Losses at Harrogate employer following auditor’s ‘serious lack of competence’

IT services provider Redcentric plc said it had made progress through historical issues, despite reporting a loss for the year ended March 31, 2019.

Thursday, 27th June 2019, 11:31 am
Central House in Harrogate, where Redcentric has its head office.

The Harrogate-based company hit the headlines in 2016 when it discovered a £20m hole in its finances.

When it was forced to restate its position, net assets were written down by £15.8m, and £5.3m in pre-tax profits turned to a £4.2m loss.

Earlier this month, “Big Four” accountancy firm PwC was found by the Financial Reporting Council (FRC) to have shown a “serious lack of competence” in its audit work for Redcentric, and was fined £4.55m. Two PwC partners were also fined.

On Tuesday, Redcentric reported a 6.7 per cent decline in revenue to £93.3m, while adjusted earnings fell from £18.1m to £16.7m. This saw statutory operating profit decrease from £900,000 to an operating loss of £300,000.

CEO Peter Brotherton said: “We have made organisational and structural changes to best position the business for the future whilst at the same time progressing through historical issues that the business has faced.

“The second half of the year has seen success in the public sector with total contracts signed to date of £17m. Additionally, we have realised annualised cost savings of £5m.

“Our cash performance continues to be excellent and this, combined with our overall confidence in the future of the group, has allowed us to announce an improved dividend policy and seek authority to commence a share buyback programme.”