Final Results

FOR RELEASE 7.00AM 6 March 2008 ACCESS INTELLIGENCE PLC ("Access Intelligence" or "the Group") (Software and computer services) PRELIMINARY RESULTS FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER 2007 2007 2006 Change £000 £000 Turnover 4,068 3,677 11% Operating (loss)/profit before tax, amortisation (5) 560 and exceptional costs (Loss)/profit before tax (478) 246 Basic (loss)/earnings per share (0.41)p 0.12p Diluted adjusted (loss)/earnings per share (0.08)p 0.52p Dividends per share Nil Nil Highlights * Results in line with December trading statement * Postponed contracts at MS2M held Group back * Two other core software and computer services businesses showed good progress * Continued investment in lead products * Strong cash position Current Trading and Outlook * New financial year in line with management expectations * Management is optimistic about the Group's overall growth potential * New sales and marketing management in place * Awaiting market reaction to launch of `mysatcom.net' * No material outflow of cash expected * Justifiable reasons for believing that profits can be rebuilt For further information: Access Intelligence plc 01904 520 840 Jeremy Hamer (Non Executive Chairman) Brendan Austin (Chief Executive) Colin Davies (Finance Director) Cubitt Consulting 020 7367 5100 Brian Coleman-Smith / James Verstringhe Nicola Krafft Blue Oar Securities 020 7448 4400 Rhod Cruwys / Shane Gallwey The Group Today Access Intelligence is based in York with offices in Stockport, Greater Manchester, Chorley, Lancashire and Newcastle upon Tyne. It is a compliance led Software and Computer Services group of companies providing business critical compliance and legislative driven services to both public and private sectors. The software services are provided primarily as Software as a Service (SaaS) on a recurring revenue basis. Its principal software led services are: The Virtual Compliance Officer™ which enables companies in the retail financial services sector to support their customer acquisition process whilst also ensuring that they comply with ever increasing regulations from the EU and the FSA. mysatcom.net™ a compliance portal which enables companies in the general insurance and mortgage sectors to risk asses their businesses against FSA compliance requirements. ProContract™ a suite of sourcing and procurement software which enables public sector bodies and private enterprises to demonstrate compliance and transparency when acquiring goods and services. ProContract™ streamlines and reduces costs of tendering and contract management for both buyers and suppliers in the public and private sectors. The government has the objective that all public sector bodies comply with its directive to use methods such as electronic tendering for goods and services in order that it can meet its planned reductions in public spending. The Group's data management solutions include: backup & running™ ensures secure encrypted online storage and management of data. Starscan™ its anti virus and spam filtering managed service which prevents companies' servers being brought down by external virus attacks. Starserver Monitor™ its managed support service which remotely monitors clients' servers and networks to ensure optimum availability. The Group's email archiving and high availability storage and retrieval systems, used by both private and public sectors ensure that information is available when required in a secure environment. They assist organisations in their need to comply with initiatives such as Sarbanes-Oxley and the Data Protection Act. The Group provides nationwide support services to both public and private sector organisations in the UK. ACCESS INTELLIGENCE PLC ("Access Intelligence" or "the Group") (Software and computer services business) PRELIMINARY RESULTS FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER 2007 Chairman's Statement I am pleased to announce our results for the year ended 30 November 2007. Whilst overall the results have been disappointing, we have seen progress in a number of areas and have used up little of our cash resources with a cash balance at the year end of £872,000. Adding further critical mass remains important to our long-term development, however, our share price has restricted our acquisition activities. Results Group turnover was up by 11% to £4.1m (2006: £3.7m). Operating loss before amortisation and exceptional costs was £5,000 (2006: operating profit £ 560,000). Adjusted losses per share were 0.08p (2006: earnings per share 0.55p). In light of this performance, the Group is not proposing to pay a dividend on the ordinary shares, despite earlier indications to the contrary. The Year in focus Having downgraded market expectations during the year these results are in line with revised estimates. However, notwithstanding the results, our two core software and computer services businesses have progressed significantly. Willow Starcom is in