Press Release

Proposed acquisition of Clinical Micro Sensors, Inc. ("CMS") from Motorola, Inc., and Placing - 1 July 2005

Not for release, publication or distribution, directly or indirectly, in or into the United States of America, Canada, Australia, the Republic of Ireland or Japan

1 July 2005

OSMETECH PLC

Osmetech plc announces proposed acquisition of Clinical Micro Sensors, Inc. ("CMS") from Motorola, Inc., and Placing

Highlights

Proposed Acquisition of Clinical Micro Sensors, Inc. from Motorola, Inc. for the issue of warrants over 78,114,287 Osmetech shares at 1.75p per share
CMS is developing an instrument with an associated consumable in the field of genetic diagnostics testing
Motorola to invest £3.7m in the Placing
Proposed Placing of 628,571,430 New Ordinary Shares at 1.75 pence per New Ordinary Share by Evolution Securities to fund working capital

The above summary should be read in conjunction with the full text of the following announcement.

James White, Chief Executive, Osmetech plc, said,

"We believe that the Acquisition will significantly increase Osmetech's presence in a rapidly growing sector of the medical diagnostics market, providing a product with the capability of conducting more complex assays than our Opti GENE device. We believe that with the combination of Opti GENE and CMS products, Osmetech is well positioned to address the majority of existing and new tests in the genetic diagnostics market.

'Genetic diagnostics is the fastest growth segment of the global diagnostics market and, in the U.S., is forecast to grow at approximately 20 per cent. per year from $795 million in 2003 to $2.75 billion in 2010.

'CMS's diagnostic tests for cystic fibrosis and CYP450 are closest to commercial launch and we believe that these products have significant market potential. Clinical trials have been completed for cystic fibrosis carrier screening at two hospitals and one reference laboratory in the United States to support a 510K submission to the FDA."

For further information contact:

Osmetech plc:
James White/David Sandilands 020 7849 6027

Madano Partnership:
Matthew Moth 020 7 378 7033

This announcement is not for distribution in the United States and is not an offer of securities for sale in the United States. Neither the Existing Shares, the Sub-Divided Ordinary Shares nor the New Ordinary Shares have been, or will be, registered under the United States Securities Act of 1933 (as amended) or under the securities laws of any state of the United States or qualify for distribution under any of the relevant securities laws of Canada, Australia, Japan or the Republic of Ireland nor has any prospectus in relation to the New Ordinary Shares been lodged, or registered by, the relevant security commissions of Canada, Australia or Japan or with the registrar of companies in the Republic of Ireland or to, or for the account or benefit, of any US Person or any national, resident or citizen of Canada, Australia, Japan and the Republic of Ireland. Accordingly, subject to certain exceptions, the New Ordinary Shares must not be, directly or indirectly, offered, sold, taken up, delivered or transferred in or into the United States, Canada, Australia, Japan or the Republic of Ireland. The New Ordinary Shares are being offered and sold outside the United States to non-US persons in reliance on Regulation S under the Securities Act and within the United States pursuant to an exemption from the registration requirements of the Securities Act.

Evolution Securities Limited, which is regulated by the Financial Services Authority, is acting exclusively for Osmetech plc and no-one else in relation to the matters described in this announcement and will not be responsible to any other person for providing the protections afforded to customers of Evolution Securities Limited or for advising any such person on the contents of this announcement or any matter referred to herein. This announcement does not constitute an offer or an invitation to purchase or subscribe for any securities.

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "believes", "estimates", "expects", "aims", "intends", "will", "can", "may", "anticipates", "would", "should", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control and could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, the events described in the forward-looking statements in this announcement may not occur.

Osmetech PLC

Proposed Placing of 628,571,430 New Ordinary Shares

at 1.75 pence per New Ordinary Share by Evolution Securities Limited

Proposed Acquisition of Clinical Micro Sensors, Inc.

Proposed Grant of Long Term Incentive Awards and Replacement

Long Term Incentive Awards

Proposed Sub-Division of Share Capital

Amendments to Articles of Association

Proposed Amendment to the U.S. Plan

and

Extraordinary General Meeting

Introduction

The Board of Osmetech announces today that a wholly owned subsidiary of Osmetech has entered into an agreement to acquire CMS from Motorola. CMS is developing an instrument with an associated consumable in the field of genetic diagnostics testing. The technology is universal in that it has the capability of being used for a number of genetic tests. The two tests which are nearest to market are for Cystic Fibrosis and CYP450 (which is a family of enzymes associated with the body's metabolism of many common pharmaceuticals and food). The consideration for the Acquisition is the issue to Motorola by the Company of the Motorola Warrants, which grant the right to Motorola to subscribe for 78,114,287 Ordinary Shares at a subscription price of 1.75 pence per Ordinary Share. Motorola has also agreed to subscribe for 212,470,862 New Ordinary Shares in the Placing referred to below, which represents an investment of £3.7million in Osmetech. Completion of the Acquisition is conditional, inter alia, upon the completion of the Placing referred to below.

