Iomart set for ‘significant’ growth as profits rise

Iomart are based in Glasgow. Picture: Donald MacLeod

As the Glasgow-based group posted an 18 per cent jump in annual revenues to £65.8m, MacSween told The Scotsman that the company has the firepower for “significant” deals.

He said: “Adding £1m or £2m in revenues isn’t moving the needle much any more, and there are bigger opportunities out there. We have ambitions to get beyond £100m in revenues within the next couple of years.

“We get offered a lot of businesses for sale but we reject 90 per cent as we have disciplined criteria around what we buy.”

Yesterday’s results came the day after Iomart announced a deal, worth up to £13m, to buy London-based cloud computing consultant SystemsUp – the firm’s biggest since it splashed out £23m in October 2013 for Yorkshire disaster recovery specialist Backup Technology.

Adjusted pre-tax profits for the 12 months to 31 March came in at £16.6m, in line with the company’s guidance and up from £14.6m a year earlier.

Iomart’s board also proposed a 43 per cent hike in its final dividend to 2.5p a share, to be paid to investors on 1 September.

“It’s a reflection of the strong cash generation we enjoy within the business, and it’s gone down well in the MacSween household,” said the company’s co-founder, who has a stake of about 17 per cent in the firm that he set up in 1998 with brother-in-law Bill Dobbie.

Andrew Darley, analyst at FinnCap, said the dividend increase was well ahead of forecasts and “we expect further acquisition activity to compound organic growth”. The broker lifted its price target on Iomart’s shares from 280p to 290p.