Global Offer

C I T I G R O U P • U B S

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This document comprises a prospectus relating to Xchanging plc (the ‘‘Company’’) prepared in accordance with the Prospectus Rulesof the Financial Services Authority (the ‘‘FSA’’) made under section 73A of the Financial Services and Markets Act 2000, as amended(‘‘Prospectus Rules’’ and ‘‘FSMA’’ respectively) and has been prepared in connection with the offer to certain institutional and certainother investors described in Part 3: The Global Offer (the ‘‘Global Offer’’) of ordinary shares of 5 pence each (the ‘‘Shares’’).

Application has been made to the FSA and to the London Stock Exchange plc (the ‘‘London Stock Exchange’’) respectively foradmission of all of the Shares issued and to be issued: (i) to the Official List of the FSA (the ‘‘Official List’’ and ‘‘Admission toListing’’ respectively) and (ii) to the London Stock Exchange’s main market for listed securities (‘‘Admission to Trading’’).Conditional dealings in the Shares are expected to commence on the London Stock Exchange on 25 April 2007. It is expected thatAdmission (as defined in Part 9: Definitions and Glossary) will become effective and that unconditional dealings in the Shares willcommence on the London Stock Exchange at 8.00 a.m. on 30 April 2007. All dealings in the Shares before the commencement ofunconditional dealings will be on a ‘‘when issued’’ basis and will be of no effect if Admission does not take place. Such dealings will beat the sole risk of the parties concerned. No application has been, or is currently intended to be, made for the Shares to be admitted tolisting or dealt with on any other stock exchange.

The Company and its Directors, whose names appear in the section entitled ‘‘Directors, Company Secretary, Registered Office andAdvisers’’ on page 26 of this document, accept responsibility for the information contained in this document. To the best of theknowledge of the Company and the Directors, who have taken all reasonable care to ensure that such is the case, the informationcontained in this document is in accordance with the facts and contains no omission likely to affect its import.

Prospective investors should read the entire document and, in particular, the Risk Factors set out on pages 11 to 20, when consideringan investment in the Company.

(Incorporated and registered in England and Wales under the Companies Act 1985with registered no. 5819018)

Global Offer of 84,186,874 Shares of 5p each andadmission to listing on the Official List and to trading on the

London Stock Exchangeat an Offer Price of 240p per Share

Share capital immediately following AdmissionAuthorised Issued and fully paid

Nominal NominalValue Number Value Number

£17,500,000 350,000,000 Shares of 5p each £10,278,920.40 205,578,408

Joint Global Co-ordinators and Joint Bookrunners

Citigroup UBS Investment BankSponsor

Citigroup

Co-Lead Managers

Bridgewell Limited Jefferies International Limited

The Company is offering 31,250,000 new Shares (the ‘‘New Shares’’) and the Selling Shareholders are offering an aggregate of52,936,874 existing Shares (the ‘‘Existing Shares’’) under the Global Offer. The Company will not receive any of the proceeds of thesale of the Existing Shares, all of which will be paid to the Selling Shareholders.

The Shares to be issued pursuant to the Global Offer will, following Admission, rank pari passu in all respects with the other issuedShares and will carry the right to receive all dividends and distributions declared, made or paid on or in respect of the issued Sharesafter Admission.

Each of Citigroup, UBS, Bridgewell Limited and Jefferies International Limited (together the ‘‘Underwriters’’) are acting forXchanging plc and no one else in connection with the Global Offer and will not regard any other person as its customer in relation tothe Global Offer and will not be responsible to anyone other than Xchanging plc for providing the protections afforded to theirrespective customers, nor for providing advice in relation to the Global Offer or any transaction or arrangement referred to in thisdocument.

The distribution of this document and the offer of the Shares in certain jurisdictions may be restricted by law. No action has been orwill be taken by the Company, the Selling Shareholders or the Underwriters to permit a public offering of the Shares or to permit thepossession or distribution of this document (or any other offering or publicity materials relating to the Shares) in any jurisdiction

(other than the United Kingdom) where action for that purpose may be required. Accordingly, neither this document nor anyadvertisement or any other offering material may be distributed or published in any jurisdiction except under circumstances that willresult in compliance with any applicable laws and regulations. Persons into whose possession this document comes should informthemselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of thesecurities law of any such jurisdictions. The Global Offer and the distribution of this document are subject to the restrictions set outin paragraph 14 of Part 8: Additional Information.

Apart from the responsibilities and liabilities, if any, which may be imposed on the Underwriters by FSMA or the regulatory regimeestablished thereunder, none of the Underwriters accepts any responsibility whatsoever for the contents of this document or for anyother statement made or purported to be made by it, or on its behalf, in connection with the Company, the Shares or the GlobalOffer. The Underwriters accordingly each disclaim all and any liability whether arising in tort, contract or otherwise (save as referredto above) which they might otherwise have in respect of such document or any such statement.

Investors should rely only on the information in this document. No person has been authorised to give any information or make anyrepresentations other than those contained in this document and, if given or made, such information or representations must not berelied on as having been authorised by the Company, the Selling Shareholders or any of the Underwriters. Without prejudice to anyobligation of the Company to publish a supplementary prospectus pursuant to section 87G of FSMA and paragraph 3.4 of theProspectus Rules, neither the delivery of this document nor any subscription or purchase of Shares made pursuant to this documentshall, under any circumstances, create any implication that there has been no change in the affairs of the Group since, or that theinformation contained herein is correct at any time subsequent to, the date of this document.

The contents of this document are not to be construed as legal, financial, business or tax advice. Each prospective investor shouldconsult his, her or its own legal adviser, financial adviser or tax adviser for legal, financial or tax advice.

In connection with the Global Offer, the Underwriters and any of their respective affiliates acting as an investor for its or their ownaccount(s) may subscribe for or purchase Shares and, in that capacity, may retain, purchase, sell, offer to sell or otherwise deal for itsor their own account(s) in such securities, any other securities of the Company or other related investments in connection with theGlobal Offer or otherwise. Accordingly, references in this document to the Shares being issued, offered, subscribed or otherwise dealtwith should be read as including any issue or offer to, or subscription or dealing by, the Underwriters or any of them and any of theiraffiliates acting as an investor for its or their own account(s). The Underwriters do not intend to disclose the extent of any suchinvestment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

Notice in connection with the United States, Australia, Canada and Japan

This document does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy, Shares in any jurisdiction inwhich such offer or solicitation is unlawful and is not for distribution in or into the United States, Australia, Canada or Japan. Inparticular, the Shares offered by this document have not been and will not be registered under the Securities Act, under theapplicable state securities laws of the United States or under the applicable securities laws of Australia, Canada or Japan and, subjectto certain exceptions, may not be offered or sold, directly or indirectly, in or into the United States, Australia, Canada or Japan, or toor for the account or benefit of or any person resident in Australia, Canada or Japan.

The Underwriters may arrange for the offer and sale of Shares in the United States only to persons reasonably believed to be‘‘Qualified Institutional Buyers’’ (as defined in Rule 144A of the Securities Act) in reliance on the exemption from the registrationrequirements of the Securities Act provided by Rule 144A or another exemption from, or transaction not subject to, the registrationrequirements of the Securities Act. Prospective purchasers are hereby notified that the Selling Shareholders may be relying on theexemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. For a description of these and certain furtherrestrictions on the offer, sale and transfer of the Shares and distribution of this document, see paragraph 14 of Part 8: AdditionalInformation.

No US federal or state securities commission or regulatory authority has approved or disapproved of the Shares or passed upon theadequacy or accuracy of this document. Any representation to the contrary is a criminal offence in the United States.

The Shares are subject to the restrictions on resale and transfer contained in the section entitled ‘‘Transfer Restrictions’’ inparagraph 14 of Part 8: Additional Information. By subscribing for or purchasing any Shares, you will be deemed to have made certainacknowledgements, representations and agreements as described in that section of this document. You may be required to bear thefinancial risks of investing in the Shares for an indefinite period of time.

The discussion in paragraph 13 in Part 8: Additional Information under the heading ‘‘Taxation of US Resident Shareholders’’ is notintended or written to be used, and cannot be used by any person, for the purpose of avoiding United States federal tax penalties, andwas written to support the promotion or marketing of the Global Offer. Each prospective investor should seek advice based on itsparticular circumstances from an independent tax adviser.

The Global Offer and the associated tax strategies are not confidential, proprietary or exclusive. Notwithstanding anything to thecontrary herein, there is no limitation on the disclosure by any recipient of this document of the tax treatment or tax structure of theGlobal Offer described therein.

Notice in connection with Member States of the European Economic Area

This document has been prepared on the basis that all offers of Shares will be made pursuant to an exemption under the ProspectusDirective, as implemented in member states of the European Economic Area (‘‘EEA’’), from the requirement to produce aprospectus for offers of Shares. Accordingly any person making or intending to make any offer within the EEA of Shares which arethe subject of the Global Offer contemplated in this document should only do so in circumstances in which no obligation arises forthe Company, the Selling Shareholders or any of the Underwriters to produce a prospectus for such offer. Neither the Company, theSelling Shareholders nor the Underwriters have authorised, nor do they authorise, the making of any offer of Shares through anyfinancial intermediary, other than offers made by Underwriters which constitute the final placement of Shares contemplated in thisdocument.

No Incorporation of Website Information

The contents of the Group’s website or any website directly or indirectly linked to the Group’s website do not form part of thisdocument.

References to Time and Other Important Information

All references to time are references to London time. Other important information can be found on pages 21 and 22.

CONTENTS

Summary Information .................................................................................................................................... 5

Risk Factors ..................................................................................................................................................... 11

Other Important Information ....................................................................................................................... 21

Presentation of Financial and Other Information ..................................................................................... 23

Global Offer Statistics.................................................................................................................................... 25

Expected Timetable For The Global Offer ................................................................................................ 25

Directors, Company Secretary, Registered Office And Advisers ............................................................ 26

Part 1: Information On The Group........................................................................................................... 27

1. Company Overview ............................................................................................................................... 27

2. History Of The Group ......................................................................................................................... 27

3. Key Strengths......................................................................................................................................... 28

4. Growth Strategy .................................................................................................................................... 31

5. Market Environment ............................................................................................................................ 32

6. Business Model...................................................................................................................................... 34

7. Operating Structure .............................................................................................................................. 37

8. Sales Methodology ................................................................................................................................ 43

9. Execution Approach ............................................................................................................................. 43

10. Information Systems ............................................................................................................................. 48

11. Intellectual Property ............................................................................................................................. 48

12. Data Protection ..................................................................................................................................... 49

13. Dividend Policy...................................................................................................................................... 49

Part 2: Directors, Senior Managers, Employees And Corporate Governance.................................... 50

1. Directors................................................................................................................................................. 50

2. Senior Managers.................................................................................................................................... 52

3. Compensation ........................................................................................................................................ 53

4. Employees .............................................................................................................................................. 54

5. Corporate Governance ......................................................................................................................... 54

6. Model Code ........................................................................................................................................... 56

Part 3: The Global Offer ............................................................................................................................ 57

1. The Global Offer .................................................................................................................................. 57

2. Reasons For The Global Offer And Use Of Proceeds ................................................................... 57

3. Allocation And Pricing......................................................................................................................... 57

4. Over-Allotment And Stabilisation ...................................................................................................... 58

5. Dealing Arrangements.......................................................................................................................... 58

6. CREST.................................................................................................................................................... 59

7. Underwriting Arrangements And Lock-Up Arrangements ............................................................ 59

Part 4: Operating And Financial Review.................................................................................................. 62

Part 5: Accountants’ Reports and Financial Information ...................................................................... 85

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Part 6: Unaudited Pro Forma Financial Information ............................................................................. 184

Part 7: Regulation ........................................................................................................................................ 188

1. Regulated Entities In The Group....................................................................................................... 188

2. Regulation Applicable To Customers Of The Group In Relation To The Outsourcing OfTheir Activities ...................................................................................................................................... 194

Part 8: Additional Information................................................................................................................... 195

1. Responsibility ......................................................................................................................................... 195

2. Information ............................................................................................................................................ 195

3. Share Capital ......................................................................................................................................... 195

4. Memorandum And Articles Of Association...................................................................................... 203

5. Other Directorships .............................................................................................................................. 212

6. Directors’ And Other Interests ........................................................................................................... 215

7. Directors’ Service Agreements And Letters Of Appointment ....................................................... 218

8. Employee Share Plans.......................................................................................................................... 220

9. Property .................................................................................................................................................. 227

10. Subsidiaries ............................................................................................................................................ 227

11. Pensions .................................................................................................................................................. 228

12. United Kingdom Taxation.................................................................................................................... 236

13. Taxation Of US Resident Shareholders ............................................................................................. 238

14. Securities Laws ...................................................................................................................................... 240

15. Working Capital .................................................................................................................................... 244

16. Significant Change ................................................................................................................................ 244

17. Litigation ................................................................................................................................................ 244

18. Material Contracts ................................................................................................................................ 244

19. Selling Shareholders ............................................................................................................................. 253

20. Related Party Transactions................................................................................................................... 254

21. Consents ................................................................................................................................................. 254

22. General ................................................................................................................................................... 254

23. Documents For Inspection................................................................................................................... 255

Part 9: Definitions And Glossary............................................................................................................... 256

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SUMMARY INFORMATION

The following summary information should be read as an introduction to this Prospectus. Any decision by aprospective investor to invest in Shares should be based on consideration of the document as a whole and notsolely on this summarised information. Following the implementation of the relevant provisions of theProspectus Directive (Directive 2003/71/EC) in each member state of the European Economic Area, civilliability attaches to those persons who are responsible for the summary, including any persons responsible forany translation of the summary, but only if this summary is misleading, inaccurate or inconsistent when readtogether with the other parts of this document. Where a claim relating to the information contained in thisdocument is brought before a court in a member state of the European Economic Area, the claimant may,under the national legislation of that member state where the claim is brought, be required to bear the costs oftranslating this document before legal proceedings are initiated.

1. INFORMATION ON THE GROUP

The Group is one of the leading international, pure play BPO providers. It has more than 3,800employees operating in seven countries and services blue-chip customers in 34 countries, with a focuson the UK and Continental Europe.

The Group provides industry specific processing and other services to the banking and insuranceindustries and also provides procurement, finance and accounting and human resources services tocustomers across industries.

The Group’s customers include Aon Limited (‘‘Aon’’), BAE Systems, Boots the Chemists, Citibank,Deutsche Bank, the International Underwriting Association (‘‘IUA’’), Lloyd’s, National AustraliaGroup, Sal. Oppenheim, United Biscuits and University Hospital Birmingham.

The Group performs complex, large-scale processing on behalf of its customers, providing them withbetter service at a lower cost than when these functions were performed internally. Operatingcustomers’ non-core functions is the Group’s core business.

Examples of the Group’s services in 2006 included: settling an estimated 15% of securitiestransactions in the German market, settling £11.4 billion of insurance claims in the Lloyd’s insurancemarket, providing human resource and payroll services and support to 1.5 million staff and theirdependants, procuring £390 million of indirect spend and paying over £800 million of invoices.

The Group offers a full suite of BPO services including large-scale partnering, outsourcing, softwareproducts and solutions, Straight Through Processing (‘‘STP’’) and business support.

At the heart of the Group’s business strategy is a unique partnering approach. The Group takes over acustomer’s back office and creates a jointly owned business with its customer called an ‘‘EnterprisePartnership’’ or ‘‘EP’’. Enterprise Partnerships provide the Group with scalable platforms from whichit can also offer its services to other customers.

A key component of the Group’s partnering and procurement outsourcing arrangements is its‘‘gain-share’’ approach. This gain-sharing approach is a step beyond that of a traditional outsourcingarrangement where a customer outsources services in return for payment of an agreed fee. The natureof the gain-sharing relationship provides transparency for all parties, shortens decision-making timeand engenders an environment of trust.

The Group uses a distinctive execution approach to deliver its services in a standardised andrepeatable way.

The Group delivers its services through a balance of on-shore and offshore operations, seeking toprovide the lowest cost solution consistent with its customers’ requirements.

The Group recorded revenues of £393.5 million for the year ended 31 December 2006, an increasefrom £350.0 million in 2005 and £254.1 million in 2004 (a 2004-2006 CAGR of 24%).

2. KEY STRENGTHS

The Group’s key strengths include:

� Strong competitive position—the Group believes its unique partnering approach and full suite ofBPO offerings provide a competitive advantage and enable the Group to manage complexprocesses across a range of industries.

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� High growth markets—according to IDC, the combined value of the BPO markets in the WesternEuropean, Asian Pacific and US Regions (excluding industry-specific BPO revenue) wasapproximately US$49 billion in 2005 and is forecast to continue to grow at a CAGR of 13.8%from 2005 to 2010.(1)

� High revenue visibility—due to the long term nature of the Group’s contracts and therelationships it builds with major customers.

� Established profitability with the opportunity for further margin enhancement—demonstrated byachieving a 67% CAGR of XPAT from 2004-2006, with XPAT margins increasing from 2.4% in2004 to 4.4% in 2006.

� Proven entrepreneurial management—the management team has extensive experience inexecuting complex BPO contracts.

3. STRATEGY

The Group has a clear strategy of:

� Expanding existing business platforms—through offering processing services and products to newand existing customers, based on the Group’s in-depth industry and domain expertise.

� Developing new service platforms via partnerships—entering into additional partnerships acrossnew industries and new geographic areas to develop platforms undertaking new processingfunctions.

� Achieving a low cost production position—providing the Group’s services for the lowest costpossible consistent with its customers’ needs and constraints.

� Making selective acquisitions—to enhance the expertise or the scale of existing operations (eithervertically, geographically, or in terms of technological capability).

� Buying out partners’ shares in EPs—where appropriate, the Group seeks to buy out partners’interests in EPs.

4. SUMMARY FINANCIAL INFORMATION

The table below sets out the Group’s summary financial information for the periods indicated. Thedata has been extracted from Part 5: Accountants’ Reports and Financial Information of thisdocument which has been prepared in accordance with IFRS as adopted by the European Union(‘‘IFRS’’).

Summary Financial InformationYear ended 31 December

2004 2005 2006

£ (in millions)

Revenue................................................................................ 254.1 350.0 393.5Cost of sales ........................................................................ (222.8) (302.6) (348.7)

Gross profit.......................................................................... 31.3 47.4 44.8(2)

Administrative expenses (pre-exceptional items) ........... (12.8) (13.2) (13.7)

Operating profit (pre-exceptional items)......................... 18.5 34.2 31.1(2)

Net exceptional items......................................................... (2.2) — (6.9)

Operating profit .................................................................. 16.3 34.2 24.2Net finance (costs)/income ................................................ (0.3) (0.3) 0.7

Profit before tax .................................................................. 16.1 33.9 24.9Taxation ................................................................................ (5.7) (11.3) (7.5)

Profit for the year ............................................................... 10.4 22.6 17.4

Profit attributable to minority interests ........................... 5.4 10.8 6.7Profit attributable to equity holders of the Group ........ 5.0 11.8 10.7

(1) Source: IDC—Doc #2014178, Doc #BP01N, and Doc #AP224107N.

(2) The results of the business were affected by a number of factors during 2006 including investment costs in India and salesinfrastructure, and transferring the BAE Systems procurement contract from a profit share mechanism to a gain-sharemechanism, all of which suppressed the gross profit and operating profit of the Group.

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5APR200721535620 5APR200721535884

Key Performance Indicators (‘‘KPIs’’)

The Directors use two non-GAAP measures as KPIs (XEBIT and XPAT) to monitor the business andthe results generated for the Group’s shareholders. The Group believes these provide importantmeasures of historical performance due to the Group’s significant minority interests. XEBIT is theGroup’s shareholders’ share of the operating profit (pre-exceptional items), following the add back ofcertain non-cash items(1). XPAT is the Xchanging shareholders’ share of the profit after tax (pre-exceptional items), following the add back of certain non-cash items(2). Revenue, XEBIT and XPATare set out in the following table:

Year ended 31 December 2004–20062004 2005 2006 CAGR

£ (in millions)

Revenue............................................................... 254.1 350.0 393.5 24%

XEBIT ................................................................. 9.0 19.7 22.2 57%

XPAT.................................................................... 6.1 13.6 17.1 67%

XEBIT

2004 2005 2006

25.0

20.0

15.0

10.0

5.0

0.0

£m

2004 2005 2006

20.0

15.0

10.0

5.0

0.0

XPAT

£m

These KPIs are not intended to comply with SEC reporting requirements. Compliance with suchrequirements would require the modification or exclusion of certain financial measures, includingXEBIT and XPAT and their related ratios and the presentation of certain other financial informationnot included herein.

The tables below show the reconciliation of the Group profit to XEBIT and XPAT:Year ended 31 December

2004 2005 2006

£ (in millions)

XEBIT.......................................................................................... 9.0 19.7 22.2Adjusted operating profit attributable to minority interests 10.0 15.2 10.1

Adjusted operating profit ......................................................... 19.0 34.9 32.3Less— Net exceptional items(3) ....................................................... (2.2) — (6.9)— Other add backs(4) ................................................................ (0.5) (0.7) (1.2)

Operating profit ......................................................................... 16.3 34.2 24.2

(1) Add backs to operating profit comprise amortisation of intangible assets previously unrecognised by an acquired entity and sharebased payment charges.

(2) Add backs to profit for the year comprise amortisation of intangible assets previously unrecognised by an entity acquired by theGroup, share based payment charges, imputed interest on the historic financing structure of the Group which will fall away onAdmission, imputed interest on put options and the related tax thereon.

(3) Net exceptional items comprise exceptional costs of £6.9 million and an exceptional gain of £4.7 million for 2004 and exceptionalcosts of £6.9 million for 2006.

(4) Add backs to operating profit comprise amortisation of intangible assets previously unrecognised by an acquired entity and sharebased payment charges.

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Year ended 31 December

2004 2005 2006

£ (in millions)

XPAT ............................................................................................ 6.1 13.6 17.1Adjusted profit after taxation attributable to minority

interests ................................................................................... 6.0 10.8 7.3

Adjusted profit after taxation .................................................. 12.1 24.4 24.4Less— Net exceptional items........................................................... (2.2) — (6.9)— Other add backs(1) ................................................................ (1.7) (2.1) (2.5)Tax effect of above..................................................................... 2.2 0.3 2.4

Profit for the year ...................................................................... 10.4 22.6 17.4

5. CURRENT TRADING AND PROSPECTS

In early 2007, the Group completed the buy-out of BAE Systems’ interests in the Xchanging HumanResources Services (‘‘XHRS’’) and Xchanging Procurement Services (‘‘XPS’’) partnerships for£57 million (a net cash price of £54 million). This will allow the Group to achieve full strategic controlover the operations of these partnerships and, in the Group’s opinion, will lead to enhancedcontribution from those businesses.

With respect to current trading and the prospects for the remainder of 2007, trading remains in linewith management expectations. The Group anticipates further growth through additional revenuefrom existing operations, new EPs and acquisitions.

6. DIVIDEND POLICY

The Company intends to adopt a dividend policy which reflects the growth prospects and cash flowgeneration of the Group, whilst maintaining an appropriate level of dividend cover.

7. MAJOR SHAREHOLDER

On Admission, General Atlantic will control approximately 34.3% of the rights to vote at generalmeetings of the Group (or approximately 28.2% if the Over-allotment Option is exercised in full). Therelationship deed between General Atlantic and the Company, includes an undertaking from GeneralAtlantic to exercise voting rights in relation to the Group to ensure that the Group is capable ofcarrying on its business independently of General Atlantic. If General Atlantic holds 30% or more ofthe Group’s Shares following Admission, any further increase in its interest in Shares will be subject tothe provisions of Rule 9 of the Takeover Code.

8. LOCK-UP ARRANGEMENTS

Each of the Company, the Selling Shareholders (other than BAE Systems which has agreed to sell allof its Existing Shares as part of the Global Offer), the Directors and certain of the Senior Managershas agreed to certain lock-up arrangements.

9. SUMMARY OF THE GLOBAL OFFER

Under the Global Offer, the Company will issue 31,250,000 New Shares and the Selling Shareholderswill sell 52,936,874 Existing Shares. In addition, General Atlantic has granted UBS, as stabilisingmanager, the Over-allotment Option, which is exercisable in whole or in part during the periodcommencing on the date of publication of the Offer Price and ending 30 days thereafter, to purchase,or procure purchasers for, up to an additional 12,628,031 Existing Shares, inter alia, to coverover-allotments made (if any) in connection with the Global Offer and/or to cover short positionsrelating to stabilisation transactions.

The Global Offer is being made by way of an offering of Shares in the United States only to QIBs intransactions meeting the requirements of Rule 144A or other transactions exempt from the

(1) Add backs to profit for the year comprise amortisation of intangible assets previously unrecognised by an entity acquired by theGroup, share based payment charges, imputed interest on the historic financing structure of the Group which will fall away onAdmission, imputed interest on put options and the related tax thereon.

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registration requirements of the Securities Act and to persons in the United Kingdom and the rest ofthe world in offshore transactions meeting the requirements of Regulation S.

It is expected that Admission will take place and unconditional dealings in the Shares will commenceon the London Stock Exchange at 8.00 a.m. on 30 April 2007. Prior to Admission, it is expected thatdealings in the Shares will commence on a conditional basis on the London Stock Exchange at8.00 a.m. on 25 April 2007.

10. REASONS FOR THE GLOBAL OFFER AND USE OF PROCEEDS

The Global Offer, Admission and issue of New Shares will allow the Group to fund its future growththrough establishing new Enterprise Partnerships, developing its existing businesses and selectivelyacquiring businesses. The Group believes it will also further raise the profile of the Group and assist inincentivising employees. In addition, the Selling Shareholders will realise part of, and in the case ofBAE Systems all of, their investment in the Group.

Pursuant to the Global Offer, which is fully underwritten subject to the terms of the UnderwritingAgreement, by the Underwriters, the Group is expected to receive approximately £75 million from thesubscription of New Shares, net of underwriting commissions and other fees and expenses ofapproximately £65 million(1). The Group will not receive any proceeds from the sale of Existing Sharesby the Selling Shareholders.

11. RISK FACTORS

The Group’s business is subject to certain risks including but not limited to the following:

� The Group could fail to accurately forecast its ability to deliver outsourcing services efficiently.

� Contracts may not be implemented within appropriate timescales or could be implementedpoorly and fail to deliver savings to the customers.

� Volumes anticipated under contracts may not be achieved or the nature of required services maychange.

� Growth is dependent on attracting new customers. The scale of major contracts requires longlead time and significant input of resources.

� Customers may have rights to ‘‘put’’ their shares in the EPs under certain circumstances.

� Some agreements give customers the right under certain circumstances to ‘‘call’’ the Group’sshares in EPs for no or nominal consideration.

� Contracts may be terminated before their full term or may not be renewed.

� The Group is exposed to operational risks after the establishment of its EPs.

� Customers may seek to dispose of their shares in EPs.

� It may take several months before the Group begins to recognise revenue from majorprocurement contracts.

� A number of the Group’s major contracts contain provisions for benchmarking services againstthe market for comparable services.

� The Group is dependent on a few major customers and, in particular, on customers in thebanking and insurance industries.

� The Group faces competition from a variety of sources.

� The Senior management team and other key team members are critical to its continued success.

� Attracting skilled personnel is competitive and the Group may fail to attract enough suchpersonnel to support its operations.

� With operations in several countries, the Group is exposed to a variety of employment issues.

� The Group has two large defined benefit pension schemes that are currently underfunded on anIAS 19 basis.

(1) This assumes that the full discretionary fee is paid to the Underwriters.

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� The Group could be exposed to a certain amount of volatility associated with pension deficits andemployer contributions.

� The Group is exposed to risks associated with pensions schemes run by other organisations.

� The Group could be subject to risks posed by the Pensions Act 2004.

� The BPO industry is relatively new and its growth may not be sustained.

� The Group may be unable to effectively manage its rapid growth.

� Disruptions to customers’ businesses or inadequate service, may cause claims for damages thatinsurance coverage may be inadequate to cover.

� The Group is liable to its customers for damages caused by unauthorised disclosure of sensitiveand confidential information.

� Business may be adversely affected by disruptions to IT systems.

� The Group may fail to develop systems, technology and products that satisfy customer’s needs.

� Third-party suppliers are key to business operations; quality issues or supply disruptions maynegatively affect the Group.

� The Group may be exposed to changes in law and regulations, which could increase regulatorycosts and prevent services from being provided.

� The Group may be adversely affected by negative reactions to offshore outsourcing.

� Finding suitable acquisition opportunities may be difficult.

� The international nature of the Group’s business exposes it to risks.

� The Group may be unable to protect its proprietary rights.

� A significant change in certain exchange rates may have an adverse effect on the Group.

� By virtue of its significant shareholding, General Atlantic may be able to influence shareholderdecisions.

� Substantial future sales of Shares could impact the market price of the Shares.

� There has been no public trading market for the Shares and an active trading market may notdevelop.

� The Shares may be subject to market price volatility and the market price for the Shares maydecline disproportionately in response to adverse developments unrelated to the Group’soperating performance.

� The Company may not be able to pay dividends.

� Exchange rate fluctuations may expose an investor whose principal currency is not poundssterling to foreign currency rate risk.

� US and other non-UK holders of shares may not be able to exercise pre-emption rights.

� There is doubt as to the enforceability in England and Wales of claims based on federal securitieslaws of the United States.

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RISK FACTORS

Before investing in Shares, prospective investors should carefully consider the following risk factors in additionto the other information contained in this document. If any of the risks described below were to occur, it couldhave a material adverse effect on the Group’s business, results of operations or financial condition. If this wereto lead to a decline in the trading price of the Shares, prospective investors may lose all or part of theirinvestment. The risks and uncertainties described below are not the only ones faced by the Group. Additionalrisks and uncertainties not presently known or currently deemed by the Directors to be immaterial may also havea material adverse effect on the Group’s business, results of operations or financial condition. These risks arenot set out in any particular order of priority.

This document also contains forward-looking statements that involve risks and uncertainties. See ‘‘Forward-Looking Statements’’ on page 21 of this document. The Group’s actual results could differ materially fromthose anticipated in these forward-looking statements as a result of certain factors, including the risks faced bythe Group set out below and elsewhere in this document. Prospective investors should read this document as awhole and not rely solely on the information set out in this section. The financial information set out in thissection has been extracted without material adjustment from Part 5: Accountants’ Reports and FinancialInformation and from Part 6: Unaudited Pro Forma Financial Information. Prospective investors should readthis section in conjunction with Part 5: Accountants’ Reports and Financial Information and Part 6: UnauditedPro Forma Financial Information and the other detailed information contained elsewhere in this document.

Risks relating to the Group’s business

Failure by the Group to accurately forecast its ability to deliver outsourcing services efficiently could result inlosses under major contracts.

The Group’s major contracts with its customers provide for the establishment by the parties of a cost‘‘baseline’’—an estimate of the pre-outsourcing cost incurred by the customer to provide the relevantgoods or services. These baselines are the result of intensive studies undertaken by the Group, generallyover a number of months and are agreed with the customer. The baseline costs form the ‘day one servicecharge’ to be paid by the customer for the outsourced services. Based on this, there is a projected costsavings profile which is shared with the customer. The Group commits to the customer to deliver at leastpart of this cost savings profile, by means of guaranteed service charge discounts. If the Groupunderestimates the baseline costs or if it overestimates achievable savings, it may incur losses. Discountsthat increase over time will require either further increases in efficiency or the addition of third partyrevenues in order to maintain profitability, neither of which may be attainable. Any of the foregoing couldhave a material adverse affect on the Group’s results of operations, financial condition and cash flows.

The Group may not be able to implement its contracts within appropriate time frames or could implementthem poorly and fail to deliver savings to the customer.

The gain-sharing model, used in certain of the Group’s major contracts, requires the Group to generatesavings from the baseline estimate of the pre-outsourcing cost incurred by the customer. If the Groupencounters difficulties or delays in implementing the methodologies through which the Group plans togenerate the required savings, these savings may be delayed or may never materialise. Such delays orfailures may have a material adverse effect on the Group’s business, results of operations, financialcondition, cash flows and on its reputation as an outsourcing provider.

The Group may not achieve volumes anticipated under its contracts or the nature of required services maychange over the course of the contract.

The service fees paid to the Group under certain of its major contracts may be affected by the volume oftransactions or services that are provided or undertaken pursuant to the contract. Under these contractsthe customer typically pays a fixed fee and grants the Group exclusivity in providing particular goods orservices but generally does not commit to a minimum transaction or expenditure level. Therefore, actualvolumes achieved under the contracts may be materially less than anticipated volumes when the contractwas agreed and there may be no right of recovery under the contract for any additional expense incurred.Further, the customers’ needs may change during the course of the contracts (EP service contractsgenerally last 10 to 12 years) and it may be that alterations are required to meet those needs. If customersdo not require the volume of services or transactions anticipated under the contracts, it will limit theGroup’s ability to achieve its own targets and could result in lower than anticipated profitability of thecontracts.

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The Group’s growth is largely dependent on its ability to attract new customers, whilst the scale of the Group’smajor contracts requires long relationship building and development lead times and significant input of Groupresources.

The Group’s growth is dependent upon its ability to attract additional EP or major Outsourcing customers.If the Group does not succeed in continuing to attract and retain such customers, it could have a materialadverse affect on its results of operations, financial condition and cash flows. Moreover, there can be noguarantee that the Group will continue to achieve its historic rates of growth.

The development of the large and complex arrangements that the Group targets requires time andexpenditure by the Group and its personnel. Potential customers may be reluctant to turn over importantback-office operations to a third party and may first require the Group to build a relationship of trust withthem. Group personnel work closely with potential customers over several months (or longer) to createand refine potential arrangements and to alleviate possible concerns about reliability of the services to beprovided. Following preliminary approval of an arrangement by the potential customer, further substantialplanning and development are necessary and typically require the devotion of expert resources by theGroup. After preliminary approval of an arrangement by a customer, there is a risk that arrangements maybe aborted or delayed by customers due to factors over which the Group has little or no control (such asthe performance of the customers’ underlying businesses or changes in customers’ budgetary priorities) oras a result of the parties failing to agree detailed commercial terms. The failure to convince potentialcustomers of the viability of arrangements, or the failure to successfully conclude such arrangements oncetentatively approved can result in unrecovered costs and impede the growth of the Group.

Some of the Enterprise Partnership agreements give the partner rights, under certain circumstances, to ‘‘put’’their shares to the Group creating a cash requirement for the Group.

Under some of the Group’s contracts for its Enterprise Partnerships, the partners have the right, in definedcircumstances or at certain times, to put their shares in the EP to the Group based on a valuation inaccordance with specified rules, and in some cases these valuations are subject to minimum values. Thevaluations are not capped and could place significant cash demands upon the Group.

Some of the Enterprise Partnership agreements give the partner the right, under certain circumstances, to‘‘call’’ the Group’s shares for no or nominal consideration.

Under some of the Group’s contracts, in circumstances such as insolvency, material default, performancefailure, serious regulatory interventions or change of control of the Group, the partner may (in some casesup to a specified point in the contract, often the fifth anniversary), call for the transfer of the Group’sshares in the Enterprise Partnership for a nominal value. This would lead to the loss by the Group of itsentire shareholding interest in and the associated revenue from that Enterprise Partnership. In thesecircumstances, the assets and employees of the EP remain within the EP (now wholly-owned by the EPpartner) and the Group’s contractual commitments to provide people, software and intellectual property(apart from certain licences) fall away and any assets and employees provided under these arrangementsremain with the Group. Any such transfer would have a material adverse effect on the Group’s results ofoperations, financial condition and cash flows.

The Group’s contracts may be terminated before their full term or may not be renewed.

The service contracts provided by the Group’s Enterprise Partnerships to its partners have terms in therange of 10 to 12 years. The Group’s major Outsourcing contracts generally have terms in the range offive to seven years. These service contracts and Outsourcing contracts may include rights for the customerto terminate for cause, change of control and convenience at or after specified times. Where terminationfor convenience is permitted, the customer must pay a termination fee.

In addition to the separately identified call and put options in respect of the Group’s shares in itsEnterprise Partnerships, termination of service contracts would reduce the revenue of the EnterprisePartnerships and may result in irrecoverable costs and assets, contracts and staff surplus to operationalrequirements.

In view of the Group’s short operational history, none of the Group’s major long-term contracts hasreached maturity. In XIS and XCS, the principal services agreements are divided into individual customerservices contracts for the Lloyd’s market and the Companies market and all such contracts have anindefinite term and are capable of termination on 12 months’ notice and not less than three months’ noticerespectively.

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The Group is exposed to operational risks after the establishment of its EPs.

The establishment of an Enterprise Partnership results in the assumption of the normal operational risksof a corporate organisation, including responsibility for employees transferred from the customers’ internaloperations to the Enterprise Partnership, compliance with regulatory requirements, dealings withsuppliers, leasing obligations for the entity’s premises, overhead and certain pensions liabilities. In theinsurance and securities processing EPs, the Group also has responsibility for executing complex, highvalue and repetitive transactions and processes and, in certain circumstances, for losses arising fromsettling errors. These operational risks, including systemic processing failures could have a materialadverse effect on the entity, and the Group’s business, results of operations, financial condition and cashflows.

Partners may seek to dispose of their shares in EPs creating a cash requirement for the Group.

Enterprise Partnership contracts give the customers the right to transfer their shares after an initial period.There are normally pre-emption rights in favour of the Group if the customer intends to sell its shares to athird party. The purchase of shares in these circumstances, if the pre-emption rights are exercised, couldplace cash demands upon the Group.

Following customer approval of a major procurement contract, it may take several months before the Groupbegins to recognise revenue from that contract.

When the Group has entered into a major procurement contract it may take a number of months tocomplete adapting and implementing the appropriate platforms, systems, IT support, baselining andmethodologies. Unanticipated regulatory, technological, legal, design-related or other issues can delay thecommencement of operations. The Group does not recognise revenue from these contracts until theimplementation phase has been completed and operations have begun and this could have an adverseeffect on the Group’s prospective results of operations, financial condition and cash flows.

Many of the Group’s major contracts contain provisions for benchmarking the Group’s services against themarket for comparable services.

The Group’s major contracts often contain provisions for benchmarking services against the market forcomparable services. The implementation of such benchmarks could lead to reduced charges for servicesor to increased costs of providing the services, which could have a material adverse effect on the Group’sbusiness, results of operations, financial condition and cash flows.

The Group is dependent on a few major customers and, in particular, on customers in the banking andinsurance industries.

For the year ended 31 December 2006, 66% of the Group’s revenue was attributable to its ten largestcustomers and 54% was attributable to its three largest customers: BAE Systems, Deutsche Bank and Aon.After contracts are entered into, the deterioration of relations with, or the termination of any majorcontracts by, the Group’s significant customers could have a material adverse effect on the Group’soperating performance. Financial difficulties experienced by any of its significant customers could have asignificant impact on the Group. In addition, should any of the Group’s significant customers divest largeportions of their operations, experience consolidation or a change of control, the functions outsourced bysuch customer may face significant alteration. This may lead to reductions or changes of the scope of, ortermination of, major contracts.

A substantial portion of the Group’s customers is concentrated in the banking and insurance industries. Inthe year ended 31 December 2006, 58% of the Group’s revenue was attributable to customers in thoseindustries. The Group’s revenue is thus largely dependent on revenue from customers in these industriesand a reduction in demand from these industries could have an adverse impact on the Group’s results ofoperations.

The Group faces competition from a variety of sources.

The BPO industry is new and the Group faces competition from other outsourcing companies, processingoriented service providers, service companies that focus on providing business services from relativelylow-cost geographic areas (principally India) and large IT and consulting companies with BPO divisions.Some of these companies have financial resources greater than those of the Group, may have access todifferent technologies or experience from the Group, or may have scales of operations (either in particular

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countries or overall) that provide advantages to them. The Group can provide no assurance that it will beable to compete successfully in the future against present competitors or new entrants from new sources orthat competitive pressures will not have a material adverse effect on its business, financial condition orresults of operations.

The Group’s senior management team and other key team members in its various operations are critical to itscontinued success.

The Group’s future success depends on the continued service and performance of the members of itsmanagement team and other key team members across its various operations. These personnel possesstechnical and business capabilities, including domain expertise, that are difficult to replace quickly. Thereis competition for experienced management and the Group may not be able to retain its key personnel orrecruit qualified replacements. The loss of key members of the Group’s management or other key teammembers could have a material adverse effect on the Group’s business, results of operations, financialcondition and cash flows.

Attracting skilled personnel is competitive and the Group may fail to attract enough such personnel to supportits operations and to continue its business.

The Group’s business relies on skilled employees, and its success depends to a significant extent on itsability to attract, train and retain employees with technical and industry expertise in the business processoutsourcing industry.

The Group’s failure to attract, train and retain personnel with the qualifications necessary to fulfil theneeds of its existing and future customers or to successfully assimilate and train new employees insufficient numbers could have a material adverse effect on its business, results of operations, financialcondition and cash flows.

The Group maintains operations in several countries, therefore it is exposed to a variety of employment issuesand may be adversely affected by changes in employment law in any of the regions or countries in which itoperates.

The Group operates in France, Germany, India, Malaysia, the UK, the US and Australia, and is subject toa range of employment regulations. As a result of employment regulations in these countries (and inparticular in France, Germany, India and the UK), the Group could have difficulty eliminating redundantemployees or may be subject to pension obligations, which could materially affect the Group’s results ofoperations.

The Group has two large defined benefit pension schemes in the UK that are currently underfunded on anIAS 19 basis and an unfunded defined benefit arrangement in Germany supported by a contractual trustagreement.

The deficits in the Rebus Scheme and LPC Scheme are described in more detail in paragraph 11 of Part 8:Additional Information. The total liabilities for the two pension schemes as at 31 December 2006 on anIAS 19 basis were £91.6 million with assets of £72.2 million and a corresponding deficit of £19.4 million.Assets are held in a contractual trust arrangement (‘‘CTA’’) in respect of the German arrangements,assessed as at 31 December 2006 at £47.7 million against pension liabilities assessed at £50.2 million. Thereis also a provision of £8.0 million on the Xtb balance sheet for long service and early retirementarrangements. The German arrangements are described in more detail in paragraph 11.4 of Part 8:Additional Information. If the Group were required to fund the entirety of the deficit over a shorter periodthan is currently envisaged for any of the schemes, it could place unanticipated cash demands on theGroup and could have a material adverse effect on the Group’s financial condition and cash flows.

The Group could be exposed to a certain amount of volatility associated with pension deficits and employercontributions and could be faced with a significant cash flow impact in relation to its pension schemes.

The nature of a defined benefit pension scheme and the investment strategy adopted means that the RebusScheme and LPC Scheme can create volatile cash, balance sheet and profit and loss impacts. In particularthe funding level of the schemes for both cash and accounting purposes is sensitive to changes in a widerange of factors, including investment returns, discount rates for valuing liabilities, life expectancy,inflation and salary growth. As a result, it is not possible to predict future funding levels, deficit repaymentperiods or employer cash contribution obligations and accounting charges. It is possible that these externalmarket factors could materially affect the Group’s cash flow and/or balance sheet and distributable

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reserves. A new scheme-specific funding regime for defined benefit schemes has been introduced and willfirst impact the Rebus Scheme and the LPC Scheme at their next valuations (due at 1 April 2007 and 1 July2007 respectively). There is a risk that the assumptions adopted to address the scheme-specific fundingregime are likely to be more conservative than those used in the previous valuations resulting in anincrease in the deficits. Further, the trustees may seek a shorter period for repayment of any deficitsdisclosed.

If the Rebus Scheme or the LPC Scheme were to be wound-up, the trustees would have the power undersection 75 of the Pensions Act 1995 to claim a debt equal to the deficit in the schemes on a buyout basisagainst the employers of the scheme and certain former employers. As at 1 May 2006, the actuary of theRebus Scheme estimated that if a section 75 wind-up debt were to be triggered it would be approximately£75 million. As at 1 July 2004, the actuary of the LPC Scheme estimated that if a section 75 wind-up debtwere to be triggered it would be approximately £20 million. If the Group were required to fund the entiretyof the section 75 wind-up debt for either of the schemes, it would place unanticipated cash demands on theGroup and would have a material adverse effect on the Group’s financial condition and cash flows.

The Group is exposed to risks associated with pension schemes run by other organisations.

Some of the Group’s employees participate in defined benefit pension schemes run by BAE Systems andLloyd’s. Although contractual protection is in place for the benefit of the relevant employers and the widerGroup with a view to reducing the risk of the Group becoming liable to contribute towards deficits in thoseschemes, the structure of UK pensions legislation is such that this possibility cannot be excludedaltogether. The result is that if either BAE Systems or Lloyd’s were unable to support its own pensionscheme, the Group could be called upon to contribute to those schemes’ deficits and the contributioncould be material. In the extreme, if no other participating employer were able to contribute, the Groupcould become liable to fund the entirety of one or all of the defined benefit pension schemes in an amountwhich would materially exceed the Group’s available financial resources. Notice has been served requiringthe relevant employers to exit the Lloyd’s pension scheme effective on and from 1 July 2007. This exit willreduce this risk further but will itself trigger a ‘‘debt’’ of around £10 million to be paid by certain Groupcompanies to the Lloyd’s pension scheme. The Group has indemnity protection in its contractualarrangements with Lloyd’s to cover this debt.

The Group could be subject to risks posed by the Pensions Act 2004.

Under the ‘‘moral hazard provisions’’ of the Pensions Act 2004 the Pensions Regulator has the power toimpose ‘‘contribution notices’’ and ‘‘financial support directions.’’ These notices and directions can extendliability to support defined benefit pension schemes to entities and people who are not the employers inthe scheme.

Under the moral hazard provisions the Group could be called upon to provide support to the BAESystems’ schemes or the Lloyd’s pension scheme and could be called upon to support predecessor schemes(i.e. schemes that companies have been in previously but have now left).

The BPO industry is a relatively new industry and its growth may not be sustained.

The Group commenced operations in 1999 and the scope of its operations has increased rapidly over thepast few years. The BPO industry as a whole has also grown quickly during that time. Due to the industry’srelatively short history, it is difficult to determine whether demand for BPO services will continue to growin line with recent trends if at all. A slowdown in BPO industry growth would likely have an adverse effecton the Group’s ability to sustain its own growth rate.

The Group may be unable to effectively manage its rapid growth.

The Group’s rapid growth could place significant demands on its management and its internal controls.Growth requires the Group to continue to invest in personnel skilled in implementation. If the Group failsto attract, train and retain such resources, it may not be able to implement new contracts or integrateacquisitions. As a result of any of these constraints, the Group’s business, results of operations, financialcondition and cash flows could be materially and adversely affected.

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If the Group causes disruptions to its customers’ businesses or provides inadequate service, customers mayhave claims for damages against the Group. The Group’s insurance coverage may be inadequate to coverthese or other claims.

All of the Group’s major contracts contain service performance requirements, including requirementsrelating to the quality of the services. Failure to meet service requirements of a customer consistently orerrors made by Group personnel in the course of delivering services to customers could disrupt thecustomer’s business and result in a reduction in revenue or a claim for damages suffered by the customeragainst the Group. As a result of the volume and nature of the information processed within certainEnterprise Partnerships (in particular in relation to securities and insurance processing), a minor errorcould have significant unforeseen financial implications. In addition, a failure or inability to meet acontractual requirement could damage the Group’s reputation and affect its ability to attract new business.

Under the Group’s contracts, liability is generally capped at a portion of the service charges paid orpayable to the Group under the relevant contract. However, contractual provisions set forth in the Group’scontracts may not, depending on the circumstances, protect the Group from all liability for damages. Inaddition, certain liabilities (such as for breach of confidentiality obligations, third party intellectualproperty rights and improper use of data), for which the Group may be required to indemnify itscustomers, are generally unlimited under those agreements. Although the Group has professionalindemnity and crime insurance coverage, including coverage for errors or omissions and breaches ofconfidentiality and network security, that coverage may not be sufficient, may be disclaimed or may notcontinue to be available on reasonable terms or to be available in sufficient amounts to cover one or morelarge claims against the Group. Such circumstances could have a material adverse effect on its business,results of operations, financial condition and cash flows of the Group.

The Group is liable to its customers for damages caused by unauthorised disclosure of sensitive andconfidential information, whether through a breach of its computer systems, through its employees orotherwise.

The Group is required to manage, utilise and store sensitive or confidential customer data in connectionwith several of its major contracts. Under the terms of customer contracts, the Group is required to keepsuch information strictly confidential and liability is often not limited. If any person penetrates the Group’snetwork security or otherwise mismanages or misappropriates sensitive or confidential customer data, theGroup could be subject to significant liability and lawsuits from its customers or from their customers forbreaching contractual confidentiality provisions or privacy laws and could suffer damages to its reputation.The Group maintains insurance coverage for mismanagement or misappropriation of such information.There are risks that coverage may not be sufficient, may be disclaimed or may not continue to be availableon reasonable terms or in sufficient amounts to cover one or more large claims against the Group. Suchcircumstances could have a material adverse effect on its business, results of operations, financial conditionand cash flows of the Group.

The Group’s business may be adversely affected by disruptions to its IT systems.

Many of the Group’s operations depend on its IT systems and the IT systems of third parties. Disruption ofthese systems could result from, amongst other things, technical and electricity breakdowns, computermalfunctions and viruses. Any failure of the Group’s equipment or systems, or any major disruption tobasic infrastructure such as power and telecommunications in the locations in which the Group operates,could impede its ability to provide services to customers, have a negative impact on its reputation and harmits business.

The Group may fail to develop systems, technology and products that satisfy customers’ needs.

The future success of the Group depends on its ability to enhance systems and products that continue tomeet the requirements of its customers and produce planned savings in respect of their back-officefunctions which they have transferred to the Group. The Group’s competitors or customers may developand introduce superior solutions or may do so more quickly than the Group. Failure to successfullyenhance systems, technology and products or to keep pace with innovations in IT (for example, in theLondon Insurance Market to move from paper based processing to electronic processing) could have anadverse effect on the Group’s ability to attract and retain customers and so, on the Group’s business andprofitability.

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A number of third-party suppliers are key to the Group’s business operations; quality issues or supplydisruptions may negatively affect the Group.

The Group relies on the services of independent suppliers to meet its business operations needs. If one ofthe Group’s key suppliers decides to terminate its contract with the Group, the Group may experiencedifficulties in replacing the supplier on comparable terms. If this happens, the Group’s business andoperations may be subject to interruptions. In addition, if the services, or products, provided by theGroup’s suppliers experience problems or disruptions, it could affect the Group’s reputation both with itsexisting and future customers. If the Group were unable to retain its third-party suppliers or needs toincrease the amount paid for its services or products, the Group’s business, prospects, results of operationsor financial condition may be materially adversely affected.

The Group may be exposed to changes in law and regulation which could increase regulatory costs andprevent services from being provided.

The ability of certain subsidiaries in the Group to continue to conduct banking activities in Germany andinsurance intermediation activities in the UK requires the holding and maintenance of certain licences,permissions or authorisations and compliance with laws, rules and regulations promulgated from time totime in these jurisdictions. The failure of these subsidiaries to comply with these laws, rules and regulationscould lead to disciplinary action, the imposition of fines or the revocation of the licence, permission orauthorisation to conduct business in Germany or the UK, which could have a material adverse effect onthe continued conduct of business in these jurisdictions. Over the past few years, the banking industry inGermany and the insurance intermediation industry in the UK have been subject to increased scrutiny byregulatory bodies. Further reviews and changes to the laws and regulation applicable to banking activitiesin Germany and insurance intermediation activities in the UK may occur in the future.

The Group cannot predict the timing, form or full effect that any proposed or future law, regulation orinitiative may have on the financial condition or results of operations of the Group. Changes to applicablelaw (including taxation) or regulation (or in their interpretation or enforcement) may occur at any timeand may adversely affect the Group’s business. Such changes may also prevent the Group from providing aservice or result in increased costs to the Group (if the Group is unable to pass the costs of such changeson to its customers), for example, due to it being required to set up additional compliance controls or dueto the direct cost of such compliance.

The Group’s customers’ business operations are also subject to applicable law and regulation. The Group’scustomers may contractually require that the Group performs its services in a manner that would enablethem to comply with such law and regulation. A change in applicable law or regulation may result in acustomer requesting a change to the services provided which could potentially affect the cost basis and/orprofits of the Group. The failure of the Group to perform its services in compliance with applicable rulesand regulations could result in breaches of contract with the Group’s customers and, in some limitedcircumstances, the imposition of fines and criminal penalties on the Group.

The Group may be adversely affected by negative reactions to offshore outsourcing.

Portions of the Group’s operations take the form of offshore outsourcing (that is, the transfer of tasks togeographic locations where such tasks can be performed more inexpensively, primarily in India). Currentor prospective customers may be discouraged from transferring services from onshore to offshoreproviders to avoid negative perceptions (such as those associated with the loss of jobs from the domesticmarket) that may be associated with using offshore providers. Any slowdown or reversal of current industrytrends toward offshore outsourcing could adversely affect the Group’s ability to utilise its Indian facilitiesto generate certain of the savings required by the Group to deliver profitable growth.

The Group may not be able to find and successfully integrate suitable acquisition opportunities.

A part of the Group’s growth strategy is to identify and complete selective acquisitions to add expertiseand scale to the Group’s operations. The success of this strategy will depend on the Group’s ability to find,evaluate and consummate suitable acquisitions on acceptable terms. Making further acquisitions will alsodepend on the Group’s ability to finance such acquisitions and its ability to obtain any necessarygovernmental approvals.

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The international nature of the Group’s business exposes it to other risks.

The Group has operations in France, Malaysia, the United States, India, the UK, Germany and Australiaand services customers across Europe, and in North America and Asia. As a result, the Group is exposedto risks typically associated with conducting business internationally, many of which are beyond its controland could have a material adverse affect on the Group’s business, results of operations, financial conditionand cash flows. These risks include:

� legal uncertainty owing to the overlap of different legal regimes, and problems in asserting contractualor other rights across international borders;

� potentially adverse tax consequences, such as scrutiny of transfer pricing arrangements by authoritiesin the countries in which the Group operates;

� potential tariffs and other trade barriers;

� foreign regulatory authorities and/or the audit committees of customers may inspect outsourcedbusiness areas, and thus may require access to the Group’s premises and/or systems;

� longer payment cycles in some countries;

� the burden and expense of complying with the laws and regulations of various jurisdictions;

� terrorist attacks and other acts of violence or war;

� an outbreak of an infectious disease or any other serious public health concern; and

� natural disasters.

The Group may be unable to protect its proprietary rights.

The Group relies on intellectual property laws (including those related to patents, trade marks andintellectual property licenced to, or by, the Group) to protect its rights to certain aspects of its systems,products and processes including product designs, proprietary technologies, research and concepts.However, the actions the Group takes to protect its proprietary rights may be inadequate to preventimitation or unauthorised use of its systems and products. The laws of various countries offer differentlevels of protection for the Group’s proprietary rights and there can be no assurance that the registrationof the Group’s intellectual property will provide it with a competitive advantage. In addition, the Groupmay be subject to litigation by third parties claiming the Group has infringed their intellectual propertyrights. Any of these possibilities could have a material adverse effect on the Group’s business, results ofoperations and financial condition.

A significant change in the pound sterling/euro or the pound sterling/Indian rupee exchange rates may havean adverse effect on the Group’s results of operations.

The Group’s financial statements are denominated in pounds sterling. However, based on the Group’sresults for 2006, 24.8% of the Group’s revenues are earned in euros (primarily representing the results ofits German operations). Accordingly, the Group’s financial results can be affected by fluctuations incurrency exchange rates between the euro and the pound sterling. A depreciation of the euro against thepound sterling will adversely affect the amount of revenues and expenses the Group records in poundsterling in its financial statements. A depreciation of the euro against the pound sterling may thereforehave an adverse effect on the Group’s results of operations. A portion of the Group’s operating expensesare incurred in Indian rupees, so a significant strengthening of the rupee against the pound sterling couldlimit the Group’s ability to achieve cost savings from using Indian operations. Such a strengthening couldhave an adverse affect on the Group’s results of operations.

Risks relating to the Global Offer

By virtue of its significant shareholding, General Atlantic may be able to influence shareholder decisions.

Upon completion of the Offer, General Atlantic will beneficially own, in the aggregate, approximately34.3% of the issued Shares, and 28.2% of the issued Shares if the Over-allotment Option is exercised infull. Whilst the Company has entered into a Relationship Deed with General Atlantic to ensure that theGroup is capable of carrying on its business independently of General Atlantic, by virtue of the level of itsshareholding General Atlantic may be able to influence certain matters requiring approval of theCompany’s shareholders, such as the election of directors and certain business decisions. Thisconcentration of control could be disadvantageous to other shareholders with interests different from

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those of General Atlantic. In addition, this concentration of share capital ownership may adversely affectthe prevailing market price for the Group’s shares because investors could perceive disadvantages inowning shares in companies with a concentration of ownership by a single shareholder.

Substantial future sales of Shares could impact the market price of the Shares

Upon completion of the Global Offer, the Directors, the Selling Shareholders and the Senior Managerswill in aggregate hold 113,065,250 Shares (or 100,437,219 Shares if the Over-allotment Option is exercisedin full). These Shares will be subject to lock-up arrangements, described in further detail in paragraph 7 ofPart 3: The Global Offer. Sales of substantial amounts of Shares following the expiry of the lock-up periodscould adversely affect the prevailing market price of the Shares. These sales may also make it difficult forthe Group to issue equity securities in the future at a time and at a price that it deems appropriate.

There has been no public trading market for the Shares and an active trading market may not develop.

Prior to the Global Offer there has been no public trading market for the Shares. The Group does notknow the extent to which investor interest in the Group will lead to the development of a trading marketfollowing Admission or how liquid that market might be, or, if a trading market does develop, whether itwill be sustained. If an active and liquid trading market does not develop or is sustained, investors mayhave difficulty selling their Shares.

The Shares may be subject to market price volatility and the market price for the Shares may declinedisproportionately in response to adverse developments that are unrelated to the Group’s operatingperformance.

The Offer Price may not be indicative of the market price for the Shares following Admission. FollowingAdmission, the trading price of the Shares may be subject to wide fluctuations in response to many factors,including those referred to in this section, as well as period-to-period variations in operating results orchanges in revenue or profit estimates by the Group, industry participants or financial analysts. The tradingprice of the Shares could also be adversely affected by developments unrelated to the Group’s operatingperformance such as operating and share price performance of other companies that investors mayconsider comparable to the Group; speculation about the Group in the press or the investmentcommunity; strategic actions by competitors, such as acquisitions and restructurings; changes in marketconditions and regulatory changes.

The Company may not be able to pay dividends.

As a matter of English law, the Company can pay dividends only to the extent that it has availabledistributable reserves. The Company will only become the parent of the Group on Admission and has nottraded in the period from its incorporation to Admission. Accordingly, it has no distributable reserves andits ability to pay dividends to shareholders in the future is therefore a function of the existing distributablereserves within the Group (to the extent they are available for distribution), its future profitability and theoutcome of a restructuring of the Group to be undertaken following Admission. Under this restructuring,the Company will transfer Xchanging B.V. to a subsidiary in exchange for shares and the subsidiary willthen seek the approval of the High Court in London to reduce its share capital and thereby createdistributable reserves from which dividends may be paid to the Company which in turn will utilise thedistributable reserves so created to pay dividends to Shareholders. Whilst the Company expects the HighCourt to approve the reduction, this cannot be assured. The Company’s distributable reserves could beadversely affected by reductions in profitability as well as by impairment of assets.

Exchange rate fluctuations may expose an investor whose principal currency is not pounds sterling to foreigncurrency rate risk.

The Shares are, and any dividends to be paid in respect of them will be, denominated in pounds sterling.An investment in Shares by an investor whose principal currency is not pounds sterling exposes the investorto foreign currency rate risk. Any depreciation of sterling in relation to such foreign currency will reducethe value of the investment in the Shares or any dividends in foreign currency terms, and any appreciationof sterling would increase the value in foreign currency terms.

US and other non-UK holders of Shares may not be able to exercise pre-emption rights.

In the case of certain increases in the Group’s issued share capital, existing holders of Shares are generallyentitled to pre-emption rights to subscribe for such Shares, unless Shareholders waive such rights by a

19

resolution at a shareholders’ meeting, or in certain other circumstances as stated in the Articles. USholders of Shares are customarily excluded from exercising any such pre-emption rights they may have,unless a registration statement under the Securities Act is effective with respect to those rights, or anexemption from the registration requirements thereunder is available. The Group has no current plan tofile any such registration statement, and the Group cannot assure prospective investors that any exemptionfrom the registration requirements would be available to enable US or other overseas holders to exercisesuch pre-emption rights or, if available, that the Group will utilise any such exemption.

There is doubt as to the enforceability in England and Wales of claims based on federal securities laws of theUnited States.

The Company is a public limited company incorporated under the laws of England and Wales. Themajority of the Directors and officers of the Company and certain of the Selling Shareholders resideoutside the United States. In addition, a substantial proportion of the assets of the Directors and officers,certain of the Selling Shareholders and the Group are or may be located outside the United States. It maynot be possible, therefore, for investors to effect service of process within the United States upon theCompany or its Directors or officers or such Selling Shareholders, or to enforce in US courts judgmentsagainst them obtained in those courts based upon the civil liability provisions of the federal securities lawsof the United States. Furthermore, there is substantial doubt as to the enforceability in England and Wales,whether by original actions or by seeking to enforce a judgment of a US court, of claims based on thefederal securities laws of the United States.

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OTHER IMPORTANT INFORMATION

Over-allotment and Stabilisation

In connection with the Global Offer, UBS, as stabilising manager on behalf of the Underwriters (the‘‘Stabilising Manager’’), may, for stabilisation purposes, over-allot Shares up to a maximum of 15% of thetotal number of Shares comprised in the Global Offer. For the purposes of allowing it to cover shortpositions resulting from any such over-allotments and/or from the sales of Shares effected by it during thestabilisation period, the Stabilising Manager has entered into the Over-allotment Option with GeneralAtlantic which is exercisable in whole or in part, upon notice by the Stabilising Manager, for the periodcommencing on the date of publication of the Offer Price and ending 30 days thereafter. Pursuant to theOver-allotment Option, the Stabilising Manager may require General Atlantic to transfer up to12,628,031 additional Shares at the Offer Price, inter alia, to cover over-allotments or further allotments, ifany, in connection with the Global Offer and/or to cover short positions resulting from stabilisationtransactions.

In connection with the Global Offer, the Stabilising Manager or any of its agents may (but will be under noobligation to) to the extent permitted by applicable law over-allot or effect transactions intended to enable itto satisfy any over-allotment or which stabilise, maintain or otherwise affect the market price of the Sharesat a level higher than that which might otherwise prevail. Such transactions may be effected on the LondonStock Exchange, on over-the-counter markets or otherwise and may be undertaken at any time during theperiod commencing on the date of publication of the Offer Price and ending no later than 30 days thereafter.However, there may be no obligation on the Stabilising Manager or any of its agents to effect stabilisingtransactions and no assurance is given that stabilising transactions will be undertaken. Such transactions,if commenced, may be discontinued at any time without prior notice. In no event will measures be taken tostabilise the market price of the Shares above the Offer Price.

Save as required by any legal or regulatory obligation, neither the Stabilising Manager nor any of its agentsintends to disclose the extent of any over-allotment and/or stabilisation transactions under theGlobal Offer.

NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCEHAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES (‘‘RSA421-B’’) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY ISEFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRECONSTITUTES A FINDING BY THE SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE,THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING.NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLEFOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE OF THE STATEOF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, ORRECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT ISUNLAWFUL TO MAKE OR CAUSE TO BE MADE TO ANY PROSPECTIVE PURCHASER, CUSTOMEROR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THISPARAGRAPH.

Available Information for investors in the United States

The Company has agreed that, so long as any of the Shares are ‘‘restricted securities’’ within the meaningof Rule 144A(a)(3) under the Securities Act, the Company will, during any period in which the Company isneither subject to section 13 or 15(d) of the US Securities Exchange Act of 1934, as amended, nor exemptfrom reporting pursuant to Rule 12g3-2(b) thereunder, furnish, upon request, to any holder or beneficialowner of Shares offered hereby, or any prospective purchaser of such restricted stock designated by suchholder or beneficial owner, the information required to be delivered pursuant to Rule 144A(d)(4) underthe Securities Act.

Forward-looking Statements

This document includes ‘‘forward-looking statements’’ which include all statements other than statementsof historical facts included in this document, including, without limitation, those regarding the Group’s or,as appropriate, the Directors’ current views with respect to financial performance, business strategy, plansand objectives of management for future operations (including development plans relating to the Group’sproducts and services). These statements relate to both the Group and the sectors and industries in which

21

the Group operates. Statements which include the words ‘‘expects’’, ‘‘intends’’, plans’’, ‘‘believes’’,‘‘projects’’, ‘‘anticipates’’, ‘‘will’’, ‘‘targets’’, ‘‘aims’’, ‘‘may’’, ‘‘would’’, ‘‘could’’, ‘‘continue’’ and similarstatements of a future or forward-looking nature identify forward-looking statements for purposes of theUS federal securities laws or otherwise. These statements are contained in sections entitled SummaryInformation, Risk Factors, Part 1: Information on the Group and Part 4: Operating and Financial Reviewand other parts and sections of this document.

All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there areor will be important factors that could cause the Group’s actual results to differ materially from thoseindicated in these statements. These factors include, but are not limited to, those described in the part ofthis document entitled ‘‘Risk Factors’’, which should be read in conjunction with the other cautionarystatements that are included in this document. Any forward-looking statements in this document reflectthe Group’s current views with respect to future events and are subject to these and other risks,uncertainties and assumptions relating to the Group’s operations, results of operations, growth strategyand liquidity.

These forward-looking statements speak only as of the date of this document. Subject to any obligationsunder the Prospectus Rules, the Disclosure Rules and the Listing Rules and save as required by law, theCompany undertakes no obligation to publicly update or review any forward-looking statement, whether asa result of new information, future developments or otherwise. All subsequent written and oral forward-looking statements attributable to the Group or individuals acting on behalf of the Group are expresslyqualified in their entirety by this paragraph. Prospective investors should specifically consider the factorsidentified in this document which could cause actual results to differ before making an investmentdecision.

The Acquisition

This document has been prepared on the basis that the Acquisition has occurred, although this will onlyoccur upon Admission becoming effective.

Enforceability of Civil Liabilities

The Company is a public limited company incorporated under the laws of England and Wales. Themajority of the Directors and officers of the Company and certain of the Selling Shareholders resideoutside of the United States. In addition, a substantial portion of the assets of the Directors and officers,certain of the Selling Shareholders and the Group are or may be located outside the United States. It maynot be possible, therefore, for investors to effect service of process within the United States upon theCompany or its Directors or officers or such Selling Shareholders, or to enforce in US courts judgmentsagainst them obtained in those courts based upon the civil liability provisions of the federal securities lawsof the United States. Furthermore, there is substantial doubt as to the enforceability in England and Wales,whether by original actions or by seeking to enforce a judgment of a US court, of claims based on thefederal securities laws of the United States.

References to Defined Terms

Certain terms used in this document, including certain capitalised terms and certain technical and otherterms, are defined, and certain selected industry and technical terms used in this document are defined andexplained, in Part 9: Definitions and Glossary.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Financial Data

Unless otherwise indicated, the financial information in this document has been prepared in accordancewith IFRS as adopted by the European Union (‘‘IFRS’’). IFRS differs in certain significant respects fromUS GAAP. The Company has not quantified the impact of those differences on its adopted accountingpolicies. In making an investment decision, prospective investors must rely on their own examination of theGroup, the terms of the Global Offer and the financial information in this document. Prospective investorsshould consult their own professional advisers for an understanding of the differences between IFRS andUS GAAP.

Certain figures contained in this document, including financial information, have been subject to roundingadjustments. Accordingly, in certain instances, the sum of the numbers in a column or a row in tablescontained in this document may not conform exactly to the total figure given for that column or row.

IFRS differs in certain respects from generally accepted accounting principles in the United States(‘‘US GAAP’’). The Group has not prepared and does not currently intend to prepare its financial statementsin, or reconcile them to, US GAAP. In making an investment decision, prospective investors must rely ontheir own examination of the Group, the terms of the Global Offer and the financial information in thisdocument. Prospective investors should consult their own professional advisers for an understanding of thedifferences between US GAAP and IFRS.

Market, Economic and Industry Data

Market, economic and industry data used throughout this document is sourced from various industry andother independent sources. Unless otherwise indicated, market data, statistics and information in thisdocument in respect of the Business Processing Outsourcing market have been sourced from reports anddata tables published by IDC. Where market, economic and industry data is from industry and otherindependent sources, the publications in which they are contained generally state that the information theycontain has been obtained from sources believed to be reliable, but that the accuracy and completeness ofsuch information is not guaranteed.

Currency Presentation

Unless otherwise indicated, all references in this document to ‘‘pounds sterling’’, ‘‘£’’, ‘‘pence’’ or ‘‘p’’ areto the lawful currency of the UK, all references to ‘‘$’’, ‘‘US$’’ or ‘‘US dollars’’ are to the lawful currency ofthe US and all references to ‘‘A’’ or ‘‘Euros’’ are to the currency introduced at the start of the third stage ofEuropean economic and monetary union pursuant to the Treaty establishing the European Community, asamended.

Key Performance Indicators (‘‘KPIs’’)

The Group has included in this document presentations of adjusted operating profit, XEBIT and XPATwhich it believes are appropriate to reflect its ongoing operations. None of adjusted operating profit,XEBIT or XPAT should be considered as an alternative to operating profit, profit for the year or any otherperformance measures derived in accordance with IFRS. Adjusted operating profit, XEBIT and XPATmay not be indicative of the Group’s historical operating results, nor are they meant to be predictive offuture results. The adjusted operating profit, XEBIT and XPAT figures for the years ended 31 December2004, 2005 and 2006 have been derived on the basis of methodologies other than in accordance with IFRS.Where information has been derived, it has been calculated by adding together and/or subtracting figureswhich are extracted without material adjustment either from the financial statements that appear inSection A of Part 5: Accountants’ Reports and Financial Information or in the notes thereto.

The Group utilises these supplemental measures that it believes are useful and important in analysingperformance. Adjusted operating profit, XEBIT and XPAT may not be comparable to similarly titledmeasures disclosed by other companies. Investors should not consider these non-GAAP measures inisolation or as a substitute for operating profit/loss or profit after tax as determined by IFRS. Investorsshould not use these non-GAAP measures as a substitute for the analysis provided in the Group’s incomestatements or cash flow statements. Accordingly, undue reliance should not be placed on the adjustedoperating profit, XEBIT and XPAT data contained in this document.

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Initial Contract Values and Indirect Spend

The Group estimates initial contract values based on the revenue the Group expects to generate (assumingno services are provided in addition to those originally contemplated by the contract) over the maximumlife of the contract. The Group estimates the indirect spend values of its procurement contracts based onthe customer’s non-core expenditure (or ‘‘indirect spend’’) which the Group expects to manage for thecustomer either annually or over the maximum life of the contract as described (assuming no additionalservices are provided under the contract). Both of these values are as estimated at the beginning of thecontract, have not been updated and should not be taken as an indication of historic or future contractperformance. Additionally, where relevant, the Group has used an assumed exchange rate of A1.45 to £1 toestimate contract values.

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GLOBAL OFFER STATISTICS

The Global Offer statistics in this document are subject to change at the determination of the Company.

Offer Price per Share .................................................................................................................... 240p

Number of Shares being offered.................................................................................................. 84,186,874

New Shares.................................................................................................................................. 31,250,000

Existing Shares............................................................................................................................ 52,936,874

Number of Shares subject to the Over-allotment Option(1)..................................................... 12,628,031

Percentage of enlarged issued share capital being offered ...................................................... 41%

Number of Shares in issue following the Global Offer ............................................................ 205,578,408

Market capitalisation...................................................................................................................... £493 million

Proceeds receivable by the Company after expenses(2)............................................................. £65 million

Proceeds receivable by the Selling Shareholders after expenses(3).......................................... £122 million

EXPECTED TIMETABLE FOR THE GLOBAL OFFER

Each of the times and dates is subject to change without further notice. References to a time of day are toLondon time (unless stated otherwise).

Announcement of Offer Price and notification of allocations ..................... 25 April 2007

Prospectus containing, inter alia, the Offer Price published......................... 25 April 2007

Conditional dealings in Shares commence(4) .................................................. 8.00 a.m. on 25 April 2007

Admission and expected commencement of unconditional dealings inShares ............................................................................................................... 8.00 a.m. on 30 April 2007

Shares credited to CREST accounts(5)............................................................. 8.00 a.m. on 30 April 2007

Where applicable, definitive share certificates available for despatchfrom or as soon as practicable after ............................................................ 14 May 2007

(1) The number of Shares subject to the Over-allotment Option is, in aggregate, equal to 15% of the total number of Shares to beissued or sold in the Global Offer.

(2) The proceeds receivable by the Company are stated after deduction of estimated underwriting commissions and other fees andexpenses of the Global Offer payable by the Company and are expected to be approximately £10 million (assuming that the fulldiscretionary fee is paid to the Underwriters). The Company will not receive any of the net proceeds from the sale of the ExistingShares in the Global Offer.

(3) The proceeds receivable by the Selling Shareholders are stated after deduction of estimated underwriting commissions andstamp duty, assuming that there is no exercise of the Over-allotment Option and that the full discretionary fee is paid to theUnderwriters.

(4) It should be noted that, if Admission does not occur, all conditional dealings will be of no effect and any such dealings will be atthe sole risk of the parties concerned.

(5) Or as soon as practicable thereafter. No temporary documents of title will be issued.

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DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS

Board of Directors John Robins (Non-Executive Chairman)David Andrews (Chief Executive Officer)Richard Houghton (Chief Financial Officer)Adele Browne (Executive Director, Sales and Commercial)David Hodgson (Non-Executive Director)Tom Tinsley (Non-Executive Director)Stephen Brenninkmeijer (Non-Executive Director)Dennis Millard (Non-Executive Director)John Bramley (Non-Executive Director)Nigel Rich (Non-Executive Deputy Chairman)Johannes Maret (Non-Executive Director)Friedrich Carl Janssen (Non-Executive Director)

all of

13 Hanover SquareLondon, W1S 1HN

Company Secretary Gary Whitaker

Registered Office and 34 Leadenhall Streettelephone number London, EC3A 1AX

+44 (0) 20 7780 6999

Sponsor Citigroup Global Markets LimitedCitigroup CentreCanada SquareLondon, E14 5LB

Joint Global Citigroup Global Markets U.K. Equity LimitedCo-ordinators and Citigroup CentreJoint Bookrunners Canada Square

London, E14 5LB

UBS Limited1 Finsbury AvenueLondon, EC2M 2PP

Co-Lead Managers Bridgewell LimitedOld Change House128 Queen Victoria StreetLondon, EC4V 4BJ

Jefferies International LimitedFloor 4, Bracken House1 Friday StreetLondon, EC4M 9JA

Legal Advisers to the Clifford Chance LLPCompany as to English and 10 Upper Bank StreetUS law London, E14 5JJ

Legal Advisers to the Clifford Chance LLP, AmsterdamCompany as to Dutch law Droogbak 1A

1013 GE Amsterdam

Legal Advisers to the LinklatersJoint Global Co-ordinators, One Silk StreetJoint Bookrunners and the London, EC2Y 8HQUnderwriters as to Englishand US law

Auditors to the Group and PricewaterhouseCoopers LLPReporting Accountants 1 Embankment Place

London, WC2N 6RH

Registrars Lloyds TSB RegistrarsThe CausewayWorthing, BN99 6QQ

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PART 1: INFORMATION ON THE GROUP

The following information should be read in conjunction with the more detailed information appearingelsewhere in this document, including the financial and other information in Part 4: Operating and FinancialReview and Part 5: Accountants’ Reports and Financial Information on the Group. The financial informationincluded in this Part 1: Information on the Group has been extracted without material adjustment from Part 5:Accountants’ Reports and Financial Information on the Group and Part 6: Unaudited Pro Forma FinancialInformation, or has been extracted without material adjustment from the Group’s accounting records.

1. COMPANY OVERVIEW

The Group is one of the leading international, pure play business process outsourcing (‘‘BPO’’)providers. It has more than 3,800 employees operating in seven countries and services blue-chipcustomers in 34 countries, with a focus on the United Kingdom and Continental Europe.

The Group provides industry specific processing and other services to the banking and insuranceindustries and also provides procurement, finance and accounting and human resources services tocustomers across industries.

The Group’s customers include Aon, BAE Systems, Boots the Chemists, Citibank, Deutsche Bank,the IUA, Lloyd’s, National Australia Group, Sal. Oppenheim, United Biscuits and UniversityHospital Birmingham.

The Group performs complex, large-scale processing on behalf of its customers, providing themwith better service at a lower cost than when these functions were performed internally. Operatingcustomers’ non-core functions is the Group’s core business.

Examples of the Group’s services in 2006 included: settling an estimated 15% of securitiestransactions in the German market, settling £11.4 billion of insurance claims in the Lloyds insurancemarket, providing human resource and payroll services and support to 1.5 million staff and theirdependants, procuring £390 million of indirect spend and paying over £800 million of invoices.

The Group offers a full suite of BPO services including large-scale partnering, outsourcing, softwareproducts and solutions, Straight Through Processing (‘‘STP’’) and business support.

At the heart of the Group’ s business strategy is a unique partnering approach. The Group takesover a customer’s back office and creates a jointly owned business with its customer called an‘‘Enterprise Partnership’’ or ‘‘EP’’. Enterprise Partnerships provide the Group with scalableplatforms from which it can also offer its services to other customers.

A key component of the Group’s partnering and procurement outsourcing arrangements is its ‘‘gainshare’’ approach. This ‘gain-sharing’ approach is a step beyond that of a traditional outsourcingarrangement where a customer outsources services in return for payment of an agreed fee. Thenature of the gain-sharing relationship provides transparency for all parties, shortens decision-making time and engenders an environment of trust.

The Group uses a distinctive execution approach to deliver its services in a standardised andrepeatable way.

The Group delivers its services through a balance of on-shore and offshore operations, seeking toprovide the lowest cost solution consistent with its customers’ requirements.

The Group recorded revenues of £393.5 million for the year ended 31 December 2006, an increasefrom £350.0 million in 2005 and £254.1 million in 2004 (a 2004-2006 CAGR of 24%).

2. HISTORY OF THE GROUP

The Group was founded in 1999 by David Andrews with funding provided by General Atlantic.Prior to the creation of the Group, David was a board member of Andersen Worldwide and themanaging partner of Andersen Consulting Western Europe. David built up the Accenture (formerlyknown as Andersen Consulting) outsourcing business. Building a team drawn from a wide range ofoperational, commercial and implementation backgrounds and backed by General Atlantic, he hasdeveloped, in Xchanging, a unique capability for meeting the burgeoning demand for transformingback-office operations.

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The Group’s first major outsourcing arrangement was an EP with BAE Systems with an initialcontract value of £249 million, created in 2001 to provide a range of human resource services. In thesame year the Group established two insurance EPs, one with Lloyd’s and the other with Lloyd’sand the IUA, and entered into a new EP with BAE Systems for procurement services (for themanagement of £80 million of annual indirect spend, which has grown to an annual indirect spendvalue of £150 million). The combined initial contract value and indirect spend for the BAESystems EPs was £1 billion over 10 years.

In 2003, the Group expanded its operations to France and Germany by opening offices in eachlocation. As a result of this expansion, the Group was able to secure an EP with Deutsche Bank forsecurities processing in 2004, marking the Group’s entry into providing outsourcing services for thebanking industry.

In 2004, the Group’s insurance activities were further expanded through the acquisition of RebusInsurance Services Holdings Limited (‘‘RebusIS’’) which allowed the Group to broaden the rangeof services provided to the Insurance industry to include Products and Business Support. As part ofthe RebusIS acquisition, the Group also acquired a small IT services operation in India. At the timeof the acquisition, the Indian office had approximately 59 employees. Since 2004, the Group hasexpanded its Indian operations to approximately 11% of total Group employees as at 31 December2006.

The Group’s procurement services business was enhanced by procurement Outsourcingarrangements with United Biscuits in 2004 (originally for the management of £590 million ofindirect spend over 5 years before the disposal by United Biscuits of certain businesses within thecontract) and Boots the Chemists in 2005 (covering the management of £58 million of annualindirect spend and the processing of £800 million of invoices annually). The Group’s securitiesprocessing platform in Germany was extended to Citibank’s German operations in 2005.

In 2006, the Group acquired two small businesses to supplement its existing platforms LandmarkBusiness Consulting Ltd (‘‘Landmark’’) (offering specialist business transformation skills to the UKinsurance sector) and Ferguson Snell & Associates Ltd (‘‘Ferguson Snell’’) (offering corporateimmigration services).

Later in 2006, the Group entered into an EP for insurance broking with Aon, having an initialcontract value of £232 million, to complete its coverage of the entire commercial insurance valuechain, from placing to claims settled. In addition, the Group won a human resources and payrolloutsourcing agreement with University Hospital Birmingham in a competitive tender process. Thiswas the Group’s first public sector outsourcing arrangement. The Group also expanded itsoperations to Australia to service a new procurement Outsourcing arrangement with BAE SystemsAustralia (for the management of total indirect spend value of AUS$283 million) and entered intotwo additional new Outsourcing arrangements for procurement with Liberata (a BPO businessheadquartered in the UK in which General Atlantic owns a majority of shares) and NationalAustralia Group, respectively.

In early 2007, the Group purchased BAE Systems’ 50% interests in each of the procurement andhuman resources EPs, giving the Group full ownership while extending the term of the relatedservice agreements to 2012. The purchase of BAE Systems’ partnership interests represents theachievement of the Group’s ultimate goal for its EPs: as partnerships mature and the risks in thenew venture decrease, the Group aims to take full ownership of the EP whilst continuing to servicetheir previous partner through traditional Outsourcing arrangements.

3. KEY STRENGTHS

The Group believes the following are its key strengths:

� Strong Competitive Position. The Group focuses on providing complex back office processesand services. The Group believes its unique partnering approach and full suite of BPOofferings provide competitive advantage and enable the Group to manage complex processesacross a range of industries.

The Group offers a unique Partnering approach which seeks to align the interests of theGroup and its customers. This approach involves the gain-sharing of benefits with strongassociated governance mechanisms. This allows the Group to take over the operation of

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complex large-scale back office functions which customers might not otherwise be preparedto outsource. It also allows the Group to enter new markets or geographic areas in acontrolled, low risk manner by developing a service capability which uses the customer’s ownassets and employees, thereby reducing the investment that would otherwise be required todevelop this capability.

The Group provides a full suite of BPO offerings. It provides large-scale Partnering andOutsourcing arrangements which are specifically designed for major, complex BPOarrangements. The Group also provides Products and Business Support offerings whichprovide services and solutions for smaller-scale customer needs.

This focus on complex processing, its unique Partnership approach and its full range of BPOofferings has allowed the Group to establish successful large-scale arrangements with bluechip customers (including Deutsche Bank, Lloyd’s, Aon, Boots the Chemists, Citibank andBAE Systems) in three core sectors (Financial Markets, Insurance and Business Lines). TheGroup believes that it is one of a limited number of international BPO providers that has theproven capability to carry out major BPO arrangements across such a broad a range ofbusiness sectors for such an international customer base.

The Group also differentiates itself from certain of its BPO competitors by offering acombination of onsite, onshore but off-site (or ‘‘near-shore’’) and offshore services to meetcustomers’ needs, objectives and constraints. This mix of delivery capabilities allows servicecosts to be reduced and is necessary to provide the complex services and processes theGroup undertakes on behalf of its customers.

� High Growth Rate Market. According to IDC, the combined value of the human resources,finance and accounting, customer care and procurement BPO markets in Western Europe,Asia Pacific and the US was some US$49 billion(1) in 2005. IDC is forecasting that the valueof this market will grow by a compound annual rate of of 13.8% between 2005 to 2010. InWestern Europe, where the Group derives the largest portion of its revenues, IDC forecastsa 14.7% CAGR (including industry-specific BPO revenue) during the same period. TheGroup’s revenue has grown from £39.9 million in 2001 to £393.5 million in 2006, a CAGR of58%.(2) From 2004 to 2006 the Group outperformed the growth rate of the BPO market withthe Group revenue increasing from £254.1 million to £393.5 million, a CAGR of 24%. TheGroup believes that it is well placed to grow at least in line with the overall BPO marketthrough its partnering proposition and its broad range of offerings.

The Group believes its growth potential is reinforced by barriers to entry in its target market(large-scale, complex BPO arrangements) and the Group expects these barriers will growover time. The Group believes that its successful implementation experience and consequentdevelopment of platforms and domain expertise in several of the most complex andattractive business sectors, as well as its applied IT expertise, are becoming increasingly hardto replicate as the BPO sector develops. Also, it would be difficult for a competitor toreplicate the Group’s re-usable assets, systems and scalable infrastructure.

� High Revenue Visibility. The Group enjoys a high degree of visibility of expected revenue asa result of the long term nature of its contracts and the relationships it builds with its majorcustomers. The Enterprise Partnerships’ service agreements with the partners tend to haveterms of 10 years or more and most non-partnership Outsourcing contracts generally haveterms of 5 to 7 years. In the London Insurance Market, the Group has contracts with marketparticipants that are subject to between three and 12 months’ notice. For the year ended31 December 2006, over 90% of Group revenue was derived from customers with whom, asat 31 December 2006, the Group has at least one agreement that has over one yearremaining prior to its maturity and 67% of Group’s 2006 revenue was derived fromcustomers with whom, as at 31 December 2006, the Group has at least one agreement thathas over five years remaining prior to maturity.

