Final Results

Robust business model delivers resilient performance, with a refreshed strategy positioning iomart for growth

iomart (AIM:IOM), the cloud computing company, is pleased to report its consolidated final results for the year ended 31 March 2021.

• Revenue resilient through the Covid-19 pandemic at £111.9m (2020: £112.6m), with revenue mix improving as growth in core cloud managed services was offset by reduction in non-recurring revenue. Positive contribution from prior year acquisitions
• Adjusted EBITDA2. of £41.4m (2020: £43.5m) with 37.0% adjusted EBITDA margin (2020: 38.6%), higher than industry average and in-line with expectations
• Adjusted profit before tax3. impacted by an increase of £1.3m in the depreciation charge in the year following acquisitions
• High levels of operating cash generated in the year at £43.7m (2020: £41.3m) which represents a 106% conversion of adjusted EBITDA (2020: 95%)
• Year end cash position of £23.0m (2020: £15.5m) with net debt of £54.6m (2020: £57.6m) which remains at a comfortable level of 1.3 times adjusted EBITDA

OPERATIONAL HIGHLIGHTS

• Appointment of Reece Donovan as Chief Executive Officer, from 1 October 2020, following retirement of founder and long-standing CEO, Angus MacSween
• Strategic review completed and refreshed strategy launched post year end, re-positioning iomart’s offerings around the growing hybrid cloud market
• Progress achieved on greater integration to ‘one-iomart’; retirement of SystemsUp consultancy brand, merger of sales and operational teams within Cloud Services, IaaS and consulting and recent appointments for key positions in leadership team
• Investment in data centre infrastructure and network, which continues to be a competitive differentiator, to improve resilience and reduce environmental impact
• Commitment to purchase Renewable Energy Guarantees of Origin (“REGO”) certified renewable electricity across our data centre estate

CURRENT TRADING AND OUTLOOK

• The Group has traded in line with management expectations at the start of the new financial year, in a manner consistent with the Group’s high recurring revenue business model
• Sales pipeline provides confidence in increased new customer wins as we move through the year, with a positive impact on revenue anticipated from H2 FY22
• Board increasingly confident in the long-term prospects for the Group

STATUORY EQUIVALENTS

A full reconciliation between adjusted and statutory profit before tax is contained within this statement on page 12. The largest item is the consistent add back of the non-cash amortisation of acquired intangible assets of £5.5m. The largest variance, year on year, is a £1.8m lower gain on the revaluation of contingent consideration relating to historic acquisitions.

Reece Donovan, CEO commented,

“The year covered by this report coincided almost to the day with the onset of the pandemic in the UK. We can look back with pride on what has been achieved during this unprecedented time for all of our employees and wider stakeholders. Our focus during the year was on the protection of our people and the business and our team responded with commitment, resilience, and dedication. I would like to take this opportunity once again to thank them for their efforts and support.

“We have now begun a new chapter for iomart, and I am proud to be at the helm of this great team. We have identified a significant market opportunity, growing our propositions in hybrid cloud, security, the digital workplace and connectivity, supporting our customers as they adapt to new ways of working now and in the future.

“We have proven the robustness of our business, underpinned by high levels of recurring revenues, breadth of customer base and strong cash generation. This is now enhanced with a clear strategic vision and roadmap to re-position the Group for growth, both organically and through selective acquisitions, and the Board is increasingly confident in the positive outlook for the long-term prospects for the Group.”

1. Recurring revenue is the revenue that repeats either under long-term contractual arrangement or on a rolling basis by predictable customer habit. % of recurring revenue is defined as recurring revenue (as disclosed in note 3) / revenue (as disclosed in the consolidated statement of comprehensive income)

2. Throughout these financial statements adjusted EBITDA (as 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 on the revaluation of contingent consideration. Throughout these financial statements acquisition costs are defined as acquisition related costs and non-recurring acquisition integration costs.

3. Throughout these financial statements adjusted profit before tax (as disclosed in the Chief Financial Officer’s report) is profit before tax, amortisation charges on acquired intangible assets, share-based payment charges, acquisition costs and gain on revaluation of contingent consideration.

4. Throughout these financial statements adjusted diluted earnings per share is earnings before amortisation charges on acquired intangible assets, share-based payment charges, acquisition costs, gain on revaluation of contingent consideration and the tax effect of adjusted items/weighted average number of ordinary shares – diluted (as disclosed in note 6).

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.