PPG.L Regulatory News (PPG)

Plutus Resources plc

("Plutus Resources" or the "Company")

Acquisition, Placing and Posting of Admission Document

Acquisition of Plutus Energy Limited, Placing of 133,333,335 Ordinary Shares at 0.6 pence per Ordinary Share, change of name to Plutus Powergen plc, changes to the Board, conversion of Loan Notes, Notice of General Meeting and Admission to trading on AIM

The Board of Plutus Resources, is pleased to announce the proposed acquisition of the entire issued share capital of Plutus Energy Limited, ("Plutus Energy"), a company established for the purpose of generating power from flexible stand-by power generation farms and generating revenues through the sale of this power to large energy supply companies during periods of peak electricity demand or Grid instability. The consideration for the Acquisition is £485,000 and will be satisfied by the issue of the Initial Consideration Shares.

In addition, the Company has conditionally raised £800,000 pursuant to the Placing to fund the working capital requirement of the Enlarged Group.

The Placing has been priced at 0.6 pence per share which represents a 25% discount to the closing mid-market share price on 31 January 2014 when trading in the Company's Shares was suspended.

The Acquisition constitutes a reverse takeover under the AIM rules for Companies. As a result, the Company is seeking Shareholder approval for the Acquisition at the General Meeting, notice of which will be posted to Shareholders today, along with the Admission Document.

Resolutions will be proposed at the General Meeting to approve the Acquisition and effect, amongst other matters, the Placing and the change of the Company's name to Plutus Powergen plc.

It is expected that Admission will take place on or around 22 August 2014 assuming the Resolutions are approved.

The Admission Document (which includes the Notice of General Meeting) is available for download from the Company's website, www.plutusresourcesplc.com.

Enquiries:

Plutus Resources plc

+44 (0) 20 8720 6562

Charles Tatnall

James Longley

SP Angel Corporate Finance LLP

Nomad & Broker

+44 (0) 20 3463 2260

Ewan Leggat

Laura Harrison

The same definition s apply throughout this announcement as are applied in the Admission Document.

Extracts from the Admission Document, providing details of the Proposals are set out below.

Placing Statistics

Note: the figures above assume no Options are exercised on or before Admission.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Note: All references to times in this timetable are to London times and each of the times and dates are indicative only and may be subject to change. Any such change will be notified by an announcement on a regulatory information service.

1. Introduction and background

The Company has today entered into a conditional agreement to acquire the entire issued and to be issued share capital of Plutus Energy that it does not already own. Plutus Energy is a company that was established in January 2014 for the purpose of generating power from flexible stand-by power generation farms and generating revenues through the sale of this power to large energy supply companies during periods of peak electricity demand or Grid instability.

In addition, the Enlarged Group has conditionally raised £800,000 pursuant to the Placing. Further details of the Placing and use of proceeds are set out under the heading "Details of the Placing and use of proceeds" below.

The Acquisition constitutes a reverse takeover under the AIM Rules for Companies. As a result, the Company is seeking, inter alia, Shareholder approval for the Acquisition at the General Meeting, the notice of which is set out at the end of the Admission Document. Irrevocable Undertakings to vote in favour of the Resolutions to be proposed at the General Meeting have been obtained, details of which are set out under the heading "Irrevocable undertakings relating to the Resolutions" below.

The Company was incorporated on 27 June 2006 as IPSO Holdings plc and was initially admitted to trading on AIM on 7 March 2007. The Company was set up to commercialise the IP of universities and other research institutes, particularly in the areas of life sciences, environmental sciences and technology. Following a period of financial difficulty, the Company announced a proposed fundraising and demerger on 28 December 2012. The proposed demerger, which constituted a fundamental change to the business of the Company, was approved by Shareholders on 14 January 2013. In early February 2013, the fundraising and demerger was complete and the Company changed its name to Plutus Resources plc. Following completion of the proposals the Company no longer held any operating assets and as such became an Investing Company, actively seeking investments in the natural resources or similar sectors.

The Company continued to search for acquisitions and/or investments in the natural resources or similar sectors in accordance with its Investing Policy. A number of proposals were reviewed and on 16 January 2014, the Existing Board (other than Josephine Dixon who was appointed subsequently) announced that the Company had acquired a 25 per cent. interest in Plutus Energy Limited (formerly Attune Energy Limited).

On 31 January 2014, the Company announced that it had entered into a letter of intent for the acquisition of the remaining 75 per cent. of Plutus Energy with the consideration to be satisfied through the issuance of new Ordinary Shares to the shareholders of Plutus Energy. As the proposed acquisition of Plutus Energy would constitute a reverse takeover under the AIM Rules the Ordinary Shares were suspended from trading on AIM at 7.30 a.m. on 31 January 2014 pending completion of the Acquisition by the Company.

As a consequence of the Acquisition constituting a reverse takeover under the AIM Rules for Companies, the Company is required to apply for re-admission of the Enlarged Group to trading on AIM. It is expected that Admission will take place on 22 August 2014 assuming the Resolutions are approved.

Resolutions will be proposed at the General Meeting to approve the Acquisition and effect, amongst other matters, the Placing and the change of the Company's name to Plutus PowerGen Plc.

The Admission Document sets out the reasons for the Acquisition, explains why the Existing Directors consider the Proposals to be in the best interests of the Company and its Shareholders as a whole, and asks Shareholders to vote in favour of the Resolutions which will be proposed at the General Meeting of Shareholders to be held at the offices of DMH Stallard LLP, 6 New Street Square, New Fetter Lane, London EC4A 3BF on 21 August 2014 at 10.00 a.m., notice of which is set out at the end of the Admission Document.

It is important for Shareholders to note that if the Proposals are not approved at the General Meeting then Admission will not occur and the Company's shares will be cancelled from trading on AIM.

2. Information on Plutus Energy Limited

Plutus Energy was established on 8 January 2014 for the purpose of generating power from flexible stand by electricity generation sites and to generate revenues through the sale of this power to established national energy suppliers during periods of peak electricity demand or Grid instability.