data storage and retrieval offering off-line, on-line and e-mail archiving solutions. Due North offers procurement software solutions as a service. As a whole these two maturing businesses represent 80% of our sales at £3.3m (2006: £3.0m). Willow Starcom had a steady year launching a new e-mail archiving product towards the end of the period and re-shaping its sales force. During the year we completed the integration of our new online storage solution and we are once again building its customer base. We appointed an experienced senior sales manager at the beginning of this new financial year and are optimistic about growing profits in this area in 2008. In the procurement field where our software helps its users reduce the cost and complexity of procurement, enabling better buying decisions, we have had a strong year of progress both building our share of the public sector e-procurement activity and in achieving our first private sector success with Ladbrokes. Frustratingly, despite winning a number of regional council portals, we are yet to see the individual councils using the full product suite leaving considerable revenue opportunities still to be won. The sales team at Due North has again been strengthened in recent weeks and we have an encouraging pipeline of opportunity on which we expect to build in 2008. Our third business, MS2M is more embryonic and had a difficult year. It continued broadening its product offering, the latest element of which will be launched in March 2008. Its products help insurance companies, banks, building societies, insurance brokers and independent financial advisers manage the FSA's regulations in the area of training and competence. The product to be launched in March is called mysatcom.net™ and is a compliance portal which enables companies to assess their risk profile against the FSA guidelines for compliance. Companies using mysatcom.net™ complete an online health check and can be provided with a route map to compliance. If found to be deficient then MS2M has, in `Virtual Compliance Officer™ and Trackrecord™`, the products to bridge any gaps. `mysatcom.net™' has had a warm reception from the British Insurance Brokers Association and the Council of Mortgage Lenders. Whilst the technical qualities of these products are robust, the challenge remains the generation of demand from the target market. Despite being loss making in 2007, your board remains convinced that these products more than justify the investment, time and Group support necessary to achieve market acceptance and we remain optimistic of a return to profit at MS2M in 2008. The central costs of a small public company are disproportionately high, often obscuring profits generated elsewhere in the Group. We have reviewed our costs in detail this year, consolidating two sites into one and closing a peripheral office. However, while we constantly strive to minimise central costs, we still have £350,000 of central overhead to absorb which would obviously be less significant in a Group with greater critical mass. Our legacy businesses of The Marketing Guild and Wired-Gov were fundamentally cash and profit neutral during the year and now absorb minimal management time. We have had approaches from prospective acquirers for both but no sensible price has been forthcoming. Our exceptional costs this year of £126,000 relate predominantly to office closures and redundancy. Our business model and strategy The Group's objective has been to acquire and build businesses providing software and systems solutions in the areas of compliance and data management. Your Board is of the opinion that our current share price does not allow us to continue acquisition activity for the time being unless we can find opportunities that can be achieved through sensible `relative value' share swaps, something which we are exploring. In the meantime we continue to build our business organically whilst preserving our cash. With excellent product capability, continued product development and an emphasis on customer service, we believe we have the correct values with which to succeed. We have broadened the role of the director of the Marketing Guild, so that he is now closely involved in the Group's marketing activities in conjunction with strengthening our sales teams. Together these actions give us the resources to improve our website communication as well as our overall messages to our target market with the aim of speeding up our organic growth. Staff Our future prosperity is in large measure dependent on the ability and loyalty of our staff. Their specialist knowledge and skills are key to providing our value added services to our customers. Staff turnover is low and we continue to attract high calibre people. On behalf of the board I would like to thank our employees for their continued commitment. Current trading and outlook We have begun the new financial year in line with our expectations. Having strengthened our sales