Corero Network Regulatory News (CNS)

30 Jun 2006 07:00

Embargoed for release on 30 June 2006 at 7.00 a.m. Mondas plc ("Mondas" or "the Company") Preliminary Results for the 8 month period ended 31 December 2005 Mondas PLC, the specialist provider of software solutions to the banking &securities and education markets, announces its preliminary results for the 8month transition period ended 31 December 2005 and updates the group's tradingposition for an additional 2 months following the announcement of the Company'sinterim results (6 months to 31 October 2005) on 22 December 2005.Update since interim results * Trading in 2 months to December 31 2005 in line with market expectations. * + revenue for 8 months period ‚£2.09 million and loss before taxation of ‚£ 1.45 million. * Extended product range and critical mass through acquisition of Eclipse Learner Systems Limited ("Eclipse") and Blue Curve Limited ("Blue Curve"). * + Expanded product portfolio expected to add significant revenues in 2006 and 2007 + Eclipse and Blue Curve integration successful - benefits of cost savings in 2006. * End of the transition period completes substantial re-structuring. 2006 to date * Improving trading conditions within financial services. * New names in both financial markets product sets including JM Finn, Panmure Gordon, Ferris Baker Watts and Brewin Dolphin * International sales opportunities have yielded early results which demonstrates the global appeal of our products. * Growing pipeline and reducing sales cycles. Peter Waller, Chairman, said:"This marks the end of a turbulent episode in Mondas's history. We have madeconsiderable progress in re-structuring the business, and the two acquisitionshave now been successfully integrated into the company, giving us theopportunity to capitalise on the strong market place in both of the sectors inwhich we operate. Following our recent contract wins from our key products infinancial markets, we feel confident of further progress in the current year." 29 June 2006Enquiries:Mondas PLC Tel: 020 7392 1300 Jarlath McGee, Chief Executive College Hill Tel: 020 7457 2020 Matthew Smallwood/Alex Walters Chairman's StatementIntroductionThis statement relates to the eight-month period to 31 December 2005, due tothe previously announced change in the company's year end to 31 December. Wereported on the first six months of this period in our interim results to 31October 2005, which we announced on 22 December 2005.I am pleased to report that trading conditions are now much improved from thoseindicated at the time of our interim announcement, although, as there was nonoticeable improvement until the beginning of 2006, trading for this additionaltwo month period remained disappointing, but in line with expectation.During this period the company remained focused on marketing to potential newbusiness prospects which has resulted in significant orders being won in 2006in all divisions of the company. The company also acquired during this periodEclipse Learner Systems and Blue Curve (which completed in January 2006) andmuch time and effort was made in successfully integrating these two businesses.In 2006 to date, our Corporate Actions product has recorded its first new namesales in over a year, with sales to JM Finn and Panmure Gordon. We secured ourfirst US customer, Ferris Baker Watts, where we have installed our Blue Curveproduct, and furthermore have sold this into Brewin Dolphin, a long standingMondas customer. In the education market we have continued to add to ourcustomer base, and now support a total of approximately 150 colleges andschools.ResultsFor the eight-month period to 31 December 2005, Mondas recorded a loss beforetax of ‚£1.45 million on turnover of ‚£2.09 million (year to 30 April 2005: lossof ‚£1.38 million on turnover of ‚£4.59 million). These figures mark the end of aturbulent period within Mondas. They are struck after charging goodwillamortisation of ‚£495,000 (2005 ‚£945,000), which represents the final element ofgoodwill arising from the October 2000 acquisition of DSR Resource and theinitial amortisation of Eclipse Learner Systems. Revenue generation wasdisappointing primarily due to slippage of new business and existing contractrenewals in the Banking