Monitise Regulatory News (MONI)

 5 September 2013

MONITISE plc

Preliminary Results for the year ended 30 June 2013

 REVENUE MORE THAN DOUBLES FOR FOURTH YEAR IN ROW

GROSS MARGIN RISES TO 76% FROM 66%, BOLSTERED BY USER GENERATED REVENUE INCLUDING PRODUCT LICENCES

MONITISE AND IBM ANNOUNCE SMARTER COMMERCE INITIATIVE

PETER AYLIFFE APPOINTED NEW CHAIRMAN

VALUE OF MONITISE MOBILE MONEY TRANSFERS AND PAYMENTS GROWS 150% TO $50BN

EXPECTED REVENUE GROWTH OF APPROXIMATELY 50% IN FY 2014

MONITISE ACQUIRES GRAPPLE, A LEADING MOBILE INNOVATION AGENCY

LONDON - Monitise plc (LSE: MONI)("Monitise", the "Company" or the "Group") announces its audited preliminary results for the year ended 30 June 2013.

Financial Highlights

· Full-year revenue more than doubled for the fourth year in succession, rising to £72.8m from £36.1m, an increase of 102%. Revenue growth was 50% on an organic basis(1).

· Gross margin increased to 76% from 66% in FY 2012, with user generated margin particularly strong, owing to a number of significant product licence deals.

· Group EBITDA(2) loss of £19.3m for the year (FY 2012: £10.4m), which takes into account the acquisition of Clairmail Inc., Mobile Money Network and eMerit Solutions, continued investment in scaling Monitise's platform technology and Group service delivery capabilities as services were launched across three continents.

· Adjusted3 loss for the year was £32.8m (FY 2012: £18.2m) and adjusted loss per share was 2.4p (FY 2012: 2.4p). Statutory Loss before tax in the year was £51.1m (FY 2012: £16.9m), with loss per share at 3.8p per share (FY 2012: 2.1p).

· Group net cash of £85.6m at 30 June 2013.

1 Assuming Clairmail Inc. (now Monitise Americas Inc.) had been owned for the full twelve months in FY 2012.

2 EBITDA is defined as operating profit/loss before exceptional items, depreciation, amortisation, impairments and share-based payment charges.

3 Adjustments comprise share-based payments, exceptional items, impairments and acquisition-related amortisation.

Revenue and revenue growth by source

*User generated revenue in FY 2013 includes product licences of £13.7m

Board Appointments

· Monitise announces that Peter Ayliffe, who has served as a Non-Executive Director on the Board of Monitise since November 2011, has been appointed Non-Executive Chairman of the Group. Peter, who has led Visa Europe as President and Chief Executive for seven and a half years, will assume his duties under his new role on 1 October, 2013, following his retirement from Visa Europe. He succeeds Duncan McIntyre, who is stepping down on 1 October. Duncan will continue as a special advisor to the Company.

· Monitise is also pleased to announce today that Victor Dahir is joining the Board as Non-Executive Director with immediate effect, replacing Ellen Richey, as the Visa Inc. appointed director.

· An announcement regarding Peter and Victor's appointments, including details required under AIM Rules, is being released separately this morning.

Grapple Mobile Ltd - Acquisition Highlights

· The Company announces the acquisition of Grapple Mobile Ltd, a leading European mobile innovation and design agency delivering smartphone and tablet solutions for leading European brands including Whitbread, Procter & Gamble, Sky and B&Q.

· In a share-based deal, Monitise has acquired the entire issued share capital of Grapple. Initial consideration (net of cash) is to be satisfied by the issue of 28,640,748 Ordinary Monitise Shares, valued at £16.5m based on the closing share price of 53.75p on 4 September, 2013, with an earn-out consideration of up to £22.9m payable on the achievement of aggressive performance-related targets.

· Grapple will form part of Monitise Create, a division focused on designing and developing world-class digital strategies and user experiences.

· The acquisition complements Monitise's globally-recognised capabilities in creating, deploying and running intuitive, cutting-edge, and bank-grade mobile solutions for and with some of the world's leading financial institutions, payment companies, network operators and technology businesses such as Visa, Telefónica, IBM, RBS, Lloyds, Cognizant and CGI.

IBM and Monitise Collaboration

· In a separate release, issued 4 September, 2013, IBM (NYSE: IBM) and Monitise announced how the companies are now collaborating to extend the adoption of Mobile Money capabilities across the two businesses' client and partner networks. Visa Europe's member banks will be among the first beneficiaries of the new partnership, drawing on IBM's Smarter Commerce initiative with support from Monitise. IBM will provide a broad range of software, technology services and consulting, including IBM Mobile First solutions, to help power Monitise mobile services for Visa Europe.

 Outlook

Our continued confidence is reflected in the following guidance:

· Expected revenue growth of approximately 50% in FY 2014.

· FY 2014 gross margin to be maintained above 70%.

· The Group sees multiple opportunities in all geographies both from direct sales channels and its growing partner network.

