Preliminary results

Tuesday 4 September 2012

MONITISE plc

Preliminary Results for the year ended 30 June 2012

 REVENUE MORE THAN DOUBLES FOR THIRD YEAR IN A ROW

CONSOLIDATED LEADERSHIP POSITION FOLLOWING ACQUISITION IN US

REVENUE GUIDANCE FOR 2012/2013 £70M ($110M) (1) MINIMUM

ORDER BOOK UNDERSCORES CONTINUED MOMENTUM IN GLOBAL BUSINESS

REGISTERED CUSTOMERS PASS 17M, COMPARED WITH 4.5M A YEAR AGO

Monitise plc (LSE: MONI) ("Monitise", the "Company" or the "Group"), the technology and services company delivering mobile banking, payments and commerce networks worldwide, announces its audited preliminary results for the year ended 30 June 2012.

Financial Highlights (2)

·; Full-year revenues more than doubled for the third year in succession, up to £36.1m from £15.3m, an increase of 136%.

·; Gross margins increased to 66% from 62% in 2010/2011, with margin improvement in both development revenues and user generated revenues.

·; Profitability in Live Operations (3) continues to build, with EBITDA of £10.6m, up from £3.9m in 2010/2011.

·; Group EBITDA(4) loss of £10.4m for the year, an improvement of £1.5m on the previous year and in line with expectations.

·; Group operating loss(5) of £13.7m (2010/2011: £12.8m), reflecting higher depreciation and amortisation resulting from peak investment made in scaling the capability of both the Monitise Enterprise Platform and in service delivery over the past two years.

·; Group gross cash at 30 June 2012 was £19.6m, with £9.7m of Clairmail inherited debt. Monitise repaid approximately half of the debt post year end.

·; Post year end equity raise in August 2012 of £22.4m net ensures that the Group maintains a strong balance sheet.

(1)Foreign exchange rate for Sterling/US Dollar used in the preliminary results is $1.56.

(2) These accounts have been prepared for the first time on an equity accounting basis rather than a proportionate basis, which show the Group's share in Joint Ventures separately. See note 2 for the rationale and impact.

(3) See note 3 for definition of Live Operations.

(4) EBITDA is defined as Operating loss before exceptional items, depreciation, amortisation, share-based payments charge.

(5) Group operating loss is defined as Operating loss before exceptional items and share based payments charge.

Operational Highlights

·; Accelerated penetration, broadened reach and step-change in growth potential in the US:

o The acquisition of Clairmail Inc. further enhances Monitise's position as a global leader in the fast expanding Mobile Money market.

o With a strong direct sales capability in the US, Monitise is now well positioned to drive new customer wins, better positioning the Group for higher user generated and transactional revenues while significantly complementing Monitise's Visa Inc. and FIS strategic partnerships.

·; Demand for Mobile Money services is at an all-time high with significant momentum across the enlarged Group:

o Registered customers now above 17m, nearly four times the 4.5m registered customers Monitise had a year ago.

o Further growth in live transactions with more than 1.6bn transactions on an annualised basis , compared with 0.1bn a year ago.

o Processed payments and transfers now worth $20bn on an annualised basis, compared with $10bn at the time the Clairmail acquisition was announced in March 2012. The corresponding figure for December 2011 was less than $2bn.

·; The Monitise Enterprise Platform now delivers mobile banking, payments and commerce on an unprecedented global scale:

o Visa Europe announced new mobile Person-to-Person payments and alerts developed in partnership with Monitise and substantial demand is being seen from banks across Europe.

o Visa Inc. announced the deployment of new mobile banking and payments services for its debit processing service, Visa DPS, with positive feedback and a strong pipeline from financial institutions.

o The Mobile Money Network launched its instant mobile checkout service Simply Tap followed by the introduction of image recognition and QR code technology. Post year end, a new strategic partnership was entered into between MMN and Associated Newspapers and Carphone Warehouse began an in-store programme to help customers register for mobile payments.

