UKHotViews
Friday 17 May 2013
The weak Q114 Autodesk forecast when it reported its end of year results has been realised with revenue at the bottom end of its own guidance as it saw weakness in performance across most of the regions it operates in.
Revenue was down 3% yoy to $570m, with net income dropping to $56m from $79m. A promotion that took $24 from H114 did not help the Q1 numbers. The operating margin fell from 16% to 14% yoy. It dropped to 14% in Q4 so the company has maintained the margin on a sequential basis. Against that background a decline in licence revenue is not surprising but the 9% drop was surprisingly large. Subscription revenue was up 6%. This reporting line covers maintenance and cloud services (e.g. the 360-badged products such as Autodesk 360 and PLM 360) so cloud performance is not discernable. However, the bulk of the revenue is still from maintenance. Overall performance lags Aveva and Delcam however (see here) but they benefit from a tight focus.
The provider of 3D design, engineering and entertainment software has products in the right places but overall market demand is low. As well as covering traditional verticals like manufacturing, construction and energy, for example, it has a strong footprint in media and entertainment (where its 3D capabilities play well in the film sector). It has taken process-intensive functions like simulation and rendering to the cloud, which will attract a wider base who would not previously have been to afford them, and it is anticipating additional business from the 3D printing movement. UK MD and VP of the ENI unit Peter Baxter says the UK is a strong market with activity in the manufacturing and construction markets. That suggests it is doing better than EMEA overall where revenue declined 4% in Q1. But at group level the volume of sales is not there and cloud services have yet to take off.
Posted by Angela Eager at '09:32'
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Friday 17 May 2013
They may prefer to call themselves 'IT solutions' suppliers, but when not one single question was raised about services on their results conference calls, you know how investors really look at Dell and Cisco.
But that's about where the similarity ends, as the results and the trends could be no different. Whereas yesterday's Q3 results from Cisco were framed around 'record' revenues and profits, Dell's Q1 results were mainly framed around the negatives; headline revenues were down 2% to $14,1bn, operating profit crashed by 73% to $226m, and EPS plummeted 81% to $0.07.
Dell's problems lie mainly in its End User Computing division (71% of revenues), which saw a 9% decline in revenues and a 65% fall in profit as the company slashed prices to try to breathe some life back into its 'Mobility' business (laptops, notebooks, tablets), where revenues fell by 16%. No doubt Windows 8 didn't help (see Dell, Windows 8 and poor forecasts), but I also doubt that the next iteration due for preview in June (see here) will provide a miraculous recovery.
Dell's Enterprise Solutions Group (servers, peripherals, networking, storage) was quite a different story. Revenues grew by 10% to $3.1bn and operating profits soared 71% to $136m, a 4.4% margin. Surely Dell's prospects lie fairer in the data centre.
There were also some 'positives' to be found in Dell's Services. Support & Deployment services revenues grew by 2% to $1.2bn, and so-called Infrastructure, Cloud & Security services grew by 11% to $612m. However, revenues for Applications & Business Process services (I assume the old Perot business) fell by 15% to $295m. That acquisition didn't make sense at the time, doesn't make sense now – in fact it will never make sense. What a waste of $4bn. Anyway, perhaps the new owners will do the decent thing – assuming there will be new owners!
Posted by Anthony Miller at '09:27'
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Friday 17 May 2013
Following an impressive end to last year with profits ahead of expectations (see Tribal Group: technology key to services growth), Tribal Group has had a more muted start to 2013. Although it said trading since 1st January has been ‘in line with expectations’, the order book actually dropped £10m to £158m by the end of April. This is against an increasing international focus on higher growth markets like Asia Pacific and the Middle East.
Last year, the star of the show was Tribal’s Solutions division (revenue was up 23%), which provides an online school self-evaluation management tool, lesson observation resources, and recruitment services for schools, higher education and government. However so far in 2013, Solutions has only performed ‘satisfactorily’ due to a quiet domestic UK market, although it is apparently gaining momentum in Asia Pacific and also the US and Middle East.
The Systems business meanwhile is making ‘good progress’, albeit against a 6% decline last year, and 9% decline in the UK. Tribal said the pipeline in the UK remains resilient, and internationally it has a broader spread of potential new customers for its student management systems, including discussions with two universities in North America, and one in the Middle East.
Tribal's increasing focus on higher growth markets like APAC and ME is sensible, since its domestic UK market remains at best subdued. But Tribal remains heavily reliant on the UK market for most of its revenue. It therefore needs to be careful how it manages the transition to a more balanced geographic revenue mix.
Posted by John O'Brien at '08:37'
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Friday 17 May 2013
Declaring the company's turnaround (or perhaps more aptly, resurrection) "symbolically and practically complete", Vineet Nayyar, chairman of Hyderabad-based Mahindra Satyam (MSat) signalled the start of "a new chapter" once the merger with sibling Tech Mahindra finally comes to pass. Nayyar advised that the merger is at its "penulitmate phase" of what will have turned out to be an oft-delayed four-year journey (see ‘Mahindra IT’ marriage delayed again).
Nonetheless, MSat closed a respectable year (to 31st March) with revenues 8% higher at $1.41bn, a growth rate notably faster than much larger peers Infosys (see Infosys limbos under the bar) and Wipro (see Wipro scrapes by). Operating margins were over 5 points higher yoy, at 18.8%, also a creditable performance.
