Midas Capital Share Discussion Threads

[gac141] 01/11/2006 08:24

Magpie

We can all dream of 7 contracts a month but realistically. Mondas could be in a position of achieving at perhaps 1 per month. To expect more would be foolish.
These contracts could be to an array of customers. From the Williams de Broe type deal to the multi million pound deal from a client like HSBC, Credit Suisse or similar. There are some very big fish in the sea and Mondas has but rippled the surface. We have two global rollouts under way, as a business, but an opportunity to see many more.

I am hopeful that Mondas can quickly build up revenues to over 20 million and produce profits in excess of 2 million within 2 years. If CAPS gets going this will happen. I will add Blue Curve and Resource both look very exciting too and must not be under estimated. BC looks like it is a good cash generative business for Mondas and Resource has doubled its profit.

George

[mollymolly] 31/10/2006 21:14

Magpie,

I think it is likely your number is not unreasonable worldwide, but are we talking about banks or brokers. Of course there are not many big global banks and obviously these are the big prize for Mondas.

There are many smaller institutions and Brokers, and Mondas has the lead position with them. Mondas has just announced its first hosted system (Blue Curve) for Charles Stanley. I believe that there will be a similar service for CAPS. This will make it easier for smaller institutions to use the system.

So far Mondas has won only two big CAPS bank orders; Credit Suisse and HSBC. The recent results announcement was encouraging that Mondas has got one global rollout for CAPS and that includes the US. It remains to be seen how well Mondas can capitalise on this, but clearly we do have a system than can satisfy the global needs of one of the world's largest banks.

There are I think several factors that have slowed the CAPS market in general and Mondas' success in it. So what has been holding it back?

. Until this year the brakes had been firmly on spending
. Lack of proven software. Everyone is rightly wary of new software products
It makes sense not to be first.
. The evolution of the regulatory requirements.
. The impact of implementing CAPS on organisations.
. Mondas' management turmoil.

So, I think the time may well now be right for Mondas. They have shown that they can implement smallish systems quickly - Panmure took only three months. Mondas can also be reassuring about the robustness of its product, as it now has impressive reference sites. Management has proved itself and will, I'm sure, deliver the forecast for this year and next year's number looks reasonable.

So to your question. I'm sure that you can see that nowhere near 7/month is possible nor needed to get a fair chunk of the world market. Only a handful of the biggest banks would give a large share of the global CAPS market. George is right that 2/3 deals per year will produce a very profitable business. If big bank contracts were to be landing faster than this then I expect there would be a delay while Mondas geared up to meet the demand.

It would be encouraging to see another CAPS contract before Christmas, though I do not think that will be necessary to meet forecast. Any large deal landed now will likely put most of its revenue into 2007. Mondas has its two "global" deals this year (a Blue Curve and a CAPS) and I think that much of the revenue from these will fall into 2007.

I should also say that you should not only ask about CAPS. It is only about 1/3rd of the business. Blue Curve looks to be a very big winner.

Mondas really is in its best position EVER, but the share price still languishes!!!!!!!!! Probably the most important reason why the share price has not moved up is that shareholders are still sceptical. We have seen a few promising moments in Mondas' history but we are still waiting. The severe profit warning 10 days before the end of year 2004, is still in memory. Perhaps we will have to wait to hear the results before shareholders and potential investors will accept that Mondas is a profitable business with exciting prospects.

[magpie99] 31/10/2006 16:28

The point is George, is Molly's statement that it is obvious that automation will take place over the next 3 years correct ( actually 2 years and 8 months - hes said this before), not whether Mds is a good investment.

If this statement is true what are the sales figure Mds could achieve?


Answers please

[gac141] 31/10/2006 14:51

Magpie

You and I know Mondas does not need to land anything like that to become a very attractive investor stock. If they were to land 3 or 4 new deals each year you will be amazed on how much profit and recurring revenue could be generated.

Everyone has their own view on Mondas and we have all born the brunt of a poor share price. Let us see what comes over the next 2 months and into the results.

My long-lasting view is Mondas will still make the big time and I feel it has already started with the global roll out of CAPS to our very impressive major client. If they are confident of Mondas and the products other will surely follow.

George

[magpie99] 31/10/2006 12:19

Thanks for the post Molly,

If we are to accept as you state that it is obvious that automation should take place over the next 3 years, I would like to put some numbers behind this statement.

How many possible orders per month does this imply Mondas should be winning?

Say ( I dont know how many) if there are 500 banks/brokers/investment houses still left to automate globally, Mondas as lead provider gets half of these deals.

