Key points

• Successful integration of Eclipse Learner Systems in the Resource Division
• Proposed acquisition of Blue Curve to complement product set in banking & securities
• Radica CAPS v4 launched and first international deployment of CAPS installed
• Strengthened management team with appointment of Peter Waller as Non-Executive Chairman and Mark Robertson as MD of the Banking and Securities Division
• Proposed placing of 2,608,696 new ordinary shares at 11.5p per ordinary share, to raise approximately £300,000 before expenses

Results and Current Trading

• Operating loss before goodwill amortisation and restructuring charges of £455,031m (2004: loss £367,248)
• Pre-Tax loss of £1.16m (2004: £1.45m
• Cash balances of £0.66m (2004: £1.03m)
• Deferred Income of £1.35m (2004: £0.87m)

Commenting on the results, Jarlath McGee, Chief Executive, said: "We have made significant progress in building a broader suite of products in both our operating divisions. Through this diversity of product we have the opportunity to be able to cross market within the product type and build critical mass of the group."

Chairman's Statement

Introduction

I am pleased to present the interim results for the six month period ended 31 October 2005. During the period under review, Mondas has made significant progress in building critical mass in both operating divisions. In October, we announced the acquisition of Eclipse Learner Systems Limited (Eclipse), a supplier of software systems to colleges of further education, which has been successfully integrated into our Resource division. This was followed in November by the acquisition, subject to shareholder approval at the forthcoming EGM, of Blue Curve Limited, (Blue Curve) a supplier of software solutions to financial institutions, which will join our Banking and Securities division.

Trading conditions in the financial services sector have not improved as quickly as had been anticipated, especially the market for new corporate actions processing systems. The weakness in this particular sector, though expected to be temporary, illustrates the need to widen our portfolio of product offerings to our enlarged customer base and the pipeline of new business. Our recent acquisitions help to achieve this, bringing established software products to both divisions, and creating opportunities for cross selling to existing customers.

Results

Mondas recorded an operating loss, before goodwill amortisation, restructuring and depreciation charges, for the six months ended 31 October 2005, of £455,031 (2004: loss £367,248) on turnover of £1.54m (2004: £1.82m). Revenues fell primarily due to slippage against new business and existing contracts in the Banking and Securities division. This fall was partially offset by growth within the Resource division arising from an increased level of new name sales. Operating costs were reduced by 10 per cent. to £2.03m (2004: £2.25m), due to lower central overheads following last year's major restructuring. The restructuring charge of £67,856 (2004: £426,938) arose from realignment of product development resources following the release of version 4 of our corporate actions processing system in the Banking and Securities division and from the integration of Eclipse.

The amortisation charge of £472,000 (2004: £472,000) represents the final element of goodwill arising from the October 2000 acquisition of DSR Resource. Losses before taxation reduced to £1.03m (2004: £1.33m). At 31 October 2005, cash balances amounted to £660,386 (2004: £1.048m).

Accruals and deferred income increased to £1.72m (2004: £1.34m). Of this £1.35m(2004: £0.87m) was deferred income, with a large part of the increase in deferred income arising from Eclipse annual customer support contracts which were renewed in October. Accruals also include the final cash consideration payment to the Eclipse vendors, of £100,000, which was paid on 15 December 2005.

With effect from 1 January 2006, the Company will change its year end to 31 December, to better align it with its customers' year ends, and to reduce the costs of integration with Blue Curve. We will therefore report in due course on the 8 month period ending 31 December 2005 and annually thereafter.

Resource Division

I am pleased to report that this division's revenues have grown compared to the same period last year. We added two further new clients (North Trafford College and Newham Sixth Form College), and our relationship with Pearson Education continues to generate new sales into schools. We have also seen a steady growth in revenue from our existing client base, particularly for our web-based applications.

The acquisition of Eclipse in October 2005 has further enhanced our position as a leading supplier within the education sector, with the addition of 26 colleges, including 9 existing common customers. We now have an educational user base of approximately 140 establishments, including 120 colleges. Eclipse has been successfully integrated into our Resource division, and opportunities for cross selling have been identified.

Banking and Securities

During the period under review, Mondas expanded its product offerings to clients in the banking and securities sector. Our New Issues and Placing System (NIPS), which was launched towards the end of our last financial year, is attracting interest from organisations involved in the issuing of securities. We believe that this early-stage market could produce significant returns to Mondas over the next few years.

