Despite a much weaker Rupee, Mphasis, the ‘renegade’ offshore services business 60% owned by HP, saw EBITDA margins shrink by nearly two points to 17.8% in the FY closing 31st Oct. Headline revenues grew by 8% to Rs58bn, (c. $1bn) while pre-tax profit fell by 3% to Rs10bn (c. $175m).
As has been the case for some time, the proportion of revenues deriving from HP customers is in decline, falling by 16% over the year, and now represents just 40% of the total. In contrast, revenues from ‘direct’ clients grew by 38%, accounting for 42 of the 76 new logos opened in the year.
I regularly harp on about HP management’s failure (albeit not assisted by Mphasis’ management dogged aim to declare UDI) to make more of Mphasis (see Mphasis declares itself to be Indian and work back). OK, Mphasis added a useful $80m to HP’s bottom line but it’s leverage ought to be so much greater.
Posted by Anthony Miller at '08:37'
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In my report US court rules HP shareholders can’t sue Mike Lynch on 28th Nov, Mike Lynch had told me to expect news from his Invoke fund soon. Today Lynch has announced an investment rumoured to be between $5-$9m in Cambridge-based Neurence. You can read more in the FT Lynch fund sees future in app that merges real and virtual worlds.
Neurence is described as a ‘social augmented reality’ app. Indeed it has echoes of what Lynch has done in the past where he combines the power of visuals with his unstructured search background. So you point your smartphone at something, it works out what it is and then tells you something you need to know. So the example is pointing your smartphone at a packet of crisps and by reference to data in the cloud, it tells you how many calories are in it. Substitute Google Glasses for a smartphone and the world is your oyster.
As you know, we believe that we are on the cusp of the era of wearable computing. Augmented reality will one of the key ingredients of making that happen; making it really useful. I can imagine going shopping and my camera recognising an item I am about to buy and telling me I could buy it cheaper elsewhere. Maybe even a doctor looking at an X ray scan and getting an immediate diagnosis.
As my memory fails, the app I’d really like is an instant face recognisition at cocktail parties. Then instant data feedback on the person. Oh what embarrassment that would save me! I could then say “Oh hello John. How is your company BigComputing going? We last met in Aug 2012 at Sally’s party. How's your new wife Sarah?”.
Posted by Richard Holway at '07:53'
All but preannouncing its FY results, Gary Elden, CEO of UK-headquartered international recruitment firm SThree, said it was “still too early to call a broadly-based recovery” in the economy. The business is expected to confirm a gross profit decline of 5% in the FY to 1st Dec 2013 to £196.7m, mainly due to a 14% GP decline in SThree’s permanent recruitment activities (44% of the total). Contractor GP rose by 4%. SThree is still heavily dependent on ICT recruitment for which GP fell by 10% and represents 43% of the total. However, even non-ICT recruitment GP declined by 1%.
Management has been keen to reduce SThree’s exposure to the UK and to ICT (use to be 100% when the original businesses were founded) but not quite in this manner. Nonetheless, if it weren’t for its international expansion and broadening of recruitment sectors, it’s a pretty good bet that SThree would have found the going very much tougher. We’ll have to wait till early February to see the full picture, but it seems that Elden and his team are not taking much cheer yet from the Chancellor’s prediction of a significant improvement in the UK economy next year (see Autumn Statement 2013 - What a difference a year makes).
Posted by Anthony Miller at '07:53'
In a tersely worded statement issued this morning, it was announced that John O’Connell has resigned from the board of back office optimisation software provider eg solutions with immediate effect. Founder Elizabeth Gooch will run the shop as executive chairman until a new non-exec chairman and CEO are appointed. Industry veteran O’Connell joined the eg board in March this year (see here) and assumed executive control in September (see eg Solutions prepared and ready for growth) with Gooch as President.
Posted by Anthony Miller at '07:30'
For exactly 90 minutes today, the Chancellor could boast UK would be enjoying the fastest growth in the G7. Unfortunately the US then revised its growth forecasts putting them back at #1. Despite that, today’s Autumn Statement increased forecast UK GDP growth to 1.4% this year and 2.4% in 2014 rising to 2.7% in 2017. Unemployment is set decline to 7% by 2015 – two years ahead of the forecast just 6 months ago. On top of that a small budget surplus is forecast for 2019.
I was particularly pleased that Employers NI has been removed for all under 21 year olds. In addition, there is a new training regime to apply to young unemployed to make sure they have some basic literacy and numeracy skills – something that the schools should have been providing anyway. Employers are to control apprenticeship funds - long overdue. At the Prince's Trust we know that the best training gets delivered by employers not third parties. Anything that can be done to encourage youth employment is welcome and is a major passion of mine..
However, tax-wise there are few new measures to stimulate investment in the tech sector. Although it was great to see the new tax reliefs to the visual effects industry which will benefit great British companies like Framestore – the company behind Gravity and many others films. See Britain defying Gravity. The £270m funding towards Quantum Technology is welcome. A national network of five research centres will be established. The export finance capacity for UK businesses has been doubled to £50bn to help firms. There will be an additional 50,000 start-up loans for entrepreneurs and an extension to the new Enterprise Allowance.
There are some welcome adjustments to Employee Ownership rules – particularly the ability to leave employees shares free of IHT when you die. But, frankly, they are pretty minimal.
But some might view the anti-LLP measures (TechMarketView is an LLP!) as counter productive. Many tech companies and their advisers operate as LLPs.
But the major good news for tech will come from an improving economy. More consumers spending more money will unlock the corporate purse strings for more tech investments. Indeed many now consider tech to be key to their competitive advantage.
For TechMarketView’s ‘takeaways for UK SITS suppliers to the UK Publics sector’ see here and in more detail, in HotViewsExtra..
We often hear about Government IT disasters. So interesting to hear in the Autumn Statement that the paper car tax disc is being made obsolete after 90 years. Indeed, the ‘experience’ of renewing your car licence is an excellent example of working, joined up IT – validating your insurance cover and your MOT with your other details. It really does work very well.
