SCC EMEA revenues reach £2.5bn despite “challenging year”

SCC, Europe’s biggest independent technology solutions provider, has announced its EMEA financial results for the year ended 31 March 2021, with group revenues reaching £2.5bn (up 8.4%) during a “challenging and rewarding” year impacted by the COVID-19 pandemic.

  Highlights:

• Group turnover up 8.4% to £2.5bn from £2.3bn in FY21
• Operating profit at £45.9m, up 49%; growth profit flat at £257m YoY
• Profit before tax up 55% to £44.5m
• Net assets at £196.9m, up 16% from £169m; net cash up to £390m from £310m

Group revenues grew to £2.5bn from £2.3bn in FY21, driven primarily by a significant increase in demand from SCC’s customers for software and assets to facilitate remote working in both the UK and France as a result of the global pandemic. COVID-19 particularly impacted on FY21 performance in first half of the year, with services operations reducing in volume as many businesses were unable to operate as normal. As a result, services revenue for the group has seen a 7% decline. Gross profit for the group remained stable at £257m, whilst Operating profit for the group at £45.9m has grown by over 49% compared to prior year following recovery in the second half and last quarter in the UK. James Rigby, SCC EMEA CEO, said: “FY21 has been both a challenging and a rewarding year for the SCC EMEA group. The global pandemic has inevitably impacted our customers, partners, and our employees. Financial performance for the group reflects the strength of our French business and its focus on supporting the government sector together with the speed at which, in the UK government, support was made available and management action was taken to put the business in good shape for the critical second half of the fiscal period. Overall, our businesses are robust and agile with strong balance sheets and management teams enabling us to respond to the crisis. More than ever this last year has taught us that digital transformation is a key enabler for businesses to meet the challenges of the future. Our collaborative partnering approach has been a significant factor in our financial success this year and will continue to be fundamental in helping our customers to manage their ongoing digital journeys. We remain committed to further adapting our operations to improve efficiency and developing our services so that we remain relevant to both vendors and customers. We will continue to monitor the impacts of COVID-19 and other sources of economic uncertainty. Our business remains robust and resilient, our financial strength will sustain us, and we are well prepared for future success over the coming years.” SCC UK UK operations grew in FY21, delivering a record year at £712m driven by product sales as services reduced by 10% as a result of the COVID-19 pandemic. SCC UK’s core product and software businesses performed well, along with SCC AVS, SCC’s specialist audio visual business, which delivered 3.6% growth in turnover. It has maintained gross margin at 19% compared to 21% in prior year and delivered 53% growth in operating profit before tax. The breadth of the UK’s supply and services businesses provide opportunities to support customers as their needs change in response to changes in their working patterns and investment priorities. With a strong financial performance in the current year, sound balance sheet and access to cash, SCC expects its UK business will continue to generate cash and will be able to respond to any future uncertainty having traded successfully in past recessions. Mike Swain, SCC UK CEO, commented: “The last year has been unsettling for all of us and it has been a year in which SCC has been called upon to support our customers in different ways. Although it has been difficult, I believe that we have grown as an organisation and we move forward a more cohesive and nimble company. Financially, we have delivered a solid result in challenging circumstances. Overall, turnover is similar to the prior year, with product showing growth of 5% and services a decline of 10%. Operating profit was slightly down on last year at £17.8m, a decrease of £0.3m. As we progress through the next year I am looking forward to market confidence increasing as the UK’s COVID-19 restrictions are gradually relaxed. The changes that we have made to our business this year mean that we are in a good position to benefit from the recovery. I am confident that we will be the partner of choice for our customers and our team will deliver the exceptional customer service that we are known for. Our balance sheet and cash reserves are strong and we continue to look to grow the business organically and through acquisitions.” SCC France SCC France continues to deliver the largest part of group turnover at 68%, up from 65% last year. Turnover increased by 11% to €1.9bn, driven primarily by the strong growth in the product business revenue, particularly in software. France has increased operating profit by over 100% YoY to €29m and now contributes 57% of the group profitability. France continued its transformation programme into the current year, delivering further improvements both in operational efficiency and contract profitability management. In FY21, SCC France developed enhanced consultancy services and, via its Helios web platform, is now able to support existing, and many new customers with software procurement and asset management. As software moves towards more subscription-based models. SCC Spain Profitability before tax in Spain increased by 64% to €1.0m. This was driven by stronger gross margin rate performance, combined with a management focus on overhead savings. Spain has contributed 2% of group operating profit in the current and prior year. Despite the challenging year, SCC Spain’s strategic objective remains to grow turnover to be in excess of €100m. Global Delivery Centres SCC’s Global Delivery Centres (GDC), in Romania and Vietnam, which support operations in the UK and France, have contributed £1.6m of operating profit for the group, an increase of 20% on prior year following improved operational efficiency. Headcount remained stable at just over 1,100 across both GDC territories. On SCC’s FY22 outlook, James Rigby, SCC EMEA CEO, added: “SCC’s resilient business model, based on long-term relationships and annuity services which are relevant to the needs of customers in the future, and sound financial management has enabled growth despite operating in a global pandemic. Government support protected jobs helping to ensure that we can quickly resume our high levels of service to support customers as they recover from the pandemic. Although the UK has an advanced vaccine programme and we can see customers benefiting in the near term, we are not yet in the same position in other countries and their recovery may be later. Our financial position is strong and, as the UK emerges from the pandemic, we are not dependent on the support from government. The group’s cash position is very strong as is our ability to access funds as required and we expect to continue to generate sufficient new cash in the coming period to continue to invest in the business as required to respond to the future. Despite continued economic uncertainty we are confident that our business model remains robust. Our executive teams are continually reviewing our operating models to ensure that we are able to respond in circumstances of prolonged uncertainty and changes within the technology sector.”