clock • 5 min read

Your questions about how we go about compiling our annual top 100 rundown answered

Who qualifies to be in Top VARs… and who doesn't?

Top VARs is a ranking list of the UK's top value-added-resellers of third-party IT and comms, print and audiovisual solutions by revenue.

The firms in the top 100 variously brand themselves as resellers, VARs, MSPs, solution providers, systems integrators, cloud services providers and consultancies. The common thread is that they all sell and service third-party technology from leading technology vendors including Microsoft, Cisco, HP, Dell EMC and AWS, to a greater or lesser extent.

We have made a tough judgement call to omit IT services giants such as Accenture and Fujitsu Services, and datacentre/hosting providers such as UKFast, Pulsant and Six Degrees from this list, although we note that an argument could be made for including both breeds of firms.

We have also chosen to omit retailers and e-tailers which lack a significant focus on business-to-business.

How is the ranking determined?

As in previous years, purely by revenue. In the vast majority of cases, we take the revenue figure from the last set of UK accounts filed on Companies House. This may be the ultimate parent company, or it may be what we consider to be the most appropriate trading company, or companies.

In a few cases, we have used audited figures provided to us by the companies themselves that had not been filed on Companies House at the time of going to press. We have tried to be clear about when we've done this.

Although Top VARs is primarily a reflection of past performances, there are two exceptions to this.

Firstly, we have had to use estimates - based on reliable third-paty testimonies - for two large US companies that do not report UK revenues, namely SHI and WWT. And secondly, we have used runrate figures for two firms that have made transformative acquisitions in the last 12 months, namely Daisy and Apogee.

We closed the research in early to mid November, so any new sets of accounts filed since then will not have fed into the research.

Why did you use a runrate revenue figure for some firms and not others?

Several firms in Top VARs have made transformative acquisitions in the past 12 months, but we only used a runrate figure for two: Daisy and Apogee.

In both cases, we felt listing a runrate figure in the headline number was the best option because they were very large acquisitions and the acquired firms in question (Alternative Networks and Danwood, respectively) had been integrated.

In other cases, we stuck to the status quo of listing an historical revenue figure for both the acquiring firm, and the firms they acquired. This was true for Bytes, which acquired Phoenix Software in October. It was also true for Maintel and Intrinsic, as well as GCI (which acquired two firms with revenues of about £20m). In these instances, however, we have listed a runrate figure within the profiles themselves.

Why does the revenue threshold for Top VARs keep rising?

Since Top VARs launched in 2011, the revenue threshold has risen from £12.5m to £32.3m. This year it increased by nearly £5m.

There are three reasons for this.

Firstly, the firms in Top VARs are experiencing swift organic growth. This year, the average growth of the top 100 stood at 15 per cent and would still be in the double digits even stripping out acquisitions.

Secondly, every year we make a conscious effort to improve the spread of players included in the research. There are more Oracle, SAP and printer/audio-visual resellers in Top VARs than when it first started, for instance, and this year we have made an effort to add more AWS, Google and Azure partners.

Thirdly, every year more Top VARs appear on our radar that, frankly, we weren't necessarily aware of, or at least weren't aware they are as large as they are. Each December we are contacted by companies that have been overlooked, and we would encourage you to do the same if you feel your company should be in the list.

Why do you use operating profit, not EBITDA or another profit measure?

Although Top VARs is ranked by revenues, we also display an operating profit margin percentage in the heading of each of the profiles. We introduced this last year in response to calls for more focus on the bottom lines of the firms in Top VARs.

Operating profit, otherwise known as earnings before interest and tax (EBIT), is regarded as a KPI by many of the firms in the top 100, and also has the advantage of being very close to the ultimate bottom line (net profit).

We are mindful that it is not regarded as the most appropriate measure of profitability by some, however, particularly larger firms that have made acquisitions, who tend to favour more underlying measurs such as earnings before interest, tax, depreciation and amortisation of goodwill (EBITDA).

There is certainly an argument for using EBITDA, but many companies in the top 100 do not give this figure in their annual accounts. Almost all display EBIT, in contrast.

How did you rank resellers that are part of larger businesses?

There are several Top VARs whose primary business lies outside the provision of third-party technology.

In some cases, it was viable to break out a number for the most relevant division of the company in question. We did this for Capita and NG Bailey for instance (and for Civica, which finished just outside the top 100). But we didn't choose to do this for some other players where the reseller activity made up a good chunk of their overall revenues, or where it was problematic to break out a relevant figure. This includes RM, NCC Group and Telent.

Why is my firm not on the list?

We may also feel that your firm doesn't quite meet the criteria set out at the top of this FAQ. But it may simply be because we are not aware that you should be in it, so please get in touch if you've been overlooked via [email protected].

However, with rare exceptions (such as US giant WWT and SHI - who are too big for us to ignore) we are only able to include firms that file full accounts (containing a revenue and profit figure) on Companies House. For obvious reasons, we have to be able to see the relevant numbers with our own eyes.

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