FCRM.L Regulatory News (FCRM)

10 October 2013

FULCRUM UTILITY SERVICES LIMITED

Disposal of domestic gas connection assets of Fulcrum Pipelines Limited

Fulcrum Utility Services Limited ("Fulcrum" or the "Group"), the provider of gas and utility connection services, announces the disposal of substantially all of its non-core domestic-customer gas connection assets held by its subsidiary Fulcrum Pipelines Limited ("FPL") to ES Pipelines Limited (the "Disposal") for a gross consideration of £6.3 million (the "Consideration"). The Consideration has been settled in cash, subject to a small retention covering transitional matters; all necessary regulatory approvals have been obtained. The net proceeds of the Disposal, after advisers' fees and transaction costs will be approximately £5.9 million.

The assets included in the Disposal consist of approximately 31,000 domestic and mixed-use customer gas connection pipelines and associated equipment (the "Disposed Assets"). The Disposed Assets generated £1.0 million of revenue and operating profit of £0.4 million (before shared overheads and central costs) in the year ended 31 March 2013. As at 31 March 2013 the book value of these assets was £7.5 million.

Following the Disposal, FPL retains a portfolio of approximately 2,000 industrial and commercial ("I&C") pipeline assets which generated revenue of approximately £0.6 million in the year ended 31 March 2013.

Fulcrum's core Infrastructure Services business provides the design and installation of gas connections for I&C and domestic customers. The Infrastructure Services business contributed £39.0 million or 96% of the Group's revenues in the year ended 31 March 2013. Proceeds from the sale significantly strengthen Fulcrum's cash position and will be used to further develop the Group's core business, where the Directors believe the greatest opportunity exists for creating shareholder value.

As part of its core Infrastructure Services business, Fulcrum will continue to pursue opportunities to add I&C assets to its portfolio of retained assets. The Directors consider that the ability of the Group to take ownership of I&C assets is a unique differentiator in the provision of its core services business and is an important part of the Group's growth strategy. The strengthening of Fulcrum's cash position will allow the Group to seek new opportunities for revenue growth such as the adoption of new I&C pipeline assets and new contracts to support conversion of customers from fuel oil to gas.

Under the terms of the sale agreement, Fulcrum has transferred all future income and liabilities associated with the Disposed Assets to ES Pipelines Limited and will support ES Pipelines Limited through a period of transition while the assets are properly transferred. The Disposal has no impact on Fulcrum's existing banking or financing facilities. As at the date of the Disposal the book value of the Disposed Assets was £7.4 million and the net loss on disposal, before fees and transaction costs, is anticipated to be circa £1.1 million.

Martin Donnachie, Chief Executive Officer of Fulcrum, said: "The Disposal represents an opportunity to rejuvenate the prospects for the core business, providing Fulcrum with significant additional cash resources to support the existing business and new growth opportunities."

Philip Holder, Chairman, said: "The Disposal represents an excellent result for Fulcrum and allows the Company to focus on its core services. The consideration received realises value which the Board feels was not fully recognised in the Group's market valuation, with the net proceeds representing almost 80% of the market capitalisation of the Company on the last trading day before this announcement. The Board remains committed to establishing Fulcrum as a leading multi-utility connection services business in the UK."

Enquiries

Fulcrum +44 (0)114 263 7449

Martin Donnachie (CEO)

Marcus Green (CFO)

Smith Square Partners LLP +44 (0)203 696 7260 (Financial adviser to the Group)

Jonathan Coddington

Sylvester Oppong

Cenkos Securities plc +44 (0)20 7397 8900 (Nominated adviser and broker)

Stephen Keys

Max Hartley

College Hill +44 (0)20 7457 2020 (PR adviser)

Toby Bates

Notes to Editor

Fulcrum is an energy solutions company based in Sheffield, UK. The Company's primary business is the provision of unregulated utility connection services to the residential, commercial and industrial markets throughout the UK. These range from the design, installation or alteration of connections for single site properties to large complex multi-site projects. Through its subsidiary, Fulcrum Pipelines Limited, Fulcrum is also licensed as an Independent Gas Transporter, operating gas connection pipelines that connect properties to the main UK gas network.

Smith Square Partners LLP, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser for Fulcrum Utility Services Limited and for no one else in connection with the transaction and is not advising any other person or treating any other person as its client in relation thereto and is not responsible to anyone other than Fulcrum Utility Services Limited for providing the protections afforded to clients of Smith Square Partners LLP, or for giving advice to any other person in relation to the transaction, the contents of this announcement or any other matter referred to herein.