Iomart profits surge sparking talk of fresh takeover interest

By PETER RANSCOMBE
Published on 20/03/2012 00:00

PROFITS at Iomart, the Glasgow-based website hosting and IT company, have nearly doubled in the past year, sparking talk of it becoming a takeover target.

Chief executive Angus MacSween yesterday revealed that his firm made a profit of about £6.7 million in the year to 31 March, up from £3.6m in the previous 12 months.

In a pre-close trading update, MacSween said that the company had benefited from the growing number of companies that are looking to outsource their IT departments.

He said Aim-quoted Iomart was also reaping the rewards of having “sticky customers” that stay with the business instead of moving away.

“We remain very confident of further growth in the next financial year and beyond,” MacSween added.

Iomart has taken over three rivals – EQSN, Global Gold and Switch Media – in the past year and MacSween said the group would continue to grow through both acquisitions and via its own customers.

Paul Morland, an analyst at house broker Peel Hunt, added: “It is encouraging to see that the three most-recent acquisitions are all performing at least as well as management had hoped.

“We understand there are more targets available, and acquisitions are likely to remain a key part of this growth story.”

Mick Gilligan, head of research at Killik & Co, said Iomart itself could become attractive to other companies. “In an industry that has seen a significant amount of mergers and acquisitions in recent time, we would not rule out the possibility of Iomart being a takeover candidate itself,” he said.

Iomart hailed a number of contracts in the past year, including work for financial software firm Misys, government office supplies provider Office2office and Edinburgh-based flight comparison website Skyscanner.

Shares in Iomart closed up 6.5p or 4.7 per cent at 145p, valuing the IT firm at about £145m.

MacSween founded Iomart in 1998 alongside his brother-in-law, Bill Dobbie, who has since gone on to launch fast-growing Edinburgh-based dating website operator Cupid, which earlier this month posted a 67 per cent rise in full-year profits to £7m.