Bond International Software PLC
04 September 2006
FOR IMMEDIATE RELEASE 4 September 2006
BOND INTERNATIONAL SOFTWARE PLC
INTERIM RESULTS
Bond International Software Plc, the specialist provider of software for the
international recruitment and human resources industries, with operations in the
UK, USA and Australia, today announces its interim results for the six months to
30 June 2006.
KEY POINTS
- Sales increased 27% to £7.4m (2005: £5.8m)
- Operating profit before amortisation of goodwill and share based
payments up 21% to £1.5m (2005: £1.2m)
- Pre-tax profit increased 19.5% to £1.2m (2005: £1.0m)
- Earnings per share increased 14% to 3.45p (2005: 3.02p)
- Planned expansion into the Far East market progressing strongly
Commenting on the results, Group Chief Executive Steve Russell, said:
'We have been pleased with the robust performance during the first half of the
year. Our markets are all performing extremely strongly and we are particularly
excited about the opportunity in the Far East. Our sales pipeline is encouraging
and we look forward to the second half with confidence.'
For further information, please contact:
Bond International Software Plc: Tel: 01903 707070
Steve Russell: Group Chief Executive e-mail: bmorrison@bond.co.uk
Bruce Morrison: Finance Director
Buchanan Communications: Tel: 020 7466 5000
Tim Thompson e-mail : nicolac@buchanan.uk.com
Nicola Cronk
Oriel Securities Limited: Tel: 020 7710 7600
Andrew Edwards
Bond International Software Plc and Subsidiary Companies
Chairman's Statement
I am delighted to announce record results for the six months ended 30 June 2006.
Group revenues increased by more than 27% to £7,434,000 (2005: £5,831,000)
resulting in a 21% rise in operating profit (before the amortisation of goodwill
and the impact of the new accounting standard on share based payments) to
£1,507,000 (2005: £1,249,000).
The rise in revenues has been driven by a 40% increase in the sale of software
and services to £3,923,000 (2005: £2,801,000). This in turn has led to an
increase in income from software support of 21% to £2,669,000 (2005:£2,213,000)
as new customers go live. Rental income from AdaptVMS and our ASP clients
continued to grow in the first half of 2006, up 16% to £676,000 (2005:
£579,000).
We have experienced growth in all the major geographical markets in which we
operate compared to the same period last year with revenues in the UK up by 33%
to £4,167,000 (2005: £3,131,000), in North America up by 23% to £2,609,000
(2005:£2,117,000) and in Asia Pacific up by 48% to £400,000 (2005: £270,000).
The financial position of the group was further strengthened by the placing of
£3,000,000 of new shares with institutional shareholders. The decision to
proceed with the placing was based on the need to satisfy institutional demand
and to provide funding to assist the group in pursuing its strategy for growth,
both through acquisition and product development. The board was delighted with
the confidence shown in the group by the institutional investors who took up the
new shares.
The placing has allowed the group to increase its net cash by £1,459,000 despite
the exceptional demands on the group's cash flow in the first six months of
2006. With debtor days up slightly on the year end, the group's working capital
requirement has increased during the first half and this coupled with the
payment of the deferred consideration of £718,000 and the company's first
dividend of £252,000 has led to a net cash outflow before financing of
£1,409,000 in the period to 30 June 2006. The board believes the company will
experience strong cash flow in the second half of the year.
UK & Europe
Sales in the UK & Europe have increased by nearly 29% to £4,401,000 in the first
half of 2006 (2005: £3,417,000). The strong growth in sales has been driven both
by revenue from new clients and from existing clients through the sale of
additional licences and services, rental income and support.
In the first six months of 2006 we sold 64 new systems covering 830 users, and
19 ASP deals covering 58 users. These deals were worth £1,230,000 in capital
sales and once they are all installed they will provide £241,000 of recurring
income, either through monthly rentals or annual support agreements.
When taken together with the revenue from existing clients, the sale of software
and services produced revenues of £2,267,000 in the period to 30 June 2006 which
were 61% up on the same period last year (2005: £1,409,000).
Our corporate business continues to develop with such notable new orders as BA
Connect and Yorkshire Water.
North America
The growth of our North American operation continues apace with sales up 23% in
the six months to 30 June 2006 to £2,609,000 (2005: £2,117,000). The company
recently established two new offices on the West Coast, one in San Francisco and
one in San Diego, to improve access to the estimated 3,500 staffing companies
based in California.
