Half Yearly Report

RNS Number : 8969H

Access Intelligence PLC

18 July 2012

 



FOR RELEASE                                                                                                   

7.00AM

18 July 2012

ACCESS INTELLIGENCE PLC

("Access Intelligence" or "the Group")

UNAUDITED INTERIM FINANCial statements

FOR

the six months to 31 may 2012

	Unaudited 6 months to 31 May 2012	Unaudited 6 months to 31 May 2011
	(£'000)	(£'000)
		#Restated
Continuing operations
Revenue	3,930	3,572
Adjusted EBITDA	127	382
Exceptional re-organisation and centralisation costs	(224)	(202)
Share Based Payments	(25)	(10)
EBITDA	(122)	170
Loss before and after tax	(216)	(31)
Profit for the period from discontinued operations net of tax	-	52
Total (loss)/profit for period after tax	(216)	21
Continuing and discontinued operations
Basic (loss)/profit per share (pence)	(0.09)	0.01
Diluted (loss)/profit per share (pence)	(0.09)	0.01
Continuing operations
Basic loss per share  (pence)	(0.09)	(0.01)
Diluted loss per share  (pence)	(0.09)	(0.01)

# Restated - prior period comparatives have been restated to disclose Solcara as a discontinued activity

Financial highlights:

§ Revenue up 10% year on year to £3.9m (H1 2011: £3.6m)

§ Contracted revenue not yet invoiced up 63% to £4.4m; up from £2.7m at the year end (November 2011)

§ AI Talent (formerly known as Cobent) lost £70k (H1 2011: loss £230k) excluding exceptional re-organisation and centralisation  costs of £139k (H1 2011: £202k)

§ Loss after taxation was £216k (H1 2011: profit £21k)

§ Cash balance at 31 May 2012 £3.2m (H1 2011: £2.7m)

§ £250k received July 2012 from Solcara sale escrow

§ Recurring revenue of £2.7m (H1 2011: £2.4m), being 68% (H1 2011: 65%) of total revenue

Operation highlights:

§ Significant investment in Group functions including a development centre in York

§ Rebranding - the Group rebranded under the "AI" banner - Cobent and MS2M became AI Talent and AI TrackRecord respectively; Due North's private sector offering is branded AI Procurement and Willow Starcom's south of England offering is AI Cloud

§ Appointment of Kole Dhoot to the Board, as CFO,  on 6 March 2012

Michael Jackson, Executive Chairman, commented:  "2012 is a year of investment to accelerate the Group's topline growth, product innovation and integrated Governance, Risk and Compliance GRC offering.  Whilst AI Talent has suffered some set backs with personnel, the product is continually improving and sales in its target regulated markets are gaining momentum.  The Group is already benefitting from the initial phases of the investment planned over the next six months, with revenue yet to be recognised now £7.1m up from £5.4m at the year end. Since the half year, we are also delighted that AI ControlPoint has signed new deals with a total contract value of £260k. The Board believes 2012 will be transformational, with significant investment in product development, group marketing and organisational capabilities which will be crucial to create long term shareholder value."  

For further information:

Access Intelligence plc	0207 400 0485
Michael Jackson (Executive Chairman)
Joanna Arnold (COO)
Kole Dhoot (CFO)
Northland CP	020 7796 8800
Shane Gallwey / Katie Shelton
Cubitt Consulting	020 7367 5100
Gareth David / Madeline Douglas

 

Chairman's Statement

I am pleased to announce our results for the 6 months ended 31 May 2012. These results have been impacted by the investment to accelerate sales growth and drive further Group product innovation. Whilst AI Talent continues its recovery, progress has been slower that anticipated with some exceptional restructuring costs relating to personnel and centralisation.

Results

Group revenue was up by 10% to £3,930,000 (H1 2011: £3,572,000). The Group's operating loss before taxation was £198,000 (H1 2011: profit £41,000). In arriving at the operating loss we have charged £76,000 (H1 2011: £129,000) for the depreciation and amortisation and £25,000 (H1 2011: £10,000) for share-based payments.

Cost of sales increased to £1,300,000 (H1 2011 £1,106,000) due to messaging costs at AI ControlPoint and high sub-contractor costs, in part driven by volume of activity but also a high rate per message. Messaging services were tendered resulting in a 76% reduction in ongoing costs, while sub contractors have now been replaced by permanent hires.

Operating costs rose to £2,502,000 (H1 2011 £2,085,000), reflecting the significant investment made in central functions as well as at subsidiary operating level. The Group is now supported by a full time CFO, CTO and CMO while the subsidiaries have also added expertise in sales, development and training.

