RNS Number:7377M
Mondas PLC
25 June 2003
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 2003.
ENQUIRIES:
Mondas PLC Tel: 020 7392 1302
Tim Simon, Chairman
College Hill Tel: 020 7457 2020
Matthew Smallwood
Mondas PLC
("the Group", "the Company" or "Mondas")
Preliminary Results for the year ended 30 April 2003
Chairman's Statement
INTRODUCTION
I am pleased to report on the consolidated results of Mondas for the year ended
30 April 2003. During the second half year to 30 April 2003 Mondas PLC ("the
Group", "the Company" or "Mondas") achieved its best operating results to date,
posting record revenues and operating profits with substantial cash generation.
Investment in new products throughout the year has now been translated into
sales in both Financial and Education Markets. Complex large-scale systems have
been successfully deployed in both the Financial and Commercial Sectors. Our
client list has continued to expand both in quality and quantity, with major
elements of the Credit Suisse group adopting our flagship financial solution,
Radica CAPS (Corporate Actions Processing System). All this was accomplished
despite the ongoing bear market and general economic slowdown and has reinforced
our position as a market leader in accounting solutions for the Further
Education market, and in Corporate Actions ("CA") processing in the Banking &
Securities Sector.
RESULTS
Turnover for the twelve months to 30 April 2003 was #3.713 million (2002: #3.742
million). The final six months saw revenues grow by 12% to #2.260 million (2002:
#2.012 million). This partially offset the turmoil in the first six months of
the year that adversely affected sales, particularly in the Financial sector.
Turnover was split approximately equally across the business units. Material
licence and service income from the major new contracts from financial
institutions and final deliveries to Blue Arrow Limited ("Blue Arrow") and GNI
Limited ("GNI"), contributed to the increased revenue in the second half.
Our operating loss before goodwill amortisation and depreciation was #679,000
(2002: #416,000). This was after a restructuring charge of #154,000 (2002:
#180,000) reflecting reductions made to address the continuously challenging
economic environment. After allowing for this charge, the second half saw an
operating profit before interest, tax, depreciation and amortisation of #229,000
(2002: #84,000)
Despite the trading environment Mondas continued to invest in new products and
during the year increased its Research & Development investment to #616,000
(2002: #363,000). Major projects included the development of Resource Learning
Management System ("LMS") and the new version of Radica CAPS.
Cash balances as at 30 April 2003 were #977,000 (2002: #1.420 million). During
the second half Mondas generated significant cash from operations in addition to
the #350,000 net proceeds from the December 2002 placing. The Company placed, at
23.5p per share, 1,004,749 new ordinary shares and 573,722 existing ordinary
shares (resulting from the Reality warranty claim settlement, raising #134,000.
Such shares would otherwise have been cancelled and had been fully provided for
at 30 April 2002). Both new and existing institutional investors, as well as
members of the Board and staff, participated in this placing.
Trade debtors represented the last 19 days of sales based on billings in April
2003 (2002: 23).
Deferred revenues increased to #856,000 (2002: # 796,000), and the order book
stood at #900,000 (2002: #1.700 million). The change in the value of the order
book primarily arises from significant deliveries against the large order from
Brewin Dolphin Securities Limited ("Brewin Dolphin") received in April 2002.
OPERATIONS REVIEW
The Company now comprises two discrete business units: one addressing the
Banking and Securities Sector ("Finance Business Unit") and one focused on the
Public and Commercial Sectors with Resource accounting and financial solutions
("Resource Business Unit"). The Company has been structured to withstand the
uncertainties in the market and will continue to match resources with market
demands.
FINANCE BUSINESS UNIT REVIEW
We were delighted to announce in December 2002, that Mondas has signed an
agreement with Credit Suisse First Boston (Europe) Limited ("CSFB"), for the
largest sale to date of 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 #640k to the Company, with CSFB having the option of confirming an
additional #450,000 of professional services work.
Following on from this, in April 2003, contracts were signed with Credit Suisse
Asset Management (UK) Holding Limited ("CSAM") worth a minimum of #112,000 for
Radica CAPS. Both these sales were won against strong competition from both
European and U.S. vendors.
