18:00 Fri 03 Apr 2020
Redcentric PLC - Trading update and COVID-19 update
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Trading update and COVID-19 update
Trading update for the year ended
The Board is pleased to announce that the Company's trading performance for the year ended
Net debt at
The Company expects to report its full year results for the year ended
COVID-19 update
Overview
The Company's overriding concern is the health, safety and wellbeing of its employees, customers and business partners. We are complying with all relevant government recommendations both in the
The duration and extent of the economic consequences of the pandemic are currently unknown and this makes predicting future demand for the Company's offerings difficult. However, the Board believes that the Company is well placed to withstand the current challenges. In particular:
· Our strategy of focusing on our network and platform infrastructure has put us in a good position to meet the increased demand for flexible and remote co-working.
· Our recent focus on the Public sector networks and, in particular, the Health and Social Care Networks (HSCN) has provided a large number of new logo customers where we have significant cross sell opportunities.
· 90% of our revenues are recurring in nature and over half of our non-recurring revenue has historically been derived from the Health sector.
· The business is operating profitably with pre IFRS16 EBITDA margins expected to increase.
· The business is cash generative and the recent network and platform upgrades mean that we have modern, scalable platforms which will require lower levels of capital expenditure over the medium term.
· We have low levels of borrowing with pre IFRS16 net debt currently less than one times annualised pre IFRS16 EBITDA. As at
Sales
In the second half of
We are currently working on closing out the remaining leads generated in March and as a result we expect April new sales volumes to be as anticipated for this time of the year.
Looking further forward, we anticipate a reduction in sales to new customers and a slowdown in major change projects from existing customers until such time as the COVID-19 crisis is averted. We also anticipate that some of our customers may come under pressure as a result of the COVID-19 pandemic and this may lead to delayed customer receipts and increased business failures.
Offsetting this, we expect a lower level of normalised cancellations and renewal churn in the same period.
Deliveries
Deliveries in the last quarter of FY20 have been strong as a result of significant additional temporary resource being employed to roll out the HSCN contracts. Whilst these networks have been slower to roll out than anticipated, circa 75% of the contracts are now implemented with the remainder expected to be live by the end of
The additional sales orders signed in
With respect to the remaining unfulfilled orders, installations requiring on-site engineers are likely to be delayed and hence revenues will be delayed. At this time, it is impossible to know how long this situation is likely to continue.
Share buyback and dividend
The Board has taken the decision to temporarily halt the share buyback programme until such time as the outlook becomes more certain.
In addition, although the Board will continue to monitor the effects of Covid-19, in light of the current situation it is highly unlikely that a final dividend for the year will be recommended by the Board.
Enquiries:
Peter Brotherton, Chief Executive Officer
David Senior, Chief Financial Officer
finnCap Ltd - Nomad and Broker +44 (0)20 7220 0500
Marc Milmo/ Simon Hicks (Corporate Finance)
Andrew Burdis / Sunila de Silva (ECM)
END
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