5 Apr 2011 07:00
FOR IMMEDIATE RELEASE 5 April 2011
2010 UNAUDITED PRELIMINARY RESULTS
Bond International Software plc, the specialist provider of software for the international recruitment and human resources industries, with operations in the UK, USA, Hong Kong, Japan and Australia, today announces its unaudited preliminary results for the year ended 31 December 2010.
KEY POINTS
·; Revenue of £32.4m (2009: £32.5m)
·; Recurring revenue grew by 7% to £18.7m (2009: £17.4m) representing 58% of revenue
·; Operating margins (before share of joint ventures and amortisation of intangible assets) reduced to 8% (2009: 11%) reflecting:
o Change in mix of licences and services
o Small number of labour intensive projects
o Lack of new business sales
·; Adjusted* profit after tax of £0.4m (2009: £1.3m)
·; Loss after tax £0.6m (2009: profit £171,000)
·; Adjusted* earnings per share of 1.23p (2009: 3.79p)
·; Net cash generated from operating activities of £3.3m (2009: £2.6m)
·; Net debt reduced by £0.42m (2009: increase in net debt of £2.17m)
·; Proposed dividend unchanged at 0.8p
* Adjusted for the amortisation of acquired intangibles and share based payments expense.
Commenting on the results Chief Executive Steve Russell, said:
"There is no doubt that the vertical and geographical markets in which the group operates improved in the second half of 2010 This together with the new and exciting products that the group is bringing to market gives the board optimism for 2011 and beyond.."
For further information, please contact:
Bond International Software plc: | Tel: 01903 707070 ir@bond.co.uk www.bondinternationalsoftware.com |
Steve Russell: Group Chief Executive |
|
Bruce Morrison: Group Finance Director |
|
| Buchanan Communications: | Tel: 020 7466 5000 |
Tim Thompson | |
Chris McMahon | |
Gabriella Clinkard | |
Cenkos Securities Limited | Tel: 020 7397 8900 |
Stephen Keys |
BOND INTERNATIONAL SOFTWARE PLC
Chairman's Statement
Financial overview
With signs of recovery in the staffing industry, the group's revenues have remained largely unchanged at £32,372,000 compared to £32,537,000 in 2009.
The group's gross margin fell from 91.9% in 2009 to 87.5% in 2010 for two reasons. Firstly, the group acquired the remaining 50% of Strictly Education Solutions in July 2010 and this company operates on a lower gross margin than the rest of the group. Secondly, the nature of the orders taken in 2010 in the staffing software business has required us to supplement our own resource with external contractors. As a result, despite reducing our overheads by 7.1% excluding the effects of the acquisitions made during 2010, our operating margins have reduced to 8.3% in 2010 compared with 10.8% in 2009. This reflected the change in mix of licence and service revenues and the continuing trend of selling software on a rental basis rather than the traditional capital sale. As a result, operating profit before amortisation of intangible assets was £2,695,000 compared with £3,511,000 last year. The trend toward software sold on a rental basis will provide the group with strong growth in recurring revenues in future years.
Recurring revenue continued its upward trend and grew by 7.4% in 2010 to £18,674,000 (2009: £17,391,000) and represented 58% of sales, up from 53% in 2009 and covered 73% of group administrative expenses compared with 66% last year. This combined with a number of major projects set to complete their roll out during 2011 means that the board expects the level of recurring revenue to continue to grow in excess of overheads.
The group has reported a loss per share of 1.85p (2009: earnings 0.52p). 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 intangible assets arising on acquisitions and the charge for share based payments. On this basis the adjusted profit after tax was £417,000 (2009: 1,251,000) and the adjusted earnings per share were 1.23p (2009: 3.79p).
The group generated £3,310,000 from its operating activities (2009: £2,577,000) and managed to reduce overall net debt by £420,000 despite total capital expenditure of £3,661,000, the majority of which was invested in product development. This compares with an increase in net debt in 2009 of £2,167,000.
I am pleased to say that the board is recommending the payment of a dividend of 0.8p, unchanged from last year. The payment is subject to shareholder approval at the Annual General Meeting and, if approved by shareholders, will be made on 5 August 2011 to shareholders on the register at 8 July 2011.
Acquisitions
During the year the group continued its expansion by making two acquisitions. In July 2010 the group acquired the remaining 50% of Strictly Education Solutions Limited (formerly Eduaction2 Limited) for a consideration of £160,000. The acquisition allowed us to merge its business with that of Strictly Education Limited, to take advantage of economies of scale and to broaden the range of services we provide to our existing customer base.
