REG - Redcentric PLC - Trading Statement

RedcentricAnnouncement

06/04/2021 07:05

RNS Number : 3977U
  
Redcentric PLC
  
06 April 2021
  
 

Redcentric plc
("Redcentric" or the "Company")
Trading update and sale of non-core business unit 
Redcentric plc (AIM: RCN), a leading UK IT managed services provider, today announces a trading update for the year ended 31 March 2021 and the sale of a non-core business unit.
Trading update 
The Company's performance throughout the year ended 31 March 2021 has been excellent with revenues growing, healthy profitability and exceptional cash flows.  Our strong recurring revenues, resilient business model and diverse customer base have enabled us to not only weather the Covid-19 storm but also flourish in these difficult times.
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. 
Revenues and trading
Working collaboratively with our customers, we were able to quickly develop and deploy solutions that helped customers to securely navigate remote working requirements. Despite customers continuing to defer decisions on large scale IT projects, the Company has continued the strong progression reported at the half year and is pleased to report continued growth in revenues.
Operational 
As previously communicated, the data centre and network restructuring programme was successfully completed in June 2020, achieving annualised costs savings of £4.0m, significantly more than the £2.8m originally announced.
On 5 October 2020, the finance and operations modules of our new ERP system went live, adding to the sales module that was launched during the previous financial year. This system replaces five legacy systems and will ensure that there is consistent and more accurate data across the organisation. We are seeing significant benefits from the implementation of this system, from both an improved management information and a cash collection perspective, the latter due to improved billing accuracy and a reduction in time taken to issue sales invoices. Refinements to the system and the processes that surround it are ongoing and we expect to see further productivity and efficiency benefits during FY22.
Cash Flows
Good cash flow and strong working capital performance continues to be a feature of the business.  During the year ended 31 March 2021, net debt reduced by approximately £19.0m after dividend payments of £1.9m and exceptional items of £2.9m (net of £5.8m restitution fund raise). On 1 March 2021 the Company repaid its revolving credit facility in full.
 
Full year results announcement
The full year results announcement will be released on 24 June 2021.
 
Sale of non-core business unit
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 (the "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. 
 
Peter Brotherton, Chief Executive Officer commented:
 "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."
 
 
 
Enquiries:
Redcentric plc                                                                                                   +44 (0)800 983 2522          
Peter Brotherton, Chief Executive Officer                                          
David Senior, Chief Financial Officer                                                        
finnCap Ltd - Nomad and Broker                                                                               +44 (0)20 7220 0500
Marc Milmo / Simon Hicks / Charlie Beeson (Corporate Finance)
Andrew Burdis / Sunila de Silva (ECM)    
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
  END
 
 
TSTUAONRAVUSRAR