With the PM, many of the Cabinet and 70 leading businessmen in India, the message has been more like a Love in. The statistics quoted of the number of employees of Indian companies in the UK is pretty misleading. Most of them are a result of Indian companies acquiring UK companies or, in the case of IT, winning UK outsourcing contracts. A comparison of numbers employed in those ventures ‘before and after’ would undoubtedly show a decrease.

As readers must know by now, my real concerns are about entry level jobs. Basically, Indian companies create few if any entry level jobs for school leavers or graduates in the UK. Indeed, the vast majority of entry level IT recruitment is undertaken by UK HQed companies – like BT, Logica, ARM, Sage, Autonomy  etc. Something my friend Mike Lynch has been making clear in a series of press articles recently. See Daily Mail 14th July 10.  Indian companies do practically all their entry level/graduate recruitment in India.  No entry level jobs = fewer students going to university to study IT-relevant subjects. In turn that ripples back down the education chain.

Of course, Indian companies do recruit in the UK. But their recruitment is of tasks which must be undertaken ‘on site’ or of very specialised skills. The problem is that without entry level jobs, people with those specialised skills will not be trained here. So, more and more visas will have to be issued to bring those skills in from India.

Vince Cable is very keen not to restrict the import of those skills into the UK. Something an immigration cap would threaten. But nobody seems to be talking about how we grow those skills in the UK to avoid the immigration in the first place. The Indian players MUST play a part here. If they want to be accepted as ‘good neighbours’ in the UK then they should set about entry level recruitment here too. No reason why those recruits shouldn’t be shipped to India for training/work experience.  

This week several of the major defence contractors have announced H1 results: Raytheon, Lockheed Martin and BAE Systems. Due to the nature of their businesses, it is nigh on impossible to determine the performance of these companies' IT services business in the UK – that will require us to catch up with the management teams in the UK (which you can be assured we will be doing!).

All three companies increased worldwide sales with single digit percentage growth – BAE Systems by 9% (or 7% on a like-for-like basis), Lockheed Martin by 3% and Raytheon by just under 3% (if you take out the impact of the termination of eBorders – more on that below).

Of course, total sales include products and services far removed from our IT services world (involving fighting equipment such as tanks, submarines and aircraft and their subsystems). Looking at the divisions most relevant to IT services, there appears to have been a mixed performance. Within BAE Systems, Programmes & Support (the bit that now includes Detica), saw sales increase 27%; within Lockheed Martin, the Information Systems & Global Services (IS&GS) division saw sales increase by 3%; but within Raytheon, the Intelligence & Information Systems (IIS) division saw sales decline by about 4.8% (even ignoring the impact of the eBorders termination).

Double-digit percentage growth for BAE Systems Programmes & Support division was driven by the company’s substantial involvement in ‘cyber & security services’ in government and ‘readiness and sustainment’ activities in defence (i.e. through-life support of systems). All the defence contractors are, as Lockheed Martin so neatly puts it, “refining” their portfolios of services and capabilities. The results appear to indicate that BAE is succeeding in pursuing business in areas of the market adjacent to its traditional defence equipment focus both in the US and UK. When we visited the Farnborough Air Show last week, both Lockheed Martin and Raytheon were also working hard to market their cyber security skills. Not surprising considering the words from Baroness Neville-Jones, Chairman of the British Joint Intelligence Committee, when she launched Cyber Security Challenge UK on Monday. She stated that Britain has “a talented, but small pool of highly skilled public and private sector cyber-security individuals... but... we don’t have enough... future online security professionals have to be encouraged and nurtured”.

Now, back to eBorders... both BAE Systems and Raytheon have been impacted by the Home Office’s decision to terminate Raytheon’s contract (as Detica was a subcontractor to Raytheon on the deal). The impact on Detica is unclear. However, under US GAAP, Raytheon has had to recognise in Q210 the potential financial impact of the termination notice. As a result, net sales have been dragged down by $316m in the period and income from continuing operations have been dragged down by $395m. In addition the company's ‘backlog’ and ‘funded backlog’ has been brought down by $556m. Raytheon states that it “will pursue vigorously the collection of unbilled receivables and damages and defend itself against the claims for losses and previous payments”... watch this space! It will be interesting to see if any other suppliers are willing to take on this project (perhaps one of the subcontractors in the prime role?). We suspect, though, considering some of the seemingly insurmountable legal barriers faced thus far, that the eBorders programme requirements will need to be reviewed and reshaped.

As always, it’s hard to dissect BT’s financial results to get to grips with its IT services performance. At the Group level in Q1 (to 30^th June 2010), revenues declined 4% to £5,006m and adjusted EBITDA increased by 6% to £1,399m (reported EBITDA was up 5%). The single digit percentage decline in revenues was common across all parts of the business.

In the bit we’re most interested in ‘BT Global Services’ (BT GS), revenues declined 3% to £2,007m while adjusted EBTDA increased by 110% to £130m. Much of that decline was down to a reduction in UK calls and line revenue rather than IT services. In addition, it appears the ICT services element of the BT Wholesale and BT Retail business put in a pretty good show – BT Retail saw revenues from “managed solutions and IT services” increase by 10% while BT Wholesale reported revenues from “managed network services" up by 19% to £199m. All in all, these figures indicate that the ICT services element of BT's business did better than the Group as a whole.

BT was at pains to point out in its release that the UK public sector accounts for just 10% of revenues. However, while that’s the case at Group level, by our calculations, it is reliant on UK Government for about two thirds of its IT services business. Indeed, like Capgemini (see Capgemini optimistic about recovery), much of BT Global Service’s increase in total order intake (up from £1.4b to £1.6b) is thanks to extensions on UK public sector contracts – a 2 year extension with Connecting for Health (CfH) for N3 and a 3-year extension as subcontractor to Capgemini at the Metropolitan Police Service.  As we pointed out in our write-up of Capgemini’s results, current announcements on extensions to UK public sector contracts should come with a ‘health warning’, as it’s unlikely to mean an increase in annual contract value.  To increase annual revenues from UK public sector, BT will have to think about expanding into areas that where it doesn’t currently have a footprint, e.g. take its local government BPO experience and use it to tap into potential in the central government market. Let's hope the new management team (see Changes at BT Global Services UK) quickly pins down exactly where the company wants to be playing, as now's the time to be setting its stall out.

Private sector orders in the quarter included an extension with Unilever to supply managed services in over 100 countries and a new five-year contract with Nationwide to provide managed security services.

