Proposed Firm Placing and Open Offer

THIS ANNOUNCEMENT IS RESTRICTED AND IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, SOUTH AFRICA, THE REPUBLIC OF IRELAND OR AUSTRALIA OR NEW ZEALAND OR ANY OTHER STATE OR JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

28 September 2012

Energetix Group Plc

("Energetix" or the "Company")

Proposed Firm Placing and Open Offer & Notice of General Meeting

Energetix Group plc, (AIM: EGX), which develops and commercialises alternative and efficient energy products, announces a proposed Firm Placing and Open Offer to raise up to £14m to further the continuing commercial development of the Kingston microCHP boiler for planned product launch in 2013.

The Company announces a conditional Firm Placing of 42,857,143 new Ordinary Shares at 28 pence each to raise gross funds of £12.0 million by a means of a placing by Cenkos Securities. In addition, in order to provide Shareholders who have not taken part in the Firm Placing with an opportunity to participate in the proposed issue of shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe at the same price, up to a further £2.0 million.

·; Proceeds - Up to £14.0 million to be raised by way of a conditional Firm Placing with certain existing and new investors at a price of 28 pence per Ordinary Share and an Open Offer.

·; Use of Funds - Funds will be used to complete product optimisation, finance controlled market entry in Q4 2012 and to provide working capital to produce the first commercial production of Kingston microCHP boilers in H2 2013.

·; Open Offer - Up to £2.0 million to be raised from an Open Offer at the Offer Price of 28 pence (a discount of 15.2 per cent. to the closing middle market price of 33 pence on 27 September 2012). Qualifying Shareholders are entitled to apply for 17 Offer Shares for every 200 Existing Ordinary Shares, however there is an over-allotment option available.

·; Qualifying Shareholders - Any Shareholders on the register of members at 5pm on 5 October 2012.

·; Notice of GM - Placing subject to approval of Shareholders at a General Meeting on Tuesday 16 October 2012.

·; Admission - Admission of the First Placing Shares expected on 17 October 2012 and admission of the Second Placing Shares expected on 18 October 2012 and admission of the Offer Shares on 24 October 2012.

·; Directors' participation - As the Company has been in a close period prior to the publication of the interim results the Directors were prohibited from participating in the Placing. However it is the intention of certain Directors to subscribe for shares immediately following the publication of the Company's results.

Commenting Peter Richardson, Group CEO of Energetix, said:  "I am delighted that we have raised £12 million from existing and new investors through the firm placing and hope that our existing shareholders will continue to support the Company in the Open Offer enabling us to raise a further £2 million. We believe that this demonstrates the strength of our proposition and we look forward to the exciting next phase of the Group's development. We also wanted to thank all our investors for their support over the years and to give everyone an opportunity to take part in this fundraising through the Open Offer."

INTRODUCTION

The Company announces that it has conditionally raised gross proceeds of £12.0 million through a placing of 42,857,143 new Ordinary Shares at 28 pence per Ordinary Share and up to approximately £2.0 million through an open offer of up to 7,090,836 ordinary shares.

The Firm Placing comprises a placing of 10,830,998 new Ordinary Shares which it is anticipated will qualify as VCT investments (the " First Placing Shares") and a placing of a further 32,026,145 new Ordinary Shares (the "Second Placing Shares").

The Firm 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 Tuesday 16 October 2012 at the offices of Atticus Legal LLP, Castlefield House, Liverpool Road, Castlefield, Manchester M3 4SB for the purpose of considering the Resolutions to approve the issue of shares under the Firm Placing and Open Offer. Further details of the Resolutions are set out in the Circular that is being posted to Shareholders today. 

BACKGROUND AND RATIONALE FOR THE FIRM PLACING and OPEN OFFER and USE of PROCEEDS

As previously announced the Company has been implementing its strategy to deliver an energy services business, provisionally called Kingston Energy, which is based upon the proposition of providing customers with a new gas microgeneration boiler for free provided the customers buy gas and electricity from Kingston Energy for an agreed period.

