Access Intelligence, the AIM listed
supplier of compliance solutions via
Software-as-a-Service ('SaaS') this morning
released results for the six months ended 31
May 2010 that further confirmed its strategy
is delivering. Indeed, the group's operating
profit before exceptional items exceeded
those of the whole of the last financial
year. While recurring revenue increased 65%
from £ 1.4 million to £ 2.4
million and now represents 57% of total
revenues; total monthly revenue had reached
£ 0.7 million by the end of May of
which recurring revenues represented £
0.435 million while monthly costs were around
£ 0.6 million.
The results include initial 3-months
from Cobent, which has strengthened the
group's existing compliance and training
solutions to the public sector while opening
UK and global cross-selling opportunities
within the highly regulated and compliant
private sector including pharmaceuticals,
financial services and retail. Access
Intelligence also sold Wired-Gov to its
management during May 2010 and its results
have been eliminated from the reported
results and the previous year's results have
been restated to provide a clearer picture of
underlying progress.
Turnover increased 63.7% from £
2.543 million to £ 4.137 million, of
which Cobent contributed £ 0.289
million. The growing proportion of recurring
revenues helped restrain the growth in cost
of sales to 21.9% or £ 1.596 million
(2009: £ 1.309 million) and enabled the
gross profit margin to expand 12.9 percentage
points to 61.4%, which lifted the gross
profit from £ 1.234 million to £
2.541 million. Administrative expenses
increased 76.2% from £ 1.065 million to
£ 1.876 million due in large part to
the integration of Cobent together with
further group-wide investment in the private
sector sales and marketing teams. Operating
profit before exceptional costs (2010 Cobent
acquisition cost of £ 0.120 million)
increased 4-fold from £ 0.169 million
to £ 0.668. Reported pretax profit
increased from £ 0.170 million to
£ 0.470 million despite net finance
costs jumping to £ 0.78 million (2009
net finance income of £ 1,000). Basic
earning per share increased from 0.12p to
0.22p despite the tax charge expanding from
8.8% or £ 0.15 million to £ 25.3%
( £ 0.119 million).
Table: Profit & Loss
Account £ 000
|
6 months ended 31
May
|
2010
|
2009
|
%
change
|
|
Revenue
|
4,137
|
2,543
|
63.7
|
|
Cost
of sales
|
(1,596)
|
(1,309)
|
21.9
|
|
Gross
profit
|
2,541
|
1,234
|
105.9
|
|
Margin
|
61.4%
|
48.0%
|
NA
|
|
Administrative
expenses
|
(1,876)
|
(1,065)
|
76.2
|
|
Share
based payments
|
(3)
|
0
|
|
|
Operating profit
before acquisition
costs
|
668
|
169
|
295.3
|
|
Margin
|
16.1%
|
6.6%
|
|
|
Acquisition
costs
|
(120)
|
0
|
NA
|
|
Operating
profit
|
548
|
169
|
224.3
|
|
Margin
|
13.2%
|
6.6%
|
|
|
Net
finance
|
(78)
|
1
|
NA
|
|
Pretax
profit
|
470
|
170
|
176.5
|
|
Margin
|
11.4%
|
6.7%
|
|
|
Taxation
|
(119)
|
(15)
|
693.3
|
|
Profit from
continuing operations
|
351
|
155
|
126.5
|
|
Discontinued
operations
|
106
|
29
|
265.5
|
|
Profit for
period
|
457
|
184
|
148.4
|
|
|
|
|
|
|
Earnings per share
(p)
|
0.22
|
0.12
|
83.3
|
Source:
Company
The group's strategy to enhance
shareholder value remains unchanged, i.e.,
organic growth supported through acquisition
of compliance driven SaaS companies that
deepen and extend opportunities both within
the UK and internationally.
Despite the expectation that the public
sector purse will shrink substantially over
the coming months, Access Intelligence, like
most public sector exposed businesses that
demonstrably provide low cost solutions that
enhance service efficiency, views the future
with cautious optimism. The company's
optimism stems from the successful organic
and acquisitional development of its
compliance/SaaS activities that have grown
over the last 12-months from 55% of total
revenues to 77%; last February's Cobent
acquisition increasing private sector
exposure and international opportunities. We
have reviewed our earlier expectations and
are edging back our sales expectations for
2010 from £ 9.6 million to £ 9.1
million and 2011 from £ 11.7 million to
£ 10.7 million but maintaining our
pretax profit and earnings per share
forecasts.
We continue to value Access
Intelligence using an Enterprise Value/EBITDA
('EV/EBITDA') methodology and with the shares
trading at 4.25p, the financial year 2009
multiple would be 10.12 times. Therefore, if
the shares were to trade on a similar
EV/EBITDA multiple based on our maintained
2011 forecasts, the shares should be 8.7p;
consequently, we continue to recommend the
shares as a buy.
