Corero Network Regulatory News (CNS)

22 Dec 2005 10:07

Mondas PLC22 December 2005 This announcement replaces the earlier announcement made today at 7.00am byMondas Plc. This announcement has a correction in the paragraph headed "Placing"contained in the Chairmans Statement. The sentence in question now reads "Thismorning your company announced the placing of 2,608,696 new ordinary shares at11.5 pence each raising approximately GBP 250,000 net of expenses for thecompany." Mondas plc Interim Results for the six months to 31 October 2005 Mondas PLC, the specialist provider of software solutions to the banking &securities and education markets, announces its interim results for the sixmonths to 31 October 2005. KEY POINTS •Successful integration of Eclipse Learner Systems in the Resource Division •Proposed acquisition of Blue Curve to complement product set in banking & securities •Radica CAPS v4 launched and first international deployment of CAPS installed •Strengthened management team with appointment of Peter Waller as Non-Executive Chairman and Mark Robertson as MD of the Banking and Securities Division •Proposed placing of 2,608,696 new ordinary shares at 11.5p per ordinary share, to raise approximately £300,000 before expenses (see separate announcement) Results and Current Trading: •Operating loss before goodwill amortisation and restructuring charges of £455,031m (2004: loss £367,248)) •Pre-Tax loss of £1.16m (2004: £1.45m) •Cash balances of £0.66m (2004: £1.03m) •Deferred Income of £1.35m (2004: £0.87m) Commenting on the results, Jarlath McGee, Chief Executive, said: "We have made significant progress in building a broader suite of products inboth our operating divisions. Through this diversity of product we have theopportunity to be able to cross market within the product type and buildcritical mass of the group." 22 December 2005 Enquiries: Mondas plc Tel: 020 7392 1300Jarlath McGee, Chief Executive College Hill Tel: 07831 379122/Matthew Smallwood/Clare Warren 020 7457 2020 Chairman's Statement Introduction I am pleased to present the interim results for the six month period ended 31October 2005. During the period under review, Mondas has made significantprogress in building critical mass in both operating divisions. In October, weannounced the acquisition of Eclipse Learner Systems Limited ("Eclipse"), asupplier of software systems to colleges of further education, which has beensuccessfully integrated into our Resource division. This was followed inNovember by the acquisition, subject to shareholder approval at the forthcomingEGM, of Blue Curve Limited, ("Blue Curve") a supplier of software solutions tofinancial institutions, which will join our Banking and Securities division. Trading conditions in the financial services sector have not improved as quicklyas had been anticipated, especially the market for new corporate actionsprocessing systems. The weakness in this particular sector, though expected tobe temporary, illustrates the need to widen our portfolio of product offeringsto our enlarged customer base and the pipeline of new business. Our recentacquisitions help to achieve this, bringing established software products toboth divisions, and creating opportunities for cross-selling to existingcustomers. Results Mondas recorded an operating loss, before goodwill amortisation, restructuringand depreciation charges, for the six months ended 31 October 2005, of £455,031(2004: loss £367,248) on turnover of £1.54m (2004: £1.82m). Revenues fellprimarily due to slippage against new business and existing contracts in theBanking and Securities division. This fall was partially offset by growth withinthe Resource division arising from an increased level of new name sales.Operating costs were reduced by 10 per cent. to £2.03m (2004: £2.25m), due tolower central overheads following last year's major restructuring. Therestructuring charge of £67,856 (2004: £426,938) arose from realignment ofproduct development resources following the release of version 4 of ourcorporate actions processing system in the Banking and Securities division andfrom the integration of Eclipse. The amortisation charge of £472,000 (2004: £472,000) represents the finalelement of goodwill arising from the October 2000 acquisition of DSR Resource.Losses before taxation reduced to £1.03m (2004: £1.33m). At 31 October 2005,cash balances amounted to £660,386 (2004: £1.048m). Accruals and deferred income increased to £1.72m (2004: £1.34m). Of this £1.35m(2004: £0.87m) was deferred income, with a large part of the increase indeferred income arising from Eclipse annual customer support contracts whichwere renewed in October. Accruals also include the final cash considerationpayment to the Eclipse vendors, of £100,000, which was paid on 15 December 2005. With effect from 1 January 2006, the Company will change its year end to 31December, to better align it with its customers' year ends, and to reduce thecosts of integration with Blue Curve. We will therefore report in due course onthe 8 month period ending 31 December 2005 and annually thereafter. Resource Division I am pleased to report that this division's revenues have grown compared to thesame period last year. We added two further new clients (North Trafford