Interim Results

13 February 2012

Monitise plc

Interim results for the six months to 31 December 2011

H1 FY 2012 REVENUE OF £15.8M ($24.5M1 ), THREE TIMES H1 FY 2011'S £5.3M ($8.2M)

FULL-YEAR REVENUE GUIDANCE RAISED 21% TO £34M ($53M)

PROFITABILITY OF LIVE OPERATIONS FIVE TIMES H1 FY 2011

RECORD ORDER BOOK OF £83M ($128M) AT 31 DECEMBER 2011

MILLIONS OF CUSTOMERS MOVING BILLIONS OF POUNDS VIA HUNDREDS OF MILLIONS OF TRANSACTIONS

LONDON - Monitise plc (LSE: MONI), the technology and services company delivering mobile banking, payments and commerce networks worldwide, announces its unaudited interim results for the six months ended 31 December, 2011.

Financial highlights

·; H1 FY 2012 revenue of £15.8m ($24.5m ), three times H1 FY 2011's £5.3m ($8.2m) and 12% higher than FY 2011

·; EBITDA2 in Live Operations3 of £4.8m ($7.5m), five times H1 FY 2011 and greater than£3.4m ($5.2m) in FY 2011

·; Group EBITDA2 loss reduced from £7.5m ($11.6m) in H1 FY 2011 to £6.9m ($10.7m) in H1 FY 2012

·; Group pretax profit of £1.1m ($1.6m), reflecting one-time gain of £10.1m ($15.6m), related to acquisition of majority 51% holding in Monitise Americas joint venture

·; Strong cash position of £43m ($67m), debt free

·; Record order book of £83m ($128m) at 31 December 2011, with a further £120m ($186m) of revenues with a high degree of visibility from existing contracts over the next five years, totalling £203m ($314m)

1 Foreign exchange rate for Sterling/US Dollar used in the interim results is $1.55, being the rate as at 31 December 2011

2EBITDA is defined as operating profit/loss before depreciation, amortisation, share-based payment charges and one-off gains made on the acquisition of subsidiaries

3 Live operations comprise Monitise UK, Monitise US and Global Accounts (incl Visa Inc., Visa Europe and Travelex)

Business highlights

·; Demand accelerates for Monitise mobile money services

o Monitise's Enterprise Platform is now enabling billions of pounds of transactions per annum and rising

o 480m transactions a year are processed across the platform, compared with 120m transactions per annum in December 2010

o At peak times, more than 1m customers daily are using Monitise services to manage their money in real time via their mobile handsets

o Monitise and Visa Europe delivered the first pan-European mobile person-to-person payments and alerts service

o Strategic partner RBS extends its hugely successful retail mobile banking apps for personal customers to mobile business banking customers via new range of apps for iPhone, iPad and iPod touch that Monitise helped to develop

·; Step change in US market

o Visa Inc., in collaboration with Monitise, announced on 8 February, 2012, new mobile services offered via its Debit Processing Service (DPS), the largest issuer processor of Visa transactions in the US. DPS allows financial institutions to offer their account holders the ability to monitor account history and balances, transfer funds between accounts, and receive instant transaction alerts on their mobiles

o Acquisition of FIS's 51% majority stake in joint venture, Monitise Americas, enables Monitise to sell directly into the US market

o Five-year strategic partnership entered with FIS to create innovative mobile money services for existing and new clients via a licensing, services and development agreement involving multi-million dollar per annum revenues

o U.S. Bank partnered with Monitise Americas and FIS to offer a new mobile app for U.S. Bank ReliaCard Visa cardholders in 16 states

o Frank D'Angelo, former FIS Executive Vice President of Payment Solutions, joins as Executive Chairman of Monitise's US business

·; Powerful partnerships deepened in Europe

o Alliance with Visa Europe strengthened on 31 October 2011 via a strategic investment of £24.7m ($38.3m) in Monitise made by Visa Europe to assist in the delivery of its 'Future of Payments' strategy

o Launch of alerts service alongside bill pay and person-to-person services, allowing registered users to transfer funds to any Visa cardholder in Europe from their mobile

