Final Results

Iomart Group PLC 21 May 2003 iomart results for the year ended 31 March 2003 iomart Group plc, the Glasgow based software and web services business, announces its consolidated final results for the year ended 31 March 2003. Highlights â€¢Reduction in loss to 3.5p per share from 14.7p â€¢Clear focus on two business streams in growth markets â€¢Web services business with 7,000 customers adding 1,000 monthly â€¢NetIntelligence gaining market recognition â€¢Cash balances of Â£4 million in hand â€¢Anticipate monthly group profitability before end of 2003/04 Nick Kuenssberg, chairman, commented: 'The figures show revenues of Â£2.2 million and a loss of Â£1.9 million down from Â£7.9 million in 2001/02. We retain cash balances of Â£4 million which will be sufficient to fund both incremental marketing spend for NetIntelligence and the further development of our web services business. We remain confident about both our businesses. With overhead expense running at Â£220,000 per month and a maturing sales platform we believe that monthly group profitability is achievable before the end of the current financial year.' Contact: Angus MacSween, chief executive officer 0141 931 7000 Nick Kuenssberg, chairman 07860 635 191 CHAIRMAN'S STATEMENT The year 2002/03 has seen the company focusing on its two businesses of network security software and web services. The figures showing revenues of Â£2.2 million (2002 - Â£5.4 million) and a loss of Â£1.9 million (2002 - Â£7.9 million) demonstrate the effects of this focus and the impact of a more robust business model. NetIntelligence has been developed into a sophisticated tool in the growing content management market related to the increased usage of email, internet and networks by companies both large and small. The latest version 3.07, providing a full range of detailed management reports, suitable for both corporate and SME customers, has a significant sales pipeline with some forty customers to date. Potential for major announcements in the near term emphasises the validity of this product portfolio. The speed of uptake has however been disappointing and will probably remain below expectations in the current business climate.New sales initiatives should begin to create more significant sales revenue before the end of the current year. Web services are based on the iomart Internet operation with sales offices originally in Lancaster and latterly in Barrow, backed up by office and infrastructure in Glasgow and a third sales team potentially also in Glasgow. Sales are now running at Â£2.5 million per annum and progress will be enhanced by the introduction of new products for our customer base of c 7,000. The ability of the existing Glasgow hosting business has been underwritten by having recently won a substantial deal from a major media group. We exited the operations in Germany early in the year, full provision having already been made at March 2002 as advised with the 2001/02 results. It is not anticipated that the 20% holding in Canbox Technologies GmbH will create any value for shareholders. Although we have looked at other companies and business opportunities to complement our offerings, our focus is clear and we have not been distracted. We retain cash balances of Â£4 million which will be sufficient to fund both incremental marketing spend for NetIntelligence and the further development of our web services business. The promotion of NetIntelligence demands a new director of sales who started in April. As a consequence Bill Dobbie will move from an executive to a non-executive role as at the date of the AGM with a wide-ranging remit for strategic development. Our tight cohesive board remains appropriate for the current size and shape of your company's activities. We remain confident about both our businesses. With overhead expense running at Â£220,000 per month and a maturing sales platform we believe that monthly group profitability is achievable before the end of the current financial year. Nick Kuenssberg Non-executive chairman 20 May 2003 CHIEF EXECUTIVE OFFICER'S REPORT The year to end March 2003 has been one of consolidation, cost control and concentration on building our two business streams. We began April 2002 with a relatively new software product, NetIntelligence, and an embryonic web services business, having restructured our telecoms business. Whilst this