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Preliminary Results Announcement for the year ended 30 April 2004

24 June 2004

Xansa, the international process and IT services company, is pleased to announce that its results for the full year ended 30 April 2004 are in line with management expectations. The results are on track and growth has been delivered in the UK continuing business. The second half of the year has provided evidence that the benefits of management focus and actions are being felt.

Business Highlights

Stability is returning to the business after a period of challenging market conditions and organisational change
Xansa is on track with the development and implementation of its strategy
Major orders in the period:
Royal Mail, up to £180 million over ten years
Learning and Skills Council, up to £38 million over three years
MyTravel, minimum of £33 million over seven years
Lawson, multi-million dollar over three years
Barclaycard, extension of partnership, additional £10 million over three years
Total orders taken, £350 million, with accelerated deal closure in second half of £212 million from first half of £138 million
Exited unprofitable overseas operations
India workforce increased by over 80% to 1,886 people, with current seat capacity of 2,625

Financial Performance

Turnover declined 7.6% to £419.5 million (2003: £453.9 million), principally due to the exit of overseas operations
UK continuing business (excluding FBS) increased revenue by 5.0% to £363.7 m (2003: £346.5 million)
Operating loss reduced from £156.0 million to £27.1 million
Loss before tax reduced from £157.0 million to £31.2 million
Loss per share reduced from 57.09p to 12.67p
Pre-tax profit* fell 11.9% to £24.4 million (2003: £27.7 million)
Operating margin* stabilised at 6.2% (2003: 6.3%)
Corporate costs* reduced by 29.5% to £6.2 million
Exceptional costs £21.6 million
Diluted earnings per share* up 9.7% to 4.53 pence (2003: 4.13 pence)
Net borrowings of £7.0 million (2003: funds £3.8 million)
Dividend per share has been maintained at 3.24 pence (2003: 3.24 pence)

* These figures are quoted before distribution of shares from the trusts, reorganisation costs, goodwill amortisation and impairment and loss on sale of businesses.

Presentation to City analysts

Commenting on the results, Alistair Cox, Chief Executive said:

"Stability is returning to our business after a period of challenging market conditions and organisational change. Whilst the environment we operate in remains highly competitive, we are witnessing early signs of cautious optimism towards recovery. In particular, future growth rates in IT Outsourcing (ITO) and Business Process Outsourcing (BPO) are expected to be strong. We are building our business and positioning ourselves to take advantage of these trends. I believe the progress we have made in the last twelve months shows that we are on track with the development and implementation of our strategy. The market is now stabilising and progress to date puts Xansa on track to capture a leading position in the provision of these services as the market begins its recovery."

Commenting on the results, Bill Alexander, Chairman said:

"Xansa has gone through a challenging time in the last two years. The Board has been taking firm action to reposition the company to provide a sound platform for further growth. It has acted decisively to address loss-making business, exit markets where we will not be able to achieve scale in the medium term, to make appropriate investment in new client propositions, especially in India, and to structure itself to address the challenges of the market in which we operate."

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