1 FOR IMMEDIATE RELEASE 28 September 2015 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 FINANCIAL HIGHLIGHTS Revenue up 11% to 20.4m (H1 2014: 18.4m) Operating profit up 4% to 1.75m (H1 2014: 1.69m) Profit before tax 0.86m (H1 2014: 0.77m) Adjusted earnings per share 2.94p (H1 2014: 3.41p) Net debt of 2.6m (H1 2014: 5.4m) Commenting on the results, Group Chief Executive Steve Russell said: The increase in the Group s revenues and profits is pleasing. Net cash inflow from operating activities is solid at 2.4m (including 1m deferred consideration paid on the Eurowage acquisition) and the Group s balance sheet is robust with net cash of 0.23m. The strategic review is wide ranging, the outcome of which is expected in the near future. For further information, please contact: Bond International Software Plc: Tel: Steve Russell: Group Chief Executive Bruce Morrison: Finance Director Buchanan: Tel: Richard Darby Gabriella Clinkard Cenkos Securities plc: Tel: Stephen Keys
2 Chairman s Statement I am pleased to report an increase of 11% in the Group s revenues from 18,376,000 to 20,418,000 with recurring revenues up by 8.4% to 13,420,000 (2014: 12,375,000). Total administrative expenses have increased by 10.1% year on year, as a result of the acquisition of Eurowage in April Excluding this acquisition they have increased by 5.2%. Profit before tax has increased by 12% to 863,000 in the first half of the year (2014: 769,000) and basic earnings per share were 1.65p per share compared with 1.42p for the same period in To assist with understanding the Group s underlying performance, 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 1,255,000 (2014: 1,433,000) and the adjusted diluted earnings per share were 2.94p (2014: 3.41p). The Group generated cash of 2,373,000 in the first half of 2015 (2014: 3,222,000) after the payment of deferred consideration on the acquisition of Eurowage of 1,000,000 in May Overall the Group had net cash of 234,000 (cash balances net of bank borrowings) at 30 June 2015 compared with net bank debt of 206,000 at the end of In addition the Group had further financial liabilities at 30 June 2015 comprising a loan note due to the vendor of Eurowage which had a fair value of 2,672,000 and amounts due in respect of finance leases of 179,000. Recruitment Software Division The Recruitment Software Division has seen revenues rise by 2.2% from 9,017,000 to 9,216,000. In our UK staffing software business a fall in nonrecurring revenues to 1,607,000 (2014: 1,914,000) reflects the decision by an increasing number of new customers to opt for SaaS rather than the configured On Premise solution. This has impacted on both the sale of software licences and consultancy services. Recurring SaaS revenues from On Demand grew by 15% in 2015 to 704,000 (2014: 613,000). Recurring revenues in the US Staffing Software business of 3,202,000 are up 6.36% (2014: 3,011,000) with SaaS rental increasing by 16% to 1,124,000 (2014: 968,000) and maintenance revenues of 2,078,000 at a similar level to last year (2014: 2,042,000). Asia Pacific revenues of 1,363,000 are 41% up on the same period last year, primarily through the rollout of a major contract in Japan which has resulted in significant revenues from licences and services. Analysis of Recruitment Software Division revenues Revenue by type Software sales & services 3,212 3,159 6,897 Software support 3,506 3,417 6,934 SaaS and software rental 2,498 2,441 4,906 9,216 9,017 18, December Six months ended 30 June Revenue by location of operating company United Kingdom 3,948 4,432 8,971 USA 3,905 3,620 7,387 Asia Pacific 1, ,379 9,216 9,017 18,737
3 Chairman s Statement (cont d) 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. 31 December Six months ended 30 June Revenue by type Software sales & services ,286 Software support and hosting 1,532 1,585 3,416 2,328 2,481 4,702 Overall revenues for the division fell by 6.1% to 2,328,000 in 2015 compared with 2,481,000 for the same period last year with maintenance revenues from legacy products, Bond Professional and Bond Workforce, down 15% to 532,000 (2014: 626,000). In June 2015 we launched our new flagship integrated Payroll & HR product called Amity, which we will start to sell in the final quarter of Amity, which is a web based product will be delivered primarily on a SaaS basis. The analysis of revenues by product is Bond Payrite Bond Team Spirit , ,839 1,690 Bond Professional Bond Workforce ,328 2,481 4,702 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 1.3% increase in revenues from 2014 to Non recurring revenues rose by 3% to 1,617,000 (2014: 1,569,000) whilst recurring revenues from annually renewable contracts were 3,294,000 (2014: 3,281,000). These represent 110% of fixed overheads creating a low risk operating environment for the company. Strictly Education made an operating profit of 781,000 in 2015 (2014: 806,000). Bond Payroll Services has seen a 10% increase in revenues year on year to 1,367,000 (2014: 1,240,000) and operating profit is 365,000 (2014: 359,000). The business is now processing an average of 71,300 payslips per month which represents a 3.7% increase on last year. Eurowage Limited, which was acquired at the beginning of May 2014 generated revenues of 2,596,000 in the six months to 30 June 2015 compared with 788,000 for the two months it was owned by the Group in The business also contributed an operating profit of 958,000 (2014: 290,000).
