Transense Regulatory News (TRT)

THIS ANNOUNCEMENT IS RESTRICTED AND IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, AUSTRALIA OR NEW ZEALAND OR ANY OTHER STATE OR JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

 7 June 2013

Transense Technologies plc

Placing, Offer for Subscription

and Notice of General Meeting

Transense Technologies plc (AIM: TRT) ("Transense", the "Company" or the "Group") the AIM listed technology company that develops sensor systems for the automotive and industrial markets, today announces that it has conditionally raised up to approximately £3.2 million before expenses.

Highlights

·; Proposed Placing to raise approximately £3.2 million and an Offer to raise approximately up to a further £1.05 million

·; Issue price for the Placing and the Offer of 7.5 pence per New Ordinary Share

·; Placing with new institutional and other investors

·; Net proceeds of the Placing and Offer to be used principally for, inter alia, sales and field support, quality control and for working capital purposes

The Company has conditionally placed 42,709,960 Ordinary Shares at the Issue Price with institutional and other investors, for gross proceeds of approximately £3.2 million. N+1 Singer acted as broker to the Placing. 

Furthermore, in order to provide Shareholders with an opportunity to participate in the proposed issue of new Ordinary Shares, the Company is providing all Eligible Shareholders with the opportunity to subscribe, at the Issue Price, for up to 14,000,000 new Ordinary Shares by way of the Offer, to raise up to £1.05 million before expenses. The Offer provides Eligible Shareholders with an opportunity to participate in the proposed issue of New Ordinary Shares whilst providing the Company with additional capital to invest in the business of the Group.

The Company intends to use the net proceeds of up to approximately £4.0 million from the Placing and the Offer to continue the progress made to date by further developing the Company's strategy, in particular, for sales and field support, quality control and for working capital purposes. The Board is also planning to invest in further product and software development and the development of the Company's sales and marketing functions.

The Placing Shares have been placed firm. Of these, 26,576,630 Ordinary Shares have been placed subject only to admission to trading on AIM (the "First Stage Placing Shares"), with the balance of 16,133,330 Ordinary Shares (the "Second Stage Placing Shares") being placed subject to, inter alia, shareholder approval at the General Meeting and subject to admission to trading on AIM.

Application has been made to AIM for the admission of the First Stage Placing Shares. It is expected that Admission to trading on AIM for the First Stage Placing Shares will commence at 8.00 a.m. on 10 June 2013. Following the Admission of the First Stage Placing Shares, the Company will have 227,869,203 Ordinary Shares in issues.

The Company is also seeking Shareholders' approval at the General Meeting for a new share scheme for employees of its US subsidiary, IntelliSAW, which the Board considers to be an important and appropriate measure to enable IntelliSAW to attract, retain and incentivise existing and new employees.

A circular (the "Circular") and notice of general meeting will today be posted to those Shareholders who have requested hard copies. Personalised Application Forms for use in connection with the Offer will be posted to all Shareholders today. Extracts from the Circular are set out below, to provide the details of, the Fundraising and the U.S. Share Scheme, to explain the background to and the reasons for the Fundraising and why the Directors recommend that Shareholders vote in favour of all of the Resolutions to be proposed at the General Meeting. Details of the Expected Timetable of Principal Event and the Key Statistics of the Fundraising are also set out below.

Copies of the Circular will also shortly be made available free of charge from the Company's website (www.transense.co.uk).

Unless stated otherwise, capitalised terms in this announcement have the same meaning as given in the Circular.

General Meeting

For the purpose of effecting, inter alia, the Second Stage Placing and the Offer, the Resolutions will be proposed at the General Meeting to be held at 3 Lloyd's Avenue, London EC3N 3DS at 10.00 a.m. on 2 July 2013.

Commenting on the Placing and Offer, Graham Storey, Chief Executive Officer of the Group, said: 

"We are delighted by the strong support we have received from both existing and new investors. We have enjoyed growing momentum in orders and these funds will enable us to support both the direct and indirect sales channels, building on our recent successes. We are confident that we have the best in class solutions for tyre management, the electrical transmission industry and in torque sensing in the industrial and automotive arenas. The quality of our solutions combined with the strong underlying market drivers in these industries means we are confident of our continued success."

