25th Feb 2008 07:01
Xchanging PLC25 February 2008 Xchanging plc Preliminary announcement - 25 February 2008 We have delivered rapid growth in revenues and profits in 2007 and have hadsignificant strategic and operational successes. Our prospects for 2008 lookencouraging. 12 months ended 12 months ended Increase 31 December 2007 31 December 2006Revenue £468.2m £393.5m 19%Statutory operating profit 1 £31.7m £24.2m 31%Group adjusted operating profit 2 £38.9m £32.3m 20%Xchanging's share of adjusted £31.6m £22.2m 43%operating profit (XEBIT) 2XEBIT Margin 6.8% 5.6% +120 basis pointsXchanging's share of adjusted £22.8m £17.1m 33%profit after tax (XPAT) 3Pro forma EPS - Diluted 4 10.51p 7.89p 33%Proposed dividend (per share) 2.0p n/aCash generated from operations £49.7m £29.4m 69%Group net cash £98.4m £58.7m Strategic highlights of the year: • Established new Enterprise Partnership with Allianz Global Investors • Bought out minority stakes in HR and procurement businesses for £57m • Expanded international footprint in Europe, USA and Asia • Completed successful IPO raising £75m of primary equity capital David Andrews, CEO of Xchanging, commented: "We are delighted with our firstyear's results as a public company. Entering the FTSE 250 was an important stepin our journey to become the leading global pure play business processor.Xchanging has a strong competitive position for sustainable high growth. Ourlong-term contracts give us high forward revenue visibility and there is upsidepotential for margins as we rigorously pursue low cost production. We have aproven management team executing our rapid growth and low cost producerstrategy." "The business process outsourcing market is an exciting place to be, with hugepotential for outsourcing back office functions. There are only a few proveninternational BPO providers and Xchanging is a recognised leader. Recessionarypressures are forcing companies to reduce costs and transform theirinfrastructures, particularly in financial services. All in all, 2008 is a verypromising year for Xchanging to take advantage of these favourable BPO marketconditions to boost our position internationally." 25 February 2008EnquiriesXchanging plcDavid Andrews, Chief Executive OfficerRichard Houghton, Chief Financial Officer Tel: 020 7780 6999 Tulchan GroupDavid AllchurchStephen Malthouse Tel: 020 7353 4200 Timing of analysts/ investor presentation A presentation for investors and analysts will be held at Xchanging's offices at34 Leadenhall Street, London, EC3A 1AX at 11:00am on 25 February 2008. Footnotes: 1 Statutory operating profit of £31.7m is post exceptional IPO items of £6.2m(2006: £24.2m post exceptional IPO items and software migration costs of £6.9m). 2 Adjusted operating profit excludes exceptional items and certain non-cashitems, which comprise share-based payment charges of £0.5m (2006: £0.5m) andamortisation of intangible assets previously unrecognised by acquired entities.A detailed reconciliation to statutory operating profit is provided in thesection 'Shareholder value - key performance indicators' below. 3 Adjusted profit after tax incorporates add backs to profit for the yearcomprising of exceptional items, amortisation of intangible assets previouslyunrecognised by acquired entities, share-based payment charges, imputed intereston the historic funding structure of the Group which fell away on admission,imputed interest on put options, imputed interest on employee loans and therelated tax thereon. A detailed reconciliation to statutory profit for the yearis provided in the section 'Shareholder value - key performance indicators'below. 4 Pro forma diluted EPS is calculated by dividing the Group's adjusted earnings(based on XPAT) by the weighted average number of shares had the Group's postIPO capital structure been in place from the beginning of 2007. This pro formanumber of shares was also applied to 2006 for consistency. Statutory EPS numbersare disclosed in Note 4 to the financial information below but have not beenpresented in this summary due to the impact of the IPO exceptional items and thesignificant change in the capital structure of the Group at the time of the IPO. About Xchanging Xchanging is a fast growing international, pure play business processoutsourcing (BPO) company providing complex industry specific processing to thebanking and insurance industries such as securities processing, commercialinsurance premiums and claims processing. We also provide procurement, financeand accounting, and human resources services to customers across industries.www.xchanging.com Full Year Results for the 12 months ended 31 December 2007 Overview As a fast growing, international, pure play business process outsourcing (BPO)company with blue-chip customers, Xchanging became a public company in April2007 with a clear strategy to build shareholder value. Our strategy is: • to grow existing platforms in commercial insurance, financial markets, HR, procurement, accounting and technology infrastructure • to add new platforms in new processes, new geographies or new industry sectors • to become the low cost producer through operational efficiency and a globally balanced approach Our financial results demonstrate that this strategy is driving strong financialperformance and an international BPO market leadership position. 2007 has seen our international footprint expand further into Europe, the USAand Asia and we continue to see significant market opportunities and strongdemand from our customers internationally. Revenue grew 19.0% to £468.2 million, of which over 18% was organic (includingEnterprise Partnerships). This growth has come from all three reportingsegments, Business Lines, Financial Markets, and Insurance. Sales across thefull range of offerings combined with revenues from contracts won in 2006(particularly Aon and National Australia Group Europe) have made a majorcontribution to 2007. Revenues also include two month's contribution from ourEnterprise Partnership with Allianz Global Investors, which commenced on 1November 2007. The Group uses a revenue visibility measure to monitor the revenue that theGroup expects to generate in the coming year. Revenue visibility going into2008 for the Group is £445.7 million; going into 2007 it was £394.3 million,which was 84% of the revenue actually achieved. Helped by the buy out of minority shares in our HR and procurement partnerships,Xchanging's share of operating profit (XEBIT) grew by 42.5% to £31.6 million(2006: £22.2 million). This represents an XEBIT operating margin of 6.8% (2006:5.6%). Xchanging's share of profit after tax (XPAT) grew by 33.2% to £22.8 million(2006: £17.1 million). This represents an XPAT margin of 4.9% (2006: 4.4%).XPAT growth was lower than growth in XEBIT having been impacted by the increasein the effective tax rate to 31.8% (2006: 26.6%). The increase in the tax chargewas partially offset by an increase in net finance income attributable toXchanging. The Directors recommend a dividend payment of 2.0 pence per share. We have a highly motivated and talented set of employees who are instrumental inachieving the collective success of Xchanging. Both the management team and asignificant number of employees are shareholders in the Group and, therefore,have a strong alignment of interests with all of our stakeholders. Growth...through our suite of BPO offerings Xchanging is a