Logica Plc has turned in another strong performance across the group, but the City is a hard master to please and even a 22% rise in pre-tax profits failed to prevent shares sliding 16 points to 679 pence early yesterday morning. By mid-afternoon they had recovered to 690.5 pence, still off 4.5p. The UK-based software, consultancy and systems integrator has been on the up since its restructuring, and this fiscal has been no exception. Pre-tax profits for the year to June 30 rose 22% to 25m British pounds on revenue that climbed 14% to 285m pounds. Since he joined the company three years ago, chief executive Martin Read has made a determined effort to extend the group’s global activities to establish it as a worldwide service provider. And although Europe continues to bring in the majority of its revenues, which amounted to 22m pounds of profit and 76% of the group’s total revenue, Read said its strategy has started to pay off. While margins remained weak at about 3% in North America, the figure nearly doubled that of the previous year. Revenue slipped 4% to 38m pounds as marginal activities in the finance sector were trimmed but the company said its Synercom work management information information system division grew rapidly during the second half.
Electricity Pool
Read said the UK was used to pump and prime the US operation, and about 250 staff from the UK were used to build up its skills base. Back in the UK, operating profits rose 15% and margins narrowly missed the 10% target by 0.02%. The UK plays a major role in Logica’s business elsewhere in the world and exports rose 18% to 29m pounds. Market conditions were generally good in all sectors, especially in finance and industry, but in some government areas procurement was slowed by delays related to the Private Finance Initiative. In September the company sold its 49% stake in the Speedwing joint venture to partner British Airways Plc, but has retained the airline as a customer. Margins suffered in order to secure growth in continental Europe during the period as investment in a number of start-up operations, combined with additional marketing expense, increased overheads. However, operating profits grew 26% to 5.9m pounds. The Netherlands and Germany made the greatest contribution to the region, and Read said a firm foothold was established in the Czech Republic. Profits almost doubled to 600,000 pounds in the Asia-Pacific and Middle East region, with growth concentrated in the telecommunications sector. Profitability in the group’s Far Eastern operations was adversely affected by the dispersed nature of the business, and Logica said in future it will concentrate more tightly on key countries such as Singapore and Malaysia.
