Growing numbers of small- and medium-sized companies avoid substantial costs, complexity and security risks by tasking Iomart (IOM) with remotely hosting and managing their data. That helped the Glasgow-based group - which offers managed 'cloud' services and infrastructure, often bundled with access to major platforms owned by Amazon and Microsoft - to grow its adjusted cash profit by 23 per cent to about £29.1m in the year to March.
That was driven entirely by the main hosting division, where sales soared 23 per cent and the cash-profit margin widened by 1.4 percentage points to 50 per cent. The purchase of peer ServerSpace and two previous acquisitions helped, but organic sales also rose 9 per cent. The segment's gains were partly offset by a 20 per cent spike in group administrative costs due to acquisitions. Management also reported an increase in churn and pricing pressure as some customers ran into financial trouble, exited the market or were acquired.
Meanwhile, sales and profits dipped at the EasySpace business, which provides domain names, servers and email services to around 90,000 small businesses paying an average of £40 to £100 a year. Yet management highlighted the segment's excellent cash generation, which underpinned its decision to hike the dividend and target a payout ratio of 25 per cent over time - up from 20 per cent last year.
Broker finnCap expects EPS of 14.7p in the year to March 2016 (from 12.6p in full-year 2015).
| IOMART (IOM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 238p | MARKET VALUE: | £251m | |
| TOUCH: | 235-240p | 12-MONTH HIGH: | 288p | LOW: 160p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 68p* | NET DEBT: | 21% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 25.2 | 2.8 | 2.9 | 0.65 |
| 2012 | 33.4 | 5.8 | 6.2 | 0.90 |
| 2013 | 43.0 | 8.7 | 6.9 | 1.40 |
| 2014 | 55.6 | 9.7 | 7.3 | 1.75 |
| 2015 | 65.8 | 10.8 | 8.3 | 2.50 |
| % change | +18 | +11 | +14 | +43 |
Ex-div: 13 Aug Payment: 1 Sep *Includes intangible assets of £66.4m, or 62p a share | ||||
