CFO quits after company’s assets overstated by ‘at least £10m’

IT SERVICES company Redcentric expects to have to revise its net assets down by “at least £10m” after a review of its accounts showed misstated accounting balances.

The AIM-listed company has launched a forensic review of its accounts and its chief financial officer Tim Coleman resigned yesterday after being placed on gardening leave.

Redcentric said that after investigations, profits for previous years will need to be written down, but it is unsure at this stage by how much.

The board said it would bring in someone from outside the company to replace Mr Coleman on an interim basis.

Harrogate-based Redcentric has announced that an internal review found misstated accounting balances were found in its interim results for the six months to 30 September 2016. The board now believes net debt at the half year was approximately £30m.

It also said it expects its underlying net debt position at 31 March 2016 to be materially higher than reported – therefore, it says, the business has still reduced its underlying net debt in the six months to 30 September 2016.

Redcentric said this would delay publication of its interim results, which were due on 14 November.

Chris Cole, chairman of Redcentric, (pictured right) commented:”The Board is absolutely focused on completing the internal review to resolve the situation in a timely manner and release the Company’s interim financial statements at the earliest time.

“Management’s focus remains on working with our motivated staff to provide critical IT services to our customers. The indications are that these accounting issues relate to prior periods and that the current levels of new business sales by the Company are as expected.”

Company revenue for the year to 31 March 2016 reached £109.5m up from £94.3m with pre-tax profits falling slightly to £7.4m from £7.8m.

It listed on the AIM in 2013 following a demerger from Redstone.