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 £640,000 to
the Company, with CSFB having the option of confirming an additional £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 £1,452,981 (2001:
£1,729,088). The resulting loss before goodwill, amortisation and depreciation
was £754,503 (2001: loss £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 £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 £1.36m (2002: £0.19m) and the
deferred revenues were £689,394 (2002: £525,644). Debtors represented the last
25 days of sales (2001: 44 days).
Operating costs (excluding amortisation and interest payments) were £2,207,484
(2001: £2,049,831). The Directors have managed costs aggressively and given
market uncertainty, will continue to do so. These costs included an investment
of £0.4m (2001: £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 £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
£ £ £
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)
£ £ £
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)
£ £ £
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
£ £ £
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
£ £ £
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
£ £ £
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 £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.
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