Redcentric reports strong trading and disposal

Shares of Harrogate-based IT firm Redcentric Plc rose about 2% on Tuesday after it announced a strong trading update for the year ended March 31, 2021, and the sale of a non-core business unit.

“The company’s performance throughout the year ended 31 March 2021 has been excellent with revenues growing, healthy profitability and exceptional cash flows …” said Redcentric.

“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 …

“Good cash flow and strong working capital performance continues to be a feature of the business …”

On its disposal, Redcentric said: “On 31 March 2021, the company reached agreement with Thales UK Limited to sell the assets and knowhow required for the provision of maintenance services to four EDF nuclear power stations.

“Redcentric previously provided maintenance services direct to EDF under a ten-year contract which expired on 31 March 2021.

“In the year to 31 March 2021, the contract contributed £1m to revenue and £0.72m to EBITDA and generated £0.68m of operating cash flow.

“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.”

Redcentric CEO Peter Brotherton said: “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.”