iomart Group plc Annual report and accounts 2016 OVERVIEW
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About iomart
Highlights
STRATEGIC REPORT
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Chairman’s statement
Chief executive officer’s report
Finance director's report
Key performance indicators and principal risks and uncertainties
CORPORATE GOVERNANCE
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Board of directors
Corporate governance report
Report of the board to the members on directors’ remuneration
Directors' report
Directors' responsibilities statement
FINANCIAL STATEMENTS
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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
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Notice of annual general meeting
OFFICERS AND PROFESSIONAL ADVISERS
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Officers and professional advisers
iomart Group plc Annual report and accounts 2016 About iomart
Established in 1998 and headquartered in Glasgow, Scotland, iomart is one
of the leading providers of secure managed hosting and cloud services. We
help organisations across the private and public sector, from government
departments to enterprise business, to take full advantage of what the cloud
has to offer.
By owning and operating data centres at eight locations across the United
Kingdom and having international Points of Presence in Dubai, Singapore and
the United States of America, we can deliver everything from cloud consultancy
to full IT transformation and ongoing management for our customers.
Most businesses today are digital in some shape or form. They need help to
architect the right cloud strategy and understand the myriad of cloud services
on offer to them. Through our own expertise and our key partnerships with
the world’s leading technology vendors and public cloud providers, we make
this complex world simple for them.
We are still at the start of the journey to the cloud, with many organisations
yet to make the move. As a result, we believe there is a significant long term
opportunity for iomart in the provision of managed cloud services.
iomart delivers any cloud your way
iomart Group plc Annual report and accounts 2016 Our Year
iomart continues to succeed in the cloud services market
through a combination of organic growth and a disciplined
acquisition strategy.
Revenues have doubled over the past five years to £76.3m
(2015: £65.8m). This year we noted our first significant
public cloud implementation and have continued to build
ever closer partnerships with the global hypercloud players
The long term opportunity for us is bigger than ever.
We continue to invest in our infrastructure, our
services and our people, to make sure we are well
positioned to take advantage of this growing market.
iomart Group plc Annual report and accounts 2016 Our
Infrastructure
We do not jeopardise our customers’ mission-critical
IT systems by relying on third parties to deliver the
core components of our services. When we say “our
data centres” we mean it.
In the United Kingdom our data centres, which are
connected via a private fibre network, provide secure
and reliable hosting for thousands of businesses and
organisations.
We are also directly connected to the hypercloud
vendors AWS and Microsoft allowing us to combine
different clouds as required.
Glasgow
Nottingham
St.Asaph
Leicester
Manchester
Maidenhead
London
Gosport
iomart Group plc Annual report and accounts 2016
Our Partnerships
To ensure we can support our customers across the whole range of
cloud services available, iomart has built important partnerships with the
leading public cloud vendors, the so-called Hypercloud providers, Amazon
Web Services (AWS) and Microsoft. We are part of a network of trusted
partners who can provide the management wrap around their services.
This is the model for ‘Cloud as a Service’ rather than as a commodity. Each
of these public cloud services has hundreds of separate tools that can
be used by everyone from the digital agency right up to the enterprise.
Understanding which ones best suit your business is where it gets
difficult.
With our skills and expertise we can help customers design the right
cloud strategy, whether they need just public cloud or a hybrid model that
incorporates their legacy systems.
We pride ourselves on our levels of service and have invested in the
accreditations and certifications to ensure our infrastructure and
management operate at the highest level and can provide the most
comprehensive range of cloud services to the U.K. public sector as well as
the private sector.
iomart Group plc Annual report and accounts 2016 Our People
iomart’s workforce has grown as iomart has grown.
It is rapidly approaching 400.
More than 250 of our people are skilled technicians who
deliver services and solutions from our customer support
centre in Glasgow and our network of U.K. data centres.
They are constantly learning and gaining new, advanced
certifications to support the growing range of cloud
technologies and services that iomart delivers.
The sales and account management structures have
also been expanded to help provide customers with the
right advice and support as they navigate the complex
decisions they have to make when choosing the right cloud
strategy. Our cloud consultants are often embedded within
organisations to ensure their cloud projects are delivered to
the highest standards.
We continue to invest in our people, their training and their
technical accreditations to keep us at the forefront of cloud
technology.
iomart Group plc Annual report and accounts 2016 Our Customers
iomart’s customer base stretches across almost all industries and spans both the private and
public sector.
• We have helped government departments, local authorities and businesses of all sizes take their
first steps into the cloud.
• We protect Petabytes of data for well-known consumer brands using the latest storage,
backup and Disaster Recovery technologies.
• We are the cloud services partner of choice for transport companies, professional and legal
services providers, media companies, digital agencies and software companies.
Many of our customers have been with us a long time. They started small and have grown their
services over the years as we have become their trusted adviser on cloud services.
With many organisations lacking the in-house skills to migrate their services to the cloud, iomart is
well positioned to take advantage of this opportunity and deliver further significant growth.
iomart Group plc Annual report and accounts 2016 “It was absolutely critical that we work with a cloud partner who would
fit the services around our unique business need. The team at iomart
came prepared to listen, be responsive and to work with us.”
iomart provides Infrastructure as a Service platform and EMC
Avamar Cloud Backup for LabVantage Solutions, Inc., the leading
global laboratory informatics provider
iomart Group plc Annual report and accounts 2016 “We already hosted our IT platform
with iomart and we knew they had
the expertise as a Microsoft Cloud
Solution Provider to take us to
Office 365. ”
Caroline Briggs, Managing
Director of Amici Procurement
“It’s not just a supplier customer
relationship with iomart, it’s a
partnership. It’s about working
together to serve Multiplay’s
customers’ needs, whether that’s a
consumer playing one of our games
or a big publisher who knows we
can deal with their requirements.”
Craig Fletcher, CEO of Multiplay
“Our partnership with iomart for
cloud backup will help us fully
satisfy our customers’ service level
requirements for mission critical
systems. These added attributes
makes our enterprise cloud offering
more compelling to customers by
catering for their complex needs. ”
Manabu Yamamoto,
Managing Director of
IIJ Europe
iomart Group plc Annual report and accounts 2016 “Cloud Distaster Recover as a
Service fits seamlessly into our
existing infrastructure and is
delivering extremely high service
levels. It’s given us an enterprise
class DR solution,”
Graham Francis, Director of
Continuous Improvement at
Havering Sixth Form College
“As well as cloud backup,
iomart provides International
Greetings with storage archiving
and content filtering for the
company’s business laptops.
The backup of our data is hugely
important to us and is a subject
that is discussed at board level.”
Mike Harris, Group IT Manager
for International Greetings
“Hosted desktop is the perfect
solution because it allows our
management to work on the road
without having any important data
held on their devices. The whole
solution is hosted in iomart’s
cloud, in their fully compliant and
accredited data centres.”
Michael Wolfenden, Operations
Director for
Chase Solutions
iomart Group plc Annual report and accounts 2016 “Their level of technical knowledge
and hands-on experience is
astounding. They integrated well
into the organisation, understanding
our constraints and being extremely
patient when we had to delay
activities at short notice. It was a
great experience to work with them.”
iomart’s public cloud consultancy
SystemsUp planned and delivered
a SAN migration for NHS South
London
iomart Group plc Annual report and accounts 2016
The worldwide public cloud services market is projected to grow
16.5 percent in 2016 to total $204 billion, up from $175 billion
in 2015, according to Gartner, Inc. The highest growth will come
from cloud system infrastructure services.
“The market for public cloud services is continuing to
demonstrate high rates of growth across all markets and
Gartner expects this to continue through 2017. This strong
growth continues reflect a shift away from legacy IT services
to cloud-based services, due to increased trend (sic) of
organisations pursuing a digital business strategy."
Sid Nag, Research Director, Gartner
iomart Group plc Annual report and accounts 2016 Financial statements for year ended 31March 2016
Highlights
FINANCIAL HIGHLIGHTS
• Revenue growth of 16% to £76.3m (2015: £65.8m)
• Adjusted EBITDA1 growth of 11% to £32.3m (2015: £29.1m)
• Adjusted profit before tax growth2 of 14% to £19.0m (2015: £16.6m)
• Adjusted diluted earnings per share3 from operations increased by 14% to 14.44p (2015: 12.63p)
• Cashflow from operations increased by 14% to £30.9m (2015: £27.2m)
• Adjusted PBT2 margins maintained at 25% (2015: 25%)
• Proposed final dividend increased by 26% to 3.15p per share (2015: 2.50p per share)
OPERATIONAL HIGHLIGHTS
• Continuing to build relationships for Hybrid Cloud opportunities with major players
• First significant public cloud implementation and achieved Advanced Partner status with Amazon
Web Services (AWS)
• Continued M&A activity with the acquisitions of SystemsUp and United Hosting
• Continued investment in senior resources to provide platform for future growth
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 21% to £13.0m (2015: £10.8m)
• Basic earnings per share from operations increased by 24% to 10.32p (2015: 8.34p)
Throughout these financial statements adjusted EBITDA is earnings before interest, tax, depreciation and amortisation (EBITDA) before share based payment charges, gain on revaluation of
1
contingent consideration 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, share based payment charges, mark to market adjustments
in respect of interest rate swaps, acquisition costs, interest on contingent consideration due, gain on revaluation of contingent consideration and the accelerated write off of arrangement fees on the bank
borrowing facility which was restructured during the year.
3
Throughout these financial statements adjusted diluted earnings per share is earnings per share before amortisation charges on acquired intangible assets, share based payment charges, mark
to market adjustments in respect of interest rate swaps, acquisition costs, interest on contingent consideration due, gain on revaluation of contingent consideration and the accelerated write off of
arrangement fees on the bank borrowing facility which was restructured during the year, including the taxation effect of these.
12
iomart Group plc Annual report and accounts 2016 Strategic Report
Strategic Report
Chairman's Statement
We have once again been able to deliver another year of excellent performance for our shareholders. It is especially pleasing
that we have managed to maintain our relative level of organic growth in our Cloud Services segment (formerly the Hosting
segment) in the midst of substantial overall revenue growth.
In accordance with our acquisition strategy we added SystemsUp, in June, and United Hosting, in November, into the Group
and both are performing well. We have also benefited from the full year contribution from ServerSpace which we acquired in
December 2014. We believe there will be other opportunities to allow us to continue to add to our organic growth through
acquisition.
We have again enjoyed a substantial increase in profitability over the year, driven by both organic and acquisitive growth.
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.
After nearly 11 years of first class commitment and service, Chris Batterham has chosen not to stand for re-election as Non-
Executive Director at our forthcoming Annual General Meeting. Both personally and on behalf of everyone connected with the
Group, I want to thank him for his valuable contribution to the development of iomart over the years. The search for Chris’
replacement is at an advanced stage and we expect to make an announcement in this regard in the near future.
As I indicated in my statement in last year’s Report and Accounts, we have adopted a progressive dividend policy with the
intention of moving over time to a pay-out ratio of 25% of our adjusted diluted earnings per share. Last year we paid a final
dividend of 2.5p per share equivalent to a pay-out ratio of 19.8% of adjusted diluted earnings per share. This year the Board
is proposing to pay a final dividend of 3.15p per share on 30 August 2016 to shareholders on the register on 12 August 2016,
based on an ex-dividend date of 11 August 2016, representing an increase of 26% over the dividend last year and equivalent
to a pay-out ratio of 22% 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 new financial year in a strong position and I look forward to another exciting year of growth with
considerable confidence.
Ian Ritchie
Chairman
6 June 2016
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iomart Group plc Annual report and accounts 2016 Strategic Report
Chief Executive Officer's Report
Introduction
I am delighted 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 an ever broader range of cloud solutions.
Our revenues in the year were £76.3m, an increase of 16% over the previous year, our adjusted EBITDA of £32.3m showed an
11% increase over the previous year and our profit before tax increased by 21% to £13.0m.
The opportunity remains to continue to grow both organically and through a disciplined acquisition strategy.
Market
The market for cloud services continues to grow and evolve. It is important to remember that we are still at the very early
stages of this opportunity with enormous scope for long term growth. More and more applications and workloads are moving
to the cloud, data volumes are growing exponentially, the emergence of the Internet of Things is creating ever more data, and
alongside this a new generation of users now expect everything to be delivered to them through their mobile device of choice.
This means an ever growing complexity in the choices and permutations available when forming an IT policy for cloud and we
believe that this will drive opportunity for those companies, such as iomart, who are agile and have the correct skillsets for
success.
All businesses are now digital businesses to a greater or lesser extent. They are confronted by an increasely complex set of
cloud decisions in terms of cost, value, effectiveness, complexity, security, data protection and compliance.
Indeed the new legal requirements around data, particularly the EU General Data Protection Regulation (GDPR), are going
to impact on all organisations. They will introduce significant new rules and compliance obligations for all organisations
around data protection in the cloud with global implications and we believe will drive further opportunity for iomart in helping
organisations become compliant and secure.
The traditional way of moving to the cloud, being a private or hybrid approach, is here for the foreseeable future and the long
term recurring revenue opportunity for iomart remains compelling. We are well established as a major player in providing the
flexible cloud solutions that businesses require, whether that be the private cloud, public or hybrid cloud spheres.
There is a large market opportunity in preparing and managing enterprises for transformation to cloud. This typically starts
with an on-premise reorganisation and virtualisation programme, followed by some private cloud on-premise and in-hosted
environments and moving through a hybrid model or a public cloud model.
The public cloud vendors led by AWS and Microsoft continue to win market share. It is becoming clear that they will require
an ecosystem of businesses orbiting them to provide services and support. The public cloud has introduced another level of
complexity to the choices that businesses have in their future IT buying decisions and we believe with that increase in choice
and complexity comes opportunity. As underlying infrastructure becomes more mature and efficient the future success of
cloud companies will be addressed further towards the application layer and not on the hardware.
Our challenge is to navigate through these early days of the further evolution of cloud adoption to ensure we have the skills and
resources necessary to be successful in that space. The addition of SystemsUp to the Group during the period has enhanced
our ability to provide solutions involving public cloud.
iomart set out on executing its current strategy almost 10 years ago. I believe that the opportunity over the next 10 years is
significantly greater.
Acquisitions
We again augmented our organic growth through the acquisition of Systems Up Limited (“SystemsUp”) in June and United
Communications Limited (which trades as “United Hosting”) in November. SystemsUp has been added into our Cloud Services
segment and United Hosting into our Easyspace segment. Both have performed well since acquisition.
We continue to look for businesses that fit our 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 2016
Strategic Report. Chief Executive Officer's Report
Cloud Services
We have renamed our Hosting segment as Cloud Services to better describe the breadth of products and services we deliver.
Due to the complex nature of the market opportunity this breadth of offerings helps us to maintain overall growth as the
demand for specific products and services fluctuates over time.
