Looks like these Guys like it aswell. 'Share Of The Week' at everyinvestor.co.uk
ANOTHER SOFTWARE DEVELOPER WITH MASSIVE GAINS POTENTIAL. 12/5/2003

Bond International Software

Business Summary
Provision of software, hardware and related support services, principally to the recruitment services.

Market: AIM
Website: www.bond.co.uk

Bond International Software, although only a tiny company, has a leading position in the market for software for recruitment businesses. After a disastrous year in 2002 the company slashed costs, especially in its US operations, and has just reported a return to modest profits for the first half of calendar 2003. But the excitement in the share price is the potential for the soon-to-be-launched Version 11 of its software.

Version 11 may sound no big deal but the company has been working on this for years and says the improvements are so massive that it is really a new product. Chief executive Steve Russell says the product will be launched with an important customer signed up. Even more significantly he says that there is scope to sign up some giant customers for the software. A single order could be for as much as 5m which would have a transforming impact on a company with sales last year of 6.4m and a market capitalisation of 4.9m.

I should caution here that managements at small software companies are not noted for their pessimistic outlook on life. A more down-to-earth note from stockbrokers, Seymour Pierce, published after the latest interim figures, forecasts sales rising to 7m this year and 7.5m next, with profits of 300,000 and 500,000 respectively. Even that provides reasonable underpinning for the present share price, but Russell says those forecasts could be left way behind by events. Analysts are paid to make assumptions about the future but they can hardly factor into their forecasts sales from unknown customers for a product that has not even been launched yet. Alan Matthews, author of the Seymour Pierce note, says that he has not built into his numbers any upside for Version 11.
Massive cost-cutting restores profitability
Bond received a bloody nose in 2002 from an over-ambitious expansion in America. It built up a far-flung sales and support operation with 55 employees to service and build the expected fast-growing US arm of the business. The catastrophic attacks on the World Trade Centre on 11 September 2001 were a commercial disaster for the group. New orders for software dried up completely and the business began haemorrhaging cash. In a spectacular slash-and-burn exercise the US labour force was cut from 55 to 6. Amazingly, the group claims that this has been done without destroying the ability of the US arm to operate successfully.

The result of the staff cuts is that administrative costs have dropped from 4.85m to 2.95m. At the same time turnover has crept up from 3.18m to 3.37m enabling the group to turn a 2.1m loss into a 155,000 profit. Profits are also helped by capitalising 75 per cent of the anticipated 1m cost of developing Version 11. These costs will be amortised against revenues once the product is completed.

At the same time as cutting overheads drastically, the group has been focusing on building recurring revenues from customers. These are sales from maintenance, support services and from the managed service package. In the latest year recurring revenues represented 70 per cent of overheads against 37 per cent the year before. The plan is to build recurring revenues to cover 100 per cent of overheads so that new license sales will be pure profit. If the company can reach this position by 2005 and make big license sales the impact on the business will be dramatic.

Who;s who of recruitment giants already customers
As well as having what it believes to be an exciting new product the group also has a formidable customer base with a whos who of the worlds leading recruitment businesses like Manpower already clients. In the UK the group is growing its managed services business through a relationship with recruitment and support services giant, Hays.

Bond’s software helps recruitment companies manage the personnel they are supplying to their customers right across the relationship. Version 11 is a vastly upgraded product that is compatible with third party databases rather than requiring bespoke systems. This has the advantage that customers can configure their systems to their own particular requirements while still using highly cost-effective software. The company claims that there is already considerable interest from potential customers, hence its confidence that some large orders will be signed over the next couple of years.

The risks are obvious. There could be delays in launching the product. Customers may not respond as hoped. But meanwhile there are positive developments including signs of life in the recruitment market, an improving order book with more large prospects in the pipeline and a major deal in the UK and two in the US already won in 2003. The shares look a solidly based speculation with the potential to really hit the jackpot. ENDS.

Quite a breathtaking report with fair warnings given. I think the most important aspect being that the brokers have not even factored anything in yet for version 11 and they have to my knowledge a BUY note on it whith a further add note after the results on the 9th.

GF PDYOR.

Great results today and a much deserved lift in share price.

Hopefully with the change in broker these will start to get a bit more exposure.

Hanging on in for 1.50 +

all the best capa

Agree - been in this for a while and cannot understand the lack of movement a sit is a good company with a good product, making good profits.
We will now hopefully see an upward movement on th eback of results today. Also first dividend - small but appreciated!

Still got a holding, hoping for more from the new broker.

cheers GF.