Redcentric aims to expand HQ with more jobs in the pipeline

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IT services provider Redcentric is planning to expand its Harrogate headquarters after a year of strong growth.

The group said it inherited 140 employees when it bought the Harrogate HQ two years ago and this has since risen to 200.

CEO Fraser Fisher said: “We are expanding in both size and headcount. We could easily have another 100 people over the next few years.”

He was speaking as the firm announced a 16 per cent increase in revenue to £110m in the year to March 31, helped by two acquisitions which Mr Fisher said have bedded down well.

The group continues to look for more deals.

“We are always looking,” said Mr Fisher.

“There is plenty of stuff out there to look at, but it has to be in areas where we are already present. Our acquisitions will always be quality.”

He added that there is no pressure to do a deal as the group has good organic growth.

Redcentric raised its final dividend by 20 per cent to 3.0p per share, increasing total dividends for the year by 29 per cent to 4.5p per share.

“We are very confident with this business. It’s going well,” said Mr Fisher.

“Customers are buying more and new customers are coming in. 60 per cent of our growth comes from existing customers buying more and 40 per cent is from new customers. It’s a good balance.”

Over the year the group has increased its work with the Sue Ryder charity, which helps people with life-threatening illnesses.

“We are rolling out connectivity across their stores. Hopefully, that will save them money,” said Mr Fisher.

The group’s pre-tax profit fell 5 per cent to £7.4m from £7.8m as a result of higher administrative expenses.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 21 per cent to £25.8m.

Analyst Oliver Knott at N+1 Singer said: “Redcentric has delivered another strong year with recent acquisitions augmenting a good organic performance.

“Total revenue grew 16 per cent to £109.5m with recurring revenue up an impressive 17 per cent and now 82 per cent of total revenue.

“As highlighted in March, an increase in customer driven capex combined with a larger than usual working capital outflow resulted in net debt at the year-end above our initial estimates. Net debt at March was £19.9m, in line with our £19.3m revised estimate but higher than our original £10.2m estimate.

“We see Redcentric as a core holding in the sector and retain our ‘buy’ recommendation.”

Analyst Will Wallis at Numis said: “Redcentric has continued to deliver double digit organic growth in recurring revenues and robust margins.

“Cash flow was weaker than originally expected, as had been notified in March.

“Once again the sales pipeline has shown good growth.”

Redcentric’s chairman Chris Cole said: “These results show that Redcentric has continued to follow its strategic plan with very solid organic growth and recurring revenue being augmented by two successful acquisitions in the year. This combination reflects the strength of the underlying platform, and the board’s confidence in continuing to deliver shareholder value in the future.”