05 November 2007
- Revenue in the first nine months of 2007 up 3.6% on a pro forma constant currency basis
- Third quarter revenue growth of 4.0%, led by a particularly strong performance in France
- Full year revenue growth now expected to be around 3%
£130 million share buyback now complete
- Previously announced Board changes became effective on 1 November 2007, with Andy Green to become CEO on 1 January 2008
- Company name to transition to Logica in the first quarter of 2008

Commenting on current trading, Jim McKenna, interim Chief Executive, said:
“Revenue growth above the market in France, Netherlands and the Nordics in the third quarter was partially offset by weaker performances in the UK and International businesses. France performed particularly well in the quarter.

“In the UK, we remain focused on improving operational performance in our commercial business and were pleased with the return to growth in the Energy and Utilities sector in the third quarter.

“In the first quarter of 2008, we will transition the group to a single brand name, Logica. A common brand identity for the whole organisation will help us to enhance our brand recognition internationally amongst customers, partners and employees. ”

LogicaCMG is today issuing an interim management statement based on unaudited results for the third quarter ended 30 September 2007.

Revenue for the nine months to 30 September was £2,236.7 million (2006: £2,158.5 million), with revenue in the third quarter at £710.5 million (Q3 2006: £683.4 million). This represents third quarter growth of 4.0% on a pro forma constant currency basis, compared to 3.5% for the first half. Growth was particularly strong in France, with above-market growth in the Netherlands and the Nordics. Germany continued to deliver a solid performance. This offset weaker performances in the UK and the International businesses.

Nordics
Revenue in the Nordics was up 6.6% on a pro forma constant currency basis to £178.8 million, with good performance from Sweden, Finland and Norway. Higher licence sales, which were more third quarter weighted than last year, also contributed to a better than expected performance in the quarter. As a result, year to date growth is above our expectations at 7.0%.
We have been awarded £24 million of cross-selling orders in the third quarter, bringing the total for the year to date to £37 million. These include a three year contract for HR/Payroll BPO services with AB Volvo in Sweden and a number of projects which leverage our strong ERP expertise. Several projects awarded also include a development and testing component to be delivered out of India.

We expect to deliver the previously announced cost savings of £5 million in 2007, £13 million in 2008, with full annualised cost savings of £15 million from 2009.

UK
Revenue in the UK was down 7.5% on a pro forma basis to £160.4 million. This compares to £159.6 million in the second quarter of 2007.

A return to growth in our Energy and Utilities business in the third quarter, combined with strong growth in the Public Sector, was offset by the continuing impact of the IDT contract which ended at the end of 2006 and lower revenue in Financial Services when compared to a good second half performance in 2006.

Our contracted order backlog and expected renewals for 2007 increased to approximately 90% of our revenue forecast at the end of September. As orders are likely to be more fourth quarter weighted than previously anticipated, we currently expect second half revenue to be at a similar level to the first half. New orders booked in the period included a secure messaging solution for BT, a new invoice management contract in the IDT sector and an extension of the work we are doing under the Ministry of Defence DII programme.

We continue to see a good pipeline of opportunities into 2008. Although we expect Public Sector growth to be at a lower level than 2007, improvements in the commercial sectors should return the UK business overall to modest growth in 2008.

France
Revenue was up 17.1% on a pro forma basis to £136.7 million, compared to the third quarter of 2006 when headcount was at lower levels. Utilisation remains high and we continue to use subcontractors to deliver growth.

We also continued to win new cross-selling orders and to grow revenue under cross-selling contracts signed in 2006. In the quarter, we were awarded an SAP governance and risk compliance project to be delivered out of France and Belgium and a €7 million project for the French postal service.

Attrition in the business remains in line with the group average. Recruitment remains strong, with a net addition of over 300 employees since the end of June.

Netherlands
Revenue in the Netherlands was up 9.5% on a pro forma basis to £114.3 million. Public Sector growth was particularly healthy in the third quarter, driven by revenue from social security contracts which began in the last quarter of 2006. This was complemented by a good performance across the commercial sectors in the quarter.

While the order pipeline remains healthy overall, it remains strongest in the Public Sector and IDT, with some slowing of opportunities in Financial Services as a result of recent M&A activity. Availability of skills in a strong labour market is also a constraint.

