consolidated half yearly results 2011 · of managed hosting contracts together with the...

Consolidated Half Yearly Results 20116 months ended 30 September 2011

“iomart Hosting’s support has allowed us to scale up as fast as possible, while still allowing us to serve our millions of customers in a professional, responsive and personal manner.”

Craig Parker, Director of IT, Skyscanner

Consolidated Half Yearly Results6 months ended 30 September 2011

Highlights

iomart Group plc (AIM:IOM), the cloud computing and managed host-ing services company, is pleased to report its consolidated half yearly results for the period ended 30 September 2011.

FINANCIAL HIGHLIGHTS

•Revenuegrowthof36%to£15.4m(H12011:£11.4m)

•AdjustedEBITDA1growthof85%to£5.0m(H12011:£2.7m)

•Profitbeforetaxgrowthof106%to£2.4m(H12011:£1.2m)

•Basicearningspersharefromoperationsincreasedby 112%to2.23p(H12011:1.05p)

•Cashflowfromoperationsof£4.1m(H12011:£3.1m) •Netcashatendofperiodof£3.5m(H12011:£5.3m)

OPERATIONAL HIGHLIGHTS

•AcquisitionofSwitchMediaGroupformaximumof£1.2min April 2011

•AcquisitionofEQSNLimitedformaximumof£2.5min November2011

•TitanserverestatemigratedintoGroupdatacentreseliminating third party datacentre costs

•Continuingrationalisationprogrammeforpreviouslyacquired businesses

1 AdjustedEBITDAmeansearningsbeforeinterest,tax,depreciation,amortisa-tioncharges,sharebasedpaymentcharges,acquisitionrelatedcostsandnonrecurringacquisitionintegrationcosts

£2.4M PROFITBEFORE TAXIncrease of 106%

36% INCREASE in Revenue

112% INCREASE in EarningsPer Share

£5MEBITDA Increase of 85%

ChiefExecutive'sStatement2

Introduction

IamverypleasedtoreportonanotherexcellentperiodoftradingfortheGroup.WearenowestablishedasoneoftheUK’s leading managed hosting and cloud services providers, with organisations continuing to choose iomart for the provisionoftheirwebfacinginfrastructureandtheservicesthatsurroundthat.Wehavebuiltonthesuccessofthepreviousperiodandcontinuetodemonstratetheeffectivenessofthebusinessmodelweareexecuting.

OurprofitabilityatadjustedEBITDA levelhasalmostdoubled in theperiod from£2.7m to£5.0mwithbothofouroperating segments having contributed to this high level of profit growth. Our Hosting segment has continued to winsubstantialamountsofnewandrepeatbusinessacrossallofourbrandsandtheEasyspacesegmenthasalsocontributedstrongly,helpedbytheacquisitionofSwitchMediaduringtheperiod.

FinancialPerformance

Overallrevenuesfromouroperationsgrew36%to£15.4m(H12011£11.4m),withbothofouroperatingsegmentscontributing to the growth.

The Easyspace segment grew revenues by 8% to £4.2m (H1 2011 £3.9m) over the period largely due to theacquisitionofSwitchMediaGroupinApril2011.

OurHostingsegmentgrewrevenuesby50%to£11.3m(H12011£7.5m)mainlythroughthesustainedacquisitionofmanagedhostingcontractstogetherwiththecontributionofTitanInternetLimitedwhichwasacquiredinNovember2010.

Thegrossprofit in theperiod,which iscalculatedbydeductingvariablecostofsalessuchasdomaincosts,powerandsalescommissionandtherelativelyfixedcostsofoperatingourdatacentres,fromrevenue,increasedby52%to£10.3m(H12011£6.8m).Thissubstantial increaseingrossprofitwasadirectresultofthecontributionfromtherevenuegrowthdeliveredbybothsegments.Inpercentagetermsthegrossmarginimprovedto67%(H1201160%)withagainbothsegments recording improvedgrossmarginpercentages in theperiod. In theEasyspaceSegmentthiswas due to an improved salesmixwith a greater proportion of sales coming fromhighermargin products. InHosting,duetothefixednatureofsomeoftheoperatingcosts,thecontributionfromincreasedrevenuesimprovedthepercentage margin together with a reduction in the level of some of our other cost of sales as our purchasing power improves with our growth.

The Group’s adjusted EBITDA grew by 85% to £5.0m (H1 2011 £2.7m) reflecting a significantly improvedperformance with again both segments contributing to the improvement.

