Iomart's new acquisitions boost revenue but profits dip

Iomart failed to improve first-half profits despite an increase in first-half revenue thanks to a strong contribution from newly acquired businesses in its cloud services segment.

For the six month period ended 30 September the cloud computing specialist grew turnover 8% compared to the same period last year to reach £50.9m, but profit before tax dropped 5% to £7.3m as higher sales costs and administrative fees wiped away revenue progress.

Revenue from Iomart’s cloud services segment increased by 10% to £44.3m, including a full contribution from Sonassi, Simple Servers and Dediserve, which were acquired in the prior financial year, and a partial contribution by Bytemark, which was acquired in August.

Meanwhile, revenue and EBITDA from the Easyspace segment, which provides products such as domain names, shared hosting, emails and dedicated servers to small businesses, remained consistent at £6.7m and £3.1m respectively.

Cash and cash equivalents at 30 September stood at £9.4m, up from £7.1m at the same point last year, while the AIM traded company upped its interim dividend from 2.25p to 2.45p per share.

Angus MacSween, chief executive of Iomart, said: "Iomart's continued strong trading performance is a reflection of the strength of our cloud capabilities and business model, the breadth of our customer base and the ongoing growth of the cloud market. We help companies at all stages of their journey, with a wide portfolio of managed cloud services, which makes us confident about the significant and sustainable market opportunity ahead."

After having purchased Bytemark for a total consideration of £4.9m during the period, Iomart said it remains committed to complementing its organic growth through further acquisitions.

"The high levels of visibility within our recurring revenue business model and strong cost control provides stability to our trading performance for the second half of the year, ensuring the full year should deliver a similar overall year on year progression as we have reported in the first half. We remain very confident in the group's long term prospects," said MacSween.

Iomart’s shares were down 0.46% at 348.38p at 0916 GMT.