Interim Results

Mondas PLC 30 December 2002 For Immediate release 30th December, 2002 Mondas plc ('Mondas' or 'the Company') Interim Results for the six months ended 31st October, 2002, Placing and major contract Chairman's Statement Major contract I am delighted to announce that Mondas has signed an agreement with Credit Suisse First Boston (Europe) Limited ('CSFB'), for the largest sale to date of our flagship product Radica Corporate Actions Processing System ('Radica CAPS'). The contract for the initial phase, covers licences, project and support services for their UK, European and possibly Asia Pacific based investment banking and securities businesses. This order is worth a minimum of Â£640,000 to the Company, with CSFB having the option of confirming an additional Â£450,000 of professional services work. This landmark contract, which was won against strong competition from both European and U.S. vendors, will materially benefit the second half of our current financial year from both revenue and cash perspectives. Interim Results Turnover in the six months ended 31 October 2002 was Â£1,452,981 (2001: Â£1,729,088). The resulting loss before goodwill, amortisation and depreciation was Â£754,503 (2001: loss Â£320,743). In line with other financial sector software vendors, we suffered from protracted sales cycles and market turbulence. However, the value of orders received for Resource 32000 accounting solutions (' Resource') increased by approximately 50%, including its largest ever sale, worth over Â£250,000, to Blue Arrow Limited part of Corporate Services Group PLC. This order will benefit the second half of this financial year. At the end of the period the order book, not including CSFB, was Â£1.36m (2002: Â£0.19m) and the deferred revenues were Â£689,394 (2002: Â£525,644). Debtors represented the last 25 days of sales (2001: 44 days). Operating costs (excluding amortisation and interest payments) were Â£2,207,484 (2001: Â£2,049,831). The Directors have managed costs aggressively and given market uncertainty, will continue to do so. These costs included an investment of Â£0.4m (2001: Â£0.2m) in new applications for the financial and education sectors. This investment has already benefited the Company through the gain of the CSFB contract. It is expected that any further software development will largely be customer funded. Financial Sector The Company had originally expected to close significant new business in the first half of the year, but market turmoil, unequalled in my experience since 1974, presents IT vendors with enormous challenges. Procurement cycles have lengthened with ever more rigorous return on investment ('ROI') justifications applied. In several cases the budgets of potential customers were withdrawn during final negotiations. Our potential customers tell us that Corporate Actions is one of the few areas that will be budgeted during the next year due to its operational risk mitigation and substantial ROI over a short planning period. This has been corroborated by an increase in sales activity during the last few weeks with several key prospects restarting their procurement process in advance of their new budget years commencing on 1 January, 2003. (The term corporate actions relates to any information that affects the capital structure of a corporation - such as stock splits, rights issues or income payments. This important area has historically been one of the least automated, and therefore most labour-intensive, risky and prone to error). The delivery of the new institutional version of Radica CAPS to GNI Limited, now part of Man Financial PLC, one of the world's largest futures brokers, is currently undergoing final user acceptance tests. The Company now has strong reference sites with both Institutions and Private Client Brokers. The Directors believe that this will enable Mondas to maintain its position as a supplier of choice, with a proven and market leading solution, in this new and rapidly expanding market. Brewin Dolphin Securities Limited continues to be an active client, with the bulk of the contracted services likely to benefit the second half with the development of new solutions and enhancements to existing software. We are pleased to announce that our new product Radica RECS (reconciliation and exception control system) was successfully implemented at Man Securities Limited and now handles its CREST, cash and stock reconciliations. Resource Division The Resource division covers commercial markets generally, but is particularly active in the Education sector where it is a market leader in the supply of accounting solutions to Colleges of Further Education. Mondas continues to expand its product offerings in this sector. In November 2002 we launched our Resource Learning Management System ('Resource LMS'). This new solution, in combination with the existing Human Resources and Payroll system and the widely used Resource 32000 financial management system, will enable the Company to deliver the benefits of a fully integrated system. Mondas has significantly invested in its sales and delivery capability and has established a dedicated team of experts in the Education sector, where the Directors believe that many colleges will be seeking to replace their systems during the next few years. Dividend The Directors are not recommending the payment of a dividend in respect of the period under review (2001: nil). Funding The Company has conditionally placed 1,004,749 new ordinary shares in addition to the 573,722 existing shares, resulting from the Reality warranty claim settlement, which would otherwise have been cancelled. Both new and existing institutional investors, as well as members of the Board and staff have participated in this placing which will take place at 23.5p per share immediately following this announcement. This will raise approximately Â£350,000 (net of costs), which, combined with the Company's existing cash resources, and the CSFB contract, will ensure that Mondas has adequate working capital to service its existing business for the foreseeable future. Future Prospects Our strategy in the Education sector, to invest in new solutions to create a larger and more comprehensive offering to the Higher Education sector, has inevitably introduced longer sales cycles in that area. Concurrently we are developing the general commercial markets where our specialist knowledge and project costing capabilities provide us with competitive edge. In the financial sector, Corporate Actions represents one of the few rapid growth areas in a depressed sector. The CSFB order is an endorsement of the quality and functionality of the product and the team behind it. The Directors believe that Mondas' market leading solution can now be delivered to the largest global financial institutions and we are well positioned, with a strong sales pipeline of organisations of a similar profile as CSFB, and comprehensive product, to capitalise on this key area. The institutional version of CAPS offers significant global sales potential for the Company over the forthcoming months and years, with presentations already given to institutions in both the US and Asia Pacific. Our goal is to dominate this significant market opportunity and the Directors are confident of winning further significant orders in 2003. Whilst market conditions and sales delays have reduced our chances of delivering our target results for the financial year as a whole, the Directors believe that the Company can still achieve significant progress in the current year. Tim Simon Chairman 30th December, 2002 INDEPENDENT REVIEW REPORT TO MONDAS PLC Introduction We have been instructed by the company to review the financial information set out on pages 4 to 8. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. As a company quoted on the Alternative Investment Market (AIM), Mondas PLC has voluntarily elected to follow the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied, unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 October 2002. RSM Robson Rhodes Chartered Accountants London, England 30 December, 2002 Consolidated Profit and Loss Account (unaudited) For the six months ended 31st October 2002 6 months ended 6 months ended 12 months ended 31st October 31st October 30 April 2002 2001 2002 (Unaudited) (Unaudited) (Audited) Total Â£ Â£ Â£ Turnover 1,452,981 1,729,088 3,741,673 Cost of sales (67,624) (165,989) (226,194) Gross profit 1,385,357 1,563,099 3,515,479 Distribution and administrative expenses (2,793,236) (2,560,640) (5,263,947) Analysis of group operating losses Operating (loss) before goodwill Amortisation and depreciation (754,503) (320,743) (416,667) Amortisation of goodwill (638,418) (665,701) (1,304,119) Depreciation of tangible fixed assets (14,958) (11,907) (27,682) Group operating loss (1,407,879) (997,541) (1,748,468) Net interest (payable)/receivable (121,795) (95,043) (217,113) Revaluation of investments - (91,795) (212,277) Loss before Taxation (1,529,674) (1,184,379) (2,177,858) Taxation 72,605 - 146,248 Loss for the period (1,457,069) (1,184,379) (2,031,610) Basic and diluted loss per share (7.3)p (5.9)p (10.1)p There are no recognised gains or losses for the above periods other than those stated above. Balance Sheet as at 31st October, 2002 At At At 31st October 31 October 30 April 2002 2001 2002 (Unaudited) (Unaudited) (Audited) Â£ Â£ Â£ Fixed Assets Intangible assets 3,139,372 4,393,292 3,754,874 Tangible assets 145,274 49,278 78,151 3,284,646 4,442,570 3,833,025 Current Assets Stock 306 - 236 Debtors 543,534 575,506 849,739 Investments - 120,481 - Cash at Bank and in hand 363,083 1,256,262 1,420,752 906,923 1,952,249 2,270,727 Creditors: Amounts falling due within one year (1,294,292) (1,219,809) (1,763,305) Net Current assets/(Liabilities) (387,369) 732,440 507,422 Total Assets less Current Liabilities 2,897,277 5,175,010 4,340,447 Creditors: Amounts falling due after more than one year (2,922,584) (2,896,017) (2,908,685) Net assets (25,307) 2,278,993 1,431,762 Capital and Reserves Called up share capital 2,009,501 2,009,501 2,009,501 Share premium account 5,241,078 5,241,078 5,241,078 Profit and loss account (7,275,886) (4,971,586) (5,818,817) Equity Shareholders' funds (25,307) 2,278,993 1,431,762 Consolidated Cash Flow Statement for the six months ended 31st October, 2002 Six months Six months 12 months ended ended Year ended 31 October 31 October 30 April 2002 2001 2002 (Unaudited) (Unaudited) (Audited) Â£ Â£ Â£ Reconciliation of operating loss to net cash outflow Operating loss (1,407,879) (997,541) (1,748,468) Amortisation of goodwill 638,418 665,701 1,304,119 Depreciation of tangible fixed assets 14,958 13,522 27,682 Profit on sale of fixed assets - (2,425) (4,047) (Increase)/decrease in stocks (70) 417 181 (Increase)/decrease in debtors 180,862 109,249 (18,736) (Decrease)/increase in creditors (470,000) (403,601) 153,688 Net cash outflow from operating activities (1,043,711) (614,678) (285,581) Cash flow statement Net cash outflow from operating activities (1,043,711) (614,678) (285,581) Returns on investments and servicing of finance (106,909) (82,227) (205,422) Taxation received 197,948 - - Capital expenditure and financial investment (104,997) 1,046 (40,366) Acquisitions and disposals - - - Cash outflow before financing and liquid resources (1,057,669) (695,859) (531,369) Management of liquid resources 800,000 5,813 115,753 Financing - issue of shares (net of costs) - 1,034 1,034 - issue of convertible unsecured loan stock - - - (Increase)/decrease in cash (257,669) (689,012) (414,582) Notes to the Interim Financial Information 1. Interim report This interim report was approved by the Board on ** December 2002. It has been prepared using accounting policies that are consistent with those adopted in the statutory accounts for the year ended 30 April 2002. The figures for the year to 30 April 2002 were derived from the statutory accounts for that year. The statutory accounts for the year ended 30 April 2001 have been delivered to the Registrar of Companies and received an audit report which was unqualified and did not contain statements under s237(2) or (3) of the Companies Act 1985. 2. Taxation All tax charges and credit relate to current UK taxation. 3. Dividends The directors are not declaring a dividend for the six months ended 31 October 2002. 4. Loss per share Basic loss per share is based on the loss attributed to the members of Mondas Plc and on the weighted average number of shares outstanding throughout the six months ended 31 October 2002 of 20,095,600 (2001: 20,077,785). Diluted loss per share is the same as the basic loss per share because the options and convertible unsecured loan stock have no dilutive effect. 5. 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 2002 2001 2002 Â£ Â£ Â£ Change in cash (257,669) (689,012) (414,582) Cash inflow from increase in debt - - - Cash outflow from (decrease)/increase in liquid resources (800,000) (5,813) (115,753) Change in net debt from cash flows (1,057,669) (694,825) (530,335) Amortisation of CULS (13,899) - (25,484) Opening net (debt)/funds (1,487,933) (1,048,913) (932,114) Closing net funds (2,559,501) (1,743,738) (1,487,933) 6. Reconciliation movements in shareholders' funds Six months Six months 12 months ended ended ended 31 October 31 October 30 April 2002 2001 2002 Â£ Â£ Â£ Total recognised losses relating to the period (1,457,069) (1,184,379) (2,031,610) Net proceeds of share issue - 1,034 1,034 Increase/(decrease) in shareholders' funds (1,457,069) (1,183,345) (2,030,576) Opening shareholders' funds 1,431,762 3,462,338 3,462,338 Closing shareholders' funds (25,307) 2,278,993 1,431,762 7. Current asset investments Six months Six months 12 months ended ended ended 31 October 31 October 30 April 2002 2001 2002 Â£ Â£ Â£ Own shares held - 120,481 - - 120,481 - Own shares held relates to 573,722 shares recovered from the vendors of Reality Communications Scandanavia AS which are held by Mr D Bolton and Ms F Walkinshaw, both of whom were partners at the previous lawyers, Garretts. 8. Post Balance Sheet Event On 30 December 2002 the company issued 1,004,749 new ordinary 10p shares and procured the placing of the 573,722 existing ordinary shares referred to in note 7. The combined proceeds of these placings will raise approximately Â£350,000 net of costs. 9. Copies of the interim report Copies of the interim report are being sent to all shareholders of the Company and are available to the public from the Company's registered office: 3rd Floor, 17-29 Sun Street, London, EC2M 2PT and the offices of John East & Partners Ltd, Crystal Gate, 28-30 Worship Street, London EC2A 2AH until 30 December 2002. This information is provided by RNS The company news service from the London Stock Exchange

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