BDI.L Regulatory News (BDI)

31 Mar 2008 07:01

Bond International Software PLC31 March 2008 FOR IMMEDIATE RELEASE 31 March 2008 2007 PRELIMINARY RESULTS Bond International Software plc, the specialist provider of software for theinternational recruitment and human resources industries, with operations in theUK, USA, Hong Kong and Australia, today announces its preliminary results forthe year ended 31 December 2007. KEY POINTS • Revenue up 71% to £29.5m (2006: £17.2m). • Recurring revenue up 86% to £12.8m (2006 £6.9m) • Operating profit before amortisation up by 49% at £7.1m (2006: £4.8m). • Pre-tax Profit up 12% to £5.1m (2006 : £4.6m). • Adjusted* basic EPS up 4% to 14.6p (2006: 14.0p). • Proposed dividend of 1.6p per share (2006: 1.4p per share). • Acquisition of Gowi and Strictly Education • Major contract wins including Michael Page International in the UK and Vaco in the US * Adjusted for the amortisation of intangible assets and share based paymentsexpense. Commenting on the results Chief Executive Steve Russell, said: "We are encouraged by trading conditions in the first quarter of 2008 and withsignificant orders in the UK and US, a high level of recurring revenue and ourdiversification into the wider human capital management arena through theacquisitions of Gowi Group and Strictly Education, we approach the first half of2008 with some confidence. We believe that the strength of our business willenable the group to withstand the effects of any downturn and continue toinvestigate expansion opportunities via targeted acquisitions." For further information, please contact: Bond International Software plc: Tel: 01903 707070 ir@bond.co.uk www.bondinternationalsoftware.comSteve Russell: Group Chief ExecutiveBruce Morrison: Group Finance Director Buchanan Communications: Tel: 020 7466 5000Tim ThompsonNicola Cronk Oriel Securities Limited Tel: 020 7710 7600Andrew Edwards BOND INTERNATIONAL SOFTWARE PLC Chairman's Statement FINANCIAL OVERVIEW I am delighted to present the 2007 annual report for Bond International Softwareplc. This has been another excellent year for the group. Revenues have increased by71% to £29,459,000 compared with 2006 revenues of £17,209,000. This has beenachieved through a combination of organic growth of 10% together with theacquisitions of Gowi Group Limited and Strictly Education Limited which tookplace in January and February respectively. I am particularly pleased to reportthat revenues of a recurring nature such as software support and rental incomerose to £12,770,000 in 2007 compared with £6,853,000 in 2006. Recurring incomerepresented 43% of sales (2006: 40%) and covered 62% of overheads (2006: 59%). The growth in revenues has enabled the group to increase operating profit beforeamortisation of intangible assets by 49% to £7,133,000 (2006: £4,785,000) andprofit before tax by 12% to £5,111,000 (2006: £4,554,000). These are the first full accounts to be prepared by the group on the basis ofInternational Financial Reporting Standards ("IFRS"). Whilst the adoption ofIFRS has no impact on the operations of the group, the results for the yearended 31 December 2006 and the balance sheets at 1 January 2006 (the effectivedate of transition to IFRS) and 31 December 2006 have been restated inaccordance with IFRS. Reconciliations of prior period's results, balance sheetsand cash flows under IFRS are presented in note 31 of the financial statementstogether with explanations of how IFRS has been applied. Following the introduction of IFRS basic earnings per share fell to 11.66pcompared with 13.66p in 2006 as a result of the amortisation of intangibleassets arising on the above acquisitions coupled with an increase in theeffective tax rate from 19% in 2006 to 28% in 2007. In order to assist inunderstanding the underlying operating performance of the group, we are alsoreporting adjusted earnings per share excluding the effects of the amortisationof intangible assets arising on acquisition and the valuation of share basedpayments. On this basis the adjusted profit after tax was up nearly 21% to£4,550,000 (2006: £3,770,000) and the adjusted earnings per share were up 4 % to14.56p (2006: 14.0p). On the basis of these strong results the directors are very pleased torecommend, a dividend of 1.6p per share to be paid on 4 July 2008 toshareholders on the register at 13 June 2008. ACQUISITIONS As I explained in last year's annual report and in the half year statement, wemade two acquisitions in the first quarter of 2007, both of which have made avaluable contribution to the group's financial performance. We are pleased withthe way these new businesses have bedded into the group and we believe thatthere are yet further benefits to be gained through