has reduced revenues to Â£2.2 million we have dramatically improved our profit and loss account from losses of Â£7.9 million to a loss of Â£1.9 million. Our focus is on continuing to bear down on cost, whilst growing aggressively our web services business via direct sales by c. 1,000 customers a month to ensure a quality recurring revenue stream and increasing our revenues from direct and indirect sales of NetIntelligence. Whilst we attained our forecast revenue for web services, sales of NetIntelligence are still not flowing through as quickly as we had hoped. However we remain convinced that, with an ever improving product and the increasing demands around the management of internet and email, we will start to close significant sales through this year. Results Turnover for the year of Â£2.19 million is made up of Â£2.17 million from ongoing operations, network security and web services (co-location, hosting, domain names and mail), and Â£0.02 million from the discontinued operations in Germany. Administrative expenses totalled Â£3.81 million, which represents a considerable decrease on the total of Â£11.08 million for the previous period. In addition, restructuring costs of Â£0.47 million were incurred. We have continued to reduce our administrative expenses to reflect our current business. We have carried out an extensive impairment review of all tangible and intangible fixed assets and have fully written down those where we do not anticipate any recoverable value. Going forward the requirement for capital expenditure is expected to be modest. The group operating loss was Â£2.40 million compared with a total of Â£11.84 million, of which Â£6.98 million was attributable to continuing operations for the previous period. Bank interest receivable amounted to Â£0.20 million. Interest payable on finance leases and hire purchase contracts was Â£0.03 million. The loss for the year before taxation was Â£2.22 million. There is no liability to corporation tax on the results for the year and research and development tax credits totalling Â£0.33 million are due to be refunded to the group, resulting in a loss after taxation for the year of Â£1.89 million (2002 - Â£7.90 million). The loss per share for the year was 3.5p compared to 14.7p for the 15 months ended 31 March 2002. Cash and borrowings Cash balances at 31 March 2003 were Â£4.04 million. Borrowings under finance leases amounted to Â£0.54 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 of the holding company and the UK subsidiaries 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. Prospects We are continuing to meet our revenue and customer acquisition forecasts in web services, focussed on providing web hosting and related services to small business. We believe there are significant growth opportunities in this sector as knowledge and understanding of the internet matures within the small and micro business community. Our challenge with NetIntelligence remains to break into the security and content management market in a meaningful way. The next twelve months will be critical in this regard but we remain confident that the leadership we have in functionality will win us important reference customers in the year ahead. Angus MacSween Chief executive officer 20 May 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 31 March 2003 Note Year 15 months ended 31 March ended 31 March 2003 2002 Â£'000 Â£'000 TURNOVER Continuing operations 3 2,174 1,719 Discontinued operations 3 18 3,680 --------- --------- Total turnover 2,192 5,399 Cost of sales 3 (312) (3,339) --------- --------- Gross profit 3 1,880 2,060 --------- --------- Administrative expenses (3,809) (11,079) Restructuring expenses (466) (3,021) --------- --------- Total administrative expenses 3 (4,275) (14,100) Other operating income - 203 --------- --------- Net operating expenses 3 (4,275) (13,897) --------- --------- OPERATING LOSS Continuing operations 3 (2,395) (6,976) Discontinued operations 3 - (4,861) --------- --------- Operating loss 4 (2,395) (11,837) Profit on sale of businesses - 3,609 --------- --------- (2,395) (8,228) Net interest 5 171 327 --------- --------- LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (2,224) (7,901) Tax on loss on ordinary activities 334 - --------- --------- LOSS ON ORDINARY ACTIVITIES AFTER TAXATION FOR THE YEAR/PERIOD (1,890) (7,901) Equity minority interests 