Underwritten Open Offer to raise £340,140

Tern Plc (AIM:TERN), the company focused on value creation from Internet of Things ("IoT") technology businesses, announces an underwritten Open Offer to raise approximately £340,140 (before expenses) through the issue of 34,013,989 Open Offer Shares at an Issue Price of 1.00p per Open Offer Share.

1 Open Offer Share for every 16 Ordinary Shares held on the Record Date.

The Issue Price of 1.00p per Open Offer Share represents a discount of approximately 28.6 per cent. to the closing middle market price of 1.40p for each Ordinary Share on 16 April 2025 (the latest practicable date prior to this announcement).

The Open Offer is being underwritten in full by CMC Markets UK Plc who has agreed to subscribe, in cash at the Issue Price, for all of the Open Offer Shares which remain unsubscribed for by Qualifying Shareholders pursuant to the Open Offer.

The Open Offer is only conditional upon the admission of the Open Offer Shares to trading on AIM. It is expected that Admission will become effective and dealings in the Open Offer Shares will commence on 8 May 2025.

The Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission. The Open Offer Shares will be issued pursuant to the authority granted to the directors at the General Meeting of the Company held on 23 September 2024.

The Open Offer is open for acceptance from now until 6 May 2025. Details of the Open Offer will be set out in a Circular to be sent to shareholders later today. The Circular sets out the reasons for and further details of the Open Offer, including its terms and conditions and risk factors.

Notes:

• References to times in this Document are to London time (unless otherwise stated).

Open Offer statistics

Please refer to Appendix 1 below for further information

Appendix 1

Introduction

The Company is proposing to raise approximately £340,140 pursuant to the Open Offer. The Open Offer is being made on a pre-emptive basis, allowing all Qualifying Shareholders the opportunity to participate by subscribing for Open Offer Shares at the Issue Price of 1.00 pence per Ordinary Share, pro rata to their holdings of Existing Ordinary Shares. The purpose of this Document is to set out the background to, and reasons for, the Open Offer and to provide Qualifying Shareholders with details of its terms and conditions.

In addition, the Underwriter, CMC Markets UK Plc, have agreed to subscribe, at the Issue Price, for any Open Offer Shares not otherwise taken up by Qualifying Shareholders pursuant to the Open Offer as explained further in paragraph 5 below.

Background to and reasons for the Open Offer

The Board remains committed to growing the value of Tern's portfolio companies. While the global macroeconomic backdrop continues to pose challenges for early-stage technology businesses, the Company's current direct portfolio companies, Device Authority Limited, FVRS Limited and Talking Medicines Limited, and many of those held by Sure Valley Ventures Enterprise Capital Fund ("SVV2") and Sure Ventures plc, entities in which the Company is invested, continue to make significant progress. Active engagement is maintained with the Company's direct investment portfolio companies, together with some of those held by SVV2, helping shape their strategies and tactics. Additionally, the Company's Board and executive management's extensive network is utilised to introduce these companies to new markets and investors, particularly in the USA.

As previously announced, the focus of the Board and Tern's executive management is on realisations. The Board's goal is to maximise the value of Tern's portfolio companies to achieve successful exits from its investments at the appropriate time, ultimately seeking strong returns for Shareholders.

Corporately, the Company is maintaining strict control over operational costs. Following the Board and management restructuring in 2023, the Company's spending on administration costs in the six months to 30 June 2024 was 42% lower than in the same period in 2023. However, as an AIM-quoted company, the Company still incurs substantial professional fees and costs, both associated with maintaining its status as a publicly traded company and with its portfolio, many of which are largely fixed.

The Company is also presented, often at relatively short notice, with fundraisings planned by its direct portfolio companies. If it is not possible for Tern to participate in these fundraisings, the Company could find that either, or both, its shareholding in the relevant portfolio company is diluted and their valuation reduces, which is likely to then adversely impact upon the Company and the potential returns available for Shareholders. In addition, as announced on 2 March 2022, Tern has committed to invest up to £5 million in SVV2 over its 10-year life and is required to provide capital to SVV2 from time to time, often at short notice. Tern has a 6.1% holding in SVV2 which, as at 21 February 2025, had an unaudited valuation of approximately £750,000.

The Directors believe that whilst the additional funding required to maintain the Company's admission to AIM and to prevent a potentially significant reduction in the value of its holdings could potentially be satisfied from disposals of holdings in the Company's portfolio, the Directors believe that any short-term disposals are uncertain and if these were to be successfully concluded could potentially be in a manner that may not be in the best long-term interests of the Company and its Shareholders.

The Company is therefore proposing the underwritten Open Offer, utilising substantially all of the Director's current authority to allot Ordinary Shares without disapplying pre-emption rights, to generate funds to invest further in one or more of Tern's portfolio companies, contribute towards Tern's commitment to invest in SVV2, and for general corporate purposes.

Whilst the Open Offer is underwritten, and the gross proceeds expected to be received by the Company are fixed, the Board would like to ensure that Qualifying Shareholders maximise their opportunity to subscribe for Open Offer Shares. The Company has therefore included the Excess Application Facility to enable those Qualifying Shareholders who wish to apply for more Open Offer Shares than their Basic Entitlements to do so.

