INTERVIEW: Angus MacSween, Iomart
‘It is rare for us not to be talking about acquisitions’
While the economic forecasters predict only sluggish prospects for the forseeable future there is one development that is poised for rapid growth. Big data is getting bigger and is throwing up a lot of opportunities, not least in how to manage it.
Iomart is not exactly a household name, but the Glasgow company has been around the hosting and cloud computing business for some time. It was set up in 1998 by entrepreneurs Bill Dobbie and Angus MacSween and the latter remains chief executive. The chairman is another well-kent technology entrepreneur and investor Ian Ritchie.
MacSween is a serial entrepreneur who has forged a career which has secured his place among the technology elite and made him a personal fortune. In the intervening years the board has built one of Scotland’s most endurable tech firms which has spurned at least two offers and progressed through at least a similar number of downturns. It is also true to say that in that time the business itself has been transformed as technology has developed.
In his notes accompanying the company’s year-end results MacSween is unequivocal about the opportunities which data management is now creating, stating that the amount of data that companies are expected to hold is “exponential”. One industry analyst said last week that big data is forecast to add over £241 billion to the economy by 2020.
Technological development and the growth of cloud based data storage is one driving factor and, as MacSween says in his statement: “All businesses are now digital businesses to a greater or lesser extent.”
But there at least two others: the need for companies to meet an increasing volume of complex legal and regulatory guidelines on such things as data protection; and the explosion in cybercrime which MacSween says is being “under reported”.
Speaking after announcing the latest figures he says: “There is a huge amount of data and it is going to change the way companies do things. They will have to outsource it because they do not have the means to do it internally.”
Companies like Iomart are the beneficiaries of these these challenges and compliance requirements.
This is working wonders for the company’s top and bottom line, as evidenced by the latest results. Revenue was up 16% and adjusted pre-tax profits 14%. Shareholders are benefiting from a proposed 26% uplift in the final dividend.
Few opportunities come up that we don’t know about
It could have turned out differently in 2014 when the board rejected two offers at 275p and 285p, valuing the company at £300m which the directors felt undervalued it, though this is precisely its value today.
Since the turn of the year the shares have stagnated somewhat, barely unmoved. MacSween jokes that the company may have become “too predictable”, but is not ruling out a move up from the Alternative Investment Market to the Main Market. It would increases liquidity and the added exposure might give the shares a lift.
“Our brokers are enthusiastic about it,” he says. “I’m sure we’ll be having that conversation.”
Since rejecting the potential offers it has driven its growth plans which can be apportioned almost equally to organic development and through acquisitions.
“The company has earned a reputation for integrating its acquisitions and there are few opportunities that come up which we don’t know about,” he says, adding that the company receives at least two approaches a week from others wanting to be bought. The board rejects nine in every ten but will always run through the numbers, just in case.
“It is a rare for us not to be having a conversation about acquisitions,” he says, adding that it is effectively buying customer bases. “It is a good way to accelerate growth,” he adds.
While the shares may have stagnated in recent months, they are up 200% over five years. MacSween sees no reason why the company cannot double in size over the next five. “We have done that without raising any equity,” he says.
Career Highlights: MacSween’s family were crofters on the Isle of Lewis. He served as a naval officer and started his first business selling telephone systems in 1984. He has established, grown and sold five profitable businesses in the telephony and internet sector. He set up a telecoms company, Teledata, which he sold to Scottish Telecom, for £11m in 1996. Two years later he set up Iomart with Bill Dobbie, who is also his brother-in-law, and floated it on the Aim in 2000, becoming CEO.
Interesting fact: The group takes its name from a derivation of the Gaelic word “iomairt” meaning enterprise.