LogicaCMG is back on track

ANGLO-Dutch computer services group LogicaCMG today said its UK information technology business had returned to growth although conditions remained challenging in mainland Europe.

The group, seen as something of a bellwether for the IT industry, said it had been winning more outsourcing contracts in the UK in what could be seen as a tentative sign that the drought in new business is coming to an end.

But on the continent, market conditions 'remained challenging', the group said. Overall, the past six months saw its IT revenues stabilise, arresting the decline of last year.

It said its wireless networks division, consisting largely of mobiles text messaging software, had stabilised by the half-year stage. The boom in short text messaging saw group profits jump 40% a year for eight years but came to an abrupt halt last year.

LogicaCMG, formed from the merger of the two companies last year, has implemented major cost-cutting.

After restructuring costs of £85.3m and nearly £12m writing off goodwill, the group made a pre-tax loss in the six months to 30 June of £57.7m.

Even on an underlying basis, profits fell to £39.4m before tax from £59.1m a year earlier. The total restructuring charge for the merger would be £110m, £10m more than predicted.