One of the few remaining independent mid market ERP providers is about to come under PE ownership as EQT VII takes a majority stake in Swedish IFS. It will follow up with a mandatory bid for the remaining shares within the next four weeks, which is unlikely to be contested as the initial shares were acquired from key shareholders.
EQT is paying a premium of c20% on the average share price over the past six months, representing a valuation of 9.05 SEK/$1.04bn/£69m. In the first nine months IFS reported revenue of 2.4bn SEK with 180m SEK operating profit. In Q3 revenue was up 1% to 772 SEK (see here) - and that’s the crux of the matter. Although IFS has been growing well, benefitting from its focus on thee key verticals (Oil and Gas, Aerospace and Defence, Field Service Management), and a lower cost proposition that enables it to go head-to-head with SAP and Oracle, EQT believes it can do more.
We see the move as being positive for IFS because it will help scale the company at a time when mid market providers have a window of opportunity to take market share from the mainstream tier 1 vendors. For more thoughts on what this means for IFS and analysis of the impact of the broader trend for PE investment in mid market ERP providers, see HotViewsExtra here. Unit4, Advanced Computer Systems (ACS), Access Technology Group, and of course Infor have all been acquired by private equity firms. It’s early days for ACS and Access, but Unit4 and Infor are thriving.
Posted by Angela Eager at '18:28'
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Sometimes you discover a ‘disrupter’ service that just ‘works’. I did so last week with Freegle – www.ilovefreegle.org . We have had a new utility room fitted and had several bits of stuff that I was going to take to the dump. But a friend suggested I gave them away via Freegle.
We put five items up on the local site and have been inundated with people wanting them. An OAP wanted our bread-maker because hers had broken. A local youth group wanted our electric grill. A person whose fridge had packed up that morning was delighted to come and collect our old one.
Sounds a bit stupid but it actually made me feel good. Certainly much better than dumping the stuff.
Freegle is a ‘not for profit’ organisation started in 2009. It has 407 local groups and 2.3m members. All groups are run by volunteers. Unsure how they get the funds to run the organisation. But, whatever, I applaud it.
Posted by Richard Holway at '14:30'
East Riding of Yorkshire Council has selected Civica to modernise all of its customer contacts as part of the Transforming East Riding programme. Civica’s Digital 360 platform will provide residents with self-service access to a range of digital transactions via a single account.
East Riding is looking to reduce the 2.7m calls the customer service network and officers receive annually. The Civica Digital 360 platform will enable residents to log service requests, via mobile devices or self-service kiosks, to the streetscene and public protection teams or view their Council Tax or Business Rates accounts. Users will be able to track their transactions and receive personalised updates. In addition to underpinning the adoption of the digital channels, the platform needs to deliver an integrated view of customer contacts and real time customer intelligence.
Local authorities are at varying stages in their digital journeys and we expect to see an increase in both the volume and value of digital transformation projects in the coming years as councils look to SITS suppliers to assist them redesign their services. East Riding will be an important reference customer for Civica further to its acquisition of Asidua (see here) and the intense competition from Agilisys.
Posted by Michael Larner at '09:59'
Sanderson continues to benefit from its position in the fast growing digital retail market. The software and IT services business, which specialises in multi-channel retail and manufacturing markets in the UK and Ireland, reports a 17% increase in revenue in the year to 30 September 2015 to £19.2m. In tandem, adjusted operating profit (before amortisation, share-based payment charges and acquisition & restructuring costs) increased by 16% to £3.3m.
It’s no surprise that it’s the retail business that’s driving growth: revenue from that division increased by 31% to £12.7m and operating profit climbed by 39% to £2.6m. A strong year-end order book (£1.45m) and good sales prospects bode well for the Digital Retail part of the business growing strongly in FY16 as well, as retail organisations rush to adopt mobile commerce products and develop in-store technology.
On the other hand, the manufacturing division reported a slight decline in revenue to £6.5m (FY14: £6.7m) and operating profit (to £680k vs £952k the previous year), contrasting with a strong performance last year. The business focused on customers operating in the food and drink sector saw some sales orders delayed, which hit profitability. However, a large order post the year-end means that the outlook for the current year is much improved.
A solid, cash-generative business, Sanderson has continued to invest in the development of its software products and services as well as in sales and marketing to capitalise on opportunities, particularly in mobile commerce and food and drink processing. We expect these two areas, together with entry level systems in the manufacturing division, to remain the focus of investment going forwards. Selective acquisitions could also be on the cards to augment organic growth as Sanderson targets £30m revenue by FY18 under its three-year plan.
Posted by Tola Sargeant at '09:51'
One of our Fourth Generation Little British Battlers (LBBs), Shaping Cloud, has filed accounts for Y/E 31st July 2015. Our initial review of Shaping Cloud is in LBB Shaping Cloud tightens focus on UK public sector and the LBB Fourth Generation report. Under the leadership of CEO Carlos Oliveira, the company, which was built around offering cloud migration and custom built software development for the Microsoft Azure platform (utilising a number of proprietary tools), has had a successful year. Turnover increased five times, just breaking the £1m barrier (FY14: £197K); operating profit stood at £174K (FY14: £189K); and PBT was £168K (FY14: £190K). Oliveira and his team are now targeting revenue of £2.2m for FY16.
During FY15, Shaping Cloud hit a few significant milestones. This included the launch of its first software product into the public sector: foiPRO (see www.foipro.com). Enabled by funding received in late 2013, Shaping Cloud has worked in partnership with a company specialising in Information Compliance to develop the first, dedicated SaaS offering for handling Freedom of Information requests. The product is now accepting registrations for a private beta and has been accepted on G-Cloud 7. Also relevant to Shaping Cloud’s focus on the UK public sector market is Oliveira’s election to Vice Chair of the TechUK Public Services Board (PSB). This should be a good platform for raising the profile of Shaping Cloud (and other SMEs) in the central government market. The company will be hoping that both these moves boost its G-Cloud success; sales to date through the framework have totalled just £20K (for specialist cloud services); much of the company’s success to date has come, instead, from building local relationships around its home town of Manchester.
It feels like Shaping Cloud has enough to be concentrating on in the UK. However, driven by US-based Chairman, Ron Reynolds, a couple of interesting projects have also transpired over the pond. It is developing a mobile app for Detroit Eastern Market and is also building an IoT platform for Green Collar Foods. We will continue to track Shaping Cloud’s progress at home and abroad.
Posted by Georgina O'Toole at '09:44'
As presaged a few weeks ago, enterprise mobility management SaaS provider, Globo, has delisted from AIM today following fraud allegations.
Those interested in this sorry (and still continuing) saga can follow the UKHotViews trail starting here and working back.
Posted by Anthony Miller at '09:38'
When Brad Petzer joined Monitise in April 2013, the company was going places. Now he is, leaving a very different company behind him.
He has resigned as CFO but will remain with the company until a successor has been found to ensure an orderly handover. The skills now required of the Monitise CFO are very different from those that Brad had expected to be using. Monitise now has to re-set its business model on the cloud and act more like a start-up again.
