Final Results
FOR RELEASE 7.00AM 8 MARCH 2006
ACCESS INTELLIGENCE PLC
('Access Intelligence or 'the Group')
(A technology-based support services group which uses the power of
internet-based information and communication technologies to deliver vital
information and support services to a broad range of companies)
PRELIMINARY RESULTS
FOR
THE FINANCIAL YEAR ENDED 30 NOVEMBER 2005
2005 2004 Change
£000 £000
Turnover 1,943 543 358%
Profit / (loss) before tax and amortisation
of goodwill 175 (259) N/a
Loss before tax (10) (381) N/a
Basic earnings / (loss) per share (0.10p) (1.59p) N/a
Adjusted earnings / (loss) per share 0.21p (1.02p) N/a
Dividends per share Nil Nil N/a
* Turnover adjusted for acquisitions up by 45%
* Recurring revenue for current year around £2m p.a.
* Capital raising of £2.8m net of expenses.
* Net cash £603,000 (2004: net debt £224,000)
* Two substantial acquisitions
*
+ Ridgeway Technologies Limited for initial payment of £700,000
+ Due North Limited for an initial payment of £1.5 million
* Current trading in line with market expectations
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 / Allison Reid / Nia Thomas
Corporate Synergy 020 7448 4400
Rhod Cruwys / David Seal
Background Note
Who are we and what do we do?
Access Intelligence is a group of companies, with operations in York,
Newcastle-Upon-Tyne, Chorley in Lancashire and Stockport in Greater Manchester,
delivering a range of business critical support services to private and public
sector organisations.
The team of directors, Jeremy Hamer, Brendan Austin, Colin Davies, Ian Savage
and Alwin Thompson, has extensive experience in making successful acquisitions
while simultaneously driving organic growth. In the two years since flotation,
Access Intelligence has acquired and successfully integrated two businesses.
The Group Today
Today, Access Intelligence is a technology-based support services business. It
harnesses the power of internet-based information and communication
technologies (ICT) to deliver vital information and support services.
Specifically these are:
* Digital marketing services and business development support;
* Online and offline data storage back-up and retrieval;
* Sourcing and procurement software for both buyers and suppliers in industry
and local government; and
* Electronic news and current awareness digests of government initiatives,
policies and finance affecting business, the professions and the public
sector.
The Business Model
The majority of the Group's income is derived from repeat revenues delivered
through recurring contracts ranging between one and five years. This model
provides excellent visibility of future revenues and, with effective customer
retention, outstanding gross margins over the longer term.
The Strategy for Growth
The strategy is to acquire businesses which have good management and high
growth potential that fit the revenue model while, at the same time, adding
value to the Group's existing services.
The businesses acquired will have substantial autonomy to develop within
budgets agreed with the Group Chief Executive and Finance Director, whilst
benefiting from the experience and cross selling opportunities provided by
being part of an expanding group of companies.
At this stage of the Group's development, the Central Group Executive Team,
which is based in York, will be kept to a maximum of four people, including
support staff. The Non-Executive Directors will continue to be involved in
sourcing and evaluating potential acquisitions and monitoring the performance
of the Group.
ACCESS INTELLIGENCE PLC
PRELIMINARY RESULTS
FOR
THE FINANCIAL YEAR ENDED 30 NOVEMBER 2005
Chairman's statement
I am very pleased to announce our results for the year ended 30th November
2005. This year has seen the Group transformed by both the fundraising we
completed in December 2004 and the two acquisitions we made in June and July
2005. Together with the progress we have made in our core businesses this has
been an excellent year.
Results
Group turnover was up by 358% to £1,943,000 (2004: £543,000). Turnover adjusted
for acquisitions grew by 45%. Operating profit before amortisation has now
moved into a profit of £175,000 (2004: Loss £259,000). Adjusted earnings per
share improved significantly to 0.21p (2004: Loss per share of 1.02p).
The Group is not proposing to pay a dividend on the ordinary shares. The
dividend scheduled in the accounts is payable to the preference share holders.
The Year in focus
In December 2004 we raised £3,000,000 (£2,808,000 net) at 10p per share to
accelerate our acquisition strategy. At the year-end we had net cash of £
603,000 (2004: Net Debt £224,000).
On June 27th 2005 we completed a reverse takeover of Ridgeway Technologies
Limited ('Ridgeway Technologies'), a leading provider of managed data storage,
retrieval and network solutions. The acquisition complemented the activities of
Backup and Running plc ('Backup and Running') our online data storage and
retrieval business. Ridgeway was purchased for a cash consideration of £650,000
and £50,000 in Access Intelligence shares. There were net cash balances at
completion of £176,000. There is an earn-out payable in shares based upon 5
times profits in excess of £100,000 for the year ended December 2005 which is
likely to result in the Group issuing a further £800,000 in Ordinary Shares.
