TIDMACSO
RNS Number : 1065Z
Accesso Technology Group PLC
16 September 2020
16 September 2020
accesso (R) Technology Group plc
("accesso" or the "Group")
INTERIM RESULTS
for the six-month period ended 30 June 2020
accesso Technology Group plc (AIM: ACSO) , the premier
technology solutions provider to leisure, entertainment and
cultural markets, today announces interim results for the six
months ended 30 June 2020 ('1H 2020').
Commenting on the results, Steve Brown, Chief Executive Officer
of accesso , said:
"During the first half of 2020 we have been successful in
managing accesso through the onset of the COVID-19 pandemic and
preparing the business to navigate through further uncertainty. We
have proven resilient and highly adaptable in the wake of major
disruption to our end-markets, acting early and decisively to
reduce cost and evolve our technology to the new environment. While
our financial results reflect the challenges faced across our
industry, we delivered revenue ahead of our own revised
expectations as many customer venues reopened across the summer
while also firmly managing our operating costs. Our team responded
with rapid enhancements to our solutions and deployed technology to
support the mandated capacity limitations and physical distancing
measures necessary for our customers to reopen. While the pandemic
does continue to impact our end-markets, we are now seeing a
significant number of operators reopening their doors at reduced
capacity. With our recently raised contingency funds and credit
facility still fully at our disposal, and with our mission-critical
technology supporting venues as they welcome back their guests, we
are focused on building towards the future with confidence in our
ability to react, adapt and succeed".
Financial Highlights
-- Group revenue of $24.6m (1H 2019: $50.7m) was ahead of our
own revised expectations for the period, driven by successful
customer engagement with our adaptable, mission-critical technology.
o Transactional revenue severely impacted by COVID-19 enforced
venue closures from March 2020, amounting to $12.1m or 49.1%
of total in 1H 2020 (1H 2019: $36.4m, 71.7%)
o Ticketing and Distribution $16.8m (1H 2019: $35.8m); Guest
Experience $7.8m (1H 2019: $14.9m)
-- Net Cash(1) at the end of the period was $30.8m (1H 2019:
-$15.2m), benefiting from the $46.1m raised by the Group in
May 2020 which remains unspent.
-- Cash EBITDA(2) loss was -$10.4m (1H 2019: +$1.0m) reflecting
the COVID-19-related impact on revenue in the period.
-- Adjusted EBITDA(3) loss was -$7.4m (1H 2019: +$11.0m).
Operational Highlights
-- Swift and decisive cost action reduced monthly operating cost
run rate by $2.2m or 36.7% to $3.8m from Q1 2020 to Q2 2020.
-- Reappointment of Steve Brown as Chief Executive, with Fern
MacDonald and Andrew Jacobs appointed as Chief Financial Officer
and Chief Commercial Officer respectively. Refreshed leadership
team now in place with firm focus on operational efficiency
and customer success.
-- Supporting customers as they reopen their venues, with our
technology enabling pre-booking requirements and in-venue
social distancing resulting in better than expected ecommerce
and queuing revenues.
-- Virtual Queuing wins with Walibi Holland, Holiday World &
Splashin' Safari in Indiana and Parc Asterix in France underline
new demand for post-COVID-19 Guest Experience modifications.
Outlook and guidance
-- Recent trading has continued to be slightly ahead of our expectations
as nearly 80% of accesso Passport (R) and more than 60% of
accesso LoQueue (R) supported venues reopened with reduced
capacities. A range of new wins in the ski sector further indicate
support for our technologies in the coming winter period.
-- Assuming market conditions do not deteriorate, we expect revenue
for the full year 2020 to be not less than $48m.
Footnotes:
(1) Net cash is calculated as cash and cash equivalents less
borrowings.
(2) Cash EBITDA is calculated as adjusted EBITDA less
capitalised development costs paid in cash as per the consolidated
cash flow statement.
(3) Adjusted EBITDA is calculated as operating profit before the
deduction of amortisation, impairment of intangible assets,
depreciation, acquisition costs and aborted sale expenses, deferred
and contingent payments, and costs related to share-based
payments.
(4) Adjusted basic earnings per share is calculated after
adjusting operating profit for impairment of intangible assets,
amortisation on acquired intangibles, deferred and contingent
consideration linked to continued employment, acquisition and
aborted sale expenses, finance charges relating to deferred and
contingent liabilities and share-based payments, net of tax at the
effective rate for the period on the taxable adjusted items.
(5) 30 June 2019 statutory loss before tax and basic earnings
per share restated for deferred compensation charge overstatement
of $384k. See 2019 annual financial statements for full details on
page 101.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this
announcement, this inside information is now considered to be in
the public domain
The Company will be hosting a webcast presentation for analysts
at 1pm. Analysts and institutional investors are also able to
request a copy of the presentation and audio webcast conference
details by contacting accesso@fticonsulting.com. A copy of the
presentation made to analysts will be available for download from
the Group's website, shortly after the conclusion of the
meeting.
For further information, please contact:
accesso Technology Group plc +44 (0)118 934 7400
Steve Brown, Chief Executive Officer
Fern MacDonald, Chief Financial Officer
FTI Consulting +44 (0) 203 727 1000
Matt Dixon, Adam Davidson, Chris Birt
Numis Securities Limited +44 (0)20 7260 1000
Simon Willis, Mark Lander, Hugo Rubinstein
About accesso Technology Group
At accesso, we believe technology has the power to redefine the
guest experience. Our patented and award-winning solutions drive
increased revenue for attraction operators while improving the
guest experience. Currently serving over 1,000 clients in 30
countries around the globe, accesso's solutions help our clients
streamline operations, generate increased revenues, improve guest
satisfaction and harness the power of data to educate business and
marketing decisions.
accesso invests heavily in research and development because our
industries demand it, our clients benefit from it and it makes a
positive impact on the guest experience.
Our commitment to improving the guest experience and helping our
clients increase revenue is the core of our business. Our
technology solutions allow venues to increase the volume and range
of on- and off-site spending and to drive increased
transaction-based revenue through cutting-edge ticketing,
point-of-sale, virtual queuing, distribution and experience
management software.
Many of our team members come from backgrounds working within
the attractions and cultural industry. In this way, we are
experienced operators who run a technology company serving
attractions operators, versus a technology company that happens to
serve the market. Our staff understand the day-to-day operations of
managing complex venues and the challenges this creates, and
together we strive to provide our clients and their guests with
technology that empowers them to do more and enjoy more. From our
agile development team to our dedicated client service specialists,
every team member knows that their passion, integrity, commitment,
teamwork and innovation are what drive our success.
accesso is a public company, listed on AIM: a market operated by
the London Stock Exchange. For more information, visit www.accesso
. com. Follow accesso on Twitter, LinkedIn and Facebook.
Chief Executive's Review
Framing the First Half
The first six months of 2020 have been challenging for everyone.
No corner of the global economy has been untouched by the COVID-19
pandemic, and - for the industries we traditionally serve - the
impact has been particularly hard felt. Normally busy parks and
venues closed their doors completely and abruptly, and accesso has
shared the impact of these events. In the face of this crisis, we
have taken steps to stay financially resilient through the
pandemic's toughest days; flexed our technology capabilities to
support our customers as they adapted to new requirements; and
continued to reshape our business while looking towards the future
and the approach that will underpin it.
