Firm replaced CFO after announcing a forensic review of finances in November
Companies: Redcentric Plc
IT managed services firm Redcentric Plc has swung to profit in its interim results for the half-year to 30 September.
Redcentric also announced that it had made good progress with its remedial plan following the accounting misstatement first announced in November. At the time, the firm disclosed that it would have to restate past results and delay publishing its interim results.
The company appointed Deloitte LLP and Nabarro LLP to lead the forensic review, with the initial results identifying a number of processes and control failings.
Redcentric says it has taken rectifying action, including more robust controls around cash reconciliation, and improvements to its billing and credit control processes.
In the wake of that announcement, Redcentric fired its CFO and has since appointed Peter Brotherton to the role.
The company posted revenues of £53m, up 2% on the previous year, 84.3% of which came from recurring revenues. Recurring revenues jumped 6% to £44.7m, leading to adj EBITDA of £9.1m and pretax profit of £0.3m (up from £2.5m loss last year).
The company also saw a slight reduction in net debt to £34.4m (from £37.8m).
Operationally the firm won 38 new clients, generating a £93m sale pipeline. Its office in India was opened, potentially doubling the size of its operation there.
Chairman Chris Cole said it had been a very difficult period for the company, with a great deal of work being carried out to complete the forensic review, start the remedial plan, and report the interims.
"While there is obviously more work to be done, we have made some important steps forward with the appointment of a strong and experienced Chief Financial Officer who is leading the ongoing strengthening of our internal processes. With the welcomed support of our banks, clients and colleagues, we are focused on taking a more robust business forward."
While CEO Fraser Fisher, said the company had continued to deliver excellent services and support for clients despite the disruption:
"Our priority now is to take the necessary actions required to strengthen the business. With the opportunities ahead in our market - reflected by the strong sales pipeline and 38 client wins in the period - we are focused on taking a stronger, sustainable business forward."
Redcentric share's rose 2% in early trading on Friday. The company is currently trading on a forward P/E of c.25x