Plutus Energy has a management team with expertise in the building and operation of flexible power generation projects, a demonstrable track record of securing EIS funding for the fixed cost element of the construction of diesel generation sites, obtaining planning permission with suitable connectivity to the Grid as well as successfully tendering for National Grid contracts for this form of specialised energy sales.

The Directors believe that the market opportunity arises from the constraints inherent in the National Grid's electricity transmission network where flexible power generation has an increasing role to play particularly as fossil fuel power stations continue to close and it will be many years before new nuclear power stations will be built in the UK.

Whilst Plutus Energy has yet to generate revenues, the business plan of the Enlarged Group assumes that within 12 months from Admission, and subject to securing the necessary funding and planning permissions, it will have secured contracts for construction, on-going tendering and operations & management of STOR facilities for individually established special purpose vehicles, which will be part owned by the Enlarged Group. In addition, the Enlarged Group intends to enter into service contracts for the tender and operations of STOR capacity for business to business energy efficiency companies.

3. Information on the flexible power generation market

The market in the UK for flexible power generation is believed by the Directors to be growing for the following reasons:

Supply side volatility is increasing

The renewable generation mix in the UK is changing in response to the EU Climate and Energy Package, which was signed in April 2009 and is legally binding. It commits the UK to deliver 15 per cent. renewable energy by 2020. To achieve this, the UK government set itself a target of producing 30 per cent. of the UK's generation from renewable sources. Projections from the Department for Energy and Climate Change ("DECC"), which are shown in Figure 1 below, estimate the UK will achieve 36 per cent. of electricity from renewables by 2020, falling to 33 per cent by 2030 as planned nuclear power stations come on stream.

UK historic and projected electricity supply by fuel type 2000-2020 (TWh)

Figure 1 can be found on page 16 of the Admission Document which is available for download from the Company's website, www.plutusresourcesplc.com.

Figure 1. (Source: DUKES 2012, DECC, National Grid)

A range of UK government policy instruments are being used to encourage the transition to renewable energy. Principal amongst these are the Large Combustion Plant Directive ("LCPD"), the Carbon Price Floor and the Industrial Emissions Directive. OFGEM itself predicts a further tightening of supply-demand margin.

For example, the LCPD will bring about the early closure of 11.7GW of oil and coal generation, a capacity that equates to a loss of up to 51TWh, or c.14 per cent., of generation per annum until 2025. Crucially, as renewable energy sources in the UK are largely made up of wind and solar, this means that the renewable capacity displacing higher carbon sources of generation is increasing the volatility of energy supply. In turn, the need for large consumers and National Grid to secure access to alternative reliable energy sources for balancing supply is increasing significantly.

The supply-demand margin is tightening

Despite growing UK government and consumer focus on energy saving measures, demand for power continues to grow at a time when renewable capacity is not replacing fully the lost higher carbon capacity forced off as a result of policy, this places a premium on access to flexible generation capacity. With old capacity coming offline and new capacity being slow to come online, there is a very real threat of a capacity margin squeeze as shown in Figure 2 below. This risk was recently highlighted by the retiring OFGEM chief executive when he said, "We have to face the likelihood that avoiding power shortages will also carry a price... Within three years we will see reserve margin of generation fall from below 14 per cent. to below 5 per cent. That is uncomfortably tight."

Ofgem's Capacity Margin Forecast

Figure 2 can be found on page 17 of the Admission Document which is available for download from the Company's website, www.plutusresourcesplc.com.

Figure 2. (Source: OFGEM)

As the capacity margin continues to tighten, the Directors expect that energy prices will become more volatile, as will the risk of energy supply companies not being able to balance their own energy book. In turn, the Directors believe this will place a premium on access to flexible power generation capacity.

Alternative balancing technologies are not available at scale in the timeframe required

The new energy market design intends to introduce the means by which demand can participate in the balancing markets and new technologies, such as frequency response, can contribute by affecting demand at times of need. However, while these markets and technologies are emerging, they remain relatively unproven or not yet at scale.

The significance of not having enough options or tools available to meet demand is a 'brownout' - where voltage is reduced - or a 'black-out' - where power is simply cut. The probability of these events occurring is illustrated in Figure 3 below.

Figure 3 can be found on page 17 of the Admission Document which is available for download from the Company's website, www.plutusresourcesplc.com.

Figure 3. (Source OFGEM)

4. Strategy of the Enlarged Group

4.1 The business model

The Enlarged Group is being formed to provide the management infrastructure and expertise to build a group of companies which intend to operate power plants to provide flexible electricity generation in the UK. It is planned that these power plants will generate electricity from containerised, modular diesel generators and the electricity generated will be sold to a utility company via a Power Purchase Agreement ("PPA").

Plutus Energy is expected to have an equity interest in and receive fees from the management of the entities established to manage each flexible power generation project that it builds such as Joint Ventures and SPVs. It may also receive third party fees for other consultancy projects in connection with the flexible power generation business.

Generating electricity from diesel generators is expensive, and not competitive in the normal wholesale electricity market. For this reason, the Enlarged Group intends to provide short-term flexible operating capacity to address two specific markets within the UK electricity market, namely STOR and Triad:

· STOR is the scheme under which the National Grid contracts with flexible generators of electricity to provide Short Term Operating Reserve (i.e. back-up power) where the National Grid identifies that it is likely to have a short-term requirement for additional power. The amount of STOR capacity needed varies depending on the time of year, week and day; split into a number of seasons; each season containing defined hours in the day (known as "Availability Windows").

· Triad is the scheme under which the National Grid recharges the cost of using the electricity network to users of the network (distribution/supply companies) by pro-rating this cost across the users of the network during the three half hour periods of peak demand during a year. These distribution/supply companies will pay flexible generators of electricity a significant premium for electricity that they can supply during these three half-hour periods to avoid being charged this Triad cost.

The Company's business model is not unique; there are already a number of companies that provide Triad and STOR services using diesel generators, for example Greenfrog Power Limited. However, the Directors believe that the time is well suited a new entrant into this market for the following reasons:

· The need for flexible power generation is increasing as a result of imbalance being brought into the UK electricity network due to existing, reliable power generation (e.g. nuclear and coal) being decommissioned and being replaced, in part, by less predictable renewable power generation. The requirement for STOR generation capacity across the UK is forecast to increase as the UK's energy infrastructure changes over the next decade to 8GW in 2025.