·; Mobile commerce launch in UK

o Monitise joint venture, the Mobile Money Network™, launched Simply Tap™ using the Monitise Enterprise Platform

o The Carphone Warehouse, HMV, Thorntons, Goldsmiths, thehut.com, Pretty Green and moreTvicar.com among launch phase retailers, with more announcements to follow shortly

·; Worldwide reach broadened

o In India, the launch of Monitise's mobile payments service through a 50/50 joint venture with Visa Inc. is progressing with further announcements regarding partner banks expected in the coming weeks 

o In the Asia Pacific region, a mid-2012 launch is planned with local partner JETCO, the major ATM switch serving the majority of banks in Hong Kong, with one of the initial launch clients for mobile payments being PCCW mobile. In Indonesia, the joint venture with Astra subsidiary AGIT will also be launching an innovative payment service around this time.

o In Africa, the Central Bank of Nigeria licenced the Monitise mobile money platform in the country with person-to-person transfers, salary payments and airtime top-up services already live with MainStreet Bank. Other banks in Nigeria are expected to become members of the Monitise mobile payments ecosystem over the coming months

·; Board strengthened - New Non-Executive Director appointments

o Peter Ayliffe,Visa Europe President and Chief Executive, appointed November 2011

o Brian McBride, previously Managing Director of Amazon.com in the UK, appointed September 2011

Outlook

·; We expect revenue to continue to grow during the second half from existing partnerships and have increased our guidance to £34m ($53m) for FY 2012 from £28m ($43m)

·; Gross margin guidance is increased to more than 70% by H2 FY 2013, driven by a greater proportion of user generated revenues, which have relatively higher margins, as clients evolve through the development phases to live operations

·; We expect continued growing profits from our live operations

·; Continued opex investment in value creating opportunities

·; Cash break-even remains on target for December 2013

·; Monitise is well funded with a cash balance of £43m ($67m)

·; The Board is encouraged by the performance of the company and looks to the future with confidence

Alastair Lukies, Monitise Group Chief Executive Officer, said:

"Our growth continues to accelerate and we had an excellent six months to the end of December 2011 with encouraging signs across all our key financial, operational and adoption metrics. Our rapidly growing order book, increasing pipeline and deepening partnerships further validate Monitise's leadership role as the enabler of choice in the mobile money industry.

Monitise's Enterprise Platform is the leading global, bank-grade enabler of mobile money, relevant to both the banked and unbanked markets, offering the widest range of services for consumers on the move who want to manage their money and shop via their handsets. This platform is scaling globally through our continued investment as we deliver against our strategy. We have particularly seen momentum accelerate in the US mobile money market and we believe we are well placed to benefit from this."

Duncan McIntyre, Monitise Group Chairman, said:

"The global market for mobile banking, payments and commerce across developed, hybrid and emerging markets has certainly reached a tipping point. Monitise has established its position as the global leader in this exciting space.

"The business goes from strength to strength and during the first half we continued to build on our networks of relationships and partnerships, including the recent key strategic agreements with FIS and Visa. The depth of experience across our Board has been further strengthened and we welcome Peter Ayliffe and Brian McBride as non-executive directors. I am also delighted to welcome Frank D'Angelo as Executive Chairman to our business in the US where our prospects look brighter than ever. Monitise is extremely well positioned to deliver ongoing value for our shareholders."

About Monitise

Monitise plc (LSE: MONI.L) is a technology and services company delivering mobile banking, payments and commerce networks worldwide with the proven technology and expertise to enable financial institutions and other service providers to offer a wide range of services to their customers in developed and emerging markets.

