CHIEF FINANCIAL OFFICER'S REPORT

Financial Review

Key Performance indicators

			2021	2020
Revenue			£111.9m	£112.6m
% of recurring revenue1			90%	85%
Gross Profit %2			60.5%	60.8%
Adjusted EBITDA3			£41.4m	£43.5m
Adjusted EBITDA margin %4			37.0%	38.6%
Adjusted profit before tax5			£19.6m	£22.8m
Adjusted profit before tax margin %6			17.5%	20.2%
Profit before tax			£12.5m	£16.8m
Profit before tax margin %7			11.1%	14.9%
Basic earnings per share			9.3p	12.5p
Adjusted earnings per share (diluted) 8			14.4p	16.3p
Cash flow from operations / Adjusted EBITDA %9			106%	95%
Net debt / Adjusted EBITDA leverage ratio10			1.3	1.3

See page 14 for definition of alternative performance measures

Revenue

Total revenue for the year is consistent with the prior year at £111.9m (2020: £112.6m), with growth from the acquisitions made in the prior year offset by, to the largest extent, a reduction in non-recurring revenue as a result of the impact of Covid-19 on customers, plus a £0.9m reduction within Easyspace, our domain name and mass hosting business, in line with our expectations.

Cloud Services

Overall, our Cloud Services segment grew revenues by £0.1m. For the first time, we have provided some additional disaggregation of revenue which is relevant for the Cloud Services segment. The following is the disaggregation of the Cloud Services revenue of £99.9m (2020: £99.8m):

Disaggregation of Cloud Services revenue			2021 £'000	2020 £'000
Cloud managed services			57,961	54,590
Self-managed infrastructure			30,311	28,009
Non-recurring revenue			11,672	17,190
			99,944	99,789

 

Cloud managed services

Cloud managed services is the area we have focused our development and commercial efforts on and where we have consistently achieved organic growth. Growth was achieved both organically (£1.8m) and through the acquisition of ServerChoice on the 28 February 2020. The strongest element of new orders in the year was from our existing customer base as they required increased capacity or additional services, with a lower contribution from new client wins.  We believe the growth would have been higher if Covid-19 had not delayed the larger digital transformation projects which is often the catalyst for attracting new customers to iomart. We experienced higher than normal levels of non-renewals in the final months of the year, which while not significantly impacting recognised revenue in 2021, has resulted in an opening recurring revenue level within cloud managed services going into the new year at a level similar to 12 months ago.

Self-managed infrastructure

Over the previous two years we have experienced some reduction in revenue within the self-managed infrastructure activity, predominantly from the large tail of smaller customers within some of the acquired brands. Overall, this segment grew in the year, due to the contribution from the Memset acquisition, which was made on the 12 March 2020, however organic revenue reduced by £2.3m.

 

 

Non-recurring revenue

The largest area of revenue reduction in the current year was in non-recurring revenue in respect of on-premise hardware and software solution sales. This represented a £5.5m net reduction in revenue.  This activity saw the most immediate impact from Covid-19 as customers simply delayed IT expenditure.

Easyspace

Our Easyspace segment has performed in line with expectations over the year with revenues reducing by £0.9m (6.7%) to £11.9m (2020: £12.8m).  The domain name and web hosting business is a growing market but one in which we concluded that the marketing spend to compete with the global players was not the best use of our resources. 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 etc 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 3^rd 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 excellent revenue visibility.

Gross Profit

Gross profit in the year, which is calculated by deducting from revenue variable cost of sales such as domain costs, public cloud costs, the cost of hardware and software sold, power, sales commission and the relatively fixed costs of operating our data centres, reduced by £0.9m to £67.6m (2020: £68.5m). In percentage terms, gross margin² was broadly stable at 60.5% (2020: 60.8%), however, the movement in the year is a combination of a reduction in on-premise hardware and software solution sales which are typically lower gross margin given the inclusion of the reselling element of their solutions, offset by initial lower contribution levels on some of the larger managed cloud solutions compared to margins from the self-managed infrastructure only deals made in previous years.

We have not seen any significant individual price change in any of the components of the purchased cost base in the last 12 months, although as more complex solutions are designed for customers we generally see more bought in recurring costs being introduced to our cost of sales.

Adjusted EBITDA³

The Group's adjusted EBITDA reduced by 4.8% to £41.4m (2020: £43.5m) which in adjusted EBITDA margin⁴ terms translates to 37.0% (2020: 38.6%). The impact of the acquisitions is the main factor behind the increase in the administration expense (before depreciation, amortisation, share based payment charges and acquisition cost) of £1.2m versus the previous year comparative with a small £0.2m saving within the underlying business. 

Cloud Services segment saw a 4.3% reduction in adjusted EBITDA to £40.5m (2020: £42.3m). In percentage terms the Cloud Services margin decreased to 40.5% (2020: 42.4%). This adjusted EBITDA profitability reflects the reducing revenue contribution from the higher margin legacy self-managed infrastructure, which cannot be fully replaced by the initial profitability of wins within the more complex managed cloud services, along with some investments in operations in the year. Although at a lower overall level, stability was achieved during the year, with the second half adjusted EBITDA margin being consistent with those achieved in the first half of the year.