Posted by Richard Holway at '18:28'
Three and a half years ago the Chancellor George Osborne set out his long-term economic plan in the Emergency Budget. One of the three strands of the plan focused on addressing the problem of unreformed public services. Today’s Autumn Statement highlights how that endeavour is ongoing, and in particular emphasises that the Government commits to “fix the roof when the sun is shining”.
Departments are currently keeping well within their budgets, further cuts are in the plan for some - but not all - public sector orgaisations, and budgets have been allocated to focus attention on certain key issues. In UKHotViewsExtra Georgina O'Toole analyses today's statement and highlights the key takeaways for SITS suppliers to the public sector market. Subscribers can read the article now, everyone else should contact Deb Seth to gain access.
Posted by Georgina O'Toole at '17:49'
I am delighted to say that normal service has been restored on my mobile (see Vodafone customer disservice). A charming lady from the “Vodafone Directors' Office” called me this afternoon to say they were on the case and an hour later my number was live on my new smartphone. Deep joy.
Posted by Anthony Miller at '16:49'
We’ve spotted a couple of UK public sector SITS procurement notices worthy of mention this morning.
The first is the next in the increasingly long line of SIAM (Service Integration & Management) opportunities. The Vehicle and Operator Services Agency (VOSA) and the Driving Standards Authority (soon to be merged into a single body), follow in the footsteps of the likes of the Ministry of Justice (MoJ - see Lockheed preferred SIAM bidder at MoJ) and the Foreign & Commonwealth Office (FCO – see BAE Systems Detica bags FCO SIAM contract). In a tender notice giving a potential contract value of between £5m and £35m over three years, the agency states that the SIAM supplier “is to deliver a single, clear, and concise interface to all Authority nominated users in support of all their ICT operational needs, regardless of which Tower Service Supplier delivers the specific Tower Service capabilities”. The SIAM will also be responsible for managing the transition of all ICT services currently supported by VOSA and DSA’s incumbent suppliers to a joint VOSA/DSA multi-sourced IT Tower Service environment. Atos and Capita are the current ICT services partners at VOSA and DSA respectively; both contracts expire at the end of 2014. There is a short timescale for the procurement, with the winning bidder expected to be announced in April 2014.
The second notice is a PIN for a ‘Transactional IT Procurement Solution’ (TIPS) – a commercial solution for basic low value, standard, high volume transactions and the management of the supply chain providing those commodity products - and has been issued by “the Minister for the Cabinet Office acting through the Government Procurement Service”. The other two notices will address more complex or higher value requirements (IT PASS) and commodity software requirements through specialist providers. The notice supports the objectives of the new Crown Commercial Service, which was first announced in July this year (see ‘Musings on Government Procurement’), to provide an integrated commercial service to public sector organisations enabling the centralised purchasing of common goods and services.
Both of today’s notices support our view that the Cabinet Office is continuing to maintain momentum across Whitehall as it seeks to alter the way UK Government procures and manages ICT.
Posted by Georgina O'Toole at '09:48'
An interesting article in today’s FT (see here) highlighted the pressures that cloud-based infrastructure providers such as Amazon and Google are putting on traditional ‘earthbound’ IT suppliers. The article alluded to Google slashing the monthly cost of a gigabyte of cloud storage from 10 cents to 4 cents; apparently Amazon charges 9.5 cents – but I guess not for long.
For both players, ‘infrastructure as a service’ is just a tiny part of their overall business, so slashing prices on what is probably already a loss-making activity is not likely to visibly move the needle on the bottom line (which is slightly negative anyway for Amazon and hugely positive for Google).
The issue is whether earthbound players feel compelled to follow suit. This is, as ever, a case of choosing where you pitch your tent and deciding which battles you wish to fight.
If you have the mighty cash flows of an Amazon or a Google, or the unquestioning love of your investors, then what the heck, go for it! But for everybody else, pause a moment to reflect on business basics: as I so frequently have to remind executives when I preach on this subject, if you spend more than you earn, you will run out of cash.
Posted by Anthony Miller at '09:45'
Accenture is promoting new CE leads to its global management committee from the start of 2014, who will head up three new divisions Accenture Digital, Accenture Strategy and Growth Markets.
Michael Sutcliff, Accenture’s US financial services lead, will take on the role of CE for Accenture Digital, which brings together 23,000 people from Accenture Interactive and its capabilities in analytics and mobility. Digital is being aimed squarely at the SMAC disruptor space (social, mobile, analytics and cloud), with the aim of developing an ‘integrated end-to-end digital capability’.
Senior MD of growth & strategy for Health & Public Service, Mark Knickrehm, takes the role of CE for Accenture Strategy, which will focus on ‘helping C-level executives shape and execute their business and technology transformation agendas’. Strategy will focus on areas like growth and innovation, industry convergence, geographic expansion, digital strategies, sustainable cost management and enterprise transformation.
These two divisions are known as ‘growth platforms’, and will sit alongside the other two growth platforms with heads already on Accenture's global management committee – Technology, led by Martin I. Cole, and BPO, led by Michael J. Salvino.
Growth Markets will be led by Gianfranco Casati, currently CE of Accenture’s Products group, who will now oversee Accenture's business in Asia Pacific, Africa and Latin America. Sander van ‘t Noordende, will move from his role as CE for management consulting, to CE of Products, and also sit on the global management committee. Products' focus is on emerging vertical industry technology and solutions. Navitaire, Accenture’s airline ticketing and reservation service, is one example in the market today.
These new growth areas are also where Accenture is focusing M&A effort. In BPO, it recently bought US procurement player Procurian (see here); in May it acquired UK-based digital marketing player Fjord (see here); and in April it snapped up predictive analytics player ChangeTrack Research (see here). We expect more investments as Accenture develops these new divisions further.
