Corero Network Regulatory News (CNS)

26 Sep 2006 07:02

Mondas PLC26 September 2006 Embargoed for release at 7.00 am on 26 September 2006 Mondas PLC ("Mondas" or "the Company") Interim Results for the six month period ended 30 June 2006 Mondas, the specialist provider of software solutions to the banking &securities and education markets, announces its interim results for the sixmonth period ended 30 June 2006 • 75 per cent. increase in revenue to £2.69 million (2005: £1.54 million) • Profit after interest payable and before amortisation and restructuring costs, of £35,000 (31 October 2005: loss £605,000) • All operating divisions now profitable • Significant new name contracts from: • J.M. Finn • Panmure Gordon • Brewin Dolphin Securities • Significant increase in sales opportunities resulting in new name sales and new business from the existing user base • First US customer signed up - Ferris Baker Watts • 2005 acquisitions now integrated resulting in increased revenues and profits • Business Systems division delivers more profit in the period than in the year ended 30 April 2005 Period post July 2006 • Stronger financial market continues to drive Blue Curve's growth • New contracts signed with: • One of the largest UK based global investment banks • Charles Stanley Securities • MDM Bank (Russia) • Convertible Unsecured Loan Stock ( "CULS" ) renegotiated and additional financing secured • Significant project for rollout of CAPS to US and Asia from existing customer • Group continues to trade strongly and is well positioned to achieve full year expectations Peter Waller, Chairman, said: "I am delighted with the progress of all businesses within Mondas which resultedin this first half profit. The successes of our recent acquisitions demonstrateour growing ability to create value for shareholders and I am optimistic for ourprospects for the remainder of the year." 26 September 2006 Enquiries: Mondas PLC Tel: 020 7392 1300 Jarlath McGee, Chief Executive College Hill Tel: 020 7457 2020 Alex Walters Chairman's Statement IntroductionI am pleased to announce the interim results for the six month period ended 30June 2006. Your company has made significant progress in the period underreview. With increasing sales activity across all divisions, we have achieved aprofit, after net interest payable and before amortisation and restructuringcosts of £35,000, compared with a loss of £605,000 for the comparative period.Our recent acquisitions have been successfully integrated and we havedemonstrated their value by achieving higher than anticipated revenues, areduction in costs and product cross selling opportunities. Financial ResultsThe group recorded a profit before amortisation, acquisition integration costsand taxation of £35,000 (2005 loss £605,000). This major improvement was due toall divisions generating profits in line with expectations. After adjusting foramortisation and acquisition costs, our result for the period was a loss of£213,000 (31 October 2005: £1,159,000 loss). Revenues increased by 75 per cent.to £2,690,000 (2005: £1,539,000), of which £626,000 arose from Blue Curve, whichwas acquired in January 2006. Significant increases were recorded across allrevenue categories, with a notable increase in support base revenues arisingfrom both increased sales, and from the acquisitions of Eclipse and Blue Curve.We are pleased to note that Blue Curve has traded ahead of our initialestimates, and additional equity consideration of £388,000 has been accruedagainst goodwill. Operating costs excluding goodwill and acquisition integration expenses were£2,478,000. Certain cost reductions were made relating to the integration ofcentral overheads. These savings were reinvested in increased sales and deliverystaff. Acquisition integration costs were £67,000, the majority of which arosefrom provisions arising from the closure of certain premises. Net interest payable increased slightly to £128,000 (2005: £108,000), arisingfrom the increase of the Convertible Unsecured Loan Stock ("CULS") coupon ratefrom 8 per cent to 8.75 per cent, which took place on 1 November 2005, and fromlower interest receipts from cash balances. Notional interest charges arose fromthe change in accounting policy described in the notes to the accounts. On 16 January 2006 the acquisition of Blue Curve was completed. Consideration of£925,000 was paid by the issue of 5,606,060 10p ordinary shares which wereissued at 16.5 pence each. On acquisition, and following a provisional fairvalue review, Blue Curve had net separable liabilities of £5,000 and, on thatbasis, purchased goodwill (including capitalised contingent consideration) of£1,318,000 arose on acquisition. Goodwill amortisation costs were £178,000(2005: £472,000) and arose solely from Blue Curve and Eclipse, with the balanceof DSR Resource being fully amortised by October 2005. Cash outflows were reversed, allowing cash balances to increase to £534,000 from£397,000 at 31 December 2005. On 30 August 2006 our balance sheet wasstrengthened by the changes