For further information, please contact:

Notes to Editors

About Transense Technologies

Based in Oxfordshire, UK, Transense has developed patent-protected sensor systems for use in diverse high growth markets. Developed in conjunction with partners including McLaren Electronic Systems and General Motors, Transense's Surface Acoustic Wave (SAW), wireless, battery-less, sensor systems offer significant advantages over legacy wireless sensor systems. Via two wholly owned divisions, IntelliSAW and Translogik, Transense is targeting the high growth global electrical Smart Grid applications market and the transport industry respectively.

Transense's sensors are also being used in the wind turbine monitoring industry. The Company is part of a consortium of nine companies ("IntelWind") that has begun development on a major EU funded project to improve the efficiency and reliability of wind turbines.

Transense's shares are admitted to trading on AIM, a market operated by the London Stock Exchange (AIM: "TRT").

www.transense.co.uk

Important notice:

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 New Ordinary Shares, nor shall it (or any part of it), or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract or commitment whatsoever with respect to the proposed Placing and the Offer or otherwise. This announcement is not a prospectus and investors should not subscribe for or purchase any New Ordinary Shares referred to in this announcement. Any offer to acquire New Ordinary Shares referred to in this announcement will be made, and any investor should make his investment, solely on the basis of information in the Circular. When made generally available, copies of the Circular may be obtained at no cost through the Company's corporate website (www.transense.co.uk).

The distribution of this announcement and/or the transfer of the New Ordinary Shares in or into jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, this announcement should not be distributed, forwarded to, or transmitted in or into the United States, Australia, Canada, Japan, the Republic of South Africa or New Zealand.

The New Ordinary Shares referred to in this announcement will not be offered in or into any jurisdiction unless such an offer can be made without contravention of any unfulfilled registration or other legal or regulatory requirements. The New Ordinary Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States and may not be offered or sold in the United States absent registration or an exemption from registration. The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority, nor have the foregoing authorities passed upon or endorsed the merits of the Placing and the Offer or the accuracy or adequacy of the information contained in this announcement or any other document. Any representation to the contrary is unlawful and is a criminal offence in the United States.

N+1 Singer, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company and no one else in connection with the Placing and the Offer and will not regard any other person (whether or not a recipient of the Circular) as its client in relation to the Placing and the Offer and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in connection with the Placing and the Offer or any other matter referred to herein.

Cautionary note regarding forward looking statements:

This announcement includes certain ''forward-looking statements'' with respect to the business, strategy and plans of the Company and its current goals and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about the Company's or the Directors' and/or management's beliefs and expectations are forward looking statements. Words such as ''believes'', ''anticipates'', ''estimates'', ''expects'', ''intends'', ''aims'', ''potential'', ''will'', ''would'', ''could'', ''considered'', ''likely'', ''estimate'' and variations of these words and similar future or conditional expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. These factors include, but are not limited to, those discussed in the Circular. Neither the Company nor any member of its group undertake any obligation publicly to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, save in respect of any requirement under applicable laws, the Prospectus Rules, the Disclosure and Transparency Rules and other applicable regulations.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

If any of the details contained in the timetable above should change, the revised times and dates will be notified to Shareholders by means of a Regulatory Information Service announcement. All events listed in the above timetable following the General Meeting are conditional on the passing of Resolutions 1, 2, 5 and 6 at the General Meeting.

References to time in the document and the Notice of General Meeting are to British Summer Time.

All enquiries in connection with the procedure for application and completion of the Application Form should be made to the Receiving Agent on the shareholder helpline on 0121 585 1131 or if you are calling from outside the UK on +44 121 585 1131. Calls are charged at Shareholders' network providers' standard rates. Lines are open 9 a.m. to 5 p.m. (London time) Monday to Friday (excluding Bank Holidays). Calls to the helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note neither the Registrar nor the Receiving Agent can provide financial, legal or tax advice on the merits of the Offer. Calls may be recorded and monitored for security and training purposes.

KEY STATISTICS

Notes:

1 The above assumes that the Offer is subscribed for in full and that there is no further issue of Ordinary Shares other than as set out above.

2 As at the Record Date (taking account of the notices of exercise noted above), 29,972,985 Warrants remain outstanding under the Warrant Instrument. All such Warrants will expire on 30 June 2014 if not validly exercised before such date.

3 Following each admission of New Ordinary Shares pursuant to the Placing and the Offer, the Company will notify the prevailing issued share capital by way of a regulatory announcement.

4 Estimated proceeds stated after deducting related commissions and expenses.

LETTER FROM THE CHAIRMAN

1. Introduction

The Company today announced a conditional placing with certain existing Shareholders and new institutional investors, to raise approximately £3.2 million before expenses through the issue of 42,709,960 New Ordinary Shares at the Issue Price. The Placing has been split into two parts, the First Stage Placing and the Second Stage Placing.

