The vast majority – around 90 per cent – of Iomart’s (IOM) revenues are recurring, meaning it is unlikely to be too far out of whack with consensus from one year to the next. That said, acquisition costs and previously undiscovered software licence fees dented statutory earnings at the full year, leading investors to send the shares down 5 per cent on the day against a flat FTSE. Despite this, the potential for growth both organically and through further acquisitions is as robust as ever. (With acquisitions part of the growth strategy, the group has agreed a new borrowing facility worth £80m to fund new deals when opportunities come up.) On an adjusted basis cash profits grew 9 per cent, thanks to gross margin expansion in the core cloud services business.
Management notes that marketing its products is a challenge, as many people find cloud computing and consultancy services somewhat arcane. The good news is that iomart can succeed with only a small sliver of the overall market. To this end, it is restructuring the sales and marketing team to emphasise a more data-driven approach.
Analysts at Peel Hunt trimmed their forecasts based on higher depreciation and finance costs, and now expect adjusted pre-tax profit of £26.6m, giving EPS of 19.9p in 2019 (from £24m and 18p in 2018).
| IOMART (IOM) | ||||
| ORD PRICE: | 382p | MARKET VALUE: | £412m | |
| TOUCH: | 379-382p | 12-MONTH HIGH: | 423p | LOW: 299p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 91p* | NET DEBT: | 27% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 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 |
| 2017 | 89.6 | 14.7 | 11.3 | 6.00 |
| 2018 | 97.7 | 14.8 | 11.4 | 7.18 |
| % change | +9 | +1 | +1 | +20 |
| Ex-div: | 16 Aug | |||
| Payment: | 06 Sep | |||
| *Includes intangible assets of £103m, or 95p a share | ||||
