Corero Network Regulatory News (CNS)

28 Jan 2005 07:30

Mondas PLC28 January 2005 Mondas plc Interim Results for the six months to 31 October 2004 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 2004. KEY POINTS Actions: • Progress made on a number of fronts: • Convertible Unsecured Loan Stock ("CULS") - Agreement reached for a 2 year extension at the same conversion price, strengthening the company's balance sheet • Agreement with Rhyme Systems Ltd. for a development licence for the Fund Manager Enquiry System, 'FES' • Outsourced certain software development offshore Trading: • Banking & Securities Division: • Progressing the delivery of systems to CSFB & HSBC • Receiving growing interest from North America and private client stockbrokers • Discussions with global financial institutions continue • Resource Division • First orders from our relationship with Pearson • Emphasis on customer management has increased sales of new product Results and Current Trading: • Operating loss before goodwill amortisation and restructuring charges of £0.43m (2003: loss £0.50m) • Pre-Tax loss of £1.45m (2003: £1.09m) exacerbated by one off exceptional items of £0.42m • Encouraged by an improving trend in our results excluding exceptional items • Cash balances of £1.05m (2003: £1.88m) Commenting on the results, Jarlath McGee, Chief Executive, said: "These results reflect a challenging period for the Company. However, there arenow clear signs that we are moving away from the problems of the past. Thestrategic review, the results of which we announced in October 2004, is beingvigorously implemented although there is still work to be done. We are nowfocused on delivering asset servicing solutions to the investment banking andfund management markets. The education market remains a high priority, as thereare considerable opportunities for growth." 27 January 2005 Enquiries:Mondas PLC Tel: 020 7392 1300Jarlath McGee, Chief Executive College Hill Tel: 020 7457 2020Matthew Smallwood/Clare Warren CHAIRMAN'S STATEMENT In August last year, your Board carried out a top-level reorganisation torestore the confidence of our customers, our shareholders and our staff in thefuture of the Company. At the subsequent Annual General Meeting on 29 October2004, our actions received the clear support of shareholders. These interimresults cover this difficult period, which, of necessity, includes a substantialreorganisation charge. I am pleased to report today that the holders of 89.42% of the ConvertibleUnsecured Loan Stock ('CULS'), which was due to be repaid on 31 October 2005,have irrevocably undertaken to vote in favour of a special resolution to beproposed at an Extraordinary General Meeting of the holders of CULS to extendthe redemption date by two years to 31 October 2007. The Company proposes toincrease the annual coupon, with effect from 1 November 2005, by 0.75% from 8%to 8.75%. There is no change in the conversion terms, which remain two ordinaryshares for each £1 of loan stock. Financial Results Mondas recorded an operating loss, before goodwill amortisation andrestructuring charges, for the six months ended 31 October 2004, of £429,859(2003: loss £496,244) on turnover of £1.82 million (2003: £1.85 million). Theselosses arose in the first quarter but were partially reversed by a small profitin the second quarter. The restructuring charge was £426,938 (2003: £nil) andamortisation of goodwill was £472,698 (2003: £472,698). Loss per share was 5.5p(2003: 4.1p). We have realigned our cost base to eliminate some central costs and to focus ourefforts on our key markets. As a result our headcount has fallen from 56 at 1May 2004 to 49 as of today. This, combined with the change in management atthe start of the second quarter, has given rise to a restructuring charge of£426,938, of which £285,355 arose from the board changes in August 2004, £28,767from the Annual General Meeting in October 2004, and £112,816 from the businessrestructuring. These amounts include salary costs, severance payments, legaland professional fees and cancellations of certain marketing programs. At 31 October 2004 the Company's cash balances amounted to £1.048 million (2004:£1.884 million). Within creditors falling due within one year is an amount of£2.98 million arising from reclassification of the CULS to a short termliability as at the balance sheet date. As stated above holders of CULS holdingin excess of the required 75 per cent have irrevocably undertaken to vote infavour of the special resolution to extend the redemption date to 31 October2007. Accruals and deferred income has increased by £192,000 due to provisionsarising from the restructuring. Banking and Securities Division Mondas continues to maintain its position as a market leader of corporateactions processing systems. Our success at Credit Suisse First Boston (Europe)Limited in delivering the orders announced in our second quarter has furtherunderlined its confidence in Mondas as a major supplier. This has subsequentlyled to the identification of further opportunities over the next two years, toinclude progressive development of functionality and international adoption ofthe system. We continue to receive growing interest from the North Americanmarket from existing and prospective customers and from partners. We remainconfident of the successful implementation of the system sold to HSBC plc, inthe second half of the current financial year. As part of our business review, we stated our intent to maximise the value ofcertain non core applications. I am pleased to report that we have enteredinto an agreement (subject to final contract) with Rhyme Systems Limited ("RhymeSystems") to