Collegeand Newham Sixth Form College), and our relationship with Pearson Educationcontinues to generate new sales into schools. We have also seen a steady growthin revenue from our existing client base, particularly for our web-basedapplications. The acquisition of Eclipse in October 2005 has further enhanced our position asa leading supplier within the education sector, with the addition of 26colleges, including 9 existing common customers. We now have an educational userbase of approximately 140 establishments, including 120 colleges. Eclipse hasbeen successfully integrated into our Resource division, and opportunities forcross selling have been identified. Banking and Securities During the period under review, Mondas expanded its product offerings to clientsin the banking and securities sector. Our New Issues and Placing System("NIPS"), which was launched towards the end of our last financial year, isattracting interest from organisations involved in the issuing of securities. Webelieve that this early-stage market could produce significant returns to Mondasover the next few years. Mondas continues to be a leading provider of corporate actions processingsystems ("CAPS") to the banking and securities sector. New name sales forcorporate actions vendors have been elusive, but we have continued to invest inour product, most notably with the release of version 4 of Radica CAPS. Ourexisting customers continue to purchase further products, including add-onmodules and upgrades, and we have recently announced our first internationaldeployment of CAPS, with the installation of a system in Zurich. We continue to believe in the long-term market opportunity for CAPS, especiallywith the ever-increasing need for banks and other financial institutions toguard against operational risk. However, with long sales cycles affecting ourresults, and to reduce our dependence on our corporate actions product, we arebuilding a portfolio of software products for the wider banking and securitiesmarket. Although some of these products will be developed internally, such asNIPS, we intend to acquire companies with complementary financial sectorproducts. The acquisition of Blue Curve, announced on 24 November 2005, and subject toapproval at an EGM to be held on or before 30 January 2006 is an important stepin this "buy and build" strategy. Blue Curve's customers include leadingfinancial firms in the UK and Europe. The Blue Curve solution is complementaryto Radica CAPS and NIPS and, since there is no overlap in the respectivecustomer bases, we believe that opportunities exist for cross-selling bothsolutions across an enlarged international customer and prospect bases, whereBlue Curve's existing sales agreements in Holland and the United States shouldprovide a channel to markets previously unaddressed by Mondas. Placing This morning your company announced the placing of 2,608,696 new ordinary sharesat 11.5 pence each raising approximately £250,000 net of expenses for thecompany. The proceeds of this placing will be used for working capital and forthe integration of our recent acquisitions. The shares were placed by ourbroker, Teather & Greenwood Limited, with institutional shareholders. Dividend The Directors are not recommending the payment of a dividend in respect of theperiod under review (2004: nil). Management Changes I am pleased to announce that Mr Peter Waller (57), the Chairman of Blue Curve,will be joining the board of Mondas as non-executive Chairman following the EGM.Peter brings to Mondas a wealth of experience at a senior executive level, froma 30 year career in the software and services sector. He is currentlynon-executive chairman of two unlisted UK software companies and a non-executivedirector of LSE-listed Biotrace plc. Prior to this he held a succession of othernon-executive positions, most recently at AIM-listed Xpertise plc. His executivecareer in the IT sector includes Director of Marketing Operations for IBMEurope, Managing Director of Hitachi Data Systems UK, and Chief OperatingOfficer of Hitachi Data Systems Europe. Peter is a graduate of CambridgeUniversity and is member of the Worshipful Company of Information Technologistsand Freeman of the City of London. Mark Robertson (38), the Chief Executive and founder of Blue Curve, will jointhe board of Mondas IT (the group's trading subsidiary) and will become managingdirector of the enlarged Banking and Securities Division. Mark founded BlueCurve in 1995, following six years in financial IT related roles at Swiss BankCorporation, Price Waterhouse Management Consultants and First Interstate Bank.Mark holds a first class honours degree in Electrical & Electronic Engineeringfrom Heriot-Watt University. I will be standing down from the chairmanship of Mondas following the EGM, butwill remain on the board as a non-executive director. I welcome Peter and Markto the management team and look forward to working with them on the next phaseof building a successful software company. Acquisitions Whilst significant progress has already been made in building critical mass inboth operating divisions, we believe this strategy has much further to go.Mondas is now an acquisitive software solutions provider focussed on thefinancial services and education