£10.6m pre-tax loss for listed IT business

IT firm Redcentric has seen its revenues drop 6% to £87.5m in its preliminary results for the year ended 31 March 2020.

The Harrogate-based provider of managed IT services has made a reported loss before tax of £10.6m in FY20 (2019: loss of £1.4m) This includes a one-off provision of £11.4m in respect of the restitution scheme announced on 13 July 2020 as part of the settlement reached with the Financial Conduct Authority. (FCA)

As reported last month, the firm has agreed to compensate shareholders as part of a scheme that will cost it £11.4m, after the FCA issued a public censure to the company for committing market abuse in 2015-16.

It is the first time that an AIM-listed company has offered to implement its own scheme to pay compensation.

In a separate action, three former employees of Redcentric are being prosecuted on charges of fraud, false accounting and misleading an auditor after an investigation by the FCA.

However, reporting on its latest results, the business says it has recorded a good start to FY21, with all its key metrics showing positive trends.

Redcentric says most of its employees have been working remotely from 17 March 2020, and it has not been necessary to furlough any staff.

It says it has achieved a return to recurring revenue growth, while its network and data centre rationalisation programme is now largely complete, generating annualised cost savings of £3.5m.

Peter Brotherton, CEO of Redcentric, said: “We have had a very productive year with many of the initiatives undertaken giving rise to long term benefits.

“After three years of decline, recurring revenues are now growing and account for 89% of total revenues.

“The efficiency and integration initiatives undertaken during the year have resulted in annualised savings of £3.5m, which will boost future profitability.

“Our network and operational platforms have all been upgraded, resulting in modern, resilient and scalable infrastructure to support future growth.

“The settlement with the FCA means the company’s management team is now free to focus solely on the business and able to sell to all markets, including those regulated by the FCA.”