FOR IMMEDIATE RELEASE                                                                                                                                                  3 April 2012   

 

 

 

2011 UNAUDITED PRELIMINARY RESULTS

  

  

Bond International Software plc, a world leading supplier of staffing, HR and payroll software and outsourcing , with operations in the UK, USA, Hong Kong, Japan, China and Australia, today announces its unaudited preliminary results for the year ended 31 December 2011.

 

 

KEY POINTS

 

·      Revenue up 30% to £36.8m (2010 restated: £28.3m)

·      Recurring revenue grew by 28% to £22.4m (2010: £17.5m) representing 61% of revenue (2010:62%)

·      Operating margins (before share of joint ventures and amortisation of intangible assets) improved to 14.2% (2010: 7.8%) reflecting change in mix of licences and services

·      Operating profit before the amortisation of acquired intangible assets and exceptional items of £2.59m (2010: loss £0.1m)

·      Adjusted* profit after tax of £1.95m (2010: £0.1m)

·      Adjusted* diluted earnings per share of 4.71p (2010: 0.37p)

·      IFRS diluted loss per share 3.08p (2010: 2.40p)

·      Net cash generated from operating activities of £5.15m (2010:  £3.31m)

·      Net debt reduced by £1.55m (2010: increase in net debt of £0.99m)

·      Proposed dividend increased 50% to 1.2p

 

 

* Adjusted for the amortisation of acquired intangibles,share based payments expense. exceptional items and impairment of intangible assets

 

Commenting on the results Chief Executive Steve Russell, said:

 

"2011 has been a year of operational progress for Bond as we continue our recovery from the difficult environment of 2009 and 2010.

2012 has begun positively and we are confident that the Asia Pacific market will provide significant opportunities going forward.  It is on this basis that the Board has recommended a dividend of 1.2p per share, a 50% increase on last year"

 

 

 

For further information, please contact:

 

Bond International Software plc:	Tel: 01903 707070 www.bondinternationalsoftware.com
Steve Russell: Group Chief Executive
Bruce Morrison: Group Finance Director
Buchanan:	Tel: 020 7466 5000
Tim Thompson Nicola Cronk
Gabriella Clinkard
Cenkos Securities Limited	Tel: 020 7397 8900
Stephen Keys

BOND INTERNATIONAL SOFTWARE PLC

Chairman's Statement

 

Financial overview

2011 has seen a significant improvement for the group following the difficult trading conditions experienced in 2009 and 2010.

In April 2011 the group disposed of its interest in Abacus Software Limited and consequently the 2010 income statement has been restated to show the results of Abacus as a discontinued operation.

Group revenues from continuing operations have increased by 30% to £36,751,000 compared with the restated revenues of £28,314,000 with underlying revenue growth of 12%.  The accounts include a full year from VCG LLC and Strictly Education Solutions Limited both of which were acquired in the second half of 2010.

Although gross profit has increased by 30% to £32,029,000 (2010: £24,687,000), the group's gross margin as a percentage of sales has fallen slightly reflecting the effect of the first full year of Strictly Education Solutions on the group accounts. The trend towards a greater proportion of consulting services compared with software licences, which I discussed last year, slowed down in 2011 and this has offset some of the impact of Strictly Education Solutions.

The group has worked hard to control overheads so that although administrative expenses have increased by 17%, the majority of this increase is as a result of acquisitions with the underlying increase running at less than 1% per annum.  As a consequence the operating profit before amortisation of all intangible assets, exceptional items and impairment of intangible assets has risen by 136% to £5,209,000 (2010: £2,206,000) and operating profit before the amortisation of acquired intangibles is £2,588,000 compared with a loss in 2010 of £106,000.

Underpinning the group's improved performance is a 28% increase in recurring revenue to £22,449,000 representing 61.3% of total revenues in 2011 from £17,479,000 in 2010 representing 61.7% of total revenues.  Of this around 6% is like for like growth with the remainder arising from acquisitions.  Recurring revenues now cover approximately 85% of the group's administrative expenses (excluding amortisation of intangible assets) compared with 77% last year.

The pre-tax loss is £1,430,000 compared with a loss of £1,463,000 in 2010 as a result of the impairment charge of £1,368,000 on goodwill arising from business combinations.  The group continues to benefit from research & development tax credits in the UK which coupled with the impact of the change in UK rates of corporation tax have allowed the group to report a small tax credit in 2011.

The group has a reported undiluted loss per share from continuing operations of 3.48p (2010: 2.40p) and fully diluted loss per share from continuing operations of 3.08p (2010: 2.40p).  In order to assist with understanding the underlying performance of the group we have reported adjusted earnings per share excluding the effects of the amortisation of acquired intangibles, share based payments and one off exceptional items.  On this basis the adjusted profit after tax was £1,948,000 (2010: £126,000) and the adjusted undiluted earnings per share were 5.32p (2010: 0.38p) and the adjusted fully diluted earnings per share were 4.71p (2010: 0.37p).

