Typical, Iomart (IOM:AIM) says virtually nothing for months, then along come three announcements at once. But analogies to buses are not really fair, this company is more sleek, chauffeur-driven Bentley that puttering public transport. As today's trading update spells out, business is typically brisk and moving forward, built on that compelling and growing IT hosting and services outsourcing theme.
Today's £23 million acquisition of Backup Technology Holdings (BTL) plays the same tune, bringing blue-chips client such as Siemens, the British Red Cross, Lloyds, Suzuki, even Liverpool and Everton football clubs, both currently flying high in the Premier League.
Last year to December, BTL achieved £5.2 million of revenue and £2.4 million earnings before interest, tax, depreciation and amortisation (EBITDA) for a 46% margin, matching last month's Redstation deal.
Today's take-out price is substantially higher, pitched at 9.6-times trailing EBITDA compared to the 3.4-times EBITDA of Redstation and typical four to six-times ratings of past acquisitions.
If BTL's 200-odd clients can help prop-up Iomart's own sprialing 38% measure EBITDA margins, reported last year to March, perhaps the price will prove a moot point.
The third interesting development centres around Iomart management's plans to flog £11.8 million worth of stock via a book build placing. This is arguably the biggest factor in the shares near 3% slip today to 282p. But chief executive and founder Angus MacSween, who alone is selling £10 million worth, has not been a regular seller despite the shares incredible 10-fold four-year run from 28p.
He says he wants to 'rebalance his portfolio and utilise his entrepreneurs' relief.' That seems quite reasonable as any business builder must at some stage get the chance to crystalise their hard graft. He's only selling about a fifth of his overall stake, as well as promising not to do it again... well, not until at least after full year results for 2015.
I've been a long-run fan of Iomart, it's been one of my favourite companies on the market for a good two years now, when I first flagged the stock in Shares in October 2011 at 102p (see page 8 of PDF). I did similarly last November at 197.5p, and several time since. But there comes a point when the market valuation of even the best-run businesses catches up with events, hence my recent steer to top slice profits. I'll be watching from the sidelines for future opportunities.
