Interim Results

Access Intelligence PLC 26 July 2007 FOR RELEASE 7.00AM 26 July 2007 ACCESS INTELLIGENCE PLC ('Access Intelligence' or 'the Group') 'Access Intelligence is a software and Computer Services group of companies providing business critical and legislative driven services to both public and private sectors on a recurring basis' UNAUDITED INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 31 MAY 2007 Unaudited Unaudited Audited 6 months ended 6 month ended Year ended 31 May 2007 31 May 2006 30 Nov 2006 £000s £000s £000s Turnover 1,738 1,764 3,677 (Loss)/profit before tax, goodwill and amortisation (114) 192 558 (Loss)/profit before tax (323) 46 92 Adjusted earnings per share (0.08p) 0.2p 0.55p Dividend Nil Nil Nil Key messages * Contract delays at MS2M and a drop in storage solution sales at Willow Starcom reduce H1 2007 profits * Framework contract won for the North West County Councils by Due North, now enabling us to work with any public authority in England and Wales * Approximately £400,000 of long term public sector contracts won by Compliance Software * MS2M to launch a new series of internet based compliance services in the Autumn targeted at financial services, retail and automotive sectors * Encouraging response to a strategic review at Willow Starcom that identified e-mail archiving as the leading proposition for the company going forward * A 10% increase in Group recurring revenues to £186,000 per month * Net cash of £693,000 For further information: Access Intelligence plc Jeremy Hamer (Chairman) 01904 520840 Brendan Austin (Chief Executive) 01904 520840 Colin Davies (Finance Director) 01904 520840 Blue Oar Securities Plc David Seal / Shane Gallwey 020 7448 4400 Cubitt Consulting Ltd Brian Coleman-Smith / James Verstringhe / Leanne Denman 020 7367 5100 Background note Access Intelligence is a group of Software and Computer Services companies providing business critical compliance and legislative driven services to both public and private sectors on a recurring revenue basis. Since the flotation on AIM in November 2003, the Group has made three acquisitions. The Group today Access Intelligence is based in York with subsidiaries in York, Stockport, Greater Manchester, Chorley, Lancashire and Newcastle upon Tyne. The company has two principal divisions which are: • Compliance software and services division: This includes a range of software including The Virtual Compliance OfficerTM 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. ProContractTM our suite of sourcing and procurement software 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. • Data management division: The architecture and provision of high availability systems for mission critical applications that enable customers' data to be available at all times in the event of computer failure. Backup & RunningTM our online offsite data storage and retrieval via secure data centres. Email archiving. There is an ever increasing compliance emphasis driven by initiatives such as Sarbannes-Oxley to ensure data is held appropriately and can be retrieved easily when required. The business model The Group's income strategy is to build repeating 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. New companies to the group can take advantage of back office facilities where appropriate thus enabling them to concentrate on the core activities of customer acquisition, service delivery and product development. 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 INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MAY 2007 Chairman's Statement I am pleased to announce our results for the 6 months ended 30 May 2007. Despite an encouraging start the first half has faltered due to contract delays at MS2M and a drop in storage solution sales at Willow Starcom. As a result our internal profit expectations for the year ending 30 November 2007 have been reduced. Despite this setback, progress has been considerable on a number of fronts and we remain optimistic about the potential for both our Data Management and Compliance divisions going forward. Results Group turnover was broadly in line with last year at £1,738,315 (2006: £1,763,745). The loss before tax and goodwill amortisation and interest was £117,707 (2006: Profit £190,359). The adjusted loss per share slipped to (0.08p) (2006: 0.20p). The Group had net cash at 31 May of £693,000. The Group is not proposing to pay an interim dividend on the ordinary shares but remains intent on paying a maiden dividend when appropriate. Recurring revenue at May 2007 increased by 10% this financial year to £186,000 per month. The Year in focus The emphasis in the first half has been to develop the profit potential of the 3 key businesses we acquired over the last 2 years. Unfortunately this has coincided with a disappointing sales period but progress nevertheless has been made. Willow Starcom: - The market for traditional data storage has been very competitive and Willow has, as a result, missed out on a number of contracts. We have looked at a number of alternative strategies to improve sales and increase margins and concluded that e-mail archiving, for which there is an increasing need, would be the leading proposition for the company. It is early days but the response so far has been encouraging. Due North: - Due North has had a