Acquisition of MS2M

FOR RELEASE 7.00AM 20 SEPTEMBER 2006 ACCESS INTELLIGENCE PLC Proposed Acquisition of Management Services 2000 Limited Placing of 25,000,000 new Ordinary Shares at 6 pence per share to raise £1,500,000 Notice of Extraordinary General Meeting Nominated Adviser and Broker Corporate Synergy Plc * Placing of 25,000,000 ordinary shares at 6p per Ordinary Share * Acquisition of Management Services 2000 ("MS2M"), a developer of compliance software for the financial services industry, for an initial consideration of £1.95 million * + £1.45 million in cash (cash consideration £1 million together with an amount equal to the cash balances of MS2M in excess of £300,000, estimated to be £450,000) + £500,000 in new Ordinary Shares. + Deferred consideration based on five times the average operating profit for the two years ending 31 May 2007 and 31 May 2008 less the amount of the initial consideration + Total deferred consideration not exceeding £2.5 million. * MS2M generated operating profits of £104,000 on a turnover of £607,000 in the year ended 31 May 2004 and profits of £299,000 on a turnover of £ 893,000 in the year ended 31 May 2005. It has recurring revenues of approximately £300,000 per annum. Jeremy Hamer, the Chairman of Access Intelligence, commented: "The acquisition of Management Services 2000, known as MS2M, is, we believe, another excellent acquisition for Access Intelligence. It has a blue chip client base among some of the leading banks, building societies and financial institutions. With the increasing compliance requirements both in UK and the European Union, we believe that MS2M has tremendous growth opportunities particularly in the UK where its "Virtual Compliance Officer" helps companies comply with the Financial Services Authority's regulatory requirements. The Group's existing businesses are performing well and the we believe that they have exciting growth prospects." For further information: Access Intelligence plc 01904 520 840 Jeremy Hamer (Non Executive Chairman) Brendan Austin (Chief Executive) Colin Davies (Finance Director) Cubitt Consulting 020 7367 5100 Brian Coleman-Smith / Allison Reid / Nia Thomas Corporate Synergy Plc 020 7448 4400 Rhod Cruwys / David Seal / Shane Gallwey EXPECTED TIMETABLE OF PRINCIPAL EVENTS Extraordinary General Meeting 11:00a.m. Monday, 16 October 2006 Placing Shares admitted to trading on AIM Tuesday, 17 October 2006 PLACING AND ACQUISITION STATISTICS Placing Price 6 pence Number of Ordinary Shares in issue prior to the Placing and 77,202,215 Acquisition Number of Placing Shares to be issued pursuant to the Placing 25,000,000 Number of Consideration Shares to be issued pursuant to the 7,598,784 Acquisition Number of Ordinary Shares in issue following the Placing and 109,800,999 completion of the Acquisition Percentage of enlarged issued share capital represented by the 22.8% Placing Shares Percentage of enlarged issued share capital represented by the 7.0% Consideration Shares Approximate proceeds of the Placing available to the Company £1.32 million (net of expenses) Market capitalisation following the Placing at the Placing £6.59m Price FOR RELEASE 7.00AM 20 SEPTEMBER 2006 ACCESS INTELLIGENCE PLC Proposed Acquisition of Management Services 2000 Limited Placing of 25,000,000 new Ordinary Shares at 6 pence per share to raise £ 1,500,000 1. Introduction The Board of Access Intelligence Plc announces that the Company is proposing to acquire Management Services 2000 Limited ("MS2M"), which develops compliance software for the financial services industry, for an initial consideration of £ 1.95 million, being £1.5 million plus an amount equal to the cash balance of MS2M in excess of £300,000, which is estimated to be £450,000. The consideration will be satisfied as to £1.45 million in cash and as to £500,000 by the issue of 7,598,784 in new Ordinary Shares. The Company is proposing to raise £1.5 million, before expenses, by way of a placing of 25,000,000 new Ordinary Shares at 6 pence per new Ordinary Share, in order to finance that part of the cash element of the initial consideration which is not backed by cash balances within MS2M in excess of its current requirements, and for costs, working capital and a provision for an element of deferred consideration. The equity element of the initial consideration will be satisfied by the issue of 7,598,784 Consideration Shares to the vendors, credited as fully paid at the Placing Price. The issue price of 6 pence per new Ordinary Share represents an 11.1 per cent. discount to the Closing Price of 6.75 pence per Ordinary Share on 18 September 2006 (being the latest practicable date prior to the publication of this document). The purpose of this announcement is to explain the background to and the reasons for the Placing 2. Background The Company was admitted to AIM in November 2003 with The Marketing Guild Limited ("Marketing Guild"), Wired Gov Limited ("Wired Gov") and Backup and Running plc ("Backup and Running") as its existing subsidiaries. In June 2005 the Company completed a reverse takeover of Ridgeway Technologies Limited, a leading provider of managed data storage, retrieval and network solutions. In July 2005, the Company completed the purchase of Due North Limited ("Due North"), a leading software developer of e-commerce solutions. The common links between these acquisitions are that they provide practical services and advice to small and medium sized enterprises ("SMEs"), corporate entities and governmental organisations. The services provided are recurring revenue based and provide a foundation for expansion by means of recurring annual revenues. Following the integration of these businesses, the Company is