The Board also announces today that the Company is proposing to raise £11.0 million before expenses (£10.2 million net of expenses) by way of the issue of 628,571,430 New Ordinary Shares at 1.75p per share to fund the Enlarged Group's working capital requirements. The New Ordinary Shares are being placed firm largely with new investors. The Board had originally proposed to provide all existing Shareholders with the opportunity to participate in the fundraising through an offer of shares on a pre-emptive basis. However, the Board concluded that it was not in the best interests of the Company to make available such a pre-emptive offer due to the time and cost involved, particularly in view of new rules and regulations which come into force today, relating to the issue of prospectuses by AIM companies and the necessity to successfully complete the acquisition of CMS in a timely manner.

The Issue Price represents a discount of 17.6 per cent. to the prevailing midmarket price of 2.125p per Existing Share at close of business on 30 June 2005 being the business day immediately prior to the announcement of the Placing.

The Placing (save for the Motorola Shares), has been underwritten by Evolution Securities. The principal purpose of the Placing is to provide additional working capital for the Enlarged Group.

The Board also intends to grant Long Term Incentive Awards to James White, David Sandilands, Alfred Marek and two senior managers over, in aggregate, 11 per cent. of the issued ordinary share capital of the Company following the Placing. The Independent Directors believe that it is appropriate to grant these awards in order to incentivise these key individuals and to align their interests with those of Shareholders. James White and David Sandilands will also be granted further awards to replace all the existing options that they hold under the Share Option Schemes. The LTIP Awards and Replacement LTIP Awards are subject to the approval of Shareholders at the EGM.

In order that the Executives and Senior Managers only pay a nominal amount upon exercise of the LTIP Awards and Replacement LTIP Awards, it is proposed that the Company's Existing Shares be sub-divided into ordinary shares of 0.01p each and deferred shares of 0.99p each. Following the Sub-Division, each Shareholder will (prior to the issue of the New Ordinary Shares pursuant to the Placing) hold the same proportion of the issued ordinary share capital of the Company as it did prior to the Sub-Division. Each Sub-Divided Ordinary Share will carry the same rights as each Existing Share. The Deferred Shares will in effect be worthless.

In addition, in order to recruit and retain high calibre individuals to work in the Enlarged Group's U.S. operations, the Board proposes to increase the maximum number of Ordinary Shares over which options may be granted by the Board under the U.S. Plan. Accordingly, a resolution will be proposed at the EGM to increase the number of shares available under this plan to 100 million Ordinary Shares.

The Placing is conditional upon, inter alia, the passing of the Fundraising Resolutions which are to be proposed at the Extraordinary General Meeting, Admission and upon completion of the Acquisition. Accordingly, the Placing and the Acquisition are each conditional on the other being completed. The grant of the LTIP Awards, the Replacement LTIP Awards and the Sub-Division are each conditional upon the Acquisition and the Placing being completed.

At the Company's Annual General Meeting, which is likely to be held in early September, the Board intends to propose a consolidation of the share capital as they consider that this may give the Enlarged Group greater credibility in its core markets where a higher share price may be perceived to signify a more substantial company.

Information on Osmetech

Osmetech's strategy is to develop an international devices and diagnostics business in the fast growing near patient testing market segment. The successful acquisition and integration of the OPTI product line of blood gas and electrolyte analysers acquired from Roche in 2003 established an operational infrastructure for Osmetech and a customer base capable of supporting the development, manufacture and sale of medical diagnostic products for the near patient testing market.

OPTI

The principal OPTI product is a blood gas analyser which has established market positions in a number of countries and an existing customer base of over 4,000 instruments, with more than 1,000 in the US alone. Revenue is generated through sales of new instruments and ongoing repeat sales of proprietary reagents to facilitate analysis. In the year to 30 April 2005, the Directors expect the OPTI division to have generated sales of $10,613,000, with 63 per cent. of revenues generated by consumable sales. Excluding the one off benefits on turnover of SARS related orders in Asia and initial distributor pipeline filling, underlying OPTI sales are up by over 10 per cent. in the last 12 months.

In August 2004, Osmetech signed a worldwide OEM manufacturing and supply agreement scheduled to run for over ten years with IDEXX, a leading developer of animal health diagnostic products. This agreement together with the launch of a number of key new products is expected to accelerate further revenue growth for OPTI for both instruments and consumables. The Company has also signed a development and supply agreement with IDEXX to create a new platform for measuring critical care parameters based on Osmetech's proprietary optical fluorescence technology, which is progressing well.

Opti GENE

In October 2004 Osmetech acquired Molecular Sensing plc, a company focused on the development of DNA and RNA diagnostic tools. This acquisition provided the Company with the technology and intellectual property required to develop Opti GENE which is a device for DNA and RNA analysis. The device is simple to use, and is designed for the near patient testing market. It utilises a single patient disposable cartridge which provides a test result in 30 to 45 minutes. The Molecular Sensing business has been successfully integrated into the Group

and given a new commercial focus on healthcare applications.

In line with its strategy to develop Opti GENE for the genetic diagnostics market, in December 2004 the Company announced that it had signed a licence agreement with LGC to enable the Company to use LGC's HyBeacon tests with Opti GENE. The results of a study of clinical samples at the Royal Free Hospital in London which evaluated the HyBeacon Chlamydia detection assay run on the Opti GENE instrument support the Directors' belief that Opti GENE has significant potential to address the most critical requirements of the vaginal infection and sexually transmitted infections market.

