Acquisition of Red Circle Technologies Limited

12th December 2007

The Board of Zamano Plc, a leading provider of digital entertainment to mobile devices, is pleased to announce that it has conditionally agreed to acquire the entire issued share capital of Red Circle for Consideration of up to Euro 24.4 million.

Highlights

Red Circle is a successful, Dublin-based, leading provider of digitalentertainment to mobile devices, with over 500,000 active subscribers in the UK, Australia, USA and Ireland.

Red Circle generated revenues, restated under IFRS, of Euro31.1 million in the year ended 31 May 2007, delivering EBITDA of Euro3.5 million and profit after tax of Euro3.3 million.

The Acquisition will expand Zamano’s suite of mobile brands serving a range of demographics in four separate geographic markets, and treble the active subscriber base.

The Board believes that the acquisition provides Zamano with significantly increased scale in the UK, Ireland and Australia and that the emerging presence in the strategically important US market represents a strong opportunity for further expansion for the Enlarged Group. The Acquisition is in line with the Group’s strategy of balancing strong organic growth with strategic acquisitions and maintaining a hybrid B2B:B2C business model. The acquisition strengthens the Group’s B2C presence in the core UK and Ireland market to match the existing strong positioning of its B2B business in this market. The Board expects pre-tax cost savings of at least Euro500,000 per annum will be generated once the full benefits of the Acquisition are realised. These benefits will be off-set in year one by certain integration costs of combining the two businesses.

The maximum total consideration payable of Euro24.4 million consists of two elements: Euro17.2 million payable at completion and up to Euro7.2 million additional consideration based on Red Circle’s EBITDA for the three months ending on 31 December 2007. If the maximum additional consideration of Euro7.2million is paid, Red Circle will have generated EBITDA of at least Euro3.9 million in the year ending 31 December 2007.

The initial consideration and the additional consideration will be split 75% cash and 25% in Zamano shares.

The cash element of the consideration will be funded by a new loan facility with Bank of Scotland (Ireland).

The maximum number of Consideration Shares to be issued pursuant to the Acquisition is 16,944,444 shares, representing approximately 20 per cent. of the equity of the Enlarged Group. The final number of Consideration Shares to be issued will be calculated based on a share price of 36 cents per share(which represents a premium of approximately 9.1 per cent. to the closing share price on 23 November 2007), or, if higher, the average closing share price during the five days prior to the EGM. On Completion, the Vendors will enter into an agreement not to dispose of any of their consideration shares for 12 months. The Board believes that the acquisition will immediately enhance earnings per share of the Group (before the amortisation of intangible assets). The Enlarged Group will be managed by the existing Zamano Board, Rod Matthews (Non Executive Chairman), John O’Shea (Managing Director) and Colm Saunders (Finance Director), supported by its Non Executive Directors, Brendan Mullin, Colin Tucker and John Michael Watson.

As a result of the size of Red Circle relative to Zamano, the Acquisition constitutes a reverse takeover under the AIM Rules for Companies and the IEX Rules for Companies and is conditional, inter alia, on the approval of Shareholders at the EGM which has been convened for 11.00 a.m. on 12 December 2007.

If the Acquisition is approved, the admission of the Existing Ordinary Shares to trading on AIM and IEX will be cancelled and the Company will apply for its enlarged share capital to be re-admitted to trading on AIM and IEX, with admission expected to occur on 13 December 2007.

The Board of Zamano, who have been advised on the Acquisition by NCB Corporate Finance, believe that the Acquisition is in the best interests of the Company and its S hareholders and unanimously recommend that all Shareholders vote in favour of the Acquisition, as they intend to do in respect of their own beneficial holdings of Ordinary Shares.

John O’Shea, Managing Director of Zamano, said:

“This is a transformational deal for Zamano and brings together two successful mobile technology companies, creating an enlarged company which will operate on a global level.

The Acquisition more than doubles Zamano’s revenue on a pro-forma basis.

Red Circle is Zamano’s fifth acquisition overall and the second in 2007; the Directors are confident that this will be another successful transaction. The Company will continue to seek further organic and inorganic opportunities for growth in line with the strategy.

I am delighted to welcome the Red Circle team, led by Cathal Fay, to the Group and look forward to working with them to ensure the continuation of their strong track record of growth and innovation.quot;

Rod Matthews, Chairman of Zamano, added:

quot;Zamano’s business continues to perform very strongly and, as I stated at the time of our interim results announcement in September, the Board continue to be very comfortable with market expectations for the full-year to 31 December 2007.quot;

The Admission Document containing a notice convening an Extraordinary General Meeting to be held at the Conrad Dublin Hotel, Earlsfort Terrace, Dublin 2, Ireland at 11.00 a.m. on 12 December 2007 is being sent to shareholders today.

 

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