The Group’s gain-sharing approach, with its emphasis on close cooperation with customersand focus on complex projects, is based on relationships with very senior levels of customer

(1) Source: IDC—Doc #2014178, Doc #BP01N, and Doc #AP224107N.

(2) Revenue for the years ended 31 December 2001 was taken from the Group’s audited financial statements for that yearprepared using UK GAAP in 2001.

29

management and the development within the Group of in-depth knowledge of key aspects ofits customers’ businesses. These help the Group to tailor its solutions to meet customerneeds. The extent of these relationships also enhances the Group’s ability to find and exploitopportunities to increase the scope and scale of existing contracts or services through STPand the sale of Products and Business Support.

The Group seeks to further customer loyalty through its Products and Business Supportofferings. The Products the Group offers are primarily software solutions designed toenhance the efficiency of a particular back office function and its Business Support offeringinvolves the provision of advisory and fulfillment or other support services to a customerwith respect to a specific back office function. The functions served by the Group’s Productsand Business Support offerings are typically sufficiently narrow or straightforward that theywould not warrant a Partnership or other gain-sharing structure. Through its ability to offerProducts and Business Support (aimed at smaller scale customer needs), as well as itsEnterprise Partnerships and other major gain-sharing arrangements (for complex, large-scalearrangements), the Group provides services matched to the scale of customers’ needs,thereby increasing its opportunities to undertake further business for a customer andenhance the strength and depth of its customer relationship.

� Established Profitability with the Opportunity for Further Margin Enhancement. The Groupfocuses on achieving profitability through a combination of rigorous contracting techniques,continual productivity improvements, scaling its existing service infrastructure and detailedperformance measurement. The Group has demonstrated its focus on increasingprofitability, achieving a CAGR of 56.7% in XEBIT from 2004-2006, with XEBIT marginsincreasing from 3.6% to 5.6% during the same period. XPAT has increased at a 67.3%CAGR from 2004-2006 while, XPAT margins increased from 2.4% to 4.4% during the sameperiod.

During the development phase of major arrangements, the Group works closely with thecustomer to carefully define the parameters of the services to be provided (referred to as the‘‘service definition’’) and analyses the costs the customer incurs to provide the service(referred to as the ‘‘production definition’’). These provide the baseline for the services to bedelivered and allow the Group to identify how productivity gains will be measured andachieved.

The Group enhances productivity, and therefore profitability, through a wide range ofactions, including process improvement, consolidation of operations both within and acrosssites and through arbitrage (lowering costs of resources by changing sites where work isperformed or better alignment of employee skills to processes).

The Group seeks to enhance profitability further by focusing on developing platforms andsystems that are easily scalable and readily adaptable or re-usable in other similarapplications. This flexibility is achieved through the Group’s drive towards standardisationand repeatability of processes and methodologies. This focus enables the Group to leveragethe use of its existing service platforms to supply services to adjacent areas of existingcustomers’ businesses and to similar functions and provide outsourcing products and servicesto other potential customers.

To monitor and improve profitability, the Group maintains very thorough and regularperformance measurement procedures that are standardised across all its operations, with aview to driving efficiency and productivity improvements. The Group uses a combination ofempirical and perception-related criteria to evaluate its service performance and identifyareas in need of attention, investment or change.

� Proven Entrepreneurial Management. The Group benefits from a management team withextensive experience in BPO, in executing complex processing contracts and in deliveringagainst a clear strategy. The majority of Executive Directors and senior management havebeen together for over six years and they have successfully implemented large scale BPOprojects across a range of industries. The Group’s management seek to continually increaseefficiency and productivity both with respect to customers’ operations as well as the Group’sinternal practices and methods. Within its well-developed system for monitoring theperformance, the Group’s management seeks to foster, and provide incentives for, acompany-wide and pervasive entrepreneurial focus.

30

4. GROWTH STRATEGY

The Group intends to increase earnings and create further value for shareholders through thestrategies outlined below.

� Expanding Existing Business Platforms. The Group will continue to seek to increase revenuefrom existing platforms by offering processing services and products to new and existingcustomers utilising its knowledge of customers’ needs and operations and its in depthindustry and domain expertise. ‘‘Straight Through Processing’’ is a delivery method by whichthe Group takes an existing service platform and applies it to another area of that existingcustomer’s business. This enables the Group to capture a larger portion of the value chainand to generate provision of further outsourcing savings to the customer. Similarly, anexisting service platform can also be applied to a similar area of a new customer’s business.This leverages the use of the existing platform, enhancing its profitability to the Group. Inaddition, the Group will seek to increase revenues from existing customers and newcustomers by offering them products and services from other parts of its portfolio.

� Developing New Service Platforms via Partnerships. The Group has extensive experience andexpertise in successfully developing and implementing large BPO arrangements across avariety of industries. In the course of doing so, the Group has developed various tools(including its rigorous contracting techniques, productivity enhancement techniques,performance management methodologies and an emphasis on repeatability and scalableprocesses) that it believes can be applied across many industries and geographic areas. TheGroup also recognises that its partners have been critical to the successful development ofthe Group’s major platforms by providing, amongst other things, physical and IP assetstogether with significant domain knowledge (in the staff transferred to the EP). The Groupwill therefore seek to enter into new Partnerships in order to develop new service platformsto undertake processing functions not currently undertaken by the Group, and will seek todo so across new industries and new geographic areas.

� Achieving a Low Cost Production Position. The Group will continue to seek to provide itsservices for the lowest cost possible that is consistent with its customers’ needs andconstraints. The Group will continue to seek to optimise the efficiency of providing itsservices through the use of on-site Group-developed procedures and methodologies, throughthe off-site amalgamation of services and through provision of outsourcing services from lowcost offshore locations (principally from the Group’s facilities in India). The Group seeks toprovide a balanced on-site, off-site and offshore approach to maximise cost savings withinthe framework of its customers’ constraints. For example, it may only be possible to providecertain services on-site or off-site as regulatory restrictions or union pressures may causecustomers not to wish to, or not to be able to, relocate some functions to low cost locations.In addition, by standardising functions, streamlining and batching procedures, eliminatingduplicative functions and similar techniques, the Group continually seeks to free up capacitywithin given assets or systems, and then to utilise this capacity to perform similar operationseither in other areas of a given customer’s business or in comparable operations in othercustomers’ businesses, thus improving profitability by generating more revenue with thesame infrastructure.

� Making selective acquisitions. The Group will continue to consider selective acquisitions inareas in which the Group may require additional expertise, or where such acquisitions wouldenhance the scale of existing operations (either vertically, geographically or in terms oftechnological capability) in a manner consistent with the core practices of the Group. TheGroup has integrated the operations of RebusIS (acquired in 2004), adding substantially tothe scope of its Business Support and Product offerings in the Insurance sector. In January2006 the Group acquired Landmark, which allowed the Group to broaden its services in theInsurance sector. Similarly, in April 2006, the Group acquired Ferguson Snell, which enabledthe Group to provide customers with corporate immigration related services. The Groupbelieves that its values, methodologies and systems can be efficiently applied to otheracquired operations.

� Buying out partners’ shares in EPs. Where appropriate, the Group will continue to seek tobuy-out its partners’ interests in EPs as they reach maturity and thereafter provide services tothe partner through an Outsourcing contract. As EPs reach their maturity, they are likely

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5APR200719452538

to require less active input from partners, and a shareholding participation in the EP may beseen as unneccessary to such partners. Becoming the sole owner of major arrangementsenables the Group to assert full strategic control over an EP’s operations. In early 2007, theGroup bought out the interests of BAE Systems in its human resources and procurementEPs.

5. MARKET ENVIRONMENT

5.1 BPO Market

BPO companies offer their customers operational efficiency improvements and improved service oftheir non-core, but often mission-critical, processing operations. BPO service providers typicallyenter into medium to long term outsourcing contracts which allow them to deliver cost reductionsand superior services provision over time. Outsourcing penetration has been driven by customers’increasing focus on core areas of competence, cost reduction initiatives and a desire to reduce levelsof investment.

BPO is typically separated into the five core processes of human resources; finance and accounting;customer care; procurement and industry specific processes. Human resources BPO includesservices such as recruitment and benefits/pension administration; finance and accounting includesservices such as accounts payable management and fixed asset accounting; procurementincludes services such as direct/indirect spend management and sourcing strategies; customer careincludes services such as call-centre management and customer acquisition; and industry specificincludes processes that are unique to a specific industry or vertical, such as securities processing,insurance claims settlement and utilities billing.

According to IDC, the combined value of the human resources, finance and accounting, customercare and procurement BPO markets in Western Europe, Asia Pacific and the US was someUS$49(1) billion in 2005. IDC is forecasting that the value of this market will grow at a compoundannual rate of 13.8%, between 2005 and 2010.

The table below presents IDC’s forecast market value for the each of the five core BPO processesin Western Europe.(2)

Western Europe BPO Services Market, 2005-2010

3.3 3.8 4.40.2 0.3 0.4 0.5 0.6 0.73.0 3.4 3.98.1

9.110.3

11.512.9

14.57.69.2

10.912.6

14.4

16.3

20.1

23.4

27.0

30.9

35.2

39.8

2.92.52.1

2.3 2.62.0

0

5

10

15

20

25

30

35

40

45

2005 2006 2007 2008 2009 2010

HR Procurement Finance & Accounting Customer Care Industry Specific

Ann

ual S

pen

d U

S$

bill

ions

14.7% CAGR

16.4% CAGR

12.3% CAGR

14.6% CAGR

23.9% CAGR15.6% CAGR

According to IDC, the Western European BPO market is expected to grow strongly, achieving acompound annual growth rate of 14.7% between 2005 and 2010. Procurement services are expected

(1) Source: IDC (Doc #2014178, Doc #BP01N and Doc #AP224107N).

(2) Source: IDC—Western European BPO Services Market Forecast, 2005-2010, Doc #BP01N.

32

to deliver the strongest growth (23.9%) over this period, with industry specific processes achievingthe second fastest rate of growth (16.4%). IDC is forecasting the total Western European market tobe worth some US$39.8 billion in 2010.

The UK market is considered to be the most mature in Western Europe with a broad understandingof BPO services and a higher level of acceptance of outsourcing generally. The rapid take-up ofBPO services across the UK public and private sectors has yet to be reflected in the rest of WesternEurope with relatively low penetration of the majority of continental European countries.According to the IDC data, the UK represented approximately 52% of the Western Europeanmarket in 2006. The UK, Germany and France combined represented approximately 74% of themarket in the same year.

Banking and financial services is currently the single largest sector within BPO. However, IDCpredicts that by 2010, BPO will have further penetrated a number of other vertical industries in thepublic and industrial sectors, significantly broadening the addressable market. Due to thestandardisation and repeatability of the Group’s approach the Group believes that it is ideallypositioned to take advantage of the increasing demand for BPO services.

5.2 Barriers to Entry

Processes that companies outsource are often complex and integrated within the customers’ coreoperations. Outsourcing these processes requires a high degree of customisation and an in-depthunderstanding of such processes. Customers typically incur high switching costs to transferoutsourced processes back in-house, or to other BPO providers. As a result, BPO service providersbenefit from long standing relationships with customers underpinned by multi-year contracts andembedded services.

Given the long-term strategic nature of BPO engagements, companies undertake a highly rigorousprocess in evaluating potential BPO providers. The Group believes that a customer typically selectsa BPO provider based on:

� Established reputation and industry or domain leadership;

� Demonstrated ability to execute a diverse range of complex business processes;

� Track record of execution experience; and

� Cultural fit.

Importantly, these characteristics rely on reference sites demonstrating the experience ofoutsourcing complex processes, a reputation for delivery on contract promises and the ability todeliver low costs through economics of scale. Specific industry or process knowledge andcompliance/regulatory approvals can provide further barriers to entry which, coupled with thecombination of the need for an established reputation for successful BPO delivery, the long-termnature of BPO contracts and an inherent bias towards the incumbent service provider, createsbarriers to entry for new market entrants.

5.3 Competition

The Company believes that it is one of a limited number of international pure-play BPO servicesproviders capable of undertaking large-scale, complex processes using standardised platforms.

The Group’s primary international competitors are large IT services firms for whom BPO is not thecore focus of their business, such as IBM. There are a limited number of other pure-play BPOcompanies, such as Genpact, WNS and EXL, that have emerged as ‘‘carve-outs’’ from otherbusinesses; however, to date, the Group has seldom competed for business with them. Transactionprocessors such as ADP and First Data use standardised platforms to deliver a service focused on aspecific outsourced process, but again the Group is rarely in direct competition for business withthem due to the variety of complex, bespoke, industry specific processes which the Companytargets. UK companies such as Capita provide complex BPO services, however, Capita’s statedstrategy is to focus only on the UK BPO market.

The Company’s offering is further differentiated from that of its competitors through the use ofPartnering. Through its partnerships, the Company is able to share the risks and rewards ofdelivering large-scale, complex BPO processes with its customers that may not have been delivered

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using standard outsourcing contracts. This can expand the traditional definition of the BPO marketas it brings new services and processes into the BPO market, thereby increasing the Group’s overalladdressable market.

6. BUSINESS MODEL

6.1 Full Suite of BPO Market Offerings

The Group uses five main methods (the ‘‘Offerings’’) to contract for and deliver services to itscustomers: Partnering, Outsourcing, Products, Straight Through Processing and Business Support.Partnering is used for large-scale, complex outsourcing arrangements, creating service platformswhich provide the Group with processing scale. The Group uses the other four Offerings to build onthese service platforms. With Outsourcing, the Group takes on entire business processes from thecustomer onto existing service platforms offering a standard service. The Group’s Products Offeringis the sale of standardised and repeatable software solutions. Business Support is the use of theGroup’s experts to offer specific services from the platforms. Products and Business Support arealso entry points that could lead to Partnerships or major Outsourcing arrangements. StraightThrough Processing is extending the existing scope of services to other areas of the customer’sbusiness.

These five Offerings enable the Group to provide its customers with a broad range of contractingchoice and type of service relationships, from cooperative partnerships, to fixed price contracts, to asingle product or suite of services. In addition, in Partnering and procurement Outsourcingarrangements, the Group works closely with customers to develop a savings profile for theoutsourced services, with these savings being shared between the Group and the customer. Thissharing of savings is referred to as a ‘‘gain-share’’. For example, the Group may deliver an amountof procurement expenditure with a baseline cost of £20 million (representing the pre-outsourcingcost to the customer of the services to be provided); for a cost of £18 million, resulting in a savingsof £2 million, which would be shared between the customer and the Group (i.e. the ‘‘gain-share’’).

Details of the five Offerings are:

6.1.1 Partnering: Partnering is used for large and complex business processes. The Group createsa jointly owned company with the customer (its partner) that it calls an EnterprisePartnership. The resources and assets from the customer’s organisation are transferred intothe EP in order to create a service platform. The Group has day-to-day operational andboardroom control of the EP and the partner has representation on the EP Board.

Since its inception, the Group has established six EPs, of which four are currently inoperation following the buyout of BAE Systems’ stake in the HR and Procurement EPs. Thefour remaining EPs have four different EP anchor partners:

� XCS: An EP with Lloyd’s to perform claims management and processing services;

� XIS: An EP with Lloyd’s and the IUA to perform premium and policy processingservices;

� Xtb: An EP with Deutsche Bank to provide securities processing services; and

� XBS: An EP with Aon to provide claims handling, payment, settlement and relatedservices.

In early 2007, the Group bought BAE Systems’ 50% interests in the two EPs developed withthem in 2001: XPS (a procurement service platform) and XHRS (a human resources serviceplatform). The service agreements with BAE Systems for procurement and human resourcesservices were extended to 2012. BAE Systems no longer has a partnership interest in eitherof these service platforms.

Prior to an EP commencing operations, the employees and resources of the customer’sback-office function are transitioned to a new legal entity that becomes the EP. Otherresources, such as office equipment, as well as agreements for the use of properties andexisting IT systems may also be transferred into this entity. A service agreement is put intoplace between the EP and the customer (usually for a period of 10 to 12 years) to provide thecustomer with the agreed BPO services. The Group provides a software and IP licenceagreement to the EP covering the use of the Group’s methodologies and software toolset to

34

be used by the EP, as well as a management and operating agreement under which theGroup commits to provide people and services to manage and operate the EP. At this stage,the Group also commits to an ‘‘Implementation Investment’’, which is a commitment toprovide internal expertise and, where appropriate, external resources in order to re-engineerbusiness processes and operations. This investment occurs both before and during theGroup’s operation of the EP. Following the completion of the foregoing steps, the Grouptakes operational control of the EP.

During the period in which the EP is being created, the Group undertakes a detailedexercise to establish a ‘‘baseline’’ of the cost of the services to be provided by the EP (usingthe customer’s cost data), such that the EP is initially in a profit-neutral position (i.e. theprice paid by the customer for the services under the service agreement is equal to the costsbeing incurred by the EP). Where appropriate, the terms of the EP contracts will provide foradjustment of the ‘‘baseline’’ costs six months after the start of the contract.

The Group may commit to provide a minimum level of cost savings to the customer as partof the EP services agreement. These minimum cost savings form part of the customer’s profitshare. These minimum cost savings are delivered through two principal mechanisms,depending on the nature of the EP: price discounts for services performed (for example, anagreement to provide securities processing at a decreasing base price over the period of theservice contract) and rebates (for example, an agreement to provide guaranteed rebates tocustomers either by way of a fixed amount or a fixed percentage of revenue, which canincrease over the period of the service contract). Both of these mechanisms result in areduction of income for the EP, which places a greater incentive on the Group to reduce thecost base and/or supplement the EP with additional third party revenue in order to maintainprofitability. In addition, the Group undertakes to the customer that, for all or part of theterm of the EP, in the event the EP makes a net loss the Group will contribute funds to theEP to return the EP to a ‘‘no-loss’’ position. The Group may also, in certain cases, guaranteethe performance by the EP of the service agreement with the customer.

The charges for the services provided under the service agreement are paid by the customerto the EP, generally under a fixed price arrangement. For procurement arrangements, thecustomer may also pay an agreed administration fee to the EP. In return for the software andIP licence agreement the Group provides to the EP, the Group receives a royalty that isnegotiated and agreed during the set-up of the contract (usually a fixed percentage ofrevenue). The Group also receives reimbursement for certain costs for services that havebeen performed on behalf of the EP (such as the costs of the senior management of theGroup who perform services for the EP). After deduction of the royalty payments anddiscounts, the remaining profits are shared between the customer and the Group. Typically,prices, service fees and administration fees are indexed annually for inflation.

The EP shareholder agreement is designed to terminate when either one of the EP partnersbuys out the other partner such that 100% of the EP share capital is owned by that partner.The Group’s preferred outcome is, at some point during the EP agreement period, to buyout an EP partner and to continue to provide services under an Outsourcing arrangement, aswas done in early 2007 with the BAE Systems EPs. By acquiring 100% of the EP serviceplatform, these buyouts result in the transition of the EP and give the Group full controlwhilst it continues to offer the EP services to the former partner and other parties.

Some of the existing EP shareholder agreements include options for the partner to ‘‘put’’ itsshares in the EP to the Group in defined circumstances based on a valuation which mayinclude a minimum value. In defined circumstances such as particular defaults, change ofcontrol of the Group or failure to meet pre-agreed targets, the relevant partner may alsohave the option to call the Group’s shares in the EP for nil or limited consideration. TheGroup also has call options in limited cases in relation to some of its EPs. None of theseoptions has been exercised.

The EP contracts will typically include provision for termination for specified causes,including material breach, under-performance, force majeure, insolvency and related events.In addition, other rights to terminate such as for the customer’s convenience after a specifiedperiod or upon change of control may be included as part of the overall negotiated set ofcontracts.

35

6.1.2 Outsourcing: As with EPs, the principle behind the Group’s Outsourcing Offering is toreduce customers’ processing and procurement costs. Outsourcing involves the transfer of abusiness process or procurement spend from the customer’s organisation on to one of theGroup’s existing platforms.

The Group provides Outsourcing customers with services based on an agreed specificationand usage charge and, for procurement expenditure, a ‘‘baseline’’ cost of items is alsoestablished (as with the EPs). In some circumstances, a customer may transfer people orassets to the Group as part of the Outsourcing arrangement, but unlike EPs the customerretains no ownership. In effect, the customers’ fixed costs are exchanged for a more variable-based cost for non-core functions. As part of the Group’s procurement Outsourcingagreements, it also targets a savings profile, the benefit of which is shared between thecustomer and the Group.

Outsourcing contracts tend to run for five to seven years. Currently, the Group hasoutsourcing contracts with, inter-alia, Citibank and Sal. Oppenheim (for securities processingin Germany); BAE Systems, BAE Systems Australia, United Biscuits, Liberata, NAG andBoots the Chemists (for procurement); BAE Systems and University Hospital Birmingham(for human resources and payroll services); and Ascot (for insurance claims management).

6.1.3 Products: The Group’s Products consist of a range of business processing software productswhich provide customers with solutions that the Group believes are more efficient than thecustomer could develop internally. The Products can be tailored to the customer’s specificneeds and support for the Products is also provided.

The Group’s current range of Products include Genius, Elgar, Brokasure and IRIS (allinsurance-related software Products) and CPS (which provides prices for financial productsand derivatives to banks and fund managers). The Group’s insurance software Products wereacquired as part of the acquisition of RebusIS in January 2004.

As the Group develops standardised Products, these are licenced to its customers. TheGroup charges license fees, implementation fees and ongoing support and maintenance feesfor the use of its Products.

6.1.4 Straight Through Processing: STP refers to additional services offered by the Group that lieoutside of the scope of the original Outsourcing or EP contract. STP is a key characteristic ofthe Group’s business model in that it generates additional value by extending the scope andnature of the services provided to encompass more of the customer’s business. The Groupinvests in mapping its customers’ processes and procedures outside of the scope of the EPsor Outsourcing agreements, but which are closely linked to the services then being provided,to identify opportunities to create further value. These additional services are added aroundprocesses that the Group already understands, which allows the Group to standardise andoptimise them rapidly in line with the existing services provided and to create additionalrevenues. STP services are initially priced at cost plus an agreed mark-up, which thenbecomes the agreed service price. Any implementation costs to the Group are recovered aspart of the service charge. STP services tend to be recurring, providing the Group withincremental revenues from existing customers.

6.1.5 Business Support: The Group’s Business Support service is typically structured as acontractual relationship between the Group and its customers for a professional service orservices using the Group’s employees. The Group offers experts for improving activities inthe business processing value chain. Support is provided on a project-by-project or interimassignment basis to support improvement activities in customers’ processing activities.Generally, this encompasses smaller-scale functions that are put in place within (or withoutaltering) the customers’ existing operations. The Business Support delivery method gives thecustomer access to the Group’s expertise on an as-needed basis, and gives the Group anopportunity to leverage the skills and expertise of its employees to generate revenue outsideof large-scale contracts. The Group’s current range of Business Support services includeprogramme management, IT implementation services (with a particular emphasis on theinsurance sector), permanent and temporary recruitment services (predominantly tocustomers in the insurance sector), and corporate immigration services. Customers arecharged for Business Support services based on the time and materials required or at a price

36

per transaction. Prices are determined taking into account the level of expertise of staff,degree of involvement and the achievement of the agreed key deliverables. The Groupcurrently provides Business Support services to BAE Systems, Aon, Allianz, RSA, HSBC,three of the top five UK law firms and a number of other clients.

7. OPERATING STRUCTURE

The Group provides BPO services to two industry sectors, Insurance and Financial Markets, andalso provides cross-industry services such as HR, procurement and finance and accounting(‘‘Business Lines’’). These three operating segments are supported by the Group’s off-shore businessprocessing facility (‘‘BPS’’) and ‘‘Corporate’’ which provides the infrastructure, resources andinvestment to sustain and grow the business, including sales and commercial, performancemanagement, implementation and business management functions.

7.1 Insurance

The Group’s Insurance platform is one of the leading providers of BPO services and software ininternational commercial insurance markets. In 2006, the Group handled over 560,000 claimtransactions for the marine, aviation and non-marine sectors of the London insurance market,having a combined value of approximately £11.4 billion. The London insurance market is movingfrom paper based processing to electronic based processing and the Group’s infrastructure andservices are capitalising on this development. The Group believes it is well placed for this transitionand that it has the capability to continue to develop, maintain and support electronic processingsystems for the commercial insurance market. The Group divides its Insurance products andservices into five categories: complex processing, market infrastructure, accounting and settlement,software and related business support. For the year ended 31 December 2006, the Insurance sectorhad revenues (including inter-segment revenues) of £135.7 million and adjusted operating profit(1)

of £23.2 million.

7.1.1 Complex Processing

The Group’s complex processing and services include the following:

� Premium Processing: Service provided to both the Lloyd’s market and the LondonCompanies market. Premium transactions are checked to ensure that appropriateauthorisation for the transaction has been received and transaction data is entered, asappropriate, into the Lloyd’s market premium processing system and the LondonCompanies market system where further automated validation is performed.Customers receive electronic signing messages for all valid transactions.

� Claims Processing and Agreement: Electronic data capture service provided onspecific claims files. The Group’s main service involves taking data from paper filesand entering data on computer record which is then sent to the customer.

� Claims Agreement for Followers: The Group undertakes the review of claims on behalfof Lloyd’s market underwriters subscribing to the risk, to ensure that claims are valid,according to the terms of coverage and are being handled to an appropriateprofessional standard. This is under-pinned by the Lloyd’s claims scheme.

� Policy Checking, Signing and Sealing Service: Service provided to the Lloyd’s marketand the London Companies market. Policies prepared by the broker are technicallychecked to ensure completeness and accuracy and are returned to the broker uponcompletion. Where both the Lloyd’s market and the London Companies marketshare risk, separate policies are issued. The Lloyd’s market premium processingsystem and the London Companies market system are updated to reflect policyissuance.

� Policy Preparation: Policy preparation service provided to the Lloyd’s market. Policiesare prepared, checked, signed and sealed on the basis of slips submitted by the brokerand are returned to the broker on completion. This service is supported, as

(1) This is a non-GAAP measure extracted from note 5 of Section A of Part 5: Accountants’ Reports and Financial Information.Add-backs to operating profit comprise amortisation of intangible assets previously unrecognised by an acquired entity andshare based payment charges.

37

appropriate, by the use of wordings held on the market wordings library and theLloyd’s market premium processing system is updated to reflect policy issuance.

In 2006, the Group transacted 10.3 million transactions, with a value of £46.8 billion in thepremium processing category. The Group provides these services predominantly to Lloyd’sand the London Companies markets.

The Group provides the premium processing, policy checking signing and sealing and policypreparation insurer and broker services through the XIS EP. The Group performs the claimprocessing and agreement and claims agreement for followers services for Lloyd’s insurancemarket through the XCS EP. In addition, the Group provides outsourced claimsmanagement services to a number of customers, including Ascot, delivered through theXCS EP division of the insurance platform. Revenues for the claims management servicesprovided are derived from the individual contracts with the managing agent the majority ofwhich are negotiated in relation to pricing on an annual basis.

7.1.2 Market Infrastructure

The market infrastructure services include:

� Market Repository: Document management systems to enable the electronicdistribution, storage and sharing of structured and unstructured insurancedocumentation.

� Messaging: Core market messaging systems to enable the electronic agreement anddistribution of premium and claim information.

� Data Warehouse: Data management, information and reporting services.

These services are provided predominantly to the Lloyd’s and London Companies market.

7.1.3 Accounting and Settlement

The third category of services within the Insurance platform is accounting and settlement,which includes:

� Premium Settlement: the processing and distribution of settlement messages betweenbrokers and insurers for premiums supporting settlement to a diversified market.

� Claim Settlement: the processing and distribution of settlement messages betweenbrokers and insurers for claims supporting timely settlement to a diversified market.

� Accounting: the processing of accounting information supporting insurancetransactions, including tax and regulatory data.

� Payment: the direct settlement of insurance transactions.

These services are delivered to Aon through the XBS EP and to Lloyd’s and the IUAthrough the XIS and XCS EPs.

7.1.4 Software and Related Business Support

The Group provides a suite of software products and related business support services tosupport all of its Insurance services offerings. The software products cover insurancecompanies, reinsurance companies, insurance brokers and other smaller products (primarilya predictive statistical risk-based product). The key Insurance software products are:

� Genius: general lines insurance and reinsurance underwriting system aimed at theinternational property and casualty market;

� IRIS: insurance and reinsurance underwriting system aimed at the Lloyd’s market;

� ELGAR: international reinsurance recovery and credit control system; and

� Brokasure: direct and reinsurance risk processing platform covering premium, claims,endorsement and insurance broking account processing.

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Each of these products is owned, developed and sold to customers by the Group, and iscommonly used in the commercial insurance industry. The Group’s software products areupdated to meet the changing needs of customers. The Group’s hosting services allowinsurance companies that do not have the critical mass for such capabilities to utilise itssoftware service platforms for provision of servers and communications rooms. A customerwho purchases software from Group’s service platform often uses the service platform forhosting services as well. The software division is supported by the Group’s IT estateconsisting of three data centres, two IBM mainframes and 1,219 servers. The Group hassignificant software arrangements with customers including ACE, Allianz and AXA.

The Group provides Insurance services at locations in the UK, and in India, the United States andMalaysia. The Group’s operations in India have grown rapidly over the past two years and currentlysupport the Insurance sector by handling certain software development and support services andpolicy, premium, claims and accounts processing services. In addition, the Group has an agreementwith a third party provider for certain offshore processing services.

For more information on the regulatory environment in which Group’s Insurance sector, see Part 7:Regulation.

7.2 Financial Markets

The Group’s Financial Markets services can be divided into banking operations and software. Thebanking operations services are provided both directly to the financial institution (e.g. DeutscheBank) and on behalf of the financial institution directly to the end customer of the financialinstitution. These are undertaken by the Xchanging Transaction Bank (‘‘Xtb’’) which has a fullGerman Banking Licence. For the year ended 31 December 2006, the Financial Markets sector hadrevenues (including inter-segment revenues) of £96.2 million and adjusted operating profit(1) of£12.5 million.

Xtb is an EP which was entered into with Deutsche Bank in 2004. Deutsche Bank benefits fromguaranteed discounts which increase over time to an agreed cap. The Group receives 100% of EPprofit up to the level of the guaranteed discount. In the event that Xtb profits are in excess of theguaranteed rebate, amounts are distributed in accordance with equity shareholdings.

The Group currently performs banking operations services for Deutsche Bank, Sal. Oppenheim andCitibank. The Group primarily offers its financial service offerings in Germany at its Frankfurtoffice, and through branch offices in Dusseldorf and Ludwigsburg. In addition, some securitiesprocessing services are provided through its facility in India.

7.2.1 Banking operations

The Group’s Banking operations include the following:

� Trades Processing: The Group provides settlement services for executed trades inrelation to securities held in electronic format. For example, a trader in DeutscheBank may execute an order to purchase a certain number of shares and place thesesecurities in the portfolio of a customer. Xtb’s role is to ensure the executed order issettled on the customer’s behalf. Settlement includes ensuring the cash is debited inpayment, the correct type and amount of the security is purchased on the exchangeand the trade is booked properly. The majority of these tasks are normally processedautomatically with the trade processing system, ‘‘ee2’’. However, where errors orexceptions occur, it is Xtb’s responsibility to act as the administrative intermediarybetween the relevant parties to resolve the issue and close the position.

� Vault & Coupons: This service is analogous to trades processing but for securities heldin paper format. Principal activities include safekeeping of physical securities (held ascommon or specialised depository), processing of all related receipts and deliveries,checking of definitive bonds for certificates reported lost or stolen, authentication ofnew physical securities, clipping of physical coupons (e.g. dividend entitlement) andsecurely destroying bonds and coupons as required.

(1) This is a non-GAAP measure extracted from note 5 of Section A of Part 5: Accountants’ Reports and Financial Information.Add-backs to operating profit comprise amortisation of intangible assets previously unrecognised by an acquired entity andshare based payment charges.

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� Corporate event processing: The Group provides the processing of complex dividendpayments and corporate event processing for financial institutions. The ee2processing system used by the Group includes modular components forannouncement capture, data scrubbing, notification, entitlement, reconciliation,disbursements, claims and tax processing, workflow management, alerts andexception handling designed to achieve lower operational costs and increaseefficiency.

� General meetings: The Group offers handling of corporate annual general meetingattendances, shareholder communications, and proxy voting on behalf of institutionsand their customers. In 2006, over 300 annual general meetings were attended onbehalf of the Group’s Financial Markets customers.

� Regulatory reporting: Reports are prepared to BaFin and other agencies on behalf ofthe customers.

� Static data: Customer standing data is maintained and updated.

� Tax: Annual reporting to end customer of portfolio profits/losses and tax information.Administering tax reclaim and tax relief at source schemes.

� Structured trades: Calculation/pricing of securities portfolios and exchange-tradedderivatives for institutional customers.

� Other services: These include all manner of administrative services such as issuing ofaccount statements for end customers, issuing duplicates, and archiving data.

7.2.2 Software

The Group is a 10% shareholder in CAD IT, a quoted Italian company. CAD IT software iswidely used in Italy and is well-suited to Italian banks and institutions. CAD IT servicesinclude licensing, implementation and customisation, maintenance, assistance, applicationmanagement, training and technical consulting services.

For more information on the regulatory environment in which the Group’s Financial Markets sectoroperates, see Part 7: Regulation.

7.3 Business Lines

Business Lines is a cross-industry sector under which the Group currently provides humanresources, procurement finance and accounting and IT hosting services. For the year ended31 December 2006, the Business Lines sector had revenues (including inter-segment revenues) of£176.1 million and adjusted operating profit(1) of £14.2 million.

7.3.1 Human ResourcesThe Group’s range of human resources services includes:

� Payroll: Fulfilling statutory requirements through the calculation, payment, reportingand delivery of payslips to customers.

� Pensions and Benefits Administration: Providing pensions administration, advice andsupport for a wide range of complex defined benefits and defined contributionschemes.

� Graduate Recruitment: Analysing customers’ recruitment needs and deliveringtailored solutions that are customer specific.

� Training: Designing and delivering engineering and business apprentice trainingincluding initial assessment, induction, registration, training, further education andScottish/National Vocational Qualification assessment.

(1) This is a non-GAAP measure extracted from note 5 of Section A of Part 5: Accountants’ Reports and Financial Information.Add-backs to operating profit comprise amortisation of intangible assets previously unrecognised by an acquired entity andshare based payment charges.

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� Performance Management: The analysis, reporting and presentation of data thatsupports talent management and succession planning processes through an‘‘e-enabled’’ appraisal process that captures performance and potential data.

� Resource Management: A complete resource management service, which includesassociated processes for attraction, selection, appointment, induction and exit of thecustomer’s workforce.

� International Assignments: A repatriation and inpatriation service covering scenariotesting, cost analysis, tax advice, location support and employee orientation.

� Learning and Development: Undertaking training needs analysis for the customer’sbusiness and developing company-wide and specific team training plans, sourcing anddelivering learning and development solutions and evaluating the success of suchplans.

� Remuneration and Benefits: Working with customers to develop remuneration andbenefits strategies and project-managing the execution of those strategies throughannual and bespoke processes.

� HR Information Services: Maintaining employee data, providing bespoke andstandard reports, conducting data reconciliation and identifying anomalies tomaintain high levels of data integrity for customers.

� Other HR: Validation, production, quality assurance and despatch of correspondenceand documentation relating to a range of HR Services outlined above.

The Group currently provides human resource and payroll services and support to1.5 million staff and their dependants, across multiple locations and countries. The Group’sprimary customer is BAE Systems. The Group has recently added University HospitalBirmingham as a customer. In 2001, the Group established the XHRS EP for humanresources services with BAE Systems. In January 2007, the Group bought BAE Systems’interest in the EP and now the Group retains 100% of the profits. Human resources servicesare provided on-site at the customer’s facilities and at the Group’s Preston and Farnboroughfacilities in the United Kingdom.

Through the acquisition of Ferguson Snell in April 2006, the Group also offers corporateimmigration services in the UK. This acquisition enabled the Group to offer both its businessand private customers assistance with UK immigration processes, including visas, workpermits, residence permits, investing and naturalisation.

7.3.2 Procurement

The Group’s procurement services fall into two categories: spend management andprocure-to-pay.

� Spend Management: Spend management services comprise managing procurement onbehalf of the customer. The Group either acts as an agent between the customer andthe supplier (customers are invoiced directly by suppliers for the goods or servicesprocured by the Group) or acts as the principal with the supplier, and sells the goodsor services directly to the customer (the Group is invoiced by the supplier and in turn,invoices the customer). The Group handled £390 million of transacted spend (thevalue of goods and services procured on behalf of customers) in 2006, and procuresgoods and services in the following categories: technical and non-technical contractlabour and recruitment, travel and fleet, office supplies, utilities, facilities, IT andtelecoms, marketing, workplace, maintenance, repairs and operations (MRO) andprofessional services. The Group provides cost reduction benefits through lower costbuying on a like-for-like basis. The Group’s spend management customers includeBAE Systems, BAE Systems Australia, NAG, United Biscuits, Boots the Chemistsand Liberata.

� Procure-To-Pay: Procure-to-pay covers all processing aspects of procurement. As partof procure-to-pay, the customer transfers its purchase ledger control to the Group.This enables the Group to embed itself within the customer’s organisation. The

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Group provides its procure-to-pay customers with the implementation andmaintenance of a service platform for accounts payable. The service platformcurrently being developed by the Group is designed to be compliant with theSarbanes-Oxley Act legislation, which the Group believes makes it attractive tocustomers in markets outside of the UK. The elements of the procure-to-pay servicesinclude processing of purchase requisitions, purchase orders and invoices, payment tosuppliers, administration of travel and expense reports, implementation of purchasingcards, maintenance of data and tactical buying.

The Group currently provides Boots the Chemists with procure-to-pay services andprocessed 220,000 invoices and one million purchase orders in 2006 through theprocure-to-pay platform.

The Group provides procurement services to its customers from its UK facilities inPreston and onsite services at customer locations, as well as administering itsprocure-to-pay services off-site at its facility in India. Procurement services areprimarily provided on the Group’s XPS service platform. XPS was an EP created bythe Group and BAE Systems in 2001; however, in March 2007, the Group purchasedBAE Systems’ 50% interest in the EP and, like XHRS, the Group now has fullownership of the service platform.

7.3.3 IT Hosting

IT hosting services are used to support the Group’s Insurance and Financial Marketssoftware products, as well as for its procure-to-pay service platform. The Group’s key hostingservices are:

� Management of Hosting Services: The Group provides the management of technologyinfrastructure services on behalf of its customers. The Group believes it providessuperior and more cost effective services in this area than its customers would becapable of.

� Warehousing of Data: The Group provides extensive data warehousing facilities for itscustomers. The Group currently houses over 30 terabytes of information in itsBasildon Data Centre. A prominent example is that the Group provides a datawarehousing facility for Lloyd’s and the London Companies market which supportsapproximately 80 insurers and 60 brokers.

� Management and Support of Networks: The Group manages complex andinternational networks which provide connectivity to various markets. For example,the Group provides network services to the Lloyd’s and London Companies marketinsurance communities to deliver to them core central clearing services. The Grouphas complex international networks which enable its overseas offices to accessservices based in other countries such as Germany, Malaysia and India.

� Integration of Systems: The Group delivers systems integration services to a high levelof quality and reliability in complex environments. The Group has deliveredsignificant re-engineering of trading platforms and also offers technology architectureservices to a significant customer base.

� Business Continuity Services: The Group offers business continuity services tocustomers. This offering ranges from business support services establishing the‘‘Business Impact Assessment’’ following the denial of various business facilitiesthrough to the provision of office facilities for displaced staff.

� Disaster Recovery Services: The Group offers provision of contingency services forcustomers’ key technology platforms to ensure that the interruption of customers’services is kept to a minimum in the event of an unexpected disruption to the primarytechnical platforms.

The Group’s hosting services print 1.1 million payslips and process nearly £1.3 billion ofpayments each month. These services are currently provided to 71 external customers. TheGroup provides IT hosting services at its facilities in Basildon, UK; Frankfurt, Germany; andGurgaon, India.

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8. SALES METHODOLOGY

Within each sector, the Group has sales teams dedicated to each of its Offerings (Partnering,Outsourcing, Products, Straight Through Processing and Business Support). It also has a ‘‘GlobalPartnering’’ team that looks for new Partnering opportunities which sit outside the three sectors.Over the last two years, the Group has made a major investment in upgrading and building up itssales teams.

The business development process has five distinct phases through which each successful new BPOcontract must pass:

� ‘‘Qualification’’ (or ‘‘door-opening’’) where the internal authorisation process is commencedand relationships with customers or potential customers are initiated or reactivated.

� ‘‘Interest’’ where discussions are held with the potential customer to identify relevant issues,facts and areas for possible improvement.

� ‘‘Shaping’’ where further information is collected from the potential customer in order tocreate a business proposal.

� ‘‘Validation’’ where a business case is written and commercial terms are agreed with thepotential customer.

� ‘‘Conclusion’’ where the business plan and implementation plan are prepared, the legalcontracts are drafted, negotiated and executed.

This phased approach helps to develop and build a relationship with the customer, as the customerworks together with the development team to create an arrangement that will address thecustomer’s needs. The Group believes that this cooperative approach also reduces the risks that theGroup might miss issues that will hamper its ultimate delivery of service or that there is anymisunderstanding with customers as to the scope of services to be provided. Further, thethoroughness of this process increases the likelihood that the Group will accurately projectanticipated savings and so provide achieveable levels of guaranteed cost reductions in its contractswith customers. From start up, the operations are monitored very closely against a rigorous set ofperformance measures to ensure compliance with service, production quality, financial and otherperformance targets as well as customer satisfaction targets. The Group’s sales pipeline is tightlymanaged, updated continuously and formally reviewed at the monthly sales committee meeting forvolume, velocity and quality.

9. EXECUTION APPROACH

The Group employs a formal execution approach that embraces rigorous contracting, continualproductivity improvement, increasing the scale of the platform by winning new third party revenueand measuring performance. The Group believes this approach establishes profitability andprovides margin upside over time.

9.1 Overview

9.1.1 Rigorous contracting

At the outset of major BPO arrangements, the Group seeks to convert a customer’s internalcost base to a defined set of services and production. The service definition is the baselineagainst which service delivery and improvement is measured. The definition is updated forchanging services, new service classes and new customer types.

9.1.2 Productivity improvement

The Group utilises a range of tools, techniques and methods to re-align and streamlineproduction and improve service over time. This productivity improvement occurs thoughprocess optimisation, aggregation and arbitrage, as well as upgrading the quality of existingservices.

9.1.3 Scaling the platform

Following the implementation of productivity improvements, the Group seeks to capitaliseon the spare capacity it has created through productivity improvement so that it can add

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volume and revenues. In order to commercialise its platforms, the Group adds sales andrelations expertise to secure the new revenues and volumes and quality management toassure consistent high standards are achieved in all service offerings.

9.1.4 Systematic performance measurement

To sustain and enhance the margins the Group operates a detailed process of performancemeasurement. Performance measurement encompasses every aspect of the business: service,production, implementation, relations, sales and quality. The Group continuously measuresperformance at a detailed level to offer an overall view of the performance of eacharrangement in a consistently thorough manner. This is reviewed monthly at theperformance committee meeting.

9.2 Rigorous Contracting

Beginning with the Validation and Conclusion phases of the Group’s sales methodology andcontinuing as the Group undertakes the realignment of the customer’s functions onto the Group’sstandardised platform, the Group works to identify the services, customers, products, providers ofservices, resources used and costs needed for the proposed arrangement. The moment a contract issigned, the Group expects to begin the process of taking over the contracted services from thecustomer. Therefore, having a clear picture of the services to be provided and the productionnecessary to perform the contract is critical.

The Group creates a baseline definition for both service and production. The service definitionshows the classes of service delivered, the customer types and the standards of performance. Theproduction definition shows the classes of resources, the supply types and the standards ofoperational delivery. The baseline then forms the basis of the Group’s operational measurementand control approach.

These baselines represent the contractual specification of service, which is updated with customersas service requirements change over time. Having a clear picture of all of the elements of thecontracted arrangement enables the Group to fix the baseline of costs and resources (assuming nochange from cost to the customer before the Group’s involvement), which is used to establish costsavings and service improvements. In addition, the baseline allows the Group to quickly identifyinefficiencies to target for productivity improvement, and to educate the customer in terms ofexisting process, cost and quality, so that improvements and opportunities for additional service canbe shown over time, and billed for. These service and production definitions, as well as the baseline,become a part of the contracted arrangement with the customer and offer the Group an ‘‘as is’’starting point from which to measure productivity improvements. In addition, they offer the Groupa roadmap for the process of realigning the customer’s practices with the Group’s standardisedapproach.

9.3 Productivity Improvement

Once the Group has defined a production baseline of resources, supply types and the costs, it seeksto re-align and streamline the resources and supply types and maximise use of the Group’s re-usableassets. The Group follows this with reassessments to find ways to further streamline and improveservice.

As the customer’s operations ‘‘taken over’’ by the Group are realigned to become consistent withthe Group’s standardised approach, the Group focuses on three principal methods to improveproductivity:

9.3.1 Process Optimisation

The goal of process optimisation is to reduce significantly the amount of work necessary toprovide the required services in order to create spare capacity. Process optimisationrepresents a continual focus on cycle time and error reduction and the removal of non value-added processes, which increase productivity and allow the Group to meet the needs of itscustomers.

The Group’s process optimisation approach is based on Six Sigma methodology. Theobjectives of Six Sigma are to understand, simplify and optimise core processes in order to

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reach a targeted maximum of 3.4 defects per million opportunities to create a defect (withthe defects being defined by the customer). The Group applies Six Sigma processoptimisation techniques to every partnership and across the entire operation, to driveproductivity improvement at all levels. To support this, the Group trains 1.5% of itsemployees as full-time process improvement experts (known as ‘‘Black Belts’’ under SixSigma).

The Group maps the processes in detail and identifies where it can remove non-value addedservices, reduce cycle times and cut out re-work loops. This comprises the bulk of the processoptimisation work and is undertaken during the early years of a major new partnership. Itleads in subsequent years to process standardisation, which in turn enables capacity sharingand workforce flexibility. It is a goal of the Group, once the processes have reached astandardised state, to increase the degree of automation to improve efficiency levels further.

9.3.2 Aggregation

Aggregation seeks to consolidate processes and services wherever possible and share sparecapacity generated by productivity improvements. There are three ways the Group seeks toaggregate its production resources: within sites, across sites and across businesses:

9.3.2.1 Within-Site Aggregation

The focus of within-site aggregation is to identify spare capacity within a productionsite. Overcapacity, by staffing each process for maximum demand, can be sharedacross processes through process optimisation, by workload scheduling and cross-process training, which together allow for the switching of spare capacity betweendifferent processes. In identifying and using such spare capacity, total performance atthe site can be improved. For example, in the Financial Markets sector threeinvestigation teams were combined providing a common approach and tools.

9.3.2.2 Across-Site Aggregation

The Group creates generic process flows that become standard components used tosupport standardised services. Training employees to use these standard componentsallows resource sharing across different businesses. This is often achieved through thestandardisation of services, which in turn enables the consolidation of resources. Forexample, when the Group took over BAE Systems’ human resource services, 34 sitesthat had been used to provide HR services by the various BAE Systems’ businessunits were consolidated such that only seven principal sites remain(1). Thisconsolidation is made possible by having identical structures, functions andperformance controls such that any site can replace its sister site.

The Group also strives to aggregate indirect external spend by category ofprocurement. For example, for BAE Systems the Group has aggregated indirectspend from 13 business units and over 50 sites into a single, common framework ofmanaged procurement spend. These categories of spend include travel, temporarylabour and office consumables and furniture. The savings through standardising thespecification, purchasing economies of scale and compliance are substantial.

9.3.2.3 Across-Business Aggregation

Through its use of uniform processes, the Group also allows different areas within theGroup to share resources through across-business aggregation. For example, thespare capacity generated through aggregation of human resources processes andservices under the Group’s HR platform allows the Group to offer human resourceservices to its own businesses. In addition, the Group provides IT hosting services tothe majority of businesses through its network of operations. Finally, the Groupleverages its purchasing power and category expertise for indirect spend to reduce theinput cost of its operating businesses.

(1) Based on sites with greater than seven employees.

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9.3.3 Arbitrage

Arbitrage exchanges higher for lower input costs. With arbitrage, the Group seeks to createvalue by ‘‘right-skilling’’, ‘‘near-shoring’’ and ‘‘offshoring’’.

9.3.3.1 Right-skilling

Right-skilling describes a method of substituting over-qualified employees withemployees trained in simplified processes. This provides cost savings and encouragesgreater enthusiasm for the job. The Group’s standardisation approach enables it tocreate processes which support right-skilling, and the right-skilling process optimisesemployee performance. This method uses natural attrition, promotion andperformance management to create these benefits. It includes redeployment ofexperienced staff on to work that provides a proper return for their skill-set, ratherthan depending on redundancy.

9.3.3.2 Near-shoring

Near-shoring moves work (rather than employees) between sites to obtain costadvantages. It allows the Group to avoid redundancies by releasing capacity at aparticular site to serve new customers or perform other activities, another benefit ofthe standardised processes. As with right-skilling, this method uses re-deployment ofspare capacity, performance management and natural attrition to realise the arbitragebenefit.

9.3.3.3 Offshoring

Similarly, offshoring moves work (rather than employees) to India to gain further costadvantages. India offers costs per employee that are lower than those typicallyachievable in Western countries. However, the Group believes that maintainingcustomer service is paramount, so only certain processes are moved offshore, and theprocesses are only moved after they have been standardised and optimised locally.Currently, insurance policy and premium processing administration of theprocure-to-pay systems, securities processing and insurance software developmentand support, have been relocated to India.

9.3.4 On-site, Off-site and Offshore Provision of Services

To offer customers the most efficient, most tailored solutions possible, the Group utilises amix of on-site, off-site and offshore facilities to deliver its products and services. As theGroup looks for ways to aggregate the services provided to any customer (throughconsolidation and sharing of spare capacity) and to apply arbitrage to trade high costs forlow costs, it selectively places functions on-site, off-site or offshore. This allows the Group tomaximise savings while allowing its customers to keep critical functions on-site or nearby andtransition others off-site or offshore to generate further savings and efficiencies.

On-site services are offered in situations in which activities need to be carried out close tothe customer or face-to-face interaction is desirable (such as in the handling of complexinsurance claims). In order to serve its customers best, the Group provides its services at itscustomers’ locations or at its own facilities in a location near to the customer. For example,at the Group’s Leadenhall Street offices in the City of London where it provides a range ofinsurance services to brokers and underwriters.

Off-site services are provided ‘‘on-shore’’ in a geographic region near the customer forfunctions that can be removed from the customer’s location and run from a less costly area,but still need to be provided locally. In the Insurance sector, the Group has transitionedcertain insurance policy and premium processing, claims handling, software implementationand development, hosting and broking back office services to off-site facilities such asChatham, United Kingdom. The ability to move to off-site facilities allows the Group toreduce costs, and, through consolidation, gain economies of scale for its platforms.

The Group is able to achieve further cost savings by moving other services that are notrequired to be performed locally to its offshore facility in India. Currently, the Group offers

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insurance policy and premium processing, administration of procure-to-pay services,securities processing and software development and support, offshore. In addition to theadvantage of lower costs, moving processes offshore allows the Group to free up capacity atits on-shore sites which can be used for new services or processes or to service newcustomers. The Group believes that the expense of large scale redundancy programmesreduces the cost reduction benefits of moving people offshore and as a result seeks to use itsSTP model to leverage the spare capacity created by the movement offshore rather thanmake people redundant.

9.4 Scaling the Service Platforms

As standardised, efficient and effective operations are developed through rigorous contracting andproductivity improvements, the Group looks to build further economies of scale and enhancemargins. As capacity becomes available though productivity improvements, it is employed to createincremental revenue for the Group. Incremental revenue can be derived by offering services to newcustomers as well as by offering new services to existing customers.

The Group has been successful in generating incremental revenue onto its service platformsthrough each of the five offerings (Partnering, Outsourcing, Products, STP and Business Support).

9.5 Systematic Performance Management

To manage the complexities and scale of the back office functions that the Group provideseffectively, the Group believes that it is vital to ensure that all of its services and productionmethods are provided in a consistent manner. Furthermore, the Group believes that it shouldcontinuously look for Group-wide best practices and opportunities to adapt success in one area tothe practices of other operations. Therefore, the Group has a formal and comprehensiveperformance management approach that embraces every aspect of any particular arrangement. Thesame performance management approach is adopted throughout the Group.

9.5.1 Performance measurement

The Group measures performance at many points, across all of its functions in the same way.A formal monthly measurement reporting cycle reports the actual and perceivedperformance of any given function against the performance definition and baseline createdfor it, with updates for changing business conditions. These measurements are reviewed andmade available within the Group’s ‘‘performance hubs’’ specifically set up to monitor anddisplay performance, which enables operational management to assess improvementsday-to-day.

9.5.2 Performance baseline setting

Building on the service and production definitions developed as part of the customercontract, the Group develops a performance definition for all elements of its business. Eachperformance definition includes an analysis of the services to be provided to the customer,the production required to perform those services and the key performance measures. Theperformance definition captures both the ‘‘as is’’ status and the ‘‘should be’’ status for anygiven function. These performance definitions ultimately measure performance for each ofthe three sectors served by the Group.

9.5.3 Empirical and perceived measures of performance

Performance is measured both empirically against the baselines and using perceptionmeasures. The empirical measurements of performance take into account pre-definedrepresentative indicators of performance, such as indicators of a volume, value and qualitynature for services. Perception measures of performance include both the judgment of theexternal customer and internal subject matter experts, to ensure that a balanced view ispresented. The external and internal approach also allows the Group to identify gapsbetween empirical measures and perception and then to redress them.

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9.5.4 Performance measurement benefits

The Group’s standardised method of performance management helps the Group to chartlarge scale service offerings and the production needed to provide the services efficiently. Inaddition, it enables the Group to spot both performance deficiencies and opportunities foradded value quickly. The Group believes that performance measurement is key inestablishing and maintaining customer relationships, as well as critical to keeping its ownstaff aware of targets; as such, the Group’s performance is made transparent both within theGroup and to customers.

10. INFORMATION SYSTEMS

The Group’s business is predicated on the premise that the Group seeks to control the coreinformation systems on which each business is built. These systems consist of different componentsdepending on the sector in which the system operates but almost invariably at their core is a largeIT asset that is used to deliver scale benefits to business processing services offerings.

The Group has developed its IT assets using the methods described below.

As a consequence of its unique Enterprise Partnership approach, the Group seeks to gain control ofthe IT processing assets critical to the operations of the business. Typically, these processing assetsare mature, benefiting from heavy investment during the customer’s initial development andcommissioning, and are operated on a business-as-usual basis at the time of a change of control tothe Group.

Principally, the role of the Group from the commencement of the Enterprise Partnership business isto act as the domain manager of the processing assets. The Group seeks to target its investment inthe assets in order to improve the processing efficiency and lengthen their effective lifetime andthereby achieve maximum return from the previous investments. In this manner, the Group acts asa commercial manager in setting future technology direction.

IT assets can also be acquired either through the acquisition of the business that owns them (as withthe range of insurance software products and the financial system based on SAP obtained throughthe acquisition of RebusIS in 2004) or through the acquisition of assets directly (through theoutright purchase or, in the case of application software, through acquiring a ‘‘development’’ licencewhich effectively gives the Group full control of that version of the software in the future).

Finally, a number of the IT systems have been developed in-house either at Group level, consistingmainly of a series of portals and e-mail, office and financial systems, or have been developed byentities within the Group to support the business relevant to that entity.

The Group has Data Centres in Basildon, Chatham, London and Frankfurt providing IT servicessuch as payroll, hosting, printing, broking and document management for the Group. Otherlocations such as Preston, Folkestone and Gurgaon (India) have extensive hardware for IT servicesincluding mail, filing and development. Frankfurt is home to an extensive hardware inventory aswell as a disaster recovery centre for Xtb.

Xchanging UK Limited holds the Group’s central IT infrastructure, including the Group’s network,finance system, time recording system, e-mail and office systems. In this regard, the key informationtechnology applications are licenced applications from Oracle (regarding the finance system) andAdeo (regarding the time recording system).

In summary, the Group seeks to:

� Leverage and enhance existing IT assets obtained through acquisition or inheritance fromEnterprise Partnerships as fully as possible through targeted investment.

� Avoid major technology replacement investments by enhancing existing platforms over time.

� Apply Group ‘‘re-usable assets’’ to enforce standardisation and repeatability.

11. INTELLECTUAL PROPERTY

Registered Intellectual Property

The Group is the owner of a number of registered trade marks including the marks XCHANGING,X (logo), INS-SURE, SERVICE 1ST (logo) and XCELLENCE (logo) which are registered under

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the Community Trade Mark system (which covers the whole of the EU) in respect of relevant goodsand services. The Group also has a number of national trade mark registrations for these trademarks, in particular in the USA and the UK. The Group does not register trade marks for all of thebrands used in the Group’s business.

Unregistered Intellectual Property

Part of the Group’s business involves the development of software which is used as part of theservices it offers. Such software is developed largely by the Group’s employees. The Group alsomakes use of external contractors for software development.

Enterprise Partnerships

The Group generally grants non-exclusive licences of the relevant intellectual property to theEnterprise Partnerships in return for royalties based on the revenue generated by the relevantEnterprise Partnership. Generally, intellectual property that is created by the EnterprisePartnership is licensed to the partner, and the Enterprise Partnership retains ownership of theintellectual property (save for improvements made to the Group’s intellectual property, which vestsin the Group).

12. DATA PROTECTION

The Group’s operations are subject to data protection laws. These laws place restrictions on thecollection, use, international transfer and other processing of personal data and provide rights toindividuals with regard to their personal data. Where the Group processes personal data on behalfof customers the customers will generally have primary responsibility but the Group may have somedirect responsibilities for security. Customers generally impose specific contractual obligationsregarding personal data on the Group.

Xchanging has established a Group security function that is responsible for the production andmaintenance of information security policies and standards applicable across the Group. Acorporate information security policy, approved by the Board, is given effect by protocols and otherdocuments addressing aspects of information security conformant to ISO 17799. The Group hascountry-specific data protection policies and protocols and is in the course of bringing these under agroup wide data protection policy. The Group’s security officers provide advice on request, forexample when new systems and processes are being developed. Appropriate awareness programmesare conducted across the Group and with targeted groups, including data protection. All relevantstaff in India are trained in the European Data Protection Directive and specific requirements inthe UK and German implementations thereof. Specific data protection responsibilities exist alsowithin businesses. Technological countermeasures are installed to protect data confidentiality.

13. DIVIDEND POLICY

The Company intends to adopt a dividend policy which reflects the growth prospects and cash flowgeneration of the Group, whilst maintaining an appropriate level of dividend cover.

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PART 2: DIRECTORS, SENIOR MANAGERS, EMPLOYEES ANDCORPORATE GOVERNANCE

1. DIRECTORS

The Board currently comprises three Executive Directors and nine Non-Executive Directors. TheDirectors are as follows:

Date appointed NoticeName Position to Board(1) Period

John Robins F.C.T. ................................... Non-Executive Chairman 22 March 2007 6 monthsDavid Andrews M.A., F.C.A. .................. Chief Executive Officer 27 June 2006 12 monthsRichard Houghton M.A., M.B.A. .......... Chief Financial Officer 27 June 2006 12 monthsAdele Browne A.C.A. .............................. Executive Director, Sales

and Commercial 22 March 2007 12 monthsDavid Hodgson M.B.A. ........................... Non-Executive Director 27 June 2006 3 monthsTom Tinsley M.B.A. ................................. Non-Executive Director 27 June 2006 3 monthsNigel Rich C.B.E., F.C.A......................... Non-Executive Deputy

Chairman 22 March 2007 3 monthsStephen Brenninkmeijer B.A.................. Non-Executive Director 22 March 2007 3 monthsDennis Millard M.B.A., C.A. (SA) ........ Non-Executive Director 22 March 2007 3 monthsJohn Bramley M.A., F.C.A...................... Non-Executive Director 22 March 2007 3 monthsJohannes Maret M.B.A., C.P.A. ............. Non-Executive Director 22 March 2007 3 monthsFriedrich Carl Janssen Dipl.-Kfm. ......... Non-Executive Director 22 March 2007 3 months

The business address of each of the Directors is 13 Hanover Square, London W1S 1HN.

The management expertise and experience of each of the Directors is set out below:

John Robins (68), joined the Group in 1999 and is the Non-Executive Chairman. He retired as GroupChief Executive of Guardian Royal Exchange plc in 1999 after 15 years in the insurance industry. Priorto joining Guardian Royal Exchange, he spent 10 years as Group Financial Director of Willis Coroonplc and 5 years as Chief Executive Officer of Bally Group UK Limited. He is also Deputy Chairman ofAlexander Forbes Limited.

David Andrews (57), founded Xchanging and has served as the Chief Executive Officer of the Groupsince its formation in 1999. Prior to the creation of Xchanging, he was a board member of AndersenWorldwide and the Managing Partner of Andersen Consulting Western Europe. Mr Andrews built upAccenture’s (formerly Andersen Consulting’s) BPO business through the 1980s and 1990s, leading anumber of large outsourcing contracts. During his tenure at Andersen Consulting, he held positions asHead of Financial Services (UK) and Head of the Telecommunications Practice (Global). He is also anon-executive director of the supervisory board of Deutsche Borse, a Fellow of the Institute ofChartered Accountants and a William Pitt Fellow of Pembroke College, Cambridge.

Richard Houghton (48), joined the Group in early 1999 and was appointed as Chief Financial Officer,with responsibility for Finance, Legal and Group Implementation in 2003. Before joining the Group,Mr Houghton worked at Caradon plc where he was Chief Executive Officer of the Industrial ProductsDivision and was responsible for the realignment of their overall business portfolio. He graduated inChemical Engineering from Cambridge and began his career at Esso before completing his MBA atHarvard. He subsequently spent 5 years working in consulting at McKinsey and Company.

Adele Browne (38), joined the Group in July 1999 and is currently Executive Director of Sales andCommercial, responsible for shaping and structuring the commercial aspects of the Group’s partnerand customer arrangements. Prior to joining the Group, Ms Browne worked in Corporate Finance atLazard Brothers. She started her career at PricewaterhouseCoopers, where she qualified as achartered accountant.

David Hodgson (50), joined the Group in 1999 as a Non-Executive Director. Mr Hodgson is a ManagingDirector of General Atlantic LLC, where he has been since 1982 and he is a member of the firm’sinvestment and executive committees. He also serves as a director of a number of public and privatecompanies, including Dice, Inc., InsightExpress, Inc., ipValve, Northgate Information Solutions plcand TriNet.

(1) Each of the board directors joined the Group prior to these dates as described in the above biographies.

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Tom Tinsley (53), joined the Group in 2000 as a Non-Executive Director. Mr Tinsley is currently aManaging Director of General Atlantic LLC and also serves on the boards of BMC Software,Philanthropic Research, Inc. and Critical Path, Inc. During 1995 to 1999 he held various executivepositions with Baan Company, NV, a leading provider of Enterprise Software Solutions, includingChairman and Chief Executive of the Management Board. Prior to joining Baan, he was a director atMcKinsey and Company, where he was employed for 18 years.

Nigel Rich (61), joined the Group in November 2006 and is the Non-Executive Deputy Chairman. He isChairman of Slough Estates plc, a property investment and development company, Deputy-Chairmanof Asia House and Co-Chairman of the Philippine British Business Council. His other non-executivedirectorships include Pacific Assets Trust plc, KGR Absolute Return PCC, John Armit Wines Limitedand Matheson & Co. Limited. In 1974 he joined Jardine Matheson in Hong Kong and subsequentlyheld management positions before becoming Finance Director and then Managing Director of HongKong Land. From December 1988 to 1994 he was Managing Director of Jardine Matheson and in1994, he became Group Chief Executive of Trafalgar House until it was taken over in 1996. He is aFellow of the Institute of Chartered Accountants and was awarded a CBE in 1995.

Stephanus (Stephen) Brenninkmeijer (51), became a Non-Executive Director in 2000.Mr Brenninkmeijer was Managing Director of Cardex Europe, a division of the MondialOrganisation, which is the importing division of C&A Europe until 2001. He founded the AndromedaFund in 2002, a venture capital fund investing in entrepreneurs with a direct link to the emergingmarkets. Andromeda is part of the Entrepreneurs Fund BV that is owned by COFRA Holding AG.He was founding Chairman of NFTE UK (Network of Teaching Entrepreneurship), which mergedwith Business Dynamics in July 2006. Both organisations created the Enterprise Education Trust inNovember 2006 of which Mr Brenninkmeijer is Deputy Chairman. He earned his degree at theEuropean Business School in Germany.

Dennis Millard (58), joined the Group in 2005 as a Non-Executive Director and was appointedChairman of the Audit Committee in 2006. Mr Millard was Group Finance Director of CooksonGroup PLC from 1996 until 2005. His previous executive positions include that of Finance Director ofMedeva PLC from 1994 to 1996 and directorships at the Plate Glass Group, a South African publiccompany, from 1980 to 1993. He was a non-executive director and chairman of the audit committee ofboth Exel PLC from 2003 to 2005 and Arc International PLC from 2000 to 2003. Mr Millard is alsocurrently Deputy Chairman and senior independent director of Smiths News PLC and a non-executivedirector and chairman of the audit committee of Debenhams PLC. He is a member of the SouthAfrican Institute of Chartered Accountants.

John Bramley (67), joined the Group in 1999 as a Non-Executive Director. He was formerly theFinance Director of BP’s Worldwide Exploration and Production group, where he played a significantpart in the outsourcing of BP’s Finance and Accounting. Mr Bramley qualified as a charteredaccountant with Ernst & Young. His career with BP was financially based and encompassed theupstream, downstream and central activities of the company.

Johannes Maret (56), joined the Group in 2003 as a Non-Executive Director. Mr Maret is alsoManaging Director of Maret GmbH and an Advisor and Non-Executive Director of the investmentcommittee of the Triton fund, a mid-market European buy-out fund. Prior to joining the Group,Mr Maret was a partner in, and Chief Financial Officer of, Sal. Oppenheim jr. & Cie. KGaA, wherehe was responsible for banking and administration and was a member of the supervisory board ofEuropean Transaction Bank (now called Xtb).

Friedrich Carl Janssen (62), became a Non-Executive Director in February 2005 when Sal. Oppenheimjr. & Cie. KGaA, in which he is one of the five General Partners, became a shareholder of XchangingB.V. In 1974 Mr Janssen became a partner in the law and audit firm Gurland, Schlutter, Luer andJanssen. In 1983 he was appointed to the Executive Board of KPMG Germany. From 1990 until 1994he was a member of the Management Board of Kaufhof Holding AG, part of the Metro Group. Hesubsequently joined Arthur Andersen & Co. GmbH as the lead partner for the western region ofGermany and a member of the Operating Committee, later becoming a member of the GlobalSupervisory Board. He is currently a supervisory board member of Ernst & Young AG, InterserohAG, AXA Service AG, Content Management AG, gardeur AG and Deutsche Hypothekenbank AG.

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2. SENIOR MANAGERS

In addition to the executive management on the Board of the Company, the following seniormanagers (the ‘‘Senior Managers’’) are considered relevant to establishing that the Company has theappropriate expertise and experience for the management of its business:

Name Position

David Rich-Jones ..................... Executive Director – Business Lines SectorSteven Beard............................. Executive Director – Insurance SectorMike Margetts .......................... Executive Director – Financial Markets SectorClive Buesnel ............................ Executive Director – Group RelationsHugh Morris ............................. Executive Director – Sales and Relations, Business Lines SectorStephen Bowen......................... Executive Director – Sales and ServiceMelissa Pitt ............................... Group HR DirectorGary Whitaker.......................... Company Secretary and General Counsel

The business address of each of the Senior Managers is 13 Hanover Square, London W15 1HN. Theaverage age of the Senior Managers is 41.

The management expertise and experience of each of the Senior Managers is set out below:

David Rich-Jones is the Group’s Executive Director responsible for the Business Lines Sector. Hejoined the Group in April 2000 to establish Procurement Services, having previously been GroupPurchasing Director of the building products group Caradon plc. Prior to joining Caradon, he wasVice President, Global and Strategic Purchasing at Smithkline Beecham and was Group PurchasingDirector (IT) for National Westminster Bank plc. Mr Rich-Jones commenced his career inManufacturing with GEC Marconi as a sponsored graduate, and then joined Raytheon Ltd to work inManufacturing and Supply Chain Management. He is a prior member of the Council and Board ofManagement of the Chartered Institute of Purchasing and Supply.

Steven Beard has served as the Group’s Executive Director for Insurance since July 2006. Mr Beardstarted his career in finance and has since held director level positions in insurance, technology andventure capital companies. He joined the Group in 2002 to lead the XCS business throughrealignment and streamlining and has held a number of senior positions since then. Prior to joiningthe Group, Mr Beard’s previous roles included Finance Director of a division of XL Capital andexecutive director and CFO of GlobalWave Group plc. Mr Beard is a Fellow of the Association ofChartered Certified Accountants.

Mike Margetts joined the Group in 2000 as the head of Implementation and was appointed COO ofXHRS in 2001, Head of Production at Xtb in 2003 and Corporate Director in 2005, beforeprogressing to his current role as Executive Director of Xchanging’s Financial Markets Sector,responsible for its overall growth and performance. Before joining the Group, Mr Margettscommenced his career in the Financial Markets sector with Accenture, before becoming EuropeanHead of Project Services at CSFB, responsible for implementing a series of cross-functional projectsto improve the Bank’s control environment and cost efficiency. Mr Margetts is an ACMA.

Clive Buesnel joined the Group in 2000, serving as Head of Technology and Head of London MarketServices before progressing to his current role as Relations Director with responsibility for GlobalRelationships and Insurance Sales. Mr Buesnel is a qualified Production Engineer and joined theGroup from British American Tobacco where he was Head of Marketing IT. Prior to that he spent7 years at Andersen Consulting where he programme managed major IT implementations forEuropean Banks. He also worked for Mars, Inc. as a European Business Systems Manager responsiblefor design and implementation of sales and marketing systems across Europe.

Hugh Morris joined the Group in 2003 and served as Managing Director of Xchanging HR Services andExecutive Director for Global Delivery, before becoming the Executive Director for Business LinesSales and Relations in the UK in 2007. Mr Morris has more than 15 years experience in outsourcingand related business activities. He started his career at Arthur Andersen & Co. ManagementConsultants in 1980, and was promoted to partner in Andersen Consulting, in 1991. From 2001 to2003, he was the Operations Director for QA plc, where he was responsible for all aspects of QA’straining, outsourcing and consulting businesses.

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Stephen Bowen joined the Group in 2000 and has worked in many roles including Head of Technology,Head of Service for Xtb, Head of Global Investment and more recently the Group’s ExecutiveDirector Sales and Service. Before joining Xchanging, Mr Bowen was at Accenture (formerlyAndersen Consulting) where he was made Manager in 1993 and Associate partner in 1998. WithAndersen Consulting Mr Bowen specialised in the delivery of major strategic change to the retailindustry working with major brand names in the US, South Africa, Sweden, France, Germany and theUK. Mr Bowen is a Kitchener and National Engineering Scholar.

Melissa Pitt joined the Group as Learning and Development Director in March 2003 before becomingthe Group HR Director. Prior to joining the Group, Ms Pitt worked at KPMG Consulting in theMergers and Acquisition Integration Practice, focusing on issues such as training, cross-culturalrealignment, communications and recruitment.

Gary Whitaker has served as the Group’s General Counsel and Secretary to the Board since joining theGroup in 2001. Prior to joining the Group, Mr Whitaker was a corporate lawyer with Norton RoseSolicitors, working in both the London and Moscow corporate finance departments. Prior to his legalcareer, he was a commissioned officer in the Royal Navy, serving as aircrew in the fleet air arm.

3. COMPENSATION

3.1 The aggregate total remuneration accrued in respect of the financial year ended 31 December 2006(including contingent or deferred compensation) and benefits in kind granted (under any descriptionwhatsoever) to each of the Directors by members of the Group was £1,469,300.

3.2 The remuneration received by the Directors for the year ended 31 December 2006 was as follows:Name Fee/Basic salary Bonus Benefits Total

DirectorsJohn Robins............................................................ £125,000 — — £125,000David Andrews....................................................... £500,000 — £11,408 £511,408Richard Houghton................................................. £330,000 — £7,761 £337,761Adele Browne ........................................................ £300,000 — £6,483 £306,483David Hodgson ...................................................... — — — —Tom Tinsley ............................................................ — — — —Nigel Rich............................................................... £25,000 — — £25,000Stephen Brenninkmeijer ....................................... £40,000 — — £40,000Dennis Millard ....................................................... £46,936 — — £46,936John Bramley ......................................................... £40,000 — — £40,000Johannes Maret(1) .................................................. £34,077 — — £34,077Friedrich Carl Janssen(2) ....................................... £2,635 — — £2,635

3.3 In respect of the financial year ended 31 December 2006, the aggregate total remuneration accrued(including contingent or deferred compensation) and benefits in kind granted (under any descriptionwhatsoever) to each of the Senior Managers by members of the Group was £1,862,348.

3.4 The total amount set aside or accrued by the Group to provide pension, retirement or other benefitsto the Directors and Senior Managers in the year ending 31 December 2006 is £73,231.

(1) Johannes Maret’s fees in respect of the financial year ended 31 December 2006 were received as a consultant of XchangingGmbH. The fees of A50,000 were converted into pounds sterling at the average exchange rate for the year (A/£1.46725). Furtherdetails of Mr Maret’s consultancy arrangement with the Group are set out in paragraph 7.2.6 of Part 8: Additional Information.

(2) Friedrich Carl Janssen’s fees in respect of the financial year ended 31 December 2006 were received for his supervisory boardmembership at Xtb. The amount he received was A3,866.28 and has been converted into pounds sterling at the average exchangerate for the year (A/£1.46725).

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4. EMPLOYEES

The average number of full-time equivalent employees of the Group for the financial years ended31 December 2004, 2005 and 2006 is set out below:

Financial Financial FinancialCategory of activity Year 2004 Year 2005 Year 2006

Business Lines ............................................................................................. 635 726 863Insurance...................................................................................................... 1,187 1,276 1,471Financial Markets ....................................................................................... 511 875 810Other............................................................................................................. 132 239 305Average number of persons (including Executive Directors)

employed .................................................................................................. 2,465 3,116 3,449

Location by Country on Average:Germany....................................................................................................... 511 875 810India.............................................................................................................. 137 232 356Malaysia........................................................................................................ 28 25 18Thailand ....................................................................................................... 2 2 1USA .............................................................................................................. 29 32 23Australia ....................................................................................................... — 1 4France ........................................................................................................... 2 5 8UK................................................................................................................. 1,756 1,944 2,229

2,465 3,116 3,449

The Group formally recognises AMICUS MSF in the UK. The recognition covers the Group’sprofessional grades within XHRS’ legal entities, collective bargaining and negotiations regardingterms and conditions and salary.

In Germany, under German law (‘‘Betriebsverfassungsgesetz’’) the employees within the Xtb arerepresented by the Workers’ Council, which is a forum of Xtb staff elected to the role for a period of4 years. The current representatives were elected with a majority of 70% in March 2006 and actindependently, i.e. they do not represent a specific union. The Workers’ Council remit covers anumber of corporate elements (e.g. terms and conditions, internal organisation) as well as individualelements (e.g. recruiting approvals, transfer of staff, termination).

5. CORPORATE GOVERNANCE

The Company intends to comply with the Combined Code other than as set out in this paragraph 5.

The Combined Code recommends that at least half the members of the board of directors (excludingthe chairman) of a public limited company incorporated in England and Wales should be independentin character and judgment and free from relationships or circumstances which are likely to affect, orcould appear to affect, their judgment.

The Combined Code also recommends that the board of directors should appoint one of theindependent non-executive directors as senior independent director and Nigel Rich has beenappointed to fill this role. The senior independent director should be available to shareholders if theyhave concerns which contact through the normal channels of chairman, chief executive or financedirector has failed to resolve or for which contact is inappropriate.

Currently, the Board is composed of twelve members, consisting of the Chairman, three ExecutiveDirectors and eight Non-Executive Directors, four of whom are independent. Tom Tinsley, DavidHodgson, Johannes Maret and Friedrich Carl Janssen are deemed by the Board not to beindependent under the Combined Code. Friedrich Carl Janssen is deemed not to be independent ashe is a director of Sal. Oppenheim which on Admission will be a 2.2% shareholder in the Company, a5% shareholder in Xtb and a customer of Xtb. Johannes Maret is deemed not to be independent as hehas been a consultant to Xtb since June 2003 and will continue to be a consultant to the Groupfollowing Admission. Tom Tinsley and David Hodgson will remain on the Board following Admissionas the General Atlantic Directors pursuant to the Relationship Deed between the Company andGeneral Atlantic, a summary of which is set out in paragraph 18.13 of Part 8: Additional Information.Johannes Maret and Friedrich Carl Janssen will remain on the Board following Admission because

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the Board considers that the Group will continue to benefit from their extensive contacts, experienceand knowledge in connection with the business community in Germany. It is intended that by theAGM of the Company held in 2008, John Robins and John Bramley will have retired as directors andthat Nigel Rich will have replaced John Robins as Chairman. Suitable replacement non-executivedirectors will be appointed to the Board.

The Chairman’s role is to ensure good corporate governance. His responsibilities will include leadingthe Board, ensuring the effectiveness of the Board in all aspects of its role, ensuring effectivecommunication with shareholders, setting the Board’s agenda and ensuring that all Directors areencouraged to participate fully in the activities and decision-making process of the Board.

On Admission, the Company will not comply with the provisions of the Combined Code that at leasthalf the Board (excluding the Chairman) should comprise independent non-executive directors. TheBoard intends to work towards full compliance with the requirements of the Combined Codefollowing the Global Offer. The Board will report to shareholders with progress on implementing itsplan for achieving compliance.

As envisaged by the Combined Code, the Board has established Nomination, Remuneration andAudit Committees, with formally delegated duties and responsibilities with written terms of reference.From time to time, separate committees may be set up by the Board to consider specific issues whenthe need arises.

Nomination Committee

The Nomination Committee assists the Board in discharging its responsibilities relating to thecomposition and make up of the Board. It is also responsible for periodically reviewing the Board’sstructure and identifying potential candidates to be appointed as directors of the Company as theneed may arise. The Nomination Committee is responsible for evaluating the balance of skills,knowledge and experience on the Board, the size, structure and composition of the Board, retirementsand appointments of additional and replacement directors and will make appropriaterecommendations to the Board on such matters.

The Combined Code provides that a majority of the members of the Nomination Committee shouldbe independent non-executive directors.

The Company’s Nomination Committee is composed of seven members, four of whom areindependent non-executive directors (namely John Bramley, Stephen Brenninkmeijer, Dennis Millardand Nigel Rich), David Hodgson (who is not considered to be independent), John Robins (theChairman) and David Andrews (Chief Executive Officer). The Chairman of the NominationCommittee is John Robins. The Company, therefore, considers that it complies with the CombinedCode recommendations regarding the composition of the Nomination Committee.

The Nomination Committee will meet formally at least twice a year and otherwise as required.

Remuneration Committee

The Remuneration Committee assists the Board in determining its responsibilities in relation toremuneration, including making recommendations to the Board on the Company’s policy on executiveremuneration, determining the individual remuneration and benefits package of each of the executivedirectors and recommending and monitoring the remuneration of senior management below Boardlevel. The Combined Code provides that the Remuneration Committee should consist of at least threemembers who are all independent non-executive directors.

The membership of the Company’s Remuneration Committee comprises six non-executive directors(namely Nigel Rich, John Bramley, Stephen Brenninkmeijer, Dennis Millard, John Robins and TomTinsley). The Chairman of the Remuneration Committee is Nigel Rich. As Tom Tinsley is notconsidered to be an independent non-executive director, on Admission, the Company will not complywith this recommendation of the Combined Code.

The Remuneration Committee will meet formally at least twice a year and otherwise as required.

Audit Committee

The Audit Committee assists the Board in discharging its responsibilities with regard to financialreporting, external and internal audits and controls, including reviewing the Company’s annual

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financial statements, reviewing and monitoring the extent of the non-audit work undertaken byexternal auditors, advising on the appointment of external auditors and reviewing the effectiveness ofthe Company’s internal audit activities, internal controls and risk management systems. The ultimateresponsibility for reviewing and approving the annual report and accounts and the half-yearly reportsremains with the Board.

The Combined Code recommends that the Audit Committee should comprise of at least threemembers who should all be independent non-executive directors, and that at least one member shouldhave recent and relevant financial experience.

The membership of the Company’s Audit Committee comprises four independent non-executivedirectors (namely Dennis Millard, John Bramley, Stephen Brenninkmeijer and Nigel Rich). DennisMillard is considered by the Board to have recent and relevant financial experience. The Chairman ofthe Audit Committee is Dennis Millard. The Company therefore considers that it complies with theCombined Code recommendations regarding the composition of the Audit Committee.

The Audit Committee will meet formally at least three times a year and otherwise as required.

6. MODEL CODE

Upon Admission, the Company will adopt a code of securities dealings in relation to the Shares whichis based on, and is at least as rigorous as, the Model Code as published in the Listing Rules. The ShareDealing Code adopted will apply to the Directors and other relevant employees of the Group.

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PART 3: THE GLOBAL OFFER

1. THE GLOBAL OFFER

Under the Global Offer, the Company will issue 31,250,000 New Shares and the SellingShareholders will sell 52,936,874 Existing Shares. In addition, a further 12,628,031 Existing Shareswill be made available by General Atlantic pursuant to the Over-allotment Option described below.

The New Shares represent approximately 15% of the issued ordinary share capital of the Companyupon Admission.

The New Shares being issued by the Company will rank pari passu in all respects with the ExistingShares, including the right to vote and the right to receive all dividends and other distributionsdeclared, made or paid on the Company’s share capital after Admission. The Shares will,immediately following Admission, be freely transferable under the Articles of Association.

The Global Offer is fully underwritten by the Underwriters.

Immediately following Admission, it is expected that 41.0% of the Shares will be held in publichands, assuming no exercise of the Over-allotment Option, and 47.1% if the Over-allotment Optionis exercised in full.

The Global Offer is being made by means of an offer of Shares to certain institutional investors inthe United Kingdom and elsewhere outside the United States and by way of an offering of Shares inthe United States to QIBs pursuant to Rule 144A or another exemption from, or transaction notsubject to, the registration requirements of the Securities Act.

Certain restrictions that apply to the distribution of this document and the Shares being issued andsold under the Global Offer in jurisdictions outside the United Kingdom are described inparagraph 14 of Part 8: Additional Information.

When admitted to trading, the Shares will be registered with ISIN number GB00B1VK7X76 andSEDOL number B1VK7X7.

2. REASONS FOR THE GLOBAL OFFER AND USE OF PROCEEDS

The Global Offer, Admission and issue of New Shares will allow the Group to fund its futuregrowth through establishing new Enterprise Partnerships, developing its business through its otherdelivery methods and selectively acquiring businesses. The Group believes it will also further raisethe profile of the Group and assist in retaining and incentivising employees. In addition, the SellingShareholders will realise part of, and in the case of BAE Systems, all of their investment in theGroup.

The gross proceeds the Company expects to receive from the issue of New Shares pursuant to theGlobal Offer are £75 million. After deducting underwriting commissions (assuming that the fulldiscretionary fee is paid to the Underwriters) and other estimated fees and expenses incurred inconnection with the Global Offer, the Company expects to receive net proceeds of £65 million. TheCompany will not receive any proceeds from the sale of Existing Shares or Over-allotment Sharesby the Selling Shareholders.

3. ALLOCATION AND PRICING

Allocations of Shares under the Global Offer will be determined at the sole discretion of theCompany (following consultation with the Joint Global Co-ordinators). A number of factors will beconsidered in deciding the Offer Price and the bases of allocation under the Global Offer, includingthe level and the nature of the demand for Shares and the objective of encouraging thedevelopment of an orderly after-market in the Shares.

All Shares issued or sold pursuant to the Global Offer will be issued or sold at the Offer Price.

Upon notification of any allocation, prospective investors will be contractually committed to acquirethe number of Shares allocated to them at the Offer Price and, to the fullest extent permitted bylaw, will be deemed to have agreed not to exercise any rights to rescind or terminate, or otherwisewithdraw from, such commitment. Dealing may not begin before notification is made.

The rights attaching to the Shares will be uniform in all respects and will form a single class for allpurposes. The proportions in which particular allocations of Shares under the Global Offer will

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comprise Existing Shares and New Shares may vary at the sole discretion of the Company (followingconsultation with the Joint Global Co-ordinators). Liability for UK stamp duty and stamp dutyreserve tax is described in paragraph 12 of Part 8: Additional Information.

4. OVER-ALLOTMENT AND STABILISATION

In connection with the Global Offer, the Stabilising Manager, or any of its agents, may (but will beunder no obligation to), to the extent permitted by applicable law, over-allot and effect othertransactions with a view to supporting the market price of the Shares at a level higher than thatwhich might otherwise prevail in the open market. The Stabilising Manager is not required to enterinto such transactions and such transactions may be effected on any stock market, over-the-countermarket or otherwise. Such stabilising measures, if commenced, may be discontinued at any time andmay only be taken during the period from the date of publication of the Offer Price and ending30 days thereafter. Save as required by law or regulation, neither the Stabilising Manager nor any ofits agents intends to disclose the extent of any over-allotments and/or stabilisation transactionsunder the Global Offer.

