Technology outsourcing specialist Xchanging (XCH) is set to step up investment in product development, services and acquisitions this year as part of an ongoing plan to diversify its customer base. It disposed of its shareholding in Xchanging Transaction Bank and closed its human resources service contract with BAE Systems last year, while competing for new business from a broader base of customers.
These efforts saw the company's Xuber insurance software product, launched in April, win its first US contract with Everest Re in November and seal a deal with Ascot in London. MarketMaker4, a procurement product acquired in September, has seen customer numbers grow by a half. There were also contract wins across North America, Europe and Malaysia with companies such as Godiva and Diageo. These developments helped push Xchanging's full-year results ahead of forecasts, with the adjusted operating profit 10 per cent higher at £55.5m and underlying sales growth of 3 per cent.
However, the loss of a contract with London Metal Exchange was disappointing, and Xchanging will have considerable ground to make up in 2014. Group revenue is likely to be lower, but new sales at higher margins, cost savings and acquisitions should help mitigate the impact. Investec expects adjusted pre-tax profit of £52.4m in 2014, giving EPS of 10.8p (from £51m and 10.6p).
| XCHANGING (XCH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 179p | MARKET VALUE: | £432m | |
| TOUCH: | 178-179p | 12-MONTH HIGH: | 190p | LOW: 121p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 91p* | NET CASH: | £120m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 750 | -60.2 | -33.0 | nil |
| 2010 | 689 | -7.6 | -16.8 | nil |
| 2011 | 651 | -2.5 | -5.8 | nil |
| 2012 | 668 | 40.7 | 8.9 | 1.0 |
| 2013 | 686 | 78.3 | 21.8 | 2.5 |
| % change | +3 | +92 | +146 | +150 |
Ex-div: 23 Apr Payment: 23 May *Includes intangible assets of £227m, or 94p a share | ||||