Today, TechMarketView has published its latest report, “What needs to change in UK Government?”, based on an in-depth survey of 19 key ICT industry suppliers, including 8 of the top 20 UK SITS suppliers.

Following a fantastic response to the survey, TechMarketView’s analysis reveals that the IT industry largely supports the new Government ICT strategy, believing that change is long overdue. For example, 100% of respondents supported reform of government IT procurement, the outsourcing of back office functions and a reduction in consultancy spend. 

However, support is tinged with uncertainty over the practicalities of implementing the changes. The Government will need to go further to clarify its position before its key ICT suppliers will fully rubber stamp the proposals. In addition, it is clear that radical changes are required to the way Government functions for many of the plans to be successful. Subscribers to the TechMarketView PublicSectorViews research service can read our in-depth analysis here.

Capgemini’s Q1 press release back in May started with the headline, “stabilisation confirmed”. Today, it has upped the ante with its H1 press release headlining with “confirmed recovery”. That’s despite a 3.8% decline in revenues to Eur4.2b compared to H109 (and a 6.1% decline on a like-for-like basis – constant Group structure and exchange rates). Indeed, Outsourcing revenues were down 6.3%, Technology Services revenues were down in line with Group revenue, Local Professional Services revenues were down by 4.1% and Consultancy Services were down 9.3%. As H109 including significant restructuring costs, operating profits were up 19.8% to Eur200m.

So, why the optimism? Well firstly, sequential performance was far better. Comparing to H209, revenues were up 5.4% (1.8% like for like). In addition much of the decline was attributable, as it was in Q1, to two major contracts (TXU in the US, which was terminated, and HMRC Aspire in the UK, which was ‘renegotiated’). As a result the UK’s revenue decline compared to H109 was 5.0% while the US suffered a 3.9% decline (Benelux continued to be the worst performer – down 12.2%). Outside of these two contracts outsourcing revenues increased by 4.0%. In the US, there also seemed to be a particular improvement in activities in technology services for the financial services sector, where revenues experienced a “veritable bounce”, up 30%.

Looking ahead, Capgemini points to improved bookings, with volumes up by 14% like-for-like compared to H109 (and 32% in Q2 alone). Mind you, much of this increase was down to the “early renewal or extension of several major outsourcing contracts”, which pushed booking volumes for the outsourcing business up by 37%. Important to remember, therefore, that the early renewal or extension has probably only been possible alongside a drop in the annual value of those contracts for Capgemini (so increased bookings won’t necessarily translate into revenue growth). In the UK, Capgemini’s Metropolitan Police Service contract is a case in point (see Capgemini – MPS contract extension in exchange for cost savings).

One further point to note: Capgemini states that the offshore headcount (including nearshore) now represents 34.4% of Group revenues at 32,869. Looking back, the company added 2,700 employees in offshore locations in Q1 and planned to add another 3,500 in Q2. By our calculations, it is somewhat short of that figure, adding 2,169 employees in Q2. We’ll find out more in due course.

There were a whole raft of US software company quarterly results last night. Basically, Citrix, (revenues up 17%), Concur (up 20%), and Taleo (up 14%) all beat Wall Street consensus estimates on revenue and profits. While BMC (up 2%) and Symantec (flat) were below. The first three are all, in a sense, Cloud companies (one Virtualisation, the others SaaS). The other two aren’t – though they are moving that way. There’s a message here.

Oh, and we forgot to mention yesterday that Adobe is buying Swiss ECM (enterprise content management) company Day Software to round out its enterprise software portfolio, for $240m. Day has been around for a fair time (18 years, in fact), but it has recently been portraying itself as a Cloud software vendor. We’re a bit sceptical about that but it can’t have hurt – Adobe’s offer represents a whopping 67% premium to Day’s previous 3-month average, and 10x trailing 12-month revenues. It did however grow 47% in the first half of 2010, year-on-year. And Adobe expects the deal, which should close in 4QFY10, to be accretive in FY2011.

Software AG, Germany’s second-largest software company and a top 25 software supplier to the UK market – particularly significant in the public sector market here – has released its Q2 results. Thanks to last year’s acquisition of IDS Scheer (which has almost closed: it’s a very long process) revenues for the half year were up 51%, to €518m. Without IDS, growth would have been a rather more modest 4% (5% in Q2). Due to the much-larger services portion following the IDS integration (now 40% compared to 25% a year ago) EBIT margin fell from 24% to 20% but rebounded to 22% in Q2. That’s pretty good for a mixed software/services business, and eps was up 20%, to 2.29. It seems the integration is going well.

The main organic growth driver was SWAG’s webMethods middleware business: up 14% to €170m, with (new) licence growth of 31% in the second quarter. Speaking with SWAG earlier this year, we learned that UK public sector customers are some of the most enthusiastic adopters, using webMethods to build secure and robust distributed systems spanning the world, eg for visa applications. SWAG’s historic ETS (Adabas) business continued its slow decline (down 3%, but up 8% sequential and very profitable); it is still substantial and retains some important clients, eg DVLA.

Declining revenues and deeper losses in its BPO business marred an otherwise impressive growth quarter for HCL, the last in its FY.  HCL recorded a stunning 9.1% qoq revenue growth at constant currency (ccy), comfortably above its larger peers. This brought FY revenues to $2.49b, up 28%, including the effect of its acquisitions of Axon and Liberata Financial Services. As with peers, growth in Europe, at 4.2% qoq (ccy) lagged other regions, leaving Europe representing just under 25% of HCL’s group revenues, almost 4 points down yoy. Q4 Margins wer 90bps down qoq to 15.3%, 270bps lower yoy. IT services attrition rose nearly 2 points to 15.7% (LTM). There’s much stuff to pour through and  I will bring you more later.

After returning – just – to organic growth last quarter, after several quarters of decline (see Temenos returns to growth), Swiss banking software provider Temenos today announced some real growth. With figures that will give rivals such as Misys pause for thought, it announced that revenues overall were up 22%, to $100m; like-for-like (excluding currency effects and acquisitions) growth was a still-impressive 11% year-on-year. More important perhaps as a pointer to the future, reported new licence growth was up 26% and like-for-like licence growth was +19%.

On the conference call, CEO Andreas Andreades was keen to emphasize that the order pipeline was substantial too, and building. For the year as a whole, the company is guiding for 6% total growth, like-for-like, with 12% licence growth.