18 5 --------- --------- LOSS FOR THE FINANCIAL YEAR/PERIOD (1,872) (7,896) ========= ========= Loss per ordinary share (pence) Basic 6 (3.5p) (14.7p) There have been no recognised gains and losses attributable to the shareholders other than the loss for the current financial year and preceding financial period and accordingly, no statement of total recognised gains and losses is shown. CONSOLIDATED BALANCE SHEET 31 March 2003 2003 2002 Â£'000 Â£'000 FIXED ASSETS Intangible assets 13 279 Tangible assets 376 1,011 -------- -------- 389 1,290 -------- -------- CURRENT ASSETS Debtors 793 927 Cash at bank and in hand 4,042 6,519 -------- -------- 4,835 7,446 -------- -------- CREDITORS: amounts falling due (1,170) (2,513) within one year -------- -------- NET CURRENT ASSETS 3,665 4,933 -------- -------- TOTAL ASSETS LESS CURRENT LIABILITIES 4,054 6,223 CREDITORS: amounts falling due after more than (292) (571) one year EQUITY MINORITY INTERESTS 30 12 -------- -------- NET ASSETS 3,792 5,664 ======== ======== CAPITAL AND RESERVES Called up share capital 538 538 Capital redemption reserve 1,200 1,200 Share premium account 19,087 19,087 Profit and loss account (17,033) (15,161) -------- -------- TOTAL EQUITY SHAREHOLDERS' FUNDS 3,792 5,664 ======== ======== These financial statements were approved by the board of directors on 20 May 2003. Signed on behalf of the board of directors Angus MacSween Director CONSOLIDATED CASH FLOW STATEMENT Note Year 15 months Year ended 31 March 2003 ended 31 March ended 31 March 2003 2002 Â£'000 Â£'000 Net cash outflow from operating 7 (1,822) (7,833) activities Returns on investments and servicing of finance 8 171 327 Capital expenditure and financial investment 8 (92) (577) Acquisitions and disposals 8 - 4,030 --------- ------------ Cash outflow before financing (1,743) (4,053) Financing 8 (734) (1,454) --------- ------------ Decrease in cash in the year/period (2,477) (5,507) ========= ============ Reconciliation of net cash flow to movement in net funds Decrease in cash in the year/period (2,477) (5,507) Cash outflows from debt and lease 9 734 1,454 financing --------- ------------ Change in net funds from cash flows 9 (1,743) (4,053) New hire purchase and finance leases 9 - (101) Opening net funds 5,244 9,398 --------- ------------ Closing net funds 9 3,501 5,244 ========= ============ NOTES TO THE ACCOUNTS Year ended 31 March 2003 1. BASIS OF PREPARATION The financial information set out above does not constitute the company's statutory financial statements for the year ended 31 March 2003 or the fifteen month period ended 31 March 2002 but is derived from those financial statements. Those financial statements have been reported on by the Company's auditors. The report of the auditors was unqualified and did not contain a statement under S.237 (2) or (3) Companies Act 1985. The statutory financial statements for the fifteen month period ended 31 March 2002 have been delivered to the Registrar of Companies. The statutory financial statements for the year ended 31 March 2003 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 2. ACCOUNTING POLICIES The financial statements have been prepared on the basis of the accounting policies set out in the Group's statutory financial statements for the year ended 31 March 2002. 3. ANALYSES OF OPERATIONS Dis- Total Dis- Total Continuing continued year Continuing continued 15 months year year ended 31 March 15 months 15 months ended 31 March ended 31 March ended 31 March 2003 ended 31 March ended 31 March 2002 2003 2003 Â£'000 2002 2002 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Turnover 2,174 18 2,192 1,719 3,680 5,399 Cost of (303) (9) (312) (559) (2,780) (3,339) sales -------- -------- -------- -------- -------- -------- Gross profit 1,871 9 1,880 1,160 900 2,060 -------- -------- -------- -------- -------- -------- Administrative (3,800) (9) (3,809) (6,712) (4,367) (11,079) expenses Restructuring (466) - (466) (1,572) (1,449) (3,021) expenses -------- -------- -------- -------- -------- -------- Total (4,266) (9) (4,275) (8,284) (5,816) (14,100) administrative expenses Other - - - 148 55 203 operating -------- -------- -------- -------- -------- -------- income Net operating (4,266) (9) (4,275) (8,136) (5,761) (13,897) expenses -------- -------- -------- -------- -------- -------- Operating (2,395) - (2,395) (6,976) (4,861) (11,837) loss ======== ======== ======== ======== ======== ======== Turnover from continuing operations comprises revenue from network security and web services, excluding VAT. The results of Canbox Technologies GmbH up to 31 May 2002, the date it ceased to be a subsidiary, and the comparatives for the 15 month period ended 31 March 2002 are shown under discontinued operations. 