Mid-market network, cloud and IT managed services provider IDE Group saw a fall in sales and an increase in losses for the half-year ended 30 June, with customers holding off expenditure during the pandemic.
It said an increased reliance on mobile working and the need to facilitate customers' staff working remotely, alongside increased demand for lifecycle services, helped to offset a reduction in field, site and procurement sales amid Covid-19. Revenue was £12.4m compared to £14.7m for the same period last year, and the gross profit was £3.1m against the £3.6m generated last time – margins slightly improved to 24.7% from 24.4%. Adjusted EBITDA slumped to £400,000 from £1.2m, and the loss after tax for the period increased to £3.6m (H1 2019: £2.9m).
Net debt increased to £15.5m from the £15m owed at year-end 31 December 2019. During the pandemic 56 members of staff were put on on furlough, with 32 of these staff having now returned to work. A further 10 staff members returned from furlough but were made redundant. Another 14 remain on furlough.
A “majority” of customers deferred projects into the second half or “potentially into 2021”, said the company. “The group continues to be impacted by a general level of churn in the business, in particular our cloud and networks divisions,” it added.
On 1 June 2020, the company completed the acquisition of Nimoveri, a small cloud and IT services business for £200,000 in cash and secured loan notes. In the month of June, Nimoveri generated revenue of £39,000 and a net profit of £16,000.
On 1 July 2020, the company split its business into two divisions of Partner and Direct. Partner includes the group’s business with channel partners and predominantly consists of lifecycle, field and site engineering and certain other projects. Direct consists of the customers to which IDE provides services directly, which includes networking and connectivity, cloud and hosting, service desks, as well as some field engineering.
“The directors believe that this split of the business will help to focus the sales team, which has been enhanced by several new hires, and better align services to support our customers’ requirements,” said IDE.
The company expects that both revenue and EBITDA will be lower in the second half of 2020 than that in the first half.
