Redstone: Turnaround mission (almost) accomplished

Networking reseller claims interim results show it has regained its mojo

Networking reseller Redstone claims it has successfully re-established itself as a "leading ICT provider" after returning to profitable trading.

For the six months ended 30 September, the AIM-listed Cisco, Extreme and Brocade partner saw revenue rise 14.3 per cent year on year to £36.5m.

Losses for the period – including discontinued operations – stood at £1.7m, although Redstone emphasised its bottom line was hit by the after-effects of the huge restructuring programme it carried out last year. That figure also compares favourably with the £11m loss it logged in its financial year to 31 March.

Operating losses halved to £0.5m after exceptional costs of £0.6m, while adjusted EBITDA rose from £0.1m to £1.9m year on year.

Redstone admitted it was close to folding last summer before it secured new funding and launched a strategy to dispose of non-core units. In February it united all its businesses under a single trading entity. Chief executive Tony Weaver said the interim results demonstrate the firm is now successfully re-established as a "leading ICT provider".

The firm stressed it also now has a full complement of 26 full-time sales staff, which it regards as "best in class" in its areas of expertise.

"I am pleased to report encouraging interim results that show that in a difficult market, the restructuring undertaken in the previous financial year has enabled the businesses to trade profitably, and also achieve significant contract wins," said Weaver.

Redstone's project revenue jumped by 29.5 per cent to £18m, while annuity revenue rose by a more modest 2.7 per cent to £18.6m.

Losses from discontinued operations hit £0.4m, mainly stemming from the write-off of loan notes outstanding from its disposal of security reseller RMS Security (which has since changed ownership again).

Non-executive chairman Richard Ramsey said: "It is important to note that while the major operational restructuring was completed by 31 March 2011, the Group was still assimilating the impact of the structural changes in the current financial year. Therefore, although the results for the six months to 30 September 2011 show a vast improvement on 2010, there is scope for further improvement."