“Successful delivery of first year of strategic plan provides strengthened basis for future growth”

iomart (AIM: IOM), the cloud computing company, is pleased to report its consolidated final results for the year ended 31 March 2022 (FY22).

Financial Highlights

	2022	2021	Change
Revenue	£103m	£111.9m	-8%
% of recurring revenue*	93%	90%	+3pp
Adjusted EBITDA**	£38m	£41.4m	-8%
Adjusted PBT***	£17.1m	£19.6m	-13%
Profit before tax	£12.2m	£12.5m	-2%
Adjusted diluted EPS****	12p	14.4p	-17%
Basic EPS	8.6p	9.3p	-8%
Cash generation from operations	£37.9m	£43.7m	-13%
Proposed final dividend per share	3.6p/ share	4.5p/ share	-20%

The Group continues to benefit from a robust business model delivering very strong levels of recurring revenues, amounting to 93%* of Group revenues

• The reduction in Group revenue reflects lower non-recurring equipment and consultancy sales, along with lower customer renewal levels at the start of the year, which have since returned to normal levels
• Margins remain stable with adjusted EBITDA** margin and adjusted profit before tax3 margin at 36.9% (2021: 37%) and 16.6% (2021: 17.5%), respectively. Absolute profit reductions simply follow the revenue profile in the year
• Strong cash generation from operations in the period of £37.9m with a consistent cash conversion****** of 100% (2021: 106%)
• Year-end net debt***** reduced to £41.3m, comfortable at 1.1 times adjusted EBITDA
• Successful refinancing with an increased £100m revolving bank facility from a new group of four leading banks, underpinning the Group’s five-year growth strategy

OPERATIONAL HIGHLIGHTS

• Launch of new brand and successful restructuring of the organisation to create a “one iomart” team
• Established a new product team and launched new solutions targeting new and existing customers in areas of Digital Workplace, Secure Connectivity and Managed Microsoft Azure
• New security alliance with cyber security specialists, e2e-assure, to deliver proactive 24/7 security operations centre services
• Enhancements made to core operational and service-based systems and tools, with a primary focus on improved levels of customer service excellence
• Strengthened commercial leadership with appointment of a new Chief Commercial Officer
• M&A – positive progress in evaluating targeted opportunities to further extend the Group’s technology, product capabilities and routes to market, while enhancing revenue, profitability and EPS
• Continued delivery against our ESG programme

OUTLOOK

• The first two months of the new financial year has seen performance in line with the Board’s expectations, consistent with our high recurring revenue business model
• Inflation in energy prices is being proactively managed via price increases to our customers while we are using hedging options to provide some certainty for customers and our own planning
• The launch of the enhanced set of product offerings, coupled with a clearly defined brand and targeted go to market capability provide for a positive environment to deliver future growth

STATUTORY EQUIVALENTS

A full reconciliation between adjusted and statutory profit before tax is contained within this statement. The largest item is the consistent add back of the non-cash amortisation of acquired intangible assets. The largest variance, year on year, is a £1.5m lower amortisation of acquired intangible assets as the amortisation periods expire on certain historic acquisitions.

Reece Donovan, CEO commented,

“We have made good progress on all aspects of our strategic growth plan and start the second year of this plan in an improved position. With an expanded offering and strengthened team, as well as an established reputation within the UK’s cloud computing market place, we have a strong platform from which to return to a growth phase of the business.

“We are mindful that the wider business environment continues to be challenging. As iomart has shown in the past, during periods of uncertainty, we have a robust business model and strong financial position to manage such short-term pressures. This is especially the case as the market for cloud computing solutions continues to offer long term growth and our strategic actions taken, together with our M&A plans, puts us in a stronger position to benefit from this over the coming year and beyond.”

 

*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)

**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.

3Throughout 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, accelerated write off of arrangement fee on bank facility 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, accelerated write off of arrangement fee on bank facility, 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).

5 Net debt being outstanding bank loans, lease liabilities less cash and cash equivalents (as disclosed on page 13)

6 Cash conversion is calculated as cash generation from operations (as disclosed in the consolidated statement of cashflows) divided by adjusted EBITDA.

 

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