Legal action takes its toll on IT services provider
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IT services provider adept4 reported a drop in revenues and a pre-tax loss for the year to Septemer 30, 21018, today.
Turnover of £10.185m was slightly down from £10.301m the previous year, while a pre-tax profit of £831,000 a year ago was turned into a loss of £3.976m in the latest figures from the Daresbury-based business.
It explained the loss was due to significant non-recurring items, including an impairment charge of £2.6m against goodwill.
Net debt increased to £2.7m from £2m in 2017.
During the year the company achieved a successful settlement of a legal case against vendors of Adept4 Managed IT Limited in the sum of £1.6m, of which £600,000 was receivable in cash.
It revealed this hampered its mergers and acquisitions strategy and also affected its sales functions.
The company said it strengthened its management team, leading to improved technical and service levels, while increasing utilisation of cloud technology by customers resulted in a reduced requirement for remote-based and field workers, leading to a reduction in the operating cost base towards the end of the year.
After the reporting period the firm has decided to focus on existing customers, with less emphasis on new business acquisition. It said 70% of its turnover is attributable to its recurring customer base, which it said demonstrates its strength of customer relationships.
Further cost savings have been identified and are being implemented to protect the cash reserves while the board assesses strategic options.
Chairman Simon Duckworth said: “Despite it being a challenging year for the business, we have made progress against each of our key areas of strategic development, including the strengthening of our senior operational management team and development of our technology partnerships.
“We have improved our levels of service delivery, leading to high levels of customer satisfaction, though the investment made in the new sales team has not yet delivered the results we had hoped for.”
He added: “Maintaining our strong relationships with existing customers, together with protecting the group’s cash balances and shareholder value, are our key objectives while we explore the strategic options for the group.”