Redcentric (RCN) has reached a settlement with the Finacial Conduct Authortiy (FCA) in relation to accounting misstatements in 2016, which has cost the group £11.4m.
The company again blamed a fall in recurring revenue to the loss of public sector contracts to Crown Hosting, the joint venture between the Cabinet Office and Ark Data Centres. In 2017, these contracts had accounted for £8.2m annualised recurring revenues, compared to £2.7m in 2020. But after three years of decline, recurring revenues started to grow in the final quarter of the year and now account for 89 per cent of total group turnover.
The group has built on the Health and Social Care Network (‘HSCN’) contracts it won last year, securing additional sales in both cross-selling additional products and in sales to new logo organisations. Commercial activity derived from these contracts, as well as cross-selling have been the primary driver of underlying revenue growth.
Redcentric has mostly completed its network and data centre rationalisation programme, which generates annualised cost savings of £3.5m. This should help to further strengthen its margins - indeed margins for adjusted cash profits grew by 5.6 percentage points to 23.5 per cent in the year. The group said, however, that it would not recommend a final dividend for shareholders in 2020, in light of the coronavirus pandemic.
The consensus forecast for the year to March 2021 is that the reported loss per share will narrow to 4.6p
| REDCENTRIC (RCN) | ||||
| ORD PRICE: | 132p | MARKET VALUE: | £ 203m | |
| TOUCH: | 130-132p | 12-MONTH HIGH: | 134p | LOW: 75p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | NA | |
| NET ASSET VALUE: | 39p* | NET DEBT: | 58%** | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 102 | -6.10 | -2.90 | 4.50 |
| 2017 | 105 | -4.20 | -1.60 | nil |
| 2018 | 100 | -0.50 | 0.30 | nil |
| 2019 | 93.3 | -1.40 | -1.30 | 1.40 |
| 2020 | 87.5 | -10.6 | -7.14 | 0.83 |
| % change | -6 | - | - | -41 |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £68.9m or 45p a share **Includse lease liabilties of £21m | ||||