After the full shutdown across April, May and most of June, many
of the visitor attractions we serve have reopened and operated with
reduced capacity across much of the summer. Theaters, live events
and the cruise industry remain shuttered with no definitive
timeline for reopening. Where a venue has reopened, customer
responses have varied by region with some geographies performing
more strongly than others. In some cases, a venue may have reopened
with positive customer response, only to scale back some weeks
later as restrictions re-emerged. Needless to say, our business has
adjusted to what is now a continuous state of flux.
The past few months have been challenging on many levels for our
staff as well as our customers. From the outset, our team stood
tall and has approached each challenging day with determination and
unprecedented commitment to our customers. For this, I would like
to start off with a big thank you to our entire team. Despite the
difficulty of reduced salaries, furloughs, remote working and other
personal challenges they have faced this crisis with a level of
commitment that is simply remarkable. Their willingness to go to
significant lengths to support our customers and, importantly, each
other has shown our brand in its best light. While I returned to
the business shortly before this crisis emerged, the past few
months have firmly reminded me of the strength that lies in the
heart and soul of this business. On behalf of the Board, we are
grateful for the teamwork they have displayed even though we have
not been able to work truly as a team, together, in person.
Operationally Resilient in the Face of Challenge
In April of this year we updated our investors on how the
initial impact of COVID-19 was being felt across our business. In
that statement, we announced swift and decisive action on our cost
base, as well as the steps we had taken to work with employees,
customers and financial stakeholders to ensure that our business
remains operationally and strategically resilient through the
crisis.
Our first priority was to ensure our own internal resilience.
During the peak of the crisis we had to take tough but necessary
measures to ensure the Group's long-term health. We made reductions
in staffing expenses which accounted for around 73% of accesso's
operating expenses in 2019. We lowered headcount by 59 full-time
positions and 30 independent contractor roles; implemented a 20%
pay reduction via a 4-day work week for most of our staff; and
undertook a 20% reduction in remuneration for the Group's directors
until further notice . Along with reductions in discretionary
spending including travel, marketing and tradeshows, these measures
allowed us to reduce the Group's monthly operating run rate by
$2.2m in Q2 resulting in a monthly run rate of $3.8m during the
period of reduced operations.
In May, our next priority was to strengthen our balance sheet.
We successfully raised $46.1m through a placing and open offer to
give us the flexibility to react to new circumstances, if
necessary, and we further reinforced our position by reaching an
agreement with our lending bank, Lloyds Bank, to waive leverage and
interest cover covenants tests up to and including December 2021 on
our $30m revolving credit facility. To provide further contingency
headroom, we agreed an additional $9.8m facility with Lloyds Bank
under the Coronavirus Large Business Interruption Loan Scheme
programme ("CLBILS"), committed until August 2021.
While this crisis is far from over, our early and aggressive
approach to cost-management and clear focus on operational
priorities has allowed us to maintain balance sheet strength. The
contingency capital raised from the placing as well as the
additional funding arranged with the CLBILS facility is untouched
and remains fully available. As we look ahead to the uncertainty
and timeframe for the recovery, we do so with a focus on preserving
the flexibility afforded by our balance sheet and a clear focus on
managing through this crisis in the most prudent manner possible,
while continuing to maintain and, in fact, strengthen our product
offering.
Market Update
Despite the crisis beginning to take hold in the early part of
the year, we delivered strong performance through February with
revenue 12.9% higher than the comparative period in 2019.
However, as announced in our Trading Update of 27 April 2020,
the introduction of global lockdown measures during the course of
March meant revenue began to decline sharply. Revenue in April was
80% lower than during the corresponding month in 2019. For the
first half in its entirety we delivered revenue of $24.6m (1H 2019:
$50.7m). Despite this revenue impact, we have supported our clients
by maintaining our focus on innovation as we help them to overcome
the challenges of COVID-19.
As large attractions began to plan for eventual reopening,
capacity management became essential and advance booking technology
quickly emerged as a necessity for large theme parks, water parks,
zoos and the like. Our team mobilised and enhanced existing
functionality within our accesso Passport eCommerce platform to
provide an end-to-end reservation solution, at scale. The new
reservation process alongside existing capacity control
capabilities became central to the reopening and operational plans
for many of our customers, including Six Flags, Cedar Fair and
Merlin. From launch of the expanded reservation functionality in
early June through the end of August, more than 12 million guest
bookings have been made utilising the accesso Passport platform. We
are expecting the trend toward online, advance bookings for large
scale attractions to continue as more venues reopen with capacity
limitations and social distancing guidelines in place.
Other sectors, including live entertainment and the ski
industry, are laying out plans for their reopening and our support
of those efforts is central to their plans. Across the theater
sector, we have supported clients in revising seat maps and making
other booking system enhancements to assist with capacity
management and physical distancing in preparation for their
eventual reopening. Similar to the theme park sector, the ski
industry is looking towards a reservation based operational model
and we are working with customers, new and prospective, to meet
this need for the coming season.
Maintaining Strategic Focus
The circumstances of this crisis have forged even stronger
relationships with our customers as we work closely alongside them
to combat new and evolving challenges. In the face of adversity, we
have maintained our focus on our customers and in many cases
reinvigorated long standing relationships. As a proven and trusted
partner, we have found ourselves in the unique position of being
essential to their efforts to reopen and operate successfully. We
have remained steadfast in this responsibility to our customers and
supporting their efforts to reopen in any way possible.
Furthermore, the crisis has not deterred us from our core
strategic efforts set forth at the start of the year. Whilst
navigating the daily operational demands, we have successfully
completed an overall staff reorganisation across the business that
fully aligns teams across our various products, and provided
clarity on roles and responsibilities with an aim towards enhancing
innovation and responsiveness to customer expectations. With a
refreshed senior leadership team including new appointments to the
posts of Chief Financial Officer and Chief Commercial Officer, as
well as new Senior Vice Presidents of Product and People, we remain
squarely focused on our three stated strategic priorities: our
product roadmap, operational efficiency, and the success of our
customer relationships.
Whilst continuing to operate with a clear and aggressive focus
on cost-management, preserving the talent and knowledge offered by
our team has been an essential priority. We have managed staffing
levels and our return to work strategies hand in hand with business
results. Nearly all staff have now returned to work, with
approximately half remaining on 4-day work weeks and 20% salary
reductions. Across the balance of 2020, we expect to continue a
phased approach to returning our team to full 5-day work weeks
based upon meeting the needs of the business, retaining talent and
preparing for the recovery phase. In the face of the personal
financial toll to our staff, they have remained steadfast in
supporting the business while working remotely. Returning each of
them fully to work as soon as possible is a top priority.
Having served as a Non-Executive director of accesso's Board
since 2010, David Gammon has informed the Group of his plans to
step down before the year-end. The Board would like to thank David
for his dedication and passion for our business over the past ten
years, as he helped guide the Company to its position as a
technology provider to the global leisure industry. We plan
immediately to commence a search and will continue to ensure there
is relevant and diverse leadership across our Board.
New Business - Signs of Recovery and Opportunity
During the first half we have been supporting many clients'
social distancing efforts with our virtual queuing technology. In
June, Holiday World in the United States added accesso LoQueue as a
baseline offering for all visitors, and several other existing
customers including Walibi Holland in the Netherlands and Village
Roadshow Theme Parks in Australia have evolved their use of virtual
queuing from a premium offering to a baseline feature of admission.
As we moved beyond H1, Parc Asterix in France signed on as a new
customer and introduced our virtual queuing solution as well.
Visitor and client response to the availability of virtual queuing
in these venues has been extremely positive, providing both an
improved guest experience as well as increased operational
efficiency.
Beyond our core leisure sector, we have also expanded virtual
queuing outreach to other sectors and continue to focus our
business development efforts on wider possibilities in the longer
term. While the appetite for more widespread use of virtual queuing
remains strong with many customers and the industry as a whole,
crowd levels upon reopening have not warranted the need to date,
particularly in the US. However, our traditional premium service
model has performed ahead of our expectations where we are present
in venues that have reopened.
We have also seen new areas of interest emerging alongside these
virtual queuing deployments and certain sectors have accelerated
their activity despite the COVID-19 environment. For example, we
have seen a number of clients, including eight ski resorts and one
zoo, expand their existing agreements for accesso Siriusware(SM) to
include accesso Passport eCommerce. We are deploying our
contactless Food & Beverage solution to an existing ski
industry customer across some 100 restaurants at the 14 resorts
within their portfolio. The increased focus towards online sales,
pre-booking and contactless transactions for the coming season has
been a notable area of interest across the ski sector.
While the live entertainment sector is still essentially dark
across the globe, as venues prepare for their eventual reopening,
many are looking to improve their technology, particularly as it
relates to online booking functionality. Despite the industry
disruption, accesso ShoWare(SM) added five new venues in 1H 2020
and a further seven contracts have been agreed post period end to
date.
Overall, while sales activity across the business is not at its
normal level, the continuing demand we have realised is a testament
to the strength of our technology during even the most challenging
of times.
Continuing With Our Plan
Our focus now is on continuing to support our global
customer-base through its efforts to reopen venues and reconnect to
visitors. We are already a mission-critical technology provider to
many of them, and our role is even more important now. Our range of
solutions will help them make the most of any upswing in demand as
we step towards the rebuild and recovery phase. Given the regional
nature of the operations for many of the customers we serve, we
anticipate the potentially swift return of visitors when the
pandemic begins to subside and/or a COVID-19 vaccine becomes widely
available.
Outlook
2020 has been a year of unprecedented challenge for everyone in
our industry. Despite months of uncertainty, we reached the
half-year with revenue ahead our revised expectations and our
trading through the recent busier summer months has followed a
similar trend. With that peak trading period now behind us and on
the assumption that market conditions do not significantly
deteriorate, we can confirm that we expect revenue for the full
year of 2020 to be not less than $48m. Given the gradual re-scaling
of our operations, we will also see a gradual increase in our
operating cost run-rate to an average of $4.6m per month over the
remainder of 2020.
While our year-to-date performance demonstrates the resilience
of our business and the importance of our technology to our
clients, we are aware we cannot take any current signs of recovery
for granted. The current lack of an available vaccine means market
uncertainty is likely to continue into 2021. While these factors
limit our visibility into the coming year, we are confident that
our strong customer relationships, market-leading technology and
focus on operational efficiency give us a strong foundation on
which to build our recovery.
Financial Review
In the first half of 2020 the Group delivered a resilient
financial performance against the backdrop of COVID-19, with
revenue ahead of our revised range of expectations. The Group's two
operating divisions, Guest Experience and Ticketing both entered
the half with strong revenue growth, before being significantly
impacted by the COVID-19 pandemic. As venues have begun to reopen,
both divisions have started to scale quickly as key enablers of
social distancing and advanced ticketing.
As expected, the Group's transactional revenue stream was
severely impacted by COVID-19. The aggressive cost actions taken
and fund-raising activity have ensured the business remains on a
firm footing. As venues begin to reopen at full scale, the Group
now sees opportunity to benefit from latent consumer demand showing
through in the UK and Europe, alongside the deeper partnership it
has built in recent months with many of the operators it
serves.
Alternative Performance Measures
The Board continues to utilise consistent alternative
performance measures ("APMs") internally and in evaluating and
presenting the results of the business and views these APMs as more
representative of the Group's performance.
The historic strategy of enhancing its technology offerings via
acquisitions, as well as an all employee share option arrangement
necessitate the making of adjustments to statutory metrics to
remove certain items which the Board do not believe are reflective
of the underlying business. These adjustments include acquisition
expenses, amortisation related to acquired intangibles, deferred
and contingent payments related to acquisitions, changes to
earn-out considerations, share-based payments, impairment charges
and exceptional items.
By consistently making these adjustments, the Group provides a
better period to period comparison and is more readily comparable
against a business that does not have the same acquisition history
and equity award policy. APMs include: adjusted EBITDA; Cash
EBITDA; adjusted operating profit; adjusted net cash/(debt) and
adjusted cash from operations.
Cash EBITDA is considered by the Group to be a principal
Alternative Performance Measure. Cash EBITDA is defined as Adjusted
EBITDA less capitalised internal development costs.
Key Financial Metrics
Group revenue for the first half of 2020 was $24.6m (1H 2019:
$50.7m), a reduction of 51.5%. The Group started the first two
months of 2020 with revenues of $14.1m, up 12.9% on 2019 with 18.2%
and 11.5% gains in the Group's Guest Experience and Ticketing
segments respectively.
However, the COVID-19 impact that followed from March 2020
onwards has had a major impact on the Group's transactional revenue
streams. The majority of the Group's customers were either mandated
to close by local governments or voluntarily closed across all the
Group's markets from mid to late March through to May, with partial
and limited capacity reopenings beginning in June depending on the
geography. This was the primary cause for our cash EBITDA to reduce
to -$10.4m for the six-month period ended 30 June 2020 (1H 2019:
+$1.0m).
Venues in the United Kingdom and Other Europe were largely
closed from mid-March until early July depending on the sector.
Some regions and types of attraction remained closed through to
August 2020 and in the case of the UK theatre sector, have yet to
reopen. Australia and South Pacific began partial and limited
capacity reopenings in June 2020 with some pent-up demand resulting
in larger than expected revenues coming through in that month
depending on the region. We have also observed the pent-up demand
effect in UK and Other Europe in certain areas in July and August
2020.
Some of our customers in the USA began reopening in May and June
depending on the local state regulation however these typically
achieved low queuing, eCommerce and transactional revenue due to
the continued high COVID-19 case numbers and the knock-on impact on
consumer confidence. The USA region benefits the most from having
the majority of the Group's professional service, licence fees and
maintenance and support revenues which have been much less impacted
by our customer closures.
Revenue on a segmental and geographical basis was as
follows:
Six months Six months
ended 30 ended 30
June 2020 June 2019
Unaudited Unaudited
$000 $000
----------- -----------
Ticketing and Distribution 16,806 35,835
Guest Experience 7,766 14,877
Total revenue 24,572 50,712
=========== ===========
$000 $000
----------- -----------
United Kingdom 2,330 12,001
Other Europe 484 1,610
Australia/South Pacific 990 1,502
USA and Canada 20,098 33,598
Central and South America 670 2,001
Total revenue 24,572 50,712
=========== ===========
Revenue Quality
The following is an analysis of the Group's revenue visibility.
