iomart Group plc Annual report and accounts 2017 Contents
Overview
About iomart
Highlights
Strategic Report
Chairman’s statement
Chief executive officer’s report
Finance director's report
Key performance indicators and principal risks and uncertainties
Corporate Governance
Board of directors
Corporate governance report
Report of the board to the members on directors’ remuneration
Directors' report
Directors' responsibilities statement
Financial Statements
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
Notice of annual general meeting
Officers and Professional Advisers
Officers and professional advisers
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iomart Group plc Annual report and accounts 2017
About iomart
iomart provides managed cloud services to support businesses and
organisations of all sizes in their digital transformation.
Not only do we design, build and deploy bespoke cloud platforms in
our data centres, we provide the network connectivity, security services
and technical expertise to support them 24x7.
Our consultants help organisations decide how to take their very first
steps into the cloud, while our comprehensive portfolio of managed
services helps the biggest global brands consolidate and strengthen
their enterprise
IT while protecting their data across multiple
geographical locations.
In a world where cyber-attacks are a constant threat, iomart works
with the world’s leading technology vendors to provide secure cloud
solutions and multi-layered defence to customers.
iomart is proud to be the UK’s most accredited cloud services company
and a trusted partner to business.
iomart Group plc Annual report and accounts 2017 Our Year
iomart has enjoyed another exciting year of
growth with revenues increasing by 17% to
£89.6m.
As a result we are improving our dividend
policy to reflect this ongoing growth and our
confidence in the future.
iomart Group plc Annual report and accounts 2017 Our Infrastructure
iomart continues to invest in its people, skills and infrastructure to help
organisations derive maximum commercial and operational value from
the cloud.
The core components of our services are delivered from a network of
data centres which are fully connected by our own fibre network.
Our managed cloud services are delivered from a network of fully
owned data centres across the UK. We also have points of presence in
16 locations globally to extend our reach for our customers.
iomart has partnerships with the big three public cloud vendors – AWS,
Microsoft and Google Cloud – which enable us to combine public cloud
access with our own cloud services to help our customers to innovate
and grow.
iomart Group plc Annual report and accounts 2017 “iomart continue to be a pleasure to work with. They
afford us a wealth of technical and commercial
expertise as well as hands-on account management
and assist with planning complex requirements at
every stage. iomart’s knowledge and appetite to
deliver, combined with our in-house development
team and contract expertise, ensures CEMAR remains
highly available, fast, secure, resilient and flexible for
our clients.”
Daniel Walker, Infrastructure Director for CEMAR
iomart Group plc Annual report and accounts 2017 “With iomart's partnership, we were able to
strengthen our infrastructure model within the
UK, enabling us to provide various solutions that
meet UK Government regulatory compliance, and
deliver the value our customers have come to
expect from Exostar."
Girish Maheswar, Senior Product Manager,
eSourcing for Exostar
iomart Group plc Annual report and accounts 2017 Financial statements for year ended 31March 2017
Highlights
FINANCIAL HIGHLIGHTS
· Revenue growth of 17% to £89.6m (2016: £76.3m)
- Cloud Services segment organic revenue growth of 10% (2016: 9%)
· Adjusted EBITDA1 growth of 13% to £36.6m (2016: £32.3m)
· Adjusted profit before tax growth2 of 18% to £22.4m (2016: £19.0m)
· Adjusted diluted earnings per share3 from operations increased by 18% to 16.99p (2016: 14.44p)
· Cashflow from operations increased by 22% to £37.8m (2016: £30.9m)
· Adjusted profit before tax2 margins maintained at 25% (2016: 25%)
· Proposed final dividend increased by 90% to 6.00p per share (2016: 3.15p per share)
OPERATIONAL HIGHLIGHTS
· Acquisition of Cristie Data during the year for a net consideration of £0.7m
· Acquisition of Dediserve post year end for a consideration of €7.9m
·
· Strengthened relationships with Hypercloud vendors
Further investment in skills and accreditations to support broadening service offering
Statutory Equivalents
The above highlights are based on adjusted results. A full reconciliation between adjusted and
statutory results is contained within this statement. The statutory equivalents of the above results are
as follows:
· Profit before tax growth of 13% to £14.7m (2016: £13.0m)
· Basic earnings per share from operations increased by 9% to 11.27p (2016: 10.32p)
1 Throughout these financial statements adjusted EBITDA is earnings before interest, tax, depreciation and amortisation (EBITDA) before share based payment charges, acquisition costs and in the previous
year the gain on revaluation of contingent consideration. 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 and in the previous year the gain on revaluation of contingent consideration and the accelerated write off of
arrangement fees on the bank borrowing facility which was restructured in the previous 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 and in the previous year the gain on revaluation of contingent consideration and the accelerated
write off of arrangement fees on the bank borrowing facility which was restructured in the previous year, including the taxation effect of these.
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iomart Group plc Annual report and accounts 2017
Strategic Report
Chairman's Statement
We have once again seen another year of excellent performance for our shareholders. Not only have we maintained our
relative level of organic growth in our Cloud Services segment, our Easyspace segment has also returned to organic growth
after declining a little last year.
Both of those elements of organic growth plus the acquisition of Cristie during the year, which we have allocated to a new Non-
recurring Revenue segment, together with the full year contributions of SystemsUp and United Hosting has meant we have
maintained our overall level of revenue growth for the year. In May, after the end of our financial year we purchased Dediserve
and we believe that 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 that organic and acquisitive revenue
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.
Sarah Haran, who has served as an executive director of iomart throughout the time the Group has been listed on AIM, decided
to step down from the Board at the end of this financial year. She has given many years of loyal and valuable service to the
Group and on behalf of all shareholders I thank her warmly for her service.
After nearly 6 years of first class commitment and service, Crawford Beveridge 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
a replacement for Crawford is at an advanced stage and we expect to be in a position to make an announcement about this
in the near future.
As we indicated in our trading update which was issued at the end of March we have decided to improve our dividend policy
to reflect the ongoing growth that we have been delivering, the level of cash we generate, and the confidence we continue to
have in our future prospects. We had previously committed to paying up to 25% of our adjusted diluted earnings per share by
way of dividend and last year our pay-out ratio was 22%. We have now increased the upper limit of dividend pay-out to 40%
and the Board is proposing to pay a final dividend of 6.0p per share on 6 September 2017 to shareholders on the register on
11 August 2017, based on an ex-dividend date of 10 August 2017. This represents an increase of 90% over the dividend last
year and equivalent to a pay-out ratio of 35% 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
12 June 2017
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iomart Group plc Annual report and accounts 2017
Strategic Report
Chief Executive Officer's Report
Introduction
We have again enjoyed another very successful year with revenues and profits growing to record levels both organically and through
acquisition as we continue to deliver an ever broader range of cloud solutions.
Our revenues in the year were £89.6m, an increase of 17% over the previous year, our adjusted EBITDA of £36.6m showed a 13%
increase over the previous year and our profit before tax also increased by 13% to £14.7m.
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. There is still a long runway of opportunity as the ‘IT as a service’ philosophy
and delivery unfolds. There is an inevitability around this fundamental change in how IT is delivered but there is also a built in delay
mechanism as systems, processes and applications are dealt with on a ‘one by one’ basis rather than in one full organisation wide
swoop, as applications and workloads are individually considered for an upgrade, refresh or rewrite.
Security has again been in the headlines and it serves to show that on premise infrastructure is far more difficult to keep secure and
available on a 24x7x365 basis than those in the cloud, in specialist datacentres, with 24x7x365 monitoring and management and with
all the required perimeter defences in place.
We believe that iomart is one of the most compliant organisations with regard to security and certification in the sector. This will drive
more opportunity for us, with our long experience of security whether it be infrastructure and network protection, detection and
response to threats, access control, log management, or compliance with various standards.
We are now less than a year away from the introduction of the new regulations around data security, the EU General Data Protection
Regulation (GDPR). Our plans for the introduction of these regulations are well advanced both for the Group’s own needs and to help
other organisations understand the implications for their own business and thereby to become compliant.
Organisations today are confronted by an increasingly complex set of cloud decisions in terms of cost, value, effectiveness, complexity,
security, data protection and compliance. Whatever the cloud challenge iomart can assist all organisations in moving to the cloud,
whether it be private, public or hybrid approach. 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.
The future success of cloud companies will be driven by their ability to address further towards the application layer as well as the
underlying infrastructure. There is growing evidence of different market segments with distinct hosting and cloud requirements and
characteristics. This is leading to a growing trend in specialisation in various verticals such as e-commerce or financial software and
this is one reason why the hosting and cloud markets will be served by a wide variety of vendors and vendor types.
Our challenge is to continue to navigate through these early days of the further evolution of cloud adoption and to ensure we build
the skills and resources necessary to be successful in that ever more complex space.
Acquisitions
We again augmented our organic growth through the acquisition of Cristie Data Limited (“Cristie”) in August and after the year-end, in
May, through the acquisition of Dediserve Limited (“Dediserve”), a Dublin based provider of Cloud solutions in ten locations around the
world. To date we have not seen any impact from the UK’s decision to leave the European Union other than the weakening of Sterling.
The Board has considered the impact on the Group of the UK’s decision to leave and whilst there are still many issues to be resolved
we believe we will be able to deal with them as they arise. The acquisition of Dediserve gives us a Cloud operation in geographical areas
where we do not currently have a presence, including another base in the European Union.
We continue to look for businesses that fit our criteria with a view to making further acquisitions in the coming year.
Operational Review
We have previously reported in two operating segments (Cloud Services and Easyspace) both of which involve the provision of services
from common infrastructure delivering a very high level of recurring revenue. During the year we acquired Cristie and we have decided
to report that in a separate segment as it predominantly involves the provision of IT infrastructure on customers’ premises with little
by the way of recurring revenue. We have designated this segment as Non-recurring Revenue.
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iomart Group plc Annual report and accounts 2017 Strategic Report. Chief Executive Officer's Report
Cloud Services
Revenues in this segment have grown by 11% to £72.7m (2016: £65.4m) partly as a result of the continued organic growth and as a
result of acquisitions. Organic growth in the year was 10%, slightly above the level of 9% we have delivered in our last two financial years
and our adjusted EBITDA percentage margin continues to be amongst the highest in the industry.
Through our iomart Cloud unit we provide complex hosting solutions, involving private, public and hybrid cloud solutions with
customers typically paying for these services on a monthly basis on contracts ranging from one to three years in length. Our churn
levels in this unit have stabilised and are in line with that experienced last year.
Our server infrastructure business, delivering dedicated physical servers to customers, is run as one unit encompassing the RapidSwitch
and Redstation brands. We manage many thousands of 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. Having a consultancy division within the Group allows us to engage at an earlier stage
with organisations considering their cloud strategy and provides the opportunity to leverage the provision of those consultancy services
to gain recurring revenue through the deployment of cloud solutions. However, unlike our other activities within the Cloud Services
segment there is less recurring revenue generated from consultancy services and this area has not performed as predicted during
the year and in future we will be more prudent in projecting the revenues which we expect to generate to recognise the difficulty in
estimating revenue levels. We have made some changes to senior management within the consultancy unit and have also refined its
strategic approach to focus on the delivery of a set of core cloud technologies. This is with a view to ensuring that as often as possible
projects that are delivered will ultimately have a managed service and recurring revenue element.
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.
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 being presented with a growing number of Microsoft Azure opportunities.
We continue to build on our skills and accreditations and see constant improvement across the Group’s skillset.
Easyspace
In line with our expectations the Easyspace segment has performed well over the year, returning to a position of organic revenue
growth.
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.
Revenues in the segment have grown by 22% to £13.2m (2016: £10.9m) mainly as a result of the acquisition of United Hosting in the
previous year. Organic growth in the year was 4% against a decline of 8% in the previous year.
Non-recurring revenue
The non-recurring revenue segment contains the results of Cristie since we acquired that business in August 2016. In just over 7
months of ownership the revenue generated was £3.6m.
Cristie primarily provides solutions similar to those provided by the Cloud Services segment with the exception that they would tend to
be less complex in nature and predominantly installed on the customers’ own premises rather than from a datacentre location. These
solutions would involve, for example, the provision of storage and back-up infrastructure. Cristie has a substantial number of public
sector customers in areas such as health and education and we welcome its activities into the Group.
Current trading and outlook
This has been another year of strong growth and trading since the year end remains good.
The long term opportunity and runway for success remains large and long. iomart remains 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
12 June 2017
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iomart Group plc Annual report and accounts 2017 Strategic Report
Finance Director's Report
Trading Results
Revenue
Revenues for the year grew by 17% to £89.6m (2016: £76.3m) through the combination of continued organic growth and the impact
of acquisitions.
Our Cloud Services segment grew revenues by 11% to £72.7m (2016: £65.4m). This growth was helped by a full year contribution from
SystemsUp which we acquired in June 2015. Revenue growth in the Cloud Services segment excluding the impact of acquisitions was
10% (2016: 9%).
Revenues within the Easyspace segment grew by 22% to £13.2m (2016: £10.9m). This growth was helped by a full year contribution
from United Hosting which we acquired in November 2015. Revenue growth in the Easyspace segment excluding the impact of
acquisitions was 4% (2016: decline of 8%). As expected the decline in the organic revenue levels in this segment has stopped as new
sales and churn levels have moved into balance, largely due to revised pricing in the domain market and the introduction of new
products. As a result, the segment has returned to an encouraging level of organic growth.
During the year we acquired Cristie which is largely a non-recurring revenue operation. Given that the vast majority of our revenue in
our Cloud Services and Easyspace segments is recurring in nature we have decided to review the performance of this unit separately
and as a consequence we will report this in a separate segment which we have called our Non-recurring Revenue segment. Revenues
of £3.6m (2016: £nil) were generated in this segment in 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 £57.3m (2016: £51.6m) increasing as a result of the additional revenues we generated as explained
above. In percentage terms our margin reduced to 64.0% (2016: 67.7%). This expected reduction in percentage has arisen partly due
to the changing nature of the provision of some of our cloud infrastructure and partly due to the impact of the acquisition of Cristie.
The provision of Public Cloud solutions by our Cloud Services segment results in a charge from the Public Cloud service provider within
our cost of sales. This is offset by savings in our costs for power, which is included within cost of sales, and some support services which
are provided by the Public Cloud service provider, which is included within our overheads and depreciation. Whilst our gross margin
percentage has reduced our adjusted profit before tax percentage margin has been maintained partly due to the offsetting savings
when providing Public Cloud solutions.
The gross margin within our traditional private and hybrid cloud solutions continues to rise due to our relatively static datacentre costs
which to some extent are fixed in nature and therefore do not rise in line with revenue growth.
Cristie predominantly sells hardware and software to its customers on which it incurs a substantial cost of sale and therefore a lower
gross margin percentage contribution than in the other segments.
The gross margin within our Easyspace segment improved over the year due largely to the impact of the acquisition of United Hosting.
Adjusted EBITDA
The adjusted EBITDA for the year was £36.6m (2016: £32.3m) an increase of 13%. As expected, our adjusted EBITDA margin has
reduced to 40.8% (2016: 42.4%). The Cloud Services segment increased its absolute level of margin over the period whilst experiencing
a modest reduction in its percentage margin, the Easyspace segment increased both its absolute and percentage margin and the
Non-recurring Revenue segment has a lower adjusted EBITDA contribution than the other segments which contributed to the overall
adjusted EBITDA percentage margin reduction.
