Synchronica plc Provides Trading Update and Advice to Shareholders

ROYAL TUNBRIDGE WELLS, UK, Feb. 14, 2012 /CNW/ - Synchronica plc (AIM: SYNC) (TSX Venture: SYN) ("Synchronica" or "the Company"), the international provider of next-generation mobile messaging services, announces an operational trading update. The Company also maintains its advice to shareholders in respect to the firm offer for the entire issued and to be issued share capital of Synchronica, announced recently by Myriad Group AG ("Myriad").

Order from a New Handset Manufacturer Customer
Synchronica is pleased to announce that it has secured a contract with a device manufacturer targeting the Americas. Under the terms of the agreement, the device manufacturer will bundle Synchronica's white-labelled Mobile Gateway onto its entry-level Smartphone devices. This recurring-revenue deal is initially valued at US$250,000 for hosting and professional services, while Synchronica will also receive US$0.36 for each device sold.

Mobile World Congress and Product Repositioning
Having attracted some 60,000 visitors during 2011, Mobile World Congress is the industry's most important annual trade event, featuring prominent representation from mobile operators, device manufacturers and vendors from across the world.

Synchronica intends to use Mobile World Congress as a platform to unveil a new identity for its flagship product, Mobile Gateway. The Company expects that the product's new identity - Unity - will showcase its competitive advantages to mobile operators and device manufacturers in both developed as well as emerging markets.

In addition to several new features added to the flagship Unity product, Synchronica expects to announce that it will have signed a letter of intent with a Canadian RCS specialist to cooperate in the development, sales and marketing of a next-generation Rich Communication Suite (RCS) product which will be demonstrated during Mobile World Congress.

Business Transition
Synchronica has been transitioning from a period of growth, driven primarily by acquisition, to one where the focus has shifted to monetising its existing customer relationships.

In late 2011, with a view to aligning its costs with its revenue billings, Synchronica informed Shareholders that it was implementing several cost reduction initiatives across the entire business. Some benefit from these cost reductions was seen in 2011 and the Directors expect that a greater benefit from these cost reduction initiatives will be recognised in 2012.

The Directors committed to manage the Company's cash carefully, in this endeavour it has enjoyed the support of its customers, while also seeking further funding opportunities which would accelerate the business and drive shareholder value. The Directors continue to believe that Synchronica will move into cash generation in the current year.

Synchronica's first repayment to Nokia for deferred consideration is due in February 2012. This will be paid this month and the Board believes that Synchronica will be able to continue to service this debt in the future.

A very high proportion of the Company's revenues are recurring. Synchronica's customers are building their user numbers and increasing the quality of Synchronica's earnings from recurring revenue. In addition Synchronica continues to add new customers. Synchronica's Board remains confident that it will successfully complete this transition to the benefit of its Shareholders.

Letter of Intent with Intertainment Media for Co-development and Investment in Synchronica
On 8 February 2012, Synchronica announced that it had signed a Letter of Intent with Intertainment Media Inc. ("Intertainment Media") relating to a co-development agreement and an investment in Synchronica.

Intertainment Media is prepared to make an investment of up to CND$10 million (approximately £6.3 million) in Synchronica in cash at a minimum price of 16 pence (CDN$0.25) per unit. Each unit will comprise one Share plus one warrant, exercisable at a price of CDN$0.40 (26 pence) per Share at any time within the next two years.

The proposed product co-development agreement with Intertainment Media is consistent with the strategy of developing products and revenue opportunities to enhance profitability for the benefit of the Company and its Shareholders, while the proposed investment will improve Synchronica's cash balance and be used to reduce its liabilities.

The proposed investment by Intertainment Media is conditional upon Shareholder approval, under the provisions of the Takeover Code. The Board will shortly be writing to Shareholders to seek their approval to the investment.

Indicative Offer from Myriad Group AG
On 31 January 2012, Myriad announced a firm intention to make an offer for the entire issued and to be issued share capital of Synchronica ("Myriad Offer"), and must now formally make this offer to Shareholders by 28 February 2012. The Synchronica Board, and its advisors BDO Corporate Finance, believe that the Myriad Offer is opportunistic and its terms undervalue the Company and its prospects, and the Board recommends that Shareholders do not accept the Myriad Offer when the formal offer is finally made.

The Myriad Offer values each Synchronica Share at 13 pence on an all share basis as at 31 January 2012, which valued the entire issued and to be issued share capital of Synchronica at approximately £20.63 million. In contrast, Intertainment Media is prepared to make an investment in Synchronica of up to CND$10 million (approximately £6.3 million), at a minimum price of 16 pence (CDN$0.25) per unit; valuing Synchronica at approximately £25.4 million before the new money or approximately £31.7 million after the new money.

