Annual Report and Accounts 2015
iomart Group plc Annual report and accounts 2015 OVERVIEW
1
10
About Us
Highlights
STRATEGIC REPORT
13
14
16
19
Chairman’s statement
Chief executive officer’s report
Finance director's report
Key performance indicators and principal risks and uncertainties
CORPORATE GOVERNANCE
22
24
29
32
34
Board of directors
Corporate governance report
Report of the board to the members on directors’ remuneration
Directors' report
Directors' responsibilities statement
FINANCIAL STATEMENTS
36
37
38
39
40
42
71
Independent auditor's report to the members of iomart Group plc
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the financial statements
Parent company financial statements
ANNUAL GENERAL MEETING
80
Notice of annual general meeting
OFFICERS AND PROFESSIONAL ADVISERS
85
Officers and professional advisers
iomart Group plc Annual report and accounts 2015 About Us
“We open up a whole world of cloud computing options, offering a
range of cloud services, across a global network, owned, managed and
supported by us 24×7.”
We are an award winning managed cloud company that enables
businesses and organisations to operate their online data and
IT environments safely and securely. Headquartered in Glasgow,
Scotland, we partner with leading vendors such as VMware, Amazon
Web Services, EMC, Microsoft, Asigra, Arbor and Dell to offer our
customers a centrally managed, controlled and completely agnostic
set of hybrid, private and public cloud platforms. By owning a
global network and datacentre infrastructure, we can support any
customer who wishes to move seamlessly between any and all of
these platforms with a consultative level of knowledge and expertise,
delivering cloud services to meet exact business needs.
iomart Group plc Annual report and accounts 2015 Our Locations
We will not jeopardise our clients' mission critical systems by relying on middlemen to deliver core
components of our service for us. When we say “our data centres” – we mean it.
iomart has invested millions of pounds in building, equipping and operating 10 UK data centres, six
US data centres and two further international points of presence.
Each data centre is built using Tier 1 infrastructure, is N+ in design and is safe, secure and staffed
24 x 7.
iomart Group plc Annual report and accounts 2015 Our Track
Record
iomart Group plc has been on an upward curve.
Our latest annual results show an 18% rise in
revenue to £65.8m (2014: £55.6m), which marks
an almost doubling of revenue for us over the
past three years (2012: £33.5m) through business
from existing customers, new business wins
and aquisitions. This strategy in turn has been
driven by investment in the physical infrastructure
and technical skills and expertise to deliver the
managed cloud and hosting services needed by
modern business.
iomart Group plc Annual report and accounts 2015 Our Market
“iomart is investing in the relationships and skills to help customers
make an informed choice across the cloud spectrum and to help
them manage these environments moving forward.”
We currently provide a wide range of managed hosting services to
both SMEs and corporate customers, all of whom are at various
stages of development. All our solutions are delivered from our
network of datacentres and fully supported by us around the clock.
The market continues to grow and evolve. Potential cloud customers
are confronted by an ever more complex set of decisions in terms
of cost, value, effectiveness, complexity, security and compliance. In
response, an ecosystem of managed services providers and large
infrastructure providers is growing to serve these customers.
iomart Group plc Annual report and accounts 2015 We are well positioned to strengthen our position
around that very complexity as customers look
to find the best way forward for their own
needs, whether that be private infrastructure
in a datacentre of their choice, public cloud
infrastructure or more likely a mixture of the two
combined with legacy on-premise infrastructure.
The effective management of all these is the
opportunity for iomart which we would collectively
term the Hybrid Cloud.
Our clients span every sector and include: Misys,
Barton Wilmore, English National Ballet, Liverpool
FC, Stagecoach, British Red Cross, Network Rail,
Pernod Ricard & Essex County Fire & Rescue
Service.
iomart Group plc Annual report and accounts 2015 Our
Corporate
& Social
Responsibility
Since 2012, we have developed
a sustainable, yet innovative and
relevant, corporate and social
responsibility framework which has
young people and our employees
at its heart.
It is vital that employers like iomart
help demystify the IT industry and
engage and encourage the future
talent pool. We do this in a number
of ways.
• Supporting them in sport via Host
Your Kit - an innovative campaign
which has given over 300 sports
kits to youth teams across Britain.
• Supporting them as they
prepare for life beyond full-time
education through mentoring,
work placements and provision of
business skills.
• Supporting them by organising
educational events and initiatives
aimed at engaging students with
our industry.
Manchester
City FC's Jenny
Beattie launched
an iomart Host
Your Kit giveaway
for the Women's
World Cup.
iomart Group plc Annual report and accounts 2015 iomart hosted a Safer Internet Day
conference for young people at Glasgow
Caledonian University.
iomart Group plc Annual report and accounts 2015 Our Employees
iomart is recognised and respected as one of the leading cloud computing companies and we have
achieved this position through the professionalism, talent and sheer hard work of our incredible
employees. At the heart of our success lies our simple desire to succeed.
We want our people to thrive, prosper and to leave work every day feeling valued and that they have
made a difference. In return, iomart is committed to their professional and personal development and
to ensuring that they have a fantastic place to work.
We firmly believe that by maintaining a truly diverse pool of talent, our business will benefit from the
differing backgrounds, cultures, experiences and personalities of our team, as we strive to become a
truly world class cloud computing company.
We also encourage our employees to help make a difference in their local communities – so much so
that we call them our Local Heroes.
We support them in any number of ways – from the provision of services, donations or equipment and
we’re delighted to do so.
iomart Group plc Annual report and accounts 2015 iomart in Numbers
iomart Group plc Annual report and accounts 2015 Financial statements for year ended 31March 2015
Highlights
FINANCIAL HIGHLIGHTS
• Revenue growth of 18% to £65.8m (2014: £55.6m)
• Adjusted EBITDA1 growth of 23% to £29.1m (2014: £23.6m)
• Adjusted profit before tax growth2 of 14% to £16.6m (2014: £14.6m)
• Adjusted diluted earnings per share3 from operations increased by 16% to 12.63p (2014: 10.85p)
• Cashflow from operations increased by 13% to £27.2m (2014: £24.0m)
• Adjusted EBITDA1 margin increased to 44% (2014: 42%)
• Proposed final dividend increased by 43% to 2.50p per share (2014: 1.75p per share)
OPERATIONAL HIGHLIGHTS
• Building relationships for Hybrid Cloud opportunities with major players
• Continued M&A activity with the acquisition of ServerSpace
• Acquisition of SystemsUp to address the Public Cloud opportunity
STATUTORY EQUIVALENTS
The above highlights are based on adjusted results. A full reconciliation between adjusted and
statutory results is contained within these financial statements. The statutory equivalents of the above
results are as follows:
• Profit before tax growth of 11% to £10.8m (2014: £9.7m)
• Basic earnings per share from operations increased by 14% to 8.34p (2014: 7.30p)
1 Throughout these financial statements adjusted EBITDA is earnings before interest, tax, depreciation and amortisation (EBITDA) before share based payment charges and acquisition costs. Throughout
these financial statements acquisition costs are defined as acquisition related costs and non-recurring acquisition integration costs.
2 Throughout these financial statements adjusted profit before tax is profit before tax, amortisation charges on acquired intangible assets, shared based payment charges, mark to mark adjustments in
respect of interest rate swaps, acquisition costs and in the previous year the accelerated write off of arrangement fees on the bank borrowing facilities which were repaid early during that year.
3 Throughout these financial statements adjusted diluted earnings per share is earnings per share before amortisation charges on acquired intangible assets, shared based payment charges, mark to
mark adjustments in respect of interest rate swaps, acquisition costs and in the previous year the accelerated write off of arrangement fees on the bank borrowing facilities which were repaid early during
that year, including the taxation effect of these.
10
iomart Group plc Annual report and accounts 2015 Financial statements for year ended 31March 2015
Revenue Growth
EBITDA Growth
18%
to £65.8M
Margin
Increased to
44%
23%
to £29.1M
Adjusted PBT
Growth
14%
to £16.6M
Cashflow Increased
Proposed Final Dividend
Increased by
13%
to £27.2M
43%
to 2.50p
11
iomart Group plc Annual report and accounts 2015 iomart was chosen to host the Medical Appraisal and Revalidation System (MARS) for 6,300 doctors
working in Wales after proving it could meet the UK Information Commissioner’s requirements and
could provide a responsive, scalable managed service backed by dedicated technical support.
“We realised we needed much stronger Service Level Agreements around the project because of its
importance for the NHS in Wales.”
Paul Kirk, Business Systems Support Unit Manager
for Wales Deanery
iomart Group plc Annual report and accounts 2015 Strategic Report
Strategic Report
Chairman's Statement
Once again it is extremely pleasing to report on another very good year for your Group. We continue to make excellent
progress as we execute on our combined strategy of growing our business both organically and by acquisition. Our reputation
as one of the UK’s leading cloud computing companies continues to develop.
We have again enjoyed a substantial increase in profitability over the year, driven by both organic and acquisitive growth. This
year we have only made the one acquisition during the year, ServerSpace, in December 2014, and we have also benefited from
a full year contribution of both Redstation and Backup Technology which were acquired last year.
After the year end we completed the acquisition of Systems Up Limited, a consultancy company with a particular focus on
Public Cloud.
All of this progress is a result of a great deal of hard work by our executives and staff and I thank them all on behalf of the Board
and the shareholders for their efforts over the year.
The Group has pursued a progressive dividend policy for a number of years now. As a consequence of our continued strong
performance we intend to adopt a dividend policy aimed at improving shareholder returns whilst maintaining a strong capital
position for future acquisitions. Accordingly, our intention will be, over time, to increase the dividend pay-out to 25% of adjusted
diluted earnings per share. This year the Board is proposing to pay a final dividend of 2.5p per share on 1 September 2015 to
shareholders on the register on 14 August 2015, representing an increase of 43% over the dividend last year and equivalent
to a pay-out ratio of 19.8% of adjusted diluted earnings per share. We continue to offer shareholders the option to participate
in a Dividend Reinvestment Plan (DRIP) as an alternative to receiving cash. Details of the DRIP scheme will be distributed with
the annual accounts in due course.
We have started the 2015 financial year in a strong position and I look forward to another exciting year of growth with
considerable confidence.
Ian Ritchie
Chairman
8 June 2015
13
iomart Group plc Annual report and accounts 2015
Strategic Report
Chief Executive Officer's Report
Introduction
I am pleased once more to report on another excellent year for iomart. We have increased our revenues and profits both organically
and through acquisition as we continue to deliver a widening range of cloud solutions.
Our revenues in the year were £65.8m, an increase of 18% over the previous year and our adjusted EBITDA of £29.1m showed a 23%
increase over the previous year and our profit before tax increased by 11% to £10.8m.
The opportunity remains to continue to grow both organically and through a disciplined acquisition strategy.
Market
The market continues to grow and evolve. The number of companies offering cloud services also continues to grow alongside an ever
faster consolidation of companies to achieve scale and presence.
Potential cloud customers are confronted by an ever more complex set of decisions in terms of cost, value, effectiveness, complexity,
security and compliance. In response, an ecosystem of managed services providers and large infrastructure providers is growing to
serve these customers. Because the cloud has disrupted the traditional IT value chain, cloud service providers (CSPs) are now forming
key alliances allowing them to excel at the delivery of one or more service whether it be the delivery of infrastructure as a service (IaaS),
platform as a service (PaaS) or software as a service (SaaS).
Microsoft, Amazon (AWS) and Google (Public Cloud Providers) all have their own long term strategies to capture market share and all
three of them have stated that we are at the very beginning of a long journey to full cloud adoption. All of these companies will require
channel partners to go to market.
iomart is well placed to strengthen its position around that very complexity as customers look to find the best way forward for their
own needs, whether that be private infrastructure in a datacentre of their choice, Public Cloud infrastructure or more likely a mixture
of the two combined with legacy on-premise infrastructure. The effective management of all these is the opportunity for iomart which
we would collectively term the Hybrid Cloud.
iomart is investing in the relationships and skills to help customers make an informed choice across the cloud spectrum and to help
them manage these environments moving forward.
Acquisitions
We again augmented our organic growth through the acquisition of ServerSpace Limited (“ServerSpace”) in December 2014. This has
performed as expected over the period and integration is well underway.
We have just announced the acquisition of Systems Up Limited (“SystemsUp”) on 5 June 2015. SystemsUp has gained a reputation in
the cloud market for expertise across a wide range of cloud products and services, with an emphasis on Public Cloud consultancy.
We believe the skills and experience we have acquired will accelerate our progress in becoming credible suppliers of Hybrid Cloud
to ensure we can make the ‘best fit’ recommendation for our customers along with the subsequent deployment and management of
their ever more complex cloud environments.
We continue to look for businesses that fit our acquisition criteria with a view to making further acquisitions in the coming year.
Operational Review
Whilst all of our activities involve the provision of services from common infrastructure we are organised into two operating segments.
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iomart Group plc Annual report and accounts 2015 Strategic Report. Chief Executive Officer's Report
Hosting
Our Hosting segment continued to perform well over the year, delivering an overall revenue growth rate of 23% and a satisfactory
organic growth rate of 9% whilst increasing adjusted EBITDA margins from 48.6% to 50.0%.
We provide a wide range of managed hosting services to both SMEs and corporate customers. All our solutions are delivered from
our network of datacentres.
The more complex managed hosting solutions are delivered by iomart Hosting and customers typically pay for these services on a
monthly basis on contracts ranging between one and three years in length. These solutions are provided to a wide range of customers,
all of whom are at various stages of development and over the year we have seen some casualties amongst our base as customers
experience funding difficulties, drop out of markets or become acquired and, as a result, are integrated elsewhere. All of which has
resulted in some additional customer churn and some pricing pressure at contract renewal which, in turn, has adversely impacted our
organic growth in the segment though we are still pleased with the level of growth achieved over the year. This area of our activity is
the one which has the greatest opportunity arising out the Hybrid Cloud. However, the choice of direction to an adopter of Cloud is
much more complex than before and thus we will require to become Hybrid Cloud Experts, especially in the consultation process an
organisation will go through before making a final choice. We believe the acquisition of SystemsUp will provide us with a strong platform
from which to attack the Hybrid Cloud opportunity.
We address the dedicated physical server market, or bare metal as it is becoming known, through our RapidSwitch and Redstation
operations largely through online marketing. Melbourne delivers complex managed hosting solutions and provides us with a strong
presence in the North West of England with a particular emphasis on the creative sector. Backup Technology provides enterprise class
cloud backup and business continuity services. iomart Cloud Services provides a range of Cloud products, mainly through channel
partners and this unit also provides Cloud services in the USA, following on from our investment in cloud infrastructure and backup
assets in that region during the year. All these business units use common infrastructure and processes but there are different
dynamics in each customer base.
Revenues in this segment have grown by 23% to £55.0m (2014: £44.7m) partly as a result of the continued organic growth and as a
result of acquisitions.
Easyspace
The Easyspace segment has performed as expected over the year.
Our activities within this segment provide a range of products to the micro and SME markets including domain names, shared,
dedicated and virtual servers and email services.
As anticipated, revenues of £10.8m (2014: £11.0m) have remained around the same level as in the previous year, and with the benefit
of delivering strong levels of cash for the Group.
Current trading and outlook
Trading since the year end remains encouraging and in line with our expectations.
We are working hard to ensure we remain at the leading edge in terms of the skill sets and experience to provide an ever more complex
set of services to our customers and are confident of our abilities to do so, reinforced by the acquisition of SystemsUp in recent days.
We are well positioned for further significant growth.
I look forward, once again, with confidence to the year ahead.
Angus MacSween
Chief Executive Officer
8 June 2015
15
iomart Group plc Annual report and accounts 2015 Strategic Report
Finance Director's Report
Trading Results
Revenue
Revenues for the year grew by 18% to £65.8m (2014: £55.6m) through the combination of continued organic growth and the impact
of acquisitions.
Our Hosting segment grew revenues by 23% to £55.0m (2014: £44.7m). This growth was helped by a full year contribution from
Redstation and Backup Technology both of which we acquired in September 2013 and ServerSpace which was acquired in December
2014. The growth in the Hosting segment revenues excluding the impact of acquisitions was 9%.
Revenues within the Easyspace segment of £10.8m (2014: £11.0m) were close to the level of the previous year showing a very modest
2% decrease.
We continue to have good revenue visibility and high levels of recurring revenue. With our larger customers we have multi-year
contracts for the provision of complex managed hosting solutions. Many of our smaller customers pay in advance for the provision of
hosting services resulting in a substantial sum of deferred revenue which we then recognise during the period over which we provide
our services.
Gross Margin
Our gross profit for the year was £44.3m (2014: £37.8m) and this increased as a result of the additional revenues we generated.
In percentage terms we maintained our margin at 67.4% (2014: 68.0%) with both operating segments maintaining their respective
percentage margins.
Adjusted EBITDA
The adjusted EBITDA for the year was £29.1m (2014: £23.6m) an increase of 23%. Our percentage adjusted EBITDA margin has also
significantly improved to 44.2% (2014: 42.5%). The Hosting segment increased both its absolute and relative margin over the period
whilst the Easyspace segment performed very much in line with the previous year.
The Hosting segment’s adjusted EBITDA was £27.5m (2014: £21.7m), an increase of 26.7%. In percentage terms the adjusted EBITDA
margin has improved to 50.0% (2014: 48.6%). This greatly improved performance is a direct result of the additional gross margin
delivered by the increase in sales revenue from the Hosting segment offset by an increase in administrative expenses. Administrative
expenses have increased principally due to the impact of the acquisition made in the period and the full impact of the acquisitions
made in the previous period. The inclusion of Redstation and Backup Technology for the full year has contributed to the improvement
in the adjusted EBITDA in both absolute terms and percentage terms. The contribution from ServerSpace since its acquisition in
December has contributed to the level of absolute margin improvement.
The Easyspace segment’s adjusted EBITDA was £4.9m (2014: £5.0m) which was slightly less than in the previous year. In percentage
terms the adjusted EBITDA margin has improved slightly to 45.5% (2014: 45.2%) due to careful control of costs.
Group overheads, which are not allocated to segments, include the cost of the Board, the running costs of the headquarters in
Glasgow, Group marketing, human resource, finance and design functions and legal and professional fees for the year. These overhead
costs have increased to £3.3m (2014: £3.0m) mainly due to increased payroll and staff related costs.
Adjusted profit before tax
Depreciation charges of £10.1m (2014: £7.2m) have increased largely as a consequence of the full year effect of acquisitions made in
the previous year, the impact of the acquisition of ServerSpace in this financial year, as a result of charges for the equipment bought
to provide services to the additional Hosting segment customers and charges in respect of the fit out of our Maidenhead datacentre
which was completed at the start of this financial year.
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iomart Group plc Annual report and accounts 2015 Strategic Report. Finance Director's Report
The charge for amortisation of intangibles, excluding amortisation of intangible assets resulting from acquisitions (“amortisation of
acquired intangible assets”) of £1.0m (2014: £0.7m) has increased over the year as a consequence of the full year impact of the
acquisition of Backup Technology which was acquired during the previous financial year and also due to the charge resulting from an
increase in the level of capitalised development costs.
Finance income in the period was £nil (2014: £0.1m). Finance costs of £1.3m (2014: £1.2m), excluding the mark to market adjustment
in respect of interest swaps on the Company’s loans and in the previous year the accelerated write off of arrangement fees on the early
repayment of bank facilities, remained static over the period as our level of net borrowings remained at a similar level over the period.
After deducting the charges for depreciation, amortisation, excluding the charges for the amortisation of acquired intangible assets,
and finance costs, excluding mark to market adjustments on the interest rate swap and in the previous year the accelerated write off of
arrangement fees on the early repayment of the bank facilities, and crediting the finance income from the adjusted EBITDA, the Group’s
adjusted profit before tax was £16.6m (2014: £14.6m) an increase of 14%.
The adjusted profit before tax margin for the year was 25% (2014: 26%). This modest reduction is largely due to the improvement of
1.7% in the adjusted EBITDA margin over the year offset by the increase in depreciation charges as a percentage of revenue of 2.5%.
That relative increase in the depreciation charge is mainly a consequence of the mix of sales revenue within our Hosting segment over
the year, including the impact of a full year contribution from both Redstation and Backup Technology, and the commencement of
depreciation charges on the Maidenhead datacentre which was completed early in this financial year.
Profit before tax
The measure of adjusted profit before tax is a non-statutory measure which is commonly used to analyse the performance of
companies particularly where M&A activity forms a significant part of their activities.