announced to the CULS, with the redemption datebeing extended to 31 October 2011, the coupon reduced to 8 per cent. and theconversion price adjusted to 25p. In addition a placing of £1,000,000 nominal ofnew CULS was completed at par, together with a small placing of 405,250 newordinary shares at 16p per share, raising £65,000, to provide funds forincremental investment opportunities and working capital. Debtors increased to £1,308,000 (2005: £952,000). This increase arose from anincrease in sales volumes at the end of the respective periods, and a change inthe timings of certain prepayments. Days sales outstanding, based on averagebillings for the final month of the period were 33 (2005: 34). Accruals anddeferred revenue decreased, due to a change in the relative timing of certainsignificant support renewals and payments made against cash consideration forthe acquisition of Eclipse. Financial Markets Division ReviewPositive trading conditions in financial markets have resulted in increasedopportunities for your company. During the period, we have won significant newcontracts for our key products with Brewin Dolphin, Panmure Gordon and JM Finn.We have also added our first US customer, Ferris Baker Watts with our Blue Curveproduct. This momentum has continued into the second half with recent sales toCharles Stanley and MDM Bank (a Russian investment bank). These follow on fromour contract win from a global investment bank announced in July. Our existingusers, including Evolution Group plc, Credit Suisse and Investec continue toextend the use of our solutions, through licences and additional projects. Sucha key additional project is the global roll out of our CAPS product to the USand Asia. We have experienced an increase of confidence in our banking and securitiescustomers as they seek to reduce their exposure to operational risk. This hasincreased the size and quality of our sales pipeline and appears to have reducedthe sales cycles in some areas. In order to meet this increase in demand we haveexpanded our sales force, and invested in additional professional servicesstaff. Business Systems Division ReviewDivisional sales have increased compared to 2005, with profits for the six monthperiod being greater than those for the twelve month period ended 30 April 2005.In the period we signed four new college users, Norwich School of Art & Design,Stroud College of Gloucestershire, Oaklands College and Peterborough College ofAdult Education. In addition, through our partnership with Pearson plc, we alsocontracted with 11 new schools and city academies. Demand was strong from theexisting user base, particularly for additional modules developed for theEclipse system, which was acquired at the end of 2005. Support revenues are nowapproximately £1.4m with a low level of attrition. We have opened a small officein Birmingham which will become the centre for our learner management solutions. OutlookA noticeable increase in sales activity and the reduction of sales cycles insome areas of financial markets coupled with a solid performance from theBusiness Systems Division gives the board increasing confidence in our abilityto show the potential of the business. We have demonstrated our ability toacquire businesses and to integrate them, resulting in a significant improvementin their trading performance. We are encouraged by the sale of Blue Curve to ourfirst US customer and have increasing global opportunities for both CAPS andBlue Curve products. We expect to rollout CAPS to our largest customer in boththe US and Asia later in the second half. Our overall visibility of business has improved significantly and the committedorder book has strengthened throughout the year. Full year results will dependupon the timely delivery of projects and the successful closure of identifiedbusiness. However, the board believes that the company will trade in line withmarket expectations and the directors view the future with optimism. Peter Waller Chairman26 September 2006 INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the six months ending 30 June 2006 Six months Six months Six months Six months 8 months ended ended 30 June ended 30 June ended 30 June ended 31 31 December 2006 2006 2006 October 2005 2005 (unaudited) (unaudited) (unaudited) (unaudited) (audited) Acquisitions Continuing Total Total Total Operations £ £ £ £ £Turnover 625,965 2,064,318 2,690,283 1,538,960 2,091,456Cost of (10,000) (38,795) (48,795) (82,295) (90,949)sales --------- --------- --------- ---------- --------Gross profit 615,965 2,025,523 2,641,488 1,456,665 2,000,507 --------- --------- --------- ---------- --------Amortisationof Goodwill (124,922) (53,118) (178,040) (472,691) (494,826)Non Goodwilladministrationcosts (429,324) (2,049,082) (2,478,406) (1,954,078) (2,622,062)Restructuringcharge (51,121) (15,649) (66,770) (67,856) (90,070) --------- --------- --------- ---------- --------Totaladministrativeexpenses (605,367) (2,117,849) (2,723,216) (2,494,625) (3,206,958) --------- --------- --------- ---------- --------Operatingprofit /(loss) 10,598 (92,326) (81,728) (1,037,960) (1,206,451) --------- --------- --------- ---------- --------Net interestpayable (128,250) (107,883) (150,700)Amortisationof ConvertibleLoan Stockissue costscharged to netinterest - (13,900) -Notional CULSinterest (41,565) - (89,428) --------- --------- --------- ---------- --------Net Interest (169,815) (121,783) (240,128) --------- --------- --------- ---------- --------Profit /(loss) afterinterestpayable,beforeamortisationof goodwillandrestructuring. 