In connection with the Global Offer, the Stabilising Manager, may, for stabilisation purposes,over-allot Shares up to a maximum of 15% of the total number of Shares comprised in the GlobalOffer. For the purposes of allowing it to cover short positions resulting from any suchover-allotments and/or from sales of Shares by it during the stabilising period, the StabilisingManager has entered into the Over-allotment Option with General Atlantic pursuant to which theStabilising Manager may, on behalf of the Underwriters, purchase or procure purchasers for theOver-allotment Shares at the Offer Price. The Over-allotment Option is exercisable in whole or inpart, upon notice by the Stabilising Manager, at any time on or before the day that is 30 days afterthe date of publication of the Offer Price. Any Over-allotment Shares made available pursuant tothe Over-allotment Option will be purchased on the same terms and conditions as the Shares beingsold or issued in the Global Offer and will form a single class for all purposes with the Shares.

For a discussion of certain stock lending arrangements entered into in connection with theOver-allotment Option, see paragraph 7.3 of this Part 3: The Global Offer.

5. DEALING ARRANGEMENTS

The Global Offer is subject to the satisfaction of certain conditions contained in the UnderwritingAgreement which are typical of an agreement of this nature including Admission occurring andbecoming effective by 8.00 a.m. (London time) on 30 April 2007 or such later date or time (notbeing later than 18 May 2007) as the Company may agree with the Joint Global Co-ordinators andto the Underwriting Agreement not having been terminated. Further details of the UnderwritingAgreement are set out in paragraph 7 of this Part 3: The Global Offer.

Application has been made to the FSA for all the Shares to be listed on the Official List andapplication has been made to the London Stock Exchange for the Shares to be admitted to tradingon the London Stock Exchange’s market for listed securities.

It is expected that Admission will take place and unconditional dealings in the Shares willcommence on the London Stock Exchange at 8.00 a.m. (London time) on 30 April 2007. Settlementof dealings from that date will be on a three day rolling basis. Prior to Admission, it is expected thatdealings in the Shares will commence on a conditional basis on the London Stock Exchange on25 April 2007. The earliest date for settlement of such dealings will be 30 April 2007. All dealingsbetween the commencement of conditional dealings and the commencement of unconditionaldealings will be on a ‘‘when issued basis’’. If the Global Offer does not become unconditional in allrespects any such dealings will be of no effect and any such dealings will be at the risk of the partiesconcerned. These dates and times may be changed.

Each investor will be required to undertake to pay the Offer Price for the Shares sold or issued toeach investor in such manner as shall be directed by the Joint Global Co-ordinators. It is expectedthat Shares allocated to investors in the Global Offer will be delivered in uncertificated form andsettlement will take place through CREST on Admission. No temporary documents of title will beissued. Dealings in advance of crediting of the relevant CREST stock account shall be at the risk ofthe person concerned. It is intended that, where applicable, definitive share certificates in respect ofthe Global Offer will be distributed from 14 May 2007 or as soon thereafter as practicable.

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In connection with the Global Offer, each of the Underwriters and any affiliate acting as an investorfor its own account may take up the Shares and in that capacity may retain, purchase or sell for itsown account such securities and any securities of the Company or related investments and mayoffer or sell such securities or other investments otherwise than in connection with the GlobalOffer. Accordingly, references in this document to the Shares being offered or placed should beread as including any offering or placement of securities to any of the Underwriters and any affiliateacting in such capacity. The Underwriters do not intend to disclose the extent of any suchinvestment or transactions otherwise than in accordance with any legal or regulatory obligation todo so.

6. CREST

CREST is a paperless settlement procedure enabling securities to be transferred from one person’sCREST account to another without the need to use share certificates or by written instruments oftransfer. On Admission, the Articles of Association will permit the holding of Shares under theCREST system. The Company has applied for the Shares to be admitted to CREST with effectfrom Admission. Accordingly, settlement of transactions in the Shares following Admission maytake place within the CREST system if any shareholder so wishes.

CREST is a voluntary system and holders of Shares who wish to receive and retain share certificateswill be able to do so. Investors applying for Shares under the Global Offer may, however, elect toreceive Shares in uncertificated form if they are a system member (as defined in The UncertificatedSecurities Regulations 2001) in relation to CREST.

7. UNDERWRITING ARRANGEMENTS AND LOCK-UP ARRANGEMENTS

7.1 Pursuant to an agreement dated 25 April 2007 between, amongst others, the Company, theDirectors, the Selling Shareholders and the Underwriters (the ‘‘Underwriting Agreement’’);

7.1.1 the Company and the Selling Shareholders have agreed, subject to certain conditions thatare typical for an agreement of this nature, to issue and sell, as the case may be, the NewShares and the Existing Shares to be issued and sold under the Global Offer at the OfferPrice;

7.1.2 the Underwriters have agreed, subject to certain conditions that are typical for an agreementof this nature, including Admission, to procure subscribers and purchasers for or, failingwhich, to subscribe for and purchase themselves the New Shares and the Existing Shares tobe issued and sold under the Global Offer at the Offer Price. The Underwriting Agreementwill become unconditional on Admission;

7.1.3 General Atlantic has granted an Over-allotment Option to the Stabilising Manager, pursuantto which the Stabilising Manager may, subject to certain conditions, procure purchasers foror purchase itself up to 12,628,031 Existing Shares for the purposes, amongst other things, ofallowing the Stabilising Manager to meet over-allocations, if any, in connection with theGlobal Offer and to cover short positions resulting from stabilising transactions. The numberof Existing Shares to be transferred pursuant to the Over-allotment Option, if any, will bedetermined not later than 30 days from the date of publication of the Offer Price. Settlementof the Over-allotment Option will take place shortly after the exercise of the Over-allotmentOption;

7.1.4 the Company and the Selling Shareholders will, in aggregate, agree to pay to theUnderwriters a commission of 2.25% of the amount equal to the Offer Price multiplied bythe number of New Shares and Existing Shares which the Underwriters have agreed toprocure purchasers or subscribers for, or failing which to purchase or subscribe forthemselves, pursuant to the terms of the Underwriting Agreement (the ‘‘Gross Fixed Fee’’).This Gross Fixed Fee will be divided between the Underwriters and will include a fee of£500,000 which the Company shall pay to Citigroup in connection with its appointment asSponsor. In addition, the Company and the Selling Shareholders will pay to theUnderwriters an additional commission of between 1% (the ‘‘1% Fee’’) and 1.25% of theaggregate proceeds (including from any Existing Shares, if any, sold by the SellingShareholders under the Over-allotment Option) of the Global Offer (the ‘‘DiscretionaryFee’’). The allocation of the 1% Fee and the decision to pay any amount of the DiscretionaryFee over and above the 1% Fee and its allocation among the Underwriters will in each case

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be determined at the sole discretion of the Company within 20 days of Admission and, to theextent applicable, paid within 30 days of Admission;

7.1.5 the obligations of the Company and the Selling Shareholders to issue or sell, as the case maybe, Shares and the obligations of the Underwriters to procure subscribers and/or purchasersfor, or failing which to themselves subscribe for or purchase, the Shares to be issued and soldunder the Global Offer are subject to certain conditions including, among others, Admissionoccurring by not later than 8.00 a.m. on 30 April 2007 or such later time and/or date (beingnot later than 18 May 2007) as the Joint Global Co-ordinators may agree with the Company.The Joint Global Co-ordinators may terminate the Underwriting Agreement in certaincircumstances that are typical for an agreement of this nature prior to Admission. Thesecircumstances include the occurrence of certain significant changes in the condition(financial or otherwise), prospects or earnings of the Company or any other member of theGroup and certain changes in financial, political or economic conditions;

7.1.6 the Company and the Selling Shareholders have severally agreed to pay any stamp duty orstamp duty reserve tax arising on the issue or initial sale (as applicable) of Shares by themunder the Global Offer (including in the case of the Selling Shareholders pursuant to theOver-allotment Option);

7.1.7 the Company has agreed to pay or cause to be paid (together with any related value addedtax) certain costs, charges, fees and expenses of, or in connection with, or incidental to,amongst others, the Global Offer, Admission or the other arrangements contemplated by theUnderwriting Agreement, including (but not limited to) its own legal fees and expenses,costs and expenses of the Registrar, other advisers’ fees and expenses and certain expensesof the Underwriters (including the fees and expenses of their legal advisers); and

7.1.8 the Company has given certain representations, warranties and undertakings to theUnderwriters. The Company has agreed to indemnify the Underwriters in respect of lossessuffered or incurred in connection with the Global Offer. The liabilities of the Companyunder the Underwriting Agreement are not limited as to time and amount. The Directorshave given certain representations, warranties and undertakings to the Underwriters. Theliabilities of the Directors under the Underwriting Agreement are limited as to time andamount. The Selling Shareholders have given certain representations, warranties andundertakings to the Underwriters. The liabilities of the Selling Shareholders under theUnderwriting Agreement are also limited as to time and amount.

7.2 Description of Lock-Up Arrangements

7.2.1 The Company has undertaken in the Underwriting Agreement that during a period of180 days from the date of Admission it will not, without the prior written consent of the JointGlobal Co-ordinators (not to be unreasonably withheld), offer, sell or contract to sell, pledgeor otherwise dispose of, directly or indirectly, or announce an offering or issue of, any Shares(or any interest therein or in respect thereof) or any other securities exchangeable for orconvertible into, or substantially similar to, Shares or enter into any transaction with thesame economic effect as, or agree to do, any of the foregoing. These restrictions are,however, subject to certain specified exceptions (which for the avoidance of doubt do notrequire prior written consent of the Joint Global Co-ordinators) including:

(a) the issue of any Shares to the Xchanging Employee Benefit Trust or theXchanging B.V. 2007 Employee Benefit Trust; and

(b) the issue of any Shares arising from the exercise of any share options under one of theCompany’s share option schemes or the grant by the Company of such options.

7.2.2 Each of General Atlantic, Sal. Oppenheim, 52nd Street Associates, the Directors and certainof the Senior Managers have undertaken in the Underwriting Agreement or in separatelock-up agreements that, in the case of General Atlantic, Sal. Oppenheim and 52nd StreetAssociates during a period of 180 days from the date of Admission and, in the case of theDirectors and the relevant Senior Managers during a period of 365 days from the date ofAdmission, it or he or she will not, without the prior written consent of the Joint GlobalCo-ordinators, directly or indirectly, offer, issue, lend, sell or contract to sell, issue options inrespect of, or otherwise dispose of, directly or indirectly, or announce an offering or issue of,

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any Shares (or any interest therein or in respect thereof) or any other securitiesexchangeable for or convertible into, or substantially similar to, Shares or enter into anytransaction with the same economic effect as, or agree to do, any of the foregoing. Theserestrictions are, however, subject to certain specified exceptions (which for the avoidance ofdoubt do not require prior written consent of the Joint Global Co-ordinators) including:

(a) a disposal of Shares made in connection with a general offer for the ordinary sharecapital of the Company, made in accordance with the Takeover Code;

(b) a disposal of Shares in connection with, or pursuant to, any scheme of reconstructionunder section 110 of the Insolvency Act 1986;

(c) a disposal by any of General Atlantic, Sal. Oppenheim or 52nd Street Associates toanother company within its group or, in the case of General Atlantic only, between itsfunds (provided that any such transferee shall have entered into an agreement withthe Joint Global Co-ordinators in which it undertakes to be bound by the lock-uparrangements);

(d) in respect of General Atlantic only, a disposal of not more than 1,200,000 Shares inaggregate in the Company, in the form of a bona fide gift or charitable contribution;

(e) a disposal of Shares executed in accordance with the terms of the underwriting orstock lending agreements;

(f) any disposal solely in order to raise funds in order to meet liabilities to which suchparty is subject pursuant to the terms of the Underwriting Agreement;

(g) any disposals required by the Directors or Senior Managers to meet tax obligations(and, in the case of Mike Margetts, Nigel Rich and Stephanus Brenninkmeijer, to paythe exercise price) that have arisen as a result of the exercise of their options in theCompany or any Subsidiary or have otherwise arisen as a result of listing theCompany;

(h) in respect of David Andrews only, a disposal or transfer in the form of a bona fide giftor charitable contribution, with the relevant transferee entering into a deed ofadherence to the terms of the lock-up; and

(i) in respect of David Andrews only, disposals or transfers of not more than anaggregate of 1,000,000 Shares to enable gifts to be made to employees of the Groupand to cover the costs of any applicable tax arising in connection therewith.

7.2.3 For the avoidance of doubt, the carve outs in paragraphs (c) and (d) shall not apply to theDirectors and the relevant Senior Managers.

7.2.4 If the Joint Global Co-ordinators grant their specific consent (as contemplated byparagraph 7.2.2 above) to permit any Selling Shareholder to dispose of any of his/her/itsShares, then each of 52nd Street Associates and Sal. Oppenheim shall also be entitled todispose of all of its shareholding in the Company at that time.

7.3 Description of Stock Lending Arrangements

In connection with settlement and stabilisation, the Stabilising Manager has entered into a stocklending agreement with General Atlantic Partners (Bermuda), L.P. Pursuant to this agreement, theStabilising Manager is able to borrow up to 12,628,031 Shares. This agreement will allow theStabilising Manager to settle, on Admission, over-allotments, if any, made in connection with theGlobal Offer. If the Stabilising Manager borrows any Shares pursuant to the stock lendingagreement, it will be required to return equivalent securities to the lender by no later than 25 May2007 in accordance with the terms of the stock lending agreement.

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PART 4: OPERATING AND FINANCIAL REVIEW

The following is a discussion of the Group’s results of operations and financial condition for the 2004 financialyear, the 2005 financial year and the 2006 financial year. Prospective investors should read the followingdiscussion, together with the whole of this document, including Risk Factors, the Group’s historicalconsolidated financial statements and the related notes included in Part 5: Accountants’ Reports and FinancialInformation and Part 6: Unaudited Pro Forma Financial Information and should not just rely on the key orsummarised information contained in this Part 4: Operating and Financial Review. The Group’s historicalconsolidated financial statements have been stated in IFRS, which differs from US GAAP in a number ofsignificant respects. The Company has not quantified the impact of those differences. Prospective investorsshould consult their own professional advisors for an understanding of the differences between IFRS andUS GAAP. The financial information in this Part 4: Operating and Financial Review has been extracted withoutmaterial adjustment from Part 5: Accountants’ Reports and Financial Information and Part 6: Unaudited ProForma Financial Information.

This section contains ‘‘forward looking statements’’. Those statements are subject to risks, uncertainties andother factors that could cause the Group’s future results of operations or cash flows to differ materially from theresults of operations or cash flows expressed or implied in such forward looking statements. Percentages in tableshave been rounded and accordingly may not add up to 100%. In addition, certain financial data has beenrounded. As a result of this rounding, the totals of data presented in this document may vary slightly from theactual arithmetic totals of such data.

1. OVERVIEW

The Group is one of the leading international, pure play business process outsourcing (‘‘BPO’’)providers. It has more than 3,800 employees operating in seven countries and services blue-chipcustomers in 34 countries, with a focus on the United Kingdom and Continental Europe.

The Group provides industry specific processing and other services to the banking and insuranceindustries and also provides procurement, finance and accounting and human resources services tocustomers across industries.

The Group’s customers include Aon, BAE Systems, Boots the Chemists, Citibank, Deutsche Bank,the IUA, Lloyd’s, National Australia Group, Sal. Oppenheim, United Biscuits and UniversityHospital Birmingham.

The Group performs complex, large-scale processing on behalf of its customers, providing them withbetter service at a lower cost than when these functions were performed internally. Operatingcustomers’ non-core functions is the Group’s core business.

Examples of the Group’s current services in 2006 included: settling an estimated 15% of securitiestransactions in the German market, settling £11.4 billion of insurance claims in the Lloyds insurancemarket, providing human resource and payroll services to 1.5 million staff and their dependants, andprocuring £390 million of indirect spend and paying over £800 million of invoices.

The Group offers a full suite of BPO services including large-scale partnering, outsourcing, softwareproducts and solutions, Straight Through Processing (‘‘STP’’) and business support.

At the heart of the Group’ s business strategy is a unique partnering approach. The Group takes overa customer’s back office and creates a jointly owned business with its customer called an ‘‘EnterprisePartnership ’’ or ‘‘EP’’. Enterprise Partnerships provide the Group with scalable platforms from whichit can also offer its services to other customers.

A key component of the Group’s approach to large partnering and procurement outsourcingarrangements is its gain-share approach. The gain-sharing approach is a step beyond that of atraditional outsourcing arrangement where a customer outsources services in return for payment of anagreed fee. The nature of the gain-sharing relationship provides transparency for all parties, shortensdecision-making time and engenders an environment of trust.

The Group uses a distinctive execution approach to deliver its services in a standardised andrepeatable way.

The Group delivers its services through a balance of on-shore and off-shore operations, seeking toprovide the lowest cost solution consistent with its customers’ requirements.

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The Group recorded revenues of £393.5 million for the year ended 31 December 2006, an increasefrom £350.0 million in 2005 and £254.1 million in 2004 (a 2004-2006 CAGR of 24%).

2. PRESENTATION OF FINANCIAL RESULTS

Consolidation

The EPs are generally formed on the basis of 50% ownership by the Group and 50% ownership by thepartner, but with the Group retaining operational control over the EP. As a result, the Group fullyconsolidates the results of its EPs in its financial statements, which thus contain significant minorityinterests. As a result, the Group measures financial performance based on the Group’s share of profit,which it believes offers an important measure of performance for its shareholders. For a discussionand analysis of the measures the Group uses to monitor performance, see paragraph 5 of this Part 4:Operating and Financial Review.

Revenue Recognition

Included in the revenue recognition policy is the treatment of revenue generated from procurementcontracts. Where the Group acts as principal, the revenue that is recognised includes the cost of thegoods or services acquired for the customer. Where the Group acts as agent, only the fee for arrangingthe purchase is recognised as revenue. For further discussion of the Group’s revenue recognitionpolicies for the various services and products it provides, see Note 2(e) in Section A of Part 5:Accountants’ Reports and Financial Information.

Segments

The Group has three operating segments: Insurance, Financial Markets and Business Lines. In bothof the Insurance and Financial Markets segments the Group provides industry-specific BPO servicesand software to customers. Business Lines is a cross-industry segment in which the Group providesprocurement, human resources, finance and accounting and IT hosting services. These services arealso provided to the other segments in the Group to extract scale benefits and ensure consistency ofapproach. These three operating segments are supported by the Group’s offshore business processingservices facility (‘‘BPS’’) and ‘‘Corporate’’, which provides the infrastructure, resources, andinvestment to sustain and grow the business, including sales and commercial, performancemanagement, implementation and business management functions. Although the Group’s financialstatements also include a breakdown of revenue by geography, the Group uses these four segments tomanage its business.

Key Performance Indicators

Due to the significant minority interests in the Group, the Group measures financial performancebased on the Group’s share of profit which it believes offers an important measure of performance forthe Group’s shareholders.

Further, the Group monitors financial performance pre-exceptional items and after adding backcertain non-cash items comprising share based payment charges, amortisation of intangible assets thatwere previously unrecognised by an entity acquired by the Group, imputed interest on the historicfinancing structure of the Group which will fall away on Admission, imputed interest on put optionsand the related tax thereon.

For further discussion and analysis of the measures the Group uses to monitor performance, seeparagraph 5 of this Part 4: Operating and Financial Review.

3. FACTORS AFFECTING RESULTS OF OPERATIONS

The following is a discussion of the most significant factors that have affected the Group’s results ofoperations in the past and that are expected to continue to affect the Group’s business.

Revenue

The Group’s revenues have been significantly affected by (i) the pricing structures used in connectionwith each of the Group’s five offerings, (ii) the volumes of transactions achieved, (iii) the ability of theGroup to attract new customers – both to develop new EPs and platforms and also to leverage existingplatforms, (iv) the basis on which procurement spend is managed in the Group’s procurement-related

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BPO arrangements, (v) the level of discounting negotiated into major arrangements and (vi) theimpact of acquisitions.

Pricing Structure

The pricing structure for each of the Group’s five offerings has a significant impact on Group revenue.

Partnering—Partnering has been a key contributor to the revenue of the Group, and provides aplatform for further growth through the other offerings. The EP permits customers to share theprofit and capital upside created by the productivity and efficiency gains achieved throughapplication of the Group’s execution approach. Partnering is used for large and complex businessprocesses. The Group creates a company jointly owned with the customer (its partner) that itcalls an Enterprise Partnership. The resources and assets from the customer’s organisation aretransferred into the EP in order to create a service platform. The Group has day-to-dayoperational and boardroom control of the EP and the partner has representation on the EPBoard.

During the period in which the EP is being created, the Group undertakes a detailed exercise toestablish a ‘‘baseline’’ of the cost of the services to be provided by the EP (using the customer’scost data), such that the EP is initially in a profit-neutral position (i.e. the price paid by thecustomer for the services under the service agreement is equal to the costs being incurred bythe EP). Where appropriate, the terms of the EP contracts will provide for adjustment of the‘‘baseline’’ costs six months after the start of the contract.

The Group may commit to provide a minimum level of cost savings to the customer as part of theEP services agreement. These minimum cost savings form part of the customer’s profit share.These minimum cost savings are delivered through two principal mechanisms, depending on thenature of the EP: price discounts for services performed (for example, an agreement to providesecurities processing at a decreasing base price over the period of the service contract) andrebates (for example, an agreement to provide guaranteed rebates to customers either by way of afixed amount or a fixed percentage of revenue, which can increase over the period of the servicecontract). Both of these mechanisms result in a reduction of income for the EP, which places agreater incentive on the Group to reduce the cost base and/or supplement the EP with additionalthird party revenue in order to maintain profitability.

The charges for the services provided under the service agreement are paid by the customer tothe EP, generally under a fixed price arrangement. For procurement arrangements, the customermay also pay an agreed administration fee to the EP.

Over time fixed service fee arrangements agreed at the establishment of an EP typically evolveinto full or partial transactional pricing arrangements. While transactional pricing exposes the EPto fluctuations in volumes, the EP’s position is protected through its exclusivity arrangementswith the partner. Furthermore, being able to offer transactional pricing of an EP’s servicesfacilitates opportunities for sales of individual services to existing or new customers from theplatform.

Revenue from EPs is therefore affected by a variety of factors, including a determination of thebaseline costs which provide the basis for the EP’s service fees; the levels of service chargediscounts from the baseline over the course of the contract (if any); the volume of transactions orservices required by the customer over the course of the service contract; whether or not thecustomer requires modifications of services; proper and timely implementation of contracts;customer’s exercise of termination rights; changes of control, mergers or consolidations affectingcustomers; and provisions for price indexation.

Outsourcing—The Group also undertakes major, complex outsourcing arrangements without anEnterprise Partnership structure. As with EPs, the principle behind the Group’s OutsourcingOffering is to reduce customers’ processing and procurement costs. Outsourcing involves thetransfer of a business process or procurement spend from the customer’s organisation on to oneof the Group’s existing platforms.

The Group provides Outsourcing customers with services based on an agreed specification andusage charge and, for procurement expenditure, a ‘‘baseline’’ cost of items is also established.

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The establishment of baseline costs and commitment to a savings profile are common to bothPartnering and procurement Outsourcing arrangements.

In respect to procurement Outsourcing contracts, there is a gain-sharing approach, in which thesavings against the baseline costs are allocated on a contractually agreed basis (as opposed tosharing the profit of a partnership). In respect of Outsourcing contracts for non-procurementBPO services, the customer benefits from contracted discounts rather than profit sharing.

Revenue from Outsourcing contracts may be affected by similar factors to those outlined in thepartnering section above.

Products—The Group’s Products consist of a range of business processing software productswhich provide customers with solutions that the Group believes are more efficient than thecustomer could develop internally. The Products can be tailored to the customer’s specific needsand support for the Products is also provided. As the Group develops standardised Products,these are licenced to its customers. The Group charges licence fees, implementation fees andongoing support and maintenance fees for the use of its Products. Where the Group performsspecific enhancements for customers, such costs are recovered through the price charged.Non-software based Products are generally charged on a price per unit of service basis.

Straight Through Processing—STP refers to additional services offered by the Group that lieoutside of the scope of the original Outsourcing or EP contract. STP is a key characteristic of theGroup’s business model in that it generates additional value by extending the scope and nature ofthe services provided to encompass more of the customer’s business. STP services are initiallypriced at cost (including allocated overhead) plus an agreed mark-up, which then becomes theagreed service price. Any implementation costs to the Group are recovered as part of the servicecharge. STP services tend to be recurring and utilise the scalability of the Group’s platforms,providing the Group with incremental revenues from existing customers.

Business Support—The Group’s Business Support service is typically structured as a contractualrelationship between the Group and its customers for a professional service or services using theGroup’s employees. The Group offers experts on a project-by-project or interim assignment basisto support improvement activities in customers’ processing activities. Generally, this encompassessmaller-scale functions that are put in place within (or without altering) the customers’ existingoperations. Customers are charged for Business Support services based on the time and materialsrequired or at a price per transaction. Prices are determined taking into account the level ofexpertise of staff, degree of involvement and the achievement of the agreed key deliverables.

Volumes Achieved

The amount of revenue generated by most of the Group’s major arrangements is often affected by thevolume of transactions or services that are undertaken or provided pursuant to the service contract.The amount of revenue affected by volume generally increases over time as fixed service feearrangements agreed at the establishment of an EP transition to transactional price for servicearrangements during the life of the contract.

The effects volume can have on the results of operations for the Group’s major arrangements aredescribed below:

� In contracts without transactional pricing, volume can vary within agreed bands without anyadjustment to price. If the level of activity falls outside of agreed bands, the pricing will beadjusted by the change in actual cost.

� In the case of contracts with transactional pricing Group revenue will vary according totransaction volume. In these circumstances, the Group seeks to secure certain levels or types offees that are not linked to volume. These could take the form of a subscription fee, or in the caseof a procurement contract, contractually agreed levels of savings or gain-sharing would fall awayif volume levels failed to reach specified minimum levels.

Developing New Customers

Developing new customers has a significant impact on revenue in two ways. First, the Group’s focuson major, complex BPO arrangements means that developing a new EP or other Outsourcingarrangement potentially adds a large increment to revenues. Second, in order for the Group to take

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full advantage of the scalability of the platforms it has developed for its existing EPs and majorOutsourcing arrangements, it needs to be able to leverage them by finding new customers to whomservices can be provided with relatively little alteration of existing services.

Acting as principal in procurement contracts

The Group’s procurement-related Outsourcing arrangements have an effect on revenues (and cost ofsales). Where the Group acts as principal, rather than as agent, the revenue recognised by the Groupincludes the value of the goods and services acquired on the customers’ behalf (and the correspondingcost is included as a cost of sales). Procurement contracts in which the Group acts as principaltherefore significantly raise the level of both revenue and cost of sales of the Group, as compared tothe impact of procurement done on an agency basis, in which the customer pays the cost to thesupplier and the Group simply recognises its share of the benefits.

Discounting

The Group’s EPs and other major Outsourcing arrangements typically feature discounts built in to theservice contracts. These are commercially negotiated contract conditions which vary with each majorcontract. Discounts are generally based on a scale, with discounts increasing over time until themaximum discount is reached. The Group’s annual revenue is affected by the level of contracteddiscounts in new EPs and Outsourcing contracts and annual increases in discounts with existingcustomers where a scale of increasing discounts forms part of the contract. Revenue is recognised andreported net of contracted discounts.

Where EP contracts include guaranteed discounts to partners, the Group is entitled to profitsequivalent to the value of the guaranteed discount, after which the remaining profits are distributed inline with the respective shareholdings.

Acquisitions

Strategic and selective acquisitions have been a factor in increasing the revenue of the Group. Duringthe three-year period ended 31 December 2006, the Group made three strategic acquisitions(RebusIS, Landmark and Ferguson Snell). The Group will continue to consider selective acquisitionsin areas in which the Group may require additional expertise, or where such acquisitions wouldenhance the scale of existing operations (either vertically, geographically or in terms of technologicalcapability) in a manner consistent with the core practices of the Group.

Costs

The Group’s costs are essentially divided into two principal categories: cost of sales and administrativeexpenses.

Cost of Sales

Cost of sales are primarily costs attributable to the operations of the subsidiaries and EPs of theGroup that provide services to customers. Cost of sales is principally composed of direct staff costs,costs of goods and services directly related to sales, technology and communications costs, otherstaff-related costs, property-related costs (primarily leasing costs) and depreciation and amortisation.

‘‘Costs of goods and services directly related to sales’’ is comprised predominantly of the costs of salesrelated to procurement activities in which the Group acts in the capacity of principal, as described inthe paragraph headed ‘‘Acting as principal in procurement contracts’’ of this Part 4: Operating andFinancial Review. To the extent that the Group enters into procurement contracts where it acts asprincipal, the cost of goods and services directly related to these procurement activities will affect costof sales.

The Group seeks to decrease costs of sales as a percentage of revenues through productivityimprovements including the process optimisation, arbitrage and aggregation activities described underparagraph 9 of Part 1: Information on the Group.

Administrative Expenses

The Group’s administrative expenses represent central costs required to provide the infrastructure,resources, and investment to sustain and grow the business, including sales and commercial

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performance management, implementation and business management functions. Additionally,administrative expenses include depreciation and amortisation of pre-contract costs and capitalisedassets created from the implementation of existing EPs.

Certain of the Group’s expenses incurred centrally (such as time of senior management who areemployed by Corporate but who work for an individual operation) are recharged to thecustomer-facing unit. Recharges are not recognised by the Group as revenue but rather reduceadministrative expenses, which are shown on a net basis.

Administrative costs affect the results of operations primarily through:

� Economies of scale. As Group revenue increases, administrative expenses are expected to reduceas a proportion of total revenue thereby improving the results of the business.

� Utilisation. Increasing utilisation of central implementation resources and leveraging reusableassets positively affects the results of the business. Maintaining or increasing utilisation of theseresources is dependent upon increasing the scope and scale of the Group’s business generally(and in particular on successfully establishing new EPs and major Outsourcing arrangements).

� Capitalisation of implementation investment in EPs. When a new EP is formed, the Group investsin the transformation of the EP from a back office to a commercial business (implementationinvestment). During implementation, where the investment can properly be considered to createa reusable asset, the cost is capitalised, otherwise it is expensed as incurred. Results will beaffected by the amount of implementation activity undertaken during the year and the associatedvalue and number of assets created.

Finance Costs

Finance costs primarily represent interest earned on the Group’s cash resources and the expectedreturn on the Group’s defined benefit pension scheme assets. These are offset by actual and imputedinterest on debt and deferred consideration and interest on pension scheme liabilities.

Taxation

The Group operates in a number of different tax regimes and hence the effective tax rate is driven bythe proportion of profits earned in the different jurisdictions. The main two countries where profitsarise are the United Kingdom, which has a statutory tax rate of 30%, and Germany, which currentlyhas a tax rate of 40.86% but which is due to decrease in January 2008 to 32.86%.

The Group holds tax losses in its UK central services unit totalling £16.2 million at 31 December 2006.These tax losses were built up in the early years of the business, as the Group incurred investments inbuilding the platforms that have become the basis of the Group’s EPs and major Outsourcingarrangements. The Group’s effective tax rate can be reduced over the period that these tax losses areutilised.

Profit Attributable to Equity Holders of the Group

The factors discussed in the revenue and costs sections above all affect the Group’s profitability. Inaddition, there are a number of factors that affect the profit attributable to equity holders of theGroup.

The EP structure is the key factor contributing to the profit attributable to equity holders of theGroup. Although an EP’s equity ownership is generally divided on a 50/50 basis with the partner, theGroup anticipates that over time it will usually derive returns in excess of 50% of the EP’sprofitability.

Within the contracting mechanism, the Group charges performance and licence fees to the EP inexchange for access to the software, methodologies, and reusable assets provided by the Group. Thesefees are extracted prior to determination of the EP’s profitability.

Also, where EP contracts include guaranteed discounts to partners, the Group is entitled to profitsequivalent to the value of the guaranteed discount, after which the remaining profits are distributed inline with the shareholders’ respective economic rights.

Buy-out of minorities will not affect Group operating profit as the EPs are fully consolidated into theresults of the Group. Buy out of minorities will affect profit attributable to equity holders of the

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Group as it will reduce the amount of minority share of profits to be paid out by the Group. TheGroup recently bought BAE Systems’ 50% interests in XHRS and XPS with effect from1 January 2007.

Seasonality

The Group’s profit performance is higher in the second half of the year. In the first half of the yearperformance is impacted by guaranteed discounts to EPs which increase in January each year untilthey reach the maximum contracted discount level. The Group’s profitability typically grows duringthe year as productivity improvements reduce costs and new business is contracted.

Other Factors

The Group operates in a number of territories, with operations in the UK, Western Europe, theUnited States, India, and Australia. The Group’s results are affected by movements in exchange ratesbetween currencies in these regions. The greatest exposure is to movements in the Euro against thepound sterling from the Group’s Financial Markets business based in Germany.

4. RESULTS OF OPERATIONS

The following table sets forth the consolidated income statement data for the Group for the yearsindicated.

Year ended 31 December

2004 2005 2006

£ (in millions)

Revenue ...................................................................................................... 254.1 350.0 393.5Cost of sales .............................................................................................. (222.8) (302.6) (348.7)

Gross profit ............................................................................................... 31.3 47.4 44.8

Administrative expenses— pre-exceptional items...................................................................... (12.8) (13.2) (13.7)

Administrative expenses— exceptional items............................................................................. (6.9) — (6.9)

Administrative expenses .......................................................................... (19.7) (13.2) (20.6)

Other operating income — exceptional profit on disposal ofGroup companies ................................................................................. 4.7 — —

Operating profit........................................................................................ 16.3 34.2 24.2

Finance costs ............................................................................................. (6.8) (8.4) (8.4)Finance income......................................................................................... 6.6 8.1 9.1

Profit before taxation............................................................................... 16.1 33.9 24.9

Taxation...................................................................................................... (5.7) (11.3) (7.5)

Profit for the year .................................................................................... 10.4 22.6 17.4

Profit attributable to minority interests................................................. 5.4 10.8 6.7Profit attributable to equity holders of the Group.............................. 5.0 11.8 10.7

10.4 22.6 17.4

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The following table presents an analysis of revenues by the three financial reporting segments:Insurance, Business Lines and Financial Markets.

2004 2005 2006

(£ in % of (£ in % of (£ in % ofmillions) revenue millions) revenue millions) revenue

RevenueInsurance.......................................... 109.7 43 116.9 33 135.7 34Business Lines ................................. 83.7 33 143.9 41 176.1 45Financial Markets ........................... 62.9 25 96.8 28 96.2 24Inter segment revenue.................... (2.2) (1) (7.6) (2) (14.4) (4)

Total Revenue .................................. 254.1 100 350.0 100 393.5 100

Revenue

Revenue for the year ended 31 December 2006 was £393.5 million as compared to £350.0 million forthe year ended 31 December 2005, an increase of £43.5 million, or 12.4%. This increase is attributableto organic growth in the Insurance and Business Lines sectors, including the creation of a newinsurance EP with Aon and entry into four new Outsourcing contracts. Revenue also grew during theyear due to annual indexation, and increased volumes in existing businesses, primarily in BusinessLines where several large projects increased demand for technical contract labour procurement fromBAE Systems and in Insurance where claims in respect of recent catastrophes (such as HurricaneKatrina) continued to generate increased claims volumes. Increases in Business Lines revenue werepartially offset by transition of the BAE Systems procurement contract to a 50/50 gain-share model,introducing rebates which were netted against revenue. Revenue for the year also benefited to a smallextent from the acquisition of Landmark and Ferguson Snell by the Insurance and Business Linessectors respectively. Financial Markets revenue decreased marginally in 2006 as increased contractdiscounts and a reduction in the quantum of the base revenue services charge were largely offset byincreased revenue from new services to Deutsche Bank and other third-party revenue. FinancialMarkets revenue was further reduced through the anticipated exit of State Street Bank, who acquiredDeutsche Bank’s custody business prior to the establishment of the Xtb EP.

As a result of the above, the Business Lines segment contributed 45% of Group revenue in 2006,compared to 41% in 2005, Financial Markets contributed 24% in 2006, compared to 28% in 2005 andInsurance contributed 34% in 2006, compared to 33% in 2005.

Revenue increased £95.9 million, or 37.7% in the year ended 31 December 2005 to £350.0 millionfrom £254.1 million in the year ended 31 December 2004. £35.5 million of this increase resulted frominclusion of a full year’s results of the Xtb EP entered into with Deutsche Bank in June 2004. Further,revenue was enhanced by expansion of the procurement contract between XPS and BAE Systems toinclude the ‘‘technical contract labour’’ category, which generated £51.2 million of revenue in 2005recognised on a principal basis. Revenue for the year also benefited from continued organic growthacross the existing businesses.

All three operating segments increased revenue between 2004 and 2005, however, the proportion ofrevenue contributed increased significantly in Business Lines, primarily due to the new technicalcontract labour spend category procured on behalf of BAE Systems being accounted for on a principalrather than agent basis. This had a dilutive effect on the Business Lines segment adjusted margins.The Business Lines segment contributed 41% of Group revenue in 2005, compared to 33% in 2004,Financial Markets contributed 28% in 2005, compared to 25% in 2004 and Insurance contributed 33%in 2005, compared to 43% in 2004.

Cost of sales

Cost of sales for the year ended 31 December 2006 was £348.7 million as compared to £302.6 millionfor the year ended 31 December 2005, an increase of £46.1 million, or 15.2%. Cost of sales hasincreased largely as a result of the sales growth achieved during the period. In particular, cost of goodsand services directly related to sales increased due to increased volume of principal procurementspend, primarily BAE Systems technical contract labour category. Direct staff costs also increasedduring the year, primarily due to the transfer of approximately 500 staff from Aon in September uponcommencement of the new EP with Aon. Additionally, cost of sales increased during the year ended

69

31 December 2006 due to additional costs incurred to strengthen the Group’s IT infrastructure and tofurther the development of scalable business processing in India. Cost increases were offset to a smallextent by the release of unutilised provisions.

Cost of sales for the year ended 31 December 2005 increased £79.7 million, or 35.8% from£222.9 million for the year ended 31 December 2004. Cost of sales increased largely as a result of thecontinued growth of the business, in particular the full year impact of Xtb which commenced tradingin June 2004. Additionally, cost of sales increased due to the recognition of additional cost of goodsand services associated with procurement of technical contract labour for BAE Systems, a category inwhich the Group acts as principal.

Administrative expenses—pre-exceptional items

Administrative expenses—pre-exceptional items for the year ended 31 December 2006 were£13.7 million, an increase of £0.5 million, or 3.8% from £13.2 million in 2005. This change isattributable to the completion of a two-year investment in upgrading and building the Group’s salesteams, including the establishment of a new dedicated centralised sales hub in London and theestablishment of a new business development office in Sydney, Australia. Additionally, the Groupincurred implementation costs in relation to the new EP with Aon, some of which were expensed asincurred in the year.

Administrative expenses—pre-exceptional items increased marginally by £0.4 million, or 3.1% in 2005from £12.8 million in 2004. These costs have remained relatively flat despite the strong growth of thebusiness during this period, evidencing the Group’s ability to leverage central resources across agrowing business.

Administrative expenses—exceptional items

The Group recorded a £6.9 million exceptional item in 2006 relating to management and legalrestructuring of the Group in preparation for the Global Offer and costs incurred in migratingcustomers from a discontinued insurance software platform. The discontinued software was impairedin 2004 due to the RebusIS acquisition which had a superior platform that overlapped with theGroup’s existing insurance underwriting product, Riskwrite.

In 2004 exceptional items were recorded relating to the creation of onerous lease provisions as a resultof the RebusIS acquisition (£5.4 million) and as described above, impairment charges (£1.5 million)relating to the withdrawal of support for the overlapping and therefore redundant insurance softwareproduct, Riskwrite, also resulting from the RebusIS acquisition.

Other operating income—exceptional profit on disposal of Group companies

In 2004, exceptional other operating income of £4.7 million was recognised in respect of a profit onthe deemed disposal of 49% of Xtb that arose as part of the transfer mechanism with Deutsche Bank,where the Group acquired a 100% share of Xtb through a holding company and subsequently sold49% of the holding company to Deutsche Bank to create the partnership, crystalising an accountingprofit on the ‘‘sale’’ transaction.

Operating profit

As a result of the factors discussed above regarding revenue and expenses, operating profit for theyear ended 31 December 2006 was £24.2 million as compared to £34.2 million in 2005, a decrease of£10.0 million, or 29.2%. The decrease is primarily a result of the exceptional items incurred during theyear amounting to £6.9m as described above. The Group’s operating profit was also affected by therenegotiation of the procurement contract with BAE Systems, which introduced a 50/50 gain-share, inline with third-party procurement contracts, in advance of the Group’s planned acquisition of BAESystems minority interest in this business. The Group’s operating profit was also impacted by theGroup’s investments in its Indian operations, IT hosting business, strengthening of the sales andcommercial functions, and implementation of the EP with Aon. These investments andimplementation costs were offset by the release of unutilised provisions.

Group operating profit increased to £34.2 million in 2005 from £16.3 million in 2004. In 2005, theGroup’s operating profit benefited from the full year effect of the Xtb EP, which was formed in

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June 2004. Additionally, the Group’s operating profit increased as a result of the successfulcompletion of a number of outsourcing contracts during the year in all three operating segments.

Segmental operating profit is measured by the Group pre-exceptional items and after adding backcertain non-cash items. For a discussion and analysis of the Group’s adjusted segmental operatingprofit, see paragraph 5 of this Part 4: Operating and Financial Review.

Net finance income/(costs)

Net finance income for the year ended 31 December 2006 was £0.7 million, an increase of £1.0 millionfrom finance costs of £(0.3) million for the year ended 31 December 2005. Finance income improveddue to increased bank interest earned on the Group’s cash resources of £0.3 million and the receipt ofa dividend from the Group’s shareholding in CAD IT of £0.1 million. Finance costs benefited fromthe net impact of £0.4m from the expected return on pension scheme assets and interest costs ofpension scheme liabilities.

Net finance costs for the year ended 31 December 2005 remained unchanged from costs of£(0.3) million for the year ended 31 December 2004. Bank interest income increased £0.6 million,primarily due to the full year effect of interest on cash balances held by Xtb. Increased bank interestwas offset by increased imputed interest charges on convertible loan notes of £(0.3) million which hadincreased during the year to fund the RebusIS acquisition and the Group’s expansion into WesternEurope, and the net impact of £(0.3) million from the expected return on pension scheme assets andinterest costs of pension scheme liabilities.

Taxation

Taxation for the year ended 31 December 2006 was £7.5 million as compared to £11.3 million for theyear ended 31 December 2005, a decrease of £3.8 million, or 33.7%. This decrease is attributable tolower profits of the Group and a lower tax rate applied to the Group in 2006 as a result of theutilisation of Group tax losses. The Group’s effective tax rate has decreased to 30% in 2006 from 33%in 2005.

Taxation for the year ended 31 December 2005 was £11.3 million as compared to £5.7 million for theyear ended 31 December 2004, an increase of £5.6 million, or 98.0%. This increase in taxation wasprincipally due to the increase in the Group’s operating profit. The Group’s effective tax ratedecreased to 33% in 2005 from 35% in 2004, primarily as a result of the utilisation of Group tax losses.

Profit for the year

As a result of the foregoing, profit for the year 2006 was £17.4 million, as opposed to £22.6 million for2005 and £10.4 million for 2004.

Profit attributable to equity holders of the Group

Due to the significant minority interests in the Group, the Group believes that profit attributable toequity holders is a more useful indicator of the Group’s financial performance than profit for the year.

For the year ended 31 December 2006, profit attributable to equity holders of the Group decreased by9.5% to £10.7 million from £11.8 million for the year ended 31 December 2005. This decrease resultedfrom a number of exceptional costs incurred during 2006 amounting to £6.9 million. These costsrelated to management and legal restructuring of the Group in preparation for the Global Offer andcosts incurred in migrating Insurance sector BPO customers from the Riskwrite underwriting softwareplatform. The majority of these costs were borne by the Group’s shareholders rather than shared withthe partners.

For the year ended 31 December 2005, profit attributable to equity holders of the Group increased by136% to £11.8 million from £5.0 million in 2004. This increase resulted from the performance of thebusiness as described above and the favourable profit share from Xtb due to guaranteed discountsprovided to Deutsche Bank, which reduces the partner’s share of profits.

The growth in profit attributable to equity holders of the Group exceeds the growth in profitattributable to minorities in both 2005 and 2006. This growth in the share of the Group’s profits wasdue to the performance of 100% owned businesses, acquisitions, the effect of guaranteed discounts inEP contracts, licence fees growing with EP revenue growth, and leveraging administrative expenses.

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The Group believes that it is important to measure financial performance based on the Group’s shareof profit adjusted to take account of exceptional and certain non-cash items. For a discussion andanalysis of these measures see paragraph 5 of this Part 4: Operating and Financial Review.

5. KEY PERFORMANCE INDICATORS AND ADJUSTED SEGMENTAL OPERATING PROFIT

Key Performance Indicators

The Group uses four key performance indicators to measure the financial performance of thebusiness: one revenue measure, two profit measures and one cash measure.

Each of these measures is discussed in more detail below.

Revenue

The revenue KPI measures annual revenue from each customer relationship categorised by theremaining length of the longest contract with that customer.

Year ended 31 December

2004 2005 2006

£ (in millions)

Revenue by remaining contracted customer relationship(1)

Revenue....................................................................................... 254.1 350.0 393.5< 1 year................................................................................... N/A N/A 9%> 1 year and < 5 years ........................................................ N/A N/A 24%5 years or more ...................................................................... N/A N/A 67%

The Group’s five key Offerings are contracted under a variety of contract periods. However, thebusiness is built on platforms created by EPs, which have long term contracts (generally ten to twelveyears in length) with the partner(s) thereby building long term contractual relationships with revenuesacross a range of Offerings.

Profit

Due to the significant minority interests in the Group, the Group believes that measurement of profitattributable to equity shareholders is an important measure of performance for the Group’sshareholders. The Group uses two measures to monitor the performance of profit attributable toequity shareholders of the Group. The two measures are:

� Adjusted operating profit attributable to equity holders of the Group (XEBIT).

� Adjusted profit for the year attributable to equity holders of the Group (XPAT).

(1) There is no prior year comparative information available for the contracted customer relationship key performance indicator.

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5APR200721535753 5APR200721540013

These profit measures are calculated by adding back the impact of exceptional items and certain non-cash items. The Group believes the resulting KPIs provide an effective measure of the underlyingperformance of the Group. Details of the non-cash add backs are set out below:

Adjustment Adjustmentto operating to profit

Item profit for the year

Amortisation of intangible assets previously unrecognised by an entityacquired by the Group in a business combination, but which wererecognised in accordance with IFRS 3 ....................................................... � �

Share based payments, representing charges to the profit and lossagainst share options granted to employees .............................................. � �

Fair value adjustments. No fair value adjustments have arisen duringthe period, however these may arise if the fair value of put optionsheld on the balance sheet is revised prior to exercise.............................. � �

Imputed interest on the historic financing structure of the Group,which will fall away on Admission. As a private company, part of theGroup’s historic financing has been in the form of loan notesconvertible to equity, the remaining convertible loan note converts atthe time of the Global Offering................................................................... ✗ �

Imputed interest on put options ...................................................................... ✗ �

Tax effect of the individual adjustments ......................................................... ✗ �

The XEBIT and XPAT performance are set out in the following table:

Year ended 31 December 2004 – 20062004 2005 2006 CAGR

£ (in millions)

XEBIT ................................................................. 9.0 19.7 22.2 57%

XPAT.................................................................... 6.1 13.6 17.1 67%

XEBIT

2004 2005 2006

25.0

20.0

15.0

10.0

5.0

0.0

£m

2004 2005 2006

20.0

15.0

10.0

5.0

0.0

XPAT

£m

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XEBIT PERFORMANCE

The table below details the adjustments made to operating profit to derive XEBIT.

Year ended 31 December

2004 2005 2006

(£ in millions)

Operating profit ......................................................................... 16.3 34.2 24.2

Add back:—Exceptional expenses ............................................................. 6.9 — 6.9—Exceptional profit................................................................... (4.7) — —

Net exceptional items ................................................................ 2.2 — 6.9

—Amortisation of intangible assets that were previouslyunrecognised by an entity acquired by the Group ............ 0.3 0.3 0.7

—Share based payment charges .............................................. 0.2 0.4 0.5

Total other add backs ................................................................ 0.5 0.7 1.2

Adjusted operating profit ......................................................... 19.0 34.9 32.3

Adjusted operating profit attributable to minority interests 10.0 15.2 10.1

XEBIT.......................................................................................... 9.0 19.7 22.2

XEBIT has increased 12.7% to £22.2 million in 2006 (representing a XEBIT margin of 5.6%) from£19.7 million in 2005 (representing a XEBIT margin of 5.6%). In addition to the factors impacting onoperating profit, XEBIT grew due to the royalty payable from the Group’s EP with Lloyd’s and theIUA, which became effective in April 2006. Additionally, profits from acquisitions made during theperiod (Landmark and Ferguson Snell) contributed directly to XEBIT. The XEBIT margin of 5.6%achieved in 2006 was consistent with that achieved in 2005 despite the rebasing of the BAE Systemscontract and the investment in India, sales and implementation.

XEBIT increased 118.9% to £19.7 million in 2005 from £9.0 million in 2004 (representing a XEBITmargin of 3.6%). In addition to the factors impacting on operating profit, XEBIT grew due to theperformance of the 100% Group owned businesses and the EP contractual arrangements some ofwhich provided a greater profit share to the Group due to guaranteed discounts provided to partners(e.g. Xtb).

The growth of XEBIT exceeded the growth of adjusted operating profit attributable to minorityinterests in both 2005 and 2006. This growth in XEBIT was due to the effect of licence fees growingwith EP revenue, contracted licence fees becoming effective during the period, the effect ofguaranteed discounts in EP contracts on profit share, performance of businesses owned 100% by theGroup, acquisitions and leveraging administrative expenses.

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XPAT PERFORMANCE

The table below details the adjustments made to profit for the year to derive XPAT.

Year ended 31 December

2004 2005 2006

(£ in millions)

Profit for the year ...................................................................... 10.4 22.6 17.4

Add back—Exceptional expenses ............................................................. 6.9 — 6.9—Exceptional profit................................................................... (4.7) — —

Net exceptional items ................................................................ 2.2 — 6.9

—Amortisation of intangible assets that were previouslyunrecognised by an entity acquired by the Group ............ 0.3 0.3 0.7

—Share based payment charges .............................................. 0.2 0.4 0.5—Imputed interest on loan notes............................................ 1.2 1.4 1.1—Imputed interest on put options .......................................... — — 0.2

Total other add backs ................................................................ 1.7 2.1 2.5

Tax effect of add backs—Exceptional expenses ............................................................. (1.8) — (1.3)—Exceptional profit................................................................... — — ——Amortisation of intangible assets that were previously

unrecognised by an entity acquired by the Group ............ (0.1) (0.1) (0.2)—Share based payment charges .............................................. — — (0.6)—Imputed interest on loan notes............................................ (0.3) (0.2) (0.2)—Imputed interest on put options .......................................... — — (0.1)

Total tax effect of add backs .................................................... (2.2) (0.3) (2.4)

Adjusted profit after taxation .................................................. 12.1 24.4 24.4

Adjusted profit after taxation attributable to minorityinterests ................................................................................... 6.0 10.8 7.3

XPAT ............................................................................................ 6.1 13.6 17.1

XPAT grew by 25.7% to £17.1 million in 2006 (representing a XPAT margin of 4.4%) from£13.6 million in 2005 (representing a XPAT margin of 3.9%). As well as the performance driversdescribed in XEBIT above, return on cash resources improved during the period. In addition, theGroup’s XPAT has benefited from a reduction in the effective tax rate from 33% in 2005 to 30% in2006. The decrease in effective tax rate was primarily due to utilisation of Group tax losses.

XPAT grew by 123% to £13.6 million in 2005 from £6.1 million in 2004 (representing a XPAT marginof 2.4%). As well as the performance drivers described in XEBIT above, finance costs attributable toequity shareholders grew during the period primarily due to the full year effect of interest on the cashbalances held by Xtb. Additionally, XPAT benefited from a reduction in the effective tax rate from35% in 2004 to 33% in 2005. The decrease in effective tax rate was primarily due to utilisation ofGroup tax losses.

Adjusted Segmental Operating Profit

The Group has three operating segments: Insurance, Financial Markets and Business Lines. In bothof the Insurance and Financial Markets segments the Group provides industry-specific BPO servicesand software to customers. Business Lines is a cross-industry segment in which the Group providesprocurement, human resources, finance and accounting and IT hosting services. These services arealso provided to the other segments in the Group to extract scale benefits and ensure consistency ofapproach. These three operating segments are supported by the Group’s offshore BPS and Corporate,which provides the infrastructure, resources, and investment to sustain and grow the business,

75

including sales and commercial, performance management, implementation and businessmanagement functions.

Segmental operating profit is measured by the Group pre-exceptional items and after adding backcertain non-cash items comprising amortisation of intangible assets that were previously unrecognisedby an entity acquired by the Group and share based payment charges.

The following tables present adjusted operating profit and adjusted operating profit margin bysegment:

2004 2005 2006

(£ in % of (£ in % of (£ in % ofmillions) adjusted millions) adjusted millions) adjusted

operating operating operatingprofit profit profit

Adjusted Operating ProfitInsurance.......................................... 16.1 85 19.1 55 23.2 72Business Lines ................................. 12.3 65 17.5 50 14.2 44Financial Markets ........................... 4.1 22 13.6 39 12.5 39BPS & Corporate............................ (13.5) (71) (15.3) (44) (17.6) (55)

Total Adjusted OperatingProfit(1) ......................................... 19.0 100 34.9 100 32.3 100

2004 2005 2006

% of % of % ofrevenue revenue revenue

Adjusted Operating Profit MarginInsurance ..................................................................................... 14.7 16.3 17.1Business Lines ............................................................................ 14.7 12.2 8.1Financial Markets ...................................................................... 6.5 14.0 13.0

Total Adjusted Operating Profit Margin................................ 7.5 10.0 8.2

Between 2005 and 2006, adjusted operating margins grew in Insurance (to 17.1% in 2006 from 16.3%in 2005) due to improved performance of the existing businesses and contribution from the acquisitionof Landmark. This was offset by the establishment of a new EP with Aon during 2006, which has adilutive effect on margin during the implementation stage. Financial Markets adjusted operatingmargin decreased (to 13.0% in 2006 from 14.0% in 2005) due to the impact of guaranteed discountsand the reduction of revenues from State Street offset by new third party and STP business. Adjustedoperating margins in Business Lines decreased (to 8.1% in 2006 from 12.2% in 2005), primarily due tothe migration of the BAE Systems procurement contract to a third party gain-share model to facilitatethe buy out of the minority interests (completed with effect from 1 January 2007). Additionally, theBusiness Lines adjusted operating margin was negatively affected by its IT hosting operation, whichinvested during the year in strengthening the IT infrastructure platform to support existing and newbusiness. BPS and Corporate increased from £(15.3) million to £(17.6) million, reflecting theinvestments made during the year in the sales and commercial function, India, and implementation ofthe new EP with Aon.

Between 2004 and 2005, adjusted operating margins grew in Insurance (to 16.3% in 2005 from 14.7%in 2004) primarily due to renegotiation of the sector’s insurance claims contract and strongperformance of the software business which undertook new software implementations during the year.Financial Markets adjusted operating margin also grew (to 14.0% in 2005 from 6.5% in 2004) due tothe effect of productivity savings achieved during the first full year’s operations of Xtb. Adjustedoperating margin in Business Lines decreased (to 12.2% in 2005 from 14.7% in 2004), due toadditional principal procurement services being accounted for on a gross basis. BPS and Corporatecost increased from £(13.5) million to £(15.3) million.

(1) Adjusted operating profit is reported pre exceptional items and after certain non-cash adjustments comprising amortisation ofintangible assets created on acquisition and share based payments.

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Cash

The Group uses one cash conversion measure to monitor cash performance. The Group calculatescash conversion as cash generated from operations divided by the Group’s adjusted operating profit,as detailed in the table below:

Year ended 31 December

2004 2005 2006

Cash generated from operations (£ in millions).................... 17.4 34.5 29.4Adjusted operating profit (£ in millions)................................ 19.0 34.9 32.3Cash Conversion % ................................................................... 91.7% 98.9% 91.1%

Cash conversion was above 90% in each year during the period. The Group had strong operating cashprimarily due to tight cash management and control and rigorous contracting in relation to paymentterms in the EPs. Cash conversion in 2006, at 91%, was impacted by the payment of exceptionalcharges during the year and utilisation of provisions. If exceptional cash items were added back, cashconversion would have exceeded 100% during the year.

6. LIQUIDITY AND CAPITAL RESOURCES

Historically, the Group’s sources of funding have principally been from cash flow from operations,which includes royalty and licence fees as well as dividends paid by EPs, supplemented by sales ofequity and convertible debt securities. The cash reflected on the Group’s balance sheet includes cashimmediately accessible for operations but also includes cash held within the Enterprise Partnerships,which is paid to the Group on an annual, or in some cases quarterly, basis as dividends and licencefees. Therefore cash available for the Group’s 100% owned operations is dependent on the periodicdistributions from the Enterprise Partnerships, all of whom have a 100% distribution policy.

The Group’s capital requirements have principally been for establishing EPs and other BPOoperations and for selective acquisitions

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Cash flow

The following tables set forth certain information about the consolidated cash flows of the Group forthe years indicated.

Year ended 31 December

2004 2005 2006

(£ in millions)

Cash flow from operating activitiesCash generated from operations.............................................. 17.4 34.5 29.4Income tax paid.......................................................................... (4.9) (6.4) (9.4)

Net cash from operating activities .......................................... 12.5 28.2 20.0

Cash flows from investing activitiesAcquisition expenses.................................................................. (1.7) — (0.1)Acquisition costs of subsidiaries .............................................. (11.1) — (6.3)Cash and cash equivalents acquired with subsidiaries.......... 57.1 — 0.4Cash invested by minority interests ......................................... — — 0.1Purchase of property, plant and equipment........................... (7.0) (5.7) (8.7)Purchase of intangible assets.................................................... (5.8) (15.5) (7.0)Pre-contract expenditure ........................................................... (2.9) (1.0) (3.2)Proceeds from sale of property, plant and equipment ......... 0.8 1.1 0.4Purchase of available for sale financial assets ....................... — (21.8) —Interest received......................................................................... 1.8 2.4 2.8

Net cash generated by/(used in) investing activities ............ 31.3 (40.5) (21.7)

Cash flows from financing activitiesProceeds from issue of shares .................................................. 0.3 10.0 1.6Proceeds from shares not yet issued ....................................... — 0.8 —Purchase of own shares............................................................. — (0.5) —Transaction costs of shares issued ........................................... — — (0.3)Proceeds from issue of convertible debt................................. 16.0 — —Interest paid................................................................................ (0.2) (0.3) —Dividend paid to minority interests......................................... (7.9) (6.1) (11.6)

Net cash from financing activities........................................... 8.2 3.9 (10.3)Effects of exchange rate changes............................................. 0.6 (0.2) 0.3

Net increase/(decrease) in cash and cash equivalents .......... 52.6 (8.5) (11.6)Cash and cash equivalents at 1 January ................................. 26.3 78.9 70.3

Cash and cash equivalents at 31 December .......................... 78.9 70.3 58.7

Net cash from operating activities

In 2006, cash flow from operating activities exceeded operating profit by £5.3 million. Non-cash itemsof £13.6 million, comprising primarily depreciation and amortisation, were offset by £8.4 millionabsorption of working capital primarily as a result of utilisation of prior year provisions by Xtb, whichheld a number of cash backed provisions acquired when the EP was established.

In 2005, cash flow from operating activities exceeded operating profit by £0.3 million. Non-cash itemsof £10.3 million, comprising primarily depreciation and amortisation, were offset by £10.0 millionabsorption of working capital. Trade and other receivable balances increased during the year primarilyas a result of an increase in procurement business transacted as principal, and amounts due at yearend from Deutsche Bank to settle outstanding transfer arrangements in relation to Xtb.

In 2004, cash flow from operating activities exceeded operating profit by £1.1 million. Non-cash itemsof £6.0 million, comprising primarily depreciation and amortisation, were offset by a non-cash profitof £4.7 million recognised on the creation of the Xtb EP. Working capital decreased during the year by£4.9 million primarily as a result of the utilisation of provisions in Xtb, acquired when the EP wasestablished.

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Net cash generated by/(used in) investing activities

In 2006, cash utilised in investing activities totalled £(21.7) million. During the year, the Groupacquired two business services companies, Landmark and Ferguson Snell. In addition, the Groupcontinued to invest in developing new business, capitalising £3.2 million in pre-contract expenditure inrelation to negotiating the new EP with Aon and a number of material outsourcing contracts such asthe procurement contracts with National Australia Group and BAE Systems Australia, and the HRadministration contract with University Hospital Birmingham. The Group continued to invest indeveloping intangible assets, both centrally in relation to investment commitments made to partnersand within the operating businesses developing and maintaining operating infrastructure. Finally, theGroup invested in tangible assets, which, in addition to the purchase of assets in the normal course ofbusiness, comprised of fit out and hardware assets in relation to a new data centre managementcontract.

In 2005, cash utilised in investing activities totalled £(40.5) million (£(18.7) million before investmentsin financial assets). Investments in intangible assets included continued implementation investment inthe Xtb EP and e-processing infrastructure assets in the Insurance sector. During the year, the Groupinvested in financial assets available for sale comprising a strategic investment in CAD IT and listeddebt securities purchased by Xtb. The Group continued to invest in developing new business,capitalising £1.0 million in pre-contract expenditure.

In 2004, cash generated by investing activities totalled £31.3 million. This included cash and cashequivalents acquired with the Xtb EP totalling £57.1 million, which commenced on 1 June 2004.Excluding this, cash utilised in investing activities amounted to £(25.8) million. A significant elementof this was the Group’s investment during the year in the acquisition of RebusIS. Additionally, theGroup invested in tangible assets acquired in the normal course of business and intangible assetscreated during the implementation of EP’s, primarily Xtb, and investment by existing EPs inintangible assets.

Net cash from financing activities

In 2006, cash from financing activities totalled £(10.3) million, primarily comprising dividends paid tominority interests totalling £(11.6) million during the year in respect to partners’ share in EP profits.This was partially offset by proceeds from the exercising of options during the year totalling£1.6 million.

In 2005, cash from financing activities totalled £3.9 million, primarily comprising £10 million receivedfrom the subscription of a new class of preference D shares in the Group by Sal. Oppenheim.Dividends were paid during the year to minority interests totalling £(6.1) million in respect topartners’ share in EP profits.

In 2004, cash from financing activities totalled £8.2 million primarily comprising proceeds from theissue of convertible loan notes to the Group’s Major Shareholder, General Atlantic, totalling£16.0 million, which were issued to fund the Group’s acquisition of RebusIS and its expansion intoWestern Europe. This was offset by dividends paid to minority interests totalling £(7.9) million duringthe year in respect to partners’ share in EP profits.

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Capitalisation and indebtedness of the Xchanging B.V. Group

The following tables show the capitalisation of the Xchanging B.V. Group as at 31 December 2006 andits gross indebtedness as at 28 February 2007.

Gross indebtedness

28 February2007

(£ in millions)

Total current debtSecured(1) .................................................................................................................................. 13.2Unsecured/non-guaranteed(2) ................................................................................................. 0.5Guaranteed(3)............................................................................................................................ 49.9

63.6

Total non-current debtSecured...................................................................................................................................... —Unsecured/non-guaranteed —Guaranteed(4)............................................................................................................................ 7.2

7.2

Capitalisation

31 December2006

(£ in millions)

Shareholders’ equity(5) ............................................................................................................Ordinary shares........................................................................................................................ 0.2Share premium......................................................................................................................... 82.6Other reserves .......................................................................................................................... 1.3

Total capital and reserves ....................................................................................................... 84.1

There has been no material change to the capitalisation of Xchanging B.V. since 31 December 2006.

(1) Secured current debt comprises a sterling convertible loan note of £13,184,000 which can be converted into convertiblepreference class C shares and is secured over such shares. This will be converted into equity prior to Admission. There isalso £5,000 in respect of hire purchase obligations, which is secured against those assets to which the obligations relate.

(2) Unsecured/non-guaranteed current debt relates to bonds issued on the acquisition of Landmark in 2006.

(3) Guaranteed current debt is the deferred consideration of £47,114,000 payable by a member of the Group in relation tothe acquisition of the minority interests in Xchanging Procurement Services in 2007 and contingent deferredconsideration of £2,784,000 for the acquisition of Ferguson Snell in 2006, both of which are guaranteed by Xchanging B.V.should the contracted acquiring entity be unable to meet its obligations.

(4) The Group has minority shareholders in two Enterprise Partnerships that hold the right to sell their shares to the Groupat a future date, with guarantees provided by Xchanging B.V. should the potential acquiring entity be unable to meet itsobligations.

(5) Shareholders’ equity does not include the profit and loss account reserve.

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Net Indebtedness

The following table shows the net financial indebtedness of the Xchanging B.V. Group as at28 February 2007.

28 February2007

(£ in millions)

Cash ........................................................................................................................................... 54.4Cash equivalents ...................................................................................................................... —Trading securities ..................................................................................................................... —

Total liquidity ........................................................................................................................... 54.4

Current financial debt............................................................................................................. (63.6)Current portion of non-current debt .................................................................................... —

Current financial debt ............................................................................................................ (63.6)

Net current financial indebtedness....................................................................................... (9.2)

Non current bank debt ........................................................................................................... —Bonds issued............................................................................................................................. —Other non-current financial debt .......................................................................................... (7.2)

Non-current financial indebtedness...................................................................................... (7.2)

Net financial indebtedness ..................................................................................................... (16.4)

Debt Facility

The Group entered into a credit agreement in March 2007 with Lloyds TSB Bank plc, providing amaximum aggregate principal amount of £35 million, consisting of a £25 million multi-currency termloan facility and a £10 million multi-currency revolving credit facility. For more information, pleasesee paragraph 18 of Part 8: Additional Information.

Capitalisation and indebtedness of Xchanging plc

The Company’s capitalisation as at 31 December 2006 was £50,000. The Company had noindebtedness as at 28 February 2007.

Contractual Commitments

The following table presents the Group’s contractual obligations as at 31 December 2006:

Payments due by period

Less than More thanTotal 1 year 1-5 years 5 years

(£ in millions)

Operating lease obligations .............................. 79.0 10.1 34.4 34.5Financial Investments ........................................ 24.7 2.3 22.4 —

Total ..................................................................... 103.7 12.4 56.8 34.5

The Group’s most significant operating leases are those of the premises at Leadenhall Street, Londonand in Frankfurt. The Leadenhall lease expires on 30 June 2021 and is subject to a rent review inJuly 2009 and again in 2014 and 2019. The Frankfurt lease expires in June 2013.

The Group is contractually obligated to invest amounts, on behalf of the EPs it has acquired or set-up,in technology development and maintenance and in the development of new processes and systems.Current obligations exist in relation to Xtb and XBS.

On 6 March 2007, a subsidiary of Xchanging B.V. entered into an agreement to acquire BAE Systems’shares in XPS for a consideration of £47 million (£44 million net cash price), which is payable no laterthan 2 July 2007 and includes an element of interest to be calculated from an effective date of1 January 2007 up to the date of payment. Further information on this acquisition can be found inparagraph 18.8 of Part 8: Additional Information.

81

Letters of Credit

The Group has a number letters of credit currently in place.

A letter of credit exists in relation to the Xtb EP for A15 million, which expires on 30 June 2007.

A letter of credit exists in relation to the lease commitment for the Group’s property at 34 LeadenhallStreet for £8.9 million, which the Group expects to expire on 1 July 2007.

There is a commitment to Aon, in relation to the XBS EP, to provide a letter of credit if available freecash falls below £40 million. If over a period of time, available free cash is between £30 million and£40 million, a £10 million letter of credit is required and a £15 million letter of credit will be requiredif available free cash is below £30 million. These commitments will not apply at any time if theoperating profit of XBS exceeds a certain amount.

Distributable reserves

Following the Global Offer, an intermediate holding company will be inserted into the Groupstructure, between Xchanging plc and Xchanging B.V., in a share for share exchange. This companywill become a treasury company for the Group, and will seek a Court approved capital reduction tocreate additional distributable reserves.

Pension liabilities

For a discussion of the Group’s pension liabilities, see Risk Factors on pages 15 and 16, Part 7:Regulation, and note 36 contained in Section A of Part 5: Accountants’ Reports and FinancialInformation and paragraph 11 of Part 8: Additional Information.

Off-Balance Sheet Arrangements

Currently, the Group does not have any off-balance sheet arrangements that would require disclosurein its financial statements.

7. CRITICAL ACCOUNTING POLICIES AND ESTIMATES

For a discussion of the Group’s principal accounting policies see note 2 contained in Part 5:Accountants’ Reports and Financial Information.

Management is required to exercise significant judgment and make use of estimates and assumptionsin the application of these policies.

Areas which management believes require the most critical accounting judgments are:

Retirement benefit obligations

The Group operates a number of defined benefit plans. The retirement benefit obligations recordedare based on actuarial assumptions, including discount rates, expected long-term rate of return onplan assets, inflation and mortality rates. The assumptions are based on current market conditions,historical information and consultation with and input from actuaries. Management reviews theseassumptions annually. If they change, or if actual experience is different from the assumptions, thefunding status of the plan will change and the retirement benefit obligation will be adjustedaccordingly. The assumptions used are detailed in note 36 of Section A of Part 5: Accountants’Reports and Financial Information.

The Group participates in various BAE Systems pension schemes and in the Lloyd’s Pension Scheme.The terms on which the Group participates in these schemes give the Group protection against beingrequired to fund future deficits that arise in the schemes, and against future exit debts that may fall onwithdrawal from these schemes. However, in the event of BAE Systems or Lloyd’s becominginsolvent, there is a risk that the Group could become liable to fund the wider pension schemes ofthese companies in an amount which would materially exceed the Group’s available financialresources. The directors consider that the risk of either of these events is remote and consequently theschemes are accounted for as defined contribution schemes in note 36 of Section A of Part 5:Accountants’ Reports and Financial Information.

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Estimated impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with theaccounting policy stated in note 2(j) of the Group’s financial information contained in Part 5:Accountants’ Reports and Financial Information. The recoverable amounts of cash-generating unitshave been determined based on value-in-use calculations. These calculations require the use ofestimates, see note 14 of of Section A of Part 5: Accountants’ Reports and Financial Information.

Exceptional items

The directors consider that items of income or expense which are material and non-recurring by virtueof their nature and amount should be disclosed separately if the financial statements are to fairlypresent the financial position and financial performance of the Group. The directors label these itemscollectively as ‘‘exceptional items’’.

Calculation of cost and appropriate amortisation period

The original cost of developed assets includes project development costs (including appropriate directinternal costs) which are capitalised from the point that it is virtually certain that the project willproceed to completion. The directors consider that this point of virtual certainty is reached when thememorandum of understanding related to the contract is signed by all parties involved.

Depreciation of these developed assets is charged so as to write down the value of the asset to itsresidual value over its estimated useful life.

Taxation

The level of tax provisioning is dependent on subjective judgment as to the outcome of decisions to bemade by the relevant tax authorities.

It is necessary to consider the extent to which deferred tax assets should be recognised based on anassessment of the extent to which they are regarded as recoverable.

Assumptions on put options

Two put options are accounted for as financial liabilities under paragraph 23 of IAS 32. Theseliabilities are measured at the fair value of the future cash flows associated with them. The levels ofthese cash flows and the relevant discount rates used in the fair value calculations are based on futureprojections and incorporate a certain element of management judgment.

8. WORKING CAPITAL

For a discussion of the Group’s working capital requirements please see paragraph 15 of Part 8:Additional Information.

9. REGULATORY CAPITAL

For a discussion of the Group’s regulatory capital requirements please see Part 7: Regulation.

10. CURRENT TRADING AND PROSPECTS

In early 2007 the Group completed the buy-outs of BAE Systems’ interests in the XHRS and XPSpartnerships for £57 million (a net cash price of £54 million). This will allow the Group to achieve fullstrategic control over the operations of these partnerships and, in the Group’s opinion, will lead toenhanced contribution from those businesses.

With respect to current trading and the prospects for the remainder of 2007, trading remains in linewith management expectations. The Group anticipates further growth through additional revenuefrom existing operations, new EPs and acquisitions.

11. RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements, please see note 2 to Section A of Part 5:Accountants’ Reports and Financial Information.

83

12. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk

The Group’s interest rate risk arises from its indebtedness. See paragraph 6 of this Part 4: Operatingand Financial Review. The Group currently has £19 million of letters of credit outstanding. TheGroup considers debt financing on a case-by-case basis, assessing variable rate versus fixed rateproposals based on value and term of the facility and projected economic conditions.

Foreign exchange risk

The Group’s international operations expose the group to foreign exchange risk. The Group currentlyoperates in a number of foreign currencies (Euro, US Dollar, Indian Rupee, Australian Dollar,Malaysian Ringgit and Thai Baht), of which the only significant transactional foreign currency cashflow exposure is Euros, totalling £97.5 million, which represents 24.8% of total revenues. The Group’spolicy is to hedge a proportion of the exchange rate risk on these transactions to leave a level of riskthat the Group considers acceptable. The hedging policy adopted does not currently meet the criteriafor hedge accounting under IAS 39.

84

2NOV200423333498

PART 5: ACCOUNTANTS’ REPORTS AND FINANCIAL INFORMATION

SECTION A – ACCOUNTANTS’ REPORT AND FINANCIAL INFORMATION FORXCHANGING B.V. FOR THE THREE FINANCIAL YEARS ENDED 31 DECEMBER 2004,

31 DECEMBER 2005 AND 31 DECEMBER 2006

PricewaterhouseCoopers LLP1 Embankment PlaceLondon WC2N 6RH

The DirectorsXchanging plc34 Leadenhall StreetLondonEC3A 1AX

Citigroup Global Markets Limited (the ‘‘Sponsor’’)Citigroup CentreCanada SquareCanary WharfLondonE14 5LB

25 April 2007

Dear Sirs

Xchanging B.V.

We report on the financial information set out in Section A of Part 5: Accountants’ Reports and FinancialInformation. This financial information has been prepared for inclusion in the prospectus dated 25 April2007 (the ‘‘Prospectus’’) of Xchanging plc on the basis of the accounting policies set out in note 2. Thisreport is required by item 20.1 of Annex I to the PD Regulation and is given for the purpose of complyingwith that item and for no other purpose.

Responsibilities

The Directors of Xchanging plc are responsible for preparing the financial information in accordance withthe basis of preparation set out in note 2 to the financial information.

It is our responsibility to form an opinion on the financial information as to whether the financialinformation gives a true and fair view, for the purposes of the Prospectus, and to report our opinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly addressedand for any responsibility arising under item 5.5.3R(2)(f) of the Prospectus Rules to any person as and tothe extent there provided to the fullest extent permitted by law we do not assume any responsibility andwill not accept any liability to any other person for any loss suffered by any such other person as a result of,arising out of, or in connection with this report, consenting to its inclusion in the Prospectus.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. Our work included an assessment of evidence relevant to theamounts and disclosures in the financial information. It also included an assessment of significantestimates and judgments made by those responsible for the preparation of the financial information andwhether the accounting policies are appropriate to Xchanging B.V.’s circumstances, consistently appliedand adequately disclosed.

85

15FEB200619332872

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance that thefinancial information is free from material misstatement whether caused by fraud or other irregularity orerror.

Our work has not been carried out in accordance with auditing standards generally accepted in the UnitedStates of America or auditing standards of the Public Accounting Oversight Board (United States) andaccordingly should not be relied upon as if it had been carried out in accordance with those standards.

Opinion

In our opinion, the financial information gives, for the purposes of the Prospectus, a true and fair view ofthe state of affairs of Xchanging B.V. as at the dates stated and of its profits, cash flows and statement ofrecognised income and expense for the periods then ended in accordance with the basis of preparation setout in note 2 to the financial information.

Declaration

For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of theProspectus and declare that we have taken all reasonable care to ensure that the information contained inthis report is, to the best of our knowledge, in accordance with the facts and contains no omissions likely toaffect its import. This declaration is included in the Prospectus in compliance with item 1.2 of Annex I ofthe PD Regulation.

Yours faithfully

PricewaterhouseCoopers LLPChartered Accountants

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XCHANGING B.V.

Income statements — year ended 31 DecemberNotes 2004 2005 2006

£’000 £’000 £’000

Revenue .................................................................................. 6 254,139 349,968 393,495Cost of sales ........................................................................... (222,852) (302,560) (348,739)

Gross profit ............................................................................ 31,287 47,408 44,756Administrative expenses — pre-exceptional items ........... (12,781) (13,221) (13,693)Administrative expenses — exceptional items .................. 7 (6,931) — (6,906)Administrative expenses ....................................................... (19,712) (13,221) (20,599)

Other operating income — exceptional profit ondisposal of group companies............................................ 8 4,758 — —

Operating profit — pre-exceptional items......................... 18,506 34,187 31,063Net exceptional items ........................................................... (2,173) — (6,906)Operating profit..................................................................... 8 16,333 34,187 24,157Finance costs .......................................................................... 11 (6,828) (8,434) (8,351)Finance income...................................................................... 11 6,555 8,145 9,114

Profit before taxation............................................................ 16,060 33,898 24,920

Taxation................................................................................... 12 (5,672) (11,287) (7,476)

Profit for the year.................................................................. 10,388 22,611 17,444

Profit attributable to minority interests.............................. 32 5,412 10,771 6,726Profit attributable to equity holders of the group ............ 28 4,976 11,840 10,718

10,388 22,611 17,444

Earnings per share for profit attributable to the equityholders of the group during the year (expressed inpence per share)

— Basic................................................................................... 13 2.4 5.8 5.2

— Diluted............................................................................... 13 2.3 5.4 4.9

The financial information above may not be representative of future results; for example, the historicalcapital structure does not reflect the future capital structure. Future interest income and expense, taxcharges and earnings per share may be different from those achieved prior to the Global Offer.

87

XCHANGING B.V.

Statements of recognised income and expense — year ended 31 December

Notes 2004 2005 2006

£’000 £’000 £’000

Profit for the year.................................................................. 10,388 22,611 17,444

Actuarial (losses)/gains arising from defined benefitpension schemes ................................................................ 36 (3,505) (180) 8,017

Movement on deferred tax relating to pension scheme .. 12 944 88 (2,280)Revaluation of available-for-sale financial assets.............. 17 — 179 (1,470)Deferred tax on revaluation of available-for-sale

financial assets ................................................................... 12 — (211) 316Deferred tax on share options............................................. 12 — — 2,150Exchange differences ............................................................ 31 699 7 (360)

Net (losses)/gains not recognised in income statement ... (1,862) (117) 6,373

Total recognised income for the year— attributable to minority interests .................................. 5,548 11,320 7,369— attributable to equity shareholders............................... 2,978 11,174 16,448

Total......................................................................................... 8,526 22,494 23,817

88

XCHANGING B.V.

Balance sheets — 31 December

Notes 2004 2005 2006

£’000 £’000 £’000

Assets

Non-current assetsGoodwill ............................................................................... 14 21,132 21,132 29,362Intangible assets .................................................................. 15 18,919 28,332 28,471Property, plant and equipment ......................................... 16 10,106 11,536 15,096Available-for-sale financial assets ..................................... 17 — 22,249 20,441Trade and other receivables .............................................. 18 4,101 4,131 6,115Deferred income tax assets ............................................... 26 14,534 13,508 16,317

68,792 100,888 115,802

Current assetsTrade and other receivables .............................................. 18 48,572 64,455 74,976Cash and cash equivalents................................................. 19 78,872 70,328 58,684

127,444 134,783 133,660

LiabilitiesCurrent liabilitiesTrade and other payables................................................... 20 (67,383) (74,534) (80,902)Current income tax liabilities ............................................ 21 (2,626) (6,220) (7,129)Borrowings ........................................................................... 22 (10,405) (10,644) (3,270)Provisions ............................................................................. 25 (6,147) (8,395) (8,720)

Net current assets............................................................... 40,883 34,990 33,639

Total assets less current liabilities................................... 109,675 135,878 149,441

Non-current liabilitiesTrade and other payables................................................... 23 (8,927) (8,094) (9,764)Financial liabilities— Borrowings...................................................................... 22 (11,594) (12,303) (13,042)— Other liabilities .............................................................. 24 — — (7,140)Deferred income tax liabilities.......................................... 23, 26 (1,745) (2,281) (2,517)Retirement benefit obligations.......................................... 36 (27,885) (28,512) (21,901)Provisions ............................................................................. 25 (18,253) (15,770) (9,447)

(68,404) (66,960) (63,811)

Net assets ............................................................................. 41,271 68,918 85,630

Shareholders’ equityOrdinary shares ................................................................... 27 195 199 221Share premium.................................................................... 29 58,671 68,163 82,589Other reserves ..................................................................... 30 (1,696) (974) 1,251Retained earnings ............................................................... 28 (27,904) (15,696) (10,209)

Total shareholders’ equity .................................................. 29,266 51,692 73,852Minority interest in equity................................................. 32 12,005 17,226 11,778

Total equity .......................................................................... 31 41,271 68,918 85,630

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XCHANGING B.V.

Cash flow statements — year ended 31 December

Notes 2004 2005 2006

£’000 £’000 £’000

Cash flows from operating activitiesCash generated from operations ......................................... 34 17,422 34,510 29,433Income tax paid ..................................................................... (4,897) (6,354) (9,404)

Net cash from operating activities ...................................... 12,525 28,156 20,029

Cash flows from investing activitiesAcquisition expenses ............................................................. (1,730) — (115)Acquisition cost of subsidiaries ........................................... (11,071) — (6,275)Cash and cash equivalents acquired with subsidiaries ..... 57,134 — 402Cash invested by minority interests .................................... — — 50Purchase of property, plant and equipment ...................... (6,965) (5,706) (8,707)Purchase of intangible assets ............................................... (5,784) (15,509) (7,027)Pre-contract expenditure ...................................................... (2,899) (1,007) (3,223)Proceeds from sale of property, plant and equipment .... 762 1,123 375Purchase of available-for-sale financial assets................... — (21,799) —Interest received .................................................................... 1,804 2,443 2,846

Net cash generated by/(used in) investing activities......... 31,251 (40,455) (21,674)

Cash flows from financing activitiesProceeds from issue of shares ............................................. 282 9,996 1,611Proceeds from shares not yet issued .................................. — 794 —Purchase of own shares ........................................................ — (500) —Transaction costs of shares issued....................................... — — (325)Proceeds from issue of convertible debt ............................ 16,070 — —Interest paid ........................................................................... (192) (258) (43)Increase in borrowings.......................................................... 12 — —Repayment of borrowings .................................................... — (27) —Dividend paid to minority interests .................................... (7,918) (6,099) (11,591)

Net cash from financing activities....................................... 8,254 3,906 (10,348)Effects of exchange rate changes ........................................ 562 (151) 349

Net increase/(decrease) in cash and cash equivalents .... 52,592 (8,544) (11,644)Cash and cash equivalents at 1 January........................... 26,280 78,872 70,328

Cash and cash equivalents at 31 December...................... 19 78,872 70,328 58,684

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XCHANGING B.V.

Notes to the financial information

1 General information

Xchanging B.V. and its subsidiaries engage in business processing services, specialising in increasingthe efficiency of complex back-office functions to allow their customers to concentrate on their coreoperations. The group is engaged in business processing services in human resources, procurement,customer administration, finance and accounting and securities processing, and also in thedevelopment and sale of computer software packages, mainly for the insurance industry.

2 Principal accounting policies

The principal accounting policies applied in the preparation of this financial information are set outbelow. These policies have been consistently applied to all the years presented.

(a) Basis of preparation of the financial information

The financial information has been prepared in accordance with the requirements of thePD regulation and the Listing Rules and in accordance with this basis of preparation. The basis ofpreparation describes how the financial information has been prepared in accordance withInternational Financial Reporting Standards as adopted by the European Union (IFRS as adopted bythe EU) except as described below.

IFRS as adopted by the EU does not provide for the specific accounting treatment set out below, andaccordingly in preparing the financial information certain accounting conventions commonly used forthe preparation of historical financial information for inclusion in investment circulars as described inthe Annexure to SIR 2000 (Investment Reporting Standard applicable to public reportingengagements on historical financial information) issued by the UK Auditing Practices Board havebeen applied. The application of these conventions results in the following material departure fromIFRS as adopted by the EU. In other respects IFRS as adopted by the EU has been applied.

Given the anticipated change in the Group’s capital structure as a result of the restructuring, thedirectors of the group do not believe the group’s historical earnings per share figures to bemeaningful. Therefore, they have not been presented in the consolidated financial information.

Instead, the earnings per share figures have been presented based upon the number of shares inXchanging plc after taking into account the restructuring of the Company’s share capital as describedin paragraph 3.5 of Part 8: Additional Information of this document (including New Shares),representing the earnings per share that would have been disclosed if Xchanging plc had been theparent entity of the group throughout the period presented.

Both the functional currency and the presentation currency of the financial information is sterling dueto the group being managed in the UK and the majority of transactions being denominated in sterling.

