Final Results

Mondas PLC 19 June 2002 Mondas PLC Preliminary Results for the year ended 30 April 2002 Mondas PLC, specialist providers of software solutions for the banking & securities sector and the education sector, today announces preliminary results for the year ended 30 April 2002. HIGHLIGHTS • Turnover for the year grew by 38% to £3.74 million (2001: £2.7 million) • Gross Margins improved by 10% to 94%. • EBITDA profit before restructuring costs of £84,076 in the second half • LBITDA for the year of £416,667 • Cash balances at the year end were £1.42 million (2001: £1.95 million) cash increased by £164,000 in second half • Major contract wins with Brewin Dolphin and GNI announced after the year end • New Student Records solution to build on the success of Resource in the Education Sector • 2002/3 begins with • record opening order book of £1.7 million • nearly £800,000 of deferred income • record sales month for Resource in May 2002 Tim Simon, Chairman and Chief Executive concluded: 'This sound financial platform of cash, order book and deferred income combined with the number of current negotiations in our two key market sectors gives us confidence that 2002/3 will be the company's best year ever.' 19 June 2002 ENQUIRIES: Mondas PLC Tel: 020 7392 1302 Tim Simon, Chairman College Hill Tel: 020 7457 2020 Matthew Smallwood Camilla Glen Mondas PLC Preliminary Results for the year ended 30 April 2002 Chairman's Statement INTRODUCTION The Company has made much progress during the last financial year, especially in the second half when the Group secured material contracts in the securities and banking sector. As expected, the education sector played a significant role in our success with over 30 new clients and this trend continuing into the current year. Notably, this activity enabled Mondas, in the second half of this reporting period (although not for the year as a whole), to break through into profitability, generate cash, and achieve our highest ever order book with which to open the current year. RESULTS Turnover for the year grew by 38 per cent. to £3.74 million (2001: £2.7 million). Gross margins improved to 94 per cent. (2001: 84%), reflecting the increasing proportion of licence sales and a reduction in the use of external contractors. The six month period ended 30th April, 2002 reflected the first material finance sector licence sales from our Radica Corporate Actions Processing System (' Radica CAPS') & Radica Reconciliations and Exception Control System ('Radica RECS') products and the Company recorded an operating profit before interest, tax, depreciation and amortisation ('EBITDA') of £84,076 (six month period ended 30th April, 2001:loss £226,842). This was struck before a once-off restructuring charge of £180,000 (2001: £Nil) relating to redundancies and facilities closures in November 2001. This enabled costs in the second half of the year to be consistent with the first half of the year under review (apart from the above charge). The Group recorded a loss before interest, tax, depreciation and amortisation ('LBITDA') for the year of £416,667 (2001: loss £363,842). Loss before tax for the period was £2.18 million (2001: £1.5 million) after charging goodwill amortisation of £1.3 million (2001: £975,000). The increase reflects a full year of amortisation from the October 2000 acquisition of DSR Holdings Limited. Net interest charges increased to £217,113 (2001: £101,274) reflecting the first full year of interest charges on the Convertible Unsecured Loan Stock issued in October 2000. On 13th June 2002 your Directors decided to cancel the 573,722 shares recovered from the vendors of Reality Communications (Scandinavia) AS. Their carrying value is fully provided for and a non-cash charge of £212,277 (2001: £17,212) has been taken. Mondas PLC Preliminary Results for the year ended 30 April 2002 Chairman's Statement Cash balances at 30 April 2002 were £1.42 million (2001: £1.95 million). During the second half of the year cash increased by £164,000. Cash collections were particularly strong with a closing trade debtor balance of £564,374 (2001: £586,736). This represented at 30 April 2002 approximately the last 23 days of sales (2001: 35 days). Deferred incomes, which arise primarily from services and support revenues, rose to £796,538 (2001: £767,201). Deferred licence income of £126,638 from the now discontinued business in Norway was recognised on final settlement of the outstanding litigation. Orders received but not invoiced were approximately £1.7 million (2001: £Nil). SALES & MARKETING Mondas has continued to improve its position in two key markets, the securities and banking sector and the education sector. Securities & Banking Sector In October 2001 we made the first sale of Radica RECS to Man Securities Limited. This is based on our Radica Transaction & Communication Management System (' Radica TCMS') technology platform and will handle their CREST, cash and stock reconciliations. The end-to-end automation of Corporate Actions Processing is a new initiative in the securities industry. Mondas first implemented its Radica CAPS solution more than two years ago, which, we believe, was the first of its kind. This lead has given us a competitive advantage. The desire to automate this labour-intensive, paper-laden process has been fuelled