Final Results

Iomart Group PLC
11 May 2001

                               iomart Group plc

                           Preliminary Announcement

              Final Results for the year ended 31 December 2000

HIGHLIGHTS


  * Revenues of £3.6 million

  * Loss of £4.4 million prior to one off costs

  * Cash balances at 31 December 2000 of £12 million

  * Implementation of new strategy to move into business services

  * Successful launch of DSL and Thinkmail product sets

  * Sale of Madasafish ISP business completed today for cash consideration
    of £3 million



Nick Kuenssberg, Chairman iomart Group plc, commented:

'We have seen some fundamental changes in our marketplace, particularly for
consumer related activities. We are now focussing on business services and
creating a world class messaging business, building on our Thinkmail product
for outsourced e-mail management.

We have just concluded the sale of our Madasafish ISP business, reinforcing
this focus and strengthening our cash position; added to our experienced and
talented management team, we are well positioned to exploit the available
opportunities.'

                                                                   11 May 2001
Enquiries:
iomart Group plc                       Tel: [phone]

Angus MacSween

David Harrison
College Hill                           Tel: [phone]

Matthew Smallwood

Chelsea Allen



CHAIRMAN'S STATEMENT

While iomart Limited was founded in late 1998 and revenues began in August
1999 the calendar year 2000 is the first real period of trading.

Gross profit for the period was £2.2 million. Turnover was £3.6 million with a
loss of £4.4 million before non-recurring expenses of £0.7 million are
included to give a loss for the year of £5.1 million. Shareholders' funds at
year-end were £13.6 million of which £12 million was cash.

The prospects for both consumer and business markets in early 2000 justified
the successful flotation of the group in April, as a result of which £19
million net of expenses was raised through the placing and public offer at a
price of 90p per share.

Both the financial markets for the so called 'new economy' sector and the
economic conditions for telecoms companies have been highly volatile,
characterised by downward pressure on prices and traffic under performing
anticipated activity levels. The introduction of perceived free services have
undermined the ISP sector while DSL broadband demand has disappointed. Your
board believes that there are many companies whose business models are far
from robust; indeed many of them have been seeking additional funding.

For our part we have reviewed this turbulent scene and determined that the
future will be based on the business sector rather than on the consumer sector
where current aggressive pricing and weaker volume expectations make
profitability a tentative long term prospect. We have accordingly reduced our
marketing spend and cut back on the additional consumer services planned. This
has culminated with the sale today of our Madasafish ISP business for £3
million cash.

These funds will be invested in increasing our activity in the business
market. This has focused on DSL and in particular on the recently announced
ThinkMail, our high volume, high security messaging service allied to mass
storage capacity, which we believe is the leading product in the UK in this
fast-growing sector.

At the year-end cash reserves were £12 million compared with a current monthly
cash requirement of approximately £0.5 million. Our cash position has been
further enhanced by the sale of Madasafish and this gives us comfort as well
as capacity for the acquisition of businesses which will add value and revenue
to the group in complementary sectors. We reviewed a number of such businesses
and indeed have invested resource up to the due diligence stage. However we
decided not to proceed with any project other than NSL in the belief that the
prices asked were excessive under the emerging market conditions. NSL is a web
hosting and co-location business in Edinburgh acquired in September 2000 which
has been fully integrated into the company.

During the year we completed our executive team including David Harrison as
finance director and three experienced and talented senior executives covering
sales, DSL and messaging services. We now have a solid platform well placed to
deliver service to our customers at levels amongst the best available in the
UK.

The directors are working to build a solid long-term business rather than
looking for quick results. Your board is confident that, after first quarter
revenues broadly in line with expectations, the group will make real progress
in the current year with a redefined strategy, innovative business products, a
reduced cash burn and a clear focus on profitability in the first half of
2002.

CHIEF EXECUTIVE'S REVIEW

Our maiden year as a public company was certainly exhilarating. The internet
seemed to advance and retreat like a tsunami and there were some spectacular
highs and lows along the way.

iomart launched with two distinct business streams; internet dial access for
consumers with our Madasafish brand and easybuild websites for small
businesses marketed via the Virgin group and its Virgin Biznet brand. We
believed these two business streams would enjoy solid growth.

On the consumer front Madasafish showed strong growth through the spring of
2000 until late May when the whole industry was ambushed by companies with
naive and inexperienced management teams clambering over one another to
announce ever more 'free' services to the consumer. Our business plan was
founded on many years experience of the telecoms business and the economic
realities therein. That plan did not factor in our competitors subsidising
individual consumers at a rate of up to £30 per month per user. We had neither
the inclination nor the resources to go down this road and the number of ISP
casualties and lower valuations we have seen over the last six months has
vindicated that policy. This climate was also compounded by ill-informed
commentators who were bemoaning the high cost of internet access in the UK. In
fact for average users of around 400 minutes per month or less the UK has had
probably the cheapest internet access in the world.

Inevitably our growth slowed as consumers moved to subsidised packages and we
awaited market clarity and a fixed price package that was economically viable.
The regulator has singularly failed to create a regime whereby internet
traffic is provided at a fixed cost to BT's competitors, thereby making it
impossible for them to provide fixed price packages at a known cost with a
known margin. Despite this background and a reduced marketing spend we
attracted close to 200,000 registrations during the year, a creditable
performance.

Notwithstanding this apparent success the business model was not sufficiently
robust and we decided to dispose of the Madasafish ISP activity. It has been
sold as of today at a price of £3 million in cash. This generates funds which
will be targeted more sensibly towards our business to business activities in
line with our revised strategy.

Our Virgin biznet business also came up against the 'free' market share at any
cost mentality, with the availability of many such competing offers confusing
the market. However we have continued to work hard with Virgin to build this
business and whilst it has not achieved the forecast numbers, we believe that
we jointly manage the strongest, most successful business of its type in the
UK today.

During 2000 we had also intimated our intentions to enter the broadband market
with ADSL. We spent significant time and effort on plans to take advantage of
the competitive environment we were led to believe was being created by the
'local loop unbundling' process managed by OFTEL. We quickly learned that
building any competing network to BT under the scenario envisaged by OFTEL was
untenable, as the economics are fundamentally flawed by the BT price structure
agreed by OFTEL. In the absence of a major policy shift we believe BT will
retain a de facto national monopoly for the foreseeable future. Our ADSL
deployment is therefore based on reselling BT's wholesale product with the
addition of iomart value-added services. Today we believe we are currently No.
3 or 4 in the UK in terms of installed ADSL lines and our sales continue to
grow.

In each area of business where we have been active over the year we have as a
team punched above our weight and this reflects the strong management team we
have in place.

In September 2000 we acquired NSL, an Edinburgh based web hosting company.
This fitted with our requirement to provide business class web hosting
services alongside business access. It gives us a solid platform in a good
Edinburgh office from which to grow this business and fits with our revised
strategy.

As the year progressed and the difficulties in our chosen markets became
apparent we worked hard to create a strategy which will maintain and enhance
shareholder value longer term. We believed that it was important to target the
business marketplace, as businesses recognise the need to pay for products and
services. Further we needed to introduce value-added products alongside the
access and simple hosting products.

My experience in the internet arena has led me to a strongly held view that
e-mail has been the main driver of internet growth and is the original and
ongoing 'killer application'. It remains the strongest growing element of the
internet today. Every business or organisation will need to have it. We
concluded that we should develop a set of products around e-mail. As well as
being compelling products in their own right, they should:


      + create recurring revenue streams

      + be highly scalable

      + be in large and growing markets with global potential

      + have a significant element of own intellectual property

      + suffer nil or minimal regulatory burdens

      + enjoy good margins

      + have appropriate barriers to entry.



I believe our new Thinkmail product set meets all these criteria. Every
business or organisation will need e-mail and it is predicted that a large
proportion of the market will move to outsource e-mail and messaging
requirements as those become mission critical to the organisation and the
difficulties of running ever more complex services internally become
increasingly apparent.

Many PCs in business today are in effect e-mail terminals, and the e-mail
software programme is quickly becoming the document storage repository of
virtually every document. This, combined with growing requirements for virus
scanning, security, webmail, mobile services and archiving means we are in an
area set to grow significantly over the next two to three years.