grant it a development licence for our fund manager enquiry system, "FES", currently deployed at Brewin Dolphin Securities Limited. Thisagreement includes a royalty payable to Mondas by Rhyme Systems for certainfuture revenues from this product. Rhyme Systems is a major supplier of backoffice systems to the UK asset management market. Rhyme Systems will also be adistributor of our flagship product, Radica CAPS, to its significant user base. In order to increase margins we have outsourced certain software developmentprojects offshore. We continuously evaluate our internal working practices toensure minimisation of cost. Resource Division We continue to build on our existing commitment to the education sector and arenow seeing the first orders from our relationship with Pearson plc's educationdivision for our existing Resource 32000 range. In addition to the UK market,this relationship has generated international opportunities for the Resourcedivision, which we are currently pursuing. An increased emphasis on customer management has resulted in a recentsignificant increase in sales of new products to our user base. Acquisitions and Alliances In October 2004 we described our strategy to acquire intellectual propertywithin the asset servicing market that will give the company customer base,product and geographic reach. We are in active dialogue and negotiations with anumber of businesses which meet our criteria. Current Trading and Outlook Against a background of some previous internal turmoil and difficult marketconditions, we are encouraged by an improving trend in our results. Althoughour ability to achieve market expectations is dependent on closing some newlicence business, we are seeing a firming of the pipeline from private clientstockbrokers and discussions with global financial institutions are progressing. The agreement reached with the holders of the CULS for a two year extension tothe CULS, with no change in the conversion price of 50p per share, is anencouraging indication of support for the new management team. The internalrestructuring, together with our order delivery and pipeline, allows yourdirectors to look to the future with cautious optimism. Independent Review Report to Mondas PLCFor the six months ended 31 October 2004 Introduction We have been instructed by the company to review the financial information whichcomprises the profit and loss account, balance sheet, cash flow statement andrelated notes 1 to 7. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report is madesolely to the company having regard to guidance contained in Bulletin 1999/4 'Review of interim financial information' issued by the Auditing Practices Board.To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company, for our work, for this report,or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the AIMrules. The directors are also responsible for ensuring that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review having regard to guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied, unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom Auditing Standards and thereforeprovides a lower level of assurance than an audit. Accordingly we do notexpress an audit opinion on the financial information. Convertible Unsecured Loan Stock redemption In arriving at our review conclusion we have considered the adequacy of thedisclosures made in note 1 to the Interim Report concerning the possible outcomeof negotiations for the extension of the repayment date of the ConvertibleUnsecured Loan Stock of £3,000,000, currently repayable on 31 October 2005. TheInterim Report has been prepared on a going concern basis, the validity of whichdepends upon the repayment date being extended. The financial statements do notinclude any adjustments that would result from a failure to obtain an extensionto the repayment date. Details of the circumstances relating to this fundamentaluncertainty are described in the Chairman's Statement. Our opinion is notqualified in this respect. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 October 2004. RSM Robson Rhodes LLPChartered Accountants London, England27 January 2005 Interim Consolidated Profit and Loss Accountfor the six months ended 31 October 2004 Six months ended Six months 12 months ended 31 October ended 31 October 30 April 2004 2003 2004 (unaudited) (unaudited) (audited) £ £ £ Turnover 1,816,653 1,847,452 3,974,732 Cost of sales (115,497) (71,556) (156,384)Gross profit 1,701,156 1,775,896 3,818,348 Restructuring charge (426,938) - -Other administrative expenses (2,603,713) (2,744,838) (5,362,889)Total administrative expenses (3,030,651) (2,744,838) (5,362,889) Analysis of group operating lossesOperating loss before goodwill amortisationand depreciation (794,186) (454,993) (501,206)Amortisation of goodwill (472,698) (472,698) (945,396)Depreciation of tangible fixed assets (62,611) (41,251) (97,939) Operating loss (1,329,495) (968,942) (1,544,541) Net interest payable (124,863) (121,626) (235,013) Loss on ordinary activities before taxation (1,454,358) (1,090,568) (1,779,554) Taxation (918) 147,748 147,748Loss for the period (1,454,276) (942,820) (1,631,806)Basic and diluted loss per share (5.5p) (4.1p) (6.6p) There are no recognised gains or losses for the above periods other than thosestated above. Interim Balance Sheetat 31 October 2004 As at As at As at 31 October 31 October 30 April 2004 2003 2004 (unaudited) (unaudited) (audited) (restated-note 1)(restated-note 1) £ £ £Fixed assetsIntangible assets 945,389 1,890,784 1,418,087Tangible assets 174,225 223,662 229,294 1,119,614 2,114,446 1,647,381Current assetsDebtors 460,749 709,907 934,331Cash