IMImobile (IMO) faced issues within its Middle East and Africa segment in the year to March, dampening the top line and feeding through to a 17 per cent decrease in gross profits, even though the underlying margin ticked up 270 basis points. The revenue decline stemmed partly from the impact of the devaluation of the naira – Nigeria’s currency – and mobile operator MTN renewing its contract with IMImobile on less favourable terms. Overall, however, the cloud communications group enjoyed 7 per cent organic revenue growth, with gross profits up 17 per cent to £50.7m, albeit on a reduced margin due to the contribution of Infracast (acquired in March 2017), which has to contend with the costs of third-party mobile infrastructure.
Still, new long-term contracts in the Middle East and Africa provide a “healthier outlook” moving into the 2019 financial year. And the preliminary numbers simultaneously convey a story of strong growth in Europe and the Americas, with gross profit up 37 per cent to £31.3m, thanks to existing customer relationships, new wins, and contributions from three recent acquisitions – Infracast, Sumotext and Healthcare Communications.
The fall in pre-tax profit derived largely from acquisition-related costs. Broker Investec forecasts pre-tax profits of £5.3m and EPS of 4.6p for the year to March 2019 (from £2.7m and 1.5p in FY2018).
| IMIMOBILE (IMO) | ||||
| ORD PRICE: | 274p | MARKET VALUE: | £170m | |
| TOUCH: | 272-276p | 12-MONTH HIGH: | 288p | LOW: 186p |
| DIVIDEND YIELD: | nil | PE RATIO: | 183 | |
| NET ASSET VALUE: | 87p* | NET CASH: | £4.3m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 43.4 | 5.3 | -7.6 | nil |
| 2015 | 48.9 | -2.3 | -13.5 | nil |
| 2016 | 61.6 | 4.2 | 7.1 | nil |
| 2017 | 76.1 | 5.1 | 11.8 | nil |
| 2018 | 111 | 2.7 | 1.5 | nil |
| % change | +46 | -48 | -87 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £53.7m, or 86p a share | ||||