·; Growing world leading blue-chip partners and customers including:

o Multi-year contracts with RBS Group, HSBC UK, and The Co-operative Bank to develop and deploy new mobile banking and payments services. Enhanced partner and client base in the Americas includes FIS, Fifth Third Bank, U.S Bank, Sallie Mae, PNC Bank and Frost National Bank, among many others.

o New five-year strategic agreement in the US with FIS, the world's largest dedicated provider of banking and payments technologies, to create innovative new Mobile Money services for existing and new clients.

o In India, Monitise's 50/50 Joint Venture with Visa Inc., Movida, signed HDFC Bank, the second largest private bank, for the launch of new mobile services allowing customers to pay bills, top up prepaid airtime and buy tickets from their mobile devices.

o In Asia Pacific, strong progress is being made on launching live services in Indonesia with Astra and PermataBank and in Hong Kong with JETCO, the major ATM switch, and PCCW mobile.

Outlook

Our confidence in executing existing contracts plus the growing opportunities available to us in the fast expanding Mobile Money market, is reflected in the following forward guidance:

·; Revenues in 2012/13 to reach a minimum of £70m ($110m).

·; Gross margins to exceed 70% in the second half of fiscal year 2012/13.

·; EBITDA breakeven to be achieved by September 2013, one quarter earlier than the guidance provided this time last year.

·; Order book for the combined Group at the end of June 2012 comprised more than £110m committed minimum orders, double the previous year, plus a further £160m of additional revenues expected from existing contractual arrangements, delivering more than £270m in total.

·; The Company has also been approached by a number of global technology companies interested in partnering with the Group and reselling Monitise's platform capabilities.

·; In a separate announcement today, Monitise also announced that its Monitise Asia Pacific Hong Kong business and Bank of China (Hong Kong) have jointly signed a Memorandum of Understanding, forming a partnership to explore new ways for people to make payments on their mobile phones.

Alastair Lukies, Group CEO, Monitise plc, said:

"This has been another very successful year for Monitise in which we have achieved and in many cases surpassed all that we set out to do. Revenues have more than doubled for a third year in a row and we have a very robust order book.

Our strategy centres on being the enabling technology platform of choice for financial institutions and payments companies worldwide, helping them to defend and extend their position as money becomes increasingly digitised. It is critical that our platform is bank grade and we invest to ensure it meets the highest standards. We have a fantastic team of people who uniquely blend experience in banking, payments and innovation. It is important that we continue to attract and retain the best talent.

We continue to evaluate the optimal path to maximise shareholder return, having now completed the acquisition of Clairmail and subsequent capital raising, and are excited by the opportunities ahead of us. We are focused on delivering profitability earlier than anticipated. "

Duncan McIntyre, Chairman, Monitise plc, added:

"Monitise has had another strong year. We have achieved increased scale and growth and we have to continue to invest strategically in technology and infrastructure in order to continue to meet the requirements of the banking and payments industry as well as their end consumers.

We would like to thank our shareholders for their support. We continue to actively engage with them so that they understand the position, opportunities and challenges Monitise has before it. The Group has a strong balance sheet providing financial flexibility and a solid foundation for future growth."

An analyst presentation will be held on Tuesday 4 September 2012 at 9.30 am BST at the London Stock Exchange, St Paul's, EC4M 7LS. A live webcast of the presentation will be available to view online via investor relations on www.monitise.com. A replay facility will be accessible via www.monitise.com/investor_relations within 24 hours of the results presentation.

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.

About Monitise

Monitise plc (LSE: MONI.L) is a leading technology and services company that delivers mobile banking, payments, and commerce networks worldwide. Monitise enables financial institutions and other payments companies to defend and extend their market position by protecting their existing customer relationships and transactions while enabling new forms of mobile commerce revenue.

