New Low-Cost Email Device

London, Royal Tunbridge Wells, June 12, 2009. - Synchronica plc, the international provider of mobile email and synchronization solutions, has announced a major new strategic collaboration with a Korean original device manufacturer (ODM) and a device distributor and an associated fundraising that should transform the company's prospects. The three partners are developing a low-cost, messaging-oriented handset that will be optimized for and bundled with Synchronica's Mobile Gateway, a low-cost, end-to-end mobile email solution, but at a price point for emerging markets. Synchronica will receive revenues per handset sold plus Mobile Gateway license fees. The impact should be significantly positive on Synchronica's revenues, profitability, and cashflows from 2010 onwards.

The partners believe that there is a significant opportunity for delivering a low-cost push email solution to the mass market, particularly in emerging economies where smartphone products and services are simply too expensive. They are thus developing an entry-level, email-centric device for emerging markets which will cost only a fraction of a typical smartphone device. Synchronica has been selected to provide the email and synchronization service that will power the device.

In an analyst note, research company Equity Development concludes: "This strategic collaboration is very positive for Synchronica as it will open up new distribution channels, provide a complementary hardware-based solution to its existing software-based solution, and generate new revenues sources from a share of handset sales. The Korean ODM and the distributor are excellent partners for Synchronica, given respectively their handset design and manufacturing expertise and their high-level relationships with mobile network operators."

As a condition of the deal, Synchronica has raised GBP 4.723 million gross of new equity to significantly strengthen its balance sheet. Whilst Synchronica will incur additional ongoing costs to support the collaboration (cicra USD 1.5 million per year initially), Equity Development estimates that the collaboration will be profitable for Synchronica from 2010; hence the additional funding will support Synchronica's growth from all sources. One of the collaboration parties will be granted options for 38.85 million shares (approximately 6.7 percent of the new, enlarged share capital) at a price of 2.5p, subject to performance criteria.

Synchronica believes that the market potential for such a device is significant, with global handset sales of over one billion a year (of which two thirds are in emerging markets) and comparable smartphone device sales of 31 million a year based on the fourth quarter of 2008 / 2009. Sales of the new device should be in the low millions at the very least.

Equity Development is taking this opportunity to revise its existing forecasts for the significant appreciation of sterling in recent weeks which will have a negative impact on Synchronica, given that many of its revenues are in USD whereas a reasonable proportion of its costs are in GBP. A change in the assumed GBP/USD rate from 1.48 to 1.70 reduces 2009 forecast EBITDA from GPB 1.165 million to GBP 0.394 million and 2010 from GBP 6.4 million to GBP 4.9 million before the impact of the collaboration and fundraise.

Equity Development has then adjusted these new forecasts to reflect the collaboration, incorporating additional costs for 2009, enhancements to revenues, EBITDA, net income and cashflows from 2010, and the impact on earnings per share (EPS) from the fundraise. Given the uncertainty over the sales potential of the new device, the analysts have presented two scenarios that they believe err on the side of caution:

• In Scenario one, sales of just 0.5 million units in 2010 and one million in 2011 would boost revenues and EBITDA by 20 percent and eight percent in 2010 and 28 percent and 23 percent in 2011 compared with the revised base forecast
• In Scenario two, sales of one million and two million in 2010 and 2011 would boost revenue and EBITDA by 40 percent and 39 percent in 2010 and 56 percent and 65 percent in 2011

Equity Development has adopted the first scenario for their new base forecasts for Synchronica, but will expect to revisit these as and when more information becomes available on the progress and potential of the collaboration. [1]

[1] Source: Equity Development

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About Synchronica

Synchronica plc develops and markets mobile email and synchronization solutions for mobile operators and device manufacturers. Products include the award-winning push email and synchronization solution Mobile Gateway and the device backup solution Mobile Backup. Based on industry standards, Synchronica can reach the built-in email and synchronization clients of more than two billion mobile devices on the market today. Service providers in emerging and developed markets use Synchronica's products to offer mobile email, PIM synchronization, and backup and restore services to consumer and business subscribers.

Headquartered in England, Synchronica has a development center in Germany and presences in the USA, Hong Kong, and Dubai. Synchronica plc is a public company traded on the AIM list of the London Stock Exchange (SYNC.LN). More information is available at www.synchronica.com

For more information, please contact:

Nicole Meissner
Chief Operating Officer
Tel.: +44 1892 552 780
Mobile: +44 7977 256 412
Fax: +44 1892 552 721
nicole.meissner@synchronica.com