(Alliance News) - Redcentric PLC on Friday said it has suspended share buybacks and is not likely to declare a final dividend amid Covid-19 uncertainty.
The IT managed services provider said its trading performance for the year ended March 31 is expected to be in line with its expectations.
In the second half of March, Redcentric said it has seen a material increase in sales opportunities as a result of the Covid-19 pandemic. Demand has been particularly strong for increased bandwidth and, in particular, for the company's secure remote access product.
As a result, the volume of new recurring revenue contracts signed in March was materially above that seen in previous years, Redcentric highlighted.
Looking ahead, the company said it expects April new sales volumes to be as anticipated for this time of the year.
Looking further forward, Recentric said it anticipates a reduction in sales to new customers and a slowdown in major change projects from existing customers until such time as the Covid-19 crisis is averted.
Offsetting this, Redcentric expects a lower level of normalised cancellations and renewal churn in the same period.
Net debt as at the end of March was GBP13.5 million, including GBP400,000 of share buy backs in the second half.
However, Redcentric said it has taken the decision to temporarily halt the share buyback programme until such time as the outlook becomes more certain.
Also, the company said it is highly unlikely that a final dividend for the year will be recommende.
The company expects to report its full year results on June 25, it said.
Turning to Covid-19, Redcentric said the duration and extent of the economic consequences of the pandemic are currently unknown and this makes predicting future demand for the company's offerings difficult.
Redcentric shares were trading 3.2% higher in London on Friday at 101.64 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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Redcentric (RCN)