Access Intelligence Regulatory News (ACC)

8 Mar 2006 07:00

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 840Jeremy Hamer (Non Executive Chairman)Brendan Austin (Chief Executive)Colin Davies (Finance Director)Cubitt Consulting 020 7367 5100Brian Coleman-Smith / Allison Reid / Nia ThomasCorporate Synergy 020 7448 4400Rhod Cruwys / David SealBackground NoteWho 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 publicsector organisations.The team of directors, Jeremy Hamer, Brendan Austin, Colin Davies, Ian Savageand Alwin Thompson, has extensive experience in making successful acquisitionswhile simultaneously driving organic growth. In the two years since flotation,Access Intelligence has acquired and successfully integrated two businesses.The Group TodayToday, Access Intelligence is a technology-based support services business. Itharnesses the power of internet-based information and communicationtechnologies (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 ModelThe majority of the Group's income is derived from repeat revenues deliveredthrough recurring contracts ranging between one and five years. This modelprovides excellent visibility of future revenues and, with effective customerretention, outstanding gross margins over the longer term.The Strategy for GrowthThe strategy is to acquire businesses which have good management and highgrowth potential that fit the revenue model while, at the same time, addingvalue to the Group's existing services.The businesses acquired will have substantial autonomy to develop withinbudgets agreed with the Group Chief Executive and Finance Director, whilstbenefiting from the experience and cross selling opportunities provided bybeing 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, includingsupport staff. The Non-Executive Directors will continue to be involved insourcing and evaluating potential acquisitions and monitoring the performanceof the Group. ACCESS INTELLIGENCE PLC PRELIMINARY RESULTS FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER 2005 Chairman's statementI am very pleased to announce our results for the year ended 30th November2005. This year has seen the Group transformed by both the fundraising wecompleted in December 2004 and the two acquisitions we made in June and July2005. Together with the progress we have made in our core businesses this hasbeen an excellent year.ResultsGroup turnover was up by 358% to ‚£1,943,000 (2004: ‚£543,000). Turnover adjustedfor acquisitions grew by 45%. Operating profit before amortisation has nowmoved into a profit of ‚£175,000 (2004: Loss ‚£259,000). Adjusted earnings pershare 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. Thedividend scheduled in the accounts is payable to the preference share holders.The Year in focusIn December 2004 we raised ‚£3,000,000 (‚£2,808,000 net) at 10p per share toaccelerate 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 TechnologiesLimited ("Ridgeway Technologies"), a leading provider of managed data storage,retrieval and network solutions. The acquisition complemented the activities ofBackup and Running plc ("Backup and Running") our online data storage andretrieval business. Ridgeway was purchased for a cash consideration of ‚£650,000and ‚£50,000 in Access Intelligence shares. There were net cash balances atcompletion of ‚£176,000. There is an earn-out payable in shares based upon 5times profits in excess of ‚£100,000 for the year ended December 2005 which islikely to result in the Group issuing a further ‚£800,000 in Ordinary Shares.Since joining the Group Ridgeway and Backup and Running have been mergedoperationally enabling us better to exploit reseller channels and reduce costsby ‚£75,000 annually.On the 6th July 2005 we completed the purchase of Due North Limited ("DueNorth") a leading software developer of e-commerce solutions predominantly inpurchasing and procurement, to both public and private sectors. Theconsideration at completion was ‚£1,000,000 in cash and ‚£500,000 in AccessIntelligence shares. There is an earn-out in place providing the vendors with 4times 2006 operating profits in excess of ‚£350,000 and 3 times 2007 operatingprofits in excess of ‚£450,000. These payments will be predominantly sharebased. At this stage we have made a provision of ‚£350,000 for additionalpayments.Our other two companies The Marketing Guild Limited ("Marketing Guild") whoprovide marketing and business development information and support to small andmedium sized businesses and Wired Gov Limited ("Wired Gov") who provide anelectronic distribution service of government initiatives, policies and financeaffecting businesses, have both developed their offering significantly duringthe year.Our business modelThe Group's objective is to acquire and build businesses which provide servicesto corporates and the public sector by way of recurring revenue contractslasting between one and five years. This model provides excellent visibility offuture revenues and, with effective customer retention, outstanding grossmargins over the longer term. On the first day of the new financial year we hadapproximately ‚£2m of contracted recurring revenue for this year.StaffOur future prosperity is in large measure dependent on the ability and loyaltyof our people. Their specialist knowledge and skills is key to providing ourvalue added services to our customers. Staff turnover is low and we continue toattract high calibre people.On behalf of the board I would like to thank our employees for their continuedcommitment.Current Trading and OutlookWe have begun the new year in line with market expectations. The markets wherewe compete are still buoyant and together with our continuing investment intechnology and people development enable us to view the Group's outlook withoptimism.We continue to look for further businesses to join the Group and are encouragedby the opportunities available to us. In conclusion we are looking forward toanother significant step forward in 2006 founded on full year contributionsfrom Ridgeway and Due North.Jeremy HamerChairman8 March 2006Chief Executives ReviewLooking backLast year we completed two strategic acquisitions. Both companies have strongmanagement teams and operate in expanding markets.Ridgeway Technologies, which trades as Willow Starcom, supplies missioncritical data storage, retrieval and network solutions to mid-sized corporatebusinesses.It sells its services predominantly through a reseller channel, which enablesthem to grow with a minimum increase in headcount. Currently more than 50% ofits revenues are recurring.The acquisition has enabled us to move Backup and Running from York to WillowStarcom's premises in Chorley in Lancashire with the added advantages of usingtheir channel to sell our online service and utilise its 24-hour support centreto service our existing customer base. Both sales forces are tightly integratedand are already supplying each other with sales opportunities.Due North, based