A reconciliation of adjusted profit before tax to reported profit before tax is shown below:
Reconciliation of adjusted profit before tax to profit before tax
Adjusted profit before tax
Less: Amortisation of acquired intangible assets
Less: Acquisition costs
Less: Share based payments
Less: Mark to market adjustment on interest rate swaps
Less: Accelerated write off of arrangement fees on early repayment of bank facilities
Profit before tax
2015
£’000
16,613
(4,368)
(526)
(809)
(125)
-
10,785
2014
£’000
14,612
(3,093)
(374)
(1,257)
(20)
(153)
9,715
The adjusting items are: charges for the amortisation of acquired intangible assets of £4.4m (2014: £3.1m) which have increased
substantially as a result of the acquisition made in the year and the full year effect of acquisitions made in previous years; costs of £0.5m
(2014: £0.4m) as a result of acquisition costs; share based payment charges in the period of £0.8m (2014: £1.3m) which have decreased
substantially as the charge in respect of share options granted in previous periods comes to an end; a mark to market adjustment in
respect of interest rate swaps on the Company’s loans of £0.12m (2014: £0.02m) and the accelerated write off of arrangement fees on
the early repayment of bank facilities during the year of £nil (2014: £0.15m).
After deducting charges for the amortisation of acquired intangible assets; acquisition costs; share based payments; mark to market
adjustments in respect of interest rate swaps and in the previous year the accelerated write off of arrangement fees on the early
repayment of bank facilities during the year from the adjusted profit before tax; the reported profit before tax was £10.8m (2014:
£9.7m) an increase of 11%. In percentage terms the profit before tax margin was 16% (2014: 17%) with the reduction due to the same
reasons as the adjusted profit before tax percentage margin reduction together with increased amortisation of acquired intangible
assets charges offset by reduced shared based payment charges.
Taxation
There is a tax charge for the year of £1.9m (2014: £2.0m). The tax charge for the year is made up of a corporation tax charge of £2.7m
(2014: £2.5m) with a deferred tax credit of £0.8m (2014: credit £0.5m). At the year end, the Group has unused tax losses of £1.2m
(2014: £4.0m) available for offset against future profits, of which all have been provided for within deferred tax.
Profit for the year from total operations
After deducting the tax charge for the year from the profit before tax the Group has recorded a profit for the year from total operations
of £8.9m (2014: £7.7m) an increase of 15%.
Earnings per share
Adjusted diluted earnings per share is based on profit for the year attributed to ordinary shareholders before share based payment
charges, amortisation charges of acquired intangible assets, mark to market adjustments in respect of interest rate swaps, the
accelerated write off of arrangement fees on the early repayment of bank facilities in the previous year, acquisition costs and the tax
effect of these items was 12.63p (2014: 10.85p) an increase of 16%
The measure of adjusted diluted earnings per share as described above is a non-statutory measure which is commonly used to analyse
the performance of companies particularly where M&A activity forms a significant part of their activities.
The calculation of both adjusted earnings per share and basic earnings per share is included at note 12.
Basic earnings per share from continuing operations was 8.34p (2014: 7.30p), an increase of 14% over the year.
17
iomart Group plc Annual report and accounts 2015
Strategic Report. Finance Director's Report
Acquisitions
On 3 December 2014 the Company acquired ServerSpace for a maximum consideration of £4.2m; on a no cash no debt, normalised
working capital basis. At completion an initial payment of £2.6m in cash was made. No payment was due in respect of the additional
debt assumed, cash acquired and normalised working capital position of the company at completion. An additional sum is due related
to the profitability of ServerSpace in the period to September 2015 and the estimated amount to be paid in this regard is £1.6m, which
is also the maximum amount which could be due. Payment of this sum is expected to be made before the end of the 2015 calendar
year.
On 5 June 2015 the Company acquired the entire share capital of SystemsUp on a no debt, no cash, normalised working capital basis.
At completion an initial payment of £9m in cash was made and in addition an amount of £0.5m was made as an interim settlement of
the expected amount due in respect of the no debt, no cash, normalised working capital adjustment. A further sum is contingent on a
measure of revenue for the year to 31 March 2016 which is expected to be paid in either May or June 2016. The potential contingent
consideration payable has been initially estimated to be in the region of £1.0m to £3.5m.
Cash flow and net cash
Net cash flows from operating activities
The Group continued to generate high levels of operating cash over the year. Cash flow from operations was £27.2m (2014: £24.0m)
with the significant increase of 13% over the previous year’s level largely due to the improvement in adjusted EBITDA. After deducting
payments for corporation tax of £3.2m (2014: £2.3m) the net cash flow from operating activities was £24.0m (2014: £21.7m).
Cash flow from investing activities
In line with our strategy of accelerating our growth by acquisition the Group continued to incur substantial sums on investing activities,
spending a total of £15.8m (2014: £31.5m) in the period. Of this amount, £2.4m (2014: £19.0m), was incurred in relation to acquisition
activities described above. In addition the Group incurred expenditure of £1.3m (2014: £0.1m) in respect of contingent consideration
due on the acquisition of Redstation.
The Group continues to invest in property, plant and equipment through expenditure on datacentres and on equipment required to
provide managed services to both its existing and new customers. In addition the Group invested in cloud infrastructure and backup
assets in the USA during the year. As a result the Group spent £10.7m (2014: £11.7m) on assets, net of related finance lease drawdown,
trade creditor movements and non-cash reinstatement provisions.
Expenditure was also incurred on development costs of £1.0m (2014: £0.6m) and on intangible assets of £0.4m (2014: £nil).
Cash flow from financing activities
There was net cash spent on financing activities of £12.9m (2014: £11.4m cash generated). The Company’s borrowing facilities were
restructured in the period with a term loan of £13.5m being repaid and an additional revolving credit facility of £13.5m being drawn
down (2014: £37.5m drawdown). In addition further bank loan repayments of £8.5m were made resulting in total repayments of
£22.0m (2014: £16.5m) in the year. We repaid borrowings on acquisitions of £nil (2014: £5.7m). We received £nil (2014: £0.2m) from
the issue of shares as a result of the exercise of options by employees. We also made a dividend payment of £1.9m (2014: £1.5m) and
incurred finance costs of £1.3m (2014: £1.2m).
Net cash flow
As a consequence, our overall cash expenditure during the year was £4.7m (2014: £1.6m cash generated) which resulted in cash and
cash equivalent balances at the end of the year of £8.3m (2014: £13.0m). After recognising bank loans of £21.5m (2014: £30.0m) and
finance lease obligations of £2.2m (2014: £2.8m) net debt balances at the end of the period stood at £15.4m (2014: £19.8m) a level the
Board is comfortable with given the strong cash generation of the Group.
Exposure to credit and liquidity risks
Disclosures relating to our exposure to credit and liquidity risks are outlined in note 30.
Financial position
The Group is now in a position where it is generating substantial amounts of operating cash. The generation of that cash flow together
with the committed bank loan facility for acquisitions and finance lease facilities which are available to fund capital expenditure, means
that the Group has the liquidity it requires to continue its growth through both organic and acquisitive means.
Richard Logan
Finance Director
8 June 2015
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iomart Group plc Annual report and accounts 2015 Strategic Report. Key Performance Indicators and Prinicipal Risks and Uncertainties
Key performance indicator review
Revenue Growth
Revenue
Growth
2015
£65.8m
18% increase
2014
£55.6m
29% increase
Revenue from continuing operations grew by 18% over the year compared to a growth of 29% in the previous year. The Hosting
segment grew revenues by 23% (2014: 40%) and the Easyspace segment declined by 2% (2014: 1%).
Adjusted EBITDA Margin
Adjusted EBITDA
Adjusted EBITDA margin
2015
£29.1m
44%
2014
£23.6m
42%
The adjusted EBITDA margin has shown a modest improvement as a result of the Hosting segment both continuing to win new
business and the impact of acquisitions both in the previous year and in the current year. Easyspace has also contributed to
the adjusted EBITDA margin improvement through increased operational efficiencies.
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. In addition to these risks Note 30 contains details of
financial risks.
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 performance of the Group could be adversely affected if the
required staffing levels are not maintained. 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. Should the Group be unable to provide the required level of service this could
have an adverse effect on the Group’s performance through the loss of customers and reputation. Our ongoing
investment in preventative maintenance and lifecycle replacement programme ensures our datacentres continue to
deliver operational efficiency and effectiveness.
Network
The service we provide to customers is dependent on the continued operation of our fibre network which connects our
datacentre estate. Should the network fail there would be an adverse impact on customers. The Group has implemented
a resilient network throughout its datacentre estate with no single points of failure to ensure the likelihood of network
failure is minimised.
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. Were any of these key suppliers to fail in their service provision to the
Group this could have an adverse effect on the Group’s ability to provide services to its customers. 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.
19
iomart Group plc Annual report and accounts 2015
Strategic Report. Key Performance Indicators and Prinicipal Risks and Uncertainties
Search engine optimisation
A significant amount of the Group’s sales revenues are generated through consumers using internet search engines to
acquire goods and services. Should the Group’s search engine optimisation performance deteriorate this could have
an adverse effect on the revenue of the Group. The Group continually monitors the position of its websites with respect
to these search engines. Through the allocation of experienced staff the Group seeks to maintain or enhance the position
of its websites for detection by internet search engines.
Growth management
The Group is experiencing high levels of growth through both organic and acquisitive means. As a consequence we need
to continue to evolve as an organisation to meet the demands that such growth places on our business operations.
Failure to evolve in the necessary way could lead to deterioration in overall business performance. As part of our
annual strategy and budget review process, which is updated as necessary throughout the year we identify the resource
and organisational changes that are needed to support our growth. In addition a detailed integration and migration plan
is produced for each acquisition that is made to ensure the acquired operation is successfully integrated into the Group’s
operations.
Acquisitions
The Group has made several acquisitions over the last years and has a stated strategy to continue to make acquisitions.
This produces three areas of risk:
• Acquisition target risk – We may not be able to identify suitable targets for acquisition. Through a combination of
internal research and external relations we maintain an active pipeline of potential acquisition targets.
• Acquisition integration risk – We may not integrate the acquired business into the Group in an effective manner and
as a consequence could lose staff and customers of the acquired business. For each acquisition we prepare a detailed
integration and migration plan which includes the participation of the vendor to ensure successful integration of the
acquired business into the Group’s operations.
• Acquisition performance risk – The acquired business may not perform in line with expectations. As a consequence the
expected financial performance of the operation may not be achieved with a resulting adverse effect on profits and
cashflow. For each acquisition diligence and integration planning is undertaken and all potential synergies identified.
The Strategic Report on pages 13 to 20 has been approved by the Board and is signed on its behalf:
Richard Logan
Finance Director
8 June 2015
20
iomart Group plc Annual report and accounts 2015
iomart has carried out a major server and storage migration for Barton Willmore, the
UK’s leading integrated planning and design consultancy. Barton Willmore recently
steered the new £40m ‘Islands’ attraction at Chester Zoo, the biggest development in
the history of UK zoos, through the planning process.
“Our data is our gold and without it there is no Barton Willmore. It really is very important
to us to know that it is secure and protected within iomart’s network.”
Lee Cripps, IT Manager, Barton Willmore
iomart Group plc Annual report and accounts 2015 Corporate Governance
Board of Directors
1
3
5
1. Ian Ritchie, Chairman
2. Angus MacSween, Chief Executive
3. Crawford Beveridge, Non Executive Director
4. Chris Batterham, Non Executive Director
5. Richard Logan, Group Finance Director
6. Sarah Haran, Chief Operations Officer
22
2
4
6
iomart Group plc Annual report and accounts 2015 Ian Ritchie
Non-Executive Chairman
Angus MacSween
Chief Executive Officer
Chris Batterham
Non-Executive Director
64, appointed 2008; currently Chairman
of Computer Application Services
Ltd, Interactive Design Institute Ltd,
Cogbooks Ltd and Red Fox Media Ltd.
He is a past President of the British
Computer Society and the current
Vice President (Business) of the Royal
Society of Edinburgh. Ian was founding
chairman of
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 Cirrus
Logic Inc).
several
58, 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.
60, 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
chairman of Eckoh plc and a non
executive director of SDL plc, NCC
Group plc and Toumaz Ltd. Chris has
also served on the boards of Staffware
plc, DBS Management plc and Betfair
plc.
Crawford Beveridge
Non-Executive Director
Sarah Haran
Chief Operations Officer
Richard Logan
Group Finance Director
49, 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.
69, appointed 2011; Crawford Beveridge
CBE has over 40 years experience in
the technology industry, including 16
years at Sun Microsystems ("Sun"), most
recently as Executive Vice President
and Chairman, EMEA, APAC and the
Americas until retiring in January 2010.
His business background also includes
roles with Hewlett-Packard, Digital
Equipment Corp., Analog Devices, non-
executive director of Hitachi Global
Storage Technologies, a subsidiary
of Hitachi Ltd and Chief Executive of
Scottish Enterprise. Current board roles
include Chairman of the investment
advisory board at Scottish Equity
Partners and Non Executive Chairman
of NASDAQ listed Autodesk.
is a
57, appointed 2006; Richard
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.
23
iomart Group plc Annual report and accounts 2015 Corporate Governance Report
As the company is listed on the Alternative Investment Market it is not required to comply with the provisions of the UK Corporate
Governance Code (the “Code”) issued in September 2012. 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.
We do not comply with the Code. We have reported on our Corporate Governance arrangements by drawing upon best practice
available including those aspects of the Code we consider to be relevant to the Company. The Board considers that at this stage in the
Group’s development the expense of full compliance with the Code is not appropriate.
The Board
The Code requires the Company to have an effective Board whose role is to develop strategy and provide leadership to the Company
as a whole, as well as ensuring a framework of controls exist which allow for the identification, assessment and management of risk,
ultimately taking collective responsibility for the success of the Company.
Through the leadership of the Chairman, the Board sets the Company’s strategic goals; ensuring obligations to shareholders are met.
Matters reserved for a decision of the Board include approval of Group strategy, annual budgets and business plans, acquisitions,
disposals, business development, annual reports, interim statements, and any significant funding and capital expenditure plans.
The Board meets regularly, usually monthly, to discuss and agree on the various matters brought before it, including the trading results.
The Company has a highly committed and experienced Board, which is supported by a senior management team, with the qualification
and experience necessary for the running of the Group.
In addition, there is regular communication between Executive and Non-Executive Directors, where appropriate, to update the Non-
Executive Directors on matters requiring attention prior to the next Board meeting.
Role of the Chairman and Chief Executive Officer
The Code requires that there should be a clear division of responsibilities between the running of the Board and the executive
responsible for the Company’s business, so as to ensure that no one person has unrestricted powers of decision.
The Chairman is responsible for the leadership of the Board, ensuring its effectiveness and setting its agenda. Once strategic and
financial objectives have been agreed by the Board, it is the Chief Executive Officer’s responsibility to ensure they are delivered upon.
To facilitate this, the Chief Executive Officer chairs the Group’s Operations Boards which additionally comprises the other executive
directors and, where appropriate, senior members of the management team. The day-to-day operation of the Group’s business is
managed by these Boards.
The Chairman holds other directorships, as detailed in his biography on page 23. The Board has considered the time commitment
required by his other roles and has concluded they do not detract from his chairmanship of the Company.
Composition of and Appointments to the Board
The Code requires that there should be a balance of Executive and Non-Executive Directors and when appointing new Directors to the
Board there should be a formal, rigorous and transparent procedure.
The Board comprises a Non-Executive Chairman, Chief Executive Officer, Finance Director, Chief Operating Officer and two independent
Non-Executive Directors. Short biographies of the directors are given on page 23.
All Non-Executive Directors serving at the year-end are considered to be independent. The Board does not consider the shareholdings
of the Non-Executive Directors as detailed on page 30 to have any effect on their independence.
The Board is satisfied with this balance between Executive and Non-Executive Directors. The Board considers that its composition
is appropriate in view of the size and requirements of the Group’s business and the need to maintain a practical balance between
Executive and Non-Executive Directors.
Each member of the Board brings different experience and skills to the Board and its various committees. The Board composition is
kept under review as this mix of skills and business experience is a major contributing factor to the proper functioning of the Board,
helping to ensure matters are fully debated and that no individual or group dominates the Board decision-making process.
When a new appointment to the Board is made, consideration is given to the particular skills, knowledge and experience that a
potential new member could add to the existing Board composition. A formal process is then undertaken, which may involve external
recruitment agencies, with appropriate consideration being given, in regards to Executive appointments, to internal and external
candidates. Before undertaking the appointment of a Non-Executive Director, the Chairman establishes that the prospective Director
can give the time and commitment necessary to fulfil their duties, in terms of availability both to prepare for and attend meetings and
to discuss matters at other times.
24
iomart Group plc Annual report and accounts 2015
Corporate Governance Report
Information and Development
A further principle of the Code is that information of a sufficient quality is supplied to the Board in a timely manner.
The Chairman is responsible for ensuring that all the Directors continually update their skills, their knowledge and familiarity with the
Group in order to fulfil their role on the Board and the Board’s Committees. Updates dealing with changes in legislation and regulation
relevant to the Group’s business are provided to the Board by the Company Secretary/Finance Director and through the Board
Committees.
All Directors have access to the advice and services of the Company Secretary, who is responsible to the Board for ensuring the
Board procedures are properly complied with and that the discussions and decisions are appropriately minuted. Directors may seek
independent professional advice at the Company’s expense in furtherance of their duties as Directors.
Training in matters relevant to their role on the Board is available to all Board Directors. New Directors are provided with an induction
in order to introduce them to the operations and management of the business.
Performance Evaluation
The Code requires the Board to undertake a formal and rigorous evaluation of its own performance annually and that of its committees
and individual Directors.
During the year a formal evaluation was conducted by means of a detailed questionnaire which was completed by each Director. The
results of this process were collated by the Chairman and discussed by the Board collectively. The evaluation included a review of
the performance of individual Directors, including the Chairman, and the Board Committees. Based on this evaluation the Board has
concluded that its performance in the past year has been satisfactory.
Re-election
Under the Code, Directors should offer themselves for re-election at regular intervals and under the Company’s Articles of Association,
at every Annual General Meeting, at least one third of the Directors who are subject to retirement by rotation, are required to retire
and may be proposed for re-election. In addition, any Director who was last appointed or re-appointed three years or more prior to
the AGM is required to retire from office and may be proposed for re-election. Such retirement will count in obtaining the number
required to retire at the AGM. New Directors, who were not appointed at the previous AGM, automatically retire at their first AGM and,
if eligible, can seek re-appointment.
Two Directors will retire from office at the Company’s forthcoming AGM and stand for re-appointment.
Board Committees
The Board has established two committees to deal with specific aspects of the Board’s affairs: Audit and Remuneration Committees.
The Board has also established a Nominations Committee which is chaired by Ian Ritchie and includes Crawford Beveridge, Chris
Batterham and the Chief Executive Officer.
Attendance at Board and Committee Meetings
Attendances of Directors at Board and Committee meetings convened in the year, along with the number of meetings that they were
invited to attend, are set out below:
Board
Held
Attended
Remuneration
Committee
Held Attended
Audit
Committee
Held
Attended
Ian Ritchie – Non-Executive Chairman
Angus MacSween – Chief Executive Officer
Sarah Haran – Chief Operating Officer
Chris Batterham – Non-Executive Director
Crawford Beveridge – Non-Executive Director
Richard Logan – Finance Director
10
10
10
10
10
10
10
10
9
10
9
10
2
-
-
2
2
-
2
-
-
2
2
-
3
-
-
3
3
-
3
-
-
3
3
-
25
iomart Group plc Annual report and accounts 2015
Corporate Governance Report
The Audit Committee
The Audit Committee’s role is to assist the Board with the discharge of its responsibilities in relation to the internal controls and external
audits. The Audit Committee will normally meet at least three times a year. The Audit Committee is chaired by Chris Batterham and its
other members are Ian Ritchie and Crawford Beveridge. The Finance Director, Chief Executive Officer and other senior management
attend meetings by invitation and the Committee also meets the external auditors without management present. Chris Batterham, as
chairman of the Audit Committee, has recent and relevant financial experience.
During the year, the Audit Committee, operating under its terms of reference, discharged its responsibilities, including reviewing and
monitoring:
interim and annual reports, information including consideration of the appropriateness of accounting policies;
•
• material assumptions and estimates adopted by management;
• developments in accounting and reporting requirements;
• external auditor’s plans for the year-end audit of the Company and its subsidiaries;
• the Committee’s effectiveness;
• the Risk Register covering the systems of internal control and their effectiveness, reporting and making new recommendations
to the Board on the results of the review and receiving regular updates on key risk areas of financial control;
• the performance and independence of the external auditor concluding in a recommendation to the Board on the reappointment
of the auditor by shareholders at the Annual General Meeting. The auditor reports annually to the Committee confirming their
independence and stating the methods they employ to safeguard their independence;
• non-audit fees charged by the external auditor; and
• the formal engagement terms entered into with the external auditor.
