Iomart on cloud nine as it eyes fresh acquisitions in next year

Website hosting firm Iomart expects to complete up to four acquisitions over the coming year as it continues to benefit from growing demand for “cloud” computing services.

Chief executive Angus MacSween said the Glasgow-based group, which bought three rival businesses last year, had a “healthy pipeline” of potential deals after seeing its profits almost double in the year to the end of March.

He described trading since the start of the group’s new financial year as “encouraging” as customers look to cut costs by moving their computer applications and data online to its cloud networks, rather than storing them on individual machines.

Sign up to our daily newsletter

The i newsletter cut through the noise

Ian Mitchell, an analyst at Nomura, said: “We continue to see Iomart as a key stock pick as a result of the increasingly rapid move to cloud computing, and one of a handful of UK technology stocks that is likely to benefit from cloud.”

Iomart said that full-year revenues rose 33 per cent to £33.5 million, which helped push adjusted pre-tax profits to £6.9m, up from £3.6m a year earlier.

Analysts expect the profit figure to rise to about £9.6m for the current year, and Canaccord Genuity said: “The outlook remains upbeat, with management confidently expecting a continuation of strong trading that it has experienced over the past 18 to 24 months.”

The Aim-quoted firm made three acquisitions over the past year, snapping up rivals EQSN, Global Gold and Switch Media. Chairman Ian Ritchie said all were performing “as expected” and have now been fully integrated into Iomart’s operations.

MacSween added: “We continue to look for businesses that fit our acquisition criteria with a view to making further acquisitions in the coming year.

“We’ve got a healthy pipeline of potential acquisitions at the moment, and they range from £1m in revenues up to £4m or £5m. I’d expect us to do two, three or four acquisitions this year of varying sizes.”

Iomart generates the vast majority of its revenues within the UK, and MacSween said the company was not looking at takeover targets overseas.

“International expansion is only on the cards to support our existing customers,” he said. “The opportunities for us in the UK are still big enough for us not to have to go elsewhere to continue the growth levels we’ve seen.”

The company, whose clients include Edinburgh-based flight search engine Skyscanner and fashion retailer Reiss, proposed a final dividend of 0.9p per share, an increase of 38 per cent over the previous year’s payout.