markets. We will continue to seek acquisitions : •where there is a strategic fit with either our Banking and Securities division or our Resource division; •that are earnings enhancing, readily identifiable cost savings, and recurring revenues; •that provide intellectual property which will complement our existing product offerings; •which expand our customer base, and provide access to further geographical markets; and •where the consideration is predominantly share-based, with a significant earn-out element. We believe that this "buy and build" strategy, where organic growth issupplemented by acquisitions, will create a more stable earnings profile,leading to greater shareholder value. Current Trading and Outlook 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, we nowanticipate that this expected improvement will fall into the new financial yearwhich will commence on 1 January 2006. With the acquisition of both Blue Curve and Eclipse, Mondas is at last achievingthe critical mass necessary to enable it to produce consistently better resultsand I look forward to a positive outcome for 2006. Colin PetersChairman 22 December 2005 Interim Consolidated Profit and Loss Accountfor the six months ending 31 October 2005 Six months Six months Six months Six months 12 months ended 31 ended 31 ended 31 ended 31 ended 30 October 2005 October 2005 October 2005 October 2004 April 2005 (unaudited) (unaudited) (unaudited) (unaudited) (audited) Acquisitions Continuing Total Operations £ £ £ £ £ Turnover 59,838 1,479,122 1,538,960 1,816,653 4,592,675 Cost of sales (5,116) (77,179) (82,295) (115,497) (155,655) -------- --------- --------- ---------- ---------- Gross profit 54,722 1,401,943 1,456,665 1,701,156 4,437,020 Restructuringcharge - (67,856) (67,856) (426,938) (489,618)Otheradministrativeexpenses (20,276) (2,406,493) (2,426,769) (2,603,713) (5,079,060) --------- ------------ ------------ ------------ ------------ Totaladministrativeexpenses (20,276) (2,474,349) (2,494,625) (3,030,651) (5,568,678) Analysis ofgroup operatinglosses ---------------------------------------------------------------------Operating | |profit/(loss) | |before | |goodwill | |amortisation, | |restructuring | |and | |depreciation | 34,446 (489,477) (455,031) (367,248) (406,178)|Amortisation | |of goodwill | - (472,691) (472,691) (472,698) (945,396)|Depreciation | |of tangible | |fixed assets | - (42,382) (42,382) (62,611) (102,822)|Restructuring | |charge | - (67,856) (67,856) (426,938) (489,618)| | | ---------------------------------------------------------------------Operatingprofit/(loss) 34,446 (1,072,406) (1,037,960) (1,329,495) (1,131,658) Net interestpayable (121,783) (124,863) (252,423) ------------------------------------------- Amortisation | |of Convertible | |Loan Stock | |issue costs | |charged to net | |interest | (13,900) (27,800) (27,800)| | ---------- ---------- ---------|Profit/(loss) | |before | |amortisation | |of goodwill | |and loan stock | |issue costs, | |restructuring | |and taxation | (605,296) (526,922) 78,733 | | ---------- ---------- ---------| ------------------------------------------- Profit/(Loss)on ordinaryactivitiesbeforetaxation (1,159,743) (1,454,358) (1,384,081) Taxation - (918) (265) ------------ ------------ ------------ Profit/Lossfor the period (1,159,743) (1,445,276) (1,383,816) ------------ ------------ ------------ Basic loss pershare (4.4p) (5.5p) (5.3p) ------------ ------------ ------------ There are no recognised gains or losses for the above periods other than thosestated above. Interim Balance Sheet at 31 October 2005 As at As at As at 31 October 31 October 30 April 2005 2004 2005 (unaudited) (unaudited) (audited) £ £ £Fixed assetsIntangible assets 518,039 945,389 472,691Tangible assets 123,503 174,225 152,225 -------- -------- -------- 641,542 1,119,614 624,916 -------- ---------- -------- Current assetsDebtors 952,466 460,749 1,433,221Cash at bank and in hand 660,386 1,048,770 1,030,865 -------- ---------- ---------- 1,612,852 1,509,519 2,464,086 Creditors: Amounts falling duewithin one yearOther Current Liabilities (377,810) (378,734) (690,786)Convertible 8% Unsecured LoanStock 2005 - (2,978,185) - ---------- ------------ ---------- (377,810) (3,356,919) (690,786) Net current (liabilities)/assets 1,235,042 (1,847,400) 1,773,300 ---------- ------------ ---------- Total assets less currentliabilities 1,876,584 (727,786) 2,398,216 Creditors: Amounts falling due inmore than one year Convertible 8% Unsecured loanstock 2005 (2,959,908) - (2,951,585)Accruals and deferred income (1,721,887) (1,335,391) (1,448,348) ------------ ------------ ------------ Net (liabilities) (2,805,211) (2,063,177) (2,001,717) ============ ============ ============ Capital and reservesCalled up share capital 2,822,775 2,614,164 2,614,164Share premium account 6,428,346 6,280,707 6,280,707Profit and loss account (12,056,332) (10,958,048) (10,896,588) ------------ ------------ ------------ Equity shareholders' (deficit) (2,805,211) (2,063,177) (2,001,717) ============ ============ ============ The interim accounts were approved by the Board of Directors on 22 December 2005and signed on its behalf by: Colin PetersChairman Interim Consolidated Cash Flow Statementfor the six months ended 31 