Ceps Regulatory News (CEPS)

8 May 2013

CEPS PLC

 ("CEPS" or the "Company")

Publication of Circular & Notice of GM

The board of CEPS announces that a circular has been published today convening a general meeting of the Company ("GM") to be held at 11:45 a.m. (or, if later, immediately following the conclusion of the Company's Annual General Meeting taking place at 11.30 a.m.) on 10 June 2013 at Engineers' House, The Promenade, Clifton Down, Bristol BS8 3NB.

The purpose of the GM is to seek shareholder approval for a proposed reorganisation of the Company's share capital.

The circular may be downloaded from the Company's website at www.cepsplc.com and a copy of the letter from the Chairman to shareholders contained within the circular is copied below.

Enquiries

8 May 2013

Dear Shareholder

Proposed Share Capital Reorganisation

Notice of General Meeting

1 Background to and reasons for the Restructuring Proposals

The Directors of CEPS have today announced a proposal for the reorganisation of the share capital of the Company.

The Company currently has in issue 10,814,310 Existing Ordinary Shares which, as at the date of this letter, are held by approximately 1,051 Shareholders. The Directors are conscious that Shareholders with small numbers of Ordinary Shares may find it uneconomic to trade them. In addition, such a wide shareholder base places an administrative and cost burden on the Company which is disproportionate for a company of the size of CEPS.

The Directors consider that it is in the best interests of the Company's long term development as a public quoted company to have a more manageable number of Shareholders.

The Restructuring will reduce the number of Shareholders, which, in turn, will:

(a) provide holders of small numbers of Existing Ordinary Shares with the opportunity to receive a cash sum for their Existing Ordinary Shares without them having to incur dealing costs which would normally apply to a conventional disposal of shares in the market; and

(b) achieve cost savings for the Company, which currently incurs significant printing and posting costs whenever documents are sent to Shareholders.

The Restructuring Proposals are subject to Shareholders' approval at the General Meeting, notice of which is set out at the end of this Document.

The purpose of this Document is to provide Shareholders with details of the Restructuring Proposals and to explain why the Directors are recommending Shareholders to vote in favour of the Restructuring Proposals at the General Meeting.

2 The Restructuring Proposals

The Restructuring Proposals are as follows:

• Consolidation The Existing Ordinary Shares will be consolidated into Consolidated Shares on the basis that every 500 Existing Ordinary Shares will become 1 Consolidated Share.

Shareholders holding a number of Existing Ordinary Shares not divisible by 500 will be entitled to fractions of Consolidated Shares. Please refer to paragraph 5 overleaf for details of how the Directors propose to deal with all such fractional entitlements.

• SubdivisionAll of the resulting Consolidated Shares will then be subdivided into New Ordinary Shares on the basis that each Consolidated Share will become 250 New Ordinary Shares.

The Restructuring Proposals require the passing of the Resolutions at the General Meeting, which is to be held at 11:45 a.m. (or, if later, immediately following the conclusion of the Annual General Meeting which is scheduled to start at 11:30 a.m.) on 10 June 2013 at Engineers' House, The Promenade, Clifton Down, Bristol BS8 3NB. If the Resolutions are passed, the Restructuring Proposals will become effective immediately following close of business on that date.

3 Consolidation

The minimum threshold for entitlement to receive Consolidated Shares will be 500 Existing Ordinary Shares. As a result, if a Shareholder holds fewer than 500 Existing Ordinary Shares at the Record Date, he or she will not receive any Consolidated Shares, but will be entitled to a fractional entitlement to a Consolidated Share.

Any Shareholder who holds fewer than 500 Existing Ordinary Shares and wishes to retain an interest in the Company will need to acquire additional Existing Ordinary Shares so that the Shareholder's enlarged holding at the Record Date is divisible at least once by 500.

If a Shareholder holds more than 500 Existing Ordinary Shares at the Record Date, then, unless his or her shareholding is exactly divisible by 500, he or she will, following the Consolidation, own a whole number of Consolidated Shares and will be entitled to a fractional entitlement to a Consolidated Share.

4 Subdivision

The Directors believe that the Consolidation would lead to an excessively high price for each Consolidated Share and that this would adversely impact on liquidity and the ability of investors to trade in Consolidated Shares on AIM. The Directors, therefore, propose that each Consolidated Share will be subdivided into 250 New Ordinary Shares of 10 pence each.

The Record Date for the Subdivision will be the same as for the Consolidation, which is 10 June 2013.

Application will be made for the New Ordinary Shares to be admitted to trading on AIM and dealings in the New Ordinary Shares are expected to commence on 11 June 2013.

5 Fractional entitlements to Consolidated Shares

As a result of the Consolidation, Shareholders holding a number of shares not divisible by 500 will be entitled to fractions of Consolidated Shares.

The Directors propose that all such fractional entitlements to Consolidated Shares are dealt with in the following way:

(a) Shareholders who will have a fractional entitlement to a Consolidated Share will not be issued with any fraction of a Consolidated Share.

(b) Instead, all such fractional entitlements to Consolidated Shares will be aggregated with all other such fractional entitlements, subdivided into New Ordinary Shares and sold in accordance with sub-paragraphs (c) to (f) below.

(c) Upon the admission of the New Ordinary Shares to trading on AIM, the New Ordinary Shares arising out of the Subdivision of the aggregated fractional entitlements described in sub-paragraph (b) above will be sold to certain of the Directors of the Company.

