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Highlights:
- Iomart acquires Atech Support’s holding company for £57 million, enhancing its cloud services and Microsoft solutions capabilities.
- Interim revenues remained flat at £62 million, with declines in adjusted earnings and pre-tax profits due to higher licensing costs and customer churn.
- Iomart expects the acquisition to strengthen its cloud services offering and drive customer loyalty despite short-term profitability challenges.
IT and cloud computing business Iomart (LSE:IOM) announced the acquisition of Atech Support's holding company, Kookaburra Topco, for £57 million in a strategic move to enhance its cloud offerings. The AIM-listed company described the acquisition as a "powerful combination" that marks the next phase in Iomart’s evolution, expanding its capabilities in Microsoft services and Azure Cloud solutions.
The acquisition will be funded through Iomart’s existing cash and banking facilities, including £19.6 million for debt repayments and working capital adjustments at the time of completion. Iomart highlighted the synergy between its existing Azure Cloud services, bolstered by the 2023 acquisition of Extrinsica Global, and the solutions offered by Atech, a Microsoft solutions partner. This alignment is expected to increase Iomart’s share of customer spending and enhance customer loyalty.
Despite the positive acquisition news, Iomart revealed that interim revenues remained flat year-on-year at approximately £62 million. The company also reported declines in adjusted underlying earnings and pre-tax profits, which fell to £17 million and £4.5 million, respectively. Iomart attributed these weaker results to higher licensing costs from Broadcom’s VMware pricing, customer churn, and the timing of order billings.
The company noted that its relatively fixed cost base in areas such as depreciation, amortisation, and interest expenses had a significant impact on first-half profitability. However, Iomart remains optimistic about the long-term benefits of recent acquisitions and the expansion of its cloud services portfolio.
As of 0940 BST, shares in Iomart were down 7.22%, trading at 106.70p.
