Judging by what looks set to be Xchanging's (XCH) last set of results as a standalone entity, the owners of its prospective suitor, Virginia-based Computer Sciences Corp . (CSC), might feel they've been sold a pup. The process management specialist swung to an earnings loss in 2015 on the back of a £59.3m goodwill impairment on the group's procurement business, together with charges linked to restructuring and onerous contract provisions.
Of course, Xchanging's faltering performance may have acted as a catalyst for several informal approaches in the final quarter of 2015, culminating in the CSC bid. Performance in the core procurement segment was hit by falling volumes, exacerbated by unmet gain-sharing thresholds, a number of contract exits and a failure to bring costs in line with falling revenues. These problems persisted throughout 2015, although remedial measures were implemented in the second half of the year.
There were some encouraging signs for the prospective new owners. Group chairman Geoff Unwin highlighted the progress of insurance software business Xuber, with material contracts signed, including Ariel Re, and a growing pipeline of new business opportunities.
| XCHANGING (XCH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 189.8p | MARKET VALUE: | £470m | |
| TOUCH: | 189.5-190p | 12-MONTH HIGH: | 195p | LOW: 87p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 57p* | NET DEBT: | 15% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 651 | -2.5 | -5.8 | nil |
| 2012 | 668 | 40.7 | 8.9 | 1.00 |
| 2013 | 686 | 78.3 | 21.8 | 2.50 |
| 2014 | 574 | 32.5 | 6.6 | 2.75 |
| 2015 | 440 | -46.2 | -27.6 | nil |
| % change | -23 | - | - | - |
Ex-div:- Payment:- *Includes intangible assets of £277m, or 112p a share | ||||
