Revenue slides for struggling IDE
Sales fell 23 per cent year-on-year for the MSP
Troubled managed service provider IDE group continued to see its fortunes tumble as it reported revenue of £41.1m for its year ending 31 December 2018.
The AIM-listed company reported its unaudited results showing a 23 per cent year-on-year decline in sales, along with a loss of £3.9m in adjusted EBITDA following review of "onerous contracts", staff costs and classification of exceptional items.
IDE, formerly known as Coretx, has had a tumultuous 12 months that saw it sell off 365 ITMS, which it had purchased in 2017 during an M&A spree. The sale worth £3m was used to reduce IDE's net debt.
The MSP also underwent a management overhaul, which saw former Capita CEO Ian Smith take over as executive director from Andy Ross, Andy Parker installed as executive chairman and Max Royde as non-executive director.
IDE's share price fell as much as 40 per cent today.
"The year being reported was a difficult one for IDE," stated Parker.
"The business has faced significant challenges created by the previous leadership team which have necessitated substantial effort and work in order to right-size the cost base and re-capitalise the balance sheet."
However, the company is optimistic about its future fortunes, telling the London Stock Exchange that the unaudited results are a result of "significant but positive" operational change in FY18.
"As a result of the actions taken during 2018, we ended the year in a much stronger position than we started it with a strong leadership team, an appropriate cost base and clear focus on operational execution and customer service to drive increased profitability and cash generation," Parker stated.
"The refinancing, which was completed post year end, has provided long term funding and means that the company has no other external debt, as the loan notes are held solely by shareholders, and predominantly by the largest shareholders."
It expects to make further operational cost savings of £7.2m, primarily through reducing headcount, along with £3m in savings over the next three years from a settlement in relation to an outsourced service contract.
It also received an injection of £7.5m from equity and convertible loan notes in order to turn business around.
"With the upheaval of last year behind us, we are now focused on driving the core activities necessary to support our customers and rebuild value for shareholders," said Parker.
"Towards the end of the year, several of the group's material customers renewed their contracts with IDE, some on a multi-year basis and - at the time of writing - the pipeline of opportunities across the business, both with existing and new customers and partner, is the strongest it has been since my involvement.
"I am also pleased to report that the group has been trading profitably at an adjusted EBITDA level in the year to date.
"We are confident our strategy is on track and look forward to reporting continued progress throughout the current year."