With live services in the UK, the US, India and Africa, the company is working with international partners to extend trusted and secure mobile banking, payment and commerce services in territories worldwide, including Europe, Asia Pacific and Latin America. Monitise has strategic partnerships with Visa Inc., Visa Europe, RBS Group and FIS. Other leading partners and clients include HSBC, Lloyds Banking Group, First Direct, U.S. Bank, Standard Chartered Bank, Travelex, Vocalink, Vodafone, Orange, O2, T-Mobile, 3 UK, Research In Motion, Best Buy Europe, The Carphone Warehouse, First Eastern, Astra, JETCO and PCCW mobile.

More information is available at www.monitisegroup.com

Contacts:

Forward Looking Statements

This document includes forward looking statements. Whilst these forward looking statements are made in good faith they are based upon the information available to Monitise at the date of this document and upon current expectations, projections, market conditions and assumptions about future events. These forward looking statements are subject to risks, uncertainties and assumptions about the Group and should be treated with an appropriate degree of caution.

Business Review

This has been a period of strong progress for the Group with the launch of new services spanning mobile banking, payments and commerce for the banked and unbanked consumers across developed, hybrid and emerging markets. The mobile phone is revolutionising how businesses can enable consumers to bank, pay and shop. As a proven and trusted enabler, our strategy at Monitise is focused on being the mobile money technology platform of choice at the heart of a rapidly evolving worldwide ecosystem that delivers multiple network benefits to financial institutions and payment providers, mobile network operators, merchants and online commerce players.

Our performance during the first half of 2012 has rapidly built on our breakthrough 2011 year. EBITDA in our live operations is £4.8m, five times the comparable period during the first six months of 2011 and greater than the EBITDA of £3.4m booked in the 2011 full year. We have deepened, broadened and entered new partnerships and agreements worldwide, with leading businesses such as Visa Europe, RBS in the UK, FIS in the US and Astra in Indonesia.

The order book as at 31 December 2011 stands at £83m ($128m), up from £55m ($85m) in FY 2011, demonstrating the continuing strength and greater certainty of Monitise's future revenues. In addition, over the next five years, we are forecasting with a high degree of visibility further revenues of £120m ($186m) from existing contracts adding to £203m ($314m) in all.

The mobile, with its real-time functionality allowing consumers to manage their money whenever and wherever they want and irrespective of their handset, is now recognised as a key channel to help build richer, deeper engagement between businesses and their customers. Whether it is Visa Europe predicting that by 2020, more than half of all its transactions in Europe will be on a mobile or industry forecasts predicting that fees from mobile commerce will hit $37bn by 2016, the opportunities ahead are tremendously exciting and Monitise is perfectly positioned to build on its leadership role in mobile money.

Our key differentiators continue to be the combination of our unique market positioning, platform capability and network approach. These include: the strength and depth of our strategic partnerships worldwide; our global footprint; the breadth of our capabilities across mobile banking, payments and commerce; our scale and stability; and our mobile money roadmap, all of which enable our business to act as a trusted mobile partner, providing pragmatic services for today with a clear line of sight to the future.

Financial Review

We have continued to deliver considerable revenue growth, with H1 FY 2012 revenue of £15.8m being greater than the £14m generated in the entire 12 months to 30 June 2011. User generated revenue has grown to £5m, double H1 FY 2011, and development and integration revenues have grown to six times last year's H1, driven by the new contracts signed in 2011, including RBS, Visa Europe, The Mobile Money Network™ and Visa Inc. This growth will help drive the acceleration in user generated revenue over future periods as customers increasingly evolve from the development to live operation phases.

Gross margin has increased to 63% (H1 FY 2011: 62%). Development and integration margins have increased to 53% in H1 FY 2012 from 34% in H1 FY 2011 and user generated margins have reached 80% from 61% in the comparative period. We anticipate Group gross margins to increase to above 70% by H2 FY 2013. This uplift reflects the greater proportion of user generated revenue across the business anticipated from next year onwards.