Posted by John O'Brien at '09:40'
After two very active months for European TMT M&A, the number of deals dropped back by just over 7% to 283 in November, according to latest date from corporate finance firm, Regent Partners. Despite fewer deals, their total value increased to $18bn in the month. Valuation multiples remained broadly stable with the Price/EBITDA at 8.8 and the Price/Sales at 1.2. Listed companies, as represented by the Techmark Index, were virtually unchanged in terms of value and Price/EBITDA.
November was a busy month for M&A activity in the UK software and IT services market, including the sale of ‘recruitment process outsourcing’ firm Alexander Mann Solutions to Graphite Capital (see here), the acquisition of Midlands-based CAD/CAM software supplier Delcam by Autodesk (see here), infrastructure services play Redcentrics’s acquisition of peer InTechnology (see here) and most recently, the acquisition of Nuneaton-based FactoryMaster by Access Group (see here).
As ever, eligible TechMarketView subscription service clients can catch up with the UK software and IT services corporate activity scene every quarter in IndustryViews Corporate Activity.
Posted by HotViews Editor at '09:21'
After reasserting full control on the running of the business at half-time (see Swinstead takes tighter grip on Parity reins), Philip Swinstead, executive chairman of AIM-listed IT recruitment-cum-digital media aspirant Parity, is looking to an 80% increase in ‘adjusted EBITDA’ over the year.
Swinstead alluded to a better profit performance at acquired digital media agency Inition along with contractor expansion in the core recruitment business, though with ‘call-off’ delays (i.e. revenue slowdown) in its Talent Management activities. We will have to wait for the FY results to see what the ‘real’ bottom line looks like at once full operating expenses have been incorporated into the ‘adjusted’ numbers.
Posted by Anthony Miller at '08:20'
Apologies to all of you who have been trying to phone me on my mobile only to find the line is dead.
In a masterful stroke of operational excellence, Vodadone disconnected my number and cancelled my account during what should have been a straightforward process of transferring my work mobile number from my 'dumb' phone to my new smartphone (Sammy S4 since you asked) – both on Vodafone contracts.
Many frustrating conversations transpired with help desk people in faraway lands. I am told it may take up to 10 days to restore the service.
In the mean time would you please be so kind as to use my landline number (on our website) should you wish to speak to me. Forget about texts!
Posted by Anthony Miller at '07:13'
We are once again looking to recruit an analyst to join the ever-expanding TechMarketView research team.
The ideal candidate will have at least three years’ experience researching the UK IT industry; knowledge of the UK public sector market would be a distinct advantage. Your background could be in market intelligence in an IT supplier or as a tech journalist – or of course as an industry analyst.
You must have proven skills communicating an informed opinion based on your research, both in writing and face to face. Our extensive client list includes top executives in the IT industry, government officials and investors. We hold a privileged position with many of our clients as advisors as much as analysts.
This is a very demanding but highly stimulating role. You must be self-motivated, confident, disciplined, and very deadline-focused. We all work from our own homes but this is not a ‘work at home’ job; you will be spending much of your time out in the market meeting clients, attending company briefings and talking to the media. This also means you should live within an hour or so's commute of central London.
The compensation is very competitive and there is plenty of opportunity for the right candidate to take on more responsibility if they prove their worth. But perhaps the most significant reward is the recognition you get from being part of the most respected name in the UK IT research industry.
If you think you might fit the bill, please email your CV to TechMarketView Managing Partner Anthony Miller.
Posted by HotViews Editor at '07:00'
Although Sage’s results for the full FY13 (see Sage making progress) were well received with a near 10% rise in its share price early on, they did report a major decline in basic EPS from 18.63p to 3.97p due to losses on disposals. However, underlying EPS grew 14% from 19.87p to 22.27p.
As long-term readers know, Sage and Capita were the only current holders of the Holway Boring Awards (search archive or see The Last Time) given for uninterrupted EPS growth. In Sage’s case since their 1989 IPO.
The problem is that, on whatever measure you use, Sage has suffered a reversal – indeed both underlying and basic EPS fell in FY12 – basic EPS fell again in FY13. Should have spotted that last year, of course. Mind you, the record - see chart - is still pretty impressive with EPS up around 90x since 1989.
So now Capita is the only Boring Award holder left. Would be good to give a new one. Mike Phillips at Micro Focus made a point in his recent announcement. Now only two years to go!. See Micro Focus edges closer to Boring Award.
Also good to see our Peter Roe quoted in Sally Davies’ article on Sage in the Financial Times today
Posted by Richard Holway at '14:18'
Sage reported full year revenue up 3% to £1.38bn, with similar growth in EBITDA. European business was flat, with the US and the Rest-of-World operations up by 8%. Losses on disposals halved pre-tax profit, to £164.1m, but underlying eps grew by 12%. Cash flow remained strong, with over £1bn returned to shareholders in the past two years.
The results show that the company’s transformation strategy, as discussed in our July report, is beginning to work.
Key to execution is the greater focus of resources on growth products where investment is up one-third. Cloud propositions are now becoming available for Sage’s three user segments. Progress is seen at the tightly-contested lower end, with a three-fold increase in subscriptions. Cloud-based ERP products for SMBs are now launched in the UK, Ireland and Spain with other markets, including North America following in 2104.
Linking a payments platform with Sage’s North American products clearly shows the benefits of a more integrated portfolio, with sales of the relevant products up 20%. This offers productivity benefits to users, and further up-sell possibilities to Sage. Likewise the US-led Sage Data cloud, linking mobile applications with Sage’s accounting and ERP products, contributed to the North American revenue increase.
Despite progress in migrating the customer base, subscription revenue is still only 8% of the total. This is key to long term growth and margin as a combination of cloud and a subscription model can drive substantial up-selling and high retention rates.
Sage management is confident of achieving the targeted 6% growth rate by 2015, but we look to them to maintain momentum as competition is mounting and Sage still has a long way to go to complete its transformation.
