Accesso Technology Group PLC – Half-year Report

Accesso Technology Group PLC – Half-year Report

accesso Technology Group plc (AIM: ACSO), the premier technology solutions provider to leisure, entertainment and cultural markets, today announces interim results for the six months ended 30 June 2019 (‘1H 2019’).

 

In 1H 2019, the Group has made important progress on its long-term strategy to integrate its offerings to uniquely position itself to take advantage of a $3.4bn(1) addressable market, driven by a market shift toward the integrated guest experience and leveraging data to improve business outcomes for customers. The Group will be deploying its third customer on an integrated platform in Q4 and moving forward will continue to organise the company around a unified product strategy and go-to-market. These efforts will drive both product innovation as well as development and operational efficiencies, supporting plans to accelerate revenue and cash EBITDA growth.

 

Overall, financial performance during the first half of 2019 was broadly in-line with management expectations. Despite revenue below management expectations, costs associated with the integration strategy were lower than originally anticipated, contributing to a lower than expected increase in the Group’s expenditure base. 

 

Six months ended

30 June 2019

Six months ended

30 June 2018 (7)

% change

Year ended

31 December 2018 (7)

Unaudited

Unaudited

Audited

$m

$m

$m

Revenue

50.7

54.4

(6.8) %

118.7

Revenue – constant currency (2)

51.8

54.4

(4.8) %

Operating (loss)/profit

(4.4)

2.3

(291.3) %

6.3

Adjusted operating profit (3)

3.9

11.0

(64.5) %

25.1

Adjusted EBITDA (4)

11.0

15.1

(27.2) %

34.8

Cash EBITDA (5)

1.0

3.9

(74.1)%

13.7 (9)

(Loss)/profit before tax

(5.0)

1.4

(457.1) %

5.2

Net (debt)/ cash (6)

(15.2)

(11.6)

(31.0) %

0.5

(Loss)/earnings per share – basic (cents)

(13.44)

3.85

 (449.1) %

12.23

Adjusted earnings per share – basic (cents) (8)

14.21

30.31

 

(53.1) %

73.58

 

(1) Internal management analysis

(2) The period ended 30 June 2019 has been prepared on a proforma basis using consistent currency rates with the period ended 30 June 2018 to assist with assessing the underlying performance of the business.

(3) Operating profit before the deduction of amortisation related to acquisitions, acquisition costs, deferred and contingent payments, and costs related to share-based payments (note 6)

(4) Operating profit before the deduction of amortisation, depreciation, acquisition costs, deferred and contingent payments, and costs related to share-based payments (note 6)

(5) Adjusted EBITDA less capitalised internal development costs (note 6)

(6) Cash and cash equivalents less borrowings

(7) 30 June 2018 and 31 December 2018 results have not been restated for the impact of IFRS 16 – Leases (see note 1)

(8) Adjusted earnings per share is after adjusting operating profit for amortisation on acquired intangibles, deferred and contingent payments, profit recognised on the reduction of the earn-out liability, acquisition costs, finance charges relating to refinance for acquisition purposes and share-based payments, net of tax at the effective rate for the period

(9) Not audited

 

Overall Highlights 

·      The formal sale process which we announced on 24 July 2019 remains ongoing. The Company recently held management presentations with a number of interested parties and is expected to receive feedback by the end of September 2019.

·      The Board remains confident that the Group’s product range, data assets and technology expertise give it a unique ability to capitalise on market trends, driven by an evolving and increasingly demanding guest experience requirement. accesso is the only vendor capable of delivering personalised customer experiences at scale, enhancing all-important repeat visitation and yield-per-guest metrics for operators by optimising the guest experience.

·      accesso’s plan to bring integrated product solution to market is progressing ahead of previously communicated expectations, with initial sizeable integrated deployments in 2019. Completion is expected by the end of 2021 and incremental development investment is expected to be below previous guidance.

·      The plan also incorporates a transition to a single global service and implementation team which is expected to create significant efficiencies, as well as an enhanced go-to-market approach to deliver both standalone core system sales and integrated guest experience solutions.

