REG - Redcentric PLC - Half Year Results
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RNS Number : 9060K Redcentric PLC 10 December 2025
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.
10 December 2025
Redcentric plc
('Redcentric', the 'Company' or the 'Group')
Half Year Results
Updated MSP Growth Strategy
Robust performance & strong base for future growth and cash generation
Redcentric plc (AIM: RCN), a leading UK IT Managed Services provider, is
pleased to announce its half year unaudited results for the six months ended
30 September 2025 ('H1 FY26' or the 'period' or the "first half").
Corporate Highlights
· Developing and growing the Managed Service Provider ("MSP") business
unit is now the focus for the Group with the Board seeing an attractive
opportunity to build additional shareholder value;
· The Board welcomed new senior management, with Michelle Senecal de
Fonseca, formerly a Non-Executive Director, becoming CEO in May 2025, and Tony
Ratcliffe joining as CFO in August 2025;
· Progressed negotiations in the period for the sale of the Data Centre
("DC") business and announced on 23 October the disposal of the DC business,
for an enterprise valuation of up to £127 million, payable in cash;
· The Board believes this is transformational deal for the Group,
allowing it to focus on the attractive MSP opportunity, reduce the leverage on
the Group's balance sheet, and return material proceeds to shareholders most
likely via a Tender Offer;
· The Board remains focused on completing the DC sale transaction by
the end of March 2026; and
· Following the planned material reduction in net debt and unburdened
by the capital expenditure requirements of the DC business, the Board expects
the Group to deliver higher cash conversion and improved free cash flow.
Reflecting this the Board will, at the end of the year, consider the possible
reintroduction of a progressive dividend policy and / or a potential
introduction of a share repurchase plan.
Updated MSP Strategy Highlights
· The Group intends to offer enhanced cybersecurity solutions by
building upon its current security portfolio and better integrating security
products to its customer offering;
· Leveraging MSP's established market leadership, capitalising on the
public sector opportunity by delivering advanced managed services and critical
sovereign cloud capabilities;
· Expand relationships with selected partners in certain vertical
markets in order to accelerate go-to-market initiatives to fuel new customer
growth; and
· Drive operational efficiency by optimising the Group's cost base and
investing in automation to build a scalable platform for future growth.
Financial Highlights
Unless otherwise indicated, the following results are based on the continuing
operations of the Group, the MSP business. Percentage changes are calculated
on absolute values:
Six months to Six months to Change
30 Sept 2025 30 Sept 2024
("H1 FY26") ("H1 FY25")
Unaudited Unaudited
*restated
£66.8m £69.2m -3.6%
Total revenue
Recurring revenue(1) £60.4m £60.9m -0.9%
Recurring revenue percentage(1) 90.4% 88.0% +2.5%
Gross profit £41.1m £40.9m +0.5%
Gross margin 61.6% 59.1% +2.5%
Adjusted EBITDA(2) £9.1m £8.9m +2.7%
Adjusted EBITDA(2) margin 13.7% 12.8% +0.8%
Reported operating profit £3.6m £3.7m -2.4%
Reported profit before tax £1.9m £1.6m +18.7%
Group Net debt (£68.6m) (£66.6m) +2.9%
Group Adjusted net debt(3) (£41.8m) (£39.9m) +4.6%
Adjusted basic earnings per share(4) 1.86p 1.70p +9.3%
Reported basic earnings per share 1.19p 1.13p +4.8%
A full explanation of the alternative performance measures used is available
in the Appendix. In summary:
(1) Recurring revenue comprises the revenue that repeats either under
contractual arrangement or by predictable customer habit;
(2) Adjusted EBITDA comprises earnings before interest, tax, depreciation and
amortisation ('EBITDA') further adjusted for exceptional items and share-based
payments, including National Insurance;
(3) Adjusted net debt comprises reported net debt (borrowings net of cash) but
excluding any supplier loans or lease liabilities that would have been
classified as operating leases under IAS17 and is a measure reviewed by the
Group's banking syndicate as part of covenant compliance; and
(4) Adjusted basic earnings per share comprises earnings before interest, tax,
depreciation and amortisation, exceptional items and share-based payments to
which a notional tax charge of 25% is applied.
*restated to reflect continuing operations
Financial Highlights - Total Operations
(Combined MSP business unit and the DC business unit that is recognised as
discontinued under IFRS5)
· Solid first-half performance;
· Total revenue for the Group was £83.6m (H1 FY25: £86.8m);
· Total recurring revenue for the Group was £77.0m (H1 FY25:
£78.3m);
· Group maintained strong recurring revenue performance with
recurring revenue as a percentage of total revenue up 1.9% from 90.2% to
92.1%;
· Adjusted EBITDA was £17.4m (H1 FY25 £18.2m); and
· Gross margin improved up 2.2% from 58.3% to 60.5%.
Outlook
· Board is confident in the outlook for the Group and enthusiastic
about the clear growth strategy for subsequent years;
· Following the leadership transition and the significant time and
resources dedicated to the business unit separation and the DC sale, the Board
anticipates broadly flat MSP revenues for the current year.
· Management's focus is on margin expansion and rigorous cost
discipline as the business emerges from this transformational period, with a
clear strategy for future years;
· Refocus of the Group to higher margin MSP business is already
underway;
· Recurring revenue model and lower capex MSP business, with
reduced debt, has attractive earnings potential with improved cash conversion;
· Enhanced MSP growth strategy expected to deliver attractive
revenue and earnings growth in FY27 and beyond;
· DC disposal targeted to complete by end of March 2026, and
anticipated to enable the Board to announce a significant return of capital to
shareholders, materially reduce debt and provide modest investment
opportunities to accelerate MSP growth;
· Board to review capital allocation and dividend policy at the
year end in light of lower capex and higher cash conversion MSP business; and
· Confidence in the medium to long-term outlook of earnings and
cash generation with a strong business model and transformed balance sheet
Commenting on the results, Michelle Senecal de Fonseca, CEO of Redcentric,
said: "I am delighted to deliver these positive results, in what has been a
very busy first half for the Group. Whilst the transformational year has been
challenging, it is pleasing to see that our focus on securing and maintaining
higher margin business and managing costs has already delivered improved
margins from the MSP business. With the sale of the DC business now announced,
our ongoing focus is very much on MSP as we start to execute the new strategy
and growth plan which we believe will accelerate growth in both revenue and
earnings in the years to come, building on the strong foundations of a market
leading position and a high recurring revenue model."
Analyst Presentation
A presentation for sell-side analysts will be held at 9.30am today at Burson
Buchanan's office. If you are interested in attending, please email Burson
Buchanan on redcentric@buchanancomms.co.uk
(mailto:redcentric@buchanancomms.co.uk) .
For further information:
Redcentric plc via Burson Buchanan
Michelle Senecal de Fonseca, CEO www.redcentricplc.com (http://www.redcentricplc.com/)
Tony Ratcliffe, CFO
Tel: +44 (0) 20 7220 0500
Cavendish Capital Markets Limited - Nomad and Broker
Marc Milmo / Callum Davidson (Corporate Finance)
Andrew Burdis / Sunila de Silva (ECM)
For media enquiries:
Burson Buchanan - Financial Communications Tel: +44 (0) 20 7466 5000
Henry Harrison-Topham / Jamie Hooper / Toto Berger redcentric@buchanancomms.co.uk (mailto:redcentric@buchanancomms.co.uk)
Notes to Editors:
Redcentric has a strong track record in delivering IT Managed Services
provision that empowers businesses to scale, innovate and grow in a rapidly
evolving digital landscape. As technology continues to advance the Company's
goal is to be the go-to-all-in-one infrastructure and managed IT service
provider for customers of all sizes offering an unmatched range of products
and solutions.
The Company's MSP division serves the private and public sectors with all
their IT requirements. The MSP division acts as an outsourced IT department,
handling day to day maintenance and security of customers' IT infrastructures.
This allows customers to improve security and efficiency and focus on growing
their core businesses.
From infrastructure management and cloud services to cybersecurity and data
analytics, Redcentric has a comprehensive suite of solutions designed to meet
the diverse needs of modern businesses.
For additional information please visit www.redcentricplc.com
(http://www.redcentricplc.com)
Chairman's Statement
I am pleased to introduce the half year results of the Redcentric Group for
the six months ended 30 September 2025.
Overview
The first half year has been a busy one, dominated by progression of the
proposed sale of the DC business. Post period end, the Board was delighted to
announce on 23 October the sale of the DC business to Stellanor Datacenters
Group Limited, backed by a fund managed by DWS Group. The consideration, all
payable in cash, is based on an enterprise valuation of up to £127 million.
This consideration is subject to adjustment on completion to ensure the DC
business is sold on a cash free, debt free basis and is also subject to a
target level of working capital and a number of adjustments relating to
commercial and property contract matters.
Completion of the DC sale remains dependent on several agreed conditions
precedent being satisfied, which comprise regulatory requirements, as well as
certain conditions relating to outstanding matters from the separation of the
business into two segments. It is positive to report that certain of these
conditions precedent have already been satisfied. Whilst the technical long
stop date for completion is 31 May 2026, the Board currently estimates that
completion will occur on or before 31 March 2026.
This is a pivotal year for the Group and this transaction is expected to be
transformational, allowing a reduction in Group debt, the ability to de-risk
and focus on the future MSP growth strategy and the ability to return
significant amounts of capital to shareholders.
Following the completion of the DC business sale, the Board is excited about
the significant growth potential in its MSP business. The refreshed
lower-capex growth strategy outlined in the CEO's report is expected to drive
strong operational leverage, delivering margin expansion and, with reduced
financing costs, substantially higher cash conversion. This clear pathway
should further strengthen the balance sheet and create scope for enhanced
shareholder returns through additional distributions, as the Board monitors
ongoing debt repayment and dividend policies.
Focus on the MSP business
The sale of the DC business is also pivotal because it will allow the Group to
focus on the MSP market which the Board believes provides a very attractive
opportunity for growth and scale, which can be capitalised on by leveraging
the Group's existing operational infrastructure and cost base, thus creating
the potential to deliver attractive returns to shareholders while continuing
to deliver market leading service to the Group's valued client base.
The Board has agreed an enhanced MSP growth strategy, which is discussed in
more detail in the CEO's Review.
Solid progress and momentum have been achieved in the first half, with the MSP
business delivering revenues of £66.8m with an increased gross margin of
61.6% (H1 FY25: £69.2m at a gross margin of 59.1%) from success in its three
core service towers: Cloud, Connectivity and Communication. The recurring
revenue model, a key strength of the MSP business, accounted for 90.4% of
total MSP revenues (H1 FY25: 88.0%). Adjusted EBITDA of £9.1m at an Adjusted
EBITDA margin of 13.7% shows an increase (H1 FY25: £8.9m at an adjusted
EBITDA margin of 12.8%). This performance is very solid given the challenging
market environment.
The work involved in the separation of the two business units during the
period, plus the time focused on the DC disposal has presented some
significant and inevitable distractions during this financial year. However,
management is dedicated to its commitment to drive MSP revenue whilst
prudently managing the cost base to maximise stakeholder value.
Possible Return of capital to shareholders
As the DC sale reaches completion, the Board intends to review the capital
allocation from the sale proceeds, with the funds due to be received on
completion allocated to deliver benefits to shareholders and to strengthen the
Group's financial position. The Board will be considering a number of options,
including an agreed reduction in its debt to enhance financial stability,
returning capital to shareholders (most likely by way of a Tender Offer),
repurchasing shares and evaluating opportunities to accelerate growth within
the MSP business. At this stage, the Board has agreed with its lenders to
reduce the size of its Revolving Credit Facility ("RCF") following completion
of the disposal, from £60m to £30m and to reduce RCF amounts drawn at
completion to no more than £19m (RCF borrowings at 30 September 2025 were
£41m).
Shareholders will be kept informed of further progress and the expected
outcome and timing of the completion of the DC sale and any further capital
allocation decisions. In the event of a return of capital by tender offer,
this would be subject to shareholder approval at a General Meeting.
Board changes and people
During the first half, the Board appointed Michelle Senecal de Fonseca as CEO
in May 2025, following her tenure as a Non-Executive Director of Redcentric
since February 2024. Michelle has driven the MSP strategic refresh and has a
strong operational focus on MSP, which is already delivering positive change.
The Board also welcomed Tony Ratcliffe as CFO in August 2025. Tony has a
successful background in delivering growth and building and realising
shareholder value in technology businesses, a number of those having been
listed on the AIM market.
I also wish to express my continued appreciation to all our colleagues for
their efforts in driving the Group's progress. We are equally grateful to all
of our valued clients for their partnership and to our investors for their
continuing support as we transform the business in this busy year.
Richard McGuire
Non-Executive Chairman
Chief Executive Officer's Review
Introduction
I am pleased to report the first half results for FY26.
