BABYLON PUMP & POWER LIMITED — Capital/Financing Update 2014

Dec 22, 2014

ASX$Release$

23$December$2014$

==> picture [25 x 97] intentionally omitted <==

Agreement(to(acquire(( Syncom(Australia(Pty(Ltd(

• IMI(has(entered(into(an(agreement(in(relation(to(the(acquisition(of( Syncom(Australia(Pty(Ltd(

• Syncom(is(a(leading(provider(of(data(centre(based(co=location(and( managed(services,(hosting(and(cloud(computing(services(

• The(proposed(acquisition(accelerates(IMI’s(strategy(to(enter(the( co=location(and(managed(services(sector(

• IMI(expects(to(be(profitable(in(2015(after(completing(the( acquisition(

Introduction(

IMI$ Limited$ (ASX:$ IMI,$ IMIO)$ (“IMI”$ or$ “the$ Company”)$ is$ pleased$ to$ announce$ that$ it$ has$ entered$into$an$agreement$(“the$Agreement”)$in$relation$to$the$acquisition$of$Syncom$Australia$ Pty$Ltd$(“Syncom”)$via$a$reverse$takeover.$$$

Syncom,$through$its$subsidiary$companies$and$group$businesses,$is$a$leading$Australian$based$ provider$ of$ managed$ IT$ services$ including$ enterprise$ grade$ dedicated$ and$ virtual$ server$ hosting,$ secure$ coPlocation$ services,$ high$ capacity$ network$ access,$ scalable$ cloud$ services$ utilising$VMware$software,$data$processing$infrastructure,$web$hosting$services,$domain$name$ registration$ and$ data$ storage$ devices$ to$ a$ wide$ range$ of$ individual,$ small$ business$ and$ corporate$customers.$$Syncom$operates$7,500$dedicated$and$virtual$servers$on$behalf$of$more$ than$35,000$customers.$

The$ Syncom$ group$ includes$ a$ number$ of$ businesses$ serving$ the$ rapidly$ growing$ managed$ services$sector$including:$

• iCentre( P$provides$wholesale$data$centre$services$such$as$coPlocation$and$IP$transit$services$ for$the$individuals$through$to$large$corporates$at$its$secure$coPlocation$data$centre$facility$ in$Milton,$Brisbane;$

T 03 9607 8280 F 03 9613 4111

IM Medical Limited T 03 9607 8280 Level 40 F 03 9613 4111 140 William St. Melbourne VIC 3000Aust E im.medical@icloud.com ACN 009 436 908 W immedical.com.au

1

==> picture [25 x 97] intentionally omitted <==

• Indigo $ P$ provides$ enterprise$ grade$ server$ hardware$ from$ its$ Sydney$ dataPcentre,$ Indigo$ cloud$infrastructure$and$coPlocation$services$P$with$a$large$network$of$dedicated$and$virtual$ servers$Indigo$is$one$of$the$largest$dedicated$hosting$providers$in$Australia;$

• IntaServe $P$provides$fast$and$reliable$web$hosting$and$affordable$domain$registration;$and$

• Dedicated( Servers $ P$ the$ original$ and$ one$ of$ the$ largest$ providers$ of$ dedicated$ servers,$ powering$many$Australian$Web$Hosting$companies.$

Syncom$utilises$dataPcentres$in$the$heart$of$Sydney$at$Global$Switch$in$Ultimo$and$Vocus$DC$in$ Alexandria$and$operates$its$own$data$centre$in$Brisbane$at$Milton.$$It$is$currently$finalising$an$ agreement$to$lease$and$operate$the$Datacom$data$centre$facility$at$St$Leonards$in$Sydney.$

IMI$ reported$ at$ its$ Annual$ General$ Meeting$ on$ 28$ November$ 2014$ that$ the$ proposed$ acquisition$by$IMI$of$ADX$Management$Pty$Ltd$(ADX),$manager$of$the$Australian$Data$Exchange$ Property$Trust$has$been$subject$to$protracted$delays.$The$delays$have$been$outside$of$IMI’s$ control,$and$key$conditions$of$the$proposed$acquisition$have$not$been$satisfied.$As$a$result,$IMI$ has$terminated$the$acquisition$agreement$with$ADX.$

Syncom$reported$unaudited$earnings$before$interest,$tax$and$depreciation$of$approximately$ $2.0m$in$the$year$to$30$June$2014.$$Syncom$aims$to$increase$earnings$via$organic$growth$and$ by$targeted$acquisitions$of$consolidation$opportunities$in$the$data$centre$services$and$hosting$ sectors.$