Operating losses at AI Talent have decreased to £70,000 (H1 2011: loss £230,000) excluding exceptional costs of £139,000 (H1 2011: £202,000) relating to the re-organisation and centralisation of the company, moving location to AI's head offices.

The basic loss per share was 0.09p (H1 2011: earnings 0.01p). The Group had net cash at the end of the period of £3,192,000 (H1 2011: £2,745,000).

On 20 April 2012, an annual dividend of 0.2 pence per share was paid, following shareholder approval at our General Meeting in April 2012.

Strategy

2012 is a year of investment for Access Intelligence Plc as we move the Group to a more integrated, sustainable entity.  Our solutions are uniquely positioned to take advantage of the growing Governance, Risk and Compliance (GRC) market and in order to take advantage of it, we have had to invest heavily in product redevelopment, sales and marketing and group execution.  We have therefore taken the strategic decision to forego short term profits to transform the long-term shareholder value of the Group through investment in product innovation and new market development. 

This is a pivotal year for the Group, but we have not lost sight of our overall strategy, to combine growth through the organic sales of our best of breed solutions with complementary acquisitions in the GRC space. The product portfolio offers a strong bedrock on which to build dynamic and competitive Software-as-a-Service propositions providing the Group with sustainable profits and long-term growth in shareholder value.

Whilst the cost of investment has an immediate impact on profitability, the associated benefit takes increased time to reflect revenues.  This delayed visibility is even more marked in  the Software-as-a-Service business model, as the full benefits of a sale are not as immediately evident as in traditional licence sales, though much greater shareholder value is created.   In the first half £2,681,000 (H1 2011: £2,387,000) was derived from recurring revenues.

Research and development is essential to the Group's transformation and during the first half of 2012 we have expensed £439,000 (H1 2011: £318,000). An important investment this year has been the creation of a development centre in York that will service all of the software divisions. The investment is crucial to long-term value creation as we integrate the Group solutions, reduce key man risk and focus on product innovation and quality management. In the first half, we have redeveloped legacy products, delivered new modules to market and taken the first steps towards an integrated GRC solution. 

Whilst Public sector decision making remains slow, we continue to see strong demand for our products due to their cost saving and risk mitigating nature.  Brand recognition in the Private Sector is constantly growing with new customers including BP, InterContinental Hotels Group and Next Retail.

AI Talent

The trading losses and turnaround costs of AI Talent have reduced and we have consolidated its location into the AI Head Offices in London, incurring exceptional charges for changes in personnel and office closure costs. Exceptional costs amounting to £139,000 (H1 2011: £202,000) combined with operating losses of £70,000 (H1 2011: loss £230,000) to produce a loss for the period of £209,000 (H1 2011: £432,000).

The half year in focus

1. GRC Software Portfolio:

AIMediaComms: The launch of two new modules, "Zetter's Online" and "Freedom of Information" broadens the offering into the lucrative public affairs market. AIMediaComms had a strong start to the year, with the addition of 22 new name accounts including four in the private sector.  Public sector budget cuts continue to impact the customer base but to a lesser extent than last year. 

Due North: The inherent cost saving benefits of our procurement and contract management tools continues to support sales into the public sector, although there is a continued slow-down in decision-making. The new investment in sales and marketing has resulted in a strong private sector pipeline. The development of the private sector product, AI Procurement continues, whilst Due North's public sector product ProContract has had a completely new user interface refresh. The business continues to perform well with 17 new name accounts in the first half, including Next Retail, The Environmental Agency and a number of London boroughs.

AI Talent: Progress at AI Talent has been slower than expected but the business has now been integrated into Head Office with success. Sales are focused on niche regulated markets where AI Talent's Learning Compliance Suite is best of breed.

AI TrackRecord: Continues to consolidate its strong relationships with leading financial institutions RBS and Aviva. Its leading risk and compliance monitoring tool represents an exciting opportunity for the group and work begins on building an integratable product in the second half.

AI ControlPoint: Offers incident management software to the Oil & Gas, Financial Services and Transport industries. We have invested heavily in this embryonic division to capitalise on its first mover advantage in a new market. Investment in sales and marketing has paid dividends with new customer acquisitions including BP, Altor and InterContinental Hotels Group.

2. IT Support Services

Willow Starcom: The transition from the difficult hardware maintenance market to delivering cloud services directly to SME customers has reinforced this business for the future. Furthermore, Willow provides key hosting and 24/7 support services to the Group customer base under the AI Cloud brand. 

