Interim Results

Thursday 10 February 2011

MONITISE PLC

Interim results for the six months to 31 December 2010

MONITISE ACCELERATES GROWTH AS MOBILE MONEY MARKET EXPANDS GLOBALLY

CUSTOMER REGISTRATIONS HIT 3.5 MILLION

MONITISE UK AND LIVE OPERATIONS REACH PROFITABILITY EARLIER THAN ANTICIPATED

FIRST MONITISE ENABLED LAUNCH IN INDIA

Monitise plc (LSE: MONI.L), the leading global Mobile Money solutions provider, announces its unaudited interim results for the six months ended 31 December 2010.

Financial Highlights

·; 207% growth in revenue to £5.3m (H1 2010: £1.7m)

o 202% rise in user generated revenue to £2.5m (H1 2010: £0.8m) with strong growth across all business streams

o Momentum building with 3.5 million registered customers across the group at today's date, more than double the number at December 2009

o Increased gross margin to 62% (H1 2010: 54%)

o Monitise UK1 delivers cash breakeven milestone in December and has generated a profit in H1, six months ahead of management's target

o Total live operations2 break even one year ahead of target

·; Operating loss, before share based payments and exceptional item3, of £7.9m (H1 2010: £6.9m)

o Investment consistent with stated use of proceeds in July 2010 fundraising, supporting strategy of geographical, technology and product expansion to:

§ Maintain leadership in mobile banking and payments

§ Strengthen position in mobile commerce

o Business well positioned for next phase of growth

·; Strong financial position

o Cash balance of £33.7m on 31 December 2010 (H1 2010: £9.5m)

Business Update

o Monitise and Visa Europe sign exclusive partnership agreement to develop mobile banking and payment services offering mobile payment services direct to their customers - consumers and retailers

o Phased launch commenced in India with Standard Chartered

o Monitise Asia Pacific making strong progress, and on track for regional launch this year

o Heads of terms announced today for partnership in Indonesia

o Mobile Money Network Joint Venture created in November 2010 to deliver mobile payments, shopping and marketing network

o First Monitise enabled Visa product launch on iPhone

o Partnership with DeviceFidelity to launch world's most advanced mobile payments technology for Visa payWave transactions

o Partnership with NFC software developer ViVOtech to deliver mobile payments services to banks across the United States

o Monitise Americas launch new mobile banking service for U.S. Bank's prepaid card holders

o First Mobile Money apps for Android handsets rolled out in US

o Provisional licence granted in Nigeria

Technology

o Enhanced integrated Monitise Globe technology platform unveiled October 2010

o Industry leading product portfolio relevant to both developed and emerging markets launched; Mobile Banking, Mobile Wallet, Mobile Trading, Mobile Shopping and Payments and Mobile Servicing

Outlook

·; Strong growth in registered customers and transaction volumes expected to continue

·; Further new partnerships expected in the second half of the financial year which will deliver long-term contracts and strengthen our global footprint

·; Total live operations set to generate profits and cash in the second half

·; Consumer appetite and acceptance for Mobile Money services expected to grow substantially

Alastair Lukies, Chief Executive Officer, Monitise, said:

"The six months ending December 31 2010 clearly demonstrate the strength and robustness of Monitise's platform and business model.

We are operating in a very exciting space and we have continued to extend our footprint, signing further critical commercial partnerships. These include the Mobile Money Network with Best Buy Europe and Charles Dunstone, and our partnership announced earlier this month giving Visa Europe a licence to Monitise's world-leading mobile technology across Europe. We firmly believe that the era of connected commerce is upon us and are pleased to continue to assist financial institutions in defending and extending their role at the centre of the payments infrastructure.

We anticipate signing further strategic partnership deals during the second half that strengthen both our global footprint and long-term contractual relationships. The rapid progress in our existing live operations and the number of exciting partnerships in play position us well as we continue to invest to extend our market footprint. We look to the future with confidence."

Duncan McIntyre, Chairman, Monitise, said:

"This has been another outstanding six months for Monitise with significant progress made across the business. We have started the second half with confidence and are well placed to further develop our global mobile banking, payments and commerce services for clients.

