27th Feb 2014 14:15
LONDON (Alliance News) - Xchanging PLC said thursday it has raised its dividend as it reported pretax profit rose in 2013, but cautioned that revenue will be lower overall in 2014 after it chose not to continue certain lines of business in its continuing transformation strategy.
The business services company raised its total dividend to 2.5 pence, more than doubled from 1.0 pence in the previous year.
Xchanging posted a pretax profit of GBP78.3 million, up from GBP40.7 million, as revenue rose to GBP685.9 million from GBP668.3 million and it saw a GBP30.3 exceptional benefit.
The exceptional benefit included a GBP13.3 million payment from the early surrender for the lease on the Leadenhall Street premises, and GBP12.5 million from the sale of its Xchanging Transaction Bank subsidiary.
On an adjusted basis, removing these one off exceptional costs, Xchanging saw an adjusted pretax profit of GBP51.7 million, up from GBP45.5 million in the previous year.
Xchanging is currently in the process of transitioning from its original business model, a small number of very large contracts, to a newer model based on a broader spread of customers.
The company has simplified its business by selling its holding in Xchanging Transaction Bank to partner Deutsche Bank AG, and discontinued certain lines of its business. It chose not to continue a HR service contract provided to BAE Systems PLC, Selex ES and others because it was not a good fit with it new strategy.
Xchanging warned that it would be losing a substantial portion of its managed services for the London Metal Exchange after it was acquired by Hong Kong Exchanges and Clearing Ltd. This means that those managed services are being taken in house, and as a result its contract with LME will end on May 1.
The company said that in 2014 it will move ahead with its transformation process, with the aim of maintaining its current level of profit despite anticipating reduced revenue from areas it has chosen not to continue operating. Xchanging said it expects this to position it well to resume growth in 2015.
Shares in Xchanging were trading down 7% at 173.68 pence Thursday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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