by the compulsory introduction of a new electronic messages standard, ISO 15022, in November 2002. This will enable Straight Through Processing, ('STP' - a financial industry term for end-to-end automation without manual intervention) of corporate events, increasing productivity and reducing risk along the way. Successful installations of our Radica CAPS solution took place at private client brokers and asset managers Brewin Dolphin Securities Limited, StockTrade Limited, Man Securities Limited and Close Wealth Management Limited. However, in the second quarter the market for private client stockbrokers became more difficult and we shifted our focus towards the institutional stockbroking, investment banking and asset management market. Such organisations are predominantly global operations with longer decision-making processes, which has resulted in extended sales cycles. This revised strategy was endorsed in April 2002 by our first institutional market sale to GNI, part of Old Mutual plc (a FTSE 100 company) and one of the world's foremost financial brokers. The GNI contract for the supply of the Radica CAPS solution is worth £380,000, the majority of which will be realised in the current financial year. Mondas PLC Preliminary Results for the year ended 30 April 2002 Chairman's Statement At the end of the year under review, we won a major contract with our longest standing client, Brewin Dolphin Securities Limited. This new contract, worth a minimum of £1.42m over the two financial years ending 30th April 2003 and 30th April 2004, is for professional services and support for their Radica Portfolio Management and Radica CAPS systems, software development projects and associated services. We have made three important new alliances in this marketplace with Telekurs (UK) Limited, providers of electronic data feeds to the financial markets, Mercator Software, Inc., market leading provider of integration solutions and we have joined the SWIFT (the 'Society for Worldwide Interchange of Financial Transactions') Solution Partners Program. These relationships all strengthen our proposition to the worldwide financial sector particularly in the area of corporate actions. The current reporting period was an exciting time within the securities and banking arena. We closed the year with our highest ever order book and, due to the keen interest in Radica CAPS by global institutional banks and brokers, the sales pipeline in this area has improved dramatically in size and quality. Education Sector The Resource 32000 Accounting and Management Information System ('Resource') continues to sell well in its established markets of professional, marketing services and particularly further education. Its position as one of the market leaders in this marketplace continues to strengthen. In the period, orders worth £707,000 were won from over 30 Colleges of Further Education ('CoFEs'), including Southdowns College, North East Surrey College of Art & Technology and a consortium of six Essex CoFEs. Within this reporting period, we have focussed on CoFEs with our primary offering of Resource, which can be integrated with workflow and intranet web delivery. As a result of increased government spending on the provision of training and education, and the requirement to replace aging legacy systems predominant in this sector, the Directors believe that this market will continue to grow. Mondas currently has over 90 CoFE customers and over 110 in the education sector as a whole. As an addition to the Resource suite of programs we have developed a new Human Resources module ('HR') which was launched into this market with a price equivalent to a typical Resource sale. We made the first HR sale to Reaseheath College and have to-date sold three further HRs to other CoFEs. An agreement is in place with e-Government Solutions Ltd, providers of feonline.net, the Association of Colleges e-purchasing platform and portal to provide an interface between the portal and the user's Resource system. The first site due to be implemented in July will be Guildford College. Mondas PLC Preliminary Results for the year ended 30 April 2002 Chairman's Statement Mondas now has over 400 Resource sites under support. SOLUTIONS AND TECHNOLOGIES The Radica CAPS application has been developed extensively over the period, integrating facilities such as dividend processing and Internet access. Web functionality has also been added to Resource, extending the reach of many of the modules. The platform itself has been enhanced with the workflow engine ported to run on any ODBC compliant database, increasing its appeal and application across our chosen markets. A significant development during the period under review, was a new platform component, Radio, which is an event-handler and system integration tool which can respond to events in diverse systems including, for example, the SWIFT and CREST messages used by the financial sector, and the messages required by feonline.net. SETTLEMENT OF LITIGATION The dispute with Mondus Limited in relation to trademark infringement and passing off, has been settled out-of-court with a co-existence agreement protecting the areas of our trademark, together with a small financial compensation paid to us by Mondus. The 573,722 Mondas ordinary shares received by the Company's solicitors from