It looks like Patni rather missed guidance for Q2 (to 30^th June), as revenues came in at just $168m, shy of the $171-172m management were hoping for. Operating margins also fell, down 220bps qoq to 18.8%, though nearly 4 points higher than in Q209. Europe still proved troublesome, with revenues (as reported) down 13% yoy and qoq to $20m, now just 12% of the total. Attrition (LTM excluding BPO) jumped to 21.5%.

The only bright spot was the announcement that Patni had extended its relationship with UK BPO player, Serco. This is an interesting relationship, and one that goes back to 2003. I am speaking with Patni EMEA CEO, Derek Kemp later in the week and will bring you more afterwards.

Sage issued its Q3 IMS this morning, which takes about a page to tell us nothing we didn’t already know. ‘In line with expectations’ is the order of the day, though the company does hint tantalisingly at “improving organic growth trends in our third quarter” despite an uncertain economic outlook.

Much more interesting to us is that the word on the street is that Sage’s bid for Italian TeamSystem (see Will Sage bid for TeamSystem?) should come to a head by the end of this week. Apparently Sage and a couple of PE firms are in the running. But the bidding war with Unit4 for Teta (Sage concedes over Teta – where next?) shows that even though it’s been repeatedly castigated for lack of growth, Sage is determined not to overpay for an acquisition according to its own metrics. Quite different to, say, Oracle. We hope to hear something more official (or unofficial!) very soon.

Despite a 5% revenue increase in its BPO Medical business in H1, Atos Origin UK was unable to keep ahead of last year, reporting a 3.6% organic revenue decline to €442m. In fact, it seems the business reversal accelerated slightly in Q2, given that the Q1 revenue decline was 2.4% (see Subdued 2010 start sees France lead UK at Atos). UK first half margins held steady at 8.2% yoy, though this was almost 1 point down on FY09.

Across the group, revenues declined by 4.6% like-for-like, to €2.49b, with margins improving 140bps to 6.0%, up 30bps on FY09. France was essentially flat, Benelux ‘improved’ to a 11% decline, Germany/CEA fell by 16% and Spain by 10%.  None of Atos’ traditional business lines grew other than BPO Medical, with consulting the worst, as expected, down 17% and now running at a loss. Oops! However, High-Tech Transactional Services (HTTS – nee Atos Worldline) grew by 2% and now represents 20% of group revenues. HTTS is also Atos’ most profitable business line, with near-16% margins, up over a point yoy.

Offshore (including nearshore) headcount has risen by 9% snce year end to some 5,500 FTEs, of which 70% are in India. This brings the offshore mix to 11% of group headcount, up a point since year end. Still a ways to go.

Atos Chairman and CEO, Thierry Breton, is holding to his FY guidance, expecting revenues to decline in 2010, but less than the 4% fall in 2009. He maintains his ‘ambition’ to improve margins by between 50 and 100bps in 2010.

I’ll bring you more after my usual fireside chat with Atos UK CEO, Keith Wilman.

Anthony’s review of Misys’s results yesterday (‘Debt free’ Misys ready for game of two halves) summed things up neatly. But the results briefing yielded some interesting additional pointers to Misys’s future. First, the Open Source Solutions experiment has now made it onto the results scoreboard, with real revenues from two reference customers. Second, the company really is bullish about BankFusion, but the impact on the numbers won’t come through till the second half of next year. A major constraint is apparently its ability to roll the systems out, and it appears to be heavily dependent on partner HCL in this. More partners needed?

Misys’s banking rival Temenos reports its Q2 later today. It should provide an interesting counterpoint to the Misys numbers. Meantime, TechMarketView Foundation Service subscribers can read more of our analysis of Misys results in UKHotViews Extra, here.

Following my HotViews article – IDOX votes for electoral management services business – I had a call from Richard Kellett-Clarke, IDOX’s Chief Executive. He wanted to allay my concerns over IDOX's acquisition of Computershare Electoral Management Services (Strand Business Systems). There is logic behind the move but IDOX won't have an easy ride competing for market share. Following our discussion, subscribers can read our detailed analysis in HotViewsExtra.

It’s bizarre, isn’t it, when the only two major tech indices to march forward In Q2 were those which most perceive as the least ‘exciting’: IT hardware, and Fixed Line Telecom. All the other major indices went south, though UK tech did better than both the FTSE 100 and Nasdaq. The reversal took a lot of the steam out of the FTSE SCS (software and computing services) index, which fell by 8% in the quarter, ending June now ‘only’ 29% higher yoy and just 5% up ytd.

You can read the rest of our analysis of the UK software and IT services quoted sector, including the Top 20 Rising Stars & Blazing Comets, in the latest issue of IndustryViews Quoted Sector, available to TechMarketView Foundation Service clients to download right now.

After a pretty miserable first quarter, business picked up for Unisys in Q2, albeit once again led by product sales. Services revenues grew by 5% qoq to $911m, though still 7% down yoy. Product sales raced ahead, up 14% qoq to $145m, 56% higher yoy (excluding divestments). As we have said many times before, Unisys seems to operate in a parallel universe!

Services operating margins stood at 6.0%, up 140bps qoq but 140bps lower yoy. Product margins were a stunning 27.4%, double the prior quarter; products lost money in Q209.

I’ll be speaking with Unisys UK MD, Rob Chapman soon and will bring you more local colour and movement then.

The most outstanding feature of European tech M&A activity in H1 10 was the 41% increase in software deals (in yellow), according to the latest data from our good friends at Regent. Executive chairman Peter Rowell observed that "large, cash-rich software companies are seeking to fill out their product portfolios by acquiring smaller software developers that may have strong product offerings but weak sales and marketing capabilities". In contrast, IT services acquisitions are holding firm, with strongest interest in suppliers offering vertical solutions, and outsourcing/managed services.

European tech deal activity was about flat in Q2 compared to Q1 though aggregate deal value was 8% higher. UK in particular saw a 12% increase in purchase transactions. However, valuations eased in the quarter, following the trend in the quoted sector. IPO activity was up, with no fewer than 12 in Europe, though London – the IPO bellwether – saw only one.

We’ll be delving into the detail on the UK software and IT services M&A scene in the next edition of IndustryViews M&A.

In stark contrast to the woes of suppliers focused mainly on the UK educational IT market, Promethean World, a provider of interactive learning technology, has delivered a strong first half performance thanks to global demand for its systems. Revenues for the six months to 30 June 2010 are up 35% to £122.4m (H109: £90.7m) according to today’s trading update.