cross selling and productrationalisation. STAFF The group now employs nearly 400 staff in our offices around the world. Amotivated and committed workforce is vital to the continuing development of thebusiness and on behalf of the board I would like to thank all of the staff fortheir continuing hard work, loyalty and dedication to the group. PROSPECTS Despite the expectation of adverse market conditions, we have seen nodeterioration in trading in the first quarter of 2008. We have recentlyannounced significant contracts to supply staffing software both here andinternationally and our corporate business continues to grow at an encouragingrate. Our contract with Michael Page International is one of the largest thegroup has ever signed and further underlines the strength of our product rangefollowing the significant investment we have made over the last few years. We are excited about the progress we are making in the corporate market and havealready announced contracts with a number of household names this year. Whilst we cannot predict what the future holds, we believe that the current,broader based group is well placed to withstand the current economic downturn,with cash in the bank, an increasing level of recurring income and a strongorder book. In fact we believe that this presents an opportunity for furtherexpansion through targeted acquisitions and we will continue to identify andinvestigate potential targets in the forthcoming year. Martin Baldwin Chairman 31 March 2008 BOND INTERNATIONAL SOFTWARE PLC Group Chief Executive's Report OVERVIEW The group has undergone significant change over the last twelve months,particularly following the acquisitions of Gowi and Strictly Education. We haveseen operating profits before the amortisation of intangible assets increase by49% to £7.1m in 2007 compared to £4.8m in 2006. We have increased recurringrevenues, secured a further multi territory deal and made significant progressin the integration of the two acquisitions that were made in early 2007. Following these acquisitions the group has changed from being primarily asupplier of software and services to the recruitment industry to a point wherethe broader spectrum of our products, and the markets to which they appeal,firmly places us in the Human Capital Management Software marketplace. As a result, the group is now organised in four principal divisions coveringrecruitment software, HR and payroll systems, outsourcing and web services. Theoperations and financial performance of each division are covered in detailbelow. RECRUITMENT SOFTWARE DIVISION Revenues from the sales of recruitment software grew by 10% to £18,906,000(2006: £17,209,000) and are analysed by revenue type and geographical area asfollows: 2007 2006Revenue by type £000 £000 (restated) Software sales & services 11,264 10,085Software support 5,643 5,563Software rental income 1,672 1,290 _________ _________ 18,579 16,938Hardware and other sales 327 271 _________ _________ 18,906 17,209 _________ _________ 2007 2006Revenue by location of operating company £000 £000 (restated) United Kingdom 12,185 11,037USA 5,745 5,434Asia Pacific 976 738 _________ _________ 18,906 17,209 _________ _________ Last year saw growth in revenues in all the geographical areas in which weoperate with the principal driver being the deployment of the latest generationof Adapt. The group has also benefited from the ongoing world wide deployment ofsoftware under the contract signed with Manpower in late 2006. The start of 2008has seen no let up in the level of activity with major contracts announced withMichael Page International in the UK and Vaco in the US. Support revenues continue to grow, although at a more modest rate as moreclients opt to take our products on an ASP basis which provides a monthly rentalincome rather than the traditional licence sale and support income. The corporate business goes from strength to strength, with notable orders overthe last 12 months from BMI, Jet2, Knight Frank, Habitat and Liverpool Direct toname but a few. The strength of the corporate business is that it tends to besold on a rental basis for a minimum term of three years which, in turn,increases our recurring income. The group's eEmpACT division, acquired in 2005, continued to make excellentprogress in 2007 with revenues up by 14% from $4.4m in 2006 to $5.0m althoughsome of the benefit was lost to the group through the weakening US dollar. Wesigned 44 new customers in the small to medium range whilst at the same timemanaging to increase the average sale values for each new customer by 33%. Thecompany further strengthened its customer base with the acquisition of Traxstarin September which, whilst only a small deal, added 33 new