Xchanging announced a solid set of results at the half-year stage, with underlying operating profits up 16 per cent to £16m on flat revenues as its self-help programme delivered results. The business process outsourcer (BPO) increased operating profit margin from 4.3 to 5 per cent and the cash flowed in with free cash flow up by £16.4m to £19.4m, leaving a strong net cash position.
Flat revenue belied changing fortunes across Xchanging's business. The financial services operation reported revenues down 9.1 per cent as falling trading volumes hit the securities operations, and technology sales were down 11.3 per cent as the company exited a specific infrastructure programme. This tough trading was offset by growth in the procurement business and a stable performance from insurance.
The strong profit performance was largely the result of cost-cutting that began in 2011, and which has greatly reduced head-office costs and doubled profits at financial services. Ken Lever, chief executive, said there has been a considerable amount of activity building the foundations for renewed growth, broker Panmure Gordon left full-year adjusted EPS forecasts unchanged at 8.99p (7.95p in 2011).
XCHANGING (XCH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 102p | MARKET VALUE: | £244m | |
| TOUCH: | 102-103p | 12-MONTH HIGH: | 108p | LOW: 61p |
| DIVIDEND YIELD: | na | PE RATIO: | na | |
| NET ASSET VALUE: | 78p* | NET CASH: | £62m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 322 | 0.80 | -1.63 | nil |
| 2012 | 323 | 11.9 | 1.99 | nil |
| % change | +0 | +1388 | -222 | - |
Ex-div: na Payment: na *Includes intangible assets of £211m, or 88p a share | ||||