New management team

Over the past twelve months the Company has transformed itself from a founder led business to one with a board with a wider range of experience and capabilities to roll out the energy services proposition. Most recently the Company appointed Peter Richardson, the former COO of Dyson Limited, as Group CEO. The appointment of Peter Richardson follows on from the appointments of Clare Spottiswoode, a former Director General of Ofgas, as Chairman and Tony Stiff as Commercial Director who brings experience of setting up and operating an energy supply business.

The "free" boiler proposition

Energetix has developed a microCHP (micro combined heat and power) appliance (the "Kingston microCHP" or "microCHP"). This is a gas fuelled heating boiler that, when in operation, produces electrical power in addition to heating the home and supplying hot water. The microCHP uses established technology in a novel way and Energetix owns the patents to use that technology to generate electricity. The power generated can be used in the home or exported to the grid. The Kingston microCHP can generate power at significantly lower utility costs than the incumbent technology, whilst at the same time conforming to the parameters of a typical household boiler. The Kingston microCHP is able to generate electricity itself at less than 35 per cent. of the price of buying it from the grid. 

Normally, energy suppliers buy electricity on the wholesale electricity markets and transport this electricity to the customers' homes making a small margin. The electricity generated by the microCHP when the boiler is running will be used by the customer in their home or if demand is low in the home it will be exported to the grid. The Directors intend that Energetix's energy supply business can charge the customer at the tariff rate for the electricity generated by the microCHP resulting in an enhanced margin.

Kingston Energy intends to supply a gas boiler free to a homeowner who pays for the installation at approximately the same cost as a normal boiler. The homeowner, in turn, agrees to sign a five year credit agreement and to buy gas and electricity from Kingston Energy under a home energy supply contract tracked to the average rates of the six largest energy suppliers' standard tariff. Whilst the homeowner remains a customer of Kingston Energy for their gas and electricity supply Kingston Energy will pay an amount to the customer each month equivalent to that due under the credit agreement for the boiler, in full, for the duration of the five years of the credit agreement. Kingston Energy will make a supplier margin on the gas and electricity supplied to the homeowner and will make an enhanced margin in electricity generated by the boiler. At the end of the five years, provided the homeowner remains a Kingston Energy customer, Kingston Energy expects to be able to share the generation margin with the homeowner.

Market opportunity

The UK is the largest gas boiler market in Europe with approximately 1.4 million boilers installed each year. Nearly 80 per cent. of boiler sales are a distressed purchase as a result of boiler failure costing a typical homeowner between £2,500 and £3,500 to install a replacement and is one of the costliest emergency bills a homeowner will face.

Initially, the Directors intend to target homes in the three to five bedroom range with the "free" boiler proposition. Currently there are 6.9 million homes in England alone that are equal or larger in size to a three bedroom semi and typically seven per cent. of homes need a replacement boiler every year indicating an accessible market in England of around 480,000 per annum.

Development of the energy services

Kingston Energy has electricity and gas licences in place and is currently preparing for live operation in October 2012 in a Controlled Market Entry ("CME") phase. This will involve Kingston signing up to 100 energy customers over a three month period to test the processes and IT systems. The Directors anticipate that the CME process will be completed by January 2013. During the CME process Kingston intends to install approximately 10-20 Kingston microCHP boilers to test and refine the installation process.

Supply Chain

The key enabler to the Energetix's business model is the capability to manufacture the Kingston microcCHP boiler at a low cost point and in volume. The cost of the microCHP is targeted to be £800 in high volume production. Energetix, has in place an experienced purchasing team with a background in the boiler industry. The negotiation process for all major cost mechanical components has been completed, with quotes and delivery scheduling being confirmed.

Assembly of the boiler in volume is being planned and the Company's preferred partner contract is in the final stages of negotiation. The power module will be assembled by Eaton Williams Group Limited.