pure play business process outsourcing company. We have a rangeof offerings to meet the varying needs of customers for business processingservices. Our unique offering for dealing with complexity and scale isPartnering. On top of this, we provide four further offerings - Outsourcing,Products, Straight Through Processing and Business Support for customerflexibility and repeatability. In short, a distinctive '1+4 Go to MarketStrategy'. Partnering Aon In September 2006, Xchanging and Aon Ltd agreed an Enterprise Partnership withan initial 10-year service contract to provide claims processing and accountingand settlement services. The intention of the partnership is to deliver radicalimprovement in the London insurance market, connecting the value chain from thebroker right through to the underwriter. Nearly 500 employees transferred from Aon to the Xchanging Broking Services(XBS) partnership with minimal disruption. At start-up, the partnership wasbusiness as usual for Aon. Xchanging immediately assumed operational deliveryrisk, guaranteed savings to Aon and mobilised an improvement programme. Throughout 2007, Xchanging has been implementing its standard realignmentapproach and XBS exited the realignment phase in December 2007. We haveimplemented performance measurement, service control, production management,quality control, transferred a number of roles to India and consolidatedoperations from four sites to two. With this streamlined value chain, we are nowactively targeting third party customers. Allianz Global Investors In November 2007, Xchanging assumed operational control of Fondsdepot Bank GmbHfrom Allianz Global Investors. Based in Hof, Germany, Fondsdepot Bank has over450 employees providing retail investment account management services. The goalof the partnership is to create a neutral provider of these services that cangenerate third party sales from other members of the German asset managementcommunity. The realignment process is underway and Xchanging is deploying its low costproduction approach to optimise the existing processes and deliver productivityimprovements. This enhanced platform will deliver superior performance toAllianz Global Investors and a cost- effective solution for other assetmanagers. Outsourcing, Products, Straight Through Processing (STP) and Business Support Xchanging provides four distinctive offerings in addition to Partnering. Theseofferings deliver economies of scale, processing breadth, product depth and knowhow to our customers. Outsourcing delivers our customers better and cheaperprocessing and procurement spend. Products supplies customers with improvedsolutions for business processes and information requirements. STP extends thescope of existing services to customers and secures additional processing andspend efficiencies for them. Business Support provides experts and re-useableassets to support specific improvement activities in a customer's processingoperations. Together, these offerings enable Xchanging to be flexible inmeeting changing customer needs as they seek to improve the performance of theirback office functions. During 2007, the successes of our offerings have been truly international and wesee this trend accelerating in 2008 as the recessionary market conditionsstimulate the need for cost savings and improved infrastructures in backoffices. UK In the UK, we continue to work with Tokio Marine and QBE on an Outsourcing andBusiness Support basis and we have renewed our Outsourcing contract with SELEXGALILEO. We have won new Outsourcing contracts with eight NHS Trusts. We havealso won significant STP revenues with BAE Systems, Aon and Lloyd's. We haverenewed our Business Support contract for immigration services to Citi andprovided services to a major insurance broker. We have also made Product salesto a major US investment bank. Europe In Europe, we have renewed our Outsourcing contract with Sparda-Banken andnetbank AG. We have won STP revenues with Deutsche Bank, Sal. Oppenheim andCiti. We have sold our Central Price Service (CPS) product to Helaba Invest,Hauck & Aufhauser, BHF and Metzler and Delta Lloyd Investment Managers. InJanuary 2008, we acquired Mercuris SA, a French procurement outsourcing servicescompany serving the financial markets and insurance industries. USA and Asia In the USA, we have sold our Products to Collins (Brokasure) and two Bermudianre-insurers (G4RI). In Asia, we delivered a combined software product andoutsourcing services solution to Lloyd's new Chinese re-insurance business andwe have won Business Support for Tech Mahindra. Global Balancing As a pure play business processor, Xchanging focuses on operational efficiency.One of the elements of this is our Global Balancing approach. Xchanging offers amix of on-site, nearshore and offshore facilities. This approach enablesXchanging to retain critical customer processes locally, while consolidatingother processing into cheaper nearshore or offshore facilities. In 2007 we havecontinued to develop our Indian operations and, as of 31 December 2007, we had516 employees in our Gurgaon operation and a further 277 staff undertakinginsurance processing in a partner organisation. All our sectors now have aproportion of their processing in India and we are also actively expanding ouroperations in Malaysia. Through the Allianz Global Investors partnership, wenow have a high quality nearshore processing facility in Hof employing more than450 staff for the German market. Our business sectors Our Business Lines, Insurance and Financial Markets sectors have continued togrow and achieve their profitability goals. In each sector, there are excitingopportunities and the market outlook is promising. Business Lines Our Business Lines platforms cover cross-industry processing services in humanresources, procurement, finance and accounting and technology infrastructure andhad total revenues of £215.8m in 2007. Business Lines primary customers includeBAE Systems, National Australia Group Europe, United Biscuits and the NHS. Highlights of 2007 • Bought out BAE Systems' minority stakes in the HR and procurement businesses for £57 million • Completed a five-year extension to our contract with SELEX GALILEO for HR services • Signed new payroll outsourcing contracts with eight NHS trusts through our partnership with UHB, providing services to over 130,000 NHS employees • Maintained our 'Investors in People' accreditation and was a finalist in the category of 'Partnership' at the Scottish Modern Apprenticeship Awards • Supported the award of a Grade 2 OFSTED rating to BAE Systems for the Apprentice Training programme that is delivered by Xchanging HR Services • Obtained Sarbanes-Oxley (SOX) certification for our procure-to-pay platform • Received IS09001, TickIT Quality Standard and ISO27001 Information Security Standard certification for our Data Centre IT Hosting services. There are good growth opportunities for Business Lines. According to IDC5, theWestern European market for cross-industry BPO services will continue to growrapidly. IDC forecasts that the fastest growing segment is procurement with a20.5% compound annual growth rate from 2007 - 2011, while HR and F&A have aforecast compound growth rate of 13.8% and 13.2% per annum respectively over thesame period. 