Then we should be winning approx 7 contracts per month.

I dont think we won any deals this month for CAPS

[rambutan2] 26/10/2006 00:03

anyone here the 100k buyer?

i'll own up to the 10k - buy when blood on the streets and all that...

just hope it doesn't turn out to be my blood!

[damanko] 25/10/2006 07:42

Update on the venture capital trust holding in Mondas: As a result of the Mondas takeover of Blue Curve (also a FTVC investee company), Foresight "C" (FTVC) now has 3,666,641 ordinary shares in Mondas. Representing 10.1% of equity/voting rights. Also retains £900,000 in convertible loan stock, the terms of which we know have been renegotiated, along with other CULS holders. No sign of any selling by FTVC, they appear to be in for the "long term", for good or bad. Seems like a small vote of confidence in Mondas to me.......

[rambutan2] 24/10/2006 23:47

much to agree with there molly.

odd how the offer ticked up a penny today when the only two trades were sells, likewise yesterday both trades were sells.

[mollymolly] 24/10/2006 20:42

Magpie,

You have not mentioned any problems at all that could conceivably cause the issue of more shares in order for Mondas "to buy its way out of trouble". The major problem that Mondas has is that its shares are poorly rated. The evidence is that all parts of the business are performing well. Trading profitably and therefore cash generative. There will not be a cash call. You are right about the £1m raised; add to that the £534k at the ½ year and cash generated in the second half to get my guesstimate of £2m. The other causes of share issue would be another acquisition and the payment of the earn out to Blue Curve in March 2007. Neither of these eventualities could be called "buying out ...of trouble"

The two acquisitions made so far have been very successful. As far as I am aware there is no likelihood of making further acquisitions at this sort of share price. I agree with you that "critical mass" is significant, but I am sure that the directors would take the view that any future deals will have to be at a much higher share price. Now that it is clear that the business is running well in its three market areas, it makes more sense to allow organic growth to prove itself before buying more companies.

You are right about the likely issue of shares to Blue Curve at the completion of the earn out. The T&G forecast assumes that Blue Curve would perform at the minimum level and so no additional payment would be made. My guess is that 50-70k is included in the T&G number for Blue Curve. If they are to make the full earn out, I think that there will be at least an additional profit of 500k coming from Blue Curve alone. At the half year we had a provision for additional payment, clearly some substantial earn out payment will be made (in cash or shares) THIS HAS BEEN A GOOD BUY.

Most of us bought Mondas shares because we got excited about the CAPS prospects. The CAPS market really is still there. Very very slow progress has been made over the years. Most institutions are still processing Corporate Actions manually and it is obvious that this area will be automated over the next few years. Mondas does have the world-leading product and several other companies are trying unsuccessfully (so far) to compete with Mondas. There is no short-term prospect of your 2 or three global rollouts and nor are any needed to make the 2006 and 2007 forecasts. If/when? Mondas does achieve 2/3 global rollouts (value say £8-10m) Mondas will be highly values indeed. I certainly agree that CAPS has been frustratingly slow, there has been a protracted and painful period of development. I believe that we can be confident that we now have a robust and mature product. Panmure and Finn were installed smoothly in 3 months, and we would not be getting the global rollout if there were still software glitches or deficiencies in the functionality. You ask will the performance of CAPS justify the investment? – We will have to see over the next year or two. Certainly, so far, it has cost more than it contributed. This year clearly we have turned into profit on the CAPS business. We do need more CAPS deals, we have been told that prospects are better than ever, but we all know how frustratingly slow it can be to land new business. Mondas has landed more CAPS business this year than in any other and the global CAPS rollout, especially including the US, is a very exciting development. Shareholders can be excused for scepticism, as we have seen many false dawns over the years, but we are in pole position to take advantage of the emerging CAPS market.

I agree with the comments from you and spurious about PR. The share price is just where it was after the following:
. Charles Stanley Contract
. MDM Bank in Russia
. Decent Interim results with bullish outlook statement
. T&G BUY note with 25p target
. Ian Selby buys shares.

All of that and the price falls!!! What nonsense. I know that the directors will be looking hard at that. The directors must be doing something wrong for the share price not to rise significantly on 5 decent bits of news.

Certainly, I have to accept that my expectations about the share price have been wrong, I have held many Mondas shares for years now and have an average buying price of just under 30p. I can assure you I am most unhappy about the performance of my Mondas investment. It would make an already long post a monster to go into the history. Anyway it is the future not the past we should look to.

