Redstone trading hit by cost-cutting delays

Communications VAR admits efforts to shave £7m from its cost base are taking longer than anticipated

VAR Redstone has admitted that trading since December has been “slightly below expectations”, citing the challenging economy and delays in its efforts to cut costs.

The London-listed firm, which parted company with chief executive Martin Balaam in April, initiated a £7m cost-cutting programme in December after tumbling to a £1.8m pre-tax loss in its fiscal first half.

However, Redstone admitted in a trading update that its cost-reduction measures have taken longer to implement than anticipated.

As a result, first-half trading for its current financial year is likely to be at a similar level to the previous six months, the VAR cautioned.

The communications specialist added that it expects to report adjusted EBITDA of between £7.5m and £8m for the year ended 31 March. Net debt is set to be about £26m as at 31 March.

Alan Coppin, who took on executive chairman duties following Balaam’s departure, said: “We, along with many other companies operating in our sector, have experienced weakness in overall trading conditions as a result of the current economic downturn.

“However, the board believes the actions it has taken – and is taking – will ensure the group continues to build on its strengths and that it is well positioned to take advantage of improved trading conditions as and when they arise.”