In November 2010 we announced the acquisition of VCG LLC for a total consideration of $9.2million. This company, based in Atlanta Georgia, is involved in the provision of staffing software solutions in the USA. With its significant user base, the acquisition of VCG reinforces our position as a leading supplier of software to the US staffing industry as well as increasing the group's recurring income base.
Further details of the acquisitions are set out in Note 8.
Employees
The group now employs nearly 500 people in our offices around the world. Our business relies heavily on a motivated and committed workforce and on behalf of the board I would like to thank all of the staff for their continuing hard work, loyalty and dedication to the group.
Prospects
There is no doubt that both the vertical and geographical markets in which the group operates improved in the second half of 2010. Renewed confidence in prospects for the staffing industry should now allow staffing companies to make the investments in capital projects which will benefit the group. This together with the new and exciting products that the group is bringing to market gives the board optimism for 2011 and beyond.
Martin Baldwin
Chairman
5 April 2011
BOND INTERNATIONAL SOFTWARE PLC
Group Chief Executive's Report
Overview
2010 was a testing year for the group. The downturn in trading conditions in the last quarter of 2009 carried right through 2010. The staffing industry has now started to recover with most companies showing signs of growth last year but only recently have we seen confidence returning sufficiently for them to start making substantial investment decisions.
However, our decision to diversify into other areas of Human Capital Management has allowed us to continue trading profitably (before amortisation of acquired intangible assets) and our overall revenues have held up well. Margins, however, have been significantly affected and as a result, we have seen a fall in operating profit, before amortisation, to £2,695,000 (2009: £3,511,000).
The group's operations are organised into four divisions covering recruitment software, HR & payroll software, outsourcing and web services.
Recruitment software
Recruitment software accounted for 52% of group revenues in 2010 compared with 56% in 2009.
Recruitment software revenue by type | 2010 £000 | 2009 £000 | |
Software sales & services | 7,796 | 9,712 | |
Software support | 6,435 | 6,112 | |
Software rental income | 2,537 | 2,323 | |
16,768 |
18,147 | ||
Hardware and other sales | 1 | 23 | |
Total revenues | 16,769 | 18,170 |
Revenues | Operating profit* | ||||||
Revenue and operating profit* by location of operating company | 2010 £000 | 2009 £000 | 2010 £000 | 2009 £000 | |||
United Kingdom | 8,803 | 9,904 | 110 | 2,035 | |||
USA | 6,728 | 7,370 | 300 | 444 | |||
Asia Pacific | 1,238 | 896 | (333) | (215) | |||
16,769 | 18,170 | 77 | 2,264 | ||||
*before amortisation of intangible assets and share of profit from joint venture
This division has experienced the most difficult trading conditions seeing an 8% fall in sales as well as declining margins. There are a number of contributing factors, the principal ones being the impact of the recession on our customer base, the changing mix of licence and service revenues and the continuing transition from traditional capital sale to the rental model.
In 2010 our UK Adapt operation gained 86 new clients, of which 17 were on the basis of a licence sale, the balance being on rental. The picture was very similar in the US where of the 22 new clients we signed in 2011, 16 were on a rental basis.
Account Management income which comprises the sale of software and services to existing clients, has seen some recovery up by some 28% on the previous year. However new business sales have seen a decline of 22% compared to 2009.
We have seen an increase of 5% in recurring revenues from software support, and, as the fortunes of the staffing industry improve, we should see revenues from software support continue to grow.
Geographically the UK has experienced an 11% fall in revenues from £9,904,000 to £8,803,000 and the US has seen a 9% fall in revenues from £7,370,000 in 2009 to £6,728,000 in 2010.
Our operating margins have also been affected by losses experienced in Asia Pacific together with the increased operating costs as a result of opening our new office in Japan.
HR and payroll software
Whilst revenues have reduced by 8.6% to £4,944,000 (2009: £5,410,000), operating profit before amortisation of intangible assets has increased from £1,299,000 in 2009 to £1,909,000 in 2010, primarily as a result of the reorganisation that took place in the last quarter of 2009 which led to significant reductions in operating costs. As a result operating margins have improved from 24% to 38%. One of the strengths of the HR & Payroll Division is its level of recurring revenues which account for 71% of total revenues. The revenues derived from support now represent 116% of the fixed operating costs of this division. We are currently looking to expand this operation by maximising the opportunities presented by cross selling as well as re-launching Payrite.
