Iomart nets 45% leap as web market bucks the recession

Published on Wednesday 3 June 2009 21:43

IOMART chief executive Angus MacSween has predicted the online economy will continue to grow throughout the recession, after his firm yesterday reported a 45 per cent jump in revenue from its data centres.

The Glasgow-based company sold business directory unit Ufindus to BT last year, allowing it to focus solely on the remote hosting of data and online information for business customers. It revealed revenue at its data hosting business had risen by 3.7 million to 11.8m in the year to 31 March.

MacSween revealed the growth had continued in the current financial year. "What we're coming to understand is that there's an offline economy and an online economy, and the online economy continues to thrive and continues to do business, he said.

"There's a fundamental shift on to the web, where companies outsource their web presence, and we're nowhere near the end of that."

Both Easyspace, which focuses on services for small and medium-sized businesses, and Hosting, Iomart's corporate level service, reported growth during the year. But MacSween said the group's biggest opportunity was winning new business from mid-sized corporations, around the FTSE-250 index.

Currently a disparate market, MacSween expects the data-hosting market to consolidate in the coming years until it is dominated by a relatively small number of large players, and he believed Iomart could be one of them.

He said: "We would like to be one of the players that would dominate this space in the UK, and certainly be in the top two or three in the hosting market."

As well as giving the company the opportunity to focus, the sale of Ufindus provided Iomart with substantial firepower, holding net cash of 13.2m at the end of March.

Last month Iomart paid 5.25m for Maidenhead-based RapidSwitch, and MacSween said Iomart was "running the rule over lots of different companies at any one time". While he said Iomart was likely to complete "one or two smaller acquisitions" this year, none were imminent, with few examples of distressed companies coming up for sale.

The sale of Ufindus created a one-off gain of more than 12m to Iomart's profits, which meant it posted an 11.2m pre-tax profit yesterday, with its underlying loss falling to 300,000, from 1.4m in the previous year.

Iomart, which abolished its dividend in 2007 to focus on growth, said it was now re-establishing the cash return to shareholders, paying 0.3p a share.

Despite making a loss on continuing operations last year, MacSween said that Iomart had now hit monthly profitability.

"The business is now profitable on a month-to-month basis and generating cash, and we don't see that going backwards."

Shares in Iomart, which is listed on the Aim, rose 1p to close at 37p, valuing the company at 35.9m.