TechMarketView subscribers can see our UKHotViewsExtra report on the fast moving cloud SMB accountancy market, here.
Posted by Peter Roe at '10:07'
Fast growing video search platform provider Blinkx is about to grow again through the acquisition of specialist mobile video advertising platform provider Rhythm NewMedia. Blinkx will pay $65m (£39.7m) in cash and shares ($30m in cash, $35m in equity) and is raising additional funds through a share placing to help fund the deal.
The proposed purchase is twice the price of its previous significant acquisitions (PVMG $36m and Burst Media $30m –see here) but Blinkx has gained scale since then via organic and inorganic growth (and practice at integrating acquisitions) so it should be manageable. Blinkx had revenue of $112m in H1 (to September 30 2013), which was up 36% yoy and has maintained a powerful upward revenue curve over the past year or more.
Rhythm NewMedia is also a high growth outfit with FY14 revenues estimated at $25m and expected to grow 30% annually over the next 24 months. Its FY14 EBITDA loss is expected to be $4.6m. (In the year to December 31 2012 it had a $7.4m operational loss on $19m revenue). $1m of the estimated FY14 loss is likely to hit Blinkx’s pre-exceptional EBITDA in FY14, but breakeven is anticipated within the first full year under Blinkx and with material profit after that.
This is a strategic move for Blinkx which will boost its mobile business. Mobile video advertising is accelerating fast and the Rhythm NewMedia platform is specifically designed to serve video to smartphones and tablets. Blinkx also improves its ability to meet advertiser demand for integrated, cross-platform online and mobile video advertising campaigns, addressing multi-screen distribution needs. It also gets access to Rhythm NewMedia’s premium broadcasting brands, while Rhythm NewMedia will be able to extend its services to the many providers Blinkx serves. It is a complementary acquisition on both sides in a competitive market – other players in the in-stream premium content video field include Vevo and Hulu, while iAd, Pandora and MobileThoery operate in the in-banner area, with ESPN crossing both areas.
Posted by Angela Eager at '09:32'
I see that David Cameron, on his trip to China, is working hard to persuade Alibaba to do its upcoming IPO in London – not NASDAQ or NYSE. See The Times article today. If he was to be successful, it would be a mega coup. A $15b fundraising of a c$120b company in London no less.
Alibaba is China’s biggest ecommerce site – a Chinese Amazon. Yahoo owns a 14% stake which has boosted its own value in recent times. Japanese Softbank owns 35%. A Hong Kong listing had been planned but abandoned recently due to difficulties with Alibaba’s shareholding structure.
Must admit, although the ambition of an LSE IPO is great, it does sound a bit of a tall order. Other Chinese internet companies like Baidu have chosen US listings. But the knock on effect of Alibaba listing in London could be terrific.
Posted by Richard Holway at '08:28'
The big data movement is giving a boost to UK-based software development business Arria NLG, who builds mission critical enterprise level software for the oil and gas industry (e.g. monitoring large scale machinery on oil and gas production platforms), and was spun out of research from the University of Aberdeen. The company is about to be admitted to the AIM, with trading scheduled to start on December 5 2013. It has an initial capitalisation of £102.3m.
The goal of the AIM listing is to raise its profile and support the development of the Arria NLG brand internationally, as well as to gain access to equity capital and help with the recruitment of new employees to enable further growth. Arria NLG has raised $40m in private funding over the past 15 months. The oil and gas industry continues to invest in technology (as Delcam and Aveva can attest to) so Arria is operating in an active area and the big data aspect is not something that will run out of stream any time soon. It will be interesting to watch Arria’s progress.
Posted by Angela Eager at '10:11'
AIM-listed communications services firm, Daisy, saw H1 revenue (ending September 2013) decline 2% to £173.9m - primarily as a result of its declining fixed line network services business and a change in contractual terms with a key mobile partner. However, the adjusted EBITDA margin edged up very slightly (from 15.3% to 16%) due to changes in the business mix and cost control. Across its product areas, Network was down 9% to £73.7m, Data was up 13% to £38m (boosted by £6.1m in revenue from the acquired 2e2 data centre services business), Systems climbed 3% to £15.6m, and Mobile declined 4% to £46.6m. Daisy, like other network services firms (e.g. Colt, see The IT services piece in the Colt growth puzzle) faces the not insignificant challenge of trying to recoup the decline in its traditional voice and data business by entering growth areas.
Acquisitions have formed an important part of Daisy’s strategy to improve its product mix and shift both revenue and profit in the right direction. However, Daisy has to be very careful that it is able to create something that is more than the ‘sum of the parts’ of its purchases.
After the close of H1, Daisy acquired Indecs (Daisy expands IT services business with Indecs purchase), which provides multi-vendor support and maintenance services for servers and storage. Together with its Servassure and Net Crowd businesses, Daisy claims it now has “credible scale” for the provision of services to partners. Scale in ICT support operations is indeed important for firms that are the ‘feet on the street’ component. However, we know how tough it can be working with partners who apply significant and consistent pressure to reduce the cost of the services they buy from third parties. Daisy certainly has its work cut out.
Posted by Kate Hanaghan at '09:56'
Acquisitive security firm, Accumuli, has closed H1 (ending September 2013) with revenues up 23% to £7.7m - thanks largely to acquisitions. Indeed, only yesterday the firm announced it was buying analytics and monitoring firm, Eqalis (see Accumuli grows Splunk capabilities with Eqalis acquisition). Accumuli’s underlying growth rate was more moderate at 6% - a figure it hopes to improve upon as it builds out the breadth of its portfolio. In terms of the bottom line, Group EBITDA margin slipped from 16% to 14%.
A key objective for Accumuli is being able to cover overhead costs with gross profit from recurring revenues. That is something it is now getting close to being able to achieve. Furthermore, 62% of gross profit is now derived from recurring revenue streams - up from 53% last year.
The purpose of the acquisition trail is to build out a range of security offerings that can be offered as a managed service. Accumuli wants its discussions with customers and potential customers to be – quite rightly, we say – business-led rather than technology-led. The ultimate aim is that deal sizes grow to become worth 100s of thousands of pounds, rather than 10s of thousands of pounds. We like what Accumuli is aiming for. Let’s see if it can show more evidence over the next 6-12 months of edging towards that objective.
Posted by Kate Hanaghan at '09:50'
The overall numbers were pretty much in line with expectations for Micro Focus half way through the year but what was noteworthy was the increase in full year guidance, which was due to acquisitions during the period (six months to October 31 2013) that are nudging the company towards the much sought after growth position.
Full year revenue guidance was increased from a range of 0%-5% to 3%-6% (constant currency) due to the effect of the Iona and SoferTe acquisitions which were closed during the period, plus the OpenFusion Corba assets from the PrismTech deal that closed in November just after the period ended and the AccuRev purchase which is going through at the moment (for details on the acquisitions see here). Iona alone added $11m to revenue during H1.
Looking back, H1 was period of sustained activity that shows the determination of management to remix the business and minimise the impact of niche products and take down the interest in consultancy. Looking forward these new assets will play an important part in stimulating growth but there is still plenty of work to be done to realise the goal. H1 revenue was up a marginal 0.4% to $207.5m, although that was a 2.4% lift in constant currency. Excluding revenue from Iona and the declining niche and consultancy businesses, revenue was broadly flat. Pre-tax profit was down 7% to $70.5m, (minus 3% cc), with adjusted EBITDA down 1.7% to $89.9 m (+1.6% in cc). Overall, H1 was solid but H2 has the potential to be better still.
Posted by Angela Eager at '09:43'
If there’s one job that could be described as challenging in the current climate it would be leader of the UK public sector division of the leading SITS company in the UK public sector market. HP has announced that Stuart Bladen has taken up that role, taking the place of acting UK PS head, Richard Trevor, who was in the role for nigh on 12 months.
The public sector accounts for a significant proportion of the HP’s SITS revenues; by our calculations, just over half. But revenues from the sector have been on the decline for the last couple of years, as a result of changing attitudes and behaviours around IT procurement and management across Whitehall.
Bladen has been with HP for seven years; he ran HP EMEA’s Application and Business Services business and, most recently, the Benefits and Tax sub-sector and DWP account within UK PS for the past 18 months. Previously Bladen had roles at Hitachi Consulting and Unisys in their public sector businesses. The challenge in his new role will be to align, as closely as possible, HP’s UK PS approach with the UK Government’s ICT strategies and policies, in order to retain as much of its central government business as possible, while also trying to make an entree into local and devolved government organisations.
Posted by Georgina O'Toole at '09:32'
Two weeks after a positive trading statement, see here, we can now see some of the reasons underpinning the management’s confidence. Today Gresham announced another contract with a blue-blooded London investment house and a placing with institutional shareholders to raise £3m.
The contract creates another large reference customer for Gresham’s CTC matching and reconciliation engine, used in many areas of settlement and liquidity and risk management. Gresham's innovative approach is now paying dividends in terms of a good pipeline of orders and a growing annuity revenue stream from insurance companies, investment banks and fund managers.
The company's priorities are now to build a strong market presence and exploit their recent success. The placing enables them to boost development of the CTC proposition and importantly to expand the sales and support operation to strengthen their position in overseas markets, particularly the US and Asia-Pac.
The management remain confident about progress and meeting expectations, as do we.
To find out more about TechMarketView's new service focusing on Software and IT Services in the Financial Services sector, follow this link.
Posted by Peter Roe at '09:31'
Proxama, the recently AIM-listed m-commerce company majoring in NFC (Near Field Communications) technology has announced a successful placing to raise £8.6m. This was done at a deep, 41% discount to the share price, with the placing shares now representing over 40% of the issued share capital. Nonetheless, this is a handsome amount of cash for a company that generated revenue of less than £350k and pre-tax losses of £1.35m in the six months to end June.
An investment in Proxama is all about the massive potential of NFC technology in payments (TechMarketView Subscribers can see our report, Setting the Scene for Mobile Banking, here). Proxama has a different angle, its TapPoint platform making mobile wallets much more useful by enabling the mobile phone to read NFC tags attached to adverts or in stores. These enable the user to learn about the product, access vouchers and offers and to purchase it using funds in his/her mobile wallet.
Proxama has already won contracts to provide an NFC solution for ISIS, the mobile commerce joint venture in the US linking AT&T Mobility, T-Mobile USA and Verizon Wireless and a global agreement with CBS Outdoor to add NFC tags to their adverts. Closer to home, Proxama worked with our Little British Battler, Paythru, to provide an innovative “Tap and Donate” option for this year’s Royal British Legion appeal and they are now working together to explore other opportunities to link payments to the back end of user journeys initiated by NFC tags. Read the LBB Paythru comment here.
Mobile commerce is growing strongly, and the Proxama tag can significantly boost the appeal of mobile wallets. It may well be that the institutions that took part in the placing have got themselves a bargain!
Posted by Peter Roe at '09:18'
Wipro is attempting to bounce back from recent disappointments (see here and work back), paying £75m to acquire Opus CMC (Opus Capital Markets Consultants LLC), a US mortgage risk management specialist that will complement its mortgage BPO business.
Based in Lincolnshire, Illinois, Opus CMC employs some 490 people including 315 loan underwriters across five sites in the US. It provides a range of risk management services into the US mortgage market, such as operational and loan level due diligence, valuation support, forensic analysis, and advisory services. Its customers include top global banks, mortgage conduits, mortgage investors, and independent mortgage originators.
Opus CMC will become part of Wipro’s BPO division, which had revenue of $539m in FY13 (up 4.8% on FY12). It’s not clear what revenue the business will contribute however. Wipro already has a presence in the US mortgage market via its Wipro Gallagher Solutions (WGS) division acquired back in 2008 (see here). WGS employs c150 people, and provides a loan origination platform called NetOxygen, and offers supporting loan fulfilment services.