A huge effort has been incurred in the period to initially separate the two
business units, MSP and DC, from what had historically been a single, combined
business and subsequently to advance the sale of the DC business.
Both the Company and the buyer of the DC business, Stellanor Data Centers
Group, are working hard to finalise the remaining conditions precedent to
allow legal completion of the sale to occur as soon as possible. Whilst we are
committed to support the buyer for twelve months post completion by way of a
transitional services agreement, the clear focus and attention of the Board
and management going forward is very much directed to addressing what it sees
as an attractive MSP market opportunity. The Group has strong MSP foundations
built on recurring revenues which it is expected can be further built upon to
create incremental shareholder value over the medium term. The focus of my
review below is devoted to the ongoing MSP business.
The IT Managed Services market
UK customer demand for managing IT infrastructure, cybersecurity and end-user
systems is well established, with the Service Addressable Market (SAM)
estimated at over £10 billion per annum.
This IT Managed Services market is highly fragmented, supplied by
approximately 12,000 providers in the UK. There are a small number of very
large, predominantly global, providers, a huge number of quite small providers
and a modest number of mid-tier providers. It is the large and mid-tier
providers that dominate the marketplace and this is where Redcentric sits as a
mid-tier leader. The Group's competitors are a broad spectrum of businesses
from global telecommunication companies through hardware and software
providers, system integrators and a range of independent providers, and
include companies providing individual elements of the overall IT Managed
Services spectrum.
Redcentric enjoys a diverse portfolio of customers equally split over the
public and private sectors. It has built a particularly strong position in the
public sector, particularly with NHS trusts and associated social care as well
as in the commercial markets among customers that require compliant oriented
services.
Management believes the Group has the requisite national scale to provide
diverse and attractive product and service offerings with the ability to be
nimble enough to offer the right level of customised and technically compliant
services with intimate account engagement. Maintaining this agility and deep
customer knowledge differentiates the Group from the global service providers
and is the key reason in being rewarded with long-term customer loyalty. The
investment the Group makes in maintaining and expanding a wide array of
technical and regulated compliance certifications separates it from most of
its peers. The Group is fortunate not to suffer from many of the challenges
that its smaller competitors face, such as the lack of a delivery structure,
reputation, reliability and financial strength. The Board also views the
Group's AIM listing as a strong and visible demonstration of the Group's solid
balance sheet and governance, making the Group a particularly attractive
counterparty for its customers to contract with.
The MSP Strategy
The Group provides a broad range of IT Managed Services across its three core
specialist areas of Cloud, Connectivity and Communication. Each of these areas
has a dedicated focus with technologically advanced infrastructure and
appropriately skilled resource. Historically, the Group has built its
offerings both organically and through M&A.
The Group has positioned itself in the market as being able to combine the
benefits of proprietary networks with a flexible and technically skilled
workforce able to deliver and support critical services and solutions in an
exceptionally secure environment. The Group seeks to differentiate itself in
three distinct ways:
· Innovation - in the design and delivery of its services;
· Reliability - applying the right technical skills, organised in the
right way, to give predictable high-quality results; and
· Value - service offerings designed to offer value for money to
mid-market customers.
Since becoming CEO in May, my focus and priority has been to review and update
the MSP strategy. I believe that the combination of the current dynamics in
the MSP marketplace together the Group's core strengths and capabilities in
this sector provide a unique opportunity to capitalise on a number of
high-priority attractive growth initiatives. The strategy to exploit these
opportunities is focused on:
Cybersecurity solutions
Cyber threats, compliance mandates and privacy concerns continue to intensify.
The Group intends to build upon its existing security portfolio by continuing
to invest in a comprehensive security product offering, building compliance
frameworks suited to its customer sectors, and creating offerings that enhance
cyber-resilience for customers. Investment will be made to obtain
certifications with key security vendors, enhance our Security Operations
Centre (SOC) capabilities and to develop proprietary compliance intellectual
property. Enhancing the Group's cybersecurity solutions are expected to
support the growth of higher margin recurring revenue, under-pinned by cross
selling to existing customers and demonstrating our strong competitive
advantage.
Public sector cloud modernisation
There is a significant opportunity to upgrade and modernise cloud platforms in
the public sector, where the Group already has a strong presence. The Group
intends to prioritise cloud migration, partnerships and modernisation
initiatives to further develop managed services for public cloud environments,
including highlighting our own sovereign cloud capabilities. Sovereign cloud
is a cloud environment that ensures compliance with the legal frameworks of
specific countries or regions, allowing customers to meet the digital
sovereignty requirements by keeping data within national boundaries, enhancing
data protection and security to address the growing demand for data privacy
and compliance. Investment will be made in cloud platforms and infrastructure
with resources focussed to deliver to more public framework agreements. These
initiatives are expected to capitalise on existing relationships and
capabilities, with the objective of further embedding the Group within its
existing customer base and providing a lower risk route to enhanced
revenues.
Expand the Group's partner ecosystems
Currently, the Group has a limited, but valuable number of selected partners
in certain of the vertical markets in which it operates. By developing these
partnerships into more robust ecosystems, it will provide a richer route to
market for the Group to grow its new customer business. Additionally, the
Group is selecting additional partners for faster evolution of some of its
newer service offerings. Understanding the requirements of different regulated
industries and maintaining today already a highly secured, certified
workforce, the Group intends to put additional focus on commercial entities
that require such compliant and differentiated service offerings.
Cost and efficiency improvements
The Group is making efforts to reduce the MSP's facilities requirement, to
further focus on procurement and supplier optimisation, both to reduce cost.
Investments are expected to be made in network delivery automation and to
upgrade its Microsoft 365 ERP installation to better align to the current and
future business needs and to provide a scalable platform for further growth.
Further details of how we will look to improve our operational efficiencies is
set out below.
Artificial Intelligence ("AI")
Whilst these are the primary nearer-term drivers anticipated to unlock further
growth, the Group expects to monitor market trends and opportunities and to be
agile to further market opportunities. These areas will likely include AI and
automation software, Generative AI (GenAI). While the world is focused on AI
applications and data centre capacity, it is overlooking the lack of
significant available AI enabled network connectivity. The Group's current
infrastructure is already AI-enabled and is working with its partners to find
the right customer use cases to maximise the intended benefits.
Business Model
The Group has a well-established and capable direct sales and account
management team, who are complemented by a few strategic partners, who work to
continue to attract new customers and to deepen and broaden its relationships
with existing customers. As noted above, the strategic review has identified
the need to work with a more defined set of partners to accelerate market
penetration, better leverage the Group's existing partnerships with more
structure and create specific ecosystems aligned to key market segments.
The Group's very high proportion of recurring revenue is a highly attractive
facet of its business model. Focus continues on maintaining the level of
recurring revenues, as this provides a solid and highly visible picture of
future revenues and earnings, but also to complement these revenues with
non-recurring revenues, for example professional services around security or
new client installations, which can provide useful uplifts in revenue.
The Group's MSP business is focussed towards the public sector, and large
enterprise customers, with a significant amount of business secured through
bid or tender processes. Customer contracts vary but are typically multi-year
contracts, a key strength. There is of course a natural cycle when customer
contracts approach renewal and the Group generally seeks to renew on broadly
similar or enhanced terms. Therefore, focus on securing renewals is a key
internal KPI with the Group focused on maintaining or increasing customer
profitability through upselling and cost of service improvements
Whilst the Group has a complete and attractive portfolio of offerings, it is
committed to remaining at the technological forefront of the market and
therefore seeks to broaden its offering to provide customers with solutions
that best meet their needs. The Group has a strong and reliable national
infrastructure and has developed a delivery model that provides assurance and
certainty for customers.
Operations
As already noted, there has been significant change in the first half,
particularly driven by the split of the business into separate MSP and DC
business units.
Other operational highlights in the first half within the MSP business
include:
Hardware and licencing optimisation
Following a comprehensive review of internal platforms and the licensing
estate, specifically the utilisation of VMWare and MS licensing across the
relative services, there has been solid progress in optimising hardware usage
and licencing. Following a re-architecture of Redcentric's internal data
capture (specifically internal licensing usage) capabilities, the Group will
be taking further steps to consolidate and significantly reduce internal
systems requirements. Current expectations are a significant reduction in
internal system license expenditure with some impact in H2 FY26 and a more
significant impact during FY27 and beyond.
Rack Consolidation
Following the end of sale notification of its hardware recovery services
solution offering, the Group has restructured the remaining client contracts
to allow for the decommissioning of its colocation rack estate, creating
operational efficiencies which allow cost savings going forward.
Operational efficiency initiatives
In conjunction with the strategic review of the MSP market and business, I
have had the opportunity to review all operational aspects of the MSP and can
report a number of planned initiatives that are expected to improve
operational efficiency and effectiveness, provide the platform for further
growth in MSP and to better manage its cost base in the medium to long term.
These initiatives include:
Rationalisation of facilities
The MSP business is based in Harrogate and also has a sizeable but
under-utilised facility in York. The York facility has now been vacated and
the lease is in the process of being assigned.
Delivery automation
The MSP business intends to accelerate its further automation of its circuit
provisioning in its Connectivity tower. With modest up-front investment, the
Board believes it can bring forward certain operational efficiencies and cost
savings, effective from the second half of FY27.
Microsoft 365 ERP system upgrade
Whilst material investment has been made historically in the Group's Microsoft
365 ERP system, there have been significant changes in the Group's structure
and operations, driven by prior year acquisitions and now the imminent sale of
the DC business. Whilst the Customer Engagement (CE) side requires less
modification, the Board has approved the investment required to update the
Finance & Operations ("F&O") component to better suit the Group's
current and planned business and to provide a much more appropriate platform
for future growth. While discovery and planning is currently underway, it is
expected that the majority of this investment will be made during FY27,
financed from the proceeds of the DC sale, and will generate progressive
operational and cost saving initiatives from the latter part of FY27 and
beyond.
Organic growth
The sales team continues to exploit the opportunities arising from prior
acquisitions, with the enlarged customer base presenting new cross-selling
opportunities and the new product offerings providing a wider range of
services to the existing customer base. The Group also has the opportunity to
target its increased VMware customer base for cross-selling opportunities.
The organic sales strategy can be summarised into three key focus areas:
1. Cross-sell multiple products and services to existing customers, where
they only have one or a few products or services;
2. Cross-sell other Group products and services to VMware customer wins;
and
3. Attracting new customers.
The Group appointed Aleksandra Lubavs as Chief Revenue Officer in June 2025
and under her leadership the sales team is focussed and driven to meet
ambitious targets for both recurring and non-recurring revenue.
Inorganic growth
The Group has worked hard through the complexities of splitting the MSP and DC
business units, the associated internal reorganisations and, following
completion of the DC sale, will have twelve months of managing transitional
services for the acquirer of the DC business. These factors, as well as the
need to focus on the attractive organic growth initiatives identified above
and the operational changes contemplated, mean the current intention is very
much on an organic growth strategy. That being said, management is ensuring it
builds a platform that could be accelerated further with M&A, and the
Board retains its opportunistic approach to M&A should potential
opportunities fulfil various criteria including being strategically relevant,
financially accretive, contribute to Group scale, expand or enhance
infrastructure to deliver greater levels of security and service, bring new
technologies to benefit from innovation, be a cheaper alternative than
building the capabilities internally or offer cross-selling opportunities.
Summary financial results
More detailed financial data is summarised in the CFO's Review with fuller
detail in the Financial Statements. Revenues from continuing operations were
£66.8m (H1 FY25: £69.2m), all organic. Recurring revenue increased as a
proposition to 90.4% (H1 FY25: 88.0%). These are commendable results in what
remains a challenging market.
Gross profit increased to £41.1m in H1 FY26 (representing a 61.6% gross
margin) from £40.9m (representing a 59.1% gross margin) in H1 FY25. The
increase in gross margin was due to a conscious focus to secure and retain
higher margin business.
Adjusted EBITDA increased to £9.1m in H1 FY26 (at a 13.7% margin) from £8.9m
(at a 12.8% margin). It is positive to see the increase in absolute Adjusted
EBITDA as well as Adjusted EBITDA margin, achieved whilst operating costs
continue to remain under pressure.
Outlook
The focus for FY26 and beyond is to drive recurring revenue within our MSP
business, whilst actively managing the cost base to deliver the strongest
possible margin and cashflow performance over the medium to long-term.
The Board and senior management believe that there is fundamentally an
attractive MSP opportunity to build scale and deliver shareholder value, with
key initiatives laid out to target growth, improve the operational
effectiveness of the MSP business and to lower the cost base.
In the current market environment, with the distractions experienced in the
year from the sale of the DC business and the modest investment to deliver the
growth strategy, the Board currently expects that FY26 MSP revenues will be
broadly flat versus FY25 MSP revenues. Management is focused on managing
general cost pressures and expects a modest reduction in earnings in FY26 but
that this is followed by more ambitious revenue and earnings growth from FY27
and beyond. I am confident of the Group's medium to long-term MSP prospects as
it executes this strategy.
