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Iomart pushes organic growth

The cloud computing group delivered its twelfth consecutive year of growth
June 24, 2020

Iomart (IOM) reported its twelfth consecutive year of growth in 2020, with adjusted cash profits moving up 3 per cent to £43.5m. The cloud computing firm said that it achieved this through both organic growth and acquisitions made in the prior year. The group purchased Mesmet Limited, as well as the managed private cloud division of ServerChoice, for initial considerations of £2.7m and £2m, respectively, though its largest segment, Cloud Services, was primarily driven by organic growth, with revenues increasing by a tenth. 

IC TIP: Buy at 352p

The group’s smaller Easyspace division, which caters to the micro and SME markets, saw revenue dip slightly, down 2 per cent to £12.8m. Management put a dampener on its growth ambitions for the segment, saying that it now aims to simply retain its existing presence in the UK market through selective marketing and dynamic pricing. 

Iomart said that despite coronavirus the first two months of its current financial year have performed in line with expectations, and the group has maintained cash balances at a similar level to the year-end. It did, however, note that the timing of new projects is likely to be more uncertain for the rest of 2020. 

Broker Investec forecasts adjusted pre-tax profits of £23.2m and EPS of 16.6p for March 2021, compared with £22.8m and 16.3p in FY2020. 

IOMART (IOM)    
ORD PRICE:352pMARKET VALUE:£384m
TOUCH:352-368p12-MONTH HIGH:409pLOW: 220p
DIVIDEND YIELD:1.9%PE RATIO:28
NET ASSET VALUE:103p*NET DEBT:51%**
Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201679.313.010.33.15
201789.614.711.36.00
201897.814.911.57.18
201910416.211.97.46
202011316.812.56.53
% change+8+4+5-12
Ex-div:tba   
Payment:tba   
*Includes intangible assets of £111m or 101p a share **Includes lease liabilities of £20.3m