the vendors of Reality Communications (Scandinavia) AS in settlement of the warranty claim are now in the process of being cancelled. Your Board is pleased to announce that following these successful settlements the Company now has no outstanding litigation. MANAGEMENT CHANGES During the period there have been no changes at the Mondas PLC holding company Board level. At Mondas Information Technology Limited, ('MITL') Mondas' sole wholly owned trading company, the following changes have taken place. In September 2001 Jarlath McGee who was previously Sales Director, was appointed Chief Operating Officer and in December 2001 Tom McClelland was appointed Technical Director. Graham Ross left MITL in November 2001. Mondas PLC Preliminary Results for the year ended 30 April 2002 Chairman's Statement DIVIDEND The Directors are not recommending the payment of a dividend in respect of the financial year under review (2001: nil). FUTURE PROSPECTS The Group started this current financial year in a better position than ever before with the benefit of cash of over £1.4 million, a record order book of £1.7 million and deferred income of nearly £800,000. Finance The recent Brewin Dolphin contract represents an excellent start to the current year and will contribute £940,000 in services and support revenue. The Directors believe that further imminent orders will add substantially to that position. Corporate Actions processing is becoming an increasingly important topic for financial institutions as they look to reduce costs and mitigate risks and is being driven by the introduction of ISO 15022 messaging in November 2002. Other market drivers like the Basel II Capital Accord, where firms will be assessed on their risk exposures and required to deposit capital to cover those risks, are forcing organisations to look critically at their existing systems. Errors may be costly anyway but, in some cases, substantial fines are being imposed by the regulators. Industry experts have confirmed that workflow will be increasingly important to deliver systems for the financial community in its goal to achieve STP. The Directors believe that Mondas is well positioned to take advantage of these opportunities with solutions built upon its workflow based technology platform, Radica TCMS. One such solution with development already underway is a Radica Settlement system. Resource Following on from our strong finish to the year under review, May 2002 continued with impressive trading momentum for the Resource business unit with a record month's orders of over £400,000. This includes a deal with one of the UK's largest recruitment businesses which, subject to rigorous acceptance criteria, is worth over £200,000. With 100 users this is the biggest single Resource contract achieved, endorsing the strategy to move Resource up the value chain. The concept of STP, although rooted in the financial sector, also applies to the education sector. Government initiatives to encourage the Public Sector to reduce costs through the use of the Internet and tight management controls, are providing us with opportunities to expand our offering within the education client base to include workflow and e-processes. Mondas PLC Preliminary Results for the year ended 30 April 2002 Chairman's Statement One of the most significant factors affecting Mondas' future prospects within education is our acquisition, in May 2002, of the intellectual property rights of Wigston College's Student Records System ('SRS'). Wigston College is a current user of the Resource solution. Mondas has entered into a three-year agreement to develop and market the SRS software to the further education sector. The Directors believe that the full market opportunity in this sector will be £50 million over the next three years and a large proportion of the further education colleges will be reviewing and changing their systems. We believe that by combining Resource with HR and SRS this will give Mondas the potential to create significantly larger sales than those typically earned in the past. 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 make our initial moves, over the course of this new financial year, for international expansion. There are already signs that the Radica CAPS product will move the Company into international markets through a global client base. This sound financial platform of cash, order book and deferred income combined with the number of current negotiations in our two key market sectors gives us confidence that 2002/3 will be the company's best year ever. D T A Simon Chairman 19 June 2002 Mondas PLC Preliminary Results for the year ended 30 April 2002 Consolidated Profit and Loss Account for the year ended 30 April 2002 2002 2001 Note £ £ Turnover 1 3,741,673 2,702,141 Cost of sales (226,194) (436,948) Gross Profit 3,515,479 2,265,193 Administrative expenses (5,263,947) (3,650,749) Analysis of Group operating losses Operating loss before goodwill Amortisation and depreciation (EBITDA) (416,667) (363,842) Amortisation of goodwill (1,304,119) (975,172) Depreciation of tangible fixed assets (27,682) (46,542) Operating loss 2 (1,748,468) (1,385,556) Net interest 3 (217,113) (101,274) Amounts written off investments (212,277) (17,212) Loss on ordinary activities before taxation (2,177,858) (1,504,042) Tax on loss on ordinary