I am particularly pleased to see our European business expand through our partnership with Visa Europe and the forging of an exciting new partnership in Indonesia, the fourth most populous country in the world. We anticipate this momentum continuing. "

Contacts:

Monitise Group Tel: 020 7947 4300

Alastair Lukies, CEO

John Brougham, CFO

Tom Spurgeon, Finance Director and Company Secretary

Gavin Haycock, Communications Director

Evolution Securities Limited (NOMAD) Tel: 020 7071 4300

 Bobbie Hilliam

 Tim Redfern

 Canaccord Genuity Limited Tel: 020 7050 6500

 Simon Bridges

 Financial Dynamics Tel: 020 7831 3113

 Juliet Clarke / Haya Herbert-Burns / Charles Palmer

About Monitise

Monitise plc (LSE: MONI.L) is a global leader in Mobile Money solutions, with the proven technology and expertise to enable financial institutions and other service providers to offer a wide range of mobile banking and payments services to their customers in both developed and developing territories.

With live services in the UK and in the USA, where it is in partnership with FIS, the company is currently working with international partners to deliver similar safe, secure mobile banking and payment services in territories worldwide, including India and the Asia Pacific region. Current key partners include Visa Inc., Visa Europe, VocaLink, FIS, HSBC, Lloyds TSB, First Direct, Royal Bank of Scotland, NatWest, Travelex, U.S. Bank, Ulster Bank, Standard Chartered Bank, Vodafone, Orange, O2, T-Mobile, 3 UK, Best Buy Europe, The Carphone Warehouse and First Eastern.

For more information visit http://www.monitisegroup.com

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 sustained growth and Monitise has enhanced its proven credentials as a catalyst and enabler, acting as the world's leading provider of mobile banking and payments technology, linking customers to their money via their mobile phone. In line with our declared strategy we have signed further key strategic partnerships, including with Visa Europe, where we will develop and supply mobile payments services for Visa's member banks and financial institutions across Europe. This strategic partnership builds on our existing and recently strengthened agreement with Visa Inc. providing true global coverage, significant minimum annual fee income, and an addressable market of more than two billion Visa cards worldwide.

We are delighted to announce today that as of February 2011, Standard Chartered, a key global partner and strategic investor, has begun a phased launch of a world leading mobile banking, payment and commerce service in India using the Monitise platform. The platform has been designed in a way which allows replication in their other markets.

Working closely with our Joint Venture partner First Eastern, we continue to make strong progress in Asia Pacific and are experiencing very high levels of interest for deployments across the broader Asia Pacific region and the Middle East. In Africa, we have been granted a provisional licence by the Central Bank of Nigeria to introduce payments by mobile phone across the country and will take steps forward supported by Africa Enterprise Challenge Fund monies. In the US there has been significant activity, both on building our leading position in mobilising the pre-paid card marketplace, and in participation in the increasing levels of activity and interest for Near Field Communications ("wave and pay") technology. We have also recently announced the launch of our first Android apps. We expect to build on our momentum and launch an exciting number of new initiatives over the coming year around the world, through leverage of and building of further new strategic partnerships.

We see the coming 24 months as a period of tremendous opportunity with new alliances forming between major players in the market. We continue to attract leading brands to our proven scalable offering, such as our new collaboration to form the Mobile Money Network. This exciting joint venture has been created by Monitise and Best Buy Europe with the personal backing of Charles Dunstone, founder of The Carphone Warehouse. It will provide a trusted and secure one-stop shop for mobile services related to shopping, banking and marketing.

Having established Monitise as the trusted bridge between innovation and bank-grade security, we have been delighted by the growing number of new services we have helped create for our existing partners such as the US launch of Visa's iPhone app, the first Monitise-enabled service launched under our six year Alliance Agreement with Visa Inc., the world's largest retail electronic payments network. We have launched our first Android mobile money apps and we have seen the technology we developed for U.S. Bank, the fifth largest commercial bank in the United States, picking up an award in the Best Virtual/Prepaid Application category in the 2011 Paybefore Awards. The service to U.S. Bank is delivered through Monitise Americas, our joint venture with FIS, one of the world's largest providers of banking and payments technology to financial institutions and businesses worldwide, and we are delighted to have seen Monitise Americas join the prestigious list of global innovative technology companies as a winner of the 2010 Red Herring 100 Global Award.

As evidenced by these achievements and results, Monitise has made significant progress as we execute against our strategy.

Financial Review

Revenue for the six months to 31 December 2010 has grown by 207% to £5.3m (H1 2010: £1.7m).

There has been very strong growth across all business streams, with user generated revenue showing a more than threefold increase to £2.5m (H1 2010: £0.8m), consulting services, development and integration revenue almost four times higher at £1.6m (H1 2010: £0.4m), and licence fees and royalties increasing by 152% to £1.2m (H1 2010: £0.5m).

Gross margin of the Group increased to 62% compared to 54% in the equivalent period last year driven by improvements in user generated and development revenue.

