Annual Report
and Financial
Statements
2023
What we do
iomart is a leading provider of cloud hosting and managed services to UK
SME and Large Enterprise businesses. We make our customers unstoppable
by helping them connect, secure and scale anytime, anywhere.
Seamless User Experience
Peace of Mind
Reliability
Productivity
Flexibility
Consulting Services
Secure Connectivity
Digital Workplace
Our Place
(Private Cloud)
Your Place
(On Premise)
Security
Their Place
(Public Cloud)
Connected Data Centres
24/7 Managed Services
“When speaking to other companies they all spoke in very general
terms, nothing specific. It all sounds good, but it was difficult to
understand exactly what they were trying to sell us. With iomart
though it was all very clear, concise and to the point.”
Jatinder Grewall, Head of Project Management & Technology
“What we got from iomart was a real hands-on, caring
experience. It was a massively successful project and has
changed the perception of IT within Harrow Council. Whereas
before IT was seen as a thorn in everyone’s side, it’s now seen
as a positive force and a key enabler for the delivery of our vital
public services.”
Ben Goward, Director of ICT
1
iomart Group plc Annual Report and Financial Statements 2023 Contents
OVERVIEW
Highlights
STRATEGIC REPORT
Chair’s statement
Chief executive officer’s report
Chief financial officer's report
Principal risks and uncertainties
Stakeholder engagement
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 2023 Annual General Meeting
OFFICERS AND PROFESSIONAL ADVISERS
Officers and professional advisers
4
6
8
14
20
23
30
32
41
48
53
55
66
67
68
69
70
108
116
123
2
iomart Group plc Annual Report and Financial Statements 2023 Revenue
% of recurring
revenue
Adjusted
EBITDA
£115.6m
92%
£36.2m
2022 : £103m
2022 : 93%
2022 : £38.0m
Adjusted profit
before tax
Profit before tax
Adjusted diluted
eps
£14.8m
£8.5m
10.9p
2022 : £17.1m
2022 : £12.2m
2022 : 12.0p
Basic eps
Cash generation
from operations
Proposed final
dividend per
share
6.4p
£33.8m
3.5p
2022 : 8.6p
2022 : £37.9m
2022 : 3.6p
See page 19 for definition of alternative profit measures
“This has been another busy year at iomart for the full team. Together, we have generated good momentum across both the
commercial and operational areas. A higher level of M&A activity has also been pleasing to see, with two acquisitions having
been completed in the last ten months.
These acquisitions have expanded our capabilities and routes to market, making our solution portfolio relevant to a wider
audience. The increase in the effectiveness of our sales activities, the operational improvements made, the resilience of our
business model and our clear focus on execution gives us a stronger foundation on which to accelerate organic growth whilst
making selective acquisitions.”
Reece Donovan, CEO
3
iomart Group plc Annual Report and Financial Statements 2023 Annual Report and Financial Statements 2023
Highlights
Financial Highlights
» Sales pipeline improvement noted in H1 converting into stronger order booking levels in H2
» Revenue increased by 12% YoY to £115.6m, a record level for the Group, reflecting a combination of improved customer renewal levels,
organic revenue growth within core cloud managed services, inflationary pricing adjustments (primarily for data centre energy usage),
together with the acquisition of Concepta on 15 August 2022
» Concepta provided £6.2m of revenue, a positive profit contribution, and is performing well, strengthening the Group’s indirect routes
to market, and extending its products, skills and capabilities
» Reduction in adjusted EBITDA2 and adjusted profit before tax3 reflects revenue mix, together with investment in upskilling employees'
capabilities, appropriate wage increases and cost of living support. Interest expense is £0.9m higher year-on-year
» Profitability margins reflect the changes in revenue mix and the impact of inflationary price adjustments with adjusted EBITDA margin
and adjusted profit before tax margin at 31.3% (2022: 36.9%) and 12.8% (2022: 16.6%) respectively
» Statutory profit before tax reduced to £8.5m from £12.2m includes consistent adjusted items, the largest being non-cash amortisation
charges on acquired intangibles of £3.9m (2022: £4.0m) plus a current year £0.8m non-recurring cost associated with the
interpretation of the six-month Energy Bill Relief Scheme
» Cash conversion ratio6 is strong at 94% (2022: 100%)
» Year-end net debt5 of £39.8m (2022: £41.3m), comfortable at 1.1 times annualised EBITDA5 (2022: 1:1 times)
Operational Highlights
» iomart’s robust customer arrangements have ensured that wholesale energy price rises were appropriately passed to the customer
base in the year. The energy markets appear less volatile in the new financial year and the Company has a proactive hedging strategy
in place
» New regional sales leadership team reshaped the sales structure in H1, with order bookings accelerating in H2
» Product management team continued to support solution portfolio development, including refinement of data security and managed
Microsoft Azure offerings, plus the launch of a new multi-tenant cloud platform
» Launched a full learning management system internally to support skills development programmes
» Lucy Dimes appointed as new Independent Chair of the Board and, subsequent to the year-end, two new Independent Non-Executive
Directors, Annette Nabavi and Adrian Chamberlain were appointed. All bring a wealth of industry experience
» Subsequent to the year-end, the acquisition of Extrinsica Global, announced on 5 June 2023, provides a large step forward in the
Group’s capabilities to support existing and new customers in their use of Microsoft’s Azure cloud platform
Statutory Equivalents
A full reconciliation between adjusted and statutory profit before tax is contained within this statement. The largest item is the consist-
ent add back of the non-cash amortisation of acquired intangible assets of £3.9m (2022: £4.0m). The largest variance, year on year, is
a £0.8m exceptional non-recurring cost recorded within cost of sales associated with the interpretation of the six-month government
Energy Bill Relief Scheme.
1 Recurring revenue, as disclosed in note 3, is the revenue that repeats either under long-term contractual arrangement or on a rolling basis by predictable customer habit. % of recurring revenue is defined as recurring
revenue (as disclosed in note 3) / revenue (as disclosed in the consolidated statement of comprehensive income)
2 Throughout this statement adjusted EBITDA, as disclosed in the consolidated statement of comprehensive income, is earnings before interest, tax, depreciation and amortisation (EBITDA) before share based payment
charges, acquisition costs and exceptional non-recurring costs. Throughout this statement acquisition costs are defined as acquisition related costs and non-recurring acquisition integration costs
3 Throughout this statement adjusted profit before tax, as disclosed on page 16, is profit before tax, amortisation charges on acquired intangible assets, share based payment charges, acquisition costs, accelerated
write-off of arrangement fee on bank facility and exceptional non-recurring costs
4 Throughout this statement adjusted diluted earnings per share, as disclosed in note 7, is earnings per share before amortisation charges on acquired intangible assets, share based payment charges, acquisition costs,
accelerated write off of arrangement fee on bank facility and exceptional non-recurring costs and the taxation effect of these /weighted average number of ordinary shares – diluted (as disclosed in note 7)
5 Net debt being outstanding bank loans, lease liabilities less cash and cash equivalents (as disclosed on page 18). Annualised EBITDA is the last 12 months of EBITDA for the year ended 31 March 2023
6 Cash conversion is calculated as cash flow from operations, as disclosed in the consolidated statement of cash flows, divided by adjusted EBITDA defined above
4
iomart Group plc Annual Report and Financial Statements 2023
ESG: iomart in the community
SmartSTEMS
Our work with SmartSTEMS UK children’s charity continued
this year. It focused on engaging young people aged 10-14
years about the possibility of a career in technology. This year
we’ve been hosting workshops in virtual classrooms, speaking
to kids who otherwise might not have the opportunity to meet
professionals in STEM careers. Our CEO, Reece met a couple
of 10-year-olds in a primary school and explained what Cloud is
to them. We created a campaign around this with SmartSTEMS
– promoting their important messages across our digital
channels.
Empowering Women to Lead in
Cyber Security
We moved into year two of our partnership with Empowering
You, which aims to build an empowered community of diverse,
and confident leaders who can deliver transformational
change. Specifically, working to empower female leaders in
the technology industry. This year we sponsored ‘Empowering
Women to Lead Cyber Security’.
iomart’s programme participant, Technical Support Engineer,
Charlene Butcher said: “Before I first started this course,
I thought that I was someone who didn’t have leadership
abilities. However, enrolling in, and completing, this program
helped me to look at myself differently. Even just that process
was incredibly empowering".
Generation
Generation is a Global non-profit organisation, founded in
2015. They run education to employment programs to prepare,
place and support people into life-changing careers that would
otherwise be inaccessible. They provide employers with the
highly skilled, diverse talent they need whilst addressing key
hiring challenges they face. Learners are selected based on
dedication and their social impact case – not on their formal
academic achievements. Each cohort is typically 50% female,
60% ethnic minority backgrounds and all are NEET (not in
education and/or employment).
iomart partner with Generation as an employer and offer
opportunities to the programme participants, when they
complete their programs. Currently, iomart has 5 employees
from Generation in the business.
5
iomart Group plc Annual Report and Financial Statements 2023
Strategic Report - Chair's Statement
Chair's
Statement
In my first period as Chair, I am delighted to report on a year in which we have delivered a number of strategically important
milestones, seen a return to organic revenue growth within cloud managed services and achieved financial results in line
with market expectations4. We have reported record revenue in the year of £115.6m and continued to deliver high levels of
profitability and cash generation.
It is clear to me that the market and iomart’s position within it provide the platform to scale the business as a leading
provider of secure hybrid cloud services. During the last 12 months, we have made good progress against this aim with
strong momentum in order bookings, and a return of customer renewal levels to long-term average rates, providing a more
solid base of recurring revenues. Behind the scenes, we have refreshed our full sales team under the guidance of the
new sales leadership, simplified our internal service organisation and processes, and extended a number of our managed
service offerings. We have successfully navigated the significant challenges in the energy market by ensuring additional
costs have been appropriately passed through to the customer base. We also recommenced our M&A activities with the
acquisition of Concepta Capital Limited (“Concepta”) in August 2022, and subsequent to the year end, on 2 June 2023, we
successfully completed the acquisition of Extrinsica Global Limited (“Extrinsica”), a Microsoft managed service provider.
Our iomart team are at the heart of these successes and I would like to thank them all for their hard work and commitment
during the year. One of the strengths of the Group is the quality of its fantastic workforce. Investing in the workforce and
their further development and support is one of the central tenets of our strategy.
After invaluable service to iomart, we have seen three of our Non-Executive Directors step down, with Ian Steele (previous
Chair) standing down at the AGM, Andrew Taylor leaving the Board in December 2022, and Richard Masters notifying
us of his intent to step down at the forthcoming AGM in September 2023. On behalf of everyone connected with the
Group, I wish to thank them all for their valuable contribution to the development of iomart. We announced two new
Independent Non-Executive Director appointments in May 2023. Annette Nabavi who joined the Board on 25 May 2023
and Adrian Chamberlain who joined the Board on 1 June 2023. Annette and Adrian bring different but very relevant
skills and experience to the Board, and will be extremely valuable in helping guide the execution of our growth strategy.
During the year, we paid an interim dividend of 1.94p per share to shareholders in January 2023. In addition, the Board is
now proposing to pay a final dividend of 3.50p per share taking the total for the year to 5.44p being at the maximum pay-
out ratio under our stated dividend policy of paying up to 50% of adjusted diluted earnings per share. We believe this is
appropriate given our funding position, robust business model and strength of our balance sheet.
The progress we have already seen in the delivery of our strategy and the continued solid financial performance gives me
and the Board confidence in a bright future for iomart.
Lucy Dimes
Non-Executive Chair
13 June 2023
6
iomart Group plc Annual Report and Financial Statements 2023 Who is iomart ?
Secure hybrid cloud computing
and managed services business,
based in the UK
£116m turnover (FY23) and
market leading profitability
Delivering cyber security,
hybrid cloud, secure
connectivity, data management
and digital workplace
Cloud services
(90% group revenue)
Domains & Web hosting
(10% group revenue)
470+ strong team in the UK and
a small operation in the USA
92% recurring revenue and
strong cash generation
Providing 24/7 managed
services to organisations
headquartered in the UK
12 UK data centres connected
with 2500km private network
infrastructure, and 25 global
points of presence
Direct and indirect go to
market channels
Proactive M&A strategy with
23 acquisitions in the past
13 years
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iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Chief Executive Officer’s Report
Chief Executive
Officer's Report
Introduction
I am encouraged by the progress we have made during the year and pleased to be reporting financial results in line with market
expectations4, delivering revenue of £115.6m (2022: £103.0m), adjusted EBITDA1 of £36.2m (2022: £38.0m), adjusted profit before
tax2 of £14.8m (2022: £17.1m) and a statutory profit before tax of £8.5m (2022: £12.2m). We continue to benefit from the highly
recurring nature of our business model, with 92% (2022: 93%) of revenue in the year recurring3.
The revenue of £115.6m is a record level for the Group and is a combination of a return to long-term historic customer renewal
levels with organic revenue growth within our core cloud managed services offering, and inflationary pricing adjustments, primarily
for data centre energy usage, plus the successful completion of the acquisition of Concepta in August 2022. The Group's adjusted
EBITDA reflects both the revenue mix effect in the year, together with investment in upskilling our employees' capabilities,
alongside appropriate wage increases and cost of living support. EBITDA margin percentage of 31.3% (2022: 36.9%) in the year
was heavily impacted by the pass through of much increased energy costs and to a lesser extent the lower margin business within
the Concepta acquisition, primarily from their reselling activities. The increase in the UK interest rates has pushed the Group's
interest expense up by £0.9m year on year but the Group's cash generation continued to be strong, with the year-end net debt
standing at £39.8m (2022: £41.3 million). This represents a comfortable net debt to adjusted EBITDA ratio of 1.1 times (2022: 1.1
times).
I am pleased by how we navigated through the unexpected challenges in the energy markets, which resulted in a £7m increase in
the Group's electricity costs. iomart's robust business model and customer arrangements have ensured this additional energy cost
has been appropriately passed through to the customer base. While electricity costs remain high, the energy markets appear less
volatile as we enter the new financial year. We have a proactive hedging strategy in place for the next two years and expect this
matter to be less of a distraction for our team and customers than we have experienced in the last 12 months.
At iomart, momentum and pace are important aspects for success. Following growth in our sales pipeline, we saw this translate
to improved order booking levels in the second half of the year, with the last quarter order bookings being the highest quarter in
the last two years. Year on year we have seen double digit order bookings growth within the cloud managed services area, which
along with healthy customer renewal levels, provides a solid foundation for growth for the new financial year. The two acquisitions
completed within a ten-month period fully support our drive to broaden our service offerings across the full hybrid cloud spectrum.
Strategy
Our strategic growth plan is focussed on three main activities:
• Protect and expand the existing base of run rate revenue and EBITDA which is underpinned by our existing core private cloud
infrastructure and services;
• New services focused on four new service areas – hybrid cloud, cybersecurity, the future digital workplace and secure
connectivity ensuring a complete suite of solutions and services to deliver a comprehensive secure hybrid cloud offering; and
• Complementary acquisitions - to expand the customer base and to acquire new skillsets
We have made good progress on all aspects of our strategic growth plan, and start the third year of this plan in an improved
position as noted in each of the areas detailed below:
Sales & Marketing
In February 2022, we strengthened our commercial leadership with the appointment of our new Chief Sales Officer. Under his
leadership, we have changed the structure of our sales organisation to underpin our growth strategy, and over the last 12 months
replaced a large element of the team. We have made incremental investments in these changes but all within an agreed cost
envelope. We completed most of this in the first half of the year and so we start the new financial year with a well-inducted and
skilled team, with momentum and confidence building as order bookings increased during the second half.
We continue to believe that our existing large customer base represents a fertile sales ground for the Group and the continued
broadening of our solutions offering increases our relevance to a wider pool of new customers.
8
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Chief Executive Officer’s Report
New services
Our product team continue to evolve and develop new solution offerings. These are targeted at both new customers, and upselling
and cross-selling to our existing customers. Activity in the last 12 months has included:
• Continued refinement of our Managed Microsoft Azure offering launched in prior year. Even though we targeted M&A to
accelerate this area of the business, it was also important that we built some element of our own capabilities and strengthened
our Microsoft relationship. We have continued to see steady growth in this area with wins from both existing and new
customers. Extrinsica, our recent Microsoft Azure acquisition, will take the lead on adding significant engineering capability
and expertise on Azure infrastructure design, deployment and management for our customers.
• In March 2022, we announced a new security partnership with cyber security specialists, e2e-assure, to deliver proactive
24/7 security operations centre services. The move into the security market has been a long-standing ambition of iomart and
is a key part of the growth strategy. We now have five customers taking this service and they provide a strong reference base
for further customer wins. Globally, cyber-attacks are on the rise and we now have a highly credible offering for customers
to address this everyday threat. We will continue to look to expand this cyber portfolio, with a strong focus on Microsoft via
internal developments, additional partnerships and potential M&A.
• During the year, we launched an enhanced, multi-tenanted cloud platform with the latest technology from VMware. This
refreshes our virtual cloud offering with the latest cloud functionality, control and scalability. We are one of the few managed
service providers globally to successfully implement this leading edge vendor technology. We see private cloud remaining as
a core element of any hybrid cloud offering and we are leading the way on this.
All of these new products are designed with a 24/7 service capability, as it is the service support we offer our customers and our
deep technical expertise which remains at the heart of our hybrid offering.
People and Systems
We have invested in a Learning Management System (“LMS”) which supports our skills development programmes and employee
engagement. This is an important step, as we strongly believe a continuous learning culture will underpin our future success. In a
period of skills shortages, we believe, attracting, developing and retaining our talent is critical.
In the second half, we changed the structure of our executive management team with the role of COO split between a Chief
Customer Officer (“CCO”) and a Chief Technology Officer (“CTO”). As well as bringing focus, it also provides greater bandwidth on
execution. We were able to promote internally for the CCO role and are pleased to have recruited externally an experienced CTO
for the Group who joined us in late May 2023.
Enhancing the tooling and systems in the business is an evergreen task, allowing especially our customer facing staff to work
efficiently and respond well to customer requests. We replaced our telephone system with a Teams based service in the year,
and we continued to consolidate asset platforms and simplify our reporting. The working environment for our staff is also
important and we have recently committed to a 10-year lease for a new Glasgow office. This will see us move from our existing
premises into a Grade A office in the city centre enhancing the working environment for existing staff whilst also being positive for
recruitment. This was achieved without any significant cost increase.
M&A
As in the past and as reconfirmed in our strategy communications we plan to use selective M&A to augment our organic growth.
It was pleasing to see a high level of activity in this area with the acquisition of Concepta in August 2022, and subsequent to the
year-end, on 2 June 2023, we successfully completed the acquisition of Extrinsica, a Microsoft Azure managed service provider.
We will maintain our structured and disciplined approach to M&A and remain active in evaluation of potential targets.
Market
Macroeconomic headlines such as double-digit inflation, rising debt costs, and a cost-of-living crisis, coupled with geo-political
uncertainties, form a challenging backdrop for many of our customers and their planned spending levels. However, we do have
the benefit of a very wide and varied customer base with no significant sector or single customer concentration, which provides
some natural portfolio protection. While iomart will not be immune to this economic backdrop, the requirement for organisations to
be supported on their hybrid cloud journey will continue to grow for the foreseeable future. Providing excellent customer service
and deep technical expertise, related to the cloud infrastructure that is managing mission critical applications for our customers,
also supports our view of sustainable growth over the medium term.
The concept of “Cloud” computing is now globally recognised across all market segments. The “public cloud” giants such as
Amazon, Microsoft and Google have vastly contributed to this general awareness and consequently have seen high growth
globally as many organisations look for Cloud infrastructure and capabilities. The reality of the situation is that a vast majority of
the world’s IT infrastructure is complex and untidy in nature which means hybrid cloud models will remain a key market feature for
many use cases and many years to come. Even if businesses want to use Public Cloud infrastructure fully, many lack the detailed
know-how, skills and resources required to manage all the elements. iomart is well positioned to meet this demand given our long-
established capability in designing and running private clouds, supporting on-premise solutions, and with the recent acquisition of
Extrinsica adding skills and capabilities for public cloud provisioning and ongoing management.
With the insatiable growth in data across all industries, the demand for the three core building blocks of compute power, storage
and connectivity continues to rise. Organisations are increasingly outsourcing these requirements to experts, who can help them
navigate a constantly evolving and complex technical landscape, providing high levels of reliability, customer support, flexibility,
9
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Chief Executive Officer’s Report
Strategic Report – Chief Executive Officer’s Report
and technical know-how. These requirements increasingly come with greater security and compliance needs, particularly around
data storage, protection, and transit.
No two organisations are the same, and therefore the cloud solution mix in the future will be unique and reflect the needs of an
organisation at that time, especially for those organisations that are running established applications that are not public cloud
compatible. Many customers are looking for a single point of accountability for all their cloud needs and iomart is well positioned
to provide this service going forward, particularly for medium to large enterprises.
Commitment to ESG and sustainability
iomart believes that integrating environmental, social and governance (“ESG”) considerations across our business enables us to
accelerate our customers’ success whilst looking after the environment and society.
Environmental
Last year, we worked on establishing carbon reduction targets and identifying ways to reduce further our overall emissions as we
work towards achieving carbon neutrality. This concluded with an alignment with the UK Government targets and a commitment
to achieve Net Zero by 2050, or earlier, if possible. We commenced purchasing Renewable Energy Guarantees of Origin (“REGO”)
certified renewable electricity across our UK data centre estate in 2021, which significantly reduces our carbon emissions. As
this has been in place for the whole of the financial year, this takes a significant step towards our commitment to Net Zero. We
continue to look at ways to increase the energy efficiency across our UK data centre estate, and have therefore have accelerated
upgrades to our battery power systems.
Social
We have undertaken a number of initiatives for our own staff wellbeing and engagement including:
• Winter cost of living allowance payments made to staff at a total cost of around £0.4m
• Launch of a learning management system ‘”iosmart” to support a learning culture and our skills development programmes
• Manager fundamental training completed by all managers, and completion of a leadership development programme across the
Group
• UK Wide HR Roadshows held to enhance employee engagement
We have also implemented a number of external facing initiatives, the key activities being:
• Continuing to partner with local charities that align with our brand focus and employees’ interests, such as SmartSTEMs and
Scotland’s Empowering Women to Lead Cyber Security and Digital Transformation leadership programmes
• Partnered with Generation, a charity that supports IT education to employment of people from disadvantaged socioeconomic
backgrounds
• Sponsorship of Scotland IS digital technology awards
Governance
In August 2022, we saw the appointment of Lucy Dimes, our new Chair. In addition, in May 2023 we announced we would be
appointing two new independent Non-Executive Directors who bring significant sector experience to the Board to support and
guide our growth strategy.
After the appointment of an external third party to lead an outsourced internal audit function, there has been an appropriate full
year’s worth of engagement, which has been well received by the business. In February 2023, we announced the appointment of
Investec as the Company's Nominated Adviser replacing the incumbent who had been in place since our IPO.
Acquisitions
On 15 August 2022, we successfully completed and announced the first acquisition under our refreshed strategy,
acquiring Concepta, a holding company for the ORIIUM and Pavilion IT brands, for an initial cash consideration of £10.8m with
the potential of a further £4.0m contingent earn-out payment based on profitability for the 12-months ending 30 June 2023. It is
expected, based on the current forecast that this maximum earn-out will be paid in July 2023. We also repaid £1.5m of bank debt
acquired on completion. The Concepta Group consists of two brands:
• ORIIUM, established in 2007, is a channel-only organisation working with value added resellers and managed service providers
to deliver best in class data and application management solutions to end users. With this acquisition, iomart gained an
independent wholesale operation that understands the UK IT channel deeply, and has built trust through long-standing
strategic partner relationships. Data management is a core element of the Group's hybrid cloud proposition, and ORIIUM
materially strengthens iomart's indirect sales channel capabilities, while extending the Group's product and technical skills and
capabilities, with an additional 45 technical engineers who joined the Group.
• Pavilion IT, a business established for over 30 years, which also includes the 2021 acquisition of P2 Technologies, a business
focused on the legal & accounting professional services sector which added customer vertical specialisation. This brand has a
strong direct sales organisation with over 250 customers under one unified operational delivery team offering a range of hybrid
and cloud infrastructure technology solutions plus professional services and on-going customer support arrangements.
10
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Chief Executive Officer’s Report
Acquisitions (continued)
As announced on 5 June 2023, subsequent to our year-end, we completed the acquisition of Extrinsica, for an initial
consideration of £4.0m, with a potential further £0.3m in cash payable on the achievement of certain key customer targets
during the calendar year. Of the initial consideration, £2m was satisfied by the issue of 1,562,500 new ordinary shares in iomart,
which under the terms of the Sale and Purchase Agreement are subject to a 12 month “lock in” provision and based on a fixed
share price of £1.28, being the volume weighted average price for the 90 days prior to completion. The balance of £2.0m was
paid in cash. We also repaid £3.7m of debt acquired on completion. A further £4.0m to £7.0m of contingent earn-out payments
is included in the share purchase agreement based on the profitability for the 12 months ending 31 March 2024. Of any earn-
out payment that becomes due, £1.0m will be satisfied by the issue of iomart shares (the number of shares to be issued will
be based on the same share price as the initial consideration). The amount of contingent consideration payable, based on
management’s forecast, recognised at the date of the Acquisition, is expected to be £4.0m.
Extrinsica is a Microsoft Azure Cloud solution services provider with offerings including managed Azure Cloud, Azure solution
design and implementation services, support & optimisation services and licencing. The company was incorporated in 2010
as a Cloud services provider to micro businesses. It was in 2017 that its current business model was established when it was
invited by Microsoft to become one of the first 25 Microsoft Azure CSP partners worldwide. It is now solely Azure public Cloud-
focused. This acquisition provides iomart with deep Microsoft Azure expertise, a highly capable team of 33 based in the UK,
strong customer references and a shared value and vision for how the Microsoft Practice in iomart should be shaped to support
acceleration of growth. Prior to our acquisition, Extrinsica generated revenues of £7.4m, being year on year growth of c.40%, and
EBITDA of £0.1m (unaudited).
Operational Review
While all of our activities involve the provision of services from common infrastructure, we are organised into two operating
segments, Cloud Services (£103.9m revenue) and Easyspace (£11.7m revenue).
Cloud Services
Within our Cloud Services division, we have three core offerings that recognise the differing complexity of the solutions designed
and the level of ongoing managed services we provide being: iomart cloud managed services, self-managed infrastructure and
non-recurring revenue. This means we can supply products and services across the full cloud spectrum and do so using shared
resources and common platforms across the Group.
•
iomart cloud managed services: £64.1m revenue (2022: £55.7m): provides fully managed, complex bespoke designs,
resulting in resilient solutions involving differing infrastructures. This has a wide range of offering across the full cloud
spectrum from simpler colocation data centre services to a full 24/7 managed service complemented by our back-up and
disaster recovery offering. Over the long-term we anticipate this will be the highest growth area for iomart, supported by the
market drivers described above. This is the part of the business on which new product service launches are focused because
we believe provision of managed service is what organisations are looking for to support their business objectives and that
we are well placed to offer.
• Self-managed infrastructure: £30.4m revenue (2022: £28.4m): provides dedicated, physical, self-service servers to
customers. We deliver many thousands of physical servers for our customers using highly automated systems and processes
which we continue to develop and improve. Our own regional data centre estate and fibre network positions us well to offer
such infrastructure as a service. It is generally recognised that this activity is a lower growth area within the cloud market
but continues to offer a cost competitive solution for many customer use cases and for those who have retained their own IT
skills.
• Non-recurring revenue: £9.4m (2022: £7.1m): relates primarily to on-premise equipment and software reselling via our Cristie
Data and Pavilion IT brands, as well as consultancy projects. By their nature this activity is lower margin but we believe it
to be relevant to our ability to offer support to our existing customer base and new customer wins. It is often these non-
recurring activities that provide an interesting initial introduction to the wider Group and evolve customers into a higher level
of recurring services.
During the year ended 31 March 2023, Cloud Services revenues increased by £12.7m (14%) to £103.9m (2022: £91.2m). This
included £6.2m of revenue for the 7.5 months of trading from the Concepta acquisition completed on the 15 August 2022, split
50/50 between recurring and non-recurring revenue.
Our recurring revenue saw the largest increase being £10.4m to £94.5m (2022: £84.1m), with the largest area being from our
core cloud managed services. This is a combination of a return to long-term historic customer renewal levels, inflationary pricing
adjustments, primarily for data centre energy usage, plus the successful completion of the acquisition of Concepta. The data
centre sector has had to navigate the significant challenges in the energy markets and during the year the Group’s electricity
costs increased by approximately £7 million. iomart’s robust business model and customer arrangements have ensured this
additional energy cost has been appropriately passed through to the customer base.
Non-recurring revenues increased by £2.3m (31%) to £9.4m (2022: £7.1m) which include £3.1m of non-recurring revenue from
the Concepta acquisition in August 2022, primarily the Pavilion IT brand. The underlying reduction in non-recurring revenue
was £0.8m all of which arose in the first half of the year. The economic situation in some of our customer base has slowed down
hardware refresh activity, but we are reviewing our specific product proposition to ensure it avoids the more commoditised
areas, matches our deeper skills, for example in data management, and at the same time create a greater likelihood that such
customers would, over time, move to iomart’s core recurring services.
11
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Chief Executive Officer’s Report
Strategic Report – Chief Executive Officer’s Report
Cloud Services (continued)
Cloud Services EBITDA (before share based payments, acquisition costs, central group overheads and non-recurring exceptionals)
was £35.3m being 34.0% of cloud services revenue (2022: £36.6m (40.2% of cloud services revenue)). The reduction of £1.3m in
Cloud Services EBITDA is a combination of many moving parts, including timing and pass through nature of costs associated with
the inflationary environment, additional investment in upskilling our employees’ capabilities, alongside appropriate wage increases
and cost of living support, and the lower EBIDTA margin which also comes with lower CAPEX needs of some of our new offerings
in comparison to the self-managed infrastructure-only deals of earlier years.
Easyspace
The global domain name and mass market hosting sector continues to grow, supported by the increasing importance of an internet
presence and ecommerce for all areas of the economy, including the small and micro business community represented within our
Easyspace division. This sector is increasingly dominated by a smaller number of large global operators and we recognised a long
time ago that the marketing spends required to compete for new business in this specific area was not the best use of iomart’s
resources. The Easyspace segment has performed well during the year, delivering revenues and EBITDA (before share based
payments, acquisition costs and central group overheads) of £11.7m (2022: £11.8m) and £5.6m (2022: £5.7m), respectively.
