Redcentric reports resilient results despite the pandemic

IT firm Redcentric has reported "highly resilient" results which are in line with the market expectations before the outbreak of the Covid-19 pandemic.

Redcentric said it reacted well to customer demands driven by the Covid-19 pandemic
Redcentric said it reacted well to customer demands driven by the Covid-19 pandemic

The Harrogate-based firm said these results were achieved with no benefit from any Government support packages, including no staff furloughed and no cash flow reliefs.

In the year to March 31, the group reported revenue growth of 4.5 per cent to £91m.

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Organic recurring revenue rose 5.5 per cent to £82m, with recurring revenue representing 90 per cent of total revenue. Underlying earnings rose 19 per cent to £25m.

This was driven by the completion of the Health and Social Care Network rollouts and the associated cross sell of collaboration and security products.

In addition, the company said it reacted well to customer demands driven by the Covid-19 pandemic and quickly deployed connectivity and security solutions to enable businesses to work remotely.

The firm said it has invested in significant upgrades to its Harrogate and Shoreditch data centres, a strengthening of its sales team, the appointment of financial advisers and the creation of a new head of corporate development role.

Peter Brotherton, Redcentric's chief executive, said: "We have had an extremely productive year with many historical issues addressed and with a very robust financial performance in line with expectations set before the pandemic.

"We are now an efficient and fully integrated business delivering sector leading financial metrics including high recurring revenue, strong EBITDA margins and excellent cash generation.

"Notwithstanding such a resilient set of results, it is impossible to avoid the impact of the ongoing Covid uncertainty."

Mr Brotherton said that throughout the Covid-19 pandemic, Redcentric has experienced customer delays regarding decisions on large scale IT projects.

"These delays have persisted and consequently we expect revenues and EBITDA in the first half of the 2022 financial year to be broadly flat with modest growth returning in the second half once the country returns to a more normalised position," he said.

"We remain confident about our medium-term outlook, with an encouraging pipeline of potential new business which continues to gather momentum.

"With such a strong balance sheet we are ideally placed to supplement our organic growth strategy with targeted acquisitions for both scale and capability.

"The next phase of our journey is to capitalise on our scale, financial strength and customer proposition to enable us to take part in the inevitable industry consolidation."