and marketing management in key areas, we are optimistic about the group's overall growth potential. With the more embryonic MS2M we await market reaction to `mysatcom.net™', its new product offering. Central costs are under control and we are not expecting any material outflow of cash over the year. In summary we have justifiable reasons to believe we can rebuild our profitability during 2008. Jeremy Hamer Chairman 6 March 2008 Chief Executives Review 2007 perspective MS2M, which was acquired in the penultimate month of our 2006 reporting year, was troubled by major project postponements at two of its larger customers. This had a damaging effect on its expected contribution for 2007. MS2M provides compliance software to the retail financial services industry. The company's software products manage the ever more complex process of ensuring compliance with Financial Services Authority (FSA) regulations and ever increasing legislation from the EU. Companies using the software include the Royal Bank of Scotland Group, National Australia Group, Axa Sunlife and Liverpool Victoria as well as other blue chip financial services organisations. Your board still believe that, despite this year's major setbacks, there are significant opportunities for the company's products and services. We continued to invest in product development for both existing and new products during 2007 which we believe will bring benefits during 2008 and beyond. Due North provides strategic sourcing software solutions. During the period they won the contract to develop the procurement portal for the North West Centre of Excellence which represents 46 local authorities in the North West of England. This means that Due North has won three out of the four centres of excellence that have gone out to tender. There are five yet to do so. Importantly the company also won a framework contract for all public bodies in England and Wales. Government agencies can now acquire the Due North suite of software without having to go through the costly and time consuming processes of going out to tender. During the period the second generation e-sourcing suite ProContract™ was launched. ProContract™, whilst modular in nature, manages the sourcing process from initial interest through the complete life cycle of the contract including the management of supplier performance. The new software has been warmly received by the market and the company had significant wins in the last quarter. They achieved their first overseas win within central government by achieving a five year contract with The States of Jersey. Additionally the company's first private sector customers were added with 3 year contracts at JANET the UK's education network provider, and Ladbrokes, the leading leisure company. The partnership with COA Solutions (previously Cedar Open Accounts) has continued to bring success with contract wins within the National Health Service. We continue to look for appropriate partners to broaden our distribution channels. In our interim statement, we announced that Willow Starcom was taking action, including leading its sales proposition with email archiving, to address its shortfall in sales. These actions brought the expected monthly run rate back on plan by the year end. They also saw their first public sector sales with contract wins at Chorley and Sedgefield Borough Councils and Wearside District Council. Their online backup service Backup & Running™ increased its recurring revenues by 20%. The year ahead The changes we have made to senior management will, we believe, assist in continuing momentum throughout the year. The investment in new product development at MS2M has enabled them to launch a new compliance portal www.mysatcom.net™ . The portal is aimed initially at the general insurance and mortgage sectors. mysatcom.net™ enables companies to risk assess their business against Financial Services Authority (FSA) requirements. Easy to use, it audits every part of a business from senior management arrangements, systems and controls through to training and competence including treating customers fairly. Companies using the portal are provided with a gap analysis and a route map to compliance success. Work by the FSA throughout 2007 demonstrated that despite levying fines and cancelling permissions of 151 firms, the standards at mortgage intermediary firms were still well below those expected. MS2M is currently piloting mysatcom.net™ with eleven companies within general insurance and mortgage broking in conjunction with a cross section of intermediaries. We believe the outcome from this exercise should generate more enquiries for MS2M's compliance software as a service offering. Due North continues to build on last year's success with increased opportunities in the public sector. Following last year's breakthrough in the health sector, contract wins have continued and the pipeline here is growing. A senior head of sales has been appointed to leverage