4. OPERATING LOSS Year 15 months ended 31 March ended 31 March 2003 2002 Â£'000 Â£'000 Operating loss is after charging/ (crediting) Depreciation of tangible fixed assets: Owned assets 214 432 Leased assets 283 1,117 Impairment write down of tangible fixed 230 1,452 assets Amortisation of intangible fixed 118 499 assets Impairment write down of intangible 148 506 assets Loss on sale of assets - 15 Rentals under operating leases 261 492 Revenue grants - (55) Amortised deferred grant income - (148) Auditors' - company audit 6 10 remuneration fees - group audit 20 26 fees - other services 34 134 ======== ======== The discount rate used in assessing the fixed asset write down is 8.4%. 5. NET INTEREST Year 15 months ended 31 March ended 31 March 2003 2002 Â£'000 Â£'000 Investment income: Bank interest receivable 204 587 -------- -------- Interest payable and similar charges: Bank overdraft and other borrowings (1) (3) Finance leases and hire purchase (32) (257) contracts -------- -------- (33) (260) -------- -------- Net interest 171 327 ======== ======== 6. LOSS 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/period. FRS 14 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. For a loss making company with outstanding share options, net loss per share would only be increased by the exercise of out-of-the-money options. Since it seems inappropriate to assume that option holders would act irrationally and there are no other diluting future share issues, diluted EPS has not been presented. Year 15 months ended 31 March ended 31 March 2003 2002 Â£'000 Â£'000 Loss for the financial period and basic earnings attributed to ordinary shareholders (1,872) (7,896) No No '000 '000 Weighted average number of ordinary shares 53,796 53,796 Loss per share (3.5p) (14.7p) 7 RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Year 15 months ended 31 March ended 31 March 2003 2002 Â£'000 Â£'000 Operating loss (2,395) (11,837) Depreciation 497 1,549 Amortisation of intangible assets 118 499 Write down of tangible fixed assets 230 1,452 Write down of intangible fixed assets 148 506 Loss on sale of assets - 15 Foreign exchange translation - 18 differences Decrease in debtors 468 907 Decrease in creditors (888) (942) -------- -------- Net cash outflow from operating (1,822) (7,833) activities ======== ======== 8. ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT Year 15 months ended 31 March ended 31 March 2003 2002 Â£'000 Â£'000 Returns on investments and servicing of finance Other interest receivable 204 587 Bank overdraft and other borrowings (1) (3) Finance leases and hire purchase (32) (257) contracts -------- -------- 171 327 ======== ======== Capital expenditure and financial investment Payments to acquire tangible fixed (92) (656) assets Proceeds of disposal of fixed assets - 135 Payments to acquire intangible fixed - (56) assets -------- -------- (92) (577) ======== ======== Acquisitions Purchase of subsidiary undertakings - (310) Purchase of businesses - (907) Net cash acquired with subsidiary - 310 -------- -------- - (907) -------- -------- Sale of businesses Sale of dial up access - 2,960 Sale of ADSL - 1,977 -------- -------- - 4,937 -------- -------- Total acquisitions and disposals - 4,030 ======== ======== Financing ======== ======== Capital element of finance lease rentals and hire purchase contract payments (734) (1,454) ======== ======== 9. ANALYSIS OF CHANGE IN NET FUNDS At 31 March At 31 March 2002 2003 Â£'000 Â£'000 Cash flow Â£'000 Cash at bank and in hand 6,519 (2,477) 4,042 Finance leases and hire purchase (1,275) 734 (541) -------- -------- -------- Net funds 5,244 1,743 3,501 ======== ======== ======== 10 ANNUAL GENERAL MEETING The 2003 annual general meeting of the company will be held at Fleming Pavilion, Todd Campus, West of Scotland Science Park, Glasgow G20 0XA on 24 June 2003 at 12 noon. This information is provided by RNS The company news service from the London Stock Exchange

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