Glasgow cloud computing firm Iomart gets £100 million growth boost

Iomart, the Glasgow-headquartered cloud computing group, has secured a £100 million financing facility to back its growth plans.

The firm said it had agreed a refinancing, replacing an existing single bank revolving credit facility of £80m that was due to mature at the end of next September, with a new £100m facility.

It is being provided by a group of four banks - HSBC UK, Royal Bank of Scotland, Bank of Ireland and Clydesdale Bank, part of Virgin Money group.

The new facility has an initial maturity date of June 30, 2025, with a 12-month extension option.

Iomart CEO Reece Donovan. Picture: Peter Devlin

Chief financial officer Scott Cunningham said: “Our four new banks, HSBC UK, Royal Bank of Scotland, Bank of Ireland and Clydesdale Bank, are very supportive of our refreshed strategy and clear growth plans, underpinned by the existing strong and predictable financial model, with high recurring revenue and good cash generation.”

Last month, Iomart said it was trialling a “first of its kind” cooling system that could slash data centre carbon emissions.

The firm said results for the new technology indicated the potential for an up to 50 per cent reduction in electrical power consumption by the site’s cooling system. Data centres are heavy consumers of power with substantial cooling required for the banks of computer servers.

Iomat believes that the prototype passive cooling system in its Glasgow facility could have a significant impact on the carbon footprint of the data centre industry as a whole and help the sector on its way to carbon neutrality.

Chief executive Reece Donovan said: “Data centres are essential to a more connected, digital future, but the environmental impact of the sector is something the industry has to come to terms with.”

At the start of October, the group warned of results that will fail to match up to market expectations but insisted that it has built “solid foundations to support future growth”.

The group told investors that it was progressing with the launch of a new brand, the release of new products and scoring its first “hybrid customer win” during the six months to September.

However, bosses warned that the firm’s “refreshed strategy” would take time to flow through into its financial results.

Iomart also cautioned that a “slightly higher than usual” customer churn rate seen in the final months of the last financial year had continued into the first half of the current period.

In a trading update ahead of its detailed first-half figures, which are due to be released next week, the firm stressed that profit margins have remained strong in the period.

For the six months to September 30 this year, the group expects to report revenue of about £52m, which would be down from £56.3m a year earlier, adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of approximately £19.5m, down from £20.8m, and adjusted profit before tax of around £9m, against £9.8m previously, according to October’s trading update.

Martin O’Sullivan, an analyst at Shore Capital, noted: “Over the medium term, we see Iomart building upon its core foundations: executing on core portfolio organic growth, complementary acquisitions, new services and geographies and protecting the existing base of run rate revenue and Ebitda.”

A message from the Editor:

Thank you for reading this article. We’re more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven’t already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription: www.scotsman.com/subscriptions