Outsourcing
This division comprises two distinct operations, Strictly Education which provides outsourced HR, payroll and other services to schools in the state sector, and Bond Payroll Services which provides payroll bureau services to a variety of organisations in the state and private sectors.
Strictly Education has had another successful year with revenues increasing by 51% to £4,906,000 compared with £3,252,000 in 2009 and operating profit before amortisation increasing by 73.7% to £563,000 (2009: £324,000). The growth has been achieved through a combination of organic growth and the acquisition of Strictly Education Solutions in July 2010. This acquisition has also added the ability to provide schools with additional services such as ICT support and ancillary services such as cleaning, special needs assistants and grounds maintenance. The government's announcement to allow schools to apply for academy status has allowed Strictly Education to offer assistance and it is in the throes of helping over 50 schools go through the necessary steps to achieve this, with many more in the pipeline.
2010 has seen continued growth for Bond Payroll Services. Significant new clients include Redefine Hotels, Age UK and many NCVO members in the charity sector. Other growth areas have been in the Human Capital Management arena, delivering managed HR services, and international payroll solutions increasing Bond's global offerings. This allowed Bond Payroll Services to grow revenues by nearly 9% from £1,582,000 in 2009 to £1,695,000 in 2010. The business has also taken steps to reduce its operating costs by merging two offices in the last quarter of 2010 and the cost of this exercise has temporarily reduced operating margins, though the business will feel the benefit through reduced operating costs in 2011. As a result, Bond Payroll Services made an operating profit of £271,000 in 2010 (2009: £283,000).
Web services
Abacus is a leading supplier of digital technology to the business-to-business media and public sectors.
Revenue in 2010 was £4,033,000, down 9% on 2009, reflecting the difficult market conditions in both sectors. Within these figures however there was some good news in that recurring revenues were up 21% reflecting the move to SAAS (Software as a service) and annualised license fees. As a result of the fall in revenues, operating profit before amortisation has reduced to £438,000 compared to £570,000 in 2009.
Casis Media was a significant new client win this year, and existing clients like EMAP, Macmillan and UBM continued to invest in their digital future. Important projects included the development of IFR China for Thomson Reuters and the Pitch marketing site for Centaur Media. Major government wins include a recruitment partnership portal for Bournemouth and Poole, and a new web presence for Lincolnshire County Council.
Product strategy
We continue to invest a significant proportion of our revenue in enhancing our products with overall expenditure on development rising to £4,677,000 which is 14.5% of revenue compared with £4,993,000 in 2009 which was 15.3% 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 ongoing development of Bond Talent in preparation for its launch in 2011, on Vantage which is a product designed for the Executive Search market and Employ, a product designed to support the Government's Work Programme.
The group has also invested in the development of a new product for Audience Development which has been written to support Abacus' customers in the publishing industry.
People
These have been difficult times for the group but our ability to work through the problems presented by the economic recession is in no small part due to the hard work of the staff and I would like to thank them all for helping us in the continued development of the group. I would also like to welcome the new additions to the workforce following the acquisitions of Strictly Education Solutions and VCG in 2010.
Outlook
There is clear evidence that a sustainable recovery is underway, particularly in the staffing industry, where many companies are showing significant revenue and profits growth. As this improvement continues, companies will again invest in technology, and the group, with its portfolio of leading edge products, remains in an excellent position to benefit.
