Issue of Equity and Notice of General Meeting

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Energetix Group Plc

("Energetix" or the "Company")

Issue of Equity, notice of General Meeting, and announcement of the creation of a new energy supply business to promote the Kingston microCHP boiler

Energetix Group plc, (AIM: EGX), which develops and commercialises alternative and efficient energy products, announces that it has conditionally raised gross proceeds of approximately £4.6 million through a placing of 18,266,600 new Ordinary Shares at 25 pence per Ordinary Share. The funds will be used to create a unique dual fuel energy company that will provide free Kingston microCHP boilers to its customers in return for a commitment to purchase gas and electricity for a fixed period.

Highlights

·; Proceeds - £4.6m to be raised by way of a conditional placing, to certain existing and new investors at a price of 25 pence per Ordinary Share.

·; Notice of GM - Placing subject to approval of Shareholders at a General Meeting on Monday 19 March 2012.

·; Use of Funds - Net proceeds are to support what is anticipated to be substantial growth, proceeds from the placing will be predominately utilised to grow the necessary infrastructure of the new Energy Supply Business and to prepare for the supply of increasing volumes of Kingston microCHP appliances. A small proportion of the funds will also be used to support the Pnu Power business through to profitability.

·; Unique Business Model - The Kingston microCHP boiler will be able to generate a proportion of the household's electricity needs in the home which should enable Kingston Energy to achieve a higher profit from each customer than for a typical energy supplier. The Directors believe the Kingston Energy proposition is unique and represents a substantial opportunity to use the Kingston boiler appliance to become a major energy supplier.

·; Management Changes - It is planned to extend the roles of Clare Spottiswoode and Tony Stiff to Executive Chairman and CEO of Kingston Energy respectively. Recruitment is in progress of a seasoned senior executive to become the CEO of the Kingston product company, responsible for the supply of the Kingston microCHP boiler. Adrian Hutchings, current Energetix Group CEO, will manage this role on an interim basis, and on appointment of the new CEO Adrian will take on the role of Energetix Group Executive Deputy Chairman.

·; Admission - Admission of the VCT Placing Shares expected on 20 March 2012 and Admission of the Non-VCT Placing Shares expected on 21 March 2012.

Commenting Adrian Hutchings, CEO of Energetix Group, said:  "Over the past year we have been evaluating the unique concept of building a dual-energy supply business around the Kingston microCHP appliance. We have recently been delighted to recruit Clare Spottiswoode and Tony Stiff, seasoned senior executives with substantial experience within the energy supply industry, to oversee the development of the new Kingston energy supply business. Clare and Tony have already added significant value to Kingston energy and presented a clear commercialisation strategy that is set to deliver significant shareholder value. This is obviously an exciting time for Energetix and a major step forward for the Group and one that I am very proud to be part of. We are delighted that current and new institutional investors have provided us with support to fund this phase of the Company's development."

For further information:

INTRODUCTION

The Company announces that it has conditionally raised gross proceeds of £ 4,566,650 through a placing of 18,266,600 new Ordinary Shares at 25 p per Ordinary Share.

The Placing comprises a placing of 1,200,000 new Ordinary Shares which it is anticipated will qualify as VCT investments (the "VCT Placing") and a placing of a further 17,066,600 new Ordinary Shares (the "Non-VCT Placing").

The Placing is conditional, inter alia, upon the passing by Shareholders of certain resolutions being put to Shareholders at the General Meeting of the Company, which is being convened for 10.00 a.m. on Monday 19 March 2012 at Castlefield House, Liverpool Road, Castlefield, Manchester M3 4SB for the purpose of considering the Resolutions to approve these authorities. Further details of the Resolutions are set out in a circular that is being posted to Shareholders today.

BACKGROUND AND RATIONALE FOR THE PLACING and USE of PROCEEDS

Genlec

The Group has recently completed the development of Kingston, a production engineered microCHP boiler. Prototypes of this boiler have been tested in the Group's workshops and a small number of staff homes over the past 12 months, and the results of these tests have been incorporated into the current design.