(d) The price at which the New Ordinary Shares to be sold in accordance with the arrangements described in paragraph (c) above will be the average of:

i. the closing mid-market price per New Ordinary Share, as derived from the AIM Appendix to the London Stock Exchange Daily Official List for 11 June 2013; and

ii. the highest mid-market price at which New Ordinary Shares were dealt in on 11 June 2013.

(e) The proceeds from the sale of the New Ordinary Shares arising from the aggregated fractional entitlements to Consolidated Shares will be distributed pro rata to the relevant Shareholders save that, in accordance with article 7 of the Company's Articles, where a Shareholder is entitled to an amount which is less than £5, the amount will not be distributed to such a Shareholder, but will be donated to a charity nominated by the Directors.

(f) Payments will be made in Pounds Sterling on a cheque drawn on a branch of a UK bank which will be posted, by first class post, to the person(s) entitled thereto at their own risk.

6 General Meeting

The Restructuring Proposals must be approved by Shareholders by ordinary resolution at the General Meeting, which is convened by the notice set out at the end of this Document. Shareholders will be entitled to attend and vote at the General Meeting in accordance with the Articles. On a poll they will have one vote per Existing Ordinary Share held as at the Record Date.

7 United Kingdom taxation in relation to the Restructuring

The comments below are intended as a general guide only and are based on current United Kingdom tax law and HM Revenue and Customs' published practice. The comments below apply only to Shareholders who are individuals resident, ordinarily resident and domiciled in the United Kingdom for tax purposes, who hold their Existing Ordinary Shares as investments and not on a trading account and are the absolute beneficial owners of such shares.

The taxation position of certain Shareholders subject to special rules, such as dealers in securities, broker dealers, companies, insurance companies and collective investment schemes, is not considered and such Shareholders who are in any doubt about their tax position or who are subject to tax in another jurisdiction outside the UK should consult their own professional advisers.

For the purposes of United Kingdom taxation, the position of each Shareholder will differ depending on whether or not they hold an exact multiple of 500 Existing Ordinary Shares.

For example, a holder of 600 Existing Ordinary Shares will be treated in accordance with paragraph (A) below in respect of 500 Existing Ordinary Shares and in accordance with paragraph (B) below in respect of 100 Existing Ordinary Shares.

(A) Treatment in respect of Existing Ordinary Shares which, following the Consolidation, give rise to whole Consolidated Shares which are subsequently subdivided into New Ordinary Shares which are held by the Shareholder in question

The Restructuring will be treated as a reorganisation of the share capital of the Company for UK tax purposes. Accordingly, the Consolidated Shares and, subsequently, the New Ordinary Shares will, for tax purposes, be treated as the same asset as the Shareholder's Existing Ordinary Shares and as having been acquired at the same time and for the same price as the Shareholder's Existing Ordinary Shares were acquired. There will be no disposal for capital gains tax purposes as a result of the Restructuring.

(B) Treatment in respect of Existing Ordinary Shares which, following the Consolidation, give rise to fractional entitlements to Consolidated Shares which are subsequently subdivided into New Ordinary Shares and then sold on behalf of the Shareholder in question

Shareholders not holding an exact multiple of 500 Existing Ordinary Shares will have, immediately following the Consolidation, a fractional entitlement to a Consolidated Share in respect of the portion of their Existing Ordinary Shares not divisible by 500 (in addition to any whole Consolidated Shares). The New Ordinary Shares arising out of the Subdivision of such fractional entitlements will then be sold on their behalf. This will constitute a disposal for tax purposes. The disposal will be subject to capital gains tax ("CGT"). This may, depending on the Shareholder's individual circumstances and the amount they paid for their shares, give rise to a chargeable gain or an allowable loss for CGT purposes. In calculating any CGT they may have to pay on the disposal, the individual Shareholder may deduct their CGT annual allowance, if available (currently £10,900 for the 2013 - 2014 tax year), and any allowable losses. Any CGT payable on the disposal is payable through a self-assessment tax return for the tax year in which the purchase of the fractional entitlements is made and is payable by 31 January following the end of the relevant tax year (31 January 2015 for disposals in the tax year ended 5 April 2014).

8 Action to be taken

Holders of Existing Ordinary Shares will find enclosed with this Document a Form of Proxy for use by them at the General Meeting.

Whether or not you are able to attend the General Meeting, you are requested to complete the enclosed Form of Proxy and return it to Share Registrars Limited, Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL as soon as possible and, in any event, so as to arrive by 11:45 a.m. on 6 June 2013. The completion and return of a Form of Proxy will not prevent you from attending the General Meeting and voting in person if you subsequently wish to do so.

You may call Share Registrars Limited on 01252 821 390 if you have any questions about the Restructuring Proposals.

9 Share certificates

If the Restructuring Proposals are approved, new share certificates in respect of the New Ordinary Shares will be sent to relevant Shareholders whose Existing Ordinary Shares are not held in CREST, as soon as is practicable by first class post. Existing share certificates in respect of Existing Ordinary Shares will cease to be valid.

10 CREST

For Shareholders whose Existing Ordinary Shares are held in CREST, CREST accounts will be credited with the New Ordinary Shares on the first day of dealings in the New Ordinary Shares.

11 Recommendation

The Directors consider that the Restructuring Proposals are fair and reasonable and are in the best interests of the Company and its Shareholders as a whole. The Directors, therefore, recommend you to vote in favour of the Resolutions.

The Directors intend to vote in favour of the Resolutions in respect of their own beneficial holdings of Existing Ordinary Shares. Such shareholdings comprise 2,523,360 Existing Ordinary Shares representing approximately 23.3 per cent of the total Existing Ordinary Shares.

Yours faithfully

R T Organ

Non-Executive Chairman