18th January 2010

I am delighted to announce that UKDN has new business partners in Lyceum Capital Partners LLP (“Lyceum”). Lyceum are an independent UK based company who specialise in investing in small and medium sized businesses.

The UKDN board constantly review our position within the market and identify new and exciting opportunities. It was for this reason that the board decided to seek investment from an external party. Following an extensive and thorough review of various options over the last year, UKDN have chosen Lyceum as our preferred investment partner.

(Image, left to right; Simon Hitchcock, Lyceum Capital Partners LLP & Greg Beech, UKDN CEO)

STRUCTURE

Since the original merger of our 5 founder contractors in 2007, we have made many valuable changes to the business and we have now positioned ourselves as the clear market leader in the insurance related drainage market. Lyceum’s investment provides UKDN with additional funding to grow and develop the business.

Following the investment by Lyceum there will be several changes to the business. As part of the board restructuring process of this deal I am pleased to announce that Jonathan Rhodes has been appointed as Finance Director, and Paul Wozencroft joins the board as Client Operations Director. With both possessing a great mix of knowledge & practical experience in their respective fields, UKDN are delighted that Jonathan and Paul have decided to make these steps

The board will be further strengthened with Simon Hitchcock and David Harland joining us as non-executive directors from Lyceum. A non-executive chairman will be appointed shortly. We hope you all join us in welcoming Simon & David to UKDN and wish them every success.

One member of the current board who will be leaving UKDN is Peter Tidey, who will be retiring after a long and illustrious career. I am pleased that he has agreed to stay in our business for a further year enabling us to consult with him and draw on his wealth of experience. I am sure you would all like to raise a glass and say a big thank you to Peter for all his efforts over the years.

STRATEGY

The strategy of the management team, which is supported by Lyceum, covers a number of different objectives. As well as targeting organic growth opportunities in the drainage market, the group plans broaden its capabilities to encompass other services, creating one of the UK’s leading outsourced claims management and validation providers operating in the home insurance market. This wider offering, of new and diverse services will aid the growth of the business and will also act to build the companies name & brand outside of the drainage sector.

The majority of the business is currently providing 2nd Fix work for insurance clients. The organic strategy is to maintain the focus on small bore drainage and the existing range of services but to significantly scale the business. This will be achieved through investment in a dedicated sales resource focussed on customer acquisition outside the insurance market and investment in scaling the delivery systems and operations of UKDN.

To aid the growth, other drainage businesses with complimentary clients and geographic operations may be acquired and integrated in a similar manner to the Homeserve Drainage Acquisition.

The key objectives for UKDN will now be to:

• Retain UKDN’s current market position and invest in the service proposition with its key insurer clients;

• Create a combined product and service offering that addresses the requirements of UKDN’s existing insurer clients

• Grow the 1st fix side of the business to support the strong insurance revenues

• Identify and acquire (where appropriate) attractive businesses that will lend themselves to the ‘UKDN Claims management and validation’ model and incorporate these into the business



This strategy, along with the hard work and support of UKDN’s staff, will help to develop UKDN into an even stronger, more efficient and ultimately more client focused business.

The last few weeks have been very important in the future of UKDN and I would like to thank everybody who has worked so hard within the business to see this deal through to completion and ensure that it went without delay or issue. A special thank you goes out to all these people.

I am very excited with what the future will bring with the support of our new shareholders in Lyceum and our expanded management team. I genuinely believe we will fulfil our true potential and create a business that we will all be very proud of.

Greg Beech, UKDN CEO