Steve Russell
Group Chief Executive
5 April 2011
BOND INTERNATIONAL SOFTWARE PLC
Unaudited consolidated income statement for the year ended 31 December 2010
Note | 2010 £000 | 2009 £000 | |||
Revenue |
2 |
32,372 |
32,537 | ||
Cost of sales | (4,043) | (2,649) | |||
Gross profit | 28,329 | 29,888 | |||
Post-acquisition reorganisation costs Administrative expenses Expenses of acquisitions | - (25,722) (173) | (134) (26,243) - | |||
Total administrative expenses | (25,895) | (26,377) | |||
Other income - profit on disposal of joint ventures | 261 | - | |||
Operating profit before share of profit of joint ventures and amortisation of intangible assets |
2 | 2,695 |
3,511 | ||
Share of post tax profits of joint ventures | 52 | 87 | |||
Amortisation of internally generated development costs | (2,472) | (1,987) | |||
Operating profit before the amortisation of acquired intangible assets | 275 | 1,611 | |||
Amortisation of acquired intangible assets | (1,363) | (1,299) | |||
Operating (loss)/profit | (1,088) | 312 | |||
Finance income | 23 | 16 | |||
Finance costs | (127) | (111) | |||
(Loss)/profit on ordinary activities before tax | (1,192) | 217 | |||
Income tax credit/(expense) | 3 | 561 | (46) | ||
(Loss)/profit for the year attributable to the owners of the parent | (631) | 171 | |||
(Loss)/Earnings per share (pence) | 4 | ||||
Basic Diluted | (1.85p) (1.85p) | 0.52p 0.52p |
BOND INTERNATIONAL SOFTWARE PLC
Unaudited consolidated statement of comprehensive income for the year ended 31 December 2010
2010 £000 | 2009 £000 | ||||
(Loss)/profit for the year | (631) | 171 | |||
Other comprehensive income net of tax | |||||
Currency translation differences on foreign currency net investments | 187 |
(411) | |||
Other comprehensive income net of tax | 187 |
(411) | |||
| Total comprehensive income for the year attributable to the owners of the parent. | (444) |
(240) | |||
There are no taxation effects in respect of the foreign currency translation differences.
BOND INTERNATIONAL SOFTWARE PLC
Unaudited consolidated balance sheet at 31 December 2010 Company number: 2142222
Note | 2010 £000 | 2009 £000 | |||
ASSETS | |||||
Non-current assets Property, plant and equipment Intangible assets Investments in joint ventures accounted for using equity method Deferred tax assets |
7 |
3,080 35,861 - 2,756 |
3,073 30,922 177 943 | ||
41,697 |
35,115 | ||||
Current assets Inventories Trade and other receivables Cash and cash equivalents |
|
49 11,456 3,031 |
59 10,132 1,392 | ||
14,536 |
11,583 | ||||
Total assets | 56,233 | 46,698 | |||
EQUITY Share capital Share premium account Equity option reserve Currency translation reserve Retained earnings |
|
413 23,863 731 (274) 11,577 |
331 17,906 757 (461) 12,380 | ||
Total equity attributable to the owners of the parent | 36,310 | 30,913 | |||
LIABILITIES | |||||
Non-current liabilities Borrowings Deferred tax liabilities |
|
5,451 3,322 |
141 2,991 | ||
|
8,773 |
3,132 | |||
Current liabilities Trade and other payables Current income tax liabilities Borrowings |
|
11,010 20 120 |
8,364 79 4,210 | ||
11,150 |
12,653 | ||||
Total liabilities | 19,923 | 15,785 | |||
Total liabilities and equity | 56,233 | 46,698 |
BOND INTERNATIONAL SOFTWARE PLC
Unaudited consolidated cash flow statement for the year ended 31 December 2010
Note | 2010 £000 | 2009 £000 | |||
Cash flows from operating activities |
|
| |||
Cash generated from operations Interest paid Income tax received/(paid) | 6
| 3,089 (127) 348 | 3,307 (111) (619) | ||
Net cash generated from operating activities | 3,310 | 2,577 | |||
Cash flows from investing activities Acquisition of subsidiaries net of cash acquired Acquisition of trade and assets Interest received Purchase of property, plant and equipment Purchase of intangible assets Proceeds from sale of property, plant and equipment |
|
(4,980) - 23 (394) (3,267) 2 |
- (26) 16 (549) (3,673) 4 | ||
Net cash used in investing activities | (8,616) | (4,228) | |||
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 |
|
6,039 5,400 (303) (28) - (46) (265) |
28 98 (109) (32) 71 (46) (528) | ||
Net cash from/(used in) financing activities | 10,797 | (518) | |||
Increase/(decrease) in cash, cash equivalents and bank overdrafts for the year | 5,491 | (2,169) | |||
| Cash, cash equivalents and bank overdrafts at the beginning of the year | (2,602) | (402) | |||
Effects of foreign exchange rate changes | 142 | (31) | |||
| Cash, cash equivalents and bank overdrafts at the end of the year | 3,031 | (2,602) | |||
| Shown as: | |||||
| Cash and cash equivalents | 3,031 | 1,392 | |||
| Bank overdraft | - | (3,994) | |||
| Cash, cash equivalents and bank overdrafts at the end of the year | 3,031 | (2,602) |
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.