The financial information has been prepared under the historical cost convention as modified by therevaluation of available-for-sale investments, financial assets and liabilities held for trading. Asummary of the more important group accounting policies is set out below, together with anexplanation of where changes have been made to previous policies on the adoption of new accountingstandards in the year.

The preparation of financial information in conformity with EU endorsed IFRS requires the use ofjudgments, estimates and assumptions that affect the reported amounts of assets and liabilities at thedate of the financial information and the reported amounts of revenues and expenses duringthe reporting period. Although these estimates are based on management’s best knowledge of theamount, event or actions, actual results ultimately may differ from those estimates. The accountingpolicy descriptions set out the areas where significant judgments, estimates and assumptions havebeen made.

IFRS 7 ‘‘Financial Instruments: Disclosures’’ which is mandatory for periods beginning on or after1 January 2007, has been adopted early in this financial information. This introduces new disclosurerequirements for the group’s financial instruments.

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XCHANGING B.V.

Notes to the financial information (Continued)

(b) Basis of consolidation

The group financial information consolidates the company and all of its subsidiary undertakings.Subsidiary undertakings include those companies in which the company has a 50% equity stake,commonly referred to by the directors as ‘‘enterprise partnerships’’, but over which the company hasoverall operational and financial control.

Interests acquired in subsidiary undertakings are consolidated from the date control passes to theacquirer. Transactions and balances between group companies are eliminated. The interest of minorityshareholders in the balance sheet is stated at the minority’s proportion of the fair values of the assetsand liabilities recognised.

(c) Business combinations

Business combinations are accounted for under IFRS 3. A business combination is deemed to haveoccurred where the group acquires a third party business, either in whole or in part so that it obtainscontrol of that business. The assets and liabilities acquired with the business are fair valued on thedate of acquisition and any difference between the fair value of purchase consideration (and directexpenses of acquisition) and the fair value of the net assets, including intangibles, is recognisedas goodwill.

(d) Segment reporting

A business segment is a group of assets and operations engaged in providing products or services thatare subject to risks and returns which are different from those of other business segments. Ageographical segment is engaged in providing products or services within a particular economicenvironment that are subject to risks and returns which are different from those of segments operatingin other economic environments.

(e) Revenue recognition

Group revenue, which excludes value added tax, rebates and discounts, comprises the value of servicesprovided for customer administration, human resources, procurement services, securities processingand software sales.

The group provides administration services to the insurance market, from which there are threeprincipal sources of revenue. These, together with the bases of revenue recognition, are set out below:

(i) Revenue in respect of the provision of administration services comprises amounts receivable forsubscription fees, a transaction charge for the provision of administration services and other adhoc services. Subscription fees are recognised in the income statement on a straight-line basisaccording to the period to which they relate. Transactional revenue for these services isrecognised in the period in which the transaction takes place. Ad-hoc revenue is recognised in theperiod in which the service is provided.

(ii) Revenue in respect of business process services contracts is divided into an implementation phaseand a service provision phase. Revenue in respect of the implementation phase is accounted foron a long-term contract basis. Revenue and attributable profit is recognised on a percentagecompletion basis representing the stage of completion of contractual obligations. Revenue inrespect of the provision of post-implementation administration services to business processservices customers is recognised in the period to which the service relates.

(iii) Revenue in respect of the rental or maintenance of computer software programmes is recognisedas earned. Billings are included in trade receivables in accordance with the terms of the relevantrental or maintenance contract. To the extent that billings are recorded in advance of the relevantrevenue, such advance billings are included in deferred income. The income arising from the saleof an initial licence is recognised over the period of implementation of the software.

Revenue from the provision of securities processing services is recognised on a straight-line basisaccording to the period to which the service relates, net of guaranteed rebates to customers.

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XCHANGING B.V.

Notes to the financial information (Continued)

Revenue from the provision of human resources services is recognised on a straight-line basisaccording to the period to which the service relates, net of guaranteed rebates to customers. Revenuefrom other HR services is recognised only when all obligations are fulfilled.

Revenue from the provision of procurement services is recognised on a gross basis where the group isresponsible for the whole supply chain process and associated business process from end-to-end.Where the group acts as an agent, revenue is recognised on a net basis. Revenue is recognised on astraight-line basis, net of guaranteed rebates to customers, according to the period to which theservice relates and only when all obligations are fulfilled.

(f) Finance costs

Finance costs are charged to the income statement using the effective interest rate method.

(g) Finance income

Interest income is reported in the income statement as it arises through the application of theeffective interest rate method.

(h) Dividend distribution

Dividend distribution to the company’s shareholders is recognised as a liability in the group’s financialstatements in the period in which the dividends are approved by the company’s shareholders.

(i) Foreign currency transactions

(i) Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured using thecurrency of the primary economic environment in which the entity operates (‘‘the functionalcurrency’’). The consolidated financial statements are presented in sterling which is the group’sfunctional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange ratesprevailing at the dates of the transactions. Foreign exchange gains and losses resulting from thesettlement of such transactions and from the translation at year-end exchange rates of monetary assetsand liabilities denominated in foreign currencies are recognised in the income statement.

Translation differences on non-monetary financial assets, such as equities classified asavailable-for-sale, are included in the fair value reserve in equity.

(iii) Group companies

The results and financial position of all the group entities (none of which has the currency of ahyperinflationary economy) that have a functional currency different from the presentation currencyare translated into the presentation currency as follows:

� assets and liabilities for each balance sheet presented are translated at the closing rate at the dateof that balance sheet;

� income and expenses for each income statement are translated at average exchange rates (unlessthis average is not a reasonable approximation of the cumulative effect of the rates prevailing onthe transaction dates, in which case income and expenses are translated at the rate on the dates ofthe transactions); and

� all resulting exchange differences are recognised as a separate component of equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assetsand liabilities of the foreign entity and translated at the closing rate.

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XCHANGING B.V.

Notes to the financial information (Continued)

(j) Goodwill

Goodwill, arising from the purchase of subsidiary undertakings, represents the excess of the fair valueof the consideration paid over the fair value of the identifiable net assets (including intangible assets)acquired. Goodwill is capitalised as an intangible asset. Impairment reviews are performed annually toensure the present value of estimated future net income streams from the associated contracts, beingthe cash-generating units to which the goodwill is allocated, and discounted using discount ratesspecific to each sector, exceeds the goodwill capitalised.

(k) Intangible assets

Development costs are stated at cost less a provision for amortisation and any provision forimpairment. Research costs are expensed as incurred.

Costs incurred during the development period of new contracts, including the costs of process andsystem designs that substantially improve those processes and systems already installed in theenterprise partnerships, are treated as development costs. These costs are capitalised. Costs that arecapitalised comprise directly attributable incremental costs incurred during the development period,including wages and salaries of staff employed solely for the purpose of improving the processes andsystems, and third party costs.

Development costs do not include restructuring costs, (including redundancy, early terminationpenalties and such like), which are expensed to the income statement as they are incurred.

Amortisation of development costs occurs on a straight line basis over the life of the contract to whichthey relate (between 6 and 12 years). This period represents the useful life of the intangible asset.

Software costs are capitalised where they meet the criteria for recognition under IAS 38. Where thecriteria for capitalisation are not met, software development expenditure is expensed as incurred.

Software development costs are amortised on a straight line basis on an annual rate of 20% or overthe life of the related contract, if longer, so as to write off the asset cost on a straight-line basis overthe expected useful economic life.

Subsequent expenditure undertaken to ensure that an asset maintains its previously assessed standardof performance, for example routine repairs and maintenance expenditure, is recognised in theincome statement as it is incurred. Where subsequent expenditure significantly enhances an asset, thisis capitalised.

Contractual customer relationships are capitalised on acquisition where they meet the criteria forrecognition under IFRS 3 and IAS 38. Amortisation of customer contractual relationships occurs inline with the period from which future value is expected to be earned, which is between one andseven years.

(l) Negative goodwill

Where the fair value of the separable net assets exceeds the fair value of the consideration for anacquired undertaking the difference is treated as negative goodwill and is taken to the incomestatement in the year of acquisition.

(m) Property, plant and equipment

The cost of tangible fixed assets is their purchase cost, together with any incidental costsof acquisition.

Assets in the course of development are not depreciated until completion at which point they aretransferred to the relevant fixed asset category.

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Depreciation is calculated so as to write off the cost of tangible fixed assets, less their estimatedresidual values, on a straight-line basis over the expected useful economic lives of the assetsconcerned. The principal annual rates used for this purpose are:

Computer equipment .................................. 20–33%Fixtures and fittings..................................... 10–25%Leasehold improvements ............................ over the period of the leaseMotor vehicles.............................................. 25%

(n) Impairment of tangible and intangible assets

At each balance sheet date, management reviews its tangible assets to determine whether there is anyindication that those assets have suffered an impairment loss. Intangible assets are reviewed if atrigger event is deemed to have happened. If any such indication exists, the recoverable amount of theasset is estimated in order to determine the extent of the impairment loss (if any). Where the assetdoes not generate cash flows that are independent from other assets, the group estimates therecoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with anindefinite useful life is tested for impairment annually and whenever there is an indication that theasset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value inuse, the estimated future cash flows are discounted to their present value using a pre-tax discount ratethat reflects the current market assessments of the time value of money and the risks specific to theasset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carryingamount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount.An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generatingunit) is increased to the revised estimate of its recoverable amount, but so that the increased carryingamount does not exceed the carrying amount that would have been determined had no impairmentloss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairmentloss is recognised as income immediately.

(o) Financial instruments

(i) Financial assets

The group classifies its financial assets in the following categories: loans and receivables andavailable-for-sale. The classification depends on the purpose for which the financial assets wereacquired. The group determines the classification of its financial assets at initial recognition.

� Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable paymentsthat are not quoted in an active market. They are included in current assets, except for maturitiesgreater than 12 months after the balance sheet date. These are classified as non-current assets.Loans and receivables are classified as ‘‘trade and other receivables’’ in the balance sheet(note 2(q)).

� Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this categoryor not classified in any of the other categories. They are included in non-current assets unlessmanagement intends to dispose of the investment within 12 months of the balance sheet date.

Regular purchases and sales of financial assets are recognised on the trade-date – the date on whichthe group commits to purchase or sell the asset. Investments are initially recognised at fair value plustransaction costs for all financial assets not carried at fair value through profit or loss. Financial assetsare derecognised when the rights to receive cash flows from the investments have expired or have

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been transferred and the group has transferred substantially all risks and rewards of ownership.Available-for-sale financial assets are subsequently carried at fair value. Loans and receivables arecarried at amortised cost using the effective interest method.

Changes in the fair value of monetary and non-monetary securities classified as available-for-sale arerecognised in equity.

When securities classified as available-for-sale are sold or impaired, the accumulated fair valueadjustments recognised in equity are included in the income statement as ‘‘gains and losses frominvestment securities’’.

Dividends on available-for-sale equity instruments are recognised in the income statement as part offinance income when the group’s right to receive payments is established.

The fair values of quoted investments are based on current bid prices.

The group assesses at each balance sheet date whether there is objective evidence that a financialasset or a group of financial assets is impaired. In the case of equity securities classified asavailable-for-sale, a significant or prolonged decline in the fair value of the security below its cost isconsidered as an indicator that the securities are impaired. If any such evidence exists foravailable-for-sale financial assets, the cumulative loss – measured as the difference between theacquisition cost and the current fair value, less any impairment loss on that financial asset previouslyrecognised in profit or loss – is removed from equity and recognised in the income statement.Impairment losses recognised in the income statement on equity instruments are not reversed throughthe income statement. Impairment testing of trade receivables is described in note 2(q).

(ii) Convertible debt

Short term and long term convertible loans are classified as loans and are separated into debt andequity elements upon initial recognition. The liability is measured at amortised cost using the effectiveinterest rate method. The effective interest rate is the market rate in effect at the date of inception ofthe instrument.

The initial carrying amount is then accreted over the expected life of the instrument to the faceamount payable on maturity.

The equity element is recognised directly in the equity reserves and not subsequently re-measuredduring the life of the instrument.

On conversion of the convertible debt, the fair value of the liability together with the portionrecognised in equity is transferred to share capital and share premium.

(p) Put options granted to minority shareholders

In accordance with IAS 32, when minority interests hold put options that enable them to sell theirinvestments to the group, the net present value of the future payment is reflected as a financialliability in the consolidated balance sheet. At the end of each period, the valuation of the liability isreassessed with any changes recognised in the income statement for the period.

(q) Trade and other receivables

Trade and other receivables are recognised at fair value and subsequently measured at amortised costless provision for impairment.

Pre-contract costs comprise legal and other professional expenses and other directly attributable staffcosts incurred in order to obtain specific customer contracts. Costs that are directly attributable to acontract are capitalised when it is virtually certain that the contract will be awarded and the contractwill result in future net cash inflows with a present value at least equal to all amounts recognised asan asset.

Pre-contract costs are included within trade and other receivables and are amortised over the life ofthe contract, starting from the date when the contract commences.

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(r) Cash and cash equivalents

Cash and cash equivalents include cash in hand, demand deposits and short term highly liquidinvestments which are readily convertible to cash and are subject to minimal risk of changes in value.

(s) Trade and other payables

Trade and other payables are recognised at fair value and subsequently measured at amortised cost.

(t) Operating and finance leases

Rental costs under operating leases are charged to the income statement on a straight-line basis overthe lease term. Lease incentives provided by lessors to the group are amortised over the lease termtogether with any related costs of acquiring the lease.

Assets held under finance leases are initially reported at the lower of the fair value of the assets andthe present value of minimum lease payments with an equivalent liability categorised as appropriateliabilities due within or after one year. The asset is depreciated over the shorter of the lease term andits useful economic life. Finance charges are allocated to accounting periods over the period of thelease to produce a constant rate of return on the outstanding balance.

(u) Taxation including deferred taxation

Current tax is recognised at the amount expected to be paid to (or recovered from) the taxationauthorities using the tax rates and laws that have been enacted or substantially enacted by the balancesheet date.

Deferred tax is recognised in respect of all temporary differences that have originated but notreversed at the balance sheet date where transactions or events that result in an obligation to paymore, or a right to pay less, tax in the future have occurred at the balance sheet date. Deferred taxassets are regarded as recoverable and therefore recognised, only when, on the basis of all availableevidence, the directors consider that it is more likely than not that there will be suitable taxable profitsfrom which the future reversal of the underlying temporary differences can be deducted.

(v) Employee benefit costs

(i) Pension obligations

The group operates, or participates in, both defined contribution and defined benefit pensionschemes. All the pension schemes are accounted for in accordance with IAS 19.

Professional independent actuaries value the defined benefit schemes triennially and the valuationswere updated at each year-end. The directors believe that this is sufficiently regular so that theamounts do not differ materially from expectations at the year end.

Scheme assets are measured using closing market values at the balance sheet date. Pension schemeliabilities are measured using the projected unit method and discounted at the current rate of returnon a high quality corporate bond of equivalent term and currency to the liability. Variations betweenthe scheme assets and liabilities identified as a result of these actuarial valuations (actuarial gains andloses) are recognised in full through the statement of recognised income and expense (SORIE) in thatyear. Current service costs, expected returns on plan assets and interest costs are charged to theincome statement. Past-service costs are recognised immediately in income, unless the changes to thepension plan are conditional on the employees remaining in service for a specified period of time(the vesting period). In this case, the past-service costs are amortised on a straight-line basis over thevesting period.

The group participates in a number of defined benefit schemes which are multi employer schemes andwhere insufficient information exists to be able to account for the schemes as defined benefit plans asthere is no consistent and reliable basis for allocating the obligations, plan assets and costs toindividual entities participating in these schemes. In accordance with IAS 19 such schemes are

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accounted for as defined contribution schemes and contributions are charged to the income statementas incurred.

Contributions to the defined contribution schemes are charged to the income statement as incurred.

(ii) Share based compensation

The group operates a number of equity-settled, share-based compensation plans. The fair value of theemployee services received in exchange for the grant of the options is recognised as an expense. Thetotal amount to be expensed over the vesting period is determined by reference to the fair value of theoptions granted, excluding the impact of any non-market vesting conditions (for example, profitabilityand sales growth targets). Non-market vesting conditions are included in assumptions about thenumber of options that are expected to vest. At each balance sheet date, the entity revises its estimatesof the number of options that are expected to vest. It recognises the impact of the revision to originalestimates, if any, in the income statement, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital(nominal value) and share premium when the options are exercised.

(w) Provisions

Provisions are recognised when a present obligation exists as the result of a past event and it isprobable that this will result in an outflow of economic benefit, the size of which can be reliablyestimated. Where the provision is long term, such as onerous contract provisions where theunavoidable costs of meeting obligations exceed any economic benefits expected to be received, thenet cash flows are discounted using the group’s appropriate pre-tax discount rate.

Restructuring provisions are only recognised if an obligation exists at the balance sheet date i.e. aformal plan exists and those affected by that plan have a valid expectation that the restructuring willbe carried out.

(x) Share capital

Share capital comprises the nominal value of all issued shares. On subscribing for shares any excessconsideration over the nominal value of the shares issued less any issue costs is credited to the sharepremium account.

(y) Fair value estimation

The fair values of short-term loans and overdrafts with a maturity of less than one year are assumed toapproximate to their book values. For loans due in more than one year the fair value of financialliabilities for disclosure purposes is estimated by discounting the future contractual cash flows at themarket interest rate available to the group for similar financial instruments. The fair value foravailable-for-sale investments is based on their quoted market price.

(z) Exceptional items

Exceptional items are events or transactions that fall within the activities of the group and which byvirtue of their size or incidence have been disclosed in order to improve a reader’s understanding ofthe financial information.

3 Financial risk management

The group’s operations expose it to a variety of financial risks. The group manages these risks underfinancial risk management policies, which the Board reviews and agrees. These policies are regularlyreviewed. The group’s financial instruments comprise borrowings, cash and liquid resources andvarious items, such as trade receivables and trade payables that arise directly from its operations. Thegroup also enters into derivative transactions (principally forward foreign currency contract options).The purpose of such transactions is to provide an operational hedge for certain currency risks arisingfrom the group’s operations.

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It is the group’s policy that no trading in financial instruments or speculative transactionsbe undertaken.

Interest rate risk

The group reviews its interest rate profile against acceptable risk profiles.

Currently the group has a number of letters of credit, with interest rates on a fixed basis. The groupconsiders debt financing on a case by case basis, assessing variable rate versus fixed rate proposalsbased on value and term of the facility and projected economic conditions.

Working capital is generally held in variable rate operational accounts, with surplus cash placed onfixed rate short term deposits.

Foreign exchange risk

The group’s international operations expose the group to foreign exchange risk. The group currentlyoperates in a number of foreign currencies (Euro, US dollar, Indian rupee, Australian dollar,Malaysian ringgit and Thai baht), of which the only significant transactional foreign currency cash flowexposure is Euros. These cash flows may be hedged using forward foreign contracts or currencyoptions/swaps. The group’s policy is to hedge a proportion of the exchange rate risk on thesetransactions to leave an acceptable level of risk. The hedging policy adopted does not currently meetthe criteria for hedge accounting under IAS 39.

Liquidity risk

The group actively manages its liquidity risk through cash management, including detailed weeklyshort term and monthly long term cash flow forecasting, which support regular reviews of fundingstrategies. The group’s policy is to ensure that all projected borrowing needs are covered bycommitted facilities.

Market risk

The group holds listed investments (CAD IT). These investments are reviewed on a regular basis as totheir suitability according to the group’s risk profile.

Credit risk

The group has a concentration of credit risk with respect to trade receivables due to the nature andstructure of the enterprise partnerships. Credit risk assessments are performed when signing up to anew enterprise partnership and for new customers.

Commodity risk

Commodity risk is not considered to be applicable to the group as the group does not performmaterial transactions of commodities.

4 Critical accounting judgments

The group’s principal accounting policies are set out in note 2 to this financial information.Management is required to exercise significant judgment and make use of estimates and assumptionsin the application of these policies.

Areas which management believes require the most critical accounting judgments are:

(i) Retirement benefit obligations

The group operates a number of defined benefit plans. The retirement benefit obligationsrecorded are based on actuarial assumptions, including discount rates, expected long-term rate ofreturn on plan assets, inflation and mortality rates. The assumptions are based on current marketconditions, historical information and consultation with and input from actuaries. Managementreviews these assumptions annually. If they change, or if actual experience is different from the

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assumptions, the funding status of the plan will change and the retirement benefit obligation willbe adjusted accordingly. The assumptions used are detailed in note 36.

Xchanging participates in various BAE Systems pension schemes and in the Lloyd’s PensionScheme. The terms on which Xchanging participates in these schemes give Xchanging protectionagainst being required to fund future deficits that arise in the schemes, and against future exitdebts that may fall on withdrawal from these schemes. However, in the event of BAE or Lloyd’sbecoming insolvent, there is a risk that Xchanging could become liable to fund the wider pensionschemes of these companies. The directors consider that the risk of either of these events isextremely remote and consequently the schemes are accounted for as defined contributionschemes as per note 36.

(ii) Estimated impairment of goodwill

The group tests annually whether goodwill has suffered any impairment, in accordance with theaccounting policy stated in 2(j). The recoverable amounts of cash-generating units have beendetermined based on value-in-use calculations. These calculations require the use of estimates(see note 14).

(iii) Exceptional items

The directors consider that items of income or expense which are material and non-recurring byvirtue of their nature and amount should be disclosed separately if the financial information is tofairly present the financial position and financial performance of the group. The directors labelthese items collectively as ‘‘exceptional items’’.

(iv) Calculation of cost and appropriate amortisation period

The original cost of developed assets includes project development costs (including appropriatedirect internal costs) which are capitalised from the point that it is virtually certain that theproject will proceed to completion. The directors consider that this point of virtual certainty isreached when the memorandum of understanding related to the contract is signed by all partiesinvolved.

Depreciation of these developed assets is charged so as to write down the value of the asset to itsresidual value over its estimated useful life.

(v) Taxation

The level of tax provisioning is dependent on subjective judgment as to the outcome of decisionsto be made by the relevant tax authorities.

It is necessary to consider the extent to which deferred tax assets should be recognised based onan assessment of the extent to which they are regarded as recoverable.

(vi) Assumptions on put options

Two put options are accounted for as financial liabilities under paragraph 23 of IAS 32. Theseliabilities are measured at the fair value of the future cash flows associated with them. The levelsof these cash flows and the relevant discount rates used in the fair value calculations are based onfuture projections and incorporate a certain element of management judgment.

5 Segmental information

Types of products and services from which each reportable segment derives its revenues:

The group has three reportable business segments for financial reporting purposes: Insurance,Financial Markets and Business Lines. In both of the Insurance and Financial Markets sectors thegroup provides industry-specific BPO services and software to customers. Business Lines is across-industry sector in which the group provides procurement, human resources, finance andaccounting and IT hosting services. These three operating sectors are supported by the group’soffshore business processing services facility (‘‘BPS’’) and ‘‘Corporate’’, which provides the

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infrastructure, resources, and investment to sustain and grow the business, including sales andcommercial, performance management, implementation and business management functions.

Measurement of operating segment profit and loss, assets and liabilities:

The accounting policies of the operating segments are the same as those described in note 2.Xchanging measures segmental performance on operating profit before exceptional items, sharebased payments related to the granting of share options and amortisation of intangible assetspreviously unrecognised by an acquired entity.

Xchanging’s reportable segments account for inter segment sales and transfers as if the sales ortransfers were to third parties i.e. at current market prices.

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Reportable segment profit or loss, assets and liabilities

Segmental information – 2004

Business Financial BPS andLines Insurance Markets Corporate Total

£’000 £’000 £’000 £’000 £’000

Reportable segment profit andloss

Revenue....................................... 83,673 109,669 62,956 — 256,298

— from external customers ...... 83,090 108,093 62,956 — 254,139— inter segment......................... 583 1,576 — — 2,159

Depreciation and amortisation. 2,332 1,848 807 3,594 8,581

Adjusted operating profit/(loss) ....................................... 12,353 16,135 4,067 (13,538) 19,017

Adjusted operating profitpercentage................................. 14.8% 14.7% 6.5% 7.4%

Exceptional items ....................... (3,013) (1,506)(1) 4,758 (2,412) (2,173)Adjustment of certain non

cash items:— Share based payments.......... (16) (16) (2) (171) (205)— Amortisation of intangible

assets previouslyunrecognised by an acquiredentity ........................................ (153) (153) — — (306)

Operating profit/(loss) ............... 9,171 14,460 8,823 (16,121) 16,333Allocation of central costs:— Investment in enterprise

partnerships............................. (228) — (1,925) 2,153 —— Depreciation and

amortisation ............................ (412) (303) (168) 883 —— Other ...................................... (84) (586) — 670 —

Segment result ............................ 8,447 13,571 6,730 (12,415) 16,333— Finance costs ......................... (6,828)— Finance income..................... 6,555— Taxation .................................. (5,672)

Profit for the year ...................... 10,388

Reportable segment assetsReportable segment assets........ 29,415 44,543 50,727 59,242 183,927— Deferred tax assets ............... 14,534— Inter segment assets ............. (2,225)

Total assets .................................. 196,236

Expenditures from reportablesegment non-current assets... 7,300 7,213 9,346 22,436 46,295

Reportable segment liabilitiesReportable segment liabilities .. 31,976 38,969 40,189 19,686 130,820— Deferred tax liabilities ......... 1,745— Inter segment liabilities........ (2,225)— Taxation payable ................... 2,626— Borrowings............................. 21,999

Total liabilities ............................ 154,965

(1) Impairment of the Riskwrite insurance software platform.

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Segmental information – 2005

Business Financial BPS andLines Insurance Markets Corporate Total

£’000 £’000 £’000 £’000 £’000

Reportable segment profit andloss

Revenue....................................... 143,939 116,903 96,753 — 357,595

— from external customers ...... 138,747 114,632 96,589 — 349,968— inter segment......................... 5,192 2,271 164 — 7,627

Depreciation and amortisation. 2,416 1,802 1,445 4,078 9,741

Adjusted operating profit/(loss)......................................... 17,555 19,061 13,605 (15,348) 34,873

Adjusted operating profitpercentage................................. 12.2% 16.3% 14.1% 9.7%

Adjustment of certain noncash items:

— Share based payments.......... (40) (23) (14) (291) (368)— Amortisation of intangible

assets previouslyunrecognised by an acquiredentity ........................................ (159) (159) — — (318)

Operating profit/(loss) ............... 17,356 18,879 13,591 (15,639) 34,187Allocation of central costs:— Investment in enterprise

partnerships............................. (210) (440) (388) 1,038 —— Depreciation and

amortisation ............................ (379) (76) (406) 861 —— Other ...................................... (169) (1,171) — 1,340 —

Segment result ............................ 16,598 17,192 12,797 (12,400) 34,187— Finance costs ......................... (8,434)— Finance income..................... 8,145— Taxation .................................. (11,287)

Profit for the year ...................... 22,611

Reportable segment assetsReportable segment assets........ 47,855 51,553 76,065 63,040 238,513— Deferred tax assets ............... 13,508— Inter segment assets ............. (16,350)

Total assets .................................. 235,671

Expenditures from reportablesegment non-current assets... 2,100 6,029 8,643 4,443 21,215

Reportable segment liabilitiesReportable segment liabilities .. 42,177 43,329 52,555 13,594 151,655— Deferred tax liabilities ......... 2,281— Inter segment liabilities........ (16,350)— Taxation payable ................... 6,220— Borrowings............................. 22,947

Total liabilities ............................ 166,753

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Segmental information – 2006

Business Financial BPS andLines Insurance Markets Corporate Total

£’000 £’000 £’000 £’000 £’000

Reportable segment profit andloss

Revenue....................................... 176,076 135,678 96,177 — 407,931

— from external customers ...... 165,158 132,393 95,944 — 393,495— inter segment......................... 10,918 3,285 233 — 14,436

Depreciation and amortisation. 3,273 2,567 2,588 4,728 13,156

Adjusted operating profit/(loss)......................................... 14,182 23,175 12,530 (17,600) 32,287

Adjusted operating profitpercentage................................. 8.1% 17.1% 13.0% 7.9%

Exceptional items ....................... (460) (1,793) — (4,653) (6,906)Adjustment of certain non

cash items:— Share based payments.......... (46) (14) (17) (418) (495)— Amortisation of intangible

assets previouslyunrecognised by an acquiredentity ........................................ (394) (335) — — (729)

Operating profit/(loss) ............... 13,282 21,033 12,513 (22,671) 24,157Allocation of central costs:— Investment in enterprise

partnerships............................. — (893) — 893 —— Depreciation and

amortisation ............................ (369) (35) (527) 931 —— Other ...................................... (331) (1,184) (494) 2,009 —

Segment result ............................ 12,582 18,921 11,492 (18,838) 24,157— Finance costs ......................... (8,351)— Finance income..................... 9,114— Taxation .................................. (7,476)

Profit for the year ...................... 17,444

Reportable segment assetsReportable segment assets........ 68,517 62,314 51,402 78,508 260,741— Deferred tax assets ............... 16,317— Inter segment assets ............. (27,596)

Total assets .................................. 249,462

Expenditures from reportablesegment non-current assets... 6,037 8,448 2,674 8,125 25,284

Reportable segment liabilitiesReportable segment liabilities .. 58,362 48,119 34,491 17,350 155,330— Deferred tax liabilities ......... 2,517— Inter segment liabilities........ (24,596)— Taxation payable ................... 7,129— Borrowings............................. 16,312— Put option liability ................ 7,140

Total liabilities ............................ 163,832

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Geographical information

2004 2005 2006

£’000 £’000 £’000

Revenue by geographical destinationUnited Kingdom......................................................................... 180,210 224,482 288,395Continental Europe ................................................................... 70,577 118,276 99,835Rest of the world ....................................................................... 3,352 7,210 5,265

254,139 349,968 393,495

Segment assets by location

2004 2005 2006

£’000 £’000 £’000

United Kingdom......................................................................... 131,808 151,741 189,601Continental Europe ................................................................... 48,774 72,736 49,499Rest of the world ....................................................................... 3,929 7,886 8,621

Segmental assets......................................................................... 184,511 232,363 247,721— Deferred tax assets ............................................................... 14,534 13,508 16,317— Inter segment assets ............................................................. (2,809) (10,200) (14,576)

Total assets .................................................................................. 196,236 235,671 249,462

Expenditure from segment non current assets

2004 2005 2006

£’000 £’000 £’000

United Kingdom......................................................................... 36,933 12,571 22,094Continental Europe ................................................................... 9,362 8,644 2,675Rest of the world ....................................................................... — — 515

46,295 21,215 25,284

6 Analysis of revenue by category

2004 2005 2006

£’000 £’000 £’000

Revenue by categoryRevenue from services............................................................... 252,845 346,386 389,620Sale of goods .............................................................................. 1,294 3,582 3,875

254,139 349,968 393,495

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7 Expenses by nature

Note 2004 2005 2006

£’000 £’000 £’000

Cost of goods and services directly related to sales .. 39,945 84,003 105,000Direct staff costs ............................................................. 9 105,824 135,018 142,839Other staff related costs ................................................ 18,337 19,999 24,582Technology and communications .................................. 36,027 46,251 47,393Property costs .................................................................. 15,807 17,197 20,911Depreciation, amortisation and impairment charges. 8,581 9,741 13,156Other costs....................................................................... 11,112 3,572 8,551Exceptional items............................................................ 6,931 – 6,906

Total cost of sales and administrative expenses ........ 242,564 315,781 369,338

Exceptional costs comprise the following:

2004 2005 2006

£’000 £’000 £’000

Legal and professional fees in relation to grouprestructuring including costs associated with the GlobalOffer......................................................................................... — — 3,398

Staff costs relating to group restructuring.............................. — — 1,866Costs incurred migrating customers onto new software

package .................................................................................... — — 1,642Integration of RebusIS acquisition .......................................... 5,425 — —Software impairment ................................................................. 1,506 — —

Total exceptional items.............................................................. 6,931 — 6,906

Minority interests’ share of exceptional items ....................... 753 — 821

Tax on exceptional items........................................................... 2,233 — 1,256

Minority interests’ share of tax on exceptional items........... 226 — 240

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8 Operating profit

2004 2005 2006

£’000 £’000 £’000

Operating profit is stated after charging/(crediting):Staff costs (note 9)..................................................................... 105,824 135,018 142,839Exceptional items excluding exceptional loss and

exceptional impairment below (note 7) .............................. 5,022 — 6,906Exceptional loss on disposal of fixed assets (note 7)............ 403 — —Exceptional impairment of intangibles (note 7) .................... 1,506 — —Depreciation of property, plant and equipment– owned assets ............................................................................ 3,416 3,814 4,554– assets held under finance leases ........................................... 124 111 180Net amortisation of intangible assets ...................................... 4,625 5,132 7,541Amortisation of pre-contract costs .......................................... 416 684 881Release of unutilised restructuring provision......................... — — (1,022)Impairment of trade receivables .............................................. 175 514 209Operating leases – land and buildings .................................... 9,237 9,187 10,493

– plant and machinery................................. 478 787 667Foreign exchange (gain)/loss .................................................... (31) 155 438Loss on disposal of fixed assets ............................................... 40 126 45Exceptional profit on disposal of group company

(note 35).................................................................................. 4,758 — —Auditors’ remuneration – audit services ................................. 534 659 838

– non-audit services ......................... 534 763 1,862

Fees payable to the group’s auditors in the year were as follows:

2004 2005 2006

£’000 £’000 £’000

Audit servicesFees payable to the company’s auditors for the audit of

the parent and consolidated accounts................................. 79 98 193

Fees payable to the company’s auditors for other servicesThe audit of the company’s subsidiaries................................. 455 561 645Other services pursuant to legislation..................................... 156 686 784Tax services.................................................................................. 313 77 254Transaction related services ...................................................... 65 — 632All other services ....................................................................... — — 272

1,068 1,422 2,700

107

XCHANGING B.V.

Notes to the financial information (Continued)

9 Employees

Notes 2004 2005 2006

£’000 £’000 £’000

Staff costs for the group during the yearWages and salaries ........................................................ 86,104 112,384 120,440Social security costs....................................................... 10,967 13,401 14,653Other pension costs – defined contribution

schemes ....................................................................... 6,148 5,824 4,270Other pension costs – defined benefit schemes........ 2,914 3,958 3,478Share based payments................................................... 27a 205 368 495

106,338 135,935 143,336

Staff costs included within exceptional costsStaff costs relating to group restructuring ................. 7 — — 1,866

Included within:Operating expenses ....................................................... 8 105,824 135,018 142,839Finance costs .................................................................. 514 917 497

106,338 135,935 143,336

2004 2005 2006Number Number Number

Average number of persons (including executive directors)employed by business group................................................. 2,465 3,116 3,449

Business Lines ............................................................................ 635 726 863Insurance ..................................................................................... 1,187 1,276 1,471Financial Markets ...................................................................... 511 875 810BPS and Corporate.................................................................... 132 239 305

10 Directors and key management

2004 2005 2006

£’000 £’000 £’000

Key management compensationSalaries and short term employee benefits ............................ 4,146 5,120 3,816Post-employment benefits ......................................................... 28 6 22Termination benefits .................................................................. — — 410Share based payments ............................................................... 138 156 284

4,312 5,282 4,532

The key management figures given above include the Xchanging B.V. directors and all members of theXchanging Executive Committee, which comprises the key members of executive management.

2004 2005 2006

£’000 £’000 £’000

DirectorsAggregate emoluments.............................................................. 683 1,702 1,434

Highest paid directorAggregate emoluments.............................................................. 653 939 511

108

XCHANGING B.V.

Notes to the financial information (Continued)

Directors’ emoluments

Emoluments in respect of the year to 31 December 2004 are shown below:

Fee/basicsalary Bonus Benefits Total

£’000 £’000 £’000 £’000

D Andrews .......................................................... 500 150 3 653J Bramley ............................................................ 30 — — 30D Hodgson.......................................................... — — — —T Tinsley.............................................................. — — — —

Emoluments in respect of the year to 31 December 2005 are shown below:

Fee/basicsalary Bonus Benefits Total

£’000 £’000 £’000 £’000

D Andrews .......................................................... 500 400 39 939J Bramley ............................................................ 40 — — 40S Brenninkmeijer(1) ............................................ 8 — — 8A Browne(1)......................................................... 59 47 1 107D Hodgson.......................................................... — — — —R Houghton(2)..................................................... 282 282 12 576F Janssen(2).......................................................... — — — —J Maret(1) ............................................................. 6 — — 6J Robins(1) ........................................................... 26 — — 26T Tinsley.............................................................. — — — —

(1) Appointed 18 October 2005

(2) Appointed 23 February 2005

Emoluments in respect of the year to 31 December 2006 are shown below:

Fee/Basicsalary Bonus Benefits Total

£’000 £’000 £’000 £’000

D Andrews .......................................................... 500 — 11 511J Bramley(1) ......................................................... 36 — — 36S Brenninkmeijer ............................................... 40 — — 40A Browne ............................................................ 300 — 6 306D Hodgson.......................................................... — — — —R Houghton........................................................ 330 — 8 338F Janssen............................................................. 3 — — 3J Maret ................................................................ 34 — — 34D Millard(2) ......................................................... 34 — — 34N Rich(3) .............................................................. 7 — — 7J Robins............................................................... 125 — — 125T Tinsley.............................................................. — — — —

(1) Resigned 28 November 2006

(2) Appointed 26 April 2006

(3) Appointed 28 November 2006

Directors’ pension information

No directors accrued any retirement benefits under defined contribution or defined benefit schemesin 2004, 2005 and 2006.

109

XCHANGING B.V.

Notes to the financial information (Continued)

Directors’ shares

The beneficial interests of the directors at 31 December 2004 in the share capital of the company areshown below.

Common Common Commonclass A class B class C Common Scheme Class G

shares of shares of shares of shares of shares of shares ofEuro 0.01 Euro 0.01 Euro 0.01 Euro 0.01 Euro 0.01 Euro 0.01

2004 each each each each each each

At 1 January2004

D Andrews .......... 1,785,714 1,785,714 1,785,715 3,000,000 — 44,444J Bramley ............ — — — 17,500 62,500 —

At 31 December2004

D Andrews .......... 1,785,714 1,785,714 1,785,715 3,000,000 — 44,444J Bramley ............ — — — 17,500 62,500 —

Save as stated above, during the course of the year, no director, nor any member of their immediatefamily, had any other interest in the share capital of the company or any of its subsidiaries.

The beneficial interests of the directors at 31 December 2005 in the share capital of the company areshown below.

Common Common Commonclass A class B class C Common Scheme Class G

shares of shares of shares of shares of shares of shares ofEuro 0.01 Euro 0.01 Euro 0.01 Euro 0.01 Euro 0.01 Euro 0.01

2005 each each each each each each

At 1 January 2005 or date ofappointment

D Andrews....................................... 1,785,714 1,785,714 1,785,715 3,000,000 — 44,444J Bramley ......................................... — — — 17,500 62,500 —S Brenninkmeijer ............................ — — — — 62,500 —A Browne......................................... — — — 125,500 125,000 3,333R Houghton..................................... — — — 150,000 125,000 3,333J Maret ............................................. — — — — — 3,333J Robins............................................ — — — 17,500 62,500 —

At 31 December 2005D Andrews....................................... 1,785,714 — 1,785,715 3,000,000 — 44,444J Bramley ......................................... — — — 17,500 62,500 —S Brenninkmeijer(1) ......................... — — — — 62,500 —A Browne(1)...................................... — — — 125,500 125,000 3,333R Houghton(2) ................................. — — — 150,000 125,000 3,333J Maret(1).......................................... — — — — — 3,333J Robins(1) ........................................ — — — 17,500 62,500 —

(1) Appointed 18 October 2005

(2) Appointed 23 February 2005

Save as stated above, during the course of the year, no director, nor any member of their immediatefamily, had any other interest in the share capital of the company or any of its subsidiaries.

110

XCHANGING B.V.

Notes to the financial information (Continued)

The beneficial interests of the directors at 31 December 2006 in the share capital of the company areshown below.

ConvertibleCommon Common preference

class class Common Scheme Class G class DA shares of C shares of shares of shares of shares of shares of

Euro 0.01 Euro 0.01 Euro 0.01 Euro 0.01 Euro 0.01 Euro 0.012006 each each each each each each

At 1 January 2006D Andrews....................................... 1,785,714 1,785,715 3,000,000 — 44,444 —S Brenninkmeijer ............................ — — — 62,500 — —A Browne......................................... — — 125,500 125,000 3,333 —R Houghton..................................... — — 150,000 125,000 3,333 —J Maret ............................................. — — — — 3,333 —J Robins............................................ — — 17,500 62,500 — —

At 31 December 2006D Andrews....................................... 1,785,714 1,785,715 3,000,000 — 44,444 —S Brenninkmeijer ............................ — — — 62,500 — —A Browne......................................... — — 175,000 125,000 3,333 —R Houghton..................................... — — 300,000 125,000 3,333 —J Maret ............................................. — — — — 3,333 90,000J Robins............................................ — — 37,500 62,500 — —

Save as stated above, during the course of the year, no director, nor any member of their immediatefamily, had any other interest in the share capital of the company or any of its subsidiaries.

Directors’ share options

The directors’ holdings of options over common shares in Xchanging B.V. during 2004 are as follows:

Number ofoptions at At Date fromDuring the yearGrant 1 January 31 December Exercise which Expiry

Director type 2004 Granted Exercised 2004 price exercisable date

J Bramley........................ (1) 12,500 — — 12,500 136.0p 24/11/06 24/11/13(1) 12,500 — — 12,500 383.0p 24/11/06 24/11/13

(1) The Unapproved Share Option Plan

The market price of the shares as at 31 December 2004 was £2.21 and the range during the year was£1.36–£2.21.

111

XCHANGING B.V.

Notes to the financial information (Continued)

The directors’ holdings of options over common shares in Xchanging B.V. during 2005 are as follows:

Number ofoptions at1 January2005 or at At Date fromDuring the yearGrant date of 31 December Exercise which Expiry

Director type appointment Granted Exercised 2005 price exercisable date

J Bramley........................ (1) 12,500 — — 12,500 136.0p 24/11/06 24/11/13(1) 12,500 — — 12,500 383.0p 24/11/06 24/11/13

S Brenninkmeijer(3)........ (1) 12,500 — — 12,500 136.0p 24/11/06 24/11/13(1) 12,500 — — 12,500 383.0p 24/11/06 24/11/13

A Browne(3) .................... (2) 21,295 — — 21,295 136.0p 24/11/06 24/11/13(1) 49,500 — — 49,500 207.0p 19/12/04 19/12/11(1) 78,705 — — 78,705 136.0p 24/11/06 24/11/13(1) 100,000 — — 100,000 383.0p 24/11/06 24/11/13

R Houghton(4) ................ (2) 500 — — 500 207.0p 19/12/04 19/12/11(2) 21,295 — — 21,295 136.0p 24/11/06 24/11/13(1) 149,500 — — 149,500 207.0p 19/12/04 19/12/11(1) 103,705 — — 103,705 136.0p 24/11/06 24/11/13(1) 125,000 — — 125,000 383.0p 24/11/06 24/11/13

J Maret(3) ........................ (1) 62,500 — — 62,500 383.0p 17/08/07 17/08/14(1) 5,000 — — 5,000 383.0p 13/12/07 13/12/14(1) 50,000 — — 50,000 383.0p 27/04/08 27/04/08

J Robins(3) ....................... (1) 45,000 — — 45,000 61.0p 25/07/03 25/07/10(1) 12,500 — — 12,500 136.0p 24/11/06 24/11/13(1) 12,500 — — 12,500 383.0p 24/11/06 24/11/13

(1) The Unapproved Share Option Plan

(2) The Approved Share Option Plan

(3) At date of appointment – 18 October 2005

(4) At date of appointment – 23 February 2005

The market price of the shares as at 31 December 2005 was £2.75 and the range during the year was£2.21–£2.75.

112

XCHANGING B.V.

Notes to the financial information (Continued)

The directors’ holdings of options over common shares in Xchanging B.V. during 2006 are as follows:

Number ofoptions at At1 January 31 December2006 or at 2006 or date Date fromDuring the yearGrant date of of Exercise which Expiry

Director type appointment Granted Exercised resignation price exercisable date

J Bramley(3) .................... (1) 12,500 — — 12,500 136.0p 24/11/06 24/11/13(1) 12,500 — — 12,500 383.0p 24/11/06 24/11/13

S Brenninkmeijer........... (1) 12,500 — — 12,500 136.0p 24/11/06 24/11/13(1) 12,500 — — 12,500 383.0p 24/11/06 24/11/13

A Browne ....................... (2) 21,295 — — 21,295 136.0p 24/11/06 24/11/13(1) 49,500 — (49,500) — 207.0p 19/12/04 19/12/11(1) 78,705 — — 78,705 136.0p 24/11/06 24/11/13(1) 100,000 — — 100,000 383.0p 24/11/06 24/11/13

R Houghton ................... (2) 500 — (500) — 207.0p 19/12/04 19/12/11(2) 21,295 — — 21,295 136.0p 24/11/06 24/11/13(1) 149,500 — (149,500) — 207.0p 19/12/04 19/12/11(1) 103,705 — — 103,705 136.0p 24/11/06 24/11/13(1) 125,000 — — 125,000 383.0p 24/11/06 24/11/13

J Maret............................ (1) 62,500 — — 62,500 383.0p 17/08/07 17/08/14(1) 5,000 — — 5,000 383.0p 13/12/07 13/12/14(1) 50,000 — — 50,000 383.0p 27/04/08 27/04/08

D Millard(4)..................... (1) 50,000 — — 50,000 550.0p 11/04/09 11/04/16

N Rich(5) ......................... (1) 50,000 — — 50,000 530.0p 19/10/09 19/10/16

J Robins .......................... (1) 45,000 — (20,000) 25,000 61.0p 25/07/03 25/07/10(1) 12,500 — — 12,500 136.0p 24/11/06 24/11/13(1) 12,500 — — 12,500 383.0p 24/11/06 24/11/13

(1) The Unapproved Share Option Plan

(2) The Approved Share Option Plan

(3) At date of resignation – 28 November 2006

(4) At date of appointment – 26 April 2006

(5) At date of appointment – 28 November 2006

The market price of the shares as at 31 December 2006 was £5.30 and the range during the year was£2.75–£5.30.

A Browne and R Houghton exercised their share options when the market price of the shares was£3.75, resulting in a gain of £83,160 for A Browne and £252,000 for R Houghton. J Robins exercised20,000 options when the market price of the shares was £5.30, resulting in a gain of £93,400.

113

XCHANGING B.V.

Notes to the financial information (Continued)

11 Finance costs and income

2004 2005 2006

£’000 £’000 £’000

Finance costs:Imputed interest payable on shareholder loan and

convertible loan note (note 24) ........................................... (1,226) (1,385) (1,053)Actual interest payable on shareholder loan and

convertible loan note (note 24) ........................................... (166) (172) (56)Interest payable on bank securities ......................................... (115) — —Interest payable on bank loans and overdrafts...................... (35) (45) (6)Interest cost on defined benefit pension schemes................. (5,242) (6,619) (6,765)Imputed interest on deferred consideration re acquisitions — — (256)Imputed interest on put option to acquire minority

interest ..................................................................................... — — (174)Interest payable on finance leases ........................................... (44) (35) (8)Other interest payable............................................................... — (178) (33)

Finance costs............................................................................... (6,828) (8,434) (8,351)

Finance income:Bank interest............................................................................... 1,827 2,443 2,700Expected return on plan assets – defined benefit pension

schemes.................................................................................... 4,728 5,702 6,268Dividends received on available-for-sale assets ..................... — — 107Other interest ............................................................................. — — 39

Finance income .......................................................................... 6,555 8,145 9,114

Finance (costs)/income – net.................................................... (273) (289) 763

12 Taxation

2004 2005 2006

£’000 £’000 £’000

Analysis of charge/(credit) in periodCurrent tax.................................................................................. 4,510 9,948 9,927Deferred tax................................................................................ 1,162 1,339 (2,451)

5,672 11,287 7,476

Tax on items charged to equity

2004 2005 2006

£’000 £’000 £’000

Deferred tax on available-for-sale assets ................................ — 211 (316)Deferred tax on convertible debt............................................. 1,440 — (1,178)Deferred tax on put options..................................................... — — 910Deferred tax on share options ................................................. — — (2,150)Deferred tax on pension ........................................................... (944) (88) 2,280

496 123 (454)

114

XCHANGING B.V.

Notes to the financial information (Continued)

Factors affecting the current tax charge for the year

The above tax charges reconcile with the standard rate of corporation tax in the UK (30%) as follows:

2004 2005 2006

£’000 £’000 £’000

Profit on ordinary activities before tax ................................... 16,060 33,898 24,920

Profit on ordinary activities multiplied by rate ofcorporation tax in the UK of 30% ...................................... 4,818 10,169 7,476

Taxable overseas dividend income ........................................... — 605 1,110Overseas losses not available for group relief ....................... 243 143 827Utilisation of tax losses ............................................................. (39) (1,131) (2,069)Depreciation for the year in excess of capital allowances ... (184) (36) 181Expenses not deductible for tax purposes:— Exceptional items.................................................................. 299 — 816— Imputed interest on convertible loans ............................... 6 178 62— Other expenses...................................................................... 240 1,131 1,029Difference in deductibility of share options........................... 62 110 (431)Non-taxable profit on disposal of group company................ (1,427) — —Short term temporary differences............................................ 223 (355) (688)Tax in respect of prior years..................................................... 115 95 (390)Withholding tax written off ...................................................... 28 — —Difference on foreign tax rates ................................................ 563 378 (447)Deferred tax assets not recognised.......................................... 725 — —

Tax charge for the year ............................................................. 5,672 11,287 7,476

Factors that may affect future tax charges

Tax losses arising in previous years and other timing differences total an estimated carried forwardamount of £18,967,000 (2005: £26,653,000) (2004: £27,840,000) which gives rise to an unrecogniseddeferred tax asset of £5,690,000 (2005: £7,996,000) (2004: £8,352,000), assuming a tax rate of 30% Asthe group undertaking in which these tax losses rest makes profits, future tax charges will be reducedas a result of the profits being offset by these tax losses. However no asset in relation to this has beenrecognised as there is insufficient certainty over the timing and availability of such future profits.

The German tax authorities have commenced a tax audit of Xtb. No provision has been raised for anypotential tax exposure that may arise from the investigation as it has not progressed sufficiently tomake quantifying any potential exposures feasible at this stage.

115

XCHANGING B.V.

Notes to the financial information (Continued)

The table below reconciles profit after taxation to XPAT, one of the group’s key performanceindicators. It highlights the tax adjustments necessary to determine XPAT, which is a measure of theadjusted profit attributable to equity shareholders of the Group.

2004 2005 2006

£’000 £’000 £’000

Profit after taxation ................................................................... 10,388 22,611 17,444

Add back:— Exceptional expenses (note 7) ............................................ 6,931 — 6,906— Exceptional profit (note 35)................................................ (4,758) — —— Amortisation of intangible assets previously

unrecognised by an acquired entity (note 15) .................. 306 318 729— Share based payments (note 27a) ...................................... 205 368 495— Imputed interest on loan notes (note 11)......................... 1,226 1,385 1,053— Imputed interest on put options (note 11) ....................... — — 174

Tax effect of addbacks— Exceptional items.................................................................. (1,781) — (1,257)— Exceptional profit ................................................................. — — —— Amortisation of intangible assets previously

unrecognised by an acquired entity.................................... (92) (95) (219)— Share based payments.......................................................... — — (579)— Imputed interest on loan notes .......................................... (361) (238) (254)— Imputed interest on put options......................................... — — (52)

Adjusted profit after taxation................................................... 12,064 24,349 24,440Adjusted profit after taxation attributable to minority

interests ................................................................................... (5,939) (10,771) (7,301)

XPAT............................................................................................ 6,125 13,578 17,139

Tax on the addbacks is charged at 30% unless otherwise stated within factors affecting the current taxcharge for the year.

13 Earnings per share

Basic

Basic earnings per share is calculated by dividing the net profit attributable to equity holders ofXchanging B.V. by the number of ordinary shares of Xchanging plc, taking into account therestructuring of the Company’s share capital on the date of the Global Offer (note 2a).

Diluted

Diluted earnings per share is calculated by dividing the above net profit attributable to equity holdersof Xchanging B.V. by the sum of the above Xchanging plc shares (taking the restructuring of theCompany’s share capital into account) and the weighted number of potential dilutive Xchanging plc

116

XCHANGING B.V.

Notes to the financial information (Continued)

shares outstanding at the date of the Global Offer. These potential dilutive shares all relate tooutstanding share options.

Number of Per shareEarnings shares amount

£’000 thousands pence

Basic earnings per share:— 2004......................................................................................... 4,976 205,578 2.4— 2005......................................................................................... 11,840 205,578 5.8— 2006......................................................................................... 10,718 205,578 5.2

Diluted earnings per share:— 2004......................................................................................... 4,976 218,689 2.3— 2005......................................................................................... 11,840 218,689 5.4— 2006......................................................................................... 10,718 218,689 4.9

The following compares the share data used in the basic and diluted earnings per share calculations:

Number

thousands

Number of ordinary Xchanging plc shares for basic and headline earnings per share ... 205,578

Dilutive potential ordinary shares:— Employee share options....................................................................................................... 13,110

Weighted average number of ordinary Xchanging plc shares for diluted earnings pershare......................................................................................................................................... 218,689

In addition to the above, adjusted earnings per share is disclosed to provide a better understanding ofthe underlying trading performance of the group:

Number of Per shareEarnings shares amount

£’000 thousands pence

Basic adjusted earnings per share:— 2004......................................................................................... 6,125 205,578 3.0— 2005......................................................................................... 13,578 205,578 6.6— 2006......................................................................................... 17,139 205,578 8.3

Diluted adjusted earnings per share:— 2004......................................................................................... 6,125 218,689 2.8— 2005......................................................................................... 13,578 218,689 6.2— 2006......................................................................................... 17,139 218,689 7.8

The adjusted earnings per share figures are calculated based on the Xchanging adjusted profit aftertax (XPAT) as calculated in note 12 divided by the above basic and diluted number of sharesoutstanding at the date of the Global Offer.

117

XCHANGING B.V.

Notes to the financial information (Continued)

14 Goodwill2004 2005 2006

£’000 £’000 £’000

CostAt 1 January ............................................................................... 3,942 21,132 21,132Additions (note 35).................................................................... 17,190 — 8,230

At 31 December .......................................................................... 21,132 21,132 29,362

Aggregate impairmentAt 1 January and at 31 December .......................................... — — —

Net book amountAt 31 December .......................................................................... 21,132 21,132 29,362

At the end of each year the acquired goodwill in respect of all previous acquisitions is tested forimpairment in accordance with IAS 36. Following the impairment test, it was not considered necessaryto recognise an impairment charge for any of the years.

Goodwill is allocated to the group’s cash-generating units (CGUs) identified according to enterprisepartnership and business sector. The carrying amounts of goodwill by division are as follows:

Financial BusinessInsurance Markets Lines Other Total

Ins-sure Holdings Limited ........ 3,942 — — — 3,942RebusIS ....................................... — — — 16,920 16,920Xtb ............................................... — 270 — — 270Landmark Business Consulting

Limited .................................... 3,263 — — — 3,263Ferguson Snell and Associates

Limited .................................... — — 4,938 — 4,938Xchanging Broking Services

Limited .................................... 29 — — — 29

7,234 270 4,938 16,920 29,362

The recoverable amount of a CGU is determined based on value in use calculations. Thesecalculations use cash flow projections based on budgets approved by management covering a threeyear period. Cash flows beyond the three year period are extrapolated using the estimated growthrates stated below.

Key assumptions used for value in use calculations:

Financial BusinessInsurance Markets Lines Other

Growth rate (post year 3)................................. 0.0% 0.0% 0.0% 0.0%Discount rate ...................................................... 18.0% 24.0% 18.0% 23.0%

The budgeted turnover values used for the first three years of the value in use calculations incorporategrowth rates specific to that CGU. A zero growth rate was assumed for all years post the third year.

The discount rates used are pre-tax and reflect specific risks relating to the relevant business sector.

118

XCHANGING B.V.

Notes to the financial information (Continued)

15 Intangible assetsCustomer Assets in the

Development contractual course ofcosts Software relationship development Total

£’000 £’000 £’000 £’000 £’000

CostAt 1 January 2004 ...................... 8,243 14,630 — 286 23,159Acquisitions................................. — 959 1,614 — 2,573Additions – external................... — 191 — — 191Additions – internally

generated................................. 2,038 2,557 — 998 5,593Disposals...................................... (73) (163) — — (236)Exchange adjustments ............... — 102 — — 102

At 31 December 2004................. 10,208 18,276 1,614 1,284 31,382

AmortisationAt 1 January 2004 ...................... 1,473 4,900 — — 6,373Charge for the year ................... 964 3,355 306 — 4,625Disposals...................................... (19) (92) — — (111)Impairment loss.......................... — 1,506 — — 1,506Exchange adjustments ............... — 70 — — 70

At 31 December 2004................. 2,418 9,739 306 — 12,463

Net book amountAt 31 December 2004................. 7,790 8,537 1,308 1,284 18,919

Customer Assets in theDevelopment contractual course of

costs Software relationship development Total

£’000 £’000 £’000 £’000 £’000

CostAt 1 January 2005 ...................... 10,208 18,276 1,614 1,284 31,382Additions – internally

generated................................. 2,444 10,629 — 2,436 15,509Transfers ...................................... — 580 — (580) —Disposals...................................... — (3,428) — — (3,428)Written off to income

statement ................................. — (55) — — (55)Exchange adjustments ............... — 9 — — 9

At 31 December 2005................. 12,652 26,011 1,614 3,140 43,417

AmortisationAt 1 January 2005 ...................... 2,418 9,739 306 — 12,463Charge for the year ................... 1,163 3,651 318 — 5,132Disposals...................................... — (2,479) — — (2,479)Exchange adjustments ............... — (31) — — (31)

At 31 December 2005................. 3,581 10,880 624 — 15,085

Net book amountAt 31 December 2005................. 9,071 15,131 990 3,140 28,332

119

XCHANGING B.V.

Notes to the financial information (Continued)

Customer Assets in theDevelopment contractual course of

costs Software relationship development Total

£’000 £’000 £’000 £’000 £’000

CostAt 1 January 2006 ...................... 12,652 26,011 1,614 3,140 43,417Acquisitions................................. — — 864 — 864Additions – internally

generated................................. 779 1,270 — — 2,049Additions – external................... 307 3,853 — 818 4,978Transfers from tangibles............ — 213 — — 213Transfers to/(from) assets in

the course of development ... — 2,502 — (2,502) —Disposals...................................... (501) (236) — — (737)Exchange adjustments ............... — (233) — — (233)

At 31 December 2006................. 13,237 33,380 2,478 1,456 50,551

AmortisationAt 1 January 2006 ...................... 3,581 10,880 624 — 15,085Charge for the year ................... 1,227 5,585 729 — 7,541Transfers ...................................... — 81 — — 81Disposals...................................... (327) (235) — — (562)Exchange adjustments ............... (1) (64) — — (65)

At 31 December 2006................. 4,480 16,247 1,353 — 22,080

Net book amountAt 31 December 2006................. 8,757 17,133 1,125 1,456 28,471

Amortisation has been charged through cost of sales and administrative expenses in the incomestatement as follows:

2004 2005 2006

£’000 £’000 £’000

Cost of sales................................................................................ 1,713 2,001 4,243Administrative expenses ............................................................ 2,912 3,131 3,298

4,625 5,132 7,541

120

XCHANGING B.V.

Notes to the financial information (Continued)

16 Property, plant and equipment

Leasehold Computer Motor Fixtures andimprovements equipment vehicles fittings Total

£’000 £’000 £’000 £’000 £’000

CostAt 1 January 2004...................... 1,797 5,901 268 1,687 9,653Acquisitions ................................ 1,190 1,952 119 846 4,107Additions..................................... 2,819 3,373 85 688 6,965Disposals ..................................... (1,693) (33) (189) (272) (2,187)Exchange adjustments ............... 33 236 (3) 131 397

At 31 December 2004 ................ 4,146 11,429 280 3,080 18,935

DepreciationAt 1 January 2004...................... 1,059 3,880 164 981 6,084Charge for year .......................... 344 2,553 94 549 3,540Disposals ..................................... (772) (21) (138) (173) (1,104)Exchange adjustments ............... 11 208 (1) 91 309

At 31 December 2004 ................ 642 6,620 119 1,448 8,829

Net book valueAt 31 December 2004 ................ 3,504 4,809 161 1,632 10,106

Leasehold Computer Motor Fixtures andimprovements equipment vehicles fittings Total

£’000 £’000 £’000 £’000 £’000

CostAt 1 January 2005...................... 4,146 11,429 280 3,080 18,935Additions..................................... 1,434 3,842 66 364 5,706Disposals ..................................... (9) (727) (93) (307) (1,136)Exchange adjustments ............... (22) (146) 3 15 (150)

At 31 December 2005 ................ 5,549 14,398 256 3,152 23,355

DepreciationAt 1 January 2005...................... 642 6,620 119 1,448 8,829Charge for year .......................... 419 2,617 77 812 3,925Disposals ..................................... (5) (472) (79) (280) (836)Exchange adjustments ............... (3) (122) 3 23 (99)

At 31 December 2005 ................ 1,053 8,643 120 2,003 11,819

Net book valueAt 31 December 2005 ................ 4,496 5,755 136 1,149 11,536

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Leasehold Computer Motor Fixtures andimprovements equipment vehicles fittings Total

£’000 £’000 £’000 £’000 £’000

CostAt 1 January 2006...................... 5,549 14,398 256 3,152 23,355Acquisitions ................................ 8 15 106 11 140Transfers...................................... — (604) — 604 —Additions..................................... 2,202 3,382 — 3,123 8,707Transfer to intangibles............... — (213) — — (213)Disposals ..................................... (104) (2,691) (165) (199) (3,159)Exchange adjustments ............... (48) (209) (5) (88) (350)

At 31 December 2006 ................ 7,607 14,078 192 6,603 28,480

DepreciationAt 1 January 2006...................... 1,053 8,643 120 2,003 11,819Transfers...................................... — (306) — 306 —Charge for year .......................... 706 3,121 71 836 4,734Transfers to intangibles ............. — (81) — — (81)Disposals ..................................... (104) (2,606) (60) (144) (2,914)Exchange adjustments ............... 25 (158) (4) (37) (174)

At 31 December 2006 ................ 1,680 8,613 127 2,964 13,384

Net book valueAt 31 December 2006 ................ 5,927 5,465 65 3,639 15,096

Depreciation has been charged through cost of sales and administrative expenses in the incomestatement as follows:

2004 2005 2006

£’000 £’000 £’000

Cost of sales................................................................................ 3,257 3,549 3,951Administrative expenses ............................................................ 283 376 783

3,540 3,925 4,734

Included in property, plant and equipment are fixtures and fittings held under finance leases with anet book value of £271,000 (2005: £416,000) (2004: £522,000).

17 Available-for-sale financial assets2004 2005 2006

£’000 £’000 £’000

At 1 January ............................................................................... — — 22,249Additions ..................................................................................... — 21,799 —Exchange differences ................................................................. — 271 (338)Revaluation surplus/(deficit)..................................................... — 179 (1,470)

At 31 December .......................................................................... — 22,249 20,441

Non current ................................................................................ — 22,249 20,441

These investments are held at fair value.

There were no disposals or impairment provisions on available-for-sale financial assets during 2005or 2006.

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Available-for-sale financial assets include the following:2004 2005 2006

£’000 £’000 £’000

Listed equity securities – Eurozone ........................................ — 6,242 5,546Listed debt security.................................................................... — 16,007 14,895

— 22,249 20,441

The underlying currency of the above investments is Euros.

18 Trade and other receivables2004 2005 2006

£’000 £’000 £’000

Due within one year:Trade receivables – non related parties .................................. 15,388 25,070 29,430Trade receivables – related parties (note 38)......................... 9,047 11,985 7,872

Trade receivables........................................................................ 24,435 37,055 37,302Less: provision for impairment of receivables ....................... (973) (1,642) (1,003)

Net trade receivables ................................................................. 23,462 35,413 36,299Amounts owed by related parties (note 38) .......................... 399 39 —Taxes receivable .......................................................................... 1,450 393 536Other receivables ....................................................................... 3,418 8,759 10,788Prepayments and accrued income ........................................... 19,335 19,050 26,145Pre-contract costs (see note below)......................................... 508 801 1,208

48,572 64,455 74,976

2004 2005 2006

£’000 £’000 £’000

Due after more than one year:Pre-contract costs (see note below)......................................... 3,871 3,901 5,826Other receivables ....................................................................... 230 230 289

4,101 4,131 6,115

Pre-contract costs2004 2005 2006

£’000 £’000 £’000

Written down value at 1 January............................................. 1,896 4,379 4,702Pre-contracts costs deferred in year ........................................ 2,899 1,007 3,223

4,795 5,386 7,925Amortisation charge for the year ............................................ (416) (684) (881)Write-offs in the year ................................................................ — — (10)

Written down value at 31 December ...................................... 4,379 4,702 7,034

Included in amounts owed by related parties in 2004 were loans to R Houghton and A Browne,directors of the company. The loans were made prior to their appointments to the Board, carried acoupon of 5% per annum and were secured over their shareholdings in the company. These loanswere repaid during 2005. The amounts outstanding were:

2004 2005 2006

£’000 £’000 £’000

A Browne .................................................................................... 96,320 — —R Houghton................................................................................ 115,569 — —

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The following table sets out the age of financial assets that are past due but not impaired:2006

£’000

Current ........................................................................................................................................ 20,293Past due:1–30 days ..................................................................................................................................... 8,41631–60 days ................................................................................................................................... 2,66961–90 days ................................................................................................................................... 2,458>90 days...................................................................................................................................... 2,463

Net trade receivables ................................................................................................................. 36,299

19 Cash and cash equivalents2004 2005 2006

£’000 £’000 £’000

Cash at bank and in hand......................................................... 78,872 70,328 58,684

Within the balance shown above, there is £5,000,000 cash held in respect of the collaterisation for aletter of credit provided for the Xtb acquisition (2005: £5,000,000) (2004: £5,000,000). The letter ofcredit is provided by Lloyds TSB for 3 years from signing the contract and underwrites the savingsguarantees that are being made by Xchanging to Deutsche Bank in respect of the acquisition of Xtb.Upon Xtb failing to deliver the guaranteed savings, Deutsche Bank may call for an amount of up toEuros 15m. This letter of credit expires on 30 June 2007.

The cash reflected on the group’s balance sheet includes cash immediately accessible for operationsbut also includes cash held within the enterprise partnerships, which is paid to the group on an annual,or in some cases quarterly, basis as contractual dividends and licence fees. Therefore cash available forthe group’s 100% owned operations is dependent on the periodic distributions from the enterprisepartnerships, all of whom have a 100% distribution policy.

2004 2005 2006

£’000 £’000 £’000

Cash available for 100% owned operations ........................... 15,358 18,275 24,091

20 Trade and other payables – current2004 2005 2006

£’000 £’000 £’000

Trade payables – non related parties ...................................... 13,535 17,189 18,094Trade payables – related parties (note 38)............................. 4,587 6,027 2,360

Trade payables ............................................................................ 18,122 23,216 20,454Other taxation and social security ........................................... 4,590 5,129 7,481Other payables – non related parties...................................... 2,153 4,378 9,256Other payables – related parties (note 38) ............................ — 1,165 6,880Accruals and deferred income ................................................. 42,518 40,646 31,451Accruals and deferred income – related parties (note 38) .. — — 4,133Dividends payable to minority interests.................................. — — 1,247

67,383 74,534 80,902

21 Current income tax liabilities2004 2005 2006

£’000 £’000 £’000

Current income tax liabilities ................................................... 2,626 6,220 7,129

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22 Financial liabilities – borrowings2004 2005 2006

£’000 £’000 £’000

CurrentBank loans and overdrafts due within one year on

demand .................................................................................... 27 — —Shareholder loan ........................................................................ 10,192 10,363 —Obligations under finance leases ............................................. 186 281 17Deferred consideration on acquisitions .................................. — — 3,253

10,405 10,644 3,270

Non currentConvertible loan note................................................................ 11,402 12,195 13,042Obligations under finance leases ............................................. 192 108 —

11,594 12,303 13,042

In September 2003 the sterling shareholder loan of £5m was provided by General AtlanticPartners LLP to fund the international expansion plans of the group. It took the form of an interestbearing convertible loan note at 1.71%, with interest rolling up into the principal. In January 2004 thiswas rolled over into a note with the same properties and an additional £5m was advanced by GeneralAtlantic Partners LLP at this time. The loan note was exchanged for 1,895,020 convertible preferenceclass E shares in May 2006 at a price of £5.50 per share, which was considered to be the fair marketvalue of the shares at the time. The equity elements of the shareholder loan were transferred to theshare premium reserve on exchange.

In January 2004 a sterling convertible loan note was issued to Rebus Insurance Services HoldingsLimited, and was subsequently transferred to General Atlantic Partners LLP, on the acquisition of theRebusIS group. The face value of the loan note is £15m on its maturity date of 28 January 2009 and isrecorded in the balance sheet at its fair value, having been discounted at the market rate on the dateof issue. Before maturity the loan note can be converted into convertible preference class C shares at aprice of £11 per share and is secured over such shares. The loan note is not interest bearing. Theequity element of £355,000 recognised on inception was transferred to equity reserves in 2004.

The effective interest rates, being market rate at the time the loans were entered into, are as follows:

Shareholder loan ................................................................................................................................ 7.63%Convertible loan note ........................................................................................................................ 6.95%

All borrowings are denominated in sterling.

23 Other non-current liabilities2004 2005 2006

£’000 £’000 £’000

Trade and other payables.......................................................... 8,927 8,094 9,764Deferred income tax liabilities (note 26) ............................... 1,745 2,281 2,517

10,672 10,375 12,281

24 Financial instruments

Fair values of non-derivative financial assets and financial liabilities

The carrying amounts of all current financial instruments approximate to their fair value.

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The carrying amounts and fair values of the non-current financial liabilities are as follows:

Carrying amount Fair value

2004 2005 2006 2004 2005 2006

£’000 £’000 £’000 £’000 £’000 £’000

Convertible loan note..................... 11,402 12,195 13,042 11,402 12,195 12,915Put option to acquire minority

interest.......................................... — — 7,140 — — 7,140

11,402 12,195 20,182 11,402 12,195 20,055

The group has minority shareholders in two enterprise partnerships that hold the right to sell theirshares to the group at a future date. In accordance with IAS 32 the cash flows associated with theseoptions are fair valued and discounted back to their present value. This notional liability is recognisedin the balance sheet, the other side of the entry going to reserves (note 31).

Fair values of the above are calculated by taking the future cash flows associated with the instrumentsand discounting them back to their present value using interest rates based on current market rates.

Maturity of non-current financial liabilities

The maturity profile of the group’s non-current liabilities, at 31 December was as follows:2004 2005 2006

£’000 £’000 £’000

In more than one year but not more than two years ........... — — —In more than two years but not more than five years.......... 15,000 15,000 25,000In more than five years ............................................................. — — —

15,000 15,000 25,000

Finance lease payments

The minimum lease payments under finance leases fall due as follows:

2004 2005 2006

£’000 £’000 £’000

Not later than one year............................................................. 181 281 17Later than one year but not more than five years................ 197 108 —More than five years.................................................................. — — —

378 389 17

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Notes to the financial information (Continued)

25 Provisions

OperationalRestructuring Property risk Other Total

£’000 £’000 £’000 £’000 £’000

At 1 January 2004..................... 1,166 127 — — 1,293Acquired in the year................. — — 12,605 12,834 25,439Released in the year................. — — (650) (44) (694)Provided in the year ................. — 3,853 628 2,258 6,739Utilised in the year ................... (1,166) (127) (3,779) (3,212) (8,284)Exchange adjustments .............. — — (104) 11 (93)

At 31 December 2004 ............... — 3,853 8,700 11,847 24,400Released in the year................. — (173) (387) (108) (668)Provided in the year ................. — 579 1,039 12,551 14,169Utilised in the year ................... — (2,188) (4,345) (6,640) (13,173)Exchange adjustments .............. — — (267) (296) (563)

At 31 December 2005 ............... — 2,071 4,740 17,354 24,165Released in the year................. — — (1,426) (1,336) (2,762)Provided in the year ................. 1,866 833 1,238 1,859 5,796Utilised in the year ................... — (834) (2,022) (5,363) (8,219)Exchange adjustments .............. — (7) (76) (312) (395)Other movements...................... — 180 — (598) (418)

At 31 December 2006 ............... 1,866 2,243 2,454 11,604 18,167

Provisions have been analysed between current and non-current as follows:2004 2005 2006

£’000 £’000 £’000

Current ........................................................................................ 6,147 8,395 8,720Non-current................................................................................. 18,253 15,770 9,447

24,400 24,165 18,167

The restructuring provision relates to management redundancies as a result of the strategicrealignment of various aspects of the business in order to increase productivity and reduce costs.

The property provision relates to dilapidations on the withdrawal from a number of operating leasesand a provision to cover the shortfall in vacant properties between expected sub-letting rents and thecost of two onerous operating leases. The leases provided for have 5 and 9 years left to run.

The operational risk provision comprises an estimated liability in respect of identified operating errorswhich had occurred in the ordinary course of business in the Financial Markets division up to31 December 2006.

The other provision includes provisions for early retirement, severance and long service payments,other personnel related provisions, being provisions for profit sharing, gratuities and leaveencashment, and a VAT provision due to a change in regulations.

26 Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using a tax rateof 30% for differences arising in the UK and 40.86% for those arising in Germany.

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The movements in deferred tax assets and liabilities (prior to the offsetting of balances within thesame jurisdiction as permitted by IAS 12 during the period) are shown below:

2004 2005 2006

£’000 £’000 £’000

AssetsAt 1 January ............................................................................... 1,994 14,534 13,508Recognised on business combination ...................................... 12,893 — 25Profit and loss (charge)/credit .................................................. (1,708) (1,015) 2,486Exchange differences ................................................................. 411 (99) (118)Tax credited to equity ................................................................ 944 88 416

At 31 December ......................................................................... 14,534 13,508 16,317

2004 2005 2006

£’000 £’000 £’000

LiabilitiesAt 1 January ............................................................................... (37) (1,745) (2,281)Recognised on business combination ...................................... (795) — (259)Profit and loss credit/(charge).................................................. 546 (324) (35)Exchange differences ................................................................. (19) (1) 20Tax (charged)/credited to equity .............................................. (1,440) (211) 38

At 31 December ......................................................................... (1,745) (2,281) (2,517)

The group has recognised all deferred tax assets in 2006, with the exception of deferred tax assetsarising in one subsidiary company, which has been loss making in the past. The unrecognised deferredtax assets for this company amount to £4,874,000 in respect of tax losses carried forward (2005:£7,093,000) (2004: £7,566,000) and £816,000 in respect of accelerated capital allowances (capitalallowances in excess of depreciation) and other temporary differences (2005: £903,000) (2004:£786,000). These assets have not been recognised due to the uncertainty of future suitable taxableprofits within this company. In addition, in 2004 deferred tax assets of £70,000 for accelerated capitalallowances (capital allowances in excess of depreciation) and other temporary differences were notrecognised in other group companies.

Unrecognised deferred tax assets

2004 2005 2006

£’000 £’000 £’000

Tax losses carried forward......................................................... 7,566 7,093 4,874Other timing differences ........................................................... 63 6 5Accelerated capital allowances................................................. 793 897 811

8,422 7,996 5,690

Deferred tax assets and liabilities are only offset where there is a legal right of offset and there isintention to settle the balance net.

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Notes to the financial information (Continued)

Deferred tax assetsAccelerated

Tax tax Share ConvertiblePension losses depreciation options debt Other Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000

At 1 January 2004 ................. 1,583 — 274 — — 137 1,994Recognised on business

combinations ...................... 8,856 1,577 298 — — 2,162 12,893(Charged)/credited to

income statement .............. (233) (255) 607 — — (1,827) (1,708)Credited to equity ................. 944 — — — — — 944Exchange rate adjustments .. 177 — — — — 234 411

At 31 December 2004............ 11,327 1,322 1,179 — — 706 14,534Credited/(charged) to

income statement .............. 1,105 (1,214) (323) — — (583) (1,015)Credited to equity ................. 88 — — — — — 88Exchange rate adjustments .. (79) — — — — (20) (99)

At 31 December 2005............ 12,441 108 856 — — 103 13,508Recognised on business

combinations ...................... — — — — — 25 25Credited/(charged) to

income statement .............. 723 1,478 (154) 280 254 (95) 2,486(Charged)/credited to

equity................................... (2,280) — — 2,150 443 103 416Exchange rate adjustments .. (23) — — — — (95) (118)

At 31 December 2006............ 10,861 1,586 702 2,430 697 41 16,317

Deferred tax liabilitiesAccelerated

Convertible taxdebt depreciation Put option Other Total

£’000 £’000 £’000 £’000 £’000

At 1 January 2004 ...................... — 37 — — 37Recognised on business

combination............................. — 795 — — 795Credited to income statement.. (361) (185) — — (546)Charged to equity ...................... 1,440 — — — 1,440Exchange rate adjustments ....... — 19 — — 19

At 31 December 2004................. 1,079 666 — — 1,745(Credited)/charged to income

statement ................................. (238) 562 — — 324Charged to equity ...................... — — — 211 211Exchange rate adjustments ....... — (1) — 2 1

At 31 December 2005................. 841 1,227 — 213 2,281Recognised on business

combination............................. — 259 — — 259Charged/(credited) to income

statement ................................. — 34 (52) 53 35(Credited)/charged to equity .... (735) — 910 (213) (38)Exchange rate adjustments ....... — (20) — — (20)

At 31 December 2006................. 106 1,500 858 53 2,517

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Notes to the financial information (Continued)

The deferred income tax charged/(credited) to equity during the year is as follows:

2004 2005 2006

£’000 £’000 £’000

Fair value reserves in shareholders’ equity:— available-for-sale financial assets........................................ — 211 (316)— put option .............................................................................. — — 910— convertible debt .................................................................... 1,440 — (1,178)— share option........................................................................... — — (2,150)— actuarial movements on retirement benefit obligations.. (944) (88) 2,280

496 123 (454)

27 Called up share capital

2004 2005 2006

£’000 £’000 £’000

AuthorisedAll shares nominal value 0.01 Euro19,600,000 convertible preference class A shares

(2005 & 2004: 19,500,000) .................................................... 109 109 1104,826,255 convertible preference class B shares .................... 28 28 2820,000,000 convertible preference class C shares .................. 128 128 1281,818,181 convertible preference class D shares (2004: nil) — 13 132,000,000 convertible preference class E shares

(2005 & 2004: nil) .................................................................. — — 141,785,714 common class A shares............................................ 10 10 10Nil common class B shares (2005 & 2004: 1,785,714).......... 10 10 —1,785,715 common class C shares ............................................ 10 10 1053,581,245 common shares........................................................ 307 307 3072,937,500 scheme shares A ....................................................... 16 16 16126,000 scheme shares B........................................................... 1 1 1100,000 class G shares............................................................... 1 1 1

620 633 638

Share movements – 2004

Number of Number of Totalshares at shares at nominal

Allotted, called up and fully paid 1 January Issued Redeemed 31 December value

£’000

All shares nominal value 0.01 EuroConvertible preference class A shares... 19,031,250 — — 19,031,250 106Convertible preference class B shares... 4,826,255 — — 4,826,255 28Common class A shares .......................... 1,785,714 — — 1,785,714 10Common class B shares........................... 1,785,714 — — 1,785,714 10Common class C shares........................... 1,785,715 — — 1,785,715 10Common shares ........................................ 3,836,681 262,612 — 4,099,293 24Scheme shares A ...................................... 937,500 — — 937,500 5Scheme shares B....................................... 126,000 — — 126,000 1Class G shares........................................... 84,440 — — 84,440 1

195

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Notes to the financial information (Continued)

Share movements – 2005

Number of Number of Totalshares at shares at nominal

Allotted, called up and fully paid 1 January Issued Redeemed 31 December value

£’000

All shares nominal value 0.01 EuroConvertible preference class A shares ... 19,031,250 — — 19,031,250 106Convertible preference class B shares.... 4,826,255 — — 4,826,255 28Convertible preference class D shares ... — 1,818,181 — 1,818,181 13Common class A shares ........................... 1,785,714 — — 1,785,714 10Common class B shares............................ 1,785,714 — (1,785,714) — —Common class C shares............................ 1,785,715 — — 1,785,715 10Common shares ......................................... 4,099,293 145,788 — 4,245,081 25Scheme shares A ....................................... 937,500 — — 937,500 5Scheme shares B ....................................... 126,000 — — 126,000 1Class G shares ........................................... 84,440 207 — 84,647 1

199

Share movements – 2006Number of Number of Total

shares at shares at nominalAllotted, called up and fully paid 1 January Issued Redeemed 31 December value

£’000

All shares nominal value 0.01 EuroConvertible preference class A shares...... 19,031,250 568,750 — 19,600,000 110Convertible preference class B shares ...... 4,826,255 — — 4,826,255 28Convertible preference class D shares...... 1,818,181 — — 1,818,181 13Convertible preference class E shares ...... — 1,895,020 — 1,895,020 13Common class A shares.............................. 1,785,714 — — 1,785,714 10Common class C shares .............................. 1,785,715 — — 1,785,715 10Common shares ........................................... 4,245,081 655,404 — 4,900,485 30Scheme shares A.......................................... 937,500 — — 937,500 5Scheme shares B.......................................... 126,000 — — 126,000 1Class G shares.............................................. 84,647 — (11,110) 73,537 1

221

Voting rights

All classes of shares carry equal voting rights.

Dividend rights

Convertible preference class A, B, C, D and E shares, common shares and scheme shares A and Bcarry equal dividend rights. Common class A and C shares gain the same dividend rights on theachievement of milestones based on the market capitalisation of the company. Class G shares aretreated for the purposes of the allocation of interim and final dividends as if they had identical rightsto those attaching to such number of common shares to which they have equivalent rights (not toexceed 5.5 million common shares) at the time of the distribution as is calculated using the procedureset out in article 4b of the company’s articles of association.

Rights on liquidation or winding up

Convertible preference class A, B, C, D and E shares have a preferential right over all classes ofcommon share and class G shares on liquidation or winding up to the return of the nominal amountplus any premium paid, and then an equal right with common shares and scheme shares A and B(following completion of their three year probationary period) to the remaining assets. Class G shares

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Notes to the financial information (Continued)

are only entitled to participate in the remaining assets as if they had identical rights to those attachingto such number of common shares (not to exceed 5.5 million common shares) to which they haveequivalent rights as at the date of dissolution of the company as is calculated using the procedure setout in article 4b of the company’s articles of association. Common class A and C shares are onlyentitled to participate in the remaining assets equally with common shares on achievement of themarket capitalisation milestones referred to above.

Conversion rights

Convertible preference class A, B, C, D and E shares are convertible to an equal number of commonshares by resolution of the Board of the company.

Share options

The company operates a number of employee share option plans. The number of shares subject tooptions, the periods in which they were granted and the periods in which they may be exercised aregiven below:

Approved options Unapproved options G Share options

Number WAEP* Number WAEP* Number WAEP*

(pence) (pence) (pence)

At 1 January 2004Options outstanding ........ 1,004,585 175.01 3,015,943 252.88 — —Options granted ................ 538,650 354.66 732,850 382.78 20,656 3,426.07Options exercised ............. (222,937) 80.89 (39,675) 208.96 — —Options forfeited .............. (118,320) 218.48 (121,603) 246.51 — —At 31 December 2004

Options outstanding ......... 1,201,978 243.33 3,587,515 280.12 20,656 3,426.07

Movements during 2005Options granted ................ — — 832,500 378.74 — —Options exercised ............. (145,788) 124.01 — — (207) 7,401.60Options forfeited .............. (95,991) 274.61 (225,471) 275.26 (593) 2,134.89At 31 December 2005

Options outstanding ......... 960,199 290.86 4,194,544 299.95 19,856 3,423.18

Movements during 2006Options granted ................ 106,786 383.02 185,714 467.60 — —Options exercised ............. (85,597) 269.44 (569,807) 215.78 — —Options forfeited .............. (80,434) 349.48 (329,018) 279.93 (533) 7,401.60At 31 December 2006

Options outstanding ......... 900,954 298.58 3,481,433 325.59 19,323 3,313.45

Range of exercise prices.. 27.16p 63.35p 2,134.81p— — —

386.56p 550p 7,401.60pWeighted average

remaining contractuallife................................... 2,593 days 2,659 days 2,766 days

Number of optionsexercisable at31 December 2006........ 344,597 1,851,290 —

* Weighted average exercise price.

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Notes to the financial information (Continued)

27a Share based payments

Options are granted with a fixed exercise price at the date of the grant. The contractual life of anoption is 10 years. Awards are granted to directors and employees on a merit basis. The company hasmade several grants per year since January 2000. Options granted become exercisable on the thirdanniversary of the date of grant. Exercise of an option is subject to continued employment. The grouphas no legal or constructive obligation to repurchase or settle the options in cash. Options were valuedusing the Black-Scholes pricing model. The fair value per option granted and the assumptions used inthe calculations are as follows:

General assumptions

Vesting period (years)............................................................ 3Option life (years) .................................................................. 10Expected life (years) .............................................................. 3.25Expected dividends expressed as a dividend yield (%) .... 0Possibility of ceasing employment before vesting (%)...... 20Risk free interest rate............................................................ 3.1%–3.7%

Options over common shares

2004 2005 2006

Share price at grant date (pence) ........................................ 136–221 275 375–530Weighted average exercise price (pence)— Approved options.............................................................. 354.66 — 383.02— Unapproved options ......................................................... 382.78 383.01 467.60Weighted average fair value of options granted in the

period (Euro)— Approved options.............................................................. 0.38 — 1.29— Unapproved options ......................................................... 0.41 0.80 1.25Expected volatility (%) .......................................................... 44–45 34–41 26–30

Options over G shares

2004 2005 2006

Share price at grant date (pence) ........................................ 1,645–7,397 — —Weighted average exercise price (pence)............................ 3,426.07 — —Weighted average fair value of options granted in the

period (Euro) ...................................................................... 13.57 — —Expected volatility (%) .......................................................... 42–45 — —

There were no grants of options over G shares during 2006 and 2005.

The expected volatility is based on historical volatility over the last three years. The expected life is theaverage expected period to exercise. The risk free rate of return is the yield on zero-couponEuro-zone government bonds of a term consistent with the assumed option life. A reconciliation ofoption movements over the year to 31 December 2006 is in note 27.

The weighted average share price during the year for options exercised over the year was £3.97 pershare for ordinary shares. No options over G shares were exercised. The total charge for 2006 relatingto employee share based payments was £495,000, all of which related to equity-settled share basedpayment transactions (2005: £368,000) (2004: £205,000).

133

XCHANGING B.V.

Notes to the financial information (Continued)

28 Retained earningsNote £’000

At 1 January 2004 .......................................................................................................... (33,085)Retained profit for the financial year .......................................................................... 4,976Value of employee service — share options ............................................................... 27a 205

At 31 December 2004 ..................................................................................................... (27,904)Retained profit for the financial year .......................................................................... 11,840Value of employee service — share options ............................................................... 27a 368

At 31 December 2005 ..................................................................................................... (15,696)Retained profit for the financial year .......................................................................... 10,718Value of employee service — share options ............................................................... 27a 495Deferred tax on share options recognised early......................................................... 12 2,150Recognition of put option to acquire minority interest ............................................ 24 (6,966)Deferred tax on the put option .................................................................................... 12 (910)

At 31 December 2006 ..................................................................................................... (10,209)

29 Share premium account2004 2005 2006

£’000 £’000 £’000

At 1 January....................................................................................... 58,390 58,671 68,163Premium on shares issued during the year under the share

option schemes .............................................................................. 281 195 1,606Premium on shares issued during the year ................................... — 9,787 1,480Premium on exchange of convertible loan note into shares ....... — — 11,665Premium on shares bought back by the company........................ — (490) —Transactional costs of shares issued................................................ — — (325)

At 31 December ................................................................................. 58,671 68,163 82,589

134

XCHANGING B.V.

Notes to the financial information (Continued)

30 Other reservesShares to Warrant Revaluation Translation Otherbe issued reserve reserve reserve reserves Total

£’000 £’000 £’000 £’000 £’000 £’000

At 1 January 2004........................... — 690 — — 158 848Actuarial loss on pensions ............. — — — — (3,350) (3,350)Deferred tax on pensions taken

to reserves .................................... — — — — 950 950Convertible debt – equity

element......................................... — — — — 894 894Deferred tax on convertible debt . — — — — (1,440) (1,440)Exchange adjustments .................... — — — 402 — 402

At 31 December 2004 ..................... — 690 — 402 (2,788) (1,696)Shares to be issued ......................... 794 — — — — 794Revaluation of investments............ — — (76) — — (76)Actuarial loss on pensions ............. — — — — (863) (863)Deferred tax on pensions and

revaluations taken to reserves... — — (107) — 276 169Convertible debt – equity

element......................................... — — — — 594 594Exchange adjustments .................... — — — 104 — 104

At 31 December 2005 ..................... 794 690 (183) 506 (2,781) (974)Transfer to issued share capital .... (794) (690) — — — (1,484)Revaluation of investments............ — — (1,091) — — (1,091)Actuarial gain on pensions ............ — — — — 6,661 6,661Deferred tax on pensions and

revaluations taken to reserves... — — 160 — (1,934) (1,774)Convertible debt – equity

element......................................... — — — — 206 206Deferred tax on convertible debt . — — — — 1,178 1,178Exchange of convertible debt into

shares ............................................ — — — — (1,255) (1,255)Exchange adjustments .................... — — — (216) — (216)

At 31 December 2006 ..................... — — (1,114) 290 2,075 1,251

The shares to be issued reserve and warrant reserve related to share warrants over preference sharesissued as consideration for £690,000 in consulting services provided to Xchanging UK Limited, asubsidiary of the company. 568,750 shares were issued during 2006 in satisfaction of the warrants at aprice of US$3.20 per share and amounts included within the warrant reserve and shares to be issuedhave been transferred to the share capital and share premium reserves.

BAE Systems hold a warrant to subscribe for 664,754 shares in the common shares of the company atthe price of US$3.20 per share. Contingent upon the occurrence of certain other events, the warrantincludes a right for BAE Systems to subscribe for additional shares in common shares of the companyso that its total holding would be 957,244 shares.

BAE Systems also has dilution protection in that if any shares in the common shares of the companyare issued to a third party, subject to certain defined exceptions, BAE Systems has the right tosubscribe for such additional number of shares (at the same price as paid by the respective third party)in the common stock of the company so that its percentage share post issue of shares to the third partywould be the same as it was pre issue of shares to the third party.

135

XCHANGING B.V.

Notes to the financial information (Continued)

31 Movement in shareholders’ equityShare Share Other Retained Minority

Note capital premium reserves earnings interests Total equity

£’000 £’000 £’000 £’000 £’000 £’000

At 1 January 2004 .............................. 194 58,390 848 (33,085) 9,522 35,869

Net profit ............................................. — — — 4,976 5,412 10,388Minority interest on business

combination ..................................... 32 — — — — 4,853 4,853Share options— proceeds from shares issued ....... 1 281 — — — 282— value of employee services .......... 27a — — — 205 — 205Actuarial loss on pensions................. 36 — — (3,350) — (155) (3,505)Deferred tax on pensions taken to

reserves............................................. 12 — — 950 — (6) 944Convertible debt – equity element... — — 894 — — 894Deferred tax on convertible debt ..... 12 — — (1,440) — — (1,440)Exchange adjustments........................ — 402 — 297 699Dividends paid .................................... — — — — (7,918) (7,918)

At 31 December 2004 ......................... 195 58,671 (1,696) (27,904) 12,005 41,271

Net profit ............................................. — — — 11,840 10,771 22,611Revaluation of investments ............... 17 — — (76) — 255 179Deferred tax on revaluation of

investments ...................................... 12 — — (107) — (104) (211)Issue of share capital ......................... 13 9,987 — — — 10,000Transaction costs on issue of share

capital ............................................... — (200) — — — (200)Share options— proceeds from shares issued ....... 1 195 — — — 196— value of employee services .......... 27a — — — 368 — 368Shares bought back by company ...... (10) (490) — — — (500)Shares to be issued............................. — — 794 — — 794Actuarial gain/(loss) on pensions ..... 36 — — (863) — 683 (180)Deferred tax on pensions taken to

reserves............................................. 12 — — 276 — (188) 88Convertible debt – equity element... — — 594 — — 594Exchange adjustments........................ — — 104 — (97) 7Dividends paid .................................... — — — — (6,099) (6,099)

At 31 December 2005 ......................... 199 68,163 (974) (15,696) 17,226 68,918

Net profit ............................................. — — — 10,718 6,726 17,444Revaluation of investments ............... 17 — — (1,091) — (379) (1,470)Deferred tax on revaluation of

investments ...................................... 12 — — 160 — 156 316Minority interests on business

combination ..................................... 32 — — — — 21 21Share options— proceeds from shares issued ....... 5 1,606 — — — 1,611— value of employee services .......... 27a — — — 495 — 495Deferred tax on share options.......... 11 — — — 2,150 — 2,150Exercise of warrants ........................... 4 1,480 (1,484) — — —Actuarial gain on pensions................ 36 — — 6,661 — 1,356 8,017Deferred tax on pensions taken to

reserves............................................. 12 — — (1,934) — (346) (2,280)Exchange of convertible debt into

shares................................................ 13 11,665 (1,255) — — 10,423Put option recognition ....................... 24 — — — (6,966) — (6,966)Deferred tax on the put option ........ 11 — — — (910) — (910)Convertible debt – equity element... — — 206 — — 206Deferred tax on convertible debt ..... 12 — — 1,178 — — 1,178Exchange adjustments........................ — — (216) — (144) (360)Transactional costs of shares issued. — (325) — — — (325)Dividends paid .................................... — — — — (12,838) (12,838)

At 31 December 2006 ......................... 221 82,589 1,251 (10,209) 11,778 85,630

136

XCHANGING B.V.

Notes to the financial information (Continued)

32 Equity minority interests2004 2005 2006

£’000 £’000 £’000

At 1 January ............................................................................... 9,522 12,005 17,226Minority interests’ share of profit for year............................. 5,412 10,771 6,726Minority interests’ share of net (losses)/gains not

recognised in income statement........................................... (161) 646 787Exchange rate differences......................................................... 297 (97) (144)Minority interest on business combination............................. 4,853 — 21Dividends payable to minority interests.................................. (7,918) (6,099) (12,838)

At 31 December .......................................................................... 12,005 17,226 11,778

The profits of the Xchanging group companies in which the minorities have an interest are notnecessarily shared in proportion to the shareholding interest in that company as each of the aboveindividual enterprise partnerships have a distinct contractual method of profit share.

33 Financial commitments

At 31 December future aggregate minimum lease payments under non-cancellable operating leaseswere as follows:

2004 2005 2006

£’000 £’000 £’000

Operating leases: land and buildingsWithin one year.......................................................................... 8,736 8,573 9,683Later than one year and less than five years......................... 31,903 31,665 34,230Later than five years.................................................................. 49,978 42,319 34,489

2004 2005 2006

£’000 £’000 £’000

Operating leases: otherWithin one year.......................................................................... 586 784 408Later than one year and less than five years......................... 596 497 204

The group’s most significant leases are that of the premises at Leadenhall Street, London and inFrankfurt. The London lease expires on 30 June 2021 and is subject to a rent review in July 2009 andagain in 2014 and 2019. The Frankfurt lease expires in June 2013.

The group is contractually obligated to invest amounts, on behalf of the enterprise partnerships it hasacquired or set-up, in technology development and maintenance and in the development of newprocesses and systems. The total commitment outstanding at 31 December is presented below asanalysed by the period in which the commitment falls due:

2004 2005 2006

£’000 £’000 £’000

Financial investment commitmentsWithin one year.......................................................................... 8,417 4,030 2,319One to two years........................................................................ 3,209 8,424 8,809Two to five years ........................................................................ 17,635 8,424 13,574

29,261 20,878 24,702

137

XCHANGING B.V.

Notes to the financial information (Continued)

34 Cash flow from operating activities

Reconciliation of operating profit to cash generated from operating activities:

2004 2005 2006

£’000 £’000 £’000

Operating profit ......................................................................... 16,333 34,187 24,157Adjustment for non-cash items:Employee share-based payment charges................................. 205 368 495Depreciation ............................................................................... 3,540 3,925 4,734Loss on disposal of property, plant and equipment ............. 443 126 45Profit on disposal of group company ...................................... (4,758) — —Impairment of fixed assets........................................................ 1,506 — —Write-off of intangibles ............................................................. — 55 10Amortisation of intangibles ...................................................... 4,625 5,132 7,541Amortisation of pre-contract costs .......................................... 416 684 881

22,310 44,477 37,863Changes in working capital (excluding effects of

acquisitions)Increase in trade and other receivables.................................. (9,645) (15,590) (8,523)Increase in payables................................................................... 9,437 6,329 5,477(Decrease)/increase in pensions............................................... (1,038) (471) 909Decrease in provisions............................................................... (3,642) (235) (6,293)

Cash generated from continuing operations.......................... 17,422 34,510 29,433

35 Business combinations

(i) RebusIS group

During 2004 the group acquired 100% of the equity of the RebusIS group, taking control from1 January 2004. The group was acquired by Xpanse Limited, a subsidiary of Xchanging B.V. via theissue of a convertible loan note (see note 22).

Details of the book value of the RebusIS group’s net assets acquired, fair value adjustments,consideration paid and the resulting goodwill and other intangibles, are set out below.

Accounting Otherpolicy fair value

Book value alignment adjustments Fair value

£’000 £’000 £’000 £’000

Intangible assets ................................................. 767 (298) 1,614 2,083Property, plant and equipment ........................ 2,138 — — 2,138Trade and other receivables.............................. 15,022 — — 15,022Deferred income tax assets............................... 6,066 — 515 6,581Cash and cash equivalents ................................ 833 — (524) 309Current liabilities ............................................... (13,571) — — (13,571)Non-current liabilities........................................ (140) — — (140)Retirement benefit obligations......................... (17,105) — — (17,105)

Net liabilities assumed ...................................... (5,990) (298) 1,605 (4,683)Goodwill (note 14) ............................................. 16,920Costs of acquisition ........................................... (1,166)

Settled by convertible loan note (note 22) ..... 11,071

The fair value and accounting policy adjustments were as follows:

(i) A reduction to intangible assets of £298,000 in respect of alignment of depreciation andamortisation policies.

138

XCHANGING B.V.

Notes to the financial information (Continued)

(ii) A fair value increase in the deferred tax asset arising from the recognition of deferred tax lossesunder IFRS 3.

(iii) A fair value adjustment to cash representing adjustments made to the completion balance sheet.

Goodwill represents the value of synergies and the collective work force.

The fair value in respect of intangible assets recognised for the first time in accordance with IFRS 3on the acquisition of RebusIS can be analysed as follows:

£’000

Contractual customer relationship – order book................................................................... 1,614

Post exceptional costs of £5,425,000 for the RebusIS integration, the group’s profit for 2004 includes a£267,000 loss in respect of the RebusIS operations.

(ii) Xchanging Transaction Bank GmbH (formerly etb GmbH)

With effect from 1 June 2004, the group entered into an enterprise partnership which resulted in a51% interest in the equity of Xtb. The accounting treatment of this was a disposal of a 49% interest inXchanging etb GmbH (previously a 100% owned subsidiary of the Xchanging group) in return for a51% interest in Xtb. The unrealised gain on disposal of the 49% interest was £4.8 million and hasbeen recognised as an exceptional item in the income statement.

Details of the book value of Xtb’s net assets acquired, consideration paid and the resulting goodwilland other intangibles, are set out below.

Book andfair value

£’000

Intangible assets ......................................................................................................................... 490Property, plant and equipment ................................................................................................ 1,966Trade and other receivables...................................................................................................... 8,834Cash and cash equivalents ........................................................................................................ 56,825Liabilities ..................................................................................................................................... (28,972)Provisions .................................................................................................................................... (29,272)

Net assets acquired.................................................................................................................... 9,871Minority interest ........................................................................................................................ (4,853)

Group interest in fair value of net assets acquired ............................................................. 5,018Costs of acquisition ................................................................................................................... (530)Gain on deemed disposal.......................................................................................................... (4,758)

Goodwill (note 14) ..................................................................................................................... (270)

Xtb contributed £2,928,000 to the group’s profit in 2004.

(iii) Impact on Xchanging group

The results of operations, as if the above acquisition had been made at the beginning of 2004 isas follows:

Group 2004

£’000

Revenue....................................................................................................................................... 307,602Operating profit ......................................................................................................................... 18,567

139

XCHANGING B.V.

Notes to the financial information (Continued)

(iv) Landmark Business Consulting Limited

On 1 January 2006 the group acquired 100% of the equity of Landmark Business Consulting Limited,a specialist company in business transformation, concentrating on business advisory and contractlabour within the professional services division of the UK insurance sector.

Details of net assets acquired and goodwill are as follows:

Fair value

£’000

Purchase consideration:— Deferred consideration........................................................................................................ 2,898— Contingent consideration .................................................................................................... 472— Costs of acquisition.............................................................................................................. 13

Total purchase consideration .................................................................................................... 3,383Fair value of net assets acquired ............................................................................................. (120)

Goodwill (note 14) ..................................................................................................................... 3,263

The goodwill is attributable to the workforce of the acquired business and the synergies expected toarise after the group’s acquisition of Landmark Business Consulting Limited.

The deferred and contingent consideration has been discounted using the effective interest rate at thetime of acquisition, being market rate of 5.75% The contingent consideration takes the form of bonds,contingent on the performance of the business over the period to 31 December 2008. The amountestimated as probable has been included in contingent consideration above.

The assets and liabilities as of 1 January 2006 arising from the acquisition are set out below:

Acquiree’scarryingamount Fair value

£’000 £’000

Non-contractual customer relationship (included in intangibles)(note 15).......................................................................................................... — 170

Property, plant and equipment (note 16)....................................................... 3 3Trade and other receivables.............................................................................. 934 934Trade and other payables.................................................................................. (651) (669)Borrowings .......................................................................................................... (4) (4)Current tax liabilities ......................................................................................... (263) (263)Deferred tax liabilities....................................................................................... — (51)

Net assets acquired............................................................................................ 19 120

The acquired business contributed revenues of £2,750,000 and net profit after tax of £660,000 to thegroup during 2006.

(v) Ferguson Snell and Associates Limited

On 1 April 2006 the group acquired 100% of the equity of Ferguson Snell and Associates Limited, acompany providing immigration consultancy services in the UK.

140

XCHANGING B.V.

Notes to the financial information (Continued)

Details of net assets acquired and goodwill are as follows:

Fair value

£’000

Purchase consideration:— Initial cash consideration .................................................................................................... 3,275— Contingent consideration .................................................................................................... 2,623— Costs of acquisition.............................................................................................................. 102

Total purchase consideration .................................................................................................... 6,000Fair value of net assets acquired ............................................................................................. (1,062)

Goodwill (note 14) ..................................................................................................................... 4,938

The goodwill is attributable to the workforce of the acquired business and the synergies expected toarise after the group’s acquisition of Ferguson Snell and Associates Limited.

The contingent consideration has been discounted using the effective interest rate at the time ofacquisition, being market rate of 7.5% The contingent consideration takes the form of cash,contingent on the performance of the business over the period to 31 March 2007. The amountestimated as probable has been included in contingent consideration above.

The assets and liabilities as of 1 April 2006 arising from the acquisition are set out below:

Acquiree’scarryingamount Fair value

£’000 £’000

Non-contractual customer relationship (included in intangibles)(note 15).......................................................................................................... — 694

Property, plant and equipment (note 16)....................................................... 196 137Trade and other receivables.............................................................................. 738 716Cash ..................................................................................................................... 406 406Trade and other payables.................................................................................. (466) (466)Borrowings .......................................................................................................... (22) (22)Current tax liabilities ......................................................................................... (195) (195)Deferred tax liabilities....................................................................................... — (208)

Net assets acquired............................................................................................ 657 1,062

The acquired business contributed revenues of £2,337,000 and net profit after tax of £561,000 to thegroup during 2006.

(vi) Xchanging Broking Services Limited

With effect from 1 September 2006, the Xchanging Group entered into an enterprise partnership bysubscribing for 50% of the equity in a new company, Xchanging Broking Services Limited. Employeeswere transferred into the new company, which is accounted for as a business combinationunder IFRS 3.

141

XCHANGING B.V.

Notes to the financial information (Continued)

Details of the fair value of the assets associated with the transfer of the employees, consideration paidand the resulting goodwill are set out below.

Fair value

£’000

Deferred tax assets..................................................................................................................... 25Trade and other payables.......................................................................................................... (83)

Net liabilities acquired.............................................................................................................. (58)Minority interests’ share of liabilities...................................................................................... 29

Group interest in fair value of net liabilities acquired........................................................ (29)

Costs of business combination ................................................................................................. —Net liabilities assumed............................................................................................................... 29

Goodwill (note 14) ..................................................................................................................... 29

The acquired business contributed revenues of £11,519,000 and net profit after tax of £1,000 to thegroup during 2006.

(iv) Impact on Xchanging group

If the above business combinations had been made at the beginning of 2006, group revenue wouldhave been £417,100,000 and net profit would have been £17,577,000. These amounts have beencalculated using the group’s accounting policies and adjusting the results of the subsidiaries to reflectthe additional depreciation and amortisation that would have been charged assuming the fair valueadjustments had applied from 1 January 2006, together with the consequential tax effects.

36 Retirement benefit obligations

The group participates in a number of pension schemes covering many of its employees. The principalfunds are the LPC Scheme, the Rebus Scheme, the Xtb Scheme, the Lloyd’s Pension Scheme, theBAE Schemes, each of which are defined benefit schemes, and the Xchanging defined contributionschemes.

The total retirement benefit obligation for the defined benefit schemes recognised in the balancesheet is:

2004 2005 2006

£’000 £’000 £’000

LPC Scheme ............................................................................... 6,773 5,326 1,548Rebus Scheme ............................................................................ 20,685 22,528 17,839Xtb Scheme................................................................................. 427 658 2,514

Retirement benefit obligation recognised in the balancesheet ......................................................................................... 27,885 28,512 21,901

The total actuarial gains/(losses) for the defined benefit schemes recognised in the statement ofrecognised income and expense is:

2004 2005 2006

£’000 £’000 £’000

LPC Scheme ............................................................................... (1,557) 1,513 3,845Rebus Scheme ............................................................................ (3,219) (1,544) 5,328Xtb Scheme................................................................................. 1,271 (149) (1,156)

Actuarial gains/(losses) recognised in the statement ofrecognised income & expense .............................................. (3,505) (180) 8,017

142

XCHANGING B.V.

Notes to the financial information (Continued)

(i) LPC Scheme

In the most recent actuarial valuation of the LPC pension plan, the principal assumptions made by theactuaries were:

2004 2005 2006

% % %

Rate of increase in pensionable salaries................................. 3.75 3.75 3.80Rate of increase in pensions in payment (RPI up to 5%) .. 2.75 2.75 2.75Rate of increase in pensions in payment (RPI up to

2.5%)........................................................................................ 0.00 1.90 1.95Rate of increase in deferred pensions .................................... 2.75 2.75 2.80Discount rate .............................................................................. 5.40 4.80 5.10Inflation assumption .................................................................. 2.75 2.75 2.80Expected return on plan assets ................................................ 6.34 5.68 6.76

To develop the expected long term rate of return on assets assumption, the group considered thecurrent level of expected returns on risk free investments (primarily government bonds), the historicallevel of the risk premium associated with the other asset classes in which the portfolio is invested andthe expectations for future returns of each asset class. The expected return for each asset class wasthen weighted based on the target asset allocation to develop the expected long term rate of returnassumption for the portfolio. The mortality tables used for the scheme are the PMA 92 and PFA 92series. Under these assumptions, the life expectancy for a male current pensioner at age 65 is19.4 years (2005: 16.9 years) (2004: 16.9 years) and for a male future pensioner at age 65 is 20.5 years(2005: 19.4 years) (2004: 19.4 years).

The weighted average asset allocations of the fair value of the total plan assets in the defined benefitsection of the scheme were:

2004 2005 2006

% % %

Equities........................................................................................ 66.78 66.37 67.41Bonds ........................................................................................... 32.85 33.47 32.45Other............................................................................................ 0.37 0.16 0.14

Total ............................................................................................. 100.00 100.00 100.00

The retirement benefit obligation recognised in the balance sheet is:

2004 2005 2006

£’000 £’000 £’000

Present value of funded obligations ........................................ (34,110) (36,104) (35,292)Fair value of plan assets............................................................ 27,337 30,778 33,744

Net deficit recognised in the balance sheet ........................... (6,773) (5,326) (1,548)

143

XCHANGING B.V.

Notes to the financial information (Continued)

The amounts recognised in the income statement are as follows:

2004 2005 2006

£’000 £’000 £’000

Current service cost ................................................................... (577) (611) (662)Interest cost ................................................................................ (1,642) (1,747) (1,748)Expected return on plan assets ................................................ 1,670 1,728 1,744

Total included within staff costs (note 9) ............................... (549) (630) (666)

Included within:Administrative expenses ............................................................ (577) (611) (662)Finance income/(costs) .............................................................. 28 (19) (4)

(549) (630) (666)

The amounts recognised in the statement of recognised income and expense are:

2004 2005 2006

£’000 £’000 £’000

Net actuarial (losses)/gains recognised during the year ....... (1,557) (2,466) 3,845Past service income re removal of discretionary pension

increase.................................................................................... — 3,979 —

(1,557) 1,513 3,845

Cumulative (losses)/gains recognised in the statement ofrecognised income and expense........................................... (1,313) 200 4,045

Analysis of the movement in the present value of the defined benefit obligation

2004 2005 2006

£’000 £’000 £’000

Present value of obligation in scheme as at 1 January......... (29,879) (34,110) (36,104)Current service cost ................................................................... (577) (611) (662)Interest cost ................................................................................ (1,642) (1,747) (1,748)Plan participants contributions paid........................................ — — (72)Past service income re removal of discretionary pension

increase.................................................................................... — 3,979 —Actuarial (losses)/gains.............................................................. (2,624) (4,357) 2,462Benefits paid ............................................................................... 612 742 832

Present value of obligation in scheme as at 31 December .. (34,110) (36,104) (35,292)

Analysis of the movement in the fair value of the plan assets

2004 2005 2006

£’000 £’000 £’000

Fair value of scheme assets as at 1 January........................... 24,601 27,337 30,778Expected return on plan assets ................................................ 1,670 1,728 1,744Actuarial gains............................................................................ 1,067 1,891 1,383Employer contributions paid .................................................... 611 564 599Plan participants contributions paid........................................ — — 72Benefits paid ............................................................................... (612) (742) (832)

Fair value of scheme assets as at 31 December .................... 27,337 30,778 33,744

Actual return on plan assets..................................................... 2,737 3,619 3,127

144

XCHANGING B.V.

Notes to the financial information (Continued)

The group’s transition date to IFRS was 1 January 2003 and the following historical data has beenpresented from that date. The historical data will be built up to a rolling five-year record over thenext year.

2003 2004 2005 2006

£’000 £’000 £’000 £’000

History of experience adjustments on planassets and liabilities

Fair value of scheme assets .............................. 24,601 27,337 30,778 33,744Present value of defined benefit obligations.. (29,879) (34,110) (36,104) (35,292)

Net liability recognised...................................... (5,278) (6,773) (5,326) (1,548)

Experience adjustments on plan assetsAmount (£’000) .................................................. 1,938 1,067 1,891 1,383Percentage of scheme assets............................. 8% 4% 6% 4%

Experience adjustments on plan liabilitiesAmount (£’000) .................................................. (285) (371) (313) (461)Percentage of scheme liabilities ....................... (1%) (1%) (1%) (1%)

The expected contributions to the defined benefit section of the pension scheme in 2007 are £622,000.

(ii) Rebus Scheme

In the most recent actuarial valuation of the Rebus pension plan, the principal assumptions made bythe actuaries were:

2004 2005 2006

% % %

Rate of increase in pensionable salaries................................. 3.80 3.80 3.80Rate of increase in pensions in payment (RPI up to 5%) .. 2.55 2.50 2.75Rate of increase in pensions in payment (fixed 5%)............ 5.00 5.00 5.00Discount rate .............................................................................. 5.30 4.90 5.10Inflation assumption and rate of increase in deferred

pensions ................................................................................... 2.80 2.80 2.80Expected return on plan assets ................................................ 6.27 5.68 6.19

The expected return on plan assets is determined with reference to the expected long term level ofdividends, interest and other returns derived from the plan assets. The expected returns are based onlong term market expectations and analysed on a regular basis to ensure any sustained movements inunderlying markets are reflected. The mortality tables used for the scheme are the PMA 92 and PFA92 series. Under these assumptions, the life expectancy for a male current pensioner at age 65 is19.4 years (2005: 17.9 years) (2004: 17.9 years) and for a male future pensioner at age 65 is 20.5 years(2005: 19.0 years) (2004: 19.0 years).

145

XCHANGING B.V.

Notes to the financial information (Continued)

The weighted average asset allocations of the fair value of the total plan assets in the defined benefitsection of the scheme were:

2004 2005 2006

% % %

Equities........................................................................................ 39.57 40.49 41.18Bonds ........................................................................................... 48.25 24.56 24.14Gilts.............................................................................................. 0.00 24.28 23.16Property ....................................................................................... 9.81 9.35 10.17Cash ............................................................................................. 0.00 0.00 0.07Insurance annuity contracts ...................................................... 2.37 1.32 1.28

Total ............................................................................................. 100.00 100.00 100.00

The retirement benefit obligation recognised in the balance sheet is:

2004 2005 2006

£’000 £’000 £’000

Present value of funded obligations ........................................ (49,350) (57,156) (56,310)Fair value of plan assets............................................................ 28,665 34,628 38,471

Net deficit recognised in the balance sheet ........................... (20,685) (22,528) (17,839)

The amounts recognised in the income statements are as follows:

2004 2005 2006

£’000 £’000 £’000

Current service cost ................................................................... (1,035) (1,079) (1,175)Interest cost ................................................................................ (2,374) (2,688) (2,869)Expected return on plan assets ................................................ 1,785 1,832 2,002

Total included within staff costs (note 9) ............................... (1,624) (1,935) (2,042)

Included within:Administrative expenses ............................................................ (1,035) (1,079) (1,175)Finance costs............................................................................... (589) (856) (867)

(1,624) (1,935) (2,042)

The amounts recognised in the statement of recognised income and expense are:

2004 2005 2006

£’000 £’000 £’000

Net actuarial (losses)/gains recognised during the year ....... (3,219) (1,544) 5,328

Cumulative amounts recognised in the statement ofrecognised income and expense........................................... (3,219) (4,763) 565

146

XCHANGING B.V.

Notes to the financial information (Continued)

Analysis of the movement in the present value of the defined benefit obligation

2004 2005 2006

£’000 £’000 £’000

Present value of obligation in scheme as at 1 January......... — (49,350) (57,156)Acquired in business combination ........................................... (42,002) — —Current service cost ................................................................... (1,035) (1,079) (1,175)Interest cost ................................................................................ (2,374) (2,688) (2,869)Plan participants contributions paid........................................ (283) (375) (462)Actuarial (losses)/gains.............................................................. (4,003) (4,596) 4,718Benefits paid ............................................................................... 347 932 634

Present value of obligation in scheme as at 31 December .. (49,350) (57,156) (56,310)

Analysis of the movement in the fair value of the plan assets

2004 2005 2006

£’000 £’000 £’000

Fair value of scheme assets as at 1 January........................... — 28,665 34,628Acquired in business combination ........................................... 24,897 — —Expected return on plan assets ................................................ 1,785 1,832 2,002Actuarial gains............................................................................ 784 3,052 610Employer contributions paid .................................................... 1,263 1,636 1,403Plan participants contributions paid........................................ 283 375 462Benefits paid ............................................................................... (347) (932) (634)

Fair value of scheme assets as at 31 December .................... 28,665 34,628 38,471

Actual return on plan assets..................................................... 2,569 4,884 2,612

The group acquired RebusIS on 1 January 2004 and the following historical data has been presentedfrom that date. The historical data will be built up to a rolling five-year record over the next two years.

2004 2005 2006

£’000 £’000 £’000

History of experience adjustments on plan assets andliabilities

Fair value of scheme assets ...................................................... 28,665 34,628 38,471Present value of defined benefit obligations.......................... (49,350) (57,156) (56,310)

Net liability recognised.............................................................. (20,685) (22,528) (17,839)

Experience adjustments on plan assetsAmount (£’000) .......................................................................... 784 3,052 610Percentage of scheme assets..................................................... 3% 9% 2%

Experience adjustments on plan liabilitiesAmount (£’000) .......................................................................... 134 1,435 695Percentage of scheme liabilities ............................................... 0% 3% 1%

The expected contributions to the defined benefit section of the pension scheme in 2007 are£2,402,000. This includes a special contribution of £250,000 due in January 2007.

147

XCHANGING B.V.

Notes to the financial information (Continued)

(iii) Xtb defined benefit Scheme

In the most recent actuarial valuation of the Xtb pension plan, the principal assumptions made by theactuaries were:

2004 2005 2006

% % %

Rate of increase in pensionable salaries................................. 2.50 2.50 2.50Rate of increase in pensions in payment and deferred

pensions ................................................................................... 2.00 2.00 2.00Discount rate .............................................................................. 5.00 4.25 4.60Expected return on plan assets ................................................ 5.00 5.00 5.00

The expected return on plan assets reflects the average rate of earnings expected on the fundsinvested or to be invested to provide benefits. The expected long term rate of return on plan assets isused (with the market related value of assets) to compute the expected return on assets. The mortalitytable used in the scheme is Richttafeln 2005 G, Heubeck-Richttafeln GmbH, Koln 2005. Under theseassumptions, the life expectancy for a male current pensioner at age 65 is 17.2 years (2005: 17.2 years)(2004: 17.2 years) and for a male future pensioner at age 65 is 23.6 years (2005: 23.6 years)(2004: 23.6 years).

The weighted average asset allocations of the fair value of the total plan assets in the defined benefitsection of the scheme were:

2004 2005 2006

% % %

Equities........................................................................................ 17.47 17.00 8.08Bonds and gilts ........................................................................... 63.10 71.56 67.92Cash ............................................................................................. 13.77 8.78 22.34Other............................................................................................ 5.66 2.66 1.66

Total ............................................................................................. 100.00 100.00 100.00

The retirement benefit obligation recognised in the balance sheet is:

2004 2005 2006

£’000 £’000 £’000

Present value of funded obligations ........................................ (45,713) (51,586) (50,250)Fair value of plan assets............................................................ 45,286 50,928 47,736

Net deficit recognised in the balance sheet ........................... (427) (658) (2,514)

The amounts recognised in the income statements are as follows:

2004 2005 2006

£’000 £’000 £’000

Current service cost ................................................................... (788) (1,352) (1,144)Interest cost ................................................................................ (1,226) (2,184) (2,148)Expected return on plan assets ................................................ 1,273 2,142 2,522

Total included within staff costs (note 9) ............................... (741) (1,394) (770)

Included within:Administrative costs................................................................... (788) (1,352) (1,144)Finance costs............................................................................... 47 (42) 374

(741) (1,394) (770)

148

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Notes to the financial information (Continued)

The amounts recognised in the statement of recognised income and expense are as follows:

2004 2005 2006

£’000 £’000 £’000

Net actuarial gains/(losses) recognised during the year ....... 1,271 (149) (1,156)Foreign exchange differences ................................................... (74) 10 22

1,197 (139) (1,134)

Cumulative amounts recognised in the statement of totalrecognised income and expense........................................... 1,197 1,058 (76)

Analysis of the movement in the present value of the defined benefit obligation

2004 2005 2006

£’000 £’000 £’000

Present value of obligation in scheme as at 1 January......... — (45,713) (51,586)Acquired in business combination ........................................... (40,996) — —Current service cost ................................................................... (788) (1,352) (1,144)Interest cost ................................................................................ (1,226) (2,184) (2,148)Actuarial (losses)/gains.............................................................. (1,623) (4,866) 2,206Contributions paid ..................................................................... 1,100 226 48Benefits paid ............................................................................... 543 1,075 1,232Foreign exchange differences ................................................... (2,723) 1,228 1,142

Present value of obligation in scheme as at 31 December .. (45,713) (51,586) (50,250)

Analysis of the movement in the fair value of the plan assets

2004 2005 2006

£’000 £’000 £’000

Fair value of scheme assets as at 1 January........................... — 45,286 50,928Acquired in business combination ........................................... 38,471 — —Expected return on plan assets ................................................ 1,273 2,142 2,522Actuarial gains/(losses).............................................................. 2,894 4,717 (3,362)Benefits paid ............................................................................... — — (1,232)Foreign exchange differences ................................................... 2,648 (1,217) (1,120)

Fair value of scheme assets as at 31 December .................... 45,286 50,928 47,736

Actual return on plan assets..................................................... 4,167 6,859 (840)

The group acquired Xtb on 1 June 2004 and the following historical data has been presented fromthat date. The historical data will be built up to a rolling five-year record over the next two years.

2004 2005 2006

£’000 £’000

History of experience adjustments on plan assets andliabilities

Fair value of scheme assets ...................................................... 45,286 50,928 47,736Present value of defined benefit obligations.......................... (45,713) (51,586) (50,250)

Net liability recognised.............................................................. (427) (658) (2,514)

149

XCHANGING B.V.

Notes to the financial information (Continued)

Sevenmonths to Year to Year to

31 December 31 December 31 December2004 2005 2006

£’000 £’000 £’000

Experience adjustments on plan assetsAmount........................................................................................ 2,894 4,717 (3,362)Percentage of scheme assets..................................................... 6% 9% 7%

The historical data with respect to plan liabilities has been presented from 1 January 2006 inaccordance with the amendment to IAS 19.

Year to31 December

2006

£’000

Experience adjustments on plan liabilitiesAmount........................................................................................................................................ 200Percentage of scheme liabilities ............................................................................................... 0.4%

The expected contributions to the defined benefit section of the pension scheme in 2007 are £nil.

(iv) The Lloyd’s Pension Scheme

The group participates in a defined benefit scheme operated by Lloyd’s. The terms on which thegroup participates in the scheme were set in commercial agreements reached with Lloyd’s during2001. An actuarial valuation by external professional actuaries is carried out triennially to determinethe funding position and the payments to be made to the scheme.

The group’s contribution rate is set in relation to the cost of accrual of future service benefits only. Nopast service costs are suffered by the group as these are borne by the Corporation of Lloyd’s. Thegroup’s contributions are not affected by any surplus or deficit in the scheme relating to the pastservice of its own employees or other members of the scheme.

Also, it is not possible to identify the group’s share of the underlying assets and liabilities of thescheme on a consistent and reasonable basis. Accordingly, the group accounts for contributions to thescheme as if it were a defined contribution scheme under IAS 19.

Lloyd’s has given notice such that the group’s participation in the Lloyd’s Pension scheme will ceasefrom 30 June 2007 and replacement arrangements will be set up by the group. A final payment to theLloyd’s Pension scheme will be required by the group on exit, the group is indemnified against suchpayments under the agreements setting out the terms of its participation in the scheme. If theproposals go ahead, it is anticipated that the group will implement a replacement scheme atsimilar cost.

The pension cost that was charged in the income statement for the year relating to current yearcontributions was £1,439,000 (2005: £1,885,000) (2004: £1,529,000).

Pension contributions outstanding at the year end amount to £nil (2005: £290,000) (2004: £nil).

(v) The BAE Schemes

The group also participates in a number of multi-employer defined benefit schemes run for theemployees of BAE Systems plc.

The terms on which the group participated in these schemes up to the end of 2006 were set incommercial agreements reached with BAE Systems during 2001. The terms of participation wererenegotiated in 2006 and revised contribution rates were implemented during 2006.

Under the terms of the new agreements, the contributions payable by the group represent the cost ofaccrual of future service benefits and the group’s share of the deficit contributions made by BAE tothe schemes only (not including any one off contributions made by BAE during 2006). The

150

XCHANGING B.V.

Notes to the financial information (Continued)

contributions are expressed as fixed percentages of pensionable payroll. The group’s contributionrates to the schemes are contractually fixed and will only be affected by changes to the cost of accrualof future service benefits, as determined at the triennial valuations of the schemes. The group’scontribution rates will not be affected by any future changes in the past service position of theschemes, relating to past service of its own employees or other members of the scheme.

It is not possible to identify the group’s share of the underlying assets and liabilities of the schemes ona consistent and reasonable basis. Accordingly, the group accounts for contributions to the schemes asif they were defined contribution schemes under IAS 19.

The pension cost that was charged in the income statement relating to current year contributions was£1,279,000 (2005: £851,000) (2004: £926,000).

The group’s estimated contributions to the BAE pension schemes for 2007 are £1,160,000.

(vi) Xchanging Group defined contribution schemes

The group also participates in a number of defined contribution schemes run for the employees ofvarious subsidiary companies of Xchanging B.V. Pension costs for the group that were charged to theincome statement for the year relating to current year contributions were £1,552,000 (2005: £840,000)(2004: £596,000).

37 Ultimate controlling party

Xchanging B.V. is controlled jointly by General Atlantic Partners LLP and the Chief ExecutiveOfficer, David Andrews, the founding partners. General Atlantic Partners LLP is the majorityshareholder through a number of its group companies’ shareholdings in Xchanging B.V., which act inconcert within the context of a group. David Andrews is able to appoint the majority of the Board ofXchanging B.V.

38 Related party transactions

The following companies are considered to be related parties of the group as they hold minorityshareholdings in a number of the subsidiaries of Xchanging B.V.

The Corporation of Lloyd’s held a 25% interest in Ins-sure Holdings Limited and a 50% interest inXchanging Claims Services Limited at 31 December 2006. Some of the directors of Xchanging ClaimsServices Limited are employees of the Corporation of Lloyd’s. The emoluments of these directorswere borne by the Corporation of Lloyd’s.

The International Underwriting Association held a 25% interest in Ins-sure Holdings Limited at31 December 2006.

BAE Systems plc held a 50% interest in Xchanging Procurement Services (Holdco) Limited and a50% interest in HR Enterprise Limited at 31 December 2006. Employees of BAE Systems plc formedparts of the boards of directors of Xchanging Procurement Services (Holdco) Limited and HREnterprise Limited. The emoluments of these directors were borne by BAE Systems plc.

Deutsche Bank AG held a 44% interest in Xchanging etb GmbH at 31 December 2006. Some of thedirectors of Xchanging etb GmbH are employees of Deutsche Bank AG. The emoluments of thesedirectors were borne by Deutsche Bank AG.

Aon Limited held a 50% interest in Xchanging Broking Services Limited. Some of the directors ofXchanging Broking Services Limited are employees of Aon Limited. The emoluments of thesedirectors were borne by Aon Limited.

151

XCHANGING B.V.

Notes to the financial information (Continued)

A description of the nature of the services provided from these companies by/to the group and theamount receivable/(payable) in respect of each at 31 December 2006, are set out in the table below:

Sales/(purchases) Year end receivables/(payables)Services providedby/to the group 2004 2005 2006 2004 2005 2006

£’000 £’000 £’000 £’000 £’000 £’000Securities processing

services ................................ 58,206 89,482 66,330 2,029 6,015 1,141Processing, expert and data

services ................................ 1,115 757 13,160 89 22 363Property charges .................... 431 673 1,316 — 10 187HR and procurement 65,737 113,527 129,001 6,929 5,937 6,181

services ................................ { — { (1,165) { (6,880)IT costs, premises,

divisional corporatecharges and otherservices in support ofoperating activities............. (20,919) (32,846) (29,507) (3,310) (5,309) (3,818)

Operating systems,development, premisesand other services insupport of operatingactivities .............................. (4,562) (2,385) (1,117) (671) (395) (319)

Desktop, hosting,telecommunications,accommodation andprocessing services............. — — (2,802) — — (2,202)

Accommodation, IT servicesand directors’secondment charges .......... (1,235) (947) (1,259) (606) (324) (154)

Property charges .................... — (108) — — — —Current accounts ................... — — — 43,401 29,543 1,804

In respect of 2004, £398,697 was due from the following officers in respect of the exercise of optionsduring the year ended 31 December 2003.

Officer

J AttenboroughS BowenA BrowneC BuesnelR HoughtonD Rich-Jones

The loans bore interest at the rate of 5% per annum and, save in respect of the loan due fromJ Attenborough, were fully repaid at the 2005 year end.

In respect of 2005, £39,226 was due from J Attenborough in respect of the exercise of options. Thiswas fully repaid at the 2005 year end.

39 IFRS 7 sensitivity analysis

The group has used a sensitivity analysis technique that measures the estimated change to the incomestatement and equity of either an instantaneous increase or decrease of 1% (100 basis points) inmarket interest rates or a 10% strengthening or weakening in sterling against all material currencies(Euros and rupees) for each class of financial instrument with all other variables remaining constant.The sensitivity analysis excludes the impact of market risks on net post employment benefit

152

XCHANGING B.V.

Notes to the financial information (Continued)

obligations. This analysis is for illustrative purposes only, as in practice market rates rarely change inisolation. The sensitivity analysis is based on the following assumptions:

Interest rate risks

� Changes in market interest rates affect the interest income or expense of variable interestfinancial instruments.

� Changes in market interest rates only affect interest income or expense in relation to financialinstruments with fixed interest rates if these are recognised at their fair value.

Under these assumptions, a 1% increase or decrease in market interest rates for all materialcurrencies in which the group had borrowings and derivative financial instruments would increase ordecrease profit before tax by approximately £600,000 and equity by £300,000 before tax.

Foreign exchange risks

� Material entities reporting in foreign currencies and material foreign currency financialinstruments within sterling reporting entities have been included.

With a 10% strengthening or weakening of sterling against all material currencies (Euros and rupees),profit before tax would have decreased by approximately £200,000 or increased by £300,000,respectively, and equity would have decreased by approximately £1,500,000 or increased by £1,800,000,respectively.

Fair value sensitivity analysis

This fair value sensitivity analysis expresses information about changes in fair values of financialinstruments for 31 December 2006. The amounts generated from the sensitivity analysis are forward-looking estimates of market risk assuming certain adverse market conditions occur. Actual results inthe future may vary materially from those projected results due to developments in the globalfinancial markets which may cause fluctuations in interest and exchange rates to vary fromhypothetical amounts disclosed in the following table, which therefore should not be considered aprojection of likely future events and losses.

The estimated changes in fair values of borrowings which affect equity are set out in the table below:

Fair value changesarising fromCarrying

value at 10%31 December 1% fall in weakening

2006 interest rates in sterling

£’000

Borrowings (note 22)................................................................. (3,270) — —Non-current financial liabilities (note 24) .............................. (20,182) (317) —

Credit risk

Details of the group’s credit risk policies and exposures are presented in note 3. An analysis of alldebts which are past due is included in note 18.

40 Events after the balance sheet date

(i) HR Enterprise Limited

With effect from 1 January 2007, the Xchanging group acquired the remaining 50% minority holdingin the HR Enterprise Limited enterprise partnership from BAE Systems plc. This 50% interest wasacquired by HR Holdco Limited, a subsidiary of Xchanging B.V.

153

XCHANGING B.V.

Notes to the financial information (Continued)

Details of the minority interests’ share of the book and fair value of the assets of HR EnterpriseLimited acquired, consideration paid and the resulting goodwill are set out below:

Book andfair value

£’000

Costs of acquisition – consideration........................................................................................ 10,082Minority interests’ share of net assets acquired .................................................................... (372)

Goodwill....................................................................................................................................... 9,710

BAE Systems plc no longer has any representatives on the HR Enterprise board of directors and haveno influence in the business decisions of the entity.

(ii) Xchanging Procurement Services (Holdco) Limited

With effect from 1 January 2007, the Xchanging group acquired the remaining 50% minority holdingin the Xchanging Procurement Services (Holdco) Limited enterprise partnership from BAESystems plc. This 50% interest was acquired by XUK Holdco (No 2) Limited, a subsidiary ofXchanging B.V.

Details of the minority interests’ share of the book and fair value of the assets of XchangingProcurement Services (Holdco) Limited acquired, consideration paid and the resulting goodwill areset out below:

Book andfair value

£’000

Costs of acquisition – consideration........................................................................................ 46,590Minority interests’ share of net assets acquired .................................................................... (2,790)

Goodwill....................................................................................................................................... 43,800

The consideration has been discounted using the effective interest rate at the time of the acquisition,being market rate of 7.5% The date for payment of the consideration is contingent upon certainevents and the most probable date for payment has been used to calculate the fair value above. Thecost of acquisition is therefore provisional.

BAE Systems plc no longer has any representatives on the Xchanging Procurement Services (Holdco)Limited board of directors and has no influence in the business decisions of the entity.

154

15FEB200619332872

PART 5: ACCOUNTANTS’ REPORTS AND FINANCIAL INFORMATION

SECTION B – ACCOUNTANTS’ REPORT AND FINANCIAL INFORMATION FORXCHANGING TRANSACTION BANK GMBH FOR THE FINANCIAL PERIOD

FROM 1 JANUARY 2004 TO 31 MAY 2004

PricewaterhouseCoopers LLP1 Embankment PlaceLondon WC2N 6RH

The DirectorsXchanging plc34 Leadenhall StreetLondonEC3A 1AX

Citigroup Global Markets Limited (the ‘‘Sponsor’’)Citigroup CentreCanada SquareCanary WharfLondonE14 5LB

25 April 2007

Dear Sirs

Xchanging Transaction Bank GmbH (‘‘Xtb’’)

We report on the financial information set out in Section B of Part 5: Accountants’ Reports and FinancialInformation. This financial information has been prepared for inclusion in the prospectus dated 25 April2007 (the ‘‘Prospectus’’) of Xchanging plc on the basis of the accounting policies set out in note 2. Thisreport is required by item 20.1 of Annex I to the PD Regulation and is given for the purpose of complyingwith that item and for no other purpose.

Responsibilities

The Directors of Xchanging plc are responsible for preparing the financial information in accordance withthe basis of preparation set out in note 2 to the financial information.

It is our responsibility to form an opinion on the financial information as to whether the financialinformation gives a true and fair view, for the purposes of the Prospectus, and to report our opinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly addressedand for any responsibility arising under item 5.5.3R(2)(f) of the Prospectus Rules to any person as and tothe extent there provided, to the fullest extent permitted by law we do not assume any responsibility andwill not accept any liability to any other person for any loss suffered by any such other person as a result of,arising out of, or in connection with this report, consenting to its inclusion in the Prospectus.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. Our work included an assessment of evidence relevant to theamounts and disclosures in the financial information. It also included an assessment of significantestimates and judgments made by those responsible for the preparation of the financial information andwhether the accounting policies are appropriate to Xtb’s circumstances, consistently applied andadequately disclosed.

155

15FEB200619332872

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance that thefinancial information is free from material misstatement whether caused by fraud or other irregularity orerror.

Our work has not been carried out in accordance with auditing standards generally accepted in the UnitedStates of America or auditing standards of the Public Accounting Oversight Board (United States) andaccordingly should not be relied upon as if it had been carried out in accordance with those standards.

Opinion

In our opinion, the financial information gives, for the purposes of the Prospectus, a true and fair view ofthe state of affairs of Xtb as at the date stated and of its profit, cash flow and statement of recognisedincome and expense for the period then ended in accordance with the basis of preparation set out in note 2to the financial information.

Declaration

For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of theProspectus and declare that we have taken all reasonable care to ensure that the information contained inthis report is, to the best of our knowledge, in accordance with the facts and contains no omissions likely toaffect its import. This declaration is included in the Prospectus in compliance with item 1.2 of Annex I ofthe PD Regulation.

Yours faithfully

PricewaterhouseCoopers LLPChartered Accountants

156

XCHANGING TRANSACTION BANK GMBH(FORMERLY EUROPEAN TRANSACTION BANK GMBH)

Income statement – period ended 31 May

Period from1 January to

31 MayNotes 2004

B’000

Revenue ................................................................................................................................ 5 66,990Cost of sales ......................................................................................................................... 6 (64,262)

Operating profit ................................................................................................................... 7 2,728Finance costs ........................................................................................................................ 9 (1,320)Finance income.................................................................................................................... 9 1,361

Profit before taxation .......................................................................................................... 2,769Taxation ................................................................................................................................. 10 (5,677)

Loss for the period attributable to equity holders of Xtb............................................. (2,908)

157

XCHANGING TRANSACTION BANK GMBH

Statement of recognised income and expense – period ended 31 May

Period from1 Januaryto 31 May

Notes 2004

B’000

Loss for the period.............................................................................................................. (2,908)Actuarial loss arising from defined benefit pension schemes ....................................... 25 (3,091)Movement on deferred tax relating to pension scheme ................................................ 17 1,263

Net losses not recognised in income statement .............................................................. (1,828)

Total recognised loss for the year attributable to equity shareholders....................... (4,736)

158

XCHANGING TRANSACTION BANK GMBH

Balance sheet – 31 May

31 MayNotes 2004

B’000

AssetsNon-current assetsIntangible assets................................................................................................................... 11 737Property, plant and equipment .......................................................................................... 12 2,957Deferred income tax assets ................................................................................................ 17 12,173

15,867

Current assetsTrade and other receivables ............................................................................................... 13 4,368Cash and cash equivalents.................................................................................................. 14 85,127

89,495

LiabilitiesCurrent liabilitiesTrade and other payables ................................................................................................... 15 (43,304)Provisions .............................................................................................................................. 16 (13,651)

Net current assets ................................................................................................................ 32,540

Total assets less current liabilities ................................................................................... 48,407

Non-current liabilitiesDeferred income tax liabilities........................................................................................... 17 (468)Retirement benefit obligations .......................................................................................... 25 (3,795)Provisions .............................................................................................................................. 16 (26,100)

(30,363)

Net assets.............................................................................................................................. 18,044

Shareholder’s equityNominal capital.................................................................................................................... 18 10,000Capital reserve ..................................................................................................................... 20 8,056Other reserves ...................................................................................................................... 21 (1,828)Retained earnings ................................................................................................................ 19 1,816

Total shareholder’s equity .................................................................................................. 22 18,044

159

XCHANGING TRANSACTION BANK GMBH

Cash flow statement – period ended 31 May

Period from1 Januaryto 31 May

Notes 2004

B’000

Cash flows from operating activitiesCash generated from operations ....................................................................................... 24 (43,300)

Net cash from operating activities .................................................................................... (43,300)

Cash flows from investing activitiesPurchase of property, plant and equipment .................................................................... (182)Purchase of intangible assets ............................................................................................. (61)Proceeds from sale of property, plant and equipment................................................... 823Interest received .................................................................................................................. 1,361

Net cash generated by investing activities........................................................................ 1,941

Cash flows from financing activitiesInterest paid ......................................................................................................................... (5)Dividend paid to shareholders........................................................................................... (23,108)

Net cash from financing activities ..................................................................................... (23,113)

Net decrease in cash and cash equivalents ..................................................................... (64,472)Cash and cash equivalents at 1 January ......................................................................... 149,599

Cash and cash equivalents at 31 May ............................................................................. 14 85,127

160

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information

1 General information

Xtb was purchased from Deutsche Bank AG by the Xchanging Group on 1 June 2004 (see note 35 of theXchanging B.V. financial information) and the results of Xtb from 1 June 2004 have been included in theconsolidated financial information for the group. The financial information presented herein is for the fivemonth period from 1 January 2004 to 31 May 2004.

Xchanging Transaction Bank GmbH, in its capacity as a bank, possesses a full German Banking Licenceand mainly processes securities transactions for other banks. Xtb is incorporated in Germany and locatedat Wilhelm-Fay-Straße 31-37, 65936 Frankfurt.

Following a general meeting of Xtb on 31 March 2004 and subsequent recording in the register on 25 May2004, the legal form of Xtb was changed from Aktiengesellschaft (AG), a non-listed limited company, toGesellschaft mit beschrankter Haftung (GmbH), a non-listed limited company funded with nominalcapital.

On 12 May 2004 the year end was changed from 31 December 2004 to 31 May 2004, due to the impendingchange of control of Xtb.

Xchanging Transaction Bank GmbH changed its name from european transaction bank GmbH via ashareholders’ resolution on 28 April 2006 and subsequent recording in the register on 19 June 2006.

2 Principal accounting policies

The principal accounting policies applied in the preparation of this financial information are set out below.

(a) Basis of preparation of the financial information

The financial information has been prepared in accordance with the requirements of the PD regulationand the Listing Rules and in accordance with this basis of preparation. The basis of preparation describeshow the financial information has been prepared in accordance with International Financial ReportingStandards as adopted by the European Union (IFRS as adopted by the EU) except as described below.

IFRS as adopted by the EU does not provide for the specific accounting treatments set out below, andaccordingly in preparing the financial information certain accounting conventions commonly used for thepreparation of historical financial information for inclusion in investment circulars as described in theAnnexure to SIR 2000 (Investment Reporting Standard applicable to public reporting engagements onhistorical financial information) issued by the UK Auditing Practices Board have been applied. Theapplication of these conventions results in the following material departures from IFRS as adopted by theEU. In other respects IFRS as adopted by the EU has been applied.

Presentation of a pre-acquisition track record

The financial information has been prepared for Xtb for the period from 1 January 2004 to 31 May 2004,the date Xtb was acquired by Xchanging B.V., in order to form part of the track record of the business ofXchanging B.V. as required by the application of Listing Rule 6.1.4(1). Consequently the financialinformation includes information for a period that is less than a full accounting period and does notinclude comparative financial information.

The accounting policies applied in the financial information are those of Xchanging B.V. as set out innote 2 to Xchanging B.V.’s financial information included in Section A of Part 5: Accountants’ Reports andFinancial Information of the Prospectus. Acquisition accounting adjustments made by Xchanging B.V. onacquisition of Xtb have not been reflected in the financial information. The financial information does notcomprise the first IFRS financial statements. With respect to the application of IFRS 1, no comparativeinformation has been presented, as discussed above, and reconciliation to amounts reported underprevious GAAP are not included, as detailed below.

The financial information does not include reconciliations to amounts reported under previous GAAP asXtb’s previous GAAP financial information was not publicly available therefore such reconciliations wouldnot provide meaningful information in the context of the Prospectus in which the financial information ispresented.

161

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Notes to the financial information (Continued)

Xtb originally adopted IFRS on acquisition by the Group with a date of transition to IFRS of 1 June 2004.For the purpose of this financial information, IFRS has been applied to the figures for the five months to31 May 2004, giving a revised transition date of 1 January 2004.

Both the functional currency and the presentation currency of the financial information is euros due to Xtbbeing managed in Germany and the majority of transactions being denominated in euros.

The financial information has been prepared under the historical cost convention. A summary of the moreimportant company accounting policies is set out below.

The preparation of financial information in conformity with EU endorsed IFRS requires the use ofjudgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the dateof the financial information and the reported amounts of revenues and expenses during the reportingperiod. Although these estimates are based on management’s best knowledge of the amount, event oractions, actual results ultimately may differ from those estimates. The accounting policy descriptions setout the areas where significant judgments, estimates and assumptions have been made.

(b) Revenue recognition

Revenue, which excludes value added tax, rebates and discounts, comprises the value of services providedfor securities processing services. Revenue is recognised on a straight-line basis according to the period towhich the service relates, net of guaranteed rebates to customers.

(c) Segmental reporting

The company operates in one business segment, being the provision of financial services and in addition,operates in one geographical segment, being Continental Europe.

(d) Finance income

Interest income is reported in the income statement as it arises through the application of the effectiveinterest rate method.

(e) Dividend distribution

Dividend distribution to the company’s shareholders is recognised as a liability in the period in which thedividends are due, according to the profit transfer agreement.

(f) Foreign currency transactions

(i) Functional and presentation currency

Items included in the financial information are measured using the currency of the primary economicenvironment in which the entity operates (‘‘the functional currency’’). This financial information ispresented in euros which is Xtb’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange ratesprevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlementof such transactions and from the translation at year-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the income statement.

(g) Intangible assets

Software costs are capitalised where they meet the criteria for recognition under IAS 38. Where thecriteria for capitalisation are not met, software expenditure is expensed as incurred.

Subsequent expenditure undertaken to ensure that an asset maintains its previously assessed standard ofperformance, for example routine repairs and maintenance expenditure, is recognised in the incomestatement as it is incurred. Where subsequent expenditure significantly enhances an asset, this iscapitalised.

162

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Notes to the financial information (Continued)

(h) Property, plant and equipment

The cost of tangible fixed assets is their purchase cost, together with any incidental costs of acquisition.

Assets in the course of development are not depreciated until completion at which point they aretransferred to the relevant fixed asset category. There are no such assets at the year end.

Depreciation is calculated so as to write off the cost of tangible fixed assets, less their estimated residualvalues, on a straight-line basis over the expected useful economic lives of the assets concerned. Theprincipal annual rates used for this purpose are:

Computer equipment ............................. 20–33%Fixtures and fittings................................ 10–25%Leasehold improvements ....................... 10%

(i) Impairment of tangible and intangible assets

At each balance sheet date, management reviews its tangible assets to determine whether there is anyindication that those assets have suffered an impairment loss. Intangible assets are reviewed if a triggerevent is deemed to have happened. If any such indication exists, the recoverable amount of the asset isestimated in order to determine the extent of the impairment loss (if any). Where the asset does notgenerate cash flows that are independent from other assets, Xtb estimates the recoverable amount of thecash-generating unit to which the asset belongs. No assets have indefinite lives.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,the estimated future cash flows are discounted to their present value using a pre-tax discount rate thatreflects the current market assessments of the time value of money and the risks specific to the asset forwhich the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carryingamount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. Animpairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) isincreased to the revised estimate of its recoverable amount, but so that the increased carrying amount doesnot exceed the carrying amount that would have been determined had no impairment loss been recognisedfor the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as incomeimmediately.

(j) Financial instruments

(i) Financial assets

Xtb classifies its financial assets in the following category: loans and receivables. The classification dependson the purpose for which the financial assets were acquired. Xtb determines the classification of itsfinancial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They are included in current assets, except for maturities greater than12 months after the balance sheet date. These are classified as non-current assets. Loans and receivablesare classified as ‘‘trade and other receivables’’ in the balance sheet (note 2 (k)).

Regular purchases and sales of financial assets are recognised on the trade-date – the date on which Xtbcommits to purchase or sell the asset. Investments are initially recognised at fair value plus transactioncosts for all financial assets not carried at fair value through profit or loss. Financial assets arederecognised when the rights to receive cash flows from the investments have expired or have beentransferred and Xtb has transferred substantially all risks and rewards of ownership. Loans and receivablesare carried at amortised cost.

Xtb assesses at each balance sheet date whether there is objective evidence that a financial asset or a groupof financial assets is impaired. If any such evidence exists the cumulative loss is recognised in the incomestatement.

163

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

(k) Trade and other receivables

Trade and other receivables are recognised at fair value and subsequently measured at amortised cost lessprovision for impairment.

(l) Cash and cash equivalents

Cash and cash equivalents include cash in hand and demand deposits. No cash equivalents were held in2004.

(m) Trade and other payables

Trade and other payables are recognised at fair value and subsequently measured at amortised cost.

(n) Operating leases

Rental costs under operating leases are charged to the income statement on a straight-line basis over thelease term.

(o) Taxation including deferred taxation

Current tax is recognised at the amount expected to be paid to (or recovered from) the taxation authoritiesusing the tax rates and laws that have been enacted or substantially enacted by the balance sheet date.

Deferred tax is recognised in respect of all temporary differences that have originated but not reversed atthe balance sheet date where transactions or events that result in an obligation to pay more, or a right topay less, tax in the future have occurred at the balance sheet date. Deferred tax assets are regarded asrecoverable and therefore recognised, only when, on the basis of all available evidence, the directorsconsider that it is more likely than not that there will be suitable taxable profits from which the futurereversal of the underlying temporary differences can be deducted.

(p) Employee benefit costs

(i) Pension obligations

Xtb operates, or participates in, both defined contribution and defined benefit pension schemes. All thepension schemes are accounted for in accordance with IAS 19.

Professional independent actuaries value the defined benefit schemes annually and the valuations wereupdated at the year-end. The directors believe that this is sufficiently regular so that the amounts do notdiffer materially from expectations at the year end.

Scheme assets are measured using closing market values at the balance sheet date. Pension schemeliabilities are measured using the projected unit method and discounted at the current rate of return on ahigh quality corporate bond of equivalent term and currency to the liability. Variations between the schemeassets and liabilities identified as a result of these actuarial valuations (actuarial gains and losses) arerecognised in full through the statement of recognised income and expense (SORIE) in that year. Currentservice costs, expected returns on plan assets and interest costs are charged to the income statement.Past-service costs are recognised immediately in income, unless the changes to the pension plan areconditional on the employees remaining in service for a specified period of time (the vesting period). Inthis case, the past-service costs are amortised on a straight-line basis over the vesting period.

Contributions to the defined contribution schemes are charged to the income statement as incurred.

(q) Provisions

Provisions are recognised when a present obligation exists as the result of a past event and it is probablethat this will result in an outflow of economic benefit, the size of which can be reliably estimated. Wherethe provision is long term, such as onerous contract provisions where the unavoidable costs of meetingobligations exceed any economic benefits expected to be received, the net cash flows are discounted usingXtb’s appropriate pre-tax discount rate.

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XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

There are no other known risks which bear the risk of material adjustments to the carrying amounts ofassets and liabilities.

Restructuring provisions are only recognised if an obligation exists at the balance sheet date i.e. a formalplan exists and those affected by that plan have a valid expectation that the restructuring will be carriedout.

(r) Share capital

Share capital comprises the typically fully paid nominal capital of a German limited company (GmbH).The nominal capital does not comprise of individual shares but is considered as one lump sum. Oninvesting the capital any excess consideration over the nominal value of the share capital less any investingcosts is credited to the capital reserve account.

(s) Exceptional items

Exceptional items are events or transactions that fall within the activities of Xtb, and, which by virtue oftheir size or incidence, have been disclosed in order to improve a reader’s understanding of the financialinformation.

3 Financial risk management

Xtb’s operations expose it to a variety of financial risks. Up to 31 May 2004, Xtb was integrated intoDeutsche Bank’s risk management. Therefore the policies followed were those established by DeutscheBank. These policies were regularly reviewed. Xtb’s financial instruments comprise cash and liquidresources and various items, such as trade receivables and trade payables that directly arise from itsoperations.

It is Xtb’s policy that no trading in financial instruments or speculative transactions be undertaken.

Operational risk

Due to the nature of its business, Xtb’s most significant risk relates to operational risk deriving from errorsin the securities transaction business. A process is in place to monitor the operational risk which complieswith the German banking regulations relevant to Xtb and which assists with the calculation of thenecessary provision.

Up to 31 May 2004, a special database set up by Deutsche Bank was used to record all mishandlingincidents. After 31 May 2004, Xtb set up its own policies and a more advanced database which allowedmore detailed tracking of individual incidents.

Interest rate risk

Xtb reviews its interest rate profile against acceptable risk profiles.

Working capital is generally held in an interest paying bank account.

Foreign exchange risk

Xtb has no major foreign exchange risk and no hedging takes place.

Liquidity risk

During the period Xtb’s cash management was performed by the Group Treasury department of DeutscheBank. Due to the significant levels of cash, Xtb has low liquidity risk. Xtb has no borrowings.

Market risk

Xtb does not hold any investments, other than the assets held within the pension scheme, which areinvested in a mixture of equities, bonds and gilts. The market risk is low due to this diversification.

165

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

Credit risk

Xtb has a credit risk with respect to trade receivables due to the nature and structure of its business, whichis mitigated to a certain extent as the majority of counterparties are regulated banks. Credit riskassessments are performed for new customers. The maximum counterparty risk was A89,495,000. In theperiod there was a high concentration of credit risk with Deutsche Bank, who required Xtb’s currentaccount to be held with them. The money deposited with Deutsche Bank exceeded the amount of Xtb’snominal capital.

Commodity risk

Commodity risk is not considered to be applicable to Xtb as Xtb does not perform any transactions ofcommodities.

4 Critical accounting judgments

Xtb’s principal accounting policies are set out in note 2 to this financial information. Management isrequired to exercise significant judgment and make use of estimates and assumptions in the application ofthese policies.

Areas which management believes require the most critical accounting judgments are:

(i) Retirement benefit obligations

Xtb operates a number of defined benefit plans, which collectively form the Xtb defined benefit scheme.The retirement benefit obligations recorded are based on actuarial assumptions, including discount rates,expected long-term rate of return on plan assets, inflation and mortality rates. The assumptions are basedon current market conditions, historical information and consultation with and input from actuaries.Management reviews these assumptions annually. If the assumptions change, or if actual experience isdifferent from the assumptions, the funding status of the plan will change and the retirement benefitobligation will be adjusted accordingly. The assumptions used are detailed in note 25.

(ii) Exceptional items

The directors consider that items of income or expense which are material and non-recurring by virtue oftheir nature and amount should be disclosed separately if the financial information is to fairly present thefinancial position and financial performance of Xtb. The directors label these items collectively as‘‘exceptional items’’. Xtb did not have any exceptional items in the period to 31 May 2004.

(iii) Provisions

The most significant provisions are for operational risk, early and part-time retirement, severance and longservice payments. All of these provisions apart from the provision for operational risk are valued annuallyby an actuary and discounted. For operational risk, see note 3.

(iv) Taxation

The level of tax provisioning is dependent on subjective judgment as to the outcome of decisions to bemade by the relevant tax authorities.

It is necessary to consider the extent to which deferred tax assets should be recognised based on anassessment of the extent to which they are regarded as recoverable.

166

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

5 Analysis of revenue by category and geographical destination

Period endedRevenue by category 31 May 2004

B’000

Revenue from financial services ...................................................................................................... 66,990

Period endedRevenue by geographical destination 31 May 2004

B’000

Continental Europe ........................................................................................................................... 66,990

6 Expenses by nature

Period endedNotes 31 May 2004

B’000

Direct staff costs .................................................................................................................. 8 28,443Other staff related costs ..................................................................................................... 3,115Technology and communications ....................................................................................... 24,801Property costs ....................................................................................................................... 3,904Depreciation, amortisation and impairment charges...................................................... 1,005Other costs............................................................................................................................ 2,994

Total operating expenses..................................................................................................... 64,262

7 Operating profit

Period ended31 May 2004

B’000

Operating profit is stated after charging/(crediting):Staff costs (note 8)............................................................................................................................. 28,443Depreciation of property, plant and equipment – owned assets (note 12) ................................................................................................................. 781Net amortisation of intangible assets (note 11) ............................................................................ 224Operating leases – land and buildings ............................................................................................ 2,106

– plant and machinery......................................................................................... 262Profit on disposal of fixed assets ..................................................................................................... (381)Auditors’ remuneration – audit services ......................................................................................... 146

In accordance with the German commercial code an expense equalling the HGB, German GAAP, profit ofA10,272,000 was recognised. Similarly an amount of A10,272,000 was recognised as a liability to the parentcompany, due to the profit transfer agreement with Deutsche Bank.

167

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

8 Employees and directors

Period endedNotes 31 May 2004

B’000

Staff costs for the periodWages and salaries............................................................................................................... 22,227Social security costs ............................................................................................................. 4,654Pension costs — defined benefit scheme ......................................................................... 2,287Pension costs — defined contribution scheme ................................................................ 590

29,758

Included within:Operating expenses.............................................................................................................. 7 28,443Finance costs ........................................................................................................................ 9 1,315

29,758

Period ended31 May 2004

Number

Average number of persons (including executive directors) employed by the company:Selling and distribution ..................................................................................................................... 847Administration.................................................................................................................................... 63

910

No employees of Xtb are directors of the Xchanging Group or meet the definition of key management fordisclosing key management compensation.

9 Finance costs and income

Period ended31 May 2004

B’000

Finance costs:Interest payable on bank loans and overdrafts.............................................................................. (5)Interest cost on defined benefit pension schemes......................................................................... (1,315)

Finance costs....................................................................................................................................... (1,320)

Finance income:Bank interest....................................................................................................................................... 1,361

Finance income .................................................................................................................................. 1,361

Finance income – net ........................................................................................................................ 41

168

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

10 Taxation

Period ended31 May 2004

B’000

Analysis of charge in periodDeferred tax: – Continuing operations .................................................................................................................. 5,677

Tax on items credited to equity

Period ended31 May 2004

B’000

Deferred tax on pension ................................................................................................................... 1,263

Factors affecting the current tax charge for the period

The tax for the period consists entirely of deferred tax. A tax rate of 40.86% is applied which reflects21.18% corporation tax including solidarity surcharge and 19.68% trade tax. The tax for the period ishigher than this standard rate. The differences are explained below:

Period ended31 May 2004

B’000

Profit on ordinary activities before tax ........................................................................................... 2,769

Profit on ordinary activities multiplied by rate of corporation tax in Germany of 40.86%.... 1,131Other adjustments to accounting profit & loss ............................................................................. (1,131)Short term temporary differences.................................................................................................... 5,677

Tax charge for the period ................................................................................................................. 5,677

The other adjustments to accounting profit and loss relate to the reversal of income taxes as due to thefiscal unity with Deutsche Bank, no income taxes are paid.

11 Intangible assets

Software Total

B’000 B’000

CostAt 1 January 2004 ...................................................................................................... 2,341 2,341Additions – external................................................................................................... 61 61Disposals...................................................................................................................... (214) (214)

At 31 May 2004 .......................................................................................................... 2,188 2,188

AmortisationAt 1 January 2004 ...................................................................................................... 1,440 1,440Charge for the period................................................................................................ 224 224Disposals...................................................................................................................... (213) (213)

At 31 May 2004 .......................................................................................................... 1,451 1,451

Net book amountAt 31 May 2004 .......................................................................................................... 737 737

Amortisation is charged against cost of sales in the income statement.

169

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

12 Property, plant and equipment

Leasehold Computer Fixtures andimprovements equipment fittings Total

B’000 B’000 B’000 B’000

CostAt 1 January 2004.................................................... 811 6,430 6,050 13,291Additions................................................................... 19 159 4 182Disposals ................................................................... — (102) (2,833) (2,935)

At 31 May 2004 ........................................................ 830 6,487 3,221 10,538

DepreciationAt 1 January 2004.................................................... 207 4,897 4,190 9,294Charge for the period ............................................. 34 514 233 781Disposals ................................................................... — (88) (2,406) (2,494)

At 31 May 2004 ........................................................ 241 5,323 2,017 7,581

Net book valueAt 31 May 2004 ........................................................ 589 1,164 1,204 2,957

Depreciation is charged against cost of sales in the income statement.

13 Trade and other receivables

31 May 2004

B’000

Due within one year:Trade receivables – non related parties .......................................................................................... 2,642Trade receivables – related parties .................................................................................................. 1,363Less: provision for impairment of receivables ............................................................................... —

Net trade receivables ......................................................................................................................... 4,005Prepayments and accrued income ................................................................................................... 360Other receivables ............................................................................................................................... 3

4,368

14 Cash and cash equivalents

31 May 2004

B’000

Cash at bank and in hand................................................................................................................. 85,127

15 Trade and other payables – current

31 May 2004

B’000

Trade payables – non related parties .............................................................................................. 15,686Trade payables – related parties ...................................................................................................... 21,277Other taxation and social security ................................................................................................... 2,294Other payables.................................................................................................................................... 2,593Accruals and deferred income ......................................................................................................... 1,454

43,304

170

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

16 Provisions

OperationalProperty risk Other Total

B’000 B’000 B’000 B’000

At 1 January 2004 ...................................................... 444 6,968 43,044 50,456Released in the year .................................................. — (1,394) (3,647) (5,041)Provided in the year .................................................. — 1,833 3,339 5,172Utilised in the year .................................................... (33) (252) (10,551) (10,836)

At 31 May 2004 .......................................................... 411 7,155 32,185 39,751

Provisions have been analysed between current and non-current as follows:

31 May 2004

B’000

Current ................................................................................................................................................ 13,651Non-current......................................................................................................................................... 26,100

39,751

The property provision relates to a lease for vacant property, which has 5 years left to run. As the propertyprovision is relating to a contract the amount of the liability is calculated with a high certainty.

The operational risk provision comprises an estimated liability in respect of identified operating errorswhich had occurred in the ordinary course of business up to 31 May 2004. The operational risk provisioncomprises two categories of incidents. The first category consists of incidents where the amount of the cashflow is defined but there is a small element of uncertainty around the date of this fixed cash flow. Thesecond category covers incidents where the date of cash outflow is set, however there is a small amount ofuncertainty around the amount to be paid.

The other provision includes, amongst others, provisions for early retirement, severance and long servicepayments and other personnel related provisions. The provision for early retirement is calculated withreference to a defined period of cash outflows and a small amount of uncertainty surrounding thepayments to be made. The provision for long service payments is characterised by a lengthy period of setdates for the cash outflows (based on 25 and 40 years of service) and a higher degree of uncertainty on theamounts which will be paid.

17 Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of40.86% for differences arising in Germany.

The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the samejurisdiction as permitted by IAS 12 during the period) are shown below:

Period ended31 May 2004

B’000

AssetsAt 1 January 2004 .............................................................................................................................. 16,620Profit and loss charge........................................................................................................................ (5,710)Tax credited to equity – pensions .................................................................................................... 1,263

At 31 May 2004.................................................................................................................................. 12,173

171

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

Period ended31 May 2004

B’000

LiabilitiesAt 1 January 2004 .............................................................................................................................. (501)Profit and loss credit ......................................................................................................................... 33

At 31 May 2004.................................................................................................................................. (468)

Deferred tax assets and liabilities are only offset where there is a legal right of offset and there is intentionto settle the balance net.

Pension Other Total

B’000 B’000 B’000

Deferred tax assetsAt 1 January 2004 .............................................................................. 7,191 9,429 16,620Charged to income statement .......................................................... (2,678) (3,032) (5,710)Credited to equity .............................................................................. 1,263 — 1,263

At 31 May 2004 .................................................................................. 5,776 6,397 12,173

Acceleratedtax

depreciation Total

B’000 B’000

Deferred tax liabilitiesAt 1 January 2004 ...................................................................................................... (501) (501)Credited to income statement.................................................................................. 33 33

At 31 May 2004 .......................................................................................................... (468) (468)

The deferred income tax credited to equity during the period is as follows:

Period ended31 May 2004

B’000

Fair value reserves in shareholder’s equity: – actuarial movements on retirement benefit obligations .......................................................... 1,263

18 Nominal capital

Nominalcapital

B’000

Fully paidAt 1 January and at 31 May 2004 ................................................................................................... 10,000

The share capital comprises of 1 share with nominal value of A10,000,000 at 31 May 2004.

19 Retained earnings

Retainedearnings

B’000

At 1 January 2004 .............................................................................................................................. 27,832Retained loss for the period............................................................................................................. (2,908)Dividends paid.................................................................................................................................... (23,108)

At 31 May 2004 .................................................................................................................................. 1,816

172

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

20 Capital reserve

Capitalreserve

B’000

At 1 January and at 31 May 2004................................................................................................... 8,056

21 Other reserves

Otherreserves

B’000

At 1 January 2004.............................................................................................................................. —Actuarial loss on pensions ................................................................................................................ (3,091)Deferred tax on pensions taken to reserves................................................................................... 1,263

At 31 May 2004 .................................................................................................................................. (1,828)

22 Movement in shareholder’s equity

Nominal Capital Other Retained Totalcapital reserve reserves earnings equity

B’000 B’000 B’000 B’000 B’000

At 1 January 2004.............................. 10,000 8,056 — 27,832 45,888Net loss................................................ — — — (2,908) (2,908)Actuarial loss on pensions ................ — — (3,091) — (3,091)Deferred tax on pensions taken to

reserves ............................................ — — 1,263 — 1,263Dividends paid.................................... — — — (23,108) (23,108)

At 31 May 2004 .................................. 10,000 8,056 (1,828) 1,816 18,044

The whole profit of Xtb is distributed as dividends to the main shareholder due to a profit transferagreement.

23 Financial commitments

At 31 May 2004 future aggregate minimum lease payments under non-cancellable operating leases were asfollows:

B’000

Operating leases: land and buildingsWithin one year.................................................................................................................................. 4,976Later than one year and less than five years................................................................................. 19,869Later than five years.......................................................................................................................... 16,652

Operating leases: otherWithin one year.................................................................................................................................. 248Later than one year and less than five years................................................................................. 223

Xtb’s most significant lease is that of the premises in Frankfurt. The lease expires in June 2013.

173

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

24 Cash flow from operating activities

Reconciliation of operating profit to cash generated from operating activities

Period ended31 May 2004

B’000

Operating profit ................................................................................................................................. 2,728Adjustment for non-cash items:Depreciation ....................................................................................................................................... 781Profit on disposal of property, plant and equipment.................................................................... (381)Amortisation of intangibles .............................................................................................................. 224

3,352Changes in working capitalIncrease in trade and other receivables.......................................................................................... (995)Increase in payables........................................................................................................................... 24,806Decrease in pensions ......................................................................................................................... (59,758)Decrease in provisions....................................................................................................................... (10,705)

Cash used by continuing operations ............................................................................................... (43,300)

25 Retirement benefit obligations

Xtb defined benefit scheme

Xtb operates a number of defined benefit plans, which collectively form the Xtb defined benefit scheme,for retirement payments which guarantee defined payments to its employees when they have reached theretiring age.

In the most recent actuarial valuation of the Xtb pension plan, the principal assumptions made by theactuaries were:

Period ended31 May 2004

%

Rate of increase in pensionable salaries......................................................................................... 3.0Rate of increase in pensions in payment and deferred pensions ............................................... 2.0Discount rate ...................................................................................................................................... 5.5Expected return on plan assets ........................................................................................................ 0.0

The expected return on plan assets reflects the average rate of earnings expected on the funds invested orto be invested to provide benefits. As there were no funds invested at the start of the period, this is nil. Theexpected long term rate of return on plan assets is used (with the market related value of assets) tocompute the expected return on assets. The mortality table used in the scheme is Richttafeln 1998 G,Heubeck-Richttafeln GmbH, Koln 1998. Under these assumptions, the life expectancy for a male currentpensioner at age 65 is 16 years and for a male future pensioner at age 65 is 16 years. Employees do notcontribute to the scheme. At 31 May 2004 it covered 1,333 employees and surviving dependents of which976 employees were entitled to receive a pension at the retirement age of 65 years, 225 employees qualifiedfor early retirement and 24 employees for part-time retirement and were entitled to receive a pension atthe age of between 60 and 63 depending on individual circumstances, 99 pensioners and 9 survivingdependents were recipients of a pension. The retirement benefit consists of pension payments. Thepension amount depends on salary, age and number of years in employment at Xtb. The entitlement to apension depends on legal regulations. Up to the end of 2005 employees had to work for the company for10 years and reach the age of 35 in order to qualify for these vested benefits. From 1 January 2006 this waschanged to a working period of 5 years and the age of 30 in order to qualify. There were no changes inlegislation or other regulations during the period from 1 January 2004 to 31 May 2004. The funding policyfor the scheme was to invest the cash equivalent into a pension fund rather than holding it as cash.

174

XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

The weighted average asset allocations of the fair value of the total plan assets in the defined benefitsection of the scheme were:

Period ended31 May 2004

%

Equities................................................................................................................................................ 14.98Bonds and gilts ................................................................................................................................... 69.20Other.................................................................................................................................................... 15.82

Total ..................................................................................................................................................... 100.00

The retirement benefit obligation recognised in the balance sheet is:

31 May 2004

B’000

Present value of funded obligations ................................................................................................ (61,637)Fair value of plan assets.................................................................................................................... 57,842

Net deficit recognised in the balance sheet ................................................................................... (3,795)

The amounts recognised in the income statements are as follows:

Period ended31 May 2004

B’000

Current service cost ........................................................................................................................... 972Interest cost ........................................................................................................................................ 1,315Expected return on plan assets ........................................................................................................ —

Total included within staff costs (note 8) ....................................................................................... 2,287

Included within:Administrative costs........................................................................................................................... 972Finance costs....................................................................................................................................... 1,315

2,287

The amounts recognised in the statement of recognised income and expense are as follows:

Period ended31 May 2004

B’000

Net actuarial losses recognised during the period ........................................................................ 3,091

Analysis of the movement in the present value of the defined benefit obligation

Period ended31 May 2004

B’000

Present value of obligation in scheme as at 1 January................................................................. (60,279)Current service cost ........................................................................................................................... (972)Interest cost ........................................................................................................................................ (1,315)Actuarial losses................................................................................................................................... (2,232)Benefits paid ....................................................................................................................................... 782Curtailments........................................................................................................................................ 2,379

Present value of obligation in scheme as at 31 May .................................................................... (61,637)

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XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

Analysis of the movement in the fair value of the plan assets

Period ended31 May 2004

B’000

Fair value of scheme assets as at 1 January................................................................................... —Contributions by plan participants .................................................................................................. 58,700Actuarial losses................................................................................................................................... (859)

Fair value of scheme assets as at 31 May....................................................................................... 57,841

Actual return on plan assets............................................................................................................. (859)

Defined contribution scheme

The contribution plan covers employees within the financial industry. The assets of these funds are heldwithin an external pension fund. Pension costs that were charged to the income statement for the periodrelating to current contributions were A590,000.

26 Ultimate controlling party

Xtb was 100% owned by Deutsche Bank in the period from 1 January to 31 May 2004.

27 Related party transactions

Deutsche Bank is considered to be a related party as it holds a 100% shareholding of XchangingTransaction Bank GmbH in the period to 31 May 2004. Sal. Oppenheim jr. & Cie KGaA is considered tobe a related party for this financial information as from June 2005 it held a 5% shareholding inXchanging etb GmbH, which from June 2004 was the 100% parent of Xtb.

A description of the nature of the services provided by/to Deutsche Bank and Sal. Oppenheim and theamount receivable/(payable) in respect of each at 31 May 2004 are set out in the table below:

Sales/ Year end(purchases) receivables/

Period ended (payables)31 May 31 May

Services provided by/to Xtb 2004 2004

B’000 B’000

Securities processing services ................................................................................... 41,466 1,194Property charges......................................................................................................... (3,159)IT charges ................................................................................................................... (17,700) (21,277)Other operating expenses ......................................................................................... (1,248) {Interest on current accounts..................................................................................... 1,361 169Current accounts ........................................................................................................ — 85,127

The members of the Xtb directors’ board are:

Bernd Sperber, Achim Pohler and Gunter Wolfertz.

The members of the Xtb supervisory board are:

Hermann-Josef Lamberti, Deutsche BankSiegfried Heger, XtbIngo Herzog, XtbGuido Heuveldop, Deutsche BankFriedrich Carl Janssen, Sal. OppenheimPeter Scharpf, Verband der Sparda-Banken e.V.