Along similar lines to the IDEXX relationship for OPTI, the Directors expect to be able to secure suitable partnerships in other markets including veterinary, food, forensic, environmental and research.

Opti GENE is scheduled to be exhibited at the Medica (Europe) and AMP (USA) trade exhibitions in November this year. Product sales are likely to commence in the first half of 2006, with the initial tests expected to be for Thrombophilia markets.

Genetic Diagnostics Market

Genetic diagnostics is the fastest growth segment of the global diagnostics market and, in the U.S., is forecast to grow at approximately 20 per cent. per year from US$795 million in 2003 to US$2.75 billion in 2010 (Source: Stratcom).

The benefits of genetic diagnostics are that it can provide highly accurate testing, the possibility of earlier detection of infectious diseases and can identify patients with a predisposition for certain diseases such as cystic fibrosis and certain cancers. This provides the facility for earlier intervention of therapy thereby facilitating improved treatment success rates. Genetic diagnostics can also enable physicians to pre-determine drug dosages and monitor the effectiveness of such treatments for individual patients and also aid the avoidance of toxicity or adverse drug reactions.

The two main growth drivers for the genetic diagnostics market are the Human Genome Project and the growth of new technologies providing the opportunity for small and medium sized hospitals to carry out tests within this market. Through the Human Genome Project, over 30,000 genes have been sequenced. Assuming that 5 per cent. of these genes will be of diagnostic significance this would create 1,500 gene based tests which could potentially be run on the Opti GENE or CMS system. The Directors believe that small and medium sized hospitals (Osmetech's existing core customer base for its OPTI products) would like to do their own testing but are currently constrained by a lack of instrumentation available to meet their cost needs, ease of use and throughput requirements.

Three main sub segments account for over 75 per cent. of the U.S. genetic diagnostics market: Human Genetics, Pharmacogenomics and Infectious Diseases.

Human Genetics

Human genetics focuses on enabling the physician to test individuals for diseases for which they have a genetic predisposition, for example: cystic fibrosis, thrombosis, Alzheimer's or certain cancers. This is achieved through the detection of SNPs or "mistakes" in an individual's DNA which may cause the mutations that are associated with a particular disease. This is the segment in which the Enlarged Group expects to launch its first products.

Pharmacogenomics

Pharmacogenomics is the process of developing drug therapies tailored to an individual patient's needs through genetic testing. This enables physicians to ensure that treatments are both safe and effective, reducing drug wastage and reducing the possibility of patients experiencing adverse drug reactions. This is an area in which the Directors anticipate rapid growth. The FDA has recently approved a new product from Roche/Affymetrix for the CYP450 family of enzymes which will provide relevant genetic information for drug metabolism. CMS has a product currently under development for CYP450 which is anticipated for launch in 2006.

Infectious Diseases

Healthcare physicians rely on tests which are able to identify the DNA of the bacteria responsible for sexually transmitted diseases (e.g., HIV, Chlamydia, gonorrhoea) and other infectious diseases such as MRSA. This is the largest sector of the genetic diagnostics market today and is concentrated in central laboratories which batch test high volumes of samples. Osmetech's aim through its Opti GENE instrument is to improve the turn around time of testing in this area sufficiently to justify a shift in testing away from the central laboratory to near point of care. An easy to perform test which can provide a result within 45 minutes, whilst the patient is still at the hospital or clinic presents a significant opportunity to control the spread of disease both in the hospital and in the general population. These attributes are also expected to be useful for the effective diagnosis for emerging contagious diseases such as Bird Flu.

The genetic diagnostics market today is at an early stage of development and is characterised by expensive first generation instruments which require skilled labour and are reliant on high throughput in order to control costs. The batch testing performed in large laboratories and hospitals precludes the ability to give rapid turnaround times. Whilst the common PCR technology is widely understood, the Directors believe that the products available today do not meet the needs of small and medium sized hospitals.

Information on CMS

History

CMS was founded in 1994 as a spin out from Caltech and was acquired in June 2000 by Motorola for a consideration of $280m. It currently employs approximately 60 people and operates from two sites in Pasadena, California USA. CMS has not yet launched a product and has generated substantial losses over this period. During 2004 the operations of CMS were restructured and costs were significantly reduced. The Directors intend to achieve further cost savings following completion of the Acquisition. The amounts required to fund CMS following completion are set out under "Use of Proceeds from the Issue".

The core technology of CMS is electro-chemical detection. CMS has for a number of years been developing a low cost and easy to use instrument and consumable as well as developing assays to enable this technology to be used in the field of complex genetic diagnostics testing. The system comprises:

. Instrument - eSensor 4800 reader

. Consumable - single use eSensor bio-chip disposable cartridge

The system is manufactured by CMS at its premises in California, although various key components are bought in from suppliers.

CMS has developed the system for Cystic Fibrosis carrier screening and has completed clinical trials at two hospitals and one reference laboratory in the United States to support a 510k submission to the FDA. CMS is being disposed of by Motorola as it is considered to be non-core to its business.