Demand appears strong across the business - Promethean reports 35% growth in interactive display systems revenues in the first half (to £103.2m) and 32% growth in learner response systems (to £19.2m). What is more, it has managed to increase the average selling price of both sets of products by selling a higher proportion of the feature-rich equipment. Yesterday’s acquisition of SynapticMash – a US-based educational software start-up – also bodes well for future revenue growth. Its software complements Promethean’s learning response system and there appears to be a good fit between the two businesses.

Shouldn’t the acquisition be chosen to suit the strategy rather than the strategy be altered to suit the acquisition? IDOX, the supplier of software and services to the local government market, has announced the acquisition of Computershare Electoral Management Services Limited (CEMS) – which trades as Strand Business Systems - for a total consideration of £4.4m. Strand is to be renamed Strand Electoral Management Services Limited.

The acquisition sees IDOX retain its focus on the local government market, but is something of a departure from its previous “land and property”-focused ventures. Indeed, the announcement states, “the acquisition broadens and strengthens IDOX’s leadership in the Land, Property and People markets”. We’re not quite sure what’s meant by the ‘people’ market but we assume that’s where Strand comes in. Strand provides electoral management software and services and supplies 116 local authorities, covering about 30% of the UK electorate. Its revenues in the year to 30^th June 2010 were £1.6m and it achieved a pre-tax profit of £0.8m. Cash in the bank stands at £1.2m. According to IDOX, the acquisition will be immediately earnings enhancing.

We can understand why IDOX has chosen to expand horizontally – it sells its planning software to 80% of local authorities to there is limited scope for growth in that business. However, it’s questionable whether electoral management was the right way to go, or whether this has been more of an opportunistic move. Looking at the history, Computershare only completed the acquisition of Strand Business Systems two years ago. Back then, Strand had 112 local authorities on its books. So it’s only added four authorities since 2008. In 2008, Computershare optimistically stated, “every single one of Strand’s clients stands to benefit, in the very near future, from greater investment in staff, systems and processes, as well as a wider technological and service base”. IDOX would be hard pushed to claim the same today. The question has to be ‘how high on the new government’s agenda will electoral modernisation be?’ We doubt it’s something keeping Mr Cameron awake at night. However, as with anything in UK public sector, the trick will be for IDOX to attract new local authorities by proving they’ll get a return on investment within 12 months.

I will leave it to my learned colleague, Philip Carnelley, to flesh out the detail of Misys’ FY results after this morning’s briefing, so I will just brush over the highlights. First, Misys is now at zero net debt (yeah, I know that’s not the same as ‘debt free’ but that makes a better headline). Second, as previously announced, when the Allscripts divestment goes through (see Misys to become ‘half the man it used to be’), shareholders are expected to get a $1b windfall. Short pause for a hymn of praise to CEO Mike Lawrie.

But it behoves us to take a closer look at Misys’ two remaining businesses, which still leave Misys as a game of two quite differing halves. One half, the Treasure & Capital Markets (TCM) business seems to be recovering, with revenues up 9% to £180m and operating margins up 3 points to 23%. Order intake is up 41% to £112m (including services) and ASP orders are also up 41%, though we don’t know yet from what base (suspect small).

But it’s a completely different picture for the Banking division. Revenues down 14% to £162m, orders down 15% to £83m, and operating margins fell a point to 19%. The brighter news was that Misys scored 9 new orders for its BankFusion suite in H2. We saw a demo of the product and it really does look good. But as Lawrie notes, “opportunities for new sales of traditional core banking systems have been limited”, so the key to selling BankFusion in mature markets is through modular ‘bolt-ons’ rather than complete replacement systems.

Lawrie is sticking to his two-year growth (5-8%) and margin (17-20%) predictions, but one wonders if before then Misys will become two games of one half each – or somebody else’s game altogether.

Derivatives trading & exchange software vendor Patsystems has released its interim results showing 6% growth, largely organic, to £10m for the half year. Adjusted pre-tax profit rose 37% to £1m, though reported operating profit halved as H109 hedging gains (nearly £1m) turned into losses (£291k).

The revenue growth was – unusually at this time – strongest in Europe, with 25% growth, in part because of the TurkDEX contract we remarked on earlier this year (Patsystems' Turkey success).  (See SAP's Q2 results this morning for a more "normal" picture of European weakness). Asia too was up a pleasing 16% but the picture was spoilt by a 20% fall in the US. CEO David Webber explained that this was due to a couple of major clients going out of business (one was Lehmans) as the company is heavily dependent on recurring revenues. Other than those, business was essentially flat in the US but still not great compared with other regions.

Looking forward, the company is putting great hopes on its XConnect “ASP” (application service provider) business: the provision of hosted systems to clients, something we would call Cloud computing or SaaS. (We advised Webber to sprinkle the word Cloud around more often in his marketing and PR – ASP seems so 1990s, as a term, even if it is an accurate description.)

Still a very small portion of revenues so far, the company is rapidly building out its Cloud capability with data centres in Tokyo and Hong Kong so far, Sydney, Singapore coming very soon, London, the US and Sao Paolo in the pipeline. (The company absolutely needs to provide very low latency and resilience, hence the number of data centres). It has a number of clients signed up for its ASP services Tokyo, Hong Kong and Sao Paolo. Without being experts on derivatives trading systems technology, it seems like Patsystems is making all the right moves. We expect to see more in the future.

SAP has released its Q2 results showing evidence of a continued rebound from the dark days of last year. Last quarter’s licence growth wasn’t a blip. Driven by a real rebound in the Americas, it posted a 17% rise in new licence fees, and overall a 14% rise in maintenance fees, to give total software revenues of €2.3bn, up 16%. Services were essentially flat, at €600m, giving overall growth of 12%. That said, currency had a big impact on its results as the euro continued to fall against the dollar. At constant currencies, new licences, heavily skewed to the US, were up a more modest 5% and support fees up 8%. Subscription (SaaS) fees, while still relatively small, at €95m, were up 30% (26% ccy) even before the roll-out of its SME-oriented SaaS product, Business ByDesign, gets underway in earnest, starting next week.

This is a solid result from SAP and much better than this time last year, but it’s not all great news. SAP, like many companies, is finding the US and Latin America by far the healthiest and most fertile territory for new projects. Even at constant currency, new licence sales jumped 40% in the Americas, yet plummeted 12% in EMEA and 6% in APJ. Overall, its huge maintenance fee stream smoothed the numbers – including the much argued-about Enterprise Support agreement (see SAP backs off on support price rises), which the company said the majority of customers were “endorsing”. But even so, while Germany was up 9%, and the Americas at 11%, the rest of EMEA fell 3%.

