Final Results

Mondas PLC 27 June 2001 MONDAS PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 APRIL 2001 Mondas PLC, specialists in Securities, Banking and e-Business software solutions, today announces results for the year ended 30 April 2001. FINANCIAL * Turnover grew by 98% to £2.7 million (2000: £1.36 million) * EBITDA of (£0.38) million including £45,000 of one-off costs (2000: loss of £0.33 million) * Loss per share 9.5p (2000: 6.8p) OPERATIONS * The Board and operational management has been strengthened by new appointments DSR (Acquisition October 2000) * DSR performed well with profits significantly greater than expectations * DSR has been successfully integrated into Mondas Information Technology Ltd * £440,000 of orders won in the last quarter. Further orders are expected. The Group has now over 80 customers in the educational sector. Technology Radica Transaction and Communication Management System ('TCMS') is the new powerful technology platform which combines workflow, Internet and accounting technologies to deliver straight through processing ('STP') Finance Sector * New Financial Sector solutions have been offered including corporate actions, dividend processing, client & portfolio management, reconciliations and research management intranet * 'Remarkable' market response to Radica Corporate Actions Processing System (CAPS) generating a number of prospects expected to contribute to revenue during the first half of the current year * Reach has been extended through alliances with Exchange Data International and Consort Security Systems. Current Trading * Trading momentum in the current year is encouraging across the Group. Tim Simon, Chairman, said: 'The Group is now benefiting from both the acquisition of DSR and the flexibility of our Radica TCMS technology platform. Education continues to be a buoyant market for the Resource product. We are addressing the key issues in the Securities and Investments sector, including Corporate Actions and Reconciliations, as part of our STP and legacy migration strategy. We believe that the Group is entering a period of sustainable growth.' 27 June 2001 ENQUIRIES: Mondas PLC Tel: 01932 334600 Tim Simon, Chairman College Hill Associates Tel: 020 7457 2020 Matthew Smallwood Camilla Glen Preliminary Results for the year ended 30 April 2001 Chairman's Statement RESULTS We are pleased to report the results of Mondas PLC ('the Group', 'the Company' or 'Mondas') for the year ended 30 April 2001. Turnover for the year grew by 98% to £2,702,141 (2000: £1,358,811). £1,161,475 was attributed to DSR Holdings Limited ('DSR'), acquired 9 October 2000. The Group recorded EBITDA of £(381,054) (2000: £(330,183)). This was after charging £45,000 of legal expenses in relation to the successful warranty claim against the vendors of Reality Communications Scandinavia AS ('Reality') and a non-cash charge of £17,212 arising from the change in value of the shares recovered. Loss before tax for the period was £1,504,042 (2000: £ 857,573). Goodwill amortisation was £975,172 (2000: £503,797), £503,528 arising from the acquisition of DSR. Deferred income was £764,151 (2000: £ 126,683) arising primarily from services and support revenues, with £126,638 (2000: £126,683) from deferred licences in our Norwegian business. The cash balance at the end of the period was £1,951,087 (2000: £8,742). The performance of DSR exceeded our expectations, producing an EBITDA of £ 279,203, even after increased investment in people, marketing and infrastructure. The Group negative EBITDA was slightly larger than that for the comparative period, but this was after significant further investment in research and development, people and marketing, and a £50,000 loss from activities in Norway. The sharp increase in interest payable is due to the issue of £3 million nominal of 8% Convertible Unsecured Loan Stock in October 2000. In April 2001 the Company adopted Turnbull as the risk management model and formally implemented a strict revenue recognition policy compliant with the US GAAP standard SOP 97-2. DSR Revenues were slightly ahead of expectations but profits were significantly greater. In the last quarter alone, new orders of over £440,000 were won. The business of DSR is highly cash generative and on acquisition had cash balances of £725,350. At both an operational and technical level, the business of DSR has now been integrated into Mondas Information Technology Limited ('MITL') and, from 1 May 2001, will not report separately. Staff retention has been good with all DSR's staff now enjoying the Mondas benefits and share option schemes. The Resource 32000 Accounting & Management Information System ('Resource') continues to sell well in its established markets of further education, distribution, professional and marketing services. Its position as one of the market leaders in the further education marketplace continues to strengthen. Orders worth over £450,000 were won from over 20 establishments, between November 2000 and April 2001, including Radbrook College and a Humberside consortium of colleges. Further orders are expected. In March 2001 Resource was accredited by the Institute of Chartered Accountants in England & Wales. Software products are accredited on the basis that they