Via its Monitise Enterprise Platform which reaches more than 17m registered customers, Monitise provides bank-grade solutions and cloud computing capabilities, handling on an annualised basis, more than a billion transactions , as well as payments and transfers worth US$20bn. Monitise has an unprecedented global reach and unique set of partners and clients using its completely adaptable platform.

More information is available at www.monitise.com

Chairman's Statement

It has been another very strong year of continued momentum for Monitise. The Group's financial and operational performance highlights the commercial strength of our Monitise Enterprise Platform and the strategy we are aggressively pursuing.

In the past year we have deepened our relationships with Visa Inc., Visa Europe, FIS and RBS, and forged new partnerships with the likes of HSBC and The Co-operative Bank. We more than doubled our revenues for the third year running. In August 2012, post year end, we conducted a successful placing, raising £22.4m net of expenses, ensuring that the Group maintains a strong balance sheet and is not constrained in investment to create shareholder value in the ever growing opportunities in Mobile Money.

A clear strategy for a globally scaleable business

Monitise has a very clear vision: to make money totally mobile across the world, for everyone. Our best-in-class technology platform provides the firmest of foundations and perfectly positions us to further support leading financial institutions and payments companies in developing their mobile offering given our presence across mobile banking, payments and commerce in developed, emerging and hybrid markets.

The acquisition of leading US-based mobile banking and payments specialist Clairmail enhanced Monitise's position as a global leader in the fast expanding Mobile Money space. The integration of the two companies is progressing well.

Looking forward to the coming years, Mobile Money will continue to be an area of substantial growth. Our strategic partner Visa Europe predicts that by 2020 more than half of all Visa transactions in Europe will be on a mobile device. As smartphone adoption rises in developed markets and people in the developed world turn more to mobile to access services which help them manage and move their money , growth in Mobile Money transactions will continue.

Financial institutions, retailers and many other industry players are increasingly realising the value of creating engaging, 'always-on' mobile services and the importance of developing services optimised for the capabilities of mobile - not just rerendered replicas of online offerings. The Mobile Money industry has reached a tipping point in demand, and Monitise is seizing the opportunity as a global leader in this space, as demonstrated by our substantial growth in registered customers and transaction revenues.

The Company operates in a high growth and dynamic market and on behalf of the Board I would like to thank all our staff for their commitment and hard work during the year.

Board Appointments

During the year we further strengthened our Board with the appointments of Peter Ayliffe and Brian McBride. Peter Ayliffe, Visa Europe President and Chief Executive, joined the Board as a Non-Executive Director in November 2011. Prior to joining Visa Europe in 2006, Peter spent more than 20 years with Lloyds TSB. Brian McBride joined the Board as a Non-Executive Director in September 2011. Brian is also a Non-Executive Director on the BBC Executive Board, 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.

Annual General Meeting

Monitise's Annual General Meeting ("AGM") of the Company will be held on 11 October 2012 at 10.00 a.m. at the offices of FTI Consulting, 26 Southampton Buildings, Holborn Gate, London WC2A 1PB.

Duncan McIntyre

Monitise Group Chairman

Chief Executive's Business Review

Overview

It has been another year of phenomenal growth for Monitise. We have continued to execute on our strategy as we extended our global footprint, bolstered our team, deepened our existing partnerships and entered into new agreements worldwide. In addition, during the period, we undertook the acquisition of Clairmail Inc., a leading US provider of mobile banking and payments solutions, which further strengthens our position in the US market as we look to capture the significant opportunity we see in this region.

Our order book underscores the continued momentum in our growing global business. Full-year revenue more than doubled to £36.1m, continuing a trend of doubling revenues for the third year in succession. As existing customers draw on more services and we attract new clients, our revenue mix is moving further towards higher gross margin business and user generated revenues, enhancing our path to profitability.

As credibility and acceptance of our platform capabilities and network approach to Mobile Money continue, the global industry is also booming. Juniper Research (January 2012) forecasts that mobile banking users worldwide will reach 530m by 2013, up from 300m in 2011. Gartner forecasts the worldwide value of mobile payments transactions will be up by 62% to $171.5bn this year from $105.9bn a year ago (May 2012). 