IP Portfolio

The combination of two exclusive worldwide licensed technologies from Caltech and Harvard University has allowed CMS to develop the eSensor DNA detection technology. The main area that has been licenced to CMS is electrochemical DNA detection. CMS has protected its core technologies by assembling an intellectual property portfolio through strategic licensing and the pursuit of patent protection for its own inventions. This portfolio includes, at present, 49 issued U.S. patents and four granted European patents. The portfolio also includes many issued patents in countries outside the U.S. and Europe. Numerous patent applications are currently under prosecution throughout the world.

Assays

The eSensor system provides a platform which the Directors believe has the capability to be used for a number of genetic tests by the creation of specific DNA probes. The two applications which are nearest to market are for Cystic Fibrosis and CYP450.

Cystic Fibrosis

With a carrier frequency of one in 25 and an incidence of one in 2,500, Cystic Fibrosis is the most commonly inherited disease in the North American Caucasian population. The American College of Medical Genetics and the American College of Obstetricians and Gynaecologists recommended in 2001 that Cystic Fibrosis carrier testing should be made available for all reproductive couples. CMS is developing such a test and is also developing a test for Cystic Fibrosis detection in new borns. Currently approximately one million tests are carried out annually in the US alone, which is expected to grow as adoption rates increase. Most current tests are not FDA approved and testing locations are restricted to those 300 institutions which are CLIA approved for running complex testing where the testing institution is responsible for regulatory obligations rather than the diagnostic company.

Currently the tests carried out in the large central laboratories are performed on instruments that can cost in the region of US$100,000 and a high throughput is required to justify the capital cost of the equipment. In addition the instruments are operated by qualified technicians capable of interpreting the results. As a result of this each test is relatively expensive with each test recharged at up to US$400 per test to those small to medium sized hospitals requesting the tests to be run on their behalf. The Directors believe that the CMS product will have a number of key advantages over the laboratory based instruments including a lower capital cost, less need for trained personnel due to the objective nature of the results, less preparation of the test sample, a lower cost per test and a quicker turnaround time for results, typically a number of hours rather than a number of days.

By having an FDA approved test, CMS would be able to sell to all hospitals in the USA. In the rest of the world the aim would be to utilise the distributor network that Osmetech has in place for its OPTI products. In Germany, Osmetech would leverage its own recently established direct sales force. Product sales are expected to commence in early 2006.

CYP450

CYP450 is a family of enzymes associated with the body's metabolism of many common pharmaceuticals and foods. The mutations impact how well individuals metabolise drugs which can vary significantly from person to person. For example, if an individual is a poor metaboliser of a drug then this could result in a build up of the drug in the individual which could be toxic or even fatal. Conversely, for an individual with a rapid metabolism there can be a risk that the treatment does not reach the required therapeutic dose. The p450 gene and its major mutations - CYP2D6 and CYP2C19 - are known to affect the body's ability to metabolise about 45 per cent. of drugs on the market including those for depression, high blood pressure, attention deficit hyperactivity disorder and heart disease.

In December 2004, Roche received FDA approval for its Affymetrix chip to test for CYP450 genetic diagnostic information. This test should lead to an increased awareness of an important new area of diagnostics that has the potential to both improve patient care and reduce costs within the healthcare system. CMS is anticipating launching a product in this area in 2006 with a similar distribution strategy to the Cystic Fibrosis product.

Management of CMS in the Enlarged Group

Bruce Huebner has recently agreed to join the Group as President of CMS. Bruce was previously Chief Operating Officer of Gen-Probe and President and Chief Operating Officer of Nanogen, two major international companies in the genetics and infectious diseases markets. Bruce has a strong Sales and Marketing background and oversaw Gen-Probe through a period of growth and commercial success in the diagnostics industry. Geoff McKinley and Dick Keys have also recently joined Osmetech, both of whom have considerable experience in the genetic diagnostics market.

Background to and Reasons for the Acquisition

The Directors have consistently sought to find opportunities to expand the Group's revenue base and to utilise its operational skills and existing distribution network more effectively. The acquisition of Molecular Sensing which had a product that was close to being marketed and was in the near patient medical devices sector was part of this strategy.

Opti GENE is a product that relies on DNA and RNA analysis and the Board has now identified CMS as a business with a complementary product to Opti GENE which the Directors anticipate is close to market launch and which should allow the Group to utilise further its skills and infrastructure. The Directors believe that the acquisition of CMS provides an opportunity to expand the product base of the Group on attractive terms with a product that has a clear route to market.

Osmetech already has an infrastructure with manufacturing capabilities for instruments and consumables, over 50 international distributors and more than 4,000 instruments installed around the world predominantly in small and medium sized hospitals. The Directors expect to sell the Enlarged Group's expanded product base using this infrastructure. Osmetech also has strategic partnerships with Sysmex, a leading diagnostic company in Asia, Roche, one of the world's leading healthcare diagnostics companies and IDEXX, a leading global animal health business. Utilising this infrastructure and these relationships the Board aims to continue to expand the Group's opportunities in high growth market segments of the diagnostics industry.

