Released final results yesterday and the price fell 7% to below 190p, unfairly in my view. Profits and EPS were inline with expectations, but market was dissappointed by lack of major new contract announcements. They are growing at over 20% a year and have a forward PE of 11 for 2009, the CEO says in yesterdays Finals that XCH should benefit from recession, due to banks and financials costsaving by outsourcing systems to XCH.

Tipped in The Times today. Just dipped in at 97.4p
Any thought on this company?

Times share tips

Good luck, privatesharedealer

Xchanging pre-tax profits drop 95%

Xchangings efforts to recover from a disastrous start to 2011 have taken a further setback after interim pre-tax profit plunged at the troubled back-office services group, missing analysts forecasts.

The former FTSE 250 company is struggling to recover from a profits warnings in February, when the outsourcing group said it would refine the way that it accounted for contracts, prompting David Andrews, founder and chief executive, to stand aside.

That move spooked investors in the group, which handles tasks such as procurement and customer services for large companies, and more than halved the groups market capitalisation in a single day.

The sombre news continued on Monday, when Xchanging reported a 95 per cent decline in pre-tax profits from 19.5m to 812,000 in the six months to June 30. Diluted earnings per share fell from 4.5p to 2.6p and there was no dividend.

Xchanging is in the midst of a cost-cutting programme that includes axing about 15 per cent of its senior management, closing the groups London West End head office and relocating to Leadenhall, and cutting overheads in the US.

This is a year of transition for Xchanging as we address areas of weakness in our business and put in place a structure and strategy for renewed growth. To date we have made good progress, the company said.

We have tackled the most serious immediate problems threatening our business, taken action to reduce costs and secured our funding. The business has been stabilised and the cornerstones of our transition plan are now in place.

The group, whose operations include processing insurance claims for Lloyds of London, said it had agreed a four-year 75m revolving credit facility, as well as a 20m loan, priced at 325 basis points above Libor.

Xchanging, which sponsors the annual boat race between the universities of Oxford and Cambridge, has also signed a 3-year deal with L'Orl, the cosmetics and beauty products company, to provide indirect procurement across the UK, France, Germany, Italy and Spain.

Analysts at Panmure Gordon said that Xchanging had made some progress during the first half, but noted that the figures were below their expectations. We continue to believe there are better ways to play the sub-sector and believe execution risk along the long road to recovery remains high. We therefore maintain a sell recommendation.

Analysts at Liberum Capital called the figures disappointing but reiterated their buy recommendation on the stock, with a 110p target price, on Xchangings turnround plan.

Whoops. Classic case of "do your own research before investing on the back of a newspaper tip"!

But Liberum Capital have reiterated their "buy" with a 110p target which would give a 13% on my buy price so we'll see...

Not heading towards 110 at the moment. Slipsliding the other way - with no support between here and the 50p it fell to in February :-O