MSP Redcentric engulfed in financial reporting scandal

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Audited accounts for previous years will need to be restated, resulting in some write downs

IT managed service provider Redcentric plc has seen its share price go through the floor by over two-thirds this morning after reporting it had discovered its accounts had been “misstated”.

It’s board has commenced a “forensic review” of the group’s current and historic balance sheets, which will delay publication of the group’s interim results, which were originally scheduled to be posted on 14 November.

cash-600x387-600x387So far, Redcentric has discovered that audited accounts for previous years will need to be restated, resulting in some write downs of historic posted profits.

The company believes the impact of re-stating cumulative misstatements could result in needing to reduce net assets by “at least” £10 million. And net debt guidance announced in a previous pre-close trading update is now believed to be “unreliable”. Redcentric now believes net debt at the half year stage was “approximately” £30 million.

As a result of the debacle, Redcentric has put its CFO Tim Coleman on “gardening leave” and is looking to make an “external interim appointment” as a replacement.

For the full year ending 31 March 2016, the company reported that operating profits had fallen and sales had risen.

The company’s service infrastructure includes data centres in Reading, London, Cambridge, Manchester and Theale, backed by a 10Gbit/s MPLS backbone network and bolstered by the recent acquisitions of Calyx Managed Services and City Lifeline. Business includes a £2 million contract with the Legal Aid Agency.

@AntonySavvas