The prelim full year results statement from HR and payroll software and services provider Bond International was notable for the most curious comment. Referring to 5% yoy growth in recurring revenue due to the move into SaaS, management commented “this growth, which is almost hidden on first examination, represents a major step forward for the group”. That sums up Bond’s performance over the year – important strategic moves but minor movements in real terms.
Revenue from continuing operations fell from £36.8m to £35.5m for the year to December 31 212. Within this recruitment, and HR and payroll both dropped yoy, leaving only the outsourcing division to deliver a revenue increase. At the half year point it was clear that the UK recruitment division was an issue (see here) and this continued through to the end of the year, but the US was also problematical. Asia-Pac is a growth area, albeit from a low base. Restructuring in the UK and US has cut costs and management is hoping for better things during 2013. Revenue from the HR and Payroll division was down 5% due to fewer customers using the Professional and Workforce products. Recruitment suffered in part from the shift to SaaS.
While the top line fluctuated, the bottom line saw some improvements. Operating profit switched from a loss of £1.2m to a profit of £676,000. Likewise, PBT moved from a loss of £1.4m to a profit of £550,000. There is still work to be done to stabilise and improve profitability and this is a focus for 2013.
There were upsides to the business – significant new contracts in Australia and Japan, the move to SaaS, and recurring revenue now contributing 67% of total revenues (vs. 61% in 2011) and covering 92% of the group's administrative expenses (excluding the amortisation of intangible assets). 2013 has started well in terms of contracts and there has been an improvement in the UK market which is still Bond’s largest market but overall progress is still slow.