MCN Direct Newswire

Vol. 2 No. 20, 27 May 2003

This issue is sponsored by:

IBM, Lawson Software, OpenAccounts and OutsourceWorld

This issue news

1. Bidders get set for $8 billion MoD contract race
2. Anite parts company with chief executive
3. Detica goes from strength to strength
4. ITNet banks on public sector
5. Hedra hires ex-PwC director
6. Further information - feedback/forward to a colleague/unsubscribe

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1. BIDDERS GET SET FOR $8 BILLION MoD CONTRACT RACE

IT consultants keen to bid for a massive $8 billion Ministry of Defence (MoD) contract have passed a pre-qualifying test and are now under scrutiny as the ministry prepares to announce preferred bidders at the end of June.

The 10-year Defence Information Infrastructure (DII) contract will be run as a public-private partnership and is the largest of its kind ever undertaken by the MoD. It will replace more than 100 information systems that cater for more than 300,000 MoD staff at 2,000 locations in the UK and abroad. The contract winner will not only design, build and operate an infrastructure encompassing the whole of the MoD, it will also manage and move existing information systems - including 2,500 applications - to the new IT service.

At least four consortia are in the running for the contract. CSC is heading the so-called Radii consortium, which also includes BT Government, Cap Gemini Ernst & Young and Thales UK. Others reported to be on the starting blocks are EDS, working with Fujitsu Services, LogicaCMG and General Dynamics; IBM working with Steria; and Lockheed Martin leading a consortium containing Hewlett-Packard, SAIC and Unisys.

Bob Quick, DII integrated project team leader of the Defence Communications Services Agency, which is responsible for the MoD's IT and communications, said: "DII has been formed to provide a coherent information infrastructure and associated services that will enable the sharing of information and collaborative working across the whole of defence."

Preferred bidders will be notified in June, with the contract award scheduled for the first quarter of 2005 and go-live of all systems due in 2008.

2. ANITE PARTS COMPANY WITH CHIEF EXECUTIVE

The board of IT services group Anite has unseated CEO John Hawkins, saying his skills no longer meet the company's needs.

The sudden departure of Hawkins - who had been with Anite since 1997 and had overseen a massive company overhaul including disposals, restructuring and more than 30 acquisitions - followed a warning that pre-tax profits for the year to 30 April would be at the bottom end of expectations.

Earlier this month, the most pessimistic broker following Anite suggested a 34% fall in pre-tax profit to $30.5 million.

Profits will be further depleted by goodwill impairment charges against acquisitions of $164 million, restructuring costs - including the loss of 100 jobs - of $16 million and a disposal loss of $26 million against Anite's German consultancy business GMO. The company said it had completed renegotiations on earn-out liabilities associated with acquisitions and that they had been capped.

Revenues for the year are forecast to be in line with expectations. Earlier this month, the consensus suggested a gain of around 11% to $328 million.

Hawkins' immediate departure will leave a vacuum that will be filled, while a replacement is found, by non-executive director David Thorpe, until recently a corporate vice president and president for Europe at EDS.

Commenting on Anite's poor financial performance, company chairman Alec Daly said: "Markets remain very tough with no immediate signs of improvement. The focus will be on organic growth, tightly managed continuing businesses and working to position the group for recovery."

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3. DETICA GOES FROM STRENGTH TO STRENGTH

Detica has turned in an impressive set of financial results, just a year after an IPO placed it on the London Stock Exchange (MCN Direct 27).

The company, which offers IT services in the customer management and UK national security markets, reported pre-tax profit for the year to 31 March up 25% at $12.1 million, on revenue rising 19% to $64 million. Net cash at the year end was $27.1 million, up from $7.8 million at the close of fiscal 2002.

Government clients led the way in fiscal 2003, with revenues from the national security and public sector markets rising 40% to $32.2 million. National security commanded the larger portion of revenues, up 37% at $27.1 million, but public sector business grew 55% to $5.1 million, justifying the creation of an independent public sector business unit on 1 April.

Results from other verticals showed telecoms, media and technology revenues up 19% at $11.4 million, energy up 11% at $10 million, travel down 17% at $6.5 million and financial services down 4% at $3.8 million.

Detica's revenues from consultancy services grew 11% to $42.5 million - representing 66% of the total - while system implementation revenues grew 40% to $21.6 million, fuelled by requirements from UK national security clients.

The company is continuing to recruit and increased its average fee-earner headcount by 19% to 255 last year.

Anticipating another good year ahead, chief executive Tom Black said: "In the short term, we will devote our primary efforts to the national security market and the wider public sector as demand here seems set to remain strong for the foreseeable future. In the longer term, we intend to increase market share in our commercial verticals and develop our portfolio of commercial businesses, broadening our representation in the economy."

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4. ITNET BANKS ON PUBLIC SECTOR

ITNet is pinning its hopes on the public sector for a good financial performance in 2003.

The IT services provider reported "an encouraging first quarter" with new business signings in the local government market worth $82 million over 10 years and a total order book of $459 million at 30 April 2003 - following a 29% increase in profits on revenue growth of 1.4% last year (MCN Direct Vol. 2 No. 8).

The new contracts include a $59 million, 10-year public sector partnership with the London Borough of Richmond upon Thames for consultancy, IT and communications, and e-government services; a $2.6 million, 18-month contract with Buckinghamshire County Council to support business transformation; and the extension of a contract with Colchester Borough Council to cover funding of $7.5 million over three years for the implementation of a contact centre, website and intranet services, plus change management and integration services.

Speaking at ITNet's recent annual general meeting, chairman Lord Crickhowell said: "A significant driver in local government is shared strategic partnerships, where groups of authorities band together to look for a partner to help them transform their organisations to deliver joined-up services. Transformation and modernising government are still major requirements in such partnerships and we are ideally placed to take advantage of this trend."

While the public sector is ITNet's best play in today's market, it is building its commercial business in the key verticals of transport and utilities. Contracts to the tune of $16 million have been signed in the current financial year.

Looking forward, Lord Crickhowell commented: "With the strength of our order book and our market-leading position in local government, together with the significant sales pipeline in the public sector, we believe this represents an encouraging platform for another good performance in 2003."

Sponsor

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5. HEDRA HIRES EX-PwC DIRECTOR

Public sector consultancy Hedra has gone back to the ranks of former PricewaterhouseCoopers employees to hire Andrew Hebb as its chief financial and operating officer.

Hebb, who joins Hedra immediately, will work alongside former head of PwC Consulting Lynton Barker, who became chairman of the consultancy in January 2003.

Hebb was most recently operations director of global architectural practice Aedas, where he managed a restructuring and rebranding of the company. Prior to joining Aedas, he spent five years as finance and operations director at PwC's management consulting practice. During the 1998 merger of Price Waterhouse and Coopers & Lybrand he was responsible for the integration of the two firm's financial processes. His earlier career was in the retail sector.

At Hedra, Hebb will manage all financial and operations matters, helping to build an infrastructure that will support the business as it grows. He will also assist Barker in developing corporate strategy.

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