RedstoneConnect Plc (LON:REDS), a leading provider of technology and services for smart buildings and commercial spaces, announced today its final results for the year ended 31 January 2018.
Financial Highlights:
· Revenue up 15% to £47.6 million (2017: £41.5 million)
· Gross profit up 45% to £13.4 million (2017: £9.2 million), with an increased gross margin of 28% (2017: 22%)
· Adjusted EBITDA* up 60% to £3.2 million (2017: £2.0 million) reflecting the successful implementation of the strategy to focus on higher quality, higher margin business
· Adjusted profit before tax** of £2.4 million (2017: £1.3 million)
· Profit before tax from continuing operations of £1.5 million (2017: £1.2 million)
· Profit after tax from continuing operations of £1.5 million (2017: £1.8 million)
· Cash at year end of £3.4 million (2017: £3.2 million) and net cash of £1.2 million (2017: £0.8 million)
· Basic earnings per share from continuing operations of 7.72 pence (2017: 11.14 pence)
· Adjusted earnings per share from continuing operations 12.81 pence (2017: 13.13 pence)
* profit for the period from continuing operations before net finance costs, tax, depreciation, amortisation, integration costs and transactional items, impairment charge and share based payments.
** adjusted profit before tax is before: integration costs and transactional items, impairment charge, share based payments and amortisation recognised as a result of purchase price allocation under IFRS.
Operational Highlights:
· In May 2017, completed a successful placing to raise £6.5 million, of which £1.4 million was used to acquire Anders + Kern (“A+K”), a systems and solutions integrator specialising in meeting room management and audio-visual solutions:
o Integration of A+K is now complete, providing the Group with an indirect sales channel to sell the Group’s meeting room and space management software solutions to small and mid-sized clients, both in the UK and overseas
o A+K made a positive contribution to the Group’s performance in the year
· £1.2 million of proceeds have been invested in development of the Group’s software platform:
o In December 2017 we released OneSpace Link, a locally installed meeting room management solution which integrates with Microsoft Outlook
o Ongoing development of a full web-based meeting room management tool which will be offered as a module of the OneSpace platform
o Continued development of our OneSpace platform adding to existing modules which include desk management, wayfinding, car parking, visitor management, frictionless vending and space management
· OneSpace continues to gain traction. In December 2017, we announced a deal with a market-leading global technology business to provide an Original Equipment Manufacturer (“OEM”) version of our platform. This deal was worth £2.25 million, our largest single contract for OneSpace thus far
· Continued strong performance and levels of renewals from our Managed Services division
· Agreements secured in the year for the Company’s innovative in-Building Cellular (“IBC”) and Distributed Antenna Systems (“DAS”) solutions
Post Year End:
· Announced the proposed sale of the Systems Integration and Managed Services divisions for a total consideration of £23.0 million comprising; £19.6 million payable in cash on completion; £2.0 million payable on or before 30 November 2018, subject to completion of an already contracted project by Redstone Converged Solutions Ltd; and the waiver of loans owed by the Company to the divisions of £1.4 million. Owing to its size the disposal requires the approval of shareholders
· This disposal will allow the Group to focus on developing and growing the Company’s software proposition in the smart building and co-working space markets both in the UK and internationally
Mark Braund, CEO of RedstoneConnect Plc, commented: “I’m pleased to report another year of continued operational and strategic progress across all our business units. We closed the year showing strong revenue and EBITDA growth, boosted by organic initiatives and the positive impact of bolt-on acquisitions.
However, following the disposal of our Systems Integration and Managed Services divisions, our core focus now shifts to accelerating our exposure to the provision of software solutions that support smart buildings and commercial spaces.
Employee mobility and agile working is driving demand as commercial real estate becomes more of a user experience business. We firmly believe that the significant global demand for workspace management solutions coupled with the market leading suite of services already being deployed within our software division, creates an ideal base from which to accelerate our growth.
Our strategic focus on creating greater levels of recurring, annuity based revenues, and improving the earnings visibility of the Group, underpins the Board’s commitment to becoming a fast-growing workspace management software company delivering long term shareholder value.”
