Redcentric deal with FCA lifts barrier to sales growth
IT MANAGED services provider Redcentric said a settlement reached with the Financial Conduct Authority over historical accounting misstatements has removed a “significant” barrier to sales growth.
The deal with the FCA includes the implementation of a restitution scheme with an estimated exceptional cost of £11.4m.
In a statement, Redcentric said: “Following the end of FY20, we reached a settlement with the Financial Conduct Authority in respect of the historical accounting misstatements uncovered by the company in November 2016.
“The FCA’s investigation into the company lasted over three years and its conclusion is hugely significant for the group as it removes a significant barrier and uncertainty for all of our stakeholders and will allow the management team to focus solely on running and growing the business.”
Redcentric, which is an IT managed services provider, has announced its full-year results for the year ended March 31, 2020.
Revenue of £87.5m was 6 per cent below the previous year, although the revenue figure for the second half of the year was higher than the first half.
The adjusted EBITDA of £20.6m, was below the £16.7m recorded the year before.
Redcentric said there were high levels of recurring revenues and it was in a strong financial position.
The group said it has had a good start to the new financial year with all key business metrics showing positive trends.
Peter Brotherton, the group’s CEO, commented: “We have had a very productive year with many of the initiatives undertaken giving rise to long-term benefits. After three years of decline, recurring revenues are now growing and account for 89 per cent of total revenues.
“The settlement with the FCA means that the company’s management team is now free to focus solely on the business and able to sell to all markets, including those regulated by the FCA.”
Analysts from Finncap said yesterday : “Finals for the year to March demonstrate rude health and opportunities despite lockdown – and after nearly four years, the... spectre of the FCA investigation has been dealt with”
It added: “The organisational efficiency which CEO Peter Brotherton has delivered over those four years has not just included cost savings, but also an upgraded and rationalised network and infrastructure.”