Adjusted EBITDA in the Cloud Services segment was £33.7m (2016: £31.1m), an increase of 8.4%. This improved performance is mainly
a direct result of the additional gross margin delivered by the increase in sales revenue, from both organic and acquired sources, offset
by a modest increase in administrative expenses which has been helped by an exchange gain. In percentage terms the adjusted EBITDA
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iomart Group plc Annual report and accounts 2017 Strategic Report. Finance Director's Report
margin has reduced to 46.3% (2016: 47.5%). This reduction is due to the impact of the reduced gross margin percentage as previously
explained together with the full year effect of SystemsUp which has a lower adjusted EBITDA margin than the rest of the segment’s
operations but which, unlike the rest of the segment, has no depreciation charges. This was offset by administrative expenses rising at
a slower rate than revenue which improved the segment’s EBITDA percentage margin.
The Easyspace segment’s adjusted EBITDA was £6.2m (2016: £5.1m) an increase of 22.6%. This improvement in adjusted EBITDA
is almost entirely due to the full year impact of United Hosting which was acquired in the previous year. Excluding the acquisition,
adjusted EBITDA increased slightly as a result of the increase in organic revenue. In percentage terms the adjusted EBITDA margin has
improved to 47.1% (2016: 46.8%). Excluding the acquisition of United Hosting the Easyspace segment maintained its adjusted EBITDA
percentage margin. The improvement in percentage margin is therefore entirely due to the impact of the previous year’s acquisition.
The Non-recurring segment’s adjusted EBITDA was £0.3m (2016: £nil). In percentage terms the adjusted EBITDA margin was 9.0%.
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 reduced slightly to £3.6m (2016: £3.8m) mainly due to staff related costs.
Adjusted profit before tax
Depreciation charges of £11.0m (2016: £10.9m) have remained at the same level as previous years as a result of charges for the
equipment bought to provide services to the additional Cloud Services segment customers being offset by equipment purchased in
previous periods becoming fully depreciated and thereby no longer impacting the depreciation charge in the year.
The charge for amortisation of intangibles, excluding amortisation of intangible assets resulting from acquisitions (“amortisation of
acquired intangible assets”) of £1.9m (2016: £1.2m) has increased over the year as a result of an increase in the level of software
acquired over the year and the advance purchase of some software licences.
Finance income in the period was £nil (2016: £0.1m). Finance costs of £1.6m (2016: £1.4m), excluding the mark to market adjustment
in respect of interest swaps on the Company’s loans, the interest charge on the contingent consideration due in respect of acquisitions
and in the previous year the accelerated write off of arrangement fees on the restructuring of the bank facility, 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 interest charge
on the contingent consideration due in respect of acquisitions and in the previous year the accelerated write off of arrangement fees
on the restructuring of the bank facility, and crediting the finance income from the adjusted EBITDA, the Group’s adjusted profit before
tax was £22.4m (2016: £19.0m) an increase of 18%.
The adjusted profit before tax margin for the year was 25.0% (2016: 24.9%). This modest margin improvement of 0.1% has two largely
offsetting components. The adjusted EBITDA margin reduced by 1.6% as previously explained. Depreciation charges as a percentage
of revenue have fallen by 2.0% partly due to tangible assets becoming fully depreciated, partly due to the provision of Public Cloud not
incurring a depreciation charge and partly due to some of our activities not needing the purchase of tangible assets in the provision
of their services.
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: 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
2017
£’000
22,406
(5,558)
(104)
(1,844)
84
-
(330)
-
14,654
2016
£’000
18,970
(5,354)
(116)
(1,081)
64
(177)
(152)
870
13,024
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iomart Group plc Annual report and accounts 2017
Strategic Report. Finance Director's Report
Profit before tax (continued)
The adjusting items are: charges for the amortisation of acquired intangible assets of £5.6m (2016: £5.4m) which have increased slightly
mainly 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 (2016: £0.1m) as a result of acquisitions made; share based payment charges of £1.8m (2016: £1.1m) 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 £0.08m (2016: £0.06m); the accelerated write off of arrangement fees on the restructuring of the bank facility
during the previous year of £nil (2016: £0.2m); 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 £0.3m (2016: £0.2m); and in the previous period
the gain on the revaluation of the contingent consideration to be paid for SystemsUp of £nil (2016: £0.9m).
After deducting these items from the adjusted profit before tax; the reported profit before tax was £14.7m (2016: £13.0m) an increase
of 13%. In percentage terms the profit before tax margin was 16% (2016: 17%). The reduction in percentage margin is for the same
reasons as the adjusted profit before tax percentage margin change and also due to the gain on revaluation of contingent consideration
recorded in the previous year which improved the percentage margin last year.
Taxation
There is a tax charge for the year of £2.6m (2016: £2.0m). The tax charge for the year is made up of a corporation tax charge of £4.4m
(2016: £3.6m) with a deferred tax credit of £1.8m (2016: £1.6m). The effective rate of tax for the year is 17.5% (2016: 15.4%) and an
explanation of this increase in given in note 9. At the year end, the Group has no unused tax losses available for offset against future
profits (2016: £nil).
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 £12.1m (2016: £11.0m) an increase of 10% which has been significantly adversely affected by the gain on revaluation on contingent
consideration recorded in the previous year.
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 charge
of interest on contingent consideration due, acquisition costs and in the previous year the accelerated write off of arrangement fees
on the restructuring of the bank facility and the gain on the revaluation of the contingent consideration to be paid for SystemsUp and
the tax effect of these items was 16.99p (2016: 14.44p), an increase of 18%.
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 11.27p (2016: 10.32p), an increase of 9% which has been significantly
adversely affected by the gain on contingent consideration recorded in the previous year.
Acquisitions
On 25 August 2016 the Company acquired the entire share capital of Cristie on a no debt, no cash, normalised working capital basis. At
completion a payment of £3.8m in cash, including adjustments required in respect of normalised working capital, was made to acquire
Cristie which at the time had net debt/cash of £3.1m resulting in a net outflow of funds of £0.7m to acquire the company.
After the end of the financial year, on 17 May 2017 we completed the acquisition of the entire share capital of Dediserve on a no
debt, no cash, normalised working capital basis for a total purchase price of €7.9m. An initial payment was made at completion of
€7.8m (£6.7m) in cash less the sum of €0.25m (£0.21m) in cash as an interim settlement of the expected amount due by the vendors
in respect of the no debt, no cash, normalised working capital adjustment. The initial payment was funded by a draw down from the
Group’s revolving credit facility. A further sum of €0.1m has been deferred and is due to be paid on the earlier of the completion of the
handover of certain operational tasks or 6 months after the original purchase date.
Dividends
We have proposed a 90% increase in the level of dividend pay-out for this year thereby raising the rate to 6.00p per share (2016: 3.15p).
We have also committed to an improved pay-out ratio in the future based on the level of adjusted diluted earnings per share we deliver.
The Board has taken the decision to increase the dividend return to shareholders as a result of the recurring revenue nature of the
Group, the level of operating cash which we now deliver and the low level of indebtedness within the Group. We have continued with
our acquisition activity having brought Cristie into the Group during the year and Dediserve post the year end and we are confident
that we can make additional acquisitions in the future. The proposed change to dividends will have no impact on our ability to continue
to make acquisitions of the like we have to date.
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iomart Group plc Annual report and accounts 2017 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 £37.8m (2016: £30.9m)
with the significant increase of 22% over the previous year’s level due to a combination of the increase in adjusted EBITDA and
improvements in working capital management. After deducting payments for corporation tax of £3.9m (2016: £4.3m) the net cash flow
from operating activities was £33.9m (2016: £26.6m).
Cash flow from investing activities
In line with our strategy of accelerating our growth by acquisition the Group continued to incur substantial sums on investing activities,
spending a total of £15.2m (2016: £32.6m) in the year. Of this amount, £0.7m (2016: £15.9m), net of cash acquired of £3.1m (2016:
£4.5m), was incurred in relation to the acquisition of Cristie as described above. In addition, the Group incurred expenditure of £1.16m
(2016: £1.65m) 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 £10.2m (2016: £12.4m) on assets, net
of related finance lease drawdowns, trade creditor movements and non-cash reinstatement provisions.
Expenditure was also incurred on development costs of £1.4m (2016: £1.1m), on intangible assets of £1.8m (2016: £1.2m) and on
property lease deposits of £nil (2016: £0.3m).
Cash flow from financing activities
There were no drawdowns of the bank loan in the year (2016: £16.5m) to fund the purchase of the acquisitions. Bank loan repayments
of £16.0m (2016: £3.5m) were made in the year. We received £1.1m (2016: £0.1m) from the issue of shares as a result of the exercise
of options by employees. We also made a dividend payment of £3.4m (2016: £2.7m); incurred finance costs of £1.2m (2016: £1.5m);
and made lease repayments of £0.6m (2016: £1.0m).
Net cash flow
As a consequence, our overall cash expenditure during the year was £1.4m (2016: £2.0m cash generated) which resulted in cash and
cash equivalent balances at the end of the year of £8.9m (2016: £10.3m). After recognising bank loans of £18.6m (2016: £34.5m) and
finance lease obligations of £0.9m (2016: £1.4m) net debt balances at the end of the period stood at £10.6m (2016: £25.6m) 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
12 June 2017
13
iomart Group plc Annual report and accounts 2017 Strategic Report - Key Performance Indicators and Principal Risks and Uncertainties
Key performance indicator review
Revenue Growth
Revenue
Growth
2017
£89.6m
17% increase
2016
£76.3m
16% increase
Revenue from continuing operations grew by 17% over the year compared to a growth of 16% in the previous year. The Cloud
Services segment grew revenues by 11% (2016: 19%) and the Easyspace segment grew by 22% (2016: 1%). The Non-recurring
Revenue segment, which was created on the acquisition of Cristie on 25 August 2016, generated £3.6m (2016: £nil) of revenue
which helped drive overall revenue growth.
Adjusted EBITDA Margin
Adjusted EBITDA
Adjusted EBITDA margin
2017
£36.6m
41%
2016
£32.3m
42%
The adjusted EBITDA has shown a 13% increase as a consequence of organic growth and acquisitions. In percentage terms
there has been a modest decrease partly as a result of recent acquisitions and partly due to the change in the nature of the
provision of some services from our Cloud Services segment. Easyspace improved its adjusted EBITDA percentage margin
mainly due to the impact of an acquisition made in the previous year. The Non-recurring Revenue segment adjusted EBITDA
margin of 9% contributed £0.3m (2016: £nil) to the absolute level of adjusted EBITDA growth.
Adjusted PBT Margin
Adjusted PBT
Adjusted PBT margin
2017
£22.4m
25%
2016
£19.0m
25%
The adjusted PBT has shown a 18% increase as a consequence of organic growth and acquisitions. The percentage margin
has been maintained over the year.
Adjusted diluted EPS
Adjusted diluted EPS
Adjusted diluted EPS growth
2017
16.99p
18%
2016
14.44p
14%
Our dividend policy uses adjusted diluted EPS as its calculation basis. We have therefore added adjusted diluted EPS and in
particular the growth of this measure as a KPI. The adjusted diluted EPS has shown a 18% increase as a consequence of organic
growth and acquisitions.
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.
14
iomart Group plc Annual report and accounts 2017 Strategic Report - Key Performance Indicators and Principal Risks and Uncertainties
Principal risks and uncertainties (continued)
Data and Cyber Security
There has been a sharp rise in recent years in cyber and data related crime. The security of customer, commercial and
personal data presents both a reputational and financial risk to the Group. Whilst it is a challenge to completely eliminate
all data and cyber security risks the Group continues to make substantial investment in physical and data security systems
and promote a culture within the organisation which embeds security across all of our operations. The Group also carries
specific insurance in this regard.
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.
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 number of 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 7 to 15 has been approved by the Board and is signed on its behalf:
Richard Logan
Finance Director
12 June 2017
15
iomart Group plc Annual report and accounts 2017 Corporate Governance
Board of Directors
Ian Ritchie
Non-Executive
Chairman
Angus
MacSween
Chief Executive
Officer
Crawford
Beveridge
Non-Executive
Director
Richard Logan
Finance Director
Ian Steele
Non-executive
Director
Aged 66, appointed
2008; currently
Chairman of Computer
Application Services
Limited, Krotos Limited,
Red Fox Media Limited,
Tern plc and the
Informatics Ventures
unit at Edinburgh
University. Ian is a past
President of the British
Computer Society and
former Vice-President
of the Royal Society
of Edinburgh. He was
founding chairman
of several technology
companies, including
Voxar Limited (now
part of Toshiba), Orbital
Software Group plc
(now part of Sopheon
plc), Digital Bridges
Limited (now part
of Oberon Inc) and
Sonaptic Limited (now
part of Cirrus Logic Inc).
16
Aged 60, appointed
2000; founded iomart
in December 1998
following 15 years
spent creating and
selling businesses in
the telephony and
internet sector. In 1984,
after a short service
commission in the Royal
Navy, Angus started his
first business selling
telephone systems. He
then grew and sold five
profitable businesses
– including Prestel,
an online information
division of BT, which
he turned into one of
the UK’s first internet
service providers.
Following the sale of
Teledata Limited, the
UK’s leading telephone
information services
company, to Scottish
Telecom plc, Angus
then spent two years
on the executive of
Scottish Telecom
plc where he was
responsible for the
development of the
company's internet
division.
Aged 71, appointed
2011; Crawford
Beveridge CBE has over
40 years’ experience in
the technology industry,
including 16 years at
Sun Microsystems
("Sun"), where he was
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. and Analog
Devices. He was a
Non-Executive Director
of Hitachi Global
Storage Technologies,
a subsidiary of Hitachi
Limited; Chief Executive
of Scottish Enterprise;
and Chairman of the
investment advisory
board at Scottish
Equity Partners. He is
currently Non-Executive
Chairman of NASDAQ
listed Autodesk.
Aged 59, appointed
2006; Richard is a
chartered accountant,
having qualified with
Arthur Young in 1984.
Richard then spent
seven years with Ben
Line Group Limited
initially as Group
treasurer and latterly
as financial director
of the main container
shipping division. From
1992 to 2002 Richard
served as finance
director of Kingston
SCL, 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 Limited, a
technology company
based in Scotland.
Richard is a Non-
Executive Director
of Inspired Energy
plc, an AIM listed
energy procurement
organisation.
Aged 60, appointed
2016; Ian is a chartered
accountant with over
35 years’ experience in
the corporate finance
and corporate advisory
sector. During a 16-year
career with Deloitte
LLP, Ian undertook
roles within corporate
finance and global
advisory services. For
the past eight years, Ian
sat on the UK board
of the firm and fulfilled
the role of senior
partner for Scotland
and Northern Ireland.
Ian is a member of
the Council of the
Institute of Chartered
Accountants of
Scotland. He is a Non-
Executive Director of
STV Group plc and a
Non-Executive Director
of Killinchy Aerospace
Holdings Limited,
the principal trading
subsidiary of which is
Martin-Baker Aircraft
Company Limited.
iomart Group plc Annual report and accounts 2017 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. During the year the Board met with corporate governance advisers and reviewed trends in corporate
governance, best practice where compliance with the Code was not required and its current corporate governance arrangements.
