Phoenix suffers commercial hangover in tricky first quarter

Services firm still troubled by problems of past 18 months with Q1 numbers expected to show declines

Phoenix is approaching the second half of the year with caution after the problems that have dogged the firm for the past 18 months continued to put a strain on numbers in its first fiscal quarter.

In an interim management statement published to the markets today, the IT services heavyweight claimed that "the issues that affected the group last year are still having a negative impact on results".

"Management is working to resolve these issues," adds the statement. "Though any material benefits are unlikely to be evident before the second half of the financial year, with the first half likely to produce a lower result than the previous year."

A major reorganisation of the business took place around the start of last year, and Phoenix has previously admitted this affected sales and contributed to a rise in customer churn. Meanwhile the discovery of accounting irregularities resulted in the firm having to swallow a £68.1m one-off charge.

For the three-month period to the end of June, Phoenix claims its "mid-market division is starting to show signs of improvement". But its indirect arm appears to have endured a tougher quarter, with the company admitting "the poorly executed restructuring" has affected sales.

Group contract value as of 30 June stood at £183.6m, down from £191.9m at the start of the quarter. Order-book value fell £12m during Q1 to £306.6m at quarter end.

The statement concludes: "The business environment remains challenging and we remain cautious in the short term. We are planning for revenue growth in the second half of the year and believe the business can recover from the difficulties of last year."