and Securities division which has now been confirmedthrough contracts completed in 2006, although this reduction was partiallyoffset by excellent growth within the Resource division.Mondas completed two acquisitions in the period. In October, we acquiredEclipse a supplier of software systems to colleges of further education, and inNovember, we acquired Blue Curve (which was subsequently approved byshareholders on 16 January 2006, and thus does not form part of theseconsolidated accounts). These acquisitions have now been fully integrated intothe Mondas group.PersonnelMy appointment as chairman, in January 2006, followed the acquisition of BlueCurve. I would like to thank my predecessor, Mr Colin Peters, for hischairmanship during this transitional phase of the company and I am pleasedthat his experience continues to be available to Mondas as senior non-executivedirector on the board.Finally I thank all of our employees who have continued to demonstrate skill,energy and commitment during a difficult period of transition for the company.OutlookThe return of confidence in the financial markets combined with greaterregulation and a growing need for compliance has led to a stronger pipeline ofbusiness coupled with shortening sales cycles. We are actively pursuinginternational business and now, following the sale to Ferris Baker Watts, haveclients in the USA, Eastern and Western Europe and the Far East.The successful acquisition and integration of Eclipse and Blue Curve isexpected to add significantly to 2006 revenues and has given us the confidenceand experience to pursue other value enhancing opportunities.Our recent significant contract wins with JM Finn, Panmure Gordon and BrewinDolphin are confirmation that we have an excellent product range to market toboth existing and potential customers and that market conditions have improved.We expect this improving trend to continue, resulting in a materially betteroutcome for the current year.Peter WallerChairman29 June 2006Consolidated Profit and Loss Account for the 8 month period ended 31 December2005 Notes 8 month 8 month 8 month Year ended period ended period period ended 30 April 31 December ended 2005 31 December 2005 31 December 2005 2005 ‚£ ‚£ ‚£ ‚£ Acquisitions Continuing Total Operations Turnover 132,106 1,959,350 2,091,456 4,592,675 Cost of sales (10,428) (80,521) (90,949) (155,655) Gross Profit 121,678 1,878,829 2,000,507 4,437,020 Analysis of administrative expenses Amortisation of goodwill (22,135) (472,691) (494,826) (945,396) Non goodwill administration (53,873) (2,568,189) (2,622,062) (4,133,664)costs Restructuring charge 2 (24,589) (65,481) (90,070) (489,618) Total Administrative (100,597) (3,106,361) (3,206,958) (5,568,678)Expenses Operating profit/(loss) 21,081 (1,227,532) (1,206,451) (1,131,658) Net Interest Payable (150,700) (150,700) (224,623) Amortisation of Convertible - - (27,800)Loan Stock Issue Costs National CULS interest (89,428) (89,428) - Net Interest (240,128) (240,128) (252,423) Profit/(Loss) on ordinary 21,081 (1,467,660) (1,446,579) (1,384,081)activities before Taxation Tax on loss on ordinary 3 265activities Loss for the period (1,446,579) (1,383,816) Basic and Diluted loss per 4 (5.4p) (5.3p)share All of the above operations are continuing. The Group had no recognised gainsand losses other than the loss for the above financial yearsConsolidated Balance Sheet as at 31 December 2005 Note 31 December 30 April 2005 2005 ‚£ ‚£ Fixed assets Intangible assets 509,102 472,691 Tangible assets 109,577 152,225 618,679 624,916 Current assets Debtors 840,911 1,433,221 Cash at bank and in hand 397,405 1,030,865 1,238,316 2,464,086 Creditors: Amounts falling due within one (392,081) (690,786)year Net current assets 846,235 1,773,300 Total assets less current liabilities 1,464,914 2,398,216 Creditors: amounts due falling after more than 1 year Convertible 8% Unsecured Loan Stock 2007 6 (2,823,067) (2,951,585) Accruals and deferred income 7 (1,392,196) (1,448,348) Net liabilities (2,750,349) (2,001,717) Capital and Reserves Called up share capital 2,822,775 2,614,164 Share Premium account 6,428,347 6,280,707 Profit and loss account (12,001,471) (10,896,588) Equity shareholders' deficit 8 (2,750,349) (2,001,717)Consolidated Cash