Bond International Share Discussion Threads

[rivaldo] 15/6/2007 08:12

Nice to see keen pre market open buying following yesterday's statement and a quick price response. Maybe the seller from the recent highs has gone - clear blue skies ahead hopefully!

[rivaldo] 14/6/2007 21:42

Sper, I think you've got your terminology wrong - wrapping advisers' fees etc into the costs of acquisition as per standard practice will put them ON the Balance Sheet.

There may be initial costs as you say, but most if not all of the acquisition costs will go on the Balance Sheet, particularly if BDI plan/agree the redundancies etc as part of the acquisition process. That's usually the way it works - BDI won't want to jeapordise their smooth profit/EPS progression just to save a bit of tax imo. Even if they do they'll separate them out as exceptionals so that the City concentrates on the core trading numbers.

Out of interest, the Investors' Chronicle web site has been revamped and it seems I can access historic tips on companies without being a subscriber. This is what they said about BDI on 30th March post-results. IMO the market has yet to realise what the IC has (suprisingly perceptively!) stated - that BDI "is no longer hitched to the recruitment cycle".

Note the "Good value" verdict at 211p - the price is now 200p:



"BOND INTERNATIONAL (BDI)
Created: 30 March 2007
Like translation technology provider SDL, Bond International can be seen as a play on globalisation. Version 11 of its Adapt human-capital-management software was a breakthrough in helping it live up to its 'international' moniker: the software's multi-lingual support and ability to run on any IT platform has enabled Bond to target larger international organisations in the UK, US, Australia and Asia, including Deutsche Bank and BAE. A $12m, five-year contract with Manpower across 4,440 offices in 70 countries validates this approach, covering the cost of the software's ongoing development. Bond claims it is the largest such deal the recruitment industry has ever seen.

This diversification, and two acquisitions since the year-end, mean Bond is no longer hitched to the recruitment cycle. So it is now looking to build or, more likely, buy its way into continental Europe - its last untapped market. House broker Oriel forecasts adjusted earnings of 15.7p in 2007 (13.2p in 2006).

Ord price: 211p Market value: £64m
Ex-div: 23 May
Payment: 22 Jun

Although Bond has diversified away from the cyclical recruitment market, its shares are still discounting its exposure to that area. So, on 13 times forecast earnings, a rerating is overdue. Good value."

[sper] 14/6/2007 16:02

Agree there should be some cost rationalisation but when that comes the extent of one-off costs (redundancy, termination payments, etc) could swing cost savings to additional costs in the short term. There will also be substantial admin costs in the DD and advisors fees I'm sure. Whilst wrapping those costs into the cost of acquisition will keep them off the balance sheet, getting whatever proportion you can through the p&l will save you 30% Corporation Tax. Worth taking the hit in the p&l for the first year if you can.

That said, none of that should make one jot of a difference to the value of the company because with BDI, valuation is significantly driven by quality of revenue and all this stuff is one-off hits to profit (one hopes).

[njp] 14/6/2007 14:59

As usual, you're far too modest, riv!

Assuming the usual cautious BDI-speak, we must be on track for at least that 18p this year.

Beddie-byes for me, now. Keep that price moving upwards!

[rivaldo] 14/6/2007 14:47

Polzeath, the current year forecast PBT is £6.6m.

To arrive at the adjusted EPS you should add back to the BDI PBT £467k of goodwill amortisation and £130k of share-based payment expense....so altogether that's around £6m of PBT based purely on last year's figures.

With a "strong" performance this year you'd expect more than 10% PBT growth (even with a small negative currency effect, although I see the pound is weakening at present). In particular, as NJP has pointed out, there could/should also be large savings on synergies with the acquisitions and central costs to be cut.

Even on forecasts the current year P/E is only 12.7. If as seems possible the forecasts are well beaten then anything's possible.

EDIT - NJP, great minds think alike! Sorry I posted after you, your analysis is as usual far better than mine.

[njp] 14/6/2007 14:39

Well, this was what I reckoned BDI might be able to achieve this year, given a fair wind:


NJP - 27 Mar'07 - 06:21 - 1097 of 1230 edit


Well, tell me why Bond can't do 20p eps this year!

Let's look at t/o.

UK was £8.67 last year. Gowi (per the acquisition announcement) had a running rate of £9m and SE had £1.9m for 2006. Adjust to allow for completion dates by taking 11.5 months of Gowi and 10 months of SE. Assume they can grow revenue by 8% for these two businesses and you get £11m. Then assume Bond can grow UK revenue by 15% this year - another £1.33m Total for UK in 2007 - £21m.

Use Oriel's figures for ROW - 2007 t/o £9.4m. (To me, btw, USA forecast seems very light - £7.4m vs £7.2m last year - but that may be to do with lumpiness; they did £4.59m in H2).

Total t/o for 2007 - £30.4m (vs Oriel's £29.7m).

Assume gross margin of 94% (as per Oriel) gives £28.57m.

