Logica update

(By Anthony Miller – Wednesday 25th Feb. ’09 4:00pm). First a quick erratum to my piece in this morning’s UKHotViews email. Logica’s 1H09 guidance was in fact +10% in GBP terms and flat in constant currency – apologies for that!

I’ve just been speaking to Joe Hemming, Logica UK CEO (I was gently chastised for previously referring to Joe as UK MD!), upon who group CEO (hope that’s the correct title) Andy Green heaped praise during this morning’s investor briefing. And well deserved too, as the UK business had been having a horrible time with two prior years of revenue decline which saw margins crashing to 4.6%. Now Logica UK is back to 7% growth – about twice the market rate last year – and 7.8% ‘adjusted’ margin. The UK is also of course Logica’s outsourcing and offshoring star, with 45% of revenues from outsourcing (mainly application management) and 23% of effort delivered ‘offshore’. Hemming sees scope to increase both.

Logica got 58% of its UK revenues from the public sector, with a broad spread of clients in central government, defence and criminal justice. Local government is only a small part of the picture but it’s an area Hemming sees opportunity either as a ‘prime’ or by partnering with some of the larger councils in some form of shared services arrangement. But the real turn-around story was in Energy & Utilities, 15% of UK revenues and now back growing again (+4%). Financial Services suffered in the UK as elsewhere, down 13%, but is <10% of UK revenues.

I must say that I heard a much more confident Logica management today – almost a ‘spring in their step’ or as close as you can get when the ground is shifting as much as it is in the marketplace. If this confidence is indeed reflected throughout the rest of organisation then that’s a good place to be when facing such challenging markets and hungry competitors.