The Easyspace segment's adjusted EBITDA was £5.3m (2020: £5.6m) reflecting the impact of slightly lower revenue this year offset with some improvement in gross margin due to the specific bundle of packages sold to hosting customers.  In percentage terms the adjusted EBITDA margin increased to 44.8% (2020: 44.2%).

Group overheads remained stable at £4.4m (2020: £4.4m). 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 £16.9m (2020: £15.6m) has increased by £1.3m in the year, driven by the acquired asset base of the Memset and ServerChoice acquisitions at the end of last year. The depreciation charge as a percentage of recurring revenue is 16.8% which is broadly consistent with prior year of 16.4%. 

The charge for amortisation of intangibles, excluding amortisation of intangible assets resulting from acquisitions ("amortisation of acquired intangible assets"), of £2.9m (2020: £2.9m) has remained stable year on year.

Finance costs of £2.0m (2020: £2.2m), has reduced due to lower bank loan interest as LIBOR rates fell. 

After deducting the charges for depreciation, amortisation (excluding the charges for the amortisation of acquired intangible assets) and finance costs from the adjusted EBITDA, the Group's adjusted profit before tax reduced to £19.6m (2020: £22.8m), representing an adjusted profit before tax margin⁶ of 17.5% (2020: 20.2%).

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			2021 £'000	2020 £'000
Adjusted profit before tax5			19,628	22,768
Less: Amortisation of acquired intangible assets			(5,457)	(6,159)
Less: Acquisition costs			(493)	(438)
Less: Share-based payments			(1,247)	(1,243)
Add: Gain on revaluation of contingent consideration			33	1,856
Profit before tax			12,464	16,784

 

The adjusting items are: charges for the amortisation of acquired intangible assets of £5.5m (2020: £6.2m) with the reduction being from expiry of the amortisation charge on earlier acquisitions; acquisition costs of £0.5m (2020: £0.4m) and share-based payment charges of £1.2m (2020: £1.2m).

In addition, the adjusting items also include a minor gain on the revaluation of contingent consideration in the year on the prior year acquisitions.  During the year to 31 March 2020, the equivalent value was higher at £1.9m which related to the reduction in the earn-out payment on the December 2019 LDeX acquisition.

After deducting these items from the adjusted profit before tax, the reported profit before tax was £12.5m (2020: £16.8m).  In percentage terms the profit before tax margin⁷ was a reduction to 11.1% (2020: 14.9%) with one third of the reduction coming from a one off gain on contingency consideration in prior year not repeated, with the majority of the balance driven by the trading result in the year.

Taxation

The tax charge for the year is £2.3m (2020: £3.1m). The tax charge for the year is made up of a corporation tax charge of £3.5m (2020: £3.6m) with a deferred tax credit of £1.2m (2020: £0.5m). The effective rate of tax for the year is 18.1% (2020: 18.7%).  The increase to a 25% UK corporation tax rate was not substantively enacted at 31 March 2021 consequently, at the year end, the deferred tax balances have been calculated with a 19% rate. We believe the UK headline corporation tax rate, is considered a reasonable recurring effective tax rate for underlying profits. Further explanation of the tax charge for the year is given in note 4. 

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 from total operations of £10.2m (2020: £13.6m).

Earnings per share

The calculation of both adjusted earnings per share and basic earnings per share is included at note 6.

Basic earnings per share from continuing operations was 9.3p (2020: 12.5p), 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, the gain on the revaluation of contingent consideration, and the tax effect of these items was 14.4p (2020: 16.3p), a reduction of 11.7%.

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. We have reviewed our dividend policy in the year and with the continued strong level of cash generation in the business are increasing the maximum pay-out policy from 40% to 50% of adjusted diluted earnings per share. This amendment allows the Directors to propose a final dividend of 4.50p which is above the prior year of 3.93p and we believe is fully appropriate given the recurring revenue nature of the Group, the level of operating cash which we deliver, the low level of indebtedness within the Group and the fact we have not utilised any of the government furlough schemes. As a result, along with the interim dividend of 2.60p (2020: 2.60p), which was paid in January 2021, the total dividend for the year is 7.10p (2020: 6.53p), an increase of 8.7%.

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 £43.7m (2020: £41.3m) which represents a 106% conversion⁹ of adjusted EBITDA (2020: 95%). During the year the Group received £2.3m of cash deposit back from our landlord as part of the negotiation of the extension of the London data centre lease to June 2035. Adjusting for this one item takes the EBITDA conversion to cash ratio to 100% in the year. This strong level of cash flow conversion has been a constant feature over the years, recognising the strength of our business model and cash cycle. 

 

Payments of taxation in the year was £1.1m lower at £3.6m (2020: £4.7m) and results in a net cash flow from operating activities in the year of £40.1m (2020: £36.6m), an increase of 9.4%.

Cash flow from investing activities

Our strategy is to continue to reinvest some of our strong operating cash flow we generate back into the business both in the form of internal investments into our global infrastructure but also in the continuation of our disciplined acquisition strategy.