Now, admin expenses. I believe there must be scope here for rationalisation. One ought to be able to set a target by saying that costs for 2007 should be no more than the combined admin figures (excluding goodwill and share based payments) for Bond and the acquired companies in 2006. Those figures are £12m (Bond), £6.8m (Gowi) and £1.3m (SE). I've adjusted the acquired companies again for relevant completion dates. This gives total admin expenses (excl goodwill and sbp) of £20.1m. Oriel are showing £21.35m.

Resulting PBT (pre goodwill and sbp), my figures, is £8.47m.

Now tax. Oriel's 28% refers to tax vs unadjusted PBT. The rate they're using vs adjusted PBT is only 23%. As we're now showing higher profits, let's play safe and use the 25% vs adjusted PBT that Oriel use in 2008-9. This will give tax of £2.12.

Resulting adjusted post tax profit is £6.35m. Divvy that up over 30.275m shares and you get 21p per share.

OK you say, to achieve those admin savings there's going to have to be some termination costs. So - let's assume £0.75m of those. Net of tax, these 'exceptionals' cost £0.56m, reducing post tax profits to £5.8m. That's still an eps of 19p - with a true running rate, excluding 'one-off' costs, of 21p (or more, with full years from the acquistions).

My conclusion? I think Bond must have much more ambitious targets than Oriel are disclosing. That's how it should be - under promise and over deliver - but I'd be surprised if Bond are not looking for at least 18p this year on the basis of the group as currently constituted.

[njp] 14/6/2007 11:55

polzeath

Never over-promise, that's their style. Watching the Sopranos so missed the agm statement when it first appeared. Still, hold plenty enough to be happy that it's turning around. Looks right on cue, too, from the chart.

[polzeath] 14/6/2007 11:42

Quite a few buys going through, AGM statement well-received, BDI now bouncing back above 100 day SMA with 50 day SMA line (210p) the immediate target.

[thewalrus] 14/6/2007 11:23

Back on track now (hopefully). :-)

[polzeath] 14/6/2007 11:10

Hopefully this trade [10:50 2,591 @ 193.50p] was just incredibly bad timing (RNS was out 6 minutes later) :-)

Or do they know something we don't?!

[sundance 13] 14/6/2007 11:05

Just topped up holding, looks great value given the prospects for this year, especially after recent pullback.

[rivaldo] 14/6/2007 11:01

Great AGM statement - you can't ask for any more than that. The current share price is, erm, very underpriced imho:



"Martin Baldwin, Chairman of Bond International Software plc the specialist
provider of software for the international recruitment and human resources
industries, will make the following statement at the Company's Annual General
Meeting to be held later today;

'I am pleased to announce the strong performance that the Group produced during
2006 has continued into 2007 and although it is still early, the Group is on
course for another successful year. The integration of The Gowi Group Limited,
acquired in January 2007, and Strictly Education Limited, acquired in February
2007 is progressing as expected.'"

[polzeath] 14/6/2007 09:53

BSL offering 195p to buy now, so that's a 1500 share 'buy' at 09.36.

[hywel] 13/6/2007 16:01

Is it me or are a lot of stocks back to their long term trend line, BDI, FDP (back to trend line from Dec) and i've just bought into Cheiftain (CFT)? Depending on markets they could either bounce up from here or break support and all bets are off, i think the former but keeping some cash just in case.

Any thoughts?

Not a BDI holder but getting tempted now.

[polzeath] 13/6/2007 12:46

I'm in. Roll on decent AGM statement tomorrow!

[polzeath] 11/6/2007 12:27

Cheers Riv - I see the share price is weakening as I write! Could be a great opportunity, I can get £10k @ 197p online which is cheaper than it's been since the end of March but could indicate some big sells out there in the ether.... Pondering a buy :-)

I'll revisit this thread and go back a few weeks to firm up my decision!

[rivaldo] 11/6/2007 12:06

Hi polzeath, you asked about BDI on another thread. You did say in less than 200 words - my post 1214 above fits the bill perfectly!

Individual companies like IMP in particular niches may rise or fall, but the consensus at present is that recruitment is going great guns.

More importantly, which the market doesn't appear to have grasped, the corporate side is growing rapidly in increasing BDI's diversification away from cyclicality - see the deals with Knight Frank, Hamptons, Easyjet, Flybe etc.

And on the recruitment side BDI has large guaranteed income anyway for the next 3 to 5 years from the likes of the recent contracts with Manpower and Hays.

I'm convincing myself to reinvest some FDP proceeds here :o))

[polzeath] 09/6/2007 09:01

Riv - see IMP, not brilliant share price performance on the back of no bad news yet but possible worsening outlook for top tier recruitment.

[polzeath] 08/6/2007 10:08

Tight spread 196-200

[rivaldo] 07/6/2007 11:54

NJP, the AGM is a month later than last year and therefore a suitable candidate for a trading update given the interval since the prelims. I've spoken to the FD, and the Board will be meeting soon to consider the content of the AGM statement - that alone indicates to me that they're at least considering some sort of update.

I'm amazed at the share price slippage:
- all the recruitment firms are reporting strong progress (SThree are just the latest)
- AXA have increased their stake
- BDI are regularly announcing corporate contract wins (Knight Frank was only 3 weeks ago)
- the P/E is extremely low, and that's on likely very conservative forecasts
- the Manpower and Hays contracts guarantee visibility of income for years to come