Reece Donovan: progress

Cloud computing firm Iomart Group said it expects to deliver full-year financial results in June in line with market expectations as it managed its way through a sharp hike in energy costs.

Revenue should come in at a record £115 million (FY22: £103m), though profits will be lower, it said in a pre-close trading update.

Adjusted EBITDA is forecast to be approximately £36.2m (FY22: £38m) and adjusted profit before tax £14.6m (FY22: £17.1m). The figures reflect both the revenue mix in the year together with investment in retraining, rising energy costs, wage increases and cost of living support.

There was also lower margin within the Concepta acquisition, primarily from its reselling activities. The increase in UK interest rates pushed borrowing charges up by approximately £0.9m.

The group said the datacentre sector as a whole has had to navigate the significant challenges in the energy markets During the year the group’s electricity costs increased by approximately £7 million.

The board said its “robust business model and customer arrangements have ensured this additional energy cost has been appropriately passed through to the customer base.”

The group has seen stability of customer renewal rates across all areas of the business, providing a solid base of recurring revenues, which remains high at 92% of total revenue (FY22: 93%).

Meanwhile, the sales pipeline improvement noted in H1 converted into stronger order booking levels in H2, providing positive momentum as the group enters the new financial year.

Chief executive Reece Donovan said: “I am pleased with the progress achieved this year in our transition to a secure hybrid cloud offering.

“We saw our pipeline improve in the first half and this converted to stronger order booking levels as we completed the year.

“The team has worked hard to ensure momentum in the execution of our strategic plan and continuous improvement within the business. This gives us confidence that we will continue to be successful within the wider growing cloud sector.”