares (2008: 6,667) were exercised and the market price at the exercise date was
46.5p (2008: 67.5p).
iomart group plc Annual Report 2009
Notes to the Financial Statements. Year ended 31March 2009.
47
23. SHARE BASED PAYMENTS (CONTINUED)
As disclosed in note 5, a share based payment charge of £231,000 (2008: £143,000) has been recognised in the income statement
during the year in relation to the above schemes. The fair value of the employee services received is valued indirectly by valuing the
options granted using the Black-Scholes option pricing model, which worked on the following assumptions for the options granted in the
year.
Grant date
Vesting date
Variables used
Share price at grant date
Volatility
Dividend yield
Number of employees
holding options/units
Option/award life (years)
Expected life (years)
Risk free rate
Expectations of meeting
performance criteria
Fair value
Exercise price per share
31-Mar-09
29-Sep-08
31-Mar-10
31-Mar-11
31-Mar-09 31-Mar-10 31-Mar-11 31-Mar-12
06-Oct-08
46.50p
44%
0.00%
10
10
0.5
4.56%
100%
6.18p
46.50p
46.50p
44%
0.00%
10
10
1.5
4.56%
100%
11.08p
46.50p
46.50p
44%
0.00%
10
10
2.5
4.56%
100%
14.53p
46.50p
46.50p
44%
0.00%
3
10
0.5
4.56%
100%
6.18p
46.50p
46.50p
44%
0.00%
3
10
1.5
4.56%
100%
11.08p
46.50p
46.50p
44%
0.00%
3
10
2.5
4.56%
100%
14.53p
46.50p
46.50p
44%
0.00%
3
10
3.5
4.56%
100%
17.32p
46.50p
Grant date
Vesting date
Variables used
Share price at grant date
Volatility
Dividend yield
Number of employees holding options/units
Option/award life (years)
Expected life (years)
Risk free rate
Expectations of meeting performance criteria
Fair value
Exercise price per share
05-Feb-09
30-Sep-09 31-Mar-10 31-Mar-11 31-Mar-12
26.50p
51%
0.00%
1
10
0.6
2.79%
100%
4.49p
26.50p
26.50p
51%
0.00%
1
10
1.2
2.79%
100%
6.01p
26.50p
26.50p
51%
0.00%
1
10
2.2
2.79%
100%
8.24p
26.50p
26.50p
51%
0.00%
1
10
3.2
2.79%
100%
9.95p
26.50p
i) Expected volatility was determined at the date of grant from historic volatility, adjusted for events that were not considered to be reflective
of the volatility of the share price going forward
ii) Risk free rate was calculated based on the average Bank of England zero coupon yields.
www.iomart.com
48
Notes to the Financial Statements. Year ended 31March 2009.
23. SHARE BASED PAYMENTS (CONTINUED)
Details of options and awards outstanding, and a reconciliation of movements in the year in respect of the Company’s ordinary shares
of 1p each, under the various schemes are as follows:
As at 31 March 2009
Details
Options for shares outstanding
Vested
options for
shares not yet
exercisable
Exercise
price
Grant
date
Exercise
date
Expiry
date
31 March
2008
Issued
Forfeited
Exercised Expired 31 March 31 March
2009
2009
Enterprise management incentive scheme
6.25 26/07/2002
6.25 26/07/2002
6.25 26/07/2002
6.25 02/07/2003
6.25 02/07/2003
6.25 02/07/2003
78.50 17/11/2004
74.00 24/08/2006
27/09/2007
50.50
20/12/2007
43.50
20/12/2007
43.50
20/12/2007
43.50
20/12/2007
43.50
20/12/2007
43.50
20/12/2007
43.50
29/09/2008
46.50
29/09/2008
46.50
29/09/2008
46.50
06/10/2008
46.50
06/10/2008
46.50
05/02/2009
26.50
26/07/2002
26/07/2003
26/07/2004
02/07/2004
02/07/2005
02/07/2006
17/11/2007
24/08/2009
27/09/2010
20/12/2007
20/06/2008
20/12/2008
20/06/2009
20/12/2009
20/06/2010
31/03/2009
31/03/2010
31/03/2011
31/03/2009
31/03/2010
05/02/2012
26/07/2012
26/07/2012
26/07/2012
02/07/2013
02/07/2013
02/07/2013
17/11/2014
24/08/2016
27/09/2017
20/12/2017
20/12/2017
20/12/2017
20/12/2017
20/12/2017
20/12/2017
29/09/2018
29/09/2018
29/09/2018
06/10/2018
06/10/2018
05/02/2019
266,666
266,666
266,668
44,583
48,583
54,251
583,818
135,135
85,982
200,000
210,000
210,000
210,000
129,540
10,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
345,700
216,668
211,287
235,923
28,495
100,000
-
-
-
(2)
(667)
(6,331)
(359,297)
(85,135)
-
(50,000)
(50,000)
(50,000)
(50,000)
(29,885)
-
-
-
-
-
-
-
(266,666)
(266,666)
(266,668)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Savings related scheme
76.00
01/03/2006
01/03/2009
01/09/2009
337,565
-
(295,986)
276,886
276,887
276,887
50,000
4,256,182
64,865
914,018
80,460
200,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
104,304
233,334
238,708
214,077
721,505
1,050,000
1,350,000
12,000
-
-
-
-
(3,755,703)
(64,865)
-
(20,115)
(50,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Unapproved schemes
5.00 29/03/2000
5.00 29/03/2000
5.00 29/03/2000
11.75 31/10/2001
78.50 17/11/2004
74.00 24/08/2006
27/09/2007
50.50
20/12/2007
43.50
20/12/2007
43.50
29/09/2008
46.50
29/09/2008
46.50
29/09/2008
46.50
06/10/2008
46.50
06/10/2008
46.50
06/10/2008
46.50
06/10/2008
46.50
05/02/2009
26.50
11/05/2000
11/02/2001
11/02/2002
31/10/2001
17/11/2007
24/08/2009
27/09/2010
20/12/2009
20/06/2010
31/03/2009
31/03/2010
31/03/2011
31/03/2009
31/03/2010
31/03/2011
31/03/2012
30/09/2009
Approved Schemes
44.00 24/01/2001
13.50 26/09/2001
11.75 31/10/2001
Total
Weighted Average Exercise price
24/01/2004
26/09/2004
31/10/2004
iomart group plc Annual Report 2009
29/03/2010
29/03/2010
29/03/2010
31/10/2011
17/11/2014
24/08/2016
27/09/2017
20/12/2017
20/12/2017
29/09/2018
29/09/2018
29/09/2018
06/10/2018
06/10/2018
06/10/2018
06/10/2018
05/02/2019
24/01/2011
26/09/2011
31/10/2011
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44,581
47,916
47,920
224,521
50,000
85,982
150,000
160,000
160,000
160,000
99,655
10,000
345,700
216,668
211,287
235,923
28,495
100,000
-
-
-
44,581
47,916
47,920
224,521
-
-
150,000
160,000
160,000
-
-
-
345,700
-
-
235,923
-
-
41,579
41,579
276,886
-
276,887
-
276,887
-
50,000
-
500,479
-
-
-
914,018
-
60,345
-
150,000
-
104,304
-
233,334
-
238,708
-
214,077
-
721,505
-
- 1,050,000
- 1,350,000
12,000
-
276,886
276,887
276,887
50,000
500,479
-
-
-
-
104,304
-
-
214,077
-
-
-
-
37,500
5,000
23,888
-
-
-
9,522,030 5,062,001
46.06p
56.49p
-
-
-
(4,867,986)
75.95p
-
-
-
(800,000)
6.25p
37,500
5,000
23,888
37,500
-
5,000
-
-
23,888
- 8,916,045 3,224,048
40.32p
44.45p
n/a
Notes to the Financial Statements. Year ended 31March 2009.