Under its terms of reference the Audit Committee is responsible for monitoring the independence, objectivity and performance of
external auditors, and for making a recommendation to the Board regarding the appointment of external auditors on an annual basis.
The Group’s external auditors, Grant Thornton UK LLP, were first appointed as external auditor of the Company for the period ended
31 March 2005.
The Remuneration Committee
The Remuneration Committee is chaired by Crawford Beveridge and its other members are Ian Ritchie and Chris Batterham. It is normal
for the Chief Executive Officer to be invited to attend meetings except where matters under review by the Committee relate to him.
The Committee has responsibility for making recommendations to the Board on the remuneration packages of the Executive Directors
which includes:
• making recommendations to the Board on the Company’s policy on Directors’ remuneration and overseeing long term incentive
plans (including share option schemes for all employees);
• ensuring remuneration is both appropriate to the level of responsibility and adequate to attract and/or retain Directors and staff
of the calibre required by the Company; and
• ensuring that remuneration is in line with current industry practice.
Internal Control
The Directors, who are responsible for the Group’s system of internal control, have established systems to ensure that an appropriate
level of oversight and control is provided. The systems are reviewed for effectiveness annually by the Audit Committee and the Board.
The Group’s systems of internal control are designed to help the Company meet its business objectives by appropriately managing,
rather than eliminating, the risks to those objectives. The controls can only provide reasonable, not absolute, assurance against material
misstatement or loss. Executive Directors and senior management meet to review both the risks facing the business and the controls
established to minimise those risks and their effectiveness in operation on an on-going basis. The aim of these reviews is to provide
reasonable assurance that material risks and problems are identified and appropriate action taken at an early stage.
The Board confirms that procedures to identify, evaluate and manage the significant risks faced by the Group have been in place
throughout the year and up to the date of approval of the Annual Report.
26
iomart Group plc Annual report and accounts 2015
Corporate Governance Report
Financial Control
The annual financial plan is reviewed and approved by the Board. Financial results with comparisons to plan and forecast results are
reported on monthly to the Board together with a report on operational achievements, objectives and issues encountered. Significant
variances from plan are discussed at Board meetings and actions set in place to address them.
Approval levels for authorisation of expenditure are at set levels and cascaded through the management structure with any expenditure
in excess of predefined levels requiring approval from the executive directors.
Relations with Shareholders
The Chief Executive Officer and Finance Director have, where appropriate, had regular dialogue with shareholders and analysts to
discuss strategic and other issues including the Company’s financial results.
The Company engages in full and open communication with both institutional and private investors and responds promptly to all
queries received. In conjunction with the Company’s brokers and other financial advisers all relevant news is distributed in a timely
fashion through appropriate channels to ensure shareholders are able to access material information on the Company’s progress. The
Company’s website has a section for investors, which contains all publicly available financial information and news on the Company.
Going Concern
The Directors, having made suitable enquiries and analysis of the accounts, consider that the Group has adequate resources to
continue in business for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing
the financial statements. In making this assessment, the Directors have considered the Group budgets, the cash flow forecasts and
associated risks and the availability of bank and leasing facilities.
AIM Rule Compliance Report
iomart Group plc is quoted on AIM and as a result the Company has complied with AIM Rule 31 which requires the following:
• Have in place sufficient procedures, resources and controls to enable its compliance with the AIM Rules;
• Seek advice from its Nominated Advisor (“Nomad”) regarding its compliance with the Rules whenever appropriate and take that
advice into account;
• Provide the Company’s Nomad with any information it reasonably requests in order for the Nomad to carry out its responsibilities
under the AIM Rules for Nominated Advisors, including any proposed changes to the Board and Provision of draft notifications
in advance;
• Ensure that each of the Company’s Directors accepts full responsibility, collectively and individually, for compliance with the AIM
rules; and
• Ensure that each Director discloses without delay all information which the Company needs in order to comply with AIM Rule
17 (Disclosure of Miscellaneous Information) insofar as that information is known to the director or could with reasonable
diligence be ascertained by the Director.
Quality of Personnel and Employee Involvement
The Group is committed to attracting and retaining the highest level of personnel. It strives to do this through, amongst other things,
the application of high standards in recruitment. The Group is aware of the importance of good communication in relationships with
its staff and also follows a policy of encouraging training.
A number of employees participate in the growth of the business through the ownership of share options with some employees also
participating in the Group bonus scheme.
Business Ethics
The Board recognises that the Company is accountable to its shareholders and, at the same time, seeks to take into account the
interests of all its stakeholders including customers, suppliers and subcontractors, employees, as well as the local community, and the
environment in which it operates.
The Group maintains core values of Honesty, Integrity, Hard Work, Service and Quality and actively promotes these values in all activities
undertaken on behalf of the Group.
27
iomart Group plc Annual report and accounts 2015
Corporate Governance Report
Customers
The Group treats all of its customers with the utmost respect and seeks to be honest and fair in all relationships with them. The Group
provides its customers with products of high quality.
Suppliers and Subcontractors
Relationships with suppliers and subcontractors are based on mutual respect, and the Group seeks to be honest and fair in its
relationships with suppliers and subcontractors, and to honour the terms and conditions of its agreements in place with such suppliers
and subcontractors.
The Group is aware that the giving or accepting of bribes is not acceptable business conduct.
Employees
The Group recognises the importance of its employees and that the success of the Group is due to their efforts. The Group respects the
dignity and rights of all its employees. The Group provides clean, healthy and safe working conditions. An inclusive working environment
and a culture of openness are maintained by the regular dissemination of information.
The Group endeavours to provide equal opportunities for all employees and facilitates the development of employees’ skill sets. A fair
remuneration policy is adopted throughout the Group.
The Group does not tolerate any sexual, physical or mental harassment of its employees. The Group operates an equal opportunities
policy and specifically prohibits discrimination on grounds of colour, ethnic origin, gender, ages, religion, political or other opinion,
disability, or sexual orientation.
By order of the Board
Bruce Hall
Company secretary
8 June 2015
28
iomart Group plc Annual report and accounts 2015
Report of the board to the members on directors' remuneration
As the Company is listed on the Alternative Investment Market it
is not required to comply with the provisions of the UK Corporate
Governance Code 2012 (“Code”) issued by the Financial
Reporting Council. However, in framing its remuneration policy
the committee has given consideration to the Code and other
than details of Directors’ remuneration which is required by AIM
Rule 19 the other disclosures are voluntary as is the resolution
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;
• Pensions
to
Pension contributions
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
The Group operates share option plans for executive directors
and managers as a combined reward and incentive for those
who have made a major contribution to the Group and will
continue to play a key role in helping the Group achieve its
objectives in the future. Whenever an award under a share
option plan is made performance conditions are attached to
the award consistent with the objectives of the Group. No share
options awarded will vest any earlier than the third anniversary
of the date of grant of the option.
• the need to attract and retain executives of an appropriate
calibre; and
• Other benefits
• the continued commitment of executives to the Group’s
success through appropriate incentive schemes.
The executive directors are entitled to life insurance cover and
to participate in the Group’s Private Medical Insurance scheme.
The committee normally meets at least twice per year.
All of 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.
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. Base salaries are reviewed annually and the
remuneration committee considers external expert advice when
setting the level of reward packages. The executive directors do
not receive directors’ fees.
• Bonus scheme
The executive directors are eligible to receive a bonus on
top of their basic salary dependent on individual and Group
performance at the discretion of the remuneration committee.
The level of executive directors’ discretionary bonus payments is
determined by a number of factors including the Group’s financial
performance and the individual’s non-financial performance. For
the executive directors, there may be an opportunity to sacrifice
their potential bonus in exchange for a payment into a pension
plan.
29
iomart Group plc Annual report and accounts 2015
Report of the board to the members on directors' remuneration
Directors’ remuneration (this information has been audited)
Details of individual directors’ emoluments for the year are as follows:
Name of director
Angus MacSween
Chris Batterham
Crawford Beveridge
Sarah Haran
Richard Logan
Ian Ritchie
Salary or fees
£
293,700
35,000
25,000
170,000
180,200
55,000
Bonus
£
220,275
-
-
127,500
135,150
-
Pension
Benefits contributions
£
-
-
-
17,000
18,020
-
£
2,989
-
-
680
2,172
-
Year ended
31 March
2015
Total
£
516,964
35,000
25,000
315,180
335,542
55,000
Year ended
31March
2014
Total
£
558,829
30,000
25,000
331,846
333,806
50,000
758,900
482,925
5,841
35,020
1,282,686 1,329,481
Directors’ interests in shares
The interests of the directors in the shares of the company at 31 March 2015, together with their interests at 1 April 2014 were as
follows:
Name of director
Angus MacSween
Chris Batterham
Crawford Beveridge
Sarah Haran
Richard Logan
Ian Ritchie
Number of ordinary shares
31 March 2015
At 1 April 2014
16,800,552
90,621
30,000
1,963,747
981,393
151,400
16,800,552
90,621
30,000
1,963,747
981,393
151,400
30
iomart Group plc Annual report and accounts 2015
Report of the board to the members on directors' remuneration
Directors’ interests in share options (this information has been audited)
The interests of the directors at 31 March 2015 in options over the ordinary shares of the Company were as follows:
Name of
director
At
1 April
2014 Exercised
At 31
Granted Lapsed
March Exercise
price
2015
Date of
Date from
which
Grant exerciseable
Expiry
date
Angus MacSween
Sarah Haran
Richard Logan
43,010
113,334
113,333
113,333
-
383,010
58,115
42,913
80,000
80,000
80,000
-
341,028
50,000
28,495
80,000
80,000
80,000
-
318,495
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
117,480
-
43,010
- 113,334
- 113,333
- 113,333
- 117,480
46.5p 06/10/2008
1p 27/03/2013
1p 27/03/2013
1p 27/03/2013
1p 25/09/2014
31/03/2009 06/10/2018
31/05/2014 27/03/2023
31/05/2015 27/03/2023
31/05/2016 27/03/2023
25/09/2017 25/09/2024
117,480
- 500,490
-
-
-
-
-
68,000
-
-
-
-
-
-
58,115
42,913
80,000
80,000
80,000
68,000
50.5p 27/09/2007
46.5p 06/10/2008
1p 27/03/2013
1p 27/03/2013
1p 27/03/2013
1p 25/09/2014
27/09/2010 27/09/2017
31/03/2009 06/10/2018
31/05/2014 27/03/2023
31/05/2015 27/03/2023
31/05/2016 27/03/2023
25/09/2017 25/09/2024
68,000
- 409,208
-
-
-
-
-
72,080
-
-
-
-
-
-
50,000
28,495
80,000
80,000
80,000
72,080
74.0p 24/08/2006
46.5p 06/10/2008
1p 27/03/2013
1p 27/03/2013
1p 27/03/2013
1p 25/09/2014
24/08/2009 24/08/2016
31/03/2010 06/10/2018
31/05/2014 27/03/2023
31/05/2015 27/03/2023
31/05/2016 27/03/2023
25/09/2017 25/09/2024
72,080
- 390,575
During the year options over 257,560 ordinary shares (2014: nil) were granted to Directors under the unapproved share option scheme
with an average exercise price of 1.0p per share. No share options were exercised by the Directors.
The market price of the company’s shares at the end of the financial period was 204.50p and the range of prices during the period
was between 160.00p and 284.62p.
By order of the board
Crawford Beveridge
Chairman, Remuneration committee
8 June 2015
31
iomart Group plc Annual report and accounts 2015
Directors' Report
The directors present their annual report on the affairs of the
in respect of £10m which has been drawn under the revolving
Group, together with the financial statements and auditor’s
credit facility from April 2015 which reduces by £2m every 6
report, for the year ended 31 March 2015.
months until October 2017 and as a consequence the interest
Financial instruments
rate on that loan is fixed at 2.03% from April 2015 until maturity.
The Group has also entered interest rate swap arrangements in
The Group’s financial instruments comprise cash and liquid
respect of £4m which has been drawn under the multi option
resources, bank loans and finance leases together with various
credit facility which has been fixed at 1.02% until June 2015
items such as trade debtors and trade creditors that arise
and £5m drawn under the multi option credit facility which
directly from its operations. The main purpose of these financial
has been fixed at 1.26% from August 2014 for 12 months. The
instruments is to provide finance for the Group’s operations. On
remaining £12.5m drawn under the multi option credit facility is
28 July 2014 the Group agreed a new bank facility with Lloyds
not covered by interest rate swap arrangements. The Group’s
Banking Group comprising a £15m multi option revolving credit
borrowings at 31 March 2015 comprise finance leases totalling
facility which together with the existing £20m multi option
£2.3m (2014: £2.8m) and bank loans totalling £21.5m (2014:
revolving credit facility provided £35m of total facilities. The new
£30.0m). The interest rates on the finance leases are fixed
multi option revolving credit facility replaced a £15m term loan
for the term of the lease at between 5.6% and 11.5% and the
facility.
average interest rate was 8.9% (2014: 8.4%).
At the beginning of the year under the bank facilities there was
The Group has exposure to movements in the exchange rate of
£15m outstanding on the multi option revolving credit facility
the US dollar as certain domain name purchases are transacted
and £15m outstanding on the term loan. In April 2014, £1.5m
in this currency. To protect cash flows against the level of
was repaid on the term loan. Following the agreement of the
exchange rate risk, the Group entered into forward exchange
new bank facility, the remaining £13.5m of the term loan was
contracts to hedge foreign exchange exposures arising on the
repaid in July 2014 and a draw down under the new multi option
forecast payments. The majority of transactions of the parent
revolving credit facility of £13.5m was made. This resulted in
company and the UK subsidiaries are in UK sterling and, with the
the total drawn down of multi option revolving credit facilities
exception of forward foreign exchange contracts and interest
of £28.5m.
rate swaps, the Group does not use derivative instruments.
Additional information on financial instruments is included in
In September 2014, £3.5m and in March 2015, £3.5m were
Note 30.
repaid on the new multi option revolving credit facility which left
an outstanding balance at the year end of £21.5m.
Dividend
The £35m multi option revolving credit facility may be used
ended 31 March 2015 (2014: nil). The directors recommend a
by the Group to finance acquisitions, capital expenditure and
final dividend for the year ended 31 March 2015 of 2.50p per
The directors have not declared an interim dividend for the year
for the issue of guarantees, bonds or indemnities. The facility
share (2014: 1.75p per share).
is available until October 2017 at which point any advances
made under the revolving credit facility will become immediately
Research and development
repayable. In addition, each draw down made under this facility
The Group develops cloud computing products including private
can be for either 3 or 6 months and can either be repaid or
cloud platforms, hybrid cloud platforms, virtual platforms, online
continued at the end of the period. Interest is charged on this
backup and storage solutions and email related products.
loan at an annual rate determined by the sum of the term loan
margin, LIBOR and the lender’s mandatory costs. The multi
Directors and their interests
option credit facility margin is fixed at 2.0% per annum. A one-off
The present membership of the board is set out on page
arrangement fee of £337,500 was paid in respect of the £20m
85. In accordance with the company’s Articles of Association,
multi option revolving credit facility when the facility was first
Angus MacSween and Richard Logan will offer themselves for
drawn down and a non-utilisation fee of 40% of the multi option
re-election at the forthcoming annual general meeting.
revolving credit facility margin is due on any undrawn portion of
the full £35m multi option revolving credit facilities. The effective
Details of directors’ interests in the company’s shares are set
interest rate for multi option revolving credit loans in the current
out in the Report of the Board to the Members on Directors’
year was 3.82% (2014: 4.41%).
Remuneration on pages 29 to 31.
The Group has exposure to movements in interest rates on its
borrowings. The Group has entered into an interest rate swap
32
iomart Group plc Annual report and accounts 2015 Directors' Report
Substantial shareholdings
Website disclaimer
At 29 May 2015 the following interests in 3% or more of the
The maintenance and integrity of the iomart Group plc website
issued ordinary share capital, excluding shares held by the
is the responsibility of the directors. The work carried out by
iomart Group plc Employee Benefit Trust, had been notified to
the auditors does not involve consideration of these matters
the Company:
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
Shareholder
Shares
Percentage held
they were initially presented on the website. Legislation in the
Angus MacSween
16,800,552
15.74%
United Kingdom governing the preparation and dissemination
of the financial statements may differ from legislation in other
Liontrust Asset
Management
14,447,764
13.54%
jurisdictions.
Auditors
Octopus Investments
6,502,425
6.09%
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
8 June 2015
Tosca Asset
Management LLP
6,200,000
Schroders plc
5,550,256
Noble Grossart
Investment Limited
British Steel Pension
Fund Trustees Ltd
3,235,797
3,505,000
5.81%
5.20%
3.28%
3.03%
Transactions in own shares
During the year 38,000 (2014: 40,250) own shares held in
treasury at a carrying value of 49.5p each were issued following
the exercise of share options by employees for which a net total
of £23,820 (2014: £20,869) was received.
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 incentive schemes and it is the board’s policy
to make specific 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 promote their career
development within the organisation.
33
iomart Group plc Annual report and accounts 2015
The directors confirm that:
• so far as each director is aware, there is no relevant audit
information of which the Group and Parent Company’s
auditor is unaware; and
• the directors have taken all the steps that they ought to
have taken as directors in order to make themselves
aware of any relevant audit information and to establish
that the auditors are aware of that information.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Group's website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Directors' Responsibilities Statement
The directors are responsible for preparing the Strategic Report
and Directors’ Report, and the Group and 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 to prepare the financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted
by the European Union. Under company law the directors must
not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs and profit
or loss of the Company and Group for that period. In preparing
these financial statements, the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether applicable IFRSs have been followed for
the Group financial statements and whether United
Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable laws) have
been followed for the Parent Company financial
statements, subject to any material departures disclosed
and explained in the financial statements;
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Parent Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group and
Parent Company and enable them to ensure that the Group
and Parent Company financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding
the assets of the Group and Parent Company and hence for
taking reasonable steps for the prevention and detection of
fraud and other irregularities.
34
iomart Group plc Annual report and accounts 2015
iomart supports the managed cloud requirements for all sized businesses at all
stages in their development. Our private cloud is supporting Wakelet the new
social sharing site backed by the original publishers of Angry Birds.
"This sort of collaboration is something start-ups just don't normally get with hosting
providers at such an early stage. Essentially we've produced a beautiful piece of
software and iomart has produced a beautiful platform on which it can flourish."
Jamil Khalil, Founder, Wakelet
iomart Group plc Annual report and accounts 2015 Financial Statements
Independent auditor's report to the members of iomart Group plc
Opinion on other matter prescribed by the Companies Act
2006
In our opinion the information given in the Strategic Report
and Directors’ Report for the financial year for which the Group
financial statements are prepared is consistent with the Group
financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if,
in our opinion:
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit.
Other matter
We have reported separately on the parent company financial
statements of iomart Group plc for the year ended 31 March
2015 and on the information in the Directors’ Remuneration
Report that is described as having been audited.
Robert Hannah
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Glasgow
8 June 2015
We have audited the Group financial statements of iomart
Group Plc for the year ended 31 March 2015 which comprise
the consolidated statement of comprehensive income, the
consolidated statement of financial position, the consolidated
statement of cash flows, the consolidated statement of changes
in equity and the related notes. The financial reporting framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted
by the European Union.
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. 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 auditor
As explained more fully in the Directors’ Responsibilities
Statement, the directors are responsible for the preparation of
the Group financial statements and for being satisfied that they
give a true and fair view. Our responsibility is to audit and express
an opinion on the Group financial statements in accordance with
applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is
provided on the Financial Reporting Council’s website at www.frc.
org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion the Group financial statements:
• give a true and fair view of the state of the Group's affairs
as at 31 March 2015 and of its profit for the year then
ended;
• have been properly prepared in accordance with IFRSs as
adopted by the European Union; and
• have been prepared in accordance with the requirements
of the Companies Act 2006.
36
iomart Group plc Annual report and accounts 2015
Consolidated statement of comprehensive income. Year ended 31March 2015
Note
2015
£’000
2014
£’000
65,797
55,618
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Analysed as:
Earnings before interest, tax, depreciation,
amortisation, acquisition costs and share based payments
Share based payments
Acquisition costs
Depreciation
Amortisation – acquired intangible assets
Amortisation – other intangible assets
Finance income
Finance costs
Profit before taxation
Taxation
Profit for the year attributable to equity holders of the parent
Other comprehensive income
Amounts which may be reclassified to profit or loss
Currency translation differences
Other comprehensive income for the year
Total comprehensive income for the year
attributable to equity holders of the parent
Basic and diluted earnings per share
Total operations
Basic earnings per share
Diluted earnings per share
The following notes form part of the primary financial statements.
4
4
27
6
4
4
4
7
7
9
(21,477)
(17,794)
44,320
37,824
(32,121)
(26,767)
12,199
11,057
29,053
(809)
(526)
(10,142)
(4,368)
(1,009)
45
(1,459)
10,785
(1,890)
8,895
23,611
(1,257)
(374)
(7,170)
(3,093)
(660)
68
(1,410)
9,715
(1,995)
7,720
(49)
(49)
3
3
8,846
7,723
12
12
8.34 p
8.24 p
7.30 p
7.23 p
37
iomart Group plc Annual report and accounts 2015
Consolidated statement of financial position. As at 31March 2015
Note
2015
£’000
ASSETS
Non-current assets
Intangible assets – goodwill
Intangible assets – other
Lease deposits
Property, plant and equipment
Current assets
Cash and cash equivalents
Trade and other receivables
Total assets
LIABILITIES
Non-current liabilities
Non-current borrowings
Trade and other payables
Provisions
Deferred tax
Current liabilities
Contingent consideration due on acquisitions
Trade and other payables
Current income tax liabilities
Current borrowings
Total liabilities
Net assets
EQUITY
Share capital
Own shares
Capital redemption reserve
Share premium
Merger reserve
Foreign currency translation reserve
Retained earnings
Total equity
13
13
14
16
18
17
22
20
23
10
21
19
22
25
26
2014
£’000
44,879
19,488
2,416
32,533
99,316
13,025
7,696
20,721
47,342
19,041
2,416
34,846
103,645
8,347
11,389
19,736
123,381
120,037
(1,346)
(703)
(2,440)
(2,087)
(6,576)
(1,650)
(18,680)
(1,401)
(22,395)
(44,126)
(13,716)
-
(1,566)
(2,443)
(17,725)
(1,271)
(15,158)
(1,868)
(19,128)
(37,425)
(50,702)
(55,150)
72,679
64,887
1,078
(538)
1,200
21,067
4,983
(47)
44,936
72,679
1,078
(556)
1,200
21,067
4,983
2
37,113
64,887
These financial statements were approved by the board of directors and authorised for issue on 8 June 2015.
Signed on behalf of the board of directors
Angus MacSween
Director and chief executive officer
iomart Group plc – Company Number: SC204560
The following notes form part of the primary financial statements.
38
iomart Group plc Annual report and accounts 2015
Consolidated statement of cash flows. Year ended 31March 2015
Profit before taxation
Finance costs – net
Depreciation
Amortisation
Share based payments
Movement in trade receivables
Movement in trade payables
Cash flow from operations
Taxation paid
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
Proceeds on disposal of property, plant and equipment
Payments for current period acquisitions net of cash acquired
Contingent consideration paid on prior period acquisition
Deferred consideration paid on prior period acquisition
Finance income received
Net cash used in investing activities
Cash flow from financing activities
Issue of shares
Draw down of bank loans
Repayment of finance leases
Repayment of bank loans
Repayment of borrowings on acquisition of business
Finance costs paid
Dividends paid
Net cash (used in)/received from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Note
7
4
4
27
16
13
13
22
22
8
2015
£’000
10,785
1,414
10,142
5,377
809
(3,277)
1,956
27,206
(3,212)
23,994
(10,683)
(1,041)
(367)
-
(2,445)
(1,271)
-
33
(15,774)
13
13,500
(1,245)
(22,000)
-
(1,299)
(1,867)
(12,898)
(4,678)
13,025
Cash and cash equivalents at the end of the year
18
8,347
The following notes form part of the primary financial statements.
2014
£’000
9,715
1,342
7,170
3,753
1,257
250
503
23,990
(2,277)
21,713
(11,651)
(557)
(24)
22
(19,016)
(125)
(201)
91
(31,461)
154
37,500
(1,384)
(16,503)
(5,731)
(1,172)
(1,483)
11,381
1,633
11,392
13,025
39
iomart Group plc Annual report and accounts 2015
Consolidated statement of changes in equity. Year ended 31March 2015
Changes in equity
Note
Share
capital
£’000
Own
shares
Own
shares
EBT Treasury
£’000
£’000
Foreign
currency
Capital
Share
translation redemption premium Merger Retained
reserve earnings
£’000
account
£’000
reserve
£’000
reserve
£’000
£’000
Total
£’000
Balance at 1 April 2013
1,058
(70)
(506)
(1)
1,200
20,936
- 29,599 52,216
Profit in the year
Currency translation differences
Total comprehensive income
Dividends – final (paid)
Share based payments
Deferred tax on share based
payments
Issue of own shares for option
redemption
Issue of new shares for option
redemption
Issue of new shares for business
acquisition
Total transactions with owners
8
27
26
25
25
-
-
-
-
-
-
-
3
17
20
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
-
-
20
-
3
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
131
-
131
-
-
-
-
-
-
-
-
7,720 7,720
3
7,720 7,723
-
(1,483) (1,483)
1,257 1,257
19
1
19
21
-
134
4,983
4,983
- 5,000
(206) 4,948
Balance at 31 March 2014
1,078
(70)
(486)
2
1,200
21,067
4,983 37,113 64,887
Profit in the year
Currency translation differences
Total comprehensive income
Dividends – final (paid)
Share based payments
Deferred tax on share based
payments
Issue of own shares for option
redemption
Total transactions with owners
8
27
10
26
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
18
-
(49)
(49)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,895 8,895
(49)
8,895 8,846
-
(1,867) (1,867)
809
809
(19)
(19)
23
5
(1,072) (1,054)
Balance at 31 March 2015
1,078
(70)
(468)
(47)
1,200
21,067
4,983 44,936 72,679
The following notes form part of the primary financial statements.
40
iomart Group plc Annual report and accounts 2015
iomart has been selected as a Tier 1 partner in the Microsoft
Cloud Solution Provider Program.
“The Cloud Solution Provider Program puts our partners at the
centre of the customer relationship. Through participation these
partners have demonstrated dedication to helping our mutual
customers successfully move to the cloud.”
Phil Sorgen, corporate vice president, Worldwide Partner
Group at Microsoft Corp.
iomart Group plc Annual report and accounts 2015 Notes to the financial statements. Year ended 31March 2015
1. GENERAL INFORMATION
iomart Group plc is a company incorporated and domiciled in the
United Kingdom under the Companies Act 2006. The address
of the registered office is given on page 85 of this report. The
nature of the Group’s operations and its principal activities are
set out in the Strategic Report and Directors’ Report.
The financial statements are presented in UK Pounds Sterling
is the currency of the primary economic
because that
environment in which the Group operates.
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 in accordance with
the Companies Act 2006. 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.
Standards, amendments, and interpretations effective in
year
There were no additional standards, amendments and
interpretations that had a material impact on the Group’s
financial statements during the year. The following standard,
amendment and interpretation were effective in the year but
had no material impact on the Group’s financial statements:
•
•
•
•
•
IFRS 10 (May 2011) Consolidated Financial Statements
(effective 1 January 2014)
IFRS 11 (May 2011) Joint Arrangements (effective 1 January
2014)
IFRS 12 (May 2011, updated January 2012) Disclosures of
Interests in Other Entities (effective 1 January 2014)
IAS 27 (revised May 2011) Separate Financial Statements
(effective 1 January 2014)
IAS 28 (revised May 2011) Investments in Associates and
Joint Ventures (effective 1 January 2014).
• Amendments to IAS 32 (December 2011) Offsetting
Financial Assets and Financial Liabilities (effective 1 January
2014)
• Amendments to IAS 36 (May 2013) Recoverable Amount
Disclosures for Non-Financial Assets (effective 1 January
2014)
• Amendments to IAS 39 (June 2013) Novation of Derivatives
and Continuation of Hedge Accounting (effective 1 January
2014)
• Amendments to IFRS 10, 11 & 12 (June 2012) Transitional
Guidance (effective 1 January 2014)
• Amendments to IFRS 10,12 & 27 (October 2012) Investment
Entities (effective 1 January 2014)
42
New standards and interpretations of existing standards
that are not yet effective and have not been adopted early
by the Group
IFRS 15 presents new requirements for the recognition of
revenue, replacing IAS 18 ‘Revenue’, IAS 11 ‘Construction
Contracts’, and several revenue-related interpretations. The new
standard establishes a control-based revenue recognition model
and provides additional guidance in many areas not covered
in detail under existing IFRSs, including how to account for
arrangements with multiple performance obligations, variable
pricing, customer refund rights, supplier repurchase options,
and other common complexities. The Directors have not yet
assessed what impact this standard will have on the Group’s
revenue recognition policies, as full details of the standard are
yet to be confirmed. As of April 2015, the IASB proposed to
defer the effective date of this standard from 1 January 2017 to
1 January 2018. In addition, as a revised exposure draft of the
standard is yet to be released, combined with the fact that it is
yet to be endorsed by the EU, the Directors are not in a position
to make a reliable estimate of the impact this revised standard
will have on the Group’s accounting policies.
In addition the following new amendments and interpretations
of existing standards that are not yet effective and have not
been adopted early by the Group are not expected to have
any material impact on the Group’s consolidated financial
statements:
• Annual Improvements to IFRSs 2010 – 2012 cycle (effective 1
July 2014)
• Annual Improvements to IFRSs 2011 - 2013 cycle (effective 1
July 2014)
• Amendments to IAS 19 (November 2013) Defined Benefit
Plans: Employee Contributions (effective 1 July 2014)
• Amendments to IAS 38 (Issued May 2014) Intangible Assets
(effective 1 January 2016)
•
IFRIC 21 (March 2013) Levies (effective 17 June 2014)
Summary of Accounting Policies
Basis of consolidation
The Group financial statements consolidate those of the
Company and all of its subsidiary undertakings drawn up to 31
March 2015. Under IFRS 10, control exists when an investor is
exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns
through its power over the investee. As each of the divisions
within the Group are 100% wholly owned subsidiaries, the
Group has full control over each of its investees.
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 acquisition
method. The acquisition method involves the recognition at fair
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
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
statement of financial position at their fair values, which are also
used as the bases for subsequent measurement in accordance
with the Group accounting policies.
Where the Group’s assessment of the net fair value of a
subsidiary’s identifiable assets acquired and liabilities assumed
is less than the fair value of the consideration including
contingent consideration of the business combination then the
excess is treated as goodwill. Where the Group’s assessment
of the net fair value of a subsidiary’s net assets and liabilities
exceeds the fair value of the consideration including contingent
consideration of the business combination then the excess is
recognised through profit or loss immediately.
Revenue
Revenue comprises the fair value of the consideration received
or receivable for the sale of 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.
Easyspace
This operating segment provides domain name registration and
hosting services. Revenue from the provision of domain names
is recognised at the point of sale when the title to the domain
name passes to the customer. Revenue from the provision of
hosting services is recognised evenly over the period of the
service and only after the service has been established. Any
unearned portion of revenue is included in payables as deferred
revenue.
Hosting
This operating segment provides managed cloud computing
facilities and services. Revenue from the sale of facilities and
services is spread evenly over the period of the agreement
and only after the service has been established. Any unearned
portion of revenue is included in payables as deferred revenue.
Interest
Interest is recognised on an accruals basis using the effective
interest method.
Intangible assets
Goodwill
Goodwill arising on consolidation
is capitalised on the
consolidated statement of financial position and, subject to an
annual impairment test, has an indefinite life. The carrying value
of goodwill is cost less accumulated impairment losses and is
allocated to cash generating units for the purpose of impairment
testing. The allocation is made to those cash generating units
that are expected to benefit from the business combination.
Impairment reviews are carried out by the Board at least
annually. Impairments to goodwill are charged to profit or loss
in the period in which they arise.
Customer relationships
Customer relationships are recognised only on acquisition.
The fair value is derived based on discounted cash flows from
estimated recurring revenue streams. The carrying value is
stated at fair value at acquisition less accumulated amortisation
and impairment losses. The useful economic life is assessed for
each acquisition separately. Amortisation is charged over the
useful life of the relationships in proportion to the estimated
future cash flows, a period which is generally between five and
eight years.
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 for all developments
capitalised. Amortisation charges are recognised through profit
or loss in the period in which they are incurred.
Software
Software is recognised at cost on purchase and amortised on a
straight-line basis over its useful economic life, which does not
generally exceed five years.
43
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
2. ACCOUNTING POLICIES (CONTINUED)
Acquisition costs
In accordance with IFRS 3 Business Combinations, costs
incurred on professional fees during an acquisition are not
included in the overall cost of the investment in the acquired
business. Consequently, these acquisition costs are included
as Administrative Expenses in the Consolidated Statement of
Comprehensive Income. In addition, the costs associated with
integrating the acquired businesses into the Group are also
included in this category. The combination of both these types
of expenses is also shown in the Consolidated Statement of
Comprehensive Income as acquisition costs.
Non-Statutory Profit Measures
In addition to measuring financial performance of the Group
based on statutory profit measures, the Group also measures
performance based on adjusted EBITDA and adjusted profit
before tax.
Adjusted EBITDA
Adjusted EBITDA is defined as earnings before interest, tax,
depreciation and amortisation (EBITDA) before share based
payment charges and acquisition costs. Adjusted EBITDA is a
common measure used by investors and analysts to evaluate
the operating financial performance of companies, particularly
in the sector that the Group operates.
The Group considers adjusted EBITDA to be a useful measure of
operating performance because it approximates the underlying
operating cash flow by eliminating the charges mentioned
above. It is not a direct measure of liquidity, which is shown in
the Consolidated Statement of Cash Flows, and needs to be
considered in the context of the Group’s financial commitments.
Adjusted Profit before Tax
Adjusted profit before tax is defined as profit before tax,
amortisation charges on acquired intangible assets, share based
payment charges, mark to market adjustments in respect of
interest rate swaps, the accelerated write off of arrangement
fees on the bank borrowing facilities which were repaid early in
the previous year and acquisition costs. Adjusted profit before
tax is a common measure used by investors and analysts to
evaluate the financial performance of companies, particularly in
the sector that the Group operates, where M&A activity forms a
significant part their activities.
The Group considers adjusted profit before tax to be a useful
measure of performance because it eliminates the impact of
certain items associated with acquisitions and other charges
commonly excluded from profit before tax by investors and
analysts for valuation purposes.
Contingent consideration
Where an acquisition involves a potential payment of contingent
consideration the estimate of any such payment is based on its
fair value. To estimate the fair value an assessment is made as
to the amount of contingent consideration which is likely to be
paid having regard to the criteria on which any sum due will be
calculated and is probability based to reflect the likelihood of
different amounts being paid. Where a change is made to the fair
value of contingent consideration within the initial measurement
period as a result of additional information obtained on facts and
circumstances that existed at the acquisition date then this is
accounted for as a change in goodwill. Where changes are made
to the fair value of contingent consideration as a result of events
that occurred after the acquisition date then the adjustment is
accounted for as a charge or credit to profit or loss.
44
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 profit or loss.
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 have immaterial residual
values. The rates generally applicable are:
Freehold property
Between 2.00% and 3.33% per
annum
Leasehold improvements Between 6% and 10% per annum
Computer equipment
Between 20% and 50% per annum
Office equipment
Between 10% and 25% per annum
Datacentre equipment
Between 6% and 10% per annum
Motor vehicles
25% per annum
Land
Not depreciated
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 goodwill.
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. Management estimate expected future cash flows
from each cash generating unit and determines a suitable
interest rate to determine the present value of the future cash
flows. Discount factors are determined for each cash generating
unit to reflect the underlying risks involved. The future cash flows
used in the calculation are based on the Group’s latest approved
budget.
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
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
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 13.
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
profit or loss over the period of the lease.
All other leases are regarded as operating leases and the
payments made under them are charged to profit or loss 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, these are considered separately as to whether there
is a finance lease within the lease.
Lease deposits
Rental and re-instatement deposits for leasehold premises are
included in the Consolidated Statement of Financial Position as
either non-current assets or current assets depending on the
length of time to maturity. Where lease deposits are interest
earning the amount of deposit is not discounted and where they
are not interest earning they are discounted at an appropriate
rate.
Borrowings
Borrowings are initially stated at fair value after deduction
of any issue costs. The carrying amount is increased by the
finance costs in respect of the accounting period and reduced
by payments made in the period. Borrowings are subsequently
stated at amortised cost, any difference between the periods
(net of transaction costs) and the redemption value is recognised
through profit or loss over the period of the borrowings using
the effective interest method. Where borrowings are repaid
early and new loan facilities agreed the terms of each loan
facility are compared. Where the terms of the new borrowings
are significantly different from those of the previous borrowings,
the previous borrowings are treated as extinguished rather than
modified as prescribed under IAS 39.
reinstatement has been fully provided at the end of the lease
period.
Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past events, it is probable
that an outflow of resources will be required to settle the
obligation, and the amount can be reliably estimated. Provisions
are measured at the present value of the expenditures expected
to be required to settle the obligation using a pre-tax rate
that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in
the provision due to passage of time is recognised as interest
expense.
Income taxes
The tax expense recognised in profit or loss comprises the
sum of deferred tax and current tax not recognised in other
comprehensive income or directly in equity.
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 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 period end.
Changes in deferred tax assets or liabilities are recognised as a
component of tax expense in the Statement of Comprehensive
Income, except where they relate to items that are recognised
directly in other comprehensive income or equity (such as share
based remuneration) in which case the related deferred tax
is also recognised in other comprehensive income or equity
accordingly.
Reinstatement costs
The Group has made alterations to properties which it occupies
under lease arrangements. These lease arrangements contain
provision for reinstatement of the property to its original
condition at the Group’s cost at the end of the lease should the
landlord require that to happen. In respect of property leases
which contain such a reinstatement provision the estimated
cost of the reinstatement is provided in the financial statements.
The discounted value of the expected cost of reinstatement is
recorded as a leasehold improvement within property, plant
and equipment and is then depreciated over the remaining
term of the lease. A matching provision is recognised at the
same time which is increased over the period of the lease by
way of an interest charge such that the estimated cost of the
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
profit or loss are recognised at fair value plus transaction costs
on initial recognition. Financial assets categorised as at fair value
through profit or loss are recognised initially at fair value with
transaction costs expensed through profit or loss.
All income and expenses relating to financial assets that are
recognised in the statement of comprehensive income are
presented within ‘finance costs’ or ‘finance income’ except for
impairment of trade receivables which is presented within
‘administrative expenses’.
45
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
2. ACCOUNTING POLICIES (CONTINUED)
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Loans and receivables are measured subsequent to
initial recognition at amortised cost using the effective interest
method, less provision for impairment. Discounting is omitted
where the effect of discounting is immaterial. The Group’s cash
and cash equivalents, trade and most other receivables fall into
this category of financial instruments.
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
reporting date.
Financial derivatives such as forward foreign exchange contracts
and interest rate swaps are carried at fair value through profit or
loss subsequent to initial recognition.
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 profit or loss. 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 through profit or
loss. All other financial liabilities are recorded at amortised
cost using the effective interest method, with interest-related
charges recognised as an expense in finance costs through
profit or loss. A financial liability is derecognised only when
the obligation is extinguished, that is, when the obligation is
discharged, cancelled or when it expires. Finance charges,
including premiums payable on settlement or redemption and
direct issue costs, are charged to profit or loss on an accruals
basis using the effective interest method and are added to the
carrying amount of the instrument to the extent that they are
not settled in the period in which they arise.
Foreign currency transactions
Transactions denominated in foreign currencies are recorded at
the rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the period
end are retranslated at the rates ruling at that date. Any gains
or losses arising on assets and liabilities between the date
of recording and the date of settlement are treated as gains
or losses through profit or loss. Forward foreign exchange
contracts used to hedge the Group’s exposure to foreign
currency transactions are fair valued at the balance date and the
gain or loss is recognised through profit or loss for the period.
The results and financial position of all Group entities that have a
functional currency different from the presentation currency are
translated into the presentation currency as follows:
• assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of the
statement of financial position;
46
•
income and expenses for each income statement are
translated at average exchange rates; and
• all resulting exchange differences are recognised as a
separate component of equity in the foreign currency
translation reserve.
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.
Dividends
Dividend distributions payable to equity shareholders are
included in the financial statements within ‘other short term
financial liabilities’ when a final dividend is approved in a general
meeting. Interim dividend distributions to equity shareholders
approved by the Board are not included in the financial
statements until paid.
Equity
Equity comprises the following:
•
•
•
•
•
•
•
“Share capital” represents the nominal value of equity
shares.