Product Performance

To enable Kingston Energy to define its target market for the "free boiler" proposition, performance testing has been undertaken at Gastec to determine the quantity of electricity that the Kingston microCHP boiler is likely to generate on an annual basis for a range of properties. To date this testing and the Company's internal analysis has identified that the Company's business plan target of average annual electricity generation of 1,800 kWh can be achieved or exceeded in at least 6.9 million homes in Great Britain.

Product Reliability

Product reliability and life expectancy has been considered for both components of the Kingston microCHP boiler; the gas condensing boiler and the power module. The patented design of the Kingston microCHP boiler enables the boiler, in the event that the power module is not operating, to continue to provide heating and hot water to the home.

The microCHP is principally made up of conventional components from boiler and refrigeration manufacturers used in a novel and reconfigured manner. These parts are widely available which the Directors expect will enable low cost mass production.

Volume installation capability

The Company has engaged with Carillion Energy Services to provide installation and after care services. Carillion have a proven track record of delivering high volume projects across Great Britain and are the leading installer for the Department of Energy and Climate Change's Warm Front program with over 1,000 installations per day of central heating and insulation systems. Their aftercare service includes a 24 hour emergency facility for our customers.

Business Model

The Directors expect that the microCHP boiler will cost in the region of £800 in volume production. Installation will be charged to the customer at approximately the same cost as a standard gas boiler. The microCHP is a high efficiency condensing boiler and as such only attracts 5 per cent. VAT on installation compared to 20 per cent. for a normal boiler. As the microCHP boiler makes electricity for the home for use in the home, the Directors expect to be able to achieve a far higher margin on the supply of this electricity than can be achieved by a traditional energy supply company, whilst keeping energy prices competitive with the six largest energy suppliers.

Use of proceeds

The funds raised through the Firm Placing and Open Offer will be used for the continuing commercial development of the free boiler proposition through to live operation and cashflow generation. In particular the funds will be applied to:

·; complete product optimization;

·; finance the controlled entry into the market in Q4 2012; and

·; provide the working capital to produce 4,500 Kingston microCHP boilers to go live in H2 2013.

THE PLACING

The Company has conditionally raised £12.0 million before expenses by the conditional Firm Placing of 42,857,143 new Ordinary Shares at the Offer Price to the Firm Placees.

The Firm Placing is conditional, inter alia, upon:

(i) the passing of all of the Resolutions;

(ii) the Firm Placing and Open Offer Agreement becoming or being declared unconditional in all respects and not having been terminated in accordance with its terms prior to the First Admission and Second Admission (as the case may be); and

(iii) First Admission becoming effective by no later than 8.00 a.m. on 17 October 2012 and Second Admission becoming effective by no later than 8.00 a.m. on 18 October 2012 or such later time and/or date (being no later than 8.00 a.m. on 7 November 2012) as Cenkos Securities and the Company may agree.

If any of the conditions are not satisfied, the Firm Placing Shares will not be issued and all monies received from the Firm Placees will be returned to them (at the Firm Placees' risk and without interest) as soon as possible thereafter.

The Firm Placing Shares are not subject to clawback and are not part of or subject to any condition related to the Open Offer.

The Firm Placing Shares (and the Offer Shares) will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the admission of the Firm Placing Shares to trading on AIM. It is expected that First Admission will occur and that dealings will commence at 8.00 a.m. on 17 October 2012 at which time it is also expected that the First Placing Shares will be enabled for settlement in CREST. It is expected that Second Admission will occur and that dealings will commence at 8.00 a.m. on 18 October 2012 at which time it is also expected that the Second Placing Shares will be enabled for settlement in CREST.

THE OPEN OFFER

The Company is proposing to raise up to £14.0 million before expenses by the issue of up to 49,947,979 New Ordinary Shares, of which £12.0 million will be raised from the Firm Placing, and the balance of up to £2.0 million will be raised from the Open Offer.

A total of 7,090,836 New Ordinary Shares are available to Qualifying Shareholders pursuant to the Open Offer at the Offer Price, payable in full on acceptance. Any Offer Shares not subscribed for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility. The balance of any Offer Shares not subscribed for under the Excess Application Facility will not be available to Firm Placees under the Firm Placing.