Flow Statement for the 8 month period ended 31 December 2005 Notes 8 month Year ended period ended 30 April 31 December 2005 2005 ‚£ ‚£ Net cash outflow from operating activities A (381,850) (171,268) Returns on investments and servicing of (150,700) (224,623)finance Taxation - 265 Capital expenditure (10,610) (25,753) Acquisition of subsidiary (159,550) - Cash outflow before use of liquid resources 702,710 (421,379)and financing Management of liquid resources 94,249 766,688 Financing Issue of ordinary capital including premium 69,250 (40,500)net of costs (Decrease)/increase in cash (539,211) 304,809Notes to the Consolidated Cash Flow StatementA. Reconciliation of operating loss to net cash outflow from operatingactivities. 8 month Year ended period ended 30 April 31 December 2005 2005 ‚£ ‚£ Operating loss (1,206,451) (1,131,658) Depreciation 57,289 102,822 Amortisation 494,826 945,396 Decrease / (Increase) in debtors 653,280 (498,890) (Decrease) / Increase in creditors (380,794) 411,062 Net cash outflow from operating activities (381,850) (171,268)B. Reconciliation of Net Cash Flow to movement in net debt 8 month Year ended 30 April period ended 2005 31 December 2005 ‚£ ‚£ Opening net debt - as previously stated (1,920,720) (1,471,541) Restatement 217,946 - Opening net debt (1,702,774) (1,471,541) Change in Cash (539,211) 304,809 Cash outflow from decrease in liquid resources (94,249) (766,688) Loan Stock re-negotiation - 40,500 Change in net debt from cash flows (633,460) (421,379) Amortisation of CULS - (27,800) National CULS interest (89,428) - Closing net debt (2,425,662) (1,920,720)Notes to the preliminary results1. Basis of PreparationThese financial statements have been prepared under the historical costconvention, and in accordance with applicable accounting standards, using thefollowing accounting policies. After making reasonable enquiries of the currentsales prospects and existing working capital resources the Directors believethe accounts should be prepared on a going concern basis. The Directors notethat significant cash flows can arise from the closure of large contracts, thetiming of which can be uncertain due to protracted sales cycles items. Thecurrent sales prospects combined with existing working capital resources shouldensure that Mondas has adequate working capital to service its existingbusiness for the foreseeable future.Although the Group incurred significant trading losses and cash outflows duringthe 8 month period ended 31 December 2005, the directors believe that theeffects of internal restructuring combined with the acquisitions made towardsthe end of the period, will bring about improved operating results. Thedirectors have made this assessment based on internal forecasts and cash-flowprojections that factor in these changes, the sales pipeline as well as the newcontract wins made in the first few months of 2006.Change in accounting policyFinancial Reporting Standard (FRS) 25 Financial Instruments: Disclosure andPresentation requires a company to recognise separately the components of afinancial instrument that a) creates a financial liability of the entity and b)grants an option to the holder of the instrument to convert it into an equityinstrument of the entity. As a result of this the company's CULS have beenrestated. The liability element of the CULS has been calculated based uponfuture cash flows discounted at an interest rate that would have been payableon a loan without a conversion option. The impact of this instrument is thatnon cash interest and loan amortisation costs have been increased by ‚£78,138and net assets / (liabilities) and shareholders' funds / (deficit) haveincreased / (reduced) by ‚£263,588 (2004 ‚£341,696).The prior year comparatives have not been restated as advantage has been takenof the exemption granted under FRS 25.The prior year comparatives were prepared under the group's previous accountingpolicy with the CULS accounted for in accordance with FRS 4Had the prior year comparatives been restated it would have resulted in a lowerCULS balance in the balance sheet, an improved retained loss position and ahigher interest charge in the profit and loss account.2. Restructuring Charge 8 month Year ended 30 April period ended 2005 31 December 2005 ‚£ ‚£ Integration Costs (acquisitions) 24,589 - Other restructuring including severances, 65,481 115,270professional fees - 33,802Annual General Meeting Board Restructuring - 340,546 90,070 489,6183. Tax on loss on ordinary activitiesThe amounts represent tax refunds received during the period. 