Turbo Power : AIM Market - Notice of AGM Announcement

19 April 2017

TPS, the innovative high-speed electrical machines and power electronic systems provider, announces that it will today post its Annual Report and Accounts for the financial year ended 31 December 2016, together with notice of the Company's Annual General and Special Meeting and a Management Proxy and Information Circular, to shareholders. The Information Circular sets out, inter alia, information regarding the intention to seek Shareholder approval for the cancellation of admission of its Ordinary Shares to trading on AIM and for the proposed share consolidation of 5,000 Common Shares into one New Common Share.

The Company has received a letter of intent from the Company's Major Shareholder to vote in favour of the

Cancellation Resolution and Consolidation Resolution in respect of 2,982,444,445 Common Shares representing

89.4 per cent. of the issued share capital of the Company. As a result the Directors believe it will be highly likely that the Cancellation Resolution and Consolidation Resolution will be passed at the Annual General and Special Meeting.

Subject to the Cancellation Resolution being passed at the Annual General and Special Meeting, the expected last day of dealings in Common Shares on AIM will be Friday 2 June 2017 and the Cancellation will become effective at 7.00 a.m. on Monday 5 June 2017. Pursuant to Rule 41 of the AIM Rules, the Company, through its nominated adviser, finnCap, has notified the London Stock Exchange of the proposed Cancellation.

An extract from the Management Proxy and Information Circular, regarding the background to and principal effects of the Cancellation and Consolidation is set out at the bottom of this announcement. The Management Proxy and Information Circular should be read by Shareholders in full.

The Annual General and Special Meeting will be held at 1.00 p.m. (London, GMT + 1) on Thursday 25 May 2017 at the Company's registered office at 1 Queens Park, Queensway North, Team Valley Trading Estate, Gateshead, NE11 0QD. Copies of these documents will shortly be available to view on the Company's website (http://turbopowersystems.com).

For further information, please contact:

1. Proposed Cancellation of Admission of Common Shares to Trading on AIM

   On March 30, 2017, the Company announced that TWC3N, a company controlled principally by certain members of the Company's existing management team, had acquired the entire issued and to be issued share capital of TAO UK. The Company also announced on March 30, 2017 that TWC3N, in a separate transaction, had acquired all of the A Ordinary Shares (the "A Shares") in the capital of TPSL, the Company's subsidiary, at a price of 0.00112 pence each. The A Shares are convertible into an equal number of Common Shares of no par value in the Company on request by the holder, having given 61 days' notice. As a result of TWC3N's acquisition of TAO UK and the A Shares, the ultimate parent undertaking of the Company is TWC3N, a company entirely owned by Carlos Neves, Chief Executive Officer of the Company (26.5% voting rights of TWC3N), Charles Rendell, Chief Financial Officer of the Company (26.5% voting rights of TWC3N), Nigel Jakeman, Engineering and Business Development Director of the Company (26.5% voting rights of TWC3N), and Adderstone Group Limited, a group comprising a diverse range of businesses involving property and investment within the UK, whose Chief Executive Officer and Founder is Ian Baggett (20.5% voting rights of TWC3N)..

   In the announcement made by the Board on March 30, 2017, the Board concluded that it is in the best interests of the Company to cancel the admission of the Common Shares to trading on AIM. Pursuant to Rule 41 of the AIM Rules, the Company, by way of its nominated adviser, finnCap Ltd, has notified the London Stock Exchange of the date of the proposed Cancellation.

   The Cancellation is conditional, pursuant to Rule 41 of the AIM Rules, upon the approval of not less than 75 per cent (75%) of the votes cast by Shareholders (whether present in person or by proxy) at the Annual General and Special Meeting, notice of which is set out in the Management Proxy and Information Circular.

   The Company is therefore seeking Shareholders' approval of the Cancellation at the Annual General and Special Meeting, which has been convened for 1:00 p.m. (London, GMT +1) on May 25, 2017 at the Company's offices at 1 Queens Park, Queensway North, Team Valley Trading Estate, Gateshead, NE11 0QD, United Kingdom.

   If the Cancellation Resolution is passed at the Annual General and Special Meeting, it is anticipated that the Cancellation will become effective at 7:00 a.m. on June 5, 2017.

   The purpose of the Management Proxy and Information Circular is to seek Shareholders' approval for the Cancellation Resolution, to provide you with the information on the background and reasons for Cancellation and to explain the consequences of the Cancellation and why the Directors unanimously consider the Cancellation to be in the best interests of the Company and its Shareholders as a whole.

   1.1 Background and reasons for Cancellation

   The Board has conducted a review of the benefits and drawbacks to the Group and its Shareholders in retaining its quotation on AIM, and believes that Cancellation is in the best interests of the Company and its Shareholders as a whole. In reaching this conclusion, the Board has considered the following key factors:

   • the considerable cost, management time and the legal and regulatory burden associated with maintaining the Company's admission to trading on AIM which, in the Directors' opinion, are disproportionate to the benefits to the Company;

   • the Directors and the Major Shareholder hold in total 89.4 per cent (89.4%) of the Company's current issued share capital and, as a result, the free float and liquidity of the Common Shares is limited;

• the AIM listing of the Common Shares does not, in itself, offer investors the opportunity to trade in meaningful volumes or with frequency within an active market. With little trading volume, the Company's share price can move up or down significantly following trades of small numbers of shares; and

• due to the Company's limited liquidity in its shares and, in practical terms, a small free float and market capitalisation, continuing admission to trading on AIM no longer sufficiently provides the Company with the advantages of providing access to capital or enabling the Common Shares to be used to effect acquisitions.

Following careful consideration, the Board believes that it is in the best interests of the Company and Shareholders to seek the proposed Cancellation at the earliest opportunity.

The Board is aware that the proposed Cancellation, should it be approved by Shareholders at the Annual General and Special Meeting, would make it more difficult for Shareholders to buy and sell Common Shares should they wish to do so.

Immediately following the proposed Cancellation, the Company intends put in place a Matched Bargain Facility to assist Shareholders to trade in the Common Shares.

The Matched Bargain Facility will be made available either directly through the a third party provider. Under the Matched Bargain Facility, Shareholders or persons wishing to acquire or dispose of Common Shares would be able to leave an indication with the Matched Bargain Facility that they are prepared to buy or sell at an agreed price.

In the event that the Matched Bargain Facility is able to match that order with an opposite sell or buy instruction, the Matched Bargain Facility would contact both parties and then effect the bargain.

Details of the Matched Bargain Facility, will be made available to Shareholders on the Company's

website at www.turbopowersystems.com and directly by letter or e-mail (where appropriate).

In due course, the Company and/or TWC3N may decide to purchase Common Shares tendered through the Matched Bargain Facility however there can be there is no guarantee that either the Company and

/ or TWC3N will ultimately proceed with purchasing further Common Shares.