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XCHANGING TRANSACTION BANK GMBH

Notes to the financial information (Continued)

28 Financial instruments and capital requirements

Financial instruments

The main financial instruments are the investment funds which in the balance sheet are shown nettedagainst the pension liability, the cash position held with Deutsche Bank and trade receivables and tradepayables shown within loans and receivables on the balance sheet.

Trade receivables are shown at nominal value. Xtb does not hold any financial assets or liabilities at fairvalue through profit and loss nor was Xtb engaged in any kind of financial trading.

The maximum credit risk is A89,495,000 as at 31 May 2004.

Capital requirements

As a bank Xtb has to comply with the banking supervisory capital requirements according to the GermanBanking Act (Kreditwesengesetz, ‘‘KWG’’). In order to comply with the capital requirements the calculationto establish if sufficient capital is held was performed on a monthly basis and reported to the BaFin(German Banking Supervisory Authority). For the purpose of this calculation, the liable capital is smallerthan the balance sheet capital as all intangible assets are deducted from the balance sheet capital todetermine the liable capital. During the period the capital requirements have always been fulfilled. Theonly capital components are the nominal capital and the capital reserve. There are no subordinated debtsthat would count as capital.

29 Post balance sheet events

On 1 June 2004, Xtb was purchased by Xchanging etb GmbH.

On 18 October 2004, the year end was changed from 31 May 2005 to 31 December 2004, due to the abovechange of ownership.

A profit transfer agreement, whereby the whole profit of Xchanging Transaction Bank GmbH for anaccounting period is transferred to its parent, was entered into with Xchanging etb GmbH viashareholders’ resolution on 18 October 2004 and entry into the register on 18 November 2004.

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15FEB200619332872

PART 5: ACCOUNTANTS’ REPORTS AND FINANCIAL INFORMATION

SECTION C – ACCOUNTANTS’ REPORT AND FINANCIAL INFORMATION FORXCHANGING PLC FOR THE FINANCIAL PERIOD FROM ITS INCORPORATION

ON 16 MAY 2006 TO 31 DECEMBER 2006

PricewaterhouseCoopers LLP1 Embankment PlaceLondon WC2N 6RH

The DirectorsXchanging plc34 Leadenhall StreetLondonEC3A 1AX

Citigroup Global Markets Limited (the ‘‘Sponsor’’)Citigroup CentreCanada SquareCanary WharfLondonE14 5LB

25 April 2007

Dear Sirs

Xchanging plc

Introduction

We report on the special purpose financial information set out in Section C of Part 5: Accountants’Reports and Financial Information. This special purpose financial information has been prepared forinclusion in the prospectus dated 25 April 2007 (the ‘‘Prospectus’’) of Xchanging plc (the ‘‘Company’’) onthe basis of the accounting policies set out in note 2. This report is required by item 20.1 of Annex 1 to thePD Regulation and is given for the purposes of complying with that item and for no other purpose.

Responsibilities

The Directors of the Company are responsible for preparing the special purpose financial information inaccordance with International Financial Reporting Standards as adopted by the European Union.

It is our responsibility to form an opinion on the financial information as to whether the special purposefinancial information gives a true and fair view, for the purposes of the Prospectus and to report ouropinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly addressedand for any responsibility arising under item 5.5.3R(2)(f) of the Prospectus Rules to any person as and tothe extent there provided, to the fullest extent permitted by law we do not assume any responsibility andwill not accept any liability to any other person for any loss suffered by any such other person as a result of,arising out of, or in connection with this report, consenting to its inclusion in the Prospectus.

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Basis of opinion

We conducted our work in accordance with Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. Our work included an assessment of evidence relevant to theamounts and disclosures in the financial information. It also included an assessment of significantestimates and judgments made by those responsible for the preparation of the special purpose financialinformation and whether the accounting policies are appropriate to the Company’s circumstancesconsistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance that thefinancial information is free from material misstatement, whether caused by fraud or other irregularity orerror.

Our work has not been carried out in accordance with auditing standards generally accepted in the UnitedStates of America or auditing standards of the Public Accounting Oversight Board (United States) andaccordingly should not be relied upon as if it had been carried out in accordance with those standards.

Opinion

In our opinion, the financial information gives, for the purposes of the Prospectus, a true and fair view ofthe state of affairs of the Company as at the date stated and of its profits, cash flows and statement ofrecognised income and expense for the period then ended in accordance with International FinancialReporting Standards as adopted by the European Union.

Declaration

For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of theProspectus and declare that we have taken all reasonable care to ensure that the information contained inthis report is, to the best of our knowledge, in accordance with the facts and contains no omissions likely toaffect its import. This declaration is included in the Prospectus in compliance with item 1.2 of Annex I ofthe PD Regulation.

Yours faithfully

PricewaterhouseCoopers LLPChartered Accountants

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XCHANGING PLC

Balance Sheet – 31 December

Notes 2006

£’000

AssetsCurrent assetsAmounts owed by related parties ....................................................................................... 5 50

Net current assets ................................................................................................................. 50

Net assets ............................................................................................................................... 50

Shareholders’ equityOrdinary shares...................................................................................................................... 6 50

Total equity............................................................................................................................. 6 50

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XCHANGING PLC

Statement of changes in shareholders’ equity

Period from16 May to

Share 31 DecemberNotes capital 2006

£’000 £’000

Balance as at 16 May 2006, on incorporation........................................... — —Issue of share capital .................................................................................... 6 50 50

Total changes in shareholders’ equity......................................................... 50 50

Balance as at 31 December 2006 ................................................................ 50 50

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XCHANGING PLC

Notes to the financial information

1 General information

Xchanging plc was incorporated on 16 May 2006 and did not trade from the period of incorporationto 31 December 2006.

On 31 July 2006 the Company entered into the conditional Takeover Offer Agreement withXchanging B.V. and certain of its shareholders, which sets out the terms on which those shareholdersof Xchanging B.V. will exchange their shares in Xchanging B.V. for shares in the Company onAdmission becoming effective. For details of the Takeover Offer Agreement and the associatedEmployee Offer Letters please refer to paragraphs 18.9 and 18.10 of Part 8: Additional Information.

2 Principal accounting policies

The principal accounting policies applied in the preparation of this financial information are set outbelow.

(a) Basis of preparation of the financial information

This financial information has been prepared in accordance with EU endorsed International FinancialReporting Standards, IFRIC interpretations and with those parts of the Companies Act applicable tocompanies reporting under IFRS.

The financial information has been prepared under the historical cost convention. A summary of theaccounting policies is set out below.

(b) Cash and cash equivalents

Cash and cash equivalents include cash in hand, demand deposits and short term highly liquidinvestments which are readily convertible to cash and are subject to minimal risk of changes in value.

(c) Share capital

Share capital comprises the nominal value of all issued shares. On subscribing for shares any excessconsideration over the nominal value of the shares issued less any issue costs is credited to the sharepremium account.

3 Directors’ emoluments

The directors did not receive any emoluments in respect of their role as directors of the Company.

4 Employees

The Company did not have any employees.

5 Amounts owed by related parties

General Atlantic Partners (Bermuda) L.P., which is a related party by virtue of its shareholding in theCompany, has provided an unconditional undertaking to pay up in full the amounts owed on its sharesbeing £49,998.

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XCHANGING PLC

Notes to the financial information (Continued)

6 Called up share capital

2006

£’000

Authorised49,998 redeemable preference shares of £1 each.................................................................. 5050,000 ordinary shares of £1 each ........................................................................................... 50

100

Alloted, called up and fully paid49,998 redeemable preference shares of £1 each.................................................................. 502 ordinary shares of £1 each .................................................................................................... —

50

The Company was incorporated with £50,000 authorised share capital, comprising of 50,000 ordinaryshares of £1 each. Two ordinary shares were allotted on incorporation for £2 cash. On 27 June 2006the authorised share capital was increased by £49,998 by the creation of 49,998 redeemable preferenceshares of £1 each. All of these redeemable preference shares were issued on 27 June 2006 in exchangefor an unconditional undertaking to pay the subscription amounts in full. The shares are consideredfully paid up as to the nominal value.

Share rights

The redeemable preference shares do not carry any rights to dividends or voting rights. The ordinaryshares are subordinate to the redeemable preference shares in event of liquidation or winding up.

7 Post balance sheet events

Since the balance sheet date the following activities have taken place:

Xchanging plc acquired the entire share capital of Xchanging Holdings Limited on 23 April 2007 asdescribed in paragraph 3.10 of Part 8: Additional Information.

At the annual general meeting of the Company held on 23 April 2007 the shareholders resolved that:

� each issued and unissued ordinary share of £1 each be subdivided into 20 ordinary shares of 5peach;

� the redeemable preference shares, subject to them being redeemed, be cancelled; and

� the authorised share capital of the Company be increased to £17,500,000 by the creation of anadditional 349,000,000 ordinary shares of 5p each.

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2NOV200423333498

PART 6: UNAUDITED PRO FORMA FINANCIAL INFORMATION

PricewaterhouseCoopers LLP1 Embankment PlaceLondon WC2N 6RH

The DirectorsXchanging plc34 Leadenhall StreetLondonEC3A 1AX

Citigroup Global Markets Limited (the ‘‘Sponsor’’)Citigroup CentreCanada SquareCanaryWharfLondonE14 5LB

25 April 2007

Dear Sirs

Xchanging plc (the ‘‘Company’’)

We report on the pro forma net assets statement (the ‘‘Pro forma net assets statement’’) set out in Part 6:Unaudited Pro Forma Financial Information of the Company’s prospectus dated 25 April 2007 (the‘‘Prospectus’’) which has been prepared on the basis described, for illustrative purposes only, to provideinformation about how the proposed Global Offer, the acquisition of the Xchanging B.V. group and otherconsequential items might have affected the financial information presented on the basis of the accountingpolicies adopted by the Company in preparing the financial statements for the period ending 31 December2006. This report is required by item 7 of Annex II to the PD Regulation and is given for the purpose ofcomplying with that PD Regulation and for no other purpose.

Responsibilities

It is the responsibility of the directors of the Company to prepare the Pro forma net assets statement inaccordance with item 20.2 of Annex I to the PD Regulation.

It is our responsibility to form an opinion, as required by item 7 of Annex II to the PD Regulation on thePro forma net assets statement as to the proper compilation of the Pro forma net assets statement and toreport our opinion to you.

In providing this opinion we are not updating or refreshing any reports or opinions previously made by uson any financial information used in the compilation of the Pro forma net assets statement, nor do weaccept responsibility for such reports or opinions beyond that owed to those to whom those reports oropinions were addressed by us at the dates of their issue.

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Save for any responsibility which we may have to those persons to whom this report is expressly addressedand for any responsibility arising under item 5.5.3R(2)(f) of the Prospectus Rules to any person as and tothe extent there provided, to the fullest extent permitted by law we do not assume any responsibility andwill not accept any liability to any other person for any loss suffered by any such other person as a result of,arising out of, or in connection with this report or consenting to its inclusion in the Prospectus.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. The work that we performed for the purpose of making thisreport, which involved no independent examination of any of the underlying financial information,consisted primarily of comparing the unadjusted financial information with the source documents,considering the evidence supporting the adjustments and discussing the Pro forma net assets statementwith the directors of the Company.

We planned and performed our work so as to obtain the information and explanations we considerednecessary in order to provide us with reasonable assurance that the Pro forma net assets statement hasbeen properly compiled on the basis stated and that such basis is consistent with the accounting policies ofthe Company.

Our work has not been carried out in accordance with auditing standards or other standards and practicesgenerally accepted in the United States of America or auditing standards of the Public CompanyAccounting Oversight Board (United States) and accordingly should not be relied upon as if it had beencarried out in accordance with those standards and practices.

Opinion

In our opinion:

(a) the Pro forma net assets statement has been properly compiled on the basis stated; and

(b) such basis is consistent with the accounting policies of the Company.

Declaration

For the purposes of Prospectus Rule 5.5.3R(2)(f), we are responsible for this report as part of theProspectus and we declare that we have taken all reasonable care to ensure that the information containedin this report is, to the best of our knowledge, in accordance with the facts and contains no omission likelyto affect its import. This declaration is included in the Prospectus in compliance with item 1.2 of Annex Iand item 1.2 of Annex III to the PD Regulation.

Yours faithfully

PricewaterhouseCoopers LLPChartered Accountants

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Unaudited IFRS Pro forma financial information

Set out below is unaudited pro forma financial information based on the net assets of Xchanging B.V. as at31 December 2006. The pro forma is prepared for illustrative purposes only to show the effects of theGlobal Offer, the Acquisition, and other consequential items as detailed in notes 2, 3, 4 and 5 below, onthe Group as if they had occurred on 31 December 2006. Due to its nature, the pro forma financialinformation represents a hypothetical situation, and therefore, does not represent the Group’s actualfinancial position or results. The unaudited IFRS pro forma financial information has been compiled fromthe IFRS balance sheets of Xchanging plc as at 31 December 2006 and Xchanging B.V. Group as at31 December 2006, as set out in Sections A and C of Part 5: Accountants’ Reports and FinancialInformation, adjusted as described in notes 3 to 5 below.

Adjustments

Note 2Note 1 Xchanging

Xchanging plc B.V. Group Pro formaas at as at as at

31 December 31 December 31 December2006 2006 Note 3 Note 4 Note 5 2006

£’000 £’000 £’000 £’000 £’000 £’000AssetsNon-current assetsGoodwill ............................................. 29,362 — — — 29,362Intangible assets ................................ — 28,471 — — — 28,471Property, plant and equipment ....... — 15,096 — — — 15,096Available-for-sale financial assets ... — 20,441 — — — 20,441Trade and other receivables ............ — 6,115 — — — 6,115Deferred income tax assets.............. — 16,317 — — — 16,317

— 115,802 — — — 115,802Current assetsTrade and other receivables ............ 50 74,976 — — (50) 74,976Cash and cash equivalents ............... — 58,684 1,576 65,000 — 125,260

50 133,660 1,576 65,000 (50) 200,236

LiabilitiesCurrent liabilitiesTrade and other payables................. — (80,902) — — — (80,902)Current income tax liabilities .......... — (7,129) — — — (7,129)Borrowings ......................................... — (3,270) — — — (3,270)Provisions ........................................... — (8,720) — — — (8,720)

Net current assets............................. 50 33,639 1,576 65,000 (50) 100,215

Total assets less current liabilities. 50 149,441 1,576 65,000 (50) 216,017Non-current liabilitiesTrade and other payables................. — (9,764) — — — (9,764)Financial liabilities— Borrowings.................................... — (13,042) 13,042 — — —— Other liabilities ............................ — (7,140) — — — (7,140)Deferred income tax liabilities ........ — (2,517) — — — (2,517)Retirement benefit obligations........ — (21,901) — — — (21,901)Provisions ........................................... — (9,447) — — — (9,447)

— (63,811) 13,042 — — (50,769)

Net assets ........................................... 50 85,630 14,618 65,000 (50) 165,248

Notes:

1. Information on Xchanging plc has been extracted, without adjustment from the IFRS historical financial information forXchanging plc set out in Section C of Part 5: Accountants’ Reports and Financial Information. Xchanging plc will become theimmediate listed entity of the Xchanging group on Admission.

In contemplation of and in connection with the Global Offer the following adjustments have been made:

2. Information on Xchanging B.V. has been extracted, without adjustment, from the group IFRS historical financial information setout in Section A of Part 5: Accountants’ Reports and Financial Information.

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3. Receipt of US$2,212,301 (which for the purposes of this pro forma has been translated at the average US$:£ exchange rate forthe period 1 January 2007 to 31 March 2007 of 1.95449 to £1,131,907) and £443,712 proceeds on exercise of the BAE Warrantand the debt/equity swap of the full outstanding amount of £13,402,000 owed under the Rebus loan for shares in Xchanging B.V.as described in paragraphs 3.8 and 3.9 in Part 8: Additional Information.

4. Receipt of net proceeds of the Global Offer of £65 million, being gross proceeds of £75 million less fees of £10 million (assumingthat the full discretionary fee is paid to the Underwriters) as described in Part 3: The Global Offer.

5. Redemption of the preference shares issued on 27 June 2006 as described in paragraph 3.5.3 in Part 8: Additional Information.

6. No adjustment has been made for the purchase by the Xchanging Group of the XHRS and XPS minority interests.

7. No adjustment has been made for trading activity since 31 December 2006.

8. There was no deferred tax adjustment in respect of the above adjustments.

9. This pro forma financial information does not constitute statutory accounts within the meaning of section 240 of the CompaniesAct.

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PART 7: REGULATION

1. REGULATED ENTITIES IN THE GROUP

Certain entities in the Group are subject to regulation in the UK and Germany in respect of theinsurance intermediation and banking activities which they carry on.

It should be noted that the regulations described in paragraphs 1.1 and 1.2 of this Part 7: Regulationare generally designed to protect policyholders and customers of the regulated firms rather thaninvestors.

1.1 UNITED KINGDOM

1.1.1 Regulatory

Following the implementation of the EU Insurance Mediation Directive, since 14 January 2005UK incorporated insurance intermediaries have been subject to regulation by the FSA underFSMA.

XITS is an insurance intermediary which is authorised and regulated by the FSA under FSMA.XITS is authorised to carry on the regulated insurance intermediation activities of arranging(bringing about) deals in non-investment insurance contracts and agreeing to carry on thisregulated activity. XITS is not authorised to hold client money and its capital resourcesrequirement is set accordingly at 2.5% of its annual income from its regulated insuranceintermediation activities.

XBS submitted an application to the FSA on 20 December 2006 for authorisation to carry onregulated insurance intermediation activities relating to the EP entered into with Aon. These arethe activities of arranging (bringing about) deals in non-investment insurance contracts, assistingin the administration and performance of a non-investment insurance contract and agreeing tocarry on these regulated activities. XBS does not intend to hold client money and it is thereforeanticipated that XBS’s capital resources requirement will be set at 2.5% of its annual incomefrom its regulated insurance intermediation activities.

As an interim measure pending XBS’s authorisation, Aon has appointed XBS as its appointedrepresentative under FSMA to carry on the above-mentioned insurance intermediation activities.

The ability of XITS (and XBS when authorised) to conduct its business depends on compliancewith applicable legal and regulatory requirements. In the UK, these requirements cover suchareas as:

� prudential supervision, as set out in the Prudential Sourcebook for Mortgage and HomeFinance Firms, and Insurance Intermediaries (‘‘MIPRU’’). These rules require insuranceintermediaries to take out and maintain sufficient professional indemnity insurance and tomaintain adequate capital resources and to ensure that they are able to meet their liabilitiesas they fall due;

� internal systems and controls and an approved persons regime, whereby the FSA mustapprove persons carrying on certain key functions identified by the relevant rules;

� high level requirements in the FSA’s Principles for Business;

� reporting; and

� requirements as to the conduct of business with customers.

Failure to comply with the relevant legal and regulatory requirements could lead to disciplinaryaction (including public statements and censures and/or financial penalties), requirements toprovide redress or restitution, an individual being prohibited from carrying out specifiedfunctions, a variation of permission or ultimately the revocation of an authorisation. Breaches ofcertain FSA rules by an authorised firm may also give a private person that suffers loss as a resultof the breach a right of action against the authorised firm for damages.

The FSA has wide powers under FSMA, particularly powers of intervention and investigation.The FSA has the power to require an authorised firm to provide specified information or producespecified documents reasonably required by the FSA in connection with the exercise of itsfunctions under FSMA. The FSA may also require the authorised firm (or any member of its

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group) to provide the FSA with a report (prepared by a person nominated or approved by theFSA) on any matter in relation to which it has required or could require information orproduction of documents.

1.1.2 Change in Control Regime

In the UK, the FSA regulates the acquisition of control over UK authorised firms. The priorapproval of the FSA is required of any person proposing to acquire control of a UK authorisedperson under Part XII of FSMA. For these purposes, a person acquires control over a UKinsurance intermediary if such person holds 20% or more of the shares in a UK insuranceintermediary or its parent, or is entitled to exercise or control the exercise of 20% or more of thevoting power at general meetings of the UK insurance intermediary or its parent.

Accordingly, any person who alone, or together with any associates, proposes to acquire 20% ormore of the shares in Xchanging plc would become a controller of XITS and would require priorapproval of the FSA.

The FSA has up to three months from the date on which it receives the notification either toapprove the proposal or to object to the proposal. Such approval may be unconditional or subjectto such conditions as the FSA considers appropriate. If this three month period expires and theFSA has not objected to the proposal, approval is deemed to be given.

In considering whether to grant or withhold its approval to the proposal, the FSA must besatisfied both that the acquirer is a fit and proper person to have control over the UK authorisedfirm and that the interests of consumers would not be threatened by its acquiring control.

Where approval is granted, subsequent notification of the relevant change in control must bemade to the FSA when the person actually acquires control.

The acquisition of control (including by way of a transfer of shares or acquiring a right to beissued shares) or reduction of control in breach of the notification requirements contained inFSMA is a criminal offence. In addition, where shares are acquired in contravention of a noticeof objection from the FSA or a condition imposed on an approval, the FSA has certain powers todeclare the transfer of shares void to prevent the exercise of voting rights or the payment ofdividends in relation to those shares.

1.1.3 Regulatory Changes in the United Kingdom and at a European Level relevant to InsuranceIntermediation

The FSA has restructured its Handbook in relation to prudential standards (largely as aconsequence of implementing the Capital Requirements Directive). With effect from 1 January2007, the FSA Handbook now includes a separate sourcebook, MIPRU, governing prudentialrequirements for insurance intermediaries, mortgage and home finance firms.

Other recent and future regulatory developments in the insurance intermediation sector that mayaffect XITS and XBS include:

(a) Contract certainty

In December 2004, the FSA challenged firms conducting general insurance business to find asolution to the issue of contract certainty (i.e. achieving complete and final agreement of allterms in insurance contracts before the inception of risk under them). From December 2006,the FSA expects all such firms to be able to demonstrate that they are achieving contractcertainty, which includes having in place systems and controls to support data collection andto capture information on any contracts not achieving contract certainty. They must also takesteps to address the legacy issue (i.e. contracts of insurance previously entered into withoutany terms or policy having been issued to the customer). The FSA has stated that contractcertainty is a supervisory priority for 2007 and any firms falling behind the rest of the marketwill be subject to the full range of regulatory sanction, including where necessaryconsideration of enforcement action. A small proportion of document validation servicescarried on by one entity in the Group has moved to a pre-inception and pre-bind basis and isnow undertaken by XITS, away from post-bind which, before the advent of the FSA’scontract certainty challenge to the market, was the norm for Lloyd’s and the London market.

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(b) EU inquiry into the Business Insurance Sector

On 13 June 2005, the European Commission (the ‘‘Commission’’) launched two EU-wideFinancial Markets sector investigations pursuant to Article 17 of Regulation 1/2003,specifically into the business insurance and retail banking sectors. The business insurancesector inquiry (the ‘‘Inquiry’’) aims at providing the Commission with a better understandingof the functioning of the sector, which would allow the Commission to detect distortions ofcompetition that, where appropriate, could then be tackled through antitrust enforcement,either by the Commission or by Member States’ competition authorities. The Inquiry hasfocused on the following five areas: financial aspects of the business insurance sector;duration of contracts in the business insurance sector; reinsurance; structure, function andremuneration of distribution channels; and horizontal co-operation among insurers.In January 2007, the Commission published an interim report in respect of the Inquiry (the‘‘Interim Report’’). The Commission’s main concerns raised in the Interim Report in respectof its examination of distribution channels include:

� the potential conflict of interest where brokers act both as adviser to their customersand also as a distribution channel for the insurer, often with underwriting powers andbinding authorities;

� conflicts of interest relating to the remuneration of intermediaries including the use ofcontingent commissions. A contingent commission is very broadly a payment made byan insurer to an intermediary based on the achievement of agreed targets, relating tothe business placed by the intermediary with that insurer. The Commission is focusingon the issue of contingent commissions following the ‘‘Spitzer’’ investigation in theUnited States and intends to examine this issue further;

� the overall lack of transparency of intermediaries’ remuneration, which the Commissionintends to examine further; and

� insurers prohibiting brokers from rebating commission, another issue which theCommission intends to examine further.

The Commission intends to conduct an additional targeted round of investigative steps withvarious stakeholders. The Commission also launched a public consultation on the variousissues raised in its Interim Report, which ended on 10 April 2007. On 9 February 2007 apublic hearing took place in Brussels to discuss the Interim Report. The final report of theInquiry is scheduled to be published in the summer of 2007. The Commission may proposeregulatory changes to deal with the issues raised in the Inquiry and it may bring individualcompetition enforcement proceedings for breaches of Articles 81 and 82 of the EC Treaty. Abreach of Article 81 or 82 can lead to the imposition of serious penalties, including fines ofup to 10% of worldwide turnover as well as a requirement that the prohibited conduct cease.Prior to the publication of the final report relating to the Inquiry, it is difficult for thedirectors to predict the impact of this investigation on XITS and XBS. It is possible that theInquiry could result in the introduction of changes to the regulation of conflicts of interestsand remuneration as regards insurance intermediaries. To the extent that such changes applysolely to insurance intermediaries which advise insureds on insurance policies while acting asa distribution channel for insurers under those policies for a commission from those insurers,it is likely that XITS and XBS would fall outside the scope of such regulatory changes.However, to the extent that any changes to the regulation of conflicts of interests andremuneration have a wider application and apply to other insurance intermediaries (inaddition to insurance intermediaries which advise insureds on insurance policies while actingas a distribution channel for insurers under those policies for a commission from thoseinsurers), such regulatory changes could potentially affect XITS and XBS. In this case, suchregulatory changes could result in an increase in XITS’ and XBS’ compliance costs andgreater disclosure being required by XITS and XBS.

(c) Financial Services Compensation Scheme (the ‘‘FSCS’’)

The FSA has set out proposals in a consultation paper published in March 2007 (the‘‘Consultation Paper’’) to reform the funding of the FSCS. The FSCS is the UK’s statutoryfund of last resort that pays compensation to a consumer where they have a valid claimagainst an FSA authorised firm that is unable, or likely to be unable to pay claims against it.

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The publication of the Consultation Paper has highlighted that the FSA is proposing thatregulated wholesale firms (firms which do not deal with consumers) should make a newseparate and explicit contribution to the compensation costs of the FSCS.

The FSA’s proposals at this stage are broadly to make it possible to have recourse to theregulated wholesale sector for a proportionate contribution to the funding of the FSCS onlyif a catastrophic event has occurred and if the funding from regulated firms undertakingretail business has been exhausted. The FSA intends to consult further on the proposals inrespect of funding by the wholesale sector later on this year in a FSCS Funding ReviewSupplementary consultation paper. The FSA does not envisage its proposals beingimplemented before 1 April 2009.

Assuming the FSA’s proposals for funding by the wholesale sector are implemented, thiswould result in an increase in XITS’ and XBS’ costs of being in business.

1.2 GERMANY

1.2.1 Principal laws and regulators

Xtb is a German credit institution subject to supervision and regulation by German supervisoryauthorities, namely the German Financial Markets regulator, the Federal Financial MarketsSupervisory Authority (Bundesanstalt fur Finanzdienstleistungsaufsicht, ‘‘BaFin’’), and the Germancentral bank (Deutsche Bundesbank, ‘‘Bundesbank’’). Xtb is licenced to conduct banking businessin accordance with the KWG. The KWG contains the principal rules for German bankingsupervision, including the requirements for a banking licence, and also regulates the generalbusiness activities, organisational requirements (including internal audit and risk management)and capital adequacy of credit institutions.

1.2.2 Supervision by the BaFin

The BaFin is authorised to issue regulations, circulars and publications implementing theprovisions of the German banking laws and other laws affecting German banks. The mainpurpose of the German banking laws is to protect the soundness and proper working of theGerman banking system. The KWG also implements, or is the basis for implementing certaindirectives of the European Union relating to banks and certain recommendations on bankingsupervision issued by the Basle Committee on Banking Regulations and Supervisory Practices atthe Bank for International Settlements (the ‘‘Basle Committee’’), including the BasleCommittee’s report on International Convergence of Capital Measurement and CapitalStandards: a Revised Framework published in June 2004 (‘‘Basle II’’). The Basle II rules andrelated EU directives have been implemented into German law by amending the KWG and bythe new Solvability Regulation (Solvabilitatsverordnung, ‘‘SolvV’’) which came into force on1 January 2007 subject to certain transitional provisions. Xtb is currently implementing the BaselII banking regulation requirements regarding solvency and capital adequacy. Depending on theoutcome of Xtb’s current internal risk assessment exercise, which is to be overseen by theregulator (BaFin), Xtb may require an additional capital injection in 2007 or 2008. Such aninjection would need to be funded by Xtb shareholders in proportion to their holdings in Xtb.The Group may, therefore, be called upon to increase its level of committed investment in Xtb.

The BaFin supervises the operations of German banks to ensure that they conduct their businessin accordance with the provisions of the KWG and other applicable German laws andregulations. Particular emphasis is placed on compliance with capital adequacy and liquidityrequirements, large exposure limits and restrictions on certain activities imposed by the KWGand the regulations issued thereunder.

Following the merger of the three former German regulatory authorities into the BaFin, theBaFin is also the competent authority to monitor compliance with the rules of conduct and othermatters including transaction reporting under the German Securities Trading Act(Wertpapierhandelsgesetz, ‘‘WpHG’’). In respect of the forthcoming implementation of theMarkets in Financial Instruments Directive (‘‘MiFID’’) into German law (due to take placein November 2007), the scope of application of the WpHG will become much broader and theprovisions relating to the rules of conduct, organisational requirements and transparencyrequirements will be revised and new requirements, such as best execution, will be enacted.

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Organisational requirements will also include provisions on outsourcing and the documentationof services provided by third parties.

1.2.3 Supervision by the Bundesbank

The BaFin carries out its supervisory role in close cooperation with the Bundesbank in itscapacity as the German central bank. Even though the BaFin and the Bundesbank work closelytogether, the functions of the BaFin and the Bundesbank are distinct. While the authority to issueadministrative orders (Verwaltungsakte) binding on banks is vested solely with the BaFin, theBaFin must consult with the Bundesbank before it issues regulations (Verordnungen) if theregulations affect the functions of the Bundesbank. This would be the case, for example, forregulations affecting capital adequacy and liquidity requirements.

The Bundesbank is responsible for organising the collection and analysis of several statistics andreports relating to capital adequacy requirements, liquidity requirements and certain data fromGerman banks. These statistics and reports are submitted to the regional offices(Hauptverwaltungen) of the Bundesbank responsible for the district in which the bank has itscorporate seat. Xtb reports to the regional office based in Frankfurt am Main.

Since the commencement of stage three of the European Economic and Monetary Union(‘‘EMU’’) on 1 January 1999, responsibility for monetary policy and control, including minimumreserve requirements, in those states that participate in the EMU, such as Germany, lies with theEuropean Central Bank.

1.2.4 Capital adequacy and liquidity requirements

German capital adequacy requirements relate to counterparty risk (Adressrisiko), operational risk(operationelles Risiko) and market risk (Marktrisiko) (including certain risk relating to optiontransactions). Counterparty risk and operational risk must be backed by modified availablecapital (modifiziertes verfugbares Eigenkapital), whereas market risk can be backed by own funds,comprising modified available capital (not required for counterparty and operational risk) andtier III capital (Drittrangmittel). With respect to counterparty risk, each bank must maintain at theend of each business day a ratio of at least 8% between the modified available capital and itsrisk-weighted assets and other risk positions, including off-balance sheet items.

The KWG and the SolvV provide for numerous detailed provisions as regards the calculation ofthe capital of banks and the relevant risk positions subject to capital adequacy requirements.Capital adequacy requirements must also be met on a consolidated basis by entire banking groupsor financial conglomerates.

Each bank must invest its funds in a manner that guarantees sufficient liquidity at all times. TheKWG and the Liquidity Regulation (Liquiditatsverordnung, ‘‘LiqV’’) establish certain liquidityrequirements for credit institutions. According to the LiqV, the payment obligations of a creditinstitution are to be divided into four maturity periods and compared with the means of paymentduring the applicable maturity period. The liquidity of a credit institution is considered sufficientif its payment obligations during each relevant maturity period do not exceed its means ofpayment during such period.

1.2.5 Limitation on large exposures

The KWG, together with the Large Exposure Regulation (Großkredit- undMillionenkreditverordnung), limits the concentration of credit risks through restrictions on largeexposures (Großkredite) of banks and groups of institutions. A bank must report its largeexposures to the Bundesbank and notify the BaFin and the Bundesbank if it exceeds certainthresholds.

1.2.6 Reporting requirements

In order to enable the BaFin and the Bundesbank to monitor compliance with the KWG andother applicable legal requirements, and to obtain information on the financial condition ofbanks, BaFin and the Bundesbank require the filing of comprehensive information by Germanbanks.

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1.2.7 Enforcement of laws and regulations governing the supervision of banks; disclosure and audits

To ensure that German banks fully comply with all applicable legal regulatory and reportingrequirements, the BaFin requires every bank to have an effective internal auditing departmentadequate in size and quality and procedures for monitoring and controlling the bank’s activities.Further, each bank must establish a written plan of organisation which must set forth theresponsibilities of its employees, its operating procedures and the lines of responsibility up to thebank’s management with respect to the bank’s activities. An internal audit department mustexamine compliance with this plan and these responsibilities and procedures. In order to securecompliance with the KWG and the regulations issued thereunder, the BaFin and the Bundesbankmay require information and documents from a bank, and the BaFin may conduct investigationswithin a bank without having to give any particular reason. In addition, the BaFin may attendmeetings of the bank’s supervisory board and of the bank’s shareholders and may require suchmeetings to be convened. If the BaFin discovers irregularities, it can impose a variety ofsanctions. It can require the bank to dismiss managers or prohibit them from continuing theiractivities. If a bank’s own funds are insufficient or liquidity requirements are not met and theseshortcomings are not corrected within a period set by the BaFin, it can prohibit or restrict theprofit distributions or lending activities.

1.2.8 Deposit protection

Under the German Deposit Protection and Investor Compensation Act (Einlagensicherungs- undAnlegerentschadigungsgesetz) each German bank must be a member of one of the statutorycompensation funds licenced and supervised by the BaFin. Xtb is a member of the compensationfund administered by the Entschadigungseinrichtung deutscher Banken GmbH. Thiscompensation fund is responsible for collecting and managing the contributions of member banksand for satisfying any claims for compensation in accordance with the provisions of the DepositProtection and Investor Compensation Act. Xtb is also a member of the deposit insurance fundof the Bundesverband deutscher Banken, a deposit insurance fund established voluntarily by themembers of the Association of German Banks. Within the limits set under its statutes, thevoluntary deposit insurance fund secures customer claims that, because of their amount andscope, are not covered by the Deposit Protection and Investor Compensation Act.

1.2.9 Supervision of investment services and of safe custody and securities settlement services

Investment services are subject to the provisions of the WpHG and certain aspects of safe custodyand securities settlement services are regulated by the German Safe Custody Act (Depotgesetz,‘‘DepotG’’). The BaFin supervises the compliance with the WpHG and the DepotG.

To the extent safe custody services are provided, the DepotG and the Requirements on theProper Conduct of Safe Custody Business and the Settlement of Securities Delivery Obligationsdated 21 December 1998 require in particular that the relevant assets are kept separate andprovide for details regarding the monitoring of customers’ assets.

1.2.10 Money Laundering

The German Money Laundering Act (Geldwaschegesetz, ‘‘GwG’’) specifies certain identificationand organisational requirements for credit institutions. Under the GwG, an identificationrequirement arises upon the beginning of a business relationship as well as upon the acceptanceof any cash, securities or precious metals equal to or exceeding an amount of A15,000. Accordingto the GwG, German credit institutions must designate a money laundering officer who has to actas contact person for the law enforcement authorities in the prosecution of money launderingoperations and who is responsible for the enforcement of the GwG. Credit institutions mustreport suspicious transactions. Further requirements (including a number of publications by theBaFin) concern the organisation within a bank to combat money laundering, including threatanalysis.

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2. REGULATION APPLICABLE TO CUSTOMERS OF THE GROUP IN RELATION TO THEOUTSOURCING OF THEIR ACTIVITIES

Customers of the Group, whose activities are regulated in the jurisdiction in which they are based,may be subject to regulation regarding the outsourcing of their activities to entities in the Group. Forexample:

� in the UK, a regulated firm which outsources certain of its functions must comply with a range ofprinciples, rules and guidance and must notify the FSA before entering into any materialoutsourcing. The FSA’s rules and guidance cover matters such as the supervision of the dischargeof outsourced functions by a service provider, systems and controls arrangements and paying dueregard to the interests of customers and treating them fairly. A regulated firm is not able tocontract out its regulatory obligations;

� under German law, a credit institution or a financial services institution which outsources certainof its functions is obliged to notify the BaFin of the outsourcing. According to applicableregulatory requirements, an outsourcing agreement must be entered into which, inter alia,ensures that the outsourced functions can still be supervised by the outsourcing institution and itsregulators; and

� Where customers of the Group are subject to regulation under Section 404 of the Sarbanes OxleyAct 2002, they need to demonstrate that they have effective controls in place to protect theirfinancial statements. In support of this, relevant areas of the Group provide independentlyaudited SAS70 Type 2 reports which provide assurance to the Group’s customers that relevantkey controls are in place and effective.

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PART 8: ADDITIONAL INFORMATION

1. RESPONSIBILITY

1.1 The Company and the Directors accept responsibility for the information contained in thisdocument. To the best of the knowledge of the Company and the Directors (who have taken allreasonable care to ensure that such is the case), the information contained in this document is inaccordance with the facts and contains no omission likely to affect its import.

2. INFORMATION

2.1 The Company was incorporated in England and Wales on 16 May 2006 with registered number5819018 under the Act as a public company limited by shares with the name Tabbyview PLC.

2.2 The Company changed its name to Xchanging plc on 27 June 2006.

2.3 The principal legislation under which the Company operates is the Act. The business of theCompany and its principal activity, is to act as the ultimate holding company of the Group.

2.4 The registered office of the Company is at 34 Leadenhall Street, London EC3A 1AX(Tel. No. +44 (0) 20 7780 6999).

3. SHARE CAPITAL

3.1 The authorised, issued and fully paid share capital of the Company as at 31 December 2006 was asfollows:

Authorised Issued and fully paid

Number Amount (£) Nominal Value Number Amount (£)

99,998 shares £99,998 £1.00 each 50,000 divided into £50,0002 ordinary shares of

£1.00 each and 49,998redeemable preference

shares of £1.00 each

3.2 The authorised, issued and fully paid share capital of the Company immediately followingAdmission is expected to comprise of Shares as follows:

Authorised Issued and fully paid

Number Amount (£) Nominal Value Number Amount (£)

350,000,000 £17,500,000 £0.05 each 205,578,408 10,278,920.40

3.3 On incorporation the authorised share capital of the Company was £50,000 divided into 50,000ordinary shares of £1.00 each, of which one was issued nil paid to Clifford Chance NomineesLimited and one was issued nil paid to Clifford Chance Secretaries Limited, the subscribers to theMemorandum of Association.

3.4 Since incorporation there have been the following changes in the authorised and issued sharecapital of the Company:

3.4.1 to obtain the Company’s trading certificate pursuant to section 117 of the Act, the authorisedshare capital of the Company was increased on 27 June 2006 from £50,000 to £99,998 by thecreation of 49,998 redeemable preference shares of £1.00 each, the terms of which providefor automatic redemption by the Company at par upon Admission, and 49,998 redeemablepreference shares of £1.00 each were issued on that date for cash fully paid, against anundertaking by the subscriber to pay £49,998 to the Company on or before 30 September2008; and

3.4.2 to insert the Company as the parent company of the Group, on 31 July 2006, the Companyentered into a takeover offer agreement (the ‘‘Takeover Offer Agreement’’), details of whichare set out in paragraph 18.9 of this Part 8: Additional Information. Under the terms of theTakeover Offer Agreement, shareholders of Xchanging B.V. (the previous holding companyof the Group) agreed to exchange their shares in Xchanging B.V. for shares in the Company.The offer comprised in the Takeover Offer Agreement has since been extended to all othershareholders of Xchanging B.V. and has been accepted by them under the terms of

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individual employee offer letters with Xchanging B.V. and the Company (the ‘‘EmployeeOffer Letters’’). In addition, employees holding options over shares in Xchanging B.V. underthe Employee Share Plans have agreed to exchange their options for options of equivalentvalue over Shares under the terms of option rollover letters with Xchanging B.V. and theCompany (the ‘‘Option Rollover Letters’’).

3.5 In anticipation of Admission, the shareholders of the Company resolved at the annual generalmeeting of the Company held on 23 April 2007 that:

3.5.1 each issued and unissued ordinary share of £1.00 be sub-divided into 20 ordinary shares of 5peach;

3.5.2 the authorised share capital of the Company be increased from £99,998 to £17,549,998 by thecreation of an additional 349,000,000 ordinary shares of 5p each;

3.5.3 subject to the redemption of the redeemable preference shares of £1 each, the authorisedshare capital of the Company be reduced from £17,549,998 comprising of 350,000,000 Sharesand 49,998 redeemable preference shares of £1 each to £17,500,000 comprising of350,000,000 Shares;

3.5.4 in substitution for all existing authorities and/or powers, the Directors be generally andunconditionally authorised for the purposes of section 80 of the Act to exercise all powers ofthe Company to allot relevant securities up to an aggregate nominal amount of £17,499,998,such authority to expire on the earlier of 22 April 2012 and the conclusion of the annualgeneral meeting of the Company held in 2012 (but the Company may make an offer oragreement which would or might require relevant securities to be allotted after the expiry ofthis authority and the Directors may allot relevant securities pursuant to that offer oragreement as if this authority has not expired) provided that, following Admission on30 April 2007, or such later date, being not later than 30 June 2007, as the Directors maydecide, the authority conferred on the Directors under this paragraph is restricted so that itwill not be exercisable to the extent that the amount of the authorised but unissued sharecapital of the Company would exceed one-third of the issued share capital of the Companyfollowing Admission;

3.5.5 the report and accounts for the period ended 31 December 2006, together with theDirectors’ reports and auditors reports on those accounts be approved;

3.5.6 PricewaterhouseCoopers LLP be reappointed as auditors to hold office from the conclusionof the meeting until the conclusion of the next general meeting of the Company at whichaccounts are laid and that the Directors be authorised to fix their remuneration;

3.5.7 each of the following be re-elected as a director: John Robins; David Andrews; RichardHoughton; Adele Browne; David Hodgson; Tom Tinsley; Nigel Rich; StephenBrenninkmeijer; Dennis Millard; John Bramley; Johannes Maret; and Friedrich CarlJanssen;

3.5.8 the Company be authorised to: (i) make donations to EU political organisations, notexceeding £50,000 in aggregate; and (ii) incur EU political expenditure, not exceeding£50,000 in aggregate, in the period beginning on the date of the passing of this resolutionand expiring on the earlier of 22 July 2008 and the conclusion of the annual general meetingof the Company held in 2008 provided that the combined aggregate amount of donationsmade and EU political expenditure incurred pursuant to this authority shall not exceed£50,000. Such authority shall extend to enable any such donation to be made or EU politicalexpenditure to be incurred either by the Company or by its wholly owned subsidiary,Xchanging UK Limited. For the purposes of this resolution, ‘‘donation’’, ‘‘EU politicalorganisation’’ and ‘‘EU political expenditure’’ have the meanings ascribed to them in PartXA of the Act;

3.5.9 the Directors be generally empowered pursuant to section 95 of the Act to allot equitysecurities within the meaning of section 94(2) of the Act for cash, pursuant to the authorityreferred to in paragraph 3.5.4 of this Part 8: Additional Information as if section 89(1) of theAct (statutory pre-emption rights) did not apply to such allotment, such power to expire onthe earlier of 22 April 2012 and the conclusion of the annual general meeting of theCompany held in 2012 (but the Company may make an offer or agreement which would or

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might require equity securities to be allotted after the expiry of this power and the Directorsmay allot equity securities pursuant to such offer or agreement as if this power had notexpired), provided that such authority be limited to:

(a) the allotment of up to 37,500,000 ordinary shares of 5p each pursuant to the GlobalOffer;

(b) the allotment of equity securities in connection with a rights issue, open offer or anyother pre-emptive offer in favour of ordinary shareholders but subject to suchexclusions as may be necessary to deal with fractional entitlements or legal orpractical problems under any laws or requirements of any regulatory body in anyjurisdiction; and

(c) the allotment (other than pursuant to (a) and (b) above) of equity securities for cashup to an aggregate nominal amount equal to 5% of the issued share capital of theCompany immediately following Admission.

The power conferred on the Directors by the resolution set out in this paragraph 3.5.9 ofPart 8: Additional Information shall also apply to a sale of treasury shares, which is anallotment of equity securities by virtue of section 94(3A) of the Act, but with the omission ofthe words ‘‘pursuant to the general authority conferred by the authority referred toresolution 4’’ (being the resolution set out in paragraph 3.5.4 of this Part 8: AdditionalInformation);

3.5.10 conditional on Admission becoming effective, the Articles of Association be adopted in placeof the existing articles of association;

3.5.11 conditional on Admission becoming effective, the Company be generally and unconditionallyauthorised to make one or more market purchases (within the meaning of section 163(3) ofthe Act) of Shares provided that:

(a) the maximum aggregate number of Shares authorised to be purchased is 20,000,000;

(b) the minimum price which may be paid for a Share is its nominal value;

(c) the maximum price which may be paid for a Share is an amount equal to 105% of theaverage of the middle market quotations for a Share as derived from The LondonStock Exchange Daily Official List for the five business days immediately precedingthe day on which that Share is purchased;

(d) this authority expires at the earlier of 22 July 2008 and the conclusion of the annualgeneral meeting of the Company held in 2008; and

(e) the Company may make a contract to purchase Shares under this authority before theexpiry of the authority which will or may be executed wholly or partly after the expiryof the authority, and may make a purchase of Shares in pursuance of any suchcontract.

3.6 On Admission of the unissued share capital, a maximum of 22,766,236 Shares will be reserved forissue in respect of options and awards granted under the Company’s Employee Share Plans (detailsof which are set out in paragraph 8 of this Part 8: Additional Information).

3.7 The share capital history for Xchanging B.V. since 1 April 2004 is as set out below.

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3.7.1 The authorised, issued and fully paid share capital of Xchanging B.V. as at 1 April 2004 wasas follows:

NominalAuthorised Issued and fully paidvalueShare Class Number Amount (E) per share (E) Number Amount (E)

Convertible Preference Class A........ 19,500,000 A195,000.00 A0.01 19,031,250 A190,312.5Convertible Preference Class B........ 4,826,255 A48,262.55 A0.01 4,826,255 A48,262.55Convertible Preference Class C........ 20,000,000 A200,000.00 A0.01 0 A0.00Convertible Preference ...................... 11,151,189 A111,511.89 A0.01 0 A0.00Class A Common................................ 1,785,714 A17,857.14 A0.01 1,785,714 A17,857.14Class B Common ................................ 1,785,714 A17,857.14 A0.01 1,785,714 A17,857.14Class C Common................................ 1,785,715 A17,857.15 A0.01 1,785,715 A17,857.15G Shares .............................................. 100,000 A1,000.00 A0.01 84,440 A844.40Scheme A Shares................................ 2,937,500 A29,375.00 A0.01 937,500 A9,375.00Scheme B Shares ................................ 126,000 A1,260.00 A0.01 126,000 A1,260.00Common............................................... 53,581,245 A535,812.45 A0.01 3,836,681 A38,366.81

TOTAL ................................................. 117,579,332 E1,175,793.32 34,199,269 E341,992.69

3.7.2 On 21 April 2004, Xchanging B.V. bought back 3,333 G Shares from Wolf Peter Graeser,3,333 G Shares from Michael Peine and 1,111 G Shares from John Benjamin at the nominalvalue of A0.01 each and a total purchase price of A77.77.

3.7.3 On 27 April 2004, Xchanging B.V. issued 15,556 Common Shares at an issue price roundedto A3.31 per share to Franz Knoblauch for consideration of A51,490.36 in accordance with therules of the Unapproved Share Option Plan and pursuant to notice of exercise of options.

3.7.4 On 28 May 2004, Xchanging B.V. issued 62,500 Common Shares at an issue price rounded toA0.45 per share to David Rich-Jones for consideration of A28,125; 500 Common Shares at anissue price rounded to A1.03 per share to Sarah Stephenson for consideration of A515; 20,000Common Shares at an issue price rounded to A1.15 per share to John Doherty forconsideration of A23,000 and 25,000 Common Shares at an issue price rounded to A1.15 pershare to Peter Rushton for consideration of A28,750 in accordance with the rules of theApproved Share Option Plan and pursuant to notices of exercise of options.

3.7.5 On 17 June 2004, Xchanging B.V. issued 28,267 Common Shares at an issue price rounded toA1.51 per share for 27,728 Common Shares for consideration of A41,869.28 and at an issueprice rounded to A3.33 per share for 539 Common Shares for consideration of A1,794.87 toJohn Benjamin in accordance with the rules of the Approved Share Option Plan andpursuant to notice of exercise of options.

3.7.6 On 19 July 2004, Xchanging B.V. issued, at an issue price rounded to A3.28 per share, 6,167Common Shares to Bernd Rausch for consideration of A20,220.36 in accordance with therules of the Unapproved Share Option Plan and pursuant to notices of exercise of optionsand 25,277 Common Shares to Rajendra Pandhare for consideration of A82,878.23 inaccordance with the rules of the Unapproved Share Option Plan in respect of 17,952Common Shares and in accordance with the rules of the Approved Share Option Plan inrespect of 7,325 Common Shares, both pursuant to notices of exercise of options.

3.7.7 On 25 August 2004, Xchanging B.V. issued 3,792 Common Shares at an issue price roundedto A3.31 per share to Anne Marie Elliott for consideration of A12,551.52; 4,979 CommonShares at an issue price rounded to A3.39 per share to Paul Leighton for consideration ofA16,892.25 and 4,889 Common Shares at an issue price rounded to A3.30 per share to DarenJonathan Briant for consideration of A16,121.48 in accordance with the rules of theApproved Share Option Plan and pursuant to notices of exercise of options.

3.7.8 On 25 October 2004, Xchanging B.V. bought back 3,333 G Shares for no valuableconsideration from Dorothee Ritz.

3.7.9 On 9 December 2004, Xchanging B.V. issued 4,000 Common Shares, at an issue pricerounded to A0.45 per share for 2,500 Common Shares and A1.03 per share for 1,500Common Shares, to Louise Archer for consideration of A2,670; 4,310 Common Shares at anissue price rounded to A3.31 per share to John Doherty for consideration of A14,266.10;10,000 Common Shares at an issue price rounded to A3.31 to Thomas Evans forconsideration of A33,100; 500 Common Shares at an issue price rounded to A3.31 per share

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to David Joseph for consideration of A1,655 and 46,875 Common Shares at an issue pricerounded to A1.03 per share to Bryony Moore for consideration of A48,281.25 in accordancewith the rules of the Approved Share Option Plan and pursuant to notices of exercise ofoptions.

3.7.10 On 7 March 2005, following the increase in the authorised share capital of Xchanging B.V. toinclude 1,818,181 Convertible Preference Class D Shares, Xchanging B.V. issued 1,818,181Convertible Preference Class D Shares to Sal. Oppenheim in consideration for the paymentto Xchanging B.V. by Sal. Oppenheim of £10,000,000.

3.7.11 On 13 May 2005, Xchanging B.V. bought back 1,785,714 Class B Common Shares fromDavid Andrews for consideration of £500,000.

3.7.12 On 1 June 2005, Xchanging B.V. issued 500 Common Shares at an issue price rounded toA3.33 per share to Adele Browne for consideration of A1,665; 62,500 Common Shares at anissue price rounded to A0.45 per share to Clive Buesnel for consideration of A28,125; 5,000Common Shares at an issue price rounded to A3.39 per share to Hamish Coop forconsideration of A16,950; 2,000 Common Shares at an issue price rounded to A3.33 per shareto Mark Sherwood-Edwards for consideration of A6,660; 1,500 Common Shares at an issueprice rounded to A3.33 per share to Anthony Gerrard for consideration of A4,995; 6,503Common Shares at an issue price rounded to A3.31 per share to Peter Rushton forconsideration of A21,524.93; 5,000 Common Shares at an issue price rounded to A3.33 pershare to Neil Watkinson for consideration of A16,650 and 15,000 Common Shares at an issueprice rounded to A1.15 per share for 5,000 Common Shares and at an issue price rounded toA1.46 per share for 10,000 Common Shares to Gary Whitaker for consideration of A20,350 inaccordance with the rules of the Approved Share Option Plan and pursuant to notices ofexercise of options.

3.7.13 On 24 November 2005, Xchanging B.V. issued 14,490 Common Shares at an issue pricerounded to A3.30 per share to David Bauernfeind for consideration of A47,780.78; 14,087Common Shares at an issue price rounded to A3.28 per share to Peter George forconsideration of A46,189.86; 10,000 Common Shares at an issue price rounded to A3.28 pershare to Nishil Khimasia for consideration of A32,790; 2,708 Common Shares at an issueprice rounded to A5.75 per share to Nitin Singhal for consideration of A15,576.42; and 1,500Common Shares at an issue price rounded to A3.34 per share to Sarah Stephenson forconsideration of A5,002.50 in accordance with the rules of the Approved Share Option Planand pursuant to notices of exercise of options.

3.7.14 On 23 December 2005, Xchanging B.V. issued 207 G Shares at an issue price rounded toA32.06 per share to Horst Maiwald for consideration of A6,637.04 in accordance with therules of the Xchanging Group Unapproved G Share Option Plan and 5,000 Common Sharesat an issue price rounded to A3.30 per share to Jorg Brand for consideration of A16,490 inaccordance with the rules of the Approved Share Option Plan pursuant to notices of exerciseof options.

3.7.15 On 29 March 2006, Xchanging B.V. issued 1,820 Common Shares at an issue price roundedto A3.33 per share to David White for consideration of A6,060.60 in accordance with the rulesof the Approved Share Option Plan and pursuant to notice of exercise of options.

3.7.16 On 8 May 2006, Xchanging B.V.’s authorised share capital was increased to include 2,000,000Convertible Preference Class E Shares.

3.7.17 On 8 May 2006, Xchanging B.V. issued 1,332,524 Convertible Preference Class E Shares toGeneral Atlantic Partners (Bermuda), L.P.; 219,807 Convertible Preference Class E Sharesto GAP-W International, LLC; 109,284 Convertible Preference Class E Shares to GapStarLLC; 231,916 Convertible Preference Class E Shares of to GAP Coinvestment Partners II,L.P. and 1,489 Convertible Preference Class E Shares to GAPCO GmbH & Co. KG., all atan issue price of £5.50 per share and total purchase price of £10,422,610 in full and finalsatisfaction of the principal and interest of £10,422,610 owed by Xchanging B.V. to theGeneral Atlantic subscribers, the subject of this issue, under the terms of 1.71% SeniorConvertible Promissory Notes held by them.

3.7.18 On 10 May 2006, Xchanging B.V. issued 10,510 Common Shares at an issue price rounded toA3.30 per share to David Bauernfeind for consideration of A34,656.73 in accordance with the

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rules of the Unapproved Share Option Plan; 30,300 Common Shares at an issue pricerounded to A1.51 per share to John Benjamin for consideration of A45,785.95 in accordancewith the rules of the Unapproved Share Option Plan; 49,500 Common Shares at an issueprice rounded to A3.33 per share to Adele Browne for consideration of A165,062.82 inaccordance with the rules of the Unapproved Share Option Plan; 10,000 Common Shares atan issue price rounded to A3.39 per share for 5,000 Common Shares in accordance with therules of the Unapproved Share Option Plan and A3.28 per share for 5,000 Common Sharesin accordance with the rules of the Approved Share Option Plan to Darren Fisher for a totalconsideration of A33,357.50; 150,000 Common Shares at an issue price rounded to A3.33 pershare, 500 shares being in accordance with the rules of the Approved Share Option Plan and149,500 in accordance with the rules of the Unapproved Share Option Plan to RichardHoughton for a total consideration of A500,190.35; 80,000 Common Shares at an issue pricerounded to, respectively, A1.15 per share for 1,584 Common Shares in accordance with therules of the Approved Share Option Plan and, in accordance with the rules of theUnapproved Share Option Plan, A3.39 per share for 10,000 Common Shares, A3.33 per sharefor 8,416 Common Shares, A3.33 per share for 40,000 Common Shares and A5.57 per sharefor 20,000 Common Shares to Mike Margetts for a total consideration of A308,646.54; 4,328Common Shares at an issue price rounded to A3.30 per share to Thomas Peel forconsideration of A14,240 in accordance with the rules of the Approved Share Option Plan;150,000 Common Shares at an issue price rounded to, respectively, A3.33 per share for 6,570Common Shares in accordance with the rules of the Approved Share Option Plan and, inaccordance with the rules of the Unapproved Share Option Plan, A5.90 per share for 25,000Common Shares, A3.33 per share for 118,430 Common Shares to David Rich-Jones for atotal consideration of A564,303.79; 10,497 Common Shares at an issue price rounded to A3.31per share to Peter Rushton for consideration of A34,766.58 in accordance with the rules ofthe Unapproved Share Option Plan and 20,000 Common Shares at an issue price roundedto, respectively, A3.39 per share for 2,365 Common Shares in accordance with the rules of theApproved Share Option Plan and, in accordance with the rules of the Unapproved ShareOption Plan, A3.33 per share for 17,400 Common Shares and A3.30 per share for 235Common Shares to Gary Whitaker for a total consideration of A66,820.65, all the abovebeing pursuant to notice of exercise of options.

3.7.19 On 23 May 2006, Xchanging B.V. issued 20,000 Common Shares at an issue price rounded toA5.57 per share to Stephen Bowen for consideration of A111,452.91 in accordance with therules of the Unapproved Share Option Plan; 6,000 Common Shares at an issue pricerounded to A3.33 per share for 1,000 Common Shares and A5.57 per share for 5,000Common Shares to Ruth Craven for consideration of A31,198 in accordance with the rules ofthe Approved Share Option Plan; 8,000 Common Shares at an issue price rounded to A5.59per share to Nicholas Edwards for consideration of A44,734.40 in accordance with the rulesof the Unapproved Share Option Plan; 5,000 Common Shares at an issue price rounded toA5.57 per share to Michael Hannan for consideration of A27,863.23 in accordance with therules of the Unapproved Share Option Plan; 2,500 Common Shares at an issue pricerounded to A3.28 per share to Nicole Jones for consideration of A8,197 in accordance withthe rules of the Approved Share Option Plan and 4,485 Common Shares at an issue pricerounded to A3.33 per share to Christopher Main for consideration of A14,955.69 inaccordance with the rules of the Approved Share Option Plan and all pursuant to notices ofexercise of options.

3.7.20 On 23 June 2006, Xchanging B.V.’s authorised share capital was increased to include afurther 100,000 Convertible Preference Class A Shares.

3.7.21 On 23 June 2006, Xchanging B.V. issued 568,750 Convertible Preference Class A Shares to52nd Street Associates in full and final satisfaction of a warrant to purchase 468,750Convertible Preference Class A Shares dated 19 September 2000 (exercised on 15 February2005) from Xchanging B.V. in favour of 52nd Street Associates and a letter agreement dated23 June 2006 between Xchanging B.V. and McKinsey & Company, Inc. (in respect of anadditional 100,000 Convertible Preference Class A Shares) for an issue price of US$3.20 pershare.

3.7.22 On 1 September 2006, Xchanging B.V. cancelled 11,110 G Shares and 1,785,714 Class BCommon Shares, all held by Xchanging B.V..

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3.7.23 On 1 December 2006, Xchanging B.V. issued 14,573 Common Shares at an issue pricerounded to A1.97 per share for 7,287 Common Shares, A5.55 per share for 1,150 CommonShares both in accordance with the rules of the Approved Share Option Plan and A5.55 pershare for 6,136 Common Shares in accordance with the rules of the Unapproved ShareOption Plan to Hamish Coop for a total consideration of A54,778.12; 5,208 Common Sharesat an issue price rounded to A5.75 per share to Anthony Burke for consideration ofA29,956.42 in accordance with the rules of the Approved Share Option Plan; 15,000Common Shares at an issue price rounded to A5.57 per share to Gary Whitaker forconsideration of A83,589.68 in accordance with the rules of the Approved Share Option Plan;5,000 Common Shares at an issue price rounded to A5.59 per share to Michael Taylor forconsideration of A27,959 in accordance with the rules of the Approved Share Option Plan;16,800 Common Shares at an issue price rounded to A3.28 per share for 10,000 CommonShares and A5.59 per share for 6,800 Common Shares to Steven Beard for consideration ofA70,812.24 in accordance with the rules of the Approved Share Option Plan; 20,000Common Shares at an issue price rounded to A1.03 per share to John Robins forconsideration of A20,601.61 in accordance with the rules of the Unapproved Share OptionPlan and 15,883 Common Shares at an issue price rounded to A1.97 per share for 14,583Common Shares and A5.54 per share for 1,300 Common Shares to David White forconsideration of A35,807.38 in accordance with the rules of the Unapproved Share OptionPlan and all pursuant to notices of exercise of options.

3.7.24 On 2 February 2007, Xchanging B.V.’s authorised share capital was increased to include2,500,000 Class F Common Shares.

3.7.25 On 5 February 2007, Xchanging B.V. issued, at an issue price of £5.30 per share for allClass F Common Shares in this issue, 125,000 Class F Common Shares to AdeleBrowne for consideration of £662,500; 100,000 Class F Common Shares to CliveBuesnel for consideration of £530,000; 15,000 Class F Common Shares to Darren Fisher forconsideration of £79,500; 250,000 Class F Common Shares to David Rich-Jones forconsideration of £1,325,000; 37,500 Class F Common Shares to GaryWhitaker for consideration of £198,750; 25,000 Class F Common Shares to JonathanStratford for consideration of £132,500; 80,000 Class F Common Shares to MelissaPitt for consideration of £424,000; 75,000 Common Class F Shares to Mike Margetts forconsideration of £397,500; 125,000 Class F Common Shares to Richard Houghton forconsideration of £662,500; 50,000 Class F Common Shares to StephenBowen for consideration of £265,000; 300,000 Class F Common Shares to Steven Beard forconsideration of £1,590,000; and 33,266 Class F Common Shares to Thomas Runge forconsideration of £176,309.80. All such Class F Common Shares were issued pursuant to theSPP, with the subscription price for the shares being loaned to the subscribers listed above bythe Xchanging B.V. 2007 Employee Benefit Trust.

3.7.26 On 10 April 2007, Xchanging B.V., in accordance with the rules of the Approved ShareOption Plan, issued as fully paid 21,285 Common Shares to Mike Margetts at an exerciseprice of A1.9612 per share for consideration of A41,744.14.

3.7.27 On 10 April 2007, Xchanging B.V. in accordance with the rules of the Unapproved ShareOption Plan, issued as fully paid 13,715 Common Shares to Mike Margetts at an exerciseprice of 1.9612 per share for consideration of A26,897.86 and 35,000 Common Shares at anexercise price of A5.523 per share for consideration of A193,305.

3.7.28 On 11 April 2007, Xchanging B.V., in accordance with the rules of the Approved ShareOption Plan, issued as fully paid: 1,000 Common Shares at A0.44924 per share to JarrodNicholson for cash consideration of A449.24 and 1,000 Common Shares at an exercise priceof A1.03008 per share for consideration of A1,030.08;

3.7.29 On 19 April 2007, Xchanging B.V., in accordance with the rules of the Unapproved ShareOption Plan, issued as fully paid: 40,002 Common Shares at their par value to Clive Buesnelfor cash consideration of A400.02, together with an undertaking to pay A78,051.90 in respectof the balance of the exercise price; 36,000 Common Shares at their par value to DavidRich-Jones for cash consideration of A360, together with an undertaking to pay A70,243.20 inrespect of the balance of the exercise price; 25,000 Common Shares at their par value toGary Whitaker for cash consideration of A250, together with an undertaking to pay

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A93,302.50 in respect of the balance of the exercise price; 117,500 Common Shares at theirpar value to Johannes Maret for cash consideration of A1,175, together with an undertakingto pay A664,407.50 in respect of the balance of the exercise price; 50,000 Common Shares attheir par value to John Robins for cash consideration of A500, together with an undertakingto pay A118,804.52 in respect of the balance of the exercise price; 50,000 Common Shares toNigel Rich for cash consideration of A500, together with an undertaking to pay A395,000 inrespect of the balance of the exercise price; 50,000 Common Shares at their par value toDennis Millard for cash consideration of A500 together with an undertaking to pay A395,600in respect of the balance of the exercise price; 25,000 Common Shares at their par value toStephen Brenninkmeijer for cash consideration of A250, together with an undertaking to payA93,302.50 in respect of the balance of the exercise price; and 25,000 Common Shares attheir par value to John Bramley for cash consideration of A250, together with an undertakingto pay A93,302.50 in respect of the balance of the exercise price.

3.8 BAE Systems will exercise the BAE Warrant (which gives BAE Systems the right to subscribe forCommon Shares of Xchanging B.V.), on the day of but prior to Admission in accordance with theterms of the Takeover Offer Agreement. For further details see the description of the TakeoverOffer Agreement set out in paragraph 18.9 of this Part 8: Additional Information. Immediatelyfollowing the exercise of the BAE Warrant, Xchanging B.V. shall issue fully paid 772,019 CommonShares of Xchanging B.V. to BAE Systems in consideration of £443,712 and US$2,212,301. Asummary of the BAE Warrant is set out in paragraph 18.2 of this Part 8: Additional Information.

3.9 General Atlantic Partners (Bermuda), L.P. and GAP Coinvestment Partners II, L.P. will convert theRebus Loan on the day of but prior to Admission in accordance with the terms of the TakeoverOffer Agreement. For further details see the description of the Takeover Offer Agreement set outin paragraph 18.9 of this Part 8: Additional Information. Immediately following the conversion ofthe Rebus Loan, Xchanging B.V. shall issue fully paid 1,128,681 Convertible Preference Class EShares to General Atlantic Partners (Bermuda), L.P. and 234,955 Convertible Preference Class EShares to GAP Coinvestment Partners II, L.P. in satisfaction of all liabilities under the Rebus Loan.

3.10 Immediately prior to Admission, the authorised, issued and fully paid share capital of XchangingB.V. will be as follows:

NominalAuthorised Issued and fully paidvalueShare Class Number Amount (E) per share (E) Number Amount (E)

Convertible Preference Class A....................... 19,600,000 A196,000.00 A0.01 19,600,000 A196.000Convertible Preference Class B....................... 4,826,255 A48,262.55 A0.01 4,826,255 A48,262.55Convertible Preference Class C....................... 20,000,000 A200,000.00 A0.01 — —Convertible Preference Class D ...................... 1,818,181 A18,181.81 A0.01 1,818,181 A18,181.81Convertible Preference Class E....................... 3,258,656 A32,586.56 A0.01 3,258,656 A32,586.56Class A Common............................................... 1,785,714 A17,857.14 A0.01 1,785,714 A17,857.14Class C Common............................................... 1,785,715 A17,857.15 A0.01 1,785,715 A17,857.15Class F Common ............................................... 2,500,000 A25,000.00 A0.01 1,215,766 A12,157.66Class G................................................................ 100,000 A1,000.00 A0.01 73,537 A735.37Scheme A Shares............................................... 2,937,500 A29,375.00 A0.01 937,500 A9,375.00Scheme B Shares ............................................... 126,000 A1,260.00 A0.01 126,000 A1,260.00Common.............................................................. 53,581,245 A535,812.45 A0.01 6,163,006 A61,630.06

TOTAL................................................................ 112,424,240 A1,124,242.40 41,590,330 A415,903.30

Under the terms of the Takeover Offer Agreement and following the Acquisition and the sharecapital reorganisation described in paragraph 3.5 of this Part 8: Additional Information, the issuedand fully paid share capital of Xchanging B.V. of 41,590,330 shares will have been exchanged for174,328,408 Shares (excluding any New Shares).

3.11 Xchanging Holdings Limited (‘‘XHL’’) (which changed its name from Clippercrown Limited toXchanging Holdings Limited with effect from 4 April 2007 pursuant to a special resolution dated3 April 2007) was incorporated with £100 authorised share capital on 31 October 2006. XHLbecame a wholly owned subsidiary of the Company on 23 April 2007. Following Admission, it isintended that XHL will be inserted between the Company and Xchanging B.V. by means of a sharefor share exchange and that XHL will effect a court approved capital reduction (pursuant tosection 135 of the Act) to create distributable reserves.

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3.12 Upon Admission, the Company will be subject to the continuing obligations of the Listing Rulespublished by the FSA with regard to the issue of securities for cash and the provisions of section 89of the Act (which confers on shareholders rights of pre-emption in respect of the allotment ofequity securities which are, or are to be, paid up in cash) apply to the balance of the authorised butunissued share capital of the Company which is not the subject of the disapplication referred toabove.

3.13 The Shares are in registered form and, from Admission, will be capable of being held inuncertificated form and title to such shares may be transferred by means of a relevant system (asdefined in the Regulations). Where Shares are held in certificated form, share certificates will besent to the registered members by first class post. Where Shares are held in CREST, the relevantCREST stock account of the registered members will be credited.

3.14 As at 31 December 2006, there were no Shares held by any member of the Group.

3.15 Immediately following the Global Offer, the Major Shareholder will in aggregate control theexercise of 34.3% of the rights to vote at a general meeting of the Company (or 28.2% if theOver-allotment Option is exercised in full).

3.16 Mandatory Bids

On Admission, the City Code on Takeovers and Mergers (the ‘‘Takeover Code’’) will apply to theCompany. Rule 9 of the Takeover Code provides that if any person or group of persons acting inconcert with each other, acquire an interest in shares which, when taken together with shares inwhich that person or group of persons are already interested: (i) would increase their aggregateinterests to an amount carrying 30% or more of the voting rights in the Company; or (ii) where thepersons or group of persons are interested in shares which in aggregate carry more than 30% of thevoting rights in the Company but do not hold shares carrying more than 50% of such voting rights,would increase their percentage of shares carrying voting rights in which they are interested, theperson and, depending on the circumstances, its concert parties, would be required (except with theconsent of the Panel on Takeovers and Mergers) to make a cash offer for the outstanding shares inthe Company as well as any other class of transferable securities carrying voting rights in theCompany at a price not less than the highest price paid for interests in shares by the acquirer or itsconcert parties during the previous 12 months.

Following Admission, General Atlantic will be interested in Shares carrying 34.3% (or 28.2% if theOver-allotment Option is exercised in full) of the Company’s voting share capital, (but will not holdShares carrying more than 50% of such voting rights) and if such interest is 30% or more anyfurther increase in its interest in Shares will be subject to the provisions of Rule 9 of the TakeoverCode.

3.17 Squeeze-out and Sell-out Rules

Under the 2006 Act, an offeror in respect of a takeover offer for the Company has the right to buyout minority shareholders where he has acquired (or unconditionally contracted to acquire) 90% invalue of the shares to which the offer relates. The notice to acquire shares from minorityshareholders must be sent within three months of the last day on which the offer can be accepted.The squeeze out of minority shareholders can be completed at the end of six weeks from the datethe notice has been given.

In addition, where there has been a takeover offer for the Company, minority shareholders canrequire the offeror to purchase the remaining shares provided that at any time before the end of theperiod within which the offer can be accepted, the offeror has acquired (or contracted to acquire) atleast 90% in value of all voting shares in the Company, which carry not less than 90% of the votingrights. A minority shareholder can exercise this right at any time until three months after the periodwithin which the offer can be accepted. An offeror shall give the remaining shareholders notice oftheir rights within one month from the end of the period in which the offer can be accepted.

4. MEMORANDUM AND ARTICLES OF ASSOCIATION

4.1 The Memorandum of Association of the Company provides that the Company’s principal objectsare, among others, to act as an investment holding company and to do all such things that are, in theopinion of the directors of the Company, incidental or conducive to the attainment of all or any ofthe Company’s objects. The objects of the Company are set out in full in clause 4of its Memorandum of Association which is available for inspection in the manner specified inparagraph 23 of this Part 8: Additional Information.

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4.2 The Articles of Association of the Company adopted pursuant to a special resolution passed at theannual general meeting of the Company held on 23 April 2007 contain provisions to the followingeffect:

4.2.1 Rights Attaching to Shares

(a) Voting rights of members

Subject to any special rights or restrictions as to voting for the time being attached toany class of shares by or in accordance with the articles (as to which there are none atAdmission), and subject to disenfranchisement in the event of non-payment of anycall or other sum due and payable in respect of any share or non compliance with anystatutory notice requiring disclosure of the beneficial ownership of any shares, at ageneral meeting every member present in person has on a show of hands one voteand every member present in person or by proxy has on a poll one vote for everyshare of which he is the holder. In the case of joint holders of a share, the vote of thesenior who tenders a vote, whether in person or by proxy, shall be accepted to theexclusion of the vote or votes of the other joint holder or holders, and seniority isdetermined by the order in which the names of the holders stand in the register.

Unless the Board decides otherwise, no member is entitled in respect of a share heldby him to be present or vote, either in person or by proxy, at a general meeting or at aseparate meeting of the holders of any class of shares or on a poll, or to exercise otherrights conferred by membership in relation to the meeting or poll, if a call or otheramount due and payable in respect of the share is unpaid.

(b) Dividends

Subject to the provisions of the Acts and the Articles, the Company may by ordinaryresolution declare a dividend to be paid to its members in accordance with theirrespective rights and interests, but no dividend may exceed the amount recommendedby the Board.

Except as otherwise provided by the rights attached to, or the terms of issue of shares,a dividend shall be declared and paid according to the amounts paid up on the sharesin respect of which the dividend is declared and paid, but no amount paid up on ashare in advance of a call may be treated for these purposes as paid up on the share.

Except as otherwise provided by the rights attached to, or the terms of issue of shares,all dividends shall be apportioned and paid proportionately to the amounts paid upon the shares during any portion or portions of the period in respect of which thedividend is paid.

Except as otherwise provided by the rights attached to shares, dividends may bedeclared or paid in any currency. The Board may agree with any member thatdividends which may at any time or from time to time be declared or become due onhis shares in one currency shall be paid or satisfied in another, and may agree thebasis of conversion to be applied and how and when the amount to be paid in theother currency shall be calculated and paid and for the Company or any other personto bear any costs involved.

Any unclaimed dividend, interest or other amount payable by the Company in respectof a share may be invested or otherwise made use of by the Board for the benefit ofthe Company until claimed. Any dividend which has remained unclaimed for 12 yearsfrom the date it was declared or became due for payment is forfeited and ceases toremain owing by the Company. The payment of an unclaimed dividend, interest orother amount payable by the Company in respect of a share into a separate accountdoes not constitute the Company a trustee in respect of it.

Subject to the Acts, the Board may declare and pay such interim dividends (including,without limitation, a dividend payable at a fixed rate) as appear to it to be justified bythe profits of the Company available for distribution. No interim dividend shall bedeclared or paid on shares which do not confer preferred rights with regard todividend if at the time of declaration, any dividend on shares which do confer a right

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to a preferred dividend is in arrear. If the Board acts in good faith, it does not incurany liability to the holders of shares conferring preferred rights for a loss they maysuffer by the lawful payment of an interim dividend on shares ranking after those withpreferred rights. No dividend or other amount payable by the Company in respect ofa share bears interest against the Company unless otherwise provided by the rightsattached to the share.

The Board may, with the prior authority of an ordinary resolution of the Company,direct that payment of a dividend may be satisfied wholly or in part by the distributionof specific assets and in particular of paid-up shares or debentures of anothercompany. Subject to the provisions of the Acts, the Board may, with the priorauthority of an ordinary resolution of the Company, offer to holders of shares theright to elect to receive shares credited as fully paid instead of cash in respect of all orpart of a dividend or dividends.

The Company is not obliged to send or transfer a dividend or other amount payableto a shareholder if a cheque, warrant or money order is returned undelivered or leftuncashed or transfer not accepted on two consecutive occasions, or, following onesuch occasion, reasonable enquiries have failed to establish another address oraccount of the person entitled to the payment, until the shareholder notifies theCompany of an address or account to be used for that purpose.

The Board may deduct from a dividend or other amounts payable to a person inrespect of a share amounts due from him to the Company on account of a call orotherwise in relation to a share.

The Board may withhold payment of a dividend (or part of a dividend) payable to aperson entitled by transmission to a share until he has provided such evidence of hisright as the Board may reasonably require.

(c) Return of Capital

On a voluntary winding up of the Company, the liquidator may, on obtaining anysanction required by law, divide among the members in kind the whole or any part ofthe assets of the Company, whether or not the assets consist of property of one kindor of different kinds, and vest the whole or any part of the assets in trustees upon suchtrusts for the benefit of the members as he, with the like sanction, shall determine.For this purpose, the liquidator may set the value he deems fair on a class or classesof property, and may determine on the basis of that valuation and in accordance withthe then existing rights of members how the division is to be carried out betweenmembers or classes of members. The liquidator may not, however, distribute to amember without his consent an asset to which there is attached a liability or potentialliability for the owner.

4.2.2 Transfer of Shares

(a) Shares in certificated form may be transferred by an instrument of transfer in writingin any usual form, or in any other form approved by Board. The instrument oftransfer shall be executed by or on behalf of the transferor and (in the case of atransfer of a share which is not fully paid) by or on behalf of the transferee.A member may transfer all or any of his uncertificated shares in accordancewith the Uncertificated Securities Regulations 2001 (‘‘Uncertificated SecuritiesRegulations’’).

Subject to the provisions of the Uncertificated Securities Regulations, the transferorof a share is deemed to remain the holder of the share until the name of thetransferee is entered in the register in respect of it.

Subject to the requirements of the Listing Rules, the Board may, in its absolutediscretion and without giving a reason, refuse to register the transfer of a certificatedshare which is not fully paid or the transfer of a certificated share on which theCompany has a lien.

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The Board may also, in its absolute discretion and without giving a reason, refuse toregister the transfer of a certificated share or a renunciation of a renounceable letterof allotment unless all of the following conditions are satisfied:

(i) it is in respect of only one class of shares;

(ii) it is in favour of (as the case may be) a single transferee or renouncee or notmore than four joint transferees or renouncees;

(iii) it is duly stamped (if required); and

(iv) it is delivered for registration to the office or such other place as the Boardmay decide, accompanied by the certificate for the shares to which it relates(except in the case of a transfer by a recognised financial institution where acertificate has not been issued, or in the case of a renunciation) and such otherevidence as the Board may reasonably require to prove the title of thetransferor or person renouncing and the due execution by him of the transferor renunciation or, if the transfer or renunciation is executed by some otherperson on his behalf, the authority of that person to do so.

If the Board refuses to register the transfer of a certificated share it shall, within twomonths after the date on which the transfer was lodged with the Company, sendnotice of the refusal to the transferee. An instrument of transfer which the Boardrefuses to register shall (except in the case of suspected fraud) be returned to theperson depositing it.

In accordance with and subject to the provisions of the Uncertificated SecuritiesRegulations, the Operator of the relevant system shall register a transfer of title toany uncertificated share or any renounceable right of allotment of a share which is aparticipating security held in uncertificated form unless the Uncertificated SecuritiesRegulations permit the Operator of the relevant system to refuse to register such atransfer in certain circumstances in which case the said Operator may refuse suchregistration.

If the Operator of the relevant system refuses to register the transfer of anuncertificated share or of any such uncertificated renounceable right of allotment of ashare it shall, within the time period stipulated by the Uncertificated SecuritiesRegulations, send notice of the refusal to the transferee.

In accordance with and subject to the provisions of the Uncertificated SecuritiesRegulations, where title to an uncertificated share is transferred by means of arelevant system to a person who is to hold such share in certificated form thereafter,the Company as participating issuer shall register the transfer in accordance with therelevant Operator-instruction, but so that the Company may refuse to register such atransfer in any circumstance permitted by the Uncertificated Securities Regulations.

In accordance with the Uncertificated Securities Regulations, if the Company asparticipating issuer refuses to register the transfer of title to an uncertificated sharetransferred by means of a relevant system to a person who is to hold such share incertificated form thereafter, it shall, within two months after the date on which theOperator instruction was received by the Company, send notice of the refusal to thetransferee.

4.2.3 Changes in Capital and Purchase of Own Shares

(a) The Company may by ordinary resolution:

(i) increase its share capital by a sum to be divided into shares of an amountprescribed by the resolution;

(ii) consolidate and divide all or any of its share capital into shares of a largeramount than its existing shares;

(iii) subject to the Acts, sub-divide all or any of its shares into shares of a smalleramount and so that the resolution whereby any share is sub-divided maydetermine that the shares resulting from such sub-division have amongst

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themselves such preferred, deferred or other special rights or advantages or besubject to any such restrictions as the Company has power to attach tounissued or new shares; and

(iv) cancel any shares which have not, at the date of the passing of the resolution,been taken or agreed to be taken by a person and diminish the amount of itsshare capital by the amount of the shares so cancelled.

(b) Subject to the Acts and the rights attached to existing shares, the Company may also:

(i) by special resolution, reduce its share capital, any capital redemption reserve,share premium account or other undistributable reserve in any way; and

(ii) purchase, or agree to purchase in the future, any shares of any class (includingredeemable shares) in its own capital in any way.

4.2.4 Variation of Rights

Subject to the Acts, the rights attached to any class of shares may be varied or abrogated(whether or not the Company is being wound up), either with the consent in writing of theholders of at least three-fourths in nominal value of the issued shares of that class (excludingany shares of that class held as treasury shares) or with the sanction of an extraordinaryresolution passed at a separate general meeting of the holders of the issued shares of thatclass validly held in accordance with the Articles. In addition to the provisions of the Actsregarding the variation of class rights, the Articles provide that the rights attached to a classof shares are not, unless otherwise expressly provided by those rights, deemed to be varied bythe creation, allotment or issue of further shares ranking pari passu with or subsequent tothem or by the purchase or redemption by the Company of its own shares in accordance withthe Acts and the Articles.

4.2.5 Forfeiture

The Company may serve notice on the members in respect of any amounts unpaid on theirshares. The member shall be given not less than 14 clear days notice to pay the unpaidamount, together with any interest and all costs, charges and expenses incurred by theCompany. In the event of non-compliance, a share in respect of which the notice is givenmay be forfeited by resolution of the Board.

4.2.6 Redeemable Shares

Subject to the provisions of the Articles and the Acts and to the rights attached to ExistingShares, shares may be issued on terms that they are to be redeemed or, at the option of theCompany or the holder, are liable to be redeemed.

4.2.7 General Meetings

An annual general meeting and any extraordinary general meeting at which a specialresolution is to be proposed or (subject to the Acts) at which some other resolution of whichspecial notice under the Act has been given to the Company shall be called by not less than21 clear days’ notice. All other extraordinary general meetings shall be called by not less than14 clear days’ notice.

Subject to the Acts, and although called by shorter notice than that specified in the Articles,a general meeting is deemed to have been duly called if it is so agreed:

(a) in the case of an annual general meeting, by all the members entitled to attend andvote at the meeting; and

(b) in the case of another meeting, by a majority in number of the members having a rightto attend and vote at the meeting, being a majority together holding not less than95% in nominal value of the shares giving that right.

The notice shall specify whether the meeting is an annual general meeting or anextraordinary general meeting, the place, the date and time of meeting, in the case of anyspecial business, the general nature of that business and, with reasonable prominence, that amember entitled to attend and vote may appoint one or more proxies to attend and, on apoll, vote instead of him and that a proxy need not also be a member. A notice convening

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a meeting to pass an extraordinary resolution or a special resolution as the case may be shallspecify the intention to propose the resolution as such.

The notice of the meeting may also specify a time (which if the Company is a participatingissuer shall not be more than 48 hours before the time fixed for the meeting) by which aperson must be entered on the register in order to have the right to attend or vote at themeeting.

The accidental omission to give notice of a general meeting or to send, supply or makeavailable any document or information relating to the meeting, or the non receipt of anysuch notice, document or information by a person entitled to receive any such notice,document or information shall not invalidate the proceedings at that meeting.

The notice of meeting shall be given to the members (other than any who, under theprovisions of the Articles or the terms of allotment or issue of shares, are not entitled toreceive notice), to the directors and to the auditors.

The Board may determine that persons entitled to receive notices of meeting are thosepersons entered on the register at the close of business on a day determined by the Board,provided that, if the Company is a participating issuer, the day determined by the Board maynot be more than 21 days before the day that the relevant notice of meeting is being sent.

4.2.8 Notices

Save where the Articles expressly require otherwise, any notice, document or information tobe sent or supplied by the Company may be sent or supplied in accordance with the 2006 Act(whether authorised or required to be sent or supplied by the Acts or otherwise) in hardcopy form, in electronic form or by means of a website.

4.2.9 Directors

(a) Appointment

There is no age limit for directors.

Directors may be appointed by the Company by ordinary resolution or by the Board.A director appointed by the Board holds office only until the dissolution of the nextannual general meeting after his appointment unless he is reappointed during thatmeeting, and is not taken into account in determining the number of directors whoare to retire by rotation at that meeting. Unless otherwise determined by ordinaryresolution, the number of directors shall be not less than two and is not subject to amaximum number.

A director of the Company need not be a member of the Company.

(b) Remuneration

Unless otherwise decided by the Company by ordinary resolution, the Company shallpay to the directors (but not alternate directors) by way of remuneration for theirservices as directors, such amount of aggregate fees as the Board decides (notexceeding £600,000 per annum or such larger amount as the Company may, byordinary resolution, decide).