The threat to banks and financial institutions from disintermediation, or being disenfranchised as other players experiment with and create new channel distribution opportunities, is real. The banks' traditional role as core and key providers of banking services, is being challenged on multiple fronts, including the ownership of the customer transaction, share of wallet and user experience. Given their regulated bank-grade infrastructure and heritage, financial service providers have such an important role to play that they must make sure that they are not losing ground in a space, which many would argue, they ought naturally to own. Essentially, this centres on defending and extending their role in the payments industry via an integrated, collaborative and networked approach to Mobile Money..

The Company has invested significantly in its Monitise Enterprise Platform and technology over the past few years and is also delighted to have completed four major customer launches during June and July. The Company has a strong pipeline of future deployments.

Our Monitise Enterprise Platform, unique network approach and range of Mobile Money solutions empower financial institutions to defend their core business transactions and customer relationships while extending their business model to capture new forms of revenue.

UK and Europe

Monitise has been building its platform capabilities in the UK, one of the world's most developed Mobile Money markets, since 2007. Over the past five years, the inevitable convergence of the Mobile Money ecosystem has accelerated and we are delighted that banks, payments companies, leading mobile network operators and consumers are all benefiting from Monitise's unique platform.

During the financial year the Group further extended its partnerships and customer reach, including contracts and deployments with Visa Europe, RBS Group, HSBC UK and The Co-operative Bank. New services were also launched by our mobile commerce Joint Venture the Mobile Money Network.

Monitise entered a five-year global agreement with RBS Technology Services, covering all RBS Group divisions. The strategic partnership goes from strength to strength, with more than two million customers actively using the bank's mobile platform, demonstrating extremely high engagement levels - three to four times greater than those typically seen within UK online banking.

RBS Technology Services and Monitise have continued to drive mobile innovation throughout the year, with RBS and NatWest launching mobile business banking appsallowing business banking customers to view their full account portfolios. A further market-leading mobile services innovation is the 'Get Cash' service, allowing the bank's customers to take money out of an ATM without needing a debit card.

In April 2012, a three-year partnership was announced with HSBC UK for Monitise to develop and support its Fast Balance mobile banking application. Services have gone live across iPhone, Android and BlackBerry platforms.

In June 2012, Monitise was selected by The Co-operative Bank to develop apps and mobile banking services such as SMS balance alerts for its internet banking customers and Smile account holders. A range of services have gone live and have been well received as part of a three-year relationship with the bank.

During the financial year we have continued to strengthen and deepen our commercial relationship with Visa Europe, which is owned and operated by more than 3,700 banks and other payments services across 36 countries in Europe. Services delivered as part of our ongoing partnership included the first pan-European mobile Person-to-Person payments and alerts service. Visa Europe is actively marketing its solutions across its entire membership base and is in advanced talks with several banks regarding the deployment of these solutions in coming months.

In addition, Visa Europe furthered its investment in Monitise through a £24.3m, net of expenses, strategic investment in October 2011 and post year end in August 2012, Visa Europe participated in a placing of new Monitise shares subscribing for a further 45.25m shares, valued at approximately £12.8m gross.

Monitise's Joint Venture the Mobile Money Network launched its instant mobile checkout, Simply Tap, in November 2011, with retailers including Carphone Warehouse, Thorntons, HMV and Pretty Green. MMN's Instant Mobile Checkout has been first to market with cutting-edge technology including image recognition and transactional QR codes. Post year end, in August 2012, MMN announced a deal with Associated Newspapers, publisher of the Daily Mail and Mail on Sunday, to integrate its instant mobile checkout technology as part of a number of initiatives. This strategic partnership with one of the UK's largest publishers of national newspapers and consumer websites enables smartphone users to buy direct from Associated's print and web portfolio. Monitise provides the technology platform for this.