This will be a watershed year for MSat. Management will need to have tight control on the operational levers to ensure that the integration with Tech Mahindra does not result in yet another 'turnaround' – but in the wrong direction!
Posted by Anthony Miller at '08:21'
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Thursday 16 May 2013
Back in Feb 13 I wrote a series of articles along the theme – Doing Good is Good for Business. I received a large and wholly supportive postbag as a result.
Today we have seen two examples of companies accused of not ‘doing good’ – indeed one of ‘doing evil’ – although in neither case does it seem to have done much harm to their thriving businesses. One example was Amazon which was found to have paid £3.2m tax on UK revenues of £4.26b and, to add insult to injury, had received £2.5m in Scottish grants! The other was Google where Matt Brittin was hauled back before the Public Accounts Committee and accused of misleading Parliament in his earlier testimony. The Google case hinges around whether the UK ‘sells’ or just ‘promotes’ their services. I’m not lawyer, but listening to Brittin’s laboured responses, the term ‘If it swims like a duck, if it quacks like a duck, it probably….’ came to mind.
Although I’m sure that almost every HotViews reader is also a Google and Amazon user too, we just must accept that everything we now ‘consume’ via them used to go through a UK-HQed (and therefore UK-taxpaying) entity. Be it classified ads in a local paper or the local record shop. We freely chose to use Amazon and Google but, bluntly, I didn’t freely choose for them to have a significant tax advantage over their UK-based competitors.
Clearly we need to change the tax laws. Whether this can be done by the UK alone or whether it requires global action is unclear. But is it totally unfair to ask companies to ‘do the right thing?” As I have said in previous articles I have been offered all manner of tax saving schemes but have freely chosen to avoid them. I owe a great deal to the UK and, as long as taxes are ‘fair and reasonable’, I don’t have an issue in paying them. UK corporation taxes are now ‘fair and reasonable’ and I can’t see why companies should not pay their fair share.
Anyway, Doing Good is Good for Business too!
Posted by Richard Holway at '14:50'
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Thursday 16 May 2013
SAP is pumping out announcements at its Sapphire conference but its unified cloud strategy and SAP Fiori productivity applications are of particular note.
Under the unified cloud strategy, SAP will support all of its cloud products on its in-memory HANA database technology within the next one to two years. It has already moved its core on premise applications, including Business Suite, to HANA and made HANA available on the cloud (see SAP boldly takes HANA to the cloud). Native SaaS assets such as Ariba and Successfactors are already using HANA for analytics. If there were any doubts about the level of commitment to HANA and the cloud this dispels them – the future of the company has been committed to them. Plans for the wholesale availability of complex line of business applications in the cloud is another sign that the cloud and SaaS is poised to shift into new development phase, taking on mainstream business applications, at scale, and appropriate for large enterprises. See further thoughts on this theme in our Make or Break predictions here.
The other announcement that grabbed our attention was SAP Fiori – a set of productivity applications with consumer-style UI’s - think Apple, Google - designed to work across multiple devices (PCs, tablets, smartphones). The initial set of 25 applications will focus on the most common business processes e.g. approvals, sales order and invoices creation. They aim to address one of SAP’s long-standing problems – usability – but will also extend its applications to a wider audience, particularly casual users. More users means more revenue and so it is another strategy for counteracting the expected decline in licence revenue from its traditional applications – and a statement that SAP is doing all it can to remain relevant. This announcement also hooks into another of SAP’s news pieces, its Mobile Secure service, which is designed to secure Android and iOS devices for enterprise use.
These announcements underline the rapid pace of development in disruptive technology areas – now all that is needed is for enterprises to start spending serious money in these spaces.
Posted by Angela Eager at '09:18'
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Thursday 16 May 2013
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Document management provider Invu is nibbling it way back to strength and although the rate is slow progress is apparent. The most welcome aspect of its full year results (to January 31 3012) was the return to profitability. It wasn’t much - £0.3m on revenue that was flat at £2.7m – but it is the first profit in five years and a long way from the £8.8m loss for the year ending January 2009.
Last year the loss was £0.3m (see here). The forward movement is the result of a long-term turnaround programme but management cannot afford to ease up as its position is still fragile. It points to a tough current and ongoing trading environment in the UK, which is its prime market. One of its most effective strategies seems to have been its OEM agreement with Iris, which embeds Invu in the SMB accountancy sector. Iris has become its most significant partner in terms of revenue. Invu is also ramping up its direct sales in order to attract more medium sized businesses. There was a yoy decline in licence sales (from £1.04m to £0.99m), which Invu needs to address but otherwise it was good to see this British battler making positive progress. However, with document management largely subsumed into broad base suites, Invu is a target for acquisition. Jon Moulton’s Better Capital backed m-hance (see here) is building a reputation for buying this type of company.
Posted by Angela Eager at '08:20'
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Thursday 16 May 2013
Although this has arguably little or no direct relevance to the UK market, I think there is a lesson to be learned (should lessons still be needed) about 'Trojan horses'.