Qualifying Shareholders may apply for Offer Shares under the Open Offer at the Offer Price on the following basis:

17 Offer Shares for every 200 Existing Ordinary Shares

and so in proportion for any number of Existing Ordinary Shares held on the Record Date. Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Offer Shares. Fractional entitlements which would otherwise arise will not be issued to the Qualifying Shareholders but will be made available under the Excess Application Facility. The Excess Application Facility enables Qualifying Shareholders to apply for Excess Shares in excess of their Open Offer Entitlement. Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered office in certain overseas jurisdictions will not qualify to participate in the Open Offer. The attention of Overseas Shareholders is drawn to paragraph 6 of Part 3 of the Circular.

Valid applications by Qualifying Shareholders will be satisfied in full up to their Open Offer Entitlements as shown on the Application Form for certificated Shareholders. Applicants can apply for less or more than their entitlements under the Open Offer but the Company cannot guarantee that any application for Excess Shares under the Excess Application Facility will be satisfied as this will depend in part on the extent to which other Qualifying Shareholders apply for less than or more than their own Open Offer Entitlements. The Company may satisfy valid applications for Excess Shares of applicants in whole or in part but reserves the right not to satisfy any excess above any Open Offer Entitlement. The Board may scale back applications made in excess of Open Offer Entitlements on such basis as it reasonably considers to be appropriate.

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that such Open Offer Entitlements will be credited to CREST on 8 October 2012. The Open Offer Entitlements will be enabled for settlement in CREST until 11.00 a.m. on 23 October 2012. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of bona fide market claims. The Offer Shares must be paid in full on application. The latest time and date for receipt of completed Application Forms or CREST application and payment in respect of the Open Offer is 11.00 a.m. on 23 October 2012. The Open Offer is not being made to certain Overseas Shareholders, as set out in paragraph 6 of Part 3 of the Circular.

Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore the Offer Shares which are not applied for by Qualifying Shareholders will not be sold in the market for the benefit of the Qualifying Shareholders who do not apply under the Open Offer. The Application Form is not a document of title and cannot be traded or otherwise transferred.

Further details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment, are contained in Part 3 of the Circular and on the Application Form accompanying the Circular.

The Open Offer is conditional on the Firm Placing becoming or being declared unconditional in all respects and not being terminated before First Admission and Second Admission (as the case may be). The principal conditions to the Firm Placing are:

(a) the passing of all of the Resolutions at the General Meeting;

(b) the Firm Placing and Open Offer Agreement having become unconditional; and

(c) First Admission becoming effective by no later than 8.00 a.m. on 17 October 2012 and Second Admission becoming effective by no later than 8.00 a.m. on 18 October 2012 or such later time and/or date (being no later than 8.00 a.m. on 7 November 2012) as Cenkos Securities and the Company may agree.

Accordingly, if these conditions are not satisfied or waived (where capable of waiver), the Open Offer will not proceed and the Offer Shares will not be issued and all monies received by Neville Registrars will be returned to the applicants (at the applicants' risk and without interest) as soon as possible thereafter. Any Open Offer Entitlements admitted to CREST will thereafter be disabled.

The Offer Shares (and the Firm Placing Shares) will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the admission of the Offer Shares which are subscribed for to trading on AIM. It is expected that Offer Admission will occur and that dealings will commence at 8.00 a.m. on 24 October 2012 at which time it is also expected that the Offer Shares will be enabled for settlement in CREST.

GENERAL MEETING

The Directors do not currently have authority to allot all of the New Ordinary Shares and, accordingly, the

Board is seeking the approval of Shareholders to allot the New Ordinary Shares at the General Meeting.

