Acquisition of Spikes Cavell

6 February 2015

Xchanging plc

Acquisition of spend analytics company Spikes Cavell

to enhance Procurement business

Xchanging plc ('Xchanging'), the business process, procurement and technology services provider, announces it has agreed to acquire 100% of the spend analytics company Spikes Cavell Analytic Limited ('SCAL'), for a total potential cash consideration of up to $11.5m on a cash free, debt free basis (the 'Acquisition'). The Acquisition is subject to certain customary closing conditions and is expected to complete by the end of March 2015.

SCAL is a British company which provides spend analytics technology and services mainly to public sector institutions in the UK and higher education authorities in the USA, but also increasingly to the private sector. Based in Newbury (UK) and Virginia (US) and with 35 employees, SCAL brings to Xchanging a portfolio of c. 60 existing lead customers, some of whom represent groups. SCAL had revenues of £1.8m for the year ended 31 March 2014.

Spend analytics is an important diagnostic tool for customer due diligence in determining spend savings and is frequently included within wider procurement engagements. Spend analytics also provides a way for measuring spend in order to manage supply chain risk and assist organisations in assessing their compliance with diversity programmes. SCAL is also pioneering analytics services that benchmark an organisation's competitiveness against its peers.

The Acquisition fits Xchanging's strategy to differentiate its products and services through technology-enablement. Within Xchanging's Procurement business, the SCAL technology will augment its existing MM4 platform, enabling MM4 to achieve 'full-suite status' in the sourcing technology sector.

The SCAL technology, like the MM4 technology platform, can be offered both as a stand-alone Software-as-a-Service (SaaS) product as well as part of a bundled offering within our Procurement-as-a-Service (PaaS) offering. SCAL's low priced entry point option further enhances Xchanging's opportunity to grow its customer base through cross-selling.

Of the total potential cash consideration, $6.75m will be paid on completion of the Acquisition, and up to a further $4.75m will be payable over the next two years, subject to certain operating performance targets.

Ken Lever, Xchanging's Chief Executive, commented: "Increasingly organisations are recognising the major savings that can be made by using technology to enhance their procurement strategies. Our procurement business went through a significant transformation in 2014, building on the impetus of the MM4 acquisition, made in late 2013, which brought a core technology platform. It also opened up the business to accelerated client acquisition by increasing the number of lower price point offerings. SCAL contributes to this strategy and further enhances our technology capabilities."

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 announcement. Xchanging therefore will comply with its obligations to publish updated information as required by law or by any regulatory authority but otherwise assumes no further obligation to publish any additional information.