Interim Management Statement

15 May 2013

Xchanging plc

Interim Management Statement

Xchanging plc ('Xchanging'), the business process, procurement and technology services provider, today issues its Interim Management Statement covering the period from 1 January 2013 to date.

We have continued to pursue our transformation agenda, migrating from our founding business model based on a small number of large partnership contracts to one predicated on a larger number of contracts with a wider base of customers. Our objectives are to reduce customer concentration, develop clear competitive edge through innovation and technology-enablement and to reduce our cost base.

Current Trading

Trading in the first four months of the year has been in line with our expectations as we sustained the momentum of the second half of last year into 2013. Xchanging retains a healthy financial position with a strong balance sheet.

Our Insurance business has had a good start to the year. We are seeing some initial interest in our Netsett service, launched last year, although it is early days, with the service currently in the pilot phase. In Australia, we secured an extension to 2015 for our specialist insurance claims contract with Toyota.

The Financial Services business has performed steadily against a subdued market background. The merger of our Italian business, Kedrios, with AR Enterprise S.r.l., announced last November, took place in January. The combined business is now called Xchanging Italy S.p.A. and full integration is well underway.

In Technology, Xuber, our specialist insurance software business, has secured a number of contracts in the early months of the year, including with Q-Re and Aviva, and we have seen an increasing level of interest in our software range. In April the product was formally launched into the US market and featured strongly at the ACORD LOMA insurance industry conference held in Las Vegas this month. We reported on 29 April that, following a change of control at the London Metal Exchange ("LME") at the end of last year, our current contract with the LME will end with effect from 1 May 2014.

In Procurement, we continued to make slower than expected progress with the implementation of the North American contract won in 2011. Revenues from this contract are now likely to be lower than originally expected over the contract term.

Sale of 51% shareholding in Xchanging Transaction Bank to Deutsche Bank

Today, Xchanging is also announcing the sale of its 51% shareholding in Xchanging Transaction Bank GmbH ("XTB") to its partner Deutsche Bank for a total cash payment of €40.5 million, including estimated cash payable to Xchanging in respect of trading up to the closing of the transaction.

The transaction contributes to the transformation of Xchanging's business model, and releases value, in the form of cash, to invest in areas of long term future growth. It represents completion of the last substantial strategic element of the Four Part Action Plan launched in 2011.

More information about this transaction can be found in today's separate announcement on the subject.

Commenting on today's Interim Management Statement, Ken Lever, Chief Executive, said: "The year's trading has started as we expected, and we continue to see new contract wins as well as extensions to existing contracts. I am also very pleased with the progress of our insurance software business, Xuber, and with the market's response since the launch late last year."

The company's Annual General Meeting will take place at 9:30am today at Xchanging's head office at 34 Leadenhall Street, London EC3A 1AX.

David Bauernfeind and Alexandra Hockenhull will host a conference call for analysts and investors to discuss both of today's announcements at 08:00 BST on Wednesday 15 May 2013. The conference call telephone number is +44 (0)1452 555 566 and conference ID is 70790436.

For individuals unable to participate in the conference call, a replay will be available on the following page of the corporate website, http://www.xchanging.com/investors/reports.

Enquiries

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

David Bauernfeind, Chief Financial Officer

Alexandra Hockenhull, Director of Corporate Communications and Investor Relations

Maitland Tel: +44 (0) 207 379 5151

Brian Hudspith

Emma Burdett

Dan Yea

Xchanging

What we are

Xchanging provides business processing, technology and procurement services internationally for customers across multiple industries.

What we do

Xchanging brings innovation, thought leadership and passion to its customers' businesses so as to enhance performance and value. Our values are embedded into everything we do.

What we want to be

Xchanging wants to be regarded as the best provider in its chosen markets by delivering services that are recognised for outstanding quality, reliability and innovation.

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.