1 Jul 2009 07:00
1 JULY 2009
ACCESS INTELLIGENCE PLC
("Access Intelligence" or "the Company")
Acquisition and Convertible Loan Note
The Board of Access Intelligence is pleased to announce the acquisition of Ether-Ray Limited ("Ether-Ray") for a consideration of £2.413 million (subject to certain adjustments) payable in cash, and the issue of £1.75 million of Convertible Loan Notes.
Acquisition of Ether-Ray Limited
Ether-Ray was founded by Raul Gonzalez in 1999 and is based in Old Street, London. Ether-Ray's products are delivered via the Software-as-a-Service ("SaaS") model with the majority of customers on six year subscription contracts, where subscriptions are paid annually in advance. Ether-Ray has approximately 188 customers, of which around 150 are on the hosted platform. Raul will stay on as a consultant for a limited period to help transition the business into the Access Intelligence group.
Ether-Ray's MARCOMM product provides on-demand, hosted software for the corporate communications teams within the public sector. All facets of the communications function, including media and public relations, stakeholder management, internal comms, and marketing aims to increase productivity and efficiency by having easy access to the software that streamlines and simplifies the workload. Through MARCOMM users are able to capture, create, distribute and analyse all communications, driving brand recognition in the communities they serve and upholding the reputation of their organisation.
In addition, Ether-Ray's CODEX product is an online contacts database of journalists and media professionals. It is available 24/7 and takes the "Wikipedia" / Web 2.0 approach where businesses can help each other by compiling and updating a definitive list of UK journalists.
Ether-Ray's unaudited turnover for the year ending 31st August 2008 was £888,000 (2007: £564,000), generating an unaudited profit before interest and tax of £380,000 (2007: £217,000).
Michael Jackson, Access Intelligence's Executive Chairman, commented:
"Ether-Ray is one of the market leaders in this public sector niche, servicing around 25% of local authorities and counting Universities, NHS organisations, Police Authorities, Charities and Government Agencies among their clients. Ether-Ray has a strong team with specialist knowledge in these sectors.
The acquisition is in line with our plans to focus Access Intelligence on SaaS. Ether-Ray has good synergies with our existing businesses and we see a number of significant cross-selling and up-selling opportunities with other companies within the Access Intelligence group of companies.
Our product portfolio offers a strong bedrock on which to build a dynamic and competitive SaaS proposition, which we believe provides us with growing revenues and increasing visibility."
Convertible Loan Note
Access Intelligence also announces that it has raised £1,750,000 through the issue of 1,750,000 6% Convertible Loan Notes (the "Loan Notes") of £1 each. The Company has used the proceeds to part fund the acquisition of Ether-Ray Limited.
The principal terms of the Convertible Loan Notes are as follows:
the nominal amount of each of the Loan Notes is £1;
the holders of the Loan Notes shall be entitled to convert their Loan Notes into new ordinary shares in the Company at any time, at a price of 4 pence per share;
interest on the Loan Notes shall accrue at 6 per cent. per annum and shall be paid to the holders of the Loan Notes semi-annually;
the Company reserves the right to redeem the Loan Notes, in whole or in part, at any time within 18 months of the issue date at a 10 per cent premium; and
any Loan Notes not converted by 30 June 2014 shall be redeemed.
Elderstreet VCT Plc ("Elderstreet") and Unicorn VCT Plc, who have subscribed for 500,000 and 750,000 Loan Notes respectively, have each agreed not to convert their Loan Notes into ordinary shares until the Company has sufficient authorities in place for the relevant new shares to be issued and allotted.
The conversion price represents a discount of approximately 10 per cent to the closing mid-market price of 4.38 pence per Existing Ordinary Share on 30 June 2009, being the last dealing day prior to the date of this announcement.
Related party transaction
Michael Jackson and David Lowe, who are both directors of Access Intelligence, are also on the board of Elderstreet. In addition, Elderstreet is a substantial shareholder in Access Intelligence, owning 14.8 per cent. of the ordinary shares, and is deemed to be a related party.