Wipro’s ambition is to create an end-to-end offering into the US mortgage space, and eventually expand into the UK, Europe and Australia. It appears to be on the right track. Opus CMC will provide the front end expertise in mortgage due diligence, and an entrée into new mortgage clients. WGS will offer a technology platform to help track mortgage applications through to completion. Wipro will then have an opportunity to upsell its broader back and front office BPS.
Of particular value will be Opus CMC’s analytics on 1m+ loans reviews over the past ten years, and its knowledge on regulatory requirements. This should help Wipro offer low risk and compliant mortgage BPO - critical requirements from early 2014 when new regulations come into force demanding mortgage lenders verify that borrowers can repay their loans.
Posted by John O'Brien at '09:09'
AIM-listed, Cambridge-based ‘real-time location intelligence’ products and services company Ubisense has taken a bold step to further its Asian expansion ambitions by acquiring its Japanese partner, Geoplan Interworks KK. Ubisense will pay up to £3.4m in cash and (mostly) new shares to acquire Interworks and its Korean and Philippines subsidiaries, though the Japanese entity is only 77% owned by the vendors. Ubisense has an option to acquire another 18% for £700k. Interworks recorded pre-tax losses of £380k in FY13 (to 30th June) on revenues of £5.4m.
The theory behind the acquisition looks good; the practice may prove challenging. The theory is that Ubisense already has marquee customers in Japan and Korea such as Mitsubishi, Hyundai, Honda and BMW Cherry though no direct presence in Asia. The challenges are many and various, not the least of which is that owning a Japanese company is not the same as partnering with one, more so when you don’t hold all the stock. Also, Interworks is losing money –as is Ubisense (see Ubisense senses contract slipping to the right and work back) – though, also in theory, it will all come good by the end of 2014.
I really like the Ubisense story and I think it has great potential to play out better than it is currently doing. The risk is that buying and managing Interworks may prove more of a distraction than attraction.
Posted by Anthony Miller at '08:25'
After announcing impressive full year 2013 results (see Innovation Group breaks £200m revenue mark), we spoke with Andy Roberts, CEO, and Jane Hall, FD of The Innovation Group, to discuss the detail behind the numbers, and where the business is heading as it enters its new 2014 financial year.
TIG is in fact heading into 2014 in a very good position, with a clear focus, a strong balance sheet, and some real momentum.
TechMarketView Foundation Services subscribers can read the analysis and implications in UKHotViewsExtra here.
Posted by John O'Brien at '15:06'
Servelec became the largest UK tech IPO for three years when it began trading on LSE’s Main market this morning. Shares in the company, which reported a turnover of £39.4m and adjusted PBT of £11.9m last fiscal year, are currently trading up 20% at around 215p, valuing the business at close to £150m. Servelec’s previous owners, Singapore’s CSE Global, should be very happy with that return on investment - they acquired the business in 2000 for £18.6m, when it had revenues of £7.7m and slight losses.
So, who is this newcomer to the market? The Sheffield-based group is a company of two parts. The Healthcare division, which reported a turnover of £16.7m and PBT of £8.7m in FY12, is best known for its RiO patient record software for community and mental health and is a key supplier to the NHS. The larger Automation division, which turned over £22.6m and made a profit of £4.7m in the same period, provides mission-critical control systems to large blue-chip companies operating in the oil and gas, nuclear power, water, utilities and broadcast industries. Although operating in very different niches, both businesses are profitable with a loyal customer base and respected IPR so it’s easy to see why Servelec would be a popular choice with investors.
Servelec plans to use its new funds for both organic and acquisitive growth in its two key markets, both of which are undergoing change and present growth opportunities. We’re particularly interested to see what happens in healthcare, where Servelec will be competing against larger rivals on a number of fronts. The likes of EMIS, Advanced Computer Software, Civica and Allocate Software, for example, are also determined to expand their footprint in the UK healthcare SITS market via acquisition. No doubt they’ll all be watching Servelec’s progress as a listed company with as much interest as us!
Posted by Tola Sargeant at '09:54'
In FY12, Colt hit the significant milestone of returning to growth (in Euros) for the first time in seven years. However, management’s ambition doesn’t stop there. The objective is to achieve compound growth of mid-to-high single digits to 2017. To make this a reality, Colt will need to ensure its legacy products in voice and data can consistently grow – something that will be a significant challenge in today’s market. In IT services, there is an opportunity to grow strongly in cloud-delivered infrastructure services. However, Colt’s business here is currently small and our view is that it is not yet delivering the kind of growth Colt needs to justify the investments made to date.
In this CompanyViews research note (see The IT services piece in the Colt growth puzzle), we take a closer look at Colt’s cloud and IT services business. Available to subscribers of TechMarketViews’ Foundation Service and InfrastructureViews only. To gain access to research, please contact Deb Seth (firstname.lastname@example.org).
Posted by Kate Hanaghan at '09:42'
UK managed security services player, Accumuli, has acquired the entire issued share capital of Eqalis Ltd for a net consideration of £1.9m (£700k payable on completion, and a further £1.2m payable over three years). Eqalis builds on Accumuli’s existing SIEM proposition (Security Information Event Management, and see Accumili 'Edges' towards its SIEM goals) and also enhances its big data monitoring and analytics capabilities (Eqalis is a key Splunk partner in the UK and the only Splunk authorised training provider here). The analytics capabilities are important for detecting and mitigating security breaches as they enable the analysis of large amounts to identify, and deal with, any potential security issues.
Accumuli has been following a highly acquisitive pathway over the past couple of years, which has seen it grow significantly in revenue terms. In 2011/2012, Accumuli made numerous purchases that boosted revenue from £2.4m to £12.4m (see Accumuli confirms expansive year). During FY13, the company acquired EdgeSeven (see Accumili 'Edges' towards its SIEM goals) and disposed of Webscreen (see Accumuli buries Webscreen in Juniper). Most recently, and after the close of FY13, Accumuli was at it again – see Accumuli acquires Signify Solutions. We estimate that the addition of Eqalis will take full year revenues over the £17m mark.