Infrastructure investment and energy pricing
Our UK-owned infrastructure is an important aspect of the delivery of our recurring revenue services and a critical differentiator in
the market, allowing more of the value-add to be retained by iomart. We have a well-maintained data centre estate as this is core
to ensuring a resilient service.
The data centre sector has had to navigate the significant challenges in the energy markets and during the year the Group’s
electricity costs increased by approximately £7 million. iomart’s robust business model and customer arrangements have ensured
this additional energy cost has been appropriately passed through to the customer base. While electricity costs remain high, the
energy markets appear less volatile as we enter the new financial year. We have a proactive hedging strategy in place for the next
two years and expect this matter to be less of a distraction for our team and customers going forward.
During the year we re-contracted our core UK fibre network. This refreshes the resilient network that securely connects our data
centres, with the implementation to be undertaken during the course of 2023. We had already commenced the upgrade to our
uninterruptible power systems (“UPS”) in our core data centres last year. However, given the increase in energy costs we have
accelerated this as the new systems offer improved energy efficiencies. Towards the end of the year, we closed our Dunsfold data
centre, which had been included in the Memset acquisition of 2020. This was one of our smaller regional UK data centres. Our
two largest data centres in Maidenhead and central London account for around half of our UK capacity. We will continue to look
for areas to consolidate over the medium to longer term without affecting any customer needs.
Current trading and outlook
Current trading in the first two months of the new financial year are in line with internal expectations, reporting revenues ahead of
the equivalent prior period, with a mix of organic and acquisitive growth.
While iomart will not be immune to any potential economic volatility in the UK and beyond, the requirement for organisations to
be supported on their hybrid cloud journey will continue to grow for the foreseeable future. We support customers with their
cloud infrastructure needs, around often mission critical applications, and the increasing complexity of the technical landscape
will continue to see customers look for partners who can provide the solutions, capabilities, expertise and experience across the
entire cloud ecosystem.
The two recent acquisitions have expanded our capabilities and routes to market, making our solution portfolio more relevant to a
wider audience. The increase in the effectiveness of our sales activities, operational improvements made, and our clear focus on
execution gives us a stronger foundation to accelerate growth. These factors and the momentum achieved in the second half of
the last financial year underpins the Board’s confidence in the outlook for the long-term prospects for the Group.
Reece Donovan
Chief Executive Officer
13 June 2023
Definition of alternative performance measures:
1 Throughout these financial statements adjusted EBITDA (disclosed in the consolidated statement of comprehensive income) is earnings before interest, tax, depreciation and
amortisation (EBITDA) before share-based payment charges, acquisition costs and exceptional non-recurring costs. Throughout these financial statements acquisition costs are defined
as acquisition related costs and non-recurring acquisition integration costs
2 Throughout these financial statements adjusted profit before tax (disclosed on page 16) is profit before tax, amortisation charges on acquired intangible assets, share-based payment
charges, acquisition costs, accelerated write off of arrangement fee on bank facility and exceptional non-recurring costs
3 Recurring revenue is the revenue that repeats either under long-term contractual arrangement or on a rolling basis by predictable customer habit. % of recurring revenue is defined as
Recurring Revenue (as disclosed in note 3) / Revenue (as disclosed in the consolidated statement of comprehensive income)
4 Market expectations based on known sell-side analyst estimates for the full year ended 31 March 2023, established in or around 11 October 2022
12
iomart Group plc Annual Report and Financial Statements 2023 Customer Spotlight
Cyber Security
The cyber threat landscape has become far more sophisticated and complex in
recent years. And about three years ago, Computer Application Services (CAS)
CTO, Chris Ellis, started to investigate enhanced ransomware protection against
a background of increasing attacks and in response to questions from customers.
CAS are a technology company based in Edinburgh, Scotland. CAS have been
developing software since 1969 and moved to employee ownership in January
2014. This coincided with significant investment in their products and processes.
CAS wanted to strengthen their security posture with our Enhanced Security
Operations Centre solution. Rather than offering a piece of technology marketed
as a ‘silver bullet’ we took the time to properly assess CAS’s current security
posture. That meant we were able to put together a package which provided the
right balance of people, process and technology that would meet their specific
business needs.
With end customers ever more concerned about the security of their services, CAS
have been able to reassure their current customer base and win new business. All
while saving money on cyber analyst recruitment, gaining Cyber Essentials Plus,
and upskilling staff internally.
CAS’s Infrastructure Manager, Marc Forrest, said:
“The SOC platform has definitely allowed us to reassure current customers and
win business. We were getting a lot of questions a few years back, and we would
say to customers ‘tell us what you need from a security perspective, and we’ll get
it for you.’ Now when customers come with their list of requirements we can say
‘yes got that, yes we’ve got 24/7 monitoring, tick tick tick.”
CAS’s CTO Chris Ellis said:
“One of our big customers – we have regular sessions with them, and we do a risk
review every month. And one of the things that comes up is cyber security. Their
senior management and IT staff now feel reassured and better protected that
we’re managing the risk of cyber attack on their behalf.”
13
Strategic Report – Chief Financial Officer’s Report
Chief Financial
Officer's Report
Financial Review
Key Performance Indicators
Revenue
% of recurring revenue1
Gross profit %2
Adjusted EBITDA3
Adjusted EBITDA margin %4
Adjusted profit before tax5
Adjusted profit before tax margin %6
Profit before tax
Profit before tax margin %7
Basic earnings per share
Adjusted earnings per share (diluted) 8
Cash flow from operations / Adjusted EBITDA %9
Net debt / Adjusted EBITDA leverage ratio10
See page 19 for definition of alternative performance measures
Revenue
2023
2022
£115.6m
£103.0m
92%
55.0%
£36.2m
31.3%
£14.8m
12.8%
£8.5m
7.4%
6.4p
10.9p
94%
1.1
93%
59.5%
£38.0m
36.9%
£17.1m
16.6%
£12.2m
11.8%
8.6p
12.0p
100%
1.1
Overall revenue from our operations increased by 12% to £115.6m (2022: £103.0m).
We saw a consistent share of recurring revenue at 92% (2022: 93%) compared to prior years. We remain focussed on
retaining our recurring revenue business model with the combination of multi-year contracts and payments in advance
providing us with good revenue visibility.
Cloud Services
The following is the disaggregation of Cloud Services revenues of £103.9m (2022: £91.2m):
Disaggregation of Cloud Services revenue
Cloud managed services
Self-managed infrastructure
Non-recurring revenue
2023
£’000
64,115
2022
£’000
55,745
30,444
28,363
9,359
7,128
103,918
91,236
14
iomart Group plc Annual Report and Financial Statements 2023
Strategic Report – Chief Financial Officer’s Report
Cloud managed services (recurring revenue)
The recurring revenue within cloud managed services increased strongly by £8.4m or 15% to £64.1m (2022: £55.7m). This
was driven by return to organic growth aided by customer renewal levels returning to long-term historic averages, the
Concepta acquisition (mainly the ORIIUM brand) contributing £3.1m and our managed service customers taking around
half of the additional pricing adjustments for the energy cost increase given their services are underpinned by data centre
services and availability. The customers within the self-managed infrastructure area received the balance of the energy
pricing adjustments.
Self-managed infrastructure (recurring revenue)
The self-managed infrastructure revenue of £30.4m (2022: £28.4m) increased by £2.1m. This is a combination of
a reduction in the number of our long tail of smaller customers, more than offset by energy price rises passed onto
customers, which are more energy intensive within this area, plus higher new order bookings from an internal sales
team established to retain dedicated focus on this area. We will continue to allocate resources to ensure we provide this
customer base with resilient, cost effective and increasingly automated solutions.
Non-recurring revenue
Non-recurring revenue of £9.4m (2022: £7.1m) relates primarily to on premise product and licence reselling plus
consultancy projects. Often these non-recurring activities provide an interesting initial introduction to the wider iomart
Group and customers evolve into a higher level of recurring services. The Concepta acquisition in August 2022 included
the Pavilion IT brand, which primarily undertakes similar reselling and professional services activity. This added £3.1m of
non-recurring revenue post acquisition, meaning excluding acquisition impact, the underlying reduction in non-recurring
revenue was £0.8m that arose in the first half of the year. The economic situation in some of our customer base has slowed
down hardware refresh activity.
Easyspace
Our Easyspace segment has performed well over the year with revenues remaining broadly consistent at £11.7m (2022:
£11.8m). The domain name and web hosting business is an area in which we do not invest heavily but it was pleasing to
see a solid performance with high level of renewals from our base of c.60,000 customers. The activity remains highly
profitable and cash generative.
Business model
Our business model in both segments generally involves the provision of cloud and managed hosting services from our
data centres, delivering the computing power, storage, and network capability our customers require for the operation of
their own businesses. We have invested in an estate of data centres, an extensive fibre network and for each customer the
servers, routers, firewalls and other assets that are necessary to create the IT infrastructure they require. These resources,
along with the associated staff, are shared across most of our revenue streams. Customers pay us for the provision of that
infrastructure, with the potential to add 3rd party technology and various degrees of a managed services wrapper.
Larger customers tend to have multi-year contracts for complex cloud solutions, which are invoiced and paid on a monthly
basis. Many of our smaller customers pay in advance for the provision of services which results in a substantial sum of
deferred revenue, which is then recognised over the period of the service provision. A significant proportion of our revenue
is therefore recurring and the combination of multi-year contracts and payment in advance provides us with strong revenue
visibility.
Gross Profit
Gross profit in the year, which is calculated by deducting from revenue variable cost of sales such as power, software
licences, connectivity charges, domain costs, public cloud costs, sales commission, the relatively fixed costs of operating
our data centres plus, for non-recurring revenue, the cost of hardware and software sold, increased by £2.3m to £63.6m
(2022: £61.3m). In percentage terms, gross margin2 is down on prior year at 55.0% (2022: 59.5%) being heavily impacted
by the pass through of energy costs and to a lesser extent lower margin within the Concepta acquisition, primarily from
their reselling activities. In addition as expected given the scope of the service, we typically see lower gross margin levels
on some of the new business won compared to margins from some of the self-managed infrastructure only deals of earlier
years.
Adjusted EBITDA3
The Group’s adjusted EBITDA reduced by £1.8m to £36.2m (2022: £38.0m) which in adjusted EBITDA margin4 terms
translates to 31.3% (2022: 36.9%). The administration expense (before depreciation, amortisation, share based payment
charges, acquisition costs and exceptional non-recurring costs) of £27.4m (2022: £23.3m) is £4.1m higher than the
previous year comparative. However, this includes £1.9m of administrative expenses from the Concepta acquisition
meaning the underlying increase in administrative expenses is limited to £2.2m or 9%. Of this increase our annual salary
award, staff winter cost of living allowance payment and national insurance levy accounts for around half. Year on year
average headcount levels were broadly flat although iomart is employing a higher skilled workforce.
15
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Chief Financial Officer’s Report
Strategic Report – Chief Financial Officer’s Report
Adjusted EBITDA (continued)
The Cloud Services segment saw a 3.6% reduction in adjusted EBITDA to £35.3m (2022: £36.6m). In percentage terms the
Cloud Services margin decreased to 34.0% (2022: 40.2%) for the reasons noted earlier. The Easyspace segment’s adjusted
EBITDA was £5.6m (2022: £5.7m) reflecting the stable revenue performance in the year, which in percentage terms was
again stable at 48.1% (2022: 48.2%).
Group overheads increased by £0.5m in the year to £4.8m (2022: £4.3m). These are costs which are not allocated to
segments, including 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.
Adjusted profit before tax5
The depreciation charge of £15.9m (2022: £16.3m) fell by £0.4m in the year and as a percentage of recurring revenue is
15.0% (2022: 17.0%), driven by the profile and drivers of the higher recurring revenue in the year.
The charge for amortisation of intangibles, excluding amortisation of intangible assets resulting from acquisitions
(“amortisation of acquired intangible assets”), of £2.6m (2022: £2.6m) is consistent year on year.
Finance costs of £2.9m (2022: £2.1m) has increased year on year due to the higher SONIA interest rate. Our revolving
credit facility has a borrowing cost at the Group’s current leverage levels of 180 basis points over SONIA.
After deducting the charges for depreciation, amortisation (excluding the charges for the amortisation of acquired
intangible assets), exceptional non-recurring costs and finance costs from the adjusted EBITDA, the Group’s adjusted profit
before tax reduced to £14.8m (2022: £17.1m), representing an adjusted profit before tax margin6 of 12.8% (2022: 16.6%).
Profit before tax
The measure of adjusted profit before tax is an alternative profit 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 tax5
Less: Amortisation of acquired intangible assets
Less: Acquisition costs
Less: Share-based payments
Less: Accelerated write off of arrangement fee on bank facility
Less: Cost of sales - exceptional non-recurring costs
Profit before tax
2023
£’000
2022
£’000
14,820
17,109
(3,880)
(4,044)
(922)
(696)
-
(820)
8,502
(315)
(480)
(102)
-
12,168
The adjusting items in the current year are:
• charges for the amortisation of acquired intangible assets of £3.9m (2022: £4.0m);
• acquisition costs of £0.9m (2022: £0.3m) which includes a mainly non-cash charge of £0.6m in respect of the closure
of our Memset Dunsfold data centre;
• share-based payment charges of £0.7m (2022: £0.5m) driven by a higher number of options lapsing in the prior year
driving a lower charge; and
• exceptional non-recurring costs of sales of £0.8m which is explained below.
16
iomart Group plc Annual Report and Financial Statements 2023
Strategic Report – Chief Financial Officer’s Report
Profit before tax (continued)
On 1 October 2022, iomart entered into a new three-year electricity utility supply agreement, a new hedging arrangement
and participated in the Energy Bill Relief Scheme (“EBRS”). All of this was undertaken in conjunction with our long
established energy consultant and broker. Around November 2022, we instigated an energy price increase across the bulk
of our customer base. The basis of this price increase was the cost information we received from our energy consultant
and broker. However, in March 2023 our energy consultant and broker identified an error in the previously advised fixed
commodity charge due to a wrong interpretation by them of when the EBRS discount is applied within the charging regime.
This meant that rather than a timing aspect only, there was a £0.8m cost impact for the 6 months to 31 March 2023.
Given the timing of this notification from our energy consultant and broker we are not in a position to recover such sums
from our customer base via our contractual mechanisms. We believe if we had been aware of this item we would have
successfully passed this onto customers in the November 2022 exercise. As the error relates to interpretation of the
EBRS then the matter does not affect financial planning for the period from April 2023 onwards. On this basis, we believe
the item is exceptional and non-recurring in nature and requires to be drawn out separately to ensure a more meaningful
understanding of the financial performance in the year.
After deducting these items from the adjusted profit before tax, the reported profit before tax was £8.5m (2022: £12.2m).
In percentage terms the profit before tax margin7 was a decrease to 7.4% (2022: 11.8%) driven by the exceptional non-
recurring costs and acquisition costs in the year and the impact of the lower trading result in the year.
Taxation
The tax charge for the year is £1.5m (2022: £2.8m). The tax charge for the year is made up of a corporation tax charge
of £0.9m (2022: £1.1m) with a deferred tax charge of £0.6m (2022: £1.7m). The effective rate of tax for the year is 18%
(2022: 23%). The future increase to a 25% UK corporation tax rate was applied to deferred tax balances in the prior year
driving a higher effective tax rate in the prior year. The decrease in the effective tax rate for the year is a function of the
greater impact from the tax accounting on share based payments in the prior year offset partially by the positive effect of
the higher “super deduction” available for capital investments in the current year. Given iomart is very much a UK business
then the UK headline corporate tax is still considered a reasonable recurring effective tax rate for underlying profits. Further
explanation of the tax charge for the year is given in note 9.
Profit for the year
After deducting the tax charge for the year from the profit before tax the Group has recorded a profit for the year of £7.0m
(2022: £9.4m).
Earnings per share
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 6.4p (2022: 8.6p), a reduction of 25.6%.
Adjusted diluted earnings per share8, based on profit for the year attributed to ordinary shareholders before amortisation
charges of acquired intangible assets, acquisition costs, share-based payment charges, exceptional non-recurring costs,
and the tax effect of these items was 10.9p (2022: 12.0p), a reduction of 9.2%.
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.
Dividends
Our dividend policy, which has been in place for several years now, is based on the profitability of the business in the
period measured with reference to the adjusted diluted earnings per share we deliver in a financial year. For the last few
years we have been paying dividends at the maximum level allowed by our stated policy. The current policy is a maximum
pay-out policy of 50% of adjusted diluted earnings per share. The Directors are proposing a final dividend of 3.50p (2022:
3.60p) which is at maximum level set by the dividend policy which we believe is fully appropriate given the recurring
revenue nature of the Group, the level of operating cash which we deliver and the low level of indebtedness within the
Group. As a result, along with the interim dividend of 1.94p (2022: 2.42p), which was paid in January 2023, the total
dividend for the year is 5.44p (2022: 6.02p), a reduction reflecting the movement in the adjusted diluted earnings per share.
17
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Chief Financial Officer’s Report
Strategic Report – Chief Financial Officer’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 £33.8m
(2022: £37.9m) which represents a 94% conversion9 of adjusted EBITDA (2022: 100%). The metric in the current year is
somewhat distorted by the cash element of the non-recurring adjusting items of around £0.8m which if excluded from cash
flow from operations would result in a conversion ratio of 96%.
Cash payments for corporation tax in the year were limited (2022: £2.5m), due to overpayments from prior years which
could be offset against our quarterly instalments and we received a tax refund resulting in a small tax inflow of £48,000,
resulting in net cash flow from operating activities in the year of £33.9m (2022: £35.4m).
Cash flow from investing activities
Our strategy is to continue to reinvest some of the strong operating cash flow we generate back into the business both
in the form of internal investments into our UK infrastructure but also in the continuation of our disciplined acquisition
strategy. The Group invested a total of £21.2m (2022: £10.2m) during the year. In the current year, we paid equity
consideration on the Concepta acquisition, paid associated professional services fees that combined with the cash
acquired, results in a £10.3m net outflow. There were no payments made concerning M&A activity in the prior year.
The Group continues to invest in property, plant and equipment through expenditure on data centres and on equipment
required to provide managed services to both its existing and new customers. As a result, the Group spent £8.9m (2022:
£9.5m) on assets. Most of the expenditure in the year was on operational items such as servers and storage to support
customer deployments.
Expenditure was also incurred on development costs of £1.9m (2022: £1.4m) and on intangible assets of £0.1m (2022:
£0.1m).
Cash flow from financing activities
In the current year, loan drawdowns of £10.4m (2022: £nil) were made from the revolving credit facility to support the
initial equity consideration for the Concepta acquisition. We also repaid £1.5m of bank debt acquired from Concepta at
completion.
Bank loan repayments of £10m (2022: £18.8m) were made in the year resulting in a closing drawn bank loan of £34.4m
(2022: £34.0m). Cash received in the year from issue of shares was only £5k (2022: £4k). We also made dividend
payments of £6.1m (2022: £7.6m); paid finance costs of £2.2m (2022: £2.1m) which included £0.2m of arrangement fees
associated with the extension options taken within the bank facility and made lease repayments of £4.9.m (2022: £4.4m).
Net cash flow
As a consequence of the above component elements and especially the payments associated with the acquisition in the
year, our overall cash position was an outflow of £1.5m (2022: £7.7m outflow) which resulted in cash and cash equivalent
balances at the end of the year of £13.8m (2022: £15.3m).
Net Debt
The net debt position of the Group at the end of the year was £39.8m (2022: £41.3m) as shown below. The net debt
position represents a multiple of 1.1 times10 our adjusted EBITDA (2022: 1.1 times) which we believe is a comfortable level of
debt to carry given the recurring revenue business model and strong cash generation in the business.
Bank revolver loan
Lease liabilities
Less: cash and cash equivalents
Net Debt
2023
£’000
2022
£’000
34,400
34,000
19,180
22,623
(13,818)
(15,332)
39,762
41,291
18
iomart Group plc Annual Report and Financial Statements 2023
Strategic Report – Chief Financial Officer’s Report
Cash flow and net debt (continued)
Net debt (continued)
The Group has access to a £100m Revolving Credit Facility ("RCF") provided by a banking group consisting of HSBC, Royal
Bank of Scotland, Bank of Ireland and Clydesdale Bank, that now matures on 30 June 2026 (2022: 30 June 2025), which
also benefits from a £50m Accordion Facility. On 17 November 2022, the lenders approved the Group enactment of the
extension option. The RCF has a borrowing cost at the Group’s current leverage levels of 180 basis points over SONIA.
The decrease in the lease liability to £19.2m (2022: £22.6m) reflects expected payments on property arrangements and
that there were no material revisions to existing leases.
Exposure to credit and liquidity risks
Disclosures relating to our exposure to credit and liquidity risks are outlined in note 29.
Financial position
The strength of our business model, with high recurring revenue, low customer concentration across wide sectors and
a positive cash cycle is well established and creates a very strong financial position. The Group continues to generate
substantial amounts of operating cash. The generation of that cash flow, together with the committed bank loan facility
for acquisitions, capital expenditure and general business purposes, means that the Group has the liquidity it requires to
continue its growth through both organic and acquisitive means.
Scott Cunningham
Chief Financial Officer
13 June 2023
Definition of alternative performance measures:
1 Recurring revenue is the revenue that repeats either under long-term contractual arrangement or on a rolling basis by predictable customer habit. % of recurring revenue is defined as
Recurring Revenue (as disclosed in note 3) / Revenue (as disclosed in the consolidated statement of comprehensive income)
2 Gross profit margin % is defined as Gross Profit / Revenue as a % (both as disclosed in the consolidated statement of comprehensive income)
3 Adjusted EBITDA (as disclosed in the consolidated statement of comprehensive income) is earnings before interest, tax, depreciation and amortisation (EBITDA) before share-based
payment charges, acquisition costs and exceptional non-recurring costs. Throughout these financial statements acquisition costs are defined as acquisition related costs and non-
recurring acquisition integration costs.
4 Adjusted EBITDA margin % is defined as adjusted EBITDA (as disclosed in the consolidated statement of comprehensive income) / Revenue (as disclosed in the consolidated statement
of comprehensive income) as a %
5 Adjusted profit before tax (as disclosed on page 16) is profit before tax, amortisation charges on acquired intangible assets, share-based payment charges, acquisition costs,
accelerated write off of arrangements fee on bank facility and exceptional non-recurring costs.
6 Adjusted profit before tax margin % is defined as adjusted profit before tax (as disclosed on page 16) / Revenue (as disclosed in the consolidated statement of comprehensive income)
as a %
7 Profit before tax margin % is defined as Profit before Tax / Revenue (both as disclosed in the consolidated statement of comprehensive income) as a %
8 Adjusted diluted earnings per share is earnings before amortisation charges on acquired intangible assets, share-based payment charges, acquisition costs, accelerated write off of
arrangement fee on bank facility and exceptional non-recurring costs and the tax impact of adjusted items /weighted average number of ordinary shares – diluted (as disclosed in note
12)
9 Cash flow from operations / Adjusted EBITDA % is defined as cash flow from operations (as disclosed in the consolidated statement of cash flows) / Adjusted EBITDA (as disclosed in
the consolidated statement of comprehensive income) as a %
10 Net debt / Adjusted EBIDTA level ratio is defined as Net Debt (as disclosed on page 18) / Adjusted EBITDA (as disclosed in the consolidated statement of comprehensive income)
19
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Chief Financial Officer’s Report
Strategic Report – Principal Risks and Uncertainties
Principal Risks and Uncertainties
The Board of Directors, who are responsible for the Group’s system of risk management and internal controls, have
established systems to ensure that an appropriate level of oversight and control is provided to manage principal risks
and uncertainties identified that could have a material impact on the Group’s performance. The Group’s systems of risk
management and internal controls, which are reviewed for effectiveness by the Audit Committee and the Board at least
on an annual basis, are designed to help the Group meet its business objectives by appropriately managing, rather than
eliminating, the risks of failure to achieve business objectives, as any system can only provide reasonable, not absolute,
assurance against material misstatement or loss.
The Board delegates oversight of certain risk management activities to the Audit Committee. The Board ensures that it
controls the risk appetite through the Group’s delegated authorities and matters reserved for the Board. In addition, the
Board must approve any decision likely to have a material impact on the Group from any perspective, including, but not
limited to, financial, operational, strategic or reputational.
The Audit Committee reviews aspects of the risk management and control system at its meetings. At least once a year, the
Committee formally reviews the system’s effectiveness as a whole on behalf of the Board.
Risk management approach
A risk management framework is in place which sets out the ongoing processes for the identification, assessment and
management of risks, and for their ongoing monitoring and review. Effective risk management is essential to enable us to
deliver on the Group’s strategy and to achieve our operational objectives.
The risk management framework sets out our approach to risk management which is designed to support our identification
of risks to the business. Once identified, risks are given a gross score, based on an approved risk scoring matrix, based
on the Group’s assessment of the likelihood and impact of the risk occurring. Each risk is assessed with a risk response
and is re-assessed and given a net score based on the strength of mitigating controls that are in place. This process is
documented in our Group risk register which is reviewed formally bi-annually by the Audit Committee.
In the current year, the Group has continued to apply its risk management framework and risk assessment process to
monitor the relevant identified risks to the Group in order to execute and deliver the Group’s strategy. Executive Directors
and senior management carried out two detailed reviews of the Group risk register and risk map during the year to review
the identified significant risks, the probability of those risks occurring, their potential impact and the plans for managing
and mitigating each of the identified risks. These reviews included a robust assessment of the Group’s emerging risks
taking into consideration internal and external insights to identify key emerging risks for further consideration, monitoring
and action planning. Any emerging risks identified are captured on the Group’s risk register.
More details on the Group’s control framework is provided in the Corporate Governance report on page 32 and details of
financial risks are outlined in note 29.
Risk control assurance
We have strong management controls, including policies and procedures, together with management oversight. Through
the new learning management system launched in the year, all employees completed phishing training to raise awareness
of the potential risk related to IT security. As the learning management tool develops, we intend to utilise this tool to give
employees access to risk management training programmes to raise awareness of potential risks.
We have internal assurance through a detailed review of risks, including operational and commercial risks, and functional
oversight and monitoring of risks. The Board and Executive team review the Group’s financial and operational performance
through comprehensive financial reporting processes including monthly reporting of financial performance compared to
budget, forecasts and the prior year and monitoring of key performance indicators related to various risks of the business.
In addition, we have independent assurance through our internal audit programme led by Ernst and Young LLP (“EY). In
the current year, EY developed an internal audit plan based on their review of our current risk management approach and
Group’s risk register, which was approved by the Audit Committee.
Principal risks and uncertainties
Through the above process, potential material risks and uncertainties remain similar to the prior year, with the exception of
the removal of the risk associated with Covid-19 as the risk to the Group has reduced, and the addition of inflation risk as
described below. These risks are as follows:
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 or senior staff are not retained. 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. The Group also has the ability to
manage and recruit resource across multiple locations which creates, to some degree, flexibility on where we recruit and
how we deploy our resources.
20
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Principal Risks and Uncertainties
Data centre operation
Any downtime experienced at our data centres 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 data centres continue to operate effectively.
We also continually look at new innovations and technology within the sector that can help to deliver operational efficiency
and effectiveness in line with our ISO50001 energy management system, and our obligations within the CRC Energy
Efficiency Scheme.
Network
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. The service we provide to customers is dependent on the continued operation of our
diverse fibre network which connects our data centre estate. Should the network fail, there would be an adverse impact
on customers and any diminution in the level of service could have serious consequences for customer acquisition and
retention. The Group has implemented a resilient network throughout its data centre estate with no single points of failure
to ensure the likelihood of network failure is minimised.
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 to promote a culture within the organisation which embeds security across all of our operations. iomart continues to
develop our security portfolio to equip our customers with the means to counter the types of security threats our clients
face. We continue to focus on enhancing our internal process improvement, security awareness and training to ensure we
provide solutions which customers can rely on. The Group also carries specific insurance in relation to cyber related crime.
Our contracts and associated schedules with customers make it clear where responsibilities lie in relation to the roles and
responsibilities of each party for the Security of Data and Data Protection in general.
Competition
iomart operates in a competitive and fluid marketplace and while the Directors believe the Group enjoys significant
strengths and advantages in competing for business, some of the competitors are significantly larger, allowing them to
offer similar services for lower prices than the Group would be prepared to match, or launching new product offerings
with significantly enhanced features. Consequently, these competitors could materially adversely impact the scale of the
Group’s revenues and its profitability. In response to this, we maintain a broad customer base, with currently no single
customer with more than 2% of our annual revenue. We also mitigate the risk by establishing strong relationships with our
customers, developing tailor-made and value-creating solutions and delivering excellent service performance while being
cost competitive in our day to day business. Our development team are continually working towards both enhancing, and
augmenting, the services and products we currently offer. Our product board meets regularly to keep abreast of new
technology which could enhance the Group's service portfolio.
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.
Volatility of energy prices
Our UK data centres are large consumers of electricity to power servers and provide cooling. In the last 12 months, due
to unprecedented global events, the wholesale cost of energy rose sharply and experienced significant volatility. iomart’s
robust business model and customer arrangements ensured this additional energy cost was appropriately passed through
to the customer base. While electricity costs remain high, the energy markets appear more stable as we enter the new
financial year. We have a proactive hedging strategy in place for the next two years and expect this matter to be less of a
risk to the business as we enter the new financial year.
21
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Principal Risks and Uncertainties
Strategic Report – Principal Risks and Uncertainties
Inflationary pressure
In 2022, inflationary pressure was added to the Group’s risk register as a risk. Our largest cost base is our people cost
which is managed centrally with annual salary awards and reviews of our benefits packages to staff. In the current year,
the Group paid a “cost of living” payment to staff in November 2022 and February 2023. Other significant costs, excluding
electricity, relate to licence, data centre and connectivity costs. Monthly reviews are undertaken of the cost base and we
are in discussion with customers and suppliers where we are seeing any inflationary impact. In addition, our pricing model
is regularly reviewed to ensure that contracts are priced adequately to cover inflation risk.
