3 Apr 2012 07:00
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 2012BOND 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.