“Own shares Treasury” represents the amount of the
Company’s own equity shares, plus attributable transaction
costs, that is held by the Company as treasury shares.
“Own shares EBT” represents the amount of the Company’s
own equity shares, plus attributable transaction costs, that
is held by the Company within the iomart Group plc
Employee Benefit Trust.
“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.
“Merger reserve” represents the excess over nominal value
of the fair value of consideration received for equity shares,
net of expenses of the share issue, when ordinary share
capital is included in the consideration for business
acquisitions.
“Capital redemption reserve” represents set aside reserves
in relation to previous redemption of own shares.
“Foreign currency translation reserve” represents all
exchange differences on the translation of the results
and financial position of Group entities that have a functional
currency different from the presentation currency.
•
“Retained earnings” represents retained profits.
Employee benefits - pensions
The Group contributes to an auto-enrolment pension scheme
and also 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.
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
Share-based payment
The Group operates equity-settled share-based remuneration
plans for its employees. 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 share-based remuneration plans are ultimately recognised as
an expense through profit or loss with a corresponding credit to
‘retained earnings’.
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 based incentives
expected to vest differs from previous estimates. The two main
vesting conditions that apply to share options relate to the
achievement of annual objectives and continuous employment.
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 based incentives ultimately
exercised are different to that estimated on vesting.
Upon exercise of share based incentives the proceeds received
net of attributable transaction costs are credited to share
capital, and where appropriate share premium.
Segmental reporting
The Group provides segmental reporting on a basis consistent
with the provision of internal financial information used for
decision making purposes by the Chief Operating Decision
Maker. Internal reports are produced on a basis consistent
with the accounting policies adopted in the Group’s financial
statements.
The Group calculates geographical information on the basis of
the location of the customer.
Going concern
The Group’s business activities, together with the factors likely
to affect its future development, performance and position
are set out in the Strategic Report on pages 13 to 20. The
financial position of the Group, its cash flows, liquidity position
and borrowing facilities are described in the Finance Director’s
Report on pages 16 to 18.
In addition, Note 30 to the financial statements include the
Group’s objectives, policies and processes for managing its
capital; its financial risk management objectives; details of its
financial instruments and hedging activities; and its exposures to
credit risk and liquidity risk. As described in note 22 the Group
has a £35m revolving credit facility with Lloyds Banking Group
of which £21.5m is drawn down at the year end. The net debt
balances at the end of the period stood at £15.4m (2014: £19.8m)
a level which the Board is comfortable with given the strong cash
generation of the Group The Group has considerable financial
resources together with long-term contracts with a number
of customers and suppliers across different geographic areas
and industries. As a consequence, the directors believe that the
Group is well placed to manage its business risks.
The directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for
the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing the annual financial
statements.
Key judgements and sources of estimation uncertainty
The key assumptions concerning the future, and other key
sources of estimation uncertainty at the period end, 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
The Group is required to make a judgment as to whether there
is any impairment of goodwill. This 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 13.
Valuation of intangible assets and fair value adjustments on
acquisition
As the Group continues to implement its acquisition strategy
there is a requirement to fair value the assets and liabilities of
any business acquired during the year. The Group is required
to make a judgment as to what intangible assets exist within
the acquired business at the time of the acquisition. When
reviewing the existence of intangible assets consideration has
been given to potential intangible assets such as customer
relationships and brand. The estimation of the valuation of
customer relationships is based on the value in use calculation
which requires estimates of the future cash flows expected to
arise from the existing customer relationships over their useful
life and to select a suitable discount rate in order to calculate
the present value. Full details of the assumptions used in the
calculation of intangible assets and fair value adjustments on
the acquisitions that have occurred during the current year are
disclosed in note 11.
Reinstatement provisions
At the inception of the leases and annually thereafter, the
Directors assess the cost of restoring leasehold premises to
their original condition at the end of the lease. These estimates
are based on information provided by external advisors, the
initial cost of the leasehold improvements and inflation rates
and discount rates until the end of the lease. The reinstatement
provision required at the end of the current year is shown in
note 23.
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. The deferred tax asset
in relation to tax losses is shown in note 10.
Contingent consideration
Where an acquisition involves a potential payment of contingent
consideration the estimate of any such payment is based on its
fair value. To estimate the fair value an assessment is made as
to the amount of contingent consideration which is likely to be
paid having regard to the criteria on which any sum due will be
calculated and is probability based to reflect the likelihood of
different amounts being paid. Full details of the assumptions
adopted in such a calculation are shown in Note 11.
47
iomart Group plc Annual report and accounts 2015 Notes to the financial statements. Year ended 31March 2015
3. SEGMENTAL ANALYSIS
The chief operating decision-maker has been identified as the Chief Executive Officer (“CEO”) of the Company. The Group has two
operating segments and the CEO reviews the Group’s internal reporting which recognises these two segments in order to assess
performance and to allocate resources. The Group has determined its reportable segments which are also its operating segments
based on these reports.
The Group currently has two operating and reportable segments.
• Easyspace – this segment provides a range of shared hosting and domain registration services to micro and SME companies.
• Hosting – this segment provides managed cloud computing facilities and services, through a network of owned datacentres, to
the larger SME and corporate markets. The segment uses several routes to market and provides managed hosting services
through iomart Hosting, RapidSwitch, Melbourne, iomart Cloud Services, Redstation and Backup Technology. ServerSpace was
acquired during the year and has been reported as part of the Hosting segment since acquisition.
Information regarding the operation of the reportable segments is included below. The CEO assesses the performance of the operating
segments based on revenue and a measure of Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) before any
allocation of Group overheads, charges for share based payments or costs associated with acquisitions. This segment EBITDA is used
to measure performance as the CEO believes that such information is the most relevant in evaluating the results of the segment.
The Group’s EBITDA for the year has been calculated after deducting Group overheads from the EBITDA of the two segments as
reported internally. Group overheads include the cost of the Board, all the costs of running the premises in Glasgow, the Group
marketing, human resource, finance and design functions and legal and professional fees.
The segment information is prepared using accounting policies consistent with those of the Group as a whole.
The assets and liabilities of the Group are not reviewed by the chief operating decision-maker on a segment basis. Therefore none of
the Group’s assets and liabilities are segmental assets and liabilities and are all unallocated for segmental disclosure purposes. For that
reason the Group has not disclosed details of segmental assets and liabilities.
All segments are continuing operations. No customer accounts for 10% or more of external revenues. Inter-segment transactions are
accounted for using an arms-length commercial basis.
Operating Segments
Revenue by Operating Segment
Easyspace
Hosting
External
£’000
10,782
55,015
65,797
2015
Internal
£’000
-
950
950
Total
£’000
10,782
55,965
66,747
External
£’000
10,959
44,659
55,618
2014
Internal
£’000
-
932
932
Total
£’000
10,959
45,591
56,550
Geographical Information
In presenting the consolidated information on a geographical basis, revenue is based on the geographical location of customers. The
United Kingdom is the place of domicile of the parent company, iomart Group plc.
Analysis of Revenue by Destination
United Kingdom
Rest of the World
Revenue from operations
48
2015
£’000
54,253
11,544
65,797
2014
£’000
48,005
7,613
55,618
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
3. SEGMENTAL ANALYSIS (CONTINUED)
Profit by Operating Segment
2015
2014
Depreciation,
EBITDA before amortisation,
acquisition
costs and
Depreciation,
EBITDA before amortisation,
acquisition
costs and
acquisition
costs and share
based
payments
£’000
4,905
27,481
(3,333)
-
-
29,053
29,053
share based Operating
payments profit/(loss)
£’000
4,489
12,378
(3,333)
(526)
(809)
12,199
(3,304)
8,895
£’000
(416)
(15,103)
-
(526)
(809)
(16,854)
(16,854)
acquisition
costs and share
based
payments
£’000
4,953
21,700
(3,042)
-
-
23,611
23,611
share based Operating
payments profit/(loss)
£’000
4,348
11,382
(3,042)
(374)
(1,257)
11,057
(3,337)
7,720
£’000
(605)
(10,318)
-
(374)
(1,257)
(12,554)
(12,554)
Easyspace
Hosting
Group overheads
Acquisition costs
Share based payments
Profit before tax and interest
Group interest and tax
Profit for the year
Group overheads, acquisition costs, share based payments, interest and tax are not allocated to segments.
4. OPERATING PROFIT
The profit for the year from total operations is stated after charging the following operating costs:
Staff costs excluding development costs capitalised and research
and development costs written off the statement of comprehensive income
Depreciation of property plant and equipment
- Owned assets
- Leased assets
Property, plant and equipment hire
- Land and buildings
- Plant and machinery
Amortisation of intangible assets
- Acquired intangible assets
- Other intangible assets
R&D expensed to statement of comprehensive income
Marketing and sales
Bad debt expense
Premises and office
Included within other expenses are fees paid to the Group’s auditors, an analysis of which is provided below:
Auditors’ remuneration
Audit services:
- Fees payable for the audit of the consolidation and the parent company accounts
- Fees payable for audit of subsidiaries, pursuant to legislation
Non-audit services:
- Assurance service fees
- Tax compliance fees
- Corporate finance and advisory transactions
2015
£’000
2014
£’000
13,220
13,046
9,162
980
2,433
97
4,368
1,009
476
1,101
46
5,088
6,191
979
2,139
366
3,093
660
132
597
350
4,597
2015
£’000
2014
£’000
40
58
13
31
25
38
55
12
25
4
167
134
49
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
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
2015
£’000
1,248
35
665
517
-
2014
£’000
1,270
60
1,035
532
27
During the year the Company made personal pension contributions to the personal pension schemes of 2 directors (2014: 3).
The aggregate amount of gains realised by directors on the exercise of share options during the year was £nil (2014: £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 29 to 31.
Average number of persons employed by the Group (including directors):
Technical
Customer services
Sales and marketing
Administration
Staff costs of the Group during the year in respect of employees and directors were:
Wages and salaries
Social security costs
Pension costs
Share based payments
2015
No.
159
44
81
50
334
2015
£’000
12,464
1,336
128
809
14,737
2014
No.
136
53
79
25
293
2014
£’000
11,178
1,182
118
1,257
13,735
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 Report of the Board to the Members on Directors’ Remuneration on pages 29 to 31. 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.
6. ACQUISITION COSTS
Professional fees
Non-recurring integration costs
Total acquisition costs
2015
£’000
150
376
526
2014
£’000
374
-
374
During the year costs of £150,000 (2014: £374,000) were incurred in respect of professional fees on various acquisitions. In addition
to these professional fees, one-off costs of £376,000 (2014: £nil) directly related to the integration of acquisitions into the Group were
also incurred.
50
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
7. NET FINANCE COST
Finance income:
Bank interest receivable
Other interest income
Finance income for the year
Finance expenses:
Bank loan
Finance leases
Other interest charges
Mark to market interest adjustment
Accelerated write off of arrangement fees on early repayment of facilities
Finance expense for the year
2015
£’000
33
12
45
(965)
(318)
(51)
(125)
-
(1,459)
2014
£’000
56
12
68
(962)
(235)
(40)
(20)
(153)
(1,410)
Net finance cost
(1,414)
(1,342)
Included in other interest income is £12,000 (2014: £12,000) in respect of leasehold deposits.
8. DIVIDENDS ON SHARES CLASSED AS EQUITY
Paid during the year:
Final dividend
Equity dividends on ordinary shares
2015
Pence per
share
2015
£’000
2014
Pence per
share
2014
£’000
1.75p
1,867
1.40p
1,483
The directors have recommended a final dividend for the year ended 31 March 2015 of 2.50p per share (2014: 1.75p per share).
Subject to shareholder approval this proposed final dividend would be payable on 1 September 2015 to shareholders on the register
as of 14 August 2015.
51
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
9. TAXATION
Tax charge for the year
Adjustment relating to prior years
Total current taxation charge
Origination and reversal of temporary differences
Effect of different statutory tax rates of overseas jurisdictions
Effect of changes in tax rates
Total deferred taxation credit
2015
£’000
(2,782)
36
(2,746)
871
14
(29)
856
2014
£’000
(3,002)
480
(2,522)
486
-
41
527
Total taxation charge
(1,890)
(1,995)
The Group has a deferred tax asset which has been recognised in respect of tax losses within one subsidiary company, 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 before tax are as follows:
Profit before tax
Tax charge @ 21% (2014 – 23%)
Expenses disallowed for tax purposes
Non-taxable income
Adjustments in respect of prior years
Effect of different statutory tax rates of overseas jurisdictions
Movement in deferred tax relating to changes in tax rates
Effect of research and development tax reliefs
Tax effect of share based remuneration
Movement in unprovided deferred tax related to property, plant and equipment
Movement in deferred tax relating to prior periods
Taxation charge for the year
2015
£’000
10,785
2,265
71
(6)
(36)
(14)
29
(395)
155
-
(179)
1,890
2014
£’000
9,715
2,234
263
-
(480)
-
(41)
(350)
142
103
124
1,995
The weighted average applicable tax rate for the year ended 31 March 2015 was 21% (2014: 23%). The total current tax charge of
£2,782,000 (2014: £3,002,000) on operations represents 25.8% (2014: 30.9%) of the Group profit before tax of £10,785,000 (2014:
£9,715,000). A number of changes to the UK Corporation tax system were announced in the March 2014 Budget Statement with the
main rate of corporation tax reduced from 21% to 20% from 1 April 2015. These changes were substantively enacted at the period end
and therefore are included in these financial statements.
52
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
10. DEFERRED TAX
The Group recognised deferred tax assets and liabilities as follows:
2015
Deferred tax Deferred tax
Recognised Unrecognised
£’000
£’000
2014
Deferred tax Deferred tax
Recognised Unrecognised
£’000
£’000
Tax losses carried forward
Share based remuneration
Capital allowances temporary differences
Deferred tax on acquired assets with no capital allowances
Deferred tax on customer relationships
Deferred tax liability
289
575
873
(605)
(3,219)
(2,087)
-
-
-
-
-
-
831
600
414
(765)
(3,523)
(2,443)
-
-
-
-
-
-
At the year end, the Group has unused tax losses of £1.2m (2014: £4.0m) available for offset against future profits. A deferred tax asset
has been recognised in respect of all £1.2m (2014: £4.0m) of such losses as these losses are expected to be used up by taxable profits
by the end of the period covered by future projections.
The movement in the deferred tax account during the year was:
Tax losses
Capital
Deferred tax
on acquired
allowances assets with no
capital
allowances
£’000
carried Share based
temporary
forward remuneration differences
£’000
£’000
£’000
Balance at 1 April 2013
Acquired on acquisition of subsidiary
Credited to equity
(Charged)/credited to statement of
comprehensive income
Effect of changes in tax rates
Balance at 1 April 2014
Acquired on acquisition of subsidiary
Debited to equity
(Charged)/credited to statement of
comprehensive income
Effect of different tax rates of overseas
jurisdictions
Effect of changes in tax rates
Balance at 31 March 2015
1,167
-
-
(222)
(114)
831
89
-
(673)
44
(2)
289
681
-
19
(41)
(59)
600
-
(19)
2
-
(8)
575
282
215
-
(64)
(19)
414
(13)
-
550
(30)
(48)
873
(949)
-
-
104
80
(765)
-
-
131
-
29
(605)
Customer
relationships
£’000
(1,649)
(2,736)
-
709
153
(3,523)
(557)
-
Total
£’000
(468)
(2,521)
19
486
41
(2,443)
(481)
(19)
861
871
-
-
(3,219)
14
(29)
(2,087)
The deferred tax asset in relation to tax losses carried forward arises from unutilised tax losses in the Hosting operating segment. The
deferred tax asset has been recognised in line with future projections over the next year. The basis of these projections is:
•
•
•
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 certain companies within the operating segments, 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.
The deferred tax on capital allowances temporary differences arises mainly from plant and equipment in the Hosting segment where
the tax written down value varies from the net book value.
The deferred tax on acquired assets arises from datacentre equipment acquired through the acquisition of iomart Datacentres Limited
on which depreciation is charged but on which there are no capital allowances available.
The deferred tax on customer relationships arises from temporary differences on acquired intangible assets.
53
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
11. ACQUISITIONS
ServerSpace Limited
The Group acquired 100% of the issued share capital of ServerSpace Limited (“ServerSpace”) on 3 December 2014.
ServerSpace is a London based provider of managed hosting services to over 300 customers. The acquisition is in line with the Group’s
strategy to grow its hosting operations both organically and by acquisition.
During the current period the Group incurred £116,000 of third party acquisition related costs in respect of this acquisition. These
expenses are included in administrative expenses in the Group’s consolidated statement of comprehensive income for the period
ended 31 March 2015.
The following table summarises the consideration to acquire ServerSpace and the provisional amounts of identified assets acquired
and liabilities assumed at the acquisition date:
Recognised amounts of net assets acquired and liabilities assumed (provisional):
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Intangible assets
Trade and other payables
Current borrowings
Non-current borrowings
Deferred tax liability
Identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash – paid on acquisition
Contingent consideration - payable
Total consideration transferred
£’000
155
376
453
2,778
(1,458)
(13)
(23)
(481)
1,787
2,463
4,250
2,600
1,650
4,250
The recognised amounts of all the net assets acquired and liabilities assumed are provisional.
The share purchase agreement, in respect of the acquisition of ServerSpace, included a provision under which the total consideration
payable may have been adjusted by a payment to be made either to or by the Company, depending on the level of cash, debt and
working capital shown in an agreed set of accounts (the Completion Accounts) made up to, and as at, the completion date. Following
agreement of the Completion Accounts it was agreed by the Company and the former shareholders of ServerSpace that no payment
was due either to or by the Company under the terms of this provision. The contingent consideration arrangements require the
Company to pay the former shareholders of ServerSpace additional amounts contingent on the completion of the migration of existing
customer services to an iomart datacentre (“the Migration Payment”) and on the level of profitability and the mix of revenue delivered
by ServerSpace in the year ending 30 September 2015 (“the Earn-out Payment”).
The potential undiscounted amount of the total payments that the Company could be required to make is between £nil and £1,650,000.
The amount of contingent consideration payable which was recognised as of the acquisition date was £1,650,000.
The amount of contingent consideration payable in respect of the Migration Payment is between £nil and £125,000 and the amount of
contingent consideration payable in respect of the Earn-out Payment is between £nil and £1,650,000. The total contingent consideration
payable in respect of the Migration payment and the Earn-out payment is restricted to £1,650,000 and, if the total of the two payments
would exceed this amount, the Earn-out payment will be reduced by the amount required to reduce the total to £1,650,000.
The fair value of the Migration Payment has been calculated to be £119,000. This amount was calculated using a weighted average
based on management estimates of the probability that the conditions required for the payment to be made will be met by the former
shareholders of ServerSpace.
54
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
11. ACQUISITIONS (CONTINUED)
The fair value of the Earn-out Payment has been calculated to be £1,531,000. The Earn-out Payment is based on the absolute level
of profitability achieved by ServerSpace in the year ending 30 September 2015, subject to reductions if either or both of the level of
profitability in relation to revenue or the revenue mix is below specified limits.
The absolute level of profitability was estimated by applying the income approach to different scenarios based on historic performance
and forecasts. These scenarios had a range of outcomes for the amount of the Earn-out Payment of £1,157,000 to £1,650,000. A
weighted average, based on management estimates of the probability of the achievement of the various levels of profitability, was
then calculated to give the expected outcome of the amount of the Earn-out Payment, before any reduction in respect of the level of
profitability in relation to revenue or the revenue mix, of £1,609,000.
The reductions to be applied to the Earn-out Payment in respect of each of the level of profitability in relation to revenue and the
revenue mix were estimated by applying management estimates of the probability that the conditions required for the full payment to
be made will not be met and calculating the weighted average outcome in each case.
The calculated reductions in the Earn-out Payment in respect of the level of profitability in relation to revenue and the revenue mix were
then both applied to the expected outcome, before these adjustments, of £1,609,000, to give a net expected outcome of £1,573,000. As
the total of the calculated Migration Payment and the Earn-out Payment exceeds the maximum contingent consideration of £1,650,000,
the fair value of the Earn-out Payment has been reduced to £1,531,000.
The fair value of the contingent consideration is £1,650,000, being the total of the fair values of the Migration Payment of £119,000
and the Earn-out Payment of £1,531,000.
The goodwill arising on the acquisition of ServerSpace is attributable to the premium payable for a pre-existing, well positioned
business and the specialised, industry specific knowledge of the management and staff, together with the benefits to the Group in
merging the business with its existing infrastructure and the anticipated future operating synergies from the combination. The goodwill
is not expected to be deductible for tax purposes.
