BDI.L Regulatory News (BDI)

FOR IMMEDIATE RELEASE 15 September 2014

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 2014.

FINANCIAL HIGHLIGHTS

· Revenue of £18.4m (H1 2013: £17.0m) now represents 98% of fixed operating costs (H1 2013 94%)

· Operating profit up 25% to £1.7m (H1 2013: £1.3m)

· Operating Margin increased to 9% (H1 2013: 8%)

· Adjusted Profit before Tax increased by 31% to £1.4m (H1 2013: 1.1m)

· Adjusted earnings per share up 29% to 3.41p (H1 2013: 2.65p)

OPERATIONAL HIGHLIGHTS

· Acquisition of Eurowage Limited in April 2014, for minimum consideration of £8.5m and integration into the Group progressing well

· Major contract win with global recruitment company in Asia Pacific office

· Strictly Education recurring revenues now account for 112% of fixed overheads

· In line to meet market expectations for the full year

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

"The ongoing economic recovery in the UK and overseas is having a positive impact on the group. Not only are we seeing robust growth levels returning in the UK but also we have made substantial headway in our Asia-Pacific office.

The acquisition of Eurowage was a significant step change for the group and the Board believes this will produce good growth prospects. We maintain our confidence that we are well placed to benefit from global growth and combined with our continued innovation in our products and services we see a positive second half for the group."

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Chairman's Statement

I am pleased to report an increase of 25% in the group's operating profit before amortisation of acquired intangible assets for the six months ended 30 June 2014 from £1,344,000 to £1,685,000 of which 14.8% is organic growth with the balance arising from the acquisition of Eurowage Limited in May 2014 (net of the expenses of acquisition).

Revenues have grown from £17,016,000 in 2013 to £18,376,000 in 2014, an increase of 8%, with Eurowage Limited contributing revenues of £788,000 from the date of acquisition to the end of June 2014.

Recurring revenues are £12,375,000 (2013: £11,719,000) representing 67% of total revenues and importantly, covering 98% of the group's fixed operating costs (excluding the expenses of acquisition and amortisation of intangible assets) compared with 94% in 2013. As a result, the group has nearly reached the position where its fixed operating costs are covered by recurring revenues.

Total administrative expenses have increased by 2.4% year on year, as a result of the acquisition of Eurowage in April 2014. Excluding this acquisition they have fallen by 0.5%. The result is an improvement in the operating margin before the amortisation of acquired intangible fixed asset from 8% to 9%.

Profit before tax has therefore increased by 58% to £769,000 in the first half of the year (2013: £488,000) and basic earnings per share were 1.42p per share compared with 1.18p for the same period in 2013. In order to assist with understanding the underlying performance of the group, we have reported adjusted earnings per share excluding the effects of the amortisation of acquired intangibles and one off exceptional items. On this basis, the adjusted profit after tax was up nearly 31% to £1,433,000 (2013: £1,094,000) and the adjusted diluted earnings per share were up 29% to 3.41p (2013: 2.65p).

The group has seen strong cash generation in the first half of 2014 with a net inflow from operating activities of £3,222,000 (2013: £3,504,000) which inter alia has provided funding for the acquisition of Eurowage Limited. Overall the company has moved from net cash of £1,352,000 at 31 December 2013 to net bank borrowings of £70,000 at 30 June 2014. As part of the acquisition of Eurowage Limited the group assumed additional non-bank debt with a fair value of £5,318,000 of which £246,000 is payable in November 2014, £966,000 in May 2015, £1,702,000 in July 2015, £467,000 in May 2016 and £1,937,000 in May 2017. Total net debt stands at £5,388,000 at 30 June 2014.

Acquisition

On 9 April 2014 we announced the conditional acquisition of Eurowage Limited, which trades as FMP Europe, for a minimum consideration of £8.5m with additional amounts payable based on the company's performance over the next three years. The acquisition subsequently completed on 1 May 2014. The company offers fully managed international payroll solutions to principally UK and USA organisations expanding into new countries.

The company, which was established in 2005, has seen revenues grow to £3.9m in 2013 with a profit before taxation of £1.78m and will prove a worthwhile addition to the group's portfolio of operations.

Recruitment Software Division

The Recruitment Software Division has seen revenues rise by 4% from £8,680,000 in 2013 to £9,017,000 in 2014 as more customers move from legacy products to the latest version of Adapt.