The Group invested a total of £19.2m (2020: £21.3m) during the 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 £15.2m (2020: £14.7m) on assets, net of related lease drawdowns, trade creditor movements and non-cash reinstatement provisions.  Most of the spend in the year was on operational items such as servers and storage to support customer deployments.  Project type capital expenditure on the infrastructure was £0.7m higher than last year. This included payments associated with the investment in the London data centre chiller replacement and the network upgrade in the last quarter of the year.

Expenditure was also incurred on development costs of £1.3m (2020: £1.4m) and on intangible assets of £0.6m (2020: £1.1m).

We made no acquisitions in the last year (2020: £4.1m of payments, net of cash acquired).  During the year we incurred £2.4m of expenditure in respect of contingent consideration due on previous year acquisitions (2020: £nil). As we have outlined in our strategy we do expect M&A activity will continue to support and accelerates our organic growth ambitions over the coming five years. 

Cash flow from financing activities

Drawdowns of £1.2m (2020: £6.2m) were made from the revolving credit facility in the year to fund the payment of contingent consideration due on acquisitions.  Bank loan repayments of £1.2m (2020: £2.0m) were made in the year thus the closing drawn bank loan remains unchanged at £52.8m (2020: £52.8m). Cash received in the year from issue of shares was £0.4m (2020: £0.6m). We also made dividend payments of £7.1m (2020: £8.3m); paid finance costs of £1.1m (2020: £1.7m); and made lease repayments of £5.4m (2020: £4.7m). 

Net cash flow

As a consequence, our overall cash generated during the year was £7.5m (2020: £5.4m) which resulted in cash and cash equivalent balances at the end of the year of £23.0m (2020: £15.5m).

 

 

 

Net Debt

The net debt position of the Group at the end of the year was £54.6m (2020: £57.6m) as shown below. The increase in the lease liability to £24.9m (2020: £20.3m) primarily relates to extensions to existing lease arrangements, including the five-year extension to our London data centre. The net debt position represents a multiple of 1.3 times¹⁰ (2020: 1.3 times) our adjusted EBITDA which we believe is a comfortable level of debt to carry given the recurring revenue business model and strong cash generation in the business.

			2021 £'000	2020 £'000
Bank revolver loan			52,791	52,791
Lease liabilities			24,867	20,347
Less: cash and cash equivalents			(23,038)	(15,497)
Net Debt			54,620	57,641

 

The banking facility, which provides an £80m revolving credit facility, matures in September 2022.

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. This resilience has been proven during the last 12 months in what has been an unprecedented period globally with the challenges caused by the Covid-19 pandemic. 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

15 June 2021

 

 

Definition of alternative performance measures:

¹ Recurring revenue is the revenue the 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 gain on the revaluation of contingent consideration. 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 defined on page 9) / Revenue (as disclosed in the consolidated statement of comprehensive income) as a %

⁵ Adjusted profit before tax (as disclosed on page 12) is profit before tax, amortisation charges on acquired intangible assets, share-based payment charges, acquisition costs and gain on revaluation of contingent consideration.

⁶ Adjusted profit before tax margin % is defined as adjusted PBT (as defined on page 9) / 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 and gain on revaluation of contingent consideration and the tax impact of adjusted items /weighted average number of ordinary shares - diluted (as disclosed in note 6)

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 defined on page 9) as a %

¹⁰ Net debt / Adjusted EBIDTA level ratio is defined as Net Debt (as disclosed on page 14) / Adjusted EBITDA (as defined on page 9) 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 MARCH 2021

 

			Note	2021  £'000	2020  £'000
Revenue				111,883	112,581
Cost of sales				(44,241)	(44,093)
Gross profit				67,642	68,488
Administrative expenses				(53,230)	(51,387)
Operating profit				14,412	17,101
Analysed as:
Earnings before interest, tax, depreciation, amortisation, acquisition costs and share-based payments				41,408	43,510
Share-based payments				(1,247)	(1,243)
Acquisition costs				(493)	(438)
Depreciation			8	(16,882)	(15,635)
Amortisation - acquired intangible assets			7	(5,457)	(6,159)
Amortisation - other intangible assets			7	(2,917)	(2,934)
Gain on revaluation of contingent consideration				33	1,856
Finance income				19	39
Finance costs				(2,000)	(2,212)
Profit before taxation				12,464	16,784
Taxation			4	(2,260)	(3,135)
Profit for the year attributable to equity holders of the parent				10,204	13,649
Other comprehensive income
Amounts which may be reclassified to profit or loss
Currency translation differences				(94)	98
Other comprehensive income for the year				(94)	98
Total comprehensive income for the year attributable to equity holders of the parent				10,110	13,747
Basic and diluted earnings per share
Basic earnings per share			6	9.3p	12.5p
Diluted earnings per share			6	9.1p	12.2p

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2021

 