49
23. SHARE BASED PAYMENTS (CONTINUED)
As at 31 March 2008
Details
Options for shares outstanding
Vested
options for
shares not yet
exercisable
Exercise
price
Grant
date
Exercise
date
Expiry
date
31 March
2007
Issued Forfeited Exercised Expired
31 March 31 March
2008
2008
Enterprise management incentive scheme
6.25
6.25
6.25
6.25
6.25
6.25
78.50
74.00
50.50
43.50
43.50
43.50
43.50
43.50
43.50
26/07/2002
26/07/2003
26/07/2004
02/07/2004
02/07/2005
02/07/2006
17/11/2007
24/08/2009
27/09/2010
20/12/2007
20/06/2008
20/12/2008
20/06/2009
20/12/2009
20/06/2010
26/07/2002
26/07/2002
26/07/2002
02/07/2003
02/07/2003
02/07/2003
17/11/2004
24/08/2006
27/09/2007
20/12/2007
20/12/2007
20/12/2007
20/12/2007
20/12/2007
20/12/2007
26/07/2012
26/07/2012
26/07/2012
02/07/2013
02/07/2013
02/07/2013
17/11/2014
24/08/2016
27/09/2017
20/12/2017
20/12/2017
20/12/2017
20/12/2017
20/12/2017
20/12/2017
266,666
266,666
266,668
44,583
51,916
57,585
583,818
135,135
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
85,982
200,000
210,000
210,000
210,000
129,540
10,000
Savings related scheme
76.00
01/03/2006
01/03/2009
01/09/2009
337,565
-
Unapproved schemes
29/03/2000
5.00
29/03/2000
5.00
29/03/2000
5.00
31/10/2001
11.75
17/11/2004
78.50
24/08/2006
74.00
27/09/2007
50.50
20/12/2007
43.50
20/12/2007
43.50
Approved Schemes
44.00
13.50
11.75
24/01/2001
26/09/2001
31/10/2001
11/05/2000
11/02/2001
11/02/2002
31/10/2001
17/11/2007
24/08/2009
27/09/2010
20/12/2009
20/06/2010
29/03/2010
29/03/2010
29/03/2010
31/10/2011
17/11/2014
24/08/2016
27/09/2017
20/12/2017
20/12/2017
276,886
276,887
276,887
50,000
4,256,182
64,865
-
-
-
-
-
-
-
-
-
914,018
80,460
200,000
24/01/2004
26/09/2004
31/10/2004
24/01/2011
26/09/2011
31/10/2011
37,500
5,000
23,888
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,333)
(3,334)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
266,666
266,666
266,668
44,583
48,583
54,251
583,818
135,135
85,982
200,000
210,000
210,000
210,000
129,540
10,000
266,666
266,666
266,668
44,583
48,583
54,251
583,818
-
-
200,000
-
-
-
-
-
-
337,565
-
276,886
-
276,887
-
276,887
-
-
50,000
- 4,256,182
64,865
-
914,018
-
80,460
-
200,000
-
276,886
276,887
276,887
50,000
4,256,182
-
-
-
-
-
-
-
37,500
5,000
23,888
37,500
5,000
23,888
Total
Weighted Average Exercise price
7,278,697 2,250,000
46.61p
59.50p
-
n/a
(6,667)
6.25p
- 9,522,030
56.49p
n/a
6,934,465
57.87p
24. RELATED PARTY TRANSACTIONS
The only related party transactions in the year were the payments to key management (only directors are deemed to fall into this category)
disclosed in note 5.
25. CONTINGENCIES AND COMMITMENTS
(a) Contingencies
There were no contingent assets or contingent liabilities as at 31 March 2009 (2008: nil).
(b) Commitments
Capital expenditure on property, plant and equipment committed by the Group at 31 March 2009 was £261,000 (2008: £370,000).
www.iomart.com
50
Notes to the Financial Statements. Year ended 31March 2009.
26. RISK MANAGEMENT
The Group finances its operations by raising finance through equity and bank borrowings. No speculative treasury transactions are undertaken
however the Group does from time to time enter into forward foreign exchange contracts to hedge known currency exposures. Financial
assets and liabilities include those assets and liabilities of a financial nature, namely cash, investments, short term receivables/payables and
borrowings.
Financial assets
The Group’s financial assets are:
Deferred consideration on disposal of subsidiary
Trade receivables
Cash and cash equivalents
Lease deposit
Other receivables
Forward foreign exchange contracts
Maturing
One year or less or on demand
Over one year
Financial liabilities
The Group’s financial liabilities are:
Trade payables
Accruals
Finance leasing capital obligations
Bank overdrafts – floating rate
Bank loan – floating rate
Maturing
One year or less or on demand
Over one year
2009
£’000
1,000
697
13,910
884
174
59
16,724
14,840
1,884
16,724
(746)
(1,923)
(202)
-
-
(2,871)
(2,817)
(54)
(2,871)
2008
£’000
-
1,647
1,105
884
92
-
3,728
2,844
884
3,728
(792)
(1,024)
(427)
(362)
(432)
(3,037)
(2,850)
(187)
(3,037)
All of the fixed interest obligations are repayable within one year. An analysis of the maturity of Group debt is given in note 20. For the purposes
of IFRS 7, all Financial assets are classified as ‘Loans and receivables’ and all Financial liabilities are classified as ‘Other financial liabilities’.
Liquidity risk
The Group seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash safely and
profitably.
Interest rates
The interest rate on the Group’s floating rate loan, overdraft and cash at bank is determined by reference to the base rate.
At the year end, the Group had a committed overdraft facility of £nil (2008 - £4,500,000). This facility was cancelled by the Group on 15 July
2008 following the receipt of the disposal proceeds from the sale of Ufindus Limited to British Telecommunications plc.
Currency risk
During the year the Group made payments totalling US$1.4m (2008 – US$1.1m) to acquire domain names for its Easyspace division. The Group
entered into forward exchange contracts to hedge its exposure to the US Dollar arising on these purchases. At the year end, the Group had
outstanding forward contracts under which it was due to purchase $500,000 for a total of £289,000, at an average exchange rate of US$:GBP
of 1.73 over the period to August 2009. The fair value of these currency contracts is estimated to be approximately £348,000 and the gain of
£59,000 has been recognised in the income statement for the year. There were no outstanding foreign exchange contracts at the end of the
preceding year. The Group has no non-monetary assets or liabilities denominated in foreign currencies and the level of monetary assets and
liabilities denominated in foreign currencies is minimal.
iomart group plc Annual Report 2009
Notes to the Financial Statements. Year ended 31March 2009.
