Redcentric delivers 'excellent' performance as it sells non-core businesss

Redcentric, a UK IT managed services provider, has announced a trading update for the year ended 31 March 2021.

The statement said: "The company's performance throughout the year ended 31 March 2021 has been excellent with revenues growing, healthy profitability and exceptional cash flows. Our strong recurring revenues, resilient business model and diverse customer base have enabled us to not only weather the Covid-19 storm but also flourish in these difficult times.

"Revenue and adjusted EBITDA for the financial year ended 31 March 2021 are expected to be in line with the board's expectations, with net debt of approximately £15.6m (including £16.5m of IFRS-16 liabilities & supplier loans) being better than the board's expectations."

"Working collaboratively with our customers, we were able to quickly develop and deploy solutions that helped customers to securely navigate remote working requirements. Despite customers continuing to defer decisions on large scale IT projects, the company has continued the strong progression reported at the half year and is pleased to report continued growth in revenues."

"Good cash flow and strong working capital performance continues to be a feature of the business. During the year ended 31 March 2021, net debt reduced by approximately £19.0m after dividend payments of £1.9m and exceptional items of £2.9m (net of £5.8m restitution fund raise). On 1 March 2021 the company repaid its revolving credit facility in full.

On March 31 2021, the company reached agreement with Thales UK Limited to sell the assets required for the provision of maintenance services to four EDF nuclear power stations.

Under the terms of the agreement, Thales will pay Redcentric a fixed consideration of £5.75m, payable in two instalments: £3.5m on 30 April 2021 and £2.25m on 30 September 2021. As part of the sale the five employees that previously worked on the contract were transferred to Thales.

Peter Brotherton, Chief Executive Officer commented: "We have had a very busy and successful year with all strategic objectives being achieved. The business has reacted well to the many challenges presented by the Covid-19 pandemic and has proven to be terrifically resilient.

"We have returned to growth, operational efficiency programmes have been delivered, the ERP system has been successfully implemented and profits are healthy. This could not have been achieved without our employees, and, on behalf of the board, I would like to thank them all for their continued support and dedication."

"The company's contract with EDF was non-core within the Redcentric business as the services provided did not relate to either telecommunications or IT solutions.

"The contract was inherited as part of the Calyx Limited acquisition in 2016 and this sale completes the restructuring of the company's historical acquisitions. All of the company's product offerings are now core to the business and we operate on one physical network, with one network platform, an optimised data centre portfolio and fully integrated operational systems."