BDI.L Regulatory News (BDI)

FOR IMMEDIATE RELEASE 17 September 2013

BOND INTERNATIONAL SOFTWARE PLC

UNAUDITED INTERIM RESULTS

Bond International Software Plc ("the Group"), the specialist provider of software for the international recruitment and human resources industries, with operations in the UK, USA and Asia Pacific, today announces its unaudited interim results for the six months to 30 June 2013.

FINANCIAL HIGHLIGHTS

· Recurring revenue of £11.7m (2012: £11.7m) now represents 94% of fixed operating costs (2012 90%)

· Administration expenses reduced 5% to £12.4m (2012: £13.1m)

· Operating profit up 35% to £1.35m (2012: £1.0m)

· Diluted earnings per share of 1.18p (2012: 0.43p)

· Adjusted fully diluted earnings per share up 45% to 2.65p (2012: 1.83p)

· Net debt reduced from £1,790,000 to £208,000

OPERATIONAL HIGHLIGHTS

· Strong growth in Outsourcing Division

· HR and Payroll contract win with Carpetright announced March 2013

· Bond Adapt contract win with Academic Work announced May 2013

· New US recruitment software AdaptSuite launched February 2013 and gaining traction

· In line to meet market expectations for the full year

Commenting on the results, Group Chief Executive Steve Russell said:

"There is no doubt that confidence is returning to the major markets in which we currently operate. We are seeing an increase in demand for our staffing software both in the UK and the US which should lead to revenue growth in the second half of 2013 and into next year.

Bond continues to work with some of the world's largest recruitment companies on deals to sell them the latest version of Adapt which will hopefully result in a series of material contracts over the next few years. Our Asia Pacific operation is on track to complete their first major implementation in Japan which we expect to complete in the last quarter of the year. "

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Chairman's Statement

I am pleased to say that the group's operating profit before the amortisation of acquired intangible assets for the six months ended 30 June 2013 has risen by 35% to £1,344,000 from £995,000 in 2012 on revenues of £17,016,000 (2012: £17,443,000).

Recurring revenues are £11,719,000 (2012:£11,740,000) representing 69% of total revenues compared with 67% in 2012 and more importantly covering 94% of the group's fixed operating costs (excluding the amortisation of intangible assets) compared with 90% in 2012. As a result the group has nearly reached the position where its fixed operating costs are covered by recurring revenues.

During 2012 the group reduced administrative expenses by 5% to £12,446,000 (2012:£13,104,000) which has contributed to the overall increase in operating profit.

Profit before tax has therefore increased by 175% to £488,000 in the first half of the year (2012: £177,000) and basic earnings per share were 1.33p per share compared with 0.48p for the same period in 2012. 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 and one off exceptional items. On this basis the adjusted profit after tax was £1,094,000 (2012: £757,000) and the adjusted diluted earnings per share were up 45% to 2.65p (2012: 1.83p).

The group has seen strong cash generation in the first half of 2013 with a net inflow from operating activities of £3,504,000 (2012:£991,000) which has allowed the group to reduce net debt by £1,582,000 from £1,790,000 at the end of 2012 to £208,000 at 30 June 2013. With the reducing requirement for working capital and the renewal of the £6m facility with Barclays for a further three years, the headroom available to the group in its banking facilities will allow the board to consider acquisitions over the coming months.

Recruitment Software Division

In the UK we continue to see a shift towards the SaaS business model (Software as a Service) with the value of capital sales both to new and existing clients falling in line with expectations by 45% from the first six months of 2012 to the same period for 2013. As a result the income from licences and services fell by 12% to £1,774,000 (2012: £1,740,000). However we are seeing increasing user numbers and revenues from SaaS clients which over time will give greater quality revenues with more visibility.

The US is experiencing the same trend towards SaaS rather than the traditional licence model. Their product, AdaptSuite, was launched at the end of February 2013 and is gaining traction. The US also has a number of major prospects, all of whom could choose to acquire Adapt, either through the purchase of user licence and support or on a SaaS basis.

The focus of our efforts in Asia Pacific has been to implement the first major system in Japan and establish new offices in Singapore and Shanghai, both of which are vital to the group's prospects for growth in the region. When the group first signed the Japanese contract in June 2012, it received a non-refundable licence fee representing 30% of the contract value. The balance is due to be received and recognised as income in the second half of 2013 when the client goes live. This has contributed to lower revenues for the region in the first half of 2013 but should provide growth in the second half of the year.

Analysis of Recruitment Software Division revenues

Chairman's Statement (continued)

HR and Payroll Software Division

The HR & Payroll division supports a portfolio of HR and Payroll Solutions. Their target market is small to medium sized enterprises in both the private and public sector.

The division increased revenues by 14% to £2,649,000 (2012: £2,325,000) helped by a contract with Carpetright which we announced earlier this year and the increased workload arising from the Auto Enrolment process introduced by the Pensions Regulator which has created demand for our consultancy services. As a result the division made an operating profit before amortisation of intangible assets of £965,000 representing an 11% increase on the operating profit for the same period in 2012 of £867,000.

Outsourced HR & Payroll Services

This division comprises Strictly Education which provides outsourced HR, payroll and other services to schools in the UK state sector, and Bond Payroll Services which provides payroll services to organisations in both the private and public sectors.

The revenues for the division are a combination of monthly fees under annual contracts for a variety of outsourced services together with fees payable in respect of consulting services for projects undertaken on behalf of customers.

