Bond International Software plc announces unaudited preliminary results for 2013

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Bond International Software plc, a world leading supplier of staffing, HR and payroll software and services, with operations in the UK, USA, Hong Kong, Japan, China, Singapore and Australia, today announces its audited preliminary results for the year ended 31 December 2013.

KEY POINTS

FINANCIAL HIGHLIGHTS

  • Recurring Revenues now represent 95% of adminsitrative expenses (2012: 92%)
  • Administrative expenses* reduced 4.1% to £24.6m (2012: £25.7m)
  • Operating profit* up 23% to £3.4m (2012 £2.7m)
  • Profit before tax up 193% to £1.6m (2012: £0.56m)
  • Diluted earnings per share up 56% to 3.5p (2012: 2.3p)
  • Recommended Final Dividend up 22% to 2.2p (2012: 1.8p)
  • Moved to net cash position of £1.4m (2012 net debt: £1.8m)

* Pre amortisation of intangibles assets and exceptional items and impairment of intangible assets

OPERATIONAL HIGHLIGHTS AND CURRENT TRADING

  • £8.5m Acquisition of Eurowage Limited (FMP Europe)
    • A fully managed International Payroll solution to multi-national companies in the UK and overseas
    • Adds international payroll solutions to Bond’s portolio of product offerings
    • Immediately earnings enhancing
  • Significant contract wins with Capita PLC, Carpertrght plc and Elwood Staffing
  • The board believe the Group is well placed to benefit from the ongoing economic recovery

Commenting on the results Chief Executive Steve Russell, said:

“The group is seeing all our worldwide recruitment markets improve on a real and sustainable basis. The reorganisation in our US business is having a positive effect, Asia Pacific continues to present opportunities for significant growth and our payroll operations continue to show material upside underpinned by the acquisition of Eurowage to the group. We have made good strategic progress this year and are confident on the future prospects of the Group.”

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
Gabriella Clinkard

Cenkos Securities Limited
Tel: 020 7397 8900

Stephen Keys

BOND INTERNATIONAL SOFTWARE PLC

Chairman’s Statement

I am pleased to report the results for the year ended 31 December 2013 which shows a year of improving profitability with operating profit before amortisation of all intangible assets and exceptional items rising by 13.1% to £6,124,000 (2012: £5,413,000) and operating profit before the amortisation of acquired intangibles up by 23.0% to £3,419,000 compared with £2,779,000 in 2012.

As previously reported, the group’s strategy has focussed on growing recurring revenues as part of its drive to build value in the business. Recurring revenues provide less benefit in the year in which the business is acquired but in the longer term they are more valuable to the group and to the future value of the business.  The recurring revenues were marginally down on 2012, as they were impacted by the expiry of a fixed term contract which we are now invoicing on a time and materials basis. However the underlying trend continues to be upwards as we focus on increasing our SaaS (Software as a Service) customers along with recurring revenues from other sources such as the group’s payroll operations. Looking forward the group expects to see increasing revenues from SaaS although the impact will be offset to some extent by reducing support revenues from our legacy products. In 2013 recurring revenues were £23,365,000 compared to £23,609,000 in 2012. These now represent a substantial 67% of total revenues (2012: 67%) and cover 95% (2012; 92%) of the group’s administrative expenses (excluding the amortisation of intangible assets).  These have reduced by 4.1% from £25,738,000 in 2012 to £24,672,000 in 2013.

Profit before exceptional items has increased by 57.2% to £1,809,000 (2012: £1,151,000) and the group has made a profit before tax of £1,634,000 compared with £558,000 in 2012.

The group has a reported undiluted earnings per share from continuing operations of 3.52p (2012: 2.30p) and diluted earnings per share from continuing operations of 3.52p (2012: 2.30p).  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 £2,726,000 (2012: £2,556,000) and the adjusted undiluted earnings per share were 6.60p (2012: 6.19p) and the adjusted diluted earnings per share were 6.60p (2012: 6.19p).

The group generated £7,851,000 of cash from operating activities (2012: £3,952,000) helped by a reduction in the working capital requirement of £1,346,000 through improved credit control and cash collection. The group’s capital expenditure on property, plant and equipment and internally generated product development increased by 6.5% to £4,184,000 (2012:£3,927,000) and the dividend payment increased by 50% from £496,000 to £744,000.  The positive cash flows allowed the group to turn net debt of £1,790,000 at the end of 2012 to net cash of £1,352,000 at the end of 2013.

Based on the progress made by the group, I am pleased to say that the board is recommending the payment of a dividend of 2.2p per share which is a 22% increase on last year.  The payment is subject to shareholder approval at the Annual General Meeting on 26 June 2014 and, if approved, will be made on 8 August 2014 to shareholders on the register at 18 July 2014.

Acquisition

We have today 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 company offers fully managed international payroll solutions to principally UK and USA organisations expanding into new countries.

Bond has seen its payroll operations deliver consistent growth in revenue and profitability over the last few years and is seeking to expand them further both organically and through acquisition. The payroll operations, which utilise Bond’s intellectual property, are currently operating in the UK only.  Increasingly companies with overseas subsidiaries or branches are looking for one payroll provider to meet all their payroll needs, something that Bond cannot offer in its own right. In order to broaden its customer base to multinational companies in the UK and international companies, primarily in the US, the board believes that the Bond has to offer payroll solutions in countries other than the UK.

Eurowage provides managed payroll solutions in many countries around the world to both UK based and overseas based customers.  Bond has already partnered with the Eurowage on previous deals but believe that bringing them into the Bond group will strengthen its product offering and drive sustainable growth in revenues and profits from payroll operations. Furthermore Bond’s existing customer base includes organisations with operations in many countries around the world and to whom the group will be well placed to offer international managed payroll solutions through Eurowage.

The company which was established in 2005 has seen revenues grow to £3.90m in 2013 with a profit before tax of £1.78m and the board believe that it will be earnings enhancing from the date of acquisition.

Employees

The group employs 460 people in our offices around the world. A motivated and committed workforce is vital to the continuing development of the group and I would like to thank all the staff for their continuing hard work, dedication and loyalty to the group.

Prospects

The board has been encouraged by the start to 2014.  Trading conditions are good in the major markets in which we operate and we believe the group is well placed to benefit from the ongoing economic recovery.  The acquisition we announced today will complement our payroll bureau operation by allowing us to offer international payroll solutions to customers and prospects alike.

Martin Baldwin
Chairman
8 April 2014