Twenty years old and Logica Plc of London W1 is still steadily growing with pre-tax profits up 28% at just under UKP18m on turnover up 32% at UKP179.5m. Furthermore, these are the first annual figures where more than 50% of the company’s revenue has been generated from outside the UK. This reflects the first full year of trading of Logica Data Architects following the acquisition of Data Architects in 1987. The acquisition bought with it the BESS funds transfer product for SWIFT networking on Tandem machines which is proving to be very profitable. Another product, Logica Transaction Director, which was launched a few months ago and was developed within the US side of the business is expected to be equally successful. It acts as a gateway system to go in front of a number of different host machines on very large networks to bring together services that exist on several different mainframes. Logica has already supplied two Directors to unnamed clients in the financial sector. The beauty of this product is that it coexists with Logica’s Fastwire system for DEC minis giving the company a bigger bite of the financial sector’s market for software. Its US business was also instrumental in helping Logica get a large contract to implement Hogan Systems’ banking software on IBM mainframes for the Australian & New Zealand Banking Group. For its Los Angeles office the Hogan competency centre specialises in providing banks with core applications for Hogan software. Furthermore, the US business has helped Logica grow its presence in Japan, a country that now accounts for 4% of its revenues. Its business there at present is mainly consultancy for IBM Japan, but it hopes to establish a permanent presence in its own right soon.
Continental acquisition
Finance is of course Logica’s core business, producing 32% of turnover but other sectors such as defence, energy and utilities have also grown strongly. Logica has not been troubled by the contraction of the defence sector from which it derived 11% of turnover this year. David Mann, the company’s managing director puts this down to the fact that money is still being poured into communications and software development as well as to Logica’s broad portfolio in this sector. Although he is worried by the undermining of confidence in the UK’s defence industry by current affairs such as Ferranti’s difficulties, Plessey’s loss of independence and so on, he believes the industry is still in relatively good shape. As for energy and the utilities Logica has of course been active in the gas and water industries for a number of years. It has won further contracts for gas distribution systems from British Gas, as well as working on projects such as digital mapping, control and monitoring systems for Anglian Water – as Mann put it there’s a lot of work to do there (he can say that again, comments the European Commission). Finally, of course, there is the new area being opened up in the electricity industry by its imminent privatisation and Logica is already active in this sphere developing a system for an organisation within the restructured industry. Beyond the UK and the US, Logica performed well on the continent pulling off a big contract with the Netherlands Gasunie to put in a new generation of gas control systems. The continent provided 21% of turnover, but negotiations to find a suitable acquisition here have so far proved unfruitful companies are either not a good match for Logica or they come too expensive. As for the future, Mann said that Logica would continue to achieve higher than average growth rate and was not bothered by the presence of large software houses such as Hoskyns Group and Misys Plc since their business areas are so different from the customised software that is its speciality. –