Easyspace improved itsadjustedEBITDAto£1.6m(H12011£1.4m)andalso itsmargin to39%from36%.TheincreaseinouradjustedEBITDApercentagemarginismainlyduetotheeffectoftheimprovedsalesmixwhichinturnproduced an improved gross margin percentage performance.

iomart group plc Half Yearly Report 2011

AngusMacSween,ChiefExecutiveOfficer

Hosting improved its adjusted EBITDA to £4.6m (H1 2011 £2.4m) and also itsmargin to 41% from 32%. Thissignificant improvement is largely due to the increased gross margin contribution arising from our sales growth together withthecostsavingsachievedfrommovingTitan’sserverestatetoourowndatacentrefromrenteddatacentrespaceafteracquisition.OvertheperiodwehavecontinuedtoincuradditionaladministrativeexpenditureonresourcesfortheHostingsegmenttoprovidethehighlevelofserviceourgrowingcustomerbasehascometoexpect,andtoincreaseoursalesforcetofurtherexploittheopportunitiesaffordedbythegrowingmarketforourservices.

Group overheads, which are not allocated to segments, include the cost of the Board, all the running costs of theheadquarters inGlasgow,andGroup led functionssuchashumanresources,marketing, financeanddesign.Groupoverheadsincreasedslightlyintheperiodto£1.2m(H12011£1.1m).

Depreciation charges of £1.8m (H1 2011 £1.2m) have increased as we depreciate the equipment purchased toprovide services to our new customers and also due to additional datacentre capacity being brought into operation in Maidenhead.Thechargefortheamortisationofintangibleassetshasincreasedto£0.5m(H12011£0.3m)asweamortise the intangibleassetsacquired through theacquisitionsofbothTitanandSwitchMedia.Thesharebasedpaymentchargeisunalteredat£0.1m(H12011£0.1m).Intheperiodwehavecontinuedtoincurcostsrelatedtoacquisitionsinrespectofprofessionalfeesof£0.1m(H12011£0.1m)andalsoincurrednon-recurringcostsrelatedtotheintegrationofacquisitionsintheperiodof£0.2m(H12011£nil).

Financeincomeintheperiodwas£Nil(H12011£0.2m)andfinancecostswere£0.1m(H12011£0.1m).

Asaresulttheprofitsfortheperiodbeforetaxmorethandoubledto£2.4m(H12011£1.1m).

There isasmall taxcharge in theperiodof£0.2m (H12011£0.1m) resulting inaprofit for theperiod from totaloperationsof£2.2m(H12011£1.0m).

TheGroupgeneratedcash fromoperatingactivities in theperiodof£4.0m (H12011£3.1m).Netexpenditureoninvestingactivitiesof£3.1m(H12011£1.3m)includedpaymentsof£1.0mtoacquireSwitchMediainApril2011and£0.6minrespectofthedeferredconsiderationduefromtheacquisitionofTitanInternetinNovember2010.Therewasnetcashgeneratedfromfinancingactivitiesof£0.8m(H12011£0.5mnetexpenditure)including£0.5mfromtheissueofsharesasaresultoftheexerciseofoptionsbyemployeesand£1.0mfromthedrawdownofabankloantohelpfundtheacquisitionofSwitchMedia.Asaresultcashandcashequivalentbalancesattheendoftheperiodwere£8.6m(H12011£7.1m).

ThenetcashpositionoftheGroupattheendoftheperiodwas£3.5m(H12011£5.3m).

InNovember 2011 the company acquired EQSN Limited for amaximum consideration of £2.5m ofwhich£2.3mwaspaidoncompletionandGlobalGoldLimitedforamaximumconsiderationof£1.2mofwhich£0.7mwaspaidoncompletion.

Operational Review

Whilstallouractivitiesinvolvetheprovisionofmanagedhostingservicesweareorganisedintotwosegments.

Hosting

Thehostingoperationhasperformedwellovertheperiod.Wearecontinuingtowinbusinessfromnewandexistingcustomersprovidingamixofmanagedhostedservices,bothphysicalandvirtualasthetrendtooutsourcetothecloudcontinues.

ChiefExecutive'sStatement

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ChiefExecutive'sStatement

4


Wearecontinuingtointegrateouracquisitionstoensureanefficientdeliverymechanismtocustomersnomatterwhichbrandoravenuetheybuythrough.Thishasseencontinuedsuccessandimprovedprofitabilityacrosstheboard.Alotofefforthasbeenputintoensuringahighercustomertouchtomakesurewemissnoopportunitytoincreasesalestocustomerswhichhasbeenrewardedduringtheperiodwithanincreaseinadditionalordersfromexistingcustomers.Weareagaindelightedthatourcustomershavechosentorewardusinthisway.Inreturnandalsomoregenerallyinresponsetomarketneedswehavewidenedanddeepenedourproductsettomaximisetheopportunitiesbothwithinourexistingcustomerbaseandinthemarketoverall.

