Join our community of smart investors

iomart adds interim dividend

The cloud computing specialist grew first-half revenues organically and through acquisitions
December 5, 2017

A strong first half for iomart (IOM) saw cloud services revenue rise by 13 per cent to £40.3m, albeit with a slower organic growth rate year on year. This stemmed from the conclusion of a low-margin public cloud consultancy project. Adjusting for this, the division’s organic growth was up an encouraging 8 per cent. The shares rose on the day, supported by the announcement of a maiden half-year dividend.

IC TIP: Buy at 390p

Recent acquisitions provided a fillip to the top line. The purchase of Dediserve in May for €7.9m (£6.7m) provides the company with an EU operation as Brexit looms, and expands iomart's cloud infrastructure presence. In line with management’s plan to consolidate its ecommerce offering, Tier 9 (trading as Simple Servers) was acquired in July, and Sonassi was purchased after the reporting period. These both provide infrastructure for ecommerce applications, specifically for the Magento ecommerce platform. Chief executive Angus Macsween says Sonassi makes significant use of automation, and boasts impressive cash profit margins of more than 80 per cent.

Iomart’s small and micro business segment, Easyspace, continued to trade well, with revenue up 2.3 per cent to £6.7m. Analysts at N+1 Singer forecast adjusted pre-tax profit of £24.4m with EPS of 18.4p for the year to March 2018, up from £22.4m and 17p in FY2017.

IOMART (IOM)   
ORD PRICE:390pMARKET VALUE:£420m
TOUCH:383-390p12-MONTH HIGH:390pLOW: 274p
DIVIDEND YIELD:2.1%PE RATIO:33
NET ASSET VALUE:87p*NET DEBT:26%
Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201642.17.15.4nil
201747.07.86.02.25
% change+12+9+10-
Ex-div:21 Dec   
Payment:31 Jan   
*Includes intangible assets of £91m, or 85p a share