First-half figures from IT outsourcing firm Logica contain little that would change our minds over our March sell tip. Revenues for the half to end June were flat at £1.87bn as 9 per cent outsourcing growth continues to be offset by declines in higher-margin consulting work, which was down 7 per cent to £1.08bn.
At the same time, public-sector contracts are being squeezed, revenue falling £602m to £590m. Doubts remain over Logica's handling of the shift of traditional IT systems to cloud computing, where management seems reluctant to embrace the required radical thinking. A hike of future dividends to a minimum 40 per cent payout ratio to EPS by 2012 came as a shock, but this may be Logica's tactful way to admitting that it is no longer a growth company.
When: 05/03/10
Price: 119p
Performance to date: +2.5%
