Xansa shrugs off IT slowdown as profits jump 57%

Xansa warned yesterday that it would not be immune to a severe economic downturn, but the information technology services and outsourcing specialist called its prospects "better than ever".

Shares in Xansa, which changed its name last month from FI, raced ahead 5 per cent to 310p, as investors welcomed a strong second-half recovery and a 25 per cent increase in the order book to £523m.

Hilary Cropper, the executive chairman, said: "We are currently finding little evidence of any change in the economic environment affecting our business, with the exception of telecoms and finance clients in the USA. However, the economic outlook is more uncertain than it has been for some time."

She said that Xansa could not be "entirely insulated" from a dramatic economic slowdown but that the company "has a greater resilience than most". Xansa has decided to award all UK staff £3,000 of free shares in August as part of a new employee share option scheme.

"We have all the capabilities we need to help organisations transform themselves to become more competitive, to do what they want and do it more effectively," she said. "It's almost what you would call a recession-proof offering."

Trading at all of Xansa's core operations improved in the year to March, with the momentum continuing since year-end. "The pipeline for orders, including large outsourcing deals, has continued to build," she said. Xansa's largest order last year was a five-year £70m deal with AXA Sun Life.

Pre-tax profits rose 57 per cent to £42.3m, before the amortisation of £41.6m of goodwill, on a 41 per cent uplift in sales to £434.7m. The operating margin widened from 9.3 per cent to 10.4 per cent.

Customer demand began to return to more normal levels in the second half after a slower first half than usual, affected by the freeze in IT spending that followed the millennium changeover.

The best performance came from Enterprise Solutions – which Xansa bought under the name Druid in January 2000 for £800m – which returned to the black in the second half with profits of £3m. It had reported a loss of £2.4m in the previous six months.