We have reported on our Corporate Governance arrangements by drawing upon that review 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 fully
complying 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 16. 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 and two independent Non-Executive
Directors. Short biographies of the directors are given on page 16.
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 25 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.
17
iomart Group plc Annual report and accounts 2017 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, Ian Steele
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:
Ian Ritchie – Non-Executive Chairman
Angus MacSween – Chief Executive Officer
Chris Batterham – Non-Executive Director
(resigned 24 August 2016)
Crawford Beveridge – Non-Executive Director
Sarah Haran – Chief Operating Officer
(resigned 31 March 2017)
Richard Logan – Finance Director
Ian Steele – Non-Executive Director
(appointed 15 June 2016)
Board
Remuneration
Committee
Audit
Committee
Held
Attended
Held
Attended
Held
Attended
10
10
3
10
10
10
8
10
10
3
8
10
9
8
2
-
1
2
-
-
1
2
-
1
2
-
-
1
4
-
2
4
-
-
2
4
-
2
3
-
-
2
18
iomart Group plc Annual report and accounts 2017 Corporate Governance Report
The Audit Committee
The members of the Audit Committee during the year were Ian Steele (Chairman from 24 August 2016 succeeding Chris
Batterham who retired from the Board on 24 August 2016), Ian Ritchie and Crawford Beveridge.
The Audit Committee, chaired by Ian Steele, who has recent and relevant experience, is authorised by the Board to conduct
any activity within its terms of reference and to seek any information it requires from any employee. The Audit Committee has
written terms of reference, which are available on request, and include reviewing and monitoring:
interim and annual reports, 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 effectiveness of the Committee;
•
the Risk Register covering the systems of internal control and their effectiveness, reporting and making 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;
non-audit fees charged by the external auditor; and
the formal engagement terms entered into with the external auditor.
•
•
•
At the invitation of the Committee, meetings are attended by the Chief Executive Officer, the Group Finance Director and the
Group Financial Controller. Representatives of the external auditors, Grant Thornton, also attend each meeting. The Chairman
of the Committee also meets separately with senior management and the external auditors.
The Chairman of the Audit Committee reports to the subsequent meeting of the Board on the Committee’s work and the Board
receives a copy of the minutes of each meeting.
The Committee’s effectiveness is reviewed annually as part of the Board evaluation exercise.
Under its terms of reference, the Audit Committee is responsible for monitoring the independence, objectivity and performance
of the 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 auditors of the Group for
the period ended 31 March 2005.
The auditors have confirmed to the Committee that in relation to their services to the Company they comply with UK regulatory
and professional requirements, including Ethical Standards issued by the Auditing Practices Board and that their objectivity is
not compromised.
The auditors are required each year to confirm in writing that they have complied with the independence rules of their
profession and regulations governing independence. Before Grant Thornton takes on any engagement for other services from
the Company careful consideration is given as to whether the project could conflict with their role as auditor or impair their
independence.
The Remuneration Committee
The Remuneration Committee is chaired by Crawford Beveridge and its other members are Ian Ritchie and Ian Steele. 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.
19
iomart Group plc Annual report and accounts 2017 Corporate Governance Report
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.
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 and the cash
flow forecasts for the next two financial periods, and associated risks and the availability of bank and leasing facilities. The £60m
revolving credit facility is available from Lloyds Banking Group plc until June 2019.
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.
•
•
•
•
20
iomart Group plc Annual report and accounts 2017 Corporate Governance Report
Quality of Personnel and Employee Involvement
The Group is committed to attracting and retaining the highest level of personnel. It strives to do this through, amongst other
things, the application of high standards in recruitment. The Group is aware of the importance of good communication in
relationships with its staff and also follows a policy of encouraging training.
A number of employees participate in the growth of the business through the ownership of share options with some employees
also participating in the Group bonus scheme.
Business Ethics
The Board recognises that the Company is accountable to its shareholders and, at the same time, seeks to take into account the
interests of all its stakeholders including customers, suppliers and subcontractors, employees, as well as the local community,
and the environment in which it operates.
The Group maintains core values of Honesty, Integrity, Hard Work, Service and Quality and actively promotes these values in all
activities undertaken on behalf of the Group.
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
12 June 2017
21
iomart Group plc Annual report and accounts 2017 Report of the board to the members on directors' remuneration
Directors’ Remuneration Report for the year to March 2017
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 to ensure that the remuneration policy both reflects our strategy and
is aligned with shareholders’ interests.
We have provided disclosures in addition to that which is required by AIM Rule 19 on a voluntary basis to enable shareholders to
understand and consider our remuneration arrangements. In line with best practice, we will also voluntarily submit this report
to an advisory shareholder vote at the annual general meeting.
Remuneration committee
The remuneration committee determines, on behalf of the board, the Group’s policy for executive remuneration and the
individual remuneration packages for executive directors. In setting the Group’s remuneration policy, the remuneration
committee considers a number of factors, including the following:
•
•
•
salaries and benefits available to executive directors of comparable companies;
the need to attract and retain executives of an appropriate calibre; and
alignment with our overall strategy and the continued commitment of executives to the Group’s success through
appropriate incentive schemes.
The committee is chaired by Crawford Beveridge. Ian Ritchie, the Company’s non-executive Chairman and Ian Steele are also
members of the Committee. The CEO may attend meetings from time to time at the invitation of the committee and provide
information and support as requested. Directors are not present when their own remuneration is being discussed.
The committee normally meets at least twice per year and met two times during the current year.
Remuneration of executive directors
The remuneration packages of the executive directors comprise the following elements:
Element
Overview of policy and
structure
Opportunity
Performance measures
Base salary
• The remuneration committee sets
base salaries to reflect responsibilities
and the skill, knowledge and experience
of the individual taking into account
salary levels at similar sized businesses.
• 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.
• The committee
recently reviewed base
salary and salaries
with effect from 1 April
2017 will be as follows:
• CEO – £350,000
• FD – £210,000
n/a
22
iomart Group plc Annual report and accounts 2017 Report of the board to the members on directors' remuneration
Remuneration of executive directors (continued)
Element
Overview of policy and
structure
Opportunity
Performance measures
Annual bonus
• The executive directors are
eligible to receive an annual bonus
dependent on Group and individual
performance at the discretion of the
remuneration committee.
• Bonuses are normally paid in cash
following the year end.
The maximum annual
bonus opportunity is
135% of base salary.
Performance
share plan
• The Group operates a performance
share plan for executive directors
and managers to reward, retain and
incentivise those individuals 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.
• Awards are granted in the form of
1p options.
• No share options awarded will vest
any earlier than the third anniversary
of the date of grant of the option.
• Participants have 10 years from
award to exercise awards
The maximum
award under the
performance share
plan is 110% of base
salary.
• The level of executive directors’
discretionary bonus payments
is determined by a number of
factors including the Group’s
financial performance, its successful
continuation of its organic and
acquisitive strategy, its continual
internal improvement programme and
the individual’s own performance.
• For the bonus for the March
2018 financial year the performance
measures will be based primarily on
Group adjusted EBITDA performance,
with the above criteria taken into
account by the Committee when
determining payments.
• For achievement of target a bonus
100% of salary is paid. Executives only
receive more than 100% of salary for
performance well in excess of target.
Bonuses reduce significantly if targets
are not achieved with no bonuses
payable if less than 90% of target is
achieved.
• The vesting of options is subject
to the achievement of performance
conditions and the executive
continuing in employment with the
group.
• Performance is assessed based on
the achievement of profit targets in
three years set with reference to our
organic and acquisitive growth strategy.
• Options granted in April 2017 will
vest based on Group adjusted EBITDA
performance for the March 2020
financial year to ensure continued
focus on driving profit performance.
23
iomart Group plc Annual report and accounts 2017 Report of the board to the members on directors' remuneration
Remuneration of executive directors (continued)
Element
Overview of policy and
structure
Opportunity
Performance measures
Pension
• The Company may make pension
contributions to individuals’ personal
pension arrangements.
• The maximum contributions
payable by the Group are 2 times
the contribution made by the
director up to a maximum employer
contribution of 10% of basic salary.
n/a
• Neither the CEO nor the CFO
currently receive a pension
contribution.
Benefits
• The executive directors are entitled
to life insurance cover, death in
service benefits and to participate in
the Group’s Private Medical Insurance
scheme.
n/a
• The Group operates a Sharesave
scheme for all employees including
executive and non-executive directors.
n/a
Service contracts
Executive directors are engaged under service contracts which require the following notice periods:
Angus MacSween
Richard Logan
12 months
6 months
Remuneration of non-executive directors
The fees paid to the non-executive directors are determined by the Board. In addition to basic fees, non-executive directors are eligible
to participate in the Sharesave scheme. Non-executive directors are not entitled to receive any bonus or other benefits. Non-executive
directors are entitled to reasonable expenses incurred in the performance of their duties.
Non-executive directors’ fees were reviewed during the year to ensure that they are appropriate for a company of our size and
complexity. Our policy for the March 2018 financial year is to pay a fee of £40,000 per annum for Board Director duties with additional
fees of £5,000 per annum paid to the Audit and Remuneration Committee chairman to reflect the additional time required to fulfil
these roles.
The chairman receives a fee of £75,000 per annum.
Non-executive directors’ letters of appointment are on a 6 month rolling basis.
24
iomart Group plc Annual report and accounts 2017
Report of the board to the members on directors' remuneration
Directors’ remuneration for the year ended 31 March 2017
Details of individual director’s emoluments for the year are as follows (this information has been audited):
Name of director
Executive directors
Angus MacSween
Richard Logan
Sarah Haran 1
Non-executive directors
Chris Batterham 2
Crawford Beveridge
Ian Ritchie
Ian Steele 3
Salary or fees
£
Bonus
£
Benefits
£
330,000
196,000
191,000
231,000
137,200
133,700
4,210
2,669
940
14,090
25,000
55,000
27,462
-
-
-
-
-
-
-
-
1 Sarah Haran stepped down from the Board on 31 March 2017
2 Chris Batterham stepped down from the Board on 24 August 2016
3 Ian Steele joined the Board on 15 June 2016
Pension
contributions
£
Year ended
31 March
2017
Total
£
Year ended
31 March
2016
Total
£
-
-
-
-
-
-
-
565,210
335,869
325,640
595,706
373,020
361,660
14,090
25,000
55,000
27,462
35,000
25,000
55,000
-
Directors’ interests in shares
The interests of the directors in the shares of the company at 31 March 2017, together with their interests at 1 April 2016
were as follows:
Name of director
Angus MacSween
Chris Batterham (resigned 24 August 2016)
Crawford Beveridge
Sarah Haran (resigned 31 March 2017)
Richard Logan
Ian Ritchie
Ian Steele (appointed 15 June 2016)
Number of ordinary shares
31 March 2017
At 1 April 2016
16,998,789
16,994,087
n/a
30,000
1,956,449
962,095
156,102
-
90,621
30,000
1,963,747
969,393
151,400
n/a
25
iomart Group plc Annual report and accounts 2017 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 2017 in options over the ordinary shares of the Company were as follows:
At 31
March
2017
Exercise
price
Date of
Grant
Date from
which
exerciseable
Expiry
date
43,010
46.5p
06/10/2008
31/03/2009
06/10/2018
113,334
113,333
113,333
1p
1p
1p
27/03/2013
31/05/2014
27/03/2023
27/03/2013
31/05/2015
27/03/2023
27/03/2013
31/05/2016
27/03/2023
-
191.4p
08/01/2014
01/02/2017
31/07/2017
117,480
1p
25/09/2014
25/09/2017
25/09/2024
4,620
194.8p
12/08/2015
01/10/2018
31/03/2019
175,575
134,281
814,966
1p
1p
28/08/2015
28/08/2018
28/08/2028
01/04/2016
01/04/2019
01/04/2026
-
50.5p
27/09/2007
27/09/2010
27/09/2017
42,913
80,000
80,000
80,000
46.5p
06/10/2008
31/03/2009
06/10/2018
1p
1p
1p
27/03/2013
31/05/2014
27/03/2023
27/03/2013
31/05/2015
27/03/2023
27/03/2013
31/05/2016
27/03/2023
-
191.4p
08/01/2014
01/02/2017
31/07/2017
68,000
1p
25/09/2014
25/09/2017
25/09/2024
4,620
194.8p
12/08/2015
01/10/2018
31/03/2019
85,253
70,574
3,529
514,889
28,495
80,000
80,000
80,000
1p
1p
1p
28/08/2015
28/08/2018
28/08/2028
01/04/2016
01/04/2019
01/04/2026
24/08/2016
24/08/2019
24/08/2026
46.5p
06/10/2008
31/03/2010
06/10/2018
1p
1p
1p
27/03/2013
31/05/2014
27/03/2023
27/03/2013
31/05/2015
27/03/2023
27/03/2013
31/05/2016
27/03/2023
-
191.4p
08/01/2014
01/02/2017
31/07/2017
72,080
1p
25/09/2014
25/09/2017
25/09/2024
4,620
194.8p
12/08/2015
01/10/2018
31/03/2019
87,557
72,481
7,428
512,661
1p
1p
1p
28/08/2015
28/08/2018
28/08/2028
01/04/2016
01/04/2019
01/04/2026
24/08/2016
24/08/2019
24/08/2026
-
191.4p
08/01/2014
01/02/2017
31/07/2017
4,620
4,620
194.8p
12/08/2015
01/10/2018
31/03/2019
Name of
director
At 1 April
2016
Exercised
Granted
Lapsed
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Angus
MacSween
Sarah
Haran
Richard
Logan
43,010
113,334
113,333
113,333
-
-
-
-
4,702
(4,702)
117,480
4,620
175,575
-
-
-
-
-
-
-
-
-
-
-
-
-
134,281
685,387
(4,702)
134,281
58,115
(58,115)
42,913
80,000
80,000
80,000
4,702
68,000
4,620
85,253
-
-
-
-
-
-
(4,702)
-
-
-
-
-
503,603
(62,817)
28,495
80,000
80,000
80,000
4,702
72,080
4,620
87,557
-
-
-
-
-
-
(4,702)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
70,574
3,529
74,103
-
-
-
-
-
-
-
-
72,481
7,428
437,454
(4,702)
79,909
Ian
Ritchie
4,702
4,620
9,322
(4,702)
-
(4,702)
-
-
-
26
iomart Group plc Annual report and accounts 2017 Report of the board to the members on directors' remuneration
During the year options over 288,293 ordinary shares (2016: 348,385) were granted to Directors under the unapproved share option
scheme with an average exercise price of 1.0p per share (2016: 1.0p per share) and no options over ordinary shares under the
Sharesave scheme were granted to Directors (2016: 18,480 with an average exercise price of 194.8p per share).
Between 25 August 2016 and 26 August 2016, Richard Logan sold 6,000 ordinary shares at an average price of 307.3p per share
resulting in proceeds of £18,440. Over the same time period, Mr Logan’s spouse sold 6,000 ordinary shares at an average price of
307.3p per share resulting in proceeds of £18,440. On 26 August 2016, Sarah Haran sold 6,000 ordinary shares for 306.0p per share
resulting in proceeds of £18,360. Between 30 August 2016 and 31 August 2016, Mrs Haran’s spouse sold 6,000 ordinary shares at an
average price of 297.5p per share resulting in proceeds of £17,850.