Transactional revenue is defined as revenue earned as either a
fixed amount per sale of an item, such as a ticket sold to a
customer or as a percent of revenue generated by a venue operator.
Normally this revenue is repeatable where a multi-year agreement
exists and purchasing patterns by venue guests do not significantly
change. Other repeatable revenue is defined as revenue, excluding
transactional revenue, that is expected to be earned through each
year of a customer's agreement, such as maintenance support revenue
without the need for additional sales activity. Non-repeatable
revenue is revenue that occurs one-time (e.g. up-front licence
fees) or is not repeatable based upon the current agreement (e.g.
billable professional services hours) and is unlikely to be
repeatable without additional successful selling execution by
accesso. Other revenue consists of hardware sales and other revenue
that may or may not be repeatable with limited sales activity if
customer behaviour remains consistent.
With the backdrop of COVID-19, the Group's transactional
revenue, which is typically repeatable in nature as purchasing
patterns do not significantly change under normal circumstances,
has been significantly impacted by the COVID-19 pandemic. This
unprecedented global crisis has led to government mandated changes
in consumer behavior and purchasing patterns globally that has led
to repeatable revenue falling significantly in the period to 69.7%
of total revenue (1H 2019: 81.8%).
Six months Six months Year ended
ended 30 ended 31 December
June 2020 30 June 2019
Unaudited 2019
Unaudited
$000 $000 % $000
----------- --------------- ---------------------
Virtual queuing 2,270 8,912 (74.5%) 24,687
Ticketing and eCommerce 9,802 27,458 (64.3%) 60,909
------------------------------- ----------- --------------- ---------------------
Transactional revenue 12,072 36,370 (66.8%) 85,596
Maintenance and
support 3,967 4,511 (12.1%) 8,742
Platform fees 1,079 578 86.8% 1,149
------------------------------- ----------- --------------- ---------------------
Total Repeatable 17,118 41,459 (58.7%) 95,487
------------------------------- ----------- --------------- ---------------------
Licence revenue 1,253 1,777 (29.5%) 3,496
Professional services 5,155 6,116 (15.7%) 14,787
------------------------------- ----------- --------------- ---------------------
Non-repeatable revenue 6,408 7,893 (18.8%) 18,283
------------------------------- ----------- --------------- ---------------------
Hardware 524 1,004 (47.8%) 2,499
Other 522 356 46.6% 913
------------------------------- ----------- --------------- ---------------------
Other revenue 1,046 1,360 (23.1%) 3,412
Total revenue 24,572 50,712 (51.5%) 117,182
=========== =============== =====================
Total Repeatable
as % of total 69.7% 81.8% 81.5%
The reported gross profit margin was 81.8% in 1H 2020, compared
to 74.9% in 1H 2019. This 6.9% increase primarily results from a
change in sales mix compared with 1H 2019. Our lower margin
distribution business is a smaller portion of our revenue for this
period and conversely higher margin revenue streams such as licence
fees, maintenance and support and platform fees are proportionately
greater during 1H 2020, these movements combine to drive a higher
gross profit margin.
Swift and decisive cost action implemented due to the COVID-19
pandemic reduced monthly operating cost run rate by $2.2m or 36.7%
to $3.8m from Q1 of 2020 to Q2 of 2020, which is in line with
estimates provided within our 27 April 2020 business update for 1H
2020. Through management action, underlying administrative
expenditure was reduced by 17.6% to $30.5m (1H 2019: $37.0m). The
above reductions were principally achieved through implementing a
company-wide four-day working week from April 2020, utilisation of
the available government job retention schemes in the USA, UK and
Australia, a reduction in workforce of 59 full time employees and
30 contractors alongside significantly decreased discretionary
spend including travel, marketing and tradeshows.
Six months Six months
ended 30 ended 30 June
June 2020 2019
Unaudited Unaudited
$000 $000
----------- ---------------
Administrative expenses - reported (1) 38,804 42,033
Capitalised development expenditure 3,010 10,040
Deferred equity settled acquisition
consideration (1) (138) (1,076)
Amortisation related to acquired intangibles (1,505) (5,812)
Share based payments (333) (1,080)
Amortisation and depreciation (excluding
acquired intangibles) (7,565) (7,120)
Impairment of intangible assets (1,360) -
Costs related to formal sale process (446) -
Underlying administrative expenditure 30,467 36,985
=========== ===============
1) Under IFRS 3, consideration paid to employees of the acquired
entity, who must remain employees post-acquisition in order to
receive earn out or deferred consideration, is treated as
compensation expense rather than consideration. The 30 June 2019
deferred equity settled acquisition consideration has been restated
by a reduction of $384k which reduced the reported administrative
expenses from $42,418k to $42,034k.
Adjusted Operating Profit
Due to the impact of the COVID-19 pandemic on the operations of
the Group's customers, adjusted operating profit fell to a loss of
$14.9m (1H 2019: +$3.9m). Cash EBITDA, which the Board considers as
its key underlying metric, fell to a loss of $10.4m (1H 2019:
+$1.0m).
The table below sets out a reconciliation between statutory
operating loss, adjusted EBITDA and cash EBITDA:
Six months Six months Year ended
ended 30 ended 30 31 December
June 2020 June 2019 2019
Unaudited Unaudited Audited
$000 $000 $000
----------- ----------- ----------------------
Operating loss (1) (18,706) (4,043) (56,278)
Add: Aborted sale process 446 - 305
Add: Deferred equity settled
acquisition consideration (1) 138 1,076 1,416
Add: Amortisation related to
acquired intangibles 1,505 5,812 11,286
Add: Share based payments 333 1,080 1,845
Add: Impairment of intangible
assets 1,360 - 53,617
----------- ----------- ----------------------
Adjusted operating (loss)/profit (14,924) 3,925 12,191
Add: Amortisation and depreciation
(excluding acquired intangibles) 7,565 7,120 16,014
----------- ----------- ----------------------
Adjusted EBITDA (7,359) 11,045 28,205
Less: Capitalised internal
development costs paid in cash (3,010) (10,040) (21,064)
----------- ----------- ----------------------
Cash EBITDA (10,369) 1,005 7,141
1) Under IFRS 3, consideration paid to employees of the acquired
entity, who must remain employees' post-acquisition in order to
receive earn out or deferred consideration, is treated as
compensation expense rather than consideration. The 30 June 2019
charge has been restated by a reduction of $384k which reduced the
reported operating loss from $4,427k to $4,044k.
The Group reported a statutory operating loss before tax of
$18.7m (1H 2019: loss of $4.0m), adjusted earnings per share in the
first half of 2020 reduced to a loss per share of 37.94 cents (1H
2019: earnings per share of 14.21 cents).
