After a couple of warnings last year about weakening revenues it was with some relief that Logica, a provider of computer programming contractors, said its 2011 results were in line with guidance it issued in mid-December.
In fact, the numbers look a bit better than the market was expecting, although the figures are riddled with notes about adjustments reflecting discontinued operations and exceptional items so it is difficult to determine whether apples are being compared to apples.
Revenue for 2011 rose to £3,921.3m from £3,696.8m in 2010, slightly higher than the market consensus figure of £3,887.3m.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Underlying revenue rose 4% to £3.9bn, driven by a 9% increase in outsourcing revenue, although the growth rate from this source slowed to 7% in the second half of the year.
Consulting and Professional Services revenue was flat, with second half revenue down 1% year-on-year.
Revenue in the commercial sectors was up 7%, offset by a 3% decline in the Public Sector.
Fourth quarter weakness was seen particularly in the Benelux region and Sweden, the company advised, but Logica expects its Benelux operations to return to profit in 2012 and its Swedish business to deliver an improved margin.
Full year orders were up 13% to £4.6bn, driven by Outsourcing orders up 23% to £2.2bn.
Underlying adjusted operating profit at £247m was in line with December guidance, down 11% (on a pro-forma basis) from £278m in 2010. Profit before tax tumbled to £33m from £193m the year before.
Underlying adjusted basis earnings per share of 11.3p were ahead of the market forecast of 10.58p.
The full year dividend has been nudged up to 4.40p from 4.20p, a tad below market expectations of a pay-out of 4.42p.
Full year cash conversion of 92% resulted in a net cash inflow for the year of £226m. Net debt at the end of 2011 was £295m, versus net debt of £280m. This represented a net debt/EBITDA (earnings before interest, tax, depreciation and amortisation) of 0.9.
"2011 was a more difficult year then we had expected," said Logica's Chief Executive Officer, Andy Green, demonstrating an admirable mastery of understatement.
"The revenue outlook remains uncertain but we are on track in implementing the actions we announced in December. As a result, we expect our Benelux business to return to profit in 2012, our Swedish business to deliver an improved margin and our Outsourcing business to be strongly competitive. Even in tough market conditions, we expect our full year operating margin for 2012 to be above 6.5%," Green revealed.
The shares shot up 5.6p to 87p on the results.
jh
