Dimes’ first Iomart deal, says ex-CEO had ‘difficult time’
Iomart, the Glasgow-based cloud computing company, has acquired Accesspoint Group Holdings, an IT hosting partner focused on the UK legal industry.
The acquisition, for an initial £4.5 million but worth up to £6.4m, is a first deal for new CEO Lucy Dimes who stepped into the role in September following the sudden departure of Reece Donovan who had been in post for two years.
Following Ms Dimes’ move from non-executive to executive chair in August, Mr Donovan had said he looked forward to working with her. A month later he had left the company.
Speaking to Daily Business about her predecessor’s exit, she said: “He just had a difficult time. We just got to the point where there was an agreement where we needed new energy and pace.”
She said her watchwords were “focus and pace” and that the strategy for growth is working. The company, which has 12 datacentres around the UK, has made 23 acquisitions in 14 years and will continue to seek out opportunities.
“We are very much on the front foot. The strategy is sound,” she said, adding that headhunters are seeking a new chairman and an announcement is due in the spring.
Based in North East London, Accesspoint has been focused on the UK legal industry since 2009. It delivers a suite of managed and hosted services including infrastructure hosting, software licensing, security management, business continuity services and communications provisioning.
Iomart said the acquisition provides the company with “deep industry expertise and a highly capable team with a strong reputation within the legal sector.”
It added that the addition of the new customer base when combined with iomart’s existing legal customers consolidates iomart’s position in a key sector.
For the year ended 31 August 2023, Accesspoint generated revenues of £3.8m and adjusted EBITDA of £0.8m (unaudited).
The initial consideration is £4.5m paid in cash on completion on a debt and cash free basis, with a potential further £0.5m in cash payable on the achievement of certain post-acquisition milestones. It also includes up to a further £1.4m contingent earn-out payment based on the profitability of Accesspoint for the 12 months ending 31 August 2024.
The initial payment will be financed through a combination of existing bank facilities and cash on the company’s balance sheet.
Ms Dimes said: “The flow of sensitive data and drive to adopt technology to provide enhanced customer service within the legal sector means that data management, security and data sovereignty are all pressing considerations for legal firms and ones in which iomart and Accesspoint excel.
“We are delighted to welcome Accesspoint’s growing list of customers into the iomart Group and excited to be working with the full team to further advance iomart’s differentiation in this sector and positively contribute to the group’s overall organic growth plans.”
The deal was announced alongside interim results showing an 18% rise in revenue to £62m for the six months to the end of September with strong levels of recurring revenues maintained (94%), in line with forecasts.
Cloud managed services revenue increased strongly, by 27% to £37m, driven by modest organic growth, price adjustments from energy cost increases, and M&A.
Adjusted profit before tax came in 3% higher at £7.6m, slightly ahead of the £7.5m forecast. The dividend is maintained at 1.94p.
Ms Dimes added: “I’m pleased to report on another period of progress at iomart. We continue to build on our existing strong foundations as a well-established and trusted service provider within the private cloud space, at the same time as extending our service offering across the wider and higher growth hybrid cloud market.
“We see great opportunity ahead. For the UK to thrive as an economic powerhouse, its businesses will need to increase efficiency, operate at pace and adapt – leveraging cloud, data and digital technologies.
“Our blend of both IT and connectivity skills combined with our secure, scalable, resilient cloud and network infrastructure uniquely positions us to support the ambitions of our customer base, giving us confidence in our ability to participate successfully in the growing cloud sector.”
Shares closed up 3p (1.95%) at 156p.