Development Expenditure
At the onset of the COVID-19 pandemic, the Group implemented an
immediate cost management programme to strengthen the Group's
resilience. This prudent action included significantly decreasing
gross development expenditure, totaling $12.8m in the half (1H
2019: $16.2m). Despite this decrease to development expenditure,
2020 has been a period of innovation within accesso, with frontline
and technical teams working at great pace to deliver solutions to
enable business continuity for blue-chip customers throughout the
COVID-19 pandemic. As venues across the globe begin to reopen, the
Group expects development expenditure to scale in Q4 of 2020 to
continue investment into the Group's unified product strategy.
Total development expenditure in 2020 is now expected to be in the
region of $26m (2019: $33.5m) for the full year. In 1H 2020, the
Group capitalised development expenditure of $3.0m (1H 2019:
$10.0m) reflecting a decreased total gross development expenditure,
an increasingly cautious approach to capitalising such investment
and a maturing suite of commercialised products. Consequently, on a
full year basis the proportion of total development expenditure
capitalised is expected to reduce to approximately 19%.
Cash and Net Cash/(Debt)
Net cash at the end of the period was $30.8m (1H 2019: Net debt
of $15.2m), consisting of cash balances of $55.7m and borrowings of
$24.9m. This strong net cash position benefited from the $46.1m net
proceeds from the equity placing and open offer completed by the
Group in June 2020. In the absence of the equity raise our net debt
would have been $15.2m and in line with 1H 2019. The maintenance of
comparable net debt despite the COVID-19 impact on revenue is due
to diligent working capital management, immediate action on
preserving cash in terms of utilisation of job keeper schemes,
deferring payroll taxes where permitted and reducing the underlying
administrative expenses as noted above.
As a consequence of the COVID-19 pandemic impacting revenues,
the first half has seen a net cash outflow from operations in the
period of $11.9m (1H 2019: $2.7m).
As noted above, the Group's capitalised development expenditure
has reduced significantly to $3.0m (1H 2019: $10.0m). The reduction
in gross research and development, combined with a heavily
curtailed capital expenditure investment into property plant and
equipment of $0.3m (H1 2019: $1.4m) has helped to further preserve
the Group's cash balances.
The Group maintains a borrowing facility with Lloyds Bank plc
which was renegotiated in June 2020 together with the successful
completion of the equity placing. The Group gained access to an
additional facility of GBP8m ($9.8m) under the Coronavirus Large
Business Interruption Loan Scheme (the "CLBILS Facility"). The
CLBILS Facility is available to the Group for 15 months until
August 2021 and remains undrawn as at 30 June 2020 and 16 September
2020. The Group's existing borrowing facility of $30m is committed
until March 2022. Prior to the completion of the equity fundraise
the Group drew down $10.1m on its available facility (H1 2019:
$4.8m), resulting in total drawn debt of $24.9m, and total unused
facilities of $14.9m.
As a result of the immediate measures taken by management on
cost and cash flow management and the successful equity fundraise,
the board believes that the Group is in a strong financial position
and ends the period with $55.8m cash in the bank ($56.1m on 11
September 2020).
Taxation
The tax rate used by the Board on the half year to 30 June 2020
represents the actual effective tax rate for the period, this is a
result of the unprecedented challenges presented by COVID-19 in
reliably estimating annual effective rates. The actual effective
tax rate on the statutory loss before tax for the half year is
16.1.% (FY 2019: 12.1%). The FY19 rate was reduced to 12.1% from
the statutory rates primarily due to a $17.4m non-deductible
goodwill impairment. The actual effective rate for the period ended
30 June 2020 is reduced from statutory rates due to the restriction
in recognition of the Group's deferred tax asset on available
losses, after taking into account the availability of loss carry
back provisions pertaining to principle jurisdictions, due to the
uncertainty of short-term profitability.
-S -
Consolidated statement of comprehensive income
for the six-month period ended 30 June 2020
30 June 30 June 31 December
2020 Unaudited 2019 Unaudited 2019
Restated- Audited
note 10
Notes $000 $000 $000
------------------------------------- ------ ---------------- ---------------- -------------
Revenue 24,572 50,712 117,182
Cost of sales (4,474) (12,721) (31,554)
---------------- ---------------- -------------
Gross profit 20,098 37,991 85,628
Administrative expenses (38,804) (42,034) (141,906)
---------------- ---------------- -------------
Operating loss before impairment
of intangible assets (17,346) (4,043) (2,661)
Impairment of intangible assets 8 (1,360) - (53,617)
------------------------------------- ------ ---------------- ---------------- -------------
Operating loss (18,706) (4,043) (56,278)
Finance expense (438) (607) (1,324)
Finance income 666 11 21
---------------- ---------------- -------------
Loss before tax (18,478) (4,639) (57,581)
---------------- ---------------- -------------
Income tax benefit 5 2,980 1,346 6,985
Loss for the period (15,498) (3,293) (50,596)
================ ================ =============
Other comprehensive (loss)/income
Items that will be reclassified
to income statement
Exchange differences on translating
foreign operations (1,034) 30 611
---------------- ---------------- -------------
Total comprehensive loss (16,532) (3,263) (49,985)
================ ================ =============
All loss and comprehensive
loss is attributable to the
owners of the parent
Earnings per share expressed
in cents per share:
Basic 7 (53.17) (12.04) (184.26)
Diluted 7 (53.17) (12.04) (184.26)
All activities of the company are classified as continuing.
Consolidated statement of financial position as at 30 June
2020
31 December
30 June 2020 30 June 2019 2019
Unaudited Unaudited Audited
Restated
(1)
$000 $000 $000
-------------------------------- ------------- ------------- ------------
Assets
Non-current assets
Intangible assets 135,073 195,826 142,456
Property, plant and equipment 3,160 4,210 3,766
Right of use assets 4,666 6,391 5,715
Contract assets 1,843 4,392 3,654
Deferred tax 10,794 8,849 8,647
------------- ------------
155,536 219,668 164,238
------------- ------------- ------------
Current assets
Inventories 1,052 889 1,004
Contract assets 4,661 3,009 5,926
Trade and other receivables 8,616 24,992 23,676
Derivative financial asset 645 - -
Income tax receivable 105 777 50
Cash and cash equivalents 55,786 9,537 16,205
------------- ------------
70,865 39,204 46,861
------------- ------------- ------------
Liabilities
Current liabilities
Trade and other payables 12,813 17,794 31,811
Lease liabilities 1,270 1,251 1,307
Contract liabilities 6,875 6,795 7,299
Corporation tax payable 1,318 3,908 4,005
------------- ------------
22,276 29,748 44,422
------------- ------------- ------------
Net current assets 48,589 9,456 2,439
------------- ------------- ------------
Non-current liabilities
Deferred tax 9,880 16,104 10,778
Contract liabilities 1,672 1,722 1,823
Lease liabilities 254 5,559 30
Other non-current liabilities 4,203 860 4,976
Borrowings 24,937 24,752 15,851
------------- ------------
40,946 48,997 33,458
------------- ------------- ------------
Total liabilities 63,222 78,745 77,880
------------- ------------- ------------
Net assets 163,179 180,127 133,219
============= ============= ============
Shareholders' equity
Called up share capital 595 424 427
Share premium 153,327 107,220 107,403
Own shares held in trust (665) (665) (665)
Retained earnings (3,767) 59,006 11,331
Merger reserve 19,641 19,641 19,641
Translation reserve (5,952) (5,499) (4,918)
------------- ------------- ------------
Total shareholders' equity 163,179 180,127 133,219
============= ============= ============
(1) The 31 December 2018 balance sheet was restated which
resulted in a $343k reduction in retained earnings, see page 103 of
our 2019 audited financial statements for a full reconciliation and
note 10 of these interim statements.
