THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018).  UPON THE PUBLICATION OF THIS ANNOUNCEMENT THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE WITHIN THE PUBLIC DOMAIN.

21 July 2022

Tern Plc

("Tern" or the "Company")

Strategic Update

Tern Plc (AIM:TERN), the company focused on value creation from Internet of Things ("IoT") technology businesses, is providing an update on the Company's strategy following the termination of its proposed acquisition of Pires Investments plc ("Pires"), announced earlier today.

The board of Tern (the "Board") believes that the last two years have been pivotal for all of Tern's network of companies* and believes that they are all now well positioned for the future.

Tern has, with its hands-on approach, supported the growth of its companies from their early start-up days to now, alongside validation from independent third-party investors, who invested after conducting thorough due diligence.  The Board believes that these third-party investments demonstrate confidence in the companies' management teams, business models, market focus and future prospects.  These actions in the past eighteen months have resulted in uplifts in their carried values for our shareholders, delivered important investors to help them achieve market relevance and have enabled them to gain important commercial traction and grow their monthly recurring revenues ("MRR").

Whilst the Board believes that all of the companies in Tern's network are capable of further value enhancing growth under Tern's stewardship, the Board recognises the views expressed by a segment of the Company's shareholders who wish to see further demonstrations of the ability of the Tern business model to crystalise value for shareholders, specifically through the exit of an existing holding before further companies are added to the network of companies.

July 2021 saw the first IPO of one of Tern's companies, Wyld Networks AB, on the NASDAQ First North Growth Market in Stockholm, transforming Tern's holding from one of a venture investor to an institutional investor.  The public quotation of Wyld Networks now provides Tern with access to capital and ultimately a route to exit its participation at the appropriate time, to further maximise value for Tern shareholders.  However, the Board believes that Wyld Networks has significant future potential and that a sizable reduction in Tern's holding would not be in shareholders' or the Company's best interests at the present time.

The Board is therefore reviewing all of Tern's other holdings with a target to achieve a realisation of one or more of the Company's participations as soon as economically prudent and feasible.  Whilst there can be no guarantee that buyers will be available at an appropriate price for any of Tern's holdings, particularly given the current financial market conditions, the Board is focused on achieving this target as soon as it is appropriate and realistic in the Board's view.

The Board also recognises both the desire to protect Tern's current positions in its network of companies and the limited appetite of some shareholders to see further companies added to Tern's network, at least until one or more exits have been achieved.  Therefore, the Board's current intention is not to add any new companies to the Tern network of companies, other than to meet any commitment the Company may have in relation to the Sure Valley Ventures UK Software Technology Fund, until it has received a capital return from an exit of one of its current investments.

However, it is important to note that Tern's companies are all in an MRR growth phase and may require further funding if they are to realise their full potential and deliver appropriate returns to all their shareholders, including Tern and its shareholders.  Funding therefore may be required ahead of the receipt of any exit proceeds and in that event the Board will seek to explore all the funding sources and options available to the Company, together with the appropriateness of participating in any capital raise being undertaken by one of Tern's companies, in order to protect the gains and value creation already achieved for Tern's shareholders and to ensure the Company is able to negotiate from a position of strength.

The focus, therefore, at least in the short to medium term, will be on Tern's existing companies and the Company's existing significant pipeline of exciting and disruptive potential investment opportunities will be put on hold at the present time.  In light of this, the Board will also be assessing its structure to ensure that it is configured to best meet the Company's and its network of companies' immediate needs.

Further announcements will be made in due course, as appropriate.

*Tern's "network of companies" or "Tern's companies" comprise: Device Authority Limited, Wyld Networks AB, InVMA Limited (trading as Konektio), FVRVS Limited (Trading as FundamentalVR) and Talking Medicines Limited, which are companies that Tern has interests in, together with Tern's holding in the Sure Valley Ventures UK Software Technology Fund.

Commenting Al Sisto, CEO of Tern, said:

"As was outlined in the various transaction announcements and the circular to Tern shareholders, we believed that the acquisition of Pires could have delivered substantial benefits to Tern shareholders.  Therefore, whilst it is disappointing that the acquisition of Pires has not proceeded, we are determined to continue to execute our strategy and maximise value for Tern shareholders, both in the short and long term. 

"Tern's companies have all made important progress in the last eighteen months, despite the pandemic, and we recognise the desire of many shareholders to see this demonstrated through an exit.  We will therefore be carefully evaluating how best this may be achieved, whilst continuing to improve those in our network of companies that we believe have the potential to deliver significantly higher returns to their shareholders, including Tern and its shareholders.

"The Board remains fully focussed on continuing to maximise value for Tern shareholders and I look forward to making further announcements in due course."

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