The group generated £5,317,000 of cash from operating activities (2010: £3,089,000) and after capital expenditure of £3,828,000 on property, plant and equipment and internally generated product development and a dividend of £330,000 managed to reduce net debt by £1,553,000 to £987,000 compared with £2,540,000 at the end of 2010.

I am pleased to say that the board is recommending the payment of a dividend of 1.2p per share which is a 50% increase on last year.  The payment is subject to shareholder approval at the Annual General Meeting on 14 June 2012 and, if approved, will be made on 3 August 2012 to shareholders on the register at 6 July 2012.

Acquisitions and disposals

On 8 April 2011 the group completed the sale of Abacus Software Limited. As we reported at the time, the disposal allows the group to focus on its core activities in recruitment software, HR & Payroll software and outsourcing.

As a consequence, Abacus Software Limited has been treated as a discontinued operation for reporting purposes and the results for the period to the date of disposal together with the loss on disposal, have been shown as one line in the income statement.  As required by accounting standards, the comparative figures for the year ended 31 December 2010 have been restated to show the discontinued operation separately from continuing operations. Further details of the impact on the group's results are set out in note 10.

On 21 September 2011 the group purchased Matrix ICT Services Limited for details of which are set out in Note 9. Although only a small acquisition, Matrix specialises in the provision of information technology services to state schools and complements the existing operations of Strictly Education as well as increasing the customer base.

 

Employees

The group now employs around  500 people in six countries supported by offshore teams in India and the Ukraine. Our improved financial performance is due in no small measure to the hard work and dedication shown by all our employees over the last twelve months and I thank them for their ongoing commitment to the future success of the business.

Prospects

Whilst we have made considerable progress over the last year there is still uncertainty surrounding the outlook for the UK economy. The recovery is underway in the US and this is reflected in growing confidence in the wider staffing industry. This has led to a strong start to 2012 for our recently merged business. We are moving closer to signing our first significant contract in Japan which has some of the largest recruitment companies in the world and the wider Asia Pacific market is providing some significant opportunities for the revenue growth.  We have also taken our first steps into South America by establishing a small office in Peru.  This will provide us with a base from which we can access some of the fastest growing economies in the world.

 

Martin Baldwin

Chairman

2 April 2012

BOND INTERNATIONAL SOFTWARE PLC

Group Chief Executive's Report

 

Overview

2011 has been a year of improvement for the group particularly in the Staffing Division. Whilst not back to the pre-recession levels the recruitment industry has recovered significantly in both the UK and the USA which remain the principal geographic markets in which we operate. Amongst other factors, this has contributed to a 30% increase in overall revenues to £36,751,000, a 136% jump in operating profit before the amortisation of intangible assets, exceptional items and impairment of intangible assets from £2,206,000 in 2010 to £5,209,000 in 2011.

 

Following the disposal of Abacus Software, the group is now organised into three divisions covering recruitment software, HR & payroll software and outsourcing.

 

Recruitment software

Recruitment software accounted for 61% of group revenues in 2011 compared with 59% in 2010. 

 

Recruitment software revenue by type	2011 £000		2010 £000
Software sales & services	9,788		7,797
Software support	8,636		6,435
Software rental income	4,181		2,537
Total revenues	22,605		16,769

 

	Revenues				Operating profit/(loss)*
Revenue and operating profit/(loss)* by location of operating company	2011 £000		2010 £000		2011 £000		2010 £000
United Kingdom	10,485		8,803		1,537		83
USA	10,363		6,728		1,285		300
Asia Pacific	1,757		1,238		(76)		(333)
	22,605		16,769		2,746		50

*before amortisation of intangible assets, exceptional items and impairment of intangible assets

 

Following the difficult trading conditions experienced by this division in 2009 and 2010, we are seeing a recovery in the fortunes of staffing companies here and particularly in the US. As a result revenues increased by 35% of which 15% was organic growth with the balance coming from the inclusion of a full year's revenue from VCG

Recurring revenues have jumped by 43% to £12,817,000 in 2011 compared to £8,972,000 in 2010.  This reflects underlying organic growth of 12% with support revenues growing organically by 3% and the major increase coming from software as a service ("SaaS) growing organically by 37%. As I have said previously the market is shifting from capital sale to the SaaS model and although this has short term negative effects on results, the longer term stability and visibility are of great benefit to the group.

Geographically the UK saw a 19% increase in revenues from £8,803,000 to £10,485,000 and the US saw a 54% increase aided by the acquisition of VCG in November 2010. We have consolidated our operating companies in the US and now operate under one umbrella. This provides us with a stable and well motivated platform which allows us to take advantage of the rapidly improving markets there.

Asia Pacific, where we now have offices in Sydney, Hong Kong, Shanghai and Tokyo is an increasingly important market for our multi lingual recruitment software. Our Australian office has recently secured one of their largest ever orders, the benefit of which will not be seen until 2012.  We have signed our first clients in Japan, one of the world's largest markets for staffing firms the revenues derived from these together with the significant prospects we have in this market should enable us start trading profitably in Japan during the course of this year.