our position in our existing marketplace and spearhead its entry into the private sector. The change of sales strategy and investment in senior sales management at Willow Starcom has had a positive impact on sales revenues. In spite of disappointing performance in 2007 the group begins 2008 having invested in stronger sales management, broader marketing resource and a number of new products. Brendan Austin Chief Executive 6 March 2008 Finance Director's Review Despite an operating loss before tax and goodwill amortisation of £5,000 we ended the year with cash balances of £872,000 (2006: £1,002,000), which reflects strong working capital control by the Group. The strategy of the group is to focus on companies that have a high element of recurring revenue. We believe that this will underpin the quality of earnings and generate strong cash flow. Recurring revenues accounted for 51% of total revenue at £2.1 million. International Financial Reporting Standards As a result of the admission to AIM, the Company will be required in future to produce consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS") for accounting periods beginning on or after 1 January 2007. The group will therefore adopt IFRS for the financial year ending 30 November 2008, with the first results reported under IFRS being the interim results for the six months ending 31 May 2008. The group is committed to achieving a smooth transition to IFRS, and a review of the effect of the conversion from UK GAAP to IFRS is currently being undertaken and will be complete by 31 July 2008. Colin Davies Finance Director 6 March 2008 ACCESS INTELLIGENCE PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER 2007 Note 2007 2006 £'000 £'000 Turnover Continuing operations 4,068 3,677 Cost of sales (1,958) (1,653) ______ ______ Gross profit 2,110 2,024 Administrative expenses (2,115) (1,464) ______ ______ Operating (loss)/profit before exceptional (5) 560 items Non-recurring expenses 2 (126) -- ______ ______ Operating (loss)/ profit (131) 560 Amortisation of goodwill (355) (312) ______ ______ (Loss)/ profit on ordinary activities before (486) 248 interest Interest receivable 20 17 Interest payable (12) (19) ______ ______ (Loss)/ profit on ordinary activities before (478) 246 taxation Taxation 3 31 (154) ______ ______ (Loss)/ profit on ordinary activities after (447) 92 taxation ______ ______ Basic (loss)/earnings per share 4 (0.41)p 0.12p Adjusted (loss)/earnings per share 4 (0.08)p 0.55p Diluted (loss)/earnings per share 4 (0.39)p 0.12p Diluted adjusted (loss)/earnings per share 4 (0.08)p 0.52p ______ ______ ACCESS INTELLIGENCE PLC CONSOLIDATED BALANCE SHEET AT 30 NOVEMBER 2007 2007 2006 Note £'000 £'000 Fixed assets Intangible assets 5 6,691 8,251 Tangible assets 198 157 ---------------- ----------------- 6,889 8,408 ---------------- ----------------- Current assets Stocks 351 314 Debtors 1,156 1,216 Cash at bank and in hand 872 1,002 ----------------- ----------------- 2,379 2,532 Creditors: amounts falling (1,582) (2,101) due within one year ----------------- ----------------- Net current assets 797 431 ----------------- ----------------- Total assets less current 7,686 8,839 liabilities Creditors: amounts falling (2) (708) due after more than one year ----------------- ----------------- 7,684 8,131 ______ ______ Capital and reserves Called up share capital 549 549 Share premium account 7,906 7,906 Capital redemption reserve 160 24 Profit and loss account (931) (348) ----------------- ----------------- Equity shareholders' funds 7,684 8,131 ______ ______ ACCESS INTELLIGENCE PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER 2007 2007 2006 Note £'000 £'000 Net cash inflow from operating activities 6 475 365 _____ _____ Returns on investments and servicing of finance Interest paid (2) (7) Interest received 20 17 Preference dividends paid (10) (12) _____ _____ Net cash inflow/(outflow) from 8 (2) servicing of finance _____ _____ Taxation (263) (43) _____ _____ Capital expenditure and financial investment Payments to acquire intangible fixed assets (97) (332) Payments to acquire tangible fixed assets (106) (69) _____ _____ Net cash outflow from capital expenditure (203) (401) and financial investment _____ _____ Acquisitions Purchase of subsidiary undertakings (4) (1,708) Net cash acquired with subsidiaries - 818 _____ _____ Net cash outflow from acquisitions (4) (890) _____ _____ Net cash inflow/(outflow) before use of 13 (971) liquid resources and financing _____ _____ Financing Issue of equity share capital - 1,500 Cost of share issues - (101) Repayment of loans (136) (24) Capital element of leases (7) (5) _____ _____ Net cash (outflow)/inflow from financing (143) 1,370 _____ _____ (Decrease)/increase in cash (130) 399 _____ _____ NOTES TO THE FINANCIAL INFORMATION 1. Basis of preparation and financial information The financial information in this preliminary announcement has been prepared in accordance with the accounting policies set out in the financial statements of Access Intelligence PLC for the financial year ended 30 November 2007 which have remained unchanged from the financial year 2006. The financial information in this document does not constitute the company's statutory accounts for the financial year ended 30 November 2007 or financial year 2006, but is derived from those accounts. Statutory accounts for 2006 have been delivered to the Registrar of Companies and those for 2007 will be delivered following the company's Annual General Meeting. The auditors have reported on these accounts; their reports were unqualified and did not contain statements under sections 237 (2) or (3) of the Companies Act 1985. 