The Open Offer

The Company is proposing to raise approximately £340,140 pursuant to the Open Offer. The Issue Price of 1.00 pence per Open Offer Share represents a discount of 28.6 per cent. to the closing mid-price of 1.40 pence per Ordinary Share on 16 April 2025, the latest practicable date prior to announcing the Open Offer. The Open Offer is being made on a pre-emptive basis, allowing all Qualifying Shareholders the opportunity to participate.

1 Open Offer Share for every 16 Existing Ordinary Shares held

Qualifying Shareholders who do not take up their Basic Entitlements in full will experience a dilution to their interests of approximately 5.88 per cent. following Admission.

Qualifying Shareholders should note that the Open Offer is being underwritten on the terms of the Underwriting Agreement.

Qualifying Shareholders with fewer than 16 Existing Ordinary Shares will not be able to apply for Open Offer Shares.

Conditions

The Open Offer is conditional, inter alia, upon the Admission of the Open Offer Shares becoming effective by not later than 8:00 a.m. on 8 May 2025 (or such later time and/or date as the Company may determine, being not later than the Long Stop Date).

If conditions are not satisfied and Admission does not occur by 8:00 a.m. on 8 May 2025 (or by 8:00 a.m. on the Long Stop Date), the Open Offer will not proceed and any applications made by Qualifying Shareholders will be rejected. In such circumstances, application monies will be returned (at the applicant's sole risk), without payment of interest, as soon as practicable thereafter. Revocation of applications for Open Offer Shares cannot occur after dealings have begun.

Excess applications

Qualifying Shareholders may also make applications in excess of their Basic Entitlements. To the extent that Basic Entitlements are not subscribed by Qualifying Shareholders, such Open Offer Shares will be available to satisfy such excess applications, subject always to a maximum of 34,013,989 Open Offer Shares in aggregate and provided that no Qualifying Shareholder shall be entitled to subscribe for Open Offer Shares if it would bring their aggregate interest in the share capital of the Company to more than the Aggregate Limit. To the extent that applications are received in respect of an aggregate of more than 34,013,989 Open Offer Shares and/or would result in a Qualifying Shareholder having an aggregate interest in the share capital of the Company which would exceed the Aggregate Limit, excess applications will be scaled back pro rata to the number of Excess Shares applied for by Qualifying Shareholders under the Excess Application Facility.

Qualifying Shareholders should note that the Open Offer is not a rights issue.

Settlement and dealings

Application will be made to the London Stock Exchange for the Open Offer Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Open Offer Shares will commence at 8:00 a.m. on 8 May 2025. Further information in respect of settlement and dealings in the Open Offer Shares is set out in paragraph 9 of Part III of this Document.

CREST instructions

Application has been made for the Basic Entitlements and the Excess Entitlements for Qualifying CREST Shareholders to be admitted to CREST. It is expected that the Basic Entitlements and the Excess Entitlements will be enabled for settlement through the CREST system as soon as practicable on 22 April 2025. Applications through the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

Qualifying non-CREST Shareholders will receive a personalised Application Form which gives details of their Basic Entitlement under the Open Offer (as shown by the number of the Open Offer Shares allocated to them) with this Document. If they wish to apply for Open Offer Shares under the Open Offer, they should complete the accompanying Application Form in accordance with the procedure for application set out in the Circular and on the Application Form itself. The completed Application Form, accompanied by full payment, should be returned by post or by hand (during normal business hours only) to Share Registrars Limited so as to arrive as soon as possible and in any event no later than 11:00 a.m. on 6 May 2025.

Qualifying CREST Shareholders, will receive no Application Form with the Circular but will receive a credit to their appropriate stock account in CREST in respect of their Basic Entitlement and if appropriate their Excess Entitlement. They should refer to the procedure for application set out in Part III of this Document. The relevant CREST instruction must have settled by no later than 11:00 a.m. on 6 May 2025.

The latest time for applications under the Open Offer to be received is 11:00 a.m. on 6 May 2025. The procedure for application and payment depends on whether, at the time at which application and payment is made, a Qualifying Shareholder has an Application Form in respect of their Basic Entitlement or have their Basic Entitlement credited to their stock account in CREST.

Directors' interests

The Directors intend to take their full entitlement under the Open Offer. The interests of the Directors in the Ordinary Shares (i) as at the date of this Document and (ii) immediately following the issue of the Open Offer Shares, are as shown below.

Notes:

1 Assuming that the Directors take their full entitlement in the Open Offer, but do not receive any Excess Entitlement.

Underwriting Agreement

Subject to the terms and conditions of the Underwriting Agreement entered into with the Underwriter on 17 April 2025, the Underwriter has agreed to subscribe in cash at the Issue Price for the Underwritten Shares (being all of the Open Offer Shares which remain unsubscribed by Qualifying Shareholders pursuant to the Open Offer).

The Underwriter's respective obligations under the Underwriting Agreement are subject to certain conditions, including:

• Admission.

Immediately following completion of the Open Offer, and if no Open Offer Shares are taken up by Qualifying Shareholders under the Open Offer the Underwriter would hold approximately 5.88 per cent. of the Enlarged Share Capital.

The Company will pay the Underwriter a fee of £23,810, being equal to 7 per cent. of the total value of the Open Offer for Underwriting the Open Offer.

Additional information

Your attention is drawn to the risk factors set out in Part II of the Circular. Shareholders are advised to read the whole of the Circular and not rely solely on the summary information presented in this announcement.

Details of the action to be taken if you wish to subscribe for Open Offer Shares are provided in Part III of the Circular.

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