				2021	2020
		Note		£'000	£'000
ASSETS
Non-current assets
Intangible assets - goodwill		7		86,479	86,479
Intangible assets - other		7		18,101	24,631
Trade and other receivables				502	2,760
Property, plant and equipment		8		77,012	72,344
Deferred tax				138	-
				182,232	186,214
Current assets
Cash and cash equivalents				23,038	15,497
Trade and other receivables				22,979	23,237
Current tax asset				235	-
				46,252	38,734
Total assets				228,484	224,948
LIABILITIES
Non-current liabilities
Trade and other payables				(2,662)	(2,283)
Non-current borrowings		9		(74,221)	(70,109)
Provisions				(2,097)	(1,956)
Deferred tax		5		-	(1,146)
				(78,980)	(75,494)
Current liabilities
Contingent consideration due on acquisitions		11		-	(2,480)
Trade and other payables				(29,495)	(31,948)
Current tax liabilities				-	(3)
Current borrowings		9		(3,437)	(3,029)
				(32,932)	(37,460)
Total liabilities				(111,912)	(112,954)
Net assets				116,572	111,994
EQUITY
Share capital				1,097	1,092
Own shares				(70)	(70)
Capital redemption reserve				1,200	1,200
Share premium				22,495	22,147
Merger reserve				4,983	4,983
Foreign currency translation reserve				(44)	50
Retained earnings				86,911	82,592
Total equity				116,572	111,994

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED 31 MARCH 2021

 

			Note	2021 £'000	2020 £'000
Profit before taxation				12,464	16,784
Gain on revaluation of contingent consideration				(33)	(1,856)
Finance costs - net				1,981	2,173
Depreciation			8	16,882	15,635
Amortisation			7	8,374	9,093
Share-based payments				1,247	1,243
Movement in trade receivables				2,516	(1,107)
Movement in trade payables				268	(627)
Cash flow from operations				43,699	41,338
Taxation paid				(3,643)	(4,719)
Net cash flow from operating activities				40,056	36,619
Cash flow from investing activities
Purchase of property, plant and equipment			8	(15,192)	(14,688)
Proceeds received from disposal of property, plant and equipment				260	-
Development costs			7	(1,306)	(1,405)
Purchase of intangible assets				(561)	(1,065)
Proceeds received from disposal of intangible asset				73	-
Payments for current period acquisitions net of cash acquired				-	(4,156)
Contingent consideration paid				(2,447)	-
Finance income received				19	39
Net cash used in investing activities				(19,154)	(21,275)
Cash flow from financing activities
Issue of shares				353	636
Drawdown of bank loans				1,150	6,150
Repayment of lease liabilities			10	(5,435)	(4,686)
Repayment of bank loans				(1,150)	(2,000)
Finance costs paid				(1,147)	(1,734)
Dividends paid				(7,132)	(8,282)
Net cash used in financing activities				(13,361)	(9,916)
Net increase in cash and cash equivalents				7,541	5,428
Cash and cash equivalents at the beginning of the year				15,497	10,069
Cash and cash equivalents at the end of the year				23,038	15,497

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 MARCH 2021

 

			Share capital	Own shares EBT	Foreign currency translation reserve	Capital redemption reserve	Share premium account	Merger reserve	Retained earnings	Total
			£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2019			1,085	(70)	(48)	1,200	21,518	4,983	75,729	104,397
Profit for the year			-	-	-	-	-	-	13,649	13,649
Currency translation differences			-	-	98	-	-	-	-	98
Total comprehensive income			-	-	98	-	-	-	13,649	13,747
Dividends - final (paid)			-	-	-	-	-	-	(5,448)	(5,448)
Dividends - interim (paid)			-	-	-	-	-	-	(2,834)	(2,834)
Share-based payments			-	-	-	-	-	-	1,243	1,243
Deferred tax on share-based payments			-	-	-	-	-	-	253	253
Issue of share capital			7	-	-	-	629	-	-	636
Total transactions with owners			7	-	-	-	629	-	(6,786)	(6,150)
Balance at 31 March 2020			1,092	(70)	50	1,200	22,147	4,983	82,592	111,994
Profit for the year			-	-	-	-	-	-	10,204	10,204
Currency translation differences			-	-	(94)	-	-	-	-	(94)
Total comprehensive income			-	-	(94)	-	-	-	10,204	10,110
Dividends - final (paid)			-	-	-	-	-	-	(4,287)	(4,287)
Dividends - interim (paid)			-	-	-	-	-	-	(2,845)	(2,845)
Share-based payments			-	-	-	-	-	-	1,247	1,247
Issue of share capital			5	-	-	-	348	-	-	353
Total transactions with owners			5	-	-	-	348	-	(5,885)	(5,532)
Balance at 31 March 2021			1,097	(70)	(44)	1,200	22,495	4,983	86,911	116,572

 

 

 

 

 

 

 

 

 

NOTES TO THE FINANCIAL INFORMATION          

YEAR ENDED 31 MARCH 2021

 

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.

2.         ACCOUNTING POLICIES

 

Basis of preparation

The financial information set out in the announcement does not constitute the Group's statutory accounts for the years ended 31 March 2021 and 31 March 2020 within the meaning of section 434 of the Companies Act 2006. The financial information for the year ended 31 March 2020 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The financial information for the year ended 31 March 2021 is derived from the statutory accounts for that year which were approved by the Directors on 15 June 2021. The statutory accounts for the year ended 31 March 2021 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors reported on those accounts; their report was unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

The Group's financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) in conformity with the requirements of the Companies Act 2006. 

The Group's financial statements have been prepared on the historical cost basis, except for the valuation of certain financial instruments that are measured at fair values at the end of each reporting period.

