Redcentric H1 tops £163m but big customers cancel

Harrogate-based IT firm Redcentric plc said its revenue rose 15.1% to £163.1 million in the year to March 31, 2024 — but the firm said four of its larger customers “unexpectedly decided to cancel their contracts” amid the company’s move to a new data centre in Elland.

Redcentric shares fell about 5%.

In a trading update for the year, Redcentric said: “These results reflect the benefits of the first full year of trading contribution from the 4D Data Centres and two Sungard asset acquisitions made in FY23.

“They also reflect the delays in implementing the new cooling infrastructure at the London Technology Centre (LTC) and the closure costs of the Harrogate data centre both of which will benefit performance in FY25.”

On current trading and outlook, Redcentric said: “The electricity conservation measures are expected to generate year on year volume savings of £2.8m, this, combined with significantly reduced electricity commodity prices from 1 April 2024 is expected to reduce electricity charges by £8.1m and will result in FY25 fully reflecting the benefit of the acquisitions made during FY22 and FY23.

“The closure and decommissioning of the Harrogate data centre was completed at the end of March 2024 in line with our project plan and expectations.

“Whilst most of the customers were successfully migrated to our Elland data centre, four of the larger customers unexpectedly decided to cancel their contracts.

“The annualised revenue and profit from these customers totalled £2.6m and £1.3m respectively, which will result in reduced associated revenues and profits of £2.0 and £1.0m respectively in FY25, however, this loss will be partly offset by reduced annual running costs resulting from the closure.

“The focus for FY25 will be to continue driving organic recurring revenue growth of at least 5% and leveraging operational gearing to deliver improved profit margins.”

Redcentric CEO Peter Brotherton said: “FY24 was a very productive year with all the original integration programmes completed, generating cost savings either in line or slightly ahead of our expectations.

“The electricity conservation measures were implemented later than expected but are now yielding very significant savings which are slightly ahead of our original run rate expectations. 

“These volume savings, combined with secured lower electricity prices from 1 April 2024 are expected to reduce electricity costs by £8.1m in FY25.

“Looking forwards, our key tasks for FY25 will be to continue to drive organic growth and focus on delivering productivity gains to drive improved margin and cashflow performance.”