Cloud hosting firm Iomart in high spirits as revenues rise

● Aim-quoted IT player reaps reward of sales investment ● Eyeing further acquisitions to accelerate growth

Iomart, the Glasgow-based cloud computing and web hosting company, has recorded a jump in revenues on the back of investment in its sales functions.

The IT group posted an 8 per cent year-on-year rise in turnover to £55.1 million in the half year to 30 September, pointing to an annualised investment of more than £1m in its sales engine and a broader mix of revenues.

Pre-tax profits increased by 15 per cent to £8.4m.

Iomart, which is quoted on London’s junior Alternative Investment Market, now has 25 sites globally, having established operations in Paris, Frankfurt and Amsterdam in the past six months.

It also noted that the final planning phases for investment in its acquired Manchester datacentre, where it sees growing demand for hosting services, are under way.

The business, which has doubled in size during the past five years through organic and acquisitive growth, indicated that future buy-outs could be in the pipeline.

Net debt as of 30 September stood at £58.7m, around 1.3 times the group’s annualised underlying earnings.

The board proposed an interim dividend of 2.6p per share, up from 2.45p last year.

Chief executive Angus Macsween

said: “The positive trading performance from the group reflects the investment we are making in our sales engine, which has delivered significantly more business from new customers than the comparable period.

“We have also seen an increasing level of larger, more complex enterprise contract wins, whose revenue will start to be recognised in the second half of the year and beyond.

“This momentum, combined with high levels of visibility within our recurring revenue business model, gives increasing confidence that we are on track for an improving trend in our organic growth. In addition, we continue to see opportunities to enhance this growth through acquisitions.”

In the year to 31 March, Iomart acquired Bytemark and LDEX Group, adding new customers and complementary datacentre locations.

Arlene Ewing, investment manager at Brewin Dolphin, praised “another robust set of results”.

She added: “A combination of organic growth and strategic acquisitions has put the business in a good place, and its continued geographical diversification is another positive development.

“While the principal concern about the company has been over its ability to compete with the larger players in the cloud services market – a fact reflected in some share price volatility – Iomart continues to thrive.

“The shares are still some way off their peak of last year, but Iomart’s prospects are sound in a world that continues to rely more and more heavily on the cloud.”