In 2011 we have also opened an embryonic office in Peru to service the very active South American staffing industry.

 

HR and payroll software

The revenues from this division are overwhelmingly recurring in nature. In 2011 revenues fell by 2.7% to £4,810,000 but margins improved slightly so that operating profit before the amortisation of intangible assets has increased from £1,909,000 in 2010 to £1,967,000 in 2011. 

One of the strengths of the HR & Payroll Division remains its high level of recurring income from software support which account for 72% of total revenues. The revenues derived from support now represent 123% of the operating costs.

There remains many opportunities to cross sell the products in this division and to increase the revenues generated by the excellent payroll software that we ourselves use to support our outsourcing clients.

Outsourcing

Outsourcing comprises two distinct operations, Strictly Education which provides HR, payroll and other services to schools, primarily in the state sector, and Bond Payroll Services which provides payroll bureau services to a variety of organisations in both the state and private sectors.

Strictly Education has had another year of excellent growth arising from a further acquisition in September of Matrix ICT Services, the full effect of the acquisition of Strictly Education Solutions Limited in July 2010, and good incremental growth boosted by the opportunities provided by the number of schools moving from State School to Academy. Strictly Education has or is providing assistance to 120 schools in conversion to academies.

This has resulted in revenue growth of 53% from £4,906,000 to £7,509,000, and growth in operating profit before amortisation of intangible assets from £858,000 to £1,245,000.

 

2011 has seen continued growth for Bond Payroll Services. Significant new clients include National Deaf Children's Society, Yorkshire Staffing Services and Hallam Medical in the recruitment sector and QED Clinical Services in the fast growing medical sector. Other growth areas have been in the Human Capital Management arena, delivering managed HR services, and international payroll solutions thereby increasing Bond's global offerings. This has allowed Bond Payroll Services to grow revenues by nearly 8% from £1,695,000 in 2010 to £1,827,000 in 2011 and operating profit to £413,000 in 2011 (2010: £271,000).

 

Product strategy

We continue to invest a significant proportion of our revenue in enhancing our products, with overall expenditure on development rising to £4,945,000, which is 13.5% of revenue, compared with £4,152,000 in 2010 which was 14.7% of revenues.

The group has continued to invest in its flagship product, Adapt, as well as configuring new applications using Adapt technology to achieve, where possible, a consistent technical platform across the group. The group has spent significant sums on the on-going development of Bond Talent in preparation for its launch in 2012,  on Vantage which is a product designed for the Executive Search market and Employ, a product designed to support the Government's Work Programme.

People

I would like to take this opportunity to thank all of our employees worldwide who have worked so hard during these difficult times to ensure that our customers receive the products and support that are so essential to the successful running of their businesses. I would also like to welcome the new additions to the group, brought about by the acquisitions of Matrix ICT services and Strictly Education Solutions.

Outlook

The group faces an exciting period. Our export markets are becoming increasingly active, employment statistics from the USA are very encouraging and there is a new mood of optimism among staffing companies. Our emerging markets in Japan, China and South America represent significant opportunities for growth and our Australian and Hong Kong businesses continue their success.

New products are in the portfolio, executive search, corporate recruitment and welfare to work  will all be big markets for the group in 2012.

Lastly the trend towards outsourcing provides some exciting opportunities for both Payroll Services and Strictly Education.

 

Steve Russell

Group Chief Executive

2 April 2012

BOND INTERNATIONAL SOFTWARE PLC 

Unaudited consolidated income statement for the year ended 31 December 2011

 

	Note					2011       £000				2010 (restated) £000
Continuing operations Revenue		2			36,751				28,314
Cost of sales					(4,722)				(3,447)
Gross profit					32,029				24,867
Administrative expenses Expenses of acquisitions					(26,809) (11)				(22,749) (173)
Total administrative expenses					(26,820)				(22,922)
Other income - profit on sale of joint venture					-				261
Operating profit before share of profit of joint ventures and amortisation of intangible assets		2			5,209				2,206
Share of post tax profits of joint ventures					-				52
Amortisation of internally generated development costs					(2,621)				(2,364)
Operating profit/(loss) before the amortisation of acquired intangible assets					2,588				(106)
Amortisation of acquired intangible assets					(1,590)				(1,254)
Operating profit/(loss) before exceptional items and impairment of intangible assets					998				(1,360)
Exceptional items		3			(848)				-
Impairment of intangible assets		8			(1,368)				-
Operating loss					(1,218)				(1,368)
Finance income					23				24
Finance costs					(235)				(127)
Loss before income tax					(1,430)				(1,463)
Income tax credit		4			156				645
Loss from continuing operations					(1,274)				(818)
Discontinued operations
(Loss)/profit for the period from discontinued operations		10			(635)				187
Loss for the year attributable to the owners of the parent					(1,909)				(631)
(Loss)/earnings per share from continuing and discontinued operations attributable to the owners of the parent during the year (pence)		5
Basic (loss)/earnings per share From continuing operations From discontinued operations					(3.48p) (1.74p)				(2.44p) 0.56p
					(5.22p)				(1.88p)
Diluted (loss)/earnings per share From continuing operations From discontinued operations					(3.08p) (1.54p)				(2.40p) 0.55p
					(4.62p)				(1.85p)

