Preliminary Results

22 November 2010

Earthport plc (the 'Company' or the 'Group')

Preliminary Results for the year ended 30 June 2010

Earthport plc, the global payments utility company, announces its audited preliminary results for the year ended 30 June 2010.

Financial Highlights

·; Total revenue £1.9m (2009: £1.6m) (+ 24%)

·; Gross profit £1.5m (2009: £1.2m) (+25%)

·; Operating loss £4.7m (2009: £6.7m) (-30%)

Operational Highlights

·; Successfully raised approximately £5 million in early 2010

·; First corporate client gone live with the IBM General Expense Reporting System

·; Delivery of improved functionality and product enhancement

·; Transaction volumes increased 18% and gained traction in targeted market segments

·; Board strengthened with executives and entrepreneurs with a successful track record

Commenting on the results, Hank Uberoi, Executive Director, said:

"The last 12 months has been transformational for Earthport with a full review of operations at every level within the Company. As a result, Earthport is now well positioned in a growing market with a collection of competitive products.

"Having raised £7.5m in October, the Company now has the resources needed to achieve significant growth over the coming years.

"In addition, we announced last week a number of senior appointments at Board level with significant industry knowledge, contacts and experience. This newly formed Board looks to the future with confidence."

For further information, please contact:

The year to 30 June 2010 was one of significant change within the Company. The Board undertook a thorough review of all operations and subsequently realigned Earthport to focus on its key development and growth opportunities. The Board has been significantly restructured and it is confident of Earthport's future prospects.

The first half of the year was characterised by a lack of focus on the business and underperformance. A misguided strategic review was conducted and there was non-receipt of payment in relation to significant contracts.

On 2 December 2009, Zafar Karim was appointed as an Executive Director to the Board. On 20 January 2010, James Bergman, the Chief Executive Officer resigned from the Company. Following his departure, Earthport raised £875,000 and shortly thereafter, in February 2010, a further £4.1m was raised. At the same time the Board and management team was strengthened with the appointment of Hank Uberoi as an Executive director.

The Board then undertook a full review of Earthport's management, existing business, operations, technology, products and market opportunities leading to a strengthening of Company processes and relations with customers and suppliers. A new strategy was formulated and, following Peter Chappell's retirement as an Executive Director, Vinode Ramgopal was appointed as a Non-Executive director in April 2010.

As a result of the various changes, combined with the restoration of customer confidence in Earthport, existing customers began to increase transaction volumes and new customers signed contracts with the Company. Several clients were signed in the Middle East and the first corporate client went live with the IBM General Expense Reporting Solution.

Following the year end, new products were launched in August/September 2010 including Earthport Direct. This product is a key milestone as it allows SME customers to contract and go live in a very short time frame utilising our web based interface.

Having stabilised the Company and demonstrated traction in targeted market segments, the focus shifted to planning the next phase of growth. As part of this, the Company consulted several advisers, all with significant experience in payments. On the basis of these discussions and demonstrated business wins, the management clarified the business opportunity and execution strategy at a detailed level. The Company raised a further £7.5m of growth capital by way of an over-subscribed equity placing in October 2010. The funding was raised from institutional and other investors including both existing and new shareholders. As a result, the Company is now fully funded to achieve its significant potential.

Following the successful funding round, Mike Harrison has retired as Non-Executive Chairman. Lance Brown has also stepped down as Vice Chairman and non-Executive Director. Philip Hickman has joined the Board as Non-Executive Chairman and Terence Williams has also joined as a Non-Executive Director. In addition, the Company continues to strengthen the management team.

Whilst this has been a year of significant change, the Company is now well positioned with a Board that consists of executives and entrepreneurs with a successful track record and the resources necessary to achieve significant growth over the coming years.

Transaction volumes for year ended 30 June 2010 were up 18% compared with the prior year. Transaction volumes rose from July to September 2009 although these then started to fall hitting their nadir in February 2010. Following completion of the February 2010 fund raising and strengthening of management, transaction volumes started to recover in March 2010 and reached a peak in June 2010, when transaction volumes were up 80% on February 2010. June 2010 included transaction volume associated with the FIFA World Cup. Post year end, transaction volumes for July, August, September and October 2010, whilst lower than June 2010, were up 29% per month on average compared with the same months in 2009.