customers. Thecompany also completed its three year development of Version 14 of the eEmpACTproduct for the temporary staffing industry which incorporates a full backoffice accounting and payroll system and which has generated significantinterest amongst sales prospects. We are also able to utilise this technology inconjunction with other group products in the US. Operating margins for the recruitment software division improved to 32% from 30%in 2006 allowing the group to increase operating profit before the amortisationof intangibles by nearly 17% to £6,178,000 (2006: £5,281,000). HR AND PAYROLL DIVISION As part of the strategy to diversify into the wider Human Capital Managementarena the group acquired two HR products and a payroll product as part of theGowi acquisition in January 2007. Gowi itself had been acquisitive prior toJanuary 2007 and the HR and payroll division comprised three separate operatingcompanies when the group bought Gowi. As a result much of 2007 was spentconsolidating those operations in order to take advantage of the synergies andefficiencies created by the consolidation. At the start of 2008 the group movedto the second stage by bringing the HR and payroll operation closer to therecruitment software division to better focus on the cross selling opportunitiesbetween our recruitment products, and the more generic HR and Payroll products. One of the strengths of the HR and payroll division is the very high level ofrecurring income which covers approximately 82% of the operating costs of thebusiness. The HR and payroll division generated revenues for the group of £4,776,000 inthe period from the date of acquisition in January 2007 through to the end ofthe financial year. Of this £3,068,000 or 64% represented income of a recurringnature. OUTSOURCED HR AND PAYROLL SERVICES DIVISION Following the acquisition of Strictly Education in February 2007, the group nowprovides outsourced services into the state school sector. Traditionally theseservices would have been provided to schools by their local education authoritybut increasingly they are being encouraged to look to the private sector formore efficient and cost effective services. The company utilises the group'sproducts to provide outsourced HR, payroll, property management and financialservices to nearly 400 primary and secondary schools. With nearly 30,000 schoolsin the state sector, there is significant opportunity to expand this businessboth through increasing the number of customers as well as broadening the rangeof services offered. As well as broadening the group's portfolio of products, one of the strengths ofthe business is the level of recurring revenue through annual contracts which at£1,740,000 represented 74% of total revenues generated by the business since thedate of acquisition. Overall the Strictly Education business generated revenues of £2,366,000 and anoperating profit before the amortisation of intangible assets of £572,000 injust under 11 months since the date of acquisition. Also included within this division are the operations of Gowi Services Limitedwho provide outsourced development services principally to the group. Thecompany did undertake a limited amount of development work for third partieswhich generated revenues of £175,000 in 2007 although following a reorganisationthe company made a small loss of £120,000. WEB SERVICES DIVISION Abacus Software Limited, which was acquired as part of Gowi in January 2007, isa developer of web based services and offers consultancy, design, developmentand hosting to its clients, primarily in the Media and Public Sectors. Althoughit is often categorised as a new media agency (and makes the NMA top 100) thebusiness is development driven and most of its sites are built around in-housesoftware products. They are for the most part content management based, butAbacus does also provide recruitment management solutions, primarily to publicsector organisations. Last year saw the company deliver its best ever set of results generatingrevenues of £3,236,000 in the period since acquisition and an operating profitbefore the amortisation of intangible assets of £627,000. Revenues were up 23%on the previous year. Following major contract wins with Times SupplementsLimited and Ocean Media, new business sales represented almost 45% of revenuesas against a typical 30%. Abacus has started the current year with a strong order book which, coupled withnew business already won, means that it is shaping up for a strong first half ofthe year despite current concerns about the UK economy. PRODUCT STRATEGY We continue to invest a significant proportion of our revenue in enhancing ourproducts with expenditure on development rising to £4,429,000 in 2007 which