Strong pipeline of prospects
Cloud firm Iomart passes £100m revenue milestone
A new marketing effort has seen profits and revenue increase, enabling the Glasgow-based company to lift its dividend. However, in spite of its growth the company’s shares have struggled to gain any traction and trade 12.5% lower than a year ago.
Pushing revenue through £100 million to £103.7m (2018: £97.8m) is described as a milestone for the company. Adjusted EBITDA grew 6% to £42.2m (2018: £39.9m) while adjusted profit before tax was also 6% higher at £25.5m (2018: £24.1m).
Angus MacSween, CEO, pictured, said: “These results represent another year of strong performance by the Company, with increased revenues, profits, cash flow and dividend levels. The demand for the products and services we provide continues to grow.
“Over the last 12 months we have reinvigorated our sales and marketing function which delivered a strong finish to the year with March, the final month of our financial year, recording the highest month of revenue in the year. We enter the new year with confidence, underpinned by a significantly larger pipeline of prospects than this time last year.
“The journey to cloud adoption remains a long term trend and, as a result, our market opportunity is large and widening. We continue to invest in our cloud product offering, skills and organisational platform to ensure we are positioned to capitalise on this opportunity, and the Board is confident that strong growth will continue for many years into the future.”
· Revenue growth of 6% to £103.7m (2018: £97.8m), a milestone for the company surpassing £100m
· Adjusted EBITDA growth of 6% to £42.2m (2018: £39.9m)
· Adjusted profit before tax growth of 6% to £25.5m (2018: £24.1m)
· Adjusted diluted earnings per share from operations increased by 4% to 18.6p (2018: 17.9p)
· Cash flow conversion from operations >90%, being £39.1m (2018: £40.8m)
· Adjusted profit before tax margin maintained at 25% (2018: 25%)
· Proposed final dividend of 5.01p per share resulting in total dividend for year of 7.46p per share, an increase of 4% (2018: 7.18p per share), representing the 10th consecutive year of dividend growth
· Investments made to ensure long term certainty to datacentre infrastructure, including the purchase of the freehold of our Maidenhead site
· Two acquisitions completed, Bytemark and LDeX, adding new customers and complementary datacentre locations
· Refreshed sales and marketing function to support next phase of growth; early benefits started to flow through in H2 with increased new lead generation from both new and existing customers
· New Board members appointed, adding significant experience to the leadership team
· Market remains large with structural drivers, which combined with M&A strategy, supports ambition to deliver same long term pace of growth achieved over last 5 years which saw the business double in size
The above highlights are based on adjusted results. A full reconciliation between adjusted and statutory results is contained within this statement. The statutory equivalents of the above results are as follows:
· Profit before tax growth of 9% to £16.2m (2018: £14.9m)
· Basic earnings per share from operations increased by 3% to 11.9p (2018: 11.5p)
John Moore, senior investment manager at Brewin Dolphin, said: “iomart continues to deliver steady growth. The company has exceeded sales of £100 million for the first time, with revenues and profit before tax up 6%, while maintaining a healthy profit margin of around 25%.
“As well as internal growth iomart has a sound acquisition strategy, the combination of which has seen the company double in size over the past five years. Encouragingly, management’s bullish statement suggests it will aim to maintain a high rate of expansion.
“Of course, the principal concern has been some of the big players that compete in the same market; but, to date, iomart has successfully carved out a role for itself and the ever-increasing demand for data centres and services should mean it is well placed. Although the shares have faltered since hitting a peak of 475p in October 2018, today’s results may remind investors of the long-term story, helped by an increasing dividend.”