As our experience in the business market grows it is becoming clear that
business customers often require more than single products or services. We are
finding clear evidence of strong demand for bundled packages that provide
broadband access, e-mail services and web hosting as a combined offering. This
is being driven by the need for organisations to simplify the management of
their DNS / IP address, e-mail servers and web servers. To deliver these
services we have developed effective and strong business processes around
sales, provisioning, billing and customer service that would be the envy of
many larger companies.

During 2001 we have continued to implement this plan, refocusing the group
away from the consumer sector towards an outsourced messaging business. As we
move into the second half of the year iomart's strategy will be to become a
world class messaging company, investing in its own product development and
intellectual property alongside other messaging software, whilst providing the
complementary access (ADSL and dial) and web hosting services being demanded
by the market today.

Your board and management team recognise that old fashioned valuation criteria
are coming back into vogue and earnings growth is the key driver once again.
We welcome that and you can be assured that we are keenly focused on taking
iomart through breakeven to profitability.



FINANCIAL REVIEW

Turnover

Turnover for the year of £3.58 million is made up of £2.03 million from dial
up access revenue, £0.16 million from ADSL and £1.39 million from web services
(co-location, hosting and domain names). Turnover from NSL (Internet) Ltd,
acquired on 27 September 2000, is included for three months and amounts to £
0.14 million, all in respect of web services.

Gross profit

Gross profit margin for the year was 60%.

Net operating expenses

Administrative expenses of £7.66 million comprise £2.74 million for salaries
and other staff costs, £1.52 million for marketing, £0.52 million for the
costs of operating the group's telecom network and related technical
infrastructure, £1.52 million for premises and office expenses, £1.04 million
for depreciation and amortisation and £0.32 million for items regarded by the
board as being outside the normal operations of the business. This amount of £
0.32 million includes £0.15 million for professional fees relating to the
stock exchange listing, £0.11 million for fees and other costs in connection
with potential merger and acquisition opportunities not completed and £0.06
million in connection with the local loop unbundling process. Other operating
income of £0.22 million relates primarily to grants received.

Operating loss

The total operating loss of £5.29 million is attributable to £5.14 million
from continuing operations and £0.15 million from NSL.

Net interest

Bank interest receivable amounted to £0.67 million. Interest payable on
borrowings was £0.15 million. Interest expense also includes a charge of £0.33
million in respect of the early redemption of a loan.

Loss on ordinary activities

The loss for the year was £5.1 million including £0.7 million for the loan
redemption fee and other costs outside normal operations. Excluding these
items the adjusted loss is £4.4 million. No tax charge arises in respect of
the group's trading.

Cash and borrowings

Cash balances at 31 December 2000 were £12.03 million. Borrowings under
finance leases amounted to £2.63 million. The group had no other debt
outstanding.

Financial instruments

The group's financial instruments comprise cash and liquid resources and
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 main risk to the group is
interest rate risk arising from floating rate interest rates. All transactions
are in UK sterling and the group does not use derivative instruments.

Financial Position

The group's financial position remains strong with sufficient cash reserves to
fund the current business plan and take the group through to profitability.



CONSOLIDATED PROFIT AND LOSS ACCOUNT

YEAR ENDED 31 DECEMBER 2000
                                                     Year ended 31  Restated 18
                                                          December       months

                                                          ended 31     ended 31
                                                          December     December

                                                              2000         1999

                                                             £'000        £'000

TURNOVER
Continuing operations                                        3,443          283
Acquisitions                                                   138            -

Total turnover                                               3,581          283

Cost of sales                                              (1,424)        (225)

Gross profit                                                 2,157           58

Administrative expenses                                    (7,663)      (2,308)
Other operating income                                         219          151

Net operating expenses                                     (7,444)      (2,157)

OPERATING LOSS
Continuing operations                                      (5,135)      (2,099)
Acquisitions                                                 (152)            -

Group operating loss                                       (5,287)      (2,099)

Net interest                                                   185         (64)

LOSS ON ORDINARY ACTIVITIES BEFORE                         (5,102)      (2,163)
TAXATION
Tax on loss on ordinary activities                               -            -

