REG - Redcentric PLC - Trading Update

RedcentricAnnouncement

16/05/2024 07:00

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RNS Number : 6264O  Redcentric PLC  16 May 2024

Redcentric plc

("Redcentric" or the "Company")

Trading Update

Redcentric plc (AIM: RCN), a leading UK IT managed services provider offering
cloud, cyber security, connectivity and communication solutions to mid-market
and enterprise customers, is pleased to announce the following update for the
financial year ended 31 March 2024 ("FY24").

PROVISIONAL RESULTS FOR THE YEAR ENDED 31 MARCH 2024 (FY24)

We are pleased to announce the following provisional results for FY24:

                      FY24 (£m)   FY23 (£m)   Change
 Revenue              163.1       141.7       +15.1%
 Recurring Revenue    149.1       128.5       +16.0%
 Recurring Revenue %  91.4%       90.7%       +0.7%

 Adjusted EBITDA*     28.4        24.5        +15.9%
 Adjusted net debt    41.9        35.6        +17.7%

 

 

 

 

 

*Adjusted EBITDA is EBITDA excluding exceptional items, share-based payments
and associated National Insurance

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.

OPERATIONAL HIGHLIGHTS

·    Following the acquisition of VMware by Broadcom, Redcentric has been
selected as one of only seven UK strategic partners. Initial sales engagement
with customers has been encouraging with several new logos signing contracts
during March and April 2024.

 

·    All the original integration programmes were completed by the year
end with annualised costs savings of £22m being achieved, in line with
previous announcements. We now operate fully integrated systems, utilising
single Enterprise Resource Planning, HR and customer service systems.

 

·    Whilst all of the planned electricity conservation measures were
completed by the year end, the installation of the LTC cooling infrastructure
was delayed by four-and-a-half-months as a result of having to decontaminate
the cooling system water prior to the installation of the new plant. The plant
was eventually installed in November 2023 and was fully commissioned by the
end of January 2024.  The new system is performing well with ongoing savings
achieved to date slightly higher than our original expectations.

 

·    Adjusted Net Debt at the year-end was £41.9m up from £35.6m. On 26
March 2024 the company agreed with its banking syndicate to extend the current
banking facilities by one year under the same terms as the original agreement.
The facilities are now due to expire on 25 April 2026.

 

 

 

CURRENT TRADING AND OUTLOOK

·    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.

 

 

 

Peter Brotherton, Chief Executive Officer, commented:

"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."

 

Enquiries:

 Redcentric plc                                                  +44 (0)800 983 2522

 Peter Brotherton, Chief Executive Officer

 David Senior, Chief Financial Officer

 Cavendish Capital Markets Limited - Nomad and Broker            +44 (0)20 7220 0500

 Marc Milmo / Simon Hicks / Charlie Beeson (Corporate Finance)

 Andrew Burdis / Sunila de Silva (ECM)

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.

 

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