ACC.L Regulatory News (ACC)

2 Jun 2005 07:00

Access Intelligence PLC02 June 2005 FOR RELEASE 7.00AM 2 JUNE 2005 ACCESS INTELLIGENCE PLC (Range of companies providing information, advice and services to small and medium sized businesses and the public sector) Acquisition of Ridgeway Technologies Limited Admission to AIM * Acquisition of Ridgeway Technologies Limited for an initial consideration of £700,000 * Further £1.1 million based on 2005 performance * Underlying profits of £150,000 * Acquisition strengthens Access Intelligence's position in the growing field of data storage, backup and recovery and increases the range of IT services it can offer businesses * Business to be integrated with Access Intelligence's Backup and Running subsidiary * Cross-selling opportunities Outlook and Current Trading * Access Intelligence + Group now beyond breakeven on a month to month basis. + Still £2 million cash after this acquisition + Acquisitions still a priority * Ridgeway + Willow has traded well from the start of 2005 + Profitability ahead of the same period last year and ahead of budget. + Recurring revenues are in excess of £1 million annually and continue to rise + Active resellers increased by 47 per cent. Jeremy Hamer, the Chairman of Access Intelligence, commented: "We are delighted to announce the first step in our strategy of building aportfolio of companies which provide information, advice and services tobusiness and public sector organisations on a recurring revenue basis and we arecontinuing to target businesses which we believe will add value to the Group.We are confident that every business in the Enlarged Access Intelligence Groupwill show growth in the year to November 2005 and, with the addition ofRidgeway, there will be increased opportunities for the cross selling ofservices providing us with a strong platform for future growth." For further information: Jeremy Hamer (Chairman) 01904 520840Brendan Austin (Chief Executive) 01904 520840Colin Davies (Finance Director) 01904 520840 Brian Coleman-Smith / Jo Clewlow 020 7053 6400Beattie Financial Rhod Cruwys 020 7626 2244Corporate Synergy FOR RELEASE 7.00AM 2 JUNE 2005 ACCESS INTELLIGENCE PLC Acquisition of Ridgeway Technologies Limited Admission to AIMIntroduction The Company is pleased to announce that it has today conditionally agreed toacquire the entire issued share capital of Ridgeway, the owner of Willow, aprovider of specialist IT service for the backup and storage of data for aninitial consideration of £700,000. Deferred consideration of up to £1,100,000 ispayable in the event of Willow meeting future performance targets. Furtherdetails regarding the terms of the Acquisition are set out below. Under the AIM Rules this transaction is deemed to be a reverse take-over and asa consequence requires the approval of Shareholders in general meeting. The purpose of this announcement is to provide Shareholders and the media withthe background to and information on the Acquisition. Background to and reasons for the Acquisition The Company was incorporated in June 2003 and in November of that year acquiredAccess Intelligence Limited which owned three businesses, The Marketing Guild,Wired Gov and Backup and Running. The common links between these businesses arethat they provide practical services and advice to small and medium sizedcompanies and public sector organisations. The services provided aresubscription-based and provide a foundation for expansion by means of recurringannual revenues. Further information on the Group's businesses is set out below. The Marketing Guild The Marketing Guild provides practical marketing help and advice aimed at smalland medium sized businesses. This is delivered through regular newsletters, ahelpline and training seminars for which members pay a fee based on the level ofservice they require. In addition, members have access through the helpline to''MAGiC'', a database containing ideas and tactics, which offers strategies tomembers. Wired Gov Wired Gov provides its subscribers with immediate press releases from thegovernment and other public sector organisations via its website and e-mailalert system. Income is derived from subscriptions and sponsorship. Subscribersto the service can specify from which organisations they wish to receiveinformation and additionally use key word searches. An archive system is alsoavailable. Wired Gov has approximately 10,000 registered users. Backup and Running Backup and Running provides small and medium sized organisations with a disasterrecovery service for computerised information. The software is made availableunder a licence from Novastor Corporation Inc. The software allows users toconfigure an operating system to specify which files are to be backed up and thefrequency of the routine. The specified information is encrypted then sent to aremote storage facility. The software has several facilities including anarchive facility which allows the user to retrieve all back ups made over a fiveyear period. Backup and Running has approximately 130 customers. Strategy The Group's ongoing strategy is to establish a portfolio of companies whichprovide information, advice and services to business and public sectororganisations on a recurring revenue basis. The Directors believe that thismodel provides high levels of repeat business and, thus, high quality revenues,together with cross selling opportunities within the Group. The Proposed Acquisition Ridgeway, which was founded in 2000, owns the entire issued share capital ofWillow. Willow provides specialist IT services across a broad range of marketsectors that include data storage, backup and recovery, network design supportand consultancy and hardware and software maintenance support services. Byacquiring Ridgeway, which has no other trading activities, the Company willacquire the whole of the issued share capital of Willow. Data storage consultancy The business originally began as a data storage business and the Directorsbelieve that Willow's offering in this arena is one of its competitivestrengths. The cost of entry into this market is expensive due to the requiredinvestment in specialist staff and systems. Services offered by the data storagedivision include the following: . strategic backup and storage analysis;. backup/restore analysis and strategy;. backup and storage:. resource management;. project planning and management; and. implementation / configuration;. disaster recovery planning; and. specialist storage support and maintenance. Willow adopts a consultative approach, selecting the best hardware / softwaresolutions available in the market for the client and designs a solution thatmeet clients' needs. Once designed, these solutions are implemented using arange of technical, planning and project management services. The company's official accreditations and partnerships with a number of keysoftware providers enhance and strengthen its position with clients andsuppliers and ensure preferential access to specialist technical resources andproducts from suppliers. While the company mainly addresses the SME and midcorporate market, there are some notable larger companies within its customerbase including HFS Loans Limited. Networks, design and consultancy In this area Willow has focused on the larger SME customers and offers a rangeof contracted services and consultancy to complement an organisation's existingIT staff. Services offered by the network division include the following: . IT health checks - testing and monitoring the effectiveness ofnetwork components and identifying weaknesses that could cause problems in thefuture; and. data security services - provision of advice on products,technologies and services available to secure data from unauthorised access.Examples include firewalls, virus protection, internet vulnerability testing,security audits and internet / e-mail monitoring. Hardware and software maintenance support services This division offers hardware maintenance, software support, disaster recoveryand on-site, remote-dial-in and telephone support. Willow's field engineering, help desk and on-line services provide 24 hour coveracross the UK, allowing clients' in-house IT professionals to reduce the timespent on routine maintenance and support. The Directors believe that there isgrowth potential not only in expanding software support services but also inpackaging 'managed services' designed to identify risks and opportunitiespro-actively, before problems arise. Willow sells its services either directly to end users, or via its resellerchannel. As new services are developed the reseller channel provides aready-made route to market through which the services can be sold. Financial information During the financial year ended 31 December 2004 income from recurring revenuerepresented 51 per cent. of turnover. This recurring revenue base of existingclients has always provided a strong platform to sell new products and services.The Directors believe this platform will be reinforced with opportunities tosell other products from within the Enlarged Group. In particular, Willow iswell positioned to sell Backup and Running's services to its marketplace. Anumber of Willow's customers have already expressed an interest in an on-linebackup service of the type provided by Backup and Running. The following table has been extracted, without adjustment, from theaccountants' report on Ridgeway set out in the Admission Document. Year ended Year ended Year ended 31 December 31 December 31 December 2004 2003 2002 £'000 £'000 £'000Turnover 2,295 2,029 1,783Gross profit 619 454 421Profit before taxation 96 95 98Profit after taxation 71 72 77 The Directors believe that included in the results for 2004 is a minimum of£50,000 of non-recurring costs. Acquisition Agreement Under the terms of the Acquisition Agreement, the Company has conditionallyagreed to acquire the entire issued share capital of Ridgeway for an initialconsideration of £700,000 to be satisfied as to £650,000 in cash and, as to thebalance, by the issue of 500,000 new Ordinary Shares. It is the term of theAcquisition Agreement that Willow will have a minimum net cash balance of£150,000 on completion. Deferred consideration will be paid on the basis of 5 times the operating profitof Willow over £100,000 for the year ended 31 December 2005, subject to amaximum deferred payment of £1.1 million. In addition, the Ridgeway Vendors willreceive a further payment of deferred consideration in the event that theCompany, prior to 31 December 2005, completes the acquisition of a companyintroduced to it by the Ridgeway Vendors. The deferred consideration will besatisfied by the issue of new Ordinary Shares at the lower of the averageclosing mid-market price of the Ordinary Shares for the 3 business days prior tothe determination of Willow's profits for the relevant period and 15 pence pershare, with a minimum of 10 pence per share. Both the initial consideration shares and the deferred consideration sharesallotted pursuant to the Acquisition will be subject to restrictions on theirdisposal. Neither the initial consideration shares nor the deferredconsideration shares may be disposed of by any of the Ridgeway Vendors for aperiod of two years after their respective allotments. The Acquisition is conditional, inter alia, on the passing of the Resolutions bythe Shareholders and Admission. Current Trading and Outlook Access Intelligence Access was incorporated in June 2003 and acquired Access Intelligence Limited inNovember of that year. The Company's first full accounts were for the 17 monthperiod from incorporation to 30 November 2004 and showed a loss before taxationof £381,000 on revenue of £543,000. However, since the end of the financialyear, trading has been significantly better, with sales in the 17 weeks periodto 31 March 2005 over 50 per cent. ahead of the prior year. The group is nowbeyond breakeven on a month to month basis. Ridgeway Willow has traded well from the start of 2005 with