AIM-quoted management solutions firm Idox has closed its loss-making digital division and made further "alterations" to the business model of its engineering arm in order to resolve the group's issues and provide a "strong base for future growth".
Following a "wide-ranging operational and financial review" of its business in recent weeks, Idox chose to take the "necessary actions" to enable the business to deliver improving profitability combined with better cash generation and improving levels of recurring revenue.
Idox warned that, as a result of the reduction in digital revenues, the firm now expects full-year adjusted EBITDA to come to around £13m to £15m, despite the group's underlying performance, excluding the discontinued digital division, being projected to be in a range of £18-20m.
The firm noted that "the majority" of the impacts had already been incurred throughout the first half and would result in an adjusted EBITDA of roughly £1m, a significant drop from the £10.3m posted over the first six months of the previous year.
Idox did highlight that with the closure of its digital business, the reduction to its cost base was now expected to be in excess of £10m per year.
Laurence Vaughan, chairman of Idox, said, "The major review and actions taken reflect our commitment to deal decisively with the issues faced by the Group during the last year. Despite the impact on our financial performance this year, this necessary programme of change has positioned the group to deliver an improved performance in future financial years."
Separately, Idox announced on Tuesday that David Meaden would join its ranks as its new chief executive on 1 June following a six month period where non-executive director Richard Kellett-Clarke handled the role on an interim basis.
"I have known Idox for many years as a leading player in the public sector solutions and services market and am confident that it has both attractive products and talented people," Meaden said.
As of 1200 BST, Idox shares
had tumbled 14.18% to 33.60p.