34,832 (605,296) (772,255) --------- --------- --------- ---------- --------Loss onordinaryactivitiesbeforetaxation (251,543) (1,159,743) (1,446,579) Taxation onloss onordinaryactivities 38,240 - - --------- --------- --------- ---------- --------Loss for theperiod (213,303) (1,159,743) (1,446,579) --------- --------- --------- ---------- --------Basic anddiluted lossper share (0.5p) (4.4p) (5.4p) --------- --------- --------- ---------- -------- CONSOLIDATED INTERIM BALANCE SHEETAt 30 June 2006 30 June 31 October 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) £ £ £Fixed assetsIntangible assets 1,693,849 518,039 509,102Tangible assets 96,805 123,503 109,577 --------- --------- ---------- 1,790,654 641,542 618,679Current assetsDebtors 1,308,029 952,466 840,911Cash at bank and in hand 534,280 660,386 397,405 --------- --------- ---------- 1,842,309 1,612,852 1,238,316 Creditors: Amountsfalling due within oneyear (937,917) (377,810) (392,081) --------- --------- ----------Net current assets 904,392 1,235,042 846,235Total assets less currentliabilities 2,695,046 1,876,584 1,464,914 Creditors: Amounts falling due inmore than one yearConvertible 8.75 percent. Unsecured loanstock 2007 (2,864,633) (2,959,908) (2,823,067)Accruals and deferredincome (1,295,439) (1,721,887) (1,392,196) --------- --------- ----------Net (liabilities) (1,465,026) (2,805,211) (2,750,349) --------- --------- ---------- Capital and reservesContingent equityconsideration 388,000 - -Called up share capital 3,644,250 2,822,775 2,822,775Share premium account 6,717,498 6,428,346 6,428,347Profit and loss account (12,214,774) (12,056,332) (12,001,471) --------- --------- ----------Equity shareholders'deficit (1,465,026) (2,805,211) (2,750,349) --------- --------- ---------- INTERIM CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 30 June 2006 Six months Six months Eight months ended 30 ended 31 ended 31 June 2006 October 2005 December 2005 £ £ £Net cashoutflow fromoperatingactivities (14,405) (81,569) (381,850) Returns oninvestmentsand servicingof finance (129,329) (107,884) (150,700)Taxation 38,240 - -Net Capitalexpenditure (16,879) (13,660) (10,610)Acquisition ofsubsidiary 73,619 (159,550) (159,550) --------- --------- ----------Cash outflowbefore use ofliquidresources andfinancing (48,754) (362,663) (702,710) Management ofliquidresources (16,721) (38,907) 94,249 FinancingIssue ofordinarycapitalincludingpremium net ofcosts 185,629 69,250 69,250Increase/(decrease) in cash 120,154 (401,570) (608,461) --------- --------- ---------- Notes to the interim results 1. Interim Report This interim report was approved by the Board on 25 September 2006. It has beenprepared using accounting policies that are consistent with those adopted in thestatutory accounts for the eight month period ended 31 December 2005. The figures for the eight month period ended 31 December 2005 were derived fromthe statutory accounts for that period. The statutory accounts for the eightmonth period to 31 December 2005 have been delivered to the Registrar ofCompanies and received and audit report which was unqualified and did notcontain statements under s273(2) or (3) of the Companies Act 1985 The accounts have been prepared on a going concern basis as the Directorsbelieve that the current sales prospects combined with existing working capitalresources should ensure that Mondas has adequate working capital to service itsexisting business for the foreseeable future. 2. Change in accounting policy Financial 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 were restatedfor the eight month period ended 31 December 2005. The liability element of theCULS has been calculated based upon future cash flows discounted at an interestrate that would have been payable on a loan without a conversion option. Theimpact of this instrument is that non cash interest and loan amortisation costsfor that period have been increased by £78,138 and net assets and shareholders'funds at 31 December 2005 increased by £263,588. The six month period ended 31 October 2005 comparatives have not been restatedas advantage has been taken of the exemption granted under FRS 25, and wereprepared under the group's previous accounting policy with the CULS accountedfor in accordance with FRS 4 Had the prior period comparatives been restated it would have resulted in alower CULS balance in the balance sheet, an improved retained loss position anda higher interest charge in the profit and loss account. 