Current trading

As announced on 5 May 2005, sales during the second half of the financial year ended 30 April 2005 were 44 per cent. higher than those achieved in the first half of the year and 32 per cent. higher than those achieved in the second half of the year ended 30 April 2004. Overall the Directors expect sales for the year ended 30 April 2005 to be approximately US$10,863,000. In total these were 4 per cent. higher than the total sales in the year ended 30 April 2004 although there will be a 9 to 10 per cent. negative currency translation impact compared to the prior year due to the relative weakness of the US dollar during the period.

In the second half of the year Osmetech began to see strong order volume from its OEM manufacturing and supply agreement with IDEXX to provide an OPTI product for the veterinary market. The Directors expect this to continue throughout the current financial year. Good progress is also being made with IDEXX on the development and supply contract to create a new platform for measuring critical care parameters based on Osmetech's proprietary optical fluorescence technology. Both IDEXX contracts are for a period of at least 10 years. The performance of the OPTI division will also benefit during the current financial year from the launch of a number of new products in to the market place. The Company continued to incur the development costs of those products, and further additional costs related to the Opti GENE product, during the second half of the year ended 30 April 2005.

During this financial year the Directors will continue to invest in the Opti GENE genetic testing platform with sales likely to commence in the first half of 2006.

Prospects

The Directors believe that the Acquisition will significantly increase Osmetech's presence in a rapidly growing sector of the medical diagnostics market. The continued strong performance of OPTI combined with the Placing will provide support for the Company through to the launch of Opti GENE and the CMS Cystic Fibrosis products. Revenues from both Opti GENE and the CMS products will be derived from both instrument sales and consumables. As the Enlarged Group develops new assays a greater number of tests could be performed on each instrument, thereby increasing sales of consumables and further strengthening the Company's product offering.

The proposed acquisition of CMS would provide a product with the capability of conducting more complex assays than Opti GENE with multiple gene targets. The Board believes that with the combination of Opti GENE and CMS products, Osmetech is well positioned to address the majority of existing and new tests in the genetic diagnostics market.

The Directors consider that the net proceeds of the Placing are sufficient for the development and launch of the Opti GENE and the CMS Cystic Fibrosis products. However, depending on the timing of the launch of these products, it is likely that the Enlarged Group will require further funding in the future.

Competition

Historically, the genetic diagnostics market has not been dominated by the major pharmaceutical companies although Abbot, Roche, ABI and Gen Probe have a presence. Their sales focus is primarily with the larger hospitals supplying costly products for high throughput customers. The Directors believe that it would be very difficult to migrate these products into the small and medium sized hospitals which are looking for a cost-effective solution for lower volume testing with a greater emphasis on ease of use. The market is also served by a number of smaller North American companies such as Cepheid, Third Wave, Nanogen and TM Biosciences.

The Directors believe that the combination of the CMS and Opti GENE products can create a strong market position in genetic diagnostics. The accuracy of PCR technology has been utilised to produce low cost testing platforms that have the capability of producing rapid results or processing more complex tests in an easy to use manner. The Group's international distribution network and existing customer base in addition to the experienced management team now in place gives the Board further confidence that Osmetech can be a significant player in a market that is growing at over 20 per cent. per annum.

Use of proceeds from the Placing

The Directors intend to use the net proceeds of the Placing to provide additional working capital for the Enlarged Group.

The working capital requirements of the Enlarged Group will principally relate to the salaries of the personnel developing both the CMS products and the Opti GENE product and the rental of the premises for this research and development. Further amounts will be expended on licenses required for the products and manufacturing the instruments and consumables. In total the Directors anticipate that the net funding requirement of the CMS businesses over the next 12 months will be US$14 million and for the Enlarged Group (which includes CMS) will be £10 million.

Terms of the Acquisition

Under the terms of the Acquisition Agreement, Osmetech has agreed to acquire the entire issued common stock of CMS for a consideration to be satisfied by the issue by Osmetech to Motorola of the Motorola Warrants, the terms of which are described below.

CMS is to be acquired free of debt and free of cash, and Motorola will retain responsibility for and will indemnify the Company and OTI in respect of certain liabilities of CMS arising prior to the completion date. The Acquisition Agreement also contains usual commercial warranties given by Motorola in connection with the business of CMS.

The Acquisition is conditional, inter alia, upon completion of the Placing. Both Osmetech and Motorola have rights to terminate the Acquisition Agreement in certain circumstances up to Completion. Were the Acquisition Agreement not to become unconditional, or to be terminated, the Placing would also not proceed.

Under the terms of the Acquisition, Motorola has agreed to subscribe for 212,470,862 New Ordinary Shares in the Placing, equating to an investment of £3.7 million in Osmetech.

The Motorola Warrants entitle Motorola to subscribe for 78,114,287 new Ordinary Shares at any time in the period up to 26 July 2010 at a price equal to the Issue Price. The Motorola Warrants are not transferable (other than within the Motorola Group) and will not be quoted or listed on any investment exchange. Motorola has agreed with Osmetech not to dispose of any of the new Ordinary Shares arising on the exercise of the Motorola Warrants for a period of six months from Admission.

As part of the Acquisition, Motorola will license to CMS certain intellectual property rights which relate to its business.