Total revenue for the year ended 30 June 2010 was up 24% to £1.9m (2009: £1.6m). Transactional revenue was up 14% reflecting primarily an increase in the transaction volumes. Other revenues (including foreign exchange and integration) were up 54%. Gross profit was up 25% to £1.5m (2009: £1.2m). Gross margin increased slightly to 75% from 74%.

Administrative expenses increased to £5.7m (2009: £5.5m). Whilst some administrative costs fell, and costs per employee remained broadly stable, legal and professional costs rose to £926,000 from £585,000. This increase was due to the significant increase in legal costs associated with restructuring the Company. The share based payment charge fell significantly as a result of £1.9m being written back due to the cancellation of options of directors and employees leaving the Company. The net share-based payment charge was £426,000 compared with £2.2m for the prior year. The share-based payment charge is a non-cash item.

Operating loss decreased 30% to £4.7m (2009: £6.7m).

Finance costs increased to £409,000 from £325,000. This was primarily due to additional interest on short term debt (repaid after the February 2010 funding round) and remaining charge associated with warrants issued in the year ended 30 June 2009.

Loss for the year fell to £5.1m from £7.3m for the prior year.

The Company's total debt decreased 17% to £586,000 (2009: £704,000). This was due to the full repayment of secured debt. As at the year end and today's date there are now no remaining charges or liens on the Company's assets.

Cash as at year end was £559,000. With the recent successful fund raising of £7.5m, the cash and equivalents position of the Company as at the date of these accounts was £7.2m.

The past 12 months have seen the deployment of improved functionality and product enhancement across the epClearing platform. Many of these enhancements have been under gestation for some time. Delivery has streamlined core processes such as FX and Treasury Management, Payment Validation, Auto-Batching cycles, Management Information Systems and Exception Handling. As a result operational efficiency and capacity has improved.

The growth of the Company's Banking coverage has rallied well in the face of significant market challenges, notably the ever-changing regulatory requirements governing the processing of 3rd Party Payments across multiple geographies. Key successes were attained with the addition of new delivery channels in key markets, and the streamlining of several under-developed channels across the Asia-Pacific region.

Excellent progress was made in establishing a local payment offering in both Japan and parts of Africa. Both of these are expected to be live in early 2011. Ongoing efforts include the securing of new delivery channels in various South Asian corridors, in the LACA territories, and across Africa. Several initiatives in support of these objectives are now underway.

The year to 30 June 2010 has seen many of our new customers go live on the new WSDL interface. The feedback on the interface has been positive, both in terms of its ease of use and the features offered. Services provided have been further added to throughout the year. Security and privacy of our customer's data has been further enhanced by the encryption of critical customer data. Our system availability continues to exceed our 99.9% targets.

The significant changes in the Company over the past 12 months have strengthened the Company's position in terms of products, competitiveness, resources and this is beginning to show demonstrable results.

The next period will be one of investment, execution and growth. The Company plans to expand its sales resources significantly in several geographies in order to capture the opportunities clearly available.

While the prospects for Earthport are very promising, future success will not be immediate. The Company has developed a significant pipeline of opportunities which are being turned into contracts and will be implemented into revenue producing transactions. In some market segments the implementation and ramp up period is long but the size and recurring nature of the revenue is large.

We presently expect revenue from the current pipeline to start ramping up in early 2011 - slowly at first and then accelerating as the number of implementations increases and the live clients start increasing volumes. While we do not expect the Company to generate a profit in the full financial year ending June 2011, we do expect to end this period with a strong run-rate of revenues and to be well positioned for profitability in the periods ahead.

THE BOARD

22 November 2010

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 June 2010

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The financial statements were approved and authorised for issue by the Board on 22 November 2010

and were signed on its behalf by:

Hank Uberoi - Director

Zafar Karim - Director

COMPANY STATEMENT OF FINANCIAL POSITION

The financial statements were approved and authorised for issue by the Board on 22 November 2010

and were signed on its behalf by:

Hank Uberoi - Director

Zafar Karim - Director

CONSOLIDATED STATEMENT OF CASH FLOWS

COMPANY STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 30 June 2010

COMPANY STATEMENT OF CHANGES IN EQUITY

for the year ended 30 June 2010

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 30 June 2010

1. GENERAL INFORMATION

Earthport plc is a public limited company incorporated and domiciled in England and Wales under the Companies Act 2006. The address of its principal place of business and registered office is 21 New Street, London EC2M 4TP.

2. GOING CONCERN

The financial statements have been prepared on the assumption that the Group is a going concern.

Since the balance sheet date, the Company has raised £7.5m in additional finance through the issue of equity.