is15 % of revenues compared with £2,603,000 in 2006. Following the release of thelatest version of Adapt in 2006 the focus of development is shifting towardsconfiguring new products using Adapt technology. Further development will beundertaken on achieving a consistent technical platform across the group'sentire product range. PEOPLE Bond has seen a considerable amount of growth over the last three years bothorganically and through acquisition. Our ability to achieve this growth is in nosmall part down to the hard work of our staff and I would like to thank thempersonally for helping us in the development of the group. We are committed to developing not only our products and services but also ourpeople and as we take the group on to the next stage of its development it isgreat to have such a loyal and committed workforce. OUTLOOK Despite the current uncertainties in the financial markets we remain encouragedby the trading conditions in the first quarter of 2008 and as I mentionedearlier we have signed significant orders both here and in the US. Strong orderbooks and the high level of recurring income we have built through organicgrowth and acquisition mean that we can approach the first half of 2008 withsome confidence. Looking further ahead we wait to see how changing marketconditions will affect the capital investment plans of our clients and prospectsbut believe that the strength of our business will enable the group to withstandthe effects of any downturn. Our decision to diversify into the wider humancapital management arena through the acquisition of Gowi and Strictly Educationand through the development of products for sale into the much larger corporatemarket, means around 40% of the group's revenues are now generated outside therecruitment sector. Steve RussellGroup Chief Executive 28 March 2008 BOND INTERNATIONAL SOFTWARE PLCConsolidated income statement for the year ended 31 December 2007 2007 2006 Note £000 £000 (restated) Revenue 2 29,459 17,209 Cost of sales (1,608) (915) _________ _________Gross profit 27,851 16,294 _________ _________ Post-acquisition reorganisation costs (132) - Administrative expenses (20,586) (11,509) _________ _________Total administrative expenses (20,718) (11,509) _________ _________Operating profit before amortisation of 2 7,133 4,785intangible assets Amortisation of intangible fixed assets (1,883) (309) _________ _________Operating profit 5,250 4,476 Finance income 67 144Finance costs (206) (66) _________ _________Profit on ordinary activities before tax 5,111 4,554 Income tax expense (1,466) (875) _________ _________Profit for the year attributable to equity 7shareholders of the company 3,645 3,679 ========= ========= Earnings per share (pence) 4 2007 2006 (restated) Basic 11.66p 13.66p Diluted 11.38p 13.36p The operating profit for the year arises from the group's continuing operations. BOND INTERNATIONAL SOFTWARE PLC Consolidated statement of recognised income and expense for the year ended 31December 2007 2007 2006 £000 £000 (restated) Currency translation differences onforeign currency net investments 5 (246) _________ _________Net income/(expense) recognised 5 (246)directly in equity Profit for the financial year 3,645 3,679 _________ _________Total recognised income for the yearattributable to the equity holders ofthe company 3,650 3,433 ========= ========= BOND INTERNATIONAL SOFTWARE PLC Consolidated balance sheet at 31 December 2007 2007 2006 Note £000 £000 (restated)ASSETS Non-current assets Goodwill 13,908 4,869 Other intangible assets 14,053 5,050 Property, plant and equipment 2,884 2,523 Deferred tax asset 835 425 _________ _________ 31,680 12,867 _________ _________Current assets Inventories 60 - Trade and other receivables 8,599 3,594 Cash and cash equivalents 1,257 8,770 _________ _________ 9,916 12,364 _________ _________Total assets 41,596 25,231 ========= =========EQUITY Share capital 328 281 Share premium account 17,622 9,180 Equity option reserve 441 266 Currency translation reserve (241) (246) Retained earnings 11,176 7,928 _________ _________Total equity attributable to equity 7 29,326 17,409shareholders _________ _________ LIABILITIES Non-current liabilities Borrowings 281 428 Deferred tax liabilities 2,919 292 _________ _________ 3,200 720 _________ _________ Current liabilities Trade and other payables 8,538 6,263 Current income tax liabilities 368 614 Borrowings 164 225 _________ _________ 9,070 7,102 _________ _________Total liabilities 12,270 7,822 _________ _________Total liabilities and equity 41,596 25,231 ========= ========= BOND INTERNATIONAL SOFTWARE PLC Consolidated cash flow statement for the year ended 31 December 2007 2007 2006 Note £000 £000 (restated) Cash flows from operating activitiesCash generated from operations 6 3,195 6,219 Net interest (paid)/received (139) 78 Income tax paid (953) (774) _________ _________Net cash from operating activities 2,103 5,523 _________ _________Cash flows from investing activities Acquisition of subsidiary undertakings net ofcash and overdrafts acquired (8,618) -Purchase of property, plant and equipment (535) (415)Purchase of intangible assets (2,849) (2,072)Proceeds from sale of property, plant andequipment 6 36 _________ _________ Net cash flow used in investing activities (11,996) (2,451) _________ _________Cash flows from financing activities Issue of ordinary share capital 4,992 3,000 Increase in bank loans 15 - Repayment of bank loans (1,971) (86) Repayment of other loans (69) (368) New finance leases - 111 Repayment of finance leases (55) (145) Equity dividend paid 5 (427) (252) _________ _________Net cash flow from financing activities 2,485 2,260 _________ _________(Decrease)/Increase in cash and cash (7,408) 5,332equivalents for the period Cash and cash equivalents at the beginning of 8,770 3,511the year Effect of foreign exchange rate changes (105) (73) _________ _________Cash and cash equivalents at end of year 1,257 8,770 ========= ========= BOND INTERNATIONAL SOFTWARE PLCNotes 1. Basis of preparation The above financial information does not constitute statutory accounts asdefined in section 240 of the Companies Act 1985. The above figures for the yearended 31 December 2007 are an abridged version of the company's accounts whichwill be reported on by the auditors, despatched to the shareholders and filedwith the Registrar of Companies shortly. The audited accounts for the year ended 31 December 2006 have been delivered tothe Registrar of Companies and the report of the auditors was unqualified anddid not contain statements under Section 237(2) or (3) Companies Act 1985. Following the adoption of International Financial Reporting Standards ("IFRS"),the financial information in this announcement has been prepared on the basis ofthe accounting policies set out in the interim financial statements for the 6months ended 30 June 2007. The 2006 financial information is restated as aresult of adopting IFRS. The announcement was approved by the board of directors on 28 March 2008. 2. Segmental Review (a) Primary business segment 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 asthose that can be allocated on a reasonable basis. Unallocated items comprisemainly corporate and head office expenses. 2007 2006 £000 £000 (restated) RevenueRecruitment Software 18,906 17,209HR and Payroll Software 4,776 -Outsourcing 2,541 -Web services 3,236 - _________ _________ 29,459 17,209 ========= ========= Operating profit before the amortisation ofintangible assetsRecruitment Software 6,178 5,281HR and Payroll Software 747 -Outsourcing 452 -Web services 627 -Central departments (871) (496) _________ _________ 7,133 4,785 ========= ========= Profit before interest and taxRecruitment Software 5,268 4,972HR and Payroll Software 27 -Outsourcing 319 -Web services 507 -Central departments (871) (496) _________ _________ 5,250 4,476 ========= ========= BOND INTERNATIONAL SOFTWARE PLCNotes (cont'd) (b) Segmental analysis of revenues by location of operating company 2007 2006 £000 £000 (restated) RevenueUnited Kingdom 22,738 11,037Asia Pacific 976 738North America 5,745 5,434 _________ _________ 29,459 17,209 ========= ========= (c) Revenues by income type are: 2007 2006 £000 £000 (restated)SalesSoftware sales & services 16,322 10,085Hardware and other sales 367 271 _________ _________ 16,689 10,356 _________ _________ Recurring incomeSoftware support 8,715 5,563Software rental income 1,367 1,290Software as a service 2,688 - _________ _________ 12,770 6,853 _________ _________ Total revenues 29,459 17,209 ========= ========= (d) Revenue and operating profit from acquisitions 2007 2006 £000 £000 (restated)RevenueContinuing operations 18,906 17,209 AcquisitionsGowi Group Limited 8,187 -Strictly Education Limited 2,366 - _________ _________ 10,553 - _________ _________ Total revenue 29,459 17,209 ========= ========= Operating profitContinuing operations 5,456 4,785 _________ _________ AcquisitionsGowi Group Limited 1,104 -Strictly Education Limited 573 - _________ _________ 1,677 - _________ _________Total operating profit beforeamortisation of intangible assets 7,133 4,785 ========= ========= BOND INTERNATIONAL SOFTWARE PLCNotes (cont'd) 3. Taxation 2007 2006 £000 £000 (restated)Current tax expenseUK Corporation tax 483 962Foreign tax 70 38Adjustment in respect of prior years 2 - _________ _________Total current tax 555 1,000 _________ _________ Deferred tax expenseOrigination and reversal of temporary differences 