In the period, the Corporate Actions team has been extended to bring additional
skills and more resources into the unit. The latest version of Radica CAPS was
implemented at GNI, part of the Man Group plc, where they stated that "the
Mondas team had managed the project extremely professionally and proved its
ability to deliver a quality, functionally rich CA solution". We believe this
has helped to demonstrate to the market that we are a credible vendor for
increasingly larger Corporate Actions projects.
In addition, client demands have led to enhancements addressing the specific
needs of the global investment banking arena which, the Directors believe, will
expand the market for Radica CAPS to many different institutions across the
Banking & Securities Sector.
Mondas has continued to develop new solutions and deliver enhancements for its
existing clients such as Man Securities, Close Wealth Management and leading
private client broker, Brewin Dolphin. Mondas continues to look for new areas to
deploy its technology and has now developed a complex, workflow-based control
system to monitor and reconcile disparate applications and replicate data. The
first deployment of this new system will be in the current reporting period and
may trigger new opportunities in due course.
RESOURCE BUSINESS UNIT REVIEW
The Mondas strategy to take its accounting and finance solution, Resource 32000,
into larger commercial organisations was validated by the successful
implementation of the Credit Management system for Blue Arrow, one of the UK's
largest recruitment businesses. This was the largest delivery that the Resource
Business Unit has made with over 100 users of the system in a contract worth
over #350,000. The Directors believe that similar contracts, despite their
longer sales cycles, represent a significant opportunity. Mondas is therefore
further investing in its ability to win and deliver these solutions.
Mondas has worked with its Education sector customers to broaden its product
offering. This has produced an integrated suite that adds learning management
and continuous professional development applications to our existing accounting,
human resources and payroll solutions. Your Board believes that there are few
companies capable of delivering a truly integrated solution such as this and the
investment during the year is beginning to bear fruit. In June 2003, we achieved
our first Resource LMS sale and, indeed, first integrated solution sale
combining Resource LMS with Resource 32000 for Richmond Adult Community College
in a pioneering agreement worth approximately #100,000.
Launched in November 2002, Resource LMS manages the people and processes within
an education environment including enrolments, examination management and, vital
to colleges, the production of the government reports required to secure their
funding. The Directors believe that many more colleges will be seeking to
replace their systems in this area over the next few years.
MANAGEMENT CHANGES
In January 2003 Tom McClelland resigned from the Board of Mondas Information
Technology Limited, the Company's only wholly-owned trading company, and
announced his intention to pursue other ventures, leaving the Company in July
2003. Mondas would like to thank him for his contribution to the Company and
wish him all the best for the future.
DIVIDEND
The Directors are not recommending the payment of a dividend in respect of the
financial year under review (2002: nil).
FUTURE PROSPECTS
The strategy within the Education Sector has been to extend the range of
products offered to both new and existing customers. The new Resource LMS
product is already generating significant interest. A consortium of Sixth Form
Colleges have been evaluating the product recently and a number of
non-legally-binding Letters of Intent have been received which, if all the
consortium convert to firm contracts, will represent an aggregate value of
approaching #700,000 over five years.
A recent report from US research company, Celent Communications, claims that "s
pending on Corporate Actions projects is projected to total almost US$830
million between 2003-2007 as the securities and investment industry looks to
automate one of the last remaining manual areas within the securities processing
chain." We believe that Mondas is in an enviable position in one of the few
markets where global institutions are still spending. Today, the Company is in
exclusive contractual negotiations with one of the world's largest banks with
retail and wholesale operations, which wishes to automate its CA processing with
Radica CAPS.
Your Board believes that the opportunities facing the Company today will enable
Mondas to expand both organically and through acquisition. In the Banking and
Securities Sector, following approaches from US organisations, members of the
management team visited sales prospects, clients and alliance partners to
discuss US openings. The Company is actively seeking acquisition opportunities
to help both Business Units extend their reach.