 

Adoption of new and revised Standards - Amendments to IFRS that are mandatorily effective for the current year

The Group applied the amendments to IAS 1 and IAS 8 Definition of Material for the first time as this is effective for annual periods beginning on or after 1 January 2020.  The amendments provide a new definition of material that states, "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. The Directors consider that this amendment had no impact on the financial statements of the Group, nor is there expected to be any future impact to the Group.

 

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 which 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), SystemsUp, Cristie Data, Sonassi, LDeX, Bytemark and Memset.

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 and 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.

Operating Segments

 

Revenue by Operating Segment

 

					2021	2020
					£'000	£'000
Easyspace					11,939	12,792
Cloud Services					99,944	99,789
					111,883	112,581

 

Cloud Services revenue during the year can be further disaggregated as follows:

 

					2021	2020
					£'000	£'000
Cloud managed services					57,961	54,590
Self-managed infrastructure					30,311	28,009
Non-recurring revenue					11,672	17,190
					99,944	99,789

 

The nature of these three offerings are explained within the Chief Executive Officer report on page 7.

 

Recurring and Non-recurring Revenue

The amount of recurring and non-recurring revenue recognised during the year can be summarised as follows:

 

					2021	2020
					£'000	£'000
Recurring - over time					100,211	95,391
Non-recurring - point in time					11,672	17,190
					111,883	112,581

 

Geographical Information

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

					2021	2020
					£'000	£'000
United Kingdom					97,113	95,333
Rest of the World					14,770	17,248
Revenue from operations					111,883	112,581

 

 

 

 

 

 

 

Profit by Operating Segment

 

	2021			2020
	Adjusted EBITDA	Depreciation,  amortisation, acquisition costs and share-based payments	Operating profit/(loss)	Adjusted EBITDA	Depreciation,  amortisation, acquisition costs and share-based payments	Operating profit/(loss)
	£'000	£'000	£'000	£'000	£'000	£'000
Easyspace	5,343	(1,165)	4,178	5,649	(1,459)	4,190
Cloud Services	40,482	(24,091)	16,391	42,307	(23,269)	19,038
Group overheads	(4,417)	-	(4,417)	(4,446)	-	(4,446)
Acquisition costs	-	(493)	(493)	-	(438)	(438)
Share-based payments	-	(1,247)	(1,247)	-	(1,243)	(1,243)
	41,408	(26,996)	14,412	43,510	(26,409)	17,101
Gain on revaluation of contingent consideration			33			1,856
Group interest and tax			(4,241)			(5,308)
Profit for the year			10,204			13,649

Group overheads, acquisition costs, share-based payments, interest and tax are not allocated to segments.

 

4.     TAXATION

 

				2021 £'000	2020 £'000
Corporation Tax:
Tax charge for the year				(3,448)	(3,976)
Adjustment relating to prior years				(100)	357
Total current taxation charge				(3,548)	(3,619)
Deferred Tax: Origination and reversal of temporary differences				1,266	367
Adjustment relating to prior years				18	266
Effect of different statutory tax rates of overseas jurisdictions				4	(13)
Effect of changes in tax rates				-	(136)
Total deferred taxation credit				1,288	484
Total taxation charge				(2,260)	(3,135)

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:

				2021 £'000	2020 £'000
Profit before tax				12,464	16,784
Tax charge @ 19% (2020: 19%)				2,368	3,189
Expenses disallowed for tax purposes				33	20
Tax effect of net (loss)/gain on revaluation of contingent consideration				(6)	(353)
Adjustments in current tax relating to prior years				100	(357)
Tax effect of different statutory tax rates of overseas jurisdictions				10	6
Movement in deferred tax relating to changes in tax rates				-	136
Tax effect of share-based remuneration				(259)	651
Movement in unprovided deferred tax related to development costs				-	40
Movement in unprovided deferred tax related to property, plant and equipment				32	69
Movement in deferred tax relating to prior years				(18)	(266)
Total taxation charge for the year				2,260	3,135

The weighted average applicable tax rate for the year ended 31 March 2021 was 19% (2020: 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 18.1% (2020: 18.7%).  

Deferred tax assets and liabilities at 31 March 2021 have been calculated based on the rate of 19% enacted at the balance sheet date (2020: 19%).  It is expected that the 25% UK corporation tax rate announced by the UK government in March 2021 will be enacted in the next financial year.

 

 

 

 

5.         DEFERRED TAX

 

The Group recognised deferred tax assets and liabilities as follows:

				2021 £'000	2020 £'000
Share-based remuneration				1,332	1,069
Capital allowances temporary differences				1,363	1,364
Deferred tax on acquired assets with no capital allowances				(40)	(88)
Deferred tax on customer relationships				(2,356)	(3,298)
Deferred tax on intangible software				(161)	(193)
Deferred tax asset/(liability)				138	(1,146)

At the year end, the Group had no unused tax losses (2020: £nil) available for offset against future profits.

