Good morning!

iomart (LON:IOM)

Share price: 218p (down 6% today)
No. shares: 106.8m
Market Cap: £232.8m

Final results for y/e 31 Mar 2015 - as usual, the blue text on the left is a clickable link through to the results statement. I've not looked at this company before. It's a cloud computing company, which seems to provide domain name & cloud hosting services.

The Stockopedia graphs show a very good progression of sales & profitability. I note this has been achieved with only a 7.5% increase in the number of issued shares, over the same timeframe as the graphs below. Although note that the company has used up its cash pile, and moved into net debt over that period.

5576a0e24e125IOM_graphs.PNG

Valuation - adjusted diluted EPS reported today is up 16% to 12.63p.

That means the shares are valued on a PER of 17.3 times - which looks about right, i.e. the PER is similar to the current growth rate in earnings.

Outlook - sounds OK:

5576a1ea27573IOM_outlook.PNG

Balance Sheet - as you would expect for an acquisitive IT group, the balance sheet is dominated by intangibles, mainly goodwill. Writing off the intangibles, gives net tangible asset value of £6.3m.

The current ratio is a stand-out negative. It stands at only 0.45, which is particularly bad, indicating stretched creditors. However, in this case the reason is that the bank borrowings are nearly all shown within current liabilities. This is probably due to the facilities coming up for renewal, and that should sort itself out once the bank facilities are renewed, with bank debt dropping down into long term creditors. So it's not a particular concern. The level of bank debt looks reasonable, compared with cash generation.

Cashflow - in my experience, the cashflow statement is a far more useful statement than the P&L for IT companies, as it shows you what's actually happening in cash terms, which is (in the long term) all that matters.

In this case, the top part of the cashflow statement shows a very cash generative business, once the large depreciation charge is added back:

5576a49aec20aIOM_cashflow.PNG

However, before we get too carried away, the company spends about the same on capex as the depreciation charge. So presumably they're having to replace servers, etc, with newer and more powerful ones on an ongoing basis, as web traffic…

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