Such fees shall be divided among the directors in such proportion as the Boarddecides or, if no decision is made, equally. Such a fee payable to a director is distinctfrom any salary, remuneration or other amount payable to him pursuant to otherprovisions of the articles or otherwise. Subject to the Acts and Articles and therequirements of the Listing Rules, the Board may arrange for part of a fee payable toa director to be provided in the form of fully paid shares in the capital of theCompany.

The salary or other remuneration of a director appointed to hold employment orexecutive office in accordance with the Articles may be a fixed sum of money, orwholly or in part governed by business done or profits made, or as otherwise decidedby the Board, and may be in addition to or instead of a fee payable to him for hisservices as director pursuant to the Articles.

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The Board shall also be repaid all reasonable travelling, hotel and other expensesproperly incurred by them in the performance of their duties, including the expensesof attending the meetings of the Board, committee meetings, general meetings andseparate meetings of the holders of any class of shares or debentures of the Company.

The Board may grant reasonable additional remuneration and expenses (whether byway of salary, percentage of profits or otherwise) to any director of the Company whogoes or resides abroad, makes a special journey or performs any special service onbehalf of the Company at the request of the Board.

The Board may exercise all the powers of the Company to provide pensions or otherretirement or superannuation benefits and to provide death or disability benefits orother allowances or gratuities by insurance or otherwise to a person who is or has atany time been a director of the Company or a director of any company which is or wasa subsidiary undertaking of or allied to or associated with the Company or asubsidiary of the Company or a predecessor in business of the Company or of asubsidiary undertaking of the Company and to the relatives or dependants of any suchperson. For this purpose the Board may establish, maintain, subscribe and contributeto any scheme, trust or fund and pay premiums. The Board may arrange for this to bedone by the Company alone or in conjunction with another person.

(c) Retirement by Rotation

At each annual general meeting one-third of the directors who are subject toretirement by rotation or, if their number is not three or a multiple of three, thenumber nearest to but not less than one-third, shall retire from office provided that ifthere are fewer than three directors who are subject to retirement by rotation, oneshall retire from office.

If any one or more directors:

(i) were last appointed or reappointed three years or more prior to the meeting;

(ii) were last appointed or reappointed at the third immediately preceding annualgeneral meeting; or

(iii) at the time of the meeting will have served more than eight years as anon-executive director of the Company (excluding as the chairman of theBoard),

he or they shall retire from office and shall be counted in obtaining the numberrequired to retire at the meeting.

(d) Directors’ Interests

A director who, to his knowledge, is in any way, whether directly or indirectly,interested in a contract, arrangement, transaction or proposal with the Company shalldeclare the nature of his interest at the meeting of the Board at which the question ofentering into the contract, arrangement, transaction or proposal is first considered, ifhe knows his interest then exists, or, in any other case, at the first meeting of theBoard after he knows that he is or has become interested.

A director may not vote on or be counted in any quorum in relation to a resolution ofthe Board or of a committee of the Board concerning any contract, arrangement,transaction or proposal to which the Company is or is to be a party and in which hehas an interest which is, to his knowledge, a material interest (otherwise than byvirtue of his interest in shares or debentures or other securities of or otherwise in orthrough the Company). Notwithstanding the above, this prohibition does not apply toa resolution concerning any of the following matters:

(i) the giving of a guarantee, security or indemnity in respect of money lent orobligations incurred by him or by any other person at the request of, or for thebenefit of, the Company or any of its subsidiary undertakings;

(ii) the giving of a guarantee, security or indemnity in respect of a debt orobligation of the Company or any of its subsidiary undertakings for which he

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himself has assumed responsibility in whole or in part, either alone or jointlywith others under a guarantee or indemnity or by the giving of security;

(iii) any contract, arrangement, transaction or proposal concerning an offer ofshares, debentures or other securities of the Company or any of its subsidiaryundertakings for subscription or purchase, in respect of which he is or may beentitled to participate as a holder of any such securities or in the underwritingor sub-underwriting of which he is to participate;

(iv) any contract, arrangement, transaction or proposal to which the Company is oris to be a party concerning another company (including a subsidiaryundertaking of the Company) in which he is interested (directly or indirectly)whether as an officer, shareholder, creditor or otherwise if he does not to hisknowledge hold an interest in shares (within the meaning of sections 820 to825 of the 2006 Act) representing 1% or more of either any class of equityshare capital of such company or of the voting rights of that company;

(v) any contract, arrangement, transaction or proposal for the benefit ofemployees of the Company or any of its subsidiary undertakings (including anypension fund or retirement, death or disability scheme) which does not awardhim a privilege or benefit not generally awarded to the employees to whom itrelates; and

(vi) any contract, arrangement, transaction or proposal concerning the purchase ormaintenance of an insurance policy for the benefit of directors or for thebenefit of persons including directors.

Subject to the Acts and provided he has disclosed to the Board the nature and extentof any direct or indirect interest of his, a director, notwithstanding his office:

(i) may enter into or otherwise be interested in any contract, arrangement,transaction or proposal with the Company or in which the Company isotherwise interested, either in connection with his tenure of an office or placeof profit or as seller, buyer or otherwise;

(ii) may hold another office or place of profit with the Company (other than theoffice of auditor of the Company or auditor of any subsidiary) in conjunctionwith the office as director and he by himself or through his firm in aprofessional capacity for the Company and may be remunerated for doing soas the Board may decide;

(iii) may be a director or other officer of, or may be employed by, or be party to acontract, transaction, arrangement or proposal with or otherwise interested in,a company promoted by the Company or in which the Company is otherwiseinterested or as regards which the Company has a power of appointment; and

(iv) is not liable to account to the Company for a profit, remuneration or otherbenefit realised by any such contract, arrangement, transaction, proposal,office or employment and no such contract, arrangement, transaction orproposal shall be avoided on the grounds of any such interest or benefit.

A director shall not vote or be counted in the quorum at a meeting of the directors orcommittee meeting in respect of any resolution concerning his own appointment(including fixing and varying the terms of his appointment or its termination), as theholder of any office or place of profit with the Company or any other company inwhich the Company is interested but, where proposals are under considerationconcerning the appointment (including fixing or varying the terms of appointment orits termination) of two or more directors to offices or places of profit with theCompany or a company in which the Company is interested, those proposals shall bedivided and a separate resolution considered in relation to each director; and in suchcase each of the directors concerned (if not otherwise debarred from voting under theArticles) shall be entitled to vote and be counted in the quorum in respect of eachresolution except that concerning his own appointment.

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If a question arises at a meeting as to the materiality of a director’s interest (otherthan the interest of the chairman of the meeting) or as to the entitlement of a director(other than the chairman) to vote or be counted in a quorum and the question is notresolved by his voluntarily agreeing to abstain from voting or being counted in thequorum, the question shall be referred to the chairman and his ruling in relation tothe director concerned is conclusive and binding on all concerned.

If a question arises at a meeting as to the materiality of the interest of the chairman ofthe meeting or as to the entitlement of the chairman to vote or be counted in aquorum and the question is not resolved by his voluntarily agreeing to abstain fromvoting or being counted in the quorum, the question shall be decided by resolution ofthe directors or committee members present at the meeting (excluding the chairman)whose majority vote is conclusive and binding on all concerned.

4.2.10 Borrowing Powers

Subject to the provisions of the Acts, the directors may exercise all the powers of thecompany to borrow money, mortgage or charge its assets and uncalled capital of theCompany and issue debentures and other securities.

4.2.11 Indemnity of Directors and Officers

To the extent permitted by the Acts and without prejudice to any indemnity to which he mayotherwise be entitled, every person who is or was a director or other officer of the Company(other than any person (whether or not an officer of the Company) engaged by the Companyas auditor) shall be and shall be kept indemnified out of the assets of the Company againstall costs, charges, losses and liabilities incurred by him (whether in connection with anynegligence, default, breach of duty or breach of trust by him or otherwise) in relation to theCompany or its affairs provided that such indemnity shall not apply in respect of any liabilityincurred by him:

(a) to the Company or to any associated company;

(b) to pay a fine imposed in criminal proceedings;

(c) to pay a sum payable to a regulatory authority by way of a penalty in respect ofnon-compliance with any requirement of a regulatory nature (howsoever arising);

(d) in defending any criminal proceedings in which he is convicted;

(e) in defending any civil proceedings brought by the Company, or an associatedcompany, in which judgment is given against him; or

(f) in connection with any application under any of the following provisions in which thecourt refuses to grant him relief, namely:

(i) section 144(3) or (4) (acquisition of shares by innocent nominee); or

(ii) section 727 (general power to grant relief in case of honest and reasonableconduct).

4.2.12 Failure to Disclose Interests in Shares

If any member or other person appearing to be interested in shares of the Company hasbeen duly served with a notice under section 793 of the 2006 Act and has failed in relation toany shares to give the Company the information required within the prescribed period fromthe date of service of the notice sanctions apply unless the Board otherwise decides.

The sanctions are the suspension of voting or other rights conferred by membership inrelation to meetings of the Company in respect of the relevant shares and, additionally, inthe case of shareholders representing at least 0.25% in nominal value of their class of shares(excluding any shares of their class held as treasury shares), the withholding of payment ofdividends on, and in certain cases the restriction of transfers of, the relevant shares. For thepurpose of enforcing the restriction of transfers, the Board may give notice to a memberrequiring the member to change default shares held in uncertificated form to certificatedform by the time stated in the notice.

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The restrictions shall cease to apply seven days after the earlier of, receipt by the Companyof notice of an excepted transfer (but only in relation to the shares transferred) and, receiptby the Company (in a form satisfactory to the Board) of all the information required by thesection 793 notice.

5. OTHER DIRECTORSHIPS

5.1 The Directors and Senior Managers are or have been directors or partners or senior managers ofthe following companies and partnerships (excluding all members of the Group) at any time in theprevious five years:

DirectorsPrevious directorships/partnerships

Name Current directorships/partnerships (held in the last 5 years)

John Robins ............................... Alexander Forbes Limited Alexander Forbes RiskAlexander Forbes Services Limited

International Limited American EuropeanFFSGH (1990) Employee Business Association

Investments Limited LimitedFFSGH Employee Austin Reed Group Plc

Investments Limited AXA Asia Pacific HoldingsForbes (1994) Share Trust LimitedForbes Share Trust Gresham CollegeForbes Staff Share Trust The British Museum

(4225/96) FriendsForbes Staff Share Trust The National Mutual Life

(10514/96) Association of AustraliaLimited

David Andrews .......................... Deutsche Borse None

Richard Houghton .................... None None

Adele Browne ............................ None None

David Hodgson.......................... Dice, Inc. Atlantic Data Services, Inc.,FDGS Holdings General Avisent General Partner LCC

Partner II, LLC Avisent, L.P.General Atlantic Limited Creditek LLCGeneral Atlantic LLC InterPro Holdings, LLCiFormation Group Holdings MarketWatch.com, Inc.

General Partner, Ltd ProBusinessInsight Express, Inc. information ManagementIP Value Management, Inc. Corporation (Europe)Northgate Information Limited

Solutions plc Pinnacor Inc.TriNet Group, Inc. Rebus HR Group Limited

Rebus Insurance ServicesHoldings Limited

S1 CorporationSmart Time Software, Inc.Suber Acquisitions Limited

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Previous directorships/partnershipsName Current directorships/partnerships (held in the last 5 years)

Tom Tinsley ................................ Advisory Board of the Meta4 N.V.Kellogg Institute forInternational Studiesat the University ofNotre Dame

BMC Software, Inc.Critical Path, Inc.General Atlantic LLCPhilanthropic Research, Inc.

Nigel Rich .................................. Asia House CP Ships LimitedAsia House Enterprises Exel plc

Limited Granada LimitedChelsea Square Garden Granada plc

Limited Hamptons Group LimitedDowne House School Hamptons InternationalDowne House School Services Commercial Limited

Limited Harvey NicholsJohn Armit Wines Limited Group plcKGR Absolute Return PCC Sutherland CorporateMatheson & Co, Limited Services LimitedPacific Assets Trust plcSlough Estates plcThe Exel Foundation

Stephen Brenninkmeijer........... C&A Amdromeda Fund B.V.Emptor Services C&A Charitable TrusteesEnterprise Education Trust NFTE-EuropeEntrepreneurs Fund Orbis Pension Trustees

Management Services LimitedLimited Swiftflow Distribution

Irvine Bay Trustee CompanyNFTE 2006NFTE GermanyOptinose UK LimitedSchwab Foundation

SwitzerlandStichting LangenbrueckThe Derwent Charitable

Consultancy

Dennis Millard........................... Debenhams PLC Arc International PLCSmiths News PLC Cookson Group PLC

Cookson Overseas LimitedExel Plc

John Bramley ............................. None None

Johannes Maret ......................... DAB bank AG Allgemeine HypothekenbankGebr. Rhodius GmbH & Rheinboden AG

Co. KG European Transaction BankMaret GmbH Nordwind Capital GmbHMLP AG Sal. Oppenheim jr. & Cie.Triton Manager Limited KGaA

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Previous directorships/partnershipsName Current directorships/partnerships (held in the last 5 years)

Friedrich Carl Janssen .............. AXA Service AG Arthur Andersen & Co.Sal. Oppenheim GmbH

International S.A.Sal. Oppenheim jr. & Cie.

Corporate Finance(Schweiz) AG

Bank Sal. Oppenheim jr. &Cie. (Luxemburg) S.A.

Bank Sal. Oppenheim jr. &Cie. (Osterreich) S.A.

Bank Sal. Oppenheim jr. &Cie. (Schweiz) AG

Content Management AGDeutsche Hypothekenbank

AGErnst & Young AGFinanciere Atlasgardeur AGINTERSEROH AGOppenheim Beteiligungs AGSal. Oppenheim jr. &

Cie. KGaAService Generaux de Gestion

S.A.IV. Oppenheim AGV. Oppenhein AG

Senior Managers

David Rich-Jones ...................... Churchwells Limited Riverside House ManagementMewshall Properties Limited Company (Mortlake)Perfect Properties Limited LimitedRichstone Investments

Limited

Steven Beard.............................. None GlobalWave LimitedRedwave PlcWave Europe Limited

Mike Margetts ........................... CAD IT SpA None

Clive Buesnel ............................. None None

Hugh Morris .............................. Osprey Lodges Limited Osprey Management ServicesMilton House Trust LimitedOdyssey Trust UK The Labrador Rescue TrustInternational Care and Relief Labrador Rescue (Trading)

LimitedCompany of Management

Consultants EnterprisesLimited

Sadler’s Wells Trust LimitedSadler’s Wells LimitedSadler’s Wells Development

TrustNew Sadler’s Wells Limited

Stephen Bowen.......................... St Georges Close Limited None

Melissa Pitt................................. None None

Gary Whitaker ........................... None None

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5.2 Save as set out below, within the period of five years preceding the date of this document none ofthe Directors or Senior Managers:

5.2.1 has any convictions in relation to fraudulent offences;

5.2.2 has been a director or senior manager (who is relevant to establishing that a company hasthe appropriate expertise and experience for the management of that company) of anycompany at the time of any bankruptcy, receivership or liquidation of such company; or

5.2.3 has received any official public incrimination and/or sanction by any statutory or regulatoryauthorities (including designated professional bodies) or has been disqualified by a courtfrom acting as a director of a company or from acting in the management or conduct of theaffairs of a company.

The GlobalWave Group is a technology and investment group, which was demerged from a listedcompany, Internet Technology Group plc, in January 2000. Mr Beard joined the group in July 2000to help formulate and execute a financial strategy to maximise the return to shareholders. Mr Beardwas appointed as a director of three of the companies in the group: GlobalWave Limited and itswholly-owned subsidiaries, Redwave plc and Wave Europe Limited. These three companies wereplaced into members’ voluntary liquidation in May 2003.

Mr Morris was a director of the following three companies at the time they were dissolved (by wayof members’ voluntary liquidation): Osprey Management Services Limited on 30 January 2007;Company of Management Consultants Enterprises Limited on 4 July 2006; and Allow-Me Limitedon 14 October 2003. Each of these companies was, at the time of its dissolution, dormant with nooutstanding creditors.

Meta4 N.V. was dissolved (by way of member’s voluntary liquidation) with effect fromDecember 2004 by resolution of its board of directors on 29 December 2003. Mr Tinsley was anon-executive director of this company at that time and it was solvent at the time of its dissolution.

Sutherland Corporate Services Limited was put into solvent liquidation on 24 September 2006.Nigel Rich was a director of this Company at the time of its dissolution.

Mr Brenninkmeijer was a director of the following four companies at the time they were dissolved:C&A Charitable Trustees, NFTE Europe, Orbis Pension Trustees Limited and SwiftflowDistribution. Each of these companies was solvent at the time of its dissolution.

5.3 Save as disclosed below, none of the Directors or Senior Managers has any potential conflicts ofinterests between their duties to the Company and their private interests or other duties.

The Company and General Atlantic have entered into a Relationship Deed to regulate therelationship between them following Admission. As well as being Non-executive Directors of theCompany, David Hodgson and Tom Tinsley are both directors of General Atlantic LLC. DavidHodgson and Tom Tinsley are the current General Atlantic Directors (as defined inparagraph 18.13 of this Part 8: Additional Information) under the Relationship Deed. Under theterms of their letters of appointment, each of David Hodgson and Tom Tinsley has agreed to use hisbest endeavours to promote and advance the interests of the Company and its subsidiaryundertakings and to comply with the UK Listing Authority’s Model Code for securities transactionsby directors of listed companies and with any code of conduct relating to securities transactions bydirectors and specified employees issued by the Company from time to time. For more informationon the Relationship Deed, see paragraph 18.13 in this Part 8: Additional Information.

6. DIRECTORS’ AND OTHER INTERESTS

The tables in this paragraph 6 of Part 8: Additional Information set out certain interests in the sharecapital of the Company as at 24 April 2007 (being the latest practicable date prior to publication ofthis document) and immediately following Admission. Each table assumes that the Acquisition andthe share capital reorganisation described in paragraph 3.5 of this Part 8: Additional Informationhave each been completed.

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6.1 Shares held (otherwise than pursuant to the SPP) by Directors and Senior Managers are as follows:

24 April 2007 (lastpracticable date prior to

publication of this Immediately followingdocument) Admission

Number ofShares

currently % of issued Number of % of issuedName held share capital Shares share capital

DirectorsJohn Robins................................................................... 600,000 0.34 480,000 0.23David Andrews ............................................................. 28,000,588(1) 16.06 22,400,588 10.90Richard Houghton........................................................ 1,700,000 0.98 1,700,000 0.83Adele Browne ............................................................... 1,350,084 0.89 1,350,084 0.66Nigel Rich...................................................................... 200,000 0.11 200,000 0.10Stephen Brenninkmeijer .............................................. 350,000 0.20 350,000 0.17Dennis Millard .............................................................. 200,000 0.11 100,000 0.05John Bramley ................................................................ 348,000 0.20 348,000 0.17Johannes Maret ............................................................ 1,579,976 0.91 1,224,004 0.60

Senior ManagersSteven Beard ................................................................. 67,200 0.04 67,200 0.03Stephen Bowen ............................................................. 520,088 0.30 520,088 0.25Clive Buesnel ................................................................ 680,008 0.39 520,000 0.25Mike Margetts............................................................... 1,049,992 0.60 1,049,992 0.51David Rich-Jones.......................................................... 1,294,000 0.74 1,150,000 0.56Gary Whitaker .............................................................. 320,000 0.18 220,000 0.11

(1) 400,000 of these Shares are held by the Trustees of the David William Andrews Discretionary Trust.

This table takes into account that on 24 April 2007 the following people sold shares in XchangingB.V. to the Xchanging B.V. 2007 Employee Benefit Trust (‘‘2007 EBT’’) for a price equal to theOffer Price attributable to the Shares issued as consideration pursuant to the Acquisition, less anydeductions payable by the 2007 EBT as a Selling Shareholder under the Underwriting Agreement:Adele Browne, 2,666 G Shares (equivalent to 599,892 Shares); Richard Houghton, 3,333 G Shares(equivalent to 749,976 Shares); Clive Buesnel, 1,111 G Shares (equivalent to 249,992 Shares); DavidRich-Jones 1,111 G Shares and 62,500 Scheme A Shares (equivalent to 499,992 Shares); StephenBowen, 1,155 G Shares (equivalent to 259,892 Shares); and John Bramley 18,000 Scheme A Shares(equivalent to 72,000 Shares).

6.2 Shares held by Directors and Senior Managers pursuant to the SPP are as follows:

24 April 2007 (last practicabledate prior to publication of Immediately following

this document) Admission

Number ofShares

currently % of issued Number of % of issuedName held share capital Shares share capital

DirectorsRichard Houghton ......................................... 500,000 0.29 500,000 0.24Adele Browne................................................. 500,000 0.29 500,000 0.24

Senior ManagersSteven Beard................................................... 1,200,000 0.69 1,200,000 0.58Stephen Bowen............................................... 200,000 0.11 200,000 0.10Clive Buesnel .................................................. 400,000 0.23 400,000 0.19Mike Margetts ................................................ 300,000 0.17 300,000 0.15David Rich-Jones ........................................... 1,000,000 0.57 1,000,000 0.49Melissa Pitt ..................................................... 320,000 0.18 320,000 0.16Gary Whitaker................................................ 150,000 0.09 150,000 0.07

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6.3 Options which have been granted to Directors and Senior Managers under the Company’sEmployee Share Plans and have not been exercised as follows:

6.3.1 Approved Share Option Plan

SubscriptionName Date of grant No. of Shares price (£)

DirectorsRichard Houghton .................................. 19 November 2003 85,180 0.33Adele Browne.......................................... 19 November 2003 85,180 0.33

Senior ManagersStephen Bowen........................................ 19 December 2001 2,000 0.56

19 November 2003 85,180 0.33Clive Buesnel........................................... 19 December 2001 26,280 0.56Hugh Morris ............................................ 19 November 2003 88,220 0.33Melissa Pitt .............................................. 29 April 2003 20,000 0.95

11 April 2006 20,000 0.93

6.3.2 Unapproved Share Option Plan

SubscriptionName Date of grant No. of Shares price (£)

DirectorsRichard Houghton .................................. 19 November 2003 414,820 0.33

19 November 2003 500,000 0.94Adele Browne.......................................... 19 November 2003 314,820 0.33

19 November 2003 400,000 0.94Johannes Maret....................................... 15 March 2007 200,000 1.63

Senior ManagersSteven Beard ........................................... 29 April 2003 12,800 0.95

19 November 2003 60,000 0.3319 November 2003 60,000 0.9413 December 2004 200,000 0.94

Stephen Bowen........................................ 19 December 2001 158,000 0.565 March 2002 40,000 0.57

19 November 2003 74,820 0.3319 November 2003 160,000 0.94

Clive Buesnel........................................... 19 December 2001 213,720 0.5625 June 2002 40,000 0.56

19 November 2003 139,992 0.3319 November 2003 300,000 0.94

Hugh Morris ............................................ 19 November 2003 111,780 0.3319 November 2003 200,000 0.94

28 April 2004 600,000 0.9727 April 2005 600,000 0.95

David Rich-Jones .................................... 19 November 2003 254,000 0.3319 November 2003 400,000 0.94

12 July 2005 500,000 0.94Melissa Pitt .............................................. 13 December 2004 40,000 0.94

6.3.3 Unapproved G Share Option Plan

SubscriptionName Date of grant No. of Shares price (£)

Senior ManagersStephen Bowen........................................ 28 April 2004 249,992 0.10Mike Margetts ......................................... 28 April 2004 499,984 0.10Gary Whitaker......................................... 13 December 2004 150,084 0.32

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6.4 Save as set out in this Part 8: Additional Information, following the Global Offer no Director orSenior Manager will have any interest in the share capital of the Company or any of its subsidiaries.

6.5 So far as the Company is aware, as at 24 April 2007 (being the latest practicable date prior topublication of this document) the following persons (other than the Directors and SeniorManagers) are directly or indirectly interested in 3% or more of the Company’s issued share capitalor will be so interested immediately following Admission:

24 April 2007 (lastpracticable date prior to

publication of thisdocument) Immediately following Admission

Number of Number ofShares Shares

(assuming no (assumingNumber of exercise of full exercise

Shares the Over- of the Over-currently % of issued allotment % of issued allotment % of issued

Name held share capital Options) share capital Option) share capital

General Atlantic(1) .................... 108,464,644 62.22 70,502,023 34.3 57,873,992 28.2Sal. Oppenheim......................... 6,912,724 3.97 4,493,271 2.2 4,493,271 2.2

(1) The General Atlantic holding is currently held as follows: General Atlantic Partners 55, L.P., 8,495,556 Shares(4.87%), GAP-Xchange Partners, L.L.C., SCA, 17,749,696 Shares (10.18%), GAP Coinvestment Partners L.P.,5,229,808 Shares (3.00%), GAP Coinvestment Partners II, L.P., 11,479,612 Shares (6.59%), General Atlantic Partners(Bermuda), L.P., 57,479,576 Shares (32.97%), GAPstar, LLC, 4,651,512 Shares (2.67%), GAPCo GMBH & Co.KG,34,916 Shares (0.02%), GAP-W International, L.P., 3,343,968 Shares (1.92%).

Save as set out in this Part 8: Additional Information, the Company is not aware of any person whois or will immediately following Admission be interested (within the meaning of the Act), directly orindirectly, in 3% or more of the issued share capital of the Company.

6.6 None of the shareholders referred to in paragraph 6.5 of this Part 8: Additional Information hasdifferent voting rights from any other holder of Shares in respect of any Shares held by them.

6.7 Save as set out in this Part 8: Additional Information, the Company is not aware of any person whoimmediately following Admission directly or indirectly, jointly or severally, will own or couldexercise control over the Company.

7. DIRECTORS’ SERVICE AGREEMENTS AND LETTERS OF APPOINTMENT

7.1 Executive Directors’ Service Agreements

7.1.1 The Executive Directors of the Company have entered into new service agreements with theCompany which are conditional upon and take effect on Admission.

7.1.2 The service agreements for the Executive Directors provide that the notice required toterminate their employment is 12 months’ given by either the director or the Company. TheCompany has the right to elect to terminate the employment of an Executive Directorwithout notice or with less than 12 months’ notice by making a payment in lieu of noticeequal to the base salary the Executive Director would be entitled to receive during anyunexpired part of the notice period.

7.1.3 The employment of each of the Executive Directors is terminable with immediate effect ifhe/she:

(a) commits any serious or persistent breach of any of the terms, conditions orstipulations contained in their service agreement;

(b) is guilty of any serious negligence or gross misconduct in connection with or affectingthe business or affairs of the Company or any company of the Group for which he/sheis required to perform duties;

(c) is guilty of conduct which brings or is likely to bring himself/herself or the Companyor any company of the Group into disrepute;

(d) is convicted of a criminal offence punishable by imprisonment (other than an offenceunder road traffic legislation in the United Kingdom or elsewhere for which anon-custodial penalty is imposed);

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(e) is adjudged bankrupt or makes any arrangement or composition with his/her creditorsor has an interim order made against him/her pursuant to section 252 Insolvency Act1986;

(f) is or becomes prohibited by law from being a director;

(g) becomes of unsound mind or a patient under any statute relating to mental health;

(h) is guilty of a serious breach of any rules issued by the Company or any company of theGroup relating to the use of information technology, computer systems, email and theinternet; or

(i) voluntarily resigns as a director of the Company without the prior written approval ofthe Board.

7.1.4 The Executive Directors are entitled to receive the following benefits under the terms oftheir new service agreements:

(a) a basic salary of £535,600 per annum (in the case of David Andrews), £360,000 perannum (in the case of Richard Houghton) and £330,000 (in the case of AdeleBrowne);

(b) eligibility to receive an annual bonus, subject to the terms and conditions as theRemuneration Committee in its absolute discretion may determine from time to time;

(c) eligibility to join the Company’s defined contribution pension arrangements subjectto the rules of the arrangement. Employer contribution rates (as a percentage of basicsalary per annum) to the defined contribution arrangements are: (i) 6% for membersaged between 35-44 years with a member contribution of 3%; or (ii) 8% for membersaged over 45 years with a member contribution of 4%;

(d) 25 days holiday per annum in addition to public holidays; and

(e) other customary benefits (including life assurance, permanent health insurance andeligibility to join the Group’s private medical insurance scheme).

7.1.5 Each of the Executive Directors will be subject to non-compete and non-solicitationrestrictive covenants for a maximum period of 12 months following termination of theirrespective service agreements.

7.2 Non-Executive Directors

7.2.1 The Non-Executive Directors (including the Chairman) of the Company have entered intoletters of appointment with the Company which are conditional upon and take effect onAdmission. The terms of the letters of appointment are subject to the provisions of theirArticles (and in the case of Tom Tinsley and David Hodgson, also subject to the RelationshipDeed). The fees paid to the Non-Executive Directors and the Chairman will initially be asfollows:

Fees perNon-Executive Directors annum (£)

John Robins.............................................................................................................. 125,000Nigel Rich................................................................................................................. 82,500Dennis Millard ......................................................................................................... 50,000John Bramley ........................................................................................................... 40,000Stephen Brenninkmeijer ......................................................................................... 40,000David Hodgson ........................................................................................................ 40,000Tom Tinsley .............................................................................................................. 40,000Johannes Maret........................................................................................................ 40,000Friedrich Carl Janssen ............................................................................................ 40,000

7.2.2 The fee payable to John Robins is in relation to his appointment as Chairman to the Boardand Chairman of the Nomination Committee. The fee payable to Nigel Rich is in relation tohis appointment as Deputy Chairman to the Board, senior independent director andChairman of the Remuneration Committee. The fee payable to Dennis Millard includes a

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fee of £10,000 per annum in relation to Mr Millard’s appointment as chair of the AuditCommittee.

7.2.3 The appointment of each Non-Executive Director is for a fixed term of three years (subjectto the retirement by rotation provisions in the Articles of Association) unless terminatedearlier by either party upon three months’ written notice (except John Robins whoseappointment is terminable by either party upon six months’ written notice).

7.2.4 The appointment of each of the Non-Executive Directors does not give rise to anyentitlement of the relevant Non-Executive Director to compensation in respect of theirtermination.

7.2.5 In addition to the fees and benefits mentioned above, the Company will reimburse allexpenses reasonably incurred by the Non-Executive Directors in the performance of theirduties and will endeavour to obtain appropriate directors’ and officers’ liability insurance.

7.2.6 In addition to his letter of appointment described above, Mr Maret has entered into a specialadvisor agreement with Xchanging GmbH dated 26 March 2007 pursuant to which Mr Maretassists the Group in the development of the Group’s customer base in Germany and othercountries in Europe. Mr Maret receives the following under the terms of the special advisoragreement with Xchanging GmbH:

(a) a fee of £25,000 per annum (payable in equal quarterly instalments);

(b) in relation to each potential customer or partner in respect of whom Mr Maret hasassisted the Group, a fee of £200,000 on each occasion that a member of the Groupsigns a contract with a customer or partner with an annual value to the Group inexcess of A100 million; and

(c) in relation to each potential customer or partner in respect of whom Mr Maret hasassisted the Group, a fee of £50,000 on each occasion that a member of the Groupsigns a contract with such customer or partner with an annual value to the Group ofless than A100 million, but greater that A30 million.

In addition, Mr Maret has been issued with the following grant of share options:

(i) options over 40,000 Class F Common Shares under the Unapproved Share OptionPlan at a price of £6.50 per share exercisable in the event that a fee of £200,000described at paragraph 7.2.6(b) above first becomes payable; and

(ii) options over 10,000 Class F Common Shares under the Unapproved Share OptionPlan at a price of £6.50 per share exercisable in the event that a fee of £50,000described at paragraph 7.2.6(c) above first becomes payable.

These options will, on Admission, become options over 160,000 and 40,000 Sharesrespectively at an exercise price of £1.625 per Share.

Mr Maret’s special advisor agreement is stated to be for a two year fixed term, subject totermination by either party giving no less than three months’ notice in writing.

7.3 Save as set out in this Part 8: Additional Information, there are no existing or proposed serviceagreements between any Director and any member of the Group providing for benefits upontermination of employment.

8. EMPLOYEE SHARE PLANS

8.1 The Group has adopted the following employee share plans: the Approved Share Option Plan, theUnapproved Share Option Plan, the Unapproved G Share Option Plan, the SPP, the ESOP and thePSP.

8.2 The Group has also established the Xchanging Employee Benefit Trust, the Infrex Employee ShareTrust and the Xchanging B.V. 2007 Employee Benefit Trust.

8.3 The holders of all options under the Approved Share Option Plan, the Unapproved Share OptionPlan and the Unapproved G Share Option Plan have agreed, conditionally on Admission takingplace, to exchange their existing options over shares in Xchanging B.V. for new options over Shares.These new options will remain subject to the rules of the plans under which they were granted. The

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Board has resolved that, following Admission, no further options will be granted under theApproved Share Option Plan, the Unapproved Share Option Plan and the Unapproved G ShareOption Plan, nor will any further awards be made under the SPP.

On 2 May 2007 an ex-employee of the Group may exercise options over 20,000 Shares under theApproved Share Option Plan in order to allow him to benefit from a UK favourable tax treatmentwhich would not be available if such options were exercised at a later date. In addition, on the firstbusiness day following 1 June 2007 employees of the Group may exercise vested options over Sharesunder the Approved Share Option Plan, the Unapproved Share Option Plan and the UnapprovedG Share Option Plan, such exercise date having been deferred from the option exercise datescheduled for the first business day following 1 May 2007. Thereafter, the intention is that optionexercises under the above three Plans will generally take place on or about 1 May and 1 Novemberof each year, as has been the practice in the past.

The aggregate number of Shares subject to outstanding options under each of the Approved ShareOption Plan, the Unapproved Share Option Plan and the Unapproved G Share Option Plan on24 April 2007 is 22,766,236. Up to 11,974,076 of these Shares could be issued in respect of vestedoptions exercisable on the first business day following 1 June 2007.

The intention is that the two new Employee Share Plans summarised in paragraphs 8.8 and 8.9 willbe operated in the future. The current intention is that the first PSP awards will be made in early2008, although options may be granted under the ESOP at any time.

The Chief Executive Officer, David Andrews, intends to make personal gifts of Shares in theCompany, shortly after Admission, to all employees of the Group. These gifts, together with Shareswhich David Andrews will sell to cover the costs of applicable tax in connection therewith, will notexceed in aggregate 1,000,000 Shares. The precise timing and amount of these gifts and employeeeligibility criteria have not yet been finalised. Any Shares given to employees in this way will not besubject to any sale restrictions and so may be sold by employees on or any time after the date onwhich they are acquired by employees.

Details of the Employee Share Plans are set out in paragraphs 8.4 to 8.12 below (the summaries oftwo new Employee Share Plans are more detailed than the summaries of the other Employee SharePlans, under which no further options or awards will be granted):

8.4 The Unapproved Share Option Plan

The Unapproved Share Option Plan, which was adopted by Xchanging B.V. on 25 July 2000, is notapproved by HMRC. The number of Shares subject to outstanding options under the UnapprovedShare Option Plan on 24 April 2007 was 14,596,528 at exercise prices ranging from £0.332 to £1.625and with exercise dates up to 15 March 2017.

Options are personal to participants and may not be transferred except on death. Options are notpensionable. Options cannot normally be exercised within three years of the date of grant and maynot be exercised more than 10 years after their date of grant. Options may only be exercised on thefirst business day immediately following 1 May or 1 November of any calendar year or on suchalternative dates as the Board may permit. At the Board meeting of Xchanging B.V. held on15 March 2007, the 1 May 2007 exercise date was postponed until 1 June 2007. The exercise ofoptions may be satisfied by the issue of new shares or the transfer of existing shares.

Early exercise of options is permitted if a participant ceases to be employed by reason of death,injury, disability, redundancy, retirement or the transfer out of the group of the business orsubsidiary by which the optionholder is employed or in other circumstances determined by thegrantor. In the event of a change of control of Xchanging B.V., the option holder will, with theagreement of the acquiring company, release his rights under the option in exchange for newoptions over shares in the acquiring company with equivalent rights of the same value.

In the event of any increase or variation of share capital, or in the event of a demerger or specialdividend, the Board may make such adjustments as it considers appropriate to the number of sharesunder option and the price at which they may be acquired.

The Board may alter the rules of the Unapproved Share Option Plan at any time. Any amendmentthat is to the disadvantage of an optionholder requires the consent of the optionholder.

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8.5 The Approved Share Option Plan

The Approved Share Option Plan was adopted by Xchanging B.V. on 19 April 2000 and wasapproved by HMRC on 17 May 2000. The number of Shares subject to outstanding options underthe Approved Share Option Plan on 24 April 2007 was 3,986,744 at exercise prices ranging from£0.332 to £1.325 and with exercise dates expiring up to 5 February 2017.

The rules of the Approved Share Option Plan are substantially the same as the rules of theUnapproved Share Option Plan set out above. However, there is no compulsory exchange ofoptions in the event of a change of control of Xchanging B.V.. In addition, adjustments to the termsof options granted under the Approved Share Option Plan must be approved by HMRC. Theconsent of HMRC is also required in respect of amendments made to the Approved Share OptionPlan.

8.6 The Unapproved G Share Option Plan

The Unapproved G Share Option Plan was adopted by Xchanging B.V. on 28 April 2004. TheUnapproved Share Option Plan is not approved by HMRC. The number of Shares subject tooutstanding options under the Unapproved G Share Option Plan on 24 April 2007 was 4,182,964 atexercise prices ranging from £0.096 to £0.322 and with exercise dates up to 13 December 2014.

The rules of the Unapproved G Share Option Plan are substantially the same as the rules of theUnapproved Share Option Plan set out above. However, on cessation of an optionholder’semployment with the Group for any reason, his options may only be exercised if and to the extentthat the grantor so determines during a period of three months, after which they will lapse.

8.7 The SPP

The SPP was adopted by the Company on 16 January 2007. The Company has established theXchanging B.V. 2007 Employee Benefit Trust, details of which are set out in paragraph 8.12 of thisPart 8: Additional Information, to operate in conjunction with the SPP. The SPP is not approved byHMRC. Awards under the SPP are not pensionable. The Board does not intend to issue any furtherinvitations after Admission to invite executives to purchase Shares under the SPP.

Only the Executive Directors and certain members of senior management currently participate inthe SPP.

The Xchanging B.V. 2007 Employee Benefit Trust has been funded by way of a loan of £6,443,560from Xchanging B.V., which the Xchanging B.V. 2007 Employee Benefit Trust has on-lent to theparticipants in the SPP to acquire 1,215,766 Class F Common Shares in Xchanging B.V. at marketvalue. Conditional on Admission, those shares have been exchanged for 4,863,064 Shares.

No interest is payable on a loan (unless the participant defaults on repayment of the loan, in whichcase default interest will be payable). The loans will become repayable on the first to occur of theemployee ceasing employment, the employee transferring or otherwise disposing of his Shares (orattempting to do so), the employee accepting another loan from a member of the Group torefinance the loan and the ‘‘long-stop’’ date of 31 December 2011.

If a participant ceases to be employed for any other reason than by reason of death, injury,disability, redundancy or retirement (or his employing business or subsidiary being transferred outof the Group), the participant can be required to sell his Shares to the Xchanging B.V. 2007Employee Benefit Trust at the lower of fair market value and the purchase price paid for theoriginal Xchanging B.V. shares.

In order to enable the Xchanging B.V. 2007 Employee Benefit Trust to enforce repayment of theloan (in any circumstances), the Xchanging B.V. 2007 Employee Benefit Trust has a call option overall of each participant’s Shares until the participant’s loan is repaid in full. If a participant ceases tobe employed by reason of death, injury, disability, redundancy or retirement (or his employingbusiness or subsidiary being transferred out of the Group) (‘‘good leaver reasons’’), he can berequired to sell his Shares to the Xchanging B.V. 2007 Employee Benefit Trust for their fair marketvalue. A participant who ceases employment for a good leaver reason can oblige the Xchanging B.V.2007 Employee Benefit Trust to purchase his Shares at their fair market value. Any other leaver canoblige the Xchanging B.V. 2007 Employee Benefit Trust to purchase his shares at the lower of theoriginal purchase price paid for the original Xchanging B.V. shares and fair market value. In each

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case the participant can only oblige the Xchanging B.V. 2007 Employee Benefit Trust to purchasesufficient Shares to enable the loan to be repaid.

Aside from a possible sale of Shares on leaving employment (as described above), participants maynot normally sell, transfer or otherwise dispose of their Shares for a period of 18 months from thedate of issue of the original Xchanging B.V. shares. However, if there is a change of control, schemeof reconstruction or amalgamation or winding up of the Company, participants may sell theirShares even where the event in question occurs within 18 months from the date of issue of theoriginal Xchanging B.V. shares.

8.8 The PSP

The Remuneration Committee will be responsible for the operation of the PSP, which will beoperated in conjunction with the Xchanging B.V. 2007 Employee Benefit Trust. However, in thecase of participants who are neither Executive Directors nor other very senior executives designatedas ‘‘senior managers’’ in the PSP, all references below to the Remuneration Committee should beread as instead applying to the Board. The PSP is not intended to be approved by HMRC. Awardsunder the PSP are not pensionable.

The Remuneration Committee may select any employee (including executive directors) of theCompany or any of its subsidiaries to participate in the PSP.

Only the Executive Directors and certain members of senior management will initially participate inthe PSP.

An award takes the form of an option with a nil exercise price or an allocation, being a deferredright to acquire Shares in the future at no cost to the participant. The Remuneration Committeemay also decide that an award should take the form of forfeitable Shares (if it would beadvantageous for tax or other reasons for a participant to hold forfeitable Shares in a particularjurisdiction rather than holding an option or allocation) or such other form of award as hassubstantially the same economic effect. If forfeitable Shares are awarded under the PSP, aparticipant holding forfeitable Shares will not be automatically entitled to receive dividends or beable to vote the Shares until the Shares have vested (vesting will be on the same terms as for optionsand allocations). However, whatever the form of the award, the Remuneration Committee maydetermine that the participant should receive cash or additional Shares by reference to dividendspaid on those Shares which vest under the SPP.

Awards may be made during the six weeks following Admission and thereafter during the period ofsix weeks following the announcement by the Company of its results for any period and at any othertime when the grant of awards would not be prohibited under the Model Code or the Company’sown share dealing code. No awards may be made after 23 April 2017, being 10 years after the dateon which the PSP was adopted.

Awards comprise a basic award and a ‘‘stretch’’ award. The maximum number of Shares subject to abasic award granted to an individual in any financial year will be equal to 100% of annual basesalary as at the award date. The maximum number of Shares subject to a ‘‘stretch’’ award granted toan individual in any financial year will be equal to 50% of salary. However, if the RemunerationCommittee decides that exceptional circumstances exist in relation to the recruitment or retentionof an employee, the maximum award level will be 300% of annual base salary.

Awards are personal to a participant and, except on death, may not be transferred.

The performance conditions will be determined by the Remuneration Committee before awardsunder the PSP are made. The performance conditions applicable to awards granted in any year willbe described in the annual report and accounts of the Company for that year.

The performance conditions applicable to the first grant of awards will be determined by referenceto the Company’s relative Total Shareholder Return (‘‘TSR’’) performance over a period of no lessthan three years.

The Company’s relative TSR performance will be measured against those companies which makeup the constituents of the FTSE 250 index (excluding investment trusts) at the date when theawards are made. The Company believes that the constituents of the FTSE 250 index will provide ameaningful and sufficiently stretching comparator group against which to measure the Company’sperformance.

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No vesting of awards under the PSP will be possible unless the Company’s relative TSRperformance is at the median level against the comparator group (at which level there is 25%vesting of the basic portion of the award), with maximum vesting of the basic portion of the awardonly possible if performance is at or above the upper quartile of the comparator group over theperformance period. In addition to the TSR performance criteria, the annual average EPS growthmust be greater than RPI plus �% (with � to be determined by the Remuneration Committee)over the performance period for any award to vest.

In addition, any vesting of the ‘‘stretch’’ portion of the award will require the Company’s relativeTSR performance to be at or above upper quartile level and maximum vesting of the ‘‘stretch’’portion of the award will require upper decile performance.

The parameters of the performance measure should not be construed as providing any view on thefuture performance of the Company.

There will be no provision for the re-testing of performance. The Remuneration Committee willregularly review the performance conditions for future awards to ensure they are appropriate forthe Company and the prevailing recruitment market. The conditions may be varied in exceptionalcircumstances following the grant of an award so as to achieve their original purpose but not so asto make their achievement any more or less difficult to satisfy.

Awards will normally vest after three years, but only to the extent that the performance conditionshave been met.

Normally, a participant must remain employed by a member of the Group to receive his Shares.However, if a participant ceases to be employed by reason of death, injury, disability, redundancy orretirement (or his employing business or subsidiary being transferred out of the Group), his awardscan nonetheless vest. If a participant ceases to be employed for any other reason, the RemunerationCommittee has discretion to allow his awards to vest. In these ‘‘early leaver’’ circumstances, theRemuneration Committee may determine that the number of Shares which vest after three yearsshall be reduced proportionately on a time basis. Alternatively, the Remuneration Committee mayallow awards to vest prior to the third anniversary of grant to the extent that the performanceconditions have been satisfied at the time that the participant ceases employment, but on the basisthat the number of Shares in respect of which an award may vest shall be reduced proportionatelyon a time basis, unless the Remuneration Committee decides otherwise.

The PSP is subject to the following limits:

(a) in any 10 year period, the number of Shares which may be issued or placed under option oraward under the PSP and under any other executive share plan established by the Companymay not exceed 5% of the issued ordinary share capital of the Company from time to time;and

(b) in any 10 year period, the number of Shares which may be issued or placed under option oraward under the PSP, any other executive share plan and under any employee share planestablished by the Company may not exceed 10% of the issued ordinary share capital of theCompany from time to time.

The issue of Shares after Admission in relation to options and awards granted before Admission(whether or not granted conditional on Admission) are not counted towards the above limits. Inaddition, 4,006,388 Shares previously authorised by shareholders but not yet allocated to employeesmay be placed under option or issued without counting towards the above limits. Treasury Sharesmay be used to satisfy awards but these will be treated as issued for the purposes of the limits in (a)and (b) above.

The Xchanging B.V. 2007 Employee Benefit Trust above may subscribe for or purchase Shares to beused to satisfy awards granted under the PSP.

If there is a change of control, scheme of reconstruction or amalgamation or winding up of theCompany, awards will vest to the extent that the performance conditions have been met as at thattime, but on the basis that the number of Shares in respect of which an award vest shall be reducedproportionately on a time basis, unless the Remuneration Committee decides otherwise. Aninternal reorganisation will not trigger the early vesting of awards.

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In the event of an increase or variation of the share capital of the Company, the RemunerationCommittee may make such adjustments as it considers appropriate to the number of Shares which aparticipant can acquire under his awards.

The Remuneration Committee may amend the PSP at any time. However, the prior approval of theCompany in general meeting will be required for amendments to the advantage of participantsrelating to eligibility, limits, rights to exercise awards and variations of capital except for minoramendments to benefit the administration of the PSP, to take account of changes in legislation or toobtain or maintain favourable tax treatment, exchange control of regulatory treatment forparticipants or any member of the Group. Any amendment to the disadvantage of participantsrequires their majority consent.

Where an award has vested, the Remuneration Committee, instead of issuing, or procuring thetransfer of, Shares, may pay cash to the executive concerned. The amount to be paid shall be equalto the value of the Shares at the time of vesting.

8.9 The ESOP

The ESOP is divided into two parts: Part A which has been designed for approval by HMRC andPart B which is not intended to be so approved. Options granted under the ESOP are notpensionable. The Remuneration Committee will be responsible for the operation of the ESOP.However, in the case of participants who are neither Executive Directors nor other very seniorexecutives designated as ‘‘senior managers’’ in the ESOP, all references below to the RemunerationCommittee shall be read as instead applying to the Board.

A person is eligible to be granted an option under the ESOP if he or she is an employee (includingan executive director) of the Company or any of its subsidiaries.

Options may normally only be granted in the six weeks beginning with each of (1) the date on whichthe ESOP is adopted by the Company and (2) Admission (or in the case of options under Part A, inthe six weeks following the date on which Part A of the ESOP is approved by HMRC) andthereafter in the six-week period following the announcement by the Company of its results for anyperiod. Options may be granted outside these periods in exceptional circumstances. No options maybe granted after 23 April 2017, being 10 years after the date of adoption of the ESOP. Options arepersonal to participants and may not be transferred except on death.

A participant may not receive in any year an option over Shares with a market value in excess of twotimes (or three times in exceptional circumstances) his basic salary. The aggregate market value ofShares which any person may acquire upon exercise of options granted under Part A of the ESOPmay not, in aggregate with other outstanding HMRC-approved discretionary options, exceed£30,000.

The price payable for each Share under option will be determined by the Remuneration Committeebefore the grant of the option, provided that it shall not be less than the market value of a Share atthe time the option is granted.

An option will normally be exercisable between three and 10 years following its grant. In the eventthat options are granted under this plan to senior managers, such options will only be exerciseablewhere a specified performance condition (which will be described in the Company’s annual reportand accounts) has been satisfied.

If a participant ceases to be employed through death, injury, disability, redundancy, normalretirement or in the event that the employing company or business is sold out of the Group, or inexceptional circumstances determined by the Remuneration Committee, the option can beexercised from the third anniversary of the date of grant.

In the event of a takeover, reconstruction or winding-up of the Company, early exercise of optionsis permitted based on the level of performance up to the date of the triggering event

Where an option has been exercised under Part B, the Remuneration Committee may elect, insteadof issuing or procuring the transfer of Shares, to pay cash to the executive concerned. The amountto be paid (subject to deduction of tax or similar liabilities) shall be equal to the amount by whichthe market value of the Shares subject to the option on the day before the option was exercisedexceeds the exercise price.

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In the event of any increase or variation of share capital, the Remuneration Committee may makesuch adjustments as it considers appropriate to the number of Shares under option and the price atwhich they may be acquired. Adjustments to the terms of options granted under Part A must beapproved by HMRC.

The ESOP contains the following limits:

(a) in any 10-year period, the number of Shares which may be issued or placed under option oraward under the ESOP and under any other executive share plan established by theCompany may not exceed 5% of the issued ordinary share capital of the Company from timeto time; and

(b) in any 10-year period, the number of Shares which may be issued or placed under option oraward under the ESOP, any other executive share plan and under any other share planestablished by the Company may not exceed 10% of the issued ordinary share capital of theCompany from time to time

Shares may be transferred out of treasury to satisfy options granted under the ESOP but any sharesso transferred will be treated as issued for the purposes of the limits in (a) and (b) above. The issueof Shares after Admission in relation to options and awards granted before Admission (whether ornot granted conditional on Admission) are not counted towards the above limits. In addition,4,006,388 Shares previously authorised by shareholders but not yet allocated to employees may beplaced under option or issued without counting towards the above limits.

The Remuneration Committee may amend the ESOP at any time. However, the prior approval ofthe Company in general meeting will be required for amendments to the advantage ofoptionholders relating to eligibility, limits, rights to exercise options and variations of capital, exceptfor minor amendments to benefit the administration of the ESOP, to take account of changes inlegislation or to obtain or maintain favourable tax treatment, exchange control or regulatorytreatment for participants or any member of the Group. Any amendment to the disadvantage ofparticipants requires their majority consent. The consent of HMRC is required in respect ofamendments made to key features of Part A of the ESOP.

8.10 Infrex Employee Share Trust

The trustees of the Infrex Employee Share Trust are David Andrews and John Bramley. The InfrexEmployee Share Trust is a discretionary trust for the benefit of such employees of Xchanging UKLimited and its subsidiaries as the trustees decide to benefit.

On 10 April 2007, the Infrex Employee Share Trust sold, in aggregate, 14,723 Common Shares tocertain employees of the Group (within the class of beneficiaries of that Trust), as follows: 5,000Common Shares to Gary Whitaker; 1,500 Common Shares to John Doherty; 4,223 Common Sharesto Jonathan Stratford; 2,000 Common Shares to Stephane Bouvier; and 2,000 Common Shares toDarren Fisher, each at purchase price of £7.34 per Common Share.

The Infrex Employee Share Trust holds a further 47,777 Common Shares which, conditional onAdmission, have been exchanged for 191,108 Shares.

8.11 Xchanging Employee Benefit Trust

The trustee of the Xchanging Employee Benefit Trust is Ogier Employee Benefit Trustee Limited,an independent professional trustee situated in Jersey. The Xchanging Employee Benefit Trust is adiscretionary trust for the benefit of such employees of Xchanging B.V. and its subsidiaries as thetrustees decide to benefit. The Xchanging Employee Benefit Trust does not hold any CommonShares.

8.12 Xchanging B.V. 2007 Employee Benefit Trust

The trustee of the Xchanging B.V. 2007 Employee Benefit Trust is Ogier Employee BenefitsTrustee Ltd, an independent professional trustee situated in Jersey. The Xchanging B.V. 2007Employee Benefit Trust is a discretionary trust for the benefit of such employees of Xchanging UKLimited as the trustees decide to benefit. The Xchanging B.V. 2007 Employee Benefit Trust hasbeen funded by way of a loan from Xchanging B.V. in order to enable selected executives toparticipate in the SPP (see paragraph 8.7 above). The Xchanging B.V. 2007 Employee Benefit Trustwas established in order to operate in conjunction with the SPP summarised at paragraph 8.7 above.

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However, it will also operate in conjunction with the PSP summarised above. Certain SellingShareholders have sold their Scheme A and/or G Shares to the Xchanging B.V. 2007 EmployeeBenefit Trust. As consideration for these transfers, the Xchanging B.V. 2007 Employee BenefitTrust has agreed to remit the proceeds of the sale of the resulting Shares to the Selling Shareholderson or as soon as reasonably practicable after the date of Admission. For further information of thisarrangement, please refer to paragraph 19 of this Part 8: Additional Information.

9. PROPERTY

9.1 No property in the Group accounts for 10% or more of the Group’s annual turnover. All of theGroup’s properties are held under leases, including the Company’s registered office and principalplace of business located at 34 Leadenhall Street, London EC3A 1AX.

9.2 So far as the Company is aware, there are no environmental issues that may affect the Group’sutilisation of its fixed assets.

10. SUBSIDIARIES

10.1 The Company is the holding company of the Group and has the following significant subsidiaryundertakings, each of which is (save where otherwise stated in this paragraph 10.1) incorporated inEngland and Wales, having its registered office at 34 Leadenhall Street, London EC3A 1AX and iswholly-owned, either directly or indirectly, by the Company and will be consolidated into the annualfinancial statements of the Company. Xchanging Procurement Services Limited has its registeredoffices at 13 Hanover Square, London W15 1HN; Xchanging Asia Pacific Sdn Bhd is incorporatedin Malaysia and has its registered office at Level 19 Uptown 1, No. 1 Jalen 55, 21/58 DamansaraUptown, Petaling Jaya, 47400 Selangor, Malaysia; Xchanging etb GmbH, Xchanging GmbH andXchanging Transaction Bank GmbH are all incorporated in Germany and each has its registeredoffice at Wilhelm-Fay-Str. 31-37, Frankfurt 65936; Xchanging Procurement Services Pty Ltd isincorporated in Australia and has its registered office at Tower 2, Level 21, 201 Sussex Street,Sydney NSW 2000; Xchanging Systems and Services Inc. is incorporated in the USA and has itsregistered office at 8 Campus Dr Ste 2, Parsippany, NJ 07054; and Xchanging Technology ServicesIndia Private Ltd is incorporated in India and has its registered office at R-4, Greater Kailash,Phase I, New Delhi-110048, India:

Proportion ofnominal value of

issued sharescontrolled by the

Group (andproportion of

voting rights ifName of company different) (%) Field of activity

Direct Subsidiaries of the Company

Xchanging B.V.......................................................... 100 Holding company

Xchanging Holdings Limited ................................. 100 Holding company

Indirect Subsidiaries of the Company

Ferguson, Snell and Associates Limited............... 100 UK immigration services

Ins-sure Services Limited........................................ 50 Non-life insurance policy andpremium processing

Landmark Business Consulting Limited............... 100 Business and management consultancy

LCO Marine Limited .............................................. 25(50)(1) Non-life Insurance claims handlingand processing

LCO Non-Marine and Aviation Limited ............. 25(50)(1) Non-life Insurance claims handlingand processing

London Processing Centre Limited ...................... 50 Non-life Insurance premium andpolicy processing

LPSO Limited .......................................................... 50 Non-life insurance policy andpremium processing

Xchanging Asia Pacific Sdn Bhd........................... 100 Software sales and support

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Proportion ofnominal value of

issued sharescontrolled by the

Group (andproportion of

voting rights ifName of company different) (%) Field of activity

Xchanging Broking Services Limited.................... 50 Insurance broker administration andprocessing services

Xchanging Claims Services Limited...................... 25(50)(1) Insurance claims handling andprocessing

Xchanging etb GmbH............................................. 51(100)(2) Holding company for securitiestransaction processing

Xchanging Global Insurance Solutions Limited.. 100 Software consultancy and supply

Xchanging GmbH.................................................... 100 Business development

Xchanging HR Services Limited ........................... 100 HR administration

Xchanging Insurance Professional ServicesLimited .................................................................. 100 Business and management consultancy

Xchanging Insurance Technical ServicesLimited .................................................................. 50 Regulated insurance administration

Xchanging Procurement Services Limited ........... 100 Holding company

Xchanging Procurement Services Pty Ltd............ 100 Procurement services

Xchanging Resourcing Services Limited .............. 100 Recruitment services

Xchanging Systems and Services Inc. ................... 100 Software sales and implementation

Xchanging Technology Services India PrivateLtd ......................................................................... 100 Application development and business

processing services

Xchanging Transaction Bank GmbH .................... 51(100)(2) Securities transaction processing

Xchanging UK Limited........................................... 100 Business and management consultancy

(1) Whilst the proportion of the nominal value of the shares held is 25%, the proportion of the voting rights held is 50%and the economic interest is approximately 50%.

(2) The Group has 100% voting rights with respect to shareholder resolutions, although Deutsche Bank has voting rightsonly in relation to certain reserved matters to protect Deutsche Bank against an undue derogation of its business andstrategic interest as a minority shareholder.

11. PENSIONS

The employing companies in the Group and the Enterprise Partnerships (together the ‘‘XchangingEmployers’’) provide pension benefits to employees through a number of different pensionarrangements. Some of these are defined benefit arrangements, and some of these are definedcontribution arrangements. Paragraphs 11.1 to 11.3 below are concerned with the UKarrangements, paragraph 11.4 is concerned with the German arrangements and paragraph 11.5 withdefined contribution pension arrangements elsewhere.

11.1 UK Defined Benefit Schemes—General

Currently Xchanging Employers operate two UK pension schemes that provide benefits on a finalsalary basis. These are: The Rebus Insurance Service Limited Final Salary Pension Scheme (2003)(the ‘‘Rebus Scheme’’) and the London Processing Centre Limited Retirement and Death BenefitsScheme (the ‘‘LPC Scheme’’). Xchanging Employers also participate in final salary pension schemesoperated by BAE Systems. These schemes are: the BAE Systems Pension Scheme, BAE Systems2000 Plan, Royal Ordnance Pension Scheme, BAE Systems (VSEL) Section of the ShipbuildingIndustries Pension Scheme, BAE Systems Executive Pension Scheme and the Alvis Pension Scheme(collectively the ‘‘BAE Schemes’’). Xchanging Employers also participate in a final salary schemeoperated by Lloyd’s (the ‘‘Lloyd’s Pension Scheme’’). Certain Xchanging Employers may set up anew final salary scheme within the next 12 months to accommodate staff that will leave the Lloyd’sPension Scheme. Finally certain Xchanging Employers may, at some stage in the future, be required

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to set up final salary arrangements to provide benefits for employees associated with the UniversityHospital Birmingham contract or the BAE Systems contract.

11.1.1 The Rebus Scheme

The Rebus Scheme is a multi-employer, funded final salary pension scheme providingbenefits to and in respect of members on retirement, ill health and death. As at 1 May 2006The Rebus Scheme had 564 beneficiaries (including pensioners, deferred pensioners andcurrent employees); it is operated on the basis that it is closed to new entrants. J. Boyle ofSBJ Benefit Consultants Limited, One Hundred Whitechapel, London is the scheme actuaryand is a Fellow of the Faculty of Actuaries.

The Rebus Scheme was established on 1 April 2003 as part of the arrangements that lead tothe relevant Xchanging Employers becoming part of the Group. Following the establishmentof the Rebus Scheme, a bulk transfer of assets and liabilities was effected such that theRebus Scheme became responsible for the liabilities relating to the past service of employeeswho had previously been in the Rebus Group Pension Scheme (the previous schemeoperated by the seller) and a share of the pensioners and deferred pensioners who had beenin that scheme.

There has been one formal valuation of the Rebus Scheme since its establishment. Theeffective date of this valuation was 1 April 2004. As at 1 April 2004 the deficit on the ongoingfunding basis was £11.811 million. Following this valuation, it was agreed between theemployers and the Rebus Scheme trustees that the employer would pay contributions at therate of 19.6% of Pensionable Salaries in respect of those who joined the predecessor schemepre 1 April 1992 and 14.6% of Pensionable Salaries in respect of those who joined thepredecessor scheme after 1 April 1992; this is currently equivalent to £1.4 million per annum.During 2006 the trustees and employers agreed that the employers will make additionalcontributions to fund the Rebus Scheme at a fixed rate of £1 million per annum from1 October 2006. While not referred to in the current Schedule of Contributions, theseadditional contributions will be paid until the next Schedule of Contributions is finalisedfollowing the next formal valuation due as at 1 April 2007. This valuation will be the firstvaluation of the scheme under the new scheme specific funding regime.

Xchanging Global Insurance Systems Limited is not an employer in the Rebus Scheme buthas given a guarantee to the trustees of the Rebus Scheme in respect to the employersobligations to pay contributions to be Rebus Scheme up to a specified amount.

Further information on the funding status of the Rebus Scheme is contained in note 35 ofSection A of Part 5: Accountants’ Reports and Financial Information.

11.1.2 The LPC Scheme

The LPC Scheme is a multi-employer, funded pension scheme which operates on both a finalsalary and defined contribution basis. The LPC Scheme was first established by interim deedon 30 December 1993 to provide benefits for former members of the London Insurance andReinsurance Market Association Retirement Benefits Scheme and the Pension Scheme ofthe Institute of London Underwriters. The LPC Scheme provides benefits to and in respectof members on retirement, ill health and death. As at 30 June 2006 the LPC Scheme had 658beneficiaries (including pensioners, deferred pensioners and current employees); it isoperated on the basis that it is closed to new entrants. N. Dodd of Mercer Human ResourceConsulting Limited, Tower Place, London is the scheme actuary and is a Fellow of theInstitute of Actuaries.

The trustees have typically carried out formal actuarial valuations of the LPC Scheme everythree years. The effective date of the last valuation was 1 July 2004 and showed a deficit onthe ongoing funding basis of £5.127 million but this included allowance for certaindiscretionary pension increases the granting of which is controlled by the relevant XchangingEmployer. The granting of these increases has been suspended. If no allowance were madefor discretionary pension increases the 1 July 2004 valuation would have revealed a surplusof £1.485 million. Following this valuation, it was agreed between the employers and trusteesof the LPC Scheme that the employers would pay contributions at the rate of 21.3% ofpensionable salaries; this is currently equivalent to approximately £600,000 per annum. It

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should be noted that if the relevant Xchanging Employer were to reinstate discretionarypension increases this would reduce the funding level of the scheme. Further information onthe funding status of the LPC Scheme is contained in note 35 of Section A of Part 5:Accountants’ Reports and Financial Information.

The defined contribution part of the scheme is non-contributory for members with theemployer paying 7.5% of basic salary into members’ personal accounts. Annuities arepurchased at retirement to provide pensions in respect of any members not transferring theirpersonal accounts to the defined benefit section.

Members of the defined contribution section are eligible to join the defined benefit sectionbetween ages 35 and 41. If they wish to do so, members can purchase additional years andmonths of pensionable service on the defined benefit basis using their personal account. Theterms on which pensionable service is granted are not neutral on the current funding oraccounting basis to the financial position of the LPC Scheme. Of the 26 members at 1 July2006 in the defined contribution section, 22 are under age 41 and thus have the option totransfer to the defined benefit section now or in future. If all such members were to exercisethis option this would reduce the funding levels in the scheme.

11.1.3 Participation in the Lloyd’s Pension Scheme

As part of the Enterprise Partnership entered into with Lloyd’s during 2001, threeXchanging Employers currently participate in the Lloyd’s Pension Scheme, which is a finalsalary pension scheme. These companies are LCO Marine Limited, LCO Non-MarineLimited and LPSO Limited (the ‘‘Lloyd’s Participating Companies’’). As at 31 January 2007253 Xchanging employees were active members of the Lloyd’s Pension Scheme. A fourthXchanging Employer, Ins-Sure Services Limited, previously participated in the Lloyd’sPension Scheme but ceased to do so in April 2006.

New employees of the Lloyd’s Participating Companies are offered membership of theSkandia defined contribution arrangement explained in more detail at paragraph 11.2 below.

Were the Lloyd’s Scheme to wind up while the Lloyd’s Participating Companies were in thescheme, the Lloyd’s Participating Companies would be liable for a share of the debts undersection 75 of the Pensions Act 1995 (‘‘Section 75 debts’’) and if Lloyd’s were insolvent thisliability could be material. Xchanging has indemnity protection in its contractualarrangements with Lloyd’s to cover this. In addition, notice has been served requiring therelevant employers to exit the Lloyd’s Pension Scheme which should in due course crystallisethe indemnity and eliminate this risk going forward.

The participation of the Lloyd’s Participating Companies is governed by the terms ofagreements for the sale and purchase of the shares of those companies (the ‘‘ParticipationArrangements’’) (see paragraph 18.1 of Part 8: Additional Information for a description ofthe sale and purchase agreements more generally). One of the key terms of the ParticipationArrangements is that contributions paid to the Lloyd’s Pension Scheme are to equal the costof future benefit accrual and do not reflect any surplus or deficit in the Lloyd’s PensionScheme. Based on the current salary roll of the Lloyd’s Participating Companies, cashcontributions in respect of the first six months of 2007 are likely to be approximately£0.7 million.

The Participation Arrangements also provide for the Lloyd’s Participating Companies toleave the Lloyd’s Pension Scheme at the option of either Lloyd’s or the Group after 2006 andLloyd’s has served notice requiring the Lloyd’s Participating Companies to leave effective onand from 1 July 2007. This exit will trigger a Section 75 debt estimated to be in the region of£10 million to be paid by the existing employers to the Lloyd’s Pension Scheme. However,Xchanging has indemnity protection in its contractual arrangements with Lloyd’s to coverthis debt.

It is proposed that the employees of the Lloyd’s Participating Companies will be offered twoalternative forms of future pension provision after exit. This will be either (i) membership ofa contributory defined benefit scheme; or (ii) membership of a non-contributory definedcontribution pension plan. If there is insufficient interest expressed in the stand-alonedefined benefit scheme it will not be established. Ultimately, the cost of pension provision in

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the new arrangements will depend on the take-up of the two options. It is broadly estimatedby Xchanging that the initial cash cost will be around 20% of pensionable salary or£1.4 million per annum.

In addition to the Lloyd’s Participating Companies, Ins-Sure Services Limited participated inthe Lloyd’s Pension Scheme from 15 December 2003 until 1 April 2006 but it was notindemnified against any Section 75 debts; it incurred a Section 75 debt on 1 April 2006.Lloyd’s have advised that the total Section 75 debt is approximately £1 million of whichXchanging estimates £250,000 relates to Ins-Sure Services Limited.

Once the Xchanging Employers in the Lloyd’s Pension Scheme have ceased to employ anyactive members and have paid the Section 75 debt due from them there is no furtherobligation to make payments under the terms of the Lloyd’s Pension Scheme. There ishowever a structural risk created by the legal framework of the Pensions Act 2004 that theXchanging Employers could be called upon by the Pensions Regulator under the moralhazard regime while they are still participating and for up to 12 months (in respect offinancial support directions) or 6 years (in respect of contribution notices) after they haveceased to provide additional support to the Lloyd’s Pension Scheme (see paragraph 11.3.2below for an explanation of the moral hazard provisions).

The relevant employers have been in consultation with employee representativessince November 2006 in relation to the exit of the Lloyd’s Participating Companies fromLloyd’s Pension Scheme. Any change relating to employees’ pensions has the ability totrigger employee relations issues. However, management has designed the replacementarrangement to be at a level intended to mitigate the risk of such issues arising.

11.1.4 BAE Systems

XHRS and XPS (together the ‘‘BAE Participating Employers’’) participate in the BAESchemes for certain existing employees. As at 10 January 2007, 165 employees of the BAEParticipating Employers were active members of the BAE Schemes. New employees of theBAE Participating Employers are offered membership of the Skandia defined contributionarrangement which is explained in greater detail below.

Were any of the BAE Schemes to wind-up, while the BAE Participating Employers were inthe scheme, the BAE Participating Employers would be liable for a share of the totalSection 75 debt. The BAE Participating Employers have an indemnity from BAE Systems inrespect of this.

The participation of XHRS and XPS in the BAE Schemes means that in the event of BAEbecoming insolvent, there is a risk that XHRS and XPS (and any other participatingemployer) could become liable to fund an increased part of the wider BAE Schemes. In theextreme, XHRS or XPS could become liable to fund the entirety of one or all of the widerBAE Schemes by virtue of the Section 75 debt and in the extreme if no other participatingemployer is able to contribute the Group could become liable to fund the entirety of one orall of the defined benefit pension schemes in an amount which would materially exceed theGroup’s financial resources.

The BAE Participating Employers began participating in the BAE Schemes in 2001 when theenterprise partnerships between the Group and BAE Systems began.

The key terms of participation are set out in the sale and purchase agreements with BAESystems (see paragraph’s 18.6 and 18.8 of this Part 8: Additional Information for adescription of the wider agreement in relation to XHRS and XPS) and are as follows:

(a) participation is for a closed class of employees and the number of employees in theclass will reduce over time through staff turnover. Participation will be until atleast December 2012 (unless all the relevant staff have left a particular scheme beforethen or the trustees give 3 months notice that the employer must leave);

(b) the BAE Participating Employers pay the future service contribution rates (whichmay vary) and pay a combination of fixed proportions of pensionable salary (whichwill not vary) and fixed cash amounts (which will not vary) towards the current deficitin the BAE Schemes. The BAE Participating Employers’ share of the PPF levy will

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also be a fixed amount unless the employers’ credit score deteriorates materially forreasons that Xchanging could have prevented. It is estimated that the BAEParticipating Employers’ contributions to the BAE Scheme will be approximately£1.2m for 2007;

(c) if a BAE Participating Employer leaves a BAE Scheme when it still employs membersof that scheme and (i) the BAE Participating Employers are still providing services toBAE Systems; and (ii) the BAE Participating Employer chooses or is required toleave, the BAE Participating Employer must set up a final salary scheme and accept apast service transfer (which will likely include a share of deficit);

(d) if a BAE Participating Employer leaves a BAE Scheme in circumstances other thanthose described in 11.1.4(c) above that employer is not required to set up a finalsalary scheme or accept a past service transfer; and

(e) if a Section 75 debt is triggered against a BAE Participating Employer or the trusteesof any BAE Scheme demand contributions in excess of the amounts specified in theagreement, BAE Systems will indemnify the employer with the exception of a verysmall group of employees for whom Xchanging retains the Section 75 debt risk(currently there are 8 employees in this group).

11.1.5 UHB

The Group provides services to University Hospital Birmingham (‘‘UHB’’) through amanagement contract but does not employ staff who are currently eligible to participate inthe NHS Pension Scheme.

The contract with UHB includes arrangements whereby the Group may be required topurchase the part of the UHB business that it currently manages. This put option, whichcould be exercised in 2011, might result in a TUPE transfer of employees to a new companythat would be owned by Xchanging. If this happens the contract provides that pensions willbe treated in line with statutory requirements and government guidance. Currentgovernment guidance requires a final salary scheme to be established and members invitedto transfer their past service benefits.

The contract with UHB states that to the extent that the Group takes on any liabilities,XHRS and the Group must use their reasonable endeavours to ensure an amountdetermined by the Government Actuary’s Department (GAD) is transferred. In additionUHB is required to use its best endeavours to pay further ‘‘top-up’’ amount so that theliabilities would be fully funded on a risk free basis at the time the transfer takes place.

11.1.6 Xchanging Broking Services Limited

On 1 September 2006 Xchanging entered into an Enterprise Partnership with AonConsulting Ltd, with the establishment of Xchanging Broking Services Limited and thetransfer of staff from Aon. New employees of Xchanging Broking Services Limited areoffered membership of the AXA Plan described below. Approximately 475 of the employeesthat transferred from Aon became members of the AXA Plan on enhanced terms. As theseemployees transferred on 1 September 2006, only four months’ contributions were reflectedin the year end accounts. The full year cost is expected to be approximately £1.8 million.

11.2 UK Defined Contribution Arrangements

The Group operates a number of defined contribution schemes in the UK and as at 31 January2007 there were 989 employees of the Group eligible to join the defined contribution schemes whohave not done so. If they were to do so immediately, employer contributions could increase by £1.5million per annum. Within these schemes there are different contribution structures; some of whichare age-related, some service-related and some based on a ‘‘matching’ approach. The schemes areas follows:

(a) The Xchanging Stakeholder Pension Plan (administered with AXA) (the ‘‘AXAPlan’’) which as at 31 January 2007 had 468 Active Members;

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(b) The Xchanging Skandia Executive Pension Scheme (an occupational definedcontribution pension scheme) (the ‘‘Skandia Scheme’’) which as at 31 January 2007had 301 Active Members; and

(c) The Rebus IS Group Stakeholder Pension Plan (administered with ScottishEquitable) (the ‘‘Rebus Plan’’) which as at 31 January 2007 had 67 Active Members.

All new employees across the Group in the UK (with the exception of Xchanging Broking ServicesLimited) are currently offered membership of the Skandia Scheme or the Rebus Plan (dependingon employer).

11.3 Regulatory and Legal Environment Relating to Pensions

11.3.1 Pensions Act 1995

As the Rebus and LPC Schemes have several employers there are risks of Section 75 debtsfalling due in future when employers cease to participate in either of the schemes. This is astatutory debt which is triggered under Section 75 of the Pensions Act 1995 in certaincircumstances, including when an employer exits a multi-employer defined benefit schemewhen there is a deficit in the scheme on the ‘‘buy out’’ basis. Generally the ‘‘exiting’’employer must pay a debt equal to a proportion of the total buy out deficit. Any debt paid inby an exiting employer will improve the funding position of the scheme and so ultimatelyreduce the contingent liability on the remaining Xchanging Employers although theaccounting and cash flow consequences may be unpredictable.

The Group will monitor changes in employee numbers in employers in both the Rebus andLPC Scheme to manage the risk of debts inadvertently falling due. For Section 75 debt issuesin relation to Lloyd’s and BAE please see paragraphs 11.1.3 and 11.1.4 above.

A Section 75 debt is also triggered when a pension scheme winds up. As of 1 May 2006 theactuary of the Rebus Scheme estimated that if a Section 75 wind-up debt were to betriggered it would be approximately £75 million. As at 1 July 2004 the actuary of the LPCScheme estimated that if a Section 75 wind-up debt were to be triggered it would beapproximately £20 million.

Under the Rebus Scheme the trustees can wind-up the scheme (i) if the principal employergoes into liquidation; or (ii) if there are no members in either pensionable or insurableservice. Under the LPC Scheme the trustees can wind-up the scheme if (i) the actuarycertifies that the scheme is insolvent; (ii) the trustees decide on actuarial advice that thecontributions paid by the employer are so low that the financial position of the scheme isprejudiced; (iii) the trustees decide that the intention and objects of the scheme havebecome significantly different to those which were relevant at the start of the scheme;(iv) the Principal Employer fails, in the opinion of the trustees, to comply with any provisionsof the scheme and does not remedy this when notified by the trustees; or (v) insolvency ofthe Principal Employer. Further, if the actuary certifies that there will be insufficient assetsto meet the scheme’s liabilities, the trustees have certain powers to trigger a wind-up.

Certain Xchanging Employers have in the past participated in other final salary pensionsarrangements including the predecessor to the Rebus Scheme (the ‘‘Rebus Group PensionScheme’’). Where an employer has been in a final salary scheme, there is a risk that it may berequired to pay additional contributions under Section 75 even after it has left the scheme ifthe scheme winds up in the future in deficit or under the ‘‘moral hazard’’ provisions.Provided, however, that the sponsoring employer of a predecessor scheme remains able tosupport the scheme the risk to the Group companies is low.

11.3.2 Pensions Act 2004

(a) Moral Hazard

Under the ‘‘moral hazard provisions’’ of the Pensions Act 2004, the Pensions Regulator hasthe power to impose Contribution Notices (‘‘CNs’’) and Financial Support Directions(‘‘FSDs’’). CNs can be imposed where the Pensions Regulator is of the opinion that one ofthe main purposes of an act or failure to act was to prevent recovery of a statutory pensionsdebt or, otherwise than in good faith, to prevent such debt becoming due or to settle orreduce such debt. The Regulator must also be of the opinion that it is reasonable to impose

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the CN. A CN may be issued to an employer or a person who is ‘‘connected with’’ or ‘‘anassociate of’’ an employer. The categories of ‘‘connected or associate’’ are widely definedand include: (i) other group companies; (ii) one-third shareholders; (iii) directors andemployees of the employer; and (iv) persons who are ‘‘connected’’ with a director of theemployer.

FSDs, in contrast to CNs, do not require avoidance of a debt. FSDs can, like CNs, beimposed on a person or company who is connected with or associated with an employer in ascheme. The Regulator can issue an FSD where it is of the opinion that the participatingemployer is either a service company or ‘‘insufficiently resourced’’ and it is of the opinionthat it is reasonable to impose an FSD. It can require arrangements to be put in place whereall group companies are jointly liable or a suitable holding company is liable.

The moral hazard provisions have two potential impacts. First the Enterprise Partnershipsand the Group could be called upon to provide support to the BAE Schemes or the Lloyd’sScheme. Second, Xchanging Employers could be called upon to support predecessorschemes.

(b) Statutory funding requirements

A new scheme-specific funding regime for defined benefit schemes is being introducedunder sections 222 to 231 of the Pensions Act 2004. Under the new regime the trustees havespecific duties in setting the scheme’s funding arrangements. The regime does not prescribethe funding arrangements which must be adopted, but gives the Pensions Regulator power toissue guidance and to impose funding arrangements in some limited circumstances.

The combination of the scheme-specific funding regime and the balance of power in thegoverning documentation of the Rebus Scheme and LPC Scheme means that thecontribution rate must be agreed by the employers and the trustees or failing agreementreferred to the Pensions Regulator.

The new funding regime will first actively impact on the Rebus Scheme at the next valuationwhich is due as at 1 April 2007 and on the LPC Scheme at the next valuation which is due asat 1 July 2007. The employer contribution rates in both the Rebus and LPC Scheme will bereviewed at this next valuation. There therefore is uncertainty regarding the company cashcontribution rate following the forthcoming valuations of both schemes. The contributionrate determined will depend on a number of factors including the financial position of eachscheme at the date of valuation and the degree of prudence adopted in assessing theliabilities of both schemes. The scheme-specific funding regime requires that a ‘‘prudent’’approach be adopted, but does not define prudence in this context. There is a risk that theassumptions adopted to address the scheme-specific funding regime are likely to be moreconservative than those used in the previous valuations. The timescale over which anyassessed deficit in both of the schemes is to be removed following the valuations will alsohave an effect on the contribution rate under the scheme specific funding guidelines, themaximum deficit removal period normally accepted is 10 years, and the trustees may seek ashorter removal period.

(c) PPF Levy

The Government introduced the Pension Protection Fund (‘‘PPF’’) with effect from April2005 to provide compensation to members of defined benefit pension schemes which areunder-funded and whose employers are insolvent. In order to fund the PPF, levies are raisedon defined benefit pension schemes in the UK. Accordingly, the Group is ultimatelyrequired to meet the cost of the levy in respect of the both the Rebus and LPC Scheme andto contribute to the cost of the levy for the BAE Schemes (the BAE Participating Employers’share of the PPF levy will be a fixed amount unless the employers’ credit score deterioratesmaterially for reasons that Xchanging could have prevented). The levy for the Rebus Schemefor the year 2006 was £28,000. The levy for the LPC Scheme was £21,000. The PPF levy for2007/08 for both the Rebus Scheme and LPC Scheme is uncertain, and will depend on anumber of factors including Dun & Bradstreet ‘‘failure scores’’ for the companies and thefinancial position of the both schemes at the time of valuation.

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11.3.4 Equalisation

Sex discrimination law requires pension schemes to provide pensions based on the samenormal retirement date for men and women for service after May 1990. While the currenttrust deed and rules for the LPC Scheme and the Rebus Scheme provides for the samenormal retirement date for men and women this is a complex and evolving area of the law,with the result that it is possible that there are unrecognised areas in which a scheme’sadministration may not be fully compliant with the obligations that flow from this basicprinciple. Such areas could give rise to additional liabilities. Further, there may be sexdiscrimination liabilities that arise because the schemes were ‘‘contracted out’’ of the Statepension scheme before 1997. On the last point it should be noted however that many otherpensions schemes face exactly the same issue and it will only be resolved with assistance fromthe UK courts or Government.

11.4 German Pension Arrangements

Xtb operates three defined benefit schemes. Pension plans VO 78 and VO 84 provide pensions toall regular employees of the company who started employment prior to 31 March 1984 or between1 April 1984 and 31 December 1995 respectively. Pensions are based on salary and service atretirement, death or disability. Benefits to the employee’s widow/er and orphans are included.Member contributions are not required. Both plans are closed to new entrants.

The Cash Balance Plan was set up in 1995 for new joiners from 1 January 1996 and is currentlyopen. Members of the VO 78 and of the VO 84 pension plans were given the opportunity totransfer past service benefits into the Cash Balance Plan and to accrue future service benefits in theCash Balance Plan. The majority of the VO plan members made use of this opportunity. Under theCash Balance Plan employees are entitled to a salary-related regular contribution, which, after theapplication of an age-related actuarial factor, is credited to plan members’ individual ‘‘BenefitAccount’’. The balance of the Benefit Account can be claimed by the plan member or his/herdescendants as a lump-sum, as instalments or as life-long pension payment in case of retirement,death or disability. Rauser AG of Oskar-Kalbfell-Platz 14, Handelsgesetzbuch is the actuarial firmappointed to all three German defined benefit schemes.

As of 30 November 2006 pension plans VO 78 and VO 84 covered 212 active and deferred membersand 226 pensioners and the Cash Balance Plan covered 895 active and deferred membersemployees, of and 24 pensioners. As of 31 December 2006, the balance sheet provisions for theVO 78/VO 84 pension commitments were A25,528,502 (according to German accounting rulesstipulated in the German Commercial Code (Handelsgesetzbuch (‘‘HGB’’)) or A36,757,340(IAS 19) and for the Cash Balance Plan A27,610,800 (HGB) or A36,653,297 (IAS 19), resulting in atotal of A53,139.302 (HGB) or A73,410,637 (IAS 19).

Although not legally required in Germany, the pension liabilities are supported by way of aContractual Trust Arrangement (‘‘CTA’’). The CTA, by which Xtb plans are supported, forms asegregated part, which is contractually owned by Xtb, of the Deutsche Bank Pension Fund.Deutsche Bank operates two funds managed by Deutsche Asset Management. There is approx.A2.8 billion in each fund of which approx. A71 million relates to the CTA. The pension liabilities arealmost fully financed by means of the CTA, which can be regarded as segregated assets under theprovisions of IAS 19.

The existence of the CTA does not reduce the pension obligation as shown in the balance sheet andif the assets held under the CTA management by Deutsche Asset Management do not performadditional funding will be required.

11.5 Defined Contribution Arrangements Elsewhere

Two Xchanging employers in the United States operate ‘‘401(k) Plans’’: the Xchanging GlobalInsurance Services (US) Inc 401(k) Profit Sharing Plan and the Xchanging Systems and Services Inc401(k) Profit Sharing Plan. These are retirement savings plans which accept employer and employeecontributions. They are defined contribution arrangements. In Bermuda, Xchanging operates adefined contribution plan: the Pension Plan of Rebus International (BDA) Limited.

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12. UNITED KINGDOM TAXATION

12.1 General

The following statements are only a guide to the general position and are based on current UKtaxation legislation and published practice of HMRC both of which are subject to change, possiblywith retrospective effect. Except where the position of non-UK residents is expressly referred to,these statements relate solely to persons who are resident or ordinarily resident in the UK for UKtax purposes, who are the beneficial owners of Shares, who hold their Shares as an investment andnot as trading stock and who have not (and are not deemed to have) acquired their Shares byreason of an office or employment). The comments below may not apply to certain classes ofshareholders such as (but not limited to) dealers in securities, insurance companies and collectiveinvestment schemes. If you are in any doubt as to your tax position or if you are subject to tax in ajurisdiction other than the UK, you should consult your own professional advisers.

12.2 Dividends

Under current UK taxation legislation, no tax will be withheld at source from dividend payments bythe Company.