A notice convening the General Meeting, which is to be held at the offices of Atticus Legal LLP at Castlefield House, Liverpool Road, Castlefield, Manchester M3 4SB at 10.00 a.m. on Tuesday 16 October 2012, is set out in the Circular. At the General Meeting, the following Resolutions will be proposed:

·; Resolution 1 which is an ordinary resolution to authorise the Directors to allot relevant securities up to an aggregate nominal amount of £2,497,398.95, being equal to 49,947,979 New Ordinary Shares (i.e. the maximum number of New Ordinary Shares available under the Firm Placing and Open Offer); and

·; Resolution 2. which is conditional on the passing of Resolution 1 and is a special resolution to authorise the Directors to issue and allot 49,947,979 New Ordinary Shares pursuant to the Firm Placing and Open Offer on a non-pre-emptive basis.

The authorities to be granted pursuant to the Resolutions shall expire on whichever is the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2013 or the date falling 15 months from the date of the passing of the Resolutions (unless renewed varied or revoked by the Company prior to or on that date) and shall be in addition to the Directors' authorities to allot relevant securities and dis-apply statutory pre-emption rights granted at the Company's Annual General Meeting held in 2012.

SETTLEMENT AND DEALINGS

Application will be made for admission of the New Ordinary Shares to trading on AIM. It is expected that admission of the First Placing Shares will become effective and dealings will commence at 8.00 a.m. on 17 October 2012 and that admission of all other Firm Placing Shares will become effective and dealings will commence at 8.00 a.m. on 18 October 2012. Admission of the Offer Shares is expected to occur at 8.00 am on 24 October 2012.

Admission is subject to the passing of Resolutions 1 and 2 at the General Meeting and to the Firm Placing and Open Offer Agreement becoming unconditional in all respects (save only for First and Second Admission) and not being terminated in accordance with its terms.

SHARE CAPITAL

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

Assuming the Open Offer is subscribed for in full a further 7,090,836 Shares will be issued resulting in an Enlarged Share Capital of 133,369,587 (nominal value £6,668,479.35).

ACTION TO BE TAKEN 

In respect of the General Meeting

Shareholders will be sent a hard copy of the Circular together with a Form of Proxy for use at the General Meeting. Whether or not you intend to be present at the General Meeting, you are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon. To be valid, completed Forms of Proxy must be received by Neville Registrars at Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA as soon as possible and in any event not later than 10.00 a.m. on 14 October 2012, being 48 hours before the time appointed for holding the General Meeting. Completion of a Form of Proxy will not preclude you from attending the meeting and voting in person if you so choose.

In respect of the Open Offer

Qualifying non-CREST Shareholders wishing to apply for Offer Shares or the Excess Shares must complete the non-CREST Application Form, which will be sent to shareholder in due course, with the instructions set out in paragraph 3.1 of Part 3 of the Circular and on the accompanying non-CREST Application Form and return it with the appropriate payment to Neville Registrars at Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA, so as to arrive no later than 11.00 a.m. on 23 October 2012.

If you do not wish to apply for any Offer Shares under the Open Offer, you should not complete or return the Application Form. Shareholders are nevertheless requested to complete and return the Form of Proxy.

If you are a Qualifying CREST Shareholder, no Application Form will be sent to you. Qualifying CREST Shareholders will have Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to their stock accounts in CREST. You should refer to the procedure for application set out in paragraph 3.2 of Part 3 "Terms and Conditions of the Open Offer" of the Circular. The relevant CREST instructions must have settled in accordance with the instructions in paragraph 3.2 of Part 3 "Terms and Conditions of the Open Offer" of the Circular by no later than 11.00 a.m. on 23 October 2012.

Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with this document and the Open Offer.

RECOMMENDATION and IRREVOCABLE UNDERTAKINGS

The Directors consider that the Firm Placing and Open Offer 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 12,215,038 Ordinary Shares beneficially held by them, representing approximately 14.6 per cent. of the entire issued share capital of the Company.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

FIRM PLACING STATISTICS

1 excluding the Open Offer

OPEN OFFER STATISTICS

* on the assumption that the Open Offer is fully subscribed

DEFINITIONS

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