Revenue in total live operations more than trebled to £4.9m (H1 2010: £1.6m) generating an operating profit of £0.9m compared with a loss of £(1.6)m in H1 2010. The £0.9m operating profit benefited from one-off licence revenue. Excluding this an underlying operating profit was generated, one year ahead of management's target.

Monitise UK achieved cash break even during the half year, in line with our declared milestone, and generated a small operating profit for the half year as a whole, six months ahead of management's target.

We have invested in the operating cost base in line with the stated use of proceeds in the fundraising undertaken in July 2010. This has resulted in increased investment in:

·; developing new business opportunities including funding the start up losses in our new joint ventures in the high growth markets of India and Asia (£1.8m increase)

·; the Globe platform to maintain and extend our technological advantage in the market (£1.1m increase)

·; corporate costs to ensure that we successfully manage the very rapid business growth, from selectively securing new business partnerships through to on time, on cost, customer delivery (£0.7m increase)

This increased investment, net of £0.2m efficiency improvements in live operations, has driven the increase in operating costs of £3.4m to £11.2m (H1 2010: £7.8m), up by 43%, approximately one fifth of the percentage growth in revenue.

The resulting operating loss, before share based payments, was £7.9m, £1.0m higher than the £6.9m operating loss, stated before share based payments and exceptional item in H1 2010.

Net cash outflows utilised in operating activities totalled £7.6m (H1 2010: £5.6m).

There has also been investment in our Globe platform that has been capitalised and will be amortised to match future revenue and margin generation. A total of £2.5m, comprising £0.8m fixed asset additions and £1.7m capitalised labour costs, has been taken to the balance sheet (H1 2010: £0.1m).

The cash balance at the end of December 2010, which includes the net £31.1m of funds raised in July 2010, was £33.7m (H1 2010: £9.5m).

Operational Review

Technology

We continue to invest in maintaining our world-leading position in the Mobile Money space, growing our capabilities through mobile banking, mobile payments and now mobile commerce technology. Maintaining a combination of technological excellence and thought leadership across all key areas of the business is a significant investment but essential in maintaining our platform at the leading edge of the Mobile Money industry.

During the period we have unveiled Monitise Globe, our enhanced technology platform which underpins our ability to deliver long term, sustainable solutions for mobile banking and payments worldwide. Monitise Globe offers the following products: Mobile Wallet, Mobile Shopping & Payments, Mobile Trading, Mobile Servicing and Mobile Banking. The platform enables financial institutions, mobile phone networks, service providers, payment companies and processors to offer a wide variety of Mobile Money services in both developed and emerging markets.

Monitise Globe enables clients and partners to offer services by text, mobile app, mobile browser and USSD, operating on more than 2,700 different types of handset. It is also already compatible with the next generation of 'wave and pay' payments from the handset.

Live Operations

We have now recorded 3.5 million customer registrations, more than double the number as at December 2009, and are building a positive trajectory of growth.

·; UK

In December 2010 we announced that Monitise UK had reached our declared milestone of month-on-month cash break even on time. We are delighted that this business has also been able to declare a small profit for the first half year, six months ahead of management targets.

Monitise UK provides services to banks covering more than 55% of the UK retail banking population and we continue to look to both deepen our relationship within existing banks and to target new opportunities across UK financial institutions. We are pleased to continue to assist UK financial institutions in defending and extending their role at the centre of the payments infrastructure.

·; Americas

During the period Monitise further established its position as one of the leaders in the North American market, focusing on a strategy to broaden its range of banking and payments offerings and extending its platform capabilities to turn mobile phones into 'wave and go' mobile wallets. Monitise has a 49% equity stake in the joint venture, Monitise Americas, with our partner FIS.

Monitise now has more than 250 financial institutions and prepaid card providers signed up to its services in the US, including U.S. Bank, the fifth largest bank in the US. We are seeing an acceleration in customer adoptions, boosted by seasonal tax disbursement activity as part of our national rollout with H&R Block, and the accompanying rapid growth in user generated activity demonstrates the customer appeal and value of Monitise's services to the US market.

In September 2010 we announced a partnership with Device Fidelity, the microSD card specialists, and in November 2010 we announced participation in a joint microSD technology trial with U.S. Bank. As part of the pilot, U.S. Bank employees are able to pay for products simply by waving their mobile phone handset over the contactless payment terminal at a shopping register. The trial combines Monitise's expertise in mobile financial services apps with DeviceFidelity's In2Pay microSD memory card and Visa's payWave contactless transactions technology.

Handsets with built-in near field communication (NFC) capability will continue to be released in 2011 by major manufacturers. Monitise will remain at the forefront of new developments and has further strengthened its position in the proximity payment space by partnering with NFC software developer ViVOtech, to deliver mobile phone payments services to banks across the US. To date, ViVOtech software has been used successfully in more than 35 NFC phone pilot projects around the globe.