Growth management
The Group seeks to achieve high levels of growth through a combination of 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, an 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 a stated strategy 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 an integration
and migration plan which includes the participation of the vendor to ensure successful integration of the acquired
business into the Group’s operations; and
• 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 cash
flow. For each acquisition diligence and integration planning is undertaken and all potential synergies identified.
22
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Stakeholder Engagement
Stakeholder Engagement
Stakeholder engagement is critical to the long-term success and sustainability of our business and the Board recognises
its responsibility to take into consideration the needs and concerns of our key stakeholders as part of its discussion and
decision-making processes. During the year, the Board and its Directors confirm they have acted in a way that promotes
the success of iomart Group for the benefit of its members as a whole, and in doing so have had regard to the stakeholders
and key matters set out in Section 172(1) (a) to (f) of the Companies Act 2006 (“Section 172”).
The Board considers that the Group’s key stakeholders are its shareholders, employees, customers, suppliers and key
partners and the environment. The Directors recognise that they are expected to take into account the interests of those
stakeholders whilst prioritising the long-term success of the Group. This can mean that the interests of certain stakeholder
groups in the short-term may need to be balanced against such long-term success.
The Board view the key stakeholders and principal methods of engagement as shown in the table below. In all cases, the
level of engagement informs the Board, both in relation to stakeholder concerns and the likely impact on decision-making.
The Board uses its monthly board meetings as a mechanism to address and meet its obligations under Section 172.
Stakeholder
Group
Shareholders
How we engaged in 2022/2023
The Board engages with shareholders throughout the year through the annual and half year results,
trading updates, regulatory news service announcements, the Annual General Meeting, the investor
roadshows and the investor pages on the iomart Group website.
The Board receives detailed feedback reports via our various advisors, on views of shareholders and
covering analysts. Throughout the year the Board have maintained open and effective engagement
with shareholders and investors on key topics such as strategy, environmental, social and governance
(“ESG”) and business performance.
We refreshed our investor site in June 2022 followed by a full relaunch of the iomart website in August
2022 to support improved online presence and opportunity capture and improve our communication
with our internal and external stakeholders.
Employees
Our culture defines the behaviours we all hold ourselves to account on and helps drive our strategy
of building a high performance team. Our core values are:
• People first – our people are at the heart of everything we do. We support them to anticipate our
customers’ needs and exceed their expectations;
• One team – we work together to achieve great things and treat each other with respect;
• Be curious – we will always strive to improve and challenge the status quo;
• Be accountable – we take ownership of what we do and how we do it. We will deliver on our
promises and are open to feedback; and
• Be ambitious – we take pride in and are passionate about our work and we insist on the highest
standards from ourselves and others.
In the current year, we have continued to engage with employees through wider communication
channels to ensure employees are informed about business strategy and developments in real-
time. Through the use of Yammer across the Group we connect leaders and employees to build
communities, share knowledge (both formal and informal) and engage everyone to acknowledge new
business wins and staff achievements in addition to promoting social events. We encourage the
involvement of all employees from different functions, including the Board and Executive Team, to
take part in Q&A video sessions which are shared with the wider Group to enhance the sharing of
knowledge and information.
A Senior Leadership team (“SLT”) exists which supports the Executive Team to deliver the Group’s
strategy. Throughout the year, the SLT and the Executive team have held monthly calls and have
focussed on achieving objectives to deliver on results. The SLT are in regular communication with
employees giving updates on the business.
23
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Stakeholder Engagement
Strategic Report – Stakeholder Engagement
Stakeholder
Group
Employees
(continued)
Customers
Suppliers and
key partners
How we engaged in 2022/2023 (continued)
The Board communicate to all employees through quarterly townhalls led by our CEO to provide
updates on strategy, organisational change and answer any questions put forward by employees.
The Executive team use iocomms, an email tool, to communicate and engage with all employees and
has been used in the year to introduce new employees and members of the Executive team, to give
internal and external news updates and to involve employees in various fun and interactive events
throughout the year.
The Board also continues to receive monthly HR updates covering key employee matters and
developments which drives a positive connection to the wider employee base.
To mark International Women’s Day in March 2023, we hosted a roundtable discussion with our Chair,
Lucy Dimes where she discussed her experiences building a career in Technology.
The Group places customers at the heart of our business and strategy and has continued to focus on
this ethos to ensure we support our customers. All our teams are focused on regular communication
with customers to ensure we fulfil our customers’ product and service requirements and to deliver
excellent customer service. We ensure that our customers have the opportunity to speak to their
support team, account manager or a member of senior management throughout each stage of their
customer journey with iomart.
During the year, we continued to host topical webinars on Cyber Security and ‘Zero Trust – how to
protect your business from Cyber Threats’, we released e-books on ‘Remote Working’ and ‘A guide
to cyber insurance’ and blogs covering various topics. We also produced our independent ‘State of
Cyber Security in the UK’ report with Oxford Economics which involved a survey of 500 UK cyber
security decision makers to find out what challenges they face and to investigate how they approach
cyber strategy for their organisation and produced an independent document that we have shared
across the industry.
We have also hosted a number of round table discussions, which were well attended, on industry
specific topics including Local Government Strategy, Social Housing Forums, Education Strategy
Forum and Cyber Insurance all focussed on the impact ransomware is having on the industry.
In June 2022 and March 2023 respectively, we hosted stands at Digital Transformation Expo and
Cloud Expo Europe, technology events held in London, to connect with existing and prospective
customers, technologists and business leaders to help engage in conversations on their digital
transformation journeys.
Our product team, which was launched last year, have continued to redefine and launch a number
of new product initiatives, including a refreshed multi-tenanted cloud platform, targeted at both new
customers and upselling and cross-selling to our existing customers.
For more details on how the Group engages with customers, see the Directors’ report on page 49.
Open and honest engagement and relationships with our suppliers and subcontractors is critical to
the delivery of our business model and long-term strategy. The Group has a number of key strategic
partners that we engage with to support delivery of our business in a number of key areas including
IT infrastructure and communication products and services, software, provision of power and our
landlords on leased property. Our teams and employees interact with our strategic partners and all
other suppliers on a regular basis to strengthen trading relationships and to ensure that the supply
chain function continues to operate well to support the business.
In the current year, we appointed a new Strategic Vendor Alliance Manager focussing on our top
suppliers. In addition, the CEO and CFO continue to engage with a number of key strategic partners
to ensure we monitor the quality of our suppliers to optimise operational efficiency, ensure we receive
the best level of service and continue to contract on favourable terms to support the business. For
more details on how the Group engages with suppliers, see the Directors’ report on page 50.
24
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Stakeholder Engagement
Stakeholder
Group
Environment
How we engaged in 2022/2023 (continued)
The Group recognises the environmental impacts arising from our business activities and is committed
to reducing these through effective environmental management. The Group operates a number of
data centres throughout the UK and we operate our data centres in a way intended to reduce the
impact on our local environment, including the usage of energy and greenhouse gas emissions.
The Company participates in the Energy Saving Opportunities Scheme (ESOS) and meets the
requirements of the Streamlined Energy and Carbon Reporting (SECR) regulations (see pages 50 to
52 for our SECR reporting and details on our energy efficiency actions in the year). The Board receive
regular management reports on energy performance and outputs of our data centres to demonstrate
our commitment to ESOS and SECR and is committed to developing the reporting of emissions across
the Group with the intention to further improve environmental performance of our key data centre
locations.
The Board also receive updates on compliance with ISO standards, environmental and energy
efficiency management policies and updates on improvement activities through monthly Board
reporting.
The following table covers the key decisions made during the year and the stakeholder group(s) impacted by these
decisions.
Key Impact
Key decisions made
Key Stakeholder
Group impacted
Long term
strategy and
performance
of the Group
In April 2021, the Board approved the Group’s long-term strategic plan for the
next five years. In the current year, the Board held a strategy day in January
2023 to monitor progress against the strategic plan and continue to consider the
potential impact that the Group’s growth plans might have on its key stakeholders
to ensure that there is a healthy balance between growth, shareholder returns,
internal and external factors and wider stakeholder considerations.
Shareholders,
Employees,
Customers,
Suppliers,
Environment
The Board approved the Group’s FY24 financial budget and five year plan. The
budget was developed by the Executive team and senior management through
a detailed bottom-up approach to set annual targets taking into consideration
the strategic plan and any specific priorities and challenges faced by the
Group. The Board considered the potential impact on our key stakeholders
to ensure that the budget achieved a responsible balance between operating
performance and short and long-term considerations that matter to our key
stakeholders.
The Board continues to monitor the trading performance of the Group, on a
monthly basis, through detailed Board reports provided by the CFO covering
trading in the month and year to date, with performance monitored against
budget and the previous financial year. In addition, at each Board meeting, the
Board receives a detailed CEO report covering performance, external market
and sales, people, marketing and communications, operations, M&A and risk
management updates.
25
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Stakeholder Engagement
Strategic Report – Stakeholder Engagement
Key Impact
Key decisions made
Key Stakeholder
Group impacted
Financing and
capital spend
The Board approves major capital expenditure in excess of £1m to support the
capital investment of our infrastructure and data centres. The Board approved
the terms of the 10 year lease for our new Glasgow head office which will see
occupancy at the start of August 2023.
Shareholders,
Customers
The Board approved the terms and conditions of the Group’s multi revolving
credit facility established in 2021. As part of the monthly Board reporting, the
board receives reporting on compliance with loan covenants.
The Board reviews the dividend policy and approved the interim and annual
dividends taking into account the results and financial position of the Group.
There has continued to be a clear focus on monitoring of cash flow and strong
cash management with monthly reporting to the Board.
In August 2022, the Board approved the acquisition of Concepta Capital Limited,
a holding company of a group of companies which includes the ORIUUM and
Pavilion IT brands. In May 2023, the Board approved the acquisition of Extrinsica
Global Holdings Limited, the holding company of Extrinsica Global Limited. The
Board considers that these transactions are in line with the acquisition strategy
of the Group and the achievement of long-term growth plans.
Employees
and culture
The Board seeks to ensure that the Group’s staff policies and processes are
aligned with the Company’s core values and promote the long-term strategy of
the Group. In addition, the Board continues to make decisions that encourage
improvements in systems, processes and benefits which impact our employees.
Shareholders,
Employees
During the year, the HR team have held UK wide roadshows visiting all locations
in the UK to engage with staff. In addition, HR led an employee engagement
survey in the year to encourage feedback across the organisation on various
aspects of the Group and drive cultural alignment with our core values and our
focus on building a learning culture. In addition, it ensures areas of importance
highlighted by employees are considered and reflected in future decisions and
communications. The results of our interaction with employees were reviewed
by the Executive team and the Board to develop actions and resulted in the
continuation of a number of existing initiatives to support our employees and
the launch of a number of new programmes outlined below.
The Company has continued to strengthen our focus on ensuring the health
and wellbeing of our employees and has continued to support hybrid working
patterns. As previously reported, the Board supported a number of key initiatives
which have continued throughout the current year including:
• An employee assistance programme with a third party provider, Health
Assured, offering free counselling support available 24/7 for all employees
and their families;
• All employees have access to Health Assured’s ‘My Healthy Advantage’
phone app giving access to, among other things, mindfulness videos, mini
health checks, health coaching and healthy eating guidance.
• We have continued our partnership with a charity, Mindapples, as part of our
employee wellbeing programme to improve mental health and help people
take better care of their minds improving resilience and productivity.
•
In the year we have hosted financial webinars, led by HSBC, to support our
staff in managing finances in the current economic environment.
26
iomart Group plc Annual Report and Financial Statements 2023 Key
Stakeholder
Group
impacted
Shareholders,
Employees
Shareholders,
Employees,
Customers,
Suppliers,
Environment
Strategic Report – Stakeholder Engagement
Key Impact
Key decisions made
Employees
and culture
(continued)
In the current year we have invested in, and launched, a full internal learning
management system, “iosmart”, to support our skills development programme and
employee engagement. We strongly believe a continuous learning culture will underpin
our future success and attract, develop and retain talent. In addition, all managers
attended manager fundamentals training and fifty senior leaders completed an external
Leadership Development course, led by an external consultancy firm, to develop their
leadership skills.
In October 2022, the Board approved a ‘winter cost of living’ allowance to the majority
of staff paid over two instalments in November 2022 and February 2023 to support our
staff through rising energy costs and inflationary increases.
During the year, the Remuneration Committee has continued to make recommendations
to the Board on the remuneration packages, including annual bonuses and salary
review, for the Executive and Non-Executive Directors and long-term incentive plans.
The Board reviews the Nomination Committee assessment of the current and future
composition of the Board, with a focus on diversity, skills and succession planning.
Governance,
regulatory
requirements
and risk
The Board reviews and approves the results announcements and trading updates,
the half year report and annual report and the AGM statement. The Board receives
regular briefings from the Chairman, CEO and CFO and the Group’s brokers and public
relations advisers.
Through the half year and annual year end results process and the investor roadshows,
the Board are in communication with analysts and advisors to help understand
shareholder views which contributes to the Group’s strategy and decision making. In
the current year, the Chairman met face to face with a number of investors and external
stakeholders. The CFO presents investor feedback results from the roadshows to
the Board. A range of corporate information (including Group announcements) are
available to all shareholders, investors and the public on the Group website www.
iomart.com/investors.
The Board takes regulatory responsibilities seriously and is committed to ensuring that
it is open and transparent with regulators. In February 2023, the Board approved the
appointment of Investec Bank Plc (“Investec”) as nominated advisor and sole broker.
As part of take-on procedures the Board met with Investec in January 2023 who
provided an overview of the AIM rules and market abuse regulations, ensuring iomart’s
compliance with requirements.
The Board undertakes a formal and rigorous evaluation of its own performance
annually and that of its Committees and individual Directors. As noted in our Corporate
Governance report on page 35, an internal evaluation of the Board was completed in
March 2023.
On 30 August 2022, the Board approved the appointment of Lucy Dimes as Independent
Non-Executive Chair.
On 28 February 2023, the Board approved the appointment of Julie Brown, In-house
Legal Counsel, as Company Secretary.
In May 2023, the Board approved the appointment of Annette Nabavi and Adrian
Chamberlain as Non-Executive Directors.
27
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Stakeholder Engagement
Strategic Report – Stakeholder Engagement
Key
Stakeholder
Group
impacted
Employees,
Customers,
Suppliers,
Environment
Key Impact
Key decisions made
Governance,
regulatory
requirements
and risk
(continued)
As noted in the Board biographies on pages 30 to 31, these appointments bring a
wealth of experience and additional sector skills to the Board.
In the last 12 months, the Board has been heavily involved in our energy strategy,
approving decisions on our energy provider, energy hedging arrangements and our
business model and customer arrangements to ensure that wholesale energy price
rises have been appropriately passed through to our customer base and included in
our pricing plans for renewals and new business going forward.
Social
The Board are very supportive of our focus on continuing to improve our environmental,
social and governance (“ESG”) footprint and have supported a number of key initiatives
in the year.
We have continued our sponsorship of the “Empowering Woman in Leadership”
programme which is designed to address the lack of gender diversity in leadership
roles across the technology profession in Scotland by supporting the creation of a
community of empowered future female leaders. In the current year, we supported the
“Digital Transformation” and “Cyber Security” cohorts and enjoyed working with the
team to help play a role increasing diversity and championing the exceptional female
leaders we have in our industry, as well as inspiring future generations to pursue a
leadership role in technology.
We continue to work with a local charity SmartSTEMs who organise and host events to
inspire and engage young people aged 10-14 from underprivileged backgrounds with
the range of careers in the four STEM pillars – Science, Technology, Engineering and
Mathematics. We provide videos to SmartSTEMS of our staff explaining their roles that
are played to primary school children followed up by on-site school visits during the
year by the CEO and other key staff members to allow the children to ask questions.
During the year, we partnered with Generation, a company that transforms education
to employment to prepare, place and support people into careers that would otherwise
be inaccessible. iomart has worked with Generation to provide employment for
candidates from disadvantaged backgrounds.
In May 2022, we sponsored the ScotlandIS digital technology awards, rewarding
innovation, expertise and ambition of companies across the breadth of Scotland’s
digital sector.
Our staff have been active in the year taking part in the ‘Movember’ run throughout the
UK in November 2022, raising awareness and money for men’s mental health.
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iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Stakeholder Engagement
Key Impact
Key decisions made
Environment
The Board is committed to demonstrating clear environmental policies to minimise
the impact of our business operations on the local environment.
As previously reported in 2021, the Board approved the commitment to procurement
of Renewable Energy Guarantee of Origin (“REGO”) certificates for our green
energy procurement. All our UK data centres are 100% powered by REGO certified
renewable energy significantly driving down our carbon emissions (see Greenhouse
Gas reporting on page 51).
In the prior year, the Board approved the development of our carbon roadmap
strategy. For details of our commitment to reducing our carbon footprint and
progress during the year, see our carbon emission reporting on pages 50 to 52.
During the year, we have re-contracted our core UK fibre network, refreshing the
resilient network that securely connects our data centres, and we have accelerated
the upgrade to UPS battery power systems, which was approved by the Board,
providing for greater energy efficiency in the future.
Key Stakeholder
Group impacted
Employees,
Customers,
Suppliers,
Environment
The Strategic Report on pages 8 to 29 has been approved by the Board and is signed on its behalf:
Scott Cunningham
Chief Financial Officer
13 June 2023
29
iomart Group plc Annual Report and Financial Statements 2023 Strategic Report – Stakeholder Engagement
Board of Directors
Board of Directors
REECE DONOVAN, CHIEF EXECUTIVE OFFICER
Date of appointment - March 2020, appointed as Chief Executive Officer in October 2020
Background and experience
Reece has over 23 years' experience in the technology and telecommunication industries, with a
demonstrable track record of achievement in roles both in the UK and internationally. Reece's most recent
position, prior to joining iomart, was Chief Executive Officer at Nomad Digital, a provider of IP connectivity
and digital solutions to the global transportation sector. Previous positions include Senior Vice-President
Global Services for CSG International, a provider of software solutions to over 400 customers located in
120 countries and a number of management and operational roles across the technology, communications
and consumer packaged goods industries at Steria plc, Xansa plc and Druid plc.
SCOTT CUNNINGHAM, CHIEF FINANCIAL OFFICER
Date of appointment - September 2018
Background and experience
Scott is a chartered accountant having trained with Arthur Andersen where he became a senior manager
providing audit and transaction support services to both public and private companies. Leaving Arthur
Andersen in 2001, Scott joined Clyde Blowers and performed a number of roles including Group Financial
Controller for the Clyde Bergemann Power Group from 2003 to 2006. He became Director of Corporate
Finance and Company Secretary for AIM listed InterBulk Group plc in February 2006 and, in April 2007,
Scott became Group Finance Director for InterBulk Group plc until it was successfully sold to Den Hartogh
in March 2016. Immediately prior to joining iomart he was an Investment Director at Clyde Blowers Capital.
LUCY DIMES, NON-EXECUTIVE CHAIR
Date of appointment - August 2022
Committee Membership - Audit, Remuneration and Nomination (Chair)
Background and experience
Lucy brings extensive experience across the technology, telecoms and business services sectors, gained
from a successful international executive career at BT plc, Alcatel-Lucent (now Nokia), Fujitsu, Virgin
Money plc, UBM plc and Equiniti Group plc.
Lucy holds an MBA from London Business School, a First Class Degree in Business from Manchester
Metropolitan University, and attended the Global Women Leadership Programme at Harvard Business
School.
External appointments
Lucy is also a Non-Executive Director of Babcock International Group plc and a member of their
Remuneration, Audit, Nomination and UK Security Committees. She is the Founder and Director of
Paradimes Services Ltd, a consultancy and advisory business, and was previously an NED for Berendsen
plc from 2012 to 2016 prior to their acquisition by Elis S.A.
ANGUS MACSWEEN, NON-EXECUTIVE DIRECTOR
Date of appointment - March 2000, appointed as Non-Executive Director in October 2020
Background and experience
Angus 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. Angus was Chief
Executive Officer until he retired on 1 October 2020 and was appointed as a Non-Executive Director on
the same day.
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iomart Group plc Annual Report and Financial Statements 2023 Board of Directors
RICHARD MASTERS, NON-EXECUTIVE DIRECTOR
Date of appointment - June 2017
Committee Membership - Audit, Remuneration (Chair, resigned 1 June 2023) and Nomination
Background and experience
Richard has over 30 years’ experience in the legal profession and was managing partner of McGrigors
LLP until April 2012 when it merged with Pinsent Masons LLP. He sat on the main board of Pinsent
Masons until March 2017 and has held a number of roles in the business including corporate finance
advisory services. He served as Head of Client Operations for Pinsent Masons for three years post-
merger before being appointed as Executive Chairman of Complete Electronic Risk Compliance Limited,
a Pinsent Masons LLP subsidiary which was sold to Dow Jones in February 2018. Richard was Chair of
Scotland and Northern Ireland for Pinsent Masons from September 2017 until October 2019 when he
retired. Richard will not stand for re-election at the forthcoming Annual General Meeting in September
2023 and will leave the Board at that time.
External appointments
Richard is the Chief Executive Officer at the Faculty of Advocates and Faculty Services Limited.
KARYN LAMONT, NON-EXECUTIVE DIRECTOR
Date of appointment - February 2019
Committee Membership - Audit (Chair), Remuneration and Nomination
Background and experience
Karyn is a chartered accountant and former audit partner at PricewaterhouseCoopers LLP. She has
over 25 years of experience, 13 years as an audit partner, and provided audit and other services to a
range of clients across the UK's financial services sector, including outsourcing providers. Her specialist
knowledge includes financial reporting, audit and controls, risk management, regulatory compliance and
governance. Karyn left PricewaterhouseCoopers LLP in 2016.
External appointments
Karyn is a Non-Executive Director, and Audit Committee Chair of Scottish Building Society, North American
Income Trust plc and Scottish American Investment Trust plc. In September 2022, Karyn was appointed
to Ediston Property Investment Company plc as Non-Executive Director and Audit Committee Chair.
ANNETTE NABAVI, NON-EXECUTIVE DIRECTOR
Date of appointment - May 2023
Committee Membership - Remuneration (Chair) effective 1 June 2023
Background and experience
Annette brings over 30 years of experience in operational and advisory roles in the technology sector
including significant expertise in driving growth through acquisition and partnerships. Annette currently
sits on the board of Eleco plc, an AIM listed software company, and serves as the Chair of its Remuneration
Committee. She has held several Non-Executive Director roles, including a seven-year tenure at AIM listed
Maintel Holdings Plc, a cloud and managed services company, where she also chaired the Remuneration
Committee. She has substantial experience in the area of Remuneration through her involvement with
the Quoted Companies Alliance (QCA), where she supported the update to the Remuneration Committee
Guide.
External appointments
Annette is a Non-Executive Director, and Remuneration Committee Chair at Eleco plc and is Finance
Director for Women in Telecoms and Technology, a Not-for-Profit organisation.
ADRIAN CHAMBERLAIN, NON-EXECUTIVE DIRECTOR
Date of appointment - June 2023
Committee Membership - Audit, Remuneration and Nomination
Background and experience
Adrian has considerable experience across the technology and telecoms sector, having spent a significant
period of his executive career with Cable & Wireless plc before becoming CEO of Message Labs and
then Achilles, both cloud-based SaaS businesses. He has substantial experience in strategy formulation,
growing turnover and establishing presence in new markets. Until recently, Adrian was the Chair of the
Board of eConsult Health Ltd, a cloud-based SaaS business in the healthcare sector.
External appointments
Adrian is a Non-Executive Director at Alfa Financial Software Holdings plc, a listed global software
provider, a Non-Executive and Senior Independent Director at Cambridge University Hospitals NHS
Foundation Trust.
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iomart Group plc Annual Report and Financial Statements 2023 Board of Directors
Corporate Governance Report
Corporate Governance Report
On behalf of the Board, I am pleased to present our Corporate Governance report for the year ended 31 March 2023. As
Chair of the Board, I am responsible for ensuring that the Board operates effectively and that it continues to uphold a high
standard of corporate governance with strong procedures and policies that are considered appropriate to the nature and
size of the Group. The Board understands the importance of ensuring that there is a strong governance framework in
place which underpins the Group’s ability to achieve its strategic goals, and aims to improve continually our processes and
risk management to support the continued growth of the Company. The Board reviews governance arrangements on an
ongoing basis to ensure that they remain fit for purpose and that our governance model continues to support our business.
The Company continues to adopt the Quoted Companies Alliance (“QCA”) code and this report describes our approach
to governance and how the principles of the QCA code have been fully complied with during the year. Our statement
of compliance, required for AIM companies, can also be found on our website at www.iomart.com/investors/corporate-
governance.
Stakeholder engagement
Engagement with our stakeholders is critical to the long-term success of the Group and it is my role to manage the Board in
the best interests of the Group’s many stakeholders and be responsible for ensuring the Board’s integrity and effectiveness.
The Board recognises its responsibility to take into consideration the needs and concerns of all our stakeholders as part of
our discussions and decision-making process and remains committed to strengthening business relationships.
The Board continues to have iomart’s environmental, social and governance (“ESG”) performance at the forefront of its
agenda and we have continued to make improvements to our ESG strategy in the current year. Our reporting on ESG
performance in the current year is covered in this Corporate Governance report, the Stakeholder Engagement report on
pages 23 to 29 and the Directors report (including our Streamlined Carbon Energy Reporting) on pages 48 to 52.
A culture of strong corporate governance is essential to our future growth and I am confident that our approach to
governance provides a robust framework to support the achievement of our strategic plan.
Lucy Dimes
Non-Executive Chair
13 June 2023
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iomart Group plc Annual Report and Financial Statements 2023 Corporate Governance Report
The Board
Role of the Board
The Board’s principal role is to provide effective leadership of the Group and establish and align the Group’s values,
strategic plans and culture. The strategic report describes the business model on page 15 and explains the basis on which
the Group generates value, and outlines the long-term strategy of the Group on page 8.
It is the Board’s role to ensure that the Group is managed for the long-term benefit of all its stakeholders and is responsible
for delivering shareholder value by developing the Group’s strategic plans. The Board ensures that obligations to all
key stakeholders are met and that effective and efficient decision making is made incorporating the needs of our many
stakeholders to drive and deliver its strategy in the best interest of all the Group’s stakeholders.
The Board is responsible for overseeing the Group’s external financial and other reporting requirements and for ensuring
that a robust framework of governance and controls exist which allow for the identification, assessment and management
of internal controls and risk management to support the continued growth of the business.
There is an approved formal schedule of matters reserved for the Board which includes, but is not limited to:
• approval of strategic plans, annual financial budgets and business plans;
• approval of material acquisitions, contracts, major capital expenditure and disposal of major assets;
• changes relating to the Group’s structure and shares;
• approval of the annual report and interim financial statements, trading statements, preliminary announcements and
accounting policies;
• approving any significant funding facilities; and
• approval of the dividend policy at half-year and year end.
The Board meets regularly, usually monthly, to discuss and agree on the various matters brought before it, including the
trading performance. Information of a sufficient quality is supplied to the Board in a timely manner. 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.
Board Structure and division of responsibilities
The Group is led by a strong and experienced Board of Directors which brings depth and diversity of expertise to the
leadership of the Group. The Board has an appropriate balance of skills, experience and knowledge of the Group and its
market to enable it to discharge its duties and responsibilities effectively. The Board recognises that to remain effective it
must keep the composition of the Board under review to continue to ensure the right mix of skills and business experience
to support the effective functioning of the Board, helping to ensure matters are fully debated and that no individual or
group dominates the Board decision-making process.
Following appointments made post year end, the Board now has eight members, comprising two Executive Directors being
the Chief Executive Officer and Chief Financial Officer, the Non-Executive Chair and five Non-Executive Directors. Board
biographies of all Board members giving details of their experience are included on pages 30 to 31.
The responsibilities of the roles within the Board are set out below:
Chair
The Chair is responsible for the leadership and effectiveness of the Board and overall running of the Board, ensuring that all
Directors receive sufficient and relevant information prior to meetings to allow independent judgement and bring effective
challenge to decision making. The Chair sets the Board agenda and chairs the Board meetings to encourage open and
honest debate, constructive challenge of the Executive Directors and facilitate effective contribution of Non-Executive
Directors. There is clear division of responsibility between the Chair and Chief Executive Officer. The Chair provides
challenge to the Executive Directors and works closely with the Chief Executive Officer on key strategic decisions. The
Chair maintains and supports communication channels with shareholders as appropriate.
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iomart Group plc Annual Report and Financial Statements 2023 Corporate Governance Report
Corporate Governance Report
Chief Executive Officer and Chief Financial Officer
The Chief Executive Officer’s responsibility is the leadership, management and overall control of the Group. Once the Board
has approved the strategic plan and financial objectives, 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 Executive Committee which comprises the
Chief Financial Officer and senior executives who manage the day-to-day operation of the Group’s business.
The Chief Executive Officer is responsible for the running of the business and, along with the Chief Financial Officer,
is responsible for the day to day financial and operational management of the Group in addition to approving budgets,
monitoring the Group’s principal risks and maintaining close contact with all key stakeholders. The Chief Executive Officer
and Chief Financial Officer are supported by a highly committed and experienced senior management team, with the
qualifications and experience necessary to run the Group and are responsible for monitoring the performance of the senior
management team.
Overall, there is a clear division of responsibilities between the running of the Board and the Executives responsible for
delivering on the Group’s strategic plan, to ensure that no one person has unrestricted powers of decision.
Independent Non-Executive Directors
The Non-Executive Directors provide independent, constructive challenge to the Executive Directors and are responsible
for bringing independent judgement and scrutiny to decisions taken by the Board. They strengthen governance through
being members of the various Board Committees and help ensure that the Group’s strategy is delivered within the Group’s
risk framework and internal control environment.
Company Secretary
The Company Secretary supports the Chair and Chief Executive Officer on all matters of governance and is available to all
Directors for advice and support. The Company Secretary is responsible to the Board for ensuring the Board procedures
are properly complied with and that the discussions and decisions are appropriately minuted. In February 2023, Andrew
McDonald was replaced by Julie Brown as Company Secretary.
The Chair and Non-Executive Directors hold other Directorships, as detailed in the Board biographies set out on pages
30 to 31. The Board has concluded that these other commitments do not detract from their ability to discharge their
responsibilities effectively.