· A move to the London Stock Exchange's main market is targeted in calendar 2014.

Operational Highlights

· Strong growth in core business

o Registered customers at 24m, compared with 17m a year ago.

o Further growth in live transactions, with more than 3bn transactions on an annualised basis, compared with 1.6bn a year ago.

o Processed payments and transfers now worth more than $50bn on an annualised basis, 150% higher than the $20bn a year ago.

· Second-half highlights

o Under a five-year agreement, Monitise became the preferred mobile payments and commerce technology partner for Telefónica Digital, the global innovation arm of Telefónica, one of the world's largest telecommunications businesses with more than 316m subscribers in 24 countries. It operates under the O2, Movistar and Vivo commercial brands.

o A new three-year deal was entered into with Visa Europe spanning the development and deployment of Mobile Money solutions for Europe's leading financial institutions.

o BBM Money, a person-to-person mobile payments service, was launched through Monitise Asia Pacific's Joint Venture with Astra Graphia Information Technology in partnership with Indonesian financial institution PermataBank and BlackBerry.

o A mobile point of sale (mPOS) partnership was created with Lloyds Bank Commercial Banking to develop a suite of mobile card acceptance solutions for the bank's micro-merchant, start-up and small business customers. This agreement occurred shortly after the launch of Monitise's white-labelled mPOS service for banks, mobile operators and acquirers.

o The launch of an international partnership with Blackhawk Network, a leading prepaid payment network, was announced to make mobile gift card purchasing available to consumers through certain banks and financial institutions.

· New business wins post year end

o On 22 July, Monitise announced that in India, ICICI Bank had entered into an agreement with Movida, the Group's Indian Joint Venture with Visa Inc., to enable ICICI payment cardholders to pay bills, recharge prepaid airtime and buy cinema tickets via their mobile.

o On 12 August, Monitise announced an agreement with Desjardins Group, Canada's leading cooperative financial group, to develop and deploy NFC (near field communication) mobile payment capabilities to its members and clients.

o The Group has been selected and is progressing discussions with two commercial banks in Continental Europe regarding the implementation of mPOS services and looks forward to updating the market in due course.

Monitise Group CEO Alastair Lukies said:

"Monitise has delivered another financial year of very strong growth that reflects our standing as a category-leading specialist. By creating, developing, deploying and running 'bank', 'pay' and 'buy' solutions for our partners and clients around the world, we are playing our role in societies' ever-quickening shift to Mobile Money, globally. Significant momentum via both our partner and direct sales channels continues to grow across the business.

I am honoured to announce Peter's appointment as Chairman. Peter's wealth of experience and insights will be invaluable in supporting us through the next phase of our growth. I would also like to take this opportunity to thank Duncan for his selfless and constant support and guidance as we have built Monitise into the trusted and proven business it has become. He has been an outstanding Chairman as the Company has grown from a start-up to a business that services more than 350 financial institutions and initiates payments, purchases and transfers across its platform technology worth more than $50 billion.

The acquisition of Grapple announced today, which will become part of our Monitise Create division, supports the growth of our creative capabilities and further reinforces our leading position as a technology enabler at the heart of the Mobile Money ecosystem. Combined with our very exciting Smarter Commerce initiative with IBM, we are executing against our strategy to bring together the global ecosystem in banking, payments and commerce. We are excited by the opportunities we can now pursue from our combined strengths.

We have made a positive start to our new year. We have a strong sales pipeline and broadening strategic partnerships allowing us to target revenue growth of approximately 50% in FY 2014."

Monitise Chairman Duncan McIntyre added:

"This has been another strong year for the business, thanks to ongoing progress in our key areas of strategic focus as we build our business to meet the present and future needs of our partners and clients.

It has been tremendously exciting being part of Monitise's journey to becoming a leading global Mobile Money specialist. I am delighted to be able to hand over the chair to Peter, a high-calibre executive with relevant and deep industry knowledge. Peter has been a highly valuable member of the Board and I am delighted that he has agreed to succeed me as Chairman and oversee the next chapter in Monitise's journey.

As a Group, we remain on track with our growth strategy and believe we are perfectly placed with our strong balance sheet and proven platform technology to further expand our market reach as we enable our customers' ongoing expansion into Mobile Money."

An analyst presentation will be held on Thursday 5 September 2013 at 9.00am BST at the London Stock Exchange, London, 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.

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 (LSE: MONI) is a world leader in Mobile Money - banking, paying and buying with a mobile device. Leading banks, payments companies, retailers and mobile networks utilise Monitise's technology platforms and services to securely connect people with their money. 

Already 24 million consumers benefit from our patented technology to 'bank anywhere', 'pay anyone' and 'buy anything', accounting for $50bn of payments, purchases and transfers annually. More information is available at www.monitise.com.

Chairman's Statement

The strong results delivered again this year underscore the success of the Group's strategic focus to create a significant and scalable growing ecosystem of partners and clients, leveraging Monitise's bank-grade platform technology around the world.