· The intended installed capacity of the Enlarged Group's power plants is immaterial to both the overall UK electricity markets and the Triad and STOR markets in which the Company intends to operate.

· Although the timing and the final structure of the impending UK Electricity Market Reform ("EMR") remains unclear, it appears likely that electricity generators will face much greater penalties than they do under the current arrangements if they are unable to provide electricity for which they have contracted to supply. Utility companies have indicated that, where this is the case, they will likely look to secure a reserve of flexible generation power plants that they could call on to provide back-up power if their main power plants fail to operate.

· It is also generally accepted that flexible power generation whether diesel or gas will receive capacity payments in the new market and values in the range of circa £40,000 per MW have been stated. Whilst the Directors believe it is prudent not to rely on any revenue from these payments, they will review the Enlarged Group's commercial strategy once the capacity mechanism has been finalised.

4.2 Securing revenue contracts

STOR

In order to be able to tender for the STOR service, a STOR Framework Agreement must first be entered into between the National Grid and the prospective service provider. This will give effect to the standard contract terms in force at that time, in respect of any accepted tender(s). The STOR Framework Agreement lists the assets that a STOR provider may wish to tender at some stage in the future and tenders may only be submitted in respect of electricity generating assets listed in a STOR Framework Agreement.

There are two forms of the STOR service:

Committed Service

The provider must make the STOR service available for all availability windows within the contracted term. There are permitted exclusions when a particular asset is technically unable to provide the STOR service due to maintenance or plant breakdown or where an asset has been removed by the STOR provider in advance of an availability window.

Flexible Service

Flexible Service providers have greater freedom as to how many hours they wish to make the STOR service available, and when that availability is offered. However, National Grid may choose to reject Flexible Service availability and, provided the rejection is issued in the defined timescale, the National Grid will not make availability payments for rejected Flexible Service availability. Flexible Service makes up the majority of tender rejections.

There are three tender rounds run each year by the National Grid for STOR service. The tender process works on a rolling basis and is driven by price and reliability of the STOR asset. STOR providers are currently only able to contract for short-term contracts (no longer than two years).

As illustrated in Figure 4 below, the National Grid transparently discloses the results of the tender process following each tender round. There are three points in the year where the Company can submit process and this combination enables the Company to submit tenders with an understanding of where other companies in the market are tendering.

Figure 4 can be found on page 19 of the Admission Document which is available for download from the Company's website, www.plutusresourcesplc.com.

Figure 4. (Source: National Grid plc published tender results)

Triad

Triad demand is measured as the average demand on the Grid over three peak half hours between November and February (inclusive). In April of each year, each licensed electricity supplier is charged a fee for the peak load it imposed on the Grid during those three peak half hours of the previous winter. Exact charges vary depending on the distance from the centre of the network, but the Directors believe that in South West England it is likely to be circa £40,000/MW for 2015-16. This is a means for National Grid to recover its costs, and to impose an incentive on users to minimise consumption at peak, thereby easing the need for investment in the system. This is the main source of income which National Grid uses to cover its costs and these charges are commonly also known as Transmission Network Use of System charges ("TNUoS").

A Triad Avoidance payment is associated with reducing the demand on the transmission network during a Triad period. Flexible power generators are paid the Triad amount every time its generators operate during a Triad event. Payment is achieved by entering into a negotiated Power Purchase Agreement ("PPA") with a major electricity supplier. The power generator receives 95 per cent. of the Triad charge under a PPA.

Triad costs are rising steeply at present, with a compound annual growth rate ("CAGR") of 8 to 10 per cent. over the last five years. This high level of inflation is due to the significant Grid upgrade works that have been required over recent years to maintain the existing network and to make the changes that are necessary for the reduction in coal and nuclear generation expected over the next 10 years and the increase in renewable energy generation.

The directors of Plutus Energy have approached several utility companies as part of the market research it has performed and these utility companies have confirmed that they would be willing to enter into long term Power Purchase Agreements ("PPAs") for the Company's power and that these PPAs include pricing for electricity provided during a Triad period.

Table 1 below shows the tariffs for 1 MW of electricity generated during the Triad periods per year

National Grid Triad Factors 2013-2016

Table 1. (Source: National Grid plc published data)

4.3 Technology

The technology to be employed by the Enlarged Group is simple, proven and widely available.

The Enlarged Group intends to acquire high quality diesel-fuelled generators for its power plants. Plutus Energy has sought out the most cost effective diesel option. It is generally expected that the size of the diesel generating set will be 400kW, although other options will be considered especially when space is a constraint. A 400kW diesel generating set is considered by the Directors to be the most cost effective (on a cost per MW basis) type of generator on the market suitable for the Enlarged Group's purposes.

There are a number of highly reliable and well known diesel engine manufacturers, including Cummins Inc., Mitsubishi Engine North America, Inc. and Caterpillar Inc. and the Company intends to acquire engines from these manufacturers where possible. Diesel engines can be matched to any variety of alternators and these will be reviewed on a case-by-case basis subject to price and quality.

The Directors believe the technology which Plutus Energy proposes to use to be of high quality and very reliable. Reliability is a key requirement and viewed more favourably by the National Grid as part of the tender process.

Regardless of the size and type of diesel generator, each generating set will be delivered as a containerised solution including fuel storage, remote start facilities and remote diagnostic functions to detect, for example, when fuel is running low or when oil changes are required. The diesel engines will run on 'red diesel' and when operating at full output have enough diesel to run for approximately 4 hours. A bunded diesel storage tank will be kept on site containing sufficient diesel to run the entire plant at full output for a further 8 hours.

The Directors believe that diesel generators are preferable for a number of reasons. The technology is well established, with a number of suppliers, good availability of parts and technical know-how, and some banks may be willing to lend against the assets. There is a reasonable correlation between diesel prices and electricity prices, providing an overall hedge to the business plan. Operations and maintenance are low and performed by the Original Equipment Manufacturers (OEMs) and/or by the installation contractor.

