Logica is the second major European SI to report FY11 results (Capgemini was last week - see Capgemini UK margins squeezed). It seems that Logica avoided any nasty surprises in the last couple of weeks before the end of the year. Its revenue growth of 3% (to £3.9b) was in line with the guidance given at the time of its profit warning in mid December (see Logica confronts the inevitable). This compares to organic revenue growth of 5.6% from Capgemini. For what it’s worth, Logica states that “underlying revenue growth” i.e. before the impact of £39 million of contract charges, was 4%. Interesting to note, though, that revenue from Logica’s Top 50 clients, which accounted for 44% of Group revenue, was up 11% (indicating that revenue from ‘the rest’ was down 1%... Sounds like the sales efforts have been focused in the right places).
Logica’s operating profit was impacted by restructuring and contract changes so was down from £212.2m to £54.5m (a decline of 74%), pushing the total operating margin down from 5.6% to 1.4%. Before the impact of restructuring and contract charges, the underlying adjusted operating margin was 6.3% - down from 7.3% and below Capgemini (which managed to nudge operating margins up from 6.8% to 7.4% over the same period).
Credit where credit's due though. Capgemini’s bookings were down 8.4% like-for-like. Logica is reporting orders up 13% to £4.6b driven by its BPO (orders up 265%) and Application Management (orders up 11%) businesses. Notably, in the UK, where revenue growth in FY11 was 2%, the volume of orders more than doubled that signed in 2010 at £1,179m (impacted by SOCA – see Logica gets serious about crime - and Shell wins in Q111 and contract extensions in Q411 – see Logica wins contract with Shell). Of course, with Logica, it’s all about the execution. We’ll have more on the performance of the UK business following the concall this morning.