I look forward to updating shareholders of the Group's performance in due
course.
Michelle Senecal de Fonseca
Chief Executive Officer
Chief Financial Officer's Review
Overview
The results for the first half continue to highlight a change in presentation
from the first half of FY25. As previously announced, the Board made the
decision to separate the DC and MSP business units (which had been aggregated
in all previous financial reporting), as they represented two quite distinct
business units, operating in different market segments with different business
models and having different resource requirements.
The consequence of the decision to sell the DC business was that under IFRS 5,
the financial reporting for this period primarily highlights the continuing
operations, i.e. MSP, as it did in the full year results for FY25. The detail
in the Statement of Comprehensive Income therefore shows the line-by-line
results of MSP, together with appropriate comparative data for the prior year
first half to allow a meaningful comparison. The DC business unit's results
continue to be presented, in accordance with IFRS 5, as a discontinued
operation in the Consolidated Statement of Comprehensive Income, with its
assets and liabilities classified as held for sale in the Consolidated
Statement of Financial Position. Under IFRS5, the comparative balance sheet
has not been restated to reflect the change in presentation and therefore, by
definition, the balance sheet items show more marked variances compared to the
prior half year.
The financial review below covers the primary Financial Statements as
presented and, unless otherwise stated, focuses on the continuing MSP
business. Where significant differences have arisen because of the change in
presentation as noted above, these are highlighted.
Revenue
Revenue for continuing operations, the MSP business unit, for the first half
was generated wholly from the UK and was £66.8m, a decrease of 3.6% on
£69.2m generated in H1 FY25. Total revenue can be analysed below:
Six months ended Six months ended Year ended 31 March 2025
30 September 30 September Audited
2025 2024
Unaudited Unaudited
*restated
£'000 £'000 £'000
Continuing operations - MSP business unit 66,759 69,241 135,138
Discontinued operations - DC business unit 21,533 22,249 44,571
Inter-segment revenue (4,655) (4,705) (9,818)
Total revenue 83,637 86,785 169,891
*restated to reflect continuing operations
The Group's continued focus remains on maximising recurring revenues which
provide strong visibility and security of future revenues.
The mix of revenues for the MSP business unit, is summarised below:
Six months ended Six months ended Year ended 31 March 2025
30 September 30 September Audited
2025 2024
Unaudited Unaudited
*restated
Continuing operations £'000 £'000 £'000
Recurring revenue 60,355 60,898 120,657
Product sales 2,243 2,803 4,888
Services revenue 4,161 5,540 9,593
Total revenue 66,759 69,241 135,138
*restated to reflect continuing operations
Recurring revenue amounted to £60.4m (H1 FY25: £60.9m) representing an
increased proportion of 90.4% of total revenue (H1 FY25: 88.0% of total
revenue).
Gross profit
Six months ended
Six months ended 30 September
30 September 2024 Year ended 31 March 2025
2025 Unaudited Audited
Continuing operations Unaudited *restated £'000
£'000 £'000
Gross profit 41,131 40,926 83,281
Gross margin 61.6% 59.1% 61.6%
*restated to reflect continuing operations.
The gross profit for the first half from continuing operations was £41.1m, an
increase of 0.5% on £40.9m generated in H1 FY25. This represented a gross
margin of 61.6%, which compared to 59.1% in H1 FY25. In common with
competitors in the sector, whilst the Group has the benefit of index linked
annual price increases in a number of customer contracts, it also typically
encounters price pressure as customers may renew contracts at lower prices for
newer offerings. It has also experienced general cost pressures which will
remain a high priority activity to manage as far as possible, with the focus
being on securing and maintaining higher quality revenues.
Operating expenses
For continuing operations, the Group's total operating costs were £37.5m, an
increase of 0.8% on the £37.2m in H1 FY25. For continuing operations, the
Group's underlying operating costs were in line with H1 FY25 at £32.0m. An
analysis of the major components of the cost base is shown below:
Six months ended Six months ended Year ended 31 March 2025
30 September 30 September Audited
2025 2024
Unaudited Unaudited
*restated
Continuing operations £'000 £'000 £'000
UK-based employee costs 18,133 17,668 36,006
Office costs 133 (158) 742
Network and equipment costs 7,367 7,756 22,471
Other sales, general and administration costs 5,681 6,079 3,960
Offshore based employee and office costs 691 693 1,344
Underlying operating costs 32,005 32,038 64,523
Depreciation of property, plant and equipment 2,103 1,811 4,001
Amortisation of intangibles 1,221 1,165 2,593
Depreciation of right-of-use assets 779 938 1,610
Exceptional costs 1,293 739 924
Share-based payments and associated National Insurance 98 515 1,235
Total operating costs 37,499 37,206 74,886
*restated to reflect continuing operations.
It should be highlighted that network and equipment costs represent technical
infrastructure costs that cannot individually be linked to customer contracts.
Whilst costs have been well managed, there remains significant pressure on all
costs, and this will continue in the second half of the year.
Adjusted EBITDA
The Board's key measure of underlying business profitability and assessing
trends across periods is adjusted earnings before interest, tax, depreciation
and amortisation ('EBITDA') further adjusted for exceptional items,
share-based payments and associated National Insurance costs ("Adjusted
EBITDA"). Adjusted EBITDA for continuing operations for the first half was
£9.1m, an increase of 2.7% on the £8.9m generated in H1 FY25, essentially
driven by the higher gross margin and the successful cost control in the
period.
Finance costs
For continuing operations, net finance costs for the Group year reduced to
£1.7m (H1 FY25: £2.1m), as the unutilised element of the revolving credit
facility ("RCF") was reduced.
Tax
For continuing operations, the tax charge for the first half was £0.1m (H1
FY25: credit of £0.2m).
Discontinued operations
The net profit after tax for the discontinued operations, being the DC
business unit was, £0.9m (H1 FY25: £2.0m), shown as a single line item in
the Consolidated Statement of Comprehensive Income. A fuller analysis of the
components of the performance of the DC business is shown below.
( ) Six months ended 30 September 2025 Six months ended 30 September 2024 Year ended
Unaudited Unaudited 31 March
2025
Audited
( ) £'000 £'000 £'000
Revenue 21,533 22,249 44,571
Cost of sales (8,390) (8,742) (18,415)
Gross profit 13,143 13,507 26,156
Operating expenditure (10,507) (10,827) (23,091)
Gain on contingent consideration - - -
Adjusted EBITDA from discontinued operations 8,322 9,311 16,633
Depreciation of property, plant and equipment (1,800) (1,976) (3,617)
Amortisation of intangibles (387) (416) (832)
Depreciation of right-of-use assets (3,360) (4,138) (8,308)
Exceptional costs (98) (85) (779)
Exceptional income - - -
Share-based payments (41) (16) (32)
Operating profit from discontinued operations 2,636 2,680 3,065
Finance costs (765) (715) (1,461)
Profit before tax from discontinued operations 1,871 1,965 1,604
Income tax (expense)/credit (955) 78 (809)
Profit for the period from discontinued operations 916 2,043 795
Revenue for the discontinued operations for the period was generated entirely
in the UK and was £21.5m, a decrease of 3.2% on the £22.2m generated in H1
FY25.
Gross profit for the discontinued operations for the year was £13.1m, a
decrease of 2.7% on £13.5m generated in H1 FY25. This represented a gross
margin of 61.0%, which was a modest increase compared to a 60.7% gross margin
in H1 FY25.
Operating costs for the discontinued operations were £10.5m, compared to
£10.8m in H1 FY25.
Adjusted EBITDA for the discontinued operations for the half was £8.3m,
compared to £9.3m generated in H1 FY25.
Earnings per share
As detailed further in note 10, the basic and diluted earnings per share for
continuing operations amounted to 1.19 pence per share and 1.17 pence per
share in the first half, compared to 1.13 pence per share and 1.10 pence per
share in H1 FY25.
Adjusted basic and adjusted diluted earnings per share on continuing
operations, which is an Alternative Performance Measure and excludes tax,
amortisation of acquired intangibles, share-based payments plus associated
National Insurance and exceptional items, to which a notional tax charge of
25% is applied amounted to 1.86 pence per share and 1.83 pence per share in
the year, compared to 1.70 pence per share and 1.65 pence per share in H1
FY25.
Intangible assets
As detailed further in note 11, total intangible assets amounted to £35.5m at
the half year, compared to £36.4m at the year-end date FY25.
Property, plant and equipment
As detailed further in note 12, total property, plant and equipment amounted
to £10.0m at the half year, compared to £10.2m at the year-end date FY25.
Total additions in the first half year amounted to £3.9m whilst total
depreciation in the period amounted to £3.9m.
Right-of-use assets
As detailed further in note 13, total right-of-use assets amounted to £4.1m
at the half year, compared to £4.7m at the year-end date FY25. Total
additions in the first half year amounted to £8.1m whilst total amortisation
in the year amounted to £4.6m.
Trade and other receivables
Total trade and other receivables (both current and non-current) amounted to
£35.8m at the half year, compared to £32.3m at the year-end date FY25. The
expected credit loss provision amounted £0.1m at the half year-end date,
compared to £0.1m at half year-end FY25. Trade debtor days were 32 at 30
September 2025 compared to 34 at 30 September 2024. Trade debtor days are
calculated as gross trade debtors divided by revenue (incl. VAT) multiplied by
182.5.
Trade and other payables
Total trade and other payables amounted to £32.0m at the half year, compared
to £32.9m at the year-end date FY25. Trade payable days were 28 at 30
September 2025 compared to 34 at 30 September 2025. Trade payable days are
calculated as trade payables divided by total purchases (cost of sales and
operating expenditure) multiplied by 182.5.
Net debt
As detailed further in the Appendix, net debt for the Group amounted to
£68.6m at 30 September 2025, compared to £65.5m at 31 March 2025, an
increase of £3.1m.
The table below summarises the Group's total movements (continuing and
discontinued operations) in the components of net debt, with the cash flow and
non-cash flow elements separated out:
( ) As at 30
( ) As at 31 Net cash Net non- September
March 2025 Flow cash flow 2025
Audited Unaudited Unaudited Unaudited
( ) £'000 £'000 £'000 £'000
Cash 3,018 1,078 (38) 4,058
Revolving Credit Facility (38,947) (405) (1,523) (40,875)
Term Loan (3) 3 - -
Asset Financing Facility (4,924) 277 470 (4,177)
Lease Liabilities (24,599) 1,944 (4,920) (27,575)
(65,455) 2,897 (6,011) (68,569)
Included in lease liabilities at 30 September 2025 are £26.8m (31 March 2025:
£23.6m) of IFRS 16 lease liabilities that were previously classified as
operating leases under IAS 17 Leases.
The split of net debt at 30 September 2025 between continuing operations and
discontinued operations is shown below:
( ) Continuing Total Group Year ended
Operations 30 September 2025
Unaudited Discontinued Unaudited
Operations
Unaudited
( ) £'000 £'000 £'000
Cash 4,058 - 4,058
Revolving Credit Facility (40,875) - (40,875)
Asset Financing Facility (1,419) (2,758) (4,177)
Lease Liabilities (3,955) (23,620) (27,575)
Net Debt (42,191) (26,378) (68,569)
Financing
Total facilities and amounts drawn at 30 September 2025, compared to the
year-end date FY25 are summarised below.
30 September 2025 31 March 2025
Available Drawn Undrawn Available Drawn Undrawn
Unaudited Unaudited Unaudited Audited Audited Audited
£'000s £'000s £'000s £'000s £'000s £'000s
Committed
Revolving Credit Facility 60,000 41,000 19,000 80,000 39,000 41,000
Term Loan - - - 3 3 -
Asset Financing Facility 10,000 4,177 5,823 10,000 4,924 5,076
Lease Liabilities 27,575 27,575 - 24,600 24,600 -
97,575 72,752 24,823 114,603 68,527 46,076
Uncommitted
Accordion Facility 20,000 - 20,000 20,000 - 20,000
20,000 - 20,000 20,000 - 20,000
Total borrowing facilities 117,575 72,752 44,823 134,603 68,527 66,076
Uncommitted facilities represent facilities available to the Group, but which
may be withdrawn by the lender subject to agreement by the lenders and hence
are not within the Group's control.
As at 30 September 2025, the Group was party to £70.0m of committed banking
facilities, comprising a Revolving Credit Facility ("RCF") of £60.0m of which
a net £41.0m was utilised at 30 September 2025 and a £10.0m Asset Financing
Facility ("AFF") of which £4.2m was utilised at 30 September 2025.
The borrowing cost of the RCF is determined by the Group's leverage and has a
borrowing cost of 205 basis points over SONIA at the Group's current leverage
levels. A commitment fee is payable on the undrawn portion of the RCF at 82
basis points, being 40% of the borrowing cost.
