London based services specialist Logica has reported profit before tax up 52 per cent at £63.4 million for the year to 30 June, exceeding consensus estimates of £60 million.
This was on on revenue up 39 per cent to £659.5 million. Logica reported increases across all markets with the exception of Asia/Pacific where there was a revenue fall of 24 per cent. Revenue in the UK grew 23 per cent to £283 million while continental European revenue was up 34 per cent to £195.2 million.
More importantly, margins improved in all regions, exceeding 10 per cent in the UK for the first time. According to Martin Read, Logica's chief executive, despite the possibility of 'instability' due to Year 2000 issues, the outlook remains bright with an order book up 37 per cent.
In the last year, Logica has benefited from continued demand in telecommunications services. Its mobile products are used by over 150 operators worldwide that in turn serve more than 50 per cent of the global population of mobile telecommunications users.
During the year, it broadened its portfolio to include the June acquisition of SAP systems integrator Team 121, which had revenue of £36 million and net profit of £3.6 million up to April 1999.
Analyst Richard Holway said, "The transformation in Read's six years at Logica has been remarkable - not just for the share price which has risen from 55p to over 800p in the period."
Read has long had ambitions to become part of the FTSE-100 and Holway believes this is now in sight.
"Logica is now a well focused, but also well rounded, group. Good geographic coverage, focus on the fastest expanding markets and good 'all-embracing services' - i.e. sell more of everything into the client base," he continued.
According to Holway, Logica's turnaround has left his organisation eating its words: "Many years ago we told a joke about Logica being 'a car which always seemed to have one of its cylinders misfiring.' (Today) Logica really is a star of which the UK should be very proud."
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