October 2005 Six months Six months 12 months ended ended Year ended 31 October 31 October 30 April 2005 2004 2005 £ £ £Net cash outflow from operating activities (81,569) (324,551) (171,268)Returns on investments and servicing offinance (107,884) (110,964) (224,623)Taxation paid/(received) - (918) 265Capital expenditure and financialinvestment (531,699) (7,541) (25,753) ---------- -------- --------- Cash outflow before financing and liquidresources (721,152) (443,974) (421,379)Management of liquid resources (38,907) 333,210 766,688Cash inflow from financing 350,673 - - ---------- -------- --------- Decrease in cash (409,386) (110,764) (304,809) ========== ========== ========== 1. Interim report This interim report was approved by the Board on 22 December 2005. It has beenprepared using accounting policies that are consistent with those adopted in thestatutory accounts for the year ended 30 April 2005. The figures for the year to 30 April 2005 were derived from the statutoryaccounts for that year. The statutory accounts for the year ended 30 April 2005have been delivered to the Registrar of Companies and received an audit reportwhich was unqualified and did not contain statements under s237(2) or (3) of theCompanies Act 1985. The above financial information does not constitute statutory accounts withinthe meaning of section 240 of the Companies Act 1985. The accounts have been prepared on a going concern basis as the Directorsbelieve that 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. Dividends The directors are not declaring a dividend for the six month period ended 31October 2005. 3. Loss per share Basic loss per share is based on the loss attributed to the members of MondasPlc and on the weighted average number of shares outstanding throughout the sixmonths ended 31 October 2005 of 26,286,763 (2004: 26,141,634). Diluted loss pershare is the same as the basic loss per share because the options andconvertible unsecured loan stock have no dilutive effect. 4. Reconcilation of net cash flow to movement in net debt Six months Six months 12 months ended ended ended 31 October 31 October 30 April 2005 2004 2005 £ £ £ Change in cash (409,385) (110,764) 304,809Cash outflow from increase/(decrease) in liquid resources 38,907 (333,210) (766,688) ---------- ---------- ---------- Change in net debt from cash flows (370,478) (443,974) (461,879) Amortisation of ConvertibleUnsecured Loan Stock (13,900) (13,900) (27,800)Opening net (debt)/funds (1,961,220) (1,471,541) (1,471,541) ------------ ------------ ------------ Closing net funds (2,345,598) (1,929,415) (1,961,220) ============ ============ ============ 5. Reconciliation of movements in shareholders' funds Six months Six months 12 months ended ended ended 31 October 31 October 30 April 2005 2004 2005 £ £ £ Losses for the financial year (1,159,743) (1,445,276) (1,383,816)Issue of ordinary shares at par 208,611 - -Costs of Issue (6,750) - -Premium on new shares issued 154,388 - - ---------- ---------- ---------- Increase/(Decrease) in shareholders'funds (803,494) (1,445,276) (1,383,816)Opening shareholders' funds (2,001,717) (617,901) (617,901) ------------ ---------- ---------- Closing shareholders' funds (2,805,211) (2,063,177) (2,001,717) ============ ============ ============ 6. Restructuring Charge as per Profit and Loss Six months ended 31 October 2005 £Costs relating to redundancies 62,106Taxation and legal fees relating to restructure of groupcompanies 5,750 ------ 67,856 ====== 7. Acquisition of subsidiary Mondas PLC acquired the entire share capital of Eclipse Learner Systems Limitedon 11 October 2005. The consideration was £550,000 and net assets amounted to£31,962. The Directors have conducted a provisional fair value exercise and onthat basis purchased goodwill of £518,038 arose on acquisition. The fair valueswill be finalised when the statutory financial statements for the year ending 31December 2005 are prepared. 8. Copies of the interim report Copies of the interim report are being sent to all shareholders of the Companyand are available to the public from the Company's registered office: 17-29 SunStreet, London, EC2M 2PT and the offices of John East & Partners Ltd, CrystalGate, 28-30 Worship Street, London EC2A 2AH. 9. Post balance sheet events Mondas has exchanged contracts in relation to the acquisition of the entireshare capital of Blue Curve Limited ("Blue Curve"), for a maximum considerationof £3 million, to be satisfied by the issue of Mondas ordinary shares. 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 percent 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. An EGM will be convened on or before 31 January 2006 in order to obtain therequired shareholder approvals. The acquisition is therefore conditional uponthe appropriate resolutions being passed and admission to trading on the AIMMarket of 5,606,060 new Mondas ordinary shares. On 22 December 2005, Mondas announced the placing of 2,608,696 new ordinaryshares at 11.5p, raising approximately £150,000, net of the costs of the BlueCurve acquisition and of the placing. These shares will be issued subject toapproval of the Blue Curve acquisition at the EGM. This information is provided by RNS The company news service from the London Stock Exchange