5 Source: IDC, "Worldwide and U.S. Business Process Outsourcing 2007-2011Forecast: Market Opportunities by Horizontal Business Process", Doc#208290,September 2007. Insurance Our Insurance platform is one of the leading providers of BPO services andsoftware in international commercial insurance markets. In 2007, the Grouphandled over four million insurance premium and claim transactions betweenbrokers and underwriters operating in the marine, aviation and non-marinesectors of the London insurance market, having a combined value of over £45billion. We provide insurance services from locations in the UK, India, the USAand Malaysia and generated revenues of £164.7m in 2007. Highlights of 2007 • Achieved the first two sales of our new Genius for Re-Insurance (G4RI) product for Bermudian re-insurers • Delivered a combined software and services processing solution to Lloyd's new Chinese re-insurance business • Implemented our first US sale of Brokasure (our wholesale broking product) to Collins, one of the world's largest re-insurance intermediaries. • Signed a memorandum of understanding with partner RI3K to build an end to end processing platform for Bermuda's re-insurance market. • Successfully completed the realignment of our partnership with Aon for broking services, which we won in September 2006. Already, we are actively working towards building the international broking processing platform. We are well placed to lead the London insurance market from paper-based toelectronic-based processing. In 2007, we have added technology capabilities tosupport our aim of becoming the preferred provider of electronic processing incommercial insurance markets internationally. Financial Markets Our Financial Markets platforms cover banking and asset management operationsand software and generated revenue of £102.9m in 2007. Processing services areprovided both directly to financial institutions and on their behalf to the endcustomers. Xchanging's major customers include Deutsche Bank, Sal. Oppenheim,Citi, Sparda-Banken and netbank AG and Allianz Global Investors. We provide ourservices in Germany from our processing centres in Frankfurt and Hof and throughlocations in Dusseldorf and Ludwigsburg. In addition, certain securitiesprocessing services are provided through our global processing centre in India. Highlights of 2007 • Entered into an Enterprise Partnership with Allianz Global Investors for retail investment account management services in Germany • Completed the renewal of our retail securities processing contract with Sparda-Banken Group and netbank AG in Germany • Extended our STP service offering to all core customers • Developed a Business Support offering providing Six Sigma services to a number of companies in Germany • Moved elements of German securities processing work to India. The banking industry is now facing a difficult period in the aftermath of the2007 credit crunch. Margins have been squeezed and capital is a scarcecommodity. We are well placed to help banks reduce their costs and minimiseinvestment by leveraging our processing platforms and expertise. Also, as oneof the few international BPO providers, we believe we are well positioned tosupport the increasing pressure for common financial processes across theEuropean Union. The market opportunity The long-term market opportunity for BPO companies is substantial. The BPOmarket is still in its early stages of development with low penetration levelsof the corporate cost base available for outsourcing. Having grown steadily infavourable stock market and economic conditions, the current corporateenvironment provides the basis for an acceleration in BPO. Large corporates, particularly in financial services, are under increasingpressure to deliver long-term profit improvements. The economic environment isconstraining growth and core businesses are requiring more attention andinvestment than in recent years. At the same time, medium-sized companies areseeking access to economies of scale and to reduce investment requirements toremain competitive. Despite the need to drive down costs, improve efficiency and reduce investmentin back office processing, increased regulation is having the opposite effect.In many cases companies have already secured the more easily achievable costsavings (IT outsourcing, shared services, basic offshoring) and economies ofscale have peaked. Business process outsourcing resolves these conflicting pressures as theoutsourcer provides guaranteed cost reductions, undertakes investment in ashared platform and enhances the service quality. The ability to provide thesebenefits across boundaries, be they geographic or functional, will deliver theeconomies of scale that customers are seeking. These factors will fuel growthin the BPO market in the medium term. There are a limited number of proven BPO providers globally that have thecredibility and track record to deliver these benefits to customers. Xchangingis ideally positioned with a strong track record as a pure play BPO company withan international footprint. Our Enterprise Partnerships offer large scaletransformational outsourcing for blue chip customers and we providecost-effective solutions for smaller companies through our full suite of BPOofferings. Clear strategy for building shareholder value With the market opportunities ahead of us our strategy remains clear and simple: • to grow existing platforms in commercial insurance, financial markets, HR, procurement, accounting and technology infrastructure • to add new platforms in new processes, new geographies or new industry sectors • to become the low cost producer through operational efficiency and a globally balanced approach Where appropriate we will complement our organic growth strategy with valueenhancing acquisitions. Shareholder value - key performance indicators (KPIs) Financially, 2007 has been a good year for Xchanging, with strong organicrevenue growth, significant earnings growth and very strong cash flows. The Group's KPIs, as defined below, are: 12 months ended 12 months ended Increase 31 December 2007 31 December 2006Revenue £468.2m £393.5m 19.0%Xchanging's share of adjusted £31.6m £22.2m 42.5%operating profit (XEBIT)XEBIT Margin 6.8% 5.6% +120 bpsXchanging's share of adjusted £22.8m £17.1m 33.2%profit after tax (XPAT)Pro forma EPS - Diluted 10.51p 7.89p 33.2%Cash generated from operations £49.7m £29.4m 68.9%Cash conversion ratio 128% 91% Revenues Revenue growth continued to be strong, increasing 19.0% to £468.2 million in2007 (2006: £393.5 million). The Group has delivered consistently strong growthsince its first contract in 2001, with a compound annual growth rate of 51%between 2001 and 2007. Growth was predominantly organic in 2007 withacquisitions accounting for less than 1% of the growth during the past year. Sales across the full range of offerings combined with revenues from contractswon in 2006 (particularly Aon and National Australia Group Europe) have made amajor contribution to 2007. Revenues include two month's contribution from ourEnterprise Partnership with Allianz Global Investors which commenced on 1November 2007. The Group's 2007 revenue growth has been achieved by all threereporting segments, Business Lines, Financial Markets and Insurance. Revenue visibility The Group has high revenue visibility due to the long-term nature of itscontracts and the relatively high predictability of revenues generated. TheGroup uses a revenue visibility measure which represents revenue