This is a far cry from the business that briefly enjoyed a market cap of over £1bn and grew revenue by two-thirds in 2013/4. Then however the company had little option but to change to a subscription model (see Let battle commence for Monitise) as it tried to keep pace with the market and the rate of change of technology. The market cap is now somewhere around £65m and Brad’s departure completes the exit of the earlier leadership team.
Monitise is looking to rebuild its business by leveraging its established relationships and its experience in creating secure, robust and industrial strength m-commerce systems for the financial services industry. At the centre of their strategy is their FINkit solution which shortens development cycles, using pre-built API-based financial components to enable customers to bring propositions to the market quickly. Monitise has cash in the balance sheet and understands the complexities of the wider financial ecosystem, but rebuilding the business will be a long haul for the new CFO and the new top team.
Posted by Peter Roe at '09:36'
Another positive month for tech stocks. Against the backdrop of a flat FTSE100 – indeed a flat NASDAQ too – UK tech stocks continued their forward charge. The FTSE SCS Index – which most closely mirrors the SITS companies we track – was up another 5.1%. So that’s a really massive 32% rise YTD. Unfortunately some of this is due to premiums paid on acquisitions. Support services were up 5.3% (7.6% YTD) as Serco recovers although Capita had a flat month (still up 18% YTD). Even the Telecom index was up 5.7% as BT also continues to advance. Up 6.8% in Nov and 23.6% YTD.
Parity up 49% (but still down 24% YTD). The only corporate news this month to cause this was Philip Swinstead’s decision to stand down… IS Solutions up 32% (82.5% YTD). IS is ‘in storming health’ as it refocuses on data solutions, Castleton Technology (up 24% (102% YTD). Castleton (an MXC portfolio company) focuses on systems for social housing. The market reacted well to its trading update. Lombard Risk Management up 18% (down 12% YTD) as Alastair Brown is appointed as their new CEO. SDL up 16% (up 8% YTD) – perhaps yet another example of shareholders reacting positively to the replacement of its CEO?
Serco up 18% (down 31% YTD). After all the shocks of the last few years, Serco is a now a smaller and more focused business.
Ubisense down 52% (down 65% YTD). See Revenues crash, losses spiral at Ubisense. Rather says it all doesn’t it! Blur down 22% (down 67% YTD).See Blur loses focus. Tribal down 22% (down 60% YTD). See Tribal ‘warns’ as difficult conditions bite.
The short term future looks reasonable too with most observers predicting a Santa Rally. But the medium term is still clouded by geo political issues as well as all the usuals like BRIXIT, interest rate rises etc.
Posted by Richard Holway at '09:32'
Actually, frenetic barely does it justice, given the flurry of activity at multi-faceted tech merchant bank (and TechMarketView Little British Battler programme sponsor) MXC Capital, which announced its maiden FY results today. MXC in effect IPO’d in July 2014 through a reverse-in (see MXC in reverse takeover of Broca) and subsequently restructured (in the literal sense) its operating units and then shipped itself off to tax haven Guernsey (we are obliged to say, 'not a good look’).
The results themselves have as yet no real context, but for the record, MXC reported revenues for the year to 31st August 2015 of £2.1m and net profit of £4.9m, taking into account profits from exits (e.g. see here). MXC currently has four AIM-listed companies in its portfolio (Redcentric, Castleton Technology, Pinnacle Technology and 365 Agile) along with five privately-held tech businesses. The total portfolio is currently valued at around £45m, in which MXC has so far invested £15m.
MXC also announced today a £1.33m investment for a 24.7% stake in AIM-listed cash shell ECV, to which it has also been appointed financial advisor. Formerly known as Mercedes taxi reseller Eco City Vehicles, ECV crashed and burned in October last year, with management blaming, at least in part, Uber, for its collapse. 'New' ECV is raising £5m to start on the acquisition trail. Indeed MXC co-founder Ian Smith advised that they have already exchanged Heads of Terms on four potential transactions.
If anything, the pace at MXC will get even more frenetic this year!
(Disclosure: Certain TechMarketView LLP Partners hold shares in MXC Capital).
Posted by Anthony Miller at '09:15'
Verifying the identity of individuals remains a challenge as more interactions take place online and GB Group (GBG), the identity data intelligence specialist, continues to be a company worth paying close attention to.
The half year results to 30th September were in line with October’s trading update. Revenues grew by 39% yoy to £32.4m (including an 18% increase in overall organic revenue growth) and adjusted operating profits rose by 21% yoy to £4.5m.
The Identity Proofing business grew revenues by 36% to £15.4m and H2 revenues will be bolstered by GBG’s involvement in the UK Government’s identity assurance scheme, GOV.UK Verify, via both their own brand CitizenSafe and by collaborating with Royal Mail. The Identity Solutions business saw HI revenues grow by 43% to £17m.
GBG also sees services partnerships as a route to market. In November, local goverment business process services (BPS) provider Liberata announced a tie-up with GBG in a Government-funded Fraud and Error project for a consortium of 12 local authorities. We understand this is now gaining traction with other authorities. So clearly another growth space.
International expansion has been a key focus for the GBG (see GB Group sets sights on international expansion) and now international revenues account for 26% of GBG’s business, up from 19% at the year-end in March, as a result of contract wins in the Asia Pacific region. GBG now accesses data from owners in 40 countries up from 31 in 2014.
The client base remains fragmented with the top six verticals accounting for 63% of FY15 revenues. Upselling at existing clients and tailoring propositions for particular verticals will be a focus going forward.
GBG Group has successfully acquired eight businesses in the last four years (see here) and with above in mind further acquisitions are on the horizon; supported by new banking facility arrangements with Barclays Bank PLC and Lloyds Bank PLC.
We expect that GBG will go from strength to strength in 2016 with new propositions around identity assurance in government, the utilisation of Blockchain (see Blockchain, this year’s “must-have”) and fraud prevention; both in the UK and overseas.
Posted by Michael Larner at '09:09'
Capita is now extending its 160 pence per share offer for Xchanging to 16 December, after failing to get enough backing from Xchanging shareholders by its first extension deadline of 30 November.
This means Capita is therefore extending its offer for a second time, and it could even extend it again if either CSC or Ebix decide to make a firm offer for Xchanging by 9 December.
Capita owns 10% of Xchanging today (see here), and has got valid acceptances from a further 14% of its shareholders – so 24% in total. But this hasn’t changed since mid-November, when CSC and Ebix threw their hats into the ring with tentative higher offers (see Ebix bid for Xchanging trumps CSC and Capita).
Shareholders have failed to give Capita full backing because of the significant discount of its offer versus the potential bids from CSC (at 170p) and Ebix (at 175p). Indeed the bidding war has been great news for Xchanging’s share price, which has risen steadily, and is now higher than all three offers at c180p.
While this tussle for ownership carries on, Xchanging is pursuing its own offensive, announcing new name customer wins for its Xuber insurance software. Yesterday it announced a new multi-year deal with Aon (see here), and today it announced a new deal with Cigna to provide its software and business processing services for its international health insurance policies. Xchanging put this win down to its Agencyport Europe acquisition, which gave it access to the health insurance software market.
Posted by John O'Brien at '08:30'
Some CSC shareholders might have wondered why the share price more than halved yesterday.
Let me try to explain.
In May 15, CSC announced that it was ‘Doing the splits’. A US Public sector based unit and ‘the rest’.
In Sept, CSC (Public Sector) bought SRA (a similar US-based public sector IT services provider) for $390m. See CSC – One up. One down.
Yesterday, the split occurred. CSC shareholders received the same number of shares in CSRA (the ticker for the US Public sector bit) with CSC remaining the ticker for the rest.
On top of that CSC shareholders get a $2.25 per share special dividend and CSRA shareholders get $8.25 - $10.50 in total.
Mike Lawrie continues as CEO of CSC which also retains the existing CSC logo. CSC now has 56,000 employees and revenues of $8.1b.
Mike Lawrie is the new Chairman of CSRA which unveiled a new logo. Larry Prior is the CEO of CSRA (he ran CSC Public sector business in the US) CSRA will have revenues of $4.1b.
Hope that is all crystal clear! Anyway, if you were a CSC shareholder last Friday, all-in-all you are worth about the same today as you were then.
Posted by Richard Holway at '08:09'
Just a day before the company reports its half-time results, AIM-listed hosting services company iomart has announced the acquisition of Hemel Hempstead-based SME managed services firm United Communications Limited (trading as United Hosting). iomart will pay £7.5m cash on the nose and up to further £3.5m on a two-year earn-out.
United turned over £2.4m this year (to 30th April 2015) with £1.3m EBIT, which makes the maximum £11m that iomart might pay look a little fruity at first blush. Having said that, iomart itself has a market cap of around £320m and reported FY revenues of £66m this year with an operating profit of £12.2m (see iomart boosted by hosting acquisitions), on which basis United might look cheap! Or …
Anyway, all part of life’s rich tapestry – and iomart’s growth strategy – and we will have more to say tomorrow.
Posted by Anthony Miller at '07:50'
Paysafe (formerly known as Optimal Payments) will list on the Main Market of the London Stock Exchange just in time for Christmas, on December 23rd, if the approvals process goes as expected. Existing shareholders may well benefit as the promotion to the big league opens up the share to more investing institutions. Many could be eager to build a stake in this global provider of online payment solutions with a good geographical spread and a balance of revenue and profit between its operations in prepaid cards, digital wallets and payments processing.
Today the company has acted to close the historic issue of data breaches which affected two of its operations in 2009 and 2010, see here. According to today’s announcement, any problems from the relatively small number of accounts that were compromised seem to have been settled. The company has understandably invested heavily in cyber-security since then to meet the changing and growing threat and is not aware of any similar data breaches since that time.
The payments market is very volatile and increasingly competitive, but Paysafe, following the acquisition and integration of Skrill, has the breadth and scale to build a strong market position. However, the management will probably have to contend with a slower growth rate and tough opposition. Consequently, we would expect them to be on the look-out for more acquisitions to further their growth ambitions.
Posted by Peter Roe at '09:50'
London-based restaurant payment app Velocity has just made another acquisition, that of London-based restaurant reservation app Uncover. Terms were not disclosed. A couple of months ago Velocity acquired US-based restaurant payments app, Cover.
Back in June Velocity raised $12m in a Series A funding round from various angel investors – a surprisingly large sum from this source of funding for a UK start-up. This was topped up with a further $4m in September.
Not in the least surprised to see consolidation in the mobile restaurant payments market. There are a number of players already here in the UK, including start-ups Splittable and Flypay as well as Mastercard’s own Qkr! app. Dare I say I still find it easier just to tap my credit card than dragging out my smartphone, but clearly there are many who prefer to engage with high technology to pay for their £8.95 bowl of noodles.
Update: Just heard from one of our legion Twitter followers that Uncover was Velocity's 3rd acquisition. Besides Cover they acquired Toronto-based Tab last month.
Posted by Anthony Miller at '09:43'
Business process services provider Xchanging, which is at the centre of a takeover battle between Capita, CSC and Ebix (see here and work back), has announced global insurance broker Aon as a big name new customer for its insurance platform Xuber.
Xchanging said it had signed a contract with Aon, to provide Xuber software, implementation services and ongoing support for its wholesale broking operations within the London insurance market.
This contract follows more than 20 smaller Xuber contracts won during 2015, including a six-year contract with Ariel Re, to provide policy, claims, billing and ceding tools. It’s clear a lot of this momentum has been helped by Total Objects, the insurance SaaS provider Xchanging acquired late last year (see here). MD Jim Barry said Total Objects’ performance had exceeded expectations, with new name wins in Australia, the UK and North America.
As we pointed out in our BusinessProcessViews and FinancialServicesViews note Why is Capita breaking its rule book to buy Xchanging?, the Xuber product set and the supporting bureau services, are the real prize for the bidders in this current takeover battle for Xchanging.
Huge costs are associated with managing and transacting global insurance business for major industry sectors like oil and gas. Insiders tell us the crown jewel is being able to ‘Uberize’ this sector, by disintermediating the supply chain, so that transaction costs go down along with premiums for clients. Whoever gets this right over the next few years is likely to make a lot of money.
Posted by John O'Brien at '08:31'
FinancialServicesViews does not normally comment on companies active in the gambling and gaming markets, but today we note that Playtech has signed a five-year deal with News UK to operate its Sun bingo website and connected mobile offerings.
Of greater importance however, is that Playtech has been thwarted in two of its larger M&A deals as it has failed to get approval for the purchases of Plus500 and of AVA Trade, both operators of trading platforms. The FCA’s concerns (in the case of the Plus500 deal) and the Central Bank of Ireland’s more direct opposition to the AVA Trade deal have placed insurmountable obstacles in the way of Playtech’s latest ambitions in the financial services sector so the management will have to think again.
These deals would have been two of the ten largest deals within the UK Financial Services sector, as reported in our recent analysis; M&A Trends in Financial Services SITS. This report analyses the major trends in this important aspect of the sector, which we believe will become even more critical as SITS companies try to cope with greater competitive pressure and increasingly demanding customers.
Posted by Peter Roe at '08:31'
Buried deep in the bowels of Kingston & Hull-headquartered telecom services provider KCOM Group sparkles a little gem of an IT consultancy that is trying to shine brighter.
The history behind this consultancy, branded Smart421 (“Smart solutions for the 21st Century”), alone makes interesting reading (see here) – arguably the future more so, given its increasing focus on cloud services (see Public cloud providers: Unlocking enterprise spend).
In the six months to 30th Sept, Smart421’s revenues jumped 30% to £16.6m, though the 20% rise in EBITDA, to £1.8m, squeezed margins down from 11.7% to 10.8%. Smart421 often works alongside sibling business unit Kcom (the non-Hull/East Yorkshire telecoms services part of KCOM Group – as opposed to KC, the bit that does Hull/East Yorkshire. Get it? Got it! Good), notably in implementing cloud-based multi-channel contact centres.
