Harrogate-based IT managed services provider Redcentric plc said its revenue grew 5.8% to £86.8 million in the six months to September 30, 2024, “reflecting the impact of the VMware market positioning following selection as a Pinnacle partner by Broadcom, coupled with core business organic growth.”
Redcentric’s reported profit before tax was £3.6 million, compared to H1 FY24 loss of £700,000.
Interim dividend is maintaind at 1.2p per share.
Redcentric said: “Adjusted EBITDA at £18.2m (H1 FY24: £14.5m) and adjusted EBITDA margins were strong reflecting higher revenue and lower energy costs, partially offset by increases in operating costs related to inflationary pressures on core IT platforms and increased regulatory costs.”
In its outlook, Redcentric said: “The significant improvement in all key profit measures in the first half of this year is a demonstration of the success of the company’s acquisition strategy.
“The Sungard and other businesses that were acquired in FY22 and FY23 have now been fully integrated with all the anticipated synergies and cost savings delivered.
“Adjusted organic growth for the group in H1 has been good following a strong end to the previous financial year.
“The political uncertainty and general economic backdrop in the first half of this year has led to slower order intake and whilst the sales pipeline is starting to return to more normal levels, H2 bookings are unlikely to meaningfully convert into revenue growth until next financial year.
“As a result, we are cautiously forecasting a broadly flat H2 FY25 in terms of revenue and gross profit, but an improved profit performance arising from c.£0.9m of cost savings.
“Overall this would represent very considerable progress with full year revenues up circa 7% and adjusted EBITDA in excess of 30% on the prior year FY24 numbers.
“The separation of the Data Centre and Managed Services businesses will provide investors with greater clarity on the performance and operating metrics of two very distinct businesses, both of which have exciting growth prospects, albeit driven by different factors.”
Redcentric CEO Peter Brotherton said: “H1 FY25 marks the first reporting period to fully reflect the benefits of the investments made in FY22 and FY23.
“With the energy market returning to more normalised conditions, combined with the positive impact of energy conservation and integration measures implemented in FY24, the company has delivered strong financial results for the six months.
“The key performance indicators illustrate the solid progress achieved. Additionally, ongoing cost efficiency initiatives, both recently completed and currently in progress, are set to remove an additional £2.6m from the cost base on an annualised basis.
“Looking ahead, we anticipate valuation clarity and definable improved profitability from the strategic decision to separate reporting and implementation of growth initiatives to the core two businesses: Data Centres (DC) and the Managed Service Provider (MSP) business.”