TIDMACSO
RNS Number : 1103T
Accesso Technology Group PLC
23 March 2021
23 March 2021
accesso (R) Technology Group plc
("accesso" or the "Group")
PRELIMINARY RESULTS FOR THE YEARED 31 DECEMBER 2020
Results ahead of revised expectations, stronger foundation for
future growth
accesso Technology Group plc (AIM: ACSO), the premier technology
solutions provider to leisure, entertainment and cultural markets,
today announces preliminary results for the year ended 31 December
2020 ('2020').
Commenting on the results, Steve Brown, Chief Executive Officer
of accesso, said:
"During 2020 we proved ourselves resilient in the face of a
near-total shutdown of our industry as global travel and leisure
was severely impacted by the COVID-19 pandemic. I am proud of how
our team responded, and how we worked through the personal,
professional, and financial impacts together.
With so many of our customers shuttered, we took the opportunity
to refocus and reshape our business. We have removed duplication,
refined processes, reduced costs, aligned our teams for greater
efficiency, improved customer support, and delivered new
innovation. We now have a growth-ready foundation on which to
address substantial pent-up demand as the pandemic recedes.
During 2020 we delivered strong performance where and when our
customers were able to open. This gives us confidence that our
underlying opportunity is intact or even enhanced. In the last
year, technology has become an even more critical element of the
guest experience as both venues and customers increased their need
and reliance on digital services to drive efficiency and improved
experiences.
While the pandemic is not yet behind us, with vaccination
programmes underway in our key geographies, we feel confident of a
progression to more normal trading conditions in 2021. With the
strength of our technology offering, solid relationships, and an
amplified focus on technology by venue operators, we are well-set
to re-embark on our growth journey."
Headline Financial Results
-- Group revenue was $56.1m (2019: $117.2m), a resilient performance
ahead of expectations set out at the onset of the pandemic
o Repeatable revenues(1) fell 56.8% to $41.3m due to the impact
of COVID-19 closures, representing 73.6% of total revenue.
o Non-repeatable revenue(1) reduced by 32.9% to $12.3m (2019:
$18.3m), with lower impact due to licence fees and professional
service revenues, particularly relating to our work in the
cruise segment, continuing to be delivered throughout the
year.
-- Cash EBITDA (2) , now the Group's principal operating metric,
decreased to a loss of $11.5m (2019: +$7.1m). The reduction of
$18.6m against a revenue decline of $61.1m is a testament to
the swift and decisive actions of management to realign the Group's
cost base in response to the pandemic. Statutory cash used in
operations was an outflow of $11.9m (2019: inflow of $24.6m).
-- Net cash at December 31, 2020 was $29.7m(4) (2019: $0.4m). This
reflects a $46.1m (net of costs) placing in June 2020 the proceeds
of which remained at the Company's disposal due to strong cash
management.
-- New debt facility committed by the Group on 19 March 2021 with
Investec Bank PLC. All year-end bank loan borrowings with Lloyds
Bank PLC have been settled and the Group now has access to an
unutilised GBP18m, revolving facility with a term of 3 years
to March 2024; draw down is subject to securing charges over
our US subsidiary entities.
-- Adjusted basic EPS (3) was a loss of 60.64 cents per share (2019:
+30.78 cents per share), a basic loss per share of (84.78) cents
per share (2019: Loss of 184.26 cents per share))
-- Statutory loss before tax was $32.9m (2019: loss $57.6m) largely
reflecting a $61.1m revenue reduction net of cost saving exercises
deployed by management.
Operational & Strategic highlights
-- Leadership change: Steve Brown returns as CEO; Fern MacDonald
appointed CFO; new Chief Commercial Officer ('CCO'), new Head
of Product and Head of People returned to the Group reflecting
structural realignment to drive productivity and efficiency.
-- Business platform transformation: Along with cost-action to manage
pandemic pressures, development teams have been aligned around
focus areas; operational teams aligned around key markets; support
systems consolidated; and product roadmap defined.
-- Innovation to support customers: Online reservations, virtual
queuing, mobile Food & Beverage technology all support venue
openings with social distancing while providing longer term adoption
opportunities. Cross-product integration opportunity continues
to receive strong validation with 50 venues now utilising more
than one solution (2019: 26).
-- Innovation drives new business wins: Virtual queuing success,
robust demand for accesso Passport(R) eCommerce and strong performance
from our new mobile Food & Beverage solution all underline new
demand for post-COVID eCommerce and Guest Experience technologies.
-- Opportunity ahead remains intact: Underlying demand remains strong
while eCommerce has become more critical to operator success.
More venues signed on for online ticketing solutions in 2020
(45) than signed on during 2019 (42). Markets served by accesso
are expected to rebound quicker than the broader leisure space
due to more localised target audiences.
Outlook & guidance
-- Encouraging start to 2021: Despite European and Californian attractions
remaining closed in January and February the Group delivered
strong revenue performance, trading only 19% down on the same
two months in 2019. Our year-to-date eCommerce trading also indicates
strong pent-up demand, with year-to-date eCommerce ticket volumes
in APAC at 15% and 21% above 2020 and 2019 respectively. North
American volumes are up 54% and 28% over the same periods. The
majority of our remaining venues have now either opened or have
scheduled openings through to May 2021.
-- COVID-19 remains impactful: The Group anticipates travel and
tourism will be substantially restricted in 2021 however our
late-2020 experience suggests significant pent-up demand will
come through as the pandemic recedes. Venues in certain regions
have already reopened at reduced capacity or plan to reopen between
April and early summer. Out largest clients have all indicated
their plans to fully reopen all parks ahead of summer (assuming
Government approval).
-- Cautious optimism for the year ahead: We remain cautiously optimistic
for 2021 as vaccine rollouts accelerate. We expect performance
in H1 to be above 2020 levels with a return to something close
to normal trading expected later in H2. Our strong balance sheet
and available facilities enable us to manage potential downside
scenarios.
-- Financial Results: With base level demand expected to be ahead
of 2020, we anticipate neutral to slightly positive cash flow
for 2021, based upon anticipated revenue of not less than $83m.
We do not anticipate utilising any additional credit facility
on a full year basis and expect to retain significant cash resources
as a contingency.
Footnotes
(1) Repeatable revenue consists of transactional revenue such as
a ticket sold by a customer or as a percent of revenue generated
by a venue operator and recurring maintenance, support and platform
revenue. 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
sales execution by accesso
(2) Cash EBITDA is calculated as operating profit before the deduction
of amortisation, impairment of intangible assets, depreciation,
acquisition costs, deferred and contingent payments, and costs
related to share-based payments less capitalised development
costs paid in cash as per the consolidated cash flow statement.
(3) Adjusted basic earnings per share is calculated using an after
adjusting operating profit that is adjusted 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
(4) Net cash is calculated as cash and cash equivalents less borrowings
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 presentation for analysts at 1300
UK time this morning. 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.
accesso Technology Group plc
Steve Brown, Chief Executive Officer
Fern MacDonald, Chief Financial Officer +44 (0)118 934 7400
Numis Securities Limited (Nominated Adviser
and Sole Broker)
Simon Willis, Mark Lander, Hugo Rubinstein +44 (0)20 7260 1000
FTI Consulting, LLP
Matt Dixon, Adam Davidson +44 (0)20 3727 1000
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 more than
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 stands as the leading technology provider of choice for
tomorrow's attractions, venues and institutions. We invest 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 innovative technology solutions allow venues to
increase the volume and range of on-site spending and to drive
increased transaction-based revenue through cutting edge ticketing,
point-of-sale, virtual queuing, distribution and experience
management software.
Furthermore, COVID-19 has highlighted the benefits our
technology is able to bring to venues from facilitating social
distancing using our robust and sophisticated virtual queuing
solutions; reservation systems delivered through our agile
eCommerce platform to enable capacity management, taking queues
away from front gates; and attraction eateries utilising our
contactless food and beverage offerings.
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 understands 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 statement
My decision to return to accesso as CEO in early 2020 was driven
by my firm view that our business has a unique opportunity to be
successful in the markets we serve. We have a customer-base,
technology set and level of scale which sets us apart from the
competition, and we have a level of ambition, driven by some of the
best people in our industry, that none can match. Despite a year in
which the COVID-19 pandemic has turned our industry upside-down, my
level of belief remains the same.
There is no doubt that circumstance intervened and made 2020
quite different from the year I had imagined. We were only able to
focus on growth for a few short weeks. Quite soon we had to shift
quickly, reinforcing our financial position and building
operational resilience to ensure we could weather the coming storm.
We right-sized our employee base, initiated a four-day working week
for many staff during the period of reduced operations, reducing
our underlying administrative expenditure by $1.4m to an average of
$4.7m per month during the year. We also raised $46.1m from
shareholders in June 2020 as contingency and took the opportunity
to bring forward planned changes that would simplify our structure,
reduce inefficiency, and bring clarity to the overall accesso
operation. These actions, focused on three pillars of activity we
called People, Process and Product, solidified our outlook and gave
us the license to focus our energy on supporting our customers by
doing what we do best: innovating to help them make the most of
their opportunities.
Throughout the pandemic we have adopted a simple mantra in
relation to our customer base: treat clients like family. accesso
has built its reputation on trusted partnership, and our
relationships are strengthened in times of challenge. Whether
helping to facilitate refunds for cancelled events, tapping into
previously unused product features, or making last minute feature
changes to enable re-openings, our teams worked with a level of
quality and commitment that our customers will not soon forget.
Our proactive approach enabled us to adapt and develop
technology solutions suited to our customers' new reality. During
the year we used our virtual queuing technology to enable in-venue
social distancing, contactless food & beverage ordering to
reduce in-person interactions, online reservations and ticketing to
assist with capacity management, plus a range of other
modifications to support the emerging needs of our industry.
Whilst our full-year revenues were significantly impacted by the
pandemic, our team's ability to adapt and align with our customers
to provide essential technology was nothing short of remarkable.
Together we faced unprecedented adversity with the type of purpose,
passion and partnership that are at the core of our company vision
statement. With the hard work done across 2020 to reshape our
business, I am as optimistic as ever about the future.
2020 in review
Our Market
2020 was an incredibly difficult year for our customers and
end-markets in general. The introduction of global lockdowns from
March onwards put a stop to almost all trading activity through
most of the European and North American summers, and although we
did see some reopenings at reduced capacities during the autumn,
volumes for the year were far lower than normal.
Despite the overall supressed trading, during 2020 we did see
technology - and particularly eCommerce - playing an increasingly
important role in the activity which did take place. With the
breadth of venue-types we serve looking to manage strict capacity
controls and facilitate less face-to-face interaction with staff,
we saw our online ticketing business provide much-needed capability
to the venues that were able to reopen.
Across the broader global environment, we saw consumers across
demographics shift to online food delivery, online supermarket
shopping and other web-based alternatives. Online buying took
centre stage and we are confident that this increased adoption of
mobile technology represents a permanent behavioural shift in many
cases. Historic trends indicate that once customers adopt
eCommerce, the efficiency gains and guest experience upsides tend
to mean they continue transacting in this manner. We will only know
the true extent of the impact of these dynamics on our addressable
market when the pandemic has passed, but the early signs are
certainly encouraging.
As we enter 2021, we still expect pandemic restrictions in many
venues to persist in the near to mid-term. However, our overall
confidence of a return to more normal conditions later in the year
is bolstered by the increasing traction of the various vaccination
programmes being rolled out in our key markets.
We are also aware that the various segments of our market are
likely to recover at different speeds. For example, we expect the
recovery for destination travel to be slower than that of the
regional attractions, live event venues and cultural a ttractions
like theatres, museums and zoos which are closer to home and can be
planned at a moment's notice. Destination travel requires longer
lead-times for planning, higher costs to adopt and more travelling
for guests, while the regional attractions of scale can reopen
quickly and capture demand as soon as restrictions ease. For
live-event operators, those who can operate on a cash positive
basis even with capacity restrictions are likely to recover fairly
quickly. For others, progress will be uneven and dependent on the
ability to invest in securing talent, committing to a planning
schedule and commencing ticket sales. These are all dynamics which
rely to a certain extent upon the removal of social distancing
requirements in order to operate profitably.
Approximately 60% of accesso's typical transaction-based volume
is concentrated in leisure categories expected to realise fairly
rapid recovery versus the broader leisure sector. This assumption
is underpinned by our strong trading performance through the autumn
and early winter of 2020 and is also reflected in the performance
we have delivered in the first part of 2021.
Whilst the early months of the year typically see lower
transaction volume, our year-to-date 2021 eCommerce trading
indicates the level of potential pent-up demand. Across the APAC
region, eCommerce volumes for this period were up 21% and 15% on
2019 and 2020 respectively, and in North America, driven primarily
by a range of new ski customers in the period, eCommerce volumes
were up 54% and 28% on the same periods. Whilst our European
markets remained in lockdown for much of this period, results in
recent weeks show robust performance as UK theme park customers
have opened up their eCommerce sites for bookings following release
of the UK government's reopening plans.
Financial performance
During 2020, accesso delivered financial performance ahead of
the expectations it had set out following the onset of the
pandemic, reporting revenue for the year of $56.1m. Given the lower
levels of activity across our industry, our transactional revenue
stream, usually a bedrock of our financial performance, was down
from $85.6m in 2019 to $31.3m in 2020. Our professional services
revenue stream continued steadily as our TE2 work for the cruise
sector and other key clients moved forward as customers looked to
utilise the downtime to continue project efforts.