In August 2012, MMN announced that Carphone Warehouse staff across its 800 stores would start personally helping customers install and register the Carphone Warehouse Mobile Checkout powered by Simply Tap.

North America

In the US during the 2012 financial year, the Group exploited new opportunities via partners such as Visa Inc. and FIS and developed its direct sales capabilities. Taken together, these three routes to market will accelerate our penetration and growth potential in the US, the largest developed mobile market in the world.

Monitise has been working with Visa Inc., a global leader in payments, since 2009. Visa chose Monitise as its lead mobile technology development partner in mobile banking, payments and commerce capabilities for Visa's financial institution clients. Our 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.

Initiatives in the year included the launch of mobile services offered via Visa's Debit Processing Service, DPS, the largest issuer processor of Visa transactions in the US, allowing 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 any mobile device, any mobile channel, and with any eligible debit, credit or prepaid account. Additional services are currently in development including mobile cheque deposit, mobile NFC payments, mobile offers, and support for V.me, Visa's digital wallet. Feedback has been extremely positive and the adoption of services by a number of US banks is expected to be announced in coming months.

In October 2011, Monitise bought out the 51% majority holding in the Group's Monitise Americas Joint Venture from FIS. Shortly thereafter, the Group deepened its relationship with FIS by entering a licensing, development and services agreement with multi-million dollar per annum revenues.

On 26 June 2012, the Group announced the completion of the acquisition of Clairmail Inc., which has served to further strengthen Monitise's presence in North America and complement existing routes to market via Visa Inc. and FIS. Clairmail extended Monitise's US customer base of 250 financial institutions with the addition of 48 customers, including more than half of the top 13 North American financial institutions, and a third of the top 50.

Customer feedback following the acquisition has been very positive. The integration is progressing well and we are, as anticipated, seeing strong demand from US banks to migrate, upgrade and benefit from all of the technology assets that the combined Group has to offer.

India

During the year, Movida, Monitise's Joint Venture with Visa Inc. in India, entered into an agreement with HDFC Bank, India's second-largest private bank, to launch mobile payments services. The service will allow users to pay bills, buy tickets and top up airtime with any mobile phone. We continue to progress with final preparations for launching the service across India on USSD and Interactive Voice Response channels. Negotiations are progressing with other Indian banks to launch the services to their consumers.

Asia Pacific

In 2010, we formed our Asia Pacific Joint Venture with First Eastern, a leading Hong Kong-based investment group chaired by Victor Chu, a pioneer in the field of direct investments in China and across Asia. Our strategy in Asia Pacific, as it is globally, is anchored on acting as an enabler at the heart of the growing Mobile Money ecosystem. Through our Asia Pacific Joint Venture, our partnerships and commercial relationships have broadened further.

During the year, Monitise Asia Pacific entered into a Joint Venture with a subsidiary of Astra, the largest conglomerate in Indonesia, to develop mobile services for Indonesia's banked and unbanked population. PermataBank, one of Indonesia's top-10 banks, entered into a memorandum of understanding to be the launch bank for the new Joint Venture. Together, the companies successfully completed work on their Jakarta‐based data centre to support the full spectrum of mobile banking, payments and commerce and we are now in the live pilot stage, with a full commercial launch expected to be announced soon subject to central bank approval.

In Hong Kong, the Group via its Asia Pacific Joint Venture with First Eastern is continuing to work towards launching our mobile payments services 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. Services are in development and expected to go live in coming months.

Emerging Markets

The clear shift into what mobile technology can offer in emerging markets is transformational for individuals, businesses and governments. There are nearly three billion people in developing countries with no access to financial services. The proliferation of mobile services across the world has created a unique opportunity to provide financial services over the mobile network. Monitise believes that Mobile Wallet products have the potential to be the catalyst for positive change and economic growth by empowering unbanked consumers. Monitise's Mobile Wallet solutions in countries such as Nigeria are end-to-end services that enable organisations to offer their customers a full set of bank branded mobile banking and payments services now and in the future.

