18 February 2014

Keywords Studios plc ("Keywords", "the Group")

Acquisition of Babel Media Ltd

Operational synergies and enlarged global presence

Keywords Studios, the international technical services provider to the global video games industry, today announces the acquisition of Babel Media Ltd ("Babel"), a leading provider of outsourced video games services with operations in the UK, Canada and India, from Quatrro Global Services Pvt. Ltd. and The D. E. Shaw Group.

The acquisition is in line with Keywords Studios' strategy of growing both organically and by acquisition to extend the Group's client base, market penetration or service lines, where the Group can use its existing expertise, multi-service platform, scale and global reach to generate synergies.

Under the terms of the acquisition, which is expected to be materially earnings enhancing in the first year, Keywords Studios is paying the sellers and settling the financing obligations of Babel to a total of £5,369,000. This is being satisfied as to £2,215,000 by the issue of 1,516,944 new shares in Keywords Studios at a price of 145.994 pence per share (being the volume weighted average price over the preceding 5 trading days) and cash amounts to settle indebtedness to a total of £3,154,000.

 Founded in 1999, Babel Media is one of the most recognised technical services brands in the video games industry. The unaudited management accounts for the 10 months to 31 January 2014 show Babel has achieved revenues of £6.4m and EBITDA of £0.4m; it has net assets of £1.44m after adjusting for the loans being repaid.

Babel's strengths are in Localisation Testing, Functional Testing and the Translation of video games for leading video game publishers and developers. Combining the two businesses will significantly broaden Keywords' function testing capability (which accounted for less than 3% of Group turnover in the first half of the current financial year) whilst providing substantial operational synergies with Keywords existing Localisation Testing and Translation activities and extending the number of client relationships across the combined Group. The business will be integrated into Keywordsduring the course of 2014 and, by bringing Keywords' operational efficiency to Babel's strong brand, we anticipate the business delivering significant margin improvement as part of the wider group.

Andrew Day, Chief Executive of Keywords Studios, commented:

"The acquisition of Babel brings together two of the leading video games testing and localisation providers, firmly establishing Keywords as the market leader in its field, with operations across Dublin, Rome, Montreal, Seattle, Tokyo and now in New Delhi.

"The acquisition will not only generate considerable cost synergies but it will provide greater scale and breadth of services for our combined interactive media client base globally.  Adding India to our global locations, with its significant cost advantages, is another important step in both enhancing Group margins and enabling our clients and prospects to benefit from a range of services differentiated by cost, flexibility, time zone, scalability and languages offered. "

"We look forward to welcoming Babel's highly talented employees to the fast growing Keywords group and to continuing to build upon its strong brand with Keywords' approach to focusing on the efficient delivery of high quality services to our clients."

Raman Roy, Chairman and CEO of Quatrro, commented:

"This divesture is a win-win for both companies. While it allows us to focus on our core business lines, it will also provide Babel Media with the right platform for the next phase of its growth. I would like to wish the Babel and Keywords Studios teams the very best for the future."

For further information, please contact:

About Keywords Studios

Keywords Studios is an international technical services provider to the global video games industry.  Established in 1998, and now with facilities in Dublin, Tokyo, Rome, Montreal and Seattle, it provides integrated localisation, testing and audio services across 30 languages and 12 games platforms to a blue chip client base in more than 15 countries. It enjoys a leading market position, providing services to 15 of the top 25 most prominent games companies listed by Gartner¹, including Microsoft, Namco Bandai, Konami, Sony, Electronic Arts and Square Enix. Key recent titles it has worked on include: Dead Rising 3, Pro Evolution Soccer 2014, Assassin's Creed IV: Black Flag, Forza Motorsport 5, Candy Crush Saga, Clash of Clans and Farmville 2.  Keywords is listed on AIM, the London Stock Exchange regulated market (KWS.L). For further information, please visit: www.keywordsstudios.com.

About Babel Media

Babel is a leading global provider of outsourced specialist services to the games and interactive entertainment industries. Founded in 1999, the company has delivery centres in New Delhi, India and Montreal, Canada.  The company provides a complete outsourced testing and localisation service for all Console, PC, Online, Handheld and Mobile content, to many of the biggest names in games and interactive entertainment, working on thousands of titles including many of the best-selling titles of the past few years.

Babel is an authorised QA testing partner for Microsoft, Sony and Nintendo, as well as an authorised partner for QUALCOMM, Apple, Android and Nokia. Babel has been voted Best Outsourcing Company 2003, 2005, 2007 and 2008, at the Develop Industry Excellence Awards. For further information, please visit: www.babelmedia.com.