The UK staffing software business has seen a 10% increase in total revenue with licence sales up 144% to £509,000 (2013: £209,000) as staffing companies expand, and the sale of consulting services up 21% to £1,424,000 (2013: £1,180,000). The US continues to be affected by declining support revenues from its legacy products. Their new product, AdaptSuite, whilst gaining traction in the US market, is still relatively new and at the moment is being sold to customers with a requirement for Front Office functionality only. Back Office functionality required to replace the legacy products will be introduced in the next major release Q1 2015.The Asia Pacific business has seen a 47% increase in revenues following the announcement of the major contract earlier this year. Our Japanese operation will become profitable for the first time in the second half of 2014 which represents a major step forward for the group.

Analysis of Recruitment Software Division revenues

HR and Payroll Software Division

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

Although revenues have fallen, the division continues to be very profitable with an operating profit of £892,000 compared with £965,000 in 2013. There are a number of legacy products which we continue to support and which have declining support revenues, but the impact will start to be offset by new product sales when the latest versions of our strategic products are launched in 2015.

Outsourced HR & Payroll Services

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

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

Strictly Education has seen 6.5% increase in revenue from 2013 to 2014. Non recurring revenues fell by 2.6% as we scaled down some of the less profitable services provided to schools but this is more than offset by an 11.5% increase in recurring revenues from annually renewable contracts. These now represent 112% of fixed overheads creating a low risk operating environment for the company. Operating margins have grown from 14% in 2013 to 16% in 2014 resulting in an operating profit of £806,000 in 2014 (2013: £651,000), an increase of 24%.

Bond Payroll Services has seen a 9.5% increase in revenues year on year to £1,241,000 (2013: £1,133,000) and operating profit is up by 22% to £359,000 (2013: £295,000). The business is now processing an average of 69,000 payslips per month which represents a 9% increase on last year.

Eurowage Limited which was acquired at the beginning of May 2014, has only had a limited impact in the first half of 2014 contributing revenues of £788,000 in the period since acquisition and an operating profit of £142,000 after taking account of the expenses of acquisition of £148,000.

Current trading and future prospects

As I highlighted in the 2013 Annual Report, trading conditions are good in the major markets in which we operate and the group is benefitting from the ongoing economic recovery. With the Japanese operation becoming profitable in the second half of 2014 and a full six months of revenue and profits from Eurowage Limited the board remains confident about the prospects for the full year and confirms trading remains in line to meet market expectations for the full year.

Martin Baldwin

Chairman

12 September 2014

Consolidated statement of comprehensive income for the six months ended 30 June 2014 (unaudited)

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

Consolidated balance sheet at 30 June 2014 (unaudited)

Consolidated cash flow statement for the six months ended 30 June 2014(unaudited)

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

Consolidated statement of changes to shareholders' equity for the six months ended 30 June 2014 (unaudited

Notes to the financial statements (continued)

1. Basis of preparation

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

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

The interim financial statements are unaudited and were approved by the Board of Directors on 12 September 2014. 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 2013 has been extracted from the statutory accounts for that year which received an unqualified audit report and did not contain a statement made under Section 498(2) and (3) of the Companies Act 2006, and have been filed with the Registrar of Companies.

2. Segmental Review

(i) Operating segments

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

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

(ii) Segmental analysis by location of operating company

Revenue

2. Segmental review (cont'd)

 (iii) Revenues by income type are:

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.

4. Earnings per share (continued)

(b) Diluted

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

(c) Adjusted

The Income Statement includes the earnings per share adjusted for the impact of the amortisation of certain intangible assets and share based payments. The adjusted earnings per share are based on the adjusted attributable profit calculated as follows:

5. Dividend

A dividend for 2013 of 2.2p per share was approved by the Annual General Meeting on 26 June 2014 and was paid to shareholders on 8 August 2014.

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

7. Business combinations

On 1 May 2014 the group acquired 100% of the issued share capital of Eurowage Limited for an estimated consideration of £13,527,000. As a result of the acquisition the group us able to offer international payroll solutions to its existing client base.

The estimated goodwill of £6,373,000 is attributable to the name and reputation of the Eurowage Limited in the field of international managed payroll solutions, the acquired customer base and the assembled workforce. None of the goodwill is expected to be deductible for income tax purposes.

The following table summarises the consideration paid for Eurowage Limited and the estimated amounts of the assets acquired and liabilities assumed recognised at the acquisition date.

The fair values of the acquired identifiable intangible assets of £4,442,000 and the contingent consideration arrangements are provisional pending receipt of the final valuations for those assets and liabilities.