 

Financial Highlights

·      Revenue of $50.7m or $51.8m at constant currency (2018: $54.4m) was below management expectations following slower than expected scaling within distribution despite progress signing agreements with key accesso Passport clients.

·      The comparative prior year period benefited from non-recurring revenue items with a net impact of $6.2m. Excluding these, underlying revenue growth was $3.6m at constant currency, or 7.7%.

·      A focus on platform fees and transactional deals saw the proportion of repeatable revenues increase to $35.7m in the period (79.3%), or $36.8m (79.7%) at constant currency (1H 2018: $34.8; 71.3%), a trend we expect to continue.

·      Guest Experience performance was broadly in-line with expectations, with strong momentum going into H2. This has been achieved despite an attendance linked underperformance at a specific park and impact from a previously stated non-repeating license fee of $2.2m.

 

Continued progress in our served verticals

·      Over 40 Ticketing deployments delivered across N. America, S. America, Europe and Asia/Pac.

·      Multiple signed and/or on-boarded cross-product deals that included accesso Passport ecommerce with accesso Siriusware POS; select clients include: 

Audubon Institute, New York Botanical Gardens, Santa Cruz Beach and Boardwalk, Jiminy Peak, and Coney Island

·      Growth at accesso ShoWare included several large market deals including:

State Fair of Texas, Stratosphere Hotel/Casino, Fotografiska Museum, Rink Management Services.

accesso ShoWare solutions also supported major live entertainment events including Ed Sheeran, Shawn Mendes and Iron Maiden

·      Guest Experience business signed and/or deployed a variety of strategic deals and cross sells including:

Village Roadshow Theme Parks (VRTP) – expected delivery of major elements of the Group’s unified solutions and third-party integrations to VRTP (ticketing, queueing, distribution, food and beverage, photo)

Carnival – supported the deployment of three new ships

Cedar Fair – TE2 identity service and accesso Passport integration now rolled out to a total of 11 locations with a food and beverage pilot at select parks

Grupo Vidanta – food and beverage launched

Leading hospitality operator – mobile app development and select capabilities

 

Outlook & Guidance

·      Revenue:

FY 2019: Reported revenue between $118m – $121m ($120m – $123m on a constant currency basis)

2020 – 2021: high single digit organic growth in repeatable business offset by negative growth in non-repeatable revenues producing overall low to mid-single digit revenue growth

2022 onwards: The benefits of the integration and go-to market plans are expected to support overall double-digit organic revenue growth

The Group expects the quality of revenues to increase with the percentage of repeatable revenues expected to be c80% in FY 2019 and steadily increase to c90% by FY 2022

 

·      Development expenditure:

FY 2019: expected to be below previous guidance at c. $33m (previous: $36-$39m) – 28% of revenues; 60%-63% capitalisation

2020: similar expenditure and capitalisation to FY2019

Longer term: opportunity for development expenditure to normalise at c.20% of revenues as integration plan is completed and business reorganises and benefits from efficiencies

 

·      Cash EBITDA (new metric):

Opportunities to increase Cash EBITDA margin to c.20% by 2022, as business leverages efficiencies derived from development and operational re-organisation

 

·      Tax: ETR on adjusted earnings expected to be 20% to 23%

 

Commenting on the results, Paul Noland, Chief Executive Officer of accesso, said:

“During the first half of 2019 we have made important progress in our plans to transition to a unified product strategy. accesso is uniquely positioned to deliver an integrated digital guest experience. We have continued to see strong demand for both single and combined offerings across our served verticals, reaffirming our faith in the strategy and our ability to deliver against a TAM within currently served verticals that we estimate to be $3.4bn.

Against this positive long-term backdrop, revenues in the first half have been below our internal expectations as the expansion of our distribution efforts, which remains an important element of our future plans, has taken somewhat longer than expected to take hold. Despite this, with our new strategic plan in place and moving forward, we are increasingly confident of seizing the significant opportunity before us.

Going into H2 the Board is clear that we have the right strategy in place to deliver sustainable attractive organic growth in the medium term, while focusing on the reorganisation of our technology development teams, operating efficiency opportunities and redefining our go-to-market strategy.”

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