Long Term Incentive Awards and Replacement Long Term Incentive Awards

Conditional upon completion of the Placing, and the Acquisition, the Board intends to grant long term incentive awards to James White, David Sandilands, Alfred Marek, and two senior managers, Bruce Huebner and Geoff McKinley. The Independent Directors believe it is appropriate to grant the LTIP Awards in order to incentivise these key individuals and to give them the opportunity to achieve meaningful rewards for growing the Company's business and to align their interests with those of Shareholders. The LTIP Awards will provide the Executives and the Senior Managers with the right to acquire Ordinary Shares at nominal value, subject to the achievement of demanding performance conditions relating to growth in the Company's market capitalisation and profitability. It is proposed that the LTIP Awards to be granted to James White, David Sandilands and Alfred Marek will comprise five per cent., two and a half per cent. and one and a half per cent. respectively of the issued ordinary share capital of the Company following the Placing. The LTIP Awards proposed to be granted to each of the Senior Managers will comprise one per cent. (two per cent. in aggregate) of the issued ordinary share capital of the Company following the Placing. Further details of these awards are set out in the circular being sent to Shareholders today.

James White and David Sandilands shall, in addition, be granted awards to acquire shares at nominal value on similar terms to the LTIP Awards in replacement of the cancellation of all their outstanding options under the Share Option Schemes currently representing 5.4 per cent. of the issued ordinary share capital of the Company. The Replacement LTIP Awards will be granted over Ordinary Shares having a value of £500,000 in the case of James White and £250,000 in the case of David Sandilands based on the market value of an Ordinary Share on the dealing day following the date of Admission. Shares subject to the Replacement LTIP Awards will vest on achievement of performance targets relating to the development or launch of specific products. Further details of these awards are set out in the circular being sent to Shareholders today.

The grant of the LTIP Awards and the Replacement LTIP Awards is subject to the approval of Shareholders which will be sought at the EGM.

In order that the Executives and Senior Managers only pay a nominal amount upon exercise of the LTIP Awards and the Replacement LTIP Awards, it is proposed that the Company's Existing Shares be sub-divided into ordinary shares of 0.01p each and deferred shares of 0.99p each as described below. However, at the Company's Annual General Meeting, which is likely to be held in early September, the Board intends to propose a consolidation of the share capital as they consider this may give the Enlarged Group greater credibility in its core markets where a higher share price may be perceived to signify a more substantial company.

Sub-division of share capital

At the EGM, a resolution will be proposed to sub-divide each Existing Share into 1 ordinary share of 0.01p each and one Deferred Share. Following the Sub-Division, each Shareholder will (prior to the issue of the New Ordinary Shares, pursuant to the Placing) hold the same proportion of the issued ordinary share capital of the Company as it did prior to the Sub-Division . Each Sub-Divided Ordinary Share will carry the same rights (including voting, dividend rights and rights on a return of capital) as each Existing Share. The Deferred Shares will in effect be worthless.

The necessary approvals to effect the Sub-Division and make the associated changes to the Articles dealing with the creation of the Deferred Shares are included in Resolution 1 to be proposed at the EGM.

Subject to Resolution 1 being passed at the EGM, the Sub-Division will be effected by reference to Shareholders and their holdings of Existing Shares on the register as at the close of business on 25 July 2005:

Dealings in Existing Shares will cease on 25 July 2005 and dealings in Sub-Divided Ordinary Shares will commence on 26 July 2005;
Settlements effected on or after 26 July 2005 of bargains made before that date will be in Sub-Divided Ordinary Shares; and
For Shareholders holding their Existing Shares in uncertificated form, the relevant CREST accounts will be credited with the Sub-Divided Ordinary Shares on 26 July 2005, in place of their Existing Shares. New share certificates will not be issued in respect of the Sub-Divided Ordinary Shares.

No adjustment will be required to be made to the exercise price and/or the number of shares subject to an option under the Share Option Schemes.

U.S. Plan

The U.S. Plan provides for options on tax efficient terms to be granted to employees of the Enlarged Group resident in the United States.

It is important for the Enlarged Group to be able to recruit and retain high calibre individuals to work in the Enlarged Group's U.S. operations. The Board is currently authorised under the terms of the U.S. Plan to grant options over up to 50 million shares and wishes to increase this to 100 million shares. A resolution to this effect will be proposed at the EGM.

Principal terms of the Placing

Under the Placing, the Company intends to raise £11.0 million (before expenses).

Under the Placing, 628,571,430 New Ordinary Shares are being conditionally placed firm largely with new investors. The Board had originally proposed to provide all existing Shareholders with the opportunity to participate in the fundraising through an offer of shares on a pre-emptive basis. However, the Board concluded that it was not in the best interests of the Company to make available such a pre-emptive offer due to the time and cost involved particularly in view of new rules and regulations which come into force today, relating to the issue of prospectuses by AIM companies and the necessity to sucessfuly complete the acquisition of CMS in a timely manner. The Placing (save for the Motorola Shares), has been underwritten by Evolution Securities.

James White, David Sandilands and Gordon Hall will be participating in the Placing. Further details are set out below, under the paragraph entitled ''Directors' Participation in the Placing''.