On completion of the anticipated DC sale, the Group has agreed to repay its
RCF down to a maximum of £19.0m and to reduce its RCF facility down from
£60.0m to £30.0m. In the three months following the anticipated sale, the
Group expects to review its banking facilities.
Lease liabilities
Total current and non-current lease liabilities amounted to £4.0m at the half
year-end date, compared to £4.7m at the year-end date FY25.
Provisions
Provisions amounted to £0.2m at the half year date, compared to £0.7m at the
year-end date FY25.
Tony Ratcliffe
Chief Financial Officer
Redcentric plc
Condensed consolidated statement of comprehensive income for the six months
ended 30 September 2025
Six months to Six months to Year ended
30 September 30 September 31 March
2025 2024 2025
Unaudited Unaudited Audited
*restated
Note £'000 £'000 £'000
Continuing operations
Revenue 6 66,759 69,241 135,138
Cost of sales (25,628) (28,315) (51,857)
Gross profit 41,131 40,926 83,281
Operating costs (37,499) (37,206) (74,886)
Adjusted EBITDA(1) 9,126 8,888 18,758
Depreciation of property, plant and equipment (2,103) (1,811) (4,001)
Amortisation of intangibles (1,221) (1,165) (2,593)
Depreciation of right-of-use assets (779) (938) (1,610)
Exceptional costs 7 (1,293) (739) (924)
Share-based payments and associated National Insurance (98) (515) (1,235)
Operating profit 3,632 3,720 8,395
Finance income 6 - -
Finance costs 8 (1,704) (2,091) (4,011)
Profit before taxation on continuing operations 1,934 1,629 4,384
Income tax (expense)/credit 9 (43) 163 (1,691)
Profit for the period from continuing operations 1,891 1,792 2,693
Discontinued operations
Profit after tax for the period from discontinued operations 5 916 2,043 795
Profit for the period attributable to owners of the parent 2,807 3,835
3,488
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Currency translation differences (127) (134) (105)
Net loss on cash flow hedges (258) - (245)
Deferred tax in relation to prior years - - 14
Total comprehensive profit for the period 2,422 3,701 3,152
Earnings per share
Basic earnings per share 10 1.77p 2.43p 2.20p
Diluted earnings per share 10 1.73p 2.36p 2.13p
Earnings per share from continuing operations
Basic earnings per share 10 1.19p 1.13p 1.70p
Diluted earnings per share 10 1.17p 1.10p 1.64p
( )
(1) For an explanation and reconciliation of the alternative performance
measures used in this report, please refer to pages APM section of this
Report.
(*) For detail on the prior year restatements, please see note 2.2.
Redcentric plc
Condensed consolidated statement of financial position as at 30 September 2025
30 September 30 September 31 March
2025 2024 2025
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Non-Current Assets
Intangible assets 11 35,457 78,121 36,428
Property, plant and equipment 12 10,028 21,925 10,208
Right-of-use assets 13 4,058 32,583 4,689
Trade and other receivables 4,961 2,783 3,508
Deferred tax asset 2,012 2,770 2,109
56,516 138,182 56,942
Current Assets
Inventories 2,255 3,232 2,509
Trade and other receivables 30,866 35,508 28,809
Corporation tax receivable - 40 -
Cash and cash equivalents 4,058 4,001 3,018
Assets held for sale 14 86,244 - 82,169
123,423 42,781 116,505
Total Assets 179,939 180,963 173,447
Current Liabilities
Trade and other payables 29,618 40,933 30,436
Bank loans and asset financing 816 1,318 822
Lease liabilities 16 1,514 8,626 1,526
Financial liabilities 354 - 153
Provisions 17 - 1,469 507
Corporation tax payable 328 - 329
Liabilities directly associated with the assets held for sale 14 46,314 - 40,320
78,944 52,346 74,093
Non-Current Liabilities
Trade and other payables 2,393 128 2,461
Bank loans and asset financing 41,478 41,420 39,933
Lease liabilities 16 2,441 19,265 3,181
Financial liabilities 149 - 92
Provisions 17 233 11,036 233
46,694 71,849 45,900
Total Liabilities 125,638 124,195 119,993
Net Assets 54,301 56,768 53,454
Equity
Called up share capital 18 159 159 159
Share premium account 18 75,649 75,649 75,649
Common control reserve (9,454) (9,454) (9,454)
Own shares held in treasury (126) (761) (298)
Cash flow hedge reserve (503) - (245)
Translation reserve (1,264) (1,166) (1,137)
Retained earnings (10,160) (7,659) (11,220)
Total Equity 54,301 56,768 53,454
Redcentric plc
Consolidated cash flow statement for the six months ended 30 September 2025
Six months Six months Year ended
to 30 to 30 31 March 2025
September September Audited
2025 2024
Unaudited Unaudited
£'000 £'000 £,000
Profit before taxation 3,805 3,594 5,988
Finance costs 2,463 2,806 5,472
Operating profit 6,268 6,400 11,460
Adjustment for non-cash items
Depreciation and amortisation 9,650 10,444 20,961
Exceptional costs 1,391 824 1,703
Share-based payments 139 531 1,267
Operating cash flow before exceptional items and movements in working capital 17,448 18,199 35,391
Cash costs of exceptional items (1,414) (871) (1,320)
Cash costs of provisions (325) (34) (33)
Operating cash flow before changes in working capital 15,709 17,294 34,038
Changes in working capital
Decrease in inventories 254 955 1,678
Increase in trade and other receivables (5,303) (1,633) (846)
Decrease in trade and other payables (1,785) (1,133) (4,959)
Cash generated from operations 8,875 15,483 29,911
Tax paid (44) (12) (145)
Net cash generated from operating activities 8,831 15,471 29,766
Cash flows from investing activities
Purchase of property, plant and equipment (3,869) (4,093) (9,664)
Purchase of intangible assets (302) (801) (1,698)
Net cash used in investing activities (4,171) (4,894) (11,362)
Cash flows from financing activities
Dividends paid (1,907) (1,899) (5,705)
Disposal of treasury shares on exercise of share options 139 6 387
Financing of property, plant and equipment 37 890 1,714
Financing of unsecured loans - - 966
Interest received 6 - -
Interest paid on bank loans, term loans and asset financing (1,634) (1,897) (3,597)
Interest paid on leases (558) (618) (1,251)
Repayment of leases (1,386) (4,371) (8,762)
Repayment of asset financing liabilities (156) (582) (1,031)
Repayment of term loans (3) (8) (18)
Drawdown of bank loans 4,000 2,500 8,500
Repayment of bank loans (2,000) (3,500) (9,500)
Payment of loan arrangement fees (120) (200) (200)
Net cash used in financing activities (3,582) (9,679) (18,497)
Net increase / (decrease) in cash and cash equivalents 1,078 898 (93)
Cash and cash equivalents at beginning of period 3,018 3,130 3,130
Effect of exchange rates (38) (27) (19)
Cash and cash equivalents at end of the period 4,058 4,001 3,018
Redcentric plc
Condensed consolidated statement of changes in equity for the six months ended
30 September 2025
Share Share Common Own Translation reserve Retained Total
capital premium control shares Cash earnings equity
reserve held in flow
treasury hedge
reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2024 audited 159 75,649 (9,454) (779) - (1,032) (10,060) 54,483
Profit for the period - - - - - - 3,835 3,835
Transactions with owners
Share-based payments - - - - - - 477 477
Dividends paid - - - - - - (1,899) (1,899)
Share option exercises - - - 18 - - (12) 6
Other comprehensive income
Currency translation differences - - - - - (134) - (134)
At 30 September 2024 unaudited 159 75,649 (9,454) (761) - (1,166) (7,659) 56,768
Loss for the period - - - - - - (347) (347)
Transactions with owners
Share-based payments - - - - - - 660 660
Dividends paid - - - - - - (3,806) (3,806)
Share option exercises - - - 463 - - (82) 381
Other comprehensive income
Currency forward contracts - - - - (245) - - (245)
Currency translation differences - - - - - 29 - 29
Deferred tax relating to prior periods - - - - - - 14 14
At 31 March 2025 audited 159 75,649 (9,454) (298) (245) (1,137) (11,220) 53,454
Profit for the period - - - - - - 2,807 2,807
Transactions with owners
Share-based payments - - - - - - 193 193
Dividends paid - - - - - - (1,907) (1,907)
Share option exercises - - - 172 - - (33) 139
Other comprehensive income
Currency forward contracts - - - - (258) - - (258)
Currency translation differences - - - - - (127) - (127)
At 30 September 2025 unaudited 159 75,649 (9,454) (126) (503) (1,264) (10,160) 54,301
Redcentric plc
Notes to the unaudited condensed set of financial statements for the six
months ended 30 September 2025
1 Corporate information
The unaudited financial statements for the six months ended 30 September 2025
and the six months ended 30 September 2024 do not constitute statutory
accounts within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 March 2025 were approved by the Board
on 23 September 2025. The auditor's report on those accounts was unqualified,
did not contain an emphasis of matter paragraph and did not contain any
statement under Section 498 (2) or (3) of the Companies Act 2006.
These condensed Interim Financial Statements were approved for issue by the
Board on 9 December 2025 and were not independently reviewed by the Group's
auditor.
Redcentric plc is a public limited company incorporated and domiciled in
England and Wales, whose shares are publicly traded on the AIM market of the
London Stock Exchange. Redcentric plc was incorporated on 11 February 2013 and
admitted to AIM on 24 April 2013. The registered office is located at Central
House, Beckwith Knowle, Harrogate, HG3 1UG.
These unaudited condensed Interim Financial Statements comprise the Company
and its subsidiaries (together referred to as the "Company" or the "Group").
The principal activity of the Group during the year was the supply of IT
Managed Services, with the provision of DC services considered a discontinued
operation.
The principal accounting policies applied in the preparation of these
condensed interim Financial Statements are consistent with those set out more
fully in the Annual Report and Accounts for the year ended 31 March 2025.
These policies have been applied consistently in the current and prior period.
This Financial Information is presented in pound sterling, being the currency
of the primary economic environment in which the Group operates. All amounts
have been rounded to the nearest thousand (£'000), unless otherwise
indicated. The Financial information is prepared on the historical cost basis
except that derivative financial instruments are measured at fair value.
2 Accounting policies
2.1 Basis of preparation
These condensed Interim Financial Statements for the six months ended 30
September 2025 have been prepared in accordance with the AIM Rules for
Companies, comply with IAS 34 Interim Financial Reporting as adopted by the
UK-adopted international accounting standards, and should be read in
conjunction with the Annual Financial Statements for the year ended 31 March
2025. They do not include all of the information required for a complete set
of Financial Statements prepared in accordance with IFRS Accounting Standards.
However, selected explanatory notes are included to explain events and
transactions that are significant to an understanding of the changes in the
Group's financial position and performance since the last Annual Financial
Statements.
2.2 Going Concern
The Financial Statements are prepared on a going concern basis which the
Directors believe to be appropriate for the following reasons:
The Group and Company meets their day-to-day working capital requirements from
the Group's operational cash flows, a Revolving Credit Facility, Asset
Financing Facility and leasing arrangements. As at the half year date, the
Revolving Credit Facility is a £60.0m facility (net £41.0m utilised at 30
September 2025), while the Asset Financing Facility is a £10.0m facility
(increased from £7.0m in August 2024). A total of £4.2m of the Asset
Financing Facility was utilised at 30 September 2025. In March 2024 the
Revolving Credit Facility and Asset Financing Facility were extended at the
Group's request, with a new maturity date of 26 April 2026. Subsequently, on
25 July 2025, the Revolving Credit Facility and Asset Financing Facility were
extended a further year to 26 April 2027. In parallel with this extension, the
Revolving Credit Facility was reduced from £80.0m to £60.0m, with Bank of
Ireland exiting the facility, all other terms remaining unchanged.
The Directors have prepared detailed line-by-line financial forecasts,
including cash flow forecasts, on a monthly basis for a period exceeding 12
months from the date of approval of these Financial Statements (the "going
concern assessment period") which indicate that, taking account of reasonably
possible downsides on the operations and its financial resources, the Group
and the Company will have sufficient funds to meet their liabilities as they
fall due for that period, and will comply with debt covenants over that
period.
The Group is required to comply with financial debt covenants for adjusted
leverage (net debt to adjusted EBITDA), cashflow cover (adjusted cashflow to
debt service, where adjusted cashflow is defined as adjusted EBITDA less tax
paid, dividend payments, IFRS 16 lease repayments and cash capital
expenditure) and provisions relating to guarantor coverage such that
guarantors must exceed a prescribed threshold of the Group's gross assets,
revenue and adjusted EBITDA. The guarantors are Redcentric plc, Redcentric
Solutions Limited and Redcentric Data Centres Limited. Covenants are tested
quarterly each year. The Group can confirm it has met each quarterly bank
covenant.
The Directors' forecasts in respect of the going concern assessment period
have been built from the updated detailed three year plan to 31 March 2028 as
presented to the Board in November 2025, and the going concern assessment
takes account of the debt covenant requirements.
The DC business unit has been presented as an asset held for sale and as such
the base and downside scenario assumes a sale takes place in the forecast
period at current expected consideration, net proceeds and an assumed
distribution to shareholders. Should the disposal complete as anticipated, it
is expected to lead to a substantial improvement in the Group's liquidity
position and the Directors would expect to renegotiate the terms of the
Group's facilities and associated covenants to ensure they are appropriate for
the size of the Group going forwards.
Whilst a sale is deemed to be highly probable now that contract exchange has
been achieved, alternative scenarios have been undertaken to assess the
Group's ability to continue as a going concern should a sale fail to complete.
The following paragraphs outline the scenario planning underpinning both a
sale occurring and not occurring. In the former instance it would govern the
period up to the sale for the DC business, and beyond a sale for the
continuing business.
The forecasts include a number of assumptions in relation to order intake,
renewal and churn rates, EBITDA margin improvements, the impact of energy
efficiency investment and improved electricity pricing at forward rates
favourable to those achieved in prior years.
The DC business unit has been presented as an asset for sale and, on
completion, with consideration in cash, the Board would anticipate a very
substantial upside scenario.
Whilst the Group's trading and cash flow forecasts have been prepared using
current trading assumptions, the operating environment continues to present
several challenges which could negatively impact the actual performance
achieved. These risks include, but are not limited to, achieving forecast
levels of new order intake, the impact on customer confidence as a result of
general economic conditions, inflationary cost pressures including unexpected
one-off cost impacts, and the efficacy of energy efficiency measures under a
prolonged period of hot weather. In making their going concern assessment, in
light of these risks, the Directors have also modelled a combined severe but
plausible downside scenario when preparing the forecasts.
The downside scenario assumes significant economic downturn over FY26 and
FY27, primarily impacting recurring new order intake and non-recurring product
and services revenues as the Directors note the uncertainties surrounding the
timing and extent of non-recurring revenue from quarter to quarter. In this
scenario, recurring monthly order intake is forecast to materially reduce
compared to base case budget and product and services non-recurring revenues
are forecast to similarly materially reduce compared to base case budget
incorporating potential supply chain issues, reduced investment from the
Group's existing customer base and failure to expand market share as planned.
In addition, the downside scenario also assumes the new business obtained does
not achieve the gross margin planned, with a reduction to the planned gross
margin achievement across all new recurring revenue modelled.
An additional factor that can impact the revenue and gross margin assumptions
in the going concern assessment period is the level of customer cancellations
(of an individual service or product). Whilst known, near-term customer
cancellations have been modelled, coupled with an underlying level of customer
cancellations based on historic trends, there remains a risk that unexpected,
medium to large customer cancellations could occur in the near-term. The Group
is protected contractually to a large extent with notice periods and
cancellation clauses, however a residual risk remains. An additional level of
customer cancellations has therefore been modelled each quarter in the
downside scenario to reflect this risk.
Following the energy efficiency measures delivered in FY24, electricity
volumes are significantly more predictable than they have been historically.
In addition, power prices are primarily fixed (at current volumes) through to
September 2028. However, there remains a risk that periods of sustained higher
summer temperatures, considering the impacts of wider climate-related factors,
could increase energy usage at sites where new efficiency measures have been
introduced, but not tested, at these prolonged higher temperatures.
In preparing the cash flow forecasts and analysis relating to debt covenant
compliance through the going concern assessment period, the Directors have
considered the nature of exceptional items and are satisfied that such items
meet the Group's accounting policy and borrowings facility agreement
definition of exceptional items.
Given external market analysis indicates an expectation that interest rates
have stabilised, no sensitivity on interest rates has been included in the
plausible downside scenario. Both the base case and severe but plausible
downside forecast scenarios continue to model the payment of dividends,
including a potential final FY25 dividend payment in January 2026, however in
the instance of a DC business sale there is not anticipated to be a dividend
paid in the testing period, due to significant funds being return to
shareholders from the proceeds anticipated. The Directors will continue to
monitor the impact and timing of dividend payments in the normal course of
their quarterly liquidity and debt covenant compliance monitoring.
Under the downside scenario modelled, and including the new customer contract
overlay, the forecasts demonstrate that the Group is expected to maintain
sufficient liquidity and will continue to comply with the relevant debt
covenants without management taking mitigating actions. While not modelled,
mitigating actions which are within the Group's control would also be
available in the event of a severe downside. Such actions include, but are not
limited to, the rephasing of discretionary capital expenditure, and further
management of discretionary cost areas such as marketing, training and travel.
The Directors therefore remain confident that the Group and Company have
adequate resources to continue to meet their liabilities as and when they fall
due within the period of at least 12 months from today's date.
2.3 Prior period restatement
As a result of the DC business unit carve out and subsequent recognition as a
discontinued operation at 31 March 2025, the prior half results have been
restated so that all of H1 FY25, H1 FY24 and FY24 profit and loss are
presented on a continuing basis.
The restated Consolidated Statement of Comprehensive Income for the six months
ended 30 September 2024 is as follows:
Six months to
Six months to 30 September
30 September 2024
2024 IFRS 5 presentational adjustment *restated
(previously reported) Unaudited
Unaudited
£'000 £'000 £'000
Continuing operations
Revenue 86,785 (17,544) 69,241
Cost of sales (36,169) 7,854 (28,315)
Gross profit 50,616 (9,690) 40,926
Operating costs (44,216) 7,010 (37,206)
Adjusted EBITDA(1) 18,199 (9,311) 8,888
Depreciation of property, plant and equipment (3,787) 1,976 (1,811)
Amortisation of intangibles (1,581) 416 (1,165)
Depreciation of right-of-use assets (5,076) 4,138 (938)
Exceptional costs (824) 85 (739)
Share-based payments and associated National Insurance (531) 16 (515)
Operating profit 6,400 (2,680) 3,720
Finance costs (2,806) 715 (2,091)
Profit before taxation on continuing operations 3,594 (1,965) 1,629
Income tax credit 241 (78) 163
Profit for the period from continuing operations 3,835 (2,043) 1,792
Discontinued operations
Profit after tax for the period from discontinued operations - 2,043 2,043
Profit for the period attributable to owners of the parent 3,835 - 3,835
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Currency translation differences (134) - (134)
Total comprehensive profit for the period 3,701 - 3,701
As a result of the changes to segmental reporting in accordance with IFRS 8,
and the classification of the DC business unit as a discontinued operation and
asset held for sale in accordance with IFRS 5, a number of APM's have been
restated for the prior period which are not reconciled in the table above due
to their nature. The following reconciliations show the movement from the
final H1 FY25 position to the restated H1 FY25 position shown.
Six months to
Six months to 30 September
30 September 2024
2024 IFRS 5 presentational adjustment *restated
(previously reported) Unaudited Unaudited
Unaudited
£'000 £'000 £'000
Recurring revenue 78,280 (17,382) 60,898
EBITDA 16,844 (9,210) 7,634
Adjusted operating profit 8,838 (2,996) 5,842
3 Critical accounting judgements, key sources of estimation uncertainty
and other areas of estimation
In the application of the Group's accounting policies, which are described in
the Group's 2025 Annual Report and Accounts, the Board is required to make
judgements, estimates and assumptions about the carrying amounts of assets and
liabilities, without clear direction from other sources. The estimates and
associated assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis and
are consistent with the Group's risk management and climate-related
commitments where appropriate. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision only
affects that period, or in the period of the revision and future periods if
the revision affects both current and future periods.
3.1 Judgements
The Group has identified the following items as a critical accounting
judgement which could have a significant impact on the amounts recognised in
the Financial Statements for the period ended 30 September 2025.
3.1.1 Segmental reporting - prior period restatement
During the prior year, management re-evaluated the composition of its
operating structure, which resulted in the separation of one previously
reported business into two distinct operating segments, being the MSP business
unit and the DC business unit. Work to formally carve out the DC business
began in summer 2024, with Redcentric Data Centres Limited being incorporated
on 28 August 2024 as a wholly owned subsidiary of Redcentric PLC. On 1
February 2025 the trade and assets of the DC business were transferred from
Redcentric Solutions Limited into Redcentric Data Centres Limited, such that
the trading activities of the DC business unit essentially sits within
Redcentric Data Centres Limited and the trading activities of the MSP business
unit essentially sits within Redcentric Solutions Limited. As a result of this
carve out and migration, management were able to report to the Board, (the
Chief Operating Decision Maker "CODM") from 1 February 2025, discrete
financial information for both business units.
In order to complete this business unit separation, a thorough and detailed
contract by contract analysis was undertaken for components of both revenue
and costs to determine into which business unit individual items belonged. In
preparing comparative information for the two new segments, management had to
exercise judgement in applying the basis of this separation retrospectively
but believe that the approach taken and result obtained represented a
reasonable set of comparative results.
Comparative information in respect of revenue from external customers was
derived from the underlying financial records on an aggregated basis
determined by its revenue product category, as opposed to contract detail
level obtained in respect of the current year. The level of estimation from
this approach was low due to the discrete nature of the revenue streams within
the data centre business.
Inter-segment revenues, and corresponding cost of sales and operating costs,
for both periods were derived with reference to the contractual relationships
that governed the period from 1 February 2025 onwards. Management judge the
contracts to be on an arms-length basis, determined by reference to existing
third-party customer and supplier contracts and considered extensively at the
Board level before their initiation.
Cost of sales from external customers for both periods was derived by
reference to underlying financial records, with limited judgement applied due
to the discrete nature of costs that are analysed in this caption.
Operating costs before adjusted EBITDA for both periods were derived again by
reference to underlying financial records, principally the cost centre
originally used for existing reporting, thereby requiring little judgement.
Judgement has been applied in respect of corporate overheads, by reference to
appropriate metrics such as headcount and sales effort, though the quantum of
costs assessed under this basis is a small proportion of overall overheads.
Depreciation and amortisation for both periods could again be derived by
underlying financial records by reference to asset registers and their
corresponding categorisation. Judgement was mainly applied in this area in
reference to the split of Customer relationship intangible assets. In this
example the segmentation has been performed by reference to which business
unit that customer relationship has been allocated to when separating the
business units on 1 February 2025.
Exceptional costs and exceptional income have been assessed by management on
an item-by-item basis for both periods based on the business unit that drove
the exceptional activity, which in most cases was discrete.
Share-based payments for both periods have been derived by reference to the
associated employees, with no judgement required.
Finance costs in respect of lease arrangements in both periods have been
derived by underlying financial records, with little judgement required.
Finance costs in respect of the Group's RCF have been allocated based on an
estimation of the original drawdown requirement, adjusted for the estimated
segmental cash flows subsequent to initial drawdown. This has required a
degree of judgement in respect of the drawdown allocation and the subsequent
judgements over cash flows, however represents management's best estimation of
the segments' use of the RCF during this period. Other bases were considered
including working capital / capital employed, as well as measures such as
revenue or profitability measures, however management deemed these bases to be
either inappropriate or requiring a higher degree of estimation than the
method used.
These allocations represent management's best estimate of the financial impact
of the DC business on prior periods and management considers this to provide
relevant, reliable, and understandable information to users of the Financial
Statements in accordance with the principals of IFRS8 and IFRS5.
3.1.2 Assets held for sale and discontinued operations
Management has exercised judgement in determining whether the criteria for
classification of an operation held for sale under IFRS 5 Non-current Assets
Held for Sale and Discontinued Operations were met for the DC business unit at
the year-end reporting date of 31 March 2025 and interim reporting date of 30
September 2025. The DC business was formerly separated as of 1 February 2025.
The Board considered the DC business unit and hence Redcentric Data Centre
Limited subsidiary to meet the criteria to be classified as held for sale at
31 March 2025 and for the current interim reporting period of 30 September
2025 for the reasons discussed in the 2025 Annual Report:
The Group announced the sale of the DC business on 23 October 2025, subject to
certain conditions. Although there are always inherent uncertainties in any
such transaction, the Board believes that a sale will occur prior to 31 March
2026 and therefore criteria for classification as an asset held for sale
continue to be met.
Management also exercised judgement in determining what components of the
Group's operations met the requirements of IFRS5 to ensure that only trade
that is ceasing was included in the discontinued operations disclosures. It
should be highlighted that in the allocation of costs to the two business
units, all central and shared costs, which would be ongoing in the event of a
disposal of the DC business unit, have been shown within the MSP business unit
with the exception of the RCF finance costs which have been split to ensure
that the costs that will continue post a disposal are correctly recognised in
accordance with IFRS5.
Accordingly, the assets and liabilities of the DC business unit have been
reclassified as assets held for sale and liabilities held for sale within the
Consolidated Statement of Financial Position. The Income Statement results of
the DC business have also been extracted from the total business results and
shown separately within the Consolidated Statement of Comprehensive Income in
accordance with IFRS5.
