Phoenix IT Group to axe over 300 jobs
Heads roll and real estate cut in cost-cutting drive
Phoenix IT Group is to axe more than 300 jobs as part of a company-wide reorganisation.
As previously revealed by El Reg, the IT services firm murdered the ICM brand and placed the system integration, comms, hosting, managed services and business continuity operations under the Phoenix banner from January.
The LSE-listed firm, which also integrated service delivery and functional back office roles across the group, said the biz overhaul should be concluded by the end of fiscal 2012 in March.
"While the reorganisation provides greater strategic focus, it also facilitates departmental consolidation, property rationalisation and other efficiency savings," Phoenix said in an interim trading statement today.
"This will lead to a reduction in staff numbers, principally in back office and delivery functions, in excess of 300," it added.
This equates to 11 per cent of the total workforce as of last September.
The firm, which ushered in new chief exec Dave Courtley in the summer, also revealed it will rationalise real estate too, "with the planned exit from four leased facilities over the next 12 months".
The re-org will result in charges of roughly £10m in the current financial year, the firm said, with a cash cost of £3m and £5m for 2012 and 2013 respectively. The moves are expected to save Phoenix in the region of £4m per year.
There will also be a non-cash impairment charge of £8.1m in the current financial year to write off the intangible asset carrying value of the ICM brand.
Phoenix has suffered during the challenging economic climate, recording a decline in sales for the fiscal half year to 30 September and a drop in profits following the loss of major contracts.
In today's update, the company said the order book had dropped from £322m at the end of September to £309m at the end of calendar 2011.
At the same time, it revealed that a single specific contract entered into by the IT maintenance service unit, which incurred a loss of £900,000 for the first nine months of fiscal 2012, requires a provision of up to £5m over its lifetime.
"Actions to mitigate future losses are currently being investigated and the level of the actual provision required will be determined during the coming months and included in the current year financial results," it said. ®