Esteem gains 14 per cent in annual EBITDA

Turnover rises to £34.7m for the year ending 30 June 2014 and EBITDA to £4m

Managed services provider Esteem IT has seen its profits rise 14 per cent to £4m on the back of increased annual revenue of £34.7m for its fiscal year ending 30 June 2014.

Joe Connolly, chief executive at Leeds-headquartered Esteem, told ChannelWeb the company is benefiting from having undertaken a journey from IT reseller to managed services provider status, following some difficult years after 2008.

"In 2008 we had a good year, then we had a bad year, because we were overly dependent on the public sector, which had expenditure curtailed. And also when Oracle bought Sun, our system sales went down," he said. "We then became dependent on ourselves."

This year would see more investment in its Citrix Platinum Partner relationship as well as with Oracle, and another 10 technical staff are expected to be added to the 240-strong headcount to further support its managed services and maintenance offering by the end of the current quarter, Connolly said.

"The transformation of the business is shown by the fact that contracted revenues now account for 52 per cent of group turnover. Our managed services base increased nine per cent in the year, a reflection not only of our success in winning new business but also of our retention of existing contracts by delivering exceptional levels of customer service," he noted.

Connolly told ChannelWeb that its "maintain, transform, manage" philosophy has been key to its success. This might be understood as a way of building on a foundation customer support contract by helping them move forward and transform their business, which could then be augmented with managed services.

"For example, Leeds Teaching Hospitals, where we have a £5m contract to manage their storage environment. We had sold them storage upfront, and transformed it so it was all in one repository. That's quite exciting stuff, and we have a number of other customers in the public sector on long-term contracts," he said.

Esteem engineers may start the ball rolling when they go in to fix an electronic point-of-sale technology for a retailer, and the customer may then come to Esteem when it is ready to transform its back office.

Last year's new business wins – such as the N8 research group HPC cluster contract based at the University of Leeds – and selection for the government's £6bn Technology Products Framework were highlights, Connolly confirmed.

"Following these positive results, and our recent refinancing deal with Lloyds Bank, we are extremely well positioned to continue to accelerate the growth of our business," he said.

Esteem focuses on the UK's mid-market and corporate sectors in Scotland as well as the north and the south of England, with a special interest in healthcare, higher education, the professions, and financial services verticals.

Customers also include Paperchase, the Nottingham Building Society and law firm Irwin Mitchell.

"We've got a few big orders (although the revenue may be in the following year's accounts) but I think [this year] we're consolidating the business and ensuring we have customer retention, which is important to us," Connolly added. "We don't have datacentres, for example, so we are not going to open datacentres. And we will continue to work with partners."

2014 marked Connolly's tenth anniversary at the company's helm.