The company also announced that it has completed the tender offer for Sybase following the EU’s approval last week. For the time being Sybase will operate as a separate company under former CEO John Chen’s leadership – news which will comfort customers and the markets. A new joint strategy for Sybase and SAP will be unveiled while Europe’s all on holiday in mid-August.

HR SaaS provider SuccessFactors has released its Q2 results showing 27% growth – organically – to $47m. Growth will probably accelerate next quarter as it recently closed two acquisitions – a social software company CubeTree, and Inform, an analytics/workforce planning software company (SuccessFactors buys Inform to cap the year). It has raised its year-end guidance to c$200m – 30% growth, including the acquisitions. However it still isn’t showing a profit: this quarter operating losses were $4m (2009: $2.4m) as it goes for growth not profits.

HR is following CRM as one of the most fertile areas for software as a service (SaaS). As well as SuccessFactors, the US has Taleo, another high-profile SaaS vendor offering ‘talent management’ and Concur (travel and expenses). UK companies are starting to respond: for example Bond International now has around 11% of revenues from SaaS, and Allocate is working towards as SaaS strategy internally and with its recent acquisition of Dynamic Change (Allocate adds SaaS expertise). It’s a broad field but it seems clear that the most successful companies are going to be those who ride the SaaS wave. Those who aren’t on the way should start now.

Writing Facebook 500m last week set me thinking on how quickly the social media scene has developed. I know there are a number of readers who were present at my ‘Power to the People’ presentation for the Princes Trust in 2007. 

Facebook had only just been opened up to everyone.  I asked my audience who had a social network profile and only three hands went up. My eulogy about the effect that social media was going to have on all our lives – and on the enterprise in particular – was greeted with some bewilderment. Indeed, I got the feeling that many in the audience thought I was either mad or a pervert (maybe even both…) There was a majority view that such things were only for ‘young people’ and would never go mainstream.

Oh how very wrong they were. For more on how social media is now mainstream read my post on HotViews Extra. Only available to Foundation Service clients.

As our rankings have continually shown, business intelligence software giant SAS Institute seems to carry on almost regardless of the economy, growing for 35 straight years, up 15% in 2007, 5% in 2008 and an admittedly modest 2% in 2009 (software sales up 3%), to $2.3bn – more than double its level a decade ago. The BI vendor has a very loyal customer base and a recurring-revenue focused software rental model which has served it well. We estimate that it’s around the 15th biggest supplier of software to the UK market.

SAS applications are based on, or created using, a SAS-devised 4GL. In recent years a small Hampshire-based company called World Programming (WPL) spotted an opportunity to use technology it had developed to create and sell tools to run applications written in the SAS 4GL on mainframes and Windows systems. These tools are rather cheaper than SAS’s own, so we understand, though we don't know how they compare for functionality and performance. So while WPL is something of gnat on the face of the giant, SAS didn’t take kindly to this incursion into its territory and took WPL to court to protect its IP.

However last week the High Court in London did not directly confirm SAS’s claims of breach of copyright (other than in instances referring to a support manual), but rather referred them to the European Court of Justice, for that court to give its interpretation of the directive at European level – which apparently could take about 3 years(!)  The interesting general point at issue seems to be whether emulating the function of the SAS tools in interpreting the language specification is a breach of copyright if none of the original source code was used or copied. The applicable law is a European one – the “European Software Directive” – and other software developers operating in Europe will be watching with interest to see how what decisions are eventually made at the European level as they could affect their ability to profit from their IP. 

So WPL lives to fight another day – truly a Little British Battler. We watch with interest to see the final outcome.

It was a pretty woeful quarter for telecom-focused Indian SI, Tech Mahindra. Profits fell 20% yoy in Q1 (to 30^th June), slashing operating margins to 18.5% (Q1 09: 25.5%). Revenues declined by 3% qoq as reported, to $251m. Tech Mahindra chairman Anand Mahindra reported “prolonged decision making cycles at key customers,” adding, “We believe this to be temporary...”. Number one ‘key customer’ (and shareholder) is of course BT. Judging by BT's woes, I wouldn’t be betting a huge amount of dosh on precisely how ‘temporary’ Tech Mahindra's setback will be.

Given that the UK is the regional leader in outsourcing, any weakness in the market is sure to pull down the numbers. And that’s exactly what happened in Q2, according the outsourcing advisors TPI. Indeed the EMEA outsourcing market was 21% lower in Q2 than the prior quarter, against a 14% decline in worldwide commercial outsourcing deals, as measured by TCV (total contract value). This left EMEA outsourcing TCV down 6% in first half compared to H1 09.

One of the more curious trends that TPI spotted was an increase in combined ADM (application development & management) and IM (infrastructure management) deals. Previously, as indeed was the received wisdom, clients were multisourcing major deals and appointing ‘best of breed’ suppliers for each activity outsourced. More recently though, it appears that the attraction of making bigger savings quicker has enticed CIOs to bundle services back again. Good news for full-line services players from all walks of life.

TPI had also been taking the pulse of CIOs on cloud computing. Fewer than 20% were actually in discussion with suppliers on cloud, and this was mainly around Infrastructure as a Service (IaaS), particularly around virtualisation. In other words, cost cutting is still way up on the agenda.

The outlook for outsourcing deals for the rest of the year was distinctly muted, with TPI expecting the market to make a slow and uneven recovery.  That sounds about right to us.

When we published our inaugural TechMarketView UK SITS (software and IT services) rankings last summer, the Top 20 players had seen headline revenues grow by 8% in 2008. In 2009 the Top 20 saw revenues decline by 1%! Such was the parlous state of the market.

But as almost every player was affected by the downturn, there was actually very little change in the rankings. HP retained its almost unassailable lead at the top of the charts, with IBM and Capita holding on to second and third spots. Other than Capgemini and Fujitsu trading places, the rest of the Top Ten maintained their rankings.

But will the picture be the same next year? We very much doubt it!

To see the full Top 50 rankings, and our opinion on the prospects of the leading players, just download our new CompanyViews UK SITS Rankings report. Of course, you have to be a TechMarketView Foundation Service client to do so, and Puni Rajah (prajah@techmarketview.com) would be happy to tell you how to become one.

