IT group slips to a loss amidst volatile electricity costs
Harrogate-based managed IT services business, Redcentric, has reported a pre-tax loss of £12.5m (2022: £5.5m pre-tax profit) in its preliminary results for the year ended 31 March 2023.
Total revenue grew by 51.8% to £141.7m (FY22: £93.3m) and recurring revenue grew by 54.8% to £128.5m, with recurring revenue representing 90.7% of the total revenue (FY22: £83m/88.9%).
As a result of five acquisitions completed by Redcentric over the last two financial years, over 600 customers have been added to the firm’s existing base.
Peter Brotherton, CEO, said: “The integration of the five acquisitions undertaken in the last two financial years is now largely complete, with the savings pertaining to the remaining energy conservation measures and closure of the Harrogate Data Centre to be realised before the end of the current financial year.
“The acquisitions have resulted in a significant increase in revenues and much improved organic growth.
“Improvements in profitability will follow in FY25 once the synergy and energy efficiency programmes have been completed and the much reduced electricity commodity prices take effect.”
Redcentric has again noted that its recent data centre acquisitions mean electricity costs are key to the financial performance of the business.
It points out that FY23 has seen the most volatile electricity pricing for a generation, with commodity prices reaching as high as 10 times historical averages.
The company says it is continuing to invest in energy efficiency measures to cut consumption while also being very active in the energy market.
Its update explains: “We have limited any commodity price volatility in FY24 by agreeing own-use commodity contracts to fix prices and we have also taken advantage of the relatively favourable energy market by fixing a significant proportion of our FY25 requirements.”
Redcentric adds its electricity costs are expected to reduce from £25.5m in FY24 to £17.6m in FY25, with about £7m worth of these savings to result in increased profitability.
The business notes its sales pipeline is healthy, and it expect the growth rates seen in the last 12 months to continue for at least the remainder of FY24.
