Letter to shareholders

Mondas PLC
25 October 2004



                     MONDAS PLC ('Mondas' or 'the Company')

                             Letter to shareholders



The following is the text of a letter from the chairman of Mondas, which is
being sent to the shareholders of the Company today.





Dear Shareholder,



Mondas PLC Annual General Meeting - Letter from Tim Simon



You will by now have received a letter from Tim Simon, the Company's former
chairman and chief executive, dated the 21st October 2004, which contains
resolutions to appoint himself and Michael Jones to the board, if Jarlath McGee
and Bernard Fairman are not re-appointed at the forthcoming annual general
meeting.  It is a sad letter and one which has followed a sad set of
circumstances.



Mr Simon founded Mondas in 1991 and, until he was removed from the board in
August this year, had been its chairman and chief executive for a period of
thirteen years. When the roles of chairman and chief executive are combined in
one individual, that individual must take total responsibility for the
performance of the company which he manages and in Mondas' entire history,
despite the best of intentions, the Company never achieved break even in any
year, never mind a profit.



Mondas was listed on the Alternative Investment Market ('AIM') in October 1996,
when £1 million was raised in a placing at 75p per share. The first day closing
price was 90.5p. Much was promised, but the results tell a different story.



I should like to remind shareholders of the Company's performance during its
eight years on AIM, under Mr Simon's leadership.



Results History


 Year to                    Loss         Goodwill     Loss  before  Av. no. of    Year-end    Market cap.
 30 Apr      Turnover    before tax    amortisation   amortisation   employees   share price  (ords.)  £m.
  1997         56,609     (421,192)          81,280      (339,912)      9
  1998        297,169     (482,322)         108,375      (373,947)     11          77.5          4.7
  1999        955,301     (520,770)         289,687      (231,083)     12          68.5          8.6
  2000      1,358,811     (857,573)         503,797      (353,776)     23          86.5          10.9
  2001      2,702,141   (1,504,042)         975,172      (528,870)     33          32.5          6.5
  2002      3,741,673   (2,177,858)       1,304,119      (873,739)     52          25.0          5.0
  2003      3,713,353   (2,224,645)       1,391,392      (833,253)     55          23.5          4.9
  2004      3,974,732   (1,779,554)         945,396      (834,158)     55          26.0          6.8
 TOTALS    16,799,789   (9,967,956)       5,599,218    (4,368,738)



Despite endless promises of better times ahead, year after year losses have
mounted, to a total of almost £10 million in less than eight years. Goodwill
amortisation cannot be excluded as it includes some very real losses, such as
the cost of the Reality Communications acquisition in November 1998, which
subsequently proved disastrous and cost Mondas almost £2 million.



In a trading update issued on 20 April 2004, just 10 days before the year end,
the Company announced that, as a result of delays in sales and contractual
negotiations, results for the year to 30 April 2004 would fall significantly
short of expectations. After eight years of promises, for many shareholders this
was the final straw.



The Company's share price responded by falling sharply. Not only was this
distressing for shareholders, but it also created a potential problem with
regard to the Company's £3 million of convertible unsecured loan stock.
Conversion is on the basis of two ordinary shares for every £1 of loan stock,
which is equivalent to a share price of 50p, but, if not converted, the loan
stock is redeemable on 31 October 2005. Unless the share price recovers before
then, the Company's options will be severely limited.



Urgent action had to be taken, and, in my then role as senior non-executive
director, and supported by Bernard Fairman, my fellow non-executive director, I
began an investigation into the causes of our continuing poor performance. A
company's success depends on building profitable, long-term relationships with
its customers. This is especially true of Mondas' banking and securities market,
where we are dealing with major international investment banks. It became clear
to me that we had failed to develop successful relationships, that this had
directly affected our ability to win new business, and that responsibility for
this failure rested with the chairman and chief executive, Mr Simon.



We announced, on 5 August 2004, that Mr Simon had been removed as chairman,
chief executive and as a director of the Company, and additionally that he had
been given one year's notice under his employment contract. This announcement
was made after negotiations had failed to produce a compromise solution.
Nevertheless, I continued to negotiate with Mr Simon and his advisors in an
attempt to avoid the situation we now have. After giving the initial impression
that he did want to reach a fair and reasonable settlement, Mr Simon's demands
became outrageous and highly detrimental to other shareholders. Settlement
therefore became impossible.



Jarlath McGee was recruited by the company in December 2000 to the position of
sales director of the operating subsidiary, Mondas Information Technology
Limited ('MITL'), not August 2001 as Mr Simon states in his letter. That was the
date of his subsequent appointment as chief operating officer of MITL, a
position which reflected his wide responsibilities and his impressive leadership
skills. Mr McGee has played a major part in moving our flagship Corporate
Actions product ('CAPS') into the investment banking market, but he had little
control over contractual matters, which Mr Simon insisted on retaining.



Your directors note that Mr Simon is critical of Mr McGee. It is worth bearing
in mind, however, that Mr McGee reported to Mr Simon for nearly four years. It
is noteworthy that Mr Simon has only chosen to object to Mr McGee now, when he
seeks to regain his old job, even though he had ample opportunity to remove him.
Without Mr McGee, Mondas would not have successfully refocused the CAPS product
into the investment banking market. Where would the Company be now had Mr McGee
not secured GNI, CSFB and HSBC as important clients? Is Mr Simon really serious
when he blames Mr McGee for the Company's poor performance?



