Anglo-Dutch computer systems integrator CMG Plc’s main problem at the moment, in the opinion of CEO Tom Rusting, is managing its growth. The market for IT services in Europe is in a buoyant phase, driven in part by demand for Y2K remediation but, increasingly for euro adaptation services, says CMG chairman Cor Stutterheim, and CMG in particular is enjoying above-average growth. For the first half of this year, it reported net profits up 64% at the equivalent of $26.1m, while revenue rose 38% to $325.8m. At the pre-tax level, profits were up 59% at $40.4m, and earnings per share rose 65% to 20.4 cents. Figures were converted at a rate of รบ1 = US$1.678. Moreover, the rise would have been even more impressive were it not for the continued strength of the British pound, all the above values having been published in pounds rather than guilders, and the company forecasts an even better second half. These are busy times for CMG, which has acquired three companies in France so far this year (Alias, Cometh and Techside), as well as one in the UK (Microlex), plus one in Belgium (CSS) at the end of 1997. The acquisition trail has by no means dried up, either. Stutterheim says the company is still seeking further candidates for takeover, particularly in the countries in which it is already present, though potentially also in some other key European markets. Indeed, the company reckons there is ‘scope for growth in market share’ in the Old Continent, where it aims to move from the top 15 to the top 10. CMG is not, however, tempted by the vast US market, where it is happy to send in teams for specific tasks but has no intention of setting up shop. If the right acquisition were to come along in its target markets, however, the company would be sufficiently interested even to have recourse to banks for a loan, said financial director Chris Banks. This would represent a break from its traditional policy of zero gearing – financing all such operations out of the cash its business generates. Despite all the stories about a shortage in qualified IT personnel right now in Europe, the company’s headcount underwent net growth of some 800 people in the first six months of this year, the majority of whom were experienced workers. This explains why profitability grew more than revenue during the period, these new members of staff being able to get up and running quickly. Despite this intake of qualified new employees, Banks went on, payroll is increasing only at around 10% on average, and the company is ‘having no difficulty in passing this on into our prices’. Two of CMG’s recent acquisitions were bought for their prowess in SAP, and, although SAP and Baan-related business currently represents only around 8% of the SI’s overall business, there is clearly concern on its part to beef up its international offering in this area. That is one of the most hotly disputed segments for staff however: Stutterheim says companies are even offering prospective employees with SAP knowledge special joining fees to come to their companies.