Revenues in this segment have grown by 19% to £65.4m (2015: £55.0m) partly as a result of the continued organic growth and
as a result of acquisitions. Organic growth in the year was 9% and our adjusted EBITDA percentage margin remains amongst
the highest in the industry.
iomart Hosting, Melbourne and ServerSpace are now managed as one business unit and trade as iomart Cloud and this will
be reflected in our marketing as the year unfolds. This unit provides complex hosting solutions with customers typically paying
for these services on a monthly basis on contracts ranging from one to three years in length. Last year I made reference to
an increase in customer churn and some pricing pressure at contract renewal. I am pleased to report that over this period
customer churn has improved and we have seen less pricing pressure at contract renewal. This has helped the overall segment
maintain its healthy organic growth level over the period.
Our server infrastructure business, delivering dedicated physical servers to customers, is run as one unit encompassing the
RapidSwitch and Redstation brands. We manage over 12,000 physical servers for our customers using highly automated
systems and processes which we continue to develop and improve.
Our Back-up and Disaster Recovery specialism is primarily sold through Backup Technology.
SystemsUp provides consultancy services to organisations, particularly in the public sector, helping them to decide on their
cloud strategy with an emphasis on the public cloud. We have started to see SystemsUp move into the provision of public cloud
infrastructure to the public sector during the period.
We are able to supply products and services across the cloud spectrum and do so using common platforms across the Group.
Within the scope of our product set we have strengthened our relationships with Amazon Web Services (AWS) and Microsoft
now labelled as Hypercloud vendors. Both are growing strongly on a global basis although they still account for a very small
fraction of overall IT and Cloud spend.
Due partly to the amount of revenue we are generating from the provision of their public cloud we are now an Advanced Partner
of AWS and moving towards the next level. We are one of Microsoft’s most respected Cloud Service Providers in the UK and we
are beginning to engage with their customers at a strategic consultancy level.
We continue to build on our skills and accreditations and see constant improvement across the Group’s skillset. We have
strengthened and broadened our sales and marketing team with a new Account Director, a new Sales Director, dedicated
channel management and a new Director of Marketing.
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.
During the year United Hosting became part of the segment delivering a similar range of products but to larger organisations.
It has successfully created a support operation in India to provide services to its customers.
Revenues of £10.9m (2015: £10.8m) have remained around the same level as in the previous year whilst delivering strong levels
of cash for the Group.
Current trading and outlook
Trading since the year end remains good and in line with market expectations.
The long term opportunity is bigger than ever. The investments we have made in our staff, skillsets and industry relationships
mean we are well positioned to take advantage of that opportunity and to deliver further significant growth.
I look forward, once again, with confidence to the year ahead.
Angus MacSween
Chief Executive Officer
6 June 2016
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iomart Group plc Annual report and accounts 2016
Strategic Report
Finance Director's Report
Trading Results
Revenue
Revenues for the year grew by 16% to £76.3m (2015: £65.8m) through the combination of continued organic growth and the
impact of acquisitions.
Our Cloud Services segment grew revenues by 19% to £65.4m (2015: £55.0m). This growth was helped by a full year contribution
from ServerSpace which we acquired in December 2014 and SystemsUp which was acquired in June 2015. Revenue growth in
the Cloud Services segment excluding the impact of acquisitions was 9% (2015: 9%).
Revenues within the Easyspace segment grew by 1% to £10.9m (2015: £10.8m). This growth was entirely due to the contribution
from United Hosting which was acquired in November 2015. Excluding the impact of acquisitions the segment’s revenue
declined by 8% (2015: 2%) due to the level of churn exceeding new sales both of which were in line with expectations. We expect
the organic revenue levels in this segment to stabilise in the future as new sales and churn levels move into balance, through
the introduction of new products and revised pricing in the domain market. Indeed the rate of decline in organic revenue over
the full year was less than the rate in the first half of the year.
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 £51.6m (2015: £44.3m) increasing as a result of the additional revenues we generated
as explained above. In percentage terms we maintained our margin at 67.7% (2015: 67.4%) with both operating segments
maintaining their respective percentage margins.
Adjusted EBITDA
The adjusted EBITDA for the year was £32.3m (2015: £29.1m) an increase of 11%. Our adjusted EBITDA margin has reduced
to 42.4% (2015: 44.2%). The Cloud Services segment increased its absolute level of margin over the period whilst experiencing
a modest reduction in its percentage margin and the Easyspace segment increased both its absolute and percentage margin.
Adjusted EBITDA in the Cloud Services segment was £31.1m (2015: £27.5m), an increase of 13.1%. This greatly improved
performance is a direct result of the additional gross margin delivered by the increase in sales revenue, from both organic
and acquired sources, offset by an increase in administrative expenses. Administrative expenses have increased principally
in relation to staff costs which has been largely due to the impact of the acquisition made in the period, the full impact of the
acquisition made in the previous period and the recruitment of senior staff. In percentage terms the adjusted EBITDA margin
has reduced to 47.5% (2015: 50.0%). This reduction is almost entirely due to the impact of acquisitions and in particular the
impact of SystemsUp which although having a lower adjusted EBITDA margin than the rest of the Cloud Services segment also
has almost no depreciation charge and therefore has a similar adjusted profit before tax percentage margin as the rest of the
Group.
The Easyspace segment’s adjusted EBITDA was £5.1m (2015: £4.9m) an increase of 3.9%. This improvement in adjusted EBITDA
is entirely due to the impact of an acquisition made in the period. Excluding the acquisition adjusted EBITDA reduced as a result
of the decline in organically generated revenue. In percentage terms the adjusted EBITDA margin has improved to 46.8% (2015:
45.5%). Excluding the acquisition the Easyspace segment maintained its adjusted EBITDA percentage margin, as a consequence
of continued cost control. The improvement in percentage margin is entirely due to the impact of the acquisition made in the
year.
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iomart Group plc Annual report and accounts 2016 Strategic Report. Finance Director's Report
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 £3.8m (2015: £3.3m) mainly due to increased payroll and staff related costs.
Adjusted profit before tax
Depreciation charges of £10.9m (2015: £10.1m) have increased largely as a result of charges for the equipment bought to
provide services to the additional Cloud Services segment customers and also as a result of the full year contribution of
ServerSpace.
The charge for amortisation of intangibles, excluding amortisation of intangible assets resulting from acquisitions (“amortisation
of acquired intangible assets”) of £1.2m (2015: £1.0m) has increased over the year as a result of an increase in the level of
software acquired over the year.
Finance income in the period was £0.1m (2015: £nil). Finance costs of £1.4m (2015: £1.3m), excluding the mark to market
adjustment in respect of interest swaps on the Company’s loans, the accelerated write off of arrangement fees on the
restructuring of the bank facility and the interest charge on the contingent consideration due in respect of acquisitions,
remained static over the period.
After deducting the charges for depreciation, amortisation, excluding the charges for the amortisation of acquired intangible
assets, and finance costs, excluding the mark to market adjustment in respect of interest swaps on the Company’s loans, the
accelerated write off of arrangement fees on the restructuring of the bank facility and the interest charge on the contingent
consideration due in respect of acquisitions, and crediting the finance income from the adjusted EBITDA, the Group’s adjusted
profit before tax was £19.0m (2015: £16.6m) an increase of 14%.
The adjusted profit before tax margin for the year was 25% (2015: 25%). Although the margin has remained the same over both
periods there are two largely offsetting components. The adjusted EBITDA margin reduced by 1.8% primarily due to the impact
of acquisitions and principally due to the impact of SystemsUp. On the other hand depreciation charges as a percentage of
revenue have fallen by 1.1% again primarily due to the impact of the acquisition of SystemsUp which has minimal depreciation
charges.
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
Add/Less: Mark to market adjustment on interest rate swaps
Less: Accelerated write off of arrangement fees on restructuring of the bank facility
Less: Interest on contingent consideration
Add: Gain on revaluation of contingent consideration
Profit before tax
2016
£’000
18,970
(5,354)
(116)
(1,081)
64
(177)
(152)
870
13,024
2015
£’000
16,613
(4,368)
(526)
(809)
(125)
-
-
-
10,785
The adjusting items are: charges for the amortisation of acquired intangible assets of £5.4m (2015: £4.4m) which have increased
substantially as a result of the acquisitions made in the year and the full year effect of acquisitions made in previous years;
acquisition costs of £0.1m (2015: £0.5m) as a result of acquisitions made; share based payment charges of £1.1m (2015: £0.8m)
which have increased as a result of the award of share options in the year; a mark to market credit adjustment in respect of
interest rate swaps on the Company’s loans of £0.06m (2015: £0.12m charge); the accelerated write off of arrangement fees on
the restructuring of the bank facility during the year of £0.2m (2015: £nil); the charge of interest, at the weighted average cost of
capital rate of 15.5%, on the contingent consideration expected to be paid for the acquisition of United Hosting of £0.2m (2015:
£nil); and the gain on the revaluation of the contingent consideration to be paid for SystemsUp of £0.9m (2015: £nil). It was
originally estimated that the contingent consideration would be £1.0m which was based on a measure of the revenue generated
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iomart Group plc Annual report and accounts 2016
Strategic Report. Finance Director's Report
by the business. Whilst the overall quantum of revenue generated by the business was consistent with what was expected, the
mix of revenue was not, with more revenue than expected being generated from the provision of public cloud services and less
from the provision of consultancy services. As a result the amount due in respect of the contingent consideration is £0.1m and
consequently, an amount of £0.9m has been recognised in the Statement of Comprehensive Income during the year as a gain
on revaluation of contingent consideration.
After deducting these items from the adjusted profit before tax; the reported profit before tax was £13.0m (2015: £10.8m)
an increase of 21%. The increase in the year has been significantly affected by the gain on revaluation of the contingent
consideration of £0.9m. In percentage terms the profit before tax margin was 17% (2015: 16%). This improvement is entirely
due to the gain on revaluation of the contingent consideration due on the acquisition of SystemsUp. Before that gain the
percentage margins in both years would have been very similar, consistent with the adjusted profit before tax percentage
margin over the same periods.
Taxation
There is a tax charge for the year of £2.0m (2015: £1.9m). The tax charge for the year is made up of a corporation tax charge
of £3.6m (2015: £2.7m) with a deferred tax credit of £1.6m (2015: credit £0.8m). The effective rate of tax for the year is 15.4%
(2015: 17.5%) and an explanation of this reduction in given in note 9. At the year end, the Group has no unused tax losses (2015:
£1.2m) available for offset against future profits.
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 £11.0m (2015: £8.9m) an increase of 24% which has been significantly affected by the gain on revaluation of
contingent consideration.
Earnings per share
Adjusted diluted earnings per share, 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 restructuring of the bank facility, acquisition costs; the charge
of interest on contingent consideration due and the gain on the revaluation of the contingent consideration to be paid for
SystemsUp and the tax effect of these items was 14.44p (2015: 12.63p) an increase of 14%.
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 10.32p (2014: 8.34p), an increase of 24% which has been significantly
affected by the gain on revaluation of contingent consideration.
Acquisitions
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 of £335,000 was paid in August 2015 to the vendors in respect of the final amount due in respect of the no debt, no cash,
normalised working capital adjustment. A final sum was contingent on a measure of revenue for the year to 31 March 2016 and
this has now been calculated to be £0.1m and was paid in May 2016.
On 30 November 2015, the Group acquired the entire issued share capital of United Hosting on a no cash no debt, normalised
working capital basis. At completion, an initial payment of £7.5m in cash was made and in addition an amount of £2.0m in cash
was paid as an interim settlement of the expected amount due in respect of the no debt, no cash, normalised working capital
adjustment. An additional sum of £1.1m was paid in February 2016 in respect of the final amount due in respect of the no
debt, no cash, normalised working capital adjustment. A further two sums are contingent on the profitability of the business in
the years ending April 2016 and April 2017 and this has been estimated to have a present value at March 2016 of £3.1m. The
maximum purchase price on a non-discounted basis is £11.0m, excluding any sums due in respect of the no debt, no cash,
normalised working capital adjustment. The amount of contingent consideration due for the year ended April 2016 has now
been agreed at £1.0m which was in line with expectations and was paid in June 2016.
18
iomart Group plc Annual report and accounts 2016
Strategic Report. Finance Director's Report
Cash flow and net debt
Net cash flows from operating activities
The Group continued to generate high levels of operating cash over the year. Cash flow from operations was £30.9m (2015:
£27.2m) with the significant increase of 14% over the previous year’s level largely due to the improvement in adjusted EBITDA.
After deducting payments for corporation tax of £4.3m (2015: £3.2m) the net cash flow from operating activities was £26.6m
(2015: £24.0m).
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 £32.6m (2015: £15.8m) in the period. Of this amount, £15.9m (2015: £2.4m), net of cash acquired
of £4.5m (2015: £0.2m), was incurred in relation to acquisition activities described above. In addition the Group incurred
expenditure of £1.65m (2015: £1.3m) in respect of contingent consideration due on acquisitions.
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. As a result the Group spent £12.4m (2015:
£10.7m) on assets, net of related finance lease drawdown, trade creditor movements and non-cash reinstatement provisions.
Expenditure was also incurred on development costs of £1.1m (2015: £1.0m), on intangible assets of £1.2m (2015: £0.4m) and
on property lease deposits of £0.3m (2015: £nil).
Cash flow from financing activities
The Company’s banking facility was restructured in the year resulting in a substantial increase in the quantum of the facility
together with a lower interest margin. There were drawdowns of £16.5m (2015: £13.5m) from the facility to fund the purchase
of the acquisitions in the year. In addition bank loan repayments of £3.5m were made (2015: £22.0m) in the year. We received
£0.1m (2015: £nil) from the issue of shares as a result of the exercise of options by employees. We also made a dividend
payment of £2.7m (2015: £1.9m); incurred finance costs of £1.5m (2015: £1.3m); and made lease repayments of £1.0m (2015:
£1.2m).
Net cash flow
As a consequence, our overall cash generated during the year was £2.0m (2015: £4.7m cash spent) which resulted in cash and
cash equivalent balances at the end of the year of £10.3m (2015: £8.3m). After recognising bank loans of £34.5m (2015: £21.5m)
and finance lease obligations of £1.4m (2015: £2.2m) net debt balances at the end of the period stood at £25.6m (2015: £15.4m)
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 capital expenditure and finance lease facilities which are
also 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
6 June 2016
19
iomart Group plc Annual report and accounts 2016 Strategic Report - Key Performance Indicators and Principal Risks and Uncertainties
Key performance indicator review
Revenue Growth
Revenue
Growth
2016
£76.3m
16% increase
2015
£65.8m
18% increase
Revenue from continuing operations grew by 16% over the year compared to a growth of 18% in the previous year. The Cloud
Services segment grew revenues by 19% (2015: 23%) and the Easyspace segment grew by 1% (2015: 2% decline).
Adjusted EBITDA Margin
Adjusted EBITDA
Adjusted EBITDA margin
2016
£32.3m
42%
2015
£29.1m
44%
The adjusted EBITDA has shown an 11% increase as a consequence of organic growth and acquisitions. In percentage terms
there has been a modest decrease mainly as a result of acquisitions in the Cloud Services segment in the current year.
Easyspace improved its adjusted EBITDA percentage margin mainly due to the impact of an acquisition.