Just for the record, KCOM Group’s revenues for the period grew by 3% to £177.9m though operating profit eased back 3% to £25.8m. However, pre-tax profits grew 2% to £24.2m.
It must be said that KCOM Group is a bit of a mish-mash of business units and I can’t see Smart421 having the chance to really flourish until it is untangled from some of the other parts of the Group – or perhaps find an entirely new home.
Posted by Anthony Miller at '08:01'
This is the first in a series of short reports into the emerging Intelligent Automation (IA) space as it applies to Business Process Services (BPS). The series builds on our research into the fast-growing Business Process Automation (BPA) space (see Business Process Automation - a brave new world for BPS providers and TMV Evening - September 2015).
In Part One here, we outline what we mean by Intelligent Automation in the context of BPS, assess the technology and service enablers, and identify how BPS providers are building strategies to position themselves in this emerging space.
In subsequent reports we will look into the impact of Intelligent Automation on the Workforce of the Future, and provide deep dives into specific enabling technology and services opportunities including: Robotic Process Automation; Artificial Intelligence and Advanced Analytics.
Subscribers to TechMarketView's BusinessProcessViews research stream can read the new report here - Business Process Automation - What is 'Intelligent Automation'?
If you're not yet a subscriber and would like to find our more, please contact Deb Seth (email@example.com), who will be delighted to help.
Posted by John O'Brien at '07:26'
The choice of Alastair Brown as the new CEO of Lombard Risk Management is an interesting one for this specialist provider of collateral management and regulatory reporting solutions. He will probably find that his new role is a lot more diverse and challenging than his various technology leadership posts at RBS, most recently as Head of eChannels, in RBS Global Transaction Services. He will take up his post in December.
However, he is joining a company in a relatively strong position, with a tried-and –tested platform approach and offering trading companies straightforward and cost-effective solutions based on substantial experience and domain expertise. Over the past eighteen months we have seen real progress in terms of the number of new clients brought on, see here, and in expanding its geographical reach with investment in the US and Far East. Market trends are also in the new CEO’s favour as the regulatory burden and cost pressures on market participants will only continue to rise.
Mr. Brown will however have to be careful to avoid the obvious banana skins of the last two years, where reported results have been hit by delays, either due to regulator tardiness or through the complexity of signing bigger deals, the latest such event being in March of this year. Shareholders and customers are also likely to be expecting significant progress as the new CEO takes over. At the half-year the pro-tem Executive Chairman whetted the collective appetite about the art of the possible re cloud delivery and industry-wide collaboration, see Lombard looking to bigger things.
We wish Mr. Brown well in his new role and we will follow his progress with avid interest.
Posted by Peter Roe at '09:09'
Funding of UK and Irish tech companies continued to be very active last quarter, with a total value of venture capital investment of £638m in 131 deals by 115 investors, according to latest data from corporate finance firm, Ascendant. Although this is 4% down in value terms from the record level Q2, it is up 74% on the same period last year and the number of deals is an all-time record high.
Subscribers to TechMarketView's Foundation Service can read our analysis, along with commentary on selected deals, in our latest IndustryViews report, IndustryViews Venture Capital Q3 2015, which is available for download here.
If you don't yet subscribe to the Foundation Service and you'd like details of our Subscription Packages please email Deb Seth in our Client Services team.
Posted by HotViews Editor at '08:26'
Tickets for The Future of Team Collaboration, an exclusive event in London on December 2nd, are almost sold out. The event, run by award-winning software development company Clearvision, features inspiring talks and promises delegates the opportunity to discover next-generation software solutions.
The ability to be agile and adapt to fast-evolving technology is essential to the success of any business. By focusing on the very latest in collaboration tools and trends, attendees will leave the event perfectly positioned to transform their teams and boost productivity through groundbreaking collaborative techniques.
Network with tech industry thought leaders, get exclusive product demos of cutting edge collaborative tools, and take inspiration from keynote speeches by Professor Brian Cox, SAS veteran Chris Ryan, and Head of Collaboration at Atlassian Spencer Frasher.
The day’s agenda offers a more detailed breakdown of what you can expect.Click HERE for more details.
Throughout the day there will be additional talks from collaborative experts. Each session will be followed by an interactive Q&A panel, where attendees will benefit from real time collaboration thanks to the event’s iPad conferencing, featuring Clearvision’s purpose built app.
With just a few days until the event, this is your last chance to grab a ticket to what is expected to be a sell out event. Don’t miss this opportunity to hear exclusive talks from the leading voices in the tech world, just five minutes from King’s Cross Station at the iconic Kings Place venue. Book tickets to secure your place today.
Visit www.teamwork.life for more information and tickets.
Posted by Clearvision at '00:00'
I’m delighted to report that Allianz Technology Trust (#ATT.L), where I have been a Director since 2007, last night won the ‘Best Specialist Investment Company’ at the Investment Week Investment Company Awards.
It’s an Award based on quantitative data over three, 1 year periods since June 2012 and the cumulative share price return for the whole three years. ATT won on every count against some 13 specialist trusts including our two main tech ‘rivals’ Polar and Herald.
Over 3 years to 30th June 15, ATT had a share price return of 102.3% (ie it DOUBLED) against our benchmark (the Dow Jones World Tech Index) return of 52.3%.
Of course, this was all due to my involvement…
But seriously, the Fund Manager, Walter Price, and his team in San Francisco, must take the credit for this. I visited them last week (see – Tales from the Valley) and I know first-hand how passionate they are towards both technology in general and #ATT in particular.
As they say ‘past performance is no indicator of future performance’. Walter Price has a particular emphasis at the moment on some of the hottest trends: cyber security in particular. But also on the kind of undervalued, profitable and cash-generative companies that we report on (and rather like) in HotViews. The Top Five holdings as last reported on 31st Oct 15 were Microsoft, Amazon, Alphabet/Google, Intel and Visa.
Posted by Richard Holway at '17:36'
In yesterday’s Joint Spending Review and Autumn Statement, Chancellor George Osborne sought to shift the emphasis from ‘rescue’ to ‘rebuild’. Buoyed by improved finances and better forecasts from the Office for Budget Responsibility, he was able to make a u-turn on cutting tax credits and protect police budgets in real terms. The alternatives would have been politically unpopular. But that’s not to say we are entering an easier period. This is a Chancellor sticking to his “fixing the roof while the sun shines” mantra. He still sees a great opportunity to make the machinery of government more efficient, which will lead to an increasing ‘shrinking of the state’. Departmental budgets will continue to shrink over this spending period. The unprotected departments will suffer the most. But even in the priority spending areas, like health and police, the Chancellor still expects efficiency savings to be made so that resources can be redirected to the delivery of frontline services rather than the back-end administration.
