The company, which resulted from the combination of Logica and CMG, said that while sales for the full year 2003 dropped 6.4% to 1.71bn pounds ($3.17bn), its adjusted group margin increased to 7.8% from 5.8%. However, operating profit before restructuring and other charges fell to 111.2m pounds ($206.6m) from 118.0m pounds ($219.2m).

Its net loss narrowed to 46.1m pounds ($85.6m) from 755.0m pounds ($1.44bn) a year ago when the company took heavy post-merger goodwill amortization, impairment and restructuring charges.

The company said there are many promising signs in its results: its wireless networks division returned to revenue growth and profitability in the second half of the year, and it secured a number of Multimedia Messaging Services contracts, increasing market share. Outsourcing increased to 20% of its revenue from 16% in 2002, and there were signs of improvement in all its major IT services markets except Germany where sales fell 12.7%.

Revenue from the financial services sector in the country fell 34%, due to what LogicaCMG claimed were long-term structural issues in the banking sector.

Local management proved insufficiently experienced to deal with the complex integration task against continuing difficult market conditions, it said in a statement, and it has appointed a new chief executive in the region.

The UK was its most successful market. Revenue declined only 1.6%, and it delivered an operating margin of 10.9%. Outsourcing increased to 30% of revenue, and UK public sector revenue increased by 17.8% to 278.9m pounds ($518.2m), 16% of the whole group’s sales.

Its optimistic outlook for 2004 was laced with caution. CEO Dr Martin Reed said: Overall, the market environment is gradually improving, tempered by continuing constraints on capital expenditure and with outsourcing offering the best growth opportunity.

This was not upbeat enough for investors who sent its London Stock Exchange listed shares down 7% in early trading Tuesday. Its pre-announcement stock price rise was in anticipation of a more bullish stance, hence the profit taking despite the fact that the company’s 2003 performance had been at the top end of expectations.

This article is based on material originally published by ComputerWire