Adjusted PBT Margin
Adjusted PBT
Adjusted PBT margin
2016
£19.0m
25%
2015
£16.6m
25%
Since some of the acquisitions into the group have different business models and due to the evolving public cloud market
where it is likely there will be no depreciation charges it has been decided to add adjusted PBT as an additional KPI by which
to measure the group’s performance. The adjusted PBT has shown a 14% increase as a consequence of organic growth and
acquisitions. The percentage margin has been maintained over the year.
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. This risk is mitigated by the operation of our datacentres, the network and staffing as described
above. 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.
20
iomart Group plc Annual report and accounts 2016
Strategic Report - Key Performance Indicators and Principal Risks and Uncertainties
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.
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 21 has been approved by the Board and is signed on its behalf:
Richard Logan
Finance Director
6 June 2016
21
iomart Group plc Annual report and accounts 2016
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 2016 Ian Ritchie
Non-Executive Chairman
Angus MacSween
Chief Executive Officer
Crawford Beveridge
Non-Executive Director
65, appointed 2008; currently Chairman
of Computer Application Services Ltd,
Krotos Ltd, Cogbooks Ltd and Red Fox
Media Ltd. He is a past President of
the British Computer Society. Ian was
founding chairman of several technology
companies, including Voxar Ltd (now
part of Toshiba), Orbital Software Group
plc (now part of Sopheon plc), Digital
Bridges Ltd (now part of Oberon Inc)
and Sonaptic Ltd (now part of Cirrus
Logic Inc).
59, 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.
70, 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.
Chris Batterham
Non-Executive Director
Richard Logan
Group Finance Director
Sarah Haran
Chief Operations Officer
61, 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, Blue Prism Group plc and
Toumaz Ltd. Chris has also served
on the boards of Staffware plc, DBS
Management plc and Betfair plc.
58, appointed 2006; Richard
is a
chartered accountant having qualified
with Arthur Young in 1984. Richard
then spent 7 years with Ben Line
Group initially as Group treasurer and
latterly as financial director of Ben
Line’s main container shipping division.
From 1992 to 2002 Richard served
as finance director of Kingston SCL a
company which provided administration
and billing software to the mobile
communications market during which
time he was involved in a management
buy-out and subsequent trade sale of
the company. Immediately prior to
joining iomart Richard served as finance
director of ePOINT Group, a technology
company based in Scotland.
50, 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.
23
iomart Group plc Annual report and accounts 2016 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 2014. 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 2016
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
9
10
10
9
10
2
-
-
2
2
-
2
-
-
2
2
-
4
-
-
4
4
-
4
-
-
4
4
-
25
iomart Group plc Annual report and accounts 2016
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.
Risk Management and Internal Control
The Directors, who are responsible for the Group’s system of risk management and internal control, have established systems
to ensure that an appropriate level of oversight and control is provided. The systems are reviewed for effectiveness by the Audit
Committee and the Board. The Group’s systems of risk management and 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 2016
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.
27
iomart Group plc Annual report and accounts 2016
Corporate Governance Report
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.
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
6 June 2016
28
iomart Group plc Annual report and accounts 2016 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 2014 (“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:
• Pensions
Pension contributions to individuals’ personal pension
arrangements are payable by the Group at the rate of twice
the contribution made by the director subject to a maximum
employer contribution of 10% of basic salary.
•
Share options
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.
• salaries and benefits available to executive directors of
comparable companies;
• Sharesave scheme
• the need to attract and retain executives of an
appropriate calibre; and
The Group operates a sharesave scheme for all employees
including executive and non-executive directors.
• the continued commitment of executives to the
Group’s success through appropriate incentive
• Other benefits
schemes.
The committee normally meets at least twice per year.
The executive directors are entitled to life insurance cover
and to participate in the Group’s Private Medical Insurance
scheme.
Remuneration of executive directors
The remuneration packages of the executive directors
comprise the following elements:
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.
• 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 2016
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
Salary or fees
Angus MacSween
Chris Batterham
Crawford Beveridge
Sarah Haran
Richard Logan
Ian Ritchie
320,000
35,000
25,000
185,000
190,000
55,000
Bonus
£
272,000
-
-
157,250
161,500
-
Pension
Benefits contributions
£
-
-
-
18,500
19,000
-
£
3,706
-
-
910
2,520
-
Year ended
31 March
2016
Total
£
595,706
35,000
25,000
361,660
373,020
55,000
Year ended
31March
2015
Total
£ £
516,964
35,000
25,000
315,180
335,542
55,000
810,000
590,750
7,136
37,500
1,445,386 1,282,686
Directors’ interests in shares
The interests of the directors in the shares of the company at 31 March 2016, together with their interests at 1 April 2015 were as
follows:
Name of director
Angus MacSween
Chris Batterham
Crawford Beveridge
Sarah Haran
Richard Logan
Ian Ritchie
Number of ordinary shares
31 March 2016
At 1 April 2015
16,994,087
90,621
30,000
1,963,747
969,393
151,400
16,800,552
90,621
30,000
1,963,747
981,393
151,400
30
iomart Group plc Annual report and accounts 2016
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 2016 in options over the ordinary shares of the Company were as follows:
Name of
director
Angus MacSween
Sarah Haran
Richard Logan
At
1 April
2015
43,010
113,334
113,333
113,333
4,702
117,480
-
-
505,192
58,115
42,913
80,000
80,000
80,000
4,702
68,000
-
-
413,730
50,000
28,495
80,000
80,000
80,000
4,702
72,080
-
-
At 31
Date from
which
Grant exerciseable
Date of
2016
Granted Lapsed
-
-
43,010
- 113,334
-
- 113,333
-
- 113,333
-
-
-
4,702
- 117,480
-
4,620
-
4,620
- 175,575
175,575
March Exercise
price
46.5p 06/10/2008
1p 27/03/2013
1p 27/03/2013
1p 27/03/2013
191.4p 08/01/2014
1p 25/09/2014
194.8p 12/08/2015
1p 28/08/2015
Expiry
date
31/03/2009 06/10/2018
31/05/2014 27/03/2023
31/05/2015 27/03/2023
31/05/2016 27/03/2023
01/02/2017 31/07/2017
25/09/2017 25/09/2024
01/10/2018 31/03/2019
28/08/2018 28/08/2028
180,195
- 685,387
-
-
-
-
-
-
-
4,620
85,253
-
-
-
-
-
-
-
-
-
58,115
42,913
80,000
80,000
80,000
4,702
68,000
4,620
85,253
50.5p 27/09/2007
46.5p 06/10/2008
1p 27/03/2013
1p 27/03/2013
1p 27/03/2013
191.4p 08/01/2014
1p 25/09/2014
194.8p 12/08/2015
1p 28/08/2015
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
01/02/2017 31/07/2017
25/09/2017 25/09/2024
01/10/2018 31/03/2019
28/08/2018 28/08/2028
89,873
- 503,603
Exercised
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,620
87,557
-
-
-
-
-
-
-
-
-
-
28,495
80,000
80,000
80,000
4,702
72,080
4,620
87,557
74.0p 24/08/2006
46.5p 06/10/2008
1p 27/03/2013
1p 27/03/2013
1p 27/03/2013
191.4p 08/01/2014
1p 25/09/2014
194.8p 12/08/2015
1p 28/08/2015
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
01/02/2017 31/07/2017
25/09/2017 25/09/2024
01/10/2018 31/03/2019
28/08/2018 28/08/2028
395,277
(50,000)
92,177
- 437,454
Ian Ritchie
4,702
-
4,702
-
-
-
-
4,620
4,620
-
-
-
4,702
4,620
191.4p 08/01/2014
194.8p 12/08/2015
01/02/2017 31/07/2017
01/10/2018 31/03/2019
9,322
31
iomart Group plc Annual report and accounts 2016
Report of the board to the members on directors' remuneration
During the year options over 348,385 ordinary shares (2015: 257,560) were granted to Directors under the unapproved share option
scheme with an average exercise price of 1.0p per share (2015: 1.0p per share) and options over 18,480 ordinary shares (2015: 18,808)
were granted to Directors under the Sharesave scheme with an average exercise price of 194.8p per share (2015: 191.4p).
On 2 December 2015, Richard Logan exercised 50,000 share options under the Company’s Enterprise Management Incentive Share
Option Scheme at an exercise price of 74.0p. Mr Logan sold the resulting 50,000 ordinary shares over the period to 7 December 2015
at an average price of 270.4p per share resulting in a gain on exercise of £98,200. The market price on the date of exercise was 270.0p.
No share options were exercised by directors in the previous year. In addition, over the same period, his wife sold 12,000 ordinary
shares at an average price of 265.5p per share resulting in proceeds of £31,860.
The market price of the company’s shares at the end of the financial period was 270.0p and the range of prices during the period was
between 202.0p and 307.5p.
By order of the board
Crawford Beveridge
Chairman, Remuneration committee
6 June 2016
32
iomart Group plc Annual report and accounts 2016 The directors present their annual report on the affairs of the
Group, together with the financial statements and auditor’s
report, for the year ended 31 March 2016.
Financial instruments
The Group’s financial instruments comprise cash and liquid
resources, bank loans and finance leases together with various
items such as trade debtors and trade creditors that arise
directly from its operations. The main purpose of these financial
instruments is to provide finance for the Group’s operations.
On 1 July 2015 the Group restructured its banking facility with
Lloyds Banking Group. Under the restructuring the previous
multi option revolving credit facility of £35m was increased to
£60m, the term of the facility was extended from September
2017 to June 2019 and the margin on the facility was reduced.
As a consequence of this restructuring the arrangement fee of
£337,500 which had been paid in the previous year has been
fully written off to the Consolidated Statement of Comprehensive
Income in the year.
At the start of the year there was £21.5m outstanding on the
original multi option revolving credit facility. On 5 June 2015 £9m
was drawn down to fund the acquisition of SystemsUp and on
30 November 2015 a further £7.5m was drawn down to fund the
acquisition of United Hosting. Repayments totalling £3.5m were
made during the year resulting in a balance outstanding at the
end of the year of £34.5m.
The £60m 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 June 2019 at which point any advances made
under the multi option 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. Interest is
charged on this loan at an annual rate determined by the sum
of the multi option credit facility margin, LIBOR and the lender’s
mandatory costs. The multi option revolving credit facility margin
is fixed at 1.7% per annum. A one-off arrangement fee of
£250,000 was paid in respect of the increase in the multi option
revolving credit facility during the year and a non-utilisation fee
of 40% of the multi option revolving credit facility margin is due
on any undrawn portion of the full £60m multi option revolving
credit facility. The effective interest rate for multi option revolving
credit facility in the current year was 3.17% (2015: 3.82%).
The Group has exposure to movements in interest rates on its
borrowings. 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 amount of borrowing is fixed at 2.03% from April
2015 until maturity. The Group had also entered interest rate
swap arrangements in respect of £4m which had been drawn
under the multi option credit facility which was fixed at 1.02%
until June 2015 and £5m drawn under the multi option revolving
Directors' Report
credit facility which was fixed at 1.26% until August 2015. As a
consequence, at 31 March 2016, £8m out of the amount drawn
under the multi option revolving credit facility was covered by
interest rate swap arrangements. The Group’s borrowings at
31 March 2016 comprise finance leases totalling £1.4m (2015:
£2.3m) and bank facility usage totalling £34.5m (2015: £21.5m).
The interest rates on the finance leases are fixed for the term of
the lease at between 5.6% and 11.5% and the average interest
rate was 9.9% (2015: 8.9%).
The Group has exposure to movements in the exchange rate of
the US dollar as certain domain name purchases are transacted
in this currency. To protect cash flows against the level of
exchange rate risk, the Group entered into forward exchange
contracts to hedge foreign exchange exposures arising on the
forecast payments. The majority of transactions of the parent
company and the UK subsidiaries are in UK sterling and, with the
exception of forward foreign exchange contracts and interest
rate swaps, the Group does not use derivative instruments.
Additional information on financial instruments is included in
Note 30.
Dividend
The directors have not declared an interim dividend for the year
ended 31 March 2016 (2015: nil). The directors recommend a
final dividend for the year ended 31 March 2016 of 3.15p per
share (2015: 2.50p per share).
Research and development
The Group develops cloud computing products including private
cloud platforms, hybrid cloud platforms, virtual platforms, online
backup and storage solutions and email related products.
Directors and their interests
The present membership of the board is set out on page 90.
In accordance with the company’s Articles of Association, Ian
Ritchie, Sarah Haran and Chris Batterham are due to retire by
rotation. Ian Ritchie and Sarah Haran will offer themselves for
re-election at the forthcoming annual general meeting.
Details of directors’ interests in the company’s shares are set
out in the Report of the Board to the Members on Directors’
Remuneration on pages 29 to 32.
Insurance for directors and officers
The Company has purchased and maintains appropriate
insurance cover against legal action brought against directors
and officers.
33
iomart Group plc Annual report and accounts 2016 Directors' Report
Substantial shareholdings
At 31 May 2016 the following interests in 3% or more of the
issued ordinary share capital, excluding shares held by the
iomart Group plc Employee Benefit Trust, had been notified to
the Company:
Shareholder
Shares Percentage held
Angus MacSween
16,994,087
15.90%
Liontrust Asset
Management
15,725,978
14.71%
Schroders plc
9,915,775
Octopus Investments
8,583,108
9.28%
8.03%
Noble Grossart
Investment Limited
3,505,000
3.28%
Transactions in own shares
During the year 98,567 (2015: 38,000) 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 £91,374 (2015: £23,820) 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.
Auditors
Grant Thornton UK LLP have expressed their willingness to
continue in office as auditors and a resolution to reappoint them
will be proposed at the forthcoming annual general meeting.
By order of the board
Bruce Hall
Company secretary
6 June 2016
34
iomart Group plc Annual report and accounts 2016
Directors' Responsibilities Statement
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 Company’s auditor is 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.
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.
35
iomart Group plc Annual report and accounts 2016
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
2016 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
6 June 2016
We have audited the Group financial statements of iomart
Group Plc for the year ended 31 March 2016 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 as set out on page 35, 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 2016 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 2016
Consolidated statement of comprehensive income. Year ended 31March 2016
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Analysed as:
Earnings before interest, tax, depreciation, amortisation, acquisition costs,
share based payments and gain on revaluation of contingent consideration
Share based payments
Acquisition costs
Depreciation
Amortisation – acquired intangible assets
Amortisation – other intangible assets
Gain on revaluation of contingent consideration
Finance income
Finance costs
Profit before taxation
Taxation
Note
2016
£’000
2015
£’000
76,280
65,797
(24,650)
(21,477)
51,630
44,320
(37,917)
(32,121)
13,713
12,199
32,341
(1,081)
(116)
(10,878)
(5,354)
(1,199)
870
128
(1,687)
29,053
(809)
(526)
(10,142)
(4,368)
(1,009)
-
45
(1,459)
4
4
27
6
4
4
4
11
7
7
13,024
10,785
9
(2,005)
(1,890)
Profit for the year attributable to equity holders of the parent
11,019
8,895
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.
