Rights Issue

THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION, DISTRIBUTION OR FORWARDING, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED TO OR TRANSMITTED IN OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL SECURITIES LAWS OR REGULATIONS OF SUCH JURISDICTION. PLEASE READ THE IMPORTANT INFORMATION AT THE END OF THIS SUMMARY.

15 December 2011

Pursuit Dynamics plc

Proposed 1 for 8 Rights Issue of 9,382,908 New PDX Shares at 100 pence each to raise approximately £9.38 million

PDX today announces the details of a proposed Rights Issue to raise approximately £9.38 million (£8.88 million net of expenses). It is anticipated that the Rights Issue will be made on the basis of 1 New PDX Share for every 8 Existing PDX Shares at a price of 100 pence per New PDX Share, representing a discount of 50.8 per cent. to the Closing Price of 203.25 pence on 14 December 2011, being the latest practicable date prior to the publication of this announcement.

Highlights:

·; Planned 1 for 8 Rights Issue to raise approximately £9.38 million (£8.88 million net of expenses)

·; Support from institutional investors to subscribe for all of the New PDX Shares

·; Net proceeds of the Rights Issue will provide further funding for the commercialisation of PDX's technology portfolio

Cenkos is the Company's Nominated Adviser. Cenkos and Mirabaud Securities LLP are the Company's brokers. The Rights Issue will be made to Qualifying Shareholders on the register as at the Record Date. The timetable for the Rights Issue, including the Record Date, will be published at the time of publication of the Prospectus in relation to the Rights Issue, which is expected to be towards the end of February 2012.

Andy Quinn, Non-executive Chairman of PDX said:

"Although the generation of revenue and cash from the commercialisation of PDX's reactor and atomisation technology has progressed at a lower rate than we had anticipated, giving rise to a need for additional funding, PDX's prospects remain strong. We are pleased that our institutional investors have demonstrated their commitment to the Company and its technology by supporting this fundraising."

Enquiries:

Pursuit Dynamics plc 01480 422 050

Andy Quinn

Jeremy Pelczer

Richard Webster

Cenkos Securities plc 020 7397 8900

Ian Soanes

Max Hartley

Mirabaud Securities LLP 020 7878 3360

Rory Scott

M Communications 020 7920 2339

Nick Miles

Elly Williamson

IMPORTANT INFORMATION

This announcement has been issued by and is the sole responsibility of Pursuit Dynamics plc. This announcement is for information purposes only and does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security in the capital of the Company in any jurisdiction in which such offer or invitation is unlawful.

This announcement does not constitute an offer for sale of securities of the Company in the United States, Australia, Canada, Japan or the Republic of South Africa. The Nil Paid Rights, the Fully Paid Rights and the New PDX Shares to be issued in connection with the Rights Issue have not been and will not be registered under the U.S. Securities Act or under the securities legislation of any state or territory or jurisdiction of the United States, and may not be offered, or sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, in the United States except pursuant to an exemption from registration under the Securities Act and in compliance with state securities laws.

This announcement does not constitute a prospectus. The information contained in this announcement is for background purposes only and does not purport to be full or complete. No relevance may or should be placed by any person whatsoever on the information contained in this announcement or its accuracy or completeness. The information in this announcement is subject to change. Nothing in this announcement should be interpreted as a term or condition of the Rights Issue. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any Nil Paid Rights, Fully Paid Rights and/or New PDX Shares must be made only on the basis of the information contained in and incorporated by reference into the Prospectus, expected to be published towards the end of February 2012.