The$acquisition$of$Syncom$is$consistent$with$IMI’s$strategy$of$focussing$on$the$provision$of$data$ centre$managed$services$and$cloud$computing$services.$$$

The$directors$of$IMI$believe$that$the$acquisition$of$Syncom$provides$IMI$with$a$more$direct$ entry$ into$ the$ managed$ services$ sector,$ a$ faster$ path$ to$ profitability,$ and$ will$ be$ subject$ to$ substantially$lower$implementation$risks.$$$$$$

The$Australian$data$centre$services$market$is$expected$to$grow$at$a$CAGR$of$14%$from$2013$to$ 2020$to$reach$A$1,737m$by$2020$with$Managed$Hosting$growing$more$rapidly$than$CoPlocation$ services[1] .$$Globally,$cloud$data$centre$traffic$will$grow$at$a$faster$rate$(35%$CAGR)$or$4.5Pfold$ growth$from$2012$to$2017[2] .$

The$ Board$ believes$ that$ the$ entry$ into$ the$ data$ centre$ services$ market$ via$ the$ proposed$ acquisition$of$Syncom$is$in$the$interests$of$IMI$shareholders$and$will$prove$to$be$a$very$positive$ step$for$the$Company.$$$

1$Frost$&$Sullivan$2014$

2$Cisco$Global$Cloud$Index$2012P2017

IM Medical Limited T 03 9607 8280 Level 40 F 03 9613 4111 140 William St. Melbourne VIC 3000Aust E im.medical@icloud.com ACN 009 436 908 W immedical.com.au

2

==> picture [25 x 97] intentionally omitted <==

Acquisition(Terms(

The$all$scrip$acquisition$of$Syncom$is$subject$to$shareholder$approval$and$certain$conditions$ precedent.$$The$terms$of$the$Heads$of$Agreement$entered$into$between$IMI,$Syncom$and$Jon$ Eaves$(controller$of$Syncom)$contains$the$terms$of$the$Acquisition,$are$as$follows:$

• (a)$ the$agreement$is$subject$to$a$number$of$conditions$including:$

• satisfactory$financial,$legal,$technical$and$commercial$due$diligence$investigations$by$ both$Syncom$and$IMI;$

• entering$ into$ definitive$ transaction$ documentation$ with$ all$ of$ the$ shareholders$ of$ Syncom;$

• completion$ of$ the$ transfer$ of$ certain$ operating$ companies$ and$ assets$ to$ Syncom$ prior$to$completion;$

• completion$ of$ a$ minimum$ of$ $3.0$ million$ equity$ capital$ raising$ by$ IMI$ that$ is$ proposed$to$be$underwritten$(“ Equity(Capital(Raising ”);$

• IMI$shareholder$approval$of$the$matters$the$subject$of$this$announcement;$and$$

• rePcompliance$with$Chapters$1$&$2$of$the$ASX$Listing$Rules$and$rePadmission$to$the$ official$list$of$the$ASX.$$

• (b)$ Under$the$Heads$of$Agreement,$Syncom$has$undertaken$to$procure$that$IMI$will$acquire$ all$the$shares$in$Syncom$from$its$existing$shareholders.$$Consideration$for$the$acquisition$ of$Syncom$is$new$IMI$shares$to$be$issued$at$20$cents$per$share$postPconsolidation,$with$a$ value$ of$ approximately$ $10.0$ million,$ subject$ to$ adjustment$ based$ on$ a$ multiple$ of$ 5$ times$the$annualised$and$aggregate$audited$maintainable$Earnings$before$Interest,$Tax,$ Depreciation$and$Amortisation$of$Syncom$for$the$half$year$to$31$December$2014.$

• (c)$ IMI$will$hold$a$shareholder$meeting$to$seek$approval$for:$

• (i)$ the$1$for$125$share$consolidation;$$

• (ii)$ the$issue$of$shares$as$consideration$for$the$Acquisition;$

• (iii)$ the$Equity$Capital$Raising;$$

• (iv)$ change$in$the$nature$and$scale$of$business$arising$from$the$Acquisition;$

• (v)$ change$ of$ name$ of$ IMI$ to$ Syncom$ Limited$ and$ associated$ change$ to$ the$ constitution;$

