Phoenix IT has posted a promising set of results for its financial year ending 31 March, coming back into black with a bang.
The Northampton-based managed services provider posted pre-tax profits of £8.8m; a stellar figure considering that the year before it was posting pre-tax losses of £29.2m.
Phoenix is one year into its three-year turnaround plan and the results suggest that for all intents and purposes, the plan is working.
Turnover fell by 9% to £212.4m, although this had been expected as the crux of the recovery plan is a focus on profitability, rather than revenue. With a few legacy contracts coming to an end, the drop in turnover was no surprise.
Net debt also fell by £7.1m to £49m, again indicating a strong turnaround.
“Over the past twelve months a significant amount of work has been done to stabilise our financial performance, revitalise our go-to-market approach and bring greater rigor to the way in which we work, serve and partner with our customers,” said Steve Vaughan, chief exec of Phoenix.
“Those efforts are just the first part of our plan for the Group, but it is gratifying to see them translate into our results. It is also encouraging to start to see some customers, some new, some long-held, respond well to the improvements we are making to our service portfolio.”
But the best-laid plans of mice and men oft go awry, and with the news that Phoenix has struck a takeover deal with Daisy Group could render a three-year plan two years too long.
In a statement following the news of the takeover, Daisy indicated that there would likely be some changes on the horizon.
“It is anticipated that the integration review will identify areas of overlapping corporate, commercial, operational and support functions,” Daisy said, adding that a ‘headcount reduction’ was likely.
There will undoubtedly be some quiet back patting taking place at Phoenix HQ, but despite the positive set of results, the board remained adamant that a takeover offered the brightest future.
“Following the offer for the Group from Daisy Intermediate Holdings, announced on May 27, the whole Board has taken the view that this represents the best option for Phoenix in the future,” Vaughan said. “The price offered recognises the progress made in the first phase of the strategy, and the potential of future phases.”
The offer Mr, Vaughan is referring to is for £135m or 160-pence-per-share, a significant premium on the current share price. The deal is expected to be completed by the end of July.
Daisy has its own share of problems to address, with its traditional comms business struggling to maintain relevance in the marketplace. The Group continues to gobble up companies with a vengeance. Including the acquisition of Phoenix and Damovo UK earlier this year, Daisy has racked up nearly 50 acquisitions in its 14-year history.