17th Nov 2005 07:01
Iomart Group PLC17 November 2005 PRESS RELEASE 17 Nov 2005 iomart Group plc Interim Results Announcement @ 30.9.05 iomart Group plc ("iomart"), the Glasgow based software and web-servicesbusiness, presents its consolidated interim results for the six month periodended 30 September 2005. Financial highlights • total turnover £10.95m, up 70% on previous year (£6.43m) with annualised sales running at £24m • profit before tax £1.42m (£0.11m) and fully diluted EPS of 1.79p (0.24p) • cash balance of £1.39m and net debt of £2.01m (12.5% of shareholders' funds) • gross margin improved to 82.4% (76.7%) Operational highlights • web services business now has 220,000 customers • UfindUs local search directory successfully established • Netintelligence fully fledged ASP model for home, SME and corporate application Prospects • Continuing organic growth in web services business • Netintelligence reseller channel and BT partnership provide platform for growth • Webhosting, online local directories and online security are all growing markets Nick Kuenssberg, chairman, commented: "These first half year results are good, demonstrating that the company'sbusiness model is effective and profitable. Developments in web services, focussed on the UfindUs local search directory,and Netintelligence, the on demand security software which addresses the needsof every business on an ASP basis, provide us with considerable scope forfurther growth. The second half is historically significantly stronger which, with the impact ofrecurring growth, gives us confidence for a very good set of results for thefull year. The Group's operating performance for the current year may be impacted bydelayed sales and the change in revenue recognition for Netintelligence.However, due to a likely lower than expected tax charge, results for the fullyear are likely to be in line with expectations." Chief Executive Officer's review The first half has seen continuing organic growth in our webservices businessand encouraging progress with Netintelligence. UfindUs aims to become a leading provider of local internet search services tothe small and micro business community, providing all that is required to drivebusiness from the web to those customers. We believe that consumer behaviour insourcing products and services is moving away from traditional paper sources toonline local directories and search engines. We expect strong growth in thismarket for the foreseeable future; DTI figures suggest that there are still 2.7million small businesses in the UK without a web presence. With over 40,000customers we are beginning to establish a significant presence in this localsearch engine market. Our improvements to the Easyspace product set and infrastructure have beenrewarded by higher customer retention rates and continued growth of newcustomers. Netintelligence is now established as an ASP model which provides intelligentsecurity on demand to any computer whenever or wherever that computer connectsto the internet. The move to the ASP model and the implied change in revenuerecognition defers anticipated turnover. We now have in place multiple channelsto market, including telcos, distributors and resellers in addition to webmarketing. We have enjoyed limited but important success in both the consumerand business sectors, with growing recurring revenues. We have built goodfoundations across a wide spectrum, including education, local government andenterprise with a much shorter sales cycle. Our resellers are now becomingactive with aggressive sales plans in place alongside training, marketing andtechnical support. We believe that our 'managed service' platform, which can bewhite labelled for resellers along with the recurring revenue opportunity, willbe appealing to many potential resellers. Netintelligence, through our BT relationship, has been adopted by 15 ISP's ofvarying sizes to resell into their customer base. Our aim is to convince the ISPcommunity to bundle Netintelligence with their broadband offerings, and weexpect the first bundled contracts to go live in the next six months. We areseeing interest from overseas, particularly the USA, and we expect to see thisrevenue building in 2006 Financials Turnover on continuing operations for the period was £10.95m, up from £6.43m,which represents an increase of 70% over the corresponding period last year.Total gross profit margins have increased to 82.4% from 76.7% for the sameperiod last year. Administrative expenses of £7.50m include a full six months' expenses ofEasyspace Limited, which was acquired in September 2004, and reflect theexpansion of the webservices business division. The operating profit for the period was £1.52m (previous year £0.08m) and thenet profit was £1.42m (£0.17m). Fully diluted earnings per share were 1.79pcompared to 0.24p. Cash balances at 30 September were £1.39m and net debt was £2.01m. Prospects Our markets are real and growing. Our products are proven and market ready. Oursecond half is historically stronger and we look forward to ongoing growth. Our challenges are to continue to execute effectively in our webservicesbusiness and to stimulate greater revenue