MCN Direct Newswire

Vol. 2 No. 35, 22 September 2003

This issue is sponsored by:

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This issue news

1. Atos Origin pays $1.5bn for SchlumbergerSema
2. Accenture shows upturn at year end
3. Xansa pulls out of Asia-Pacific
4. Axon puts on lively performance
5. Capita chalks up $78.6m education deal
6. Further information - feedback/forward to a colleague/unsubscribe

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1. ATOS ORIGIN PAYS $1.5BN FOR SCHLUMBERGERSEMA

Atos Origin has agreed to acquire SchlumbergerSema's IT services activities from oilfield services giant Schlumberger in a deal valued at $1.5 billion.

The agreement is subject to regulatory and shareholder approval, but is expected to be completed no later than January 2004 and be earnings accretive to Atos Origin next year. It also includes an IT services deal under which Atos Origin is expected to generate minimum revenues of $804 million.

The combination of Atos Origin and SchlumbergerSema will create a global consultancy with 50,000 staff operating in 50 countries and annual revenues in excess of $5.7 billion.

Atos Origin chief executive Bernard Bourigeaud said: "This transaction provides Atos Origin with critical mass in almost all of the major IT spending markets of Europe, together with strong extended support coverage on a global basis. This is absolutely essential if we are to provide our clients with effective support and have the capacity to win major new clients."

Atos Origin is paying a total of $1.5 billion, comprising $459 million in cash plus 19.3 million Atos Origin shares representing 28.9% of the combined group's capital. Subsequent to closing, Schlumberger will reduce its shareholding in Atos Origin to 19%, improving the company's stock liquidity.

While Atos Origin will acquire SchlumbergerSema's IT services business, Schlumberger will still own specific SchlumbergerSema units including business continuity, Swedish database company Infodata and the telecoms software products that came from Sema's ill-fated acquisition of LHS Group. These, together with smart cards, point-of-sale terminals and payments systems, are being prepared for sale by Schlumberger.

2. ACCENTURE SHOWS UPTURN AT YEAR END

Accenture has released preliminary financial results for fiscal 2003 showing a full-year gain in operating profit and revenue, boosted by a strong fourth quarter.

Revenue for the year to 31 August is expected to climb 2% to $11.8 billion, with operating profit up 10% to $1.6 billion for a 13.1% margin.

The full-year results were helped by growth in the fourth quarter. Accenture anticipates a final quarterly operating profit more than doubling to $350 million, on revenues rising 12% to $3 billion for a margin of 11.6%.

Accenture chairman and CEO Joe Forehand said: "While our performance in a single quarter isn't necessarily an indication of future trends, we are encouraged by the 12% growth in revenues we achieved in the fourth quarter, as well as by our 2% revenue growth for the full year. We expect our new bookings for the full year to total $16.1 billion, with fourth-quarter bookings of approximately $3.8 billion representing a 34% increase over the same period last year."

For the full year, Accenture's consulting revenues are expected to show a drop of 10% to $7.9 billion, while outsourcing is expected to reach $3.6 billion, an increase of 37% over the 2002 result.

In terms of geographic regions, Accenture said revenues rose 8% in EMEA to $5.4 billion, while the Americas dropped 3% to $5.7 billion and Asia-Pacific gained 2% to reach $0.8 billion.

3. XANSA PULLS OUT OF ASIA-PACIFIC

Xansa has closed its Asia-Pacific and Paris offices as it continues to monitor its cost base and focus on IT outsourcing, business process outsourcing (BPO) and applications management.

Chief executive Alistair Cox told the company's annual general meeting that trading in the first four months of the financial year was in line with management expectations, although market conditions remain highly competitive.

The decision to close the Asia-Pacific operations - which employed around 80 people and contributed about 1% of total revenue in the year to 30 April - follows an extensive review which concluded it was not possible to deliver sustainable growth in an acceptable timeframe in the region.

"The process to close our offices in Singapore and Malaysia is underway and will be done to ensure that we appropriately discharge our client and staff obligations," explained Cox.

Xansa's small Paris office is being closed as the French market does not play to the company's strengths, although it will maintain an aerospace and defence centre of excellence in Toulouse.

Elsewhere, Xansa's Benelux business remains strong, with trading in line with management expectations, while operations in the US are moving ahead in a similar market environment to that of the UK.

Commenting on the UK business, Cox said: "We continue to see considerable interest in our propositions, especially IT outsourcing and BPO. Our Indian delivery capability is increasingly instrumental in such discussions. Although sales cycles for major deals remain lengthy, we have recently secured several pilot BPO projects in the financial services and utilities sectors which we expect will translate into larger-scale programmes in due course."

Confirming an earlier announcement (MCN Direct 2-22), Xansa chairman Hilary Cropper retired from the board after the AGM. The company is in discussions with a preferred candidate to replace her, and a new chairman is expected to take over in January 2004. In the meantime, deputy chairman Andrew Buxton will serve as chairman.

4. AXON PUTS ON LIVELY PERFORMANCE

Business transformation consultancy Axon has reported strong growth for the first half of 2003, reversing a collapse in profits on flat revenues for full-year 2002.

Axon's pre-tax profit for the six months to 30 June rose 66.6% to $3.2 million, on revenues rising 15.3% to $39.8 million. The company - which started as a SAP consultancy and now offers business transformation programmes for corporations with a SAP platform as well as SAP services - also increased headcount in the first half, with 378 employees at the end of the period, up from 322 a year ago.

Axon said 75% of total revenues came from its top five clients - up from 56% in the first half of 2002 - with recent client wins including BP, the Department of Work and Pensions and Innogy.

The company's business consulting practice grew 46% in the first half to record revenues of $8.2 million, with solutions implementation flat at $20.5 million. Applications management returned to growth with a 31% rise to $11 million and further support promised through the creation of an offshore facility in Dubai Internet City. Axon noted greatest demand for its services in the utilities, transport and public sectors.

Claiming a strong pipeline of new business, Axon chief executive Mark Hunter said: "Our market is flat and competitive, and will remain so for the foreseeable future. We have demonstrated that by executing our strategy, we can deliver growth in these conditions. We are confident of meeting market expectations for 2003 and look forward to 2004 with enthusiasm."

5. CAPITA CHALKS UP $78.6M EDUCATION DEAL

Capita has won a competitive bid for a $78.6 million, five-year contract with the Department for Education and Skills (DfES) to run a new education allowance designed to keep 16-19 year-old students in school.

Capita and its contract partners claim they have learnt lessons from the disastrous individual learning accounts programme which was administered by Capita but abandoned last October when a National Audit Office report proved that the programme had suffered fraud and abuse by training companies seeking funds for ineligible courses.

The new education maintenance allowance programme has been piloted since 1999, with independent research showing that means-tested payments to students have a powerful effect on school participation rates and reduce drop-out.

Capita will be responsible for delivering initial services, including a helpline, in November, and will then manage the service through the life of the five-year contract, which has an option for a one or two-year extension.

Application and assessment services are due to go on stream by May 2004, with full service provision, including payment services, going live in September 2004.

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