AllofthisactivitycontributedtoanincreaseintheHostingsegmentrevenueof50%to£11.3m(H12011£7.5m).

Easyspace

During theperiodweexpandedourEasyspaceoperation through theacquisitionofSwitchMedia.Oneof themainadvantages of this acquisition is the focus on new corporate entities thereby improving the overall quality of theunderlyingcustomerbase.Easyspacecontinues toprovidea rangeofproductsandservices to themicroandSMEmarkets, including the adoption of many of the services and processes from Hosting, to broaden and deepen theservices we deliver to customers. One of the processes adopted from Hosting is the increase in customer touch and as aresultwehaveseenahealthyincreaseinrenewalratesoverthecomparableperiod.Additionally,asaconsequencethere is less of a distinction in what we now sell between the two segments.

AsaconsequenceofouractivitiesintheperiodtheEasyspacesegmentrevenuehasincreasedby8%to£4.2m(H12011£3.9m).

Acquisitions after the period end

InaccordancewithourstrategytogrowbybothorganicandacquisitivemeanswearedelightedtohavecompletedthepurchaseofEQSNLimitedaftertheendoftheperiodasannouncedon24November2011.ThisisanexcellentacquisitionfortheGroupwithanimpressivecustomerbaseandwelookforwardtointegratingitsoperationsintotheGroupover the comingmonths. In addition, also inNovember,wepurchaseda smallwebhosting company,GlobalGoldHoldingsLimited,thatprovidesavarietyofhostinganddomainpackagestoalargenumberofSMEsintheUK.Whilstsmall,thisbusinessaddsagoodsetofcustomersandwillbesimilarlyintegratedintotheGroupinthecomingmonths.

Current trading and outlook

Tradinginthesecondhalfoftheyearhasbegunwellandourpipelineofopportunitiescontinuestostrengthen.

Themarket opportunities available to us continue to grow asmore andmore organisations take advantage of thebenefitsofoutsourcingtheirinfrastructureneedstoastrongandtrustedsuppliersuchasiomart.Wecontinuetoexpandourskills,productsetsandinfrastructuretodeliveranincreasingrangeofcloudservicesandexpecttocontinuethegrowthwehaverecentlyenjoyed.

Welookforwardwithconfidence.

“iomartHosting’stechnicalexpertiseandsupportprovidesrelieftoNova’ssmallbutbusyITteam.It’scriticalforourbusinessthatwehavea24/7scalableservice.”

Chris Kewin, IT Director, Nova International

"Showingcouragebytakingtheopportunitytogrow,iomartisoperatinginahighlycompetitivemarketbutprovingtobecapableofexpansionthroughorganicgrowthandaquisition."

Unaudited Unaudited Audited 6 months 6 months Year to to 30/09/11 to 30/09/10 31/03/11 £’000 £’000 £’000

Revenue 15,428 11,378 25,252

Costofsales (5,110) (4,571) (9,699)Gross profit 10,318 6,807 15,553

Administrativeexpenses (7,843) (5,743) (12,780)

Operating profit 2,475 1,064 2,773

Analysed as: Earnings before interest, tax, depreciation, amortisation, acquisition costs and share based payments 5,009 2,707 6,644Sharebasedpayments (84) (117) (290)Acquisitioncosts 4 (223) (60) (195)Depreciation (1,753) (1,174) (2,689)Amortisation (474) (292) (697) Financeincome 12 185 197Financecosts (105) (94) (178) Profit before taxation 2,382 1,155 2,792 Taxation 5 (166) (120) 70 Profit for the period from total operations 2,216 1,035 2,862 Other comprehensive income Currencytranslationdifferences (5) - -Other comprehensive expense for the period (5) Total comprehensive income for the period 2,211 1,035 2,862 Attributable to equity holders of the parent 2,211 1,035 2,862 Basic and diluted earnings per share Total operations Basicearningspershare 3 2.23p 1.05p 2.91pDilutedearningspershare 3 2.17p 1.04p 2.85p

ConsolidatedInterimIncomeStatementofComprehensiveIncome.Sixmonthsended30September2011

