Eco City Vehicles : VAT recovery transaction update

27 May 2014

Eco City Vehicles PLC

("ECV" or "the Group")

VAT Recovery

Eco City Vehicles PLC, the exclusive supplier of the licensed Mercedes Vito taxi, announces the following update in relation to the Group VAT Recovery.

Further to the announcement made on 25 April, as contemplated by the VAT Recovery Transaction, the Company has now received consideration of £0.6m and made the agreed payments upon receipt.

As previously disclosed the VAT Recovery Transaction requires the approval of the corporate trustee of the Pension Scheme.  The beneficiaries of the Pension Scheme agreed to use all best endeavours to ensure that the necessary documentation is entered into by the Pension Scheme trustees by 25 May 2014.  Following receipt of the consideration referred to the parties to the transaction have now agreed to extend the above period by an additional period of 30 days. A further announcement will be made at that point. The VAT Recovery Transaction therefore remains subject to the agreement of the Pension Scheme trustees and no guarantee can be given at this stage that they will agree to such terms. ECV understands that Cabvision Network Limited intends to repay the Pension Scheme Loan in full or to provide alternative security within 30 days from this announcement, following which the Pension Scheme will release its first fixed and floating charge over the Group's assets.

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