Redcentric reports solid full-year figures

15th Aug 2024 11:13

(Sharecast News) - Managed IT service provider Redcentric reported a robust full-year financial performance on Thursday, alongside significant progress in operational integration.

The AIM-traded firm said it achieved total revenue growth of 15.2% in the 12 months ended 31 March, reaching £163.2m, up from £141.7m in 2023.

It said the increase was largely driven by a 16.1% rise in recurring revenue, which now accounted for 91.4% of total revenue, amounting to £149.1m.

The company said its gross profit also saw a substantial increase of 17%, totaling £118m.

Adjusted EBITDA improved 15.6% to £28.3m, while adjusted operating profit rose 11.8% to £9.7m, an increase of £1.1m from the prior year.

Additionally, Redcentric reported a significant reduction in its reported loss before tax, which decreased £7.8m to £4.7m, compared to a loss of £12.5m in the 2023 financial year.

The reported operating profit also saw an improvement, increasing by £9.8m to £0.9m.

On the balance sheet, Redcentric's adjusted net debt as of the end of March stood at £42m, excluding £30.3m of IFRS 16 lease liabilities, which were previously classified as operating leases under IAS17.

Operationally, Redcentric said it completed its acquisition integration programmes, including the planned exit from its Harrogate data centre.

The company also reported strong organic growth, driven by structural market trends and effective cross-selling strategies.

First-quarter trading for the current financial year was meanwhile in line with the board's expectations.

In a notable leadership change, chief executive Peter Brotherton announced his retirement and would step down once a suitable successor was appointed.

"2024 was a very productive year with all the original integration programmes completed, generating cost savings either in line or slightly ahead of our expectations,"said chief executive officer Peter Brotherton.

"The electricity conservation measures are now yielding very significant volume savings, which combined with secured lower electricity prices from 1 April, are expected to reduce electricity costs by £8.1m in the 2025 financial year.

"The focus for 2025 will be to drive organic revenue, profit and cash flow growth by cross selling the broadened product and solution portfolio into the enlarged customer base, whilst also capitalising on the structural opportunities presented by AI related demand and the recently awarded VMware Pinnacle partnership agreement."

Brotherton said the business was now in a "very different place" to when he joined in November 2016.

"All of the historical issues have been overcome and the acquisitions undertaken in 2022 and 2023 have significantly increased the scale and capability of the business.

"Revenues and profits for 2025 are on course to be double what they were pre the acquisitions and solid foundations are now in place for sustainable and profitable growth."

At 1100 BST, shares in Redcentric were down 0.3% at 139.32p.

Reporting by Josh White for Sharecast.com.