BDI.L Regulatory News (BDI)

FOR IMMEDIATE RELEASE 27 September 2016

BOND INTERNATIONAL SOFTWARE PLC

UNAUDITED INTERIM RESULTS

Bond International Software Plc ("the Group"), the specialist provider of software for the international recruitment and human resources industries, with operations in the UK, USA and Asia Pacific, today announces its unaudited interim results for the six months to 30 June 2016.

HIGHLIGHTS

· Disposal of Strictly Education Limited in April 2016 for a total consideration of £11.3m

· Bank debt fully repaid in the period

· Disposal of the HR and Payroll subsidiaries in August 2016 for a consideration of £27.3m cash and the assumption of £2.6m debt

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Chairman's Statement

I am pleased to report the results for the six months ended 30 June 2016.

Strategic review

As I reported to you in March 2015, the Board had decided to undertake a wide ranging review of all the strategic options available to the Group including a strategic partnership, acquisitions to increase the scale of the Group, a sale of the Company or a new or extended bank facility to continue to invest in the Company.

Having considered all the options available to the Group, the Board determined that the way to deliver the best return to shareholders as a whole is through a programme of divestments.

On 29 April 2016 the Group completed the first of these disposals with the sale of Strictly Education Limited to Education Services Solutions Limited, for a total consideration of £11.3m, comprising an initial cash consideration of £7.0m and a loan note of £4.3m which is repayable within six months of completion. Further details of the disposal and its impact on the interim results is set out in note 7.

On 22 July 2016 the Group announced that it had entered into a conditional agreement with FMP Global Bidco Limited for the sale of the entire issued share capital of its payroll subsidiaries comprising Bond HR and Payroll Software, Bond Payroll Services and Eurowage Limited, for a net cash consideration of £27.4 million and the assumption of £2.0 million of net debt. The sale was conditional on shareholder approval in a general meeting; the Purchaser's debt financing for the acquisition being completed, and finalisation of documentation with Barclays Bank Plc for the continuation of existing facilities for the payroll subsidiaries. The conditions of the agreement were subsequently satisfied and the sale completed on 19 August 2016.

On 12 September 2016 the Group announced that it had entered into a conditional agreement for the sale of the entire issued share capital of its staffing software subsidiaries comprising Bond International Software (UK) Limited, Bond International Software Inc, Bond International Software Pty Limited, Bond International Singapore Pte Limited, Bond International Software China Limited, Bond International Japan KK for a cash consideration of £17.25m subject to adjustments for net debt and net working capital. The agreement is conditional upon shareholders voting in favour of a resolution to approve the sale at a general meeting of shareholders on 28 September 2016.

Further, on 30 June 2016, Constellation Software Inc ("Constellation") announced an unsolicited offer for the issued and to be issued Ordinary Shares of the Company not already owned by Constellation and the parties acting in concert with Constellation, at 105 pence per Ordinary Share in cash (the "Constellation Offer"). The full terms of the Constellation Offer were set out in the Constellation Offer Document published by Constellation on 18 August 2016. On 8 September 2016, Constellation announced the level of acceptances, being approximately 6.3 per cent of the Company's existing issued ordinary share capital, extended the first closing date to 1.00 p.m. on 29 September 2016 and lowered the acceptance condition from not less than 90 per cent of the Ordinary Shares to which the Constellation Offer relates to more than 50 per cent voting rights normally exercisable at a general meeting of the Company.

On 1 September 2016, the Directors published their response to the Constellation Offer, which concluded that the Directors, who have been so advised by Houlihan Lokey, having considered the merits of the Constellation Offer, believe that it is not in the interests of Shareholders to accept the Constellation Offer. In providing advice to the Directors, Houlihan Lokey took into account the Directors' commercial assessment.

On 2 September 2016, the Directors issued a statement confirming that ESW Capital, LLC. had made a highly preliminary approach to the Company without any indication of the price, timing, terms or transaction structure of any offer ESW might make, if any formal offer is made. There can be no certainty that a firm offer by ESW will be made, nor as to the terms on which any firm offer might be made.

On 23 September 2016, Constellation and the Directors announced a recommended revised cash offer from Constellation at 115.5p per share. On 22 September 2016 Constellation and parties acting in concert with Constellation either owned or had received valid acceptances in respect of a total of 35.9%.

Financial overview 

Following the decision to pursue a programme of divestments, the Board is required to treat the activities of those businesses which it is actively considering the sale of, as discontinued operations. As a consequence the 2015 results have been restated to treat those same businesses as discontinued operations.

The Board has identified three separate disposal groups, Strictly Education Limited, HR and Payroll and Recruitment Software. The results of each of those disposal groups and their assets and liabilities are disclosed in note 7. The remaining activities of the Company are disclosed as that of a holding company.

Following the reclassification the Group has made an operating loss on continuing activities of £639,000 in 2016 compared with a loss of £720,000 for the same period in 2015 and a loss before tax of £762,000 (2015: £937,000). The loss principally comprises the operating costs of the holding company for the period.

There is a profit from discontinued activities of £9,003,000 (2015: £1,520,000) including a profit on the sale of Strictly Education Limited of £8,073,000 with the balance of £930,000 arising from the operations of the disposal groups. The result is earnings per share of 19.30p (2015: 1.65p).

The Group generated £2,469,000 of cash from its operating activities (2015: £2,863,000) and a further £6,538,000 (net of cash disposed of) through the sale of Strictly Education Limited. The Group paid out £500,000 for deferred consideration for Eurowage Limited and £1,860,000 on capital expenditure on property, plant and equipment and intangible assets (2015: £2,253,000). As a result of these cash flows the Group has repaid its bank borrowings of £5,950,000 in full. The group has financial liabilities at 30 June 2016 comprising a loan note due to the vendor of Eurowage Limited - which had a fair value of £2,609,000 (At 31 December 2015: £2,670,000).

Martin Baldwin

Chairman

27 September 2016

Consolidated statement of comprehensive income for the six months ended 30 June 2016

Consolidated statement of changes to shareholders' equity for the six months ended 30 June 2016 (unaudited)

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

Consolidated balance sheet at 30 June 2016

Consolidated cash flow statement for the six months ended 30 June 2016

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.

Consolidated statement of changes to shareholders' equity for the six months ended 30 June 2016 (unaudited)

Notes to the financial statements

1. Basis of preparation

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

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

The interim financial statements are unaudited and were approved by the Board of Directors on 27 September 2016. The financial information contained in these statements does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the year ended 31 December 2015 has been extracted from the statutory accounts for that year. The statutory accounts for the year ended 31 December 2015 did not comply with the requirements of IFRS3 in the treatment of contingent consideration on the acquisition of Eurowage Limited and as a consequence the Auditor included a qualification in his Audit Report. The statutory accounts did not contain a statement made under Section 498(2) and (3) of the Companies Act 2006, and have been filed with the Registrar of Companies.

Going Concern

As referred to in the Chairman's Statement on page 1, the Company has entered in to programme of divestments and completed the sale of two divisions, one during the period ended 30 June 2016 and one after the period end. As a result the Company has reclassified the activities of the disposal group's as discontinued activities. The Directors have considered the Company's position in the light of this strategy and believe that it remains a going concern. If and when all business segments are disposed of the Directors will reconsider the position and determine whether the Company remains a going concern. Whilst the negotiations for the disposal of the staffing software division are at an advanced stage, there remains a risk that it may not go ahead and the group continues as a going concern. The Directors have considered the impact of this scenario on the Group's cash flows and prepared forecasts which support their conclusion that the Group is a going concern whatever the outcome of the negotiations.

2. Segmental Review

(i) Operating segments

For management purposes, the Group was until recently organised into operating segments, which were represented by three divisions - Recruitment software, HR and Payroll software and Outsourcing. These divisions were the basis on which the Group has historically reported its segment information. Following the decision to dispose of one or divisions of the Group, the activities of those divisions have been reclassified as discontinued and the segments reorganised into disposal groups. The results and assets and liabilities of those disposal groups are set out in note 7.

3. Income tax expense

4. Earnings per share

(a) Basic

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

(b) Diluted

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

5. Dividend

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

7. Non current assets held for sale and discontinued operations

Strictly Education

On 29 April 2016 the group completed the disposal of Strictly Education Limited which formed part of our outsourcing operations. As a result of this disposal, these operations have been treated as discontinued operations for the period ended 30 June 2016. 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 amount shown in the income statement. The income statements for prior periods have been restated to show the discontinued operation separately from continuing operations.

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

7. Non current assets held for sale and discontinued operations (cont'd)

HR and payroll software and services

The assets and liabilities of the disposal group comprising the HR and payroll software and outsourced services have been presented as held for resale following the acceptance of a conditional offer to buy the group. The sale completed in August 2016.

Assets of the disposal group classified as held for sale

Liabilities of the disposal group classified as held for sale

Analysis of the results of discontinued operations and the results recognised on remeasurement of assets of HR and payroll software and services disposal group is as follow:

7. Non current assets held for sale and discontinued operations (cont'd)

Recruitment software disposal group

The assets and liabilities of the disposal group comprising the recruitment software businesses have been presented as held for resale following the acceptance of a conditional offer to buy the group. The sale is expected to complete in October 2016.

Assets of the disposal group classified as held for sale

Liabilities of the disposal group classified as held for sale

Analysis of the results of discontinued operations and the results recognised on remeasurement of assets of the Staffing Software disposal group is as follow: