Posting of Circular to Shareholders

1 December 2010

cScape Group PLC

("Company" or "cScape")

Posting of Shareholder Circular and Notice of General Meeting

The board of directors ("Board") of cScape announces that a notice convening a General Meeting forming part of a circular (the "Circular") was posted to shareholders today. The General Meeting will be held at 10.00 a.m. on Thursday, 23 December 2010 at the offices of Smith & Williamson Corporate Finance Limited, 25 Moorgate, London EC2R 6AY, for the purpose of considering the following resolutions:

1. a special resolution to effect the Sub-division, as defined in the Circular;

2. a special resolution to effect the Consolidation, as defined in the Circular;

3. an ordinary resolution authorising the Board to allot ordinary shares in the Company; and

4. a special resolution giving the Board the power to disapply statutory pre-emption rights in respect of allotments of ordinary shares for cash.

A copy of the Circular and the form of proxy are available on the Company's website at www.cscapegroup.com and selected information extracted from the Circular is set out below.

For further information, please contact:

Smith & Williamson Corporate Finance Limited Tel: 020 7131 4000

Azhic Basirov / Siobhan Sergeant

The following information has been extracted without material adjustment from the Circular.

The board of directors ("Board") of cScape Group PLC ("Company" or "cScape") is proposing to make the change to the Company's capital structure, explained below ("Capital Reorganisation"). In addition, the Board is seeking the authority of shareholders at a General Meeting, (notice of which is set out at the end of the Circular), to allot new ordinary shares in the Company for cash pursuant to a placing (the "Placing") to raise approximately £230,000 (net of expenses). Set out below are further details of and reasons for the proposals.

Capital Reorganisation

The Company's ordinary shares of 10p each ("Ordinary Shares") are currently trading at or below the nominal value. It is unlawful for the Company to allot Ordinary Shares at a discount to their nominal value and this, therefore, restricts the Company's ability to issue new Ordinary Shares, either for cash or non-cash consideration, at or near to the current market price of an Ordinary Share. Therefore, in order to undertake an equity fundraising or take advantage of any future opportunities, the Board proposes a sub-division and redesignation of the Ordinary Shares.

In addition, the Board believes that the Company's ability to attract new, particularly institutional, investors would be enhanced and so the liquidity of the Company's shares improved if, following a sub-division and redesignation of the Ordinary Shares, there was a consolidation of the shares then comprised in the Company's ordinary share capital into shares of a higher nominal amount. 

It is not expected that the Capital Reorganisation will affect the continued admission of the Company's shares to trading on the AIM market of the London Stock Exchange.

Sub-division of Ordinary Shares

It is proposed that each of the 11,311,558 issued Ordinary Shares and the 6,688,442 unissued Ordinary Shares of 10p each be sub-divided into one share of 9p and one share of 1p. The redesignation of these shares will result in each share of 9p becoming a deferred share ("Deferred Share") and each share of 1p becoming a new ordinary share ("New Ordinary Share"), (together, the "Sub-division").

Immediately following the Sub-division, every cScape shareholder ("Shareholder") will hold one New Ordinary Share and one Deferred Share in place of every Ordinary Share previously held. 

The voting and other rights (including the rights to dividends) conferred on the New Ordinary Shares will be identical to those currently attaching to the existing Ordinary Shares as set out in the articles of association of the Company. 

The Deferred Shares will carry minimal rights and will have little or no economic value. The Deferred Shares will have no rights to vote or to participate in dividends and will carry limited deferred rights on any return of capital (whether on a liquidation or otherwise). No application will be made for the Deferred Shares to be admitted to trading on AIM. Further details of the rights attached to the Deferred Shares are set out in Resolution 1 contained in the notice of General Meeting.

Consolidation

Immediately following the Sub-division, it is proposed that there is a reconsolidation of the Company's New Ordinary Shares (the "Consolidation"). The Board believes that the Consolidation will increase liquidity of the Company's shares.

The Consolidation would be on the basis that every 10 New Ordinary Shares (whether issued or unissued) shall become one consolidated ordinary share of 10p in the Company ("Consolidation Share"). Fractions of a Consolidation Share will not be issued and accordingly individual Shareholders' entitlements will be rounded down to the nearest whole number of Consolidated Shares. Fractional entitlements will instead be aggregated and sold in the market for the benefit of the Company.

The voting and other rights (including the rights to dividends) conferred on the Consolidation Shares will be identical to those currently attaching to the Ordinary Shares as set out in the articles of association of the Company. Application will be made for the Consolidation Shares to be admitted to trading on AIM following the approval of certain resolutions which will be put to the Company's shareholders at a General Meeting to be held on 23 December 2010.

