Civica has extended its footprint in Australia with the acquisition of Icon Global Solutions Pty Ltd, trading as Carelink. The terms of the deal have not been disclosed.

Icon Global is headquartered in Geelong, Victoria, with additional teams in Sydney, Melbourne, Brisbane and Perth. The business provides cloud-based software focused on the community care sector, including case management, scheduling, workforce optimisation, business intelligence and budgeting tools. It also offers a range of services such as consultancy, training, data migration and system integration.

The business has 140 customers across Australia, including local authorities, and national and state-based not-for-profit and for-profit community care providers. In total, Icon Global has c.20% of the Australian community care market, which opens up a significant new area of business for Civica and better positions the company to support the digital transformation of the health and care sector in the region. 

The deal fits well with Civica’s strategy of extending its global capability and expertise in core markets and continues the shift towards cloud software. The business has been growing strongly outside of the UK with international growth up 55% to £77.5m, representing 24% of group revenue, in 2017 (see Civica revenues up 21% in 2017).

This is the fourth business Civica has acquired in 2018. It follows VisionWare and Nationwide Retail Systems in May and OneStep Solutions in February. It’s the first acquisition outside of the UK since it joined Partners Group last year, but with the appointment of Ian West (see Civica new recruit to lead M&A drive) we can expect to see further deals in the near future.

The Secretary of State for Education, Damian Hinds, has challenged the tech industry to help tackle some of the biggest issues facing the education sector.

He said only a minority of schools and colleges are currently taking advantage of the opportunities that technology can provide, and he wants industry to help “create a step change in education” by improving teaching and slashing teacher workload. The Department for Education (DfE) listed five areas where there is an opportunity for industry to help:

• Teaching practices to support access, inclusion, and improved learning outcomes for all.
• Assessment processes, making assessment more effective and efficient.
• Methods for delivery of teacher training and development by upgrading educator support so they can learn and develop more flexibly.
• Administration processes to reduce the burden of ‘non-teaching’ tasks.
• Solutions to lifelong learning to help those who have left the formal education system to get the best from online learning.

He said there are many examples of where technology has been used successfully in education, but he wants the tech industry to “demonstrate how to roll this out more widely across the country, backed up by evidence of the impact they are having on schools, colleges and universities".

It was also announced that the DfE is going to work with the Chartered College of Teaching, British Educational Suppliers Association (BESA) and industry leaders to develop online training packages, establish an online portal providing free software trials for schools, and establish a series of regional ‘demonstrator’ roadshows.

Technology has formed a key part of Hinds’ thinking since he took on the role of Education Secretary in January 2018, including launching a competition to identify high quality education apps last month. This latest move will be welcomed (somewhat sceptically, I suspect) by industry. As we have highlighted in our recent UK Public Sector SITS: Market Forecast Preview and UK Public Sector SITS Supplier Rankings 2018 education remains a challenging sector for software and IT services suppliers.

In what could be its swansong results as an independent company given the acquisition agreement with Broadcom in July, CA Technologies has released Q118 results. The sparse details show net income of $166m on revenue of $938m.

Having adopted the ASC 606 reporting method for Q1 (to 30 June 2018), the company also showed results under the previous ASC 605 method for yoy comparatives, which showed net income up 47% to $261m on revenue up 3% to $1.05bn. Given the acquisition process no material commentary on performance was released but growth at CA over the last year has been due to acquisitions (Veracode, Automic) so that is unlikely to have changed. Sequential performance was down slightly compared to Q4 but the pending acquisition has not significantly dented performance even though the rationale behind a semi-conductor supplier acquiring a mainframe-heavy infrastructure software provider remains puzzling. 

First quarter results for Firstsource show the Indian customer management specialist continuing to grow with revenue of INR9,060m up 4.7% year-on-year (INR8,507m Q1 18). EBITDA also improved to INR1,281m (INR1,006m Q1 18) with margins also up year-on-year to 13.94% (11.46% Q1 18).

The UK has become increasingly important for Firstsource (see - Firstsource more profitable on UK focus) and this has continued in the first quarter with the UK now accounting for 44.7% of global revenues (41.2% Q118). The company now boasts some of the UK’s leading brands with clients including SKY, BBC Worldwide, Virgin Atlantic, NOW TV and the FCA.

