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Iomart goes ‘bigger and bolder’ in pursuit of growth

Iomart is targeting bigger-ticket acquisitions in the future as chief executive Lucy Dimes looks to further boost the cloud computing provider’s revenue growth.

Posting record revenues for the 12 months to the end of March, Iomart said it remains confident in its long-term prospects as the increasing complexity of the technical landscape bolsters demand for service partners among small and medium-sized businesses. Growth efforts will be focused on its biggest division, cloud managed services, which also incudes data protection and cybersecurity.

“The plan is to sell more and to buy more, and to buy bigger,” Ms Dimes said. “Bigger, better, bolder is our mantra, so bolder M&A.

“What we mean by bolder M&A is the last couple of acquisitions we’ve done have averaged about £7m in revenue, [and] if you look at all 24 over the last 10 years it’s been £7m to £10m in revenue, so bigger than that would be £10m or £20m revenue.”

Acquisitions accounted for nearly £9m of additional revenues from cloud managed services, Iomart’s largest division, which expanded by a total of 17% last year to £75.2m. Overall revenues were 10% higher at £127m.

Adjusted pre-tax profit grew by a more modest 1% to £15m as the company was hit by higher interest rate changes on debts that stood at £42.3m at the year-end. However, chief financial officer Scott Cunningham said Iomart still has “plenty of firepower” to execute on its growth strategy.

“There’s some good opportunities out there so I guess we would be surprised if we didn’t do another acquisition before the end of the calendar year,” he added.

Asked about the prospects for acquisitions, Ms Dimes said: “It’s traditionally quite a fragmented market – there’s lots of founder-led businesses that are in that sub-£10m area.

“There’s also a lot of…private equity money that hasn’t yet been spent, so you’re always going to be competing with those investors, but the overall multiples have come down a lot over the last couple of years which is a good thing for companies like us.”

Looking ahead, Iomart said growth will be more weighted to the second half in the coming year due to industry changes in VMware licensing and inflation-driven cost increases.

The company, which has 12 data centres connected by a 2,500 kilometre fibre network, also announced the appointment Richard Last as its new chairman.

Ms Dimes has held the post of both chair and chief executive at Iomart since September 2023, when former CEO Reece Donovan – who largely steered the company through Covid and its aftermath – stepped down suddenly.

Mr Last has extensive experience across quoted and private companies in the technology services sector. During the past six years he has held chair positions at Hyve Group, Gamma Communications, Arcontech Group and Servelec Group.

“In taking up the role of chair, I was impressed by the leading position Iomart has established in the cloud services marketplace, the strength of its customer relationships and the talent across the team,” Mr Last said.

“I am very much looking forward to working with the board to leverage these strong foundations and support the group in realising its growth ambitions.”

Ms Dimes added: “Since I took on the dual role of chair and CEO in September 2023 we have been running a diligent process for a new chair, and we are delighted to have attracted such an experienced and knowledgeable individual as Richard.

“His wealth of experience in M&A and growing many successful technology sector leaders will be a great asset as we drive forward the execution of our growth strategy.”

Source: The Herald

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