Ordina used to fly high as the 'local hero' in the Dutch IT services market. However, its prior CEO refused to see the writing on the wall about the need for offshore capability until 2006, when key client, Rabobank, insisted on an element of offshore delivery before it would outsource some of its application development work to Ordina. With little or no low-cost resource itself, Ordina partnered with Cognizant, then the fastest growing of the India-centric players (see here).
Roll forward to December 2012 and, surprise, surprise, Rabobank is now perfectly comfortable dealing direct with Cognizant, awarding it a 5-year contract for application development, maintenance, and testing services. Ordina managed to cling on to some of Rabobank's 'onshore' business.
As a result, when Ordina announced its Q1 results, revenues were over €5m light from the loss of the offshore contract alone. This was only part of the reason behind the 9% headline revenue fall (to €94m), the other component of which management put down to the two fewer working days in the quarter. Such are the perils of a business model highly geared to time-and-materials services.
The 'balance of power' between the India-based IT services firms and the global and European IT majors is shifting, though this is as much because the India-based majors have achieved critical mass and cannot grow as quickly as they used to, as that the other players have since developed formidable global delivery networks themselves (well, some of them anyway).
Ordina will surely find it very hard to close the stable door now that this Trojan horse has bolted.
Posted by Anthony Miller at '08:16'
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Thursday 16 May 2013
On Tuesday I wrote UK moves to growth. Yesterday, we had a raft of further news which rather supported the argument.
Firstly, the outgoing Governor of the Bank of England gave his last Quarterly Economic Forecast. He stressed that ‘recovery was in sight’ as he raised UK GDP growth forecasts from 1% to 1.2% for 2013. He was also able to point to slightly lower inflation.
Conversely the Eurozone put out a bleak report showing a 0.2% decline in Q1 with France in recession and the outlook for Germany markedly lower.
Also the news from the US – which is turning back to its old role of being the powerhouse of the world economy – had wall-to-wall good news on jobs, deficit etc. Even Japan reported some pretty exceptional growth – for them anyway.
Now, I know there are sceptics out there and, let’s face it, a 1.2% growth for 2013 is pretty minor in any historic context. But this is about the first time in the last 5+ years that the revisions are upwards. It is even more exceptional given the Eurozone problems and downturn. Afterall we do more than 50% of our trade with Europe (not just the Eurozone) So this recovery in the UK is being fuelled by an uplift in domestic demand (the lion’s share) and our trade with the US, BRICs and elsewhere outside of Europe.
We are far from being out of the woods yet and there are still ‘events’ that could knock this fragile recovery off its tracks. But at least there was some good news to report for once on a long, long time.
Posted by Richard Holway at '07:51'
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Thursday 16 May 2013
Xchanging’s exit from Xchanging Transaction Bank (XTB) one of its founding joint venture enterprise partnerships (EPs) with Deutsche Bank (see Xchanging exits Deutsche Bank JV) is actually a sign of progress at the recovering business process services (BPS) provider.
The initial news sent Xchanging’s shares down 9% in early trading, but they recovered most of the ground later. We have been saying for a while now that Xchanging needs to clarify its position on its EPs. This announcement was certainly a surprise, but may help point the way forwards.
Subscribers to TechMarketView's Foundation Service can read the analysis in UKHotViewsExtra here.
Posted by John O'Brien at '07:30'
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Wednesday 15 May 2013
CSC has made a welcome return to profitability in the year to end of March, as the turnaround plan instigated by President and CEO Mike Lawrie begins to bear fruit. Diluted EPS from continuing operations for FY13 was ahead of expectations at $3.2 compared to a diluted loss per share in FY12 of over $28. Operating profit came in at $900m for the year giving a margin of 6%, also a huge improvement on last year’s losses. What is more, despite returning $428m to shareholders this year, CSC ended fiscal 2013 with cash and cash equivalents of $2.05bn, an increase of $961m on the prior year.
Whilst profitability made great strides thanks to better contract management and cost reductions, revenue not unsurprisingly moved in the opposite direction in part due to divestments. Total revenue was $14.99bn down from $15.36bn in fiscal 2012. The Managed Services Sector (MSS) reported a 2% decline in turnover to $6.46bn (unchanged in constant currency, ccy) and revenue from the North American Public Sector division decreased by 6% to $5.39bn. Business Solutions and Services managed to increase revenue by 3% (+6% ccy) to $3.27bn in FY13, and moved from loss to profit with a 4.2% operating margin.
It’s still impossible to glean any clues about the performance of the UK, or even EMEA, from CSC’s results. But CSC seems to have put the worst of the National Programme for IT in the NHS debacle behind it - indeed Lawrie talked of 'strong growth' from NHS bookings during the year on the analyst call today. And the SPVA deal with the MoD (see HP fails to ‘defend’ SPVA contract) last April should have helped to lessen the impact of other contract losses (see for example Atos takes on nuclear responsibilities) on its UK performance.
Strategically, Lawrie plans more of the same for FY14 with continued cost reductions, expanded market coverage, ‘pursuing delivery excellence’ and ‘driving innovation’ all high on the agenda. The target for EPS from continuing operations for FY14 has been increased to $3.30-$3.50, but revenue in the year ahead is expected to be 'flat to slightly down'.