This announcement and any materials distributed in connection with this announcement may include forward-looking statements. These statements include forward-looking statements both with respect to the Group and the markets in which the Group operates. Statements which include the words ''expects'', ''intends'', ''plans'', ''believes'', ''projects'', ''anticipates'', ''will'', ''targets'', ''aims'', ''may'', ''would'', ''could'', ''continue'' and similar statements of a future or forward-looking nature identify forward-looking statements. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a number of variables which could cause actual results or trends to differ materially, including, but not limited to any limitations of the Company's internal financial reporting controls; an increase in competition; an unexpected decline in turnover, legislative, fiscal and regulatory developments, including but not limited to, changes in environmental, safety and healthcare regulations; currency and interest rate fluctuations and the adoption of International Financial Reporting Standards. Each forward-looking statement speaks only as of the date of this announcement. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Group's actual results of operation, financial condition, prospects, growth, synergies, strategies and dividend policy and the development of the industries in which they operate may differ materially from the impression created by the forward-looking statements contained in this announcement. In addition, even if the results of operations, financial condition, prospects, growth, synergies, strategies and the dividend policy of the Group, and the development of the industries in which it operates, are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Any forward-looking statement contained in this announcement based on past or current trends and/or activities of the Group should not be taken as a representation that such trends or activities will continue in the future. No statement in this announcement is intended to be a profit forecast or to imply that the earnings of the Group for the current year or future years will necessarily match or exceed the historical or published earnings of the Group. The Company does not undertake any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Prospective investors should not treat the contents of this announcement as advice relating to legal, taxation, investment or any other matters. Prospective investors should inform themselves as to: (a) the legal requirements within their own countries for the purchase, holding, transfer or other disposal of New PDX Shares, Nil Paid Rights and/or Fully Paid Rights; (b) any foreign exchange restrictions applicable to the purchase, holding, transfer or other disposal of New PDX Shares, Nil Paid Rights and/or Fully Paid Rights which they might encounter; and (c) the income and other tax consequences which may apply in their own countries as a result of the purchase, holding, transfer or other disposal of New PDX Shares, Nil Paid Rights and/or Fully Paid Rights. Prospective investors must rely upon their own legal advisers, accountants and other financial advisers as to legal, tax, investment or any other related matters concerning the Company and any investment therein. No person has been authorised to give any information or make any representations other than the information contained in this announcement and, if given or made, such information or representations must not be relied upon as having been authorised by the Company, Cenkos or Mirabaud.

Cenkos, which is authorised and regulated in the UK by the FSA, is acting exclusively for the Company as Nominated Adviser and broker in connection with the Rights Issue and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Cenkos or for providing advice in relation to the matters described in this announcement.

Mirabaud, which is authorised and regulated in the UK by the FSA, acts exclusively for the Company as its broker and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Mirabaud or for providing advice in relation to the matters described in this announcement.

Subject to the responsibilities and liabilities, if any, which may be imposed on Cenkos and Mirabaud by the FSMA or the regulatory regime established thereunder, no representation or warranty, express or implied, is made by Cenkos or Mirabaud as to any of the contents of this announcement and no liability whatsoever is accepted by Cenkos or Mirabaud for the accuracy of any information or opinions contained in this announcement or for the omission of any material information, for which the Board and the Company are solely responsible.

Neither the content of PDX's website nor any website accessible by hyperlink on PDX's website is incorporated in, or forms part of, this announcement.

Pursuit Dynamics plc

Proposed 1 for 8 Rights Issue of 9,382,908 New PDX Shares at 100 pence each to raise approximately £9.38 million

1. Introduction

PDX today announces the details of a proposed Rights Issue to raise approximately £9.38 million (£8.88 million net of expenses). It is anticipated that the Rights Issue will be made on the basis of 1 New PDX Share for every 8 Existing PDX Shares at a price of 100 pence per New PDX Share, representing a discount of 50.8 per cent. to the Closing Price of 203.25 pence on 14 December 2011, being the latest practicable date prior to the publication of this announcement.

2. Background to and reasons for the Rights Issue

PDX has made substantial progress with the commercialisation of its technology and products. Customer relationships were formed in increasing numbers during the past year across its lines of business. Despite this progress, the rate at which binding contracts have been signed has been slower than the Board had expected and revenues generated from those contracts have been slower to emerge than anticipated. This timing delay means that much of the income that the Board had expected to generate in the 2011 financial year is instead expected to be recognised in the coming year and for this reason the Company's cash resources are lower than the Board had forecast. The Board therefore proposes to raise additional funds to provide the Company with the financial resources required to become profitable and cash generative. In order to allow all Shareholders to participate in the fundraising the Board has, following consultation with the Company's major Shareholders, chosen to raise the required funds by way of a rights issue.