 

               

BOND INTERNATIONAL SOFTWARE PLC 

Unaudited consolidated statement of comprehensive income for the year ended 31 December 2011

 

				2011   £000		2010 (restated) £000
Loss for the year				(1,909)		(631)
Other comprehensive income net of tax
Currency translation differences on foreign currency net investments				(130)		187
Other comprehensive income net of tax				(130)		187
Total comprehensive income for the year attributable to the owners of the parent				(2,039)		(444)
Total comprehensive income attributable to equity shareholders arises from: -     Continuing operations -     Discontinued operations				(1,404) (635)		(631) 187
				(2,039)		(444)

 

 

 

There are no taxation effects in respect of the foreign currency translation differences.

 

 

BOND INTERNATIONAL SOFTWARE PLC

Unaudited consolidated balance sheet at 31 December 2011               Company number: 2142222

 

	Note		2011 £000		2010 £000
ASSETS
Non-current assets Property, plant and equipment Intangible assets Deferred tax assets Trade and other receivables	8		2,901 32,665 3,076 644		3,080 35,861 2,756 -
			39,286		41,697
Current assets Inventories Trade and other receivables Cash and cash equivalents			59 9,105 3,713		49 11,456 3,031
			12,877		14,536
Total assets			52,163		56,233
EQUITY Share capital Share premium account Equity option reserve Currency translation reserve Retained earnings			413 23,863 480 (404) 9,589		413 23,863 731 (274) 11,577
Total equity attributable to the owners of the parent			33,941		36,310
LIABILITIES
Non-current liabilities Borrowings Deferred tax liabilities			4,601 3,176		5,451 3,322
			7,777		8,773
Current liabilities Trade and other payables Current income tax liabilities Borrowings			10,225 121 99		11,010 20 120
			10,445		11,150
Total liabilities			18,222		19,923
Total liabilities and equity			52,163		56,233

 

 

BOND INTERNATIONAL SOFTWARE PLC

Unaudited consolidated cash flow statement for the year ended 31 December 2011

 

							Note				2011 £000				2010 £000
Cash flows from operating activities
Cash generated from operations Interest paid (continuing operations) Income tax received (continuing operations)								7				5,317 (235) 69				3,089 (127) 348
Net cash generated from operating activities												5,151				3,310
Cash flows from investing activities Acquisition of subsidiaries net of overdraft acquired Proceeds from sale of subsidiary undertaking Interest received Purchase of property, plant and equipment Purchase of intangible assets Proceeds from sale of property, plant and equipment												(23) 564 23 (447) (3,381) 6				(4,980) - 23 (394) (3,267) 2
Net cash used in investing activities												(3,258)				(8,616)
Cash flows from financing activities Net proceeds from the issue of ordinary share capital Increase in bank loans Repayment of bank loans Repayment of other loans New finance leases Repayment of finance leases Equity dividend paid								6				- - (960) (12) 145 (59) (330)				6,039 5,400 (303) (28) - (46) (265)
Net cash (used in)/from financing activities												(1,216)				10,797
Increase in cash and cash equivalents for the year												677				5,491
Cash and cash equivalents at the beginning of the year												3,031				(2,602)
Effects of foreign exchange rate changes												5				142
Cash and cash equivalents at the end of the year												3,713				3,031

 

 

For the purposes of the cash flow statement, cash includes deposits at call with financial institutions

 

 

BOND INTERNATIONAL SOFTWARE PLC

Unaudited consolidated statement of changes to shareholders' equity for the year ended 31 December 2011

 

                                                                                                                Attributable to owners of the parent

 

	Share capital £000	Share premium £000	Equity option reserve £000	Currency translation reserve £000	Retained earnings £000	Total £000
At 1 January 2010	331	17,906	757	(461)	12,380	30,913
Comprehensive income: Loss for the financial year	-	-	-	-	(631)	(631)
Other comprehensive income net of tax:   Currency translation differences		-	-	187	-	187
Total comprehensive income for the year	-	-	-	187	(631)	(444)
Transactions with owners:                Dividend paid	-	-	-	-	(265)	(265)
Proceeds from the issue of ordinary shares	82	6,057	-	-	-	6,139
Issue of ordinary shares	-	(100)	-	-	-	(100)
Share based payment expense	-	-	67	-	-	67
Share options lapsed or exercised	-	-	(93)	-	93	-
Total transactions with owners	82	5,957	(26)	-	(172)	5,841
At 31 December 2010	413	23,863	731	(274)	11,577	36,310
Comprehensive income:   Loss for the financial year	-	-	-	-	(1,909)	(1,909)
Other comprehensive income net of tax:   Currency translation differences	-	-	-	(130)	-	(130)
Total comprehensive income for the year	-	-	-	(130)	(1,909)	(2,039)
Transactions with owners: Dividend paid	-	-	-	-	(330)	(330)
Share options lapsed or exercised	-	-	(251)	-	251	-
Total transactions with owners	-	-	(251)	-	(79)	(330)
At 31 December 2011	413	23,863	480	(404)	9,589	33,941

 

 

The share premium account is used to record the amounts received in excess of the nominal value of shares issued.