BOND INTERNATIONAL SOFTWARE PLC
Unaudited consolidated statement of changes to shareholders' equity for the year ended 31 December 2010
| Attributable to the 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 2009 |
330 |
17,879 |
640 |
(50) |
12,709 |
31,508 | |
Comprehensive income: Profit for the financial year |
- |
- |
- |
- |
171 |
171 | |
Other comprehensive income net of tax: Currency translation differences |
- |
- |
- |
(411) |
- |
(411) | |
Total comprehensive income for the year |
- |
- |
- |
(411) |
171 |
(240) | |
Transactions with owners: Dividend paid |
- |
- |
- |
- |
(528) |
(528) | |
Issue of ordinary shares | 1 | 27 | - | - | - | 28 | |
Share based payment expense | - | - | 145 | - | - | 145 | |
Share options lapsed or exercised | - | - | (28) | - | 28 | - | |
Total transactions with owners | 1 | 27 | 117 | - | (500) | (355) | |
At 31 December 2009 | 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 issue of ordinary shares | 82 | 6,057 | - | - | - | 6,139 | |
Cost of 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 | |
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 unaudited consolidated income statement and unaudited consolidated statement of comprehensive income.
BOND INTERNATIONAL SOFTWARE PLC
Unaudited notes for the year ended 31 December 2010
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 2010 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 2011, 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 2009 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 5 April 2011.
2. Segmental Reporting
(a) Operating segments
For management purposes, the group is currently organised into four operating segments - Recruitment software, HR and payroll software, outsourcing and web services. 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 makers (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.
Web services: Supplier of digital service development to the business-to-business media
Unallocated items comprise mainly corporate and head office items.
BOND INTERNATIONAL SOFTWARE PLC
Unaudited notes for the year ended 31 December 2010 (cont'd)
2. Segmental reporting (cont'd)
(a) Operating segments (cont'd)
Segment information about these businesses is presented below.
| Recruitment software £'000 | HR and payroll software £'000 |
Outsourcing £'000 | Web services £'000 |
Unallocated £'000 | Total Group £000 |
Year ended 31 December 2010 | ||||||
Revenue Sales to external customers |
16,769 |
4,944 |
6,626 |
4,033 |
- |
32,372 |
Result Operating profit/(loss) before share of profit of joint ventures and amortisation of intangible assets |
77 |
1,909 |
1,129 |
438 |
(858) |
2,695 |
Share of profit of joint ventures | - | - | 52 | - | - | 52 |
Amortisation of internally generated development costs |
(2,364) |
- |
- | (108) |
- | (2,472) |
Operating (loss)/profit before amortisation of acquired intangibles |
(2,287) |
1,909 |
1,181 | 330 |
(858) | 275 |
Amortisation of acquired intangible assets |
(99) |
(1,119) |
(145) | - |
- | (1,363) |
Operating (loss)/profit |
(2,386) |
790 |
1,036 | 330 |
(858) | (1,088) |
Finance income Finance costs | 23 (127) | |||||
Loss before tax | (1,192) | |||||
Income tax credit | 561 | |||||
Loss for the year |
(631) | |||||
Assets and liabilities Segment assets Segment liabilities |
36,112 (8,946) |
10,215 (2,969) |
5,499 (1,224) |
3,639 (923) |
768 (5,861) |
56,233 (19,923) |
Total net assets/(liabilities) |
27,166 |
7,246 |
4,275 |
2,716 |
(5,093) |
36,310 |
Other segment information | ||||||
Amount of investment in joint ventures | - | - | - | - | - | - |
Revenues from transactions with other operating segments | 45 | - | - | - | - | 45 |
Capital expenditure Property, plant & equipment Intangible assets |
133 2,902 | - - | 85 - | 176 365 | - - | 394 3,267 |
Depreciation | 320 | 29 | 124 | 67 | 31 | 571 |
Amortisation of intangible assets Internally generated development costs Customer contracts Software | 2,364 32 67 | - 616 503 | - 145 - | 108 - - | - - - |
2,472 793 570 |
BOND INTERNATIONAL SOFTWARE PLC
Unaudited notes for the year ended 31 December 2010 (cont'd)