Service and preventative maintenance can be contracted for a period of one to five years. Service and maintenance contracts can be entered into with providers of the diesel generators. The Company will assess on a case-by-case basis the quality of service and price associated with providing such services and where appropriate tender out to the market to seek the best value for maintenance services.

4.4 Funding of projects

The Directors intend to build plants in increments of a maximum of 20MW. This is for two reasons:

· The planning thresholds - and therefore construction timescales - are reduced, meaning that planning can be more quickly secured on suitable land; and

· The emissions fall below a European threshold, thereby reducing compliance costs and risk.

The exact cost of establishing a 20MW plant will depend on the specific characteristics of the selected sites. However, the Directors expect that, typically, each 20MW project will cost in the region of £5 million to develop and construct. Typically this cost can be broken down as follows:

Diesel Generators

It is the strategy of the Company to establish an individual Special Purpose Vehicle ("SPV") for each flexible power generation project that it builds. It is intended that each SPV will be part owned by Plutus Energy and part owned by third party investors. In exchange for its shareholding in the SPV, Plutus Energy shall provide it with site identification expertise, project management and implementation services, and expert knowledge in relation to the building of the flexible power generation project. Plutus Energy will also manage the tender process for STOR and Triad contracts on behalf of the SPV. It is proposed that third party investors shall provide the majority of the funding required for the project, with the balance to be provided as debt finance.

Plutus Energy has had a number of discussions with potential investors in relation to the proposed SPV project structure and in particular the Directors believe the structure proposed is attractive to EIS Investors.

In this regard, the Company has sought comfort from HMRC that the proposed structure would qualify for EIS tax relief and such comfort has been forthcoming, subject to usual conditions.

The Company has entered into a Letter of Intent ("LOI") with Rockpool Investments LLP, an investment adviser which offers a specialist EIS portfolio service to its clients. Pursuant to the terms of the LOI, Rockpool Investments LLP has agreed to seek to arrange investment in an SPV established by the Company, such funding to be used to enable the SPV to develop and build a flexible electricity generation facility and to provide working capital to support the SPVs operations. The investment remains subject to contract, due diligence and approval by Rockpool Investments LLP's investment committee. Further details of the terms of the LOI are set out in paragraph 12.1.9 of Part VI of the Admission Document.

The structure of the SPV for each flexible power generation project will vary, however based on discussions with potential investors, an illustrative example of a proposed structure is set out below.

Illustrative example of a flexible power generation project SPV structure

Source of funds:

Ownership profile:

(Source: Company estimates)

Other terms:

· Profits of the SPV are distributed pro-rata to the fully diluted ownership of the SPV.

· Plutus Energy will propose two or three directors to the board of the SPV and the EIS Investors shall have the right to nominate one director to the board of the SPV.

As well as EIS Investors and conventional asset financing possibilities, joint venture funding of SPVs from strongly-capitalised landlords is actively being discussed and pursued by the Company. Additionally, funding the capital requirement of the SPVs from VISA Immigration Funds is being actively pursued by the Enlarged Group. In this regard an arrangement letter with a broker for a Visa Immigration Fund has been received and Plutus Energy is currently engaged in discussions with two blue-chip asset finance organisations for the provision of debt funding.

5. Securing of suitable sites

Plutus Energy is currently engaged in discussions with prospective landlords for the securing of potential sites for the planned power plants. To date Plutus Energy has received draft heads of terms from London & Devonshire Trust for:

· two sites located in Plymouth and Cirencester which the Directors hope will be able to host plants generating up to 80MW of energy; and

· securing sites with strong Grid connection prospects in South West England and South Wales.

Plutus Energy has entered into discussions with a second landlord with the aim of securing sites to achieve generation of 60MW of energy in Southampton.

Furthermore, Plutus Energy has entered into heads of terms with Associated British Ports, a UK port operator with the scope for the provision of an initial site producing 20MW of energy with the possibility to increase to 60MW in the future.

Further details of the draft heads of terms with London & Devonshire Trust and Associated British Ports are set out in paragraphs 12.2.2 and 12.2.3 of Part VI of the Admission Document.

6. Principal terms of the Acquisition

On 5 August 2014, the Company entered into the Acquisition Agreement, pursuant to which it conditionally agreed to acquire the entire issued share capital of Plutus Energy that it does not already own for a purchase price of £485,000 to be satisfied by the issue of the Initial Consideration Shares by the Company to the Vendors, pro rata to their respective holdings in Plutus Energy. The Initial Consideration Shares will be credited as fully paid and will represent 16.55 per cent. of the Enlarged Share Capital.

In addition, Deferred Consideration of up to 50,000,000 Ordinary Shares at 0.6p per share for each of the Vendors may become payable depending upon the occurrence prior to, the fourth anniversary of Admission of either (a) the Earnings Per Share exceeding (i) 0.1575 pence in respect of 25,000,000 Deferred Consideration Shares for each of the Vendors or (ii) 0.297 pence in respect of 50,000,000 Deferred Consideration Shares for each of the Vendors (less any Deferred Consideration Shares allotted and issued pursuant to (i)), or (b) a takeover bid is made for the entire issued and unissued share capital of the Company and is declared unconditional in all respects at a price per Ordinary Share of 1.5 pence or more.

Completion of the Acquisition Agreement is subject to the passing of the Resolutions by Shareholders at the General Meeting and Admission. Further details of the Acquisition Agreement are set out in paragraph 12.1.3 of Part VI of the Admission Document.

7. Reasons for the Acquisition

As previously stated by the Company, the Existing Directors examined a number of investment proposals and were pleased to announce the acquisition of 25 per cent. of Plutus Energy in January 2014.

The Directors believe that the market opportunity for the Plutus Energy business arises from the constraints inherent in the National Grid electricity transmission network where flexible power generation has an increasing role to play particularly when power stations continue to close and it will be many years before new nuclear and other power stations will be built in the UK.

The Directors believe that the Acquisition provides investors with the opportunity to participate in a company that will provide flexible electricity generation in the UK. It is expected that the Enlarged Group will generate revenue by being available to provide electricity at very short notice to customers that are expected to include the National Grid, UK electricity utilities and major consumers of electricity.