As outlined in the interim results published in September 2011, the Group was targeting the production of a batch of Kingston microCHP boilers and to date the Group has produced 44 of the 50 unit batch. The Group has agreed to work with Calor Gas on a liquefied petroleum gas version and with Carillion Energy Services Limited on the installation and testing of these appliances.

In parallel with the development and production of the first batch of appliances, the Group has been working on the development of the commercial options to deliver value from the Kingston product. During this period the Group has reviewed a number of commercial options, and initiated the recruitment of key personnel, including Clare Spottiswoode and Tony Stiff, to support the commercial development of the business. This process has identified what the Directors believe is a unique and substantial opportunity to use the Kingston product to build a major energy supplier. This strategy will include the creation of a new dual fuel (gas and electricity) energy supply business (the "Energy Supply Business"), provisionally called Kingston Energy, and a substantial proportion of the Placing proceeds will be utilised to develop this business.

The strategy is to attract customers to the Energy Supply Business by offering them a free boiler in exchange for using the Energy Supply Business to supply dual fuel for a fixed period.

The Directors understand that there are approximately 1.5 million boilers sold in the UK every year, and a large proportion of these are for replacement boilers often where the homeowner's current boiler has failed. The typical cost for a boiler and its installation is around £2,500, of which the Directors believe, whilst affected by a number of factors, that installation comprises approximately £1,000 including VAT. The cost is a large emergency payment for many householders. An ICM Research survey carried out for the Group indicated that a large proportion of homeowners surveyed would likely agree to purchase dual fuel for a fixed period in return for a free boiler, on the basis that the price of this fuel would be equivalent to gas and electricity that could be purchased from the existing major energy suppliers.

The Directors believe that the free boiler offering can be marketed at low cost with viral marketing, presentations and interviews, and have a lower cost of customer acquisition than a normal entrant to the energy supply business. In addition the Directors believe that the profit that the Company can earn from each customer would be higher than for a typical energy supplier, as the Kingston boiler will be making a significant proportion of the electricity the customer needs in the home, which results in the new Kingston Energy company not needing to buy that electricity from the grid.

The Company plans to charge homeowners only for the installation of the Kingston microCHP boiler, which includes an element of VAT. As a result of the VAT charges on installation, the Company expects to benefit from a level of VAT differential which will partially offset the cost of production of the boiler. In order to finance mass production of the Kingston microCHP, the Company will seek to enter into asset financing agreements in due course.

The Company has run outline models which indicate that, once the Company benefits from the lower costs of volume production, even without Feed In Tariffs or other financial benefits such as lower fuel costs; ability to remotely control the boiler to increase or reduce supply to the grid; and service and maintenance contracts, a good rate of return could be achieved. These additional benefits will be explored in the future but are not essential to make the financial basis for the business.

The Directors believe that this model is scalable in terms of customer attraction and retention. Certain key milestones will need to be met, including securing reliable contract assembly of the Kingston microCHP boiler and the provision of asset financing to fund the free boiler model. On 26 January 2012, the Company announced a key milestone, the appointment of Carillion Energy Services Limited to provide installation, maintenance and after care services in support of the Kingston microCHP field trial programme. Carillion Energy Services Limited has significant experience in boiler installation and maintenance which could greatly enable the future scalability of the business.

Pnu Power

Pnu Power focuses on the provision of compressed air back-up power which can ensure an uninterruptible power supply ("ups") for critical systems, particularly for the telecoms, data centre and power transmission markets. The Pnu Power range has been extended to include a product that can now meet the demand of the rapidly growing green data centre market, providing a low carbon alternative to diesel rotary ups systems.

In the Company's interim results published in September 2011, the Company indicated that it was progressing the completion of National Grid Type Approval for Pnu Power backup power products. This was successfully completed early this year. The Company is now in discussions with National Grid with regard to becoming part of a three year framework agreement for the supply of products. National Grid have indicated that they normally procure up to 400 such systems a year and a key Pnu Power target is to be selected to provide a proportion of these systems.