which canreasonably be expected to arise in the year from current customers where we havein place a contractual relationship. Visible revenue excludes any revenue fromprospective new sales. On this basis, revenue visibility going into 2008 is £445.7 million. Revenuevisibility going into 2007 was £394.3 million, which was 84% of the revenueachieved in 2007. Profits Due to its Enterprise Partnerships, there is a sizeable minority element in theXchanging income statement. The Group therefore measures and tracks profitdirectly attributable to equity shareholders (net of Enterprise Partnershipminority interests) as the comparable and consistent measure of profitperformance for Xchanging's shareholders. Profits are also adjusted to excludeexceptional and certain non-cash items. We use two measures to monitor theperformance of profit attributable to equity shareholders of the Group: • adjusted operating profit attributable to equity holders of the Group (XEBIT) • adjusted profit for the year attributable to equity holders of the Group (XPAT). XEBIT grew by 42.5% to £31.6 million (2006: £22.2 million). This represents anXEBIT operating margin of 6.8% (2006: 5.6%). The XEBIT growth is driven bystrong performances in the procurement, HR and insurance processing businesses,including a contribution from Xchanging Broking Services (the Aon EnterprisePartnership) in its first full year. Strong operational profit improvements inFinancial Markets were offset by the increased discount to Deutsche Bank and thefull year impact of a contract exit. XEBIT also grew through the buy out of theminority interests in the HR and procurement Enterprise Partnerships. Xchanging's share of profit after tax (XPAT) grew by 33.2% to £22.8 million(2006: £17.1 million). This represents an XPAT margin of 4.9% (2006: 4.4%). XPATgrowth was lower than growth in XEBIT having been impacted by the increase inthe effective tax rate to 31.8% (2006: 26.6%). The increase in the tax chargewas partially offset by an increase in net finance income attributable toXchanging. The tables below detail the adjustments to operating profit to determine XEBITand XPAT: XEBIT 2007 2006 £m £mXEBIT 31.6 22.2Adjusted profit before taxation attributable to minority interests 7.3 10.1Adjusted operating profit 38.9 32.3less:Exceptional items (6.2) (6.9)Share-based payment charges (0.5) (0.5)Other add backs (0.5) (0.7)Operating profit 31.7 24.2 XPAT 2007 2006 £m £mXPAT 22.8 17.1Adjusted profit after taxation attributable to minority interests 4.9 7.3Adjusted profit after taxation 27.7 24.4less:Exceptional items (6.9) (6.9)Share-based payment charges (0.5) (0.5)Other add backs (1.3) (2.0)Tax effect of above 1.5 2.4Profit for the year 20.5 17.4 XEBIT margin and margin drivers The Group grew XEBIT margin significantly during the year to 6.8% (2006: 5.6%),which is ahead of the 50-100 basis point growth in XEBIT margin that the Grouptargets annually. Xchanging has continued to drive XEBIT margin growth through productivityimprovement and expanding our processing platforms through new revenues. The buyout of the minority interests in Xchanging Procurement Services and Xchanging HRServices has been a key driver of XEBIT margin growth during the year. The Grouphas also continued to leverage its central expenses, which have declined to 3.2%of revenues (2006: 3.4%). This strong growth in margins has been achieved despite the dilutive effect oftwo new Enterprise Partnerships. During the course of 2007 the Group has beenintegrating Xchanging Broking Services which commenced on 1 September 2006 andFondsdepot Bank which commenced on 1 November 2007. Pro forma earnings per share (EPS) When calculating earnings per share for 2007, the Group considers it appropriateto use XPAT as described above, as it represents the underlying performance ofthe business. In addition, as the Group's results were impacted by the change incapital structure resulting from the IPO in April 2007, a pro forma number ofshares has been used for comparison purposes. The pro forma analysis is set out below to show how the Group's adjustedearnings per share (based on XPAT) would have been calculated had the Group'spost IPO capital structure been in place from the beginning of 2007. This wasalso applied to 2006 for consistency. 2007 2006Pro forma basic / diluted earnings per shareXPAT (£m) 22.8 17.1Pro forma number of shares in issue (m)* 209.5 209.5Pro forma basic earnings per share (pence) 10.89 8.18 XPAT (£m) 22.8 17.1Pro forma diluted number of shares (m)* 217.2 217.2Pro forma diluted earnings per share (pence) 10.51 7.89 * weighted average number of shares The Company believes that the pro forma earnings per share above provide thebest analysis of the underlying performance of the business for the period. Forreference, the 2007 adjusted earnings per share (based on XPAT) using the actualweighted average shares during the year is 11.68p basic and 11.20p diluted. Income statement Statutory operating profit grew 31.1% to £31.7 million (2006: £24.2 million),while adjusted operating profit grew 20.3% to £38.9 million (2006: £32.3million). The Group incurred significant exceptional costs during the year related to theIPO in April. These costs totalled £6.2 million at the operating profit level(2006: £6.9 million), of which the majority related to advisers fees and thecharge associated with share gifts to employees from the CEO's own shareholding.In 2007, a further exceptional cost was due to the effect of revaluing onerouslease provisions at the Group's post-IPO weighted average cost of capital (WACC)which reduced. This charge, totalling £0.7 million is classified as anexceptional finance cost. Net finance income (pre exceptional items) increased by 99.1% to £1.5 million(2006: £0.8 million). This overall improvement was due to bank interest earnedon the net cash increase resulting from the receipt of IPO proceeds. Financecosts increased due to interest costs incurred on the deferred consideration forthe acquisition of BAE Systems' minorities and the full year effect of imputedinterest charges on put options. The Group's effective tax rate on Xchanging's share of adjusted profit beforetax increased to 31.8% (2006: 26.6%). The effective tax rate has been negativelyaffected by the decrease in corporation tax rates in Germany from 2007 and theUK from 2008 resulting in a revaluation of deferred tax assets held on thebalance sheet, creating a one-off cost to the Group. Additionally, in 2007 theGroup did not utilise significant prior year accumulated tax losses, which hadfavourably impacted the Group's effective tax rate in previous years. The use ofthese was limited in 2007 due to additional tax deductions in relation toemployees exercising share options. The Group's effective tax rate on the statutory results was also up for theperiod at 36.8% (2006: 30.0%). In addition to the above, the effective tax rateis affected by exceptional costs related to the IPO, a high proportion of whichare disallowable for tax purposes. Segmental revenues and profits Business Lines Revenue in the Business Lines sector increased by 22.5% to £215.8 million (2006:£176.1 million). Business Lines revenue grew through successful implementationof procurement contracts with National Australia Group Europe, Liberata and BAESystems Australia. During 2007, Business Lines has further grown revenue throughbuilding on the relationship with UHB, signing a number of HR and payroll dealswith other NHS trusts. Business Lines revenue also benefited from the full yeareffect of revenue from Ferguson Snell and Associates, the immigration servicescompany acquired in 2006. XEBIT grew during 2007 by 100.6% to £19.7 million (2006: £9.8 million) with thebuy out of the minorities in procurement and HR and new contracts bothcontributing during the year. In addition, the existing businesses performedstrongly with improved XEBIT from procurement contracts and the successfulimplementation of variable pricing for the sector's HR service offerings.Adjusted operating profit grew during 2007 by 39.1% to £19.7 million (2006:£14.2 million). XEBIT margin has increased to 9.1% (2006: 5.6%) driven primarily by the buy outof the BAE Systems' minority interests. Adjusted operating margin has increasedto 9.1% (2006: 8.1%). Subsequent to year end, Business Lines extended its procurement operations inFrance with the acquisition of 100% of the share capital of Mercuris SA, aprocurement service provider based in Paris. Insurance Revenue in the Insurance sector increased by 21.4% to £164.7 million (2006:£135.7 million). A major contributor to this growth has been a full year'scontribution from the Group's Enterprise Partnership with Aon (Xchanging BrokingServices), which commenced on 1 September 2006. The sector has also experiencedstrong growth across its existing insurance administration and softwarebusinesses. XEBIT grew during 2007 by 24.9% to £20.8 million (2006: £16.7 million). XEBITgrew with strong profit growth across the insurance processing and productsbusinesses. In addition, there was a contribution to profit by Xchanging BrokingServices in its first full year of operation. Adjusted operating profit grewduring 2007 by 22.5% to £28.4 million (2006: £23.2 million). XEBIT margins grew to 12.6% (2006: 12.3%). Margin improvements in most of theInsurance businesses have been offset by the integration of the new brokingservices partnership with Aon. This business did contribute to profit growthduring 2007 but like all Enterprise Partnerships only achieved a modest returnin its first full year of operation. Adjusted operating margin grew to 17.2%(2006: 17.1%). Financial Markets Revenue in the Financial Markets sector increased by 7.0% to £102.9 million(2006: £96.2 million). Revenue growth arose from strong securities processingvolumes and the addition of the Group's seventh Enterprise Partnership,Fondsdepot Bank (commenced on 1 November 2007), which offset the increaseddiscount to Deutsche Bank and the full year impact of a contract exit. XEBIT declined during 2007 by 21.7% to £10.4 million (2006: £13.3 million).XEBIT has been impacted by an increase in contracted discounts to Deutsche Bankand a full year's impact of the loss of volumes from a contract exit in 2006.However, these factors have been mitigated by increased processing volumes,productivity improvements, and the transfer of work to India. Fondsdepot Bankwas break-even, which was in line with expectations for this new EnterprisePartnership. Adjusted operating profit declined during 2007 by 19.7% to £10.1million (2006: £12.5 million). XEBIT margin has declined to 10.1% (2006: 13.8%).The reduction in XEBIT marginshas resulted from the fall in XEBIT described above and the dilutive effect ofthe Fondsdepot Bank Enterprise Partnership, which commenced on 1 November 2007.Adjusted operating margin has declined to 9.8% (2006: 13.0%). Operating cash flow and capital expenditure Operating cashflow The business continued to be strongly cash generative with reported cashgenerated from operations increasing by 68.9% to £49.7 million. 2007 2006 £m £mCash generated from operations 49.7 29.4Adjusted operating profit 38.9 32.3Cash conversion 128% 91% Cash performance is measured using a cash conversion ratio, calculated as cashgenerated from operations (pre capital expenditure) divided by the Group'sadjusted operating profit. Cash conversion was 128% (2006: 91%). Cash conversionimproved as a result of tighter control of working capital, a reduction in theamount of cash exceptional costs and the increase in depreciation andamortisation. Cash held by the Group companies at the period end was £98.4 million (2006:£58.7 million) of which £41.0 million (2006: £34.6 million) was held byEnterprise Partnerships. There were significant movements in cash between theperiods, most notably receipt of the primary funding of £75 million from theIPO, payment of £57 million for the acquisition of minority interests in theEnterprise Partnerships with BAE Systems and a £9.7 million payment associatedwith our Enterprise Partnership with Allianz Global Investors. Capital expenditure The Group invested £14.2 million (2006: £15.7 million) in capital expenditure(on both property, plant and equipment (PPE) and intangible assets) during theyear, representing 3.0% of revenue. This was below our expected long-termaverage of 4.0%. Capital was invested across the Group, primarily in developinginfrastructure assets to support new and existing businesses. The depreciation and amortisation charges of £13.8 million incurred during 2007in relation to PPE and intangible assets were broadly equal to the Group'scapital expenditure for the year at 2.9% of revenue. As the Group continues togrow, it is expected that investment in PPE and intangible assets will return tothe expected long-term trend to support this growth. In addition, the Group capitalised £0.2 million (2006: £3.2 million) aspre-contract costs, which are disclosed as trade and other receivables in thestatutory accounts. Costs directly attributable to winning a contract arecapitalised when it is virtually certain that the contract will be awarded.These costs are amortised over the life of the contract, the amortisation chargefor 2007 was £1.2m (2006: £0.9m). Balance sheet The balance sheet has strengthened significantly between reporting periods, as aresult of the IPO in the second quarter and strong operating performance. Inaddition, the net deficit in relation to defined benefit pension and retirementschemes has reduced to £8.7 million (2006: £21.9 million). Net cash held by the Group at the period end was £98.4 million (2006: £58.7million) of which £41.0m (2006: £34.6m) was held by Enterprise Partnerships. Dividend The Board recommends the payment of a dividend of 2.0 pence per share payable on30 May 2008 to all shareholders on the share register at the record date (2 May2008). This proposed dividend is not reflected in the 2007 financial accounts.Based on the 2007 pro forma diluted EPS of 10.51p, this dividend is covered 5.3times and based on the 2007 adjusted diluted EPS of 11.68p, this dividend iscovered 5.8 times. Board changes A number of changes to the Board have recently been announced: • John Bramley will be retiring from the Board at the Annual General Meeting (AGM) in May 2008. He worked closely with David Andrews in the formation of Xchanging. • David Hodgson will be retiring from the Board at the AGM, thereby reducing the number of General Atlantic nominated Board members to one. • John Robins will be stepping down from the Board at the next AGM. He will hand over the Chairmanship to Nigel Rich, our Deputy Chairman, who brings a wealth of public company and international experience. • Friedrich Carl Janssen retired from the Xchanging Board in