Back to business as usual for Redcentric after accounting error

IT services firm Redcentric said it was returning back to 'business as usual' following an accounting overstatement that came to light last year.

Chris Jagusz, new Redcentric CEO.

The Harrogate-based company announced a historic overstatement of net assets and profit in 2016 leading to a £21m hole in its finances and the departure of its former chief financial officer.

However, the company said it had worked tirelessly to return to a normal footing as it announced a “solid” set of results for the first six months of the year.

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Revenue was down slightly to £51.4m in the first six months to September 30, 2017, from £51.8m for the corresponding period the previous year.

Redcentric said trading results were in line with the equivalent period last year and that it reduced its net debt by £6.2m over the six month period. Net debt now sits at £33.3m

It reported an operating profit of £500,000, up from a loss of £1.9m the previous year.

Chris Cole, non-executive chairman of Redcentric, said: “Over the last six months we have focused on improving operating cash flows, reducing net debt and right-sizing the cost base of the business.”

He added that the company had taken action to reduce operating costs and the full effects of these cost savings are to be realised in the second half of the financial year.

Mr Cole said: “A year has now passed since the announcement of the accounting misstatements. Over this period the Board and the company’s employees have worked tirelessly to get the business back on to a ‘business as usual’ footing.”

“The chief financial officer Peter Brotherton has been in place for a year now. Over this time he has rebuilt and strengthened both the finance team and the financial systems and processes within the business.

“He and his team are engaged in all areas of the business and this is evidenced in the results for the first six months of the financial year.”

In October, Redcentric appointed Chris Jagusz as CEO. Mr Cole said the new CEO would be looking forwards now that the business has been stablised.

Mr Jagusz said: “Despite the significant problems encountered as a result of the accounting misstatements, the business is fundamentally strong. Its product offering is well aligned to the demands of customers, it has a strong and loyal recurring revenue customer base and the business is cash generative.

“The issues surrounding the accounting misstatements have been addressed and so my focus is on providing the business with a clear strategy to enable the business to grow.”