14th May 2008 07:00
14 May 2008
Logica interim management statement
Logica is today issuing an interim management statement based on unaudited results for the first quarter ended 31 March 2008 and four months ended 30 April 2008.
2008 2007 2007 2007 Growth Growth actual proforma adjusted reported (Proforma) (Actual) (adjusted * * at current exchange rates) Q1 REVENUE 856 826 754 768 3.6% 11.5% (‚£m)
*Adjusted for acquisitions and disposals in 2007
First quarter revenue up 3.6% on a pro forma constant currency basis, with March impacted by the effect of an earlier Easter
For the first four months of 2008, revenue was up 6.0% on a pro forma constant currency basis
UK revenue stable in the first quarter, with positive momentum into Q2 2008
2008 guidance reaffirmed
Plan to revitalise Logica announced on 22 April 2008, alongside new targets for revenue growth and margin improvement
Commenting on today's announcement, Andy Green, CEO, said:
"The Q1 results represent a sound start to the year, with good growth across Europe. I am pleased with the progress we are making in the UK where we have announced a number of new wins since the beginning of the first quarter.
"Since announcing our plan for the business on 22 April, we have been communicating internally to ensure that everyone in the Logica team around the world understands their role in delivering our goals. I have been delighted with the enthusiasm, drive and support I have seen.
"We are reaffirming our 2008 guidance today. We have begun to execute our programme for growth to drive long-term sustainable value for employees, customers and shareholders."
Overview
Revenue for the first quarter of 2008 was ‚£856 million (2007: ‚£826 million). This represents first quarter growth of 3.6% on a pro forma constant currency basis. Revenue for the first four months to the end of April, which smooths out the timing effect of a March Easter, grew 6.0% on a pro forma constant currency basis.
Our mainland European businesses delivered good revenue growth for the first quarter and for the first four months. In the UK, revenue was stable in the first quarter but showed modest growth for the first four months.
Group book to bill was 1.06:1 in the first quarter of 2008, in line with the reported book to bill in the first quarter of 2007 (2007: 1.06:1).
"Revitalising Logica"
On 22 April 2008, we set out a programme for growth to revitalise Logica and improve returns to our shareholders. The programme will centre around four action areas: 1) Focus for growth, 2) Accelerate blended delivery, 3) One Logica and 4) Competitive costs. We will give an update on progress at our interim results on 14 August 2008.
Outlook
We are reaffirming the guidance we provided on 22 April 2008. For 2008, we expect revenue growth of around 3% at constant currency and margins similar to the underlying 7.6% achieved in 2007.
We continue to see a few examples of slower spending in an uncertain market environment but overall market activity levels appear resilient and underpin our confidence in our 2008 guidance.
We remain alert to changes in customer sentiment and are carefully monitoring utilisation levels and recruitment. We are continuing to build flexibility in our resourcing model through the use of subcontractors and our blended delivery model.
We have begun to execute the "Revitalising Logica" plan, which is designed to deliver revenue growth above the market and further margin improvement from 2009.
Revenue by geographyQ1 REVENUE (‚£m) 2008 2007 pro 2007 Growth Growth actual forma reported (pro (actual) (adjusted* forma) at current exchange rates) Nordics 236.2 230.1 214.2 2.7% 10.3% UK 174.7 174.6 174.6 0.1% 0.1% France 170.5 164.1 145.3 3.9% 17.3% Netherlands 139.5 133.6 119.7 4.4% 16.5% Germany 50.0 44.9 39.8 11.4% 25.6% International 85.0 79.0 74.2 7.6% 14.6% Total 855.9 826.3 767.8 3.6% 11.5%
*Adjusted for acquisitions and disposals in 2007
Nordics
First quarter revenue in the Nordics was up 2.7% on a pro forma basis to ‚£236 million (Q1 2007: ‚£230 million).
Revenue growth was measured against a strong quarter in 2007, in which we benefited from higher sales of telecoms licenses in Sweden. As anticipated, these have continued to decrease into 2008. Slower growth in Sweden was offset by good growth in Finland and Norway.