• (vi)$ appointment$of$the$new$directors;$$

• (vii)$ the$issue$of$124$million$options$(on$a$prePconsolidation$basis)$to$investors$in$a$share$ placement$announced$on$19$December$2013.$$The$options$are$exercisable$at$0.2$ cents$(prePconsolidation)$on$or$before$31$March$2019$(“Option”);$and$

IM Medical Limited T 03 9607 8280 Level 40 F 03 9613 4111 140 William St. Melbourne VIC 3000Aust E im.medical@icloud.com ACN 009 436 908 W immedical.com.au

3

==> picture [25 x 97] intentionally omitted <==

(viii)$ other$shareholder$approvals$as$required$to$effect$the$acquisition$of$Syncom.$

New(Directors(

On$completion$of$the$Acquisition,$it$is$proposed$that$Mr$Andrew$Hardy,$Mr$Jamie$Cullen$and$ Mr$Jon$Eaves,$will$join$the$Board$of$IMI.$$The$appointments$will$bring$significant$expertise$to$ the$IMI$Board.$$Profiles$of$the$proposed$new$directors$are$set$out$below:$

Andrew(Hardy(=(Chief(Executive(Officer(elect(

Andrew$coPfounded$Harbour$MSP$in$2003$to$provide$data$centre$services$to$local$and$multiP national$ clients$ across$ a$ wide$ range$ of$ industries.$ $ Harbour$ MSP$ was$ cash$ flow$ positive$ within$18$months,$and$was$sold$to$NTT$Communications$in$2013$with$revenues$of$$AUD40m$ and$with$4,000$m2$of$data$centre$space$across$5$data$centres$in$Sydney,$Melbourne$and$ Singapore.$$

Andrew$ has$ over$ twenty$ years’$ experience$ in$ the$ telecommunications$ and$ coPlocation$ services,$including$7$years$for$MFS/Worldcom$in$senior$sales$and$management$positions$in$ Japan$and$Europe.$

Jamie(Cullen(–(Proposed(Non=Executive(Director(elect(((B.Com,(CA,(F(Fin,(FAICD)(

Twenty$years$experience$as$CEO$of$ASX$listed$entities$P$Resource$Equipment$Limited$(2008$–$ 2014)$and$PCH$Group$Ltd$(1994$–$2007),$both$specialist$international$rental$and$contracting$ businesses$serving$the$mining,$oil$&$gas$and$construction$sectors.$$$Previously$finance$and$ management$ executive$ in$ motion$ picture$ industry$ in$ Los$ Angeles$ and$ prior$ to$ that$ with$ PriceWaterhouseCoopers$in$Australia,$New$Zealand$and$Los$Angeles.$

Jon(Eaves(=(Chief(Operating(Officer,(Executive(Director(elect(

Jon$ Eaves$ is$ the$ founder$ and$ major$ shareholder$ in$ Syncom$ and$ has$ built$ the$ combined$ business$ to$ an$ EBITDA$ of$ approximately$ $2m$ in$ 2014$ with$ no$ significant$ debt.$ Jon$ established$the$successful$hosting$business$in$2001$which$expanded$into$cloud$computing,$ coPlocation,$data$centre$services,$and$remote$technical$support.$$$Jon$sold$his$Sydney$and$ Melbourne$based$coPlocation$business$to$Vocus$Communications$in$2010$and$retained$the$ server$and$hosting$business$which$has$delivered$continued$growth.$

Jon$ acquired$ Intaserve$ in$ 2012$ and$ has$ since$ expanded$ the$ Syncom’s$ services$ to$ include$$ shared$hosting$and$cloud$hosting,$$and$domain$name$registration.$$Jon$has$also$led$more$ recent$acquisitions$including$hosting$providers$Unlimited$Space$and$Dhost.$

Richard$ Wadley,$ will$ continue$ as$ an$ executive$ director,$ and$ is$ Chief$ Financial$ Officer$ and$ Company$Secretary$of$IMI.$

IM Medical Limited T 03 9607 8280 Level 40 F 03 9613 4111 140 William St. Melbourne VIC 3000Aust E im.medical@icloud.com ACN 009 436 908 W immedical.com.au

4

==> picture [25 x 97] intentionally omitted <==

On$completion$of$the$Acquisition,$with$the$appointment$of$the$new$directors,$existing$directors$ Mr$Nigel$Blaze,$and$Mr$Paul$Burton$will$resign$from$the$IMI$Board.$$$

