The Redcentric Plc Board has reviewed the financial performance of the business and has decided to maintain an interim dividend payment of 1.2p per share, which will be paid on 27 January 2023 to shareholders on the register at the close of business on 16 December 2022, with the shares going ex-dividend on 15 December 2022. The last date for dividend reinvestment plan (DRIP) elections is 6 January 2023.
As noted previously, the Board will continue to review its policies in relation to dividends and share buybacks having regard to the Company's debt position and additional acquisition opportunities to continue the Group's M&A strategy.
Other financial highlights include:
Total revenue grew by 38.8% to £61.5m (H1-22: £44.3m) with recurring revenue of £56.4m (H1-22: £39.6m), reflecting the impact of the three acquisitions made in the six months to 30 September 2022.
The proportion of recurring revenue increased by 2.1% to 91.7% (H1-22: 89.6%) reflecting the relative higher levels of recurring revenue derived from the services provided by both 4D Data Centres Limited ("4D") and business and assets relating to three data centres acquired from Sungard Availability Services Limited (In administration) ("Sungard DCs").
Adjusted operating expenditure increased by £16.0m (101%) to £31.8m (H1-22: £15.8m) reflecting the impact of the three acquisitions made in the six months to 30 September 2022. Group headcount has increased by 135 since 31 March 2022 to 602 (FY-22: 467).
Adjusted EBITDA was £11.7m (H1-22: £11.9m) and adjusted EBITDA margins decreased by 7.8% to 19.0% (H1-22: 26.8%) which reflects:
o The acquisitions of 100% of the issued share capital of 4D, and the consulting and risk and resilience business of Sungard Availability Services Limited (in administration) ("Sungard Consulting") and Sungard DCs, the latter of which was significantly loss making prior to acquisition;
o Investment in the organisational senior management structure to support the continued growth of the business.
Reported operating profit increased by 48.1% to £5.2m (H1-22: £3.5m) reflecting total exceptional items of -£5.0m (H1-22: £0.9m). Exceptional items largely consist of acquisition and integration costs of £3.5m and negative goodwill of £9.7m arising on the acquisition of Sungard DCs.
Net debt has increased by £49.1m since 31 March 2022 to £65.8m, reflecting:
o Consideration payable, net of cash acquired, for 4D, Sungard DCs and Sungard Consulting, of £23.2m;
o Additional IFRS lease liabilities of £16.8m in relation to certain data centre properties acquired with 4D and Sungard DCs acquisitions;
o An investment of £3.2m, reflecting stock forward bought to avoid significant price increases, protecting profitability, and to ensure that supply chain issues do not delay network rollout projects. It is anticipated that approximately half of this working capital investment will reverse by the end of the financial year;
o An additional working capital requirement of £6.3m as the Group worked to onboard the customers acquired as part of the Sungard DCs acquisition. The invoicing relating to this onboarding has now been brought up to date and hence this adverse working capital impact is expected to reverse in H2 of this financial year ending 31 March 2023 ("FY23");
o The cash cost of exceptional items of £4.8m were incurred in the period, £2.5m higher than anticipated due to additional integration and restructuring costs in relation to the 4D and Sungard acquisitions. Approximately half of these additional costs will result in like for like additional annual savings in the financial year ending 31 March 2024.