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Unaudited Unaudited Audited 30/09/2011 30/09/2010 31/03/2011 £’000 £’000 £’000 ASSETS Non-current assets Intangibleassets–goodwill 6 25,147 20,723 23,952Intangibleassets–other 6 2,179 1,072 1,978Deferredtaxasset 451 612 619Leasedeposit 2,416 1,616 2,016Property,plantandequipment 7 15,287 12,890 14,788 45,480 36,913 43,353 Current assets Cashandcashequivalents 8,611 7,073 6,864Tradeandotherreceivables 3,488 3,235 3,100 12,099 10,308 9,964 Total assets 57,579 47,221 53,317 LIABILITIES Non-current liabilities Non-currentborrowings (970) (1,096) (920) (970) (1,096) (920) Current liabilities Contingentconsiderationdueonacquisitions 8 (225) - (600)Tradeandotherpayables (10,678) (8,712) (10,047)Currentborrowings (4,107) (722) (2,846) (15,010) (9,434) (13,493) Total liabilities (15,980) (10,530) (14,413) Net assets 41,599 36,691 38,904 EQUITY Sharecapital 1,047 1,035 1,038Ownshares (2,351) (2,464) (2,464) Capital redemption reserve 1,200 1,200 1,200 Sharepremium 20,311 19,847 19,977Retainedearnings 21,392 17,073 19,153 Total equity 41,599 36,691 38,904

ConsolidatedInterimStatementofFinancialPosition.Asat30September2011

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Unaudited Unaudited Audited 6 months to 6 months to Year to 30/09/11 30/09/10 31/03/11 £’000 £’000 £’000 Profit before tax 2,382 1,155 2,792Financeincome-net 93 (91) (19)Depreciation 1,753 1,174 2,689Amortisation 474 292 697Sharebasedpayments 84 117 290Exchangemovements (5) - -Movementindeposits (400) (400) (800)Movementintradereceivables (352) (338) 194Movementintradepayables 89 1,173 1,211Cash flow from operations 4,118 3,082 7,054Taxationpaid (70) - (12)Net cash flow from operating activities 4,048 3,082 7,042 Cash flow from investing activities Purchaseofproperty,plantandequipment (1,375) (924) (3,419)Capitalisationofdevelopmentcosts (224) (163) (351)Purchaseofintangibleassets–software (63) (193) (197)Paymentforacquisitionofsubsidiaryundertaking 10 (1,025) - (3,144)Deferredconsiderationpaidonpriorperiodacquisition 8 (600) (1,000) (1,000)Receiptfromdisposalofdiscontinuedoperation - 795 795Netcashacquiredwithsubsidiaryundertaking 126 - -Interestreceived 12 225 237Net cash used in investing activities (3,149) (1,260) (7,079) Cash flow from financing activities Issueofshares 460 340 473Bankloans 1,000 - 2,000Repaymentoffinanceleases (523) (360) (759)Interestpaid (89) (53) (137)Dividendspaid - (391) (391)Net cash generated from/(used in) financing activities 848 (464) 1,186 Net increase in cash and cash equivalents 1,747 1,358 1,149 Cashandcashequivalentsatthebeginningoftheperiod 6,864 5,715 5,715 Cash and cash equivalents at the end of the period 8,611 7,073 6,864

ConsolidatedInterimStatementofCashFlows.Sixmonthsended30September2011

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Foreign Own currency Capital Share Share shares translation redemption premium Retained capital JSOP reserve reserve account earnings Total £’000 £’000 £’000 £’000 £’000 £’000 £’000Changes in equity Balance at 1 April 2010 1,028 (2,464) - 1,200 19,514 16,312 35,590 Profitintheperiod - - - - - 1,035 1,035Total comprehensive income - - - - - 1,035 1,035 Sharebasedpayments - - - - - 117 117Dividendspaid - - - - - (391) (391)Issueofnewsharesforoptionredemption 7 - - - 333 - 340Total transaction with owners 7 - - - 333 (274) 66 Balance at 30 September 2010 1,035 (2,464) - 1,200 19,847 17,073 36,691

Profitintheperiod - - - - - 1,827 1,827Total comprehensive income - - - - - 1,827 1,827 Sharebasedpayments - - - - - 173 173Deferredtaxonsharebasedpayments - - - - - 80 80Issue of new shares for option redemption 3 - - - 130 - 133Total transaction with owners 3 - - - 130 253 386 Balance at 31 March 2011 1,038 (2,464) - 1,200 19,977 19,153 38,904

Profitintheperiod - - - - - 2,216 2,216Currencytranslationdifferences - - (5) - - - (5)Total comprehensive income - - (5) - - 2,216 2,211 Sharebasedpayments - - - - - 84 84Deferredtaxonsharebasedpayments - - - - - (60) (60)IssueofownsharesfromJSOP - 113 - - - 4 117Issueofnewsharesforoptionredemption 9 - - - 334 - 343Total transaction with owners 9 113 - - 334 28 484 Balance at 30 September 2011 1,047 (2,351) (5) 1,200 20,311 21,397 41,599

ConsolidatedInterimStatementofChangesinEquity.Sixmonthsended30September2011

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1. Accounting policies

The financial information for theyearended31March2011setout in thishalf yearly reportdoesnot constitutestatutoryfinancialstatementsasdefinedinsection434oftheCompaniesAct2006.Thefiguresfortheyearended31March2011havebeenextractedfromtheGroupfinancialstatementsforthatyear.ThosefinancialstatementshavebeendeliveredtotheRegistrarofCompaniesandincludedanindependentauditors'report,whichwasunqualifiedanddidnotcontainastatementundersection493oftheCompaniesAct2006.

ThehalfyearlyfinancialinformationhasbeenpreparedusingthesameaccountingpoliciesandestimationtechniquesaswillbeadoptedintheGroupfinancialstatementsfortheyearending31March2012.TheGroupfinancialstatementsfortheyearended31March2011werepreparedunderInternationalFinancialReportingStandardsasadoptedbytheEuropeanUnion.ThesehalfyearlyfinancialstatementshavebeenpreparedonaconsistentbasisandformatwiththeGroupfinancialstatementsfortheyearended31March2011.TheprovisionsofIAS34‘InterimFinancialReporting’havenotbeenappliedinfull.

2. Operating segments

Revenue by Operating Segment

6 months to 30/09/2011 6 months to 30/09/2010 Year to 31/03/2011 External Internal Total External Internal Total External Internal Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000Easyspace 4,171 - 4,171 3,850 - 3,850 7,558 - 7,558Hosting 11,257 456 11,713 7,528 459 7,987 17,694 896 18,590 15,428 456 15,884 11,378 459 11,837 25,252 896 26,148

Geographical InformationIn presenting the consolidated information on a geographical basis, revenue is based on the geographical location of customers. TheUnitedKingdomistheplaceofdomicileoftheparentcompany,iomartGroupplc.AlloftheGroup’srevenueoriginatesfromtheUnitedKingdom.NoindividualcountryotherthantheUnitedKingdomcontributesamaterialamountofrevenuethereforerevenuefromoutsidetheUnitedKingdomhasbeenshownasfromRestoftheWorld.

Analysis of Revenue by Destination 6 months to 6 months to Year to 30/09/2011 30/09/2010 31/03/2011 £’000 £’000 £’000UnitedKingdom 13,810 10,430 22,585RestoftheWorld 1,618 948 2,667Revenue from operations 15,428 11,378 25,252

NotestotheHalfYearlyFinancialInformation.Sixmonthsended30September2011

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3. Earnings per share

Thecalculationsofearningspersharearebasedonthefollowingresultsandnumbers: 6 months to 6 months to Year to 30/09/11 30/09/10 31/03/11Total Operations £’000 £’000 £’000 Profitforthefinancialperiodandbasicearningsattributedtoordinaryshareholders 2,216 1,035 2,862 No No No Weighted average number of ordinary shares: 000 000 000 Calledup,allottedandfullypaidatstartofperiod 103,840 102,753 102,753SharesheldbyEmployeeBenefitTrust (4,914) (4,977) (4,977)Newsharesissuedduringtheperiod(weightedaverage) 327 423 674

Weighted average number of ordinary shares - basic 99,253 98,199 98,450Dilutiveimpactofshareoptions 793 480 958DilutiveimpactofJSOPshares 2,140 4551,026Weighted average number of ordinary shares - diluted 102,186 99,134 100,434 Basicearningspershare 2.23p 1.05p 2.91pDilutedearningspershare 2.17p 1.04p 2.85p

4. Acquisition costs 6 months to 6 months to Year to 30/09/11 30/09/10 31/03/11

Professionalfees 73 60 195Integrationcosts 150 - - Totalacquisitioncostsfortheperiod 223 60 195

Duringtheperiodcostsof£73,000(H12011£60,000)wereincurredinrespectofprofessionalfeesonvariousacquisitions.Inadditiontotheseprofessionalfees,one-offcostsof£150,000(H12011£nil)directlyrelatedtotheintegrationofsuccessfulacquisitionsintotheGroupwerealsoincurred.

5. Taxation 6 months to 6 months to Year to 30/09/11 30/09/10 31/03/11 Taxchargefortheperiod (155) (128) (183)Adjustmentrelatingtopriorperiod 47 - 33Deferredtax(debit)/credit (58) 8 220 Taxation(charge)/creditfortheperiod (166) (120) 70

TheGrouphasadeferred taxassetwhichhasbeenrecognised in respectof tax losseswithin threesubsidiarycompanies,whichhavegeneratedtaxableprofitsandareexpectedtocontinuetodoso.Attheperiodend,theGrouphasunusedtaxlossesof£11.8m(H12011£15.4m)availableforoffsetagainstfutureprofits.Adeferredtaxassethasbeenrecognisedinrespectof£5.4m(H12011£8.8m)ofsuchlosses.