51
26. RISK MANAGEMENT (CONTINUED)
Credit risk
The majority of the Group’s customers are small businesses and a significant number of these customers take advantage of the deferred payment
terms offered by the Group, however the revenue recognition policy takes account of this, so that there is no exposure from the deferred payment
terms. Therefore the Group consider that the trade receivables which are stated net of applicable provisions represent the total amount exposed
to credit risk. The Group’s cash at bank is held within the UK clearing banks.
Further information on financial instruments policy and procedures is given in the Directors’ Report.
27. POST BALANCE SHEET EVENT
On 11 May 2009, the Group acquired the entire issued share capital of RapidSwitch Limited for a total cash consideration of £5.25 million.
Of the total consideration of £5.25 million, £4.3 million was paid on completion and a further £0.95 million is payable on 31 March 2010. In
addition, at the date of acquisition, RapidSwitch Limited had approximately £0.8m of net debt. Due to the proximity of the date of approval of
the financial statements to the date of acquisition there has been insufficient time available to enable the identification of all assets, liabilities and
contingent liabilities existing at date of acquisition and to perform a full and reliable fair value exercise thereon. Consequently, full disclosure as
set out in IFRS 3 ‘Business combinations’ has not been given as it is impracticable to provide this information.
www.iomart.com
“I'd like to congratulate you on your marvellous win at
the Storage Awards 2009. It just shows how highly
the readership of Storage Magazine thinks of iomart
Hosting - Data Centre Operator of the Year 2009.”
Stuart Leigh, Publishing Director
iomart group plc Annual Report 2009
53
Holding Company Financial Statements
Year ended 31March 2009
REPORT OF THE INDEPENDENT AUDITOR TO THE
MEMBERS OF IOMART GROUP PLC
We have audited the parent company financial statements of
iomart Group plc for the year ended 31 March 2009 which
comprise the principal accounting policies, the balance sheet
and notes 1 to 14. These parent company financial statements
have been prepared under the accounting policies set out
therein.
We have reported separately on the group financial statements
of iomart Group plc for the year ended 31 March 2009.
This report is made solely to the company’s members, as
a body, in accordance with Section 235 of the Companies
Act 1985. Our audit work has been undertaken so that we
might state to the company’s members those matters we are
required to state to them in an auditor's 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 and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual
Report and the parent company financial statements in
accordance with United Kingdom law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted
Accounting Practice) are set out in the Statement of Directors'
Responsibilities.
Officer's Report, the Finance Director's Report, the Director's
Report, the Statement of Director's Responsibilities, Report of
the Board to the Members on Director's Remuneration and
the Corporate Governance. We consider the implications for
our report if we become aware of any apparent misstatements
or material inconsistencies with the parent company financial
statements. Our responsibilities do not extend to any other
information.
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures in
the parent company financial statements. It also includes an
assessment of the significant estimates and judgments made
by the directors in the preparation of the parent company
financial statements, and of whether the accounting policies
are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all
the information and explanations which we considered
necessary in order to provide us with sufficient evidence to
give reasonable assurance that the parent company financial
statements are free from material misstatement, whether
caused by fraud or other irregularity or error. In forming
our opinion we also evaluated the overall adequacy of the
presentation of information in the parent company financial
statements.
Our responsibility is to audit the parent company financial
statements in accordance with relevant legal and regulatory
requirements and International Standards on Auditing (UK
and Ireland).
Opinion
In our opinion:
We report to you our opinion as to whether the parent company
financial statements give a true and fair view and whether the
parent company financial statements have been properly
prepared in accordance with the Companies Act 1985. We
also report to you whether in our opinion the Directors' Report
is consistent with the parent company financial statements. The
information given in the Directors' Report includes that specific
information presented in the Chairman's Statement, Chief
Executive Officer's Report and the Finance Director's Report. In
addition we report to you if, in our opinion, the company has
not kept proper accounting records, if we have not received all
the information and explanations we require for our audit, or if
information specified by law regarding directors' remuneration
and other transactions is not disclosed.
• the parent company financial statements give a true
and fair view, in accordance with United Kingdom
Generally Accepted Accounting Practice, of the state of
the company's affairs as at 31 March 2009;
• the parent company financial statements have been
properly prepared in accordance with the Companies Act
1985; and
• the information given in the Directors' Report is consistent
with the financial statements.
We read other information contained in the Annual Report
and consider whether it is consistent with the audited
parent company financial statements. This other information
comprises only the Chairman's Statement, the Chief Executive
GRANT THORNTON UK LLP
REGISTERED AUDITOR, CHARTERED ACCOUNTANTS
GLASGOW.
2 June 2009
www.iomart.com
54
Holding Company Financial Statements. Year ended 31March 2009.
FIXED ASSETS
Investments
CURRENT ASSETS
Debtors
Cash at bank
CREDITORS: amounts falling due within one year
NET CURRENT ASSETS
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Own shares
Capital redemption reserve
Share premium account
Profit and loss account
Note
2009
£’000
2008
£’000
4
5
7
9
10
10
10
10
17,129
17,129
13,081
13,577
26,658
(5,400)
21,258
20,033
20,033
11,585
-
11,585
(6,406)
5,179
38,387
25,212
1,002
(678)
1,200
17,583
19,280
994
-
1,200
17,541
5,477
TOTAL EQUITY SHAREHOLDERS’ FUNDS
38,387
25,212
These financial statements were approved by the board of directors on 2 June 2009.
Signed on behalf of the board of directors
Angus MacSween
Director and Chief Executive Officer
iomart group plc Annual Report 2009
Holding Company Financial Statements. Year ended 31March 2009.
55
1. ACCOUNTING POLICIES
The financial statements are prepared in accordance with
applicable United Kingdom accounting standards.
Investments
Investments held as fixed assets are stated at cost less
provision for any permanent diminution in value.
Deferred taxation
Deferred tax is provided in full on timing differences which
result in an obligation at the balance sheet date to pay
more tax, or a right to pay less tax, at a future date, at
rates expected to apply when they crystallise based on
current tax rates and law. Timing differences arise from the
inclusion of items of income and expenditure in taxation
computations in periods different from those in which they
are included in financial statements. Deferred tax assets are
recognised to the extent that it is regarded as more likely
than not that they will be recovered. Deferred tax assets
and liabilities are not discounted.
Leases
Assets obtained under finance leases, which transfer
substantially all the risks and rewards of ownership,
are capitalised at their fair value on acquisition and
depreciated over their estimated useful economic lives.
The finance charges are allocated over the period of the
lease in proportion to the capital element outstanding.
Operating lease rentals are charged to the profit and loss
account in equal annual amounts over the lease term.
Financial instruments
Financial assets are recognised in the balance sheet at the
lower of cost and net realisable value. Provision is made
for diminution in value where appropriate.
Income and expenditure on financial instruments is
recognised on the accruals basis and credited or charged
to the profit and loss account in the financial period to
which it relates.
Pension scheme arrangements
The Group operates a stakeholder pension scheme and
contributes to a number of personal pension schemes on
behalf of executive directors and some senior employees.
No other post retirement benefits are provided to employees.
Pension costs are charged to the profit and loss account in
the period to which they relate.
