Iomart has unveiled its latest acquisition as the Scottish cloud computing specialist’s new chief executive revealed that she wants to pick up the pace of expansion following the abrupt departure of her predecessor.
Lucy Dimes, chair of Iomart since August 2022, stepped into the role of chief executive in September of this year following the resignation of Reece Donovan. No reason was given at that time for Mr Donovan’s immediate exit.
Mr Donovan took over the role of chief executive in September 2020 from Iomart co-founder Angus MacSween. His transition into the post began during the early throes of lockdown as the company’s employees were shifting to remote working.
READ MORE: Boss of Iomart quits with immediate effect
Asked yesterday about the circumstances of Mr Donovan’s departure, Ms Dimes said: “Basically Reece had three very tricky years coping with Covid, the energy crisis, [and] a lot of building the foundations [and] internal stuff to do.
“We got to a point where a lot of that heavy lifting had been done. We just agreed by mutual consent that the next phase of Iomart needed a different pace and a different focus and different energy.”
She added that she and the board were “very happy” with what Mr Donovan achieved during the difficult period of his tenure, “but it just felt like we needed somebody new going forward.” The company’s growth strategy remains sound, but it was “the pace and execution of that strategy that we wanted to increase”.
“You can read into wanting a faster pace to mean that it wasn’t happening fast enough before,” Ms Dimes added.
“There are reasons for that, there were other things to contend with, so it wasn’t for the want of the trying. We kind of felt we were at the stage where we could up the pace a bit.”
READ MORE: Iomart declares confidence following abrupt departure of CEO
She was speaking after Glasgow-based Iomart unveiled an increase in revenues and earnings for the six months to September 30. However, pre-tax profits were down by 10% at £4.4 million while basic earnings slid by 11% to 3.1p per share.
“Basically we have had growth in the revenue, growth in the trading profit [and in] the EBITDA of the business, but we’ve also had an £800,000 increase in our interest costs which is purely [from] the Bank of England increase in rates,” chief financial officer Scott Cunningham explained. “That has dampened down some of the other positive factors.”
The AIM-traded company generated nearly 60% of its £62m of revenues during the first half from cloud managed services such as web hosting. Income from this line of business was 27% higher than in the same period a year earlier, helped in large part by the acquisitions of Concepta and Extrinsica.
Iomart announced a further acquisition yesterday with the company set to take over the entire issued share capital of Accesspoint Technologies, a London-based IT hosting company that has been focused on the UK legal industry since 2009.
READ MORE: New broom at iomart looks to ‘tweaks’ for future growth
Iomart will pay an initial cash consideration of £4.5m with a further £500,000 potentially payable upon achievement of certain post-acquisition milestones. A further £1.4m earn-out payment is contingent upon the profitability of Accesspoint during the 12 months to August 31 of next year.
“Our current shareholders understand that we can do [bolt-on acquisitions and] understand that we can do them from our balance sheet and our cashflow,” Mr Cunningham said, noting that Iomart’s debt level is “nearly identical” to what it was a year ago. “But if something larger came along we have always said we would have a look at it, and if it made sense we would take it forward.”
The company has moved from its home of more than 20 years in the West of Scotland Science Park into new offices in Robertson Street in the centre of Glasgow. About 150 of its 500 employees are based out of the new headquarters.
Ms Dimes said it has been “quite an upgrade”.
“This has got a kind of classic modern tech company city centre vibe and I think any person under a certain age would be attracted here,” she explained. “It ought to help us with our acquisition of talent.”
Shares in Iomart closed yesterday's trading nearly 2% higher at 157p.
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