Watchdog probe into Redcentric's account failings

The Harrogate-based company announced a historic overstatement of net assets and profit four months ago.

This led to a £21m hole in its finances and the departure of its former chief financial officer.

Redcentric said it will co-operate fully with the FCA and other relevant authorities concerning this matter.

It said a further announcement will be made in due course if appropriate.

The IT firm is hoping to put the incident behind it. It announced a return to profit in the first half and said it is taking steps forward following the accounting misstatement.

The group reported pre-tax profits of £300,000 in the six months to September 30, up from a £2.5m loss the previous year.

Revenue rose 2 per cent to £53.0m and recurring revenue was up 6 per cent to £44.7m.

The group said it had exceeded its first half sales targets following 38 new client wins and it had a strong sales pipeline of £93m.

Deloitte and Nabarro were appointed in early November to lead a forensic review, which identified a number of process and control failings which required prompt action.

The group said it has made improvements to the company’s finance function and internal policies and procedures.

These include more robust internal controls around cash reconciliations and improvements to billing and credit control management systems and pro- cesses.

The firm said the forensic review and remedial actions will result in an exceptional charge of around £1m in the current financial year

It added that improvements under the remedial plan will continue throughout the first half of 2017 and its banks remain fully supportive.

Chief executive Fraser Fisher said customer and staff loyalty and support “was very much in evidence throughout this turbulent period”.