Redcentric's full year revenues rise by 16%

Revenue increased 16% to £109.5m in the year to 31 March 2016, representing 8% organic growth. Recurring revenue grew 17% to £90.2m including 11% organic growth. Recurring revenue represented 82% of the total.

The organic growth was driven by the company winning new customers and from existing customers taking more services. Recurring revenue remained in tact as average contracts at the company last about three years, which provides a good stream of revenue.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 21% to £25.8m as adjusted margins rose to 23.6% from 22.7%. The group attributed the rise in margins to an "improved revenue mix, cost synergies from acquisitions, the benefits of scale, and the effective execution of the company's business model".

Operating profit fell to £8.4m from £8.7m as transaction and integration costs jumped to £4.6m from £0.6m the previous year following two acquisitions.

The company acquired Calyx Managed Services in April 2015 and City Lifeline in January this year, which contributed to the rise in revenue. The company said that the former is fully integrated, and the latter is on track, but both are performing in line with expectations.

The final dividend was up 20% to 3p per share growing total dividends for the year by 29% to 4.5p per share. The company reported strong growth in earnings per share, up 24% to 10.5p.

Chief executive Fraser Fisher said: "The good progress seen in the first half continued into the second half of the year, and we're pleased with the 17% growth in our recurring revenue base and the increase in profitability”.

Chairman Chris Cole added: "These results show that Redcentric has continued to follow its strategic plan with very solid organic growth and recurring revenue being augmented by two successful acquisitions in the year."