3. Dividend The directors do not recommend paying a dividend for the six months ended 30June 2006 4. Loss per share Basic and Diluted loss per share for the 6 month period is based on a weightedaverage number of shares outstanding throughout the six months ended 30 June2006 of 35,757,937 (2005: 26,286,763) and loss after taxation of the £213,303(2005: £1,159,743). The CULS and share options were non-dilutive for bothperiods and thus the diluted loss per share is the same as the basic amount. 5. Contingent Equity Consideration The consideration for the acquisition of Blue Curve announced in November 2005,and completed on 16 January 2006 includes an element of deferred considerationwhich is payable as set out below.Additional consideration of up to £2,075,000 is payable based on Blue Curve'srevenues for the year ending 31 December 2006, after deducting for any shortfalladjustment, at the rate of twice the excess above a minimum revenue of £1.15million. The shortfall adjustment is defined as 1.5 times the amount by whichBlue Curve's revenues for the year ending 31 December 2005 fall below £925,000.The deferred consideration is payable by the issue of up to a further 12,205,882new Mondas ordinary shares, issued at the higher of 17p per share and a discountof 10 per cent. to the mid market price of a Mondas ordinary share on the dateof the announcement of preliminary results for the year ending 31 December 2006. The Board has estimated the current value of this additional consideration as£388,000 which has been accounted for as an adjustment to goodwill arising onacquisition, and as a potential equity reserve. The value of this considerationwill be determined post the audit for the year ended 31 December 2006. 7. Tax on loss on ordinary activities The amount represents a tax refund regarding Research and Development taxcredits received during the period. 8. Reconciliation of net cash flow to movement in net debt Six months Six months Eight months ended 30 June ended 31 ended 31 2006 October 2005 December 2005 £ £ £Opening netdebt - aspreviouslystated (2,425,662) (1,920,720) (1,920,720)FRS 25Restatement - - 217,946 ------------ ------------ -------------Opening netdebt (2,425,662) (1,920,720) (1,702,774) Change in cash 120,154 (409,385) (539,211)Cash outflowfromincrease/(decrease) inliquidresources 16,721 38,907 (94,249) ------------ ------------ -------------Change in netdebt from cashflows 136,875 (370,478) (633,460)Amortisationof CULS - (13,900) -Notional CULSinterest (41,565) - (89,428) ------------ ------------ -------------Closing netdebt (2,330,352) (2,291,198) (2,425,662) ------------ ------------ ------------- 9. Reconciliation of movements in shareholders funds Six months Six months Eight months ended ended ended 30 June 31 October 31 December 2006 2005 2005 £ £ £ Loss for thefinancialperiod (213,303) (1,159,743) (1,446,579)Issue ofordinaryshares at par 821,475 208,611 208,611Contingentequityconsideration 388,000 - -Premium on newshare issued(net ofexpenses) 289,152 147,638 147,639 ------------ ------------ -------------Netaddition/(reduction) toshareholders'funds 1,285,324 (803,494) (1,090,329) --------- ------------ -----------Opening shareholders deficit :- as previously stated (2,750,350) (2,001,717) (2,001,717) FRS 25 restatement - - 341,696 ------------ ------------ ------------- Openingshareholders'deficit afterrestatement (2,750,350) (2,001,717) (1,660,021) ------------ ------------ ------------- Closingshareholdersdeficit (1,465,026) (2,805,211) (2,750,350) ------------ ------------ ------------- 10. Post Balance Sheet Events On 30 August 2006 an extraordinary general meeting of the company and the CULSholders approved certain variations to the CULS. Key changes are summarisedbelow: 1. the amendment of the redemption date of the CULS from 31 October 2007 to 31 October 2011; 2. the amendment, with effect from, but not including, 31 August 2006, of the rate of the interest from 8.75 per cent. to 8 per cent.; 3. the enhancement of the conversion rights from two ordinary shares for every £1 nominal of CULS to four ordinary shares for every £1 nominal of CULS and the inclusion of appropriate adjustments to the conversion rights in the event of a bonus issue or rights issue. The Company raised £1,000,000 (before expenses) by the issue of the additionalCULS at a price of 100p per £1 nominal. Additionally, the company placed 406,250new 10 pence ordinary shares at 16p per share, raising £65,000 for the Companybefore expenses. These were issued to certain subscribers of additional CULS toenable their subscriptions to qualify under the Venture Capital Trust Scheme. 11. Sundry Information This interim statement was approved by the Board on 25 September 2006. Copies ofthe interim report are being sent to all shareholders of the Company and areavailable to the public from the Company's registered office: 17-29 Sun Street,London EC2M 2PT and the offices of John East & Partners Limited, Crystal Gate,28-30 Worship Street, London EC2A 2AH. This information is provided by RNS The company news service from the London Stock Exchange