The Issue Price represents a discount of 17.6 per cent. to the prevailing mid-market price of 2.125p per Existing Share immediately prior to the announcement of the Placing on 30 June 2005.

The Placing is conditional upon the Placing Agreement having become unconditional in all respects and not having been terminated in accordance with its terms. The Placing Agreement is conditional, inter alia, upon the satisfaction of the following conditions:

(i) the passing of the Fundraising Resolutions at the Extraordinary General Meeting;

(ii) the Acquisition Agreement having become unconditional in all respects (other than in respect of Admission),
not having been terminated and having been completed in escrow by 8.00 a.m. on 26 July 2005;

(iii) Admission becoming effective by not later than 8.00 a.m. on 26 July 2005 (or such later time and/or date as
the Company and Evolution Securities may agree being not later than 9.00 a.m. on 15 August 2005).

None of the New Ordinary Shares have been marketed or been made available in whole or in part to the public in conjunction with the application for Admission. The New Ordinary Shares to be allotted pursuant to the Placing will, when issued and fully paid up, rank pari passu in all respects with the Sub-Divided Ordinary Shares including the right to receive all dividends and other distributions declared, made or paid thereon following Admission.

Application has been made for the New Ordinary Shares to be admitted to trading on AIM.

It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence on 26 July 2005.

Directors' participation in the Placing

James White, David Sandilands and Gordon Hall have agreed to subscribe for 571,428, 285,714 and 285,714 Placing Shares respectively at the Issue Price. This represents a total of 0.18 per cent. of the Placing Shares. None of the other Directors will participate in the Placing.

Extraordinary General Meeting

The EGM is to be convened for 11.00 a.m. at the offices of Ashurst Broadwalk House, 5 Appold Street, London EC2A 2HA on 25 July 2005 to approve the Proposals

Other

The Circular is expected to be dispatched to Shareholders and, for information only, to participants in the Osmetech Share Option Schemes today which provide details of the Proposals described in this announcement.

Copies of the Circular can be obtained from or inspected at the office of Evolution Securities at 100 Wood Street, London EC2V 7AN.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Latest time and date for receipt of Forms of Proxy	11.00 a.m. on 23 July 2005
Extraordinary General Meeting	11.00 a.m. on 25 July 2005
Record Date for the Sub-Division	Close of dealings on 25 July 2005
Dealings in Existing Shares cease	4.30 pm on 25 July 2005
Dealings in the Sub-Divided Ordinary Shares commence	8.00 a.m. on 26 July 2005
Admission effective and dealings commence in New Ordinary Shares	8.00 a.m. on 26 July 2005
Completion of the Acquisition	26 July 2005
Delivery in CREST of New Ordinary Shares to be held in uncertificated form	8.00 a.m. on 26 July 2005
Despatch of definitive share certificates in respect of New Ordinary Shares to be held in certificated form	By 9 August 2005

ISSUE STATISTICS

Issue Price	1.75p
Net proceeds of the Placing	£10.2 million
Number of Existing Shares in issue at the date of this document	689,478,300
Number of New Ordinary Shares being issued pursuant to the Placing	628,571,430
Number of Ordinary Shares in issue following the Placing	1,318,049,730
Market capitalisation of Osmetech at the Issue Price following Admission	£23.1 million

This announcement is not for distribution in the United States and is not an offer of securities for sale in the United States. Neither the Existing Shares, the Sub-Divided Ordinary Shares nor the New Ordinary Shares have been, or will be, registered under the United States Securities Act of 1933 (as amended) or under the securities laws of any state of the United States or qualify for distribution under any of the relevant securities laws of Canada, Australia, Japan or the Republic of Ireland, nor has any prospectus in relation to the New Ordinary Shares been lodged, or registered by, the relevant security commissions of Canada, Australia or Japan or with the registrar of companies in the Republic of Ireland. Accordingly, subject to certain exceptions, the New Ordinary Shares must not be, directly or indirectly offered, sold, taken up, delivered or transferred in or into the United States, Canada, Australia, Japan or the Republic of Ireland or to, or for the account or benefit, of any US Person or any national, resident or citizen of Canada, Australia, Japan and the Republic of Ireland. . The New Ordinary Shares are being offered and sold outside the United States to non-US persons in reliance on Regulation S under the Securities Act and within the United States pursuant to an exemption from the registration requirements of the Securities Act.

Overseas Shareholders and any person (including, without limitation, nominees and trustees) who has a contractual or other legal obligation to forward this announcement into a jurisdiction outside the UK should seek appropriate advice before taking any action. Evolution Securities Limited, which is regulated by the Financial Services Authority, is acting exclusively for Osmetech plc and no-one else in relation to the matters described in this announcement and will not be responsible to any other person for providing the protections afforded to customers of Evolution Securities Limited or for advising any such person on the contents of this announcement or any matter referred to herein. This announcement does not constitute an offer or an invitation to purchase or subscribe for any securities.