Profitability was impacted by this lower level of revenue
although our decisive cost-management ensured the bottom-line
impact was limited. This was illustrated by our Cash EBITDA, our
key earnings measure, which was a loss of $11.5m in 2020, down from
$7.1m of earnings in 2019, despite a $61.1m reduction in revenue.
Our statutory loss for the year was $29.9m, again reflecting the
revenue reduction in the year.
Importantly, the Group retains a very strong liquidity position
with net cash at the December year-end of $29.7m and a refinanced
debt facility from 19 March 2021. Draw down on the new facility is
conditional on finalising security charges over the US subsidiary
entities, providing the Group with additional liquidity of GBP18m
through a revolving Coronavirus Large Interruption Scheme Loan
facility for a 3-year term to March 2024.
Our Business
During 2020 we worked tirelessly to reshape and refocus accesso
to build a more efficient and productive organisation for the
longer term. This work took place in three pillars: People,
Process, and Product.
People
We began our efforts in this first pillar area by reshaping our
leadership team. With a new CFO, new CCO, new Head of Product and
the return of our former Head of People in place, we then conducted
a structural realignment across the broader organisation. This
process removed duplication resulting from piecemeal merger
integration, and more effectively aligns our teams with clear
accountability for the future.
For example, all software engineers working on our various
eCommerce solutions are now in one team rather than being spread
across the various system groups within accesso. Additionally, our
operational teams are now aligned with key market segments such as
Theme Parks, Cultural Attractions, and the Ski Industry. The shift
from software system alignment to industry alignment allows for
improved client relationships, particularly as the number of
clients using multiple solutions continues to increase. We now go
forward with a team focused on shared success across our entire
business, with a refreshed and better-structured approach to client
service.
Employee turnover was notably higher in 2020 than in prior years
at 33% (2019: 19%), driven largely by the impact of reductions
implemented to streamline and reduce long-term operating costs.
Whilst we started the year with a headcount of 560 and 17 open
positions, we ended the year with a headcount of 435 and 70 open
positions (excluding seasonal staff). Open positions were largely
held for recruitment in 2021 as we awaited clarity on the
vaccination programme. To date, nearly half of the open positions
have been filled and recruiting efforts continue for the
remainder.
We reinforced our commitment to Diversity and Inclusion, with
the addition of a dedicated page on our website outlining our
approach to providing a workplace that thrives on innovation from
individuals from a wide range of backgrounds with diverse talents.
That page can be found at www.accesso.com/about/diversity-inclusion
.
We also continued our commitment to support our local
communities as our team members utilised the days allocated for
each to volunteer for a service activity of their choice. For
example, one team member volunteered at an animal shelter during
the California wildfires whilst another sewed masks for a local
urgent care facility.
Process
Along with this organisational realignment, we needed to adjust
our operational processes to ensure we can capitalise on the
benefits of our new staffing structure. We therefore worked to
bring teams on to the same internal support systems, enabling
seamless collaboration across the group. We have also redesigned
how customer system enhancement requests move through our workflow,
improving quality while reducing delivery times. We have
transformed accesso from a company operating in multiple product
silos to a business with a single operational platform, focused on
customer success and growth.
Product
Product innovation continues to be a vital part of our
go-forward plan at accesso, and during the year we identified
several opportunities to continue our overall improvement journey.
Importantly, we have developed a clearly defined product roadmap
across the full technology set, both to improve our near-term
output and to ensure strategic focus into the medium and
longer-term. To build the foundation for this work, this year we
completed the migration to AWS of our North American technology
footprint, and the migration of accesso Passport to Cybersource.
These developments enable a more unified payment processing
solution across the Group. Since its launch, we have generated over
5 million payment tokens through the platform and eliminated the
need to store credit-card details on our systems.
During the year we also sharpened our focus on integration
between systems to respond more effectively to the growing demand
for operators to combine deployment of multiple accesso solutions.
Furthermore, our ongoing interaction with customers has helped to
develop specific upgrades in some of our existing product areas.
These conversations led us to adapt our virtual queuing offering to
assist with social distancing, enhance our mobile food &
beverage offerings, adapt our online reservation programmes,
develop live-event streaming capability and rollout a full update
of the accesso Siriusware(SM) solution.
With the appointment of a Head of Product to oversee our entire
technology estate, we are now much better-positioned to evolve our
technology platform in a manner that is more strategic, more
efficient, and more responsive to customer needs. As a result of
the changes we've made, our team is now set up simultaneously to
work on our longer-term plan while managing our customers' evolving
near-term needs.
New Business - Signs of Recovery and Opportunity
Despite the pandemic, accesso still found ways of supporting
operators and bringing new innovation to the market in 2020. In the
first half, new business activity was focused on facilitating
social distancing through virtual queuing, and in June, Holiday
World in the United States began using our accesso LoQueue(R)
virtual queuing as the solution underpinning all visitation at its
sites. Several other existing customers including Walibi Holland in
the Netherlands and Village Roadshow Theme Parks in Australia also
evolved their use of virtual queuing from a premium offering to a
baseline feature of admission. During the second half, Parc Asterix
in France also signed on for virtual queuing, with extremely
positive feedback on the product's ability to drive revenue, ensure
guest satisfaction and increase operational efficiency. In total,
more than 6 million guest rides were fulfilled in the parks
utilising our 100% virtual queuing solution to facilitate social
distancing. Over 50% of guests surveyed by Walibi Holland indicated
an increased likelihood to return to the venue if virtual queuing
remained in place.
Alongside this, we conducted virtual queuing-related tests with
other customers and expanded our virtual queuing outreach to other
sectors with a view to exploring possibilities for more
comprehensive offerings in the longer term. While the appetite for
more widespread in-venue use of virtual queuing remains strong
across the industry, most large-scale operators managed through the
near term with manual processes given the lower levels of
attendance. Notably, our 'classic' premium virtual queuing offering
performed ahead of our expectations when customer venues have been
open.
We were also pleased to work with our partner, Digisoft, to
adapt our Prism wearable device in a unique manner. Utilising the
range of sophisticated technical capabilities and with software
enhancements developed by Digisoft, the Prism band has been adapted
to identify, measure and track interactions between wearers in a
GDPR compliant manner to a secure administrator information hub.
Our patented wristband also provides social distancing guidance via
on-screen and vibration alerts in the workplace. We were pleased to
successfully pilot this program with the Irish Defence Force as
well as with a large pharmaceutical company in their US based
laboratory. Whilst we do not view this specific adaptation as a
significant future revenue opportunity, this unique use-case is
further testament to the underlying strength of our technology set
and our ability to access a broad range of opportunities.
In ticketing, we quickly pivoted to offer existing reservation
functionality to our general admission venues and as a result
booked nearly 9 million guest reservations. Despite the
significantly reduced operations around the globe, we still sold 25
million tickets through accesso Passport, down just 41% on 2019 as
nearly all venues required advance purchase of tickets for entry.
Nearly 3.4 million tickets were sold in the winter holiday period
as venues adapted to provide drive-through or socially distanced
experiences.
Overall, the challenges of 2020 have highlighted the benefit to
venues of having a robust and agile eCommerce platform as they
reopen. Consequently, we have been successful in implementing 29
new accesso Passport deployments during the year, of which 21 were
signed during 2020. Notably, demand from our existing accesso
Siriusware POS customers to add accesso Passport eCommerce was
strong, with implementation at 16 new ski venues. This success
highlights the opportunity for growth with our existing customer
base. Whilst accesso Siriusware provides POS and Guest Management
to 117 ski venues, only 21 of those are also utilising accesso
Passport eCommerce. This represents a significant near-term
penetration opportunity and is an area of key focus for the Group.
As a result, we have now named an executive product leader to focus
solely on our accesso Siriusware/accesso Passport development
roadmap and champion the efforts to accelerate feature integrations
between the two products. Beyond the ski sector, the remaining 165
accesso Siriusware customers remain key cross-sell prospects for
our eCommerce solution particularly in light of the pandemic's
impact and the overall expansion of visitor expectations over
time.
During the year we also saw a rise in demand for one of our
incubator solutions as leisure operators have taken time to review
their future technology plans to drive improved efficiency and
guest service. As venues have looked to reduce contact at food
locations, we have seen more traction than anticipated with the
adoption of our mobile food ordering solution. We deployed our
contactless Food & Beverage solution to Alterra Mountain
Company across some 40 restaurants within their ski resort
portfolio, and we are now working with them to add restaurants at 8
additional resorts in 2021. Two standalone ski customers along with
Grupo Vidanta and Cedar Fair are also implementing the solution. As
a result of this success and building upon our significant
expertise with online ticketing, we are now evaluating the
potential long-term opportunity in the broader food & beverage
sector. Given our solution integrates with a restaurant's POS
solution (for those not utilising our own), this presents a
potentially sizeable market opportunity.
Many venues in the live entertainment sector are also looking to
improve their technology infrastructure as they move towards
reopening, particularly as it relates to online booking
functionality. Despite the industry disruption, accesso ShoWare(SM)
was implemented at 29 new venues in 2020 (compared to 55 in 2019)
as operators used the dark time to update their offerings with
advanced functionality. Beyond 2020, the sales pipeline continues
to gain momentum.
Within Ingresso, we are focused on the post-pandemic recovery as
we onboarded 19 new distributors and 44 new supplier venues in
2020, including Merlin, which is now utilising our Ingresso
platform to support digital sales through third party channels.
Security infrastructure
accesso is viewed as a premier technology solutions provider to
the verticals it serves, and as a result, we continue to invest in
ensuring our technology offering leads the market. An increasingly
critical focus of our clients, and therefore the Group, is around
data security and compliance against an evolving global landscape.
Intrusion threats are becoming more sophisticated and regulations
covering the handling of data demand that compliance is at the
forefront of our business. accesso is acutely aware of the
importance of security to the Group's clients and their guests and
continues to employ state-of-the-art systems to mitigate risk
across the group. With the introduction of GDPR and other global
privacy initiatives, compliance continues to be a top priority
across the business and accesso has maintained pace with all
relevant developments.
With our migration to CyberSource, we have taken new measures to
reduce our data security exposure risk. Whilst we do not disclose
the details of our specific security measures or systems,
throughout 2020 we continued to invest in further enhancements, new
systems, and revisiting procedures as well as the organisational
strength of our security group.
Brexit
The impact of the UK leaving the European Union ("Brexit") has
thus far been limited for the Group. It is recognised that there
could be an impact to consumer spending within the UK or EU and
this could impact attendance at certain venues or investment
decisions by leisure operators. Additionally, there could be a
positive or negative impact on exchange rates which could alter
international visitation patterns. Brexit is not anticipated to
have a material impact on the operations or financial results of
the Group given its significant operations in the US and its
growing global presence outside of the EU.
Board
Having served as a Non-Executive director of accesso since 2010,
David Gammon has now stepped down from our Board. Following an
extensive search David was replaced by Jody Madden who started her
tenure on January 1, 2021. Jody is an experienced technology
leader, and is currently Chief Executive Officer of Foundry, a
London-based creative software developer for the Media,
Entertainment and Digital Design industries. She has 20 years of
experience in Media and Entertainment and has held a range of
senior roles at Digital Domain, Lucasfilm and Industrial Light
& Magic prior to joining Foundry. Jody is also on the Board of
Directors of the Sustainable Food Center, a Central Texas
non-profit group. As part of her Board role Jody will be heading a
new ESG committee as the Group continues its efforts to meet
best-practice standards in this vital area.
Board composition is an important reflection of our focus on
diversity and inclusion. We are pleased that our Board is now
comprised of 50% female directors and overall represents a broad
range of experience across industries. We are thankful to the Board
for their continued support and strategic guidance as we have
worked fervently to manage the impacts of the pandemic and ensure
the long-term success of the business.
2020 Financial Review
The Group delivered a resilient financial performance against
the backdrop of COVID-19 during 2020, with revenue and Cash EBITDA
ahead of our revised range of expectations. accesso's two operating
divisions, Guest Experience and Ticketing both started the year
with strong revenue growth, before being significantly impacted by
the COVID-19 pandemic. As venues reopened, both divisions acted as
key enablers of social distancing and advanced ticketing.
As expected, the Group's transactional revenue stream was
severely impacted by COVID-19. Decisive cost actions, fund-raising
activity and a banking facility refinancing have ensured the
business remains on a firm footing. As venues begin to reopen at
full scale throughout 2021, the Group now sees opportunity to
benefit from latent consumer demand showing through in key markets,
with the deeper partnerships it has built throughout 2020 enabling
it to push on to growth and success in 2021 and beyond.
Alternative performance measures
The Board continues to utilise consistent alternative
performance measures ("APMs") internally and in evaluating and
presenting the results of the business. The Board views these APMs
to be more representative of the Group's underlying
performance.
The historic strategy of enhancing accesso's technology
offerings via acquisitions, as well as an all employee share option
arrangement, necessitate adjustments to statutory metrics to remove
certain items which the Board does not believe are reflective of
the underlying business. These adjustments include aborted
acquisition or aborted sale related expenses, amortisation related
to acquired intangibles, deferred and contingent consideration
linked to continued employment, share-based payments and
impairments.
By consistently making these adjustments, the Group provides a
better period-to-period comparison and is more readily comparable
against businesses that do not have the same acquisition history
and equity award policy.
