Logica results could point to better times ahead
Published: 03 Sep 2003 17:45 BST
Investors in London reacted positively on Wednesday morning to Logica's latest financial results, which raised expectations that better times could be ahead for the technology sector.
The software and IT services group saw its share price rise by almost 15 percent after it announced that it was winning more orders and was in the running for several large contracts, including upgrading the NHS patient records service.
Company chief executive Dr Martin Read also announced that the recent merger between Logica and CMG has yielded greater benefits than expected.
"Against a challenging economic background, our first six months as a merged company have exceeded our original expectations," explained Dr Read, in a statement outlining Logica's performance in the six months ended 30 June 2003.
"The integration programme is well advanced with savings ahead of plan, giving us a more competitive cost base. Combined with our larger scale, this has enabled us to grow our order book substantially. There is continuing evidence of pricing stability in our key territories and the UK business has returned to growth," Dr Read added.
Many of Logica's contract wins involve wireless networking, creating systems to support mobile applications such as picture messaging. Dr Read predicted that Logica's Wireless Network division -- a key part of the organisation -- would be profitable for the full year.
Although Logica's results for the first half of 2003 compared unfavourably with the second half of 2002, they were still better than forecast. It made a pre-tax profit of £39.4 million, 28 percent lower than in the previous sixth months, on revenues of £854.3 million.
Logica also announced that the cost of restructuring its operations following the CMG merger would reach £110m, £10m more than previously estimated. It revealed that 2,650 people would lose their jobs as a result of the merger, 450 more than had been expected.
"The increase from the previously estimated 2,200 follows finalisation of the rationalisation programmes for Germany and France in the light of market conditions, and further reductions in Wireless Networks in line with our programme to relocate some development and support work to India," Logica explained.
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