Two words stood out in the statement in terms of how that efficiency will be achieved: digitisation and collaboration. On digitisation, a £1.8b investment in digital was announced, including £450m for the Government Digital Service. A Digital Transformation plan is due in 2016. But it is clear that much of the spend will go on HMRC’s digital tax accounts. While at GDS the only ‘new’ Government-as-a-Platform initiative highlighted was the common payments platform. However, across many departments, the “harnessing of today’s technological advances” was a common theme, from a £700m investment in digitising the courts, to a £1b investment in the next generation 4G communications network for the Emergency Services (enabling officers to access police databases, take mobile fingerprints and e-witness statements and stream live body-worn video), to a £1b investment in new technology in the NHS (see What does NHS funding boost mean for SITS?).
In terms of collaboration, there is numerous evidence that more joint working is on the cards: increased collaboration between the three security and intelligence agencies and the Armed Forces (see Defence & National Security: Important role for ICT innovation); the introduction of a £115m fund for the Joint Work and Health Unit, including £40m for an innovation fund to pilot new ways to join up across the health & employment systems; and the ‘Devolution Revolution’, which will see more power given to nations, cities and local authorities, resulting in a more joined up approach at local level.
Having trawled the statement, we will have more detail on all the above in a PublicSectorViews research note in the coming days. If you are not yet a subscriber, please contact Deb Seth to find out more.
Posted by Georgina O'Toole at '09:24'
Access Technology Group is one of those rare beasts - a UK HQ’d mid sized software company - and one that is going from strength to strength, as its FY15 results confirm.
The provider of business software solutions for select verticals ended FY15 with a 29% rise in revenue to £68.9m. Although acquisitions contributed to the result, even organic growth was an impressive at 13%. High growth levels are not a one-off achievement either as FY14 illustrated (see here), as was the case with prior years too. Under the leadership of CEO Chris Bayne and his management team, high growth has become a feature of Access but they are not pursuing a ‘growth at any cost’ strategy so the bottom line continues to push upwards. FY15 EBITDA was £15.4m, a cool 33% yoy increase. Increasing EBITDA has also become an apparently sustainable habit for Access even while it is investing in SaaS (and its on-premise products) and building its SaaS revenues.
PE firm TA Associates took a majority stake in Access in January (see here). We had a chat with Bayne yesterday and detected a palpable new force within the company on the back of the TA interest. It seems that TA is enabling Access to think big and is also providing the support and advise to support bigger ambitions, but without trampling on the Access culture (it was one of The Sunday Times 100 Best Companies to Work for in 2015). There is a lot under the covers with Access, including a smart way of getting into adjacent verticals, which is based on targeting vertical specific mission critical operational systems (e.g., rostering Health and Social Care). Its biggest issue is visibility in the wider market, although visibility can be a double edged sword for a profitable, high growth software company.
Posted by Angela Eager at '08:34'
mporium, the mobile commerce specialist morphing out of MoPowered is completing its transformation, fuelled by another placing for £3.1m.
MoPowered had briefly offered much in terms of helping retailers set up mobile commerce sites, but its on-boarding process was too slow and expensive so the company lost momentum and went into free fall, see here and work back. The current management will close the MoPowered platforms so that from mid-2016 the fortunes of the business will be entirely driven by the company’s new strategy.
At the half year stage, to the end of June, mporium’s losses had widened to £3.9m, on revenue of £560k, as a result of re-structuring.
The company is now centred on the operations of FWM (previously FastWebMedia), a digital marketing agency and its strategic alliance with Cxense. Cxense offers tailored websites to retailers, providing user analysis and generating product recommendations and enabling targeted advertising. mporium has also bought the remaining shares in InTELEgentsia which supports FWM with additional analysis tools to support e-commerce and context-related advertising.
The funds raised are to enable further product development and the expansion of working capital as the mporium’s new product strategy, which is still largely under wraps but which aims "to deliver advanced m-commerce functionality including detailed analytics, targeted marketing strategies and personalised content”.
M-commerce is a competitive and fast-changing world, as the previous leaders of this company found. The new management team will do well to remember where their predecessors went wrong as they build their new operation.
Posted by Peter Roe at '08:34'
It’s actually old news if you are an avid reader of the excitable Economic Times of India, but the less excitable media picked up the story today that ex-Infosys CFO Rajiv Bansal has turned up at Bangalore-headquartered taxi hailing start-up Ola. Bansal bailed out from Infosys in October (see Infosys grows faster, reduces forecast, loses CFO). Ola is apparently India’s largest taxi-hailing app – a case of ‘Ola uber Uber’ I suppose.
What may be newer news, though, is the resignation of former White House director of energy and climate change policy, Carol M Browner, from the Infosys board ‘for personal reason’ with immediate effect. So immediate, in fact, that her profile has been deleted from the Infosys website though there appears as yet to be no official announcement. Browner was appointed as non-executive director as recently as April last year.
This is not encouraging news, coming barely a week after Infosys alerted the market that all was not going well in FYQ3 (see Infosys serves up a double-fault). Dissension among the upper ranks?
Posted by Anthony Miller at '07:52'
On Monday night I had the pleasure of being involved in the Prince’s Trust Corporate Employee Awards. Only a few years back the Trust raised only limited funds from employee fundraising. But in the last year a massive £2.3m has been raised from this source. Over £1m of that comes from the Million Makers scheme (think Dragon’s Den) and the rest from active stuff like the Palace to Palace (P2P) cycle event or the London marathon.
I’ve found that these activities are ‘WIN WIN’. The Trust wins not only because it raises much needed funds to help its work with disadvantaged young people but also because it greatly increases retention of its corporate supporters who have embedded these activities into their employee infrastructure. The corporates themselves gain because of the team-building this engenders (eg the CEO ‘s often lead their teams in P2P) and the now well evidenced finding that employees are both attracted to and will stay longer with companies that have a strong social ethic.
So let me applaud Monday’s winners; particularly those from thetech sector. Although everyone who raises funds for the Prince’s Trust is a winner!
Zero to Hero – Winner NatWest, #’2 Samsung, #3 Ricoh
Million Makers – Winner EMC, #2 ATOS, #3 Admiral
Active Challenge – Winner VMware, #2 NCP, #3 Cognizant
Road Runners – Winner Morgan Stanley, #2 Qatalyst, #3 Bloomberg
Blazing Saddles <5000 employees - Winner Xerox, #2 Zoopla, #3 Xerox
Blazing Saddles >5000 employees – Winner Accenture, #2 HP, #3 ISS. Accenture raised £82,000 for the Trust at P2P.
Going for Gold – Winner Capita, #2 Costain, #CGI. Indeed worth mentioning that Capita has raised a staggering £300,000 for the Prince’s Trust in its first year as a partner.
Volunteering <5000 employees – Winner BGL group, #2 SDL, #3 ARM
Volunteering >5000 employees – Joint Winners Accenture & Barclays, #3 Natwest
All Round Hero <5000 employees – Winner Samsung, #2 Commerzbank, #3 Ricoh
All Round Hero >5000 employees – Winner Barclays, #2 Accenture, #3 Natwest
Well Done to everyone. If you’d like to get involved next year – the Prince’s Trust 40 Anniversary – then please drop me an email at firstname.lastname@example.org.
Photo - Me with Ben Marson and Jo Passington from the Prince's Trust. The presenters last night. All Copyright Lucy Starling.
