MCN Direct Newswire

Vol. 4 No. 22, 26 September 2005

This issue is sponsored by:

Syan, Maconomy and NetIQ

This issue news

1. LogicaCMG pays £630m for Unilog
2. PwC back in consultancy
3. Capgemini wins in the US
4. Liberata chooses new CEO
5. Cornwell confident for the year
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. LOGICACMG PAYS £630m FOR UNILOG

LogicaCMG is planning to buy Unilog, France's fourth largest IT services firm, in a deal worth €930.3 million (£630.6 million). The acquisition will strengthen LogicaCMG's position as a European IT services firm, pushing its workforce up by 7,400 employees to 27,000.

Unilog will add significantly to LogicaCMG's underweight operations in France and Germany. LogicaCMG's business in France accounts for 7% of its revenue and is expected to show a loss this year. In contrast, Unilog makes 81% of its revenue in France, with profit margins of about 10% and customers including Total, EDF and Vivendi. It is ranked fourth in the market behind IBM, Capgemini and Atos Origin.

Unilog also has 1,100 staff in Germany, where LogicaCMG is struggling to gain momentum, as well as a presence in the UK, Switzerland and Austria. Its 2004 revenues were £0.4 billion, compared to LogicaCMG's £1.7 billion.

LogicaCMG will launch its bid for Unilog in November with the aim of completing the deal by the end of the year. Chief executive Martin Read said: "This transaction has a strong commercial, financial and strategic logic. Unilog is an excellent business with a track record of delivering a first-class performance. The two businesses have complementary client bases, geographical strengths and service offerings. There are also exciting opportunities to cross-sell capabilities."

The acquisition is LogicaCMG's largest since it was formed by the merger of Logica and CMG in 2002. It will be funded partly by a rights issue aimed at raising net proceeds of about £389 million. Under the terms of the acquisition, a number of senior Unilog executives will join LogicaCMG's board, with Unilog executive vice president Didier Herrmann taking responsibility for LogicaCMG's business in France, Germany and Switzerland.

2. PwC SCALES UP CONSULTANCY

Accountancy firm PricewaterhouseCoopers (PwC) is rebuilding its management and IT consultancy business after selling out to IBM in 2002, amid market and regulatory concern that auditors should not carry out non-audit work for clients.

PwC's UK results for the year to 30 June show total revenue up 12% at £1.8 billion. Assurance and tax services provided the bulk of this revenue with gains of 18% and 8% respectively, but PwC's performance improvement consulting revenues - part of its advisory services group - rose 28% to over £100 million. The company attributed this to "increased market awareness, a string of project wins and the continued recruitment and development of high-quality, specialist expertise".

While PwC is not expected to return to the large-scale IT implementations it delivered through PwC Consulting before it was sold, it plans to continue building its advisory services. Reviewing the financial year, UK chairman Kieran Poynter said: "Our performance improvement consulting practice showed particularly strong growth. We were recently ranked as the UK's 11th largest consultancy business, with most of those ahead of us in that listing being providers of big-ticket IT consulting and outsourcing, activities in which we have chosen not to engage."

In terms of recruitment and training, Poynter said performance improvement consulting was a particular area of investment, along with specialists in the IFRS accounting standards and the US Sarbanes-Oxley legislation on financial compliance.

Sponsor

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3. CAPGEMINI WINS IN THE US

Capgemini claims to have "confirmed" its business recovery in North America following contract wins in consulting, technology and outsourcing.

Capgemini has reported a 9% gain in US revenue for the first six months of 2005 and says its outsourcing business is on track to make an operating profit in the second half, with its contract with TXU starting to break even and its project and consulting business beginning to resume growth (MCND 4-21).

At a North American analysts meeting following the results, Capgemini group chief operating officer Pierre Danon said: "I can confirm the robustness of the North American turnaround, with six major wins from the second and third quarters. These wins demonstrate Capgemini's full breadth of solutions and capabilities across consulting, technology & systems integration and outsourcing. They represent a strong rebound across many key sectors where Capgemini is focused and take advantage of the company's global delivery capabilities as well as its new orientation towards service oriented architecture."

The contracts highlighted by Danon are with aircraft manufacturer Bombardier, alliance partner HP, retail group Limited Brands, the National Gallery of Art in Washington, and telecom, media and entertainment clients Sony Pictures Entertainment and Time Warner Cable.

Sponsor

NetIQ

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The latest issue of Management Consultants' News featuring NetIQ, contains the following articles:
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4. LIBERATA CHOOSES NEW CEO

Business process outsourcing specialist Liberata has named Robert Gogel as group CEO following the departure of Tom Butler after just 15 months in the job.

Gogel took over the role last week after Butler told the board that he wanted to "pursue new opportunities" - the same reason given by Butler's short-lived predecessor Glenn Timms when he left the company in May 2004 (MCND 3-17).

Gogel is former CEO of software company RebusIS, which was last year taken over by Xchanging, a company that - like Liberata - is partially owned by investment firm General Atlantic. He previously held strategic and operational roles at AXA, Siemens and Capgemini. Liberata chairman Geoff Unwin said: "Bob Gogel has proven experience of delivering rapid results in our sector and will undoubtedly be a key force in achieving Liberata's continued success."

Gogel has a tough job ahead of him with few major BPO contracts coming onto the market and larger competitors such as Capita and Capgemini as keen as Liberata to secure any new business.

5. CORNWELL CONFIDENT FOR THE YEAR

Cornwell Management Consultants has reported its first financial results since listing on AIM last November, showing a 35% gain in pre-tax profit to £970,000 on turnover rising 12% to £10 million.

Public sector turnover for the six months to 30 June rose 22% to £9.3 million, representing 93% of total. Invitations to tender in Cornwell's central government business were up 45% on last year's comparable period, while it maintained a 40% win rate on proposals submitted. It is engaged on more than 100 central government projects, with its work in defence, local government, health and police also improving compared to the same period a year ago.

Private sector turnover for the six months was down 45% at £700,000, with growth in the commercial sector offset by a reduction in financial services. Steps to improve the financial services business have been taken, with the private sector business boosted by Cornwell's August acquisition of outsourcing consultancy Quantum Plus for up to £4.5 million.

Cornwell managing director Jonathan Broadhurst said: "Overall, we believe that our current trading position, coupled with our acquisition of Quantum Plus, provides a sound base for the rest of the year."

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