3.1.3 Exceptional items
The Group presents separately on the face of the Consolidated Statement of
Comprehensive Income, material items of income and expenses, which, because of
their nature and expected infrequency of events giving rise to them, merit
separate presentation to allow shareholders to understand better the elements
of the Company's underlying financial performance. An element of management
judgment is required in identifying these exceptional items.
Additional information and a detailed breakdown of exceptional items is
included in note 7.
3.2 Estimates
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the this or the next financial year, are described below. The Group based its
assumptions and estimates on parameters available when the consolidated
financial statements were prepared. Existing circumstances and assumptions
about future developments, however, may change due to market changes or
circumstances arising that are beyond the control of the Group. Such changes
are reflected in the assumptions when they occur.
3.2.1 Dilapidation provision
The Group has recognised a dilapidations provision for the cost of returning
the leasehold properties to their agreed condition at the end of the lease
term, in accordance with the terms of the lease agreements. In determining the
fair value of the provision, assumptions and estimates have been made in
relation to the expected cost for anticipated condition of the properties at
the end of the lease term and reinstatement works plus inflation and discount
rates. In order to reduce the estimation uncertainty regarding expected costs
Management engaged a third party expert to prepare detailed valuations at 31
March 2025. These were then discounted back to present value by management.
Additional information is included in note 17.
4 Segmental reporting
IFRS8 requires operating segments to be identified based on internal financial
information reported to the chief operating decision-maker (CODM) for
decision-making purposes. The Group considers the role of the chief operating
decision-maker (CODM) for decision-making purposes as being performed by the
main Board. The Board believes that the Group continued to comprise a single
reporting segment, being the provision of IT Managed Services to customers
until the Data Centre business was transferred from Redcentric Solutions
Limited to Redcentric Data Centres Limited on 1 February 2025. After this
point the Board reviewed financial information for the P&L on a two
divisional basis being the provision of IT Managed Services ("MSP") and the
provision of Data Centre Services ("DC"). Balance Sheet and Cash Flow
information however continued to be reviewed on a Group basis.
In restating comparative information, management exercised judgement in
applying the basis of segmentation retrospectively based on available and
reliable information, rather than conducting standalone segment determination
on the prior period contract structure. Management deemed that reconstructing
a full standalone segmental view based on the prior period structure would
have been unduly complex and impractical as it would have required
reconstructing historic allocations at a level of detail not used by
management in prior decision making. Management exercised judgement in
applying the basis of segmentation retrospectively based on available and
reliable information which it believes presents a fair comparison. This
judgement is considered in more detail below.
Comparative information in respect of revenue from external customers was
derived from the underlying financial records on an aggregated basis
determined by its revenue product category, as opposed to contract detail
level obtained in respect of the current year. The level of estimation from
this approach was low due to the discrete nature of the revenue streams within
the data centre business.
Inter-segment revenues, and corresponding cost of sales and operating costs,
for both years were derived with reference to the contractual relationships
that governed the period from 1 February 2025 onwards. The contracts
management judge to be on an arms-length basis, determined by reference to
existing third party customer and supplier contracts and considered
extensively at the Board level before their initiation.
Cost of sales from external customers for both years was derived by reference
to underlying financial records, with limited judgement applied due to the
discrete nature of costs that are analysed in this caption.
Operating costs before adjusted EBITDA for both periods were derived again by
reference to underlying financial records, principally the cost centre
originally used for existing reporting, thereby requiring little judgement.
Judgement has been applied in respect of corporate overheads, by reference to
appropriate metrics such as headcount and sales effort, though the quantum of
costs assessed under this basis is a small proportion of overall overheads.
Depreciation and amortisation for both periods could again be derived by
underlying financial records by reference to asset registers and their
corresponding categorisation. Judgement was mainly applied in this area in
reference to the split of Customer relationship intangible assets. In this
example the segmentation has been performed by reference to which business
unit that customer relationship has been allocated to when separating the
business units on 1 February 2025.
Exceptional costs and exceptional income have been assessed by management on
an item-by-item basis for both years based on the business unit that drove the
exceptional activity, which in most cases was discrete.
Share-based payments for both years have been derived by reference to the
associated employees, with no judgement required.
Finance costs in respect of lease arrangements in both years have been derived
by underlying financial records, with little judgement required. Finance costs
in respect of the Group's RCF have been allocated based on an estimation of
the original drawdown requirement, adjusted for the estimated segmental cash
flows subsequent to initial drawdown. This has required a degree of judgement
in respect of the drawdown allocation and the subsequent judgements over cash
flows, however represents managements best estimation of the segments' use of
the RCF during this period. Other bases were considered including working
capital / capital employed, as well as measures such as revenue or
profitability measures, however management deemed these bases to be either
inappropriate or requiring a higher degree of estimation than the method used.
These allocations represent managements best estimate of the financial impact
of the DC business on prior periods and management considers this to provide
relevant, reliable, and understandable information to users of the Financial
Statements in accordance with the principles of IFRS8 and IFRS5.
The CODM assesses profit performance principally through an adjusted EBITDA
measure.
Whilst the Board reviews the Group's three revenue streams separately
(recurring, product and service), the operating costs and operating asset base
used to derive these revenue streams are the same for all three categories and
are presented as such in the Group's internal reporting to the CODM. In
addition, the Statement of Financial Position is still presented on a Group
basis hence it is not disclosed in the following information on a line-by-line
basis.
The Group has presented the DC segment as a discontinued operation and
restated the comparatives for H1 FY25 for consistency.
4.1 Segmental results
The segment results for the period ended 30 September 2025 are as follows:
( ) MSP business unit DC business Total segments Adjustments and eliminations Consolidated
continuing operations unit Unaudited Unaudited Unaudited
Unaudited discontinued operations
Unaudited
( ) £'000 £'000 £'000 £'000 £'000
Revenue
Recurring revenue 59,409 17,613 77,022 - 77,022
Product revenue 2,243 - 2.243 - 2,243
Services revenue 4,161 211 4,372 - 4,372
External customers 65,813 17,824 83,637 - 83,637
Inter-segment 946 3,709 4,655 (4,655) -
Total revenue 66,759 21,533 88,292 (4,655) 83,637
Cost of sales
External customers (25,555) (7,444) (32,999) - (32,999)
Inter-segment (73) (946) (1,019) 1,019 -
Total cost of sales (25,628) (8,390) (34,018) 1,019 (32,999)
Gross profit 41,131 13,143 54,274 (3,636)* 50,638
Adjusted EBITDA 9,126 8,322 17,448 - 17,448
Depreication of property,
Depreciation of property, plant and equipment (2,103) (1,800) (3,903) - (3,903)
Amortisation of intangibles (1,221) (387) (1,608) - (1,608)
Depreciation of right-of-use assets (779) (3,360) (4,139) - (4,139)
Exceptional costs (1,293) (98) (1,391) - (1,391)
Share-based payments and associated National (98) (41) (139) - (139)
Insurance
Operating profit 3,632 2,636 6,268 - 6,268
Finance costs (973) (1,496) (2,469) - (2,469)
Profit before tax 2,665 1,140 3,805 - 3,805
*This is eliminated out in operating costs therefore the effect is £nil at
adjusted EBITDA.
The segment results for the period ended 30 September 2024 are as follows:
( ) MSP business unit DC business Total segments Adjustments and eliminations Consolidated
continuing unit (*Restated) (*Restated) (*Restated)
operations discontinued operations Unaudited Unaudited Unaudited
(*Restated) (*Restated)
Unaudited Unaudited
( ) £'000 £'000 £'000 £'000 £'000
Revenue
Recurring revenue 60,104 18,176 78,280 - 78,280
Product revenue 2,803 - 2,803 - 2,803
Services revenue 5,540 162 5,702 - 5,702
External customers 68,447 18,338 86,785 - 86,785
Inter-segment 794 3,911 4,705 (4,705) -
Total revenue 69,241 22,249 91,490 (4,705) 86,785
Cost of sales
External customers (28,221) (7,948) (36,169) - (36,169)
Inter-segment (94) (794) (888) 888 -
Total cost of sales (28,315) (8,742) (37,057) 888 (36,169)
Gross profit 40,926 13, 507 54,433 (3,817)* 50,616
Adjusted EBITDA 8,888 9,311 18,199 - 18,199
Depreication of property,
Depreciation of property, plant and equipment (1,811) (1,976) (3,787) - (3,787)
Amortisation of intangibles (1,165) (416) (1,581) - (1,581)
Depreciation of right-of-use assets (938) (4,138) (5,076) - (5,076)
Exceptional costs (739) (85) (824) - (824)
Share-based payments and associated National (515) (16) (531) - (531)
Insurance
Operating profit 3,720 2,680 6,400 - 6,400
Finance costs (1,206) (1,600) (2,806) - (2,806)
Profit before tax 2,514 1,080 3,594 - 3,594
*This is eliminated out in operating costs therefore the effect is £nil at
adjusted EBITDA.
The segment results for the year ended 31 March 2025 are as follows:
( ) MSP business unit DC business Total segments Adjustments and eliminations Consolidated
continuing operations unit Audited Audited Audited
Audited discontinued operations
Audited
( ) £'000 £'000 £'000 £'000 £'000
Revenue
Recurring revenue 119,070 35,928 154,998 - 154,998
Product revenue 4,888 - 4,888 - 4,888
Services revenue 9,593 412 10,005 - 10,005
External customers 133,551 36,340 169,891 - 169,891
Inter-segment 1,587 8,231 9,818 (9,818) -
Total revenue 135,138 44,571 179,709 (9,818) 169,891
Cost of sales
External customers (51,681) (16,828) (68,509) - (68,509)
Inter-segment (176) (1,587) (1,763) 1,763 -
Total cost of sales (51,857) (18,415) (70,272) 1,763 (68,509)
Gross profit 83,281 26,156 109,437 (8,055)* 101,382
Adjusted EBITDA 18,758 16,633 35,391 - 35,391
Depreication of property,
Depreciation of property, plant and equipment (4,001) (3,617) (7,618) - (7,618)
Amortisation of intangibles (2,593) (832) (3,425) - (3,425)
Depreciation of right-of-use assets (1,610) (8,308) (9,918) - (9,918)
Exceptional costs (924) (779) (1,703) - (1,703)
Share-based payments and associated National Insurance (1,235) (32) (1,267) - (1,267)
Operating profit 8,395 3,065 11,460 - 11,460
Finance costs (2,352) (3,120) (5,472) - (5,472)
Profit before tax 6,043 (55) 5,988 - 5,988
*This is eliminated out in operating costs therefore the effect is £nil at
adjusted EBITDA.
5 Discontinued Operations
As previously announced and noted, the Board took the decision to create two
autonomous business units, DC and MSP. At the balance sheet date year ended 31
March 2025, the Board had made the decision to sell the DC business unit
(Redcentric Data Centres Limited), allowing the Group to concentrate on its
core MSP business. The DC business unit has therefore been treated as a
discontinued operation at the period end reporting date.
The profit/(loss) of the discontinued operation is as follows:
( ) Six months to Six months to Year ended
30 Sept 30 Sept 31 March
2025 2024 2025
Unaudited Unaudited Audited
( ) £'000 £'000 £'000
Revenue 21,533 22,249 44,571
Cost of sales (8,390) (8,742) (18,415)
Gross profit 13,143 13,507 26,156
Operating expenditure (10,507) (10,827) (23,091)
Adjusted EBITDA 8,322 9,311 16,633
Depreciation of property, plant and equipment (1,800) (1,976) (3,617)
Amortisation of intangibles (387) (416) (832)
Depreciation of right-of-use assets (3,360) (4,138) (8,308)
Exceptional costs (98) (85) (779)
Share-based payments and associated National Insurance (41) (16) (32)
Operating profit from discontinued operations 2,636 2,680 3,065
Finance costs (765) (715) (1,461)
Profit before tax from discontinued operations 1,871 1,965 1,604
Income tax (expense)/credit (955) 78 (809)
Profit for the period from discontinued operations 916 2,043 795
Earnings per share from discontinuing operations
Basic earnings per share 0.58p 1.29p 0.50p
Diluted earnings per share 0.57p 1.26p 0.49p
Finance costs for the discontinued operation do not include finance costs
which relate to the DC business unit but will remain within the continuing
business. These finance costs will however be shown in the DC segment finance
costs in note 4.
