IDN - 2006 - Ever increasing profits

Interesting article from earlier in the year :

Making management count

OF ALL the factors that can make a company attractive to investors, management has always come top in my opinion. Poor management can ruin a good performing company but good management can rescue a poorly performing company from the scrapheap.

Proof of that theory has come with IDN Telecom, the Aim-quoted company that makes its living by advising companies on the best telecom services to use in their operations.

IDN Telecom came to the market in 2000, which would give it a B-minus for timing; by May 2002 the company was very close to going under. At that stage the struggling management made one of its best ever decisions in appointing Mike Morrison, then 45, as interim finance director.

A Fellow of the Chartered Institute of Management Accountants and chief financial officer of a major division of Equant, a global telecommunications company, he took the company by the scruff of the neck and began shaking it into shape.

Six months later the founding board had gone and so had many of the employees. But Mike had moved up to chief executive and Barry Roberts, formerly managing director of the banking division of Misys, had been brought in as chairman.

Only one year later the company reported its first ever profit of £258,000 and this week it revealed that in the year to end-October 2004 pre-tax profits had risen a further 155% to £659,000.

Brokers Seymour Pierce and investment group SQC Research are both predicting the figure will rise to £900,000 this year, and this is a management team that has made it clear that it doesn’t want to miss market expectations.

Such a rapid turnaround in its fortunes indicates that IDN Telecom was always a good company, but it needed good management to make it work properly. One advantage of the bad times, however, is that the company is carrying forward more than £2.6m of tax losses.

Opportunities for growth come not only from expanding its existing customer base where clients spend anything from £2,000 to £50,000 a month with a customer 'churn' of 0.5% a month compared with the industry average of 2% a month. -

The 2.6m tax losses carried forward are going to be a big advantage this time round as it means they will not have to pay Corporation Tax on their 900,000 plus profit. A significant gain for the company.