On 6 December 2016, Sarah Haran exercised 58,115 share options under the Company’s Enterprise Management Incentive Share
Option Scheme at an exercise price of 50.5p. Mrs Haran sold the resulting 58,115 ordinary shares on 7 December 2016 at a price of
289.0p per share resulting in a gain on exercise of £138,604. The market price on the date of exercise was 291.3p.
On 1 February 2017, Angus MacSween, Richard Logan, Sarah Haran and Ian Ritchie each exercised 4,702 share options under the
Company’s sharesave scheme at an exercise price of 191.4p per share each resulting in a gain on exercise of £5,436. The market price
on the date of exercise was 307.0p.
The market price of the company’s shares at the end of the financial period was 296.5p and the range of prices during the period was
between 245.0p and 325.0p.
By order of the board
Crawford Beveridge
Chairman, Remuneration committee
12 June 2017
27
iomart Group plc Annual report and accounts 2017 Directors' Report
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 2017.
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.
The Group has a £60m multi option revolving credit facility with Lloyds Banking Group plc. At the start of the year there was £34.5m
outstanding on the multi option revolving credit facility and there were no drawdowns made from the facility during the year.
Repayments totalling £16.0m were made resulting in a balance outstanding at the end of the year of £18.5m.
The 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 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 3.32% (2016: 3.17%).
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. As a
consequence, at 31 March 2017, £2m 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 £84,000 (2016: £64,000) which has
been recognised in profit or loss for the year.
The Group’s borrowings at 31 March 2017 comprise finance leases totalling £0.9m (2016: £1.4m) and bank facility usage totalling
£18.5m (2016: £34.5m). The interest rates on the finance leases are fixed for the term of the lease at between 9.3% and 11.5% and
the average interest rate was 11.2% (2016: 9.9%).
The Group has exposure to movements in the exchange rate of the US dollar as certain domain name purchases and licences 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 2017 (2016: nil). The directors recommend a final
dividend for the year ended 31 March 2017 of 6.00p per share (2016: 3.15p 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.
Post balance sheet events
On 17 May 2017 the Company acquired the entire share capital of Dediserve Limited. Further details of the acquisition have been
given in note 31.
Future developments
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 7 to 15.
28
iomart Group plc Annual report and accounts 2017 Directors' Report
Directors and their interests
The present membership of the board is set out on page 84 and the directors who served during the year are listed on page 25. In
accordance with the company’s Articles of Association Angus MacSween, Richard Logan and Crawford Beveridge are due to retire by
rotation. Angus MacSween and Richard Logan 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 22 to 27.
Insurance for directors and officers
The Company has purchased and maintains appropriate insurance cover against legal action brought against directors and officers.
Substantial shareholdings
At 30 May 2017 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
Liontrust Asset Management
Angus MacSween
Octopus Investments
Schroders plc
Investec Wealth & Investment
Noble Grossart Investment Limited
Shares
Percentage held
17,182,408
16,998,789
10,767,142
7,727,716
4,077,324
3,505,000
15.97%
15.80%
10.01%
7.18%
3.79%
3.26%
Transactions in own shares
During the year 745,797 (2016: 98,567) 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 £1,065,018 (2016: £91,374) 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
12 June 2017
29
iomart Group plc Annual report and accounts 2017 Directors' Responsibilities Statement
The directors are responsible for preparing the Strategic Report and Directors’ Report, and the Group and Parent Company financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have to
prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European
Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and
fair view of the state of affairs and profit or loss of the Company and Group for that period. In preparing these financial statements,
the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable IFRSs have been followed for the Group financial statements and whether United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws) have been followed for the Parent
Company financial statements, subject to any material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will
continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Parent
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and
enable them to ensure that the Group and Parent Company financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and Parent Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
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.
30
iomart Group plc Annual report and accounts 2017
Independent Auditor's Report to the Members of iomart Group Plc
We have audited the Group financial statements of iomart Group Plc for the year ended 31 March 2017 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 30, 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 parent company financial statements:
• give a true and fair view of the state of the Group's affairs as at 31 March 2017 and of its profit for the year then ended;
• have been properly prepared in accordance with IFRS as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors' report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors' report.
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 Group, or returns adequate for our audit have not been received from
branches not visited by us; or
• the Group 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 on the information in the Directors’ Remuneration Report that is described as having been audited and have
reported separately on the parent company financial statements of iomart Group plc for the year ended 31 March 2017.
Robert Hannah
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Glasgow
12 June 2017
31
iomart Group plc Annual report and accounts 2017 Consolidated statement of comprehensive income. Year ended 31March 2017
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
4
4
27
6
4
4
4
30
7
7
2017
£’000
89,573
2016
£’000
76,280
(32,266)
(24,650)
57,307
51,630
(41,074)
(37,917)
16,233
13,713
36,570
32,341
(1,844)
(104)
(1,081)
(116)
(10,972)
(10,878)
(5,558)
(1,859)
(5,354)
(1,199)
-
22
870
128
(1,601)
(1,687)
14,654
13,024
9
(2,571)
(2,005)
Profit for the year attributable to equity holders of the parent
12,083
11,019
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
22
22
10
10
12,105
11,029
12
12
11.27 p
11.08 p
10.32 p
10.17 p
The following notes form part of the financial statements.
32
iomart Group plc Annual report and accounts 2017
Consolidated statement of financial position. Year ended 31March 2017
Note
2017
£’000
2016
£’000
ASSETS
Non-current assets
Intangible assets – goodwill
Intangible assets – other
Lease deposits
Property, plant and equipment
Current assets
Cash and cash equivalents
Trade and other receivables
Total assets
LIABILITIES
Non-current liabilities
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
13
13
14
16
18
17
21
22
20
23
10
21
19
23
22
25
26
62,000
19,707
2,760
35,049
119,516
8,906
15,080
23,986
61,123
23,065
2,760
36,045
122,993
10,341
13,718
24,059
143,502
147,052
-
(625)
(102)
(1,721)
(888)
(3,336)
(2,373)
(23,368)
(38)
(2,000)
(18,872)
(46,651)
(2,068)
(826)
(455)
(1,879)
(2,075)
(7,303)
(1,135)
(19,532)
(211)
(1,504)
(35,098)
(57,480)
(49,987)
(64,783)
93,515
82,269
1,078
(120)
1,200
21,067
4,983
(15)
65,322
93,515
1,078
(489)
1,200
21,067
4,983
(37)
54,467
82,269
These financial statements were approved by the board of directors and authorised for issue on 12 June 2017.
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 financial statements
33
iomart Group plc Annual report and accounts 2017
Consolidated statement of cash flows. Year ended 31March 2017
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 (used in)/received from financing activities
Note
30
7
4
4
27
16
13
13
22
22
8
2017
£’000
14,654
-
1,579
10,972
7,417
1,844
837
480
37,783
(3,874)
33,909
2016
£’000
13,024
(870)
1,559
10,878
6,553
1,081
(1,612)
298
30,911
(4,311)
26,600
(10,189)
(12,385)
(1,372)
(1,845)
(703)
(1,161)
-
22
(1,123)
(1,207)
(15,924)
(1,650)
(300)
33
(15,248)
(32,556)
1,064
-
(580)
(16,000)
(1,205)
(3,375)
(20,096)
91
16,500
(984)
(3,500)
(1,489)
(2,668)
7,950
Net (decrease)/increase in cash and cash equivalents
(1,435)
1,994
Cash and cash equivalents at the beginning of the year
10,341
8,347
Cash and cash equivalents at the end of the year
18
8,906
10,341
The following notes form part of the financial statements.
34
iomart Group plc Annual report and accounts 2017 Consolidated statement of changes in equity. Year ended 31March 2017
Changes in equity
Share
capital
£’000
Own
shares
EBT
£’000
Own
shares
Treasury
£’000
Note
Foreign
currency
translation
reserve
£’000
Capital
redemption
reserve
£’000
Share
premium
account
£’000
Merger
reserve
£’000
Retained
earnings
£’000
Total
£’000
Balance at 1 April 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
Balance at 31 March
2016
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
Balance at 31 March
2017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49
49
-
10
10
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,019 11,019
-
10
11,019 11,029
(2,668)
(2,668)
1,081
1,081
57
42
57
91
(1,488)
(1,439)
1,078
(70)
(419)
(37)
1,200
21,067
4,983
54,467 82,269
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
369
369
-
22
22
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,083 12,083
-
22
12,083 12,105
(3,375)
(3,375)
1,844
1,844
(392)
(392)
695
1,064
(1,228)
(859)
1,078
(70)
(50)
(15)
1,200
21,067
4,983
65,322 93,515
The following notes form part of the financial statements.
35
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
Cloud Services segment
Under IFRS 15 some set-up fees charged on contracts,
which are currently recognised when the set-up is
complete, will require to be spread over the life of the
contract.
The impact of any changes, both individually and in
aggregate are not expected to be material to the
revenue or profits in any given financial year.
Easyspace segment
The total revenue from the provision of domain names
is currently recognised at the point of sale when the
title to the domain name passes to the customer.
Under IFRS 15 this revenue will require to be split
between the registration of the domain and the
ongoing services, such as support and mail forwarding,
which are provided by the company over the period of
registration of the domain.
As with the Cloud Services segment, the impact of any
changes, both individually and in aggregate are not
expected to be material to the revenue or profits in any
given financial year.
Non-recurring segment
The current accounting policies within the non-recurring
segment comply fully with IFRS 15, and as such, no
adjustments will be required.
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.
Summary of Accounting Policies
Basis of consolidation
The Group financial statements consolidate those of the
Company and all of its subsidiary undertakings drawn up to 31
March 2017. 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.
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 84 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:
•
IAS 16 and IAS 38 - Amendments relating to Clarification
•
•
•
of Acceptable Methods of Depreciation and Amortisation.
IAS 27 - Amendments relating to Equity Method in Separate
Financial Statements.
IFRS 9 – Financial instruments.
IFRS 10 and IAS 28 - Amendments relating to Sale or
Contribution of Assets between an Investor and its Associate
or Joint Venture.
•
IFRS 11 - Amendments relating to Acquisitions of Interests in
Joint Operations.
• Annual Improvements to IFRSs 2012 - 2014 cycle.
New standards and interpretations of existing standards
that are not yet effective and have not been adopted early
by the Group
IFRS 15, Revenue from Contracts with Customers, becomes
effective for the Group on 1 April 2018. The guidance permits
two methods of adoption: retrospectively to each prior
reporting period presented (full retrospective method), or
retrospectively with the cumulative effect of initially applying
the guidance recognised at the date of initial application (the
cumulative catch-up transition method). It is expected that the
Group will adopt the cumulative catch-up transition method.
The Group is currently performing a detailed analysis of the
impact of IFRS 15 on all aspects of its business. The preliminary
analysis has been substantially completed and the indications
are that the vast majority of the Group’s current accounting
policies as regards revenue recognition will not change as a
result of the adoption of IFRS 15.
The review has identified some minor areas in which adjustments
may be required in revenue and cost recognition and in the
related procedures and processes. The areas which are likely
to be affected are in relation to set-up fees within the Cloud
Services segment and revenue from domain registration within
the Easyspace segment.
36
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
2. ACCOUNTING POLICIES (CONTINUED)
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.
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.
Non-recurring
This operating segment provides data storage, backup and
virtualisation solutions. Revenue from the supply of hardware or
software, and the provision of services in respect of installation
or training, is recognised when delivery and installation of
the equipment is completed. Revenue from the sale of cloud
computing facilities and support services is spread evenly over
the period of the agreement and only after the service has been
established. Any unearned portion of revenue is included in
payables as deferred revenue.
Interest
Interest is recognised on an accruals basis using the effective
interest method.
Intangible assets
is capitalised
Goodwill
Goodwill arising on consolidation
in the
consolidated statement of financial position and, subject to an
annual impairment test, has an indefinite life. The carrying value
of goodwill is cost less accumulated impairment losses and is
allocated to cash generating units for the purpose of impairment
testing. The allocation is made to those cash generating units
that are expected to benefit from the business combination.
Impairment reviews are carried out by the Board at least
annually. Impairments to goodwill are charged to profit or loss
in the period in which they arise.
Customer relationships
Customer relationships are recognised only on acquisition.
The fair value is derived based on discounted cash flows from
estimated recurring revenue streams. The carrying value is
stated at fair value at acquisition less accumulated amortisation
and impairment losses. The useful economic life is assessed for
each acquisition separately. Amortisation is charged over the
useful life of the relationships in proportion to the estimated
future cash flows, a period which is generally between five and
eight years.
Research and development
Expenditure on research (or the research phase of an
internal project) is recognised as an expense in the period
in which it is incurred. Development costs incurred are
capitalised when all the following conditions are satisfied:
•
completion of the intangible asset is technically feasible so
that it will be available for use or sale
• the Group intends to complete the intangible asset and use
or sell it
• the Group has the ability to use or sell the intangible asset
• the intangible asset will generate probable future economic
benefits
• there are adequate technical, financial and other resources
to complete the development and to use or sell the
intangible asset, and
• the expenditure attributable to the intangible asset during its
development can be measured reliably.
Development costs not meeting the criteria for capitalisation
are expensed as incurred. The 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.
37
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
2. ACCOUNTING POLICIES (CONTINUED)
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.
Adjusted Profit before Tax
Adjusted profit before tax is defined as profit before tax adjusted
for the following:
• amortisation charges on acquired intangible assets;
•
• mark to market adjustments in respect of interest rate
share based payment charges;
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.
38
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
Between 20% and 50% per annum
Office equipment
Between 10% and 25% per annum
Datacentre equipment
Between 6% and 10% per annum
Motor vehicles
25% per annum
Land
Not depreciated
Impairment testing of goodwill, other intangible assets
and property, plant and equipment
For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash-generating units). As a result, some assets
are tested individually for impairment and some are tested at
cash-generating unit level. Goodwill is allocated to those cash-
generating units that are expected to benefit from synergies of
the related business combination and represent the lowest level
within the Group at which management monitors goodwill.
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
2. ACCOUNTING POLICIES (CONTINUED)
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.
(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.
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 determine a suitable interest rate to
calculate 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. 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
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.
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.
39
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
2. ACCOUNTING POLICIES (CONTINUED)
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.
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.
40
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.
Equity
Equity comprises the following:
•
•
•
•
•
•
•
•
“Share capital” represents the nominal value of equity shares.
“Own shares Treasury” represents the amount of the
Company’s own equity shares, plus attributable transaction
costs, that is held by the Company as treasury shares.
“Own shares EBT” represents the amount of the Company’s
own equity shares, plus attributable transaction costs, that
is held by the Company within the iomart Group plc Employee
Benefit Trust.
“Share premium” represents the excess over nominal value of
the fair value of consideration received for equity shares, net
of expenses of the share issue.
“Merger reserve” represents the excess over nominal value
of the fair value of consideration received for equity shares,
net of expenses of the share issue, when ordinary share
capital is included in the consideration for business
acquisitions.
“Capital redemption reserve” represents set aside reserves in
relation to previous redemption of own shares.
“Foreign currency translation reserve” represents all exchange
differences on the translation of the results and financial
position of Group entities that have a functional currency
different from the presentation currency.
“Retained earnings” represents retained profits.
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
2. ACCOUNTING POLICIES (CONTINUED)
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.