Directors and Senior Management

On 6th March 2012 Kole Dhoot joined the PLC board as CFO, having previously worked for Fizzback, which was successfully sold to Nice Systems in Autumn 2011. Before that Kole was CFO of Hospedia where he was a key member of the executive team managing the business.  Kole is a Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW).

Current Trading

In a difficult economic climate, our SaaS business model has proven robust as customers reduce large capital expenditure.  Despite these difficult market conditions, we have had high-profile contract wins in the public and private sectors, with contracted revenue not yet invoiced up 63% to £4.4m, from £2.7m in November 2011.  

2012 represents a transformational year for the Group as we invest heavily to refresh our product suite and focus on the integration of our product suite with a development centre in York. This key investment will provide centralised dedicated teams for testing, coding, program management and deployment which will serve the entire Group. This investment will increase our cost base, however it provides a very solid basis for future growth.

Michael Jackson

Chairman

18 July 2012

Access Intelligence Plc

Consolidated Statement of Comprehensive Income

for the 6 months to 31 May 2012

			#Restated
	Notes	Unaudited	Unaudited	Audited
		6 months to	6 months to	Year to
		31-May-12	31-May- 11	30-Nov-11
		£'000	£'000	£'000
Revenue		3,930	3,572	7,233
Cost of sales		(1,300)	(1,106)	(2,142)
Gross profit		2,630	2,466	5,091
Administrative expenses		(2,803)	(2,415)	(5,212)
Share based payments		(25)	(10)	(35)
Operating (loss)/ profit		(198)	41	(156)
Financial income		22	5	26
Financial expenses		(40)	(77)	(149)
Loss before tax		(216)	(31)	(279)
Taxation		-	-	188
Loss from continuing operations		(216)	(31)	(91)
Profit attributable to discontinued operations		-	52	2,192
(Loss)/profit for the period		(216)	21
Other comprehensive income		-	-	-
Total comprehensive income for the period		(216)	21	2,101
attributable to the owners of parent company
Earnings per share
Continuing and discontinued operations		Pence	Pence	Pence
Basic (loss)/profit per share	2	(0.09)	0.01	0.84
Diluted (loss)/profit per share	2	(0.09)	0.01	0.64
Continuing operations
Basic loss per share	2	(0.09)	(0.01)	(0.04)
Diluted loss per share	2	(0.09)	(0.01)	(0.04)
# Restated - prior period comparatives have been restated to disclose Solcara as a discontinued activity

There were no recognised gains and losses in the period, or in prior periods, other than the results below

Consolidated Statement of Financial Position

 at 31 May 2012

	Unaudited	Unaudited	Audited
	At 31 May 2012	At 31 May 2011	At 30 Nov 2011
	£'000	£'000	£'000
Non-current assets
Property, plant and equipment	311	232	249
Intangible assets	8,415	8,465	8,130
Deferred tax asset	199	420	199
Total non-current assets	8,925	9,117	8,578
Current assets
Inventories	239	232	253
Trade and other receivables	2,549	2,289	1,932
Current income tax assets	-	-	0
Cash and cash equivalents	3,192	2,745	4,162
Total current assets	5,980	5,266	6,347
Total assets	14,905	14,383	14,925
Current liabilities
Trade and other payables	1,285	1,164	803
Accruals and deferred income	3,105	3,000	2,973
Current income tax liabilities	-	130	0
Bank overdraft	-		2
Total current liabilities	4,390	4,294	3,778
Non-current liabilities
Interest-bearing loans and borrow	1,197	1,676	1,183
Deferred tax liabilities	368	548	368
Total non-current liabilities	1,565	2,224	1,551
Total liabilities	5,955	6,518	5,329
Net assets	8,950	7,865	9,596
Equity
Share capital	1,286	1,286	1,286
Treasury Shares	(148)		(148)
Share premium	-	-	0
Capital redemption reserve	191	191	191
Share option valuation reserve	251	328	226
Equity reserve	126	176	126
Retained earnings	7,244	5,884	7,915
Total equity attributable to equity shareholders	8,950	7,865	9,596