Summary

Our 2012 financial performance confirms our leadership role as a proven enabler at the heart of the evolving Mobile Money ecosystem. The strategic and commercial merits of our Monitise Enterprise Platform have been recognised by a broadening array of businesses keen to increase their own exposure to Mobile Money solutions, with a number of global technology companies interested in partnering with the Group and reselling Monitise's patent-protected capabilities.

As a company of unprecedented scale in this space and with the ongoing support of our strategic partners, we are executing on our strategy to capitalise on the global Mobile Money business opportunity and we are focused on delivering profitability earlier than we previously anticipated. 

Alastair Lukies

Monitise Group Chief Executive Officer

Financial Review

The year to 30 June 2012 has been another breakthrough year for Monitise.

·; Revenues more than doubled for the third consecutive year, rising to £36.1m from £15.3m, an increase of 136%.

·; The acquisition of Clairmail at the end of June has opened up the US Mobile Money market for the Group.

·; The order book for the combined Group at the end of June 2012 comprised more than £110m committed minimum orders, double the previous year, plus a further £160m of additional revenues expected from existing contractual arrangements; delivering more than £270m in total.

·; Profitability in Live Operations has continued to build, with EBITDA of £10.6m, up from £3.9m in 2010/2011.

·; Gross margins increased to 66% from 62% in 2010/2011, with increases in both development gross margins, to 58% from 43% and user generated gross margins to 84% from 77%.

·; Statutory Loss before tax in the year was £16.9m (2010/2011: £17.2m), with loss per share consistent at 2.1p per share.

Financial Reporting

These accounts have been prepared for the first time on an equity accounting, rather than a proportionate basis, which now show the Group's share in Joint Ventures separately. See note 2 for the rationale and impact of this change.

As the acquisition of Clairmail was completed on 26 June 2012, only the provisional closing balance sheet for the year is incorporated into the Group Accounts.

Financial Highlights

Revenues in the year grew by 136% from £15.3m to £36.1m. Development and integration revenues, which fuel future user generated revenues, grew by 237% from £7.0m to £23.6m, reflecting functionality developed for RBS, Visa Inc and Visa Europe among others, which will result in growth in user generated revenues in the future. Excluding a £0.9m one-off licence in 2010/2011, user generated revenues increased by 69% from £7.4m to £12.5m.

User generated revenues grew as a proportion of total revenues during the year, up from 31% of the total in the first half to 37% in the second half. We expect user generated revenues, which have a higher gross margin, to continue to grow as a percentage of overall revenues as an increasing number of services enabled by Monitise are deployed by our clients to their customers.

Live Operations

Live Operations, which include our contracts with RBS, Visa Inc. and Visa Europe, broke through into EBITDA profitability in 2010/2011 for the first time, with continued strong growth during 2011/2012.

Revenues grew year-on-year by 130% to £29.4m from £12.8m, and EBITDA grew by 171% to £10.6m from £3.9m.

Investments in Future Operations, Technology and Corporate

In line with our strategy we continue to invest to create value from the growing opportunities in the Mobile Money market. We are investing in:

Future Operations

Future Operations comprise:

·; Revenues generated primarily from the provision of services to Monitise's Joint Ventures of £6.6m (2010/2011: £2.5m), generating a gross margin of £4.0m (2010/2011: £1.2m)

·; Operating spend in the year of £9.1m (2010/2011: £5.5m) includes resources supporting the provision of services to the Joint Ventures, new business development activity, our operations in emerging markets and the significant investment and scaling made during the year in our hosting and managed services capabilities to support future growth in the business.

Technology

Expenditure of £8.8m (2010/2011: £6.3m) reflecting continued investment in the Monitise Enterprise Platform to maintain and extend our market leading position. These investments underscore the progress made in further advancing the productisation of our platform.

