19 Apr 2012 07:00
Redstone plc
("Redstone" or "The Company")
Trading Statement / Contract Wins
Redstone plc (AIM:RED.L), a leading provider of network based end to end managed services, technology and infrastructure solutions, is pleased to provide a positive update on trading for the year ended 31 March 2012 and also to announce further contract wins.
Highlights:
·; Adjusted EBITDA* in line with market expectations
·; Significant level of contract wins in the year
·; Group debt further reduced
·; Further annualised cost savings of £0.9 million implemented
Tony Weaver, Chief Executive of Redstone commented:
"I am pleased that the Company has performed in line with market expectations. Redstone has been successfully repositioned as a leading specialist ICT provider with an attractive market offering and a stable financial position, underpinned by a return to a solid EBITDA performance.
The underlying strength and quality of the Redstone brand and business are now beginning to deliver the results Ian Smith and I believed possible when we invested and joined Redstone in September 2010. This strength is evidenced by contract wins announced throughout the year that have totalled in excess of £45m.
We continue to evolve and improve the Company's offering to meet the needs of our clients and the markets which we serve. Our stable annuity revenue base, allied to strengthened technical and sales capabilities allow us to look to the future with confidence. While we expect the major project markets to remain challenging, the Company is now positioned to deliver on our long term strategic aim of achieving an adjusted EBITDA margin of 10%."
Trading Update and Outlook
The Board is pleased to report that the second half of the financial year ended 31 March 2012 was successful and it expects to report an Adjusted EBITDA* for the full year in line with market expectations. Trading in the second half of the year included the successful implementation of the first stage of a multi-year project for a major bank and other significant contract wins strengthening the Company's position as a leading ICT provider.
As highlighted at the time of our interim results, market conditions were and have remained difficult, which adds credence to the results achieved and the Board wishes to thank all of the Company's employees for their hard work.
The stable and recurring annuity nature of a large part of our business buoyed by recent contract wins and the continuing growth of our Connectivity business has ensured that the business has met Adjusted EBITDA* expectations.
The results achieved in our Connectivity business are particularly encouraging and support the rationale for the fundraising in July 2011. With two MANs (Metropolitan Area Network) now fully operational, a long established network in Cambridge and the recently lit network in Portsmouth (operational for four months only), our Connectivity and Cloud offering is genuinely differentiated and is gaining considerable traction.
Project work continues to be difficult to predict with inevitably lengthening sales cycles in uncertain economic times. Consequently, we have constantly monitored levels of overhead and moved to re-align the cost base in response to the lower level of activity in the project market. We have therefore implemented further costs reductions which will result in further savings of £0.9 million per annum. The encouraging levels of new business generated put Redstone in a strong position for the coming year and consequently approximately 50% of the non-recurring revenues expected for FY2013 are already contracted, which is a materially better position than a year ago.
Contract Wins
We are pleased to announce the following additional contract wins in the financial year ended 31 March 2012:-
£954k of new projects for financial services clients
£730k infrastructure project with leading global investment bank. Redstone has been awarded a contract to the approximate value of £730k with a leading global investment bank. This new project will see Redstone design and install infrastructure for the expansion of one of the bank's UK data centres.
£224k cabling project for leading UK bank. Redstone has been appointed to install new CAT6 structured cabling to support a leading UK bank with repurposing two of its offices.The Company will deliver a new cabling system without disrupting the existing live network which will remain operational throughout the day. Redstone has worked with the bank on numerous projects which were a key factor in the decision. The customer was also impressed with Redstone's plan to safely and securely deliver the new network without impacting the existing operations. Work is due to begin in May 2012.
RIBA Enterprises to save six figures in infrastructure and maintenance costs with Redstone's cloud service
RIBA Enterprises, the knowledge business of the Royal Institute of British Architects, has become Redstone's latest customer to go-live with its cloud infrastructure as a service (IaaS) platform. The service is one of the first VMware vCloud® Powered services in the UK. RIBA Enterprises, already a long-standing customer of Redstone, is using IaaS to support its web environments. It is likely to save in excess of £100k in IT maintenance and hardware costs over the next three years.
*Before net finance costs, tax, depreciation, amortisation, integration and strategy costs and share based payments.
Enquiries:
Redstone plc
Tony Weaver, CEO / Peter Hallett, CFO Tel. +44 (0)845 201 000
finnCap Tel. +44 (0)20 7220 0500
Corporate Finance - Marc Young / Charlotte Stranner
Corporate Broking - Brian Patient / Victoria Bates
Newgate Threadneedle Tel. +44 (0)20 7653 9842
Josh Royston / Guy McDougall