growth in Netintelligence. The Group's operating performance for the current year may be impacted bydelayed sales and the change in revenue recognition for Netintelligence.However, due to a likely lower than expected tax charge, results for the fullyear are likely to be in line with expectations. Angus MacSweenChief Executive Officer 16 November 2005 Consolidated Profit and Loss AccountSix months ended 30 September 2005 6 months ended Year ended 30.9.05 30.9.04 31.3.05 Unaudited Unaudited Audited £ 000 £ 000 £ 000TURNOVERContinuing operations 10,952 6,105 13,775Acquisitions - 323 2,828 -------- -------- -------- Total turnover 10,952 6,428 16,603 Cost of sales (1,928) (1,496) (3,513) -------- -------- -------- GROSS PROFITContinuing operations 9,024 4,722 11,118Acquisitions - 210 1,972 -------- -------- -------- Gross profit 9,024 4,932 13,090 -------- -------- -------- Administrative expenses (7,503) (4,797) (11,176)Restructuring expenses - (50) (113) -------- -------- -------- Total administrative expenses (7,503) (4,847) (11,289) -------- -------- -------- OPERATING PROFITContinuing operations 1,521 48 1,137Acquisitions - 37 664 -------- -------- -------- OPERATING PROFIT 1,521 85 1,801 Net interest (104) 22 (77) -------- -------- -------- PROFIT ON ORDINARY ACTIVITIES BEFORETAXATION 1,417 107 1,724Taxation - 71 1,415 -------- -------- -------- PROFIT ON ORDINARY ACTIVITIES AFTERTAXATION FOR THE PERIOD 1,417 178 3,139Equity minority interests - (11) (11) -------- -------- -------- PROFIT FOR THE FINANCIAL PERIOD TRANSFERREDTO RESERVES 1,417 167 3,128Proposed dividend - - 958 -------- -------- -------- PROFIT FOR THE FINANCIAL PERIOD 1,417 167 2,170 ======== ======== ======== Earnings per ordinary share (pence) (Note 2)Basic 1.85p 0.26p 4.45pFully diluted 1.79p 0.24p 4.26p Underlying earnings per ordinary share(pence) (Note 2)Basic 1.85p 0.26p 2.74pFully diluted 1.79p 0.24p 2.63p There have been no recognised gains or losses attributable to the shareholdersother than the profit for the current financial period and the losses for thepreceding financial periods and accordingly, no statement of total recognisedgains and losses is shown. Consolidated Balance SheetAs at 30 September 2005 30.9.05 30.9.04 31.3.05 Unaudited Unaudited Audited Notes £ 000 £ 000 £ 000 FIXED ASSETSIntangible assets 13,879 14,588 14,289Tangible assets 905 626 885 -------- -------- -------- 14,784 15,214 15,174 -------- -------- --------CURRENT ASSETSDebtors 3 7,564 3,554 5,256Deferred tax asset 1,200 - 1,200Cash at bank and in hand 1,390 2,094 2,033 -------- -------- -------- 10,154 5,648 8,489 CREDITORS: amounts falling due withinone year (6,998) (5,816) (6,891) -------- -------- -------- NET CURRENT ASSETS/(LIABILITIES) 3,156 (168) 1,598 -------- -------- -------- TOTAL ASSETS LESS CURRENT LIABILITIES 17,940 15,046 16,772 CREDITORS: amounts falling due aftermore than one year (1,885) (2,674) (2,201) -------- -------- -------- 16,055 12,372 14,571 ======== ======== ======== CAPITAL AND RESERVESCalled up share capital 770 754 767Capital redemption reserve 1,200 1,200 1,200Share premium account 6,172 27,940 6,108Profit and loss account 7,913 (17,522) 6,496 -------- -------- -------- TOTAL EQUITY SHAREHOLDERS' FUNDS 16,055 12,372 14,571 ======== ======== ======== The comparative figures for the financial year ended 31 March 2005 are anextract of the company's statutory accounts for that financial year. Thoseaccounts have been reported on by the company's auditors and delivered to theRegistrar of Companies. The report of the auditors was unqualified and did notcontain a statement under section 237 (2) or (3) of the Companies Act 1985. This report was approved by the board of directors on 16 November 2005. Consolidated Cash Flow StatementSix months ended 30 September 2005 6 months ended Year ended 30.9.05 30.9.04 31.3.05 Unaudited Unaudited Audited Notes £ 000 £ 000 £ 000 -------- -------- ---------Net cash inflow from operating activities 4 274 82 1,057 -------- -------- --------- Returns on investments and servicing offinanceBank interest received 14 42 65Bank and other loan interest paid (118) (19) (142)Finance lease and hire purchase interest paid (2) (11) (17) -------- -------- --------- Net cash inflow from returns oninvestments and servicing of finance (106) 12 (94) -------- -------- --------- Taxation 124 4 4 -------- -------- --------- Capital expenditurePayments to acquire tangible fixed assets (275) (290) (765) -------- -------- --------- Acquisitions and disposalsPurchase of subsidiary undertakings - (5,852) (5,852)Professional fees in connection withacquisitions - (182) (182)Payment of deferred consideration (28) (92) (117)Net cash acquired with subsidiary - 2,147 2,048 -------- -------- --------- (28) (3,979) (4,103) -------- -------- --------- Equity dividends paid (959) - - -------- -------- --------- Cash outflow before financing (970) (4,171) (3,901) -------- -------- --------- FinancingIssue of ordinary shares 67 103 327Professional fees in connection withshare exchanges - (236) (236)Expenses of capital reduction - - (28)Bank loan (net of arrangement fee) - 3,465 3,465Repayment of bank loan (438) - (429)Repayment