Harrogate’s Redcentric calls off sale as revenue rises

Harrogate-based IT firm Redcentric Plc said on Thursday it has decided to “terminate the formal sale process with immediate effect.”

On September 2, Redcentric had said it “initiated limited discussions with third parties with a view to seeking a potential purchaser or purchasers for the company.”

Redcentric, which has a stock market value of around £200 million, said on September 2 it was “in discussions with Macquarie Principal Finance Pty Limited, UK Branch and Six Degrees Holdings Limited.”

On Thursday, however, the company said; “Following that announcement, the board has held constructive discussions with a significant number of interested parties.

“However, these discussions did not materialise into any fully funded offers.

“Redcentric therefore today announces that the board has decided to terminate the formal sale process with immediate effect.”

Redcentric also announced its half year results to September 30, 2020, which showed a 7% increase in revenue to £46.2 million and a 19% increase in Adjusted EBITDA to £12.3 million.

The company has also reinstated its dividend and its share buyback programme.

Redcentric chairman Ian Johnson said: “I am pleased to report that the business is performing very well with revenues growing, strong profit margins and excellent cash generation.   

“Our very significant presence in the public and private healthcare sectors, highly relevant products and high levels of recurring revenues combine to put us in an excellent position to withstand the current challenges associated with COVID-19 and the downturn in the wider economy.

“The outlook for the remainder of the year remains positive, although the board remains cautious in respect of the longer-term economic uncertainty posed by a prolonged COVID-19 pandemic.

“We also announced today the termination of the formal sale process that commenced earlier in the year. 

“With the FCA Investigation now firmly behind us, the business performing well and low levels of net debt, we are in a strong position to consider a number of other strategic options for improving shareholder value, including appropriate acquisitions to add scale and capability. 

“With these results, the board also announces the reinstatement of a dividend and the share buyback programme.

“Full details of the board’s recommended dividend policy will be communicated when the company announces its preliminary results for FY21 and will reflect the conclusion of the Board’s ongoing strategic review.

“Unless there are opportunities to re-invest at attractive rates of return, including appropriate acquisitions, the company will seek to return its free cash flow annually to shareholders via dividends and/or share buybacks.”