 

The currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

 

The equity option reserve is used to record the reserve set aside for share based payment expense.

 

The retained earnings reserve and currency translation reserve represent the cumulative net gains and losses arising in the Consolidated Income Statement and Consolidated Statement of Comprehensive Income.

BOND INTERNATIONAL SOFTWARE PLC

Unaudited notes for the year ended 31 December 2011

 

1.            Basis of preparation

The financial information set out in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards adopted for use in the European Union and does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The above figures for the year ended 31 December 2011 are extracted from the company's unaudited accounts. These will be reported on by the auditor, despatched to the shareholders and filed with the Registrar of Companies following the AGM in June 2012, and they do not contain all of the information required to be disclosed in the financial statements prepared in accordance with the International Financial Reporting Standards ("IFRS").

The audited accounts for the year ended 31 December 2010 have been delivered to the Registrar of Companies and the report of the auditor was unqualified and did not contain statements under Sections 498(2) and 498(3) of the Companies Act 2006.

 

                The announcement was approved by the board of directors and authorised for issue on 2 April 2012.

 

2.            Segmental Reporting

 

(a)           Operating segments

 

For management purposes, the group is currently organised into three operating segments - Recruitment software, HR and payroll software and outsourcing. These divisions are the basis on which the group reports its segment information. The operating segments presented in the following tables are presented on the same basis as that used for internal reporting purposes to the Board, which is the Chief Operating Decision maker (CODM).

 

                The group measures the performance of its operating segments based on revenue and profit from operations, before any exceptional items and amortisation. Accounting policies used for segment reporting reflect those used for the group. Inter-segment sales are priced on an arms-length basis. Costs and overheads incurred centrally are assigned to an unallocated segment.

 

                The principal activities used to identify the segments for reporting are as follows:

 

Recruitment software:       Supply of specialist recruitment software

HR and payroll software:   Supply of integrated HR and payroll solutions

Outsourcing:                        Outsourced HR, payroll and other services to schools in the state sector, and payroll bureau services to a variety of organisations in the state and private sectors.            

Unallocated items comprise mainly corporate and head office items.

 

BOND INTERNATIONAL SOFTWARE PLC

Unaudited notes for the year ended 31 December 2011 (cont'd)

 

2.             Segmental reporting (cont'd)

 

(a)           Operating segments (cont'd)

 

Segment information about these businesses is presented below.

               

Year ended 31 December 2011	Recruitment software £'000	HR and payroll software £'000	Outsourcing £'000	Unallocated £'000	Total Group £000
Revenue Sales to external customers	22,605	4,810	9,336	-	36,751
Result Operating profit/(loss) before the amortisation of intangible assets	2,746	1,967	1,659	(1,163)	5,209
Amortisation of internally generated development costs	(2,621)	-	-	-	(2,621)
Operating (loss)/ profit before the amortisation of acquired intangibles	125	1,967	1,659	(1,163)	2,588
Amortisation of acquired intangibles	(319)	(983)	(288)	-	(1,590)
Operating (loss)/profit before exceptionals	(194)	984	1,371	(1,163)	998
Exceptional items Impairment of intangible assets	(848) (1,368)	- -	- -	- -	(848) (1,368)
Operating (loss)/profit	(2,410)	984	1,371	(1,163)	(1,218)
Finance income Finance costs					23 (235)
Loss before income tax					(1,430)
Income tax credit					156
Loss for the year from continuing operations					(1,274)
Assets and liabilities Segment assets Segment liabilities	35,291 (9,541)	8,974 (2,338)	5,745 (1,406)	2,153 (4,937)	52,163 (18,222)
Total net assets/(liabilities)	25,750	6,636	4,339	(2,784)	33,941
Other segment information
Capital expenditure Property, plant & equipment Intangible assets	221 3,134	55 -	171 111	- 136	447 3,381
Depreciation	260	40	156	-	456
Amortisation of intangible assets Internally generated development costs Customer contracts Software	2,621 201 122	- 589 394	- 216 72	- - -	2,621 1,006 584

 

 

BOND INTERNATIONAL SOFTWARE PLC

Unaudited notes for the year ended 31 December 2011 (cont'd)

 

2.            Segmental reporting(cont'd)

 

(a)           Business segment (cont'd)

 