4 Analysis of revenues 31 December Six months ended 30 June Recurring revenue Strictly Education 3,294 3,281 6,594 Bond Payroll Services 1,159 1,024 2,013 Eurowage Limited 1, ,884 5,884 4,932 10,491 Non recurring revenue Strictly Education 1,617 1,569 3,543 Bond Payroll Services Eurowage Limited 1, ,262 2,990 1,946 6,181 Total revenue Strictly Education 4,911 4,850 10,137 Bond Payroll Services 1,367 1,240 2,389 Eurowage Limited 2, ,146 Strategic review 8,874 6,878 16,672 In March 2015 the Group announced a strategic review to evaluate the Group s future strategy to maximise the potential of its market leading software and services and take full advantage of the Group s growth potential. This is a wide ranging review which is considering all strategic options available to the Group including partnerships, acquisitions, corporate divestitures, a sale of the Group or a new or extended bank facility to continue to invest in the Group. The Board can confirm that good progress has been made in this wide ranging exercise and that expects to make further announcements as to the conclusions reached in the coming weeks. Martin Baldwin Chairman 25 September 2015
5 Consolidated statement of comprehensive income for the six months ended 30 June 2015 Note (Audited) Revenue 2 20,418 18,376 40,111 Cost of sales (3,044) (2,517) (5,795) Gross profit 17,374 15,859 34,316 Administrative expenses (14,034) (12,593) (26,095) Expenses of acquisitions (148) (148) Total administrative expenses (14,034) (12,741) (26,243) Operating profit before the amortisation of intangible assets 2 3,340 3,118 8,073 Amortisation of internally generated development costs (1,593) (1,433) (2,949) Operating profit before the amortisation of acquired intangible assets 1,747 1,685 5,124 Amortisation of acquired intangible assets (703) (870) (1,983) Operating profit 1, ,141 Finance income Finance costs (222) (64) (288) Profit before income tax ,909 Income tax expense 3 (160) (174) (728) Profit for the period attributable to owners of the parent ,181 Earnings per share from continuing operations attributable to the owners of the parent during the period 4 Basic earnings per share 1.65p 1.42p 5.17p Diluted earnings per share 1.65p 1.42p 5.17p
6 (Audited) Profit for the financial period ,181 Other comprehensive income net of tax Currency translation differences on foreign currency net investments (217) (311) 294 Total other comprehensive income net of tax (217) (311) 294 Total comprehensive income for the financial period attributable to the owners of the parent ,475 There are no taxation effects in respect of the foreign currency translation differences.
7 Consolidated balance sheet at 30 June 2015 At At 30 June 31 December (Audited) ASSETS Noncurrent assets Property, plant and equipment Intangible assets Deferred tax assets Trade and other receivables 2,739 40,911 1, ,730 41,021 2,449 2,705 41,396 1, ,727 46,200 46,269 Current assets Inventories Trade and other receivables Cash and cash equivalents 64 8,374 4, ,988 3, ,271 3,688 12,522 11,287 12,985 Total assets 58,249 57, EQUITY Share capital Share premium account Merger Equity option Currency translation Retained earnings , (1,228) 11, , (1,616) 10, , (1,011) 12,233 Total equity attributable to the owners of the parent 36,352 34,654 36,821 LIABILITIES Noncurrent liabilities Trade and other payables Borrowings Deferred tax liabilities 2,962 2,748 7,402 3, ,484 2,787 5,710 10,929 9,749 Current liabilities Trade and other payables Current income tax liabilities Borrowings 12, ,739 9, ,264 12, ,187 11,904 12,684 Total liabilities 21,897 22,833 12,433 Total liabilities and equity 58,249 57,487 59,254
8 Consolidated cash flow statement for the six months ended 30 June 2015 Note (Audited) Cash flows generated from operating activities Cash generated from operations Interest paid Income tax paid 6 2,863 (173) (317) 3,289 (64) (3) 7,056 (192) (790) Net cash from operating activities 2,373 3,222 6,074 Cash flows from investing activities Acquisition of subsidiary net of cash acquired Interest received Purchase of property, plant and equipment Purchase of other intangible assets Proceeds from sale of property, plant and equipment 41 (216) (2,037) (2,650) 18 (242) (1,725) 11 (2,650) 56 (370) (3,535) 16 Net cash flow used in investing activities (2,212) (4,588) (6,483) Cash flows from financing activities Issue of new ordinary shares Increase in bank borrowings Repayment of bank loans New finance leases Repayment of finance leases Equity dividend paid (48) 2 3,000 (1,758) 36 (56) 2 3,600 (2,069) 84 (142) (936) Net cash inflow from financing activities 228 1, Increase/(decrease) in cash and cash equivalents for the period 389 (142) 130 Cash, cash equivalents at the beginning of the period 3,688 3,479 3,479 Effects of foreign exchange rate changes 7 (59) 79 Cash, cash equivalents at the end of the period 4,084 3,278 3,688 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.
