Outsourcing firm Xchanging made a statutory operating profit of £3.2m for the first half of 2011, down 85.3% from the £21.7m profit it made in the same period last year.

The company, which handles claims processing for the Lloyd’s and London insurance markets through a joint venture, has also signed a £95m agreement to refinance its term loan and revolving credit facilities.

Xchanging hit trouble in February this year when it announced that its full-year 2010 results would be hit by a £12m impairment charge and a £100m goodwill write-down. At the same time, its chief executive David Andrews stepped down and was replaced by current chief Ken Lever. The share price halved to 60p on the news.

The outsourcing firm subsequently announced a restructuring programme called the Four Part Action Plan. The first half 2011 result includes £8.2m of exceptional items, of which £8m related to the review of Xchanging’s cost base under the restructuring plan.

Xchanging’s adjusted operating profit, which strips out the £8.2m of exceptional items and £2.4m of amortisation, was £13.8m (H1 2010: £24m).

Xchanging’s share price opened this morning at 98p, down from 98.5p at yesterday’s close, and are currently trading around 97p.

While the group’s overall profit dropped, the insurance services division’s adjusted profit increased 16% to £15.9m (H1 2010: £13.7m).

Xchanging Insurance Services (XIS), a joint venture between Xchanging (50%), Lloyd’s (25%) and the International Underwriting Association (25%), handles claims processing for the Lloyd’s and London market.

The venture’s chairman, Richard Bucknall, wrote to the market in February after Xchanging’s profit warning assuring practitioners that XIS was not under threat and that the other shareholders would buy Xchanging’s stake if the outsourcing firm ceased to be a going concern.

At the end of July Xchanging signed an agreement to refinance its term loan and revolving credit facilities and extend the maturity for a period of four years. The revolving credit facility remains at £75m and the $26m dollar-denominated term loan was redenominated into sterling and increased to £20 million.

At 30 June 2011, the company had £29.3m (FY 2010: £28.8m) of headroom under its committed debt facilities.

“We expect to be able to finance our current business plans from ongoing operations and our committed funding facilities,” the company said in a statement.

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