Financials

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FY18 – demand for digital drives another record year of growth for SCC

Europe’s largest independent IT group SCC has announced record earnings for the fifth consecutive year driven by customer demand for digital services and cloud strategies.

The SCC EMEA Group’s full year results for the financial year ending 31 March 2018 showed revenues reaching a record £1.8bn and EBIT of £27.7m – a 10% growth year-on-year.

Other financial highlights of the year include: £1.8bn turnover, up 9% across EMEA; EBITDA at £45m up 9% across EMEA; group services at £325m – up 4% year-on-year; earnings of £16m for the UK business (before interest and tax); strong EBIT growth in both Spain and France; and net assets £147m, up 7%.

“Performance of the business over the last year has been exceptional with growth and improved profitability in all our key trading operations,” said James Rigby, SCC Chief Executive. “There is now a need for all businesses – whoever they are or whatever they do – to digitise their operations, and outsourcing that requirement is an effective way to manage the continual investment needed for growth. We have invested over the past few years via our cloud services and data centres in anticipation of that demand and we expect to continue our current performance levels in the coming years.

“We will continue to invest in our capabilities and that means areas such as artificial intelligence and cognitive computing where we are already well-placed to meet customer demand.”

Operations in SCC France and the UK continue to drive the majority of SCC’s turnover (96%) and profitability (94%) and this is expected by the group to continue to be the case for the foreseeable future.

SCC UK (includes M2)

In the UK, we have had another very successful year with further growth in Specialist Computer Centres plc, following a record performance in the previous financial year.

Turnover rose by 2% following growth in our product business for the first time in several years. Whilst still removing high volume low margin activity which again fell during the year, higher value product business grew to offset that decline.

Our strong services business, led by our £50m Data Centre and Cloud operation, grew slightly during the year and starts the new year with a strong pipeline of new business in our data centre and print businesses, ready for implementation

We support key public sector service providers within Health and the Police, FTSE 100 companies, banks and a significant set of private companies including the BBC, the NHS, BAE Systems, British Airways and the National Trust.

SCC France

With 89% of turnover from our product business, EBIT margins are comparatively lower in France than in our UK operations, however returns are improving as the business grows its services operation and manages overheads effectively.

Product revenues grew by 11% to €1.2bn driven by strong performance in the public sector and with margins maintained; contribution to EBIT grew in the year by €5.8m.

Our financing solution business Rigby Capital SAS grew by 30% to €129m delivering €2.4m of EBITDA. Supporting both the financing needs of our IT operations and external organisations, Rigby Capital is well positioned for growth in the coming year.

Our customers are spread over the public and private sectors where we have established long term relationships. Our public sector business is particularly strong. Customers include: UGAP: Ministeries of Defence, Interior and Finance; Safran; Air France; Thales; Societe Generale, AXA and La Poste.

SCC Spain

Our business in Spain has been growing steadily over the last five years. In the last year turnover reached €73m, a growth in year of 7% following the same rate of growth in the prior year. Since reporting €49.4m in 2013, the business has grown by 48% over the five year period.

Most of this growth came from our product business which represents 75% of company turnover. Whilst services turnover has not grown significantly in the year our services offerings are key opportunities for the future. Ambitious growth plans are in place to grow revenues from Security and Software as well as our Cloud and Managed Service offerings.

Our customers come from both the public and the private sectors, in both of which we have seen growth this year. We have an excellent customer base in the private sector, including: Alcampo, Group Mango, Holcim, La Caixa, Carrefour, Correos, Mondragon, Iberdrola, Mapfre, Campofrio, Leroy-Merlin.

SCC Romania

Our Romanian business based in Iasi and Bacau, was established in 2006 and has a long record of successful growth and recognition excellence, recently winning the Employer of the Year award at the Regional Outsourcing & Shared Services Industry Awards 2018.

SCC Vietnam

Our operation in Vietnam was established in Ho Chi Minh City in 2017 and provides access to the skills we need to support our customer’s most technical requirements and is already providing datacentre infrastructure support to UK customers. We also have staff supporting the development of internal software solutions which are key to our operations in the UK and France. Headcount in Vietnam is already growing towards 100.

FY19 Outlook

We have been successfully growing our services business for a number of years, whilst at the same time growing the right type of product revenues and as we continue with this approach we are seeing the impact on our profitability so will continue in this vein.

Earnings enhancement will continue to take the lead over revenue growth in the future and we will continue to invest to secure our long term and where opportunities are right, to acquire other businesses if the strategic fit and price is right.

Our outlook remains bright as we continue to evolve our business responding to the needs of our customers to digitise their businesses. We will continue our strategy of growing our earnings based on the strong foundations of our Cloud and Digital Services capabilities and expect to maintain or exceed our current performance levels in the coming financial year.

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