Live Operations generated EBITDA of £4.8m in the period, five times the comparative period (H1 FY 2011: £1m), on revenues that are three times greater. The Group has continued to reinvest this profit in future operations, Monitise's Enterprise Platform and service delivery capability in line with its strategy. Group EBITDA has improved from a loss of £7.5m in H1 FY 2011 to a loss of £6.9m in H1 FY 2012.

The Group has generated profit before tax of £1.1m. This is due to an exceptional gain on the acquisition of the remaining 51% of Monitise Americas, as announced in October 2011. The one-off profit of £10.1m reflects the fair value of our previously held 49% stake of Monitise Americas. 

Operational Review

·; Technology

Monitise, via its Enterprise Platform, is best in class and simplifies the complexity of delivering secure mobile money services. The platform is the first truly global bank-grade platform for mobile money spanning banked and unbanked markets across banking, payments and commerce. We now have recorded 6m customer registrations, twice as many as the 3m at the start of January 2011.

Live operations

·; UK

In August 2011, Monitise entered a five-year global agreement with RBS Technology Services to provide the bank with our award-winning platform so it can offer mobile apps and services to customers. The contract covers all RBS Group divisions including RBS and NatWest UK Retail, Citizens Bank US, Ulster Bank and RBS Global Corporate and Business.

Post period end on 8 February, RBS and NatWest mobile business banking apps were launched. These were developed by Monitise in partnership with RBS Group Technology Services. The bank's SME customers will be able to have sight of multiple business bank accounts, check balances, view up to 100 transactions and make intra-account transfers. RBS and NatWest already operate successful apps for personal customers and the introduction of these new apps now extend across personal and business markets.

Global Accounts

Global accounts represent the Group's products and services to Monitise's global cross-territory customers, including Visa Inc. and Visa Europe.

·; Visa Inc.

During the period Monitise worked as technology development partner in close collaboration with Visa Inc., a global leader in payments, following the five-year global alliance agreement the two companies announced in June 2011. Monitise's expertise in customising mobile applications across a broad range of phone models and operating systems enables Visa to virtualise existing Visa accounts on mobile phones and offer Visa account holders globally a new array of payment types.

On 8 February 2012, Visa, in collaboration with Monitise, announced that it had made a significant enhancement to its issuer processing platform, Visa DPS, to offer mobile services that are fully managed by Visa Inc. and can be accessed with any mobile device, any mobile channel, and with any eligible debit, credit or prepaid account. Visa DPS processes more than 16bn payment transactions per annum, making it the largest volume issuer processor of Visa transactions in the world.

Enabling mobile services for debit, credit and prepaid products through the Visa DPS platform directly aligns with Visa Inc.'s global innovation strategy to accelerate the global shift to electronic mobile payments, to make payments more secure, more convenient and to bring electronic payments to more consumers in more places. The launch of mobile services offered by Visa DPS is a significant win for financial institutions in North America eager to utilise the mobile channel to serve their customers. Additional services are currently in development including mobile check deposit, mobile NFC payments, mobile offers, and support for V.me by Visa, Visa Inc.'s digital wallet.

·; Visa Europe

On October 31, 2011, Monitise announced a strategic investment from Visa Europe, with its CEO Peter Ayliffe joining our Board. This came eight months after we entered an agreement with Visa Europe to develop and supply mobile payments services for its 4,000+ member banks and financial institutions across 36 countries.

Through our partnership with Visa we have launched the first Europe-wide 'pay anyone' Mobile Person-to-Person Payments service, which allows registered users to transfer funds to any Visa cardholder in Europe from their mobile phone. This service was launched in tandem with the Visa Alerts service, which notifies cardholders on a real-time basis whenever their card has been used to make a purchase or to withdraw cash through Visa Europe's payment network. These market-leading innovations are the first in a series of developments Monitise is undertaking for Visa Europe over the coming months and years.

Monitise US

In September 2011, we further strengthened our US business, buying out the 51% majority holding in our Monitise Americas joint venture from FIS, one of the world's largest global providers dedicated to banking and payments technologies. This step-change in our US approach to mobile money puts Monitise in a stronger position by allowing us to sell directly into the key US market.

