Bglobal : DISPOSAL OF UTILIGROUP LIMITED

Bglobal plc (AIM:BGBL), announces it has conditionally agreed to sell its wholly owned subsidiary Utiligroup Limited to a new company backed by NorthEdge Capital LLP and supported by Utiligroup's management team, for a cash consideration of £16.1 million, payable on completion.

The Disposal constitutes a fundamental change of business under Rule 15 of the AIM Rules. Accordingly, the Disposal is conditional upon approval of Shareholders at a general meeting to be held on 18 June 2014.

Highlights

• Disposal of Utiligroup for a cash consideration of £16.1 million
• Following completion of the Disposal Bglobal will have estimated cash balances of £16.8 million
• The Board's strategy is to return this capital to Shareholders, and it is currently in discussion with its advisers to explore ways in which this can be achieved most effectively
• It is anticipated that capital equal to up to 11 pence per Ordinary Share will be returned to Shareholders in 2014, with the balance of £5.1 million being retained to cover working capital and any liabilities arising from the disposal of Utiligroup and the disposal of B Global Metering Limited (which was announced on 22 April 2014)

A circular, explaining the background to and reasons for the Disposal and providing notice of a general meeting (the "Circular"), is expected to be posted to Shareholders later today. Copies of the Circular will also be available on the Company's website (www.bglobalplc.com).
John Grant, Executive Chairman of Bglobal plc, commented:

"When I became Chairman in August last year, it was apparent that there was significant value within the Group that was in danger of being depleted rather than realised. Since then, I am pleased that the Board has been able to deliver improved underlying performance for Bglobal Metering and Utiligroup. This transaction, and the sale of Bglobal Metering in April, demonstrate that value which the Board has been able to unlock for our shareholders."

Tim Jackson Smith, Chief Executive of Bglobal plc, commented:

"I am delighted that we have agreed, subject to shareholder approval, to sell Utiligroup to a new company backed by NorthEdge Capital LLP. This deal is part of our ongoing programme to return value to our shareholders and the price we have achieved, which represents a significant premium to the current share price, fairly reflects the value of Utiligroup."

Background to and reasons for the Disposal
At the general meeting of the Company on 15 August 2013, Shareholders approved a resolution mandating the Board to carry out of a strategic review of the Group the purpose of which was to improve the performance of the business and enhance value for Shareholders. The Board appointed KPMG to carry out this review, whilst at the same time it actioned its own plan to significantly reduce Bglobal's head office costs, re-focus the business on its customers, implement strict cash management procedures and remove approximately £1.0 million of annualised costs from Bglobal Metering. As announced on 11 November 2013, following detailed consultation and receipt of a report from KPMG, the Board commenced exploring a potential sale of its metering business.
On 22 April 2014, Bglobal announced it had reached an agreement with Energy Assets Group plc to dispose of the entire issued ordinary share capital of its metering business, Bglobal Metering, for a cash consideration of £2.3 million, which included a payment of £0.2 million for the cash balance on completion.

Following the announcement of the strategic review, the Board received a number of enquiries from various parties who expressed an interest in acquiring Utiligroup. Whilst the Board's main focus was in securing a buyer for Bglobal Metering and removing excess costs from the Group, it was decided in early 2014 to pursue a formal process to gauge the level of interest in Utiligroup and the likely value that a disposal of that business could generate for Shareholders. As part of this process, in February 2014, NorthEdge, supported by Utiligroup's management team, approached the Board with an offer for the entire issued share capital of Utiligroup.
The Board is focused on enhancing value for Shareholders and considers that the sale of Utiligroup represents the best way to increase value for a number of reasons, namely:

• in connection with the formal sales process of the business over 25 parties were approached to explore whether they were interested in acquiring Utiligroup. As part of that process several offers were received from both trade and private equity backed buyers and it was clear from the terms being offered that the offer from NorthEdge was the most attractive, not only with regard to the price being offered but also with regard to the deliverability of the offer. The sensible approach being adopted in respect of the scope and length of warranty and indemnity protection required and the caps on liability under those warranties and indemnities, will also allow the Board to return cash to Shareholders much quicker than under the alternative offers;
• it has been clear to the Board for a while now that in order to thrive as a business, capitalise on future opportunities and fulfil its potential Utiligroup requires significant investment in its resources and systems which the Directors believe NorthEdge can deliver. The Board's view is that the Group is unable to provide this investment without raising further funds the return on which would be uncertain;
• without the necessary investment, the Group would remain a small AIM quoted company and Utiligroup would need to support the head office and other costs that are associated with an AIM quotation, which will further restrict its potential to grow; and
• when Utiligroup was acquired by the Company in June 2010, the total consideration paid was £10.79 million (of which £6.8 million was satisfied in cash). In February 2013, Utilisoft Pty was sold for £2.2 million cash and accordingly, if this present transaction is completed, the Company will have received £18.3 million in cash in less than four years for the whole of the Utiligroup group, representing a significant return on that investment. Throughout the period of ownership Utiligroup has been profitable and cash generative all of which has helped to support the Group as other parts of its business failed to perform in line with expectations.

