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A Q1 trading update from Phoenix shows management remains cautious about the firm’s performance for the first six months of the year. Phoenix is still feeling the pinch from the issues that hit it hard in the last financial year. Those issues were largely due to an unsuccessful reorganisation of its operating units, initiated by prior management. The upshot was that in FY12 the company’s core Partner Services division (which provides infrastructure services to SIs and outsourcers) saw revenue dip 7% to £109m. Furthermore, it took 25% off the underlying profit (to £10.9m).
That downward trend has carried over into Q1. For the opening few months of the year, Phoenix reports that its annual contract value and order book (at 30 June 2013) were £183.6m (£191.9m at 31 March 2012), and £306.6m (£318.6m at 31 March 2012) respectively. Again, the reason for these reductions is the performance of the Partner Services division. When we met with Executive Chairman, Peter Bertram, a few months ago, we got more insight into the work that has been going on behind the scenes to rectify the situation. Subscribers can read more on what we found here: Phoenix - Is the ship starting to steady?
On a more positive note, Phoenix says its mid-market division is showing “signs of improvement”, with improving sales activity. Phoenix also says it’s working on a new "Virtual Shared Platform", which should be complete by October. The Board, however, remains cautious about the remainder of the year. It says it is “planning for revenue growth” in H2 and “believe[s] the business can recover from the difficulties of last year”.
Want to see where Phoenix ranks in the UK infrastructure services market? Read “Infrastructure Services Supplier Landscape”here. If you don’t subscribe to InfrastructureViews, but would like to, please contact Deb Seth (dseth@techmarketview.com).