activities 146,248 - Loss for the financial year (2,031,610) (1,504,042) Basic and diluted loss per share 4 (10.1p) (9.5p) Profit and loss account At 1 May 2001 (3,787,207) (2,283,165) Loss for the financial year (2,031,610) (1,504,042) At 30 April 2002 (5,818,817) (3,787,207) 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. Mondas PLC Preliminary Results for the year ended 30 April 2002 Consolidated Balance Sheet as at 30 April 2002 2002 2002 2001 2001 Note £ £ £ £ Fixed assets Intangible assets 3,754,874 5.058,993 Tangible assets 78,151 61,420 3,833,025 5,120,413 Current assets Stocks 236 417 Debtors 849,739 684,755 Investments - 212,277 Cash at bank and in hand 1,420,752 1,951,087 2,270,727 2,848,536 Creditors: Amounts falling due within one year (1,763,305) (1,623,410) Net current assets 507,422 1,225,126 Total assets less current liabilities 4,340,447 6,345,539 Creditors: amounts due falling after more than 1 year Convertible 8% Unsecured Loan Stock 2005 (2,908,685) (2,883,201) Net assets 1,431,762 3,462,338 Capital and Reserves Called up share capital 2,009,501 2,006,056 Share Premium account 5,241,078 5,243,489 Profit and loss account (5,818,817) (3,787,207) Equity shareholders' funds 5 1,431,762 3,462,338 Mondas PLC Preliminary Results for the year ended 30 April 2002 Consolidated Cash Flow Statement for the year ended 30 April 2002 Reconciliation of operating loss to net cash outflow from operating activities. 2002 2001 £ £ Operating loss (1,748,468) (1,385,556) Depreciation 27,682 46,542 Profit on sale of fixed assets (4,047) - Amortisation 1,304,119 975,172 Decrease in stocks 181 3,795 (Increase) in debtors (18,736) (255,074) Increase/(decrease) in creditors 153,688 (301,121) Net cash outflow from operating activities (285,581) (916,242 Cash Flow Statement 2002 2001 £ £ Net cash outflow from operating activities (285,581) (916,242) Returns on investments and servicing of finance (205,422) (127,149) Taxation - (138,679) Capital expenditure (40,366) 16,971 Acquisitions and disposals - (2,745,490) Cash outflow before use of liquid resources and financing (531,369) (3,910,589) Management of liquid resources 115,753 (965,753) Financing Issue of ordinary capital including premium net of costs 1,034 2,906,321 Issue of Convertible Unsecured Loan Stock ('CULS') - 3,000,000 Cash inflow from financing 1,034 5,906,321 Increase/(decrease) in cash (414,582) 1,029,979 Mondas PLC Preliminary Results for the year ended 30 April 2002 Notes 1. 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: 1. 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 under the percentage of completion method. 2. 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 invoiced on a periodic basis are recognised over the term of the agreement. 2. Consulting and Professional Services Turnover from the provision of consultancy and professional services is recognised as the work is performed. 3. Support Income is recognised over the life of the agreement. Mondas PLC Preliminary Results for the year ended 30 April 2002 2. Operating Loss Operating loss is stated after charging: 2002 2001 £ £ Operating lease rentals in respect of buildings 117,748 75,764 Operating lease rentals in respect of equipment 53,164 25,944 Research and Development Expenditure 363,950 202,176 Restructuring Charge 180,000 - Amortisation of goodwill 1,304,119 975,172 Depreciation 27,682 46,542 Auditors' fees: Audit 20,500 20,000 Other fees 7,000 - 3. Net interest 2002 2001 £ £ Bank interest receivable 48,371 56,051 Amortisation of Convertible loan stock costs (25,484) (11,265) Interest payable on other loans (240,000) (146,060) (217,113) (101,274) 4. Tax on loss on ordinary activities 2002 2001 £ £ UK Corporation Tax Current tax for the current year - - Adjustments in respect of Prior Years (146,248) - Tax on loss on ordinary activities (146,248) - Mondas PLC Preliminary Results for the year ended 30 April 2002 5. Loss per share Basic loss per share is based on a weighted average number of shares outstanding of 20,086,398 (2001: 15,830,253) and loss after taxation of £2,034,427 (2001: 1,504,042). The CULS and share options were non-dilutive for both years. 6. Reconciliation of movements in shareholders' funds 2002 2001 £ £ Loss for the financial year (2,031,610) (1,504,042) Issue of ordinary shares at par 3,445 744,871 Premium on new share issued (2,411) 2,712,641 (net of expenses and option scheme) Net addition/(reduction) to shareholders' funds (2,030,576) 1,953,470 Opening shareholders' funds 3,462,338 1,508,868 Closing shareholders' funds 1,431,762 3,462,338 7. Sundry Information This preliminary statement, which has been agreed with the auditors, was approved by the Board on 18 June 2002. It is not the Company's statutory accounts. Copies of the 2002 Annual Report and Accounts which will be posted to shareholders shortly or may be obtained from John East & Partners, Crystal Gate, 28-30 Worship Street, London EC2A 2AH. The statutory accounts for the 2 years ended 30 April 2001 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 2001 have been delivered to the Registrar of Companies but the 30 April 2002 accounts have not yet been approved, audited or filed. This information is provided by RNS The company news service from the London Stock Exchange

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