Posted by Tola Sargeant at '16:14'
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Wednesday 15 May 2013
Microsoft has set the date - and the name - for the next iteration of Windows 8. Previously known as Windows Blue (see here), the update will be officially known as Windows 8.1 and previews will be available from June 26. The upgrade will be offered free to existing Windows 8 users. Microsoft maintains 100m Windows 8 licenses have been sold but just how many of those are sitting unused in the channel is a point of much speculation.
There are no formal details but following all the talk of a U-turn (see here) Microsoft watchers will be hoping for changes to the Start screen – and something resembling a return to the now much loved Start button. Whether it will be enough to change opinion about the desirability of Windows 8 on the desktop remains to be seen. The reputation of Windows 8 has suffered and it will take a lot to recover from that.
Posted by Angela Eager at '09:50'
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Wednesday 15 May 2013
Both the Global Services (BPO) business, and AMEAA market are apparently delivering 'excellent organic growth' for Serco so far in 2013. We assume this means BPO is at least meeting last year's 12% organic growth (see here).
New UK BPO wins so far this year include a new high street retailer, adding to last year’s successes with online retailers Shop Direct (see Serco wins retail BPO megadeal) and Freeman Gratton Holdings. In the UK public sector, Serco secured an extension to its largest central government contract for the DWP’s Child Maintenance Group. This deal was brought on board via its acquisition of Vertex Public Sector last June (see here), so this extension is a good endorsement of the work being done. Serco employs c1,000 people on this contract recovering child maintenance payments.
Along with other new wins at JobCentre Plus, UCAS, DoH and the Food Standards Agency, Serco's total contract value in central government since the start of 2013 is apparently £100m+. This certainly backs up what we are seeing as a very buoyant central government BPS market (see Business Process Services opportunities in UK central government).
Across the broader business there are a couple of concerns. At c£900m the level of new wins is down significantly from £3.9bn this time last year (see Serco on track for 2012). So Serco will really need to accelerate deals signings during the rest of 2013. Second is the ‘very tough’ on going environment in in the US federal market, which is impacting its Americas division.
Despite these uncertainties, Serco expects to meet FY13 targets. It is banking on further strong growth in AMEAA, an improving UK outlook, and cost efficiencies to achieve this.
Posted by John O'Brien at '09:19'
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Wednesday 15 May 2013
South Africa-based reseller and services player Datatec has had a mixed year. Results for the year to the end of February reveal 4% growth in revenue to $5.25bn and a 2.5% decline in EBITDA to $185.5m - in line with previously reduced forecasts (see Datatec reduces year-end forecasts again). As expected, Datatec’s distribution business, Westcon, dragged the overall performance down after a tough second half, particularly in Europe and North America. In contrast, Logicalis, the infrastructure solutions and services business, delivered ‘a record financial performance’.
Logicalis’ revenue increased by 9% to $1.35bn and operating profit was up by 28% to almost $55m. The division now accounts for 26% (2012: 25%) of Datatec’s revenue, but 40% of its EBITDA (2012: 33%). The numbers suggest Logicalis’ focus on growing the services side of the business is working: product sales increased by 8% over the year, whilst total services revenue was up 14%.
The UK and USA are apparently the strongest performers at Logicalis – welcome news for new Logicalis UK CEO, Mark Starkey. The results don’t divulge figures for the UK business, which turned over £186m in FY12, but it’s singled out for praise and we’ve previously estimated Logicalis’ UK services growth in FY13 at 10%+ (see Logicalis UK: growth and evolution). We’ll be catching up with Mark again soon for more detail on the UK performance.
Datatec is predicting ‘another robust performance’ for Logicalis in FY14 with the business on track to record its fifth successive year of strong revenue and profit growth. At the very least, revenue from 2e2’s European operations, which Logicalis acquired in March, will boost the top line (see ‘2e2 Europe’ finds new home at Datatec’s Logicalis). The four operations, acquired for just $31m, are expected to add annual revenues of approximately $150m.
Posted by Tola Sargeant at '09:10'
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Wednesday 15 May 2013
Salesforce.com and Oracle have both announced plans to open UK data centres, decisions that are designed to increase their appeal to UK government and boost their G-Cloud profiles.
At the start of the month Salesforce.com announced plans to establish a UK centre in conjunction with NTT Europe. It is scheduled for completion in 2014. It will serve the European market – at 38% yoy growth it was Salesforce.com’s fastest growing region in FY13 – but the move will also be designed to help the company capture business from UK government where it has made little headway. Although Salesforce.com has joined the G-Cloud, as of the last Cloudstore update, we are not aware of it closing any deals.
Today Oracle followed suit but with a more overt government focus. Its UK data centre will be dedicated to offering services for the G-Cloud framework. It will be co-located in Equinix’s Thames Valley facility and be IL3 compliant for information security and availability. As far as we are aware Oracle had not closed any Cloudstore deals by the time of the last sales update.
These moves suggest that data residency is an issue for the public sector but they are also a strategy to help the two companies stand out from the crowd. And the timing is good as the Cabinet Office has just launched its ‘Cloud First’ policy (see here).