now organised into two main divisions: Data backup and recovery Willow Starcom Limited ("Willow Starcom"), based in Chorley, provides specialist IT services across a broad range of market sectors that include data storage, backup and recovery, network design support and consultancy and hardware and software maintenance support services. It had revenues for the year ending 30 November 2005 of £1.72 million, of which recurring revenues accounted for over £1.18 million per annum. Backup and Running plc, now integrated within Willow Starcom, provides an online data storage and disaster recovery service, which the client can customise to their own requirements. The service offers significant advantages over other alternative systems in that it backs up automatically and can provide a complete backup history for at least three years. Compliance software Due North, based in Newcastle upon Tyne, is a developer and provider of e-commerce solutions, primarily to the public sector and emergency services. The range of products includes an e-tendering module combined with an e-auction module. Its software is used widely in the local authority sector. It is the principal supplier to Police Authorities through the Blue Light Portal and also the Regional Fire and Rescue Authorities. It had revenues for the 15 months ended 30 November 2005 of £901,000 of which recurring revenues were over £ 275,000 per annum. In addition to these two divisions the Company owns two businesses in the marketing services and information sector. The Marketing Guild provides marketing advice and support to small and medium sized businesses in the form of newsletters, consultancy, lead generation and member's services. Wired Gov provides an online information service delivering press releases from over 100 government and public sector bodies. Subscribers can customise the service specifying the agency or topic they require. The Directors expect that these two businesses, whilst remaining profitable and cash generative, will not contribute significant growth to the Company in the coming years. Hence, the Company's growth is expected to occur from businesses that operate in the above two divisions. 3. The proposed acquisition MS2M develops compliance software for the financial services industry. The company employs nine people and is based in York. It has a number of products, the most notable of which is its "Virtual Compliance Officer", which assists companies to comply with the Financial Services Authority's ("FSA") regulatory requirements in a number of areas including, Retail Mediation Annual Reporting and Senior Management Arrangements, Systems and Controls. MS2M charges a licence fee and recurring support revenues on a per seat basis. Typically new contracts are three years in length and renewable thereafter. The company has approximately 20,000 seats being used by organisations such as the Royal Bank of Scotland Group, the National Australia Banking Group and other financial institutions. The directors believe that the increasing compliance requirements both in the UK and the European Union will continue to fuel growth. The Acquisition will further strengthen the management team and it fits well with the Company's strategy of building recurring revenues in business critical services. MS2M generated operating profits of £104,000 on a turnover of £ 607,000 in the year ended 31 May 2004 and profits of £299,000 on a turnover of £893,000 in the year ended 31 May 2005. The company now has recurring revenues of approximately £300,000 per annum. 4. Reasons for the placing and use of proceeds The Directors intend to utilise the net proceeds of the Placing, being approximately £1.32 million, as follows: a. £1 million to satisfy in part the initial cash consideration for the proposed acquisition of Management Services 2000 Ltd, which is not backed by cash balances within MS2M in excess of its current requirements; and b. £320,000 for working capital purposes and provision for an element of deferred consideration. 5. terms of the acquisition Under the terms of the Acquisition Agreements, the Company has conditionally agreed to acquire the entire issued share capital of MS2M for an initial consideration of £1.95 million, being £1.5 million plus an amount equal to the cash balance of MS2M in excess of £300,000, which is estimated to be £450,000. The consideration will be satisfied as to £1.45 million in cash and as to the balance by the issue of the equivalent of £500,000 in new Ordinary Shares. It is a term of the Acquisition Agreements that MS2M will have net assets of not less than £200,000 on completion and cash balances of not less than £300,000 on completion. Deferred consideration will be paid on the basis of five times the average operating profit for the two years ending 31 May 2007 and 31 May 2008 less the amount of the initial consideration, subject to the total amount of deferred consideration not exceeding £2.5 million. The deferred consideration will be satisfied by the issue of new Ordinary Shares at the average Closing Price of the Ordinary Shares for the 7 business days prior to the determination of MS2M's profits for the relevant period subject to an agreed minimum price of 2.65 pence. The vendors may give notice to the Company to take up to 50% of any payment due under the deferred consideration in loan notes. Both the initial consideration shares and the deferred consideration shares allotted pursuant to the Acquisition will be subject to restrictions on their disposal. Neither the initial consideration shares nor the deferred consideration shares may be disposed of by the vendors (other than in strictly controlled circumstances) for a period of one year after their respective allotments with any disposal in the following 12 month period required to be effected through the Company's broker. The Acquisition is conditional, inter alia, on the passing of the Resolutions by the Shareholders and Admission. 6. Strategy The Group's strategy is to establish a portfolio of companies which provide business critical services on a recurring revenue basis to SMEs, corporate entities and governmental organisations focussed on legislation, compliance, business risk and data recovery. The Directors believe that this model provides high levels of repeat business, and thus high quality revenues, together with cross selling opportunities within the Group. The Group's existing businesses are performing well, and the Directors believe that they have exciting growth prospects. In addition, the Directors intend to expand the business by seeking further acquisitions so as to build a group with critical mass and strong cashflows. 7. The Placing The Company is proposing to raise £1.5 million, before expenses, through a placing arranged by Corporate Synergy of 25,000,000 new Ordinary Shares at 6 pence per Ordinary Share. Corporate Synergy has conditionally agreed, as agent for the Company, to use its reasonable endeavours to procure subscribers for the Placing Shares. The obligations of Corporate Synergy under the Placing Agreement, and therefore the Placing, are conditional upon inter alia, passing of the Resolutions and Admission taking place by 8 am on Tuesday 17th October 2006 (or such later date, being not later than 8 a.m. on Tuesday 31st October 2006 as the Company and Corporate Synergy shall agree). The Placing Agreement contains provisions entitling Corporate Synergy to terminate the Placing Agreement at any time prior to Admission in certain limited circumstances. The Placing Shares will represent approximately 22.8 per cent. of the Enlarged Share Capital at Admission. On Admission the Company will have a market capitalisation of approximately £6.59 million at the Placing Price. As part of the Placing directors and employees have subscribed, in aggregate, for 518,333 Ordinary Shares. 8. Admission to aim Application will be made to the London Stock Exchange for all the Placing Shares to be admitted to trading on AIM. Conditional upon the passing of the Resolutions, Admission is expected to become effective and trading in the Placing Shares to commence on 17 October 2006. 9 EGM There will be an extraordinary general meeting of the Company to be held at 11.00 a.m. on Monday, 16 October 2006 at 121 The Mount, York, North Yorkshire, Y024 1DU, at which the following Resolutions will be proposed. * to increase the authorised share capital of the Company from £741,177 to £ 1,118,677, by the creation of 75,500,000 Ordinary Shares; * to authorise the Directors generally pursuant to allot relevant securities up to £309,160 in nominal amount; and * to authorise the Directors to allot equity securities for cash outside Shareholders' statutory pre-emption provisions under the Act for the purposes of the Placing. DEFINITIONS "Acquisition" the proposed acquisition of the entire issued share capital of Management Services 2000 Ltd pursuant to the Acquisition Agreements "Acquisition Agreements" the two agreements dated 19 September 2006 firstly between the Company (1) and David Alderson and Julie Alderson (2) and secondly the Company (1) and Christopher Marlow (2) "Act" the Companies Act 1985, as amended by the Companies Act 1989 "Admission" admission of the Placing Shares to trading on AIM and such admission becoming effective "AIM" the London Stock Exchange's market for smaller growing companies "AIM Rules" the AIM Rules for companies as published from time to time by the London Stock Exchange "Access Intelligence" or "the Access Intelligence Plc Company" "Backup and Running" Backup and Running plc, a wholly owned subsidiary of the Company "Closing Price" the closing middle quotation of an Existing Ordinary Share as published in the Daily Official List "Consideration Shares" the 7,598,784 Ordinary Shares to be issued to the vendors upon completion of the Acquisition "Corporate Synergy " Corporate Synergy Plc, nominated adviser and broker to the Company "Directors" or "Board" the directors of the Company "Due North" Due North Limited, a wholly owned subsidiary of the Company "EGM" the extraordinary general meeting of the Company, convened for 11:00 a.m. on Monday 16 October 2006 "Existing Ordinary Shares" the 77,202,215 Ordinary Shares in issue on the date of this document "Group" the Company and its subsidiaries "London Stock Exchange" London Stock Exchange plc "MS2M" Management Services 2000 Limited "Marketing Guild" Marketing Guild Limited, a wholly owned subsidiary of the Company "Ordinary Shares" the ordinary shares of 0.5p each in the capital of the Company "Placing" the conditional placing of the Placing Shares at the Placing Price "Placing Agreement" the conditional agreement dated 19 September 2006 between the Company and Corporate Synergy relating to the Placing "Placing Price" 6 pence per new Ordinary Share "Placing Shares" the 25,000,000 new Ordinary Shares to be issued pursuant to the Placing "Resolutions" the resolutions to be proposed at the EGM, "Ridgeway" Ridgeway Technologies Limited, the former parent undertaking of Willow "Shareholders" holders of Ordinary Shares "SME" small or medium enterprise "The Marketing Guild" The Marketing Guild Limited, a wholly owned subsidiary of the Company "Willow" Willow Starcom Limited, a wholly owned subsidiary of the Company "Wired Gov" Wired Gov Limited, a wholly owned subsidiary of the Company
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