Iomart growth fuels talk of interest from suitors

Angus MacSween: "Iomart has delivered another solid year of growth'. Picture: Lewis Houghton
Angus MacSween: "Iomart has delivered another solid year of growth'. Picture: Lewis Houghton
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TECHNOLOGY group Iomart yesterday said it was reaping the benefit of growing adoption of cloud computing services by business and organisations.

In a trading update ahead of full-year numbers, the Glasgow-based company said it expected to report “another good set of results”.

“Iomart has delivered another solid year of growth”

Angus MacSween

Shares rose on the news and one analyst said the firm – which was the subject of an approach last year from private equity firm Cinven – is likely to continue to attract attention from potential buyers.

For the year to 31 March, Iomart has pencilled in profits before tax of approximately £16.6 million compared to £14.6m last year and in line with consensus market expectations.

Chief executive Angus MacSween said the group had delivered solid organic growth combined with good performances from its recent acquisitions and expects these “dual drivers of growth” continuing in future.

MacSween said its hosting business had continued to win a substantial amount of new business over the year and it was benefitting from clients looking for cloud computing providers with the infrastructure required to provide reliability and flexibility.

It also benefited from a full-year contribution from acquired businesses Redstation and Backup Technology. both of which were bought in September 2013, and ServerSpace which has contributed to the results since its acquisition in December 2014.

Its domain name business Easyspace has also performed in line with expectations over the year.

“Iomart has delivered another solid year of growth. The long-term opportunity remains very real and Iomart is well positioned to take advantage of growth in the cloud,” said MacSween.

Analysts at SP Angel, which has a price target of 270p on the shares, said the figures suggested shares in Iomart “offer real value” and sat at a “clear discount to the quoted sector”.

They also said estimates for earnings and cash generation meant the firm would continue to attract bid attention.

In September Cinven’s Host Europe Holdings subsidiary announced it had terminated talks with Iomart after a third approach had been made with the final offer price of 300p per share, valuing the company at about £320m.

Two previous approaches from Host involving proposed offers of 275p and 285p a share had been rejected.

Executive directors at Iomart, who hold around 18 per cent of the shares, had indicated their support for the 300p a share proposal which had valued the company at £320m.

Iomart has eight data storage centres in the UK, including Glasgow, London, Manchester and Nottingham.

Shares in Iomart closed up 2p at 206.5p.