have passed the Institute's criteria for levels of support and stability and have been found acceptable by an independent technical evaluation in accordance with a published standard. SALES & MARKETING Mondas has strengths in two key vertical markets, finance and education and strong interest has been shown for both sectors' products. Finance Sector Our focus in the finance sector is initially private client stockbroking, institutional stockbroking and investment banking. We are offering new solutions including corporate actions, dividend processing, client and portfolio management, reconciliations and research management intranet and extranet. All these solutions are based on our unique Radica Transaction and Communication Management System ('TCMS') technology which gives our customers the key advantages of speed of deployment, flexibility for change, and automation - 'Straight Through Processing' ('STP'). The sales pipeline for financial sector products improved in size and quality since December 2000, when Jarlath McGee, Director of Sales, joined us. We have generated a number of prospects for our product Radica Corporate Actions Processing System ('CAPS'), which we expect to contribute to revenue during the first half of the current fiscal year. Brewin Dolphin Holdings PLC ('Brewin') became the first stockbroker to deploy our CAPS solution to over 850 users across multiple locations, thereby automating its corporate action processing. We have extended our customer reach through two key alliances. The alliance with Exchange Data International Limited, providers of electronic data feeds to the financial markets, continues to strengthen alongside the Radica CAPS sales initiative. In addition, subsequent to the period under review, a joint marketing agreement has been established with Consort Securities Systems Limited ('Consort'), suppliers of stockbroking and investment management systems. This positions Radica CAPS as the 'Best of Breed' option for the Consort user base. This agreement has already added considerably to the pipeline of business for this application. We will continue to work with other vendors in the market to provide our CAPS offering in the market. The market response to the Mondas approach has been remarkable, with keen interest registered from the industry's leading organisations, both domestic and international. Mondas is attending its first international event, 'True STP', sponsored by the Securities Market Practice Group and held in Brussels, where we will be demonstrating CAPS in June 2001. Educational Sector Within this reporting period, we have focussed on colleges of further education with the primary offering of Resource, which can be integrated with workflow and intranet. The Directors believe this is a growth market as a result of increased educational spending. Mondas currently has over 80 customers in this sector, 20 added in the second half-year and 5 already in the current year. SOLUTIONS AND TECHNOLOGIES The power of Mondas' solutions lies in its Radica TCMS technology platform. This unique platform combines the workflow, Internet and accounting technologies to give Mondas solutions competitive edge. The focus during this reporting period has been the integration of the technical teams and their technology. The unique combination of our workflow, Internet and accounting technologies creates a powerful platform, Radica TCMS, for all our solutions. Set within the three tier distributed architecture, solutions are quick to build, easy to maintain with significant flexibility for our clients. This means that 'applications' are separated from the definition of the processes and the people that participate in them, so the things that change most, roles and activities, can be modified quickly without affecting the applications themselves. Likewise, Radica TCMS is database independent so it can access or update information in many diverse systems. This minimises costs and maximises their freedom to expand or modify their IT infrastructure. REALITY In the interim statement we announced that Ephorma AS ('Ephorma'), a reseller of certain Mondas products in Norway, had, in correspondence, alleged a breach of the reseller agreement by Mondas. Mondas in turn alleged a breach of the agreement by Ephorma and has sought a commercial solution to the dispute. I am pleased to announce that an agreement in principle has been reached with Ephorma finally settling the dispute between the companies. Subject to the transfer of the relevant source code, only for the purposes of support, Ephorma will pay all outstanding sums owed to Mondas and all previous agreements between the parties will terminate. This leaves Mondas with no further obligations or liabilities to either Ephorma or its customers. This will allow us to recognise the £126,883 of previously deferred licence revenue in the current year. Mondas does not anticipate any material further revenues or costs from this non-strategic activity. Despite the operational and people issues arising from our acquisition of Reality, Mondas has secured some valuable intellectual property rights which form a significant part of our technology platform and which continue to be developed and enhanced. SETTLEMENT OF LITIGATION The company is