Consolidated statement of cash flows
for the six-month period ended 30 June 2020
30 June 31 December
2020 30 June 2019 Audited
Unaudited 2019 Unaudited
Restated
- note
10
$000 $000 $000
Cash flows from operations
Loss for the period (15,498) (3,293) (50,596)
Adjustments for:
Depreciation (excluding finance leased
assets) 781 811 1,694
Depreciation on finance leased assets 982 631 1,320
Amortisation on acquired intangibles 1,505 5,812 11,286
Amortisation on development costs
and other intangibles 5,802 5,677 13,000
Impairment of intangibles 1,360 - 53,617
Loss on disposal of fixed assets 6 82 114
Share based payments 333 1,080 1,845
Deferred consideration charge (note
10) 138 1,076 1,416
Finance expense 438 607 1,324
Finance income (666) (11) (21)
Foreign exchange loss/(gain) 131 - (90)
Income tax credit (2,980) (1,346) (6,985)
------------ ---------------- --------------
(7,668) 11,126 27,924
(Increase)/decrease in inventories (109) 193 86
Decrease/(increase) in trade and
other receivables 14,836 (4,233) (5,865)
(Decrease)/increase in trade and
other payables (18,470) (9,930) 3,562
Increase/(decrease) in contract assets/contract
labilities 2,244 (1,652) (1,140)
---------------- --------------
Cash (used in)/ generated from operations (9,167) (4,496) 24,567
Tax (paid)/received (2,728) 1,761 1,597
---------------- --------------
Net cash (outflow)/inflow from operating
activities (11,895) (2,735) 26,164
------------ ---------------- --------------
Cash flows from investing activities
Deferred consideration settlement (269) (647) (1,017)
Capitalised internal development
costs (3,010) (10,040) (21,064)
Purchase of property, plant and equipment (285) (1,371) (1,945)
Purchase of other intangible assets - - (4)
Interest received 5 15 21
------------ ---------------- --------------
Net cash used in investing activities (3,559) (12,043) (24,009)
------------ ---------------- --------------
Cash flows from financing activities
Share issue 48,215 120 306
Share issue costs (2,123) - -
Interest paid (170) (373) (830)
Payments to finance lease creditors (820) (686) (1,451)
Proceeds from borrowings 10,115 4,802 4,802
Repayment of borrowings - (275) (9,728)
Net cash generated from financing
activities 55,217 3,588 (6,901)
------------ ---------------- --------------
Increase/(decrease) in cash and cash
equivalents in the period 39,763 (11,190) (4,746)
Cash and cash equivalents at beginning
of year 16,205 20,704 20,704
Exchange (loss)/gain on cash and
cash equivalents (182) 23 247
------------ ---------------- --------------
Cash and cash equivalents at end
of period 55,786 9,537 16,205
============ ================ ==============
Consolidated statement of changes in equity
for the six-month period ended 30 June 2020
Share Share Retained Merger Own Translation Total
capital premium earnings reserve shares reserve
held
in trust
$000 $000 $000 $000 $000 $000 $000
-------------------------- ---------- ---------- ---------- --------- ----------- ------------ ---------
Balance at
31 December
2019 427 107,403 11,331 19,641 (665) (4,918) 133,219
Comprehensive
loss for the
period
Loss for period - - (15,498) - - - (15,498)
Other comprehensive
loss - - - - - (1,034) (1,034)
Total comprehensive
loss for the
year - - (15,498) - - (1,034) (16,532)
Contributions
by and distributions
by owners
Issue of share
capital 168 48,047 - - - - 48,215
Transaction
fees - (2,123) - - - - (2,123)
Share based
payments - - 333 - - - 333
Equity-settled
deferred consideration - - 138 - - - 138
Share option
tax charge
- deferred - - (71) - - - (71)
Total contributions
by and distributions
by owners 168 45,924 400 - - - 46,492
---------- ---------- ---------- --------- ----------- ------------ ---------
Balance at
30 June 2020 595 153,327 (3,767) 19,641 (665) (5,952) 163,179
========== ========== ========== ========= =========== ============ =========
Balance at
31 December
2018 - (1) 421 107,103 60,143 19,641 (665) (5,529) 181,114
Comprehensive
Income for
the year
Loss for period - - (3,293) - - - (3,293)
Other comprehensive
income - - - - - 30 30
---------- ---------- ---------- --------- ----------- ------------ ---------
Total comprehensive
loss for the
year - - (3,293) - - 30 (3,263)
---------- ---------- ---------- --------- ----------- ------------ ---------
Contributions
by and distributions
by owners
Issue of share
capital 3 117 - - - - 120
Share based
payments - - 1,080 - - - 1,080
Equity-settled
deferred consideration - - 1,076 - - - 1,076
---------- ---------- ---------- --------- ----------- ------------ ---------
Total contributions
by and distributions
by owners 3 117 2,156 - - - 2,276
---------- ---------- ---------- --------- ----------- ------------ ---------
Balance at
30 June 2019 424 107,220 59,006 19,641 (665) (5,499) 180,127
========== ========== ========== ========= =========== ============ =========
(1) The 31 December 2018 balance sheet was restated which resulted
in a $343k reduction in retained earnings, see page 103 of
our 2019 audited financial statements for a full reconciliation
and note 10 of these interim statements.
Notes to the Interim Statements
1. Basis of preparation
accesso Technology Group plc (the "Group") is a company
domiciled in England. The basis of preparation of this financial
information is consistent with the basis that will be adopted for
the full year accounts which will be prepared in accordance with
IFRS as adopted by the European Union.
While the financial figures included in this half-yearly report
have been computed in accordance with IFRS applicable to interim
periods, this half-yearly report does not contain sufficient
information to constitute an interim financial report as that term
is defined in IAS 34.
Changes to significant accounting policies are described in Note
3.
This interim financial information has neither been audited nor
reviewed pursuant to guidance issued by the FRC and the financial
information contained in this report does not constitute statutory
accounts within the meaning of Section 434 of the Companies Act
2006. The period to 31 December 2019 has been extracted from the
audited financial statements for that period.
1.1 Going concern
The directors, having reassessed the principal risks and
uncertainties, consider it appropriate to adopt the going concern
basis of accounting in the preparation of the Interim Financial
Statements.
In reaching this conclusion, the directors noted the successful
equity placing and open offer which generated net proceeds of
$46.1m (net of $2.1m costs) in June 2020, all of which remains
within the Group as at 16 September 2020. The directors have been
running two forecast scenarios following the COVID-19 impact on our
customer base since May 2020, being a conservative base case and a
severe but plausible downside case through to 31 December 2021.
Actual results to date have been trading ahead of both the
conservative base case scenario and the severe but plausible
downside case. In both scenarios modelled the Group maintains
sufficient funding headroom and is in compliance with its debt
covenants throughout the period of assessment.
