Utilitywise Regulatory News (UTW)

28 January 2019

Utilitywise plc

("Utilitywise", the "Company" or the "Group")

Strategic Review, Formal Sale Process and 2018 Annual Report and Accounts

Utilitywise, a leading independent utility cost management consultancy, announces that the Board has decided to review all the Group's strategic options in order to deliver maximum value for its stakeholders (the "Strategic Review"). The Strategic Review will include a formal sale process of the Company, further details of which can be found below. The Strategic Review will also consider all types of corporate transactions, including the sale of certain parts or the whole of the Group. In addition, the Group intends to continue discussions with its shareholders and its bank in relation to a potential equity fundraising and bank refinancing, as detailed further below, alongside all other potential strategic options.

Background

As previously announced, in the past two years the Group has experienced a number of significant and unexpected challenges and legacy issues in its Enterprise Division that have hampered the pace of transformation, with a consequential impact on the Group's financial performance. These include, inter alia:

· The repayment of commission to an energy supplier, the overpayment of which arose due to historically poor operational controls;

· Weaknesses in industry processes relating to early-termination of customer contracts (so-called "change of tenancy"), which have been exploited by third-party intermediary ("TPI") competitors, to 'break' certain of the Group's customers from energy contracts; and

· Energy suppliers introducing lower caps to the amount of commission that TPIs can charge their customers.

In order to overcome these challenges, the Group has made significant improvements to the operational controls within its business and is currently executing a clear strategy for differentiation and growth, whilst evolving its existing proposition in both its Enterprise and Corporate Divisions. Furthermore, the Group is further developing its channel strategy to reduce the cost of customer acquisition in its Enterprise Division. The Board anticipates that new revenue streams will be delivered by a strategy that places emphasis on:

· Providing IoT-based intelligent building technology solutions, which optimise building and organisational energy efficiencies. The solutions deliver dynamic procurement strategies and remotely control and optimise the efficiency of mid-sized and corporate clients, through the Group's Corporate division;

· Optimising the Group's core proposition by improving efficiencies, optimising sales channels and focusing on margin targets;

· Growing a new inbound sales channel through a price comparison website, which already exists and is generating order book and revenue;

· The creation of a digitally driven channel, targeting Micro-SME customers and offering a multi-utility bill management service with automation at its core;

· Offering the Group's customers other utilities - customers utilise many different products and services to run their business and our model, skills and partnerships can extend to some of those markets that customers also find difficult to manage or understand. Following the addition of water and broadband to our core offering of electricity and gas, we expect to add further utilities to our offering; and

· In-life cross selling - using our customer relationships carefully and intelligently to expose relevant products and services to customers and add value in-life, thus creating greater lifetime value and customer retention than a transactional model.

The Board believes that driving greater revenues from the Group's Corporate Division and entering the micro-SME market will result in profitable growth and significant cash flows for the Group in the medium term, along with offering further business services to its existing client base. However, the Group requires to make investments in the business to the value of approximately £10 million in order to execute this revised strategy.

Funding

In addition to the requirement for new investments detailed above, the Group has been in discussions with its bank in recent months with respect to the refinancing of its existing bank facilities, amounting to £25m in aggregate and which expire on 20 April 2019. The Group's lending bank indicated its willingness to refinance those banking facilities at the same level, on the condition that other funding was also obtained from alternative sources, such that the combined funding allowed the Group to make the necessary strategic investments detailed above. The Group has therefore approached both new and existing investors to seek to conduct an equity fundraising (the "Proposed Equity Fundraising"), to provide sufficient additional equity capital to the Group for its investment and working capital requirements alongside the refinanced £25m banking facility (the "Proposed Bank Refinancing"). At this stage, the Group has not attracted a sufficient level of interest in the Proposed Equity Fundraising to satisfy the Group's overall funding requirements for the period to 31 July 2021. As a result, the Board has now concluded that it should commence the Strategic Review.

Whilst the Strategic Review is carried out, and in the absence of completion of the Proposed Equity Fundraising and the Proposed Bank Refinancing, or any other similar refinancing transaction, the Group continues to discuss the provision of ongoing funding with the Bank, but will be reliant upon the ongoing support of the Bank. There can be no guarantee that the Proposed Equity Fundraising, the Proposed Bank Refinancing or any other refinancing transaction will be completed, nor as to the terms on which the Proposed Equity Fundraising, the Proposed Bank Refinancing or any other potential refinancing transaction may be completed.

Proposed Formal Sale Process

As noted above, the Group has launched a formal sale process within the meaning of the City Code on Takeovers and Mergers (the "Takeover Code"), as part of the Strategic Review.

The Takeover Panel has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Takeover Code (as referred to in the Note 2 of Rule 2.6 of the Takeover Code) such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement and will not be subject to the 28 day deadline referred to in Rule 2.6(a) of the Takeover Code for so long as it is participating in the formal sale process. Following this announcement, the Company is now considered to be in an "offer period" as defined in the Takeover Code, and the dealing disclosure requirements listed below will apply.

Parties with an interest in making a proposal for the Group pursuant to the formal sale process should contact finnCap through the contact details set out at the end of this announcement. It is currently expected that any party interested in participating in the formal sale process will, at the appropriate time, enter into a non-disclosure agreement with Utilitywise on terms satisfactory to the Board of Utilitywise and on the same terms, in all material respects, as other interested parties. The Company then intends to provide such interested parties with certain information on the business, following which interested parties shall be invited to submit their proposals to finnCap. The Company will update the market in due course regarding timings for the formal sale process as agreed with the Panel.

There can be no certainty that an offer will be made, nor as to the terms on which any offer will be made. The Company is not currently in any discussions with any potential offeror relating to an acquisition of the issued and to be issued share capital of the Company.

The Board of Utilitywise reserves the right to alter or terminate the process at any time and, in such cases, will make an announcement as appropriate. The Board of Utilitywise also reserves the right to reject any approach or terminate discussions with any interested party at any time.

Rule 2.9 disclosures

In accordance with Rule 2.9 of the Takeover Code, Utilitywise confirms that as at close of business on 25 January 2019 (being the last Business Day prior to the date of this Announcement), it has in issue 78,512,930 ordinary shares of 0.1 pence each. The International Securities Identification Number (ISIN) of the Utilitywise shares is GB00B6WVD707.

Disclosure requirements of the Takeover Code

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

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

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

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

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

A copy of this announcement is also available on Utilitywise's website at https://www.utilitywise.com/investor-relations/.

2018 Annual Report and Accounts

The audit of the financial results of the Group for the year ended 31 July 2018 ("FY2018") is substantially complete. However, in order for the Board to approve and publish the Group's annual report and accounts for FY2018, the Proposed Bank Refinancing and the Proposed Equity Fundraising (or equivalent re-financing or fundraising) would need to be completed, following shareholder approval of such proposed transaction(s).

Given the current shortfall in investor appetite for the Proposed Equity Fundraising, the Group will not be in a position to publish its annual report and accounts for FY2018 prior to close of business on 31 January 2019. In such circumstances trading in the Group's Ordinary Shares will be suspended* from 7.30 a.m. on 1 February 2019 (the "Suspension").

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement this inside information is now considered to be in the public domain.

Further Details:

About Utilitywise

Utilitywise is a leading independent utility cost management consultancy, which has established trading relationships with a number of major UK and European energy suppliers and provides services to its customers designed to assist them in achieving better value out of their energy contracts, reduced energy consumption and lower carbon footprint.

Utilitywise is a UK company quoted on the AIM market of the London Stock Exchange. For more information, please visit www.Utilitywise.com.