Redcentric shares fall 10% amid delayed IT orders

Shares of Harrogate-based IT firm Redcentric Plc fell about 10% on Thursday as it published “robust” results for the year ended March 31, 2021 — but said it has experienced customer delays on decisions for large-scale IT projects and that it expects first-half revenues in the current year to be broadly flat.

Redcentric said revenue rose 4.5% to £91.4 million and profit before taxation was £11.5 million compared to a loss of £10.6 million in the previous year.

An interim dividend of 1.2p (£1.9m) was paid during the year and a final dividend of 2.4p (£3.7m) is being recommended to shareholders.

“It is the intention of the board of directors of the company to continue with a progressive dividend policy (50% of adjusted earnings) in FY22 and beyond,” said Redcentric.

Redcentric CEO Peter Brotherton said: “We have had an extremely productive year with many historical issues addressed and with a very robust financial performance in line with expectations set before the pandemic.

“We are now an efficient and fully integrated business delivering sector leading financial metrics including high recurring revenue, strong EBITDA margins and excellent cash generation.

Notwithstanding such a resilient set of results, it is impossible to avoid the impact of the ongoing Covid uncertainty.

“Throughout the Covid-19 pandemic we have experienced customer delays regarding decisions on large-scale IT projects.

“These delays have persisted into FY22 and consequently we expect revenues and EBITDA in H1 FY22 to be broadly flat with modest growth returning in the second half of FY22 once the country returns to a more normalised position.

“We remain confident about our medium-term outlook, with an encouraging pipeline of potential new business which continues to gather momentum.

With such a strong balance sheet we are ideally placed to supplement our organic growth strategy with targeted acquisitions for both scale and capability.

“The next phase of our journey is to capitalise on our scale, financial strength and customer proposition to enable us to take part in the inevitable industry consolidation.”