6 Revenue
Revenue for the six months ended 30 September 2025 was generated wholly from
the UK and is analysed as follows:
Six months Year ended
Six months to 30 Sept 31 March
to 30 Sept 2024 2025
2025 Unaudited Audited
Unaudited (*Restated) £'000
£'000 £'000
Recurring revenue 60,355 60,898 120,657
Product revenue 2,243 2,803 4,888
Services revenue 4,161 5,540 9,593
Total revenue from continuing operations 66,759 69,241 135,138
Discontinued operations 21,533 22,249 44,571
Intercompany revenue (4,655) (4,705) (9,818)
Total revenue 83,637 86,785 169,891
*restated to reflect continuing operations
6.1 Contract balances
The following table provides information about receivables, contract assets
and contract liabilities from contracts with customers:
Six months
Six months to 30 Sept Year ended
to 30 Sept 2024 31 March
2025 Unaudited 2025
Unaudited *restated £'000 Audited
£'000 £'000
Receivables, included in trade and other receivables, net of provisions 17,765 18,187 16,529
Accrued income, included in trade and other receivables 4,874 5,935 4,510
Deferred income, included in trade and other payables (8,796) (10,664) (9,499)
7 Exceptional items
( ) Six months Six months Year ended
to 30 Sept to 30 Sept 31 March
2025 2024 2025 Audited
Unaudited Unaudited
*restated
( ) £'000 £'000 £'000
Included within operating costs:
Acquisition related professional and legal fees 69 319 484
Integration costs 21 29 -
Restructuring costs 224 391 440
DC disposal professional fees and other costs 979 - -
Total exceptional costs from continuing operations 1,293 739 924
Total exceptional costs from discontinued operations 98 85 779
Total exceptional costs 1,391 824 1,703
*restated to reflect continuing operations
8 Finance costs
( ) Six months Six months Year ended
to 30 Sept to 30 Sept 31 March
2025 2024 2025 Audited
Unaudited Unaudited
*restated
( ) £'000 £'000 £'000
Interest payable on bank loans and term loans 1,444 1,748 3,277
Interest payable on asset financing facilities 57 56 146
Interest payable on leases 124 136 287
Amortisation of loan arrangement fees 79 148 300
Other interest payable - 3 1
Total exceptional costs 1,704 2,091 4,011
*restated to reflect continuing operations
9 Income Tax
The tax credit recognised reflects management estimates of the tax credit for
the period and has been calculated using the estimated average tax rate of UK
corporation tax for the period of 25.0% (H1 FY25: 25.0%).
10 Earnings per share (EPS)
The calculation of basic and diluted EPS for continuing operations is based on
the following earnings and number of shares.
Six months Six months Year ended
to 30 September to 30 September 31 March
2025 2024 2025
Unaudited Unaudited Audited
Earnings £'000 (*Restated)
£'000 £'000
Statutory profit 1,891 1,792 2,693
Tax charge/(credit) 43 (163) 1,691
Amortisation of acquired intangibles 619 699 1,535
Share-based payments and associated National Insurance 98 515 1,235
Exceptional costs 1,293 739 924
Adjusted earnings before tax 3,944 3,582 8,078
Notional tax charge (986) (896) (2,020)
Adjusted earnings 2,958 2,687 6,059
*restated to reflect continuing operations
Number Number Number
Weighted average number of ordinary shares '000 '000 '000
In issue 159,146 158,525 159,021
Held in treasury (122) (618) (540)
For basic EPS calculations 159,024 157,907 158,481
Effect of potentially dilutive share options 2,998 4,857 5,351
For diluted EPS calculations 162,022 162,764 163,832
EPS for continuing operations Pence Pence Pence
Basic 1.19 1.13 1.70
Adjusted 1.86 1.70 3.82
Diluted 1.17 1.10 1.64
Adjusted diluted 1.83 1.65 3.70
The calculation of basic and diluted EPS for the Group (combined continuing
and discontinued operations) is based on the following earnings (number of
shares noted above).
Six months Six months Year ended
to 30 September to 30 September 31 March
2025 2024 2025
Unaudited Unaudited Audited
Earnings £'000 *restated
£'000 £'000
Statutory profit 2,807 3,835 3,488
Tax charge/(credit) 998 (241) 2,500
Amortisation of acquired intangibles 1,006 1,083 2,367
Share-based payments and associated National Insurance 139 531 1,267
Exceptional costs 1,391 824 1,703
Adjusted earnings before tax 6,341 6,032 11,325
Notional tax charge (1,585) (1,508) (2,831)
Adjusted earnings 4,756 4,524 8,494
EPS for combined continuing and discontinued operations Pence Pence Pence
Basic 1.77 2.43 2.20
Adjusted 2.99 2.86 5.36
Diluted 1.73 2.36 2.13
Adjusted diluted 2.94 2.78 5.18
In line with the Group's policy, the notional tax charge above is calculated
at a standard rate of 25% (FY25: 25%).
11 Intangible assets
Customer contracts and related relationships Trademarks and brands Software and licences Total
Goodwill
£'000 £'000 £'000 £'000 £'000
Cost
At 1 April 2024 audited 60,640 80,130 649 7,650 149,069
Additions - - - 801 801
Transfer from ROU assets - - - 123 123
At 30 September 2024 unaudited 60,640 80,130 649 8,574 149,993
Additions - - - 897 897
Reclassification to assets held for sale (33,399) (9,604) - - (43,003)
At 31 March 2025 audited 27,241 70,526 649 9,471 107,887
Additions - - - 302 302
Reclassification to assets held for sale - - - (52) (52)
At 30 September 2025 unaudited 27,241 70,526 649 9,721 108,137
Accumulated depreciation
At 1 April 2024 audited - 64,105 649 5,432 70,186
Charged in the period - 1,083 - 498 1,581
Transfer from ROU assets - - - 105 105
At 30 September 2024 unaudited - 65,188 649 6,035 71,872
Charged in the period - 1,284 - 560 1,844
Reclassification to assets held for sale - (2,257) - - (2,257)
At 31 March 2025 audited - 64,215 649 6,595 71,459
Charged in the period - 1,006 - 602 1,608
Reclassification to assets held for sale - (384) - (3) (387)
At 30 September 2025 unaudited - 64,837 649 7,194 72,680
Net book value
At 30 September 2025 unaudited 27,241 5,689 - 2,527 35,457
At 31 March 2025 audited 27,241 6,311 - 2,876 36,428
At 30 September 2024 unaudited 60,640 14,942 - 2,539 78,121
12 Property, plant and equipment
Leasehold improvements Office fixtures and fittings Vehicles and computer equipment Assets under construction Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 April 2024 audited 16,294 9,085 24,384 - 49,763
Additions 1,522 76 2,495 - 4,093
Transfer from ROU assets 156 - 650 - 806
Disposals - - (53) - (53)
At 30 September 2024 unaudited 17,972 9,616 27,029 - 54,617
Additions 2,371 377 2,629 194 5,571
Disposals (300) (65) (55) - (420)
Reclassification to assets held for sale (17,877) (7,558) (96) (194) (25,725)
Exchange - (12) - - (12)
At 31 March 2025 audited 2,166 2,358 29,507 - 34,031
Additions 2,129 97 1,640 3 3,869
Reclassification - - 194 (194) -
Reclassification to assets held for sale (2,129) (7) - 191 (1,945)
Exchange - (8) - - (8)
At 30 September 2025 unaudited 2,166 2,440 31,341 - 35,947
Accumulated depreciation
At 1 April 2024 audited 6,615 4,418 17,308 - 28,341
Charged in the period 1,043 914 1,830 - 3,787
Disposals - - (53) - (53)
Transfer from ROU assets 485 - 125 610
Exchange - 7 - - 7
At 30 September 2024 unaudited 8,143 5,339 19,210 - 32,692
Charged in year 1,309 780 1,742 - 3,831
Disposals (155) (50) 57 - (148)
Reclassification - - (57) - (57)
Reclassification to assets held for sale (7,976) (4,442) (65) - (12,483)
Exchange differences - (12) - - (12)
At 31 March 2025 audited 1,321 1,615 20,887 - 23,823
Charged in the period 1,393 631 1,879 - 3,903
Reclassification to assets held for sale (1,330) (460) (10) (1,800)
Exchange differences - (7) - - (7)
At 30 September 2025 unaudited 1,384 1,779 22,756 - 25,919
Net book value
At 30 September 2025 unaudited 782 661 8,585 - 10,028
At 31 March 2025 audited 845 743 8,620 - 10,208
At 30 September 2024 unaudited 9,829 4,277 7,819 - 21,925
13 Right-of-use-assets
Land and buildings Vehicles & computer equipment Total
£'000 £'000 £'000
Cost
At 1 April 2024 audited 67,143 14,250 81,393
Additions 313 82 395
Transfer to PPE (156) (650) (806)
Transfers to IA - (123) (123)
Disposals (13,084) (627) (13,711)
At 30 September 2024 unaudited 54,216 12,932 67,148
Additions 192 206 398
Reassessments (335) - (335)
Disposals (1,275) (605) (1,880)
Reclassification to assets held for sale (50,058) - (50,058)
At 31 March 2025 audited 2,740 12,533 15,273
Additions 8,014 46 8,060
Reassessments 4 - 4
Modifications (2,004) - (2,004)
Disposals (11,885) - (11,885)
Reclassification to assets held for sale 5,966 - 5,966
At 30 September 2025 unaudited 2,835 12,579 15,414
Accumulated depreciation
At 1 April 2024 32,527 11,388 43,915
Charged in the period 4,518 558 5,076
Transfer to property, plant and equipment (485) (125) (610)
Transfer to intangible assets - (105) (105)
Disposals (13,084) (627) (13,711)
At 30 September 2024 unaudited 23,476 11,089 34,565
Charged in the period 4,448 394 4,842
Disposals 673 (2,519) (1,846)
Reclassification to assets held for sale (26,977) - (26,977)
At 31 March 2025 audited 1,620 8,964 10,584
Charged in year 4,155 415 4,570
Modifications (431) - (431)
Disposals (11,885) - (11,885)
Reclassification to assets held for sale 8,518 - 8,518
At 30 September 2025 unaudited 1,977 9,379 11,356
Net book value
At 30 September 2025 unaudited 858 3,200 4,058
At 31 March 2025 audited 1,120 3,569 4,689
At 30 September 2024 unaudited 30,740 1,843 32,583
Most of the Group's right-of-use assets are associated with the leased
property portfolio.
Included in the net book value of land and buildings at 31 March 2025 is
£0.2m right-of-use assets for dilapidations (FY24: £0.7m).
14 Assets held for sale
The major classes of assets and liabilities of the DC business unit, which met
the criteria for being held for sale as at 30 September 2025 are as follows:
Six months ended Six months ended Year ended
30 September 30 September 31 March
2025 2024 2025
Unaudited Unaudited Audited
£'000 £'000 £'000
Intangible assets 40,411 - 40,746
Property, plant and equipment 13,387 - 13,242
Right-of-use assets 25,633 - 23,081
Trade and other receivables 3,534 - 3,227
Prepayments 2,090 - 754
Contract acquisition asset 505 - 425
Accrued income 684 - 694
Assets held for sale 86,244 - 82,169
Six months ended Six months ended Year ended
30 September 30 September 31 March
2025 2024 2025
Unaudited Unaudited Audited
£'000 £'000 £'000
Trade and other payables 3,166 - 1,005
Accruals 2,547 - 3,017
Deferred income 582 - 733
Asset financing liabilities 2,758 - 3,119
Leases 23,620 - 19,892
Corporation tax liability 319 - -
Deferred tax liability 2,190 - 1,650
Provisions 11,132 - 10,904
Liabilities held for sale 46,314 - 40,320
The above assets and liabilities are held at their carrying value which is
lower than their fair value. No impairment was identified on classification as
held for sale.
During the first half, a process of legally assigning property leases and
novating the assets and financial liabilities to Redcentric Data Centres
Limited commenced and is ongoing. The asset financing liabilities will be
settled prior to the completion of the DC sale.