Our US operation sold 20 new Adapt systems covering 585 new users and 50 new
eEmpACT systems representing 239 new users.
Australia and Asia Pacific
Our Australian operation had a record first half of 2006 with sales up 48% to
£400,000 (2005: £270,000) as we continue to strengthen our position in the
Australian and Asia Pacific markets. We sold 8 new systems covering 66 licences
in the first six months and have experienced strong demand for new licences and
service as our existing clients expanded.
Furthermore we are using our operation in Australia as a platform from which to
launch our planned expansion into the Far East market and we recently announced
the opening of our new office in Hong Kong. Although the group already has
clients in China, Hong Kong, Malaysia, Singapore, Thailand and Japan, we have
established the new office to provide full local technical support and expand
our sales opportunities throughout the region. We have also signed our first
contract to deploy Adapt in Chinese.
We have also recently launched the latest version of Adapt Recruitment Software
which, for the first time, is capable of handling Asian languages and character
sets. It is now able to provide integrated staffing systems throughout the Far
East using the local languages and we have signed our first agreement to provide
such a system.
Product Development
Product development expenditure totalled £1,068,000, representing 14.4% of
sales. Of this, £444,000 was spent on the new generation of Adapt bringing the
total spent to date on this project to £2,617,000. The balance of the
development expenditure was spent on the continuing enhancement of our existing
product range.
In the US we have developed Starsearcher, a corporate applicant tracking system
based on our eEmpACT product line and aimed at US companies with between 50 and
2,500 employees. The product was launched in July 2006 at the Microsoft Global
Partner Channel Conference and will be sold using the Microsoft Partner Network
rather than directly to customers.
Prospects
The outlook for the staffing industry remains positive worldwide and the group
is well placed to capitalise on the continuing growth in recruitment. We
continue to take orders at an encouraging rate and our sales prospect list
contains a healthy mix of medium to large sized staffing companies.
Martin Baldwin
Chairman
4 September 2006
Bond International Software Plc and Subsidiary Companies
Consolidated profit and loss account for the six months ended 30 June 2006
Six months Year ended
ended 30 June 31 December
Note 2006 2005 2005
£000 £000 £000
(unaudited) (restated) (restated)
(unaudited)
Turnover - continuing 2 7,434 5,831 13,633
operations
Cost of sales (329) (324) (809)
--------- --------- -----------
Gross profit 7,105 5,507 12,824
Administrative expenses (5,893) (4,493) (10,309)
--------- --------- -----------
Operating profit -
continuing 1,212 1,014 2,515
operations
Net interest receivable 8 7 5
--------- --------- -----------
Profit on ordinary
activities 1,220 1,021 2,520
before taxation
Tax on profit on ordinary
activities (328) (259) (616)
--------- --------- -----------
Profit on ordinary
activities after 892 762 1,904
taxation ========= ========= ===========
Earnings per share 4
Basic 3.45p 3.02p 7.55p
--------- --------- -----------
Fully diluted 3.36p 2.96p 7.37p
--------- --------- -----------
Bond International Software Plc and Subsidiary Companies
Consolidated balance sheet at 30 June 2006
At 30 June At
31 December
2006 2005 2005
Note £000 £000 £000
(unaudited) (restated) (restated)
(unaudited)
--------- --------- ----------
Fixed assets 7,470 7,020 7,352
Intangible assets 2,671 2,830 2,647
Tangible assets
--------- --------- ----------
10,141 9,850 9,999
========= ========= ==========
--------- --------- ----------
Current assets 4,156 2,338 3,480
Debtors 4,746 3,372 3,511
Cash at bank and in hand
--------- --------- ----------
8,902 5,710 6,991
Creditors: amounts falling
due (4,478) (5,210) (5,682)
within one year --------- --------- ----------
Net current assets 4,424 500 1,309
--------- --------- ----------
Total assets less current
liabilities 14,565 10,350 11,308
Creditors: amounts falling
due (454) (881) (598)
after more than one year
--------- --------- ----------
Net assets 14,111 9,469 10,710
========= ========= ==========
--------- --------- ----------
Capital and reserves 5 278 252 252
Share capital 5 9,086 6,207 6,209
Share premium account 5 262 121 189
Equity option reserve 5 (108) 91 115
Currency translation reserve 4,593 2,798 3,945
Profit and loss account
--------- --------- ----------
Equity capital and reserves 14,111 9,469 10,710