We entered a licensing, development and services agreement with FIS in December, 2011. The new partnership allows FIS to use our mobile banking and payments technology and helps strengthen the existing relationship between our two businesses. Under the terms of the five-year deal with FIS, which involves multi-million dollar per annum revenues, Monitise has created an agile mobile development and deployment team that will help banks and other financial institutions defend and extend their role in the payments industry by creating secure and innovative new products and services.

Investments in future operations

·; Mobile Money Network™

Simply Tap™ was launched in November 2011 by our joint venture, the Mobile Money Network™, using the Monitise Enterprise Platform. Simply Tap™ lets consumers order products they see by tapping a code into their mobile phone. From a foundation built on speed, security and credibility, the service is focused on making it easier for consumers to buy anything from anywhere in the UK with their mobile phone. This helps businesses sell more effectively via their existing channels. Carphone Warehouse and Best Buy Europe were among the first major retailers to integrate Simply Tap™ into how its customers can shop, joined by Thorntons, HMV, Goldsmiths, thehut.com, Pretty Green and more Tvicar.com, which have all signed up to the service with more announcements to follow shortly.

·; Monitise India

Development work has continued on our mobile payments service in India, through our 50/50 joint venture with Visa Inc. The joint venture will operate as a trusted partner to banks and mobile network operators, to provide a mass market mobile payments service initially for airtime, utility bills and tickets. Further announcements regarding the first partner banks are expected in coming weeks. 

·; Monitise Asia Pacific

In Hong Kong, we are making good progress towards a mid-2012 launch with local partner JETCO, the major ATM switch serving the majority of banks in Hong Kong, and PCCW mobile as one of the initial launch clients for mobile payments.

In Indonesia, our partnership collaborations are progressing after the announcement of plans in July 2011 to launch mobile banking, payments and commerce services in the country. This market is the world's fourth most populated country and one of the fastest-growing economies globally. Monitise Asia Pacific has a joint venture agreement with PT Astra Graphia Information Technology (AGIT), to develop cutting-edge new mobile services for Indonesia's huge population, both banked and unbanked. AGIT is an information and communication technology business and part of PT Astra International Tbk, the largest publicly-listed company in Indonesia. The JV has agreement at heads of terms level with Permata, a top 10 bank, to be one of our launch bank clients in mid-2012 for an innovative new payment service with other services being released later in the year. 

·; Monitise Africa

In Nigeria, customers can now open an account at an agent location without the need of a bank account. In November 2011 Monitise Mobile Money Nigeria, was authorised by the central bank of Nigeria to formally launch services. The service allows Nigerians to send and receive money safely from their handsets and make deposits, withdrawals and transfers via a network of approved agents as well as topping up their mobile airtime. In addition, the service can be used to make payments to employees or workers of small to medium-sized enterprises who do not necessarily have a bank account. Monitise in Nigeria, Africa's most populous country, is working with local governments to enable social aid and pension payments to citizens.

In the coming months, services such as mobile-based savings accounts will be offered in partnership with banks. Monitise's activities in Nigeria followed a successful mobile banking and payments pilot which attracted around 8,000 users and handled payments of more than 30m Naira (£150,000). Monitise Mobile Money Nigeria now has a network of agents in 15 locations across Nigeria.

Board appointments and people

The Monitise Board has been strengthened with the appointment of Peter Ayliffe and Brian McBride as non-executive directors.

Peter is currently President and Chief Executive of Visa Europe. Prior to joining Visa Europe in 2006, he spent more than 20 years with Lloyds TSB, where he held a number of executive posts in the bank's retail business, culminating in his appointment as a group board director. Peter also spent five years as a non-executive director on the Visa Europe board. Peter was named Industry Personality of the Year at The Card Awards 2009.

