iomart signals M&A activity will continue

Iomart Group has delivered a solid set of numbers for its financial year, producing a return to growth and underlining the benefit of a strategy that concentrates on cloud services.

The channel player saw sales rise by 12% from £103.02m to come in at £115.64m for the year to 31 March. Pre-tax profits fell to £8.5m from £12.2m a year earlier.

The revenue improvements were down to a number of factors, including good customer renewal levels, organic revenue growth in the firm’s core cloud managed services and a contribution from the Concepta acquisition, which was sealed last August.

Concepta provided £6.2m of revenue and a positive profit contribution in the fiscal year, and was described in the results as “performing well”, giving iomart more routes to market and additional skills and expertise.

The firm indicated that the drop in pre-tax profits was partly because of decisions to make investments in upskilling employees’ capabilities, appropriate wage increases and cost-of-living support.

During the year, the firm launched a full learning management system internally to support skills development programmes.

Operational highlights in the fiscal year included setting up a fresh regional sales leadership team to reshape the sales structure in the first half, with order bookings accelerating in the second half. On the product management front, the firm also developed its portfolio, with a refinement of data security and managed Microsoft Azure offerings, plus the launch of a multi-tenant cloud platform.

Since the close of the fiscal year, the business has continued to expand through mergers and acquisitions (M&A). Earlier this month, it picked up Azure specialist Extrinsica for an initial £4m, with a further £300,000 payable on the achievement of key customer targets during the calendar year.

Reece Donovan, CEO of iomart, said the firm had kept momentum going through the last fiscal year and was continuing to keep an eye on M&A opportunities to further bolster the business.

“This has been another busy year at iomart for the full team. Together, we have generated good momentum across both the commercial and operational areas. A higher level of M&A activity has also been pleasing to see, with two acquisitions having been completed in the last 10 months,” he said.

“These acquisitions have expanded our capabilities and routes to market, making our solution portfolio relevant to a wider audience. The increase in the effectiveness of our sales activities, the operational improvements made, the resilience of our business model and our clear focus on execution gives us a stronger foundation on which to accelerate organic growth whilst making selective acquisitions,” he added.

In the results statement, the firm indicated that since the close of the fiscal year, the past couple of months had been in line with internal expectations and revenues were ahead of the prior period, thanks to a mix of organic and inorganic growth.

The experience in the firm’s second half of the last fiscal year, where it built a strong pipeline, has also built confidence that the acquisitions are making a difference and the strategy is on the mark.