MSP IDE Group is undertaking a “full review” of its operations, which includes getting rid of its Connect business.
The company is suffering after its revenue fell to £24.1 million, down from £28.2 million in 2019, while adjusted EBITDA declined to £0.5 million from £1.1 million in the prior year. The company had a net loss from continuing operations of £18.5 million, down from a loss of £8.5 million in 2019, following “a £17.2 million amortisation and impairment charge”.
The business made several cost-cutting measures last year, including redundancies in areas that saw a decline.
Non-executive chairman Andy Parker said in the results that 2020 was an important year in the ongoing rationalisation of IDE’s trading businesses.
“We have continued the good work from 2019 in positioning the group for a period of sustained growth which is now bearing fruit in 2021. Overall, despite the operating losses in our overall group in 2020, in the current year, we are now seeing the real benefits of focussing our business strategy on profitable partnership channels and consolidating our group offering across the Manage and Connect operations and we can look to the future with confidence and expect to generate positive operating cash flow for the first time in several years.”
The firm said it was considering the divestment of its Connect business due to “the very different levels of performance across two distinct business sectors”, with revenue for the networking and connectivity focused division falling to £13.1 million from £14.6 million and adjusted EBITDA falling to a loss of £0.8 million.
Parker added that the objective in 2021 is to “further reduce costs through datacentre and network consolidation and leverage these savings into more competitive pricing to generate new, and extend existing, business opportunities”.
The company provided a more positive outlook for its Manage business – which takes care of managed services – despite revenue falling from £14.7 million to £11.5 million which it put down to “cyclical variability” in its supplies to system integrators and the “novation of contracts” to its Connect business. Adjusted EBITA rose by £1 million, however, to £2.1 million.