The Directors believe that the Acquisition will benefit the Company and its Shareholders due to the following features:

· Asset-backed infrastructure investment in a topical business area - greater than 50 per cent. of the invested capital will be in the underlying generation assets

· Revenue stability - key revenues are expected to be derived through long-term and/or repeatable contracts with large, stable counterparties

· The deployment of stable and proven technology will lead to lower operational risk

· There is the opportunity for growth in emerging markets such as Private Wire Networks and the Capacity Market

Further information on Plutus Energy is set out in paragraph 2 above. Further details of the Acquisition Agreement are set out in paragraph 12.1.3 of Part VI of the Admission Document.

8. Existing Directors, Proposed Directors and Employees

As at the date of the Admission Document the Existing Board consists of Charles Tatnall, James Longley and Josephine Dixon. With effect from Admission, Philip Stephens and Paul Lazarevic shall be appointed to the Board. On Admission the Board will comprise five directors, including four executive directors and one non-executive director. Details of the Existing Directors and Proposed Directors are set out below.

8.1. Existing Directors

Charles Tatnall (aged 50), Chief Executive Officer (Proposed Executive Chairman)

Charles Tatnall is primarily involved in advising and raising funds for small and medium sized enterprises with varying business activities ranging from advising investment and family wealth companies to reviewing investments and business opportunities together with the management of personal investments. Until 2005 he was consultant to Bolton Group PLC, a UK listed investment company, identifying and conducting due diligence on potential investment and acquisition opportunities from a broad range of industry sectors. These included natural resources, both exploration and production, electronic hardware and software, and biotechnology.

Previously he held a number of positions with public companies in North America and Canada, he was a director and founder of several micro-cap North American listed companies being responsible for general corporate governance and all finance areas. Charles was a co-founder and principal of BioProgress Technology Ltd ("BioProgress") which was quoted on the NASD regulated OTC market and later migrated to AIM. Charles held the licence for the North American business of BioProgress though a listed vehicle in North America. Earlier, Charles founded Maceworth Ltd in 1985, a large corporate entertainment company in the UK which operated in the areas of running sporting event tented corporate villages, marquee hire, corporate sponsorship and conferences.

James Longley (aged 55), Chief Financial Officer and Company Secretary

Mr Longley is a chartered accountant whose career has been focussed on venture capital, private equity and building growth companies. His earlier career was with Arthur Andersen, Creditanstalt-Bankverein Merchant Banking and Touche Ross Corporate Finance. In 1990 he co-led the £10.5m management buy-in of The Wilcox Group, one of the UK's leading aluminium alloy tipping trailer manufacturers. He was also co-founder, director and chief financial officer of

BioProgress Technology International, Inc., a VMS and drug delivery system developer using proprietary films, processes and formulations. It was a NASD quoted and regulated company from 1997 to 2002 and was subsequently listed on AIM.

Mr Longley was also a co-founder, director, chief financial officer of PhotoBox Limited from 2000 to 2006, a company that then merged with its French counterparts, Photoways to create Europe's leading online photo-finishing business. The group now enjoys a turnover in excess of £175 million and has over 25 million unique users. Private equity investors include Highland Capital Partners and Index Ventures. It acquired Moonpig.com in 2011 for circa £120 million.

Concurrently, for much of his career, Mr Longley has acted and continues to act for and invest in many small to medium businesses together with consultancy and non-executive director roles.

Josephine (Jo) Dixon (aged 54), Non-Executive Director

Josephine Dixon has over ten years' experience as a non-executive of listed companies. Miss Dixon is currently a non-executive director and senior independent director of Worldwide Healthcare Trust PLC, she is non-executive director and audit committee chairman of Baring Emerging Europe PLC, Standard Life Equity Income Trust PLC and JP Morgan European Investment Trust PLC. Miss Dixon is also a non-executive director of Strategic Equity Capital plc.

Miss Dixon is a qualified Chartered Accountant having trained with Touche Ross in London. She has experience in an executive capacity in financial services, principally at Natwest where Miss Dixon held a number of senior roles in both the management of the investment bank and the main bank working directly for the chief executive officer. In 1995 she became finance director of Newcastle United where, having ensured there was a sound financial management system, raised debt to support a significant growth strategy. She played a key role in the successful London Stock Exchange flotation raising £54m in equity. She has subsequently been commercial director of UK Europe Middle East division of Serco Group and has held a number of interim finance director roles and consultancy positions in differing sectors.

8.2. Proposed Directors

Philip (Phil) Stephens (aged 49), Proposed Chief Executive Officer

Mr Stephens has a strong track record in the electricity sector having held numerous senior roles in the energy and infrastructure marketplace. This includes a major UK generator, where he was responsible for the businesses transition from a national electricity generator to a premium low carbon energy supplier. As partner in global consulting firms, Phil's background is in energy utilities, leading practices and projects in North America, Europe and Asia Pacific. He has worked with large and small organisations in roles as diverse as interim strategy director to commercial due diligence and post-acquisition value realisation for private equity investors.

Mr Stephens is currently a director of a STOR business, building a 20MW plant in South West England, but has held numerous senior roles in the energy and infrastructure market, including listed entities:

· Head of commercial - British Energy Group plc. Phil led the development of British Energy Group plc's low carbon product, including board & regulatory sign-off, first sales and independent third party verification regime. This product has gone on to form the basis of EDF's Blue+ domestic product post acquisition of British Energy Group plc.

· Group commercial director - Mears Group plc. A listed social housing & domiciliary care business with revenues of £650 million. Phil signed an exclusive agreement with British Gas to provide energy and low carbon services to social housing, initially exploiting the fee-in tariffs and moving to waste-to-power projects.

· Asia Pacific energy & utilities leader - PA Consulting Group. Phil led the development of the world's first nodal electricity market, including development of a Financial Transmission Rights (FTR) regime as well as advising on asset management plans as part of regulatory representations.

Paul Lazarevic (aged 50), Proposed Chief Operating Officer

Paul Lazarevic has a long track record in the electricity sector including most recently as the chief executive officer of Grid balancing technology company, RLtec. Prior to that he was head of corporate sales at RWE AG where he was responsible for a £1.5bn operation, which included sales and operations to the UK's major industrial and commercial users such as J Sainsbury's plc, BT Group plc and Lafarge cement. Prior to that, Paul spent eight years at ExxonMobil where his experience varied from project managing the design and construction of embedded refinery power generation projects in the USA and Far East, to setting up a gas trading operation in the UK and running a risk management team.