The$Board$will$consider$the$appointment$of$additional$experienced$potential$executives$and$ directors$ to$ further$ broaden$ the$ skills$ and$ expertise$ available$ to$ the$ Board.$ $ The$ Company$ expects$to$make$an$announcement$regarding$additional$directors$in$the$near$future.$

Re=compliance(with(Chapters(1(&(2(of(the(ASX(Listing(Rules(

The$proposed$acquisition$of$Syncom$constitutes$a$significant$change$in$the$nature$and$scale$of$ the$Company’s$activities$of$the$nature$contemplated$by$Chapter$11$of$the$ASX$Listing$Rules.$As$ a$result$of$changing$the$nature$of$its$activities$to$the$provision$of$technology$services,$various$ aspects$of$the$transaction$will$need$to$be$approved$by$shareholders$and$the$Company$will$need$ to$rePcomply$with$the$requirements$of$Chapters$1$and$2$of$the$ASX$Listing$Rules.$

The$Company$intends$to$convene$a$meeting$of$shareholders$as$soon$as$practicable$to$approve$ the$necessary$aspects$of$the$transaction.$IMI$will$also$issue$a$prospectus$for$the$Equity$Capital$ Raising$ to$ enable$ the$ Company$ to$ complete$ the$ Acquisition$ and$ support$ its$ intended$ development$ strategy.$ Further$ details$ will$ be$ provided$ in$ the$ Notice$ of$ Meeting$ and$ the$ Prospectus$which$will$be$sent$to$all$IMI$shareholders.$$$

The$ Company$ expects$ its$ securities$ will$ be$ suspended$ from$ trading$ from$ the$ date$ of$ the$ meeting$ of$ shareholders$ and$ will$ remain$ in$ suspension$ until$ the$ Company$ satisfies$ the$ requirements$ of$ Chapters$ 1$ and$ 2$ of$ the$ ASX$ Listing$ Rules.$ It$ is$ anticipated$ that$ the$ IMI$ shareholder$meeting$will$occur$in$early$March$2015.$

Proposed(Share(Consolidation,(Equity(Capital(Raising(and(Use(of(Funds(

IMI$has$received$commitments$for$a$convertible$loan$to$sophisticated$and$professional$ investors$introduced$by$Patersons$Securities$Limited$to$raise$approximately$$300,000$before$ costs$(“ Convertible(Loan ”).$$The$new$funds$will$be$applied$towards$costs$of$the$Acquisition$and$ capital$raisings$and$towards$general$working$capital.$$Subject$to$shareholder$approval,$the$ Convertible$Loan$will$convert$into$IMI$shares$at$$0.0015$per$share$(equivalent$to$18.75¢$post$ consolidation).$Investors$in$the$Convertible$Loan$will$also$receive$a$1$free$attaching$option$with$ every$share$on$conversion,$exercisable$at$25¢$on$or$before$31$March$2019$

The$Company$intends$to$seek$shareholder$approval$to$consolidate$its$shares$on$a$1$for$125$ basis$and$to$raise$$3.0$million$via$a$prospectus$offering.$$The$Equity$Capital$Raising$is$expected$ include$a$priority$offer$to$IMI$shareholders$of$$1.5$million.$$Investors$will$receive$1$free$listed$ option$for$every$3$shares$subscribed$under$the$Equity$Capital$Raising$(exercisable$at$25¢$postP consolidation$on$or$before$31$March$2019)$(“ Option ”).$

IM Medical Limited T 03 9607 8280 Level 40 F 03 9613 4111 140 William St. Melbourne VIC 3000Aust ACN 009 436 908

E im.medical@icloud.com W immedical.com.au

5

==> picture [25 x 97] intentionally omitted <==

The$Company$has$appointed$Patersons$Securities$Limited$(“ Patersons ”)$as$Corporate$Adviser$in$ respect$ of$ the$ Acquisition$ and$ as$ Lead$ Manager$ to$ the$ Equity$ Capital$ Raising.$ $ The$ Equity$ Capital$ Raising$ is$ proposed$ to$ be$ underwritten,$ and$ further$ details$ in$ respect$ of$ the$ capital$ raising$will$be$set$out$in$the$prospectus$which$the$Company$expects$to$lodge$in$January$2015.$$$

The$proceeds$of$the$capital$raising$will$be$used$to$complete$the$Acquisition,$to$provide$capital$ for$potential$acquisitions$by$Syncom,$to$pay$the$costs$of$the$Acquisition$and$the$Equity$Capital$ Raising$and$for$general$working$capital$purposes.$

