Proposed Share Buy-Back

Energy Technique Plc

("Energy Technique" or the "Company")

Proposed Share Buy-Back

The Company announces today that it has agreed, conditionally upon the Company obtaining Independent Shareholder approval, to buy 470,000 Ordinary Shares of 10 pence each in the Company ("Shares") from Elsina Limited at a price of 42.5 pence per Share and Elsina has further agreed to grant to the Company options to acquire in two tranches up to a further 470,000 Shares from Elsina also at a price of 42.5 pence each.

Reasons for the Proposals

Elsina is currently the largest shareholder with 46.4% of the Company's share capital and it has indicated to the Board that it is desirous of reducing further the level of investment in the Company.

The Board is supportive of such further reduction and proposed to Elsina that it would be in the best interests of the Company and Shareholders as a whole for the Elsina Shares to be acquired by the Company, rather than sold through the AIM Market, for the following reasons:

1. The acquisition by the Company of the Elsina Shares is consistent with the strategy being pursued by the Directors of building shareholder value through organic growth, prior to realising the planned increase in shareholder value;

2. Any subsequent sale of the residual 25.3% shareholding of Elsina remaining after the Proposals, is less likely to trigger obligations on incoming shareholders under the City Code on Takeovers and Mergers to bid for the whole Company, potentially leading to a premature sale before shareholder value has been fully realised;

3. The Proposals will improve the free float in trading of the Company's shares from 42% to 58% of total Shares.

Principal Terms of the Proposals

The principal terms of the Proposals are as follows:

1. The Immediate Share Buy-Back of 470,000 Shares at a price of 42.5 pence per Share, will involve the payment of £199,750, immediately after the GM, out of the distributable reserves and the existing cash resources of the Company;

2. The grant of a Call Option in respect of a tranche of up to 235,000 Shares at a price of 42.5 pence per Share, which will involve if fully exercised a payment of £99,875 by way of consideration, at any time between 1 September and 30 November 2013;

3. The grant of a further Call Option, in respect of a second tranche of up to 235,000 Shares, also at a price of 42.5 pence per Share, will involve if fully exercised, a final consideration payment of £99,875, at any time between 1 December 2013 and 28 February 2014.

The Company will not exercise the Elsina Call Options if trading circumstances at the time do not permit their exercise, and in this way the Company has protected its future cash flow in the event future trading turns down.

The Elsina Call Options will both lapse if the Company has not exercised them within the specified time periods shown above.

The price of 42.5p per Share compares with the price of 44.5 pence per Share, being the closing middle market price of a Share as at 19 April 2013, being the latest practical date prior to the printing of the circular to shareholders. All shares bought back under the Proposals will be cancelled on completion of the relevant purchase.

General Meeting

Pursuant to the Companies Act 2006 the Elsina Buy-Back Agreement must be approved by Independent Shareholders by a Special Resolution. Accordingly a General Meeting of the Company is being convened for 12.30 pm on 16 May 2013 at which a resolution approving the Elsina Buy-Back Agreement and authorising the exercise of the Elsina Call Options will be put as a Special Resolution.

Board's Strategy

The Board's strategy is to build on the success of the last two years and continue to grow the Company's sales and profits organically. The Board does not consider Shareholders' best interests will be served by evaluating merger and acquisition opportunities at the present time.

Once the Board has achieved its strategic objective of growing sales and profits organically, then it will seek a strategic partnership so as to fully realise shareholder value.

Current Trading

On 7 February 2013, the Company released its trading update for the nine months ended 31 December 2012. The Board was pleased to report that the Company continued to trade profitably in the nine months ended 31 December 2012, and the following can be highlighted:

1. Sales for Diffusion of £5.39 million (2011: £5.16 million), representing a 5% increase over the corresponding period;

2. Operating profit maintained for Diffusion at £237,000 (2011: £235,000);

3. Group profit before tax of £59,000 (2011: £110,000) after charging central costs, interest and an exceptional charge of £26,000 (2011: £Nil) relating to the 2012 capital reduction and reorganisation;

4. Dividend paid of 0.75 pence per share;

5. Group cash absorbed by operations of £141,000 (2011: cash generated £7,000);

6. Group net cash at 31 December 2012 of £2,000 (31 March 2012: £237,000);

7. Group net assets at 31 December 2012 of £1.44m (31 March 2012: £1.41m) equivalent to 43.3 pence per share.

The trading results for the nine months ended 31 December 2012 absorb the seasonal trading losses ordinarily incurred in the short trading month of December. The 5% growth in Diffusion's sales was achieved in the continuing downturn in the current UK property and construction market.

Cash absorbed by operations in the nine months was due to a short term increase in working capital, reversed during January 2013. Group net cash at the end of January 2013 had increased by £180,000 to £182,000.

Order intakes for January 2013 were particularly strong, including London based high end residential developments. Trading performance in the fourth quarter was strong and the Board anticipates that financial performance for the full year ended 31 March 2013 will be in line with its expectations.

Dividend Policy

In the absence of unforeseen circumstances, the Board expects to declare a final dividend of 0.75 pence per share for the year ended 31 March 2013. Combined with the interim dividend already paid of 0.75 pence per share such payment will result in total dividends for the year ended 31 March 2013 of 1.50 pence per share.

Related Party Transaction

As Elsina is a substantial shareholder in the Company the proposed Elsina Buy-Back Agreement represents a related party transaction under the AIM Rules. The Board considers, having consulted with the Company's Nominated Adviser, finnCap Limited, that the terms of the Proposals are fair and reasonable insofar as its shareholders are concerned.

Recommendation

The Board considers that the Proposals are in the best interests of Shareholders as a whole and that the terms are fair and reasonable. Accordingly, the Board unanimously recommends that you vote in favour of the Resolution as they have undertaken to do in respect of their own shareholdings representing 11.8% of the existing issued share capital of the Company.

A copy of the Circular will be posted to shareholders today and will be available on the Company's investor website: http://www.diffusion-group.com/about/investor-information/

Defined terms used in this announcement are the same as those defined in the circular unless the context requires otherwise.

For further information, please contact:

Energy Technique Plc: 020 8783 0033

Walter Goldsmith, Chairman

Leigh Stimpson, Managing Director

finnCap (Nominated Adviser): 020 7220 0500

Ed Frisby/Ben Thompson

NOTES TO EDITORS

With over 50 years in the H&V industry, Energy Technique's operating company Diffusion is one of the oldest and most established manufactures of Heating Ventilation and Air Conditioning products in the UK. Diffusion is a market leader in the manufacture of premium quality fan coils and commercial heating products. The Diffusion and Energy Technique brand names are recognised as highly engineered, quality products, providing leading edge performance and energy efficiency, which have been fitted into projects including the Shard and No 1 Hyde Park.

Diffusion has been involved with many challenging and prestigious projects across a spectrum of sectors including hotels, commercial offices, retail, schools, hospitals, and residential. Diffusion has established excellent working relationships with many blue chip clients including Land Securities, Marks & Spencer, Boots, City Inn Hotels, Stanhope Properties and many more. All products are designed, developed and manufactured at Diffusion's 30,000 sq. ft. manufacturing facility in West Molesey, Surrey, offering the best possible products, designed specifically to meet customers' bespoke requirements.