Iomart profits on the up after growth and acquisitions
IOMART, the Glasgow-based cloud computing firm, has reported an underlying profit increase of seven per cent to £12.4 million for the first half.
The firm highlighted the strength of its sales pipeline following the restructuring of its sales and marketing activities and said it remains active on the acquisition front.
Iomart, which has 400 staff, showed revenue growth of 8% to £50.9m in its consolidated halfyearly results for the period ended September 30 2018.
It said its core complex hosting business has grown by 10% cent year on year, which was split between organic growth and acquisitions.
The firm also said it acquired Bytemark, a managed hosting business in York, for total consideration of £4.9m during the period.
Angus Macsween, chief executive, said: “We are maintaining our margins, our balance sheet remains very strong and that’s really the message for the half year.
“The underlying position is pretty consistent to where we were this time last year.”
Scott Cunningham, Iomart chief financial officer, said: “We closed the period with £33.6m of net debt which is really low.
“It is really low leverage for the dynamics of this business and gives us the firepower as its designed to continue the two pillars of our strategy, which is organic growth and M&A activity.”
Statutory profit before tax of £7.3m was below the previous £7.8m but this was partly because of higher than expected payment triggered by the performance of acquisitions being ahead of expectations.
Mr Macsween said continued acquisition activity is expected.
He said: “We get offered a lot on the acquisition front so there is no danger of that pipeline of opportunity drying up.
“It is up to us whether we decide to buy things or not.
“We’ve always got something going on conversations-wise on the M&A front.”
He added: “We are still Uk-focused really. We get offers from elsewhere but there is still enough room for us to grow in the UK without making life more difficult for ourselves going overseas.”
Brexit is “shambolic to say the least”, but “we don’t believe it will have any financial impact on us, we neither export or import”, said Mr Macsween.
He said: “Iomart’s continued strong trading performance is a reflection of the strength of our cloud capabilities and business model, the breadth of our customer base and the ongoing growth of the cloud market.
“We help companies at all stages of their journey, with a wide portfolio of managed cloud services, which makes us confident about the significant and sustainable market opportunity ahead.”
He said: “The high levels of visibility within our recurring revenue business model and strong cost control provides stability to our trading performance for the second half of the year, ensuring the full year should deliver a similar overall year-onyear progression as we have reported in the first half.
“We remain very confident in the group’s long term prospects.”
John Moore, senior investment manager at Brewin Dolphin Scotland, said: “This is another set of good results from Iomart, with revenue growth of 8%, adjusted profit before tax up 7%, and an increased dividend of 2.45p.
“Although the shares have had a tough time of late, dropping from a peak of 475p in September, there remains a lot of growth potential in the business and these figures may remind potential investors of that.
“The need for data centres and services is only increasing, buoyed by the adoption of new datahungry technologies such as the Internet of Things, which can only be good news for Iomart as it continues to expand.”
Shares closed at 348.5, down 0.43%.