The movement in the deferred tax account during the year was:

	Share-based remuneration £'000	Capital allowances temporary differences £'000	Development costs £'000	Deferred tax on acquired assets with no capital allowances £'000	Customer relationships £'000	Intangible software £'000	Total £'000
Balance at 1 April 2019	1,378	1,632	(422)	(157)	(3,173)	(197)	(939)
Acquired on acquisition of subsidiaries	-	(82)	-	-	(875)	-	(957)
Charged to equity	253	-	-	-	-	-	253
Credited/(charged) to statement of comprehensive income	(724)	(373)	472	87	1,131	27	620
Effect of different tax rates of overseas jurisdictions	-	7	-	-	6	-	13
Effect of changes in tax rates	162	180	(50)	(18)	(387)	(23)	(136)
Balance at 31 March 2020	1,069	1,364	-	(88)	(3,298)	(193)	(1,146)
Credited/(charged) to statement of comprehensive income	263	(8)	-	48	953	32	1,288
Effect of different tax rates of overseas jurisdictions	-	7	-	-	(11)	-	(4)
Balance at 31 March 2021	1,332	1,363	-	(40)	(2,356)	(161)	138

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 in the prior year 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.

 

6.         EARNINGS PER 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. 

 

Total operations				2021 £'000	2020 £'000
Profit for the financial year and basic earnings attributed to ordinary shareholders				10,204	13,649
Weighted average number of ordinary shares:				No 000	No 000
Called up, allotted and fully paid at start of year				109,160	108,510
Own shares held by Employee Benefit Trust				(141)	(141)
Issued share capital in the year				230	436
Weighted average number of ordinary shares - basic				109,249	108,805
Dilutive impact of share options				2,416	2,861
Weighted average number of ordinary shares -diluted				111,665	111,666
Basic earnings per share				9.3 p	12.5 p
Diluted earnings per share				9.1 p	12.2 p

 

Adjusted earnings per share				2021 £'000	2020 £'000
Profit for the financial year and basic earnings attributed to ordinary shareholders				10,204	13,649
-        Amortisation of acquired intangible assets				5,457	6,159
-        Acquisition costs				493	438
-        Share-based payments				1,247	1,243
-        Gain on revaluation of contingent consideration				(33)	(1,856)
-        Tax impact of adjusted items				(1,341)	(1,406)
Adjusted profit for the financial year and adjusted earnings attributed to ordinary shareholders				16,027	18,227
Adjusted basic earnings per share				14.7 p	16.8 p
Adjusted diluted earnings per share				14.4 p	16.3 p

 

7.         INTANGIBLE ASSETS

 

	Goodwill	Development costs	Acquired Customer relationships	Software	Beneficial contracts	Domain names & IP addresses	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Cost
At 1 April 2019	85,382	9,193	52,766	8,039	86	280	155,746
Additions	-	-	-	2,490	-	-	2,490
Currency translation differences	-	-	38	(33)	-	-	5
Acquired on acquisition of subsidiaries	1,097	-	4,610	-	-	56	5,763
Disposals	-	-	-	(173)	-	-	(173)
Development cost capitalised	-	1,405	-	-	-	-	1,405
At 31 March 2020	86,479	10,598	57,414	10,323	86	336	165,236
Additions	-	-	-	561	-	-	561
Currency translation differences	-	-	(78)	(57)	-	-	(135)
Disposals	-	-	(73)	-	-	-	(73)
Development cost capitalised	-	1,306	-	-	-	-	1,306
At 31 March 2021	86,479	11,598	57,263	10,827	86	336	166,895
Accumulated amortisation:
At 1 April 2019	-	(6,866)	(33,795)	(4,164)	(48)	(280)	(45,153)
Charge for the year	-	(1,507)	(6,159)	(1,420)	(7)	-	(9,093)
Currency translation differences	-	-	-	(53)	-	-	(53)
Disposals	-	-	-	173	-	-	173
At 31 March 2020	-	(8,373)	(39,954)	(5,464)	(55)	(280)	(54,126)
Charge for the year	-	(1,446)	(5,457)	(1,455)	(7)	(9)	(8,374)
Currency translation differences	-	-	82	90	-	-	172
Disposals	-	-	13	-	-	-	13
At 31 March 2021	-	(9,819)	(45,316)	(6,829)	(62)	(289)	(62,315)
Carrying amount:
At 31 March 2021	86,479	2,085	11,947	3,998	24	47	104,580
At 31 March 2020	86,479	2,225	17,460	4,859	31	56	111,110

 

Of the total additions in the year of £561,000 (2020: £2,490,000), no amounts related to leases under IFRS 16 (note 10) (2020: £1,425,000).  There were no amounts included in trade payables at the year end (2020: £nil). Consequently, the consolidated statement of cash flows discloses a figure of £561,000 (2020: £1,065,000) as the cash outflow in respect of intangible asset additions 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: £1.9m in relation to the acquisitions of Memset Limited with a remaining useful life of 7 years, the managed private cloud business of ServerChoice Limited of £1.8m with a useful life of 7 years, Bytemark Limited with a net book value of £0.8m and LDeX Group Limited of £2.0m both with a remaining useful life of 6 years, Sonassi Limited of £2.5m, Dediserve Limited of £0.9m, SimpleServers Limited of £0.5m all three with a remaining useful life of 5 years.