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 7 to 15. The financial position of
the Group, its cash flows, liquidity position and borrowing facilities
are described in the Finance Director’s Report on pages 7 to 10.
In addition, Note 30 to the financial statements includes 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 £18.5m is drawn down at the year end and
which is available until June 2019. The net debt balances at the
end of the period stood at £10.6m (2016: £25.6m) 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.
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.
41
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
3. SEGMENTAL ANALYSIS
The chief operating decision-maker has been identified as the Chief Executive Officer (“CEO”) of the Company. The Group has three
operating segments and the CEO reviews the Group’s internal reporting which recognises these three segments in order to assess
performance and to allocate resources. The Group has determined its reportable segments which are also its operating segments
based on these reports.
The Group currently has three operating and reportable segments. In the previous year there were only two segments. During the year
the Group acquired Cristie Data. Unlike the other operations in the Group, Cristie Data has largely non-recurring revenue and therefore
this has been included in a separate segment.
• Easyspace – this segment provides a range of shared hosting and domain registration services to micro and SME companies.
• Cloud Services – this segment provides managed cloud computing facilities and services, through a network of owned datacentres,
to the larger SME and corporate markets. The segment uses several routes to market including iomart Cloud, RapidSwitch,
Redstation, Backup Technology and SystemsUp.
• Non-recurring – this segment provides data storage, backup and virtualisation solutions across a range of sectors, from SMEs to
large enterprises, encompassing both public and private sector.
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 three segments as
reported internally. Group overheads include the cost of the Board, all the costs of running the premises in Glasgow, the Group
marketing, human resource, finance and design functions and legal and professional fees.
The segment information is prepared using accounting policies consistent with those of the Group as a whole.
The assets and liabilities of the Group are not reviewed by the chief operating decision-maker on a segment basis. Therefore none of
the Group’s assets and liabilities are segmental assets and liabilities and are all unallocated for segmental disclosure purposes. For that
reason the Group has not disclosed details of segmental assets and liabilities.
All segments are continuing operations. No customer accounts for 10% or more of external revenues. Inter-segment transactions are
accounted for using an arms-length commercial basis.
Operating Segments
Revenue by Operating Segment
Easyspace
Cloud Services
Non-recurring
External
£’000
13,249
72,685
3,639
89,573
2017
Internal
£’000
12
1,538
-
1,550
Total
£’000
13,261
74,223
3,639
91,123
External
£’000
10,883
65,397
-
76,280
2016
Internal
£’000
-
1,114
-
1,114
Total
£’000
10,883
66,511
-
77,394
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
42
2017
£’000
75,163
14,410
89,573
2016
£’000
64,218
12,062
76,280
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
3. SEGMENTAL ANALYSIS (CONTINUED)
Profit by Operating Segment
2017
Depreciation,
amortisation,
acquisition
costs and
share based
payments
£’000
(948)
(17,120)
(321)
-
(104)
(1,844)
Adjusted
EBITDA
£’000
6,244
33,680
326
(3,680)
-
-
Operating
profit/(loss)
£’000
5,296
16,560
5
(3,680)
(104)
(1,844)
Adjusted
EBITDA
£’000
5,094
31,084
-
(3,837)
-
-
2016
Depreciation,
amortisation,
acquisition
costs and
share based
payments
£’000
(815)
(16,616)
-
-
(116)
(1,081)
Operating
profit/(loss)
£’000
4,279
14,468
-
(3,837)
(116)
(1,081)
36,570
(20,337)
16,233
32,341
(18,628)
13,713
36,570
(20,337)
-
(4,150)
12,083
32,341
(18,628)
870
(3,564)
11,019
Easyspace
Cloud Services
Non-recurring
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
2017
£’000
2016
£’000
19,184
16,751
10,495
477
10,171
707
2,623
76
5,558
1,859
74
1,399
622
(524)
5,736
2,714
91
5,354
1,199
168
1,429
513
(39)
5,744
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 advisory
- Tax compliance
2017
£’000
2016
£’000
55
77
6
23
50
50
66
19
-
50
211
185
43
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
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
2017
£’000
1,348
-
819
565
-
2016
£’000
1,408
38
655
596
-
During the year the Company did not make any personal pension contributions to personal pension schemes of the directors (2016: 2).
The aggregate amount of gains realised by directors on the exercise of share options during the year was £161,600 (2016: £98,200).
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 22 to 27.
Average number of persons employed by the Group (including directors):
Technical
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
2017
No.
242
99
46
387
2016
No.
224
97
55
376
2017
£’000
2016
£’000
16,739
1,726
172
1,844
20,481
15,194
1,612
155
1,081
18,042
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 22 to 27. In the case of senior employees,
pension contributions to individuals’ personal pension arrangements are payable by the Group at a rate equal to the contribution
made by the senior employee subject to a maximum employer contribution of 5% of basic salary.
6. ACQUISITION COSTS
Professional fees
Non-recurring integration costs:
-
-
Total acquisition costs
Onerous lease provisions
Other
2017
£’000
99
-
5
104
2016
£’000
263
(169)
22
116
During the year costs of £99,000 (2016: £263,000) were incurred in respect of professional fees on acquisitions and £5,000 (2016:
£22,000) other costs directly related to the integration of acquisitions into the Group were also incurred. In the previous year a one-off
credit of £169,000 was earned in relation to provisions (note 23).
44
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
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
Net finance cost
2017
£’000
22
-
22
(1,131)
(172)
(52)
(1,355)
84
-
(330)
2016
£’000
21
107
128
(1,109)
(251)
(62)
(1,422)
64
(177)
(152)
(1,601)
(1,687)
(1,579)
(1,559)
Included in other interest income is £nil (2016: £95,000) in respect of leasehold deposits and £nil (2016: £12,000) other interest.
8. DIVIDENDS ON SHARES CLASSED AS EQUITY
Paid during the year:
Final dividend
Equity dividends on ordinary shares
2017
Pence per
share
2017
£’000
2016
Pence per
share
2016
£’000
3.15p
3,375
2.50p
2,668
The directors have recommended a final dividend for the year ended 31 March 2017 of 6.00p per share (2016: 3.15p per share).
Subject to shareholder approval this proposed final dividend would be payable on 6 September 2017 to shareholders on the register
as of 11 August 2017.
45
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
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
2017
£’000
(4,349)
(12)
(4,361)
1,751
227
27
(215)
1,790
2016
£’000
(3,663)
52
(3,611)
1,482
31
61
32
1,606
Total taxation charge
(2,571)
(2,005)
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% (2016 – 20%)
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 years
2017
£’000
2016
£’000
14,654
13,024
2,931
2,605
134
-
12
5
215
(326)
(151)
(13)
(9)
(227)
67
(174)
(52)
(53)
(32)
(335)
(206)
228
(12)
(31)
Taxation charge for the year
2,571
2,005
The weighted average applicable tax rate for the year ended 31 March 2017 was 20% (2016: 20%). The total current corporation tax
charge for the year of £4,349,000 (2016: £3,663,000) on operations represents 29.7% (2016: 28.1%) of the Group profit before tax of
£14,654,000 (2016: £13,024,000). 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 17.5% (2016: 15.4%). The increase of 2.1% is mainly due to the reduction in future corporation rates which has
had an adverse impact on the deferred tax charge relating to our deferred tax assets, a prior year adjustment in deferred tax relating
to the lower availability of capital allowances than previously anticipated and the absence of non-taxable income in the year when in
the previous year the gain on the revaluation of contingent consideration was non-taxable. This has been partially offset by a prior year
adjustment in deferred tax relating to share based payments and the absence of a deferred tax charge relating to development costs
in the current year following the initial recognition of a deferred tax liability in the prior year.
A number of changes to the UK Corporation tax system were announced in the March 2016 Budget Statement with the main rate
of corporation tax reduced from 18% to 17% from 1 April 2020. These changes were substantively enacted at the period end and
therefore are included in these financial statements.
46
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
10. DEFERRED TAX
The Group recognised deferred tax assets and liabilities as follows:
2017
2016
Deferred tax
Recognised
£’000
Deferred tax
Unrecognised
£’000
Deferred tax
Recognised
£’000
Deferred tax
Unrecognised
£’000
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
1,135
1,181
(311)
(326)
(2,567)
(888)
-
-
-
-
-
-
1,010
1,103
(195)
(442)
(3,551)
(2,075)
At the year end, the Group had no unused tax losses (2016: £nil) available for offset against future profits.
-
-
-
-
-
-
The movement in the deferred tax account during the year was:
Tax losses
carried
forward
£’000
Share based
remuneration
£’000
Capital
allowances
temporary
differences
£’000
Development
costs
£’000
Deferred
tax on
acquired
assets with
no capital
allowances
£’000
Customer
relationships
£’000
Total
£’000
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
Acquired on acquisition of
subsidiary
Charged 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 2017
289
-
-
(289)
-
-
-
-
-
-
-
-
-
575
-
57
389
-
(11)
873
(24)
-
378
-
(124)
-
-
-
(605)
(3,219)
(2,087)
-
-
(1,627)
(1,651)
-
57
(195)
115
1,115
1,513
-
-
-
48
61
119
61
32
1,010
1,103
(195)
(442)
(3,551)
(2,075)
-
(392)
546
-
(29)
1,135
(14)
-
321
-
(229)
1,181
-
-
-
-
(186)
(200)
-
(392)
(116)
108
1,108
1,967
-
-
-
8
27
35
27
(215)
(311)
(326)
(2,567)
(888)
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.
47
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
11. ACQUISITIONS
Cristie Data Limited
The Group acquired 100% of the issued share capital of Cristie Data Limited (“Cristie”) on 25 August 2016.
Cristie is a Stroud based data storage, backup and virtualisation solutions provider, which has operated across all sectors of industry
from SMEs to large enterprises, and public sector to private sector for over 40 years. Cristie is particularly active in the education and
health sectors, which offers the opportunity for the Group to increase its presence in these areas. The acquisition is in line with the
Group’s strategy to grow its operations both organically and by acquisition.
During the current period the Group incurred £99,000 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 2017.
The following table summarises the consideration to acquire Cristie 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 borrowings
Current income tax liabilities
Deferred tax liability
Identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash – paid on acquisition
Total consideration to be transferred
£’000
3,104
2,226
206
982
(3,358)
(25)
(33)
(200)
2,902
877
3,779
3,779
3,779
The agreed purchase price for the shares, on a cash-free, debt-free, normalised working capital basis was £1,250,000. On the date of
the acquisition a payment of £3,779,000 was made in cash, including an amount of £2,529,000 in settlement in respect of the additional
debt assumed, cash acquired and normalised working capital position of Cristie at completion.
The goodwill arising on the acquisition of Cristie 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 Cristie Data is not actively advertised or promoted, with the majority of Cristie’s business being generated from existing
customers, by word of mouth or from attendance at trade exhibitions. Cristie’s privacy policy includes a commitment not to sell,
distribute or lease any personal information it holds on customers unless the customer’s permission is given. 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.
48
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
11. ACQUISITIONS (CONTINUED)
Cristie Data Limited (continued)
The fair value included in respect of the acquired customer relationships intangible asset is £982,000.
To estimate the fair value of the customer relationships intangible asset, a discounted cash flow method, specifically the income
approach, was used with reference to the directors’ estimates of the level of revenue which will be generated from them. A post-tax
discount rate of 11.22% was used for the valuation. Customer relationships are being amortised over an estimated useful life of 5 years.
The fair value of the financial assets acquired includes trade receivables with a fair value of £496,000. The gross amount due under
contracts is £500,000 of which £4,000 are expected to be uncollectable.
Provisional fair values of the acquired assets and liabilities, including goodwill, were reported in the interim report for the 6 months
ended 30 September 2016. Following a detailed review of Cristie’s accounting policies in respect of revenue recognition, the policy
relating to the sale of third party maintenance and support contracts was changed to defer the revenue over the life of the contract, in
compliance with FRS 101, rather than recognising it in full when the sale was completed. The treatment of the cost of purchasing the
third party maintenance and support contracts, which was previously expensed in full when paid, has also been changed to spread the
costs over the life of the contract, with the deferred element of the cost being included in receivables.
These adjustments have been reflected in the table of net assets acquired and liabilities assumed with trade and other payables being
increased by £1,997,000, offset by an increase of £1,655,000 in trade and other receivables, and a reduction in current income tax
liabilities of £66,000, to give an increase in goodwill of £276,000.
The fair values of the acquired assets and liabilities, including goodwill, are now final.
Cristie earned revenue of £3,639,000 and generated profits, before allocation of group overheads, share based payments and tax, of
£235,000 in the period since acquisition.
United Communications Limited
The fair values of acquired assets and liabilities, including goodwill, previously disclosed as provisional for United Communications
Limited have been finalised in the current period with no changes to the fair values disclosed in the Annual Report and Accounts 2016.
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 2016. The
amounts include the results of the acquired business, 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 2017
£’000
91,262
11,939
49
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
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
2017
£’000
2016
£’000
12,083
11,019
No
000
107,803
(465)
(141)
107,197
No
000
107,803
(898)
(141)
106,764
Dilutive impact of share options
1,808
1,609
Weighted average number of ordinary shares - diluted
109,005
108,373
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
50
11.27 p
11.08 p
10.32 p
10.17 p
2017
£’000
2016
£’000
12,083
11,019
5,558
104
1,844
(84)
-
330
-
(1,313)
5,354
116
1,081
(64)
177
152
(870)
(1,311)
18,522
15,654
17.28 p
16.99 p
14.66 p
14.44 p
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
13. INTANGIBLE ASSETS
Goodwill
£’000
Development
costs
£’000
Customer
relationships Software
£’000
£’000
Beneficial
contracts
£’000
Domain
names & IP
addresses
£’000
Cost
At 1 April 2015
Additions
Currency translation
differences
Acquired on acquisition of
subsidiary
Development cost capitalised
At 31 March 2016
Additions
Currency translation
differences
Acquired on acquisition of
subsidiary
Development cost capitalised
47,342
-
-
13,781
-
61,123
-
-
877
-
At 31 March 2017
62,000
Accumulated amortisation:
3,709
-
-
-
1,123
4,832
-
-
-
1,372
6,204
26,431
23
8,428
-
34,882
101
982
-
2,114
1,020
3
-
-
3,137
1,670
40
-
-
86
-
-
-
-
86
-
-
-
-
280
-
-
-
-
280
-
-
-
-
35,965
4,847
86
280
109,382
Total
£’000
79,962
1,020
26
22,209
1,123
104,340
1,670
141
1,859
1,372
At 1 April 2015
Currency translation
differences
Charge for the year
At 31 March 2016
Currency translation
differences
Charge for the year
At 31 March 2017
Carrying amount:
-
-
-
-
-
-
-
(2,496)
(9,945)
(1,003)
-
(16)
(4)
(698)
(3,194)
(5,347)
(15,308)
(446)
(1,453)
-
(77)
(29)
(989)
(4,183)
(5,551)
(20,936)
(815)
(2,297)
At 31 March 2017
62,000
2,021
15,029
2,550
At 31 March 2016
61,123
1,638
19,574
1,684
(19)
-
(7)
(26)
-
(7)
(33)
53
60
(116)
(13,579)
-
(20)
(55)
(171)
(6,553)
(20,152)
-
(106)
(55)
(226)
(7,417)
(27,675)
54
81,707
109
84,188
Of the total additions in the year of £1,670,000 (2016: £1,020,000), £122,000 (2016: £297,000) was included in trade payables as unpaid
invoices at the year end resulting in a net cash outflow of £175,000 (2016: net cash outflow £187,000) in trade payables. Consequently,
the consolidated statement of cash flows discloses a figure of £1,845,000 (2016: £1,207,000) 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 £4.1m and a remaining useful life of 5 years; United Hosting with a net book value of £4.3m
and a remaining useful life of 7 years; Melbourne Server Hosting with a net book value of £2.0m and a remaining useful life of 4 years;
and ServerSpace with a net book value of £1.7m and remaining useful life of 6 years.
