Iomart Group falls as lower first half profits are confirmed

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Iomart Group PLC (LON:IOM) shares started Tuesday on the back-foot as the company confirmed lower profits in its first half.

Revenue for the six months ended September 30 increased 2% amounting to £56.3mln, of which around 90% was recurring revenue.

The company reported first half earnings (adjusted EBITDA) amounted to £20.8mln, down 4%, whilst profit before tax was marked at £6mln, down 29%.

Iomart noted that lower earnings were the result of higher take up of “lower-margin but strategically valuable” managed cloud solutions, whilst the drop in profit reflected higher depreciation and software amortisation charges.

Cash generation in the period was reported at £23.1mln, up 12% versus the same period of 2019.

The company confirmed it will maintain its interim dividend payment, at 2.6p per share.

In its outlook, the company noted an increase in new business over recent months and said both revenue and profit margins are expected to be boosted in the second half.

“Whilst we have exciting plans for the future of iomart, the focus in the first half of the year had to be the protection of our people, customers and stakeholders in the face of Covid-19,” said Reece Donovan, chief executive.

“I am pleased to report such a resilient set of results and would like to thank our team for their continued efforts and commitment. iomart’s business model has stood us in good stead and despite the global slowdown in corporate activity, we continue to perform well.”

Iomart shares fell 16.27p or 4.79% in Tuesday morning’s deals, to change hands at 323.23p.

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