Globally the proportion of revenue delivered onshore declined to 76.9% (79.3% Q1 18) reversing the recent trend of Firstsource looking to increasingly bring activity onshore. Revenue is also becoming less concentrated with its biggest five clients now accounting for 42.7% of revenue (46.9% FY 18). Global headcount remained flat at just shy of 19,000.

Firstsource is another player looking to evolve from pure play BPO player to a technology-driven BPS company and has unveiled new brand positioning ‘Stay Ahead’ to reflect this. The language and sentiment all say the right things, predictably focusing on investing in new technologies to deliver better customer experience, digital transformation and better outcomes. The reality as most customer management businesses know is much more complex, in being able to get the balance right between proactively transforming client operations whilst not overly cannibalising existing revenues. As the numbers prove so far, Firstsource has been able to navigate this change.

AIM-listed UK-headquartered international recruitment firm Harvey Nash is to be acquired by ‘The Power of Talent Ltd’ a newly incorporated entity indirectly owned and controlled by DBAY Advisors.

The offer entirely in cash, values Harvey Nash at approximately £98.7 million, representing a valuation of 9.1x EV/EBITDA for the year ended 31st January 2018.

Harvey Nash has seen an improving situation in its UK business (see - Brighter UK news from Harvey Nash) with profitability improving since its acquisition of Birmingham-based ‘digital’-focused IT recruitment and solutions company, Crimson (see Harvey Nash adds digital colour with Crimson). 

The board however clearly believe it is the right time to sell up. Chairman Julie Baddeley said: “Whilst the Independent Harvey Nash Directors believe Harvey Nash would have a strong future as an independent listed company, they consider that the offer, which is wholly in cash, represents attractive value and is in the best interests of Harvey Nash Shareholders, staff and clients.”

Approval for the offer is required by 75% of all shareholders to go ahead.

The quality assurance requirement is changing as companies join the dots between their various operations and strengthen the links between initiatives such as customer experience improvement and back office and supply chain quality and reliability. Intertek is a long time participant in the quality assurance market who has been strengthening and expanding its footprint in the line with the changes, which includes ramping up its software capability – see Intertek adds cyber assurance expertise with NTA buy. H1 results indicate a company adjusting to change as it progress on what it describes as its 'good to great' journey.

Revenue for H1 was down 1.8% to £1.35bn, but up 3.9% on a constant currency basis while PBT grew 3% to £197m, or 7.5% cc, and the operating margin expanded by 60bps to 15.5%. The results align with its focus on delivering progress in revenue, margin and cash performance at constant currency rates.

The company describes itself as a “Total Quality Assurance“ supplier, providing Assurance, Testing, Inspection and Certification solutions for customers’ operations and supply chains. It crosses technology and physical boundaries which is one of the requirements of today’s QA and one of the challenges facing the many organisations undertaking digital transformation journeys.

It is not the only provider changing its approach. Eggplant (one of our Great British Scaleups) has expanded its focus from traditional software testing and code quality to the impact of testing and quality on the customer experience and achievement of business outcomes. There are other changes occurring within the sector too, as the merger of Tricentis and QASymphony and the acquisition of SQS by Assystem Technologies (which also bridges the digital and the physical) show. One of Intertek’s goals is M&A within the fragmented Quality Assurance sector so we expect more activity from this long established company.

In 2017 the Challenger Banks and Specialist Lenders saw an increase of 20% in their level of activity in the mortgage lending markets, compared with only a 2% uplift in the business of the banks. This rapid rise, albeit from a low base, is causing lots of new mortgage platform providers to come out of the woodwork, often bringing new technology-based twists.

Only last month we heralded the arrival of Proportunity, Molo came in June and least 3 others have that we have written about (Trussle, Habito and MortgageGym) have arrived, asking for (and getting) funds over the past year.

The latest mortgage technology platform to arrive is London-based Smartr365, which provides a solution for mortgage advisors, introducers and solicitors. As well as providing an end-to-end mortgage broking platform it also offers online data and verification services, looking to supply process components to other industry players.