Since joining the Group Ridgeway and Backup and Running have been merged
operationally enabling us better to exploit reseller channels and reduce costs
by £75,000 annually.
On the 6th July 2005 we completed the purchase of Due North Limited ('Due
North') a leading software developer of e-commerce solutions predominantly in
purchasing and procurement, to both public and private sectors. The
consideration at completion was £1,000,000 in cash and £500,000 in Access
Intelligence shares. There is an earn-out in place providing the vendors with 4
times 2006 operating profits in excess of £350,000 and 3 times 2007 operating
profits in excess of £450,000. These payments will be predominantly share
based. At this stage we have made a provision of £350,000 for additional
payments.
Our other two companies The Marketing Guild Limited ('Marketing Guild') who
provide marketing and business development information and support to small and
medium sized businesses and Wired Gov Limited ('Wired Gov') who provide an
electronic distribution service of government initiatives, policies and finance
affecting businesses, have both developed their offering significantly during
the year.
Our business model
The Group's objective is to acquire and build businesses which provide services
to corporates and the public sector by way of recurring revenue contracts
lasting between one and five years. This model provides excellent visibility of
future revenues and, with effective customer retention, outstanding gross
margins over the longer term. On the first day of the new financial year we had
approximately £2m of contracted recurring revenue for this year.
Staff
Our future prosperity is in large measure dependent on the ability and loyalty
of our people. Their specialist knowledge and skills is 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 year in line with market expectations. The markets where
we compete are still buoyant and together with our continuing investment in
technology and people development enable us to view the Group's outlook with
optimism.
We continue to look for further businesses to join the Group and are encouraged
by the opportunities available to us. In conclusion we are looking forward to
another significant step forward in 2006 founded on full year contributions
from Ridgeway and Due North.
Jeremy Hamer
Chairman
8 March 2006
Chief Executives Review
Looking back
Last year we completed two strategic acquisitions. Both companies have strong
management teams and operate in expanding markets.
Ridgeway Technologies, which trades as Willow Starcom, supplies mission
critical data storage, retrieval and network solutions to mid-sized corporate
businesses.
It sells its services predominantly through a reseller channel, which enables
them to grow with a minimum increase in headcount. Currently more than 50% of
its revenues are recurring.
The acquisition has enabled us to move Backup and Running from York to Willow
Starcom's premises in Chorley in Lancashire with the added advantages of using
their channel to sell our online service and utilise its 24-hour support centre
to service our existing customer base. Both sales forces are tightly integrated
and are already supplying each other with sales opportunities.
Due North, based in Newcastle-Upon-Tyne, develops business support software
using industry standard platforms. Its e-procurement software is used widely in
the local authority sector. It provides a complete closed loop solution which
enables authorities to save money and increase operational efficiencies. The
product suite enables any organisation to manage the complete customer supplier
relationship from initial expression of interest, through tender evaluation,
post tender negotiation - using its reverse auction software - contract award
and management. Since joining the group Due North has nearly doubled its market
penetration and has begun opening up opportunities in health, universities and
the private sector.
Wired Gov, based in Stockport in Greater Manchester, which uses its technology
platform to provide government press releases to a growing subscriber base in
both public and private sectors, has seen year on year growth of 10%.
Subscriber retention rate is 94%, demonstrating the value its customers place
on the service they receive. During the year it increased revenues from
permission based advertising sponsorship by 86%. In 2006 the management plans
to launch a newsletter to capitalise on that success to increase advertising
and sponsorship revenues.
The Marketing Guild, based at the head office in York, has continued to develop
the Platinum Service offering increased benefits to members. During the year it
has increased revenues by 34%. A new online service has been launched during
the year with an encouraging response.
The year ahead
Market conditions look promising for our data storage and recovery division
Willow Starcom and Backup and Running. The world network storage software
market rose 10% year on year to reach $2.1bn in the third quarter of 2005. At
the same time the back-up and archive market increased by 12.7% growth (IDC
2005). We believe this trend will continue as the increasing awareness of
regulatory compliance among companies grows. Storage revenues are set to grow
globally by 20% in 2006 and 18.5% in 2007. (EIU 2005).
Legislation such as the Data Protection Act and the Freedom of Information Act
will fuel this growth as will high press coverage of Basel II and the US
initiated Sarbanes-Oxley legislation. E-mail archiving and retrieval is set to
grow at an annual compound rate of 34.5% until 2009 (IDC 2005).
We will launch Starscan, our managed e-mail scanning service, in May to support
our e-mail retrieval capability to capitalise on this opportunity. We are
increasing our sales resource and support infrastructure in support of this
initiative.
Due North is well positioned to take advantage of the efficiency targets and
savings set out in the Gershon review of civil procurement, by building on its
success in local authorities and emergency services. Additional sales resource
has been invested to enable it to increase its share of the health service and
universities markets. It continues to seek partners to help it exploit the
private sector.
