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Technology / AI and automation

WITH UKP8m CASH, LOGICA EXPECTS TO DO VERY NICELY OUT OF ITS CORE BUSINESSES

Logica Plc’s shares jumped 7p to 328, a near three-fold improvement on their their low of 122 this time last year, on yesterday’s interim results announcement, and, if managing director Len Taylor’s optimism for the forthcoming year is mirrored by the actual performance, they are not finished yet. Taylor believes that the 35% turnover growth achieved in the six months to December 31 can be sustained in the medium term, and he is confident that with margins improving towards Logica’s long-term goal of 10% profits will continue to bound upwards. Re-enforcing his belief is Logica’s existing order book. Some UKP57m of new orders were taken in the first half, traditionally Logica’s weaker six months. Taylor says Logica has finished the sell-offs – like the Xenix business that was sold to Santa Cruz Operations – the closing of businesses such as the main cause of Logica’s former troubles, the VTS word processing arm, and the ending of support for established products like Rapport, and with UKP8m cash and its currently strong share price, it is in a position to start looking around for something to buy. That something, if it happens, will most likely be a product or systems application aimed at a specific market segement in line with Logica’s core strategy. However, Taylor stresses, acquisitions are a low priority compared with expanding the existing business through organic growth. He says that Columbus, the European Space Agency programme for a platform in space, for which Logica is managing the systems software development and tendering for multi-million pound applications contract will be important for the future, but at the same time he refutes the story in last week’s Sunday Times that it is key to the company’s prospects: we could survive quite nicely without it. To emphasise the point, he says that unlike Systems Designers International Plc which reported yesterday (CI No 643) and is primarily a defence-oriented company, Logica has a wide spread of business. Finance accounts for 23% of turnover, computers and electronics 15%, defence 14%, post and telecommunications 10%, energy and public utilities, and manufacturing 8%, government 7%, transport 5% and space a mere 4%, so the Columbus programme has plenty of room to grow. Overseas, Logica has completed work on the automation of the Hong Kong stock exchange and is just starting similar projects on the Danish and Norwegian bourses. A water control system is being developed in Malaysia and major new contracts have been won in Japan and Austria. Australia, also, has proved lucrative, and the company has high hopes of extending its US federal government business through its newly formed subsidiary Logica Technology Inc. Offices have also been opened in Rotterdam, and in Taiwan.

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CBR Staff Writer

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