We have a central management server running SEP 12 connecting to an external SQL database. We also have a smaller customer setup on SEP12 with a SEPM utilising the embedded database but want to replicate this to the central SEPM SQL database. Is this possible?

Cheers

Tim

Yes u  can 

follow this document

How to add "Replication Partners" and Schedule Replication

http://www.symantec.com/business/support/index?page=content&id=TECH104986

Hello,

Yes. You can..

All sites typically have the same type of database. However, you can set up replication between one site that has an embedded database and a second site that has a Microsoft SQL Server database. If you use an embedded database, you can only connect one Symantec Endpoint Protection Manager. If you use the Microsoft SQL Server, you can connect multiple management servers or share one database. Only the first management server needs to be set up as a replication partner.

Reference:

How replication works