'penny dreadful' to watch - afr , page-2

Half-Year Ended 31 December 2004
Results for announcement to market
Revenue from ordinary activities
up 151% to
$521,281
Net loss from ordinary activities
after tax attributable to members
down 13% to
$1,610,266
Net loss from ordinary activities
attributable to members
down 13% to
$1,610,266
No interim dividend proposed
MXL’s sales revenue of $432 000 for the six month period to 31 December 2004 exceeded not only the
corresponding six month period, but the entire 12 month period to 30 June 2004. Expenses remained relatively
stable, with savings in travel, marketing and professional expenses being offset by increases to the salary and
depreciation and amortisation expenses.
MXL’s student management system, eMinerva has been sold to a variety of clients, in Australia and New
Zealand, from Fitness centres to Accounting bodies, highlighting the flexibility of the eMinerva system and its
ability to adapt to different administrative requirements.
Expenses have remained in line with projections, with marketing continuing in relation to several state and
country wide tenders, for which decisions are expected in the June 2005 half. As reported to the ASX on 27
January 2005, certification of eMinerva Schools by the New Zealand Ministry of Education has opened the way
for marketing activities to proceed in earnest. With each of the above mentioned opportunities comes multimillion
dollar revenue potential as the eMinerva Schools mass market product takes MXL to a new level of
potential revenue. Travel and marketing has decreased from the prior period with the number of international
flights decreasing and travel being concentrated in the Asia Pacific region.
Salary and depreciation and amortisation expenses have increased due to an executive decision to cease using
external software developers and move to recruit an internal product development team. The initial cash
outlay necessary for the acquisition of the associated resources required to support an internal development
team was capitalised thus impacting the amortisation and depreciation expense, however the long term
benefits can be measured via both cost savings, (approximated to be $480 000 per annum) and increased
productivity and efficiency. Already the internal team has accommodated the accelerated development
program for projects such as the New Zealand certification outlined above and other domestic and
international projects
The past six months has also seen MXL enter into an incorporated joint venture with Black Duck Software Pty
Limited, the owners of SchoolMate, a curriculum management tool, currently used widely in Queensland. A
60% owned MXL subsidiary was created called Schoolmate.net Pty Ltd, for further details refer to ASX
Announcement - MXL Enters Joint Venture – released on 11 November 2004. The purpose of this venture is to
redevelop SchoolMate using .NET technology to allow it to integrate with eMinerva as a module, or to be sold
as an independent, standalone product. This is the first of several attendant products that are planned for the
eMinerva solution.