December 2007. He has been an important member of the Board and his European market and German banking knowledge has been invaluable. We wish all of our retiring Board members well for the future and thank them fortheir significant contributions over their years on the Board. The Company will also take the opportunity during 2008 to add further newindependent directors. Articles of Association At the forthcoming AGM, a proposal will be put before the shareholders to adopta new set of Articles of Association for the Company. The proposed new Articlesof Association reflect those provisions of the Companies Act 2006 which havecome into force since the Articles of Association were adopted, pursuant to thespecial resolution of the Company passed on 27 June 2006, and certain of thosewhich will come into force on 1 October 2008. Looking ahead Becoming a public company and subsequently entering the FTSE 250 has positionedus well, strategically and financially, to achieve our ambition to become theleading global pure play BPO company. We are confident about the outlook forXchanging due to: • The acceleration of the BPO market opportunity in the medium term supporting sustainable high growth • The long-term nature of our contracts with blue-chip customers giving us high revenue visibility • Our strong competitive position and track record as an international pure play BPO company • The margin upside opportunity driven by our low cost production and global balancing approach • A clear strategy for growth based on our full suite of BPO offerings and value enhancing acquisitions In summary, we are excited about expanding our international footprint in 2008and look forward to building on the success we have achieved so far. Consolidated income statement for the year ended 31 December 2007 2007 2006 £'000 £'000Revenue 468,160 393,495Cost of sales (414,622) (348,739)Gross profit 53,538 44,756 Administrative expenses - before exceptional items (15,667) (13,693)Administrative expenses - exceptional items (6,200) (6,906)Administrative expenses (21,867) (20,599)Operating profit 31,671 24,157 Finance costs - before exceptional items (10,502) (8,351)Finance costs - exceptional items (719) -Finance costs (11,221) (8,351)Finance income 12,021 9,114Profit before taxation 32,471 24,920 Taxation - UK (10,632) (7,272)Taxation - overseas (1,314) (204)Profit for the year 20,525 17,444 Attributable to: - equity holders of the Company 15,336 10,718 - minority interests 5,189 6,726 20,525 17,444 Earnings per share (expressed in pence per share) - basic 7.85 6.83 - diluted 7.52 6.41 Dividends No dividends have been paid during 2006 or 2007. A dividend in respect of theyear ended 31 December 2007 of 2.0 pence per share, amounting to £4,296,000 isto be proposed at the Annual General Meeting on 22 May 2008. This preliminaryannouncement does not reflect this dividend payable. Consolidated statement of recognised income and expense for the year ended 31 December 2007 2007 2006 £'000 £'000Actuarial gains arising from defined benefit pension 14,101 8,017schemesMovement on deferred tax relating to defined benefit (4,082) (2,280)pension schemesRevaluation of available-for-sale financial assets 1,791 (1,470)Deferred tax on revaluation of available-for-sale 94 316financial assetsCurrency translation differences 1,628 (360)Net income recognised directly in equity 13,532 4,223Profit for the year 20,525 17,444Total recognised income for the year 34,057 21,667 Attributable to: - equity holders of the Company 25,366 14,298 - minority interests 8,691 7,369 34,057 21,667 Consolidated balance sheet as at 31 December 2007 2007 2006 £'000 £'000AssetsNon-current assetsGoodwill 85,620 29,362Intangible assets 39,053 28,471Property, plant and equipment 16,444 15,096Available-for-sale financial assets 23,609 20,441Trade and other receivables 6,056 6,115Retirement benefit assets 6,158 -Deferred income tax assets 16,894 16,317Total non-current assets 193,834 115,802 Current assetsTrade and other receivables 100,855 74,976Cash and cash equivalents 98,366 58,684Total current assets 199,221 133,660 LiabilitiesCurrent liabilitiesTrade and other payables (98,989) (80,902)Current income tax liabilities (1,609) (7,129)Borrowings (856) (3,270)Provisions (8,141) (8,720)Net current assets 89,626 33,639Total assets less current liabilities 283,460 149,441 Non-current liabilitiesTrade and other payables (9,974) (9,764)Financial liabilities - borrowings (655) (13,042) - other liabilities (17,865) (7,140)Deferred income tax liabilities (4,837) (2,517)Retirement benefit obligations (14,836) (21,901)Provisions (13,375) (9,447)Net assets 221,918 85,630 Shareholders' equityOrdinary shares 10,740 221Share premium 73,715 82,589Merger reserve 409,672 -Reverse acquisition reserve (312,238) -Other reserves 11,032 1,251Retained earnings 13,661 (10,209)Total shareholders' equity 206,582 73,852Minority interest in equity 15,336 11,778Total equity 221,918 85,630 Consolidated cash flow statement for the year ended 31 December 2007 2007 2006 £'000 £'000Cash flows from operating activitiesProfit before tax 32,471 24,920Net finance income (800) (763)Operating profit 31,671 24,157Depreciation and amortisation 14,993 13,156Employee share-based payments 2,591 495Changes in working capital 260 (8,430)Other non-cash movements 205 55Cash generated from operations 49,720 29,433Income tax paid (10,910) (9,404)Net cash from operating activities 38,810 20,029 Cash flows from investing activitiesAcquisition expenses (1,021) (115)Acquisition cost of minority interests in subsidiaries (56,934) -Acquisition cost of subsidiaries (12,329) (6,275)Cash and cash equivalents acquired with subsidiaries 8,498 402Cash invested by minority interests - 50Purchase of property, plant and equipment (5,477) (8,707)Purchase of intangible assets (8,710) (7,027)Pre-contract expenditure (225) (3,223)Proceeds from sale of property, plant and equipment 113 375Interest received 4,638 2,846Net cash used in investing activities (71,447) (21,674) Cash flows from financing activitiesProceeds from issue of shares 83,611 1,611Transaction costs of shares issued (4,664) (325)Interest paid (1,408) (43)Dividends paid to minority interests (4,262) (11,591)Net cash from/(used in) financing activities 73,277 (10,348)Effects of exchange adjustments (958) 349Net increase/(decrease) in cash and cash equivalents 39,682 (11,644)Cash and cash equivalents at 1 January 58,684 70,328Cash and cash equivalents at 31 December 98,366 58,684 Notes to the preliminary announcement for the year ended 31 December 2007 1 Basis of preparation and accounting policies The preliminary announcement for the full year ended 31 December 2007 has beenprepared in accordance with International Financial Reporting Standards asadopted by the European Union. Details of the accounting policies applied arethose set out in Xchanging BV's Annual Report 2006. The annual financialinformation presented in this preliminary announcement for the year ended 31December 2007 is based on, and is consistent with, that in the Group's auditedfinancial statements for the year ended 31 December 2007, and those financialstatements will be delivered to the Registrar of Companies following theCompany's Annual General Meeting. The independent auditor's report on thosefinancial statements is unqualified and does not contain any statement undersection 237(2) or (3) of