XCH.L Regulatory News (XCH)

16 April 2015

Xchanging plc

First Quarter 2015 Update

Xchanging plc ('Xchanging'), the business technology and services provider, today issues an update covering the first quarter ending 31 March 2015. This follows the lifting of the regulatory requirement to issue Interim Management Statements and Xchanging's decision to continue to issue quarterly updates between the formal full and half year reports.

Business Processing Services

In the first three months of 2015 our largest business, Business Processing Services, has performed in line with our expectations. In Insurance we are focusing on the Lloyd's Market Modernisation programme and have continued to progress our technology investment programme alongside our partners. Our Financial Services business has also seen a steady start to the year with a raised level of activity in the German stock market. We continue to drive down our cost base through our internal change programme.

Technology

In Technology, we continue to see growth in our Application Services business. We are progressing the sales cycle of a number of insurance software opportunities and we are seeing good incremental business growth from our existing customer base.

The integration of Total Objects is well underway and we are seeing encouraging early sales growth. On 13 March the Competition and Markets Authority issued its provisional finding to clear the acquisition of Agencyport Europe with a final decision expected by 24 May. If the provisional finding is confirmed, we can then begin the integration process.

Procurement

In Procurement, MM4 continues to grow with incremental business wins and contract renewals. MM4 now provides the core to our technology enabled procurement platform. We further strengthened the platform in February with the acquisition of the spend analytics business Spikes Cavell.

The implementation process for new procurement business won in the second half of 2014 is well underway. The first half will bear the costs of implementation whilst we expect to see the benefits starting to show in the second half of the year.

The reduction of the cost base of our traditional procurement outsourcing business has lagged the rate of exit from our legacy contracts and this has adversely impacted the financial performance to date. Our recovery plan is underway for the Procurement business, which we now anticipate will see a greater first half year loss than in 2014. Although Procurement will now not achieve full year profitability in 2015, it is on track to achieve run rate profitability by the end of this year.

Overview

We are pleased with the performance of our Business Processing Services and Technology businesses to date. Procurement has had a disappointing start but we are actively addressing the cause of the issues in this business, and are also taking early actions across all our businesses to mitigate the Procurement underperformance.

At the time of the 2014 annual results we said our objectives in 2015 are to demonstrate underlying revenue and profit growth, a return to stronger cash generation and increasing returns on the investments made in 2014. We remain focused on these objectives. Although there will be a heavier second half weighting this year due to the Procurement business performance, our outlook for the year as a whole remains unchanged.

Enquiries

Xchanging plc Tel: +44 (0) 203 604 6999

David Bauernfeind, Chief Financial Officer

Alexandra Hockenhull, Director of Corporate Communications and Investor Relations

Maitland Tel: +44 (0) 207 379 5151

Peter Ogden Martin Barrow Emma Burdett

www.xchanging.com

@XchangingGroup Linkedin/company/xchanging

Cautionary Statement:

This announcement contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could, is confident, or other words of similar meaning. In particular, any statements regarding Xchanging's strategy, dividend policy and other future events or prospects are forward-looking statements. Undue reliance should not be placed on any such statements because they speak only as at the date of this announcement and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors (that could cause actual results, and Xchanging's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

These forward-looking statements are not guarantees of future performance and there are a number of factors (many of which are outside of Xchanging's control) which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among these factors are: increased competition, the loss of or damage to one or more key customer relationships, changes to customer ordering patterns, delays in obtaining customer approval or price level changes, the failure of one or more key suppliers, the outcome of business or industry restructuring, the outcome of any litigation, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in raw material or energy market prices, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the failure to retain key management, or the key timing and success of future acquisition opportunities or major investment projects.

Save for those forward-looking statements required by the Listing Rules, the Disclosure and Transparency Rules and/or the Prospectus Rules, Xchanging undertakes no obligation to update these forward-looking statements, and will not publicly release any revisions it may make to these forward-looking statements that may result from events or circumstances arising after the date of this announcements. Xchanging therefore will comply with its obligations to publish updated information as required by law or by any regulatory authority but assumes no further obligation to publish any additional information.