During FY 2013, which saw our revenue double for the fourth year in a row, we raised £117m net of fees, ensuring that the Group maintains its strong balance sheet.

We continued to invest strategically in technology and infrastructure to scale our business and address mobile commerce opportunities as well as enhance the banking and payments service delivery capabilities on which our foundations are laid. Further to the acquisition of US mobile banking specialist Clairmail Inc. in 2012, the Mobile Money Network joint-venture buyout and eMerit mPOS acquisition made during the 2013 financial year enabled us to further evolve a portfolio of Mobile Money solutions relevant to the requirements of our customer and local market needs.

During the year, the Group enhanced its Bank Anywhere, Pay Anyone and Buy Anything product sets. Bank Anywhere products comprise SMS banking, card management, balance enquiries, messaging alerts, mobile image capture, ATM and branch locators, transaction histories, account transfers and more.

Monitise's Pay Anyone product capabilities feature mPOS, proximity payments, mobile phone top-up, peer-to-peer payments, travel money, charity donations, mobile stored value accounts and international remittances. Within weeks of the Group launching its enhanced mPOS proposition, Lloyds Bank Commercial Banking had entered a partnership with Monitise covering mobile card acceptance solutions for micro-merchants, start-ups and small business owners.

During the year, we enhanced our Buy Anything product sets given the Group's focus on creating new Mobile Money opportunities for businesses looking to capitalise on accelerating global demand for banking, payments and commerce capabilities. These services include mobile wallets, instant mobile checkout, bank specific loyalty and offers, bank cross-sell and up-sell and gift cards in the form of digital coupons and vouchers.

One constant which we have held strong to since launching our business is interoperability - we are not setting out to create new payment rails but rather to leverage existing and trusted payment infrastructures, be they card or bank account based. At Monitise, we see payments as a means to an end that should not be something the consumer has to think about.

Having been with Monitise for nine amazing years, I am extremely proud of where the business is today as a company: a global Mobile Money leader with services around the world. While delivering Mobile Money capabilities is not a simple task, we have always maintained an unwavering focus on making money totally mobile across the world through secure, robust and compelling solutions and services that give our clients the ability to meet the needs of consumers, both today and in the future.

It has been a tremendous honour to lead Monitise on its journey to becoming a leading global Mobile Money specialist. I am delighted to be able to hand over the chair to Peter, a high-calibre executive with relevant and deep industry knowledge. Peter has been a highly valuable member of the Board and I am delighted that he has agreed to succeed me as Chairman and oversee the next stage in Monitise's journey.

During the year we welcomed two new executives to our Board. Monitise's Chief Information Officer Mike Keyworth, who joined Monitise in early 2004, joined the Board as Executive Director in October 2012. Brad Petzer joined as Group Chief Financial Officer and Executive Director in April 2013 following John Brougham's retirement. Brad joined Monitise from Telecity Group plc, Europe's industry-leading provider of premium carrier-neutral data centres, a FTSE 250 company, where he held the position of Group Financial Controller.

Our Board also today welcomes Victor Dahir. Victor brings considerable skills and experience and will be a huge asset to our organisation. I would like to take this opportunity to thank Ellen Richey for her invaluable contribution to the Board during her time as a Non-Executive Director.

On behalf of the Board, I would like to thank our shareholders for their support. I would also like to thank all our staff for their continued contribution and hard work over the past year.

Annual General Meeting

The Annual General Meeting ("AGM") of the Company will be held on 17 October 2013 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

This was the year when Mobile Money became bigger than ever, practically for consumers, commercially for anyone doing business in this industry and strategically for us as a publicly-listed and independent business. Monitise closed FY 2012 with revenues of £36 million and had recently completed the acquisition of Clairmail Inc., the US mobile banking specialist. Since then, during the 2013 financial year, the Group has successfully acquired and integrated two further businesses specialising in mobile commerce and payments, reinforcing Monitise's position as a world-leading Mobile Money specialist.

Other highlights for FY 2013 include:

· Revenue rising 102% to £72.8m - the fourth year in which Group revenue has doubled

· Further developing and enhancing our market-leading and award-winning services via the launch of our Bank Anywhere, Pay Anyone and Buy Anything product sets

· Entering significant new partnerships and deepening existing relationships with, among others, Telefónica Digital and Visa Europe

· Launching BBM Money, the Group's first mass-market service in Indonesia

The future is mobile

Mobile is having a transformational impact on our lives personally, professionally and socially. The corporate and consumer appetite to be increasingly connected shows no sign of abating as the digital payments landscape gathers momentum faster than anyone previously anticipated. Mobile Money is a particularly exciting part of the mobile evolution. It's simplifying and speeding up the way we bank, pay and buy, opening infinitely more opportunities for people to manage their money around the clock at a time and place that suits them. Gartner notes that consumer spending on mobile technologies in 2012 accounted for almost half of all technology spend, adding up to £511bn, while IDC predicts there will be 1bn mobile banking users by 2017.