Myriad's offer is an all share offer where Myriad shares are traded on the SIX Swiss Exchange. Myriad has stated an intention to cancel the admission to trading of Shares on AIM and on the TSX Venture Exchange, and has also assumed that no warrants or options will be exercised as identified in Appendix II of its offer announcement. Myriad Shares are traded in Swiss francs, which would create a currency risk for Shareholders. The Swiss franc has fallen against £ Sterling from around 1.17 in August 2011 to 1.44 on 30 January 2012. Any further weakening of the Swiss franc would reduce the value of the Myriad Offer and the new Myriad shares.

The Board of Synchronica has also held meetings with a number of Synchronica Shareholders in the UK and Canada.

The Board believes that Synchronica has made good progress over recent months and that the prospects are attractive. Consequently, Shareholders are again advised to take no action in respect of Myriad's Offer. A further announcement, by the Board, will be made in due course. In addition Synchronica will issue a circular to its Shareholders following the posting of Myriad's formal Offer Document.

About Synchronica
Synchronica plc is a leading developer of standards-based, next-generation mobile messaging solutions for mobile operators and device manufacturers. The Company's flagship product - Synchronica Mobile Gateway - provides pre-RCS push email, synchronisation, instant messaging (IM), and social networking services to any mobile phone currently in use. Synchronica's patented transcoding technology uses advanced streaming to download email attachments and dramatically reduce the consumption of wholesale network bandwidth by as much as 90 percent.

Synchronica's white-labelled products are licensed by more than 100 mobile operator and device manufacturer customers from emerging and developed markets, delivering mass market messaging services across the entire customer base, providing competitive advantage, diversifying revenues, and reducing churn.

Synchronica is headquartered in the United Kingdom and has a regional presence in Canada, as well as the USA, Hong Kong, Spain, and Dubai. Synchronica also operates dedicated development centres in Germany and the Philippines. A public company, Synchronica is traded on the AIM list of the London Stock Exchange (SYNC) and the Venture Exchange of the Toronto Stock Exchange (SYN). For further information, please visit www.synchronica.com

Cautionary Statements
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

The foregoing information may contain forward-looking statements relating to the future performance of Synchronica. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties, and actual results may differ materially from Synchronica's plans and expectations. These plans, expectations, risks and uncertainties are detailed herein and from time to time in the filings made by Synchronica with the TSX Venture Exchange and securities regulators. Synchronica does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

A copy of this announcement will be made available on the Company's website at www.synchronica.com as soon as possible.

BDO Corporate Finance, a division of BDO LLP, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Synchronica, as financial advisor in relation to this announcement, and is not acting for or advising any other person and accordingly will not be responsible to any other person other than Synchronica for providing the protections afforded to the clients of BDO LLP or for providing advice in relation to this announcement, or any other matter referred to herein.

Sources and bases of information
In this announcement, unless otherwise stated or the context otherwise requires, the following bases and sources have been used:

a) The number of Synchronica Shares in issue is 158,707,089 as at 13 February 2012.

b) The information relating to Synchronica has been extracted or derived, without any material adjustment, from public sources.

c) The information relating to Myriad has been extracted or derived, without any material adjustment, from public sources.

The following independent analysts publish research on Synchronica - Northland Capital Partners Ltd, Equity Developments Ltd, Paradigm Capital Inc. and Stonecap Securities Inc.

Disclosure requirements of the Takeover Code (the "Code")
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified.

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on [phone].

For Synchronica investor relations enquiries, please contact:

Investor Enquiries, UK
Walbrook PR Ltd
Paul Cornelius
[phone]  [email protected]

Investor Enquires, North America
TMX Equicom
Craig MacPhail
[phone] Ext 290
[email protected]

For Synchronica corporate information, please contact:
Synchronica plc
Angus Dent
Chief Executive Officer
[phone]

BDO Corporate Finance
Rule 3 Advisor
John Stephan;
David Abbott;
Susan Brice
[phone]

Northland Capital Partners
Nominated Advisor
Shane Gallwey;
Rod Venables
Corporate Broker
Katie Shelton
[phone]

Media and Analyst Enquiries, UK
Walbrook PR Ltd
Paul McManus
[email protected]
[phone]

Media and Analyst Enquiries, North America  
TMX Equicom
Craig MacPhail
[email protected]
[phone] Ext 290