Brian McBride is a non-executive director on the BBC Executive Board. Brian is also Chairman of MX Data, a Member of the Advisory Board of Numis and Huawei UK, and Non-Executive Director of Computacenter. He was previously Managing Director of Amazon.com in the UK and brings with him more than 25 years experience in the IT industry. He began his career with Xerox and subsequently worked at IBM, Crosfield Electronics, Madge Networks, Lucent, Dell Computers as Vice President, Northern Europe and as Managing Director of T-Mobile (UK).

Our management team has also been strengthened by the appointment of Frank D'Angelo as Executive Chairman, of the Monitise business in the US. Frank has held prominent executive positions at FIS and Metavante. Frank is a respected business leader in the international payments industry with more than three decades of frontline and top-level experience driving innovative business and technology solutions spanning financial services, management, M&A, operations and sales. Frank has also spent nearly 20 years in senior management positions at Diebold, a worldwide leading supplier of ATMs and security systems. Before that, he worked for 10 years at Burroughs (now Unisys, the worldwide IT company) and held roles with IBM.

Alastair Lukies

Monitise Group Chief Executive Officer

Consolidated Statement of Comprehensive Income

1 Total Operating costs after one-off costs of £135,000 included in Exceptional gain on acquisition of subsidiary, depreciation, amortisation and share based payments for the period ended 31 December 2011 is £19,299,000 (period ended 31 December 2010: £12,187,000; year ended 30 June 2011 £26,257,000).

2 EBITDA is defined as Operating loss before exceptional gain, depreciation, amortisation and share based payments charge

All activities derive from continuing operations

Consolidated Statement of Financial position

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

* The Group's total cash balance (including short term deposits: see note 7) is £43.1 million (31 December 2010: £33.7 million; 30 June 2011: £23.6 million).

Notes to the Consolidated Financial Statements for the six months ended 31 December 2011

1. General Information

The Company is a public limited company incorporated and domiciled in England and Wales, whose shares are publicly traded on the Alternative Investment Market (AIM) of the London Stock Exchange. The address of the registered office is provided at the end of this document.

The condensed consolidated interim financial information was approved for issue by the Board on 8 February 2012.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2011 were approved by the Board on 31 August 2011 and delivered to the Registrar of Companies. The Auditors' report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 Companies Act 2006.

The condensed consolidated interim financial information is neither audited nor reviewed under IAS 34 and the results of operations for the six months ended 31 December 2011 are not necessarily indicative of the operating results for future operating periods.

2. Summary of Significant Accounting Policies

2.1 Basis of Preparation

The financial statements have been prepared under the measurement principles of IFRS, using accounting policies and methods of computation consistent, except as noted below, with those set out in the 2011 Monitise plc Annual Report and Accounts. The financial statements have been prepared under the historical cost convention. As the Group is listed on AIM, it is not required to adopt IAS 34 'Interim Financial Statements' in preparing the interim consolidated financial information and therefore is not in full compliance with IFRS.

Based on projections prepared of the Group's anticipated future results, the Directors have reasonable expectations that the Group will have adequate resources to continue in existence for the foreseeable future. Therefore the Directors continue to adopt the going concern basis in preparing these financial statements.

2.2 Accounting Policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2011, as described in those annual financial statements.

In the current year, the Directors have concluded that as the Group evolves, it is more appropriate to disclose costs as Operating costs, rather than a split between Administrative expenses and Distribution costs. The comparative periods have been adjusted accordingly.

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 July 2011, but are not currently relevant for the Group, or have had no impact:

·; IAS 24 (revised) 'Related party disclosures'

·; Amendments IAS 32 Financial instruments: Presentation on classification of rights issues

·; Amendment to IFRS 1 'First time adoption of international financial reporting standard'

·; Amendments to various IFRSs and IASs arising from 2010 Annual improvements to IFRSs

·; Amendment to IFRIC 14, 'Prepayments of a minimum funding requirement'

·; IFRIC 19, 'Extinguishing financial liabilities with equity instruments'

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 July 2011 and have not been early adopted:

Effective date

Amendment to IAS 12 'Income Taxes' 1 January 2012

IFRS 9, 'Financial instruments' 1 January 2013

IFRS 10, 'Consolidated Financial statements' 1 January 2013

IFRS 11, 'Joint arrangements' 1 January 2013

IFRS 12, 'Disclosure of Interests in other entities' 1 January 2013

IFRS 13, 'Fair Value measurements' 1 January 2013

The Group is currently assessing the impact of the standards on its results, financial position and cash flows.