Posted by Angela Eager at '09:03'
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Wednesday 15 May 2013
Gresham Computing, the long established finance sector software and services provider talks of a “solid” start to its financial year, for the January to May 2013 period, on the back of its new Client Transaction Control product. Pilots are morphing into paid-for projects in Asia and EMEA which is positive, but that is still some way from full engagements. If they make the final move they will start to deliver significant revenue and Gresham is hopeful that CTC will drive revenues through 2013. Overall performance is currently in line with expectations. What was not so positive was the news that the company took a loss on the March 2013 sale of the Banking and Lending business it operates in the Caribbean. The £0.5m sale generated a £0.3m loss, resulting in £0.3m net cash. Still, the disposal means the company can concentrate on selling CTC into the North American market, which can’t be a bad thing.
Posted by Angela Eager at '08:22'
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Wednesday 15 May 2013
Xchanging is selling one of its flagship enterprise partnership (EP) joint ventures Xchanging Transaction Bank GmbH (XTB) back to partner Deutsche Bank for €40.5m in cash. Deutsche Bank apparently decided that the securities processing services provided by XTB are now core to the business, and so it wouldn’t have renewed in May 2016. XTB had revenues of £97.4m in FY12, so Xchanging’s 51% stake would have delivered just shy of £50m last year. Xchanging's shares took a 9% cut on the news.
Xchanging also provided an in line update for the first four months of 2013, having ‘sustained the momentum’ it achieved in the second half of last year (see Xchanging’s FY12 shows signs of recovery). Of course HotViews readers will know it hasn’t all been plain sailing since the start of 2013, with the news last month that Xchanging will lose its largest infrastructure contract at the London Metal Exchange (see here).
Progress is apparently being made in insurance, following a contract extension in Australia with Toyota. Its recently launched Netsett central accounting and settlement service has also had ‘some initial interest’ and is now in pilot phase. In the technology division, Xchanging’s Xuber insurance business process platform has apparently secured a number of contracts since the start of the year, including with Q-Re and Aviva.
However the US procurement business, which it picked up from BAE Systems in 2011 (see Xchanging wins new BAE deal in the US) is underperforming due to slower than expected implementation. Consequently, revenues from the deal are now likely to be lower than the $150m over seven-years it originally expected.
It's clearly still a bumpy road to recovery. We will provide more colour and movement later following this morning's call with management in UKHotViewsExtra.
Posted by John O'Brien at '08:18'
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Tuesday 14 May 2013
For the last six months I have had an increasingly uneasy feeling that what economists are telling me about the UK economy doesn’t fit with my own experiences. TechMarketView has just finished a year of unprecedented 50%+ growth. Houses around us are increasing in value again. My stock market investments have recorded unprecedented gains as stock markets in the UK and US hit new highs. The ONS is revising up previous growth rates to the point where the last recession might just disappear. I’m even having difficulty getting a plumber to give us a quote.
When I came out with my IT’s all over now? prediction in 2002 I seemed to assume the mantle of being the industry’s pessimist. It was greatly unfair as the actuality was far worse than I had predicted. But perhaps now is the time to kill that mantle once and for all.
I believe that the UK is already in a significant recovery. Indeed both the CBI and the OECD have come out with similar observations today. Indeed, can I direct you to the PwC Global Economy Watch May 13, also issued today. As you will see from the table, PwC is predicting real UK GDP growth of 1.0% in 2013 and 2.0% in 2014. The really interesting point is that, for both years, this is a higher growth than any other country in the Eurozone including Germany which is forecast to grow by ‘just’ 0.4% in 2013 and 1.6% in 2014.
As the PwC projections show, the Eurozone really is the 'Sick man of the World' now. Growth in the US is getting stronger and stronger – up 2.1% in 2013 and 2.8% in 2014. The US is the UK's largest export market. Exports to the US soared by 21% in Feb 13. 85% of all the UK's GDP is either domestic or earned outside of Europe. Of course, it is the BRICs that lead the way in the growth stakes as the PwC chart shows. We 'must do better' here. But, without being political in any way, it is trade with these countries, rather than the Eurozone, which will really lead to the UK’s recovery and future prosperity.
Posted by Richard Holway at '22:06'
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Tuesday 14 May 2013
The number of storylines suggested by our readers would probably fill a second HotViews each day. But I was really interested to learn that iAnnounce had been bought by US Legacy.com. The UK site had been developed by a friend of the CEO of one of our clients who lamented that it was ‘sadly another example of the Little British Battler being 'taken out' at an early stage’.
Whereas Legacy.com is a US site, iAnnounce does the same in UK and Europe. The closest descriptor is that it’s ‘Facebook for the Dead’. It takes family notices (mainly deaths but also including weddings and other happier events too) from newspapers and makes them available online. This simple service has made Legacy.com one of Top 200 most visited sites! iAnnounce has 2m users and has already put up over 5m such announcements (I tested it for my own parents which it failed to find…). Legacy.com CEO says that ‘Death is the most viral event that ever occurs’. From experience, I do ‘get that’. You really do have to tell people very quickly. In turn, people do ‘like’ to post their condolences, memories etc.
The sites are funded by ads. Today’s headline is for Grief Counselling. One step on from my sponsored lead ad on my Facebook page today which is for Funeral Services.
Posted by Richard Holway at '14:38'
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Tuesday 14 May 2013
UK central government looks set to be one of the stand out sectors for growth for the UK business process services (BPS) market over the next couple of years.