15 Financial liabilities
The Group holds the following financial instruments:
15.1 Financial liabilities at amortised cost: interest bearing loans and
borrowings
Six months ended Six months ended Year
30 September 30 September ended
2025 2024 31 March 2025
Unaudited Unaudited Audited
£'000 £'000 £'000
Current
Lease liabilities 1,514 8,626 1,526
Term loans - 13 3
Asset financing liabilities 816 1,305 819
Total current financial liabilities held at amortised cost 2,330 9,944 2,348
Non-current
Lease liabilities 2,441 19,265 3,181
Bank loans 40,875 38,808 38,947
Asset financing liabilities 603 2,612 986
Total non-current financial liabilities held at amortised cost 43,919 60,685 43,114
15.2 Net debt
During the period, the Group net debt (combined continuing and discontinued
operations) increased from £65.5m to £68.6m as at 30 September 2025, with
the movements shown in the table below:
Six months ended 30 September 2025 Six months ended 30 September 2024 Year ended 31 March 2025
Unaudited Unaudited Audited
Unaudited
£'000 £'000 £'000
Operating profit 6,268 6,400 11,460
Depreciation and amortisation 9,650 10,444 20,961
Exceptional costs 1,391 824 1,703
Share-based payments 139 531 1,267
Adjusted EBITDA(1) 17,448 18,199 35,391
Working capital movements (6,834) (1,811) (4,127)
Movement on provisions (325) (34) (33)
Adjusted cash generated from operations 10,289 16,354 31,231
Cash conversion 59.0% 89.9% 88.2%
Capital expenditure - cash purchases (4,171) (4,894) (11,362)
Capital expenditure - finance lease purchases - (73) (276)
Asset financing proceeds 37 890 2,680
Net capital expenditure (4,134) (4,077) (8,958)
Corporation tax paid (44) (12) (145)
Interest received 6 - -
Interest paid (1,604) (1,872) (3,560)
Loan arrangement fees/fee amortisation (79) (148) (300)
Finance lease interest (558) (618) (1,251)
Effect of exchange rates (37) (27) (18)
Other movements in net debt (2,316) (2,677) (5,274)
Normalised net debt movement(1) 3,839 9,600 16,999
Cash cost of exceptional items (1,414) (871) (1,320)
Remeasurements relating to lease liabilities 3,605 187 (611)
Remeasurements relating to Asset Financing Facility liabilities 628 - 334
IFRS 16 lease additions (7,967) (396) (494)
Drawdown on Asset Financing Facility (37) (890) (2,680)
Dividends paid in cash (1,907) (1,899) (5,705)
Disposal of treasury shares on exercise of share options 139 6 387
(6,953) (3,863) (10,089)
Decrease in net debt (3,114) 5,737 6,910
Net debt at the beginning of the period (65,455) (72,365) (72,365)
Net debt at the end of the period (68,569) (66,628) (65,455)
(1)For an explanation of the alternative performance measures used in this
report, please refer to the Appendix. Exceptional items are outlined in note
7.
15.3 Other financial liabilities
( ) Six months to Six months to Year ended
30 September 30 September 31 March
2025 2024 2025
Unaudited Unaudited Audited
( ) £'000 £'000 £'000
Derivatives designated as hedging instruments
Current financial liabilities 354 - 153
Non-current financial liabilities 149 - 92
Total financial liabilities carried at fair value 503 - 245
Derivatives designated as hedging instruments reflect the positive change in
fair value of foreign exchange forward contracts, designated as cash flow
hedges to hedge highly probable forecast sales in US dollars (USD).
15.4 Hedging activities and derivatives
The Group is exposed to certain risks relating to its ongoing business
operations. The sole risk managed using derivative instruments is foreign
currency risk. The Group's risk management strategy and how it is applied to
manage risk are explained in the 2025 Annual Report.
The Group is holding the following foreign exchange forward contracts:
( ) Six months to Six months to Year ended
30 September 30 September 31 March
2025 2024 2025
Unaudited Unaudited Audited
( ) £'000 £'000 £'000
Current foreign exchange forward contract 354 - 153
Non-current foreign exchange forward contract 149 - 92
503 - 245
15.5 Fair values
Management assessed that fair values of cash and cash equivalents, trade
receivables, accrued income, trade payables and other current liabilities
approximate their carrying values largely due to the short-term nature of
these instruments.
The fair value of loans was calculated using Level 2 valuation techniques
reflecting the borrowing rate at the end of the reporting period and any
unamortised arrangement fees relating to those borrowings.
At 30 September 2025 the Group held the following financial instruments
measured at fair value through other comprehensive income (FY25: none).
( ) Level 1 Level 2 Level 3
( ) £'000 £'000 £'000
Foreign exchange forward contract - 503 -
The Group used the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
· Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
· Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable either directly
or indirectly; and
· Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable market
data.
There were no transfers between Level 1 and Level 2 fair value measurements
and no transfers in or out of Level 3 fair value measurements in FY25 or FY24.
16 Lease liabilities
The following disclosures relate to continuing operations only. Future minimum
lease payments under leases together with the present value of net minimum
lease payments are as follows:
( ) Present value Finance charges Future lease payments Present value Finance charges Future lease Present Finance charges Future lease payments
as at as at as at payments value as at
30 Sept 2025 30 Sept 30 Sept 2024 as at as at 31 March 2025
2025 30 Sept 31 March
2024 2025
( ) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Less than 1 year 1,514 163 1,677 8,626 955 9,581 1,526 253 1,779
Due 1 - 2 years 801 103 904 4,531 732 5,263 1,177 163 1,340
Due 2 - 3 years 968 57 1,025 3,689 567 4,256 961 89 1,050
Due 3 -4 years 292 22 314 3,767 409 4,176 566 35 601
Due 4 - 5 years 167 13 180 3,472 254 3,726 179 17 196
After more than 5 years 213 6 219 3,806 137 3,943 298 12 310
3,955 364 4,319 27,891 3,054 30,945 4,707 569 5,276
17 Provisions
Dilapidation provision
£'000
At 1 April 2024 audited 12,374
Additional provisions created in the period 165
Utilised in the period (34)
At 30 September 2024 unaudited 12,505
Additional provisions created in the period 360
Reassessment of provisions in the period (1,222)
Utilised in the period 1
Transferred to assets held for sale (10,904)
At 31 March 2025 audited 740
Additional provisions created in the period 229
Reassessment of provisions in the period (183)
Utilised in the period (325)
Transferred to assets held for sale (228)
At 30 September 2025 unaudited 233
18 Share capital
Ordinary shares of 0.1p each Share premium
Number £'000 £'000
At 1 April 2024 audited 158,884,919 159 75,649
New shares issued 122,069 - -
At 30 September 2024 unaudited 159,006,988 159 75,649
New shares issued 138,925 - -
At 31 March 2025 audited 159,145,913 159 75,649
New shares issued - - -
At 30 September 2025 unaudited 159,145,913 159 75,649
At 30 September 2025, the Company's issued share capital consisted of
159,145,913 ordinary shares of which 102,291 were in treasury.
19 Subsequent event
Subsequent to the reporting date of 30 September 2025, the Company announced
on 23 October 2025 that it conditionally agreed the sale of the DC business,
Redcentric Data Centres Limited, to Stellanor Datacenters Group Limited, for a
cash consideration based on an enterprise valuation of up to £127 million.
This consideration is subject to adjustment on completion to ensure the DC
business is sold on a cash free debt free basis and is also subject to a
target level of working capital and a number of adjustments relating to
commercial and property contract matters.
Completion of the disposal is dependent on several agreed conditions precedent
being satisfied, which comprise regulatory requirements, as well as certain
conditions relating to outstanding matters from the separation of the business
into two segments, typical in a disposal of a carved out business.
Since the announcement, the Group has been working to address the required
conditions precedent, some of which have been met.
Appendix - Alternative Performance Measures
This report contains certain financial measures and analyses that are not
defined or recognised under IFRS but are presented to provide readers with
additional financial information that management believes will be helpful to
investors and other readers in assessing the underlying performance of the
Group.
This additional information is not uniformly defined by all companies and may
not be comparable with similarly titled measures and disclosures by other
companies. These measures are unaudited and should not be viewed in isolation
or as an alternative to those measures that are derived in accordance with
IFRS.
This information is again presented on a continuing basis unless otherwise
indicated.
Recurring revenue
Recurring revenue is the revenue that repeats annually, either under
contractual arrangement or by predictable customer habit. It is a helpful
measure as it highlights how much of the Group's total revenue is secured and
anticipated to repeat in future periods, providing a measure of the financial
strength and stability of the business. It is a measure that is very well
understood by the investor and analyst community. It is also a key measure
used internally for tracking revenue mix and performance reporting.
Continuing operations: Six months ended
30 September Six months ended 30 September 2024
2025 Unaudited Year ended
Unaudited *restated 31 March
2025
Audited
( ) £'000 £'000 £'000
Recurring revenue 60,355 60,898 120,657
Non-recurring revenue 6,404 8,343 14,481
Total revenue 66,759 69,241 135,138
*restated to reflect continuing operations
The recurring revenue percentage is the percentage of recurring revenue as a
proportion of total revenue and was 90.4% in the period, an increase of
2.4ppts from the prior first half (H1 FY25: 88.0%), remaining a favourable
performance measure.
Capital expenditure - maintenance and customer
Maintenance capital expenditure is the element the capital expenditure that is
incurred in support of the Group's underlying infrastructure rather than in
support of specific customer contracts. This metric shows the level of
internal investment the Group is making through capital expenditure. As the
measure explains and analyses routine capital expenditure, land and buildings
(including any associated assets relating to dilapidation provisions) and
asset financing additions are excluded due to the infrequency of this
expenditure occurring.
Customer capital expenditure relates to expenditure on assets utilised by the
Group in delivering IT Managed Services to its customers.
The tables below are reported on a Group (combined continuing and discontinued
operations) basis.
Capital expenditure is analysed as:
( ) Six months ended 30 September 2025 Six months ended 30 September 2024 Year ended
Unaudited Unaudited 31 March
2025
Audited
( ) £'000 £'000 £'000
Property plant and equipment additions 3,869 4,084 9,664
Intangible additions 302 801 1,698
Right-of-use asset additions 46 82 288
Total capital expenditure 4,217 4,967 11,650
*These are right-of-use assets defined by the banking covenants.
Capital expenditure is split as:
( ) Six months ended Six months ended 30 September 2024 Year ended
30 September Unaudited 31 March
2025 2025
Unaudited Audited
( ) £'000 £'000 £'000
Maintenance capital expenditure 2,795 2,034 6,519
Customer capital expenditure 1,422 2,933 5,131
Total capital expenditure 4,217 4,967 11,650
EBITDA and Adjusted EBITDA
Adjusted EBITDA is earnings before interest, taxation, depreciation and
amortisation ("EBITDA") excluding exceptional items and share-based payments
plus any associated National Insurance. The same adjustments to earnings are
also made in determining the adjusted EBITDA margin.
The Board considers that this metric provides a useful measure of assessing
the underlying trading performance of the Group as it excludes items which can
dramatically impact financial performance, for example one-off exceptional
costs, or amortisation of acquired intangibles arising from business
combinations, which varies year on year dependent on the timing and size of
any acquisitions, and obscure the visibility of the underlying trading
performance of the business. Adjusted EBITDA also helps to more easily assess
the business' ability to generate cashflow and is a widely adopted metric.
( ) Six months ended Year ended
30 September 31 March
2025 2025
Unaudited Six months ended 30 September 2024 Audited
Unaudited
*restated
( ) £'000 £'000 £'000
Reported operating profit 3,632 3,720 8,395
Amortisation of intangible assets arising on business combinations 622 868 1,535
Amortisation of other intangible assets 599 297 1,058
Depreciation of property, plant and equipment 2,103 1,811 4,001
Depreciation of right-of-use assets 779 938 1,610
EBITDA 7,735 7,634 16,599
Exceptional costs (see note 7) 1,293 739 924
Share-based payments and associated National Insurance 98 515 1,235
Adjusted EBITDA 9,126 8,888 18,758
*Restated to reflect continuing operations
Adjusted EBITDA increased to £9.1m, £0.2m higher than the prior half year,
with an adjusted EBITDA margin of 13.7% (H1 FY25: 12.8%).
Adjusted operating profit
Adjusted operating profit is operating profit excluding amortisation on
acquired intangibles, exceptional items and share-based payments and any
associated National Insurance.
Reconciliation of operating profit to adjusted operating profit for continuing
operations is as follows:
( ) Six months ended Six months ended 30 September 2024 Year ended
30 September Unaudited 31 March
2025 *restated 2025
Unaudited Audited
( ) £'000 £'000 £'000
Reported operating profit 3,632 3,720 8,395
Amortisation of intangible assets arising on business combinations 622 868 1,535
Exceptional costs 1,293 739 924
Share-based payments and associated National Insurance 98 515 1,235
Adjusted operating profit 5,645 5,842 12,089
*Restated to reflect continuing operations
Adjusted net debt
Adjusted net debt is reported net debt (i.e. total borrowings net of cash)
less supplier term loans and less lease liabilities that would have been
classified as operating leases under IAS 17 and is a measure reviewed by the
Group's banking syndicate as part of covenant compliance. The table below is
based on the full Group numbers combining both continuing and discontinued
operations.
( ) Year
Ended
Six months ended 30 September 2025 Six months ended 30 September 2024 31 March
Unaudited Unaudited 2025
Audited
( ) £'000 £'000 £'000
Borrowings - Revolving Credit Facility (40,875) (38,808) (38,947)
Borrowings - Lease liabilities (27,575) (27,891) (24,599)
Borrowings - Term loan - (13) (3)
Borrowings - Asset Financing Facility (4,177) (3,917) (4,924)
Total borrowings (72,627) (70,629) (68,473)
Cash 4,058 4,001 3,018
Reported net debt (68,569) (66,628) (65,455)
Term loans - 13 3
Lease liabilities that would have been classified as operating leases under 26,791 26,671 23,562
IAS 17
Adjusted net debt (41,778) (39,944) (41,890)
Shown as:
Continuing operations (39,020) (39,944) (38,771)
Discontinued operations (2,758) - (3,119)
Adjusted net debt (41,778) (39,944) (41,890)
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