The company has secured £3m of funding. The investor in this case is none other than Legal and General, who ought to know a thing or two about mortgages. Although MortgageGym was backed by GoCompare, the others looked to be funded by investment funds. The L&G Head of Fintech will join Smarter365 as a NED.

There is no doubt that the mortgage market is a very interesting one, ripe for change and providing the opportunity to build lasting and valuable end customer relationships. At the same time, industry efforts are opening up the market to API services and established companies are trying to revitalise their technology, propositions and market reach by accessing Fintech innovation. Although we consider that any large, set-in-their-ways business will have problems extracting the benefits of such moves, it will be fascinating to see how L&G and their new collaborator combine.

PROACTIS, the global spend management company, has suffered over the past three months and today’s trading update does not provide much near-term succour, despite the announcement of another deal to build scale and a top 6 market position.

At the half-year, PROACTIS reported revenue up 124% to £26.4m, but this included only modest organic growth of 3% after the August acquisition of US Perfect Commerce. Concerns highlighted by several leading customer departures then prompted a 40% drop in the share price.

The company’s trading update for the year to end July predicts reported revenue of c.£52m. This suggests a roughly 50:50 split between halves, compared with an average split of 47:53 for PROACTIS business in 2016 and 2017, suggesting a loss of momentum (although the move to SaaS contracts may mitigate this impact somewhat). The share price fell 9% on the opening and has not recovered from the level of the April mark-down. Adjusted EBITDA for the year is expected to be £17m, after £8.4m in the first half, with the H2 contribution lower than for the reported figures in earlier years (although the split of Perfect Commerce’s business is not known). Away from reported financials, activity levels appear good, with record numbers of new logos (at 64) and a doubling of associated initial contract value (at £8.7m).

PROACTIS is buying again, this time Netherlands-based Esize, a SaaS-based buy-side procurement software business. The price is c.3x revenue, with €15.1m buying €5.1m of revenue and €1.7m of EBITDA.

Scale and momentum are vital for any eCommerce solution provider. The acquisitions are providing a boost to PROACTIS’s scale, but investors will be eagerly awaiting the detailed update on 22^nd August to estimate what momentum they can expect over the next couple of years.

London-based Quantexa, has raised $20m/£15.2m from Dawn Capital and existing investors HSBC and Albion Capital. The funds will be used to further technology development of the open source stack and international expansion for the big data and enterprise intelligence company.

When it comes to big data analytics, products should be designed and pitched for a specific set of tasks so Quantexa (founded in 2016) starts from the premise of fighting financial crime (although its products are not restricted to this task), using “Entity Resolution and Network Analytics technology” to understand customers, their relationships and behaviours. The terminology is different but bringing together disparate data and understanding relationships and behaviors is standard fare for big data technologies allied with analytics/AI/machine learning - and AI/machine learning-enabled propositions are top of the investor hit list currently. 

The Link App, a Manchester-based developer of an app for law firms, has raised £344k in funding.

Founded in 2014 by Lauren Riley, The Link App is a tool to help law firms communicate with their clients. The app allows solicitors to increase productivity across the working day, by keeping clients ‘in the loop’ without the need for back and forth communication. 

Backers included Mercia Equity Finance, which is managed by Mercia Fund Managers and part of the Northern Powerhouse Investment Fund, as well as existing and new angel investors.

The company plans to use the funds to expand the team and add further features, including the ability to provide clients with milestones to monitor the progress of their case and upload documents, including their ID, directly from their mobile phone.

The latest funding round brings the total invested into the business to over £500k.

Manchester-based Miss Group has secured funding of £6.4m from the Business Growth Fund (BGF). The firm was originally based in Stockholm (founded in 2014) but has since relocated to the UK.

In the past year Miss Group has made two acquisitions (UK and US) taking staff numbers to around 50 and the funds from BGF will be used to support its international buy-and-build strategy. With so many small players operating in the SME web hosting market there will certainly be plenty of targets to choose from. The challenge will of course be in making the right choices. Watch this space.

We have an open sponsorship opportunity at our flagship annual ‘TechMarketView Evening’ event in London on September 13th, which would suit an organisation looking to demonstrate thought leadership and raise its profile in the UK tech market.