Corporate

Expenditure of £7.1m (2010/2011: £5.1m), reflecting the increased bandwidth and skills of our corporate resource to manage a growing worldwide business.

Group EBITDA

The Group EBITDA loss reduced from (£11.9m) in 2010/2011 to (£10.4m) in 2011/2012.

Exceptional Items

The Group recorded a one off profit of £10.1m in respect to the acquisition of the remaining 51% of Monitise Americas, as announced in October 2011 which reflects the fair value of our previously held 49% stake of Monitise Americas. In addition, £5.0m of exceptional costs were recorded in the year, relating to one off costs incurred as part of the acquisition of Clairmail Inc.

Tax

As a result of increased profitability in our UK Live Operation, we have recognised further deferred tax assets for historic losses to be utilised, resulting in a tax credit of £0.5m.

Loss Per Share

The basic and diluted loss per share was 2.1p, the same level as 2010/2011. Details can be found in note 5.

Cash Flow and Funds

£24.3m net of expenses was raised in October 2011 through a subscription for new shares. The cash balance at the end of the financial year was £19.6m, gross, with £9.7m of inherited debt from Clairmail. The cash outflow from operating activities, including the Group's funding of Joint Venture activities, was £17.3m (2010/2011: £14.8m). The cash outflow from capital expenditure was £10.8m (2010/2011: £6.8m) with the increase in spend primarily driven by capitalised development costs critical in securing long-term future revenues and profits. Post year end approximately half of the inherited debt was repaid, and in August 2012 £22.4m net of expenses was raised from the issue of 81 million new shares through a placing with institutional investors and subscription agreements with Visa Europe Limited and Visa International Service Association, a subsidiary of Visa Inc., which ensures that the Group maintains a strong balance sheet.

Share of Joint Ventures

Our investments in Joint Ventures represent very valuable assets for Monitise. Our strategy is to realise this value, at the appropriate time, by either buying out our partners' shares or selling our shares to them. We have a successful track record of achieving this through taking full control of our previous Joint Ventures, Monilink in the UK and Monitise Americas.

Net loss in Joint Ventures was £6.0m in 2011/2012 up from £2.9m in 2010/2011. The major areas of spend, were in our mobile commerce JV in the UK, Mobile Money Network, our JV in India, Movida and our Asia Pacific JV. All of the JVs are in the development phase of their life cycle, and we expect live deployments from all of them in 2012/2013.

Treasury Activity and Policies

The Board formulates the Group's treasury policy objectives and policies which are designed to manage the Group's financial risk and secure cost-effective funding for the Group's operations.

These objectives include the requirement to minimise risk on investment funds but maintain flexibility. The majority of funds are currently held in a mix of term deposits. Other financial instruments are comprised principally of trade receivables and payables arising from the Group's operating activities.

Having inherited debt from the Clairmail acquisition, the Board is currently considering the degree to which debt should form part of the capital structure of the Group going forward.

Hedging of known future foreign cash investments or income flows will be undertaken, as deemed appropriate, to mitigate the Group's exposure to foreign exchange risk going forward. It is and will continue to be the Group's policy that no speculative trading in derivatives shall be undertaken.

John Brougham

Monitise Group Chief Financial Officer

Consolidated Statement of Comprehensive Incomefor the year ended 30 June 2012

Consolidated Statement of Financial Positionas at 30 June 2012

Consolidated Statement of Changes in Equityfor the year ended 30 June 2012

Cash Flow Statementsfor the year ended 30 June 2012

Basis of Preparation

The financial information presented in this Preliminary Announcement is extracted from, and is consistent with, the Group's audited financial statements for the year ended 30 June 2012.

