Amendments to MM4 earn-out arrangements

Xchanging plc

Amendments to MM4 earn-out arrangements

Xchanging plc ("Xchanging"), the business technology and services provider, reports it has further revised the earn-out arrangements for the previous shareholders of MM4 (Chirag Shah, David Bowen and Alan Buxton (the "Former MM4 Shareholders")), the e-sourcing and procurement technology business acquired by Xchanging in September 2013*.

In the half year results announcement released on 30 July 2015, it was disclosed that to improve the performance of the Procurement business (in which MM4 sits) Xchanging had initiated a "split and fix" restructuring program that included changes to the management of MM4 as well as the wider Procurement businesses, including Chirag Shah stepping down from his role as Executive Director, a role that became redundant.

As a part of the "split and fix" program the MM4 business has been integrated into the Technology Services business requiring changes to the organisation and operating structure. To ensure these changes were not hindered by the existence of the earn-out arrangement a final cash payment of $1.3m (out of the maximum potentially achievable of $3.42m) has been paid to the Former MM4 Shareholders. In addition, Chirag Shah has left Xchanging through mutual agreement.

As the Former MM4 Shareholders are related parties pursuant to the Listing Rules, the amendments to the MM4 earn-out arrangements fall within LR 11.1.10R of the Listing Rules. Xchanging considers the amendments to be fair and reasonable as far as shareholders of the company are concerned.

* MM4 is the current name for MarketMaker4, the e-Sourcing and procurement technology business acquired by Xchanging in September 2013 and the trading name for SBB Services Inc.

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Notes to editors:

In April 2015, the earn-out was amended so that whilst the consideration remained unchanged at $10.85 million, the targets were linked solely to MM4 revenue having previously been related to revenue and operating targets solely for the Procurement business. The revised payment mechanism was designed to incentivise the MM4 Founders to continue to grow the MM4 business.