good start to the year and has seen its recurring revenues climb quite quickly with an increase of 18% at the period end. It has completed the re-launch of its suite of procurement software ProContractTM with a significantly enhanced product. Most importantly it landed a framework contract with the North West County Councils which allows Due North products to be used by all public sector authorities in England and Wales going forward. This means that government bodies can buy ProContractTM without having to go through the tender process, thus saving them considerable expense. During the period it has secured three contracts with the NHS and is shortlisted on two significant private sector deals. Finally it hosted an auction recently on behalf of a major Police force and saved the force approximately £250,000, which was nearly 50% of its initial computer hardware budget. MS2M:- The 6 months ended with a frustrating lack of sales success due mostly to project delays by two large financial institutions. However, alongside the company's core training and competence products for FSA regulated sales forces, the company is about to launch a series of internet based services which will open up further opportunities with financial services companies and will also provide new prospects in the retail and automotive sectors. The products will be faster and less expensive than existing tools in the market. Following pre-launch appraisals by industry sources the new service has been identified as a key component in a company's compliance toolkit. Although we budgeted for some sales in the last quarter of this financial year, we expect to see most of the benefits coming through in the financial year commencing on 1 December 2007. Product Development The Group continues to place great emphasis on developing its product range and this has continued during the period but, following a review of projects in progress, the directors have reassessed the carrying value against the expected useful lives of certain previously capitalised projects. Consequently the net effect on the value of intangible assets in the six month period is relatively neutral subject to amortisation. Administration Expenses The £280,000 increase in administration expenses is due to MS2M's £220,000 of administration costs in the first half not present last year and also a strengthening of our financial accounting team and marketing programmes during the period. Our business model and strategy The Group's objective is to acquire and build businesses which provide compliance based software or data management services to both the private and the public sector by way of recurring revenue contracts lasting between one and five years. This model should provide excellent visibility of future revenues and, with effective customer retention, strong gross margins over the longer term. 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. On behalf of the board I would like to thank our employees for their continued commitment. Current trading and outlook The second half of the year has started with high levels of pipeline activity in most areas of the business and the key objective is to convert this activity into confirmed sales. Although we have downgraded our internal expectations for the current financial year, there are grounds for optimism based on the current activity in the Group's core businesses. The key points to note are: * Due North has a growing number of opportunities in both the public and private sectors and, with its newly won framework agreement, could see a shortening of public sector lead-times. * MS2M has a big opportunity with the autumn launch of its new services. * Willow Starcom is now majoring on e-mail archiving which should take it away from the highly price competitive traditional data storage field while still offering storage infrastructure plus consultancy and support. The strengthening of our product offering over the last 6 months must now be converted into a strong sales delivery for the Group to fulfill its full potential and the sales teams in the operating companies are fully incentivised to achieve the objectives we have set them. Jeremy Hamer Chairman 26 July 2007 Access Intelligence PLC Consolidated Profit & Loss Statement For the Six Months Ended 31 May 2007 Unaudited Unaudited Audited 6 months 6 months Year ended ended Ended 31-May-07 31-May-06 30-Nov-06 £'000 £'000 £'000 Turnover 1,738 1,764 3,677 ------------------------- --------- --------- --------- Cost of sales (857) (865) (1,653) ------------------------- --------- --------- --------- Gross profit 881 899 2,024 Administrative expenses (999) (709) (1,464) ------------------------- --------- --------- --------- Operating (loss)/ profit (118) 190 560 Goodwill amortisation (209) (146) (312) ------------------------- --------- --------- --------- (Loss)/profit on ordinary activities before interest (327) 44 248 Interest receivable 11 10 17 Interest payable (7) (8) (19) ------------------------- --------- --------- --------- (Loss)/profit on ordinary activities before taxation (323) 46 246 Taxation 22 (65) (154) ------------------------- -------- --------- --------- (Loss)/profit for the period (301) (19) 92 ------------------------- -------- --------- --------- (Loss)/profit per share (0.27p) (0.03p) 0.12p Fully