Independence
At the year end, the Board considers that all Non-Executive Directors serving are independent with the exception of Angus
MacSween. Angus MacSween was appointed as a Non-Executive Director to the Board on 1 October 2020 after resigning
as CEO and was not appointed to any of the Board’s committees. Andrew Taylor, Non-Executive Director resigned from
the Board on 31 December 2022. This specific timing meant that from 1 January 2023 to 31 March 2023 the Board was
split equally in number terms between independent and non-independent Directors, although the Chair’s casting vote,
if required, ensured independence. The Board is satisfied with the balance between Executive and independent Non-
Executive Directors which operated throughout the year. Post year end, two independent Non-Executive Directors have
joined the Board taking the Board composition to a majority independent position.
Composition of and Appointments to the Board
The composition of the Board ensures an appropriate balance of Executive and Non-Executive Directors and when
appointing new Directors to the Board there are formal, rigorous and transparent procedures in place to ensure
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 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 Chair 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.
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iomart Group plc Annual Report and Financial Statements 2023 Corporate Governance Report
Composition of and Appointments to the Board (continued)
The Chair 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 in relation to changes in
legislation and regulation relevant to the Group’s business are provided to the Board by the Company Secretary, Chief
Financial Officer and through the Board Committees.
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 members. New Directors are provided with an
induction in order to introduce them to the operations and management of the business, key business and financial risks
and the latest financial information about the Group.
Board Evaluation
The Board, led by the Chair, undertakes a formal and rigorous evaluation of its own performance annually and that of its
Committees and individual directors to identify areas for improvement. Each year a formal evaluation is conducted by
means of a detailed questionnaire which is completed by each Director. The results of this process are collated by the
Chair and discussed by the Board collectively. The annual evaluation includes a review of the performance of individual
Directors, including the Chair, and the Board Committees. The most recent evaluation during the year concluded that the
Board and the relevant Committee performance had been satisfactory. There are no outstanding actions from this year’s
process.
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:
Remuneration Audit
Nomination
Board
Committee
Committee
Committee
Reece Donovan – Chief Executive Officer
Scott Cunningham – Chief Financial Officer
Lucy Dimes – Non-Executive Chair
Ian Steele – Non-Executive Chair
Richard Masters – Non-Executive Director
Karyn Lamont – Non-Executive Director
Angus MacSween – Non-Executive Director
Andrew Taylor – Non-Executive Director
10 (10)
10 (10)
7 (7)
3 (3)
10 (10)
10 (10)
10 (10)
7 (8)
-
-
2 (2)
2 (2)
4 (4)
4 (4)
-
-
-
-
3 (3)
1 (1)
4 (4)
4 (4)
-
-
-
-
1 (1)
1 (1)
2 (2)
2 (2)
-
-
Figures in brackets indicate the maximum number of meetings in 2022/2023 for which the individual was a Board or
Committee member.
In advance of all Board meetings the Directors are supplied with detailed and comprehensive board papers covering the
Group’s financial and operational performance. Where any Board member has been unable to attend Board or Committee
meetings, their input has been provided to the Company Secretary or Chief Financial Officer ahead of the meeting. The
relevant Chair then provides a detailed briefing along with the minutes of the meeting following its conclusion.
Board Committees
The Board has established three committees to deal with specific aspects of the Board’s affairs: Remuneration, Nomination
and Audit Committees. Each Committee has formal terms of reference which were approved by the Board and can be
found in the investor section of the Group’s website. The effectiveness of all Committees is reviewed as part of the Board
evaluation exercise.
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iomart Group plc Annual Report and Financial Statements 2023
Corporate Governance Report
Corporate Governance Report
The Remuneration Committee
The Remuneration Committee was chaired by Richard Masters until 31 May 2023 and was replaced by Annette Nabavi on
1 June 2023. Its other members are Lucy Dimes and Karyn Lamont.
The Executive Directors may be invited to attend meetings, where appropriate, except where matters under review by the
Committee relate to them.
The Remuneration Committee oversees the Group’s remuneration policy, strategy and implementation and is responsible
for reviewing and making recommendations to the Board on the total remuneration packages of the Executive Directors
which includes:
• making recommendations to the Board on the Group’s policy on Directors’ remuneration and long-term incentive plans
(including share option schemes for Directors’);
• ensuring remuneration is both appropriate to the level of responsibility and adequate to attract and/or retain Directors
of the calibre required by the Group;
• ensuring that remuneration is in line with current industry practice; and
• reporting to the Board on all matters within its duties and responsibilities.
The Nomination Committee
The Nomination Committee is chaired by Lucy Dimes. Its other members are Richard Masters and Karyn Lamont.
The Nomination Committee considers the selection and re-appointment of Directors. Its terms of reference include:
• reviewing the structure and composition of the Board;
• identifying and nominating for approval candidates to fill Board vacancies;
• evaluating the balance of skills, knowledge experience and diversity of the Board;
• review results of the Board performance evaluation process; and
• reporting to the Board on all matters within its duties and responsibilities.
In the current year, the Nomination Committee, was responsible for recommending the appointment of Lucy Dimes, Non-
Executive Chair.
The Audit Committee
The Audit Committee is chaired by Karyn Lamont. Its other members are Lucy Dimes and Richard Masters.
The Audit Committee has recent and relevant experience and is authorised by the Board to conduct any activity within its
terms of reference and to seek any information it requires from any employee.
During the year, the Audit Committee provided oversight of the financial reporting process to ensure information gives an
accurate position of the Group’s position, performance, business model and strategy. In addition, the Committee continued
to oversee the risk management and internal control systems. The Audit Committee terms of reference 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 plan and scope for the year end audit of the Group and its subsidiaries;
• internal auditor’s plan and terms of reference, including scope, for each audit during the year;
• approval of internal audit plans and carrying out an annual assessment of the effectiveness of the outsourced the
internal audit function in the overall context of the Group’s risk management programme;
• the risk management framework and risk assessment 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 internal audit fees; and
• the formal engagement terms entered into with the external and internal auditors.
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iomart Group plc Annual Report and Financial Statements 2023 Corporate Governance Report
The Audit Committee (continued)
In addition, the Audit Committee monitors the Group’s arrangements by which staff may, in confidence, raise concerns
about possible improprieties in matters of financial reporting and other areas including an external whistleblowing service
to take calls from employees. For more details on the Group’s whistleblowing policy, see page 39.
Significant areas considered by the Audit Committee in relation to the 2023 financial statements are set out below:
Areas of estimates
Matter Considered and Role of the Committee
Impairment of goodwill
Business combinations valuation of
intangible assets and fair value
adjustments on acquisition
Valuation of Contingent consideration
The Audit Committee considered the carrying value of goodwill at 31
March 2023. The Committee reviewed the validity of cash flow projections
and the significant financial assumptions used, including the selection of
appropriate discount rate and long-term growth rates. These projections
and assumptions were further challenged through the use of sensitivity
analysis. As set out in note 13 to the consolidated financial statements, no
impairments of goodwill resulted from this exercise and the Committee did
not consider that a reasonably possible change in the assumptions would
cause an impairment to be recognised.
During the year ended 31 March 2023, the Group completed the acquisition
of Concepta Capital Limited (note 11). The Committee considered the
calculations supporting the fair value of assets and liabilities acquired and
reviewed the supporting papers prepared by management to support the
value of intangibles acquired and any fair value adjustments required.
The acquisition of Concepta Capital Limited involves a potential payment
of contingent consideration, the Committee reviewed the fair value
assessment prepared having regard to criteria on which any sum due will
be calculated and challenged the probability of payment being required
(note 20).
At the invitation of the Committee, meetings may be attended by the Executive Directors. As appropriate, representatives
of the external and internal auditors also attend meetings. The Chair of the Committee also meets separately with senior
management, the external auditors and internal auditors.
The Chair of the Audit Committee reports to the subsequent meeting of the Board on the Committee’s work.
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. Deloitte LLP
have confirmed to the Committee that, in relation to their services to the Group, 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 Deloitte LLP takes on any engagement for other services from
the Group careful consideration is given as to whether the project could conflict with their role as auditor or impair their
independence. In the year ended 31 March 2023, the only non-audit services performed by Deloitte LLP related to the
interim review and covenant compliance review both of which are a permitted service.
37
iomart Group plc Annual Report and Financial Statements 2023
Corporate Governance Report
Corporate Governance Report
Risk management and internal control
The approach to risk management and the principal risks themselves are set out on pages 20 to 22. 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.
The Board is responsible for the Group’s system of internal control and risk management and for reviewing its effectiveness
alongside the Audit Committee. The Directors have established a risk management framework and internal control
environment to ensure that an appropriate level of oversight and control is provided. The Group’s systems of risk
management and internal control are designed to help the Group meet its business objectives by appropriately managing,
rather than eliminating, the risks relating to those objectives. The controls can by their nature only provide reasonable, not
absolute, assurance against material misstatement or loss.
In the current year, the Group has continued to apply its risk management framework and risk assessment to monitor
the relevant identified risks to the Group in order to execute and deliver the Group’s strategy. The Audit Committee and
Executive Team reviewed the Group risk register and risk map during the year to review the identified significant risks,
the probability of those risks occurring, their potential impact and the plans for managing and mitigating each of the risks
identified. On an on-going basis, Executive Directors and senior management review the risks facing the business and the
controls established to minimise those risks and their effectiveness in operation.
The key elements of the Group’s overall control framework include:
• the Group’s strategic plan and annual financial budget are reviewed and approved by the Board;
• financial results with comparisons to plan and forecast results are reported on monthly to the Board alongside
operational reporting and 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; and
• the Group has a robust risk framework and assessment processes which are regularly reviewed. The Group has
extensive internal quality assurance processes in place and appropriate ISO certifications.
The Group’s internal audit activity is outsourced to Ernst and Young LLP (“EY”). The activities of the internal audit function
are governed by an internal audit charter which has been approved by the Audit Committee along with the annual internal
audit plan. EY will attend all regular Audit Committee meetings during the year and meet with the Audit Committee chair
independently on a regular basis.
Stakeholder engagement
The Group recognises that long-term success is underpinned by good relations with its key stakeholders, both internal
and external, and seeks to take into account the needs of the Group’s stakeholders as it discusses matters and makes
decisions. The Board considers that the Group’s key stakeholders are its shareholders, employees, customers, suppliers
and key partners and the environment. During the year, the Board and its Directors confirm they have acted in a way
that promotes the success of iomart Group for the benefit of its members as a whole, and in doing so have had regard
to the stakeholders and key matters set out in Section 172 of the Companies Act 2006 as disclosed in our Stakeholder
Engagement report on pages 23 to 29.
Relations with shareholders
Communication with shareholders is given high priority by the Board. The Group maintains a corporate website (www.
iomart.com/investors) containing a wide range of information of interest to investors including publicly available financial
information and news on the Group. As noted in our Stakeholder Engagement report on page 23, iomart is committed to
listening to and communicating openly with its shareholders to ensure that the strategy, business model and performance
are communicated. The Chief Executive Officer and Chief Financial Officer have regular dialogue with shareholders and
analysts to discuss strategic and other issues including the Company’s interim and annual financial results. Following major
periods of communications, our advisers consolidate feedback, on an anonymised basis, from the relevant parties which
then forms the basis of a briefing pack for the Board to ensure awareness of shareholder opinions.
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iomart Group plc Annual Report and Financial Statements 2023 Corporate Governance Report
Relations with shareholders (continued)
The Group engages in full and open communication with both institutional and private investors and responds promptly
to all queries received. The Group does this via investor roadshows, attending investor conferences and regular financial
reporting and through the regulatory news service (“RNS”) and press announcements. In conjunction with the Group’s
brokers and other financial and public relations advisers all relevant news is distributed in a timely fashion through
appropriate channels to ensure shareholders are able to access material information on the Group’s progress.
The Board recognises the AGM as an important opportunity to meet shareholders and give them the opportunity to raise
questions with the Board. Details of the resolutions being proposed at the AGM can be found on the Group’s website.
Shareholders are given notice of the AGM at least 21 days prior to the meeting. The Chair aims to ensure that the
Directors, including the Non-Executive Directors, are available at Annual General Meetings to answer questions.
Other Matters
Workforce engagement and promoting ethical business practices
We define corporate responsibility as ensuring that we have, or are developing sound policies, practices or programmes
that address business transparency and ethics, workplace practices and employee relationships and customer
consultation. In practice our commitment to corporate responsibility plays out in a wide variety of ways and includes
our employee engagement programme, which is designed to foster an inclusive workplace by encouraging our people to
continually improve performance in this area. Key practices include:
• Anti-Bribery and Corruption - The Group has a zero tolerance approach to bribery and corruption and is committed to
ensuring it has appropriate processes in place to mitigate the risk of bribery and corruption. The Group has a formal
business ethics and anti-bribery policy which is outlined in our employee handbook and on our corporate website
available to all staff. Staff are required to complete appropriate training to ensure awareness of the Group’s policies
and what is acceptable business conduct and the policy on accepting gifts. On receipt of a gift of any value, staff are
required to complete a gift register form which is submitted to the Executive team for approval.
• Modern Slavery Act - The Group is committed to conducting business responsibly and ensuring that our supply chain
has ethical employment practices, working conditions and has procedures in place to prevent modern slavery or human
trafficking. The Group has an anti-slavery and human trafficking policy in place supported by internal policies and
processes to ensure the principles are adhered to. Our Modern Slavery statement, which is updated annually, details
processes in place to help manage the risks outlined by the legislation is available on the iomart website.
• Whistleblowing - We recognise the importance of all of our employees and we respect the dignity and rights of all
employees and provide 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 is committed to maintaining
high ethical standards in all areas of work and practice and has a detailed whistleblowing policy in place, outlined in
the employee handbook and available on our corporate website, for employees to access. There are various ways
employees can report their concerns including access to the Executive team and the Audit Committee and access to
third party independent advice at any stage.
• Data Privacy policy – The Group has a data protection policy and information security management systems in place to
ensure we have appropriate data security systems and processes in place to protect our data and are fully accredited
with ISO 27001 ‘Information Security Management Systems’.
• Equal Opportunities - 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 our Group. The Group does not
tolerate any sexual, physical or mental harassment of its employees and we operate an equal opportunities policy that
specifically prohibits discrimination on grounds of colour, ethnic origin, gender, age, religion, political or other opinion,
disability, or sexual orientation. 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.
• Diversity – The Group seeks to have a workforce which is diverse and inclusive, that respects and values differences
and encourages staff to perform at their maximum potential. By supporting and treating all people fairly and equally, we
aim to create an inclusive and positive working environment for all employees to achieve their potential. In April 2023,
we reported our third gender pay report which has shown an improvement in our reported metrics. We will continue to
develop our recruitment strategy to drive further improvements and diversity.
39
iomart Group plc Annual Report and Financial Statements 2023 Corporate Governance Report
Corporate Governance Report
Re-election
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. The Articles of
Association also stipulate that any new Directors, who were not appointed at the previous AGM, automatically retire at their
first AGM and, if eligible, can seek re-appointment.
Scott Cunningham and Angus MacSween will retire from office at the Company’s forthcoming AGM and stand for
re-appointment.
Lucy Dimes, Annette Nabavi and Adrian Chamberlain, as newly appointed Directors, automatically retire at the forthcoming
AGM, and stand for re-appointment.
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 8 to 29. The financial position of the Group, its cash flows, liquidity position
and borrowing facilities are described in the Chief Financial Officer’s Report on pages 14 to 19.
Note 29 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.
The Group has a single £100m Revolving Credit Facility ("RCF") provided by four banks consisting of HSBC, Royal Bank of
Scotland, Bank of Ireland and Clydesdale Bank. The facility has maturity date of 30 June 2026 and benefits from a £50m
Accordion Facility. The RCF has a borrowing cost at the Group’s current leverage levels of 180 basis points over SONIA.
The RCF and the Accordion Facility (if exercised) provide the Group with additional liquidity which will be used for general
business purposes and to fund investments, in accordance with the Group's five-year strategic plan. The Directors are of
the opinion that the Group can operate within the current facility and comply with its bank covenants which consists of an
interest cover and leverage cover ratio.
At the end of the financial year, the Group had net debt of £39.8m (2022: £41.3m) 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 considered the Group budgets and the cash flow forecasts for the next three financial years, and
associated risks and the availability of bank and leasing facilities. We have run appropriate scenario and stress tests
applying reasonable downside sensitivities in respect of profitability and associated cash flow generation and are confident
we have the resources to meet our liabilities as they fall due.
After making enquiries, the Directors have a reasonable expectation that the Group will be able to meet its financial
obligations and has adequate resources to continue in operational existence for the foreseeable future (being a period
extending at least twelve months from the date of approval of these financial statements). For this reason they continue
to adopt the going concern basis in preparing the financial statements.
AIM Rule Compliance Report
iomart Group plc is quoted on AIM and as a result the Group 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 Group’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 Group needs to 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.
40
iomart Group plc Annual Report and Financial Statements 2023 Report of the Board to the Members on Directors’ Remuneration
Report of the Board to the Members on Directors’ Remuneration
Directors’ Remuneration Report for the year ended 31 March 2023
On behalf of the Board, I am pleased to present the Directors’ Remuneration Report for the year ended 31 March 2023.
This sets out our Directors’ Remuneration policy and its implementation including amounts earned by Directors in respect
of the year ended 31 March 2023. In framing its remuneration policy, the Remuneration Committee has adopted the
Quoted Companies Alliance (“QCA”) Remuneration Code for Small and Mid-sized Quoted Companies to ensure that our
remuneration policy both reflects our strategy and is aligned with the QCA Remuneration code and shareholders’ interests.
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 2018 (“Code”) issued by the Financial Reporting Council, however, we continue to provide
additional remuneration disclosures over and above the AIM Rule 19 disclosure requirements to enable shareholders to
understand and consider our remuneration arrangements. In line with best practice, we also voluntarily submit this report
to an advisory shareholder vote each year at our annual general meeting.
Remuneration Committee
The Remuneration Committee was chaired by Richard Masters until 31 May 2023 and was replaced by Annette Nabavi
on 1 June 2023. Lucy Dimes, Non-Executive Chair and Karyn Lamont, Non-Executive Director are also members of the
Committee. During the year, Ian Steele, Non-Executive Chair resigned and was replaced by Lucy Dimes. The Executive
Directors 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 has formal terms of reference which can be found in the investor section of the Group’s website, which are
reviewed and approved annually by the Board. The Committee makes recommendations to the Board, within its terms of
reference, on the remuneration and other benefits, including bonuses and share options, of the Executive Directors.
The Committee met four times during the current year. The attendance record for those meetings is included in our
Corporate Governance report on page 35.
The Remuneration Committee determines, on behalf of the Board, the Group’s policy for executive remuneration and
the individual remuneration packages for Executive Directors. Each year, the Remuneration Committee reviews the
incentive and reward packages for the Executive Directors to ensure that they are aligned with the Group’s strategic
objectives and financial performance; are appropriate to attract, retain and motivate executive behaviour in support of the
creation of shareholder value; and drive continued commitment of executives to the Group’s success through appropriate
incentive schemes. In considering the appropriateness of the remuneration policy, the Remuneration Committee considers
the current and future business strategy, wider workforce remuneration policies and practices, and market practice in
comparable organisations.
41
iomart Group plc Annual Report and Financial Statements 2023 Report of the Board to the Members on Directors’ Remuneration
Report of the Board to the Members on Directors’ Remuneration
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 in the wider market, including
at similar sized businesses.
• Base salaries are reviewed annually.
Where appropriate the Remuneration
Committee considers independent
expert advice when setting the level
of reward packages.
• The Executive Directors do not
receive Directors’ fees.
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 paid in cash following
the end of the performance year.
n/a
• The Committee generally
reviews base salaries of
the Executive Directors
with effect from 1 April in
each year. This year the
decision has been taken
to increase base salaries
by 5% resulting in 1 April
2023 values being:
CEO – £324,450
CFO – £242,689
This increase is aligned
to the average increase
across the wider
employee population.
Executive Directors
salary increased by 3% in
the prior year.
• The maximum annual
bonus opportunity is
110% of base salary.
• For achievement
of target, bonus of
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
generally no bonuses
payable if less than 90%
of target is achieved.
• The level of Executive
Directors’ discretionary
bonus payments is
determined by a number of
factors including the Group’s
financial performance
(including adjusted EBITDA
and free cash flow), its
successful continuation of
its organic and acquisitive
strategy, and the individual’s
own performance
• For the bonus for the
financial year ended 31
March 2023, adjusted
EBITDA, free cash flow
and the individual’s own
performance were the
key factors under the
scheme influencing the
payments approved by the
Remuneration Committee.
42
iomart Group plc Annual Report and Financial Statements 2023 Report of the Board to the Members on Directors’ Remuneration
Remuneration of Executive Directors (continued)
Element
Overview of policy and structure Opportunity
Performance measures
Performance
share plan
• The Group operates a
• The maximum award
under the performance
share plan is 100% of
base salary.
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 nominal cost, 1p options.
• Share options awarded will
normally vest after the third
anniversary of the date of
grant.
• Participants have 10 years
from award to exercise.
• The vesting of options is subject to
the achievement of performance
conditions. Normally vesting
is also subject to continued
employment.
• Historically, and for some unvested
options as at 31 March 2023,
performance is assessed based on
the achievement of profit targets
in three years set with reference
to our organic and acquisitive
growth strategy and to ensure
continued focus on driving profit
performance.
• Options awarded to Scott
Cunningham and Reece Donovan
in May 2022 and April 2023 will
vest 50% based on relative TSR%
performance against the AIM 100
Index over the period and 50%
remaining based on profit targets.
The Remuneration Committee
believes this creates stronger
shareholder alignment.
Pension
• The Company may make
contributions towards an
individual’s personal pension
arrangements or pay an
equivalent cash allowance.
• The maximum
contribution or
allowance payable by
the Company is 10% of
basic salary.
n/a
The CFO and the
CEO received a cash
allowance in the year
ended 31 March 2023.
43
iomart Group plc Annual Report and Financial Statements 2023 Report of the Board to the Members on Directors’ Remuneration
Report of the Board to the Members on Directors’ Remuneration
Remuneration of Executive Directors (continued)
Element
Overview of policy and structure
Opportunity
Performance measures
Benefits
• The Executive Directors are
n/a
n/a
entitled to life insurance cover,
death in service benefits and to
participate in the Group’s Pri-
vate Medical Insurance scheme.
These are consistent with other
staff arrangements.
• The Group operates a sharesave
scheme for all employees and
Executive Directors are invited to
participate.
Service contracts
Executive Directors are engaged under service contracts which require the following notice periods:
Scott Cunningham
6 months
Reece Donovan
12 months
All Non-Executive Directors have a 6 month notice period with the exception of the newly appointed Non-Exective
Directors, Annette Nabavi and Adrian Chamberlain, who have a 3 month notice period.
Chair and Non-Executive Director fees
The fees paid to the Non-Executive Directors are determined by the Board. Non-Executive Directors were paid £40,000
per annum for Board Director duties with additional fees of £5,000 per annum paid to the Audit and Remuneration
Committee Chair to reflect the additional time required to fulfil these roles.
Non-Executive Directors are not entitled to receive any bonus or other benefits with the exception of Angus MacSween
who retains private medical insurance. Non-Executive Directors are entitled to reasonable expenses incurred in the
performance of their duties.
The Chair received a fee of £75,000 per annum.
In the current year, a review of the base fees of the Chair and Non-Executive Directors was undertaken by the non-
conflicted Board members. With effect from 1 April 2023, the decision has been taken to increase base fees by 10%
resulting in revised fees of £44,000 for Board Director duties and £82,500 for the Chair. There is no increase to the
additional fees paid for Committee Chairs. Of the 10% increase in base fees, 5% is aligned to the same average increase
to staff in the year. The balance reflects the fact that this is the first change in Non-Executive Director fees since 2016 and
the large increase in regulatory compliance obligations over the last 7 years. External advice was taken to ensure that this
approach was reasonable.
44
iomart Group plc Annual Report and Financial Statements 2023
Report of the Board to the Members on Directors’ Remuneration
Directors’ Remuneration for the year ended 31 March 2023
Details of individual Director’s remuneration for the year are as follows (this information has been audited):
Salary or fees
Bonus 4
Benefits
Pension
allowance
£
£
£
£
Year ended 31
March 2023
Year ended 31
March 2022
Total
£
Total
£
Executive Directors
Reece Donovan
309,000
194,463
Scott Cunningham
231,132
170,883
2,991
2,608
30,900
23,113
537,354
427,736
464,920
348,124
Non-Executive Directors
Ian Steele 1
Richard Masters
Karyn Lamont
Angus MacSween
Andrew Taylor 2
Lucy Dimes3
31,250
45,000
45,000
40,000
30,000
44,327
-
-
-
-
-
-
-
-
-
3,021
-
-
-
-
-
-
-
-
31,250
45,000
45,000
43,021
30,000
44,327
75,000
45,000
45,000
42,795
26,807
-
1 Ian Steele resigned as Chair on 30 August 2022
2 Andrew Taylor resigned as Non-Executive Director on 31 December 2022
3 Lucy Dimes was appointed as Chair on 30 August 2022
4 The bonus payable to Reece Donovan represents 57% of the maximum payable bonus. The bonus payable to Scott Cunningham represents 67% of the
maximum payable bonus.
Directors’ interests in shares
The Directors holding office at 31 March 2023 held beneficial interests in the issued share capital of the Company as
shown in the following table:
Name of Director
Angus MacSween1
Scott Cunningham2
Reece Donovan
Richard Masters
Karyn Lamont
Lucy Dimes
Number of ordinary shares
At 31 March 2023
At 1 April 2022
17,343,409
17,003,409
122,175
18,950
11,400
7,000
-
60,000
18,950
11,400
7,000
n/a
1 On 30 January 2023, Angus MacSween exercised 340,000 share options and retained them all in shares, taking his total shareholding to 17,343,409 shares
2 On 25 January 2023, Scott Cunningham exercised 62,175 share options and retained them all in shares, taking his total shareholding to 122,175 shares
Share price
The market price of the Company’s shares at the end of the financial year was 124.4p (2022: 162.6p) and the range of
prices during the year was between 112.0p (2022: 140.0p) and 200.0p (2022: 321.5p).
45
iomart Group plc Annual Report and Financial Statements 2023 Report of the Board to the Members on Directors’ Remuneration
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 2023 in options over the ordinary shares of the Company were as follows:
-
-
-
-
-
-
Name of
Director
Reece
Donovan,
Executive
Director
At 1
April
2022
133,929
103,448
14,062
-
251,439
Exercised
Granted
Lapsed
At 31
March
2023
Exercise
price
Date of
Grant
Date from
which
exercisable
Expiry date
(40,089)
93,840
103,448
1p
1p
06/04/2020
06/04/2023
06/04/2030
27/04/2021
27/04/2024
27/04/2031
14,062
128.0p
01/03/2022
01/03/2025
01/09/2025
172,413
1p
09/05/2022
09/05/2025
09/05/2032
-
-
-
172,413
-
-
-
-
-
172,413
(40,089)
383,763
Scott
Cunningham,
Executive
Director
46,008
(46,008)
16,167
(16,167)
80,143
77,379
14,062
-
-
-
-
-
-
-
-
-
-
127,980
-
-
-
-
(29,987)
50,156
77,379
1p
1p
1p
1p
04/09/2018
04/09/2021
04/09/2028
09/05/2019
09/05/2022
09/05/2029
06/04/2020
06/04/2023
06/04/2030
27/04/2021
27/04/2024
27/04/2031
14,062
128.0p
01/03/2022
01/03/2025
01/09/2025
127,980
1p
09/05/2022
09/05/2025
09/05/2032
233,759
(62,175)
127,980
(29,987)
269,577
Angus
MacSween,
Non-
Executive
Director
113,334
(113,334)
113,333
(113,333)
113,333
(113,333)
117,480
175,575
134,281
129,848
72,142
57,710
65,344
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
117,480
175,575
134,281
129,848
72,142
57,710
(24,449)
40,895
1p
1p
1p
1p
1p
1p
1p
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
25/09/2014
25/09/2017
25/09/2024
28/08/2015
28/08/2018
28/08/2028
01/04/2016
01/04/2019
01/04/2026
12/04/2017
12/04/2020
12/04/2027
04/04/2018
04/04/2021
04/04/2028
09/05/2019
09/05/2022
09/05/2029
06/04/2020
06/04/2023
06/04/2030
1,092,380 (340,000)
-
(24,449)
727,931
On 25 January 2023, Scott Cunningham exercised 62,175 unapproved options of 1p and realised a gain of £75,791 (2022:
£64,000). On 30 January 2032, Angus MacSween exercised 340,000 unapproved options of 1p and realised a gain of
£442,680 (2022: £nil).
46
iomart Group plc Annual Report and Financial Statements 2023 Report of the Board to the Members on Directors’ Remuneration
During the year options over 300,393 ordinary shares (2022: 180,827) were granted to Directors under the unapproved
share option performance share plan with an average exercise price of 1.0p per share (2022: 1.0p per share). Options over
nil ordinary shares (2022: 28,124) were granted to Directors under the sharesave scheme in the current year at an average
exercise price of nil per share (2022: 128.0p). During the year nil ordinary shares under the sharesave scheme lapsed
(2022: 15,819) and 94,525 options over ordinary shares under the unapproved scheme lapsed (2022: 187,148). No options
were exercised under the sharesave scheme during the year (2022: nil).
By order of the Board
Richard Masters
Chair, Remuneration Committee
13 June 2023
47
iomart Group plc Annual Report and Financial Statements 2023 Report of the Board to the Members on Directors’ Remuneration
Directors’ Report
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 2023.
Principal activity
The principal activity of the Group is the provision of managed cloud services. The Group’s principal subsidiary
undertakings are listed in note 15 to the financial statements. The Group’s registered number is SC204560.
Financial risk management objectives and policies
The Group’s financial instruments comprise cash and liquid resources, bank loans and 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 access to a £100m multi option revolving credit facility, which also benefits from a £50m Accordion Facility.