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6. Intangible assets

Development Customer Domain Goodwill costs relationships Software names Total £’000 £’000 £’000 £’000 £’000 £’000 Cost: At1April2010 20,723 760 800 294 31 22,608Additionsintheperiod - - - 193 - 193Developmentcostscapitalised - 163 - - - 163At 30 September 2010 20,723 923 800 487 31 22,964Additionsintheperiod 3,229 - - 4 - 3,233Acquisitionofsubsidiary - - 1,119 - - 1,119Developmentcostscapitalised - 188 - - - 188At 31 March 2011 23,952 1,111 1,919 491 31 27,504Additionsintheperiod 1,195 - - 63 - 1,258Acquisitionofsubsidiary - - 388 - - 388Developmentcostscapitalised - 224 - - - 224At 30 September 2011 25,147 1,335 2,307 554 31 29,374 Accumulated amortisation: At1April2010 - (378) (261) (229) (9) (877)Chargefortheperiod - (134) (108) (45) (5) (292)At 30 September 2010 - (512) (369) (274) (14) (1,169)Chargefortheperiod - (141) (208) (51) (5) (405)At 31 March 2011 - (653) (577) (325) (19) (1,574)Chargefortheperiod - (159) (262) (48) (5) (474)At 30 September 2011 - (812) (839) (373) (24) (2,048) Carrying amount: At 30 September 2011 25,147 523 1,468 181 7 27,326 At31March2011 23,952 458 1,342 166 12 25,930 At30September2010 20,723 411 431 213 17 21,795

GoodwillisallocatedtoindividualCashGeneratingUnits(“CGU”)onthebasisoftheGroup’soperations.Thecarryingvalueofgoodwill by each CGU is as follows: 30/09/11 30/09/10 31/03/11 £’000 £’000 £’000 Cash generating units (CGU)

Easyspace 13,509 12,314 12,314Hosting 11,638 8,409 11,638Intangible assets - goodwill 25,147 20,723 23,952


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7. Property, plant and equipment

Leasehold Freehold improve Datacentre Computer Office Motor property -ments equipment equipment equipment vehicles Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 Cost: At1April2010 837 2,139 8,395 4,684 710 7 16,772Additionsintheperiod - 404 205 1,178 1 - 1,788At 30 September 2010 837 2,543 8,600 5,862 711 7 18,560Additionsintheperiod - 967 195 1,690 9 - 2,861Acquisitionofsubsidiary - 14 - 421 81 55 571Disposalsintheperiod - - - - - (24) (24)At 31 March 2011 837 3,524 8,795 7,973 801 38 21,968 Additionsintheperiod - 66 529 1,606 8 - 2,209Acquisitionofsubsidiary - - - 24 19 - 43At 30 September 2011 837 3,590 9,324 9,603 828 38 24,220 Accumulated depreciation: At1April2010 (20) (458) (1,329) (2,275) (414) - (4,496)Chargefortheperiod (10) (69) (346) (730) (18) (1) (1,174)At 30 September 2010 (30) (527) (1,675) (3,005) (432) (1) (5,670)Chargefortheperiod (10) (66) (363) (1,028) (42) (6) (1,515)Disposalsintheperiod - - - - - 5 5At 31 March 2011 (40) (593) (2,038) (4,033) (474) (2) (7,180)Chargefortheperiod (9) (103) (374) (1,215) (44) (8) (1,753)At 30 September 2011 (49) (696) (2,412) (5,248) (518) (10) (8,933) Carrying amount: At 30 September 2011 788 2,894 6,912 4,355 310 28 15,287 At31March2011 797 2,931 6,757 3,940 327 36 14,788 At30September2010 807 2,016 6,925 2,857 279 6 12,890

8. Contingent consideration due on acquisitions 30/09/11 30/09/10 31/03/11 £’000 £’000 £’000

Contingentconsiderationdueonacquisitions

-TitanInternetLimited - - (600)-SwitchMediaLimited (225) - - Total contingent consideration due on acquisitions (225) - (600)

On14July2011,thefinalinstalmentofcontingentconsiderationof£600,000waspaidinrelationtotheacquisitionofTitanInternetLtd.Thecriteriaforpayingthecontingentconsiderationof£225,000dueontheacquisitiononSwitchMediaLimitedarelistedinNote10andareexpectedtobecompletedwithin12monthsoftheacquisition.


