ETQ.L Regulatory News (ETQ)

ENERGY TECHNIQUE PLC

("The Company")

TRADING UPDATE FOR THREE MONTHS ENDED 30 JUNE 2014

AND

RESULT OF AGM

The Board is delighted to announce its unaudited trading results for the three months ended 30 June 2014. Sales increased by 29% over the corresponding quarter, producing a 126% improvement in operating profit for Diffusion of £325,000 and a 193% improvement in group profit before tax to £252,000. These results are ahead of management's expectations and they represent a continuation of the growth in sales and profitability reported in the year ended 31 March 2014.

The increased sales were generated by Diffusion's largest product group, fan coils, attributed to a combination of improving fan coil market conditions and Diffusion's premium branded product offering. Sales of the smaller commercial heating product group fell marginally, consistent with continued weaker demand from UK Retail High Street customers. A number of changes have been made to regenerate commercial heating, but the benefits of this have not yet shown through into higher sales.

Group net assets at 30 June 2014 amounted to £1.79 million (31 March 2014: £1.59 million), with net cash of £753,000 (31 March 2014: £873,000). The reduction in cash from 31 March 2014 is due to a combination of investment in working capital on higher sales and to other short term working capital variations. The Company has now generated sufficient cash to operate without its invoice finance facility to cover short term working capital variations, and as a consequence, future costs will be avoided by suspending this facility.

The Board expects fan coils to be the main sales driver for the remainder of the current year ending 31 March 2015. As reported in the 31 March 2014 Chairman's Statement, the Board continues to explore franchising opportunities in overseas territories, where franchisees can capitalise on Diffusion's strong brand name, product innovation and engineering excellence, together with UK sales of a range of factored trench heaters to compliment the core fan coil range.

The UK fan coil market is expected to become more buoyant over the next nine to twelve months, arising from the higher activity levels currently experienced by M&E consultants. Diffusion is well placed to continue to benefit from this, with its new ECO 270 range of energy efficient fan coils. Diffusion is enjoying high levels of fan coil enquiries and the Board believes the results for the first quarter have laid the foundations for another successful year ending 31 March 2015.

Result of AGM

All resolutions proposed at the Company's Annual General Meeting held today were duly passed.

For further information:

Walter Goldsmith Chairman 020 8783 0033

Leigh Stimpson Managing director 020 8783 0033

Ed Frisby/Ben Thompson finnCap Limited (Nominated Adviser) 020 7220 0500

NOTES TO EDITORS

The Company's trading subsidiary, Diffusion, has supplied fan coils and commercial heating products to the UK heating and ventilation industry ("HVAC") for over 50 years. Diffusion is one of the oldest and most established suppliers to the HVAC industry and it 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.

Diffusion's products are installed into commercial offices, hotels, airports, retail outlets, schools, and more recently high-end residential developments. Fan coils are supplied into developments of the major property owning companies, including Land Securities, Stanhope Properties, Grosvenor Estates and British Land. Commercial heating end users include Marks & Spencer, Sainsbury's, Tesco, New Look, Boots, ASDA, John Lewis, Fat Face, Lloyds Bank and TK Maxx. All products are designed, developed and manufactured to customers' bespoke requirements from Diffusion's 30,000 sq. ft. manufacturing facility in West Molesey, Surrey.