Mobile offers a level of engagement and repeat usage that a branch, ATM, the web and many other channels simply can't match. This is exciting for those in the business of mobile commerce - the browsing, buying and selling of products and services on mobiles. There's a growing audience of captive and connected consumers to engage with.

At Monitise, our role has always been anchored around our commercial strengths as an enabler, with the vision, legacy and capability to deliver global solutions for those wanting to deliver innovative and compelling bank-grade mobile banking, payments and commerce services to their customers. Our proven, flexible and secure platform technology has been created and refined for deployments 'on premise', hosted or via the cloud in some of the most heavily regulated financial services environments in the world. Via our platform technology, the Group simplifies the complexity of delivering secure Mobile Money services to embrace any device, payment network or operator. It is a secure, configurable bank-grade platform spanning banked and unbanked markets. Monitise connects to financial institutions' core banking systems either directly, or via an ATM switch such as Vocalink in the UK or via a third-party processor company such as Visa DPS or FIS (Fidelity Information Systems) in the Americas.

Following the Group's capital raise in December 2012, Monitise's platform technology was further expanded to incorporate mobile commerce features to help our clients retain customers, defend their position and generate new revenue streams. Amid this, Monitise is processing 3bn+ transactions on an annualised basis, compared with 1.6bn a year ago. With the ongoing growth in our partner network and broadening connections to new services, Monitise has 24m registered end-user customers, compared with 17m a year ago.

The strategic and commercial merits of our platform technology have been recognised by a broadening array of businesses keen to increase their own exposure to Mobile Money solutions. Amid long-standing relationships with Visa Inc. and Visa Europe, RBS and FIS, Monitise now works with more than 350 banks and financial institutions and an increasing array of partners positioning themselves to adopt new mobile banking, payments and commerce services.

During the year, the Group also entered into a new five-year partnership as the preferred Mobile Money technology partner with Telefónica Digital to develop and manage new and existing mobile payment and commerce services for their customers. This marked our second major deal for our Buy Anything mobile commerce initiative following our three-year contract with Visa Europe announced in March 2013. The Telefónica partnership leverages our extensive experience in delivering bank-grade secure mobile applications, our proven and deep understanding of international payment schemes and strong mobile commerce capabilities.

UK and Europe

The Group extended its partnerships and customer reach, including a further strengthening of the partnership with Visa Europe via a new three-year commercial agreement spanning the development and deployment of new Mobile Money payments and commerce solutions for Europe's leading financial institutions. Monitise has been working with Visa Europe since February 2011 to deploy mobile services to its 3,000+ member banks and financial institutions across 37 countries.

The Visa Personal Payments system Monitise helped develop now has 30 live and committed issuers across Europe, with RBS and NatWest the first banks in the UK to launch the service via their mobile banking app in March 2013.

RBS Technology Services and Monitise created new mobile banking innovations during the year. Apps were delivered for the Windows operating system and enhanced with an in-app sales functionality enabling users to sign up for and open a savings or cash ISA account from within the app itself.

In December 2012, Monitise acquired control of Mobile Money Network, a joint venture with Best Buy Europe and Carphone Warehouse founder Charles Dunstone, and announced the acquisition of mobile payments acceptance business eMerit Solutions, both of which have been successfully integrated into the Group. These commercial initiatives reflect Monitise's focus on building high-traffic platforms onto which the Group via its partnerships is increasingly layering mobile-payment and mobile-commerce functionality.

As well as the Telefónica Digital partnership, Monitise announced its first direct mPOS deal with Lloyds Bank Commercial Banking to develop a suite of mobile card acceptance solutions for micro-merchants, start-ups and small business owners. The new partnership came within weeks of Monitise launching the Group's enhanced mPOS proposition.

During the second half, we entered into a three-year partnership with Clydesdale Bank PLC to develop and deploy mobile banking services for Clydesdale and Yorkshire Bank customers. More details will be released in due course.

Monitise has an exciting pipeline of direct sales and partner opportunities in Europe. The Group has been selected and is progressing discussions with two commercial banks in Continental Europe regarding the implementation of mPOS services and looks forward to updating the market in due course.

Americas

Monitise, which has been operating in North America since 2007, has a strong and growing presence in the market given its direct customer relationships and partnerships with both Visa Inc. and FIS, one of the world's largest global providers dedicated to banking and payments technologies. The Group's growing business in the Americas has more than 11m registered direct end users.

The Group's platform technology and Bank Anywhere, Pay Anyone, Buy Anything product sets provide US financial institutions' customers with a full range of white-labelled enterprise-wide Mobile Money services, including account management services, bill payments, P2P, remote deposit capture and the ability to manage their debit, prepaid and healthcare cards.

During the year, the Group continued to strengthen its partnerships and new commercial opportunities from its two Bay Area offices near the headquarters of Visa Inc. in Foster City, and in San Rafael.