========= ========= ==========
Bond International Software Plc and Subsidiary Companies
Consolidated cash flow statement for the six months ended 30 June 2006
Six months Year ended
ended 30 June 31 December
2006 2005 2005
Note £000 £000 £000
(unaudited) (restated) (restated)
(unaudited)
Net cash inflow from operating
activities 3 550 1,432 3,300
--------- --------- ---------
--------- --------- ---------
Returns on investments and
servicing of finance 47 44 85
Interest received (39) (37) (79)
Interest paid
--------- --------- ---------
8 7 6
--------- --------- ---------
Taxation (333) - (596)
UK Corporation tax paid (39) (40) (63)
Overseas tax paid
--------- --------- ---------
(372) (40) (659)
--------- --------- ---------
Capital expenditure (540) (304) (836)
Payments to acquire intangible
fixed assets (85) (284) (434)
Payments to acquire tangible
fixed assets --------- --------- ---------
(625) (588) (1,270)
--------- --------- ---------
Acquisitions (718) (1,010) (1,114)
Payments to acquire subsidiary - 101 101
Cash acquired with subsidiary
--------- --------- ---------
Net cash outflow from (718) (909) (1,013)
acquisitions --------- --------- ---------
Equity dividends paid (252) - -
--------- --------- ---------
Net cash outflow before (1,409) (98) 364
financing --------- --------- ---------
--------- --------- ---------
Financing 3,000 3 5
Issue of new ordinary shares (96) - -
Expenses of share issue 44 69 62
New hire purchase loans (42) (274) (341)
Repayment of bank loans (166) (118) (358)
Repayment of other loans (24) (36) (66)
Repayment of hire purchase
loans --------- --------- ---------
Net cash inflow/ (outflow) from
financing 2,716 (356) (698)
--------- --------- ---------
Increase/ (decrease) in cash
for 1,307 (454) (334)
the period ========= ========= =========
Reconciliation of net cash flow to movement in net funds
Increase/ (decrease) in cash 1,307 (454) (334)
Decrease in bank loans 42 274 341
Decrease in other loans 197 77 279
Loans and HP contracts acquired
with subsidiary - (974) (974)
(Increase)/decrease in hire
purchase loans (20) (34) 4
--------- --------- ---------
Change in net funds 1,526 (1,111) (684)
Foreign currency translation
differences (67) 59 49
Net funds at 1 January 2006 2,370 3,005 3,005
--------- --------- ---------
Net funds at 30 June 2006 3,829 1,953 2,370
========= ========= =========
Bond International Software Plc and Subsidiary Companies
Notes to the financial statements
1. Basis of preparation
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Company's 2005 statutory accounts subject to
the following changes:
(i) The adoption of Financial Reporting Standard 23, The Effects of
Changes in Foreign Exchange Rate, which requires the translation of the results
of overseas subsidiaries into sterling at the actual rate (for which the average
rate for the period is permitted as an approximation) rather than at the closing
rate as previously applied under SSAP20.
In addition the goodwill arising on the acquisition of overseas subsidiaries
since 1 January 2005 is now treated as an asset of the overseas subsidiary and
expressed in the currency of the overseas subsidiary. The resulting gains or
losses on retranslation are charged or credited directly to the currency
translation reserve.
In accordance with the exemption permitted under Financial Reporting Standard
23, the cumulative translations differences on the net investment in overseas
subsidiaries are assumed to be zero at 1 January 2005.
(ii) The adoption of Financial Reporting Standard 20, Share Based
Payments, which requires the company to reflect in its profit and loss account
the effects of share based payments such as employee share options. The
company's accounting policy is to charge the value of share options granted
since 7 November 2002 to the profit and loss account on a straight line basis
over the period from grant to vesting.
The comparative figures for the six months ended 30 June 2005 and the year ended
31December 2005 have been restated to reflect these changes of accounting
policy.
These statements are unaudited and were approved by the board of directors on 1
September 2006. The financial information contained in these statements does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The financial information for the year to 31 December 2005 has been
extracted from the statutory accounts for that year, as adjusted for the changes
in accounting policy referred to above. The statutory accounts for the year
ended 31 December 2005, which received an unqualified audit report, have been
filed with the Registrar of Companies.
