Shares of Glasgow-based cloud data centre operator Iomart Group plc fell as much as 10% on Wednesday after it published a trading statement for the year ended March 31, 2021, saying its results will be “at the lower end of expectations.”

Iomart said it expects to report revenue of £112 million (FY20: £112.6 million) and adjusted profit before tax of £20 million (FY20: £22.8 million).

“Iomart expects to deliver a continued stable financial performance in the second half of the year,” said the firm.

“The third, and unexpected, COVID-19 UK lock down hindered the green shoots of growth we had expected in the second half of the year, causing results to be at the lower end of expectations. 

“However, the group remains strongly profitable, and the board is confident iomart has a strong basis for growth once UK business confidence returns and the strategic actions currently in progress under new CEO Reece Donovan have been fully implemented.”

Iomart said it has seen revenue growth within its core area of managed cloud services, but overall its cloud services division experienced a contraction “primarily due to a drop in non-recurring hardware reselling activities as customers delayed investment decisions.”

In its outlook, Iomart said: “The group’s revenue profile continues to transition away from legacy self-managed infrastructure revenue to managed cloud revenue, which by its competitive nature tends to have initially lower margins which expand over time and represent a better long term growth opportunity.

“This trend will continue as the group refocuses towards higher growth sectors, with managed cloud services at the heart of the Iomart offering.

“While the success of the transition will take time to flow through into results, the board is confident Iomart’s valuable datacentre and network infrastructure, market-leading cloud expertise, highly recurring revenue and significant customer base means the business is well positioned to execute on its strategy and return to an accelerated growth trajectory over the medium term.

“The board expects to continue to use selective M&A to augment the growth strategy.

“The group’s strong balance sheet allows the proactive consideration of acquisitions to broaden the group’s skills and capabilities in new areas.

“The board remains confident in the outlook for the long-term prospects for Iomart.”

Iomart CEO Reece Donovan said: “Iomart has performed resiliently during these unprecedented times, proving the strength of our recurring revenue model, the value our customers place on the services we deliver, and the commitment of our teams.

“We are in a period of transition for Iomart, building on a strong starting position in terms of our financial strength, business model and market position.  

“We look forward to updating investors further on our revitalised strategy at the Capital Markets Day in May.

“We have high confidence levels on the future success of Iomart and our ability to be a leading cloud service provider, supporting customers in each step of their cloud journey.”