In addition, the Company also announced today a proposed offer for subscription, in order to provide Eligible Shareholders with an opportunity to participate in the proposed issue of new Ordinary Shares. The Company is providing all Eligible Shareholders with the opportunity to subscribe, at the Issue Price, for up to 14,000,000 New Ordinary Shares by way of the Offer, to raise up to £1.05 million before expenses. The Offer provides Eligible Shareholders with an opportunity to participate in the proposed issue of New Ordinary Shares whilst providing the Company with additional capital to invest in the business of the Group.

The Company has recently announced significant orders for all three of its primary products. The order received by IntelliSAW worth US$450,000 from the distributor ETT is a further confirmation of the steady progress being made in the development of its channel marketing strategy and also end user interest in the heat monitoring system. The recent order from Dunlop Japan for US$450,000 of probes which came within a month of the then two largest ever orders (from North America and France) demonstrates the traction building globally for this product. Finally, the order from Anglo to Translogik for a sale worth approximately £1 million (as well as significant expected ongoing revenues) following Anglo's initial order last August is very encouraging evidence of the advancement of the iTrack system.

With a strong pipeline of interested prospects and additional opportunities arising both directly and through resellers and partners for its Translogik and IntelliSAW divisions, the Directors believe that these and other recently announced contracts are indicative of the potential growth available to the Company internationally. It is primarily to support the growth of the business internationally and to enable the Company to operate effectively in light of larger received and expected orders that the Company is seeking to complete the Placing and the Offer.

The First Stage Placing Shares (consisting of 26,576,630 New Ordinary Shares to be issued under existing authorities) to raise approximately £2.0 million before expenses have already been allotted by the Board under existing authorities to issue New Ordinary Shares and Admission to trading on AIM is expected to take place at 8.00 a.m. on 10 June 2013.

The document is being sent to you in connection with the Second Stage Placing, being the proposed placing of 16,133,330 New Ordinary Shares at the Issue Price, to raise approximately a further £1.2 million before expenses, and in connection with the Offer for which additional authority to allot shares is also being sought. The maximum number of New Ordinary Shares which may be issued in connection with the Offer is 14,000,000. However, as set out in paragraph 5 below, an additional general authority to allot further New Ordinary Shares is being sought in order to afford the Company greater flexibility in funding the Company's expected growth.

The Issue Price is at a discount of 31.81 per cent. to the closing middle market price of 11 pence per existing Ordinary Share on 6 June 2013 (being the last practicable date before publication of the document).

The Second Stage Placing and the Offer are each conditional, inter alia, on the passing of certain of the Resolutions by Shareholders at the General Meeting, notice of which is set out at the end of the document. If the resolutions necessary to effect the Second Stage Placing are passed, the Admission of the Second Stage Placing Shares to trading on AIM is expected to occur at 8.00 a.m. on 3 July 2013. If the Resolutions necessary to effect the Offer are passed, the Admission of the Offer Shares to trading on AIM is expected to occur at 8.00 a.m. on 12 July 2013. The Second Stage Placing and the Offer are not inter-conditional.  Neither the Placing nor the Offer have been underwritten.

The issue of the document also provides the Board with an opportunity to seek Shareholders' approval of a new share scheme for employees of its US subsidiary, IntelliSAW, Inc., which the Board considers to be an important and appropriate measure to enable IntelliSAW, Inc. to attract, retain and incentivise existing and new employees. Further details of the U.S. Share Scheme are set out in paragraph 7 of this letter and Part IV of the document.

In summary, the purpose of the document is to provide you with details of the Fundraising and the U.S. Share Scheme, to explain the background to and the reasons for the Fundraising and why the Directors recommend that Shareholders vote in favour of all of the Resolutions to be proposed at the General Meeting.

2. Background to and reasons for the Placing and Offer

Since the Company's fundraising in August 2012, the Board has been focused on increasing its sales force and its marketing spend for its two main trading divisions, Translogik and IntelliSAW. This has not only led to an increased level of product trials with potential customers but some significant product orders as described above and announced separately both today and in recent weeks.

As stated in the Company's Interim Results for the six months to 31 December 2012 (the "Interim Results"), which were released on 28 March 2013, sales for the Company had reached a record level of £0.97 million (2011: £0.41 million). The post-tax loss for the period was £1.02 million (2011: £1.04 million) which reflected the continuing costs of funding the Company's IntelliSAW operations in the US, which commenced in September 2011 and, which continue to expand as the potential for new business increases.