Consolidated Statement of Changes in Equity

for the 6 months to 31 May 2012

					Share
	Share	Treasury	Share	Capital	option	Equity	Retained	Total
	capital	Shares	premium	redemption	valuation	reserve	earnings
			account	reserve	reserve
	£'000		£'000	£'000	£'000	£'000	£'000	£'000
Group
At 1 Dec 2010	1,286	0	13,490	191	319	176	(7,627)	7,835
Transfer of share premium account	-	-	(13,490)	-	-	-	13,490	-
Share based payment charge	-	-	-	-	9	-	-	9
Total comprehensive income for the period	-	-	-	-	-	-	21	21
At 31 May 2011	1,286	-	-	191	328	176	5,884	7,865
At 1 June 2011	1,286	-	-	191	328	176	5,884	7,865
Total comprehensive income for the year	-	-	-	-	-	-	2,080	2,080
Equity component of convertible loan notes - equity portion	-	-	-	-	-	(50)	28	(22)
Share-based payments - lapsed/exercised in year	-	-	-	-	(32)	-	32	-
Share-based payments - current year	-	-	-	-	13	-	-	13
Tax reversal relating to share-based payment	-	-	-	-	(83)	-	-	(83)
Dividends recognised as distributions to owners	-	-	-	-	-	-	(257)	(257)
Treasury shares	-	(148)	-	-	-	-	148	-
At 30 November 2011	1,286	(148)	-	191	226	126	7,915	9,596
At 1 December 2011	1,286	(148)	-	191	226	126	7,915	9,596
Total comprehensive income for the year	-	-	-	-	-	-	(216)	(216)
Share-based payments - current year	-	-	-	-	25	-	-	25
Dividends recognised as distributions to owners	-	-	-	-	-	-	(455)	(455)
At 31 May 2012	1,286	(148)	-	191	251	126	7,244	8,950

Consolidated Statement of Cash Flow

for the 6 months to 31 May 2012

	Unaudited	Unaudited	Audited
	6 months to	6 months to	Year to
	31-May-12	31-May-11	30-Nov-11
	£'000	£'000	£'000
Cash flows from continuing operating activities
(Loss)/profit for the period attributable to equity shareholders of the parent	(216)	(31)	(91)
Adjustments for:
Depreciation	76	45	86
Impairment of intangible assets	-	85	421
Share option valuation charge	25	10	35
Loss on disposal of property, plant and equipment	-	-	1
Financial income	(22)	(5)	(26)
Financial expense	40	77	149
Taxation	-	-	(188)
Operating (loss)/profit  before changes in working capital and provisions	(97)	181	387
(Increase)/decrease  in trade and other receivables	(617)	364	286
Decrease in inventories	14	13	(5)
Increase in trade and other payables	551	184	126
Net cash (outflow)/inflow  the continuing operations	(149)	742	794
Tax received	-	7	61
Net cash (outflow)/inflow from continuing operating activities	(149)	749	855
Cash flows from investing in continuing activities
Interest received	22	5	26
Acquisition of property, plant and equipment	(62)	(93)	(134)
Proceeds of sale of subsidiary (net)	-	-	2,345
Cost of software development	(284)	(12)	(314)
Net cash (outflow)/inflow  from investing in continuing activities	(324)	(100)	1,923
Cash flows from financing continuing activities
Interest paid	(40)	(56)	(118)
Issue of equity share capital	-	-	-
Issue of loan notes	-	-	(500)
Repayment of borrowings	-	(13)	(25)
Payment of dividend	(455)		(257)
Net cash outflow from financing continuing activities	(495)	(69)	(900)
Net (decrease)/increase  in cash and cash equivalents	(968)	580	1,878
Cash (outflow)/inflow from discontinued operations	-	(50)	68
Opening cash and cash equivalents	4,160	2,214	2,214
Closing cash and cash equivalents	3,192	2,744	4,160

Notes

1.        Unaudited notes

Basis of preparation and accounting policies

The condensed financial statements are unaudited and were approved by the Board of Directors on 17 July 2012.

The interim financial information for the six months ended 31 May 2012, including comparative financial information, has been prepared on the basis of the accounting policies set out in the last annual report and accounts, with the exception of the amendment to IAS 1 (Presentation of Financial Statements) referred to below, and in accordance with International Financial Reporting Standards ("IFRS"), including IAS 34 (Interim Financial Reporting), as issued by the International Accounting Standards Board and adopted by the European Union.

The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may subsequently differ from those estimates.

In preparing the interim financial statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same, in all material respects, as those applied to the consolidated financial statements for the year ended 30 November 2011.

Prior period comparatives have been restated to reflect Solcara as a discontinuing activity in H1 2011.

The Group has elected to present comprehensive income in one statement.

Going concern assumption

The Group manages its cash requirements through a combination of operating cash flows and long term borrowings in the form of convertible loan notes.  

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within its existing cash deposits.

Consequently, after making enquires, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the interim financial statements.

Information extracted from 2011 Annual Report

The financial figures for the year ended 30 November 2011, as set out in this report, do not constitute statutory accounts but are derived from the statutory accounts for that financial year.

