Redcentric’s pure-play year shows what the acquisitions were hiding

Redcentric published its results for the year to 31 March 2026 on 28 September, the first set since it sold Redcentric Data Centres to Stellanor Datacenters Group for £124.9m and returned £90m to shareholders through a tender offer. On a continuing-operations basis, which excludes the sold data centers, the RNS reports revenue of £132.0m, down 2.3% from £135.1m, and adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of £17.4m, down 7.4% from £18.8m. Profit before tax rose 10.5% to £4.8m.

The numbers most boards would lead with are the balance-sheet ones. Adjusted net debt was £36.8m at the year end and £2.8m by 25 September, according to the RNS, after the tender offer took out 35.3% of the issued share capital. A £30m revolving credit facility was agreed on 28 August, and the board intends to reinstate a progressive dividend at the interim results.

Michelle Senecal de Fonseca, chief executive of Redcentric since 7 May 2025, calls the disposal transformational. “Following the disposal of RDC, Redcentric is fully focused on growing its MSP business. We have refined our go-to-market strategy and established a new business team to help realise our market opportunity,” she says in the results statement.

Then there is the harder number. The company has introduced a metric it calls Underlying annual recurring revenue (ARR), which adjusts headline ARR for churn inherited from past acquisitions, the reversal of short-term on-demand VMware licenses and its shift away from low-margin solutions. Headline ARR fell 2.1% to £116.2m. Underlying ARR rose 0.6%, from £112.5m to £113.2m. On the company’s own adjusted measure, the base grew about 0.6% in the year. That is the case study for the leaders of any UK technology business built by acquisition.

What the acquisitions were hiding

The RNS is unusually candid about where the revenue went. The board says the £2.5m fall in recurring revenue “was driven largely by customer churn inherited from the historic acquisitions of Sungard, Piksel and 4D”. Some of those customers had already arranged to leave before Redcentric bought the businesses; Sungard was in administration at the time. The statement expects the exits to finish during FY27.

Read that as a confession from a company that has stopped buying. Bolt-on acquisitions can add revenue on day one while the churn arrives later, when the next deal may cover it. At Redcentric the inherited exits are still running into FY27, with no new deals to mask them. Senecal de Fonseca’s review puts it formally – the group is now focused on organic growth, “without fully discounting opportunistic corporate activity” – and calls the inherited churn a ‘drag’ that “can continue for several years because new systems can take many years to build”.

A clean balance sheet is a sales tool, not a growth plan

Redcentric’s case to investors is that focus and financial strength win shortlists. The RNS says its balance sheet makes it “a secure, long-term counterparty for enterprise and public-sector procurement”, and it claims a market leading position in NHS trusts. Richard McGuire, non-executive chairman, puts it plainly: “The distraction of running two businesses is behind us and we look forward to executing the MSP opportunity.”

But the outlook shows the limits. McGuire says reported revenue in FY27 “is expected to be stable against FY26”, with adjusted EBITDA in line with market expectations because of savings already made. Senecal de Fonseca says the cost base “is now right-sized to current revenue”. In plain terms, FY27 improves through cost, not sales. The RNS records a reduction in headcount; CRN UK reported a 10% cut, from 637 to 574 people, plus 370 decommissioned systems and about £1.6m of annual savings.

Where the organic growth is supposed to come from

Two places, according to the statement. The first is a new business team and a refined go-to-market strategy, paid for by spending Senecal de Fonseca says she has reallocated since taking the role, with benefits expected “in the latter part of FY27 and beyond”. The RNS gives no figure for what that team has won so far, and says customer acquisition KPIs will become “increasingly important as we move forward”.

The second is Broadcom. Redcentric is one of seven Pinnacle Partners in Broadcom’s VMware cloud service provider program in the UK, and the RNS says the vendor’s restructuring of its partner and license models has created a window of opportunity. According to CRN UK, Redcentric manages about 15% of what it considers the addressable UK VMware market, and Senecal de Fonseca told the outlet she expects more of it in the second half of FY27, in ARR rather than revenue, with the top-line effect moving into FY28. The same RNS lists short-term on-demand VMware licenses among the reasons recurring revenue fell: the Broadcom effect boosted FY25 and reversed in FY26.

The lesson for leaders

Redcentric has now published, line by line, what happens when the buying stops: reported revenue falls, underlying growth rounds to almost nothing and the recovery is promised for the second half of the following year.

Three things follow. A board that cannot state its organic growth rate with acquired revenue removed does not know whether it runs a business or a portfolio, and its lenders and buyers will work it out anyway; Redcentric built Underlying ARR, which removes the ARR of acquired customers who are leaving, to get closer to an answer. Capital returns buy credibility with shareholders and a story for procurement teams, and neither is a pipeline. And cost is the only lever that works on a board’s timetable, which is why the FY27 promise is margin rather than revenue.

Selling the data centers gave Redcentric a clean balance sheet. Stopping the acquisitions gave it something rarer: an honest growth number. Every leader of a business built by acquisition should know theirs before a buyer, a bank or a new chief executive works it out for them.