9 Consolidated statement of changes to shareholders equity for the six months ended 30 June 2015 (unaudited) Attributable to the ow ners of the parent Six months ended 30 June 2015 Share capital Share premium account Merger Equity option Currency translation Retained earnings Total At 1 January , (1,011) 12,233 36,821 Comprehensive income: Profit for the period Other comprehensive income net of tax: Currency translation differences (217) (217) Total comprehensive income for the year (217) Dividend (1,067) (1,067) Issue of ordinary shares Share options lapsed or exercised (71) 71 At 30 June , (1,228) 11,940 36,352 Attributable to the ow ners of the parent Six months ended 30 June 2014 Share capital Share premium account Merger Equity option Currency translation Retained earnings Total At 1 January , (1,305) 10,967 34,279 Comprehensive income: Profit for the period Other comprehensive income net of tax Currency translation differences (311) (311) Total comprehensive income for the period (311) Dividend (912) (912) Issue of ordinary shares ,003 Share options lapsed or exercised (2) 2 At 30 June , (1,616) 10,652 34,654 Attributable to the ow ners of the parent 31 December 2014 Share capital Share premium account Merger Equity option Currency translation Retained earnings Total (Audited) At 1 January , (1,305) 10,967 34,279 Comprehensive income: Profit for the financial year 2,181 2,181 Other comprehensive income net of tax Currency translation differences Total comprehensive income for the period 294 2,181 2,475 Dividend paid (936) (936) Issue of ordinary shares ,003 Share options lapsed or exercised (21) 21 At 31 December , (1,011) 12,233 36,821
10 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 25 September The financial information contained in these statements does not constitute statutory accounts as defined in Section 434 of the Companies Act The financial information for the year ended 31 December 2014 has been extracted from the statutory accounts for that year. The statutory accounts for the year ended 31 December 2014 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. 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. Revenue Recruitment Software 9,216 9,017 18,737 HR and Payroll Software 2,328 2,481 4,702 Outsourcing 8,874 6,878 16,672 20,418 18,376 40,111 Operating profit before the amortisation of intangible assets Recruitment Software 1,242 1,452 3,378 HR and Payroll Software ,439 Outsourcing 2,104 1,307 4,473 Central departments (687) (533) (1,217) 3,340 3,118 8,073 (ii) Segmental analysis by location of operating company 31 December Six months ended 30 June Revenue United Kingdom 15,150 13,791 30,345 North America 3,905 3,620 7,387 Asia Pacific 1, ,379 20,418 18,376 40,111
11 2. Segmental review (cont d) (iii) Revenues by income type are: Non recurring income Product licence sales Software consulting services Other consulting services Computer hardware sales Third party software sales Payroll stationery sales 1,422 2,392 2, ,333 2,537 1, ,468 5,434 5,207 1, ,998 6,001 14,622 Recurring income Software support 5,262 4,923 9,915 Software rental income 2,651 2,520 5,083 Outsourcing income 5,507 4,932 10,491 13,420 12,375 25,489 Total revenues 20,418 18,376 40, Income tax expense Current tax UK Corporation Tax Foreign tax Adjustment in respect of prior years (152) Total current tax Deferred tax 52 (23) 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. Profit attributable to equity holders of the company ,181 Weighted average number of shares in issue (thousands) 42,627 41,806 42,191
12 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. Profit attributable to equity holders of the company ,181 Weighted average number of shares in issue (thousands) basic 42,627 41,806 42,191 Adjustments for: Share options Weighted average number of shares in issue (thousands) diluted 42,629 41,834 42,217 (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: Profit for the financial period ,181 Amortisation of intangible assets arising on acquisitions ,983 Expenses of acquisitions Taxation effect of adjustments (151) 148 (180) 148 (469) Adjusted profit 1,255 1,433 3,843 Adjusted earnings per share Basic Diluted 2.94p 2.94p 3.41p 3.41p 9.11p 9.10p
13 5. Dividend Dividend approved for payment to equity shareholders Dividend of 2.5p per share (2014: 2.2p) 1, Dividend paid to equity shareholders Dividend of nil per share (2014: 2.2p) 936 A dividend for 2014 of 2.5p per share was approved by the Annual General Meeting on 23 June 2015 and was paid to shareholders on 8 August Reconciliation of profit before tax to net cash flow from operations Profit before tax ,909 Adjustments for: Depreciation of property, plant & equipment Amortisation of internally generated development costs 1,593 1,433 2,949 Amortisation of acquired intangible assets ,983 Loss on sale of property, plant & equipment Finance income (41) (18) (56) Finance cost Operating cash flows before movements in working capital 3,518 3,337 8,486 Decrease in inventories Decrease/(increase) in trade and other receivables (655) Decrease in trade and other payables (1,561) (606) (777) Cash generated from operations 2,863 3,289 7,056