pleased to report that the warranty claim mentioned in my previous letter against the vendors of Reality was settled on 23 December 2000 and was satisfied by the vendors delivering 573,722 Mondas ordinary shares to the Company's solicitors. The Company is evaluating its options in relation to these shares to maximise value for shareholders. MANAGEMENT CHANGES Colin Peters and Bernard Fairman joined the Board on 31 October 2000 as Non-Executive Directors. At the same time Ken Barnes resigned as Non-Executive Director to enjoy his retirement, and Matthew Crook, Sales Director, left the company. Graham Ross was appointed Director of Technical Operations of MITL on 19 June 2000. On 4 December 2000 Jarlath McGee joined as Director of Sales of MITL, and was appointed to the Board of MITL on 20 February 2001. DIVIDEND The Directors are not recommending the payment of a dividend in respect of the financial year under review (2000: nil). FUTURE PROSPECTS The Directors believe that the continuing interest from stockbrokers and investment banks will enable us to establish Mondas as a significant player in this market. In addition to the new applications for the financial sector, such as CAPS, we have begun the process of developing solutions to replace the legacy systems prevalent across this market. One of these legacy systems is FISCAL, the product developed in 1975 by my previous company, Quotient PLC, and which still processes a substantial percentage of market volume. The Directors believe that this is a significant opportunity for the Company because of our innovative technology and extensive experience in this area. Firms within the securities industry are actively reviewing their systems requirements to achieve lower operating costs and higher levels of automated processes. The Directors believe that the pace of change is being forced by the increasing pressure of strict regulation imposed upon this industry, together with the demand for reducing settlement times. These are the areas in which the Radica TCMS platform gives us significant competitive edge. We have been successful in the education sector and will continue to develop this buoyant market for Resource. A strength of Resource is its project costing ability and we intend to expand our sales in our established markets. A campaign is already underway to offer the Resource customer base the benefits of the workflow, Internet and XML technology that can now be added to their existing system. Trading momentum has continued well into the current year, with over £140,000 of new business orders for Resource being won in May alone; over £90,000 from the educational sector. Historically the Company's revenue has been predominantly services based. The Directors intend to increase the proportion of licence sales. This should provide greater recurring income, accelerating the growth of the Group. We shall continue our programme of investment during the first half of the current year to deliver benefits in the second half. Investment will include further marketing campaigns, the recruitment of sales professionals and planned technical developments. We continue to seek value enhancing alliances and acquisition opportunities of complementary technology and customer base. Our primary geographic focus remains on the UK although we expect to plan, over the course of the new financial year, for international expansion. Your Directors now believe that your Company is entering a period of sustainable growth. D T A Simon Chairman 27 June 2001 Consolidated Profit and Loss Account for the year ended 30 April 2001 Existing Acquisitions Total Activities 2001 2001 2001 2000 Note £ £ £ £ Turnover 1 1,540,666 1,161,475 2,702,141 1,358,811 Cost of sales (358,502) (78,446) (436,948) (227,219) Gross profit 1,182,164 1,083,029 2,265,193 1,131,592 Administrative (2,326,277) (1,341,684) (3,667,961) (1,997,371) expenses Analysis of Group operating losses Operating profit/loss before goodwill Amortisation (660,257) 279,203 (381,054) (330,183) and depreciation (EBITDA) Amortisation (471,644) (503,528) (975,172) (503,797) of goodwill Depreciation (12,212) (34,330) (46,542) (31,799) of tangible fixed assets Operating 2 (1,144,113) (258,655) (1,402,768) (865,779) (loss)/profit Net interest 3 (101,274) 8,206 Loss on (1,504,042) (857,573) ordinary activities before taxation Tax on loss - - on ordinary activities Loss for the (1,504,042) (857,573) financial year Basic and 4 (9.5p) (6.8p) diluted loss per share Profit and loss account At 1 May 2000 (2,283,165) (1,425,592) Loss for the (1,504,042) (857,573) financial year At 30 April (3,787,207) (2,283,165) 2001 All of the above operations are continuing. Total recognised gains and losses The Group had no recognised gains and losses other than the loss for the above financial years. Consolidated Balance Sheet as at 30 April 2001 2001 2001 2000 2000 £ £ £ £ Fixed assets Intangible assets 5,058,993 1,536,684 Tangible assets 61,420 25,741 5,120,413 1,562,425 Current assets Stocks 417 1,810 Debtors 897,032 318,166 Cash at bank and 1,951,087 8,742 in hand 2,848,536 328,718 Creditors: (1,623,410) (382,275) amounts falling due within one year Net current 1,225,126 (53,557) assets/liabilities Total assets less 6,345,539 1,508,868 current liabilities Creditors: amounts due falling after more than 1 year Convertible 8% (2,883,201) - unsecured Loan Stock 2005 Net assets 3,462,338 1,508,868 Capital and Reserves Equity called up 2,006,056 1,261,185 share capital Share Premium 5,243,489 2,530,848 account Profit and loss (3,787,207) (2,283,165) account Shareholders' 3,462,338 1,508,868 funds Consolidated Cash Flow Statement for the year ended 30 April 2001 Reconciliation of operating loss to net cash outflow from operating activities. 