*NEW RESEARCH* Six Degrees: Is the buy & build approach working?

Mid-market network and hosting services group, Six Degrees, has just filed its FY14 accounts for the year to end March 2014. Total turnover increased 34% to £68.9m while EBITDA grew 37% to £15m. From an organic perspective, the top line was fairly flat and the EBITDA margin stayed roughly steady at c21%.

The company is now six months into its current financial year and the patterns look quite different, reflecting the fact that no acquisitions have taken place during the period. The overall top line is on track to return to growth of 2%, while the contract base looks set to grow “high single digits”. The EBITDA margin is also moving in the right direction and is expected to increase to 24% for the year (based on a run rate EBITDA of just over £17m), due to synergies from integration work and an increase in higher margin cloud services sales.

Six Degrees was formed in 2011 from data centre player UKSolutions, MPLS provider NetworkFlow and voice services company Protel in a £60m buy-and-build venture backed by UK mid-market private equity firm, Penta Capital. It then very quickly set about building out its portfolio via a series of acquisitions (13 so far).

Penta Capital is now 3.5 years into its investment cycle, meaning that logically it could well look to exit within the next 12 months or so. It therefore seems like now is a good time to assess the Six Degrees story thus far.  

Subscribers to InfrastructureViews can read the research note here: Six Degrees: Is the buy and build approach working?

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Posted by Kate Hanaghan at '08:06' - Tagged: results   cloud   datacentres   research