10
10
(49)
(49)
11,029
8,846
12
12
10.32 p
10.17 p
8.34 p
8.24 p
37
iomart Group plc Annual report and accounts 2016
Consolidated statement of financial position. As at 31March 2016
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
Contingent consideration due on acquisitions
Non-current borrowings
Trade and other payables
Provisions
Deferred tax
Current liabilities
Contingent consideration due on acquisitions
Trade and other payables
Provisions
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
Note
2016
£’000
2015
£’000
13
13
14
16
18
17
21
22
20
23
10
21
19
23
22
25
26
61,123
23,065
2,760
36,045
122,993
10,341
13,718
24,059
47,342
19,041
2,416
34,846
103,645
8,347
11,389
19,736
147,052
123,381
(2,068)
(826)
(455)
(1,879)
(2,075)
(7,303)
(1,135)
(19,532)
(211)
(1,504)
(35,098)
(57,480)
-
(1,346)
(703)
(2,187)
(2,087)
(6,323)
(1,650)
(18,680)
(253)
(1,401)
(22,395)
(44,379)
(64,783)
(50,702)
82,269
72,679
1,078
(489)
1,200
21,067
4,983
(37)
54,467
82,269
1,078
(538)
1,200
21,067
4,983
(47)
44,936
72,679
These financial statements were approved by the board of directors and authorised for issue on 6 June 2016.
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 2016
Consolidated statement of cash flows. Year ended 31March 2016
Profit before taxation
Gain on revaluation of contingent consideration
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
Payments for current period acquisitions net of cash acquired
Contingent consideration paid
Payment of deposits
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
Finance costs paid
Dividends paid
Net cash received from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Note
11
7
4
4
27
16
13
13
22
22
8
2016
£’000
13,024
(870)
1,559
10,878
6,553
1,081
(1,612)
298
30,911
(4,311)
26,600
(12,385)
(1,123)
(1,207)
(15,924)
(1,650)
(300)
33
(32,556)
91
16,500
(984)
(3,500)
(1,489)
(2,668)
7,950
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)
1,994
(4,678)
8,347
13,025
Cash and cash equivalents at the end of the year
18
10,341
8,347
The following notes form part of the primary financial statements.
39
iomart Group plc Annual report and accounts 2016
Consolidated statement of changes in equity. Year ended 31March 2016
Changes in equity
Note
Share
capital
£’000
Own
shares
Own
shares
EBT Treasury
£’000
£’000
Foreign
currency
translation
reserve
£’000
Capital
Share
redemption premium Merger Retained
reserve earnings
£’000
account
£’000
reserve
£’000
£’000
Total
£’000
Balance at 1 April 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
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49
49
-
10
10
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,019 11,019
-
-
10
-
- 11,019 11,029
-
-
-
-
-
(2,668) (2,668)
1,081 1,081
57
57
42
91
(1,488) (1,439)
Balance at 31 March 2016
1,078
(70)
(419)
(37)
1,200
21,067
4,983 54,467 82,269
The following notes form part of the primary financial statements.
40
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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 90 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
because that
is the currency of the primary economic
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 standards,
amendments and interpretations were effective in the year but
had no material impact on the Group’s financial statements:
IFRS 10 ‘Consolidated Financial Statements’
IFRS 11 ‘Joint Arrangements’
•
•
•
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.
The standard is expected to be applicable to the Group for the
period beginning 1 April 2018.
IFRS 16 presents new requirements for the recognition,
measurement, presentation and disclosure of leases. The
standard provides that lessees will be required to recognise
assets and liabilities for all leases unless the lease term is 12
months or less or the underlying asset has a low value. The
standard was issued in January 2016 and applies to annual
reporting periods beginning on or after 1 January 2019 but is yet
to be endorsed by the EU. The Directors have not yet assessed
the impact that this standard will have on the Group’s net asset
position and are therefore not in a position to make a reliable
estimate of the impact this revised standard will have on the
Group’s accounting policies. The standard is expected to be
applicable to the Group for the period beginning 1 April 2019.
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:
• Amendments to IAS 1 ‘Presentation of financial statements’
(applicable for the period beginning 1 April 2016)
IFRS 9 ‘Financial Instruments’ (applicable for the period
•
beginning 1 April 2018)
IFRS 12 ‘ Disclosure of Interest in Other Entities’
Summary of Accounting Policies
• Amendments to IAS 19 (revised) ‘Defined Benefit Plans:
Employee Contributions’
• Amendments to IAS 27 (revised) ‘Separate Financial
Statements’
• Amendments to IAS 28 (revised) ‘Investments in Associates
and Joint Ventures’
• Amendments to IAS 32 (revised) ‘Offsetting Financial Assets
and Financial Liabilities’
• Amendments to IAS 36 (revised) ‘Recoverable Amount
Disclosures for Non-Financial Assets’
• Amendments to IAS 38 (revised) ‘Intangible Assets’
• Amendments to IAS 39 (revised) ‘Novation of Derivatives and
Continuation of Hedge Accounting’
• Amendments to IFRS 10, 11 & 12 ‘Transitional Guidance’
• Amendments to IFRS 10,12 & 27 ‘Investment Entities’
• Annual Improvements to IFRSs 2010 – 2012 cycle
•
IFRIC 21 Levies
• Annual Improvements to IFRSs 2011 - 2013 cycle
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 the standard was still
being amended as recently as April 2016. Combined with the
Basis of consolidation
The Group financial statements consolidate those of the
Company and all of its subsidiary undertakings drawn up to 31
March 2016. 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
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.
41
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
2. ACCOUNTING POLICIES (CONTINUED)
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.
Cloud Services
This operating segment provides managed cloud computing
facilities and services including consultancy. Revenue from the
sale of cloud computing facilities and managed 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. Consultancy
services are generally provided on a “time and materials” basis
and therefore revenue is recognised as these services are
rendered.
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.
42
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 costs which do meet the criteria
range from new product development to the enhancement
of existing services such as mail platforms. The scope of the
development team’s work continues to evolve as the Group
continues to deliver business critical solutions to a growing
customer base. 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.
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, adjusted profit before
tax and adjusted diluted earnings per share.
Adjusted EBITDA
Adjusted EBITDA is defined as earnings before interest, tax,
depreciation and amortisation (EBITDA) before share based
payment charges, acquisition costs and any gains or losses on
the revaluation of contingent consideration. 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.
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
2. ACCOUNTING POLICIES (CONTINUED)
Adjusted Profit before Tax
Adjusted profit before tax is defined as profit before tax adjusted
for the following:
• amortisation charges on acquired intangible assets;
• share based payment charges;
• mark to market adjustments in respect of interest rate swaps;
• where bank facilities are restructured during the year any
accelerated write off of arrangement fees; and
• M&A activity including:
-
-
-
-
Professional fees;
Any non-recurring integration costs
Any gain or loss on the revaluation of contingent
consideration
Any interest charge on contingent consideration
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 its activities.
The Group considers adjusted profit before tax to be a useful
measure of performance because it eliminates the impact of
certain non-recurring items associated with acquisitions and
other charges commonly excluded from profit before tax by
investors and analysts for valuation purposes.
Adjusted Diluted Earnings per Share
Adjusted diluted earnings per share is calculated by taking
the adjusted profit before tax as described after deducting an
appropriate taxation charge and dividing by the total weighted
average number of ordinary shares in issue during the year and
adjusting for the dilutive potential ordinary shares relating to
share options.
The Group considers adjusted diluted earnings per share to
be a useful measure of performance for the same reasons as
adjusted profit before tax. In addition it is used as the basis for
dividend payments.
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.
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
Office equipment
Between 20% and 50% per
annum
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
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.
43
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
2. ACCOUNTING POLICIES (CONTINUED)
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 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
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 event, 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.
44
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
and laws 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.
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’.
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.
iomart Group plc Annual report and accounts 2016 Notes to the financial statements. Year ended 31March 2016
2. ACCOUNTING POLICIES (CONTINUED)
Equity
Equity comprises the following:
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;
• 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 with maturities of three months or less from inception 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.
• “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.
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.
45
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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 judgement as to what intangible assets exist within the
acquired business at the time of the acquisition and what fair
value adjustments are required. 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
The Group is required to make a judgement as to whether any
reinstatement of buildings held under leases is required. For
each lease, on an annual basis, 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.
Contingent consideration
Where an acquisition involves a potential payment of contingent
consideration the Group is required to make a judgement as
to whether any contingent consideration payment is likely. If
it is then an 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.
2. ACCOUNTING POLICIES (CONTINUED)
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 21. 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 19.
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 £60m multi option revolving credit facility with Lloyds
Banking Group of which £34.5m is drawn down at the year
end. The net debt balances at the end of the period stood at
£25.6m (2015: £15.4m) 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 judgement 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.
46
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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.
United Hosting was acquired during the year and has been reported as part of the Easyspace segment since acquisition.
• Cloud Services – 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, Backup Technology,
ServerSpace and SystemsUp. SystemsUp was acquired during the year and has been reported as part of the Cloud Services
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, costs associated with acquisitions and any gain or loss
on revaluation of contingent consideration. 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
Cloud Services
External
£’000
10,883
65,397
76,280
2016
Internal
£’000
-
1,114
1,114
Total
£’000
10,883
66,511
77,394
External
£’000
10,782
55,015
65,797
2015
Internal
£’000
-
950
950
Total
£’000
10,782
55,965
66,747
Geographical Information
In presenting the consolidated information on a geographical basis, revenue is based on the geographical location of customers.
There is no single country where revenues are individually material other than the United Kingdom. The United Kingdom is the place
of domicile of the parent company, iomart Group plc.
Analysis of Revenue by Destination
United Kingdom
Rest of the World
Revenue from operations
2016
£’000
64,218
12,062
76,280
2015
£’000
54,253
11,544
65,797
47
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
3. SEGMENTAL ANALYSIS (CONTINUED)
Profit by Operating Segment
2016
Depreciation,
amortisation,
acquisition
costs and
2015
Depreciation,
amortisation,
acquisition
costs and
Adjusted
EBITDA
£’000
5,094
31,084
(3,837)
-
-
32,341
share based Operating
payments profit/(loss)
£’000
4,279
14,468
(3,837)
(116)
(1,081)
13,713
£’000
(815)
(16,616)
-
(116)
(1,081)
(18,628)
Adjusted
EBITDA
£’000
4,905
27,481
(3,333)
-
-
29,053
share based Operating
payments profit/(loss)
£’000
4,489
12,378
(3,333)
(526)
(809)
12,199
£’000
(416)
(15,103)
-
(526)
(809)
(16,854)
32,341
(18,628)
870
(3,564)
11,019
29,053
(16,854)
-
(3,304)
8,895
Easyspace
Cloud Services
Group overheads
Acquisition costs
Share based payments
Profit before tax and interest
Gain on revaluation of contingent
consideration
Group interest and tax
Profit for the year
Group overheads, acquisition costs, share based payments, gain on revaluation of contingent consideration, 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 profit or loss
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 profit or loss
Marketing and sales
Bad debt expense
Exchange gain
Premises and office
2016
£’000
2015
£’000
16,751
13,220
10,171
707
2,714
91
5,354
1,199
168
1,429
513
(39)
5,744
9,162
980
2,433
97
4,368
1,009
476
1,101
46
(38)
5,088
Included within administrative 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 and advisory fees
- Corporate finance and advisory transactions
48
2016
£’000
2015
£’000
50
66
19
50
-
185
40
58
13
31
25
167
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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
2016
£’000
1,408
38
655
596
-
2015
£’000
1,248
35
665
517
-
During the year the Company made personal pension contributions to the personal pension schemes of 2 directors (2015: 2).
The aggregate amount of gains realised by directors on the exercise of share options during the year was £98,200 (2015: £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 32.
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
2016
No.
189
35
97
55
376
2016
£’000
15,194
1,612
155
1,081
18,042
2015
No.
159
44
81
50
334
2015
£’000
12,464
1,336
128
809
14,737
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 32. 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:
- Onerous lease provisions
- Other
Total acquisition costs
2016
£’000
263
(169)
22
116
2015
£’000
150
376
-
526
During the year costs of £263,000 (2015: £150,000) were incurred in respect of professional fees on various acquisitions. In addition
to these professional fees, a one-off credit of £169,000 (2015: charge £376,000) in relation to provisions (note 23) and £22,000 (2015:
£nil) other costs directly related to the integration of acquisitions into the Group were also incurred.
49
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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
Items affecting adjusted profit before tax calculation:
Mark to market interest adjustment
Accelerated write off of arrangement fees on restructuring of facility
Finance charge on contingent consideration on business combinations
Finance expense for the year
2016
£’000
21
107
128
(1,109)
(251)
(62)
(1,422)
64
(177)
(152)
(1,687)
2015
£’000
33
12
45
(965)
(318)
(51)
(1,334)
(125)
-
-
(1,459)
Net finance cost
(1,559)
(1,414)
Included in other interest income is £95,000 (2015: £12,000) in respect of leasehold deposits and £12,000 (2015: £nil) other interest.
8. DIVIDENDS ON SHARES CLASSED AS EQUITY
Paid during the year:
Final dividend
Equity dividends on ordinary shares
2016
Pence per
share
2016
£’000
2015
Pence per
share
2015
£’000
2.50p
2,668
1.75p
1,867
The directors have recommended a final dividend for the year ended 31 March 2016 of 3.15p per share (2015: 2.50p per share).
Subject to shareholder approval this proposed final dividend would be payable on 30 August 2016 to shareholders on the register as
of 12 August 2016.
50
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
9. TAXATION
Tax charge for the year
Adjustment relating to prior years
Total current taxation charge
Origination and reversal of temporary differences
Adjustment relating to prior years
Effect of different statutory tax rates of overseas jurisdictions
Effect of changes in tax rates
Total deferred taxation credit
2016
£’000
(3,663)
52
(3,611)
1,482
31
61
32
1,606
2015
£’000
(2,782)
36
(2,746)
692
179
14
(29)
856
Total taxation charge
(2,005)
(1,890)
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 @ 20% (2015 – 21%)
Expenses disallowed for tax purposes
Non-taxable income
Adjustments in current tax relating to 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 development costs
Movement in unprovided deferred tax related to property, plant and equipment
Movement in deferred tax relating to prior periods
2016
£’000
2015
£’000
13,024
10,785
2,605
2,265
67
(174)
(52)
(53)
(32)
(335)
(206)
228
(12)
(31)
71
(6)
(36)
(14)
29
(395)
155
-
-
(179)
Taxation charge for the year
2,005
1,890
The weighted average applicable tax rate for the year ended 31 March 2016 was 20% (2015: 21%). The total current corporation tax
charge for the year of £3,663,000 (2015: £2,782,000) on operations represents 28.1% (2015: 25.8%) of the Group profit before tax of
£13,024,000 (2015: £10,785,000). The effective rate of tax for the year, based on the taxation charge for the year as a percentage of
the profit before tax, is 15.4% (2015: 17.5%). The reduction of just over 2% is partly due to the overall reduction in tax rates from 21%
to 20% and also due to the favourable impact of both non-taxable income in the period, due to the gain on revaluation of contingent
consideration, and deferred tax on share based remuneration due to the increase in the Company’s share price in the year. Offsetting
this has been the adverse impact of a deferred tax charge on the initial recognition of a deferred tax liability in relation to development
costs and a smaller charge in respect of deferred tax relating to prior periods.
