Xchanging tanks on torrent of bad news

first_imgWednesday 9 February 2011 8:41 pm Tags: NULL KCS-content whatsapp Share ALARMED investors wiped out half of outsourcing firm Xchanging’s market value yesterday after the firm warned on its profits, scrapped its dividend and announced that its chief executive had left. Xchanging, which sponsors the Oxford and Cambridge boat race, also said it will take a £100m impairment charge linked to the loss of goodwill from its disastrous takeover of India’s Cambridge Solutions in 2008. Chief financial officer Ken Lever, who is acting chief executive following the sudden departure of founder David Andrews, said 2011 operating profit will be lower than £55.5m, the bottom end of analyst estimates. Contract delays and cancellations will hit the firm’s bottom line, Xchanging said in a statement, and it will reveal more details of a cost-cutting drive to offset the losses in its results statement on 1 March. A spokesperson said the firm did not plan to make any job cuts.“We mustn’t get carried away here,” said Lever during an analyst conference call. “We have a very strong profitable and cash-generating business in the UK … I wouldn’t go away from here thinking there are no silver linings.” Outgoing chief Andrews, who founded Xchanging in 1999, will remain an adviser to chairman Nigel Rich. Andrews lost around £11.3m yesterday as his 19.8m shares in Xchanging crashed to less than half their previous value. The stock closed at 56.5p yesterday – a loss of 52 per cent, and less than a quarter of its 12-month high of 222p. Analysts rushed to cut their estimates for 2011. Mike Murphy from Numis moved from “buy” to “sell”, adding in a note: “The CEO has, rightly in our opinion, fallen on his sword…. [I]t is possible everything, bar the proverbial kitchen sink, has been thrown into the 2011 numbers. “However, it is difficult to see relations being repaired with the market until the group delivers on expectations.”Profit warning for 2011Xchanging’s 2011 profit will be less than the most bearish forecasts of £55.5m, despite lowering forecasts in late 2010.£100m goodwill hitXchanging bought Bangalore-based IT firm Cambridge Solutions for £83m, but has written down £100m from loss of goodwill. Dividend scrappedXchanging paid a dividend of 2.75p per share last April, but investors will get nothing for the 2010 financial year.Chief executive leavesFounder and CEO David Andrews has left his post without warning after 12 years.Investors take a batteringXchanging’s biggest shareholders include hedge fund Breeden (which also lost out during the demise of housing repair firm Connaught), former Cambridge Solutions owner Scandent, and several board members including Andrews himself. by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeCrafthoughtThis Is What’s Going To Happen In 2021 – Nostradamus Predicted It Centuries AgoCrafthoughtNoteableyFaith Hill’s Daughter Is Probably The Most Stunning EverNoteableymoneywise.comThe Most Neglected College Football Stadiums In The U.S.moneywise.comAdventure CrunchCheck Out These Strange Looking MotorhomesAdventure CrunchDidUKnowUnsold 2018 SUVs Now Almost Being Given Away: See PricesDidUKnowMagellan TimesThis Is Why The Roy Rogers Museum Has Been Closed For GoodMagellan TimesReporter center[Photos] Gretchen Carlson And Her Partner Are Still TogetherReporter centerMold Removal | Search AdsBathroom Mold Removal Tips That Might Surprise Most AmericansMold Removal | Search AdsPets DetectiveA Coast Guard Spotted Movement On A Remote Island, Then Looked CloserPets Detective Show Comments ▼ whatsapp Xchanging tanks on torrent of bad news last_img

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