Over the last few years, the Company has executed on its revised commercial strategy of repositioning Transense away from being purely a technology development and licensing company, to one that has a broad and diverse range of products leveraging its patented SAW technology, sensor and other expertise. Having successfully established its two principal trading divisions, IntelliSAW and Translogik, developed class-leading products for its target markets, and built a large and rapidly expanding global partner and distribution network, it is the Board's view that the record revenue growth seen in the six months to 31 December 2012 may represent the start of a new chapter of commercial success for the Company. This view has been further enhanced following the Company's announcement on 13 May 2013 that one of its trading divisions, Translogik, had received its two largest single orders to date for its commercial truck tyre inspection tools.

The following sub headings of this paragraph provide a status report on the progress of each of the Company's trading divisions.

2.1 SAWSense

An additional trading division, SAWsense, is being established to continue to commercialise the traditional applications of Transense's patented SAW technology with existing and new projects, both in the automotive and non-automotive fields.

Automotive

The Company continues to progress towards the commercialisation of the torque flexplate in partnership with General Motors ("GM"). The flexplate is an integral part of a vehicle's powertrain control system and has the potential to improve vehicle driveability, reduce fuel consumption and improve transmission shift quality. Transense's role in respect of this is to provide ongoing engineering support to the GM team. Further applications of the technology are being evaluated by leading tier 1 and tier 2 companies in North America and Europe for driveline and EPAS applications. In addition, the Company continues to supply drive shafts to McLaren for use in Indycar and licensee, Stack, is marketing Transense's SAW TPMS to professional and club motor sport via direct and catalogue sales.

Non-Automotive

As announced previously, a number of paid-for, customer-driven projects are being progressed. These include applying the Company's technology for use in avionics, space, marine and a variety of industrial applications. Furthermore, the Company continues to work on the European Union funded, Intelwind project which has been implemented to look at ways in which to improve the efficiency and reliability of wind turbines.

There are an increasing number of opportunities across multiple applications, although the timing of full commercialisation of the automotive projects generally remain a longer term prospect, and of the non-automotive projects is somewhat unclear as it remains subject to the development plans of partners and prospective customers.

2.2 Translogik

With the recent increase in the costs of fuel and rubber, Translogik, the Company's trading division focused on tyre management solutions, has seen a surge of interest in its tread depth and pressure management products. Since the start of this financial year, Translogik has delivered probes to numerous OEMs, VARs/System Integrators and software research and development departments in many different countries.

Further to the above and as reported in the Company's Interim Results, Translogik continues to develop a variety of tyre inspection systems with partners across the globe on a variety of Apple and Android based platforms. A notable recent project with Brisa Bridgestone in Turkey has led to a flow of ongoing orders for inspection probes.

On 13 May 2013, the Company announced that Translogik had received its two largest single orders to date, totalling 320 units, for its commercial truck tyre inspection tools. The orders were from its French partner and VAR, Clement EDP Consultants, and an existing North American VAR. These sales represent a significant jump in the scale of orders received from end-users.

On 28 May 2013, it was announced that Translogik had received an initial order worth almost US$450,000 from Dunlop Japan, a significant OEM.

The Board believes that these recent orders demonstrate the growing traction of this product line in the marketplace and that it would be reasonable to expect further large orders for Translogik's range of tyre inspection probes in the coming months.

In August 2012 the Company announced an initial order from an Anglo American subsidiary, Kumba Iron Ore, which was the first commercial success for Translogik's iTrack system in South Africa.

This morning the Company announced a further order from Anglo American worth approximately £1 million. Furthermore, the Company expects ongoing revenues after the first year of approximately £500,000 per annum for services and consumables.

In addition, Translogik continues to establish new routes to market for its iTrack system with companies providing complementary products to the mining and earthmoving truck market. Field trials continue to progress in South America, Australia and Bulgaria; following the success in South Africa, the Board is increasingly confident that further pilots will convert to firm orders over time.

2.3 IntelliSAW

Further progress has also been made at IntelliSAW, the Company's trading division which provides sensor systems for the power industry. On 5 March 2013, the Company announced that IntelliSAW had become the provider of thermal monitoring systems for critical asset monitoring of 340 switchgears at the soon to be completed, state-of-the-art, Fuxin Special Steel Company ("FSSC") plant in the Zhangzhou Longchi Development Zone of Fujian Province, near Xiamen, China.