LOSS ON ORDINARY ACTIVITIES AFTER                          (5,102)      (2,163)
TAXATION FOR THE PERIOD

Loss per ordinary share (pence)
Basic                                                      (10.9p)      (11.0p)

Diluted                                                    (11.0p)      (11.0p)





CONSOLIDATED BALANCE SHEET

31 December 2000
                                                                     2000  1999

                                                                    £'000 £'000

FIXED ASSETS
Intangible assets                                                   1,174   198
Tangible assets                                                     3,960 1,291

                                                                    5,134 1,489

CURRENT ASSETS
Debtors                                                             1,792   370
Cash at bank and in hand                                           12,026   475

                                                                   13,818   845

CREDITORS: amounts falling due within one year                    (3,772)(1,387)

NET CURRENT ASSETS/(LIABILITIES)                                   10,046  (542)

TOTAL ASSETS LESS CURRENT LIABILITIES                              15,180   947

CREDITORS: amounts falling due after more than one year           (1,620)(1,610)

NET ASSETS/ (LIABILITIES)                                          13,560  (663)

CAPITAL AND RESERVES
Called up share capital                                              538  1,500
Capital redemption reserve                                         1,200      -
Share premium account                                             19,087      -
Profit and loss account                                           (7,265)(2,163)

TOTAL EQUITY SHAREHOLDERS' FUNDS/ (DEFICIT)                         13,560 (663)




CONSOLIDATED CASH FLOW STATEMENT

YEAR ENDED 31 DECEMBER 2000
                                                              Year    18 months

                                                          ended 31     ended 31
                                                          December     December

                                                              2000         1999

                                                             £'000        £'000

Net cash outflow from operating                             (4,681)     (1,001)
activities

Returns on investments and servicing of                        185         (64)
finance

Capital expenditure                                         (1,206)       (497)

Acquisitions                                                     5            -

Cash outflow before financing                               (5,697)      (1,562)

Financing                                                   17,248        2,037

Increase in cash in the period                              11,551          475


Reconciliation of net cash flow to movement in net
funds

Increase in cash in the period                              11,551          475

Cash outflows/(inflows) from debt and                         2,077       (537)
lease financing

Change in net funds/(debt) from cash                        13,628         (62)
flows

New hire purchase and finance leases                       (2,723)      (1,403)
Hire purchase and finance leases acquired                     (42)           -
with subsidiary
Opening net debt                                           (1,465)           -

Closing net funds/(debt)                                    9,398       (1,465)




Notes

1. The financial information set out above does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. The
Company's statutory accounts for the financial year ended 31 December 2000
will be delivered to the Registrar of Companies following the Annual General
Meeting proposed to be held on 19 June 2001 at 4 PM at the company's
registered office.

2. The results for the full period ended 31 December 1999 are taken from
accounts filed with the Registrar of Companies which contain, along with the
2000 results, an unqualified audit report and did not contain any statement
under Section 237 (2) or (3) of the companies Act 1985.

3. The calculation of loss per ordinary share is based on a loss of £5,102,000
(1999: loss £2,163,000) and on a weighted average of 46,709,000 (1999:
19,651,000) ordinary shares in issue during the year. The calculation of
diluted earnings per ordinary share is based on the same profit attributable
to ordinary shareholders and a weighted average number of 46,575,000 (1999:
19,651,000) shares. The difference between the weighted average number of
shares used in the basic and diluted calculations is due to the potential
ordinary shares arising from options. In 1999 there were no dilutive potential
ordinary shares.

4. Cost of sales and administrative expenses of the prior period have been
restated to align them with the revised reporting structure of the group. The
effect of this restatement amounts to a transfer of cost of sales to
administrative expenses of £1.312 million in the period to 31 December 1999.

5. One off costs of £0.65 million includes a £0.33 million early loan
redemption charge, £0.15 million for professional fees relating to the stock
exchange listing, £0.11 million for fees and other costs in connection with
potential merger and acquisition opportunities not completed and £0.06 million
in connection with the local loop unbundling process.

6. The annual report will be posted to all shareholders shortly and copies
will be available on request from the Company's registered office, as stated
below. Copies of these final results (and this announcement) are available for
a period of 14 days from the date of this announcement at the following
address.





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