Cloud cover

Iomart goes boldly with firepower to rapidly expand

Lucy Dimes
Lucy Dimes: strong growth

Scottish cloud computing firm Iomart has reported strong revenue growth and cash generation and says it has the financial firepower to rapidly expand its offering and scale through selective M&A.

Chief executive Lucy Dimes confirmed that more acquisitions were likely over the next 12 months.

“We have a large pipeline and there are a lot of conversations, though nothing is imminent,” she told Daily Business. “It is absolutely the plan to do more and bigger acquisitions.”

She said the company was looking particularly at the public cloud space and cybersecurity. Previous target companies had averaged at about £7m revenue and new deals would be focused on a £10m to £20m range.

The Glasgow-based company, which has relocated to city centre offices, posted a 10% growth in revenue to £127m for the year to the end of March, from £115.6m last time. Pre-tax profit rose 2% to £8.7m from £8.5m.

It said it has established “a clear strategic vision and renewed sense of purpose to execute around three simple messages: Bigger, Better, Bolder.”

The company has a double digit order book, including an increase in average order values and a higher number of new customer wins.

During the year it completed two acquisitions, Extrinsica and Accesspoint, “adding significant skills and capabilities to the group.”

The board paid an interim dividend of 1.94p in January 2024 and is proposing a final dividend of 3p per share taking the total for the year to 4.94p, 14% lower than last year, which CFO Scott Cunningham said was in line with the payout policy.

It would represent the maximum pay-out ratio under its stated dividend policy of paying up to 50% of adjusted diluted earnings per share.

“We believe this is appropriate given our funding position, robust business model and strength of our balance sheet,” said the company.

Richard Last will take over as chairman tomorrow after Lucy Dimes stepped into the CEO’s chair following the departure of Reece Donovan.

Over the past six years, Mr Last has held chair positions at Hyve Group, Gamma Communications, Arcontech Group and Servelec Group. 

In addition to his private company board roles, Last is currently chair of Tribal Group and Gresham Technologies, as well as a non-executive director of Corero Network Security.

“In taking up the role of chair, I was impressed by the leading position iomart has established in the cloud services marketplace, the strength of its customer relationships and the talent across the team,” he said. 

“I am very much looking forward to working with the board to leverage these strong foundations and support the group in realising its growth ambitions.”

The company said the first two months of the new financial year has seen trading in line with board expectations, consistent with its high recurring revenue business model which gives good visibility.

In the media call, Mr Cunningham and Ms Dimes said client decisions were taking longer but the company was resilient to broader economic pressures.

In a statement with the results, Ms Dimes said: “I am delighted to report on a year of revenue growth supported by two acquisitions and organic growth within cloud managed services, the area which is the key focus of our commercial and product strategy.

“We delivered good profitability and continued strong cash generation, providing us with the strong financial foundation on which to execute our growth strategy.

“Our vision is to be the UK’s leading secure cloud services provider to the SME market. We want to provide a compelling proposition to customers as cloud optimisation experts and a managed service provider that delivers the right cloud for the right workloads, which is secure by design.

“In a world where computing demands are getting ever more intense, and businesses across all sectors and size are looking at how they can harness the very latest technologies, iomart sits in an enviable position.

“We have a valuable data centre estate and capability connected by a fibre backbone, providing security, resilience and control, underpinned by a talented team of world class technical experts and engineers, combined with proven expertise across a range of customer segments.

“This and the financial firepower to rapidly expand our offering and scale through selective M&A gives us the confidence to drive for accelerated growth and achieve our vision.”

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