·; Global

Visa's first Monitise enabled mobile service, the Visa iPhone app, was announced and launched in the US in December 2010. The app was developed under the Monitise and Visa Inc Alliance Agreement signed in June 2009 to provide custom development of mobile services for Visa across a spectrum of handsets to ensure Visa account holders have a consistent, user friendly, and secure mobile payment experience.

Our Alliance Agreement with Visa Inc was strengthened in July 2010 with an extension from a five year term to a six year term to June 2015, at the same time increasing the minimum fees payable to Monitise by Visa under this agreement from US$13 million to US$16 million. In addition, Monitise granted Visa an exclusive licence for deployment of its Globe platform in Russia and Mexico for $1.5 million.

We continue to maintain a strong partnership with Travelex to support their mobile services.

Investments & Partnerships

·; Visa Europe

We have taken a major step forward in our relationship with the Visa family by entering a multi-year exclusive partnership with Visa Europe. We have provided a licence to our world leading mobile banking and payments technology and we will act as an advanced development engine for Visa Europe, providing its more than 4,000 member banks across Europe with a rapid go to market mobile payments service.

We believe the next two years will be a defining period for mobile money globally as smartphone penetration sees exponential growth, financial services organisations provide even more innovation in the mobile banking and payments space and consumers look to manage their money better and benefit from the even greater convenience that mobile money offers. As part of this we are delighted to support Visa Europe in looking to accelerate the development and commercialisation of large scale mobile payments and services.

·; India

As of February 2011 Standard Chartered, a key global partner and strategic investor, has begun a phased launch of a world leading mobile banking, payment and commerce service in India using the Monitise platform. The bank's customers will be able to manage their finances using any handset on any mobile network covering everything from simple balance checking to paying bills or buying cinema and airline tickets, generating revenue for the bank as well as providing a lower cost servicing channel. The platform has been designed in a way which can be replicated in other markets where Standard Chartered has a consumer banking presence.

A launch of additional services in India directly through our 50/50 joint venture with Visa Inc in India is anticipated later in 2011 and will provide mobile payment focused services to this.

·; Asia Pacific

Working closely with our Joint Venture partner First Eastern we continue to make strong progress in Asia Pacific. Plans are in place for a mid-2011 Hong Kong launch as our showcase market underpinned by letters of intent from two major local players.

In Indonesia, we are pleased to announce that we have signed Heads of Terms for a joint venture with a major local conglomerate which is among the largest publicly quoted companies in the market.

We are working towards signing a Memorandum of Understanding with a prominent mobile commerce company in mainland China to provide a market leading mobile banking and payments capability linked to Monitise's global network of international partners and connections.

·; Africa

In December 2010, Monitise Africa and its partners were granted a provisional licence by the Central Bank of Nigeria to introduce payments by mobile phone across the country. A pilot has been deployed in Nigeria that is targeted to reach 5,000 users and 100 agents across 3 states by Spring 2011. The deployment is of Monitise's Mobile Wallet solution, part of the Globe platform, and will be customised to the requirements of the Nigerian marketplace.

·; Mobile Money Network

Together with Best Buy Europe and with the personal backing of Charles Dunstone, founder of The Carphone Warehouse, Monitise has created a new venture to form the 'Mobile Money Network'. The Mobile Money Network has been set up to provide retailers, banks and advertisers with simple, relevant, innovative mobile phone based services for their customers. The Mobile Money Network will play a central role in developing services, ensuring that by acting together everyone can achieve the reach, scale and ease of use required to be successful.

Since its incorporation in November 2010 the Mobile Money Network has had positive engagement with a large number of high street retailers, banks and advertisers interested in joining the Mobile Money Network. The initial launch programme is progressing as planned and we expect to make further announcements this year.

People and Board Appointments

Our Board has been strengthened with the appointment of Sushovan Hussain, Autonomy's Chief Financial Officer, and Tim Wade as non-executive directors. Tim also now chairs the Audit Committee.

Our management team has also been strengthened by the appointment of a number of other senior hires to manage ongoing growth. As part of this, Peter Radcliffe, who had been a non-executive director since our listing on AIM in 2007, has moved to take up an executive management role as Chairman, International focusing on our businesses in Asia, India and Africa.

Outlook

In the next six months we expect revenue to grow substantially from the partnerships already in place whilst also signing new strategic partnerships and long term contracts that strengthen our global footprint. Our registered customers and transactions are accelerating and our cost structures remain appropriately aligned to our revenue growth. We are excited by the opportunity.

