IMO.L Regulatory News (IMO)

13th October 2014

IMImobile PLC

("IMI" or "the Company" or "the Group")

Acquisition of TxtLocal Limited and Trading Update

IMI is pleased to announce that it has agreed to acquire TxtLocal Limited ("TextLocal") an award winning self-service, cloud based, mobile messaging business predominantly targeting small and medium sized businesses ("SMB") in the UK. The acquisition will further enhance IMI's product suite of smarter mobile engagement software and strengthens the Company's position as a leading provider of mobile communications solutions.

Highlights:

TextLocal

· TextLocal's best-in class platform for SMBs' messaging solutions has served over 100,000 businesses since its foundation in 2005 with a 95% customer satisfaction rating.

· Initial consideration of £10m cash and £1m by way of IMI shares. Deferred consideration of up to £2.15m.

· Strong track record of profit and cash generation with revenue and profit after tax of £7m and £1m, respectively, for the year ending 30 November 2013.

· The acquisition is expected to enhance Group earnings with effect from the second half of the year ending 31 March 2015.

· Complementary to existing IMI offering providing significant cross-sell and lead generation opportunities.

· Platform to be integrated with IMI's core infrastructure with identified cost synergies.

· Significant opportunities to leverage IMI's global footprint to introduce TextLocal's offering into new international markets.

Trading update

· Trading for the six months ended 30 September in line with directors' expectations.

· Board highly confident of achieving full year profit targets for the existing business.

Commenting on the Acquisition Jay Patel, Chief Executive Officer of IMI said:

 "The acquisition of TextLocal helps us build out our set of smarter mobile engagement products and solutions. TextLocal has a best-in class product that addresses the small and medium sized businesses segments that we do not currently serve and we see opportunities to cross-sell capabilities as well as an opportunity to leverage our global distribution and operator relationships. We expect to integrate the acquisition rapidly into the Group over the next six months and we expect it to be earnings enhancing from the second half of the current financial year ending 31 March 2015."

Background and reasons for the Acquisition

IMI believes that TextLocal has the best in class messaging solutions platform focused on SMB's. This product suite will complement IMI's business allowing it to target a new market segment in the UK and roll this out internationally. The SMB sector is forecast by many analysts to be one of the fastest growing areas of the broader mobile messaging market. The acquisition will provide IMI with significant cross selling opportunities and deliver a substantial new client base.

A key attraction for IMI of the acquisition was the TextLocal team, who have successfully developed and sold its market leading platform with a track record of delivering revenues profits and cash flow.

TextLocal fits well with IMI's approach of acquiring access to customers, profits and positive cash flow, and helps strengthen the Company's position in the UK market.

Further information on TextLocal

TextLocal is based is offices in Chester and Malvern and employs 30 people from these locations.

In the year ended 30 November 2013 TextLocal reported a turnover of £7m and made a profit after taxation of £1m. As at 30 November 2013, being the date of TextLocal's latest published audited financial statements, TextLocal had net assets of £0.7m.

TextLocal was advised by GP Bullhound, the leading European technology investment bank.

Post-Acquisition integration

The directors believe that TextLocal as a result of its product suite and culture can be integrated effectively into IMI's UK operations. Whilst not a key driver for the acquisition the board believes that through the integration some attractive cost synergies can be obtained. The board believes that the TextLocal product suite and SMB intellectual property can be utilised across the broader group and has identified significant cross selling opportunities.

Terms of the Acquisition

The maximum total consideration for the acquisition is £13.15 million, comprising an initial consideration of £10.00 million payable in cash, and £1.00 million satisfied by the issue of 707,564 ordinary shares at a price of 141.33p per share with additional deferred payments, split over two years, of up to a maximum of £2.15 million. The initial cash consideration will be met from the Group's existing cash resources. TextLocal is debt free and at the date of acquisition has approximately £1.3m of net current assets.

The deferred consideration will be shared amongst the founders of the business and senior management providing IMI with a motivated and committed team to leverage TextLocal's technology across IMI's geographic regions.

Application has been made for the shares to be allotted pursuant to the acquisition to be admitted to AIM with such Admission expected to take place on Friday 17th October 2014.

Trading update

Before the Group enters its close period ahead of the announcement of its interim results expected to be in early December the board is pleased to provide the following update on trading.

We have made a good start to the year and trading in the first six months has been in line with directors' expectations. Performance in the Group's core European activities, which account for approximately 50% of the business, has been strong with significant gross profit growth in the region from a higher margin mix of sales. The strong performance in Europe has been offset to some extent by challenging trading conditions in the Group's Indian operations which account for less than 20% of the Group's business. The board remains highly confident about the Group's prospects for the remainder of the year and the achievement of profit expectations for the enlarged Group for the full year ending March 2015.

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 About IMImobile PLC

IMImobile is a leading global technology company providing software and services which help businesses capitalise on the growth in mobile communication. Its services, delivered in over 60 countries in Europe, the Americas, MEA and India, help its clients to engage and transact with their customers more efficiently through smarter mobile engagement. The company's solution allow customers to use mobile as a channel to create new revenue streams, as CRM and customer engagement channel and as a channel to improve business operations.

IMImobile's DaVinci suite of products are modular, scalable and delivered through cloud infrastructure which is integrated into mobile operator networks, internet services and social media platforms. The products and solutions have helped IMImobile establish a blue-chip client base of leading mobile operators and global enterprises. Key customers include Vodafone, O2, Telefonica, Aircel, Airtel, BSNL, AT&T, MTN, France Telecom, Centrica, Coca-Cola, Universal Music, Tata, the AA, the BBC and major financial institutions.

The company is headquartered in London with offices in Hyderabad, Atlanta and Dubai and has 650 employees worldwide. IMImobile is quoted on the London Stock Exchange's AIM market with the TIDM code IMO.