Wipro’s new European head, Jeffrey Heenan Jalil, has just brought on board his first top management recruit since taking the reins in May, appointing Ian Ordish to head up Technology Infrastructure Services in Europe. Ordish, who started with Wipro last week, was one of EDS’ top outsourcing managers, and was part of the team which won the BP European Data Centre business in 2008. Prior to his time at EDS, Ordish ran Loudcloud’s EMEA managed services business.

This is a significant hiring, as it clearly signals Heenan Jalil’s aim to build out Wipro’s infrastructure capability in Europe. Just last week, Wipro signed an agreement to take over the ownership and management of Citibank’s data centre in Meerbusch, Germany, which will become Wipro’s first data centre in Europe. Wipro acquired Citibank’s Indian IT captive, Citi Technology Services, in Dec. ’08 for $127m, linked with a $500m/6-year outsourcing deal. A year earlier, Wipro acquired US-based infrastructure outsourcing firm, Info Crossing, for $600m.

Wipro is certainly building up its local talent in the UK. Last August they recruited Fujitsu top consultant Roger Camrass to run their European consulting group (see Wipro Europe scoops top Fujitsu consultant).

Prompted by a near-40% rise in its share price this morning, telecoms billing vendor Intec has confirmed that it is in “highly preliminary discussions with a third party which may or may not lead to an offer.” Intec’s market cap today reached almost £250m.

Over recent years Intec – which competes with much bigger firms including Amdocs and Oracle – has found favour in its markets and improved its operational performance considerably. But earlier this year, a profit warning (Intec sees new weakness in emerging markets) sent its stock price crashing 38%. Subsequently at its interims in May, it reported PBT down 41% giving a margin of just 7%. Intec particularly cited price pressure and an India-based competitor, Subex, as well as clients' reluctance to close deals or propensity to scale them back.

We would be interested to learn whether the third party is a trade buyer or PE firm.  If a trade buyer, we can think of several potential candidates. Intec has been courting major services companies to extend its reach – its biggest competitor, Amdocs, is much more of a services-led, solution sell – and Intec recently signed an agreement with CSC. Perhaps one of those SI companies sees better prospects from an in-house operation than partnership. Another possible might be SAP, which in truth remains focused on its manufacturing heartland; a better reach into Telecoms would do SAP no harm and improve its competitive position against Oracle, to go alongside its Highdeal acquisition last year.

Either way, we think Intec has pretty solid business prospects, though with some difficulties around profitability and closing business in the current climate. Something it could usefully do is increase its messaging around Cloud – not so much by converting more of its business to Saas (though it could do that too) but rather by seeking to exploit the opportunities of Cloud services billing amongst its clients – something Amdocs for one is promoting quite heavily. Being more closely linked to the move to Cloud services would, we think, go down well with investors. All told, this news certainly puts the company ‘in play.’ But it would be a rather better buy at yesterday’s share price than today’s!

RM says underlying trading expectations for FY10 remain unchanged despite the government’s freezing of the Building Schools for the Future (BSF) programme. But the educational software and services supplier anticipates exceptional costs of £1.5m in the second half. This will cover restructuring costs and all previously capitalised bid costs on the six BSF contracts that had reached preferred bidder stage but will now be cancelled (with the possible exception of a few ‘sample’ schools). We must also remember that because of the seasonal nature of the business the final quarter accounts for the vast majority of the Group’s profit, so the overall picture for 2010 could yet change.

The real effects of the stopped BSF projects on revenue are expected to be felt from FY12. When the government put the brakes on the programme, RM had reached financial close on 14 projects, it has since also reached financial close on the deal with Stoke-on-Trent City Council (see here). These 15 projects will continue and represent revenue of £272m, of which c£60m has already been recognised. However, the six BSF projects on which RM had reached preferred bidder status are unlikely to continue. These were worth at least £167m to the company and the majority of the business from these projects was expected in FY12 and beyond. As a result, all of the BSF school deliveries expected in FY10 are likely to go ahead, but only 80% in FY11 and less than 40% in FY12.

To quantify the true cost of the lost BSF business to RM we’d also need to include those deals on which it was bidding that hadn’t reach preferred bidder status when the programme was put on ice. What we do know is that RM expensed BSF bid costs, net of contributions from construction partners, of £3.9m in FY09 and that net BSF bid costs in FY10 had been broadly similar. We also know from today’s IMS that RM’s total net debt has increased by over 50% over the last year to £22.1m at the end of June (30 June 2009: £14.6m).

While we can expect even greater clarity on the financial impact on RM over the next few months, it could be some time before we know what will happen to capital spending in the UK education sector – the government’s review is not expected to report until the end of the calendar year. In the meantime, RM now accepts that pressure on local education funding will affect school budgets and present challenges for the company’s UK business in the years ahead.

Document processing software vendor Kofax has released a year-end trading update telling of a strong year in software but a continued decline in its hardware business. Consequently total revenues are expected to be c$340m (the company has started to report in US dollars since last year), with software revenues of c$214m. It depends what currencies you measure in, but converting that back to sterling we think that’s as much as 16% growth in the year, with a 28% growth in software revenues. That’s a strong turnaround from last year (8% decline, at constant currency) but includes a contribution from the 170 Systems acquisition so that’s not all organic growth.

In revenue terms, the hardware business has fallen from 43% last year to 37% of total this year. While the decline in the ever-less-strategic hardware business was expected, and in truth is seen as inevitable on an ongoing basis, the company reported that earnings in this area fell faster than expected due to deteriorating profit margins. We have highlighted many times how declining margins remains a factor in most hardware-driven businesses, from servers to netbooks, as high competition and innovation combine with a still-depressed economic environment, even where volumes increase. Kofax is taking a small restructuring charge in that area – $2.5m – for reorganisation and redundancies, to give $1.5m pa savings going forward to improve profitability. Nonetheless, the company ended the year with cash balances of $55m, as cash generation was “stronger than expected.”

July seems to be the month for UK stocks to cross the Atlantic, with the announcement that hosting company, Telecity, is to launch a sponsored ADR (American Depository Receipt) with Deutsche Bank. The ADR will in effect supersede their recently launched Citibank-run unsponsored ADR. ADRs allow investors to trade stocks in US dollars, but may trade at a premium or a discount to the ‘native’ stock. This follows the announcement a couple of weeks ago that UK-based but US-focused healthcare software play, Craneware is to launch an ADR (see Craneware moves closer to US investors).