Posted by Richard Holway at '12:21'
My ‘hearty’ support (See – Tesla My heart ruled my head) for Tesla – which only grew after my factory tour last week – allows me to post a photo of the new Model X falcon-winged SUV which goes on general sale today at a ‘knock down’ (?) price of $80,000 (although you could easily add another $40,000 for extras). The original Model X was only available to the rich, early adopters at a price of $132,000. Mind, will have to wait until late 2016 for delivery.
Tesla is not without its ‘issues’. They had to issue a voluntary recall for the entire Model S range last week amongst mounting reliability concerns. Tesla is also burning cash and reporting increasing losses. Will they have to tap investors once again?
Of course, even as Elon Musk has ‘admitted’, becoming a volume car manufacturer is a whole lot more difficult than building almost any tech product. But this is the first new volume car manufacturer to be established in the US since the 1920s. The Model X is essentially two years late already. As Forbes says “To say that a repeat of this performance with the upcoming Model 3 [the people’s Tesla priced at c$30,000], which Tesla is counting on to push much higher volumes by decade’s end, would be a disaster isn’t an understatement’.
But as I said, I went into my (modest) Tesla investment with my heart not my head! I just hope Musk succeeds against the odds
Posted by Richard Holway at '12:01'
There has been a mixture of bad and good news for the UK Challenger banks in recent days.
On the negative side, the Treasury rules are making life difficult for the Challengers in that they have to hold much more capital than the established banks with long lending histories for the same class of loans. As a result, for the “safe bet” loans in the corporate sector which would be an important part of their growth potential, they are priced out of the market. This is likely to be a serious drag on their development
Good news is focused on the recent flow of money into these new organisations. The most significant deal is the injection of £45m into digital bank Atom by the Spanish giant BBVA. The history and style of these two banks could not be more different, with branch-less Atom founded by the iconoclastic Anthony Thomson who had earlier established Metro Bank, while BBVA was created by a series of mega-mergers in the 1980s and like all the large Spanish banks has more branches than you could shake a stick at! BBVA has digital aspirations though, having already bought US Simple Bank.
The BBVA investment in Atom highlights an important aspect of the banking market, that the new Challengers can enable larger competitors to put their toe in the UK water with little risk, and at the same time try out new digital banking models. The larger banks, like BBVA and Banco Sabadell (the buyer of TSB) will have the scale, capital and lending experience to mitigate the issue of the Treasury rules. Consequently, it may well be that the Challenger bank sector becomes an incubation lab of new high-tech banking models for the world’s banking and alternative finance giants.
Posted by Peter Roe at '09:25'
Target Group, the privately-owned provider of software and outsourcing services to the lending and insurance markets, has added another provider of alternative finance to its growing list of customers. This time it is Hope Capital, a five-year old provider of short-term bridging loans, that has signed up to use Target’s Bluechip software solutions aimed at the finance broker and short term lending community.
Target’s approach is to have a consistent end-to-end service platform from which it offers BPaaS (Business Process as a Service) to its customers so that they can benefit from the Group’s scale and experience. This approach is particularly attractive to start-ups and smaller companies, with little up-front costs or capex required. The growth of this business in the lending space, fuelled by the proliferation of new alternative finance providers, supplements the Group’s progress in the provision of platform-based services for the insurance market and other notable successes, such as in supporting the DVLA in its move away from tax discs to a digital approach.
Target is benefiting from being out of the spotlight that a market listing would bring. It has re-organised its top management team, see here, and brought in a number of seasoned executives to strengthen its customer relationships and growth credentials. Its disciplined approach looks as if it will continue to drive good performance and after a good 2014, the current year should show further substantive progress.
Posted by Peter Roe at '09:21'
CEO Mike Lawrie is continuing to make an acquisitive mark on the new-look CSC, this time acquiring UXC, ‘Australia’s largest independent and publicly owned IT services company’.
CSC is acquiring a 100% of UXC for $308m in shares, after completing the due diligence commenced back in October. UXC employs nearly 3,000 people, and made 2015 revenues of A$686m (US$493.9m). The company claims to be a regional leader in enterprise application capabilities, including Microsoft Dynamics, SAP, Oracle and ServiceNow implementations.
As Hot Views readers will also know, Lawrie has also thrown his hat in the ring to acquire UK-based insurance software and business process services (BPS) rival Xchanging (see CSC enters bidding war for Xchanging). CSC has until December 9 to make a firm offer.
Posted by John O'Brien at '09:13'
Meg Whitman, president and CEO of the recently launched Hewlett Packard Enterprise (HPE) (see here) said the business has got off to a ‘very strong start’, with a second quarter of constant currency (ccy) revenue growth in Q4. Whitman expects that momentum to continue into FY16.
Overall HPE’s Q4 revenue grew 3% (ccy) to $14.1bn (although down 4% at the headline level). This was a much better result than in the consumer-focused HP Inc. (printers and personal systems), which fell 14% at the headline level to $12.7bn.
Q415 (ended 31 October) is actually the last set of HP results prior to the split on 1 November. We will get a true picture of HPE (and HP Inc.) as fully independent companies from Q116 onwards.
While the HPE headlines sound encouraging, a look under the covers shows a very mixed picture.
HPE’s growth was entirely driven by the Enterprise Group (servers, storage and networking) – up 9% (ccy) to $7.4bn. Enterprise Services (ES) is still in decline – down 2% (ccy) (-9% headline) to $5bn. However, cost cutting and restructuring has had a big impact on the bottom line, with non-GAAP operating margin now running at 8.2%.
Across ES, ITO revenue was the big faller, down 11%, while application and business services (ABS) revenues were down 5%, and software was down 7% to $958m. The shift to cloud and everything as-a-service is deflationary to HPE's legacy business.
We recently met up with the senior management of HPE’s business process services business, to see how this impact is being turned around. HP has clearly been working hard, and now has some strong new propositions in areas like business process automation, analytics and customer experience. It’s clear this is still a work in progress, but management believes the worst is now behind them - something that is echoed from the top by Whitman. We look forward to 2016 with interest.
Posted by John O'Brien at '08:52'
PwC and Google have teamed up to form an Innovation Lab in Belfast to spread the digital word. Known as the Google Innovation Lab and based in PwC’s Northern Ireland HQ, it reflects similar set-ups in New York and Sydney but is the first in Europe. It comes out of a partnership the two formed last year to encourage more businesses to use Google’s software products.
For Google, that is the crux of if it because it is on a mission to boost its enterprise credentials and drive adoption of software products such as Google for Work and Google Apps as well as its cloud platform (see here). But Amazon Web Services and Microsoft Azure are doing much the same. PwC will benefit from the high profile partnership and the ability to showcase digital innovations.
In our view, digital transformation needs suppliers to demonstrate ‘the art of the possible’ so innovation labs have an important role to play. The Google/PwC lab follows the creation of innovation labs by various suppliers. No new jobs are being created as yet, but PwC expects they will be as the workload ramps up. The Innovation Lab could be important in attracting new and different types of talent, which is another contributor to digital transformation - and supplier's digital credibility.
