Technology sector stalwart iomart has reported encouraging news on the sales front but underlined the scale of the challenges facing firms in Scotland following the surge in inflation.

iomart, which helps firms to operate cloud-based computing systems, said it had enjoyed strong growth in recent months reflecting the company’s success in converting its pipeline of sales opportunities into firm orders.

Sales are expected to have risen to around £115 million once numbers for the year to March 31 are finalised, from £103m in the preceding period.

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The Glasgow-based firm seems to have enjoyed a happier time of it of late than some big technology players such as Facebook owner Meta, which have found the boost to revenues they enjoyed during pandemic lockdowns has not been sustained.

iomart noted that it operates in a market that remains in growth mode. Increasing numbers of companies and consumers are relying on specialists in cloud-based systems to help ensure they can meet their storage and processing requirements. While firms have been cutting discretionary spending in areas such as travel, investments that can improve the efficiency and security of IT systems are more likely to be regarded as essential.

Analysts said the investment iomart had made in boosting its own sales and marketing effort had paid off.

However, the company made clear that its margins have come under real pressure following the surge in inflation that started amid the recovery from the pandemic, and gained momentum after Russia launched its full-scale invasion of Ukraine.

The kind of data centres that iomart operates are power hungry places and the company said its electricity bills increased by around £7 million in the year to March 31, to an unspecified amount.

iomart said it was able to pass on the cost increase “appropriately” to customers without being specific.

Firms in sectors with less favourable demand trends will not have been so lucky.

But iomart indicated that it was impacted by the inflationary spiral that policy-makers at the Bank of England are trying to ensure is stifled.

The company noted pressure on margins resulting from pay rises it awarded staff, at least partly to help them cope with cost of living increase.

iomart also felt the impact of increases in borrowing costs that followed after lenders passed on the effect of the dramatic rise in interest rates sanctioned by the Bank of England as it tried to curb inflation.

The company said its interest expense rose by around £0.9m in the latest year, without providing further details.

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