Redcentric CEO resigns after 'mixed' H1

Firm says cost-cutting schemes were not enough to see revenue grow

Redcentric's CEO Chris Jagusz has stepped down following a "mixed" H1 which saw the firm's revenue and profit drop.

For the six months ending 30 September 2018 Redcentric's sales declined 7.6 per cent year on year to £47.5m, while gross profit dropped seven per cent to £28.4m.

In a statement to the London Stock Exchange, Redcentric said it was disappointed with the numbers, particularly given the cost-cutting plans it has implemented.

"Notwithstanding previously disclosed headwinds, the decline in revenue despite initiatives to reverse this is a source of particular disappointment," it said.

"The company continues to make good progress with cost control and cash discipline. However, the positive impact from these workstreams does not fully mitigate the revenue decline experienced in the period.

"Looking forward it is very clear that the business needs to return to top-line growth and several further initiatives are being introduced to enable this.

"It is also equally clear that there are further opportunities to achieve material cost savings and efficiencies in the second half of this year and next year, which will support the ongoing profitability and cash generation of the business."

Despite the sales drop, Redcentric said that recurring revenue still makes up 87 per cent of its overall income.

However, it said that its number of contract wins has been lower than expected, while "the quality of the new business pipeline has reduced".

Redcentric's share price fell as much as 27 per cent this morning, before showing signs of recovery.

The firm said it has started the process of appointing a new CEO, with CFO Peter Brotherton taking on the role on a temporary basis.

Non-executive chairman Chris Cole said: "During the period Redcentric has made strong progress with its programme of driving operational efficiencies, cost control and cash discipline.

"This work has led to a leaner, more efficient business and one that is able to respond more quickly in a dynamic industry. Despite these positives, top-line revenue performance has been disappointing and we have taken action to address this and return the business to organic revenue growth."