“The plan was always to list on the London Stock Exchange to take Diagonal to the next stage of growth and raise the company’s profile.” Graham Creswick, Chief Executive, Diagonal.
For Graham Creswick, it’s all about quality. As Chief Executive of Diagonal, the information technology group, he is determined to make sure that the company competes on the quality of its solutions and the quality of its client relations.
Surrey-based Diagonal was formed in 1988 and offers a compelling blend of information technology and management expertise. The company specialises in consultancy work for businesses using software from SAP of Germany. A combination of acquisitions and support from venture capital specialists 3i fuelled rapid growth and, in 1997, Diagonal floated on the main market.
“The plan was always to list on the London Stock Exchange to take Diagonal to the next stage of growth and raise the company’s profile,” says Creswick.
In March 1997, Diagonal placed 4.57 million shares at 275p, valuing the company at £51 million. Proceeds of £3 million went toward reducing borrowings and funding continued expansion. Two of the first purchases for an acquisitive Diagonal were IT recruitment businesses, Conos Resource and Sequelogic, which joined the company’s existing recruitment operations and that complemented the fast-growing consulting division. The later acquisitions of Eurostar Network Systems, CenturyCom, Interop and Claritas now form the secure networks division.
Demand for enterprise software solutions from big industrial and service sector groups and for skills to deal with the millennium bug buoyed growth in the IT services sector during the 1990s. Diagonal boasts a client roster of more than 250, but the climate has changed – businesses are now focusing more on the way they interact with customers and suppliers.
“This has led to an increased emphasis on consulting, which currently underpins Diagonal’s performance. Revenues from our SAP consulting division in 2001 were up 37 per cent,” notes Creswick.
An example of this is the work Diagonal recently completed for Tarmac, the heavy building materials group. The two companies worked together to develop and implement one of the largest SAP payroll systems ever deployed in the UK – covering 12,000 Tarmac employees and company pension holders.
The Tarmac project was a highlight in what Diagonal described as a “challenging” 2001, when the global economic slowdown hit harder than expected. Less network infrastructure business partly offset solid growth in Diagonal’s consulting division. “Yet both divisions have strong forward order books, and management and operational changes are bearing fruit,” says Creswick.
What Creswick and Diagonal’s management team are hoping to achieve is a managed return to the success achieved before the economic slowdown. Rapid growth propelled the company into the FTSE™ 250 in March 2001, but six months later the downturn damped business enough to send the stock back to the FTSE™ Small Cap index.
“We work with many multinationals, and a London listing reinforces Diagonal’s commitment to quality when we present the company to investors, analysts or clients,” says Creswick.
Facts & Figures:
Company: Diagonal plc
Location: Surrey
Number of employees: 428
FTSE index: FTSE SmallCap
FTSE sector: Software & Computer Services
Date of admission: 24 March 1997
Market value 31 Mar 2003: £45.12m
Web address: www.diagonal.co.uk
Source: Publicity, July 2000