The Group continues to monitor the potential impact of other new standards and interpretations which may be endorsed by the European Union and require adoption by the Group in future accounting periods.

3. Critical Accounting Estimates and Judgements

The preparation of the financial statements requires the Group to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The Directors base their estimates on historical experience and various other assumptions that they believe are reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

In the process of applying the Group's accounting policies, management has made a number of judgements and estimations, which have been consistent with those taken in the with those set out in the 2011 Monitise plc Annual Report and Accounts:

a) Revenue Recognition

Revenue for development and integration services is recognised when the right to consideration is earned as each project progresses. Provisions against accrued income are made as and when management become aware of objective evidence that the amount of time worked will not be recoverable in full.

b) Share-based Payments

Judgement and estimation is required in determining the fair value of shares at the date of award. The fair value is estimated using valuation techniques which take into account the awards' term, the risk-free interest rate and the expected volatility of the market price of the Company's shares.

c) Going Concern

The Directors have prepared projections of the Group's anticipated future results based on their best estimate of likely future developments within the business and therefore believe that the assumption that the Group is a going concern is valid. The financial information has therefore been prepared on the 'going concern' basis.

d) Goodwill

When the Group makes an acquisition, management reviews the business and assets acquired to determine whether any intangible assets should be recognised separately from goodwill. If such an asset is identified, then it is valued by discounting the probable future cash flows expected to be generated by the asset, over the estimated life of the asset. Where there is uncertainty over the amount of economic benefit and the useful life, this is factored into the calculation.

e) Contingent consideration

When the Group acquires businesses, the total consideration may consist of an amount paid on completion plus further amounts payable on agreed post completion dates. These further amounts are contingent on the acquired business meeting agreed performance targets. At the date of acquisition, the Group reviews the profit and cash forecasts for the acquired business and estimates the amount of contingent consideration that is likely to be due.

f) Impairment of Assets

IFRS requires management to undertake an annual test for impairment of indefinite lived assets, including goodwill, and, for finite lived assets, to test for impairment if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Impairment testing is an area involving management judgment, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including management's expectations of growth and discount rates. Changing the assumptions selected by management could significantly affect the Group's impairment evaluation and hence results. The Group's review includes the key assumptions related to sensitivity in the cash flow projections.

g) Deferred Tax

Deferred tax assets and liabilities require management judgement in determining the amounts to be recognised. In particular, judgement is used when assessing the extent to which deferred tax assets should be recognised, with consideration given to the timing and level of future taxable income.

4. Segmental Information

Monitise's operating segments are reported based on how the Group is structured, and the financial information provided to the Board of Directors. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly share based payment charges, goodwill, certain other intangible assets, cash, corporate expenses and assets, and tax (as described as 'Corporate' below).

Operating segments are as follows:

Live Operations, including both territory deployments and development contracts, consist of:

Monitise UKwhich provides the group's products and services to the UK.

Monitise USwhich represents Monitise Group's 49% proportion of the trading statement and statement of financial position of the joint venture entity Monitise Americas LLC up to acquisition on 4 November 2011. After this date, it also includes Monitise Group's products and services to its US clients, including FIS but excluding Visa Inc which is disclosed within Global accounts.

Global accounts which represents the group's products and services to Monitise's global cross-territory customers, including Visa Inc, Travelex and Visa Europe.

Investment in future operationssegment represents the group's operations which are not yet live operations covering both pre-sales and start-up period. The segment includes both revenues (e.g. initial licences and development and integration services prior to deployment) and costs. In 2012, the segment includes the joint ventures in the Indian and Asia Pacific regions as well as Mobile Money Network Limited, investment to host new operational platforms, and new business development activity.

