Tessella continues to benefit from its unusual focus on the area where ‘science and complexity meet IT’. The privately-held provider of analytics, software services and consulting had another ‘record year’ in FY13 reporting a 12.6% increase in turnover to £20.9m and respectable levels of profit and cash generation despite the distraction of an MBO last year (see ‘Science powered’ Tessella completes MBO). In fact, operating profit increased to £3m from just £251k the year before (see Tessella reports ‘record year’). UK revenue increased by 9.8% to nearly £15m.
Tessella focuses on blue-chip clients with high levels of R&D spend and differentiates itself through its scientific skills. It’s offering services in disruptive areas like mobile, cloud computing, data analytics, next generation genomics and advanced oil and gas exploration and recovery, which is helping to drive growth. Existing clients, which tend to be very ‘sticky’, are spending more but Tessella is also winning new business – it contracted with 29 new clients in FY13 and signed its biggest ever fixed price contract, a €4m+ deal with the European Space Agency to develop a system for the Solar Orbiter mission.
Tessella concentrates on a number of key vertical sectors and all but Life Sciences reported growth in FY13. Revenues from the life sciences sector decreased slightly to £5.3m (FY12: £5.8m) as a result of restructuring within some of its major clients. In contrast, the Energy Sector had a good year with revenues rising by 21% to £5.8m, whilst Government, Space & Defence reported a 12.5% increase in turnover to £4.5m. Consumer Industries’ revenue increased by 19% to £3.1m and Archiving saw revenue increase to £1.9m (£1.1m) with the launch of a cloud-hosted digital preservation service aimed at SMEs.
This is Tessella’s third consecutive year of solid growth but we get the impression that the business is more focused post the MBO, which saw Mobeus Private Equity take a stake and Alan Gaby become Managing Director. If all goes to plan, we can expect to see further growth from Tessella in FY14.