28th Nov 2019 11:43
(Alliance News) - IT services firm Redcentric PLC doubled its interim dividend Thursday after it swung to a profit despite lower revenue as the firm focused on cutting costs.
For the six months ended September, pretax profit swung to GBP887,000 from a loss of GBP122,000 the year prior. This was despite revenue falling 9.1% to GBP43.2 million from GBP47.5 million the year before.
"Visibility of future revenues remains strong with recurring revenues reaching 90%," Chair Ian Johnson said. "New customers were added in the period which, together with effective cross selling, led to quarter on quarter revenue growth. This revenue growth has been achieved despite the ongoing FCA investigation, which continues to impact the pace at which we win new business."
In 2017, the UK Financial Conduct Authority launched an investigation into financial misstatements by Redcentric in its 2015 and 2016 annual results.
"Management continues to improve the operational efficiency of the business," Johnson added. "The strategic data centre and network portfolios review now underway is expected to lead to the realisation of annual savings of at least GBP2.8 million and further improvements in operating margins."
Redcentric proposed a 0.83 pence per share interim dividend, up from 0.40p the year prior.
"Cash flow remains strong allowing significant investment into our network and a further reduction to net debt in the period," Johnson continued. "The board is confident that the business will continue to generate strong cash flows enabling it to return cash to shareholders by way of dividend and further share purchases via the share buy-back programme."
Shares in Redcentric were 8.1% higher at 94.00 pence in London on Thursday.
By Ahren Lester; [email protected]
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