3. Principal terms of the proposed Rights Issue

Under the terms of the Rights Issue, it is anticipated that 9,382,908 New PDX Shares will be offered, by way of rights, to Qualifying Shareholders (other than Excluded Overseas Shareholders) at a price of 100 pence per New PDX Share. The Rights Issue will raise approximately £9.38 million (£8.88 million net of expenses).

It is anticipated that the Rights will be made on the following basis:

1 New PDX Share for every 8 Existing PDX Shares

held by Qualifying Shareholders on the Record Date and so in proportion to any other number of Existing PDX Shares then held, and otherwise on the terms and conditions which will be set out in the Prospectus and, in the case of Qualifying non-CREST Shareholders (other than, subject to certain exemptions, Excluded Overseas Shareholders) only, the Provisional Allotment Letter.

The New PDX Shares will, when issued and fully paid, rank pari passu in all respects with the Existing PDX Shares, including the right to all future dividends or other distributions made, paid or declared after the date of issue. Details of the rights attaching to New PDX Shares appear in the Company's Articles of Incorporation, a description of which will appear in the Prospectus.

New PDX Shares representing fractional entitlements will not be allotted to Qualifying Shareholders and, where necessary, entitlements to New PDX Shares will be rounded down to the nearest whole number. Such fractional entitlements will be aggregated and, if possible, sold in the market. The net proceeds of such sales (after deduction of expenses) will be aggregated and will ultimately accrue for the benefit of the Company, save that Qualifying Shareholders will receive any proceeds in respect of a fractional entitlement in the event that such proceeds have a value of £5 or more. Holdings of Ordinary Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue.

On behalf of the Company, Cenkos has obtained support from institutional investors to subscribe for all of the New PDX Shares to be issued pursuant to the Rights Issue. Cenkos has obtained firm commitments to subscribe for New PDX Shares to the extent that they are not otherwise subscribed for in respect of 8.6 million New PDX Shares and further indications of support in respect of the remaining 0.8 million New PDX Shares. The Rights Issue is conditional, inter alia, upon:

a) the Prospectus being approved by the FSA;

b) the Rights Issue Agreement having become unconditional in all respects and not having been terminated in accordance with its terms;

c) Admission of the New PDX Shares becoming effective by not later than 8.00 a.m. on the first dealing day following publication of the Prospectus (or such later time and/or date as the Company and Cenkos may agree (being not later than 31 March 2012)); and

d) firm commitments to subscribe for all of the New PDX Shares to be issued pursuant to the Rights Issue, to the extent not otherwise subscribed for, being obtained on or prior to the date on which the Prospectus is published.

In order for the Rights Issue Agreement to become unconditional and for Admission to take place the Prospectus, which will also be an Admission Document for the purposes of AIM, will need to be prepared to a standard acceptable to Cenkos, the Company's Nominated Adviser and to be approved by the FSA. It is anticipated that the Prospectus will need to contain a statement concerning the sufficiency of working capital available to the Group in respect of a 12 month period following Admission. The Directors' ability to make a statement in relation to the sufficiency of working capital in respect of such period will depend upon the circumstances prevailing at the time of publication of the Prospectus. The Prospectus is expected to be published towards the end of February 2012.

Application will be made to AIM for the New PDX Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the New PDX Shares will commence on AIM, nil paid, at 8.00 a.m. on the first dealing day following publication of the Prospectus.

Based on the Closing Price of 203.25 pence per share and the price of 100 pence for each New PDX Share, the theoretical ex-rights price of an Ordinary Share is 191.8 pence.

The latest time and date for acceptance and payment in full of the New PDX Shares is expected to be 14 clear days following publication of the Prospectus. The terms and conditions of the Rights Issue, including the procedure for acceptance and payment and the procedure in respect of rights not taken up, will be set out in the Prospectus.

4. Procedure for acceptance

The procedure for acceptance and the latest time for acceptance and payment will be set out in the Prospectus. Further details will also appear in the Provisional Allotment Letter which will be sent to all Qualifying non-CREST Shareholders (other than Excluded Overseas Shareholders).

If you are in any doubt as to what action you should take, you should immediately seek your own financial advice from your stockbroker, bank manager, solicitor or other independent professional adviser who, if you are taking advice in the UK, is duly authorised under FSMA or from any appropriately authorised independent financial adviser if you are in a territory outside the UK, in each case who specialises in advice on the acquisition of shares and other securities.

