MCN Direct Newswire

Vol. 4 No. 16, 6 June 2005

This issue is sponsored by:

Trinity, The UK Consulting Industry 2004/5 and OutsourceWorld London 2005

This issue news

1. CSC reports record business
2. Detica completes decade of growth
3. BearingPoint CFO steps down
4. Xansa and Tesco make third pact
5. Axon caps executive bonuses
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. CSC REPORTS RECORD BUSINESS

CSC closed fiscal 2005 with record business wins worth $16 billion (£8.8 billion) - a 9% increase on the previous year.

Making its financial report for the year to 1 April, the company said full-year net profit - including gains of $313.8 million from discontinued operations - was $810.2 million, up from $519.4 million in the previous year. Revenue for the year was up 5% at $14.1 billion.

In the final quarter, CSC said revenue growth was driven by commercial activities in Europe and North America, but warned that while the market for short-term discretionary projects was growing in North America, European demand continues to be soft.

The company's commercial business led the way through fiscal 2005, representing 67% of total group revenue, up from 63% a year ago. Europe showed the greatest growth.

US federal government business - in recent years pushed up by the acquisition of DynCorp - fell to 33% of total group revenue, down from 37% in fiscal 2004.

Commenting on the results, CSC chairman and CEO Van Honeycutt said: "Given the re-profiling of our US federal government business due to the divestiture of selected DynCorp businesses, the redemption of term debt and strong major business awards, we have enhanced our competitive position and financial flexibility. We will continue to focus on improving our returns through operational improvements, cost management and the diligent application of stringent operating hurdles as we bring on new business."

Looking forward, CSC is predicting revenue for fiscal 2006 of $15-15.2 billion, with first-quarter revenue expected to come in at around $3.5 billion.

2. DETICA COMPLETES DECADE OF GROWTH

IT consultancy Detica has recorded its tenth consecutive year of growth and says the outlook remains good.

Turnover in the year to 31 March rose 33% to £71 million, while pre-tax profit climbed 2% to £9.4 million after a £2.6 million investment in the company's nascent StreamShield Networks internet content security business and a £500,000 investment in establishing planned US operations.

The company acquired customer relationship management consultancy Extraprise UK just after the end of the financial year. Its 35 staff have been integrated into Detica's commercial business and the company claimed that £1 million worth of sales from the Extraprise client base have been closed since the deal was completed in early April (MCN Direct 4-9).

With its US and StreamShield businesses about to get underway, Detica is looking for a return on investment and also states that it remains "vigilant for appropriate high-quality acquisition opportunities".

The company closed the year with a 33% rise in headcount to 583 and says it will continue to recruit consultants with a broad range of experience, as well as offer increased incentives to retain staff.

Looking forward, chief executive Tom Black said: "Based on the strategic opportunities offered by the US and StreamShield Networks, and a good start to the current financial year within our core business, we are confident in our ability to deliver significant growth. The outlook for Detica remains good."

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3. BEARINGPOINT CFO STEPS DOWN

BearingPoint has lost another top executive with the resignation of chief financial officer Joe Corbett.

Corbett had only been in the job since January and after an interim period filled the shoes of CFO Robert Falcone - who left the company last November, just weeks after former chairman and CEO Rand Blazer quit his post.

Harry You, appointed CEO of BearingPoint in March, will serve as CFO while an "aggressive search" is made for a successor to Corbett. You was previously CFO of Oracle and before that CFO of Accenture.

Neither You nor Corbett referred to a Securities and Exchange Commission investigation into BearingPoint's accounting as Corbett stepped down, with You saying only: "I wish to thank Joe for his hard work in setting BearingPoint in the right direction to sounder financial reporting and controls."

BearingPoint said Corbett stepped down by mutual agreement, leaving him to comment: "Harry and I decided that the challenges facing BearingPoint require Harry to have a CFO of his own choosing."

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4. XANSA AND TESCO MAKE THIRD PACT

Xansa has won a third IT services contract from retailer Tesco, but declined to put a value on the deal saying only that it includes a minimum revenue commitment over the three years to 2008.

Xansa's relationship with Tesco goes back 15 years, when the retailer signed an initial £18 million contract for outsourced IT services. A second contract worth £15 million was awarded in January 2002 to support Tesco's supply chain systems. In today's IT services market characterised by 'more for less', it is likely that Xansa has been squeezed even harder on the third and latest contract.

Commenting on the agreement, Xansa chief executive Alistair Cox said: "We are extremely proud to be working for Tesco, a world-class retailer. This contract will allow us both to do more of what we are each good at - Tesco to continue to be a world-leading retailer and Xansa to provide appropriate, innovative cost-effective solutions."

Under the contract, Xansa will continue to deliver services from its bases in the UK and India, including application management, software development and project management for Tesco IT systems covering distribution, stock replenishment, products and pricing, and daily shelf-edge labelling. Xansa will also support the retailer's UK and Republic of Ireland payroll systems as well as provide general sales information.

5. AXON CAPS EXECUTIVE BONUSES

Business transformation consultancy Axon is gaining a reputation in the IT market as an enthusiast for best practice in corporate governance.

Addressing the company's AGM, chairman and CEO Mark Hunter said that, with immediate effect, executive bonuses will be capped at three times salary, which in turn means there is an effective cap on the future grant of share options.

The decision to stop executives building up shares without limitation also means an end to share options being subject to rolling retesting, a less transparent and more complex method of issuing share options. This change in the company's corporate governance follows the launch of an executive reward scheme aimed at recruiting and retaining senior individuals, together with an employee benefit trust that will reward and motivate a larger group of high-performing staff.

Hunter said Axon's board will continue to review other aspects of corporate governance throughout the year with a view to achieving best practice.

In terms of the consultancy's performance, he told the AGM: "In the past 12 months we have established a significant offshore development and support business in South East Asia, become a leading player in the North American aerospace and defence industry and have continued to win market share in core European business. After this period of intense activity, we are successfully consolidating our position and I am pleased to report that we are continuing to grow the business and trade in line with expectations."

In fiscal 2004, Axon made a 58% gain in pre-tax profit to £6.3 million, on turnover up 20% at £60.3 million.

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Written by Sarah Underwood. Copyright 2012 PMP (UK) Ltd.