XCH.L Regulatory News (XCH)

7 November 2011

Xchanging plc

Interim Management Statement

and Appointment of new Non-executive Director

Xchanging plc ('Xchanging' and "the Company"), the business process and technology services provider and integrator, today issues its Interim Management Statement covering the period from 1 July 2011 to date.

Current Trading and Outlook

At the time of the Half Year results announcement on 1 August we were able to report important progress with the Four Part Action Plan set out in March.

Work relating to the Four Part Action Plan has continued successfully in the second half of the year. We have reviewed the business and are dealing with underperforming operations; reduced costs and made a series of operational improvements including the clarification of our service offering and the creation of a single 'One Xchanging' sales capability; won significant new clients; and improved the group's cash flow and funding structure.

In August, we announced the completion of our bank refinancing, ensuring we have funding in place to support future plans. We also announced we had won two Procurement contracts, with L'Oréal in Europe and BAE Systems in North America. These contracts reinforce our established position in the global procurement market and provide a base to develop further in these territories. In addition we have also been awarded a number of smaller business process outsourcing contracts through our offshoring capability in India.

In September, our Enterprise Partnership partner Aon exercised its put option and Xchanging now owns 100% of the Xchanging Broking Services business. This development together with the restructuring of the Cambridge business contribute towards our twin objectives of simplifying the Company's overall structure and strengthening its commercial prospects.

During the year we have identified and delivered cost savings across the business, including the closure of our former head office in Hanover Square in June, and the subsequent surrender of the residual lease. At the time of the Half Year results we commented that cost reductions implemented during the first half of the year were expected to benefit the second half of the year. This remains the case and we are on track to meet management's profit expectations for the year. Operating cashflow has continued to be ahead of our expectations and we now expect Xchanging to be in a net cash position at the year end.

The performance of the individual business sectors continues to develop in accordance with the outline reported in our 16 May 2011 Interim Management Statement, with Insurance and Financial Services performing slightly ahead of management's expectations, and Procurement and Other BPO in line. Technology Services has been disappointing this year, however, actions have been taken to reduce the cost base, to improve resource utilisation, to clarify the sales offering and to refocus the selling effort. We are increasingly confident this business can show improvement as we go into 2012.

Board Changes

We are announcing today the appointment of Bill Thomas as a Non-executive Director, with effect from 1 December 2011. This appointment is the subject of a separate announcement being issued today.

This new appointment follows the recent announcement of the appointment of Geoff Unwin as Non-executive Director with effect from 1 December 2011, and as Chairman with effect from 1 January 2012. Nigel Rich will retire from the role of Chairman on 31 December 2011. At the end of August, Non-executive Directors Stephen Brenninkmeijer and Johannes Maret retired from the board, in accordance with the announcement made earlier that month.

Investor Day

Tomorrow, Tuesday 8 November 2011, the Company is holding an Investor Day. This will review current strategic thinking and background to our business sectors. The presentation material will be posted on the company's website following the event.

Enquiries

Xchanging plc Tel: +44 (0) 207 780 6999

Ken Lever, Chief Executive

David Bauernfeind, Chief Financial Officer

Alexandra Hockenhull, Head of Corporate Communications

and Investor Relations

Maitland Tel: +44 (0) 207 379 5151

Neil Bennett

George Hudson

Emma Burdett

Ken Lever and David Bauernfeind will host a conference call for analysts and investors to discuss this Interim Management Statement at 08:00 GMT on Monday, 07 November 2011. The conference call telephone number is +44 (0)1452 565 176 conference ID 25215545. For individuals unable to participate in the conference call, a telephone replay will be available until Sunday, 20 November 2010. Please telephone +44 (0)1452 55 00 00 (conference ID 25215545#).

About Xchanging

Xchanging is a business process and technology service provider and integrator specialising in Financial Services, Insurance Services, Technology and Procurement, with pervasive processing skills and capabilities applicable to other vertical industry and market sectors.

www.xchanging.com 

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. Undue reliance should not be placed on any such statements because they speak only as at the date of this document 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.

There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements 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.