Trading update for the six months ending 30 June 2011

Total revenues for the half year on a proforma basis are expected to increase by 56%, compared to the corresponding period last year, to £12 million. The revenue growth has been achieved by the contribution from the customer management business acquired in August 2010 and by a 44% increase in revenues from the Intelligent Environments mobile and online banking software business. Group profits for the six month period are expected to double from the £0.5 million achieved in H1 2010.

Software

The growth in the Software division has been driven by strong demand from our existing clients as well as the success of our mobile banking product, Mobinetic. Moreover, we are seeing increased client demand for our digital banking platform, Net Finance, which incorporates both web and mobile channels. In the half we have won three new customers for Net Finance and added O2 as a major strategic customer for our Mobinetic product. We have invested extensively in both our products in terms of additional functionality and support for a variety of mobile handsets. We have also substantially increased our sales and marketing initiatives to ensure that we are well placed to take advantage of the significant opportunities opening up in both the digital banking and mobile banking markets. This has led to a number of new partnerships with global banking software businesses in the first half which should support further new sales going forward.

Services

The customer management business we acquired in August 2010 is performing in line with expectations but we are seeing delays in the closing of new sales and the flow through of resultant revenues from our back-office outsourcing activities, currently known as Documetric. However highlights in the half were the award of a new three-year contract with HBOS and the renewal of the Lloyds and RBS contracts, coupled with the data centre partnership launched in June. We exppect that this partnership, to exploit the underutilised data centre, will be a good earnings generator in 2012 and beyond.

Outlook

The board now anticipates that Group profits for the full year ending 31 December 2011 will be below both market expectations and 2010 due to the ongoing softness in the back office outsourcing activities within its Services business. However, the Software business is expected to continue trading in line with or slightly ahead of expectations, particularly in light of the strong pipeline of new business, the quality of the global partners and the explosive growth in the mobile banking market.

The board is disappointed with the performance of the Service business and is taking the necessary steps to improve its long-term financial performance. Nevertheless, the division will still make a full year profit and generate funds in the year that can be invested in the mobile banking business to continue to take advantage of the tremendous global opportunity in this growth market.