 

 

7.         INTANGIBLE ASSETS (CONTINUED)

 

During the year, goodwill was reviewed for impairment in accordance with IAS 36 "Impairment of Assets". No impairment charges (2020: £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.

 

The carrying value of goodwill by each CGU is as follows:

Cash Generating Units (CGU)				2021 £'000	2020 £'000
Easyspace				23,315	23,315
Cloud Services				63,164	63,164
				86,479	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. As outlined previously, management remain confident in sustaining such levels of growth despite the on-going Covid-19 pandemic. The impact of the pandemic has been considered in great detail when finalising these projections and they are perceived to be a reliable basis upon which to base our impairment testing.

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. These segments 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 2021	31 March 2020	31 March 2021	31 March 2020
Discount rate				14.0%	13.1%	14.0%	12.5%
Future perpetuity rate				0.0%	0.0%	2.5%	2.0%
Initial period for which cash flows are estimated (years)				5	5	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.

 

8.     PROPERTY, PLANT AND EQUIPMENT

 

	Freehold property		Leasehold property and improve-ments	Data centre equipment	Computer equipment	Office equipment	Motor vehicles	Total
	£'000		£'000	£'000	£'000	£'000	£'000	£'000
Cost:
At 1 April 2018	8,910		7,943	23,457	81,611	2,920	31	124,872
Additions in the year	-		21,287	1,482	14,847	57	11	37,684
Acquisition of subsidiaries	-		457	1,192	1,540	-	2	3,191
Disposals in the year	-		(16)	(18)	(622)	(206)	(21)	(883)
Currency translation differences	-		-	-	216	-	-	216
At 31 March 2020	8,910		29,671	26,113	97,592	2,771	23	165,080
Additions in the year	-		9,157	1,966	10,504	40	-	21,667
Disposals in the year	(179)		-	-	-	-	-	(179)
Currency translation differences	-		(134)	-	127	-	-	(7)
At 31 March 2021	8,731		38,694	28,079	108,223	2,811	23	186,561
Accumulated depreciation:
At 1 April 2019	(418)		(3,510)	(13,635)	(58,372)	(1,868)	(24)	(77,827)
Charge for the year	(279)		(3,610)	(1,853)	(9,625)	(262)	(6)	(15,635)
Disposals in the year	-		16	18	622	206	21	883
Currency translation differences	-		-	-	(157)	-	-	(157)
At 31 March 2020	(697)		(7,104)	(15,470)	(67,532)	(1,924)	(9)	(92,736)
Charge for the year	(265)		(4,541)	(1,753)	(10,089)	(226)	(8)	(16,882)
Disposals in the year	25		-	-	-	-	-	25
Currency translation differences	-		(30)	-	74	-	-	44
At 31 March 2021	(937)		(11,675)	(17,223)	(77,547)	(2,150)	(17)	(109,549)
Carrying amount:
At 31 March 2021	7,794		27,019	10,856	30,676	661	6	77,012
At 31 March 2020	8,213		22,567	10,643	30,060	847	14	72,344

 

During the year there were additions of £63,000 (2020: £824,000) in respect of reinstatement provisions and additions of £8,683,000 (2020: £20,540,000) in respect of leases under IFRS 16 (note 10).  Of the total remaining additions in the year of £12,921,000 (2020: £16,320,000), £977,000 (2020: £3,185,000) was included in trade payables as unpaid invoices at the year end resulting in a net increase of £2,271,000 (2020: net increase of £1,632,000) in trade payables. Consequently, the consolidated statement of cash flows discloses a figure of £15,192,000 (2020: £14,688,000) as the cash outflow in respect of property, plant and equipment additions in the year.

Note 10 provides the movements in the year relating to IFRS 16 right-of-use assets as included in the above table.

 

9.         BORROWINGS

 

				2021 £'000	2020 £'000
Current:
Lease liabilities (note 10)				(3,437)	(3,029)
Current borrowings				(3,437)	(3,029)
Non-current:
Lease liabilities (note 10)				(21,430)	(17,318)
Bank loans				(52,791)	(52,791)
Total non-current borrowings				(74,221)	(70,109)
Total borrowings				(77,658)	(73,138)

The carrying amount of borrowings approximates to their fair value.

Details of the Group's lease liabilities are included in note 10.

At the start of the year there was £52.8m (2020: £48.5m) outstanding on the multi option revolving credit facility and drawdowns of £1.1m (2020: £6.2m) were made from the facility during the year. Repayments totalling £1.1m (2020: £2.0m) were made resulting in a balance outstanding at the end of the year of £52.8m (2020: £52.8m).

The multi option revolving credit facility of £80m is able to be used by the Group to finance acquisitions, capital expenditure, general business purposes (up to a maximum of £8m each year) and for the issue of guarantees, bonds or indemnities.  As at 31 March 2021, the facility is available until September 2022 at which point any advances made under the multi option revolving credit facility become immediately repayable. Each drawdown made under this facility can be for either 3 or 6 months and can either be repaid or continued at the end of the period. Interest is charged on this loan at an annual rate determined by the sum of the multi option revolving credit facility margin, LIBOR and the lender's mandatory costs. The multi option revolving credit facility margin is fixed at 1.5% (2020: 1.5%) per annum and a non-utilisation fee of 40% (2020: 40%) of the multi option revolving credit facility margin is due on any undrawn portion of the full £80m multi option revolving credit facility. The effective interest rate for multi option revolving credit facility in the current year was 1.61% (2020: 2.17%). 