Investment in technology platform segment comprises the ongoing development, enhancement and maintenance costs of the core Monitise technology platform. The division is responsible for the continued availability and improvement of the product across all other segments.

The results of each segment have been prepared using accounting policies consistent with those of the Group as a whole.

Entity wide disclosures

5 Earnings / (loss) Per Share

Basic & Diluted

Basic earnings / loss per share is calculated by dividing the profit / loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period. In addition to the earnings per share required by IAS 33: Earnings Per Share, an adjusted earnings per share has also been calculated and is based on earnings excluding the effect of the exceptional profit generated on the acquisition of subsidiaries. It has been calculated to allow shareholders to have a better understanding of the trading performance of the Group. Details of the adjusted earnings / loss per share are set out below: Reconciliations of the loss and weighted average number of shares used in the calculation are set out below.

6 Intangible assets

As at 31 December 2011 (unaudited)

As at 31 December 2010 (unaudited)

As at 30 June 2011 (audited)

7 Short term investments

Cash of £30.5 million (31 December 2010: £25.0 million; 30 June 2011: £10.0 million) held on money market funds is classed as short-term investments. The Group's total cash balance (including short term deposits) is £43.1 million (31 December 2010: £33.7 million; 30 June 2011: £23.6 million).

8 Reconciliation of Net profit / loss to Net Cash Utilised by Operating Activities

9 Contingencies

Legal Contingencies

Except as set out below, no member of the Group is or has been involved in any governmental, legal or arbitration proceedings and the Directors are not aware of any such proceedings pending or threatened by or against the Group during the 6 months preceding the date of these financial statements which may have or have had, in the recent past, a significant effect on the financial position or profitability of the Group.

Mobile VPT Limited has issued a UK infringement claim against Monitise International Limited (formerly known as Monitise Limited) and other related parties. Following advice from leading counsel, the Directors believe that the Monitise Business's activities in the UK do not infringe any valid claim of Mobile VPT's Patent and that the Mobile VPT Patent may be invalid. As a result, and in line with the fact that there has been no adverse movement since the proceedings in this case were stayed in October 2007 no provision has been reflected in the financial statements.

10. Acquisition of subsidiary

On 4 November 2011, the Group acquired the remaining 51% of the issued share capital in its joint venture, Monitise Americas LLC from its joint venture partner Metavante Corporation for a consideration of £10,647,322 paid by the issuance of 26,785,714 shares in Monitise plc.

If the acquisition had occurred on 1 July 2011, combined Group sales and profit for the period would not have been materially different.

The Group has made this acquisition to take full ownership of its core business operations in the US market, including all future revenues, as the global mobile money industry accelerates. This opportunity does not wholly translate into separately identifiable intangible assets, but represents much of the assessed value within Monitise Americas LLC and the opportunity in the US market, supporting the recognised goodwill.

The amount of the equity interest held by Monitise Inc in Monitise Americas LLC, immediately before the acquisition had a provisional fair value of £10,229,779 and the gain on such provisional fair valuation recognised in the Income Statement as an 'exceptional gain' was £10,229,779. Offset against this was £135,000 of one-off costs as disclosed in the Consolidated Statement of Comprehensive income.

The acquisition had the following effect on the Group's assets and liabilities:

No adjustments for accounting policy alignments were required.

A deferred tax liability of £918,000 on the capitalisation of the intangible assets has been created on acquisition.

The intangible assets capitalised as part of the acquisition of Monitise Americas LLC will be amortised over a period of seven years and can be analysed as follows:

The calculation of the provisional fair values of assets and liabilities such as goodwill, and intangible assets as well as the assessment of any impairment to fair values generally, involve estimations of likely future cash flows deriving from or accruing to those assets and liabilities. Judgement is also involved in selecting appropriate discount rates for determining the present value of those future cash flows.

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