Consequently, the directors are satisfied that the Group's
forecasts take into account reasonably possible changes in trading
performance, including no anticipated breach of covenants and the
ability to satisfy its liabilities as they fall due for a period of
at least 15 months. Therefore there are no material uncertainties
over going concern and the going concern basis of preparation
continues to be appropriate.
2. Accounting policies
The condensed consolidated interim financial information has
been prepared using accounting policies consistent with those set
out on pages 57 to 105 in the audited financial statements for the
year ended 31 December 2019 with exception to the additional policy
identified in note 3. These accounting policies have been applied
consistently to all periods presented in this financial
information.
The policy for recognising and measuring income taxes in the
interim period is described in Note 5.
3. New accounting policy
Derivative financial instruments - forward foreign currency
contracts
Forward foreign exchange currency contracts that are either
in-the-money derivatives or out-of-money derivatives depending on
the reporting period end exchange rate relative to the forward
point exchange rate entered into by the Group on inception of the
agreement. These financial instruments are carried in the statement
of financial position at fair value with changes in fair value
recognised in the consolidated statement of comprehensive income in
the finance income or expense line. For the period ended 30 June
2020, a derivative financial asset of $644,597 is included within
the Statement of Financial position and a corresponding gain
included within Finance Income in the Statement of Comprehensive
Income.
4. Business segments and revenue analysis
Segmental analysis
The Group's operating segments have been determined with
reference to the financial information presented to the Board of
directors and encompasses Ticketing and Guest Experience. The Board
of the Group is considered the Chief Operating Decision Maker
("CODM") as defined within IFRS 8, as it sets the strategic goals
for the Group and monitors its operational performance against this
strategy.
The Group's Ticketing operating segment comprises the following
solutions:
-- accesso Passport ticketing suite using our hosted proprietary
technology offering to maximise up selling, cross selling
and selling greater volumes.
-- accesso Siriusware software solutions providing modules
in ticketing & admissions, memberships, reservations, resource
scheduling, retail, food service, gift cards, kiosks and
eCommerce.
-- The accesso ShoWare ticketing solution for box office, online,
kiosk, mobile, call centre and social media sales.
-- Ingresso operates a consolidated distribution platform which
connects venues and distributors, opening up a larger global
channel for clients to sell their event, theatre and attraction
tickets.
The Group's virtual queuing solution (accesso LoQueue) and
experience management platform (The Experience Engine(TM) ("TE2"))
represent two distinct operating segments. They share similar
economic characteristics, customers and markets; the products are
heavily bespoke, technology and software intensive in their
delivery and are directly targeted at improving a guest's
experience of an attraction or entertainment venue, whilst
providing cross-selling opportunities and increased revenues to the
venues. Management therefore conclude that they meet the
aggregation criteria.
The Group's Guest Experience operating segment comprises the
following aggregated segments:
-- accesso LoQueue providing leading edge virtual queuing solutions
to take customers out of line, improve guest experience and
increase revenue for theme parks.
-- TE2 experience management platform which delivers personalised
real time immersive customer experiences at the right time
elevating the guest's experience and loyalty to the brand.
The Group's assets and liabilities are reviewed on a group basis
and therefore segmental information is not provided for the
statements of financial position of the segments.
The CODM monitors the results of the operating segments prior to
charges for interest, depreciation, tax, amortisation and
exceptional items. The Group has a significant amount of central
unallocated costs which are not segment specific. These costs have
therefore been excluded from segment profitability and presented as
a separate line below segment profit.
The following is an analysis of the Group's revenue and results
from the continuing operations by reportable segment which
represents revenue generated from external customers.
Six months Six months Year ended
ended 30 June ended 30 31 December
2020 June 2019 2019
Unaudited Unaudited Audited
$000 $000 $000
Ticketing 16,806 35,835 79,334
Guest Experience 7,766 14,877 37,848
Total revenue 24,572 50,712 117,182
================ ============ =============
Ticketing Guest Central
Experience unallocated Group
costs
Period ended 30 June 2020 - Unaudited $000 $000 $000 $000
---------- ------------ ------------- ---------
Adjusted EBITDA (1) 2,936 (1,855) (8,440) (7,359)
---------- ------------ ------------- ---------
Depreciation and amortisation
(excluding acquired intangibles) (7,565)
Aborted sale process costs (446)
Deferred consideration related
to employment expense (138)
Amortisation related to acquired
intangibles (1,505)
Impairment of intangible assets
(note 8) (1,360)
Share-based payments (333)
Finance income 666
Finance expense (438)
Loss before tax (18,478)
=========
Ticketing Guest Central
Experience unallocated Group
costs
Period ended 30 June 2019 - Unaudited $000 $000 $000 $000
---------- ------------ ------------- --------
Adjusted EBITDA (1) 14,729 5,570 (9,254) 11,045
---------- ------------ ------------- --------
Depreciation and amortisation
(excluding acquired intangibles) (7,120)
Deferred consideration related
to employment expense (Note 10) (1,076)
Amortisation related to acquired
intangibles (5,812)
Share-based payments (1,080)
Finance income 11
Finance expense (607)
Loss before tax (4,639)
========
Ticketing Guest Central
Experience unallocated Group
costs
Year ended 31 December 2019
- Audited $000 $000 $000 $000
---------- ------------ ------------- ---------
Adjusted EBITDA (1) 34,056 16,989 (22,840) 28,205
---------- ------------ ------------- ---------
Depreciation and amortisation
(excluding acquired intangibles) (16,014)
Aborted sale process costs (305)
Deferred consideration related
to employment expense (1,416)
Amortisation related to acquired
intangibles (11,286)
Impairment of intangible assets (53,617)
Share-based payments (1,845)
Finance income 21
Finance expense (1,324)
Loss before tax (57,581)
=========
(1) Adjusted EBITDA: operating profit before the deduction of
amortisation, depreciation, acquisition costs, deferred and
contingent payments, and costs related to share-based payments.
Revenue analysis
The following is an analysis of the Group's revenue visibility.
Transactional revenue is defined as revenue earned as either a
fixed amount per sale of an item, such as a ticket sold by a
customer or as a percent of revenue generated by a venue operator.
Normally this revenue is repeatable where a multi-year agreement
exists and purchasing patterns by venue guests do not significantly
change. Other repeatable revenue is defined as revenue, excluding
transactional revenue, that is expected to be earned through each
year of a customer's agreement, such as maintenance support revenue
without the need for additional sales activity. Non-repeatable
revenue is revenue that occurs one-time (e.g. up-front license
fees) or is not repeatable based upon the current agreement (e.g.
billable professional services hours) and is unlikely to be
repeatable without additional successful selling execution by
accesso. Other revenue consists of hardware sales and other revenue
that may or may not be repeatable with limited sales activity if
customer behaviour remains consistent.
Six months Six months Year ended
ended 30 June ended 30 31 December
2020 June 2019 2019
Unaudited Unaudited Audited
$000 $000 $000
Transactional revenue 12,072 36,370 85,596
Other repeatable revenue 5,046 5,089 9,891
Non-repeatable revenue 6,408 7,893 18,283
Other revenue 1,046 1,360 3,412
Total revenue 24,572 50,712 117,182
================ ============ =============
5. Taxation
The tax expense for the period ended 30 June 2020 has been based
on the actual effective tax rate due to the unprecedented
challenges caused by COVID-19 in the ability to estimate the full
year effective tax rate reliably. For 1H 2019 it was calculated on
the expected annual effective rate. The adjusted earnings per share
(note 7) for 1H 2020 has been presented using an estimated adjusted
rate for the period, which has been adjusted to remove the effect
of deferred and contingent consideration linked to employment in
relation to the acquisitions of TE2 and the aborted sale expenses.