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9. Analysis of change in net cash/(debt) Finance Cash and leases and cash Bank hire equivalents loans purchase Total £’000 £’000 £’000 £’000 At1April2010 5,715 - (1,314) 4,401Inceptionoffinanceleases - - (864) (864)Cashflow 1,358 - 360 1,718At 30 September 2010 7,073 - (1,818) 5,255 Inceptionoffinanceleases - - (347) (347)Newbankloans - (2,000) - (2,000)Acquiredonacquisitionofsubsidiary 126 - - 126Cashflow (335) - 399 64At 31 March 2011 6,864 (2,000) (1,766) 3,098 Inceptionoffinanceleases - - (834) (834)Newbankloans - (1,000) - (1,000)Cashflow 1,747 - 523 2,270At 30 September 2011 8,611 (3,000) (2,077) 3,534

10. AcquisitionTheGroupacquired100%oftheissuedsharecapitalofSwitchMediaLimitedanditssubsidiaries(“SwitchMedia”)on26April2011.Thistransactionhasbeenaccountedforbytheacquisitionmethodofaccounting.

Switch Media supplies domain registration, web hosting and web design services to its client base primarily in the UK and in the RepublicofIrelandandtheacquisitionisinlinewiththeGroup’sstrategytogrowbothorganicallyandbyacquisition.

During the current period the Group incurred £9,000 of third party acquisition related costs in respect of this acquisition.TheseexpensesareincludedinadministrativeexpensesintheGroup’sconsolidatedstatementofcomprehensiveincomefortheperiodended30September2011.Intheprioryear,£76,000ofthirdpartyacquisitionrelatedcostswereincurredandthesewereincludedinadministrativeexpensesintheGroup’sconsolidatedstatementofcomprehensiveincomefortheyearending 31 March 2011.

The following tablesummarises theconsideration transferred toacquireSwitchMediaand theamountsof identifiedassetsacquiredandliabilitiesassumedattheacquisitiondate: £’000Fair value of consideration transferred: Cash 1,025Contingentconsideration 225Total consideration 1,250 Recognised amounts of net assets acquired and liabilities assumed (provisional): Cashandcashequivalents 126Tradeandotherreceivables 36Currentdeferredtaxasset 52Property,plantandequipment 43Intangible assets 388 Tradeandotherpayables (491)Currentdeferredtaxliability (39)Non-currentdeferredtaxliability (60)Totalidentifiableassets 55 Goodwill 1,195 1,250


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TheacquisitionofSwitchMediaincludesacontingentconsiderationarrangementthatrequiresadditionalconsiderationtobepaidbytheGroupforSwitchMediasubjecttotheintegrationofthatbusinessoperationintotheGroup,thetransferofSwitchMedia’s provisioning platforms to existingGroup platforms and the transfer ofSwitchMedia’s server estate to theGroup’sdatacentres.

ThegoodwillarisingontheacquisitionofSwitchMediaisattributabletothespecialised,industryspecificknowledgeoftheman-agementandstaff,thebenefitstotheGroupinmergingthebusinesswithitsexistinginfrastructureandtheanticipatedfutureoperatingsynergiesfromthecombination.Thegoodwillisnotexpectedtobedeductiblefortaxpurposes.

All services supplied by Switch Media are payable in advance and the fair value of the assets does not include any trade receivables.Thefairvalueoftheacquiredcustomerrelationshipsintangibleassetof£388,000isprovisionalpendingafinalvaluation.

Toestimatethefairvalueofthecustomerrelationshipintangibleasset,adiscountedcashflowmethod,specificallytheincomeapproach, was used with reference to the directors’ estimates of the level of revenue which will be generated from them. A post-taxdiscount rateof13.8%wasused for the valuation.Customer relationshipsarebeingamortisedoveranestimateduseful life of 3 years.

Thename,SwitchMediaLimited, isnotactivelyadvertisedorpromoted,withthemajorityofSwitchMedia’sbusinessbeinggeneratedfromexistingcustomersorbymailshotstonewlyregisteredcompanies.SwitchMediahasgivenacommitmenttocustomersnottoshareinformationheldaboutthemwiththirdparties.Novaluehasthereforebeenattributedtoeitherthetradename/brandortothecustomerlistsacquiredattheacquisitiondate.

11. Post balance sheet events

On23November2011,theGroupacquiredtheentireissuedsharecapitalofEQSNLimitedforatotalcashconsiderationofupto£2.5m.Ofthetotalconsiderationof£2.5m,£2.3mwaspaidoncompletionandafurtheramountofupto£0.2mispayablesubjecttothesuccessful integrationoftheoperationsofEQSNLimitedintotheGroup.Inaddition,atthedateofacquisition,EQSNLimitedhadapproximately£0.2mofnetcash.On24November2011,theGroupacquiredtheentireissuedsharecapitalofGlobalGoldHoldingsLimitedforatotalcashconsiderationofupto£1.2m.Ofthetotalconsiderationof£1.2m,£0.7mwaspaidoncompletionanda furtheramountofup to£0.5m ispayablesubject to certainperformanceandothercriteriabeingmet.

