SCC: Blighty biz cracked open wallets in 2014, and not JUST for Windows XPocalypse
End-of-support lifts reseller's numbers, services do well too
Customers fleeing end-of-support Windows XP doom coupled with boosts in data centre hosting and managed services wins fuelled top and bottom line goodness at reseller titan SCC in the recently closed fiscal '14.
The Birmingham-HQ'd channel giant pushed up turnover for the year ended 31 March by 9.5 per cent to £1.74bn as earnings before income tax depreciation and amortisation rose 93 per cent to £32m.
In Blighty, sales growth was up 13 per cent to £751m with product and services revenues rising 13 and 12 per cent respectively. EBITDA was up 27 per cent to £17.1m.
SCC CEO James Rigby told us the local product business was flat in the first six months of the fiscal year but noted a marked improvement from October onwards, adding: "Most definitely the UK economy has lifted".
He said: "The general macro economic confidence has improved; companies that haven't invested or held back investments have felt more comfortable to release [that budget]."
This was seen in "XP to Windows 7 migration" - Microsoft shuttered support for its legacy operating system on 8 April - a trend that SCC reckons has further legs yet for another two to three quarters.
XP migrations lifted professional services at the company by 20 per cent. Customer contract gains on the professional services side included Eurostar and United Utilities, it said.
The sales engine revved up storage and networking shipments but like the rest of the industry SCC saw server units decline, with Rigby suggesting it could be the impact of virtualisation. Software was flat in the year, he added.
On the vendor front, revenues generated from sales of Lenovo and Cisco climbed 60 per cent each, the company told us.
Back in March, the company acquired managed print services firm M2, and the existing print biz at SCC is being folded into this. The buy came too late in the day to have a material impact on UK sales.
On the services side, SCC said UK data centre hosting and cloud was up 69 per cent in fiscal '14 versus the prior year. The firm has three server farms in the Midlands with 900 racks in total.
Rigby said the foundations it has laid in recent years were "bearing fruit" with wins including Gist, Aggregate Technologies, BOC, IBM, Oxford Council and the Highways Agency, it won the latter's business from Atos.
In customers with up to 10,000 seats, SCC offers full lifecycle managed infrastructure service. For companies beyond that size, the reseller lacks some reference points and is up against bulky system integrators.
On the continent, SCC France bucked the country trend to grow, going up five per cent to £846m, and it made an EBITDA of £15m. Rigby said the market was in stark contrast to the UK but reckons SCC benefited from economies of scale, being the "clear number one" reseller there.
The company recently sold off its Dutch operation to Systemax because it was "sub scale" and not the right product mix. The operation in Spain turned over $40m and made an EBITDA of £500k.
There are no plans to press the eject button on the Spanish arm because it has some "good services contracts" with a "strong focus on security and networking", Rigby added.
The call centre in Romania continues to grow, reaching 600 heads in fiscal '14, and is forecast to get to 900 by the end of this current fiscal year. ®