For tax purposes, both aborted sale expenses and deferred and
contingent consideration are not deductible for tax purposes, all
other adjusted items to arrive at adjusted (loss)/profit before tax
have a related tax credit or expense.
6. Reconciliation of alternative performance measures
Management have presented the alternative performance measures
below because it monitors performance at a consolidated level and
believes these measures are relevant to an understanding of the
Group's underlying financial performance. The definitions of the
measures are the same as in the last annual financial
statements.
The measures are not a defined performance measure under IFRS.
The Group's definition of each measure may not be comparable with
similarly titled performance measures and disclosures by other
entities.
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Restated
- note
10
Adjusted operating profit, adjusted EBITDA
and Cash EBITDA $000 $000 $000
----------- ----------- -------------
Operating loss (18,706) (4,043) (56,278)
Add: Aborted sale expenses 446 - 305
Add: Deferred acquisition consideration
(1) 138 1,076 1,416
Add: Amortisation related to acquired
intangibles 1,505 5,812 11,286
Add: impairment of intangibles 1,360 - 1,845
Add: Share based payments 333 1,080 53,617
----------- ----------- -------------
Adjusted operating (loss)/profit (14,924) 3,925 12,191
Add: Amortisation and depreciation (excluding
acquired intangibles) 7,565 7,120 16,014
----------- ----------- -------------
Adjusted EBITDA (7,359) 11,045 28,205
----------- ----------- -------------
Capitalised internal development costs (3,010) (10,040) (21,064)
----------- ----------- -------------
Cash EBITDA (10,369) 1,005 7,141
=========== =========== =============
(1) Under IFRS 3, consideration paid to employees of the
acquired entity, who must remain employees post-acquisition to
receive earn out or deferred consideration, is treated as
compensation expense rather than consideration, see details of 30
June 2019 restatement in note 10.
7. Earnings per share ("EPS")
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the period.
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary shareholders by the weighted average of
ordinary shares outstanding during the period adjusted for the
effects of dilutive instruments.
Adjusted basic earnings per share is calculated by dividing the
profit attributable to ordinary shareholders adjusted for costs
related to acquisition expenses, the amortisation on acquired
intangibles, share based compensation, deferred and contingent
payments arising from acquisitions, and amortisation of loan
refinancing charges, net of tax effects, by the weighted average
number of shares used in basic EPS. The denominator for adjusted
diluted earnings per share is the weighted average number of shares
used in diluted EPS.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Restated
- note
10
$000 $000 $000
------------------------------------------------------- ------------- -------------------- ------------
Loss attributable to ordinary shareholders (15,498) (3,293) (50,596)
Basic EPS
Denominator
Weighted average number of shares used
in basic EPS 29,150 27,358 27,459
------------- -------------------- ------------
Basic loss per share - cents (53.17) (12.04) (184.26)
============= ==================== ============
Diluted EPS
Denominator
Weighted average number of shares used
in basic EPS 29,150 27,358 27,459
Deferred share consideration on business
combinations 17 280 17
Effect of dilutive securities
Options 869 690 406
-------------------- ------------
Weighted average number of shares used
in diluted EPS 30,036 28,328 27,882
Diluted loss per share - cents (53.17) (12.04) (184.26)
============= ==================== ============
The Group has made a loss in the periods presented and therefore
the options and equity settled deferred consideration are anti-dilutive.
As a result, basic and diluted earnings per share are presented
on the same basis for all periods presented.
Adjusted EPS
Loss attributable to ordinary shareholders (15,498) (3,293) (50,596)
Adjustments to loss for the period:
Aborted sale expenses 446 - 305
Amortisation relating to acquired intangibles 1,505 5,811 11,286
Impairment of goodwill - - 17,403
Impairment of intangible assets 1,360 - 36,214
Deferred and contingent consideration
linked to employment 138 1,076 1,416
Shared based payments 333 1,080 1,845
Amortisation of capitalised finance
costs - 214 -
------------- -------------------- ------------
Adjusted (loss)/ profit before tax (11,716) 4,888 17,873
Net tax related to above adjustments:
(1H 2020: 20.5%; 1H 2019: 20.47%; FY
2019: 19.41%) 656 (1,000) (9,420)
------------- -------------------- ------------
Adjusted (loss)/ profit attributable
to ordinary shareholders (11,060) 3,888 8,453
Adjusted basic EPS
Denominator
Weighted average number of shares used
in basic EPS 29,150 27,358 27,459
Adjusted earnings per share - cents (37.94) 14.21 30.78
============= ==================== ============
Adjusted diluted EPS
Denominator
Weighted average number of shares used
in diluted EPS 30,036 28,358 27,882
Adjusted earnings per share - cents (37.94) 13.71 30.32
============= ==================== ============
The Group has made an adjusted loss in the period ended 30 June
2020 and therefore the options and equity settled deferred
consideration are anti-dilutive. As a result, adjusted basic and
adjusted diluted earnings per share are the same for that
period.
8. Impairment of Ingresso Group Limited intangible assets
At 30 June 2020 it was identified that the remaining intangible
assets of Ingresso Group Limited had indicators of impairment due
to the impact of COVID-19 and the slower anticipated recovery
within the UK theatre sector. In addition, this cash generating
unit was written down to its recoverable value at 31 December 2019
as explained in note 16 of the 2019 annual financial statements and
therefore no headroom existed in the impairment test. Consequently,
the recoverable amount of Ingresso Group Limited allocated
intangible assets was tested for impairment using a value in use
method over a period that reflected the useful life of the
essential assets, being the acquired internally developed
intellectual property and development costs of five years. The
outcome of this test was a reduction in the carrying value of the
Ingresso allocated assets by $1.4m to nil, which represented all
the residual allocated intangible assets of Ingresso Group
Limited.
9. Dividend
No dividend has been proposed or recommended during the period.
The Board maintains the view that the payment of a dividend is
unlikely in the medium term with cash better invested on
growth-focused investment opportunities.
10. Restatement of deferred compensation
As set out in the Group's 2019 annual accounts on page 101,
deferred compensation was being incorrectly recognised on 454,547
deferred shares that were issued to certain key employees of Blazer
and Flip Flops Inc DBA, TE2 following the acquisition in 2017,
contingent upon their continued employment. The charge in respect
of these awards was recognised on a straight-line basis from the
date of acquisition in July 2017 and did not take account of the
3-tiered stages of vesting applied to the awards.
Consequently, the consolidated deferred compensation charge of
$1,460K was overstated by $384k in the six months to June 2019
within administrative expenses. A corresponding debit was recorded
to retained earnings at 30 June 2019. The overall impact on
consolidated net assets is nil at 30 June 2019.
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END
IR FIFIIAVIRLII
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September 16, 2020 02:00 ET (06:00 GMT)
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