Redcentric reaches settlement with FCA in connection with historical accounting misstatements

An IT managed services provider today revealed it had agreed to implement a restitution scheme following an FCA probe into historical accounting misstatements.

The announcement has been made to the stock exchange this morning.

Redcentric said it has reached a settlement with the Financial Conduct Authority in connection with the FCA's investigation into the company in relation to certain historical accounting misstatements.

As part of the settlement, the company has agreed to implement a restitution scheme.

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The settlement concludes the FCA's investigation in relation to historical accounting misstatements contained in announcements issued by the company in the period from November 9 2015 to November 4 2016.

It includes an agreement to pay restitution, amounting to approximately £11.4 million, to net purchasers of ordinary shares in the company between November 9 2015 and November 4 2016.

The FCA has confirmed that the company will not be subject to a financial penalty. The cash element of the scheme will be funded from the company's own cash resources and a placing and subscription of £5.775 million at a price of 110 pence per ordinary share.

Commenting, Peter Brotherton, CEO, said: "I am pleased that we have now achieved an agreed settlement, having worked closely with the FCA over a number of years and having acted promptly to issue a corrective statement to the market when the misstatements were discovered. This is positive news for Redcentric and follows a positive start to the year.

"The conclusion of the investigation removes significant uncertainty and costs, enabling management to focus solely on future growth.

"Over the last three years a new board of directors and management team have been appointed and have worked to transform the company, optimising its products, platforms, networks, processes and structure. As a result, we now have a modern, resilient and scalable business that is fit for growth.

"With good visibility of sales pipeline and future revenues, strong and improving margins and continued strong cash conversion, we are well placed to capitalise on opportunities across both the public and private sector markets."

Issuing a public censure to Redcentric, Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Publicly listed companies must ensure the market is properly informed with timely and true information.”

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