Accordingly, the Board considers that the offer for Utiligroup represents good value for the business and is in the best interests of Shareholders as a whole.

Following the completion of the Disposal, which is subject, inter alia, to Shareholder approval, Bglobal will have estimated cash balances (net of the expenses incurred in carrying out the strategic review and in the sale of Bglobal Metering and Utiligroup) of £16.8 million. The Board's strategy is to return this capital to Shareholders and it is currently in discussions with its advisers to explore ways by which this can be achieved most effectively. The Board anticipates that a return of capital of equal to up to 11 pence per Ordinary Share will be undertaken in 2014, with the balance of approximately £5.1 million being retained to cover working capital and any liabilities arising from the disposal of Utiligroup and Bglobal Metering under the warranties and indemnities given to each buyer in respect of those transactions. The Board expects that surplus monies will be returned to Shareholders once the extent of these liabilities, if any, has been determined.

Additionally, it is the Board's intention, in due course, to cancel the admission of the Company's Ordinary Shares to trading on AIM.

The Board will update Shareholders in relation to these matters when further information is available.

Information on Utiligroup
Utiligroup is a leading provider of energy management software and process solutions to UK energy participants. Utiligroup has many years' experience in managing market participants' dataflow requirements and breaking down barriers to entry through the "Supplier in a Box" offering to new entrants.

The business operates through two subsidiaries, Utilisoft Limited ("Utilisoft") and Utiliserve Limited ("Utiliserve").

Utilisoft is a software company specialising in the development of software solutions that manage industry processes concerned with the movement of dataflows and the automation of core processes, such as retail customer registration and energy trading.

Utiliserve offers outsourced managed services providing back office support to a number of energy suppliers who use Utilisoft software solutions. Typical support would include managing the data processes of customers switching between suppliers and dataflows associated with meter readings or meter works.

Utiligroup is a market leading provider of software and services to the energy retail sector, providing solutions to 29 of the active UK energy suppliers, from the 'Big 6' suppliers to new entrants. Its range of solutions is easily scalable for all sizes of business, from small new entrants with ambitious plans to grow, to large multi-national corporations with millions of customers.

For the year ended 31 March 2013, Utiligroup's revenue was £7.1 million and profit before taxation was £0.5 million. Gross assets at 31 March 2013 were £5.7 million. For the six months ended 30 September 2013, Utiligroup's revenue was £3.0 million and profit before taxation was £0.4 million.

Terms of the Disposal
Pursuant to the Sale Agreement, the Buyer has conditionally agreed to purchase from the Company the whole of the issued share capital of Utiligroup, for a consideration of £16.1 million payable in cash on completion.

Conditions
Completion of the Sale Agreement ("Completion") is conditional on:

(i) the despatch to Shareholders of the Circular later today ;

(ii) the passing, without amendment, of the Resolution;

(iii) the transfer of the freehold property at Unit 2D, Phoenix Park, Blakewater Road, Blackburn to the Company; and

(iv) the Sale Agreement not having been terminated by the Buyer pursuant to the Sale Agreement ("Termination Rights", as described below).

The Company has agreed to use all its reasonable endeavours to procure that each of those conditions is satisfied. If all such conditions have not been satisfied on or before 27 June 2014 (or such later date as may be agreed) the Sale Agreement will automatically terminate.

Warranties
The Company has given limited warranties to the Buyer customary for a transaction of this size and nature in relation to Utiligroup, including share capital, accounting and financial changes since 31 March 2013, assets, intellectual property, real estate, compliance and litigation matters.

The Company will not be liable for any warranty claim unless (i) the amount that would otherwise be recoverable from it in respect of such warranty claim exceeds £30,000; (ii) the amount of the liability when aggregated with all other warranty claims exceeds £300,000 (in which event the Company will be liable for the whole amount of such warranty claim and not merely the excess); (iii) the Company receives notification from the Buyer of a warranty claim on or before 30 June 2015. The maximum aggregate liability of the Company in respect of any claim arising out of the Sale Agreement is £3.22 million, being 20 per cent. of the consideration.

The warranties are given by the Company at the date of the Sale Agreement and repeated at Completion. The warranties are given by the Company subject to matters fairly disclosed (i) in the disclosure letter dated 30 May 2014 from the Company to the Buyer, and (ii) in a second disclosure letter to be delivered by the Company to the Buyer before Completion disclosing only any matter occurring after the date of the Sale Agreement.