Year ended 31 December 2010	Recruitment software   £'000	HR and payroll software   £'000	Outsourcing   £'000	Unallocated   £'000	Total Group (restated) £000
Revenue Sales to external customers	16,769	4,944	6,601	-	28,314
Result Operating profit/(loss) before share of profit of joint ventures and amortisation of intangible assets	50	1,909	1,129	(882)	2,206
Share of profit of joint ventures	-	-	52	-	52
Amortisation of internally generated development costs	(2,364)	-	-	-	(2,364)
Operating (loss)/profit before the amortisation of acquired intangibles	(2,314)	1,909	1,181	(882)	(106)
Amortisation of acquired intangible assets	(99)	(1,010)	(145)	-	(1,254)
Operating (loss)/ profit	(2,413)	899	1,036	(882)	(1,360)
Finance income Finance costs					24 (127)
Loss before tax					(1,463)
Income tax expense					645
Loss for the year from continuing operations					(818)
Assets and liabilities Segment assets Segment liabilities	36,112 (8,946)	10,215 (2,969)	5,499 (1,224)	4,407 (6,784)	56,233 (19,923)
Total net assets/(liabilities)	27,166	7,246	4,275	(2,377)	36,310
Other segment information
Revenues from transactions with other operating segments	45	-	-	-	45
Capital expenditure (restated) Property, plant & equipment Intangible assets	133 2,902	- -	85 -	176 365	394 3,267
Depreciation (restated)	351	29	124	-	504
Amortisation of intangible assets (restated) Internally generated development costs Customer contracts Software	2,364 32 67	- 616 394	- 145 -	- - -	2,364 793 461

BOND INTERNATIONAL SOFTWARE PLC

Unaudited notes for the year ended 31 December 2011 (cont'd)

 

2.            Segmental reporting(cont'd)

 

(b)           Revenue by income type:

 

               

			2011 £000		2010 £000 (restated)
Sales
Software sales & associated services			11,116		9,224
Other consulting services			3,186		1,611
			14,302		10,835
Recurring revenue
Software support			12,118		9,952
Software rental income			4,181		2,537
Outsourcing			6,150		4,990
			22,449		17,479
Total revenue			36,751		28,314

 

                                               

(c)           Geographical areas        

 

                The further segmental information is provided in respect of the geographical region in which the subsidiary operates:

 

Year ended 31 December 2011					United Kingdom £'000	North America £'000	Asia Pacific £'000		Total Group £000
Revenue					24,631	10,363	1,757		36,751
Other income					-	-	-		-
Non Current Assets Property, plant & equipment Intangible assets					2,489 24,524	353 8,109	59 32		2,901 32,665
Total non current assets					27,013	8,462	91		35,566

 

Year ended 31 December 2010 (restated)			United Kingdom £'000	North America £'000	Asia Pacific £'000	Total Group £000
Revenue			20,348	6,728	1,238	28,314
Other income			261	-	-	261
Non Current Assets Property, plant & equipment Intangible assets			2,696 26,176	306 9,653	78 32	3,080 35,861
Total non current assets			28,872	9,959	110	38,941

 

 

BOND INTERNATIONAL SOFTWARE PLC

Unaudited notes for the year ended 31 December 2011 (cont'd)

 

3.             Exceptional items

 

 

		2011 £000		2010 £000 (restated)
Post acquisition reorganisation costs following acquisition of VCG Software LLC		308		-
Settlement of product liability claim		540		-
		848		-

 

 

 

 

 

 

 

 

 

 

 

4.             Income tax expense

                                                               

			2011 £000		2010 £000 (restated)
Current tax expense
UK Corporation tax			121		(66)
Foreign tax			-		1
Adjustment in respect of prior years			(30)		(484)
Total current tax			91		(549)
Deferred tax expense
Origination and reversal of temporary differences			1,286		673
Tax losses			(1,533)		(769)
			(247)		(96)
Total taxation reported in the consolidated financial statements			(156)		(645)

 

 

5.            (Loss)/earnings per share

 

(a)                           Basic

The basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to equity holders of the parent company by the weighted average number of ordinary shares in issue during the year.

 

	2011 £000		2010 £000 (restated)
Loss from continuing operations attributable to equity holders of the company (Loss)/profit from discontinued operations attributable to equity holders of the company	(1,274)   (635)		(818)   187
Total	(1,909)		(631)
Weighted average number of shares in issue (thousands)	36,584		33,529

 

BOND INTERNATIONAL SOFTWARE PLC

Unaudited notes for the year ended 31 December 2011 (cont'd)

 

5.            (Loss)/earnings per share (cont'd)

               

(b)           Diluted

The diluted (loss)/earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.  The company has two categories of dilutive potential ordinary shares; non voting convertible shares and share options.  The non voting convertible shares are assumed to have been converted into ordinary shares. For the share options a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the company's shares based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise of the share options. 

