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Iomart provides extra silver lining from the cloud

By Oliver Haill

Date: Tuesday 05 Dec 2017

Iomart provides extra silver lining from the cloud

(ShareCast News) - Cloud computing services provider Iomart declared its first dividend as revenue and profit growth in the first half of its financial year thanks to a mix of organic and acquisitive expansion.
Revenue in the six months ended 30 September of £47m was 12% ahead of the same period last year, though slightly short of its house broker's forecasts, with adjusted earnings before interest, tax, depreciation and amortisation and adjusted profit before tax both growing by roughly 9% to £19.2m and £11.6m respectively.

Adjusted diluted earnings per share increased by 10% to 8.82p and as it generated £17m of cash from operations and had coffers bulging with around £7m at the half-year stage, the board declared a maiden interim dividend of 2.25p per share, having just paid a final payout since joining the dividend list in 2014.

Acquisitions included EU-focused Dediserve for €7.9m (£6.7m) in May, plus Tier 9 Limited in July for up to £6m and the post-period purchase of Sonassi for up to £16.5m, which both provide cloud solutions for the Magento open source e-commerce platform. Iomart said the M&A market continues to provide opportunities and management remain "committed to complementing our organic growth through further acquisitions".

Organic revenue growth came from the core Cloud Services arm rising 4% to £40.3m, which was depressed by a large low-margin contract in the period, with the August 2016 acquisition Cristie taking growth up to 13%. The Easyspace SME services arm contributed 2.3% all-organic growth.

Broker FinnCap slightly upgraded its revenue and EBITDA forecasts for 2018 and 2019 and noted net debt of £24.5m is still comfortably below annualised EBITDA.

"The ongoing acquisition of skills and customers is leading to development of further revenue streams, and development of iomart's reputation as specialist in multiple fields and verticals (for example cloud back-up as a niche expertise, and e-commerce as a vertical specialisation)," analyst said.

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