Cloud computing specialist iomart has made good on its acquisition aspirations with a deal to buy Yorkshire-based Concepta Capital in a bid to enhance revenues and profits.

The deal involves an initial cash consideration of £10.5 million with a further £4m dependent on future performance. This will be funded through a combination of iomart's existing bank facilities and cash on the company's balance sheet.

Concepta is a holding company for the Oriium and Pavilion IT brands. The group generated revenues of approximately £10m during the year to March 31, with earnings of circa £1.6m before exceptional items.

Oriium is a channel-only IT service provider specialising in data management solutions, and Pavilion provides cloud and hybrid infrastructure solutions and support services. Glasgow-based iomart provides hybrid cloud, connectivity, and digital workplace services from a network of 11 data centres across the UK.

The deal comes after iomart chief executive Reece Donovan said in June that the company was making “positive progress” in evaluating potential takeover targets. The acquisition drive is backed by a £100m credit facility secured at the end of last year.

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"We are delighted to welcome the Concepta team to iomart, marking the resumption of our M&A activity in line with our strategic plans," Mr Donovan said.

"After careful assessment of the market, in Concepta we found a business and team that fits within our strategic growth plan by extending the group's product, skills and capabilities, strengthening our direct and indirect routes to market, and complementing the group's strong financial model."

He added that Oriium’s long track record and “strong reputation” will allow iomart to broaden its reach and enhance the combined group’s expertise in the data management sector.

“Pavilion IT provides a new and diverse customer base adding scale, technology and geographical coverage to our existing infrastructure reselling and support activities,” Mr Donovan added. “This is a meaningful step as we position the group for its next phase of growth as a leading secure hybrid cloud business.”

Concepta’s majority shareholder Chris Kiaie, who established the Oriium business in 2007 and acquired Pavilion in 2018, will continue to lead the operations as chief executive. All 45 members of staff will be retained, taking iomart’s total headcount to approximately 450.

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“Joining iomart marks the beginning of the next phase of growth for Concepta and is a very exciting time for our highly-skilled, experienced and ambitious team,” Mr Kiaie said. “It allows us to leverage joint capabilities, capitalise on our understanding of the markets we operate in, and build upon the significant achievements to date.

Completion of the deal is subject to written confirmation from the Department for Business, Energy & Industrial Strategy in accordance with the National Security and Investment Act 2021. This clearance is required as Oriium provides data management services to UK government bodies.

Turnover at iomart during the year to the end of March fell by 8 per cent to £103m, reflecting lower non-recurring sales. The company also suffered from an increase in customer churn rates during the first part of the financial year, though that settled down in the second half.

Pre-tax profits dipped by 2% to £12.2m, but iomart also cut its debts by more than £13m to £41.3m.

Mr Donovan took over from iomart founder and long-standing chief executive Angus MacSween in October 2020 promising to “tweak” the type of expansion opportunities the company looks at towards increased capability, rather than just market share. Iomart completed 21 acquisitions during the decade prior to the ascension of Mr Donovan, who has now done his first deal as the head of the company.

Shares in iomart closed 3.8p higher yesterday at 173p.