Share-based payment
All share-based payment arrangements granted after 7
November 2002 that had not vested prior to 1 April 2005
are recognised in the financial statements. All share-based
payment arrangements in the company are equity settled.
All goods and services received in exchange for the grant
of any share-based payment are measured at their fair
values. Where employees are rewarded using share-
based payments, the fair values of employees’ services
are determined indirectly by reference to the fair value of
the instrument granted to the employee. This fair value is
appraised at the grant date and excludes the impact of
non-market vesting conditions (for example, profitability
and sales growth targets).
All equity-settled share-based payments are ultimately
recognised as an expense in the profit and loss account
with a corresponding credit to “Profit and loss reserve”.
If vesting periods or other non-market vesting conditions
apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of
share options expected to vest. Estimates are subsequently
revised if there is any indication that the number of share
options expected to vest differs from previous estimates.
Any cumulative adjustment prior to vesting is recognised in
the current period. No adjustment is made to any expense
recognised in prior periods if share options ultimately
exercised are different to that estimated on vesting.
Upon exercise of share options the proceeds received
net of attributable transaction costs are credited to share
capital, and where appropriate share premium.
Development expenditure
Development expenditure is charged to the profit and loss
account as incurred.
2. PROFIT OF PARENT COMPANY
As permitted by Section 230 of the Companies Act 1985,
the profit and loss account of the parent company is not
presented as part of these financial statements. The parent
company’s profit for the financial period after taxation was
£13,647,000 (2008: £242,000).
www.iomart.com
56
Holding Company Financial Statements. Year ended 31March 2009.
3. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
Staff costs of the company during the year in respect of employees and directors were:
Executive directors’ remuneration
Non-executive directors’ remuneration
Social security costs
Pension contributions to personal money purchase schemes
2009
£’000
2008
£’000
223
110
30
10
373
151
95
22
8
276
The company makes contributions to executive directors’ and some senior employees’ personal defined contribution pension schemes.
These are the only pension arrangements of the holding company.
4. INVESTMENTS HELD AS FIXED ASSETS
The company
Cost
At 1 April 2008
Share based payment
Disposal
Cost at 31 March 2009
Impairment
At 1 April 2008
Charge for the year
Impairment at 31 March 2009
Net book value of Investments at 31 March 2009
Net book value of Investments at 31 March 2008
All of the above investments are unlisted.
The following subsidiaries are included in the company financial statements:
Shares in subsidiary undertakings
£’000
21,533
79
(2,809)
18,803
(1,500)
(174)
(1,674)
17,129
20,033
Country
of registration
and operation
Activity
Ordinary share capital
Owned by
company
%
Owned by
subsidiary
undertakings
%
iomart Limited
iomart Hosting Limited
Netintelligence Limited
iomart Virtual Servers Hosting Limited
Easyspace Datacentres (UK) Limited
Easyspace Limited
Ezee DSL Limited
Internetters Limited
NicNames Limited
Web Genie Internet Limited
Scotland
Scotland
Scotland
Scotland
Scotland
England
England
England
England
England
Dormant
Managed hosting services
Network security
Dormant
Dormant
Webservices
Datacentre services
Webservices
Dormant
Webservices
100
100
100
100
100
100
99.8
-
-
-
-
-
-
-
-
-
100
100
100
iomart group plc Annual Report 2009
Holding Company Financial Statements. Year ended 31March 2009.
57
2009
£’000
299
1,076
49
79
11,578
13,081
2008
£’000
96
-
323
205
10,961
11,585
5. DEBTORS
Prepayments and accrued income
Other debtors
Other taxation and social security
Deferred taxation (note 6)
Amounts owed by subsidiary undertakings
6. DEFERRED TAXATION
The company had recognised deferred tax assets and potential unrecognised deferred tax assets as follows:
2009
Recognised Unrecognised
£’000
£’000
2008
Recognised Unrecognised
£’000
£’000
Share based remuneration
79
-
205
-
The movement in the deferred tax account during the year was:
Balance brought forward
Income statement movement arising during the year
Profit and loss account reserve movement during the year
Balance carried forward
2009
£’000
2008
£’000
205
(51)
(75)
79
-
-
205
205
The deferred tax asset in relation to share based remuneration arises from the anticipated future tax relief on the exercise of share
options.
7. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank loan
Bank overdraft
Trade creditors
Other taxation and social security
Accruals and deferred income
Amounts owed to subsidiary undertakings
2009
£’000
-
-
58
169
824
4,349
5,400
2008
£’000
432
277
342
179
257
4,919
6,406
www.iomart.com
58
Holding Company Financial Statements. Year ended 31March 2009.
8. BORROWINGS
Current:
Bank loan
Bank overdrafts
Total current borrowings
9. SHARE CAPITAL
Authorised
At 31 March 2008 and 2009
Called up, allotted and fully paid
At 31 March 2008
Exercise of options
At 31 March 2009
2009
£’000
-
-
-
2008
£’000
432
277
709
Ordinary shares of 1p each
Number of shares
£’000
200,000,000
2,000
99,439,302
800,000
100,239,302
994
8
1,002
During the year the company issued an additional 800,000 (2008: 6,667) ordinary shares of 1p each in respect of the exercise of
options, for which a net total of £50,000 (2008: £416) was received.
At 31 March 2009 the company held 3,294,547 (2008: nil) shares in treasury which are accounted for in the Own Shares reserve and
had a nominal value of £32,945 (2008: £nil) and a market value of £1,070,728 (2008: £nil). This represented 3.4% (2008 – nil) of
the issued share capital as at 31 March 2009 excluding treasury shares.
The share capital of iomart Group plc consists of ordinary shares with a par value of 1p. All shares, excluding treasury shares, are equally
eligible to receive dividends and represent one vote at the shareholders' meetings of iomart Group plc. All shares issued at 31 March
2009 are fully paid
10. STATEMENT OF MOVEMENT IN RESERVES
Profit for the financial period
Share based payments
Share capital issued
Acquisition of own shares
Deferred tax on share based remuneration
Opening balance
Own
shares
£’000
Capital
redemption
reserve
£’000
Share
premium
account
£’000
Profit
and loss
account
£’000
-
-
-
(678)
-
-
-
-
-
-
-
1,200
-
-
42
-
-
17,541
13,647
231
-
-
(75)
5,477
Closing balance
(678)
1,200
17,583
19,280
iomart group plc Annual Report 2009
Holding Company Financial Statements. Year ended 31March 2009.
59
2009
£’000
13,647
-
50
(678)
231
(75)
13,175
2008
£’000
242
-
-
-
40
205
487
25,212
24,725
38,387
25,212
11. MOVEMENT IN SHAREHOLDERS’ FUNDS
Profit for the financial period
Dividend paid
Share capital issued
Acquisition of own shares
Share based payments in company only
Deferred tax on share based remuneration
Opening shareholders’ funds
Closing shareholders’ funds
12. SHARE BASED PAYMENTS
For details of share based payment awards and fair values see note 23 to the Group financial statements. The Company accounts
recognise the charge for share based payments for the year of £231,000 (2008: £143,000) by:
1) taking the charge in relation to employees of the holding company through the holding company income statement £152,000
(2008: £40,000); and
2) recording an increase to its investment in subsidiaries for the amounts attributable to employees of subsidiaries and recording a
corresponding entry to the profit and loss account reserve £79,000 (2008: £103,000).