The name ServerSpace is not actively advertised or promoted, with the majority of ServerSpace’s business being generated from
existing customers or by word of mouth. ServerSpace has given a commitment to customers not to use for any purpose, other than
the service agreement, any confidential information received from the customer. As a consequence there is no significant value in
either the trade name/brand or customer lists acquired at the acquisition date and therefore no value has been attributed to either
intangible asset.
The fair value of the financial assets acquired includes trade receivables with a fair value of £263,000. The gross amount due under
contracts is £293,000 of which £30,000 is expected to be uncollectable.
The fair value included in respect of the acquired customer relationships intangible asset is £2,778,000.
To estimate the fair value of the customer relationships intangible asset, a discounted cash flow method, specifically the income
approach, was used with reference to the directors’ estimates of the level of revenue which will be generated from them. A post-tax
discount rate of 11.4% was used for the valuation. Customer relationships are being amortised over an estimated useful life of 8 years.
ServerSpace earned revenue of £1,003,375 and generated a loss before tax of £128,093 in the period since acquisition.
Redstation Limited and Backup Technology Holdings Limited
The fair values of acquired assets and liabilities, including goodwill, previously disclosed as provisional for Redstation Limited and
Backup Technology Holdings Limited have been finalised in the current period with no changes to the fair values disclosed in the Annual
Report and Accounts 2014.
Pro-forma full year information
The following summary presents the Group as if the business acquired during the year had been acquired on 1 April 2014. The
amounts include the results of the acquired business, a charge for interest on the additional debt incurred to finance the acquisition
and depreciation and amortisation of the acquired property, plant and equipment and intangible assets recognised on acquisition.
The amounts do not include any possible synergies from the acquisition. The information is provided for illustrative purposes only
and does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of the future results of the
combined companies.
Revenue
Profit after tax for the year
Pro-forma year ended 31 March 2015
£’000
67,721
8,207
55
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
12.EARNINGS PER ORDINARY SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the year, after deducting any own shares held by an Employee Benefit Trust in a Joint Share Ownership
Plan (“JSOP”). Diluted earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the total of the
weighted average number of ordinary shares in issue during the year, after deducting any own shares (JSOP), and adjusting for the
dilutive potential ordinary shares relating to share options, including the dilutive effect of JSOP shares that have vested.
Total operations
Profit for the financial year and basic earnings attributed to ordinary
shareholders
Weighted average number of ordinary shares:
Called up, allotted and fully paid at start of year
Own shares held in Treasury
Shares held by Employee Benefit Trust
New shares issued during year
Weighted average number of ordinary shares - basic
2015
£’000
8,895
No
000
107,803
(971)
(141)
-
106,691
2014
£’000
7,720
No
000
105,760
(1,016)
(141)
1,101
105,704
Dilutive impact of share options
1,236
1,005
Weighted average number of ordinary shares - diluted
107,927
106,709
Basic earnings per share
Diluted earnings per share
Adjusted earnings per share
Profit for the financial year and basic earnings attributed to ordinary shareholders
- Amortisation of acquired intangible assets
- Acquisition costs
- Share based payments
- Mark to market interest adjustment
- Accelerated write off of arrangement fees
- Tax impact of adjusted items
Adjusted profit for the financial year and adjusted earnings attributed
to ordinary shareholders
Adjusted basic earnings per share
Adjusted diluted earnings per share
8.34 p
8.24 p
2015
£’000
8,895
4,368
526
809
125
-
(1,093)
7.30 p
7.23 p
2014
£’000
7,720
3,093
374
1,257
20
153
(1,039)
13,630
11,578
12.77 p
12.63 p
10.95 p
10.85 p
56
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
Development
Customer
costs relationships
£’000
£’000
Domain
Beneficial names & IP
addresses
contracts
£’000
£’000
Software
£’000
13. INTANGIBLE ASSETS
Cost
At 1 April 2013
Additions
Disposals
Acquired on acquisition of subsidiary
Development cost capitalised
At 1 April 2014
Additions
Currency translation differences
Acquired on acquisition of subsidiary
Development cost capitalised
At 31 March 2015
Accumulated amortisation:
At 1 April 2013
Disposal
Charge for the year
At 1 April 2014
Currency translation differences
Charge for the year
At 31 March 2015
Carrying amount:
Goodwill
£’000
31,781
-
-
13,098
-
44,879
-
-
2,463
-
47,342
2,111
-
-
-
557
2,668
-
-
-
1,041
3,709
-
-
-
-
-
-
-
(1,396)
-
(473)
(1,869)
-
(627)
(2,496)
9,644
-
-
13,335
-
22,979
598
76
2,778
-
26,431
(2,478)
-
(3,086)
(5,564)
(20)
(4,361)
(9,945)
600
24
(15)
1,048
-
1,657
435
22
-
-
2,114
(534)
15
(156)
(675)
-
(328)
(1,003)
Total
£’000
44,253
24
(15)
27,730
557
72,549
1,033
98
5,241
1,041
79,962
31
-
-
249
-
280
-
-
-
-
280
(31)
-
(31)
(62)
-
(54)
(116)
(4,444)
15
(3,753)
(8,182)
(20)
(5,377)
(13,579)
164
66,383
218
64,367
86
-
-
-
-
86
-
-
-
-
86
(5)
-
(7)
(12)
-
(7)
(19)
67
74
At 31 March 2015
47,342
1,213
16,486
1,111
At 31 March 2014
44,879
799
17,415
982
Of the total additions in the year of £1,033,000 (2014: £24,000), £182,000 (2014: £nil) were funded by finance leases, £484,000 (2014:
£nil) was included in trade payables as unpaid invoices at the year end resulting in a net £484,000 (2014: £nil) movement in trade
payables. Consequently, the consolidated statement of cash flows discloses a figure of £367,000 (2014: £24,000) as the cash outflow
in respect of intangible asset additions in the year.
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 statement of comprehensive income.
During the year, goodwill was reviewed for impairment in accordance with IAS 36 “Impairment of Assets”. No impairment charges (2014:
£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. The goodwill acquired in the ServerSpace acquisition has been allocated to the Hosting CGU, as this is the CGU
expected to benefit from the business combination.
The carrying value of goodwill by each CGU is as follows:
Cash Generating Units (CGU)
Easyspace
Hosting
2015
£’000
17,137
30,205
47,342
2014
£’000
17,137
27,742
44,879
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 the Board covering a two-year period. These projections are the result of detailed
planning and assume similar levels of organic growth as the Group has experienced in the previous year unless there is a reason to
alter historic growth rates and also full year contributions from acquisitions.
57
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
13. INTANGIBLE ASSETS (CONTINUED)
The growth rates and margins used to extrapolate estimated future performance in the 3 years after the initial 2 year period continue
to be based on past growth performance adjusted downwards to take into account the additional risk due to the passage of time. 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
Average growth rate in years 3 to 5
Future perpetuity rate
Initial period for which cash flows are estimated (years)
Easyspace
10%
2.00%
2.00%
2
Hosting
10%
3.50%
2.00%
2
Based on an analysis of the impairment calculation’s sensitivities to changes in key parameters (growth rate, discount rate and pre-tax
cash flow projections) there was no reasonably possible scenario where the CGU’s recoverable amount would fall below its carrying
amount.
14. LEASE DEPOSITS
The lease deposits of £2,416,000 (2014: £2,416,000) are made up of a rental deposit of £784,000 (2014: £784,000) and a reinstatement
deposit of £1,632,000 (2014: £1,632,000). The rental and reinstatement deposits are 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 and therefore has not been discounted.
58
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
15. PRINCIPAL SUBSIDIARIES
The following subsidiaries have been consolidated in the Group financial statements:
Country of
registration
and operation Activity
Ordinary share capital
Owned by the
company
%
Owned by
subsidiary
undertakings
%
iomart Limited
iomart Hosting Limited
iomart Cloud Services Limited
EQSN Limited
iomart Virtual Servers Hosting Limited
Netintelligence Limited
iomart Development Limited
iomart Cloud Inc
Easyspace Limited
Open Minded Solutions Limited
Backup Technology Holdings Limited
Backup Technology Limited
Switch Media Limited
Internet Engineering Limited
Redstation Limited
My Documents Limited
Switch Media (Ireland) Limited
Global Gold Network Limited
Global Gold Holdings Limited
Skymarket Limited
Rapidswitch Limited
Titan Internet Limited
Melbourne Server Hosting Limited
ServerSpace Limited
iomart Datacentres Limited
Internetters Limited
NicNames Limited
Web Genie Internet Limited
Scotland Dormant
Scotland Managed hosting services
Scotland Managed hosting services
Scotland Non-trading
Scotland Dormant
Scotland Dormant
Scotland Dormant
USA Managed hosting services
England Webservices
England Webservices
England Non-trading
England Non-trading
England Webservices
England Webservices
England Non-trading
England Dormant
England Webservices
England Webservices
England Non-trading
England Non-trading
England Non-trading
England Non-trading
England Managed hosting services
England Managed hosting services
England Non-trading
England Dormant
England Dormant
England Non-trading
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
-
-
100
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
-
-
-
-
100
100
-
-
-
-
-
-
-
100
100
100
59
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
16. PROPERTY, PLANT AND EQUIPMENT
Freehold
property
£’000
Leasehold
improve-
ments
£’000
Datacentre
equipment
£’000
Computer
equipment
£’000
Office
equipment
£’000
Motor
vehicles
£’000
Cost:
At 1 April 2013
Additions in the year
Acquisition of subsidiaries
Disposals in the year
At 31 March 2014
Additions in the year
Acquisition of subsidiary
Disposals in the year
Currency translation differences
At 31 March 2015
Accumulated depreciation:
At 1 April 2013
Charge for the year
Disposals in the year
At 31 March 2014
Charge for the year
Disposals in the year
Currency translation differences
At 31 March 2015
837
-
1,225
-
2,062
-
-
-
-
2,062
(79)
(37)
-
(116)
(34)
-
-
(150)
5,180
1,195
357
-
6,732
109
16
-
-
6,857
(1,097)
(321)
-
(1,418)
(440)
-
-
(1,858)
11,215
5,305
325
-
16,845
1,522
-
-
-
18,367
(3,675)
(1,109)
-
(4,784)
(1,469)
-
-
(6,253)
17,138
6,290
4,831
(192)
28,067
9,705
434
(322)
94
37,978
(10,218)
(5,535)
170
(15,583)
(7,925)
322
(10)
(23,196)
1,251
249
59
-
1,559
582
3
-
-
2,144
(679)
(164)
-
(843)
(269)
-
-
(1,112)
43
-
5
-
48
-
-
-
-
48
(32)
(4)
-
(36)
(5)
-
-
(41)
Total
£’000
35,664
13,039
6,802
(192)
55,313
11,918
453
(322)
94
67,456
(15,780)
(7,170)
170
(22,780)
(10,142)
322
(10)
(32,610)
Carrying amount:
At 31 March 2015
1,912
4,999
12,114
14,782
1,032
7
34,846
At 31 March 2014
1,946
5,314
12,061
12,484
716
12
32,533
The net book value of computer equipment held under finance lease at 31 March 2015 was £1,455,000 (2014: £1,839,000) and the net
book value of datacentre equipment held under finance lease at 31 March 2015 was £617,000 (2014: £690,000).
Of the total additions in the year of £11,918,000 (2014: £13,039,000), £458,000 (2014: £894,000) were funded by finance leases,
£2,354,000 (2014: £1,577,000) was included in trade payables as unpaid invoices at the year end resulting in a net £777,000 (2014:
£65,000) movement in trade payables and £nil (2014: £429,000) related to non-cash reinstatement provisions. Consequently, the
consolidated statement of cash flows discloses a figure of £10,683,000 (2014: £11,651,000) as the cash outflow in respect of property,
plant and equipment additions in the year.
17. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Provision for impairment
Trade receivables (net)
Other receivables
Prepayments and accrued income
Trade and other receivables
2015
£’000
5,588
(539)
5,049
650
5,690
11,389
2014
£’000
3,939
(686)
3,253
442
4,001
7,696
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 segment 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 provison calculations and are not individually impaired.
60
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
17. TRADE AND OTHER RECEIVABLES (CONTINUED)
To consider the total exposure to credit risks, the Group uses figures net of VAT. At 31 March 2015, £3,118,000 (2014: £2,116,000) of
net trade receivables were fully performing. Net trade receivables of £1,931,000 (2014: £1,137,000) were past due, but not impaired.
The credit quality of financial assets that are neither past due or impaired can be assessed by reference to the customer type. Trade
receivables consist of a large number of customers in various industries and geographical areas. The Group is not exposed to any
significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The aging below
shows that almost all are less than three months old and historic performance indicates a high probability of payment for debts in this
aging. Those over three months relate to customers without history of default for which there is a reasonable expectation of recovery.
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
2015
£’000
1,867
56
8
1,931
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at start of the year
(Decrease)/increase in provision for receivables impairment
Fair value of trade receivable provision acquired during the year
Balance at end of year
18. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Cash and cash equivalents
2015
£’000
686
(177)
30
539
2015
£’000
8,347
8,347
2014
£’000
1,037
89
11
1,137
2014
£’000
376
192
118
686
2014
£’000
13,025
13,025
The credit risk on cash and cash equivalents is considered to be negligible because the counter parties are UK banking institutions. The
effective interest rate earned on short term deposits was 0.50% (2014: 0.50%).
19. TRADE AND OTHER PAYABLES
Trade payables
Other taxation and social security
Accruals
Deferred income
Other creditors
Trade and other payables
2015
£’000
(4,186)
(1,464)
(6,587)
(5,475)
(968)
(18,680)
2014
£’000
(3,733)
(1,360)
(4,334)
(5,677)
(54)
(15,158)
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.
61
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
20. NON-CURRENT TRADE AND OTHER PAYABLES
Trade payables
Non-current trade and other payables
21. CONTINGENT CONSIDERATION
Contingent consideration due on acquisitions:
- ServerSpace Limited
- Skymarket Limited
- Redstation Limited
Total contingent consideration due on acquisitions
22. BORROWINGS
Current:
Obligations under finance leases
Bank loans
Current borrowings
Non-current:
Obligations under finance leases
Bank loans
Total non-current borrowings
Total borrowings
The carrying amount of borrowings approximates to their fair value.
2015
£’000
(703)
(703)
2015
£’000
(1,650)
-
-
(1,650)
2015
£’000
(938)
(21,457)
(22,395)
(1,346)
-
(1,346)
(23,741)
The obligations under finance leases are secured by the related assets and are repayable as follows:
Due within one year
Due between two and five years
Due after more than five years
Capital
£’000
938
968
378
2,284
2015
Interest
£’000
154
300
60
514
Total
£’000
1,092
1,268
438
2,798
Capital
£’000
1,038
1,277
503
2,818
2014
Interest
£’000
183
348
110
641
2014
£’000
-
-
2014
£’000
-
(32)
(1,239)
(1,271)
2014
£’000
(1,038)
(18,090)
(19,128)
(1,780)
(11,936)
(13,716)
(32,844)
Total
£’000
1,221
1,625
613
3,459
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 8.9% (2014: 8.4%). Lease payments are made on a monthly and quarterly
basis. The future lease obligation of £2,798,000 (2014: £3,459,000) has a present value of £2,277,000 (2014: £2,710,000).
62
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
22. BORROWINGS (CONTINUED)
On 28 July 2014 the Group agreed a new bank facility with Lloyds Banking Group comprising a £15m multi option revolving credit
facility which together with the existing £20m multi option revolving credit facility provided £35m of total facilities. The new multi option
revolving credit facility replaced a term loan facility of £15m.
At the beginning of the year under the previous facilities there was £15m outstanding on the multi option revolving credit facility and
£15m outstanding on the term loan. In April 2014, £1.5m was repaid on the term loan. Following the agreement of the new bank facility,
the remaining £13.5m of the term loan was repaid in July 2014 and a draw down under the new multi option revolving credit facility of
£13.5m was made. The repayment of the term loan has been treated as an extinguishment in accordance with IAS 39. This resulted in
the total drawn down of multi option revolving credit facilities of £28.5m.
In September 2014, £3.5m and in March 2015, £3.5m were repaid on the new multi option revolving credit facility which left an
outstanding balance at the year end of £21.5m.
The £35m multi option revolving credit facility may be used by the Group to finance acquisitions, capital expenditure and for the issue
of guarantees, bonds or indemnities. The facility is available until October 2017 at which point any advances made under the revolving
credit facility will become immediately repayable. In addition, each draw down made under this facility can be for either 3 or 6 months
and can either be repaid or continued at the end of the period. As security for the loans, Lloyds Banking Group has the benefit of
floating charges and debentures granted by group companies. Interest is charged on this loan at an annual rate determined by the sum
of the term loan margin, LIBOR and the lender’s mandatory costs. The multi option credit facility margin is fixed at 2.0% per annum.
A one-off arrangement fee of £337,500 was paid in respect of the £20m multi option revolving credit facility when the facility was first
drawn down and a non-utilisation fee of 40% of the multi option revolving credit facility margin is due on any undrawn portion of the
full £35m multi option revolving credit facilities. The effective interest rate for multi option revolving credit loans in the current year
was 3.82% (2014: 4.41%).
The future loan obligations of £21,716,000 (2014: £32,865,000) equate to a present value of £21,269,000 (2014: £23,630,000). The
capital element of the bank loans is £21,457,000 (2014: £30,026,000) and this differs from the net amount drawn down of £21,500,000
(2014: £30,000,000) due to an effective interest rate adjustment.
The obligations under the multi option revolving credit facility and term loan facility are repayable as follows:
Due within one year
Due between two and five years
Analysis of change in net cash/(debt)
Capital
£’000
21,457
-
21,457
2015
Interest
£’000
259
-
259
Total
£’000
21,716
-
21,716
Cash and cash
equivalents
£’000
Bank
loans
£’000
Capital
£’000
18,090
11,936
30,026
2014
Interest
£’000
1,104
1,735
2,839
Finanace leases
and hire
purchase
£’000
Other
loans
£’000
Total
£’000
19,194
13,671
32,865
Total
£’000
At 1 April 2013
11,392
(8,848)
-
(2,972)
(428)
Repayment of bank loans
New bank loans
Impact of effective interest rate
Inception of finance leases
Acquired on acquisition of subsidiary
Cash flow
At 31 March 2014
Repayment of bank loans
New bank loans
Impact of effective interest rate
Inception of finance leases
Acquired on acquisition of subsidiary
Currency translation differences
Cash flow
At 31 March 2015
-
-
-
-
1,355
278
13,025
-
-
-
-
155
-
(4,833)
8,347
16,500
(37,500)
(174)
-
(4)
-
(30,026)
22,000
(13,500)
69
-
-
-
-
(21,457)
-
-
-
-
(5,731)
5,731
-
-
-
-
-
-
-
-
-
-
-
-
(896)
(334)
1,384
(2,818)
-
-
-
(640)
(36)
(35)
1,245
(2,284)
16,500
(37,500)
(174)
(896)
(4,714)
7,393
(19,819)
22,000
(13,500)
69
(640)
119
(35)
(3,588)
(15,394)
63
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
23. PROVISIONS
The Group has made provision for the reinstatement of certain leasehold properties and after initial measurement, any subsequent
adjustments to reinstatement provisions will be recorded against the original amount included in leasehold improvements with a
corresponding adjustment to future depreciation charges.
Upon the acquisition of ServerSpace, the Group recognised an onerous lease provision for excess datacentre capacity based on the
contracted future lease rental obligations relating to datacentre capacity that is no longer required.
The directors consider the carrying values of the provisions to approximate to their fair values as they have been discounted.
The movement in the provisions during the year was as follows:
Balance at start of the year
Initial recognition on acquisition of subsidiary
Additional provision recognised during year
Reduction in provision
Unwinding of discount
Reinstatement
£’000
(1,566)
-
-
-
(51)
(1,617)
2015
Onerous
£’000
-
(583)
(376)
136
-
(823)
2014
Total Reinstatement Onerous
£’000
£’000
-
(1,566)
-
(583)
-
(376)
-
136
-
(51)
-
(2,440)
£’000
(1,097)
-
-
(429)
(40)
(1,566)
Total
£’000
(1,097)
-
-
(429)
(40)
(1,566)
24. OPERATING LEASES
The Group has outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due
as follows:
2015
2014
Within one year
Between two to five years
After five years
Land and
buildings
£’000
2,910
7,288
3,222
13,420
Other
£’000
75
286
279
640
Land and
buildings
£’000
2,109
7,272
4,560
13,941
Other
£’000
144
193
237
574
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. At 31 March 2015, the total future minimum sub-
lease payments expected to be received under non-cancellable sub-leases were £16,000 (2014: £72,000).