2. Segmental reporting (cont'd)
(a) Business segment (cont'd)
|
Recruitment software £'000 |
HR and payroll software £'000 |
Outsourcing £'000 |
Web services £'000 |
Unallocated £'000 |
Total Group £000 |
Year ended 31 December 2009 | ||||||
Revenue Sales to external customers |
18,170 |
5,410 |
4,661 |
4,296 |
- |
32,537 |
Result Operating profit/(loss) before share of profit of joint ventures and amortisation of intangible assets |
2,264 |
1,299 |
545 |
570 |
(1,167) |
3,511 |
Share of profit of joint ventures | - | - | 87 | - | - | 87 |
Amortisation of internally generated development costs |
(1,903) |
(23) |
- | (61) |
- | (1,987) |
Operating (loss)/profit before amortisation of acquired intangibles |
361 |
1,276 |
632 | 509 |
(1,167) | 1,611 |
Amortisation of acquired intangible assets |
(62) |
(1,092) |
(145) | - |
- | (1,299) |
Operating profit |
299 |
184 |
487 | 509 | - (1,167) | 312 |
Finance income Finance costs | 16 (111) | |||||
Profit before tax | 217 | |||||
Income tax expense | (46) | |||||
Profit for the year |
171 | |||||
Assets and liabilities Segment assets Segment liabilities |
25,757 (7,116) |
11,312 (3,039) |
5,060 (1,147) |
4,000 (1,253) |
569 (3,230) |
46,698 (15,785) |
Total net assets/(liabilities) |
18,641 |
8,273 |
3,913 |
2,747 |
(2,661) |
30,913 |
Other segment information | ||||||
Amount of investment in joint ventures | - | - | 177 | - | - | 177 |
Revenues from transactions with other operating segments | - | 100 | 256 | 81 | - | 437 |
Capital expenditure Property, plant & equipment Intangible assets | 315 3,368 | 16 72 | 125 - | 24 233 | 69 - | 549 3,673 |
Depreciation | 329 | 36 | 59 | 56 | 42 | 522 |
Amortisation of intangible assets Internally generated development costs Customer contracts Software | 1,903 7 55 | 23 589 503 | - 145 - | 61 - - | - - - |
1,987 741 558 |
BOND INTERNATIONAL SOFTWARE PLC
Unaudited notes for the year ended 31 December 2010 (cont'd)
2. Segmental reporting (cont'd)
(b) Revenue by income type:
2010 £000 | 2009 £000 | |||||
Sales | ||||||
Software sales & services | 13,685 | 15,093 | ||||
Hardware and other sales | 13 | 53 | ||||
13,698 | 15,146 | |||||
Recurring revenue | ||||||
Software support | 11,367 | 11,361 | ||||
Software rental income | 2,537 | 2,323 | ||||
Software as a service | 4,770 | 3,707 | ||||
18,674 | 17,391 | |||||
Total revenue | 32,372 | 32,537 |
(c) Geographical areas
The further segmental information is provided in respect of the geographical region in which the subsidiary operates:
Year ended 31 December 2010 | United Kingdom £'000 | North America £'000 |
Asia Pacific £'000 | Total Group £000 |
Revenue | 24,406 | 6,728 | 1,238 | 32,372 |
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 |
|
28,872 |
9,959 |
110 |
38,941 |
Year ended 31 December 2009 | United Kingdom £'000 | North America £'000 |
Asia Pacific £'000 | Total Group £000 |
Revenue | 24,271 | 7,370 | 896 | 32,537 |
Other income |
- | - |
- | - |
Non Current Assets Property, plant & equipment Intangible assets |
2,623 25,799 |
369 5,091 |
81 32 |
3,073 30,922 |
|
28,422 |
5,460 |
113 |
33,995 |
BOND INTERNATIONAL SOFTWARE PLC
Unaudited notes for the year ended 31 December 2010 (cont'd)
3. Income tax expense
2010 £000 | 2009 £000 | ||||
Current tax expense | |||||
UK Corporation tax | 15 | 258 | |||
Foreign tax | 1 | 2 | |||
Adjustment in respect of prior years | (484) | (1) | |||
Total current tax | (468) | 259 | |||
Deferred tax expense | |||||
Origination and reversal of temporary differences | 676 | (404) | |||
Tax losses | (769) | 191 | |||
(93) | (213) | ||||
Total taxation reported in the consolidated financial statements | (561) | 46 | |||
4. (Loss)/earnings per share
The basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to equity shareholders of the parent company by the weighted average number of ordinary shares in issue during the year.
The diluted (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to equity shareholders of the parent company by the weighted average number of ordinary shares in issue during the year (adjusted for the effects of potentially dilutive share options).
