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For immediate release

16 October 2013

Digital Barriers plc("Digital Barriers" or the "Company")

Proposed Placing of 13,357,143 new Ordinary Shares at 140 pence per share

Digital Barriers plc (AIM: DGB), the specialist provider of advanced surveillance technologies to the international homeland security and defence markets, is pleased to announce a conditional placing of 13,357,143 new Ordinary Shares at 140 pence per share to raise approximately £18.0 million (after expenses) for the Company.

Background to and reasons for the Placing

The purpose of the Placing is to raise funds to be used by the Group to further implement its stated strategy. The Directors believe that the market opportunity for Digital Barriers' advanced surveillance products is large and continues to grow given the global security and defence context. The Group will seek to continue to expand its international sales across flagship customers and to close sales with key customers that it believes can support year-on-year sales growth, achieving the revenue momentum that will allow the Group to reach break-even. The Directors believe that continued tight control of its costs will allow the Group to benefit from further operational leverage in the medium term. The Directors are aiming to reach break-even and operational positive cash flow in the year following the Placing.

The Placing will raise funds for the short-term cash requirements of the Group. The Group is experiencing greater levels of seasonality than originally envisaged which exacerbates the peaks and troughs of the Group's sales and delivery cycles. This, combined with the need to purchase and integrate third-party equipment into large-scale solutions built around Digital Barriers' intellectual property for delivery to customers, places increased demands on the Group's cash resources.

Furthermore, in some of its recent contract wins and current projects, the Group is experiencing longer than expected trial phases, albeit that such trial phases generally conclude successfully for the Group. The Group has also embarked on new revenue models with certain customers who offer multi-year annuity contracts which typically result in a smaller cash flow to the Group during the first year of a contract. The Directors believe, however, that it is to the long-term benefit of the Group to increase the level of contractual recurring revenues.

The Group continues to invest in both its product suite and international sales infrastructure. Having set out to build the UK's leading mid-market homeland security specialist, the Group now has world-class intellectual property under its ownership and has developed an export-led business, selling into flagship customers around the world, including direct sales into more than 30 countries over the last six months and a number of strategic contract wins. The net proceeds of the Placing will allow the Group to fund the losses being incurred by the Group as a result of this investment, which are in line with the Directors' expectations.

The Group is now also seeking to strengthen its balance sheet in order to assist in senior planned recruitment, to improve supplier payment terms and to enhance customer confidence in sales situations.

Accordingly, the Group will be using approximately £10 million of the net proceeds of the Placing to fund in-year cash requirements (including seasonality, major order coverage and commercial revenue models) and short-term losses. Additionally, the balance of approximately £8 million of the net proceeds from the Placing will be used to strengthen the Group's balance sheet.

The Placing

The Company has conditionally raised £18.7 million (before expenses) through the proposed issue of the Placing Shares at the Placing Price, which represents a discount of approximately 5.1 per cent. to the closing middle market price of 147.5 pence per existing Ordinary Share on 15 October 2013, being the last practicable date prior to the publication of this announcement. The Placing Shares will represent approximately 20.8 per cent. of the Enlarged Issued Share Capital.

Settlement and dealings

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will occur at 8.00 a.m. on 4 November 2013.

The Placing Shares will, when issued, rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares following Admission and otherwise pari passu in all respects with the existing Ordinary Shares.

Directors' participation in the Placing and Related Party Transaction

The Directors have agreed to subscribe, in aggregate, for 294,998 Placing Shares under the Placing as follows:

Under the AIM Rules, Newton Investment Management Limited is currently a "Related Party" of the Company as a result of the current level of its shareholding in the Company of approximately 13.3%. Newton Investment Management Limited has subscribed for a total of 1,885,000 Placing Shares in the Placing which is considered a "Related Party Transaction" for the purpose of AIM Rules. The Directors consider, having consulted with its Nominated Adviser, Investec, that the terms of the Related Party Transaction are fair and reasonable in so far as the Company's shareholders are concerned.

The Placing Agreement

Pursuant to the terms of the Placing Agreement, Investec, as agent for the Company, has conditionally agreed to use its reasonable endeavours to procure subscribers for the Placing Shares. Investec has conditionally placed the Placing Shares with certain existing and new institutional and other investors at the Placing Price. The Placing has been fully underwritten by Investec, subject to the terms of the Placing Agreement.

The Placing Agreement is conditional upon, inter alia, Resolutions 1 and 2 being duly passed at the General Meeting and Admission becoming effective on or before 8.00 a.m. on 4 November 2013 (or such later time and/or date as the Company and Investec may agree, but in any event by no later than 8.00 a.m. on 29 November 2013).