On 17 November 2022, the Group enacted the extension option which was approved by the lenders which extends the
termination date of the RCF facility to 30 June 2026. The directors are of the opinion that the Group can operate within
the current facility and comply with its banking covenants. The RCF has a borrowing cost at the Group’s current leverage
levels of 1.8% margin over SONIA. The revolving credit facility incurs a non-utilisation fee of 35% of the 1.8% margin. The
effective interest rate for the multi option revolving credit facility in the current year was 4.26% (2022: 1.78%). The RCF
and the Accordion Facility (if exercised) provide the Group with additional liquidity which will be used for general business
purposes and to fund investments, in accordance with the Group's five-year strategic plan.
The Group has net debt at 31 March 2023 of £39.8m (2022: £41.3m). Net debt comprises lease liabilities totalling £19.2m
(2022: £22.6m), the bank facility loan of £34.4m (2022: £34.0m) and cash and cash equivalents of £13.8m (2022: £15.3m).
The Group is not exposed to material movements in interest rates on its bank borrowings.
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 elements of our 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
during the year. There are no outstanding contracts at the 31 March 2023 (2022: nil). 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,
the Group does not use derivative instruments. Additional information on financial instruments is included in note 29.
Dividend
The Directors declared an interim dividend for the year ended 31 March 2023 of 1.94p per share (2022: 2.42p). The
Directors recommend a final dividend for the year ended 31 March 2023 of 3.50p per share (2022: 3.60p per share). This
final dividend, together with the interim dividend, takes the total dividend to 5.44p per ordinary share for the 2023 financial
year (2022: 6.02p). Subject to shareholder approval this proposed final dividend would be payable on 8 September 2023
to shareholders on the register at close on 18 August 2023.
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.
Future developments
The Group’s business review and activities, together with the factors likely to affect its future development, performance
and position are set out in the strategic report on pages 8 to 29.
48
iomart Group plc Annual Report and Financial Statements 2023 Directors’ Report
Directors and their interests
The present membership of the Board at the date of this report is set out on pages 30 to 31, the Directors who served
during the year, and up to the date of this report, are listed on page 123. In accordance with the Articles of Association,
Scott Cunningham and Angus MacSween will offer themselves for re-election at the forthcoming annual general meeting.
Lucy Dimes, who was appointed to the Board during the year, and Annette Nabavi and Adrian Chamberlain, who were
appointed to Board subsequent to the year end, will seek appointment at the Company’s forthcoming AGM.
Details of Directors’ interests in the Group’s shares are set out in the Report of the Board to the Members on Directors’
Remuneration on 41 to 47.
Insurance for Directors and Officers
The Group may under the Company’s Articles of Association, and subject to the provisions of the Companies Act, indemnify
all Directors or other officers against liability incurred by them in the execution or discharge of their duties or exercise of
their powers, including but not limited to any liability for the costs of legal proceedings where judgement is given in their
favour. This indemnity was in place during the financial year and is ongoing up to the date of this report. In addition, the
Group has purchased and maintains appropriate insurance cover against legal action brought against Directors and officers.
Donations
It is the Group’s policy not to make donations for political purposes.
Substantial shareholdings
At 31 May 2023 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
Lombard Odier Asset Management
Investec Wealth & Investment
Noble Grossart Investment Limited
Employees
Shares
Percentage held
18,112,867
17,343,409
13,117,288
11,622,630
6,156.372
3,615,000
16.38%
15.68%
11.86%
10.51%
5.57%
3.27%
People are at the heart of our core values and we continuously strive to build a diverse and inclusive environment where
our employees feel valued. Our policy in respect of equal opportunities, including our policy on disabled employees, and
policy diversity are disclosed on page 39.
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. Information on our engagement
with employees in the current year and the Board’s regard to employees on the principal decisions taken by the Company
during the financial year is included in the Stakeholder Engagement report on pages 23 to 29.
We are committed to attracting and retaining the highest level of personnel. We seek to achieve this through, amongst
other things, the application of high standards in recruitment. We are aware of the importance of good communication in
relationships with staff and we have a policy of encouraging training, demonstrated by the launch of our ‘iosmart’ learning
management system in the current year. A number of employees participate in the growth of the business through the
ownership of share options with some employees also participating in a bonus scheme. Staff are eligible to receive share
options in the Company under the Group’s performance share plan (note 26) and it is the Board’s policy to make specific
awards as appropriate to attract and retain the best available people. Options in respect of Directors are detailed in the
Directors Remuneration Report on page 46.
49
iomart Group plc Annual Report and Financial Statements 2023 Directors’ Report
Directors’ Report
Customers and suppliers
The Group seeks to be honest and fair in all relationships with customers and encourages feedback from our customers
through account managers and engagement with individual customers through customer support teams. On a regular
basis we engage with customers to obtain feedback on our performance.
The Group treats all of its suppliers with the utmost respect and seeks to be honest and fair in all relationships with them.
We seek to honour the terms and conditions of our agreements in place with such suppliers and subcontractors.
Additionally, we recognise the importance to the Group and our suppliers of complying with all payment terms and we
report on a half-yearly basis on our payment practices, policies and performances in line with the Reporting on Payment
Practices and Performance Regulations 2017.
Information on our engagement with customers and suppliers and our regard to these stakeholders on the principal
decisions taken by the Group during the financial year is included in the Stakeholder Engagement report on page 24.
Environmental Reporting
Greenhouse Gas (“GHG”) Emissions reporting
iomart seeks to minimise the impact of our operations on the environment and is committed to reducing its greenhouse
gas (“GHG”) emissions. We are pleased to report that iomart is aligned with the UK Government targets and committed
to achieve Net Zero by 2050, and earlier, if possible. We are proud that a combination of our renewable electricity
commitments and other efficiencies has already ensured we have reduced our total carbon emissions by 99% since our
benchmark year of FY2021.
Key sources of energy, primarily electricity to power our data centre estate, are monitored by the Group to allow us to be
continually mindful of our energy consumption. iomart applies a set of global environmental standards to all of our activities
and our environmental and energy management systems are certified to ISO 14001 and ISO 50001 (internationally accepted
environmental standards). These certifications provide a framework against which we have developed comprehensive
environmental procedures and monitoring systems. These processes have allowed us to measure our environmental
performance and focus our activities on delivering improvements.
The table below shows total energy consumption used to calculate emissions and the total gross GHG emissions in tonnes
of CO2 (“tCO2e”) in the year ended 31 March 2023:
Year ended
31 March
2023
Market
Based
Year ended
31 March
2023
Location
Based
Year ended
31 March
2022
Market
Based*
Year ended
31 March
2022
Location
Based
Year ended
31 March
2021
Location
Based
54,392,418
54,392,418
58,017,020
58,017,020
57,956,041
-
19
128
13
-
19
-
15
-
15
-
-
10,491
4,321
12,298
13,504
13
5
5
-
159
10,522
4,341
12,317
13,508
Energy consumption used to
calculate emissions (kWh)
Scope 1 - Emissions from
combustion of gas
Scope 1 - Emissions from
combustion of fuel for transport
purposes
Scope 2 - Emissions from
purchased electricity
Scope 3 - Emissions from
business travel in rental cars or
employee-owned vehicles where
the company is responsible for
purchasing fuel
Total gross emissions (tCO2e)
*From 1 August 2021, all our UK data centres procured 100% renewable electricity through Renewable Energy Guarantees
of Origin (REGO) certificates enabling reporting under the market based approach for the period from 1 August 2021 to 31
March 2022 and the current year.
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iomart Group plc Annual Report and Financial Statements 2023 Directors’ Report
Environmental Reporting (continued)
Greenhouse Gas (“GHG”) Emissions reporting (continued)
The table below shows the carbon intensity ratio in the year ended 31 March 2023:
Year ended
31 March
2023
Market
Based
Year ended
31 March
2023
Location
Based
Year ended
31 March
2022
Market
Based*
Year ended
31 March
2022
Location
Based
Year ended
31 March
2021
Location
Based
159
106,279
10,522
106,279
4,341
95,890
12,317
95,890
13,508
100,211
0.0000015
0.000099
0.000045
0.000128
0.000135
Total gross emissions (tCO2e)
Total recurring revenue (£’000)
Carbon Intensity ratio (tCO2e/£)
Methodology
There are no scope 1 direct emissions from the combustion of gas. Thanks to our improved data collection practice, in this
year’s report we were also able to disclose our Scope 1 transport emissions. These include the combustion of transport
fuels in company-owned or long-term leased vehicles. Scope 2, indirect emissions, include consumption of purchased
electricity in kWh. Scope 3 emissions relate to business travel in employee-owned vehicles where iomart is responsible for
purchasing the fuel.
Using an operational control approach, the Group identified its population to ensure that all activities and facilities,
including data centres, are being recorded and reported in line with the mandatory GHG Protocol Corporate Accounting
and Reporting Standard. Relevant data is prepared on a monthly basis by our external energy management supplier. The
validity, accuracy and completeness of the data was checked and used to calculate the GHG emissions for the Group.
Where energy consumption data was missing, we used accepted estimation techniques by the GHG Protocol. Emissions
were calculated as activity data multiplied by emission factors (DEFRA, 2022 for all emissions and conversion factors). Dual
reporting approach has been taken to report on our electric power consumption, as the Group procured 100% renewable
electricity backed by Renewable Energy Guarantees of Origin (REGOs) for April 2022-March 2023 for its own sites. During
the calculation of Scope 3 transport emissions, the statistics of the Vehicle Licensing Statistics (VEH0203) was used to
divide the business mileage by fuel type. The driven miles were converted into litres using DEFRA 2022 conversion factors
for average sized cars.
The Group uses total recurring revenue to calculate the intensity ratio as this allows emissions to be monitored over time
taking into accounts changes in the size of the Group. This factor provides the greatest degree of accuracy and is the
metric best aligned to power usage and business growth.
Energy efficiency
The proactive management of our GHG emissions is central to iomart operations with a clear focus on controlling and
reducing our GHG and carbon footprint. The Group aims to improve energy efficiency of its operations and ensure
continued compliance with ISO 50001:2011 as the basis for its energy management arrangements and has committed to:
• setting targets and objectives for reducing energy use and maintaining an energy efficiency programme;
• managing and reducing energy use relating to our business premises;
• respecting all existing, applicable environmental regulations and meeting all new applicable regulations;
• setting targets in the form of energy performance indicators for electricity and energy consumption and power usage
effectiveness targets for each of our data centres;
• providing training on good energy management practices and encouraging employee involvement in energy efficiency
improvement initiatives; and
• the Group participates in the Energy Saving Opportunities Scheme (ESOS) with annual ESOS audits carried out
throughout the Group and is committed to meeting the requirements of the Streamlined Energy and Carbon Reporting
(SECR) regulations.
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iomart Group plc Annual Report and Financial Statements 2023 Directors’ Report
Directors’ Report
Greenhouse Gas (“GHG”) Emissions reporting (continued)
Energy efficiency (continued)
Last year, we worked on establishing carbon reduction targets and identifying ways to reduce further our overall emissions
as we work towards carbon neutrality. In the current year, we have re-contracted our core UK fibre network, refreshing the
resilient network that securely connects our data centres, and we have accelerated the upgrade to uninterruptible power
systems (“UPS”), which was approved by the Board in the prior year, providing for greater energy efficiency in the future.
For more detail on how the Board have had regard to the environment in key strategic decisions in the year, see our
Stakeholder Engagement report on page 29.
Independent Auditor and disclosure of information to auditor
The Directors confirm that each of the persons who is a Director at the date of approval of this annual report confirms 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.
This information is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.
Deloitte LLP have expressed their willingness to continue in office as auditors. A resolution to reappoint them will be
proposed at the forthcoming Annual General Meeting.
Approved and signed by the Board
Julie Brown
Company Secretary
13 June 2023
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iomart Group plc Annual Report and Financial Statements 2023 Directors’ Responsibilities Statement
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Annual Report and the 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
are required to prepare the group financial statements in accordance with UK-adopted international accounting standards
and applicable law and have elected to prepare the parent company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including
FRS 101 “Reduced Disclosure Framework”. Under company law the Directors must not approve the accounts unless they are
satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company
for that period.
In preparing the parent company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed
and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will
continue in business.
In preparing the group financial statements, International Accounting Standard 1 requires that Directors:
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users
to understand the impact of particular transactions, other events and conditions on the entity's financial position and
financial performance; and
• make an assessment of the company's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
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iomart Group plc Annual Report and Financial Statements 2023 Directors’ Responsibilities Statement
Directors’ Responsibilities Statement
Responsibility Statement
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair
view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the
consolidation taken as a whole;
• the strategic report includes a fair review of the development and performance of the business and the position of
the company and the undertakings included in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face; and
• the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the
information necessary for shareholders to assess the company’s position and performance, business model and strategy.
This responsibility statement was approved by the Board of Directors on 13 June 2023 and is signed on its behalf by:
Reece Donovan
Scott Cunningham
Chief Executive Officer
Chief Financial Officer
13 June 2023
13 June 2023
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iomart Group plc Annual Report and Financial Statements 2023
Independent Auditor’s Report to the Members of iomart Group plc
Report on the audit of the financial statements
1. OPINION
In our opinion:
• the financial statements of iomart Group plc (the ‘parent company’) and its subsidiaries (the ‘group’) give a true and fair
view of the state of the group’s and of the parent company’s affairs as at 31 March 2023 and of the group’s profit for the
year then ended;
• the group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards;
• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the consolidated statement of comprehensive income;
• the consolidated and parent company statements of financial position;
• the consolidated and parent company statements of changes in equity;
• the consolidated cash flow statement;
• the related notes 1 to 31 for the consolidated financial statements; and
• the related notes 1 to 14 for the parent company financial statements.
The financial reporting framework that has been applied in the preparation of the group financial statements is applicable
law and United Kingdom adopted international accounting standards. The financial reporting framework that has been
applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting
Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
2. BASIS OF OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the group and the parent company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard
as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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iomart Group plc Annual Report and Financial Statements 2023 Independent Auditor’s Report to the Members of iomart Group plc
Independent Auditor’s Report to the Members of iomart Group plc
3. SUMMARY OF OUR AUDIT APPROACH
Key audit matters
The key audit matters that we identified in the current year were:
• Completeness and valuation of deferred income; and
• Valuation of goodwill and other intangible assets (group) and investments (parent
company).
• Business combinations: valuation and allocation of acquired intangible assets and
contingent consideration
Within this report, key audit matters are identified as follows:
Newly identified
Similar level of risk
Materiality
Scoping
The materiality that we used for the group financial statements was £1m which was determined
on the basis of 3% of Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA).
Our audit covered 92% of the Group’s revenue, 93% of EBITDA, 88% of Profit Before Tax (PBT)
and 95% of Net Assets.
Significant changes in
our approach
Our approach is consistent with the previous year, with the exception of:
•
The valuation and allocation of acquired intangible assets and contingent
consideration is a new key audit matter as a result of the business combination in
the year.
4. CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going
concern basis of accounting included:
• Challenging underlying data and key assumptions, considering the impact of the current economic environment on the
assumptions applied;
• Evaluating the sophistication of the model used to prepare the forecasts, testing the clerical accuracy of those forecasts,
and considering the historical accuracy of the forecasts prepared by the directors;
• Assessing the headroom in the forecasts and the sensitivity analysis performed by the directors;
• Evaluating the financing facilities in place during the forecast period, including the impact of the post year-end
acquisition of Extrinsica Global Limited, repayment terms and covenants, and assessing whether these have been
appropriately reflected in the model;
• Recalculating the directors’ forecast covenant compliance calculations throughout the going concern period; and
• Assessing the appropriateness of going concern disclosures.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
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iomart Group plc Annual Report and Financial Statements 2023
Independent Auditor’s Report to the Members of iomart Group plc
5. KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall
audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
5.1 Completeness and valuation of deferred income
Key audit matter description The Group has deferred income of £14,783k (2022: £13,051k) split between current
£12,117k (2022: £10,408k) and non-current £2,666k (2022: £2,643k) included within
trade and other payables.
How the scope of our audit
responded to the key audit
matter
A significant proportion of the Group’s activities are invoiced in advance, resulting in a
material deferred income balance being recorded in the financial statements at year-
end.
Due to the high volume of customer balances being deferred and the fact that the
deferral calculation is performed across a range of systems and by a range of staff,
we have determined there is potential for fraud through a possible manipulation of this
balance.
Deferred income is included within note 19 of the financial statements.
The audit procedures we performed in respect of this matter included:
• Gaining an understanding of the process undertaken by management to
calculate deferred income, and testing of key controls within two of the full
scope components;
• Testing the balance through recalculating the deferred income balance for
each brand based on contract start and end dates;
• Performing cut-off testing, selecting a sample of pre and post year-end sales
and evaluating whether any deferred element was calculated correctly;
• Recalculating current and non-current liability classification based on underlying
schedules.
Key observations
We concluded that the completeness and valuation of deferred income recorded in the
financial statements is appropriately stated.
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iomart Group plc Annual Report and Financial Statements 2023 Independent Auditor’s Report to the Members of iomart Group plc
Independent Auditor’s Report to the Members of iomart Group plc
5. KEY AUDIT MATTERS (CONTINUED)
5.2. Valuation of goodwill and other intangible assets (group) and investments (parent company)
Key audit matter
description
There is a risk of impairment of goodwill (£100m) and other intangible assets (£13m) in the
consolidated financial statements and a risk of impairment on the investments balance
(£167m) in the parent company financial statements. The risk is pinpointed to the forecast
cash flows.
The Group has reduced the levels of customer churn in the current year back to historic
levels resulting in an increase in revenues, which have also increased as a result of
both the completion of the Concepta acquisition and the impact of the passthrough of
increased energy costs, this alongside consideration of appropriate discount rates, have
been factored in management’s changes in their impairment calculation.
The directors have concluded that no impairment is required for goodwill and other
intangible assets (group) or investments (parent company).
Further details are provided in note 13 of the consolidated financial statements and note
3 of the parent company financial statements. Refer to the considerations of the Audit
Committee on page 37.
How the scope of our
audit responded to the
key audit matter
The audit procedures we performed in respect of this matter included
• Obtaining an understanding of the relevant controls over the carrying value of
goodwill, other intangible assets and parent company investments, in particular the
controls over the forecasts that underpin the value in use model;
• Challenging the directors’ assessment of the cash flow assumptions in determining
value in use, including sensitivities, by assessing historical accuracy of forecasting
and budgeting accuracy and considering third-party data where available;
• Engaging our valuation specialists to calculate independent discount rates for each
cash generating unit and benchmarking these against the rates used in the value-in-
use model;
• Challenging the directors’ assessment of the long-term growth rates by performing
analysis of market forecasts; and
• Assessing the disclosure made in the financial statements including those around
sensitivities.
Key observations
We concluded that the valuation of goodwill, other intangible assets and investments is
appropriate, and that appropriate disclosure has been made in the financial statements.
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iomart Group plc Annual Report and Financial Statements 2023 Independent Auditor’s Report to the Members of iomart Group plc
5. KEY AUDIT MATTERS (CONTINUED)
5.3. Business Combinations: valuation and allocation of acquired intangible assets and contingent consideration
Key audit matter
description
How the scope of our
audit responded to the
key audit matter
The Group completed a business combination in the year, Concepta Capital Limited, for
total consideration of £14.8m, including £4.0m contingent consideration. The consideration
comprises £1.3m of identifiable net assets (including £4.5m customer relationships) and
£13.5m goodwill.
The directors performed a purchase price allocation exercise to allocate consideration in
excess of the net asset value to goodwill and other intangibles.
Given the judgement involved in valuing acquired intangible assets and in forecasting post-
acquisition performance, we have identified a risk of material misstatement in relation to
the valuation and allocation of acquired intangible assets and the valuation of contingent
consideration.
Business combinations are included within notes 2 and 11 to the financial statements.
The audit committee’s consideration in respect of the risk is included on page 37.
The audit procedures we performed in respect of this matter included:
• Gaining an understanding of the process undertaken by the directors to perform the
purchase price allocation and contingent consideration calculation and gaining an
understanding of the key controls;
•
•
Reviewing the share purchase agreement to assess whether the acquisition has been
accounted for correctly in the financial statements;
Engaging with our valuation specialists to understand the inputs and methodology,
forming a view on the methodology and assumptions used by the directors;
• Challenging the assumptions for the inputs to the calculations with reference to
comparable company benchmarks;
• Assessing director’s forecast of post-acquisition performance for the remaining
earn-out period to the end of June 23, and recalculated the expected contingent
consideration, including consideration of sensitivity analysis performed; and
• Assessing the disclosures made in the financial statements.
Key observations
We concluded that assumptions made by management in determining the valuation and
allocation of acquired intangible assets and contingent consideration are reasonable.
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iomart Group plc Annual Report and Financial Statements 2023 Independent Auditor’s Report to the Members of iomart Group plc
Independent Auditor’s Report to the Members of iomart Group plc
6. Our application of materiality
6.1 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in
planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent company financial statements
Materiality
£1,017k (2022: £1,106k)
£508k (2022: £553k)
Basis for determining
materiality
3% of EBITDA (2022: 2.9% of EBITDA)
0.4% of net assets (2022: 0.5% of net
assets), capped at 50% (2022: 50%) of
Group materiality.
Rationale for the
benchmark applied
We have used EBITDA measure as the
benchmark for our determination of
materiality as we consider this to be a
critical performance measure for the
Group on the basis that it is a key metric
to analysts and investors and has equal
prominence to statutory measures in the
Annual Report.
We have used net assets as the benchmark
for our determination of materiality as the
parent company is not a trading entity and
instead holds the Group’s investments in
subsidiaries. We consider net assets to be
the appropriate metric for such an entity.
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iomart Group plc Annual Report and Financial Statements 2023 Independent Auditor’s Report to the Members of iomart Group plc
6. Our application of materiality (CONTINUED)
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected
and undetected misstatements exceed the materiality for the financial statements as a whole.
Performance
materiality
Basis and rationale
for determining
performance
materiality
Group financial statements
Parent company financial statements
70% (2022: 70%) of group materiality
70% (2022: 70%) of parent company
materiality
In determining performance materiality, we considered the following factors:
• Our risk assessment, including our assessment of the Group’s overall control
environment and that we consider it appropriate to rely on controls within the
revenue business process in two of the full scope components; and
• Our past experience of the audit, which has indicated a low number of corrected
and uncorrected misstatements identified in prior periods.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £51k (2022:
£55k), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also
report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the
financial statements.
7. AN OVERVIEW OF THE SCOPE OF OUR AUDIT
7.1 Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment through discussion with IT
and the Group finance teams and by performing walkthroughs of processes across each of these areas, including Group-
wide controls, and assessing the risk of material misstatement at a Group level.
For components deemed significant to the Group, full scope audit procedures were performed to materiality levels
applicable to each entity, which was lower than the Group materiality level. Components deemed significant are as follows:
• iomart Hosting Limited
• Easyspace Limited
• Cristie Data Limited
The remaining non-significant components (Concepta Capital Ltd, Dediserve Ltd, Iomart Cloud Inc) were subject to
analytical reviews. Our audit work on these components was executed at Group materiality. At the Group level, we also
tested the consolidation process. All work was performed by the Group engagement team.
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iomart Group plc Annual Report and Financial Statements 2023
Independent Auditor’s Report to the Members of iomart Group plc
Independent Auditor’s Report to the Members of iomart Group plc
7. AN OVERVIEW OF THE SCOPE OF OUR AUDIT (CONTINUED)
7.2. Our consideration of the control environment
With the involvement of our IT specialists, we obtained an understanding of the relevant IT environment by performing
walkthroughs of key processes and, in some instances, performed testing on the relevant general IT controls and business
cycles. We took a controls reliance approach on the relevant controls for two of the full scope components within the
revenue business process cycle.
7.3. Our consideration of climate-related risks
In planning our audit, we have considered the potential impact of climate change on the Group’s business and its financial
statements, based on our cumulative knowledge and experience of the Group and environment in which it operates. We
performed a risk assessment including inspecting the Group’s risk register and Board minutes and did not identify any
additional risks of material misstatement. We have read the disclosures in relation to climate change made in the other
information within the annual report and ascertained whether the disclosures are materially consistent with the financial
statements and our knowledge obtained during our audit.
8. OTHER INFORMATION
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. RESPONSBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s
ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
10. AUDITOR’S RESPONSBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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iomart Group plc Annual Report and Financial Statements 2023 Independent Auditor’s Report to the Members of iomart Group plc
11. EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES, INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the group’s
remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
• results of our enquiries of management, the directors and the audit committee about their own identification and
assessment of the risks of irregularities, including those that are specific to the group’s sector;
• any matters we identified having obtained and reviewed the group’s documentation of their policies and procedures
relating to:
o
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of
non-compliance;
o detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or
alleged fraud;
o
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
• the matters discussed among the audit engagement team and relevant internal specialists, including valuations and IT
specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation
for fraud and identified the greatest potential for fraud in the completeness and valuation of deferred income. In common
with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management
override.
We also obtained an understanding of the legal and regulatory framework that the group operates in, focusing on
provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures
in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act
and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial
statements but compliance with which may be fundamental to the group’s ability to operate or to avoid a material penalty.
These included UK employment law, environmental regulations and labour laws.
63
iomart Group plc Annual Report and Financial Statements 2023
Independent Auditor’s Report to the Members of iomart Group plc
Independent Auditor’s Report to the Members of iomart Group plc
11. EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES, INCLUDING
(CONTINUED)
11.2. Audit response to risks identified
As a result of performing the above, we identified the completeness and valuation of deferred income as a key audit matter
related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also
describes the specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the financial statements;
• enquiring of management, the audit committee and internal and external legal counsel concerning actual and potential
litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;
• reading minutes of meetings of those charged with governance; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries
and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a
potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the
normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
including internal specialists and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Report on other legal and regulatory requirements
12. OPINIONS ON OTHER MATTERS 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.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in
the course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
13. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
13.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
13.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration
have not been made.
We have nothing to report in respect of these matters.
64
iomart Group plc Annual Report and Financial Statements 2023 Independent Auditor’s Report to the Members of iomart Group plc
14. USE OF OUR REPORT
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.
David Sweeney, CA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Glasgow, United Kingdom
13 June 2023
65
iomart Group plc Annual Report and Financial Statements 2023 Independent Auditor’s Report to the Members of iomart Group plc
Consolidated Statement of Comprehensive Income
Year ended 31 March 2023
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Analysed as:
Earnings before interest, tax, depreciation, amortisation,
acquisition costs, share-based payments and exceptional
non-recurring costs
Share-based payments
Acquisition costs
Cost of sales- exceptional non-recurring costs
Depreciation
Amortisation – acquired intangible assets
Amortisation – other intangible assets
Finance costs
Profit before taxation
Taxation
Note
3
2023
£’000
115,638
2022
£’000
103,018
(52,080)
(41,712)
63,558
61,306
(52,141)
(47,076)
4
11,417
14,230
36,161
38,009
(696)
(922)
(820)
(15,861)
(3,880)
(2,565)
(480)
(315)
-
(16,296)
(4,044)
(2,644)
(2,915)
(2,062)
8,502
12,168
(1,507)
(2,772)
26
6
4
4
4
4
7
9
Profit for the year attributable to equity holders of the parent
6,995
9,396
Other comprehensive income
Amounts which may be reclassified to profit or loss
Currency translation differences
Other comprehensive income for the year
60
60
30
30
Total comprehensive income for the year attributable to equity holders of the parent
7,055
9,426
Basic and diluted earnings per share
Basic earnings per share
Diluted earnings per share
12
12
6.4p
6.2p
8.6p
8.4p
All of the activities of the Group are classed as continuing. The following notes form part of the financial statements.
66
iomart Group plc Annual Report and Financial Statements 2023
Consolidated Statement of Financial Position
As at 31 March 2023
Note
2023
£’000
2022
£’000
ASSETS
Non-current assets
Intangible assets – goodwill
Intangible assets – other
Trade and other receivables
Property, plant and equipment
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax asset
Total assets
LIABILITIES
Non-current liabilities
Trade and other payables
Non-current borrowings
Provisions
Deferred tax
Current liabilities
Contingent consideration due on acquisitions
Trade and other payables
Current borrowings
Total liabilities
Net assets
EQUITY
Share capital
Own shares
Capital redemption reserve
Share premium
Merger reserve
Foreign currency translation reserve
Retained earnings
13
13
14
16
18
17
19
21
22
10
20
19
21
24
25
99,950
12,981
177
64,959
178,067
13,818
25,804
987
40,609
86,479
12,852
531
70,893
170,755
15,332
20,592
1,658
37,582
218,676
208,337
(2,666)
(50,203)
(2,755)
(3,221)
(58,845)
(4,000)
(31,898)
(3,377)
(39,275)
(2,643)
(53,063)
(2,438)
(1,510)
(59,654)
-
(26,232)
(3,560)
(29,792)
(98,120)
(89,446)
120,556
118,891
1,106
(70)
1,200
22,495
4,983
46
90,796
1,101
(70)
1,200
22,495
4,983
(14)
89,196
Total equity
120,556
118,891
These financial statements were approved by the Board of Directors and authorised for issue on 13 June 2023.
Signed on behalf of the Board of Directors
Reece Donovan
Director and Chief Executive Officer
iomart Group plc – Company Number: SC204560
The following notes form part of the financial statements.
67
iomart Group plc Annual Report and Financial Statements 2023
Consolidated Statement of Financial Position
As at 31 March 2023
Consolidated Statement of Cash Flows
Year ended 31 March 2023
Profit before taxation
Finance costs – net
Depreciation
Amortisation
Share-based payments
Gain on disposal of property
Movement in trade receivables
Movement in trade payables
Cash flow from operations
Taxation received/(paid)
Net cash flow from operating activities
Cash flow from investing activities
Purchase of property, plant and equipment
Proceeds received from disposal of property, plant and equipment
Development costs
Purchase of intangible assets
Payment for current period acquisitions net of cash acquired
Net cash used in investing activities
Cash flow from financing activities
Issue of shares
Drawdown of bank loans
Payments under lease liabilities
Repayment of bank loans
Repayment of debt acquired on acquisition
Finance costs paid
Refinancing costs paid
Dividends paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Note
7
16
13
26
16
13
13
24
21
23
21
8
2023
£’000
8,502
2,915
16,492
6,445
696
-
(3,256)
2,045
33,839
48
33,887
2022
£’000
12,168
2,062
16,296
6,688
480
(338)
3,257
(2,702)
37,911
(2,455)
35,456
(8,918)
(9,492)
-
700
(1,887)
(1,352)
(44)
(10,307)
(91)
-
(21,156)
(10,235)
5
10,400
(4,902)
4
-
(4,410)
(10,000)
(18,840)
(1,508)
(1,900)
(249)
(6,091)
-
(1,100)
(990)
(7,591)
(14,245)
(32,927)
(1,514)
(7,706)
Cash and cash equivalents at the beginning of the year
15,332
23,038
Cash and cash equivalents at the end of the year
18
13,818
15,332
The following notes form part of the financial statements.
