Tern PLC: Portfolio Update

28 January2020

Tern Plc ('Tern' or the 'Company')

Portfolio Update

Tern Plc (AIM:TERN), the investment company specialising in the Internet of Things ('IoT'), is pleased to provide an update on the activitiesof the Company and its principal portfolio companies following the Company's and portfolio companies'year end on 31 December 2019.

2019 has been a year of validation for Tern'sinvestment strategy, evidenced both through the achievement of additional third-party funding in an investeecompany and through the implementation of key commercial initiatives across the portfolio.

On 30 October 2019, Tern announced the completion of a successful Series A fundraise of £4.3 million by FVRVS Limited ('FundamentalVR'). This fundraise was completed at a valuation which resulted in a 27% uplift on the initial £1.9 million investment made by Tern in FundamentalVRduring 2018and attracted a syndicate of leading strategic and financial investors. The fundraise resulted in an increase in the carrying value of Tern'sinvestment in FundamentalVRbut, more significantly, is expected to facilitate significant commercial progress by FundamentalVRin 2020.

On 13 January 2020, Tern announced the achievement by InVMAof an order commitment for its industry critical AssetMinderproduct worth £817,000 over a two-year period. This is a very significant milestone for InVMAand was achieved as a result of the re-positioning of InVMA from a service to a product business, in which Tern has been instrumental.

Tern now has a genuinely diversified portfolio of investmentsin high growth companies, with each of its principal portfolio companieshaving a disruptive technology in a global market and they are all at very exciting stagesof their respective developments. Furthermore, each of Tern's principal portfolio companies is working with world class partnersto accelerate the adoption of their products which the Directors of Tern believe will providesignificant prospective value enhancements.

The Directors of Tern are confident that its portfolio companies will achieve further milestones during 2020, some of which may result inrevaluations to the carrying values of investments and consequent increases in the net asset value ('NAV')of Tern. Managementalso continuesto review new investment opportunities.

Al Sisto, CEO of Tern, said:

'FundamentalVR'ssyndicated Series A funding was animportant recognition of the company's progress and a validation of Tern's business model. Each of our principal portfolio companies demonstrated the market viability of their product offerings during 2019. We expect our portfolio companies to achieve further value enhancing events during 2020and hope to see increases inthe NAV of Tern as a result.'

2019 portfolio performance

The aggregate turnover of Tern's principal*portfoliocompanies for the yearended 31 December2019 is anticipated to be 27% ahead ofthe turnover achieved in 2018.

This figure was adversely affected by some delays in commercial orders that were expected during Q42019, whichare now anticipated early in 2020. These, together with InVMA'sJanuary 2020 contract win, are expected to contribute to a rapidstart to 2020.

The growth in turnover, customers and partners achieved by Tern's principal portfolio companies was supported by a 31% increase in aggregate employees across the portfolio in 2019, compared to 2018which the Directorsbelieve will provide a strong foundation for growth in 2020.

* Principal portfolio company growth excludes Seal Software Group Limited and Push Technology Limited, in which Tern has a <1% holding and minimal influence.

FundamentalVR

Tern holding: 26.9%

Sector: Healthcare IoT

Invested Since: May 2018

Tern's shareholding in FundamentalVR is 26.9% andfollowing the fundraise announced in October 2019, this holdinghad a valuation of £3.0million.

On 30 October 2019, FundamentalVRannounced a £4.3 million Series A fundraise, including a £0.5 million convertible loan note conversionby Tern, at a post-money valuation of £11.3 million. This validated the Tern business model, as it represented an increase in fair value within a year from Tern's most recent previous investment and involved the introduction oftrade and financial investment investors to thisportfolio company, thereby reducing the risk profile of Tern's investment.

In December 2019, FundamentalVRannounced that it had secured another significant new contract (worth £0.5 million) to create a Virtual Reality Haptic Simulation platform for a new customer, a global pharmaceutical company. As aresult, FundamentalVR'stechnology is now being used by an array of customer groups includingclinicsandmedical centres,device companiesand pharmaceutical companies.

InVMALimited ('InVMA')

Holding: 50%

Sector: IoT enablement

Invested Since: September 2017

Tern hasa 50% holdingin InVMAand as at 30 June 2019, this holdinghad a valuation of £1 million.

In January 2020, InVMAannounced that it had secured an initial order commitment worth £817,000 over a two-year period to provide its AssetMindersolution to a global, multi-billion Euro revenue supplier to the industrial and construction sectors. This order commitment was achievedwith close support and mentoring from Ternand represents a significant strategic relationship for InVMA which validates the AssetMindersolution and reinforcesthe company's strategy of becominga provider of IoT products and services rather than a services company.

Wyld Networks Limited ('Wyld Networks')

Holding: 100%

Sector: IoT enablement

Invested Since: June 2016

Tern has a 100% holding in Wyld Networksand as at 30 June 2019, this holdinghad a valuation of £78,000. Tern also hasa short-term loan balance of £0.5 million.

Wyld Networkshas been building on its framework contract with Delta-T Devices, to build a network of meshed smartphones and IoT devices at the edge of the network in enterprise communication and IoT,improving operational efficiencies in healthcare, smart factories and transportation.

Device Authority Limited ('DA')

Tern holding: 56.8%

Sector: Security

Invested Since: September 2014

Tern has a 56.8% holding in DA, which specialises in IoT security, and as at 30 June 2019, this holdinghad a valuation of £12.3 million.

DA continues to work with and develop product sales via its active partner base. Additionally, the company expanded its ability to penetrate the enterprise IoT markets with the addition of its Microsoft Azure IoT central connector in December 2019. This enables an end-to-end service offeringin the cloud with enhanced security. This key enhancement to KeyScaler is designed tooptimise and leverage the investment in IoT deploymentsby Microsoft Azure's large customer base which represents an important new segment for Device Authority growth.

Enquiries

Tern Plc Al Sisto/Sarah Payne	via Newgate Communications
Allenby Capital Limited (Nomad and Joint broker) David Worlidge/Alex Brearley	Tel: [phone]
Whitman Howard (Joint broker) Nick Lovering/Christopher Furness	Tel: [phone]
Newgate Communications Elisabeth Cowell/Megan Kovach	Tel: [phone]