The calculation of (loss)/earnings per share is based on the following data:
2010 | 2009 | |||||||
Basic | Potentially dilutive share options |
Diluted |
Basic | Potentially dilutive share options |
Diluted | |||
Earnings: | ||||||||
(Loss)/profit after tax (£'000) | (631) | - | (631) | 171 | - | 171 | ||
Weighted average number of shares (000's) |
34,138 |
18 |
34,156 |
33,017 |
18 |
33,035 | ||
(Loss)/Earnings per share (pence) |
(1.85) |
- |
(1.85) |
0.52 |
- |
0.52 | ||
BOND INTERNATIONAL SOFTWARE PLC
Unaudited notes for the year ended 31 December 2010 (cont'd)
4. Earnings per share (cont'd)
The Chairman's Statement discusses a comparison between 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 attributable profit calculated as follows:
2010 | 2009 | ||||
£000 | £000 | ||||
(Loss)/profit for the year | (631) | 171 | |||
Adjustments: | |||||
Amortisation of intangible assets arising on acquisitions | 1,363 | 1,299 | |||
Share based payment expense | 67 | 145 | |||
Taxation effect | (382) | (364) | |||
Adjusted profit | 417 | 1,251 | |||
Adjusted earnings per share Basic Diluted |
1.23p 1.23p |
3.79p 3.79p | |||
5. Dividends
2010 £000 | 2009 £000 | ||||
Amounts recognised as distributions to equity holders in the period: | |||||
Final dividend paid in the year ended 31 December 2010 of 0.8p per share (2009: 1.6p per share) |
265 |
528 | |||
Proposed final dividend for the year ended 31 December 2010 of 0.8p per share (2009: 0.8p per share) |
330 |
265 | |||
The proposed final dividend was approved by the Board of Directors on April and is payable on 5 August 2011 to all shareholders on the Register of Members on 8 July 2011 and is subject to the approval of shareholders at the Annual General Meeting. In accordance with IAS10 'Events after the balance sheet date', the proposed final dividend has not been included as a liability in these financial statements.
6. Reconciliation of (loss)/profit before tax to net cash flow from operations
2010 £000 | 2009 £000 | ||
(Loss)/profit before tax | (1,192) | 217 | |
Adjustments for: | |||
Depreciation of property, plant & equipment | 571 | 522 | |
Amortisation of internally generated development costs | 2,472 | 1,987 | |
Amortisation of acquired intangible assets | 1,363 | 1,299 | |
Loss on sale of property, plant & equipment | 9 | - | |
Share based payment expense | 67 | 145 | |
Share of profit from joint ventures | (52) | (87) | |
Other income - profit on disposal of joint venture | (261) | - | |
Finance income | (23) | (16) | |
Finance costs | 127 | 111 | |
Operating cash flow before movements in working capital | 3,081 | 4,178 | |
Decrease in inventories | 10 | 2 | |
Decrease in trade and other receivables | 550 | 975 | |
Decrease in trade and other payables | (552) | (1,848) | |
Cash generated from operations | 3,089 | 3,307 |
BOND INTERNATIONAL SOFTWARE PLC
Unaudited notes for the year ended 31 December 2010 (cont'd)
7. Intangible assets
Goodwill £000 |
Software £000 | Customers contracts and relationships acquired £000 | Internally generated development costs £000 |
Total £000 | |
At 1 January 2009 | |||||
Cost | 13,998 | 4,539 | 5,934 | 12,138 | 36,609 |
Accumulated amortisation and impairment | - | (1,344) | (1,108) | (3,373) | (5,825) |
Net book amount | 13,998 | 3,195 | 4,826 | 8,765 | 30,784 |
Year ended 31 December 2009 | |||||
At1 January 2009 | 13,998 | 3,195 | 4,826 | 8,765 | 30,784 |
Exchange differences | (21) | (2) | (5) | (247) | (275) |
Additions | - | 6 | - | 3,667 | 3,673 |
Acquisition through business combinations | 26 | - | - | - | 26 |
Amortisation charge | - | (558) | (741) | (1,987) | (3,286) |
Closing net book amount | 14,003 | 2,641 | 4,080 | 10,198 | 30,922 |
At 31 December 2009 | |||||
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 | |||||
At1 January 2010 | 14,003 | 2,641 | 4,080 | 10,198 | 30,922 |
Exchange differences | 19 | 21 | 11 | 108 | 159 |
Additions | - | 21 | - | 3,246 | 3,267 |
Acquisition of subsidiary | 2,523 | 373 | 2,452 | - | 5,348 |
Amortisation charge | - | (570) | (793) | (2,472) | (3,835) |
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 | 18,685 | 48,310 |
Accumulated amortisation and impairment | - | (2,202) | (2,642) | (7,672) | (12,516) |
Net book amount | 16,545 | 2,486 | 5,750 | 11,083 | 35,794 |
The capitalised product 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 Consolidated Income Statement.