Mondas continues to be a leading provider of corporate actions processing systems (CAPS) to the banking and securities sector. New name sales for corporate actions vendors have been elusive, but we have continued to invest in our product, most notably with the release of version 4 of Radica CAPS. Our existing customers continue to purchase further products, including add-on modules and upgrades, and we have recently announced our first international deployment of CAPS, with the installation of a system in Zurich.

We continue to believe in the long-term market opportunity for CAPS, especially with the ever-increasing need for banks and other financial institutions to guard against operational risk. However, with long sales cycles affecting our results, and to reduce our dependence on our corporate actions product, we are building a portfolio of software products for the wider banking and securities market. Although some of these products will be developed internally, such as NIPS, we intend to acquire companies with complementary financial sector products.

The acquisition of Blue Curve, announced on 24 November 2005, and subject to approval at an EGM to be held on or before 30 January 2006 is an important step in this "buy and build" strategy. Blue Curve's customers include leading financial firms in the UK and Europe. The Blue Curve solution is complementary to Radica CAPS and NIPS and, since there is no overlap in the respective customer bases, we believe that opportunities exist for cross-selling both solutions across an enlarged international customer and prospect bases, where Blue Curve's existing sales agreements in Holland and the United States should provide a channel to markets previously unaddressed by Mondas.

Placing

This morning your company announced the placing of 2,608,696 new ordinary shares at 11.5 pence each raising approximately £250,000 net of expenses for the company. The proceeds of this placing will be used for working capital and for the integration of our recent acquisitions. The shares were placed by our broker, Teather & Greenwood Limited, with institutional shareholders.


Dividend

The Directors are not recommending the payment of a dividend in respect of the period under review (2004: nil).

Management Changes

I am pleased to announce that Mr Peter Waller (57), the Chairman of Blue Curve, will be joining the board of Mondas as non-executive Chairman following the EGM. Peter brings to Mondas a wealth of experience at a senior executive level, from a 30 year career in the software and services sector. He is currently non-executive chairman of two unlisted UK software companies and a non-executive director of LSE-listed Biotrace plc. Prior to this he held a succession of other non-executive positions, most recently at AIM-listed Xpertise plc. His executive career in the IT sector includes Director of Marketing Operations for IBM Europe, Managing Director of Hitachi Data Systems UK, and Chief Operating Officer of Hitachi Data Systems Europe. Peter is a graduate of Cambridge University and is member of the Worshipful Company of Information Technologists and Freeman of the City of London.

Mark Robertson (38), the Chief Executive and founder of Blue Curve, will join the board of Mondas IT (the group's trading subsidiary) and will become managing director of the enlarged Banking and Securities Division. Mark founded Blue Curve in 1995, following six years in financial IT related roles at Swiss Bank Corporation, Price Waterhouse Management Consultants and First Interstate Bank. Mark holds a first class honours degree in Electrical & Electronic Engineering from Heriot-Watt University.

I will be standing down from the chairmanship of Mondas following the EGM, but will remain on the board as a non-executive director. I welcome Peter and Mark to the management team and look forward to working with them on the next phase of building a successful software company.

Acquisitions

Whilst significant progress has already been made in building critical mass in both operating divisions, we believe this strategy has much further to go. Mondas is now an acquisitive software solutions provider focussed on the financial services and education markets.

We will continue to seek acquisitions:

• where there is a strategic fit with either our Banking and Securities division or our Resource division
• that are earnings enhancing, readily identifiable cost savings, and recurring revenues
• that provide intellectual property which will complement our existing product offerings
• which expand our customer base, and provide access to further geographical markets and
• where the consideration is predominantly share-based, with a significant earn-out element

We believe that this "buy and build" strategy, where organic growth is supplemented by acquisitions, will create a more stable earnings profile, leading to greater shareholder value.

Current Trading and Outlook

The dynamics of Mondas' business mean that its ability to meet market expectations will depend largely on its ability to win significant licence deals from new and existing customers within the Banking and Securities division. Mondas has historically had a significantly better second half compared to the first half. As a result of the change in the Company's year-end, we now anticipate that this expected improvement will fall into the new financial year which will commence on 1 January 2006.

With the acquisition of both Blue Curve and Eclipse, Mondas is at last achieving the critical mass necessary to enable it to produce consistently better results and I look forward to a positive outcome for 2006.

Colin Peters
Chairman
22 December 2005