The Placing Agreement contains customary warranties from the Company in favour of Investec in relation to, inter alia, the accuracy of the information in this announcement and the Circular and other matters relating to the Group and its business. In addition, the Company has agreed to indemnify Investec in relation to certain liabilities it may incur in respect of the Placing. Investec has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a material breach of the warranties given to Investec in the Placing Agreement, the failure of the Company to comply in any material respect with any of its obligations under the Placing Agreement, the occurrence of a force majeure event or a material adverse change affecting the condition, or the earnings or business affairs or prospects of the Group as a whole, whether or not arising in the ordinary course of business.

The Circular

The Company will later today publish a circular (the "Circular") containing, inter alia, further details of the Placing and a notice convening the General Meeting at which the Resolutions will be proposed. The Circular will be available at www.digitalbarriers.com.

The Sharesave Scheme

In addition, the Board also proposes to take this opportunity to seek Shareholder approval to the proposed adoption by the Company of a new savings-related share option scheme, which aims to encourage employee share ownership throughout the Group.

The Sharesave Scheme will be submitted to HM Revenue & Customs for approval in due course and, once adopted, will be a standard HM Revenue & Customs tax-advantaged all-employee plan. The main terms of the Sharesave Scheme will be summarised in Appendix 1 to the Notice of General Meeting.

Current Trading

On 7 October 2013, the Company provided a trading update for the six months ended 30 September 2013. The Company has traded in line with the Directors' expectations since 30 September 2013. The Board also confirms that its cash position at 30 September 2013 was £1.1m.

Recommendation

The Directors consider the Proposals to be in the best interests of the Company and its Shareholders as a whole and accordingly intend to unanimously recommend Shareholders to vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do so in respect of their own beneficial holdings amounting, in aggregate, to 5,133,883 existing Ordinary Shares, representing approximately 10.06 per cent. of the Issued Share Capital.

Tom Black, Executive Chairman, commented:

"We are now selling our world-class surveillance technologies to flagship customers around the world. Our core products have proven themselves to be highly differentiated from their competition and we are seeing increasing demand from customers across each of our regions. This placing demonstrates the excellent support we continue to enjoy from our shareholders and has also attracted significant new investors into the Group."

Important notice

Investec Bank plc, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for the Company in connection with the Placing, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Investec Bank plc or for providing advice in relation to the Proposals in this announcement or any other matter in relation to the contents of this announcement.

This announcement has been issued by Digital Barriers plc and is the sole responsibility of the Company. This announcement has not been approved by Investec for the purposes of section 21 of the FSMA. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Investec or by any of its affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities or any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, such securities by any person in any circumstances, and in any jurisdiction, in which such offer or solicitation is unlawful. Accordingly, copies of this announcement are not being and must not be mailed or otherwise distributed or sent in or into or from the United States, Canada, Australia, Japan, the Republic of South Africa or the Republic of Ireland or any other jurisdiction if to do so would constitute a violation of the relevant laws of, or require registration thereof in, such jurisdiction (each a "Restricted Jurisdiction") or to, or for the account or benefit of, any United States, Canadian, Australian, Japanese, South African or Irish person and any person receiving this announcement (including, without limitation, custodians, nominees and trustees) must not distribute or send it in or into or from a Restricted Jurisdiction.Nopublic offering of the Placing Shares is being made in any such jurisdiction.

In particular, the securities of the Company (including the Placing Shares) have not been and will notbe registered under the US Securities Act of 1933, as amended (the "Securities Act"), or under thesecurities laws of any state or other jurisdiction of the United States, and accordingly the PlacingShares may not be offered, sold or transferred, directly or indirectly, in, into or within the United Statesexcept pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any relevant state or jurisdiction of the United States.There is no intention to register any portion of the offering in the United States or to conduct a publicoffering of securities in the United States.

The Placing Shares have not been approved or disapproved by the US Securities and ExchangeCommission, any state securities commission or other regulatory authority in the United States, norhave any of the foregoing authorities passed upon or endorsed the merits of the Placing or theaccuracy or adequacy of this announcement. Any representation to the contrary is a criminal offencein the United States.

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Directors' current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this announcement are based on certain factors and assumptions, including the Directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity. Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Save as required by law or by the AIM Rules, the Company undertakes no obligation to publicly release the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this announcement.

Expressions used in this announcement shall have the meanings set out in the Appendix to this announcement.

Appendix

Definitions

In this announcement, the following expressions have the following meanings, unless the context requires otherwise: