iomart: Final Results

24th June 2020 | iomart Group plc

Increased organic growth and continued resilience

iomart (AIM:IOM), the cloud computing company, is pleased to report its consolidated final results for the year ended 31 March 2020.

  • Revenue up by 9% to £112.6m, with the majority of the growth derived organically in the year
  • Adjusted EBITDA* benefitted by £3.0m from transition to IFRS 16 ‘Leases’
  • Adjusted profit before tax** and adjusted earnings per share*** reflects over £1m annualised investment in sales engine and broader mix of revenue
  • Cash generated from operations in the year of £41.3m (2019: £39.1m before exceptional items) which retains the consistently strong profit-to-cash conversion ratio (95% conversion of adjusted EBITDA) (2019: 93%)
  • Year-end cash position of £15.5m (2019: £10.1m) with net debt of £57.6m (£37.3m pre the adoption of IFRS 16) (2019: £39.2m), at a comfortable level of 1.3 times EBITDA4

OPERATIONAL HIGHLIGHTS

  • Cloud Services organic growth rate increased to 6% in the year (2019: 2%)
  • Increased investment in sales engine has led to several multi-million pound, multi-year contracts being secured, adding to future revenue visibility
  • Continued market leading profitability and low customer attrition
  • Acquisitions of ServerChoice in February 2020 and Memset Limited in March 2020, provide good quality customer base, with integration already underway
  • Appointment of Reece Donovan as Chief Operating Officer to prepare Group for next stage of growth

CURRENT TRADING AND OUTLOOK

  • Robust business model and strength of offering is providing resilience during Covid-19 lockdown
  • The Group has traded in line with management expectations in the first two months of the new financial year, consistent with the Group’s high recurring revenue business model
  • Group current cash balances remain at a similar level to the year end
  • Business development continues, with good discussions with both new and existing customers, although timing of new projects is likely to be more uncertain for the remainder of this calendar year

Statutory Equivalents

A full reconciliation between adjusted and statutory profit before tax is contained within this statement. The largest variance year on year within the adjustments relates to the £1.9m reduction in contingent consideration on the 2018 LDeX acquisition which translates to a gain within the consolidated statement of comprehensive income. In the prior year a similar accounting entry was recorded for the 2017 Sonassi acquisition but in that situation it was a loss of £1.4m on the finalisation of the earn-out final payment which was higher than previously expected.

Angus MacSween, CEO commented,

“This is the twelfth consecutive year of growth since the transition of the business to cloud services in 2008 with the acquisition of our first data centres. Since that time, revenues and profits have grown considerably, with revenue reaching £112.6m, through the combination of continued organic growth and acquisitions.

“As we look forward to the next stage of growth, we do so with our teams all working remotely and the world around us considerably changed due to the global impact of Covid-19. Our focus must be first and foremost on the well being of our people, all of whom have risen to the challenge fantastically, for which I and the Board are extremely grateful.

“Together we have built a strong, resilient business, providing mission critical infrastructure to a wide spread of customers across diverse industries. This resilience will serve us well as we progress through the months ahead. The switch to remote working across the world has only accelerated the move to the cloud which we believe will be a growth driver for our business over the longer term.

“Our high levels of recurring revenues, breadth of customer base, industry leading profit margins and strong cash generation, mean we are confident iomart is well positioned to withstand the current challenges and deliver long-term growth.”

* Throughout these financial statements adjusted EBITDA (disclosed in the consolidated statement of comprehensive income) is earnings before interest, tax, depreciation and amortisation (EBITDA) before share-based payment charges, acquisition costs and gain/(loss) on the revaluation of contingent consideration. Throughout these financial statements acquisition costs are defined as acquisition related costs and non-recurring acquisition integration costs.

** Throughout these financial statements adjusted profit before tax (disclosed in the Chief Financial Officer’s report) is profit before tax, amortisation charges on acquired intangible assets, share-based payment charges, acquisition costs, accelerated write off of arrangement fees on bank facility and gain/(loss) on revaluation of contingent consideration.

*** Throughout these financial statements adjusted diluted earnings per share (disclosed in note 6) is earnings per share before amortisation charges on acquired intangible assets, share-based payment charges, acquisition costs, accelerated write off of arrangement fees on bank facility and gain/(loss) on revaluation of contingent consideration.

**** EBITDA is earnings before interest, tax, depreciation and amortisation.

This announcement contains forward-looking statements, which have been made by the directors in good faith based on the information available to them up to the time of the approval of this report and such information should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information.

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