8.3. Employees

On Admission, it is anticipated that the Enlarged Group will have no employees, other than the Existing Directors and the Proposed Directors.

9. Current trading, prospects and significant trends

Financial information on the Company and Plutus Energy are set out in Parts III and IV of the Admission Document.

Plutus Resources currently has no operations and the Enlarged Group has no operating history in the flexible power generation business. However, the Proposed Directors have significant experience of the flexible power generation market. As at the date of the Admission Document, the Company and Plutus Energy have made the following progress in implementing the proposed strategy:

Funding

· Letter of Intent from Rockpool Investments LLP

· Arrangement letter with a broker for a VISA Immigration Fund

· Positive discussions with two blue-chip asset finance organisations for provision of debt financing

Sites

· Draft heads of terms with London & Devonshire Trust for:

· Sites in Plymouth and Cirencester (with the potential of hosting circa 80MW)

· Securing sites with strong Grid connection prospects in South West England and South Wales

· Positive discussions with a second landlord with regards to sites in Southampton capable of hosting circa 60MW.

· Draft heads of terms with Associated British Ports, a UK port operator with regards to an initial site capable of hosting circa 20MW.

STOR Framework Agreement

· Plutus Energy has entered into a STOR Framework Agreement with National Grid and has successfully tendered for a total of 30MW of STOR capacity across two sites (subject to certain terms and conditions). Further information on the agreement with National Grid is set out in paragraph 12.2.1 in Part VI of the Admission Document.

The Directors intend to develop the Enlarged Group and its assets as set out in paragraph 4 above headed "Strategy of the Enlarged Group".

Save as disclosed in the Admission Document, there have been no significant trends concerning the development of the business of the Company or Plutus Energy.

10. Details of the Placing and use of proceeds

The Company has conditionally raised £800,000 before expenses from the Placing, by the issue or transfer of the Placing Shares at 0.6 pence per Share.

The Placing Shares will rank pari passu in all respects with the Ordinary Shares including the right to receive all dividends and other distributions declared, paid or made after the date of issue. The Placing, which is not underwritten or guaranteed, is conditional, inter alia, upon the Acquisition completing and Admission becoming effective.

The Company, Plutus Energy, the Existing Directors and the Proposed Directors have entered into the Placing

Agreement with SP Angel pursuant to which SP Angel has conditionally agreed to act as agent for the Company and Plutus Energy and to use its reasonable endeavours to procure subscribers or purchasers for the Placing Shares at the Placing Price. The Placing is conditional, inter alia, upon Admission becoming effective on or about 22 August 2014 or such later date as agreed between the Company and SP Angel.

Further details of the Placing Agreement are set out in paragraph 12.1.1 of Part VI of the Admission Document.

It is intended that the proceeds of the Placing shall be applied to the working capital requirement of the Group as follows:

Shareholders should be aware that third party investors will be required to provide the necessary funding to each SPV that will be established to build and operate the Enlarged Group's flexible electricity generation projects. Further information on the proposed structuring and funding of each flexible power generation project is set out in paragraph 4.4 above.

Should the Company identify suitable acquisitions or opportunities for growth it may require substantial additional capital in the future. The Board will consider the most appropriate funding mechanism at the relevant time which could include the issue of further equity or debt finance.

11. Admission to AIM, Dealings and CREST

Application will be made to the London Stock Exchange for the Enlarged Share Capital to be admitted to trading on AIM. It is expected that Admission will take place, and dealings in the Enlarged Share Capital on AIM will commence, on 22 August 2014.

CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument in accordance with the CREST Regulations.

The Articles permit the holding and transfer of Ordinary Shares to be evidenced in uncertificated form in accordance with the CREST Regulations. The Existing Ordinary Shares can already be transferred by means of the CREST system and it is expected that the New Ordinary Shares will also be transferable by means of the CREST system.

12. Lock-in and orderly market arrangements

In compliance with the AIM Rules for Companies, the Directors have agreed not to, and to procure that their respective associates will not, dispose of any interests in Ordinary Shares held by them (if any) for 12 months following Admission.

For the following 12 month period after the initial one year lock-in period, the Directors have agreed not to, and to procure that their respective associates will not, dispose of any interest in Ordinary Shares held by them (if any) unless such disposals are effected through the Company's broker or in the agreed manner so as to ensure an orderly market in the Ordinary Shares.

In addition, Paternoster has agreed not to, and to procure that its associates will not, dispose of any interests in Ordinary Shares held by it for 12 months following Admission.

The restrictions on the disposal of Ordinary Shares contained in the Lock-in Deeds do not apply in certain circumstances permitted under the AIM Rules for Companies. Further details of the Lock-in Deeds can be found in paragraph 12.1.7 of Part VI of the Admission Document.

13. Relationship Agreement

The Company has entered into the Relationship Agreement with the Covenantors and SP Angel as the Covenantors will, on Admission, own 167,166,667 Ordinary Shares representing approximately 34.23 per cent. of the Enlarged Share Capital and will therefore be the majority and controlling shareholders of the Company. Under the terms of the Relationship Agreement, for so long as they collectively hold at least 30 per cent. of the Company's issued share capital, the Covenantors are obliged to ensure that the Company is capable of carrying on its business independently of them and, consequently, this agreement places certain restrictions on them as the controlling shareholders of the Company to ensure this independence. Further details of the Relationship Agreement are set out in paragraph 12.1.8 of Part VI of the Admission Document.

14. City Code and Concert Party

The City Code is issued and administered by the Panel. The City Code applies to all takeover and merger transactions, however effected, where the offeree company is, inter alia, a listed or unlisted public company incorporated in the United Kingdom. The Company is such a company and Shareholders are entitled to the protections afforded by the City Code.