	2011 £000		2010 £000 (restated)
Loss from continuing operations attributable to equity holders of the company (Loss)/profit from discontinued operations attributable to equity holders of the company	(1,274)   (635)		(818)   187
Total	(1,909)		(631)
Weighted average number of shares in issue (thousands)	41,321		34,156

 

                                Options over 830,450 shares (2010: 1,190,120 shares) are antidilutive because the exercise price is higher than the average share price in the year and have not been included in the calculation of diluted earnings per share. The Chairman's Statement discusses a comparison between the earnings per share from continuing operations adjusted for the impact of the amortisation of certain intangible assets and the share based payment expense for the periods covered by this annual report. The adjusted earnings per share are based on adjusted profit calculated as follows: 

								2011								2010
								£000								£000 (restated)
Loss for the year form continuing operations								(1,274)								(818)
Adjustments:
Amortisation of intangible assets arising on acquisitions								1,590								1,254
Impairment charge								1,368
Share based payment expense								-								43
Exceptional items								848								-
Taxation effect								(584)								(353)
Adjusted profit									1,948								126
Adjusted earnings per share Basic Diluted										5.32p 4.71p								0.38p 0.37p

 

 

BOND INTERNATIONAL SOFTWARE PLC

Unaudited notes for the year ended 31 December 2011 (cont'd)

 

6.             Dividends

			2011 £000			2010 £000
Amounts recognised as distributions to equity holders in the period:
Final dividend paid in the year ended 31 December 2011 of 0.8p per share (2010: 0.8p per share)				330			265
Proposed final dividend for the year ended 31 December 2011 of 1.2p per share (2010: 0.8p per share)				496			330

 

The proposed final dividend was approved by the Board of Directors on 2 April 2012 and is payable to all shareholders on the Register of Members on 6 July 2012 and is subject to the approval of shareholders at the Annual General Meeting on 14 June 2012. In accordance with IAS10 'Events after the reporting period', the proposed final dividend has not been included as a liability in these financial statements.

 

7.             Reconciliation of loss before tax to net cash flow from operations    

	2011 £000					2010 £000
Continuing operations
Loss before tax		(1,430)				(1,463)
Adjustments for:
Depreciation of property, plant & equipment		456				505
Amortisation of internally generated development costs		2,621				2,364
Amortisation of acquired intangible assets		1,590				1,254
Impairment charge		1,368				-
(Profit)/loss on sale of property, plant & equipment		(5)				9
Share based payment expense		-				43
Share of profit from joint ventures		-				(52)
Profit on disposal of joint venture		-				(261)
Finance income		(23)				(23)
Finance costs		235				127
Operating cash flow before movements in working capital		4,812				2,503
Decrease in inventories		(10)				10
Decrease in trade and other receivables		1,154				770
Decrease in trade and other payables		(522)				(520)
Cash generated from continuing operations		5,434				2,763

 

Discontinued operations
(Loss)/profit before tax	(635)		271
Adjustments for:
Depreciation of property, plant & equipment	20		66
Amortisation of internally generated development costs	11		108
Amortisation of acquired intangible assets	26		109
Share based payment expense	-		24
Loss on sale of subsidiary	558		-
Operating cash flow before movements in working capital	(20)		578
Decrease in inventories	-		10
Decrease in trade and other receivables	229		(220)
Decrease in trade and other payables	(326)		(32)
Cash generated from discontinued operations	(117)		326
Cash generated from operations	5,317		3,089

                                               

BOND INTERNATIONAL SOFTWARE PLC

Unaudited notes for the year ended 31 December 2011 (cont'd)

 

8.             Intangible assets

	Goodwill £000	Software £000	Customers contracts and relationships acquired £000	Internally generated development costs £000	Total £000
At 1 January 2010
Cost	14,003	4,539	5,928	15,349	39,819
Accumulated amortisation and impairment	-	(1,898)	(1,848)	(5,151)	(8,897)
Net book amount	14,003	2,641	4,080	10,198	30,922
Year ended 31 December 2010
At 1 January 2010	14,003	2,641	4,080	10,198	30,922
Exchange differences	19	21	10	108	159
Additions	-	21	-	3,246	3,267
Acquisition through business combinations	2,523	373	2,453	-	5,348
Amortisation - continuing operations	-	(461)	(793)	(2,364)	(3,618)
Amortisation - discontinued operations	-	(109)	-	(108)	(217)
Closing net book amount	16,545	2,486	5,750	11,080	35,861
At 31 December 2010
Cost	16,545	4,688	8,392	18,745	48,370
Accumulated amortisation and impairment	-	(2,202)	(2,642)	(7,665)	(12,509)
Net book amount	16,545	2,486	5,750	11,080	35,861
Year ended 31 December 2011
At 1 January 2011	16,545	2,486	5,750	11,080	35,861
Exchange differences	5	-	(1)	6	10
Additions	-	205	-	3,176	3,381
Acquisition through business combinations	54	-	410	-	464
Disposal of subsidiary	(330)	(413)	-	(691)	(1,434)
Impairment charge	(1,368)	-	-	-	(1,368)
Amortisation - continuing operations	-	(584)	(1,006)	(2,621)	(4,211)
Amortisation - discontinued operations	-	(27)	-	(11)	(38)
Closing net book amount	14,906	1,667	5,153	10,939	32,665
At 31 December 2011
Cost	16,274	4,023	8,807	21,039	50,143
Accumulated amortisation and impairment	(1,368)	(2,356)	(3,654)	(10,106)	(17,478)
Net book amount	14,906	1,667	5,153	10,939	32,665

 

The capitalised internally generated development cost relates to costs incurred on specific product development programmes.