Having earned an operating profit in the second half of the period under review,
the Directors expect this trend to continue into the current year. I am hopeful
that we will be able to announce much improved results when I report to you next
year.
The Board would like to thank all at Mondas for creating, through their hard
work and commitment, the opportunity that we have now.
D T A Simon
Chairman
25 June 2003
Consolidated Profit and Loss Account for the year ended 30 April 2003
2003 2002
Note # #
Turnover 1 3,713,353 3,741,673
Cost of sales (170,628) (226,194)
--------- ----------
Gross Profit 3,542,725 3,515,479
Administrative expenses excluding (5,501,682) (5,083,947)
restructuring charge
Restructuring Charge (154,149) (180,000)
--------- ----------
(2,113,106) (1,748,468)
--------- ----------
Analysis of Group operating losses
Operating loss before goodwill
Amortisation and depreciation (679,973) (416,667)
Amortisation of goodwill (1,391,392) (1,304,119)
Depreciation of tangible fixed assets (41,741) (27,682)
--------- ----------
Operating loss 2 (2,113,106) (1,748,468)
Net interest 3 (246,364) (217,113)
Other operating income 4 134,825 (212,277)
--------- ----------
Loss on ordinary activities before (2,224,645) (2,177,858)
Taxation
Tax on loss on ordinary activities 5 162,496 146,248
--------- ----------
Loss for the financial year (2,062,149) (2,031,610)
========= ==========
Basic and diluted loss per share 6 (10.1p) (10.1p)
========= ==========
Profit and loss account
At 1 May 2002 (5,818,817) (3,787,207)
Loss for the financial year (2,062,149) (2,031,610)
--------- ----------
At 30 April 2003 (7,880,966) (5,818,817)
========= ==========
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 2003
Note 2003 2003 2002 2002
# # # #
Fixed assets
Intangible assets 2,363,483 3,754,874
Tangible assets 193,845 78,151
-------- --------
2,557,328 3,833,025
Current assets
Stocks - 236
Debtors 749,272 849,739
Cash at bank and in 977,943 1,420,752
hand -------- --------
1,727,215 2,270,727
-------- --------
Creditors: Amounts
falling due within
one year
(1,769,407) (1,763,305)
-------- --------
Net current (42,192) 507,422
(liabilities)/ -------- --------
assets
Total assets less 2,515,136 4,340,447
current
liabilities
Creditors: amounts
falling due after
more than one year
Convertible 8%
Unsecured Loan Stock
2005
(2,936,485) (2,908,685)
-------- --------
Net (liabilities)/ (421,349) 1,431,762
assets ======== ========
Capital and
Reserves
Called up share 2,109,976 2,009,501
capital
Share Premium 5,349,641 5,241,078
account
Profit and loss (7,880,966) (5,818,817)
account -------- --------
Equity shareholders' 7 (421,349) 1,431,762
(deficit)/funds ======== ========
Consolidated Cash Flow Statement for the year ended 30 April 2003
2003 2002
# #
Net cash outflow from operating activities (438,343) (285,581)
Returns on investments and servicing of finance (218,564) (205,422)
Taxation 162,496 -
Capital expenditure (157,434) (40,366)
--------- ---------
Cash outflow before use of liquid resources and (651,845) (531,369)
financing --------- ---------
Management of liquid resources 556,212 115,753
--------- ---------
Financing
Issue of ordinary capital including premium net of 209,036 1,034
costs --------- ---------
Cash inflow from financing 209,036 1,034
--------- ---------
Increase/(decrease) in cash 113,403 (414,582)
========= =========
Reconciliation of operating loss to net cash outflow from operating activities.
2003 2002
# #
Operating loss (2,113,106) (1,748,468)
Depreciation 41,741 27,682
Profit on sale of fixed assets - (4,047)
Amortisation 1,170,433 1,304,119
Impairment of goodwill 220,959 -
Other income 134,825 -
Decrease in stocks 236 181
Increase/(Decrease) in debtors 100,467 (18,736)
Increase in creditors 6,102 153,688
--------- ---------
Net Cash outflow from operating activities (438,343) (285,581)
========= =========
Notes to the preliminary results
1. Turnover
Mondas adopted SOP97-2 "Software Revenue Recognition" issued by the American
Institute of Certified Public Accountants. Key aspects are as follows:
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 an arrangement to deliver software or a software system, either alone or
together with other products or services, requires significant production,
modification, or customization, the revenue for both services and software is
recognised under the percentage of completion method.