2001 2000 £ £ Operating loss (1,402,768) (865,779) Depreciation 46,542 31,799 Write down of own shares held 17,212 - Amortisation 975,172 503,797 (Increase)/Decrease in stocks 3,795 (633) (Increase)/Decrease in debtors (255,074) (77,591) Increase/(Decrease) in creditors (301,121) 103,670 Net cash outflow from operating activities (916,242) (304,737) Cash Flow Statement Net cash outflow from operating activities (916,242) (304,737) Returns on investments and servicing of finance (127,149) 8,206 Taxation (138,679) 2,146 Capital expenditure 16,971 3,421 Acquisitions and disposals (2,745,490) - Cash outflow before use of liquid resources and (3,910,589) (290,964) financing Management of liquid resources (965,753) - Financing Issue of ordinary capital including premium net 2,906,321 1,033 of costs Issue of Convertible Unsecured Loan Stock ('CULS') 3,000,000 - Cash inflow from financing 5,906,321 1,033 Increase/(Decrease) in cash 1,029,979 (289,931) Notes 1. Turnover Mondas has adopted SOP97-2 'Software Revenue Recognition' issued by the American Institute of Certified Public Accountants. Key aspects are as follows; a. Software Products Turnover from the sale of software results from mainly perpetual licences, which provide customers with the right to use these products. Such turnover is recognised on the following basis: - If services are essential to the functionality of the software and the payment terms are linked, the revenue for both software and services is recognised on acceptance. - Where either services are incidental to the functionality and/or the payment terms are linked to simple installations where Mondas has a history of successfully collecting cash under such arrangements, revenue from the grant of perpetual or fixed term licences to use Mondas's software is recognised when the following conditions are met: -- A signed contract exists; -- Delivery has occurred; -- The sales price is fixed and determinable; -- Collection of the debt is probable; -- No significant obligations remain. Software rentals or licences charged on a periodic basis are recognised over the term of the agreement. b. Consulting and Professional Services Turnover from the provision of consultancy and professional services is recognised as the work performed. c. Support Income is recognised over the life of the agreement. The turnover and loss before tax are attributable to the one principal activity of the Group and arise within the United Kingdom. 2. Operating Loss Operating loss is stated after charging: 2001 2000 £ £ Operating lease rentals in respect of buildings 75,764 48,055 Operating lease rentals in respect of equipment 25,944 12,124 Directors' remuneration 265,677 253,301 Research and Development Expenditure 202,176 179,918 Contribution to Director's pension fund 11,625 10,050 Amortisation of goodwill 975,172 503,797 Depreciation 46,542 31,799 Auditors' fees: Audit 20,000 11,200 Accountancy fees - 4,841 In addition to the above, the auditors were paid £75,000 in connection with the acquisition of DSR Holdings Limited and this has been capitalised as a cost of the acquisition 3. Net interest 2001 2000 £ £ Bank interest receivable 56,051 8,206 Ammortisation of Convertible loan stock costs (11,265) - Interest payable on other loans (146,060) - (101,274) 8,206 4. Loss per share Basic loss per share is based on a weighted average number of shares outstanding of 15,830,253 (2000: 12,594,814) and loss after taxation of £1,504,042 (2000: 857,573). The CULS and share options were non-dilutive for both years. 5. Reconciliation of movements in shareholders' funds 2001 2000 The The Group Group £ £ Loss for the financial year (1,504,042) (857,573) Issue of ordinary shares at par 744,871 3,445 Premium on new share issued 2,712,641 (2,412) (2,412) net of expenses and option scheme) Net addition/(reduction) to shareholders' fund 1,953,470 (856,540) Opening shareholders' funds 1,508,868 2,365,408 Closing shareholders' funds 3,462,338 1,508,868 6. Sundry Information This preliminary statement, which has been agreed with the auditors, was approved by the Board on 26th June 2001. It is not the Company's statutory accounts. Copies of the 2001 Annual Report and Accounts which will be posted to shareholders shortly or may be obtained from the registered office at Rosemount House, Rosemount Avenue, West Byfleet, Surrey KT14 6LB. The statutory accounts for the 2 years ended 30th April 2000 received audit reports which were unqualified and did not contain statements under s237(2) or (3) of the Companies Act 1985. The statutory accounts for the year to 30 April 2000 have been delivered to the Registrar of Companies but the 30th April 2001 accounts have not yet been approved, audited or filed.

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