Logica expects growth with government outsourcing

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Logica kept its full-year forecast for roughly stable sales and operating margin but today said it had agreed some reductions in the scope and value of government contracts.

Revenue grew 1% between July and September to £863 million and orders rose 8% to £758 million. Logica said it expected a strong fourth quarter as government outsourcing resumed and business from the Benelux countries improved.

"We are cautiously optimistic about our prospects for growth next year," said chief financial officer Seamus Keating.

Logica shares were down 2.8% at 129.5p this morning, the weakest performers in a flat European technology index.

Logica said it expected UK revenue to grow in the fourth quarter, despite public sector cuts, and that it had seen signs of increased activity from government departments since the end of the third quarter.

The company has agreed with the Government that to continue its contracts, which span 55 government agencies. Public sector business accounts for about 10% of Logica's total sales.

But Keating said Logica was working with the Government to scale down some contracts.