MCN Direct Newswire

Vol. 2 No. 40, 27 October 2003

This issue is sponsored by:

IBM, Cedar Software, Nimbus and Sage

This issue news

1. SchlumbergerSema gains in third quarter
2. NHS drops Patient First Alliance
3. Accenture wins $65.4m magistrates' courts contract
4. CGEY makes formal bid for Transiciel
5. Deloitte France sells consultancy business
6. Further information - feedback/forward to a colleague/unsubscribe

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1. SCHLUMBERGERSEMA GAINS IN THIRD QUARTER

SchlumbergerSema has reported upbeat financial results for the third quarter of fiscal 2003 ahead of its acquisition by Atos Origin (MCN Direct 2-35).

The company - currently the IT services business of oil and gas industry giant Schlumberger - reported a pre-tax operating profit of $27 million for the three months to 30 September, reversing a $3 million loss a year ago. The recovery reflects a restructuring charge of $16 million, taken in last year's third quarter, and cost reduction programmes carried out during the year in the Americas, Asia and the UK.

Revenue for the quarter was 6% higher than last year's comparable period at $792 million, the improvement due mainly to the weak US dollar.

The SchlumbergerSema business that will be transferred to Atos Origin after the planned acquisition forms is about 80% of the total. This business showed a quarterly pre-tax operating profit of $17 million, on revenues of $633 million.

The company's operating profit in the EMEA region fell 42%, primarily due to lower utilisation rates, lower fee rates in France and falling profitability in Germany and Sweden. Revenue in the region rose 6% to $616 million, reflecting currency movements.

The Americas turned a pre-tax loss of $2 million a year ago into a profit of $5 million, on revenues up 3% at $128 million. Asia pushed pre-tax operating profit up from $1 million to $10 million, on revenues down 2% at $51 million.

Schlumberger described the sale of the bulk of SchlumbergerSema as 'a major step' in its strategy of refocusing the company on core business in the upstream oil and gas industry. It confirmed that it has retained SchlumbergerSema's IT business in upstream oil and gas and that this will be combined with Schlumberger Information Solutions.

2. NHS DROPS PATIENT FIRST ALLIANCE

The National Health Service has deselected Patient First Alliance from the bidding for two of the five local service provider contracts within its $4.7 billion IT overhaul.

Patient First Alliance was initially led by UK services provider Jarvis and US healthcare specialist SAIC, but was later joined by Deloitte as another prime contractor.

The NHS would not detail the reasons for dropping it from the National Programme for IT (NPfIT), while strict confidentiality clauses concerning the negotiations meant the alliance could not confirm whether it was deselected or withdrew from the procurement process.

According to the Department of Health, the NPfIT worked actively with Patient First Alliance to reach an equitable contract, but excluded it from the bidding after the alliance withdrew its resources from a test centre where suppliers are required to prove their ability to deliver on the contracts. Patient First Alliance also failed to meet a deadline for giving answers to specific questions asked by the NPfIT team.

Its removal from the local service provider shortlists follows the withdrawal of Lockheed Martin from the NHS' national applications service provider contract due to demanding performance targets and costly penalty payments (MCN Direct 2-32).

Patient First Alliance was bidding for the north-east region - where the deadline for contract awards has been pushed back to 21 November (MCN Direct 2-37). This regional contract is now being contested by consortia led by Accenture and Cerner.

The second regional contract from which Patient First Alliance has been excluded - the west Midlands and north west - is being pursued by consortia led by BT, CSC, Fujitsu and IBM. This contract is due to be signed before the end of the year.

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3. ACCENTURE WINS $65.4M MAGISTRATES' COURTS CONTRACT

Accenture has secured a $65.4 million, five-year contract to implement a standard IT system for magistrates' courts in England and Wales.

The contract award follows last year's fiasco at the Department for Constitutional Affairs - then the Lord Chancellor's Department - when the Libra project aimed at overhauling IT within magistrates' courts had to be reworked because of significant time and budget over-runs.

A contract with Fujitsu Services to provide IT infrastructure and a specialist software application was renegotiated, limiting Fujitsu Services to infrastructure support and requiring a new software supplier to be found. After a $59.4 million, five-year contract to develop software was awarded to STL Technologies, part of The Technologies Group, earlier this year, Accenture has now been chosen to implement the system.

Accenture will provide the solution as a managed service, offering a standardised national system in magistrates' courts and enabling case information to be transferred electronically between courts and other criminal justice agencies such as the police and Crown Prosecution Service as part of the criminal justice IT programme.

Courts Minister Chris Leslie explained: "Accenture will start work immediately to integrate and test the software as well as train the 11,000 courts staff. Rollout to the first of the 42 Magistrates' Courts Committees will begin late next year and the system should be implemented in all courts by the end of 2005."

Accenture will also provide a management information system data warehouse that will give national statistics on the Magistrates' Courts Committees performance.

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4. CGEY MAKES FORMAL BID FOR TRANSICIEL

Cap Gemini Ernst & Young (CGEY) has made an all-share offer for Boulogne-based IT professional services company Transiciel.

The deal, which has been the subject of negotiation for some months (MCN Direct 2-32), values Transiciel at $285 million and is expected to be completed by the end of 2003 subject to shareholder and regulatory approval.

CGEY intends to combine Transiciel with Sogeti, its systems integration and professional services arm, to create a company with 13,000 employees across nine countries and combined 2002 revenues of over $1.3 billion - about 15% of total group revenues.

Transiciel's latest financial results show a net loss of $2.3 million for the first half of 2003, reversing a profit of $2.3 million in last year's comparable period. Revenue in the half fell 12.4% to $286 million for an operating margin of 4%. The company is forecasting a full-year margin of 6%.

While analysts question the wisdom of buying what is essentially a 'body shop' in a poor IT services market, CGEY believes the acquisition will strengthen its position in the local professional services market, complement Sogeti's footprint in the Benelux countries and add Transiciel's R&D outsourcing service line to its portfolio.

CGEY chief executive Paul Hermelin commented: "This acquisition is in line with the group's strategy. Cap Gemini wishes to be in a position to offer its clients local professional services as well as global solutions adapted to meet their specific requirements. With growth and high margin potential, the new organisation should benefit the entire CGEY group."

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5. DELOITTE FRANCE SELLS CONSULTANCY BUSINESS

Deloitte has sold its French consultancy business in the wake of an August 1st financial security law that prevents firms in France from certifying the accounts of companies to which they provide other services.

Deloitte indicated its intention to sell in March and has done so by setting up a group called Ineum Consulting that will be 41% owned by its 29 active partners and 40% owned by European investment capital group 3i.

The remaining 17.5% of the capital will be retained by Deloitte partners for a maximum of five years. The Deloitte partners will have no voting rights and hence no decision-making power within the new structure - but they might gain significant windfalls when the transition period is over.

Ineum Consulting, which will specialise in operational strategy, organisation and IT services, has 500 consultants and annual revenues of around $100 million. It will be managed by CEO Didier Taupin with a supervisory board of five members chaired by Jacques Manardo, owner of 1.5% of the capital, and CEO of Deloitte France until 2000 when he retired.

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