12. Availability of half yearly reports

Halfyearlyreportswillbesenttoallshareholderson16December2011.CopiesofthehalfyearlyreportwillbeavailableforcollectionfromtheofficesofPeelHuntLLP,120LondonWall,London,EC2Y5ET,foraperiodofonemonthfromthedateofdes-patch and in accordance with Rules 20 and 26 of the AIM Rules, available from the company’s website at www.iomart.com.


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Introduction

Wehavebeenengagedbythecompanytoreviewthefinancialinformationinthehalf-yearlyfinancialreportforthesixmonthsended 30 September 2011 which comprises the consolidated interim statement of comprehensive income, the consolidated interim statement of financial position, the consolidated interim statement of cash flows, the consolidated interim statement of changesinequityandtherelatednotes1to12setoutonpages7to17.Wehavereadtheotherinformationcontainedinthehalf yearly financial reportwhich comprisesonly the interim resultsannouncementand the chief executive’s statementandconsidered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial information.

ThisreportismadesolelytothecompanyinaccordancewithguidancecontainedinISRE(UKandIreland)2410,"ReviewofInterimFinancialInformationperformedbytheIndependentAuditoroftheEntity".Ourreviewworkhasbeenundertakensothatwemightstatetothecompanythosematterswearerequiredtostatetotheminareviewreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthanthecompany,forourreviewwork,forthisreport,orfortheconclusionwehaveformed.

Directors' Responsibilities

Thehalf-yearlyfinancialreportistheresponsibilityof,andhasbeenapprovedby,thedirectors.TheAIMrulesoftheLondonStockExchangerequirethattheaccountingpoliciesandpresentationappliedtotheinterimfiguresareconsistentwiththosewhich will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.

AsdisclosedinNote1,theannualfinancialstatementsoftheGrouparepreparedinaccordancewithIFRSsasadoptedbytheEuropeanUnion.Thefinancialinformationinthehalf-yearlyfinancialreporthasbeenpreparedinaccordancewiththebasisofpreparationinNote1.

Our Responsibility

OurresponsibilityistoexpresstotheCompanyaconclusiononthefinancialinformationinthehalf-yearlyfinancialreportbasedon our review.

Scope of Review

WeconductedourreviewinaccordancewithInternationalStandardonReviewEngagements(UKandIreland)2410,"ReviewofInterimFinancialInformationPerformedbytheIndependentAuditoroftheEntity"issuedbytheAuditingPracticesBoardforuseintheUnitedKingdom.Areviewofinterimfinancialinformationconsistsofmakingenquiries,primarilyofpersonsrespon-sible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scopethananauditconductedinaccordancewithInternationalStandardsonAuditing(UKandIreland)andconsequentlydoesnot enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly,wedonotexpressanauditopinion. Conclusion

Basedonourreview,nothinghascometoourattentionthatcausesustobelievethatthefinancialinformationinthehalf-yearlyfinancialreportforthesixmonthsended30September2011isnotprepared,inallmaterialrespects,inaccordancewiththebasisofaccountingdescribedinNote1.

GRANTTHORNTONUKLLPREGISTEREDAUDITORCHARTEREDACCOUNTANTSGlasgow

28November2011

IndependantReviewReporttoiomartGroupPlc

18


Easyspace asked local school children to create their sculpture for 2011conservation campaign Jungle City.

“TheJungleCityprojectwasthetalkoftheschoolandwearesoimpressedby what the pupils created,” said depute head teacher Carolyn Randall.

“ It will have pride of place and will help our pupils learn about the challenges faced by animals around the world.”

“iomart Hosting absolutely understand what we want and are preparedtocreatethebespokeinfrastructurethatweneed.”

Andy Theyers, Director, Isotoma

21

Group Contact Information

Rapidswitch

* : [email protected]

www.rapidswitch.com

Westcoastcloud


www.westcoastcloud.com

Switch Media


www.switchmedia.com

PrintedbyCCB,FSCcertifiedcolourprinters.ThisreportisprintedonElimentalChlorineFree(ECF)paper,fromsustainablemanagedforests.Designbyiomartgroupplc.All rights reserved. © iomartGroupplc2011.Allothertrademarksandregisteredtrademarksarethepropertyoftheirrespectiveowners.

iomart Group plc, Lister Pavilion, Kelvin Campus, West of Scotland Science Park, Glasgow, G20 0SP. www.iomart.com

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