A number of changes to the UK Corporation tax system were announced in the March 2015 Budget Statement with the main rate of
corporation tax reduced from 20% to 19% from 1 April 2017 and from 19% to 18% from 1 April 2020. These changes were substantively
enacted at the period end and therefore are included in these financial statements.
51
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
10. DEFERRED TAX
The Group recognised deferred tax assets and liabilities as follows:
2016
Deferred tax Deferred tax
Recognised Unrecognised
£’000
£’000
2015
Deferred tax Deferred tax
Recognised Unrecognised
£’000
£’000
Tax losses carried forward
Share based remuneration
Capital allowances temporary differences
Deferred tax on development costs
Deferred tax on acquired assets with no capital allowances
Deferred tax on customer relationships
Deferred tax liability
-
1,010
1,103
(195)
(442)
(3,551)
(2,075)
-
-
-
-
-
-
-
289
575
873
-
(605)
(3,219)
(2,087)
-
-
-
-
-
-
-
At the year end, the Group has no unused tax losses (2015: £1.2m) available for offset against future profits.
The movement in the deferred tax account during the year was:
Capital
allowances
Tax losses
carried
Share based
forward remuneration differences
£’000
temporary Development
costs
£’000
£’000
£’000
(673)
Balance at 1 April 2014
831
Acquired on acquisition of subsidiary 89
-
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 1 April 2015
Acquired on acquisition of subsidiary
Credited 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 2016
44
(2)
289
-
-
(289)
-
-
-
600
-
(19)
2
-
(8)
575
-
57
389
414
(13)
-
550
(30)
(48)
873
(24)
-
378
-
(11)
1,010
-
(124)
1,103
Deferred tax
on acquired
assets with no
capital
allowances
£’000
-
-
-
-
-
-
-
-
-
(765)
-
-
131
-
29
(605)
-
-
Customer
relationships
£’000
Total
£’000
(3,523)
(557)
-
(2,443)
(481)
(19)
861
871
-
-
(3,219)
(1,627)
-
14
(29)
(2,087)
(1,651)
57
(195)
-
-
(195)
115
1,115
1,513
-
48
(442)
61
119
(3,551)
61
32
(2,075)
The deferred tax asset in relation to share based remuneration arises from the anticipated future tax relief on the exercise of share
options.
The deferred tax on capital allowances temporary differences arises mainly from plant and equipment in the Cloud Services segment
where the tax written down value varies from the net book value.
The deferred tax on development costs arises from development expenditure on which tax relief is received in advance of the
amortisation charge.
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.
52
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
11. ACQUISITIONS
Systems Up Limited
The Group acquired 100% of the issued share capital of Systems Up Limited (“SystemsUp”) on 5 June 2015.
SystemsUp is a London consultancy business specialising in the delivery of IT transformation using Public Cloud. It boasts a range of
expertise in the design and delivery of public cloud solutions and is a G-Cloud partner to Google, an authorised Government Partner to
Amazon Web Services and a Microsoft Gold Partner. With the acquisition of SystemsUp, the Group has broadened its ability to engage
at a strategic level and act as a trusted adviser on cloud strategy to organisations wanting to create the right blend of cloud services,
both public and private, to fit their requirements. 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 £113,000 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 year ended
31 March 2016.
The following table summarises the consideration to acquire SystemsUp and the amounts of identified assets acquired and liabilities
assumed at the acquisition date and are final:
Recognised amounts of net assets acquired and liabilities assumed:
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Intangible assets
Trade and other payables
Current income tax liabilities
Deferred tax liability
Identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash – paid on acquisition
Contingent consideration - payable
Deferred consideration - paid
Total consideration to be transferred
£’000
1,184
645
29
2,516
(400)
(339)
(503)
3,132
7,708
10,840
9,500
1,005
335
10,840
The acquisition of SystemsUp included a provision for contingent consideration due in respect of revenues, on an adjusted basis, for
the year to 31 March 2016. We estimated that the amount of contingent consideration that would be paid would be £1,005,000 and
that payment will be made shortly after this reporting date. The amount of contingent consideration was based on both the level and
mix of revenue generated through until March 2016. Whilst the overall quantum of revenue generated was consistent with what was
expected the mix of revenue was not with more revenue than expected being generated from the provision of public cloud services
and less from the provision of consultancy services. As a consequence it has now been established that the amount of contingent
consideration due is £135,000. Consequently an amount of £870,000 has been recognised in the Statement of Comprehensive Income
during the year as a gain on revaluation of contingent consideration.
At the point of the acquisition a payment was made of £9,500,000 in cash, including an amount of £500,000 as an interim payment
towards the settlement in respect of the additional debt assumed, cash acquired and normalised working capital position of SystemsUp
at completion. A further £335,000 was paid in August 2015 to the vendors in respect of the final amount due for the additional
debt assumed, cash acquired and normalised working capital position of SystemsUp at completion and the £135,000 contingent
consideration was paid in May 2016.
53
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
11. ACQUISITIONS (CONTINUED)
Systems Up Limited (continued)
The goodwill arising on the acquisition of SystemsUp 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 SystemsUp is not actively advertised or promoted, with the majority of SystemsUp’s business being generated from existing
customers or by word of mouth. As the majority of customers are registered with G-Cloud, the UK Government’s on-line service
requisitioning system, their relationship with SystemsUp is publically available information. 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 £434,000. The gross amount due under
contracts is £434,000 of which £nil are expected to be uncollectable.
The fair value included in respect of the acquired customer relationships intangible asset is £2,516,000.
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 14.6% was used for the valuation. Customer relationships are being amortised over an estimated useful life of 5 years.
SystemsUp earned revenue of £4,358,000 and generated profits before tax of £792,000 in the period since acquisition.
United Communications Limited
The Group acquired 100% of the issued share capital of United Communications Limited (“United Hosting”) on 30 November 2015.
United Hosting is a Hemel Hempstead based provider of managed and shared hosting services to over 7,000 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 £150,000 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 2016.
The following table summarises the consideration to acquire United Hosting and the provisional amounts of identified assets acquired
and liabilities assumed at the acquisition date and are provisional:
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
Deferred tax liability
Identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash – paid on acquisition
Deferred consideration
Contingent consideration - payable
Total consideration transferred
54
£’000
3,291
48
146
5,912
(843)
(1,148)
7,406
6,073
13,479
7,500
3,063
2,916
13,479
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
11. ACQUISITIONS (CONTINUED)
United Communications Limited (continued)
The recognised amounts of all the net assets acquired and liabilities assumed are provisional.
The share purchase agreement, in respect of the acquisition of United Hosting, 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.
The initial payment to acquire the company was £7,500,000 in cash and in addition an amount of £2,000,000 in cash was paid as an
interim settlement of the expected amount due in respect of the no debt, no cash, normalised working capital adjustment. Following
agreement of the Completion Accounts a total payment of £3,063,000, before deduction of the interim settlement, was due by the
Company in respect of the no debt, no cash, normalised working capital adjustment and the balance of £1,063,000 was paid in cash
in February 2016.
The contingent consideration arrangements require the Company to pay the former shareholders of United Hosting additional
amounts contingent on the level of profitability delivered by United Hosting in the year ending 30 April 2016 (“the First Earn-out
Payment”) and in the year ending 30 April 2017 (“the Second Earn-out Payment”).
The potential undiscounted amount of the total payments that the Company could be required to make in respect of the First Earn-out
Payment and the Second Earn-out Payment (together “the Earn-out Payments”) is between £nil and £3,500,000. The undiscounted
amount of contingent consideration payable which was recognised as of the acquisition date was £3,450,000 and after discounting
was £2,916,000.
Both the First Earn-out Payment and the Second Earn-out Payment are based on the absolute level of profitability achieved by United
Hosting, subject to a reduction if the level of profitability in relation to revenue is below a specified limit, for the year ending 30 April
2016 in the case of the First Earn-out Payment and for the year ending 30 April 2017 in the case of the Second Earn-out Payment. The
amount payable in respect of the Second Earn-out Payment is reduced by the amount of any payment made in respect of the First
Earn-out Payment.
The absolute levels of profitability for each of the First Earn-out Payment and the Second Earn-out Payment were estimated by applying
the income approach to different scenarios based on historic performance and forecasts. The level of profitability in relation to
revenue was also calculated for each scenario.
The potential undiscounted amount of the total payment that the Company could be required to make in respect of the First Earn-out
Payment is between £nil and £1,025,000. The undiscounted fair value of the First Earn-out Payment is £1,025,000 and after discounting
is £951,000.
Under each of the scenarios reviewed the outcome for the amount of the First Earn-out Payment was the maximum payment of
£1,025,000 and in each of the scenarios there was no deduction in respect of the level of profitability in relation to revenue. The amount
of the First Earn-out payment has now been agreed at £1,025,000 and was paid in June 2016.
The potential undiscounted amount of the total payment that the Company could be required to make in respect of the Second Earn-
out Payment is between £nil and £3,500,000. After deducting the undiscounted value of the First Earn-out Payment, the undiscounted
fair value of the Second Earn-out Payment has been calculated to be £2,425,000 and after discounting is £1,965,000.
Those scenarios reviewed had a range of outcomes for the amount of the Second Earn-out Payment of £2,145,000 to £2,475,000. 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 Second Earn-out Payment, before any reduction in respect of the level
of profitability in relation to revenue of £2,425,000.
Under each of the scenarios reviewed the outcome in respect of the Second Earn-out Payment was that there was no deduction in
respect of the level of profitability in relation to revenue.
The undiscounted fair value of the contingent consideration is £3,450,000 being the total of the undiscounted fair values of the First
Earn-out Payment of £1,025,000 and the Second Earn-out Payment of £2,425,000.
The goodwill arising on the acquisition of United Hosting 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.
55
iomart Group plc Annual report and accounts 2016 Notes to the financial statements. Year ended 31March 2016
11. ACQUISITIONS (CONTINUED)
United Communications Limited (continued)
The name United Hosting is not actively advertised or promoted, with the majority of United Hosting’s business being generated from
existing customers or by word of mouth. United Hosting 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 £4,000. The gross amount due under
contracts is £4,000, all of which is expected to be collectable.
The fair value included in respect of the acquired customer relationships intangible asset is £5,912,000.
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 15.51% was used for the valuation. Customer relationships are being amortised over an estimated useful life of 8 years.
United Hosting earned revenue of £1,009,000 and generated a profit before tax of £356,000 in the period since acquisition.
ServerSpace Limited
The fair values of acquired assets and liabilities, including goodwill, previously disclosed as provisional for ServerSpace Limited have
been finalised in the current period with no changes to the fair values disclosed in the Annual Report and Accounts 2015.
Pro-forma full year information
The following summary presents the Group as if the businesses acquired during the year had been acquired on 1 April 2015. 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 2016
£’000
78,860
10,691
56
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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 in Treasury and held by the Employee Benefit Trust.
Diluted earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the total of the weighted
average number of ordinary shares in issue during the year, after deducting any own shares, and adjusting for the dilutive potential
ordinary shares relating to share options.
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
Own shares held by Employee Benefit Trust
Weighted average number of ordinary shares - basic
2016
£’000
11,019
No
000
107,803
(898)
(141)
106,764
2015
£’000
8,895
No
000
107,803
(971)
(141)
106,691
Dilutive impact of share options
1,609
1,236
Weighted average number of ordinary shares - diluted
108,373
107,927
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
- Finance charge on contingent consideration
- Gain on revaluation of contingent consideration
- 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
10.32 p
10.17 p
2016
£’000
11,019
5,354
116
1,081
(64)
177
152
(870)
(1,311)
8.34 p
8.24 p
2015
£’000
8,895
4,368
526
809
125
-
-
-
(1,093)
15,654
13,630
14.66 p
14.44 p
12.77 p
12.63 p
57
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
13. INTANGIBLE ASSETS
Development
Customer
costs relationships
£’000
£’000
Domain
Software
£’000
Beneficial names & IP
addresses
contracts
£’000
£’000
Cost
At 1 April 2014
Additions
Currency translation differences
Acquired on acquisition of subsidiary
Development cost capitalised
At 1 April 2015
Additions
Currency translation differences
Acquired on acquisition of subsidiary
Development cost capitalised
At 31 March 2016
Goodwill
£’000
44,879
-
-
2,463
-
47,342
-
-
13,781
-
61,123
2,668
-
-
-
1,041
3,709
-
-
-
1,123
4,832
Accumulated amortisation:
At 1 April 2014
Currency translation differences
Charge for the year
At 1 April 2015
Currency translation differences
Charge for the year
At 31 March 2016
Carrying amount:
-
-
-
-
-
-
-
(1,869)
-
(627)
(2,496)
-
(698)
(3,194)
22,979
598
76
2,778
-
26,431
23
8,428
-
34,882
(5,564)
(20)
(4,361)
(9,945)
(16)
(5,347)
(15,308)
1,657
435
22
-
-
2,114
1,020
3
-
-
3,137
(675)
-
(328)
(1,003)
(4)
(446)
(1,453)
At 31 March 2016
61,123
1,638
19,574
1,684
At 31 March 2015
47,342
1,213
16,486
1,111
Total
£’000
72,549
1,033
98
5,241
1,041
79,962
1,020
26
22,209
1,123
104,340
280
-
-
-
-
280
-
-
-
-
280
(62)
-
(54)
(116)
(8,182)
(20)
(5,377)
(13,579)
-
(55)
(171)
(20)
(6,553)
(20,152)
109
84,188
164
66,383
86
-
-
-
-
86
-
-
-
-
86
(12)
-
(7)
(19)
-
(7)
(26)
60
67
Of the total additions in the year of £1,020,000 (2015: £1,033,000), £nil (2015: £182,000) were funded by finance leases, £297,000
(2015: £484,000) was included in trade payables as unpaid invoices at the year end resulting in a net decrease of £187,000 (2015: net
cash inflow £484,000) in trade payables. Consequently, the consolidated statement of cash flows discloses a figure of £1,207,000 (2015:
£367,000) 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 administrative expenses in the statement of comprehensive income.
Included within customer relationships are the following significant items: customer relationships in relation to the acquisitions of
Backup Technology with a net book value of £5.6m and a remaining useful life of 6 years; United Hosting with a net book value of £5.5m
and a remaining useful life of 8 years; Melbourne with a net book value of £2.6m and a remaining useful life of 5 years; and ServerSpace
with a net book value of £2.1m and remaining useful life of 7 years.
During the year, goodwill was reviewed for impairment in accordance with IAS 36 “Impairment of Assets”. No impairment charges (2015:
£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 United Hosting acquisition has been allocated to the Easyspace CGU and the goodwill
acquired in the SystemsUp acquisition has been allocated to the Cloud Services CGU, as these are the CGUs expected to benefit from
the business combinations.