The preliminary announcement for the year ended 30 June 2012 was approved by the Board of Directors on 3 September 2012. The financial information set out above does not constitute the Company's statutory accounts for the year ended 30 June 2012 or 2011 but is derived from those accounts. Statutory accounts for 2012 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their report was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The Group's results have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

1. Change in Accounting Policy

To improve its financial information, and to better reflect the current relationship with the Joint Venture entities, the Monitise Group has elected to apply, from the year ended 30 June 2012, the option offered by IAS 31 'Interests in Joint Ventures', which enables jointly controlled entities to be consolidated using the equity method. This is a presentational change and has no effect on the profit and loss of the Group.

Under proportionate consolidation, the Group combined its share of the Joint Ventures' individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the Group's financial statements.

Under equity accounting, the Group initially recognises an investment in a Joint Venture at cost, including any goodwill arising. The carrying amount is then increased or decreased to recognise the Group's share of the Joint Venture's profits or losses after the date of acquisition. The Group's profit or loss includes the Group's share of the profit or loss of the Joint Ventures.

Equity accounting provides a better reflection of the Group's business model and distinction between its subsidiaries and its Joint Ventures, given the growing maturity of the Joint Ventures. This accounting policy election is consistent with IFRS 11 'Joint arrangements' which will apply for the Group for the year ended 30 June 2014, pending European Union endorsement. IFRS 11 removes the option to apply proportionate consolidation to joint arrangements.

In accordance with IAS 8, the change in accounting policy has been applied retrospectively from 1 July 2010. Equity at the beginning of the period as well as the comparative data presented has been restated.

The change in accounting policy resulted in an increase in reported revenue of £2,533,000 (2011: £1,235,000), an increase in reported gross margin of £1,360,000 (2011: £629,000), and an increase in reported EBITDA of £5,606,000 (2011: £2,870,000). There has been no change to reported loss after tax or reported net assets in either year. The change in accounting policy has resulted in a decrease in reported cash of £1,180,000 (2011: £1,456,000).

2. Segmental Information

Monitise's operating segments are being reported based on how the Group is structured, and the financial information provided to the chief operating decision maker. The Board of Directors is the Group's chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the Board of Directors for the purposes of allocating resources and assessing performance. The Board of Directors assesses the performance of the operating segments based on a measure of revenue and adjusted EBITDA. 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, cash, corporate expenses and assets, and tax (as described as 'Corporate' below).

Operating segments are as follows:

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

Monitise UK which provides the Group's products and services to the UK.

Monitise US which represents 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 and Visa Europe.

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 revenues (e.g. initial licences and development and integration services prior to deployment) and costs. The segment includes investment to host new operational platforms and new business development activity.

Investment in technology platformsegment 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.

3. Intangible Assets

On 26 June 2012, the Group acquired 100% of the issued share capital in Clairmail Inc for a consideration of £98 million paid for by the issuance of up to 312,787,144 shares in Monitise plc. 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 £10.6 million paid by the issuance of 26,785,714 shares in Monitise plc.

The Directors have made a provisional assessment of the fair values of the assets and liabilities acquired for both acquisitions per IFRS 3, and have a year from the date of acquisition to finalise the amounts. The final amounts may be materially different from the provisional amounts stated.

Included within Goodwill acquisitions is £103.8 million in respect to the Clairmail acquisition, and £18.3 million in respect to the acquisition of Monitise Americas LLC. Included within Customer Contract acquisitions is £15.2 million in respect to the Clairmail acquisition, and £3.5 million in respect to the Monitise Americas LLC acquisition. Included within Acquired Technology is £5.5 million in respect to the Clairmail acquisition.

4. Loss per Share

Basic and Diluted

Basic loss per share is calculated by dividing the loss attributable to owners of the Company by the weighted average number of Ordinary shares in issue during the year. 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. Reconciliation of Net Loss to Net Cash Used in Operating Activities

6. Post Balance Sheet Events

After the year end, the Group issued 81 million new Ordinary shares through a placing with institutional shareholders and subscription agreements with Visa Europe Limited and Visa International Service Association, a subsidiary of Visa Inc. The issue of new shares raised a total of £22.9 million (before expenses).