MM4 amendment to earn-out terms

8 July 2014

Xchanging plc

Amendment to MM4 earn-out arrangements and new senior management appointments for Procurement business

Xchanging plc ("Xchanging"), the business process, procurement and technology services provider, announces the appointment of new senior management for the Procurement business and an associated amendment to the earn-out arrangements in relation to the acquisition of MarketMaker4 ("MM4"), the trading name for SBB Services Inc.

Xchanging acquired MM4, an eSourcing Software-as-a-Service provider, on 20 September 2013 and the three founding shareholder directors, Chirag Shah, Dave Bowen and Alan Buxton, remained with the business post acquisition (the "MM4 Founders").

As previously reported in the Interim Management Statement on 13 May 2014, the acquisition of MM4 is enabling Xchanging to accelerate its Procurement technology strategy implementation and the repositioning of that business. Accordingly, as part of this process and as Xchanging invests this year to deliver planned synergies and build a broader customer base in the US market, Chirag Shah has now been appointed Executive Director of Xchanging's overall Procurement business. Dave Bowen and Alan Buxton have also been appointed to broader roles within Xchanging, as Managing Director, Procurement North America, and CIO for the Procurement business respectively.

To reflect these broader management responsibilities in the Procurement business, the earn-out arrangements for the MM4 Founders, who are deemed to be related parties pursuant to the Listing Rules, have now been amended. Under the amendment, the defined milestone performance criteria for the earn-out have changed from MM4 EBITDA to equivalent revenue figures for the same period 2014 and 2015. As MM4 and Xchanging's broader Procurement business are now to be fully integrated, the earn-out element linked to cross-selling other Procurement offerings has been removed and early payments are now possible dependent upon the profits of the Procurement business. The overall potential total amount of the cash earn-out for the acquisition remains unchanged at US$10.85 million.

The amendment to the MM4 earn-out arrangements falls within LR 11.1.10R of the Listing Rules and Xchanging considers the amendment to be fair and reasonable as far as shareholders of the company are concerned.

Commenting, Xchanging Chief Executive, Ken Lever, said: "These new appointments reflect the successful growth of the MM4 business since acquisition. They also reflect the opportunity to accelerate the integration of MM4 as we reposition our overall Procurement business with a technology platform at its core."

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

Emma Burdett

Martin Barrow

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. 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.