In summary we have positioned ourselves to take advantage of the opportunities
that are available to us following the restructuring of the Group and we remain
confident, barring a major economic downturn, that we will have another
successful year.
Brendan Austin
Chief Executive
8 March 2006
Finance Director's Review
During the year we successfully raised £2.8m new equity net of expenses and
introduced new institutions to our shareholder base. The fundraising allowed us
to acquire two companies and start to build some critical mass within the
Group.
Although the Group has grown by acquisition our existing companies demonstrated
organic growth of 45%, which is an excellent achievement.
During the year we repaid all our bank loans and at the year-end had net cash
of £603,000.
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. At the start of the current financial year
income from contracts, licences fees and subscriptions was approaching £2m.
p.a.
Colin Davies
Finance Director
8 March 2006
ACCESS INTELLIGENCE PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER 2005
Notes 2005 2004
£000 £000
Turnover
Continuing operations 787 543
Acquisitions 1,156 -
----------- -----------
1,943 543
Cost of sales (782) (290)
----------- -----------
Gross profit 1,161 253
Operating expenses
Amortisation of goodwill (185) (122)
Other operating expenses (1,061) (504)
----------- -----------
Total operating expenses (1,246) (626)
Operating profit (loss)
Continuing operations (21) (251)
Acquisitions 121 -
Amortisation of goodwill (185) (122)
----------- -----------
Operating (loss) (85) (373)
Interest receivable 79 9
Interest payable (4) (17)
----------- -----------
(Loss) on ordinary activities before (10) (381)
taxation
Taxation 3 (50) 41
----------- ----------
(Loss) for the financial year (60) (340)
Dividends (16) -
----------- -----------
(Loss) transferred to reserves (76) (340)
====== ======
Basic earnings per share 2 (0.10p) (1.59p)
====== =====
Adjusted earnings per share 2 0.21p (1.02p)
====== =====
Diluted earnings per share 2 (0.10p) (1.53p)
====== =====
Diluted adjusted earnings per share 2 0.20p (0.98p)
====== =====
ACCESS INTELLIGENCE PLC
CONSOLIDATED BALANCE SHEET
AT 30 NOVEMBER 2005
Notes 2005 2004
£'000 £'000
Fixed assets
Intangible 5 5,730 2,433
Tangible 123 83
---------- ----------
5,853 2,516
---------- ----------
Current assets
Stocks 277 14
Debtors 1,122 121
Cash at bank and in hand 603 31
---------- ----------
2,003 166
Creditors: amounts falling due within one (2,245) (361)
year
---------- ----------
Net current ( liabilities)/assets (242) (195)
---------- ----------
Total assets less current liabilities 5,611 2,321
Creditors: amounts falling due after more than (150) (142)
one year
Net assets ---------- ----------
5,461 2,179
---------- ----------
Capital and reserves
Called up share capital 508 332
Share premium account 5,369 2,187
Other reserves
Profit and loss account (416) (340)
---------- ----------
Equity shareholders' funds 5,461 2,179
---------- ----------
ACCESS INTELLIGENCE PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER 2005
Notes 2005 2004
£'000 £'000
Net cash outflow from operating activities (172) (540)
--------- ---------
Returns on investments and servicing of
finance
Interest paid (4) (17)
Interest received 79 9
Dividends Paid (16)
Net cash inflow/ (outflow) from returns on 59 -------
investments and servicing of finance
(8)
Taxation (24) -
Capital expenditure and financial investment
Purchase of intangible fixed assets (57) (98)
Purchase of tangible fixed assets (92) (49)
Net cash outflow from capital expenditure --------- ---------
(149) (147)
-------- --------
Acquisitions and disposals
Purchase of subsidiary undertakings (1,971) (1,753)
Net cash acquired with subsidiaries 276 ---------
---------
Net cash outflow from acquisitions and (1,695) (1,753)
disposals
--------- ---------
Net cash outflow before financing (1,981) (2,448)
Financing
Issue of share capital 3,000 2,727
Costs of Fundraising (192) (208)
Net movement on loans (213) (82)
Net cash inflow from financing --------- ---------
2,595 2,437
--------- ---------
Increase/(Decrease) in cash 614 (11)
---------- ----------
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 2005 which
have remained unchanged from the financial year 2004.
The financial information in this document does not constitute the company's
statutory accounts for the financial year ended 30 November 2005 or financial
year 2004, but is derived from those accounts. Statutory accounts for 2004 have
been delivered to the Registrar of Companies and those for 2005 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. Earnings per share
Earnings per share is calculated on the basis of profit for the year after tax
divided by the weighted average number of shares in issue for 2005 of
59,152,498 (2004: 21,361,595).