When assessing the foreseeable future the directors have looked at a period of twelve months from the date of approval of the financial statements. The directors believe that the Group has demonstrated progress in achieving its objective of positioning the Group as an infrastructure supplier to the global payments industry, and having raised £7.5m in equity financing consider that it is appropriate to prepare the Group's financial statements on a going concern basis, which assumes that the Company is to continue in operational existence for the foreseeable future.

3. ACCOUNTING POLICIES

Basis of preparation

The financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS'') as adopted by the European Union.

The financial statements have been prepared under the historical cost convention and the principal accounting policies are set out below.

New and amended standards adopted by the group

The following standards have been adopted during the year:

IAS 1 (Revised) "Presentation of Financial Statements"

IFRS 7 "Financial Instruments: Disclosures" amendments

IFRS 8 "Operating Segments"

Although the adoption of these standards has had no impact on the financial position and performance of the group, additional disclosures have been provided to comply with the revised standards. Changes have also been made with regards to the presentation of the primary financial statements.

On adoption of IAS 1 (Revised) the directors elected to present items of income and expenses in two separate statements. The Consolidated Statement of Recognised Income and Expenses has been re-presented as a Consolidated Statement of Comprehensive Income. 'Cash Flow Statement' has been re-named 'Statement of Cash Flows'.

The IFRS7 amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurement by level within a fair value measurement hierarchy.

The adoption of IFRS 8 does not give rise to any change in segment disclosures.

3. ACCOUNTING POLICIES (Continued)

At the date of authorisation of these financial statements, the following Standards and Interpretations relevant to the group operations that have been applied in these financial statements were in issue but not yet effective or endorsed (unless otherwise stated).

IFRS1 (amended)/IAS27 amended - Cost of an investment in a Subsidiary; Jointly Controlled Entity or Associate

IFRS2 (amended) Share-based Payments - Amendment; cash-settled share-based payment transactions

IFRS3 (revised 2008) Business Combinations - Comprehensive revision on applying the acquisition method

IFRS9 Financial Instruments

IAS24 (revised 2009) Related Party Disclosures

IAS27 (revised 2008) Consolidated and Separate Financial Statements - Consequential amendments arising from amendments from IFRS3

IAS28 (revised 2008) Investment in Associates - Consequential amendments arising from amendments to IFRS3

IAS31 Interests in Joint Ventures - Consequential amendments arising from amendments to IFRS3

IAS32 (amended) Classification of Rights Issues

IAS39 Financial Instruments: Recognition and Measurement - Amendments relating to eligible hedged items

IFRIC14 (amended) Prepayments of a Minimum Funding Requirement

IFRIC17 Distribution of Non-cash Assets to Owners

IFRIC18 Transfer of Assets from customers

IFRIC19 Extinguishing Financial Liabilities with Equity Instruments

Annual Improvement Project - May 2008

Annual Improvement Project - May 2009

The directors anticipate that the adoption of these standards and interpretations as appropriate in future periods will have no material impact on the financial statements of the group when the relevant standards come into effect for periods commencing on 1 July 2010.

Basis of consolidation

The Group financial statements consolidate the financial statements of Earthport plc and all of its subsidiaries for the year ended 30 June 2010. The results of subsidiaries acquired or sold are included in the Group financial statements from the date control passes, until control ceases. Profits and balances arising on trading between Group companies are excluded from the financial statements. All companies in the Group make up their financial statements to the same date.

Revenue recognition

Revenue on the sale of software licences and from the service agreements is recognised upon delivery to the customer providing that there is evidence of a contract, the fee is fixed or determinable, no significant customer obligations remain and collection of the resulting receivable is probable. In circumstances where a significant vendor obligation exists (such as the installation and acceptance of the software), revenue recognition is delayed until the obligation has been satisfied. Revenue from client transaction volume is billed monthly in arrears. Revenue from software implementation, consultancy and training is recognised as the services are performed.

Foreign currency translation

The functional and presentational currency of the parent Company and its subsidiaries is the UK Pound Sterling. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date and exchange differences taken to the income statement.

3. ACCOUNTING POLICIES (Continued)

The Company offers executive and employee share schemes. For all grants of share options, the fair value as at the date of grant is calculated using an option pricing model and the corresponding expense is recognised over the vesting period. The expense is recognised as a staff cost and the associated credit is made against equity and included in the share-based payment reserve. The fair value of warrants granted in respect of equity fund raising activities are offset against the share premium account.

Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustments to tax payable in respect of previous years.

Deferred tax expected to be payable or recoverable on differences at the balance sheet date between the tax bases and liabilities and their carrying amounts for financial reporting purposes is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible differences can be utilised.

Deferred tax is calculated at the rates of taxation which are expected to apply when the deferred tax asset or liability is realised or settled, based on the rates of taxation enacted or substantially enacted at the balance sheet date. Deferred tax is measured on an undiscounted basis.

Impairment of non-financial assets

The carrying amounts of the Group's property, plant and equipment are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such an indication exists, the asset's recoverable amount is estimated and compared to its carrying value. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where the carrying value exceeds the recoverable amount, a provision for the impairment loss is established with a charge being made to the income statement.

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less depreciation and provision for impairment. Depreciation is provided at rates calculated to write down assets to their estimated residual values over their expected useful life, as follows:

Leasehold improvements: short lease - straight line per annum over lease term

Fixture, fittings and equipment - 20% - 33% straight line per annum

Computer equipment - 33% straight line per annum

The carrying values of property, plant and equipment are reviewed for impairment annually and when events or changes in circumstances indicate that the carrying value may be impaired. Any impairment is taken direct to the income statement.

Leasing

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Rentals payable under operating leases are charged against income on a straight-line basis over the lease term.

3. ACCOUNTING POLICIES (Continued)

Pensions

The Group offers a stakeholder pension scheme to all employees and the contributions are charged to the income statement as they are incurred.

Financial risk management and financial instruments

Financial assets and liabilities are recognised in the Group's balance sheet when the Group becomes party to the contractual provisions of the instrument.

The Group's principal financial instruments comprise secured and unsecured short-term creditors, cash, short-term deposits and loans. The main purpose of these financial instruments is to finance the Group's operations, including any acquisitions where relevant. The Group has various other financial instruments, such as trade receivables and trade payables that arise directly from its operations.

It is the Group's policy that no trading in financial instruments shall be undertaken. The Group borrows at both fixed and floating rates of interest. The Group's policy in relation to the finance is to ensure that sufficient liquid funds are maintained for operations.

Trade receivables are initially measured at fair value and subsequently at amortised cost using the effective interest rate method, if material. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is evidence that the asset is impaired.

Cash and cash equivalents: comprise cash in hand, demand deposits and other short-term highly liquid investments that are readily converted into a known amount of cash and are subject to insignificant changes in value.

Trade payables are initially measured at fair value and subsequently at amortised cost using the effective interest rate method, if material.

Borrowings: Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Equity instruments issued by the Company are recognised at the proceeds received net of direct issue costs.

3. ACCOUNTING POLICIES (Continued)

Employee benefit trust

Shares to be awarded, and those that have been awarded, but have yet to vest unconditionally are held at cost by an employee benefit trust and shown as a deduction from equity in the Group and Company balance sheet.

Exceptional items

Exceptional items are non-recurring items which are disclosed separately because of their size or nature.

4. REVENUE

Revenue, loss and net assets/liabilities are all attributable to one business segment operating from the United Kingdom. The segmental analysis by location of customers is as follows:

There are three customers who individually contribute 10%, 13% and 20% respectively towards the total revenue (2009: two 10% and 27%).

Of the staff costs shown above, £30,000 (2009: £60,000) is included in cost of sales and the remainder in administrative expenses.

* Hank Uberoi receives a fixed £5,000 per month towards his expenses, including international travel and accommodation that he incurs in relation to Earthport. He received no other emoluments or reimbursements.

As part of his retirement, 2,026,316 options held by Peter Chappell lapsed and he received the termination benefit above and was granted 1,250,000 options.

Defined contribution pension benefits are being accrued for three directors (2009: three).

Social security costs in respect of the directors were £34,000 (2009: £68,000).

The share-based payment charge in respect of the directors was £133,000 (2009: £1,353,000).

For the purposes of this note, the directors are considered to be the key management of the Group.

Cost of sales includes bank transaction charges and sales commission.

Tax trading losses carried forward of £59m (2009: £53m) have not been recognised due to uncertainty over the timing of their reversal.

The movement on the deferred tax asset is as follows:

The 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 year.

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purposes of calculating the diluted loss per share are identical to those used for basic loss per ordinary share. This is because the exercise of share options and other benefits would have the effect of reducing loss per share and is therefore not dilutive under the terms of IAS33.

Depreciation for all years is included in administrative expenses in the income statement.