This is thanks to a number of recent big new deals from market leader Capita (see Capita positive start to 2013), as well as from Atos (see Atos gets bigger PIPs) and new entrant arvato (see arvato confirmed as DfT shared services provider). Looking ahead, we see further major new opportunities coming through in 2013 and 2014.
However, these deals are unlikely to be a shoo-in for suppliers. There are many new requirements and expectations by central government, relating to new deal structures, shared services, SMEs and 2nd/3rd generation BPS renewals. Suppliers will need to embrace these demands if they are to succeed in growing market share. Those with their eyes off the ball are going to miss out.
Subscribers to TechMarketView's BusinessProcessViews and PublicSectorViews research streams can read what this means for suppliers, and how they can position themselves for success in our new report Business process services opportunities in UK central government here.
Posted by John O'Brien at '11:19'
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Tuesday 14 May 2013
Over the last month the TechMarketView team of analysts has again been busy keeping you up-to-date with the latest market trends and developments starting with PublicSectorViews (PSV) research director Georgina O’Toole’s report on developments in the central government market: UK Central Government and the rise of ‘digital’.
Our PSV team also published a research note analysing 26 year-old ‘Little British Battler’, Kainos. To find out how it's managed to grow rapidly in recent years in the UK healthcare and public sector markets see 'Kainos: Healthcare & Public Sector fuel growth spurt'.
Also on the public sector front, you'll find analysis of HP's $210m ten-year contract to support Cambridge University Hospitals NHS Foundation Trust’s eHospital Programme in UKHotViewsExtra, as well as our views on the progress of the government's Efficiency & Reform Group, prompted by the latest National Audit Office report (see here for more).
If you're interested in business process services you can’t afford to miss BusinessProcessViews research director, John O’Brien’s, latest report which aims to answer the all-important question - Outcome-based business process services: what’s it all about?
April also saw another report from our InfrastructureViews research stream fly off the virtual presses. In 'Could cloud help telecoms providers achieve a break-through in the UK infrastructure services market?', InfrastructureViews research director, Kate Hanaghan, looks at some of the key telco players in the UK market and the challenges they face.
Last month Kate also caught up with Mark Starkey – the new CEO of Logicalis UK. We gave Starkey a bit of a grilling on the performance of his business and have to say we were pleasantly surprised! To see what Kate had to say, eligible subscription clients can click here.
If you’re not yet a fully paid-up TechMarketView subscriber this is just a snapshot of how much you are missing out on. You'll find details of more reports published in the first quarter in our latest Quarterly Research Summary, which you can 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.
Posted by HotViews Editor at '10:25'
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Tuesday 14 May 2013
The announcement of a co-innovation agreement between SAP and Capgemini around retail solutions built on SAP’s HANA platform was an interesting precursor to the SAP Sapphire conference.
The agreement will see the two bring packaged industry-specific solutions to market that will integrate IP from Capgemini, including industry specific data models, KPI’s, dashboards and predictive analytics. SAP will oversee the business compliance aspects via its retail business unit. In addition Capgemini will develop the solutions in conjunction with pilot customers and resell them through its global channel. The first products are expected to hit the market – including the UK - in September 2013.
The agreement highlights the need for industry-specific solutions early on in the technology and market lifecycle – something we have been stressing for some time (see What is the market reality behind Big Data?). It also demonstrates the up front effort services providers need to put in to reap the benefits from the real time and big data trends. These trends very clearly lead to ‘software + services’ engagements but noticeable revenue will only come if they are teamed with packaged industry applications because of the expertise needed to exploit the technology. This is what is needed to shift the market from pilot projects to volume production systtems. Vertical solutions will also help offset loss of revenue from the move to the cloud and subscription models. Suppliers need to move quickly to capture market share.
Posted by Angela Eager at '09:56'
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Tuesday 14 May 2013
Lombard Risk Management has just delivered an impressive set of results for the year to March 31 2013, taking it back at the high growth levels it achieved back in the year to March 2011 (and a marked contrast to the single digit growth in the intervening year – see here).
For the year to March 2013, the provider of collateral management, liquidity and regulatory reporting and compliance solutions for the financial services industry, increased yoy revenue by an impressive 31% (18% organic) to £16.8m. PBT also surged forward with a 56% increase to £3.9m, while EBITDA saw a 77% increase to £5.3m, despite investment in product development and the expansion of the sales team during the year.
The level of growth was achieved despite regulatory delays, plus ongoing issues around the Euro and the general economic malaise. CEO John Wisbey is rightly pleased with the results but says the company would have done even better were it not for the delays. However, one of his other highlights was that the company both grew and was cash generative despite the regulatory delays.
The UK was the best performing region, due to historic high levels of business, but the company still acquired new customers as well as making additional sales to existing clients, a theme that is also apparent in other areas of the business.While some customers delayed investment, Wisbey points out that this is delayed spend not lost spend.
With a wave of regulations due over the coming years, this is mileage for some years according to Wisbey. However, we can envisage peaks and troughs because company performance is linked with regulatory timetables. Lombard Risk Management’s shift to an indirect sales model via a range of partner types is notable - it is working with large ISV’s who will embed its products, and partners who can assist with marketing and execution for example. This will help it scale and sustain growth. Overall, the outlook looks promising.
