Logica Plc appears to have achieved a rare feat with its full year results – pleasing the analysts. Pre-tax profits up 50% at UKP8.5m, on turnover up 5.2% at UKP228.8m, with margins up 1.7% at 5.9%, had the pundits warmly shaking Logica’s hand. The highlight of better than expected results was the US with operating profit of UKP300,000 from a loss last time of UKP2.6m, on turnover up 39% – 28% at constant exchanges rates. Performance improved throughout the year and in the second half operating margins were 7.9%. Logica attributes the turnaround to the restructuring of the division under a new management team. All parts were profitable, except the funds transfer business where a product upgrade involved large amounts of research and development. In May the company acquired Precision Software Corp, provider of commercial loans systems for banks for $12.3m (CI No 2,407), and since the results Synercom Software for $4m (CI No 2,501). Logica’s other star was continental Europe: operating profits up 38.5% to UKP3.6m and margins rose 2.3% to 7.4%, though turnover fell 3%. The profit and margin improvement and turnover fall are all attributable to withdrawal from unprofitable activities in Germany late last fiscal and the disposal of its Italian associate. The division enjoyed growth in finance and telecommuncations, and Switzerland performed particularly well in the private banking sector. However government and space declined as specific contracts were completed. In the year Logica purchased the Dutch water systems automation software company, Fray Data International BV for UKP97,000 (CI No 2,325). The UK arm performed less well, with operating profit up 4.3% at UKP9.6m and margins up 0.1% at 7.2%. Turnover rose 2.6%, with growth in space, telecommunications and transport but government was flat. The UK has undergone the bulk of Logica’s restructuring, forming into 17 market-oriented divisions with reduced management layers and Logica already sees the benefits, and saw 2% better margins, second half on second half.
Riyadh and Dubai
Since the results Logica has secured a major contract with the National Rivers Authority and in partnership with IBM Corp, has won the Royal Air Force contract for Logistic Information Technology Systems, worth in total UKP175m. The only disappointing area was Asia Pacific, comprising Australia and the Far East. Losses were flat at UKP300,000, though Logica’s Australian operations continued profitable growth. Logica regards the Far East as an area of great potential and so changed senior management, expanding its presence to include its products, consulting and software rather than only professional services. Turnover per sector was finance, UKP72.7m, 32% of the total, up 15%; government UKP26.8m, 12%, down 22%; energies and utilities UKP24.3m, 10%, down 2%; telecommunications UKP23.3m, 10% up 41%; defence UKP21.3m, 9%, down 4%; transport UKP20.3m, 9%, up 30%; industry UKP15.4m, 7%, down 17%; computing and electronics UKP13.1m, 6%, up 14%; space UKP11.6, 5%, up 11%.. Major growth areas will be telecommunications, space, finance, and energy and utilities, offering globalisation and repeatables through products as for every pound of product revenue, Logica expects UKP2 from consultancy, support and integration. Logica now has Middle East offices in Riyadh and Dubai, focusing on finance, oil and gas and potentially defence. The dividend rises 25% to 5.0 pence. For Dr Martin Read, managing director, this marks one step up the stairs, but there are a lot more steps to go.
