Shares of iomart Group Plc (IOM.L) were losing around 10 percent on the London Stock Exchange on Tuesday after the Scottish IT company warned on first half and fiscal 2025 results.
Further, the company announced that it has agreed to acquire Kookaburra Topco Limited, the holding company of Atech Support Limited, for a total consideration of 57 million pounds. Atech is an accredited Microsoft Solutions Partner.
In its trading update, iomart said it expects adjusted profit before tax for the six-month period to September 30 to decline to 4.5 million pounds from 7.6 million pounds, recorded for the same period last year.
Excluding items, EBITDA is projected to be at 17 million pounds, lower than 18.6 million pounds a year ago. Revenue, however, projected to remain flat at 62 million pounds, compared with previous year. These weaker results reflect higher costs of Broadcom's VMware licencing pricing, combined with the reduced recurring revenue.
The results were further impacted by some specific timing of order billings and the continuation of higher churn.
iomart has entered its second-half with a lower run rate of revenue than previously anticipated, which will have an impact on full-year 2025 results for the existing iomart business.
Looking ahead, for the full year to March 31, 2025, the Board expects a flat year on year revenue profile, with overall results below market expectations.
Regarding the deal, the company said the consideration is on a cash free, normalized working capital, and debt free basis under a locked box completion mechanism.
The purchase price includes 19.6 million pounds of debt repayments and working capital adjustments at completion, with the balance paid to the Kookaburra shareholders.
The addition of the growing Atech business will change the financial profile of the Group, bringing an immediate return to revenue growth and a positive EBITDA contribution, the acquirer said.
Lucy Dimes, CEO of iomart Group, said: "Atech was a strategic target for us, and creates a powerful combination of Microsoft credentials, managed security services, high quality referenceable customer deployments, leading-edge technology and global delivery capability. This accelerates and plays directly into our vision to be the UK's leading secure public, private and hybrid cloud services provider."
For the 12-month period to June 30, Atech generated revenue of 32.2 million pounds, with adjusted EBITDA of 3.3 million pounds.
Post transaction, Ryan Langley, CEO of Atech, will continue to oversee the business.
iomart Group was trading down by 10.33 percent at 103.12 pence per share on the LSE.
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