Posted by Angela Eager at '08:13'
Our latest InfrastructureViews research outlines our thinking on HPE’s Cloud28+ cloud services initiative, which was presented at the recent EMEA Cloud Analyst Day/Cloud28+ Symposium.
Cloud28+ was launched in March 2015 with the aim of fuelling the adoption of off-premise technologies across Europe; 28+ refers to the twenty eight members of the European Union. So far over 150 organisations have become members. Cloud28+ is a worthy initiative and demonstrates how an EU wide digital market place might be created.
Subscribers to InfrastructureViews can access the report here. If you do not subscribe to this research stream, please contact Deb Seth to find out more.
Posted by Michael Larner at '19:15'
TechMarketView’s PublicSectorViews team has just published its annual review of the software and IT services (SITS) landscape in the UK public sector – UK public sector SITS supplier landscape 2015-16. Following a detailed analysis of the company performance of the leading suppliers, the report provides our latest ranking of the Top 20 players in public sector SITS and reveals how those suppliers have performed compared to their peers and to the market as a whole. In a vertical where the larger SITS suppliers are perceived to be struggling, the rankings may provide some surprises!
In the report, we define the market environment in which the top-ranked suppliers are operating and consider some of the approaches they are taking as they react to changing market conditions. Subscribers can access in-depth profiles of the leading 20 suppliers to the market, which include a thorough analysis of the recent performance of those businesses, their UK public sector strategies and our view of their prospects.
We also look at some of the ’challengers’ to the market—those that are challenging the status quo and offering a different proposition to the leading suppliers in areas like infrastructure services, network services and software.
If that wasn’t enough, the PublicSectorViews team also provides additional detail compared to previous years; the report includes Top 10 rankings for each of the six subsectors as defined by TechMarketView - central government, local (& regional) government, education, health, police and defence (& security) – along with our view of what is driving the success of the leading players in those markets.
Subscribers to TechMarketView’s PublicSectorViews research stream shouldn’t hesitate to download their copy of the report – here. If you are not yet a subscriber and are frustrated that you can’t get hold of this detailed piece of analysis, please contact Deb Seth and she will look to rectify the situation for you.
Posted by Georgina O'Toole at '17:48'
Yesterday the UK Government published its National Security Strategy and Strategic Defence & Security Review (NSS & SDSR). The key message is that the UK will invest more in equipment and people over the course of this Parliament for the country’s national security – as a country we will simultaneously meet the NATO target of spending 2% of our GDP on defence and the UN target of spending 0.7% of our GNI (gross national income) on development, while increasing investment in our security and intelligence agencies and in counter-terrorism. The Government has committed to a real increase in the defence budget year on year.
Despite the defence, national security and intelligence agencies, and counter-terrorist organisations, being under the same pressure to find efficiency savings (more than £11b has been identified), that money is set to be invested back into national security priorities. In UKHotViewsExtra – Defence & National Security: An important role for ICT innovation – Georgina O’Toole considers the role that ICT will play in the UK’s national security in the years ahead - in both achieving the efficiency savings and making defence & security orgnaistions more effective - and the likely opportunities for software and IT services suppliers.
Posted by Georgina O'Toole at '12:15'
The government’s priorities for investment over the next five years are already clearer today, a day ahead of the full Spending Review announcement tomorrow. Following the boost for defence and security spending yesterday (see Defence & National Security: Important role for ICT innovation), Chancellor George Osborne today announced an above-inflation injection of cash for front-line NHS services in England.
NHS England will get an additional £3.8bn of funding next year, a rise of 3.7% on its £101bn front-line budget once inflation is taken into account. By 2020-21, NHS England’s budget is set to be nearly £120bn meaning the government will have kept its manifesto promise to increase front-line NHS spending by c£8bn after inflation. Coupled with the extra £1.8bn that the NHS received this year, it means that the government can claim to have increased spending by over £10bn, with c£6bn front-loaded by the first year of the Spending Review.
TechMarketView subscription service clients can read our analysis of the implications for SITS suppliers in the latest UKHotViewsExtra article: SITS suppliers should give cautious welcome to front-line NHS funding boost.
Posted by Tola Sargeant at '11:13'
It was good to see some positive noises among a mixed bag of comments from Luis Alvarez in eurocomms.com as he gave an overview of BT Global Services’ trading.
As we have seen, the decline in UK public sector contracts has had a serious impact on top-line figures, but the worst appears to be over. That said, the latest rumblings from the Chancellor give few grounds for optimism here. Luis was talking positively about double-digit growth in AMEA and good progress in the US and together these operations now account for >25% of divisional revenue.
The company is also emphasising its security credentials, particularly as more customers increase their dependence on Cloud. BT GS has benefited from the Group-wide security operation being moved into this division in June 2014 and as we stated in our recent Public Sector Opportunities Bulletin, companies have been able to maintain revenues and contract sizes by attracting new spend in the area of cyber security.
Security is an intrinsic feature of BTGS’s Cloud of Clouds proposition, see here and work back, and capability here should be a major selling point. We remain convinced that the CoC proposition can be a substantial generator of revenue and profit for the Group, but also that the market is already competitive and becoming more so. BT probably needs to pick up the pace here, invest more and celebrate some successes or it could jeopardise its longer-term market position.
Unsurprisingly, Luis was not forthcoming about the prospects for revenue growth, repeating the forecast of improved earnings in the second half. Nevertheless, top line growth and investment in capabilities to drive long-term margin are fundamental components of a value-creating strategy. BT Group need to ensure that BTGS has the wherewithal to fulfil its potential.
Posted by Peter Roe at '09:58'
Our interest was piqued by sentiment from the UK & Ireland SAP User Group conference this week on the whole ‘digital business’ theme. Basically, 80% of members surveyed are skeptical about digital buzzwords from suppliers but do believe in the concept and that suppliers can add value.
What they really want, according to User Group chairman Philip Adams, is for suppliers to work with them in practical ways to help define the digital business case, understand the process design, and provide hands-off transformation advice so enterprises can define their own strategy and start project implementation. Furthermore, the User Group survey found that 30% of SAP customers already have a digital strategy in place, and 36% without one are still embarking on digital projects. Of those 69% consider digital transformation as a priority, while 87% per cent are focusing on modernising back or front-end part of the business.
Clearly, the digital appetite is there and activity levels are evident and rising. As we have said before (see ESAS Market Trends & Forecasts 2015), the onus is on suppliers to assist on the business case to demonstrate the value. We also take the view that outside the retail area, many digital examples have been uninspiring because they have tended to be ‘faster’ rather than ‘different’ and better of course. However, recent briefings with suppliers such as CSC and NIIT Technologies (see here), which included insight into several digital case studies, shows the level of innovation across live projects is increasing. This heartening in terms of demonstrations of digital business value.
Posted by Angela Eager at '09:21'
London-based food delivery start-up Deliveroo is really motoring, has just received a further $100m cash injection in a Series D funding round led by DST Global and Greenoaks Capital, along with existing investors Accel, Hummingbird Ventures and Index Ventures. This brings total funding so far to a few dollars short of $200m and follows a $70m Series C round last July. The funds will be used to further expansion – Deliveroo already operates in 50 cities across 12 countries.
