16th Dec 2009 07:00
Pre-close trading statement
Xchanging, the global business processor, today updates the market ahead of entering its year end close period.
Current trading
The Board expects results for the year ending 31 December 2009 to be in line with market expectations. Current trading conditions remain challenging; however, we continue to see significant pent up demand for outsourcing services as our customers look to reduce costs and investment.
Acceleration of lean processing strategy
Central to our success as a global business processor and our strategy to both grow existing platforms and add new ones, is our ability to be a cost competitive, lean processor with a uniform service offering. The Board has carried out a review into the progress we have made in the implementation of our lean processing strategy and has decided that it is appropriate and timely, given current market conditions, to accelerate elements of this strategy. This will be implemented by both reducing our onshore capacity in the UK and Germany and further increasing offshoring activities to India, leveraging the scale that Cambridge has provided to the Group.
In the UK, we are looking to deliver efficiencies and synergies by combining operations and in Germany we will streamline capacity to ensure it is consistent with trading volumes, business support revenues and market needs. This will be carried out over the next six to eight months. The resulting transition of onshore workload and expertise to our operations in India will be implemented over a similar time frame to ensure processing continuity.
As a consequence, c. 250 roles will be removed and a further 230 positions will be offshored in 2010. These actions will lead to a reduction in annual costs of c. £14 million in 2010 with an anticipated full year run-rate benefit of c. £17million per annum from 2011 onwards. These changes are expected to be fully implemented by the middle of 2010 and will underpin our margin improvement plans for 2010 and 2011. We expect to take an exceptional charge of c. £17 million in 2009 to cover one-off costs.
Outlook
The Board is confident that the actions taken will underpin Xchanging's growth prospects. An element of the savings generated is being reinvested in global sales operations, which will further enhance Xchanging's ability to pursue and implement large contract wins and will prepare the company to take advantage of an uplift in the market. We remain confident that our expected plans for growth in 2010 will be delivered.
16 December 2009
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Enquiries |
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Xchanging plc |
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David Andrews, Chief Executive Officer |
Tel: +44 (0) 20 7780 6999 |
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Richard Houghton, Chief Financial Officer |
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Cardew Group |
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Rupert Pittman |
Tel: +44 (0) 20 7930 0777 |
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David Roach |
David Andrews and Richard Houghton will host a conference call for analysts and investors to discuss this pre-close trading statement at 09:00 BST on Wednesday, 16 December 2009. The conference call telephone number is +44 (0) 20 7162 0025, conference ID 853864. For individuals unable to participate in the conference call, a telephone replay will be available until Wednesday, 23 December 2009. Please telephone +44 (0) 20 7031 4064 (conference ID 853864).
The Group's full year results will be announced on Monday, 1 March 2010.
About Xchanging
Xchanging is a global business processor with blue chip customers. We deliver procurement, HR, technology and mission-critical industry-specific processing services to customers in 42 countries. www.xchanging.com
Cautionary Statement:
This announcement contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could, is confident, or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Xchanging's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.
There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are; increased competition, the loss of or damage to one or more key customer relationships, changes to customer ordering patterns, delays in obtaining customer approval or price level changes, the failure of one or more key suppliers, the outcome of business or industry restructuring, the outcome of any litigation, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in raw material or energy market prices, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the failure to retain key management, or the key timing and success of future acquisition opportunities or major investment projects.
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