Corero Network Regulatory News (CNS)

24 Nov 2005 11:16

Mondas PLC24 November 2005 Mondas plc("Mondas" or "the Company") ACQUISITION OF BLUE CURVE LIMITEDAND TRADING UPDATE Mondas plc, the specialist provider of software solutions to the banking &securities and education markets, is pleased to announce the acquisition of theentire share capital of Blue Curve Limited ("Blue Curve"), a supplier ofsoftware solutions to financial institutions, for a maximum consideration of £3million, to be satisfied by the issue of Mondas ordinary shares. Blue Curve's software provides customers with the ability to manage financialdata, create complex content, manage workflow processes and distribution ofcontent across a wide variety of channels. Its solutions are used by bothinvestment management and investment banking companies to ensure compliancewith financial and legal regulations and to improve many complex financialinformation processes, such as those involved in creating and distributingfinancial research, corporate finance documents and sales and marketingmaterial. Blue Curve's customers are leading financial firms in the UK and Europe. TheBlue Curve solution is complementary to the Radica CAPS solution marketed by theCompany and, since there is no overlap in the respective customer bases, theMondas directors believe that opportunities exist for cross selling bothsolutions across an enlarged international customer and prospect base. The maximum consideration of £3 million comprises: a) an initial consideration of £925,000, satisfied by the issue of 5,606,060 new Mondas ordinary shares at a price of 16.5p per share; and b) deferred consideration of up to £2,075,000, based on Blue Curve's revenues for the year ending 31 December 2006, after deducting any shortfall adjustment, at the rate of twice the excess above a minimum revenue of £1.15 million. The shortfall adjustment is defined as 1.5 times the amount by which Blue Curve's revenues for the year ending 31 December 2005 fall below £925,000. The deferred consideration is to be satisfied by the issue of up to a further 12,205,882 new Mondas ordinary shares, issued at the higher of 17p per share and a discount of 10 per cent. to the mid market price of a Mondas ordinary share on the date of the announcement of preliminary results for the year ending 31 December 2006. With effect from 1 January 2006 Mondas will be changing its year-end to 31December. Its board believes this will align the Company's timetable betterwith those of its customers in the banking sector, as well as assisting with theintegration of Blue Curve. For the year ended 31 December 2004, Blue Curve made a gross profit of £944,000on sales of £979,000 and incurred a loss after taxation of £91,000 having paidinterest of £92,000 on its debt. It is being acquired on a debt-free basis.Mondas' directors believe that considerable opportunities exist to exploitsynergies between the two companies and to eliminate duplicated overheads. Further background and financial information is set out in a circular, whichwill be issued to shareholders shortly. The acquisition gives rise to certain considerations under the City Code, inview of the fact that the vendors may, in the event that the maximum deferredconsideration is paid and Foresight Technology VCT plc ("Foresight") convertsits holding of £900,000 of the Company's convertible unsecured loan stock intoMondas ordinary shares, hold in excess of 30 per cent. of the then enlargedissued share capital of the Company. Bernard Fairman, a director of Mondas, isalso a director of Foresight, a major shareholder in Blue Curve. Accordingly,he has taken no part in the deliberations of the board regarding theacquisition. Under the AIM Rules, the acquisition of Blue Curve is a related partytransaction as Foresight is a substantial shareholder of the Company. Theindependent directors consider, having consulted with John East & PartnersLimited, that the terms of the acquisition of Blue Curve are fair and reasonableinsofar as the shareholders of Mondas are concerned. An EGM will be convened shortly in order to obtain the required shareholderapprovals. The acquisition is therefore conditional upon the appropriateresolutions being passed and admission to trading on the AIM Market of 5,606,060new Mondas ordinary shares. Current Trading For the six months ended 31 October 2005, the Company's revenues are lower thanthe comparative period last year, due to project slippages within the Banking &Securities division. This has been partially offset by revenue growth within theResource division, following an increased level of new name sales. Operatingcosts have been reduced, including a significant reduction in restructuringcharges. Consequently, the group is expected to incur a lower loss before taxthan that for the comparable period last year. The dynamics of Mondas' business mean that its ability to meet marketexpectations will depend largely on its ability to win significant licence dealsfrom new and existing customers within the Banking and Securities division.Mondas has historically had a significantly better second half compared to thefirst half. As a result of the change in the Company's year-end, this expectedimprovement will fall into the new financial year. With the acquisition of Blue Curve, and the integration of Eclipse LearnerSystems Limited, which was acquired on 11 October 2005, Mondas is achieving thecritical mass necessary to enable it to produce consistently better results andits directors look forward to a positive outcome for 2006. Jarlath McGee, Chief Executive of Mondas said: "This acquisition is a key element in creating critical mass within the Banking& Securities division and complements our product offerings to the investmentmanagement market. The dynamics of the business models shared by the twobusinesses will make integration relatively simple and we expect to delivervalue to shareholders within a short time. Blue Curve has a very strong brandand we will seek to capitalise on this. We continue to actively pursue similarvalue opportunities within both business units." Mark Robertson, CEO of Blue Curve Limited, said: "This deal strengthens Blue Curve's position within the financial markets,giving us the resources we need to serve our customers better and to takeadvantage of the many opportunities that exist for our software. By combiningour efforts with Mondas, we aim to become a major force in the financialsoftware marketplace." 24 November 2005 Enquiries: Mondas plc Tel: 020 7392 1300Jarlath McGee, Chief Executive College Hill Tel: 020 7457 2020Matthew Smallwood/Clare Warren This information is provided by RNS The company news service from the London Stock Exchange