Redcentric reports ‘business as usual’ a year on from accounting misstatements

A year on from Redcentric’s announcement of accounting misstatements, the IT services company says employees have have worked tirelessly to get the business back to a ‘business as usual’ footing.

In a trading update for the six months ending 30 September, the Harrogate firm said its revenues stood at £51.4m, up from £51.4m for the period last year. Net debt at 30 September 2017 stood at £33.3m, representing a £6.2m reduction over the six month period.

It said the were strong operating cash flows as a result of positive working capital movements of £2.3m , which reflected success of initiatives to improve billing accuracy and cash collections.

In November 2016 it was rocked by the announcement of financial misstatements and an investigation by the Financial Conduct Authority, which saw the departure of its chief financial officer Tim Coleman.

Chris Cole, non-executive chairman, said: “Over the last six months we have focused on improving operating cash flows, reducing net debt and right-sizing the cost base of the business.

“A year has now passed since the announcement of the accounting misstatements.  Over this period the Board and the Company’s employees have worked tirelessly to get the business back on to a “business as usual” footing.

“The chief financial officer, Peter Brotherton, has been in place for a year now.  Over this time he has rebuilt and strengthened both the finance team and the financial systems and processes within the business.  He and his team are engaged in all areas of the business and this is evidenced in the results for the first six months of the financial year.”

In October, Chris Jagusz was brought into the firm as chief executive. 

Cole added: “Chris brings with him a wealth of sector and managerial experience.  Now that the business has been stabilised, Chris’s focus will be entirely forward looking.  He has already started work on refining the strategy of the business and driving top line revenue growth.”

Jagusz, chief executive, added: “I am delighted to have joined the Company. Despite the significant problems encountered as a result of the accounting misstatements, the business is fundamentally strong.  Its product offering is well aligned to the demands of customers, it has a strong and loyal recurring revenue customer base and the business is cash generative. 

“The issues surrounding the accounting misstatements have  been addressed and so my focus is on providing the business with a clear strategy to enable the business to grow.”