58
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
13. INTANGIBLE ASSETS (CONTINUED)
The carrying value of goodwill by each CGU is as follows:
Cash Generating Units (CGU)
Easyspace
Cloud Services
2016
£’000
23,210
37,913
61,123
2015
£’000
17,137
30,205
47,342
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.
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 Cloud Services
13%
3.5%
2.0%
2
14%
2.5%
2.0%
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 £2,760,000 (2015: £2,416,000) are made up of a rental deposit of £784,000 (2015: £784,000) and a reinstatement
deposit of £1,976,000 (2015: £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.
59
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
15. SUBSIDIARIES
The following are subsidiaries and have all been consolidated in the Group financial statements:
Country of
registration
and operation
Activity
Ordinary share capital
Owned by the
company
%
Owned by
subsidiary
undertakings
%
England
England
England
Scotland
England
England
England
England
USA
Scotland
England
Scotland
Scotland
Scotland
Scotland
England
England
Scotland
England
England
England
England
England
England
England
England
England
England
England
England
Non-trading
Non-trading
Webservices
Non-trading
Non-trading
Webservices
Non-trading
Dormant
Managed hosting services
Managed hosting services
Non-trading
Dormant
Managed hosting services
Dormant
Dormant
Managed hosting services
Dormant
Dormant
Dormant
Non-trading
Non-trading
Non-trading
Managed hosting services
Non-trading
Webservices
Webservices
Consultancy services
Non-trading
Webservices
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
-
-
-
-
-
100
-
-
-
-
100
Backup Technology Holdings Limited
Backup Technology Limited
Easyspace Limited
EQSN Limited
Global Gold Holdings Limited
Global Gold Network Limited
Internet Engineering Limited
Internetters Limited
iomart Cloud Inc
iomart Cloud Services Limited
iomart Datacentres Limited
iomart Development Limited
iomart Hosting Limited
iomart Limited
iomart Virtual Servers Hosting Limited
Melbourne Server Hosting Limited
My Documents Limited
Netintelligence Limited
NicNames Limited
Open Minded Solutions Limited
Rapidswitch Limited
Redstation Limited
ServerSpace Limited
Skymarket Limited
Switch Media (Ireland) Limited
Switch Media Limited
Systems Up Limited
Titan Internet Limited
United Communications Limited
Web Genie Internet Limited
60
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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 2014
Additions in the year
Acquisition of subsidiary
Disposals in the year
Currency translation differences
At 31 March 2015
Additions in the year
Acquisition of subsidiary
Disposals in the year
Currency translation differences
At 31 March 2016
Accumulated depreciation:
At 1 April 2014
Charge for the year
Disposals in the year
Currency translation differences
At 31 March 2015
Charge for the year
Disposals in the year
Currency translation differences
At 31 March 2016
2,062
-
-
-
-
2,062
-
-
-
-
2,062
(116)
(34)
-
-
(150)
(41)
-
-
(191)
6,732
109
16
-
-
6,857
466
-
-
-
7,323
(1,418)
(440)
-
-
(1,858)
(479)
-
-
(2,337)
16,845
1,522
-
-
-
18,367
2,105
-
-
-
20,472
(4,784)
(1,469)
-
-
(6,253)
(1,686)
-
-
(7,939)
28,067
9,705
434
(322)
94
37,978
9,103
152
(15)
24
47,242
(15,583)
(7,925)
322
(10)
(23,196)
(8,399)
15
(5)
(31,585)
1,559
582
3
-
-
2,144
209
3
-
-
2,356
(843)
(269)
-
-
(1,112)
(259)
-
-
(1,371)
48
-
-
-
-
48
-
20
-
-
68
(36)
(5)
-
-
(41)
(14)
-
-
(55)
Total
£’000
55,313
11,918
453
(322)
94
67,456
11,883
175
(15)
24
79,523
(22,780)
(10,142)
322
(10)
(32,610)
(10,878)
15
(5)
(43,478)
Carrying amount:
At 31 March 2016
1,871
4,986
12,533
15,657
985
13
36,045
At 31 March 2015
1,912
4,999
12,114
14,782
1,032
7
34,846
The net book value of computer equipment held under finance lease at 31 March 2016 was £930,000 (2015: £1,455,000) and the net
book value of datacentre equipment held under finance lease at 31 March 2016 was £536,000 (2015: £617,000).
Of the total additions in the year of £11,883,000 (2015: £11,918,000), £97,000 (2015: £458,000) were funded by finance leases and
£1,755,000 (2015: £2,354,000) was included in trade payables as unpaid invoices at the year end resulting in a net decrease of
£599,000 (2015: net increase of £777,000) in trade payables. Consequently, the consolidated statement of cash flows discloses a figure
of £12,385,000 (2015: £10,683,000) as the cash outflow in respect of property, plant and equipment additions in the year.
61
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
17. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Provision for impairment
Trade receivables (net)
Other receivables
Prepayments
Accrued income
Trade and other receivables
2016
£’000
7,716
(850)
6,866
619
5,819
414
13,718
2015
£’000
5,588
(539)
5,049
650
4,882
808
11,389
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 Cloud Services segment are reviewed individually for impairment and judgement made as to any likely impairment based on
historic trends and the latest communication with specific customers.
The balance of trade receivables in the Group are individually small in terms of value, so are considered for impairment by business
unit specific provision calculations and are not individually impaired
To consider the total exposure to credit risks, the Group uses figures net of VAT. At 31 March 2016, £4,460,000 (2015: £3,118,000) of
net trade receivables were fully performing. Net trade receivables of £2,406,000 (2015: £1,931,000) 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
2016
£’000
2,349
57
-
2,406
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at start of the year
Increase/(decrease) 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
2016
£’000
539
311
-
850
2016
£’000
10,341
10,341
2015
£’000
1,867
56
8
1,931
2015
£’000
686
(177)
30
539
2015
£’000
8,347
8,347
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% (2015: 0.50%).
62
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
19. TRADE AND OTHER PAYABLES
Trade payables
Other taxation and social security
Accruals
Deferred income
Other creditors
Trade and other payables
2016
£’000
(5,215)
(1,823)
(6,331)
(5,980)
(183)
(19,532)
2015
£’000
(4,186)
(1,464)
(6,587)
(5,475)
(968)
(18,680)
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.
20. NON-CURRENT TRADE AND OTHER PAYABLES
Trade payables
Non-current trade and other payables
21. CONTINGENT CONSIDERATION
Contingent consideration due on acquisitions within one year:
- ServerSpace Limited
- Systems Up Limited
- United Communications Limited
Contingent consideration due on acquisitions after more than one year:
- United Communications Limited
Total contingent consideration due on acquisitions
2016
£’000
(455)
(455)
2016
£’000
-
(135)
(1,000)
(1,135)
2015
£’000
(703)
(703)
2015
£’000
(1,650)
-
-
(1,650)
(2,068)
(2,068)
-
-
(3,203)
(1,650)
63
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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
2016
£’000
2015
£’000
(573)
(34,525)
(35,098)
(826)
-
(826)
(938)
(21,457)
(22,395)
(1,346)
-
(1,346)
(35,924)
(23,741)
The carrying amount of borrowings approximates to their fair value.
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
573
587
239
1,399
2016
Interest
£’000
130
237
24
391
Total
£’000
703
824
263
1,790
Capital
£’000
938
968
378
2,284
2015
Interest
£’000
154
300
60
514
Total
£’000
1,092
1,268
438
2,798
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 9.9% (2015: 8.9%). Lease payments are made on a monthly and quarterly
basis. The future lease obligation of £1,790,000 (2015: £2,798,000) has a present value of £1,399,000 (2015: £2,284,000).
On 1 July 2015 the Group restructured its banking facility with Lloyds Banking Group. Under the restructuring the previous multi option
revolving credit facility of £35m was increased to £60m, the term of the facility was extended from September 2017 to June 2019 and
the margin on the facility was reduced. As a consequence of this restructuring the arrangement fee of £337,500 which had been paid
in the previous year has been fully written off to the Statement of Comprehensive Income in the year.
At the start of the year there was £21.5m outstanding on the original multi option revolving credit facility. On 5 June 2015 £9m was
drawn down to fund the acquisition of SystemsUp and on 30 November 2015 a further £7.5m was drawn down to fund the acquisition
of United Hosting. Repayments totalling £3.5m were made during the year resulting in a balance outstanding at the end of the year
of £34.5m.
The £60m 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 June 2019 at which point any advances made under the multi option
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. Interest is charged on this loan at an annual rate determined
by the sum of the multi option revolving credit facility margin, LIBOR and the lender’s mandatory costs. The multi option revolving credit
facility margin is fixed at 1.7% per annum. A one-off arrangement fee of £250,000 was paid in respect of the increase in the multi option
revolving credit facility during the year and a non-utilisation fee of 40% of the multi option revolving credit facility margin is due on any
undrawn portion of the full £60m multi option revolving credit facility. The effective interest rate for multi option revolving credit facility
in the current year was 3.17% (2015: 3.82%).
64
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
22. BORROWINGS (CONTINUED)
The future loan obligations of £34,907,000 (2015: £21,716,000) equate to a present value of £33,922,000 (2015: £21,269,000). The
capital element of the bank loans is £34,525,000 (2015: £21,457,000) and this differs from the net amount drawn down of £34,500,000
(2015: £21,500,000) 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
34,525
-
34,525
2016
Interest
£’000
382
-
382
Total
£’000
34,907
-
34,907
Capital
£’000
21,457
-
21,457
2015
Interest
£’000
259
-
259
Cash and cash
equivalents
£’000
Bank
loans
£’000
Finance leases
and hire
purchase
£’000
Total
£’000
21,716
-
21,716
Total
£’000
At 1 April 2014
13,025
(30,026)
(2,818)
(19,819)
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
Repayment of bank loans
New bank loans
Impact of effective interest rate
Inception of finance leases
Acquired on acquisition of subsidiaries
Currency translation differences
Cash flow
At 31 March 2016
-
-
-
-
155
-
(4,833)
8,347
-
-
-
-
4,476
-
(2,482)
10,341
22,000
(13,500)
69
-
-
-
-
(21,457)
3,500
(16,500)
(68)
-
-
-
-
(34,525)
-
-
-
(640)
(36)
(35)
1,245
(2,284)
-
-
-
(97)
-
(2)
984
(1,399)
22,000
(13,500)
69
(640)
119
(35)
(3,588)
(15,394)
3,500
(16,500)
(68)
(97)
4,476
(2)
(1,498)
(25,583)
65
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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.
Current:
Onerous
Total current provisions
Non-current:
Reinstatement
Onerous
Total non-current provisions
Total borrowings
2016
£’000
(211)
(211)
(1,668)
(211)
(1,879)
2015
£’000
(253)
(253)
(1,617)
(570)
(2,187)
(2,090)
(2,440)
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
Provision released during year
Reduction in provision
Unwinding of discount
2016
Reinstatement Onerous
£’000
£’000
(823)
(1,617)
-
-
-
-
169
-
232
-
-
(51)
(422)
(1,668)
Total
£’000
(2,440)
-
-
169
232
(51)
(2,090)
2015
Reinstatement Onerous
£’000
£’000
(1,566)
-
(583)
-
(376)
-
-
-
136
-
-
(51)
(823)
(1,617)
Total
£’000
(1,566)
(583)
(376)
-
136
(51)
(2,440)
24. OPERATING LEASES
The Group has outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due
as follows:
2016
2015
Within one year
Between two to five years
After five years
Land and
buildings
£’000
2,406
5,853
2,458
10,717
Other
£’000
76
289
208
573
Land and
buildings
£’000
2,910
7,288
3,222
13,420
Other
£’000
75
286
279
640
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 2016, the total future minimum
sub-lease payments expected to be received under non-cancellable sub-leases was £nil (2015: £16,000).
66
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
25. SHARE CAPITAL
Authorised
At 31 March 2014, 2015 and 2016
Called up, allotted and fully paid
At 31 March 2014, 2015 and 2016
Ordinary shares of 1p each
Number of shares
200,000,000
£’000
2,000
107,803,006
1,078
At 31 March 2016 the Company held 846,636 shares (2015: 945,203) as own shares in treasury which were accounted for in the Own
Shares Treasury reserve and had a nominal value of £8,466 (2015: £9,452) and a market value of £2,285,917 (2015: £1,932,940). This
represents 0.8% (2014: 0.9%) of the issued share capital as at 31 March 2016 excluding own shares.
At 31 March 2016 the Company held 140,773 shares (2015: 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 (2015: £1,408) and a market value
of £380,088 (2015: £287,881). This represents 0.1% (2015: 0.1%) of the issued share capital as at 31 March 2016 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 2016 are fully paid.
26. OWN SHARES RESERVES
At 1 April 2014
Issue of own shares from Treasury for option redemption
At 31 March 2015
Issue of own shares from Treasury for option redemption
At 31 March 2016
Own shares
EBT
£’000
Own shares Own shares
Total
£’000
Treasury
£’000
(70)
-
(70)
-
(70)
(486)
18
(468)
49
(419)
(556)
18
(538)
49
(489)
During the year 98,567 (2015: 38,000) 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 £91,374 (2015: £23,820) was received. As a consequence, at 31 March 2016 the
Company held 846,636 shares (2015: 945,203) in treasury with a carrying value of £419,085 (2015: £467,875) which were accounted
for in Own Shares treasury reserve; and 140,773 shares (2015: 140,773) in the EBT with a carrying value of £69,982 (2015: £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 98,567 ordinary shares (2015: 38,000) were exercised and the average market price at the exercise dates
was 265.5p (2015: 216.2p). Options over 843,385 ordinary shares (2015: 257,560) were granted under the unapproved share option
scheme with an average exercise price of 108.9p (2015: 1.0p) and 225,764 options over ordinary shares (2015: nil) were granted under
the sharesave scheme with an average exercise price of 194.8p (2015: nil). Options over 35,417 ordinary shares (2015: 120,000) lapsed
under the unapproved share option scheme with an average exercise price of 118.5p (2015: 1.0p), optons over 16,666 (2015: nil) lapsed
under the EMI scheme with an average exercise price of 87.5p (2015: £nil) and options over 62,330 (2015: 33,380) lapsed under the
sharesave scheme with an average exercise price of 192.2p (2015: 191.4p).
As disclosed in note 5, a share based payment charge of £1,081,000 (2015: £809,000) 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 current and previous year:
67
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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
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
12 Aug 2015 28 Aug 2015
28 Aug 2018
30 Sept 2018
28 Aug 2015
31 Mar 2018
28 Aug 2015
31 Mar 2018
10 Dec 2015
31 Mar 2018
265.0p
60%
0.86%
69
10
3.25
1.97%
100%
132.4p
194.8p
244.2p
61%
0.86%
3
10
3.83
1.99%
100%
235.4p
1.0p
244.2p
61%
0.86%
1
10
3.0
1.99%
100%
122.6p
173.0p
244.2p
61%
0.86%
1
10
3.0
1.99%
100%
113.7p
196.0p
256.8p
61%
0.86%
1
10
3.0
1.87%
100%
132.5p
173.0p
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:
2016
2015
Weighted
average
exercise price
per share (p)
Number of
share options
Weighted
average
exercise price
per share (p)
Number of
share options
71.17
127.04
154.12
-
92.70
84.55
64.11
2,741,235
1,069,149
(114,413)
-
(98,567)
3,597,404
2,093,537
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
Outstanding at start of year
Granted
Forfeited
Expired
Exercised
Outstanding at end of year
Exercisable at end of year
68
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
27. SHARE BASED PAYMENTS (CONTINUED)
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 31 March 2016
Enterprise management
incentive scheme
Unapproved schemes
Sharesave scheme
As at 31 March 2015
43.5 – 87.5
1.0 – 196.0
191.4 – 194.8
320,011
2,874,471
402,922
3,597,404
64.01
71.61
193.19
84.55
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
3.2
7.3
2.2
6.4
3.9
7.4
2.3
6.4
320,011
1,773,526
-
2,093,537
408,677
910,610
-
1,319,287
64.01
64.12
-
64.11
66.38
28.92
-
40.53
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
29. CONTINGENCIES AND COMMITMENTS
2016
£’000
1,580
38
655
2,273
2016
£’000
425
2
49
25
4
1
506
(a) Contingencies
There were no contingent assets or liabilities as at 31 March 2016 (2015: nil).
(b) Commitments
Capital expenditure on software licences and property, plant and equipment committed by the Group at 31 March 2016
was £1,306,000 (2015: £147,000).
3.2
6.1
-
5.6
3.9
6.6
-
5.8
2015
£’000
1,414
40
665
2,119
2015
£’000
294
2
34
17
3
1
351
69
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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
2,760
6,866
10,341
619
20,586
2,416
5,049
8,347
650
16,462
2016
Non-current:
Lease deposit
Current:
Trade receivables
Cash and cash equivalents
Other receivables
Total for category
2015
Non-current:
Lease deposit
Current:
Trade receivables
Cash and cash equivalents
Other receivables
Total for category
70
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
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 or measured at
loss amortised cost
£’000
£’000
2016
Non-current:
Trade payables
Finance leasing capital obligations
Contingent consideration due on acquisitions
Current:
Trade payables
Accruals
Bank loan
Contingent consideration due on acquisitions
Finance leasing capital obligations
Interest rate swap contract
Total for category
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
-
-
(2,068)
-
-
-
(1,135)
-
(128)
(3,331)
(455)
-
-
(5,215)
(6,203)
(34,525)
-
-
-
(46,398)
-
-
(703)
-
-
-
-
(1,650)
-
(191)
(1,841)
(4,186)
(6,396)
(21,457)
-
-
-
(32,742)
Other
(non-IAS 39)
£’000
-
(826)
-
-
-
-
-
(573)
-
(1,399)
-
(1,346)
-
-
-
-
(938)
-
(2,284)
Total
£’000
(455)
(826)
(2,068)
(5,215)
(6,203)
(34,525)
(1,135)
(573)
(128)
(51,128)
(703)
(1,346)
(4,186)
(6,396)
(21,457)
(1,650)
(938)
(191)
(36,867)
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 2016
Level in
£’000 hierarchy
Description
of valuation
technique
Inputs
used for valuation
model
Contingent consideration
due on acquisitions
(3,203)
3
Based on level of future
revenue and profitability
and probability that vendors
will comply with obligations
under sale and purchase
agreement.
Management estimate
on probability and time
scale of vendors meeting
revenue and profitability
targets and complying
with obligations.
Total gains
and (losses)
recognised in
profit or loss
£’000
718
Interest rate swap
contracts
(128)
2
Observable interest rates
Interest rate swap contracts
corresponding to the
are not traded in active
maturity of the contracts.
markets. Fair valued using
observable interest rates
Effects of non-observable
corresponding to the maturity inputs are not significant
for interest rate swaps.
of the contracts.
64
Total fair value
(3,331)
Total net gains 782
There have been no changes to valuation techniques or any amounts recognised through ‘Other Comprehensive Income’. The £64,000
gain recognised in profit or loss on interest rate swap contracts is included in finance costs.
71
iomart Group plc Annual report and accounts 2016
Notes to the financial statements. Year ended 31March 2016
30. RISK MANAGEMENT (CONTINUED)
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
Recognised in profit or loss under:
- Gain on revaluation of contingent consideration
- Finance costs
Balance at end of year
2016
£’000
(1,650)
(3,921)
1,650
870
(152)
(3,203)
2015
£’000
(1,271)
(1,650)
1,271
-
-
(1,650)
Total amount included in profit or loss on Level 3 instruments under gain on business
combinations and finance costs
718
-
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 £35.9m (2015: £23.7m) is shown. The
Group has £25.5m (2015: £13.5m) 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 amount of borrowing is fixed at 2.03% from April 2015 until maturity. The Group had
also entered interest rate swap arrangements in respect of £4m which had been drawn under the multi option revolving credit facility
which had been fixed at 1.02% until June 2015 and £5m drawn under the multi option revolving credit facility which was fixed at 1.26%
until August 2015. As a consequence, at 31 March 2016, £8m of the amount drawn under the multi option revolving credit facility was
covered by interest rate swap arrangements. The fair value of the interest rate swap contracts is estimated to be a gain of £64,000
(2015: loss of £125,000) which has been recognised in profit or loss for the year.
Currency risk
During the year the Group made payments totalling US$5.3m (2015: US$6.0m) and EUR€0.1m (2015: EUR€0.2m) to acquire domain
names for its Easyspace segment and licences for its Cloud Services segment. In addition, the Group received US$3.3m (2015:
US$2.1m) and EUR€0.7m (2015: EUR€0.5m) from Cloud Services 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 (2015: none). Consequently, the fair value of currency contracts at the year end
was £nil (2015: £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 capital structure of the Group consists of net debt, which includes borrowings (note 22) and cash and cash equivalents, and equity
attributable to owners of the parent, comprising issued share capital (note 25), other reserves and retained earnings. The Group
currently has net debt due to its acquisition activities. The Group seeks 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’s current policy is to pay 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
£6,866,000 (2015: £5,049,000) which are stated net of applicable provisions and which represent the total amount exposed to credit
risk. The lease deposits of £2,760,000 (2015: £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 £10,341,000 (2015: £8,347,000) is held within the UK clearing banks.
In respect of trade receivables, lease deposits and cash at bank the directors consider the risk of exposure to credit is minimal due to
the reasons given above.
72
iomart Group plc Annual report and accounts 2016
Parent company financial statements. Year ended 31March 2016
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 2016 which comprise
the parent company statement of financial position, statement of changes in equity 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), including FRS101 ‘Reduced Disclosure Framework’.
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 2016;
• 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 2016.
Robert Hannah
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Glasgow
6 June 2016
73
iomart Group plc Annual report and accounts 2016 Parent company financial statements. Year ended 31March 2016
STATEMENT OF FINANCIAL POSITION
As at 31 March 2016
ASSETS
Non-current 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
Note
2016
£’000
Restated
2015
£’000
4
5
7
102,693
102,693
39,954
8,930
48,884
77,974
77,974
35,195
6,694
41,889
(79,208)
(53,028)
(30,324)
(11,139)
72,369
66,835
Creditors: amounts falling due after more than one year
8
(2,068)
-
NET ASSETS
EQUITY
Called up share capital
Own shares
Capital redemption reserve
Share premium account
Merger reserve
Profit and loss account
SHAREHOLDERS’ FUNDS
11
12
70,301
66,835
1,078
(489)
1,200
21,067
4,983
42,462
1,078
(538)
1,200
21,067
4,983
39,045
70,301
66,835
These financial statements were approved by the board of directors and authorised for issue on 6 June 2016.
Signed on behalf of the board of directors
Angus MacSween
Director and chief executive officer
iomart Group plc – Company Number: SC204560
74
iomart Group plc Annual report and accounts 2016
Parent company financial statements. Year ended 31March 2016
STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2016
Changes in equity
Note
Own
Share shares
capital
£’000 £’000
Own
Capital
Share
shares redemption premium Merger Retained
reserve account reserve earnings
£’000
EBT treasury
£’000
£’000
£’000
£’000
Total
£’000
Balance at 1 April 2014
1,078
(70)
(486)
1,200
21,067 4,983
19,943 47,715
Prior year adjustment
Balance at 1 April 2014 - restated
Profit in the year
Prior year adjustment
Total comprehensive income - restated
14
14
Dividends – final (paid)
13
Share based payments
Deferred tax on share based payments
6
Issue of own shares for option redemption 12
Total transactions with owners
-
1,078
-
(70)
-
(486)
-
1,200
-
-
21,067 4,983
(1,060)
(1,060)
18,883 46,655
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,466 21,466
(232)
21,234 21,234
(232)
(1,867)
809
(19)
5
(1,072)
(1,867)
809
(19)
23
(1,054)
Balance at 31 March 2015
1,078
(70)
(468)
1,200
21,067 4,983
39,045 66,835
Profit in the year
Total comprehensive income
Dividends – final (paid)
Share based payments
13
6
Deferred tax on share based payments
Issue of own shares for option redemption 12
Total transactions with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49
49
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,905
4,905
4,905
4,905
(2,668)
1,081
57
42
(1,488)
(2,668)
1,081
57
91
(1,439)
Balance at 31 March 2016
1,078
(70)
(419)
1,200
21,067 4,983
42,462 70,301
The following notes form part of the primary financial statements.
75
iomart Group plc Annual report and accounts 2016
Parent company financial statements. Year ended 31March 2016
1. COMPANY 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 90 of this report. The nature of the Company’s operations and its principal activity is that of a holding
company.
2. ACCOUNTING POLICIES
Statement of compliance
These financial statements have been prepared in accordance with applicable accounting standards and in accordance with Financial
Reporting Standard 101 – ‘The Reduced Disclosure Framework’ (FRS 101). The principal accounting policies adopted in the preparation
of these financial statements are set out below. These policies have all been applied consistently throughout the year unless otherwise
stated.
The financial statements have been prepared on a historical cost basis and are presented in Sterling (£).
Changes in accounting policies
This is the first year in which the financial statements have been prepared in accordance with FRS 101. The date of transition to FRS 101
is 1 April 2014. An explanation of the transition is included in note 14 to the financial statements. In applying FRS 101 for the first time
the Company has applied early the amendment to FRS 101 which permits a first time adopter not to present an opening statement of
financial position at the beginning of the earliest comparative period presented.
Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101. Therefore
these financial statements do not include:
• a statement of cash flows and related notes;
• the requirement to produce a statement of financial position at the beginning of the earliest comparative period;
• the requirement of IAS 24 related party disclosures to disclose related party transactions entered into between two or more
members of the iomart Group as they are wholly owned within the iomart Group;
• disclosure of key management personnel compensation;
• capital management disclosures;
• certain share based payments disclosures;
• business combination disclosures;
• disclosures in respect of financial instruments; and
• the effect of future accounting standards not adopted.
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.
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 we have elected to account for the adjustment as a charge or credit to profit or loss.
76
iomart Group plc Annual report and accounts 2016 Parent company financial statements. Year ended 31March 2016
2. ACCOUNTING POLICIES (CONTINUED)
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 Company 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 Company 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 and laws 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.
Financial assets
All financial assets are recognised when the Company 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.
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 Company’s cash and cash
equivalents and most other receivables fall into this category of financial instruments.
Provision against other receivables is made when there is objective evidence that the Company 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 Company 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.
77
iomart Group plc Annual report and accounts 2016
Parent company financial statements. Year ended 31March 2016
2. ACCOUNTING POLICIES (CONTINUED)
Leases
In accordance with IAS 17 Leases, the economic ownership of a leased asset is deemed to have been transferred to the Company (the
lessee) if the Company 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.
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.
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.
Cash at bank and in hand
Cash at bank and in hand comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that
are readily convertible into known amounts of cash with maturities of three months or less from inception and which are subject to
an insignificant risk of changes in value.
78
iomart Group plc Annual report and accounts 2016 Parent company financial statements. Year ended 31March 2016
2. ACCOUNTING POLICIES (CONTINUED)
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.
• “Retained earnings” represents retained profits.
3. 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 £4,905,000 (2015 restated:
£21,234,000).
4. INVESTMENTS HELD AS FIXED ASSETS
Shares in subsidiary undertakings
£’000
Cost
At 1 April 2015 (restated)
Additions
Share based payment (note 13)
Cost at 31 March 2016
Net book value of Investments at 31 March 2016
Net book value of Investments at 31 March 2015 (restated)
All of the above investments are unlisted.
77,974
24,320
399
102,693
102,693
77,974
79
iomart Group plc Annual report and accounts 2016
Parent company financial statements. Year ended 31March 2016
4. INVESTMENTS HELD AS FIXED ASSETS (CONTINUED)
The following subsidiaries are included in the Company financial statements:
Country of
registration
and operation
Activity
Owned by
the company
%
Owned by
subsidiary
undertakings
%
Ordinary share capital
England
England
England
Scotland
England
England
England
England
USA
Scotland
England
Scotland
Scotland
Scotland
Scotland
England
England
Scotland
England
England
England
England
England
England
England
England
England
England
England
Non-trading
Non-trading
Webservices
Non-trading
Non-trading
Webservices
Non-trading
Dormant
Managed hosting services
Managed hosting services
Non-trading
Dormant
Managed hosting services
Dormant
Dormant
Managed hosting services
Dormant
Dormant
Dormant
Non-trading
Non-trading
Non-trading
Managed hosting services
Non-trading
Webservices
Webservices
Non-trading
Webservices
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
-
2016
£’000
356
61
1,010
2,357
450
35,720
-
100
-
-
-
100
-
100
-
-
-
-
-
-
-
-
-
-
100
-
-
-
-
-
100
-
-
-
100
2015
£’000
283
15
576
1,187
342
32,792
39,954
35,195
Backup Technology Holdings Limited
Backup Technology Limited
Easyspace Limited
EQSN Limited
Global Gold Holdings Limited
Global Gold Network Limited
Internet Engineering Limited
Internetters Limited
iomart Cloud Inc
iomart Cloud Services Limited
iomart Datacentres Limited
iomart Development Limited
iomart Hosting Limited
iomart Limited
iomart Virtual Servers Hosting Limited
Melbourne Server Hosting Limited
My Documents Limited
Netintelligence Limited
NicNames Limited
Open Minded Solutions Limited
Rapidswitch Limited
Redstation Limited
ServerSpace Limited
Skymarket Limited
Switch Media (Ireland) Limited
Switch Media Limited
Titan Internet Limited
United Communications Limited
Web Genie Internet Limited
5. DEBTORS
Prepayments and accrued income
Other debtors
Deferred taxation (note 6)
Current income tax
Other taxation and social security
Amounts owed by subsidiary undertakings
80
iomart Group plc Annual report and accounts 2016
Parent company financial statements. Year ended 31March 2016
6. DEFERRED TAXATION
The Company had recognised deferred tax assets and potential unrecognised deferred tax assets as follows:
2016
Recognised Unrecognised
£’000
£’000
2015
Recognised Unrecognised
£’000
£’000
Share based remuneration
1,010
-
576
-
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
2016
£’000
576
377
57
1,010
2015
£’000
600
(5)
(19)
576
The deferred tax asset in relation to share based remuneration arises from the anticipated future tax relief on the exercise of share
options.
7. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors
Other taxation and social security
Accruals and deferred income
Contingent consideration due on acquisitions (note 9)
Current borrowings (note 10)
Amounts owed to subsidiary undertakings
8. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Contingent consideration due on acquisitions (note 9)
9. CONTINGENT CONSIDERATION
Contingent consideration due on acquisitions within one year:
- ServerSpace Limited
- Systems Up Limited
- United Communications Limited
Contingent consideration due on acquisitions after more than one year:
- United Communications Limited
2016
£’000
105
65
1,270
1,135
34,525
42,108
Restated
2015
£’000
97
65
1,121
1,650
21,457
28,638
79,208
53,028
2016
£’000
2,068
2,068
2016
£’000
-
(135)
(1,000)
(1,135)
(2,068)
(2,068)
2015
£’000
-
-
2015
£’000
(1,650)
-
-
(1,650)
-
-
Total contingent consideration due on acquisitions
(3,203)
(1,650)
81
iomart Group plc Annual report and accounts 2016
Parent company financial statements. Year ended 31March 2016
10. BORROWINGS
Current:
Bank loans
Current borrowings
Non-current:
Bank loans
Total non-current borrowings
2016
£’000
Restated
2015
£’000
(34,525)
(34,525)
(21,457)
(21,457)
-
-
-
-
Total borrowings
(34,525)
(21,457)
The carrying amount of borrowings approximates to their fair value.
The future loan obligations of £34,907,000 (2015: £21,716,000) equate to a present value of £33,922,000 (2015: £21,269,000). The
capital element of the bank loans is £34,525,000 (2015: £21,457,000) and this differs from the net amount drawn down of £34,500,000
(2015: £21,500,000) 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
11. SHARE CAPITAL
Authorised
At 31 March 2014, 2015 and 2016
Called up, allotted and fully paid
At 31 March 2014, 2015 and 2016
2016
Capital
£’000
34,525
-
34,525
Interest
£’000
382
-
382
Total
£’000
34,907
-
34,907
Capital
£’000
21,457
-
21,457
2015
Interest
£’000
Total
£’000
259 21,716
-
259 21,716
-
Ordinary shares of 1p each
Number of shares
200,000,000
£’000
2,000
107,803,006
1,078
At 31 March 2016 the Company held 846,636 shares (2015: 945,203) as own shares in treasury which were accounted for in the Own
Shares Treasury reserve and had a nominal value of £8,466 (2015: £9,452) and a market value of £2,285,917 (2015: £1,932,940). This
represents 0.8% (2014: 0.9%) of the issued share capital as at 31 March 2016 excluding own shares.
At 31 March 2016 the Company held 140,773 shares (2015: 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 (2015: £1,408) and a market value
of £380,088 (2015: £287,881). This represents 0.1% (2015: 0.1%) of the issued share capital as at 31 March 2016 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 2016 are fully paid.
82
iomart Group plc Annual report and accounts 2016
Parent company financial statements. Year ended 31March 2016
12. OWN SHARES RESERVES
Own shares Own shares
Treasury
£’000
EBT
£’000
Own shares
Total
£’000
At 1 April 2014
Issue of own shares from Treasury for option redemption
At 31 March 2015
Issue of own shares from Treasury for option redemption
(70)
-
(70)
-
(486)
18
(468)
49
At 31 March 2016
(70)
(419)
(556)
18
(538)
49
(489)
During the year 98,567 (2015: 38,000) 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 £91,374 (2015: £23,820) was received. As a consequence, at 31 March 2016 the
Company held 846,636 shares (2015: 945,203) in treasury with a carrying value of £419,085 (2015: £467,875) which were accounted
for in Own Shares treasury reserve; and 140,773 shares (2015: 140,773) in the EBT with a carrying value of £69,982 (2015: £69,982)
which were accounted for in the Own Shares EBT reserve.
13. 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 £1,081,000 (2015: £809,000) by:
1) taking the charge in relation to employees of the parent company through the parent company statement of comprehensive
income £682,000 (2015: £695,000),
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 £399,000 (2015: £114,000).
83
iomart Group plc Annual report and accounts 2016
Parent company financial statements. Year ended 31March 2016
14. TRANSITION TO FRS 101
The Company has adopted FRS 101 for the first time having previously applied UK GAAP that was effective before periods commencing
on or after 1 January 2015. The date of transition to FRS 101 was 1 April 2014. The Company has restated its comparatives for the year
ended 31 March 2015.
Restated Company Statement of Financial Position
31 March
2015
£’000
1 April
2014
£’000
Shareholders’ funds under previous UK GAAP
68,127
47,715
Effect of changes to (see below):
1. Investments – professional fees
2. Borrowings
3. Investments - reduction in contingent consideration
Sub-total – conversion adjustments
Restated shareholders’ funds
Restated profit or loss for the year ended 31 March 2015
Original profit for the financial year under previous UK GAAP
Effect of changes to (see below):
1. Investments – professional fees
2. Borrowings
3. Investments - reduction in contingent consideration
Sub-total – conversion adjustments
Restated profit for the financial year
(1,111)
(207)
26
(991)
(95)
26
(1,292)
(1,060)
66,835
46,655
31 March 2015
£’000
21,466
(120)
(112)
-
(232)
21,234
Explanation of changes
1.
Investments – professional fees
Under previous UK GAAP professional fees directly associated with acquiring investments were included as part of the cost of
the investment in subsidiary undertakings.
Under FRS 101 professional fees associated with investments are not capitalised but written off to profit or loss in the period
in which they are incurred.
2.
Borrowings
Under previous UK GAAP arrangement fees on borrowings were written off over the life of the loan facility, non-utilisation fees
and loan interest charges were accrued based on the amounts payable on each loan drawdown and the carrying value of
borrowings was the amount drawn down from the loan facility.
Under FRS 101 the effective interest method of allocating finance costs is used which results in all arrangement fees, non-
utilisation fees and interest charges being allocated to periods in relation to the amount of loans drawn down over the life of
the loan facility. The carrying value of the loans are adjusted to ensure that finance charges based on the effective interest rate
are allocated to profit or loss in the correct period.
3.
Investments – reduction in contingent consideration
Under previous UK GAAP any change to contingent consideration associated with acquiring investments were included as part
of the cost of the investment in subsidiary undertakings.
Under FRS 101 any change to contingent consideration associated with investments are not capitalised but written off to profit
or loss in the period in which they are incurred.
84
iomart Group plc Annual report and accounts 2016
Parent company financial statements. Year ended 31March 2016
15. RELATED PARTY TRANSACTIONS
As permitted by FRS 101 related party transactions with wholly owned members of the Group have not been disclosed. 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.
16. CONTINGENCIES AND COMMITMENTS
(a) Contingencies
There were no contingent assets or liabilities as at 31 March 2016 (2015: nil).
(b) Commitments
There are no commitments present as at 31 March 2016 (2015: nil).
17. ULTIMATE CONTROLLING PARTY
The Directors have assessed that there is no ultimate controlling party.
85
iomart Group plc Annual report and accounts 2016
Notice of the 2016 Annual General Meeting
NOTICE IS HEREBY GIVEN that the 2016 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 24 August 2016 at 10.00 am for the purpose of considering
and, if thought fit, passing the following resolutions, of which
resolutions 1 to 8 (inclusive) will be proposed as ordinary
resolutions and resolutions 9 to 10 (inclusive) will be proposed as
special resolutions:-
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
(b) in any other case up to an aggregate nominal amount of
£357,365.20 (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 £357,365.20);
1 To receive and adopt the financial statements of the Company
and the directors' and auditors' reports thereon for the year
ended 31 March 2016.
2 To approve the report of the board to the members on
directors' remuneration for the year ended 31 March 2016.
3 To reappoint Ian Ritchie (who retires by rotation and, being
eligible, offers himself for re-election) as a director of the
Company.
4 To reappoint Sarah Haran (who retires by rotation and,
being eligible, offers herself for re-election) as a director of the
Company.
5 To reappoint Ian Steele (who was appointed by the board
since the last annual general meeting and, being eligible, offers
himself for re-election) as a director of the Company.
6 To declare a final dividend for the year ended 31 March 2016
of 3.15p per share payable on 30 August 2016 to shareholders
on the register of members at the close of business on 12 August
2016.
7 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.
8 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 £714,730.40 (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,
provided that such authority, unless renewed, varied or revoked
by the Company, shall expire on 24 November 2017 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.
9. THAT, subject to the passing of resolution 8, 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 8, 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 8(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
and subject to such exclusions or other arrangements as the
directors consider expedient in relation to fractional entitlements,
(c) the allotment (otherwise than pursuant to paragraphs (a) and
(b) above) of equity securities up to an aggregate nominal amount
of £107,209.56.
86
iomart Group plc Annual report and accounts 2016
The power granted by this resolution will expire on 24 November
2017 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.
is hereby generally and
10. That the Company be 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 10,720,956, representing 10% of the Company's
issued ordinary share capital (excluding for these purposes the
593,445 shares held by the Company in treasury) at the date of
the notice of this annual general meeting);
(b) the minimum price (exclusive of any expenses) which may be
paid for each ordinary share is 1 pence;
(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.
Notice of the 2016 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 22 August 2016)
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:
•
close of business on 22 August 2016; or
•
if this meeting is adjourned, at close of business on the
day two days prior to the adjourned meeting,
shall be entitled to attend and vote at the meeting.
Documents on Display
4 Copies of the service contracts and letters of appointment of
the directors of the Company will be available:
•
for at least 15 minutes prior to the meeting; and
• during the meeting.
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.
By order of the board
Address: The Company Secretary
Bruce Hall
Lister Pavilion, Kelvin Campus,
Company Secretary
West of Scotland Science Park,
30 June 2016
Glasgow G20 0SP
iomart Group plc
Lister Pavilion
Kelvin Campus
West of Scotland Science Park
Glasgow
G20 0SP
87
iomart Group plc Annual report and accounts 2016
Notice of the 2016 Annual General Meeting
EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL
MEETING IOMART GROUP PLC
Telecom plc and has been responsible for developing the day-to-
day business processes and technical operations to support the
Group’s customer base.
Ordinary Resolutions
Resolutions 1 to 8 are all to be proposed as ordinary resolutions.
This means that for each of those resolutions to be passed, more
than half of the votes cast must be in favour of the resolution.
Resolution 1 – To receive and adopt the financial statements
for the year ended 31 March 2016 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 32. This resolution is an advisory one and no entitlement to
remuneration is conditional on the resolution being passed.
Resolutions 3, 4 and 5 – 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 Ian
Ritchie and Mrs Sarah Haran are required to retire by rotation at
this annual general meeting and, being eligible, offer themselves
for reappointment. In addition, the articles also stipulate that
any director appointed by the Board during the year must offer
themselves for reappointment at the next available annual
general meeting. Mr Ian Steele was appointed on 15 June 2016
and accordingly offers himself for reappointment. The board
of directors is satisfied that the performance of Mr Ian Ritchie,
Mrs Sarah Haran and Mr Ian Steele 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, 4 and 5
propose the reappointment of Mr Ian Ritchie, Mrs Sarah Haran
and Mr Ian Steele.
Brief biographical details of Mr Ian Ritchie, Mrs Sarah Haran and
Mr Ian Steele are given below.
Mr Ian Ritchie, 65, 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 several technology companies, including Voxar Ltd
(now part of Toshiba), Orbital Software Group plc (now part of
Sopheon plc), Digital Bridges Ltd (now part of Oberon Inc) and
Sonaptic Ltd (now part of Cirrus Logic Inc).
Mrs Sarah Haran, 50, 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
Mr Ian Steele, 59, appointed 2016; has over 35 years experience
in corporate finance and the corporate advisory sector. During
a 16-year career with Deloitte LLP, Ian undertook roles within
corporate finance and global advisory services. For the past 8
years, Ian sat on the UK board of the firm and fulfilled the role of
senior partner for Scotland and Northern Ireland. Ian has recently
joined the Council of the Institute of Chartered Accountants of
Scotland.
Resolution 6 – To declare a dividend 3.15p 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 3.15p per ordinary share, to be payable to shareholders
registered at close of business on 12 August 2016.
Resolution 7 – 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 8 – 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 (now the Investment 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 £714,730.40 (representing
71,473,040 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 £357,365.20 (representing
35,736,520 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 24 November 2017 or, if
earlier, at the conclusion of the next Annual General Meeting.
88
iomart Group plc Annual report and accounts 2016 Special Resolutions
Resolutions 9 and 10 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.
Resolution 9 - 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 9 (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 9 asks
shareholders to waive their pre-emption rights in respect of any
such issue of shares.
Resolution 9 (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 593,445 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 9(c):
Notice of the 2016 Annual General Meeting
(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
(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 9 will, unless sooner revoked
or renewed by the Company in general meeting, last until the
conclusion of the next annual general meeting of the Company
to be held in 2017.
Resolution 10 – Authority to purchase the Company's own
shares
This resolution grants authority to the Company to make
purchases of up to a maximum of 10% of the issued ordinary
share capital of the Company (excluding for these purposes the
593,445 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 made from funds not required for other purposes and in
light of market conditions prevailing at the time. In reaching a
decision to purchase ordinary shares, your directors would take
account of the Company's cash resources and capital, the effect
of such purchases on the Company's business and on earning per
ordinary share.
The directors have no present intention of using the authority.
However, the directors consider that it is in the best interests of
the Company and its shareholders as a whole that the Company
should have flexibility to buy back its own shares should the
directors in the future consider that it is appropriate to do so.
In relation to any buy back, the maximum price per ordinary share
at which the Company is authorised in terms of resolution 10
to effect that buy back is 5% above the average middle market
price of an ordinary share for the five business days immediately
preceding the date on which the buy back is effected.
The statutory provisions governing buy backs of own shares are
currently contained in, inter alios, sections 693 and 701 of the
Companies Act 2006.
89
iomart Group plc Annual report and accounts 2016
Officers and Professional Advisers
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 LLP, 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, Level 8, 110 Queen Street, Glasgow G1 3BX
Registrars
Capita IRG plc, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU
Company Registration Number
SC204560
90
iomart Group plc Annual report and accounts 2016
Group Contact Information
iomart Cloud Services
0141 931 6400 • info@iomart.com • www.iomart.com
Melbourne
inbox@melbourne.co.uk • www.melbourne.co.uk
ServerSpace
sales@serverspace.co.uk • www.serverspace.co.uk
Backup Technology
sales@backup-technology.com • www.backup-technology.com
SystemsUp
sales@systemsup.co.uk • www.systemsup.co.uk
Rapidswitch
sales@rapidswitch.com • www.rapidswitch.com
Redstation
sales@redstation.com • www.redstation.com
Easyspace
sales@easyspace.com • www.easyspace.com
United Hosting
sales@unitedhosting.co.uk • www.unitedhosting.co.uk
Design by iomart Group plc. All rights reserved. © iomart Group plc 2016. All other trademarks and registered trademarks
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