In the Hot Seat by Marc Barber

Compliance software specialist Access Intelligence is growing with the assistance of acquisitions. Chief executive Brendan Austin believes that for this strategy to work, you have to make sure the personnel joining the business have the right levels of commitment.

‘We look for companies with quality management because we tend to manage with a light touch. And therefore we like management [of acquired businesses] to own a big percentage of the group as an incentive,’ he explains.

Austin took up the hot seat at Access Intelligence after spells at Xerox and Prontaprint, where he was part of the team that sold the business to an Irish printing group for £23 million.

Money upfront
He has learnt from experience that the best way to buy a company is with money upfront, after which he puts in place deferred considerations linked to performance targets. Since listing on AIM through a reverse takeover of cash shell Readymarket in December 2003, Access has made three acquisitions in the areas of data back-up and recovery and compliance software.

Access recently bought Management Services 2000 (MS2) in October for £1.95 million. This is a business helping companies comply with legislation like Sarbanes-Oxley, Basel II and MiFID – the Markets in Financial Instruments Directive that comes into effect on 1 November 2007 to replace the existing Investment Services Directive (ISD).
Another key division is DueNorth, which supplies electronic procurement and sourcing systems – primarily to the public sector – and failed to meet revenue targets last year. The Government has launched an initiative for the public sector to save £20 billion a year by embracing technology and moving away from paper-based systems.

It should come as no surprise to hear that this initiative is moving slowly. ‘Of the business that was available [for DueNorth] last year, there was one significant available contract in the local government sector and that was the South East Centre of Excellence, which represents 74 councils,’ explains Austin, ‘and we won the contract’.

Profits surge
Recent figures for the year to November from Access revealed an 89 per cent surge in sales to £3.7 million, with more than a third of the growth achieved organically.

The group, which has 15 staff developing products in-house, has also just signed a 12-month contract with financial software solution supplier CedarOpenAccounts. ‘They are taking our products into the health sector,’ says Austin.

Through DueNorth, Access has 42 local authority clients. ‘We have 90 per cent of the police authorities and nearly all of the fire authorities,’ beams Austin. ‘All in all, we have ten per cent of the local authorities market. Another ten per cent has gone elsewhere – that means there is 80 per cent for us to go for.’

This venture is a business with big ambitions and a bountiful market opportunity – yet the share price is languishing at 7.00p, giving a lowly market cap of £7.69 million.
‘I am slightly bewildered as to why [the price] isn’t higher,’ says Austin, ‘and when I look at some other companies in my space who are not delivering anything like what we are delivering, it’s frustrating.’

Austin thinks that Access, which has no debt and £1 million of net cash on its books, has been guilty of hiding its light under a bushel. ‘I think we need to be more vocal about promoting what we do,’ he says.