In a world where Nvidia is the most valuable AI company globally, a plethora of smaller AI companies are starting to gather steam with early-stage investors — keep an eye out for developments in the coming quarter — but one to watch right now has to be Adsure Services.
Adsure is the parent holding company for TIAA Ltd, a specialist in providing support to organisations struggling with the world of strategic risk, The company offers a portfolio of advisory and assurance services tailored to align with key economic risks impacting the business world. This covers internal audit, anti-crime, security management, IT audit, cyber assurance and advisory services.
The company began life in 1995 as an inhouse internal audit function for a consortium of regulated social housing providers — but by 2002 had become an independent private owned company backed by a small number of private investors. A decade later, TIAA expanded into healthcare by acquiring Parkhill and had also grown into the not-for-profit market by acquiring the South Coast Internal Audit Agency.
Between 2014 and 2019, TIAA then made a number of smaller acquisitions, before launching its IPO on AQUIS.
At a glance, Adsure:
- listed on the AQUIS Exchange in 2023
- generates recurring revenue from long-term contracts with government funded organisations with clear revenue projection going 2-5 years into the future
- has a history of paying dividends which has continued after the AQUIS IPO
- works with organisations including the NHS, emergency services and housing associations
- has abundant organic growth opportunities and has identified new markets to enter
- has a 25-year track record of growth prior to IPO
- received an Innovate UK grant to develop AI Large Language Model (LLM)
Management
The team is led by CEO Kevin Limn, who has over 17 years of experience in internal audit, risk management and governance in a variety of sectors. He is responsible for the strategic configuration of TIAA’s Risk & Assurance and Risk & Advisory service, is FCCA qualified and has been a member of the ICAEW since 2010.
CFO is Victoria Davies, an FCCA qualified accountant who has worked at TIAA for over 20 years. Victoria heads TIAA’s Corporate Services Teams, ensuring that TIAA continues to provide pioneering and cutting-edge services to its customers.
Industry segments
TIAA now provides internal audit services covering two operational divisions: risk & assurance (internal audit, compliance, grant funding audits and scrutiny services) which generates 70% of total revenue, alongside risk & advisory (fraud, advisory, digital assurance, and security management), which together raise the remaining 30%.
It operates within four key industry categories — broken down by revenue generation:
- Healthcare including trusts, integrated care boards and private providers (40.2%)
- Housing, including social homes, supporting housing, and housing associations (19.75%)
- Education, including universities, colleges, MATs and schools (23.95%)
- Government, including all levels such as central government, local authorities and emergency services (16.28%)
It’s worth highlighting two key factors at this juncture. First, public sector contracts are difficult to get — but once you wedge a foot in the door, they tend to both get renewed and snowball. Second, the company enjoys diversified revenue streams that should protect it as the new government’s spending priorities shift.
For perspective, TIAA recently received an Innovate UK grant to assist in the development of a Generative AI Large Language Model — using open source artificial intelligence technology, Adsure Services is designing a proprietary AI tool to help government-funded organisations improve their efficiencies and reduce costs.
The focus for now is on the healthcare sector, though it will be expanded to the rest of the portfolio in time. Development is well underway and regular updates are expected.
Financially, Adsure has been delivering continued revenue, profit before tax and EBITDA growth in 2024, and entered the new financial year with a strong order book and in advanced discussions with new and existing clients to increase revenues further. The company paid a maiden interim dividend in April — and another is due by the end of the year.
Inaugural full-year results were released on 29 July, covering the financial year to 31 March 2024.
Adsure generated total revenue of £9.3 million, up from £8.9 million in FY23, driving profit before tax up some 72% to £471,000. As the encumbered asset charge has now been removed, cash balances remain strong, with £1,067,000 at hand as of the end of March.
Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) rose by 33% year-over-year to £876,000, with an EBITDA margin of 9.4%, up from 7.31% a year prior.
The company is now at that explosive growth stage — where current contracts cover all costs with profits left over — and scaling up offers significant margin improvements as new contracts constitute more profit.
CFO Vicky Davies enthused ‘I’m delighted to report another year of growth for Adsure Services and TIAA Ltd. Revenue for 2024 grew 3.4% to £9.3m and profit before taxation increased 72% to £471k. Demonstrating action in cost control, our EBITDA margin improved to 9.4%. We have started the year strongly and will maintain our prudent approach to managing costs.’
Operationally, the company successfully delivered its pre-set objectives set out in the corporate plan which runs to 2028. It restructured the corporate services functions which has improved efficiency in the back office, implemented a sector led approach to business development, and expanded its Advisory Practice with significant awareness raised of the brand.
The Innovate UK grant to develop the Artificial Intelligence capabilities will see Adsure further help current and prospective clients with improved service delivery — via maximising the use of big data.
The CEO notes that ‘As part of our drive to improve efficiencies across the business, we have deployed an Innovate UK grant to develop proprietary Generative AI Large Language Model (LLM) technology specifically designed to enhance outcomes for our customers across government-funded organisations, including housing associations, healthcare services, emergency services, local governments and education institutions.’
Adsure also outsourced ICT functions, removing the potential single point of failure and significantly enhancing its technological capabilities — while principal trading entity TIAA became a certified B-Corporation. This demonstrates both the inherent social value within the business model and that Adsure meet the highest levels of social and environmental performance.
To be eligible for this status, a company must not only demonstrate a very high social and environmental performance but must change the corporate governance structure to be accountable to all stakeholders, not just shareholders, in addition to exhibiting transparency by allowing information about their performance measured against B -Corporation’s standards to be publicly available.
CEO Kevin Limn notes that:
‘We saw growth across all of our four key industry groups driven by strong customer relationships and a growing range of services, enabling us to increasingly meet our client’s complex internal audit and business assurance demands. Our growth strategy is underpinned by three defined objectives; to achieve organic growth, enter new markets, and enhance our technological capabilities. Our outlook is promising, and we have excellent visibility over our revenue in the years to come due to the long-term nature of our contracts, which deliver us recurring revenues. We look forward to expanding our relationships with existing customers by providing them with additional services, while welcoming new customers. We are identifying new markets and expect to execute plans to enter these markets in the upcoming period.’
The CEO also had comments on the wider dividend strategy:
‘TIAA Ltd has a history of paying dividends, and Adsure Services was delighted to recognise our investors with the payment of our maiden 0.49p per share dividend as an AQUIS-listed company in April, and we will continue to recognise long-term shareholders through the proposed increased final dividend of 0.99p per share to be paid later this year, subject to approval at our AGM on 9 October 2024.’
The bottom line
Adsure Services is capitalised and growing. It boasts multiple public sector contracts across a wide sphere of interests, and as new contracts are won, should start to see both margins and profits continue to rise.
And the government is so positive, it’s handed out grant money to see the private-public partnerships develop further.