Under Rule 9 of the City Code, any person who acquires an interest (as defined in the City Code) in shares which, taken together with shares in which he and persons acting in concert with him are already interested, carry 30 per cent. or more of the voting rights in a company which is subject to the City Code is normally required to make a general offer to all the remaining shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with him, is interested in shares which, in aggregate, carry not less than 30 per cent. of the voting rights of a company but does not hold shares carrying more than 50 per cent. of such voting rights, a general offer will normally be required if any further interest in shares is acquired by any such person, or any person acting in concert with him, which increases the percentage of shares carrying voting rights in which he is interested.

An offer under Rule 9 must be made in cash (or with a full cash alternative) at a price not less than the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

Rule 9 of the Code further provides, amongst other things, that where any person who, together with persons acting in concert with him holds over 50 per cent. of the voting rights of a company, acquires an interest in shares which carry additional voting rights, then they will not generally be required to make a general offer to the other shareholders to acquire the balance of their shares.

Under the City Code, a concert party arises where persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control (as defined below) of a company or to frustrate the successful outcome of an offer for a company. Control means holding, or aggregate holdings, of shares carrying 30 per cent. or more of the voting rights of the company, irrespective of whether the holding or holdings give de facto control. There is an Existing Concert Party holding a potential interest in a total of 163,940,000 Ordinary Shares, representing 73.12 per cent. of the issued Ordinary Share capital of the Company as it would be following the conversion of Loan Notes and exercise of Options currently held by the Existing Concert Party. The interests of the members of the Existing Concert Party in the Ordinary Share capital of the Company was previously the subject of a waiver granted in respect of Rule 9 and approved by Shareholders by way of a written resolution in December 2012.

The Panel considers that the Concert Party has come into being as a result of the Proposals and the Call Option. The Concert Party will have an interest in up to 496,265,002 Ordinary Shares on Admission, representing up to 77.80 per cent. of the Ordinary Share capital of the Company as enlarged by the conversion of Loan Notes, exercise of Options and Warrants, and the issue of the Consideration Shares and Placing Shares.

Shareholders should note that, following Admission, the Concert Party will hold over 50 per cent. of the voting rights of the Company and will therefore be entitled to increase its interest in the voting rights of the Company without incurring a further obligation under Rule 9 to make a general offer although, individual members of the Concert Party will not be able to increase their interests in the voting rights of the Company through or between a Rule 9 threshold without Panel consent.

Further information in relation to the Concert Party is set out in Part V of the Admission Document.

15. Change of name

To reflect the proposed changes to the Company, its management and its operations as a result of the Acquisition, it is proposed that the Company will change its name to Plutus PowerGen Plc pursuant to Resolution 4 in the Notice of General Meeting.

16. Corporate governance

The Company is not required to comply with the Corporate Governance Code or QCA Code. However, the Directors recognise the importance of sound corporate governance. The Board intends to continue, following Admission, so far as is practicable for a company of its size, to implement certain corporate governance recommendations. Details are provided below.

The Board will meet regularly and is responsible for formulating, reviewing and approving the Enlarged Group's strategy, budgets, performance, major capital expenditure and corporate actions. On Admission, the Company will have in place an audit committee, a remuneration committee and an AIM Rules Compliance Committee with formally delegated rules and responsibilities.

Audit Committee

The Audit Committee will have the primary responsibility of monitoring the quality of internal controls and ensuring that the financial performance of the Enlarged Group is properly measured and reported on. It will receive and review reports from the Enlarged Group's management and external auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Enlarged Group. The Audit Committee will meet not less than twice in each financial year and will have unrestricted access to the Enlarged Group's external auditors. On Admission, the Audit Committee will comprise Josephine Dixon, James Longley and Philip Stephens; Josephine Dixon will chair the committee.

Remuneration Committee

The Remuneration Committee will review the performance of the executive directors and make recommendations to the Board on matters relating to their remuneration and terms of service. The Remuneration Committee will also make recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any employee share option scheme or equity incentive plans in operation from time to time. The Remuneration Committee will meet as and when necessary. In exercising this role, the members of the Remuneration Committee shall have regard to the recommendations put forward in the QCA Code and, where appropriate, the UK Corporate Governance Code guidelines. On Admission, the Remuneration Committee will comprise Josephine Dixon, James Longley and Philip Stephens; Josephine Dixon will chair the committee.

Nominations Committee

In view of the size of the Board, the responsibility for proposing and considering candidates for appointment to the Board will be retained by the Board.

AIM Rules Compliance Committee

An AIM Rules Compliance Committee will be established on Admission. The committee will ensure that procedures, resources and controls are in place with a view to ensuring the Company's compliance with the AIM Rules. The committee will also ensure that each meeting of the Board includes a discussion of AIM matters and assess (with the assistance of the Company's Nominated Adviser and other advisors) whether the Directors are aware of their responsibilities under the AIM Rules from time to time.

The committee will seek to ensure that all announcements made have been verified and approved by the Company's Nominated Adviser. The committee will have particular responsibility for questioning the Directors in the event of any unusual, substantial movement in the Company's share price.

The committee will monitor the Company's compliance with the AIM Rules and seek to ensure that the Company's Nominated Adviser is maintaining contact with the Company on a regular basis.

On Admission, the AIM Rules Compliance Committee will comprise Josephine Dixon, Paul Lazarevic and Charles Tatnall; Josephine Dixon will chair the committee.

Share Dealing Code

The Board intends to comply, and to procure compliance, with Rule 21 of the AIM Rules for Companies relating to dealings in the Company's securities by the Directors and other Applicable Employees. To this end, the Company has adopted a code for directors' dealings appropriate for a company whose shares are admitted to trading on AIM and will take all reasonable steps to ensure compliance by the directors and any relevant employees.

Anti-Corruption and Bribery Policy

On Admission the Board will adopt an anti-corruption and bribery policy (the "Bribery Policy"). The Bribery Policy applies to all directors and employees of the Company (and the Group) and generally sets out their responsibilities in observing and upholding a zero tolerance position on bribery and corruption as well as providing guidance to those working for the Company on how to recognise and deal with bribery and corruption issues and the potential consequences. The Bribery Policy details a zero tolerance approach which must be communicated to all contractors and business partners in all business dealings. Training on the Bribery Policy forms part of the induction process for all new employees.

