Project postponements hit Redstone’s H1

Redstone is looking to cut £7m in costs

Redstone has initiated a £7m cost-cutting programme after reporting a slowdown in orders and tumbling into the red in its fiscal first half.

According to its unaudited interim results, the VAR tumbled to a pre-tax loss of £1.8m for the six months to 30 September. This compares to a £200,000 profit a year ago.

The news sent Redstone’s share price tumbling 40 per cent to 8 pence. In September, its share price was as high as 45 pence and they were trading at more than £1.00 just 18 months ago.

Although revenue rose 10 per cent to £106m, Redstone warned that – with the exception of Building Schools for the Future (BSF) – many large-scale projects are now being deferred.

Martin Balaam, chief executive of Redstone, said in a statement: “Month on month, in common with the rest of the industry, we are seeing projects either suspended or cancelled.

“As a result we have implemented a cost reduction programme which will see our current cost base reduce by £7m by the end of December 2008.”

Redstone revealed it would decrease its focus on the provision of IT infrastructure for major construction projects, citing the slowdown in the construction industry. Instead, the reseller vowed to up its commitment to areas such as BSF, local government and the Academies programme.

The VAR also recently migrated off the BT network and claimed the move will yield monthly savings of £100,000.

“We can now switch between carriers such as BT Wholesale, Cable & Wireless, Gamma or Opal and take advantage of the best rates being offered at any one time,” said Balaam.

Balaam added that Redstone would continue to review all costs and make further reductions to its cost base if demand falls further.