The UK software company Logica reported higher than expected annual profits as it continued to benefit from growing use of mobile phone text messaging.

Profits before tax, good will and one-off items increased 54% to �97.4m ($141.4m) in the year ended 30 June.

Revenues climbed 28% to �847.4m.

"Overall, market conditions remain positive and in this environment the board is confident of delivering superior performance for the year ahead," managing director Martin Read said in a statement.

Logica won orders worth more than �1bn in fiscal 1999/2000, a 40% increase on the previous year.

Sales of mobile phone software doubled to �188.9m as Logica consolidated a market share of more than 50% for short text message systems.

Largest ever contracts

"We predict that within three years mobile telecoms operators will be sending out up to 100 billion short messages per month, a 170% per year increase over current levels," Mr Read said.

Overall, telecoms sales were up 69% at �342.7m while revenue from energy and utilities rose 40% to �149.3m as Logica secured three of its largest ever contracts.

These included a deal worth more than �50m to provide software for the New Electricity Trading Arrangements (Neta), which will replace the former Wholesale Electricity Pool of England and Wales, and a �60m, two-year contract with UK gas utility Transco for development and installation of new network control systems.

Finance sector sales slipped 21% to �119.8m which the company attributed to a slow recovery in post-millenium bug spending.

Logica shares edged down in early trade on Wednesday, as investors took their lead from tech stock falls on US markets rather than the financial results.

At 0843 GMT, the share stood at �21.52, down 23p from Tuesday's close.