Half Yearly Report

Energy Technique Plc

("Energy Technique" or the "Company")

Half-Yearly Report

30 September 2010

Headlines

·; Operating loss before exceptional items of £293,000. This was substantially incurred in the first quarter;

·; Diffusion returned to profitability in the second quarter;

·; Reduced loss for SIAS FM in the second quarter;

·; Strong balance sheet at 30 September 2010 with net assets of £2.14 million and £0.66 million of cash;

·; Diffusion's order book is strengthening and enquiry levels are high;

·; SIAS FM prospects improving by winning more small works contracts and recent cost reductions.

Chairman's statement

Introduction

The Group experienced difficult trading conditions in the first half year to 30 September 2010, due to reduced activity levels in the construction sector. As I indicated in my Chairman's Statement accompanying the accounts for the year ended 31 March 2010, sales in the current financial year were running below management's expectations, but I am pleased to report a significant improvement in financial performance in the second quarter.

Group financial performance

Group sales in the half year were £3.61 million (2009: £2.72 million), resulting in an operating loss of £293,000 before exceptional items, of which, £226,000 was incurred in the first quarter. Sales in the second quarter were 32% higher than in the first quarter, resulting in a much-reduced operating loss of £67,000 in the second quarter.

The Group incurred an exceptional cost of £46,000 in the half year, relating to the resignation of the former CEO on 28 September 2010.

Group sales are not comparable with the half year ended 30 September 2009, because the 2009 half year results include only one full month's trading from SIAS FM, which was acquired in August 2009.

The Company remains soundly financed, having a strong balance sheet at 30 September 2010 with net assets of £2.14 million, cash at bank of £655,000, together with a modest draw down of £192,000 under its invoice discounting line.

Diffusion

Diffusion's sales were £2.78 million in the first half year (2009: £2.56 million), resulting in an operating loss of £61,000, which was all incurred in the first quarter. Whilst sales grew by 9% over the corresponding half year, this did not flow through into improved profits, due to lower margins in the current fan coil market place. Importantly, sales improved by 37% in the second quarter, producing a return to profitability. The commercial heating range enjoyed a very successful first half year, with sales growing by 23% over the corresponding period.

In the first quarter, the traditional fan coil market for Diffusion was weak and as a result, Diffusion's management pursued export led growth opportunities. The first major export project was won in the second quarter with a land mark "green" commercial building in Abu Dhabi, and this successful project was a contributor to Diffusion's improved trading in the second quarter.

Whilst the UK fan coil market showed some signs of improvement in the second quarter, no significant growth is expected in the near future and Diffusion's management believes that medium-term growth prospects lie in export markets, in particular the Middle East. Management is therefore devoting highly focused marketing resources in developing certain of the Middle East countries and the follow on sales opportunities for fan coils from the first Abu Dhabi project are very encouraging. The commercial heating market place remains buoyant and more stable than for UK fan coils.

SIAS FM

SIAS FM was acquired in August 2009. Sales for SIAS FM were £825,000 in the first half year (2009: £167,000 for one full month), resulting in a loss of £134,000. This is a disappointing result for SIAS FM. However, sales in the second quarter improved by nearly 18% and this produced a much-reduced operating loss in the second quarter.

SIAS FM faced an absence of small contract works jobs in the first half year, due to customer uncertainty before the Company bought the business out of administration. However, the business has now been properly re-established in the marketplace, customer confidence has returned and SIAS FM is now starting to win more small contract works jobs.

Since acquisition, the Group has invested heavily into SIAS FM including a new head office in Stoke-on-Trent, a new state-of-the-art IT system and recruited a new business development manager. More recently, changes to the reporting and control systems have been introduced, resulting in more efficient and streamlined operational control.

Board changes

James Lugg resigned as the CEO and from the board on 28 September 2010.

I am delighted to welcome Martin Reid and Martin Kirkham, who both joined the board on 15 September 2010. Martin Reid is a director of Diffusion and Martin Kirkham is the managing director of SIAS FM. Working together with Leigh Stimpson, the managing director of Diffusion, all three executive directors are working very closely to maximise cross selling opportunities between Diffusion and SIAS FM.

Current trading

The Group incurred a small loss in October due to losses incurred by SIAS FM. Diffusion continued to trade profitably as it has done since the second quarter of the first half year. Diffusion's order book has been building in recent weeks and enquiry levels are high. Trading prospects for SIAS FM continue to improve with the growth in small works orders and the impact of the recent operational efficiencies and reduction in the company's cost structure.

Walter Goldsmith

Chairman

16 December 2010

Contacts:

Energy Technique Plc: 020 8783 0033

Walter Goldsmith, Chairman

Rob Unsworth, Company Secretary

finnCap (Nominated Adviser): 020 7600 1658

Geoff Nash/Ed Frisby

Consolidated statement of comprehensive income

For the six months ended 30 September 2010

There are no other recognised gains or losses other than as recorded in the consolidated statement of comprehensive income for the period.

Consolidated statement of financial position

At 30 September 2010

Consolidated statement of changes in equity

Consolidated cash flow statement

For the six months ended 30 September 2010

Consolidated segmental analysis

For the six months ended 30 September 2010

Notes to the consolidated interim report

For the six months ended 30 September 2010

1. GENERAL INFORMATION

Energy Technique Plc ("the Company") is a public limited company incorporated in the United Kingdom under the Companies Act 1985 (registration number 13273). The Company is domiciled in the United Kingdom and its registered office address is 47 Central Avenue, West Molesey, Surrey KT8 2QZ. The Company's Ordinary Shares are traded on the AIM market of the London Stock Exchange.

2. BASIS OF PREPARATION

Energy Technique Plc has adopted International Financial Reporting Standards ("IFRS") as adopted by the European Union with effect from 1 April 2006. The financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated. The accounting policies and methods of computation used in the preparation and presentation of this half-yearly report are in a form consistent with that which will be adopted in the Company's annual accounts.

3. REPORTING UNDER INTERNATIONAL REPORTING STANDARDS

As permitted, the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing these half-yearly financial statements and therefore the half-yearly financial information is not in full compliance with IFRS.

4. (LOSS)/EARNINGS PER SHARE

The (loss)/earnings per share calculations have been arrived at by reference to the following (loss)/earnings and weighted average number of shares in issue during the period.

5. OTHER INFORMATION

The half-yearly financial statements do not constitute statutory accounts as defined by Section 434 of the Companies Act 2006. It does not therefore include all the information and disclosures required in the annual financial statements. The financial information for the year ended 31 March 2010 has been extracted from the statutory financial statements for the Company for that period. These published financial statements prepared in a form consistent with International Financial Reporting Standards, as adopted by the European Union, were reported on by the auditors without qualification or an emphasis of matter reference and did not include a statement under Section 498(2) or (3) of the Companies Act 2006 and have been delivered to the Registrar of Companies.

6. POSTING TO SHAREHOLDERS

In an effort to further reduce costs and in accordance with the AIM Rules for Companies, this half-yearly report will be announced on a Regulatory Information Service and published on the Company's website, www.diffusion-group.co.uk, but it will not be posted to shareholders.