at bank and in hand 1,048,770 1,884,733 1,492,744 1,509,519 2,594,640 2,427,075 Creditors: Amounts falling due within one yearOther Current Liabilities (378,734) (319,671) (585,071)Convertible 8% Unsecured Loan Stock 2005 (2,978,185) - - (3,356,919) (319,671) (585,071) Net current (liabilities)/assets (1,847,400) 2,274,969 1,842,004 Total assets less current liabilities (727,786) 4,389,415 3,489,385 Creditors: Amounts falling due in more than one year - - - Convertible 8% Unsecured loan stock 2005 - (2,950,385) (2,964,285) Accruals and deferred income (1,335,391) (1,366,695) (1,143,001) Net (liabilities)/assets (2,063,177) 72,335 (617,901) Capital and reservesCalled up share capital 2,614,164 2,614,164 2,614,164Share premium account 6,280,707 6,281,957 6,280,707Profit and loss account (10,958,048) (8,823,786) (9,512,772)Equity shareholders' (deficit)/funds (2,063,177) 72,335 (617,901) The interim accounts were approved by the Board of Directors on 27 January 2005and signed on its behalf by: Colin Peters Chairman Interim Consolidated Cash Flow Statement for the six months ended 31 October 2004 Six months Six months 12 months ended ended Year ended 31 October 31 October 30 April 2004 2003 2004 £ £ £Net cash outflow from operating activities (324,551) (498,668) (727,600)Returns on investments and servicing of finance (110,964) (107,726) (207,213)Taxation paid/(received) (918) 147,748 147,748Capital expenditure and financial investment (7,541) (71,068) (133,388)Cash outflow before financing and liquid resources (443,974) (529,714) (920,453)Management of liquid resources 333,210 (1,209,207) (848,852)Financing - issue of ordinary shares - 1,513,304 1,513,304 - expenses paid in connection with share issue - (76,800) (78,050) Cash inflow from financing - 1,436,504 1,435,254 Decrease in cash (110,764) (302,417) (334,051) Notes to the Interim Consolidated Cash Flow Statement Six months Six months 12 months ended ended Year ended 31 October 31 October 30 April 2004 2003 2004 £ £ £Reconciliation of operating loss to net cashoutflowOperating loss (1,329,495) (968,942) (1,544,541)Amortisation of goodwill 472,698 472,698 945,396Depreciation of tangible fixed assets 62,611 41,251 97,939Decrease in debtors 473,582 39,365 (185,059)Decrease in creditors (3,947) (83,040) (41,335)Net cash outflow from operating activities (324,551) (498,668) (727,600) Notes to the Financial Statements 1. Interim report This interim report was approved by the Board on 27 January 2005. It has beenprepared using accounting policies that are consistent with those adopted in thestatutory accounts for the year ended 30 April 2004. The figures for the year to 30 April 2004 were derived from the statutoryaccounts for that year. The statutory accounts for the year ended 30 April 2004have 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 will ensure that Mondas has adequate working capital to service itsexisting business for the foreseeable future. The holders of 89.42% of theConvertible Unsecured Loan Stock ('CULS'), which was due to be repaid on 31October 2005, have irrevocably undertaken to vote in favour of a specialresolution to be proposed at an Extraordinary General Meeting of the holders ofthe CULS to extend the redemption date by two years to 31 October 2007. Underthe terms of the CULS instrument a majority of 75% voting in favour of theproposal at the meeting is sufficient for such a change to be effective. The comparative periods have been restated to reclassify Accruals and DeferredIncome as a separate item on the face of the balance sheet, as permitted underSchedule 4 of Companies Act 1985. The reclassification had no effect on netassets in either comparative period. 2. Dividends The directors are not declaring a dividend for the six months ended 31 October2004. 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 2004 of 26,141,634 (2003: 22,988,717). Diluted loss pershare is the same as the basic loss per share because the options andconvertible unsecured loan stock have no dilutive effect. Notes to the financial statements 4. Reconciliation of net cash flow to movement in net debt Six months Six months 12 months ended ended ended 31 October 31 October 30 April 2004 2003 2004 £ £ £ Change in cash (110,764) (302,417) (334,051)Cash (outflow)/inflow from (decrease)/increase in (333,210) 1,209,207 848,852liquid resourcesChange in net debt from cash flows (443,974) 906,790 514,801 Amortisation of Convertible Unsecured Loan Stock (13,900) (13,900) (27,800)Opening net (debt)/funds (1,471,541) (1,958,542) (1,958,542)Closing net funds (1,929,415) (1,065,652) (1,471,541) 5. Reconciliation of movements in shareholders' funds Six months Six months 12 months ended ended ended 31 October 31 October 30 April 2004 2002 2004 £ £ £ Losses for the financial year (1,445,276) (942,820) (1,631,806)Issue of ordinary shares at par - 504,188 504,188Costs of Issue - (76,800) -Premium on new shares issued - 1,009,116 931,066(Decrease)/Increase in shareholders' funds (1,445,276) 493,684 (196,552)Opening shareholders' funds (617,901) (421,349) (421,349)Closing shareholders' funds (2,063,177) 72,335 (617,901) 6. Restructuring Charge as per Profit and Loss Six months ended 31 October 2004 £Board Restructuring (including provisions for salaries, legal and other professional fees) 285,355Annual General Meeting 28,767Other restructuring including severances, professional fees, and cancellation of certainmarketing programs. 112,816 426,938 7. 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 Limited, CrystalGate, 28-30 Worship Street, London EC2A 2AH. This information is provided by RNS The company news service from the London Stock Exchange