The remaining amortisation periods for software are between 6 and 7 years, customer contracts between 6 and 8 years and internally generated development costs up to 10 years.  The total charge for the amortisation of intangible fixed assets for the year is shown on the face of the Unaudited Consolidated Income Statement.

 

BOND INTERNATIONAL SOFTWARE PLC

Unaudited notes for the year ended 31 December 2011 (cont'd)

 

9.             Business Combinations

On 27 September 2011 the group acquired control of Matrix ICT Services Limited through the purchase of the entire issued share capital of the company for £100 together with contingent consideration based on the profits of Matrix for the year ended 31 December 2012.  Matrix ICT Services Limited provides outsourced ICT support services to state schools. The directors do not believe that any further consideration will be payable and no contingent consideration has been recognised in the accounts.

As a result of the acquisition the group is able to broaden the range of services it provides to schools, increase its customer base in the State Education sector and increase its recurring revenue stream in the outsourcing division.

The following summarises the consideration paid for Matrix ICT Services Limited and the provisional fair value of assets and liabilities at the date of acquisition:

	Fair value £000
Consideration	-
Recognised amounts of identifiable assets acquired and liabilities assumed
Property, plant and equipment	37
Contractual customer relationship (included in intangibles)	410
Trade and other receivables	32
Trade and other payables	(494)
Bank overdraft	(23)
Bank loan	(13)
Deferred tax assets/(liabilities)	(3)
Total identifiable net liabilities	(54)
Goodwill	54

Acquisition costs of £6,000 have charged to administrative expenses in the consolidated income statement for the year ended 31 December 2011.

The contingent consideration arrangement requires the group to pay in cash the former owners of Matrix ICT Services up to three times the excess of profit after tax for the year ended 31 December 2012 over £162,000.  Any contingent consideration is payable in instalments between April 2013 and July 2014. The fair value of the contingent consideration has been estimated at zero based on the forecast probability-adjusted profit in Matrix ICT Services Limited for the year to 31 December 2012.

The revenue included in the unaudited Consolidated Income Statement since 27 September 2011 contributed by Matrix ICT Services Limited was £134,000. Matrix ICT Services Limited also contributed a loss of £18,000 over the same period. Had Matrix ICT Services Limited been consolidated since 1 January 2011 the unaudited Consolidated Income Statement would show revenues of £37,309,000, an operating profit before the amortisation of acquired intangible assets of £166,000 and a loss before taxation of £1,417,000.

 

BOND INTERNATIONAL SOFTWARE PLC

Unaudited notes for the year ended 31 December 2011 (cont'd)

 

10.          Discontinued operations

On 8 April 2011 the group completed the disposal of Abacus Software Limited, its Web Services Division.  The Abacus business primarily represented a separate major line of business for the group although the disposal had a small impact on the results for the other group segments.  As a result of this disposal, these operations have been treated as discontinued operations for the year ended 31 December 2011.  A single amount is shown on the face of the income statement comprising the post-tax result of discontinued operations and the post tax loss recognised on the disposal of the business.

 

The table below provides further details of the results of Abacus Software Limited for the period up to the date of disposal.  The income statement for the prior year has been restated to show the discontinued operation separately from continuing operations.

 

									2011     £000			2010           £000
Revenue									798			4,033
Cost of sales								(82)			(596)
Gross profit									716			3,437
Administrative expenses								(755)			(2,949)
Amortisation of internally generated development costs								(11)			(108)
Amortisation of acquired intangible assets								(27)			(109)
(Loss)/profit before taxation								(77)			271
Income tax								-			(54)
(Loss)/profit after taxation								(77)			187
Loss on disposal of business								(558)			-
(Loss)/profit from discontinued operations								(635)			187

 

The net assets at the date of disposal were as follows:

	£000
Property, plant and equipment (note 5)	186
Goodwill	330
Other intangible assets	1,103
Trade and other receivables	1,166
Trade and other payables	(571)
Deferred tax liability	(216)
Net assets at date of disposal	1,998
Loss on disposal	(558)
Total consideration	1,440
Satisfied by:
Cash payable on completion  (net of costs) Fair value of deferred consideration	564 876
	1,440

 

 

 

OND INTERNATIONAL SOFTWARE PLC

Unaudited notes for the year ended 31 December 2011 (cont'd)

 

11.          Report and Accounts

 

Copies of the Report and Accounts will be circulated to shareholders shortly and may be obtained after the posting date from the Company Secretary, Bond International Software plc, Courtlands, Parklands Avenue, Goring by Sea, Worthing, West Sussex, BN12 4NG.