The company announces its first half results tomorrow and we will be catching up with the management team. However, we do not expect to see a shift from its strategic objectives around acquisitions and up-sale of products and services.
Posted by Kate Hanaghan at '09:33'
Insurance software and business process service (BPS) provider The Innovation Group (TIG) has capped off what CEO Andy Roberts said is their ‘strongest, most successful ever’ with a double-digit increase in profitability and some of its largest ever deals.
For the year to 30 September, pre-tax profits were up 32% in constant currency (ccy) to £14.4m – giving TIG a 7% pre-tax margin vs. 6% last time. Headline revenue was up 8% ccy to £204.4m, and up 3% organically excluding the acquisition of UK-based Gemini Vehicle Solutions in April (see here).
Hot Views readers will know that TIG has been on something of a roll recently, with its largest total contract value (TCV) deal ever signed, with a tier 1 UK insurer (see TIG signs £75m UK subsidence contract), and most recently a handful of new deals in the US (see here). The good news for TIG is these deals were signed after the year end, so it expects these to boost organic growth further next year.
We will be speaking with CE Andy Roberts this morning, and will provide more colour and movement for TechMarketView subscribers in UKHotViewsExtra later.
Posted by John O'Brien at '08:53'
Last week I suggested, in my article Toupee or not? about Sony filing an application for a ‘wearable computer’ inside a wig, that this was a worthy April Fool’s joke. It wasn’t.
Today the BBC is running a similar 'April Fool-type' news item about Amazon introducing drones to deliver packages up to 2.3kg within 30 minutes of the order being placed using Octocopters. Jeff Bezos says the service will up and running within 5 years and be called Prime Air. I don't think he's joking either!
Now, before we all collapse in a fit of giggles, anyone who has attended any of my talks recently will know that I end with sequence of predictions which goes from ‘wearables’ to ‘driveables’ to ‘flyables’. Indeed I predict that drones will become as big a business in the civilian world as they are in the military. Clearly traffic surveillance, crime detection, surveillance of oil pipes in remote locations etc are obvious applications. So why not deliveries?
Posted by Richard Holway at '07:55'
We are delighted to welcome Wells Fargo Capital Finance as a TechMarketView banner advertiser. Indeed they have taken most of the slots for the remainder of the year.
Wells Fargo is ‘a leading supplier of financing to the technology sector’ with ‘commitments ranging from £5m to over £200m’. They are particularly interested in companies with recurring revenue streams from maintenance, subscription and hosting. Kewill is one of the UK companies referenced as a client. More details Click here.
As you might have noticed, more and more companies have recently woken up to the potential of using the UKHotViews banner advertising service to put their company's name in front of over 12,000 of the most senior people in UK technology. If you would like to join them, please contact Helen McTeer (email@example.com) on our client services team.
Posted by HotViews Editor at '07:20'
October and November have proved to be as busy a time as ever for the analyst team at TechMarketView.
In InfrastructureViews, hot on the heels of her Infrastructure Services Market Trends and Forecasts 2013 report research director, Kate Hanaghan, went on to release Mid-market Data Centre Services: Opportunities and Competitors. In this popular report, Kate delves into this highly fragmented market, which consists of a large number of enterprises with different business and technology challenges and is not the single market sector it is often thought to be. In UKHotViewsExtra, Kate covers the story on SCC sets sights on 46% growth.
The PublicSectorViews team has also been busy, publishing four new reports. In Scottish Public Sector SITS Market: Trends & Opportunities research director, Georgina O’Toole and the team look into why this relatively small market has bold ambitions, while in Steria & SSCL: a pivotal deal Georgina looks more closely at the new joint venture with the UK Cabinet Office called Shared Services Connected Ltd (SSCL).
The analysts also caught up with Dell’s UK public sector team and were surprised to find a business that is outperforming the market in many areas. Find out why in Tola Sargeant’s research note: Dell surprises in UK public sector. And finally in Agilisys leverages Blenheim Chalcot relationship, Georgina analyses why Agilisys continues to grow despite an increasingly tough local government outsourcing market. Further to this the PubicSectorViews team also produced UKHotViewsExtra articles; Alliantist gains G-Cloud IL3 accreditation, US healthcare IT woes carry lessons for the UK and BT teams up to join health and care.
In ESASViews, research director Angela Eager, followed on from her two part Market Trends and Forecasts research on the Enterprise Software and Application Services market with the eagerly anticipated ESAS Supplier Landscape 2013/14 report. Then, in SAP Business ByDesign: direction and market impact, Angela looks into why Business by Design is changing form quite radically. For UKHotViewsExtra, Angela writes about Servicing the cloud SMB accountancy market and PE firm Advent International offers €1.17bn for UNIT4.
In BusinessProcessViews, research director John O’Brien, follows on from his key report UK BPS Supplier Rankings & Landscape, 2013, with an in-depth look into the future of Indian HQ’d businesses in his report, What does the future look like for India HQ'd players in UK BPS?. John also writes on UK anomaly Genpact's opportunities and challenges in UK BPS after a recent European analyst even which he attended.
After the much anticipated launch of our latest research stream FinancialServicesViews (FSV), research director Peter Roe, published his core report Financial Services SITS Market Trends and Forecasts 2013. The report presents a heat map of SITS activity, identifying key areas for investment and focus. Keeping busy already, Peter also released Setting the Scene for Mobile Banking in which he looks at what has recently become one of the most exciting areas of the Financial Services industry with the increase in penetration of smartphones driving a revolution in how people bank, buy and pay.
From the Foundation Service stream, you’ll find IndustryViews Corporate Activity - Q3 2013, reporting on the mergers and acquisitions in Q3, the highest since Q4 2006; and IndustryViews Quoted Sector Q3 2013 in which we find out why the aggregate value of UK SITS companies listed on the London stock market (Main and AIM) hit a two-year peak last quarter, reaching £22.3bn. There’s also BrazilViews September 2013, which includes coverage of our managing partner Anthony Miller’s recent trip to the country’s largest tech hub, Porto Digital, in Recife, the state capital of Pernambuco. And in UKHotViewsExtra, Anthony Miller met up with Fouracre – read about it in Clear Books growing with the crowd.
Paid subscribers to our research services can download the full reports, or to see more of what we publish you’ll find details in our Quarterly Research Summary, available to download HERE. If you would like to find out more about our subscription packages, just drop Deborah Seth an email and she’ll be happy to help.
The only index change of note this month was NASDAQ which rose 3.6% making a pretty extraordinary 34.5% rise YTD. Indeed NASDAQ closed at 4060 – the highest close since April 2000. See Let the good times roll. All the UK Indices we follow basically flat-lined as you can see from the table. But all also retaining their major gains for he year. Although worth noting that the 18% rise in the FTSE SCS Index YTD is about half that of NASDAQ.
As usual this flat-lining covered some major differences in performance. Excluding the penny stocks, WANDisco continued to soar – up another 28% this month. The good news just doesn’t stop for WANDisco – See Game changing period at WANdisco. Since their AIM IPO in June 12 at 180p, WANdisco is up a massive 730% at 1488p. Who says you can’t have IPO success and excitement on the London markets?
Intercede, the identity management software provider, put on 26% as Interede reports best ever half year. Xchanging was up 20% after a trading update which was ‘slightly better than expectations’. But is XChanging chasing too many dreams? Blinkx continued to power ahead – up another 19% on great H1 results. Now up 200% YTD making it the best performer in the ‘Holway Portfolio’.
Breaking my vow not to mention penny shares. INVU sunk another 53% and indeed has joined the ranks of the ‘Dearly departed’. An AIM IPO in Jan 2004 at 8.5p they departed this month at 0.3p; although even that was ‘technical’ as I doubt anyone could sell even at that price. In a way, a great shame as we really thought their document management software had promise. Serco was down 18% as its UK boss resigns after it put out a warning for 2014 as it faced a SFO investigation. One can only hope that this is the worst of it – indeed their shares have recovered somewhat from their mid-month nadir.
There was very little of note amongst the global players in terms of share price movement. French Sopra put on 14.5% and it was good to see growth return to their UK operations. Canadian CGI (the old Logica in the UK) also put on 13% on their Q3 results although we reckoned UK revenues fell. HP was up 12% - and has doubled in the last 12 months – as, despite a tough Q3 investors liked the cost cutting that Meg Whitman has put in place. But, as I have often said, you cannot rebuild a company by cost cutting alone. We need to see some areas of growth.
One month to go before we sit down and write yet another year end roundup. It’s been a stunning year so far. Will December bring continued good cheer or a cold front?
Posted by Richard Holway at '06:00'
A year ago we unveiled our theme and predictions for 2013 – MAKE or BREAK. We’ll be announcing our theme and predictions for 2014 soon.
But first let’s look at those 2013 Predictions which you can reread here. Did it turn out to be a Make or Break Year?
Well, it certainly did for Nokia and Blackberry with the emphasis on the ‘break’ bit. Also Windows 8 did not prove the salvation for Microsoft. Indeed they have had to produce W8.1 in response to all the criticism. Tablet sales now exceed PC sales. Balmer is departing (we described him as ‘well past his sell-by date’) So, although we’d never describe Microsoft as ‘broke’, it’s been far, far from the ‘Make’ year they had wanted and the new CEO now has an even more difficult job to fix it.
The same applies to Apple. We said that without a new product genre ‘Apple’s golden days could well be over’. We got no iTV or iWatch. Apple shares dived - and recovered but are still c30% off their 2012 high. Again, not ‘broke’ but not fixed either.
We said that Google, Facebook and Twitter had to finally prove they could monetise mobile. Google and Facebook scored a decisive ‘Made it’ here! Their shares soared as a result. Twitter soared on its IPO but the jury is still out on any kid of monetisation of the service.
We suggested that both HP and Dell would have ‘Make or Break’ years as tablets eroded their marketplace and ‘problems of their own internal making’ persisted. Dell went private as a result and HP saw its sales decline. However, the market loved the cost-cutting that Meg Whitman put in place and HP shares doubled in the year. Both far from ‘fixed’ yet.
We suggested that 2013 had to be the year when SaaS vendors had to prove they could make money from the model. None did – but the markets didn’t seem to care. We do. Reality will strike soon.
The offshore players, as predicted, were hit with a whole range of issues like exchange rates, staff churn, local wage inflation, slowing growth rates in India and corporate governance issues. This seemed to energise them to alter their models towards more onshore activities. They (mostly) got rewarded with higher placings in our ranking tables – but more because even their reduced growth rates were better than the rest! They also started to pick up HMGovt work.
In the public sector, the relationship between the Cabinet Office and the main SIs was indeed described as ‘broken’. But there now seems to be a sense that a more ‘mature’ attitude must prevail. Even the NAO agreed. But maybe a bit of ‘banging heads together’ is still needed though.
As far as the economy in general is concerned, 2013 certainly turned out to be a ‘Make’ year for the UK – now with the highest growth in the G7. Wow, that is something I never expected to say. But the economies in many other countries still aren’t fixed – which is a major on-going risk to the UK too.
So, our ‘Make or Break’ theme was certainly pertinent. The way forward is a lot clearer than it was 12 months ago. Our other long-standing theme – Diversity of Performance – clearly applied too. If you ‘Made it’ in 2013 you really do seem to be facing an ever rosier future. If you failed to ‘Fix it’ or just ‘Broke’ in 2013, the future looks decidedly gloomy.
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