8 month Year ended period ended 30 April 31 December 2005 2005 ‚£ ‚£ UK Corporation Tax Adjustments in respect of Prior Years - (265) Tax on loss on ordinary activities - (265) 4. Loss per shareBasic and Diluted loss per share for the eight month period is based on aweighted average number of shares outstanding of 26,881,206 (year ended 30April 2005: 26,141,634) and loss after taxation of the ‚£1,446,579 (year ended30 April 2005: ‚£1,383,816). The CULS and share options were non-dilutive forboth periods and thus the diluted loss per share is the same as the basicamount.5. DividendThe directors do not recommend paying a dividend for the period (Year ended 30April 2005: nil).6. Creditors: Amounts falling due in more than one year 31 December 30 April 2005 2005 ‚£ ‚£ Convertible unsecured loan stock 2,823,067 2,951,585 Redemption value of convertible unsecured loan stock - 3,000,000 CULS Issue Costs - (139,000) Amortised issue costs - 131,085 CULS Re-negotiation costs - (40,500) Amortisation of CULS renegotiation costs - 2,823,067 2,951,585The loan stock has a par value of ‚£3,000,000 and bore an interest at an annualrate of 8 per cent until 31 October 2005 and increased to 8.75% from 1 November2005 onwards. The CULS are redeemable, if not converted, on 31 October 2007 andare convertible into fully paid Ordinary Shares on the basis of 2 OrdinaryShares for every ‚£1 nominal of convertible loan stock. Interest is payable inequal proportions on 30 June and 31 December in each year. The CULS holder hasthe option to convert the CULS into shares or redeem. If the mean average ofthe closing bid price of an Ordinary Share as shown on the London StockExchange for a period of at least 30 consecutive days is 200p or more, theCompany is entitled to require a holder of CULS to convert all or part of hisholding of CULS into fully paid Ordinary Shares on the basis set out above. Thecost of raising the CULS was ‚£139,000, was fully amortised over the period tothe original redemption date of 31 October 2005. The CULS were previouslyredeemable on 31 October but the redemption date has been extended to 31October 2007. The costs of renegotiating theCULS were ‚£40,500 that are be amortised over the extension period.For the period ended 31December 2005 the CULS have been restated in accordancewith FRS 25 Financial Instruments: Disclosure and Presentation as set out inour accounting policies note.7. Accruals and deferred income 31 December 30 April 2005 2005 ‚£ ‚£ Accruals 147,128 352,262 Deferred income 1,245,068 1,096,086 1,392,196 1,448,3488. Reconciliation of Movements in Shareholders' funds 31 December 30 April 2005 2005 ‚£ ‚£ Loss for the financial period (1,446,579) (1,383,816) Issue of 2,086,110 ordinary shares at par 208,611 - Premium on new share issued (net of expenses) 147,639 - Net (reduction) to shareholders' funds (1,090,329) (1,383,816) Opening shareholders' deficit - as previously (2,001,717) (617,901)stated FRS 25 Restatement 341,696 - Opening Shareholders' (deficit) - after restatement (1,660,021) (617,901) Closing shareholders' deficit (2,750,350) (2,001,717)9. Sundry InformationThis preliminary statement, which has been agreed with the auditors, wasapproved by the Board on 29 June 2006. It is not the Company's statutoryaccounts for the eight month period ended 31 December 2005 but has beenextracted from them. Copies of the report and accounts for the 8 month periodto 31 December 2005 will be posted to shareholders shortly and may be obtainedfrom John East & Partners Limited, Crystal Gate, 28-30 Worship Street, LondonEC2A 2AH.The statutory accounts for the eight month period ended 31 December 2005received an audit report which was unqualified and did not contain a statementunder s237 (2) or (3) of the Companies Act 1985. The statutory accounts for theyear to 30 April 2005 have been delivered to the Registrar of Companies but theaudited 31 December 2005 accounts have not yet been filed.ENDMONDAS PLC