Termination Rights
The Buyer may by notice in writing to the Company at any time before Completion elect to terminate the Sale Agreement without liability on the part of the Buyer if any of the following come to the notice of the Buyer before Completion:

(i) a failure of the Company to comply with its obligations under the Sale Agreement in respect of how to conduct the business of Utiligroup in the period between signing the Sale Agreement and Completion;

(ii) a material breach of any of the warranties given by the Company in the Sale Agreement; or

(iii) any matter which would result in a loss or liability to the Buyer of £300,000 or more and which affects or is likely to affect materially and adversely the financial position (including without limitation turnover, profitability and cashflow) of Utiligroup (not being an event affecting or likely to affect to a similar extent generally all companies carrying on similar businesses in the United Kingdom).

In the event that the Resolution is not passed, the Company has agreed to reimburse the Buyer for its costs and expenses incurred in connection with this transaction up to a maximum sum of £200,000 plus any applicable VAT.

Tax Covenant
The Company has entered into a tax covenant in favour of the Buyer in respect of any liability to taxation of any member of Utiligroup for all periods ending on or prior to Completion (subject to certain customary exceptions) in a form which is usual for a transaction of this size and nature save that any claims under the tax covenant need to be brought on or before 30 June 2015.

Conduct of business pending Completion

The Company has agreed to procure that pending Completion, the business of Utiligroup is carried on in the ordinary course and in accordance with the specific restrictions set out in the Sale Agreement.

Related Party Transaction
Matthew Hirst and Andrew Green are directors of Utiligroup and are also shareholders of the Buyer and Martin Evans, who is interested in 11.57 per cent. of the issued share capital of Bglobal, is also a shareholder of the Buyer. Accordingly, the Disposal is a related party transaction for the purposes of Rule 13 of the AIM Rules.

The Directors, who are all independent for the purposes of the AIM Rules, having consulted with Charles Stanley Securities, the Company's Nominated Adviser, consider the terms of the Disposal to be fair and reasonable insofar as the Shareholders are concerned.

The AIM Rules do not prohibit related parties from exercising the voting rights attached to their respective shareholdings at the General Meeting.

Irrevocable Commitments
Irrevocable Undertakings to vote in favour of the Resolution at the General Meeting have been obtained from the Directors and certain other Shareholders in respect of their shareholdings, amounting in aggregate to 22,836,370 Ordinary Shares representing 21.54 per cent. of the existing Ordinary Shares.

Recommendation
The Directors, who are all independent for the purposes of the AIM Rules, having consulted with Charles Stanley Securities, the Company's Nominated Adviser, consider the terms of the Disposal to be fair and reasonable insofar as the Shareholders are concerned.

The Directors believe that the disposal of Utiligroup is in the best interests of the Company and Shareholders as a whole. Accordingly, the Directors, unanimously recommend that you vote in favour of the Resolution to be proposed at the General Meeting as they have irrevocably undertaken to do so in respect of their own aggregate holdings of 125,000 Ordinary Shares, representing approximately 0.18 per cent. of the existing ordinary share capital of the Company.

DEFINITIONS
The following definitions apply throughout this announcement, unless the context otherwise requires:

"Act" the Companies Act 2006 (as amended)
"AIM" a market operated by the London Stock Exchange
"AIM Rules" the rules which apply to AIM companies and their directors, contained in the document entitled the "AIM Rules for Companies" published by the London Stock Exchange, as amended from time to time
"Bglobal Metering" B Global Metering Limited
"Board" or "Directors" the board of directors of the Company
"Buyer" DWF Apollo Midco Limited
"Company" or "Bglobal" Bglobal plc
"Disposal" the proposed disposal of the entire issued share capital of Utiligroup pursuant to the terms of the Sale Agreement
"FCA" the Financial Conduct Authority
"FSMA" the Financial Services and Markets Act 2000 (as amended)
"General Meeting" the general meeting of the Company convened by the Notice of General Meeting, to be held at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL at 10 a.m. on 18 June 2014
"Group" the Company and its subsidiary undertakings
"KPMG" KPMG LLP
"London Stock Exchange" London Stock Exchange plc
"NorthEdge" NorthEdge Capital LLP
"Notice of General Meeting" the notice convening the General Meeting set out in the circular
"Ordinary Shares" ordinary shares of one pence each in the capital of the Company
"Resolution" the ordinary resolution set out in the Notice of General Meeting
"Sale Agreement" the conditional agreement dated 30 May 2014 between the Company and the Buyer for the sale and purchase of the entire issued share capital of Utiligroup
"Shareholder" a holder of shares in the issued capital of the Company
"Utiligroup" Utiligroup Limited and its subsidiary undertakings