2. Exceptional costs The Group has made provision for the costs of closing two offices and making certain staff redundant. The costs have been disclosed as non- recurring. 3. Taxation Analysis of tax charge in the year 2007 2006 £'000 £'000 Current taxation: UK Corporation tax charge for the year (45) 143 Prior year adjustment (2) (5) ------- ------- (47) 138 Deferred taxation: Origination and reversal of timing differences 16 16 ------- ------- Tax (credit)/charge on (loss)/profit on (31) 154 ordinary activities ____ ____ As shown above, the tax assessed on the (loss)/profit on ordinary activities for the year is lower/(2006: higher) than the standard rate of corporation tax in the UK of 30% (2006: 30%). The differences are explained as follows: Factors affecting tax charge 2007 2006 £'000 £'000 (Loss)/ profit on ordinary activities before (478) 246 tax ------- ------- (Loss)/profit on ordinary activities by rate of (91) 74 tax of 19% (2006: 30%) Permanent timing differences 67 87 Depreciation in excess of/(less than) capital 8 (1) allowances Expenses not deductible for tax purposes 1 1 Utilisation of loss relief (30) (12) Adjustment for prior year (2) (5) Adjustment for marginal rates of tax - (6) ------ ------ Total current tax charge (47) 138 ____ ____ Earnings per share The calculation of earnings per share is based upon the loss after taxation of £447,000(2006: £92,000 - profit) divided by the weighted average number of ordinary shares in issue during the year, which was 109,800,999 (2006: 74,703,187). The weighted average number of ordinary shares used in the calculation of diluted earnings per share is 114,150,999 (2006: 79,053,187). This has been adjusted for the effect of potentially dilutive share options granted under the company's share option schemes. An adjusted earnings per share and a diluted adjusted earnings per share, which exclude goodwill amortisation, have also been calculated to allow shareholders to gain a clearer understanding of the trading performance of the Group. This has been computed as follows: 2007 2006 Loss Weighted Loss Profit Weighted Earnings after average no. per after average per share tax of shares share tax no. of (pence) (pence) shares £'000 £'000 Earnings (447) 109,800,999 (0.41)p 92 74,703,187 0.12p attributable to ordinary shareholders Add back 355 - - 312 - - amortisation of goodwill ____ __________ _____ ____ ________ _____ Adjusted (92) 109,800,999 (0.08)p 404 74,703,187 0.55p (loss)/ earnings per share ____ _____ ____ ________ _____ Dilutive - 4,350,000 - - 4,350,000 - effect of options Diluted (447) 114,150,999 (0.39)p 92 79,053,187 0.12p earnings per share ____ _______ ____ ________ _____ Diluted (92) 114,150,999 (0.08)p 404 79,053,187 0.52p adjusted earnings per share ____ _______ ___ ____ ________ _____ 4. Intangible fixed assets Group Development costs Goodwill Total £'000 £'000 £'000 Cost At 1 December 2006 584 8,356 8,940 Additions 97 4 101 Release of deferred - (1,250) (1,250) consideration provision ----------- ----------- ----------- At 30 November 2007 681 7,110 7,791 ----------- ----------- ----------- Amortisation At 1 December 2006 70 619 689 Charge for the year 56 355 411 ----------- ----------- ----------- At 30 November 2007 126 974 1,100 ----------------- ----------------- ----------------- Net Book Value At 30 November 2007 555 6,136 6,691 ______ ______ ______ At 30 November 2006 514 7,737 8,251 ______ ______ ______ 5. Reconciliation of operating (loss)/profit to net cash flow from operating activities 2007 2006 £'000 £'000 Operating (loss)/profit (486) 248 Depreciation of tangible fixed assets 65 56 Amortisation of goodwill 355 312 Amortisation of intangible assets 56 30 Loss on disposal of fixed assets - - Increase in stocks (37) (36) Decrease/(increase) in debtors 89 (27) Increase/(decrease) in creditors 433 (218) ____ ____ Net cash inflow from operating activities 475 365 ______ ______ Copies of the preliminary announcement are available from the company's Registered Office at Regency House, Westminster Place, York Business Park, York, YO26 6RW. The Annual Report and Accounts for the financial year ended 30 November 2007 will be posted to shareholders on or about 20 March 2008.

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