As stated in the announcement, this is the first fit out of an entire facility with IntelliSAW sensors. The IS485 systems will help ensure a reliable and safe supply of electric power throughout the site by continuously monitoring 2,000+ critical points inside the switchgears, thus helping to protect a US$2.2 billion investment by FSSC in constructing the factory.

The IS485 thermal monitoring systems have been integrated into 340 medium voltage switchgear manufactured by Nan Ya Switchgear in cooperation with IntelliSAW's integration partner, ETT, a system integrator and supplier of power conditioning, control and monitoring equipment for the electric power industry based in Taipei City, Taiwan. Nan Ya Switchgear is a division of Formosa Plastics Group and their usage of IS485 thermal monitoring systems is expected by the Company to be expanded to include China, Vietnam, the US and other territories. The Company believes the prospects for further orders via ETT to be extremely positive, and has recently secured a further order from the distributor.

In addition to the above, IntelliSAW continues to make significant commercial progress, securing record first quarter orders since the start of 2013. Notable recent orders include an order from Al Mashariq, IntelliSAW's Saudi distributor, marking the first major contract win in that region, as well as a thirty-three system installation in South Korea for POSCO, the country's largest steel manufacturer, with the potential for further larger deployments.

Furthermore, five new pilots have now begun across the United States, China, Abu Dhabi and South Korea, taking the total number of pilots to 41, including those already underway at major industrial and utility companies located in India, China, the United States, Brazil and Taiwan.

Moreover, six new distributors have been appointed in the Benelux region, Poland, Israel, Egypt, Indonesia and the Philippines, expanding the Company's global network of distribution partners for IntelliSAW to nineteen currently.

2.4 Conclusion

In light of the opportunities available to the Group and its desire to support its international sales teams, partners and resellers, as well as enhance its quality control procedures in light of growing product and solution sales, the Board has, therefore, decided to raise £3.20 million, before expenses, through a placing of New Ordinary Shares with existing Shareholders and new institutional investors and up to £1,050,000, before expenses through the Offer to all Eligible Shareholders. The use of proceeds from the Placing and the Offer are set out in paragraph 6 below.

As at 31 December 2012, the Company held cash and cash equivalents of approximately £0.8 million. The Company raised £300,000 before expenses in March 2013 through the issue of 3,000,000 new Ordinary Shares at a price of 10 pence per share.

Notwithstanding the above progress and as stated in the Interim Results, a significant proportion of projected sales comprise a small number of high value orders and the timing of the receipt of these orders is outside of the Company's control. The ability to predict accurately the timing of delivery of any such orders therefore remains challenging. Accordingly the level of reported sales may be materially affected in any given reporting period. Furthermore, the uncertainties around the timing of expected orders make cash flow projections more uncertain than usual.

Should the Second Stage Placing not proceed, the Company not obtain additional funding via the Offer and further expected orders not materialise in a timely manner, the Directors believe that the Company could face uncertainty in terms of funding the growth of the business. This would, in the Board's view, seriously restrict the potential to increase shareholder value as the business enters an important phase of commercialisation of its products and solutions.

3. Details of the Placing

3.1 First Stage Placing

The Company has already conditionally raised approximately £2.0 million before expenses through the First Stage Placing (with the First Stage Placing Shares to be issued at the Issue Price). Application will be made to the London Stock Exchange for the First Stage Placing Shares to be admitted to trading on AIM and it is expected that First Admission will become effective and that dealings in the First Stage Placing Shares will commence on AIM at 8.00 a.m. on 10 June 2013.

3.2 Second Stage Placing

In addition, the Company has conditionally raised approximately a further £1.2 million before expenses through the proposed issue of the Second Stage Placing Shares at the Issue Price.

3.3 Placing Agreement

Pursuant to the terms of the Placing Agreement, N+1 Singer as nominated adviser and broker to the Company, has conditionally agreed to use reasonable endeavours to procure placees for the Placing Shares at the Issue Price. The Second Stage Placing is conditional, amongst other things, upon the Placing Resolutions being duly passed at the General Meeting and Second Admission becoming effective on or before 8.00 a.m. on 3 July 2013. The Placing Agreement contains provisions entitling N+1 Singer to terminate the Placing Agreement at any time prior to Second Admission in certain circumstances. If this right is exercised prior to the First Stage Placing, the First Stage Placing and the Second Stage Placing will not proceed. If this right is exercised after the First Stage Placing, the Second Stage Placing will not proceed but the First Stage Placing will be unaffected. The Second Stage Placing has not been underwritten and is not subject to claw back pursuant to the Offer. The Second Stage Placing and the Offer are not inter-conditional.