64 195Tax losses 847 (320) _________ _________ 911 (125) _________ _________ Total taxation reported in the consolidated 1,466 875financial statements ========= ========= 4. Earnings per share The basic earnings per share is calculated by dividing the profit attributableto equity holders of the parent company by the weighted average number ofordinary shares in issue during the year. The diluted earnings per share is calculated by dividing the profit attributableto equity holders of the parent company by the weighted average number ofordinary shares in issue during the year (adjusted for the effects ofpotentially dilutive share options). The calculation of earnings per share is based on the following data: 2007 2006 Potentially Potentially dilutive dilutive share share Basic options Diluted Basic options DilutedEarnings:Profit after tax (£'000) 3,645 - 3,645 3,679 - 3,679 __________________________________________________________ Weighted average numberof shares (000's) 31,249 791 32,040 26,933 601 27,534 __________________________________________________________ Earnings per share (pence) 11.66 (0.28) 11.38 13.66 (0.30) 13.36 __________________________________________________________ BOND INTERNATIONAL SOFTWARE PLCNotes (cont'd) The Chairman's Statement discusses a comparison between the earnings per shareadjusted for the impact of the amortisation of certain intangible assets andshare based payments. The adjusted earnings per share is based on attributableprofit calculated as follows: 2007 2006 £000 £000 (restated) Profit for the financial period 3,645 3,679Adjustments:Amortisation of intangible assets arising on acquisitions 958 -Share based payment expense 204 130Taxation effect (257) (39) _________ _________Adjusted profit 4,550 3,770 ========= ========= Adjusted earnings per shareBasic 14.56p 14.00pDiluted 14.20p 13.69p ========= ========= 5. Dividends 2007 2006 £000 £000 (restated)Amounts recognised as distributions to equityholders in the period: Final dividend paid in the year ended 31December 2007 of 1.4p per share (2006: 1.0p pershare) 427 252 ____________ ___________Proposed final dividend for the year ended 31December 2007 of 1.6 per share (2006: 1.4p pershare) 527 427 ____________ ___________ The proposed final dividend was approved by the Board of Directors on 28 March2008 is payable to all shareholders on the Register of Members on 13 June 2008and is subject to the approval of shareholders at the Annual General Meeting. Inaccordance with IAS10 'Events after the balance sheet date', the proposed finaldividend has not been included as a liability in these financial statements. 6. Reconciliation of net operating profit to net cash flow from operations 2007 2006 £000 £000 (restated) Operating profit 5,250 4,476Depreciation of property, plant & equipment 401 310Amortisation of intangible assets 1,883 309Loss/(profit) on sale of tangible fixed assets 1 (15)Share based payment expense 204 130Increase in inventories (29) -Increase in trade and other receivables (2,577) (627)(Decrease)/Increase in trade and other payables (1,938) 1,636 _________ _________ Cash generated from operations 3,195 6,219 ========= ========= BOND INTERNATIONAL SOFTWARE PLCNotes (cont'd) 7. Consolidated statement of changes in equity Equity Currency Share Share option translation Retained capital premium reserve reserve earnings Total £000 £000 £000 £000 £000 £000 At 1 January 2006 252 6,209 189 - 4,448 11,098 Currency translation differences - - - (246) - (246)Issue of ordinary shares 29 3,071 - - - 3,100Expenses of share issue - (100) - - - (100)Share based payment expense - - 130 - - 130Share options lapsed or exercised - - (53) - 53 -Profit for the financial year - - - - 3,679 3,679Dividend paid - - - - (252) (252) ______________________________________________________________ At 31 December 2006 281 9,180 266 (246) 7,928 17,409 Currency translation differences - - - 5 - 5Issue of ordinary shares 47 8,605 - - - 8,652Expenses of share issue - (163) - - - (163)Share based payment expense - - 205 - - 205Share options lapsed or exercised - - (30) - 30 -Profit for the financial year - - - - 3,645 3,645Dividend paid - - - - (427) (427) ______________________________________________________________ At 31 December 2007 328 17,622 441 (241) 11,176 29,326 ============================================================== 8. Report and Accounts Copies of the Report and Accounts will be circulated to shareholders shortly andmay be obtained after the posting date from the Company Secretary, BondInternational Software Plc, Courtlands, Parklands Avenue, Goring by Sea,Worthing, West Sussex, BN12 4NG. This information is provided by RNS The company news service from the London Stock Exchange