During the year, goodwill was reviewed for impairment in accordance with IAS 36 “Impairment of Assets”. No impairment charges (2016:
£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 Cristie Data acquisition has been allocated to the Non-recurring CGU as this is
the CGU expected to benefit from the business combination.
51
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
13. INTANGIBLE ASSETS (CONTINUED)
The carrying value of goodwill by each CGU is as follows:
Cash Generating Units (CGU)
Easyspace
Cloud Services
Non-recurring
2017
£’000
23,210
37,913
877
62,000
2016
£’000
23,210
37,913
-
61,123
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
Non-
recurring
13%
2.5%
2.0%
2
12%
3.4%
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 (2016: £2,760,000) are made up of a rental deposit of £784,000 (2016: £784,000) and a reinstatement
deposit of £1,976,000 (2016 £1,976,000). 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 deposits at the prevailing market rate and therefore they have not been discounted.
52
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
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
%
Backup Technology Holdings Limited
England
Non-trading
Backup Technology Limited
Cristie Data Limited
Easyspace Limited
EQSN Limited
Global Gold Holdings Limited
Global Gold Network Limited
Internet Engineering Limited
Internetters Limited
iomart Cloud Inc
England
England
Non-trading
Provision of data storage,
backup and virtualisation
solutions
England Webservices
Scotland
Non-trading
England
Non-trading
England Webservices
England
Non-trading
England
Dormant
USA
Managed hosting services
iomart Cloud Services Limited
Scotland
Managed hosting services
iomart Datacentres Limited
iomart Development Limited
iomart Hosting Limited
iomart Limited
England
Non-trading
Scotland
Dormant
Scotland
Managed hosting services
Scotland
Dormant
iomart Virtual Servers Hosting Limited
Scotland
Dormant
Melbourne Server Hosting Limited
England
Managed hosting services
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
England
Dormant
Scotland
Dormant
England
Dormant
England
Non-trading
England
Non-trading
England
Non-trading
England
Managed hosting services
England
Non-trading
England Webservices
England Webservices
England
Consultancy services
England
Non-trading
England Webservices
England
Non-trading
100
-
100
100
100
100
-
100
-
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
-
100
100
100
100
-
-
100
-
-
-
-
100
-
100
-
-
-
-
-
-
-
-
-
-
100
-
-
-
-
-
100
-
-
-
-
100
53
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
16. PROPERTY, PLANT AND EQUIPMENT
Freehold
property
£’000
Leasehold
improve-
ments
£’000
Datacentre
equipment
£’000
Computer
equipment
£’000
Office
equipment
£’000
Motor
vehicles
£’000
2,062
-
-
-
-
2,062
-
-
-
-
6,857
466
18,367
2,105
-
-
-
7,323
647
-
(3)
-
-
-
-
20,472
697
-
-
-
37,978
9,103
152
(15)
24
47,242
8,115
179
(58)
125
2,144
209
3
-
-
2,356
231
27
-
-
48
-
20
-
-
68
-
-
-
-
Total
£’000
67,456
11,883
175
(15)
24
79,523
9,690
206
(61)
125
2,062
7,967
21,169
55,603
2,614
68
89,483
(150)
(41)
-
-
(191)
(67)
-
-
(1,858)
(479)
-
-
(2,337)
(440)
3
-
(6,253)
(1,686)
(23,196)
(8,399)
-
-
15
(5)
(7,939)
(1,824)
(31,585)
(8,370)
-
-
58
(45)
(1,112)
(259)
-
-
(1,371)
(258)
-
-
(41)
(14)
-
-
(55)
(13)
-
-
(32,610)
(10,878)
15
(5)
(43,478)
(10,972)
61
(45)
(258)
(2,774)
(9,763)
(39,942)
(1,629)
(68)
(54,434)
Cost:
At 1 April 2015
Additions in the year
Acquisition of subsidiary
Disposals in the year
Currency translation
differences
At 31 March 2016
Additions in the year
Acquisition of subsidiary
Disposals in the year
Currency translation
differences
At 31 March 2017
Accumulated depreciation:
At 1 April 2015
Charge for the year
Disposals in the year
Currency translation
differences
At 31 March 2016
Charge for the year
Disposals in the year
Currency translation
differences
At 31 March 2017
Carrying amount:
At 31 March 2017
At 31 March 2016
1,871
4,986
12,533
15,657
1,804
5,193
11,406
15,661
985
985
-
13
35,049
36,045
The net book value of computer equipment held under finance lease at 31 March 2017 was £546,000 (2016: £930,000) and the net
book value of datacentre equipment held under finance lease at 31 March 2017 was £456,000 (2016: £536,000).
Of the total additions in the year of £9,690,000 (2016: £11,883,000), none (2016: £97,000) were funded by finance leases and £1,256,000
(2016: £1,755,000) was included in trade payables as unpaid invoices at the year end resulting in a net decrease of £499,000 (2016:
net decrease of £599,000) in trade payables. Consequently, the consolidated statement of cash flows discloses a figure of £10,189,000
(2016: £12,385,000) as the cash outflow in respect of property, plant and equipment additions in the year.
54
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
17. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Provision for impairment
Trade receivables (net)
Other receivables
Prepayments
Accrued income
Trade and other receivables
2017
£’000
7,157
(1,121)
6,036
553
7,889
602
2016
£’000
7,716
(850)
6,866
619
5,819
414
15,080
13,718
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 2017, £4,118,000 (2016: £4,460,000) of
net trade receivables were fully performing. Net trade receivables of £1,918,000 (2016: £2,406,000) 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
2017
£’000
1,887
-
31
2016
£’000
2,349
57
-
Total unimpaired trade receivables which are past due
1,918
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 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
2017
£’000
850
267
4
1,121
2017
£’000
8,906
8,906
2016
£’000
539
311
-
850
2016
£’000
10,341
10,341
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 0.33% (2016: 0.50%).
55
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
19. TRADE AND OTHER PAYABLES
Trade payables
Other taxation and social security
Accruals
Deferred income
Other creditors
Trade and other payables
2017
£’000
(5,958)
(2,385)
(6,660)
(8,257)
(108)
2016
£’000
(5,215)
(1,823)
(6,331)
(5,980)
(183)
(23,368)
(19,532)
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:
-
-
Systems Up Limited
United Communications Limited
Contingent consideration due on acquisitions after more than one year:
-
United Communications Limited
2017
£’000
(102)
(102)
2016
£’000
(455)
(455)
2017
£’000
2016
£’000
-
(2,373)
(2,373)
(135)
(1,000)
(1,135)
-
-
(2,068)
(2,068)
Total contingent consideration due on acquisitions
(2,373)
(3,203)
56
iomart Group plc Annual report and accounts 2017 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
Notes to the financial statements. Year ended 31March 2017
2017
£’000
2016
£’000
(233)
(18,639)
(18,872)
(573)
(34,525)
(35,098)
(625)
-
(625)
(826)
-
(826)
(19,497)
(35,924)
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
233
541
84
858
2017
Interest
£’000
81
170
3
254
Total
£’000
314
711
87
Capital
£’000
573
587
239
1,112
1,399
2016
Interest
£’000
130
237
24
391
Total
£’000
703
824
263
1,790
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 11.2% (2016: 9.9%). Lease payments are made on a monthly and quarterly
basis. The future lease obligation of £1,112,000 (2016: £1,790,000) has a present value of £858,000 (2016: £1,399,000).
At the start of the year there was £34.5m outstanding on the multi option revolving credit facility and there were no drawdowns
made from the facility during the year. Repayments totalling £16.0m were made resulting in a balance outstanding at the end of the
year of £18.5m.
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 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 3.32% (2016: 3.17%).
57
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
22. BORROWINGS (CONTINUED)
The future loan obligations of £18,722,000 (2016: £34,907,000) equate to a present value of £18,315,000 (2016: £33,922,000). The
capital element of the bank loans is £18,639,000 (2016: £34,525,000) and this differs from the net amount drawn down of £18,500,000
(2016: £34,500,000) 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
Capital
£’000
18,639
-
18,639
2017
Interest
£’000
83
-
83
Total
£’000
18,722
-
18,722
Capital
£’000
34,525
-
34,525
2016
Interest
£’000
382
-
382
Total
£’000
34,907
-
34,907
Analysis of change in net cash/(debt)
At 1 April 2015
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 2016
Repayment of bank loans
Impact of effective interest rate
Acquired on acquisition of subsidiaries
Currency translation differences
Cash flow
At 31 March 2017
23. PROVISIONS
Cash
and cash
equivalents
£’000
8,347
-
-
-
-
4,476
-
(2,482)
Bank
loans
£’000
(21,457)
3,500
(16,500)
(68)
-
-
-
-
Finance
leases
and hire
purchase
£’000
(2,284)
-
-
-
(97)
-
(2)
984
Total
£’000
(15,394)
3,500
(16,500)
(68)
(97)
4,476
(2)
(1,498)
10,341
(34,525)
(1,399)
(25,583)
-
-
3,104
-
(4,539)
8,906
16,000
(114)
-
-
-
-
-
-
(39)
580
16,000
(114)
3,104
(39)
(3,959)
(18,639)
(858)
(10,591)
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
58
2017
£’000
(38)
(38)
(1,721)
-
(1,721)
(1,759)
2016
£’000
(211)
(211)
(1,668)
(211)
(1,879)
(2,090)
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
23. PROVISIONS (CONTINUED)
The movement in the provisions during the year was as follows:
Balance at start of the year
Provision released during year
Reduction in provision
Unwinding of discount
24. OPERATING LEASES
2017
2016
Reinstatement
£’000
Onerous
£’000
Total Reinstatement
£’000
£’000
Onerous
£’000
(1,668)
-
-
(53)
(1,721)
(422)
-
384
-
(38)
(2,090)
-
384
(53)
(1,617)
-
-
(51)
(1,759)
(1,668)
(823)
169
232
-
(422)
Total
£’000
(2,440)
169
232
(51)
(2,090)
The Group has outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due
as follows:
Within one year
Between two to five years
After five years
2017
Land and
buildings
£’000
1,934
4,294
1,857
8,085
2016
Land and
buildings
£’000
2,406
5,853
2,458
10,717
Other
£’000
76
285
137
498
Other
£’000
76
289
208
573
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.
25. SHARE CAPITAL
Authorised
At 31 March 2015, 2016 and 2017
Called up, allotted and fully paid
At 31 March 2015, 2016 and 2017
Ordinary shares of 1p each
Number of shares
£’000
200,000,000
2,000
107,803,006
1,078
At 31 March 2017 the Company held 100,839 shares (2016: 846,636) as own shares in treasury which were accounted for in the Own
Shares Treasury reserve and had a nominal value of £1,008 (2016: £8,466) and a market value of £298,988 (2016: £2,285,917). This
represents 0.1% (2016: 0.8%) of the issued share capital as at 31 March 2017 excluding own shares.
At 31 March 2017 the Company held 140,773 shares (2016: 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 (2016: £1,408) and a market value
of £417,392 (2016: £380,088). This represents 0.1% (2016: 0.1%) of the issued share capital as at 31 March 2017 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 2017 are fully paid.
59
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
26. OWN SHARES RESERVES
At 1 April 2015
Issue of own shares from Treasury for option redemption
At 31 March 2016
Issue of own shares from Treasury for option redemption
Own shares
EBT
£’000
Own shares
Treasury
£’000
Own shares
Total
£’000
(70)
-
(70)
-
(468)
49
(419)
369
(538)
49
(489)
369
At 31 March 2017
(70)
(50)
(120)
During the year 745,797 (2016: 98,567) 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 £1,065,018 (2016: £91,374) was received. As a consequence, at 31
March 2017 the Company held 100,839 shares (2016: 846,636) in treasury with a carrying value of £49,915 (2016: £419,085) which
were accounted for in Own Shares treasury reserve; and 140,773 shares (2016: 140,773) in the EBT with a carrying value of £69,982
(2016: £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; an 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 745,797 ordinary shares (2016: 98,567) were exercised and the average market price at the exercise
dates was 286.1p (2016: 265.5p). Options over 602,228 ordinary shares (2016: 843,385) were granted under the unapproved share
option scheme with an average exercise price of 1.0p (2016: 108.9p) and no options over ordinary shares were granted under the
sharesave scheme (2016: 225,764 options granted with an average exercise price of 194.8p). Options over 473,750 ordinary shares
(2016: 35,417) lapsed under the unapproved share option scheme with an average exercise price of 184.3p (2016: 118.5p), no options
lapsed over shares under the EMI scheme (2016: 16,666 shares with an average exercise price of 87.5p); and options over 51,853
(2016: 62,330) lapsed under the sharesave scheme with an average exercise price of 193.9p (2016: 192.2p).
As disclosed in note 5, a share based payment charge of £1,844,000 (2016: £1,081,000) 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:
60
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
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
1 Apr 2016
24 Aug 2016
30 Sep 2016
22 Dec 2016
31 Mar 2019
31 Mar 2019
30 Sep 2017
30 Sep 2017
265.0p
63%
0.93%
3
10
3.25
1.52%
100%
256.2p
1.0p
310.0p
64%
0.93%
2
10
3.83
0.69%
100%
298.2p
1.0p
278.3p
65%
0.93%
19
10
3.0
0.80%
100%
269.0p
1.0p
300.3p
64%
0.93%
1
10
3.0
1.43%
100%
291.0p
1.0p
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:
2017
2016
Weighted
average
exercise price
per share (p)
Number of
share options
Weighted
average
exercise price
per share (p)
Number of
share options
84.55
1.00
3,597,404
602,228
185.26
(525,603)
-
-
142.80
(745,797)
34.45
33.56
2,928,232
1,764,040
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
Outstanding at start of year
Granted
Forfeited
Expired
Exercised
Outstanding at end of year
Exercisable at end of year
61
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
27. SHARE BASED PAYMENTS (CONTINUED)
Summary of share options that were outstanding at the year end:
Share options – outstanding
Share options – exercisable
Range of
exercise
prices per
share (p)
Weighted
average
exercise price
per share (p)
Outstanding
shares
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise price
per share (p)
Outstanding
shares
Weighted
average
remaining
contractual
life (years)
Enterprise
management
incentive
scheme
Unapproved
schemes
Sharesave
scheme
As at 31
March 2017
Enterprise
management
incentive
scheme
Unapproved
schemes
Sharesave
scheme
As at 31
March 2016
43.5 – 87.5
260,813
66.92
1.0 – 173.0
2,487,258
19.44
191.4 – 194.8
180,161
194.68
2.6
6.9
1.9
260,813
66.92
1,496,645
27.05
6,582
191.40
2,928,232
34.45
6.2
1,764,040
33.56
43.5 – 87.5
320,011
64.01
1.0 – 196.0
2,874,471
71.61
191.4 – 194.8
402,922
193.19
3.2
7.3
2.2
320,011
64.01
1,773,526
64.12
-
-
3,597,404
84.55
6.4
2,093,537
64.11
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
2017
£’000
1,502
-
819
2,321
2017
£’000
535
3
62
31
5
1
637
2.6
5.5
0.3
5.1
3.2
6.1
-
5.6
2016
£’000
1,580
38
655
2,273
2016
£’000
425
2
49
25
4
1
506
29. CONTINGENCIES AND COMMITMENTS
(a) Contingencies
There were no contingent assets or liabilities as at 31 March 2017 (2016: nil).
(b) Commitments
Capital expenditure on software licences and property, plant and equipment committed by the Group at 31 March 2017 was
£1,146,980 (2016: £1,306,000).
62
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
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:
2017
Non-current:
Lease deposit
Current:
Trade receivables
Cash and cash equivalents
Other receivables
Total for category
2016
Non-current:
Lease deposit
Current:
Trade receivables
Cash and cash equivalents
Other receivables
Total for category
Loans and
receivables
£’000
2,760
6,036
8,906
553
18,255
2,760
6,866
10,341
619
20,586
63
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
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:
2017
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
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
At fair value
through profit
or loss
£’000
Financial
liabilities
measured at
amortised cost
£’000
Other (non-IAS
39)
£’000
-
-
(102)
-
Total
£’000
(102)
(625)
(5,958)
(6,616)
(18,639)
(2,373)
(233)
(44)
(34,590)
(455)
(826)
(2,068)
(5,215)
(6,203)
(34,525)
(1,135)
(573)
(128)
(51,128)
-
(625)
-
-
-
-
(233)
-
(858)
-
(826)
-
-
-
-
-
(573)
-
-
-
-
(2,373)
-
(44)
(2,417)
-
-
(2,068)
-
-
-
(1,135)
-
(128)
(3,331)
(5,958)
(6,616)
(18,639)
-
-
-
(31,315)
(455)
-
-
(5,215)
(6,203)
(34,525)
-
-
-
(46,398)
(1,399)
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
2017
£’000
Level in
hierarchy Description of valuation
technique
Inputs used for valuation
model
Contingent
consideration due on
acquisitions
Interest rate swap
contracts
(2,373)
(44)
3
2
Based on level of future
revenue and profitability
and probability that vendors
will comply with obligations
under sale and purchase
agreement.
Interest rate swap contracts
are not traded in active
markets. Fair valued using
observable interest rates
corresponding to the
maturity of the contracts.
Management estimate on
probability and time scale
of vendors meeting revenue
and profitability targets and
complying with obligations.
Observable interest rates
corresponding to the maturity
of the contracts. Effects of
non-observable inputs are
not significant for interest rate
swaps.
Total gains
and (losses)
recognised
in profit or
loss
£’000
(330)
84
Total fair value
(2,417)
Total net losses
(246)
There have been no changes to valuation techniques or any amounts recognised through ‘Other Comprehensive Income’. The
£84,000 gain recognised in profit or loss on interest rate swap contracts is included in finance costs.
64
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
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
Total amount included in profit or loss on Level 3 instruments under gain on business
combinations and finance costs
2017
£’000
(3,203)
-
1,160
-
(330)
(2,373)
(330)
2016
£’000
(1,650)
(3,921)
1,650
870
(152)
(3,203)
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 £19.5m (2016: £35.9m) is shown.
The Group has £41.5m (2016: £25.5m) 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. As a consequence, at 31
March 2017, £2m 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 £84,000 (2016: £64,000) which has been recognised in
profit or loss for the year.
Currency risk
During the year the Group made payments totalling US$5.5m (2016: US$5.3m) and EUR€0.1m (2016: EUR€0.1m) to acquire domain
names for its Easyspace segment and licences for its Cloud Services segment. In addition, the Group received US$3.5m (2016: US$3.3m)
and EUR€0.4m (2016: EUR€0.7m) 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 (2016: none). Consequently, the fair value of currency contracts at the year end was £nil (2016:
£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
£6,036,000 (2016: £6,866,000) which are stated net of applicable provisions and which represent the total amount exposed to credit
risk. The lease deposits of £2,760,000 (2016: £2,760,000) are held in escrow accounts with the landlord’s main UK bankers and the
landlord is a major UK plc. The Group’s cash at bank £8,906,000 (2016: £10,341,000) 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.
65
iomart Group plc Annual report and accounts 2017 Notes to the financial statements. Year ended 31March 2017
31. POST BALANCE SHEET EVENT
Acquisition - Dediserve Limited
The Group acquired 100% of the issued share capital of Dediserve Limited, (“Dediserve”) on 17 May 2017 for €7.9m on a no debt, no
cash, normalised working capital basis.
Dediserve is a company registered in the Republic of Ireland based in Dublin which provides cloud hosting services to over 1,500
customers from 10 locations world-wide. The acquisition is in line with the Group’s strategy to grow its hosting operations both
organically and by acquisition. It also provides the Group with an additional European Union place of operation.
The Group estimates that it will incur £400,000 of third party acquisition related costs in respect of this acquisition. These expenses
will be included in administrative expenses in the Group’s consolidated statement of comprehensive income for the period ended 31
March 2018.
The following table summarises the consideration to acquire Dediserve and the provisional amounts of identified assets acquired and
liabilities assumed at the acquisition date:
Recognised amounts of net assets acquired and liabilities assumed (provisional):
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Intangible assets
Trade and other payables
Borrowings
Current income tax liabilities
Deferred tax liability
Identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash – paid on acquisition
Deferred consideration – payable
Total consideration transferred
£’000
236
190
779
3,680
(384)
(279)
(108)
(671)
3,443
3,128
6,571
6,485
86
6,571
The recognised amounts of all the net assets acquired and liabilities assumed are provisional.
The share purchase agreement, in respect of the acquisition of Dediserve, includes a provision under which the total consideration
payable will be 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 €7,800,000 (£6,700,000) in cash and in addition an amount of €250,000 (£215,000) in cash was deducted
as an interim settlement of the expected amount due in respect of the no debt, no cash, normalised working capital adjustment. An
amount of €100,000 (£86,000) has been deferred and will be paid 6 months after the completion date or at the end of an operational
handover period, whichever is sooner. The initial payment of €7,550,000 (£6,485,000) was funded by a draw down from the revolving
credit facility of £6,485,000.
The goodwill arising on the acquisition of Dediserve is attributable to the premium payable for a pre-existing, well positioned business
that has excellent growth prospects, together with the benefits to the Group in leveraging its worldwide presence, 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.
66
iomart Group plc Annual report and accounts 2017
Notes to the financial statements. Year ended 31March 2017
31. POST BALANCE SHEET EVENT (CONTINUED)
The name Dediserve is not actively advertised or promoted, with the majority of Dediserve’s business being generated from existing
customers or by word of mouth. Dediserve 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 £151,000. The gross amount due under
contracts is £151,000, all of which is expected to be collectable.
The fair value included in respect of the acquired customer relationships intangible asset is £3,680,000.
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 13.61% was used for the valuation. Customer relationships are being amortised over an estimated useful life of 8 years.
67
iomart Group plc Annual report and accounts 2017 Parent company financial statements. Year ended 31March 2017
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 2017 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 as set out on page 30, 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 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 2017 and of its profit for the year then ended;
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 Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors' report.
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 Company, or returns adequate for our audit have not been received
from branches not visited by us; or
the 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 2017.
Robert Hannah
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Glasgow
12 June 2017
68
iomart Group plc Annual report and accounts 2017 Parent company financial statements. Year ended 31March 2017
STATEMENT OF FINANCIAL POSITION
As at 31 March 2017
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
Creditors: amounts falling due after more than one year
NET ASSETS
EQUITY
Called up share capital
Own shares
Capital redemption reserve
Share premium account
Merger reserve
Profit and loss account
SHAREHOLDERS’ FUNDS
Note
2017
£’000
2016
£’000
3
4
6
7
10
11
107,374
107,374
4,785
7,195
11,980
102,693
102,693
39,954
8,930
48,884
(46,153)
(79,208)
(34,173)
(30,324)
73,201
72,369
-
(2,068)
73,201
70,301
1,078
(120)
1,200
21,067
4,983
44,993
1,078
(489)
1,200
21,067
4,983
42,462
73,201
70,301
As permitted by section 408(3) of the Companies Act 2006, no profit and loss account of the company is presented. The profit for the
financial year, dealt with in the profit and loss account of the company was £3,759,000 (2016: £4,905,000).
These financial statements were approved by the board of directors and authorised for issue on 12 June 2017.
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 financial statements
69
iomart Group plc Annual report and accounts 2017
Parent company financial statements. Year ended 31March 2017
STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2017
Changes in equity
Share
capital
£’000
Own
shares
EBT
£’000
Own
shares
Treasury
£’000
Capital
redemption
reserve
£’000
Share
premium
account
£’000
Note
Merger
reserve
£’000
Retained
earnings
£’000
Total
£’000
Balance at 1 April 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
Deferred tax on share based
payments
Issue of own shares for
option redemption
Total transactions with
owners
12
5
11
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49
49
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,905
4,905
4,905
4,905
(2,668)
(2,668)
1,081
1,081
57
42
57
91
(1,488)
(1,439)
Balance at 31 March 2016
1,078
(70)
(419)
1,200
21,067
4,983
42,462
70,301
Profit in the year
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
12
5
11
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
369
369
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,759
3,759
3,759
3,759
(3,375)
(3,375)
1,844
1,844
(392)
(392)
695
1,064
(1,228)
(859)
Balance at 31 March 2017
1,078
(70)
(50)
1,200
21,067
4,983
44,993
73,201
The following notes form part of the financial statements.
70
iomart Group plc Annual report and accounts 2017
Parent company financial statements. Year ended 31March 2017
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 84 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 (£).
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:
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
• a statement of cash flows and related notes;
•
•
members of the iomart Group as they are wholly owned within the iomart Group;
• disclosure of key management personnel compensation;
•
•
• business combination disclosures;
• disclosures in respect of financial instruments; and
•
capital management disclosures;
certain share based payments disclosures;
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.
71
iomart Group plc Annual report and accounts 2017 Parent company financial statements. Year ended 31March 2017
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.
72
iomart Group plc Annual report and accounts 2017 Parent company financial statements. Year ended 31March 2017
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.
73
iomart Group plc Annual report and accounts 2017 Parent company financial statements. Year ended 31March 2017
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. INVESTMENTS HELD AS FIXED ASSETS
Cost
At 1 April 2016
Additions
Share based payment (note 12)
Cost at 31 March 2017
Net book value of Investments at 31 March 2017
Net book value of Investments at 31 March 2016
All of the above investments are unlisted.
Shares in subsidiary undertakings
£’000
102,693
3,779
902
107,374
107,374
102,693
74
iomart Group plc Annual report and accounts 2017
Parent company financial statements. Year ended 31March 2017
3. INVESTMENTS HELD AS FIXED ASSETS (CONTINUED)
The following subsidiaries are included in the Company financial statements:
Country of
registration
and operation
Activity
Ordinary share capital
Owned by the
company
%
Owned by
subsidiary
undertakings
%
Backup Technology Holdings Limited
Backup Technology Limited
Cristie Data Limited
Easyspace Limited
EQSN Limited
Global Gold Holdings Limited
Global Gold Network Limited
Internet Engineering Limited
Internetters Limited
iomart Cloud Inc
England
England
England
England
Non-trading
Non-trading
Provision of data storage,
backup and virtualisation
solutions
Webservices
Scotland
Non-trading
England
England
England
England
Non-trading
Webservices
Non-trading
Dormant
USA
Managed hosting services
iomart Cloud Services Limited
Scotland
Managed hosting services
England
Non-trading
Scotland
Scotland
Scotland
Scotland
England
England
Scotland
England
England
England
England
England
England
England
England
England
England
England
England
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
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
4. DEBTORS
Prepayments and accrued income
Other debtors
Deferred taxation (note 5)
Current income tax
Other taxation and social security
Amounts owed by subsidiary undertakings
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
-
-
-
-
100
2017
£’000
209
-
1,135
2,207
612
622
2016
£’000
356
61
1,010
2,357
450
35,720
4,785
39,954
75
iomart Group plc Annual report and accounts 2017
Parent company financial statements. Year ended 31March 2017
5. DEFERRED TAXATION
The Company had recognised deferred tax assets and potential unrecognised deferred tax assets as follows:
Share based remuneration
1,135
-
1,010
-
The movement in the deferred tax account during the year was:
2017
2016
Recognised
£’000
Unrecognised
£’000
Recognised
£’000
Unrecognised
£’000
Balance brought forward
Profit and loss account movement arising during the year
Profit and loss account reserve movement during the year
Balance carried forward
2017
£’000
1,010
517
(392)
1,135
2016
£’000
576
377
57
1,010
The deferred tax asset in relation to share based remuneration arises from the anticipated future tax relief on the exercise of share
options.
6. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors
Other taxation and social security
Accruals and deferred income
Contingent consideration due on acquisitions (note 8)
Current borrowings (note 9)
Amounts owed to subsidiary undertakings
7. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Contingent consideration due on acquisitions (note 8)
8. CONTINGENT CONSIDERATION
Contingent consideration due on acquisitions within one year:
-
-
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
76
2017
£’000
96
76
1,038
2,373
18,639
23,931
46,153
2017
£’000
-
-
2017
£’000
-
(2,373)
(2,373)
2016
£’000
105
65
1,270
1,135
34,525
42,108
79,208
2016
£’000
2,068
2,068
2016
£’000
(135)
(1,000)
(1,135)
-
-
(2,068)
(2,068)
(2,373)
(3,203)
iomart Group plc Annual report and accounts 2017 9. BORROWINGS
Current:
Bank loans
Current borrowings
Non-current:
Bank loans
Total non-current borrowings
Total borrowings
Parent company financial statements. Year ended 31March 2017
2017
£’000
2016
£’000
(18,639)
(18,639)
(34,525)
(34,525)
-
-
-
-
(18,639)
(34,525)
The carrying amount of borrowings approximates to their fair value.
The future loan obligations of £18,722,000 (2016: £34,907,000) equate to a present value of £18,315,000 (2016: £33,922,000). The
capital element of the bank loans is £18,639,000 (2016: £34,525,000) and this differs from the net amount drawn down of £18,500,000
(2016: £34,500,000) due to an effective interest rate adjustment.
The obligations under the multi option revolving credit facility are repayable as follows:
Due within one year
Due between two and five years
10. SHARE CAPITAL
Authorised
At 31 March 2015, 2016 and 2017
Called up, allotted and fully paid
At 31 March 2015, 2016 and 2017
Capital
£’000
18,639
-
18,639
2017
Interest
£’000
83
-
83
Total
£’000
18,722
-
18,722
Capital
£’000
34,525
-
34,525
2016
Interest
£’000
382
-
382
Total
£’000
34,907
-
34,907
Ordinary shares of 1p each
Number of shares
£’000
200,000,000
2,000
107,803,006
1,078
At 31 March 2017 the Company held 100,839 shares (2016: 846,636) as own shares in treasury which were accounted for in the Own
Shares Treasury reserve and had a nominal value of £1,008 (2016: £8,466) and a market value of £298,988 (2016: £2,285,917). This
represents 0.1% (2016: 0.8%) of the issued share capital as at 31 March 2017 excluding own shares.
At 31 March 2017 the Company held 140,773 shares (2016: 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 (2016: £1,408) and a market value
of £417,392 (2016: £380,088). This represents 0.1% (2016: 0.1%) of the issued share capital as at 31 March 2017 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 2017 are fully paid.
77
iomart Group plc Annual report and accounts 2017 Parent company financial statements. Year ended 31March 2017
11. OWN SHARES RESERVES
At 1 April 2015
Issue of own shares from Treasury for option redemption
At 31 March 2016
Issue of own shares from Treasury for option redemption
At 31 March 2017
Own shares
EBT
£’000
Own shares
Treasury
£’000
Own shares
Total
£’000
(70)
-
(70)
-
(70)
(468)
49
(419)
369
(50)
(538)
49
(489)
369
(120)
During the year 745,797 (2016: 98,567) 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 £1,065,018 (2016: £91,374) was received. As a consequence, at 31
March 2017 the Company held 100,839 shares (2016: 846,636) in treasury with a carrying value of £49,915 (2016: £419,085) which
were accounted for in Own Shares treasury reserve; and 140,773 shares (2016: 140,773) in the EBT with a carrying value of £69,982
(2016: £69,982) which were accounted for in the Own Shares EBT reserve.
12. 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 £1,844,000 (2016: £1,081,000) by;
1)
2)
taking the charge in relation to employees of the parent company through the parent company statement of
comprehensive income £942,000 (2016: £682,000),
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 £902,000 (2016: £399,000).
13. INFORMATION REGARDING PARENT COMPANY EMPLOYEES
Average number of persons employed by the Company (including directors):
Technical
Sales and marketing
Administration
Staff costs of the Company during the year in respect of
employees and directors were:
Wages and salaries
Staff costs recharged to other group companies
Social security costs
Pension costs
Share based payments
2017
No.
2016
No.
8
6
23
37
5
5
21
31
2017
£’000
2016
£’000
2,025
(354)
265
19
942
2,897
2,077
(364)
353
25
682
2,773
The company 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 22 to 27. 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. Details of director’s emoluments are disclosed
within note 5 of the Group financial statements.
78
iomart Group plc Annual report and accounts 2017
Parent company financial statements. Year ended 31March 2017
14. 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.
15. CONTINGENCIES AND COMMITMENTS
(a) Contingencies
There were no contingent assets or liabilities as at 31 March 2017 (2016: nil).
(b) Commitments
There are no commitments present as at 31 March 2017 (2016: nil).
16. POST BALANCE SHEET EVENT
On 17 May 2017 the Company acquired the entire share capital of Dediserve Limited. Further details of the acquisition have been
given in note 31 of the Group financial statements.
17. ULTIMATE CONTROLLING PARTY
The Directors have assessed that there is no ultimate controlling party.
79
iomart Group plc Annual report and accounts 2017 Notice of the 2017 Annual General Meeting
NOTICE IS HEREBY GIVEN that the 2017 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 23 August 2017 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 11 (inclusive) will be proposed as
special resolutions:-
by the Company, shall expire on 23 November 2018 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.
To receive and adopt the financial statements of the Company
1
and the directors' and auditors' reports thereon for the year
ended 31 March 2017.
To approve the report of the board to the members on
2
directors' remuneration for the year ended 31 March 2017.
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.
3
To reappoint Angus MacSween (who retires by rotation and,
being eligible, offers himself for re-election) as a director of the
Company.
4
To reappoint Richard Logan (who retires by rotation and,
being eligible, offers himself for re-election) as a director of the
Company.
5
To reappoint Richard Masters (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.
To declare a final dividend for the year ended 31 March 2017
6
of 6.00p per share payable on 6 September 2017 to shareholders
on the register of members at the close of business on 11 August
2017.
To reappoint Grant Thornton UK LLP, Chartered Accountants,
7
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 £718,537.32 (including within such limit any shares issued or
rights granted under paragraph (b) below) in connection with an
offer by way of rights issue:
(i)
to ordinary shareholders in proportion (as nearly as may
be practicable) to their existing holdings;
(ii)
to the holders of other equity securities as required
by the rights of those securities or as the directors
otherwise consider necessary,
and subject to such exclusions or other arrangements as the
directors consider expedient in relation to fractional entitlements,
legal, regulatory or practical problems under the laws of, or the
requirements of any regulatory body or stock exchange in, any
territory, or any other matter; and
(b)
in any other case up to an aggregate nominal amount of
£359,268.66 (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 £359,268.66),
provided that such authority, unless renewed, varied or revoked
80
9. THAT, subject to the passing of resolution 8, the directors
of the Company are authorised pursuant to section 570 of the
Companies Act 2006 to allot equity securities (as defined in
section 560(1) of the Companies Act 2006) for cash under the
authority given by resolution 8 and/or to sell ordinary shares held
by the Company as treasury shares for cash as if section 561 of
the Companies Act 2006 did not apply to any such allotment or
sale, such authority be limited:
(a) to 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)
(ii)
the ordinary shareholders made in proportion (as nearly
as may be practicable) to their existing respective
holdings; and
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) to the allotment of equity securities pursuant to any authority
conferred upon the directors in accordance with and pursuant to
article 41 of the articles of association of the Company; and
(c) to the allotment of equity securities or sale of treasury shares
(otherwise than pursuant to paragraphs (a) and (b) above) up to
an aggregate nominal amount of £53,890.30.
such authority to expire at the end of the next annual general
meeting of the Company (or, if earlier, at the close of business
on 23 November 2018) but, in each case, prior to its expiry the
Company may make offers, and enter into agreements, which
would, or might, require equity securities to be allotted (and
treasury shares to be sold) after the authority expires and the
board of directors may allot equity securities (and sell treasury
shares) under any such offer or agreement as if the authority had
not expired.
10. THAT, subject to the passing of resolution 8, the directors of
the Company are authorised in addition to any authority granted
under resolution 9 to allot equity securities (as defined in section
560(1) of the Companies Act 2006) for cash under the authority
given by resolution 8 and/or to sell ordinary shares held by the
Company as treasury shares for cash as if section 561 of the
Companies Act 2006 did not apply to any such allotment or sale,
such authority to be:
iomart Group plc Annual report and accounts 2017
Notice of the 2017 Annual General Meeting
limited to the allotment of equity securities up to a nominal
(a)
amount of £53,890.30; and
NOTES:
Appointment of Proxy
(b) used only for the purposes of financing (or refinancing,
if the authority is to be used within six months after the
original transaction) a transaction which the board of directors
of the Company determines to be an acquisition or other capital
investment of a kind contemplated by the Statement of Principles
on Disapplying Pre-Emption Rights most recently published by the
Pre-Emption Group prior to the date of this notice,
such authority to expire at the end of the next annual general
meeting of the Company (or, if earlier, at the close of business
on 23 November 2018) but, in each case, prior to its expiry the
Company may make offers, and enter into agreements, which
would, or might, require equity securities to be allotted (and
treasury shares to be sold) after the authority expires and the
board of directors may allot equity securities (and sell treasury
shares) under any such offer or agreement as if the authority had
not expired.
11 That the Company be and
is hereby generally and
unconditionally authorised for the purposes of section 701 of
the Companies Act 2006 to make one or more market purchases
(within the meaning of section 693(4) of that Act) of ordinary
shares of 1 pence each in the Company provided that:
(a) the maximum number of ordinary shares hereby authorised
to be purchased is 10,778,059, representing 10% of the Company's
issued ordinary share capital (excluding for these purposes the
22,408 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.
By order of the board
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 21 August
2017) 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 21 August 2017; 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
1 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
2 Except as provided above, members who wish to
communicate with the Company in relation to the meeting
should do so by post to the Company's registered office, details
of which are below. No other methods of communication will be
accepted.
Address: The Company Secretary
iomart Group plc
Lister Pavilion
Kelvin Campus
West of Scotland Science Park
Glasgow
G20 0SP
Bruce Hall
Lister Pavilion, Kelvin Campus,
Company Secretary
West of Scotland Science Park,
14 July 2017
Glasgow G20 0SP
81
iomart Group plc Annual report and accounts 2017
Notice of the 2017 Annual General Meeting
EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL
MEETING IOMART GROUP PLC
Ordinary Resolutions
Resolutions 1 to 8 are all to be proposed as ordinary resolutions.
This means that for each of those resolutions to be passed, more
than half of the votes cast must be in favour of the resolution.
Resolution 1 – To receive and adopt the financial statements
for the year ended 31 March 2017 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 22
to 27. 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 Angus MacSween
and Mr Richard Logan 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 Richard Masters was appointed on 20 June
2017 and accordingly offers himself for reappointment. The
board of directors is satisfied that the performance of Mr Angus
MacSween, Mr Richard Logan and Mr Richard Masters 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 Angus MacSween, Mr
Richard Logan and Mr Richard Masters.
Brief biographical details of Mr Angus MacSween, Mr Richard
Logan and Mr Richard Masters are given below.
Mr Angus MacSween, 60, appointed 2000, founded iomart in
December 1998 following 15 years spent creating and selling
businesses in the telephony and internet sector. In 1984, after a
short service commission in the Royal Navy, Angus started his first
business selling telephone systems. He then grew and sold five
profitable businesses – including Prestel, an online information
division of BT, which he turned into one of the UK’s first internet
service providers. Following the sale of Teledata Limited, the UK’s
leading telephone information services company, to Scottish
Telecom plc, Angus then spent two years on the executive
of Scottish Telecom plc where he was responsible for the
development of the company's internet division
Mr Richard Logan, 59, appointed 2006, is a chartered accountant,
having qualified with Arthur Young in 1984. Richard then spent
seven years with Ben Line Group Limited initially as Group
treasurer and latterly as financial director of the main container
shipping division. From 1992 to 2002 Richard served as finance
director of Kingston SCL, 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 Limited, a technology company based in Scotland. Richard
is a Non-Executive Director of Inspired Energy plc, an AIM listed
energy procurement organisation.
Mr Richard Masters, 52, appointed 2017; has over 30 years’
experience in the legal profession and was managing partner
with McGrigors LLP until April 2012 when it merged with Pinsent
Masons LLP. After the merger and until June 2015 he was Head
of Client Operations for Pinsent Masons LLP, which was a main
Board executive position, and then held a non-executive role
through to May 2016. He is currently the Executive Chairman of
Complete Electronic Risk Compliance Limited (Cerico), a Pinsent
Masons LLP subsidiary, and has held this role since June 2016.
Resolution 6 – To declare a dividend 6.00p 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 6.00p per ordinary share, to be payable to shareholders
registered at close of business on 11 August 2017.
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 £718,537.32 (representing
71,853,732 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 the 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 £359,268.66 (representing
35,926,866 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 23 November 2018 or, if
earlier, at the conclusion of the next annual general meeting.
Special Resolutions
Resolutions 9, 10 and 11 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.
82
iomart Group plc Annual report and accounts 2017 Resolutions 9 and 10 - Disapplication of statutory
pre-emption rights
The Companies Act 2006 gives holders of ordinary shares, with
limited but important exceptions, certain rights of pre-emption
on the issue for cash of new ordinary shares or on the sale of
any shares which the Company may hold in treasury following a
purchase of its own shares. The directors of the Company believe
that it is in the best interests of the Company that, as in previous
years, the board of directors of the Company should have limited
authority to allot some shares for cash or sell treasury shares
without first having to offer such shares to existing shareholders.
The directors' current authority expires at the close of the
forthcoming annual general meeting. The authority sought by
way of resolution 9 would expire at the earlier of the close of
the next annual general meeting or 23 November 2018. The
authority, if granted, will relate to the allotment of new ordinary
shares or the sale of treasury shares in respect of (a) rights issues
and similar offerings, where difficulties arise in offering shares
to certain overseas shareholders, and in relation to fractional
entitlements and certain other technical matters, (b) 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 cash dividend or dividends (if the Company
offers shareholders the option of making an election of that
nature and if relevant shareholders make such an election), and
(c) generally to allotments (other than in respect of pre-emptive
offerings) of ordinary shares or the sale of treasury shares having
an aggregate nominal value not exceeding £53,890.30 (being
equal to 5% 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).
Resolution 10, if approved, would give the directors of the
Company an additional authority to issue ordinary shares, or
sell treasury shares, for cash in connection with an acquisition
or capital investment of kind contemplated by the Pre-Emption
Group's Statement of Principles up to an additional aggregate
nominal amount of £53,890.30 (being equal to 5% 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). The directors confirm that they will only
allot shares pursuant to this authority where the allotment is in
connection with an acquisition or specified capital investment
(as defined in the Pre-Emption Group's Statement of Principles)
which is announced contemporaneously with the allotment or
sale, or which has taken place in the preceding six-month period
and is disclosed in the announcement of the allotment of sale.
The powers given by resolutions 9 and 10 will, unless sooner
revoked or renewed by the Company in a general meeting, last
until the earlier of the close of the next annual general meeting or
23 November 2018.
Resolution 11 – 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
22,408 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
Notice of the 2017 Annual General Meeting
of such purchases on the Company's business and on earnings
per ordinary share.
The directors have no present intention of using the authority.
However, the directors consider that it is in the best interests of
the Company and its shareholders as a whole that the Company
should have flexibility to buy back its own shares should the
directors in the future consider that it is appropriate to do so.
In relation to any buy back, the maximum price per ordinary share
at which the Company is authorised in terms of resolution 11
to effect that buy back is 5% above the average middle market
price of an ordinary share for the five business days immediately
preceding the date on which the buy back is effected.
The statutory provisions governing buy backs of own shares are
currently contained in, inter alios, sections 693 and 701 of the
Companies Act 2006.
83
iomart Group plc Annual report and accounts 2017 Officers and Professional Advisers
Directors
Ian Ritchie CBE, FREng, FRSE, FBCS, CEng, BSc
Angus MacSween
Ian Steele BAcc, CA
Crawford Beveridge CBE
Richard Logan BA, CA
Secretary
Bruce Hall BAcc(Hons), CA
Registered office
Non executive chairman
Chief executive officer
Non executive director
Non executive director
Finance 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
84
iomart Group plc Annual report and accounts 2017
Group Brands
iomart Cloud Services
0141 931 6400 info@iomart.com www.iomart.com
SystemsUp Ltd
020 7448 4615 info@systemsup.co.uk www.systemsup.co.uk
Melbourne
0161 232 0001 inbox@melbourne.co.uk www.melbourne.co.uk
Backup Technology
0800 999 3600 sales@backup-technology.com www.backup-technology.com
RapidSwitch
01753 471 040 sales@rapidswitch.com www.rapidswitch.com
Redstation
0800 622 6655 sales@redstation.com www.redstation.com
United Hosting
0845 643 2011 sales@unitedhosting.co.uk www.unitedhosting.co.uk
Easyspace
0370 755 5088 sales@easyspace.com www.easyspace.com
Cristie Data
01453 847 000 sales@cristie.co.uk www.cristie.co.uk
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85
iomart Group plc Annual report and accounts 2017 iomart Group plc Annual report and accounts 2017