The statutory accounts for the year ended 30 November 2011 were prepared under IFRS and have been delivered to the Registrar of Companies. The auditors reported on those accounts. Their report was unqualified, did not draw attention to any matters by way of emphasis and did not include a statement under Section 498(2) or 498(3) of the Companies Act 2006.  

2.       Earnings per share

The calculation of earnings per share is based upon the (loss)/profit after tax for the respective period, for, firstly, the continuing and discontinued operations and, secondly continuing operations only. The weighted average number of ordinary shares used in the calculation of basic earnings per share is based upon the number of ordinary shares in issue in each respective period. This has been adjusted for the effect of potentially dilutive share options granted under the company's share option schemes and in connection with the convertible loan notes in calculating the diluted earnings per share.

This has been computed as follows:

Continuing and discontinued	H1 2012		H1 2011		FY 2011
Operations
	Basic	Diluted	Basic	Diluted	Basic	Diluted
Loss/(profit) after tax (£000's)	(216)	(216)	21	21	2,101	2,101
Number of shares	227,604,029	300,257,811	257,720,696	333,377,641	251,581,201	329,197,511
(Loss)/earnings per share (pence)	(0.09)	(0.09)	0.01	0.01	0.84	0.64
Continuing operations
			restated	restated
Loss after tax (£000's)	(216)	(216)	(31)	(31)	(91)	(91)
Number of shares	227,604,029	300,257,811	257,720,696	333,377,641	251,581,201	329,197,511
Earnings/(Loss) per share (pence)	(0.09)	(0.09)	(0.01)	(0.01)	(0.04)	(0.04)

Notes to Editors:

Access Intelligence plc delivers Software-as-a-Service ("SaaS") solutions which help enhance corporate governance, mitigate risk and drive compliance for the public and private sectors.  The board is headed by Michael Jackson as Executive Chairman, Joanna Arnold as COO and Kole Dhoot as CFO.

Product Portfolio

e-Procurement

SaaS procurement & contract management solutions delivering cost savings to both the public and private sectors through procurement portals that facilitate aggregation. Due North's public sector customers are focused on transparency and best practice procurement procedures to ensure fairness and equality in their supply chain. Due North's private sector customers have an emphasis on mitigating supply chain risk through monitoring contracts and supplier standards. 

The division has a well-defined presence in the public sector including the Bank of England, Metropolitan Police, many large Local Government Authorities and much of the emergency services. In the private sector the customer base is building including Ladbrokes and Investec.

Training & Competence

This division incorporates AI Talent and AI TrackRecord. AI Talent provides essential training on standard operating procedures and policies for companies in the FDA, FSA and HSE regulated markets. AI Talent's training management solution ensures that organisations can show a full audit trail of employee training when required by a regulator, thus managing compliance and enhancing governance policies. AI TrackRecord monitors the lifecycle of an employee within the organization, tracking performance against KPIs like customer complaints, revenue targets or industry qualifications.

AI TrackRecord and AI Talent continue to deliver employee risk management tools to companies in heavily regulated industries, such as financial advisors who are under growing pressure to comply with the FSA's Retail Distribution Review.

Key customers for AI TrackRecord and AI Talent include: RBS, Aviva, Merck, Eli Lilly, The United Nations, Barclays, DSG and Ladbrokes.

Media & Communications

AI Media & Communications Ltd delivers a SaaS based solution for media relations, public and government affairs, internal and brand communications professionals.

AI MediaComms transforms the way organisations manage stakeholder interactions in order to protect brand reputation, through promoting corporate governance and protecting against communication discrepancies. It ensures consistency, transparency and accountability in communications planning and delivery across disparate teams, divisions or territories.

Our public sector customers including central and local government; the police and the NHS in the public sector and a growing private sector presence including RBS, Trafigura, Carphone Warehouse, BG Group and Northern Gas.

Incident Management Software

AI ControlPoint delivers a SaaS based virtual incident room for the management of risk and compliance during an incident. It ensures efficient and effective communication during an incident, whilst providing a full audit trail of actions. This embryonic business has developed a strong reputation in the Oil and Gas, Financial Services and Transport industries to assist with major risk mitigation.

Key customers for AI ControlPoint include: ING, Societe General, Visa, easyjet, Thomas Cook, Subsea7, Centrica and Petrofac.

IT Support Services

Willow Starcom provides SMEs with Hosting, Data Backup and IT Support services. The AI Cloud offering provides the infrastructure for the Access Intelligence Group's SaaS customers including Societe Generale, Visa, easyJet and Thomas Cook.

This statement will be available at the Company's registered office at 32 Bedford Row, London WC2R 4HE and on the website www.accessintelligence.com.

 

END

 

 

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