Investment: Profits rise puts Sema back in the market's good books

SEMA, THE Anglo-French computer services group, yesterday moved to re-establish its growth credentials when it reported a sharp rise in pre-tax profits and stressed its exposure to the fast-growing areas of mobile telephony and electronic commerce.

In the year to December, Sema made a pre-tax profit of pounds 97.8m on revenues of pounds 1.25bn. However, the figures were distorted by the sale in July of BAe Sema, its defence systems joint venture, to British Aerospace. On an underlying basis, profits grew by 31 per while turnover rose 21 per cent.

The figures went some way to restoring the stock market's faith in Sema after an indifferent performance in previous years. The company pointed to booming demand from mobile phone operators for IT systems as one of the reasons for its growth. Sema reckons it has 16 per cent of this fast- growing market, making it the leader ahead of rivals such as Logica.

In the past year, Sema has established its credentials as a competitor for large contracts by winning the five-year deal to handle the Benefits Agency's medical services systems. Last year it won a contest to oversee all IT systems for the Olympic Games from 2002 to 2008.

Pierre Bonelli, Sema's chief executive, said 1998 was an "intense and pivotal year" in which the company "has reshaped itself to concentrate on its chosen high-growth markets and to continue to exploit its unique positioning as a provider of a complete range of services".

But analysts said Sema still had some way to go before it could truly measure itself against the US giants of the computer services industry such as IBM and EDS. They said the company still does not have a significant presence in the United States, even though it suggested more than a year ago it could afford to spend up to $1bn on a US acquisition. But Tidu Maini, Sema's vice-president, said the company was merely being prudent. "When the right opportunity comes up you can feel it, it's like a marriage," he said.

Another area of concern is the software products division, which is still losing money as a result of a major two-year investment programme to bring Sema's software up to speed.

William Bitam, Sema's finance director, said the division was likely to break even in the current year. But some observers are concerned that Sema's decision to mix products and services was a departure from the usual practice of IT services companies.

"My concern with Sema is how they are changing the personality of the company," said George O'Connor, an analyst at Granville. "In the past, London investors have proven their absolute love of service companies. If you go down the product track, the business becomes much more risky and, on the back of this, investors might start reviewing their portfolio."

Nevertheless, most analysts yesterday upgraded their profit forecasts for 1999 to about pounds 95m, reflecting the expected growth in telecoms and the potential benefits of Sema's joint venture with Broadvision, the US ecommerce software supplier. Most observers rate the shares, which edged up 1p to 741.5p yesterday after a strong run in recent months, a solid hold.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate