"I thought the share price would have gone up," joked Xchanging (XCH) boss Ken Lever following the announcement that he will step down at the end of 2015. Unfortunately, the news coincided with some particularly disappointing results for the IT services group, which knocked 22 per cent off the stock in early trading.
For the chief executive, it's a less than triumphant note on which to depart after four hard years spent restructuring the once-floundering business. Before leaving, Mr Lever has committed to a "split and fix" operation on the procurement division (translation: cutting costs by moving work into other areas of the business), which in the six months to June booked an operating loss of £6.8m, onerous contract and related provisions of £4.1m, and a £47m goodwill impairment charge.
His second area of concern is securing more clients for Xchanging's Xuber insurance software products. These large contracts are like "open heart surgery" for customers, according to Mr Lever, and owing to their size can be a significant challenge to secure.
Analysts at Liberum Capital have downgraded their full-year pre-tax profit forecast to £44.7m, giving EPS of 8p, compared with £51.1m and 11.7p in 2014.
XCHANGING (XCH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 100p | MARKET VALUE: | £246m | |
| TOUCH: | 99.5-100p | 12-MONTH HIGH: | 192p | LOW: 97p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | NA | |
| NET ASSET VALUE: | 63p* | NET DEBT: | 20% | |
| Half-year to 30 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 282 | 22.2 | 4.54 | nil |
| 2015 | 240 | -44.4 | -22.0 | nil |
| % change | -15 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £289m, or 117p a share | ||||