profitability ahead of thesame period last year and ahead of budget. Recurring revenues are in excess of£1m annually and continue to rise. In the current trading year Willow hasincreased its active resellers by 47 per cent. The Enlarged Group Following the Acquisition, the Directors intend to integrate the administrationand support functions of Willow and Backup and Running, which they believe willimprove efficiency and customer service. The Directors are confident that every business in the Enlarged Group will showgrowth in the year to November 2005. The addition of Willow will facilitateopportunities for cross selling of services and the Directors believe it willalso allow greater utilisation of technical skills and resources across theEnlarged Group. Directors Jeremy Hamer (aged 53), Chairman Jeremy was appointed chairman of Access Intelligence in 2004 and has extensiveexperience as a director of AIM quoted companies. He currently serves on theboard of 7 companies traded on the London Stock Exchange, including AvingtransPlc, Inter Link Foods Plc and Glisten plc. Brendan Austin (aged 55), Chief Executive Officer Brendan has had senior marketing and sales operational roles with Rank Xerox andwas part of the management buy in and buy out team which exited from Prontaprintplc. He is currently chairman of Kids Safteynet Limited which is a publisher ofchildren's safety education material in the UK. Brendan is also managingdirector of The Marketing Guild. Colin Davies, FCCA (aged 47), Finance Director Colin has acted as chief executive and finance director of both public andprivate companies in a range of industries including food, engineering,marketing and textiles. He is currently a non-executive director of Inter LinkFoods Plc which he co founded and Floors2Go Plc. He has been responsible forco-ordinating the acquisition strategy of Inter Link Foods Plc. Colin is also anon-executive director of several private companies. Alwin Thompson (aged 57), Non-executive Director Alwin has been involved in the food manufacturing business since 1986. he iscurrently Chairman of Inter Link Foods Plc, the AIM listed manufacturer andsupplier to major supermarkets of own label cake products which was AIM Companyof the Year in 2001. Ian Savage (aged 61) Non-executive Director Ian has a wealth of experience in the publishing sector having held senior boardpositions within International Thompson Publishing and McGraw Hill. He hasdirect experience in managing and directing subscription based businesses. Dividend Policy It is expected that any cash generated by the Group's operations in the short tomedium term will be devoted to funding the Group's planned development. Theboard, will, however, continue to review the appropriateness of its dividendpolicy as the Group develops. Extraordinary General Meeting The Acquisition is conditional on, inter alia, the passing of the Resolutions atthe Extraordinary General Meeting ("EGM") convened for 10.00 a.m. on 27 June2005. Recommendation The Directors believe the resolutions to be proposed at the EGM are in the bestinterests of the Company and Shareholders as a whole. Accordingly, the Directorsunanimously recommend Shareholders to vote in favour of the Resolutions as theythemselves intend to do in respect of their own beneficial holdings whichamount, in aggregate to 9,231,229 Ordinary Shares, representing approximately15.85 per cent. of the Existing Ordinary Shares.ADD IN DEFINITIONS ''Acquisition'' The proposed acquisition of the entire issued share capital of Ridgeway pursuant to the Acquisition Agreement''Acquisition The agreement dated 1 June 2005 between the Company (1)Agreement'' and the Ridgeway Vendors (2) details of which are set out in the Admission Document''Act'' the Companies Act 1985, as amended''Admission'' admission of the Enlarged Share Capital to trading on AIM and such admission becoming effective in accordance with Rule 6 of the AIM Rules''AIM'' the market of that name operated by London Stock Exchange plc''AIM Rules'' the rules for AIM published by London Stock Exchange plc''Backup and Backup and Running plc, a wholly owned subsidiary of theRunning'' Company''Board'' The board of Directors of the Company''Completion'' completion of the Acquisition Agreement in accordance with their terms''Consideration the 500,000 Ordinary Shares to be issued to the RidgewayShares'' Vendors on completion, pursuant to the Acquisition Agreement''Company'' or Access Intelligence Plc''Access''''Corporate Corporate Synergy Plc, nominated adviser and broker to theSynergy'' Company''Directors'' or the directors of Access''Board''''EGM'' or the extraordinary meeting of the Company, convened for''Extraordinary 10.00a.m. on 27 June 2005, and any adjournment thereof,General Meeting''''Enlarged Group'' the Group as enlarged by the Acquisition''Enlarged Share together, the Existing Ordinary Shares and theCapital'' Consideration Shares''Existing Ordinary the 58,253,387 Ordinary Shares in issue as at the date ofShares'' this document''Form of Proxy'' the form of proxy enclosed with this document for use by Shareholders in connection with the EGM''Group'' the Company and its subsidiaries''Notice'' the notice of EGM''Official List'' the official list of the UKLA''Ordinary Shares'' ordinary shares of 0.5 pence each in the Company''Resolutions'' the resolutions to be proposed at the EGM, set out in the Notice''Ridgeway'' Ridgeway Technologies Limited, the owner of the entire issued share capital of Willow''Ridgeway Mark Berry, Andrew Philip Unsworth and Darren HarrisonVendors''''Shareholder'' a holder of Ordinary Shares''SME'' small and medium enterprise''The Marketing The Marketing Guild Limited, a subsidiary of the CompanyGuild''''UK'' the United Kingdom of Great Britain and Northern Ireland"Willow" Willow Starcom Limited, a wholly owned subsidiary of Ridgeway"Wired Gov" Wired Gov Limited, a subsidiary of the Company This information is provided by RNS The company news service from the London Stock Exchange