LONDON (Alliance News) - IT managed services firm Redcentric PLC on Friday said it swung to profit in the first half of its financial year and said remedial action to shore itself up following the disclosure of an accounting misstatement is progressing.
Redcentric said it made a pretax profit GBP300,000 in the half to the end of September, swung from a GBP2.5 million loss a year prior, when the company booked a series of acquisition and integration costs. Adjusted earnings before interest, tax, depreciation and amortisation, before any one-off costs, rose to GBP9.1 million from GBP7.8 million.
Revenue increased to GBP53.0 million, up 2.0% year-on-year from GBP51.9 million, with recurring revenue streams growing 5.9% to GBP44.7 million. Redcentric said it exceeded its sales target for the first half, winning 38 new clients, and said its current sales pipeline is strong at GBP93.0 million.
In November, however, Redcentric disclosed a forensic review of its accounts and said it would have to restate past results. The company said the move would reduce its net assets and made its net debt guidance "unreliable". It fired its chief financial officer after the announcement. The disclosure also delayed the interim results, which had been due to be reported in mid-November.
Redcentric said it has made progress on remedying the problems and has made improvements to its finance function and internal policies to address the issues. It is replacing multiple legacy back office systems and said the work on the plan will continue through the first half of calendar 2017.
"It has clearly been a very difficult period for the company. A great deal of work has been carried out - supported by our independent external advisors - to complete and consider the conclusions of the forensic review, establish a remedial plan of action and report these interim results," said Chairman Chris Cole.
"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," added Chief Executive Fraser Fisher.
Redcentric shares were up 1.4% to 84.13 pence on Friday.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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