In October 2000, a successful acquisition was made. DSR Holdings Limited (now
renamed the Resource division), which was acquired for a consideration of £4.53
million, has provided us with a valuable contribution over the last four years.
Its education software has been highly successful and offers us considerable
growth prospects. Yet credit for this acquisition should not go to Mr Simon, but
to our nominated adviser, who identified the opportunity and introduced it to
Mondas.



Mr Simon claims to have worked for some years to resolve divisions in the board,
only to have been consistently overruled. I have to tell shareholders that it
was Mr Simon who created these divisions, by taking a different view to the rest
of your board. The most serious of these divisions concerned the Company's
workflow software toolkit, Radica, which the Company was originally set up to
develop. In 2001 it became clear to your board, apart from Mr Simon, that it was
not sufficiently robust to be used as a development platform in the Company's
core banking and securities market. In 2002, after much heated debate at board
level, the decision was taken to use industry-standard software tools, with the
Radica name being retained for marketing purposes. The subsequent success of
CAPS has vindicated this decision, yet even now, Mr Simon still believes the
Radica platform should be used for application development in our financial
markets.



Mr Simon refers to Michael Jones and Professor Brian Stock-Quinn as potential
non-executive directors.  Your directors have no dispute with either of these
gentlemen, but we are moved to wonder why, if Mr Simon now believes that they
can provide such value to your company, that he did not propose them earlier,
when he had every opportunity to do so.  Mr Simon also claims that he has no
business relationship with Michael Jones.  In claiming this, Mr Simon is being
disingenuous.  It is certainly true to say that Mr Jones has no current business
relationship with Mr Simon, but Mr Jones was chief executive of Capel-Cure
Myers, when that firm was a customer of Quotient PLC, the company which Mr Simon
founded and managed before establishing Mondas, and therefore had a significant
business relationship with Mr Simon in the past.



Mr Simon criticises Mr McGee for not purchasing any Mondas shares. Though Mr
McGee has share options over 300,000 of the Company's shares, shortly after his
appointment as chief executive, he told me that he intended to make a share
purchase. This purchase would have taken place a few weeks ago, but could not
proceed until we announced the recent Brewin Dolphin contract. I can inform
shareholders that Mr McGee has today notified the Company that he has purchased
175,000 ordinary shares at a price of 20p per share.  Mr Selby has also
purchased a further 25,000 shares today, at 20p per share, bringing his holding
to 81,553 shares.



I have also purchased a further 150,000 shares at 20p per share today, bringing
my holding to  1,369,757 shares, representing 5.24% of the issued share capital.
A further 2,381,769 are held by friends of mine. The total number of shares held
by me, by my friends, by Mr McGee, by Mr Selby and by Mr Fairman (on behalf of
Foresight Technology Trust) is now 4,497,934 shares, representing 17.21% of the
Company's issued share capital.



Mr Simon seeks to give the impression that there is substantial shareholder
support for his reinstatement, in that he and his supporters hold 23.12% of the
Company's ordinary share capital. It should be noted that this includes Mr
Simon's interests which, with direct, indirect and family interests, amount to
18.55%, leaving just 4.57% of other shareholder support.



Your directors published their strategy review on Thursday 21 October 2004 and
are committed to delivering value for Mondas shareholders. Mr Simon showed
little interest in seeking out growth opportunities for the Company. I do not
believe the majority of shareholders want a return to his regime of losses and
stagnation.



Shareholders should also know that Mr Selby was on the point of leaving the
Company in July, but, when Mr Simon was removed from office, Mr Selby readily
agreed to stay. If Mr McGee is now removed and Mr Simon returns, Mr Selby has
informed me that he will also leave the Company, as would I, and these changes
would cause enormous disruption, which I believe would damage the Company. I
also strongly believe that our major customers would look seriously at their
future relationship with Mondas.



I referred above to the need to refinance, or to convert into ordinary shares,
the Company's convertible unsecured loan stock. Bernard Fairman, the Company's
other non-executive director, is fund manager of Foresight VCT, the holder of
£900,000 of the loan stock. Mr Fairman has indicated that Foresight is prepared
to extend the redemption date for a further five years, on terms to be agreed,
but that it will not do this if Mr Simon returns to the Company.



In my view, the Company is best served by allowing the new management time to
deliver the value to shareholders which I believe it is capable of doing.  If
the new management fails in this endeavour, shareholders can always exercise
their prerogative to enforce change.



I believe that your board has the necessary range of skills to deliver the
results which we all want; I believe that the Company's interests are best
served by allowing them a period of time in which to demonstrate this; I hope
that I can count on your support at the AGM or by proxy. The completion of a
proxy card will not prevent you from attending the annual general meeting and
voting in person, if you so wish.



An overwhelming vote against Mr Simon will put an end to this nonsense and let
us get on with running the business for you.





Yours faithfully,



Colin Peters
Chairman

                                                              25 October 2004


Enquiries:

Mondas PLC                                                  Tel: [phone]
Colin Peters, Chairman

College Hill                                                Tel: [phone]
Matthew Smallwood/Clare Warren






                      This information is provided by RNS
            The company news service from the London Stock Exchange