Here in the UK Deliveroo competes against the likes of take-away delivery services Just Eat and hungryhouse. It differs by having its own fleet of drivers, and by delivering food from ‘quality’ restaurants that do not offer their own take-away service (see Deliveroo, Just Eat – battle of the business models). Deliveroo charges £2.50 per delivery and, I assume, also takes a cut from the restaurant.
If you think of Deliveroo as an ‘express logistics’ play rather than a fast-food business (i.e. pick up from location A and deliver within 30-60 minutes to location B) then maybe we can use the likes of DHL Express and Fedex Express to give a first cut on a ‘mature’ profitability model – in which case we’re looking at high single-digit operating margins. If so, when?
By the way, my first (and only) experience with Deliveroo was a bit of a catastrophe (over 90 minutes to get our Thai chicken curry) – though that was more because the restaurant apparently couldn’t cope with running a take-away side-line (which is why I assume they didn’t offer the service themselves). Let’s hope that was a rare exception.
Posted by Anthony Miller at '09:20'
We would like to welcome Clearvision as a banner advertising client. Award-winning software development company Clearvision are presenting The Future of Team Collaboration, a one day event at Kings Place, London, on December 2nd. Keynote speakers include Professor Brian Cox, Chris Ryan, senior Atlassian figures and software experts. To book your ticket for this event or find out more information, click here.
If you are interested in placing a banner advert or sponsored post to promote your event, white paper, webinar, product launch etc., please contact Helen McTeer for more information.
Posted by HotViews Editor at '09:09'
At the half year results in September, SQS, the software testing specialist, raised the spectre of margin pressure in its Regular Testing business and warned of full-year profits being “slightly below the Board’s previous expectations” (see here). Unsurprisingly there was a sharp mark-down, of 15% in the share price. However, the share has now recovered most of this loss and today the management talks more positively about trading and the impact of their action to stem the problem.
The key to the improvement is the continued push into Managed Services and Specialist Consulting business, which has been boosted by the company’s quick-fire acquisition policy, boosting its US operation (see here) building on the landmark Thinksoft move in late 2013. The three acquisitions this year, of BitMedia (now SQS Italy) Trissential and Galmont Consulting have all improved the company’s international footprint and consulting credentials. New contract wins in the US; in healthcare, software re-selling and financial services, support the company’s belief that the US will reach its target of US$100m annualised revenue. European contract wins in defence, the IoT and a global engagement with a Spanish retail bank all reinforce the company’s medium term confidence.
Cost cutting and a more selective approach to new customer acquisition has improved the situation in the commodity, Regular Testing operation. As customer companies try to accelerate the introduction of new “digital” services, integrating them with legacy systems, their need for testing increases significantly (for example in financial services). However, the “bulk testing” market is very competitive with Indian Pure-Plays being particularly active and SQS is clearly following the right strategy by shifting “up-market”.
Posted by Angela Eager at '08:48'
IS Solutions (ISS), the integrator of portals, analytics and enterprise content management (ECM), said it has now successfully transitioned itself into a 'data solutions' business for the financial services, retail and airlines sectors. With over 70% of its revenue now coming from analytics, it’s a claim IS Solutions can justifiably make.
The business itself is in storming health, after its ‘excellent’ start to FY15 (see here). Revenue for the six months to 30 September more than doubled to £7.04m, and underlying pre-tax profits were £1.54m (22% margin) vs. a £350k loss last time. ISS is now sitting on £2.09m in cash.
The transformation has really been driven by a combination of the underlying business and the acquisition of the big data analytics player Celebrus bought earlier this year (see here). From the continuing business, Analytics activities now generate £4.6m, meanwhile, the addition of Celebrus’ £1.43m of analytics revenue, brings Analytics to some 72% of total ISS revenue. Celebrus in particular has benefitted being part of the larger group, with revenue up 49% on this time last year.
ISS is now introducing a new senior management team to take it through the next stage as a data solutions business. MD and co-founder John Lythall is stepping down from April 2016, and will hand over to co-founder and current sales director Peter Kear. Meanwhile, Carmel Warren, former CFO of Celebrus will become ISS’ new CFO, and Mark Boxall, former senior manager at EMC, re-joins the business as operations director.
With the ground-work in place to become a pure data analytics business, ISS will enter a high growth and dynamic market. Where that leaves the enterprise content management and portals businesses however, is unclear. There was no mention of these sides of ISS’ business. They look increasingly superfluous to the future vision.
Posted by John O'Brien at '08:40'
Hot on the scent of an expanding market, NCC Group is making a step change in its security footprint with the very strategic acquisition of Netherlands-HQ’d Fox-IT Holdings. An agreement is in place to purchase the company for €133m/£93.5m, with NCC raising most the purchase funds via a combination of firm and open placings.
This follows the acquisition of managed security services provider Accumuli in March this year (see here), which increased NCC’s security footprint and created a fourth arm to the NCC business. Previously NCC’s security assets had consisted of a security consulting business within the Assurance division. By adding Accumuli and the planned Fox-IT assets to its security consulting interests, NCC has rapidly increased in security capability and now declares that it wants to be a leading player in the cyber security sector.
With its background in escrow, assurance and nascent domain services, it has the right credentials to move into the adjacent area of cyber security but the competition is diverse and fierce, with everyone from Microsoft ramping up security (see here), to Rackspace entering into managed security services earlier this year, and BT highighing it as a growth sector. Not to mention up and coming security pure plays such as Sophos, Palo Alto, FireEye and many others contending for market share alongside stalwarts such as Symantec.
Fox-IT does bring valuable assets however, including managed security services, advanced threat intelligence, forensics and incident response, plus ‘Sovereign Cryptography’ and professional services. These capabilities and a focus on threat intelligence and security analytics take it beyond traditional information security and event management and into the high value end of security. Add 250 security experts and a client base that includes government security departments and global enterprises and NCC looks like it is buying real value. Its challenge is orchestrating its increasingly its diverse business.
Posted by Angela Eager at '08:40'
Mobile software platform developer, 365 Agile, has made its first acquisition since listing on AIM (see 365 Agile mobilises on AIM), that of ‘smart’ internet based heating and hot water controller start-up, Easytherm. Founded in 2013 and based in former code-breakers home – and now ‘science and innovation centre’ – Bletchley Park, Easytherm competes with the likes of British Gas-owned Hive and Alphabet (nee Google) Nest and, according to its website, comes with ringing endorsements from Dorset Customer ‘Megs’ and Oxfordshire Installer ‘Justin’.
365 Agile – a portfolio company of tech merchant bank (and TechMarketView Little British Battler programme sponsor) MXC Capital, will pay £2.15m for Easytherm through a combination of new shares priced at 82p and convertible 5% loan notes. 365 Agile will also pay out an outstanding loan of £350k with about a third in cash and the rest in new shares and loan notes. 365 Agile listed on AIM at 75p and its shares closed yesterday at 79.5p.
Sounds like a smart buy on smart terms to me!
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