The UK National Grid opportunity has the potential to take Pnu Power into profitability. Other European national grids will also be targeted. Progress has been made with the National Grid USA, with successful trials in both Boston and New York. However greater exploitation of this market will require a full time presence in the USA and this will not be put in place until Pnu Power has started to deliver successful volume sales in the UK and Europe.

Together with the interim results, Energetix also announced the planned installation of a 300kW Pnu Power system in the Co-operative Financial Services data centre. It is planned that this installation will be completed in Q1 2012. The Company has received a number of further enquires for data centre scale Pnu Power solutions and is currently preparing quotations for a number of these enquiries.

Use of Funds

The funds being raised in this funding round will be predominately utilised to grow the necessary infrastructure of the new Energy Supply Business and to prepare for the supply of increasing volumes of Kingston microCHP appliances.

To support what is anticipated to be a substantial growth in the Company, the new funds will also be used to recruit additional key individuals to the Board, both in executive and non-executive roles.

A small proportion of the funds will be used to support the Pnu Power business through to profitability.

THE PLACING

The Company proposes to raise £4,566,650 through the issue of 18,266,600 Placing Shares at the Placing Price. The Placing Shares will represent approximately 21.9 % of the Enlarged Share Capital following Admission.

Cenkos has entered into the Placing Agreement with the Company whereby it has agreed to use its reasonable endeavours, as agent for the Company, to procure placees for the Placing Shares. The Placing is not being underwritten.

The Placing Agreement is conditional upon, inter alia, Resolutions 1 and 3 being duly passed at the General Meeting and Admission becoming effective on or before 8.00 a.m. on 20 March 2012 for the VCT Placing Shares and on or before 8.00 a.m. on 21 March 2012 for the Non-VCT Placing Shares (or such later time as the Company and Cenkos may agree, being not later than 30 April 2012). The Placing Agreement contains warranties from the Company in favour of Cenkos in relation to, inter alia, the accuracy of the information in this announcement and other matters relating to the Company and its business. In addition the Company has agreed to indemnify Cenkos in relation to certain liabilities it may incur in relation to the Placing. Cenkos has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a breach of the warranties and after such consultation with the Company as the circumstances may allow.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission of the VCT Placing Shares will become effective and that dealings will commence on 20 March 2012 and that Admission of the Non-VCT Placing Shares will become effective and that dealings will commence on 21 March 2012. The Placing Shares will, on Admission, rank pari passu in all respects with the existing Ordinary Shares and will rank in full for all dividends and other distributions declared, made or paid in respect of the existing Ordinary Shares after Admission.

Certain of the Directors will be participating in the Non-VCT Placing. Clare Spottiswoode, Tony Stiff and Adrian Hutchings have each committed to subscribe for 200,000 Placing Shares.

MANAGEMENT CHANGES

Following Admission of the Placing Shares it is proposed that Tony Stiff be appointed as the CEO of the Energy Supply Business to be formed as a new subsidiary. At the same time it is intended that a new Energetix product company will be formed which will produce the Kingston products for supply to the Energy Supply Business; a recruitment process has been initiated to recruit a seasoned senior executive, most likely with experience of the boiler industry, to become the CEO of the product company. Both Tony Stiff and the new product company CEO will be executive directors on the Energetix board. Clare Spottiswoode's role will be extended to become executive chairman of the Company, and a review of the needs of the Company regarding non-executive directors to support the changes and growth of the Company will be undertaken. For the interim period whilst a new CEO of the product company is recruited, Adrian Hutchings will perform these duties, and it is planned that on the appointment of the new CEO Adrian will take on the role of executive deputy chairman of Energetix.