Diluted earnings per share is calculated on the basis of profit for the year
after tax divided by the weighted average number of shares in issue for 2005
adjusted for the dilutive effect of options granted which totals 62,502,498
(2004: 22,200,095).
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.
2005 2004
Earnings Weighted Per Share Earnings Weighted Per Share
Average No of Amount Average No of Amount
£'000 shares pence £'000 shares pence
Earnings (60) 59,152,498 (0.10p) (340) 21,361,595 (1.59p)
attributable to ordinary
shareholders
Amortisation 185 - - 122 - -
of goodwill
-------- ----------- ----------- ---------- ----------- -----------
Adjusted 125 59,152,498 0.21p (218) 21,361,595 (1.02p)
earnings per
share ======= ======== ====== ======= ======== ======
Dilutive - 3,350,000 - - 838,500 -
effect of
options ------------ ------------- ----------- ------------ ------------- -----------
Diluted (60) 62,502,498 (0.10p) (340) 22,200,895 (1.53p)
earnings per
share
--------- ------------ -------- --------- ------------ --------
Diluted 125 62,502,498 0.20p (218) 22,200,895 (0.98p)
adjusted
earnings per ====== ======= ===== ====== ======= =====
share
3. Taxation
2005 2004
£'000 £'000
Corporation tax at 30% (2004: 30%) 42 -
Deferred tax 8 (41)
---------- ----------
50 (41)
---------- -----------
Factors affecting the tax charge for the year
The corporation tax assessed for the year is lower than the standard rate of
corporation tax in the United Kingdom of 30% (2004: 30%). The differences are
explained below:
2005 2004
£'000 £'000
Profit (Loss) on ordinary activities before tax (10) (381)
====== ======
Profit (Loss) on ordinary activities multiplied by (2) (72)
standard rate of corporation tax in the UK of 30%
(2003: 30%)
Effect of:
Expenses not deductible for tax purposes (1) (4)
Capital allowances in excess of depreciation 1 9
Other timing differences 35 26
Adjustment due to tax rate of 19% 17 -
---------- ----------
Current tax charge for the year 50 (41)
---------- ----------
4 Acquisitions
The acquisitions of the Group for the year were as follows:
On 27 June 2005, the entire issued share capital of Ridgeway Technologies
Limited (RT) was acquired for an initial consideration of £700,000 satisfied by
the issue of 500,000 shares at 10p per share and cash of £650,000. Deferred
consideration of up to £1m is payable dependent on the results for the year
ended 31 December 2005. A provision has been made for additional consideration
payable in shares of £800,000.
On 5 July 2005 the entire issued share capital of Due North Limited (DN) was
acquired for an initial consideration of £1 million, which was satisfied by the
issue of 4,686,034 ordinary shares at 10.67p per share and £1,000,000 in cash.
Deferred consideration of up to £1.85m is payable dependent on the results for
the three years ending 31 August 2008. At this stage a provision has been made
for Deferred consideration of £350,000.
The acquisitions have been accounted for using the acquisition method of
accounting, and goodwill arising on consolidation has been capitalised and will
be amortised over a period of 20 years, their expected useful lives.
The following table sets out the identifiable assets and liabilities acquired:
RT DN Total
£'000 £'000 £'000
Tangible fixed assets 29 17 46
Stocks 238 238
Debtors 423 180 603
Cash 176 100 276
Creditors (632) (205) (837)
Taxation (34) (32) (66)
--------- --------- ---------
Net assets acquired 200 60 260
Fair value adjustments
Goodwill 1,469 1,942 3,411
--------- --------- ---------
Satisfied by: 1,669 2,002 3,671
------- -------- --------
Cash 650 1,000 1,650
Issue of shares 50 500 550
Deferred consideration 800 350 1,150
Acquisition costs 169 152 321
------- -------- --------
1,669 2,002 3,671
------- -------- --------
Ridgeway Technologies Limited achieved a profit before taxation of £102,000 in
the year ended 31 December 2004. The profit before taxation of Due North
Limited was £69,000 in the year ended 31 August 2004.
5. Intangible fixed assets
Goodwill Development Total
costs
£'000 £'000
£'000
------------- ------------- -------------
Cost
At 1 December 2004 2,435 134 2569
Additions - 92 92
On acquisition 3,411 3,411
------------- ------------- -------------
At 30 November 2005 5,846 226 6,072
------------- ------------- -------------
Amortisation
At 1 December 2004 122 14 136
Charge for the year 185 20 205
------------- ------------- -------------
At 30 November 2005 307 34 341
------------- ------------- -------------
Net book amount
At 30 November 2005 5,539 192 5,731
------------- ------------- -------------
At 30 November 2004 2,313 120 2,433
------------- ------------- -------------
The useful economic life of the goodwill in respect of all acquisitions is 20
years, based on the directors' assessment of the income streams of the acquired
businesses.
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 2005 will be posted to shareholders on or about 8 April 2006.
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