BOND INTERNATIONAL SOFTWARE PLC
Unaudited notes for the year ended 31 December 2010 (cont'd)
8. Business Combinations
Acquisition of VCG LLC
On 15 November 2010 the group acquired 100% of the issued share capital of VCG LLC for $9,192,000. As a result of the acquisition the group has increased its presence in the USA. It also expects to reduce costs through product rationalisation and economies of scale.
The goodwill of $3,475,000 is attributable to the name and reputation of VCG LLC in the staffing industry and economies of scale expected to result from combining the operations of the group and VCG LLC. None of the goodwill is expected to be deductible for income tax purposes.
The following table summarises the consideration paid for VCG LLC and the amounts of the assets acquired and liabilities assumed recognised at the acquisition date.
Net book values £000 | Fair value adjustments £000 |
Total £000 | |
Cash | 5,892 | ||
Acquisition related costs (included on the face of the consolidated income statement for the year ended 31 December 2010) |
170 | ||
Recognised amounts of identifiable assets acquired and liabilities assumed | |||
Cash and cash equivalents | 915 | - | 915 |
Property, plant and equipment | 55 | - | 55 |
Intangible assets | 6,068 | (6,068) | - |
Contractual customer relationship (included in intangibles) | - | 1,982 | 1,982 |
Software products (included in intangibles) | - | 373 | 373 |
Trade and other receivables | 1,153 | - | 1,153 |
Trade and other payables | (2,270) | - | (2,270) |
Borrowings | (29) | - | (29) |
Deferred tax assets | - | 1,485 | 1,485 |
Total identifiable net assets | 5,892 | (2,228) | 3,664 |
Goodwill |
2,228 | ||
| |||
5,892 |
The fair value of the acquired identifiable intangible assets of £2,355,000 has been determined by an independent appraisal.
The revenues included in the consolidated income statement since 15 November 2010 contributed by VCG LLC were £510,000. VCG LLC also contributed profit of £120,000 over the same period. Had VCG LLC been consolidated since 1 January 2010 the Consolidated Income Statement would show revenues of £4,557,000, an operating profit before the amortisation of intangible assets of £1,063,000 and profit before taxation of £237,000.
Acquisition of Strictly Education Solutions Limited
On 15 July 2010 the group acquired the remaining 50% of the issued share capital of Strictly Education Solutions Limited for £160,000. As a result of the acquisition the group has increased its presence in the services to schools market.
The goodwill of £295,000 is attributable to the economies of scale expected to result from combining the operations of the group and Strictly Education Solutions Limited.
None of the goodwill is expected to be deductible for income tax purposes.
The following table summarises the consideration paid for Strictly Education Solutions Limited and the amounts of the assets acquired and liabilities assumed recognised at the acquisition date.
BOND INTERNATIONAL SOFTWARE PLC
Unaudited notes for the year ended 31 December 2010 (cont'd)
8. Business combinations (cont'd)
Net book value £000 | Fair value adjustments £000 |
Total £000 | |
Cash | 40 | ||
Deferred consideration | 120 | ||
Fair value of the group's existing interest in Strictly Education Solutions Limited |
400 | ||
Total | 560 | ||
Acquisition related costs (included on the face of the consolidated income statement for the year ended 31 December 2010) |
3 | ||
Recognised amounts of identifiable assets acquired and liabilities assumed | |||
Cash and cash equivalents | 37 | - | 37 |
Property, plant and equipment | 122 | - | 122 |
Contractual customer relationship (included in intangibles) | - | 471 | 471 |
Trade and other receivables | 654 | - | 654 |
Trade and other payables | (735) | - | (735) |
Current tax liabilities | (3) | - | (3) |
Borrowings | (153) | - | (153) |
Deferred tax liability | - | (128) | (128) |
Total identifiable net assets | (78) | 343 | 265 |
Goodwill | 295 | ||
560 |
The revenue included in the Consolidated Income Statement since 15 July 2010 contributed by Strictly Education Solutions Limited was £1,565,000. Strictly Education Solutions Limited also contributed profit of £122,000 over the same period. Had Strictly Education Solutions Limited been consolidated since 1 January 2010 the Consolidated Income Statement would show revenue of £3,317,000 and a profit of £148,000.
9. 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.