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Strong first half

Iomart eyeing further opportunities for M&A activity

Angus MacSween 2Cloud computing firm Iomart has reported a strong first half and said the M&A market continues to provide opportunities.

Unveiling a 7% rise in adjusted profit before tax to £12.4 million, the company said “we remain committed to complementing our organic growth through further acquisitions”.

The company added managed hosting business Bytemark to its portfolio in August and today revealed that the previous director shareholders will leave the business early .

A negotiated settlement on the earn-out payment of £0.2m was agreed and paid. This, along with the initial consideration of £4.7m paid at completion, results in a total final consideration of £4.9m. The initial payment was funded by a drawdown from the group’s revolving credit facility.

Glasgow-based Iomart said it is benefiting from expansion in the cloud computing market which is still in its early stages of development.

Chief executive Angus MacSween, said the full year “should deliver a similar overall year on year progression as we have reported in the first half. We remain very confident in the Group’s long term prospects.

“Over the course of the past decade, cloud computing has evolved from being something service providers like iomart told companies they should be adopting, to becoming the technological lifeblood that runs through many modern enterprises.

“However, many industries and sectors are only now at the start of their journey to the cloud, which means that the market opportunity remains strong and varied.

“The market continues to grow as technology progresses. The world has an almost insatiable appetite for more bandwidth, faster downloads, more applications, which of course creates ever more data to process, store or back up.”

Speaking to Daily Business, he said the company was in regular conversation with businesses wanting a tie-up with Iomart.

“We get about two or three approaches a week. We sift through them and reject about 90% as they’re not right for us.”

The company has a £50m acquisitions war chest remaining from an £80m bank facility.

Mr MacSween said the sector is growing, probably at between 10% and 15% a year although he admitted that there are “a lot of numbers out there and I don’t think anyone measures the market that is 100% meaningful to us.”

He added that the company has minimum exposure to the public sector and is therefore not affected by ongoing spending squeezes.

“We feel we have more than enough to do in the private sector,” he said.

John Moore, senior investment manager at Brewin Dolphin Scotland, said: “This is another set of good results from iomart.

“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 data-hungry technologies such as the Internet of Things, which can only be good news for iomart as it continues to expand.”

FINANCIAL HIGHLIGHTS 

  • Revenue growth of 8% to £50.9m (H1 2018: £47.0m)
  • Adjusted EBITDA¹ growth of 10% to £21.1m (H1 2018: £19.2m)
  • Adjusted profit before tax² growth of 7% to £12.4m (H1 2018: £11.6m)
  • Adjusted diluted earnings per share³ increased by 6% to 9.23p (H1 2018: 8.71p)
  • Period end net debt of £33.6m, less than one times annualised EBITDA
  • Interim dividend of 2.45p per share (H1 2018: £2.25p)

OPERATIONAL HIGHLIGHTS 

  • Substantial growth in sales pipeline due to re-structuring of our sales and marketing activities
  • Continued investment in cloud hosting products and services to allow us to deliver all elements of a hybrid environment
  • Strong focus on efficiency and customer service which ensures market leading profitability
  • Further expansion of our UK datacentre resources and points of presence across the globe
  • Acquisition of Bytemark, a managed hosting business in York, for total consideration of £4.9m

 



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