Strictly Education has seen a 14% increase in revenues from 2012 to 2013. Underpinning this growth is an increase of 11% in recurring income from annually renewable contracts. Recurring revenue now represents 110% of fixed overheads and creates a very low risk environment for this division. Non recurring revenues have also increased by 19% due to an increase in the installation of computer projects. Operating margins have grown from 12% in 2012 to 14% in 2013 resulting in an operating profit of £651,000 in 2013 (2012: £476,000), an increase of 37%.

As Local Authorities reduce their support services to schools the market opportunity is growing. Strictly Education is enjoying success through its 100% commitment to the schools sector. This is evidenced by winning a tender at the end of last year to be the only recommended support services partner for the NAHT (National Association of Head Teachers).

Bond Payroll Services has seen a 16% increase in revenues year on year to £1,133,000 (2012: £979,000) and operating profit is up by 18% to £295,000 (2012:£249,000). The business is now processing an average of 63,000 payslips per month which represents a 10% increase on last year. This follows additional investment in staff to improve customer service and retention rates as well as to generate new business through a greater sales and marketing effort.

Bond Payroll Services has also been looking at how it can better support its clients through specialising its efforts around provision of payroll services. As a result it now offers specialist recruitment payroll services to staffing organisations of all sizes which facilitate invoicing as well as payroll processing, and we have also developed services surrounding the introduction of Automatic Enrolment giving our clients further support with the new complex administration that is being introduced as part of this legislation change.

The world of payroll has become more complex in recent years with an increase in legislation and is set to continue in this vein for the immediate future. Bond Payroll Services is perfectly situated to support organisations in this discipline.

Product Strategy

The group continues to invest a significant proportion of revenues in enhancing its product portfolio although overall expenditure on development fell slightly to £2,209,000 in 2013 compared with £2,530,000 for the same period last year.

Current trading and future prospects

There is no doubt that confidence is returning to the major markets in which we currently operate. The US and UK economies are growing and the stock index for US staffing companies reached its highest level for 5 years during the first half of 2013. As a consequence we are seeing an increase in demand for our staffing software both in the UK and the US which we expect to lead to revenue growth in the second half of 2013 and into next year. One of the principal drivers for this growth will be the increasing demand from medium sized recruitment companies who now have the confidence to make the investment required to update their technology platform and take advantage of the latest functionality. Combined with this we continue to work with some of the world's largest recruitment companies on deals to sell them the latest version of Adapt which will hopefully result in a series of contracts over the next few years. Our Asia Pacific operation is working flat out on its first major implementation in Japan and which it expects to complete in the last quarter of the year. The successful rollout will not only bring in significant revenues in the last quarter, but the board believes it will be the key to unlocking other significant deals in Japan.

Our HR & Payroll teams are working hard to deliver the support our clients require to comply with the new legislation on pensions which requires employers to do more to help their staff save for their retirement through Automatic enrolment into company pension schemes and Strictly Education will continue to increase its market share as Local Authorities cut back on the services they provide to schools.

The board looks forward to the remainder of the year and remains confident that the group will meet current market expectations for the full year.

Martin Baldwin

Chairman

17 September 2013

Consolidated income statement for the six months ended 30 June 2013 (unaudited)

Consolidated statement of comprehensive income for the six months ended 30 June 2013 (unaudited)

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

Consolidated balance sheet at 30 June 2013 (unaudited)

For the purposes of the cash flow statement, cash includes deposits at call with financial institutions less bank overdrafts forming part of the working capital management.

Notes to the financial statements (continued)

1. Basis of preparation

Bond International Software Plc is incorporated in England and domiciled in the United Kingdom. Its registered office is Courtlands, Parklands Avenue, Goring, West Sussex BN12 4NG and its principal activities are the provision of software solutions to companies operating in the recruitment industry, the provision of HR and payroll software and the provision of outsourced services. The financial statements are prepared in pounds sterling.

The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the requirements of International Accounting Standard (IAS) 34 'Interim Financial Reporting'.

The interim financial statements are unaudited and were approved by the Board of Directors on 16 September 2013. The financial information contained in these statements does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the year ended 31 December 2012 has been extracted from the statutory accounts for that year which received an unqualified audit report and did not contain a statement made under Section 498(2) and (3) of the Companies Act 2006, and have been filed with the Registrar of Companies.

2. Segmental Review

(i) Operating segments

Segmental information is presented in respect of the Group's business segments. The primary business segments are based on the Group's reporting structure.

Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise corporate and head office expenses.

Revenue

(ii) Segmental analysis by location of operating company

Revenue

2. Segmental review (cont'd)

 (iii) Revenues by income type are:

3. Income tax expense/(credit)

4. Earnings per share

(a) Basic

The basic earnings per share is calculated by dividing the profit attributable to equity holders of the parent company by the weighted average number of shares in issue.

4. Earnings per share (continued)

(b) Diluted

The diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume the 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 market share price of the company's shares during the period) 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.

(c) Adjusted

The Chairman's Statement refers to the earnings per share adjusted for the impact of the amortisation of certain intangible assets and share based payments. The adjusted earnings per share are based on the adjusted attributable profit calculated as follows:

5. Dividend

A dividend for 2012 of 1.8p per share was approved by the Annual General Meeting on 20 June 2013 and was paid to shareholders on 2 August 2013.

6. Reconciliation of profit before tax to net cash flow from operations