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Preliminary Results Announcement for the year ended 30 April 2002

26 June 2002

Xansa is a company that transforms the business capability of its clients through its expertise in Business Consulting, Information Technology, Outsourcing and Business Process Management. The company's operations cover the UK, North America, Continental Europe, India and Asia-Pacific.

Key Features

• Turnover up 18% to £515.1m (2001: £434.7m)
  
• Operating profit up 9% to £49.1m (2001: £45.2m*)
  
• Operating margin decreased to 9.5% (2001: 10.4%*)
  
• Profit before tax up 10% to £46.5m (2001: £42.2m*)
  
• EBITDA up 7% to £57.1m (2001: £53.6m*)
  
• Goodwill impairment of £497m
  
• Exceptional costs of £13.2m for the restructuring exercise
  
• Diluted earnings per share down 2.23p to 7.55p (2001: 9.78p*)
  
• Dividend per share of 3.24p (2001: 3.24p)
  
• Cash flow from operating activities up 136% to £56.0m (2001: £23.7m*)
  
• Net borrowings down 52% to £10.9m (2001: £22.8m*)

  All the above figures are quoted before profit on sale of own shares, distribution of shares from the trusts, reorganisation costs and goodwill amortisation and impairment.

  * Restated for the effects of the UITF Abstract 32 (Urgent Issues Task Force Abstract 32 - Employee Benefit Trusts and other intermediate payment arrangements).
  

• Orderbank down 1% to £518m (2001: £523m)
  
• Major new deals:
  
  • Barclays, for £140m over 5 years
    
  • Boots, for £28m over 2 years
    
  • Diageo, for £21m over 3 years
• Systems Integration (including FBS and Xansa, India) turnover increased by 14%
  
• Enterprise Solutions (excluding Synergy) turnover increased by 60%
  
• Business Change turnover decreased by 22%
  
• Xansa Recruitment turnover increased by 39%

Commenting on the results, Hilary Cropper CBE, Executive Chairman said:

"The year has been challenging as a result of the market downturn, which has proved longer and deeper than any of us expected, and consisted of two contrasting halves. The year for Xansa started out strongly, producing turnover growth in the first half of 32% and with trading results at the operating level increasing by 49% against the comparable period. However, there was a marked slowdown in discretionary spend across most of our client base in the second half resulting in a down-grading of expectations and a restructuring of the cost base on an international basis.

"One cannot control external events, only anticipate and respond to them in the most timely manner, and in this respect Xansa has fared better than most of its peers whilst simultaneously establishing the foundations for future growth. The pipeline for further orders both in the UK and internationally, remains strong and includes a number of large outsourcing prospects for both IT and business process contracts. Nevertheless, we remain cautious about the economic environment and do not expect a significant upturn in IT spending before the start of calendar 2003 at the earliest.

"The company has weathered the difficult market situation relatively well. It has been restructured to align the cost base to reflect the current outlook, has a strong cash flow profile and a low level of debt. The management team is determined, is confident in the business, and we start the year in good shape."

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