Iomart eyeing ‘more ambitious’ acquisitions

Taking over Backup has increased the firm’s presence in the back-up and disaster recovery market, while the Redstation deal extended the company’s footprint in Europe.

MacSween told The Scotsman: “If you go back a few years then we were making acquisitions that added £1m or £2m in revenues. Those deals aren’t going to move the needle for us any more because we now have a business that will turn over £60m or £70m next year.

“So, in terms of increasing shareholder value, we have to be more ambitious about the size of deals that we’re doing.”

MacSween said that, while Iomart would continue to focus on expansion in the UK, it would also look at opportunities in Europe and the United States.

His comments came as the Aim-quoted firm posted a 29 per cent rise in underlying profits to £9.8m for the six months to 30 September.

The increase in profits came on the back of a 23 per cent surge in revenues to £24.6m after the company won a string of clients, including transport firm Go-Ahead Group, flight comparison website Skyscanner and fashion label Superdry.

Other clients signed up during the opening half of the year included call centre operator Cap Gemini, the Red Cross emergency relief charity and advertising giant WPP.

Analysts continue to eye further acquisitions from Iomart.

Ian Mitchell, an analyst at Arden Partners, said: “Although net debt has risen to £23.5m, it represents just one-times earnings before interest, tax, depreciation and amortisation and we expect the group to continue to look at earnings enhancing acquisitions as opportunities arise.”

In October, MacSween sold £10m-worth of shares in Iomart, with executive director Sarah Haran selling more than £1m in stock and group finance director Richard Logan disposing of £750,000-worth of shares.

Mitchell added: “This is a reassuring set of results from Iomart and should enable the group to put behind it any concerns that recent director share sales foreshadow weaker performance.

“In addition, recent activity from the likes of Google, which last week launched a rival service to Amazon Web Services, does not represent a competitive threat to Iomart.”

FinnCap analyst Andrew Darley added: “Iomart delivered typically solid interims, with revenue and margin growth, and targeted acquisitions to make the most of the data centre technical assets.

“Acquisitions add capacity, territorial footprint and cloud capabilities. The results are straightforward, and positive.”