17. Dividend Policy

The Company has not paid any dividends since its incorporation. The Board intends to devote the Company's cash reserves to financing the development of the Enlarged Group in the short to medium term and intends in the longer term to commence the payment of dividends only when the Board considers it commercially prudent to do so, having regard to the availability of distributable reserves.

18. Share Options and Warrants

The Board believes that it is important that directors, employees and consultants of the Company are appropriately and properly incentivised. To this end, the Company has established the EMI Scheme under which eligible persons have been invited to participate and following Admission will continue to be invited to participate at the discretion of the Remuneration Committee.

Warrants have also been issued to certain Directors with effect from Admission.

Further details of the EMI Scheme and Warrants are summarised in paragraphs 5 and 12.1.4 respectively of Part VI of the Admission Document.

19. Taxation

Your attention is drawn to the taxation section contained in paragraph 19 of Part VI of the Admission Document. These details are, however, intended only as a general guide to the current tax position under UK taxation law. If you are in any doubt as to your tax position, or are subject to tax in jurisdictions other than the UK you are strongly advised to consult your own independent financial adviser immediately.

20. Risk factors & further information

Your attention is drawn to the Risk Factors set out in Part II of the Admission Document and to the section entitled "Forward Looking Statements" on page 2 of the Admission Document. Prospective investors should, in addition to all other information set out in the Admission Document, carefully consider the risks described in those sections before making a decision of whether to invest in the Company.

Your attention is drawn to Parts II to VI of the Admission Document which provide additional information on the Company and the matters described in this announcement.

21. General Meeting

A notice convening the General Meeting is set out on pages 90 to 92 of the Admission Document, which is to be held at the offices of DMH Stallard LLP, 6 New Street Square, New Fetter Lane, London EC4A 3BF at 10.00 a.m. on 21 August 2014, for the purpose of considering, and if thought fit, passing the following Resolutions:

Resolution 1, the Acquisition Resolution, will be proposed as an ordinary resolution and seeks to:

(a) approve the Acquisition for the purposes of Rule 14 of the AIM Rules for Companies; and

(b) authorise the Directors to allot the Initial Consideration Shares and the Deferred Consideration Shares.

The Acquisition Agreement is conditional upon the passing of all Resolutions.

Resolution 2 will be proposed as an ordinary resolution and is conditional upon the passing of Resolution 1 and seeks to generally authorise the Directors to allot Ordinary Shares or grant rights to subscribe for or convert any securities into Ordinary Shares up to a maximum nominal amount of £444,500, such amount representing the Ordinary Shares being issued pursuant to the conversion of the Loan Notes and any interest thereon, the Debt for Equity Conversion, the Placing, the Fee Shares, the Bonus Shares, the Warrants and a general authority for additional headroom for the Company representing approximately one-third of the Enlarged Share Capital. The authority shall expire on the conclusion of the next annual general meeting or 21 August 2015 whichever is the earlier.

Resolution 3 will be proposed as a special resolution and is conditional upon the passing of Resolutions 1 and 2 and seeks to empower the Directors to disapply statutory pre-emption rights generally up a maximum nominal amount of £625,334 representing the New Ordinary Shares, the Fee Shares, the Bonus Shares and general authority for additional headroom for the Company representing approximately one-third of the Enlarged Share Capital. This authority shall expire on the conclusion of the next annual general meeting or 21 August 2015 whichever is the earlier.

Resolution 4 will be proposed as a special resolution to change the name of the Company from Plutus Resources Plc to Plutus PowerGen Plc. The resolution is conditional upon the passing of Resolution 1.

To be passed, the Resolutions proposed to be passed as ordinary resolutions will require a simple majority, and the Resolutions proposed to be passed as special resolutions will require a majority of not less than 75 per cent. of those Shareholders voting in person or on a poll by proxy in favour of the relevant Resolution.

None of the Proposals will be implemented unless all of the Resolutions are passed and become unconditional in accordance with their terms (save as to matters which involve interconditionality).

22. Action to be taken

Enclosed with the Admission Document Shareholders will find the Form of Proxy for use by them in connection with the General Meeting. Whether or not you intend to be present at the General Meeting, Shareholders are asked to complete, sign and return the Form of Proxy to the Registrar as soon as possible but in any event so as to arrive no later than 10.00 a.m. on 19 August 2014. The completion and return of a Form of Proxy will not preclude Shareholders from attending at the General Meeting and voting in person should they wish to do so. Accordingly, whether or not Shareholders intend to attend the General Meeting, they are urged to complete and return the Form of Proxy as soon as possible.

It is important for Shareholders to note that if the Proposals are not approved at the General Meeting then Admission will not occur and the Company's shares will be cancelled from trading on AIM.

23. Irrevocable undertakings relating to the Resolutions

It is a condition to completion of the Acquisition and Placing that all of the Resolutions are approved by Shareholders.

Accordingly, the Existing Directors, Plutus Energy, Paternoster and certain other Shareholders have irrevocably undertaken to vote in favour of Resolutions in respect of their own shareholdings. In aggregate, the irrevocable undertakings to vote in favour of the Resolutions held by the Company as at the latest practicable date before the publication of the Admission Document amount to 71.93 per cent. of the Existing Share Capital.

24. Related Party Transaction and Recommendation

Plutus Energy is a substantial Shareholder and, accordingly, the Acquisition represents a transaction to which rule 13 of the AIM Rules for Companies applies. The issue of Fee Shares and Bonus Shares to Charles Tatnall and James Longley also represent a related party transaction to which rule 13 of the AIM Rules for Companies. The Independent Director considers, having consulted with the Company's nominated adviser, SP Angel, that the terms of the Acquisition and the issue of Fee Shares and Bonus Shares are fair and reasonable insofar as the Shareholders are concerned.

It is important for Shareholders to note that if the Proposals are not approved at the General Meeting then Admission will not occur and the Company's shares will be cancelled from trading on AIM.

Accordingly, the Existing 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 so in respect of their own beneficial shareholdings amounting to, in aggregate, 48,000,000 Existing Ordinary Shares representing 29.22 per cent. of the Existing Share Capital.