Redstone Group continues its impressive comeback by reporting its first ever pre-tax profit for the first half of its fiscal year.
The firm posted a £200,000 pre-tax profit for H1 2012, compared with an H1 loss of £1.5m in the same period last year.
Revenue dropped by 21.8 per cent to £28m, compared with £35.8m in H1 2011, but the firm said it was on track with its progress to increase its adjusted EBITDA return on revenue to a target of 10 per cent.
For the current period, adjusted EBITDA was £2.5m, a 29.1 per cent increase on last year, representing a return on revenue of 8.8 per cent, compared with 5.3 per cent in H1 2011.
The firm also revealed it has seen a "significant shift" in its managed services revenue, but suffered a £5m drop in project revenue due to delayed commencement of a major international bank installation. Annuity revenues also dropped by 15.5 per cent, mainly down to two Campus contract losses, but the Annuity business still grew 4.6 per cent.
In addition, the Group issued 300 million new ordinary shares, raising £3m before expenses following its recent acquisition of Maxima. The extra money will fund the reorganisation of the group.
In his statement, Richard Ramsay, non-executive chairman of Redstone Group, said: “The acquisition of Maxima is strategically important for the Group as it provides critical mass to our managed service business…..Redstone and Maxima are complementary in terms of technical capabilities and when combined will provide good potential for cross selling into each company’s respective client bases.
“We are moving quickly to integrate Maxima and extract the identified £2.3m of annualised synergy benefits, and to reassess all options for maximising shareholder value from the integrated managed service business,” he said.
Ramsay also admitted the Group reshaping has created a “period of uncertainty for all employees” as the two firms are integrated, and promised to complete the process as “quickly and sympathetically as possible to minimise business disruption and uncertainty”.
Tony Weaver, chief executive of Redstone Group, said in his statement that the business will be split into two divisions: Managed Services and Infrastructure Solutions, and also said it would be revising its adjusted EBITDA from 10 per cent to 15 per cent as a result.
“The combined business will represent a powerful presence in the provision of cloud-based services, which will be almost unique within the targeted mid-market,” he said.
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