XCH.L Regulatory News (XCH)

Xchanging plc

Interim Management Statement

Xchanging plc, the global business processing company, today issues its interim management statement covering the period from 1 January 2011 to date.

Current Trading and Outlook 

As reported on 1 March at the time of the preliminary results, 2011 is a year of transition for Xchanging. There is much activity underway based on the Four Part Action Plan we set out in the preliminary results and trading in the seasonally quieter first quarter has been solid. Insurance (excluding the workers' compensation claims business in the USA) and Financial Services have performed slightly ahead of our expectations, Procurement and HR are in line with Technology getting off to a slower start.

Our financial performance is generally weighted to the second half of the year. We expect this pattern to be even more accentuated this year as we see anticipated revenue improvements delivered and the benefits of cost reductions made in the first half begin to take effect.

Our net cash balance is higher than budgeted at this stage in the year.

Four Part Action Plan

Each of the initiatives under the Four Part Action Plan is progressing as referred to in the commentary below.

1. Strategic and Intrinsic Value Review

We are making good progress in addressing our businesses with unsatisfactory returns. We are doing this either through operational improvements or through changes to our portfolio of businesses.

2. Operational improvements

We have achieved a sizeable reduction in the number of senior managers through the integration of businesses in the UK, the reduction in the regional structure overhead in the USA and the redefining of the roles of the corporate centre and the operating business units. This process is on-going.

Our supplier management programme has been launched and we are identifying areas of cost savings which we will implement as the year progresses.

We are also closing the London West End head office and will relocate remaining head office personnel to our Leadenhall Street site by the end of July.

3. Revenue growth

We have ceased participation in the reseller revenue programme in our Technology business. This will reduce revenue by approximately £20 million in the full year but will have a negligible impact on profitability and, moreover, will deliver a cash flow benefit due to the elimination of the working capital requirement.

In the period since the end of the first quarter to date, new business won or renewed includes the renewal of the WorkSafe contract with the State of Victoria, Australia and an extension of the BAE Systems Procurement services contract also in Australia.

4. Cash and Funding

Tight management of working capital and capital expenditure has enabled better than planned cash generation at this stage in the year.

The renewal of the group's syndicated bank facilities has commenced and the banks' review process is underway.

Commenting, Acting Chief Executive and Chief Financial Officer Ken Lever said: "Since announcing our Four Part Action Plan at the time of our preliminary results we have been very active and have made good progress. We will continue to execute the plan and will be able to report further details at the half year."

16 May 2011

Enquiries

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

Ken Lever, Acting Chief Executive Officer

and Chief Financial Officer

Alexandra Hockenhull, Head of Corporate Communications

and Investor Relations

Maitland Tel: +44 (0) 207 379 5151

Neil Bennett

Emma Burdett

Ken Lever will host a conference call for analysts and investors to discuss this interim management statement at 0800 BST on Monday 16 May 2011. The conference call telephone number is +44 (0) 1452 550 733, conference ID 66204324. For individuals unable to participate in the conference call, a telephone replay will be available until Monday 23 May. Please telephone +44 (0) 1452 550 000, conference ID 66204324.

AGM

The company's AGM is being held on Wednesday 18 May, at 10:00 am in the company's offices at 34 Leadenhall Street, London EC3A 1AX.

About Xchanging

Xchanging is a global business processor, with 8,500 people serving customers in 43 countries. We provide business processing services which are applicable across industries, such as procurement, human resources and technology, as well as industry-specific offerings for insurers and financial services companies.

We have a ten-year track record of innovation and reliable delivery, and anticipating and responding to our customers' needs. Our service quality is reflected in the industry awards and world-class certifications we receive.

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.