68
iomart Group plc Annual Report and Financial Statements 2023 Consolidated Statement of Changes In Equity
Year ended 31 March 2023
Share
capital
Own
shares
EBT
Foreign
currency
translation
reserve
Capital
redemption
reserve
Share
premium
account
Merger
reserve
Retained
earnings
Note
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Total
£’000
Balance at 1 April 2021
1,097
(70)
(44)
1,200
22,495
4,983
86,911
116,572
Profit for the year
Currency translation
differences
Total comprehensive
income
Dividends – final (paid)
Dividends – interim (paid)
Share-based payments
Issue of share capital
Total transactions with
owners
8
8
26
24
-
-
-
-
-
-
4
4
-
-
-
-
-
-
-
-
-
30
30
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,396
9,396
-
30
9,396
9,426
(4,931)
(4,931)
(2,660)
(2,660)
480
-
480
4
(7,111)
(7,107)
Balance at 31 March 2022
1,101
(70)
(14)
1,200
22,495
4,983
89,196
118,891
Profit for the year
Currency translation
differences
Total comprehensive
income
Dividends – final (paid)
Dividends – interim (paid)
Share-based payments
Issue of share capital
Total transactions with
owners
8
8
26
24
-
-
-
-
-
-
5
5
-
-
-
-
-
-
-
-
-
60
60
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,995
6,995
-
60
6,995
7,055
(3,957)
(3,957)
(2,134)
(2,134)
696
-
696
5
(5,395)
(5,390)
Balance at 31 March 2023
1,106
(70)
46
1,200
22,495
4,983
90,796
120,556
The nature of equity in the statement of changes in equity is disclosed in the accounting policies (note 2).
The following notes form part of the financial statements.
69
iomart Group plc Annual Report and Financial Statements 2023 Consolidated Statement of Changes In Equity
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
1. GENERAL INFORMATION
iomart Group plc is a public listed company listed on the Alternative Investment Market (“AIM”), incorporated and domiciled
in the United Kingdom and registered in Scotland under the Companies Act 2006. The address of the registered office is
Lister Pavilion, Kelvin Campus, West of Scotland Science Park, Glasgow, G20 0SP. 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 law and UK-adopted international
accounting standards.
The financial statements have been prepared on the historical cost basis as explained in the accounting policies below.
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.
Audit exemption of subsidiaries
For the year ended 31 March 2023, the following subsidiaries of the Group were entitled to exemption from audit under
s479A of the Companies Act 2006.
Subsidiary
Add3 Limited
Bytemark Holdings Limited
Bytemark Limited
Concepta Capital Limited
Datanics Limited
iomart Cloud Services Limited
London Data Exchange Limited
LDeX Connect Limited
LDeX Group Limited
Memset Limited
Oriium Consulting Limited
P2 Technologies Limited
Pav IT Services Limited
SimpleServers Limited
Sonassi Limited
Switch Media Limited
SystemsUp Limited
United Communications Limited
Registered number
05541061
08150076
04484629
09727873
09925398
SC187413
07772407
06389332
08777552
04504980
06146501
06254265
02314882
06813119
07715859
04510647
05212115
03651923
70
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
2. ACCOUNTING POLICIES (CONTINUED)
New and revised IFRSs in issue but not yet effective and have not been adopted by the Group
At the date of authorisation of these financial statements, the following standards, interpretations and amendments have
been issued but are not yet effective and have no material impact on the Group’s financial statements:
• IFRS 17 (including the June 2020 and December 2021 Amendments to IFRS 17) - Insurance contracts
• Amendment to IAS 1 – Classification of liabilities as Current or Non-Current
• Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Account Policies Amendment to IAS 1 - Non-current
Liabilities with Covenants
• Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements
• Amendments to IAS 8 - Definition of Accounting Estimates
• Amendments to IAS 12 - International Tax Reform Pillar Two Model Rules
• Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction
• IFRS 16 - Lease Liability in a Sale and Leaseback transaction
None of these have been adopted early and the Directors do not expect that the adoption of the Standards listed above
will have a material impact on the financial statements of the Group in future periods.
Adoption of new and revised Standards - amendments to IFRS that are mandatorily effective for the current year
There are no new accounting policies applied in the year ended 31 March 2023 which have had a material effect on these
accounts. In addition, the Directors do not consider that the adoption of new and revised standards and interpretations
issued by the IASB in 2022 has had any material impact on the financial statements of the Group.
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 2023. 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 eliminated
on consolidation and the underlying value of the asset transferred is tested for impairment. Amounts reported in the
financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting
policies adopted by the Group.
Business Combinations
Acquisitions of subsidiaries are accounted for using 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.
71
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
2. ACCOUNTING POLICIES (continued)
Business Combinations (continued)
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.
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.
When the consideration transferred by the Group in a business combination includes a contingent consideration
arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the
consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify
as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill.
Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement
period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the
acquisition date.
Revenue
Revenue comprises the fair value of the consideration received or receivable for the sale of services and goods (software
and hardware) 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.
The Group will typically enter multi-element contracts where more than one service is provided such as a private cloud
platform combined with an online backup portal, and in such instances the delivery of these multi-element contracts are
treated as a single performance obligation. Revenue is then subsequently recognised over the period of service delivery
when the criteria for recognition has been met. Revenue recognised at a point in time predominantly consists of both
software and hardware sales in which revenue is recognised at the point in which the customer receives the goods (note
3). Revenue recognition policies in our operating segments are as follows:
Cloud Services
This operating segment provides managed cloud computing infrastructure and services including consultancy. Revenue
from the sale of cloud computing infrastructure and managed services is recognised on an over time basis over the life
of the agreement and only after the service has been established. Set-up fees charged on contracts are spread over the
life of the contract. Consultancy services are generally provided on a “time and materials” basis and therefore revenue is
recognised as these services are rendered. 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 on a point
in time basis. Any unearned portion of revenue is included in payables as deferred revenue.
72
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
2. ACCOUNTING POLICIES (continued)
Revenue (continued)
Easyspace
This operating segment provides domain name registration and hosting services. Revenue from the provision of domain
names is split between the registration of the domain and the ongoing services associated with each domain registration.
The registration of the domain is recognised on a point in time basis, whilst the ongoing service associated with each
domain registration is spread over the length of the registration. Revenue from the provision of hosting services is
recognised evenly over the period of the service on an over time basis and only after the service has been established. Any
unearned portion of revenue is included in payables as deferred revenue.
Exceptional costs
The Group defines exceptional items as costs incurred by the Group which relate to material non-recurring costs. These
are disclosed separately where it is considered it provides additional useful information to the users of the financial
statements.
Interest
Interest is recognised on an accruals basis using the effective interest method.
Intangible assets
Goodwill
Goodwill represents the excess of the consideration of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment charges.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are expected to benefit from the business combination in which
the goodwill arose. Impairments to goodwill are charged to profit or loss in the period in which they arise.
Intangible assets - 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
straight line 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.
Intangible assets - research and development
Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in which it
is incurred. Development costs incurred are capitalised when all the following conditions are satisfied:
• completion of the intangible asset is technically feasible so that it will be available for use or sale;
• the Group intends to complete the intangible asset and use or sell it;
• the Group has the ability to use or sell the intangible asset;
• the intangible asset will generate probable future economic benefits;
• there are adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset, and
• the expenditure attributable to the intangible asset during its development can be measured reliably.
Development costs not meeting the criteria for capitalisation are expensed as incurred. The 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.
73
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
2. ACCOUNTING POLICIES (continued)
Intangible assets (continued)
Intangible assets - software
Software is recognised at cost on purchase or fair value on acquisition and amortised on a straight-line basis over its useful
economic life, which does not generally exceed five years for purchased software or eight years in the case of acquired
software.
Acquisition costs
In accordance with IFRS 3 Business Combinations costs incurred on professional fees and attributable internal acquisition
costs 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.
Alternative performance 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, any gains or losses on revaluation of contingent consideration and material non-
recurring items. 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;
• share-based payment charges;
• where bank facilities are restructured during the year any accelerated write off of arrangement fees;
• M&A activity including:
o professional fees;
o any non-recurring integration costs;
o any gain or loss on the revaluation of contingent consideration;
o any interest charge on contingent consideration; and
• Any material non-recurring costs where their removal is necessary for the proper understanding of the underlying profit
for the period.
The Group considers adjusted profit before tax to be a useful measure of performance because it eliminates the impact of
certain non-recurring items including those associated with acquisitions and other charges commonly excluded from profit
before tax by investors and analysts for valuation purposes.
Adjusted diluted earnings per share
Adjusted diluted earnings per share is calculated by taking the adjusted profit before tax as described after deducting an
appropriate taxation charge and dividing by the total weighted average number of ordinary shares in issue during the year
and adjusting for the dilutive potential ordinary shares relating to share options. The Group considers adjusted diluted
earnings per share to be a useful measure of performance for the same reasons as adjusted profit before tax. In addition,
it is used as the basis for consideration to the level of dividend payments.
74
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
2. ACCOUNTING POLICIES (CONTINUED)
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 IFRS 16.
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 straight line rates generally applicable are:
Freehold property
Between 2.00% and 3.33% per annum
Leasehold improvements
Between 6% and 10% per annum
Data centre equipment
Between 6% and 10% per annum
Computer equipment
Between 20% and 50% per annum
Office equipment
Motor vehicles
Leases
Between 10% and 25% per annum
25% per annum
When entering into a new contract, the Group assesses whether it is, or contains, a lease. A lease conveys a right to control
the use of an identified asset for a period of time in exchange for consideration.
At the lease commencement date, the Group recognises a right-of-use asset and a corresponding lease liability on the
balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability
measured at the present value of future lease payments, any initial direct costs incurred by the Group, an estimate of any
costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease
commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end
of the lease term. The Group assesses the right-of-use asset for impairment under IAS 36 ‘Impairment of Assets’ where
such indicators exist.
Lease liabilities are presented on two separate lines in the balance sheet for amounts due within one year and amounts due
after more than one year. The lease liability is initially measured at the present value of lease payments that are not paid at
the commencement date, discounted at the Group’s incremental borrowing rate. Subsequently, the liability will be reduced
for payments made and increased for the interest applied and it is remeasured to reflect any reassessment or contract
modifications. When the lease liability is remeasured, the corresponding adjustment is reflected in the right of use asset or
in the consolidated income statement if the right of use asset is already reduced to zero.
The Group adopts recognition exemptions for short term leases of 12 months or less and leases of low value where
associated costs are expensed to the consolidated income statement.
75
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
2. ACCOUNTING POLICIES (continued)
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). Goodwill is allocated to those cash-generating units that are expected
to benefit from synergies of the related business combination and represent the lowest level within the Group at which
management monitors goodwill.
Goodwill, other individual assets or cash-generating units that include goodwill, and those intangible assets not yet
available for use are tested for impairment at least annually. All other individual assets or cash-generating units are tested
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the assets 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.
Trade and other receivable - 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.
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.
76
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
2. ACCOUNTING POLICIES (continued)
Taxation
The income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
Current tax is the tax currently payable based on taxable profit for the year and any adjustment to tax payable in respect
of prior years. Taxable profit differs from net profit as reported in the statement of comprehensive income because it
excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.
A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that
there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount
expected to become payable.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and
is accounted for using the balance sheet liability method. Deferred tax liabilities are provided in full and are generally
recognised for all taxable temporary differences, 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.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
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. Where
current or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the
accounting for the business combination.
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 balance sheet date. Deferred
tax assets and liabilities arising in the same tax jurisdiction are offset and the Group intends to settles its current tax assets
and liabilities on a net basis.
Changes in current and 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.
77
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
2. ACCOUNTING POLICIES (continued)
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group
becomes a party to the contractual provisions of the instrument. The classification of financial assets is based on the
Group’s business model for managing the financial asset and the contractual cash flow characteristics associated with
the financial asset. Assets that are held for collection of contractual cash flows, where those cash flows represent solely
payments of principal and interest, are measured at amortised cost.
Financial assets
Trade receivables
Trade receivables are amounts due from customers for goods sold and services provided in the ordinary course of
business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment. In recognising any provision for impairment, the Group applies
the IFRS 9 approach to measuring expected credit losses which uses a lifetime expected loss allowance for all assets
held at amortised cost. The Group recognises a loss allowance for all expected credit losses on initial recognition of trade
receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term deposits 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.
Financial liabilities
Trade payables
Trade payables are stated at their nominal value, recognised initially at fair value and subsequently valued at amortised
cost.
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 IFRS 9.
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.
78
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
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 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; and
• “retained earnings” represents retained profits and share-based payment reserve.
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 payments
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, with
the exception of any estimates based on a market condition which are not revised. The three main vesting conditions
that apply to share options relate to the achievement of annual objectives, continuous employment and achievement of
Group results. 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.
79
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
2. ACCOUNTING POLICIES (CONTINUED)
Segmental reporting
The Group provides segmental reporting on a basis consistent with the provision of internal financial information used for
decision making purposes by the Chief Operating Decision-Maker. Internal reports are produced on a basis consistent with
the accounting policies adopted in the Group’s financial statements.
The Group calculates geographical information on the basis of the location of the customer.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position
are set out in the Strategic Report on pages 6 to 29. The financial position of the Group, its cash flows, liquidity position
and borrowing facilities are described in the Chief Financial Officer’s Report on pages 14 to 19.
Note 29 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.
The Group has a single £100m Revolving Credit Facility ("RCF") provided by four banks consisting of HSBC, Royal Bank of
Scotland, Bank of Ireland and Clydesdale Bank. The facility has maturity date of 30 June 2026 and benefits from a £50m
Accordion Facility. The RCF has a borrowing cost at the Group’s current leverage levels of 180 basis points over SONIA,
compared to 150 basis points over LIBOR on the prior facility. The RCF and the Accordion Facility (if exercised) provide the
Group with additional liquidity which will be used for general business purposes and to fund investments, in accordance
with the Group's five-year strategic plan. The Directors are of the opinion that the Group can operate within the current
facility and comply with its financial bank covenants which consists of an interest cover and leverage cover ratio.
At the end of the financial year, the Group had net debt of £39.8m (2022: £41.3m) 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 considered the Group budgets and the cash flow forecasts for the next three financial years, and
associated risks and the availability of bank and leasing facilities. We have run appropriate scenario and stress tests
applying reasonable downside sensitivities in respect of profitability and associated cash flow generation and are confident
we have the resources to meet our liabilities as they fall due.
After making enquiries, the Directors have a reasonable expectation that the Group will be able to meet its financial
obligations and has adequate resources to continue in operational existence for the foreseeable future (being a period
extending at least twelve months from the date of approval of these financial statements). For this reason they continue
to adopt the going concern basis in preparing the financial statements.
80
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
2. ACCOUNTING POLICIES (CONTINUED)
Critical accounting judgements and key sources of estimation uncertainty
The Group do not consider that there are any critical accounting judgements or key sources of estimation uncertainty in the
preparation of the financial statements for the year ended 31 March 2023 that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
3. SEGMENTAL ANALYSIS
The Chief Operating Decision-Maker has been identified as the Chief Executive Officer (“CEO”) of the Company. The Group
has two operating segments and the CEO reviews the Group’s internal reporting which recognises these two segments
in order to assess performance and to allocate resources. The Group has determined its reportable segments are also its
operating segments based on these reports.
The Group currently has two operating and reportable segments being Easyspace and Cloud Services.
• 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
data centres, to the larger SME and corporate markets. The segment uses several routes to market including iomart
Cloud, Infrastructure as a Service (IaaS), Rapidswitch, Cristie Data, Sonassi, LDeX, Bytemark, Memset, ORIIUM, Pavilion
IT and P2.
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,
any gain or loss on revaluation of contingent consideration and material non-recurring items. This segment EBITDA is used
to measure performance as the CEO believes that such information is the most relevant in evaluating the results of the
segment.
The Group’s EBITDA for the year has been calculated after deducting Group overheads from the EBITDA of the two
segments as reported internally. Group overheads include the cost of the Board, all the costs of running the premises in
Glasgow, the Group marketing, human resource, finance and design functions and legal and professional fees.
The segment information is prepared using accounting policies consistent with those of the Group as a whole.
The assets and liabilities of the Group are not reviewed by the Chief Operating Decision-Maker on a segment basis.
Therefore none of the Group’s assets and liabilities are segmental assets and liabilities and are all unallocated for segmental
disclosure purposes. For that reason the Group has not disclosed details of segmental assets and liabilities.
All segments are continuing operations. No customer accounts for 10% or more of external revenues. Inter-segment
transactions are accounted for using an arms-length commercial basis.
81
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
3. SEGMENTAL ANALYSIS (CONTINUED)
Operating Segments
Revenue by Operating Segment
Easyspace
Cloud Services
Cloud Services revenue can be further disaggregated as follows:
Cloud managed services
Self-managed infrastructure
Non-recurring revenue
2023
£’000
11,720
103,918
115,638
2023
£’000
64,115
30,444
9,359
103,918
The nature of these three offerings are explained within the Chief Executive Officer report on page 11.
Recurring and Non-recurring Revenue
The amount of recurring and non-recurring revenue recognised during the year can be summarised as follows:
Recurring - over time
Non-recurring - point in time
Geographical Information
2023
£’000
106,279
9,359
115,638
2022
£’000
11,782
91,236
103,018
2022
£’000
55,745
28,363
7,128
91,236
2022
£’000
95,890
7,128
103,018
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
2023
£’000
99,961
15,677
2022
£’000
88,692
14,326
115,638
103,018
82
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
3. SEGMENTAL ANALYSIS (CONTINUED)
Profit by Operating Segment
2023
Depreciation,
amortisation,
acquisition
costs,
share-based
payments and
exceptional
non-recurring
costs
£’000
(690)
(22,436)
-
(922)
(696)
Adjusted
EBITDA
£’000
5,638
35,331
(4,808)
-
-
36,161
(24,744)
Easyspace
Cloud Services
Group overheads
Acquisition costs
Share-based payments
Group interest and tax
Profit for the year
2022
Depreciation,
amortisation,
acquisition
costs,
share-based
payments and
exceptional
non-recurring
costs
£’000
(665)
(22,319)
-
(315)
(480)
38,009
(23,779)
Operating
profit/(loss)
Adjusted
EBITDA
£’000
5,674
36,641
(4,306)
-
-
£’000
4,948
12,895
(4,808)
(922)
(696)
11,417
(4,422)
6,995
Operating
profit/(loss)
£’000
5,009
14,322
(4,306)
(315)
(480)
14,230
(4,834)
9,396
Group overheads, acquisition costs, share-based payments, interest and tax are not allocated to segments.
4. OPERATING PROFIT
Operating profit is stated after charging/(crediting) the following:
Staff costs (note 5) excluding development costs capitalised (note 13)
23,079
19,189
2023
£’000
2022
£’000
Depreciation of property, plant and equipment:
- Owned assets - property, plant and equipment
- Owned assets – closure of data centre included in acquisition costs (note 6)
- Right-of-use assets (note 23)
Short-term and low value lease expense (note 23)
Amortisation of intangibles:
- Acquired intangible assets
- Other intangible assets
- Right-of-use assets (note 23)
Gain on disposal of property
Bad debt expense
Net foreign exchange (gain)/loss
12,176
631
3,685
1,750
3,880
2,280
285
-
682
(248)
12,863
-
3,433
1,784
4,044
2,359
285
(337)
293
99
The Group has incurred £0.8m (2022: £nil) of exceptional non-recurring costs in relation to power costs as described in the
Chief Financial Officer’s report on page 17.
83
iomart Group plc Annual Report and Financial Statements 2023
Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
4. OPERATING PROFIT (CONTINUED)
Included within administrative expenses are fees paid to the Group’s auditor’s as follows:
Auditor’s remuneration
Audit services:
- Fees payable for the audit of the consolidation and the parent company financial statements
- Fees payable for audit of subsidiaries, pursuant to legislation – UK
- Fees payable for audit of subsidiaries, pursuant to legislation – International
Total audit services fees
Non-audit services:
- Interim review
- Covenant compliance certification
Total non-audit services fees
2023
2022
£’000
£’000
130
146
15
291
30
3
33
85
126
15
226
24
-
24
Total Auditor’s remuneration
324
250
5. INFORMATION REGARDING EMPLOYEES AND DIRECTORS
The average number of persons (including all Directors) employed by the Group during the year was as follows:
Technical
Sales and marketing
Administration
Staff costs of the Group during the year in respect of employees and all Directors were:
Wages and salaries
Social security costs
Pension costs
Share-based payments (note 26)
2023
No.
2022
No.
293
95
57
445
2023
£’000
21,567
2,294
409
696
272
77
46
395
2022
£’000
18,090
1,604
367
480
24,966
20,541
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 41 to 47. 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.
84
iomart Group plc Annual Report and Financial Statements 2023
Notes to the Financial Statements
Year ended 31 March 2023
5. INFORMATION REGARDING DIRECTORS AND EMPLOYEES (CONTINUED)
The remuneration of the Directors are as follows:
Directors’ emoluments
Aggregate emoluments
Emoluments payable to the highest paid Director are as follows:
Aggregate emoluments
2023
£’000
2022
£’000
1,204
1,048
2023
£’000
2022
£’000
537
465
During the year the Company made personal pension contributions to personal pension schemes or paid a pension
allowance to two of the Directors (2022: two) of £54,013 (2022: £52,440).
The aggregate amount of gains during the year realised by serving Directors, on the exercise of share options, which have
vested in prior periods, was £518,471 (2022: £64,000).
The share-based payment charge in relation to Directors, who served during the year, was £519,000 (2022: £79,000).
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 41 to 47.
6. ACQUISITION COSTS
Professional fees
Non-recurring acquisition integration costs
Total acquisition costs
2023
£’000
2022
£’000
236
686
922
-
315
315
Professional fees of £236,000 (2022: £nil) relates to fees incurred in relation to the acquisition of Concepta in the year.
Non-recurring acquisition integration costs of £686,000 in the current year largely relate to costs associated with the
closure of our Dunsfold data centre which was acquired through the acquisition of Memset Limited in 2020. Of this
amount, £631,000 is non-cash accelerated write down in asset value recorded as depreciation.
85
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
7. FINANCE COSTS
Bank loan
Accelerated write off of arrangement fee on bank facility
Interest on lease liabilities (note 23)
Other interest charges (note 22)
Finance costs
8. DIVIDENDS PAID ON SHARES CLASSED AS EQUITY
2023
£’000
2022
£’000
(2,216)
(1,222)
-
(586)
(113)
(102)
(646)
(92)
(2,915)
(2,062)
2023
Pence per
share
2023
£’000
2022
Pence per
share
2022
£’000
Paid during the year:
Final dividend (proposed in the prior year)
Equity dividends on ordinary shares
3.60p
3,957
4.50p
4,931
Interim dividend
Equity dividends on ordinary shares
1.94p
2,134
2.42p
2,660
Total dividend paid in cash
6,091
7,591
The Directors have recommended a final dividend for the year ended 31 March 2023 of 3.50p per share (2022: 3.60p
per share). Subject to shareholder approval this proposed final dividend would be payable on 8 September 2023 to
shareholders on the register at close on 18 August 2023.
86
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
9. TAXATION
Corporation Tax:
Tax charge for the year
Adjustment relating to prior years
Total current taxation charge
Deferred Tax:
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 charge
Total taxation charge
2023
£’000
2022
£’000
(935)
(1,333)
-
209
(935)
(1,124)
(597)
36
(11)
-
(1,517)
(137)
(4)
10
(572)
(1,648)
(1,507)
(2,772)
The differences between the total taxation charge 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 @ 19% (2022: 19%)
Expenses disallowed for tax purposes and non-taxable income
Adjustments in current tax relating to prior years
Tax effect of different statutory tax rates of overseas jurisdictions
Movement in tax relating to changes in tax rates
Tax effect of share-based remuneration
Effect of super-deduction
Movement in deferred tax related to development costs
Movement in deferred tax related to property, plant and equipment
Movement in deferred tax relating to prior years
Total taxation charge for the year
2023
£’000
8,502
2022
£’000
12,168
1,615
2,312
28
-
11
95
253
(505)
-
46
(36)
4
(209)
4
(10)
833
(377)
72
6
137
1,507
2,772
The weighted average applicable tax rate for the year ended 31 March 2023 was 19% (2022: 19%). 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 18% (2022: 23%). The
effective rate of tax has decreased due to the impact of the deferred tax rate change in the prior year and the movement
in the tax effect of share-based remuneration largely driven by the movement in the share price in the prior year. This has
been offset by the effect of super-deduction in the current year driving a higher credit recognised in the consolidated
statement of comprehensive income.
Deferred tax assets and liabilities at 31 March 2023 have been calculated based on the rate of 25% enacted at the balance
sheet date (2022: 25%).
87
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
10. DEFERRED TAX
The Group recognised deferred tax assets/(liabilities) as follows:
Share-based remuneration
Capital allowances temporary differences
Deferred tax on acquired assets with no capital allowances
Deferred tax on development costs
Deferred tax on customer relationships
Deferred tax on intangible software
Deferred tax liability
2023
£’000
638
(319)
-
(648)
(2,762)
(130)
(3,221)
2022
£’000
884
843
(19)
(542)
(2,499)
(177)
(1,510)
At the year end, the Group had no unused tax losses (2022: £nil) available for offset against future profits.
The movement in the deferred tax account during the year was:
Share-based
remuneration
Capital
allowances
temporary
differences
Development
costs
Deferred tax
on acquired
assets with
no capital
allowances
Customer
relationships
Intangible
software
Tax Losses
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 April 2021
1,332
1,363
-
(40)
(2,356)
(161)
Credited/(charged)
to statement of
comprehensive income
Effect of different
tax rates of overseas
jurisdictions
Effect of changes in tax
rates
Balance at 31 March
2022
Acquired on acquisition of
subsidiary (note 11)
Movement relating to prior
year
(Charged)/credited
to statement of
comprehensive income
Effect of different
tax rates of overseas
jurisdictions
Balance at 31 March
2023
(869)
(947)
(542)
-
-
421
884
-
-
427
843
(133)
36
34
-
635
(4)
35
-
(13)
(774)
(51)
-
-
(542)
(19)
(2,499)
(177)
-
-
-
-
(1,074)
-
(246)
(1,065)
(106)
19
822
-
-
-
638
(319)
(648)
-
-
(11)
(2,762)
(130)
-
-
47
-
-
-
-
-
-
68
-
138
(1,654)
(4)
10
(1,510)
(1,139)
36
(68)
(597)
-
-
(11)
(3,221)
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 arose from development expenditure on which tax relief was received in advance
of the amortisation charge.
The deferred tax on acquired assets arises from data centre 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 and intangible software arises from permanent differences on acquired
intangible assets.
Deferred tax on tax losses arose on acquisition in the year and has been utilised in the current year.
88
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
11. ACQUISITIONS
Concepta Capital Limited
On 15 August 2022, the Group acquired the entire issued share capital of Concepta Capital Limited ("Concepta"). Concepta
is principally a holding company which owns 100% of the issued share capital of Oriium Consulting Limited (“ORIIUM”), PAV
I.T. Services Limited (“Pavilion IT”), P2 Technologies Limited (“P2”) Datanics Limited (“Datanics”) and Add3 Limited (“Add3”).
ORIIUM is a channel only IT service provider specialising in data management solutions, and Pavilion IT is a provider of
cloud and hybrid infrastructure solutions and support services.
During the current year, the Group incurred £236,000 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
and in cash flow from investing activities for the year ended 31 March 2023.
The following table summarises the consideration to acquire Concepta, the amounts of identified assets acquired, and
liabilities assumed at the acquisition date.
Recognised amounts of net assets acquired and liabilities assumed:
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Intangible assets
Borrowings
Trade and other payables
Corporation tax asset
Deferred tax liability
Identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash – paid on acquisition
Contingent consideration – payable
Total consideration to be transferred
£’000
1,017
1,603
1,203
4,621
(1,742)
(4,323)
77
(1,139)
1,317
13,471
14,788
10,788
4,000
14,788
The acquisition of Concepta was completed using a “completion accounts” mechanism, on a no cash, no debt, and
normalised working capital basis. An initial payment of £10,548,000 was made at completion. At the date of acquisition,
Concepta had bank debt of £1,508,000 which was taken on by iomart and settled as part of the completion process.
In line with the share purchase agreement (SPA), the total consideration payable was adjusted based on the level of
cash, debt and working capital shown in the agreed set of accounts (the Completion Accounts) made up to 31 July 2022.
Following agreement of the Completion Accounts an additional payment of £240,000 was paid to the former shareholders
of Concepta.
The SPA included a provision requiring the Company to pay the former shareholders of Concepta an additional amount
contingent on the level of profitability delivered by Concepta in the twelve months ended 30 June 2023 (“the earn-out
payment”).
The potential undiscounted amount of the earn-out payment that the Company could be required to pay is between £nil
and £4,000,000. The amount of contingent consideration payable, which was recognised as of the acquisition date, was
£4,000,000. The level of profitability for the earn-out payment was estimated taking into account actual performance to
date and a management’s estimates of profitability for the remaining months to June 2023.
89
iomart Group plc Annual Report and Financial Statements 2023
Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
11. ACQUISITIONS (CONTINUED)
The goodwill arising on the acquisition of Concepta is attributable to the premium payable for a pre-existing, well
positioned business and the specialised, industry specific knowledge, including the indirect channel, of the management
and staff, together with the benefits to the Group in merging the business with its existing infrastructure and the
anticipated future revenue synergies from the combination. The goodwill is not expected to be deductible for tax
purposes.
The trading names “ORIIUM”, “Pavilion IT” and “P2” are not actively advertised or promoted. The Concepta group’s standard
terms and conditions restrict the ability of the Concepta Group to sell, distribute or lease any personal information it holds
on customers. 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.
Included in intangible assets is the fair value included in respect of the acquired customer relationships intangible asset
of £4,462,000. 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 pre-tax discount rate of 13.06% was used for the valuation. Customer relationships are being
amortised over an estimated useful life of 8 years.
The Concepta group earned revenue of £6,188,000 and generated profits, before allocation of group overheads, share
based payments and tax, of £858,000 in the period since acquisition.
If the Concepta group had been part of the iomart group from 1 April 2022, revenue earned would have been £9,955,000
and profit after tax of £1,175,000 for the year ended 31 March 2023.
90
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
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.
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 by Employee Benefit Trust
Issued share capital in the year
Weighted average number of ordinary shares - basic
Dilutive impact of share options
2023
£’000
6,995
No
000
2022
£’000
9,396
No
000
110,065
109,671
(141)
170
(141)
181
110,094
109,711
2,575
2,210
Weighted average number of ordinary shares - diluted
112,669
111,921
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
- Cost of sales - exceptional non-recurring costs
-
Share-based payments
- Accelerated write off of arrangement fee on bank facility
-
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
91
6.4 p
6.2 p
8.6 p
8.4 p
2023
£’000
6,995
3,880
922
820
696
-
2022
£’000
9,396
4,044
315
-
480
102
(1,025)
(879)
12,288
13,458
11.2 p
10.9 p
12.2 p
12.0 p
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
13. INTANGIBLE ASSETS
Cost
At 1 April 2021
Additions
Currency translation differences
Development cost capitalised
At 31 March 2022
Acquired on acquisition of
subsidiary (note 11)
Additions
Currency translation differences
Development cost capitalised
Goodwill
Development
costs
Acquired
customer
relationships Software
Domain
names
& IP
addresses
Beneficial
contracts
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
86,479
11,904
57,263
10,827
86
336
166,895
-
-
-
86,479
13,471
-
-
-
-
-
1,352
13,256
-
36
-
91
27
-
-
-
-
-
-
-
91
63
1,352
57,299
10,945
86
336
168,401
159
4,462
-
44
39
-
-
-
-
-
-
-
-
-
18,092
44
87
1,887
-
48
-
-
-
1,887
15,302
At 31 March 2023
99,950
61,809
11,028
86
336
188,511
Accumulated amortisation:
At 1 April 2021
Charge for the year
Currency translation differences
At 31 March 2022
Charge for the year
Currency translation differences
At 31 March 2023
Carrying amount:
-
-
-
-
-
-
-
(9,819)
(45,316)
(6,829)
(62)
(289)
(62,315)
(1,347)
(4,044)
(1,282)
-
(36)
(31)
(11,166)
(49,396)
(8,142)
(1,434)
(3,880)
(1,116)
-
(49)
(16)
(7)
-
(69)
(8)
-
(8)
-
(6,688)
(67)
(297)
(69,070)
(7)
-
(6,445)
(65)
(12,600)
(53,325)
(9,274)
(77)
(304)
(75,580)
At 31 March 2023
99,950
2,702
8,484
1,754
At 31 March 2022
86,479
2,090
7,903
2,803
9
17
32
112,931
39
99,331
Of the total additions in the year of £44,000 (2022: £91,000), no amounts related to leases under IFRS 16 (note 23) (2022:
£nil). There were no amounts included in trade payables at the year end (2022: £nil). Consequently, the consolidated
statement of cash flows discloses a figure of £44,000 (2022: £91,000) as the cash outflow in respect of the purchase of
intangible asset 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 net book values: £3.8m in relation to the acquisition of
Concepta Capital Limited with a remaining useful life of 7 years, £0.9m in relation to the acquisitions of Memset Limited
with a remaining useful life of 5 years, the managed private cloud business of ServerChoice Limited of £0.5m with a useful
life of 5 years, Bytemark Limited with a net book value of £0.3m and LDeX Group Limited of £0.9 both with a remaining
useful life of 4 years, Sonassi Limited of £1.3m, Dediserve Limited of £0.3m, SimpleServers Limited of £0.2m all three with
a remaining useful life of 3 years.
During the year, goodwill was reviewed for impairment in accordance with IAS 36 “Impairment of Assets”. No impairment
charges (2022: £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.
92
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
13. INTANGIBLE ASSETS (CONTINUED)
The carrying value of goodwill by each CGU is as follows:
Cash Generating Units (CGU)
Easyspace
Cloud Services
2023
£’000
23,315
76,635
99,950
2022
£’000
23,315
63,164
86,479
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 five 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 years.
The growth rates and margins used to extrapolate estimated future performance 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.
In determining the value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Management continue to apply the judgement that there are two distinct CGUs within the Group, namely Cloud Services
and Easyspace which have been derived with due consideration to IAS 36. The assumptions used for the CGU included
within the impairment reviews are as follows:
Easyspace
Cloud Services
31 March
2023
31 March
2022
31 March
2023
31 March
2022
Discount rate
Future perpetuity rate
Initial period for which cash flows are estimated (years)
14.3%
0.0%
5
14.4%
0.0%
5
14.3%
2.5%
5
14.4%
2.5%
5
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. TRADE AND OTHER RECEIVABLES – NON-CURRENT
Non-current trade and other receivables relates to lease deposits of £177,000 (2022: £531,000) which are made up of a
rental deposit of £177,000 (2022: £531,000). The rental deposit remaining of £177,000 is due to be repaid at the end of the
lease which at the earliest is June 2035.
The Group is due to receive interest on the lease deposits at the prevailing market rate and therefore they have not been
discounted.
93
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
15. SUBSIDIARIES
The following are subsidiaries and have all been consolidated in the Group financial statements:
Add3 Limited
Backup Technology Limited
Bytemark Holdings Limited
Bytemark Limited
Concepta Capital Limited
Cristie Data Limited
Datanics Limited
Dediserve Limited
Easyspace Limited
iomart Cloud Inc
Country of
registration and
operation*
Activity
England
England
England
England
Non-trading
Dormant
Non-trading
Non-trading
England
Non-trading
England
Provision of data storage,
backup and virtualisation
solutions
England
Non-trading
Republic of Ireland
Managed hosting services
England
USA
Webservices
Managed hosting services
iomart Cloud Services Limited
Scotland
Non-trading
iomart Datacentres Limited
England
Dormant
iomart Hosting Limited
iomart Limited
LDeX Connect Limited
LDeX Group Limited
London Data Exchange Limited
Melbourne Server Hosting Limited
Memset Limited
Netintelligence Limited
Oriium Consulting Limited
P2 Technologies Limited
PAV IT Services Limited
Rapidswitch Limited
Redstation Limited
ServerSpace Limited
SimpleServers Limited
Sonassi Limited
Switch Media Limited
Systems Up Limited
United Communications Limited
Scotland
Managed hosting services
Scotland
Dormant
England
England
England
England
England
Non-trading
Non-trading
Non-trading
Dormant
Non-trading
Scotland
Dormant
England
England
England
England
England
England
England
England
England
England
England
Data management products
and managed services
Reseller of IT hardware,
software and services
Reseller of IT hardware,
software and services
Dormant
Dormant
Dormant
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Owned by the
company
Owned 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
-
-
-
-
-
-
-
-
*All subsidiaries with a country of registration in England have a registered office of 3rd Floor, 11-21 Paul Street, London,
EC2A 4JU. All subsidiaries with a country of registration in Scotland have a registered office of Lister Pavilion, Kelvin
Campus, West of Scotland Science Park, Glasgow, G20 0SP. The registered office of Dediserve Limited is 13-18 City Quay,
Dublin 2. The registered office of iomart Cloud Inc is Miracle Mile Plaza, 601 21st Street, Suite 300, Vero Beach, FL 32960.
All of the above subsidiaries are wholly owned by iomart Group plc or one of its subsidiary companies and operate in the
country of registration. The Group controls 100% of the ordinary share capital of each subsidiary.
94
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
16. PROPERTY, PLANT AND EQUIPMENT
Freehold
property
£’000
Leasehold
property and
improvements
Data centre
equipment
Computer
equipment
Office
equipment
Motor
vehicles
£’000
£’000
£’000
£’000
£’000
Total
£’000
Cost:
At 1 April 2021
Additions in the year
Disposals in the year
Currency translation
differences
At 31 March 2022
Acquired on acquisition of
subsidiary (note 11)
Additions in the year
Disposals in the year
Currency translation
differences
At 31 March 2023
Accumulated depreciation:
At 1 April 2021
Charge for the year
Disposals in the year
Currency translation
differences
At 31 March 2022
Charge for the year
Disposals in the year
Currency translation
differences
8,731
-
(495)
-
8,236
-
-
-
-
(937)
(255)
138
-
(1,054)
(241)
-
-
1,834
(203)
99
38,694
28,079
108,223
2,890
(445)
5,907
(20)
2,811
43
(14)
-
158
-
40,424
30,524
114,268
2,840
300
969
(309)
132
872
1,849
(1,402)
-
1
6,591
-
378
30
116
-
-
23
186,561
-
-
-
23
-
23
-
-
10,674
(1,177)
257
196,315
1,203
9,548
(1,711)
510
8,236
41,516
31,843
121,238
2,986
46
205,865
(11,675)
(4,481)
-
(58)
(17,223)
(1,263)
445
(77,547)
(10,101)
20
-
(122)
(2,150)
(190)
(17)
(6)
(109,549)
(16,296)
-
-
-
-
603
(180)
(16,214)
(18,041)
(87,750)
(2,340)
(23)
(125,422)
(9,333)
(180)
(3)
(16,492)
(4,663)
-
(74)
(2,072)
1,402
-
-
(320)
-
-
-
-
1,402
(394)
At 31 March 2023
(1,295)
(20,951)
(18,711)
(97,403)
(2,520)
(26)
(140,906)
Carrying amount:
At 31 March 2023
6,941
20,565
13,132
23,835
466
20
64,959
At 31 March 2022
7,182
24,210
12,483
26,518
500
-
70,893
Depreciation charge in the current year is comprised of £15,861,000 as disclosed in the statement of comprehensive
income and £631,000 of accelerated depreciation in respect of the closure of a data centre in the year, as disclosed in non-
recurring acquisition integration costs in note 6.
During the year there were additions of £70,000 (2022: £249,000) in respect of reinstatement provisions (note 22) and
additions of £666,000 (2022: £1,491,000) in respect of leases under IFRS 16 (note 23). Of the total remaining additions in
the year of £8,812,000 (2022: £8,934,000), £314,000 (2022: £420,000) was included in trade payables as unpaid invoices
at the year end resulting in a net decrease of £106,000 (2022: net decrease of £558,000) in trade payables. Consequently,
the consolidated statement of cash flows discloses a figure of £8,918,000 (2022: £9,492,000) as the cash outflow in
respect of property, plant and equipment additions in the year.
Note 23 provides the movements in the year relating to IFRS 16 right-of-use assets as included in the above table.
95
iomart Group plc Annual Report and Financial Statements 2023
Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
17. TRADE AND OTHER RECEIVABLES - CURRENT
Trade receivables
Less: expected credit loss
Trade receivables (net)
Other receivables
Prepayments
Accrued income
Trade and other receivables
2023
£’000
13,514
(405)
13,109
157
11,132
1,406
2022
£’000
7,523
(335)
7,188
270
11,731
1,403
25,804
20,592
The Directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
The Group applies the simplified approach to providing for expected credit losses prescribed, which permits the use of
lifetime expected loss provision for all trade receivables. The expected credit losses on trade receivables are estimated
using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current
financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which
the debtors operate and an assessment of both the current as well as the forecast direction of economic conditions at the
reporting date.
The following table details the risk profile of trade receivables based on the Group’s provision matrix. As the Group’s
historical credit loss experience does not show significantly different loss patterns for different customer segments, the
provision for loss allowance based on past due status is not further distinguished between the Group’s different customer
segments.
Risk profile category (ageing)
2023
£’000
ECL
rate
%
2023 ECL
allowance
2022
ECL rate
2022 ECL
allowance
£’000
£’000
%
£’000
Current
Current
0-30 days
30-60 days
60-90 days
Over 90 days
Total
7,163
3,510
1,240
395
1.14%
1.72%
3.39%
5.85%
1,206
16.33%
13,514
(82)
(61)
(42)
(23)
(197)
(405)
4,856
2,099
0.43%
3.36%
355
23.06%
59.67%
99.38%
126
87
7,523
(21)
(70)
(82)
(75)
(87)
(335)
To consider the total exposure to credit risks, the Group uses figures net of VAT. At 31 March 2023, £7,163,000 (2022:
£4,856,000) of net trade receivables were fully performing. Net trade receivables of £5,946,000 (2022: £2,332,000) 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.
18. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Cash and cash equivalents
2023
£’000
13,818
13,818
2022
£’000
15,332
15,332
The credit risk on cash and cash equivalents is considered to be negligible because the counter parties are largely UK
banking institutions. The effective interest rate earned on short-term deposits was 0% (2022: 0%).
96
iomart Group plc Annual Report and Financial Statements 2023
Notes to the Financial Statements
Year ended 31 March 2023
19. TRADE AND OTHER PAYABLES
Trade payables
Other taxation and social security
Accruals
Deferred income
Other creditors
2023
£’000
(8,993)
(2,322)
(8,199)
(12,117)
(267)
2022
£’000
(5,661)
(2,290)
(7,558)
(10,408)
(315)
Trade and other payables - current
(31,898)
(26,232)
The carrying amount of trade and other payables approximates to their fair value. Current trade payables and accruals are
non-interest bearing and generally mature within three months.
Deferred income
Trade and other payables – non-current
2023
£’000
2022
£’000
(2,666)
(2,666)
(2,643)
(2,643)
Non-current deferred income in the year predominantly relates to support contracts that span over one year.
20. CONTINGENT CONSIDERATION DUE ON ACQUISITIONS
Contingent consideration due on acquisitions at 31 March 2023 is £4,000,000 (2022: £nil). Contingent consideration for
Concepta Capital Limited is based on the directors’ best estimate of payments due at 31 March 2023 and is expected to
be paid in July 2023. Under the Sale and Purchase Agreement, the earn-out range from £nil to £4million consideration is
represented by a narrow EBITDA range of £300,000. This means for each £1 of additional EBITDA above a target EBITDA,
then £13.33 consideration is earned. This means the forecasted estimate is sensitive to small variances.
21. BORROWINGS
Current:
Lease liabilities (note 23)
Current borrowings
Non-current:
Lease liabilities (note 23)
Bank loans
Total non-current borrowings
Total borrowings
2023
£’000
2022
£’000
(3,377)
(3,377)
(3,560)
(3,560)
(15,803)
(19,063)
(34,400)
(34,000)
(50,203)
(53,063)
(53,580)
(56,623)
The carrying amount of borrowings approximates to their fair value.
Details of the Group’s lease liabilities are included in note 23.
At the start of the year there was £34.0m (2022: £52.8m) outstanding on the multi option revolving credit facility and
drawdowns of £10.4m (2022: £nil) were made from the facility during the year. Repayments totalling £10m (2022: £18.8m)
were made in the year resulting in a balance outstanding at the end of the year of £34.4m (2022: £34.0m).
97
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
21. BORROWINGS (CONTINUED)
At the year end, the Group has access to a £100m multi option revolving credit facility that matures on 30 June 2026,
which also benefits from a £50m Accordion Facility. On 17 November 2022, the Group enacted the extension option which
was approved by the lenders. The directors are of the opinion that the Group can operate within the current facility and
comply with its banking covenants. The RCF has a borrowing cost at the Group’s current leverage levels of 1.8% margin
over SONIA. The revolving credit facility incurs a non-utilisation fee of 35% of the 1.8% margin. The effective interest rate
for the multi option revolving credit facility in the current year was 4.26% (2022: 1.78%).
The RCF and the Accordion Facility (if exercised) provide the Group with additional liquidity which will be used for general
business purposes and to fund investments, in accordance with the Group's five-year strategic plan.
Given the terms of the revolving credit facility and the ability for any drawdowns made to be extended beyond 31 March
2023 at the discretion of the Group, the total amount outstanding has been classified as non-current.
The obligations under the multi option revolving credit facility are repayable as follows:
Due within one year
Due within two to five years
2023
Capital
Interest
£’000
-
(34,400)
(34,400)
£’000
(540)
-
-
2022
Total
£’000
(540)
Capital
Interest
Total
£’000
£’000
£’000
-
(192)
(192)
(34,400)
(34,000)
-
(34,000)
(34,940)
(34,000)
(192)
(34,192)
The Directors estimate that the fair value of the Group’s borrowing is not significantly different to the carrying value.
Analysis of change in net debt
£’000
£’000
£’000
£’000
£’000
Cash and cash
equivalents
Bank loans
Lease
liabilities
Total liabilities
Total net debt
At 1 April 2021
23,038
(52,791)
(24,867)
(77,658)
(54,620)
Additions to lease liabilities
Disposals from lease liabilities
Settlement of commitment fee on loan
Repayment of bank loans
Currency translation
Cash and cash equivalent cash inflow
Lease liabilities cash outflow
At 31 March 2022
Acquired on acquisition of subsidiary
Additions to lease liabilities
Disposals from lease liabilities
Drawdown of bank loans
Repayment of bank loans
Currency translation
Cash and cash equivalent cash outflow
Lease liabilities cash outflow
At 31 March 2023
-
-
-
-
-
(7,706)
-
-
-
(49)
18,840
-
-
-
(1,491)
179
-
-
(49)
-
3,605
(1,491)
(1,491)
179
(49)
18,840
(49)
-
3,605
179
(49)
18,840
(49)
(7,706)
3,605
15,332
(34,000)
(22,623)
(56,623)
(41,291)
-
-
-
-
-
-
(1,514)
-
-
-
-
(10,400)
10,000
-
-
-
(235)
(666)
449
-
-
(33)
-
3,928
(235)
(666)
449
(10,400)
10,000
(33)
-
3,928
(235)
(666)
449
(10,400)
10,000
(33)
(1,514)
3,928
13,818
(34,400)
(19,180)
(53,580)
(39,762)
98
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
22. PROVISIONS
The Group has made provision for the reinstatement of certain leasehold properties and after initial measurement,
any subsequent adjustments to reinstatement provisions will be recorded against the original amount included in
leasehold improvements with a corresponding adjustment to future depreciation charges. As at 31 March 2023, the total
reinstatement provision of the Group is £2,755,000 (2022: £2,438,000). The utilisation of the reinstatement provision is in
line with the end of the leasehold properties lease terms to which the provisions relate.
Non-current:
Reinstatement provision
Total non-current provisions
The movement in the reinstatement provision during the year was as follows:
Balance at the start of the year
Acquisition of subsidiary
Increase in provision
Unwinding of discount (note 7)
23. LEASES
2023
£’000
2022
£’000
(2,755)
(2,438)
(2,755)
(2,438)
2023
£’000
2022
£’000
(2,438)
(2,097)
(134)
(70)
(113)
-
(249)
(92)
(2,755)
(2,438)
The Group leases assets including buildings, fibre contracts, colocation and software contracts. Information about leases
for which the Group is a lessee is presented below:
Right-of-use assets
Balance at 1 April 2022
Acquired on acquisition of subsidiary
Additions
Disposals
Currency translation differences
Depreciation
Amortisation
Leasehold
Property
Data centre
equipment
Software
£’000
£’000
£’000
Total
£’000
2,809
665
21,661
18,187
123
269
(309)
7
112
397
-
30
(2,150)
(1,535)
-
-
(285)
-
-
-
-
-
235
666
(309)
37
(3,685)
(285)
Balance at 31 March 2023
16,127
1,813
380
18,320
The right-of-use assets in relation to leasehold property and data centre equipment are disclosed as non-current assets
and are disclosed within property, plant and equipment (note 16). The right-of-use assets in relation to software are
disclosed as non-current assets and are disclosed within intangibles (note 13).
99
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
23. LEASES (CONTINUED)
Lease liabilities
Lease liabilities are presented in the balance sheet within borrowings as follows:
Current:
Lease liabilities (note 21)
Non-current:
Lease liabilities (note 21)
Total lease liabilities
The maturity analysis of undiscounted lease liabilities are shown in the table below:
Amounts payable under leases:
Within one year
Between two to five years
After more than five years
Add: unearned interest
Total lease liabilities
2023
£’000
2022
£’000
(3,377)
(3,560)
(15,803)
(19,063)
(19,180)
(22,623)
2023
£’000
2022
£’000
(3,880)
(8,239)
(9,780)
(4,127)
(10,244)
(11,585)
(21,899)
(25,956)
2,719
3,333
(19,180)
(22,623)
The Group has elected not to recognise a lease liability for short-term leases (leases with an expected term of 12 months
or less) or for leases of low value assets. Payments made under such leases are expensed on a straight line basis. During
the year, in relation to leases under IFRS 16, the Group recognised the following amounts in the consolidated statement of
comprehensive income:
Short-term and low value lease expense
Depreciation charge
Amortisation charge
Interest expense
Amounts recognised in the consolidated statement of cash flows:
Amounts payable under leases:
Short-term and low value lease expense
Payments under lease liabilities within cash flows from financing activities
2023
£’000
(1,750)
(3,685)
(285)
(586)
2022
£’000
(1,784)
(3,433)
(285)
(646)
(6,306)
(6,148)
2023
£’000
2022
£’000
(1,750)
(4,902)
(6,652)
(1,784)
(4,410)
(6,194)
100
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
24. SHARE CAPITAL
Authorised
At 31 March 2022 and 2023
Called up, allotted and fully paid
At 1 April 2021
Share capital issued in the year
At 31 March 2022
Share capital issued in the year
At 31 March 2023
Ordinary shares of 1p each
Number of shares
£’000
200,000,000
2,000
109,671,107
394,257
110,065,364
497,741
110,563,105
1,097
4
1,101
5
1,106
During the year, 497,741 (2022: 394,257) ordinary shares were issued for a total consideration of £4,977 (2022: £3,942),
resulting in a premium over the nominal value of £nil (2022: £nil).
At 31 March 2023 the Company held 140,773 shares (2022: 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 (2022:
£1,408) and a market value of £175,122 (2022: £228,897). This represents 0.1% (2022: 0.1%) of the issued share capital as
at 31 March 2023 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 2023 are fully paid.
25. OWN SHARES
At 31 March 2023 and 31 March 2022
Own shares
EBT
Own shares
Total
£’000
£’000
(70)
(70)
At 31 March 2023 the Company held 140,773 shares (2022: 140,773) in the EBT with a carrying value of £69,982 (2022:
£69,982) which were accounted for in the Own Shares EBT reserve.
101
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
26. SHARE-BASED PAYMENTS
The Group operated the following share-based payment employee share option schemes during the current and prior
year; 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
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
Required to
remain in
employment
Yes
Yes
The performance criteria as set by the Remuneration Committee are based on the achievement of annual objectives,
continuous employment and performance of the Group.
As disclosed in note 5, a share-based payment charge of £696,000 (2022: £480,000) 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 year:
Grant date
Vesting date
Share price at grant date (p)
Volatility (%)
Dividend yield (%)
Number of employees holding options
Expected life (years)
Option/award life (years)
Risk free rate (%)
Expectations of meeting performance criteria
Fair value at grant date (p)
Exercise price per share (p)
09 May 2022
12 September 2022
17 October 2022
31 March 2025
31 March 2023
31 March 2023
1.73
75.3%
3.99%
2
3
10
1.97%
100%
1.41
1.0
1.74
76.3%
3.46%
4
3
10
3.11%
70%
1.56
1.0
1.35
76.7%
4.10%
11
3
10
4.07%
62%
1.19
1.0
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
102
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
26. SHARE-BASED PAYMENTS (CONTINUED)
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:
2023
2022
Weighted
average
exercise
price per
share (p)
33.78
1.00
70.10
-
1.00
23.80
1.00
Number of share
options
3,029,309
790,772
(508,901)
-
(497,741)
2,813,439
1,213,723
Weighted
average
exercise
price per
share (p)
31.71
83.21
91.57
-
1.00
33.78
1.00
Number of share
options
3,371,908
1,065,661
(1,014,003)
-
(394,257)
3,029,309
1,485,859
Outstanding at start of year
Granted
Forfeited
Expired
Exercised
Outstanding at end of year
Exercisable at end of year
During the year, options over 497,741 ordinary shares (2022: 394,257) were exercised and the average market price at the
exercise dates was 145.17p (2022: 227.21p).
Options over 790,772 ordinary shares (2022: 375,855) were granted under the unapproved share option scheme with an
average exercise price of 1.0p (2022: 1.0p) and nil options over ordinary shares (2022: 689,806) were granted under the
sharesave scheme with an average exercise price of 0.0p (2022: 128.0p).
Options over 255,451 ordinary shares (2022: 697,446) were forfeited under the unapproved share option scheme with an
average exercise price of 1.0p (2022: 1.0p) and options over 253,450 (2022: 316,557) were forfeited under the sharesave
scheme with an average exercise price of 139.74p (2022: 291.1p).
No options over ordinary shares (2022: nil) expired under the unapproved share option scheme with an average exercise
price of 0.0p (2022: 0.0p).
A summary of share options that were outstanding and exercisable at the year end are as follows:
Share options – outstanding
Share options – exercisable
Range of
exercise prices
per share (p)
Outstanding
shares
Weighted
average
exercise
price per
share (p)
Weighted
average
remaining
contractual
life (years)
Outstanding
shares
Weighted
average
exercise
price per
share (p)
Weighted
average
remaining
contractual life
(years)
1.0 – 1.0
2,334,546
1.0
4.4
1,213,723
128.0 – 276.0
478,893
As at 31 March 2023
2,813,439
134.9
23.8
1.8
4.0
-
1,213,723
1.0 – 1.0
2,296,966
1.0
4.5
1,485,859
136.6
33.8
2.8
4.1
-
1,485,859
Unapproved
schemes
Sharesave
scheme
Unapproved
schemes
Sharesave
scheme
128.0 – 276.0
732,343
As at 31 March 2022
3,029,309
103
1.0
-
1.0
1.0
-
1.0
3.4
-
3.4
3.3
-
3.3
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
27. RELATED PARTY TRANSACTIONS
Dividends paid to key management during the year are as follows:
Angus MacSween
Other Directors*
Total dividends paid to Directors
2023
£’000
942
6
948
2022
£’000
1,176
5
1,181
*Dividends paid to Scott Cunningham of £3,324 (2022: £2,307), Richard Masters of £632 (2022: £546), Ian Steele £853
(2022: £823) Reece Donovan £1,050 (2022: £942) and Karyn Lamont £388 (2022: £169) include amounts in respect of
spouses’ shareholding.
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
Pension
2023
£’000
1,150
54
1,204
2022
£’000
1,048
52
1,100
Directors’ bonuses, as disclosed in the Directors’ Remuneration Report on pages 41 to 47, were paid post year end.
The share-based payment charge in respect of Directors’ in the year was £519,000 (2022: £79,000).
Gamma Communications plc were deemed a related party as Andrew Taylor, Non-Executive Director until 31 December
2022, was also a Director of Gamma Communications plc until 4 July 2022. Amounts paid to Gamma Communications plc
during the period 1 April 2022 to 4 July 2022 were £1,946 and amounts received from Gamma Communications plc for the
same period were £88,090. £1,317 is included in trade payables at 31 March 2023. There are no amounts outstanding in
trade receivables at 31 March 2023.
28. CONTINGENCIES AND COMMITMENTS
(a) Contingencies
There are no contingent assets or contingent liabilities as at 31 March 2023 (2022: nil).
(b) Commitments
Capital expenditure on property, plant and equipment committed by the Group at 31 March 2023 was £2,352,289 (2022:
£389,971).
104
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
29. RISK MANAGEMENT
The Group finances its operations by raising finance through equity, bank borrowings and leases. No speculative treasury
transactions are undertaken however the Group does from time to time enter into forward foreign exchange contracts to
hedge 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 IFRS 9:
Amortised
cost
£’000
177
13,109
13,818
157
27,261
531
7,188
15,332
270
23,321
2023
Non-current:
Trade and other receivables
Current:
Trade receivables
Cash and cash equivalents
Other receivables
Total for category
2022
Non-current:
Trade and other receivables
Current:
Trade receivables
Cash and cash equivalents
Other receivables
Total for category
105
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Notes to the Financial Statements
Year ended 31 March 2023
29. 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 IFRS 9:
2023
Non-current:
Lease liabilities
Bank loans
Current:
Trade payables
Accruals
Lease liabilities
Total for category
2022
Non-current:
Lease liabilities
Bank loans
Current:
Trade payables
Accruals
Lease liabilities
Total for category
Liquidity risk
Financial
liabilities
measured at
amortised
cost
£’000
(15,803)
(34,400)
(8,993)
(8,199)
(3,377)
(70,772)
(19,063)
(34,000)
(5,661)
(7,558)
(3,560)
(69,842)
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 21, the contractual maturity analysis of the Group’s multi option revolving credit facility
of £34.4m (2022: £34.0m) is shown. The Group has £65.6m (2022: £66.0m) available to drawdown on the £100.0m (2022:
£100.0m) multi option revolving credit facility and reviews its cash flow requirements on a monthly basis. The Group was in
compliance with all covenants under its banking facility arrangements throughout the reporting period.
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 SONIA plus a margin. For the year ended 31 March 2023, if interest rates
on the multi option revolving credit facility at that date had been 50 basis points higher/lower, with all other variables held
constant, there would have been an immaterial change in the post-tax profit for the year (2022: immaterial impact on post-
tax profit).
Currency risk
During the year the Group made payments totalling US$11.0m (2022: US$8.9m) and EUR€2.3m (2022: EUR€1.6m) to
acquire domain names for its Easyspace segment and licences for its Cloud Services segment. In addition, the Group
received US$4.3m (2022: US$4.6m) and EUR€1.5m (2022: EUR€1.5m) from Cloud Services customers billed in foreign
currency. During the year, the Group entered into forward exchange contracts to hedge its net exposure to the US Dollar
arising on these purchases but at the year end the Group had no outstanding forward contracts in place (2022: none).
Consequently, the fair value of currency contracts at the year end was £nil (2022: £nil). The level of non-monetary and
monetary assets and liabilities denominated in foreign currencies in the Group are minimal.
106
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
29. RISK MANAGEMENT (CONTINUED)
Capital risk
The capital structure of the Group consists of net debt, which includes borrowings (note 21) and cash and cash
equivalents, and equity attributable to owners of the parent, comprising issued share capital (note 24), other reserves and
retained earnings. 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. Consequently, the Group makes use of both banking facilities and 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 interim and final dividends depending on the level of adjusted diluted earnings per share.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial losses to
the Group. The Group provides standard credit terms (normally 30 days) to some of its customers which has resulted in
trade receivables of £13,109,000 (2022: £7,188,000) which are stated net of applicable provisions and which represent the
total amount exposed to credit risk. The Group manages trade receivable balances vigilantly and takes prompt action on
overdue accounts. The lease deposits of £177,000 (2022: £531,000) are held in escrow accounts with the landlord’s main
UK bankers. The Group’s cash at bank £13,818,000 (2022: £15,332,000) is held within clearing banks in the UK, Republic of
Ireland and United States of America with good credit ratings.
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.
30. ULTIMATE CONTROLLING PARTY
The Directors have assessed that there is no ultimate controlling party.
31. POST BALANCE SHEET EVENTS
As announced on 5 June 2023, we acquired the entire issued share capital of Extrinsica Global Holdings Limited, the
holding company of Extrinsica Global Limited (together "Extrinsica"). Extrinsica is a Microsoft Azure Cloud solution services
provider with offerings including managed Azure Cloud, Azure solution design and implementation services, support &
optimisation services and licencing.
The initial consideration for the acquisition is £4.0m, with a potential further £0.3m in cash payable on the achievement
of certain key customer targets during the calendar year. Of the initial consideration, £2m will be satisfied by the issue
of 1,562,500 new ordinary shares in iomart, which under the terms of the sale and purchase agreement are subject to a
twelve month "lock in" provision and based on a fixed share price of £1.28, being the volume weighted average price for
the 90 days prior to completion. The balance of £2.0m will be paid in cash. iomart will also repay £3.7m of debt acquired
on completion.
The acquisition also includes a further £4.0m to £7.0m of contingent earn-out payments which are calculated based on
Extrinsica's profitability for the 12 months ending 31 March 2024. Of any earn-out payment that becomes due, £1.0m will
be satisfied by the issue of iomart shares (the number of shares to be issued will be based on the same share price as the
initial consideration). The amount of contingent consideration payable, based on management's forecast, recognised at the
date of the acquisition, is expected to be £4.0m.
Due to the proximity of the acquisition date to the financial statements being authorised for issue, IFRS 3 disclosures are
not audited or presented.
107
iomart Group plc Annual Report and Financial Statements 2023 Notes to the Financial Statements
Year ended 31 March 2023
Parent Company Financial Statements 2023
STATEMENT OF FINANCIAL POSITION
As at 31 March 2023
Note
2023
£’000
2022
£’000
ASSETS
Non-current assets
Investments
Deferred tax
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Non-current liabilities
Non-current borrowings
Current liabilities
Trade and other payables
Total liabilities
Net Assets
EQUITY
Called up share capital
Own shares
Capital redemption reserve
Share premium account
Merger reserve
Retained earnings
Total Equity
3
5
4
7
6
8
9
166,685
151,105
638
884
167,323
151,989
34,179
69
34,248
22,350
7,965
30,315
201,571
182,304
(34,400)
(34,000)
(34,400)
(34,000)
(48,360)
(30,042)
(48,360)
(30,042)
(82,760)
(64,042)
118,811
118,262
1,106
(70)
1,200
22,495
4,983
89,097
1,101
(70)
1,200
22,495
4,983
88,553
118,811
118,262
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 of the Company was £6,184,000 (2022: £14,317,000).
These financial statements were approved by the Board of Directors and authorised for issue on 13 June 2023.
Signed on behalf of the Board of Directors
Reece Donovan
Director and Chief Executive Officer
iomart Group plc – Company Number: SC204560
The following notes form part of the financial statements
108
iomart Group plc Annual Report and Financial Statements 2023
Parent Company Financial Statements 2023
STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2023
Share
capital
Own
shares
EBT
Capital
redemption
reserve
Share
premium
account
Merger
reserve
Retained
earnings
Note
£’000
£’000
£’000
£’000
£’000
£’000
Total
£’000
Balance at 1 April 2021
1,097
(70)
1,200
22,495
4,983
81,347
111,052
Profit for the year
Total comprehensive
income
Dividends – final (paid)
Dividends – interim (paid)
Share-based payments
Issue of share capital
Total transactions with
owners
12
12
10
8
-
-
-
-
-
4
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,317
14,317
14,317
14,317
(4,931)
(4,931)
(2,660)
(2,660)
480
-
480
4
(7,111)
(7,107)
Balance at 31 March 2022
1,101
(70)
1,200
22,495
4,983
88,553
118,262
Profit for the year
Total comprehensive
income
Dividends – final (paid)
Dividends – interim (paid)
Share-based payments
Issue of share capital
12
12
10
8
-
-
-
-
-
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,184
6,184
6,184
6,184
(3,957)
(3,957)
(2,134)
(2,134)
696
-
696
5
Balance at 31 March 2023
1,106
(70)
1,200
22,495
4,983
89,342
119,056
The nature of equity in the statement of changes in equity is disclosed in the accounting policies (note 2).
The following notes form part of the financial statements.
109
iomart Group plc Annual Report and Financial Statements 2023
Parent Company Financial Statements 2023
Parent Company Financial Statements 2023
1. COMPANY INFORMATION
iomart Group plc is a public listed company listed on the Alternative Investment Market (“AIM”), incorporated and domiciled
in the United Kingdom and registered in Scotland. The address of the registered office is Lister Pavilion, Kelvin Campus,
West of Scotland Science Park, Glasgow, G20 0SP. The nature of the Company’s operations and its principal activity is that
of a holding company.
2. ACCOUNTING POLICIES
Statement of compliance
These separate financial statements of the Company are presented as required by the Companies Act 2006. The financial
statements have been prepared on the historical cost basis and on a going concern basis as described below. The financial
statements are presented in Sterling (£).
The Company meets the definition of a qualifying entity under Financial Reporting Standard 101 (FRS 101) ‘Reduced
Disclosure Framework” issued by the Financial Reporting Council (FRC). Accordingly, these financial statements have
been prepared in accordance with FRS 101.
As permitted by FRS 101, the Company has taken advantage of all disclosure exemptions available under this standard in
relation to share-based payments, financial instruments, capital management, presentation of cash flow statement and
certain related party transactions.
Where relevant, equivalent disclosures have been given in the consolidated financial statements. The principal accounting
policies adopted are the same as those set out in note 2 to the consolidated financial statements on pages 70 to 81. These
policies have all been applied consistently throughout the year unless otherwise stated.
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. On an annual basis, 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.
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.
Going Concern
The Group going concern disclosure is on page 80. Following the refinancing in December 2022, the Group has an
undrawn multi-option revolving credit facility of £65.6m at 31 March 2023 (2022: £66.0m). After making enquiries, the
Directors have a reasonable expectation that the Company will be able to meet its financial obligations and has adequate
resources to continue in operational existence for the foreseeable future (being a period extending at least twelve months
from the date of approval of these financial statements). For this reason they continue to adopt the going concern basis in
preparing the financial statements.
Key judgements and sources of estimation uncertainty
There were no critical accounting judgements or key sources of estimation uncertainty that would have a significant effect
on the amounts recognised in the parent company financial statements at the balance sheet date.
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iomart Group plc Annual Report and Financial Statements 2023 Parent Company Financial Statements 2023
3. INVESTMENTS HELD AS FIXED ASSETS
Cost
At 1 April 2022
Additions
Transfer of investment from subsidiary undertaking
Share-based payments (note 10)
Cost at 31 March 2023
Impairment
At 1 April 2022 and 31 March 2023
Net book value of Investments at 31 March 2023
Net book value of Investments at 31 March 2022
All of the above investments are unlisted.
Shares in subsidiary undertakings
£’000
156,105
14,864
485
231
171,684
(5,000)
166,685
151,105
2022
£’000
1,319
59
685
20,287
22,350
2022
£’000
884
2022
£’000
1,332
(869)
421
884
2023
£’000
1,327
-
823
32,029
34,179
2023
£’000
634
2023
£’000
884
(246)
-
638
Details of subsidiary undertakings are included in note 15 of the Group financial statements.
4. TRADE AND OTHER RECEIVABLES
Prepayments
Current income tax
Other taxation and social security
Amounts owed by subsidiary undertakings
Amounts owed by subsidiary undertakings are repayable on demand and carry no interest.
5. DEFERRED TAX
The Company had recognised deferred tax assets as follows:
Share-based remuneration
The movement in the deferred tax account during the year was:
Balance brought forward
Profit and loss account movement arising during the year
Effect of deferred tax rate change in the year
Balance carried forward
The deferred tax asset in relation to share-based remuneration arises from the anticipated future tax relief on the exercise of share
options.
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iomart Group plc Annual Report and Financial Statements 2023
Parent Company Financial Statements 2023
Parent Company Financial Statements 2023
6. TRADE AND OTHER PAYABLES
Trade creditors
Other creditors
Accruals
Current income tax
Contingent consideration due on acquisitions
Amounts owed to subsidiary undertakings
2023
£’000
2022
£’000
(118)
(42)
(1,215)
(778)
(4,000)
(115)
(53)
(1,135)
-
-
(42,208)
(28,739)
(48,361)
(30,042)
Amounts owed to subsidiary undertakings are repayable on demand and carry no interest.
Contingent consideration due on acquisitions at 31 March 2023 is £4,000,000 (2022: £nil). Contingent consideration for
Concepta Capital Ltd is based on the directors’ best estimate of payments due at 31 March 2023 and is expected to be
paid in July 2023. Under the Sale and Purchase Agreement, the earn-out range from £nil to £4million consideration is
represented by a narrow EBITDA range of £300,000. This means for each £1 of additional EBITDA above a target EBITDA,
then £13.33 consideration is earned. This means the forecasted estimate is sensitive to small variances.
7. BORROWINGS
Non-current:
Bank loans
Total non-current borrowings
2023
£’000
2022
£’000
(34,400)
(34,000)
(34,400)
(34,000)
Given the terms of the revolving credit facility and the ability for any drawdowns made to be extended well beyond 31
March 2023 at the discretion of the Company, the total amount outstanding has been classified as non-current. The
obligations under the multi option revolving credit facility and term loan facility are repayable as follows:
Due within one year
2023
2022
Capital
Interest
£’000
-
£’000
(540)
Total
£’000
(540)
Capital
Interest
Total
£’000
£’000
£’000
-
(192)
(192)
Due within two to five years
(34,400)
-
(34,400)
(34,000)
-
(34,000)
(34,400)
(540)
(34,940)
(34,000)
(192)
(34,192)
The Directors estimate that the fair value of the Group’s borrowing is not significantly different to the carrying value. For
details of the terms of repayment and rates of interest payable see note 21 in the Group financial statements.
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iomart Group plc Annual Report and Financial Statements 2023 Parent Company Financial Statements 2023
8. SHARE CAPITAL
Authorised
At 31 March 2022 and 2023
Called up, allotted and fully paid
At 1 April 2020
Share capital issued in the year
At 31 March 2022
Share capital issued in the year
At 31 March 2023
Ordinary shares of 1p each
Number of shares
£’000
200,000,000
2,000
109,671,107
394,257
110,065,364
497,741
1,097
4
1,101
5
110,563,105
1,106
During the year, 497,741 (2022: 394,257) ordinary shares were issued for a total consideration of £4,977 (2022: £3,942),
resulting in a premium over the nominal value of £nil (2022: £nil).
At 31 March 2023 the Company held 140,773 shares (2022: 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 (2022:
£1,408) and a market value of £175,122 (2022: £228,897). This represents 0.1% (2022: 0.1%) of the issued share capital as
at 31 March 2023 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 2023 are fully paid.
9. OWN SHARES RESERVES
At 31 March 2023 and 31 March 2022
Own shares
EBT
Own shares
Total
£’000
(70)
£’000
(70)
At 31 March 2023 the Company held 140,773 shares (2022: 140,773) in the EBT with a carrying value of £69,982 (2022:
£69,982) which were accounted for in the Own Shares EBT reserve.
10. SHARE-BASED PAYMENTS
For details of share-based payment awards and fair values see note 26 to the Group financial statements. The Company
financial statements recognise the charge for share-based payments for the year of £696,000 (2022: £480,000) by:
taking the recharge in relation to directors of the parent company through the parent company statement of comprehensive
income £464,000 (2022: £261,000),
recording an increase to its investment in subsidiaries for the amounts attributable to employees of subsidiaries and
recording a corresponding entry to retained earnings of £232,000 (2022: £219,000).
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Parent Company Financial Statements 2023
11. INFORMATION REGARDING PARENT COMPANY EMPLOYEES
Average number of persons employed by the Company (including all Directors):
Technical
Sales and marketing
Administration
2023
No.
2022
No.
-
-
-
-
4
9
34
47
In the current year an exercise was undertaken to consolidate payroll and subsequently, all staff costs within the company
in the current year relates to recharges from other Group entities.
Staff costs of the Company during the year in respect of
employees and Directors were:
Wages and salaries
Social security costs
Pension costs
Share-based payments
2023
£’000
2022
£’000
2,046
185
45
464
2,740
1,698
(223)
65
261
1,801
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 40 to 46.
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 Directors’ emoluments are disclosed within note 5 of the Group financial statements.
12. DIVIDENDS PAID ON SHARES CLASSED AS EQUITY
Paid during the year:
Final dividend (proposed in the prior year)
Equity dividends on ordinary shares
Interim dividend
2023
Pence per
share
2023
£’000
2022
Pence per
share
2022
£’000
3.60p
3,957
4.50p
4,931
Equity dividends on ordinary shares
1.94p
2,134
2.42p
2,660
Total dividend paid in cash
6,091
7,591
The Directors have recommended a final dividend for the year ended 31 March 2023 of 3.50p per share (2022: 3.60p
per share). Subject to shareholder approval this proposed final dividend would be payable on 8 September 2023 to
shareholders on the register at close on 18 August 2023.
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iomart Group plc Annual Report and Financial Statements 2023 Parent Company Financial Statements 2023
13. 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 27 of the Group financial statements.
14. ULTIMATE CONTROLLING PARTY
The Directors have assessed that there is no ultimate controlling party.
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iomart Group plc Annual Report and Financial Statements 2023 Parent Company Financial Statements 2023
Notice of 2023 Annual General Meeting
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action
to take, you should consult your stockbroker, solicitor, accountant or other appropriate independent professional adviser
authorised under the Financial Services and Markets Act 2000, as amended. If you have sold or otherwise transferred all
your shares in iomart Group plc, please forward this document and the accompanying form of proxy to the person through
whom the sale or transfer was effected, for transmission to the purchaser or transferee.
IMPORTANT INFORMATION:
The annual general meeting (the “AGM”) of the Company is to be held at 10.00 am on 5 September 2023 at the Company’s
new registered office at 6 Atlantic Quay, 55 Robertson Street, Glasgow, G2 8JD. As you will see from the formal Notice of
AGM set out below, there are a number of items of business to be considered (the “Resolutions”) and the purpose of each
Resolution to be proposed at the AGM is set out in the “Explanatory Notes” which follow the formal Notice.
A form of proxy for use at the AGM accompanies the Notice. The deadline for submitting proxies is by 10.00 a.m. on
1 September 2023. To be valid, the form of proxy must be completed and returned to Link Group in accordance with
paragraphs 1 and 2 of the Notes appended to this notice (or otherwise submitted electronically in accordance with
paragraph 3 of the Notes).
NOTICE IS HEREBY GIVEN that the 2023 annual general meeting of iomart Group plc (the “Company”) will be held at 6
Atlantic Quay, 55 Robertson Street, Glasgow, G2 8JD on 5 September 2023 at 10.00 am for the purpose of considering
and, if thought fit, passing the following resolutions, of which resolutions 1 to 10 (inclusive) will be proposed as ordinary
resolutions and resolutions 11 to 13 (inclusive) will be proposed as special resolutions:-
1
2
3
4
5
6
7
8
9
To receive and adopt the financial statements of the Company and the directors' and auditors' reports thereon for
the year ended 31 March 2023.
To approve the report of the board to the members on directors' remuneration for the year ended 31 March 2023.
To reappoint Scott Cunningham (who retires by rotation and, being eligible, offers himself for re-appointment) as a
director of the Company.
To reappoint Angus MacSween (who retires by rotation and, being eligible, offers himself for re-appointment) as a
director of the Company.
To elect Lucy Dimes (who was appointed since the last annual general meeting) as a director of the Company.
To elect Annette Nabavi (who was appointed since the last annual general meeting) as a director of the Company
To elect Adrian Chamberlain (who was appointed since the last annual general meeting) as a director of the Company
To declare a final dividend for the year ended 31 March 2023 of 3.50p per share payable on 8 September 2023 to
shareholders on the register of members at the close of business on 18 August 2023.
To reappoint Deloitte LLP, Chartered Accountants, as auditors of the Company from the conclusion of this meeting
until the conclusion of the next general meeting at which accounts are laid before shareholders and to authorise the
directors to fix the auditors’ remuneration.
10
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 £747,593.54 (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)
(ii)
to ordinary shareholders in proportion (as nearly as may be practicable) to their existing
holdings;
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 £373,796.77 (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 £373,796.77),
provided that such authority, unless renewed, varied or revoked by the Company, shall expire on 5 December
2024 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.
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iomart Group plc Annual Report and Financial Statements 2023 Notice of 2023 Annual General Meeting
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.
11
That, if resolution 10 is passed, the board of directors of the Company be authorised to allot equity securities (as
defined in the Companies Act 2006) for cash under the authority given by that resolution 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 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 10(a), 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;
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;
to the allotment of equity securities or sale of treasury shares (otherwise than pursuant to paragraph
(a) or paragraph (b) above) up to a total nominal amount of £112,139.03; and
to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph (a),
paragraph (b) or paragraph (c) above) up to a nominal amount equal to 20% of any allotment of equity
securities or sale of treasury shares from time to time under paragraph (c) above, such authority to be
used only for the purposes of making a follow-on offer which the board of directors of the Company
determines to be of a kind contemplated by paragraph 3 of Section 2B of the Statement of Principles
on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date
of this notice,
(b)
(c)
(d)
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 5 December 2024) 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 of the Company may allot equity securities (and sell
treasury shares) under any such offer or agreement as if the authority had not expired.
12
That, if resolution 10 is passed, the board of directors of the Company be authorised in addition to any authority
granted under resolution 11 to allot equity securities (as defined in the Companies Act 2006) for cash under the
authority given by resolution 10 and/or to sell ordinary shares held by the Company as treasury shares for cash in
each case as if section 561 of the Companies Act 2006 did not apply to any such allotment or sale, such authority
to be:
(a)
(b)
limited to the allotment of equity securities or sale of treasury shares up to a nominal amount of
£112,139.03, such authority to be used only for the purposes of financing (or refinancing, if the
authority is to be used within 12 months after the original transaction) a transaction which the board
of directors of the Company determines to be either an acquisition or a specified 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; and
limited to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph
(a) above) up to a nominal amount equal to 20% of any allotment of equity securities or sale of
treasury shares from time to time under paragraph (a) above, such authority to be used only for the
purposes of making a follow-on offer which the board of directors of the Company determines to be
of a kind contemplated by paragraph 3 of Section 2B of 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 5 December 2024) 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.
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Notice of 2023 Annual General Meeting
13
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)
(b)
(c)
(d)
(e)
the maximum number of ordinary shares hereby authorised to be purchased is 11,213,903, representing
10% of the Company's issued ordinary share capital as at the latest practicable date prior to the
publication of this notice of annual general meeting);
the minimum price (exclusive of any expenses) which may be paid for each ordinary share is 1 pence;
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;
unless previously revoked or varied, the authority hereby conferred shall expire at the end of the next
annual general meeting of the Company (or, if earlier, at the close of business on 5 December 2024); and
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
Julie Brown
Company Secretary
11 August 2023
6 Atlantic Quay,
55 Robertson Street,
Glasgow G2 8JD
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iomart Group plc Annual Report and Financial Statements 2023
Notice of 2023 Annual General Meeting
NOTES:
Appointment of Proxy
1
2
3
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.
To be effective (subject to paragraph 3 below), 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, Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL, not less
than 48 hours (excluding weekends and bank holidays) before the time for holding the meeting (i.e. by 10.00am
on Friday 1 September 2023) and if not so deposited shall be invalid.
Alternatively, you may instead submit your proxy vote electronically by accessing the shareholder portal at
www.signalshares.com, logging in and selecting the ‘Vote Online Now’ link. You will require your username and
password in order to log in and vote. If you have forgotten your username or password you can request a
reminder via the shareholder portal. If you have not previously registered to use the portal you will require your
investor code (‘IVC’) which can be found on your share certificate. Proxy votes should be submitted as early as
possible and, in any event, not less than 48 hours (excluding weekends and bank holidays) before the time for
holding the meeting (i.e. by 10.00am on Friday 1 September 2023) and if not so submitted shall be invalid.
Entitlement to attend and vote
4
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 Friday 1 September 2023; 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
5
Copies of the service contracts and letters of appointment of the directors of the Company will be available:
·
·
Communication
for at least 15 minutes prior to the meeting; and
during the meeting.
6
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 new registered office, details of which are below. No other methods of
communication will be accepted.
Address:
The Company Secretary
iomart Group plc
6 Atlantic Quay
55 Robertson Street
Glasgow
G2 8JD
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iomart Group plc Annual Report and Financial Statements 2023
Notice of 2023 Annual General Meeting
Notice of 2023 Annual General Meeting
EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING
iomart Group plc
Ordinary Resolutions
Resolutions 1 to 10 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 2023 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 41
to 47. This resolution is an advisory one and no entitlement to remuneration is conditional on the resolution being passed.
Resolutions 3, 4, 5, 6 and 7 – Re-appointment of directors
Under article 24 of the Company's articles of association, one third of the directors who are subject to retirement by
rotation, or, if the number is not three or a multiple of three, the number nearest to but not less than one-third, shall retire
at each annual general meeting. Pursuant to those articles, Scott Cunningham and Angus MacSween are required to retire
by rotation at this annual general meeting and, being eligible, offer themselves for reappointment. In addition, the articles of
association also stipulate that any directors appointed by the Board since the last annual general meeting of the Company
must offer themselves for reappointment at the next annual general meeting following their appointment. Lucy Dimes was
appointed on 30 August 2022, Annette Nabavi was appointed on 25 May 2023 and Adrian Chamberlain was appointed on
1 June 2023 (and therefore all were appointed since the Company’s annual general meeting in 2022) and accordingly offer
themselves for reappointment.
The Board of Directors is satisfied that the performance of Scott Cunningham, Angus MacSween, Lucy Dimes, Annette
Nabavi and Adrian Chamberlain 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, 5,
6 and 7 propose the reappointment of Scott Cunningham, Angus MacSween, Lucy Dimes, Annette Nabavi and Adrian
Chamberlain respectively.
Brief biographical details of Scott Cunningham, Angus MacSween, Lucy Dimes, Annette Nabavi and Adrian Chamberlain
are given below.
Scott Cunningham, appointed 2018: Scott is a chartered accountant having trained with Arthur Andersen where he became
a senior manager providing audit and transaction support services to both public and private companies. Leaving Arthur
Andersen in 2001, Scott joined Clyde Blowers and performed a number of roles including Group Financial Controller for the
Clyde Bergemann Power Group from 2003 to 2006. He became Director of Corporate Finance and Company Secretary for
AIM listed InterBulk Group plc in February 2006 and, in April 2007, Scott became Group Finance Director for InterBulk Group
plc until it was successfully sold to Den Hartogh in March 2016. Immediately prior to joining iomart he was an Investment
Director at Clyde Blowers Capital.
Angus MacSween, appointed 2000: Angus 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. Angus was Chief Executive Officer until he retired on 1 October 2020 and was appointed as a Non-Executive
Director on the same day.
Lucy Dimes, appointed 2022: Lucy brings extensive experience across the technology, telecoms and business services
sectors, gained from a successful international executive career at BT plc, Alcatel-Lucent (now Nokia), Fujitsu, Virgin Money
plc, UBM plc and Equiniti Group plc. Lucy holds an MBA from London Business School, a First Class Degree in Business
from Manchester Metropolitan University, and attended the Global Women Leadership Programme at Harvard Business
School. Lucy is also a Non-Executive Director of Babcock International Group plc and a member of their Remuneration,
Audit, Nomination and UK Security Committees. She is the Founder and Director of Paradimes Services Ltd, a consultancy
and advisory business, and was previously an NED for Berendsen plc from 2012 to 2016 prior to their acquisition by Elis S.A.
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iomart Group plc Annual Report and Financial Statements 2023 Notice of 2023 Annual General Meeting
Annette Nabavi, appointed 2023: Annette brings over 30 years of experience in operational and advisory roles in the
technology sector including significant expertise in driving growth through acquisition and partnerships. Annette currently
sits on the board of Eleco plc, an AIM listed software company, and serves as the Chair of its Remuneration Committee.
She has held several Non-Executive Director roles, including a seven-year tenure at AIM listed Maintel Holdings Plc, a cloud
and managed services company, where she also chaired the Remuneration Committee. She has substantial experience in
the area of remuneration through her involvement with the Quoted Companies Alliance (QCA), where she supported the
update to the Remuneration Committee Guide. Annette is a Non-Executive Director, and Remuneration Committee Chair at
Eleco plc and is Finance Director for Women in Telecoms and Technology, a Not-for-Profit organisation.
Adrian Chamberlain, appointed 2023: Adrian has considerable experience across the technology and telecoms sector,
having spent a significant period of his executive career with Cable & Wireless plc before becoming CEO of Message Labs
and then Achilles, both cloud-based SaaS businesses. He has substantial experience in strategy formulation, growing
turnover and establishing presence in new markets. Until recently, Adrian was the Chair of the Board of eConsult Health
Ltd, a cloud-based SaaS business in the healthcare sector. Adrian is a Non-Executive Director at Alfa Financial Software
Holdings plc, a listed global software provider, a Non-Executive and Senior Independent Director at Cambridge University
Hospitals NHS Foundation Trust.
Resolution 8 – To declare a dividend of 3.50p per ordinary share
Subject to the provisions of the Companies Act 2006, the Company may by ordinary resolution declare dividends, but
no dividend shall exceed the amount recommended by the Board of Directors. The Board of Directors recommends the
payment of a final dividend of 3.50p per ordinary share, to be payable to shareholders registered at close of business on
18 August 2023.
Resolution 9 – 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. Deloitte 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 10 – 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 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 £747,593.54 (representing 74,759,354 ordinary shares of 1p
each) 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 £373,796.77 (representing 37,379,677 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 5 December 2024 or, if earlier, at the conclusion of the next annual general meeting.
121
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Notice of 2023 Annual General Meeting
Special Resolutions
Resolutions 11, 12 and 13 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.
Resolutions 11 and 12 - 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. Your Board of Directors believes that it is in the best interests of the Company
that, as in previous years, the Board 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 11 would expire at the earlier of the
close of the next annual general meeting or 5 December 2024. 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), (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 £112,139.03 (being equal to 10% 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) and (d) to a follow-on
offer which the Board of Directors of the Company determines to be of a kind contemplated by paragraph 3 of Section 2B
of the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior
to the date of this notice.
Resolution 12, if approved, would give your Board of Directors an additional authority to issue ordinary shares, or sell
treasury shares, for cash in connection with an acquisition or capital investment of a kind contemplated by the Pre-Emption
Group's Statement of Principles (a) up to an additional aggregate nominal amount of £112,139.03 (being equal to 10% 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) and (b) in respect of a follow-on offer which the Board of Directors determines to
be of a kind contemplated by paragraph 3 of Section 2B of the Statement of Principles on Disapplying Pre-Emption Rights
most recently published by the Pre-Emption Group prior to the date of this notice. Your Board of Directors confirms that
it will only allot shares pursuant to this authority where the allotment is in connection with the financing (or refinancing, if
the authority is to be used within 12 months after the original transaction) a transaction which the Board determines to be
either an acquisition or a specified 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 the notice of AGM.
The powers given by resolutions 11 and 12 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 5 December 2024.
Resolution 13 – Authority to purchase the Company's own shares
This resolution grants authority to the Company to make purchases of up to a maximum of 10% of the issued ordinary share
capital of the Company as at the latest practicable date prior to the publication of the notice of this meeting.
In certain circumstances it may be advantageous for the Company to purchase its ordinary shares. The Directors would use
the share purchase authority with discretion and purchases would only made from funds not required for other purposes
and in light of market conditions prevailing at the time. In reaching a decision to purchase ordinary shares, your Directors
would take account of the Company's cash resources and capital, the effect of such purchases on the Company's business
and on 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
13 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.
122
iomart Group plc Annual Report and Financial Statements 2023 Chief Executive Officer
Chief Financial Officer
Non-Executive Chair
Non-Executive Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Registered office (effective 26 June 2023)
6 Atlantic Quay
55 Robertson Street
Glasgow
G2 8JD
Officers and Professional Advisers
Directors
Reece Donovan MSc, BSc
Scott Cunningham BAcc, CA
Ian Steele BAcc, CA (resigned 30 August 2022)
Lucy Dimes (appointed 30 August 2022)
Angus MacSween
Richard Masters LLB, DipLP
Karyn Lamont BAcc, CA
Andrew Taylor (resigned 31 December 2022)
Annette Nabavi (appointed 25 May 2023)
Adrian Chamberlain (appointed 1 June 2023)
Secretary
Andrew McDonald BA, CA (resigned 28 February 2023)
Julie Brown LLB (appointed 28 February 2023)
Registered office (as at date of signing
the annual report and financial statements)
Lister Pavilion
Kelvin Campus
West of Scotland Science Park
Glasgow G20 0SP
Nominated adviser and broker
Investec Bank Plc
30 Gresham Street
London EC2V 7QP
Solicitors
Pinsent Masons LLP
141 Bothwell Street
Glasgow G2 7EQ
Independent auditor
Deloitte LLP
Level 5, 110 Queen Street
Glasgow G1 3BX
Registrars
Link Asset Services
Bourne House
34 Beckenham Road
Beckenham
Kent BR3 4TU
Company Registration Number
SC204560
123
iomart Group plc Annual Report and Financial Statements 2023 Officers and Professional Advisers
124
iomart Group plc Annual Report and Financial Statements 2023 www.iomart.com
iomart Group plc, 6 Atlantic Quay, 55 Robertson Street, Glasgow G2 8JD
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