Subject to approval of the Capital Reorganisation at the General Meeting, definitive share certificates in respect of the Consolidation Shares arising from the Capital Reorganisation are expected to be despatched on or before 11 January 2011. For the avoidance of doubt, the Company will not issue share certificates in relation to the New Ordinary Shares of 1p each. Definitive share certificates for Consolidation Shares will not be despatched to those shareholders who have previously elected to have their Ordinary Shares held in uncertificated form. Instead the Consolidation Shares will be credited to such Shareholders in uncertificated form through CREST. The new ISIN for the Consolidation Shares will be GB00B4LFNL36, the new Sedol number will be B4LFNL3 and the ticker, CSC, remains unchanged.

Immediately following the passing of the resolutions to approve the Capital Reorganisation at the General Meeting, share certificates in respect of existing Ordinary Shares will cease to be valid for any purpose other than evidencing the title of Shareholders to Deferred Shares. Prior to the despatch of definitive share certificates, transfers of Consolidation Shares arising from the Capital Reorganisation will be certified against the register.

The Placing

Subject to the approval by Shareholders of the resolutions to implement the Capital Reorganisation and the Placing, the Board intends to place 357,143 Consolidation Shares (the "Placing Shares") with Keith Young, the Executive Chairman of the Company, at a price of 70p per Placing Share (equivalent to the closing mid-market price of an existing Ordinary Share as at 29 November 2010 of 7p). Following the issue of the Placing Shares, it is expected that Mr Young will have a beneficial interest in 66.84% of the revised enlarged issued share capital of the Company. Subject to the passing of each of the resolutions to be proposed at the General Meeting, the Placing Shares are expected to be issued on 24 December 2010.

The Company has seen a significant shrinkage of new business opportunities in the last few years, however the core of long established clients have continued to hold up. The Board believes that the Company is now well positioned to take advantage of the expected economic upturn. The Board acknowledges that the business environment has been challenging and the containment of costs remains a priority. Given the current situation, the Board believes that the Placing will provide further stability to the Company. It is intended the proceeds of the Placing will be used to fund the current working capital requirements of the Company and potential future growth. The Placing will also give the Company the flexibility to move quickly with regard to any future fundraising, should the opportunity arise, following the Capital Reorganisation.

Authority to allot shares and power to disapply statutory pre-emption rights

In order to implement the Placing, the Company is seeking to renew the general authority for the Board to allot shares and also to disapply the statutory pre-emption rights in respect of allotments of shares for cash so that such shares may be issued without first offering them to existing Shareholders on a pro rata basis. These authorities will be valid until 23 March 2012 being the date 15 months from the date of the relevant resolution.

The authority sought, other than with respect to rights issues and the Placing, is limited to the issue of up to 74,415 Consolidation Shares, representing approximately 5% of the revised issued share capital of the Company following completion of the Capital Reorganisation.

Related Party Transaction

The Placing constitutes a related party transaction for the purposes of the AIM Rules for Companies.

Robert Killick, the independent director of the Company, having consulted with Smith & Williamson Corporate Finance Limited, in its capacity as nominated adviser to the Company, considers the Placing to be fair and reasonable and in the best interests of the Shareholders as a whole. In providing such advice Smith & Williamson Corporate Finance Limited has taken into account the Mr Killick's commercial consideration in respect of the Placing.

Share Options

It is not anticipated that the Capital Reorganisation will have any adverse economic impact on the overall value which could be derived from the existing options over the Company's shares. 

Taxation

Shareholders are advised to consult an appropriate professional tax adviser in relation to their tax position.

General Meeting

The proposed Capital Reorganisation and the authority to allot shares in the Company will require the passing of certain resolutions by the Shareholders in general meeting. A notice convening a General Meeting of the Company to be held at the offices of Smith & Williamson Corporate Finance Limited, 25 Moorgate, London EC2R 6AY at 10.00 a.m. on 23 December 2010, is set out at the end of the Circular.

Recommendation

Your Board believes that the proposals described in this document are in the best interests of the Company and its Shareholders and therefore the Directors unanimously recommend you to vote in favour of the resolutions to be proposed at the General Meeting, as they intend to do in respect of their own beneficial and non-beneficial holdings, amounting in aggregate to 6,375,826 existing Ordinary Shares, representing approximately 56.4 per cent of the Company's issued ordinary share capital.