13. CONTINGENCIES AND COMMITMENTS
(a) Contingencies
There are no contingent assets or contingent liabilities present as at 31 March 2009 (2008: Nil).
(b) Commitments
There are no commitments present as at 31 March 2009 (2008: Nil).
14. POST BALANCE SHEET EVENT
On 11 May 2009, the Company acquired the entire issued share capital of RapidSwitch Limited for a total cash consideration of £5.25
million. Of the total consideration of £5.25 million, £4.3 million was paid on completion and a further £0.95 million is payable on 31
March 2010. In addition, at the date of acquisition, RapidSwitch Limited had approximately £0.8m of net debt.
www.iomart.com
60
Notice of the 2009 Annual General Meeting
NOTICE IS HEREBY GIVEN that the 2009 annual general
meeting of the Company will be held at Lister Pavilion,
Kelvin Campus, West of Scotland Science Park, Glasgow
G20 0SP on 27 August 2009 at 2.30 pm for the purpose
of considering and, if thought fit, passing the following
resolutions, of which resolutions 1 to 8 (inclusive) will be
proposed as ordinary resolutions and resolutions 9 to 12
(inclusive) will be proposed as special resolutions:-
1 To receive and adopt the financial statements of the
Company and the directors' and auditors' reports
thereon for the year ended 31 March 2009.
2 To approve the report of the board to the members on
directors' remuneration for the year ended 31 March
2009.
3 To reappoint Angus MacSween (who retires by rotation
and, being eligible, offers himself for re-election) as a
director of the Company.
4 To reappoint Richard Logan (who retires by rotation
and, being eligible, offers himself for re-election) as a
director of the Company.
5 To declare a final dividend for the year ended 31
March 2009 of 0.3p per ordinary share, payable on 3
September 2009 to shareholders registered at the close
of business on 12 June 2009.
6 To reappoint Grant Thornton UK LLP, Chartered
Accountants, as auditors of the Company and to
authorise the directors to fix their remuneration.
7 That, for the purposes of section 80(1) of the Companies
Act 1985 (the "Act"), the directors of the Company be
and they are hereby generally and unconditionally
authorised to exercise all of the powers of the Company
to allot relevant securities (within the meaning of section
80(2) of the Act ) subject to the following conditions:-
(a) the maximum nominal amount of relevant securities
to be allotted in pursuance of such authority shall
be £323,149; and
(b) this authority shall expire, unless sooner revoked or
varied by the Company in general meeting, on the
conclusion of the next annual general meeting of the
Company, save that the Company may before such
expiry make an offer or agreement which would or
might require relevant securities to be allotted after
such expiry and the directors may allot relevant
securities in pursuance of such offer or agreement
as if the power conferred hereby had not expired.
8 That, for the purposes of section 80(1) of the Act,
the directors of the Company be and they are hereby
generally and unconditionally authorised to exercise
all of the powers of the Company to allot equity
securities (within the meaning of section 94 of the
Act) in connection with a rights issue in favour of
the holders of ordinary shares in the capital of the
Company (the "Ordinary Shareholders") where the
equity securities respectively attributable to the Ordinary
Shareholders are proportionate (as nearly as may be)
to the respective numbers of Ordinary Shares held by
them up to a maximum nominal amount of £323,149
provided that this authority shall expire, unless sooner
revoked or varied by the Company in general meeting,
on the conclusion of the next annual general meeting
of the Company, save that the Company may before
such expiry make an offer or agreement which would or
might require relevant securities to be allotted after such
expiry and the directors may allot relevant securities
in pursuance of such an offer or agreement as if the
power conferred by this resolution had not expired.
9 That, subject to the passing of resolutions 7 and 8
above, the directors of the Company be and are hereby
empowered pursuant to section 95(1) of the Act to allot
equity securities (within the meaning of sections 94(2)
to 94(5)(A) of the Act) for cash as if section 89(1) of the
Act did not apply to such allotment provided that this
power shall be limited to:-
(a) the allotment of equity securities in connection with
one or more issues by way of rights in favour of
holders of ordinary shares of 1p each in the capital
of the Company ("Ordinary Shares") where the equity
securities respectively attributable to the interest of
all such holders are proportionate (as nearly as may
be practicable) to the respective number of Ordinary
Shares held, or deemed to be held, by them but
subject to such exclusions or other arrangements
as the directors may deem necessary or expedient
in relation to fractional entitlements or any legal,
regulatory or practical problems under the laws of,
or the requirements of any recognised regulatory
body or any stock exchange in, any territory;
(b) the allotment of equity securities pursuant to any
authority conferred upon the directors in accordance
with and pursuant to article 143 of the current
articles of association of the Company (or article
41 of the articles of association proposed to be
adopted by the Company pursuant to resolution 12
below); and
(c) the allotment (otherwise than pursuant to (a) and/
iomart group plc Annual Report 2009
or (b) above) of equity securities up to an aggregate
nominal amount of £48,472, provided that this
authority shall expire, unless sooner revoked or
varied by the Company in general meeting, on
the conclusion of the next annual general meeting
of the Company, save that the Company may
before such expiry make an offer or agreement
which would or might require equity securities to
be allotted after such expiry and the directors may
allot equity securities in pursuance of such offer or
agreement as if the authority conferred hereby had
not expired.
10 That the Company be and is hereby generally and
unconditionally authorised for the purposes of section
166 of the Act (or its successor provision, section 701
of the Companies Act 2006 (the "2006 Act"), once
such provision comes into force) to make one or more
market purchases (within the meaning of section 163(3)
of the Act (or its successor provision, section 693(4) of
the 2006 Act, once such provision comes into force))
on a recognised investment exchange (as defined in
section 163(4) of the Act (or its successor provision,
section 693(5) of the 2006 Act, once such provision
comes into force)) of Ordinary Shares provided that:
(a) the maximum number of Ordinary Shares
hereby authorised to be purchased is 9,694,475
(representing 10% of the Company's issued ordinary
share capital at the date of the notice of this annual
general meeting (excluding shares held by the
Company in treasury));
(b) the minimum price, exclusive of any expenses, which
may be paid for any such Ordinary Share is 1p;
(c) the maximum price, exclusive of any expenses,
which may be paid for any such Ordinary Share
shall be not more than 5% above the average of
the middle market quotations for an Ordinary Share
on the relevant investment exchange on which the
Ordinary Shares are traded for the five business
days immediately preceding the date on which such
Ordinary Share is contracted to be purchased;
(d) unless previously revoked or varied, the authority
hereby conferred shall expire on the conclusion of
the next annual general meeting of the Company;
and
Notice of the 2009 Annual General Meeting
61
(e) the Company may make a contract or contracts for
the purchase of Ordinary Shares under this authority
before the expiry of this authority which would or
might be executed wholly or partly after the expiry
of such authority, and may make purchases of
Ordinary Shares in pursuance of such a contract or
contracts, as if such authority had not expired.
11 That the Company be and is hereby generally and
unconditionally authorised to hold general meetings
(other than annual general meetings) on 14 days' notice
from the date of the passing of this resolution and
expiring at the conclusion of the next annual general
meeting of the Company.