Over the years I have got to know Mondas well and I am sure that we are in the best position EVER. Of course we want more. We want CAPS, BC and Resource orders, but I believe we really have turned the corner to consistent profits growth. I believe that the forecasts are reasonable with a much better chance of being beaten than missed.

[magpie99] 24/10/2006 15:45

Molly, re your post here are the problems.

CAPS is doing OK, but does the performance justify the years of investment, for instance the development cost and the cost of keeping a CAPS team running. This is our flagship product, and I am not yet convinced sales have taken off. I would like to see 2 -3 more global roll outs before I am happy. As I mentioned in my previous post another global roll out and we could challenge the 20 p – 25p level.

Unrealistic share price expectations created by bullish posts and share price forecast leading to investor disillusionment. These posts help to increase investor frustration as the posters make themselves so believable, but their viewpoint is never realised year upon year.

The step of improved media communication and linkage Spurious mentioned in his post, I have asked for many years ago, and others have pointed this out, why should this time be any different?

The £2 million cash position expectation that Molly refers to at the year end , half of this has just been raised through CULS, this total amount therefore is not through cash generation of the companies selling activities. RE the fundraising Techinvest recently referred to " another tranche being issued". This comment has an air of unfulfilled expectations about it, and in my opinion implies their expectation of more fundraising to come ie possibly further dilution

No sign of Director buying of shares in meaningful quantities

The current low share price means the total earn out for Blue Curve acquisition will be more dilutative than if the share price were higher

[mollymolly] 24/10/2006 10:00

SP/gac, what a difference between our posts and Magpie's. I suspect however, that Magpie's is more representative of how shareholders are feeling. Wrong, but understandable.

I'm sure we all agree that the company's focus should be on getting the share price up. I do not however, think it is realistic or helpful to raise expectations above the 700k profit. Nor is it fair to suggest that the company might wish to (& be in a position to) move profit from 2006 to 2007. My current view is that we should expect to see market expectations met i.e. around 700k. That would be a fantastic result indeed. The big rollout will surely take some time and I expect will take all of 2007 if not longer. A global rollout is big thing for Mondas, and is not going to drop all of the profit into 2006.

Having said that I do think that there is a better chance that the profit target will be beaten rather than missed. If we can see another decent sized order before the year end then perhaps it is possible. Bear in mind though that any really big order signed in Nov/Dec will put most of its revenue into 2007 rather than this year.

I will not be dissapointed if they report only 700k this year. The upward path from here is clear now and we should be confident of the future.

[gac141] 24/10/2006 08:50

Nice post P1

My sentiments are with you on this one. Mondas have struggled to get the believers on our side and the share price is now below the level when we delivered, what should have been, decisive and conclusive evidence that Mondas is on the up. Cautious approaches appear will not work and if there is a surplus of profit I sincerely hope that it is not rolled over to the next year. This could imply that the management are not optimistic of the future and of hitting a relatively improved target. The roll out from our favoured client must be worth a significant amount to the profit target so lets give the sceptics a headline number to put in their pipes and smoke.

George

[spurious] 23/10/2006 22:21

There comes a point in a companies life which is pivotal in its development a window of true opportunity which defines whether potential is reached and a true litmus test of ultimate wealth creation.This I believe is bought about when cost reduction, scaleability, market leadership, and growing order momentum come together to provide a springboard of good news that can propel the company into an entirely different level.
The company will only get one chance at maximising this opportunity as it is all about momentum and it must be ready to exploit it. Mondas is about to enter this critical window and must have the right people in the right supporting roles. There is no point in announcing good news if the movers and shakers are not reading it first and spreading it to the wider investing world.We need to be proactive rather than appearing reactive.
I personaly felt that a very small announcement in the FT was hardly just reward for the outstanding effort and achievement of Jarlath and the team after the last results.It would have been nice to read in one or two of the Sunday Papers of how Mondas has transformed itself into a truly global leader and that it represents a compelling investment for some of its readers.I hope we now have the apparatus in place to target and inform the wider investing world of our successes as soon as they happen because I believe they are going to be many
A strong and representative share price demands effective PR. A company that fulfills its potential demands a strong and representative share price.
To continue on the theme of momentum I hope the company would not hold back excess profits if this years target was achieved because I genuinely believe the impact of delivering say £1 million this year would be substantial and adopting a more cautious approach would merely serve to delay a further positive influence on the share price by 12 months with a corresponding loss of momentum.
I look forward with confidence to Mondas fulfilling its true potential as that promises to be truly exciting
Best wishes to all
SP

[mollymolly] 23/10/2006 15:56

Magpie,

What trouble do they need to buy their way out of?