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise:

"Acquisition"	the acquisition of CMS by OTI pursuant to the terms of the Acquisition Agreement
"Acquisition Agreement"	the agreement dated 30 June 2005 between Osmetech, OTI and Motorola relating to the Acquisition
''Act''	the Companies Act 1985 (as amended)
''Admission''	the admission of the New Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules
"AIM"	AIM, a market regulated by the London Stock Exchange
"AIM Rules"	the rules published by the London Stock Exchange governing admission to and the operation of AIM
''Articles''	the current articles of association of the Company
''Board'' or ''Directors''	the directors of Osmetech plc
"Caltech"	The California Institute of Technology
"Capita Registrars"	a trading division of Capita IRG Plc
''certificated'' or ''in certificated form''	a share or other security which is not in uncertificated form
"Circular"	the Circular relating to the Placing and the other Proposals which is being posted today to Shareholders and, for information only, to participants in the Osmetech Share Option Schemes
"CMS"	Clinical Micro Sensors Inc., a company incorporated under the laws of the State of Delaware and a wholly owned subsidiary of Motorola
''CREST''	the relevant system (as defined in the Regulations) in respect of which CRESTCo Limited is the Operator (as defined in the Regulations) in accordance with which quoted securities may be held and transferred in uncertificated form
''CREST member''	a person who has been admitted to CREST as a system-member (as defined in the Regulations)
"Deferred Shares"	deferred shares of 0.99p each in the capital of the Company (to be created pursuant to the Sub-Division)
"Enlarged Group"	the Group as enlarged by the Acquisition
"Evolution Securities"	Evolution Securities Limited
"Executives"	James White, David Sandilands and Alfred Marek
''Existing Shares''	the ordinary shares of 1p each in the capital of the Company as at the date of this announcement
''Extraordinary General Meeting'' or ''EGM''	the extraordinary general meeting of the Company to be convened for 11.00 a.m. on 25 July 2005 (or any adjournment thereof)
''Form of Proxy''	the form of proxy for use by Shareholders in connection with the Extraordinary General Meeting
''FSA''	the Financial Services Authority
''FSMA''	the Financial Services and Markets Act 2000 (as amended)
"Fundraising Resolutions"	resolutions one and two to be proposed at the EGM
''Group''	Osmetech and its subsidiaries
"IDEXX"	IDEXX Laboratories, Inc
"Independent Directors"	the Directors excluding the Executives
''Issue Price''	1.75 pence per New Ordinary Share
"LGC"	LGC Limited
''London Stock Exchange''	London Stock Exchange plc
"Long Term Incentive Awards" or "LTIPAwards"	the long term incentive awards to be made to James White David Sandilands, Alfred Marek and certain senior managers
''Motorola''	Motorola Inc., a company incorporated under the laws of the State of Delaware
''Motorola Shares''	the 212,470,862 New Ordinary Shares to be placed firm with Motorola
"Motorola Warrants"	the warrants to be issued to Motorola pursuant to the terms of the Acquisition Agreement
''New Ordinary Shares''	the 628,571,430 new Ordinary Shares to be issued pursuant to the Placing
''Notice of EGM''	the notice of EGM
''Ordinary Shares'' or ''Osmetech Shares''	the ordinary shares of 0.01p each in the capital of the Company (following the Sub-Division)
''Osmetech'' or the ''Company''	Osmetech plc, a public limited company incorporated and registered in England and Wales under the Act with registered number 2849544
"OTI"	Osmetech Technology Inc, a wholly owned subsidiary of the Company
"Placing"	the conditional placing by Evolution Securities, as agent on behalf of the Company of the New Ordinary Shares at the Issue Price pursuant to the Placing Agreement
''Placing Agreement''	the conditional agreement dated 1 July 2005 between the Company and Evolution Securities relating to the Placing
"Proposals"	the Acquisition, the Sub-Division the Placing, the amendments to the Articles, the Long Term Incentive Awards, the Replacement Long Term Incentive Awards and the amendments to the U.S. Plan
''Registrars'' or ''Capita''	Capita Registrars
''Regulations''	the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755)
"Replacement Long Term Incentive Awards" or "Replacement LTIPAwards"	the replacement long term incentive awards to be made to James White and David Sandilands as described in this announcement
''Resolutions''	the resolutions to be set out in the Notice of EGM
"Securities Act"	US Securities Act of 1933, as amended
"Senior Managers"	Bruce Huebner and Geoff McKinley
''Shareholders''	holders of Existing Shares or Ordinary Shares from time to time
''Share Option Schemes''	the option schemes of the Company
"Sub-Division"	the proposed sub-division of each Existing Share into one Ordinary Share and one Deferred Share
"Sub-Divided Ordinary Shares"	the Ordinary Shares in issue at Admission (to be created pursuant to the Sub-Division) excluding the New Ordinary Shares
''uncertificated'' or ''in uncertificated form''	an ordinary share recorded on the Company's share register as being held in uncertificated from in CREST and title to which, by virtue of the Regulations, may be transferred by means of CREST
''United Kingdom'' or ''UK''	the United Kingdom of Great Britain and Northern Ireland
''United States'' or ''US''	the United States of America, its territories and possessions and any state of the United States and the District of Columbia and all other areas subject to the jurisdiction of the United States of America
"U.S. Plan"	the 2003 US Equity Compensation Plan