of hire purchase and finance leases (99) (92) (190) -------- -------- --------- Net cash (outflow)/inflow from financing (470) 3,240 2,909 -------- -------- --------- Decrease in cash in the period (1,440) (931) (992) ======== ======== ========= Reconciliation of net cash flow to movement in net debt Decrease in cash in period (1,440) (931) (992)Cash (inflows)/outflows from debt and leasefinancing 537 (3,373) (2,846) -------- -------- -------- Change in net funds from cash flows (903) (4,304) (3,838)Opening net (debt)/funds (1,104) 2,734 2,734 -------- -------- -------- Closing net debt (2,007) (1,570) (1,104) ======== ======== ======== Notes to the AccountsSix months ended 30 September 2005 1. Accounting policies The interim financial information does not constitute statutory accounts for thepurpose of section 240 of the Companies Act 1985. The figures for the year ended31 March 2005 have been extracted from the Group accounts for that year. Thosefinancial statements have been delivered to the Registrar of Companies andincluded an auditors' report, which was unqualified. The interim financial information has been prepared using the same accountingpolicies and estimation techniques as set out in the Group accounts for the yearended 31 March 2005. 2. Earnings per share The calculations of earnings per share are based on the following profits andnumbers of shares: 6 months ended Year ended 30.9.05 30.9.04 31.3.05 Unaudited Unaudited Audited £ 000 £ 000 £ 000Adjusted earnings per share is calculatedas follows:Profit for thefinancial period 1,417 167 4,328Deferred tax credit - - 1,200 -------- -------- -------- Underlying earnings 1,417 167 3,128 ======== ======== ======== Number of Number of Number of shares shares shares 000 000 000Weighted average number of shares:For basic earnings per share 76,727 64,712 70,318Exercise of share options 2,654 3,559 3,067 -------- -------- -------- For diluted earnings per share 79,381 68,271 73,385 ======== ======== ======== 3. Debtors 6 months ended Year ended 30.9.05 30.9.04 31.3.05 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Trade debtors 2,648 1,212 1,907 Amounts due on deferred payment terms 4,068 1,695 2,603 Other debtors 848 647 746 -------- -------- -------- 7,564 3,554 5,256 ======== ======== ======== Notes to the AccountsSix months ended 30 September 2005 4. Reconciliation of operating profit to net cash inflow from operating activities 6 months ended Year ended 30.9.05 30.9.04 31.3.05 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Operating profit 1,521 85 1,801 Depreciation 255 195 412 Amortisation of intangible assets 410 171 547 Increase in debtors (2432) (1,168) (2,752) Increase in creditors 520 799 1,049 --------- -------- --------- Net cash inflow from operating 274 82 1,057 activities ========= ======== ========= 5. Analysis of change in net debt At 31.3.05 Cash flow At 30.9.05 £ 000 £ 000 £ 000 Cash at bank and in hand 2,033 (1,440) 593 Bank loan (3,036) 438 (2,598) Finance leases and hire purchase (101) 99 (2) --------- -------- --------- Net debt (1,104) (903) (2,007) ========= ======== ========= 6. Availability of interim reports Interim reports will be sent to all shareholders on 2 December 2005. Copies ofthe interim report will be available for collection from the offices of KBC PeelHunt Ltd, 62 Threadneedle Street, London, EC2R 8HP, for a period of 1 month fromthe date of despatch. INDEPENDENT REVIEW REPORT TO IOMART GROUP PLC IntroductionWe have been instructed by the company to review the financial information forthe six months ended 30 September 2005 which comprises the consolidated profitand loss account, the consolidated balance sheet, the consolidated cash flowstatement, the reconciliation of net cash flow to movement in net funds andrelated notes 1 to 6. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report is made solely to the company, in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare also responsible for ensuring that the accounting polices and presentationapplied to the interim figures are consistent with those applied in preparingthe preceding annual accounts except where any changes, and the reasons forthem, are disclosed. Review work performedWe conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom auditing standards and thereforeprovides a lower level of assurance than an audit. Accordingly, we do notexpress an audit opinion on the financial information. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2005. Grant Thornton UK LLPChartered AccountantsGlasgow 16 November 2005 Notes: A review does not provide assurance on the maintenance and integrity ofthe Group's website, including controls used to achieve this, and in particularon whether any changes may have occurred to the financial information sincefirst published. These matters are the responsibility of the directors but nocontrol procedures can provide absolute assurance in this area. Legislation in the United Kingdom governing the preparation and dissemination offinancial information differs from legislation in other jurisdictions. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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