Not even the direst pessimists are expecting losses after a year of such success. The Balance sheet is solid now and so an attractive propostion to both customers and investors.

My expectation is that we will see results in line with forecast and have cash in the region of £2M at the end of the year.

Resource continues to do well, delivering more profit in the 1st half than in whole of previous 12 months.

Blue Curve has made fantastic sales including a "global bank" - T&G's forecast includes very little from Blue Curve.

The CAPS team has signed two new names this year. Both have gone live very quickly and smoothly. In addition we have the "global" rollout of CAPS. As gac says this on its own is valued in millions.

I do not believe we are seeing barefaced lies from the directors, in fact I think they are reacting the other way, and are being over conservative in their predictions.

So I say again what trouble do they need to buy their way out of?

[gac141] 23/10/2006 15:33

Not sure I agree with you Magpie on all of your comments Magpie. But I do share your frustration. Yes a big disappointment on the share price.

Mondas seem to have come a long way on paper and the contract wins from all parts of the business this year look impressive. Why do we still languish down here though? The City must have a dismal view of Mondas and it looks like we need to do something different to make many doubters feel Mondas is worth following.

A global deal for CAPS is no mean achievement and must be worth a lot! HSBC bought in for the UK at close to a million so what is a world roll out worth???????????? Surely millions not hundreds of thousands!

A tough set of circumstances for the team. They need to explore every possible avenue available to them to find a way to get realistic value on all our shares.


George

[magpie99] 23/10/2006 14:16

So far a very unsuccessful investment-

expect more of the same as the company issues more shares to buy its way out of trouble and build critical mass with new acquisitions.

I have proved 100 % correct with my bearish forecast and 100% vindicated on the share price level.


I can guarantee share price movement is not just because of good news and good results either.

[mollymolly] 22/10/2006 16:52

Those here who are only interested in more CAPS orders might like to consider the likely value of the "Global CAPS" rollout.

[ph 100] 22/10/2006 13:44

Mondas are very frustrating!

"Every thing looks exciting to me apart from the share price".... which is how we judge the success of an investment.

[mollymolly] 20/10/2006 23:36

Orders announced this Year:

Rabobank
Ferris Baker Watts
Brewin Dolphyn
Finn & Co
Panmure Gordon
"Leading Global Bank"
MDM Bank in Russia
Charles Stanley
"Global Rollout" for existing CAPS bank customer incl US.

Also to bring total number of Colleges using Resource to over 120:
Norwich School Art
Stroud College.


Indications are for £700k profit this year and up nearly 50% next. The directors said: "..noticeable increase in sales activity and the reduction of sales cycles".

OK amt we will always want more, but we have had many many more deals than most dared hope for. There is likely to be more. I doubt that any major new sale is needed to make this years numbers.

Every thing looks exciting to me apart from the share price.

[amt] 20/10/2006 22:53

I am fed up with this company it never ceases to dissapoint. Same pattern over the last 5 years. You think it is recovering then it goes down the tube again. Where are all these deals we were expecting.

[hug00] 20/10/2006 09:52

Picking up the point Steve Wilson makes. The announcements made were very encouraging. Comments made would give most a comfort level never experienced before with this company... But NOT one large new investment by anyone? What are T&G doing? Is it not their job to promote the business to their clients? A buy note at 25p.... all ingredients for a stable share price...Yet nothing of the sort. Directors need to grasp this thorny issue and deal with it or Mondas will continue with penny share mentality with huge volatility. There is a job to be done.

[shaunie] 20/10/2006 08:43

ohhh dear the price action saddens me again ...this to be said in a eeoorr kinda voice

[rambutan2] 19/10/2006 23:24

a late night theory! the mm who took on those 200k shares at 13p, and who i reckon still had over a 100k on his books, was told to get rid of them/or realised that there weren't any takers for them at 16p - perhaps due to reasons mooted in steve wilsons post 2021 - so lowered the price.

all in all, another day of mondas madness. but who are the mad ones, the handfull who hold or mr market and the masses...

[ashmok] 19/10/2006 19:19

Something odd going on, anyway. Most of those trades today were buys.

[alexacj] 19/10/2006 18:27

Anyone think the MMs may well have stock to offload and at the normal "buy" levels it may take them a while.....just a thought but may account for the rather dramatic price falls!