With Visa Inc., Monitise worked on a number of initiatives to support its mobile strategies. These included:

· Functionality enhancements to the Visa DPS Mobile Card Management Services that launched last year. These have been designed to enable Visa's bank partners to use Monitise's mobile technology in a cost and time-effective way;

· Collaboration on Visa PayWave, Visa's contactless payments application; and

· Supporting Visa's product development of V.me by creating the mobile wallet for smartphones that extends V.me's ecommerce acceptance to mobile devices.

The acquisition of the Clairmail mobile banking and payments business was completed on 26 June 2012, just prior to the end of FY 2012. The business, which at the time was a large third-party provider of mobile banking solutions in the US, was acquired to further strengthen Monitise's presence in North America and complement its existing routes to market and sales distribution channels via Visa Inc. and FIS. Monitise has rebranded the legacy Clairmail product line in the US via its platform capabilities and product sets. These have been designed to deliver on-premise Bank Anywhere capabilities in the mobile space and to enable Pay Anyone and Buy Anything services delivered through the cloud.

The benefits to financial institutions of launching new mobile banking services developed by the Group were underscored during the period by the rapid adoption rates seen for banks and credit unions. Desert Schools Federal Credit Union reached 30% mobile banking adoption in 90 days and found early adopters of its mobile banking solution were two times more profitable than traditional banking members. Via its relationship with Monitise, Hawaii-based American Savings Bank became the first Hawaiian bank to deploy mobile remote deposit capture.

Beyond the strategic partnerships with Visa Inc. and FIS, Monitise's customers include leading US banks with partnerships spanning Fifth Third Bank, U.S. Bank, Sallie Mae, PNC Bank and Frost National Bank, among others.

Shortly before the year-end, Monitise announced a new partnership with Blackhawk Network, a leading prepaid payments network, to make mobile gift card purchasing available to consumers through certain banks and financial institutions in and beyond the United States. The two companies are working to integrate Blackhawk's extensive network into Monitise's mobile banking ecosystem, making it easier for consumers to purchase Blackhawk gift cards from popular retail brands via mobile. Easier consumer access to Blackhawk's network of content providers is expected to increase engagement with popular retailers and create new opportunities for customers to purchase directly from their participating financial institution's mobile banking platform. When launched, Monitise and Blackhawk will generate a percentage-based fee for each gift card sold.

Monitise continues to see strong demand from US banks to leverage the banking, payments and commerce capabilities of the Group with a strong pipeline of further services planned for 2014.

India

Monitise's strategic focus in India, the second-largest mobile market in the world with around 900m mobile subscriptions, is underpinned by the Group's belief that the proliferation of mobile services creates a unique opportunity to provide financial services via mobile.

The Group's commercial interests in India are centred around Movida, a 50:50 Joint Venture between Monitise and Visa Inc. that works with financial institutions to provide mobile payments services to consumers across India. The business uses the underlying capabilities of Visa and Monitise to deliver a fast, reliable, secure and simple service using proven technologies and networks.

With almost 350m debit and credit cards outstanding in India, according to Datamonitor, card ownership is not holding back card transactions, but rather the lack of opportunity to use cards at POS or online. Movida is making it possible to pay with cards by connecting to utilities and ticketing agencies and using the customer's registered card details to make the payment via mobile.

Shortly after the year-end, ICICI Bank, India's largest private sector bank, entered an agreement with Movida to deploy the Joint Venture's mobile payments service for its customer base. The service will enable ICICI Bank payment card holders to pay bills, recharge prepaid airtime and buy cinema tickets from any mobile phone and is designed to operate across all mobile networks using any Visa or non-Visa branded payment account. Movida has also been working with HDFC Bank, India's second-largest private bank, since February 2012. HDFC customers have access to mobile payments services via Movida.

Movida is now working with two of the top three banks in India that combined, make up more than half of all credit card transactions in India and one third of all debit card transactions. Negotiations continue with other Indian businesses interested in launching Mobile Money services via Movida.

Asia Pacific

Monitise Asia Pacific is a Joint Venture between Monitise and First Eastern. First Eastern is a leading Hong Kong-based investment Group, pioneering in the field of direct investments in China and across Asia Pacific. The Joint Venture works with strong local partners to extend the Group's trusted and secure mobile banking, payment and commerce services in the region.

A highlight during the year was the launch of the world's first mobile payments BBM Money service for BlackBerry Messenger, a rollout that began in February following regulatory approval from Bank Indonesia, the country's central bank. BBM Money takes advantage of BlackBerry's significant share of the smartphone installed base in Indonesia - and the use of BBM as a marketplace in Indonesia where "BBM Groups" are used to trade goods.

BBM Money allows BlackBerry users in Indonesia to send and receive money seamlessly within a BlackBerry Messenger chat conversation as well as top-up any mobile phone prepaid airtime. Consumers can load their BBM Money account through any of the ATMs across Indonesia and return money to their bank accounts from within the BBM Money App. Within three months of launch, the service had attracted more than 60,000 registered users. 

A second phase of the service went live post year-end in August, incorporating enhanced capabilities including a wide range of bill payments, cardless cash withdrawals via ATMs and access via wifi. The bill payment feature will enable BBM Money users to easily and conveniently pay a wide range of bills including utilities, credit cards, post-paid mobile, internet and cable TV, which is particularly important in a market where utilities and businesses are moving more into pre-paid services.

The new service was the result of collaboration between BlackBerry, Monitise Asia Pacific and Astra Group, the largest conglomerate in Indonesia and PermataBank, one of the top 10 financial institutions in Indonesia.

In Hong Kong, Monitise Asia Pacific is also working with local partners PCCW-HKT mobile and JETCO, the major ATM switch serving the majority of banks in Hong Kong, to launch new mobile payments services that have been developed during the year. Bank of China (Hong Kong) will be the lead partner bank. The initial service, which allows the mobile operator's customers to top up their mobile airtime and data SIM cards, will go live once regulatory approval has been secured. It is based on Monitise's proven technology platform and will also represent the Company's first Chinese language mobile app.

Board appointments

As announced separately today, Peter Ayliffe, who has led Visa Europe as President and Chief Executive for seven and a half years and has served as a Non-Executive Director on the Board of Monitise since November 2011, has been appointed Non-Executive Chairman of Monitise Group. Peter will commence his new role with Monitise on 1 October, 2013, following his retirement from Visa Europe. He succeeds Duncan McIntyre, who is stepping down on 1 October. Duncan will continue as a special advisor to the Company.

At Visa Europe, Peter is responsible for Visa's European business in 37 countries, accounting for about 30% of the worldwide expenditure on Visa cards. Peter has overseen the creation of a European owned and controlled Visa business and under his leadership, the number of transactions processed by the world-class European system has grown from 4.2 billion to 14 billion per annum.

Prior to Visa Europe, Peter spent more than 30 years in retail banking. He was a main Board Director at Lloyds TSB. During this time, Peter was a Non-executive Director on the Visa Europe Board and a Director on the Visa International Board. Peter has been on the Board of Investors In People (UK) and is currently President of the Chartered Management Institute and a Non-Executive Director of the UK's third-largest building society, the Coventry.

In the view of the Board, Peter will provide expert and independent leadership for the Board.

As also announced separately today, Victor Dahir joins the Board as Non-Executive Director with immediate effect, replacing Ellen Richey, as the Visa Inc. appointed Director, who has served for 11 months on the Monitise Board. Visa rotates its appointments to other companies' boards from time to time. Victor has more than 40 years of finance and accounting experience. He spent more than 20 years with Visa, including roles at both Visa International and Visa U.S.A and was also Chief Financial Officer of Inovant LLC, a subsidiary of Visa. Prior to joining Visa in 1984, he served as Senior Vice President and Chief Financial Officer of Redwood Bank in San Francisco for six years. A Director of MoneyGram International Inc. since May 2010, Victor is a licensed Certified Public Accountant in California.

Summary

With a year of robust revenue growth, rising gross margin and closing with a strong balance sheet, our 2013 performance reinforces our leadership position as a proven and trusted technology and services enabler at the heart of the Mobile Money ecosystem. We are excited about our prospects to benefit from the acceleration in Mobile Money globally as more companies look to embed mobile into their corporate strategies. We are backed by a fully-funded balance sheet as we move towards profitability with multiple opportunities in all geographies from both direct customers and our growing partner network.

Alastair Lukies

Monitise Group Chief Executive Officer

CFO Review

Financial summary

The year to 30 June 2013 has been another strong year for Monitise.

· Revenue more than doubled for the fourth consecutive year, rising to £72.8m from £36.1m, an increase of 102%.

· Gross margin increased to 76% from 66% in FY 2012.

· User generated gross margin hit an all time high of 90% compared to 84% a year ago owing to a number of significant product licence deals.

· Group EBITDA loss was £19.3m for the year (FY 2012: £10.4m), which takes into account the acquisition of Clairmail Inc., Mobile Money Network and eMerit Solutions, continued investment in scaling Monitise's platform technology and Group service delivery capabilities as we launched services across three continents.

· Adjusted* loss for the year was £32.8m (FY 2012: £18.2m) and adjusted loss per share was 2.4p (FY 2012: 2.4p). Statutory Loss before tax in the year was £51.1m (FY 2012: £16.9m), with loss per share at 3.8p per share (FY 2012: 2.1p).

· Group net cash of £85.6m at 30 June 2013.

* Adjustments comprise share-based payments, exceptional items, impairments and acquisition-related amortisation.

Revenue

Revenue in FY 2013 grew by 102% to £72.8m from £36.1m in FY 2012. On an organic basis, assuming Clairmail Inc. had been owned for the full twelve months in FY 2012, revenue grew by 50%.

Revenue growth was driven by higher year-on-year growth in user generated revenue both on a reported and organic basis, up 247% and 119% respectively. User generated revenue continued to grow as a proportion of total revenue, up from 35% of the total in FY 2012 to 60% in FY 2013.

Total user generated revenue in FY 2013 was £43.4m and included a strong contribution of £13.7m from product licence revenue. The product licence revenue was attributable in large part to the Group's recent Visa Europe and Telefónica Digital wins. A product licence is a sale where the customer has the ability to exploit the licenced functionality upon delivery and include both certain term-based and perpetual licences. As our product offering extends from Bank Anywhere into Pay Anyone and Buy Anything, and as our direct sales are augmented by partnership sales, we are seeing more product licence based deals being signed and this will likely continue into FY 2014 and beyond. Product licence based deals include subsequent subscription and/or transaction based revenue, as well as development and integration revenue.

Development and integration revenue increased by 25% on a reported basis and 2% on an organic basis.

Gross Margin

Gross margin increased to 76% (FY 2012: 66%), driven by the improving mix in user generated revenue. User generated margin has reached 90% from 84% in FY 2012 owing in part to strong product licence revenue as discussed above. Development and integration margin was 55% in FY 2013, compared to 58% in FY 2012.

We expect gross margin for the Group in FY 2014 to be maintained above 70%.

EBITDA

The Group EBITDA loss was £19.3m in FY 2013 compared to £10.4m in FY 2012.

In line with our strategy we continue to invest to create value from the growing opportunities in the Mobile Money market. The operating costs of £74.5m (FY 2012: £34.4m) reflect the enlarged cost base of the Group following the Clairmail Inc. acquisition and continued investment in scaling the Group's service delivery capabilities and Monitise's platform technology. These latter investments underscore the progress made in further advancing the productisation of our platform.

Other Movements

Depreciation, Amortisation and Impairments

Depreciation was £3.3m in the period (FY 2012: £1.4m). Amortisation of £11.8m (FY 2012: £1.8m) includes amortisation of acquired intangibles assets, largely relating to the Clairmail Inc. acquisition, of £6.6m and capitalised development costs of £3.9m. A £1.0m impairment was recorded relating to previously capitalised development spend.

Exceptionals

£4.2m of exceptional costs were recorded in the year, principally reflecting £1.9m of litigation and other corporate costs predominantly linked to intellectual property claims in the US and £1.6m of restructuring and property costs relating in part to restructuring costs following the Clairmail acquisition.

In addition, exceptional losses of £1.4m were incurred in the period, relating to the acquisition of Mobile Money Network Limited. In the prior year, the Group recorded a one-off profit of £10.1m in respect to the acquisition of Monitise Americas LLC, which was the Joint Venture previously held with FIS.

Share-based Payments

The share-based payment charge of £5.3m in the period (FY 2012: £2.7m) includes share-based remuneration components relating to the acquisition of Clairmail Inc. and Group employee share options grants.

Loss Before Tax

Group loss before tax was £51.1m, compared to a loss in FY 2012 of £16.9m.

Tax

The £0.3m tax charge for the year (FY 2012: £0.5m credit) reflects overseas tax payable and the utilisation of deferred tax assets, offset by the unwinding of deferred tax liabilities relating to acquisitions.

Attributable Loss

The reported loss for FY 2013 was £51.3m (FY 2012: £16.4m). On an adjusted basis excluding share based payments, exceptional items, impairments and acquisition-related amortisation, attributable loss was £32.8m (FY 2012: £18.2m). The increased loss was largely driven by the acquisition of Clairmail Inc. at the end of FY 2012 and increased platform investment.

Loss Per Share

The basic and diluted loss per share was 3.8p (FY 2012: 2.1p). Details can be found in note 4. On an adjusted basis excluding share based payments, exceptional items, impairments and acquisition-related amortisation, basic and diluted loss per share was 2.4p compared to 2.4p in FY 2012. The consistent adjusted loss per share was driven by the increased share count following the capital raise and M&A activity more than compensating for the increase in attributable loss for the year.

Cash Flow and Funds

Free cash outflow excluding exceptionals, funding and acquired cash was £35.9m, compared to £28.2m in FY 2012. This was balanced by a net £117.3m (FY 2012: £24.3m) equity fund raise in the year, driving an increase in cash and short term investments of £67.2m in the year, compared to an outflow of £2.6m in FY 2012.

Joint Venture funding, comprising investments and loans, totalled £4.0m in the year, down from £6.9m in FY 2012. Capital spending increased from £10.8m to £14.2m due to the enlargement of the Group following the acquisition of Clairmail Inc. in June 2012, and also by increasing investments to take advantage of the mobile payment and mobile commerce markets.

Capital spending included £5.1m (FY 2012: £3.2m) of tangible asset purchases, and £9.1m (FY 2012: £7.6m) of intangible purchases and capitalisation.

The Group ended the year with a strong balance sheet, holding £85.6m of net funds at 30 June 2013 compared to £9.9m in FY 2012.