12 That with effect from the close of the annual general
meeting of the Company, the regulations contained
in the document submitted to this meeting and for the
purposes of identification signed by the Chairman as
relative to this resolution be and are hereby approved
and adopted as the new articles of association of the
Company in substitution for and to the exclusion of the
existing articles of association of the Company.
By order of the board
Bruce Hall , Company Secretary
Lister Pavilion, Kelvin Campus,
West of Scotland Science Park,
Glasgow G20 0SP
30 July 2009
www.iomart.com
62
Notice of the 2009 Annual General Meeting
NOTES:
Appointment of Proxy
Communication
1 As a member of the Company you are entitled to
appoint a proxy to exercise all or any of your rights to
attend, speak and vote at a meeting of the Company.
You should have received a proxy form with this notice
of meeting. You can only appoint a proxy using the
procedures set out in the notes to the proxy form. A
proxy need not be a member of the Company.
2 To be effective, the proxy form, and any power of
attorney or other authority under which it is executed
(or a duly certified copy of any such power or
authority), must be deposited at the office of the
Company's registrars, Capita IRG plc, Bourne House,
34 Beckenham Road, Beckenham, Kent, BR3 4TU,
not less than 48 hours (excluding weekends and bank
holidays) before the time for holding the meeting (i.e.
by 2.30pm on Tuesday 25 August 2009) and if not so
deposited shall be invalid.
Entitlement to attend and vote
3 Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, only those members entered in the
Company's register of members at:
• 6.00pm on 25 August 2009; or
•
if this meeting is adjourned, at 6.00pm on the day
two days prior to the adjourned meeting, shall be
entitled to attend and vote at the meeting.
Documents on Display
4 Copies of the service contracts and letters of appointment
of the directors of the Company will be available:
•
for at least 15 minutes prior to the meeting; and
• during the meeting.
In addition, a copy of the articles of association
proposed to be adopted by the Company pursuant
to Resolution 12 (together with a copy marked to
show the changes as between the existing articles of
association of the Company and those proposed new
articles of association of the Company) will be available
for inspection at the registered office of the Company
during normal business hours until the conclusion of
the meeting.
5 Except as provided above, members who wish
to communicate with the Company in relation to
the meeting should do so by post to the Company's
registered office, details of which are below. No other
methods of communication will be accepted.
Address: The Company Secretary, iomart Group plc,
Lister Pavilion, Kelvin Campus, West of Scotland
Science Park, Glasgow G20 0SP
EXPLANATORY NOTES TO THE NOTICE OF ANNUAL
GENERAL MEETING IOMART GROUP PLC
Ordinary Resolutions
Resolutions 1 to 8 are all to be proposed as ordinary
resolutions. This means that for each of those resolutions
to be passed, more than half of the votes cast must be in
favour of the resolution.
Resolution 1 – To receive and adopt the financial
statements for the year ended 31 March 2009 and
the directors' and auditors' reports thereon
For each financial year the directors of the Company must
present the audited financial statements, the directors'
report and the auditors' report on the financial statements
to the shareholders at an annual general meeting.
Resolution 2 – To approve the directors' remuneration
report
to approve
Shareholders are asked
the directors'
remuneration report which may be found in the annual
report on pages 10 to 12. This resolution is an advisory
one and no entitlement to remuneration is conditional on
the resolution being passed.
Resolution 3 and 4 – Re-election of directors
Under articles 83 and 84 of the Company's current
articles of association one third of the directors are
required to retire by rotation at each annual general
meeting. Pursuant to those articles, Mr Angus MacSween
and Mr Richard Logan are required to retire by rotation
at this annual general meeting and, being eligible, offer
themselves for reappointment. The Board is satisfied that
the performance of Mr MacSween and Mr Logan continues
to be effective and demonstrates commitment to their roles
with the Company including commitment of time for Board
iomart group plc Annual Report 2009
Notice of the 2009 Annual General Meeting
63
meetings and other duties required of them. Accordingly,
resolutions 3 and 4 propose the reappointment of Mr
MacSween and Mr Logan.
Brief biographical details of Mr MacSween and Mr Logan
are given below.
Angus MacSween is the Company's Chief Executive
Officer. Angus started his first business selling telephony
systems in 1984. Since selling his first business he has
established, grown and sold 5 more profitable concerns
in the telecoms and internet sector. In December 1998,
Angus founded iomart and has been the driving force
behind the Group's strategic development. Angus'
contributions to the commercial sector were formally
recognised in 2004, when he received the prestigious
Glenfiddich Spirit of Scotland Business Award.
Richard Logan is the Company's Finance Director. Richard
was Finance and Commercial Director of Kingston SCL for
10 years during which time he engineered a management
buy out and subsequent trade sale. He has also held the
posts of Finance Director with ePOINT Group and The
Interactive University and Group Treasurer of Ben Line.
He is a member of The Institute of Chartered Accountants
of Scotland. Richard joined iomart in 2006.
Resolution 5 – To declare a dividend 0.3p per
Ordinary Share
Subject to the provisions of the Companies Acts, the
Company may by ordinary resolution declare dividends,
but no dividend shall exceed the amount recommended
by the Board. The Board recommends the payment of a
final dividend of 0.3p per Ordinary Share, to be payable
to shareholders registered at close of business on 12 June
2009.
Resolution 6 – Re-appointment and remuneration of
auditors
The Company is required at each general meeting at
which financial statements are presented to shareholders
to appoint auditors who will remain in office until the next
such meeting. Grant Thornton UK LLP have expressed
their willingness to continue in office for a further year. In
accordance with company law and corporate governance
best practice, shareholders are also asked to authorise
the directors to determine the auditors' remuneration.
Resolutions 7 and 8 – Authority to authorise the
directors to allot shares
Section 80 of the Companies Act 1985 (the "Act") requires
that the authority of the directors to allot shares shall be
subject to the approval of the shareholders in general
meeting. These resolutions, if passed, would give the
directors general authority to allot shares in the capital of
the Company.
Resolution 7 would give the directors the authority to allot
shares up to an aggregate nominal amount of £323,149,
being approximately one-third of the issued ordinary
share capital of the Company as at the date of the notice
of this meeting (excluding shares held by the Company in
treasury). The Company's issued share capital at the date
of the notice of this meeting is £1,002,393.02 divided into
100,239,302 Ordinary Shares of 1p each. 3,294,547
of such shares are held in treasury and accordingly the
issued share capital of the Company excluding shares
held in treasury is £969,447.55 divided into 96,944,755
Ordinary Shares.
In line with recent guidance issued by the Association
of British Insurers, resolution 8 would give directors the
authority to allot shares in connection with a rights issue
in favour of ordinary shareholders up to an aggregate
nominal amount equal to £323,149 (representing
32,314,900 Ordinary Shares). This amount represents
approximately a further one third of the issued ordinary
share capital of the Company as at the date of the notice
of this meeting (excluding shares held by the Company
in treasury).
There is no present intention to exercise either of the
authorities sought under these resolutions, which will
expire at the conclusion of the Company's annual general
meeting to be held in 2010.
Special Resolutions
Resolutions 9 to 12 will be proposed as special resolutions.
