Xchanging boosts profits after busy first half

Xchanging, the back office outsourcing firm, had a busy first half building the foundations for renewed growth, with the results pointing to the first signs of this improvement.

Revenue for the period edged higher from £322.0m to £322.7m, while adjusted operating profit jumped 15.9% from £13.8m to £16.0m, primarily driven by the impact of cost savings in the Financial Services sector and at the corporate centre.

Adjusted pre-tax profit was up 17.6% from £11.9m to £14.0m, while adjusted earnings per share rose 52.8% from 1.63p to 2.49p.

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"The half year results show the company on track to deliver the incremental improvement in profitability for the year, as described in March," the firm said.

"During the second half of 2012 we will continue to build our foundations for renewed growth and to pursue achievement of our four objectives for the year."

Organic revenue growth was £8.9m, an increase of 2.8% on a like-for-like basis. The increase in organic revenue was driven by higher UK and European procurement revenues, higher processing volumes in the UK insurance business and growth in the South East Asia technology business. However, these were partially offset by lower revenues in the UK technology business and Financial Services sector.

Net cash at the end of the period increased 64.3% from £37.8m to £62.1m.

The company said it did not yet feel it was the right time to resume dividend payments.

The share price rose 5.15% to 102p by late morning.

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