the Companies Act 1985. With effect from 30 April 2007, the Company became the legal parent company ofXchanging BV and its subsidiary undertakings. This business combination,effected through an exchange of equity interests, has been accounted for as areverse acquisition in accordance with IFRS 3, "Business combinations". The keyfeatures of this basis of consolidation are: • the consolidated income statement includes the results of Xchanging BVand its subsidiaries for the period until 30 April 2007, with the addition ofthe results of Xchanging plc from 30 April 2007 (the acquisition date) • the comparative figures in the income statement and balance sheet arethe results and position of Xchanging BV and its subsidiaries for the year ended31 December 2006 • the consolidated retained earnings reserves of the Group include thepre Xchanging plc acquisition retained earnings of Xchanging BV and itssubsidiaries • the reserves on the balance sheet are not directly comparable year onyear due to the application of reverse acquisition accounting as describedabove. Information in this preliminary announcement does not constitute statutoryaccounts of the Group within the meaning of section 240 of the Companies Act1985. The full financial statements for the Group for the year ended 31 December2007 have been delivered to the Dutch Chamber of Commerce, as the parent companyof the Group for that period was registered in the Netherlands. The independentauditor's report on those financial statements was unqualified and did notcontain a statement under section 237(2) or (3) of the Companies Act 1985. 2 Segmental reporting The Group has three reportable business sectors for financial reportingpurposes: Insurance, Financial Markets and Business Lines. In both of theInsurance and Financial Markets sectors the Group provides industry specific BPOservices and software to customers. Business Lines is a cross-industry sector inwhich the Group provides procurement, human resources, finance and accountingand technology infrastructure services. These three operating sectors aresupported by the Group's offshore business processing services facility ("BPS")and "Corporate", which provides the infrastructure, resources and investment tosustain and grow the business, including sales and commercial, performancemanagement, implementation and business management functions. Business Insurance Financial BPS and Total Lines Markets CorporateYear ended31 December 2007 £'000 £'000 £'000 £'000 £'000Revenue 215,775 164,710 102,929 195 483,609- from external customers 202,729 162,541 102,695 195 468,160- inter segment 13,046 2,169 234 - 15,449 Depreciation and amortisation 3,871 3,453 3,416 4,193 14,933 Adjusted operating profit/(loss) 19,727 28,391 10,056 (19,317) 38,857Adjusted operating profit percentage 9.1% 17.2% 9.8% 8.0% Exceptional items (158) (184) (66) (5,792) (6,200)Adjustment of certain non-cash items: - share-based payments (117) (114) (40) (245) (516) - amortisation of intangible assets (344) (126) - - (470)previously unrecognised by an acquiredentityOperating profit/(loss) 19,108 27,967 9,950 (25,354) 31,671 Allocation of central costs: - investment in Enterprise Partnerships - (1,162) - 1,162 - - depreciation and amortisation (500) (1,012) (526) 2,038 - - other 8 482 (1,480) 990 -Segment result 18,616 26,275 7,944 (21,164) 31,671 Finance costs (excluding exceptionals) (10,502)Exceptional finance costs (719)Finance income 12,021Taxation (11,946)Profit for the year 20,525 Business Insurance Financial BPS and Total Lines Markets CorporateYear ended31 December 2006 £'000 £'000 £'000 £'000 £'000Revenue 176,076 135,678 96,177 - 407,931- from external customers 165,158 132,393 95,944 - 393,495- inter segment 10,918 3,285 233 - 14,436 Depreciation and amortisation 3,273 2,567 2,588 4,728 13,156 Adjusted operating profit/(loss) 14,182 23,175 12,530 (17,600) 32,287Adjusted operating profit percentage 8.1% 17.1% 13.0% 7.9% Exceptional items (460) (1,793) - (4,653) (6,906)Adjustment of certain non-cash items: - share-based payments (46) (14) (17) (418) (495) - amortisation of intangible assets (394) (335) - - (729)previously unrecognised by an acquiredentityOperating profit/(loss) 13,282 21,033 12,513 (22,671) 24,157 Allocation of central costs: - investment in Enterprise Partnerships - (893) - 893 - - depreciation and amortisation (369) (35) (527) 931 - - other (331) (1,184) (494) 2,009 -Segment result 12,582 18,921 11,492 (18,838) 24,157 Finance costs (8,351)Finance income 9,114Taxation (7,476)Profit for the year 17,444 3 Exceptional costs 2007 2006 £'000 £'000Exceptional items included in administrative expenses comprise the following:Costs in relation to the IPO and Group restructuring 3,995 5,264Costs related to the share gift to employees by the CEO 2,205 -Costs incurred migrating customers onto a new software package - 1,642Total exceptional items included in administrative expenses 6,200 6,906Exceptional items included in finance costs comprise the following:IPO costs 719 - The IPO costs and Group restructuring costs relate to specific expenses incurredin listing the Group on the London Stock Exchange and for management and legalrestructuring during 2006 in preparation for the listing. The charge consistsmainly of external legal and professional advisers' fees of £3,370,000 (2006:£3,398,000). Staff and other costs total £625,000 (2006: £1,866,000).Additionally £4,664,000 was charged directly to equity in respect of the IPO forlisting fees, underwriting fees and other professional advisers' fees directlyassociated with the raising of capital. Upon the successful listing of Xchanging on the London Stock Exchange, the CEO,David Andrews, gave every qualifying Xchanging employee 200 of his own personalXchanging shares. This gift falls within the scope of IFRS 2 and consequentlythe Group incurs an accounting charge of £1,969,000 equivalent to the value ofthe shares at the date of the gift. In addition, social security costs of£236,000 were incurred. In 2006, costs were incurred in migrating customers from a discontinuedinsurance software platform, Riskwrite, to a superior platform acquired as partof the RebusIS acquisition in 2004. The finance cost element relates to adjustments that were made to existingonerous lease provisions due to the change in the discount rate used tocalculate the present value of these provisions. This change in discount rate isa direct result of the IPO. 4 Earnings per share Basic earnings per share is calculated by dividing the net profit attributableto equity holders of the Company by the weighted average number of ordinaryshares of Xchanging plc and, for periods prior to 30 April 2007, the weightedaverage number of Xchanging BV shares as converted into Xchanging plc shares. For diluted earnings per share, the weighted average number of ordinary sharesin existence is adjusted to include all dilutive potential ordinary shares. TheGroup has three types of potential dilutive ordinary shares: share options,convertible debt and warrants. Prior to listing on the London Stock Exchange,the warrants were exercised and the debt was converted into ordinary shares. Earnings £'000 Weighted Earnings per average number share pence of shares thousandsBasic earnings per share: - 31 December 2007 15,336 195,428 7.85 - 31 December 2006 10,718 156,846 6.83Diluted earnings per share: - 31 December 2007 