Posted by Angela Eager at '09:31'
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Tuesday 14 May 2013
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UK business process services market leader Capita said it has made a ‘positive start’ to 2013 securing four major contracts worth £660m in the first 19 weeks of the year. Although slower than this point last year when it had won six new contracts totalling £823m, this shouldn’t really cause any major concerns.
With 2012 proving a cracking year with record sales worth £4bn including its largest ever deal with Staffordshire County Council (see Capita delivers 3% organic growth in FY12), it’s not surprising management expects to deliver ‘strong growth’ in 2013.
The contracts signed in 2013 to date include a £160m 10-year customer management deal with Carphone Warehouse, a £40m 5-year ICT deal with the University of Strathclyde, an extension of its Civil Service training contract (see Capita wins £100m+ Civil Service training contract) worth at least £60m over the two year period to March 2016, and most recently, an ITIL and Prince2 commercialisation contract with the Cabinet Office (see Capita signs joint venture with Cabinet Office). Although Capita hasn’t explicitly revealed the value of this last deal, it is clear now it is worth £400m to Capita over the ten year term.
Capita is still one of the most acquisitive players in the UK SITS market. Since the start of the year, it has acquired seven companies for £165m in cash, to broaden its reach into target sectors such as justice and emergency services (see Capita acquires gamification player G2G3); customer management (see Capita acquires BBC partner iQor), education (see Capita buying Northgate MS puts spotlight back on ITS); and workplace services, via managed learning and training provider KnowledgePool Group.
Capita's continued focus on M&A and large new deal wins should ensure both the top line and organic growth remain on track in 2013.
Posted by John O'Brien at '08:38'
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Monday 13 May 2013
The FY13 results from video search engine provider Blinkx were as strong as previous announcements had forecast (see here), with revenue for the year ending March 31 2013 up 73% to $198m. Although part of this was due to acquisitions, plus the impact from events such as summer 2012 Olympics and US Presidential elections that are estimated to have contributed around a tenth to FY13 revenue, management says there was strong underlying growth too.
There were increased profits to go with the revenue growth with adjusted PBT (before acquisitions and exceptional costs) up from $10.4m to $24.6m, with PBT at $16.7m compared to $1.9m, making 2013 a successful year for the company.
The company points to four structural trends driving the online video sector: increasing prevalence of broadband and high speed mobile networks; video-enabling websites; smartphone and tablet adoption accelerating ‘anytime/anywhere’ video consumption; and an increase in online video advertising budgets. The notable theme is that these trends have longevity so it is up to Blinkx to make the most of them. At the moment it has an abundance of interactions across its platform that it is not monetising, so this is the immediate challenge. Rapid movement in this area is necessary because as more providers see the revenue opportunity in the video search and advertising sector, it will be harder for Blinkx to defend its market.
Posted by Angela Eager at '09:48'
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Monday 13 May 2013
Following the struggles of the last financial year, which included a 17% slump in revenue (see here), Microgen is to undertake a strategic review over the coming months. Although it says the current strategy and structure is a viable option, it will be taking a wide ranging review of the business that “may, or may not, result in the disposal of one of both of the operating divisions.” It will also consider whether acquisitions are appropriate.
Scrutiny must surely fall on the mature Financial Systems Division, which for all its high margins is not a growth business. We note that Vista Equity Partners has been busy buying in the UK FS sector – e.g. Misys and Thomson Reuters (see here). Meanwhile, there is growth potential for Microgen’s business process-centric Aptitude Solutions Division because of the growing market demand for process management to improve operations and visibility across organisations. The company had already started to restructure the division by the end of the last financial year, shifting the business mix towards licenses and recurring revenue and reducing reliance on consulting revenue.
Current performance of the overall business is strong enough that the company does not have to rush into anything so the review is expected to take several months. We will keep you posted.
Posted by Angela Eager at '09:46'
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Monday 13 May 2013
Instem, AIM-listed provider of software to the pharmaceutical sector, has made a bolt-on acquisition that takes it into the early phase clinical market. It has acquired Logos Technologies for an initial cash consideration of £0.55m plus an earn-out of up to £4.45m in a mixture of cash and shares should challenging profit targets be met over the next four years.
Headquartered in London, Logos provides e-source data capture and site automation software for early phase clinical studies. It turned over £0.75m in FY12, an increase of 114% over the prior year, recording an EBITDA of £65k and is expected to be earnings enhancing in its first full year of ownership. Clients include SNBL CPC, PharmaMedica Research and Spaulding Clinical.
Logos is a strategic purchase for Instem. It extends Instem’s addressable market beyond its core ‘pre-clinical’ market into the ‘early phase’ clinical trial market, which is less automated and therefore an area of opportunity. Having a broader product portfolio should also enable Instem to bid for larger deals that span both areas of the market. Another positive is the lack of overlap between the two companies’ client bases, creating cross-sale opportunities. All in all, Logos a sensible bolt-on purchase – let’s hope it provides the fillip that Instem’s recent lacklustre financial performance requires (see Instem fails to grow in FY12).
