Statement re. Press Comment

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO, OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

4 October 2015

For immediate release

Xchanging plc

Statement regarding Press Speculation

Xchanging plc ("Xchanging" or the "Company") notes the recent press speculation and confirms it has received separate approaches from Capita plc ("Capita") and Apollo Global Management, LLC ("Apollo") which may or may not lead to an offer being made for Xchanging.

On 11 August 2015, Xchanging received a non-binding conditional proposal from Capita to acquire the Company at 140 pence per share in cash. The Board of Xchanging (the "Board") reviewed the proposal, concluded that it significantly undervalued Xchanging's existing business and its prospects, and notified Capita that it would need to increase its price significantly. On 25 August 2015, Xchanging received a revised, non-binding conditional proposal from Capita at 145 pence per share in cash, which the Board concluded continued to significantly undervalue Xchanging's existing business and its prospects and unanimously rejected the revised proposal. On 17 September 2015, Xchanging received a further revised, non-binding conditional proposal from Capita at 155 pence per share in cash. The Board of Xchanging subsequently shared with Capita certain information on the Company's business plan. On 24 September 2015, Xchanging received a further revised, non-binding conditional proposal from Capita at 160 pence per share in cash. The Board of Xchanging has now granted due diligence access to Capita.

Separately, the Board of Xchanging has received a non-binding conditional proposal from Apollo to acquire the Company at 170 pence per share in cash. The Board of Xchanging has granted due diligence access to Apollo.

There can be no certainty that any offer will be made, nor as to the terms of any such offer. Further announcements will be made in due course, as appropriate. In the meantime, Xchanging shareholders are advised by the Board to retain their shares and to take no action.

The Board believes Xchanging has a leading insurance software business and an enviable position in the insurance market, a stable capital markets business, and a growing Applications Services business. The Board believes the current market rating is at a significant discount to comparator groups. In Xchanging's half year results announcement for the six months ended 30 June 2015 which was released on 30 July 2015, the Company stated: "Our BPS and Technology businesses have performed strongly in the first half of the year and the outlook is for this robust performance to continue in the second half of the year, although this is dependent on the timing of material Xuber contracts, and currency effects. In Procurement, we have a clear strategic objective to address the profitability issues in the second half of the year.  The outlook for the full year is a trading performance in line with last year and a return to growth in the full year 2016."  

Xchanging's current trading remains in line with those statements. The Company continues to engage in positive discussions on a number of multi-year and material Xuber contracts and will provide a further update when appropriate.  The 'Split and Fix' plans for Procurement are proceeding well.

As required by Rule 2.6(a) of the City Code on Takeovers and Mergers (the "Code"), both Apollo and Capita are required, by not later than 5.00 p.m. on 2 November 2015, either to announce a firm intention to make an offer for Xchanging in accordance with Rule 2.7 of the Code or to announce that they do not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline may be extended with the consent of the Panel on Takeovers and Mergers (the "Panel") in accordance with Rule 2.6(c) of the Code.

This announcement is being made by Xchanging without the prior agreement or approval of Capita or Apollo.

Enquiries:

Geoff Unwin, ChairmanKen Lever, Chief Executive

William Rucker

Cyrus KapadiaOlivier Christnacht

Christopher Baird

James Rudd

Peter Tracey

Neil Patel

Emma Burdett

www.xchanging.com

@XchangingGroup

Linkedin/company/xchanging

Disclaimer

Lazard & Co., Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Xchanging and for no one else in connection with the possible offer and will not be responsible to anyone other than Xchanging for providing the protections afforded to its clients or for providing advice in connection with the possible offer referred to in this announcement.

Investec Bank plc, which is authorised in the United Kingdom by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for Xchanging and no-one else in connection with the possible offer and will not be responsible to anyone other than Xchanging for providing the protections afforded to its clients or for providing advice in connection with the possible offer referred to in this announcement.

Liberum Capital Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Xchanging and for no one else in connection with the possible offer and will not be responsible to anyone other than Xchanging for providing the protections afforded to its clients or for providing advice in connection with the possible offer referred to in this announcement.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Relevant securities in issue

In accordance with Rule 2.10 of the Code, Xchanging confirms that, as at the close of business on 30 September 2015, it has 247,851,399 ordinary shares of 5 pence each in issue and admitted to trading on the main market of the London Stock Exchange. The International Securities Identification Number for Xchanging's ordinary shares is GB00B1VK7X76.

Rule 26.1 disclosure

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available at www.xchanging.com.

The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.