Iomart dividend almost doubles after profits jump

● Glasgow-based group grows presence in EU with purchase of Irish cloud outfit

in Iomart are in line for a 90 per cent increase in their dividend payout after the web hosting and cloud computing specialist reported a jump in annual earnings yesterday.

The Glasgow-based group has proposed a final payment of 6p a share to be paid on 6 September – up from 3.15p last time – which chief executive and co-founder Angus Macsween said reflected its high levels of operating cash and low indebtedness.

“Part of the reason for the increase in the dividend is that we’re throwing off a lot of cash now,” Macsween told The Scotsman. “We’ve made about ten acquisitions over the last five years and never gone beyond one times Ebitda [earnings before interest, tax, depreciation and amortisation] in debt, so I think it was time for us to be a bit more generous and use the dividend tool more than in the past.”

Andrew Darley, an analyst at broker Finncap, said: “The acceleration in dividend growth was expected. However, 6p beat our expectations of 5.1p and highlights board confidence in the business’ combination of growth, profitability and cash generation, while not jeopardising capacity for further acquisitions.”

The boost for investors came as Aim-quoted Iomart said adjusted pre-tax profits jumped 18 per cent to £22.4 million for the year to the end of March, on revenues 17 per cent higher at £89.6m.

The firm also said it was confident of making further acquisitions, having purchased Gloucestershire-based data storage and back-up outfit Cristie for £3.8m in August, followed by last month’s €7.9m (£7m) takeover of Dediserve, a cloud services provider headquartered in Dublin.

House broker Peel Hunt said that Dediserve, which has 17 data centres and about 1,500 customers, “broadens Iomart’s non-uk presence, and in our view, provides a solution to those Iomart cusshareholders tomers looking to navigate any complexities arising from Brexit given Dediserve’s broader EU presence”.

Macsween said: “We continue to find things to buy. It’s a long runway that we’re on, and the journey to the cloud will take the next five, ten or 15 years to complete for many people. I believe we’re still in the early days of opportunity.”

He added that Iomart previously had a “very small” physical presence in the EU, and while the firm has not seen any impact from last year’s referendum, “other than the weakening of sterling”, it was confident of being able to deal with the Brexit issues to be resolved.

“Dediserve has footprints in Dublin, Vienna, Frankfurt and Amsterdam, so that gives us a bit more scope on the European front,” Macsween said.

“Ourglobalfootprintisgrowing – we now serve customers in 129 countries. There’s no doubt that the world is shrinking and a lot of our customers trade globally as well so they do appreciate us having footprints elsewhere. That will be a trend that will probably slowly continue for us.”