25. SHARE CAPITAL
Authorised
At 31 March 2013, 2014 and 2015
Called up, allotted and fully paid
At 31 March 2013
Exercise of options
Issue of new shares for business acquisition
At 31 March 2014 and 31 March 2015
Ordinary shares of 1p each
Number of shares
200,000,000
105,759,876
321,809
1,721,321
107,803,006
£’000
2,000
1,058
3
17
1,078
During the year the Company issued nil (2014: 321,809) ordinary shares of 1p each in respect of the exercise of share options by
employees for which a net total of £nil (2014: £134,583) was received.
At 31 March 2015 the Company held 945,203 shares (2014: 983,203) as own shares in treasury which were accounted for in the Own
Shares Treasury reserve and had a nominal value of £9,452 (2014: £9,832) and a market value of £1,932,940 (2014: £2,426,053). This
represents 0.9% (2014: 0.9%) of the issued share capital as at 31 March 2015 excluding own shares.
At 31 March 2015 the Company held 140,773 shares (2014: 140,773) as own shares in the iomart Group plc Employee Benefit Trust
(“EBT”) which were accounted for in the Own Shares EBT reserve and had a nominal value of £1,408 (2014: £1,408) and a market value
of £287,881 (2014: £347,357). This represents 0.1% (2014: 0.1%) of the issued share capital as at 31 March 2015 excluding own shares.
The share capital of iomart Group plc consists of ordinary shares with a par value of 1p. All shares, excluding the shares held by
the Company in treasury and the shares held by the EBT, are equally eligible to receive dividends and represent one vote at the
shareholders' meetings of iomart Group plc. All shares issued at 31 March 2015 are fully paid.
64
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
26. OWN SHARES RESERVES
Opening balance at 1 April 2014
Issue of own shares from Treasury for option redemption
Closing balance at 31 March 2015
Own shares
EBT
£’000
Own shares
Treasury
£’000
Own shares
Total
£’000
(70)
-
(70)
(486)
18
(468)
(556)
18
(538)
During the year 38,000 (2014: 40,250) own shares held in treasury at the carrying value of 49.5p each were issued following the exercise
of share options by employees for which a net total of £23,820 (2014: £20,869) was received. As a consequence, at 31 March 2015 the
Company held 945,203 shares (2014: 983,203) in treasury with a carrying value of £467,875 (2014: £486,685) which were accounted
for in Own Shares treasury reserve; and 140,773 shares (2014: 140,773) in the EBT with a carrying value of £69,982 (2014: £69,982)
which were accounted for in the Own Shares EBT reserve.
27. SHARE BASED PAYMENTS
The Group operated the following share based payment employee share option schemes during the year; Enterprise Management
Incentive scheme, a SAYE sharesave scheme 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
Unapproved schemes
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
Yes
Yes
Yes
The performance criteria as set by the Remuneration Committee are based on the achievement of annual objectives and continuous
employment.
During the year, options over 38,000 ordinary shares (2014: 362,059) were exercised and the average market price at the exercise
dates was 216.2p (2014: 269.3p). Options over 257,560 ordinary shares (2014: 120,000) were granted under the unapproved share
option scheme with an average exercise price of 1.0p (2014: 1.0p) and no options over ordinary shares (2014: 274,435) were granted
under the sharesave scheme. Options over 120,000 ordinary shares (2014: nil) lapsed under the unapproved share option scheme with
an average exercise price of 1.0p (2014: £nil) and options over 33,380 (2014: nil) lapsed under the sharesave scheme with an average
exercise price of 191.4p.
As disclosed in note 5, a share based payment charge of £809,000 (2014: £1,257,000) has been recognised in the statement of
comprehensive income 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:
65
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
27.SHARE BASED PAYMENTS (CONTINUED)
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
25-Sep-14
25-Sep-17
224.1p
58%
0.5%
3
10
3.5
1.79%
100%
219.3p
1p
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; and
ii) Risk free rate was calculated based on the average Bank of England zero coupon yields
The movement in options during the year in respect of the Company’s ordinary shares of 1p each under the various share option
schemes are as follows:
Outstanding at start of year
Granted
Forfeited
Expired
Exercised
Outstanding at end of year
Exercisable at end of year
2015
2014
Weighted
average
exercise price
per share (p)
Number of
share options
Weighted
average
exercise price
per share (p)
Number of
share options
76.16
1.00
42.44
-
62.88
71.17
40.53
2,675,055
257,560
(153,380)
-
(38,000)
2,741,235
1,319,287
64.60
133.47
146.10
-
42.94
76.16
51.27
2,692,679
394,435
(50,000)
-
(362,059)
2,675,055
1,083,954
Summary of share options that were outstanding at the year end:
Share options – outstanding
Share options – exercisable
Weighted
average
Range of
exercise
exercise
price per Outstanding price per
share (p)
share (p)
shares
Weighted
average
remaining
contractual
life (years)
Weighted Weighted
average
average
exercise
remaining
price per contractual
life (years)
share (p)
Outstanding
shares
Enterprise management
incentive scheme
Unapproved schemes
Sharesave scheme
As at end of year
43.5 – 87.5
1.0 – 146.1
191.4
408,677
2,091,503
241,055
2,741,235
66.38
58.25
191.4
71.17
3.9
7.4
2.3
6.4
408,677
910,610
-
1,319,287
66.38
28.92
-
40.53
3.9
6.6
-
5.8
66
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
28.RELATED PARTY TRANSACTIONS
Compensation paid to key management (only directors are deemed to fall into this category) during the year was as follows:
Salaries and other short-term employee benefits
Post-employment benefits
Share-based payments
Dividends paid to key management were as follows:
Angus MacSween
Chris Batterham
Sarah Haran
Richard Logan
Ian Ritchie
Crawford Beveridge
Total dividends paid to directors
2015
£’000
1,414
40
665
2,119
2015
£’000
294
2
34
17
3
1
351
2014
£’000
1,434
68
1,035
2,537
2014
£’000
286
1
33
18
2
-
340
29. CONTINGENCIES AND COMMITMENTS
(a) Contingencies
There were no contingent assets or liabilities as at 31 March 2015 (2014: nil).
(b) Commitments
Capital expenditure on property, plant and equipment committed by the Group at 31 March 2015 was £147,000 (2014: £482,000).
30. RISK MANAGEMENT
The Group finances its operations by raising finance through equity, bank borrowings and finance leases. 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, short term
receivables/payables and borrowings.
The carrying amounts of financial assets presented in the statement of financial position relate to the following measurement
categories as defined in IAS 39:
Loans and receivables
£’000
2015
Non-current:
Lease deposit
Current:
Trade receivables
Cash and cash equivalents
Other receivables
Total for category
2014
Non-current:
Lease deposit
Current:
Trade receivables
Cash and cash equivalents
Other receivables
Total for category
2,416
5,049
8,347
650
16,462
2,416
3,253
13,025
442
19,136
67
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
30. RISK MANAGEMENT (CONTINUED)
The carrying amounts of financial liabilities presented in the statement of financial position relate to the following measurement
categories as defined in IAS 39:
At fair value
Financial
liabilities
through profit measured at
or loss amortised cost
£’000
£’000
Other
(non-IAS 39)
£’000
Total
£’000
2015
Non-current:
Trade payables
Finance leasing capital obligations
Current:
Trade payables
Accruals
Bank loan
Contingent consideration due on acquisitions
Finance leasing capital obligations
Interest rate swap contract
Total for category
2014
Non-current:
Finance leasing capital obligations
Bank loan
Current:
Trade payables
Accruals
Bank loan
Contingent consideration due on acquisition
Finance leasing capital obligations
Interest rate swap contract
Total for category
-
-
(703)
-
-
(1,346)
(703)
(1,346)
-
-
-
(1,650)
-
(191)
(1,841)
(4,186)
(6,396)
(21,457)
-
-
-
(32,742)
-
-
-
-
(938)
-
(2,284)
(4,186)
(6,396)
(21,457)
(1,650)
(938)
(191)
(36,867)
-
-
-
(11,936)
(1,780)
-
(1,780)
(11,936)
-
-
-
(1,271)
-
(66)
(1,337)
(3,733)
(4,268)
(18,090)
-
-
-
(38,027)
-
-
-
-
(1,038)
-
(2,818)
(3,733)
(4,268)
(18,090)
(1,271)
(1,038)
(66)
(42,182)
The Group’s financial liabilities per the fair value hierarchy classifications under IFRS 13 ‘Financial Instruments: Disclosures’ are
described below:
Category of
financial liability
Fair value
at 31 March
2015
£’000
Level
in
hierarchy
Description
of valuation
technique
Inputs used
for valuation
model
Total gains
and (losses)
recognised in
profit or loss
£’000
Contingent
consideration due on
acquisition
(1,650)
3
Based on level of future
profitability and probability
that vendor will comply
with obligations under sale
and purchase agreement.
Management estimate
on probability and time scale
of vendor meeting profitability
targets and complying
with obligations.
Interest rate swap
contracts
(191)
2
.
Observable interest rates
Interest rate swap contracts
are not traded in active markets. corresponding to the maturity
Fair valued using observable
interest rates corresponding
to the maturity of the contracts.
of the contracts.
Effects of non-observable
inputs are not significant
for interest rate swaps.
Total fair value
(1,841)
Total net losses
68
-
(125)
(125)
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
30. RISK MANAGEMENT (CONTINUED)
There have been no changes to valuation techniques or any amounts recognised through ‘Other Comprehensive Income’. The
£125,000 loss recognised in profit or loss on interest rate swap contracts is included in finance costs.
The reconciliation of the carrying amounts of financial instruments classified within Level 3 is as follows:
Contingent consideration
Balance at start of the year
Acquired through business combination
Settled in cash during the year
Loss recognised in profit of loss under:
- Administrative expenses
Balance at end of year
Total amount included in profit or loss on Level 3 instruments under administrative expenses
2015
£’000
(1,271)
(1,650)
1,271
-
(1,650)
-
2014
£’000
(358)
(1,200)
326
(39)
(1,271)
(39)
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. In note 22 the contractual maturity analysis of the Group’s total borrowings of £23.7m (2014: £32.8m) is shown. The
Group has £13.5m (2014: £5.0m) available to draw down on the revolving credit facility and reviews its cash flow requirements on a
monthly basis.
Interest rates
The interest rate on the Group’s cash at bank is determined by reference to the base rate and the interest rate on the Group’s revolving
credit loan facilities is based on LIBOR plus a margin. The Group has entered into an interest rate swap in respect of £10m which has
been drawn under the revolving credit facility from April 2015 which reduces by £2m every 6 months until October 2017 and as a
consequence the interest rate on that loan is fixed at 2.03% from April 2015 until maturity. The Group has also entered interest rate
swap arrangements in respect of £4m which has been drawn under the multi option credit facility which has been fixed at 1.02% until
June 2015 and £5m drawn under the multi option credit facility which has been fixed at 1.26% from August 2014 for 12 months. The
remaining £12.5m drawn under the multi option credit facility is not covered by interest rate swap arrangements. The fair value of the
interest rate swap contracts is estimated to be a loss of £125,000 (2014: £20,000) which has been recognised in profit or loss for the
year.
Currency risk
During the year the Group made payments totalling US$6.0m (2014: US$4.1m) and EUR€0.2m (2014: EUR€0.1m) to acquire domain
names for its Easyspace division and licences for its Hosting division. In addition, the Group received US$2.1m (2014: US$nil) and
EUR€0.5m (2014: EUR€nil) from Hosting customers billed in foreign currency. During the year, the Group entered into forward exchange
contracts to hedge its exposure to the US Dollar arising on these purchases but at the year end the Group had no outstanding forward
contracts in place (2014: none). Consequently, the fair value of currency contracts at the year end was £nil (2014: £nil). 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.
Capital risk
The Group currently has net debt, due to its acquisition activities. The Group’s policy on capital structure is to maintain a level of
gross cash which the Board considers to be adequate for the size of the Group’s operations which at the moment is around £10m.
Consequently, the Group makes use of both banking facilities and finance lease arrangements to help fund the acquisition of
companies and capital expenditure in order to maintain that level of gross cash. The Group is committed to paying annual dividends
depending on the level of adjusted diluted earnings per share. The Group was in compliance with all covenants under its banking facility
arrangements throughout the reporting period.
Credit risk
The Group provides standard credit terms (normally 30 days) to some of its customers which has resulted in trade receivables of
£5,049,000 (2014: £3,253,000) which are stated net of applicable provisions and which represent the total amount exposed to credit
risk. The lease deposits of £2,416,000 (2014: £2,416,000) are held in escrow accounts with the landlord’s main UK bankers and the
landlord is a major UK plc. The Group’s cash at bank £8,347,000 (2014: £13,025,000) is held within the UK clearing banks.
In respect of trade receivables, lease deposits and cash in bank the directors consider the risk of exposure to credit is minimal due to
the reasons given above.
69
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
31. POST BALANCE SHEET EVENT
The Group acquired 100% of the issued share capital and voting rights of SystemsUp on 5 June 2015 on a no debt, no cash, normalised
working capital basis.
SystemsUp is a consultancy operation based in London which specialises in the provision of Public Cloud consultancy largely in the
UK public sector. The company has formed strong relationships with the Public Cloud providers and its consultants are highly skilled
in Public Cloud consultancy and deployment. The acquisition is in line with the Group’s strategy to grow its managed cloud computing
operations both organically and by acquisition.
At completion, an initial payment of £9.0m in cash was made and in addition an amount of £0.5m was paid as an interim settlement of
the expected amount due in respect of the no debt, no cash, normalised working capital adjustment. The initial payment of £9.0m was
funded by a draw down from the Group’s revolving credit facility. A further sum is contingent on a measure of revenue for the year to
31 March 2016 which is expected to be paid in either May or June 2016. The potential fair value of the contingent consideration payable
has been initially estimated to be in the region of £1.0m to £3.5m. This is a provisional estimate of the likely range of the contingent
consideration payment. The contingent consideration is not limited.
Due to the proximity of the completion date of the acquisition to the date of the approval of the Group’s financial statements there has
been insufficient time to complete the initial accounting for the business combination including completing the assessment of the fair
value of the contingent consideration. In addition, it has not been possible to disclose the fair value of the amounts to be recognised
as of the acquisition date for each major class of assets acquired and liabilities assumed and in particular for acquired receivables the
fair value of receivables, the gross contractual amounts receivable and amounts that are not expected to be collectable; any contingent
liabilities to be recognised; and the total amount of goodwill that is expected to be deductible for tax purposes. Whilst the amount of
goodwill to be recognised has not yet been determined any goodwill that will exist will relate to the premium paid by the Group for a
pre-existing, well positioned business; the specialised, industry specific knowledge of its staff; and the potential benefits to the Group
of integrating the business into its processes to provide cross selling opportunities between the Group and SystemsUp.
The Group is estimated to have incurred £150,000 of third party acquisition related costs in respect of this acquisition. These expenses
have not yet been invoiced to the Group but will be included in administrative expenses in the Group’s consolidated statement of
comprehensive income for the year ended 31 March 2016
As the completion date of the acquisition was after the balance sheet date of the Group, there is no revenue or profit before tax from
SystemsUp included in the Group’s Consolidated Statement of Comprehensive Income for the year ended 31 March 2015. In addition,
financial information from SystemsUp for the year ended 31 March 2015 has not been included in the pro-forma full year information
as shown in note 11.
70
iomart Group plc Annual report and accounts 2015
Notes to the financial statements. Year ended 31March 2015
INDEPENDENT AUDITOR’S REPORT 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 2015 which comprise the
parent company balance sheet and the related notes. The financial reporting framework that has been applied in their preparation is
applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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 auditor
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the parent
company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an
opinion on the parent company financial statements in accordance with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.
uk/auditscopeukprivate.
Opinion on financial statements
In our opinion the parent company financial statements:
• give a true and fair view of the state of the company's affairs as at 31 March 2015;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the terms of our engagement
In our opinion the part of the Report of the Board to the Members on Directors' Remuneration which is described as having been
audited and which we were engaged to audit has been properly prepared in accordance with Rule 19 of the AIM Rules for Companies.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors' Report for the financial year for which the financial
statements are prepared is consistent with the parent company financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our
opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
•
• we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the Group financial statements of iomart Group plc for the year ended 31 March 2015.
Robert Hannah
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Glasgow
8 June 2015
71
iomart Group plc Annual report and accounts 2015
Parent company financial statements. Year ended 31March 2015
BALANCE SHEET
FIXED ASSETS
Investments
CURRENT ASSETS
Debtors
Cash at bank and in hand
CREDITORS: amounts falling due within one year
NET CURRENT LIABILITIES
TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: amounts falling after more than one year
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Own shares
Capital redemption reserve
Share premium account
Merger reserve
Profit and loss account
SHAREHOLDERS’ FUNDS
Note
3
4
6
7
8
9
9
9
9
9
10
2015
£’000
79,057
79,057
35,410
6,694
42,104
2014
£’000
72,797
72,797
25,036
11,850
36,886
(53,034)
(49,968)
(10,930)
(13,082)
68,127
-
68,127
1,078
(538)
1,200
21,067
4,983
40,337
68,127
59,715
(12,000)
47,715
1,078
(556)
1,200
21,067
4,983
19,943
47,715
These financial statements were approved by the board of directors and authorised for issue on 8 June 2015.
Signed on behalf of the board of directors
Angus MacSween
Director and chief executive officer
iomart Group plc – Company Number: SC204560
The following notes form part of the primary financial statements.
72
iomart Group plc Annual report and accounts 2015
Parent company financial statements. Year ended 31March 2015
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. As part of the acquisition
strategy of the Company, the trade and net assets of subsidiary undertakings at or shortly after acquisition may be transferred at book
value to fellow subsidiaries. Where a trade is hived across to a fellow subsidiary undertaking, the cost of the investment in the original
subsidiary, which then becomes a non-trading subsidiary, is added to the cost of the investment in the entity to which the trade has
been hived. In order to accurately assess any potential impairment of investments, the carrying value of the investment in all companies
transferred is considered together against the future cash flows and net asset position of those companies which received the trade
and net assets.
Deferred tax
Deferred tax is provided in full on temporary differences which result in an obligation at the period end 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 that have been
enacted or substantively enacted at the balance sheet date. Temporary 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 profit or loss in equal annual amounts over the lease term.
Financial instruments
Financial assets are recognised in the balance sheet at amortised cost. 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 profit or loss in the
financial period to which it relates.
Pension scheme arrangements
The Company contributes to an auto-enrolment pension scheme and also to a number of personal pension schemes on behalf of
executive directors and some senior employees. Pension costs are charged to profit or loss 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 January 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 through profit or loss with a corresponding credit to
“Profit and loss reserve” unless the share based payment arrangement relates to an employee of a subsidiary company where in such
instances the share based payment is added to the cost of investment in that subsidiary as a capital contribution.
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.
73
iomart Group plc Annual report and accounts 2015 iomart continues to innovate in its product releases. A new campaign to
help businesses transform how they work in the cloud was launched at
Cloud Expo Europe in March. ‘SavetheCloud365’ showcases how using
iomart can help customers migrate to and manage Office 365 whilst
benefiting conservation charity Rainforest Concern.
The campaign was launched by iomart’s own Queen of the IT Jungle, ‘I’m
a Celebrity….Get Me Out Of Here’ contestant and actress Vicki Michelle.
iomart Group plc Annual report and accounts 2015 Parent company financial statements. Year ended 31March 2015
2. PROFIT OF PARENT COMPANY
As permitted by Section 408 of the Companies Act 2006, 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 year after taxation was £21,466,000 (2014: £2,452,000).
3. INVESTMENTS HELD AS FIXED ASSETS
Cost
At 1 April 2014
Additions
Share based payment (note 11)
Cost at 31 March 2015
Impairment
At 1 April 2014
Reversal of previous impairment
Impairment at 31 March 2015
Net book value of Investments at 31 March 2015
Net book value of Investments at 31 March 2014
All of the above investments are unlisted.