Pursuant to the terms of the Placing Agreement, the Company has agreed to pay N+1 Singer (i) on First Admission, a commission of between two and four per cent. of the gross proceeds of the First Stage Placing, (ii) on Second Admission, a commission of between two and four per cent. of the gross proceeds of the Second Stage Placing and (iii) on Third Admission, a commission of two per cent. of the gross proceeds of the Offer. The Company has agreed to pay N+1 Singer a corporate finance advisory fee in respect of the Fundraising and to issue warrants to N+1 Singer over such number of New Ordinary Shares as shall correspond in value at the Issue Price to 0.631 per cent. of the gross proceeds of the Fundraising.

3.4 General

All Placing Shares will be issued credited as fully paid and will rank pari passu in all respects with the Ordinary Shares in issue from time to time, including the right to receive all dividends and other distributions declared on or after the date on which they are issued.

For details as to the expected date and times by which certain events (e.g. Admission, the crediting of CREST accounts and the dispatch of share certificates) are expected to happen in relation to the Placing Shares, please refer to the information on page 5 (Expected Timetable of Principal Events) of the document.

4. Details of the Offer

The Company considers it important that, where reasonably practicable, Shareholders have an opportunity to participate in any equity fundraising which it carries out by way of a placing at an equivalent price to that transacted with Placees. Accordingly, on and subject to the terms and conditions of the Offer, the Company invites Eligible Shareholders to apply for, in aggregate, up to 14,000,000 Offer Shares at the Issue Price with a view to raising up to £1,050,000 before expenses through the Offer.

The Company believes that offering all Eligible Shareholders the ability to apply for as many Ordinary Shares as they wish in the Offer (subject to the maximum amount of the Offer and to a minimum application per shareholder of £750 / 10,000 Offer Shares) allows Shareholders who wish to seek to mitigate dilution of their shareholding to achieve this insofar as is practicable in the circumstances. In the event of applications for in excess of the maximum number of Offer Shares available, the Company will (in consultation with N+1 Singer) decide on the basis for allocation, however if this scenario occurs, preference is likely to be given to Eligible Shareholders with smaller shareholdings (who historically may have had less opportunity to participate in placings conducted by the Company).

The principal terms of the Offer and the procedure exercise and payment are summarised below. However, your attention is drawn to Part III of the document which, together with the accompanying Application Form, contains the full terms and conditions of the Offer, including the procedure for exercise and payment, which you are asked to read carefully and follow.

If an Eligible Shareholder does not wish to apply for Offer Shares they should not complete or return the Application Form.

4.1 Principal terms and conditions of the Offer

Eligible Shareholders may apply for, on and subject to the terms and conditions set out in Part III of the document and in the accompanying Application Form, any whole number of Offer Shares at the Issue Price subject to the minimum subscription set out below.

Applications must be for a minimum of £750 (i.e. 10,000 Offer Shares) and thereafter in multiples of 1,000 Offer Shares. Applicants may apply for any number of Offer Shares provided that an applicant's shareholding following such issue, when taken alone or together with the shareholding of those of persons acting in concert (as defined in the City Code) with that applicant, must not exceed 29.99 per cent. of the Enlarged Ordinary Share Capital.

In the event that the Offer is over subscribed the applications will be scaled back at the discretion of the Company (in consultation with N+1 Singer) with preference likely to be given to Eligible Shareholders with smaller shareholdings (who historically may have had less opportunity to participate in other placings conducted by the Company).

The Offer is subject to Resolutions 2 and 6 being passed at the General Meeting.

The Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Ordinary Shares in issue at the date of Third Admission, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

The allotment and issue of the Offer Shares will be made upon and be subject to the terms and conditions set out in Part III of the document and in the Application Form. Eligible Shareholders will only be entitled to participate in the Offer in accordance with the procedure set out in Part III of the document and in the Application Form.

Application will be made to the London Stock Exchange for the Offer Shares to be admitted to trading on AIM. It is expected that Third Admission will become effective and that dealings in the Offer Shares will commence on AIM at 8.00 a.m. on 12 July 2013.

4.2 Procedure for Application and Payment

Eligible Shareholders wishing to apply for Offer Shares in accordance with the terms of the Offer should complete the enclosed Application Form in accordance with the instructions on it and post it or (during normal business hours only) deliver it by hand, together a cheque or bankers' draft (see below), for the number of Offer Shares applied for, to Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen B63 3DA so as to arrive as soon as possible and in any event so as to be received not later than 10.00 a.m. on 1 July 2013.

A reply-paid envelope (for use in the UK only) is enclosed with the document for the return of duly completed Application Forms and cheques or bankers' drafts. If you post your Application Form you are recommended to use the accompanying reply-paid envelope or first class post and to allow at least four working days for delivery.

Cheques or bankers' drafts should be made payable to "Neville Registrars Limited re: Transense PLC" and crossed "A/C payee only". Cheques should be drawn on the personal account to which the Eligible Shareholder has sole or joint title to the funds. Third party cheques will not be accepted with the exception of bankers' drafts/building society cheques where the bank/building society has confirmed the name of account holder on the back of the draft/cheque and has added their stamp. The account name must be the same as that of the Eligible Shareholder.

For further information on the procedure for the application and payment of Offer Shares, Shareholders are advised to read Part III of the document.

4.3 Overseas Shareholders

The attention of Eligible Shareholders who have registered addresses outside the United Kingdom, or who are citizens or residents of countries other than the United Kingdom, or who are holding Existing Ordinary Shares for the benefit of such persons, (including, without limitation, custodians, nominees, trustees and agents) or who have a contractual or other legal obligation to forward the document or the Application Form to such persons, is drawn to the information which appears in paragraph 3 of Part III of the document.

In particular, Eligible Shareholders who have registered addresses in or who are resident in, or who are citizens of, countries other than the UK (including without limitation the United States of America), should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to take up their entitlements under the Offer.

4.4 Taxation

If you are in any doubt about your tax position in respect of the Offer, you should consult your own independent professional adviser.

5. Additional Authority to Allot New Ordinary Shares

Notwithstanding the benefits of the Placing and Offer in terms of providing growth and working capital to the Company, the Board is seeking additional general authority to enable it to issue further New Ordinary Shares, up to the limits described in paragraph 10 below (Resolutions 3 and 7), in order to afford the Company greater flexibility in funding and supporting its expected growth.

6. Use of Proceeds

The Company is seeking to raise up to approximately £4.25 million (before expenses) through the Fundraising in order to continue the progress made to date by further developing the Company's strategy, in particular, for sales and field support, quality control and for working capital purposes. The Board is also planning to invest in further product and software development and the development of the Company's sales and marketing functions.

The table below sets out the anticipated use of funds from the approximate £3.0 million (net) raised in the Placing:

It is expected that the Offer (on the assumption that it meets its full potential subscription) will raise a further £1.05 million (gross). The net proceeds of the Offer are expected to be applied pro rata to the uses set out in the table above and to provide the Company with an additional working capital buffer to be applied at the discretion of the Board.

7. U.S. Share Scheme

On 31 May 2013, the Board adopted, subject to shareholder approval, the U.S. Share Scheme. The Board adopted, and recommends that the Shareholders approve, the U.S. Share Scheme in order to allow the Company to provide equity incentives under the U.S. Share Scheme through grant of stock options to employees, officers, directors, consultants and advisers of the Company's U.S. subsidiaries and to further the growth, development and financial success of the Company. Such U.S. subsidiaries now consist solely of IntelliSAW, Inc., but the Company may form additional U.S. subsidiaries in the future.

A copy of the U.S. Share Scheme will, from the date of the document, be put on display for inspection at the registered office of the Company and further details of the U.S. Share Scheme are set out in Part IV of the document.

The adoption of the U.S. Share Scheme is subject to Resolution 4 being passed at the General Meeting.

8. Shareholder Approval

For the Offer and the Second Stage Placing to proceed, Shareholder approval is required to:

(a) give the Directors the authority to allot the Second Stage Placing Shares and to dis-apply statutory pre-emption rights in respect thereof; and

(b) give the Directors the authority to allot the Offer Shares and to dis-apply statutory pre-emption rights in respect thereof.

Shareholder approval is required to give the Directors the additional general authority referred to in paragraph 5 above. Shareholder approval is also required for the U.S. Share Scheme to be adopted.

In order to obtain the necessary Shareholder approvals, a General Meeting of the Company is to be held at which the Resolutions will be proposed. Further information regarding the General Meeting is set out in paragraph 10 below.