APMs include cash EBITDA, adjusted basic EPS, net cash,
underlying administrative expenditure and repeatable and
non-repeatable revenue analysis. Cash EBITDA is defined as
operating profit before the deduction of amortisation, impairment
of intangible assets, depreciation, acquisition costs, deferred and
contingent payments, and costs related to share-based payments and
paid capitalised internal development costs; 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; net cash is defined as
available cash less borrowings and Underlying administrative
expenses which is administrative expenses adjusted to add back the
cost of capitalised development expenditure and property lease
payments and remove amortisation, impairment of intangible assets,
depreciation, acquisition costs, deferred and contingent payments,
and costs related to share-based payments. Repeatable and
non-repeatable revenue analysis is set out and explained below.
The Group considers Cash EBITDA, which disregards any benefit to
the income statement of capitalised development expenditure, as the
principle operating metric.
Key financial metrics
Revenue quality
Reported Group revenue for 2020 was $56.1m (2019: $117.2m), a
reduction of 52.1% on the prior year period. The following is an
analysis of the Group's revenue visibility. Transactional revenue
consisting of Virtual Queuing, Ticketing and eCommerce 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 percentage 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, as they did in 2020 as a
result of the pandemic. Other repeatable revenue is defined as
revenue, excluding transactional revenue, that is expected to be
earned through each year of a customer's agreement, without the
need for additional sales activity, such as maintenance and support
revenue. 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 sales
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.
2020 2019
$000 $000 %
Virtual queuing 7,407 24,687 (70.0)
Ticketing and eCommerce 23,883 60,909 (60.8)
Maintenance and support 7,711 8,742 (11.8)
Platform fees 2,263 1,149 97.0
------- ------ --------------------- -------
Total Repeatable 41,264 95,487 (56.8)
------- ------ --------------------- -------
Licence revenue 2,322 3,496 (33.6)
Professional services 9,954 14,787 (32.7)
------- ------ --------------------- -------
Non-repeatable revenue 12,276 18,283 (32.9)
------- ------ --------------------- -------
Hardware 1,493 2,499 (40.3)
Other 1,061 913 16.2
------- ------ --------------------- -------
Other revenue 2,554 3,412 (25.1)
------- ------ --------------------- -------
Total revenue 56,094 117,182 (52.1)
======= ====== ===================== =======
Total Repeatable as
% of total 73.6% 81.5%
The Group's revenue was severely impacted by the COVID-19
pandemic across 2020, with its repeatable revenue stream down 56.8%
year-on-year due to lower customer volumes across the leisure
industry. The Group's non-repeatable revenue also declined by 32.9%
down to $12.3m. This stream saw lower impact as licence fees
continued to be recognised and professional services work resumed
after a short interruption when customer attention turned to cost
saving and managing themselves through mandated closures.
The Group's ticketing and distribution segment was significantly
impacted by lower guest volumes in 2020, although it did perform
strongly when venues were open. On the ticketing side, its
flexibility in supporting online transactions and contactless
interactions enabled it to deliver revenues of $36.6m, down 37.1%
on 2019 which reflects a better-than-expected performance given the
length of certain markets closures. The outlook for the Group's
accesso Passport platform remains healthy and should benefit from
the continued trend towards eCommerce following the pandemic. The
Group's distribution business, which remains dependent on the
severely impacted UK West End Theatre market, saw a revenue decline
of 93.5% in the year. Whilst this market is currently closed it
does have a line of sight to reopening under the UK Government's
four step plan, with reduced capacities and social distancing from
17 May 2021 and without restriction from 21 June 2021. Immediately
following the announcement of the UK's reopening plan, consumers
began booking tickets to available shows, and the Group is hopeful
for a partial recovery in H2 2021 subject to the success of the
UK's reopening plan.
The Group's Guest Experience segment was similarly impacted by
COVID-19, however it continues to make good progress in rolling out
its total-virtual-queuing solutions at scale with operators such as
Village Roadshow Theme Parks, Holiday World, Walibi Holland and
Parc Asterix. As part of these rollouts the Group was able to adapt
its technology to facilitate social distancing, enabling venues to
reopen with guest experience quality still intact. Revenue in the
segment was down 52.1% in the year.
Revenue on a segmental basis was as follows:
2020 2019
$000 $000 %
Ticketing 36,603 58,237 (37.1)
Distribution 1,363 21,097 (93.5)
------- -------------- -------
Ticketing and distribution 37,966 79,334 (52.1)
------- -------------- -------
Queuing 8,348 25,208 (66.9)
Other guest experience 9,780 12,640 (22.6)
------- -------------- -------
Guest experience 18,128 37,848 (52.1)
------- -------------- -------
Total revenue 56,094 117,182 (52.1)
======= ============== =======
Revenue on a geographic and segmental basis was as follows:
2020 2019
Ticketing
and Guest Ticketing Guest
Distribution Experience Group and Distribution Experience Group
$000 $000 $000 $000 $000 $000
Primary geographic
markets
UK 4,380 848 5,228 25,500 2,047 27,547
Other Europe 1,177 649 1,826 1,859 2,185 4,044
Australia/South
Pacific/Asia 1,663 750 2,413 2,942 768 3,710
USA and Canada 30,014 15,739 45,753 45,987 32,668 78,655
Central and
South America 732 142 874 3,046 180 3,226
-------------- ------------ -------- ------------------ ------------ --------
37,966 18,128 56,094 79,334 37,848 117,182
============== ============ ======== ================== ============ ========
On a geographic basis, as was reported in the Group's interim
results announcement, venues in the United Kingdom and Other Europe
were largely closed from mid-March until early July and then again
in November and December 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. This
accounts for a revenue reduction in the UK of $22.3m. From July
through to November we did see some reopenings in our main
geographies with the exception of California-based venues, albeit
at lower capacity, and we experienced healthy demand during this
period. Texas, New Jersey and New York, our other key US regions,
experienced more limited mandated closures with venues remaining
largely open with capacity restrictions from June.
Customer concentration
The Group continues to be a trusted technology partner to
leading leisure operators. The success of these partnerships does
result in a level of revenue concentration. When the Group
delivered its results for H1 2020 it committed to providing
investors with an ongoing update regarding the level of
concentration on a full year basis. For 2020 the top five customers
accounted for 50.2% of revenue (2019: 53.5%). The Group's top ten
customers accounted for 57.4% (2019: 61.3%). The Group is pleased
to report a negligible level of customer attrition and remains
committed to working strategically with our customers to ensure we
provide the best possible service aligned to their needs.
Gross margin
Management has reviewed how costs are allocated between
administrative expenses and cost of sales. In order to give a
clearer and more meaningful picture of activity within the
business, certain costs linked to the delivery of professional
services revenue, previously shown within administrative costs have
been reclassified to cost of sales in 2020.
The Group's reported gross profit margin was 76.6% in 2020,
compared to 67.3% in 2019 when adjusting for $6.7m of professional
service cost of sales to aid comparability. This 9.3% increase
primarily results from a change in sales mix compared with 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 2020. These movements
combine to drive a higher gross profit margin.
Administrative expenses
Reported administrative expenses, including the non-cash expense
related to intangible impairments, decreased 48.3% to $73.3m (2019:
$141.9m), reflecting the Group's efforts to right-size its
operational footprint. Underlying administrative expenditure
decreased by 23.1% to $56.5m (2019: $73.5m) due to cost action
implemented following the onset of the pandemic. Management reduced
the Group's monthly underlying administrative expenses by $1.4m to
an average of $4.7m for the year principally by implementing a
company-wide four-day working week which ended in a phased manner
in H2. The Group also utilised the available government job
retention schemes in the USA, UK and Australia, receiving $595k in
support. Furthermore, the Group also reduced its workforce by 68
full time employees and 30 contractors alongside significantly
decreased discretionary spend including travel, marketing and
tradeshows. No government assistance has been sought from December
2020 onwards.
2020 2019
$000 $000
Administrative expenses as reported 73,339 141,906
Capitalised development expenditure (1) 2,969 21,064
Deferred equity settled acquisition consideration (150) (1,416)
Amortisation related to acquired intangibles (2,573) (11,286)
Share based payments (1,398) (1,845)
Amortisation and depreciation (2) (14,664) (16,014)
Property lease payments not in administrative
expense (1) 1,622 1,451
Impairment of intangibles (2,627) (53,617)
Professional services cost (3) - (6,723)
Underlying administrative expenditure 56,518 73,520
========= ===============
(1) See consolidated cash flow statement
(2) This excludes acquired intangibles but includes depreciation
on right of use assets.
(3) Professional service costs incurred in the delivery of professional
services revenue adjusted in comparative year to be comparable
with the year ended 31 December 2020.
Cash EBITDA
The Group recorded an operating loss of $30.4m (2019 operating
loss: $56.3m); and Cash EBITDA reduced from $7.1m in 2019 to a loss
of $11.5m in 2020. This $18.6m Cash EBITDA reduction is entirely a
result of the $61.1m revenue reduction, with the Group mitigating
profit impact substantially through the cash preservation
measures.
The table below sets out a reconciliation between statutory
operating loss and cash EBITDA:
2020 2019
$000 $000
Operating loss (30,354) (56,278)
Add: Aborted sale/acquisition expenses 461 305
Add: Deferred equity settled acquisition
consideration (1) 150 1,416
Add: Amortisation related to acquired intangibles 2,573 11,286
Add: Share based payments 1,398 1,845
Add: Impairment of intangible assets 2,627 53,617
Add: Amortisation and depreciation (excluding
acquired intangibles) 14,664 16,014
Capitalised internal development costs paid
in cash (2,969) (21,064)
--------- ----------------------
Cash EBITDA (11,450) 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 group reported a statutory loss before tax of $32.9m (2019:
loss of $57.6m). Adjusted basic loss per share was 60.64 cents
(2019: 30.78 cents earnings per share). Basic loss per share in
2020 was 84.78 cents (2019 basic loss per share: 184.26 cents).
Development expenditure
2020 2019
Development expenditure by segment $000 $000
Ticketing and distribution 14,044 19,856
% of ticketing and distribution segment
revenue 37.0% 25.0%
------- -------
Guest Experience 7,113 13,689
% of guest experience segment revenue 39.2% 36.2%
------- -------
Total development expenditure 21,157 33,545
% of total revenue 37.7% 28.6%
------- -------
Total development expenditure for 2020 decreased 36.9% to
$21.2m, (2019: $33.5m) due to the impact of 4-day working weeks, a
reduction of 30 contractors and the restructure of our development
teams into a single unit. 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 our customers
throughout the COVID-19 pandemic.
While the Group remains focused on innovation, the reduction
against the previous expectation reflects an integration roadmap
more in-line with the Group's overall efficiency drive, in addition
to the 4-day working week being in place for longer periods of time
than previously expected.
The group capitalises elements of development expenditure where
it is appropriate and in accordance with IAS 38 Intangible assets.
Capitalised development expenditure of $3.0m (2019: $22.0m),
representing 14.0% (2019: 65.7%) of total development expenditure.
This material decrease in the proportion of development expenditure
being capitalised is not a reflection of lesser importance of the
work being undertaken. Development continues to expand the product
set and add features that will be important for our customers'
operations in the future. However, a more conservative approach to
thresholds for such investment expenditure has been applied. The
revised approach reflects the steady maturing of the suite of
commercialised products.
Cash and Net Cash
Net cash at the end of the period was $29.7m (2019: $0.4m),
consisting of cash balances of $56.4m and borrowings of $26.7m.
2020 2019
$000 $000
--------- ---------
Borrowings (including capitalised finance
costs) (26,699) (15,851)
Less: Cash in hand & at bank 56,355 16,205
Net cash 29,656 354
--------- ---------
This strong net cash position benefited from $46.1m of net
proceeds raised through the Group's equity placing and open offer
which completed in June 2020. In the absence of the equity raise
our adjusted net debt would have been $16.4m reflecting the
COVID-19 impact on our top line. The net cash position would have
been significantly worse if it had not been mitigated by diligent
working capital management, immediate action on preserving cash,
utilisation of Government schemes, deferring payroll taxes where
permitted and reducing underlying administrative expenses as noted
above.
As a consequence of the COVID-19 pandemic impacting revenues,
the Group has seen a net cash outflow from operations in the year
of $14.5m (2019: $26.2m inflow).
As noted above, the Group's total development expenditure
reduced significantly to $21.2m in 2020 (2019: $33.5m). The
reduction in gross research and development costs, combined with a
heavily curtailed capital expenditure investment into property,
plant and equipment of $0.4m (2019: $1.9m) has helped to further
preserve the Group's cash balances.
At the period end the Group had 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 was available to the Group for 15
months until August 2021 and remained undrawn as at 31 December
2020.
The Group's year end drawn borrowing facility of $26.7m was
settled on 19 March 2021 following a successful refinancing of its
lending facilities with Investec Bank plc, conditional on the
clearance of priority security charges over US subsidiary entities.
The group has a 3-year, GBP18m Coronavirus Large Interruption
Scheme Loan revolving credit facility at a 3.5% margin expiring in
March 2024 with quarterly covenant tests on minimum revenue and
minimum liquidity for 2 years to December 2022. From March 2023
additional covenants are added for leverage and interest cover.
As a result of the immediate measures taken by management on
cost and cash flow management and the successful equity fundraise
and loan facilities refinanced in March 2021, the Board believes
that the Group is in a strong financial position and ends the year
with net cash of $29.7m.
Dividend
The Board maintains its consistent view that the payment of a
dividend is unlikely in the short to medium term with cash more
efficiently invested in continued product development and
integration efforts supporting the Group's strategy.
Impairment
In line with relevant accounting standards, the Group reviews
the carrying value of all intangible assets on an annual basis or
at the interim where indicators of impairment exist. As announced
on 16 September 2020 in our interim results release, 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. This test was revisited at 31 December 2020 with
the same outcome.
The consequence of this test is that the carrying value of the
Ingresso allocated assets was reduced by $1.4m (2019: $7.0m), which
has been charged to administrative expenses during the year.
Certain development costs of $1.2m were also impaired following a
review of their year-end carrying values.
Taxation
The effective tax rate on statutory loss before tax of $32.9m
(2019: $57.6m) was 9.2% (2019: 12.1%).
The key reconciling items to actual tax rates is $8.3m of
unrecognised deferred tax asset on US losses, net of $0.4m of prior
year items and $2.6m US carry forward credits, excluding these
items the adjusted effective tax would have been 25% (2019: 17%
excluding the $4.2m non-taxable goodwill impairment) being
reflective of the US tax rates where the majority of the group's
earnings are derived. $45m of gross US losses/credits are
unrecognised due to the uncertainty of near-term profitability and
the current period loss.
Consolidated statement of comprehensive income
for the financial year ended 31 December 2020
2020 201 9
Notes $000 $000
------------------------------------------------ ------ --------- ----------
Revenue 56,094 117,182
Cost of sales (13,109) (31,554)
--------- ----------
Gross profit 42,985 85,628
Administrative expenses (73,339) (141,906)
--------- ----------
Operating loss before impairment of intangible
assets (27,727) (2,661)
Impairment of intangible assets 10 (2,627) (53,617)
------------------------------------------------ ------ --------- ----------
Operating loss (30,354) (56,278)
Finance expense (2,518) (1,324)
Finance income 10 21
--------- ----------
Loss before tax (32,862) (57,581)
--------- ----------
Income tax benefit 8 3,008 6,985
Loss for the period (29,854) (50,596)
========= ==========
Other comprehensive income
Items that will be reclassified to income
statement
Exchange differences on translating foreign
operations 4,910 611
Income tax credit on items recorded in 1,129 -
other comprehensive income
--------- ----------
6,039 611
Total comprehensive loss (23,815) (49,985)
========= ==========
All profit and comprehensive income is
attributable to the owners of the parent
Losses per share expressed in cents per
share:
Basic 9 (84.78) (184.26)
Diluted 9 (84.78) (184.26)
C onsolidated statement of financial position
as at 31 December 2020
31 December 31 December
Registered Number: 03959429 2020 2019
Notes $000 $000
---------------------------------- ------ ------------ ------------
Assets
Non-current assets
Intangible assets 10 129,503 142,456
Property, plant and equipment 2,439 3,766
Right of use assets 4,166 5,715
Contract assets 1,109 3,654
Deferred tax assets 8 7,701 8,647
------------ ------------
144,918 164,238
------------ ------------
Current assets
Inventories 1,927 1,004
Contract assets 3,404 5,926
Trade and other receivables 15,968 23,676
Income tax receivable 1,858 50
Cash and cash equivalents 56,355 16,205
------------ ------------
79,512 46,861
------------ ------------
Liabilities
Current liabilities
Trade and other payables 17,328 31,811
Derivative financial liabilities 758 -
Finance lease liabilities 1,163 1,307
Contract liabilities 7,525 7,299
Income tax payable 667 4,005
------------ ------------
27,441 44,422
------------ ------------
Net current assets 52,071 2,439
------------ ------------
Non-current liabilities
Deferred tax liabilities 8 7,580 10,778
Contract liabilities 1,303 1,823
Other non-current liabilities - 30
Finance lease liabilities 3,790 4,976
Borrowings 26,699 15,851
------------ ------------
39,372 33,458
------------ ------------
Total liabilities 66,813 77,880
------------ ------------
Net assets 157,617 133,219
============ ============
Shareholders' equity
Called up share capital 11 595 427
Share premium 153,327 107,403
Own shares held in trust - (665)
Retained earnings (15,864) 11,331
Merger relief reserve 19,641 19,641
Translation reserve (82) (4,918)
------------ ------------
Total shareholders' equity 157,617 133,219
============ ============
Consolidated statement of cash flow
for the financial year ended 31 December 2020
2020 2019
Notes $000 $000
--------------------------------------------------- ------ --------- ---------
Cash flows from operations
Loss for the period (29,854) (50,596)
Adjustments for:
Depreciation (excluding finance lease assets) 1,758 1,694
Depreciation on finance leased assets 1,461 1,320
Amortisation on acquired intangibles 10 2,573 11,286
Amortisation on development costs and other
intangibles 10 11,446 13,000
Impairment of intangibles 10 2,627 53,617
Loss on disposal of property, plant and
equipment 22 114
Share-based payment 1,398 1,845
Deferred consideration charge 150 1,416
Finance expense 2,518 1,324
Finance income (10) (21)
Foreign exchange gain 1,308 (90)
Income tax benefit 8 (3,008) (6,985)
RDEC tax credits (384) -
(7,995) 27,924
(Increase)/Decrease in inventories (923) 86
Decrease/(Increase) in trade and other
receivables 6,658 (5,865)
Increase/(Decrease) in contract assets/
contract liabilities 4,847 (1,140)
(Decrease)/Increase in trade and other
payables (14,444) 3,562
Cash (used in)/generated from operations (11,857) 24,567
Tax (paid)/received (2,657) 1,597
--------- ---------
Net cash (outflow)/inflow from operating
activities (14,514) 26,164
--------- ---------
Cash flows from investing activities
Deferred consideration settlement (477) (1,017)
Capitalised internal development costs (2,969) (21,064)
Purchase of property, plant and equipment (437) (1,945)
Acquisition of other intangible assets - (4)
Interest received 6 21
--------- ---------
Net cash used in investing activities (3,877) (24,009)
--------- ---------
Cash flows from financing activities
Share issue 48,215 306
Share issue costs (2,123) -
Sale of shares held in trust 198 -
Interest paid (633) (830)
Payments on property lease liabilities (1,622) (1,451)
Proceeds from borrowings 10,116 4,802
Repayments of borrowings - (9,728)
Net cash generated from/ (utilised in)
financing activities 54,151 (6,901)
--------- ---------
Increase/ (Decrease) in cash and cash equivalents 35,760 (4,746)
Cash and cash equivalents at beginning
of year 16,205 20,704
Exchange gain on cash and cash equivalents 4,390 247
--------- ---------
Cash and cash equivalents at end of year 56,355 16,205
========= =========
Consolidated statement of changes in equity
for the financial year ended 31 December 2020
Merger Own shares
Share Share Retained relief held Translation
capital premium earnings reserve in trust reserve Total
$000 $000 $000 $000 $000 $000 $000
--------- --------- ---------- --------- ----------- ------------ -----------
Balance at
1 January 2020 427 107,403 11,331 19,641 (665) (4,918) 133,219
--------- --------- ---------- --------- ----------- ------------ -----------
Comprehensive income for the
year
(Loss) for
period - - (29,854) - - - (29,854)
Other comprehensive
income
Exchange differences
on translating
foreign operations - - - - - 4,910 4,910
Income tax
credit on items
recorded in
other comprehensive
income - - 1,129 - - - 1,129
--------- --------- ---------- --------- ----------- ------------ ---------
Total comprehensive
income for
the year - - (28,725) - - 4,910 (23,815)
--------- --------- ---------- --------- ----------- ------------ -----------
Issue of share
capital 168 48,047 - - - - 48,215
Share issue
costs - (2,123) - - - - (2,123)
Share-based
payments - 1,398 - - (74) 1,324
Equity-settled
deferred consideration - - 150 - - - 150
Share option
tax charge
- deferred - - 50 - - - 50
Reduction of
shares held
in trust - - (68) - 665 - 597
Total contributions
by and distributions
by owners 168 45,924 1,530 - 665 (74) 48,213
Balance at
31 December
2020 595 153,327 (15,864) 19,641 - (82) 157,617
========= ========= ========== ========= =========== ============ ===========
Balance at
1 January 2019 421 107,103 60,143 19,641 (665) (5,529) 181,114
Comprehensive income for the
year
(Loss) for
period - - (50,596) - - - (50,596)
Other comprehensive
income
Exchange differences
on translating
foreign operations - - - - - 611 611
--------- --------- ---------- --------- ----------- ------------ -----------
Total comprehensive
income for
the year - - (50,596) - - 611 (49,985)
--------- --------- ---------- --------- ----------- ------------ -----------
Contributions by and distributions
to owners
Issue of share
capital 6 300 - - - - 306
Share-based
payments - - 1,845 - - - 1,845
Equity-settled
deferred consideration - - 1,416 - - - 1,416
Share option
tax charge
- deferred - - (1,584) - - - (1,584)
Share option
tax charge
- current - - 107 - - - 107
Total contributions
by and distributions
by owners 6 300 1,784 - - - 2,090
Balance at
31 December
2019 427 107,403 11,331 19,641 (665) (4,918) 133,219
========= ========= ========== ========= =========== ============ ===========
Notes to the consolidated financial information
for the financial year ended 31 December 2020
1. Reporting entity
accesso Technology Group plc is a public limited company
incorporated in the United Kingdom, whose shares are publicly
traded on the AIM market. The company is domiciled in the United
Kingdom and its registered address is Unit 5, The Pavilions,
Ruscombe Park, Twyford, Berkshire RG10 9NN. This consolidated
financial information comprises the company and its subsidiaries
(together referred to as the "Group").
The Group's principal activities are the development and
application of ticketing, mobile and eCommerce technologies,
licensing and operation of virtual queuing solutions and providing
a personalised experience to customers within the attractions and
leisure industry. The eCommerce technologies are generally licensed
to operators of venues, enabling the online sale of tickets, guest
management, and point-of-sale ("POS") transactions. The virtual
queuing solutions and personalised experience platforms are
installed by the Group at a venue, and managed and operated by the
Group directly or licensed to the operator for their operation.
2. Basis of accounting
The preliminary results for the year ended 31 December 2020 and
the results for the year ended 31 December 2019 are prepared under
International Financial Reporting Standards and applicable law. The
accounting policies adopted in this preliminary announcement are
consistent with the Annual Report for the year ended 31 December
2020.
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 December 2020
or 2019 but is derived from those accounts. Statutory accounts for
2019 have been delivered to the registrar of companies, and those
for 2020 will be delivered in due course. The auditor has reported
on those accounts; their reports were (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
While the financial information included in this announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRS), this announcement does not itself contain sufficient
information to comply with IFRS.
The Group's consolidated financial statements have been prepared
in accordance with IFRS. They were authorised for issue by the
Company's board of directors on 23 March 2021.
Details of the Group's accounting policies are included in Notes
3 and 4.
3. Changes to significant accounting policies
Other new standards and improvements
A number of new standards are also effective or available for
early adoption from 1 January 2020 but they do not have a material
effect on the Group's financial information.
-- Amendments to References to Conceptual Framework in IFRS Standards
-- Definition of a Business (Amendments to IFRS 3
-- Definition of Material (Amendments to IAS 1 and IAS8)
-- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS
39 and IFRS 7)
-- COVID-19-Related Rent Concessions (Amendment to IFRS 16)
New standards and interpretations not yet adopted
A number of new standards, amendments to standards, and
interpretations are either not effective for 2020 or not relevant
to the group, and therefore have not been applied in preparing
these accounts.
4. Significant accounting policies
The principal accounting policies adopted in the preparation of
the financial information are set out below. The policies have been
consistently applied to all the periods presented.
Basis of consolidation
This consolidated financial information incorporates the results
of accesso Technology Group plc and all of its subsidiary
undertakings as at 31 December 2020 using the acquisition method.
Subsidiaries are all entities over which the Group has the ability
to affect the returns of the entity and has the rights to variable
returns from its involvement with the entity. The results of
subsidiary undertakings are included from the date of
acquisition.
The acquisition of subsidiaries is accounted for using the
acquisition method. The cost of the acquisition is measured at the
aggregate of the fair value, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree. Any
costs directly attributable to the business combination are written
off to the Group income statement in the period incurred. The
acquiree's identifiable assets, liabilities, and contingent
liabilities that meet the conditions under IFRS 3 are recognised at
their fair value at the acquisition date.
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in the net fair
value of the identifiable assets, liabilities, and contingent
liabilities recognised.
Investments, including the shares in subsidiary companies held
as fixed assets, are stated at cost less any provision for
impairment in value. Where necessary, adjustments are made to the
financial statements of subsidiaries to bring the accounting
policies used in line with those used by the Group.
Lo-Q (Trustees) Limited, a subsidiary company that holds an
employee benefit trust on behalf of accesso Technology Group plc,
is under control of the Board of directors and hence has been
consolidated into the Group results.
All intra-Group transactions, balances, income and expenses are
eliminated on consolidation.
Going concern
The financial information has been prepared on a going concern
basis which the directors consider to be appropriate for the
following reasons.
Following the impact of COVID-19 and the subsequent decrease in
revenues, accesso Technology Group plc (the Group), took several
steps to preserve the cash position of the Group including raising
additional cash of $46.1m through a placing and open offer,
obtaining additional loan facilities of GBP8m until 31 August 2021
($10.4m) and reducing underlying administrative expenses by $1.4m a
month for the year.
Subsequent to year end the Group has signed a new banking
agreement with Investec Bank PLC and settled in full the facility
with Lloyds Bank PLC. This agreement gives a facility of GBP18m
through to March 2024 and the covenants in the first 2 years are
minimum revenue and minimum liquidity only. Minimum revenue
covenants are tested quarterly on a 12-month basis ending on each
test date at $50m for June 2021, September 2021 and December 2021;
$55m for March 2022, June 2022 and September 2022; and $60m for
December 2022. Minimum liquidity is GBP10.7m of freely available
cash to be tested for four consecutive quarters starting on June
2021. As at 19 March 2021 the Group has cash of $28.6m and
available facilities of GBP18m subject to Investec Bank PLC
securing charges over our US subsidiaries.
The Directors have prepared cash flow forecasts for the Group
for a period of 24 months from the date of this financial
information, which indicate that, taking account of severe but
plausible downsides and the anticipated impact of COVID-19, the
Group will have sufficient funds to meet the liabilities of the
Group as they fall due for that period.
The base case assumes that there is a steady re-opening of
attractions and that Group revenue and EBITDA gradually increases
through 2021 although are still below the levels seen in 2019.
Within the base case there are contingencies to allow for a
shortfall to the expected level of performance. Under this
scenario, the Group has sufficient liquidity and adequate headroom
within its existing cash reserves and facilities and complies with
all covenants throughout the review period.The severe but plausible
downside case assumes that the impact of COVID-19 lasts for longer
with a lower and slower opening of attractions with FY21 revenues
being in line with those achieved in FY20. It also assumes that
steps would be taken to protect the Group's financial position by
taking actions which are in the Group's control such as deferring
capital expenditure, significantly reducing areas of expenditure
such as use of subcontractors and travel and accommodation costs
but assumes no government support in terms of furlough or delays in
tax payments. Under this scenario, the Group would also have
sufficient liquidity and adequate headroom within its existing cash
reserves and facilities and complies with all covenants throughout
the review period.
Consequently, the directors are confident that the company will
have sufficient funds to continue to meet its liabilities as they
fall due for the period of assessment to 31 December 2022 and
therefore have prepared the financial information on a going
concern basis.
Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated into the
respective functional currencies of Group companies at the rates
ruling when the transactions occur.
Monetary assets and liabilities denominated in foreign currency
are translated into the functional currency at the exchange rate at
the reporting date. Non-monetary assets and liabilities that are
measured at fair value in a foreign currency are translated into
the functional currency at the exchange rate when the fair value
was determined. Non-monetary items that are measured based on
historical cost in a foreign currency are translated at the
exchange rate at the date of the transaction.
Foreign operations
The assets and liabilities of foreign operations, including
goodwill, are translated into USD at the exchange rates at the
reporting date. The income and expenses of foreign operations are
translated into USD at the rates ruling when the transactions
occur, or appropriate averages.
Foreign currency differences on translating the opening net
assets at an opening rate and the results of operations at actual
rates are recognised in other comprehensive income and accumulated
in the translation reserve. Retranslation differences recognised in
other comprehensive income will be reclassified to profit or loss
in the event of a disposal of the business, or the Group no longer
has control or significant influence.
Revenue from contracts with customers
IFRS 15 provides a single, principles based five step model to
be applied to all sales contracts as outlined below. It is based on
the transfer of control of goods and services to customers and
replaces the separate models for goods and services.
1. Identify the contract(s) with a customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognise revenue when or as the entity satisfies its performance obligations.
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
measured reliably. The following table provides information about
the nature and timing of the satisfication of performance
obligations in contracts with customers, including significant
payment terms, and the related revenue recognition policies.
Type of Nature of the performance
product/service/ obligations and significant
Segment payment terms Accounting policy
a. Point-of-sale Customers obtain control IFRS 15 considers these licences
(POS) licences of the POS licence once to be recognised at a point in
and support it is installed on their time which is determined to be
revenue hardware for terms between when the customer has been
- Ticketing one and three years. They provided
and distribution have access to ongoing support the software. These licences
which is typically for a provide the customer with the
twelve-month period, this right of use of the POS software
support is not necessary as it exists, it is at the
for the functionality of customers
the licence, support revenue discretion to accept any updates
is therefore a distinct to the software, it is fully
performance obligation from functional from the date it is
the licence performance provided to the customer and
obligation. considered a distinct
With agreements longer than performance
one year, invoices are generated obligation.
either quarterly or annually, Support revenue is carved out
usually payable within thirty of the total consideration using
days. an estimate that best reflects
Although payments are made its stand-alone selling price
over the term of the agreement, and is continued to be
the agreement is binding recognised
for the negotiated term. rateably out of contract
The total transaction price liabilities
is payable over the term as the customer receives the
of the agreement via the benefit of the support.
annual or quarterly instalments.
b. Software Certain software licences IFRS 15 considers right of use
licences are installed on a customer's licences to be recognised at
and the hardware in a fully functional a point in time which is
related state together with support determined
maintenance and maintenance for a to be when the customer has been
and support twelve-month provided with a functional
revenue term. The software licence software
- Ticketing does not require the maintenance licence.
and distribution and support to operate, The maintenance and support
and Guest providing the customer with revenue
Experience control of the licence for is determined using an estimate
a twelve-month term and that best reflects its
representing a separate stand-alone
performance obligation. selling price and is continued
to be recognised rateably as
Contract terms are typically the customer receives the
either three years or perpetual benefit
whereby on each anniversary of the maintenance and support.
of the contract the customer The option to renew each year's
is required to pay the annual licence at a full discount by
support and maintenance paying the annual maintenance
to be granted the annual and support is deferred and
software licence at a 100% recognised
discount from the selling at a future point in time when
price. This option to renew the customer renews. The amount
is considered a material that is deferred is dependent
right under IFRS 15 and on the term of the contract.
represents a separate For example: on the inception
performance of a three-year contract, two
obligation. thirds of the licence fee
consideration
would be deferred and released
equally on the first and second
anniversary when the customer
renews their maintenance and
support. Perpetual licences are
recognised in the same manner,
with the exception being that
the contract term is estimated
to be five years. As such, the
renewal discounts are deferred
and spread over the remaining
four years at each point the
customer renews their
maintenance
and support.
Nature of the performance
Type of obligations and significant
product/service payment terms Accounting policy
------------------ --------------------------------- ---------------------------------
c. Virtual Virtual queuing systems IFRS 15 focuses on control of
queuing are installed at a client's the goods or services.
system - location, and revenue is Management
Guest Experience recognised when the park have determined that the Group
guest uses the service. is acting as the agent in all
The Group's performance queuing contracts as it is the
obligation is either to attractions who bring the guest
provide a licence to and to the parks, control hours of
maintain a system in the operation and have influence
park or operate the system over many aspects of the service
within the park. we supply. accesso therefore
only recognises its portion of
the sale as revenue, rather than
the full amount of the guest
payment.
d. Ticketing Revenue is recognised at Ticketing and eCommerce revenue
and eCommerce the time the ticket is sold is recognised at the time the
revenue or the transaction takes ticket is sold or the
- Ticketing place. Invoices are issued transaction
and distribution monthly and generally payable takes place.
within thirty days.
e. Professional Professional services revenue Bespoke professional services
services is typically providing work is recognised over time
- Ticketing customised where the Group has enforceable
and distribution software development and rights to revenue in the event
and Guest in general is agreed with of cancellation.
Experience the customer and billed The group recognise revenue over
at each month end. Certain time using the input method
contracts span longer time (hours/total
periods whereby the Group budgeted hours) when this method
carry out customisation best depicts the group's
and deliver software releases performance
to customers at predetermined of transferring control.
milestones. For certain customers the output
method is adopted where the
group's
right to consideration
corresponds
directly with the completed
monthly
performance obligation, revenue
for these customers is
recognised
in line with the amount of
revenue
the group is entitled to
invoice.
f. Hardware On certain contracts, customers This revenue is recognised at
sales - request that the group procure the point the customer obtains
Ticketing hardware on their behalf control of the hardware which
and distribution which the group has determined is considered to be the point
and Guest to be a distinct performance of delivery when legal title
Experience obligation. passes.
g. Platform Cloud-based experience Revenue is billed monthly and
fees management recognised over-time as the
platform systems are used performance
by certain venues to provide obligations of hosting and
customer relationship supporting
management, the secure platforms are
guest personalisation, payment provided
and ordering services, push to the venues.
notifications, scheduling,
offers, location-based services,
consumer facing screens
and many other services
to end users at attractions.
These secure platforms are
provided to venues together
with support under annual
contracts.
Contract assets and contract liabilities
Contract assets represent licence fees which have been
recognised at a point in time but where the consideration is
contractually payable over time, professional service revenue
whereby control has been passed to the customer and deferred
contract commissions incurred in obtaining a contract which are
recognised in line with the recognition of the revenue. Contract
assets for point in time licence fees and unbilled professional
service revenue represent financial assets and are considered for
impairment on an expected credit loss model, these assets have
historically had immaterial levels of bad debt and are with credit
worthy customers, and consequently the group has not recognised any
impairment provision against them.
Contract liabilities represent discounted renewal options on
licence arrangements whereby a customer has the right to renew
their licence at a full discount subject to the payment of annual
support and or maintenance fees on each anniversary of the
contract. Contract liabilities are recognised as income when a
customer exercises their renewal right on each anniversary of the
contract and pays their annual maintenance and support. In the
situation of a customer terminating their contract all unexercised
deferred renewal rights would be recognised as income, representing
a lapse of the renewal right options. The licence fees related to
these contract liabilities are non-refundable.
Where these assets or liabilities mature in periods beyond 12
months of the balance sheet date they are recognised within
non-current assets or non-current liabilities as appropriate.
Interest expense recognition
Expense is recognised as interest accrues, using the effective
interest method, to the net carrying amount of the financial
liability.
Employee benefits
Share-based payment arrangements
The Group issues equity-settled share-based payments to
full-time employees. Equity-settled share-based payments are
measured at the fair value at the date of grant, with the expense
recognised over the vesting period, with a corresponding increase
in equity. The amount recognised as an expense is adjusted to
reflect the Group's estimate of shares that will eventually vest,
such that the amount recognised is based on the number of awards
that meet the service and non-market performance conditions at the
vesting date.
The fair value of Enterprise Management Incentive (EMI) and
unapproved share options is measured by use of a Black-Scholes
model, and share options issued under the Long-Term Incentive Plan
(LTIP) are measured using the Monte Carlo method, due to the
market-based conditions upon which vesting is dependent. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
The LTIP awards contain market-based vesting conditions where
they have been set. Market vesting conditions are factored into the
fair value of the options granted. As long as all other vesting
conditions are satisfied, a charge is made irrespective of whether
the market vesting conditions are satisfied. The cumulative expense
is not adjusted for failure to achieve a market vesting condition
or where a non-vesting condition is not satisfied.
Pension costs
Contributions to the Group's defined contribution pension
schemes are charged to the Consolidated statement of comprehensive
income in the period in which they become due.
Property, plant and equipment
Items of property, plant and equipment are stated at cost of
acquisition or production cost less accumulated depreciation and
impairment losses.
Depreciation is charged so as to write off the cost of assets,
less residual value, over their estimated useful lives, using the
straight-line method, on the following bases:
Plant, machinery, and
office equipment 20 - 33.3%
Installed systems 25 - 33.3%, or life of contract
Furniture and fixtures 20%
Leasehold Improvements Shorter of useful life of the asset or
time remaining within the lease contract
Inventories
The Group's inventories consist of parts used in the manufacture
and maintenance of its virtual queuing product, along with
peripheral items that enable the product to function within a
park.
Inventories are valued at the lower of cost and net realisable
value, after making due allowance for obsolete and slow-moving
items. Inventories are calculated on a first in, first out
basis.
Park installations are valued on the basis of the cost of
inventory items and labour plus attributable overheads. Net
realisable value is based on estimated selling price less
additional costs to completion and disposal.
Deferred tax
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the Consolidated and
Company statements of financial position differs from its tax base,
except for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a transaction
which is not a business combination and at the time of the
transaction affects neither accounting or taxable profit;
and
-- investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal
of the difference and it is probable that the difference
will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax
liabilities / (assets) are settled / (recovered).
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable Group company; or
-- different Group entities which intend either to settle
current tax assets and liabilities on a net basis, or to
realise the assets and settle the liabilities simultaneously,
in each future period in which significant amounts of deferred
tax assets or liabilities are expected to be settled or
recovered.
Current income tax
The tax expense or benefit for the period comprises current and
deferred tax. Tax is recognised in the income statement, except to
the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the balance sheet date
in the countries where the company and its subsidiaries operate and
generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities. See note 8 for further
discussion on provisions related to tax positions.
Goodwill
Any excess of the cost of the business combination over the
Group's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities is recognised in the
Consolidated Statement of Financial Position as goodwill and is not
amortised.
After initial recognition, goodwill is stated at cost less any
accumulated impairment losses, with the carrying value being
reviewed for impairment at an operating segment level before
aggregation, at least annually and whenever events or changes in
circumstances indicate that the carrying value may be impaired.
Where the recoverable amount of the cash-generating unit is less
than its carrying amount including goodwill, an impairment loss is
recognised in the Consolidated Statement of Profit or Loss.
Externally acquired intangible assets
Intangible assets are capitalised at cost and amortised to nil
by equal instalments over their estimated useful economic life.
Intangible assets are recognised on business combinations if
they are separable from the acquired entity. The amounts ascribed
to such intangibles are arrived at by using appropriate valuation
techniques. The significant intangibles recognised by the Group and
their useful economic lives are as follows:
-- Trademarks over 10 years
-- Patents over 20 years
-- Customer relationships and supplier contracts over
1 to 15 years
-- Acquired internally developed technology over 5 to
7 years
Internally generated intangible assets and research and
development
Expenditure on internally developed products is capitalised if
it can be demonstrated that it is substantially enhancing an asset
and:
-- It is technically feasible to develop the product for
it to be sold;
-- Adequate resources are available to complete the development;
-- There is an intention to complete and sell the product;
-- The Group is able to sell the product;
-- Sale of the product will generate future economic benefits;
and
-- Expenditure on the project can be measured reliably
In accordance with IAS 38 'Intangible Assets', expenditure
incurred on research and development is distinguished as either
related to a research phase or to a development phase. Development
expenditure not satisfying the above criteria and expenditure on
the research phase of internal projects is recognised in the
Consolidated income statement as incurred.
Development expenditure is capitalised and amortised within
administrative expenses on a straight-line basis over its useful
economic life between 3 - 5 years from the date the intangible
asset goes into use. The amortisation expense is included within
administrative expenses in the Consolidated income statement.
All advanced research phase expenditure is charged to the income
statement. For development expenditure, this is capitalised as an
internally generated intangible asset, only if it meets the
criteria noted above. The Group has contractual commitments for
development costs of $nil (2019: $nil).
Acquired intellectual property rights and patents
Intellectual property rights comprise assets acquired, being
external costs, relating to know how, patents, and licences. These
assets have been capitalised at the fair value of the assets
acquired and are amortised within administrative expenses on a
straight-line basis over their estimated useful economic life of 5
to 7 years.
Fair value of contingent consideration
Contingent consideration payable in cash in connection with
acquisitions is measured at its fair value as of the reporting date
and classified as a financial liability with subsequent
re-measurement through profit and loss.
Equity settled contingent consideration that results in either a
fixed number of equity instruments or no issue of equity where the
employment condition is not met is treated as equity settled.
Equity settled contingent consideration is fair valued at the
acquisition date, it is not re-measured at each reporting date and
its subsequent settlement is accounted for within equity.
Where cash or equity consideration is contingent on the
continued employment of the sellers the fair value of the expense
is recognised as a remuneration expense in the statement of
comprehensive income over the deferral period, where the employment
condition does not apply and the consideration is in respect of a
business combination it is included within cost of investment.
Financial assets
The Group classifies all its financial assets into one of the
following categories, depending on the purpose for which the asset
was acquired. The Group's accounting policy for each category is as
follows:
Trade and loan receivables: Trade receivables are initially
recognised by the Group and carried at original invoice amount less
an allowance for any uncollectible or impaired amounts. An estimate
for doubtful debts is made when collection of the full amount is no
longer probable. Debts are written off when they are identified as
being uncollectible. Contract assets and other receivables are
recognised at fair value. Loan receivables are non-derivative
financial assets with fixed or determinable payments that are not
quoted in an active market. They arise principally through the
provision of goods and services to customers (trade receivables),
but also incorporate other types of contractual monetary asset.
Impairment of a financial asset is recognised if there is objective
evidence that the balance will not be recovered.
Cash and cash equivalents in the statement of financial position
comprise cash at bank, cash in hand and short-term deposits with an
original maturity of three months or less. Bank overdrafts that are
repayable on demand and form an integral part of the Group's cash
management are included as a component of cash and cash equivalents
for the purposes of the consolidated statement of cash flow.
Financial liabilities
The Group treats its financial liabilities in accordance with
the following accounting policies:
-- Trade payables and other short-term monetary liabilities
are recognised at fair value and subsequently at amortised
cost.
-- Bank borrowings and finance leases are initially recognised
at fair value net of any transaction costs directly attributable
to the issue of the instrument. Such interest-bearing liabilities
are subsequently measured at amortised cost using the effective
interest rate method, which ensures that any interest expense
over the period to repayment is at a constant rate on the
balance of the liability carried in the statement of financial
position. "Interest expense" in this context includes initial
transaction costs and premiums payable on redemption, as
well as any interest payable while the liability is outstanding.
For loan modifications the Group assesses if the loan can
be prepaid without significant penalty and if so no gain
or loss is recognised in the income statement at the date
of the modification.
-- Derivative financial liability - forward foreign currency
contracts that are out-of-money derivatives using period
end exchange rates, relative to the forward point exchange
rate entered into by the Group on inception of the agreement,
are held as derivative financial liabilities. These level
one 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 expense line. Variation margin paid
to the counter party on these forward contracts has been
offset against the derivative financial liability in the
Statement of Financial Position.
Employee benefit trust (EBT)
As the company is deemed to have control of its EBT, it is
treated as a subsidiary and consolidated for the purposes of the
consolidated financial information. Within the company balance
sheet the EBT is accounted as an investment held at cost less
accumulated impairment. The EBT's assets (other than investments in
the company's shares), liabilities, income, and expenses are
included on a line-by-line basis in the consolidated financial
information. The EBT's investment in the company's shares is
deducted from equity in the consolidated statement of financial
position as if they were treasury shares.
Government grants
The Group received government support for payroll costs
throughout the year including the UK Coronavirus Job Retention
Scheme and equivalent schemes in Australia and Germany. Grants that
compensate the Group for expenses incurred are recognised in profit
or loss as other income on a systematic basis in the periods in
which the expenses are recognised, unless the conditions for
receiving the grant are met after the related expenses have been
recognised. In this case, the grant is recognised when it becomes
receivable.
IFRS 16 Leases
The Group assesses whether a contract is or contains a lease,
under IFRS 16, a contract is, or contains, a lease if the contract
conveys a right to control the use of an identified asset for a
period of time in exchange for consideration. On transition to IFRS
16 on 1 January 2019, for these leases, lease liabilities were
measured at the present value of the remaining lease payments,
discounted at the Group's incremental borrowing rate as at 1
January 2019. The Group elected to measure right-of-use assets at
an amount equal to the lease liability, adjusted by the amount of
any prepaid or accrued lease payments.
As a lessee
The Group leases commercial office space. The Group has elected
not to recognise right of use assets and lease liabilities for some
leases of low value. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis
over the lease term.
The Group recognises a right of use asset and lease liability at
the lease commencement date. The right of use asset is initially
measured at cost, and subsequently at cost less any accumulated
depreciation and impairment losses and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounting using the Group's incremental borrowing rate.
The lease liability is subsequently increased by the interest
cost on the lease liability and decreased by lease payments made.
It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, a change in the estimate
of the amount expected to be payable under a residual value
guarantee, or as appropriate, changes in the assessment of whether
a purchase or extension option is reasonably certain to be
exercised or a termination option is reasonably certain not to be
exercised.
The Group has applied judgement to determine the lease term for
some lease contracts that include renewal options. The assessment
of whether the Group is reasonably certain to exercise such options
impacts the lease term, which significantly affects the amount of
lease liabilities and right of use assets recognised.
In adopting IFRS 16 on 1 January 2019 the Group took advantage
of the practical expedients that were applicable. These
included:
-- Applying a single discount rate to portfolio of leases
with similar characteristics.
-- The Group has also relied on its previous assessment
of whether leases are onerous or not immediately before
initial application.
-- Leases with a term ending within 12 months of 1 January
2020 were classified as short-term leases and expensed
through the administrative expenses.
-- Initial direct costs have been excluded from the measurement
of the right of use asset at the date of application.
5. Functional and presentation currency
The presentation currency of the Group is US dollars (USD) in
round thousands. Items included in the financial statements of each
of the Group's entities are measured in the functional currency of
each entity. The Group used the local currency as the functional
currency including the parent company, where the functional
currency is sterling. The Group's choice of presentation currency
reflects its significant dealings in that currency.
6. Critical judgments and key sources of estimation uncertainty
In preparing this consolidated financial information, the Group
makes judgements, estimates and assumptions concerning the future
that impact the application of policies and reported amounts of
assets, liabilities, income and expenses.
The resulting accounting estimates calculated using these
judgements and assumptions are based on historical experience and
expectations of future events and may not equal the actual results.
Estimates and underlying assumptions are reviewed on an ongoing
basis, and revisions to estimates are recognised prospectively.
The judgements and key sources of assumptions and estimation
uncertainty that have a significant effect on the amounts
recognised in the financial information are discussed below.
Judgements
Information about judgements made in applying accounting
policies that have the most significant effects on the amounts
recognised in the consolidated financial information are below:
Capitalised development costs
The Group capitalises development costs in line with IAS 38
Intangible Assets. Management applies judgement in determining if
the costs meet the criteria and are therefore eligible for
capitalisation at the outset of a project, $0.46m has been
capitalised on new projects during 2020. Significant judgements
include the determination that assets have been substantially
enhanced, the technical feasibility of the development,
recoverability of the costs incurred, and economic viability of the
product and potential market available considering its current and
future customers. See internally generated intangible assets and
research and development within note 4 for details on the Group's
capitalisation and amortisation policies, and Intangible Assets,
note 10, for the carrying value of capitalised development
costs.
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that
have a significant risk of resulting in material adjustments in the
following year are:
Goodwill, intangible and investment asset testing
The key assumptions used in the testing of goodwill allocated to
operating segments and intangible assets allocated to cash
generated units are set out in detail along with sensitivity
analysis in note 10.
The investment impairment testing is calculated on a value in
use basis and uses the key assumptions relevant to its investments
set out in note 10.
Useful economic lives of capitalised development costs
The group amortise its capitalised development costs over 3 - 5
years as this has been deemed by management to be the best
reflection of the lifecycle of their technology. If this useful
economic life estimate were to be 4 or 6 years the impact on the
current year amortisation would be $1,738k higher and $1,015k lower
respectively. Management will review this estimate each year to
ensure it is reflective of the technologies being developed.
7. Business and geographical segments
Segmental analysis
The Group's operating segments under IFRS have been determined
with reference to the financial information presented to the Board
of directors. 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 and Distribution operating segment
comprises the following products:
o accesso Passport ticketing suite using our hosted proprietary
technology offering to maximise up selling, cross selling
and selling greater volumes.
o accesso Siriusware software solutions providing modules
in ticketing & admissions, memberships, reservations, resource
scheduling, retail, food service, gift cards, kiosks and
eCommerce.
o The accesso ShoWare ticketing solution for box office,
online, kiosk, mobile, call centre and social media sales.
o Ingresso operate 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 'TE2') are
headed by segment managers who discuss the operating activities,
financial results, forecasts and plans of their respective segments
with the CODM. These two distinct operating segments 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:
o accesso LoQueue providing leading edge virtual queuing
solutions to take customers out of line, improve guest
experience and increase revenue for theme parks
o The Experience Engine ("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
non-recurring items but after the deduction of capitalised
development costs. 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.
2020 2019
$000 $000
------- --------
Ticketing and Distribution 37,966 79,334
Guest Experience 18,128 37,848
Total revenue 56,094 117,182
------- --------
Ticketing Guest Central
and Distribution Experience unallocated Group
costs
Year ended 31 December 2020 $000 $000 $000 $000
------------------ ------------ ------------- ---------
Cash EBITDA (*) 5,578 (738) (16,290) (11,450)
------------------ ------------ ------------- ---------
Capitalised development spend 2,969
Depreciation and amortisation
(excluding acquired intangibles) (14,664)
Aborted sale process costs (461)
Deferred and contingent payments (150)
Amortisation related to acquired
intangibles (2,573)
Impairment related to development
intangibles (2,627)
Share-based payments (1,398)
Finance income 10
Finance expense (2,518)
Loss before tax (32,862)
=========
Ticketing Guest Central
and Distribution Experience unallocated Group
costs
Year ended 31 December 2019 $000 $000 $000 $000
------------------ ------------ ------------- ---------
Cash EBITDA (*) 22,176 7,343 (22,378) 7,141
------------------ ------------ ------------- ---------
Capitalised development spend 21,064
Depreciation and amortisation
(excluding acquired intangibles) (16,014)
Aborted sale process costs (305)
Deferred and contingent payments (1,416)
Amortisation related to acquired
intangibles (11,286)
Impairment related to TE2 (53,617)
Share-based payments (1,845)
Finance income 21
Finance expense (1,324)
Loss before tax (57,581)
=========
(*) Cash EBITDA is calculated as operating profit before the
deduction of amortisation, impairment of intangible assets,
depreciation, acquisition costs, deferred and contingent payments,
and costs related to share-based payments but after capitalised
development costs
The segments will be assessed as the Group develops and
continues to make acquisitions.
An analysis of the Group's external revenues and non-current
assets (excluding deferred tax and contract assets) by geographical
location are detailed below:
Revenue Non-current assets
----------------- ---------------------
2020 2019 2020 2019
$000 $000 $000 $000
------- -------- ---------- ---------
UK 5,228 27,547 26,866 29,346
Other Europe 1,826 4,044 10 7
Australia/South Pacific/Asia 2,413 3,710 255 221
USA and Canada 45,753 78,655 108,714 121,915
Central and South America 874 3,226 263 447
------- -------- ---------- ---------
56,094 117,182 136,108 151,936
------- -------- ---------- ---------
Revenue generated in each of the geographical locations is
generally in the local currency of the venue or operator based in
that location.
Major customers
The Group has entered into agreements with theme parks, theme
park groups, and attractions to operate its technology in single or
multiple theme parks or attractions within the theme park
group.
There are two park and attraction operators with which the Group
has contractual relationships with combined segmental revenues in
excess of 10% of the total group revenue. The first park operator
accounted for $5.4m (2019: $7.3m) Ticketing and Distribution
revenue, the customers of this operator accounted for $5.4m (2019:
$16.4m) Guest Experience revenue. The second park and attractions
operator accounted for $5.0m (2019: $9.5m) Ticketing and
Distribution revenue, the customers of this operator accounted for
$0.9m (2019: $4.1m) Guest Experience revenue.
Another customer within the Guest Experience segment accounted
for $7.0m of group revenue in 2020 (2019: $9.6m).
8. Tax
The table below provides an analysis of the tax charge for the
periods ended 31 December 2020 and 31 December 2019:
2020 2019
$000 $000
-------- --------
UK corporation tax
Current tax on income for the period 352 1,854
Adjustment in respect of prior periods (1,031) 6
-------- --------
(679) 1,860
Overseas tax
Current tax on income for the period (531) 230
Adjustment in respect of prior periods 415 49
-------- --------
(116) 279
Total current taxation (795) 2,139
-------- --------
Deferred taxation
Original and reversal of temporary difference
- for the current period (2,218) (9,037)
Impact on deferred tax rate changes (255) -
Original and reversal of temporary difference
- for the prior period 260 (87)
-------- --------
(2,213) (9,124)
--------
Total taxation benefit (3,008) (6,985)
======== ========
The differences between the actual tax charge for the period and
the theoretical amount that would arise using the applicable
weighted average tax rate are as follows:
2020 2019
$000 $000
--------- ---------
Loss on ordinary activities before tax (32,862) (57,581)
Tax at United States tax rate of 24% (2019:
24%) (7,887) (13,820)
Effects of:
Expenses not deductible for tax purposes (89) 615
Goodwill impairment not deductible - 4,177
Profit/(loss) subject to foreign taxes
at a lower marginal rate (68) 440
Adjustment in respect of prior period
- income statement (356) (32)
US R&D credits/other US tax credits (2,584) -
Share options 224 748
Impact of rate changes (255) -
Deferred tax on US losses not recognised 8,327 -
(Release)/ recognition of uncertain tax
positions (262) 897
Other (58) (10)
Total tax benefit (3,008) (6,985)
========= =========
Deferred taxation Asset Liability
$000 $000
-------- ----------
Group
At 31 December 2018 7,999 (17,596)
Credited to income 2,194 6,930
Credited directly to equity (1,584) -
Foreign Currency translation 38 (112)
At 31 December 2019 8,647 (10,778)
(Charged)/ credited to income (1,007) 3,219
Credited directly to equity 50 -
Foreign currency translation 11 (21)
At 31 December 2020 7,701 (7,580)
-------- ----------
Company
At 31 December 2018 - (327)
(Credited)/charged to income (83) 389
Credited directly to equity (433) -
Foreign currency translation 20 (30)
Netted against the asset 496 (496)
At 31 December 2019 - (464)
(Credited)/charged to income (44) (48)
Credited directly to equity (32) -
Foreign currency translation 5 (22)
Netted against the asset 71 (71)
At 31 December 2020 (605)
-------- ----------
The following table summarises the recognised deferred tax asset
and liability:
2020 2019
Group $000 $000
-------- ---------
Recognised asset
Tax relief on unexercised employee share
options 539 455
Short term timing differences 3,584 696
Net operating losses & tax credits 1,728 5,010
S163(j) US interest disallowance 1,850 2,486
-------- ---------
Deferred tax asset 7,701 8,647
-------- ---------
Recognised liability
Capital allowances in excess of depreciation (4,675) (7,651)
Uncertain tax positions (509) (635)
Short term timing differences (456) (182)
Business combinations (1,940) (2,310)
-------- ---------
Deferred tax liability (7,580) (10,778)
-------- ---------
Company
Recognised asset
Tax relief on unexercised employee share
options 45 128
Short term timing differences 18 7
Offset against Company deferred tax asset (63) (135)
-------- ---------
Deferred tax asset - -
-------- ---------
Recognised liability
Capital allowances in excess of depreciation (661) (599)
Short term timing differences (7) -
Offset against Company deferred tax asset 63 135
-------- ---------
Deferred tax liability 605 464
-------- ---------
Group
Unrecognised asset
Net operating losses - US (Included within 10,752 -
the unrecognised deferred tax asset is
$2.2m relating to prior periods)
Unrecognised deferred tax asset 10,752 -
-------
Tax rates in the UK increased from 17% to 19% with effect from 1
April 2020 and the US rate remained at 21%, before state taxes. As
both rate changes had been substantively enacted, deferred tax
assets and liabilities were measured at a rate of 19% (2019: 17%)
and 21% (2019: 21%) plus state taxes in the UK and US,
respectively.
There are no material unrecognised deferred tax assets outside
of the US.
Taxation and transfer pricing
The Group is an international technology business and, as such,
transfer pricing arrangements are in place to cover funding
arrangements, management costs and the exploitation of IP between
Group companies. Transfer prices and the policies applied directly
affect the allocation of Group-wide taxable income across a number
of tax jurisdictions. While transfer pricing entries between legal
entities are on an arm's length basis, there is increasing scrutiny
from tax authorities on transfer pricing arrangements. This could
result in the creation of uncertain tax positions.
The Group provides for anticipated risks, based on reasonable
estimates, for tax risks in the respective countries in which it
operates. The amount of such provisions can be based on various
factors, such as experience with previous tax audits and differing
interpretations of tax regulations by the taxable entity and the
responsible authority. Uncertainties exist with respect to the
evolution of the Group following international acquisitions holding
significant IP assets, interpretation of complex tax regulations,
changes in tax laws, and the amount and timing of future taxable
income.
Given the wide range of international business relationships and
the long-term nature and complexity of existing contractual
agreements, differences arising between the actual results and the
assumptions made, or future changes to such assumptions, could
necessitate future adjustments to tax income and expense already
recorded.
Uncertainties in relation to tax liabilities are provided for
within income tax payable to the extent that it is considered
probable that the Group may be required to settle a tax liability
in the future. Settlement of tax provisions could potentially
result in future cash tax payments; however, these are not expected
to result in an increased tax charge as they have been fully
provided for in accordance with management's best estimates of the
most likely outcomes.
Ongoing tax assessments and related tax risks
The Group has undertaken a review of potential tax risks and
current tax assessments, and whilst it is not possible to predict
the outcome of any current or future tax enquiries, adequate
provisions are considered to have been included in the Group
accounts to cover any expected estimated future settlements.
In common with many international groups operating across
multiple jurisdictions, certain tax positions taken by the Group
are based on industry practice and external tax advice or are based
on assumptions and involve a degree of judgement. It is considered
possible that tax enquiries on such tax positions could give rise
to material changes in the Group's tax provisions.
The Group is consequently, from time to time, subject to tax
enquiries by local tax authorities and certain tax positions
related to intercompany transactions may be subject to challenge by
the relevant tax authority.
The Group has recognised provisions where it is not probable
that tax positions taken will be accepted, totalling $0.5m (2019:
$0.6 million) in relation to transfer pricing risks and nil (2019:
$0.3 million) in relation to availability of tax losses and
international R&D claims.
9. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated by dividing the net
profit attributable to ordinary shareholders, after adjustments for
instruments that dilute basic earnings per share, by the weighted
average of ordinary shares outstanding during the period (adjusted
for the effects of dilutive instruments).
Earnings for adjusted earnings per share, a non-GAAP measure,
are defined as profit before tax before the deduction of
amortisation related to acquisitions, impairment of intangible
assets, acquisition costs, deferred and contingent consideration
linked to continued employment, and costs related to share-based
payments, less tax at the effective rate on tax impacted items.
The table below reflects the income and share data used in the
total basic, diluted, and adjusted earnings per share
computations.
2020 2019
--------- ---------
Loss attributable to ordinary shareholders
($000) (29,854) (50,596)
Basic EPS
Denominator
Weighted average number of shares used
in basic EPS (000s) 35,213 27,459
---------
Basic loss per share (cents) (84.78) (184.26)
========= =========
Diluted EPS
Denominator
Weighted average number of shares used
in basic EPS (000s) 35,213 27,459
Effect of dilutive securities
Options (000s) 983 406
Deferred share consideration on business
combinations (000s) - 17
--------- ---------
Weighted average number of shares used
in diluted EPS (000s) 36,196 27,882
---------
Diluted loss per share (cents) (84.78) (184.26)
========= =========
The Group has made a loss in the year, 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 the years ended 31 December 2020 and 31 December
2019.
2020 2019
$000 $000
--------- ---------
Adjusted EPS
Profit attributable to ordinary shareholders
($000) (29,854) (50,596)
Adjustments for the period related to:
Amortisation relating to acquired intangibles
from acquisitions 2,573 11,286
Impairment of goodwill - 17,403
Impairment of intangible assets 2,627 36,214
Aborted sale process costs 462 305
Deferred and contingent consideration linked
to employment 150 1,416
Share-based compensation and social security
costs on unapproved options 1,398 1,845
--------- ---------
(22,644) 17,873
Net tax related to the above adjustments
(2020: 19.7%, 2019: 19.1%): 1,291 (9,420)
Adjusted profit attributable to ordinary
shareholders ($000) (21,353) 8,453
Adjusted basic EPS
Denominator
Weighted average number of shares used
in basic EPS (000s) 35,213 27,459
-------------- -------------
Adjusted basic (loss)/earnings per share
(cents) (60.64) 30.78
============== =============
Adjusted diluted EPS
Denominator
Weighted average number of shares used
in diluted EPS (000s) 36,196 27,882
-------------- -------------
Adjusted diluted (loss)/earnings per share
(cents) (60.64) 30.32
============== =============
81,718 LTIP awards were not included in the calculation of
diluted EPS because their exercise is contingent on the
satisfaction of certain criteria that had not been met as at 31
December 2020 (2019: 453,665).
10. Intangible assets
The cost and amortisation of the Group's intangible fixed assets
are detailed in the following table:
Acquired
Customer internally
relationships developed Patent
& supplier intellectual & IPR Development
Goodwill contracts Trademarks property costs costs Totals
$000 $000 $000 $000 $000 $000 $000
--------- -------------- ----------- -------------- ------- ------------ --------
Cost
At 31 December
2018 116,144 18,314 1,841 52,981 732 58,026 248,038
Foreign
currency
translation 646 - - 40 32 591 1,309
Additions - - - - 1 21,998 21,999
Disposals - - - - (3) (2,765) (2,768)
At 31 December
2019 116,790 18.314 1,841 53,021 762 77,850 268,578
Foreign
currency
translation 721 - - 16 21 481 1,239
Additions - - - - 2,969 2,969
Disposals - - - - (6,737) (6,737)
At 31 December
2020 117,511 18,314 1,841 53,037 783 74,563 266,049
--------- -------------- ----------- -------------- ------- ------------ --------
Amortisation
At 31 December
2018 - 7,196 688 24,544 507 17,771 50,706
Foreign
currency
translation - (36) (33) (163) 28 482 278
Charged - 2,468 139 8,679 97 12,903 24,286
Impairment 17,403 3,648 1,027 16,348 - 15,191 53,617
Charged - - - - - (2,765) (2,765)
Disposal
--------- -------------- ----------- -------------- ------- ------------ --------
At 31 December
2019 17,403 13,276 1,821 49,408 632 43,582 126,122
Foreign
currency
translation - - - 34 18 463 515
Charged - 882 16 1,675 21 11,425 14,019
Impairment - - - 430 - 2,197 2,627
Disposal - - - - - (6,737) (6,737)
At 31 December
2020 17,403 14,158 1,837 51,547 671 50,930 136,546
--------- -------------- ----------- -------------- ------- ------------ --------
Net book
value
At 31 December
2020 100,108 4,156 4 1,490 112 23,633 129,503
======== ------ --- ------ ---- ------- --------
At 31 December
2019 99,387 5,038 20 3,613 130 34,268 142,456
======== ========== === ====== ==== ======= ========
The cost and amortisation of the company's intangible fixed
assets are detailed in the following table:
Patent Development Totals
costs costs
$000 $000 $000
------- ------------ --------
Cost
At 31 December 2018 560 12,965 13,525
Foreign currency translation 1 463 464
Additions 25 1,579 1,604
Disposals (3) (2,765) (2,768)
At 31 December 2019 583 12,242 12,825
Foreign currency translation 14 473 487
Additions - 803 803
Disposals - (3,631) (3,631)
At 31 December 2020 597 9,887 10,484
------- ------------ --------
Amortisation
At 31 December 2018 421 6,708 7,129
Foreign currency translation 21 262 283
Charged 33 2,191 2,224
Disposals - (2,765) (2,765)
At 31 December 2019 475 6,396 6,871
Foreign currency translation 11 352 363
Impairment - 468 468
Charged 21 1,911 1,932
Disposals - (3,631) (3,631)
At 31 December 2020 507 5,496 6,003
------- ------------ --------
Net Book Value
At 31 December 2020 90 4,391 4,481
======= ============ ========
At 31 December 2019 108 5,846 5,954
======= ============ ========
Capitalised development costs are not treated as a realised loss
for the purpose of determining the Company's distributable profits
as the costs meet the conditions requiring them to be treated as an
asset in accordance with IAS 38.