The following subsidiaries are included in the Company financial statements:
Shares in subsidiary undertakings
£’000
74,573
4,370
114
79,057
(1,776)
1,776
-
79,057
72,797
Country of
registration
and operation
Activity
Ordinary share capital
Owned by the
company
%
Owned by
subsidiary
undertakings
%
iomart Limited
iomart Hosting Limited
iomart Cloud Services Limited
EQSN Limited
iomart Virtual Servers Hosting Limited
Netintelligence Limited
iomart Development Limited
iomart Cloud Inc
Easyspace Limited
Open Minded Solutions Limited
Backup Technology Holdings Limited
Backup Technology Limited
Switch Media Limited
Internet Engineering Limited
Redstation Limited
My Documents Limited
Switch Media (Ireland) Limited
Global Gold Network Limited
Global Gold Holdings Limited
Skymarket Limited
Rapidswitch Limited
Titan Internet Limited
Melbourne Server Hosting Limited
ServerSpace Limited
iomart Datacentres Limited
Internetters Limited
NicNames Limited
Web Genie Internet Limited
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
Scotland
USA
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
Dormant
Managed hosting services
Managed hosting services
Non-trading
Dormant
Dormant
Dormant
Managed hosting services
Webservices
Webservices
Non-trading
Non-trading
Webservices
Webservices
Non-trading
Dormant
Webservices
Webservices
Non-trading
Non-trading
Non-trading
Non-trading
Managed hosting services
Managed hosting services
Non-trading
Dormant
Dormant
Non-trading
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
-
-
100
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
-
-
-
-
100
100
-
-
-
-
-
-
-
100
100
100
75
iomart Group plc Annual report and accounts 2015
Parent company financial statements. Year ended 31March 2015
4. DEBTORS
Prepayments and accrued income
Other debtors
Other taxation and social security
Deferred taxation (note 5)
Corporation tax
Amounts owed by subsidiary undertakings
2015
£’000
498
15
342
576
1,187
32,792
2014
£’000
495
-
344
600
-
23,597
35,410
25,036
5. DEFERRED TAXATION
The Company had recognised deferred tax assets and potential unrecognised deferred tax assets as follows:
2015
2014
Recognised Unrecognised
£’000
£’000
Recognised
£’000
Unrecognised
£’000
Share based remuneration
576
-
600
-
The movement in the deferred tax account during the year was:
Balance brought forward
Profit and loss account movement arising during the year
Profit and loss account reserve movement during the year
Balance carried forward
2015
£’000
600
(5)
(19)
576
2014
£’000
682
(101)
19
600
The deferred tax asset in relation to share based remuneration arises from the anticipated future tax relief on the exercise of share
options.
6. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors
Other taxation and social security
Accruals and deferred income
Contingent consideration
Bank loan
Amounts owed to subsidiary undertakings
7. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Bank loan
76
2015
£’000
97
65
1,084
1,650
21,500
28,638
53,034
2015
£’000
-
-
2014
£’000
137
55
1,108
1,271
18,000
29,397
49,968
2014
£’000
12,000
12,000
iomart Group plc Annual report and accounts 2015
Parent company financial statements. Year ended 31March 2015
8. SHARE CAPITAL
Authorised
At 31 March 2013, 2014 and 2015
Called up, allotted and fully paid
At 31 March 2013
Exercise of options
Issue of new shares for business acquisition
At 31 March 2014 and 31 March 2015
Ordinary shares of 1p each
Number of shares
200,000,000
105,759,876
321,809
1,721,321
107,803,006
£’000
2,000
1,058
3
17
1,078
During the year the Company issued nil (2014: 321,809) ordinary shares of 1p each in respect of the exercise of share options by
employees for which a net total of £nil (2014: £134,583) was received.
At 31 March 2015 the Company held 945,203 shares (2014: 983,203) as own shares in treasury which were accounted for in the Own
Shares Treasury reserve and had a nominal value of £9,452 (2014: £9,832) and a market value of £1,932,940 (2014: £2,426,053). This
represents 0.9% (2014: 0.9%) of the issued share capital as at 31 March 2015 excluding own shares.
At 31 March 2015 the Company held 140,773 shares (2014: 140,773) as own shares in the iomart Group plc Employee Benefit Trust
(“EBT”) which were accounted for in the Own Shares EBT reserve and had a nominal value of £1,408 (2014: £1,408) and a market value
of £287,881 (2014: £347,357). This represents 0.1% (2014: 0.1%) of the issued share capital as at 31 March 2015 excluding own shares.
The share capital of iomart Group plc consists of ordinary shares with a par value of 1p. All shares, excluding the shares held by
the Company in treasury and the shares held by the EBT, are equally eligible to receive dividends and represent one vote at the
shareholders' meetings of iomart Group plc. All shares issued at 31 March 2015 are fully paid.
9. STATEMENT OF MOVEMENT IN RESERVES
Profit for the financial year
Dividends
Share based payments
Issue of own shares from Treasury
Deferred tax on share based remuneration
Own
shares
EBT
£’000
-
-
-
-
-
-
Own
Capital
shares redemption
reserve
£’000
-
-
-
-
-
-
treasury
£’000
-
-
-
18
-
18
Share
premium
account
£’000
-
-
-
-
-
-
Merger
reserve
£’000
-
-
-
-
-
-
Profit
and loss
account
£’000
21,466
(1,867)
809
5
(19)
20,394
Opening balance
Closing balance
(70)
(486)
1,200
21,067
4,983
19,943
(70)
(468)
1,200
21,067
4,983
40,337
During the year 38,000 (2014: 40,250) own shares held in treasury at the carrying value of 46.5p each were issued following the exercise
of share options by employees for which a net total of £23,820 (2014: £20,869) was received. As a consequence, at 31 March 2015 the
Company held 945,203 shares (2014: 983,203) in treasury with a carrying value of £439,519 (2014: £486,685) which were accounted
for in Own Shares treasury reserve; and 140,773 shares (2014: 140,773) in the EBT with a carrying value of £69,982 (2014: £69,982)
which were accounted for in the Own Shares EBT reserve.
77
iomart Group plc Annual report and accounts 2015
Parent company financial statements. Year ended 31March 2015
10. RECONCILIATION OF MOVEMENTS IN SHAREOLDERS’ FUNDS
Profit for the financial year
Dividends
Share based payments
Deferred tax on share based remuneration
Issue of own shares from treasury
Issue of new shares for business acquisition
Issue of new shares for option redemption
Net increase in shareholder funds
Opening balance
Closing balance
2015
£’000
21,466
(1,867)
809
(19)
23
-
-
20,412
47,715
68,127
2014
£’000
2,452
(1,483)
1,257
19
21
5,000
134
7,400
40,315
47,715
11. SHARE BASED PAYMENTS
For details of share based payment awards and fair values see note 27 to the Group financial statements. The Company accounts
recognise the charge for share based payments for the year of £809,000 (2014: £1,257,000) by;
1) taking the charge in relation to employees of the parent company through the parent company statement of
comprehensive income £695,000 (2014: £1,064,000),
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 £114,000 (2014: £193,000).
12. RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption in Financial Reporting Standard No. 8 “Related Party Transactions” not to disclose
transactions with wholly owned subsidiaries. Related party transactions regarding remuneration and dividends paid to key management
(only directors are deemed to fall into this category) of the Company have been disclosed in note 28 of the Group financial statements.
13. CONTINGENCIES AND COMMITMENTS
(a) Contingencies
There were no contingent assets or liabilities as at 31 March 2015 (2014: nil).
(b) Commitments
There are no commitments present as at 31 March 2015 (2014: nil).
14. POST BALANCE SHEET EVENT
On 5 June 2015 the Company acquired the entire share capital of SystemsUp. Further details of the acquisition have been given in note
31 of the Group financial statements.
15. ULITIMATE CONTROLLING PARTY
The Directors’ have assessed that there is no ultimate controlling party.
78
iomart Group plc Annual report and accounts 2015
iomart continues to be recognised at major
Industry award ceremonies. Its Maidenhead
Software Defined Data Centre investment won
Project of the Year at the Network Computing
Awards and received a commendation from the
British Computing Society at the UK IT Industry
Awards.
iomart Group plc Annual report and accounts 2015 Annual General Meeting
Notice of the 2015 Annual General Meeting
NOTICE IS HEREBY GIVEN that the 2015 annual general meeting
of iomart Group plc (the “Company”) will be held at Lister Pavilion,
Kelvin Campus, West of Scotland Science Park, Glasgow G20 0SP
on 26 August 2015 at 10.00 am for the purpose of considering
and, if thought fit, passing the following resolutions, of which
resolutions 1 to 7 (inclusive) will be proposed as ordinary
resolutions and resolutions 8 to 9 (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 2015.
2 To approve the report of the board to the members on
directors' remuneration for the year ended 31 March 2015.
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 2015
of 2.50p per share payable on 1 September 2015 to shareholders
on the register of members at the close of business on 14 August
2015.
6 To reappoint Grant Thornton UK LLP, Chartered Accountants,
as auditors of the Company from the conclusion of this meeting
until the conclusion of the next general meeting at which accounts
are laid before shareholders and to authorise the directors to fix
the auditors’ remuneration.
7 THAT the directors of the Company are generally and
unconditionally authorised pursuant to section 551 of the
Companies Act 2006 to exercise all powers to allot shares in the
Company and to grant rights to subscribe for or to convert any
security into shares in the Company:
(a) comprising equity securities (as defined in section 560(1) of
the Companies Act 2006) up to an aggregate nominal amount
of £712,385.36 (including within such limit any shares issued or
rights granted under paragraph (b) below) in connection with an
offer by way of rights issue:
(i) to ordinary shareholders in proportion (as nearly as may be
practicable) to their existing holdings;
(ii) to the holders of other equity securities as required by the
rights of those securities or as the directors otherwise
consider necessary,
and subject to such exclusions or other arrangements as the
directors consider expedient in relation to fractional entitlements,
legal, regulatory or practical problems under the laws of, or the
requirements of any regulatory body or stock exchange in, any
territory, or any other matter; and
80
(b) in any other case up to an aggregate nominal amount of
£356,192.68 (such amount to be reduced by the nominal amount
of any equity securities allotted pursuant to the authority in
paragraph (a) above in excess of £356,192.68);
provided that such authority, unless renewed, varied or revoked
by the Company, shall expire on 26 November 2016 or, if earlier,
the date of the next annual general meeting of the Company
after the passing of this resolution 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 an
offer or agreement as if the authority conferred hereby had not
expired.
This resolution revokes and replaces all unexercised authorities
previously granted to the directors to allot shares in the Company
and to grant rights to subscribe for, or to convert any security into,
shares in the Company but is without prejudice to any allotment
of shares or grant of rights already made, offered or agreed to be
made pursuant to such authorities.
8 THAT, subject to the passing of resolution 7, the directors of
the Company are generally empowered pursuant to section 570
of the Companies Act 2006 to allot equity securities (within the
meaning of section 560(1) of the Companies Act 2006) for cash,
pursuant to the authority conferred by resolution 7, as if section
561(1) of the Companies Act 2006 did not apply to any such
allotment provided that this power is limited to:
(a) the allotment of equity securities in connection with an offer of
equity securities (but, in the case of the authority granted under
resolution 7(b), by way of a rights issue only) to:
(i) the ordinary shareholders made in proportion (as nearly as
may be practicable) to their existing respective holdings;
and
(ii) to the holders of other equity securities as required by the
rights of those securities or as the directors otherwise
consider necessary,
and subject to such exclusions or other arrangements as the
directors may deem necessary or expedient in relation to treasury
shares, fractional entitlements, record dates, legal or practical
problems in or under the laws of any territory or the requirements
of any regulatory body or stock exchange; and
(b) the allotment of equity securities pursuant to any authority
conferred upon the directors in accordance with and pursuant to
article 41 of the articles of association of the Company; and
(c) the allotment (otherwise than pursuant to paragraphs (a) and
(b) above) of equity securities up to an aggregate nominal amount
of £106,857.80.
iomart Group plc Annual report and accounts 2015
Notice of the 2015 Annual General Meeting
The power granted by this resolution will expire on 26 November
2016 or, if earlier, the conclusion of the Company's next annual
general meeting (unless renewed, varied or revoked by the
Company prior to or on such date) save that the Company may,
before such expiry, make offers or agreements which would or
might require equity securities to be allotted after such expiry and
the directors may allot equity securities in pursuance of any such
offer or agreement notwithstanding that the power conferred by
this resolution has expired.
This resolution revokes and replaces all unexercised powers
previously granted to the directors to allot equity securities as
if section 561(1) of the Companies Act 2006 did not apply but
without prejudice to any allotment of equity securities already
made or agreed to be made pursuant to such authorities.
9 That the Company be and
is hereby generally and
unconditionally authorised for the purposes of section 701 of
the Companies Act 2006 to make one or more market purchases
(within the meaning of section 693(4) of that Act) of ordinary
shares of 1 pence each in the Company provided that:
(a) the maximum number of ordinary shares hereby authorised to
be purchased is 10,685,780, representing 10% of the Company's
issued ordinary share capital (excluding for these purposes the
945,203 shares held by the Company in treasury) at the date of
the notice of this annual general meeting);
NOTES:
Appointment of Proxy
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 Registrars, PXS, 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 10.00am on Monday 24 August 2015)
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 24 August 2015; or
(b) the minimum price (exclusive of any expenses) which may be
paid for each ordinary share is 1 pence;
if this meeting is adjourned, at 6.00pm on the day two days
•
prior to the adjourned meeting,
(c) the maximum price (exclusive of any expenses) which may be
paid for each 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
(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.
By order of the board
Bruce Hall
Lister Pavilion, Kelvin Campus,
Company Secretary
West of Scotland Science Park,
30 June 2015
Glasgow G20 0SP
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.
Communication
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
81
iomart Group plc Annual report and accounts 2015
Notice of the 2015 Annual General Meeting
EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL
MEETING OF IOMART GROUP PLC
the company. Immediately prior to joining iomart Richard served
as finance director of ePOINT Group, a technology company
based in Scotland.
Ordinary Resolutions
Resolutions 1 to 7 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 2015 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
Shareholders are asked to approve the directors' remuneration
report which may be found in the annual report on pages 29
to 31. This resolution is an advisory one and no entitlement to
remuneration is conditional on the resolution being passed.
Resolutions 3 and 4 – Re-election of directors
Under article 24 of the Company's 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 of directors is satisfied
that the performance of Mr Angus MacSween and Mr Richard
Logan continues to be effective and demonstrates commitment
to their roles with the Company including commitment of time for
board meetings and other duties required of them. Accordingly,
resolutions 3 and 4 propose the reappointment of Mr Angus
MacSween and Mr Richard Logan.
Brief biographical details of Mr Angus MacSween and Mr Richard
Logan are given below.
58, 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.
57, 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
82
Resolution 5 – To declare a dividend 2.50p 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 of directors. The
board of directors recommends the payment of a final dividend
of 2.50p per ordinary share, to be payable to shareholders
registered at close of business on 14 August 2015.
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.
Resolution 7 – Authority to allot shares
Under section 551 of the Companies Act 2006, the directors of a
company may only allot shares or grant rights to subscribe for, or
to convert any security into, shares in the Company if authorised
to do so.
In line with guidance issued by the Investment Management
Association, the authority contained in paragraph (a) of this
resolution will (if passed) give the directors authority to allot
ordinary shares in connection with a rights issue in favour of
ordinary shareholders up to an aggregate nominal amount
equal to £712,385.36 (representing 71,238,536 ordinary shares)
as reduced by the nominal amount of any shares issued under
paragraph (b) of this resolution. This amount (before any
reduction) represents approximately two-thirds of the issued
ordinary share capital (excluding treasury shares) of the Company
as at the latest practicable date prior to publication of the Notice
of Meeting.
The authority contained in paragraph (b) of this resolution will (if
passed) give the directors the authority to allot ordinary shares
up to an aggregate nominal value of £356,192.68 (representing
35,619,268 ordinary shares of 1p each). This amount represents
approximately one-third of the issued ordinary share capital
(excluding treasury shares) of the Company as at the latest
practicable date prior to the publication of the Notice of the
Meeting. This authority will expire on 26 November 2016 or, if
earlier, at the conclusion of the next Annual General Meeting.
Special Resolutions
Resolutions 8 and 9 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.
iomart Group plc Annual report and accounts 2015 Resolution 8 - Disapplication of statutory pre-emption rights
If new shares are to be allotted for cash, section 561(1) of the
Companies Act 2006 requires that those shares are offered
first to existing shareholders pro rata to their holdings. 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". These
pre-emption provisions also apply to the sale of treasury shares
by the Company.
There may be circumstances, however, where it is in the interests
of the Company for the directors to allot shares and/or sell
treasury shares other than to shareholders in proportion to their
existing holding or otherwise than strictly in compliance with the
requirements of the Companies Act 2006. This cannot be done
under the Companies Act 2006 unless the shareholders first
waive their pre-emption rights.
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 8 (at paragraph (a)), 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.
Under the Company's articles of association the board of directors
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 directors) of such dividend or dividends as are
specified by such resolution. Paragraph (b) of resolution 8 asks
shareholders to waive their pre-emption rights in respect of any
such issue of shares.
Resolution 8 (at paragraph (c)) asks shareholders to waive their
pre-emption rights, but only for new shares equal to 10 per
cent. of the Company's issued ordinary share capital (excluding
for these purposes the 945,203 shares held by the Company
in treasury) as at the date of the notice of this meeting. 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 10 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 10 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 10 per cent. ceiling.
The board of directors intends to adhere to the provisions in
the Pre-Emption Group's Statement of Principles, as updated in
March 2015, and not to allot shares for cash on a non pre-emptive
basis pursuant to the authority in resolution 8(c):
(i) in excess of an amount equal to 5 per cent of the total issued
ordinary share capital of the Company excluding treasury shares;
or
Notice of the 2015 Annual General Meeting
(ii) in excess of an amount equal to 7.5 per cent of the total issued
ordinary share capital of the Company excluding treasury shares
within a rolling three-year period, without prior consultation with
shareholders,
in each case other than in connection with an acquisition or specified
capital investment which is announced contemporaneously with
the allotment or which has taken place in the preceding six-month
period and is disclosed in the announcement of the allotment.
The power given by resolution 8 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 2016.
Resolution 9 – 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 (excluding for these purposes the
945,203 shares held by the Company in treasury) as at the date
of the notice of this meeting.
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 be 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 earnings
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
9 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 693 and 701 of the
Companies Act 2006.
83
iomart Group plc Annual report and accounts 2015 Officers and Professional Advisers
84
iomart Group plc Annual report and accounts 2015 Directors
Ian Ritchie CBE, FREng, FRSE, FBCS, CEng, BSc
Angus MacSween
Chris Batterham MA, FCA
Crawford Beveridge CBE
Sarah Haran
Richard Logan BA, CA
Secretary
Bruce Hall BAcc(Hons), CA
Registered office
Non executive chairman
Chief executive officer
Non executive director
Non executive director
Director
Director
Lister Pavilion, Kelvin Campus, West of Scotland Science Park, Glasgow G20 0SP
Nominated adviser and broker
Peel Hunt LLP, Moor House, 120 London Wall, London EC2Y 5ET
Principal Bankers
Lloyds Banking Group, Bank of Scotland plc, 235 Sauchiehall Street, Glasgow G2 3EY
Solicitors
Shepherd & Wedderburn, 5th Floor, 1 Exchange Crescent, Conference Square, Edinburgh EH3 8UL
Pinsent Masons LLP, 141 Bothwell Street, Glasgow G2 7EQ
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
85
iomart Group plc Annual report and accounts 2015 Group Contact Information
86
iomart Group plc Annual report and accounts 2015 iomart Group
0141 931 6400 • info@iomart.com • www.iomart.com
Easyspace
sales@easyspace.com • www.easyspace.com
Rapidswitch
sales@rapidswitch.com • www.rapidswitch.com
iomartcloud
info@iomartcloud.com • www.iomartcloud.com
Melbourne
inbox@melbourne.co.uk • www.melbourne.co.uk
Backup Technology
sales@backup-technology.co.uk • www.backup-technology.com
Redstation
sales@redstation.com • www.redstation.com
SystemsUp
info@systemsup.co.uk • www.systemsup.co.uk
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 2015. All other trademarks and
registered trademarks are the property of their respective owners.
iomart Group plc Annual report and accounts 2015 Many charities and third sector organisations have selected iomart as their IT partner
of choice, one of latest being the unique fundraising site Make a Donation, which is the
only online giving site in the UK where 100% of the donations go direct to charity.
“Our site receives and processes donations 24 hours a day, 365 days a year, so downtime is
not an option. Our fundraisers and charities want to receive as much support and as many
donations as possible so our service needs to be available at any time of day.”
David Finch, CEO, Make a Donation
iomart Group plc Annual report and accounts 2015 iomart’s Cloud Services unit which provides a range of cloud products, mainly
through channel partners, has expanded its reach to the USA, following our
investment in cloud infrastructure and backup assets in that region during the year.
“Our aim is to do things differently in the IT reseller industry. We are working with
best-of-breed partners to create exclusive working relationships that stand out for
our customers. iomart was the natural choice for cloud services because of its secure
infrastructure, its technical expertise and its financial stability.”
Chris Leigh, Director, TransACT Technology Solutions
iomart Group plc Annual report and accounts 2015 iomart Group plc Annual report and accounts 2015