Financial(Impact(of(the(Acquisition(

Syncom$ Australia$ Pty$ Ltd$ is$ the$ new$ holding$ company$ for$ a$ number$ of$ private$ businesses$ providing$data$centre,$hosting$and$managed$services.$$The$audited$accounts$for$the$Syncom$ group$are$currently$being$prepared,$and$will$be$disclosed$in$the$Notice$of$Meeting.$$Under$the$ acquisition$terms$between$IMI$and$Syncom$the$acquisition$consideration$will$be$based$on$5$x$ annualised$audited$Syncom$group$maintainable$EBITDA$for$the$6$month$period$to$31$December$ 2014,$paid$in$IMI$scrip$issued$at$20$cents$per$share$after$a$1:125$share$Consolidation.$$$$

Based$on$unaudited$management$accounts$which$are$still$subject$to$adjustment,$the$Syncom$ group$ had$ revenues$ of$ $6.1$ million$ in$ the$ year$ to$ 30$ June$ 2014,$ and$ in$ the$ same$ period$ generated$ a$ gross$ profit$ of$ $4.0$ million,$ and$ EBITDA$ of$ $1.8$ million.$ $ As$ at$ 30$ June$ 2014,$ Syncom$had$proPforma$Net$Assets$of$$5.1$million.$

Capital(Structure(

The$ indicative$ capital$ structure$ of$ IMI$ is$ set$ out$ below$ on$ the$ basis$ of$ completion$ of$ the$ Consolidation,$the$minimum$Equity$Capital$Raising$and$the$Acquisition.$$

	Shares		Options	Gross Amount Raised
		%
	(m)		(m)	($m)
Current Securities on Issue	952		7181	-
Convertible Loan issue	200		200	$0.3
Totalpre-consolidation	1,152		918	$0.3
After 1 for 125 consolidation	9.2	12.4%	7.3	-
Acquisition of Syncom	50.0	67.4%	-	-
Prospectus raising2	15.0	20.2%	5.0	$3.0
Prior Placement Options3			1.2
Total	74.2m	100%	13.5m	$3.3m

1. Existing$options$exercisable$at$90¢$(postPconsolidation)$on$or$before$30$Sept.$2016.$

2. The$Prospectus$Offer$is$conditional$on$IMI$shareholder$approval$and$completion$of$the$acquisition$of$Syncom$Pty$Ltd,$reP compliance$with$Chapters$1$&$2$of$the$ASX$Listing$Rules$and$rePadmission$to$the$official$list$of$the$ASX$

3. Options$to$be$issued$in$relation$to$a$prior$placement$on$the$same$terms$as$the$Options,$subject$to$shareholder$approval$ 4. Up$to$5$million$Performance$Shares$and$5$million$Options$are$to$be$issued$conditional$on$defined$hurdles$relating$to$specific$ EBITDA$and$EPS$hurdles$(tbd)$

T 03 9607 8280 F 03 9613 4111

IM Medical Limited Level 40 140 William St. Melbourne VIC 3000Aust ACN 009 436 908

E im.medical@icloud.com W immedical.com.au

6

==> picture [25 x 97] intentionally omitted <==

Details$of$the$proposed$share$consolidation$and$the$Equity$Capital$Raising$will$be$set$out$in$the$ Notice$of$Meeting$and$Prospectus$expected$to$be$lodged$in$January$2015.$

Change(of(Company(Name(

The$Company$will$seek$shareholder$approval$to$change$its$name$to$Syncom$Limited$to$better$ reflect$the$nature$of$the$company$after$completion$of$the$Transaction.$

Indicative(Timetable(

Event	Expected Date*
Dispatch Shareholder Meeting Documentation and Prospectus	Early February 2015
Shareholder Meeting, Complete Equity Capital Raising	Early March 2015
Suspend Company Shares	Early March 2015
Re-comply with Listing Rules 1 & 2	Mid March 2015
Complete Acquisition	Mid March 2015

*$Shareholders$should$note$that$the$timetable$is$indicative$only$and$is$subject$to$change.$$The$Company$will$keep$ shareholders$informed$of$the$timing$of$implementation$of$the$transaction$as$it$progresses.$

For$and$on$behalf$of$the$IMI$Board$

Nigel$Blaze$ Chairman

T 03 9607 8280 F 03 9613 4111 E im.medical@icloud.com W immedical.com.au

IM Medical Limited Level 40 140 William St. Melbourne VIC 3000Aust ACN 009 436 908

7