Elderstreet has subscribed for 500,000 Loan Notes, and therefore the issue of the Loan Notes is treated as a related party transaction pursuant to Rule 13 of the AIM Rules.
The Independent Directors of Access Intelligence, having consulted with the Company's nominated adviser, Astaire Securities Plc, consider the terms of the issue of the Loan Notes to be fair and reasonable insofar as its shareholders are concerned.
General Meeting
A letter will be sent to shareholders shortly containing details of the convening of a general meeting of Access Intelligence ("GM") to be held at 10.00 a.m. on 29th July 2009 at the company's registered office at 32 Bedford Row, London WC1R 4HE. The purpose of the GM is to increase the authorised share capital of the Company, to authorise the directors to issue new ordinary shares in the Company with a nominal value of up to £500,000 (100,000,000 new ordinary shares) and to dis-apply pre-emption rights with respect to certain issues of new shares by the Company. It is part of the Company's strategy to grow by acquisition and the Company is finding interesting opportunities through management contacts. The ability to issue extra shares without reverting to shareholders each time will ensure that management can move expeditiously and secure these opportunities as and when they arise. The Company is committed to enhancing shareholder value.
For further information:
| Access Intelligence plc | 020 7400 0485 |
| Michael Jackson (Executive Chairman) | 020 7831 5088 |
| Jeremy Hamer (Finance Director) | 07977 234 614 |
| Astaire Securities Plc | 020 7448 4400 |
| Shane Gallwey / Lindsay Mair | |
| Cubitt Consulting | 020 7367 5100 |
| Brian Coleman-Smith / James Verstringhe / Nicola Krafft | |
Background Note on Access Intelligence
Access Intelligence is based in London with subsidiaries in York, Stockport, Harefield, Chorley, Lancashire and Newcastle-upon-Tyne. The Group is split into three divisions:
Compliance (MS2M)
Procurement and Contract Management (Due North)
Media Relations and PR (Solcara / Wired-Gov)
Access Intelligence also retains Willow Starcom, a support services business. Whilst it does not fit into one of the three targeted growth areas, Willow Starcom has strong recurring revenues and cash flows.
Compliance
MS2M, based in York, is a developer of compliance software for the financial services industry. Its core software products are "Track Record" and "Virtual Compliance Officer". These applications monitor individuals' activities within an organisation in real time, and identify their risk profile from a compliance perspective. Individuals are graded via a traffic light system in accordance with key performance indicators. In the case of risk identification, remedial advice is offered. Clients include RBS Group, National Australia Group, Liverpool Victoria, AXA and St James's Place. These solutions are offered both as a desktop and a hosted service.
Procurement and Contract Management
Due North, based in Newcastle-upon-Tyne, develops supply chain software solutions. Its principle focus is on e-procurement software, which is widely used in the public sector. The product suite enables organisations to manage the complete customer/supplier relationship from initial expression of interest, through tender evaluation and post-tender negotiation to contract award and life cycle management. It also offers a reverse auction facility. Over the last 6 years it has become the leading supplier of e-procurement solutions to the emergency services (police and fire and rescue) and local authorities and is a growing supplier to the NHS, Housing Associations and the Transport Authorities. These solutions are offered as a hosted service.
Media Relations and PR
Solcara, based in Harefield nr London, currently has four software product offerings, covering legal and professional firms, information access, media relations and crisis management. Solcara's two key products are i) Spotlight - PR workflow and communications software; and ii) Solsearch - a search and information software application, which address the need to search, identify and analyse ever expanding volumes of information.
Wired Gov provides, under license from the cabinet office, government news alerts from more than 100 departments and agencies. Subscribers can register their preferences by agency, department, key words and phrases. They can determine the frequency of the alerts from immediate to daily or weekly. Typical subscribers in the private sector are financial services organisations and professions.
Willow Starcom Ltd
Willow Starcom supplies data storage, retrieval and network solutions to mid-sized corporate businesses. It sells its services through a reseller channel which enables it to grow revenues with a minimum increase in headcount. The company operates a 24-hour support centre from its base in Chorley, Lancashire. Included within Willow Starcom is Backup and Running which provides offsite online data storage and retrieval to small and medium sized enterprises.