Iomart acquires Atech Support holding company, H1 profits fall

1st Oct 2024 09:41

(Sharecast News) - IT and cloud computing business Iomart has agreed to acquire Atech Support holding company Kookaburra Topco for £57.0m in what it called a "powerful combination" of secure cloud offerings that marks the "next phase" in the group's evolution.

Iomart said on Tuesday that the acquisition of Microsoft solutions partner Atech would be funded through its existing cash and banking facilities and included £19.6m of debt repayments and working capital adjustments at completion.

"Increasing the scope and value of Microsoft services to its customers provides the opportunity to increase iomart's share of overall spend and drive customer loyalty. Iomart's existing capabilities and practical experience in Azure Cloud services (primarily acquired via Extrinsica Global acquisition in 2023) augment and enhance the capabilities provided by Atech," said the AIM-listed group.

Iomart also revealed that interim revenues were flat year-on-year at approximately £62.0m, but warned that adjusted underlying earnings and pre-tax profits were both lower at £17.0m and £4.5m, respectively.

"Whilst weaker H1 results were expected, due to the higher costs of Broadcom's VMware licencing pricing (£1.3m annual cost), combined with the reduced recurring revenue as the group started the year due to customer churn, trading results were further impacted by some specific timing of order billings and the continuation of higher churn which has negated the positive contribution from recent acquisitions," said Iomart. "Given Iomart's relatively fixed cost base in some areas, including depreciation, amortisation, and interest expenses, this has had a notable impact on H1 profitability."

As of 0940 BST, Iomart shares were down 7.22% at 106.70p.

Reporting by Iain Gilbert at Sharecast.com