UK
First quarter revenue in the UK was up 0.1% on a pro forma basis to ‚£175 million (Q1 2007: ‚£175 million).
We achieved strong growth in the Public Sector, with revenue up 7.3% on the first quarter of last year, and signed two orders totalling ‚£31.5 million with the Home Office to build and operate application services.
Reflecting actions undertaken at the end of 2007, revenue decline in the commercial sectors slowed. Revenue was down 8.3% in the first quarter of 2008. The Energy and Utilities pipeline reflects more active sales and bidding activity, while Financial Services continues to be the most challenging sector. Wins announced since the end of February include a 5-year, ‚£40m BPO contract with Elexon and a contract with PricewaterhouseCoopers LLP for a pay-as-you-go payroll service run on an Oracle platform.
France
First quarter revenue in France was up 3.9% on a pro forma basis to ‚£171 million (Q1 2007: ‚£164 million).
Demand remains good, with a number of wins in the first quarter including a ¢â€š¬10 million win for streamlining of IT systems for a major global travel organisation.
Netherlands
First quarter revenue in the Netherlands was up 4.4% on a pro forma basis to ‚£ 140 million (Q1 2007: ‚£134 million).
Public sector continued to be the main driver of growth, with the effects of a strong labour market continuing to constrain our ability to drive higher revenue growth in Financial Services and IDT.
Germany
Revenue in Germany was particularly strong in the first quarter, up 11.4% on a pro forma basis to ‚£50 million (Q1 2007: ‚£45 million) as we benefited from increased recruitment at the end of 2007.
Slightly slower recruitment in the first quarter, along with higher attrition, means that this growth rate is unlikely to be sustained through the year.
International
First quarter revenue in the International business was up 7.6% on a pro forma basis to ‚£85 million (Q1 2007: ‚£79 million) against a weak first quarter in 2007. This was driven by good growth in Australia, Belgium and Central Europe and an exceptional performance in Brazil. In Portugal, more active bidding is contributing to an improving pipeline.
Employees
We had 39,073 employees at the end of March compared to 38,740 as at the end of December 2007. Attrition for the group is unchanged at just under 16%, and remains highest in the Netherlands, Germany and the International businesses.
Since 22 April, we have initiated consultations with unions and works councils around 1,300 potential job losses mainly amongst non-billable staff.
Minority interests and acquisitions
We completed the acquisition of the 40% minority interest in Edinfor from EDP for ‚£42 million (¢â€š¬55 million) on 7 March 2008. As previously communicated, we expect the buyout of minority interests in WM-data to complete by the fourth quarter of 2008.
Since the end of February 2008, we also have announced the acquisition of Synergi Solutions for a consideration of around ‚£2 million. Synergi Solutions will extend Logica's ability to offer consulting solutions in the area of operational risk management, in particular with oil and gas customers in the Nordics. Twenty-five people will transfer to Logica as part of the agreement.
Financial calendar
In line with our revised financial calendar, the next scheduled statements are:
14 August - H1 2008 results
5 November - Interim management statement
For further information, please contact:
Logica Investor relations: Karen Keyes/Frances Gibbons +44 20 7446 4341/+44 7801 723 682
Logica Media relations: Louise Fisk +44 20 7446 2887/+44 7798 857 770
Brunswick: Tom Buchanan/Craig Breheny +44 (0) 207 404 5959
Notes:
1. For details of actions and metrics around each area of the "Revitalising Logica" plan, please see the materials from our 22 April 2008 presentation at www.logica.com.
2. Comparative figures for 2007 are pro forma constant currency revenues. Pro forma adjustments have been made to take account of changes in composition of the group through acquisitions and disposals.
3. Exchange rates used are as follows:
Q1 2008 Q1 2007 YTD average YTD average ‚£1 / ¢â€š¬ 1.32 1.49 ‚£1 / SEK 12.40 13.72 ‚£1 / USD 1.98 1.95
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