In a statement Redcentric said that CFO Tim Coleman was placed on garden leave and resigned with immediate effect as a director of the company on 6 November.
“The board anticipates making an external interim appointment as a replacement CFO,” the firm said. But there is a small matter of the discovery of a £10 million hole in the company accounts to sort out.
Redcentric confirmed it had identified “misstated accounting balances” in the P&L accounts when reviewing results for the half-year ended 30 September and had embarked on a “forensic review” that will delay the 14 November publication date of those results.
“The work to date has identified that audited accounts for previous years are likely to need to be restated, resulting in some write down in historic profits. Current indications are that all issues related to prior periods,” it stated.
Apparently, the numbers for the first six months of fiscal ’17 do not indicate any mistakes or wrongdoing, with new business sales and recognition of those sales into revenue “in line” with management’s expectations.
“The board believes from the information available to date that the impact of correcting these cumulative historic accounting misstatement would result in a need to reduce net assets by at least £10m,” the company statement added.
Now it seems that the company is sitting on a net debt closer to £30million and the group’s banking covenants will need to be re-calculated, “which will take some time to complete”, Redcentric revealed.
Redcentric was created in 2013 by the merger of Redstone and Maxima’s managed services business, and was supplemented by the slurp of InTechnology and the takeover of Calyx Managed Services.