diluted (loss)/profit per share (0.27p) (0.03p) 0.12p (Loss)/profit per share excluding goodwill (0.08p) 0.20p 0.55p amortisation ------------------------- -------- --------- --------- Access Intelligence PLC Consolidated Balance Sheet For the Six Months Ended 31 May 2007 Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 31-May-07 31-May-06 30-Nov-06 £'000 £'000 £'000 Fixed assets Intangible assets 8,025 5,697 8,251 Tangible assets 188 191 157 ---------------------- ---------- --------- -------- 8,213 5,888 8,408 Current Assets Stocks 313 269 314 Debtors 1,239 1,125 1,216 Cash at bank and in hand 699 534 1,002 ---------------------- ---------- --------- -------- 2,251 1,928 2,532 Creditors: amounts due within one year (1,930) (1,356) (2,101) ------------------------ -------- --------- -------- Net current assets 321 572 431 ---------------------- ---------- --------- -------- Total assets less current liabilities 8,534 6,460 8,839 Creditors: falling due after more than one year (704) (150) (708) ---------------------- ---------- --------- -------- Net Assets 7,830 6,310 8,131 ---------------------- ---------- --------- -------- Capital and reserves Called up share capital 549 576 549 Share premium account 7,906 6,170 7906 Capital redemption reserve 142 - 24 Profit and loss account (767) (436) (348) ---------------------- ---------- --------- -------- Equity shareholders' funds 7,830 6,310 8,131 ---------------------- ---------- --------- -------- Access Intelligence PLC Consolidated Cash Flow Statement For the Six Months Ended 31 May 2007 Unaudited Unaudited Audited 6 months 6 months Year ended ended Ended 31-May-07 31-May-06 30-Nov-06 £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities (11) 104 365 Returns on investments and servicing of finance Interest paid (7) (8) (19) Interest received 11 10 17 --------------------------- --------- --------- --------- Net cash inflow/(outflow) from servicing of finance 4 2 (2) --------------------------- --------- --------- --------- Taxation (92) - (43) --------------------------- --------- --------- --------- Capital expenditure and financial investment Payments to acquire intangible fixed assets - (89) (332) Payments to acquire tangible fixed assets (77) (86) (69) --------------------------- --------- --------- --------- Net cash outflow from capital expenditure and financial investment (77) (175) (401) Acquisitions Purchase of subsidiary undertaking (5) - (1,708) Net cash acquired with subsidiary - - 818 --------------------------- --------- --------- --------- Net cash outflow from acquisitions (5) - (890) --------------------------- --------- --------- --------- Net cash outflow before use of liquid resources and financing (181) (69) (971) Financing Issue of equity share capital - - 1,500 Cost of shares issued - - (101) Repayment of loans (118) - (24) Capital element of leases (4) - (5) --------------------------- --------- --------- --------- Net cash inflow from financing (122) - 1,370 --------------------------- --------- --------- --------- (Decrease)/increase in cash (303) (69) 399 --------------------------- --------- --------- --------- Notes to the Financial Information For the period 1 December 2006 to 31 May 2007 1. The unaudited results for the six months have been prepared on a basis consistent with the accounting policies disclosed in the Group's 2006 accounts and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 2. The figures for the period ended 30 November 2006 have been extracted from the statutory accounts, which have been delivered to the Registrar of Companies and received an unqualified audit report. 3. The calculation of earnings per share is based on the (loss)/profit after taxation divided by the weighted average number of ordinary shares in issue, being 109,800,999 (6 months to 31 May 2006:68,122,355 and period ended 30 November 2006 :74,703,167). 4. The weighted average number of shares used in the calculation of diluted earnings per share is 109,800,999 (31 May 2006 71,472,355 and period ended 30 November 2006: 71,472,355). This has been adjusted for the effect of potentially dilutive share options granted under the Company's Share Option and Management Incentive Schemes. 5. An adjusted earnings per share calculation, which excludes goodwill amortisation, is calculated on the basic earnings per share basis to allow shareholders a clearer understanding of the trading performance of the Company. 6. The tax charge is based on the estimated tax rate for the year to 30 November 2007. 7. Reconciliation of Opening Shareholders' Funds. Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 31-May-07 31-May-06 30-Nov-06 £'000 £'000 £'000 Opening shareholders' funds 8,131 5,461 5,461 Preference shares reclassified as debt - - (191) (Loss)/profit for the period (301) (19) 92 Shares issued - 868 2,769 ------------------ ---------- ----------- --------- Closing shareholders funds 7,830 6,310 8,131 ------------------ ---------- ----------- --------- 8. This statement is being sent to shareholders of the Company and will be available at the Company's Registered Office at Regency House, Westminster Place, York Business Park, York, YO24 6RW. This information is provided by RNS The company news service from the London Stock Exchange

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