London-based software house, consultancy and systems integrator Logica Plc is a pretty solid and focused business these days, and it quietly rode the roller-coaster as its shares plunged in early morning trading yesterday, only to recover later in the day when it presented its colors to the City. Immediately following the announcement of its interim results, Logica’s shares tumbled 37 pence to 915 pence, but were back up five at 957 pence by late afternoon. Chief executive Dr Martin Read was unperturbed, saying both profit, which was up 18% at 10.6m pounds and revenue, up 15% at nearly 148m pounds were in line with expectations. Read said what was particularly encouraging about the once very British company, was that it had turned itself around into a genuinely international company, and was now focusing on global market areas where it could offer true differentiation. The company’s main areas of focus, he said, are finance, telecommunications and energy and utilities, where he believes Logica has particular strengths. They are also areas where higher margins are achievable, and where Logica can find repeat business for its products and services. Results for the six months to December 31 were affected by substantial investment in the UK international business units to support growth elsewhere in the world. This impacted the UK’s growth in the period. Read says to date, international business has been very much controlled from the UK, but as business in the rest of Europe continues to grow, it will become more self-sufficient. The company’s largest acquisition to date, Paris-based systems house Axime Ingenierie SA, brought 1,000 staff and a list of blue chip customers to the group, as well as critical mass in France. Read says that the company fits perfectly with Logica’s strategy, with some 40% of its business in finance and insurance, and a substantial distribution network through which Logica can pipe its products and services. There is no doubt, Read says, that the company is looking for further acquisitions. Its strategy is to look for companies with products or services in its focus markets, which it can distribute through its worldwide network. It has, for example, installed the WMIS work management system it acquired with US-based Synercom Software in 1994 (CI No 2,501) with a number of UK utility companies and is about to announce its first major sale in Australia. Read says Logica is also looking to strengthen its worldwide presence. Germany, where Logica currently employs around 100 people, is one area where it would like to grow. The company, which reckons that its systems integration business is particularly strong and well established, is also focusing on building its consultancy and applications management, or facilities management of software and applications rather than hardware, businesses. Revenue grew in all parts of the world, and was up 41% in continental Europe, 10% in the US and 28% in Asia Pacific, and margins are continuing to improve. Orders in the six months were up 23% on last year, and with the technology issues surrounding the Year 2000, European Economic & Monetary Union and telecommunications deregulation to name but a few, Read is pretty confident about Logica’s future. The company will pay an interim dividend of 3.6 pence, a 20% increase.
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