This means that for each of those resolutions to be passed,
at least three-quarters of the votes cast must be in favour
of the resolution.
www.iomart.com
64
Notice of the 2009 Annual General Meeting
Resolution 9 - Disapplication of statutory
pre-emption rights
Resolution 9 gives authority to the directors of the
Company to disapply the provisions of section 89(1)
of the Act. Under that section, if the directors wish to
allot any of the unissued shares for cash the directors
must in the first instance offer those shares to existing
shareholders in proportion to the number of shares held
by such shareholders. An offer of this type is called a
"rights issue" and the entitlement to be offered a new
share is known as a "pre-emption right".
There may be circumstances, however, where it is in
the interests of the Company for the directors to allot
some of the new shares for cash other than by way of a
rights issue. This cannot be done under the Act unless
the shareholders first waive their pre-emption rights.
Resolution 9 (at paragraph (a)) asks shareholders to do
this, but only for new shares equal to 5 per cent. of the
Company's issued ordinary share capital as at the date
of the notice of this meeting (excluding shares held by
the Company in treasury). The directors will be able to
use this power without obtaining further authority from
shareholders before they allot new shares covered by it.
However, by setting the limit of 5 per cent., the interests of
existing shareholders are protected, as their proportionate
interest in the Company cannot, without their agreement,
be reduced by more than 5 per cent. by the issue of new
shares for cash to new shareholders. If the directors wish,
other than by rights issue, to allot for cash new shares
which would exceed this limit, they would first have to ask
the Company's shareholders to waive their pre-emption
rights in respect of that proportion of new shares which
exceeds the 5 per cent. ceiling.
Under the Company's articles of association the Board
may, with the sanction of an ordinary resolution, offer the
holders of shares the right to receive shares, credited as
fully paid, instead of cash in respect of the whole (or some
part, to be determined by the Board) of such dividend or
dividends as are specified by such resolution. Paragraph
(b) of resolution 9 asks shareholders to waive their pre-
emption rights in respect of any such issue of shares.
There are legal, regulatory and practical reasons why it
may not always be possible to issue new shares under
a rights issue to some shareholders, particularly those
resident overseas. To cater for this, resolution 9 (at
paragraph (c)), in authorising the directors to allot new
shares by way of a rights issue, also permits the directors
to make appropriate exclusions or arrangements to deal
with such difficulties.
The power given by resolution 9 will, unless sooner
revoked or renewed by the Company in general meeting,
last until the conclusion of the next annual general
meeting of the Company to be held in 2010.
Resolution 10 – Authority to purchase the Company's
own shares
This resolution grants authority to the Company to make
purchases of up to a maximum of 10% of the issued
ordinary share capital of the Company as at the date of
the notice of this meeting (excluding shares held by the
Company in treasury).
In certain circumstances it may be advantageous for the
Company to purchase its Ordinary Shares. The directors
would use the share purchase authority with discretion
and purchases would only made from funds not required
for other purposes and in light of market conditions
prevailing at the time. In reaching a decision to purchase
Ordinary Shares, your directors would take account of the
Company's cash resources and capital, the effect of such
purchases on the Company's business and on earning per
Ordinary Share.
The directors have no present intention of using the
authority. However, the directors consider that it is in
the best interests of the Company and its shareholders
as a whole that the Company should have flexibility to
buy back its own shares should the directors in the future
consider that it is appropriate to do so.
In relation to any buy back, the maximum price per
Ordinary Share at which the Company is authorised in
terms of resolution 10 to effect that buy back is 5% above
the average middle market price of an Ordinary Share for
the five business days immediately preceding the date on
which the buy back is effected.
The statutory provisions governing buy backs of own shares
are currently contained in, inter alios, sections 163 and
166 of the Companies Act 1985. These provisions are
due to be replaced by substantially equivalent provisions
(principally sections 693 and 701 of the Companies Act
2006) with effect from 1 October 2009. Accordingly,
resolution 10 refers to both the current statutory provisions
and the successor statutory provisions.
iomart group plc Annual Report 2009
Notice of the 2009 Annual General Meeting
65
Resolution 11 – Authority to the Company to
call general meetings other than annual general
meetings on 14 clear days' notice
Resolution 11 proposes the holding of general meetings,
other than annual general meetings, on 14 clear days'
notice to the shareholders. Although the Company's new
articles of association proposed to be adopted pursuant
to resolution 12 below will permit this, regulations are due
to come into force on 3 August 2009 to implement the
Shareholder Rights Directive, which (as currently drafted)
will require the passing of a shareholder resolution to
authorise such notice. Without the passing of resolution
11, the minimum notice under the regulations (as
currently drafted) would be 21 days. In order to maintain
flexibility to call meetings and in common with other
public companies, the directors consider it appropriate to
pass resolution 11 in order to prevent being constrained
by the regulations implementing the Shareholder Rights
Directive. The authority will expire at the conclusion of
the annual general meeting of the Company to be held
in 2010, when it is intended that a similar resolution will
be proposed.
Resolution 12 - Adoption of new articles of
association
Resolution 12 proposes to update the Company's current
articles of association (the "Current Articles") primarily
to take account of the changes in law brought about
by the Companies Act 2006. This updating would be
effected by the adoption of new articles of association.
The Companies Act 2006 is being implemented in
phases, with a number of provisions having already been
implemented and further provisions to be implemented in
the future.
Please note that copies of the New Articles showing the
proposed changes to the Current Articles are available for
inspection at the registered office of the Company, Lister
Pavilion, Kelvin Campus, West of Scotland Science Park,
Glasgow, G20 0SP.
APPENDIX
EXPLANATORY NOTES OF PRINCIPAL CHANGES TO
THE COMPANY'S ARTICLES OF ASSOCATION
1 Articles which duplicate statutory provisions
Provisions in the Current Articles which replicate
provisions contained in the Companies Act 2006 are
in the main amended to bring them into line with the
Companies Act 2006.
2 Form of resolutions
The Current Articles contain a provision that, where
for any purpose an ordinary resolution is required, a
special or extraordinary resolution is also effective and
that, where an extraordinary resolution is required,
a special resolution is also effective. This provision
is being removed as the concept of extraordinary
resolutions has not been retained under the Companies
Act 2006.
The Current Articles enable members to act by written
resolution. Under the Companies Act 2006 public
companies can no longer pass written resolutions.
These provisions have therefore been removed in the
New Articles.
3 Variation of class rights
Accordingly, it is proposed that a new set of articles of
association (the "New Articles") be adopted at the annual
general meeting on 27 August 2009. An explanation
of the changes to the Current Articles proposed to be
made at the annual general meeting are contained in the
Appendix.
The Current Articles contain provisions regarding the
variation of class rights. The proceedings and specific
quorum requirements for a meeting convened to vary
class rights are contained in the Companies Act 2006.
The relevant provisions have therefore been amended
in the New Articles.
In addition to the changes to the articles of association
of the Company to take into account the provisions of
the Companies Act 2006, further changes are proposed
in order to update and simplify the articles of association
of the Company, and to take account of changes in
market practice. Please note that any changes which are
of a minor, technical or clarifying nature have not been
included in the Appendix.
