Xchanging's (XCH) fortunes as a provider of back-office functions and transaction processing has always depended on the health of its financial, insurance and defence sector customers. Given the various challenges that these sectors have faced in recent years, the company's position hasn't always been a comfortable one. However, there were some tentative signs of recovery in these full-year results - including a return to the dividend list.
Perhaps predictably, the financial services division - with its heavy exposure to banks and broking - saw revenues fall 9.3 per cent to £163m, with operating profit down 13.8 per cent to £10.6m. Improved profitability from the reorganised Italian business is expected this yea, though. The technology division's sales, meanwhile, were flat at £98.8m, but cost savings helped deliver an underlying profit increase of 37 per cent to £9.6m. Moreover, Xchanging's procurement business benefited from higher volumes of work from BAE Systems and revenues here jumped by 14 per cent to £209m. The insurance operation made progress, too, with revenue up 4.5 per cent to £197.5m after winning a big new contract with Homecare Insurance, while profit here rose 2.5 per cent to £37.5m.
JPMorgan Cazenove forecasts EPS for 2013 of 10.5p, rising to 12.8p in 2014 (from 10.6p in 2012).
XCHANGING (XCH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 140p | MARKET VALUE: | £336m | |
| TOUCH: | 139-140p | 12-MONTH HIGH: | 142p | LOW: 86p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 74p* | NET CASH: | £76.8m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 558 | 49.2 | 13.5 | 2.50 |
| 2009 | 750 | -60.2 | -33.0 | nil |
| 2010 | 689 | -7.60 | -16.8 | nil |
| 2011 | 651 | -2.50 | -5.80 | nil |
| 2012 | 668 | 41.5 | 9.05 | 1.00 |
| % change | +3 | - | - | - |
Ex-div: 24 Apr Payment: 22 May *Includes intangible assets of £229m, or 95p a share | ||||