We are operating in a fast-growing and dynamic industry as three key phases align to create a perfect sweet spot; explosive growth in mobile data, the convergence of mobile banking and mobile payments and the high-velocity drive to mobile commerce. Monitise is laying the rails for future services with Monitise at the centre of an eco-system spanning mobile, financial services, online advertising, retail, transport and ticketing.

Our business is well funded and growing strongly at a time when the appetite by consumers for Mobile Money services and their increasing acceptance of the benefits it offers show no sign of abating. The Board is encouraged by the performance of the company and looks to the future with excitement and confidence.

 Alastair Lukies

Chief Executive Officer

Consolidated Statement of Comprehensive Income

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 6) is £33.7 million (31 December 2009: £9.5 million; 30 June 2010: £13.2 million).

Notes to the Consolidated Financial Statements for the six months ended 31 December 2010

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 9 February 2011.

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 2010 were approved by the Board on 25 August 2010 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 2010 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 2010 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 2010, as described in those annual financial statements.

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 July 2010, but are not currently relevant for the Group:

·; Amendments to various IFRSs and IASs arising from 2009 annual Improvements to IFRSs

·; Amendment to IFRS 2 Share-based payments group cash-settled transactions

·; IFRS 1 First-time Adoption - Additional exemptions

·; Amendment to IAS 32 Financial instruments: Classification of rights issues

·; Amendment to IFRS 1: 'First time adoption' − financial instrument disclosures

·; 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 2010 and have not been early adopted:

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.

2.3 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, revenue 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 2010 Monitise plc Annual Report and Accounts, except as given below:

a) Revenue Recognition

Revenue is recognised to the extent the Group has delivered goods or rendered services under an agreement, the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Group.

Under the Group's Global Alliance Agreement with Visa Inc, there is a guaranteed minimum annual revenue amount. During the current period, the Directors have concluded that it is more appropriate to spread this revenue across the contractual period on a straight line basis. Previously the revenue was accounted for in line with the performance of development work associated with the contract. Had this change occurred in the comparative 6 months to 31 December 2009 period, revenue would have increased by £104,000 with a corresponding increase in net assets. There would have been no change to the revenue for the year ended 30 June 2010.

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) Intangible assets

The Directors have continued to consider compliance with IAS 38 in the light of stage of the development of the Group. Based on this, the Group has capitalised £1.7 million of development cost in the 6 months to 31 December 2010 (see note 5).

d) 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.

e) 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.

f) 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.

g) Impairment of Assets

IFRS requires management to undertake an annual test for impairment of indefinite lived assets 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.

h) 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.

3. 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 UK which provides the group's products and services to the UK and covers European opportunities (previously known as 'Monitise Europe').

Monitise Americas which represents Monitise Group's 49% proportion of the trading statement and statement of financial position of the joint venture entity Monitise Americas LLC. This segment also includes Monitise Group's share of the annual licence fee charged to Monitise Americas.

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

Investment in future operations segment represents the group's operations which are not yet live operations covering both pre-sales and start-up period. The segment includes both revenue (e.g. initial licences and consultancy services prior to deployment) and costs. In 2010, the segment includes the joint ventures in the Indian and Asia Pacific regions, Mobile Money Network, 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 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

4 Loss Per Share

Basic & Diluted

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period. As the Group is loss-making, any share options in issue are considered to be "anti-dilutive". As such, there is no separate calculation for diluted earnings per share.

Reconciliations of the loss and weighted average number of shares used in the calculation are set out below.

5 Intangible assets

As at 31 December 2010 (unaudited)

* Includes a net book value of goodwill of £495,000, customer contracts of £967,000, and acquired licences of £625,000.

As at 31 December 2009 (unaudited)

* Includes a net book value of goodwill of £495,000, customer contracts of £1,137,000, and acquired licences of £736,000.

As at 30 June 2010 (audited)

* Includes a net book value of goodwill of £495,000, customer contracts of £1,051,000, and acquired licences of £680,000.

6. Short term investments

Cash of £25.0 million (31 December 2009: £nil; 30 June 2010: £nil) held on money market funds is classed as short-term investments. The Group's total cash balance (including short term deposits) is £33.7 million (31 December 2009: £9.5 million; 30 June 2010: £13.2 million).

7. Financial liabilities under one year

Included within Financial liabilities under one year is £588,000 which is Monitise's Group's share of the shareholder loans provided to Mobile Money Network Limited on formation of the joint venture. There is a corresponding and matching debtor balance of £588,000 included within Trade and other receivables.

8. Reconciliation of Net 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.