The package includes an exclusive five-minute speaking slot at the beginning of the analyst presentations – an unparalleled opportunity to convey your message to a captive audience of some 200 leaders from the UK software and IT services sector.

Our Diamond sponsor also enjoys 5 Sponsored Posts and a series of banner adverts in UKHotViews, plus a table for 10 at the event itself and advance sight of the guest list to smooth networking. Moreover, they can look forward to regular namechecks in all of our UKHotViews and social media coverage of the event, which goes out to our c20k readers in the weeks leading up to, and following up from, the event.

For full details and to express interest in the package please contact Sarah Robinson as soon as possible – email srobinson@techmarketview.com or call +44 (0)7880 908 008.

Maidstone and Tunbridge Wells (MTW) NHS Trust has extended its relationship with Allscripts by signing a 10-year deal to use its Sunrise clinical suite of software.

MTW has been working with the Chicago headquartered healthcare technology business for several years. It signed a deal to replace its iSoft Patient Administration System (PAS) with Allscripts PAS in 2015. This implementation was far from straightforward, but the system finally went live in October 2017.

The latest deal will see Allscripts, which has offices in Manchester and London, work with MTW to help it achieve its digital transformation ambitions over the next decade. The integration of Sunrise with MTW’s existing PAS will create a full Electronic Patient Record (EPR) system for the Trust. A phased deployment of Sunrise is scheduled to start in autumn 2019.

MTW, which runs two major hospitals and is a regional Cancer Centre, made the decision to switch to a single EPR as it doesn’t believe it can meet its objectives using a ‘best of breed’ approach. The full system will include order communications, test results, e-prescribing, clinical documents, Allscript's mobile app Sunrise Mobile Care, its A&E information system Sunrise Emergency Care, and Sunrise Surgical Care in theatres.

The agreement will allow MTW to work more closely with other NHS Trusts in the South East Region. Three out of four acute trusts in Kent are now Allscripts customers, with Medway NHS Foundation Trust going live with Allscripts PAS in 2015 and East Kent Hospitals University NHS Foundation Trust signing deals for Allscripts PAS in 2015 and Sunrise the following year. Like it has done with trusts in and around Manchester and Liverpool (see Bolton chooses Allscripts for integrated health record) Allscripts is successfully building clusters of Trusts using its platform.

Alpha Financial Markets Consulting listed on AIM and published a strong set of interim results towards the end of last year. They continued to make strong progress with the figures to end March showing group revenue up by 52% to £66m and EBITDA up 63% to £13.9m. The share price is up by 60% since the IPO.

Alpha has established itself as a strong independent player providing advice to the asset and wealth management sector which is undergoing substantial change as regulatory environments evolve, growth is increasingly dominated by Asian markets and as investment instruments become more complex. To meet the changes in technology-based consulting, Alpha has set up new Digital and Data Solutions practices to complement its six other teams spanning a wide range of operational and investment themes. The product portfolio and team has been supplemented by the mid 2017 acquisition of TrackTwo with is core 360 SalesVista product, adding to cross-selling opportunities.

Although UK growth remained strong at 40% in the year, the balance of the business is shifting into overseas markets, the UK proportion falling from 65% to 60% in the year, with new offices opening in both Europe and Asia. The US however is the surest target for near term growth, given Alpha’s breadth of activity, existing customer base and presence in six cities. The US business doubled over the past year, now representing 13% (£9m) of revenue. In the report and accounts published today, management remain confident of growth in the year ahead.

The Mike Lawrie effect continues at DXC. The President, Chairman and CEO has continued to execute his synergy plan, resulting in an improvement in profit margins and EPS (also see FY18 results commentary – DXC Technology cranks up the margin). Adjusted EBIT was $803m in Q119 (compared to $570m in the prior year), pushing the adjusted EBIT margin from 10.9% to 15.2%. Income from continuing operations before income taxes was also up - $360m (vs. $91m), even after deducting things like restructuring, transaction, separation and integration costs. This journey continues, but Lawrie won’t stop there. He also sees further opportunity for margin expansion longer term through focusing on “location, mix shift, labour pyramid optimisation, automation and continued supply chain efficiencies”.

