As analysts at finnCap neatly put it, preliminary results for cloud computing specialists iomart (IOM) were "typically strong", even if they contained few surprises following April's trading update. Despite a hike in administrative expenses, operating profit ticked up by 12 per cent, thanks to an even balance of acquisition-led and organic growth. Even after accounting for two acquisitions in the period, the business generated enough free cash for management to hike the dividend by a quarter.
This leaves plenty more room for more M&A in a consolidating sector. Whether this febrile atmosphere means iomart is a potential target is a moot point; chief executive Angus MacSween says takeover speculation has followed the company for its entire 18-year history.
Regardless, Iomart is happy to plough its own furrow through its partnerships with Amazon and Microsoft, although Mr MacSween sees public sector work as potentially more lucrative. The UK government's 'cloud first' IT policy is presenting iomart with highly complex contracts which require consultancy work. More jobs here could support the cash profit margin, which slimmed from 44 to 42 per cent last year owing to a broader revenue mix.
Analysts at Peel Hunt expect adjusted pre-tax profit of £23.5m and EPS of 17.6p for the current year ending March 2017, up from £19m and 14.4p in 2016.
IOMART (IOM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 273p | MARKET VALUE: | £292m | |
| TOUCH: | 273-277p | 12-MONTH HIGH: | 310p | LOW: 202p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 77p* | NET DEBT: | 31% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2016 | 76.3 | 13.0 | 10.3 | 3.15 |
| % change | +16 | +21 | +24 | +26 |
Ex-div: 11 Aug Payment: 30 Aug *Includes intangible assets of £84m, or 79p a share. | ||||
