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LogicaCMG reports full year 2003 results

2 March 2004
Merger successfully completed
Results at top end of expectations
Second half margins increased as merger cost savings came through
Wireless Networks returned to profit in the second half
Merger cost-savings delivered
Outsourcing up to 20% of revenues
Confident we are well-positioned for successful 2004

Dr Martin Read, LogicaCMG group chief executive, said: "Our first year as a merged company exceeded our original expectations. Today, LogicaCMG combines the attributes for which both pre-merger companies were highly regarded; deep technical expertise, in-depth industry knowledge, highly proficient people and outstanding programme and delivery skills. Our increased scale, broader range of offerings and improved international presence has been reflected in a strong book-to-bill ratio for the year and an improving sales pipeline.

"Adjusted group margins increased from 5.2% in the first half to 7.8% in the second half of 2003 as Wireless Networks returned to profit and merger cost savings came through. IT Services margins improved to 8.1% in the second half.

"We saw signs of improvement in all our major IT Services markets except Germany where revenues continued to decline. Overall, the market environment is gradually improving, tempered by continuing constraints on capital expenditure and with outsourcing offering the best growth opportunity.

"The Wireless Networks business returned to revenue growth and profitability in the second half of 2003. We secured a significant number of MMS contracts and increased our market share, a trend that has continued into 2004, as evidenced by recent contract announcements.

"We enter 2004 confident that we are strongly positioned to further leverage the benefits of the merger and take market share in both IT services and wireless telecoms, whilst improving our financial performance."

Financial Headlines

For the 12 months ended 31 December 2003, LogicaCMG plc financial results (adjusted for goodwill, restructuring charges and other exceptional items where indicated) were as follows^:

Revenue was £1,706.6 million, (6.4% lower than 2002): strong order intake with a book to bill ratio of 1.12:1
Adjusted operating profit# was £111.2 million, (5.8% lower than 2002)
Statutory operating loss was £19.8m (2002: loss of £685.1 million)
Group adjusted operating margin# was 6.5% (6.5% in 2002); 7.8% in second half
IT services adjusted operating margin at 7.2% (7.7% in 2002); 8.1% in second half
Wireless Networks adjusted operating margin at 3.1% (0.9% in 2002); 6.5% in second half
Adjusted profit before tax# was £99.5 million, (10.8% lower than 2002)
Statutory loss before tax was £33.0 million (2002: loss of £733.9 million)
Basic earnings per share was (6.3)p compared to (102.9)p in 2002
Adjusted basic earnings per share (EPS) 9.2p down 14.0% compared with 2002
Adjusted underlying operating cash flow before project financing was £119.0 million, a cash conversion of 107%
Net debt, at 31 December 2003, stood at £177.4 million (£107.1 million at 31 December 2002)
Final dividend of 3.4p, making a total for the year of 5.7p (2002 final: 3.0p)

^ The 2002 unaudited comparatives are for the 12 months ended 31 December 2002, except where stated otherwise.

# These results include the impact of accounting standard changes (FRS5 Application Note G) effective from December 2003 that were communicated to the markets at our business update on 11 December 2003. The relevant comparatives have been restated accordingly. Excluding those changes, the results were as follows:

Adjusted operating profit £114.9 million (2002: £121.7 million)
Adjusted operating margin 6.7% (2002: 6.7%)

Adjusted profit before tax £100.5 million (2002: £113.6 million)