Given the terms of the revolving credit facility and the ability for any drawdowns made to be extended beyond 31 March 2021 at the discretion of the Group, the total amount outstanding has been classified as non-current.

9.         BORROWINGS (CONTINUED)

 

The obligations under the multi option revolving credit facility are repayable as follows:

 

	2021			2020
	Capital	Interest	Total	Capital	Interest	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Due within one year	-	(366)	(366)	-	(465)	(465)
Due within two to five years	(52,791)	-	(52,791)	(52,791)	-	(52,791)
	(52,791)	(366)	(53,157)	(52,791)	(465)	(53,256)

 

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 cash/(debt)	Cash and cash equivalents £'000	Bank loans £'000	Lease liabilities £'000	Total liabilities £'000	Total net cash/(debt) £'000
At 1 April 2019	10,069	(48,536)	(777)	(49,313)	(39,244)
Lease liabilities on transition to IFRS 16	-	-	(20,421)	(20,421)	(20,421)
Additions to lease liabilities	-	-	(1,544)	(1,544)	(1,544)
Repayment of bank loans	-	2,000	-	2,000	2,000
New bank loans	-	(6,150)	-	(6,150)	(6,150)
Impact of effective interest rate	-	(105)	-	(105)	(105)
Acquired on acquisition of subsidiaries	-	-	(1,705)	(1,705)	(1,705)
Cash and cash equivalent cash inflow	5,428	-	-	-	5,428
Lease liabilities cash outflow	-	-	4,100	4,100	4,100
At 31 March 2020	15,497	(52,791)	(20,347)	(73,138)	(57,641)
Additions to lease liabilities	-	-	(8,683)	(8,683)	(8,683)
Repayment of bank loans	-	1,150	-	1,150	1,150
New bank loans	-	(1,150)	-	(1,150)	(1,150)
Currency translation	-	-	169	169	169
Cash and cash equivalent cash inflow	7,541	-	-	-	7,541
Lease liabilities cash outflow	-	-	3,994	3,994	3,994
At 31 March 2021	23,038	(52,791)	(24,867)	(77,658)	(54,620)

 

 

10.        LEASES

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				Leasehold Property £'000	Data centre equipment £'000	Software £'000	Total £'000
Balance at 1 April 2020				17,494	788	1,235	19,517
Additions			3,855		4,828	-	8,683
Currency translation differences				(162)	-	-	(162)
Depreciation				(2,328)	(1,394)	-	(3,722)
Amortisation				-	-	(285)	(285)
Balance at 31 March 2021				18,859	4,222	950	24,031

 

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 at 31 March 2021 (note 8).  The right-of-use assets in relation to software are disclosed as non-current assets and are disclosed within intangibles at 31 March 2021 (note 7).

 

Lease liabilities

Lease liabilities are presented in the balance sheet within borrowings as follows:

				2021 £'000	2020 £'000
Current:
Lease liabilities				(3,437)	(3,029)
Non-current:
Lease liabilities				(21,430)	(17,318)
Total lease liabilities				(20,347)	(20,347)

 

The maturity analysis of undiscounted lease liabilities are shown in the table below:         2021 £'000 2020 £'000             Amounts payable under leases:         Within one year     (4,215) (3,536) Between two to five years     (11,552) (9,823) After more than five years     (13,068) (9,709)                     (28,835) (23,068) Add: unearned interest       3,968 2,721 Total lease liabilities       (24,867) (20,347)
10.        LEASES (CONTINUED)   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 ended 31 March 2021, in relation to leases under IFRS 16, the Group recognised the following amounts in the consolidated statement of comprehensive income:
					2021 £'000	2020 £'000
	Short-term and low value lease expense				(1,578)	(1,662)
	Depreciation charge				(3,722)	(3,224)
	Amortisation charge				(285)	(190)
	Interest expense				(732)	(649)
					(6,317)	(5,725)

 

Amounts recognised in the consolidated statement of cash flows:

				2021 £'000	2020 £'000
Amounts payable under leases:
Short-term and low value lease expense				(1,578)	(1,662)
Repayment of lease liabilities within cash flows from financing activities*				(5,435)	(4,686)
				(7,013)	(6,348)

*Included in repayment of lease liabilities within cash flows from financing activities in the year ended 31 March 2020 is a repayment of £1.0m in relation to the settlement of lease liabilities on the acquisition of Memset Limited.

11.       CONTINGENT CONSIDERATION

				2021 £'000	2020 £'000
Contingent consideration due on acquisitions within one year:
-       LDeX Group Limited				-	(1,153)
-       Memset Limited				-	(500)
-       ServerChoice Limited				-	(827)
Total contingent consideration due on acquisitions				-	(2,480)

 

Final consideration due on acquisitions of £2,447,000 (2020: £nil) was paid in the year resulting in a gain on revaluation of contingent consideration of £33,000 (2020: £1,856,000 gain) recorded in the consolidated statement of comprehensive income.