Public Sector wins in the quarter include a project to centralise and consolidate IT systems for the police in the north-east Netherlands under the coordination of the vts Politie Nederland. The Dutch Water Authority placed an order with LogicaCMG to develop a joint water system database and taxation system. We are also extending the use of our global delivery capability, with the certification of our Indian delivery centre by a major customer which will allow us to commence work there from 2008.

Germany
We continue to achieve profitable revenue growth in Germany, with revenue up 4.4% to £46.3 million. We are well on track towards our target of 400 new recruits in the business in 2007 and expect to continue to recruit at similar levels in 2008 to grow the business further.

International
Revenue in the International business was down 3.4% to £74.0 million. A strong performance in the Australian and US businesses was set against lower revenue than last year at Edinfor and lower revenue in Asia, where we were still delivering the Natrindo contract in 2006. We continued to implement cost reductions in the Edinfor business to compensate for planned price reductions under the EDP contract. The level of revenue in the International business in the fourth quarter is expected to be broadly similar to the third quarter, with some impact on margin when compared to last year.

Employees
We had 38,878 employees at the end of September, compared to 38,496 at the end of June. Attrition was at a similar level to the second half of 2006, at 16%. We are developing innovative programmes, such as the recently-launched “Earn while you learn” programme in the UK, to attract new graduates and are collaborating with universities on skills development in our major geographies.

Disposals and exceptional charges
In the first half of 2007, we announced the disposals of the non-core Telecoms Products and Caran businesses in order to increase our focus on our core IT services business. In the third quarter, we have made further progress in this area, reaching agreements or completing on the disposal of a number of smaller non-core businesses. These include the document production business in Portugal, the staffing business focused around the US automotive sector in Detroit, our small IT services business in Austria, a small financial services business in Denmark and the former WM-data operation in Germany. We expect these actions to contribute to better profitability next year and beyond.

While we have yet to finalise all agreements, we currently expect to incur an incremental exceptional charge of around £10 million for 2007 in relation to the completion of disposals in the second half.

Including WM-data integration costs to be incurred in 2007, total anticipated exceptional charges for the year are expected to be around £26 million.

Completion of share buyback
The £130 million share buyback which we initiated at the end of June has now been completed. At 2 November, the number of shares in issue was 1,456,633,377. We expect the weighted average number of shares for the year to be approximately 1,495 million.

Board and management changes
As announced on 9 October 2007, Andy Green will join LogicaCMG as CEO on 1 January 2008.
Our previously announced Board changes came into effect on 1 November 2007, with David Tyler becoming Chairman on the retirement of Cor Stutterheim and George Loudon also leaving the Board on his retirement. Effective today, Noël Harweth has assumed the Chairmanship of the Remuneration Committee.

In early October, Patrick Guimbal succeeded Didier Herrmann as head of the business in France, with Serge Dubrana taking responsibility for the IT Services business in France. Both Patrick and Serge will serve on the LogicaCMG Executive Committee.

Transition to a single brand name
In the first quarter of 2008, we will transition the group to a single brand name, Logica. A common brand identity for the whole organisation will help us to enhance our brand recognition internationally amongst customers, partners and employees. Incremental costs associated with this transition are expected to be in the region of £5 million in 2008.

Outlook
Overall revenue growth has been 3.6% for the first nine months of 2007. Strong comparatives in the final quarter of 2006 will result in lower fourth quarter growth rates, taking full year revenue growth to around 3% at constant currency. Second half adjusted operating margin is now expected to be slightly below 9%, before accounting for approximately £6 million of charges related to management changes in France and CEO recruitment costs.

We have not yet seen any material impact in the financial services sector arising from recent difficulties in the capital markets. The recruitment market remains competitive, with demand for specialised skills remaining high. At present, we are cautiously optimistic that growth in demand for IT services in Europe in 2008 will remain broadly unchanged from the 4% to 6% range experienced in 2007.

Financial calendar
In line with our revised financial calendar, the next scheduled statements are:

27 February 2008 Preliminary results
14 May 2008 Q1 FY08 Interim Management Statement