GENERAL MEETING

The business of the General Meeting is to propose the Resolutions. The Resolutions to be proposed at the General Meeting are as follows:

Resolution 1 is an ordinary resolution to authorise the Directors to allot the Placing Shares, with such authority to expire at the conclusion of the annual general meeting of the Company held in 2012;

Resolution 2 is an ordinary resolution to authorise the Directors to allot shares or to grant rights in connection with a pre-emptive offer by way of rights issue to Shareholders up to an aggregate nominal amount representing up to two thirds of the Enlarged Share Capital, with such authority to expire at the earlier of the conclusion of the annual general meeting of the Company held in 2013 and the date eighteen months from the passing of the resolution;

Resolution 3 is a special resolution to dis-apply Shareholders' statutory pre-emption rights (which require a company to offer new shares for cash first to existing shareholders in proportion to their holdings) in relation to the allotment of the Placing Shares, with such authority to expire at the conclusion of the annual general meeting of the Company held in 2012; and

Resolution 4 is a special resolution to dis-apply Shareholders' statutory pre-emption rights in relation to an aggregate nominal amount representing approximately 15 per cent. of the Enlarged Share Capital, with such authority to expire at the earlier of the conclusion of the annual general meeting of the Company held in 2013 and the date eighteen months from the passing of the resolution. The institutional guidelines issued by the Association of British Insurers recommend a limit of 5 per cent. of the issued share capital for the dis-application of shareholders' statutory pre-emption rights. The authority sought in this resolution is in excess of that level as the Directors consider it is prudent to retain the flexibility to act quickly and allot securities within these limits if they consider it in the interests of the Company to do so.

The ordinary resolutions 1 and 2 will require a simple majority of those voting in person or by proxy (whether on show of hands or on a poll) in favour of these resolutions. The special resolutions 3 and 4 will require approval by not less than 75 per cent. of those voting in person or by proxy (whether on a show of hands or on a poll) in favour of the relevant resolutions.

SETTLEMENT AND DEALINGS

Application will be made for admission of the Placing Shares to trading on AIM. It is expected that Admission of the VCT Placing Shares will become effective and dealings will commence at 8.00 a.m. on 20 March 2012 and that Admission of the Non-VCT Placing Shares will become effective and dealings will commence at 8.00 a.m. on 21 March 2012.

Admission is subject to the passing of Resolutions 1 and 3 at the General Meeting and to the Placing Agreement becoming unconditional in all respects (save only for Admission) and not being terminated in accordance with its terms.

SHARE CAPITAL

The Company's issued share capital pre and post the Placing (assuming the Placing is fully subscribed) is set out in the table below:

Following the Placing the total number of voting rights in the Company will be 83,421,608.

ACTION TO BE TAKEN

A Form of Proxy for use by Shareholders in connection with the General Meeting accompanies the Circular. Whether or not you intend to be present at the General Meeting, you are requested to complete and sign the Form of Proxy and return it to the Company's Registrars, Neville Registrars Limited, Proxy Department, Neville House, 18 Laurel Lane, Halesowen, West Midlands, B63 3DA so as to be received no later than 10.00 a.m. on 17 March 2012.

Unless the Form of Proxy is received by the date and time mentioned in the instructions, it will be invalid. The completion and return of the Form of Proxy will not prevent you from attending the General Meeting and voting in person if you so wish.

RECOMMENDATION and IRREVOCABLE UNDERTAKINGS

The Directors consider that the Placing is in the best interests of the Company and its Shareholders as a whole.

The Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they have irrevocably undertaken to do in respect of the 11,615,038 Ordinary Shares beneficially held by them, representing approximately 17.8 per cent. of the entire issued share capital of the Company.

In addition the Company has received an irrevocable undertaking from Ora (Guernsey) Limited to vote in favour of the Resolutions to be proposed at the General Meeting in respect of 15,103,557 Ordinary Shares held by it, representing approximately 23.2 per cent. of the entire issued share capital of the Company.

Accordingly the Company has irrevocable undertakings to vote in favour of the Resolutions to be proposed at the General Meeting from Shareholders holding in aggregate 26,718,595 Ordinary Shares representing 41.0 per cent. of the entire issued share capital of the Company. 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

PLACING STATISTICS

DEFINITIONS

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