2. 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 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.
If services are incidental to the functionality and/or the payment terms are
linked to simple installations, revenue from the grant of perpetual or fixed
term licences to use Mondas's software is recognised when the above conditions
are met and services revenue is recognised separately as the services
are provided.
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.
2. Operating Loss
2003 2002
# #
Operating loss is stated after charging:
Operating lease rentals in respect of buildings 87,198 117,748
Operating lease rentals in respect of equipment 57,191 53,164
Directors' remuneration 242,760 284,426
Research and Development Expenditure 615,617 363,950
Restructuring Charge 154,149 180,000
Contributions to Director's pension fund 16,500 16,500
Amortisation of goodwill 1,170,433 1,304,119
Impairment of goodwill against Reality Communications 220,959 -
Scandinavia AS
Depreciation 41,741 27,682
Auditors' fees:
Audit 19,425 20,500
Other fees 15,460 7,000
--------- ---------
3. Net interest
2003 2002
# #
Bank interest receivable 22,681 48,371
Bank interest payable (1,245) -
Amortisation of Convertible loan stock costs (27,800) (25,484)
Interest payable on other loans (240,000) (240,000)
--------- ---------
(246,364) (217,113)
========= =========
4. Other Income
2003 2002
# #
Amounts written off investments - (212,277)
Proceeds of placing in warranty claim shares 134,825 -
--------- ---------
134,825 (212,277)
========= =========
In December 2002 the Company placed 573,722 existing shares that had been
recovered from the vendors of Reality Communications Scandinavia AS at 23.5p per
share raising a total of #134,825. These were previously held by Mr D Bolton and
Ms F Walkinshaw, both of whom were partners in the Company's previous lawyers
Garretts. The Directors had previously intended to cancel these shares and had
fully provided for these at 30 April 2002.
5. Tax on loss on ordinary activities
2003 2002
# #
UK Corporation Tax
Current tax for the current year - -
Adjustments in respect of prior years (162,496) (146,248)
--------- ---------
Tax on loss on ordinary activities (162,496) (146,248)
========= =========
The 2003 value represents Research and Development tax credits received and 2002
represents an adjustment in respect of prior years relating to DSR Holdings
Limited.
6. Loss per share
Basic loss per share is based on a weighted average number of shares outstanding
of 20,348,801 (2002: 20,086,398) and loss after taxation of #2,062,149 (2002:
2,031,610). The CULS and share options were non-dilutive for both years.
7. Reconciliation of movements in shareholders' funds
2003 2002
# #
Loss for the financial year (2,062,149) (2,031,610)
Issue of ordinary shares at par 100,475 3,445
--------- ---------
Premium of new share issued
(net of expenses and option scheme) 108,563 (2,411)
--------- ---------
Net reduction to shareholders' funds (1,853,111) (2,030,576)
Opening shareholders' funds 1,431,762 3,462,338
--------- ---------
Closing shareholders' (deficit)/funds (421,349) 1,431,762
========= =========
8. Sundry Information
This preliminary statement, which has been agreed with the auditors, was
approved by the Board on 24 June 2003. It is not the Company's statutory
accounts. Copies of the 2003 Annual Report and Accounts will be posted to
shareholders shortly and may be obtained from John East & Partners Limited,
Crystal Gate, 28-30 Worship Street, London EC2A 2AH.
The statutory accounts for the year ended 30 April 2002 received an audit report
which was unqualified and did not contain a statement under s237 (2) or (3) of
the Companies Act 1985. The statutory accounts for the year to 30 April 2002
have been delivered to the Registrar of Companies but the 30 April 2003 accounts
have not yet been approved, audited or filed.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEAFULSDSEIM