LONDON (ShareCast) - Access Intelligence is one of the few companies you are unlikely to hear complaining about more red tape, as it prepares to expand and improve its software solutions to meet requirements for tighter governance, risk monitoring and rules compliance.

Looking at the bare numbers, the company's results for 2011 were underwhelming. Turnover was barely changed at £7.23m from £7.22m in 2010 while adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) more than halved to £0.72m from £1.53m the year before.

That meant EBITDA as a percentage of total sales fell to 10% - "Not what you would call good," executive Chairman Michael Jackson told Sharecast - from 21% in 2010.

One consolation was the loss before tax, which narrowed to £0.28m from £1.57m in 2010, but even that is slightly misleading as 2010's numbers including a £2.6m write-down of goodwill.

Furthermore, the company was quite frank that profits will be depressed in the short term as it continues to invest heavily in beefing up its software offerings and sales capabilities.

Despite all of this, the shares ended the day a quarter of a penny higher at 3.375p, suggesting the market has bought in to the argument of Jackson, still probably best known as the former chairman of accountancy software behemoth, Sage, that shareholders can look forward to plenty of jam tomorrow.

"For a start, the flat sales disguises the fact that we have had plenty of new client wins," Jackson told Sharecast.

The decline in earnings was largely due to its MS2M (now renamed AITrackRecord) and Cobent (renamed AITalent) units making smaller contributions than in 2010.

The management of Cobent has been overhauled, offices have been rationalised and costs more tightly controlled, with the result that the business has stopped leaking money, and is expected to break even or make a small profit this year.

Jackson conceded that the acquisition of Cobent had not been a great success. "Too many offices, too heavily dependent on key people. Howard [Sears, the founder of Cobent] checked out and he was the glue that held the whole thing together," was Jackson's assessment.

On the other hand, the unravelling of the Cobent acquisition crystallised thinking about what was wrong with Access Intelligence (AI); namely that, as per the general perception in the stock market, it had too many small units operating in silos.

That realisation prompted the company to embark upon a restructuring, centralising many operations, enabling wider access across the group to software developments and marketing opportunities, and generally presenting a more cohesive appearance to the outside world.

"Our old structure meant that we could not benefit from economies of scale. You need to be of a certain size to attract the top talent," Jackson claimed.

Now, the management team feels it has the clout to compete against much bigger competitors in the software world, many of which have been entrenched in Access Intelligence's target markets for ten years or more.

Those companies may have the reputation and incumbency in their favour, but Chief Operating Officer Joanna Arnold reckons that "product innovation has taken us a long way and it can continue to do so", with the company not tied down by the need to support creaking legacy products.

Arnold said that Access Intelligence's approach to the governance, risk and compliance (GRC) issue is different to that of the company's rivals.

"Competitors have taken a very top down approach to GRC, encouraging compliance officers to keep bashing away at staff to remember to adhere to regulations. Our approach is to improve the core operational procedures so that employees use the new tool, and compliance is achieved as a by-product of the process," Arnold said.

So, it is an end to AI's days as a rag-bag collection of semi-autonomous units, and a hopefully bright new future as a less amorphous company riding the wave of software as a service (Saas).

The SaaS model, whereby customers typically take out a three year contract for centralised access to a company's software, does mean that revenue is spaced out over a longer period (e.g. monthly subscription revenues, instead of one-off payments under the "sell the customer an upgraded version every two years" model) but it does give great revenue visibility; recurring revenues represent 66% of total annual revenues at AI.

That visibility, along with management's confidence that its investment in research and development will pay off in the medium term, has encouraged the company to start paying dividends.

After its special dividend payment of 0.1p in August of last year, the company has proposed its maiden final dividend of 0.2p, which will be payable on April 20th.

"Our strategy continues to evolve but ... the cohesiveness of our product offering is growing, the number of customers using more than one of our solutions is growing and the opportunity to combine technologies is accelerating," Jackson said.


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