FY15: Strategic transition keeps SCC UK growth plans on track with DCS revenue up 87%

SCC* has announced its annual results for year ending March 2015, with Services revenue reaching £159m, up 22% and accounting for 24% of its total income.

Combined UK Operations*:

  • FY15 revenue £662m, down 13.3%;
  • Services revenue up 22% to £159m, now 24% of total revenue;
  • Gross Profit (GP) increase of 15% and margin rate up 3.7% in the year to 15.5%;
  • Share of GP from Services up 11% in the year to 55% of overall GP;
  • EBITDA up 25% on prior year to £19.4m;
  • PBT at £12.4m up 20% on prior year;
  • M2 print business contributes turnover of £27m and EBITDA of £1.6m.

*SCC plc & M2 Digital Ltd

The transition has seen dramatic changes in the underlying business and hyper growth in Cloud Delivered Managed Services (CDMS – DCS & Connectivity), as SCC moves the business away from low margin product sales.

Key to SCC EMEA’s strategy to reach £50m EBITDA by FY17 is its Services division, which saw an overall GP growth of 22% in FY15.

This was supported by key new business wins with Kier Group, Samworth Brothers, Grafton Group, Mcdonald Hotels, United Utilities, Department for Work and Pensions, and WHSmith.

SCC’s Professional Services business grew 11% versus last year, with Managed Services up 13% and growth from the new Flexible Resourcing service.

As SCC continues to invest heavily in its Data Centre Services (DCS) – most recently taking a majority share in Fluidata, the Data Delivery Network – it enjoyed another year of accelerated growth, up 87% on FY14.

DCS closes the year on £26m, with an Annualised Run Rate (ARR) of £34m. March 2015 alone saw Monthly Recurring Revenue (MRR) increase 100% compared to last year.

As SCC’s Cloud platforms enter maturity, DCS GP closed the year at 44% from 25%, with ARR closing on £29.4m, 96% ahead of the previous year.

Monthly DCS EBITDA closes 220% ahead of FY14, at an annualised EBITDA of £12m (pre-central costs).

Following SCC’s acquisition of SSE’s Tier 3+ Data Centre in Fareham and our recent 2nd phase 360 rack Birmingham investment, our total rack capacity is over 1,800 and 14Mv of power, the business closes the year on 67% occupancy and annual rack growth of 145%.

Looking ahead to FY16 for the combined UK business, turnover for Services business is expected to top £200m with Cloud Services set to close next March on £55m and an ARR of £70m.

EBITDA is estimated to grow 30% to £25m, with stable Product revenues of £500m and overall revenues of £700m.

SCC Chief Executive James Rigby said: “The business is firmly on track to achieve its 3-year target of £50m EBITDA. We now have a sizeable Services business to further our growth and margins through recurring revenues.

“Cloud Delivered Managed Services is the way forward for SCC. We have already started our next phase with a £10m investment in our own Data Centres, building additional data halls at Birmingham and Fareham facilities to increase capacity to 3,000 racks in FY16 to cater for CDMS growth of up to 60%.

“SCC has always been a company with vision and an ability to deliver. We have an exciting year ahead as we grow our Services business organically and through further investments.”

In Europe, SCC France recorded its best year of EBITDA for a second consecutive year, up 5.4% to £15.7m. Overall revenue in France closed on £812m a 3% improvement in constant currency terms.

SCC Spain increased its revenue by £8m to £48m versus FY14 – a constant currency increase of 30%, with EBITDA of £0.6m, up 123%, as it continues its own transition to a services led business.

And SCC Romania saw revenues of £9.2m, while the business delivered a 103% increase of EBITDA to £1.2m. During the year, headcount grew to 711 people at the facilities in Iasi and Bacau. During FY16, it is expected to grow to more than 1,200 people.

SCC EMEA closed the year on £1.55bn revenue and EBITDA of £35.2m; an increase of 10% over the prior year.

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