The emergence of cloud computing over the past few years, where the storage of data moves away from individual computers, has proved to be lucrative for Iomart (IOM), which has developed a niche in providing hosting and cloud computing services to small and medium-sized enterprises (SMEs). That approach has proved to be a great success, with a combination of organic growth and acquisitions driving underlying pre-tax profits more than 10-fold higher to £10.7m in just three years.
Iomart enjoyed a good return from an acquisition spree costing £9.5m during the year. This benefited fast-growing data hosting business segment the most, where the addition of companies such as Melborne Server Hosting, as well as a substantial number of new orders from existing customers, helped boost revenues by 37 per cent to £32m and operating profits by 54 per cent to £8.1m. On an underlying basis, revenue growth was eye-catching at 20 per cent. Acquisitions also played an important part at the Easyspace segment, which offers email and domain names to SMEs and micro-cap companies.
Angus MacSween said the company faced few direct competitors in the UK SME data-hosting area and that the drive towards cloud computing was ultimately driven by consumer demand for tablet computers and smart phones.
Canaccord Genuity forecasts adjusted pre-tax profits of £13.3m and EPS of 10.2p, rising to £15.6m and 11.9p the year after (from £10.7m and 8.5p in 2013).
IOMART (IOM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 243p | MARKET VALUE: | £254m | |
| TOUCH: | 242-243p | 12-MONTH HIGH: | 249p | LOW: 131p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 35 | |
| NET ASSET VALUE: | 50p* | NET DEBT: | £0.4m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 11.8 | -1.20 | -1.95 | 0.30 |
| 2010 | 18.3 | 1.25 | 2.12 | 0.40 |
| 2011 | 25.2 | 2.79 | 2.91 | 0.65 |
| 2012 | 33.4 | 5.84 | 6.22 | 0.90 |
| 2013 | 43.0 | 8.70 | 6.91 | 1.40 |
| % change | +29 | +49 | +11 | +56 |
Ex-div: 14 Aug Payment: 3 Sep *Includes intangible assets of £39.8m, or 38p a share | ||||
