During prevailing times of hardship in the software industry, Logica Plc, the London W1-based software systems and consultancy group, says it draws its strength from the spread of its business. While the financial arena is Logica’s main hunting ground, accounting for 30% of revenues, the company’s customers are split across eight other market sectors including energy and utilities, government and telecommunications. The central and local government arena has been a star performer of the half-year, contributing 12% of company revenues – up from 6% last year. Says managing director and chief executive David Mann, the growth in this sector was partly boosted by some classified work that the company is doing, but also through new projects Logica is working on with the European Commission such as investigating the possibility of using satellites to locate fishing vessels, looking at the infrastructure for transmitting data across Europe and testing the X500 directory systems used in electronic mail. And Bull yesterday announced a joint project with Logica to provide a housing management package for local authorities. The telecommunications sector contributed 11% of company revenues, as last year, but Mann says he is encouraged by new intelligent network contracts coming in – the company yesterday announced a project of undisclosed value with Nokia Data in Finland to provide intelligent network applications. For the six months to December 31 (see Company Results), the UK contributed 51% of Logica’s turnover, continental Europe accounting for 26%, North America for 12% and the rest of the world, including Asia Pacific, for 11%. By activity, Logica derived 58% of its turnover from custom software systems and 6% from hardware, 26% from consultancy down from 28% last year, and 10% from standard software products. The current strength of sterling, in particular against the US dollar, has depressed the underlying growth in turnover – at constant exchange rates Logica’s total revenues would have grown by 10.6% compared with last year. On this basis, revenues in the UK grew by 14.5%, grew by 13% in continental Europe, and Asia Pacific revenues grew by 18%. Logica has never shied away from the fact that its US subsidiary, Logica Data Architects, based in Waltham, Massachusetts, has been having problems – the company reported $1m trading losses for the period and revenues were down by 6% in dollar terms – 22% in sterling terms.
US moving in the right direction
As part of Logica’s attempt to get the US company back on its feet, a new president, Bill Fello, was appointed in November and 80 jobs were axed in January (CI No 1,583), the $750,000 provisions for which are included in the interim accounts. According to David Mann, however, the problems in the US were not due to the market areas themselves, but rather to the company failing to bring in the business – with new managers in place, and a reorganisation of sales divisions underway, he concludes, the US subsidiary is moving in the right direction but Logica is cautious about projecting when the company might return to profitability. Logica is still looking to broaden its small German operation to cover the company’s full range of activities, and has been involved in many discussions with regard to penetrating France, none of which have yet proved fruitful. Overall, Logica is still experiencing pressure on its operating margins, and in an attempt to contain company costs there will be no staff increases this year. Philip Hughes has now retired as chairman and has been replaced by a non-executive chairman, Paul Bosonnet. Net cash remains strong at UKP17m, down from UKP18m last year.