The Offer is NOT conditional upon the Second Stage Placing being approved by Shareholders at the General Meeting. Should the Second Stage Placing not proceed, the Company not obtain additional funding via the Offer and further expected orders not materialise in a timely manner, the Directors believe that the Company could face uncertainty in terms of funding the growth of the business. This would, in the Board's view, seriously restrict the potential to increase shareholder value as the business enters an important phase of commercialisation of its products and solutions.

9. EIS/VCT Schemes

The Company has applied for and is awaiting confirmation of advance assurance from HMRC that the Placing Shares placed with VCT Schemes are expected to constitute a qualifying holding for such VCT Schemes. HMRC has also been requested to confirm that the Placing Shares should satisfy the requirements for tax relief under EIS. The Company has previously applied for and received confirmation of advance assurance of qualifying status under VCT Schemes and EIS on a number of occasions, the most recent being July 2012 and it is not anticipated that there have been any material changes since the previous application to suggest that renewed confirmation should not be provided.

10. General Meeting

A notice convening the General Meeting to be held 3 Lloyd's Avenue, London EC3N 3DS at 10.00 a.m. on 2 July 2013 is set out at the end of the document. At the General Meeting, the following Resolutions will be proposed:

Ordinary resolutions:

(1) an ordinary resolution to authorise the Directors to allot up to 16,133,330 Second Stage Placing Shares in connection with the Second Stage Placing;

(2) an ordinary resolution to authorise the Directors to allot up to 14,000,000 Offer Shares in connection with the Offer;

(3) an ordinary resolution to generally authorise the Directors to allot relevant securities (as defined in section 551 of the Act) otherwise than pursuant to the Fundraising up to an aggregate nominal value of £860,280.16 (86,028,016 New Ordinary Shares), being an amount equal to one third of the Enlarged Ordinary Share Capital (assuming the maximum number of Second Stage Placing Shares and Offer Shares are issued). The authority sought by this Resolution 3 will last for a period of 15 months from the date of passing of the Resolution or, if earlier, until the date of the next annual general meeting of the Company;

(4) an ordinary resolution to approve the adoption of the U.S. Share Scheme by the Company;

Special resolutions:

(5) a special resolution to empower the Directors to issue the Second Stage Placing Shares for cash on a non pre-emptive basis;

(6) a special resolution to empower the Directors to issue the Offer Shares for cash on a non pre-emptive basis;

(7) a special resolution to empower the Directors to issue new equity securities of up to an aggregate nominal amount of £258,084.05 (25,808,405 New Ordinary Shares) for cash on a non pre-emptive basis, being an amount equal to 10 per cent. of the Enlarged Ordinary Share Capital (assuming the maximum number of Second Stage Placing Shares and Offer Shares are issued). The authority sought by this Resolution 7 will last for a period of 15 months from the date of passing of the Resolution or, if earlier, until the date of the next annual general meeting of the Company.

11. Further Information

Your attention is drawn to the Risk Factors relating to the Group set out in Part II of the document, the terms and conditions of the Offer set out in Part III of the document, the details of the U.S. Share Scheme set out in Part IV of the document and the Application Form.

12. Action to be taken by Shareholders

In respect of the General Meeting

A reply-paid Form of Proxy is enclosed for use at the General Meeting. Whether or not you intend to be present at the meeting you are requested to complete, sign and return this Form of Proxy to the Company's registrars, Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen B63 3DA as soon as possible but in any event so as to arrive not later than 10.00 a.m. on 28 June 2013. The completion and return of this Form of Proxy will not preclude you from attending the General Meeting and voting in person should you subsequently wish to do so.

In respect of the Offer

Eligible Shareholders wishing to participate in the Offer should carefully read the Application Form, the accompanying instructions and Part III of the document and send the Application Form along with the appropriate remittance to Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen B63 3DA so as to arrive as soon as possible and in any event so as to be received no later than 10.00 a.m. on 1 July 2013.

13. Recommendation

The Directors consider that the Fundraising and the adoption of the U.S. Share Scheme will promote the success of the Company for the benefit of its members as a whole. Accordingly, the Directors unanimously recommend and strongly urge Shareholders to vote in favour of the Resolutions at the General Meeting as they intend to do in respect of their own beneficial holdings of 8,510,517 Ordinary Shares representing 4.23 per cent. of the existing Ordinary Shares in issue as at the last practicable date before publication of the document.

Yours faithfully

David KleemanChairman

DEFINITIONS

A reference to £ is to pound sterling, being the lawful currency of the UK.

A reference to € is to the Euro, being the official currency of 17 of the 27 member states of the European Union.

GLOSSARY