15,336 203,871 7.52 - 31 December 2006 10,718 167,328 6.41 The following reflects the share data used in the basic and dilutive earningsper share calculations:PRIVATE 2007 thousands 2006 thousandsWeighted average number of ordinary shares for basic earnings per share 195,428 156,846Dilutive potential ordinary shares: - employee share options 7,653 8,731 - unexercised warrants 790 1,751Weighted average number of ordinary shares for dilutive earnings per share 203,871 167,328 Adjusted basic and diluted earnings per share In addition to the above, an adjusted earnings per share value is disclosed toprovide a better understanding of the underlying trading results of the Group.This adjusted value is in line with the KPIs as used to measure the Group'sperformance. Earnings £'000 Weighted Earnings per average number share pence of shares thousandsAdjusted basic earnings per share: - 31 December 2007 22,826 195,428 11.68 - 31 December 2006 17,139 156,846 10.93Adjusted diluted earnings per share: - 31 December 2007 22,826 203,871 11.20 - 31 December 2006 17,139 167,328 10.24 The adjusted earnings per share figures are calculated based on the Xchangingadjusted profit after tax (XPAT), divided by the basic and diluted weightedaverage number of shares as stated above. The XPAT is calculated as follows: 2007 £'000 2006 £'000Net profit attributable to Xchanging equity holders 15,336 10,718Exceptional items (net of tax) 6,246 5,074Employee share options (net of tax) 325 (84)IFRS 3 intangible asset depreciation (net of tax) 316 510Imputed interest on historical debt (net of tax) 204 799Imputed interest on put options (net of tax) 639 122Imputed interest on employee loans through the Share Purchase Plan (net of tax) (240) -Adjusted net profit attributable to Xchanging equity holders 22,826 17,139 5 Acquisition of minority interests During the year, the Group acquired BAE Systems' 50% interests in two of theEnterprise Partnerships giving the Group full ownership of these. (i) Xchanging Procurement Services (Holdco) Limited With effect from 1 January 2007, the Xchanging Group acquired the remaining 50%minority holding in the Xchanging Procurement Services (Holdco) LimitedEnterprise Partnership from BAE Systems plc. This 50% interest was acquired byXUK Holdco (No. 2) Limited, a subsidiary of Xchanging plc. Details of the minority interests' share of the book value of the assets ofXchanging Procurement Services (Holdco) Limited acquired, fair value ofconsideration paid and the resulting goodwill are set out below: £'000Costs of acquisition - consideration 46,651Cost of acquisition - fees 459Minority interests' share of net assets acquired (2,791)Goodwill 44,319 The consideration has been discounted using the effective interest rate at thetime of the acquisition which mirrors that of a similar instrument in themarketplace. (ii) HR Enterprise Limited With effect from 1 January 2007, the Xchanging Group acquired the remaining 50%minority holding in the HR Enterprise Limited Enterprise Partnership from BAESystems plc. This 50% interest was acquired by HR Holdco Limited, a subsidiaryof Xchanging plc. Details of the minority interests' share of the book value of the assets of HREnterprise Limited acquired, fair value of consideration paid and the resultinggoodwill are set out below: £'000Costs of acquisition - consideration 10,085Cost of acquisition - fees 97Minority interests' share of net assets acquired (374)Goodwill 9,808 6 Business combinations On 1 November 2007, the Group entered into an Enterprise Partnership byacquiring 51% of the equity of Fondsdepot Bank GmbH, a German bank located inHof, northern Bavaria. Fondsdepot Bank GmbH specialises in fund administrationand provides the Group with an entry point into this market. Details of net assets acquired and goodwill are as follows: Fair value £'000Purchase consideration: - Cash 9,688 - Contingent consideration based on the Phoenix provision (see below) (1,281) - Put option liability 9,483 - Costs of acquisition 467Total purchase consideration 18,357Fair value of net assets acquired (16,912)Goodwill 1,445 The Phoenix provision relates to future payments which Fondsdepot Bank GmbH hasto make to the EdW, a federal special fund aimed at protecting investors, as aresult of a securities fraud committed by one of the EdW member companies. Thesale and purchase agreement contains a clause stipulating that Fondsdepot BankGmbH's liability regarding the payments to the EdW is capped at £2,080,000. Allother payments will be reimbursed by Allianz Global Investors. These repaymentsare considered to be a deferred adjustment to the purchase price and areincluded in trade and other receivables. The contingent consideration has been discounted using the effective interestrate at the time of acquisition, being a market rate of 5.5% and is based on theGroup's estimate of the extent of the repayment from Allianz Global Investors inrespect of the Phoenix matter. The purchase agreement contains a put option for Allianz Global Investors tosell their shareholding in Fondsdepot Bank GmbH to the Group for a predetermined amount of £9,483,000 at any time after the fourth anniversary of thecontract. The fair value of this put option liability is included in thepurchase consideration. Due to the recent closure of the acquisition, the fair values of significantassets and liabilities are provisional and will be finalised within the next 12months. 7 Movement in shareholders' equity Share Share Merger Reverse Other Retained Minority Total acquisition capital premium reserve reserve reserves earnings interests equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000At 1 January 2006 199 68,163 - - (974) (15,696) 17,226 68,918Total recognised income and - - - - 3,580 10,718 7,369 21,667expense for the yearShare-based payments - - - - - 495 - 495Deferred and current income - - - - - 2,150 - 2,150tax on share optionsPut option recognition - - - - - (7,876) - (7,876)(including tax)Minority interests on - - - - - - 21 21business combinationShares issued - employee share-based 5 1,606 - - - - - 1,611payments - exercise of warrants 4 1,480 - - (1,484) - - - - exchange of convertible 13 11,665 - - (1,255) - - 10,423debtTransactional costs of shares - (325) - - - - - (325)issuedConvertible debt - equity - - - - 206 - - 206elementDeferred tax on convertible - - - - 1,178 - - 1,178debtDividends paid - - - - - - (12,838) (12,838)At 31 December 2006 221 82,589 - - 1,251 (10,209) 11,778 85,630Total recognised income and - - - - 10,030 15,336 8,691 34,057expense for the yearShare-based payments - share options - - - - - 622 - 622 - CEO's share gift - - - - - 1,969 - 1,969Deferred and current income - - - - - 6,447 - 6,447tax on share optionsBuy out of minority interests - - - - - - (3,165) (3,165)Other equity movements - - - - - (534) 1,047 513Shares issued - initial public offering 1,563 73,437 - - - - - 75,000 - employee share-based 472 13,032 - - - - - 13,504payments - exercise of warrants 5 1,546 - - - - - 1,551 - conversion of loan note 9 13,679 - - (249) - - 13,439Transactional costs of shares - (4,664) - - - - - (4,664)issuedDividends payable - - - - - - (3,015) (3,015)IFRS 3 reverse acquisition 8,470 (105,904) 409,672 (312,238) - - - -conversionAt 31 December 2007 10,740 73,715 409,672 (312,238) 11,032 13,661 15,336 221,918 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
XCH.L