£5.75m sale at listed managed services provider

Redcentric, a Harrogate-based IT managed services business, has reached an agreement with Thales UK Limited to sell the assets and knowhow required to provide maintenance services to four EDF nuclear power stations.

Redcentric previously provided maintenance services direct to EDF under a ten-year contract, which expired on 31 March.

In the year to 31 March 2021, the contract contributed £1m to revenue and £0.72m to EBITDA and generated £0.68m of operating cash flow.

Under the terms of the deal, Thales will pay Redcentric a fixed consideration of £5.75m, payable in two instalments. As part of the sale the five employees that previously worked on the contract were transferred to Thales.

Peter Brotherton, Redcentric’s chief executive officer, said: “The company’s contract with EDF was non-core within the Redcentric business as the services provided did not relate to either telecommunications or IT solutions.

“The contract was inherited as part of the Calyx Limited acquisition in 2016 and this sale completes the restructuring of the company’s historical acquisitions. 

“All of the company’s product offerings are now core to the business and we operate on one physical network, with one network platform, an optimised data centre portfolio and fully integrated operational systems.”

Tony Berry and Sarah Cameron of Clarion supported Redcentric on the transaction.

Redcentric has also today issued a trading update, noting its performance throughout the year ended 31 March 2021 has been “excellent” with revenues growing, healthy profitability and exceptional cash flows. 

The company adds that its strong recurring revenues, resilient business model and diverse customer base have enabled it to weather the COVID-19 storm.

Revenue and adjusted EBITDA for the financial year ended 31 March 2021 are expected to be in line with the Board’s expectations, with net debt of approximately £15.6m (including £16.5m of IFRS-16 liabilities & supplier loans) being better than the board’s expectations.

During the year, net debt reduced by approximately £19m after dividend payments of £1.9m and exceptional items of £2.9m (net of £5.8m restitution fund raise).

On 1 March 2021 the company repaid its revolving credit facility in full.

Brotherton added: “We have had a very busy and successful year with all strategic objectives being achieved.

“The business has reacted well to the many challenges presented by the pandemic and has proven to be terrifically resilient.

“We have returned to growth, operational efficiency programmes have been delivered, the ERP system has been successfully implemented and profits are healthy.”

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