Posted by Tola Sargeant at '09:43'
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Monday 13 May 2013
Quindell Portfolio has had to issue its second response to the market since Friday (see here) following questions raised by investors and the press about its accounting techniques and underlying business health. Shares have been in nosedive since publication of its full year results on 7th May (see Quindell’s full year raises more questions). But the latest explanation seems to have helped somewhat, with Quindell’s shares rising 18%.
Concerns had been raised explicitly about the way Quindell part paid for Accident Advice Helpline in December (see Quindell spins multiple plates) using a so-called ‘equity swap’, which it said was the least dilutive approach available at the time. Worth £13.3m, Quindell said the equity swap relates to only 6.6% of receivables at the year end, and is not a material contract.
Investors then turned their attention to the other receivables still owing. However Quindell said that of the £169.2m receivables on the balance sheet at the year end, some £127m were already added – made up of Ai Claims Solutions at £61.3m and Quindell Legal Services, which also added £61.3m. The outstanding £42.2m is apparently made up of receivables from the other claims outsourcing businesses. However Quindell said that it had collected approximately half of that since the year end up to 30 April 2013.
Quindell appears to have at least limited the damage from what management referred to as ‘misinformed speculation and shorting’. However it clearly now has a task on its hands to rectify some of the negative publicity. How this impacts future growth will be the real concern.
Posted by John O'Brien at '09:16'
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Monday 13 May 2013
Pensions and benefts software consultancy Thomsons Online Benefits has released an impressive set of maiden results following its January buyout by private equity firm ABRY in (see Thomsons benefits from ABRY investment).
Revenue for the year to 31 December was up 19% to £32.7m, and pre-tax profits were up almost three times to £6.4m, giving Thomsons a pre-tax margin of 19.6% vs. just 6.4% last year. Profitability appears to have been driven by growth, rather than cost cutting. The company ended the year with 271 employees compared to 279 last time.
At the core of Thomsons' business strategy is its Darwin self-service employee benefits software, which aims to encourage employees ‘to make informed decisions about their benefits portfolio’, by finding ‘independent and unbiased answers to all their questions, and make informed and confident choices’. Take up appears to be heading in the right direction, with a 9% increase in the number users during the year, to over 550,000, apparently across 60 countries.
R&D costs in the year were up from £3.9m to £4.2m (or 13% of revenue). CE Michael Whitfield said that the recent PE investment will help Thomsons to continue investing in its software R&D and also explore acquisitions ‘at home and abroad’. Thomsons will need to continue investing, and innovating, in this competitive space, where there are many SaaS startups as well as major HR/pensions players operating like AON Hewitt, Capita and Equiniti.
We will be exploring growth opportunities in the UK pensions and benefits market in a forthcoming report for TechMarketView’s BusinessProcessViews research service.
Posted by John O'Brien at '08:56'
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Monday 13 May 2013
In an unusual turn of events, it was Irish start-ups that took the largest share of VC tech investment last quarter, according to latest data from corporate finance firm, Ascendant. Irish firms accounted for one-third of the £287m invested, with only 22% going to London-based start-ups. However, London remained the most active region by deal volume, accounting for 24 of the 59 deals. VC investment in UK and Irish tech companies was lower than in Q1 2012, which saw 64 companies invest £298m.
Eligible TechMarketView subscription service clients will be able to read our regualr review of the UK VC software & IT services scene in the next edition of IndustryViews Venture Capital.
Posted by HotViews Editor at '08:20'
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Monday 13 May 2013
We are delighted to announce that UK-based corporate finance firm MXC Capital is to become the first official partner for the TechMarketView Little British Battler (LBB) programme.
MXC Capital is a specialist investment and advisory group that provides investment, corporate finance advice, strategic consultancy services and structured finance solutions to companies in the technology, media and telecommunications (TMT) sector. MXC was established in 2009 by entrepreneurs Ian Smith and Tony Weaver. The MXC team typically maintains an operational interest in the companies in which they invest, including AIM -listed managed infrastructure provider Redstone, AIM -listed managed services provider Redcentric and AIM-listed IT security services supplier Accumuli.
Over the last ten years Ian Smith and Tony Weaver have delivered more than 50 corporate transactions with a value in excess of £330m. The strategic vision for MXC is to become recognised as London’s leading technology merchant bank.
MXC Capital is chaired by Martin Bolland, a founding partner at private equity firm Alchemy Partners. Bolland currently serves as non-executive chairman at UK business process services leader Capita, as well as at Parkdean Holidays and RecyCoal Holdings.
Tony Weaver, MXC founding partner says “We are delighted to be supporting this programme. We know only too well the difficulties with starting and building technology businesses and we are proud to be investing back into our market”.
TechMarketView established the LBB programme in 2011 with the aim of giving a leg-up in the market to small, privately held UK-owned software and IT services companies that are 'punching above their weight'. Since then, well over 200 companies have applied and 24 have since been through the LBB 'process' (see Proud of our Little British Battlers! and other posts in the News section of our website).
Future Little British Battler sessions will be run in association with MXC Capital, giving LBB companies the option to take advantage of the experience and services of the MXC Capital team.
We will be announcing details for the next Little British Battler Day in coming weeks. But if you think you might want to participate, by all means drop a line to info@techmarketview.com to record your interest.
Posted by HotViews Editor at '07:49'
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