Impairment testing of goodwill
The Group is required to test, on an annual basis, whether
goodwill has suffered any impairment or at where indicators of
impairment exist. The recoverable amount is determined based on
value-in-use calculations. The use of this method requires the
estimation of future cash flows and the determination of a discount
rate in order to calculate the present value of the cash flows. The
goodwill balances of the group are monitored and tested at an
operating segment level, further details on their composition are
set out below.
The carrying amount of goodwill is allocated as follows:
2020 2019
$000 $000
-------- -------
Ticketing and Distribution
(CGU1, 2 and 3) * 71,609 70,887
LoQueue (CGU5) ** 28,500 28,500
100,109 99,387
======== =======
* Comprises accesso, LLC, Siriusware, Inc, accesso Passport
trading within Accesso Australia PTY Limited being CGU1, VisionOne
Worldwide Limited & its subsidiaries and accesso ShoWare
trading within Accesso Australia PTY Limited being CGU2 and
Ingresso Group Limited & subsidiaries as CGU 3.
** Comprises the accesso LoQueue trading within accesso
Technology Group plc, Lo-Q, Inc., Lo-Q Service Canada Inc and
Accesso Australia PTY Limited as CGU 5.
Current and prior year 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. This test was revisited at 31
December 2020 with the same outcome. At 31 December 2019 this test
was performed which also required an impairment charge to the
intangible assets of the CGU.
The recoverable amount of Ingresso Group Limited's allocated
intangible assets, excluding goodwill, (which is part of the
Ticketing and Distribution Operating Segment and tested at that
level in compliance with IAS36 Impairment) was tested for
impairment based on 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 key assumptions used in the estimation of
the recoverable amount are set out in the table below.
The discount rate was a pre -- tax measure estimated based on
comparable listed company gearing and capital structures, an equity
risk premium and a 30-year risk-free (2019: 20 year risk-free) rate
applicable to the UK, small stock premium relative to the market
and size of business and an appropriate cost of debt relative to
market conditions. The pre-tax discount rate has reduced by 1.5% to
11.9% (2019: 13.4%) reflecting a reduction in the equity risk
premium and risk-free rate.
The cash flow projections included specific estimates for 5
years (2019: 3 years plus 2% thereafter) per Board approved
forecasts.
Average EBITDA during the forecast period was estimated by
taking into account a 2-year recovery to 2019 levels following the
severe impact of COVID-19 on the UK theatre sector, thereafter the
growth rate from 2023 to 2025 is an average of 9%. Across the
5-year period the average is a growth rate of 55.2% (2019: 23.4%),
the increase reflecting an increase from a COVID-impacted base
level in 2020.
If the discount rate were to be increased or reduced by 1% the
impairment would remain unchanged given the CGU assets are written
down to nil with some excess. The consequence of this test the
carrying value of the Ingresso allocated assets was reduced by
$1.4m (2019: $7.0m), which included intangible assets as set out
below.
The recoverable value of Ingresso as a stand-alone CGU over a
five-year term as at 31 December 2020 was $1.8m (2019: $2.8m).
Prior year i mpairment of The Experience Engine ('TE2') - Cash
Generating Unit and Operating Segment
The recoverable amount of The Experience Engine which also
represents its own Operating Segment was based on a value in use,
estimated using discounted cash flows. The key assumptions used in
the estimation of the recoverable amount are set out below. The
values assigned to the key assumptions represent management's
assessment of the expected performance of TE2 combined with
historical data from both external and internal sources are set out
in the table below.
The discount rate was a pre -- tax measure estimated based on
comparable listed company gearing and capital structures, an equity
risk premium and a 20 year risk-free rate applicable to the US,
small stock premium relative to the market and size of business and
an appropriate cost of debt relative to market conditions. The
pre-tax discount rate has increased by 2.7% to 14.4% to take
account of increased forecasting accuracy risk.
Prior year i mpairment of The Experience Engine ('TE2') - Cash
Generating Unit 4 (CGU4) and Operating Segment (continued)
The cash flow projections included specific estimates for three
years and a 2% terminal growth rate thereafter. The terminal growth
rate was determined based on management's estimate of the long --
term compound annual growth rate relative to the US market,
consistent with the assumptions that a market participant would
make.
Average EBITDA during the forecast period was estimated taking
into account past experience and had been significantly de-risked
from the previous impairment test to reflect current performance.
TE2 performed below management expectations in 2019 which has
required the estimated EBITDA growth assumption to move to 2%.
The estimated recoverable amount of TE2 is negative and
consequently the carrying amount of all its intangible assets were
been impaired to nil with a charge of $46.6m charged to
administrative expenses. This impairment was not sensitive to
plausible changes in key assumptions.
The below table sets out the intangible asset impairments
recorded within the Guest Experience and Ticketing and Distribution
segments:
2020 2020 2020 2019 2019 2019
Guest Ticketing Total Guest Ticketing Total
Experience and Distribution Experience and Distribution
$000 $000 $000 $000 $000 $000
Goodwill - - - 17,403 - 17,403
Intangible assets - 1,360 1,360 29,222 6,992 36,214
Impairment of specific
development projects(*) 468 799 1,267
Impairment charge
recorded within
administrative expense 468 2,159 2,627 46,625 6,992 53,617
============ ================== ====== ============ ================== =======
(*)A review of all project development costs capitalised was
performed at year end. As a result, an impairment of $1.27m was
recorded against projects which are no longer considered
commercially and technically feasible.
The key assumptions used in the value in use calculations are as
follows:
2020 2019
Pre-tax discount rate (%)
accesso, LLC & Siriusware, Inc. (CGU 1) 14.0% 14.4%
VisionOne Worldwide Limited and its subsidiaries
(CGU 2) 14.0% 14.4%
Ingresso Group Limited and subsidiaries
(CGU 3) 11.9% 13.4%
The Experience Engine (CGU 4) 14.0% 14.4%
LoQueue * (CGU 5) 14.0% 14.4%
Average EBITDA growth rate during forecast
period (average %)**
accesso, LLC & Siriusware, Inc. (CGU 1) 111.1% 10.7%
VisionOne Worldwide Limited and its subsidiaries
(CGU 2) 520.8% 26.3%
Ingresso Group (CGU 3) 55.2% 23.4%
The Experience Engine (CGU 4) -44.4% 2%
LoQueue * (CGU 5) 232.6% 12.8%
Terminal growth rate (%)
accesso, LLC & Siriusware, Inc. (CGU 1) 2.0% 2.0%
VisionOne Worldwide Limited and its subsidiaries
(CGU 2) 2.0% 2.0%
Ingresso Group (CGU 3) 2.0% 2.0%
The Experience Engine (CGU 4) 2.0% 2.0%
LoQueue * (CGU 5) 2.0% 2.0%
Period on which detailed forecasts based
(years)
accesso, LLC & Siriusware, Inc. (CGU 1) 5 3
VisionOne Worldwide Limited and its subsidiaries
(CGU 2) 5 3
Ingresso Group (CGU 3) 5 3
The Experience Engine (CGU 4) 5 3
LoQueue * (CGU 5) 5 3
* Comprises accesso LoQueue trading within accesso Technology
Group plc, Lo-Q, Inc., Lo-Q Service Canada Inc and Accesso
Australia PTY Limited
**Average EBITDA growth rates have increased significantly as a
result of the recovery from 2020 COVID impacted base levels to 2019
levels in 2022/ 2023 and a significant business reorganisation
during 2020. Growth rates in 2024 and 2025 are as follows:
2020
Average EBITDA growth rate in years 4
and 5 (average %)
accesso, LLC & Siriusware, Inc. (CGU 1) 29.9%
VisionOne Worldwide Limited and its subsidiaries
(CGU 2) 14.7%
Ingresso Group (CGU 3) 1.4%
The Experience Engine (CGU 4) -8.1%
LoQueue * (CGU 5) 13.1%
Operating margins have been based on experience, where possible,
and future expectations in the light of anticipated economic and
market conditions. Growth rates beyond the formally budgeted period
are based on economic data pertaining to the region concerned.
The discount rates applied to all CGUs was a pre -- tax measure
estimated based on comparable listed company gearing and capital
structures, an equity risk premium and risk-free rate applicable to
the country, small stock premium relative to the market and size of
business and an appropriate cost of debt relative to market
conditions.
Sensitivity analysis
If any of the following changes were made to the following key
assumptions the carrying value and recoverable amount would be
equal as at 31 December 2020. A considerable amount of judgement is
applied in setting discount rates, forecasts and terminal values,
all of which will be impacted by the current uncertainty in the
market and the speed at which our customers and the wider macro
markets recover from the impacts of COVID-19.
Ticketing and Distribution* accesso
LoQueue**
2020 2019 2020 2019
-------------- -------------- ---------- ----------
Pre-tax discount rate Increase Increase Increase Increase
by 1.1% by 1.5% by 7.5% by 33.6%
EBITDA Growth rate during Reduce by Reduce Reduce Reduce by
detailed forecast period 7.8% by 7.7% by 40.0% 68.0%
(average)
Terminal growth rate Reduce by Reduce Reduce Reduce by
1.1% by 1.3% by 8.6% 33.5%
Excess over carrying value
($000) $10,481 $16,887 $36,138 $76,176
* Comprises accesso, LLC, Siriusware, Inc., VisionOne Worldwide
Limited & its subsidiaries and Ingresso Group Limited &
subsidiaries and accesso Passport/ accesso ShoWare trading within
Accesso Australia PTY Limited (CGUs 1, 2 and 3)
** Comprises the LoQueue trading within accesso Technology Group
plc, Lo-Q, Inc., Lo-Q Service Canada Inc and Accesso Australia PTY
Limited (CGU 5)
The Ticketing and Distribution segment is sensitive to
relatively small changes in the key assumptions as set out below,
if there were to be a 2% increase in the pre-tax discount rate the
result would be an $9.0m impairment charge. If the terminal growth
rate were to reduce by 2% the result would be a $8.3m impairment
charge. If the recovery of the Ticketing and Distribution segment
back to 2019 levels were to be slower than anticipated in 2023,
this would lead to an impairment.
We do not consider there are any plausible changes in
assumptions that would give rise to an impairment in accesso
LoQueue over the next financial year.
Development costs not yet available for use
Development cost assets not yet available for use reside in the
CGUs as follows and are considered annually for impairment in line
with the goodwill attached to those CGUs. These capitalised costs
relate to development projects which have not been put into use as
at the year-end:
2020 2019
$000 $000
-----
accesso, LLC & Siriusware, Inc. (CGU 1) 49 3,069
11. Called up share capital
2020 2019
Ordinary shares of 1p each Number $000 Number $000
Opening balance 27,642,822 427 27,117,995 421
Issued in relation to exercised
share options 50,187 1 204,186 2
Issued in relation to deferred
acquisition consideration 40,538 1 320,641 4
Issued in relation to the
placing and open offer 13,481,744 166 - -
Closing balance 41,215,291 595 27,642,822 427
On 9 June the company's shareholders approved the placing,
direct subscription and open offer to issue 13,481,744 new ordinary
shares at GBP2.90p to raise gross proceeds of GBP39.1 million
($48.2 million).
During the period, 50,187 shares (2019: 204,186 shares) , with a
nominal value $630 (2019: $1,552), were allotted following the
exercise of share options.
In addition, during 2020, 40,538 shares (2019: 320,641) were
issued in respect of the deferred acquisition consideration to
certain employees of Blazer and Flip Flops Inc for a nominal value
of $522 (2019: $4,201).
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company.
Following the adoption of new Articles of Association on 12
April 2011 the company no longer has an authorised share capital
limit.
All issued share capital is fully paid as at 31 December 2020.
At 31 December 2019 200,000 shares registered in the name of Lo-Q
(Trustees) Limited were unpaid, a wholly owned subsidiary of the
company on behalf of the Lo-Q Employee Benefit Trust.
12. Post balance sheet events
On 12 February 2021 the Long-Term Incentive Plan performance
conditions were approved by the Remuneration Committee for the
Chief Executive Officer and Chief Financial Officer in respect of
the 582,567 and 154,422 awards issued to them on 27 January 2020
and 16 September 2020 respectively. The performance conditions are
expected to reduce the fair value of the awards and will be
accounted for as a modification, cumulatively reducing the
share-based payment charge in 2021 following an expert's fair value
computation of the awards.
On 19 March 2021 the Group settled its two drawn borrowing
facilities with Lloyds of GBP13.2m and $8.9m and refinanced its
loan facilities with Investec Bank PLC; entering into a 3 year
GBP18m Coronavirus Large Business Interruption Scheme revolving
credit facility. The draw down on the new facility is subject to
securing charges over our US subsidiary entities, a process which
is expected to complete by 2 April 2021. The facility is subject to
quarterly covenant tests on minimum revenue and minimum liquidity
for 2 years to December 2022; from March 2023 additional covenants
are added for leverage and interest cover.
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END
FR PPUPWWUPGPPP
(END) Dow Jones Newswires
March 23, 2021 03:00 ET (07:00 GMT)
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