in Newcastle-Upon-Tyne, develops business support softwareusing industry standard platforms. Its e-procurement software is used widely inthe local authority sector. It provides a complete closed loop solution whichenables authorities to save money and increase operational efficiencies. Theproduct suite enables any organisation to manage the complete customer supplierrelationship from initial expression of interest, through tender evaluation,post tender negotiation - using its reverse auction software - contract awardand management. Since joining the group Due North has nearly doubled its marketpenetration and has begun opening up opportunities in health, universities andthe private sector.Wired Gov, based in Stockport in Greater Manchester, which uses its technologyplatform to provide government press releases to a growing subscriber base inboth public and private sectors, has seen year on year growth of 10%.Subscriber retention rate is 94%, demonstrating the value its customers placeon the service they receive. During the year it increased revenues frompermission based advertising sponsorship by 86%. In 2006 the management plansto launch a newsletter to capitalise on that success to increase advertisingand sponsorship revenues.The Marketing Guild, based at the head office in York, has continued to developthe Platinum Service offering increased benefits to members. During the year ithas increased revenues by 34%. A new online service has been launched duringthe year with an encouraging response.The year aheadMarket conditions look promising for our data storage and recovery divisionWillow Starcom and Backup and Running. The world network storage softwaremarket rose 10% year on year to reach $2.1bn in the third quarter of 2005. Atthe same time the back-up and archive market increased by 12.7% growth (IDC2005). We believe this trend will continue as the increasing awareness ofregulatory compliance among companies grows. Storage revenues are set to growglobally by 20% in 2006 and 18.5% in 2007. (EIU 2005).Legislation such as the Data Protection Act and the Freedom of Information Actwill fuel this growth as will high press coverage of Basel II and the USinitiated Sarbanes-Oxley legislation. E-mail archiving and retrieval is set togrow 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 supportour e-mail retrieval capability to capitalise on this opportunity. We areincreasing our sales resource and support infrastructure in support of thisinitiative.Due North is well positioned to take advantage of the efficiency targets andsavings set out in the Gershon review of civil procurement, by building on itssuccess in local authorities and emergency services. Additional sales resourcehas been invested to enable it to increase its share of the health service anduniversities markets. It continues to seek partners to help it exploit theprivate sector.In summary we have positioned ourselves to take advantage of the opportunitiesthat are available to us following the restructuring of the Group and we remainconfident, barring a major economic downturn, that we will have anothersuccessful year.Brendan AustinChief Executive8 March 2006Finance Director's ReviewDuring the year we successfully raised ‚£2.8m new equity net of expenses andintroduced new institutions to our shareholder base. The fundraising allowed usto acquire two companies and start to build some critical mass within theGroup.Although the Group has grown by acquisition our existing companies demonstratedorganic growth of 45%, which is an excellent achievement.During the year we repaid all our bank loans and at the year-end had net cashof ‚£603,000.The strategy of the Group is to focus on companies that have a high element ofrecurring revenue. We believe that this will underpin the quality of earningsand generate strong cash flow. At the start of the current financial yearincome from contracts, licences fees and subscriptions was approaching ‚£2m.p.a.Colin DaviesFinance Director8 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 informationThe financial information in this preliminary announcement has been prepared inaccordance with the accounting policies set out in the financial statements ofAccess Intelligence PLC for the financial year ended 30 November 2005 whichhave remained unchanged from the financial year 2004.The financial information in this document does not constitute the company'sstatutory accounts for the financial year ended 30 November 2005 or financialyear 2004, but is derived from those accounts. Statutory accounts for 2004 havebeen delivered to the Registrar of Companies and those for 2005 will bedelivered following the company's Annual General Meeting. The auditors havereported on these accounts; their reports were unqualified and did not containstatements under sections 237 (2) or (3) of the Companies Act 1985.2. Earnings per shareEarnings per share is calculated on the basis of profit for the year after taxdivided by the weighted average number of shares in issue for 2005 of59,152,498 (2004: 21,361,595).Diluted earnings per share is calculated on the basis of profit for the yearafter tax divided by the weighted average number of shares in issue for 2005adjusted 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, whichexclude goodwill amortisation, have also been calculated to allow shareholdersto 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 AcquisitionsThe acquisitions of the Group for the year were as follows:On 27 June 2005, the entire issued share capital of Ridgeway TechnologiesLimited (RT) was acquired for an initial consideration of ‚£700,000 satisfied bythe issue of 500,000 shares at 10p per share and cash of ‚£650,000. Deferredconsideration of up to ‚£1m is payable dependent on the results for the yearended 31 December 2005. A provision has been made for additional considerationpayable in shares of ‚£800,000.On 5 July 2005 the entire issued share capital of Due North Limited (DN) wasacquired for an initial consideration of ‚£1 million, which was satisfied by theissue 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 forthe three years ending 31 August 2008. At this stage a provision has been madefor Deferred consideration of ‚£350,000.The acquisitions have been accounted for using the acquisition method ofaccounting, and goodwill arising on consolidation has been capitalised and willbe 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 inthe year ended 31 December 2004. The profit before taxation of Due NorthLimited 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 20years, based on the directors' assessment of the income streams of the acquiredbusinesses.Copies of the preliminary announcement are available from the company'sRegistered Office at Regency House, Westminster Place, York Business Park,York, YO26 6RW. The Annual Report and Accounts for the financial year ended 30November 2005 will be posted to shareholders on or about 8 April 2006.ENDACCESS INTELLIGENCE PLC