Segmental information

Since the acquisition of Clairmail Inc. in June 2012, the Group has transitioned to operating as a single operating segment worldwide. The Monitise plc Board of Directors considers revenue, cost of sales, operating costs, exceptional costs and a measure of adjusted EBITDA of the Group as a whole when assessing the performance of the business and making decisions about the allocation of resources. Accordingly, the Group had one reportable operating segment for the year ended 30 June 2013. The operating segment derives revenues from delivering mobile banking, payments and commerce networks worldwide. The additional segmental information provided in note 2 is for historic comparative purposes only and is not audited.

Post balance sheet events

The Group acquired 100% of the issued share capital of Grapple Mobile Limited, a leading European mobile innovation and design agency, on 4 September 2013. Initial consideration is predominantly satisfied by the issue of 28,640,748 Ordinary shares. In addition, contingent consideration of up to £22.9 million based on the share price of 53.75p at 4 September 2013 may be payable in shares dependent on achievement of earn-out targets.

Brad Petzer

Monitise Group Chief Financial Officer

1 Total Operating costs after depreciation, amortisation, impairments, share-based payments and exceptional expenses (including one-off costs of £222,000 (2012: £135,000) included in Exceptional (loss)/gain on acquisition of subsidiary) are £100,425,000 (2012: £45,475,000).

2 EBITDA is defined as Operating loss before exceptional items, depreciation, amortisation, impairments and share-based payments charge.

* The comparative figures include the effects of the finalisation of acquisition accounting relating to prior year acquisitions.

* The comparative figures include the effects of the finalisation of acquisition accounting relating to prior year acquisitions.

1. 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 2013, with the exception of the additional segment information provided in note 2.

The preliminary announcement for the year ended 30 June 2013 was approved by the Board of Directors on 4 September 2013. The financial information set out above does not constitute the Company's statutory accounts for the year ended 30 June 2013 or 2012 but is derived from those accounts. Statutory accounts for 2013 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.

2. Segmental Information

Monitise's operating segment is 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 segment based on the information reviewed by the Board of Directors for the purposes of allocating resources and assessing performance.

Since the acquisition of Monitise Americas Inc. in June 2012, the Group has transitioned to operating as a single operating segment worldwide. The Monitise plc Board of Directors considers revenue, cost of sales, operating costs, exceptional costs and a measure of adjusted EBITDA of the Group as a whole when assessing the performance of the business and making decisions about the allocation of resources. Accordingly, the Group had one reportable operating segment for the year ended 30 June 2013.

The results from continuing operations, in the format as provided to the Board, have not been reproduced below and can be found in the Statement of comprehensive income.

For information only, the Group's results for the years ended 30 June 2013 and 30 June 2012 have been shown below on the prior year segmental basis as follows:

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

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

Monitise US which represented 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 represented the Group's products and services to Monitise's global cross-territory customers, including Visa Inc. and Visa Europe.

Investment in future operations segment represented the Group's operations which are not yet live operations covering both pre-sales and start-up period. The segment included both revenues (e.g. initial licences and development and integration services prior to deployment) and costs. The segment included investment to host new operational platforms and new business development activity.

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

* The comparative figures include the effects of the finalisation of acquisition accounting relating to prior year acquisitions.

* The comparative figures include the effects of the finalisation of acquisition accounting relating to prior year acquisitions.

On 10 December 2012, the Group acquired the remaining 56% of the issued share capital in its joint venture, Mobile Money Network Limited (MMN), from its joint venture partners for a consideration of £16,830,000 paid by the issuance of 55,678,699 shares in Monitise plc and the fair value of contingent consideration payable. On 11 December 2012, the Group acquired the entire issued share capital of eMerit Solutions Limited (eMerit) for a consideration of £1,992,000, paid by cash of £10,000, the issuance of 4,724,409 shares in Monitise plc, and the fair value of contingent consideration payable.

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 £15.1 million in respect to the MMN acquisition, and £1.5 million in respect to the eMerit acquisition. Included within Acquired Technology (acquisitions) is £5.6 million in respect to the MMN acquisition, and £0.8 million in respect to the eMerit acquisition.

During the year, the Directors finalised the acquisition accounting for the acquisition of Monitise Americas Inc., which took place on 26 June 2012, and comparatives have been updated accordingly.

During the year, as a result of the continued productisation of the Monitise platforms, the Group assessed the recoverable amount of certain previously capitalised development costs. Following this review, the carrying amount of development costs relating to a superseded product was reduced from £973,000 to £nil. The impairment loss was recognised in the 'Depreciation, amortisation and impairments' line of the Statement of Comprehensive Income.

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.

7. Post Balance Sheet Events

The Group acquired 100% of the issued share capital of Grapple Mobile Limited, a leading European mobile innovation and design agency, on 4 September 2013. Initial consideration is predominantly satisfied by the issue of 28,640,748 Ordinary shares. In addition, contingent consideration of up to £22.9 million based on the share price of 53.75p at 4 September 2013 may be payable in shares dependent on achievement of earn-out targets.

Due to the timing of the transaction, the accounting for this acquisition has not yet been finalised. As such, information on goodwill and the fair value of assets and liabilities acquired is not available at the date of signing of these financial statements.