2. Turnover analysis
(a) The geographical analysis of turnover by destination is:
Six months Year ended
ended 30 June 31 December
2006 2005 2005
£000 £000 £000
(unaudited) (restated) (restated)
(unaudited)
United Kingdom 4,167 3,131 7,375
Europe 234 286 778
Asia Pacific 400 270 619
Africa 24 27 11
North & South America 2,609 2,117 4,850
--------- --------- -----------
7,434 5,831 13,633
========= ========= ===========
Bond International Software Plc and Subsidiary Companies
Notes to the financial statements (continued)
(b) Sales by product are:
Six months Year ended
ended 30 June 31 December
2006 2005 2005
£000 £000 £000
(unaudited) (restated) (restated)
(unaudited)
Software sales &
services 3,923 2,801 7,017
Software support 2,669 2,213 5,014
Vendor managed services 676 579 1,334
--------- --------- -----------
Software revenue 7,268 5,593 13,365
Hardware & other sales 166 238 268
--------- --------- -----------
7,434 5,831 13,633
========= ========= ===========
3. Reconciliation of operating profit to net cash inflow from
operating activities
Six months Year ended
ended 30 June 31 December
2006 2005 2005
£000 £000 £000
(unaudited) (restated) (restated)
(unaudited)
Operating profit 1,212 1,014 2,515
Depreciation of tangible
fixed assets 133 176 338
Amortisation of goodwill 214 191 403
Share based payment
expense 81 44 117
Decrease in stocks - 43 43
(Increase)/decrease in
debtors (648) 157 (556)
(Decrease)/increase in
creditors (442) (193) 440
--------- --------- -----------
Net cash inflow from
operating activities 550 1,432 3,300
========= ========= ===========
4. Earnings per share
The basic earnings per share is based on attributable profit for the period of
£892,000 (June 2005: £762,000; year ended 31 December 2005: £1,904,000) and on
25,876,041 ordinary shares (June 2005: 25,218,770, year ended 31 December 2005:
25,221,981) being the weighted average number of ordinary shares in issue during
the periods. The adjustment to the earnings per share from basic to fully
diluted relates entirely to share options.
Bond International Software Plc and Subsidiary Companies
Notes to the financial statements (continued)
5. Reserves
Share Equity Currency Profit Total
Premium option translation and loss
reserve reserve account
£000 £000 £000 £000 £000
-------- -------- -------- -------- --------
At 1 January 2006 (as
previously 6,209 - - 4,185 10,394
reported)
Prior year adjustments - 189 115 (240) 64
-------- -------- -------- -------- --------
At 1 January 2006 restated 6,209 189 115 3,945 10,458
Currency translation - - (223) - (223)
adjustments
Issue of new ordinary shares 2,877 - - - 2,877
Share based payments - 81 - - 81
Share options lapsed or - (8) - 8 -
exercised
Profit for the period - - - 892 892
Dividend - - - (252) (252)
-------- -------- -------- -------- --------
At 30 June 2006 9,086 262 (108) 4,593 13,833
-------- -------- -------- -------- --------
Share Equity Currency Profit Total
Premium option translation and loss
reserve reserve account
£000 £000 £000 £000 £000
-------- -------- -------- -------- --------
At 1 January 2005 (as 6,204 - - 2,090 8,294
previously reported)
Prior year adjustments - 78 - (55) 23
-------- -------- -------- -------- --------
At 1 January 2005 restated 6,204 78 - 2,035 8,317
Currency translation - - 91 - 91
adjustments
Issue of new ordinary shares 3 - - - 3
Share based payments - 44 - - 44
Share options lapsed or - (1) - 1 -
exercised
Profit for the period - - - 762 762
-------- -------- -------- -------- --------
At 30 June 2005 6,207 121 91 2,798 9,217
-------- -------- -------- -------- --------
Share Equity Currency Profit Total
Premium option translation and loss
reserve reserve account
£000 £000 £000 £000 £000
-------- -------- -------- -------- --------
At 1 January 2005 (as
previously 6,204 - - 2,090 8,294
reported)
Prior year adjustments - 78 - (55) 23
-------- -------- -------- -------- --------
At 1 January 2005 restated 6,204 78 - 2,035 8,317
Currency translation - - 115 - 115
adjustments
Issue of new ordinary shares 5 - - - 5
Share based payments - 117 - - 117
Share options lapsed or - (6) - 6 -
exercised
Profit for the year - - - 1,904 1,904
-------- -------- -------- -------- --------
At 31 December 2005 6,209 189 115 3,945 10,458
-------- -------- -------- -------- --------
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