US investors already hold around 40% of Telecity’s stock, and the company sees the move more as a measure to gain greater insight into its investors. Companies with unsponsored ADRs have basically no visibility of its holders. Telecity operates purely in the UK and Europe, though hosts regional kit for a number of high profile US clients, including Facebook and Toys’R’Us.

Bumper week for TechMarketView in the Press

Our comments on Sage failing to recruit an outsider as CEO, particularly Anthony Miller’s quote “Surely what Sage needs now is a highly disruptive transition!” were carried throughout the world on BBC News, Reuters, Financial Times et al. Probably didn’t win us too many friends at Sage but that has never really influenced our views in the past either.

Tola Sargeant’s comments on the effects of the BSF cutbacks are almost too numerous to mention. Try these in Computer Weekly or ComputerWorld. Georgina O’Toole’s comments on the cutbacks to be inflicted by Francis Maude also received much comment. Eg CIO Network and NetworkWorld.

The bumper week ended with an excellent full page article by James Ashton in the Sunday Times – On Her Majesty’s Shrinking Service. This exposé on the ‘fortunes’ of the outsourcers under the new Coalition regime had some fine quotes from our Anthony Miller. Unfortunately these are forever hidden behind the Times ‘paywall’.

Bumper week for HotViews

Friday’s edition of HotViews was something of a record – 15 separate posts. That’s 830 posts in 2010 YTD and now around 3000 in the archive.

The Hotviews archive really is the most valuable repository of knowledge and views. We might be a bit biased but we never do anything without searching the archive for past views on a company or topic. Hugely valuable and only available to our paying Foundation Service clients.

Bumper week for HotViews Extra

HotViews Extra is emailed in the afternoons and contains longer, more considered posts on the results or events of the day. This week’s HotViews Extra posts included Capita, a roundup of US software company results and an in-depth look at the non renewal of Microsoft’s enterprise deal with the NHS.  Again, HotViews Extra is only available to our Foundation Service clients.

Bumper week for new TechMarketView research

As if that isn’t enough, the week ahead sees the publication of three MAJOR new TechMarketView reports in three of our major streams – MarketViews, SoftwareViews and PublicSectorViews. More details as they are published but remember these are only available to our Foundation Service clients.

To ‘join the club’ – and our client list now really is the ‘creme de la crème’ - just email prajah@techmarketview.com.

I see my old ‘mucker’ John O’Connell has been appointed Chairman at Helveta Ltd – the provider of supply chain management software CI World. This follows their £5m fundraising completed in May – in which I assume John invested.

I’ve known John for many years as the founder of Staffware in the 1980s. He sold it to Tibco for $260m in 2004. So John is pretty well qualified for the Chair at Helveta. Indeed John wrote a book on BPM and asked me to write the foreword – which I readily accepted on the proviso that I didn’t have to read the book…

Since selling Staffware, John has been involved in several ventures – of varying success! I’ve known him best in the last decade as one of the founders and patrons (with me) of the Prince’s Trust Technology Leadership Group. Great guy.

I do sometimes have to pinch myself when I read “Amazon sales jump 41% YoY, profits soar 46% to $207m but misses Street expectations so shares slump 15% in after hours trading”. Problem is that everyone has such high expectations for Amazon. It’s not so much revenue growth that worries the analysts, it’s costs and profits.

Firstly they are spending a fortune building both new warehouses for the physical stuff and new data centres for their Cloud computing services ambitions. Secondly, they have had to drastically reduce the price of their Kindle ebook reader to take on the competition from the iPad. Although Amazon are now selling ebooks for the iPad, as I said earlier this week they are ‘competively priced’ with obvious margin implications. BTW, it looks as if Apple sold more iPads (c3.3m) in the first couple of months than Amazon has sold Kindles in the years since launch (c3m). Thirdly, Amazon makes c50% of its revenues outside the US. So the negative move in Euro/$ exchange rates hits – and that just adds to the fears of the effects on Amazon of a Euro consumer spending slowdown.

This all reminds me of a conversation I had with TechMarketView’s  Managing Partner, Anthony Miller, some years ago when he contrasted how the views of industry analysts (like us) contrasted with stocks & shares analysts.  “Richard, you look at companies as businesses, they look at companies as stocks”. I think Amazon is a great business. But Amazon is trading on what the FT describes as “a heroic 42 times prospective earnings”. Ie nothing short of a phenomenal performances, quarter after quarter, can sustain that.

In a perfectly timed trading update in the light of the news on Raytheon (see Home Office sacks Raytheon from e-Borders), government, defence, space and media SITS supplier, SciSys, said it “remains cautious about the outlook for the second half of 2010 and for 2011 until the outcome of the UK Government's public expenditure review and the Strategic Defence and Security Review becomes clearer”. Its first half (to 30^th June) is 'in line' and the business is on track – so far – to make its FY numbers.

The news wires are buzzing with reports that the Home Office has terminated its e-Borders contract with US-based Raytheon allegedly because “critical parts of the program are running at least 12 months late”. The Home Office was reported as saying that the Home Secretary "has no confidence in the prime supplier of the e-borders contract, Raytheon, which since July 2009 has been in breach of contract." Raytheon is the programme manager and systems integrator on the deal, with Detica (now part of BAE Systems) providing specialist analytics tools.

More later, but TechMarketView PublicSectorViews subscription service clients can read our incisive assessment of the UK defence contractor market, and our critical analysis of its key suppliers including Raytheon, in our recently published report, PublicSectorViews - UK Defence Contractors. Contact Puni Rajah (prajah@techmarketview.com) if you want to find out how to subscribe. I mean, really, if you are a software and IT services company doing business with the UK public sector, how can you not need our research?

Many commentators – including ourselves – have noted that Microsoft’s stranglehold on IT is being loosened as the rise of mobile and cloud computing changes the landscape and makes network-dependence the key, not platform-dependence. Apple, Google, and others are all making inroads.

But we would never underestimate the behemoth of Redmond. The roll-out of Windows 7 in the last FY enabled it to report record revenues, operating income and EPS for FY2010. Q4 revenues were up 22% to $16bn – last year’s Q4 was somewhat affected by a ‘waiting for Win 7’ syndrome, as well as the economic malaise – and for the year they were up 7% to $62.5bn. Keeping costs flat meant that operating margin rose an impressive 4ppts to 39% in FY2010.

The major driver of all this was Windows (desktop) – with a 23% revenue rise year-on-year to $18.5bn (and a margin of 70% – truly a licence to print money!) The company has sold 175m Win 7 licences to date. Puts Apple’s 3m iPads into context, perhaps. But other divisions showed modest rises of under 5%. The under-assault entertainments and devices division was flat, at $8bn. While Online Services (Bing, MSN and advertising) continues to suck in money – with an operating loss of $2.4bn on revenues of $2.2bn. They should have taken Mr Holway’s suggestion to buy Facebook. Yahoo really wasn’t the answer.

That said, it’s clear to us – and to Microsoft – that if it is to maintain anything like its current presence in the market, it must ramp up its Cloud activities. Kevin Turner, chief operating officer asserted that “our transition to Cloud services is well underway” but in truth, it’s just beginning. The foundations are laid, as a series of recent announcements around Azure – which in our view is really the successor to Windows 7, while Windows 8 is something of a cul-de-sac – will attest (eg see Cloud dominates Microsoft Partner Conference). But as yet, Azure revenues are still ‘immaterial’ according to CFO Peter Klein. That will change.

That’s a little unfair, perhaps, but it is true. Recently appointed CEO of India-based BPO pure-play, WNS, Keshav Murugesh, highlighted that “clear dry weather” affected volumes in its UK AutoClaims business, this being one of the reasons WNS fell into a $6m net loss in Q1 (to 30^th June). The other reason was “lower volumes within the insurance businesses stemming from technology and operating efficiencies by a key client”. No names, no pack drill, but you may recall WNS won a monumental billion-dollar megadeal with UK insurer Aviva a couple of years ago (see WNS wins mega 8 year $1b BPO contract with Aviva).

WNS has been in all sorts of turmoil which Murugesh is now trying to sort out. My scheduled meeting with their European head was summarily cancelled, but we are promised some clarity soon. With a remarkable sense of irony, Murugesh reported that, “this is an exciting time for WNS”. Not sure this is quite the excitement that they’re actually looking for!

After what can only be described as rather muted results in Europe from archrivals TCS and Infosys, Wipro marched ahead in Q1 (to 30^th June), with 3.4% qoq growth at constant currency (ccy). In contrast, Infosys went backwards in Europe by just under 1% (see Europe drags down Infosys’ growth), whereas TCS managed just over 1% growth (see TCS tempts fate on pricing). This must come as jolly good news to Wipro’s new European head, Jeffrey Heenan Jalil, with whom I shall be speaking later.

Worldwide, Wipro’s IT services business grew by 4.4% qoq (ccy) to $1.2b, the top end of management’s guidance. Operating margins at 24.5% were 220bps higher yoy and 30bps higher qoq, another result bearing in mind the annual salary increases which clipped in from April. Both TCS and Infosys saw margins decline qoq, though remain higher than Wipro’s.

Wipro’s honesty with its attrition reporting is commendable and shows the real extent of the plight of the Indian players. Quarterly annualised attrition jumped again to 24.4% (Q4 10: 19.2%). Yes, they are now losing a quarter of their staff each year. However, voluntary attrition averaged out to just under 16% TTM (trailing 12 months), in line with Infosys. Despite their protestations, I find it hard to see how any of the Indian majors (or indeed ‘onshore’ players with Indian delivery) will be able to wait till next April before giving further pay increases.

Pricing is still under pressure – down 3.5% onshore and very slightly negative offshore qoq (ccy), adding a greater sense of urgency – as if needed – to move as much work offshore as possible. With Infosys also reporting pricing pressure, I really do wonder whether TCS management are being just a tad optimistic in their expectation of improved pricing later in the year.

More later.

As we announced yesterday, Mark Quartermaine has left his post as President of BT Global Services UK (BT GS) to become CEO at Azzurri. Quartermaine looks well suited to the role with 15 years at IBM but also a stint at running a smaller company – NSB Retail - between 2001 and 2005, before he joined BT. I worked closely with Quartermaine when I was on BT GS’s UK Advisory Board and, more recently, as a committee member of the Prince’s Trust Technology Leadership Group. Quartermaine first ran the UK public sector at BTGS and, more recently, the whole UK. I had a lot of respect for his performance during the most turbulent period in BT GS’ history as first Andy Green, then Francois Barrault and, more recently Hanif Lalani departed as CEO and, indeed, Quartermaine’s immediate boss, Tim Smart, left too. It doesn’t get more turbulent than that but Quartermaine kept a cool head whilst all around were losing theirs!

I also understand that Patrick O’Connell has also departed. O’Connell was President of Delivery and Services at BT GS and was MD of BT Health. If you remember this highly respected ‘large, complex’ programme manager was parachuted into BT in Feb 2005 to attempt to rescue BT’s troubled NHS projects.

These departures come just six months after Jeff Kelly was appointed CEO of BTGS. An American, he came to BT from EDS. We are still sceptical about what BTGS raison d’etre actually is. See our May 10 post BT GS gets its knitting in a twist. As BT’s Chairman Sir Michael Rake said at the AGM yesterday, "We have seen cost transformation at Global Services leading to a marked improvement in profitability." We don’t dispute that. Cutting out cost at BT GS was not the world’s most difficult thing to do. Driving revenue growth and securing a profitable, higher margin and growing future will be much more difficult.

I understand that Jeff Kelly is using the departures to make some UK organisational changes.

Neil Rogers (who we have known and respected for a decade at BT) takes on a new Government & Health division which combines all of BT’s UK Public Sector operations. Looks a very good move.

Clay Van Boren becomes COO for Government & Health (he’s currently President of Health) reporting to Neil, I assume Clay takes on Patrick’s responsibilities.

Emer Timmons takes responsibility for BTGS’s private sector (ie non public sector) business in the UK. She also takes on the ‘President BTGS UK’ mantle – ie the titular ‘UK country rep’ role. Strangely, Emer continues her responsibilities leading the MNC UK unit reporting to Michael Boustridge – we are always sceptical of split loyalties.

Tom Black’s Digital Barriers has undertaken its second acquisition since its March 10 IPO. First it was Security Applications Ltd for £2.5m in Mar 10. Now DB is buying Overtis Solutions for £3.2m. Both companies ‘provide integrated security solutions to protect high value physical, human and information assets’. It’s all part of DB’s strategy to build a specialist homeland security company - repeating the undoubted success Black and his team had at Detica. Overtis had revenues of £2.64m and EBITDA of £70K to 31^st Oct 09 – and significant net assets of £1.3m.

I better declare an interest as I became a DB shareholder at their Mar 10 IPO at £1. Shares now 135p – so one of Holway’s better investment decisions!