In terms of revenue, the headline shows growth of 0.9% to $5,282m (results exclude the US public sector business, which is now part of a new publicly traded company). But at constant currency, the decline continued – down 1.8%. Across the business units, at constant currency (ccy), GBS (Global Business Services) revenue was down, while GIS (Global Infrastructure Services) was up. But even within those numbers there is a more complex picture.

GBS revenues were up 2.4% to $2,213m, but down 4.6% ccy. The division was negatively impacted by the completion of several traditional application contracts. But the light amongst the gloom came from enterprise and cloud applications (up 14%) and analytics (up 18%). The GBS profit margin jumped from 12.1% to 18.2%. Meanwhile GIS revenues were up 3.4% to $3,069m, which also equated to a positive ccy story (just!), at +0.3%. Again, traditional ITO business was down but the bright spots came in cloud and platform services, security, and workplace and mobility. Here, a wide array of strategic partnerships is playing a crucial role, including the newly announced agreement with Amazon Web Services (AWS) to build a new strategic DXC AWS integrated practice. In the results call, Lawrie pointed to the benefits of being able to leverage the R&D expenditure and sales capacity of DXC’s partners.

Overall, digital revenues were up 21% year-on-year, primarily driven by the cloud business, where revenues grew 42%. Lawrie commented “we’re seeing literally an explosion in the number of deals that we’re doing under $5m”. Supporting this, is the DXC’s industry IP, which saw growth of 5%, driven by financial services and healthcare. The ‘digital’ book-to-bill stood at 1.6x, compared to 0.9x for the business as a whole.

In the UK, we’ve recently written about a couple of good wins at Defra (see DXC wins Defra end user services deal) and NHS Supply Chain (see DXC benefits from NHS supply chain contract disaggregation). But it is clear we will continue to see the completion of several other projects in the UK which will drag down numbers. This is the picture across the board, but Lawrie is making his mark mitigating the effects across the organisation.

Yesterday I was checking for news on Fujitsu ahead of one of our regular meets with their top management, when I hit upon a press release which seemed to promise a solution to one of the most intractable problems facing mankind.

Fujitsu has released the smallest ever laundry tag built with RFID technology. It goes under the catchy name of ‘5^th General Super Slim Washable RFID Linen Tag’. It clearly has huge application in hospitals, hotels and any dry cleaning outlet. Users can track items through the ‘washing, drying and folding processes’. The tag is only 6mm wide and can withstand multiple washing cycles and can be read at a distance of 3 metres.

In our household - and I know from many conversations in most other households too - the problem of odd socks coming out of the washing machine is, as I said, the most intractable problem known to mankind. I have a complete drawer of odd socks desperately waiting to find their twin. Clearly the ‘5^th General Super Slim Washable RFID Linen Tag’ will solve that problem…

But seriously, I can see real application here. After following Fujitsu for nearly 30 years since their acquisition of ICL in 1990, I have always been amazed at the innovation coming out of Fujitsu’s development labs. However the criticism is that inventing something really useful is one thing. Developing it and selling it commercially on a global (ie not just Japanese) basis is another.

Over the last couple of weeks, TechMarketView has published must-read Supplier Rankings across every one of our research streams. If you have not yet downloaded your copy, here are the links to the reports:

• Infrastructure Services Supplier Rankings 2018
• Application Services Supplier Rankings 2018
• Enterprise Software Supplier Rankings 2018
• Business Process Services Supplier Rankings 2018
• Cybersecurity Supplier Rankings 2018
• UK Public Sector SITS Supplier Rankings 2018
• UK Financial Services SITS Supplier Rankings 2018

Each report ranks the Top 20 suppliers to the sector and analyses their performance relative to the market and their peers. Each of the Research Directors also identifies those suppliers jostling for position. It is clear – across the board – that diversity of performance is a common theme. And often it is those further down the rankings that are performing the most strongly.

Our in-depth reviews highlight how differences in strategy and approach are determining the comparative success of the various suppliers. Which suppliers are best dealing with digital disruption in the market and, in line with our 2018 research theme, breaking their boundaries to remain relevant and take share in a shifting market?

