'New chapter' for Glasgow cloud computing group Iomart after pandemic dents profitability

Iomart, the Glasgow-headquartered cloud computing group, has “begun a new chapter” after delivering a “resilient” performance during a year overshadowed by the coronavirus crisis.

New chief executive Reece Donovan said the firm had identified “a significant market opportunity” to grow its offering as the workplace becomes increasingly digital focused. He also flagged “selective acquisitions” as the business grows its footprint and expands its range of services.

Results for the year to the end of March showed that revenues dipped 0.6 per cent to £111.9 million, in line with guidance provided to investors in an April trading update.

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Adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) came in at £41.4m, down from £43.5m, while profit before tax amounted to £12.5m, a fall of 25.7 per cent on the year before.

Iomart CEO Reece Donovan: 'We have identified a significant market opportunity'. Picture: Peter Devlin
Iomart CEO Reece Donovan: 'We have identified a significant market opportunity'. Picture: Peter Devlin

A final dividend of 4.5p a share has been proposed, compared with 3.93p a year earlier, taking the total payout for the year to 7.1p, an increase of 8.7 per cent.

Donovan, who took the reins from long-serving chief executive Angus MacSween, said: “The year covered by this report coincided almost to the day with the onset of the pandemic in the UK.

“We can look back with pride on what has been achieved during this unprecedented time for all of our employees and wider stakeholders.

“We have now begun a new chapter for Iomart, and I am proud to be at the helm of this great team. We have identified a significant market opportunity, growing our propositions in hybrid cloud, security, the digital workplace and connectivity, supporting our customers as they adapt to new ways of working now and in the future.

“We have proven the robustness of our business, underpinned by high levels of recurring revenues, breadth of customer base and strong cash generation. This is now enhanced with a clear strategic vision and roadmap to re-position the group for growth, both organically and through selective acquisitions, and the board is increasingly confident in the positive outlook for the long-term prospects for the group.”

Chairman Ian Steele added: “The progress we have already seen in the delivery of the new strategy and the continued solid financial performance gives me and the board confidence in a bright future for Iomart.”

The group said results since the start of its new financial year were in line with expectations and “consistent with our high recurring revenue business model which gives good visibility”.

It added: “We anticipate our sales pipeline will result in a stronger level of new customer wins as we move through the year as budgets for digital transformation programmes start to release.

“We will execute on the strategic improvement initiatives around our value proposition, branding and new service offerings, with a positive impact on revenue expected in the second half of the year and beyond, in line with expectations.”

Martin O’Sullivan, an analyst at brokerage Shore Capital, noted: “We feel Iomart is a name that is worthy of revisiting on the long side, for those who are not currently involved, as post pandemic trading starts to improve.”

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