Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

Bond International - management must be tempted!

The Specialist provider of software for the international recruitment and human resources industries cam out with a trading update year ending 31st Dec 2008

Deterioration in trading probably much as expected but deferral of key contracts disappointing.
Still expects to report revenues in excess of £31m for the year ending 31st Dec 2008 and an operating profit of not less than £5.4m. Consensus forecast was for pre-tax of £6.70m and revenue of £31.90m and eps of 14.90p. Operating profit guidance is pre amortization of intangibles. For the year ending 31st Dec 2007 operating profit was stated before net finance costs of £140k. Zero debt so finance costs in the current year are assumed to be irrelevant. Effective tax rate for 2007 was c29%.

Looks like eps is now going to be c8p.The board intends to pay an unchanged dividend of 1.6p which is very welcome. Outlook statement reasonably positive (in the circumstances); high level of recurring income across all divisions, has good order books and sales prospects and continues to take orders at an encouraging rate. Steps taken to reduce operating costs and remains leader in sector.

Nice little business, recurring revenue c50% of total (interim stage) and excellent cash generation (c100% + op profit). Operating margin has been steadily declining due to changed sales model (when will the benefits come through?)

Net asset value at interim stage was £34m, includes Goodwill of £14.3m

Given cash generation one can assume that management will be considering other options away from the market? Others out there must feel the same as shares were up 20% after this profit warning!


Author: Blogger John W | Posted: 10:17 am  
Good to see the Blog back in action!
I think the rise on profit warning day followed a note by Cenkos (that's according to the Daily Mail).
I wrote this on ADVFN:

I estimate an Op Pft of £5.4m means PBT of £3.4m and PAT of £2.4m or 7.2p/sh...

after £1m goodwill amortisation.
Encouraging to see we're not far adrift from each other.

I suppose this is in a sector which will be late to the recovery party!
(I have a holding)
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