12.2.1 Individuals

UK resident individual shareholders who receive a dividend from the Company willgenerally be entitled to a tax credit, which can be set off against the individual’s income taxliability on the dividend payment. The rate of tax credit on dividends paid by the Companywill be 10% of the total of the dividend payment and the tax credit (the ‘‘gross dividend’’), orone-ninth of the dividend payment. UK resident individual shareholders will generally betaxable on the gross dividend, which will be regarded as the top slice of the shareholder’sincome. UK resident individual shareholders who are not liable to income tax in respect ofthe gross dividend will generally not be entitled to reclaim any part of the tax credit. In thecase of a UK resident individual shareholder who is not liable to income tax at the higherrate (taking account of the gross dividend he or she receives), the tax credit will satisfy in fullsuch shareholder’s liability to income tax. To the extent that a UK resident individualshareholder’s income (including the gross dividend) exceeds the threshold for higher rateincome tax, such shareholder will be subject to income tax on the gross dividend at 32.5%but will be able to set the tax credit off against this liability. An individual shareholder who isliable to the higher rate of income tax will therefore be liable to income tax equal to 22.5%of the gross dividend (or 25% of the dividend payment).

12.2.2 Companies

A corporate shareholder resident in the UK (for tax purposes) will generally not be subjectto corporation tax on dividend payments by the Company. Corporate shareholders will not,however, be able to claim repayment of tax credits attaching to the dividend payment.

12.2.3 Non-Residents

In general, the right of non-UK resident shareholders to reclaim tax credits attaching todividend payments by the Company will depend upon the existence and the terms of anapplicable double tax treaty between their jurisdiction of residence and the UK. In mostcases, the amount that can be claimed by non-UK resident shareholders will be nil as a resultof the terms of the relevant treaty. They may also be liable to tax on the dividend incomeunder the tax law of their jurisdiction of residence. Non-UK resident shareholders shouldconsult their own tax advisers in respect of their liabilities on dividend payments, whetherthey are entitled to claim any part of the tax credit and, if so, the procedure for doing so.

12.2.4 Pension Funds

UK resident shareholders who are not liable to income tax, including pension funds,charities and individuals holding shares through a personal equity plan or individual savingsaccount, are not entitled to reclaim the tax credits on dividends paid by the Company.

12.3 Chargeable Gains

A disposal of the Shares by a shareholder who is resident or, in the case of an individual, ordinarilyresident for tax purposes in the UK, or a shareholder who is neither resident nor ordinarily resident

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in the UK for tax purposes, but who carries on a trade, profession or vocation in the UK through apermanent establishment (where the shareholder is a company) or through a branch or agency(where the shareholder is not a company) and has used, held or acquired the Shares for thepurposes of such trade, profession or vocation or such permanent establishment, branch or agency(as appropriate) may, depending on the shareholder’s circumstances and subject to any availableexemption or relief, give rise to a chargeable gain or an allowable loss for the purposes of UKtaxation on chargeable gains. An individual shareholder who for a period of less than five yearseither has ceased to be resident and ordinarily resident for tax purposes in the UK or has becomeresident in a territory outside the UK for purposes of double taxation relief arrangements and whodisposes of the Shares during that period, may be liable on his or her return to the UK to UKcapital gains tax on any chargeable gain realised. Nothing in any double taxation reliefarrangements shall prevent such an individual from being subject to UK capital gains tax in thosecircumstances.

For shareholders who are subject to capital gains tax, taper relief (which reduces the percentage ofthe gain chargeable by reference to how long the shares have been held) may be available to reducethe amount of chargeable gain realised as a disposal of the Shares. Prior to the listing of theCompany’s Shares, the Shares currently held by shareholders should qualify for business assist taperrelief (‘‘BATR’’). Once the Shares are listed on the full market, BATR will only be available toindividuals who are shareholders and employees or officers of the Company or who areshareholders with 5% or more of the voting rights. For Shares which qualify for BATR and whichare held for a period greater than two years the percentage of the chargeable gain is reduced by75%.

12.4 UK Inheritance and Gift Taxes

Shares beneficially owned by an individual shareholder will be subject to UK inheritance tax on thedeath of the shareholder (even if the shareholder is not domiciled or deemed domiciled in the UK).For UK inheritance tax purposes, a transfer of assets to another individual or trust could potentiallybe subject to UK inheritance tax, based on the loss of value to the donor. Particular rules apply togifts where the donor reserves or retains some benefit. UK inheritance tax is not chargeable on giftsto individuals or if the transfer is made more than seven complete years prior to death of the donor.Special rules apply to close companies and to trustees of settlements who hold shares, which couldbring them within the charge to UK inheritance tax.

Shareholders should consult an appropriate professional adviser if they intend to make a gift of anykind or intend to hold any Shares through trust arrangements. They should also seek professionaladvice in a situation where there is a potential for a double charge to UK inheritance tax and anequivalent tax in another country.

12.5 Stamp Duty and Stamp Duty Reserve Tax (‘‘SDRT’’)

In relation to the New Shares being issued by the Company, no liability to stamp duty or SDRT willarise on the issue of, or on the issue of definitive Share certificates in respect of, such shares by theCompany other than in circumstances involving depositary receipts or clearances services referredto below.

Holders of Shares will be registered on the Company’s register in the UK. Shareholders who are‘‘system members’’ of CREST may elect to hold their Shares in CREST for trading on the mainmarket.

The conveyance or transfer on sale of Shares held in certificated form will generally be subject to advalorem stamp duty on the instrument of transfer at the rate of 0.5% of the amount of value of theconsideration given (rounded up if necessary to the nearest multiple of £5). Stamp duty is normallypaid by the purchaser of the Shares.

An unconditional agreement to transfer Shares will normally give rise to a charge to SDRT at therate of 0.5% of the amount or value of the consideration for the Shares. However, where within sixyears of the date of the agreement an instrument of transfer is executed and duly stamped, theSDRT liability will be cancelled and any SDRT which has been paid will be repaid. SDRT isnormally the liability of the purchaser of the Shares.

Where Shares are issued or transferred: (i) to, or to a nominee for, a person whose business is orincludes the provision of clearance services; or (ii) to, or to a nominee or agent for, a person whose

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business is or includes issuing depositary receipts, stamp duty (in the case of a transfer only to suchperson) or SDRT may be payable at a rate of 1.5% (rounded up if necessary, in the case of stampduty, to the nearest multiple of £5) of the amount or value of the consideration payable or, incertain circumstances, the value of the Shares. This liability for stamp duty or SDRT will strictly beaccountable by the depositary or clearance service operator or their nominee, as the case may be,but will in practice generally be reimbursed by participants in the clearance service or depositaryreceipt scheme. Clearance service providers may opt under certain circumstances for the normalrates of SDRT (0.5% of the consideration paid) to apply to issues or transfers of Shares into, and totransactions within, the service instead of the higher rate applying to an issue or transfer of Sharesinto the clearance service, in which case a liability to SDRT would arise (at the rate of 0.5% of theconsideration paid) on any subsequent transfers of Shares whilst in the service.

Paperless transfers of Shares within CREST are generally subject to SDRT, rather than stamp duty,at the rate of 0.5% of the amount or value of the consideration payable. CREST is obliged to collectSDRT on relevant transactions settled within the system. Deposits of Shares in CREST willgenerally not be subject to SDRT or stamp duty, unless the transfer into CREST is itself forconsideration in money or money’s worth, in which case a liability to SDRT will arise, usually at therate of 0.5% of the value of the consideration.

Special rules apply to agreements made by market intermediaries in the ordinary course of theirbusiness.

Prospective purchasers of Shares should consult their own tax advisors with respect to the taxconsequences to them of acquiring, holding and disposing of Shares.

13. TAXATION OF US RESIDENT SHAREHOLDERS

The discussion of US tax matters set forth in this prospectus was written in connection with themaking of the Global Offer and was not intended or written to be used, and cannot be used, by aprospective investor for the purpose of avoiding tax-related penalties under US federal, state or localtax law. Each prospective investor should seek advice based on its particular circumstances from anindependent tax advisor.

The following summary is a general discussion of certain US federal income tax considerations toUS Holders (as defined below) of acquiring, holding and disposing of Shares. The followingsummary applies only to US Holders that purchase Shares in the Global Offer, will hold Shares ascapital assets for US federal income tax purposes (generally, assets held for investment) and thatare not residents of, or ordinarily resident in, the United Kingdom for tax purposes nor hold theirShares as part of a permanent establishment in the United Kingdom. The following summary is nota complete analysis of all US federal income tax consequences that may be relevant to a prospectiveUS Holder’s decision to acquire, hold or dispose of Shares, including, in particular, US federalincome tax consequences that apply to prospective US Holders subject to special tax rules,including, among others, financial institutions, insurance companies, real estate investment trusts,regulated investment companies, dealers or traders in securities or currencies, tax-exempt entities,US Holders that will hold Shares as part of an ‘‘integrated’’, ‘‘hedging’’ or ‘‘conversion’’ transactionor as a position in a ‘‘straddle’’ for US federal income tax purposes, grantor trusts, US Holders thathave a ‘‘functional currency’’ other than the US dollar, US Holders that will own (directly or byattribution) 10% or more (by voting power) of our stock and certain US expatriates or US Holderssubject to the alternative minimum tax. This summary does not address the US federal income taxconsequences of making an election to receive dividends in pounds sterling.

This summary does not discuss the tax consequences of the purchase, ownership or disposition ofShares under the tax laws of any US state, locality or foreign jurisdiction. Prospective investorsconsidering an investment in Shares should consult their own tax advisors in determining the USfederal, state, local and non-US jurisdiction, and any other tax consequences to them of aninvestment in Shares and the purchase ownership and disposition thereof.

The following summary is based on the US Internal Revenue Code of 1986, as amended (the‘‘Code’’), US Treasury Regulations thereunder, published rulings of the US Internal RevenueService (the ‘‘IRS’’), the income tax treaty between the United States and the United Kingdom (the‘‘US-UK Treaty’’) and judicial and administrative interpretations thereof, in each case as in effect andavailable on the date of this document. Changes to any of the foregoing, or changes in how any of

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these authorities are interpreted, may affect the tax consequences set out below, possiblyretroactively. No ruling will be sought from the IRS with respect to any statement or conclusion inthis discussion, and we cannot assure you that the IRS will not challenge such statement orconclusion in the following discussion or, if challenged, that a court would uphold such statement orconclusion.

For purposes of this section, a ‘‘US Holder’’ is a beneficial owner of Shares that is for US federalincome tax purposes: (i) a citizen or resident alien of the United States; (ii) a corporation or otherentity treated as a corporation for US federal income tax purposes created or organised in or underthe laws of the United States or any state thereof (including the District of Columbia); (iii) anestate, the income of which is subject to US federal income taxation regardless of its source; or(iv) a trust if (x) a court within the United States is able to exercise primary supervision over itsadministration and (y) one or more United States persons (as defined in the Code) have theauthority to control all of the substantial decisions of such trust.

If a partnership (including any entity treated as a partnership for US federal income tax purposes)holds Shares, the US federal income tax consequences to the partners of such partnership willdepend on the activities of the partnership and the status of the partners. A partnership consideringan investment in Shares, and partners in such partnership, should consult their own tax advisorsabout the consequences of the investment.

Prospective purchasers of Shares should consult their own tax advisers with respect to the USfederal, state, local and non-US tax consequences to them in their particular circumstances ofacquiring, holding, and disposing of, Shares.

13.1 Distributions by the Company

Subject to the discussion under section 13.3, ‘‘Passive foreign investment company’’ below, theUS dollar amount of any distribution by us with respect to Shares will generally be includible in aUS Holder’s ordinary income as a dividend to the extent of our current and accumulated earningsand profits (as determined under US federal income tax principles) at the time the US Holderreceives (or constructively receives) such amount in accordance with the US Holder’s usual methodof accounting for US federal income tax purposes. Any distribution in excess of our current andaccumulated earnings and profits will be treated first as a tax-free return of capital to the extent of aUS Holder’s adjusted tax basis and thereafter as capital gain. However, the Company does notmaintain calculations of its earnings and profits in accordance with US federal income taxaccounting principles. US Holders should therefore assume that any distribution by the Companywith respect to Shares will constitute ordinary dividend income.

US Holders should consult their own tax advisors regarding how to account for distributions paid incurrency other than the US dollar and the consequences of disposing of such payments.

Dividends paid by the Company will not be eligible for the dividends received deduction in thehands of corporate US Holders. Certain dividends received by certain non-corporate tax payersthrough taxable years beginning on or before 31 December 2011 are subject to a reduced maximumtax rate of 15% so long as: (i) specified holding period requirements are met; (ii) the taxpayer is notunder an obligation (whether pursuant to a short sale or otherwise) to make related payments withrespect to positions in substantially similar or related property; (iii) the Group is a ‘‘qualifiedforeign corporation’’; and (iv) the Group is not a passive foreign investment company (‘‘PFIC’’) inthe year of distribution or the prior year. The Group generally will be treated as a qualified foreigncorporation with respect to any dividend it pays if it qualifies for the benefits of the US-UK Treaty.The Group expects to qualify for the benefits of the US-UK Treaty, and thus be a qualified foreigncorporation, so long as its shares are regularly traded on the London Stock Exchange.

Dividends on a Share will be treated as foreign source income for US foreign tax credit purposes.The limitation on non-US taxes eligible for credit is calculated separately with respect to specificclasses of income. The US foreign tax credit rules are very complex, and each US Holder shouldconsult its own tax advisor concerning the availability and the utilisation of the foreign tax credit.

13.2 Proceeds from the Sale, Exchange or Retirement of the Shares

Subject to the discussion under ‘‘Passive foreign investment company’’ below, upon the sale,exchange or retirement of Shares, a US Holder will generally recognise US source capital gain or

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loss equal to the difference, if any, between the US dollar value of the amount realised on the sale,exchange or retirement and the US Holder’s tax basis in the Shares. The US Holder’s tax basis willgenerally be the US dollar value of the amount paid for the Shares. Any gain or loss generally willbe long-term capital gain or loss if the Shares have been held for more than a year. The deductibilityof capital losses is subject to limitations.

US Holders should consult their own tax advisors regarding how to account for the receipt ofproceeds from the sale, exchange or retirement of Shares in a currency other than the US dollar andthe consequences of disposing of such payments.

13.3 Passive foreign investment company

The Group does not expect to be classified as a PFIC. However, because PFIC status depends uponthe composition of the Group’s income and assets and the market value of its assets from time totime, as well as its spending of its cash balances and the proceeds of the Global Offer, the Groupcannot assure US Holders that it will not be considered a PFIC for any taxable year. In general, anon-US corporation will be classified as a PFIC if in any taxable year either: (i) 75% or more of itsgross income consists of passive income (e.g., dividends, interest and certain rents and royalties); or(ii) 50% or more of its assets, by value, determined on the basis of a quarterly average, consists ofassets that produce, or are held for the production of, passive income.

If the Group were classified as a PFIC, a US Holder could be subject to significantly greateramounts of US tax than would otherwise apply with respect to: (i) any gain on the sale or exchangeof Shares; or (ii) certain dividends. Additionally, dividends the Company pays would not be eligiblefor the special reduced rate described above under ‘‘Distributions by the Company’’. The USHolder would also be subject to more burdensome US tax reporting obligations. US Holders shouldconsult their tax advisers concerning the application of the PFIC rules to us and alternative taxreporting methods that may be available.

13.4 Backup withholding and information reporting requirements

US federal backup withholding and information reporting requirements may apply to certainpayments of dividends on, and proceeds from the sale, taxable exchange or redemption of, Sharesheld by a US Holder unless the US Holder establishes it is exempt from these rules. If it does not, aportion of any such payment may be withheld as a backup withholding against such US Holder’spotential US federal income tax liability if such US Holder fails to furnish its correct taxpayeridentification number or otherwise fails to comply with these rules. Corporate US Holders aregenerally exempt from the backup withholding and information requirements, but may be requiredto comply with certification and identification requirements in order to prove their exemption. Anyamounts withheld under the backup withholdings rules from a payment to a US Holder will becredited against such US Holder’s federal income tax liability, if any, or refunded if the amountwithheld exceeds such US Holder’s tax liability, provided the required information is furnished tothe IRS.

The above summary is not intended to constitute a complete analysis of all US federal income taxconsequences to a US Holder of acquiring, holding, and disposing of, Shares. Each US Holdershould consult its own tax advisor with respect to the US federal, state, local and non-USconsequences of acquiring, holding and disposing of Shares.

14. SECURITIES LAWS

The distribution of this document and the offer of Shares in certain jurisdictions may be restrictedby law and therefore persons into whose possession this document comes should inform themselvesabout and observe any restrictions, including those set out in the paragraphs that follow. Any failureto comply with these restrictions may constitute a violation of the securities laws of any suchjurisdiction.

14.1 United States of America

General

The Shares have not been, and will not be, registered under the Securities Act or the applicablesecurities laws and regulations of any state of the United States and, subject to certain exceptionsmay not be offered or sold in the United States. Accordingly, the Underwriters may offer Shares:

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(i) only through qualified affiliates or agents to persons reasonably believed to be QualifiedInstitutional Buyers in reliance on the exemption from the registration requirements of theSecurities Act provided by Rule 144A or another exemption from, or transaction not subject to, theregistration requirements of the Securities Act; and/or (ii) in compliance with Regulation S underthe Securities Act.

In addition, until the expiration of 40 days after the commencement of the Global Offer, an offer orsale of Shares within the United States by a dealer that (whether or not participating in the GlobalOffer) may violate the registration requirements of the Securities Act unless made pursuant toRule 144A or another exemption from the registration requirements of the Securities Act.

Transfer Restrictions

Due to the following restrictions, purchasers of Shares in the United States are advised to consultlegal counsel prior to making any offer for, resale, pledge or other transfer of the Shares.

14.1.1 Each purchaser in the United States of the Shares offered hereby will be deemed to haverepresented and agreed that it has received a copy of the document and such otherinformation as it deems necessary to make an investment decision and that (terms usedherein that are defined in Rule 144A or Regulation S under the Securities Act are usedherein as defined therein):

(a) it is: (i) a Qualified Institutional Buyer (‘‘QIB’’); (ii) acquiring such Shares for its ownaccount or for the account of one or more Qualified Institutional Buyers with respectto whom it has the authority to make, and does make, the representations andwarranties set forth herein; (iii) is not acquiring the Shares with a view to furtherdistribution of such Shares; and (iv) is aware and each beneficial owner of suchShares has been advised, that the sale of Shares to it is being made in reliance onRule 144A or another exemption from, or transaction not subject to, the registrationrequirements of the Securities Act;

(b) it understands that the Shares have not been and will not be registered under theSecurities Act or with any securities regulatory authority of any state or otherjurisdiction of the United States and may not be reoffered, resold, pledged orotherwise transferred except: (A) (i) to a person who the purchaser and any personacting on its behalf reasonably believes is a QIB purchasing for its own account or forthe account of a QIB in a transaction meeting the requirements of Rule 144A; (ii) inan offshore transaction complying with Rule 903 or Rule 904 of Regulation S; or(iii) pursuant to an exemption from registration under the Securities Act provided byRule 144 thereunder (if available) and (B) in accordance with all applicable securitiesof laws of the States of the United States;

(c) it acknowledges that the Shares (whether in physical certificated form or inuncertificated form held in CREST) offered and sold hereby in the manner set forthin paragraph 14.1.1(a) above are ‘‘restricted securities’’ within the meeting ofRule 144(a)(3) under the Securities Act are being offered and sold in a transactionnot involving any public offering in the United States within the meaning of theSecurities Act and that no representation is made as to the availability of theexemption provided by Rule 144 for resales of Shares. The purchaser understandsthat the Shares may not be deposited into any unrestricted depositary receipt facilityin respect of Shares established or maintained by a depositary bank, unless and untilsuch time as such Shares are no longer restricted securities within the meaning ofRule 144(a)(3) under the Securities Act;

(d) it understands that any offer, sale, pledge or other transfer of the Shares made otherthan in compliance with the above-stated restrictions may not be recognised by theCompany; and

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(e) the Shares (to the extent they are in certificated form), unless otherwise determinedby the Company in accordance with applicable law, will bear a legend substantially tothe following effect:

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT BEREGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE‘‘SECURITIES ACT’’) OR WITH ANY SECURITIES REGULATORY AUTHORITYOF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAYNOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT(A) (1) TO A PERSON WHOM THE SELLER AND ANY PERSON ACTING ON ITSBEHALF REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYERWITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACTPURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AQUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THEREQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTIONCOMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THESECURITIES ACT OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATIONUNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IFAVAILABLE) AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIESLAWS OF THE STATES OF THE UNITED STATES. NO REPRESENTATION CAN BEMADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BYRULE 144 UNDER THE SECURITIES ACT FOR THE RESALE OF THIS SECURITY.NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING,THIS SECURITY MAY NOT BE DEPOSITED INTO ANY UNRESTRICTEDDEPOSITARY RECEIPT FACILITY IN RESPECT OF SHARES OF THE COMPANYESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK. EACH HOLDER, BYITS ACCEPTANCE OF THIS SECURITY REPRESENTS THAT IT UNDERSTANDSAND AGREES TO THE FOREGOING RESTRICTIONS.

14.1.2 Each purchaser of the Shares offered hereby in reliance on Regulation S will be deemed tohave represented and agreed that it has received a copy of this document and such otherinformation as it deems necessary to make an investment decision and that:

(a) it is aware that the Shares have not been and will not be registered under theSecurities Act or with any securities regulatory authority of any state or otherjurisdiction of the United States;

(b) it is purchasing the Shares in an offshore transaction meeting the requirements ofRegulation S; and

(c) it will not offer, sell, pledge or transfer any Shares, except in accordance with theSecurities Act and any applicable laws of any state of the United States and any otherjurisdiction.

14.2 Australia

This document does not constitute a disclosure document under Part 6D.2 of the Corporations Act2001 of the Commonwealth of Australia (the ‘‘Australian Corporations Act’’) and will not belodged with the Australian Securities and Investments Commission. The Shares will be offered topersons who receive offers in Australia only to the extent that such offers of Shares for issue or saledo not need disclosure to investors under Part 6D.2 of the Australian Corporations Act. Any offerof Shares received in Australia is void to the extent that it needs disclosure to investors under theAustralian Corporations Act. In particular, offers for the issue or sale of Shares will only be made inAustralia in reliance on various exemptions from such disclosure to investors provided bysection 708 of the Australian Corporations Act. Any person to whom Shares are issued or soldpursuant to an exemption provided by section 708 of the Australian Corporations Act must not,within 12 months after the issue, offer those Shares for sale in Australia unless that offer is itselfmade in reliance on an exemption from disclosure provided by that section.

14.3 Canada

The Shares have not been and will not be qualified by a prospectus in accordance with theprospectus requirements under applicable securities law in any Canadian jurisdiction and thereforemay not be offered or sold, directly or indirectly, in Canada except in compliance with applicable

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Canadian securities laws. Accordingly, no sales of Shares will be made in Canada except in theprovinces of Ontario, Quebec and British Columbia: (i) through an appropriately registeredsecurities dealer or in accordance with an available exemption from the registration requirements ofapplicable Canadian securities laws; and (ii) pursuant to an exemption from the prospectusrequirements of such laws.

14.4 Japan

The Shares have not been and will not be registered under the Securities and Exchange Law ofJapan (Law No. 25 of 1948 as amend) (the ‘‘Securities and Exchange Law’’), and may not beoffered or sold, directly or indirectly, in Japan or to a resident of Japan except pursuant to anexemption from the registration requirements of, and otherwise in compliance with, the Securitiesand Exchange Law and other relevant laws and regulations of Japan.

14.5 European Economic Area

In relation to each member state of the European Economic Area which has implemented theProspectus Directive (each a ‘‘Relevant Member State’’), with effect from and including the date onwhich the Prospectus Directive is implemented in that relevant member state (the ‘‘relevantimplementation date’’), an offer to the public of any Shares which are the subject of the Global Offercontemplated by this document may not be made by the Relevant Member State except that anoffer to the public in that Relevant Member State of any Shares may be made at any time under thefollowing exemptions under the Prospectus Directive, if they have been implemented in thatRelevant Member State:

(a) to legal entities which are authorised or regulated to operate in the financial markets or, ifnot so authorised or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of: (i) an average of at least 250 employees duringthe last financial year; (ii) a total balance sheet of more than A43,000,000; and (iii) an annualturnover of more than A50,000,000, as shown in its last annual consolidated accounts;

(c) by the Underwriters to fewer than 100 natural or legal persons (other than ‘‘qualifiedinvestors’’ as defined in the Prospectus Directive) subject to obtaining the prior writtenconsent of the Joint Global Co-ordinators for any such offer; or

(d) in any other circumstances which do not require the publication by the Company of aprospectus pursuant to Article 3(2) of the Prospectus Directive,

provided that no such offer of Shares shall result in a requirement for the publication of aprospectus by the Company pursuant to Article 3 of the Prospective Directive or any measureimplementing the Prospectus Directive in a Relevant Member State and each person who initiallyacquires any Shares or to whom any offer is made under the Global Offer will be deemed to haverepresented, acknowledged and agreed that it is a ‘‘qualified investor’’ within the meaning ofArticle 2(1)(e) of the Prospectus Directive.

For the purposes of this provision, the expression an ‘‘offer of Shares to the public’’ in relation toany Shares in any Relevant Member State means the communication in any form and by any meansof sufficient information on the terms of the offer and any Shares to be offered so as to enable aninvestor to decide to purchase any Shares, as the same may be varied in that Relevant MemberState by any measure implementing the Prospectus Directive in that Relevant Member State andthe expression ‘‘Prospectus Directive’’ means Directive 2003/71/EC and includes any relevantimplementing measure in each Relevant Member State.

14.6 United Kingdom

No Shares have been offered or sold or will be offered or sold to persons in the UK prior toAdmission except to persons whose ordinary activities involve them in acquiring, holding, managingor disposing of investments (as principal or agent) for the purposes of their businesses or otherwisein circumstances which will not result in an offer to the public in the UK within the meaning ofSection 102B of FSMA.

14.7 General

No action has been or will be taken in any jurisdiction, other than the UK, that would permit apublic offering of the Shares, or possession or distribution of this document or any other offering

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material, in any country or jurisdiction where action for that purpose is required. Accordingly, theShares may not be offered or sold, directly or indirectly, and neither this document nor any otheroffering material or advertisement in connection with the Shares may be distributed or published inor from any country or jurisdiction except under circumstances that will result in compliance withany applicable rules and regulations of any such country or jurisdiction.

15. WORKING CAPITAL

The Company is of the opinion that, taking into account the bank facilities available and the netproceeds of the Global Offer receivable by the Company, the Group has sufficient working capitalfor its present requirements, that is, for at least the 12 months following the date of publication ofthis document.

16. SIGNIFICANT CHANGE

Two subsidiaries of Xchanging B.V. respectively acquired BAE Systems’ shares in the humanresources and procurement EPs. BAE Systems’ 50% holding in XHRS was acquired on 16 January2007 for £10 million and the 50% holding in XPS was acquired on 6 March 2007 for £47 million(£44 million net cash price). On 1 March 2007, a subsidiary of Xchanging B.V. entered into a creditagreement with Lloyds TSB Bank plc for facilities in a maximum aggregate amount of £35 million.Further information on these agreements can be found in paragraph 18 of this Part 8: AdditionalInformation and, in the case of the acquisitions in note 40 to Section A of Part 5: Accountants’Reports and Financial Information.

On 23 April 2007, Xchanging plc acquired the entire issued share capital of Xchanging HoldingsLimited (being 1 ordinary share of £1) for £1.

Save as set out above, there has been no significant change in the financial and trading position ofthe Group and Xchanging plc since 31 December 2006, the date to which the IFRS financialinformation in respect of the Group and Xchanging plc in Section A and Section C respectively ofPart 5: Accountants’ Reports and Financial Information has been prepared.

17. LITIGATION

17.1 Neither the Company nor any member of the Group is or has been involved in any governmental,legal or arbitration proceedings (including any such proceedings which are pending or threatened ofwhich the Company is aware) during the 12 months preceding the date of this document which mayhave, or have had a significant effect on the financial position or profitability of the Group.

17.2 In April 2003, the OFT received a complaint from Eurobase, a supplier and developer of softwarefor the insurance industry that Xchanging was abusing its dominant position in the supply of backoffice services to Lloyd’s and the London Insurance market in order to promote its own insurancesoftware.

The OFT investigated the complaint in the light of Chapter II of the Competition Act 1998 andconsidered two issues namely whether certain members of the Group held a dominant position inthe supply of back office services and whether any of them was abusing its position to sell its ownsoftware product. The OFT concluded its investigation and considered it unlikely that the marketwould be as narrow as the provision of the back office services to participants in Lloyd’s and theLondon Insurance market and that it was unlikely that any of such members of the Group held adominant position. Moreover, the evidence suggested that insurance companies at all times are freeto choose both their supplier of back office services (including continuing to provide it in-house)and to choose their software supplier.

The OFT concluded that it had seen no evidence to suggest that any of such members of the Groupwere acting in a way that would adversely affect competition. It closed the case on 10 June 2003.

18. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) havebeen entered into by a member of the Group within the two years immediately preceding the dateof this document and are, or may be, material or have been entered into at any time by any member

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of the Group and contain provisions under which any member of the Group has an obligation orentitlement which is, or may be, material to the Group as at the date of this document:

18.1 Lloyd’s Share Purchase Agreements for the entire issued share capital of LPSO Limited, LCOMarine and LCO Non-Marine Limited

On 30 April 2001, a sale and purchase agreement was entered into between Lloyd’s, as seller, andIns-sure Holdings (an unlimited company), as buyer. Pursuant to this agreement, Ins-sure Holdingsacquired the entire issued share capital of LPSO Limited in consideration for the issue andallotment to Lloyd’s of 2,000 shares of £0.001 each, designated as B shares in the capital of Ins-sureHoldings and credited as fully paid.

On 31 October 2001, two sale and purchase agreements were entered into between Lloyd’s, asseller, and Xchanging Claims Services Limited, as buyer, on substantially the same terms. Pursuantto the first agreement, Xchanging Claims Services Limited acquired the entire issued share capitalof LCO Marine Limited in consideration for the issue and allotment to Lloyd’s of 2 shares of £1each, designated as A shares in the capital of Xchanging Claims Services Limited and credited asfully paid. Pursuant to the second agreement, Xchanging Claims Services Limited acquired theentire issued share capital of LCO Non-Marine and Aviation Limited in consideration for the issueand allotment to Lloyd’s of 2 shares of £1 each, designated as A shares in the capital of XchangingClaims Services Limited and credited as fully paid.

For details of relevant surviving pensions arrangements in connection with these agreements(referred to in such paragraphs as the Participation Arrangements) in relation to LPSO Limited,LCO Marine Limited and LCO Non-Marine and Aviation Limited, see paragraph 11.1.3 of thisPart 8: Additional Information.

18.2 BAE Warrant

On 8 June 2004, Xchanging B.V. and BAE Systems entered into a second deed of amendment tothe BAE Systems warrant originally dated 19 April 2001 (as subsequently amended by a first deedof amendment dated 25 October 2001) (the ‘‘BAE Warrant’’).

Under the terms of the BAE Warrant, BAE Systems has the right to subscribe for Common Shares(for the purposes of this paragraph the ‘‘BAE Exercise Right’’). Under the terms of the TakeoverOffer Agreement described at paragraph 18.9 of this Part 8: Additional Information, BAE Systemshas agreed to exercise in whole the BAE Exercise Right prior to Admission. Immediately followingthe exercise of the BAE Exercise Right, Xchanging B.V. shall issue 772,019 Common Shares toBAE Systems for a cash consideration of £443,712 and US$2,212,301 in satisfaction of itsobligations under the BAE Warrant.

18.3 CAD IT—8 sale and purchase agreements for shares amounting to 10% of the entire issuedshare capital of CAD IT

Xchanging UK Limited (then known as Xchanging Limited) entered into 8 sale and purchaseagreements with 8 individual shareholders of CAD IT SpA (for the purposes of this paragraph‘‘CAD IT’’) to acquire 10% of the entire issued share capital in CAD IT (898,000 ordinary shares fortotal consideration of A9,608,600 at A10.7 per share). The agreements are stated to have been madeon 18 November 2005 although transfers and final execution by all selling shareholders took placeon 21 November 2005. The agreements are governed under Italian law, subject to the exclusivejurisdiction of the Courts of Verona. No representations or warranties are given by any of theparties and each of the parties bear their own costs. The agreements are made on substantially thesame terms with the exception of additional undertakings by Giuseppe Dal Cortivo not to sell any ofhis shares in CAD IT to other parties.

18.4 Share Sale Agreement for the entire issued share capital of Landmark Business ConsultingLimited

On 9 December 2005, a share sale agreement was entered into between XIPS, as buyer, and GeorgeBell, Giles Edward Lightfoot, Graham Granville Whitehead and Timothy Madeley Yorke as thesellers (for the purposes of this paragraph the ‘‘Sellers’’). Pursuant to this agreement, XIPSacquired the entire issued share capital of Landmark in consideration for £7,500,000 innon-qualifying corporate bonds of which £4,500,000 (for the purposes of this paragraph the‘‘Additional Consideration’’) is still payable in tranches up to 15 March 2009 (subject to post

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completion adjustments). Payment of the Additional Consideration is based on certain performancecriteria.

The Sellers have provided warranties as to, inter alia, their title to the shares and their power andauthority to enter into the agreement. In addition, the Sellers have also given warranties as to thestatus of the accounts, and certain tax, trading, litigation, employment, pensions and insurancematters. The aggregate liability of the Sellers in respect of any claim under the warranties and/orthe deed of indemnity dated 5 January 2006 between all parties (for the purpose of this paragraphthe ‘‘Deed of Indemnity’’) is £3,000,000 subject to a de minimis threshold of £50,000. The Deed ofIndemnity is valid for six years until 5 January 2012.

XIPS has provided warranties as to power and authority to enter into the agreement. XIPS has alsowarranted that, for at least three years from completion, Landmark shall preserve all materialrecords and allow the Sellers access to these. XIPS has warranted that it will not enter into orbecome party to any agreement or arrangement which will have the effect of placing any personabove the non-qualifying corporate bonds (the consideration) in preference of payment or inexercise of security. XIPS also warrants that it will retain all earnings before interest and taxation(for the purposes of this paragraph ‘‘EBIT’’) and working capital generated from EBIT within itsbusiness until such time as the Additional Consideration becomes payable.

The agreement also contains restrictive covenants preventing the Sellers from soliciting customersor employees, interfering with the continuance of supplies to Landmark, engaging in a similarbusiness for a period of two years from completion or six months from the date a relevant Sellerceased to be employed by XIPS (whichever is the later).

18.5 Share Sale Agreement for the entire issued share capital of Ferguson, Snell & AssociatesLimited

On 30 June 2006, a share sale agreement was entered into between HR Holdco Limited as buyer,Xchanging B.V. as guarantor and Paul Ferguson and John Snell as the sellers (for the purposes ofthis paragraph the ‘‘Sellers’’). Pursuant to this agreement, HR Holdco Limited acquired the entireissued share capital of Ferguson Snell. The consideration for the shares was an initial price of£3,275,000 paid on completion; further consideration of up to £2,150,000 to be paid upon theachievement of certain performance criteria.

In consideration of the Sellers entering into the agreement, Xchanging B.V. has guaranteed the dueand punctual performance and observance by HR Holdco Limited of all its obligations under theshare sale agreement and any document referred to in it (including the tax covenant between theparties, save for Xchanging B.V., dated 30 June 2006 (for the purposes of this paragraph the ‘‘TaxCovenant’’)). Xchanging B.V. indemnifies the Sellers against all losses, claims, costs and expensessuffered if HR Holdco Limited fails to discharge its liabilities and obligations. The guaranteeremains in force until all obligations of HR Holdco Limited are performed or satisfied. No timegiven to HR Holdco Limited or variation of this agreement will modify or release the obligations ofXchanging B.V. as guarantor.

The Sellers have provided warranties as to, inter alia, their title to their shares and their authorityand capacity to enter into the agreement and the Tax Covenant. In addition, the sellers have alsogiven warranties as to solvency, status of the accounts, and certain tax, trading, litigation, property,employment, pension, insurance and IP matters. HR Holdco Limited and Xchanging B.V. haveprovided warranties in relation to solvency and their authority and capacity to enter into theagreement and the Tax Covenant. The aggregate liability of the Sellers in respect of all claims underthe warranties or the Tax Covenant (claims under the Tax Covenant will be unenforceable after30 June 2013) is limited to the total price received by the Sellers as at the date on which relevantclaims are settled or final judgment given in favour of HR Holdco Limited. This is subject tode minimis thresholds. The aggregate liability of HR Holdco Limited and Xchanging B.V. under thewarranties is limited to £750,000 each.

HR Holdco Limited undertook to the Sellers that, subject to the prior consent of the Sellers, fromcompletion until 31 March 2007 it would ensure that the business of Ferguson Snell is carried out inthe ordinary course. HR Holdco Limited also agreed to implement and maintain a retention bonusarrangement for employees in addition to the usual bonus scheme of Ferguson Snell. The Sellersare also subject to undertakings that they will not solicit customers or employees or engage in a

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similar business anywhere until after 30 June 2009 (without the prior written consent of HR HoldcoLimited).

18.6 Share Sale Agreement for the entire issued share capital of HR Enterprise Limited

On 16 January 2007, a share sale and purchase agreement was entered into between HR HoldcoLimited as purchaser (for the purposes of this paragraph the ‘‘Buyer’’) and BAE Systems as seller(for the purposes of this paragraph the ‘‘Seller’’) (and collectively, for the purposes of thisparagraph, the ‘‘Parties’’) for HR Enterprise Limited. Prior to the Parties entering into theagreement, the Parties jointly owned HR Enterprise Limited in equal portions and it was part of ajoint venture business between them. Under the agreement, the Buyer acquired the issued sharecapital held by the Seller in the HR Enterprise, making the Buyer the owner of the entire issuedshare capital of HR Enterprise Limited. The consideration for the shares was £10,114,327 (whichincludes some interest that was payable on the base purchase price) and this amount was paid in fullon the date of completion.

The Seller has provided warranties, inter alia, as to its unencumbered title to the shares and havingcapacity to enter into the agreement. Certain categories of loss are excluded from recovery againstthe Seller under the agreement, including, inter alia, loss of revenue, opportunity, indirect orconsequential loss and the maximum liability of the Seller under the agreement in respect of theshares is £10,114,327. However the restrictive covenant not to compete against HR EnterpriseLimited (set out below) is neither subject to any cap nor exclusion of any category of loss.

The agreement contains a restrictive covenant which applies within the United Kingdom andIreland (for the purposes of this paragraph the ‘‘Territory’’) and relates to the services which weresupplied by HR Enterprise Limited to the Seller at the date of completion (with some limitedexceptions) (for the purposes of this paragraph the ‘‘Restricted Services’’). The restrictive covenantprevents the Seller or any subsidiary controlled by it and incorporated in the Territory from biddingor entering into contracts under which it will supply services substantially the same as, or acquiringcontrol of a company whose principal activity is the supply of, Restricted Services, in each casewithin the Territory for a period of three years following completion.

The restrictive covenant contains various exceptions which, inter alia, cover the Seller supplyingRestricted Services where this is incidental to a larger supply of services, acquiring and controlling acompany which was supplying Restricted Services prior to becoming so controlled by the Seller, orwhere the principal purpose of such acquisition is not to carry out contracts for Restricted Services.In each of these cases, the acquired company may then continue supplying the Restricted Services.

For details of the relevant pensions arrangements in connection with the acquisition of HREnterprise Limited from BAE Systems, see paragraph 11.1.4 of this Part 8: Additional Information.

18.7 Lloyds Facility

Xchanging UK Limited (the ‘‘Company’’) entered into a credit agreement dated on or about1 March 2007 with, inter alia, Lloyds TSB Bank plc (the ‘‘Agent’’) as mandated lead arranger (the‘‘Facility Agreement’’). The Facility Agreement provides for facilities in a maximum aggregateprincipal amount of £35 million (the ‘‘Facilities’’), consisting of a £25 million multi-currency termloan facility known as the ‘‘Term Loan Facility’’ and a £10 million multi-currency revolving creditfacility known as the ‘‘Revolving Facility’’.

The Term Loan Facility may, inter alia, be used to fund the acquisition (the ‘‘Acquisition’’) of sharesin Xchanging Procurement Services (Holdco) Limited and HR Enterprise Limited (together, the‘‘Targets’’), to pay costs incurred in connection with the Acquisition to refinance certainindebtedness of the Company. The Revolving Facility is capable of being utilised as cash drawingsand ancillary facilities for the general corporate purposes of Xchanging B.V and its subsidiaries (the‘‘Group’’).

Utilisations under the Facility Agreement will bear interest for each interest period at a rate perannum equal to LIBOR (or, in the case of drawings in Euro, EURIBOR) plus a margin and anymandatory costs. The margin is subject to a margin ‘‘ratchet’’ based on leverage. The applicablemargin leverage grid changes when the Company completes a Qualifying Listing. A ‘‘QualifyingListing’’ is a listing of Xchanging plc on the London Stock Exchange plc on or before 31 December2007 and which satisfies a number of other criteria.

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Prior to a Qualifying Listing, pursuant to the ratchet, the margin will be adjusted at specifiedincrements, if the Group (on a consolidated basis) attains certain ratios of total borrowings toEBITDA, from a maximum of 2.75% per annum to a minimum of 1.25% per annum. Following aQualifying Listing, the margin will be adjusted on the same basis from a maximum of 1.75% perannum to a minimum of 1.25% per annum.

A commitment fee is payable on the undrawn portion of the Facilities at the rate of 35% of theapplicable margin per annum. Customary upfront fees payable to the Agent for making the FacilityAgreement available are also payable.

Certain members of the Group are parties to the Facility Agreement as guarantors. In addition,material members of the Group (being those contributing 5% or more of the consolidated EBITDAand 5% or more of the gross turnover of the Group) are required to accede to the FacilityAgreement as guarantors. The Targets and their subsidiaries are also required to accede to theFacility Agreement as guarantors on or before 30 June 2007. This was achieved on 20 March 2007.

Each guarantor (other than Xchanging B.V.) has granted fixed and floating charge security over itsassets. Xchanging B.V. has granted a share charge over the shares it owns in other members of theGroup. Each guarantor is entitled to have this security released following a Qualifying Listing.

The Facility Agreement requires members of the Group to observe certain undertakings including,but not limited to, undertakings relating to delivery of financial statements, details of materiallitigation, insurances, authorisations being obtained and maintained, compliance with laws, paymentof taxes, hedging and pari passu ranking.

The Facility Agreement requires members of the Group to comply with certain negative covenantsincluding, but not limited to, covenants relating to creation of security, financial indebtedness,guarantees, disposals, loans and credit, acquisitions and joint ventures, and change in business.There are exemptions and carve-outs from these. In addition, the Facility Agreement requires theGroup to comply with specified financial ratios in relation to interest cover, leverage and minimumnet worth.

Certain provisions of the Facility Agreement are deemed not to apply following a QualifyingListing.

The Term Loan Facility is to be partially repaid in the amount of £5 million on 31 December 2009,with the balance of the loan to be repaid on 30 June 2010.

Each Loan under the Revolving Facility shall be repaid on the last day of its Interest Period, withthe Revolving Facility being repaid and cancelled in full on the earlier of 30 June 2011 and the dateon which all of the Facilities are cancelled in full.

The Facilities are required to be prepaid in full immediately upon the occurrence of certain eventsincluding a Change of Control (as defined therein). The Facilities may only be prepaid in integralmultiples of £500,000.

Any prepayment under the Facility Agreement shall be made together with accrued interest on theamount prepaid and, subject to any break costs, without premium or penalty.

The Facility Agreement contains certain events of default including, but not limited to, eventsrelating to failure to pay, misrepresentation, cross-default, breach of certain undertakings, breach offinancial covenants, insolvency and insolvency proceedings, material adverse change, cessation ofbusiness, unlawfulness and invalidity, repudiation, litigation and change of ownership of obligors.

18.8 Share Sale Agreement for the entire issued share capital of Xchanging Procurement Services(Holdco) Limited

On 6 March 2007, a share sale agreement was entered into between XUK Holdco (No. 2) Limitedas purchaser (for the purposes of this paragraph the ‘‘Buyer’’), BAE Systems as seller (for thepurposes of this paragraph the ‘‘Seller’’) and Xchanging B.V. as guarantor (together, the ‘‘Parties’’)in respect of Xchanging Procurement Services (Holdco) Limited (for the purposes of this paragraph‘‘XPS’’). Prior to entering into this agreement, the Buyer and Seller jointly owned XPS in equalportions and it was part of a joint venture business between them. Under this agreement, the Buyeracquired the issued share capital held by the Seller in XPS, making the Buyer the owner of theentire issued share capital of XPS. The consideration for the shares is payable no later than 2 July

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2007 and includes an element of interest to be calculated from an effective date of 1 January 2007up to the date of payment.

The Seller has provided warranties, inter alia, as to its unencumbered title to the shares and capacityto enter into the agreement. Certain categories of loss are excluded from recovery against the Sellerunder the agreement, including, inter alia, loss of revenue, opportunity, indirect or consequentialloss. The maximum liability of the Seller under the agreement in respect of the shares is the totalconsideration paid by the Buyer. However, the restrictive covenant not to compete against XPS(referred to below) is neither subject to any cap nor exclusion of any category of loss.

The agreement contains a restrictive covenant which applies across various countries in Europe (the‘‘Territory’’) and relates to the services which were supplied by XPS to the Seller at the date ofcompletion (with some limited exceptions) (the ‘‘Restricted Services’’). The restrictive covenantprevents the Seller or any subsidiary incorporated in England and Wales from bidding or enteringinto contracts under which it will supply services substantially the same as, or acquiring control of acompany whose principal activity is the supply of, Restricted Services, in each case within theTerritory.

The restrictive covenant contains various exceptions which, inter alia, cover the Seller supplyingRestricted Services where this is incidental to a larger supply of services, acquiring and controlling acompany which was supplying Restricted Services prior to becoming so controlled by the Seller, orwhere the principal purpose of such acquisition is not to carry out contracts for Restricted Services.In each of these cases, the acquired company may then continue supplying the Restricted Services.

The Parties have also entered into a deed of guarantee, pursuant to which Xchanging B.V. hasagreed to guarantee to the Seller the due and punctual performance by the Buyer of all itsobligations, warranties, duties and undertakings under the share sale agreement. Xchanging B.V.has also agreed to indemnify the Seller against any losses which the Seller incurs by reason of anybreach of the Buyer of its obligations, warranties, duties and undertakings under the agreement.The guarantee remains in force until all obligations of the Buyer are performed or satisfied in full.No time given by the Seller, variation of the agreement or legal limitation or insolvency of the Buyerwill release the obligations of Xchanging B.V. under the guarantee.

For details of the relevant pensions arrangement in connection with the acquisition of XPS fromBAE Systems, see paragraph 11.1.4 of this Part 8: Additional Information.

18.9 Takeover Offer Agreement

18.9.1 The Takeover Offer Agreement was executed on 31 July 2006 between, inter alia, theCompany, Xchanging B.V., General Atlantic, Sal. Oppenheim, David Andrews, BAESystems and 52nd Street Associates and sets out the terms on which the shareholders ofXchanging B.V. will exchange their shares in Xchanging B.V. for shares in the Company onAdmission becoming effective.

18.9.2 The Takeover Offer Agreement is conditional on the following conditions having beensatisfied or waived on or before 30 June 2007:

(a) Admission becoming effective;

(b) the valid acceptance of the takeover by holders of 100% by nominal value of the fullydiluted share capital of Xchanging B.V. as at completion, or such lower percentage aseach of an authorised representative of General Atlantic and David Andrews mayagree (in their joint absolute discretion) in writing:

(c) the receipt from the relevant tax authorities of tax clearances for UK tax residentshareholders in relation to the offer under Section 707 of the Income andCorporation Taxes Act 1988 and Section 138 of the Taxation and Chargeable GainsAct 1992;

(d) the notice of control (in accordance with Part XII of FSMA) being given to the FSAand the FSA approving (without imposing any conditions or requirements which werenot approved by David Andrews or General Atlantic) the Company as a controller ofXchanging Insurance Professional Services Limited either in writing or in accordancewith Section 184(2) of FSMA;

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(e) all necessary competition notifications and filings having been made and:

(i) the expiry, lapsing or termination of all applicable waiting and other timeperiods (including extensions thereof) under any applicable legislation orregulation of any applicable jurisdiction;

(ii) each necessary statutory and regulatory obligation in connection with the offerhaving been complied with; and

(iii) all necessary regulatory consents, approvals or clearances from the competentauthorities of any such jurisdictions having been obtained;

(f) the BaFin being notified under section 2c of the German Banking Act(‘‘Kreditwesengesetz’’, ‘‘KWG’’) and the BaFin approving (without imposing anyconditions or requirements which are not approved by David Andrews and GeneralAtlantic) the Company as a controller of Xtb either in writing or by not objectingwithin three months from receipt of the complete notification as provided insection 2c paragraph 1a of the KWG;

(g) the delivery to the Company of written consents (in terms satisfactory to anauthorised representative of General Atlantic and David Andrews) in relation to thecontracts set out in Schedule 10 of the Takeover Offer Agreement; and

(h) the Takeover Offer Agreement not having been terminated in accordance with itsterms by either of General Atlantic or the Board of Directors or unanimously by all ofthe shareholders of Xchanging B.V..

18.9.3 The Takeover Offer Agreement contains the following principal provisions:

(a) the shareholders of Xchanging B.V. agreed to waive their past and present rightsunder the Dutch Civil Code, the articles of association of Xchanging B.V., the ninthamended and restated stockholders’ agreement and any other relevant shareholderdocumentation on both the share for share exchange and on Admission. Consent wasgiven by the shareholders of Xchanging B.V. to the share for share exchange and anyroll-over of options pursuant to it;

(b) an agreement to convert the full outstanding amount owed under the Rebus Loan byXchanging B.V. to General Atlantic Partners (Bermuda), L.P. and GAP CoinvestmentPartners II, L.P. for shares in Xchanging B.V. on the day of but prior to Admission.These Xchanging B.V. shares were then included in the share for share exchange;

(c) BAE Systems agreed to exercise its right to subscribe for Common Shares under theBAE Warrant in whole on the day of but prior to Admission. A description of theBAE Warrant is set out in paragraph 18.2 of this Part 8: Additional Information; and

(d) the shareholders of Xchanging B.V. agreed that principal shareholder documentationof Xchanging B.V. (excluding the current articles of association of Xchanging B.V. butincluding stockholders agreements, subscription agreements, note or loancommitment agreements, warrant instruments and the latest registration rightsagreement) shall terminate upon the date of Admission becoming effective and noparty thereto shall have any claims against any other.

18.9.4 The shareholders of Xchanging B.V. gave customary warranties to the Company as to title,authority and capacity. The Company and Xchanging B.V. gave certain warranties to theshareholders of Xchanging B.V. as to title, authority, capacity, litigation, insolvency, defaultand the Company alone as to operating history up to the date of Admission.

18.10 Employee Offer Letters

Employee Offer Letters (being agreements from 31 July 2006 to 17 April 2007) have been executedbetween Xchanging B.V. and the Company with all employees (and other shareholders ofXchanging B.V. who hold shares in Xchanging B.V.). Under the Employee Offer Letters, thearrangement comprised in the Takeover Offer Agreement has been extended to, and accepted by,all other shareholders of Xchanging B.V. who are not otherwise party to the Takeover OfferAgreement and on the same basis as set out in the Takeover Offer Agreement. The Employee OfferLetters set out the terms on which the remaining shareholders of Xchanging B.V. will exchange

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their shares in Xchanging B.V. for Shares on Admission becoming effective (including shares inXchanging B.V. acquired as a result of the exercise of any options under the normal rules of theApproved Share Option Plan, the Unapproved G Share Option Plan or the Unapproved ShareOption Plan).

18.11 Option Rollover Letters

Option Rollover Letters from Xchanging B.V. and the Company were issued to all employeesholding options in Xchanging B.V. under the normal rules of the Approved Share Option Plan, theUnapproved G Share Option Plan or the Unapproved Share Option Plan. The Option RolloverLetters set out the terms under which the optionholders may roll over any remaining unexercisedoptions in Xchanging B.V. into new options of equivalent value in the Company. For optionholderswho do not accept the terms of the Option Rollover Letters, any options in Xchanging B.V. whichare not rolled over under the Option Rollover Letters will cease to be capable of exercise and willhave no value under the rules of the Approved Share Option Plan, the Unapproved G Share OptionPlan or the Unapproved Share Option Plan.

18.12 Underwriting Agreement

For information on the Underwriting Agreement, see paragraph 7 of Part 3: The Global Offer.

18.13 Relationship Deed

On 24 April 2007, General Atlantic entered into the Relationship Deed with the Companygoverning the exercise by General Atlantic of its rights in respect of the Company followingAdmission for the purposes of the Prospectus Rules, Listing Rules and the Disclosure Rules. TheRelationship Deed takes effect upon Admission.

General Atlantic has undertaken to exercise its voting powers in relation to the Company to ensurethat the Company is capable of carrying on its business for the benefit of shareholders of theCompany as a whole and independently of General Atlantic and has further agreed not to exerciseits voting rights in favour of any amendment to the memorandum and articles of association of theCompany in a manner which would be contrary with the principle of independence of the Company.

For a period of two years from Admission, General Atlantic has undertaken, to use all reasonableendeavours to ensure that it shall not, and to the extent it is legally able to do so, procure that itsaffiliates (subject to limited exceptions) shall not, deal in, acquire or dispose or agree to acquire ordispose of, directly or indirectly, any Shares without giving prior written notice to the Company andthat it shall use its reasonable endeavours to ensure that any such dealings shall be conducted in amanner designed to ensure an orderly market in the Shares.

General Atlantic has agreed that it shall not, and to the extent it is legally able to do so, shallprocure that none of its affiliates (subject to limited exceptions) shall, solicit for employment anykey employee (being any member of the management board, executive committee or any SeniorManager (or their replacements)) for a period of two years from Admission.

For so long as General Atlantic and its affiliates together hold at least 20% of the Shares in issue,General Atlantic shall be entitled to appoint (and remove and reappoint) two non-executivedirectors to the Board (the ‘‘General Atlantic Directors’’). In the event that General Atlantic and itsaffiliates together cease to hold 20% of the Shares in issue but continue to hold at least 10% of theShares, General Atlantic shall be entitled to appoint (and remove and reappoint) one non-executivedirector to the Board. Immediately following Admission, the General Atlantic Directors will beDavid Hodgson and Tom Tinsley.

General Atlantic shall cease to be entitled to appoint two General Atlantic Directors if GeneralAtlantic and its affiliates together cease to hold at least 20% of the Shares in issue and shall cease tobe entitled to appoint any General Atlantic Directors if General Atlantic and its affiliates togethercease to hold at least 10% of the Shares in issue. Additionally, if a General Atlantic Directorbecomes a director of a company that is involved in a competing business to the Company asdetermined by a majority of independent directors acting reasonably, then the Company mayrequire General Atlantic to appoint a replacement.

Where a General Atlantic Director receives information in a capacity other than as a director of theCompany, which imposes on him a duty of confidentiality, he shall not be obliged to disclose that

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information to the Company. These obligations will be reflected in the terms of the letter ofappointment of any General Atlantic Director.

All transactions and relationships between any member of the Group and General Atlantic or anyof its associates shall be conducted at arm’s length, on a normal commercial basis and, if applicable,in accordance with the related party transaction rules set out in Chapter 11 of the Listing Rules.

Only independent directors shall be entitled to vote on any matter giving rise to a conflict of interestbetween a Group Company and General Atlantic. Any material amendment to any arrangement oragreement with General Atlantic must be agreed by a majority of independent directors.

General Atlantic shall, until such a time as it ceases to have the right to appoint a General AtlanticDirector to the Board and subject to the Company’s obligations under all applicable laws (including,without limitation, the Listing Rules and the Disclosure Rules), be provided with all suchinformation as it reasonably requests to complete any tax return, compilation or filing which it isrequired by law or regulation to make. General Atlantic shall be entitled to disclose any suchinformation received to its affiliates for internal purposes (subject to limited exceptions). GeneralAtlantic shall otherwise (and shall procure that any affiliate to whom any information is passedshall) keep confidential any information relating to any member of the Group that is provided.

The Relationship Deed will terminate, and General Atlantic will no longer have the right to appointGeneral Atlantic Director(s), if General Atlantic and its affiliates collectively cease to hold Sharescarrying not less than 10% of the Shares in issue or upon the delisting of the Company or theoccurrence of certain insolvency events.

18.14 Registration Rights Agreement

18.14.1 Xchanging plc Registration Rights Agreement

On 24 April 2007, a registration rights agreement was entered into between the Company,General Atlantic, Sal. Oppenheim, 52nd Street Associates and David Andrews (for thepurposes of this paragraph the ‘‘PLC Registration Rights Agreement’’).

At any time after an initial public offering of the Company pursuant to a registrationstatement filed under the Securities Act, each of General Atlantic and David Andrews havethe right to require the Company to register their securities under the Securities Act for upto two registrations (for the purposes of this paragraph each registration a ‘‘DemandRegistration’’) at the expense of the Company. Any of General Atlantic, David Andrews,Sal. Oppenheim , 52nd Street Associates and permitted transferees are entitled to request theinclusion of their securities in such Demand Registrations (for the purposes of thisparagraph ‘‘Piggyback Registration Rights’’) at the expense of the Company. The Companyis not required to give effect to any Piggyback Registration Rights if an application is notmade within 10 days of receipt, by the holders of Piggyback Registration Rights, of writtennotice from the Company of any Demand Registrations. The Company shall use reasonableefforts to cause any Demand Registrations to become and remain effective not later than90 days after it receives a request to register securities. The Company, or the initiatingholders of a majority of registerable securities, may elect that a Demand Registration be inthe form of a firm commitment underwritten offering.

At any time after an initial public offering of registerable securities of the Company underthe Securities Act, if the Company proposes to file a registration statement with respect toan offering for its own account then the Company must give notice to General Atlantic,David Andrews, Sal. Oppenheim, 52nd Street Associates and permitted transferees at least30 days before the anticipated filing date. Such holders have 10 days from receipt of suchnotice in which to request inclusion of their securities in any registration statement at theexpense of the Company.

General Atlantic or David Andrews are entitled to request that, if Xchanging B.V. becomeseligible to use Form F-3, the Company registers securities on Form F-3 in connection with apublic offering of its securities. The Company shall give written notice of such request to allother holders of registrable securities at least 30 days before the anticipated filing date ofsuch form Form-F3 and all such holders have the right to request piggyback registration oftheir securities within 15 days of receipt of such notice and at the expense of the Company.

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The Company shall use reasonable efforts to cause such registration to become and remaineffective not later than 90 days after it receives a request to register securities. TheCompany, or the initiating holders of registrable securities, may elect that the registration bein the form of a firm commitment underwritten offering. If at the time of any request toregister a Form-F3 registration, the Company is engaged in, or has plans to engage within90 days in, a registered public offering or other activity which the management boarddetermines in good faith would be adversely affected by Form F-3 registration then theCompany may direct that such request be delayed for no more than 3 months from theeffective date of such offering or completion of such activity. In the event that the Companywere to commence an initial registered public offering under the Securities Act, theCompany expects that such an offering would include all of its outstanding shares.

19. SELLING SHAREHOLDERS

19.1 The following table sets out the number of Shares that will be sold by each Selling Shareholder aspart of the Global Offer:

Number ofShares to be Number of

sold (assuming Shares to beno exercise of sold (if the

the Over- Over-allotmentallotment Option is

Shareholder Option) exercised in full)

General Atlantic Partners 55, L.P. ..................................................... 3,005,824 4,005,693GAP-Xchange Partners, L.L.C, SCA................................................. 7,658,172 10,205,615GAP Coinvestment Partners, L.P. ...................................................... 1,602,259 2,135,241GAP Coinvestment Partners II, L.P................................................... 3,583,444 4,775,455General Atlantic Partners (Bermuda), L.P....................................... 18,249,345 24,319,872GAPstar, LLC ....................................................................................... 1,770,138 2,358,965GAPCo GMBH & Co. KG................................................................. 23,225 30,952GAP-W International, L.P. .................................................................. 2,070,214 2,758,859Sal. Oppenheim jr. & Cie. KGaA...................................................... 2,419,453 2,419,453BAE Systems PLC................................................................................ 3,088,076 3,088,07652nd Street Associates .......................................................................... 455,000 455,000John Robins........................................................................................... 120,000 120,000David Andrews ..................................................................................... 5,600,000 5,600,000Dennis Millard ...................................................................................... 100,000 100,000Johannes Maret .................................................................................... 355,972 355,972Clive Buesnel ........................................................................................ 160,008 160,008David Rich-Jones.................................................................................. 144,000 144,000Gary Whitaker ...................................................................................... 100,000 100,000Xchanging B.V. 2007 Employee Benefit Trust(1) .............................. 2,431,744 2,431,744

TOTAL................................................................................................... 52,936,874 65,564,905

(1) On 24 April 2007, the following people sold shares in Xchanging B.V. to the Xchanging B.V. 2007 Employee BenefitTrust (‘‘2007 EBT’’) for a price equal to the Offer Price attributable to the Shares issued as consideration pursuant tothe Acquisition, less any deductions payable by the 2007 EBT as a Selling Shareholder under the UnderwritingAgreement: Adele Browne, 2,666 G Shares (equivalent to 599,892 Shares); Richard Houghton, 3,333 G Shares(equivalent to 749,976 Shares); Clive Buesnel, 1,111 G Shares (equivalent to 249,992 Shares); David Rich-Jones 1,111G Shares and 62,500 Scheme A Shares (equivalent to 499,992 Shares); Stephen Bowen, 1,155 G Shares (equivalent to259,892 Shares); and John Bramley 18,000 Scheme A Shares (equivalent to 72,000 Shares).

The business address of each of General Atlantic Partners 55, L.P.; GAP-Xchange Partners, L.L.C,SCA; GAP Coinvestment Partners, L.P.; GAP Coinvestment Partners II, L.P.; General AtlanticPartners (Bermuda), L.P.; GapStar, LLC; GAPCo GMBH & Co. KG and GAP-W International,L.P. is 3 Pickwick Plaza, Greenwich, Connecticut 06830, United States. The business address of Sal.Oppenheim jr. & Cie. KGaA is Unter Sachsenhausen 4, 50667 Koln, Germany. The businessaddress of BAE Systems PLC is 6 Carlton Gardens, London, SW1Y 5AD, United Kingdom. Thebusiness address of 52nd Street Associates is 55 East 52nd Street, 27th Floor, New York, NY 10055,United States. The business address of Xchanging B.V. 2007 Employee Benefit Trust is WhiteleyChambers, Don Street, St Helier, Jersey JE4 9W6. The business address of the remaining SellingShareholders is 13 Hanover Square, London, W1S 1HN.

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20. RELATED PARTY TRANSACTIONS

In addition to those transactions referred to in note 38 of Part 5: Accountants’ Reports andFinancial Information in relation to The Corporation of Lloyd’s, the International UnderwritingAssociation, BAE Systems, Deutsche Bank and Aon Limited, the following related partytransactions between the Company and members of the Group have been entered into in the periodbetween 1 January 2004 and the date of this document:

20.1 shareholders of the Group’s Enterprise Partnerships are typically also customers of the EnterprisePartnership. As such, trading in the normal course of business has continued between the Groupand Enterprise Partnership partners;

20.2 the Group acquired the minority interests in the two Enterprise Partnerships in which BAE Systemswas the shareholder partner (HR Enterprise Limited and XPS). These acquisitions are effectivefrom 1 January 2007. Further details of these acquisitions are set out in paragraphs 18.6 and 18.8 ofPart 8: Additional Information;

20.3 a number of loans were provided by the Xchanging B.V. 2007 Employee Benefit Trust to certainDirectors and members of senior management of the Group to fund the purchase price of 1,215,766Class F Common Shares which were issued in February 2007. Further details of the loans are set outin paragraph 8.7 of this Part 8: Additional Information;

20.4 the Group contracted a gain sharing procurement outsourcing deal during 2006 with Liberata, acompany which shares the same Major Shareholder as the Group, General Atlantic. The contractcovers BPO customers of Liberata for which the Group provides procurement services for variousindirect spend categories; and

20.5 the Group has a contract for services with Mr Hans Maret, a non-executive director of the Group.The contract is for advisory services, specifically to assist with the development of the Group inGermany. Further details of this arrangement are set out in paragraph 7.2.6 of this Part 8:Additional Information.

20.6 a contract for the provision of security and derivative transactions by Xtb to Sal. Oppenheim jr. &Cie. KGaA was entered into on 29 December 2004. Mr Friedrich Carl Janssen is a partner in Sal.Oppenheim which on Admission will be a 2.2% shareholder in the Company as set out inparagraph 5 of Part 2: Directors, Senior Managers, Employees and Corporate Governance.

21. CONSENTS

21.1 PricewaterhouseCoopers LLP whose registered office is at 1 Embankment Place, LondonWC2N 6RH is a member of the Institute of Chartered Accountants in England and Wales and hasgiven and has not withdrawn its written consent to the inclusion of its reports set out in Part 5:Accountants’ Reports and Financial Information and Part 6: Unaudited Pro Forma FinancialInformation respectively and the references to its reports in the form and context in which they areincluded and has authorised the contents of its reports for the purposes of Rule 5.5.3R(2)(f) of theProspectus Rules.

A written consent under the Prospectus Rules of the FSA is different from a consent filed with theSEC under section 7 of the Securities Act which is applicable only to transactions involvingsecurities registered under the Securities Act. As the offered securities have not been and will notbe registered under the Securities Act, PricewaterhouseCoopers LLP has not filed a consent undersection 7 of the Securities Act.

21.2 IDC has given and has not withdrawn its written consent to the inclusion in this document of itsname and the references thereto in the form and context in which it appears.

22. GENERAL

22.1 The Offer Price which is to be paid in cash represents a premium of 235p over the nominal value of5p per Share.

22.2 The Global Offer is being underwritten in full by the Underwriters pursuant to the UnderwritingAgreement, details of which are set out in paragraph 7 of Part 3: The Global Offer.

22.3 The total costs, charges and expenses in connection with the Global Offer are estimated to be£10 million (assuming that the full discretionary fee is paid to the Underwriters) (exclusive of VAT).

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22.4 The Company confirms that the information sourced from IDC has been accurately reproduced andso far as the Company is aware and has been able to ascertain from that published information, nofacts have been omitted which would render the reproduced information inaccurate or misleading.

22.5 The financial information concerning the Company contained in this document does not constitutestatutory accounts within the meaning of section 240(5) of the Act. Full individual accounts of theCompany in respect of the period from its incorporation on 16 May 2006 to 31 December 2006 werereported on by PricewaterhouseCoopers LLP of 1 Embankment Place, London EC2Y 8HQ, theauditors of the Company within the meaning of section 235 of the Act and have been delivered tothe Registrar of Companies.

23. DOCUMENTS FOR INSPECTION

23.1 Copies of the following documents will be available for inspection during normal business hours onany weekday (Saturdays, Sundays and public holidays excepted) at the offices of Clifford ChanceLLP at 10 Upper Bank Street, London E14 5JJ from the date of this document until Admission:

23.1.1 the Memorandum and Articles of Association of the Company;

23.1.2 the reports by PricewaterhouseCoopers LLP set out in Part 5: Accountants’ Reports andFinancial Information and Part 6: Unaudited Pro Forma Financial Information of thisdocument;

23.1.3 the audited consolidated accounts of the Group for the two financial years ended31 December 2006 and the audited results of the Company for the period ended31 December 2006; and

23.1.4 this document.

Dated: 25 April 2007

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PART 9: DEFINITIONS AND GLOSSARY

The following definitions apply throughout this document unless the context requires otherwise:

DEFINITIONS

‘‘1.71% Senior Convertible notes evidencing debt of Xchanging B.V. and issued pursuant to aPromissory Notes’’ note commitment agreement dated 23 January 2004 between

Xchanging B.V., General Atlantic Partners (Bermuda), L.P., GAP-WInternational, LLC, GapStar, LLC, GAP Coinvestment Partners II,L.P. and GAPCO GmbH & Co. KG (as amended from time to time)

‘‘2006 Act’’ the Companies Act 2006 of England and Wales

‘‘52nd Street Associates’’ 52nd Street Associates Inc.

‘‘Accountants’ Reports’’ those accountants’ reports on the Group and the Company set out inPart 5: Accountants’ Reports and Financial Information and Part 6:Unaudited Pro Forma Financial Information of this document

‘‘Acquisition’’ the acquisition of Xchanging B.V. by means of the offer comprised inthe Takeover Offer Agreement and the Employers Offer Letters

‘‘Act’’ the Companies Act 1985 of England and Wales (as amended)

‘‘Acts’’ the Act and the 2006 Act

‘‘Admission to Listing’’ the admission to listing on the Official List of the Shares

‘‘Admission to Trading’’ the admission to trading on the London Stock Exchange’s market forlisted securities of the Shares

‘‘Admission’’ Admission to Listing and Admission to Trading and a reference toAdmission becoming ‘‘effective’’ is to be construed in accordance withthe Listing Rules or the Standards (as applicable)

‘‘AGM’’ annual general meeting

‘‘Aon’’ Aon Limited

‘‘Approved Share Option Plan’’ the share option plan established by a resolution of the managementboard of Xchanging B.V. on 19 April 2000, as amended with InlandRevenue approval up to and including 25 February 2005, and referredto as the Xchanging Group Approved Share Option Plan

‘‘Articles of Association’’ or the articles of association of the Company which have been adopted‘‘Articles’’ conditional on Admission

‘‘Audit Committee’’ the audit committee referred to in paragraph 5 of Part 2: Directors,Senior Managers, Employees and Corporate Governance of thisdocument

‘‘AXA’’ AXA Corporate Solutions

‘‘BAE Systems’’ BAE Systems PLC

‘‘BAE Warrant’’ has the meaning given in paragraph 18.2 of Part 8: AdditionalInformation of this document

‘‘BaFin’’ the German Federal Financial Supervisory Authority (‘‘Bundesanstaltfur Finanzdienstleistungsaufsicht’’)

‘‘Board’’ the board of directors of the Company

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‘‘BPO’’ Business Process Outsourcing—the outsourcing of business functionsor processes to a third party

‘‘Bridgewell’’ Bridgewell Limited in its capacity as Co-Lead Manager, of OldChange House, 128 Queen Victoria Street, London EC4V 4BJ

‘‘CAGR’’ compound annual growth rate

‘‘Chief Executive Officer’’ David Andrews

‘‘Citigroup’’ Citigroup Global Markets Limited, in its capacity as Sponsor, and/orCitigroup Global Market U.K. Equity Limited in its capacity as JointGlobal Co-ordinator and Joint Bookrunner, both of Citigroup Centre,Canada Square, Canary Wharf, London E14 5LB, as the context mayrequire

‘‘Class B Common Shares’’ class B common shares of A0.01 each in the capital of Xchanging B.V.

‘‘Class F Common Shares’’ class F common shares of A0.01 each in the capital of Xchanging B.V.

‘‘Clifford Chance Nominees a subscriber to the Memorandum of Association of the CompanyLimited’’

‘‘Clifford Chance Secretaries a subscriber to the Memorandum of Association of the CompanyLimited’’

‘‘Code’’ the US Internal Revenue Code of 1986, as amended

‘‘Co-Lead Managers’’ Bridgewell Limited and Jefferies International Limited

‘‘Combined Code’’ the Combined Code on Corporate Governance published by theFinancial Reporting Council in July 2006

‘‘Common Shares’’ common shares of A0.01 each in the capital of Xchanging B.V. and anyother common shares of Xchanging B.V.

‘‘Company’’ or ‘‘Xchanging’’ Xchanging plc

‘‘Convertible Preference Class A convertible preference class A shares of A0.01 each in the capital ofShares’’ Xchanging B.V.

‘‘Convertible Preference Class B convertible preference class B shares of A0.01 each in the capital ofShares’’ Xchanging B.V.

‘‘Convertible Preference Class C convertible preference class C shares of A0.01 each in the capital ofShares’’ Xchanging B.V.

‘‘Convertible Preference Class D convertible preference class D shares of A0.01 each in the capital ofShares’’ Xchanging B.V.

‘‘Convertible Preference Class E convertible preference class E shares of A0.01 each in the capital ofShares’’ Xchanging B.V.

‘‘CREST’’ the system for paperless settlement of trades in listed securities, ofwhich CRESTCo Limited is the operator

‘‘Deutsche Bank’’ Deutsche Bank AG

‘‘Directors’’ the Executive Directors and the Non-Executive Directors

‘‘Disclosure Rules’’ the rules relating to the disclosure of information made in accordancewith section 73A of FSMA

‘‘Dutch Civil Code’’ the Dutch Civil Code (‘‘Burgerlijk Weboek’’)

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‘‘Employee Offer Letters’’ the employee offer letters defined in paragraph 3.4.2 and furtherdescribed in paragraph 18.10 each of Part 8: Additional Informationof this document

‘‘Employee Share Plans’’ the Approved Share Option Plan, the Unapproved Share OptionPlan, the Unapproved G Share Option Plan, the SPP, the PSP andthe ESOP

‘‘Enterprise Partnership’’ or a corporate partnership between the Group and a customer, as‘‘EP’’ described in Part 1: Information on the Group of this document

‘‘ESOP’’ the Xchanging plc 2007 Executive Share Option Plan established by aresolution of the Board on 23 April 2007

‘‘European Economic Area’’ the European Economic Area created pursuant to the EuropeanEconomic Area Agreement which came into force on 1 January 2004

‘‘Exchange Act’’ the United States Securities Exchange Act of 1934 (as amended)

‘‘Executive Committee’’ the members of the Xchanging Executive Committee which includeClive Buesnel, Hugh Morris, Melissa Pitt, Gary Whitaker and othersenior management

‘‘Executive Directors’’ David Andrews, Richard Houghton and Adele Browne

‘‘Existing Shares’’ the Shares (other than the New Shares) that will be in issue onAdmission

‘‘Financial Year 2004’’ the year ended 31 December 2004

‘‘Financial Year 2005’’ the year ended 31 December 2005

‘‘Financial Year 2006’’ the year ended 31 December 2006

‘‘FSA’’ The Financial Services Authority acting in its capacity as thecompetent authority for the purposes of Part IV of FSMA

‘‘FSMA’’ Financial Services and Markets Act 2000, as amended

‘‘GAAP’’ generally accepted accounting principles

‘‘General Atlantic’’ General Atlantic Partners 55, L.P.; GAP-Xchange Partners, L.L.C.,SCA; GAP Coinvestment Partners, L.P.; GAP CoinvestmentPartners II, L.P.; General Atlantic Partners (Bermuda), L.P.;GapStar, LLC; GAPCo GMBH & Co. KG; and GAP-WInternational, L.P.

‘‘General Atlantic Director’’ a non-executive director appointed to the Board by General Atlanticpursuant to the Relationship Agreement

‘‘Global Offer’’ the offer of Shares to institutional and certain other investorsdescribed in Part 3: The Global Offer

‘‘Group’’ prior to the Acquisition, Xchanging B.V. and its subsidiaryundertakings, from time to time and, once the Acquisition has takenplace, the Company and its subsidiaries and subsidiary undertakings,from time to time

‘‘G Shares’’ class G shares of A0.01 each in the capital of Xchanging B.V.

‘‘HMRC’’ United Kingdom’s H.M. Revenue & Customs

‘‘IAS’’ International Accounting Standards

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‘‘IDC’’ global provider of market intelligence, advisory services, and eventsfor the information technology, telecommunications, and consumertechnology markets

‘‘IFRS’’ International Financial Reporting Standards, as adopted by theEuropean Union

‘‘Infrex Employee Share Trust’’ the trust established by Xchanging UK Limited, David Andrews andJohn Bramley on 3 December 1999

‘‘IRS’’ US Internal Revenue Services

‘‘ITEPA’’ Income Tax (Earnings and Pensions) Act 2003 of the UK

‘‘IUA’’ International Underwriting Association

‘‘Jefferies’’ Jefferies International Limited of Floor 4, Bracken House, 1 FridayStreet, London EC4M 9JA

‘‘Joint Bookrunners’’ Citigroup Global Markets U.K. Equity Limited and UBS Limited

‘‘Joint Global Co-ordinators’’ Citigroup Global Markets U.K. Equity Limited and UBS Limited

‘‘Listing Rules’’ the rules and regulations made by the FSA under Part VI of FSMA

‘‘Lloyd’s’’ The Society Incorporated by the Lloyd’s Act 1871 by the name ofLloyd’s

‘‘London Stock Exchange’’ London Stock Exchange plc

‘‘Major Shareholder’’ General Atlantic

‘‘Memorandum of Association’’ the memorandum of association of the Company

‘‘MiFID’’ the Markets in Financial Instruments Directive (2004/39/EC)

‘‘Model Code’’ the model code on directors’ dealings in securities as set out in theListing Rules

‘‘New Shares’’ Shares to be issued by the Company under the Global Offer

‘‘Nomination Committee’’ the nomination committee referred to in paragraph 5 of Part 2:Directors, Senior Managers, Employees and Corporate Governanceof this document

‘‘Non-Executive Directors’’ John Robins, John Bramley, Stephen Brenninkmeijer, Dennis Millard,Nigel Rich, David Hodgson, Tom Tinsley, Johannes Maret andFriedrich Carl Janssen

‘‘Offer Price’’ the price of 240p per Share at which Shares are to be issued or soldunder the Global Offer

‘‘Official List’’ the Official List of the FSA

‘‘Ogier Employee Benefit the trustee of the Xchanging B.V. 2007 Employee Benefit Trust andTrustee Limited’’ the Xchanging Employee Benefit Trust, an independent professional

trustee situated in Jersey

‘‘Option Rollover Letters’’ the option rollover letters described in paragraph 18.11 of Part 8:Additional Information

‘‘Over-allotment Option’’ the option granted by General Atlantic pursuant to which the JointGlobal Co-ordinators may require General Atlantic to sell additionalExisting Shares at the Offer Price

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‘‘Over-allotment Shares’’ Shares sold pursuant to the Over-allotment Option

‘‘Panel on Takeovers and the UK Panel on Takeovers and MergersMergers’’

‘‘PFIC’’ passive foreign investment company

‘‘Pro Forma Financial the unaudited pro forma financial information in Part 6: UnauditedInformation’’ Pro Forma Financial Information of this document

‘‘Prospectus Directive’’ Directive 2003/7/EC

‘‘Prospectus Rules’’ rules published by the FSA under section 73A FSMA

‘‘Prospectus’’ the final prospectus in connection with Admission

‘‘PSP’’ the performance share plan established by a resolution of the Boardof Xchanging on 23 April 2007 and referred to as The Xchanging plc2007 Performance Share Plan

‘‘Qualified Institutional Buyers’’ has the meaning given in Rule 144A under the Securities Actor ‘‘QIBs’’

‘‘Rebus Loan’’ the £15,000,000 loan to the Company originally from Rebus InsuranceServices Holdings and subsequently assigned to General AtlanticPartners (Bermuda), L.P. and GAP Coinvestment Partners II, L.P.

‘‘Registrar’’ Lloyd’s TSB Registrars

‘‘Regulation S’’ Regulation S under the Securities Act

‘‘Regulations’’ the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755)

‘‘Relationship Deed’’ the relationship deed between the Company and General Atlanticdescribed in paragraph 18.13 of Part 8: Additional Information of thisdocument

‘‘Relevant Member State’’ each member of the European Economic Area which hasimplemented the Prospectus Directive

‘‘Remuneration Committee’’ the remuneration committee referred to in paragraph 5 of Part 2:Directors, Senior Managers, Employees and Corporate Governanceof this document

‘‘Responsible Persons’’ the Company, the Directors and, with respect to its reports in Parts 5and 6 to the extent set out in its reports only, PricewaterhouseCoopersLLP

‘‘Rule 144A’’ Rule 144A under the Securities Act

‘‘Sal. Oppenheim’’ Sal. Oppenheim jr. & Cie. KGaA

‘‘Scheme A Shares’’ shares of A0.01 each in the capital of Xchanging B.V.

‘‘Scheme B Shares’’ shares of A0.01 each in the capital of Xchanging B.V.

‘‘SDRT’’ stamp duty reserve tax

‘‘SEC’’ U.S. Securities and Exchange Commission

‘‘Securities Act’’ the United States Securities Act of 1933 (as amended)

‘‘Selling Shareholders’’ persons listed in the table set out in paragraph 19.1 of Part 8:Additional Information

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‘‘Senior Managers’’ those persons named in paragraph 2 of Part 2: Directors, SeniorManagers, Employees and Corporate Governance of this document

‘‘Shares’’ ordinary shares of 5p each in the capital of the Company

‘‘SPP’’ or the share purchase plan established by a resolution of the‘‘Share Participation Plan’’ management board of Xchanging B.V. on 16 January 2007 and

referred to as The Xchanging Share Purchase Plan 2007

‘‘Stabilising Manager’’ UBS Limited

‘‘Standards’’ the Admission and Disclosure Standards of the London StockExchange

‘‘Subsidiary’’ or ‘‘Subsidiaries’’ any subsidiary or subsidiary undertaking, from time to time, of theCompany

‘‘Takeover Code’’ the City Code on Takeovers and Mergers

‘‘Takeover Offer Agreement’’ the takeover offer agreement described in paragraph 18.9 of Part 8:Additional Information of this document

‘‘UBS’’ or ‘‘UBS Investment UBS Limited in its capacity as Joint Global Co-ordinator and JointBank’’ Bookrunner

‘‘UK GAAP’’ generally accepted accounting principles in the United Kingdom

‘‘UK’’ or ‘‘United Kingdom’’ the United Kingdom of Great Britain and Northern Ireland

‘‘Unapproved G Share Option the unapproved share option plan relating to G Shares in XchangingPlan’’ B.V. established by a resolution of the management board of

Xchanging B.V. on 28 April 2004, as amended, and referred to as theXchanging Group Unapproved G Share Option Plan

‘‘Unapproved Share Option the unapproved share option plan established by a resolution of thePlan’’ management board of Xchanging B.V. on 25 July 2000, as amended,

and referred to as the Xchanging Group Unapproved Share OptionPlan

‘‘Underwriters’’ Citigroup Global Markets U.K. Equity Limited, UBS Limited,Bridgewell Limited and Jefferies International Limited

‘‘Underwriting Agreement’’ the underwriting agreement described in paragraph 7 of Part 3: TheGlobal Offer of this document

‘‘US GAAP’’ generally accepted accounting principles in the US

‘‘US’’ or ‘‘United States’’ United States of America, its territories and possessions, any state ofthe United States and the District of Columbia

‘‘US Holder’’ a beneficial owner of Shares that is for US federal income taxpurposes: (i) a citizen or resident alien of the United States; (ii) acorporation or other entity treated as a corporation for US federalincome tax purposes created or organised in or under the laws of theUnited States or any state thereof (including the District ofColumbia); (iii) an estate, the income of which is subject to US federalincome taxation regardless of its source; or (iv) a trust if (x) a courtwithin the United States is able to exercise primary supervision overits administration and (y) one or more United States persons (asdefined in the Code) have the authority to control all of thesubstantial decisions of such trust

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‘‘US-UK Treaty’’ the income tax treaty between the United States and the UnitedKingdom

‘‘Xchanging Broking Services one of the companies in the Group, a private company limited byLimited’’ or ‘‘XBS’’ shares incorporated in England and Wales

‘‘Xchanging B.V.’’ the previous holding company of the Group (formerly known asXchange B.V.), a private company with limited liability (‘‘beslotenvennootschap met beperkte aansprakeliijkheid’’) incorporated inThe Netherlands

‘‘Xchanging B.V. 2007 Employee the trust established by Xchanging B.V. on 23 January 2007Benefit Trust’’

‘‘Xchanging Employee Benefit the trust bearing that name as established by a trust deed datedTrust’’ 9 February 2006 and executed by (1) Xchanging UK Limited and

(2) Ogier Employee Benefit Trustee Limited

‘‘Xchanging Human Resources one of the companies in the Group, a private company limited byServices Limited’’ or ‘‘XHRS’’ shares incorporated in England and Wales

‘‘Xchanging Insurance one of the companies in the Group, a private company limited byProfessional Services Limited’’ shares incorporated in England and Walesor ‘‘XIPS’’

‘‘Xchanging Insurance Technical one of the companies in the Group, a private company limited byServices Limited’’ or ‘‘XITS’’ shares incorporated in England and Wales

‘‘Xchanging Limited’’ one of the companies in the Group, a private company limited byshares incorporated in England and Wales

‘‘Xchanging Procurement one of the companies in the Group, a private company limited byServices Limited’’ or ‘‘XPS’’ shares incorporated in England and Wales

‘‘Xchanging Transaction Bank one of the companies in the Group, a German credit institutionGmbH’’ or ‘‘Xtb’’

‘‘Xchanging UK Limited’’ one of the companies in the Group, a private company limited byshares incorporated in England and Wales

‘‘XEBIT’’ Xchanging B.V.’s Earnings Before Interest and Tax (see Part 4:Operating and Financial Review, 5. Key Performance Indicators)

‘‘XIS’’ Ins-sure Holdings Limited, one of the companies in the Group, aprivate company limited by shares incorporated in England andWales, and its subsidiaries

‘‘XPAT’’ Xchanging B.V.’s Profit After Tax (see Part 4: Operating and FinancialReview, 5. Key Performance Indicators)

In this document, words denoting any gender include all genders (unless the context otherwise requires).

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13 Hanover Square

London • W1S 1HN • UK

Telephone +44 (0)20 7780 6999

Facsimile +44 (0)20 7780 6998

Email info@xchanging.com

© 2007 Xchanging plc (Registered in England and Wales company number 5819018,Registered office 34 Leadenhall Street, London EC3A 1AX)

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