IDE Group making 'incredibly tough decisions' as it lays foundations for future growth

It comes as the MSP announced its unaudited results for the six months to 30 June 2022

IDE Group has spent the first half of 2022 laying "foundations for future growth" after making "incredibly tough decisions" which saw staff leave the business.

The MSP's comments come as it announced its unaudited results for the six months to 30 June 2022.

The period saw revenue from continuing operations drop year on year from £7.7m to £6.7m whilst its adjusted EBITDA level fell from £2m to £0.9m in the same period.

Gross profit also declined from £3.6m to £2.4m, representing an overall decline in gross margin of 10 percentage points compared to the prior period.

Explaining the drop in revenue, non-executive chairman Andy Parker said the profile of business this year is "weighted differently" to 2021.

Parker added a change in product mix with less lifecycle project work resulted in a drop of its gross margin.

"Furthermore, a number of contracts that were won have had a delayed start an example of which is a contract scheduled for commencement in May now expected for November 1," he said.

Despite this, he said the board "continues to be pleased" with trading as it builds for a "profitable cash generative year".

"The company is generating positive cashflow over and above the repayment of onerous contracts (which end this year), with the cash bank balance sitting above £1m at the date these results are posted," Parker said.

"The efforts of all staff involved in this turnaround cannot be underestimated. Some incredibly tough decisions have been made along the way, which has seen good people leave the business because the company neither had the scale or resources to keep them."

He also explained the first six months of the year has been a period of "laying the foundations for future growth" following the disposal of the Connect business.

"The group has taken advantage of this period to continue to restructure the operational side of the business and focus on expanding our network of partners." Parker said.

This comes after the group revealed it is now considering hitting the M&A trail and expanding into Europe in its long delayed full year results for 2021.

Parker said its focus is now "entirely on growth, continued organic growth and the possibility of acquisitions".

"We have an exciting future ahead of us," he added.

"It is the intention of the Group, following the release of these interim results, to call a General Meeting in order to allow a share capital reorganisation, and to convert the majority of the outstanding loan notes into equity, allowing the Group to reduce the indebtedness of the to an appropriate level.

"We can confidently look forward to a positive and rewarding future for IDE shareholders."