If you would like to read any of these reports but your organisation is not a subscriber to the relevant stream, please contact our client services team to find out how you can gain access.

You can also reserve a place at TechMarketView’s Annual Presentation & Dinner on 13^th September 2018 to hear more on how the shift from the ‘legacy’ to the ‘new is impacting software & IT services suppliers – to find out more click here.

Genpact continued to grow in Q2 with revenue up 8% on a constant currency basis to $729m for the quarter.Adjusted operating profit was $110m, down 1% year-on-year, with a corresponding margin of 15%.

Genpact’s strategy has focused on developing specialist BPS expertise for select industries such as supply chain in consumer products or anti-money laundering in banking. Genpact made two acquisitions in the quarter supporting this, Barkawi Management Consultants designed to grow its Supply Chain transformation services and Commonwealth Informatics a cloud-based drug safety analytics provider where it has already won a pharmacovigilance deal with a top 5 pharma company, one of its largest AI-based deals to-date.

As with most BPS players, clients typically engage Genpact for transformation services either in smaller digital engagements that deliver proof-of-concepts or by immediately undergoing a full-scale transformation. Genpact is now seeing more of the later where transformation services are being embedded in larger deals. These deals are typically more complex and have longer ramp-up periods resulting in lower upfront revenue but will provide greater visibility to its future top line growth.

Genpact’s ‘land and expand’ approach to sales is seeing it grow the size of its client relationships. It now boasts nine client’s relationship where annual revenue exceeds $50m, up from six during the same period last year and had its first global client relationship cross the $100 million mark in annual revenue.

This has all resulted in its largest pipeline to-date and year-to-date bookings growth well ahead of the past couple of years hence its decision to revise up full year expectations. 

We have all got used to Elon Musk’s increasingly outrageous tweets. Yesterday he entered a whole new territory announcing that he was going to take Tesla private at $420 a share which would value the loss-making company at $72b. Although the link has not been proven, Musk’s tweet - which read ‘Am considering taking Tesla private at $420. Funding secured’ - came after the FT announced that the Saudi sovereign wealth fund had built a $2b stake in Tesla.

Personally I can see huge advantages for taking Tesla out of the public gaze. Musk has become increasing tetchy with analysts who (rightfully) question him on such issues as ‘Will you need more cash?’ His SpaceX venture is still private. In fact the stock move provided some debt relief as it drove $2.3b of convertible debt past the level at which investors can swap it for stock at a profit.

The problem for Musk is that making an announcement like this could break many regulations. As many of us serving on the boards of quoted companies know only too well, making announcements which affect the share price must be done with great care. If Musk now doesn’t take Tesla private and the price sinks…Well, he could be in all kinds of trouble and face legal action from aggrieved shareholders.  

The FT reports S3 Partners saying that hedge funds shorting Tesla would lose $4.4b if the ‘take private’ @ $420 actually happened. Tesla ended the session at up 11% at $379 - close to their all -time high hit in 2017.

The managed services element of Castleton Technology’s portfolio has been outshone by its software recently, with much focus on the integration of the company’s product suite following multiple acquisitions (see Castleton Technology: The post-integration story). The provider of software and managed services has had a successful year or two (see Castleton makes more progress), winning a number of significant multi-year and multi-product contracts as a result.

Today’s news pushes the managed services business back into the spotlight, as Castleton announces a contract with Dumfries and Galloway Housing Partnership (DGHP). Castleton will provide an end-to-end managed service over four years (with a two-year extension option). The value is £1.2m over the four years (increasing to £1.6m if the extension options are taken up). The managed service covers hosted workspace-as-a-service (including desktop refresh and ancillary services utilising private and public cloud (Azure and AWS) where applicable); application hosting; business continuity; information governance; WAN and LAN management; and continual service improvement through service desk management and device management & support.

Castleton’s was formed via a ‘buy and build’ strategy. Two of its acquisitions – Montal in 2014 and Keylogic in 2015 – were focused on outsourced managed IT services to the public sector. The company’s software and managed services offerings are delivered via two aligned business units, offering opportunities for upselling and cross-selling across the Group. The addition of another managed services contributes to Castleton’s strategy to grow its recurring revenue base.