4 Treasury shares
At the time the Current Articles were adopted, UK law
did not have a concept of treasury shares. Accordingly,
in the New Articles, various provisions of the Current
Articles have been updated to reflect the fact that
treasury shares are now a feature of UK company
law.
www.iomart.com
66
Notice of the 2009 Annual General Meeting
5 Uncertificated shares
9 Chairman's casting vote
When the Current Articles were adopted, the
(SI
Uncertificated Securities Regulations 1995
1995/3272) were in force in respect of shares
held in uncertificated form. These regulations were
subsequently replaced by the Uncertificated Securities
Regulations 2001 (SI 2001/3755). Accordingly,
the New Articles refer to those new regulations
and, generally, the New Articles incorporate updated
language reflecting changes in market practice with
respect to uncertificated shares.
6 Convening extraordinary and annual general
meetings
The provisions in the Current Articles dealing with
the convening of general meetings and the length
of notice required to convene general meetings are
being amended to conform to new provisions in the
Companies Act 2006. In particular a general meeting
to consider a special resolution can be convened on
14 days' notice whereas previously 21 days' notice
was required.
7 Vote of members
The New Articles reflect that under the Companies
Act 2006 proxies are entitled to vote on a show of
hands whereas under the Current Articles proxies are
only entitled to vote on a poll. The time limits for the
appointment or termination of a proxy appointment
have been altered by the Companies Act 2006 so
that the Articles cannot provide that they should be
received more than 48 hours before the meeting or
in the case of a poll taken more than 48 hours after
the meeting, more than 24 hours before the time for
the taking of a poll, with weekends and bank holidays
being permitted to be excluded for this purpose. The
New Articles reflect all of these provisions.
8 Remuneration of directors
The Current Articles provided that the remuneration of
the directors (other than executive directors) shall be
such amount as the directors shall from time to time
determine provided that, unless otherwise approved
by the Company in general meeting, the aggregate
of the remuneration of such directors shall not exceed
£100,000 per year. In the New Articles, such figure is
increased to £150,000.
Under the Companies Act 2006 the chairman no
longer has a casting vote at general meetings at which
a show of hands takes place or at which the demand
for a poll is made. The New Articles reflect the new
provisions of the Companies Act 2006.
10 Conflicts of interest
The Companies Act 2006 sets out directors' general
duties which largely codify the existing law but with
some changes. Under the Companies Act 2006,
from 1 October 2008 a director must avoid a
situation where he has, or can have, a direct or
indirect interest that conflicts, or possibly may conflict
with the Company's interest. The requirement is very
broad and could apply, for example, if a director
becomes a director or another company or a trustee
of another organisation. The Companies Act 2006
allows directors of public companies to authorise
conflicts and potential conflicts, where appropriate,
where the articles of association contain a provision
to this effect. The Companies Act 2006 also allows
the articles of association to contain other provisions
for dealing with directors' conflicts of interest to avoid
a breach of duty. The New Articles give the directors
authority to approve such situations and to include
other provisions to allow conflicts of interest to be
dealt with in a similar way to the current position.
There are safeguards which will apply when directors
decide whether to authorise a conflict or potential
conflict. First, only directors who have no interest in
the matter being considered will be able to take the
relevant decision, and secondly, in taking the decision
the directors must act in a way they consider, in good
faith, will be most likely to promote the Company's
success. The directors will be able to impose
limits
or conditions when giving authorisation if they think
this is appropriate.
It is also proposed that the New Articles should
contain provisions relating to confidential information,
attendance at Board meetings and availability
of
Board papers to protect a director being in breach
of duty if a conflict of interest or potential conflict of
interest arises. These provisions will only apply where
the position giving right to the potential conflict has
previously been authorised by the directors.
iomart group plc Annual Report 2009
Notice of the 2009 Annual General Meeting
67
11 Notice of Board Meetings
14 General
Generally the opportunity has been taken to bring
clearer order and language into the New Articles and
in some areas to conform the language of the New
Articles.
Under the Current Articles, when a director is abroad
it shall not be necessary to give notice of a meeting
of the Board to a director who is absent from the
United Kingdom. This provision has been amended,
as modern communications mean that there may be
no particular obstacle to giving notice to a director
who is abroad. This provision has been amended
so that a director is treated as having waived his
entitlement to notice if he is abroad, unless he supplies
the Company with the information necessary to ensure
that he can be provided with the notice by electronic
communication.
12 Electronic web communications
Provisions of the Companies Act 2006 which came
into force in January 2007 enabled companies to
communicate with members by electronic and/or
website communications. The New Articles allow
communications to members in electronic form
and, in addition, they also permit the Company to
take advantage of the new provisions relating to
website communications. Before the Company can
communicate with a member by means of a website
communication, the relevant member must be asked
individually by the Company to agree that the Company
may send or supply documents or information to him
by means of a website and the Company must either
have received a positive response or have received
no response within the period of 28 days beginning
with the date on which the request was sent. The
Company will notify the member (either in writing, or
by other permitted means) when a relevant document
or information is placed on the website and a
member can always request a hard copy version of
the document or information.
13 Directors' indemnities
The Companies Act 2006 has in some areas widened
the scope of the powers of a company to indemnify
directors and to fund expenditure incurred in connection
with certain actions against directors. In addition, the
existing exemption allowing a company to provide
money for the purpose of funding a directors' defence
in court proceedings now expressly covers regulatory
proceedings and applies to associated companies.
www.iomart.com
68
Officers and Professional Advisers
Ian Ritchie
CBE, FREng, FRSE, FBCS, CEng, BSc
Non Executive Chairman
Angus MacSween
Chief Executive Officer
Chris Batterham MA, FCA
Non Executive Director
Sarah Haran
Director
Richard Logan BA, CA
Director
Fred Shedden MA, LLB
Non Executive Director
Bruce Hall BAcc (Hons), CA
Secretary
Registered office
Lister Pavilion, Kelvin Campus, West of Scotland Science Park, Glasgow G20 0SP
Nominated adviser and broker
KBC Peel Hunt Ltd, 111 Old Broad Street, London EC2N 1PH
Bankers
Bank of Scotland, 235 Sauchiehall Street, Glasgow G2 3EY
Solicitors
McGrigors LLP, Pacific House, 70 Wellington Street, Glasgow G2 6SB
Independent auditors
Grant Thornton UK LLP, 95 Bothwell Street, Glasgow G2 7JZ
Registrars
Capita IRG plc, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU
Company Registration Number
SC204560
iomart group plc Annual Report 2009
69
Group Contact Information
iomart Group
) : + 44 (0) 141 931 6400
* : info@iomart.com
www.iomart.com
iomart hosting
* : info@iomarthosting.com
www.iomarthosting.com
Easyspace
* : sales@easyspace.com
www.easyspace.com
iomart group plc Annual Report 2009
www.iomart.com
iomart Group plc
Lister Pavilion, Kelvin Campus,
West of Scotland Science Park, Glasgow, G20 0SP
www.iomart.com
Printed by CCB, FSC certified colour printers.
This report is printed on Elimental Chlorine Free (ECF) paper,
from sustainable managed forests.
Design by iomart group plc.
All rights reserved. © iomart Group plc 2009. All other trademarks
and registered trademarks are the property of their respective owners.
iomart group plc Annual Report 2009