Redcentric upbeat about impending full year results

Redcentric plc has reported a “positive” second half in a pre-close trading update before reporting its full year results for the 12 months ending 31 March 2016.

The IT managed services provider said the positive momentum reported at the interim results has “continued through the second half of the year”. It said contracted revenues “continue to grow”, driven “both through new client wins and with existing clients taking more services and products”.

It said: “EBITDA margins have improved as we continue to improve the revenue mix to higher margin services. Overall, revenue and EBITDA are both expected to be in line with expectations.”

City Lifeline, which was acquired for £4.8 million on 29 January 2016, is “performing in line with plan, and its integration into the wider Redcentric business is progressing well”.

Fraser Fisher, chief executive officer of Redcentric, said: “We’re pleased with our performance in the second half of the year. The strength of our business model, with its high proportion of recurring revenue, provides stability from which we can plan our growth.

“We remain confident in the strength of the business to continue to successfully execute its growth strategy.”

Martin Courtney, an analyst at TechMarketView, said: “Redcentric previously outlined a sales target of £110m for FY16 and we have seen nothing to suggest it will fall significantly short. Given Redcentric’s consistent performance over the last couple of years, an additional revenue forecast of £118m for FY17 does not look like wishful thinking either.”

Courtney said Redcentric has a “strong UK footprint” which 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 in April 2015 and City Lifeline.

“A strong support infrastructure in Hyderabad is another asset which should help the company achieve its short term financial targets,” said Courtney.

Redcentric is expecting to report results for the year to 31 March 2016 on 16 June.

@AntonySavvas