8th May 2018 12:06
LONDON (Alliance News) - IDE Group Holdings PLC on Tuesday reported a wider annual loss despite strong revenue growth ahead of the finalisation of an operational review.
The AIM-listed IT services and technology provider posted a pretax loss of GBP12.8 million for 2017, compared to GBP4.1 million the year before.
The company booked an impairment charge on goodwill of GBP9.3 million in 2017 compared to none the prior year, while administrative expenses also rose 25% to GBP27.1 million.
IDE's revenue for the year was GBP65.0 million, 50% higher than the GBP43.4 million it recorded in 2016. Results included full contributions from two acquisitions made in 2016 as well as nine months from an April 2017 takeover.
IDE said though progress was made, a number of factors affected profitability and cash generation.
Firstly, in managed services, a number of high margin legacy contracts expired while some revenue in the same sector was also one-off.
A contract with a "major" new supplier also failed to deliver the expected level of service to customers nor the expected cost savings.
IDE added that it was involved in a trademark dispute forcing a change in its name to its current moniker from CORETX.
The company has embarked on a cost base rationalisation programme, and is also looking to increase automation and progress efficiency as well as focusing on two specific service areas, Platform Services and Managed Services.
As a result of the cost savings programme, profitability in 2018 is expected to be well below 2017, but should improve beyond that.
Interim Non-Executive Chairman Bill Dobbie said: "2017 has been a year of continued investment and building upon the foundational work that commenced in 2016. Concurrently with this investment, we delivered 18% organic revenue growth and achieved significant sales success. Fundamentally, this illustrates the competitiveness and relevance of our portfolio of products and services within our target market.
"Our intention for 2018 is to complete the integration of the three businesses we have acquired in the last two years, significantly reducing our cost bases and becoming more focused on sustainable, recurring margins than revenue growth."
Shares were down 3.3% on Tuesday at 14.50 pence each.
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