5. Strategy of the Group

PDX's strategy is to commercialise, successfully and profitably its PDX reactor and atomising technology. PDX intends to be the leading provider of energy efficient solutions to strategic industrial applications using the unique patented PDX reactor and atomising technologies which improve output and reducing the use of natural resources.

The Company operates in a number of market places, each with different drivers and financial priorities. For this reason the Company has developed three different financial models: Licensing (annual licence fee); Royalty (share of the financial benefits that PDX technology delivers); and Sale (outright sale of a product or solution).

6. Current trading and prospects of PDX

PDX has, today, announced details of its trading performance for the year ended 30 September 2012 and has announced that Jeremy Pelczer has assumed the role of Chief Executive Officer following the decision by Roel Pieper to step down as a director of the Company.

PDX is actively developing and selling products and solutions based on its PDX reactor and atomising technology across a number of lines of business.

Bioenergy

At 30 September 2011, the Bioenergy installed customer base stood at 346 million gallons per annum (2010 - nil) at five plants, two of which have signed commercial agreements. In addition, letters of intent have now been signed with a further five producers and as a result the Company's pipeline of committed and signed up capacity is over 1 billion gallons per annum in 15 plants around the US. Installation and subsequent commercialisation of all of these installations is planned to occur during the coming year.

Brewing, Food and Beverage

PDX's wort-heating application is under commercial contract to the Susquehanna Brewing Company and Radeberger Gruppe, and is being piloted by MillerCoors and Warsteiner. The system provides the opportunity to reduce energy consumption by up to 50% during wort-boiling, equating to full return on investment in between 12 to 18 months. In addition, it delivers improved flavour stability and consistency from one brew to the next and critically has passed the strict German beer purity laws.

In Food, in September, a contract with a major European food producer worth approximately £400,000 was announced, which is the second major contract win since the Company's decision to re-enter the Food sector. The 2012 pipeline is encouraging and current activity indicates revenues are increasing.

Waste Treatment

Continuing evaluation being undertaken by Thames Water and Isle Utilities at Thames Water's Basingstoke plant has provided statistically significant support for the development of two products in 2012, subject to regulatory approval.

Public Health and Safety

During the year PDX entered into a Joint Venture with National Nuclear Laboratories Ltd. The JV has secured its first revenues, which essentially relate to research and development. The Board foresees steady progression in this business area in the year ahead.

Industrial Licensing

The Industrial Licensing group is working on a range of opportunities for the atomiser and reactor technologies. The most immediate and significant is that previously announced with Procter and Gamble.

With P&G we have agreed a one month extension to the Joint Development Agreement (JDA) to allow P&G to complete the technical and commercial evaluation of the PDX technology. Assuming a successful completion of all learning objectives of the JDA the two sides expect commercial discussions on a fee structure that will allow P&G to licene PDX's technology. PDX will seek a fee structure comprising an initial milestone payment and an annual licensing fee.

The JDA is intended to develop specific applications using the PDX reactor technology in a wide range of P&G's production processes. The JDA was developed as a modular agreement to enable successive P&G business units to explore process and product development opportunities on the PDX reactor with the full support of the Company's scientists at P&G's facilities. After working jointly to develop a platform, P&G are now in the process of data discovery, translating technical performance to model commercial benefits across the first business unit.

The evaluation is now expected to reach a conclusion in the first quarter of 2012 after which, assuming a positive outcome, under the JDA PDX envisages licensing the technology by business group / product category. PDX expects its reactor to deliver capital expenditure and operational savings and the opportunity to move from batch to continuous processing. The resulting licensing fee is expected to reflect an equitable share of the annual value to P&G.

7. Board intentions

The Board considers the terms of the Rights Issue to be in the best interests of PDX and the Shareholders as a whole. Directors intend to take up in full their rights to subscribe for New PDX Shares under the Rights Issue in respect of their own beneficial holdings of Existing PDX Shares, which amount, in aggregate, to 366,500 Existing PDX Shares, representing approximately 0.49 per cent. of the issued share capital of the Company.

DEFINITIONS